[Federal Register: May 26, 2000 (Volume 65, Number 103)]
[Rules and Regulations]
[Page 34039-34040]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26my00-1]
-----------------------------------------------------------------------
[[Page 34039]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 29
[Docket No. TB-00-10]
RIN 0581-AB87
Tobacco Fees and Charges for Mandatory Inspection; Fee Increase
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Interim final rule with request for comments.
-----------------------------------------------------------------------
SUMMARY: The Tobacco Inspection Act requires the Secretary to fix and
collect fees and charges for inspection and certification, and other
services, including administrative and supervisory costs, at designated
tobacco auction markets in all tobacco producing areas. The fees
collected must, as nearly as possible, cover the Department's costs of
performing these services and also maintain a reserve sufficient to
cover program financial liabilities. This interim final rule will
increase the fee from $.0083 to $.0100 per pound to cover the increased
cost of operating the tobacco inspection program and maintain the
operating reserve. The last increase in the fee was in 1995. This
increase does not affect the fees for import, export, or permissive
tobacco inspection.
DATES: Effective May 30, 2000; comments received by June 26, 2000, will
be considered prior to issuance of a final rule.
ADDRESSES: Send comments to John P. Duncan III, Deputy Administrator,
Tobacco Programs, Agricultural Marketing Service (AMS), United States
Department of Agriculture (USDA), AG 0280, Room 502 Annex Building, PO
Box 96456, Washington, DC 20090-6456. Comments will be made available
for public inspection at this location during regular business hours.
FOR FURTHER INFORMATION CONTACT: John P. Duncan III, Deputy
Administrator, Tobacco Programs, AMS, USDA, AG 0280, Room 502 Annex
Building, PO Box 96456, Washington, DC 20090-6456; telephone: (202)
205-0567; Fax: (202) 205-0235.
SUPPLEMENTARY INFORMATION:
A. Executive Order 12866
This rule has been determined to be not significant for purposes of
Executive Order 12866, and therefore, has not been reviewed by the
Office of Management and Budget.
B. Regulatory Flexibility Act
Pursuant to the requirements set forth in the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.), full consideration has been
given to the potential economic impact upon small business. All tobacco
warehouses and producers fall within the confines of ``small business''
which are defined by the Small Business Administration (13 CFR 121.201)
as those having annual receipts of less than $500,000 and small
agricultural service firms are defined as those whose annual receipts
are less than $3,500,000. There are approximately 360 tobacco
warehouses and approximately 170,000 producers and most warehouses and
producers may be classified as small entities. The AMS has determined
that this action would not have a significant economic impact on a
substantial number of small entities.
The Tobacco Inspection Act of 1935, as amended, (7 U.S.C. 511-
511q), requires the Secretary to fix and collect fees and charges for
inspection and certification of quota tobacco, and other services,
including administrative and supervisory costs, at designated tobacco
auction markets in all tobacco producing areas. The fees collected
must, as nearly as possible, cover the Department's costs of performing
these services.
The AMS annually reviews its user fee programs to determine if the
fees are adequate. The most recent review determined that the existing
fee schedule would result in significant losses in crop years 2000 and
2001 and leave the program with inadequate reserve balances. Due to
reductions in tobacco quotas and increases in the sale of tobacco
through contract sales, obligations for the 2000 crop-year are
estimated at $11,607,000 and revenues are expected to reach only
$6,843,000, for a loss of $4,764,000 and a reduction in the operating
reserve to $4,738,000. If the same level of service and fee structure
continues for the 2001 crop-year the estimated loss would exceed
$6,154,000 and the operating reserve would drop to a negative
$1,416,000.
The major items affecting obligations are Federally mandated
increases in salaries and benefits, travel costs, and other
administrative costs. Revenue depends on the amount of tobacco sold on
the designated auction markets. Production quotas for tobacco were
reduced by 228.6 million pounds in 1998, 330.7 million pounds in 1999,
and 318.7 million pounds in 2000. This is a total decrease of 878
million pounds in production quotas since 1997. The amount of tobacco
graded in 1998 was 1.56 billion pounds, 1.31 billion pounds in 1999,
and 938 million pounds is estimated in 2000. Contract sales of tobacco
will further reduce the amount graded by about 235 million pounds in
2000. Based on these figures, the current fee level will not generate
the amount of revenue sufficient to maintain the level of inspection
services requested and maintain funds in the program's reserve account.
An analysis of available data indicates that a fee of $.0100 per pound
effective for the 2000 crop-year would increase revenue by $1,277,000
and bring the operating reserve up to $6,014,000. The requested fee
increase was recommended by the National Advisory Committee for Tobacco
Inspection Services at its meeting on April 20, 2000. This committee is
made up of representatives of producer interest groups, appointed by
the Secretary of Agriculture, to advise on the level of services and
user fee rate. This fee increase represents the minimum level needed to
cover costs for the 2000 crop-year. In the future, AMS will continue to
review the program to ensure that fees are adequate. Accordingly, we
believe that the impact of the fee increase would not be significant on
users of the inspection and certification services.
