`[Federal Register Volume 89, Number 237 (Tuesday, December 10, 2024)]
[Proposed Rules]
[Pages 99149-99169]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-28389]


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 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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  Federal Register / Vol. 89, No. 237 / Tuesday, December 10, 2024 / 
Proposed Rules  

[[Page 99149]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1240

[Doc. No. AMS-LP-21-0028]
RIN 0581-AE07


Natural Grass Sod Promotion, Research, and Information Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule order and referendum.

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SUMMARY: This document proposes to establish an industry-funded 
promotion, research, and information program for natural grass sod 
products. The proposed program, the Natural Grass Sod Promotion, 
Research, and Information Order (Order), was submitted to the U.S. 
Department of Agriculture (USDA) by Turfgrass Producers International 
(TPI), a group of natural grass sod producers. The purpose of the 
program would be to maintain and expand markets for natural grass sod 
products and the program would be financed by an assessment on domestic 
sod producers. This proposed Order also announces that USDA is 
conducting a referendum among eligible producers to determine whether 
they favor establishing the program. The program would be established 
if it is favored by a majority of industry producers voting in the 
referendum. A separate final rule on referendum procedures is published 
in this issue of the Federal Register. This proposed Order also 
announces the Agricultural Marketing Service's (AMS) intent to request 
approval from the Office of Management and Budget (OMB) of new 
information collection requirements to implement the program.

DATES: The voting period is January 13, 2025 through February 11, 2025. 
To be eligible to vote, current natural grass sod producers must have 
sold natural grass sod products in the United States during the 
representative period from January 1, 2024 through December 31, 2024. 
Anyone who believes that they are eligible to vote in the referendum 
must request a ballot from the Referendum Agents by emailing the 
contact provided in the ADDRESSES section below. Eligible producers 
must provide evidence of natural grass sod sales during the 
representative period. Ballots will be mailed to all known eligible 
natural grass sod producers on or before January 10, 2025. Ballots must 
be received by the Referendum Agents no later than the close of 
business 5 p.m. (Eastern Standard Time) on February 11, 2025.

ADDRESSES: Copies of the proposed Order may be obtained from the 
Referendum Agents, Research and Promotion Division; Livestock and 
Poultry Program, AMS, USDA; Room 2092-S, STOP 0249; 1400 Independence 
Avenue SW, Washington, DC 20250-0249; Telephone: (202) 302-1139; Email: 
[email protected] or can be viewed at https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Maribel Reyna; Director; Research and 
Promotion Division; Telephone: (202) 302-1139 or Email: 
[email protected].

SUPPLEMENTARY INFORMATION: This proposed rule is issued pursuant to the 
Commodity Promotion, Research, and Information Act of 1996 (1996 Act or 
Act) (7 U.S.C. 7411-7425).
    As part of this rulemaking process, a proposed rule inviting 
comments was published in the Federal Register on October 16, 2023 (88 
FR 71306) that provided for a 60-day comment period which ended on 
December 15, 2023. AMS received 174 comments, the majority of which 
(151), favored the establishment of a natural grass sod promotion, 
research, and information program. The comments are addressed later in 
this document.

Executive Orders 12866, 13563, and 14094

    Executive Orders (E.O.) 12866 and 13563 direct agencies to assess 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
reducing costs, harmonizing rules, and promoting flexibility. E.O. 
14094 updates and modernizes E.O. 12866 and directs agencies to conduct 
proactive outreach to engage interested and affected parties through a 
variety of means, such as through field offices, and alternative 
platforms and media. This rulemaking has been designated as not a 
``significant regulatory action'' under section 3(f) of E.O. 12866. 
Accordingly, OMB has not reviewed this action.

Executive Order 12988

    This action has been reviewed under E.O. 12988, Civil Justice 
Reform. It is not intended to have retroactive effect. Section 524 of 
the 1996 Act (7 U.S.C. 7423) provides that it shall not affect or 
preempt any other Federal or State law authorizing promotion or 
research relating to an agricultural commodity.
    Under section 519 of the 1996 Act (7 U.S.C. 7418), a person subject 
to an order may file a petition 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 requesting 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 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.

Executive Order 13175

    This action has been reviewed under E.O. 13175, Consultation and 
Coordination with Indian Tribal Governments, which requires Federal 
agencies to consult and coordinate with Tribes on a government-to-
government basis on: (1) policies that have Tribal implications, 
including regulations, legislative comments, or proposed

[[Page 99150]]

legislation; and (2) other policy statements or actions that have 
substantial direct effects on one or more Indian Tribes, on the 
relationship between the Federal Government and Indian Tribes, or on 
the distribution of power and responsibilities between the Federal 
Government and Indian Tribes.
    AMS has assessed the impact of this action on Indian Tribes and 
determined that this rulemaking would not have Tribal implications that 
require consultation under E.O. 13175. AMS hosts a quarterly 
teleconference with Tribal leaders where matters of mutual interest 
regarding the marketing of agricultural products are discussed. 
Information about the proposed regulation will be shared during an 
upcoming quarterly call, and Tribal leaders will be informed about the 
proposed regulation and referendum procedures. AMS will work with the 
USDA Office of Tribal Relations to ensure meaningful consultation is 
provided as needed with regards to the regulations.

Background

    This proposed Order is an industry effort to establish a national 
program with a board composed of natural grass sod producers and one 
public member to promote and strengthen consumer demand for natural 
grass. Initially, producers would pay one-tenth (1/10th) of one penny 
($0.01) per square foot of natural grass products sold in the United 
States, which would be calculated by multiplying the square footage, or 
the equivalent thereof, of natural grass products sold in the United 
States by $0.001. No natural grass sod producer would be exempt from 
paying the assessment unless producing a certified organic product 
under the National Organic Program. A referendum to determine whether 
producers favor the Order would take place before the Order would go 
into effect. This proposed Order also announces AMS's intent to request 
approval by OMB of new information collection requirements to implement 
the program.

Authority in the 1996 Act

    The proposed Order is authorized by the 1996 Act (7 U.S.C. 7411-
7425), which authorizes USDA to establish agricultural commodity 
research and promotion orders that may include a combination of 
promotion, research, industry information, and consumer information 
activities funded by mandatory assessments. These programs are designed 
to maintain and expand existing markets and develop new markets and 
uses for agricultural commodities. As defined in section 513 of the Act 
(7 U.S.C. 7412), the term ``agricultural commodity'' includes 
agricultural and horticultural products and ``products processed or 
manufactured from [agricultural and horticultural products], as 
determined appropriate by the Secretary.'' 7 U.S.C. 7412(1)(F). The 
Act's definition of an agricultural commodity thus includes natural 
grass sod.
    The 1996 Act includes provisions that authorize the Secretary to 
tailor programs to the specific characteristics of different 
commodities. Section 514 of the Act (7 U.S.C. 7413) provides USDA 
discretion in determining to whom an order should apply among the 
following: (1) producers, (2) first handlers and others in the 
marketing chain as appropriate, and (3) importers (if imports are 
subject to assessments). Natural grass sod producers fall within the 
categories of ``first handlers'' and ``other persons in the marketing 
chain.''
    In addition, while section 515 of the 1996 Act (7 U.S.C. 7414) 
directs that each order must establish an administrative board, the 
board may be composed of producers, first handlers and others in the 
marketing chain as appropriate, or importers (if imports are subject to 
assessments). A board may also include one or more members of the 
general public. Section 516 of the Act (7 U.S.C. 7415) states that an 
order may include different payment and reporting schedules; authority 
for research, promotion, and information activities to expand, improve, 
or make more efficient the marketing or use of an agricultural 
commodity in both domestic and foreign markets; provision for reserve 
funds; and provision for credits for generic and branded activities.
    Section 518 of the 1996 Act (7 U.S.C. 7417) provides for a 
referendum to ascertain approval of an order to be conducted either 
prior to it going into effect or within 3 years after assessments first 
begin under the order. The Act also provides three different methods 
for determining approval of an order in a referendum: (1) by a majority 
of those persons voting, (2) by persons voting for approval who 
represent a majority of the volume of the agricultural commodity, or 
(3) by a majority of those persons voting for approval who also 
represent a majority of the volume of the agricultural commodity.

Industry Overview

    The 2022 USDA Census of Agriculture places the value of the U.S. 
natural grass sod industry at over $2.2 billion, and natural grass sod 
is produced on 1,447 farms in the United States, totaling 376,227 
acres. These farms exist nationwide with documented active natural 
grass sod farms in no fewer than 49 States. The widespread distribution 
of natural grass sod farms is due in part to the diversity of natural 
grass species, allowing them to adapt to different climates. Grass 
species such as Bentgrass, Fine fescue, Tall fescue, and Kentucky 
bluegrass thrive in USDA plant hardiness zones 1a through 6a, while 
Bermudagrass, Buffalograss, Centipedegrass, Seashore Paspalum, Saint 
Augustinegrass, and Zoysiagrass perform well in zones 7a through 10a. 
There are also various species of native grasses and other adapted 
grasses that are gaining popularity in various regions. All these 
products are produced by natural grass sod farmers throughout the 
United States and are included in the definition of natural grass sod 
products in the proposed Order.
    The $2.2 billion of natural grass sod produced in 2022 by U.S. 
natural grass sod farms enters the market where it contributes 
significantly to industries that focus on sustainable growth through 
public and private initiatives supporting environmentally responsible 
investments, as well as those industries that support it. These sectors 
include the home lawn care, sports field, golf course, roadside, and 
other markets that are essential components of local economies 
nationwide. Seed industries, primarily in the Midwest and Pacific 
Northwest, supply seed for sod farms growing cool-season grasses 
including ryegrass, fescues, bluegrasses, and native or adapted 
mixtures. This industry produces over 600 million pounds of natural 
grass seed in Oregon alone, much of which is distributed to U.S. 
natural grass sod farms to produce sod that is then sold to other 
segments of the green industry.
    In addition to contributing to rural agricultural economies, 
natural grass sod also contributes significantly to urban economies. In 
States that track sod sales data, landscape contractors in urban and 
suburban areas purchase between 39.2 percent and 68.2 percent of total 
sales, followed by sales to athletic complexes and golf courses that 
make up between 18.2 percent and 44.5 percent of total sales.\1\ The 
natural grass

[[Page 99151]]

sod supply chain contributes to local economies through home 
improvement centers, lawn and landscaping services, equipment and 
materials purchases, and more. It is estimated that the U.S. lawn care 
industry alone was worth up to $93 billion in 2018, employed more than 
1 million people, and represented 513,305 businesses.\2\
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    \1\ Waltz, Clint, 2018 Sod Producers Report, Annual Survey 
Examines Inventory and Price. UAC Winter Magazine, Winter 2018, at 
44. See also Miller, Grady, 2018 Sod Producers Report for North 
Carolina, Turffiles.ncsu.edu, https://www.turffiles.ncsu.edu/2018/04/2018-sod-producers-report-for-north-carolina/ (last visited Aug. 
30, 2024); Richards, Steve. 2018 SC Sod Producers Survey Results 
(2018, Clemson University).
    \2\ National Association of Landscape Professionals (NALP), 
Landscape Industry Statistics, Landscapeprofessionals.org, https://www.landscapeprofessionals.org/LP/News/LP/Media/landscape-industry-statistics.aspx (last visited Aug. 30, 2024).
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Need for a Program

