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Federal Register / Vol. 86, No. 158 / Thursday, August 19, 2021 / Proposed Rules
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 agencys designation. If FGIS determines the assigned OAs inability to provide a specific service, limited due to weather events or service availability, has been resolved, FGIS may terminate the longterm 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 OAs 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 points; 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

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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 OAs 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 800.117b2. 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 12866Regulatory 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.

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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 USDAregulated 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.
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 failureasymmetric information and market powerwhile preserving the ability of small producers to access markets. This rule increases the flexibility of the existing inspection program without affecting the programs 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 8 Source: USDA Federal Grain Inspection Service FGIS Program Data at: https
fgisonline.ams.usda.gov/F_DEC/
AnnualReport.aspx.

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