[Federal Register Volume 60, Number 233 (Tuesday, December 5, 1995)]
[Proposed Rules]
[Pages 62298-62314]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-29528]




[[Page 62297]]

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Part II





Department of Agriculture





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Agricultural Marketing Service



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7 CFR Part 1280



Sheep and Wool Promotion, Research, Education, and Information Order; 
Proposed Rule

  Federal Register / Vol. 60, No. 233 / Tuesday, December 5, 1995 / 
Proposed Rules   

[[Page 62298]]


DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1280

[No. LS-94-015]


Sheep and Wool Promotion, Research, Education, and Information 
Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: The Sheep Promotion, Research, and Information Act of 1994 
(Act), authorized the establishment of a national, industry-funded and 
-operated sheep and wool promotion, research, education, and 
information program. On January 4, 1995, the Agricultural Marketing 
Service (AMS) published in the Federal Register an invitation to submit 
proposals for a sheep and wool promotion, research, education, and 
information order (Order). AMS received an entire industry proposal as 
well as four other partial proposals, all of which were published for 
public comment in the June 2, 1995, issue of the Federal Register. A 
public meeting was held on June 26, 1995, at the Department of 
Agriculture (Department) to discuss the proposed Order and to solicit 
comments on the proposal. After evaluating the written comments 
submitted, the transcript from the public meeting, and other available 
material, an Order is issued pursuant to the provisions of the Act and 
will be subject to a referendum.
    Before the Order is made effective, a referendum must be conducted 
among sheep producers, sheep feeders, and importers of sheep and sheep 
products, except importers of raw wool. A final referendum rule will be 
published separately in the Federal Register. If sheep producers, 
feeders, and importers voting in the referendum approve the proposed 
Order, all producers, feeders, and importers would be required to pay 
assessments, which would be used in a national program of sheep and 
wool promotion, research, education, consumer, industry, and producer 
information.
    The certification and nomination procedures for the establishment 
of the National Sheep Promotion, Research, and Information Board 
(Board) as well as other implementing regulations will be published 
separately in the Federal Register.

ADDRESSES: Ralph L. Tapp, Chief; Marketing Programs Branch, Room 2606-
S; Livestock and Seed Division, AMS-USDA; P.O. Box 96456; Washington, 
D.C. 20090-6456.

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

SUPPLEMENTARY INFORMATION: Prior documents: Notice-Invitation to submit 
proposals published January 4, 1995 (60 FR 381); Proposed Rule-Sheep 
and Wool Promotion, Research, Education, and Information Order 
published June 2, 1995 (60 FR 28747); Proposed Rule: Procedures for 
Conduct of Referendum published August 8, 1995 (60 FR 40313); Notice-
Certification of Organization for Eligibility to Make Nominations to 
the Proposed Board published August 8, 1995 (60 FR 40343); Proposed 
Rule-Rules and Regulations published October 3, 1995 (60 FR 51737).

Regulatory Impact Analysis

Executive Orders 12866 and 12778 and the Regulatory Flexibility Act

    This proposed 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 (OMB).
    This proposed rule was reviewed under Executive Order 12778, Civil 
Justice Reform. It is not intended to have a retroactive effect. This 
rule would not preempt any State or local laws, regulations, or 
policies unless they present an irreconcilable conflict with this rule.
    The Act provides that any person subject to the Order may file with 
the Secretary a petition stating that the Order, any provision of the 
Order, or any obligation imposed in connection with the Order is not in 
accordance with the law, and requesting a modification of the Order or 
an exemption from certain provisions or obligations of the Order. The 
petitioner would have the opportunity for a hearing on the petition. 
Thereafter the Secretary would issue a decision on the petition. The 
Act provides that the district court of the United States in the 
district in which the petitioner resides or carries on business has 
jurisdiction to review the Secretary's decision, if the petitioner 
files a complaint for that purpose not later than 20 days after the 
date of the entry of the decision. The petitioner must exhaust his or 
her administrative remedies before filing such a complaint in the 
district court.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA)(5 U.S.C. 601 et seq.), the Administrator of AMS has 
considered the economic impact of this proposed action on small 
entities.
    The purpose of RFA is to fit regulatory actions to the scale of the 
businesses that are subject to such actions so that small businesses 
would not be unduly or disproportionately burdened.
    According to the January 27, 1995, issue of ``Sheep and Goats,'' 
published by the Department's National Agricultural Statistics Service, 
there are approximately 87,350 sheep operations in the United States, 
nearly all of which would be classified as small businesses under the 
criteria established by the Small Business Administration (13 CFR 
121.601). Additionally, there are approximately 9,000 importers of 
sheep and sheep products, nearly all of which would be classified as 
small businesses.
    This proposed Order would require each person who makes payment to 
a sheep producer, feeder, or handler of sheep or sheep products to be a 
collecting person, and to collect an assessment from that sheep 
producer, feeder, or handler of sheep or sheep products. Any person who 
buys domestic live sheep or greasy wool for processing must also 
collect the assessment and remit it to the Board. Each person who 
processes or causes to be processed sheep or sheep products of that 
person's own production and who markets the processed products would 
pay an assessment and remit the assessment to the Board. Any person who 
exports live sheep or greasy wool would be required to remit an 
assessment to the Board. Finally, each person who imports into the 
United States sheep, sheep products, wool, or wool products, other than 
raw wool, would pay an assessment. The U.S. Customs Service (Customs) 
would collect the assessments on imported sheep and sheep products 
(except raw wool) and forward them to AMS for disbursement to the 
Board.
    The rate of assessment on domestic sheep producers, feeders, and 
exporters of live sheep and greasy wool would be 1-cent-per-pound on 
live sheep sold and 2-cents-per-pound on greasy wool sold. Importers 
would be assessed 1-cent-per-pound on live sheep and the equivalent of 
1-cent-per-pound of live sheep for sheep products and 2-cents-per-pound 
of degreased wool or the equivalent of degreased wool for wool and wool 
products. Imported raw wool would be exempt from assessments. Each 
person who processes or causes to be processed sheep or sheep products 
of that person's own production and markets the processed products 
would be assessed the equivalent of 1-cent-per-pound of live sheep sold 
and 2-cents-per-pound of greasy wool sold. All assessment rates 

[[Page 62299]]
may be adjusted in accordance with the applicable provisions of the 
Act.

Paperwork Reduction

    In accordance with the Paperwork Reduction Act of 1980 (44 U.S.C. 
Chapter 35), the information collection requirements contained herein 
were submitted to OMB for approval and assigned OMB No. 0581-0093. This 
action sets forth the provisions for establishing a nationwide, 
industry-funded sheep and wool promotion, research, education, and 
information program. The information collection requirements as 
required by this action and necessary for the implementation of this 
Order include:
    (1) A report by each collecting person required to remit 
assessments to the Board for live sheep or greasy wool purchased from 
the producer, feeder, or handler of sheep or sheep products; by each 
person marketing sheep or sheep products of that person's own 
production; and by each exporter of sheep or greasy wool. The estimated 
number of respondents for this report is 700. Each respondent would 
submit one report per month, unless otherwise prescribed by the Board, 
and the estimated average reporting burden is 0.5 hours per response;
    (2) A requirement to maintain sufficient records to verify reports 
submitted under the Order. The estimated number of recordkeepers needed 
to comply with this requirement is 700, each of whom would have an 
estimated annual reporting burden of 0.5 hours;
    (3) An application for certification of organization, to be 
completed by eligible organizations that request certification in order 
to be eligible to nominate producers, feeders, and importers to the 
Board. The estimated number of respondents is 70 (with each submitting 
one response), and the estimated average reporting burden is 0.5 hour 
per response;
    (4) A nomination form by which certified organizations will 
nominate producers, feeders, and importers for membership on the Board. 
The estimated number of respondents is 60 for the first year of the 
Order, and 20 each year thereafter. Each respondent would submit one 
response per year, and the estimated average reporting burden is 0.5 
hour per response; and
    (5) An advisory committee membership background information form, 
to be completed by candidates nominated by certified organizations for 
appointment to the Board. The estimated number of respondents is 240 
during the first year of the Order, and 80 each year thereafter. Each 
respondent would submit one response per year, and the estimated 
average reporting burden is 0.5 hour per response.

Background

    The Act (7 U.S.C. 7101-7111), approved October 22, 1994, authorizes 
the Secretary to establish a national sheep and wool promotion, 
research, education, and information program. The program would be 
funded by a mandatory assessment on domestic sheep producers, sheep 
feeders, and exporters of live sheep and greasy wool of 1-cent-per-
pound on live sheep sold and 2-cents- per-pound on greasy wool sold. 
Importers would be assessed 1-cent-per-pound on live sheep imported and 
the equivalent of 1-cent-per-pound of live sheep for sheep products 
imported and 2-cents-per-pound of degreased wool or the equivalent of 
degreased wool for wool and wool products imported. Imported raw wool 
would be exempt from assessments. Each person who processes or causes 
to be processed sheep or sheep products of that person's own 
production, and who markets the processed products, would be assessed 
the equivalent of 1-cent-per-pound of live sheep sold and 2-cents-per-
pound of greasy wool sold. All assessment rates may be adjusted in 
accordance with applicable provisions of the Act.
    The Act provides for the submission of proposals for a Sheep and 
Wool Promotion, Research, Education, and Information Order (Order). The 
Secretary may propose the issuance of an Order, or an association of 
sheep producers may submit and request the issuance of an Order. The 
Act provides that when the Secretary decides to propose an Order or 
receives a request and proposal for an Order, the Secretary shall 
publish the proposed Order and give due notice and opportunity for 
public comment. As established by the Act, the Order provides for the 
establishment of a Board comprised of 85 sheep producers, 10 sheep 
feeders, and 25 importers of sheep and sheep products. The Act further 
provides that any State with one member may have an alternate member.
    The Department issued an invitation to submit proposals for an 
initial Order in the January 4, 1995, (60 FR 381) issue of the Federal 
Register. In response to that invitation, the American Sheep Industry 
Association (ASI), the sheep industry's producer member organization, 
submitted a proposed Order. In addition, the New Zealand Meat Producers 
Board, the Australian Meat and Live-stock Corporation, the Wools of New 
Zealand, the National Lamb Feeders Association, and the Lamb Committee 
of the National Livestock and Meat Board each submitted a partial 
proposal.
    The Department also received letters from other interested parties. 
The Department did not consider these letters to be proposals because 
they primarily addressed information related to provisions of the Act 
itself. Copies of these letters and the comments received in response 
to the proposed Order, are available for public inspection.
    The Department published ASI's proposal as Proposal I, the New 
Zealand Meat Producers Board's proposal as Proposal II, the Australian 
Meat and Live-stock Corporation's proposal as Proposal III, the Wools 
of New Zealand's proposal as Proposal IV, and the National Lamb Feeders 
Association's proposal as Proposal V. The Department modified these 
proposals slightly in order to (1) make them consistent with the Act 
and other similar national research and promotion programs supervised 
by the Department, (2) simplify the language and format of some 
provisions, and (3) add certain sections necessary for the proper 
administration of the Order by the Department. The Department rejected 
the proposal submitted by the Lamb Committee of the National Livestock 
and Meat Board and discussed that proposal in the proposed rule. Each 
proposal was published in the June 2, 1995, issue of the Federal 
Register (60 FR 28747). Interested persons were invited to submit 
comments on the proposals until July 17, 1995.
    The Department received 137 written comments concerning the 
proposed Order from individual sheep producers, sheep feeders, 
importers of sheep and sheep products, State sheep producer 
organizations, general farm organizations, universities, and other 
interested parties. Ninety-three comments were filed on time and forty-
four comments were filed after the comment period closed. The late 
comments generally expressed the same views as the timely comments that 
are discussed herein, and the commenters generally supported the 
primary proposed Order with certain qualifications.
    The substantive changes suggested by commenters are discussed 
below, together with a description of changes made by the Department 
upon review of the proposed Order and the comments. The Department has 
also made other minor changes of a nonsubstantial nature for clarity 
and accuracy.
    Of the ninety-three timely comments, sixty-two comments supported 
the proposed Order as published or expressed support with some 

[[Page 62300]]
modifications or clarifications. Six comments opposed the entire Order 
or portions thereof. The remaining comments neither supported nor 
opposed the proposal in its entirety, but rather addressed specific 
sections in the proposed Order or made general comments relating to the 
Act or the Order. Forty-two comments did not express opposition to 
Proposal II which would provide for 6 of the 25 importer Board members 
to represent importers of sheep meat and that 1 member of the Executive 
Committee be an importer of sheep meat and that organizations that 
represent importers of sheep or sheep products may make nominations for 
representation of the importer unit. Two comments opposed Proposal II. 
Fifty-nine comments opposed Proposal III which would prohibit the use 
of assessments for specific country of origin promotion programs and 
two comments supported Proposal III. Forty-eight comments opposed 
Proposal IV which would provide that funds generated under the Act be 
used to promote (1) a wide range of wool products in the United States, 
including interior textile product; e.g., carpet rugs, and upholstery; 
and (2) wool generically rather than to promote wool specifically grown 
in the United States and four comments supported Proposal IV. Finally, 
fifty-two comments supported Proposal V, which would provide that 
domestic assessments could be used to promote ``Fresh American Lamb.'' 
The discussions are organized by headings of the proposed Order's 
provisions.

