This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

14777 

Vol. 76, No. 53 

Friday, March 18, 2011 

FEDERAL LABOR RELATIONS 

AUTHORITY 

5 CFR Part 5901 

Supplemental Standards of Ethical 

Conduct for Employees of the Federal 

Labor Relations Authority 

AGENCY: Federal Labor Relations 

Authority (FLRA). 

ACTION: Final rule. 

SUMMARY: The Federal Labor Relations 

Authority (FLRA), with the concurrence 

of the Office of Government Ethics 

(OGE), is adopting as final, without 

change, the interim FLRA rule that 

supplements the executive-branch-wide 

Standards of Ethical Conduct 

(Standards) issued by OGE and, with 

certain exceptions, requires FLRA 

employees to obtain approval before 

engaging in outside employment. 

DATES: This final rule is effective March 

18, 2011. 

FOR FURTHER INFORMATION CONTACT: Rosa 

M. Koppel, Solicitor, at 

rkoppel@flra.gov, fax: (202) 343–1007. 

SUPPLEMENTARY INFORMATION: The FLRA 

published, with OGE concurrence, an 

interim rule in 75 FR 79261, on 

December 20, 2010, governing the 

conduct of FLRA employees and 

requested comments. No comments 

were received. The FLRA has 

determined, with OGE concurrence, to 

adopt the interim rule as final without 

change. The interim rule being adopted 

as final provides that an FLRA 

employee, other than a special 

Government employee, must obtain 

approval before engaging in outside 

employment. The rule defines outside 

employment and sets out the procedure 

for seeking approval. The rule also 

provides that the Designated Agency 

Ethics Official (DAEO) or alternate 

DAEO may exempt certain categories of 

employment from the prior approval 

requirement. 

For a detailed section analysis of this 

final rule, see the preamble of the 

interim rule as published in 75 FR 

79261. 

Regulatory Flexibility Act 

The FLRA has determined, pursuant 

to the Regulatory Flexibility Act, 5 

U.S.C. chapter 6, that this rulemaking 

will not have a significant economic 

impact on a substantial number of small 

entities because it primarily affects 

FLRA employees. 

Paperwork Reduction Act 

The Paperwork Reduction Act, 44 

U.S.C. chapter 35, does not apply 

because this rulemaking does not 

contain information collection 

requirements subject to the approval of 

the Office of Management and Budget. 

Congressional Review Act 

The FLRA has determined that this 

rule is not a rule as defined in 5 U.S.C. 

804, and thus, does not require review 

by Congress. 

List of Subjects in 5 CFR Part 5901 

Conflict of interest, Government 

employees. 

Authority and Issuance 

Accordingly, the Federal Labor 

Relations Authority, with the 

concurrence of the Office of 

Government Ethics, is adopting the 

interim rule adding 5 CFR chapter XLIX, 

consisting of part 5901, which was 

published at 75 FR 79261 on December 

20, 2010, as a final rule without change. 

Dated: March 9, 2011. 

Carol Waller Pope, 

Chairman, Federal Labor Relations Authority. 

Approved: March 11, 2011. 

Robert I. Cusick, 

Director, Office of Government Ethics. 

[FR Doc. 2011–6335 Filed 3–17–11; 8:45 am] 

BILLING CODE 6727–01–P 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Part 1150 

[Docket No. DA–08–07: AMS–DA–08–0050] 

RIN 0581–AC87 

National Dairy Promotion and 

Research Program; Final Rule on 

Amendments to the Order 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Final rule. 

SUMMARY: This document implements 

amendments to the Dairy Promotion and 

Research Order (Order). This action is 

pursuant to the Farm Security and Rural 

Investment Act of 2002 (2002 Farm Bill) 

and the Food, Conservation, and Energy 

Act of 2008 (2008 Farm Bill). The 2002 

Farm Bill mandates that the Order be 

amended to implement an assessment 

on imported dairy products to fund 

promotion and research and to add 

importer representation, initially two 

members, to the National Dairy 

Promotion and Research Board (Board). 

The 2008 Farm Bill specifies a 

mandatory assessment rate of 7.5 cents 

per hundredweight of milk, or 

equivalent thereof, on dairy products 

imported into the United States. This 

final rule, in accordance with the 2008 

Farm Bill, also amends the term ‘‘United 

States’’ in the Dairy Production 

Stabilization Act of 1983 (Act) to mean 

all States, the District of Columbia, and 

the Commonwealth of Puerto Rico. 

Producers in these areas will be 

assessed 15 cents per hundredweight for 

all milk produced and marketed. 

DATES: Effective Dates: These 

amendments are effective April 1, 2011 

except for § 1150.152(b) which is 

effective August 1, 2011. 

FOR FURTHER INFORMATION CONTACT: 

Whitney Rick, USDA, AMS, Dairy 

Programs, Promotion and Research 

Branch, Stop 0233–Room 2958–S, 1400 

Independence Avenue, SW., 

Washington, DC 20250–0233, (202) 720– 

6909, Whitney.Rick@ams.usda.gov. 

SUPPLEMENTARY INFORMATION: This final 

rule is being issued pursuant to the 

Dairy Production Stabilization Act of 

1983 (7 U.S.C. 4501–4514), Public Law 

98–180, enacted November 29, 1983, as 

amended May 13, 2002, by Public Law 

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107–171 and further amended June 18, 

2008, by Public Law 110–246. Prior 

Documents in this proceeding: Proposed 

Rule and Opportunity to File 

Comments, Including Written 

Exceptions, on Proposed Amendments 

to the Order: Issued May 12, 2009; 

published May 19, 2009 (74 FR 23359). 

Executive Orders 12866 and 13563 

This rule has been determined to be 

significant pursuant to Executive Order 

12866 and, therefore, has been reviewed 

by the Office of Management and 

Budget. The updated cost-benefit 

analysis for this final rule is available at 

http://www.ams.usda.gov/ 

dairyimportassessment. 

A requirement of 7 U.S.C. 4514 and 

6407 requires the U.S. Department of 

Agriculture to conduct an independent 

analysis of the dairy checkoff programs. 

The independent analysis, conducted by 

Cornell University, has consistently 

shown that the program has had a 

positive and statistically significant 

impact on per capita dairy 

consumption. Specifically, generic 

advertising and promotion of dairy 

products increases both the quantities 

consumed and prices. For 2008, it was 

estimated the farm milk price was $0.21 

to $0.26 per hundredweight higher and 

the quantity demanded was 2.3 percent 

higher because of the program. Results 

from this analysis show that the average 

Benefit-Cost Ratios for the Dairy 

Program was 5.49 (nonfat solids basis) 

and 7.07 (milk fat basis) from 1998 

through 2008. This means that each 

dollar invested in generic dairy 

marketing by dairy farmers during the 

period would return between $5.49 and 

$7.07, on average, in net revenue to 

farmers. Additionally, the Report to 

Congress estimates the elasticity of 

advertising to be .034 on a nonfat basis 

and 0.027 on a fat basis. For further 

details, see http://www.ams.usda.gov/ 

AMSv1.0/FindaReporttoCongress. 

Assessments to U.S. dairy producers 

under the Order are relatively small 

compared to producer revenue. If dairy 

producers in Alaska, Hawaii, the 

District of Columbia, and the 

Commonwealth of Puerto Rico had paid 

assessments of $0.15 per hundredweight 

of milk marketed in 2008, it is estimated 

that $1.1 million would have been paid. 

This is about 0.5 percent of the $195 

million total value of milk produced 

and marketed in these areas. 

The total of assessments collected 

from importers under the National Dairy 

Promotion and Research Program are 

expected to be relatively small 

compared to the value of dairy imports. 

If importers had been assessed $0.075 

per hundredweight, or equivalent 

thereof, for imported dairy products in 

2008 as specified in this rule, it is 

estimated that about $4.9 million would 

have been paid. This is about 0.2 

percent of the $2.6 billion value of the 

dairy products imported in 2008. 

Examination of import volumes for 

2008 indicates that tariff rate quotas 

(TRQs) constrain dairy imports in 

varying degrees. TRQs do not seem to be 

a significant hindrance to the volume 

imported for many dairy products. 

Significant quantities of dairy products 

imported are not subject to TRQs. 

The U.S. Dairy Export Council, a 

subsidiary of the Board, directs a global 

ingredients program and promotes dairy 

ingredients domestically and U.S. dairy 

ingredients internationally. Through 

importer representation on the Board 

and possible establishment of qualified 

dairy product promotion, research, or 

nutrition education programs (qualified 

programs) by importers, imported 

products could be promoted to a greater 

extent than under the current program. 

Civil Rights Analysis 

The potential civil rights implications 

of this rule on affected parties have been 

considered to ensure that no person or 

group shall be discriminated against on 

the basis of race, color, national origin, 

gender, religion, age, disability, sexual 

orientation, marital or family status, 

political beliefs, parental status, or 

protected genetic information. This 

review included persons that are 

employees of the entities that are subject 

to these regulations. This final rule does 

not require affected entities to relocate 

or alter their operations in ways that 

could adversely affect such persons or 

groups. Moreover, the amendments 

would not exclude from participation 

any persons or groups, deny any 

persons or groups the benefits of the 

program, or subject any persons or 

groups to discrimination. 

Executive Order 12988 

This final rule has been reviewed 

under Executive Order 12988, Civil 

Justice Reform. This final rule is not 

intended to have a retroactive effect. 

Section 4512(a) of the Act provides that 

nothing in the National Dairy Promotion 

and Research Program (National 

Program) may be construed to preempt 

or supersede any other program relating 

to dairy product promotion organized 

and operated under the laws of the 

United States or any State. 

The Dairy Production Stabilization 

Act of 1983 (Act) authorizes the 

National Program. The Act provides that 

administrative proceedings must be 

exhausted before parties may file suit in 

court. Under section 4509 of the Act, 

any person subject to the Order may file 

with the Secretary a petition stating that 

the Order, any provision of the Order, 

or any obligation imposed in connection 

with the Order is not in accordance with 

the law and requesting a modification of 

the Order or to be exempted from the 

Order. A person subject to an Order is 

afforded the opportunity for a hearing 

on the petition. After a hearing, the 

Secretary would rule on the petition. 

The Act provides that the district court 

of the United States in any district in 

which the person is an inhabitant, or 

has his principal place of business, has 

jurisdiction to review the Secretary’s 

ruling on the petition, provided a 

complaint is filed not later than 20 days 

after the date of the entry of the ruling. 

Executive Order 13175 

This final rule has been reviewed in 

accordance with the requirements of 

Executive Order 13175, Consultation 

and Coordination with Indian Tribal 

Governments. The review reveals that 

this regulation will not have substantial 

and direct effects on Tribal governments 

and will not have significant Tribal 

implications. 

Executive Order 13132 

This final rule has been reviewed in 

accordance with the requirements of 

Executive Order 13132, Federalism. 

USDA has determined that this final 

rule conforms with the Federalism 

principles set forth in the Executive 

Order, and that this final rule does not 

have Federalism implications. 

Regulatory Flexibility Act 

In accordance with the Regulatory 

Flexibility Act (5 U.S.C. 601–612), the 

Agricultural Marketing Service has 

considered the economic impact of this 

action on small entities and has certified 

that this final rule will not have a 

significant economic impact on a 

substantial number of small entities. 

The purpose of the Regulatory 

Flexibility Act is to fit regulatory actions 

to the scale of businesses subject to such 

actions so that small businesses will not 

be disproportionately burdened. 

The Dairy Production Stabilization 

Act of 1983 authorizes a national 

program for dairy product promotion, 

research and nutrition education. 

Congress found that it is in the public 

interest to authorize the establishment 

of an orderly procedure for financing 

(through assessments on all milk 

produced in the United States for 

commercial use and on imported dairy 

products) and carrying out a 

coordinated program of promotion 

designed to strengthen the dairy 

industry’s position in the marketplace 

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1Any producer that sells milk directly to 

consumers shall remit the assessment directly to the 

Board. 

and to maintain and expand domestic 

and foreign markets and uses for fluid 

milk and dairy products. 

As directed by the 2008 Farm Bill, 

approximately 360 producers in Alaska, 

Hawaii, the District of Columbia, and 

the Commonwealth of Puerto Rico will 

become subject to the provisions of the 

Order as of the effective date of this 

final rule. The Small Business 

Administration [13 CFR 121.201] 

defines small dairy producers as those 

having annual receipts of not more than 

$750,000 annually. Most of the 

producers who will become subject to 

the provisions of the Order are 

considered small entities. 

Assessments to dairy producers under 

the Order are relatively small compared 

to producer revenue. If dairy producers 

in Alaska, Hawaii, the District of 

Columbia, and the Commonwealth of 

Puerto Rico had paid assessments of 

$0.15 per hundredweight of milk 

marketed in 2008, it is estimated that 

$1.1 million would have been paid. This 

is about 0.5 percent of the $195 million 

total value of milk produced and 

marketed in these areas. 

