[Federal Register Volume 69, Number 170 (Thursday, September 2, 2004)]
[Rules and Regulations]
[Pages 53784-53789]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-19985]



[[Page 53783]]

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Part III





Department of Agriculture





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Agricultural Marketing Service



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7 CFR Part 59



Livestock Mandatory Reporting; Amendment To Revise Lamb Reporting 
Definitions; Final Rule

  Federal Register / Vol. 69, No. 170 / Thursday, September 2, 2004 / 
Rules and Regulations  

[[Page 53784]]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 59

[Docket No. LS-01-08]
RIN 0581-AB98


Livestock Mandatory Reporting; Amendment To Revise Lamb Reporting 
Definitions

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule amends the Livestock Mandatory Reporting 
regulations to modify the requirements for the submission of 
information on domestic and imported boxed lamb cuts sales. This rule 
amends the definition of ``carlot-based'' by inserting language to 
limit carlot-based sales of boxed lamb cuts to transactions between a 
buyer and a seller consisting of 1,000 pounds or more of one or more 
individual boxed lamb items. This rule also amends the definition of 
``importer'' by reducing the volume level of annual lamb imports 
establishing a person as an importer from 5,000 metric tons of lamb 
meat products per year to 2,500 metric tons. This amendment will 
improve the accuracy and reliability of the data being reported by the 
Agricultural Marketing Service (AMS) on domestic boxed lamb cuts sales 
by ensuring that the bulk of data being reported is representative of 
the market, thus enabling producers to evaluate market conditions and 
make more informed marketing decisions. This amendment will also 
increase the volume of imported products that will be reported to AMS, 
which will permit AMS to publish reports on the sales of imported boxed 
lamb cuts.

DATES: Effective November 1, 2004.

FOR FURTHER INFORMATION CONTACT: John E. Van Dyke, Chief, Livestock and 
Grain Market News Branch, Livestock and Seed Program, Agricultural 
Marketing Service, USDA, 1400 Independence Avenue, SW., Room 2619--
South Building, Stop 0252, Washington, DC 20250-0242; telephone (202) 
720-6231, facsimile (202) 690-3732, e-mail [email protected].

SUPPLEMENTARY INFORMATION:

Background

    In accordance with the Livestock Mandatory Reporting Act of 1999 
(Act) [7 U.S.C. 1635h-1636h], regulations implementing a mandatory 
program of reporting information related to the marketing of cattle, 
swine, lambs, and products of such livestock, were published in the 
Federal Register on December 1, 2000 (65 FR 75464). This Livestock 
Mandatory Reporting (LMR) program requires the submission of market 
information by packers who have annually slaughtered an average of 
125,000 cattle or 100,000 swine over the most recent 5 calendar year 
period, or have annually slaughtered or processed an average of 75,000 
lambs over the most recent 5 calendar year period. Importers who have 
annually imported an average of 5,000 metric tons of lamb meat products 
over the most recent 5 calendar year period are also subject to 
mandatory reporting requirements. The LMR program is intended to 
provide information on pricing, contracting for purchase, and supply 
and demand conditions for livestock, livestock production, and 
livestock products that can be readily understood by producers, 
packers, and other market participants.
    Section 241 of the Act gives the Department of Agriculture (USDA) 
authority to establish a mandatory lamb price reporting program that 
will, (1) provide timely, accurate, and reliable market information; 
(2) facilitate more informed marketing decisions; and (3) promote 
competition in the lamb slaughtering industry. AMS established 
submission requirements for lamb packers and lamb importers in 
accordance with this authority based upon its extensive knowledge of 
the lamb industry gained through a program of voluntary market 
information reporting of lamb.
    Under the mandatory lamb price reporting program, packers are 
required to report information daily on domestic sales of boxed lamb 
cuts each reporting day including prices for sales, the type of sale, 
the branded product characteristics, the quantity of each sale, the 
USDA grade, trim specification, weight range, delivery period, the 
quantity of boxes of each cut, the weight range of each cut, and the 
product state of refrigeration. USDA reports on domestic boxed lamb cut 
sales to the public once each reporting day.
    For any calendar year, a lamb importer who imported an average of 
5,000 metric tons of lamb meat products per year during the immediately 
preceding 5 calendar years is required to report to USDA weekly the 
prices received for imported lamb cuts sold on the domestic market. 
Additionally, an importer that did not import an average of 5,000 
metric tons of lamb meat products during the immediately preceding 5 
calendar years is also required to report the above information, if 
USDA determines that the person should be considered an importer based 
on their volume of lamb imports.
    Because there are not enough daily sales of imported products to 
meet the confidentiality guidelines and allow USDA to publish daily 
reports, lamb importers are required to report weekly prices received 
for sales of imported boxed lamb cuts sold on the domestic market 
during the prior week including the quantity of each transaction, the 
type of sale, the branded product characteristics, the product state of 
refrigeration, the cut of lamb, the trim specification, the cut weight 
range, and the product delivery period.
    Boxed lamb is defined in the LMR regulations to mean those carlot-
based portions of a lamb carcass including fresh primals, subprimals, 
cuts fabricated from subprimals, excluding portion-control cuts such as 
chops and steaks similar to those portion cut items described in the 
Institutional Meat Purchase Specifications (IMPS) for Fresh Lamb and 
Mutton Series 200, and thin meats (e.g., inside and outside skirts, 
pectoral meat, cap and wedge meat, and blade meat) not older than 14 
days from date of manufacture; fresh ground lamb, lamb trimmings, and 
boneless processing lamb not older than 7 days from date of 
manufacture; frozen primals, subprimals, cuts fabricated from 
subprimals, and thin meats not older than 180 days from date of 
manufacture; and frozen ground lamb, lamb trimmings, and boneless 
processing lamb not older than 90 days from date of manufacture.
    In the period since the implementation of the LMR program on April 
2, 2001, the current collection of boxed lamb cuts market information 
has prevented AMS from publishing meaningful market information on 
sales of imported and domestic boxed lamb cuts. Because of this, the 
current definitions of the terms ``carlot-based'' and ``importer'' 
under the LMR regulations need to be amended.
    In the LMR regulations, the term ``carlot-based'' is defined as, 
``any transaction between a buyer and a seller destined for three or 
less delivery stops consisting of one or more individual boxed lamb 
items or any combination of carcass weights.'' However, in practice, 
the definition of carlot-based has resulted in having virtually all 
sales of boxed lamb cuts reported, including distributive-based 
transactions, as frequently packers of boxed lamb cuts do not know the 
exact number of stops a truck will make at the time that the prices are 
established and the sales are made.
    Distributive-based sales are largely comprised of unique, value-
added

[[Page 53785]]