Definitions

    Two commenters recommended that we review all of the terminology in 
Sec. 1280.101 through Sec. 1280.136 in the proposed Order and clarify 
any terms that are ambiguous, in order to ensure that the definitions 
in the proposed Order generally conform with or mirror those in the 
Act. We agree, and reviewed the definitions and determined that the 
definitions in the proposed Order either mirror the definitions in the 
Act or conform to the Act's intent.

Section 1280.108  Degreased Wool

    One commenter stated that the definition of ``degreased wool'' has 
created some confusion because the term for ``degreased wool'' used 
both in the United States and abroad, is ``scoured wool.'' The 
commenter recommended that the term ``degreased wool'' be changed to 
``scoured wool.'' We have not adopted this recommendation because the 
Act defines the term ``degreased wool'' and we believe that the 
proposed Order's definition should mirror the Act's definition. 
Accordingly, this suggestion is not adopted.

Section 1280.113  Feeder

    Five commenters opposed the definition of ``feeder'' in the 
proposed Order. One commenter suggested that a ``feeder'' should be 
defined as ``a person that is the second owner of the lamb'' because 
the definition in the Act and in the proposed Order was ambiguous and 
could allow a person who was primarily a producer to occupy a feeder 
seat on the Board but prohibit a person who is primarily a feeder to 
occupy a producer seat on the Board. The same commenter also stated 
that according to the definition in the proposed Order many producers 
could be feeders, but few feeders could be producers. Another commenter 
suggested that ``feeder'' should be defined as ``a producer who 
purchases more than 500 head of lambs a year, to be finished for the 
commercial market.'' The commenter believes that the intent of the Act 
was not to include 4-H club members who show market sheep or other 
individuals who sell only a few market lambs in the definition of 
``feeder''. Another commenter suggested that ``feeder'' should be 
defined as ``any person other than a producer who purchases lambs to be 
finished for the commercial market.'' Another commenter suggested that 
a ``feeder'' should be defined as one whose main source of income (over 
50 percent) comes from lambs purchased for the purpose of feeding to 
market weight. Another commenter opposed the definition of ``feeder'' 
but did not provide an alternate definition. The Act itself defines 
``feeder'' as any person who feeds lambs until the lambs reach 
slaughter weight. The Department finds that the definition in the 
proposed Order should mirror that found in the Act. Accordingly, we 
have not adopted any of these suggestions.

Section 1280.122  Producer

    Five commenters opposed the definition of ``producer'' in the 
proposed Order. One commenter suggested that ``producer'' be defined as 
any person involved in certain industry segments * * * to include but 
not be limited to * * * a ``commercial'' ewe flock, purebred operation, 
speciality lamb and/or wool market segment, 4-H member or youth, 
because that definition is more representative of the producer segment 
of the sheep industry. Another commenter suggested that ``producer'' be 
defined as any producer who markets less than 500 purchased lambs per 
year. Another commenter suggested that ``producer'' be defined as one 
who breeds sheep for the production of lamb and wool. Three other 
commenters opposed the definition of ``producer'' but did not provide 
an alternative definition. The Act defines ``producer'' as any person, 
other than a feeder, who owns or acquires ownership of sheep. The 
Department finds that the definition in the proposed Order should 
mirror that found in the Act. Accordingly, we have not adopted these 
suggestions.
    One commenter suggested that the definitions of ``feeder,'' 
``importer'' and ``producer'' include a minimum age restriction and 
thus require an individual to be at least 18 years of age to ensure 
that those eligible to vote in the referendum are actually engaged in 
the commercial feeding, importation or production of sheep and sheep 
products. The Act does not specify any age limit or restriction as an 
eligibility requirement, and there are no age limits or restrictions on 
persons who are required to pay assessments. The Department believes 
that Congress intended that each person who is subject to the 
assessment should be entitled to vote. Accordingly, we have not adopted 
this suggestion.

Section 1280.126  Qualified State Sheep Board

    One commenter opposed the definition of ``Qualified State Sheep 
Board (QSSB)'' because Sec. 1280.126 of the proposed Order was 
inconsistent with Sec. 2(5), ``Findings and Declaration Policy,'' of 
the Act, which states that existing State organizations which conduct 
sheep and sheep product promotion, research, industry, and consumer 
education programs that are invaluable to the efforts of promoting the 
consumption of sheep and sheep products. The commenter further believes 
that the definition of ``QSSB'' would allow any private trade 
association to be recognized as a ``QSSB,'' because they are entities 
organized and operating within the State. Additionally, the commenter 
states that Sec. 1280.126 in the proposed Order defines QSSB as a sheep 
and wool promotion entity but also appears to include entities that 
conduct promotion, research or consumer information programs with 
respect to sheep or wool or both. Finally, the same commenter suggested 
that Sec. 1280.126 in the proposed Order be amended to include the 
following subsection ``(d)'': ``(d) * * * has agreed to maintain books 
and records as specified in regulations approved by the Secretary, to 
be subject to audit by or at the direction of the Secretary, to abide 
by all terms of the Act and the Order and to immediately 

[[Page 62301]]
suspend any and all activities funded by assessments collected pursuant 
to the Act and Order upon receipt of such a request from the 
Secretary.'' The Department believes that the Board would have the 
authority to certify a ``QSSB'' in each State. Furthermore, the 
Department believes that the Board should have the latitude to 
establish requirements, subject to Departmental approval, to ensure 
that funds expended by ``QSSB's'' are spent in accordance with the Act 
and the Order. The Act defines a ``QSSB'', as a sheep and wool 
promotion entity that is authorized by State statute or organized and 
operating within a State, receives voluntary contributions or dues and 
conducts promotion, research, or consumer information programs with 
respect to sheep or wool, or both, and is recognized by the Board as 
the sheep and wool promotion entity within the State; except that not 
more than one QSSB shall exist in any State at any one time. Therefore, 
we believe that the definition in the proposed Order should mirror that 
found in the Act. Accordingly, we have not adopted these suggestions.

Section 1280.127  Raw Wool

    Six commenters suggested that the definition of ``raw wool'' should 
be expanded to include wooltop, noils of wool and wool waste so that 
the definition is both clear and consistent with the North American 
Free Trade Agreement ``Yarn Forward'' rule of origin for wool and other 
textile imports. The Department has reviewed the definition of ``raw 
wool,'' and believes that Congress intended to assess processed sheep 
and sheep products but not raw wool. The Act defines ``raw wool'' as 
greasy wool, pulled wool, degreased wool, or carbonized wool. 
Furthermore, the Department finds that wooltop, noils of wool, and wool 
waste result from the processing of raw wool as defined in the Act and 
we believe that Congress intended that all processed products would be 
subject to the assessment. Therefore, to expand the definition would 
not be consistent with the intent of the Act. We have determined that 
the definition in the proposed Order mirrors that found in the Act. 
Accordingly, we have not adopted this suggestion.

National Sheep Promotion, Research, and Information Board

Section 1280.201  Establishment and Membership of the Board

    Eighteen commenters opposed one or more aspects of the 
``Establishment and Membership of the Board'' portion of the proposed 
Order. In general, the commenters felt that (1) the Board was too large 
and cumbersome for the sheep industry, (2) the Board should realign its 
membership on a 3-year basis based on actual collections from each 
industry segment, (3) the Board should include a packer/breaker/
retailer member because including representatives of all or some of 
these entities would enhance communication and lead to greater 
promotional efficiency and cooperation, (4) the Board is not fairly 
representative of producer, feeder and importer groups based on total 
assessment contributions, and (5) a certain number of seats on the 
Board should be held by each member category--sheep producers, sheep 
feeders and importers of sheep and sheep products--based on total 
assessments collected from these groups.
    The Act provides for the establishment and membership of the Board, 
including the number of members from each industry segment to be 
represented on the Board. The Act does not authorize the Board's 
membership to (1) be adjusted on a 3-year basis, (2) include a packer/
breaker/retailer seat or (3) be based on total contributions from each 
industry segment. Accordingly, we have not adopted any of these 
suggestions.
    One commenter suggested amending Sec. 1280.201 to include the 
following subsection: ``(e) in accordance with regulations approved by 
the Secretary, at least every 3 years and not more than every 2 years, 
the Board shall review the relative investments made by producers, 
feeders, and importers through payment of assessments and, if 
warranted, shall reapportion representation on the Board in order to 
best reflect the current state of the sheep and sheep products industry 
and ensure equitable representation in relation to respective groups 
total assessments.'' The Act authorizes the establishment of a 120-
member Board comprised of 85 producers, 10 feeders and 25 importers. 
The Act does not authorize reapportionment of the Board for any reason. 
Accordingly, we have not adopted this suggestion. The same commenter 
also suggested amending Sec. 1280.201 to include a subsection ``(f)'' 
to read: ``(f) a quorum of the Board shall consist of the producer 
representatives, importer representatives and feeder representatives or 
their respective alternates and a majority vote of representatives at a 
meeting in which a quorum is present shall constitute an act on the 
Board.'' The Department has determined that the Board should have the 
latitude to determine what constitutes a quorum of the Board in 
developing its operating principles and procedures. Accordingly, this 
suggestion is not adopted.
    One commenter suggested that the Board be selected in a manner 
similar to that used by the Consolidated Farm Service Agency for county 
and State committee elections. The Act requires that the Secretary 
appoint the Board from nominations submitted by certified 
organizations. Accordingly, we have not adopted this suggestion.
    Forty-two commenters indicated that they did not oppose proposal 
II, which proposed that 6 of the 25 importer members would represent 
importers of sheep meat, that 1 member of the Executive Committee be an 
importer of sheep meat, and that organizations representing importers 
of sheep or sheep products may make nominations for representation for 
the importer unit. Two commenters opposed Proposal II because 
allocating six seats for meat importers would give meat importers a 
greater number of seats than they would have if representation were 
based on contributions to the annual revenue. Additionally, commenters 
suggested that Sec. 1280.201(c) of the proposed Order be amended to 
read as follows: ``The importer positions shall be allocated 
proportionally to importers of wool products, sheep meat, sheep, and 
sheep products according to the relative contributions to checkoff 
revenues.'' The Act does not provide for a specified number of seats on 
the Board or the Executive Committee for each importer segment; i.e., 
sheep meat and wool. However, the Department has determined that the 
Secretary should have the latitude to appoint representatives to the 
Board in a manner that best reflects the interests of the various 
importer segments. Accordingly, we have not adopted these suggestions.
    One commenter perceived that the proposed Order lacks any minimum 
qualifications for entities seeking recognition as Qualified State 
Sheep Boards and suggested that the Department compare Sec. 1280.207 
and Sec. 1280.126. Additionally, the commenter indicated that the 
proposed Order appears to establish such standards for those 
organizations certified to nominate candidates for the Board, but not 
for those who handle the assessments collected under the program. The 
Department has reviewed these sections and determined that both are 
consistent with the intent of the Act. Thus, we have made no changes to 
this section in this proposed rule.