The assessment for dairy producers in 

Alaska, Hawaii, the District of 

Columbia, and the Commonwealth of 

Puerto Rico will be collected by persons 

who pay the producers for milk 

produced and marketed, and the money 

will be remitted to the Board.1 These 

responsible persons, usually milk 

handlers, incur the costs of calculating 

the assessment due from each dairy 

producer; forwarding a form monthly to 

the Board; and sending checks or other 

negotiable instruments of legal tender to 

the Board and designated qualified 

programs. The responsible persons 

maintain any records that are necessary 

to account for the collection of the 

15-cent assessment. Books and records 

for producers and persons collecting 

assessments subject to the Order shall 

be maintained for two years beyond the 

fiscal period of their applicability. 

These books and records would be made 

available to employees or agents of the 

Board or the Department for inspection 

during normal business hours if 

necessary for verification purposes. 

For the purpose of the Regulatory 

Flexibility Act, a dairy products 

manufacturer is a small business if it 

has fewer than 500 employees. For 

purposes of determining a milk 

handler’s size, if the plant is part of a 

larger company operating multiple 

plants that collectively exceed the 500- 

employee limit, the plant is considered 

a large business even if the local plant 

has fewer than 500 employees. While 

the number of anticipated responsible 

persons collecting assessments under 

the Order in Alaska, Hawaii, the District 

of Columbia, and the Commonwealth of 

Puerto Rico are not known, it is 

expected that most would be considered 

small businesses. 

According to U.S. Customs and 

Border Protection (CBP), there were 

about 3,000 importers of dairy products 

listed in § 1150.152 (b) in 2007 and 

2008. Although data is not available 

concerning the sizes of these firms, it is 

reasonable to assume that most of them 

would be considered small businesses. 

Although many types of businesses 

import dairy products, the most 

common classification for dairy product 

importers is Grocery and Related 

Product Merchant Wholesalers (North 

American Industry Classification 

System, category 4244). The Small 

Business Administration [13 CFR 

121.201] defines such entities with 

fewer than 100 employees as small 

businesses. According to 2006 statistical 

data from the U.S. Census Bureau, 95.2 

percent of these types of businesses had 

fewer than 100 employees (http:// 

www.census.gov/econ/susb/). 

This final rule imposes minimal 

reporting and recordkeeping 

requirements on importers subject to the 

Order. Books and records for importers 

subject to the Order shall be maintained 

for two years beyond the calendar year 

in which the import occurs. These 

books and records would be made 

available only to the Secretary for 

inspection during normal business 

hours if necessary for verification 

purposes. The proposed rule would 

have required importers subject to the 

Order to make books and records 

available to the Board, but this will not 

be required as a result of changes in this 

final rule. This rule requires importers 

to calculate assessments due based upon 

documentation concerning the cow’s 

milk solids content of the imported 

products. Products shall be assessed at 

the rate of $0.01327 per kilogram of 

cow’s milk solids. 

In many cases, the importer would 

have this documentation on hand as 

part of normal business practice. 

Importers must maintain books and 

records sufficient to verify that products 

have been properly classified according 

to the Harmonized Tariff Schedule 

(HTS). For some HTS codes, this 

includes books and records indicating 

that the milk solids content falls within 

a certain range. Default assessment rates 

listed in the proposed rule are 

eliminated in this final rule. 

Assessments to importers under the 

Order are expected to be relatively small 

compared to the value of dairy imports. 

If importers had been assessed $0.075 

per hundredweight of milk, or 

equivalent thereof, on imported dairy 

products in 2008, as specified in this 

rule, it is estimated that about $4.9 

million would have been paid. This is 

about 0.2 percent of the $2.6 billion 

value of the imported dairy products. 

This final rule provides for 

organizations that conduct qualified 

programs to receive assessment funds as 

designated by individual importers. 

Additionally, this final rule includes a 

provision that permits importers and 

organizations of importers, as approved 

by the Secretary, to nominate importer 

representatives to the Board. Such 

organizations would generally consist of 

importers who are considered mostly 

small entities. 

Paperwork Reduction Act 

Information collection requirements 

and recordkeeping provisions contained 

in 7 CFR part 1150 have been previously 

approved by the Office of Management 

and Budget and assigned OMB Control 

Number 0581–0093 under the 

Paperwork Reduction Act of 1995 (44 

U.S.C. chapter 35). Section 1601 of the 

2002 Farm Bill (Pub. L. 107–171) and 

section 1601 of the 2008 Farm Bill (Pub. 

L. 110–246) exempt this rule from the 

Paperwork Reduction Act. Although 

exempted, the requirements of the 

Paperwork Reduction Act were 

considered in developing the provisions 

of this final rule. The information 

collection requirements are minimal but 

essential to carry out the intent of the 

Dairy Production Stabilization Act of 

1983. The final amended Order 

provisions have been carefully reviewed 

and every effort has been made to 

minimize recordkeeping costs or 

requirements. 

Under the final amended Order 

provisions, importers will be 

responsible to pay assessments. CBP 

will serve as the collecting agent for 

assessments on imported dairy products 

and will remit the assessments to the 

Board. Importers will be required to 

provide records to the Secretary on 

occasions when additional information 

is needed as evidence of compliance, or 

in cases when the importer seeks a 

reimbursement of assessments. Such 

records must be retained for at least two 

years beyond the calendar year of their 

applicability. 

Additionally, each person making 

payment to a producer for milk 

produced in the United States and 

marketed for commercial use collects an 

assessment for all such milk handled. 

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These responsible persons calculate the 

assessments due from each dairy 

producer. Under the final amended 

Order provisions, responsible persons 

making payments to dairy producers in 

Alaska, Hawaii, the District of 

Columbia, and the Commonwealth of 

Puerto Rico will be required to collect 

and remit assessments and file reports 

with the Board. The Order imposes 

certain recordkeeping requirements on 

responsible persons; however, 

information required under the Order 

could be compiled from currently 

maintained records. Any producer 

marketing milk of that producer’s own 

production directly to consumers is a 

responsible person. Such records must 

be retained for at least two years beyond 

the calendar year of their applicability. 

The forms by which producer 

information is to be collected require 

the minimum information necessary to 

effectively carry out the requirements of 

the Order. There are no training 

requirements for individuals filling out 

reports and remitting assessments to the 

Board. The forms are designed to be 

simple and easy to understand, placing 

as small a burden as possible on the 

persons required to file the information. 

The timing and frequency of 

collecting information are intended to 

meet the needs of the National Program 

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 responsible 

persons who are subject to the 

provisions of the Order. Therefore, there 

is no practical method for collecting the 

required producer information without 

the use of these forms. 

The assessment places a minimal 

burden on newly regulated producers or 

importers who seek to direct monies to 

qualified programs. The amount of time 

required to designate to a qualified 

program is estimated to be 15 minutes 

to prepare a written request. Qualified 

programs are certified by the Secretary 

to receive assessment money from 

producers and importers for the purpose 

of promoting dairy products. 

The amended Order provisions would 

place a minimal burden on newly 

regulated producers or importers who 

seek nomination to serve on the Board. 

Importers and producers would be 

required to complete a background 

information form for submission to the 

Secretary. The estimated time for 

completing the form is 30 minutes, 

which includes time for reviewing 

instructions, searching existing data 

sources, gathering and maintaining the 

data needed, and completing and 

reviewing the form. Additionally, there 

would be minimal burden on importer 

organizations that voluntarily request to 

be approved by the Secretary to 

participate in the National Program by 

making nominations to the Board. The 

estimated time for reporting this is 30 

minutes. 

Currently, a producer who operates 

under an approved National Organic 

Program (NOP) (7 CFR part 205) 

certificate and thus only produces 

products that are eligible to be labeled 

as 100 percent organic under the NOP, 

and is not a split operation, shall be 

exempt from the payment of 

assessments. The final rule provides 

that an importer who imports only 

products that are eligible to be labeled 

as 100 percent organic under the NOP 

(7 CFR part 205) and who is not a split 

operation, would likewise be exempt 

from the payment of assessments. The 

Order places a minimal burden on a 

producer or importer applying for such 

an exemption. The producer or importer 

must provide a request to the Board, on 

a form provided by the Board, at any 

time initially and annually thereafter. 

The documentation is the same for 

importers as for producers. 

In addition, there are some 

requirements for information from 

importers that are occasional. For 

example, if an importer files for 

reimbursement or applies for 

reimbursement of assessments from the 

Secretary for an overpayment, 

circumstances dictate the time that it 

would take for the importer to gather the 

information necessary to make the 

claim. Assembling and transmitting the 

necessary documentation to the 

Secretary would place a minimal 

burden on importers. 

AMS is committed to complying with 

the E-Government Act, to promote the 

use of the Internet and other 

information technologies, and to 

provide increased opportunity for 

citizen access to Government 

information and services and for other 

purposes. 

Background 

The Dairy Production Stabilization 

Act of 1983 (Act) authorizes the Order 

for dairy product promotion, research, 

and nutrition education as part of a 

comprehensive strategy to increase 

human consumption of milk and dairy 

products and to reduce milk surpluses. 

The National Program functions to 

strengthen the dairy industry’s position 

in the marketplace by maintaining and 

expanding domestic and foreign 

consumption of fluid milk and dairy 

products. 

Section 1505 of the 2002 Farm Bill 

requires that the Order be amended to 

implement a mandatory assessment on 

dairy products imported into the United 

States and that the assessment be 

submitted to CBP at the time entry 

documents are filed. 

Section 1507 of the 2008 Farm Bill 

amended the term ‘‘United States’’ in 

section 4502(1) of the Act to mean all 

of the States, the District of Columbia, 

and the Commonwealth of Puerto Rico. 

This amendment requires that Alaska, 

Hawaii, the District of Columbia, and 

the Commonwealth of Puerto Rico be 

added to the existing regions of the 

Board and that producers in these areas 

be assessed 15 cents per hundredweight 

on all milk produced and marketed 

commercially. 

Section 10607 of the 2002 Farm Bill 

provides for an exemption from 

payment of assessments by organic milk 

producers and importers of organic 

dairy products. Section 1150.157 of the 

Order currently provides the specific 

requirements necessary for producers to 

receive the exemption. See 70 FR 2744 

for a complete discussion of 

implementation of the provisions of 

section 10607 of the 2002 Farm Bill as 

it relates to promotion and research 

programs for other agricultural 

commodities. The same reasoning in 

70 FR 2744 is applied in this final rule 

and, accordingly, provides for an 

exemption for dairy importers. 

A producer that operates under an 

approved National Organic Program 

(NOP) (7 CFR part 205) certificate and 

thus only produces products that are 

eligible to be labeled as 100 percent 

organic under the NOP, and is not a 

split operation, would be exempt from 

the payment of assessments. An 

importer who imports only products 

that are eligible to be labeled as 100 

percent organic under the NOP (7 CFR 

part 205), and is not a split operation, 

also would be exempt from the payment 

of assessments. To receive the 

exemption, producers and importers of 

products labeled as 100 percent organic, 

and who do not produce or market any 

non-organic products, would provide a 

request to the Board, on a form provided 

by the Board, at any time initially and 

annually thereafter. 

Additionally, the 2002 Farm Bill 

amendments authorize importers to 

have representation on the Board. 

Initially, importers are required to be 

represented by two importers appointed 

by the Secretary. Thereafter, importer 

representation on the Board will be 

adjusted at least once every three years, 

if necessary, to reflect the volume of 

imports relative to domestic production 

of milk. The amendments also specify 

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that importer assessments may not be 

used for foreign market promotion and 

that they be implemented in a manner 

consistent with United States trade 

obligations. 

The 2002 Farm Bill specifies that the 

assessment be 15 cents per 

hundredweight, or equivalent thereof, 

on dairy products imported into the 

United States. However, this rate was 

changed with the 2008 Farm Bill; 

section 1507 specifies that the 

assessment will be 7.5 cents per 

hundredweight of milk, or the 

equivalent thereof. The assessment is 

equivalent to one-half the payment 

domestic dairy farmers are required to 

remit. 

Finally, the 2002 Farm Bill amended 

the policy statement in the Act to make 

it clear that the purpose of the program 

is to expand the consumption of dairy 

products, whether produced 

domestically or imported. A program 

that promotes the substitution of a dairy 

product from one source with a dairy 

product from another source would not 

be consistent with this policy. Likewise, 

the Board and the Department will 

consider carefully whether any brand 

advertising or promotion would have a 

detrimental effect on other brands of 

dairy products before giving approval. 

No program would be approved if it 

would negatively affect similar domestic 

or imported dairy products. 

Subtitle F of Title 1 of the 2002 Farm 

Bill at section 1601 and Subtitle F of 

Title 1 of the 2008 Farm Bill at section 

1601 provide for the implementation 

timeframe and the promulgation of 

these regulations without regard to the 

Paperwork Reduction Act (44 U.S.C. 

chapter 35); the Statement of the Policy 

of the Secretary of Agriculture, effective 

July 24, 1971 (36 FR 13804); and the 

notice and comment provisions of 

section 533 of Title 5, United States 

Code. However, due to the interest of 

affected parties, a proposed rule was 

published in the Federal Register [74 

FR 3359] on May 19, 2009, inviting 

comments. Interested parties were 

provided 30 days to comment on the 

proposed amendments. 