    The need for a national research and promotion program is evidenced 
by trends that discourage consumers from using natural grass products. 
Natural grass sod producers in many areas of the United States are 
experiencing social and market trends that are increasingly impacting 
consumer perception and the value of natural grass. These trends 
minimize the value of natural grass lawns and athletic fields in urban 
and suburban environments and have resulted in consumers reducing the 
amount of grass they manage and/or replacing it with other products.
    As proposed by the industry, a natural sod checkoff would help 
educate consumers and other stakeholders about the value that plants, 
including natural grass, impart on urban and suburban areas. Plants, 
including natural grass, are often viewed as requiring large amounts of 
inputs from water, fertilizer, and chemicals, with few valuable 
outputs. This view frequently results in an inaccurate determination 
that natural grasses are resource intensive. However, when accounting 
for new technologies such as drought-tolerant varieties, reduced 
mowing, and improvements in irrigation, as well as the many ecosystem 
services (carbon sequestration, oxygen production, groundwater 
recharge, filtering of pollutants, stormwater, and runoff reduction) 
that are provided by lawns, parks, and roadsides, a more accurate 
characterization is that managed landscapes, including natural grass 
sod, provide many benefits in urban and suburban areas.
    The aforementioned perception of natural grass is embedded in 
language used by numerous governing bodies that produce building codes 
and standards for private and public spaces. These codes provide 
incentives for builders to reduce or remove natural grass from 
residential, business, and public spaces with the intent of reducing 
inputs. However, many such codes do not factor in the benefits that 
plants, including natural grasses, provide to these areas or recognize 
that simply eliminating them from the system is not a sustainable 
approach for urban and suburban construction.
    Plastic, artificial turf is the primary competitor and most common 
alternative to natural grass for athletic fields on school grounds, 
public parks, and collegiate or professional sports venues. In home 
lawns and other public spaces, alternative products also include 
patios, decks, mulch, concrete or brick pavers, and rubberized 
playgrounds. Data from the 2020 Synthetic Turf Council Market Report 
for North America indicates that the synthetic turf industry has grown 
15 percent since 2017 with a current value of $2.7 billion. The data 
also predicts continued growth at a rate of 5.7 percent through 2022, 
with sports fields representing 63 percent of the market and rapid 
growth in landscape applications.\3\ The landscape and sports field 
markets represent the two largest customer segments for natural grass 
sod producers for those who report data. However, the growth of the 
artificial turf market is reducing the market for natural grass 
landscapes and sports fields.
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    \3\ Synthetic Turf Council, 2020 Synthetic Turf Market Report 
for North America, https://www.syntheticturfcouncil.org/news/512350/Synthetic-Turf-Council-STC-Releases-2020-Synthetic-Turf-Market-Report-for-North-America.htm (last visited Aug. 30, 2024).
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    TPI is the proponent group that submitted the proposed Order to 
USDA on June 18, 2021, requesting the establishment of a natural grass 
sod research and promotion program. Since at least 2013, U.S. natural 
grass sod producers have been considering the implementation of a 
natural grass sod research and promotion program. Although State and 
local sod associations have explored the option of establishing 
voluntary research and promotion programs in previous years, they were 
deemed impractical and unsustainable without the administration and 
enforcement provided by AMS through the authority provided in the 1996 
Act. In 2017, TPI, a trade association representing natural grass sod 
farmers, equipment manufacturers, seed producers, and other industry 
participants with members located in almost every U.S. State and over 
30 countries, formally investigated AMS's research and promotion 
programs. From 2017 to 2019, TPI spoke with representatives at trade 
associations with aligned interests, AMS, a public policy consultant, 
and legal counsel to determine if a research and promotion program for 
the U.S. natural grass sod industry was feasible. After much 
deliberation and interest from U.S. natural grass sod producers, the 
industry, led by TPI, decided that the time was right for the natural 
grass sod industry to pursue a national research and promotion program.
    In 2019, after visiting with the trade associations with aligned 
interests and AMS, the industry decided to host a webinar to get 
feedback from natural grass sod producers regarding their interest in 
developing a national grass sod research and promotion program. On May 
19, 2020, U.S. sod producers participated in a 2-hour online seminar to 
learn more about AMS's Research and Promotion Programs. After this 
webinar, attendees were polled to determine their interest in 
developing a program for the natural grass sod industry and 64 percent 
stated they were very interested, 20 percent stated they were 
interested, 13 percent stated they were interested in learning more, 
and only 3 percent stated they were not interested.\4\ Attendees in 
this webinar were also polled to determine their interest in serving on 
a sod research and promotion drafting committee, and 14 sod producers 
were selected.
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    \4\ Turfgrass Producers International, Industry Analysis and 
Justification for Natural Grass Sod Promotion, Research, and 
Information Order, https://www.ams.usda.gov/sites/default/files/media/SodIndustryAnalysisandJustificationDraft.pdf (last visited 
Aug. 30, 2024).
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    This drafting committee has finalized the proposed Order contained 
herein for submission to AMS. The proposed Order contains all the 
relevant information on a natural grass sod research and promotion 
program, including the proposed assessment rate that was determined 
through an analysis of U.S. natural grass sod production farm and 
acreage data from the 2017 USDA-NASS Census of Agriculture along with 
internal data from TPI. A wide range of farm sizes, annual acres 
harvested, and assessment rates were assembled for analysis to 
determine an assessment rate that would (1) be amenable to sod 
producers; (2) not be overly burdensome; and (3) result in enough funds 
to carry out activities that would have an impact on the market. The 
formation committee of 14 members of different farm sizes, regions, and 
products all agreed that the proposed assessment rate met each of those 
conditions.

Specific Provisions

    The proposed Order is authorized under the 1996 Act, which 
authorizes USDA to establish agricultural commodity research and 
promotion orders and is consistent with existing orders for other 
commodities. The

[[Page 99152]]

proposed Order is also a part of an industry effort to establish a 
national program with a board composed of natural grass sod producers 
and one public member to promote and strengthen consumer demand for 
natural grass. Many parties, including AMS, a public policy consultant, 
and private legal counsel, were consulted and determined that a 
research and promotion program for the U.S. natural grass sod industry 
was feasible. In addition to this determination, the industry hosted a 
2-hour webinar where feedback was given from natural grass sod 
producers regarding their interest in developing a national grass sod 
research and promotion program. More than a majority (64 percent) of 
the attendees stated that they were very interested in establishing a 
research and promotion program for U.S. natural grass sod while only 3 
percent stated they were not interested. Fourteen sod producers who 
attended the webinar created the sod research and promotion drafting 
committee, which drafted the proposed Order containing the relevant 
information on research and promotion programs.
    This proposed Order includes revisions to the regulatory text of 
the proposed rule published on October 16, 2023 (88 FR 71302). These 
revisions were made to improve organization and clarity only. In 
addition, Sec.  1240.48 was added to address the exemption from 
assessment for sales of organic sod products. Since the regulatory text 
proposed herein contains the complete proposed Order, this section will 
highlight key proposed provisions.

Definitions

    Pursuant to section 513 of the 1996 Act (7 U.S.C. 7412), Sec.  
1240.20 of the proposed Order would define certain terms that would be 
used throughout the Order. Several of the terms are common to all 
research and promotion programs authorized under the Act while other 
terms are specific to the proposed natural grass sod Order.
    Proposed Sec.  1240.20 would define the term ``Act'' to mean the 
Commodity Promotion, Research, and Information Act of 1996 (7 U.S.C. 
7411-7425), and any amendments thereto.
    The term ``natural grass'' would be defined as a plant species in 
the Poaceae family or living plants in other taxa serving a similar 
purpose, as often found in sites such as lawns, sports fields, golf 
courses, parks, cemeteries, roadsides, and others.
    The term ``natural grass sod producer'' would be defined as any 
person who produces natural grass sod products in the United States.
    The term ``natural grass sod product'' would refer to natural grass 
produced for retail, wholesale, or commercial sale, including 
monostands or blends or mixtures of Bentgrass, Bermudagrass, 
Buffalograss, Centipedegrass, Fine fescue, Kentucky bluegrass, 
Ryegrass, Seashore Paspalum, Saint Augustinegrass, Tall fescue, 
Zoysiagrass, Bahiagrass, other native or adapted plants harvested and 
sold as sod, and products containing natural grass with artificial 
elements that are sold as sod. For purposes of the proposed Order, the 
term ``natural grass sod product'' would exclude all artificial and 
synthetic turf or grass products, natural grass seed, sprigs, and 
plugs.

Establishment of the Board

    Pursuant to section 515 of the 1996 Act (7 U.S.C. 7414), Sec. Sec.  
1240.30 through 1240.39 of the proposed Order would detail the 
establishment and membership of the proposed Natural Grass Sod 
Promotion, Research, and Information Board (Board), nominations and 
appointments, the term of office, removal and vacancies, procedures, 
reimbursement and attendance, powers and duties, and prohibited 
activities.
    Section 1240.30(b) specifies that the Board would be composed of 11 
members. Three members would represent the North/Cool-Season Region, 
four would represent the South/Warm-Season Region, three would 
represent the Transition Zone/California Region, and one would be a 
public member. See Table 1 below for a list of States in each region. 
The total number of Board members could not be changed without 
rulemaking. The apportionment of Board members among the regions would 
be intended to reflect the geographical distribution of the production 
of natural grass sod products in the United States, as well as the 
relative percentage of assessments paid by natural grass sod producers 
into the research and promotion program. Table 1 summarizes the 
geographical distribution of natural grass sod farms, acres of natural 
grass sod produced, and sales. At least once every 5 years but no more 
frequently than once every 3 years, the Board would review the 
geographical distribution of the production of natural grass sod 
products in the United States. Any changes in Board composition 
implemented by the Secretary would be made through rulemaking. All 
Board members would be appointed by the Secretary from nominations as 
set forth in proposed Sec.  1240.31.

                             Table 1--Farms, Acres and Sales by Proposed Regions \5\
----------------------------------------------------------------------------------------------------------------
                                 Number of
            Region                members            States             Farms        Acres         Sales \6\
----------------------------------------------------------------------------------------------------------------
North/Cool Season.............            3  AK, CO, CT, DE, ID,             454       78,076       $447,031,503
                                              IL, IN, IA, ME, MA,
                                              MI, MN, MT, NE, NH,
                                              NJ, NY, ND, OH, OR,
                                              PA, RI, SD, UT, VT,
                                              WA, WI, WY.
South/Warm Season.............            4  AL, AZ, FL, GA, HI,             579      192,722      1,067,649,331
                                              LA, MS, NM, SC, TX,
                                              U.S. Territories.
Transition Zone/California....            3  AR, CA, DC, KS, KY,             414      102,101        676,343,293
                                              MD, MO, NC, NV, OK,
                                              TN, VA, WV.
----------------------------------------------------------------------------------------------------------------

    Any natural grass sod producer who does not owe outstanding 
assessments may seek nomination for any vacant position in the region 
they produce and sell natural grass sod products. Nominees that produce 
and sell in multiple regions may seek nomination in one region of their 
choice. To seek nomination to the Board, an interested natural grass 
sod producer would provide the Board a short background statement 
outlining their qualifications. Any public member interested in seeking 
nomination would also provide the Board a short background statement 
outlining their qualifications.
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    \5\ See 2022 Census of Agriculture, USDA National Agricultural 
Statistics Service https://www.nass.usda.gov/Publications/AgCensus/2022/Full_Report/Volume_1,_Chapter_2_US_State_Level/st99_2_034_034.pdf (last visited Aug.30, 2024).
    \6\ Sales are counted in the place where the natural grass sod 
product was produced.
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    Section 1240.32 of the proposed Order would specify the nominee's 
agreement to serve. Natural grass sod

[[Page 99153]]

