[Federal Register Volume 66, Number 184 (Friday, September 21, 2001)]
[Proposed Rules]
[Pages 48764-48778]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-23647]



[[Page 48763]]

-----------------------------------------------------------------------

Part III





Department of Agriculture





-----------------------------------------------------------------------



Agricultural Marketing Service



-----------------------------------------------------------------------



7 CFR Part 1280



Lamb Promotion, Research, and Information Order; Proposed Rule

  Federal Register / Vol. 66, No. 184 / Friday, September 21, 2001 / 
Proposed Rules  

[[Page 48764]]


-----------------------------------------------------------------------

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1280

[No. LS-01-12]
RIN 0581-AC06


Lamb Promotion, Research, and Information Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Agricultural Marketing Service (AMS) is seeking comments 
regarding the establishment of an industry-funded promotion, research, 
and information program for lamb and lamb products including pelts but 
excluding wool and wool products. In response to an invitation 
published in the Federal Register to submit proposals for a Lamb 
Promotion, Research, and Information Order (Order), the AMS received an 
entire industry proposal as well as two other partial proposals. With 
modifications, the full industry proposal and two partial proposals are 
set forth below for public comment. All comments will be considered 
before we issue a final rule establishing an Order.
    Under the proposed program lamb producers, seedstock producers, 
feeders, and exporters would pay an assessment of one-half cent ($.005) 
per pound when live lambs are sold. The first handler, primarily 
packers, would pay an additional 30 cents per head of lambs purchased 
by the first handler for slaughter. The first handler would remit the 
total amount of assessment due to the proposed Lamb Promotion, 
Research, and Information Board (Board). The proposed program would be 
implemented under the Commodity Promotion, Research, and Information 
Act of 1996 and would apply to all sales of sheep and lambs.

DATES: Comments must be received by November 20, 2001.

ADDRESSES: Send a copy of your comments to Ralph Tapp, Chief; Marketing 
Programs Branch, Room 2627-S; Livestock and Seed Program, AMS, USDA; 
STOP 0251; 1400 Independence Avenue, SW.; Washington, DC 20250-0251. 
Comments will be submitted and made available for public inspection at 
the above address during regular business hours. Comments may also be 
submitted electronically to: [email protected] or by fax at 202/720-
1125. All comments should reference the docket number (LS-01-12), the 
date, and the page number of this issue of the Federal Register.
    Pursuant to the Paperwork Reduction Act (PRA), send comments 
regarding the accuracy of the burden estimate, ways to minimize the 
burden, including the use of automated collection techniques or other 
forms of information technology, or any other aspect of this collection 
of information to the above address. Comments concerning the 
information collection under the PRA also should be sent to the Desk 
Officer for Agriculture; Office of Information and Regulatory Affairs; 
Office of Management and Budget (OMB); Washington, DC 20503.

FOR FURTHER INFORMATION CONTACT: Ralph L. Tapp, Chief, Marketing 
Programs Branch; telephone 202/720-1115, fax 202/720-1125, or e-mail at 
[email protected].

SUPPLEMENTARY INFORMATION: This proposed Order is issued pursuant to 
the Commodity Promotion, Research, and Information Act of 1996, 7 
U.S.C. 7401-7425; Public Law 104-127, enacted April 4, 1996, 
hereinafter referred to as the Act.

Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. It is not intended to have retroactive effect. 
Section 524 of the Act provides that the Act shall not affect or 
preempt any other Federal or State law authorizing promotion or 
research relating to an agricultural commodity.
    Under section 519 of the Act, a person subject to the Order may 
file a petition with the Secretary stating that the Order, any 
provision of the Order, or any obligation imposed in connection with 
the Order, is not established in accordance with the law, and 
requesting a modification of the Order or an exemption from the Order. 
Any petition filed challenging the Order, any provision of the Order, 
or any obligation imposed in connection with the Order, shall be filed 
within 2 years after the effective date of the Order, provision, or 
obligation subject to challenge in the petition. The petitioner will 
have the opportunity for a hearing on the petition. Thereafter, the 
Secretary of Agriculture (Secretary) will issue a ruling on a petition. 
The Act provides that the district court of the United States for any 
district in which the petitioner resides or carries on business shall 
have the jurisdiction to review a final ruling on the petition, if the 
petitioner files a complaint for that purpose not later than 20 days 
after the date of the entry of the Secretary's final ruling.

Executive Order 12866

    This proposed rule has been determined not significant for purposes 
of Executive Order 12866 and therefore has not been reviewed by OMB.

Regulatory Flexibility Act

    In accordance with the Regulatory Flexibility Act (RFA) (5 U.S.C. 
601 et seq.), the Agency is required to examine the impact of the 
proposed rule on small entities. The purpose of the RFA is to fit 
regulatory actions to the scale of businesses subject to such actions 
so that small businesses will not be disproportionately burdened.
    The Act authorizes generic programs of promotion, research, and 
information for agricultural commodities. Congress found that it is in 
the national public interest and vital to the welfare of the 
agricultural economy of the United States to maintain and expand 
existing markets and develop new markets and uses for agricultural 
commodities through industry-funded, Government-supervised, generic 
commodity promotion programs.
    This Order is intended to develop and finance an effective and 
coordinated program of promotion, research, and information to maintain 
and expand the markets for lamb and lamb products. In response to 
invitations to submit proposals published in the Federal Register 
November 23, 1999 (64 FR 65665) and January 12, 2000 (65 FR 1825), a 
proposed Order developed by the Lamb Industry Checkoff Exploration Team 
was submitted by the American Sheep Industry Association (ASI) 
(Proponent I). Proponent I proposed a program assessing lamb producers, 
feeders, first handlers, and seedstock producers.
    While the proposed Order would impose certain recordkeeping and 
reporting requirements on persons subject to the Order, the information 
required under the proposed Order could be compiled from records 
currently maintained. First handlers and exporters would collect and 
remit the assessments on lambs to the Board. Their responsibilities 
would include accurate recordkeeping and accounting of the number of 
lambs purchased, the names of the producers, seedstock producers, and 
feeders, and the purchase date. Required reporting forms require the 
minimum information necessary to effectively carry out the requirements 
of the program, and their use is necessary to fulfill the intent of the 
Act. Such records and reports shall be retained for at least 2 years 
beyond the fiscal year of their applicability. These requirements are 
already being

[[Page 48765]]

conducted as a normal business practice. In addition, a person who is a 
market agency; i.e. commission merchant, auction market, or livestock 
market in the business of receiving lambs for sale on commission for or 
on behalf of a producer, seedstock producer, or feeder would be 
required to collect an assessment and pass the collected assessments on 
to the subsequent purchaser. There would be a minimal burden on persons 
who are market agencies. It is not anticipated that they would be 
required to submit records of their transactions involving lamb 
purchases and the required assessment collection to the Board. 
Information on such transactions could be obtained through an audit of 
the market agencies' records. Such records are already being maintained 
as a normal business practice. This would include such records or 
documents that evidence payment of an assessment pursuant to the 
requirements in Sec. 1280.225(b).
    In addition, first handlers of lambs who seek nomination to serve 
on the Board would be required to complete a nomination form that would 
be submitted to the Secretary.
    The added burden to first handlers and exporters for a lamb 
promotion, research, and information program is therefore minimal.
    There is also a minimal burden on producers, seedstock producers, 
and feeders. The burden relates to those producers, seedstock 
producers, and feeders who would seek nomination to serve on the Board, 
request a refund of assessments paid, and vote in referenda. In 
addition, the proposed Order would require producers, seedstock 
producers, and feeders to provide information to the Board or the 
Secretary when requested and to keep records to qualify for a refund. 
However, it is not anticipated that producers, seedstock producers, and 
feeders would be required to regularly submit assessment forms to the 
Board. In some instances, as part of the Board's compliance operation, 
the information would be obtained through an audit of producer's, 
seedstock producer's, or feeder's records to confirm information 
provided by a first handler or if a first handler did not file the 
required reports. When seeking nomination to serve on the Board, 
producers, seedstock producers, feeders, and first handlers would be 
required to complete one form that would be submitted to the Secretary 
by a certified organization to make nominations.
    The estimated annual cost of providing the required information to 
the Board by an estimated 71,039 respondents (51,800 producers, 15,000 
seedstock producers, 3,318 market agencies, 571 first handlers, 100 
feeders, and 15 exporters) would be $993,388 or $13.98 per respondent.
    If the program is implemented, the Department would oversee program 
operations and conduct a referendum not later than 3 years after 
assessments first begin under this part. Subsequent referenda would be 
conducted (1) not later than 7 years after assessments first begin to 
determine whether lamb producers, seedstock producers, feeders, first 
handlers, and exporters support continuation of the program, (2) at the 
request of the Board established under the Order, or (3) at the request 
of 10 percent or more of the number of persons eligible to vote in 
referenda. Additionally, the Secretary may conduct a referendum at any 
time to determine whether the continuation, suspension, or termination 
of the Order or a provision of the Order is favored by those eligible 
to vote in the referendum.
    There are approximately 51,800 producers, 15,000 seedstock 
producers, 100 feeders, 571 first handlers, and 15 exporters of lamb 
who would be subject to the program. Most of the lamb producers, 
seedstock producers, feeders, and exporters would be classified as 
small businesses under the criteria established by the Small Business 
Administration (SBA) (13 CFR 121.201). Most first handlers would not be 
classified as small businesses. SBA defines small agricultural handlers 
as those whose annual receipts are less than $5 million and small 
agricultural producers are defined as those having annual receipts of 
less than $750,000 annually.
    To compete against rising foreign imports and flat domestic demand, 
the domestic lamb industry has proposed a promotion and research 
checkoff program to improve production efficiency and promote 
consumption.
    The domestic lamb industry is composed of two groups: lamb 
producers and lamb packers and processors. Domestic lamb producers can 
be further divided into three groups: (1) breeders of purebred sheep 
and lambs used for breeding purposes, (2) commercial market producers 
who maintain sheep flocks to produce lambs for feeding and slaughter, 
and (3) commercial feed lot operators who feed lambs until ready for 
slaughter. The groups overlap and firms often perform two or more 
operations. Although many sheep production operations are located in 
the east, the majority of sheep are concentrated in the western and 
corn belt States. In the west and southwest, sheep production can be 
the most productive use of the land in some areas.
    Packers and processors are the second component of the domestic 
lamb industry. Lamb packers are companies that slaughter lambs. Most 
packers also slaughter one or more other types of livestock. This part 
of the industry includes eight federally inspected firms accounting for 
96 percent of the domestically slaughtered sheep and lambs. Processors, 
along with some packers, break lamb carcasses in to different cuts. 
There are less than 10 major processing firms and, like the packers, 
only a small portion of their operations are devoted to processing 
lamb.
    Domestic lamb producers have been competing with surging foreign 
lamb imports. Between 1993 and 1997, lamb imports increased by 49.3 
percent from 56.5 million pounds to 84.4 million pounds. The greatest 
increase in imports occurred during the period 1996 through 1997, when 
imports rose by 18.5 percent. Imports in 1998 were 30 percent above 
those in 1997, and imports in the first quarter of 1999 were 10 percent 
above those in the first quarter of 1998. As measured by quantity, 
imports captured 23.3 percent of the domestic market in January through 
September 1998, up from 11.2 percent in 1993. The loss of market share 
is magnified by the fact that domestic per capita lamb meat consumption 
dropped from 1.3 pounds in 1993 to 1.1 pounds in 1995 where it remained 
through 1997.
    Increasingly, imports have shifted away from frozen, unprocessed 
carcasses to value-added product categories. In 1993, fresh or chilled 
lamb meat accounted for only 20 percent of imports. By 1997, the figure 
had doubled to 40 percent. Processed lamb, particularly boneless cuts, 
have replaced lamb carcasses. Carcasses represented only 3 percent of 
1997 imports whereas bone-in and boneless boxed lamb cuts accounted for 
66.8 percent and 30.2 percent, respectively, of the carcass-equivalent 
volume of imported lamb meat. Between January 1993 and June 1998, 
prices on imported Australian and New Zealand lamb, which account for 
virtually all imported lamb, were anywhere from 9.4 percent to 70.3 
percent less expensive than domestic products.
    With the increase in lamb imports, the domestic production, packing 
and processing of lamb has dropped significantly. Domestic lamb meat 
production declined by 26 percent from 326.7 million pounds in 1993 to 
243 million pounds in 1999. Production was down 3 percent in May of 
2000