The Department received 189 

comments from individuals, trade 

organizations, importer organizations, 

domestic dairy producers, domestic and 

foreign dairy cooperatives, foreign 

governments, domestic and foreign 

dairy companies, a foreign dairy 

promotion board, State governments, 

attorneys, and international trading 

companies. The issues raised in the 

comments that resulted in the greatest 

changes from the proposed rule 

concerned the use of default assessment 

rates and concerns over confidentiality 

and business information associated 

with compliance, enforcement, and 

recordkeeping. Other provisions 

changed or clarified in the final rule 

relate to milk solids content; 

Harmonized Tariff Schedule codes; 

qualified programs; referendum 

provisions; organic exemptions; duties 

of the board; and definitions of CBP, 

importer, and qualified programs. 

The 2002 Farm Bill mandates that the 

import assessment be implemented in a 

manner consistent with United States 

trade obligations. USDA has consulted 

with the Office of the United States 

Trade Representative to ensure that this 

final rule is consistent with the 

international trade obligations of the 

Federal Government. 

Summary of Comments and Changes 

From the Proposed Rule 

Default Assessment Rates 

Under the proposed rule, an importer 

with adequate documentation 

concerning the milk solids content of an 

imported dairy product would pay an 

assessment based upon milk solids 

content. Further, the proposed rule 

stated that an importer without 

adequate documentation concerning the 

milk solids content of an imported dairy 

product would pay a default assessment 

rate per HTS code. For most products, 

the default assessment rate for each HTS 

code would have been based upon 

estimated maximum milk solids 

content. 

Several commenters objected to the 

proposal to set default rates at the 

maximum milk solids content for most 

products. The commenters argued that 

this would be unequal treatment for 

importers in comparison to domestic 

producers. The Department does not 

agree with the commenters’ unequal 

treatment assertions. However, the 

Department has determined that in 

order to provide one clear and 

consistent method for importers to 

calculate the assessment, to simplify 

program administration, and to best 

effectuate the purposes of the Act, 

default assessment rates should not be 

included in the Order provisions. 

Accordingly, importers will be required 

to pay based upon cow’s milk solids 

content of imported dairy products. 

Since the mandatory 7.5-cents 

assessment is per one hundred pounds 

of milk, this final rule applies a 

standard rate of assessment per unit of 

milk solids. On average during the 

period January 2006 through December 

2007, a hundredweight of U.S. producer 

milk contained 12.45 pounds of milk 

solids (3.68 percent butterfat and 8.77 

percent nonfat milk solids). Since the 

assessment rate stated in the 2008 Farm 

Bill is 7.5 cents per hundredweight of 

milk or its equivalent, this final rule 

establishes the assessment rate per 

volume of imported milk solids as 

$0.00602 per pound ($0.075/12.45 

pounds) or $0.01327 per kg (1 kg = 

2.204623 pounds.) This rate shall be 

applied to the cow’s milk solids content 

for any imported product listed in the 

table displayed in section 

1150.152(b)(1). 

Several commenters also indicated 

that in some cases it is overly 

burdensome for the importer to obtain 

documentation concerning the milk 

solids content of the imported dairy 

products. The Department disagrees 

with these comments. Where 

documentation of cow’s milk solids 

content is not presently available, the 

importer could ask the seller or 

manufacturer to provide such 

information. Cow’s milk solids product 

content could be communicated to the 

importer through an invoice, packing 

slip, bill of lading, laboratory test 

results, a letter from the manufacturer 

on the manufacturer’s letterhead, or 

similar documents. 

Compliance and Enforcement 

Several commenters recommended 

that the final rule be amended to 

include provisions restricting access to 

confidential business information 

provided in connection with import 

assessments. As proposed, the rule gave 

the Board the discretion to verify milk 

solids content reported by importers to 

the CBP to determine if additional 

money is due the Board or if an amount 

is due to an importer. The commenters 

noted that the verification of milk solids 

content of some products requires more 

specific information on product 

composition than is currently required 

under applicable labeling and import 

regulations. Specifically, one 

commenter noted that verifying the 

calculation of the milk solids content of 

a particular product requires revealing 

the exact proportion of constituent 

components of that product, and as 

such, verification reports are likely to 

contain confidential, proprietary, and 

commercially sensitive data. In light of 

this, this section is modified to require 

the Secretary, not the Board, to verify 

information reported by importers. 

Section 1150.171(b) of the proposed 

rule would require importers of dairy 

products to submit reports as requested 

by the Board or the Department as 

necessary to verify that provisions 

pursuant to § 1150.152(b) have been 

carried out correctly, including 

verification that correct amounts were 

paid based upon milk solids content of 

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the imported dairy products pursuant to 

§ 1150.152(b). The proposed rule 

indicated that each importer of dairy 

products shall maintain and make 

available for inspection by employees of 

the Board and the Secretary such books 

and records to verify that provisions 

pursuant to § 1150.152(b) have been 

carried out correctly, including 

verification that correct amounts were 

paid based upon milk solids content of 

the import dairy products. As noted in 

the earlier discussion regarding 

provisions restricting access to 

confidential business information 

provided in connection with import 

assessments, these sections are hereby 

modified so that only the Secretary has 

access to confidential information. With 

this rule, CBP shall forward assessments 

directly to the Board. CBP shall provide 

information concerning the payments of 

individual importers to USDA instead of 

the Board. Additionally, each importer 

of dairy products shall maintain and 

make available for inspection by the 

Secretary, not the Board, such books 

and records as needed to verify 

provisions pursuant to § 1150.152(b) 

have been carried out correctly. 

Costs and Benefits; National Treatment; 

and U.S. Trade Obligations 

Several commenters argued that 

import assessments would amount to 

unfair treatment because some imported 

products will not benefit to the same 

extent as others. While not all imported 

dairy products are promoted, or receive 

little promotion, the same situation 

similarly exists with domestic dairy 

production; the Board does not 

specifically promote all dairy products. 

This is evidenced in the cost-benefit 

analysis, noting that the Board does not 

specifically advertise or promote ice 

cream, even though dairy farmers pay a 

15-cent per hundredweight assessment 

for milk used in the production of ice 

cream. Other examples would be food 

preparations, infant formula, and milk 

chocolate, all of which contain dairy 

products. Thus, the import assessment 

will be collected on all specified 

imported dairy products and imported 

products containing cow’s milk solids, 

whether or not the Board chooses to 

promote such products. The National 

Program provides benefits relative to all 

dairy products, whether or not they are 

specifically promoted. With increased 

dairy consumption, the market for milk 

solids tightens. Prices are higher for the 

entire array of products that contain 

milk solids, both domestic and 

imported. Even products that are not 

directly promoted through the National 

Program receive this benefit. 

It is important to note that not all 

domestic producers or importers would 

receive benefits equally. Some importers 

may benefit more than others due to the 

portfolio of dairy products promoted by 

the Board. An equivalent case can be 

made for domestic dairy producers. A 

dairy producer in a region with high 

cheese production may benefit from 

cheese promotions more than a dairy 

producer in a low cheese production 

area. Some commenters argued that 

dairy producers would receive equal 

benefits from the National Program 

because most of the milk is pooled 

under the Federal milk marketing order 

system or a similar State program. 

However, the Federal milk marketing 

order system and similar State programs 

do not cover all milk marketed and do 

not set the prices that dairy producers 

receive; rather, they require handlers to 

pay minimum prices. Handlers may, 

and often do, pay producers or their 

cooperative more than minimum prices 

required by the pools. Furthermore, 

pools in different regions of the country 

vary in milk utilization, and thus 

minimum prices required by the pools 

may reflect different levels of benefits 

from the National Program. 

One commenter noted that the current 

dairy promotion program primarily 

promotes fluid milk sales, and to a 

lesser degree, sales of American-style 

cheeses. The commenter also stated that 

the U.S. does not import fluid milk from 

Mexico, and that Mexican-style cheese 

imported into the U.S. is far different 

than American-style cheeses. To that 

end, the commenter noted that imports 

of dairy products from Mexico are 

primarily specialized proteins (and 

specialty cheese) which are mainly used 

in food products that are not dairy 

products and that the current promotion 

program would not benefit them or the 

products they import. Similarly, another 

commenter noted that a large proportion 

of imported dairy products into the U.S. 

are ingredients with a variety of 

applications, some dairy and some nondairy in nature. It was argued that these 

imported ingredients will not benefit 

from the promotion program, 

particularly when used in non-dairy 

products. 

With respect to the aforementioned 

comments, and as correctly noted by 

one of the commenters, domestic 

producers are assessed per 

hundredweight on all milk produced 

and marketed commercially, and the 

disposition or final usage of the raw 

milk is not a fact in determining the 

assessment. Likewise, the Farm Bills 

require an assessment on imported dairy 

products, regardless of the final 

disposition of the product or usage. 

Additionally, contrary to the comments 

provided by some commenters; the 

current National Program does promote 

dairy ingredients by marketing dairy 

ingredient benefits to food and beverage 

manufacturers and to help launch new 

or improved products. The National 

Program offers a variety of insights on 

ingredient marketing, nutrition, 

processing and testing. In 2008, the 

National Program spent approximately 

$4.9 million on ingredient research and 

promotion. Furthermore, importers 

would benefit from potentially higher 

prices. Also, with the changes to the 

provision of the Order made by this 

final rule, imported dairy products and 

ingredients could be promoted to a 

greater extent than with the current 

National Program. 

Several commenters also indicated 

that 2007, the year considered by the 

cost-benefit analysis for the proposed 

rule, was an anomalous year. Had data 

from other years been examined, the 

commenters indicated the Department 

would have observed that Tariff Rate 

Quotas (TRQs) would have been of a 

greater restraint. For the final rule, the 

cost-benefit analysis has been updated 

based upon data from 2008. Similarly, 

the Department found that TRQs seem 

to constrain dairy imports in varying 

degrees for some products, but not for 

others. 

With respect to TRQs, one commenter 

proposed that importers be refunded for 

any year in which the TRQ fill rate for 

a particular product exceeds 85 percent. 

At this level, the commenter asserted 

that imports are constrained, limiting 

the benefits of the National Program. It 

is important to note that TRQs are rarely 

100-percent filled due to licensing 

requirements of imported dairy 

products. However, the fact that a TRQ 

is filled or nearly filled is not a clear 

indication that importers do not receive 

benefits from the National Program. It is 

reasonable to conclude that some TRQs 

would have had lesser fill rates without 

the National Program. Furthermore, 

importers potentially benefit from the 

generally higher prices brought about by 

the National Program. For these reasons, 

the commenter’s proposal is not 

adopted. 

In varying degrees of detail, several 

opponents of the proposed rule claimed 

that implementation of an assessment 

on imported dairy products would be a 

potential violation of the national 

treatment obligations under the World 

Trade Organization (WTO). Opponents 

of the import assessment asserted 

several reasons, including several 

references to potential violations of the 

General Agreement on Trade and Tariffs 

(GATT). As required by Section 4503(d) 

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of the Act, the Secretary has consulted 

with the Office of the United States 

Trade Representative (USTR) to ensure 

that the Order is implemented in a 

manner consistent with the 

international trade obligations of the 

Federal Government. 

Neutral Promotion of Dairy Products 

With Respect to Origin 

With the passage of the 2002 Farm 

Bill, the policy statement in the Act was 

amended to make it clear that the 

purpose of the National Program is to 

expand the consumption of dairy 

products, whether produced 

domestically or imported. A program 

that promotes the substitution of a dairy 

product from one source with a dairy 

product from another source for 

consumption in the U.S. market is not 

consistent with this policy. Several 

commenters suggested that the proposed 

changes only generally remove the 

requirement that programs promote 

products of the United States, but 

indicated the changes are not 

sufficiently clear that going forward that 

they must be neutral with respect to 

country of origin. Additionally, the 

commenters suggested that the Board 

and Dairy Management Inc. (DMI), the 

staffing and management organization 

for the National Program, would have to 

ensure that any of its activities, 

including salaries and expenses from 

conducting export promotion marketing 

or coordination and management of 

export promotion, that are funded all or 

in-part by the Board would be neutral 

with respect to State or country of 

origin, including any promotion tools. 

Further, the commenters suggested that 

the Order require AMS to certify the 

neutrality of all policies and activities of 

the National Program prior to the 

distribution of any importer assessment 

monies to the Board. Several 

commenters also raised concerns that 

the ‘‘Real Seal’’ and other programs that 

are only available to domestic products, 

if not eliminated or completely revised, 

would, in their view, adversely affect 

conditions of competition for imports, 

thereby potentially violating GATT 

Article III:4. 

AMS provides the day-to-day 

oversight for all activities related to the 

National Program. AMS oversight 

activities include reviewing and 

approving DMI and the Board’s budgets, 

budget amendments, contracts, 

advertising campaigns, investment 

plans, and all materials developed for 

public distribution. Additionally, AMS 

ensures that all expenditure of 

promotion funds is consistent with the 

Act and the Order, and the Agency’s 

other responsibilities relate to 

nominating and appointing Board 

members, amending the orders, 

conducting referenda, and conducting 

periodic program audits. Further, AMS 

representatives attend full Board 

meetings, committee meetings, and 

other staff and member meetings of 

consequence to the National Program. 