producers and public members nominated to serve on the Board would be 
required to submit to the Secretary a written agreement to serve on the 
Board if appointed by the Secretary, disclose any relationship with any 
natural grass sod promotion entity or organization that has been or is 
being considered for a contractual relationship with the Board, and 
withdraw from participation in deliberations, decision-making, and 
voting on matters that concern the relationship of the entity or 
organization considered for a contractual relationship.
    Section 1240.33 of the proposed Order would specify the terms of 
office of Board members. Except for the initial Board, each Board 
member would serve for 3 years or until the Secretary selects his or 
her successor. The initial Board member terms would be staggered at 1, 
2, and 3 years. Each region would initially have one member who serves 
a 2-year term and two members who serve 3-year terms. Additionally, the 
South/Warm-Season Region would initially have one member who serves a 
1-year term. The public member initial term would be a 3-year term. The 
Secretary would determine which of the initial members would serve a 
term of 1, 2, or 3 years. Generally, a member could not serve more than 
two consecutive terms. However, members who serve on the initial Board 
for 1 or 2 years and members who serve the remainder of a term could 
serve two additional, consecutive 3-year terms.
    Sections 1240.34 and 1240.35 of the proposed Order would specify 
reasons for removal and how vacancies would be filled. The Secretary 
would be able to remove a Board member if he or she determines there is 
a failure or refusal by the Board member to perform his or her duties 
properly or if the Board member engages in an act of dishonesty or 
willful misconduct. Refusing to follow the Act's and Order's purpose 
would also be a reason for removal. If a member is removed from office 
or resigns, the position would automatically become vacant. If a member 
becomes disqualified for ceasing to produce natural grass or ceases to 
do business in the region he or she represents, their position would be 
vacated within 6 months from the date of disqualifying event.
    Section 1240.36 of the proposed Order would specify procedures of 
the Board. A majority of the total number of Board members would 
constitute a quorum at any meeting of the Board. Each voting member of 
the Board would be entitled to one vote on any matter put to the Board 
and the motion would carry if supported by a majority (50 percent plus 
one vote) of Board members. However, recommendations to change the 
assessment rate, adopt a budget, or call for a referendum would require 
affirmation by two-thirds (\2/3\) of the Board members. When, in the 
opinion of the chairperson of the Board, such action is considered 
necessary, the members could vote by internet service, videoconference, 
teleconference, or any other means of communication. Actions taken 
under these procedures would be valid only if all members were notified 
of the meeting and all members were provided the opportunity to vote. 
Proxy voting would not be permitted. All votes would be recorded in 
Board minutes. The procedures for conducting Board meetings would be 
established by the Board and approved by the Secretary.
    Section 1240.37 of the proposed Order would specify that all 
members of the Board would serve without compensation; however, 
reimbursement for reasonable travel expenses incurred when performing 
Board duties would be provided as approved by the Board.
    Section 1240.38 of the proposed Order would specify the powers and 
duties of the Board. These powers and duties would include, among other 
things, the power and duty to administer the Order and collect 
assessments; to develop bylaws and recommend rulemaking necessary to 
administer the Order; to select a chairperson and other Board officers; 
to form other committees and subcommittees as necessary; to hire staff 
or contractors as appropriate to carry out the Board's duties; to 
develop and carry out generic promotion, research, and information 
activities related to natural grass products; to develop and administer 
programs, plans, and projects to benefit the natural grass industry; to 
submit a budget to AMS for approval prior to the start of the fiscal 
year; to borrow funds necessary to cover startup costs of the Order; to 
maintain records and books available to the Secretary for inspection 
and audit upon request; to have its books audited by an outside 
certified public accountant at the end of each fiscal period and at 
other times as requested by the Secretary; to notify natural grass sod 
producers and the Secretary of all Board meetings through press 
releases or other means; to act as intermediary between the Secretary 
and any natural grass sod producer; to furnish to the Secretary any 
information or records he or she may request; to receive, investigate 
and report to the Secretary complaints of violations of the Order; to 
recommend to the Secretary changes to the Order as the Board considers 
appropriate; to strengthen and provide maximum benefits to the natural 
grass sod industry; to invest Board funds appropriately; to pay the 
cost of activities with assessments collected under the Order and 
earnings from invested assessments and other funds; to recommend 
changes to assessments as appropriate; to appoint and convene 
committees to assist in the development of research, promotion, 
advertising, and information programs for natural grass; to 
periodically prepare and make public reports of program activities and, 
at least once each fiscal period, to make public an accounting of funds 
received and expended; and to allocate a percentage of the assessments 
collected on the sale of natural grass sod products in a State or a 
region to one or more programs proposed by a qualified organization, 
under contract, to receive funding.
    Section 1240.39 of the proposed Order specify prohibited activities 
that are common to all promotion programs authorized under the 1996 
Act. Under this provision, Board members and employees could not engage 
in any actions that would be a conflict of interest; use funds 
collected by the Board to lobby (influencing any legislation or 
governmental action or policy by local, State, national, and foreign 
governments, or subdivisions thereof, other than recommending to the 
Secretary amendments to the Order); or engage in any advertising, 
including promotion, research, or information activities authorized to 
be carried out under the Order, that may be false, misleading, or 
disparaging to another agricultural commodity.

Expenses and Assessments

    Pursuant to sections 515, 516, and 517 of the 1996 Act (7 U.S.C. 
7414, 7415, and 7416), Sec. Sec.  1240.45 through 1240.48 of the 
proposed Order detail requirements regarding the Board's budget and 
expenses, financial statements, assessments, and the exemption from 
assessment for sales of organic sod products. At least 60 calendar days 
before the start of the fiscal period, and as necessary during the 
year, the Board would submit a budget to the Secretary detailing its 
projected expenses. The budget would include a list of objectives and 
strategies, a summary of anticipated revenue, and expenses for each 
program along with a breakdown of staff and administrative expenses. 
Except for the initial budget, the Board's budgets would include 
comparative data for at least one preceding fiscal period. Each budget 
would provide for adequate funds to cover the Board's anticipated 
expenses. Any amendment or addition

[[Page 99154]]

to an approved budget would have to be approved by the Secretary, 
except that shifts of funds from one program, plan, or project to 
another that do not result in an increase in the Board's approved 
budget and are consistent with its bylaws need not have prior approval 
by the Secretary. The Board would reimburse the Secretary for all 
expenses incurred in the implementation, administration, enforcement, 
and supervision of the Order, including all referendum costs in 
connection with the Order.
    During the first year of the Board's operation, the Board could 
borrow money for the payment of startup expenses limited to the first 
year of operation. The Board could accept voluntary contributions to 
carry out activities so long as the contributions are identified in the 
Board's annual operating budget and are free from any encumbrance by 
the donor or the Board. The Board would retain control over use of any 
funds. The Board could also receive funds from Federal or State grants 
with approval of the Secretary for specific authorized projects.
    Beginning 3 years after establishment of the Board, the Board would 
be limited to spending no more than 15 percent of its available funds 
for administration, maintenance, and functioning of the Board. 
Reimbursements to USDA would not be considered administrative costs. As 
an example, if the Board received $2 million in assessments during a 
fiscal period, and had available $500,000 in reserve funds, the Board's 
available funds would be $2,500,000. In this scenario, the Board would 
be limited to spending no more than $375,000 (0.15 x $2.5 million) on 
administrative costs. The 15 percent spending limit is consistent with 
section 515 of the 1996 Act (7 U.S.C. 7414).
    The Board could establish an operating monetary reserve and carry 
over excess funds from one fiscal period to the next, provided the 
funds did not exceed two fiscal years' budgeted expenses. For example, 
if the Board's budgeted expenses for a fiscal period were $2 million, 
it could carry over no more than $4 million in reserve.
    Section 1240.46 of the proposed Order would specify the financial 
statement requirements. The Board would be required to submit to USDA 
financial statements on a quarterly basis, or at any other time 
requested by the Secretary. Financial statements would include, at a 
minimum, a balance sheet, an income statement, investments, and an 
expense budget.
    Section 1240.47 of the proposed Order would specify the 
assessments. The Board's programs and expenses would be funded by 
assessments on natural grass sod products and other funds available to 
the Board. Under the proposed Order, natural grass sod producers would 
pay one-tenth (1/10th) of one penny ($0.01) per square foot, or the 
equivalent thereof, of all natural grass sod products that the natural 
grass sod producer sells in the United States. For example, a farm that 
harvested 10,000 square feet of sod would pay $10 in assessments 
(10,000 x .001). This assessment rate was determined through an 
analysis of U.S. natural grass sod production farm and acreage data 
from the 2017 USDA-National Agricultural Statistics Service's (NASS) 
Census of Agriculture along with internal data from TPI. A wide range 
of farm sizes, annual acres harvested, and assessment rates were 
assembled for analysis to determine an assessment rate that would (1) 
be amenable to sod producers; (2) not be overly burdensome; and (3) 
result in enough funds to have an impact on the market. At the end of 
these discussions, the entire formation committee of 14 members of 
different farm sizes, regions, and products all agreed that the 
proposed assessment rate met each of those conditions.
    Twenty-four months after the Order becomes effective and 
periodically thereafter, the Board would review the assessment rate 
and, if approved by a vote of at least two-thirds (\2/3\) of the Board, 
submit a recommendation for a change in the assessment rate to the 
Secretary. The assessment rate could not exceed one-eighth (1/8th) of 
one penny ($0.01) per square foot of natural grass sod products sold 
without approval by a majority of natural grass sod producers voting in 
a referendum.
    In terms of assessment collection, each natural grass sod producer 
would remit to the Board assessments for natural grass sod products 
sold every quarter with a remittance form.
    Based on 2017 USDA NASS production acreage, TPI estimates 
assessments would be valued at approximately $14.9 million annually. 
Assessments would be collected from approximately 1,447 natural grass 
sod producers.
    In addition, proposed Sec.  1240.48, which was added in this 
version of the proposed rule, would allow individuals and entities 
producing certified organic natural grass sod, according to 7 CFR part 
205, to be exempt from paying assessments on sales of organic sod. 
Organic producers would apply to the Board annually for a certificate 
of exemption using a form provided by the Board. If a producer sells 
organic sod and non-organic sod, then that producer would be exempt 
from paying assessments only on its sales of organic sod. The producer 
would still be required to pay assessments on its sales of non-organic 
sod.
    Pursuant to section 517(f) of the 1996 Act (7 U.S.C. 7416(f)) and 
Sec.  1240.45(j) of the proposed Order, the Board would be permitted to 
invest assessments collected under the Order in the following: (1) 
obligations of the United States or any agency of the United States; 
(2) general obligations of any State or any political subdivision of a 
State; (3) interest-bearing accounts or certificates of deposit of 
financial institutions that are members of the Federal Reserve System; 
and (4) obligations fully guaranteed as to principal and interest by 
the United States.
    The proposed program would be funded by the industry through 
assessments paid by natural grass sod producers, as defined in the 
proposed Order. Based on the proposed assessment rate and an analysis 
of industry statistics provided by USDA and maintained by TPI, publicly 
available farm statistics, and TPI data, it is estimated that the 
program would collect approximately $14,900,000 annually in 
assessments, which would be used to conduct research, marketing, and 
promotion programs that would benefit the entire industry. The benefits 
of the program are expected to outweigh its costs. Evaluations of 
similar research and promotion programs by independent economists, 
required to be conducted every 5 years, have shown positive financial 
benefits with benefit-cost ratios in the range of $2.14 to $17.40 for 
every dollar invested in the programs.\7\ After reviewing and 
considering all relevant information, AMS has determined that the 
assessments proposed to be collected from natural grass sod producers 
would be relatively small in comparison to their revenue.
---------------------------------------------------------------------------

    \7\ See U.S. Gov't Accountability Office, GAO-18-54, 
AGRICULTURAL PROMOTION PROGRAMS: USDA Could Build on Existing 
Efforts to Further Strengthen Its Oversight (2017), https://www.gao.gov/assets/690/688519.pdf (last visited Aug. 30, 2024).
---------------------------------------------------------------------------

    Unlike voluntary programs, in which the universe of assessment 
payers does not always include all the industry participants who would 
likely benefit from generic research and promotion activities, all 
natural grass sod producers would be required to contribute assessments 
under the proposed research and promotion program. Therefore, the 
proposed program would be best positioned to have the greatest industry 
impact with

[[Page 99155]]

the broadest level of industry support by eliminating free riders. A 
free rider is an entity who benefits from a service without having to 
pay for it. The research and promotion program would be able to combine 
assessment funds from natural grass sod producers and have a broad 
impact on the industry by developing new markets, strengthening 
existing markets, conducting important consumer and scientific 
research, and promoting industry initiatives and activities.

Promotion, Research, and Information

    Pursuant to section 516 of the 1996 Act (7 U.S.C. 7415), Sec. Sec.  
1240.50 through 1240.52 of the proposed Order would describe the 
promotion, research, and information projects authorized by the Order. 
The Board would develop and submit to the Secretary for approval 
programs, plans, or projects that would provide promotion, research, 
and information to support natural grass sod products, including 
consumer and industry information and advertising. The Board could 
implement a program or project only upon approval by the Secretary. The 
Board would evaluate each program to ensure it contributes to an 
effective promotion program and complies with the Act and Order.
    At least once every 5 years, the Board would fund an independent 
evaluation to determine the effectiveness of the Order and programs 
pursuant to the 1996 Act. The findings of the evaluation would be made 
available to the Secretary and the general public. Finally, the 
proposed Order would specify that any patents, copyrights, trademarks, 
inventions, product formulations, and publications developed with funds 
received by the Board would be the property of the U.S. Government, as 
represented by the Board. These, along with any rents, royalties, and 
the like from their use would be considered income subject to the same 
fiscal, budget, and audit controls as other funds of the Board, and 
could be licensed with approval of the Secretary.

Report, Books, and Records

    Pursuant to section 515 of the 1996 Act (7 U.S.C. 7414), Sec. Sec.  
1240.60 through 1240.62 of the proposed Order would specify the 
reporting and recordkeeping requirements under the proposed Order as 
well as requirements regarding confidentiality of information. Each 
natural grass sod producer would be required to submit an assessment 
remittance form and assessments to the Board on a quarterly basis. The 
information required in the form would include, but not be limited to, 
the name and contact information of the natural grass sod producer, the 
quantity of natural grass sod products sold, and the natural grass sod 
producer's identification numbers, as applicable. Records would be made 
available to the Board or USDA during normal business hours and 
retained for at least 3 years past the fiscal year.
    The proposed Order would also require that all information obtained 
from persons subject to the Order as a result of the proposed 
recordkeeping and reporting requirements would be kept confidential by 
all officers, employees, and agents of the Board and AMS. Pursuant to 
the 1996 Act, such information could be disclosed only if the Secretary 
considered it relevant, and the information were revealed in a judicial 
proceeding or administrative hearing brought at the direction or at the 
request of the Secretary or to which the Secretary or any officer of 
USDA was a party. Other exceptions for disclosure of confidential 
information would allow the issuance of general statements based on 
reports or information relating to a number of persons subject to the 
proposed Order, if the statements did not identify the information 
furnished by any person; or the publication, by direction of the 
Secretary, of the name of any person violating the Order and a 
statement of the particular provisions of the Order violated.

