02-8811. Agency Information Collection Activities; Submission for OMB Review; Comment Request

AGENCY:

Federal Trade Commission (“FTC”).

ACTION:

Notice of disposition of comment.

SUMMARY:

The Federal Trade Commission (FTC) has submitted to the Office of Management and Budget (OMB) for review under the Paperwork Reduction Act (PRA) information collection requirements contained in its Funeral Industry Practices Rule (“Funeral Rule” or “Rule”). The FTC received a public comment on its PRA burden estimates, which were published previously in the Federal Register. The FTC is summarizing in this notice its reevaluation of those prior estimates in light of the public comment, and is seeking to extend through March 30, 2005 the current PRA clearance for information collection requirements contained in the Rule. That clearance expires on September 30, 2002.

DATES:

Comments must be submitted on or before May 13, 2002.

ADDRESSES:

Send written comments to the Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Room 10202, Washington, DC 20503, ATTN: Desk Office for the Federal Trade Commission (comments in electronic form should be sent to [e-mail]), and to the Secretary, Federal Trade Commission, Room H-159, 600 Pennsylvania Ave., NW., Washington, DC 20580 (comments in electronic form should be sent to [e-mail]). All comments should be captioned “Funeral Rule: Paperwork comment,” as prescribed below.

FOR FURTHER INFORMATION CONTACT:

Requests for additional information or copies of the proposed information requirements should be addressed to Myra Howard, Attorney, Division of Marketing Practices, Bureau of Consumer Protection, Federal Trade Commission, Room H-238, 600 Pennsylvania Ave., NW., Washington, DC 20580, [phone].

SUPPLEMENTARY INFORMATION:

The Funeral Rule ensures that ensures that consumers who are purchasing funeral goods and service have accurate information about the terms and conditions (especially prices) for such goods and services. The Rule requires that funeral providers disclose this information to consumers and maintain records to facilitate enforcement of the Rule.

Under the PRA (44 U.S.C. 3501-3520), Federal agencies must obtain approval from OMB for each collection of information they conduct or sponsor. On November 21, 2001, the FTC sought comment on the information collection requirements associated with the Funeral Rule, 16 CFR part 453 (OMB Control Number: 3084-0025). See 66 FR 58492. The FTC received one public comment, from the National Funeral Directors Association, which staff learned of only following its sending an information clearance request package to OMB for review (pursuant to OMB regulations that implemented the PRA, 5 CFR part 120), contemporaneous with its publishing a related notice to that effect in the Federal Register on January 25, 2002. See 67 FR 3709.

OMB granted the FTC an interim extension on March 22, 2002 running through September 30, 2002, and requested that the FTC publish revised burden estimates resulting from the comment received and further staff consultations with other industry representatives. The FTC will also, upon request, make available its complete analysis/response to comments it transmitted to OMB on March 21, 2002.

While the primary purpose of this notice is to summarize the revised burden estimates, FTC staff and OMB will consider additional comments before OMB acts on the FTC's request to extend the clearance for a three year period to March 30, 2005.^[1] These comments should be directed to the addresses shown above and submitted within 30 days following publications of this notice. If a comment contains nonpublic information, it must be filed in paper form, and the first page of the document must be clearly labeled “confidential.” Comments that do not contain any nonpublic information may instead be filed in electronic form (in ASCII format, WordPerfect, or Microsoft Word) as part of or as an attachment to e-mail messages directed to the following e-mail addresses for the FTC and OMB, respectively: [e-mail] and [e-mail]. Such comments will be considered by the Commission and will be available for inspection and copying at its principal office in accordance with Section 4.9(b)(6)(ii) of the Commission's Rules of Practice, 16 CFR section 4.9(b)(6)(ii)). The summary of staff's revised PRA analysis regarding the Rule follows:

Estimated annual hours burden: The estimated burden associated with the collection of information required by the Rule 22,300 hours for recordkeeping, 104,649 hours for disclosures, and 44,600 hours for associated training, for a total of 172,000 hours, rounded to the nearest thousand. This estimate is based on the number of funeral providers (approximately 22,300), the number of funerals and cremations annually (approximately 2.3 millions), the time needed to fulfill the information collection tasks required by the Rule, and miscellaneous other factors detailed below.

Recordkeeping: The Rule requires that funeral providers retain copies of price lists and statements of funeral goods and services selected by consumers. Based on a maximum average burden of one hour per provider per year for this task, the total burden for the 22,300 providers is 22,300 hours. This estimate is unchanged from staff's previously published estimate.

Disclosure: The Rule requires that funeral providers (1) maintain current price lists for funeral goods and services, (2) provide written documentation of the funeral goods and services selected by consumers making funeral arrangements, and (3) provide information about funeral prices in response to telephone inquiries.

Maintaining current price lists requires that funeral providers revise their price lists from time to time through the year to reflect price changes. Based on a maximum average burden of 21/2 hours per provider per year for this task (11/2 hours per year for a funeral director and 1 hour per year for an administrative assistant), the total burden for 22,300 providers is 55,750 hours. This estimate has been raised from the FTC's prior estimate of 44,600 hours (previously based on an assumed 2 hours per provider).