Given AMS’s extensive oversight 

activity and policies relating to program 

review, it is neither necessary nor 

appropriate to implement additional 

provisions at this time to ensure 

appropriate expenditure of funds with 

respect to neutrality. Additionally, as of 

the effective date of these amendments, 

all of the National Program’s activities 

will be consistent with respect to 

neutrality and country of origin. Several 

commenters accurately noted that by 

striking the words ‘‘produced in the 

United States’’ from the definition of 

milk, programs like the ‘‘Real Seal’’ and 

‘‘3-A-Day’’ partners, and promotional 

offers will become available to 

international dairy brands and 

importers. Such programs will no longer 

be allowed to refer specifically to 

domestically produced dairy products if 

funded by the Board. Also research 

carried out with assessment funds 

would be available to all of the 

importers subject to the assessment. 

Additionally, commenters raised 

concerns about other specific National 

Program activities, such as the 

promotion of American artisanal cheese 

and ‘‘The New Look of School Milk’’ 

program. As of the effective date of 

these amendments, all of these activities 

must comply with the new policy 

statement with respect to neutrality and 

country of origin. 

Separately, several commenters raised 

the concern of whether or not the 

prohibitions and restrictions with 

respect to neutrality apply to qualified 

programs and the promotion of State 

brands. Section 4512(a) of the Act 

(Administrative Provisions) states 

‘‘Nothing in this subchapter may be 

construed to preempt or supersede any 

other program relating to dairy product 

promotion organized and adopted under 

the laws of the United States or any 

State.’’ This statutory policy provides 

qualified programs with as much 

freedom to continue their present 

operation and is consistent with a 

coordinated effort. As such, the policy 

is retained and qualified programs may 

continue to promote State brands. 

Research has shown that promotion of 

State brands, to the extent they reflect 

a type of brand, can increase dairy 

category sales and is consistent with the 

intent of the Act to raise the demand 

and consumption for dairy products 

generally. Review and/or approval 

authority of the Board and the 

Department regarding branded 

advertising or promotion by qualified 

State or regional programs will remain 

as it presently exists and is not modified 

under this proceeding. Several 

commenters questioned whether this 

proceeding would impact the ability of 

qualified programs to build demand for 

locally produced milk and dairy 

products; it does not. Similarly, this 

does not impact the ability of importer 

qualified programs to build demand for 

imported dairy products. 

One commenter questioned whether 

the provision striking the use of the 

words ‘‘produced in the United States’’ 

was contrary to the recently 

implemented Country of Origin 

Labeling (COOL) legislation (7 U.S.C. 

1638–1638d). COOL provisions require 

certain food retailers (supermarkets and 

grocery stores) to provide additional 

information (country of origin 

information) to consumers on specific 

food items at the point of purchase. 

COOL does not apply to dairy products. 

The COOL program is not related to this 

proceeding and there are no applicable 

provisions or requirements that overlap 

with this final rule. 

Export and Foreign Market Promotion 

As provided in the 2008 Farm Bill, 

the Board’s budget may provide for the 

expenditure of revenues available to the 

Board to develop international markets 

for, and to promote within such 

markets, the consumption of dairy 

products produced or manufactured in 

the United States through 2012. Several 

commenters questioned how importers 

would be assured that their assessments 

would not be used to fund development 

of foreign markets for U.S. products. 

Commenters also suggested that 

allowing up to 100 percent of domestic 

producer assessments to go into export 

promotion could result in allowing 

import assessments to pay more than 

their ‘‘share’’ of domestic promotion 

thereby subsidizing the export 

promotion activities. They also noted 

that if uncapped levels of domestic 

assessments are allowed to go into 

export promotion, import assessments 

could fund a disproportionate share, up 

to 100 percent, of the domestic program 

and therefore, underwrite the domestic 

gains to producers. 

Accordingly, some commenters 

proposed that USDA should track 

imported dairy products on a milk 

equivalent basis as a percentage of 

domestic commercial disappearance. 

The commenters noted that if imports 

are 5 percent of the domestic market, for 

instance, then the Board must fund 95 

percent of domestic promotion from 

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2 In understanding the language of the HTS, ENs, 

which are drafted by the World Customs 

Organization, may be utilized. Although not 

dispositive, ENs provide a commentary on the 

scope of each heading of the HTS, and are the 

official interpretation of the Harmonized System at 

the international level. (See the U.S. Treasury 

decision number 80 from 1989, 54 FR 35127, 35128, 

August 23, 1989). 

U.S. dairy producers. Other commenters 

suggested that the Order should state 

that the funds for foreign market 

promotion in any year cannot exceed 

the level of the year prior to the 

beginning of import assessments, plus 

the level of increase in producer 

checkoff contribution in the previous 

year. These proposals are not adopted 

because the Act specifically states that 

the Order shall provide the authority for 

the Board to expend in the maintenance 

and expansion of foreign markets an 

amount not to exceed the amount 

collected from the United States 

producers for a fiscal year. Dairy 

product market share is not the 

authorized measure in determining the 

amount of the Board’s expenditure on 

export and foreign market promotion. 

Section 4501(b) of the Act states that 

domestic promotion under the National 

Program must include imported dairy 

products, and section 4504(e)(2) of the 

Act states that with respect to foreign 

market efforts, ‘‘* * * the Board’s 

budget may provide for the expenditure 

of revenues available to the Board to 

develop international markets for, and 

to promote within such markets, the 

consumption of dairy products 

produced or manufactured in the United 

States.’’ For clarification, with this final 

rule, section 1150.140(n) has been 

expanded to indicate that the duties of 

the Board are to encourage the 

coordination of programs of promotion, 

research, and nutrition education 

designed to strengthen the dairy 

industry’s position in the marketplace 

and to maintain and expand: (1) 

Domestic markets and domestic uses for 

fluid milk and dairy products produced 

in the United States or imported into the 

United States; and (2) foreign markets 

and foreign uses for fluid milk and dairy 

products produced in the United States. 

Notwithstanding the aforementioned, 

the USDA Report to Congress as 

required in section 4514(4) of the Act 

must provide an accounting for the 

receipt and disbursement of all funds 

received by the Board. This includes 

funds received from importers. AMS 

will require the Board to provide an 

accounting and evaluation of all 

activities targeted at the promotion of 

imported dairy products to be included 

in its annual Report to Congress. 

Products To Be Assessed 

Commenters argued that the proposed 

rule included assessments on products 

that fall outside the scope of accepted 

international definitions for dairy 

products. Several commenters suggested 

limiting the number of products to be 

assessed to those in Chapter 4 of the 

HTS, referring to the Explanatory Notes 

(ENs) for the definitions in the ‘‘General’’ 

section for Chapter 4.2 The Department 

does not agree that the ENs define dairy 

products, but rather they simply define 

the products that are to be covered 

under Chapter 4. One commenter 

indicated that the only products that 

should be included are those that would 

be defined as a milk product or a 

composite milk product under Codex 

Alimentarius standards. The Codex 

Alimentarius Commission was 

established in 1963 to reduce trade 

barriers and facilitate trade in safe foods 

of a defined quality. The WTO utilizes 

the Codex standards with the goals of 

formulating and harmonizing 

international food standards, ensuring 

their global compliance, and resolving 

trade disputes. The Codex milk and 

milk product standards cover a number 

of dairy products, including but not 

limited to butter, milkfat products, 

evaporated milk, condensed milk, 

edible casein products, milk powders, 

dairy fat spreads, whey cheeses, 

processed cheeses, and numerous 

varieties of natural cheeses. However, 

the definitions of ‘‘milk and milk 

products’’ in the Codex standards are 

not germane to the definition of ‘‘dairy 

products’’ in the final rule as these 

products will be assessed consistent 

with the definition of dairy products as 

defined by the Act. Therefore, this 

suggestion also is not adopted. 

In this final rule, 265 of the 266 HTS 

codes listed in section 1150.152(b) of 

the proposed rule are adopted. HTS 

code number 1901.90.9082 is for cornsoya milk blends that do not contain 

over 5.5 percent by weight of butterfat 

and are not considered dairy products 

as described in additional note 1 to 

Chapter 4 of the HTS. After consultation 

with CBP, it is concluded that products 

imported under this HTS code would 

not likely contain milk solids. 

Accordingly, products imported under 

this HTS code are not included in the 

import assessment. 

Proposal for Payments To Be Remitted 

to USDA 

Several interested parties suggested 

alternatives that would require import 

assessments first to be remitted to the 

Department rather than to the Board 

after submission to CBP. These 

alternatives are not adopted. Section 

4504(g)(6)(A) of the Act specifically 

states that the order shall provide that 

each importer of imported dairy 

products shall pay an assessment to the 

Board in the manner prescribed by the 

Order. 

Establishment and Membership/Term of 

Office 

The Order is administered by a 

36-member Board appointed by the 

Secretary representing 13 geographic 

regions of the United States. In order to 

complement the current geographical 

make up of the existing regions, the 

proposed rule indicated that each of the 

four new jurisdictions be added to the 

region of closest geographic proximity. 

No comments were received in 

opposition to this proposal, and it is 

adopted as proposed. 

Therefore, Alaska is added to Region 

1, currently comprised of Oregon and 

Washington; Hawaii is added to Region 

2, currently California; and the District 

of Columbia and the Commonwealth of 

Puerto Rico are added to Region 10, 

currently comprised of Florida, Georgia, 

North Carolina, South Carolina and 

Virginia. Each person making payment 

to a producer in Alaska, Hawaii, the 

District of Columbia, and the 

Commonwealth of Puerto Rico for milk 

produced and marketed for commercial 

use, is required to collect an assessment 

on all milk handled for the account of 

the producer at the rate of 15 cents per 

hundredweight and must remit the 

assessment to the Board. Any producer 

marketing milk of that producer’s own 

production in the form of milk or dairy 

products to consumers, either directly 

or through retail or wholesale outlets, 

must remit to the Board an assessment 

on such milk at the rate of 15 cents per 

hundredweight. Each person 

responsible for the remittance of the 

assessment for milk marketings from 

producers in Alaska, Hawaii, the 

District of Columbia, and the 

Commonwealth of Puerto Rico must 

remit to the Board not later than the last 

day of the month following the month 

in which the milk was marketed. 

Several interested parties raised 

concern regarding proposed importer 

representation on the Board. In 

accordance with the Act, the proposed 

rule indicates that importers will 

initially be represented by two importer 

representatives. Assessments collected 

from importers will be held in escrow 

until importer representatives are 

appointed. The interested parties 

proposed that the Order should provide 

for permanent representation of at least 

two importers or importer 

representatives on the Board. This 

proposal is not adopted. The 2002 Farm 

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Bill specifies that the Secretary shall 

review once every three years the 

average volume of domestic production 

of dairy products compared to the 

average volume of imports of dairy 

products into the United States during 

the previous three years. On the basis of 

the review, the Secretary shall 

reapportion the importer representation 

on the Board to reflect the proportional 

share of the U.S. market by domestic 

production and imported dairy 

products. As noted in the proposed rule, 

in order to provide a basis for 

comparison of domestic production of 

dairy products to imported products, 

estimated total milk solids will be used. 

Statistics for total milk solids of 

domestic dairy products are published 

annually by USDA National 

Agricultural Statistics Service. The 

calculation of total milk solids for 

imported products for reapportionment 

purposes would be the same as the 

calculation of total milk solids for 

assessment purposes. 

In response to commenter’s requests 

for specific information regarding 

importer representation and 

appointment to the Board, the Secretary 

will issue a separate notice in the 

Federal Register and a news release 

seeking nominations for importer 

representatives to the Board at a future 

date to be determined. The Secretary 

will appoint two individuals from those 

nominated to serve as the initial 

importer representatives on the Board. 

In order to properly stagger the two 

terms, the importer representative terms 

of office dates [Section 1150.132(a)(2)] 

are modified and one importer 

representative will serve a term ending 

October 31, 2013, and one importer 

representative will serve a term ending 

October 31, 2014. 

Importer nominations may be 

submitted by individual importers of 

dairy products and by organizations 

representing dairy importers, as 

approved by the Secretary. Nominees 

must be importers of dairy products and 

subject to the assessment to fund the 

National Program. The primary 

considerations in determining if 

organizations adequately represent 

importers of dairy products shall be 

whether its membership consists 

primarily of importers of dairy products 

and whether a substantial interest of the 

organization is in the importation of 

dairy products and the promotion of the 

nutritional attributes of dairy products. 

Individual importers submitting 

nominations to represent importers on 

the Board must establish, to the 

satisfaction of the Secretary that the 

person submitting the nomination is an 

importer of dairy products. Approval of 

importers and organizations 

representing importers will occur in a 

manner prescribed by the Secretary. An 

importer means a person that imports 

dairy products into the United States as 

a principal or as an agent, broker, or 

consignee of any person who produces 

or handles dairy products outside of the 

United States for sale in the United 

States, and who is listed as the importer 

of record for such dairy products. 

