Exceptions to Geographic Boundaries, 46606-46611 [2021-17609]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 86, Number 158 (Thursday, August 19, 2021)]
[Proposed Rules]
[Pages 46606-46611]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-17609]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 86, No. 158 / Thursday, August 19, 2021 / 
Proposed Rules

[[Page 46606]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 800

[Doc. No. AMS-FGIS-19-0062]
RIN 0581-AD90


Exceptions to Geographic Boundaries

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule; request for comments.

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SUMMARY: This notice of proposed rulemaking invites public input on 
proposed revisions to Federal Grain Inspection regulations. The 
Agricultural Marketing Service is required to revise the regulations as 
a result of 2018 Farm Bill amendments to the U.S. Grain Standards Act. 
Revised regulations would allow designated official agencies to perform 
grain inspections outside their geographic areas under certain 
additional conditions. Proposed revisions are based on industry input 
and are intended to provide additional flexibility to the industry.

DATES: Comments must be received by September 20, 2021.

ADDRESSES: Comments must be submitted through the Federal e-rulemaking 
portal at https://www.regulations.gov and should reference the document 
number and the date and page number of this issue of the Federal 
Register. All comments submitted in response to this document will be 
included in the record and will be made available to the public. Please 
be advised that the identity of individuals or entities submitting 
comments will be made public on the internet at the address provided 
above.

FOR FURTHER INFORMATION CONTACT: Sophie Parker, Deputy Director, 
Quality Assurance and Compliance Division, Federal Grain Inspection 
Service, AMS, USDA; email: [email protected].

SUPPLEMENTARY INFORMATION: Under the USGSA (7 U.S.C. 71 et seq.), each 
official agencies (OA) in the United States is assigned a specific 
geographic area where it performs all official grain inspection and 
weighing services for customers within that geographic area (7 U.S.C. 
79(f)(2)(A)). This ensures effective and efficient delivery of official 
services to all customers within the assigned OA's geographic area and 
enhances the orderly marketing of grain. The U.S. Grain Standards Act 
(USGSA) also provides that customers may obtain services from other OAs 
under certain circumstances. The Secretary may allow OAs to cross 
geographic boundaries to provide services to requesting customers if: 
(1) The assigned OA is unable to provide necessary services on a timely 
basis; (2) the customer has not been receiving official inspection 
services from the assigned OA; (3) the customer requests probe 
inspection on barge-lot basis; or (4) the assigned OA agrees in writing 
with the adjacent OA to waive the current geographic restriction at the 
customer's request (7 U.S.C. 79(f)(2)(B)). These allowances are 
considered exceptions to the USGSA's standard requirements regarding 
the use of designated OAs to perform inspection services within 
specified geographic areas. Exceptions must be approved on a case-by-
case basis by the Agricultural Marketing Service's Federal Grain 
Inspection Service (FGIS) that administers regulations under the 
USGSA.\1\ Regulations in 7 CFR part 800 provide limitations for use of 
these exceptions.
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    \1\ FGIS, formerly part of USDA's Grain Inspection, Packers and 
Stockyards Administration, was merged with USDA's Agricultural 
Marketing Service in 2018.
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Service Exceptions

