[Federal Register Volume 60, Number 109 (Wednesday, June 7, 1995)]
[Rules and Regulations]
[Pages 29962-29965]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-13920]



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DEPARTMENT OF AGRICULTURE
7 CFR Part 1230

RIN 0581-AB36
[No. LS-94-010]


Pork Promotion, Research, and Consumer Information Act of 1985--
Increase in Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: Pursuant to the Pork Promotion, Research, and Consumer 
Information Act of 1985 (Act) and the Pork Promotion, Research, and 
Consumer Information Order (Order) thereunder, this final rule 
increases the rate of assessment of 0.35 percent of market value of 
porcine animals to 0.45 percent; and adjusts the amount of assessment 
per pound due on imported pork and pork products to reflect the 
assessment rate increase of 0.10 percent and the decrease in the 1994 
average price for domestic barrows and gilts. The assessment increase 
and the adjustment in assessments on imported pork and pork products 
will increase annual funding of the promotion, research, and consumer 
information program by an estimated $10 million to $12 million over a 
12-month period.

EFFECTIVE DATE: September 3, 1995.

ADDRESSES: Ralph L. Tapp, Chief; Marketing Programs Branch; Livestock 
[[Page 29963]] and Seed Division; Agricultural Marketing Service (AMS), 
USDA; P.O. Box 96456, Room 2606-S; Washington, DC 20090-6456.

FOR FURTHER INFORMATION CONTACT: Ralph L. Tapp, Chief, Marketing 
Programs Branch, 202/720-1115.

SUPPLEMENTARY INFORMATION:

Executive Orders 12866 and 12778 and Regulatory Flexibility Act

    This rule has been determined to be not significant for purposes of 
Executive Order 12866, and therefore has not been reviewed by the 
Office of Management and Budget.
    This final rule has been reviewed under Executive Order 12778, 
Civil Justice Reform. This final rule is not intended to have a 
retroactive effect. The Act states that the statute is intended to 
occupy the field of promotion and consumer education involving pork and 
pork products and of obtaining funds thereof from pork producers and 
that the regulation of such activity (other than a regulation or 
requirement relating to a matter of public health or the provision of 
State or local funds for such activity) that is in addition to or 
different from the Act may not be imposed by a State.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 1625 of the Act, a 
person subject to an order may file a petition with the Secretary 
stating that such order, a provision of such order or an obligation 
imposed in connection with such order is not in accordance with law; 
and requesting a modification of the order or an exemption from the 
order. Such person is afforded the opportunity for a hearing on the 
petition. After the hearing, the Secretary would rule on the petition. 
The Act provides that the district court of the United States in the 
district in which the person resides or does business has jurisdiction 
to review the Secretary's determination, if a complaint is filed not 
later than 20 days after the date such person receives notice of such 
determination.
    Information available to the Department indicates that nearly all 
of the estimated 278,000 pork producers and many of the estimated 200 
importers can be classified as small entities. This final rule 
increases the rate of the assessment from 0.35 percent of the market 
value of porcine animals to 0.45 percent, and increases the cents per 
pound and per kilogram of assessments on imported pork and pork 
products subject to assessment. Adjusting the rate of assessment from 
0.35 to 0.45 percent and increasing the assessment on imported pork and 
pork products results in an estimated increase in assessments of $10 
million to $12 million over a 12-month period. However, the gross 
market value of all swine marketed in the United States during 1993 
exceeded $10.6 billion. The economic impact of the assessments will not 
be a significant part of the total market value of swine.
    This rule also adjusts importer assessments to reflect the increase 
in the assessment rate from 0.35 to 0.45 percent and to reflect a 
decrease in the 1994 average market price for domestic barrows and 
gilts. The combined effect of the assessment rate increase and the 
decrease in the average market price increases the assessments on 
imported pork and pork products subject to assessments by two- to four-
hundredths of a cent per pound, or as expressed in cents per kilogram, 
four- to nine-hundredths of a cent per kilogram. Adjusting the 
assessments on imported pork and pork products would result in an 
estimated increase in assessments of $175,000 over a 12-month period.
    Accordingly, the Administrator of AMS has determined that this 
action will not have a significant economic impact on a substantial 
number of small entities.
    The information collection requirements contained in part 1230, 
subparts A and B, have been previously approved by the Office of 
Management and Budget (OMB) and have been assigned OMB Control Number 
0851-0151.
    The Act (7 U.S.C. 4801-4819) approved December 23, 1985, authorized 
the establishment of a national pork promotion, research, and consumer 
information program. The program is funded by an assessment rate of 
0.35 percent of the market value of all porcine animals marketed in the 
United States and an equivalent amount of assessment on imported 
porcine animals, pork, and pork products. The final Order establishing 
a pork promotion, research, and consumer information program was 
published in the September 5, 1986, issue of the Federal Register (51 
FR 31898; as corrected, at 51 FR 36383, and amended at 53 FR 1909, 53 
FR 30243, 56 FR 4, and 56 FR 51635). Assessments began on November 1, 
1986.
    The Order requires that producers pay to the Board an assessment of 
0.35 percent of the market value of each porcine animal upon sale. 
However, for purposes of collecting and remitting assessments, porcine 
animals are divided into three separate categories (1) feeder pigs, (2) 
slaughter hogs, and (3) breeding stock. The Order specifies that 
purchasers of feeder pigs, slaughter hogs, and breeding stock shall 
collect an assessment on these animals if assessments are due. The 
Order further provides that for the purpose of collecting and remitting 
assessments persons engaged as a commission merchant, auction market or 
livestock market in the business of receiving such porcine animals for 
sale on commission for or on behalf of a producer shall be deemed to be 
a purchaser.
    The Order requires importers of porcine animals to pay the U.S. 
Customs Service (USCS), upon importation, the assessment of 0.35 
percent of the porcine animal's declared value and importers of pork 
and pork products to pay USCS, upon importation, the assessment of 0.35 
percent of the market value of the live porcine animals from which such 
pork and pork products were produced.
    The procedures for collection and remittance of assessments are 
specified in Sec. 1230.71 of the Order.
    Pursuant to section 1620 of the Act, the assessment rate of 0.25 
percent of the market value of porcine animals, pork, or pork products 
sold or imported was established in the initial Order and was changed 
to 0.35 percent on December 1, 1991. Based on the assessment rate of 
0.35 percent, the total annual assessments collected during 1994 were 
approximately $42 million. Assessments on imported pork and pork 
products accounted for about $1.5 million of the total.
    The Act and Sec. 1230.71 of the Order contain provisions for 
increasing the initial rate of assessment. Section 1620(b)(2) of the 
Act provides that the rate of the assessment in the initial Order may 
be increased by not more than 0.1 percent per year upon recommendation 
of the National Pork Producers Delegate Body (Delegate Body) whose 
producer and importer members are appointed annually by the Secretary. 
The Act further provides that the rate of assessment may be increased 
by no more than 0.1 percent annually not to exceed 0.5 percent of the 
market value unless the Delegate Body recommends a greater increase and 
the increase is approved in a referendum.
    The 1994 Delegate Body, at its annual meeting on March 3-5, 1994, 
in Kansas City, Missouri, voted overwhelmingly to recommend to the 
Secretary that the rate of assessment of 0.35 percent be increased to 
0.45 percent. There were 170 Delegate Body members appointed by the 
Secretary in 1994. At the Delegate Body meeting 154 delegates were 
present during voting and voted 37,226 valid share votes. States and 
importers are allotted one share per $1,000 of the 
[[Page 29964]] aggregated amount of assessment collected. There were 
31,089 share votes cast in favor of the 0.1 percent increase.
    On February 15, 1995, AMS published in the Federal Register (60 FR 
8579) a proposed rule to increase the rate of assessment of 0.35 
percent of market value of porcine animals to 0.45 percent; and adjust 
the amount of assessment per pound due on imported pork and pork 
products to reflect the assessment rate increase of 0.10 percent and 
the decrease in the 1994 average price for domestic barrows and gilts. 
The proposed rule was published with a request for comments by March 
17, 1995.
    The following example will illustrate the effect of the increase of 
0.10 percent on a per head basis. Based on the 1994 annual average five 
market price of $39.57 per hundredweight for barrows and gilts with an 
average weight of 248 pounds as reported in the USDA's publication 
``Livestock, Meat, and Wool Weekly Summary and Statistics'' published 
in January 1995, the total assessment per head at the assessment rate 
of 0.45 percent would be 44 cents. At the assessment rate of 0.35 
