[Federal Register Volume 67, Number 179 (Monday, September 16, 2002)]
[Rules and Regulations]
[Pages 58320-58323]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-23549]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1230

[No. LS-02-09]


Pork Promotion, Research, and Consumer Information Order: Rules 
and Regulations--Decrease in Assessment Rate and Decrease of Importer 
Assessments

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: Pursuant to the Pork Promotion, Research, and Consumer 
Information Act of 1985 (Act) and the Pork Promotion, Research, and 
Consumer Information Order (Order) thereunder, this final rule 
decreases the current rate of assessment of 0.45 percent of the market 
value of porcine animals to 0.40 percent, and decreases the amount of 
assessment per pound due on imported pork and pork products (two- to 
four-hundredths of a cent per pound) to reflect the combined effect of 
the increase in the 2001 average price for domestic barrows and gilts 
(about 7 percent) and the decrease in the assessment rate. The 
assessment decrease will decrease annual funding of the promotion, 
research, and consumer information program by an estimated $5 million 
to $6 million with an estimated $290,000 decrease in importer 
assessments. The assessment decrease reflects the National Pork 
Producers Delegate Body's (Delegate Body) desire to lessen the 
assessment burden on producers and make such funds available to pork 
producers and the industry. The adjustment in importer assessments also 
brings the equivalent market value of live animals from which imported 
pork and pork products are derived in line with the market value of 
domestic porcine animals. A Harmonized Tariff Schedule (HTS) number for 
prepared or preserved pork has also been added to the regulations.

EFFECTIVE DATE: September 30, 2002.

FOR FURTHER INFORMATION CONTACT: Kenneth R. Payne, Chief, Marketing 
Programs Branch, 202/720-1115.

SUPPLEMENTARY INFORMATION:

Executive Orders 12866 and 12988, the Regulatory Flexibility Act, and 
the Paperwork Reduction Act

    The Office of Management and Budget has waived the review process 
required by Executive Order 12866.
    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This rule is not intended to have a retroactive 
effect. The Act states that the statute is intended to occupy the field 
of promotion and consumer education involving pork and pork products 
and of obtaining funds thereof from pork producers and that the 
regulation of such activity (other than a regulation or requirement 
relating to a matter of public health or the provision of State or 
local funds for such activity) that is in addition to or different from 
the Act may not be imposed by a State.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under Sec.  1625 of the Act, a 
person subject to an order may file a petition with the Department of 
Agriculture (USDA) stating that such order, a provision of such order 
or an obligation imposed in connection with such order is not in 
accordance with the law; and requesting

[[Page 58321]]