Staff estimates that 13% of funeral providers prepare written documentation of funeral goods and services selected by consumers. Support for this estimate lies in the original rulemaking record, which indicated that 87 percent of funeral providers provided written documentation of funeral arrangements, even absent the Rule's requirements.^[2] Based on this estimate and the approximate total number of funeral homes, the Rule imposes a disclosure burden on 2,899 providers (13 percent of 22,300 providers). These providers are typically the smallest funeral homes. The disclosure requirement can be satisfied through the use of a standard form (an example of which is available to the industry in the Compliance Guide to the Funeral Rule). Based on an estimation that these smaller homes arrange, on average, approximately 20 funerals per year and that it would take each of them about 3 minutes to record prices for each consumer on the standard form, FTC staff estimates that the total burden associated with this disclosure requirement is one hour per provider not already in compliance, for a total of 2,899 hours.

The Funeral Rule also requires funeral providers to answer telephone inquiries about the provider's offerings or prices. Prior industry data indicated that only about nine percent of funeral purchasers make telephone inquiries, with each call lasting an estimated three minutes. The follow-up industry input staff obtained, however, yielded different conclusions and estimates, though the input was mixed. Staff received estimates ranging from as low as 5 minutes of price-related discussion per telephone inquiry to a high of 12-15 minutes per inquiry. Accordingly, in a balancing of this input, the FTC is revising its estimates to 10 minutes per inquiry. In addition, the combined responses received suggest a higher frequency of telephone inquiries about pricing than previously estimated, now increased to 12%. It is reasonable to assume that, at least in large urban areas where a relatively greater number and concentration of funeral homes may be found, price competition and related inquiries would be the norm.^[3] With an industry volume of approximately 2,300,000 funerals and cremations per year, total burden hours relating to price-related disclosures would thus be 46,000 hours.

Training: In addition to the recordkeeping and disclosure-related tasks noted above, funeral homes may also have training requirements specifically attended to the Rule. While staff believes that annual training burdens associated with the Rule should be minimal,^[4] it has in light of the comment received provided for training in its revised estimates. It estimates that, industry-wide, funeral homes should incur no more than 44,600 hours in Rule-associated training each year. This is based on an assumption that an “average” funeral home consists of approximately five employees (full-time and part-time employment combined), but with no more than four of them having tasks specifically associated with the Funeral Rule.^[5] Allowing for the input staff received regarding the time necessary, if at all, for annual training specific to the Rule, staff estimates that each of the four employees (directors and a clerical employee) per firm would each require 1/2 hour, at most, per year, for such training. Thus, total estimated time for training is 44,600 hours (4 employees per firm at 1/2 hour each for 22,300 firms).

Estimated annual cost burden: $5,071,000, rounded ($3,027,970 in labor costs and $2,043,115 in non-labor costs).

Labor costs: Labor costs are derived by applying appropriate hourly cost figures to the burden hours described above. Staff's estimates below include, where applicable, apportionments of $30, $20, and $15 per hour for various funeral director positions and $12.50 per hour for clerical tasks.^[6] The hourly rates used below are averages.

1. Recordkeeping: $278,750 (22,300 funeral homes × 1 hour per year × $12.50 per hour).

2. Maintaining and updating price lists: $1,282,250 [(11/2 hours per year × $30 per hour per funeral director) + (1 hour per year × $12.50 per administrative assistant) × 22,300 funeral homes].

3. Completing statement of funeral goods and services selected: $86,970 (2,899 hours × $30 per hour).

4. Disclosing prices over the phone: $1,380,000 (46,000 hours × $30 per hour).

Capital or other non-labor costs:

1. Copying or printing price lists: $1,150,000 (4,600,000 funeral price lists at 25 cents per page).

In light of the comment received, staff's sampling of industry sources, and its consultation with a national copying chain, staff revises its estimate to 25 cents per page. Moreover, the commenter suggested a 2 to 1 correlation between the number of copies of price lists a funeral home prints and distributes in a given year and the volume of its funeral “calls” (i.e., funerals and cremations). Applied to an industry volume of 2,300,000 funerals per year results in a total of 4,600,000 price lists used per year. At 25 cents per page, the revised estimate now increases to $1,150,000.

2. Printing statement of funeral goods and services selected: $28,990 (2,899 funeral homes × 20 funerals or cremations per year × 2 pages per form × 25 cents per page)

Staff will continue to conservatively assume that some funeral homes (13%) would not prepare such statements absent the Rule. Nonetheless, as noted above, staff has revised upward the estimated cost per page to 25 cents. Accordingly, its revised estimate of total cost to prepare the statement of funeral goods and services is $28,990.

3. Training: $864,125 [$30+$20+$15+12.50 (hourly wage of 3 funeral directors at varying levels and one clerical employee per home) × 1/2 hour per year per employee for Rule-related training × 22,300 funeral homes].