Section 1280.202  Nominations

    Two commenters suggested that the industry representatives 
nominated to 

[[Page 62302]]
the Board should be elected by the members of each industry segment 
because the Secretary is unfamiliar with the abilities of individuals 
in the various industries. The Department believes that the 
certification and nomination process would give the Secretary the 
opportunity to appoint members who best represent each industry segment 
because certified organizations comprised of members of those segments 
will submit nominations to the Board. Additionally, the Act requires 
the Secretary to appoint the Board. Accordingly, we have not adopted 
this suggestion.
    One commenter stated that the Department had modified the language 
of its initial proposal concerning nomination of importers in a way 
that made it appear that importer representatives need not be actual 
importers. The commenter suggests that the term ``importer 
representatives'' be used rather than ``importer'' because the term 
``importer representatives'' would be less restrictive and does not 
imply that the Board members must actually import wool products. The 
Department did not include this portion of the proposal as submitted. 
However, the Department has again reviewed the original language in the 
initial proposal and believes that its slight modification did not 
materially change the proposal's meaning. The Act requires the 
Secretary to appoint importers to seats established under the Act from 
nominations submitted by qualified organizations that represent 
importers. Furthermore, the Act defines ``importer'' as any person who 
imports sheep or sheep products into the United States and a ``person'' 
as any individual, group of individuals, partnership, corporation, 
association, cooperative, or any other legal entity. Consequently, the 
Department believes that the Act intended that persons who import sheep 
and sheep products should be eligible for appointment to the Board. 
Accordingly, we have not adopted this suggestion.
    One commenter opposed the inclusion of 25 importers on the Board 
because U.S. producers do not have the opportunity to influence policy 
in foreign countries. The Act provides that 25 importers of sheep and 
sheep products are to be represented on the Board. Accordingly, we have 
not adopted this suggestion.
    Two commenters suggested that Sec. 1280.202 of the proposed Order 
limits nominations to members of certified organizations because the 
definition of ``feeder'' and ``producer'' appears to allow a producer 
to qualify as a feeder but specifically prohibits feeders from 
qualifying as producers. In addition, the commenters believe that the 
definition of ``feeder'' and ``producer'' may also invite First 
Amendment challenges by individuals claiming to occupy, or to have an 
opportunity to occupy a feeder seat, but who are required to join a 
producer trade association and pay dues to such association to be 
eligible to be nominated to the Board. The Department carefully 
reviewed the Act, the proposed Order, and the nomination procedures to 
ensure that the nomination process would be conducted as provided for 
in the Act. The Act provides for certified producer organizations to 
submit only nominations from their membership for the unit in which the 
certified organization is located. There is no similar restriction on 
certified feeder and importer organizations. The Department finds no 
need to change the Order as a result of these comments.
    One commenter suggested that the Secretary should not be authorized 
to appoint the Board. The Act specifically authorizes the Secretary to 
appoint the Board from nominations submitted by certified 
organizations. Accordingly, we have rejected this suggestion.

Section 1280.205  Method of Obtaining Nominations

    One commenter suggested that Sec. 1280.205(a) (1) and (2) in the 
proposed Order should provide that individuals as well as certified 
organizations be certified as eligible to submit nominations. The Act 
provides for all nominations to be made from certified producer, feeder 
and importer organizations. If no organization is certified for an 
industry segment or for a State in the case of producers, the proposed 
Order permits the Secretary to obtain nominees by other means. 
Accordingly, we have not adopted this suggestion. The commenter further 
suggested that Sec. 1280.205(2)(C) in the proposed Order be amended to 
read as follows: ``The organization has a primary and overriding 
interest in representing the feeder or importer segment of the sheep 
industry as opposed to some other aspect of the industry.'' The Act 
establishes the criteria for certification, and it is not necessary to 
modify the Order in order to carry out the Act's provisions. The 
Department finds that the proposed changes to Sec. 1280.205 enumerated 
above are unnecessary. Accordingly, we have not adopted them.
    One commenter noted that Sec. 1280.205(b)(2) in the proposed Order 
contained a misprint and suggested that the language ``shall be made by 
the Secretary'' be inserted between the words ``Board'' and ``from.'' 
There was, in fact, a misprint and we have amended the language in 
Sec. 1280.205(b)(2) of the Order to mirror the language in the Act.
    One commenter was concerned that producer nominees would have to be 
members of a certified organization in order to be nominated to the 
Board. The Act requires producer organizations to submit only 
nominations from the membership of the organization for the unit in 
which the organization is located. Accordingly, we have not changed 
this subsection in this proposed rule.

Section 1280.207  Certification

    One commenter suggested that the National Lamb Feeders Association 
be the exclusive nominator of lamb feeder representatives, and be 
eligible to submit the names of the 15 sheep feeders for appointment to 
the 10 sheep feeder positions on the Board. The Department considered a 
similar comment proposed during the development of the proposed Order 
and did not accept it for inclusion in the proposed Order. This 
suggestion, if accepted, would prevent other existing organizations or 
new organizations from being eligible to nominate feeders to the Board, 
thereby restricting the opportunity for all qualified organizations to 
participate in the nomination process in contravention of the Act. 
Accordingly, we have rejected this suggestion.

Section 1280.208  Term of Office

    One commenter noted that the word ``proportionally'' was 
substituted for the word ``proportionately'' in the proposed Order. To 
make the Order's language consistent with the language in the Act, we 
have replaced the word ``proportionally'' with ``proportionately'' in 
Sec. 1280.208 in this proposed Order.

Section 1280.211  Powers and Duties of the Board

    Two commenters suggested that Sec. 1280.211(h) in the proposed 
Order should be amended to read as follows: ``to contract with 
entities, if necessary, to implement plans or projects in accordance 
with the Act and whenever possible, the Board shall use existing 
national organizations representative of feeders, importers, or 
producers to implement plans and projects in order to increase 
efficiency and minimize costs.'' The Act does not require the Board to 
utilize existing national organizations to implement plans and 
projects. The Department believes that the Board could use such 
organizations 

[[Page 62303]]
if it determined that they could effectively carry out certain 
projects, however, we believe that this language would unduly restrict 
the Board's authority to enter into contracts. The Department finds 
that Sec. 1280.211(h) mirrors the Act which states: ``* * * to contract 
with entities, if necessary, to carry out plans and projects in 
accordance with the Act.'' Accordingly, we have not adopted this 
language.
    One commenter suggested that the Board should contract directly 
with existing national lamb organizations like the other existing 
livestock checkoff programs that contract with national organizations 
because this would ensure continued funding for such existing national 
organizations. The Act provides the Board with the power to contract 
with such entities, if necessary, to implement plans or projects in 
accordance with the Act. However, this suggestion if adopted as a 
requirement would limit the Board's ability to conduct its program in 
the most efficient and effective manner. Accordingly, we have not 
adopted this suggestion.

Section 1280.215  Use of Assessments

    Fifty-nine commenters suggested that funds collected under the 
program should be used to fund promotion programs of ``Fresh American 
Lamb'' and other U.S. sheep products because the majority of funds 
collected would be generated from U.S. producers and feeders. 
Additionally, some commenters suggested using domestic assessments to 
fund promotion projects for ``Fresh American Lamb'' and other U.S. 
sheep products would provide the Board with the flexibility to 
establish the most effective program to enhance the markets for lamb 
and other sheep products. Furthermore, many commenters believe that 
this program is a domestic program funded primarily by U.S. growers, 
and because other livestock research and promotion programs do not 
prohibit country of origin promotion, funds generated under this 
program should not prohibit country of origin promotion. However other 
commenters contend that funds generated under the program should not be 
used for specific country of origin promotion, but to promote lamb and 
wool generically because generic promotion would provide for more 
equitable use of funds and be less subject to legal challenge. In 
addition, the same commenters pointed out that the promotion of lamb 
and wool generically would ensure that importers are not disadvantaged 
in light of their limited representation on the Board and the Executive 
Committee.
    The Department believes that the Board should have the latitude to 
fund promotion plans and projects which specifically make reference to 
sheep and wool produced in the U.S. with the limitation that funding 
for such domestic country of origin plans and projects cannot exceed 
the combined domestic assessments collected on sheep and sheep products 
and further that the percentage of domestic assessments spent on the 
promotion of domestic sheep and sheep products shall not exceed the 
percentage of import assessments spent on the generic promotion of 
sheep and sheep products. Accordingly, Sec. 1280.215 is revised in this 
proposed Order to allow Board funding of promotion plans and projects 
which involve identification of domestic sheep and sheep products as 
being U.S. produced but limit the amount of assessments the Board can 
spend on such plans and projects.
    One commenter suggested that at least one-half of the assessments 
collected should be spent on promotion activities because the industry 
is changing and in a crisis. The Department believes that establishing 
a specific amount of assessments to fund a specific program area in the 
Order would limit the Board's flexibility to administer the program 
effectively. Accordingly, we have not adopted this suggestion. This 
same commenter also suggested that the National Lamb Feeders 
Association (NLFA) receive funding from the new Board. We previously 
determined that the Act does not authorize such funding and do not 
adopt this suggestion in this proposed Order.
    Two commenters suggested that funds generated under the Act and the 
Order should promote a wide range of wool products in the United 
States, including interior textile products; e.g., carpets, rugs, and 
upholstery. The Department believes that the Board should be given the 
latitude to use funds for programs in a manner that would benefit the 
industry most effectively. The Department anticipates that the Board 
would fund projects according to the needs of the industry. 
Accordingly, we have not adopted this suggestion.
    Two commenters suggested that assessments collected on wool should 
be spent on wool projects and assessments collected on lamb should be 
spent on lamb projects. The Department believes that the Board should 
have the latitude to spend funds on projects that would best address 
the economic needs of the entire industry. Accordingly, we have not 
adopted this suggestion.
    One commenter suggested that no more than 4 percent of the annual 
assessments collected should be used for overhead and administrative 
expenses, in order to limit the amount of assessments used for such 
expenses. The Act does not limit administrative and overhead expenses. 
The Department expects that the Board would maintain its administrative 
and overhead expenses at a reasonable level. Accordingly, we have not 
adopted this suggestion.
    Some commenters suggested that any funds used for export promotion 
or in furtherance of other export activity should be separately 
accounted for, a percentage of total Board funds used in this manner 
should be refunded to importers who pay the assessments, and that 
expenditures for production-related research or information programs 
specifically targeted for promotion or product quality and safety-
related expenditures should be treated similarly because such 
expenditures would not benefit importers. The Department has concluded 
that the Board should have the latitude to determine how funds are to 
be spent, subject to the approval of the Secretary. Further, the Act 
does not provide for reimbursements. Accordingly, we have not adopted 
these suggestions.