[[Page 48766]]

compared to the same period in 1999. Domestic producers share of the 
net sales value on lamb has also declined with imports representing 
30.7 percent in January through September 1998, up from 11.2 percent in 
1993. The number of domestic lamb producers has decreased from 93,280 
in 1993 to 74,710 in 1997, a 20 percent decline. With an estimated 2.2 
workers per operation, the decline in lamb producers translates into a 
drop in workers from 205,216 in 1993 to 164,362 in 1997. Federally 
inspected sheep and lamb slaughtering plants have declined from 711 to 
571. Only 9 plants can slaughter more than 100,000 sheep and lambs 
annually. One was closed in 1995 and another was closed in 1998.
    Imports have also affected prices and sales. Direct prices for 
slaughter lambs dropped by 25 percent between the first quarter of 1997 
and the first quarter of 1998. During the second quarter of 1998, 
direct prices were 17.6 percent lower than prices during the same 
period in 1997. Similarly, for the same periods, auction prices fell by 
20.5 percent and 14.9 percent, respectively. For packers, prices on 
carcasses dropped 30.8 percent between September 1997 and April 1998.
    In response to the surge in imports, domestic producers along with 
packers and processors filed a petition with the International Trade 
Commission (ITC) seeking import relief. ITC conducted an investigation 
(Investigation No. TA 201-68) and found that imports have depressed 
prices and sales of domestic lamb causing serious harm to domestic 
producers' financial conditions (ITC Publication 3176, April 1999). It 
also found that although there is evidence that U.S. consumers prefer 
domestically produced lamb, domestic producers engage in little or no 
promotion. In recommending relief, a majority of the commissioners 
stressed the need for an industry marketing program supported by 
checkoff funds to improve production and efficiency and increase 
demand.
    Because of the decline in the domestic lamb industry caused by 
imports and flat demand, domestic producers are seeking ways to reverse 
this trend. A checkoff program to promote and market domestic lamb 
products is one way this could be accomplished. A coordinated promotion 
and marketing effort would help domestic producers compete more 
effectively against imports while increasing demand for lamb. It would 
also permit domestic producers to fund projects to develop more 
effective and efficient production processes. More efficient production 
along with increased demand would lead to higher, more stable prices 
for producers, packers, and processors.
    The proposed Order would authorize a fixed assessment paid by 
producers, seedstock producers, exporters, and feeders at a rate of 
one-half cent ($.005) per pound of live lamb sold. In addition to the 
$.005 per pound assessment on live lambs, first handlers would remit to 
the Board $.30 per head on all slaughter lambs.
    At the proposed rate of assessment of one-half cent ($.005) per 
pound of live lamb sold and the additional $.30 paid by packers on 
slaughter lambs, the Board would collect approximately $3 million 
annually. It is expected that the assessment would represent less than 
1 percent of producers' average return.
    The program would be administered by a Lamb Promotion, Research, 
and Information Board appointed by the Secretary from industry 
nominations. The Secretary would certify industry organizations that 
would nominate producers, seedstock producers, feeders, and first-
handlers to serve as members on the Board. The Board would recommend 
the assessment rate, programs and projects, budgets, and any rules and 
regulations that might be necessary for the administration of the 
program.
    The Board would consist of 12 members: six producer representatives 
(three from each of the two regions), three feeder representatives, two 
first handlers, and one seedstock producer. The members primarily would 
be nominated by eligible regional, State, and national organizations 
within the respective regions that are certified by the Secretary.
    Proposed recordkeeping and reporting requirements for the lamb 
promotion, research, and information program would be designed to 
ensure compliance and generate the data necessary for the effective 
conduct of the program.
    The estimated annual cost of providing information to the Board by 
an estimated 71,039 respondents (51,800 producers, 15,000 seedstock 
producers, 3,318 market agencies, 571 first handlers, 100 feeders, and 
15 exporters) would be $993,388 or $13.98 per respondent.
    With regard to alternatives to this proposed rule, the Act itself 
provides authority to tailor a program according to the individual 
needs of an industry. Section 514 of the Act provides for orders 
applicable to producers, first handlers, and other persons in the 
marketing chain as appropriate. Provision is made for permissive terms 
in an order in Sec. 516 of the Act and authorizes an Order to provide 
for coverage of research, promotion, and information activities to 
expand, improve, or make more efficient the marketing or use of an 
agricultural commodity in both domestic and foreign markets; provision 
for assessing imports; provision for reserve funds; and provision for 
credits for generic and branded activities. In addition, Sec. 518 of 
the Act provides for a referendum to ascertain approval of an Order to 
be conducted either prior to its going into effect or within 3 years 
after assessments first begin under the Order. An Order also may 
provide for its approval in a referendum to be based upon (1) a 
majority of those persons voting; (2) persons voting for approval who 
represent a majority of the volume of the agricultural commodity; or 
(3) a majority of those persons voting for approval who also represent 
a majority of the volume of the agricultural commodity. Section 515 of 
the Act provides for establishment of a board from among producers, 
first handlers, feeders, and others in the marketing chain as 
appropriated.
    This proposal includes provisions for domestic expansion and 
improvement, reserve funds, and a delayed referendum. Approval would be 
based upon the majority of those persons voting for approval who also 
represent a majority of the volume of lambs produced, slaughtered, or 
exported during the representative period established by the Secretary.
    We have not identified any relevant Federal rules that are 
currently in effect that duplicate, overlap, or conflict with this 
rule. While we have performed this Initial Regulatory Flexibility 
Analysis regarding the impact of this proposed Order on small entities, 
in order to obtain all the data necessary for a comprehensive analysis, 
we invite comments concerning potential effects of the proposed Order. 
In particular, we are seeking information on the number of first 
handlers, producers, seedstock producers, feeders, and exporters that 
would be covered by the program. In addition, we are interested in more 
information on the number and kind of small entities that may incur 
benefits or costs from implementation of the proposed Order and 
information on expected benefits or cost.

Paperwork Reduction Act

    In accordance with OMB regulation (5 CFR part 1320) that implements 
the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the 
information collection and recordkeeping requirements that may be 
imposed by this Order have been submitted to OMB for approval.

[[Page 48767]]

    Title: Lamb Promotion, Research and Information Order.
    OMB Number for Background Form (Number 1 Below): 0505-0001.
    Expiration Date of Approval: July 31, 2002.
    OMB Number for Other Information Collections: New collection.
    Expiration Date of Approval: 3 years from date of approval.
    Type of Request: Approval of new information collection.
    Abstract: The information collection requirements in the request 
are essential to carry out the intent of the Act.
    Under the proposed program, first handlers and exporters would be 
required to collect assessments from producers and submit the required 
reports and remit assessments to the Board. Persons who are market 
agencies would be required to collect an assessment and pass the 
collected assessments on to the subsequent purchaser. It is not 
anticipated that they would be required to submit records of their 
transactions involving lamb purchases and the required assessment 
collection to the Board. While the proposed Order would impose certain 
recordkeeping requirements on persons subject to the Order, information 
required under the proposed Order could be compiled from records 
currently maintained. Such records would be retained for at least 2 
years beyond the fiscal year of their applicability. The estimated 
annual cost of providing the information to the Board by an estimated 
71,039 respondents (51,800 producers, 15,000 seedstock producers, 3,318 
market agencies, 571 first handlers, 100 feeders, and 15 exporters) 
would be $993,388 or $13.98 per respondent. Each first handler and 
exporter responsible for the collection of assessments and remittance 
of the assessments to the Board, would do so by the 15th day of the 
month following the month in which lambs were purchased for slaughter, 
exported, or lambs or lamb products were marketed directly to a 
consumer. It is anticipated that the bulk of assessments would be 
submitted to the Board by first handlers who purchased lambs for 
slaughter. A person such as a producer or feeder is considered a first 
handler when that person markets lamb or lamb products of their own 
production directly to a consumer.
    The proposed Order's provisions have been carefully reviewed, and 
every effort has been made to minimize any unnecessary recordkeeping 
costs or requirements.
    The proposed forms would require the minimum information necessary 
to effectively carry out the requirements of the program, and their use 
is necessary to fulfill the intent of the Act. Such information can be 
supplied without data processing equipment or outside technical 
expertise. In addition, there are no additional training requirements 
for individuals filling out reports and remitting assessments to the 
Board. The forms would be simple, easy to understand, and place as 
small a burden as possible on the person required to file the 
information.
    The timing and frequency of collecting information are intended to 
meet the needs of the industry while minimizing the amount of work 
necessary to fill out the required reports. In addition, the 
information to be included on these forms is not available from other 
sources because such information relates specifically to individual 
producers and first handlers who are subject to the provisions of the 
Act.
    Therefore, there is no practical method for collecting the required 
information without the use of these forms.
    Information collection requirements that are included in this 
proposal include:
    (1) Background Information Form.
    Estimate of Burden: Public reporting for this collection of 
information is estimated to average 0.5 hours per response for each 
producer, feeder, seedstock producer, and first handler nominated to 
serve on the Board.
    Respondents: Producers, seedstock producers, feeders, and first 
handlers.
    Estimated number of Respondents: 8 (24 for initial nominations to 
the Board, 8 in the second year, and 8 in the third year).
    Estimated number of Responses per Respondent: 1 every 3 years.
    Estimated Total Annual Burden on Respondents: 12 hours for the 
initial nominations to the Board and 4 hours annually thereafter.
    Total Cost: $240 initial, $80 thereafter.