products in which prices often reflect added customer services. Because 
of the uniqueness of the distributive trade and the potential effect 
that the inclusion of such information might have on the aggregated 
reports AMS would publish, it was not intended to include the 
information in the LMR program. Such information may create a 
perception of wide price ranges in market reports for boxed lamb cuts 
and could send misleading signals to producers and packers as to the 
true direction of the market direction.
    AMS has discussed and reviewed the issue of carlot-based and 
distributive-based transactions with lamb industry packers and 
processors. Based upon its review of this matter, including actual 
reporting on a 1,000 pounds or more basis, AMS believes that the 1,000 
pound threshold is a more accurate dividing line between carlot-based 
sales and distributive-based sales and is consistent with the original 
intent of the regulation.
    In order to conform to the original intent of not including these 
types of transaction, AMS is amending the boxed lamb cuts portion of 
the definition of ``carlot-based'' (7 CFR 59.300) by limiting 
reportable sales of boxed lamb cuts to those consisting of 1,000 pounds 
or more of one or more individual boxed lamb items. The 1,000 pound 
threshold is intended to separate out distributive-based transactions. 
This final rule amends the definition of ``carlot-based'' to read, 
``The term `carlot-based', when used in reference to lamb carcass 
sales, means any transaction between a buyer and a seller destined for 
three or less delivery stops consisting of any combination of carcass 
weights, provided, however, that when used in reference to boxed lamb 
cuts sales, the term `carlot-based' means any transaction between a 
buyer and a seller consisting of 1,000 pounds or more of one or more 
individual boxed lamb items.''
    AMS is establishing the 1,000 pound threshold as the level dividing 
the majority of carlot-based sales from distributive-based sales. AMS 
believes that the 1,000 pound threshold will limit the submission of 
information on boxed lamb cut sales to more significant sales allowing 
AMS to publish more accurate and timely information on the boxed lamb 
cuts market while reducing the submission of information by covered 
lamb packers.
    In the LMR regulations, the term ``importer'' (7 CFR 59.300) is 
defined as, ``any person engaged in the business of importing lamb meat 
products that takes ownership of such lamb meat products with the 
intent to sell or ship in U.S. commerce. For any calendar year, the 
term includes only those that imported an average of 5,000 metric tons 
of lamb meat products per year during the immediately preceding 5 
calendar years. Additionally, the term includes those that did not 
import an average of 5,000 metric tons of lamb meat products during the 
immediately preceding 5 calendar years, if USDA determines that the 
person should be considered an importer based on their volume of lamb 
imports.''
    Because imported products comprise over one-third of the U.S. 
market (based on U.S. Census Bureau data, 66,882 metric tons in 2002) 
and can affect prices for domestic lamb, lamb importers were included 
for more complete information on lamb meat products being imported into 
the U.S., including the types, quantities, and prices of these 
products.
    In the comment period prior to the publication of the final rule 
for the LMR program, AMS received five comments expressing concern that 
the lamb import threshold of 5,000 metric tons and the domestic lamb 
packer threshold of an average 75,000 head per year for each of the 
preceding 5 years were not comparable. These commenters believed that 
the threshold for lamb importers was set too high in relation to the 
domestic packer threshold and should be lowered to ensure adequate 
coverage of the imported lamb market. At that time, AMS expressed 
concern that lowering the threshold would increase the number of 
smaller importers that would be required to report. AMS believed that 
the products imported by many of these operations were so unique that 
AMS would be unable to report them without disclosing proprietary 
information. AMS expected that the 5,000 metric ton lamb importer 
threshold would cover a comparable percentage of the lamb imports as 
slaughter and processing are being covered by the cattle, swine and 
lamb packer definitions, or approximately 80% of lamb imported into the 
U.S.
    During the period since the implementation of the LMR program on 
April 2, 2001, AMS has determined that the 5,000 metric ton provision 
limits the number of covered importers to a level below that which is 
necessary to ensure confidentiality of published information. As a 
result, AMS has been unable to publish market information on sales of 
imported boxed lamb cuts.
    When AMS formulated its initial estimates on the number of 
importers that would be required to report under LMR, it was 
anticipated that six companies would meet the 5,000 metric ton 
threshold. However, after implementation of the LMR program, it was 
determined that the 5,000 metric ton threshold did not cover a 
sufficient number of lamb importers necessary to publish market 
information on imported lamb in accordance with the confidentiality 
provisions of the Act. After analyzing U.S. Customs Service data for 
total lamb imported for each of the 5 years between 1998 and 2002, AMS 
believes that a 2,500 metric ton threshold will cover eight lamb 
importers which will allow AMS to collect and publish market reports on 
the imported boxed lamb cuts market in accordance with the 
confidentiality provisions of the Act.
    AMS is amending the definition of ``importer'' to lower the 
existing 5,000 metric ton provision to 2,500 metric tons. This final 
rule amends the definition of ``importer'' to read, ``The term 
``importer'' means any person engaged in the business of importing lamb 
meat products who takes ownership of such lamb meat products with the 
intent to sell or ship in U.S. commerce. For any calendar year, the 
term includes only those that imported an average of 2,500 metric tons 
of lamb meat products per year during the immediately preceding 5 
calendar years. Additionally, the term includes those that did not 
import an average of 2,500 metric tons of lamb meat products during the 
immediately preceding 5 calendar years, if USDA determines that the 
person should be considered an importer based on their volume of lamb 
imports.
    The establishment of the 2,500 metric tons provision will be more 
consistent with the 75,000 head provision defining a lamb packer for 
purposes of livestock mandatory reporting. The 2,500 metric ton 
provision is equal to approximately 5.5 million pounds of lamb meat 
product (2,500 x 2204.6 = 5,511,500 pounds). The 75,000 head provision 
is equal to approximately 5.1 million pounds of lamb meat product based 
upon an average lamb carcass weight of 68 pounds (National Agricultural 
Statistics Service data for 2002) (75,000 x 68 = 5,100,000 pounds).

Summary of Comments

    On October 27, 2003, AMS published a proposed rule for comment in 
the Federal Register. The comment period ended on December 26, 2003. 
USDA received seven comments. The majority of which were submitted by 
industry associations representing sheep producers and feeders, with a 
marketing information center, a representative of a foreign government, 
and another interested person commenting.

