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[Federal Register Volume 78, Number 93 (Tuesday, May 14, 2013)]
[Rules and Regulations]
[Pages 28121-28124]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-11390]

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1280

[No. AMS-LS-11-0038]

Lamb Promotion, Research, and Information Order; Amendment to the 
Order To Raise the Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule amends the Lamb Promotion, Research, and 
Information Order (Order) to increase the assessment rate on all live 
ovine animals sold from $0.005 per pound to $0.007 per pound for 
producers, feeders, and seedstock producers, and from $0.30 per head of 
ovine animals purchased for slaughter to $0.42 per head for first 
handlers. The increase is provided for under the Order, which is 
authorized by the Commodity Promotion, Research, and Information Act of 
1996 (Act) (7 U.S.C. 7411-7425). The American Lamb Board (Board), which 
administers the Order, recommended this action to maintain and expand 
their promotional, research, advertising, and communications programs.

DATES: Effective June 13, 2013.

FOR FURTHER INFORMATION CONTACT: Emily DeBord, Agricultural Marketing 
Specialist, Research and Promotion Division, on 202-690-2611, fax 202-
720-1125, or by email at Emily.DeBord@ams.usda.gov.

SUPPLEMENTARY INFORMATION: 

Executive Order 12866

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

Executive Order 12988

    This final rule has been reviewed under E.O. 12988, Civil Justice 
Reform. The rule is not intended to have retroactive effect and will 
not affect or preempt any other State or Federal law authorizing 
promotion or research relating to an agricultural commodity.
    Under section 519 of the Act a person subject to the Order may file 
a petition

[[Page 28122]]

with the Secretary of Agriculture (Secretary) stating that the Order, 
any provision of the Order, or any obligation imposed in connection 
with the Order is not established in accordance with the law, and may 
request a modification of the Order or an exemption from the Order. Any 
petition filed challenging the Order, any provision of the Order, or 
any obligation imposed in connection with the Order, shall be filed 
within 2 years after the effective date of the Order, provision, or 
obligation subject to challenge in the petition. The petitioner will 
have the opportunity for a hearing on the petition. Thereafter, the 
Secretary will issue a ruling on the petition.
    The Act provides that the district court of the United States for 
any district in which the petitioner resides or conducts business shall 
have the jurisdiction to review a final ruling on the petition if the 
petitioner files a complaint for that purpose not later than 20 days 
after the date of the entry of the Secretary's final ruling.