    (2) Requirement To Maintain Records Sufficient to Verify Reports 
and Requests for Refunds Submitted Under the Order.
    Estimate of Burden: Public recordkeeping burden for keeping this 
information is estimated to average 0.6 hours per record keeper 
maintaining such records.
    Recordkeepers: Producers, seedstock producers, feeders, market 
agencies, first handlers, and exporters.
    Estimated number of Recordkeepers: 71,039.
    Estimated Total Recordkeeping Hours: 42,623.4 hours.
    Total Cost: $852,468.

    (3) Monthly Remittance Report Form.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 1 hour per first handler and 
exporter.
    Respondents: First handlers and exporters.
    Estimated Number of Respondents: 586.
    Estimated Number of Responses per Respondent: 12.
    Estimated Total Annual Burden on Respondents: 7,032 hours.
    Total Cost: $140,640.

    (4) Application for Refund Form.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 0.25 hours per response.
    Respondents: Producers, seedstock producers, first handlers, 
feeders, and exporters.
    Estimated number of Respondents: 67,486.
    Estimated Total Annual Burden: 16,871.5 hours.
    Total Cost: $337,430.
    (5) Application for Certification of Organization Form.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 0.5 hours per response.
    Respondents: National, State, or regional lamb associations or 
organizations.
    Estimated number of Respondents: 20.
    Estimated number of Responses per Respondent: 1.
    Estimated Total Annual Burden: 10 hours.
    Total Cost: $200.

    (6) Nomination for Appointment to the Lamb Board Form.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 0.5 hours per response.
    Respondents: National, State, or regional lamb associations and 
organizations.
    Estimated number of Respondents: 20.
    Estimated number of Responses per Respondent: 1 per year.
    Estimated Total Annual Burden: 10 hours.
    Total Cost: $200.

    (7) Statement of Certification (Lamb Promotion, Research, and 
Information Order) (LS-83).
    Estimate of Burden: The Deputy Administrator or designee of AMS' 
Livestock and Seed Program will sign this form certifying eligible 
organizations to make nominations to

[[Page 48768]]

the Board. Because only AMS employees will complete this form, the 
estimated average reporting burden would not apply to the public.
    Comments are invited on: (a) Whether the proposed collection of 
information is necessary for the proper performance of functions of the 
Order and the Department's oversight of the program, including whether 
the information will have practical utility; (b) the accuracy of 
Department's estimate of the burden of the proposed collection of 
information, including the validity of the methodology and assumption 
used; (c) ways to enhance the quality, utility, and clarity of the 
information to be collected; and (d) ways to minimize the burden of the 
collection of information on those who are to respond, including the 
use of appropriate automated, electronic, mechanical, or other 
technological collection techniques or other forms of information 
technology. Comments concerning the information collection requirements 
contained in this action should reference the Docket Number LS-01-12, 
together with the date and page number of this issue of the Federal 
Register. Comments should be sent to Ralph L. Tapp, Chief; Marketing 
Programs Branch, Room 2627-S; Livestock and Seed Program, AMS, USDA; 
STOP 0251, 1400 Independence Avenue, SW., Washington, DC 20250-0251; by 
fax at 202/720-1125, or by e-mail at [email protected]. Comments 
should also be sent to the Desk Officer for Agriculture, Office of 
Information and Regulatory Affairs, OMB, Washington, DC 20503. All 
comments received will be available for public inspection during 
regular business hours, 8 a.m. to 4:30 p.m. Eastern Time, Monday 
through Friday, at the same address.
    OMB is required to make a decision concerning the collection of 
information contained in this rule between 30 days and 60 days after 
publication. Therefore, a comment to OMB is best assured of being 
considered if OMB receives it within 30 days after publication.

Background

    The Act authorizes the Secretary to establish agricultural 
commodity research and promotion orders. The Act provides for the 
submission of proposals for a lamb promotion, research, and information 
order by industry organizations or any other interested persons 
affected by the Act. Section 516 of the Act provides permissive terms 
for orders, and other sections provide for alternatives. For example, 
Sec. 514 of the Act provides for orders applicable to (1) Producers, 
(2) first handlers, (3) feeders and others in the marketing chain as 
appropriate. Section 516 authorizes an order to provide for exemption 
of de minimis quantities of an agricultural commodity; different 
payment and reporting schedules; coverage of research, promotion, and 
information activities to expand, improve, or make more efficient the 
marketing or use of an agricultural commodity in both domestic and 
foreign markets; provision for reserve funds; provision for credits for 
generic and branded activities; and assessment of imports. In addition, 
Sec. 518 of the Act provides for referenda to ascertain approval of an 
order to be conducted either prior to its going into effect or within 3 
years after assessments first begin under the order. The Act authorizes 
three different voting methods for approving an order in a referendum. 
Section 515 provides for establishment of a board from among producers, 
seedstock producers, first handlers, feeders, and others in the 
marketing chain as appropriate.
    This proposed Order includes provisions for both domestic and 
foreign market expansion and improvement, reserve funds, and a delayed 
referendum to be conducted within 3 years after assessments begin. The 
Order would be continued if approved the referendum by a majority of 
those persons voting who also represent a majority of the volume of 
lambs represented in the referendum.
    Proponent I has requested the establishment of a national Lamb 
Promotion, Research, and Information Order pursuant to the Act. The Act 
authorizes the establishment and operation of generic promotion 
programs that may include a combination of promotion, research, and 
information activities funded by mandatory assessments. These programs 
are designed to maintain and expand markets and uses for agricultural 
commodities. This proposal would provide for the development and 
financing of an effective and coordinated program of research, 
promotion, and information for lamb and lamb products. The purpose of 
the program would be to strengthen the position of lamb and lamb 
products in domestic and foreign markets, and to develop, maintain, and 
expand markets for lamb and lamb products. The program would become 
effective following issuance of a final order with continuance subject 
to its approval in a delayed referendum conducted by the Department. 
Section 518 of the Act provides for the Department (1) to conduct a 
required referendum, preceding a proposed Order's effective date, among 
persons who would be subject to assessments under the program or (2) to 
implement a proposed Order, pending the conduct of a referendum, among 
persons subject to assessments, within 3 years after assessments first 
begin. In accordance with Sec. 518(e) of the Act, an Order may provide 
for its approval in a referendum based upon (1) a majority of those 
persons voting; (2) persons voting for approval who represent a 
majority of the volume of the agricultural commodity; or (3) a majority 
of those persons voting for approval who also represent a majority of 
the volume of the agricultural commodity. Proponent I has recommended 
that a delayed referendum be conducted using the third approval option. 
Thus, the Secretary would conduct a referendum within 3 years after 
assessments first begin, in which approval of the Order would be 
determined by a majority of persons voting for approval who also 
represent a majority of the volume of lamb production represented in 
the referendum. The Act also requires the Secretary to conduct 
subsequent referenda: (1) Not later than 7 years after assessments 
first begin under the Order; (2) at the request of the Board 
established under the Order; or (3) at the request of 10 percent or 
more of the number of persons eligible to vote. In addition to these 
criteria, the Act provides that the Secretary may conduct a referendum 
at any time to determine whether the continuation, suspension, or 
termination of the Order or a provision of the Order is favored by 
persons eligible to vote.
    The proposed Order also contains provisions that would allow 
persons to request a refund of assessments paid during the period 
beginning on the effective date of the Order and ending on the date the 
Secretary announces the results of the required referendum. The refunds 
would be paid from an escrow account established by the Board as 
provided for in Sec. 1280.214(c). Persons who filed a request for 
refunds during the specified time period would be entitled to a refund 
of assessments paid from the effective date of the Order until the 
Secretary announces the results of the referendum. If the amount in the 
escrow fund is less than the total refunds demanded, persons entitled 
to a refund would receive a pro rata share.
    A national research and promotion program for lamb would help the 
industry to address the many market problems it currently faces. 
Domestic lamb producers have been competing with surging foreign lamb 
imports, competition from other meat and poultry, and changing consumer 
meat buying preferences. Between 1993 and

[[Page 48769]]