    A notable exception that has been implemented in the past is known 
as the nonuse of service exception. In that exception, a customer who 
had not obtained inspection services from the assigned OA for a 
specified length of time could obtain services from another OA. At 
times, regulations required customers to have not used their designated 
OA for at least 90 consecutive days; at other times the regulations 
specified a 180-day nonuse period before the customer could apply for 
service from another OA. However, lack of clarity about how FGIS 
determined whether to grant nonuse of service exceptions fostered 
confusion and conflicts among involved parties and created a perception 
of inconsistency regarding the handling of such requests. Congress 
eliminated the nonuse of service exception from the USGSA in 2015; \2\ 
FGIS subsequently removed that exception from the regulations.\3\
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    \2\ The Agricultural Reauthorizations Act of 2015, enacted 
September 20, 2015 (Pub. L. 114-54 sec. 301(b)(3)(A)).
    \3\ 81 FR 49855, July 29, 2016.
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    Although the nonuse of service exception was eliminated from the 
USGSA in 2015, Congress reinstated authority to implement a nonuse of 
service exception through an amendment to the USGSA in the 2018 Farm 
Bill.\4\ FGIS must now consider regulatory options related to the 
reinstatement of the nonuse of service exception (see 7 U.S.C. 
79(f)(2)(B)(ii)).
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    \4\ The Agricultural Improvement Act of 2018, enacted December 
20, 2018 (Pub. L. 115-334 sec. 12610(a)(1)(D)).
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    On April 1, 2020, FGIS published an advanced notice of proposed 
rulemaking (ANPR) (85 FR 18155) to solicit public comments on how FGIS 
should amend its criteria for reviewing, approving, and implementing 
exceptions to USGSA's requirements for geographic boundaries. FGIS 
received six comments on the ANPR. We have incorporated industry 
feedback from the ANPR, along with input received during industry 
meetings, to develop this proposed rule (PR). FGIS is requesting public 
comment on options for timely service and nonuse of service, as defined 
within this PR. Particularly, FGIS seeks input from industry 
participants and OAs who use and provide official services and are 
familiar with grain inspection services under the USGSA. We welcome the 
submission of data and other information to support commenters' views. 
As a result of public input received on the PR, FGIS will develop a 
final rule for publication in the Federal Register.

Restoration of Previous Nonuse of Service Exceptions

    Subsequent to 2015 amendments to the USGSA and the 2016 changes to 
the FGIS regulations, a number of nonuse of service exceptions were 
terminated. The 2018 Farm Bill directed USDA to allow for restoration 
of those exceptions where appropriate. Interested parties were given an 
opportunity to submit restoration requests to FGIS, as

[[Page 46607]]

described in a Notice to Trade published on March 5, 2019.\5\
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    \5\ Restoring Certain Exceptions to the U.S. Grain Standards 
Act, published March 5, 2019. https://www.ams.usda.gov/content/restoring-certain-exceptions-us-grain-standards-act.
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Termination of Nonuse of Service Exceptions

    The amended USGSA provides that the nonuse of service exception may 
only be terminated if all parties to the exception jointly agree on the 
termination.\6\ This means that the customer, the assigned OA, the OA 
that has been providing service under the exception (gaining OA), and 
FGIS must agree to terminate the exception. This ensures that: (1) All 
parties are aware of the change and (2) the assigned OA will resume 
providing service to the customer.
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    \6\ Public Law 115-334 sec. 12610(a)(1)(E).
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    The requirement for all parties to the exception to jointly agree 
on termination of the nonuse of service exception does not apply if the 
designation of an OA is terminated.\7\ If the designation of an OA is 
renewed or restored after being terminated, the exceptions that were 
previously approved, under 7 U.S.C. 79(f)(2)(B), may be renewed or 
restored by requesting a determination from FGIS.
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    \7\ Public Law 115-334 sec. 12610(a)(2).
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Comment Review