Several interested parties also raised 

concerns regarding sufficient importer 

representation on the Board’s Executive 

Committee. The Board’s current 

Executive Committee is comprised of all 

members of the Board. Section 

1150.140(b) of this rule specifically 

provides that the Board’s Executive 

Committee be comprised of membership 

that equally reflect each of the different 

geographic regions in the United States 

in which milk is produced and importer 

representation on the Board. 

Accordingly, this provision is made 

final without modifications. 

One commenter questioned importer 

representation of two seats on the 

Board, citing that domestic producers in 

regions 1, 8, 10, and 13 collectively 

represent a significant number of 

producers and production and 

accordingly are afforded only one seat. 

The Act and the Order are clear with 

respect to the formulas used to 

determine the number of members from 

each region of the Board. The number of 

members for each region on the Board 

is determined by dividing the total 

pounds of milk produced in the United 

States for the calendar year previous to 

the date of review by 36, which 

provides a factor of pound of milk per 

member, and then dividing the total 

pounds of milk for each region by such 

factor. With respect to importer 

representation, the law states clearly 

that importers initially shall be 

represented by two members. 

Several commenters requested 

additional information and guidance as 

to how decisions are made by the Board 

or how conflicts are resolved with 

respect to conflicting promotions. 

Currently, joint committees of the Board 

are responsible for setting program 

priorities, planning activities and 

projects, and evaluating results. With 

respect to decisions, the Board’s current 

by-laws state that any action of the 

Board requires the concurring votes of at 

least a majority of those present and 

voting. Importer representatives on the 

Board will take part in this process 

upon appointment. 

Importer Contributions to Qualified 

Programs 

Several interested parties 

recommended that USDA hold in 

escrow any funds earmarked by an 

importer for contribution to a qualified 

program until importer programs are 

qualified by the Secretary. Further, 

several commenters noted that the 

proposed rule does not specify how 

assessments above the 5 cents are to be 

directed if a qualified program is not 

designated. Commenters also noted that 

the purposes of the rule would be best 

met if the qualified portion were held 

until it could be disbursed pro rata to all 

qualified programs relating to imported 

products. 

Currently, if a producer does not 

designate or if the producer’s paying 

handler does not establish that 

producer’s participation in a qualified 

program, the full assessment is remitted 

to the Board. Similarly, if an importer 

does not designate or if participation in 

a qualified program is not established, 

the Board would retain the full 

assessment. Accordingly, the 

commenters’ suggested alternative 

provisions to hold the qualified 

programs’ portion relating to imported 

products and disburse pro rata, or until 

an importer qualified program is 

established, would not be appropriate 

and are not adopted. 

The proposed rule stated that 

importers will be required to submit 7.5 

cents per hundredweight of milk, or 

equivalent thereof, on imported dairy 

products to the Board, of which an 

importer may direct the Board to 

forward up to 2.5 cents per 

hundredweight of milk, or equivalent 

thereof, to a qualified program. 

Commenters stated that domestic milk 

producers are required to send only onethird of their assessment to the Board, 

whereas importers would be required to 

contribute two-thirds of their 

assessment to the Board. The 

commenters also suggested that as 

proposed, the Order does not comply 

with international obligations that 

dictate fairness and ‘‘equal treatment’’ 

towards imported products. One 

commenter argued that importers will 

disproportionally support operations of 

the Board, while domestic U.S. milk 

producers will disproportionately enjoy 

the benefits of Board promotions. 

The proposed provisions specify that 

the rate of assessment is 7.5 cents per 

hundredweight, or equivalent thereof, 

on imported dairy products, but that an 

importer can instruct the Board to direct 

up to 2.5 cents per hundredweight for 

contributions to a qualified program. 

The Act requires domestic producers to 

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pay 15 cents per hundredweight to the 

Board, and allows them to receive a 

credit up to 10 cents per hundredweight 

of the assessment when contributing to 

qualified programs. In effect, this 

provision requires that all domestic 

producers contribute 5 cents per 

hundredweight of milk to the Board. 

Likewise, this rule requires importers to 

pay an equivalent amount to the Board. 

With this final rule, an importer may 

inform the Secretary to direct the Board 

to forward up to 2.5 cents per 

hundredweight of milk, or the 

equivalent thereof, to a qualified 

program. As indicated by one 

commenter, importers are not required 

to provide any greater assessment to the 

overall national promotion program 

than are domestic producers. 

Alternatives to allow an importer to 

direct two-thirds of the 7.5 cents per 

hundredweight of milk, or equivalent 

thereof, to a qualified program are not 

adopted. 

One commenter questioned whether 

or not the amount of money designated 

for importer organizations to conduct 

promotion, research, or nutrition 

education programs will equate with the 

same level of assessments collected with 

respect to imported product. Importers 

only are permitted to designate up to 2.5 

cents of the 7.5 cents per 

hundredweight of milk, or milk 

equivalent thereof, to qualified 

programs. By law, 5 cents must go to the 

Board, and therefore the amount of 

money designated for importer 

organizations cannot equal the same 

level of assessments collected on 

imported dairy products. 

The final rule differs from the 

proposed rule with respect to an 

importer’s designation to a qualified 

program. With the proposed rule, the 

importer would have instructed the 

Board to forward payments to a 

qualified program. With this final rule, 

the importer will notify the Secretary to 

direct the Board to forward payments to 

a qualified program. The Secretary will 

compute the funds due each qualified 

program. This change was made in 

order to maintain confidentiality of 

importer records concerning import 

quantity volumes and quantities of milk 

solids imported. 

One commenter noted that the 

proposed rule states that any 

organization which conducts a dairy 

product promotion and research or 

nutrition education program authorized 

by Federal or State law may apply for 

certification so that producers may 

receive credit for contributions to such 

programs, and whether the credit 

treatment should also be extended to 

imported product where producers in 

the country of origin have contributed to 

generic dairy promotional programs. As 

indicated in the proposal, the credit 

only applies to contributions to 

programs operating under Federal or 

State laws of the United States or that 

have been an active and ongoing 

producer program before enactment of 

the Act. Therefore, no provisions are 

included to extend credit allowances for 

contributions to dairy product 

promotion programs in foreign 

countries. 

Importer Establishment of Qualified 

Programs 

Several commenters noted that while 

the proposed rule modifies the Order 

language regarding qualified programs 

to include those financed primarily by 

importers, the process by which a 

program becomes qualified imposes a 

great burden on importers. These 

commenters stated that the requirement 

that the qualified program be authorized 

under State or Federal law, or has been 

active and on-going prior to enactment 

of the Act, will be difficult for importers 

to achieve since there are no such 

importer organizations that predate the 

Act. Additionally, several commenters 

indicated that authorization under State 

or Federal law requires that the program 

be specifically enabled by a state 

legislature or Congress. One commenter 

proposed specific language modifying 

section 1150.153 to include new 

provisions applicable specifically for 

importers, noting the Act does not 

provide any detailed definition of State 

and regional programs. Additionally, 

several commenters suggested that the 

Department revisit this section, citing 

whether the authority for the Secretary 

to give credit to national organizations 

exists under the Order. 

The Order currently provides in 

§ 1150.153 that any organization which 

conducts a State or regional dairy 

product promotion, research, or 

nutrition education program that has 

been active and ongoing before 

enactment of the Act, or is operated 

under the laws of the United States or 

any State, may apply to the Secretary for 

certification so that producers may 

receive credit for contributions to such 

programs towards assessments owed by 

the producer. 

The proposed rule provided that an 

organization authorized by Federal or 

state law or an organization that had 

been active and ongoing before 

enactment of the Act may apply to the 

Secretary for certification of 

qualification so that producers or 

importers may direct contributions to 

such programs. While AMS disagrees 

with any suggestion in the comments 

that the proposed provisions regarding 

qualified programs were not authorized 

by statute or consistent with the Order, 

we conclude, taking into account 

comments received, that section 

1150.153 should be further revised to 

add reference to any importer 

organizations that conduct dairy 

product promotion, research, or 

nutrition education programs. 

Organizations seeking to become an 

importer qualified program need only 

submit an application provided by 

USDA to the Secretary and meet the 

four criteria as outlined in section 

1150.153 to be approved. The process is 

equivalent to the process used by 

domestic organizations seeking to 

become a qualified dairy producer 

program. The revision would provide a 

more practical and reasonable option for 

importers to direct contributions to such 

programs. Miscellaneous clarifying 

changes are made to sections 1150.152, 

1150.153, and the definition of qualified 

program in section 1150.153 to retain 

existing order language with regard to 

producer organizations to more clearly 

state provisions concerning qualified 

programs and credits for producers and 

for importers. 

Referendum 

Several commenters suggested that in 

order for the Department to provide due 

process for those importers of dairy 

products and dairy producers in Alaska, 

Hawaii, the District of Columbia, and 

the Commonwealth of Puerto Rico that 

will become subject to the assessment, 

a referendum must be held to determine 

whether or not those affected parties 

support implementation of the 

assessment. Commenters assert that 

implementation of the assessment 

without conducting a referendum is a 

violation of the Equal Protection 

guarantees of the Fifth Amendment. 

Expressing a different view, several 

commenters also noted that the 

Congressional mandate to require an 

assessment on both domestic 

production and on imported dairy 

products has been a matter of law in the 

United States since 2002. 

The Act specifies the circumstances 

under which a referendum may be 

conducted. Section 4507(b) of the Act 

states, ‘‘* * * after September 30, 1985, 

the Secretary may conduct a referendum 

at any time, and shall hold a referendum 

on request of a representative group 

comprising 10 per centum or more of 

the number of producers and importers 

subject to the order, to determine 

whether the producers and importers 

subject to the order, favor the 

termination or suspension of the order.’’ 

The Act does not provide for the 

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conduct of a referendum on proposed 

changes to the Order, as stated by a 

number of commenters. The 2002 and 

2008 Farm Bills provide for the 

promulgation and implementation of 

these regulations without regard to 

notice and comment provisions of 

section 533 of Title 5, United States 

Code. Accordingly, no changes are made 

as a result of the comments received. 

The proposed rule did not include 

necessary changes to include importers 

under ‘‘Subpart—Procedure for Conduct 

of Referenda in Connection with the 

Dairy Promotion and Research Order.’’ 

With this final rule, the appropriate 

changes have been made. 

Definitions 

The proposed rule included 

definitions for three new terms and 

definition revisions of three terms to 

reflect the provisions of the Act. The 

terms ‘‘United States’’ and ‘‘milk’’ are 

reproduced verbatim from the Act. The 

terms ‘‘CBP’’ and ‘‘importer’’ were 

modified slightly from the language of 

the Act for clarity. The term ‘‘qualified 

program’’ was modified to reflect that 

importer programs may be established 

that are not necessarily State or regional 

in scope. The definition of ‘‘qualified 

program’’ has been changed from the 

proposed rule in that it refers to section 

1150.153, which has changes from the 

proposed rule as previously discussed. 

Several commenters objected to the 

removal of ‘‘produced in the United 

States’’ from the term milk, due to the 

impact this change necessitates in the 

requirement that dairy products be 

promoted neutrally and without respect 

to origin. Additionally, commenters 

objected to modification of the term 

‘‘United States’’ which would necessitate 

inclusion of producers in Hawaii, 

Alaska, the District of Columbia, and the 

Commonwealth of Puerto Rico in the 

program without providing a 

referendum on amendments to the 

program as other U.S. contributors were 

given. For the reasons stated in previous 

discussions of comments, the definition 

changes to the Order are not changed as 

a result of the comments received. 

Organic Exemption 

Several commenters suggested that 

the current organic exemption, as 

applied to domestic dairy producers, 

would almost never be available to 

imports because importers rarely import 

organic products exclusively, but rather 

a combination of organic and nonorganic products. Consequently, those 

commenters suggested the proposed 

Order include a provision to exempt 

organic dairy product imports from the 

assessment. The 2002 Farm Bill, section 

10607 states, ‘‘A person that produces 

and markets solely 100 percent organic 

products, and that does not produce any 

conventional or nonorganic products, 

shall be exempt from the payment of an 

assessment under a commodity 

promotion law with respect to any 

agricultural commodity that is produced 

on a certified organic farm.’’ In the final 

rule (70 FR 2744, January 14, 2005), 

AMS determined that the phrase 

‘‘produces and markets’’ should apply to 

the function the person performs that 

compels the payment of an assessment. 

For importers, this means to import the 

commodity. Accordingly, this final rule 

subjects dairy importers to similar 

provisions and is consistent with other 

research and promotion programs for 

other agricultural commodities. The 

proposal to exempt organic dairy 

product imports is not adopted. 

However, after further review, this final 

rule adds an additional provision to the 

organic exemption provisions in section 

1150.157 to allow for a reimbursement 

of assessments collected by the CBP. 

This provision is similar to the added 

provision regarding reimbursement of 

assessments collected on U.S. produced 

milk solids or milk solids other than 

cow’s milk discussed in the following 

section. A clarifying change also is 

made to this section. 