a modification of the order or an exemption from the order. Such person 
is afforded the opportunity for a hearing on the petition. After the 
hearing, USDA would rule on the petition. The Act provides that the 
district court of the United States in the district in which a person 
resides or does business has jurisdiction to review USDA's 
determination, if a complaint is filed not later than 20 days after the 
date such person receives notice of such determination.
    This action also was reviewed under the Regulatory Flexibility Act 
(5 United States Code (U.S.C.) 601 et seq.). The effect of the Order 
upon small entities initially was discussed in the September 5, 1986, 
issue of the Federal Register (51 FR 31898). It was determined at that 
time that the Order would not have a significant effect upon a 
substantial number of small entities. Many of the estimated 81,000 pork 
producers and 500 importers may be classified as small entities under 
the Small Business Administration definition (13 CFR 121.201).
    This final rule will decrease the rate of the assessment from 0.45 
percent of the market value of porcine animals to 0.40 percent, and 
will decrease the cents per pound and per kilogram of assessments on 
imported pork and pork products subject to assessment. Adjusting the 
rate of assessment from 0.45 percent to 0.40 percent and decreasing the 
assessment on imported pork and pork products will result in an 
estimated decrease in assessments of $5 million to $6 million over a 
12-month period. Of that amount, approximately $290,000 will be 
attributed to the decrease in importer assessments. The gross market 
value of all swine marketed in the United States during 2000 exceeded 
$11.7 billion. This decrease will reduce the assessment burden on 
producers. The adjustment in importer assessments also will bring the 
equivalent market value of live animals from which imported pork and 
pork products are derived in line with the market value of domestic 
porcine animals. An HTS number for prepared or preserved pork also will 
be added to the regulations. Therefore, the economic impact of the 
assessments will not be a significant part of the total market value of 
swine. Accordingly, the Administrator of the Agricultural Marketing 
Service (AMS) has determined that this action will not have a 
significant economic impact on a substantial number of small entities.
    The Act (7 U.S.C. 4801-4819) approved December 23, 1985, authorized 
the establishment of a national pork promotion, research, and consumer 
information program. The final Order establishing a pork promotion, 
research, and consumer information program was published in the 
September 5, 1986, issue of the Federal Register (51 FR 31898; as 
corrected, at 51 FR 36383 and amended at 53 FR 1909, 53 FR 30243, 56 FR 
4, 56 FR 51635, 60 FR 29963, 61 FR 29002, 62 FR 26205, 63 FR 45936, 64 
FR 44643, and 66 FR 67071) and assessments began on November 1, 1986. 
The program was funded by an initial assessment rate of 0.25 percent of 
the market value of all porcine animals marketed in the United States 
and on imported porcine animals with an equivalent assessment on pork 
and pork products. However, that rate was increased to 0.35 percent 
effective December 1, 1991 (56 FR 51635), and to 0.45 percent effective 
September 3, 1995 (60 FR 29963). Based on the assessment rate of 0.45 
percent, the total annual assessments collected during 2001 were 
approximately $57.4 million. Assessments on imported pork and pork 
products accounted for about $3.7 million of the total.
    The Order requires that producers pay to the National Pork Board an 
assessment of 0.45 percent of the market value of each porcine animal 
upon sale. However, for purposes of collecting and remitting 
assessments, porcine animals are divided into three separate categories 
(1) feeder pigs, (2) slaughter hogs, and (3) breeding stock. The Order 
specifies that purchasers of feeder pigs, slaughter hogs, and breeding 
stock shall collect an assessment on these animals if assessments are 
due. The Order further provides that for the purpose of collecting and 
remitting assessments persons engaged as a commission merchant, auction 
market, or livestock market in the business of receiving such porcine 
animals for sale on commission for or on behalf of a producer shall be 
deemed to be a purchaser.
    The Order requires importers of porcine animals to pay U.S. Customs 
Service (USCS), upon importation, the assessment of 0.45 percent of the 
porcine animal's declared value and importers of pork and pork products 
to pay USCS, upon importation, the assessment of 0.45 percent of the 
market value of the live porcine animals from which such pork and pork 
producers were produced.
    The Act and Sec.  1230.71 of the Order contain provisions for 
adjusting the initial rate of assessment. The Delegate Body has the 
responsibility to recommend the rate of assessment to the USDA. The 
2002 Delegate Body, at its annual meeting on March 1-2, 2002, in 
Denver, Colorado, voted to recommend to the USDA that the rate of 
assessment of 0.45 percent be decreased to 0.40 percent. There were 167 
Delegate Body members appointed by the Secretary in 2002. At the 
Delegate Body meeting 144 delegates were present during voting and 
voted 50,750.1 valid share votes. States and importers are allotted one 
share per $1,000 of the aggregated amount of assessment collected. 
There were 29,974.9 share votes cast in favor of the 0.05 percent 
decrease.
    The formula in the preamble for the Order at 51 FR 31901 
contemplated that it would be necessary to recalculate the equivalent 
live animal value of imported pork and pork products to reflect changes 
in the rate of assessment or changes in the annual average price of 
domestic barrows and gilts to maintain equity of assessments between 
domestic and porcine animals and imported pork and pork products.
    This final rule will decrease the amount of assessment on all of 
the imported pork and pork products subject to assessment as published 
in the Federal Register as a final rule December 28, 2001, and 
effective on January 28, 2002 (66 FR 67071). The assessment decrease 
reflects the Delegate Body's desire to lessen the assessment burden on 
producers and make such funds available to pork producers and the 
industry. The adjustment in importer assessments also will bring the 
equivalent market value of live animals from which imported pork and 
pork products are derived in line with the market value of domestic 
porcine animals. An HTS number for prepared or preserved pork also will 
be added to the regulations.
    The methodology for determining the per-pound amounts for imported 
pork and pork products was described in the supplementary information 
accompanying the Order and published in the September 5, 1986, Federal 
Register at 51 FR 31901. The weight of imported pork and pork products 
is converted to a carcass weight equivalent by utilizing conversion 
factors which are published in the USDA's Agricultural Handbook No. 697 
``Conversion Factors and Weights and Measurers.'' These conversion 
factors take into account the removal of bone, weight lost in cooking 
or other processing, and the nonpork components of pork products. 
Secondly, the carcass weight equivalent is converted to a live animal 
equivalent weight by dividing the carcass weight equivalent by 74 
percent, which is the average dressing percentage of porcine animals in 
the United States as recognized by the industry. Thirdly, the 
equivalent value of the live porcine