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    Three of the commenters expressed general support for the 
amendments as proposed. One of the commenters expressed general 
opposition to the LMR program and thus also to the amendments as 
proposed.
    Two of commenters urged AMS to set the threshold for defining an 
importer such that the portion of the market covered by the LMR 
regulations is equal for imported and domestic boxed lamb and contended 
that it should be set at 2,000 metric tons rather than the proposed 
2,500 metric tons. The respondents also recommended that AMS should, 
(1) Design a system to capture and report prices on distributive sales, 
and (2) evaluate the parts of the definition of ``boxed lamb'' using 
the manufacture date as part of the criteria and make adjustments to 
the ``older than'' requirement so that product that was manufactured 
prior to the dates described in the definition does not disqualify 
these products from reporting under LMR.
    Another commenter also encouraged AMS to continue to review the 
threshold level for defining an importer and to continue to review the 
economic impacts associated with all reporting requirements to 
determine the overall efficacy of the program.

Agency Response

    AMS will continue to review the threshold for defining an importer 
to ensure that the portion of the market covered by the LMR regulations 
is equal for imported and domestic boxed lamb. AMS believes that a 
2,500 metric ton level is more consistent with the 75,000 head 
threshold used to define a lamb packer. In 2002, the average lamb 
carcass weighed 68 pounds, which places the 75,000 threshold at 5.1 
million pounds. The pound equivalent of 2,500 metric tons is 5.5 
million pounds.
    AMS continually strives to improve all of our market reports and 
the overall efficacy of our reporting services. The Act contains a 
sunset provision and will expire in October 2004, unless further action 
is taken by Congress. Upon renewal of the Act, AMS would examine 
program costs and benefits as part of future rulemakings.
    With the respect to the other recommendations made by the 
commenters concerning reporting information on distributive based sales 
and the definition of boxed lamb, these recommendations are not within 
the scope of this rulemaking. However, these recommendations may be 
reconsidered as part of any future rulemaking, if deemed appropriate.

Executive Orders 12866 and 12988

    Although not economically significant, this rule has been 
determined to be significant for purposes of Executive Order 12866 and, 
therefore, has been reviewed by the Office of Management and Budget 
(OMB). Regulations must be designed in the most cost-effective manner 
possible to obtain the regulatory objective while imposing the least 
burden on society. AMS has prepared a Regulatory Impact Assessment 
(RIA) consisting of a statement of the need for the action, an 
examination of alternative approaches, and an analysis of the benefits 
and costs.
    Need for Action. As stated in the background section, the current 
definition of carlot-based in the LMR regulations has resulted in 
requiring nearly all sales of boxed lamb cuts to be reported, including 
distributive-based transactions. It was not the Agency's intent to 
include this type of information in the LMR program as is it may have 
created a perception of wide price ranges in market reports for boxed 
lamb cuts and could send misleading signals to producers and packers as 
to the true direction of the market.
    AMS believes that amending the boxed lamb cuts portion of the 
definition of ``carlot-based'' by limiting reportable sales of boxed 
lamb cuts to those consisting of 1,000 pounds or more of one or more 
individual boxed lamb items will limit the submission of information on 
boxed lamb cut sales to significant sales, thus allowing AMS to publish 
more accurate and reliable market information and reduce the submission 
of information by covered lamb packers.
    The current definition of ``importer'' in the LMR regulations has 
also resulted in difficulties in reporting market information on sales 
of imported boxed lamb cuts. For any calendar year, the term 
``importer'' includes only those that import an average of 5,000 metric 
tons of lamb meat products during the immediately preceding 5 calendar 
years. AMS expected that the 5,000 metric ton threshold would cover a 
comparable percentage of lamb imports as slaughter and processing are 
being covered by the cattle, swine, and lamb packer definitions, or 
approximately 80% of lamb imported into the U.S. However, this has not 
been the case. When this program was initially implemented, only two 
importers would have been covered under the LMR program which hindered 
AMS' ability to collect and publish market information on imported 
boxed lamb cuts.
    AMS believes that amending the definition of importer to lower the 
existing 5,000 metric ton threshold to 2,500 metric tons will now cover 
eight lamb importers and will allow AMS to collect and publish market 
reports on the imported boxed lamb cuts market.
    Alternatives. Various methods were considered by which the 
objectives of the rule could be accomplished. The Agency looked at 
other ways of defining carlot-based such that distributive-sales would 
not be covered, including using 500 pounds as the threshold. However, 
after discussions with lamb industry packers and processors, AMS 
believes that a 500 pound threshold could result in the inclusion of 
products for which prices could be established on factors other than 
the market value and that a 1,000 pound threshold would be a more 
accurate dividing line between carlot-based sales and distributive-
based sales.
    The Agency also looked at other ways of defining the term importer. 
AMS received several comments in the comment period prior to the 
publication of the final LMR regulations which supported a threshold of 
2,500 metric tons in defining an importer. At that time, AMS believed 
that this level would preclude AMS from reporting a significant number 
of transactions due to confidentiality guidelines. However, AMS now 
believes that lowering the threshold to 2,500 metric tons will cover 
eight importers which is a sufficient number of importers to allow AMS 
to publish market information without disclosing proprietary 
information.
    Summary of Benefits. This action will allow AMS to collect and 
publish market reports on the imported boxed lamb cuts market. As 
imports account for over one-third of the U.S. market and can greatly 
impact the prices for domestic lamb, implementation of this rule will 
enable participants to better evaluate market conditions and make more 
informed marketing decisions, thus improving the reporting services of 
AMS.
    Summary of Costs. In the final LMR regulations (65 FR 75464), AMS 
prepared a complete cost analysis of the LMR program. This amendment is 
not anticipated to substantially change these prior estimates. AMS 
estimates that the total annual burden on each small lamb importer will 
remain at $2,070, including $87 for annual costs associated with 
electronically submitting data, $150 for annual share of initial 
startup costs of $750, and $1,830 for the storage and maintenance of 
electronic files that were submitted to AMS. AMS estimates that the 
total annual burden on each small lamb packer will remain at $7,860, 
including