    The ANPR suggested three criteria for timely service exceptions and 
four criteria for nonuse of service exceptions, and requested input on 
11 questions regarding factors that could impact decisions on 
exceptions. FGIS would like to thank those who participated in this 
process for providing valuable input. Not all commenters provided 
feedback on criteria for every exemption or on every question in the 
ANPR. Most recognized the need for the official system to be customer 
focused and to provide timely and accurate services.
    FGIS received mixed comments about timely service and nonuse of 
service exceptions. Some commenters stated that they thought the nonuse 
of service exception involved the inability of the OA to provide timely 
service. The USGSA specifies these are two separate exceptions; 
therefore, FGIS is using the feedback to the ANPR to improve and 
clarify the requirements under the appropriate exception.
    The ANPR criteria for timely service exceptions included that: the 
requesting facility would be required to submit a written or verbal 
request for an exception to FGIS, along with documentation regarding 
the designated OA's inability to provide service within six hours from 
the requested service. Further, the OA would have to be unable to 
provide requested services within timeframes established in the OA's 
approved fee schedule. The ANPR criteria for nonuse of service 
exception requests included the requesting facility (customer or 
applicant) demonstrating they have not received official services for 
90 days, documenting why they have not received service, and providing 
a written or verbal request for an exception. In addition, the ANPR 
suggested potential factors for consideration, some of which now fit 
within the expanded criteria for timely service requests.
    In the feedback to the ANPR criteria for timely service exceptions, 
some commenters supported the criteria but provided differing opinions 
on how to apply the criterion regarding timeframes for services 
provided. One suggested that customers should not be allowed to 
routinely call their OA after business hours as a mechanism for 
obtaining service from another OA. Here, FGIS notes parameters required 
for requesting official services are defined in 800.116(b) and OA fee 
schedules. FGIS also received requests to clarify which services are 
included in a timely service exception. Industry feedback indicates 
some OA's do not offer all official services some customers request. 
Others indicate that weather events could impact access to timely 
service. Timely service exceptions criterion in this PR would provide 
an avenue to accommodate these situations.
    In the feedback to the ANPR criteria for nonuse of service 
exceptions, some commenters asked FGIS to add flexibility to the nonuse 
of service exception and to rename it ``service exception''. According 
to industry input, customers occasionally face limitations in the types 
of services offered by the assigned OA. This again indicated to FGIS 
that there is confusion about the criteria for timely service and the 
criteria for nonuse of service exceptions. In addition, the feedback on 
the number of days without official service (for nonuse of service 
exceptions) had a wide range, from 30 to 180 days. As stated in the 
ANPR, prior ranges allowed were between 90 to 180 days in length. A 
period of 90 days is within timeframes used for the nonuse of service 
exception in the past and is a compromise based on timeframes suggested 
in the comments.
    In the general feedback to the ANPR, FGIS received comments 
expressing concern that some requests for exceptions relayed false or 
misleading information. These comments questioned how FGIS would 
validate requests for exceptions and whether the assigned OA would have 
an opportunity to respond to the request. Therefore, FGIS proposes 
adding a validation process for requests for exceptions. This would 
allow all parties to submit information and data regarding the request. 
FGIS would review information and assess requests to ensure the 
integrity of the official system is maintained. FGIS also received 
feedback expressing concern that nonuse of service exceptions 
negatively impact the integrity of the official system. FGIS has 
attempted to address all feedback within this PR.

Overview

    Amendments proposed would modify parameters for the exceptions 
program for timely service and reinstate the exception program for 
nonuse of service in 7 CFR 800.117, to comply with amendments made to 
the USGSA in the 2018 Farm Bill. This PR incorporates feedback received 
from the public on the ANPR to create a clear, consistent, and fair 
framework for considering and granting these exceptions, which allow 
designated OAs to perform grain inspections outside their geographic 
areas under certain conditions. Timely service and nonuse of service 
are two of those conditions. This PR defines and differentiates between 
timely service and nonuse of service exceptions and their associated 
requirements.
    Under Sec.  800.117(b)(1), the industry would have a mechanism to 
request and receive timely service from an alternate OA. Applicants 
could also request timely service exceptions for delays caused by 
weather events and requests for services that are not offered by the 
assigned OA. For a timely service exception, FGIS would grant an 
exception when: (1) The designated OA is unable to provide services to 
an applicant within 6 hours or the OA is unable to provide results and 
certificate in accordance with 800.160(c); or (2) a request for 
services not offered by the assigned OA would result in an inability to 
receive timely service; or (3) a weather event or impact caused by a 
weather event results in an inability to receive timely service from 
the assigned OA; and (4) granting an exception is in the best interest 
of the integrity of the official system. It is important to note that 
not all of these instances indicate a delay caused by the assigned OA 
and that the reasons and justification for the exception request weigh 
more prominently for nonuse of service requests than timely service. 
This PR proposes a tiered progression for timely service exceptions. 
The first is a one-time timely service exception. In the