[[Page 58322]]

animals is determined by multiplying the live animal equivalent weight 
by an annual average market price for barrows and gilts as calculated 
by the USDA's, AMS, Livestock and Grain Market News (LGMN) Branch. 
Finally, the equivalent value is multiplied by the applicable 
assessment rate due on imported pork and pork products. The end result 
is expressed in an amount per pound for each type of pork or pork 
product. To determine the amount per kilogram for pork and pork 
products subject to assessment under the Act and Order, the cent-per-
pound assessments are multiplied by a metric conversion factor 2.2046 
and carried to the sixth decimal.
    Since the last adjustment was made in the amount of the assessment 
due on live hogs and imported pork and pork products (66 FR 67071), 
there has been a change in the way LGMN Branch reports hog prices. Due 
to the implementation of the Livestock Mandatory Price Reporting 
Program, LGMN no longer report hogs on a live basis because most of the 
industry moved to buying hogs on a carcass basis. Thus, the Iowa-
Southern Minnesota hog reports are now reported on a carcass basis 
defined by muscle and fat. Previously, these reports were quoted for 
49-52 percent lean yield barrows and gilts weighing an average of 240-
280 pounds live weight. Therefore, the only consistent price available 
for hogs for calendar year 2001 is the average base carcass price for 
51-52 percent lean hogs derived from the National Base Lean Hog Carcass 
Slaughter Cost Report. To convert this figure to a live basis, it must 
be multiplied by 74 percent, the average dressing percentage of porcine 
animals in the United States as recognized by the industry.
    The average annual market price increased from $42.70 per 
hundredweight in 2000 to $45.87 per hundredweight in 2001, an increase 
of about 7 percent. The combined effect of the assessment rate decrease 
and the increase in the average annual market price will result in a 
decrease in assessments for all HTS numbers listed in the table in 
Sec.  1230.110(b), 66 FR 67071; December 28, 2001, of an amount equal 
to two-to four-hundredths of a cent per pound, or as expressed in cents 
per kilogram, four-hundredths to nine-hundredths of a cent per 
kilogram. Based on Department of Commerce, Bureau of Census, data on 
the volume of pork and pork products imported during 2001, the 
decreases in the assessment amounts will result in an estimated 
$290,000 decrease in importer assessments over a 12-month period. In 
addition, this rule adds a new HTS number--1602.49.9000--to the table 
in Sec.  1230.110(b). This HTS number has been assigned to prepared or 
preserved pork. In 2001, over 2,114 metric tons of prepared or 
preserved pork products were imported into the United States as 
reported by the Department of Commerce.
    On July 19, 2002, AMS published in the Federal Register (67 FR 
47474) a proposed rule which would (1) decreases the current rate of 
assessment of 0.45 percent of the market value of porcine animals to 
0.40 percent, and (2) decreases the amount of assessment per pound due 
on imported pork and pork products (two-to four-hundredths of a cent 
per pound) to reflect the combined effect of the increase in the 2001 
average price for domestic barrows and gilts (about 7 percent) and the 
decrease in the assessment rate. The proposal was published with a 
request for comments by August 19, 2002. Five comments were received. 
All of the commenters, which included the National Pork Board, the 
National Pork Producers Council, and three state pork producer 
associations, support the decrease of assessment rate. In addition, the 
Board provided information regarding the timing of the decrease in 
order to provide the Board with ample time to communicate an assessment 
rate change and to minimize the burden on those responsible for 
remitting pork checkoff assessments.
    USDA carefully considered the comments and the recommendation of 
the Delegate Body. This action lessens the assessment burden on 
producers and importers. The effective date of September 30, 2002, 
gives the Board ample time to communicate this change and will not 
burden those that remit pork checkoff assessments. Accordingly, 
pursuant to 5 U.S.C. 553, it is found that good cause exists for not 
postponing the effective date of this rule until 30 days after 
publication in the Federal Register.
    This final rule adopts the decrease in the assessment rate from .45 
percent of market value of porcine animals to .40 percent as proposed 
and decreases the amount of assessment per pound due on imported pork 
and pork products (two-to four-hundredths of a cent per pound) to 
reflect the combined effect of the increase in the 2001 average price 
for domestic barrows and gilts (about 7 percent) and the decrease in 
the assessment rate.