[[Page 53787]]

$5,875 for annual costs associated with electronically submitting data, 
$150 for annual share of initial startup costs of $750, and $1,830 for 
the storage and maintenance of electronic files that were submitted to 
AMS. The estimate of the number of importers that will be required to 
report has increased from six to eight.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform, and is not intended to have retroactive effect. States 
and political divisions of States are specifically preempted by Sec.  
259 of the Act from imposing requirements in addition to, or 
inconsistent with, any requirements of the Act with respect to the 
submission or publication of information on the prices and quantities 
of livestock or livestock products. Further, the Act does not restrict 
or modify the authority of the USDA to administer or enforce the 
Packers and Stockyards Act, 1921 (7 U.S.C. 181 et seq.); administer, 
enforce, or collect voluntary reports under the Act or any other laws; 
or access documentary evidence as provided under sections 9 and 10 of 
the Federal Trade Commission Act (15 U.S.C. 49 and 50). There are no 
administrative procedures that must be exhausted prior to any judicial 
challenge to the provisions of this rule.

Civil Rights Review

    In promulgating the final LMR regulations (65 FR 75464), AMS 
considered the potential civil rights implications on minorities, 
women, or persons with disabilities and prepared a Civil Rights Impact 
Analysis to ensure that no person or group shall be discriminated 
against on the basis of race, color, sex, national origin, religion, 
age, disability, or marital or family status.
    These amendments to the LMR regulations do not alter any of the 
findings of the Civil Rights Impact Analysis on the LMR regulations.