percent, the total per-head assessment would be 34 cents. Based on the 
Delegate Body's recommendation in accordance with Sec. 1230.71(d) of 
the Order, this final rule increases the rate of assessment from 0.35 
to 0.45 percent, which would increase assessments collected $10 million 
to $12 million over a 12-month period.
    This final rule also increases the amount of assessment on all of 
the imported pork and pork products subject to assessment as published 
in the Federal Register as a final rule September 8, 1994, and 
effective on October 11, 1994 (59 FR 46323). This adjustment reflects 
the increase in the assessment rate to 0.45 percent and would be 
consistent with the decrease in the annual average price of domestic 
barrows and gilts for calendar year 1994 as reported by USDA, AMS, 
Livestock and Grain Market News (LGMN) Branch. This adjustment in 
assessments will make the equivalent market value of the live porcine 
animal from which the imported pork and pork products were derived 
reflect the recent decrease in the market value of domestic porcine 
animals, thereby promoting comparability between the importer and 
domestic assessments.
    The methodology for determining the per-pound amounts for imported 
pork and pork products was described in the supplementary information 
accompanying the Order and published in the September 5, 1986, Federal 
Register at 51 FR 31901. The weight of imported pork and pork products 
is converted to a carcass weight equivalent by utilizing conversion 
factors which are published in the USDA Statistical Bulletin No. 616 
``Conversion Factors and Weights and Measures.'' These conversion 
factors take into account the removal of bone, weight lost in cooking 
or other processing, and the nonpork components of pork products. 
Secondly, the carcass weight equivalent is converted to a live animal 
equivalent weight by dividing the carcass weight equivalent by 70 
percent, which is the average dressing percentage of porcine animals in 
the United States. Thirdly, the equivalent value of the live porcine 
animal is determined by multiplying the live animal equivalent weight 
by an annual average market price for barrows and gilts as reported by 
the USDA, AMS, LGMN Branch. The annual average price, which was based 
on price data from six major markets, is now based on only five markets 
as one of the six markets--St. Louis--closed in 1994. This average 
price is published on a yearly basis during the month of January in the 
LGMN Branch's publication ``Livestock, Meat, and Wool Weekly Summary 
and Statistics.'' Finally, the equivalent value is multiplied by the 
applicable assessment rate of 0.45 percent due on imported pork and 
pork products. The end result is expressed in an amount per pound for 
each type of pork or pork product. To determine the amount per kilogram 
for pork and pork products subject to assessment under the Act and 
Order, the cent-per-pound assessments are multiplied by a metric 
conversion factor 2.2046 and carried to the sixth decimal.
    The formula in the preamble for the Order at 51 FR 31901 
contemplated that it would be necessary to recalculate the equivalent 
live animal value of imported pork and pork products to reflect 
increases in the rate of assessments or changes in the annual average 
price of domestic barrows and gilts to maintain equity of assessments 
between domestic porcine animals and imported pork and pork products.
    Substituting the assessment rate of 0.45 percent in the formula and 
using the 1994 average annual five market price for domestic barrows 
and gilts of $39.57 per hundredweight results in an increase in 
assessments for all the Harmonized Tariff Systems (HTS) numbers in the 
table in Sec. 1230.110, 59 FR 46323; September 8, 1994, of an amount 
equal to two- to four-hundredths of a cent per pound, or as expressed 
in cents per kilogram, four- to nine-hundredths of a cent per kilogram. 
Based on Department of Commerce, Bureau of Census, data on the volume 
of imported pork and pork products available for the period January 1, 
1994, through September 30, 1994, the increase in the assessment 
amounts would result in an estimated $175,000 increase in importer 
assessments over a 12-month period.
    The Department's review of the supplementary information revealed 
that the location of the March 3-5, 1994, Delegate Body meeting was 
incorrectly listed as Denver, Colorado. The meeting was held in Kansas 
City, Missouri, and the supplementary information has been corrected.
    The Department received 87 comments after the publication of the 
proposed rule. Thirty-four commenters, including the National Pork 
Board, the National Pork Producers Council, 23 State pork producer 
associations representing over 62,000 producers which represents a 
significant proportion of the estimated State producer association 
members nationwide, and 9 individuals supported the rate increase 
stating that it would provide additional opportunities for enhanced 
returns to pork producers and it is consistent with industry goals and 
plans. Fifty-one individual commenters did not support the rate 
increase, citing the decline in live hog prices, disfavor with the 
program and suggesting that the current rate was high enough or that 
there should be no assessment at all. Two commenters did not 
specifically address the proposed assessment rate increase; however 
they both believed the pork promotion program was successful.
    One of the two commenters argued that the comment period of 30 days 
was not sufficient time for producers to review the proposed rule and 
submit comments since most pork producers do not receive the Federal 
Register. The Department believes that a 30 day comment period is 
sufficient to allow for public comment. A press release was issued when 
the proposed rule was published to facilitate timely notification of 
interested parties of their opportunity to comment. The press release 
also indicated that interested persons could request copies of the 
proposed rule either by the phone or mail and listed the phone number 
and address. The other commenter expressed concern about the magnitude 
of the price spread between the wholesale price and retail price for 
pork.
    The Department carefully considered the comments, the 
recommendation of the Delegate Body and additional information 
regarding the usefulness of the proposed assessment rate increase. It 
has been determined that the additional [[Page 29965]] revenues which 
will be gained from the increase will be useful in strengthening the 
position of the pork industry in the marketplace and in maintaining, 
developing, and expanding markets for pork and pork products.
    The increase in total annual assessments, resulting from the 
increase in the assessment rate from .35 to .45 percent, will enable 
the pork promotion and research program to continue the funding pattern 
that has helped keep pork competitive with other meats and poultry 
since 1987. The increase will also provide the necessary funding to 
finance the pork industry's long range strategic plan which will 
address issues and initiatives that pork producers and importers 
believe will have the most significant economic impact on the future of 
the industry. These issues include environmental management, odor 
control, animal care, swine health, and food safety. The increase in 
annual assessment will provide the additional funding necessary to help 
producers take full advantage of the enhanced foreign trade 
opportunities created by NAFTA and GATT. In voting for the assessment 
rate increase, the National Pork Producers Delegate Body believed that 
the increase was necessary to make sure all producers have access to 
the latest research, technology, and information available to help them 
remain competitive in a rapidly changing industry.
    Accordingly, this final rule adopts the increase in the assessment 
rate from 0.35 percent of market value of porcine animals to 0.45 
percent as proposed; and the adjustment in the amount of assessment per 
pound due on imported pork and pork products to reflect the assessment 
rate increase of 0.10 percent and the decrease in the 1994 average 
price for domestic barrows and gilts as proposed.
List of Subjects in 7 CFR Part 1230

