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[Federal Register Volume 77, Number 113 (Tuesday, June 12, 2012)]
[Proposed Rules]
[Pages 34868-34870]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-14187]

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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: Proposed rule.

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SUMMARY: This proposed rule would amend the Lamb Promotion, Research, 
and Information Order (Order) to increase the assessment rate on all 
live ovine animals sold from $.005 per pound to $.007 per pound for 
producers, feeders, and seedstock producers, and from $.30 per head of 
ovine animals purchased for slaughter to $.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). The American Lamb Board (Board), which administers the 
Order, recommended this action to maintain and expand their 
promotional, research, advertising, and communications programs.

DATES: Written comments must be received by August 13, 2012.

ADDRESSES: Comments must be posted online at www.regulations.gov or 
sent to Kenneth Payne, Director, Marketing Programs Division, Livestock 
and Seed Program, Agricultural Marketing Service (AMS), USDA, Room 
2628-S, STOP 0251, 1400 Independence Avenue SW., Washington, DC 20250-
0251; or fax to (202) 720-1125. All comments should reference the 
docket number, the date, and the page number of this issue of the 
Federal Register. Comments will be available for public inspection at 
the aforementioned address, as well as on the Internet at http://www.regulations.gov/.

FOR FURTHER INFORMATION CONTACT: Emily DeBord, Agricultural Marketing 
Specialist, Marketing Programs Division, on 202/720-1115, 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 12866 for this action.

Executive Order 12988

    This proposed rule has been reviewed under Executive Order 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 with the 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 of Agriculture (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), AMS has considered the 
economic effect of this action on small entities. The purpose of the 
RFA is to fit regulatory action to scale on businesses subject to such 
action so that small businesses will not be disproportionately 
burdened.
    In the February 2011 publication of ``Farms, Land in Farms, and 
Livestock Operations,'' the U.S. Department of Agriculture's (USDA) 
National Agricultural Statistics Service (NASS) estimates that in 2010 
the number of operations in the United States with sheep totaled 
approximately 81,000. 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 $7 million. 
Under these definitions, the majority of the producers, feeders, 
seedstock producers, and first handlers that would be affected by this 
rule would be considered small entities
    Funds collected under the programs are used for promotion, 
information, research, and advertising of American lamb and for the 
administration, maintenance, and functioning of the American Lamb Board 
(Board). At the current assessment rate of one-half of a cent ($.005) 
per pound on all live lambs sold by producers, feeders, and seedstock 
producers and thirty cents ($.30) per head of lamb purchased by first 
handlers for slaughter, the program generates about $1.8 million in 
annual

[[Page 34869]]

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 USDA 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. This proposed 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 ($.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 1.67 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 would be assessed a rate of $0.42 
per head. Currently, section 1280.217 of the Order states that the rate 
of assessment shall be one-half of a cent ($.005 per pound) 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 ($.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 proposed rule would 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 $2.0 million in 
2010. 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 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 rule 
does not result in a change to the information collection and 
recordkeeping requirements previously approved. We have performed this 
Initial Regulatory Flexibility Analysis regarding the impact of this 
proposed amendment to the Order on small entities, and we invite 
comments concerning potential effects of this amendment on small 
businesses.

Background and Proposed 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 ($.005) per pound when live ovine animals are sold. First 
handlers, primarily packers, pay an additional $.30 per head on ovine 
animals purchased for slaughter. Importers are not assessed.
    This rule proposes to increase the assessment rate on all live 
lambs sold from $.005 per pound to $.007 per pound for producers, 
feeders, and seedstock producers and from $.30 per head of lamb 
purchased for slaughter to $.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 proposed 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 a projected 
$1.8 million in 2011. As expenses to successfully promote and increase 
the consumption of American lamb continue to rise, the Board feels 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 $.005 per 
pound to $.007 per pound for producers, feeders, and seedstock 
producers and from $.30 per head of lamb purchased for slaughter to 
$.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

[[Page 34870]]

such amendments to the Order as the Board considers appropriate.
    A 60-day comment period is provided to allow interested persons to 
respond to this proposal. All written comments received in response to 
this rule by the date specified would be considered prior to finalizing 
this action.

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, it is proposed that 7 CFR 
part 1280 be amended as follows:

PART 1280--LAMB PROMOTION, RESEARCH, and INFORMATION

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

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

    2. Sec.  1280.217, paragraph (e) and Sec.  1280.219 are 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 ($.007 per pound) per pound on all live 
lambs sold. The rate of assessment may be raised or lowered no more 
than twenty-hundredths of a cent ($.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.

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 ($.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 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: June 6, 2012.
David R. Shipman,
Administrator, Agricultural Marketing Service.
[FR Doc. 2012-14187 Filed 6-11-12; 8:45 am]
BILLING CODE 3410-02-P
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