List of Subjects in 7 CFR Part 1230

    Administrative practice and procedure, Advertising, Agriculture 
research, Marketing agreement, Meat and meat products, Pork and pork 
products.

    For the reasons set forth in the preamble, 7 CFR part 1230 is 
amended as follows:

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

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

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

Subpart B--[Amended]

    2. Section 1230.110 is revised to read as follows:


Sec.  1230.110  Assessments on imported pork and pork products.

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

------------------------------------------------------------------------
                  Live porcine animals                      Assessment
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0103.10.0000............................................        \1\ 0.40
0103.91.0000............................................        \1\ 0.40
0103.92.0000............................................       \1\ 0.40
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\1\ percent Customs Entered Value.

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

------------------------------------------------------------------------
                                                         Assessment
              Pork and pork products               ---------------------
                                                     Cents/lb   Cents/kg
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0203.11.0000......................................        .25    .551150
0203.12.1010......................................        .25    .551150
0203.12.1020......................................        .25    .551150
0203.12.9010......................................        .25    .551150
0203.12.9020......................................        .25    .551150
0203.19.2010......................................        .29    .639334
0203.19.2090......................................        .29    .639334
0203.19.4010......................................        .25    .551150
0203.19.4090......................................        .25    .551150
0203.21.0000......................................        .25    .551150
0203.22.1000......................................        .25    .551150
0203.22.9000......................................        .25    .551150
0203.29.2000......................................        .29    .639334
0203.29.4000......................................        .25    .551150
0206.30.0000......................................        .25    .551150
0206.41.0000......................................        .25    .551150
0206.49.0000......................................        .25    .551150
0210.11.0010......................................        .25    .551150
0210.11.0020......................................        .25    .551150
0210.12.0020......................................        .25    .551150
0210.12.0040......................................        .25    .551150
0210.19.0010......................................        .29    .639334
0210.19.0090......................................        .29    .639334
1601.00.2010......................................        .34    .749564
1601.00.2090......................................        .34    .749564
1602.41.2020......................................        .37    .815702
1602.41.2040......................................        .37    .815702
1602.41.9000......................................        .25    .551150
1602.42.2020......................................        .37    .815702
1602.42.2040......................................        .37    .815702
1602.42.4000......................................        .25    .551150
1602.49.2000......................................        .34    .749564
1602.49.4000......................................        .29    .639334

[[Page 58323]]

 
1602.49.9000......................................        .29    .639334
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    3. Section 1230.112 is revised to read as follows:


Sec.  1230.112  Rate of assessment.

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

    Dated: September 11, 2002.
A.J. Yates,
Administrator Agricultural Marketing Service.
[FR Doc. 02-23549 Filed 9-12-02; 10:36 am]
BILLING CODE 3410-02-P