1997, lamb imports increased by 49.3 percent from 56.5 million pounds 
to 84.4 million pounds. Imports in 1996 through 1997, which had the 
largest increase, rose by 18.5 percent. Imports in 1998 were 30 percent 
above those in 1997, and imports in the first quarter of 1999 were 10 
percent above those in the first quarter of 1998. As measured by 
quantity, imports captured 23.3 percent of the domestic market in 
January through September 1998, up from 11.2 percent in 1993. The loss 
of market share is magnified by the fact that domestic per capita lamb 
meat consumption dropped from 1.3 pounds in 1993 to 1.1 pounds in 1995 
where it remained through 1997.
    Increased funding would allow the industry to expand its current 
consumer, food service, and food manufacturer promotion efforts. Also 
it would allow for increased participation in the Department's Market 
Access Program and the opportunity to develop stronger markets 
overseas. In addition, such a program would create the opportunity to 
explore tie-in promotional activities with nationally branded food 
products that would help the lamb industry gain advertising and in-
store exposure.
    The assessment levied on domestically-produced lamb would be used 
to pay for promotion, research, and information as well as 
administration, maintenance, and functioning of the Board. Expenses 
incurred by the Secretary in implementing and administering the Order, 
including referenda costs, also would be paid from assessments.
    Sections 516(e)(1) and (2) of the Act states that the Secretary may 
provide credits of assessments for generic and branded activities. The 
proponents have elected not to propose credits for generic or branded 
activities. Therefore, the terms generic activities and branded 
activities are not defined in the Order.
    First handlers and exporters would be responsible for the 
collection of assessments and remittance of assessments to the Board. 
First handlers and exporters would be required to maintain records of 
lambs purchased from each producer, seedstock producer, and feeder, by 
the first handler or exporter, including lambs produced or fed by the 
first handler or exporter. First handlers and exporters would be 
required to file reports regarding the collection, payment, and 
remittance of the assessments. In addition, a person who is a market 
agency; i.e. commission merchant, auction market, or livestock market 
in the business of receiving lambs for sale on commission for or on 
behalf of a producer, seedstock producer, or feeder would be required 
to collect the assessment and pass the collected assessments on to the 
subsequent purchaser.
    All information obtained from persons subject to this Order as a 
result of recordkeeping and reporting requirements would be kept 
confidential by all officers, employees, and agents of the Department 
and of the Board. This information may be disclosed only if the 
Secretary considers the information relevant, and the information is 
revealed in a judicial proceeding or administrative hearing brought at 
the direction or on the request of the Secretary or to which the 
Secretary or any officer of the Department is a party. Other exceptions 
for disclosure of confidential information would include the issuance 
of general statements based on reports or on information relating to a 
number of persons subject to an order if the statements do not identify 
the information furnished by any person, or the publication, by 
direction of the Secretary, of the name of any person violating the 
Order, and a statement of the particular provisions of the Order 
violated by the person.
    The Act requires that a proposed Order provide for the 
establishment of a board to administer the program under Department 
supervision. Proponent I's proposal provided for a 12-member Board to 
ensure fair and equitable representation of the lamb industry on the 
Board. The Act requires membership on the Board to reflect the 
geographical distribution of the production of lamb and lamb products. 
To that end, the proposed Order would divide the United States into two 
geographic regions with three lamb producers on the Board from each 
region. There would be three lamb feeder members on the Board. One 
feeder would feed less than 5,000 lambs annually and two would feed 
more than 5,000 lambs annually. Two first handlers and one seedstock 
producer would be appointed as members of the Board. Members would 
serve for 3-year terms, except that the members appointed to the 
initial Board would serve proportionately for 1, 2, and 3 years. No 
member would serve more than two consecutive 3-year terms.
    Upon implementation of the Order and pursuant to the Act, the Board 
would at least once in each 5-year period, but not more frequently than 
once in each 3-year period, review the geographical distribution of 
lamb in the United States and make a recommendation to the Secretary 
after considering the results of its review and other information it 
deems relevant regarding the reapportionment of the Board.
    In response to the invitation to submit proposals, Proponent I 
submitted a proposed Order. In addition, two partial proposals were 
submitted--one partial proposal from the National Lamb Feeders 
Association and one from the U.S. Seedstock Alliance.
    Proponent I submitted a comprehensive Order. It contains sections 
embodying the provisions discussed above as well as provisions required 
by the statute and administrative provisions similar to those found 
appropriate or necessary under other promotion or marketing orders.

Proposal I

    The proposed Order submitted by the American Sheep Industry 
Association is summarized as follows: Sections 1280.101 through 
1280.129 of the proposed Order define certain terms such as lamb, 
producer and first handler, which are used in the proposed Order.
    Sections 1280.201 through 1280.211 include provisions relating to 
the Board. These provisions cover establishment and membership, 
nominations, nominee's agreement to serve, appointment, vacancies, 
certification of organizations, term of office, compensation, removal, 
prohibited activities, and powers and duties of the Board, which is the 
governing body authorized to administer the Order through the 
implementation of programs, plans, projects, budgets, and contracts to 
promote and disseminate information about lamb and lamb products, 
subject to oversight of the Secretary.
    Sections 1280.212 through 1280.216 cover budget and expenses; 
require the Board to submit a budget for the fiscal year covering 
anticipated expenses and disbursements, investment of funds, escrow 
accounts, refunds, and procedures for obtaining a refund.
    Sections 1280.217 through 1280.221 cover lamb purchases and 
authorize the collection of assessments; specify limitations on the use 
of funds; and specify who pays the assessment and how.
    Sections 1280.222 through 1280.227 cover maintaining books and 
records, accounting for the receipt and disbursement of all funds; 
reports from each first handler to the Board including the number of 
lambs purchased and amount remitted, and use and confidentiality of 
information. Also, every 5 years, the Board funds an independent 
evaluation of the program.

[[Page 48770]]

    Sections 1280.228 through 1280.236 discuss the rights of the 
Secretary; personal liability; separability; patents, copyrights, 
inventions, product formulations, and publications; amendments; 
referenda, which would be delayed (required referenda); suspension or 
termination; proceedings after termination; and effects of termination 
or amendment.
    The Department has modified the proposal in order to (1) make it 
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 proper administration of the Order by the Department.
    A definition of lamb products was added for clarity and consistency 
with other similar programs. Definitions for Order, Suspend and 
Terminate were added to maintain consistency with the Act. A definition 
of conflict of interest was added for clarity. The definition for 
collecting person was deleted as it was not necessary given the 
specificity in other provisions of the order. In the definition for 
``Promotion'' some minor adjustments were made for clarity.
    Section 1280.201 Establishment and membership, has an additional 
subsection (c), ``Adjustment of membership,'' which provides for 
reapportionment of the Board.
    Section 1280.202 ``Nominations'' was edited to mirror the language 
in the Act, for consistency with other national research and promotion 
programs, and for clarity.
    Section 1280.205, ``Initially established Board,'' from the 
proposed Order was deleted and combined with Sec. 1280.202 
``Nominations'' in the modified proposed Order.
    Section 1280.208 ``Term of office,'' from the submitted proposed 
Order was modified to conform to language in the Act.
    Section 1280.210 ``Powers and duties of the board'' was edited, 
organized, and modified to be more consistent with other national 
research promotion programs and the Act.
    In the table of contents and the regulatory text, ``Assessments'' 
was included as the undesignated center heading for Sec. 1280.217 
through Sec. 1280.221. ``Expenses'' was included as the undesignated 
center heading for Sec. 1280.212 through Sec. 1280.216.
    Section 1280.215, from the proposed Order, ``Use of assessments'' 
was deleted because it is covered in ``Powers and duties of the 
Board.''
    Section 1280.216 ``Refund Escrow Accounts'' from the proposed Order 
was divided into two sections to enhance and clarify the escrow 
requirements in Sec. 1280.214 ``Refund escrow accounts'' and the refund 
requirements in Sec. 1280.215 ``Refunds.'' The refund requirements were 
adjusted to provide consistency in the payment of refunds whether the 
Order is approved or defeated in the referendum.
    Section 1280.217 ``Lamb purchases'' was revised by adding paragraph 
(b) to exclude from assessment those persons who facilitate the 
transfer of ownership of lambs from the seller to a third party.
    Section 1280.211 ``Prohibited activities'' was added to be 
consistent with the Act.
    Section 1280.212 ``Budget and expenses'' was substituted for the 
separate sections ``Budgets'' and ``Expenses'' from the proposed Order 
for clarity and consistency with the Act.
    Section 1280.222 ``Books and records of the board'' was added prior 
to ``Reports'' to be more consistent with the Act.
    Section 1280.227 ``Confidentiality,'' was revised to be more 
consistent with other national research and promotion programs.

Proposal II

    The National Lamb Feeders Association (NLFA) proposed definitions 
for feeder, producer, and seedstock producer. We have accepted this 
proposal for comment and identified it in Sec. 1280.107, Sec. 1280.116, 
and Sec. 1280.122 in the regulatory section under Proposal II.
    NLFA proposed that further explanation of certified organizations 
be incorporated to bring clarity to the process through which the 
Secretary certifies various organizations as qualified to make 
nominations to the Lamb Board. We have not accepted this proposal 
because Proposal I adequately addresses the process through which the 
Secretary would certify such organizations.
    NLFA proposed that eligibility to vote in a referendum include 
proof of participation via an assessment deduction within the prior 12 
months. We have not accepted this proposal because the Act gives the 
Secretary flexibility in determining the length of the representative 
period and eligibility to vote applies to the production or handling of 
the agricultural commodity covered by the order or the importation of 
the agricultural commodity.
    NLFA proposed that under the establishment and membership of the 
Board, the Secretary be authorized to appoint only one feeder 
representative who annually feeds 5,000 or more head of lambs and to 
appoint two feeders who annually feed less than 5,000 head of lamb. We 
have accepted this proposal for comment and identified it in 
Sec. 1280.201(a)(2)(i) and (ii) in the regulatory section under 
Proposal II.
    NLFA proposed language that the collecting person would report the 
name of any person refusing to allow assessments to be collected and 
that the collecting person shall not be liable for the assessment. We 
have not accepted this proposal because Sec. 517(a)(1) of the Act 
requires the first handler to remit assessments and this section does 
not provide for relieving first handlers of their responsibility to pay 
assessments.
    NLFA proposed that to ensure adequate diversity and breadth of 
representation, the Secretary should not appoint more than four members 
nominated by a single organization. We did not accept this proposal 
because this could unduly restrict the Secretary from making 
appointments of Board members.
    NLFA proposed that a subsequent referenda be held no later than 7 
years after assessment begin and every 5th year thereafter. We have not 
accepted this proposal because the Act contains sufficient provisions 
for additional referenda. After the initial referendum, the Act allows 
for subsequent referenda at the request of the Board, at the request of 
10 percent or more of the number of persons eligible to vote, or as the 
Secretary may direct.