Regulatory Flexibility Act

    This rule has been reviewed under the requirements of the 
Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.). The purpose of 
the RFA is to consider the economic impact of a rule on small business 
entities. Alternatives, which would accomplish the objectives of the 
rule without unduly burdening small entities or erecting barriers that 
would restrict their ability to compete in the marketplace have been 
evaluated. Regulatory action should be appropriate to the scale of the 
businesses subject to the action. The collection of information is 
necessary for the proper performance of the functions of AMS concerning 
the mandatory reporting of livestock information. The Act (7 U.S.C. 
1635-1636) requires AMS to collect and publish livestock market 
information. The required information is only available directly from 
those entities required to report under the Act and by the LMR 
regulations and exists nowhere else. Therefore, the LMR regulations do 
not duplicate market information reasonably accessible to the Agency.
    In formulating this rule, particular consideration was given to 
reducing the burden on entities while still achieving the objectives of 
the LMR regulations. Accordingly, thresholds were set which would 
redefine those sales transactions considered to be ``carlot-based'' and 
therefore required to be reported under the LMR program, and those 
entities which would be required to report information on sales of 
imported boxed lamb cuts including applicable branded product.
    This final rule will require packers to report information on 
carlot-based sales transactions of boxed lamb cuts consisting of 1,000 
pounds or more of one or more individual boxed lamb items. The 
definition of ``carlot-based'' will be amended to read, ``The term 
`carlot-based', when used in reference to lamb carcass sales, means any 
transaction between a buyer and a seller destined for three or less 
delivery stops consisting of any combination of carcass weights. When 
used in reference to boxed lamb cuts sales, the term `carlot-based' 
means any transaction between a buyer and a seller consisting of 1,000 
pounds or more of one or more individual boxed lamb items.''
    Additionally, this final rule will also require importers that 
imported an average of 2,500 metric tons of lamb meat products per year 
to report information on sales transactions of boxed lamb cuts. The 
definition of ``importer'' will be amended to read, ``For any calendar 
year, lamb importers that imported an average of 2,500 metric tons of 
lamb meat products per year during the immediately preceding 5 calendar 
years would be required to report. Additionally, lamb importers that 
did not import an average of 2,500 metric tons of lamb meat products 
during the immediately preceding 5 calendar years if the USDA 
determines that the person should be considered an importer based on 
the volume of lamb imports are required to report.''
    Implementation of the amendment redefining the term ``carlot-
based'' will not change the number of entities required to submit 
information on sales of boxed lamb cuts under the LMR regulations.
    Implementation of the amendment redefining the term ``importer'' 
will slightly increase the original estimate of the number of lamb 
importers required to submit information on sales of imported boxed 
lamb cuts under the LMR regulations. After analyzing the U.S. Customs 
Service data for total lamb imported into the U.S. by importer for each 
of the 5 years between 1998 and 2002, AMS believes that the 2,500 
metric ton threshold will now cover eight importers of lamb into the 
U.S. (one importer is also a packer).
    Accordingly, AMS has also prepared a regulatory flexibility 
analysis. The RFA compares the size of meat packing plants to the 
Standard Industrial Code (SIC) established by the Small Business 
Administration (SBA) (13 CFR 121.201) to determine the percentage of 
small businesses within the meat packing industry and the wholesale 
meat products trade, including importers. Under these size standards, 
meat packing companies with 500 or less employees are considered small 
business entities (SIC 2011) and lamb importers with 100 or less 
employees are considered small business entities (SIC 5147).
    The objective of this rule is to improve the price and supply 
reporting services of USDA. AMS believes that this objective can be 
accomplished by amending the definitions of the terms ``carlot-based'' 
and ``importer'' in the LMR regulations.
    The LMR regulations provide for the mandatory reporting of market 
information by livestock packers who for any calendar year have 
slaughtered a certain number of livestock during the immediately 
preceding 5 calendar years. Lamb plants required to report include 
those that for any calendar year slaughter or process the equivalent of 
75,000 head per year during the immediately preceding 5 calendar years. 
Additionally, for any calendar year lamb importers that imported an 
average of 5,000 metric tons of lamb meat products per calendar year 
during the immediately preceding 5 calendar years are also required to 
report details of their purchases. Additionally, lamb packers and lamb 
meat processors and importers that did not slaughter or process the 
equivalent of 75,000 head per year or import 5,000 metric tons of lamb 
meat products per year during the immediately preceding 5 calendar 
years are required to report if the USDA determines that they should be 
considered an importer based on their volume of lamb imports. This rule 
amends the LMR regulations to redefine those entities considered as 
importers

[[Page 53788]]