[[Page 46608]]

case of untimely service, the ability to use another official agency 
may be granted for the next service request, as applicable. The second 
is a 90-day timely service exception. If, after the first request is 
granted, a second instance occurs within 180 days, the customer may 
apply for a 90-day exception. Once granted, the alternate OA would 
provide services to the customer for 90 days. The third is a long-term 
timely service exception. If there is another occurrence, within 365 
days of the return to the assigned OA, the applicant may request a 
long-term exception, extending until the termination date of the 
gaining agency's designation. If FGIS determines the assigned OA's 
inability to provide a specific service, limited due to weather events 
or service availability, has been resolved, FGIS may terminate the 
long-term exception. If FGIS terminates a long-term exception, all 
parties would be notified, and the applicant would resume service with 
the assigned OA within 60 days of notification. However, if the 
exception was associated with the assigned OA's inability to provide 
service in 6 hours or less, or timely issuance of the results and 
certificate, FGIS may not terminate the exception. During the duration 
of exceptions caused by a failure of the assigned OA to supply timely 
service, the assigned OA should work on improving their ability to 
provide the requested services.
    For nonuse of service exception requests, this PR defines the 
period of nonuse as 90 days. The PR also specifies, but does not limit, 
categories FGIS would take into consideration when reviewing requests 
for nonuse of service exceptions. These include: (1) The location of 
the specified service point(s); (2) the ability of the alternate OA to 
take on additional customers; (3) the ability of the assigned OA to 
staff an onsite laboratory; (4) whether the requesting facility has 
ever previously utilized the official system (i.e., facilities that 
have never used the official system would not qualify for nonuse of 
service exception, nor would a facility that was under new ownership by 
a company with no history of use of the official system). For a nonuse 
of service exception, FGIS would grant an exception when: (1) An OA has 
not provided service to an applicant within their assigned geographic 
area within the established time period, (2) FGIS receives a request 
for a nonuse of service exception from an applicant, and (3) granting 
an exception is in the best interest of the integrity of the official 
system. In some cases, the cost of the equipment is more than the OA 
would be able to recoup, due to the infrequency of the requests. FGIS 
would take these factors into consideration when reviewing requests for 
exceptions and would work with the OAs and customers to find a 
solution.
    FGIS recognizes there may be instances where granting an exception 
may impact the assigned OA's viability and instances where there is 
concern about the integrity of the official system. In such instances, 
FGIS proposes adding a challenge process into this regulation. As an 
example, FGIS would consider factors such as percent of business or 
percent of customers lost due to 90-day and long-term exceptions. 
Requests for a challenge must clearly state and support the identified 
reason for the request. The assigned OA must include supporting 
documentation for FGIS to review as part of this process. FGIS seeks 
input from industry participants and OAs on the challenge process. We 
welcome and encourage the submission of data and other information to 
support commenters' views.
    FGIS proposes to add the nonuse of service exception back into the 
regulations, under Sec.  800.117(b)(2). The industry would be able to 
apply for official services from an alternate OA if they have not 
received official services within the previous 90 days. In addition, 
FGIS proposes to evaluate criteria defined in the section to promote 
clarity, consistency, and transparency. FGIS also proposes to expand 
and clarify options for exceptions under timely service. Applications 
for timely service exceptions would undergo a more streamlined approval 
process and require less rigorous justification by the applicant than 
those submitted for nonuse of service exceptions. For both types of 
exceptions, the PR establishes processes to address assigned OA 
concerns of potentially false or misleading exception requests and 
validation of requests by FGIS.

Executive Orders 12866 and 13563

    Executive Orders 12866--Regulatory Planning and Review, and 13563--
Improving Regulation and Regulatory Review, direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits of reducing costs, harmonizing rules, and promoting 
flexibility.
    In this initial evaluation of costs and benefits of the rule, FGIS 
has determined that the proposed rule does not meet the criteria of a 
significant regulatory action under Executive Order 12866 as 
supplemented by Executive Order 13563. Moreover, FGIS finds that the 
rule does not create any new material costs for industry.