Regulatory Flexibility Act

    In accordance with the Regulatory Flexibility Act (RFA) (5 U.S.C. 
601-612), AMS is required to examine the impact of this rulemaking on 
small entities. Accordingly, AMS has prepared this regulatory 
flexibility analysis.
    The purpose of RFA is to fit regulatory actions to the scale of 
businesses subject to such actions so that small businesses will not be 
disproportionately burdened. The affected industry falls under the 
North American Industry Classification System (NAICS) code: 111421--
Nursery and Tree Production. The Small Business Administration (SBA) 
defines, in 13 CFR part 121, small agricultural producers in this 
industry as those having annual receipts of no more than $3,250,000.

Need for a Program

    TPI, which represents natural grass sod farmers, equipment 
manufacturers, seed producers, and other industry participants, is the 
proponent group that submitted the proposed Order to USDA on June 18, 
2021, requesting the establishment of a natural grass sod promotion, 
research, and information program. In 2017, TPI began to explore the 
creation of a promotion and research program. TPI worked with natural 
grass sod producers and other industry organizations to gauge interest 
in the development of such a program. In 2020, a drafting committee was 
formed to develop a draft Order. The drafting committee comprised 
fourteen natural grass sod producers representing a wide variety of 
natural grass sod farms. The producers represented a range of farm 
sizes, years in business, and familiarity with other research and 
promotion programs. The drafting committee's proposed Order was part of 
the submission by TPI to USDA for consideration of a program. The 
proposed Order submitted by TPI is intended to educate the public on 
the value of natural grass products, market and promote the benefits of 
natural grass on a national scale, provide U.S. sod farmers with 
marketing tools, and provide information to organizations for use in 
the development of model codes and standards for building codes.
    The synthetic turf industry is estimated to have a current value of 
$2.7 billion. The market has grown 15 percent since 2017 and has 
continued to grow at a rate of 5.7 percent through 2022, with sports 
fields representing 63 percent of the market and rapid growth in 
landscape applications.\8\ The rise in synthetic turf numbers comes 
from social and market trends that have driven consumer perception of 
natural grass lawns and athletic fields in urban and suburban 
environments. These trends have caused consumers to misunderstand the 
value of natural grass lawns and athletic fields in urban and suburban 
environments. This has caused consumers to reduce the amount of grass 
they manage and/or replace it with other products like plastic, 
artificial turf, patios, decks, mulch, concrete, brick pavers, and 
rubberized playgrounds. These misconceptions have had a significant 
impact on natural grass sod producers in many areas of the United 
States.
---------------------------------------------------------------------------

    \8\ Synthetic Turf Council, 2020 Synthetic Turf Market Report 
for North America, https://www.syntheticturfcouncil.org/news/512350/Synthetic-Turf-Council-STC-Releases-2020-Synthetic-Turf-Market-Report-for-North-America.htm (last visited Aug. 30, 2024).
---------------------------------------------------------------------------

Objectives of the Action

    As noted in the preamble above, the program would conduct research, 
marketing, and promotion activities that would benefit the entire 
industry. Primary goals of the program include educating consumers and 
stakeholders of the benefits of natural grass and providing producers 
with marketing

[[Page 99156]]

tools they can use to grow their business. The purpose of the program 
would be to strengthen the position of natural grass sod in the 
marketplace, maintain and expand markets for natural grass sod, and 
develop new uses for natural grass sod.

Legal Basis for the Proposed Rule

    The proposed Order is authorized by the 1996 Act, which provides 
that USDA may establish research and promotion programs for 
agricultural commodities. Under section 513 of the Act (7 U.S.C. 7412), 
``agricultural commodities'' are defined to include agricultural and 
horticultural products as well as ``products processed or manufactured 
from [agricultural and horticultural products], as determined 
appropriate by the Secretary.'' The Act also includes provisions that 
authorize the Secretary to tailor programs to the specific 
characteristics of each different commodity, including section 514 of 
the Act (7 U.S.C. 7413), which provides USDA discretion in determining 
to whom an order should apply among the following: ``(A) the producers 
of an agricultural commodity; (B) the first handlers of the 
agricultural commodity and other persons in the marketing chain as 
appropriate; and (C) the importers of the agricultural commodity, if 
imports of the agricultural commodity are subject to assessment.''
    Natural grass sod products fall within the 1996 Act's definition of 
an agricultural commodity and natural grass sod producers, as defined 
in the proposed Order, fall within the categories of ``first handlers'' 
and ``other persons in the marketing chain.'' The proposed Order would 
establish a program of promotion, research, and information to promote 
consumer demand for natural grass sod products and strengthen the 
position of the natural grass sod industry in the marketplace, is 
consistent with the congressional intent of the Act to maintain and 
expand existing markets as well as develop new markets and uses for 
agricultural commodities. As such, USDA is authorized to establish the 
proposed Natural Grass Sod Promotion, Research, and Information Order 
upon its approval as specified under the Act.
    As part of the approval process set forth in the 1996 Act, the 
industry must formulate an Order and submit it to USDA for review and 
final approval. Implementation of the Order, like all rulemaking, is 
subject to public notice and comment, and is subject to ongoing 
referenda where participants are given the opportunity to vote to 
determine whether the program would continue to operate. If approved by 
USDA and through the ongoing referenda, the proposed Order would become 
a regulation codified in the U.S. Code of Federal Regulations and would 
carry the force of law.
    There are no known Federal rules that duplicate, overlap, or 
conflict with the proposed Order.

Alternatives to the Proposed Rule

    USDA considered the alternative of no action; that is, the status 
quo. This alternative, however, would leave the natural grass sod 
industry without the tools of a research and promotion program to 
strengthen its position in the marketplace, maintain and expand 
markets, and develop new uses for natural grass sod.
    Although there has been sporadic success attempting to fund efforts 
at the local level with pooled resources of producers and/or 
associations, voluntary research and promotion efforts at the national 
level have historically been marginally successful due to the lack of 
funds available to undertake larger programs. There are several 
entities that fund natural grass research and promotion efforts at 
State and regional levels, but none have the capacity to fund these 
efforts on a large scale. For instance, many States sod associations 
fund research and promotion at levels under $10,000 annually. TPI funds 
research and promotion through its foundation, The Lawn Institute, at 
up to $50,000 to $100,000 annually. However, these types of funds are 
raised through voluntary contributions and fundraising efforts such as 
auctions, raffles, activities, etc., and, while they have impacted 
natural grass research and promotion on a small scale, none of these 
efforts can achieve what is proposed through a natural grass sod 
checkoff. A natural grass sod checkoff would not only be able to raise 
significant funds for these efforts, but the checkoff could also 
respond to changing needs in research and promotion. Through the 
collection of an assessment on all natural grass sod products sold in 
the United States, the proposed research and promotion program would 
leverage pooled assessment funds on a national scale and would have a 
more consistent and wider industry impact.
    The natural grass sod production industry has been discussing a 
research and promotion program since at least 2013. TPI and other 
interested stakeholders have held numerous meetings and conducted 
outreach across the industry to gauge interest in a research and 
promotion program for natural grass sod products. As noted above, a 
majority of the natural grass sod producers who actively participated 
in the May 19, 2020, webinar supported the development of such a 
program for consideration. This resulted in the creation of the sod 
research and promotion drafting committee, which drafted the proposed 
Order that is under consideration in this proposed rule.
    After careful analysis and discussions, the natural grass sod 
industry has determined that a research and promotion program would be 
best positioned to have the greatest industry impact with the broadest 
level of industry support.

Impact on Small Businesses

    The SBA defines, in 13 CFR part 121, small agricultural producers 
for industries classified as falling under NAICS 111421 (Nursery and 
Tree Production) as those having annual receipts of no more than 
$3,250,000. According to data from the 2022 USDA Census of Agriculture, 
1,447 firms--nearly 80 percent of producers--would be classified as 
small agricultural producers based on the value of sales per farm. 
Table 2 compares the average value of sales per farm to the proposed 
average assessment per farm for each category. Since the assessment 
would be calculated based on the volume of a producer's sales, the 
proportionate burden of the assessment would be the same across the 
industry, regardless of firm size. On a farm basis, small natural grass 
sod producers would pay between $205 and $13,138 in assessments 
annually per firm, while large natural grass sod producers would pay 
between $23,176 and $66,387 annually.

[[Page 99157]]



      Table 2 \9\--Number of Farms, Acres, Average Value of Sales, and Average Proposed Assessment per Farm
----------------------------------------------------------------------------------------------------------------
                             NAICS Code 111421                                         (2022 dollars)
----------------------------------------------------------------------------------------------------------------
                                                                                                  Avg. annual
                                            Farms              Acres          Avg. value of      assessment per
                                                                              sales per farm          farm
----------------------------------------------------------------------------------------------------------------
Total Industry......................              1,447            376,227         $1,534,184            $11,326
Small Firms (<$3,250,000)...........              1,150            113,030            587,719              4,283
Large Firms (>$3,250,000)...........                297            263,167          5,198,948             38,598
----------------------------------------------------------------------------------------------------------------

    The proposed assessment rate of 1/10th of one penny per square foot 
of natural grass products sold in the United States was decided upon by 
the industry in part because it was determined that rate would not 
create any undue burdens to sod farms of any size, including small 
businesses. Data from the National Quarterly Sod Report, 2023-24 Winter 
Quarter,\10\ indicate a range of natural grass sod prices across the 
United States from $0.14 to $0.81 per square foot. Thus, the proposed 
assessment rate would result in additional costs to sod producers of 
between 0.71 percent and 0.12 percent. Furthermore, when evaluating the 
prices based on weighted averages instead of ranges, the additional 
costs incurred would be between 0.38 percent and 0.13 percent.
---------------------------------------------------------------------------

    \9\ USDA, 2022 USDA NASS Census, https://www.nass.usda.gov/Publications/AgCensus/2022/Full_Report/Volume_1,_Chapter_1_US/st99_1_039_039.pdf (last visited Aug. 30, 2024).
    \10\ USDA, Agricultural Marketing Service, Livestock, Poultry, 
and Grain Market News, https://www.ams.usda.gov/mnreports/ams_2930.pdf (last visited Aug. 30, 2024).
---------------------------------------------------------------------------

    This level of assessment should have minimal impact on sod farms of 
any size, large or small, and this consideration is one of the reasons 
the drafting committee supported the proposed rate. For instance, a sod 
farm that is considered a small business may harvest as little as 10 
acres annually. At the proposed assessment rate and using pricing data 
from the National Sod Report, the annual contribution of that farm to 
the research and promotion program would be $436 per year, while 
generating sales revenue between $60,984 and $352,836.

Required Reporting and Recordkeeping

    The proposed reporting and recordkeeping requirements would not 
require specialized skills or training. The transactional documentation 
would be added to documents already generated and maintained by natural 
grass sod producers. Reporting requirements are expected to be the same 
for both large and small entities.
    The primary reporting requirement under the proposed Order is the 
requirement that producers submit quarterly remittance forms. It is 
estimated that it would take approximately 2 hours annually, or 30 
minutes every quarter, to complete and submit the remittance form to 
the Board. This is estimated to cost each natural grass sod producer 
$112.36 per year. For the purpose of estimating the cost of reporting 
and recordkeeping, this proposed rule uses $56.18 per hour. To arrive 
at this amount, AMS used the mean hourly earnings of farmers, ranchers, 
and other agricultural managers from the U.S. Department of Labor, 
Bureau of Labor Statistics, May 2023 National Occupational Employment 
and Wages Estimates,\11\ that is, $43.35 and added an additional 29.6 
percent to account for benefits and compensation.\12\ This calculation 
results in a total hourly wage of $56.18. Costs of benefits and 
compensation guidance was obtained from the Bureau of Labor Statistics 
News Release issued March 13, 2023.\13\ For additional discussion of 
the costs of the reporting and recordkeeping requirements under the 
proposed Order, please see the Paperwork Reduction Act section below.
---------------------------------------------------------------------------

    \11\ U.S. Department of Labor, Bureau of Labor Statistics, 
Occupational Employment and Wages, May 2023; 11-9013 Farmers, 
Ranchers, and Other Agricultural Managers, https://www.bls.gov/oes/current/oes119013.htm (last visited Aug. 30, 2024).
    \12\ U.S. Department of Labor, Bureau of Labor Statistics, News 
Release, Employer Costs for Employee Compensation--December 2023, 
https://www.bls.gov/news.release/pdf/ecec.pdf (last visited Aug. 30, 
2024).
    \13\ U.S. Department of Labor, Bureau of Labor Statistics, 
Economic News Release: Employer Costs for Employee Compensation 
Summary for December 2023, https://www.bls.gov/news.release/pdf/ecec.pdf (last visited Aug. 30, 2024).
---------------------------------------------------------------------------