Exclusion of Milk Solids of U.S. Origin 

Under the proposed rule, milk solids 

of U.S. origin would have been 

excluded from the calculation of dairy 

import assessments. However, after 

additional consideration, AMS 

determined that it is more reasonable 

and appropriate to include milk solids 

of U.S. origin in the calculation of dairy 

importer assessments and allow 

importers to apply for reimbursement 

from the Secretary. This final rule 

includes new language in section 

1150.155 to state that any importer of 

dairy products against whose imports an 

assessment has been collected under 

section 1150.152(b) and who believes 

that such assessment or any portion of 

such assessment was made on U.S.- 

produced milk solids or milk solids 

other than cow’s milk may apply to the 

Secretary for a reimbursement. The 

importer would be required to submit 

proof to the Secretary that the import 

was produced with U.S.-produced milk 

solids or milk solids other than cow’s 

milk. 

Effective Date 

A commenter representing customs 

brokers and forwarders indicated that it 

will take considerable time for customs 

brokers to make software changes 

necessary to calculate import 

assessments. According to the 

commenter, brokers are typically 

allotted 90 days to make any program 

changes. Upon further consideration 

and taking into account that CBP 

collects importer assessments, we 

believe that 120 days is reasonable. 

Therefore, the effective date for 

implementing 1150.152(b), Importer 

Assessments, shall be the first day of the 

month following 120 days after 

publication of this rule. 

Miscellaneous Order Provisions 

As noted in the discussion of Neutral 

Promotion of Dairy Products with 

Respect to Origin, the Board will be 

required to make available all domestic 

promotion programs and materials to all 

assessed parties. One commenter 

proposed an additional provision be 

added to section 1150.140 [Duties of the 

Board] to clearly state that all domestic 

promotional programs be available to all 

assessed parties. Section 1150.139(e) of 

the Order gives the Board the authority 

to disseminate information to producers 

or eligible organizations through 

programs or by direct contact utilizing 

the public postage system or other 

system. The proposed rule modified this 

subsection of the Order to extend the 

Board’s information dissemination 

authority to include importers and 

importer organizations. An additional 

provision as recommended by the 

commenter is not necessary and is 

therefore not adopted. 

In paragraph 1150.152(a)(6) and 

section 1150.187, obsolete language and 

references have been deleted. 

Additionally, for good cause, AMS 

has determined that it is necessary to set 

an effective date of less than 30 days for 

adoption of the provisions regarding 

nomination and appointment of 

importer representatives to the Board. 

This will enable the Secretary to solicit, 

appoint, and seat importers 

representatives on the Board in an 

efficient and expedient manner. 

List of Subjects in 7 CFR Part 1150 

Dairy products, Milk, Promotion, 

Research. 

For the reasons set forth in the 

preamble, 7 CFR part 1150 is amended 

as follows: 

PART 1150—DAIRY PROMOTION 

PROGRAM 

■ 1. The authority citation for 7 CFR 

part 1150 continues to read as follows: 

Authority: 7 U.S.C. 4501–4514 and 7 

U.S.C. 7401. 

■ 2. Section 1150.106 is revised to read 

as follows: 

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§ 1150.106 United States. 

United States means all of the States, 

the District of Columbia, and the 

Commonwealth of Puerto Rico. 

■ 3. Section 1150.109 is revised to read 

as follows: 

§ 1150.109 Qualified program. 

Qualified program means any dairy 

product promotion, research or 

nutrition education program which is 

certified as a qualified program 

pursuant to § 1150.153. 

■ 4. Section 1150.111 is revised to read 

as follows: 

§ 1150.111 Milk. 

Milk means any class of cow’s milk. 

■ 5. Sections 1150.120 through 

1150.122 are added to read as follows: 

§ 1150.120 Imported dairy product. 

Imported dairy product means any 

product that is imported into the United 

States under any of the Harmonized 

Tariff Schedule (HTS) classification 

numbers listed in § 1150.152(b)(1). 

§ 1150.121 Importer. 

Importer means a person that imports 

imported dairy products into the United 

States as a principal or as an agent, 

broker, or consignee of any person who 

produces or handles dairy products 

outside of the United States for sale in 

the United States, and who is listed as 

the importer of record for such dairy 

products. 

§ 1150.122 CBP. 

CBP means the United States Customs 

and Border Protection of the Department 

of Homeland Security. 

■ 6. Section 1150.131 is revised to read 

as follows: 

§ 1150.131 Establishment and 

membership. 

(a) There is hereby established a 

National Dairy Promotion and Research 

Board. 

(b) Thirty-six members of the Board 

shall be United States producers. For 

purposes of nominating producers to the 

Board, the United States shall be 

divided into thirteen geographic regions 

and the number of Board members from 

each region shall be as follows: 

(1) One member from region number 

one comprised of the following States: 

Alaska, Oregon and Washington. 

(2) Eight members from region 

number two comprised of the following 

States: California and Hawaii. 

(3) Four members from region number 

three comprised of the following States: 

Arizona, Colorado, Idaho, Montana, 

Nevada, Utah and Wyoming. 

(4) Four members from region number 

four comprised of the following States: 

Arkansas, Kansas, New Mexico, 

Oklahoma and Texas. 

(5) Two members from region number 

five comprised of the following States: 

Minnesota, North Dakota and South 

Dakota. 

(6) Five members from region number 

six comprised of the following State: 

Wisconsin. 

(7) Two members from region number 

seven comprised of the following States: 

Illinois, Iowa, Missouri and Nebraska. 

(8) One member from region number 

eight comprised of the following States: 

Alabama, Kentucky, Louisiana, 

Mississippi and Tennessee. 

(9) Three members from region 

number nine comprised of the following 

States: Indiana, Michigan, Ohio and 

West Virginia. 

(10) One member from region number 

ten comprised of the following States: 

Commonwealth of Puerto Rico, District 

of Columbia, Florida, Georgia, North 

Carolina, South Carolina, and Virginia. 

(11) Two members from region 

number eleven comprised of the 

following States: Delaware, Maryland, 

New Jersey and Pennsylvania. 

(12) Two members from region 

number twelve comprised of the 

following State: New York. 

(13) One member from region number 

thirteen comprised of the following 

States: Connecticut, Maine, 

Massachusetts, New Hampshire, Rhode 

Island and Vermont. 

(c) Two members of the Board shall be 

importers who are subject to 

assessments under § 1150.152(b). 

(d) The Board shall be composed of 

milk producers and importers appointed 

by the Secretary either from 

nominations submitted pursuant to 

§ 1150.133 or in accordance with 

§ 1150.136. A milk producer may be 

nominated only to represent the region 

in which such producer’s milk is 

produced. 

(e) At least every five years, and not 

more than every three years, the Board 

shall review the geographic distribution 

of milk production volume throughout 

the United States and, if warranted, 

shall recommend to the Secretary a 

reapportionment of regions and/or a 

modification of the number of producer 

members from regions in order to best 

reflect the geographic distribution of 

milk production volume in the United 

States. 

(f) At least once every three years, 

after the initial appointment of importer 

representatives on the Board, the 

Secretary shall review the average 

volume of domestic production of dairy 

products compared to the average 

volume of imports of dairy products 

into the United States during the 

previous three years and, on the basis of 

that review, if warranted, reapportion 

the importer representation on the 

Board to reflect the proportional shares 

of the United States market served by 

domestic production and imported 

dairy products. The basis for 

comparison of domestic production of 

dairy products to imported products 

shall be estimated total milk solids. The 

calculation of total milk solids of 

imported dairy products for 

reapportionment purposes shall be the 

same as the calculation of total milk 

solids of imported dairy products for 

assessment purposes. 

(g) In determining the volume of milk 

produced and total milk solids of dairy 

products produced in the United States, 

the Board and Secretary shall utilize the 

information received by the Board 

pursuant to § 1150.171(a) and data 

published by the Department. 

■ 7. In § 1150.132, paragraph (a) is 

revised to read as follows: 

§ 1150.132 Term of office. 

(a) The members of the Board shall 

serve for terms of three years, except 

that: 

(1) The members appointed to the 

initial Board shall serve proportionately, 

for terms of one, two and three years. 

(2) The 2 importer members initially 

appointed to the Board shall serve until 

October 31, 2013, and October 31, 2014. 

* * * * * 

■ 8. In § 1150.133, paragraphs (a), (c), 

and (d) are revised, and a new 

paragraph (e) is added to read as 

follows: 

§ 1150.133 Nominations. 

* * * * * 

(a) The Secretary shall solicit 

nominations for producer representation 

on the Board from all eligible 

organizations. For nominations of 

producers, if the Secretary determines 

that a substantial number of producers 

are not members of, or their interests are 

not represented by, such eligible 

organizations, the Secretary shall also 

solicit nominations from such producers 

through general farmer organizations or 

by other means. 

* * * * * 

(c) An eligible producer organization 

may submit nominations only for 

positions on the Board that represent 

regions in which such eligible 

organization can establish that it 

represents a substantial number of 

producers. If there is more than one 

Board position for any such region, the 

organization may submit nominations 

for each position. 

(d) Where there is more than one 

eligible organization representing 

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producers in a specific geographic 

region, the organizations may caucus 

and jointly nominate producers for each 

position representing that region 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 nominations for each 

appointment to be made to represent 

that region. 

(e) Nominations for representation of 

importers may be submitted by: 

(1) Organizations that represent 

importers of dairy products, as 

approved by the Secretary. The primary 

considerations in determining if 

organizations adequately represent 

importers of dairy products shall be 

whether its membership consists 

primarily of importers of dairy products 

and whether a substantial interest of the 

organization is in the importation of 

dairy products and the promotion of the 

nutritional attributes of dairy products; 

and 

(2) Individual importers of dairy 

products. Individual importers 

submitting nominations to represent 

importers on the Board must establish to 

the satisfaction of the Secretary that the 

persons submitting the nominations are 

importers of dairy products. 

■ 9. In § 1150.134, the introductory text 

and paragraph (b) are revised to read as 

follows: 

§ 1150.134 Nominee’s agreement to serve. 

Any producer or importer nominated 

to serve on the Board shall file with the 

Secretary at the time of the nomination 

a written agreement to: 

* * * * * 

(b) Disclose any relationship with any 

organization that operates a qualified 

program or has a contractual 

relationship with the Board; and 

* * * * * 

■ 10. Section 1150.135 is revised to read 

as follows: 

§ 1150.135 Appointments. 

From the nominations made pursuant 

to § 1150.133, the Secretary shall 

appoint the members of the Board on 

the bases of representation provided for 

in §§ 1150.131(b) and 1150.131(c). 

■ 11. In § 1150.139, paragraph (e) is 

revised to read as follows: 

§ 1150.139 Powers of the Board. 

* * * * * 

(e) To disseminate information to 

producers, producer organizations, 

importers, and importer organizations 

through programs or by direct contact 

utilizing the public postage system or 

other systems; 

* * * * * 

■ 12. In § 1150.140, paragraphs (b) and 

(n) are revised to read as follows: 

§ 1150.140 Duties of the Board. 

* * * * * 

(b) To appoint from its members an 

executive committee whose 

membership shall equally reflect each of 

the different geographic regions in the 

United States in which milk is produced 

and importer representation on the 

Board, and to delegate to the committee 

authority to administer the terms and 

provisions of this subpart under the 

direction of the Board and within the 

policies determined by the Board; 

* * * * * 

(n) To encourage the coordination of 

programs of promotion, research and 

nutrition education designed to 

strengthen the dairy industry’s position 

in the marketplace and to maintain and 

expand: 

(1) domestic markets and domestic 

uses for fluid milk and dairy products 

produced in the United States or 

imported into the United States; and 

(2) foreign markets and foreign uses 

for fluid milk and dairy products 

produced in the United States. 

■ 13. In § 1150.151, new paragraph (c) is 

added to read as follows: 

§ 1150.151 Expenses. 

* * * * * 

(c) The Board is authorized to expend 

up to the amount of the assessments 

collected from United States producers 

to promote dairy products produced in 

the United States in foreign markets. 

■ 14. Section 1150.152 is revised to read 

as follows: 

§ 1150.152 Assessments. 

(a) Domestic Assessments. (1) Each 

person making payment to a producer 

for milk produced in the United States 

and marketed for commercial use shall 

collect an assessment on all such milk 

handled for the account of the producer 

at the rate of 15 cents per 

hundredweight of milk for commercial 

use, or the equivalent thereof, and shall 

remit the assessment to the Board. 

(2) Any producer marketing milk of 

that producer’s own production in the 

form of milk or dairy products to 

consumers, either directly or through 

retail or wholesale outlets, shall remit to 

the Board an assessment on such milk 

at the rate of 15 cents per 

hundredweight of milk for commercial 

use or the equivalent thereof. 

(3) In determining the assessment due 

from each producer pursuant to 

§ 1150.152(a)(1) and (a)(2), a producer 

who is participating in a qualified 

program(s) under § 1150.153 shall 

receive a credit for contributions to such 

program(s), but not to exceed 10 cents 

per hundredweight of milk marketed. 

(4) In order for a producer described 

in § 1150.152(a)(1) to receive the credit 

authorized in § 1150.152(a)(3), either the 

producer or a cooperative association on 

behalf of the producer must establish to 

the person responsible for remitting the 

assessment to the Board that the 

producer is contributing to a qualified 

program under § 1150.153. Producers 

who contribute to a qualified program 

directly (other than through a payroll 

deduction) must establish with the 

person responsible for remitting the 

assessment to the Board, with validation 

by the qualified program, that they are 

making such contributions. 