Baseline

    Under the USGSA, the USDA regulates the inspection of barley, 
canola, corn, flaxseed, mixed grain, oats, rye, sorghum, soybeans, 
sunflower seed, triticale, and wheat. This rule impacts the 42 OAs that 
provide USDA-regulated grain certification and the 5,218 commercial 
entities they serve. In FY2020, OAs performed 3,093,261 grain 
inspections of 240.3 million metric tons of grain.\8\ FGIS expects 
fewer than one percent of the entities served by OAs to request and be 
granted exceptions under the rule.
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    \8\ Source: USDA Federal Grain Inspection Service (FGIS) Program 
Data at: https://fgisonline.ams.usda.gov/F_DEC/AnnualReport.aspx.
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    Official inspection costs represent a very small percentage of the 
total value of grain shipment. In 2018, FGIS calculated weighted 
average costs for inspections for different carriers as follows: $24.50 
for a semi-truck capable of carrying 58,000 pounds, $24.65 for a 
railcar capable of carrying 220,000 pounds, and $234.42 for a barge 
capable of carrying 3,000,000 pounds of grain. For example, if the 
price of wheat was $5 for a 60-pound bushel, the cost of the inspection 
would represent 0.53% of the revenue for a truck, 0.13% of the revenue 
for a railcar train, and 0.08% of the revenue for a barge.

Need for the Rule

    Federally regulated grain inspection is designed to remedy two 
competing sources of market failure--asymmetric information and market 
power--while preserving the ability of small producers to access 
markets. This rule increases the flexibility of the existing inspection 
program without affecting the program's quality standards or the 
ability of small sellers to access inspection services. Greater 
flexibility in allowing producers to obtain inspection services, 
however, will save costs and provide them greater ability to meet 
potential market opportunities.
    Many agricultural products, including grain, vary in important 
quality characteristics due to both farm production decisions and 
idiosyncratic factors. In the absence of a quality verification 
process, sellers in transactions may have more knowledge

[[Page 46609]]

of product quality than buyers, a condition called asymmetric 
information. Akerlof (1970) showed asymmetric information can cause 
economic inefficiencies in which producers forego investments that are 
less costly to implement than the benefit they provide consumers.\9\ 
Third-party inspection that verifies a product's quality resolves this 
source of market failure.
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    \9\ George Akerlof, ``The Market for Lemons: Quality Uncertainty 
and the Market Mechanism'' Quarterly Journal of Economics, 1970.
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    Grain inspectors certify the protein content, kernel size, and 
other quality factors related to product's market value to simplify 
transactions. Since the outcome of grain inspections directly affects 
the sale price, biases and inconsistences in inspection methods might 
potentially redistribute the gains to trade from seller to buyer, or 
vice versa. Market power might exacerbate the tendency to bias and 
inconsistency if, for instance, large sellers or buyers can influence 
the outcome of quality inspections in their favor. In addition to 
fairness concerns, such opportunistic behavior creates economic 
inefficiencies by reducing returns on investment in quality improvement 
and creating costs for downstream producers (i.e., bakers and food 
processors) expecting products of certain quality.
    Grain inspection is an optional service. When information 
asymmetries are a concern, inspection facilitates simpler, more rapid, 
and less risky transaction of final product. By allowing producers to 
recoup the costs of quality improvement, grain inspection also 
encourages investment in quality improvement.
    Under its regulatory authority, the USDA approves grain inspection 
standards and monitors their uniform application by OAs. To promote a 
competitive market for grain, in which all producers have access to 
inspection services, FGIS requires that OAs provide inspection services 
to all producers in an assigned area and regulates marketing fee 
schedules charged by OAs for these services. FGIS approves rates to 
cover various labor, laboratory, and travel costs and only approves 
differential rates across geographic areas if underlying costs differ 
across assigned regions. For this reason, FGIS does not expect this 
rule to impact the prices paid by inspection users or the fees received 
by OAs. Instead, FGIS expects this rule will allow the small fraction 
of inspection users who need ``timely service'' and ``nonuse of 
service'' exceptions greater flexibility in obtaining inspections 
services to meet immediate business requirements.