by changing the 5,000 metric ton provision to 2,500 metric tons.
    These packers and importers are required to report the details of 
all transactions involving domestic sales of boxed lamb cuts including 
applicable branded product, and imported boxed lamb cuts including 
applicable branded product to AMS. Lamb information is reported to AMS 
according to the schedule mandated by the LMR regulations with sales of 
boxed lamb cuts reported once each day. Previous week sales of imported 
boxed lamb cuts including applicable branded boxed lamb cuts are 
reported once weekly on the first reporting day of the week.
    For any calendar year, lamb packers required to report include 
those that slaughtered or processed the equivalent of 75,000 head per 
year during each of the immediately preceding 5 calendar years. Also 
included are processing plants that did not slaughter or process an 
average of 75,000 lambs during the immediately preceding 5 calendar 
years but are determined to be a packer by USDA based on the capacity 
of the processing plant. For any calendar year, an importer that 
imported an average of 2,500 metric tons of lamb meat products per year 
during the immediately preceding 5 calendar years will be required to 
report under this rule. Additionally, a lamb importer that did not 
import an average of 2,500 metric tons of lamb meat products during the 
immediately preceding 5 calendar years will also be required to report 
under this proposed rule if USDA determines that the person should be 
considered an importer based on the volume of lamb imports. Under this 
proposal, 20 individual plants including importers would be required to 
report information on boxed lamb sales. Based on the criteria 
established by the SBA to classify small businesses (SIC 2011 and 
5147), all 20 of these lamb plants and importers would be considered 
small businesses with no lamb packer employing more than 500 people and 
no lamb importer employing more than 100 people. The figure of 20 lamb 
packer and importer plants required to report represents approximately 
3.0% of the lamb plants and importers in the U.S. Nearly all of the 
remaining approximately 97.0% of lamb plants and importers would be 
considered small businesses and would be exempt from mandatory 
reporting.
    The LMR regulations require the reporting of specific market 
information regarding the buying and selling of livestock and livestock 
products. The information is reported to AMS by electronic means and 
the adoption of this rule will not affect this requirement. Electronic 
reporting involves the transfer of data from a packer's or importer's 
electronic recordkeeping system to a centrally located AMS electronic 
database. The packer or importer is required to organize the 
information in an AMS-approved format before electronically 
transmitting the information to AMS.
    Once the required information has been entered into the AMS 
database, it is aggregated and processed into various market reports 
which are released according to the daily and weekly time schedule set 
forth in the LMR regulations. As an alternative, AMS also developed and 
made available web-based input forms for submitting data online as AMS 
found that some of the smaller entities covered under mandatory price 
reporting would benefit from such a web-based submission system.
    In the LMR regulations, AMS estimated the total annual burden on 
each small lamb packer to be $7,860 including $5,875 for annual costs 
associated with electronically submitting data, $150.00 for annual 
share of initial startup costs of $750, and $1,830 for the storage and 
maintenance of electronic files that were submitted to AMS. AMS 
estimated the total annual burden on each small importer of lamb to be 
$2,070 including $87 for annual costs associated with electronically 
submitting data, $150.00 for annual share of initial startup costs of 
$750, and $1,830 for the storage and maintenance of electronic files 
that were submitted to AMS.
    This rule does not substantially change these prior estimates. 
While adjusting the 5,000 metric ton provision that establishes those 
lamb importers covered under the LMR regulations to 2,500 metric tons 
increases the number of lamb importers required to report to eight, the 
estimated annual cost burden per importer of $2,070 remains the same. 
Amending the definition for the term ``carlot-based'' by limiting 
covered sales of boxed lamb cuts to those consisting of 1,000 pounds or 
more of one or more individual boxed lamb items is expected to lessen 
the number of covered sales transactions that are submitted to AMS. 
However, AMS's submission burden estimates were based on lamb packers 
and importers using electronic reporting methods to automatically 
compile and submit required information. AMS believes the burden 
savings resulting from electronically compiling and submitting a 
reduced number of sales transactions to be negligible considering that 
the speed of electronic systems is measured in milliseconds.
    Each packer and importer required to report information to USDA 
must maintain such records as are necessary to verify the accuracy of 
the information provided to AMS. This includes information regarding 
price, class, head count, weight, quality grade, yield grade, and other 
factors necessary to adequately describe each transaction. These 
records are already kept by the industry. Reporting packers and 
importers are required by the LMR regulations to maintain and to make 
available the original contracts, agreements, receipts, and other 
records associated with any transaction relating to the purchase, sale, 
pricing, transportation, delivery, weighing, slaughter, or carcass 
characteristics of all livestock. Reporting packers and importers are 
also required to maintain copies of the information provided to AMS. 
All of the above-mentioned paperwork must be kept for at least 2 years. 
Packers and importers are not required to report any other new or 
additional information that they do not generally have available or 
maintain. Further, they are not required to keep any information that 
would prove unduly burdensome to maintain. The paperwork burden that is 
imposed on the packers and importers is further discussed in the 
section entitled Paperwork Reduction Act that follows.
    In addition, AMS has not identified any relevant Federal rules that 
are currently in effect that duplicate, overlap, or conflict with this 
rule.
    Professional skills required for recordkeeping under the LMR 
regulations are not different than those already employed by the 
reporting entities. Reporting is accomplished using computers or 
similar electronic means. This rule does not affect the professional 
skills required for recordkeeping.
    The LMR regulations require lamb slaughter and processing plants 
and lamb importers of a certain size to report information to the USDA 
at prescribed times throughout the day and week. The LMR regulations 
already exempt many small businesses by the establishment of daily 
slaughter, processing, and import capacity thresholds. Based on figures 
published by the National Agricultural Statistics Service, there were 
525 lamb federally inspected slaughter plants operating in the U.S. at 
the end of 2002. The LMR regulations require 20 lamb packers and 
importers to report information (approximately 2% of all federally 
inspected lamb plants and approximately 1% of all lamb importers). 
Therefore, approximately 98% of all lamb packers and approximately 99% 
of lamb importers

