[Federal Register Volume 62, Number 250 (Wednesday, December 31, 1997)]
[Proposed Rules]
[Pages 68232-68233]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-34095]
========================================================================
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.
========================================================================
Federal Register / Vol. 62, No. 250 / Wednesday, December 31, 1997 /
Proposed Rules
[[Page 68232]]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 54
[No. LS-96-006]
RIN 0581-AB44
Changes in Fees for Federal Meat Grading and Certification
Services
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The Agricultural Marketing Service (AMS) proposes revising the
hourly fee rates for voluntary Federal meat grading and certification
services. The hourly fees would be adjusted by this proposed rule to
reflect the increased cost of providing service, and ensure that the
Federal meat grading program is operated on a financially self-
supporting basis as required by law.
DATES: Comments must be received on or before March 2, 1998.
ADDRESSES: Written comments may be mailed to Larry R. Meadows, Chief;
USDA, AMS, LS, MGC; STOP 0248, Room 2628-S; 1400 Independence Avenue,
SW.; Washington, DC 20250-0248. (For further information regarding
comments, see ``Comments'' under SUPPLEMENTARY INFORMATION.)
FOR FURTHER INFORMATION CONTACT: Larry R. Meadows, Chief, Meat Grading
and Certification (MGC) Branch, 202-720-1246.
SUPPLEMENTARY INFORMATION:
Regulatory Impact Analysis
This proposed rule was reviewed under the USDA procedures
established to implement Executive Order 12866, and was determined to
be not significant. Therefore, it has not been reviewed by the Office
of Management and Budget.
Effect on Small Entities
This action was reviewed under the Regulatory Flexibility Act (Pub.
L. 96-354, 5 U.S.C. 601 et seq.), wherein the Administrator of AMS
determined that this proposed rule will not have a significant economic
impact on a substantial number of small entities. The proposed hourly
rate increase is necessary to recover the costs of providing voluntary
Federal meat grading and certification services and for the program to
continue serving the industry. To forestall a rate increase while
maintaining operating efficiency, the program has significantly
increased the use of automated information management technologies and
decreased the number of support personnel and field offices. These
cost-saving measures have not provided the margin necessary to operate
the program. Since 1993, program costs have increased by approximately
$7,620,000 or an average of $1,905,000 per year, and the programs
required capital reserves are decreasing.
The program is required to keep at least 4 months of operating
reserve. If the reserves drop to 4 months, the program must cut
services. To avoid an interruption in services to our customers, the
program must maintain more than the minimum reserve. At the beginning
of fiscal year (FY) 1997, the program had 7.7 months of operating
reserve. At the end of FY 1997, the program had only 7.23 months of
operating reserve. Assuming that the rate increase were to take effect
in April 1998, the capital reserve is projected to fall to 5.87 months
by the end of FY 98.
In FY 1997, the unit cost of program services (revenue/total pounds
graded and certified) was approximately $0.00055 per pound. In FY 1998,
including the proposed hourly rate increase, program services are
projected to cost only $0.000617 per pound or $0.000149 per pound less
than the $0.000766 per pound program services cost in FY 1993.
Paperwork Reduction Act
The provisions of the Paperwork Reduction Act do not apply to this
rulemaking as it does not require the collection of any information or
data.
Comments
Interested persons are invited to submit written comments
concerning this proposed rule. Comments must be sent in duplicate to
the Washington, D.C., Office, MGC Branch, and should bear a reference
to the date and page number of this issue of the Federal Register.
Comments submitted in reference to this document will be made available
for public inspection during regular business hours.
Background
The Secretary of Agriculture is authorized by the Agricultural
Marketing Act (AMA) of 1946, as amended, 7 U.S.C. 1621 et seq., to
provide voluntary Federal meat grading and certification services to
facilitate the orderly marketing of meat and meat products and to
enable consumers to obtain the quality of meat they desire. The AMA
also provides for the collection of fees from users of Federal meat
grading and certification services that are approximately equal to the
cost of providing these services. The hourly fees for service are
established by equitably distributing the projected annual program
operating costs over the estimated hours of service--revenue hours--
provided to users of the service. Program operating costs include
salaries and fringe benefits of meat graders, supervision, travel,
training, and all administrative costs of operating the program.
Employee salaries and benefits account for approximately 80 percent of
the total budget. Revenue hours include base hours, premium hours, and
service performed on Federal legal holidays. As program operating costs
change, the hourly fees must be adjusted to enable the program to
remain financially self-supporting as required by law.