Benefits and Costs of the Rule

    FGIS considers economic benefits of this rule as being three-fold. 
First, the rule provides clarity to producers regarding the terms under 
which exceptions are granted. Second, the rule increases options to 
producers who require inspection services to market their grain. FGIS 
expects that this option will be utilized by fewer than one percent 
producers who need inspections services quickly but face service 
constraints by OAs. Third, the rule may heighten attention to service 
issues among OAs that have received nonuse of service exception 
requests. The validation process FGIS will maintain as part of the 
granting of exceptions will ensure requests serve a valid business 
purpose. OAs may offer additional services such as a broader range of 
testing as a result.
    FGIS does not ascribe any direct compliance costs to either OAs or 
producers as a result of the potential increase for timely service and 
nonuse of service exceptions under this rule. FGIS does not expect that 
inspection fees it approves will change as a result of this rule. To 
the extent that this rule provides greater flexibility to how producers 
can obtain inspection services, it will provide improved services or 
reduce total costs to producers by, for instance, allowing those 
needing immediate inspections to get them from an OA other than the one 
to which they are assigned. Moreover, FGIS does not believe the rule 
will create significant indirect costs, aside from minor costs to 
market participants learning the rule and documenting exceptions.
    To the extent that some OAs conduct fewer inspections because 
producers in their assigned area have requested more exceptions, other 
OAs will conduct more inspections. FGIS believes that any business 
losses to an OA will be small and that any losses will be offset by 
gains to other OAs. This rearrangement of business activity constitutes 
a transfer of benefits from one OA to another and has a neutral effect 
on total costs and benefits of the rule.
    To summarize, FGIS believes that the total impact of the rule on 
the grain inspection industry is not economically significant and that 
the benefits of this rule exceed its costs, which are negligible.

Regulatory Flexibility Analysis

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) 
requires agencies to consider the impact of their rules on small 
entities and to evaluate alternatives that would accomplish objectives 
of the rule without unduly burdening small entities when rules impose a 
significant economic impact on a substantial number of small entities. 
This rule has an economic impact on farms selling grain that require 
inspections (classified under North American Industry Classification 
System, or NAICS, codes 111110, 111120, 111130, 111140, 111150, 111191, 
111160, 111191, and 111199), grain elevators and grain certifiers that 
conduct post-harvest crop activities (NAICS code 115114) and either 
require or perform inspections. The Small Business Administration (SBA) 
considers grain farms to be small if their sales are less than $1 
million and grain elevators and grain certifiers (OAs) to be small if 
their sales are less than $30 million (13 CFR 121.201).
    FGIS certifies that this rule does not have a significant economic 
impact on small businesses. This determination is made based on FGIS's 
expectation that any small entities requiring grain inspection, 
including grain farms and grain elevators, or entities performing grain 
inspection, including OAs, will see neither a change in prices paid or 
fees charged nor a loss in access to inspection services or change in 
territorial boundaries for which they can perform inspections. Further, 
FGIS believes its proposed challenge process addresses the concern that 
some small OAs may lose economic viability when exceptions are granted 
to customers under the exceptions to geographic boundary requirement.

Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988--
Civil Justice Reform. This rule is not intended to have retroactive 
effect. The USGSA provides in sec. 87g that no State or subdivision 
thereof may require or impose any requirements or restrictions 
concerning the inspection, weighing, or description of grain under the 
Act.
    This rule will not preempt any State or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
rule. No administrative proceedings would be required before parties 
could file suit in court challenging the provisions of this rule.

Executive Order 13175

    This rule has been reviewed in accordance with the requirements of 
Executive Order 13175, Consultation and Coordination with Indian Tribal 
Governments. Executive Order 13175

[[Page 46610]]

requires Federal agencies to consult and coordinate with tribes on a 
government- to-government basis on: (1) Policies that have tribal 
implications, including regulations, legislative comments or proposed 
legislation; and (2) other policy statements or actions that have 
substantial direct effects on one or more Indian tribes, on the 
relationship between the Federal Government and Indian tribes, or on 
the distribution of power and responsibilities between the Federal 
Government and Indian tribes, or on the distribution of power and 
responsibilities between the Federal Government and Indian tribes.
    Agricultural Marketing Service (AMS) has assessed the impact of 
this proposed rule on Indian tribes and determined that this rule would 
not have tribal implications that require consultation under Executive 
Order 13175. AMS hosts a quarterly teleconference with tribal leaders 
where matters of mutual interest regarding the marketing of 
agricultural products are discussed. Information about proposed changes 
to regulations will be shared during an upcoming quarterly call, and 
tribal leaders will be informed about proposed revisions to the 
regulation and the opportunity to submit comments. AMS will work with 
the USDA Office of Tribal Relations to ensure meaningful consultation 
is provided as needed with regards to the proposed regulations.
    AMS has provided 30 days for comments on this proposed rule. All 
comments received by September 20, 2021 will be considered prior to 
finalizing this proposed rule. Comments in response to any or all of 
the above processes or proposed wording should be submitted to the 
address provided in the ADDRESSES section of this document to ensure 
consideration.