    AMS is committed to complying with the E-Government Act to promote 
the use of the internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.
    Regarding outreach efforts, USDA would keep natural grass sod 
producers informed throughout the program implementation and referendum 
processes to ensure that they are aware of and are able to participate 
in those processes. USDA would also publicize information regarding the 
referendum process so that trade associations and related industry 
media can be kept informed.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
chapter 35), AMS announces its intention to request approval for a new 
information collection for the proposed natural grass sod program.
    Title: Natural Grass Sod Promotion, Research, and Information 
Order.
    OMB Number: 0581-0349.
    Expiration Date of Approval: 3 years from approval date.
    Type of Request: New information collection for research and 
promotion program.
    Abstract: The information collection requirements are essential to 
carry out the intent of the 1996 Act. The information collection 
pertains to a proposal submitted by TPI for the development of a 
national research and promotion program for natural grass sod. The 
program would be administered by a board of producer members (and one 
public member) appointed by the Secretary. The program would be 
financed by an assessment on natural grass sod products sold by natural 
grass sod producers. The program would provide an exemption from 
assessment for any organic natural grass products sold under the 
National Organic Program (7 CFR part 205). The purpose of the proposed 
program is to help build the market for natural grass sod products.
    The proposed forms would require the minimum information necessary 
to effectively carry out the requirements of the proposed Order, and 
their use is necessary to fulfill the intent of the 1996 Act.
    The information collection requirements under the program address 
Board nominations, collection of assessments and reports, and the 
organic exemption. For Board nominations, natural grass sod producers 
and the public member would need to complete the

[[Page 99158]]

``Nomination for Appointment'' form to identify nominees for 
appointment as members of the Board. Nominees would also need to 
complete a ``Nominee's Agreement to Serve'' form to disclose any 
relationship that could create a conflict of interest while serving on 
the Board. And the Background Information Form, AD-755ensures the 
individual is qualified to serve on the Board. Assessments and reports 
would be collected using the ``Quarterly Report and Remittance of 
Amount Due'' form. In addition, producers of organic sod would need to 
complete the ``Organic Exemption Request'' form to obtain an exemption 
from assessment for any organic natural grass sod products sold under 
the National Organic Program.
    For the purpose of estimating the cost of reporting and 
recordkeeping, this proposed rule uses $56.18 per hour. To arrive at 
this amount, AMS used the mean hourly earnings of farmers, ranchers, 
and other agricultural managers from the U.S. Department of Labor, 
Bureau of Labor Statistics, May 2023 National Occupational Employment 
and Wages Estimates,\14\ that is, $43.35 and added an additional 29.6 
percent to account for benefits and compensation.\15\ This calculation 
results in total hourly earnings of $56.18, which was used to calculate 
annual costs.
---------------------------------------------------------------------------

    \14\ U.S. Department of Labor, Bureau of Labor Statistics, 
Occupational Employment and Wages, May 2023; 11-9013 Farmers, 
Ranchers, and Other Agricultural Managers, https://www.bls.gov/oes/current/oes_nat.htm (last visited Aug. 30, 2024).
    \15\ News Release for Employer Costs for Employee Compensation--
June 2024, https://www.bls.gov/news.release/pdf/ecec.pdf (last 
visited Aug. 30, 2024).
---------------------------------------------------------------------------

    Information collection requirements included in this proposal are:

(1) LP-7 Application for Self-Certification of Nominating Organizations 
(OMB Form No. 0581-0349)

    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 0.5 hours per response for each 
nominating organization.
    Respondents: Natural grass sod producers and State or regional sod 
associations (15 State or regional sod associations).
    Estimated Number of Respondents: 25.
    Estimated Number of Responses per Respondent: (Estimate 
recertification every 5 years) 0.2.
    Estimated Total Annual Burden on Respondents: (25 organizations and 
producers x 0.2 responses x 0.5 hours per response) 2.50 hours.
    Total Cost: (2.50 hours x $56.18) $140.45.

(2) LP-4 Nomination for Appointment to the Board (OMB Form No. 0581-
0349)

    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 0.5 hours per response.
    Respondents: Natural grass sod producers.
    Estimated Number of Respondents: 20.
    Estimated Number of Responses per Respondent: One per year.
    Estimated Total Annual Burden on Respondents: (20 responses x 0.5 
hour per response) 10 hours.
    Total Cost: (10 hours x $56.18) $561.80.

(3) LP-6 Quarterly Report and Remittance of Amount Due for Assessment 
(OMB Form No. 0581-0349)

    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 0.5 hours per form.
    Respondents: Natural grass sod producers.
    Estimated Number of Respondents: 1,447.
    Estimated Number of Responses per Respondent: Four per year.
    Estimated Total Annual Burden on Respondents: (1,447 Number of 
respondents x 4 total number of reports x 0.50 hour per report) 2,894 
hours.
    Total Cost: (2,894 hours x $56.18) $162,585.

(4) AMS-15 Organic Exemption (OMB Form No. 0581-0093)

    Estimate of Burden: Public recordkeeping burden for this collection 
of information is estimated to average 0.25 hours per exemption form.
    Respondents: Natural grass sod producers.
    Estimated Number of Respondents: 10.
    Estimated Number of Responses per Respondent: (Annual organic 
exemption required) 1.
    Estimated Total Annual Burden on Respondents: (10 Number of 
respondents x 1 total number of reports x 0.25 hours per report) 2.50 
hours.
    Total Cost: (2.50 hours x $56.18) $140.45.

(5) AD-755 Background Information Form (OMB Form No. 0505-0001)

    Estimate of Burden: Public reporting for this collection of 
information is estimated to average 0.5 hours per response for each 
natural grass sod producer and public member nominated to serve on the 
Board.
    Respondents: Natural grass sod producer nominees and public member 
nominees.
    Estimated Number of Respondents: 14.33 (20 for initial nominations 
to the Board, 12 every year except 14 every third year in subsequent 
years).
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 10 hours for the 
initial nominations to the Board and 7 hours annually thereafter.
    Total Cost: (Number of respondents x responses per respondent x 
$56.18) $561.80 initial, and $393.26 annually thereafter.

(6) Requirement To Maintain Records Sufficient To Verify Reports 
Submitted Under the Order

    Estimate of Burden: Public recordkeeping burden for keeping this 
information is estimated to average 2 hours per recordkeeper 
maintaining such records.
    Recordkeepers: Natural grass sod producers.
    Estimated Number of Recordkeepers: 1,447.
    Estimated Total Recordkeeping Hours: (1,447 Number of recordkeepers 
x 2 hours) 2,894 hours.
    Total Cost: (1,447 Number of recordkeepers x 2 hours per 
recordkeeper x $56.18) $162,585.
    As described above, under the proposed Order, natural grass sod 
producers would be required to pay assessments and file reports and 
forms with the Board. While the proposed Order would impose certain 
recordkeeping requirements on natural grass sod producers, information 
required under the proposed Order could be compiled from records 
currently maintained. The Order would require such records to be 
retained for at least 3 years beyond the fiscal year of their 
applicability.
    The proposed Order's provisions have been carefully reviewed, and 
every effort has been made to minimize recordkeeping costs and 
requirements, including by considering information already submitted 
under other programs administered by USDA and other State programs.
    The proposed forms would require the minimum information necessary 
to effectively carry out the requirements of the program, and their use 
is necessary to fulfill the intent of the 1996 Act. Such information 
can be supplied without data processing equipment or outside technical 
expertise. In addition, there are no additional training requirements 
for individuals filling out reports and remitting assessments to the 
Board. The

[[Page 99159]]

forms would be simple, easy to understand, and place as small a burden 
as possible on the person required to file the information.
    Collecting information quarterly would coincide with normal 
industry business practices. The timing and frequency of collecting 
information are intended to meet the needs of the industry while 
minimizing the amount of work necessary to fill out the required 
reports. The requirement to keep records for 3 years is consistent with 
normal industry practices. In addition, the information to be included 
on these forms is not available from other sources because such 
information relates specifically to individual domestic producers who 
are subject to the provisions of the 1996 Act. Therefore, there is no 
practical method for collecting the required information without the 
use of these forms.

Comment Analysis

    A proposed rule for the Natural Grass Sod Promotion, Research, and 
Information Order was published in the Federal Register on October 16, 
2023 (88 FR 71306). A notice to trade was announced by AMS and the 
proposed rule provided a 60-day comment period ending December 15, 
2023. A total of 174 comments were received. Of those, 151 comments 
supported the proposed Order as written, and seven comments supported 
the proposed Order but suggested some edits. Eight commentors opposed 
the proposed Order and did not believe there was a need to establish a 
research, promotion, and education checkoff program. Two comments did 
not support the proposed Order and provided additional recommendations. 
Six comments neither supported nor opposed the proposed Order.

Comments in Full Support

    The 151 comments that fully supported the proposed Order as written 
explained that the proposed checkoff program would be vital in funding 
research to improve the sod varieties that currently exist as well as 
educating consumers on the benefits of natural grass sod. Other 
comments agreed, the program could help create a united voice that is 
representative of their diverse industry members. And some comments 
held that with the collected funding, the industry could develop 
educational resources to differentiate natural grass sod from synthetic 
turf as well as identify environmentally friendly management practices.

Comments in Support, With Modifications

    Seven commentors supported the proposed Order but suggested 
modifications. Of the seven, five commentors expressed concerns about 
the amount of funds that could potentially be returned to States under 
proposed Sec.  1240.38(f). The commentors explained that a 50 percent 
maximum rate of return to States seemed excessive. Three of the five 
commentors suggested a lower maximum rate of return such as 25 percent, 
while the other two commentors suggested the maximum rate of return 
should not exceed 30 percent.
    Section 1240.38(f) of the proposed Order describes permitted 
allocations of assessment funds to States. Specifically, this section 
provides the Board with the ability to allocate ``up to'' 50 percent of 
assessments collected on the sale of natural grass sod products in a 
State or group of States to programs proposed by a qualified 
organization that represents the State or group of States. The drafters 
of this provision included natural grass sod producers from throughout 
the United States. They determined that a 50 percent maximum rate of 
return for State programs is appropriate because of the significant 
variations in regional and local markets for sod, and the consequent 
need for the Order to be flexible enough to offer programs tailored to 
address those variations in different parts of the country. Therefore, 
we believe that proposed Sec.  1240.38(f) provides for a reasonable 
allocation to State programs while maintaining a sufficient level of 
funding for national programs. Accordingly, these suggestions are not 
adopted.
    Two comments expressed support for the proposed Order but provided 
further recommendations on referendum voting procedures and Board 
representation. One commentor objected to the proposed Order's 
allocation of one vote to each producer and suggested that votes should 
be weighted according to the percentage of total assessments the 
producer would pay under the program. The commentor also suggested that 
Board seats should be proportionate in representation to what producers 
would pay into the program. Another commentor suggested that the 
program should be implemented only if 60 percent of producers voting in 
the referendum, rather than a simple majority, favor the proposed 
Order.
    The 1996 Act authorizes the Secretary to conduct an initial 
referendum among persons to be subject to an assessment to determine 
whether they favor issuance of a proposed order. Additionally, the Act 
provides that approval of a proposed order may be determined in a 
referendum (1) by a majority of those persons voting, (2) by persons 
voting for approval who represent a majority of the volume of the 
agricultural commodity, or (3) by a majority of those persons voting 
for approval who also represent a majority of the volume of the 
agricultural commodity. TPI conducted outreach sessions to gather early 
industry approval and determined that the one-producer one-vote method 
was the most agreed upon approach by the industry. The commentors 
suggesting an alternative method for assigning votes did not provide 
data or information to suggest otherwise.
    Additionally, consistent with section 515(b)(2)(D) of the 1996 Act 
(7 U.S.C. 7414(b)(2)(D)), the composition of the Board is based on the 
geographical distribution of the quantity of natural grass sod products 
produced (and sold) in the United States. Furthermore, the proposed 
Order requires a review of the geographical distribution of the 
production of sod at least every five years and, if warranted, a 
reapportionment of Board membership to reflect changes in the 
geographical distribution of the production of sod. These procedures 
are mandated by the statute to ensure fair and equitable representation 
of the natural grass sod industry on the Board.