Executive Committee

Section 1280.217  Membership

    One commenter suggested that each of the seven regions established 
under Sec. 1280.211(n) in the proposed Order should be represented by 
one member of the Executive Committee for a total of seven members 
representing producers. The commenter further suggested that (1) each 
member be elected by a majority vote of the directors from their 
respective region; (2) three members represent feeders and be elected 
by a majority vote of the 10 feeder directors; and (3) three members 
represent importers and be elected by a majority vote of the 25 
importer directors. The Department believes that the Board should have 
the latitude to determine how the Executive Committee is structured, 
within the requirements of the Act, and that the Board should establish 
voting requirements in its policies and procedures, subject to the 
Secretary's approval. In addition, the Act provides for one ``feeder,'' 
member on the Executive Committee, not three. Accordingly, we have not 
adopted this suggestion.
    One commenter suggested that Sec. 1280.217 in the proposed Order 
implicates both equal protection and compelled association clauses of 
the Constitution because feeder and importer members would be elected 
by 

[[Page 62304]]
producer members. The commenter asked that Sec. 1280.217 be amended to 
allow the various industry segments to name their own representatives 
to the Executive Committee. The Department believes that the Board 
should establish procedures for the nomination and election of 
Executive Committee members in its policies and procedures, subject to 
the requirements of the Act, and approval of the Secretary. Thus, we 
have rejected the request to amend Sec. 1280.217 of the proposed Order, 
and have published the language as initially proposed without change.
    Several commenters recommended that of the three importer members 
who serve on the Executive Committee, one member should represent 
importers of sheep meat to ensure that the sheep meat industry has a 
voice on the Executive Committee. The Act does not specify the consist 
of the 3 importer members who serve on the Executive Committee. The Act 
merely provides that the Executive Committee would be elected by the 
membership of the Board. The Department believes that the Board should 
have the latitude to allocate the three importer member seats on the 
Executive Committee among importers of sheep, sheep meat, and wool and 
wool products. Accordingly, we have not adopted this suggestion.

Section 1280.221  Quorum

    We received two comments concerning the establishment of a quorum 
of the Executive Committee. One commenter suggested that a quorum 
should be 11 members to ensure the presence of at least one nonproducer 
member. In addition, another commenter suggested that a quorum should 
consist of eight members, including the feeder representative and at 
least one importer representative. The language in the proposed Order 
mirrors the Act's requirement, which says that a quorum of the 
Executive Committee shall consist of eight members. The Act does not 
require a feeder or importer representative to be included. Importer 
and feeder representation within the 8-member quorum could be 
considered by the Board in developing its policies and procedures. 
Accordingly this suggestion is not adopted.

Section 1280.222  Vacancies

    One commenter suggested that any vacancy on the Executive Committee 
be filled by the process established pursuant to Sec. 1280.217 in the 
proposed Order, except that the Executive Committee members would be 
elected by each industry segment. The Act requires that the Executive 
Committee be elected by the Board which includes produces, feeders, and 
importers. The Department believes that the Board should have the 
latitude to establish the procedures for filling a vacancy on the 
Executive Committee consistent with the requirements of the Act and 
subject to the approval of the Secretary. Accordingly, we have not 
adopted this suggestion.

Assessments

Section 1280.224  Sheep Purchases

    Four commenters were concerned about the high assessment rate 
compared to other commodity checkoff programs, and two of these 
commenters were concerned that the rate of assessment could increase 
over time. The Act establishes the initial assessment rate and 
specifies the manner in which the initial assessment rate may be 
adjusted. Such adjustments must be recommended by the Board and 
approved by the Secretary. Accordingly, this section is not amended in 
the Order.
    One commenter suggested that the domestic and import rate of 
assessment should increase or decrease proportionately when the Board 
recommends a change in the assessment rate. The Act authorizes 
increases or decreases in the assessment rate for both domestic and 
imported sheep and sheep products. The Department believes that 
Congress intended that any adjustments in the initial assessment rate 
should be the same for all persons subject to assessment under the Act. 
Consequently, the Secretary will carefully review any Board recommended 
assessment adjustments to ensure that such adjustments are applied 
equally to all persons who are required to pay an assessment. 
Accordingly, Sec. 1280.224(d), Sec. 1280.225(d) and Sec. 1280.228 (c) 
and (d) have been revised to reflect the intent of this suggestion.
    One commenter felt that the method of collecting money at the 
various stages in the production chain would not be workable. The Act 
establishes the method of collecting assessments and identifies those 
persons responsible for collecting and remitting the assessment. Thus, 
we have not adopted this suggestion.

Section 1280.228  Imports

    One commenter expressed opposition to Customs or any other 
government agency collecting funds from importers to promote the use of 
wool and sheep on the grounds that it is improper for the U.S. 
government to promote U.S. domestic consumption of imported or domestic 
products. Customs merely serves as a collecting agent as authorized by 
the Act. Using Customs as a collecting agent in other similar checkoff 
programs has proven to be an exceptionally economical way of collecting 
importer assessments and ensuring compliance.
    Several commenters suggested that the Department work with Customs 
or develop a joint committee to develop and publish the Harmonized 
Tariff Schedule (HTS) classification numbers, assessment amount, and 
the conversion factors for the various HTS numbers subject to 
assessment. Furthermore, these commenters asked for clarification on 
how the clean wool equivalent would be calculated or determined on the 
various types of imported wool and wool products. The Department 
published a proposed rule in the Federal Register (60 FR 51737) that 
(1) identifies the HTS classification numbers for imported sheep and 
sheep products subject to assessment; (2) describes how the assessment 
would be calculated if the proposed Order were approved in referendum; 
and (3) identifies the conversion factors that would be used to convert 
sheep meat to a live weight equivalent and wool products to a degreased 
wool equivalent.
    Some commenters expressed concern about multiple assessments being 
collected on wool or wool products imported into the U.S. after having 
been previously exported on one or more occasions to other countries 
for further processing (ie., weaving, cutting and/or assembly) and 
suggested that a drawback or refund of the assessment should be 
authorized if multiple assessments are collected. The Department 
believes that this comment would be more appropriately addressed in the 
implementing rules and regulations published in the Federal Register 
(60 FR 51737).
    One commenter suggested that rates set forth in Sec. 1280.228 (c) 
and (d) in the proposed Order should be reduced yearly by a percentage 
calculated by dividing the amounts provided to States pursuant to 
paragraphs (a) and (b) of Sec. 1280.229 in the proposed Order by the 
total assessments collected by the Board on domestic marketings in the 
year funding is given to the States. Section 1280.229 of this subpart 
applies to QSSBs and as required by the Act sets forth the amount of 
annual assessments collected by the Board that must be returned to each 
QSSB. Section 1280.229 also specifies the minimum amount QSSBs would 
receive and requires that procedures be established to account for the 
funds. Accordingly, 

[[Page 62305]]
we have not adopted this suggestion. The same commenter suggested that 
``as adjusted pursuant to Sec. 1280.229,'' be added at the end of the 
first sentence under Sec. 1280.228 (c) and (d) in the proposed Order. 
The provisions of Sec. 1280.229, as previously discussed relate to the 
distribution of collected assessments to QSSBs and are not applicable 
to the assessment rate provisions for imported sheep and sheep products 
set forth in Sec. 1280.228. Thus, we have not adopted this suggestion.
    One commenter suggested that the phrase ``and importer 
representatives'' be inserted after ``domestic sheep industry'' under 
Sec. 1280.228(c). The language in the proposed Order mirrors that found 
in the Act. Accordingly, we have not adopted this suggestion.
    One commenter suggested that the Order require a specific finding 
that a proposed increase in the assessment rate does not violate the 
U.S. GATT obligations, preferably in consultation with the U.S. Trade 
Representative (USTR). The Secretary is already directed to consult 
with USTR pursuant to 7 U.S.C. 2278. Accordingly, this suggestion is 
not adopted.
    Several commenters suggested that raw wool should not be exempt 
from the assessment collection provisions of the Act because the 
exemption of raw wool would create ``free rides'' because certain 
importers of raw wool would benefit from the program without actually 
paying an assessment on raw wool. The Act exempts imported raw wool 
from assessments. Accordingly, we have not adopted this suggestion.
    Two commenters requested an explanation of how the equivalent in 
wool and wool products is to be calculated--specifically for wooltop, 
noils of wool, and wool wastes and generally for wool products that 
have been further processed. The Department has published in the 
Federal Register (60 FR 51737) proposed rules and regulations 
concerning the method of calculation to be used in determining the 
assessment amount for live sheep, sheep meat, and wool and wool 
products.
    One commenter noted that Sec. 1280.228(d) in the proposed Order 
substituted the word ``clean'' for ``degreased.'' The Department did 
substitute the word and believes that the language in the proposed 
Order should mirror the language in the Act. Thus, the word ``clean'' 
is replaced with ``degreased'' in Sec. 1280.228(d) in this proposed 
Order.
    One commenter suggested that ``equal protection'' problems could 
arise because of the exemption of raw wool, inadequate representation 
of lamb feeders, and inclusion of importers. The Act specifically 
exempts raw wool and sets forth the composition of the Board.
    Several commenters suggested that processors of wool and wool 
products be allowed to retain 5 to 10 percent of the total amount of 
assessments collected to cover additional administrative costs 
associated with collecting and remitting assessments. The Act does not 
permit collecting persons to retain a portion of the assessments 
collected to offset administrative costs. Accordingly, we have not 
adopted this suggestion.

Section 1280.229  Qualified State Sheep Boards

    One commenter suggested that the Qualified State Sheep Boards 
(QSSBs), the Board and those who contract with the QSSBs and the Board 
should separately account for checkoff funds. The commenter also 
suggested that each QSSB should (1) be required to give a written plan 
showing how it plans to protect against improper uses of assessments; 
(2) certify each year that it has not used assessments for forbidden 
purposes; and (3) permit the Secretary and the Board the opportunity to 
audit QSSBs and groups that contract with the Board and QSSBs. Section 
1280.229(c) in the proposed Order provides that the Board would 
establish procedures with the approval of the Secretary to account for 
funds expended by the QSSBs. Additionally, Sec. 1280.213, Books and 
Records of the Board, provides that (1) the Secretary may inspect and 
audit books and records of the Board; (2) the Board must prepare and 
submit from time-to-time such reports as prescribed by the Secretary; 
and (3) the Board's books are to be audited by an independent auditor 
at the end of each fiscal year, and auditor's report submitted to the 
Secretary. Additionally, the Department believes the Act intends that 
the Board, the QSSBs and any organizations receiving funds to conduct 
program activities would be accountable for all funds received, and 
would be required to expend those funds in accordance with the Act and 
the Order. Therefore, although the Department agrees that 
accountability for funds is important, we have not made changes in this 
proposed Order as a result of these suggestions because the proposed 
Order already provides for such accountability. The Department believes 
that the Board would develop operating procedures and guidelines to 
ensure that any funds collected under the authority of this subpart 
would be accounted for as authorized under the Act. Accordingly, we 
have not adopted this suggestion.
    Two commenters suggested that importers receive a credit similar to 
the 20 percent share of funding returned to State QSSBs, contending 
that State funding defeats the basic purpose of the law which is to 
promote sheep products nationwide. The Act does not authorize the Board 
to distribute to importers a portion of the annual assessments similar 
to that distributed to QSSBs. Thus, we have not adopted this 
suggestion.

Section 1280.230  Collection

    One commenter suggested that Sec. 1280.230(b), Late Payment 
Charges, in the proposed Order should include a provision stating that 
any collector shall have the right to submit a written petition to the 
Board to have these charges waived or adjusted under this subpart. The 
commenter indicated the provisions should also state: ``The Board shall 
consider such petitions and is empowered to waive or reduce penalties 
upon a two-thirds majority vote.'' Although, the Department believes 
that the Board should have the flexibility to establish collection 
procedures consistent with the Act's intent and Order provisions, we 
have not adopted this suggestion concerning late payments.
    Another commenter suggested that the 2-percent per month late 
payment charge is usurious and should be pegged to the 30-year Treasury 
bill. The 2-percent late payment charge is designed to encourage people 
to remit assessments on a timely basis. The Department does not believe 
that reducing the late payment charge would further the purposes of the 
Act. Accordingly, we have not adopted this suggestion.
    Fifty-three commenters supported Sec. 1280.230(d) in the proposed 
Order which provides that the Secretary is authorized to receive 
assessments if the Board is not in place by the date the first 
assessments are to be collected. We have adopted this section as 
proposed.

