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.

Proposed Rules Federal Register

68232

Vol. 62, No. 250

Wednesday, December 31, 1997

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 costsaving 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 selfsupporting as required by law.

This proposed fee increase, the first

since 1993, is necessary to offset

increased program operating costs

resulting from: (1) the congressionallymandated, 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,
Federal Register / Vol. 62, No. 250 / Wednesday, December 31, 1997 / Proposed Rules 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 midlevel 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.

§ 54.27 [Amended]

2. In § 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

DEPARTMENT OF AGRICULTURE

Food and Consumer Service

7 CFR Part 246

RIN 0584–AC59

Special Supplemental Nutrition

Program for Women, Infants and

Children (WIC): WIC Cereal Sugar Limit

and Food Package Review

AGENCY: Food and Consumer Service,

USDA.

ACTION: Notice of Intent to propose

rulemaking; withdrawal.

SUMMARY: The Department published a

Federal Register Notice of Intent on

March 18, 1996 soliciting public

comments on whether the existing

Federal 6-gram sugar limit for WICeligible adult cereals should be changed.

The 90-day comment period ended on

June 17, 1996. USDA received 731

letters from a total of 878 commenters,

representing a wide range of interested

parties. The majority—809

commenters—expressed support for the

continuation of the 6-gram sugar limit

unchanged. In addition, several

commenters suggested that USDA

conduct a comprehensive review of the

WIC food packages rather than focus on

the single issue of the sugar content of

WIC-eligible adult cereals.

The purpose of this Notice of Intent

is to summarize the public comments

received in response to the earlier

Notice of intent and to announce the

Department’s intent to review the WIC

food packages and recommend

refinements that would best serve WIC

Program objectives. USDA’s Center for

Nutrition Policy and Promotion will be

spearheading this effort in conjunction

with the Food and Consumer Service.

Until this review is completed, the

Department will not make any decisions

about whether to propose a regulatory

change in the Federal sugar cap for WICeligible adult cereals. Therefore, the

current requirement that WIC-eligible

adult cereals made available to women

and child participants must contain no

more than 21.2 grams of sucrose and

other sugars per 100 grams of dry cereal

(i.e., 6 grams of sugar per dry ounce of

cereal) remains in effect.

FOR FURTHER INFORMATION CONTACT:

Barbara Hallman, Branch Chief, Policy

and Program Development Branch,

Supplemental Food Programs Division,

Food and Consumer Service, USDA,

3101 Park Center Drive, Room 542,

Alexandria, Virginia 22302, (703) 305–

2730.