    Administrative practice and procedure, Advertising, Agriculture 
research, Marketing agreement, Meat and meat products, Pork and pork 
products.
    For the reasons set forth in the preamble, 7 CFR part 1230 is 
amended as set forth below:

PART 1230--PORK PROMOTION, RESEARCH, AND CONSUMER INFORMATION

    1. The authority citation for 7 CFR Part 1230 continues to read as 
follows:

    Authority: 7 U.S.C. 4801-4819.

Subpart--[Amended]

    2. Subpart B--Rules and Regulations is amended by revising 
Sec. 1220.110 to read as follows:


Sec. 1230.110  Assessments on imported pork and pork products.

    (a) The following HTS categories of imported live porcine animals 
are subject to assessment at the rate specified.

------------------------------------------------------------------------
        Live porcine animals                      Assessment            
------------------------------------------------------------------------
0103.10.0000.......................  0.45 percent Customs Entered Value.
0103.91.0000.......................  0.45 percent Customs Entered Value.
0103.92.0000.......................  0.45 percent Customs Entered Value.
------------------------------------------------------------------------

    (b) The following HTS categories of imported pork and pork products 
are subject to assessment at the rates specified.

------------------------------------------------------------------------
                                                        Assessment      
             Pork and pork products              -----------------------
                                                   cents/lb    cents/kg 
------------------------------------------------------------------------
0203.11.0000....................................         .25     .551150
0203.12.1010....................................         .25     .551150
0203.12.1020....................................         .25     .551150
0203.12.9010....................................         .25     .551150
0203.12.9020....................................         .25     .551150
0203.19.2010....................................         .30     .661380
0203.19.2090....................................         .30     .661380
0203.19.4010....................................         .25     .551150
0203.19.4090....................................         .25     .551150
0203.21.0000....................................         .25     .551150
0203.22.1000....................................         .25     .551150
0203.22.9000....................................         .25     .551150
0203.29.2000....................................         .30     .661380
0203.29.4000....................................         .25     .551150
0206.30.0000....................................         .25     .551150
0206.41.0000....................................         .25     .551150
0206.49.0000....................................         .25     .551150
0210.11.0010....................................         .25     .551150
0210.11.0020....................................         .25     .551150
0210.12.0020....................................         .25     .551150
0210.12.0040....................................         .25     .551150
0210.19.0010....................................         .30     .661380
0210.19.0090....................................         .30     .661380
1601.00.2010....................................         .35     .771610
1601.00.2090....................................         .35     .771610
1602.41.2020....................................         .38     .837748
1602.41.2040....................................         .38     .837748
1602.41.9000....................................         .25     .551150
1602.42.2020....................................         .38     .837748
1602.42.2040....................................         .38     .837748
1602.42.4000....................................         .25     .551150
1602.49.2000....................................         .35     .771610
1602.49.4000....................................         .30     .661380
------------------------------------------------------------------------

    3. Subpart B-Rules and Regulations is amended by revising 
Sec. 1230.112 to read as follows:


Sec. 1230.112  Rate of assessment.

    In accordance with Sec. 1230.71(d) the rate of assessment shall be 
0.45 percent of market value.

    Dated: June 1, 1995.
Lon Hatamiya,
Administrator.
[FR Doc. 95-13920 Filed 6-6-95; 8:45 am]
BILLING CODE 3410-02-P