Section 1280.231  Prohibitions on Use of Funds

    Fifty-six commenters opposed and two supported the language of 
Sec. 1280.231(d) in the proposed Order, which provides that no plans or 
projects shall be undertaken to promote or advertise any sheep or sheep 
products by brand or trade name without the approval of the Board and 
the concurrence of the Secretary. The commenters opposed the language 
because Board approval and Secretary concurrence is already authorized 
under 

[[Page 62306]]
the Act and in the proposal submitted by the proponents of Proposal I. 
Therefore, the commenters feel that there is no need to address these 
plans separately from the Board's other activities and that doing so 
will result in additional bureaucracy and administration costs. The Act 
and proposed Order already authorize the Board and the Secretary to 
approve plans and projects for funding with assessments collected under 
the authority of this subpart. However, based on the Department's 
experience with other similar commodity promotion and research programs 
under the Department's oversight, branded promotion projects involve 
joint funding with participating private firms and a cooperative 
agreement. Consequently, the Department believes that such arrangements 
are more complex than the usual plans and projects and thus require 
additional review and evaluation to insure that branded promotions are 
in compliance with the Act and the proposed Order and Departmental 
policy. Based on the Department's past experience, jointly funded 
branded advertising projects have been reviewed and approved without 
added expense or undue delays. Accordingly, Sec. 1280.231(d) of the 
proposed Order is published in this rule with no modifications.
    One commenter suggested that Sec. 1280.231, Prohibition on Use of 
Funds, be deleted because it would restrict the sheep industry's 
ability to defend against detrimental legislation. The Act prohibits 
funds generated under this program from being used in any manner for 
the purpose of influencing legislation or government action or policy. 
Accordingly, we have not adopted this suggestion.
    One commenter suggested that Sec. 1280.231(b)(2) should be 
strengthened because no assessments should be used to influence 
government decision-making under the guise of providing information 
requested by a friendly government official who is actually helping the 
industry to support or oppose legislation in which it has interest. The 
Department believes that the language provided in the Act and in the 
proposed Order addresses this concern. Accordingly, we have not adopted 
this suggestion.

Additional Comments

    One commenter suggested that the Department conduct an economic 
impact study because of (1) the recordkeeping burden on the industry; 
(2) the loss of the Wool Act; and (3) the addition of the new program. 
The Administrator, AMS, previously determined pursuant to the 
requirements set forth in the Regulatory Flexibility Act that the 
economic impact on small entities would not be significant. The 
Department does not anticipate a significant increase in costs and 
paperwork burden to those persons subject to the provisions of the Act 
and Order because most of the records required to be maintained are 
normally maintained by all businesses in the sheep industry and the 
calculation of assessments is a one step procedure that uses readily 
available records. Accordingly, we have not adopted this suggestion.
    One commenter asked how the vote on the referendum would be 
conducted and how seats on the Executive Committee and the Board would 
be assigned because the Board is heavily weighted toward sheep growers. 
The Department published proposed referendum rules for public comment 
on August 8, 1995, in the Federal Register (60 FR 40313). These 
proposed rules include the registration and voting procedures. Also, 
the Act establishes the number of seats for the Executive Committee and 
the Board. We have made no changes in this proposed Order based on 
these questions.
    Several commenters suggested that additional hearings be conducted 
throughout the country to allow time for the necessary revisions and 
allow for additional public comment. The Department conducted a public 
meeting on June 26, 1995, and provided a 45-day comment period so that 
any person interested in the sheep and wool checkoff program would have 
the opportunity to present testimony or submit comments by the July 17, 
1995, deadline. The Department does not feel it is necessary to hold 
additional public meetings. Also, there are timeframes set forth in the 
Act. Further, all costs incurred by the Department in conducting the 
additional meetings are reimbursable by the sheep industry. 
Accordingly, we have not adopted this suggestion.
    A few commenters suggested that the implementation of the program 
be delayed to allow sheep on feed inventories to be more manageable and 
allow producers to be assessed their fair share. The sheep industry has 
requested that assessments begin as soon as possible so that 
promotional and other activities can begin. Because of the time frames 
set forth in the Act, the Department believes that Congress intended 
for the Department to proceed in an expeditious manner. The Department 
has determined that no useful purpose would be served in delaying 
implementation of this program.
    One commenter suggested that the Department ensure that importers 
are eligible to participate in the referendum. The Act provides that 
sheep producers, sheep feeders, and importers of sheep and sheep 
products who, during a representative period established by the 
Department, were engaged in sheep production, sheep feeding or 
importation of sheep and sheep products--excluding importers of raw 
wool--are eligible to vote in the referendum. The Department believes 
that Congress intended that each person who is subject to the 
assessment is entitled to vote. Consequently, the Department has 
proposed and published referendum rules in the Federal Register (60 FR 
40313).

List of Subjects in 7 CFR Part 1280

    Administrative practice and procedure, Advertising, Agricultural 
research, Marketing agreements, Sheep and sheep products, Reporting and 
recordkeeping requirements.

    For the reasons set forth in the preamble, it is proposed that 
chapter XI of title 7 of the Code of Federal Regulations be amended as 
follows:
    1. Part 1280 is proposed to be added as follows:

PART 1280--SHEEP PROMOTION, RESEARCH, AND INFORMATION

Subpart A--Sheep and Wool Promotion, Research, Education, and 
Information Order

Definitions

Sec.
1280.101  Act.
1280.102  Board.
1280.103  Carbonized wool.
1280.104  Certified organization.
1280.105  Collecting person.
1280.106  Consumer information.
1280.107  Customs Service.
1280.108  Degreased wool.
1280.109  Department.
1280.110  Education.
1280.111  Executive Committee.
1280.112  Exporter.
1280.113  Feeder.
1280.114  Greasy wool.
1280.115  Handler.
1280.116  Importer.
1280.117  Industry information.
1280.118  National feeder organization.
1280.119  Part and subpart.
1280.120  Person.
1280.121  Processor.
1280.122  Producer.
1280.123  Producer information.
1280.124  Promotion.
1280.125  Pulled wool.
1280.126  Qualified State Sheep Board.
1280.127  Raw wool.
1280.128  Research.
1280.129  Secretary.
1280.130  Sheep. 

[[Page 62307]]

1280.131  Sheep products.
1280.132  State.
1280.133  Unit.
1280.134  United States.
1280.135  Wool.
1280.136  Wool products.
National Sheep Promotion, Research, and Information Board
1280.201  Establishment and membership of the Board.
1280.202  Nominations.
1280.203  Nominee's agreement to serve.
1280.204  Appointment.
1280.205  Method of obtaining nominations.
1280.206  Vacancies.
1280.207  Certification of organizations.
1280.208  Term of office.
1280.209  Compensation.
1280.210  Removal.
1280.211  Powers and duties of the Board.
1280.212  Budgets.
1280.213  Books and records of the Board.
1280.214  Investment of funds.
1280.215  Use of assessments.

Executive Committee

1280.216  Establishment.
1280.217  Membership.
1280.218  Powers and duties.
1280.219  Term of office.
1280.220  Chairperson.
1280.221  Quorum.
1280.222  Vacancies.

Expenses

1280.223  Expenses.

Assessments

1280.224  Sheep purchases.
1280.225  Wool purchases.
1280.226  Direct processing.
1280.227  Exports.
1280.228  Imports.
1280.229  Qualified State Sheep Board.
1280.230  Collection.
1280.231  Prohibition on use of funds.

Reports, Books, and Records

1280.232  Reports.
1280.233  Books and records.
1280.234  Use of information.
1280.235  Confidentiality.

Miscellaneous

1280.240  Right of the Secretary.
1280.241  Proceedings after termination.
1280.242  Effect of termination or amendment.
1280.243  Personal liability.
1280.244  Patents, copyrights, inventions, and publications.
1280.245  Amendments.
1280.246  Separability.

Subpart B--[Reserved]

Subpart C--[Reserved]

Subpart D--[Reserved]

Subpart E--[Reserved]

    Authority: 7 U.S.C. 7101-7111.

Subpart A--Sheep and Wool Promotion, Research, Education, and 
Information Order

Definitions


Sec. 1280.101  Act.

    The term Act means the Sheep Promotion, Research, and Information 
Act of 1994, 7 U.S.C. 7101-7111; Public Law No. 103-107; 108 Stat. 
4210, enacted October 22, 1994, and any amendments thereto.


Sec. 1280.102  Board.

    The term Board means the National Sheep Promotion, Research, and 
Information Board established pursuant to Sec. 1280.201.


Sec. 1280.103  Carbonized wool.

    The term carbonized wool means wool that has been immersed in a 
bath, usually of mineral acids or acid salts, that destroys vegetable 
matter in the wool, but does not affect the wool fibers.


Sec. 1280.104  Certified organization.

    The term certified organization means any organization that has 
been certified by the Secretary pursuant to this part as being eligible 
to submit nominations for membership on the Board.


Sec. 1280.105  Collecting person.

    The term collecting person means any person who is responsible for 
collecting an assessment pursuant to the Act, this subpart and 
regulations prescribed by the Board and approved by the Secretary, 
including processors and any other persons who are required to remit 
assessments to the Board pursuant to this part, except that a 
collecting person who is a market agency; i.e., commission merchant, 
auction market, or livestock market in the business of receiving such 
sheep or sheep products for sale on commission for or on behalf of a 
producer or feeder shall pass the collected assessments on to the 
subsequent purchaser pursuant to the Act, this subpart and the 
regulations prescribed by the Board and approved by the Secretary.


Sec. 1280.106  Consumer information.

    The term consumer information means nutritional data and other 
information that would assist consumers and other persons in making 
evaluations and decisions regarding the purchase, preparation, or use 
of sheep products.


Sec. 1280.107  Customs Service.

    The term Customs Service means the U.S. Customs Service of the 
Department of the Treasury.


Sec. 1280.108  Degreased wool.

    The term degreased wool means wool from which the bulk of 
impurities has been removed by processing.


Sec. 1280.109  Department.

    The term Department means the U.S. Department of Agriculture.


Sec. 1280.110  Education.

    The term education means activities providing information relating 
to the sheep industry or sheep products to producers, feeders, 
importers, consumers, and other persons.


Sec. 1280.111  Executive Committee.

    The term Executive Committee means the Executive Committee of the 
Board established under Sec. 1280.216.


Sec. 1280.112  Exporter.

    The term exporter means any person who exports domestic live sheep 
or greasy wool from the United States.


Sec. 1280.113  Feeder.

    The term feeder means any person who feeds lambs until the lambs 
reach slaughter weight.


Sec. 1280.114  Greasy wool.

    The term greasy wool means wool that has not been washed or 
otherwise cleaned.


Sec. 1280.115  Handler.

    The term handler means any person who purchases and markets greasy 
wool.


Sec. 1280.116  Importer.

    The term importer means any person who imports sheep or sheep 
products into the United States.


Sec. 1280.117  Industry information.

    The term industry information means information and programs that 
would lead to increased efficiency in processing and the development of 
new markets, marketing strategies, increased marketing efficiency, and 
activities to enhance the image of sheep or sheep products on a 
national or international basis.


Sec. 1280.118  National feeder organization.

    The term national feeder organization means any organization of 
feeders that has been certified by the Secretary pursuant to the Act 
and this part as being eligible to submit nominations for membership on 
the Board.


Sec. 1280.119  Part and subpart.

    Part means the Sheep and Wool Promotion, Research, Education, and 
Information Order and all rules and regulations issued pursuant to the 
Act 

[[Page 62308]]
and the Order, and the Order itself shall be a subpart of such part.


Sec. 1280.120  Person.

    The term person means any individual, group of individuals, 
partnership, corporation, association, cooperative, or any other legal 
entity.


Sec. 1280.121  Processor.

    The term processor means any person who slaughters sheep or 
processes greasy wool into degreased wool.


Sec. 1280.122  Producer.

    The term producer means any person, other than a feeder, who owns 
or acquires ownership of sheep.


