[Federal Register Volume 69, Number 109 (Monday, June 7, 2004)]
[Rules and Regulations]
[Pages 31731-31733]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-12786]


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

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1280

[No. LS-02-05]


Lamb Promotion, Research, and Information Program: Rules and 
Regulations

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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

SUMMARY: The Department of Agriculture (Department) is adopting, as a 
final rule, without change, rules and regulations to implement the Lamb 
Promotion, Research, and Information Order (Order). The Order provides 
for the establishment of a national and industry-funded lamb promotion, 
research, and information program pursuant to the Commodity Promotion, 
Research, and Information Act of 1996 (Act). This final rule will 
implement Order provisions concerning the collection and remittance of 
assessments, procedures for obtaining a refund, reporting, and books 
and records.

EFFECTIVE DATE: July 7, 2004.

FOR FURTHER INFORMATION CONTACT: Kenneth R. Payne, Chief; Marketing 
Programs Branch, Room 2638-S; Livestock and Seed Program; Agricultural 
Marketing Service (AMS), USDA; STOP 0251; 1400 Independence Avenue, 
SW., Washington, DC 20250-0251. Telephone number 202/720-1115, or by 
electronic mail at [email protected].

SUPPLEMENTARY INFORMATION: Prior documents in this proceeding: 
Invitation to submit proposals--November 23, 1999 (64 FR 65665) and 
January 12, 2000 (65 FR 1825); proposed Lamb Promotion, Research, and 
Information Order--September 21, 2001 (66 FR 48764); and final Lamb 
Promotion, Research, and Information Order--April 11, 2002 (67 FR 
17848).

Executive Order 12866

    The Office of Management and Budget (OMB) has waived the review 
process required by Executive Order (E.O.) 12866 for this action.

Executive Order 12988

    This rule has been reviewed under E.O. 12988, Civil Justice Reform. 
This rule is not intended to have a 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 Department 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 request 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 Department 
will issue a ruling on the petition. The Act provides that the district 
court of the United States for any district in which the petitioner 
resides or conducts 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 
Department's final ruling. Service of process in a proceeding may be 
made on the Department by delivering a copy of the complaint to the 
Department. If the court determines that the ruling is not in 
accordance with the law, the court shall remand the matter to the 
Department with direction to make such ruling as the court determining 
to be in accordance with the law or to take such further action as, in 
the opinion of the court the law requires. The pendency of a petition 
filed or an action commenced shall not operate as a stay of any action 
authorized by section 520 of the Act to be taken to enforce, including 
any rule, order, or penalty in effect.

Regulatory Flexibility Act and Paperwork Reduction Act

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601 et seq.), AMS has considered the economic 
effect of this final action on small entities. The purpose of RFA is to 
fit regulatory actions to the scale of businesses subject to such 
actions in order that small businesses will not be unduly burdened.
    There are approximately 51,800 producers, 15,000 seedstock 
producers, 100 feeders, 571 first handlers, and 15 exporters of lamb 
who will 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 service 
firms 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. This number and size data remains the same as it 
appeared in the earlier analyses for the Order. Further, for purposes 
of this discussion and the prior Order analyses, there are 
approximately 3,318 market agencies, which include commission 
merchants, auction markets, brokers, or livestock markets in the 
business of receiving lambs for sale or commission. Most market 
agencies would be classified under SBA criteria as small businesses.

[[Page 31732]]

Also, under the program, there are approximately 20 national, State, or 
regional associations or organizations that are made up of and 
represent producers, feeders, seedstock producers, exporters, and first 
handlers.
    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, research, and information programs.
    The Order will develop and finance an effective and coordinated 
program of promotion, research, and information to maintain and expand 
the markets for lamb and lamb products. For the purposes of this 
program, the term ``lamb'' as defined in the Order means, ``any ovine 
animal of any age, including ewes and rams.'' A proposed Order was 
published in the Federal Register on September 21, 2001 (66 FR 48764). 
The comment period ended on November 20, 2001. The final Order was 
published in the Federal Register on April 11, 2002 (67 FR 17848). 
Collection of assessments began on July 1, 2002.
    The April 11, 2002, publication included a regulatory flexibility 
analysis concerning the provisions of the final Order. That analysis 
took into account Order provisions concerning the collection and 
remittance of assessments, refunds, reports, and books and records. 
This rule will implement Order provisions concerning these 
requirements.
    In this final rule, the section on assessments contains provisions 
on sharing proceeds of sale, market agencies, failure to collect, 
death, bankruptcy, receivership or incapacity to act, remittance of 
assessments, and non-producer status for certain transactions. The 
section on refunds includes provisions concerning the procedure for 
obtaining a refund and application form, submission of refund 
application to the Department, proof of payment of assessments, and 
payment of refunds. In addition, this final rule details provisions 
regarding reporting and maintenance of books and records and it 
establishes a reporting period.
    With the exception of the form, Statement of Certification of Non-
Producer Status (LS-78), the interim final rule and this final rule did 
not increase the burden on the industry from that previously imposed by 
the Order. The information collection burden in connection with this 
form is minimal. The public reporting burden for this collection of 
information is estimated to average .03 hours per response for an 
estimate 3,318 respondents. The information collection requirements in 
the interim final rule were previously approved under OMB control 
number 0581-0203. That OMB control number has been merged into OMB 
control number 0581-0198.