Comments Opposed

    Seven comments received were opposed to the proposed program for 
various reasons.
    Some commentors stated that the program would be redundant because 
the industry already has associations that perform similar roles. To be 
sure, there are currently voluntary programs dedicated to the promotion 
and research of natural grass sod products that have achieved impactful 
results. However, a nationally established research and promotion 
program would have the capacity to fund existing efforts on a larger 
scale. For instance, many States sod associations fund research and 
promotion at levels under $10,000 annually. TPI funds research and 
promotion through its foundation, The Lawn Institute, at up to $50,000 
to $100,000 annually.
    However, these types of funds are raised through voluntary 
contributions and fundraising efforts such as auctions, raffles, 
activities, etc., and, while they have successfully been able to impact 
natural grass research and promotion on a small scale, none of these 
efforts can achieve the potential $14.9 million of funding that would 
come through a

[[Page 99160]]

natural grass sod checkoff. A natural grass sod checkoff would not only 
be able to raise significant funds for these efforts, but the checkoff 
could also respond to changing needs in research and promotion. The 
proposed natural grass sod checkoff board, like other checkoff boards, 
would have the flexibility to modify how assessment funds are 
administered to various research and promotion projects. At the 
direction of the industry and with USDA approval, they would also be 
able to modify the program as needed within the guidelines of the Act 
and the oversight of USDA-AMS. Additionally, an industry-wide vote will 
be conducted to determine whether the industry is in favor of the 
program. Accordingly, these suggestions are not adopted.
    Other commentors stated that the program would discriminate between 
the cool season grass states and the warm season grass states due to 
the frequency of harvest of the warmer states versus the cooler states 
and the varying size of production between the warmer and cooler 
states. There is some merit to this position. Generally, warm-season 
grasses can be laid year-round since they are typically planted in warm 
regions with few winter freezes, while cool-season grass sod is 
typically planted only in the fall season. Thus, there is a possibility 
that warm-season grass sod producers could pay into the checkoff more 
often if they choose to harvest their sod year-round or longer than the 
typical season for cool-season grass sod producers.
    However, commodity checkoff programs have been established to 
``operate as `self-help' mechanisms for producers and processors to 
fund generic promotions,'' \16\ which allow producers to enjoy the 
benefit associated with pooling their money together to create 
economies of scale in their promotional efforts.\17\ The aim of the 
checkoff is that everyone benefits equally and proportionally, no 
matter their individual contributions. Accordingly, these suggestions 
are not adopted.
---------------------------------------------------------------------------

    \16\ 7 U.S.C. 7401(b)(8).
    \17\ 7 U.S.C. 7401(b)(10).
---------------------------------------------------------------------------

Comments Opposed, With Further Recommendations

    Two commentors opposed the proposed Order but also offered 
recommendations for USDA consideration. Both commentors suggested that 
the referendum is being conducted prematurely given that the last time 
the industry provided educational sessions on the proposed Order was in 
May 2020.
    TPI conducted extensive industry engagement, providing educational 
outreach to local organizations and individual producers, and 
soliciting input on interest in a national checkoff program, and 
determined that there was substantial interest in moving forward with a 
national program. Additionally, the industry hosted a webinar to get 
feedback from natural grass sod producers regarding their interest in 
developing a national grass sod checkoff program. On May 19, 2020, U.S. 
sod producers participated in a 2-hour online seminar to learn more 
about USDA research and promotion programs. After this webinar, 
attendees were polled to determine their interest in developing a 
national checkoff program for the natural grass sod industry and 64 
percent stated they were very interested, 20 percent stated they were 
interested, 13 percent stated they were interested in learning more, 
and only 3 percent stated they were not interested. Since the industry 
formally submitted its proposed Order on June 18, 2021, USDA has been 
conducting various required steps to offer a new research and promotion 
program for industry consideration. These steps have included the 
preparation and review of various documents, including those announcing 
the agency's intent to propose a new program through OMB's regulatory 
review process, and the drafting and ultimate publication of a proposed 
rule and proposed referendum procedures on October 16, 2023.
    TPI also submitted industry letters of support that confirmed the 
industry's desire to pursue a research, promotion, and education sod 
order to fund research and communicate the benefits of natural grass to 
the public. Further, if in the future the industry determines that the 
Order is no longer in its best interests, the Order may be amended 
through the regulatory process or terminated.
    The commentors also stated that AMS should ensure that every sod 
producer in the United States is identified and informed about the 
proposed Order prior to any referendum. Further, the commentors 
encouraged AMS to conduct a remedial round of public outreach to re-
assess industry support for the program following a 3-year period (from 
May 2020, when a program webinar was held, to December 2023, when AMS 
published the proposed program in the Federal Register) when they claim 
the proposed Order was not visible or part of regular industry 
discussions. AMS will use several methods to identify as many eligible 
natural grass sod producers as possible, to include self-identification 
from producers and industry input. In addition to the industry outreach 
that was previously conducted, AMS will conduct its own outreach to 
ensure that as many eligible natural grass sod producers as possible 
are informed of the referendum, the referendum schedule, instructions, 
and any other items related to the potential implementation of the 
proposed Order.
    Additionally, the commentors encouraged USDA to establish a clear 
schedule and procedures for the referendum. AMS, through public notice 
on its website, post cards, letters, and through its external networks, 
will make a referendum schedule, instructions, and other relevant 
information available to all eligible producers, trade associations and 
related industry media, which can further disseminate the information.
    The commentors also requested that USDA complete an improved 
analysis to consider various factors such as the cost to collect, 
report, and remit assessments, particularly on operations with multiple 
farms, in multiple States. AMS is aware that each industry is diverse 
in various ways, such as size, method of production and distribution, 
business practices, marketing strategies, staff size, and region. The 
updated regulatory analysis in this proposed rule did not factor every 
unique method of collecting assessments but rather focused on the 
number of farms reported and square foot of sod sold nationwide 
according to the 2022 U.S. Census. Furthermore, the commentors did not 
include any information or data to show that USDA's analysis of the 
impact of assessments on sod producers under the proposed program is 
inaccurate. Conducting the upfront referendum will provide eligible sod 
producers the ability to submit a vote and determine if the sod 
industry favors the establishment of the checkoff program.
    The commentors also opposed the apportionment of Board members 
among the regions in proposed Sec.  1240.30(b) and argued that the 
South Region should be assigned more members. They stated that, 
according to Table 1, the South Region represents 63.7 percent of total 
U.S. sales. They therefore argued that the South Region should be 
allocated 6 members instead of 4 members out of the 10 total producer 
members on the Board.
    As an initial matter, we note that the commentors' calculation 
appears to be inaccurate. In addition, the version of Table 1 that 
appeared in the first proposed rule (88 FR 71306) reflected numbers 
reported in the 2017 Census. In this second proposed rule, Table 1 has 
been updated to reflect the most recent

[[Page 99161]]

numbers reported in the 2022 Census. The updated 2022 Census data 
indicates that the South Region accounts for approximately 49 percent 
of sod sales and 52 percent of the volume of sod produced in the United 
States.
    Section 515(b)(2)(D) of the 1996 Act (7 U.S.C. 7414(b)(2)(D)) 
states that ``[t]o ensure fair and equitable representation of the 
agricultural commodity industry covered by an order, the composition of 
each board shall reflect the geographical distribution of the 
production of the agricultural commodity involved in the United 
States.'' Thus, AMS recognizes that the 2022 Census data could be cited 
to support re-assigning one Board member from the North Region to the 
South Region.
    AMS agrees that commodity sales and production data are important 
to consider in determining the composition of the Board. However, AMS 
also recognizes that other factors are relevant to ensure ``fair and 
equitable representation'' of natural grass sod producers on the Board, 
including factors such as the number and size of sod farms in a State 
or region, as well as the types of natural grass sod produced in the 
State or region.
    AMS examined other options for allocating Board seats among the 
regions. However, when all the relevant data is considered (number of 
farms, size of farms, types of natural grass sod grown, production 
data, and sales data), AMS believes that the proposed composition of 
the Board, which allocates 3 members to the North Region, 4 members to 
the South Region, and 3 members to the Transition Zone Region, should 
remain unchanged.
    The proposed 3-4-3 Board structure allows each producer member on 
the Board to represent approximately the same number of farms in their 
assigned region. If the Board composition is modified to re-assign one 
member from the North Region to the South Region, resulting in a 2-5-3 
Board structure, the two remaining members from the North Region would 
be asked to represent almost twice as many farms as the Board members 
from the South Region. As a result, this structure would not allow for 
equal representation of Board members per number of farms in each 
region.
    Additionally, sod producers in the Transition Zone Region grow both 
warm and cool season grasses. However, most farmers in these States, 
especially in Arkansas, California, North Carolina, Oklahoma, and 
Tennessee, exist in USDA Plant Hardiness Zones 8a-b and grow 
predominately warm-season grasses.\18\ As a result, they would likely 
make Board decisions similar to those that would be made by sod 
producers from the South Region. AMS policy is that the diversity of 
the Board should reflect the diversity of the industry in terms of the 
experience of members, methods of production and distribution, 
marketing strategies, and other distinguishing factors that will bring 
different perspectives and ideas to the Board's attention. In addition, 
AMS policy is that both larger and smaller production States should 
contribute to Board decision making about how resources are used for 
research and promotion programs.
---------------------------------------------------------------------------

    \18\ USDA, 2023 USDA Plant Hardiness Zone Map, https://planthardiness.ars.usda.gov.
---------------------------------------------------------------------------

    Furthermore, proposed Sec.  1240.30(b)(4) includes a provision that 
would ensure each of the three highest production States have at least 
one producer member on the Board in their respective region. Finally, 
proposed Sec.  1240.30(c) includes a measure to adjust seats every 
three to five years based on changes in production, and the Board is 
authorized to recommend changes to the Order--which could include the 
way that seats are allocated--should they determine a need in the 
future. Therefore, the proposed composition of the Board will remain 
unchanged.
    The commentors also argued that proposed Sec.  1240.38(f) does not 
ensure enough money is funneled back to State programs, as that section 
permits a maximum of 50 percent to go back to States but does not 
include a minimum amount that must be allocated to State programs. The 
commentors pointed out that this would allow a 0 percent return to 
States and suggested that there should be a minimum allocation to 
States. The provision for allocating funds to State programs is not 
intended to be a funding mechanism for State checkoff boards but, 
rather, a method to fund research and promotion initiatives specific to 
State markets that might otherwise be addressed insufficiently by 
national research and promotion initiatives. In addition to the State 
funding allocation under proposed Sec.  1240.38(f), qualified State 
programs could apply for and receive additional funding from the Board 
on a project-by-project basis. We believe that the provision provides 
for a reasonable allocation for State generic programs while 
maintaining an appropriate level of funding for the national program.
    The two commentors also objected to the rule in proposed Sec.  
1240.71 allocating only one vote per producer. One commentor stated 
that votes from larger producers should count more, and the other 
commentor stated that the proposed Order should be approved only if 
favored by either a majority of all producers in the United States or 
by a majority of all sod-producing acres in the United States.
    Section 518(e) of the 1996 Act (7 U.S.C. 7417(e)) provides for 
three options by which a proposed order may provide for its approval in 
a referendum: (1) by a majority of those persons voting, (2) by persons 
voting for approval who represent a majority of the volume of the 
agricultural commodity, or (3) by a majority of those persons voting 
for approval who also represent a majority of the volume of the 
agricultural commodity. Assigning one vote to each producer, regardless 
of size, ensures that small businesses as well as large firms have a 
voice in the referendum. Furthermore, as noted above, this method, 
combined with a voting procedure in which a majority of those persons 
voting in a referendum determines approval of an order, is authorized 
by statute. Accordingly, the proposed Order will be approved in the 
referendum if it is favored by a simple majority (50 percent + one 
vote) of the natural grass sod producers voting that have been engaged 
in the production and sale of natural grass sod products in the United 
States during a representative period determined by the Secretary.
    Lastly, the commentors argued that AMS's analysis of local sod 
markets is insufficient, and they asserted that a national sod program 
would not benefit sod producers because their local markets are so 
different from each other. AMS reviewed the industry analysis and 
justification and determined that it was an accurate depiction of the 
sod industry and local sod markets. Additionally, AMS received 151 
comments that fully supported the proposed Order as written. These 
comments explained that the proposed checkoff program would be vital in 
funding research to improve the sod varieties that currently exist as 
well as educating consumers on the benefits of natural grass sod. The 
program could help create a united voice that is representative of 
their diverse industry members. With the collected funding the industry 
could develop educational resources to differentiate natural grass sod 
from synthetic turf as well as identify environmentally friendly 
management practices.
    Accordingly, these suggestions are not adopted.

Neither Agree or Disagree

    Six comments received neither supported nor opposed the proposed

[[Page 99162]]

Order. Most of these comments included questions about the benefits of 
natural grass sod and how certain regions could restore native plants 
that do not require irrigation.