Sec. 1280.123  Producer information.

    The term producer information means activities designed to provide 
producers, feeders, and importers with information relating to 
production or marketing efficiencies or developments, program 
activities, or other information that would facilitate an increase in 
the consumption of sheep or sheep products.


Sec. 1280.124  Promotion.

    The term promotion means any action (including paid advertising) to 
advance the image and desirability of sheep or sheep products, to 
improve the competitive position, and stimulate sales, of sheep 
products in the domestic and international marketplace.


Sec. 1280.125  Pulled wool.

    The term pulled wool means wool that is pulled from the skin of 
slaughtered sheep.


Sec. 1280.126  Qualified State Sheep Board.

    The term Qualified State Sheep Board means a sheep and wool 
promotion entity that:
    (a) Is authorized by State statute or organized and operating 
within a State;
    (b) Receives voluntary contributions or dues and conducts 
promotion, research, or consumer information programs with respect to 
sheep or wool, or both; and
    (c) Is recognized by the Board as the sheep and wool promotion 
entity within the State; except that not more than one QSSB shall exist 
in any State at any one time.


Sec. 1280.127  Raw wool.

    The term raw wool means greasy wool, pulled wool, degreased wool, 
or carbonized wool.


Sec. 1280.128  Research.

    The term research means development projects and studies relating 
to the production (including the feeding of sheep), processing, 
distribution, or use of sheep or sheep products, to encourage, expand, 
improve, or make more efficient the marketing of sheep or sheep 
products.


Sec. 1280.129  Secretary.

    The term Secretary means the Secretary of Agriculture of the United 
States or any other officer or employee of the Department to whom 
authority has been delegated, or to whom authority may be delegated, to 
act in the Secretary's stead.


Sec. 1280.130  Sheep.

    The term sheep means ovine animals of any age, including lambs.


Sec. 1280.131  Sheep products.

    The term sheep products means products produced in whole or in part 
from sheep, including wool and products containing wool fiber.


Sec. 1280.132  State.

    The term State means each of the 50 States.


Sec. 1280.133  Unit.

    The term unit means each State, group of States, or class 
designation that is represented on the Board.


Sec. 1280.134  United States.

    The term United States means the 50 States and the District of 
Columbia.


Sec. 1280.135  Wool.

    The term wool means the fiber from the fleece of a sheep.


Sec. 1280.136  Wool products.

    The term wool products means products produced, in whole or in 
part, from wool and products containing wool fiber.

National Sheep Promotion, Research, and Information Board


Sec. 1280.201  Establishment and membership of the Board.

    There is hereby established a National Sheep Promotion, Research, 
and Information Board (Board) of 120 members. Members of the Board 
shall be appointed by the Secretary from nominations submitted in 
accordance with this subpart. The seats shall be apportioned as 
follows:
    (a) Producers. For purposes of nominating producers to the Board, 
each State shall be represented by the following number of members:

------------------------------------------------------------------------
                                                                 Board  
                             Unit                               members 
------------------------------------------------------------------------
Alabama......................................................          1
Alaska.......................................................          1
Arizona......................................................          1
Arkansas.....................................................          1
California...................................................          5
Colorado.....................................................          4
Connecticut..................................................          1
Delaware.....................................................          1
Florida......................................................          1
Georgia......................................................          1
Hawaii.......................................................          1
Idaho........................................................          2
Illinois.....................................................          1
Indiana......................................................          1
Iowa.........................................................          2
Kansas.......................................................          1
Kentucky.....................................................          1
Louisiana....................................................          1
Maine........................................................          1
Maryland.....................................................          1
Massachusetts................................................          1
Michigan.....................................................          1
Minnesota....................................................          2
Mississippi..................................................          1
Missouri.....................................................          1
Montana......................................................          5
Nebraska.....................................................          1
Nevada.......................................................          1
New Hampshire................................................          1
New Jersey...................................................          1
New Mexico...................................................          2
New York.....................................................          1
North Carolina...............................................          1
North Dakota.................................................          2
Ohio.........................................................          1
Oklahoma.....................................................          1
Oregon.......................................................          2
Pennsylvania.................................................          1
Rhode Island.................................................          1
South Carolina...............................................          1
South Dakota.................................................          4
Tennessee....................................................          1
Texas........................................................         10
Utah.........................................................          3
Vermont......................................................          1
Virginia.....................................................          1
Washington...................................................          1
West Virginia................................................          1
Wisconsin....................................................          1
Wyoming......................................................          5
------------------------------------------------------------------------

    (b) Feeders. The feeder sheep industry shall be represented by 10 
members.
    (c) Importers. Importers shall be represented by 25 members.
    (d) Alternates. A unit represented by only one producer member may 
have an alternate member appointed to ensure representation at meetings 
of the Board.


Sec. 1280.202  Nominations.

    (a) Producers. The Secretary shall appoint producers and alternates 
to represent units as specified under Sec. 1280.201(a) from nominations 
submitted by organizations certified under Sec. 1280.207. A certified 
organization may submit only nominations for producer representatives 
and alternates if appropriate from the membership of the organization 
for the unit in which the organization operates. To be represented on 
the Board, each certified organization 

[[Page 62309]]
shall submit to the Secretary at least 1.5 nominations for each seat on 
the Board for which the unit is entitled to representation. If a unit 
is entitled to only one seat on the Board, the unit shall submit at 
least two nominations for the appointment.
    (b) Feeders. The Secretary shall appoint representatives of the 
feeder sheep industry to seats established under Sec. 1280.201(b) from 
nominations submitted by qualified national organizations that 
represent the feeder sheep industry. To be represented on the Board, 
the industry shall provide at least 1.5 nominations for each 
appointment to the Board to which the feeder sheep industry is 
entitled.
    (c) Importers. The Secretary shall appoint importers to seats 
established under Sec. 1280.201(c) from nominations submitted by 
qualified organizations that represent importers. The Secretary shall 
receive at least 1.5 nominations for each appointment to the Board to 
which importers are entitled.
    (d) As soon as practicable, the Secretary shall obtain nominations 
from certified organizations. If no organization is certified in a unit 
the Secretary may use other means to obtain nominations. A certified 
organization shall only submit nominations for positions on the Board 
representing units in which such certified organization can establish 
that it is certified as eligible to submit nominations for 
representation of that unit of individual producers, feeders, or 
importers residing in that unit.
    (e) After the establishment of the initial Board, the Department 
shall announce when a vacancy does or will exist. Nominations shall be 
initiated not less than 6 months before the expiration of the terms of 
the members whose terms are expiring, in the manner described in 
Sec. 1280.205(b). In the case of vacancies due to reasons other than 
the expiration of term of office, successor Board members shall be 
appointed pursuant to Sec. 1280.206.
    (f) Where there is more than one eligible organization representing 
producers, feeders, or importers in a State or unit, they may caucus 
and jointly nominate a minimum of 1.5 qualified persons for each 
position representing that State or unit on the Board for which a 
member is to be appointed. If joint agreement is not reached with 
respect to any such nominations, or if no caucus is held, each 
certified organization may submit nominations for each appointment to 
be made to represent that State or unit.
    (g) Nominations should be submitted in order of preference and, for 
the initial Board, in order of preference for staggered terms. If the 
Secretary rejects any nominations submitted and there are insufficient 
nominations submitted from which appointments can be made, the 
Secretary may request additional nominations under paragraph (a), (b), 
or (c) of this section.


Sec. 1280.203  Nominee's agreement to serve.

    Any producer, feeder, or importer nominated to serve on the Board, 
or as an alternate, shall file with the Secretary at the time of the 
nomination a written agreement to:
    (a) Serve on the Board if appointed;
    (b) Disclose any relationship with any organization that operates a 
qualified State or regional program or has a contractual relationship 
with the Board; and
    (c) Withdraw from participation in deliberations, decisionmaking, 
or voting on matters that concern the relationship disclosed under 
paragraph (b) of this section.


Sec. 1280.204  Appointment.

    From the nominations made pursuant to Sec. 1280.202, the Secretary 
shall appoint the members of the Board on the basis of representation 
provided in Sec. 1280.201.


Sec. 1280.205  Method of obtaining nominations.

    (a) Initially established Board. (1) Producer and alternate 
nominations. The Secretary shall solicit, from organizations certified 
under Sec. 1280.207, nominations for each producer's or alternate 
member's seat on the initially-established Board to which a unit is 
entitled. If no such organization exist, the Secretary shall solicit 
nominations for appointments in such manner as the Secretary determines 
appropriate.
    (2) Feeder and importer nominations. The Secretary shall solicit, 
from certified organizations that represent feeders and importers, 
nominations for each seat to which feeders or importers are entitled. 
If no such organization exists, the Secretary shall solicit nominations 
for appointments in such manner as the Secretary determines 
appropriate. In determining whether an organization is eligible to 
submit nominations under this subparagraph, the Secretary shall 
determine whether:
    (i) The organization's active membership includes a significant 
number of feeders or importers in relation to the total membership of 
the organization;
    (ii) There is evidence of stability and permanency of the 
organization; and
    (iii) The organization has a primary and overriding interest in 
representing the feeder or importer segment of the sheep industry.
    (b) Subsequent appointment--(1) Producer nominations. The 
solicitation of nominations for subsequent appointment to the Board 
from eligible organizations certified under Sec. 1280.207 shall be 
initiated by the Secretary, with the Board securing the nominations for 
the Secretary.
    (2) Feeder and importer nominations. The solicitation of feeder and 
importer nominations for subsequent appointment to the Board shall be 
made by the Secretary from organizations certified in accordance with 
paragraph (a)(2) of this section.


Sec. 1280.206  Vacancies.

    To fill any vacancy occasioned by the death, removal, resignation, 
or disqualification of any member of the Board, the Secretary shall 
appoint a successor from the most recent list of nominations for the 
position or from nominations submitted by the Board.


Sec. 1280.207  Certification of organizations.

    (a) In general. The eligibility of any State organization to 
represent producers and to participate in the making of nominations 
under this subpart shall be certified by the Secretary. The Secretary 
shall certify any State organization that the Secretary determines 
meets the eligibility criteria established under paragraph (b) of this 
section. An eligibility determination by the Secretary shall be final.
    (b) Basis for certification. Certification shall be based upon, in 
addition to other available information, a factual report submitted by 
the organization that shall contain information considered relevant and 
specified by the Secretary, including:
    (1) The geographic territory covered by the active membership of 
the organization;
    (2) The nature and size of the active membership of the 
organization, including the proportion of the total number of active 
producers represented by the organization;
    (3) Evidence of stability and permanency of the organization;
    (4) Sources from which the operating funds of the organization are 
derived;
    (5) The functions of the organization; and
    (6) The ability and willingness of the organization to further the 
aims and objectives of the Act.
    (c) Primary considerations. A primary consideration in determining 
the eligibility of an organization under this paragraph shall be 
whether:
    (1) The membership of the organization consists primarily of 

[[Page 62310]]
    producers who own a substantial quantity of sheep; and
    (2) An interest of the organization is in the production of sheep.


Sec. 1280.208  Term of office.

    Each appointment to the Board shall be for a term of 3 years, 
except that appointments to the initially established Board shall be 
proportionately for 1-year, 2-year, and 3-year terms. No person may 
serve more than two consecutive 3-year terms, except that elected 
officers shall not be subject to the term limitation while they hold 
office.


Sec. 1280.209  Compensation.

    Board members shall serve without compensation, but shall be 
reimbursed for their reasonable expenses incurred in performing their 
duties as Board members.


Sec. 1280.210  Removal.

    If the Secretary determines that any person appointed under this 
part fails to perform his or her duties properly or engages in acts of 
dishonesty or willful misconduct, the Secretary shall remove the person 
from office. The Secretary may remove a person appointed or certified 
under this part, or any employee of the Board, if the Secretary 
determines that the person's continued service would be detrimental to 
the purposes of the Act.