(5) In order for a producer described 

in § 1150.152(a)(2) to receive the credit 

authorized in § 1150.152(a)(3), the 

producer and the applicable qualified 

program must establish to the Board that 

the producer is contributing to the 

qualified program. 

(6) The collection of assessments 

pursuant to § 1150.152(a)(1) and (a)(2) 

shall begin with respect to milk 

marketed on and after the effective date 

of this section and shall continue until 

terminated by the Secretary. 

(7) Each person responsible for the 

remittance of the assessment pursuant 

to § 1150.152(a)(1) and (a)(2) shall remit 

the assessment to the Board not later 

than the last day of the month following 

the month in which the milk was 

marketed. 

(8) Money remitted to the Board shall 

be in the form of a negotiable 

instrument made payable to ‘‘National 

Dairy Promotion and Research Board.’’ 

Remittances and reports specified in 

§ 1150.171(a) shall be mailed to the 

location designated by the Secretary or 

the Board. 

(b) Importer Assessments. (1) Each 

importer of dairy products identified in 

the following table, except for as 

provided for in § 1150.157, is 

responsible for paying an assessment of 

7.5 cents per hundredweight of U.S. 

milk, or equivalent thereof. The 

importer shall use the assessment rate of 

$0.01327 per kilogram (kg) of milk 

solids to calculate and pay the 

assessment. 

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HTS Nos. for dairy import assessment 

0401.10.0000 

0401.20.2000 

0401.20.4000 

0401.30.0500 

0401.30.2500 

0401.30.5000 

0401.30.7500 

0402.10.1000 

0402.10.5000 

0402.21.0500 

0402.21.2500 

0402.21.3000 

0402.21.5000 

0402.21.7500 

0402.21.9000 

0402.29.1000 

0402.29.5000 

0402.91.1000 

0402.91.3000 

0402.91.7000 

0402.91.9000 

0402.99.1000 

0402.99.3000 

0402.99.4500 

0402.99.5500 

0402.99.7000 

0402.99.9000 

0403.10.1000 

0403.10.5000 

0403.10.9000 

0403.90.0400 

0403.90.1600 

0403.90.2000 

0403.90.4110 

0403.90.4190 

0403.90.4500 

0403.90.5100 

0403.90.5500 

0403.90.6100 

0403.90.6500 

0403.90.7400 

0403.90.7800 

0403.90.8500 

0403.90.9000 

0403.90.9500 

0404.10.0500 

0404.10.1100 

0404.10.1500 

0404.10.2000 

0404.10.5010 

0404.10.5090 

0404.10.9000 

0404.90.1000 

0404.90.3000 

0404.90.5000 

0404.90.7000 

0405.10.1000 

0405.10.2000 

0405.20.2000 

0405.20.3000 

0405.20.4000 

0405.20.6000 

0405.20.7000 

0405.20.8000 

0405.90.1020 

0405.90.1040 

0405.90.2020 

0405.90.2040 

0406.10.0400 

0406.10.0800 

0406.10.1400 

0406.10.1800 

0406.10.2400 

0406.10.2800 

HTS Nos. for dairy import assessment 

0406.10.3400 

0406.10.3800 

0406.10.4400 

0406.10.4800 

0406.10.5400 

0406.10.5800 

0406.10.6400 

0406.10.6800 

0406.10.7400 

0406.10.7800 

0406.10.8400 

0406.10.8800 

0406.20.1500 

0406.20.2400 

0406.20.2800 

0406.20.3110 

0406.20.3190 

0406.20.3300 

0406.20.3600 

0406.20.3900 

0406.20.4400 

0406.20.4800 

0406.20.5100 

0406.20.5300 

0406.20.6100 

0406.20.6300 

0406.20.6500 

0406.20.6700 

0406.20.6900 

0406.20.7100 

0406.20.7300 

0406.20.7500 

0406.20.7700 

0406.20.7900 

0406.20.8100 

0406.20.8300 

0406.20.8500 

0406.20.8700 

0406.20.8900 

0406.20.9100 

0406.30.0500 

0406.30.1400 

0406.30.1800 

0406.30.2400 

0406.30.2800 

0406.30.3400 

0406.30.3800 

0406.30.4400 

0406.30.4800 

0406.30.5100 

0406.30.5300 

0406.30.6100 

0406.30.6300 

0406.30.6500 

0406.30.6700 

0406.30.6900 

0406.30.7100 

0406.30.7300 

0406.30.7500 

0406.30.7700 

0406.30.7900 

0406.30.8100 

0406.30.8300 

0406.30.8500 

0406.30.8700 

0406.30.8900 

0406.30.9100 

0406.40.4400 

0406.40.4800 

0406.40.5400 

0406.40.5800 

0406.40.7000 

0406.90.0810 

0406.90.0890 

HTS Nos. for dairy import assessment 

0406.90.1200 

0406.90.1600 

0406.90.1800 

0406.90.3100 

0406.90.3200 

0406.90.3300 

0406.90.3600 

0406.90.3700 

0406.90.4100 

0406.90.4200 

0406.90.4600 

0406.90.4800 

0406.90.4900 

0406.90.5200 

0406.90.5400 

0406.90.6600 

0406.90.6800 

0406.90.7200 

0406.90.7400 

0406.90.7600 

0406.90.7800 

0406.90.8200 

0406.90.8400 

0406.90.8600 

0406.90.8800 

0406.90.9000 

0406.90.9200 

0406.90.9300 

0406.90.9400 

0406.90.9500 

0406.90.9700 

0406.90.9900 

1517.90.5000 

1517.90.6000 

1702.11.0000 

1702.19.0000 

1704.90.5400 

1704.90.5800 

1806.20.2090 

1806.20.2400 

1806.20.2600 

1806.20.2800 

1806.20.3400 

1806.20.3600 

1806.20.3800 

1806.20.8100 

1806.20.8200 

1806.20.8300 

1806.20.8500 

1806.20.8700 

1806.20.8900 

1806.32.0400 

1806.32.0600 

1806.32.0800 

1806.32.1400 

1806.32.1600 

1806.32.1800 

1806.32.6000 

1806.32.7000 

1806.32.8000 

1806.90.0500 

1806.90.0800 

1806.90.1000 

1806.90.1500 

1806.90.1800 

1806.90.2000 

1806.90.2500 

1806.90.2800 

1806.90.3000 

1901.10.1500 

1901.10.3000 

1901.10.3500 

1901.10.4000 

1901.10.4500 

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Federal Register / Vol. 76, No. 53 / Friday, March 18, 2011 / Rules and Regulations 14791 

HTS Nos. for dairy import assessment 

1901.20.0500 

1901.20.1500 

1901.20.2000 

1901.20.2500 

1901.20.3000 

1901.20.3500 

1901.20.4000 

1901.20.4500 

1901.20.5000 

1901.90.2800 

1901.90.3400 

1901.90.3600 

1901.90.4200 

1901.90.4300 

1901.90.7000 

2105.00.1000 

2105.00.2000 

2105.00.3000 

2105.00.4000 

2106.90.0600 

2106.90.0900 

2106.90.2400 

2106.90.2600 

2106.90.2800 

2106.90.3400 

2106.90.3600 

2106.90.3800 

2106.90.6400 

2106.90.6600 

2106.90.6800 

2106.90.7200 

2106.90.7400 

2106.90.7600 

2106.90.7800 

2106.90.8000 

2106.90.8200 

2202.90.1000 

2202.90.2400 

2202.90.2800 

3501.10.1000 

3501.10.5000 

3501.90.6000 

3502.20.0000 

(2) The assessment on imported dairy 

products shall be paid by the importer 

to CBP at the time of entry summary for 

any products identified in 

§ 1150.152(b)(1). 

(3) The assessments collected by CBP 

pursuant to § 1150.152(b)(2) of this 

section shall be transferred to the Board 

in compliance with an agreement 

between CBP and the Secretary. 

(4) The Secretary, at his or her 

discretion, shall verify the information 

reported by importers to CBP to 

determine if additional money is due 

the Board or an amount is due to an 

importer based on the quantity imported 

and the milk solids content per unit. In 

the case of money due to an importer 

from the Board, the Board will issue 

payment promptly to the importer. In 

the case of money due from the importer 

to the Board, the Secretary will send an 

invoice for payment directly to the 

importer. The remittance will be due to 

the Secretary upon receipt of the 

invoice. The Secretary will promptly 

forward such payments received to the 

Board. 

(5) If an importer elects to have funds 

remitted to a qualified program(s), the 

importer shall inform the Secretary of 

such designation by sending a letter to 

an address provided by the Secretary. 

Importer remittances for qualified 

program(s) shall not exceed 2.5 cents 

per hundredweight of milk, or 

equivalent thereof, of the 7.5 cents per 

hundredweight of milk, or equivalent 

thereof, paid by the importer pursuant 

to § 1150.152(b)(1). The Secretary shall 

compute the funds due for each 

qualified program designated by 

importers and direct the Board to 

forward such funds to each qualified 

program. 

(6) Assessments collected on 

imported dairy products shall not be 

used for foreign market promotion of 

United States dairy products. 

(7) Any money received by the Board 

pursuant to § 1150.152(b)(1) before the 

Secretary appoints the initial importer 

representatives to the Board shall not be 

spent by the Board but shall be held in 

escrow until such appointment. 

(8) The collection of assessments 

pursuant to § 1150.152(a) and (b) shall 

continue until terminated by the 

Secretary. 

■ 15. In § 1150.153, revise the section 

heading and paragraphs (a) (b)(2), (b)(3), 

(b)(4), and (b)(5), and remove the phrase 

‘‘State or regional’’ from paragraphs (c) 

introductory text, (c)(2), (c)(2)(i), 

(c)(2)(ii), and (c)(2)(iii), and (c)(2)(iv) to 

read as follows: 

§ 1150.153 Qualified dairy product 

promotion, research or nutrition education 

programs. 

(a) Any producer organization that 

conducts a State or regional dairy 

product promotion, research or 

nutrition education program, authorized 

by Federal or State law; or has been an 

active and ongoing producer program 

before enactment of the Act; or is an 

importer organization that conducts a 

promotion, research, or nutrition 

education program may apply to the 

Secretary for certification of 

qualification so that: 

(1) Producers may receive credit 

pursuant to § 1150.152(a)(3) for 

contributions to such program; and 

(2) The Board may remit payments 

designated by importers pursuant to 

§ 1150.152(b)(5). 

(b) * * * 

(2) Except for producer programs 

operated under the laws of the United 

States or any State, and except for 

importer programs, have been active 

and ongoing before enactment of the 

Act; 

(3) For producer organizations, be 

financed primarily by producers, either 

individually or through cooperative 

associations, or for importer 

organizations, be financed primarily by 

importers; 

(4) Not use a private brand or trade 

name in its advertising and promotion 

of dairy products unless the Board 

recommends and the Secretary concurs 

that such preclusion should not apply; 

(5) Certify to the Secretary that any 

requests from producers or importers for 

refunds under the program will be 

honored by forwarding to either the 

Board or a qualified program designated 

by the producer or importer that portion 

of such refunds equal to the amount that 

otherwise would be applicable to that 

program pursuant to § 1150.152(a)(3) or 

(b)(5); and 

* * * * * 

■ 16. Section 1150.155 is revised to read 

as follows: 

§ 1150.155 Adjustment of accounts. 

(a) Whenever the Board or the 

Department determines through an 

audit of a person’s reports, records, 

books or accounts or through some other 

means that additional money is due the 

Board or that money is due such person 

from the Board in accordance with 

1150.152(a), such person shall be 

notified of the amount due. The person 

shall then remit any amount due the 

Board by the next date for remitting 

assessments as provided in 

§ 1150.152(a). Overpayments shall be 

credited to the account of the person 

remitting the overpayment and shall be 

applied against amounts due in 

succeeding months. 

(b) Any importer of dairy products 

against whose imports an assessment 

has been collected under § 1150.152(b) 

who believes that such assessment or 

any portion of such assessment was 

made on milk solids of U.S. origin or 

milk solids other than cow’s milk may 

apply to the Secretary for a 

reimbursement. The importer would be 

required to submit satisfactory proof to 

the Secretary that the importer paid the 

assessment for milk solids from milk 

produced from the U.S. or milk solids 

other than cow’s milk solids. The 

Secretary will instruct the Board to send 

such reimbursement to the importer. 

■ 17. In § 1150.156, paragraph (a) is 

revised to read as follows: 

§ 1150.156 Charges and penalties. 

(a) Late-payment charge. Any unpaid 

assessments due to the Board pursuant 

to § 1150.152 shall be increased 1.5 

percent each month beginning with the 

day following the date such assessments 

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14792 Federal Register / Vol. 76, No. 53 / Friday, March 18, 2011 / Rules and Regulations 

were due. Any remaining amount due, 

which shall include any unpaid charges 

previously made pursuant to this 

section, shall be increased at the same 

rate on the corresponding day of each 

month thereafter until paid. 