Proposal III

    The U.S. Sheep Seedstock Alliance proposed that the Order be 
approved in a referendum by a majority of those persons voting. We have 
accepted this proposal for comment and identified it in 
Sec. 1280.233(a)(2) in the regulatory section under Proposal III.
    The Department has also received letters from other interested 
parties. The Department did not consider these letters to be proposals 
because they primarily addressed information relating to sections 
already established under the Act. Copies of these letters, the three 
proposals, and the comments received in response to this proposed 
Order, will be available for public inspection.
    On June 25, 2001, the United States Supreme Court issued a decision 
in the case of United States v. United Foods, Inc. (United Foods), that 
held that the imposition of mandatory assessments to fund generic 
mushroom advertising violated the First Amendment insofar as it 
required the mushroom industry to subsidize commercial speech with 
which they disagreed. The Court expressly declined to reach the 
question whether the generic advertising

[[Page 48771]]

conducted under the mushroom program constitutes government speech.
    The Department will analyze all written views received to date as 
well as written comments on the three proposals published below before 
issuing a final Order.

List of Subjects in 7 CFR Part 1280

    Administrative practice and procedure, Advertising, Lamb and Lamb 
product, Consumer information, Marketing agreements, Reporting and 
recordkeeping requirements.

    The full proposal and two partial proposals set forth below have 
not received the approval of the Secretary.
    For the reasons set forth in the preamble, it is proposed that 
Title 7 of Chapter XI of the Code of Federal Regulations be amended as 
follows:

PART 1280--LAMB PROMOTION, RESEARCH, AND INFORMATION ORDER

Proposal I

Subpart A--Lamb Promotion, Research, and Information Order

Definitions

Sec.
1280.101   Act.
1280.102   Board.
1280.103   Certified organization.
1280.104   Conflict of interest.
1280.105   Department.
1280.106   Exporter.
1280.107   Feeder.
1280.108   First handler.
1280.109   Fiscal period and marketing year.
1280.110   Information.
1280.111   Lamb.
1280.112   Lamb products.
1280.113   Order.
1280.114   Part and subpart.
1280.115   Person.
1280.116   Producer.
1280.117   Producer information.
1280.118   Promotion.
1280.119   Referendum.
1280.120   Research.
1280.121   Secretary.
1280.122   Seedstock producer.
1280.123   State.
1280.124   Suspend.
1280.125   Terminate.
1280.126   Unit.
1280.127   United States.
1280.128   Wool.
1280.129   Wool products.

Lamb Promotion, Research, and Information Board

1280.201   Establishment and membership.
1280.202   Nominations.
1280.203   Nominee's agreement to serve.
1280.204   Appointment.
1280.205   Vacancies.
1280.206   Certification of organizations.
1280.207   Term of office.
1280.208   Compensation.
1280.209   Removal.
1280.210   Powers and duties of the board.
1280.211   Prohibited activities.

Expenses

1280.212   Budget and expenses.
1280.213   Investment of funds.
1280.214   Refund escrow accounts.
1280.215   Refunds.
1280.216   Procedures for obtaining a refund.

Assessments

1280.217   Lamb purchases.
1280.218   Exporter.
1280.219   First handlers.
1280.220   Collections.
1280.221   Prohibition on use of funds.

Reports, Books, and Records

1280.222   Books and records of board.
1280.223   Reports.
1280.224   Periodic evaluation.
1280.225   Books and records of persons.
1280.226   Use of information.
1280.227   Confidentiality.

Miscellaneous

1280.228   Right of the Secretary.
1280.229   Personal liability.
1280.230   Separability.
1280.231   Patents, copyrights, inventions, product formulations, 
and publications.
1280.232   Amendments.
1280.233   Referenda.
1280.234   Suspension or termination.
1280.235   Proceedings after termination.
1280.236   Effect of termination or amendment.
1280.237   Rules and regulations.
1280.238   OMB Control numbers.

Subpart B--[RESERVED]

Subpart C--[RESERVED]

Subpart D--[RESERVED]

Subpart E--[RESERVED]

    Authority: 7 U.S.C. 7401-7425.

Subpart A--Lamb Promotion, Research, and Information Order

Definitions


Sec. 1280.101  Act.

    Act means the Commodity Promotion, Research, and Information Act of 
1996 (7 U.S.C. 7401-7425; Pub. L. 104-127; 110 Stat. 1029, as amended), 
or any amendments thereto.


Sec. 1280.102  Board.

    Board means the Lamb Promotion, Research, and Information Board 
established pursuant to Sec. 1280.201.


Sec. 1280.103  Certified organization.

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


Sec. 1280.104  Conflict of Interest.

    The term conflict of interest means a situation in which a member 
or employee of a board has a direct or indirect financial interest in a 
person that performs a service for, or enters into a contract with, a 
board for anything of economic value.


Sec. 1280.105  Department.

    Department means the United States Department of Agriculture.


Sec. 1280.106  Exporter.

    The term exporter means any person who exports domestic live lambs 
from the United States.


Sec. 1280.107  Feeder.

    The term feeder means any person who acquires ownership of lambs 
and feeds such lambs in the U.S. until they reach slaughter weight.


Sec. 1280.108  First handler.

    First handler means the packer or other person who buys or takes 
possession of lambs from a producer or feeder for slaughter, including 
custom slaughter. If a producer or feeder markets lamb products 
directly to consumers, the producer or feeder shall be considered to be 
a first handler with respect to such lambs produced by the producer or 
feeder.


Sec. 1280.109  Fiscal period and marketing year.

    Fiscal period and marketing year means the 12-month period ending 
on December 31 or such other consecutive 12-month period as shall be 
recommended by the Board and approved by the Secretary.


Sec. 1280.110  Information.

    Information means information and programs that are designed to 
increase efficiency in producing lambs, to maintain and expand existing 
markets, and to develop new markets, marketing strategies, increased 
market efficiency, and activities that are designed to enhance the 
image of lamb and lamb products on a national or international basis. 
These include: (a) Consumer information, which means any action taken 
to provide information to, and broaden the understanding of, the 
general public regarding the consumption, use, and nutritional 
attributes of lamb and lamb products; and (b) Industry information, 
which means information and programs that will lead to the development 
of new markets, new marketing strategies, or increased efficiency for 
the lamb industry, and activities to enhance the image of lamb.

[[Page 48772]]

Sec. 1280.111  Lamb.

    For purposes of this part, the term lamb means ovine animals of any 
age, including ewes and rams.


Sec. 1280.112  Lamb products.

    The term lamb products means products produced in whole or in part 
from lamb, including pelts, and excluding wool and wool products.


Sec. 1280.113  Order.

    Order means an order issued by the Secretary under Sec. 514 of the 
Act that provides for a program of generic promotion, research, and 
information regarding agricultural commodities authorized under the 
Act.


Sec. 1280.114  Part and subpart.

    Part means the Lamb Promotion, Research, and Information Order and 
all rules and regulations issued pursuant to the Act and the Order. The 
Order shall be a subpart of the Part.


Sec. 1280.115  Person.

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


Sec. 1280.116  Producer.

    The term producer means any person who owns and produces lambs in 
the United States for sale.


Sec. 1280.117  Producer information.

    The term producer information means activities designed to provide 
producers, feeders, and first handlers with information relating to 
production or marketing efficiencies, development of new markets, 
program activities, or other information that would facilitate an 
increase in the demand for lambs or lamb products.


Sec. 1280.118  Promotion.

    Promotion means any action, including paid advertising and the 
dissemination of culinary and nutritional information and public 
relations with emphasis on new marketing strategies, to present a 
favorable image of U.S. lamb products to the public for the purpose of 
improving the competitive position of U.S. lamb and lamb products in 
the marketplace and to stimulate sales.


Sec. 1280.119  Referendum.

    Referendum means a referendum to be conducted by the Secretary 
pursuant to the Act whereby producers, feeders, first handlers, and 
exporters shall be given the opportunity to vote to determine whether 
the continuance of this subpart is favored by a majority of eligible 
persons voting and a majority of volume voting.


Sec. 1280.120  Research.

    Research means any type of test, study, or analysis designed to 
advance the image, desirability, use, marketability, production, 
product development, or quality of lamb or lamb products.


Sec. 1280.121  Secretary.

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


Sec. 1280.122  Seedstock producer.

    Seedstock producer means any lamb producer in the U.S. who engages 
in the production and sale of breeding replacement lambs or semen or 
embryos.


Sec. 1280.123  State.

    The term State means each of the 50 States and the District of 
Columbia.


Sec. 1280.124  Suspend.

    Suspend means to issue a rule under Sec. 553 of title 5, U.S.C., to 
temporarily prevent the operation of an order or part thereof during a 
particular period of time specified in the rule.


Sec. 1280.125  Terminate.

    Terminate means to issue a rule under Sec. 553 of title 5, U.S.C., 
to cancel permanently the operation of an order or part thereof 
beginning on a date certain specified in the rule.


Sec. 1280.126  Unit.

    The term unit means each State, group of States or class 
designation (producers, feeders, first handlers, or seedstock 
producers) which is represented on the Board.


Sec. 1280.127  United States.

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


Sec. 1280.128  Wool.

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


Sec. 1280.129  Wool Products.

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

Lamb Promotion, Research, and Information Board


Sec. 1280.201  Establishment and membership.