Regulatory Flexibility Act and Paperwork Reduction Act

    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA) (5 U.S.C. 601-612), the Administrator of the 
Agricultural Marketing Service (AMS) has considered the economic effect 
of this action on small entities and has determined that this final 
rule will not have a significant impact on a substantial number of 
small entities. The purpose of the RFA is to fit regulatory action to 
the scale of businesses subject to such action in order that small 
businesses will not be unduly burdened.
    The U.S. Department of Agriculture's (Department) National 
Agricultural Statistics Service estimated that in 2012 the number of 
operations in the United States with sheep totaled approximately 
79,500. The majority of these operations that are subject to the Order 
may be classified as small entities.
    The Small Business Administration defines, in 13 CFR Part 121, 
small agricultural producers as those having annual receipts of no more 
than $750,000, and small agricultural service firms (handlers and 
importers) as those having annual receipts of no more than $7 million. 
Under these definitions, the majority of the producers, feeders, 
seedstock producers, and first handlers that will be affected by this 
final rule are considered small entities.
    Funds collected under the programs are used for promotion, 
information, research, and advertising of American lamb and for the 
administration, maintenance, and functioning of the Board. At the 
current assessment rate of one-half of a cent ($0.005) per pound on all 
live lambs sold by producers, feeders, and seedstock producers and 
thirty cents ($0.30) per head of lamb purchased by first handlers for 
slaughter, the program generates about $1.8 million in annual revenues. 
The current assessment rate was established in April 11, 2002, when the 
Order was issued (70 FR 17848). The Order is administered by the Board 
under Department oversight. According to the Board, additional revenue 
is required in order to sustain and expand the promotional, research, 
advertising, and communications programs.
    On May 26, 2011, the Board passed a motion to raise the assessment 
rate as authorized under the Act and Order (7 CFR Part 1280). This 
final rule is consistent with section 1280.217(e) of the Order, which 
states that the rate of assessment for producers, seedstock producers, 
and feeders may be raised or lowered no more than twenty-hundredths of 
a cent ($0.002) in any one year. In addition, section 1280.219 states 
the rate of assessment for first handlers shall be increased or 
decreased proportionately if the assessment paid by producers, feeders, 
and seedstock producers is increased or decreased. The current rate 
producers pay on a per pound basis, $0.005 per pound, is 16.7 percent 
of the rate first handlers pay on a per head basis, $0.30 per head. To 
keep the same proportionality when producers are assessed a rate of 
$0.007 per pound, the first handlers will be assessed a rate of $0.42 
per head. Currently, section 1280.217 of the Order states that the rate 
of assessment shall be one-half of a cent ($0.005) per pound on all 
live lambs sold. Section 1280.219 currently states each first handler, 
in addition to remitting the assessment collected pursuant to section 
1280.217, shall pay an assessment equal to thirty cents ($0.30) per 
head of lambs purchased by the first handler for slaughter or 
slaughtered by such first handler pursuant to a custom slaughter 
arrangement. This final rule will amend the aforementioned sections.
    The Board's most recent return on investment study, Analyzing the 
Effectiveness of the Lamb Promotion, Research, and Information Order, 
by Oral Capps, Jr. and Gary W. Williams, showed that for the period 
2002 through 2010 the Lamb Checkoff Program continued to enhance the 
demand for American lamb. The analysis shows that the Board's promotion 
programs have generated roughly 7.1 to 7.5 additional pounds of total 
lamb consumption per dollar spent on advertising and promotion and 
$37.16 to $39.34 in additional lamb sales per dollar spent on 
advertising and promotion. Copies of this study can be obtained from 
the Board.
    Over the last several fiscal years, however, several trends have 
asserted downward pressure on the Board's continued ability to sustain 
the industry's recognized high level of return. Domestic lamb 
production levels have continued to decrease. A growing percentage of 
domestic lamb is being sold into non-traditional markets and higher 
costs driven by worldwide inflation have increased the expense of 
implementing Board programs. The Board's assessment collections have 
continued to decrease from $2.8 million in 2003 to $1.9 million in 
2012. Over the past few years the Board's budget has decreased and 
business costs have increased. The Board has explored ways to maintain 
effective programs by cutting programs that are not meeting the Board's 
expectations. The Board believes that marketing and promotions programs 
should not be reduced any further at a time when it is critical for the 
industry to protect American lamb's position in retail and foodservice 
and maintain market share.
    The Board states that the proposed assessment rate increase would 
enable it to maintain, enhance, and expand its efforts to build demand, 
increase awareness, and create preference for American lamb through 
targeted advertising, retail promotions, public relations campaigns and 
media outreach, foodservice programs, consumer events, social 
marketing, and nutrition education. The Board strongly believes that it 
is a critical time for the industry to protect their position in retail 
and foodservice and maintain market share in order for there to be a 
future for domestic lamb. The Board believes that it is essential to 
increase the lamb checkoff revenue and get its marketing and promotion 
budget back to the original budget levels in fiscal years 2003 and 2004 
in order to maintain its efforts to promote American lamb and deliver a 
good return on the industry's investment.
    This final rule does not impose additional recordkeeping 
requirements on producers, feeders, seedstock producers, or first 
handlers of American lamb. There are no Federal rules that duplicate, 
overlap, or conflict with this rule. In accordance with OMB regulation 
(5 CFR part 1320), which implements the Paperwork Reduction Act of 1995 
(44 U.S.C. chapter 35), the information collection and recordkeeping 
requirements have been approved previously under OMB control number 
0581-0093. This final rule does not result in a change to the

[[Page 28123]]

information collection and recordkeeping requirements previously 
approved.
    We have performed this initial RFA regarding the impact of this 
final amendment to the Order on small entities.

Background and Final Action

    Under the Order, which became effective April 11, 2002, the Board 
administers a nationally coordinated program of research, development, 
advertising, and promotion designed to strengthen the position of, and 
to develop and expand the markets for, ovine animals and ovine 
products. This program is currently financed by assessments from 
producers, feeders, and seedstock producers who pay an assessment of 
one-half cent ($0.005) per pound when live ovine animals are sold. 
First handlers, primarily packers, pay an additional $0.30 per head on 
ovine animals purchased for slaughter. Importers are not assessed.
    This final rule will increase the assessment rate on all live lambs 
sold from $0.005 per pound to $0.007 per pound for producers, feeders, 
and seedstock producers and from $0.30 per head of lamb purchased for 
slaughter to $0.42 per head for first handlers. According to the Board, 
in order to sustain and expand the promotion, research, and 
communications programs at present levels, the Board contends that 
additional revenue is required. The assessment rate increase is 
estimated to generate $700,000 in new revenue, depending upon 
production levels.
    The Board's budget is based on the amount of assessments collected 
on an annual basis. As assessments have continued to decline, the 
Board's budget has decreased from $2.8 million in 2003 to $1.9 million 
in 2012. As expenses to successfully promote and increase the 
consumption of American lamb continue to rise, the Board believes it is 
necessary to amend the Order to increase the rate of assessment.
    On May 26, 2011, the Board unanimously approved a motion to request 
that the Secretary amend sections 1280.217 (e) and 1280.219 of the 
Order to increase the assessment rate on all live lambs sold from 
$0.005 per pound to $0.007 per pound for producers, feeders, and 
seedstock producers and from $0.30 per head of lamb purchased for 
slaughter to $0.42 per head for first handlers. The Board has not 
amended the Order to raise or lower the assessment rate since the 
inception of the program. The vote to recommend the assessment increase 
was unanimous.
    The Act provides for the creation of, and amendments to, the Order. 
The Order provides in section 1280.210 that the Board shall have the 
powers and duties to recommend to the Secretary such amendments to the 
Order as the Board considers appropriate.