List of Subjects in 7 CFR Part 1240

    Administrative practice and procedure, Advertising, Consumer 
information, Marketing agreements, Natural grass sod, Reporting and 
recordkeeping requirements.
    For the reasons discussed in the preamble, AMS proposes to add 
subpart A to 7 CFR part 1240 to read as follows:

PART 1240--NATURAL GRASS SOD PROMOTION, RESEARCH, AND INFORMATION 
ORDER

Subpart A--Natural Grass Sod Promotion, Research, and Information Order
Sec.
1240.10 General.
1240.20 Definitions.

Natural Grass Sod Promotion, Research, and Information Board

1240.30 Establishment and membership.
1240.31 Nominations and appointments.
1240.32 Nominee's agreement to serve.
1240.33 Term of office.
1240.34 Removal.
1240.35 Vacancies.
1240.36 Procedure.
1240.37 Reimbursement and attendance.
1240.38 Powers and duties.
1240.39 Prohibited activities.

Expenses and Assessments

1240.45 Budget and expenses.
1240.46 Financial statements.
1240.47 Assessments.
1240.48 Exemptions from assessments

Promotion, Research, and Information

1240.50 Programs.
1240.51 Independent evaluation.
1240.52 Patents, copyrights, trademarks, inventions, product 
formulations, and publications.

Reports, Books, and Records

1240.60 Reports.
1240.61 Books and records.
1240.62 Confidential treatment.
1240.63 Qualification of natural grass sod organizations.

Miscellaneous

1240.70 Right of the Secretary.
1240.71 Referenda.
1240.72 Suspension or termination.
1240.73 Proceedings after termination.
1240.74 Effect of termination or amendment.
1240.75 Personal liability.
1240.76 Severability.
1240.77 Amendments.
1240.78 OMB control number.

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

Subpart A--Natural Grass Sod Promotion, Research, and Information 
Order


Sec.  1240.10   General.

    The terms defined/specified in this subpart shall apply to the 
Natural Grass Sod Promotion, Research, and Information Order authorized 
under the Act.


Sec.  1240.20  Definitions.

    Act means the Commodity Promotion, Research, and Information Act of 
1996 (7 U.S.C. 7411-7425), and any amendments thereto.
    Board means the Natural Grass Sod Promotion, Research, and 
Information Board established pursuant to Sec.  1240.30, or such other 
name as recommended by the Board and approved by USDA.
    Conflict of interest means a situation in which a member or 
employee of the Board has a direct or indirect financial interest in a 
person who performs a service for, or enters into a contract with, the 
Board for anything of economic value.
    Department or USDA means the U.S. Department of Agriculture, or any 
officer or employee of the Department to whom authority has heretofore 
been delegated, or to whom authority may hereafter be delegated, to act 
in the Secretary's stead.
    Eligible natural grass sod producer refers to a natural grass sod 
producer that has sold natural grass sod products in the United States 
during the representative period and is eligible to vote in the initial 
referendum or subsequent referenda.
    Fiscal year and marketing year means the 12-month period ending on 
December 31 or such other period as recommended by the Board and 
approved by the Secretary.
    Information means information and programs for consumers, 
customers, architects, city planners, and various industry participants 
and trades personnel, including educational activities, information, 
and programs designed to enhance and broaden the understanding of the 
use and attributes of natural grass, increase efficiency in producing 
natural grass sod products, maintain and expand existing markets, and 
develop new markets and marketing strategies. These include:
    (1) Consumer education and information, which means any action 
taken to provide information to, and broaden the understanding of, the 
general public regarding natural grass sod; and
    (2) Industry information, which means information and programs that 
would enhance the image of the natural grass sod industry.
    Initial referendum refers to the referendum required to approve 
this subpart as outlined in Sec.  1240.71.
    Natural grass sod refers to plant species in the Poaceae family or 
living plants in other taxa serving a similar purpose, as often found 
in sites such as lawns, sports fields, golf courses, parks, cemeteries, 
roadsides and others.
    Natural grass sod producer means any person who produces natural 
grass sod products in the United States.
    Natural grass sod product refers to natural grass produced for 
retail, wholesale, or commercial sale, including monostands or blends 
or mixtures of Bentgrass, Bermudagrass, Buffalograss, Centipedegrass, 
Fine fescue, Kentucky bluegrass, Ryegrass, Seashore Paspalum, Saint 
Augustinegrass, Tall fescue, Zoysiagrass, Bahiagrass, other native or 
adapted plants harvested and sold as sod, and products containing 
natural grass with artificial elements that are sold as sod. For 
purposes of this Order, natural grass sod product excludes all 
artificial and synthetic turf or grass products, natural grass seed, 
sprigs, and plugs.
    Order means an order issued by the Secretary under section 514 of 
the Act (7 U.S.C. 7413) that provides for a program of generic 
promotion, research, and information regarding agricultural commodities 
authorized under the Act.
    Part means the Natural Grass Sod Promotion, Research, and 
Information Order and all rules, regulations, and supplemental orders 
issued pursuant to the Act and the Order. The Order shall be a subpart 
of such part.
    Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other legal entity.
    Produce means the process of growing and/or harvesting natural 
grass sod products for the purpose of selling such products either 
individually or in combination with other products, real property, or 
services in the United States.
    Programs means those generic research, promotion, and information 
programs, plans, or projects established pursuant to the Order.
    Promotion means any action, including paid advertising and the 
dissemination of information, utilizing public relations or other 
means, to enhance and broaden the understanding of the use and 
attributes of natural grass for the purpose of maintaining and 
expanding markets for natural grass sod products.

[[Page 99163]]

    Qualified organization means any organization that has the primary 
purpose of representing natural grass sod producers, has natural grass 
sod producers as members, has a board of directors composed of a 
majority of natural grass sod producers, and is approved by the 
Secretary pursuant to the qualification process set forth in Sec.  
1240.63.
    Quarterly period means one of the four 3-month periods that are 
based upon a calendar year cycle (i.e., January 1-March 31, April 1-
June 30, July 1-September 30, and October 1-December 31).
    Representative period means the time period designated by the 
Secretary pursuant to section 518 of the Act (7 U.S.C. 7417).
    Research means any type of test, study, or analysis designed to 
enhance the image, desirability, use, marketability, production, 
environmental quality, or sustainability of natural grass, including 
research directed to product characteristics and product development 
like new products or improved technology in the production of natural 
grass sod products.
    Secretary means the Secretary of Agriculture of the United States, 
or any other officer or employee of the Department to whom authority 
has been delegated, or to whom authority may hereafter be delegated, to 
act in the Secretary's stead.
    State means any of the 50 States of the United States, the District 
of Columbia, the Commonwealth of Puerto Rico, or any territory or 
possession of the United States.
    Subsequent referenda refers to any referendum conducted pursuant to 
Sec.  1240.71 of this subpart after this subpart becomes effective.
    Suspend means to issue a rule under 5 U.S.C. 553 to temporarily 
prevent the operation of an order or part thereof during a particular 
period of time specified in the rule.
    Terminate means to issue a rule under 5 U.S.C. 553 to cancel 
permanently the operation of an order or part thereof beginning on a 
date specified in the rule.
    United States means collectively the 50 States, the District of 
Columbia, the Commonwealth of Puerto Rico, and the territories and 
possessions of the United States.

Natural Grass Sod Promotion, Research, and Information Board


Sec.  1240.30   Establishment and membership.

    (a) Establishment of the Board. There is hereby established a 
Natural Grass Sod Promotion, Research, and Information Board to 
administer the terms and provisions of this part. The Board shall be 
composed of natural grass sod producers that sell natural grass sod 
products in the United States during a marketing year and a public 
member. Seats on the Board shall be apportioned as set forth in 
paragraph (b) of this section based on the geographical distribution of 
the production of natural grass sod products in the United States.
    (b) Composition of the Board. The Board shall be composed of 11 
members, including 10 members who are natural grass sod producers and 
one public member. The Board shall be established as follows:
    (1) North/Cool-Season Region. Three members shall be appointed from 
the North/Cool-Season Region, which includes the following States: 
Alaska, Colorado, Connecticut, Delaware, Idaho, Illinois, Indiana, 
Iowa, Maine, Massachusetts, Michigan, Minnesota, Montana, Nebraska, New 
Hampshire, New Jersey, New York, North Dakota, Ohio, Oregon, 
Pennsylvania, Rhode Island, South Dakota, Utah, Vermont, Washington, 
Wisconsin, and Wyoming.
    (2) South/Warm-Season Region. Four members shall be appointed from 
the South/Warm-Season Region, which includes the following States: 
Alabama, Arizona, Florida, Georgia, Hawaii, Louisiana, Mississippi, 
Nevada, New Mexico, South Carolina, Texas, and all territories and 
possessions of the United States, including but not limited to, the 
Commonwealth of Puerto Rico.
    (3) Transition Zone/California Region. Three members shall be 
appointed from the Transition Zone/California Region, which includes 
the following States: Arkansas, California, the District of Columbia, 
Kansas, Kentucky, Maryland, Missouri, North Carolina, Oklahoma, 
Tennessee, Virginia, and West Virginia.
    (4) States with the highest volume of natural grass sod production. 
Each of the three States with the highest volume of natural grass sod 
production, as determined by the Secretary on an annual basis, shall 
have at least one natural grass sod producer to serve as a 
representative on the Board in their respective region.
    (5) Public member. The Board shall have one public member. The 
public member may not be a natural grass sod producer or have a 
financial interest in the production, sales, marketing, or distribution 
of natural grass sod.
    (c) Reapportionment. At least once in every 5-year period, but not 
more frequently than once in every 3-year period, the Board will review 
the geographical distribution of the square footage of natural grass 
sod products produced within the United States. The review will be 
conducted using the Board's annual assessment receipts, industry data 
provided by USDA, and, if available, other reliable reports from the 
industry. If warranted, the Board will recommend to the Secretary that 
the membership, geographical regions, and/or size of the Board be 
adjusted to reflect changes in geographical distribution of the square 
footage of natural grass sod products produced in the United States. 
Any changes in Board composition shall be implemented by the Secretary 
through rulemaking.


Sec.  1240.31  Nominations and appointments.

    (a) Initial nominations shall be submitted to the Secretary by 
industry organizations that have a board composed of a majority of 
natural grass sod producers; by individual natural grass sod producers; 
and from members of the public. The Secretary shall select the initial 
members of the Board from the nominations submitted.
    (b) Subsequent nominations shall be conducted as follows:
    (1) The Board shall conduct outreach to all known natural grass sod 
producers that sell natural grass sod products in a marketing year as 
well as any known industry organizations that have a board composed of 
a majority of natural grass sod producers. Natural grass sod producers 
and industry organizations may submit nominations to the Board;
    (2) Natural grass sod producer nominees and the public member 
nominee may provide the Board a short background statement outlining 
their qualifications to serve on the Board;
    (3) Nominees may seek nomination to the Board for all open or 
vacant seats for which they are qualified;
    (4) Natural grass sod producers must produce and sell natural grass 
sod products in the region for which they seek nomination. Nominees 
that produce and sell in multiple regions may seek nomination in one 
region of their choice. The Board will issue the call for nominations 
to all known natural grass sod producers and to any known industry 
organizations that have a board composed of a majority of natural grass 
sod producers and recommend nominees for each open seat and the 
additional nominees to the Secretary;
    (5) The public member may be nominated by a qualified organization 
or through self-nomination to the Board. The public member shall have 
no direct financial interest in the commercial production or marketing 
of natural grass sod except as a consumer and shall not be a director, 
stockholder, officer, or

[[Page 99164]]

employee of any person engaged in the production or sale of natural 
grass sod.
    (6) The Board may prescribe such additional qualifications, 
administrative rules and procedures for selection and voting for each 
candidate as it deems necessary, and the Secretary approves.
    (7) The Board will evaluate all the nominees and recommend at least 
two names for each open seat. Other qualified persons interested in 
serving in the open seats, but not recommended by the Board, will be 
designated by the Board as additional nominees for consideration by the 
Secretary;
    (8) The Board must submit nominations to the Secretary at least 90 
days before the new Board term begins. From the nominations submitted 
by the Board, the Secretary shall select the members of the Board. If 
the Board fails to submit nominations for the public member position, 
the Secretary may appoint such member;
    (9) Any natural grass sod producer and public member nominated to 
serve on the Board shall file with the Secretary at the time of the 
nomination a background questionnaire;
    (10) From the nominations made pursuant to this section, the 
Secretary shall appoint members of the Board on the basis of 
representation provided in Sec.  1240.30(b);
    (11) No two Board members shall be employed by a single 
corporation, company, partnership, or any other legal entity that pays 
assessments under this subpart; and,
    (12) The Board may recommend to the Secretary modifications to its 
nomination procedures as it deems appropriate. Any such modification 
shall be implemented through rulemaking by the Secretary.


Sec.  1240.32  Nominee's agreement to serve.