    (a) There is hereby established a Lamb Promotion, Research and 
Information Board of 12 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:
    (1) Producers. For purposes of nominating and appointing producers 
to the Board, the United States as defined within this subpart shall be 
divided into two regions. Region 1 shall include the geographic area 
east of the Mississippi River, which includes the following States: 
Maine, New Hampshire, Vermont, New York, Massachusetts, Connecticut, 
Pennsylvania, Rhode Island, New Jersey, Delaware, Maryland, District of 
Columbia, Virginia, West Virginia, North Carolina, South Carolina, 
Georgia, Florida, Alabama, Mississippi, Tennessee, Kentucky, Ohio, 
Indiana, Michigan, Illinois and Wisconsin. Region 2 shall consist of 
all States west of the Mississippi River, which includes the following 
states: Minnesota, Iowa, Missouri, Arkansas, Louisiana, Texas, 
Oklahoma, Kansas, Nebraska, North Dakota, South Dakota, Montana, 
Wyoming, Colorado, New Mexico, Arizona, Utah, Idaho, Washington, 
Oregon, Nevada, California, Hawaii and Alaska. With regard to 
appointments to the Board, the Secretary shall ensure that the 
representation for producers on the Board shall meet the following 
criteria:
    (i) Two producers appointed to the Board shall own annually 100 or 
less head of lambs;
    (ii) One producer shall own annually between 101 and 500 head of 
lambs; and
    (iii) Three producers shall own more than 500 head of lambs 
annually.
    (iv) Each region must be represented by three producers.
    (2) Feeders. There shall be three feeder representatives on the 
Board appointed by the Secretary from nominations submitted pursuant to 
this subpart. The Secretary in appointing feeder representatives to the 
Board shall ensure that such representatives meet the following 
criteria:
    (i) One of the feeders appointed to the Board shall feed less than 
5,000 head of lambs annually.
    (ii) Two of the feeders appointed to the Board shall feed 5,000 or 
more head of lambs annually.
    (iii) The Secretary shall ensure that the feeders appointed to the 
Board are not all located in one geographic region established for the 
nomination and appointment of producers pursuant to paragraph (a)(1) of 
this section.
    (3) First handlers. There shall be two first handler 
representatives appointed to the Board by the Secretary from 
nominations submitted pursuant to this subpart.

[[Page 48773]]

    (4) Seedstock producers. There shall be one seedstock producer 
appointed to the Board by the Secretary from nominations submitted 
pursuant to this subpart.
    (b) In soliciting nominations for the Board, the Secretary will 
request those nominating to identify specific categories in which 
nominees will qualify.
    (c) Adjustment of membership. At least once every 5 years, the 
Board will review the geographical distribution of the United States 
production of lambs. The review will be conducted using the National 
Agricultural Statistics Service inventory figures and the Board's 
annual assessment receipts. If warranted, the Board will recommend to 
the Secretary that the membership on the Board be adjusted to reflect 
changes in geographical distribution of domestic lamb production.


Sec. 1280.202  Nominations.

    All nominations authorized under this section shall be made in the 
following manner:
    (a) Nominations shall be obtained by the Secretary from eligible 
organizations certified under Sec. 1280.206. Certified eligible 
organizations representing producers, feeders, first handlers, or 
seedstock producers shall submit to the Secretary at least two nominees 
for each seat on the Board. If the Secretary determines that a unit is 
not represented by a certified eligible organization, then the 
Secretary may solicit nominations from other organizations or other 
persons residing in the unit.
    (b) After the establishment of the initial Board, the Department 
shall announce when a vacancy does or will exist. Nomination for 
subsequent Board members shall be submitted to the Secretary not less 
than 60 days prior to the expiration of the terms of the members whose 
terms are expiring, in the manner as described in this section. In the 
case of vacancies due to reasons other than the expiration of a term of 
office, successor Board members shall be appointed pursuant to 
Sec. 1280.205.
    (c) When there is more than one certified eligible organization 
representing the unit or when the Secretary solicits nominations from 
organizations and persons residing in that unit, they may caucus and 
jointly nominate, two qualified persons for each position representing 
that 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 eligible organization may submit to the Secretary 
two nominees for each appointment to be made to represent that unit.


Sec. 1280.203  Nominee's agreement to serve.

    Any producer, feeder, first handler, or seedstock producer 
nominated to serve on the Board 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 lamb promotion entity or 
with any organization that has or is being considered for a contractual 
relationship with the Board; and
    (c) Withdraw from participation in deliberations, decision-making, 
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  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 the Secretary shall request nominations for a successor 
pursuant to Sec. 1280.202 and such successor shall be appointed 
pursuant to Sec. 1280.204.


Sec. 1280.206  Certification of organizations.

    (a) In General. The eligibility of state, regional, or national 
organizations to represent producers, seedstock producers, feeders, and 
first handlers and to participate in the making of nominations under 
this subpart shall be certified by the Secretary. The Secretary shall 
certify any organization that the Secretary determines meets the 
eligibility criteria established under paragraphs (b) and (c) 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 number of active producers, seedstock 
producers, feeders, or first handlers 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 
purpose and objectives of the Act.
    (c) Primary Considerations. The primary considerations in 
determining the eligibility of an organization under this paragraph 
shall be whether:
    (1) The membership of the organization consists primarily of 
producers, seedstock producers, feeders, or first handlers who market 
or handle a substantial quantity of lamb or lamb products; and
    (2) A primary purpose of the organization is in the production or 
marketing of lamb or lamb products.


Sec. 1280.207  Term of office.

    (a) The members of the Board shall serve for a term of 3 years, 
except that the members appointed to the initial Board shall serve 
proportionately for terms of 1-year, 2-years, and 3-years.
    (b) No member may serve more than two consecutive 3-year terms.
    (c) Each member shall continue to serve until a successor is 
appointed by the Secretary and has accepted the position.


Sec. 1280.208  Compensation.

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


Sec. 1280.209  Removal.

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


Sec. 1280.210  Powers and duties of the Board.

    The Board shall have the following powers and duties:
    (a) To administer this subpart in accordance with its terms and 
provisions;
    (b) To develop and recommend to the Secretary for approval such 
bylaws as may be necessary to administer the Order, including 
activities authorized to be carried out under the Order;

[[Page 48774]]

    (c) To meet not less than annually, organize, and select from among 
the members of the Board a Chairperson, Vice Chairperson, Secretary/
Treasurer, other officers, and committees and subcommittees, as the 
Board determines to be appropriate;
    (d) To prepare and submit for the approval of the Secretary, fiscal 
year budgets in accordance with Sec. 1280.212.
    (e) To employ persons, other than the members, as the Board 
considers necessary to assist the Board in carrying out its duties, and 
to determine the compensation and specify the duties of the persons;
    (f) To develop and submit plans and projects to the Secretary for 
the Secretary's approval, and to enter into contracts or agreements, 
which must be approved by the Secretary before becoming effective, for 
the development and carrying out of programs or projects of research, 
information (including producer information), or promotion, and the 
payment of costs thereof with funds collected pursuant to this subpart. 
Each contract or agreement shall provide that any person who enters 
into a contract or agreement with the Board shall develop and submit to 
the Board a proposed activity; keep accurate records of all of its 
transactions relating to the contract or agreement; account for funds 
received and expended in connection with the contract or agreement; 
make periodic reports to the Board of activities conducted under the 
contract or agreement; and make such other reports available as the 
Board or the Secretary considers relevant. Any contract or agreement 
shall provide that:
    (1) The contractor or agreeing party shall develop and submit to 
the Board a program, plan, or project together with a budget or budgets 
that shall show the estimated cost to be incurred for such program, 
plan, or project;
    (2) The contractor or agreeing party shall keep accurate records of 
all its transactions and make periodic reports to the Board of 
activities conducted, submit accounting for funds received and 
expended, and make such other reports as the Secretary or the Board may 
require;
    (3) The Secretary may audit the records of the contracting or 
agreeing party periodically; and,
    (4) Any subcontractor who enters into a contract with a Board 
contractor and who receives or otherwise uses funds allocated by the 
Board shall be subject to the same provisions as the contractor.
    (g) To receive, investigate, and report to the Secretary complaints 
of violations of the Order;
    (h) To recommend to the Secretary such amendments to the Order as 
the Board considers appropriate;
    (i) To maintain such records and books and prepare and submit such 
reports and records from time to time to the Secretary as the Secretary 
may prescribe; to make appropriate accounting with respect to the 
receipt and disbursement of all funds entrusted to it; and to keep 
records that accurately reflect the actions and transactions of the 
Board;
    (j) To cause its books to be audited by a competent auditor at the 
end of each fiscal year and at such other times as the Secretary may 
request, and to submit a report of the audit directly to the Secretary;
    (k) To give the Secretary the same notice of meetings of the Board 
as is given to members in order that the Secretary's representative(s) 
may attend such meetings, and to keep and report minutes of each 
meeting of the Board to the Secretary;
    (l) To furnish to the Secretary any information or records that the 
Secretary may request;
    (m) To work to achieve an effective, continuous, and coordinated 
program of promotion, research, and information (including producer 
information), designed to strengthen the lamb industry's position in 
the marketplace; maintain and expand existing markets and uses for lamb 
and lamb products; and to carry out programs, plans, and projects 
designed to provide maximum benefits to the lamb industry;
    (n) To provide not less than annually a report to producers, 
feeders and first handlers, 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;
    (o) To invest funds in accordance with Sec. 1280.213.


Sec. 1280.211  Prohibited activities.

    The Board may not engage in, and shall prohibit the employees and 
agents of the lamb industry from engaging in:
    (a) Any action that would be a conflict of interest;
    (b) Using funds collected under the Order to undertake any action 
for the purpose of influencing legislation or governmental action or 
policy, by local, State, national, and foreign governments, other than 
recommending to the Secretary amendments to the Order; and
    (c) Any advertising, including promotion, research, and information 
activities authorized to be carried out under the order, that may be 
false or disparaging to another agricultural commodity.

Expenses


Sec. 1280.212  Budget and expenses.