Background

    The Act (7 U.S.C. 7411-7425) authorizes the Department to establish 
generic programs of promotion, research, and information for 
agricultural commodities designed to strengthen an industry's position 
in the marketplace and to maintain and expand existing domestic and 
foreign markets and uses for agricultural commodities. Pursuant to the 
Act, a proposed Order was published in the Federal Register on 
September 21, 2001 (66 FR 48764). The final Order was published in the 
Federal Register on April 11, 2002 (67 FR 17848). Collection of 
assessments began on July 1, 2002. This program will be funded by 
assessments on domestic lamb producers, lamb feeders, exporters, and 
seedstock producers, in the amount of one-half cent ($.005) per pound 
when live lambs are sold. For purposes of this program, the term 
``lamb'' as defined in the Order means, ``any ovine animal of any age, 
including ewes and rams.''
    First handlers, which means the packer or other person who buys or 
takes possession of lambs from a producer or feeder for slaughter, 
including custom slaughter, will be assessed an additional $.30 cents 
per head purchased for slaughter or slaughtered by such first handler 
pursuant to a custom slaughter arrangement. Each person who processes 
or causes to be processed lamb or lamb products of that person's own 
production and markets the processed products will be assessed one-half 
cent ($.005) per pound on the live weight at the time of slaughter and 
will be required to pay an additional assessment of $.30 per head. 
Exporters who directly export lambs of their own production will be 
assessed in the amount of one-half cent ($.005) per pound of live lambs 
exported. Assessment rates may be adjusted in accordance with 
applicable provisions of the Act and the Order.
    The Order also requires persons to collect and remit assessments to 
the Lamb Promotion, Research, and Information Board (Board). Each 
producer, feeder, or seedstock producer is obligated to pay that 
portion of the assessments that is equivalent to that producer's, 
feeder's, or seedstock producer's proportionate share and shall 
transfer the assessment to the subsequent purchaser, if applicable, and 
ultimately to the first handler or exporter who will remit the total 
assessments to the Board. Any person who processes or causes to be 
processed lamb or lamb products of the person's own production and 
markets the processed products will be required to pay an additional 
assessment and remit the total assessment to the Board. Each first 
handler who buys or takes possession of lambs from a producer or feeder 
for slaughter will be required to pay an additional assessment and 
remit the total assessment to the Board. Any person who exports live 
lambs will be required to collect and remit the total assessment to the 
Board at the time of export. Any exporter who directly exports lambs of 
their own production will pay an assessment to the Board. Additionally, 
a person who is a market agency; i.e., commission merchant, auction 
market, or broker in the business of receiving such lamb or lamb 
products for sale on commission for or on behalf of a producer, feeder, 
or seedstock producer, will be required to collect an assessment and 
shall transfer the collected assessment on to the subsequent 
purchaser(s). Ultimately, the first handler or exporter will remit the 
total assessment to the Board.
    The Order imposes certain recordkeeping and reporting requirements 
on persons subject to the Order. First handlers and exporters will 
collect and remit the assessments on lamb and lamb products to the 
Board. Their responsibilities will include accurate recordkeeping and 
accounting of the number of lambs purchased, total weight in pounds, 
the names of the producers, seedstock producers, and feeders, the 
purchase date, the amount of assessments remitted, and the dates the 
assessments were paid. The required reporting forms require the minimum 
information necessary to effectively carry out the requirements of the 
program, and 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. Presently, most of these requirements are likely being 
conducted as a normal business practice. There will be a minimal burden 
on persons who are market agencies. It is not anticipated that they 
will be required to submit records of their transactions involving lamb 
purchases and the required assessment collection to the Board. 
Information on such transactions can be

[[Page 31733]]

obtained through an audit of the market agencies' records. Such records 
are already being maintained as a normal business practice. This will 
include such records or documents that evidence payment of an 
assessment pursuant to the requirements in Sec.  1280.225(b). In 
addition, market agencies must certify, as required by regulations 
prescribed by the Department, that the provisions of Sec.  1280.217(b) 
have been met. This final rule includes these regulations.