C. Civil Justice Reform
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. This action is not intended to
[[Page 34040]]
have retroactive effect. This rule will not preempt any State or local
laws, regulations, policies, unless they present an irreconcilable
conflict with this rule. There are no administrative procedures that
must be exhausted prior to any judicial challenge to the provisions of
this rule.
Background
The Secretary of Agriculture is authorized by the Tobacco
Inspection Act of 1935, as amended, 7 U.S.C. 511-511q et seq., to fix
and collect fees and charges for inspection and certification of quota
tobacco, and other services, including administrative and supervisory
costs, at designated tobacco auction markets in all tobacco producing
areas. The fees collected must, as nearly as possible, cover the
Department's costs of performing these services.
The AMS regularly reviews programs to determine if fees are
adequate and if costs are reasonable. This interim final rule will
increase the fees and charges assessed by the AMS for the mandatory
inspection and certification of producer tobacco sold at designated
auction markets throughout the tobacco producing areas.
The AMS conducted a recent review of the financial status of this
program to determine whether the fee is sufficient. Revenue for the
1999 crop-year was approximately $11,419,000. Obligations for the
period are approximately $11,508,000. At the current fee level,
insufficient revenue would be generated to meet the costs of the
inspection program and to replace funds that had to be used from the
program's reserve account. The major factors affecting obligations are
mandatory increases in Federal salaries and benefits, travel
allowances, and other administrative costs since 1995. An analysis of
data available to the AMS indicates that a fee of $.0100 per pound
would cover expenses and maintain a reserve that would meet any
reasonable contingency.
Due to an estimated 43 percent reduction in tobacco to be inspected
and 20-30 percent of tobacco being sold through contract sales,
obligations for the 2000 crop-year are estimated at $11,607,000 and
revenues are expected to reach only $6,843,000, for a loss of
$4,764,000 and a reduction in the operating reserve to $4,738,000. If
the same level of service and fee structure continues for the 2001
crop-year the estimated loss would exceed $6,154,000 and the operating
reserve would drop to a negative $1,416,000.
Revenue depends on the amount of tobacco sold on the designated
auction markets. Production quotas for tobacco were reduced by 228.6
million pounds in 1998, 330.7 million pounds in 1999, and 318.7 million
pounds in 2000. This is a total decrease of 878 million pounds of
tobacco since 1997. Also, contract sales of tobacco will further reduce
the amount graded by about 235 million pounds in 2000. Based on these
figures, the current fee level will not generate the amount of revenue
sufficient to maintain the level of inspection services requested and
maintain funds in the program's reserve account. An analysis of
available data indicates that a fee of $.0100 per pound effective for
the 2000 crop-year would increase revenue by $1,277,000 and bring the
operating reserve up to $6,014,000.
Information on program income and expenses was presented to the
National Advisory Committee for Tobacco Inspection Services at its
meeting on February 17, 2000, in Raleigh, North Carolina, and again on
April 20, 2000, in Washington, D.C. The National Advisory Committee,
which is made up of 14 representatives from tobacco producer interest
groups and appointed by the Secretary of Agriculture, was established
by law in 1981 to advise the Secretary on the level of services needed
and the fees necessary to cover those services. By a majority vote, the
Committee adopted a motion to recommend to the Secretary an increase in
the fee to $.0100 per pound.
It is hereby found and determined upon good cause that it is
impracticable, unnecessary, and contrary to the public interest to give
preliminary notice prior to putting this rule into effect and that good
cause exists for not postponing the effective date of this rule until
30 days after publication in the Federal Register because: (1) The 2000
flue-cured marketing season will begin about July 17 and this action is
needed, as soon as possible, so as to treat all types of tobacco on an
equal basis for the 2000 crop-year; (2) the National Advisory Committee
recommended the fee increase by a majority vote; and (3) this interim
final rule provides a 30-day comment period, and all comments timely
received will be considered prior to finalization of this rule.
List of Subjects in 7 CFR Part 29
Administrative practice and procedure, Advisory committees,
Government publications, Imports, Pesticides and pests, Reporting and
recordkeeping requirements, Tobacco.
For reasons set forth in the preamble, 7 CFR part 29 is amended as
follows:
PART 29--TOBACCO INSPECTION
1. The authority citation for part 29, subpart B continues to read
as follows:
Authority: 7 U.S.C. 511m and 511r.
Sec. 29.123 [Amended]
2. In Sec. 29.123, paragraph (a) is amended by removing the words
``$.0083 per pound'' and adding the words ``$.0100 per pound'' in their
place.
Dated: May 22, 2000.
Kathleen A. Merrigan,
Administrator, Agricultural Marketing Service.
[FR Doc. 00-13290 Filed 5-25-00; 8:45 am]
BILLING CODE 3410-02-P
This archive was generated by hypermail 2b29 : 2000/05/26 EST