Sec. 1280.211  Powers and duties of the Board.

    The Board shall have the following powers and duties:
    (a) To elect officers of the Board, including a chairperson, vice 
chairperson, and secretary/treasurer;
    (b) To administer this subpart in accordance with its terms and 
provisions;
    (c) To recommend regulations to effectuate the terms and provisions 
of this subpart;
    (d) To hold at least one annual meeting and any additional meetings 
it deems appropriate;
    (e) To elect members of the Board to serve on the Executive 
Committee;
    (f) To approve or reject budgets submitted by the Executive 
Committee;
    (g) To submit budgets to the Secretary for approval;
    (h) To contract with entities, if necessary, to implement plans or 
projects in accordance with the Act;
    (i) To conduct programs of promotion, research, consumer 
information, education, industry information, and producer information;
    (j) To receive, investigate, and report to the Secretary complaints 
of violations of this subpart;
    (k) To recommend to the Secretary amendments to this subpart;
    (l) To provide the Secretary with prior notice of meetings of the 
Board to permit the Secretary or a designated representative to attend 
such meetings;
    (m) To provide not less than annually a report to producers, 
feeders, and importers, accounting for the funds expended by the Board, 
and describing programs implemented under the Act; and to make such 
report available to the public upon request;
    (n) To establish seven regions that, to the extent practicable, 
contain geographically contiguous States and approximately equal 
numbers of sheep producers and sheep production;
    (o) To employ or retain necessary staff; and
    (p) To invest funds in accordance with Sec. 1280.214.


Sec. 1280.212  Budgets.

    (a) In general. The Board shall review the budget submitted by the 
Executive Committee, on a fiscal year basis, of anticipated expenses 
and disbursements by the Board, including probable costs of 
administration and promotion, research, consumer information, 
education, industry information, and producer information projects. The 
Board shall submit the budget to the Secretary for the Secretary's 
approval.
    (b) Limitation. No expenditure of funds may be made by the Board 
unless such expenditure is authorized under a budget or budget 
amendment approved by the Secretary.


Sec. 1280.213  Books and records of the Board.

    The Board shall:
    (a) Maintain such books and records, which shall be made available 
to the Secretary for inspection and audit, as the Secretary may 
prescribe;
    (b) Prepare and submit to the Secretary, from time-to-time, such 
reports as the Secretary may prescribe; and
    (c) Account for the receipt and disbursement of all funds entrusted 
to it. The Board shall cause its books and records to be audited by an 
independent auditor at the end of each fiscal year, and a report of 
such audit to be submitted to the Secretary.


Sec. 1280.214  Investment of funds.

    The Board may invest, pending disbursement, funds it receives under 
this subpart, only in obligations of the United States or any agency 
thereof, in general obligations of any State or any political 
subdivision thereof, in any interest-bearing account or certificate of 
deposit of a bank that is a member of the Federal Reserve System, or in 
obligations fully guaranteed as to principal and interest by the United 
States. Any income from any such investment may be used for any purpose 
for which the invested funds may be used.


Sec. 1280.215  Use of assessments.

    (a) Assessments received by the Board shall be used by the Board:
    (1) To fund promotion, research, education, and information plans 
and projects authorized under this subpart, including promotion plans 
and projects which make specific reference to domestic sheep and sheep 
products originating or being produced and/or marketed in the U.S., 
except that the combined expenditures for such promotion plans and 
projects involving domestic country of origin shall be limited to no 
more than the combined domestic assessments collected on sheep and 
sheep products and the percentage of domestic assessments spent on the 
promotion of domestic sheep and sheep products shall not exceed the 
percentage of import assessments spent on the generic promotion of 
sheep and sheep products; and
    (2) For the payment of expenses incurred in administering this 
subpart, including a reasonable reserve.
    (b) The Board shall reimburse the Secretary, from assessments 
collected, for costs incurred in implementing and administering the 
Order as provided for under the Act.

Executive Committee


Sec. 1280.216  Establishment.

    The Board shall establish an Executive Committee of the Board to 
assist the Board in the administration of the terms and provisions of 
this subpart, under the direction of the Board, and consistent with the 
policies determined by the Board.


Sec. 1280.217  Membership.

    The Executive Committee shall be comprised of 14 members as 
follows:
    (a) Eleven members of the Executive Committee shall be elected by 
the Board annually. Of these members:
    (1) One member shall represent each of the seven regions 
established under Sec. 1280.211(n) for a total of seven members 
representing producers;
    (2) One member shall represent feeders; and
    (3) Three members shall represent importers.
    (b) The remaining three members of the Executive Committee shall be 
the elected officers of the Board. 

[[Page 62311]]



Sec. 1280.218  Powers and duties.

    (a) Plans and projects. The Executive Committee shall develop plans 
or projects of promotion and advertising, research, consumer 
information, education, industry information, and producer information, 
which plans or projects shall be paid for with assessments collected by 
the Board. The plans or projects shall not become effective until 
approved by the Secretary.
    (b) Budgets. The Executive Committee shall be responsible for 
developing and submitting to the Board, for Board approval, budgets on 
a fiscal year basis of the Board's anticipated expenses and 
disbursements, including the estimated costs of advertising and 
promotion, research, consumer information, education, industry 
information, and producer information projects. The Board shall approve 
or disapprove such budgets and, if approved, shall submit them to the 
Secretary for the Secretary's approval.


Sec. 1280.219  Term of office.

    Terms of appointment to the Executive Committee shall be for 1 
year.


Sec. 1280.220  Chairperson.

    The Chairperson of the Board shall serve as chairperson of the 
Executive Committee.


Sec. 1280.221  Quorum.

    A quorum of the Executive Committee shall consist of eight members.


Sec. 1280.222  Vacancies.

    To fill any vacancy caused by the death, removal, resignation, or 
disqualification of any member of the Executive Committee, the Board 
shall elect a successor for the position pursuant to Sec. 1280.217.

Expenses


Sec. 1280.223  Expenses.

    (a) The Board shall be responsible for all expenses of the Board 
and the Executive Committee.
    (b) Contracts and Agreements. Any contract or agreement entered 
into by the Board shall provide that:
    (1) The contracting party shall develop and submit to the Board a 
plan or project of promotion, research, education, consumer 
information, industry information, and producer information, together 
with a budget or budgets that shall show estimated costs to be incurred 
for such plan or project; and
    (2) No plan, project, contract, or agreement shall become effective 
until it has been approved by the Secretary.
    (c) The contracting party shall:
    (1) keep accurate records of all of its transactions;
    (2) account for funds received and expended, including staff time, 
salaries, and expenses expended on behalf of Board activities;
    (3) make periodic reports to the Board of activities conducted; and
    (4) make such other reports as the Board or the Secretary may 
require.

Assessments


Sec. 1280.224  Sheep purchases.

    (a) In general. Each person making payment to a producer or feeder 
for sheep purchased from the producer or feeder shall be a collecting 
person and shall collect an assessment from the producer or feeder on 
each sheep sold by the producer or feeder. Each such producer or feeder 
shall pay such assessment to the collecting person at the rate set 
forth in paragraph (d) of this section.
    (b) Remittances. Each processor making payment to a producer, 
feeder, or collecting person for sheep purchased from the producer, 
feeder, or collecting person shall be a collecting person and shall 
collect an assessment from the producer, feeder, or other collecting 
person on each sheep sold by the producer, feeder, or collecting 
person, and each such producer, feeder, or collecting person shall pay 
such assessment to the processor at the rate set forth in paragraph (d) 
in this section, and such processor shall remit the assessment to the 
Board.
    (c) Processing. Any person who purchases sheep for processing shall 
collect the assessment from the seller and remit the assessment to the 
Board.
    (d) Rate. Except as otherwise provided, the rate of assessment 
shall be 1-cent-per-pound of live sheep sold. The rate of assessment 
may be raised or lowered no more than 0.15 of a cent in any 1 year as 
recommended by the Executive Committee and approved by the Board and 
the Secretary. However, if the Board makes a recommendation to the 
Secretary to raise or lower the assessment rates, the domestic rate and 
the import rate must be raised or lowered simultaneously by an 
equivalent amount. The rate of assessment shall not exceed 2\1/2\-
cents-per-pound.


Sec. 1280.225  Wool purchases.

    (a) In general. Each person making payment to a producer, feeder, 
or handler of wool for wool purchased from the producer, feeder, or 
handler shall be a collecting person and shall collect an assessment 
from the producer, feeder, or handler on each pound of greasy wool 
sold. The producer, feeder, or handler shall pay such assessment to the 
collecting person at the rate set forth in paragraph (d) of this 
section.
    (b) Remittances. Each processor making payment to a producer, 
feeder, handler, or collecting person for wool purchased from the 
producer, feeder, handler, or collecting person shall be a collecting 
person and shall collect an assessment from the producer, feeder, 
handler, or other collecting person on all wool sold by the producer, 
feeder, handler, or collecting person, and each such producer, feeder, 
handler, or collecting person shall pay such assessment to the 
processor at the rate set forth in paragraph (d) of this section and 
such processor shall remit the assessment to the Board.
    (c) Processing. Any person purchasing greasy wool for processing 
shall collect the assessment and remit the assessment to the Board.
    (d) Rate. Except as otherwise provided, the rate of assessment 
shall be 2-cents-per-pound. The rate of assessment may be raised or 
lowered no more than 0.2 of a cent per pound in any 1 year as 
recommended by the Executive Committee and approved by the Board and 
the Secretary. However, if the Board makes a recommendation to the 
Secretary to raise or lower the assessment rates, the domestic rate and 
the import rate must be raised or lowered simultaneously by an 
equivalent amount. The rate of assessment shall not exceed 4-cents-per-
pound of greasy wool.


Sec. 1280.226  Direct processing.

    Each person who processes or causes to be processed sheep or sheep 
products of that person's own production, and markets such sheep or 
sheep products, shall pay an assessment on such sheep or sheep products 
at the time of sale at a rate equivalent to the rate established in 
Sec. 1280.224(d) or Sec. 1280.225(d), as appropriate, and shall remit 
such assessment to the Board.


Sec. 1280.227  Exports.

    Each person who exports live sheep or greasy wool shall remit the 
assessment on such sheep or greasy wool at the time of export, at a 
rate equivalent to the rate established in Sec. 1280.224(d) or 
Sec. 1280.225(d), as appropriate, and shall remit such assessment to 
the Board.


Sec. 1280.228  Imports.

    (a) In general. Each person who imports sheep or sheep products or 
who imports wool or products containing wool (with the exception of raw 
wool) 

[[Page 62312]]
into the United States shall pay an assessment to the Board.
    (b) Collection. The Customs Service is authorized to collect and 
remit such assessment to the Secretary for disbursement to the Board.
    (c) Rate for sheep and sheep products. The assessment rate for 
sheep shall be 1-cent-per-pound of live sheep. The assessment rate for 
sheep products shall be the equivalent of 1-cent-per-pound of live 
sheep, as determined by the Secretary in consultation with the domestic 
sheep industry. Such rates may be raised or lowered no more than 0.15-
cent-per-pound in any 1 year as recommended by the Executive Committee 
and approved by the Board and the Secretary, but shall not exceed 2\1/
2\-cents-per-pound. However, if the Board makes a recommendation to the 
Secretary to raise or lower the assessment rates, the domestic rate and 
the import rate must be raised or lowered simultaneously by an 
equivalent amount.
    (d) Rate for wool and wool products. The assessment rate for wool 
and products containing wool shall be 2-cents-per-pound of degreased 
wool or the equivalent of degreased wool. The rate of assessment may be 
raised or lowered no more than 0.2-cents-per-pound in any 1 year, as 
recommended by the Executive Committee and approved by the Board and 
the Secretary, but shall not exceed 4-cents-per-pound of degreased wool 
or the equivalent. However, if the Board makes a recommendation to the 
Secretary to raise or lower the assessment rates, the domestic rate and 
the import rate must be raised or lowered simultaneously by an 
equivalent amount.
    (e) The Secretary shall issue regulations regarding the assessment 
rates for imported sheep and sheep products. The Secretary may exclude 
from assessment certain imported products that contain de minimis 
levels of sheep or sheep products and waive the assessment on such 
products.