This proposed fee increase, the first since 1993, is necessary to
offset increased program operating costs resulting from: (1) the
congressionally-mandated, governmentwide salary increases for 1995,
1996, and 1997, (2) inflation of nonsalary operating costs since 1993,
and (3) accumulated increases in CONUS per diem rates for the 4-year
period from 1994 to 1997. Together, these cost increases total an
estimated $7,620,000 since 1993.
Since the last fee increase, the MGC Branch has continued to
develop more efficient grading and certification procedures and
services. At the same time, applicants for service have become more
efficient in their production techniques. These two factors working in
combination have resulted in the MGC Branch grading and certifying
larger volumes of products and charging fewer revenue hours.
Accordingly,
[[Page 68233]]
fewer revenue dollars are available to offset increases in operating
expenses. In FY 1993, MGC Branch employees graded or certified
23,445,219,703 pounds of meat at an average of 49,902 pounds per
revenue hour. In FY 1997, MGC Branch employees graded or certified
33,029,179,286 pounds of meat at an average of 73,699 pounds per
revenue hour. While the average number of pounds graded and certified
per hour have increased, the total number of revenue hours generated by
Branch employees decreased from 469,819 in FY 1993 to 448,162 in FY
1997. In FY 1997, the program had a net operating loss of $737,000. If
revenues remain constant and costs continue to increase, program
operating costs are projected to exceed total revenue by $1,519,000 in
FY 1998 and $2,124,000 in FY 1999.
Since 1993, in an effort to control overhead costs, the MGC Branch
has closed three field offices, reduced mid-level supervisory staff by
43 percent, and reduced the number of support staff by 29 percent. At
the same time, the MGC Branch has become more reliant on automated
information management systems for data collection and dissemination,
account billing, and disbursements of employee entitlements. The
reduction of field offices, supervisory staff, and support personnel
and the increased reliance on automated systems enabled the MGC Branch
to absorb increased operating costs in 1994, 1995, 1996, and 1997.
Despite the cost reduction efforts, the decrease in revenue hours
plus the increase in salaries, nonsalary operating costs, and CONUS per
diem rates have already resulted in a net operating loss for FY 1997,
and will result in a net operating loss for FY 1998. Such operating
deficits can only be balanced by adjusting the hourly fee rate charged
to users of the service. Any further reduction in personnel, services,
or management infrastructure beyond those already implemented would
have a detrimental effect on the program's ability to provide meat
grading and certification services and support the accurate and uniform
application of such services.
In view of these considerations, the Agency proposes to increase
the base hourly rate commitment applicants pay for voluntary Federal
meat grading and certification services from $36.60 to $39.80. A
commitment applicant is a user of the service who agrees, by commitment
or agreement memorandum, to use meat grading and certification services
for 8 consecutive hours per day, Monday through Friday, between the
hours of 6 a.m. and 6 p.m., excluding legal holidays. The base hourly
rate noncommitment applicants would pay for voluntary Federal meat
grading and certification services would increase from $39.00 to
$42.20, and would be charged to applicants who utilize the service for
8 consecutive hours or less per day, Monday through Friday, between the
hours of 6 a.m. and 6 p.m., excluding legal holidays. The premium
hourly rate for all applicants would increase from $44.60 to $47.80,
and would be charged to users of the service for the hours worked in
excess of 8 hours per day between the hours of 6 a.m. and 6 p.m.; for
hours worked between 6 p.m. and 6 a.m., Monday through Friday; and for
any time worked on Saturday and Sunday, except on legal holidays. The
holiday rate for all applicants would increase from $73.20 to $79.60,
and would be charged to users of the service for all hours worked on
legal holidays.
List of Subjects in 7 CFR Part 54
Food grades and standards, Food labeling, Meat and meat products.
For the reasons set forth in the preamble, 7 CFR part 54 is amended
as follows:
PART 54--MEATS, PREPARED MEATS, AND MEAT PRODUCTS (GRADING,
CERTIFICATION, AND STANDARDS)
1. The authority citation for part 54 continues to read as follows:
Authority: 7 U.S.C. 1621-1627.
Sec. 54.27 [Amended]
2. In Sec. 54.27, paragraph (a), ``$39.00'' is removed and
``$42.20'' is added in its place, ``$44.60'' is removed and ``$47.80''
is added in its place, ``$73.20'' is removed ``$79.60'' is added in its
place, and in paragraph (b), ``$36.60'' is removed and ``$39.80'' is
added in its place, ``$44.60'' is removed and ``$47.80'' is added in
its place, and ``$73.20'' is removed and ``$79.60'' is added in its
place.
Barry L. Carpenter,
Deputy Administrator, Livestock and Seed Program.
[FR Doc. 97-34095 Filed 12-30-97; 8:45 am]
BILLING CODE 3410-02-P