Comments

    On June 12, 2012, the Department published in the Federal Register 
(77 FR 34868) for public comment a proposed rule to amend the Order to 
increase the assessment rate on all live ovine animals sold from $0.005 
to $0.007 per pound for producers, feeders, and seedstock producers, 
and from $0.30 to $0.42 per head for first handlers. Comments were due 
to the Department by August 13, 2012.
    The Department received 121 timely comments related to the proposed 
rule, of which 94, or 77.7% were in support of the assessment rate 
increase, and 26, or 21.5%, were opposed to the increase. One comment 
was neither for nor against the increase, and four comments, which 
generally reflected the views of those who supported the increase, were 
received after the closing date. Commenters included producers, 
feeders, seedstock producers, first handlers, and other interested 
parties.
    Commenters supporting the assessment rate increase pointed to the 
need to raise sufficient funding for lamb promotions in the face of 
rising costs. Many noted that the assessment rate had not been 
increased during the past decade and that the increase would restore 
marketing funding to earlier levels. Several commenters suggested that 
the lamb industry would lose share of voice in the market without 
increased funding. Commenters also noted that the rate increase would 
offset the decline in lamb inventories across the country. Other 
commenters pointed out that the lamb industry increasingly was being 
outspent by competing meats and international competitors in marketing 
activities.
    Commenters who opposed the assessment rate increase cited the 
decline of the industry (lamb numbers falling; prices not competitive 
with imported lamb meat). Many suggested that lamb producers were 
losing money and could not afford the additional cost. Several 
commenters based their opposition to the rate increase on their belief 
that the Lamb Checkoff has not been driving increased lamb consumption. 
Two commenters noted that the lamb industry is too diversified for the 
generic checkoff program to be successful.
    AMS has carefully considered all comments submitted and is not 
making any changes to the proposed rule. As has been stated previously 
in this rulemaking, in the Board's view, it is a critical time for the 
lamb industry to protect its position in retail and foodservice, and 
maintain market share, in order for there to be a future for domestic 
lamb. Therefore, it is essential to increase the lamb checkoff revenue 
and get its marketing and promotion budget back to the original budget 
levels in fiscal years 2003 and 2004 in order to maintain the Board's 
efforts to promote American lamb and deliver a good return on the 
industry's investment.

List of Subjects in 7 CFR Part 1280

    Administrative practice and procedure, Advertising, Agricultural 
research, Marketing agreements, Lamb and Lamb products, Reporting and 
recordkeeping requirements.

    For reasons set forth in the preamble, this final rule amends 7 CFR 
part 1280 as follows:

PART 1280--LAMB PROMOTION, RESEARCH, AND INFORMATION

0
1. The authority citation for 7 CFR part 1280 continues to read as 
follows:

    Authority:  7 U.S.C. 7411-7425 and 7 U.S.C. 7401.

0
2. In Sec.  1280.217, paragraph (e) is revised to read as follows:

Sec.  1280.217  Lamb purchases.

* * * * *
    (e) Rate. Except as otherwise provided, the rate of assessment 
shall be seven-tenths of a cent ($0.007) per pound on all live lambs 
sold. The rate of assessment may be raised or lowered no more than 
twenty-hundredths of a cent ($0.002) in any one year. The Board may 
recommend any change to the Department. Prior to a change in the 
assessment rate, the Department will provide notice by publishing in 
the Federal Register any proposed changes with interested parties 
allowed to provide comment.
* * * * *

0
3. Section 1280.219 is revised to read as follows:

Sec.  1280.219  First handlers.

    Each first handler, in addition to remitting the assessment 
collected pursuant to Sec.  1280.217, shall pay an assessment equal to 
forty-two cents ($0.42) per head of lambs purchased by the first 
handler for slaughter or slaughtered by such first handler pursuant to 
a custom slaughter arrangement. The rates of assessment for first 
handlers shall be increased or

[[Page 28124]]

decreased proportionately if the assessment paid by producers, 
seedstock producers, and feeders is increased or decreased. Such 
assessment shall be remitted with the assessments collected pursuant to 
Sec.  1280.217.

    Dated: May 8, 2013.
David R. Shipman,
Administrator, Agricultural Marketing Service.
[FR Doc. 2013-11390 Filed 5-13-13; 8:45 am]
BILLING CODE 3410-02-P
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