    (a) The Board shall prepare and submit to the Secretary a budget 
for the fiscal year covering its anticipated expenses and disbursements 
in administering, this subpart. The budget shall be submitted before 
the beginning of each fiscal year, and as frequently as may be 
necessary thereafter.
    (b) Subject to this section, any amendment or addition to an 
approved budget must be approved by the Secretary, including shifting 
funds from one program, plan, or project to another.
    (c) The Board is authorized to incur such expenses, including 
provision for a reasonable reserve, as the Secretary finds are 
reasonable and likely to be incurred by the Board for its maintenance 
and functioning, and to enable it to exercise its powers and perform 
its duties in accordance with the provisions of this subpart. Such 
expenses shall be paid from funds received by the Board.
    (d) With approval of the Secretary, the Board may borrow money for 
the payment of administrative expenses, subject to the same fiscal, 
budget, and audit controls as other funds of the Board. Any funds 
borrowed by the Board shall be expended only for startup costs and 
capital outlays and are limited to the first year of operation of the 
Board.
    (e) The Board may accept voluntary contributions, but these shall 
only be used to pay expenses incurred in the conduct of programs, 
plans, and projects. Such contributions shall be free from any 
encumbrance by the donor and the Board shall retain complete control of 
their use.
    (f) The Board shall reimburse the Secretary for all expenses 
incurred by the Secretary in the implementation, administration, and 
supervision of the Order, including all referendum costs in connection 
with the Order.
    (g) The Board may not expend for administration, maintenance, and 
functioning of the Board in any fiscal year an amount that exceeds 10 
percent of the assessments and other income received by the Board for 
that fiscal year, except for the initial fiscal year. Reimbursements to 
the Secretary required under paragraph (f) of this section are excluded 
from this limitation on spending.


Sec. 1280.213  Investment of funds.

    The Board may invest, pending disbursement, funds it receives under 
this subpart, only in obligations of the

[[Page 48775]]

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 financial institution that is a 
member of the Federal Reserve System, or in obligations fully 
guaranteed as to principal and interest by the United States. Income 
from any such investment may be used for any purpose for which the 
invested funds may be used.


Sec. 1280.214  Refund escrow accounts.

    (a) The Board shall establish an interest bearing escrow account 
with a financial institution which is a member of the Federal Reserve 
System and will deposit into such account an amount equal to the 
product obtained by multiplying:
    (1) The total amount of assessments collected by the Board during 
the period beginning on the effective date of the Order and ending on 
the date the Secretary announces the results of the required 
referendum; by
    (2) Ten percent (10 percent).
    (b) The Board shall pay refunds of assessments to eligible persons 
requesting refunds during the period beginning on the effective date of 
the Order and ending on the date the Secretary announces the results of 
the required referendum in the manner specified in paragraph (c) of 
this section.
    (c) If the amount deposited in the escrow account is less than the 
amount of refunds requested, the Board shall prorate the amount 
deposited in such account among all eligible persons who request a 
refund of assessments paid no later than the date the required 
referendum results are announced by the Secretary.


Sec. 1280.215  Refunds.

    Any producer, seedstock producer, feeder, first handler, or 
exporter from whom an assessment is collected and remitted to the 
Board, or who pays an assessment directly to the Board, under authority 
of the Act and this subpart through the announcement of the results of 
the required referendum, and who is not in favor of supporting the 
promotion and research program as provided for in this subpart, shall 
have the right to receive from the Board a refund of such assessment, 
or a pro rata share thereof, upon submission of proof satisfactory to 
the Board that the producer, seedstock producer, feeder, first handler, 
or exporter paid the assessment for which refund is sought. Any such 
demand shall be made by such producer, seedstock producer, feeder, 
first handler, or exporter in accordance with the provisions of this 
subpart and in a manner consistent with regulations prescribed by the 
Board and approved by the Secretary.


Sec. 1280.216  Procedure for obtaining a refund.

    Each producer, seedstock producer, feeder, first handler, or 
exporter who pays an assessment pursuant to the Act and this subpart 
during the period beginning on the effective date of the Order and 
ending on the date the required referendum results are announced may 
obtain a refund of such assessment only by following the procedures 
prescribed in this section and any regulations prescribed by the Board 
and approved by the Secretary.
    (a) Application form. A producer, seedstock producer, feeder, first 
handler, or exporter shall obtain a Board-approved refund application 
form from the Board. Such form may be obtained by written request to 
the Board and the request shall bear the producer's, seedstock 
producer's, feeder's, first handler's, or exporter's signature or 
properly witnessed mark.
    (b) Submission of refund application to Board. Any producer, 
seedstock producer, feeder, first handler, or exporter requesting a 
refund shall mail an application on the prescribed form to the Board 
within 60 days from the date the assessments were paid by such 
producer, seedstock producer, feeder, first handler, or exporter but no 
later than the date the results of the required referendum are 
announced by the Secretary. The refund application shall show (1) the 
producer's, seedstock producer's, feeder's, first handler's, or 
exporter's name and address; (2) name and address of the person who 
collected applicant's assessment; (3) number of head of lambs, weight 
of lambs, or its equivalent, on which a refund is requested; (4) total 
amount of refund requested; (5) date or inclusive dates on which 
assessments were paid; (6) certification that the producer, seedstock 
producer, feeder, first handler, or exporter did not collect the 
assessment from another producer, seedstock producer, feeder, first 
handler; or exporter or documentation of assessments collected from 
others; and (7) the producer's, seedstock producer's, feeder's, first 
handler's, or exporter's signature or properly witnessed mark.
    (c) Proof of payment of assessments. The documentation provided 
pursuant to Sec. 1280.225(b) to the producer, seedstock producer, 
feeder, first handler, or exporter by the person responsible for 
collecting an assessment pursuant to this subpart, or a copy thereof, 
or such other evidence deemed satisfactory to the Board, shall 
accompany the producer's, seedstock producer's, feeder's, first 
handler's, or exporter's refund application.
    (d) Payment of refunds. The Board shall initiate payment of refund 
requests, or pay a pro rata share thereof, within 90 days of the date 
the results of the required referendum are released by the Secretary. 
Refunds shall be paid in a manner consistent with Sec. 1280.214.

Assessments


Sec. 1280.217  Lamb purchases.

    (a) Except as prescribed by regulations approved by the Secretary, 
each first handler or exporter making payment to a producer, seedstock 
producer, or feeder for lambs purchased from such producer, seedstock 
producer, or feeder shall collect an assessment from the producer, 
seedstock producer, or feeder; Each producer, seedstock producer, or 
feeder shall pay such assessment to the first handler or exporter, at 
the rate of one-half cent ($.005) per pound of live lambs sold.
    (b) Except as otherwise specified in this subpart, a person shall 
not be considered a producer, seedstock producer, or feeder within the 
meaning of this subpart if:
    (1) The person's only share in the proceeds of a sale of lambs is a 
sales commission, handling fee, or other service fee; or
    (2) The person (i) acquired ownership of the lambs to facilitate 
the transfer of ownership of such lambs from the seller to a third 
party, (ii) resold such lambs no later than 10 days from the date on 
which the person acquired ownership, and (iii) certified, as required 
by regulations prescribed by the Board and approved by the Secretary, 
that the requirements of this provision have been satisfied.
    (c) Each person processing or causing to be processed lambs or lamb 
products of that person's own production and marketing such lambs or 
lamb products, shall pay an assessment on such lambs or lamb products 
at the time of sale at a rate equivalent to the rate established in 
paragraph (e) of this section and shall remit such assessment to the 
Board.
    (d) A person who is a market agency; i.e. commission merchant, 
auction market, or livestock market in the business of receiving lambs 
for sale or commission for or on behalf of a producer, seedstock 
producer, or feeder shall collect an assessment from the producer, 
seedstock producer, or feeder and shall pass the collected assessments 
on to the subsequent purchaser pursuant to this subpart and regulations

[[Page 48776]]

prescribed by the Board and approved by the Secretary.
    (e) Rate. Except as otherwise provided, the rate of assessment 
shall be one-half of a cent ($.005 per pound) per pound on all live 
lambs sold. The rate of assessment may be raised or lowered no more 
than twenty-hundredths of a cent ($.002) in any 1 year following 
opportunity for comment by interested parties.
    (f) The collection of assessments pursuant to Sec. 1280.217, 
Sec. 1280.218, and Sec. 1280.219 shall begin with respect to lambs 
purchased, or lambs or lamb products marketed on and after the 
effective date of this section and shall continue until terminated or 
suspended by the Secretary.
    (g) 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.
    (h) Payment remitted pursuant to this subpart shall be in the form 
of a negotiable instrument made payable to the Board. Such remittances 
and the reports specified in Sec. 1280.223 and Sec. 1280.225 shall be 
mailed to the location designated by the Board.


Sec. 1280.218  Exporter.

    Each person exporting live lambs shall remit to the Board an 
assessment on such lambs at the time of export at the rate established 
in Sec. 1280.217(e). An exporter directly exporting his or her own 
lambs shall remit an assessment to the Board at the rate established in 
Sec. 1280.217(e).


Sec. 1280.219  First handlers.

    Each first handler, in addition to remitting the assessment 
collected pursuant to Sec. 1280.217, shall pay an assessment equal to 
thirty cents ($.30) per head of lambs purchased by the first handler 
for slaughter or slaughtered by such first handler pursuant to a custom 
slaughter arrangement. The rates of assessment for first handlers shall 
be increased or decreased proportionately if the assessment paid by 
producers and feeders is increased or decreased. Such assessment shall 
be remitted with the assessments collected pursuant to Sec. 1280.217.


Sec. 1280.220  Collections.

    (a) Each first handler and each exporter responsible for the 
collection of assessments under this subpart shall remit assessments to 
the Board by the 15th day of the month following the month in which the 
lambs were purchased for slaughter or export; or
    (b) If a first handler marketed lambs or lamb products directly to 
consumers, assessments shall be remitted to the Board by the 15th day 
of the month following the month in which the lambs or lamb products 
were marketed, unless the Board, with the approval of the Secretary, 
has provided otherwise.
    (c) Late Payment Charges. Any unpaid assessments due to the Board 
pursuant to Sec. 1280.217 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 timely submit a 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 timeliness of a payment to the Board shall be 
based on the applicable postmark date or the date actually received by 
the Board, whichever is earlier.
    (d) Persons failing to remit total assessments due in a timely 
manner may also be subject to actions under Federal debt collection 
procedures.


Sec. 1280.221  Prohibition on use of funds.

    No funds collected by the Board under this subpart shall be used to 
undertake any action for the purpose of influencing legislation or 
governmental action or policy, by local, state, national and foreign 
governments, other than recommending to the Secretary amendments to 
this subpart.
    A plan or project conducted pursuant to this title shall not make 
false or misleading claims on behalf of lamb or lamb products or 
against a competing product.