List of Subjects in 7 CFR Part 800

    Administrative practice and procedure, Exports, Grains, Reporting 
and recordkeeping requirements.

    For reasons set forth in the preamble, FGIS proposes to amend 7 CFR 
part 800 as follows:

PART 800--GENERAL REGULATIONS

0
1. The authority citation for part 800 continues to read as follows:

    Authority: 7 U.S.C. 71-87k.

0
2. Amend Sec.  800.117 by:
0
a. Adding paragraph (b) introductory text;
0
b. Revising paragraph (b)(1);
0
c. Redesignating paragraphs (b)(2) and (3) as paragraphs (b)(3) and 
(4), respectively; and
0
d. Adding new paragraph (b)(2).
    The additions and revision read as follows:


Sec.  800.117  Who shall perform original services.

* * * * *
    (b) Exceptions for official agencies to provide service. Under an 
exception, an official agency may provide service to a customer outside 
of their geographic area. The applicant must request that the Service 
grant an exception. As outlined below, the Service may grant an 
exceptions in instances when: The assigned official agency is unable to 
provide inspection services in a timely manner; a person requesting 
inspection services in that geographic area has not been receiving 
official inspection services from the official agency for that 
geographic area; a person requesting inspection services in that 
geographic area requests a probe inspection on a barge-lot basis; or, 
the assigned official agency for that geographic area agrees in writing 
with the adjacent official agency to waive the current geographic area 
restriction at the request of the applicant for service.
    (1) Timely service. The Service grants an exception when service is 
not timely as described in this section. Service is not timely when an 
official agency cannot provide requested official services within 6 
hours or cannot provide results and certificate in accordance with 
800.160(c). Applicants may also request timely service exceptions for 
delays caused by weather events or request a timely service exception 
for services that the assigned official agency does not offer. The 
applicant must submit a request for a timely service exception to the 
Service. The applicant may make this request orally or in writing. The 
applicant must clearly state and support the identified reason for the 
requested exception. There are three consecutive tiers of timely 
service exceptions: One-time, 90-day, and long-term. Applicants must 
progress through each tier. Applicants must apply for and the Service 
must approve a one-time exception before the Service considers a 90-day 
exception. Likewise, applicants must apply for and the Service must 
approve a 90-day exception before the Service will consider a long-term 
exception. The Service will review requests and may contact the 
applicant, the assigned official agency, or potential gaining agency 
with questions during its review. The Service will provide its 
determination on the exception request to the customer in writing.
    (i) One-time. In the case of untimely service, the ability to use 
another official agency may be granted for the next service request, as 
applicable.
    (ii) 90-day. If there is an occurrence of untimely service within 
180 days of the date of the occurrence in paragraph (b)(1)(i) of this 
section, the applicant may request a 90-day exception. This 90-day 
window will begin the day the exception is granted.
    (iii) Long-term. If after a return to service following an 
exception granted under paragraph (b)(1)(ii) of this section there is 
another occurrence of untimely service within 365 days, the applicant 
may request a long-term exception. When granting this exception, the 
Service may extend this exception up to the date of termination of the 
gaining agency's designation term.
    (iv) Supporting Documentation. The applicant must submit a request 
for a timely service exception and associated supporting documentation 
to the Service. The Service will give all parties an opportunity to 
provide information. The Service will request additional information if 
any is needed.
    (v) Review and Validation. Prior to granting a timely service 
exception, the Service will review and validate all information 
submitted with the application. If the request is urgent and made 
outside of the Service's normal business hours, an official agency from 
outside the geographic area may provide service. When providing an 
urgent service, the official agency must provide written notification 
to the Service within two business days after service. The Service will 
review and validate the circumstances of the urgent request and the 
Service will verify that the request was not false or misleading.
    (vi) False or Misleading Requests. If an applicant submits a 
request that the Service determines to be false or misleading, the 
Service will not grant the exception. If an urgent request was granted 
on the basis of a false and misleading request, the Service may deny 
the applicant from future urgent timely service exceptions for a period 
of up to 180 days.
    (vii) Return to the Assigned Official Agency. The applicant 
maintains the option of returning to the assigned official agency at 
any time with a 60-day notification period to all parties. The 
exception will be cancelled, and future exception requests will be 
considered at the beginning of successive-tiered system.
    (viii) Termination. If the Service determines the original official 
agency's inability to provide a specific service, limited due to 
weather events or service availability, has been resolved, the Service 
may terminate the long-term exception. However, if the exception