Sec. 1280.229  Qualified State Sheep Board.

    (a) Except as provided in paragraph (b) of this section, 20 percent 
of the total assessments collected by the Board on the marketings of 
domestic sheep and domestic sheep products in any 1 year from a State 
shall be returned to the QSSB of the State.
    (b) No QSSB shall receive less than $2,500 under paragraph (a) of 
this section in any 1 year. (c) The Board shall establish procedures 
with the approval of the Secretary to account for funds expended 
pursuant to paragraphs (a) and (b) of this section.


Sec. 1280.230  Collection.

    (a) Each person responsible for the collection and remittance to 
the Board of assessments under this subpart shall do so on a monthly 
basis, unless the Board, with the approval of the Secretary, has 
specifically authorized otherwise.
    (b) Late payment charges. Any unpaid assessments due the Board or 
from a person responsible for remitting assessments to the Board, shall 
be increased by 2 percent each month beginning with the day after the 
date such assessments were due under this subpart. Any assessments or 
late payment charges that remain unpaid shall be increased at the same 
rate on the corresponding day of each month thereafter until paid.
    (c) Any unpaid assessments due to the Board pursuant to 
Sec. 1280.224, Sec. 1280.225, Sec. 1280.226, and Sec. 1280.227 shall be 
increased 2 percent each month beginning with the day following the 
date such assessments were due. Any remaining amount due, which shall 
include any unpaid charges previously made pursuant to this paragraph, 
shall be increased at the same rate on the corresponding day of each 
month thereafter until paid. For the purposes of this paragraph, any 
assessment determined at a date later than the date prescribed by this 
subpart because of a person's failure to submit a timely report to the 
Board shall be considered to have been payable by the date it would 
have been due if the report had been timely filed. The date of payment 
is the applicable postmark date or the date of receipt by the Board, 
whichever is earlier.
    (d) If the Board is not in place by the date the first assessments 
are to be collected, the Secretary shall have the authority to receive 
assessments and invest them on behalf of the Board, and shall pay such 
assessments and any interest earned to the Board when it is formed. The 
Secretary shall have the authority to promulgate rules and regulations 
concerning assessments and the collection of assessments if the Board 
is not in place or is otherwise unable to develop such rules and 
regulations.


Sec. 1280.231  Prohibition on use of funds.

    (a) Except as otherwise provided in paragraph (b) of this section, 
no funds collected by the Board under this subpart shall be used in any 
manner for the purpose of influencing any action or policy of the 
United States Government, any foreign or State Government, or any 
political subdivision thereof.
    (b) The prohibition in paragraph (a) of this section shall not 
apply:
    (1) To the development and recommendation of amendments to this 
subpart; or
    (2) To the communication to appropriate government officials, in 
response to a request made by the officials, of information relating to 
the conduct, implementation, or results of promotion, research, 
consumer information, education, industry information, or producer 
information activities under this subpart.
    (c) A plan or project conducted pursuant to this part shall not 
make false or misleading claims on behalf of sheep or sheep products or 
against a competing product.
    (d) No such plans or projects shall be undertaken to promote or 
advertise any sheep or sheep products by brand or trade name without 
the approval of the Board and the concurrence of the Secretary.

Reports, Books, and Records


Sec. 1280.232  Reports.

    (a) Each collecting person, including processors and other persons 
required to remit assessments to the Board pursuant to Sec. 1280.224(b) 
for live sheep, each person who markets sheep products of that person's 
own production and each exporter of sheep shall report to the Board 
information pursuant to regulations prescribed by the Board and 
approved by the Secretary. Such information may include:
    (1) The number of sheep purchased, initially transferred or which, 
in any other manner, are subject to the collection of assessment, and 
the dates of such transaction;
    (2) The number of sheep imported or exported, or the equivalent 
thereof of sheep products imported;
    (3) The amount of assessment remitted;
    (4) An explanation for the remittance of any assessment that is 
less than the pounds of sheep multiplied by the assessment rate; and
    (5) The date any assessment was paid.
    (b) Each collecting person, including processors and other persons 
required to remit assessments to the Board pursuant to Sec. 1280.225(b) 
for wool purchased from the producer or handler of wool or wool 
products, each person purchasing greasy wool for processing, each 
importer of wool or wool products (except raw wool), each exporter of 
greasy wool, and each person who markets wool of that person's own 
production shall report to the Board information pursuant to 
regulations prescribed by the Board and approved by the Secretary. Such 
information may include: 

[[Page 62313]]

    (1) The amount of wool purchased, initially transferred or in any 
other manner subject to the collection of assessment, and the dates of 
such transaction;
    (2) The amount of wool imported (except raw wool) or the equivalent 
thereof of wool products imported or the amount of greasy wool 
exported;
    (3) The amount of assessment remitted;
    (4) An explanation for the remittance of an assessment that is less 
than the pounds of wool multiplied by the assessment rate; and
    (5) The date any assessment was paid.


Sec. 1280.233  Books and records.

    (a) Each collecting person, including processors and other persons 
required to remit assessments to the Board, each importer of sheep or 
sheep products (except raw wool), and exporter of sheep or greasy wool, 
and each person who markets sheep products of that person's own 
production, shall maintain and make available for inspection such books 
and records as may be required by regulations prescribed by the Board 
and approved by the Secretary, including records necessary to verify 
any required reports. Such records shall be maintained for the period 
of time prescribed by the regulations issued hereunder.
    (b) Document evidencing payment of assessments. Each collecting 
person responsible for collecting an assessment paid pursuant to this 
subpart, other than a person who slaughters sheep or markets sheep 
products of his or her own production for sale, is required to give the 
person or collecting person from whom the collecting person collected 
an assessment written evidence of payment of the assessments paid 
pursuant to this subpart. Such written evidence serving as a receipt 
shall include:
    (1) Name and address of the collecting person;
    (2) Name of the producer who paid the assessment;
    (3) Number of head of sheep or pounds of wool sold;
    (4) Total assessments paid by the producer;
    (5) Date; and
    (6) Such other information as the Board, with the approval of the 
Secretary, may require.


Sec. 1280.234  Use of information.

    Information from records or reports required pursuant to this 
subpart shall be made available to the Secretary as is appropriate to 
the administration or enforcement of the Act, this subpart or any 
regulation issued under the Act. In addition, the Secretary shall 
authorize the use under this part of information that is accumulated 
under laws or regulations other than the Act or regulations issued 
under the Act regarding persons paying producers, feeders, importers, 
handlers, or processors.


Sec. 1280.235  Confidentiality.

    (a) All information from records or reports required pursuant to 
this subpart shall be kept confidential by all officers and employees 
of the Department and of the Board. Such information may be disclosed 
only if the Secretary considers the information relevant, the 
information is disclosed only in a suit or administrative hearing 
brought at the direction or on the request of the Secretary, or to 
which the Secretary or any officer of the United States is a party, and 
the information relates to the Act.
    (b) Administration. No information obtained under the authority of 
this subpart may be made available to any agency or officer of the 
Federal Government for any purpose other than the implementation of the 
Act and any investigatory or enforcement action necessary for the 
implementation of the Act.
    (c) General statements. Nothing in paragraph (a) of this section 
may be deemed to prohibit:
    (1) The issuance of general statements, based on the reports of the 
number of persons subject to this subpart or statistical data collected 
therefrom, which statements do not identify the information furnished 
by any person; or
    (2) The publication, by direction of the Secretary, of the name of 
any person violating this subpart and a statement of the particular 
provisions of this subpart violated by such person.
    (d) Penalty. Any person who willfully violates the provisions of 
this subpart, on conviction, shall be subject to a fine of not more 
than $1,000, or to imprisonment for not more than 1 year, or both, and 
if the person is an officer or employee of the Board or the Department, 
that person shall be removed from office.

Miscellaneous


Sec. 1280.240  Right of the Secretary.

    All fiscal matters, programs or projects, bylaws, rules or 
regulations, reports, or other substantive actions proposed, and 
prepared by the Board shall be submitted to the Secretary for approval.


Sec. 1280.241  Proceedings after termination.

    (a) Upon the termination of this subpart, the Board shall recommend 
not more than five of its members to the Secretary to serve as trustees 
for the purpose of liquidating the affairs of the Board. Such persons, 
upon designation by the Secretary, shall become trustees of all the 
funds and property owned, in the possession of or under the control of 
the Board, including any claims of the Board against third parties that 
exist at the time of such termination.
    (b) The trustees shall:
    (1) Act as trustees until discharged by the Secretary;
    (2) Carry out the obligations of the Board under any contracts or 
agreements entered into by the Board pursuant to Sec. 1280.223(b);
    (3) From time to time account for all receipts and disbursements 
and deliver all property on hand, together with all books and records 
of the Board and of the trustees, to such persons as the Secretary may 
direct; and
    (4) Upon the request of the Secretary, execute such assignment of 
other instruments necessary or appropriate to transfer to such persons 
full title and right to all of the funds, property, and claims of the 
Board or the trustees pursuant to this subpart.
    (c) Any person to whom funds, property or claims have been 
transferred or delivered pursuant to this subpart shall be subject to 
the same obligation imposed upon the Board and upon the trustees.
    (d) Any residual funds not required to pay the necessary costs of 
liquidation shall be turned over to the Secretary to be used, to the 
extent practicable, for continuing one or more of the promotion, 
research, consumer information, education, industry information, and 
producer information plans or projects authorized pursuant to this 
subpart.


Sec. 1280.242  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this subpart or of any regulation issued pursuant 
thereto, or the issuance of any amendment to either thereof, shall not:
    (a) Affect or waive any right, duty, obligation, or liability that 
has arisen or may hereafter arise in connection with any provision of 
this subpart or any regulation issued thereunder; or
    (b) Release or extinguish any violation of this subpart or any 
regulation issued thereunder; or
    (c) Affect or impair any rights or remedies of the United States, 
the Secretary or any person with respect to any such violation. 

[[Page 62314]]



Sec. 1280.243  Personal liability.

    No member, employee, or agent of the Board, including employees, 
agents, or Board members of the QSSB, acting pursuant to the authority 
provided in this subpart, shall be held personally responsible, either 
individually or jointly, in any way whatsoever, to any person for 
errors in judgment, mistakes, or other acts of either commission or 
omission, of such member, employee, or agent except for acts of 
dishonesty or willful misconduct.


Sec. 1280.244  Patents, copyrights, inventions, and publications.

    Any patents, copyrights, inventions, or publications developed 
through the use of funds remitted to the Board under the provisions of 
this subpart shall be the property of the United States Government as 
represented by the Board, and shall, along with any rents, royalties, 
residual payments, or other income from the rental, sales, leasing, 
franchising, or other uses of such patents, copyrights, inventions, or 
publications, inure to the benefit of the Board. Upon termination of 
this subpart, Sec. 1280.240 shall apply to determine disposition of all 
such property.


Sec. 1280.245  Amendments.

    Amendments to the subpart may be proposed, from time to time, by 
the Board or by any interested person affected by the provisions of the 
Act, including the Secretary.


Sec. 1280.246  Separability.

    If any provision of this subpart is declared invalid or its 
applicability to any person or circumstances is held invalid, the 
validity of the remainder of this subpart of the applicability thereof 
to other persons or circumstances shall not be affected thereby.

Subpart B--[Reserved]

Subpart C--[Reserved]

Subpart D--[Reserved]

Subpart E--[Reserved]

    Dated: November 29, 1995.
Lon Hatamiya,
Administrator.
[FR Doc. 95-29528 Filed 12-1-95; 3:00 pm]
BILLING CODE 3410-02-P