Reports, Books, and Records


Sec. 1280.222  Books and Records of 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. 1280.223  Reports.

    Each first handler required to remit assessments to the Board for 
live lambs pursuant to Sec. 1280.217, each first handler marketing lamb 
products of that person's own production, and each exporter of lambs, 
shall report to the Board information pursuant to regulations 
prescribed by the Board and approved by the Secretary. Such information 
may include but is not limited to the following:
    (a) The number of lambs purchased, initially transferred or which, 
in any other manner, is subject to the collection of assessment, the 
total weight in pounds, and the dates of such transactions;
    (b) The number of lambs exported; the total weight in pounds of 
lambs exported;
    (c) The amount of assessment remitted;
    (d) The basis; if necessary, to show why the remittance is less 
than the total weight in pounds of lamb multiplied by the assessment 
rate;
    (e) The date any assessment was paid.


Sec. 1280.224  Periodic evaluation.

    Pursuant to the Federal Agriculture Improvement and Reform Act of 
1996 (7 U.S.C. 7401), the Board shall, not less often than every 5 
years, authorize and fund, from funds otherwise available to the Board, 
an independent evaluation of the effectiveness of the Order and other 
programs conducted by the Board. The Board shall submit to the 
Secretary, and make available to the public, the results of each 
periodic independent evaluation conducted under this paragraph.


Sec. 1280.225  Books and records of persons.

    (a) Each first handler, exporter of lambs, and market agency 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 at least 2 years beyond 
the fiscal period of their applicability.
    (b) Document Evidencing Payment of Assessments. Each person, 
including first handlers, exporters and market agencies, responsible 
for collecting an

[[Page 48777]]

assessment paid pursuant to this subpart is required to give the person 
from whom the assessment was collected, written evidence of payment of 
the assessments paid pursuant to this subpart. Such written evidence 
serving as a receipt shall include, but not be limited to, the 
following information:
    (1) Name and address of the collecting person.
    (2) Name of person who paid assessment.
    (3) Number of head of lamb sold.
    (4) Total weight in pounds of lamb sold.
    (5) Total assessments paid by the producer, seedstock producer, or 
feeder.
    (6) Date of sale.
    (7) Such other information as the board, with the approval of the 
Secretary, may require.


Sec. 1280.226  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, subpart or any regulation 
issued under the Act. In addition, the Secretary shall authorize the 
use, under this part, of information regarding persons paying 
producers, seedstock producers, feeders, first handlers or exporters 
that is accumulated under laws or regulation other than the Act or 
regulations issued under the Act.


Sec. 1280.227  Confidentiality.

    All information obtained from books, records, or reports under the 
Act, this subpart, and the regulations issued thereunder shall be kept 
confidential by all persons, including all employees and former 
employees of the Board, all officers and employees and former officers 
and employees of contracting and subcontracting agencies or agreeing 
parties having access to such information. Such information shall not 
be available to Board members, producers, seedstock producers, feeders, 
exporters, or first handlers. Only those persons having a specific need 
for such information to effectively administer the provisions of this 
subpart shall have access to such information. Only such information so 
obtained as the Secretary deems relevant shall be disclosed by them, 
and then only in a judicial proceeding 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. 
Nothing in this section shall be deemed to prohibit:
    (1) The issuance of general statements based upon 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; and
    (2) The publication, by direction of the Secretary, of the name of 
any person violating this subpart, together with a statement of the 
particular provisions of this subpart violated by such person.

Miscellaneous


Sec. 1280.228  Right of the Secretary.

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


Sec. 1280.229  Personal liability.

    No member or employee of the Board shall be held personally 
responsible, either individually or jointly, in any way whatsoever to 
any person for errors in judgment, mistakes, or other acts, either of 
commission or omission, as such member or employee, except for acts of 
dishonesty or willful misconduct.


Sec. 1280.230  Separability.

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


Sec. 1280.231  Patents, copyrights, inventions, product formulations, 
and publications.

    (a) Any patents copyrights, inventions or publications developed 
through the use of funds collected by the Board under the provisions of 
this subpart shall be the property of the U.S. Government as 
represented by the Board, and shall, along with any rents, royalties, 
residual payments, or other income from the rental, sale leasing, 
franchising, or other uses of such patents, copyrights, inventions, or 
publication, inure to the benefit of the Board. Upon termination of 
this subpart, Sec. 1280.235 shall apply to determine the disposition of 
all such property.
    (b) Should patents, copyrights, inventions or publications be 
developed through the use of funds collected by the Board under this 
subpart and funds contributed by another organization or person, 
ownership and related rights to such patents, copyrights, inventions or 
publications shall be determined by agreement between the Board and the 
party contributing funds towards the development of such patent, 
copyright, invention or publication in a manner consistent with 
paragraph (a) of this section.


Sec. 1280.232  Amendments.

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


Sec. 1280.233  Referenda.

    (a) Required Referendum. For the purpose of ascertaining whether 
the persons subject to this part favor the continuation, suspension, or 
termination of this part, the Secretary shall conduct a referendum 
among persons subject to assessments under Sec. 1280.217, 
Sec. 1280.218, and Sec. 1280.219 who, during a representative period 
determined by the Secretary, have engaged in the production, feeding, 
handling, or slaughter of lamb; or the exportation of lamb.
    (1) Time for Referendum. The referendum shall be conducted not 
later than 3 years after assessments first begin under this part.
    (2) Approval of Part. This part may be approved in a referendum by 
a majority of those persons voting for approval who also represent a 
majority of the volume of lamb produced, fed, slaughtered, handled, and 
exported.
    (b) Subsequent Referenda. The Secretary shall conduct a subsequent 
referendum:
    (1) Not later than 7 years after assessments first begin under this 
part;
    (2) At the request of the Board established pursuant to 
Sec. 1280.201; or
    (3) At the request of 10 percent or more of the lamb producers, 
seedstock producers, feeders, first handlers, and exporters eligible to 
vote to determine if the persons favor the continuation, suspension, or 
termination of this part.
    (c) Other Referenda. The Secretary may conduct a referendum at any 
time to determine whether the continuation, suspension or termination 
of this part or a provision of this part is favored by lamb producers, 
seedstock producers, feeders, first handlers, and exporters eligible to 
vote.
    (d) Costs of Referenda. The Board shall reimburse the Secretary for 
any expenses incurred by the Secretary to conduct referenda.
    (e) Manner of Conducting Referenda. A referendum conducted under 
this section with respect to this part shall be conducted in the manner 
determined by the Secretary to be appropriate.
    (1) Voting. Eligible voters may vote by mail ballot in the 
referendum or in person if so prescribed by the Secretary.
    (2) Notice. Not later than 30 days before a referendum is conducted 
under

[[Page 48778]]

this section with respect to this part, the Secretary shall notify the 
eligible voters, in such manner as determined by the Secretary, of the 
period during which voting in the referendum will occur. The notice 
shall explain any registration and voting procedures established under 
this part.


Sec. 1280.234  Suspension or termination.

    (a) The Secretary shall suspend or terminate this part or subpart 
or a provision thereof if the Secretary finds that this part, subpart 
or a provision thereof obstructs or does not tend to effectuate the 
purposes of the Act,
    (b) If, as a result of a referendum the Secretary determines that 
this subpart is not approved, the Secretary shall:
    (1) Not later than 180 days after making the determination, suspend 
or terminate, as the case may be, collection of assessments under this 
subpart; and
    (2) As soon as practical, suspend or terminate, as the case may be, 
activities under this subpart in an orderly manner.


Sec. 1280.235  Proceedings after termination.

    (a) Upon the termination of this subpart, the Board shall recommend 
to the Secretary not more than five of its members 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 funds 
and property owned, in possession of or under control of the Board, 
including claims for any funds unpaid or property not delivered or any 
other claim existing at the time of such termination.
    (b) The said trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Board under any contracts or 
agreements entered into pursuant to this subpart;
    (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 person as the Secretary may 
direct; and
    (4) Upon the direction of the Secretary execute such assignments or 
other instruments necessary or appropriate to vest in such person full 
title and right to all of the funds, property, and claims vested in the 
Board or the same obligations as imposed upon the Board and the 
trustees.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to this subpart shall be subject to 
the same obligations as imposed upon the Board and the trustees.
    (d) Any residual funds not required to defray the necessary 
expenses of liquidation shall be returned to the persons who 
contributed such funds, or paid assessments, or if not practicable, 
shall be turned over to the Department to be utilized, to the extent 
practicable, in the interest of continuing one or more of the lamb 
research or information programs hitherto authorized.


Sec. 1280.236  Effect of termination or amendment.

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


Sec. 1280.237  Rules and Regulations.

    The Secretary may prescribe such rules and regulations as may be 
necessary to effectively carry out the provisions of this subpart.


Sec. 1280.238  OMB Control Numbers.

    The control number for the information requirements by the Office 
of Management and Budget pursuant to the Paperwork Reduction Act of 
1995, 44 U.S.C. Chapter 35 has not yet been assigned, except that the 
OMB control number for the nominee Background form is 0505-0001.

Proposal II


Sec. 1280.108  Feeder.

    The term feeder means any person who is engaged in the purchasing 
of lambs for feeding to a market or slaughter weight.


Sec. 1280.116  Producer.

    The term producer means any person who is engaged in the annual 
lambing of ewes in the U.S. for sale to another person or who retains 
ownership of lambs until such lambs reach a market or slaughter weight.


Sec. 1280.122  Seedstock producer.

    Seedstock producer means any lamb producer actively engaged in the 
production and sale of breeding replacement ewes, rams, or semen or 
embryos.


Sec. 1280.201  Establishment and membership.

    (a)(2)(i) Two lamb feeders appointed to the Board shall feed less 
than 5,000 head of lambs annually.
    (ii) One lamb feeder appointed to the Board shall feed 5,000 or 
more head of lambs annually.

Proposal III


Sec. 1280.233  Referenda.

    (a)(2) Approval of Part. This part may be approved in a referendum 
by a majority of those persons voting for approval.

    Dated: September 17, 2001.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 01-23647 Filed 9-20-01; 8:45 am]
BILLING CODE 3410-02-P