(1) For the purpose of this section, 

any assessment pursuant to 

§ 1150.152(a) that was determined at a 

date later than prescribed by this 

subpart because of a person’s failure to 

submit a report to the Board when due 

shall be considered to have been 

payable by the date it would have been 

due if the report had been filed when 

due. 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. 

(2) For the purpose of this section, 

any assessment not collected by CBP at 

the time entry summary documents are 

filed by the importer is considered to be 

past due. If CBP does not collect an 

assessment from an importer, the 

importer shall be responsible for paying 

the assessment and any late charges to 

the Secretary in the form of a negotiable 

instrument made payable to ‘‘USDA.’’ 

The payment shall be mailed to a 

location designated by the Secretary or 

sent in an electronic form approved by 

the Secretary. 

* * * * * 

■ 18. Section 1150.157 is revised to read 

as follows: 

§ 1150.157 Assessment exemption. 

(a) A producer described in 

§ 1150.152(a)(1) and (a)(2) who operates 

under an approved National Organic 

Program (NOP) (7 CFR part 205) system 

plan; produces only products that are 

eligible to be labeled as 100 percent 

organic under the NOP, except as 

provided for in paragraph (h) of this 

section; and is not a split operation shall 

be exempt from the payment of 

assessments. 

(b) To apply for exemption under this 

section, a producer pursuant to 

§ 1150.152 (a)(1) and (a)(2) shall submit 

a request for exemption to the Board on 

a form provided by the Board at any 

time initially and annually thereafter on 

or before July 1 as long as the producer 

continues to be eligible for the 

exemption. 

(c) A producer request for exemption 

shall include the following: the 

producer’s name and address, a copy of 

the organic farm or organic handling 

operation certificate provided by a 

USDA-accredited certifying agent as 

defined in section 2103 of the Organic 

Foods Production Act of 1990 (7 U.S.C. 

6502), a signed certification that the 

applicant meets all of the requirements 

specified in paragraph (a) of this section 

for an assessment exemption, and such 

other information as may be required by 

the Board and with the approval of the 

Secretary. 

(d) If a producer described in 

§ 1150.152(a)(1) and (a)(2) complies 

with the requirements of this section, 

the Board will grant an assessment 

exemption and issue a Certificate of 

Exemption to the producer within 30 

days. If the application is disapproved, 

the Board will notify the applicant of 

the reason(s) for disapproval within the 

same timeframe. 

(e) The producer described in 

paragraph (c) of this section shall 

provide a copy of the Certificate of 

Exemption to each person responsible 

for remitting assessments to the Board 

on behalf of the producer pursuant to 

§ 1150.152(a). 

(f) The person responsible for 

remitting assessments to the Board 

pursuant to § 1150.152(a) shall maintain 

records showing the exempt producer’s 

name and address and the exemption 

number assigned by the Board pursuant 

to § 1150.172(a). 

(g) An importer who imports only 

products that are eligible to be labeled 

as 100 percent organic under the NOP 

(7 CFR part 205) and who is not a split 

operation shall be exempt from the 

payment of assessments. That importer 

may submit documentation to the Board 

and request an exemption from 

assessment on 100 percent organic dairy 

products—on a form provided by the 

Board—at any time initially and 

annually thereafter as long as the 

importer continues to be eligible for the 

exemption. This documentation shall 

include the same information required 

of producers in paragraph (c) of this 

section. If the importer complies with 

the requirements of this section, the 

Board will grant the exemption and 

issue a Certificate of Exemption to the 

importer. The Board will issue the 

importer a 9-digit alphanumeric 

Harmonized Tariff Schedule (HTS) 

classification valid for 1 year from the 

date of issue. This HTS classification 

should be entered by the importer on 

the Customs entry documentation. 

(h) The exemption will apply not later 

than the last day of the month following 

the Certificate of Exemption issuance 

date. 

(i) Agricultural commodities 

produced and marketed under an 

organic system plan, as described in 7 

CFR 205.201, but not sold, labeled, or 

represented as organic, shall not 

disqualify a producer from exemption 

under this section, except that 

producers who produce both organic 

and non-organic agricultural 

commodities as a result of split 

operations shall not qualify for 

exemption. Reasons for conventional 

sales include lack of demand for organic 

products, isolated use of antibiotics for 

humane purposes, chemical or pesticide 

use as the result of State or emergency 

spray programs, and crops from a buffer 

area as described in 7 CFR part 205, 

provided all other criteria are met. 

(j) Importers who are exempt from 

assessment in paragraph (g) of this 

section shall be eligible for 

reimbursement of assessments collected 

by the CBP and may apply to the 

Secretary for a reimbursement. The 

importer would be required to submit 

satisfactory proof to the Secretary that 

the importer paid the assessment on 

exempt organic products. 

■ 19. Section 1150.171 is revised to read 

as follows: 

§ 1150.171 Reports. 

(a) Each producer marketing milk of 

that producer’s own production directly 

to consumers and each person making 

payment to producers and responsible 

for the collection of the assessment 

under § 1150.152(a) shall be required to 

report at the time for remitting 

assessments to the Board such 

information as may be required by the 

Board or by the Secretary. Such 

information may include but not be 

limited to the following: 

(1) The quantity of milk purchased, 

initially transferred or which, in any 

other manner, are subject to the 

collection of the assessment; 

(2) The amount of assessment 

remitted; 

(3) The basis, if necessary, to show 

why the remittance is less than the 

number of hundredweights of milk 

multiplied by 15 cents; and 

(4) The date any assessment was paid. 

(b) Importers of dairy products shall 

submit reports as requested by the 

Secretary as necessary to verify that 

provisions pursuant to § 1150.152(b) 

have been carried out correctly, 

including verification that correct 

amounts were paid based upon milk 

solids content of the imported dairy 

products pursuant to § 1150.152(b)(1). 

■ 20. Section 1150.172 is revised to read 

as follows: 

§ 1150.172 Books and records. 

(a) Each producer who is subject to 

this subpart, and other persons subject 

to § 1150.171(a), shall maintain and 

make available for inspection by 

employees of the Board and the 

Secretary such books and records as are 

necessary to carry out the provisions of 

this subpart and the regulations issued 

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Federal Register / Vol. 76, No. 53 / Friday, March 18, 2011 / Rules and Regulations 14793 

hereunder, including such records as 

are necessary to verify any reports 

required. Such records shall be retained 

for at least two years beyond the fiscal 

period of their applicability. 

(b) Each importer of dairy products 

shall maintain and make available for 

inspection by the Secretary such books 

and records to verify that provisions 

pursuant to § 1150.152(b) have been 

carried out correctly, including 

verification that correct amounts were 

paid based upon milk solids content of 

the imported dairy products. Such 

records shall be retained for at least two 

years beyond the calendar period of 

their applicability. Such information 

may include but not be limited to 

invoices, packing slips, bills of lading, 

laboratory test results, and letters from 

the manufacturer on the manufacturer’s 

letterhead stating the milk solids 

content of imported dairy products. 

■ 21 Section 1150.187 is revised to read 

as follows: 

§ 1150.187 Paperwork Reduction Act 

assigned number. 

The information collection and 

recordkeeping requirements contained 

in §§ 1150.133, 1150.152, 1150.153, 

1150.171, 1150.172, and 1150.273 of 

these regulations (7 CFR part 1150) have 

been approved by the Office of 

Management and Budget (OMB) under 

the provisions of 44 U.S.C. chapter 35 

and have been assigned OMB Control 

Number 0581–0093 as appropriate. 

Dated: March 14, 2011. 

David R. Shipman, 

Associate Administrator, Agricultural 

Marketing Service. 

[FR Doc. 2011–6322 Filed 3–17–11; 8:45 am] 

BILLING CODE 3410–02–P 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Parts 326 and 334 

RIN 3064–AD76 

Procedures for Monitoring Bank 

Secrecy Act Compliance and Fair 

Credit Reporting: Technical 

Amendments 

AGENCY: Federal Deposit Insurance 

Corporation (FDIC). 

ACTION: Final rule. 

SUMMARY: The FDIC is adopting a final 

rule to update cross-references in its 

anti-money laundering program and 

Fair Credit Reporting Act rules, to 

conform to changes in the numbering of 

the Department of the Treasury’s rules 

that implement the Bank Secrecy Act. 

DATES: Effective March 18, 2011. 

FOR FURTHER INFORMATION CONTACT: 

Division of Risk Management 

Supervision and Consumer Protection: 

Debra Novak (202) 898–6641; Legal 

Division: Carl Gold, Counsel, (202) 898– 

8702; Richard M. Schwartz, Counsel, 

(202) 898–7424. 

SUPPLEMENTARY INFORMATION: As 

required by section 8(s) of the Federal 

Deposit Insurance Act, 12 U.S.C. 

1818(s), the FDIC’s regulation, 12 CFR 

326.8, requires every State nonmember 

bank to establish and maintain 

procedures reasonably designed to 

assure and monitor its compliance with 

the requirements of the Bank Secrecy 

Act (‘‘BSA’’), 31 U.S.C. 5311 et seq., and 

the regulations implementing that 

statute (‘‘BSA regulations’’). In addition, 

the FDIC has regulations, 12 CFR part 

334, which implement the Fair Credit 

Reporting Act, 15 U.S.C. 1681 et seq. 

The Financial Crimes Enforcement 

Network (FinCEN), an arm of the 

Department of the Treasury, recently 

amended the BSA regulations to 

reorganize and move them from 31 CFR 

Part 103 to Chapter X of Title 31 of the 

CFR. 75 FR 65806 et seq. (Oct. 26, 2010). 

Effective March 1, 2010, the BSA 

regulations governing State nonmember 

banks (as well as other federally-insured 

depository institutions) are contained in 

31 CFR part 1010 et seq. 

To conform to this change, the FDIC 

is amending a general cross-reference to 

the BSA regulations in 12 CFR 326.8, 

and specific cross-references to the 

Customer Identification Program (‘‘CIP’’), 

31 CFR 103.121, in 12 CFR 326.8, 12 

CFR 334.82, and Appendix J to Part 334. 

The CIP regulation, which is 

substantively unchanged, is now found 

at 31 CFR 1020.220. 

Administrative Procedure Act 

The Administrative Procedure Act, 

5 U.S.C. 553(b) provides that a final 

regulation may be issued without prior 

notice or an opportunity for comment 

when the agency for good cause finds 

(and incorporates the finding and a brief 

statement of reasons therefor in the 

rules issued) that notice and public 

procedure thereon are impracticable, 

unnecessary, or contrary to the public 

interest. The FDIC finds that good cause 

exists as the regulatory amendments are 

nonsubstantive, and therefore notice 

and public procedure are unnecessary. 

5 U.S.C. 553(d) provides that the 

required publication or service of a 

substantive rule shall be made not less 

than 30 days before its effective date, 

with some exceptions. Since this is not 

a substantive rule, the rule is effective 

immediately upon publication in the 

Federal Register. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

does not apply to a rulemaking where a 

general notice of proposed rulemaking 

is not required. See 5 U.S.C. 603 and 

604. As noted previously in the 

SUPPLEMENTARY INFORMATION section, the 

FDIC has determined, for good cause, 

that it is unnecessary to publish a notice 

of proposed rulemaking for this final 

rule. Accordingly, the RFA’s 

requirements relating to an initial and 

final regulatory flexibility analysis do 

not apply. 

Paperwork Reduction Act 

There are no information collection 

requirements in this final rule. 

List of Subjects in 12 CFR Parts 326 and 

334 

Banks, banking, Currency, Insured 

nonmember banks, Reporting and 

recordkeeping requirements. 

For the reasons set out in the 

preamble, the FDIC hereby amends 12 

CFR chapter III as follows: 

PART 326—MINIMUM SECURITY 

DEVICES AND PROCEDURES AND 

BANK SECRECY ACT COMPLIANCE 

■ 1. The authority citation for part 326 

continues to read as follows: 

Authority: 12 U.S.C. 1813, 1815, 1817, 

1818, 1819 (Tenth), 1881–1883; 31 U.S.C. 

5311–5314 and 5316–5332.2. 

■ 2. Revise § 326.8 to read as follows: 

§ 326.8 Bank Security Act compliance. 

(a) Purpose. This subpart is issued to 

assure that all insured nonmember 

banks as defined in 12 CFR 326.1 

establish and maintain procedures 

reasonably designed to assure and 

monitor their compliance with the 

requirements of subchapter II of chapter 

53 of title 31, United States Code, and 

the implementing regulations 

promulgated thereunder by the 

Department of Treasury at 31 CFR 

Chapter X. 

(b) Compliance procedures— 

(1) Program requirement. Each bank 

shall develop and provide for the 

continued administration of a program 

reasonably designed to assure and 

monitor compliance with recordkeeping 

and reporting requirements set forth in 

subchapter II of chapter 53 of title 31, 

United States Code, and the 

implementing regulations issued by the 

Department of Treasury at 31 CFR 

Chapter X. The compliance program 

shall be written, approved by the bank’s 

WReier-Aviles on DSKGBLS3C1PROD with RULES