This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

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REGISTER issue of each week.

Rules and Regulations Federal Register

32965

Vol. 63, No. 116

Wednesday, June 17, 1998

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: Final rule.

SUMMARY: The Agricultural Marketing

Service (AMS) is revising the hourly fee

rates for voluntary Federal meat grading

and certification services. The hourly

fees will be adjusted by this final 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.

EFFECTIVE DATE: June 18, 1998.

FOR FURTHER INFORMATION CONTACT:

Larry R. Meadows, Chief, Meat Grading

and Certification (MGC) Branch, 202–

720–1246.

SUPPLEMENTARY INFORMATION:

Regulatory Impact Analysis

This final 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 will not require any

additional or new recordkeeping. The

final rule 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 final rule will not have a significant

economic impact on a substantial

number of small entities.

AMS provides meat grading and

certification services to a total of 370

businesses of which 261 are small

entities. Small entities are defined as

those which employ less than 500

employees. The Agency provides meat

grading and certification services to 93

meat processors, 90 livestock

slaughterers, 52 reprocessors of

Federally donated products, 13 trade

associations, 9 livestock feeders, 3

trucking companies, and 1 broker.

Small entities generate 38 percent of

the Agency’s meat grading and

certification hourly revenues. In fiscal

year (FY) 1998, the fee increase will cost

small entities approximately $336,840

or an average of $1,290 per small entity.

In FY 1999, small entities will pay

approximately $627,000 or an average of

$2,402 per small entity.

We have limited the impact fee

increases have had on small entities

during the more than 70 years that we

have charged hourly fees. On numerous

occasions, the Agency considered

charging applicants based on

production volume. This alternative has

not been adopted because it would

increase the documentation required by

the applicant, the amount of time

required for the AMS employee to

complete the task, and the related

nonproductive administrative costs of

such a fee system. Each of these factors

would increase the total cost of the

service. Also considered was the fact

that the Agency incurs direct employee

costs by the hour. Based on all of the

involved information, the Agency

concluded that charging for service by

the hour remains the most cost-effective

and equitable method for basing fees.

This 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. Since 1993,

costs increased an average of $1,905,000

per year or a total of $7,620,000.

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,

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. 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 hourly rate

increase, program services are projected

to cost only $0.000617 per pound as

compared to the $0.000766 per pound

program services cost in FY 1993. While

the unit cost of program services

decreased and the average number of

pounds graded and certified per hour

increased, the total number of revenue

hours generated by Branch employees

decreased from 469,819 in FY 1993 to

448,162 in FY 1997. These factors

resulted in a loss of $737,000 in FY

1997. 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

disbursement 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

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
32966 Federal Register / Vol. 63, No. 116 /Wednesday, June 17, 1998 /Rules and Regulations

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.

The 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.

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

On December 31, 1997, in the Federal

Register, the Agency published the

proposed rule to increase the fees and

requested comments by March 2, 1998.

The Agency received two comments.

The first respondent requested

additional information about the effect

of the fee increase on small entities.

Additional information has been

provided in the Effect on Small Entities

section of this final rule. Respondent # 1

also alleged that the program charges a

minimum of 8 hours per day, and

suggested that charges should be based

on volume of production. As identified

in 7 CFR 54.27 (a), noncommitment

applicants, of which almost all are small

entities, are charged to the nearest

quarter hour, and the minimum charge

is half an hour. For reasons cited in the

Effect on Small Entities section, the

Agency determined that the current

hourly fee method of charging

applicants provides the best alternative

for businesses who need less than 8

hours of service.

Respondent # 2 asked the Agency to

continue to find ways to reduce costs

and to refrain from imposing higher

grading costs on the industry. The

Agency is continually seeking ways to

reduce costs and increase efficiency.

This fee increase amounts to an average

annual increase of 2.2 percent since the

last increase in 1993. Even though

businesses will pay more for hourly

services, the Agency has increased the

amount of service provided by over

9,580,000,000 pounds per year in

comparison to FY 1993. This amounts to

a 48 percent per hour increase in

efficiency which reduces the cost of

services by 0.0149 cents per pound. As

requested by the respondent, the

Agency will continue seeking way to

increase efficiency, quality, and

timeliness of services.

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.

In view of these considerations, the

Agency will 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 for noncommitment

applicants for voluntary Federal meat

grading and certification services will

increase from $39.00 to $42.20, and will

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 will

increase from $44.60 to $47.80, and will

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 will

increase from $73.20 to $79.60, and will

be charged to users of the service for all

hours worked on legal holidays.

Pursuant to 5 U.S.C. 553, it is hereby

found that since the program is

operating at a loss, good cause exists for

not delaying the effective action until 30

days after publication of this final rule

in the Federal Register. Therefore, this

final rule will be effective on June 18,

1998.

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.

Dated: June 11, 1998.

Robert L. Leverette,

Acting Deputy Administrator, Livestock and

Seed Program.

[FR Doc. 98–16010 Filed 6–16–98; 8:45 am]

BILLING CODE 3410–02–P

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 953

[Docket No. FV98–953–1 IFR]

Irish Potatoes Grown in Southeastern

States; Increased Assessment Rate

AGENCY: Agricultural Marketing Service,

USDA.

ACTION: Interim final rule with request

for comments.

SUMMARY: This rule increases the

assessment rate established for the

Southeastern Potato Committee

(Committee) under Marketing Order No.

953 for the 1998–99 and subsequent

fiscal periods from $0.0075 to $0.01 per

hundredweight of potatoes handled.

The Committee is responsible for local

administration of the marketing order