The changes in staff's estimates are summarized in the tables below.

Changes in FTC Cost Estimates

Activity	Prior FTC estimate ($)	Revised FTC estimate ($)
1. Recordkeeping of Price Lists	$223,000	$278,750
2. Maintaining and Updating Price Lists	2,620,250	1,282,250
3. Completing Statement of Funeral Goods and Services Selected	217,425	86,970
4. Disclosing Prices Over the Phone	776,250	1,380,000
5. Copying or Printing of Price Lists	334,500	1,150,000
6. Printing Statement of Funeral Goods and Services Selected	5,798	28,990
7. Training Licensed and Non-Licensed Funeral Home Staff	0.00	864,125
Total	4,177,223	5,071,085

Changes in FTC Hours Estimates

Activity	Prior FTC stimate	Revised FTC estimate
1. Recordkeeping of Price Lists	22,300	22,300
2. Maintaining and Updating Price Lists	44,600	55,750
3. Completing Statement of Funeral Goods and Services Selected	2,899	2,899
4. Disclosing Prices Over the Phone	10,350	46,000
5. Copying or Printing of Price Lists
6. Printing Statement of Funeral Goods and Services Selected
7. Training Licensed and Non-Licensed Funeral Home Staff	0	44,600
Total	80,149	171,549

William E. Kovacic,

General Counsel.

Footnotes

1.  The 3-year clearance is tied to the date the OMB clearance would have expired but for the interim extension.

2.  The original version of the Funeral Rule required that funeral providers retain a copy of and give each customer a separate “Statement of Funeral Goods and Services Selected.” The 1994 amendments to the Rule eliminated that requirement, allowing instead for such disclosures to be incorporated into a written contract, bill of sale, or other record of a transaction that providers use to memorialize sales agreements with customers.

3.  A slowly but steadily increasing minority of funeral homes advertise their prices (e.g., newspapers, other publications, and the Internet). These homes presumably will receive price-related inquiries less frequently than would those who do not advertise their prices.

4.  Rule compliance is generally included in continuing education requirements for licensing and voluntary certification programs. Moreover, the FTC has provided its Compliance Guide to all funeral providers at no cost, and additional copies are available on the FTC Web site or by mail.

5.  According to one nonpublic survey by an industry association, approximately 70% of its members that responded were from funeral homes with 1-5 employees. Moreover, according to a recent NFDA survey, the median number of full-time employees within member homes was 3, as was the case for part-time employees. National Funeral Directors Association 2001 Compensation Survey, October 2001. Assuming that 3 part-time employees equates to 1.5 full-time employee work-years, that, combined with 3 full-time employees, adds up to almost 5 full-time employees per firm. But, this composition also includes employees whose tasks are not directly associated with Rule compliance. The NFDA survey responses indicate that funeral home employee categories, beyond management and professional positions (i.e., owner or managing and non-owner/non-managing funeral directors), consist of: (a) driver; (b) receptionist; (c) maintenance worker; (d) clerical; and (e) bookkeeper. Of those categories, the ones reported as applicable in the greatest frequency among reporting firms were drivers, maintenance, and clerical. However, besides management, the only pertinent employee category with regard to compliance with the Rule would be the clerical category. Extrapolating from that input, staff estimates that an “average”-size firm would include no more than one clerical employee. Depending on size and/or other factors, a funeral home may be run by as few as one owner/manager funeral director to multiple directors of various compensation levels. The NFDA survey, for example, lists as director sub-categories “owner/manager,” “mid-level manager,” “funeral director/embalmer,” “funeral director only,” among others. Staff believes that a fairly representative composition of a five-person home (but with only four persons having tasks associated with the Rule) would include an owner/manager, funeral director/embalmer, and “funeral director only” (along with one clerical employee).

6.  According to the National Compensation Survey, Wages in the United States, 2000, U.S. Department of Labor, Bureau of Labor Statistics, the national average hourly wage of a funeral director is $24.03. The NFDA survey, however, lists several sub-categories of funeral home directors, including “owner/manager,” “mid-level manager,” “funeral director/embalmer,” and “funeral director only.” See National Funeral Directors Association 2001 Compensation Survey. Staff believes that a fairly representative composition of a five-person home would include these three sub-categories of directors. Based on data within the NFDA survey, their upper-tier median hourly wages are $33.65, $19.63, and $15.14, respectively. For simplicity, however, staff has rounded those amounts to $30, $20, and $15 in its estimates. Moreover, except where otherwise indicated under its cost estimates, staff will conservatively assume the activities described are performed by a director who is also an owner and/or manager, and thus apply the $30 per hour estimate.

The mean hourly wage of administrative support personnel for various degrees of potentially applicable sub-categories (copy and office machine operators, stock and inventory clerks, general office clerks, and administrative clerks “not elsewhere classified”) ranges from $8.86-$12.22 per hour. These figures include straight wages, “hazard” pay, and cost-of-living adjustments. Allowing for other incidental benefits excluded and this additional industry assessment, staff believes that a representative clerical hourly wage to be $12.50.