[[Page 53789]]

are not required to report. As discussed earlier, this rule does not 
change this requirement.
    With regard to alternatives, if the definitions of importer and 
carlot-based are not changed, AMS would continue to be hindered in 
reporting more accurate and reliable information on sales of imported 
and domestic boxed lamb cuts.
    AMS will continue to work actively with those small businesses 
required to report to minimize the burden on them to the maximum extent 
practicable.

Paperwork Reduction Act

    In accordance with OMB regulation (5 CFR part 1320) that implements 
the Paperwork Reduction Act (44 U.S.C. chapter 35), the information 
collection has been previously approved by OMB and assigned OMB control 
number 0581-0186. A revised information collection package was 
submitted and approved by OMB for a 15 hour increase in total burden 
hours.
    The purpose of this rule is to amend the LMR regulations (65 FR 
75464) to modify the requirement for the submission of information on 
domestic and imported boxed lamb cuts sales. All other provisions of 
the LMR regulations will remain the same. Adjusting the 5,000 metric 
ton provision that establishes those lamb importers covered under the 
LMR regulations to 2,500 metric tons increases the estimated number of 
lamb importers required to report from six to eight. This change will 
not substantially impact the overall total burden hours. The estimated 
annual cost burden per importer of $2,070 remains the same. Amending 
the definition for the term ``carlot-based'' by limiting covered sales 
of boxed lamb cuts to those consisting of 1,000 pounds or more of one 
or more individual boxed lamb items is expected to lessen the number of 
covered sales transactions required to be submitted to AMS. However, 
AMS's submission burden estimates were based on lamb packers and 
importers using electronic reporting methods to automatically compile 
and submit required information. AMS believes the burden savings 
resulting from electronically compiling and submitting a reduced number 
of sales transactions to be negligible considering that the speed of 
electronic systems is measured in milliseconds.
    AMS is committed to implementation of the Government Paperwork 
Elimination Act which provides for the use of information resources to 
improve the efficiency and effectiveness of governmental operations, 
including providing the public with the option of submitting 
information or transacting business electronically to the extent 
practicable.

List of Subjects in 7 CFR Part 59

    Lamb, Livestock, Reporting, Importer.

0
For the reasons set forth in the preamble, Chapter I, of Title 7 of the 
Code of Federal Regulations is amended as follows:

PART 59--LIVESTOCK MANDATORY REPORTING

0
1. The authority citation for part 59 continues to read as follows:

    Authority: 7 U.S.C. 1621 et seq.

Subpart D--Lamb Reporting

0
2. The definition of the term Carlot-based is revised to read as 
follows:


Sec.  59.300  Definitions.

* * * * *
    Carlot-based. The term Carlot-based when used in reference to lamb 
carcass sales means any transaction between a buyer and a seller 
destined for three or more delivery stops consisting of any combination 
of carcass weights. When used in reference to boxed lamb cuts sales, 
the term Carlot-based means any transaction between a buyer and a 
seller consisting of 1,000 pounds or more of one or more individual 
boxed lamb items.
* * * * *

0
3. In the definition of the term Importer, the number ``5,000'' is 
revised to read ``2,500'' each time it appears.

    Dated: August 27, 2004.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 04-19985 Filed 9-1-04; 8:45 am]
BILLING CODE 3410-02-P