[[Page 46611]]

was associated with the official agency's inability to provide service 
in 6 hours or less, or timely issuance of the results and certificate, 
the Service may not terminate the exception. If the Service terminates 
a long-term exception, all parties will be notified, and the applicant 
will resume service with the assigned official agency within 60 days of 
notification.
    (2) Nonuse of service exception. If an applicant has not received 
service from the assigned official agency within the last 90 days, the 
applicant may request that the Service grant a nonuse of service 
exception.
    (i) Requests must clearly state and support the following:
    (A) The last date of service from assigned official agency;
    (B) The reason service has not been received during this timeframe;
    (C) The identified reason for the request.
    (ii) Relevant information. Applicants may submit any relevant 
supporting information. This may include, but is not limited to:
    (A) The location of the specified service point(s);
    (B) The types of services requested by the applicant and offered by 
assigned official agency;
    (C) The ability of the gaining official agency to take on 
additional customers;
    (D) The ability of the assigned official agency to provide the 
requested service;
    (E) Whether the requesting facility has ever used the official 
system.
    (iii) Supporting Documentation. Included with the request for an 
exception, the applicant must submit supporting documentation to the 
Service. After receipt of the request, the Service will give all 
parties an opportunity to provide additional supporting documentation. 
The Service will request additional information if any is needed.
    (iv) Review and Validation. Prior to granting an exception, the 
Service will review the application and all supporting documentation, 
and the Service will conduct any necessary analysis to estimate the 
exception's impact.
    (A) Notification. The Service will notify the assigned official 
agency prior to granting an exception for nonuse of service.
    (B) Challenge. The assigned official agency may challenge a 
proposed exception for any reason. To challenge a proposed exception, 
the assigned official agency must object in writing, and must submit 
supporting documents to the Service within 14 days after the date of 
notification. Documents must clearly identify the objection and support 
the identified reason for the challenge.
    (C) Determination. The Service will consider impacts on the 
assigned official agency, the applicant, and the potential gaining 
agency when deciding whether to grant an exception. These impacts may 
include, but are not limited to, the viability of the assigned official 
agency given the loss of business. The Service will also consider the 
impact on the integrity of the official system and confirm an exception 
would not undermine the congressional policies in section 2 of the 
United States Grain Standards Act. The Service will provide its 
decision in writing to the assigned official agency, the applicant, and 
the potential gaining agency.
    (v) False or Misleading Requests. If an applicant submits a request 
that the Service determines is false or misleading the Service may 
elect to limit them from submitting further requests for a period of up 
to 180 days.
    (vi) Renewal or Termination of Exception. The nonuse of service 
exception is for the period of the gaining agency's designation. At the 
end of the designation, the Service will review the exception, and 
verify all criteria and information. If the exception still meets the 
nonuse criteria, the Service will renew the exception for the new 
designation period. In the event the gaining agency is no longer 
designated, the exception would automatically terminate and the 
customer would return to the assigned official agency. If all parties 
jointly agree to the termination of a nonuse of service exception, the 
Service will terminate the exception. In this case, the assigned 
official agency must resume service within 60 days of notification.
    (vii) Historic exceptions. All nonuse of service exceptions, that 
were in place as of March 30, 2019, will be incorporated into 
geographic boundaries of the gaining agencies.
* * * * *

Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2021-17609 Filed 8-18-21; 8:45 am]
BILLING CODE P