Comments

    On June 7, 2002, the Department published in the Federal Register 
(67 FR 39249) an interim final rule with request for comments. The 
comment period ended August 6, 2002.
    The Department received 10 comments in a timely manner. In 
addition, five late comments were received. The late comments generally 
reflected the substance of comments timely received. Comments were 
received from producers, auction market operators, general farm and 
sheep organizations, and an association representing marketing agents. 
The changes suggested by the commenters are discussed below.
    One commenter suggested that remitters should be allowed to remit 
the assessment and appropriate paperwork via the Internet. Currently, 
the Board does not have the ability to accept the transfer of funds or 
required forms via the Internet. The Board may choose to explore this 
option after an analysis of the current collection procedures. 
Accordingly, this suggestion is not adopted.
    One commenter urged the Department to embark on an educational 
campaign aimed at the marketing agencies so there is a better 
understanding of what is required of them and to recommend procedures 
that can be used to meet those requirements. The Department agrees that 
a continuing educational program is warranted. Since the Board was 
seated in November 2002, Board representatives have attended annual 
meetings of several industry groups in order to better inform industry 
representatives about the program. Additionally, Board representatives 
have visited individual marketing agencies (i.e., auction markets) to 
better educate them regarding their responsibilities for collecting the 
assessment, passing the assessment on to the subsequent buyer, and 
remitting the assessment to the Board. The Board has made these types 
of outreach activities a staple of their client communications program. 
Accordingly, no change is needed as a result of this comment.
    Some commenters recommended that the Department suspend the program 
until the Board is in place to allow sale and auction markets time to 
become fully educated and compliant with the Federal checkoff 
procedures. An extensive educational and outreach program was conducted 
beginning at least 2 years before the implementation of the program 
with the creation of the Exploration Team. In addition, in July 2002, 
the Department distributed informational packets to nearly 1,000 
auction markets explaining the program. Further, the Board has been in 
place since November 2002. Accordingly, this suggestion is not adopted.
    One commenter suggested that auction markets should not be required 
to complete a Non-Producer Status Form (LS-78). Auction markets 
generally facilitate the transaction between the seller and buyer and, 
usually, do not take ownership of the lambs. Under the Lamb Checkoff 
Program, auction markets are not required to complete the form unless 
they are seeking non-producer status. The Non-Producer Status form is 
intended for those market agents that are subject to Sec.  1280.217 of 
the Order. Form LS-78 is intended to be completed only by those persons 
who buy and resell lambs within 10 days from the date of purchase on 
which the market agency acquired ownership. If an auction market buys 
animals in the company's name (taking title to the lambs) and resells 
them within 10 days from the date of purchase, they would be required 
to complete the form.
    The Department received several comments regarding issues that were 
previously subject to public comment in connection with implementation 
of the Order and not part of the rules and regulations that are the 
subject of this rulemaking. The following comments were received: two 
commenters suggested that those persons who remit a small amount of 
assessment should be afforded the opportunity to remit the assessment 
when the amount reaches a certain dollar amount or be allowed to remit 
less often than required by the interim final rule; several commenters 
recommended assessing animals on a per head basis; one commenter 
suggested that ewes should be exempt from the assessment; several 
commenters suggested that the assessments should be collected and 
remitted at each transaction similar to other commodity checkoff 
programs; one commenter suggested that the Board should include one or 
two representatives from an association or organization representing 
livestock markets that sell sheep; and one commenter suggested that 
auction markets remit the assessment directly to the Board.
    On September 21, 2001, the proposed Order was published in the 
Federal Register with a request for public comment. The final Order was 
published and became effective on April 12, 2002. The interim final 
rule was published in the Federal Register on June 7, 2002, with a 
request for public comment. The comment period ended on August 6, 2002. 
The purpose of this final rule is to implement provisions of the Order 
provisions concerning the collection and remittance of assessments, 
procedures for obtaining a refund, reporting, and books and records. 
The aforementioned comments were not within the scope of this final 
rule and would require a change to the Order and further rulemaking. 
Accordingly, these suggestions are not adopted in this action.
    Accordingly, after consideration of all comments, the interim final 
rule, as published in the Federal Register (67 FR 39249, June 7, 2002) 
is finalized without change.

List of Subjects in 7 CFR Part 1280

    Administrative practice and procedure, Advertising, Consumer 
Information, Marketing agreements, Lamb and lamb products, Reporting 
and record keeping requirements.

PART 1280--LAMB PROMOTION, RESEARCH, AND INFORMATION

0
Accordingly, the interim final rule amending 7 CFR part 1280 which was 
published at 67 FR 39249 on June 7, 2002, is adopted as a final rule 
without change.

    Dated: June 2, 2004
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 04-12786 Filed 6-4-04; 8:45 am]
BILLING CODE 3410-02-P