    Any producer or person nominated to serve on the Board shall file 
with the Secretary at the time of the nomination a written agreement 
to:
    (a) Serve on the Board if appointed;
    (b) Disclose any relationship with any national grass sod producer 
or with any organization that has or is being considered for a 
contractual relationship with the Board; and
    (c) Withdraw from participation in deliberations, decision-making, 
or voting on matters that concern the relationship disclosed.


Sec.  1240.33  Term of office.

    (a) With the exception of the initial Board, each Board member 
shall serve for a term of 3 years or until the Secretary selects his or 
her successor. Each term of office shall begin and end on dates 
determined by the Board. No member may serve more than two consecutive 
terms, except as provided in paragraph (c) of this section.
    (b) For the initial Board, the terms of the Board members shall be 
staggered for 1, 2, and 3 years. Each region initially shall have one 
member who serves a 2-year term and two members who serve 3-year terms. 
In addition, the South/Warm-Season Region shall have one member who 
serves a 1-year term. The Secretary shall determine which of the 
initial members shall serve a term of 1, 2, or 3 years. The public 
member shall serve an initial 3-year term.
    (c) Members serving terms of 1 or 2 years on the initial Board and 
members who are appointed to serve the remainder of a term are eligible 
to serve two additional consecutive 3-year terms.


Sec.  1240.34  Removal.

    The Board may recommend to the Secretary that a member be removed 
from office if the member consistently fails or refuses to perform his 
or her duties properly or engages in dishonest acts or willful 
misconduct, which removal is subject to the Secretary's approval. If 
the Secretary determines that a member consistently fails or refuses to 
perform his or her duties properly or engages in acts of dishonesty or 
willful misconduct, the Secretary shall remove the person from office. 
A member may also be removed by the Secretary if the Secretary 
determines that the person's continued service would be detrimental to 
the purposes of the Act.


Sec.  1240.35  Vacancies.

    (a) If a member is removed from office or resigns, or in the event 
of death of any member, such position shall automatically become 
vacant.
    (b) If a member becomes disqualified for ceasing to produce natural 
grass sod products or ceasing to do business in the region he or she 
represents, such position shall be vacated within a period of 6 months 
from the date of the disqualifying event.
    (c) If a position becomes vacant, nominations to fill the vacancy 
will be conducted using the nominations process set forth in this 
subpart or the Board may recommend to the Secretary that he or she 
appoint a successor from the most recent list of nominations for the 
position.
    (d) A vacancy will not be required to be filled if the unexpired 
term is less than 6 months.


Sec.  1240.36  Procedure.

    (a) The Board shall publicly announce all scheduled Board meetings 
through a direct communication, press release, or other means and give 
the Secretary the same notice of meetings of the Board (including 
committees, subcommittees, and the like) as is given to members so that 
the Secretary's representative(s) may attend such meetings.
    (b) A majority (50 percent plus one) of the Board members shall 
constitute a quorum at any meeting of the Board.
    (c) Each member of the Board shall be entitled to one vote on any 
matter put to the Board and the motion will carry if supported by a 
majority (50 percent plus one vote) of Board members, except for 
recommendations to change the assessment rate, adopt a budget, or call 
for a referendum, which require affirmation by two-thirds of the total 
number of Board members.
    (d) At an assembled meeting, all votes shall be cast in person. At 
a meeting in which some or all members attend via an internet service, 
videoconference, or teleconference, members may cast votes remotely by 
using available technology according to procedures that shall be 
established by the Board.
    (e) In lieu of voting at an assembled meeting and, when in the 
opinion of the chairperson of the Board such action is considered 
necessary, the Board may take action if supported by a majority of 
members (unless two-thirds is required under the Order) by mail, 
telephone, electronic mail, facsimile, or any other means of 
communication. In that event, all members must be notified and provided 
the opportunity to vote. Any action so taken shall have the same force 
and effect as though such action had been taken at an assembled 
meeting. All votes shall be recorded in Board minutes.
    (f) There shall be no proxy voting.
    (g) The organization of the Board and the procedures for conducting 
meetings of the Board shall be in accordance with its bylaws, which 
shall be established by the Board and approved by the Secretary.


Sec.  1240.37  Reimbursement and attendance.

    Board members shall serve without compensation, but shall be 
reimbursed for reasonable travel expenses, as approved by the Board, 
which they incur when performing Board business.


Sec.  1240.38  Powers and duties.

    The Board shall have the following powers and duties:
    (a) To administer this subpart in accordance with its terms and 
conditions and to collect assessments;
    (b) To develop and recommend to the Secretary for approval such 
bylaws as may be necessary for the functioning of the Board, and such 
rules and regulations as may be necessary to

[[Page 99165]]

administer the Order, including activities authorized to be carried out 
under the Order;
    (c) To meet not less than annually, organize, and select from among 
the members of the Board a chairperson, vice chairperson, secretary/
treasurer, other officers, and committees and subcommittees, as the 
Board determines to be appropriate. The committees and subcommittees 
may include persons other than Board members, including representatives 
of natural grass sod producers, as the Board deems necessary and 
appropriate, provided Board members constitute a majority of all 
committees and subcommittees;
    (d) To employ or contract with persons, other than the Board 
members, as the Board considers necessary to assist the Board in 
carrying out its duties, and to determine the compensation and specify 
the duties of the persons;
    (e) To develop and submit programs to the Secretary for the 
Secretary's approval and enter into contracts or agreements related to 
such programs, which must be approved by the Secretary before becoming 
effective, for the development and carrying out of programs of 
promotion, research, and information. The payment of costs for such 
activities shall be from funds collected pursuant to the Order. Each 
contract or agreement shall provide that:
    (1) The contractor or agreeing party shall develop and submit to 
the Board a program together with a budget or budgets that shall show 
the estimated cost to be incurred for such program;
    (2) The contractor or agreeing party shall keep accurate records of 
all its transactions and make periodic reports to the Board of 
activities conducted, submit accounting for funds received and 
expended, and make such other reports as the Secretary or the Board may 
require;
    (3) The Secretary may audit the records of the contracting or 
agreeing party periodically; and
    (4) Any subcontractor who enters into a contract with a Board 
contractor and who receives or otherwise uses funds allocated by the 
Board shall be subject to the same provisions as the contractor; and
    (5) Any other provisions required by the Secretary.
    (f) To allocate, to the extent practicable, up to 50 percent of the 
assessments collected on the sale of natural grass sod products in a 
State or group of States, as defined in Sec.  1240.20, less 
administrative costs, to one or more programs proposed by a qualified 
organization representing such State or group of States. On an annual 
basis, the Board shall solicit proposals for programs, select the 
programs that shall receive funding, and enter into contracts only with 
the entities that will directly implement the programs. If the 
qualified organization is not the entity that will implement the 
program, the Board may reimburse the qualified organization for 
reasonable administrative costs incurred while making such proposal. 
For purposes of this section, the Secretary shall have the authority to 
approve an organization that the Board nominates to be a ``qualified 
organization'' pursuant to the qualification process set forth in Sec.  
1240.63;
    (g) To prepare and submit for the approval of the Secretary fiscal 
year budgets in accordance with Sec.  1240.45;
    (h) To borrow funds necessary for startup expenses or other capital 
outlays of the Board as set forth in this subpart;
    (i) To invest assessments collected and other funds received 
pursuant to this subpart and use earnings from invested assessments to 
pay for activities carried out pursuant to this subpart;
    (j) To recommend changes to the assessment rates as provided in 
this subpart;
    (k) To cause its books to be audited by an independent auditor at 
the end of each fiscal year and at such other times as the Secretary 
may request, and to submit a report of the audit directly to the 
Secretary;
    (l) To periodically prepare and make public reports of program 
activities and, at least once each fiscal year, to make public an 
accounting of funds received and expended;
    (m) To maintain such minutes, books and records, and prepare and 
submit such reports and records from time-to-time to the Secretary as 
the Secretary may prescribe; to make appropriate accounting with 
respect to the receipt and disbursement of all funds entrusted to it; 
and to keep records that accurately reflect the actions and 
transactions of the Board;
    (n) To act as an intermediary between the Secretary and any natural 
grass sod producer;
    (o) To receive, investigate, and report to the Secretary complaints 
of violations of this subpart;
    (p) To recommend to the Secretary such amendments to this subpart 
as the Board considers appropriate; and
    (q) To work to achieve an effective, continuous, and coordinated 
program of promotion, research, and information and to carry out 
programs designed to provide maximum benefits to the natural grass sod 
industry.


Sec.  1240.39  Prohibited activities.

    The Board may not engage in, and shall prohibit the employees and 
agents of the Board from engaging in:
    (a) Any action that would be a conflict of interest;
    (b) Using funds collected by the Board under the Order to undertake 
any action for the purpose of influencing legislation or governmental 
action or policy, by local, State, national, and foreign governments or 
subdivision thereof, other than recommending to the Secretary 
amendments to this subpart; and
    (c) Any program or advertising that is false, misleading, or 
disparaging to another agricultural commodity. Natural grass sod 
products of all geographic origins shall be treated equally.

Expenses and Assessments


Sec.  1240.45  Budget and expenses.

    (a) At least 60 calendar days prior to the beginning of each fiscal 
year, and as may be necessary thereafter, the Board shall prepare and 
submit to the Department a budget for the fiscal year covering its 
anticipated expenses and disbursements in administering this part. The 
budget for the Board may not be implemented prior to approval by the 
Secretary. Each such budget shall include:
    (1) A statement of objectives and strategy for each program;
    (2) A summary of anticipated revenue, with comparative data for at 
least one preceding fiscal year, except for the initial budget;
    (3) A summary of proposed expenditures for each program; and
    (4) Staff and administrative expense breakdowns, with comparative 
data for at least one preceding fiscal year, except for the initial 
budget.
    (b) Each budget shall provide adequate funds to defray its proposed 
expenditures and to provide for a reserve as set forth in this subpart.
    (c) Subject to this section, any amendment or addition to an 
approved budget must be approved by the Department. Shifts of funds 
that do not result in an increase in the Board's approved budget and 
are consistent with governing bylaws need not have prior approval by 
the Department.
    (d) The Board is authorized to incur such expenses, including 
provision for a reserve, as the Secretary finds reasonable and likely 
to be incurred by the Board for its maintenance and functioning, and to 
enable it to exercise its powers and perform its duties in accordance 
with the provisions of this subpart. Such expenses shall be paid from 
funds received by the Board.

[[Page 99166]]

    (e) With approval from the Department, the Board may borrow funds 
necessary for startup expenses or other capital outlays of the Board as 
set forth in the subpart, which funds shall be subject to the same 
fiscal, budget, and audit controls as other funds of the Board.
    (f) The Board may accept voluntary contributions. Such 
contributions shall be free from any encumbrance by the donor and the 
Board shall retain complete control of their use. The Board may receive 
funds from outside sources with approval of the Secretary for specific 
authorized projects.
    (g) The Board shall reimburse the Secretary for all expenses 
incurred by the Secretary in the implementation, administration, 
enforcement, and supervision of this subpart, including all referendum 
costs in connection with this subpart.
    (h) For fiscal years beginning 3 years after the date of the 
establishment of the Board, the Board may not expend for 
administration, maintenance, and the functioning of the Board an amount 
that is greater than 15 percent of the assessment and other income 
received by and available to the Board for the fiscal year. For 
purposes of this limitation, reimbursements to the Secretary, and other 
Board expenses outlined in guidance provided by the Secretary, shall 
not be considered administrative costs.
    (i) The Board may establish an operating monetary reserve and may 
carry over to subsequent fiscal years excess funds in any reserve so 
established; provided that, the funds in the reserve do not exceed two 
fiscal years' budget of expenses. Subject to approval by the Secretary, 
such reserve funds may be used to defray any expenses authorized under 
this subpart.
    (j) Pending disbursement of assessments and all other revenue under 
a budget approved by the Secretary, the Board may invest assessments, 
and all other revenues collected under this subpart in:
    (1) Obligations of the United States or any agency of the United 
States;
    (2) General obligations of any State or any political subdivision 
of a State;
    (3) Interest bearing accounts or certificates of deposit of 
financial institutions that are members of the Federal Reserve System;
    (4) Obligations fully guaranteed as to principal and interest by 
the United States; or
    (5) Other investments as authorized by the Secretary.


Sec.  1240.46  Financial statements.

    (a) The Board shall prepare and submit financial statements to the 
Department on a quarterly basis, or at any other time as requested by 
the Secretary. Each such financial statement shall include, but not be 
limited to, a balance sheet, income statement, and expense budget. The 
expense budget shall show expenditures during the time period covered 
by the report, year-to-date expenditures, and the unexpended budget.
    (b) Each financial statement shall be submitted to the Department 
within 30 calendar days after the end of the time period to which it 
applies.
    (c) The Board shall submit to the Department an annual financial 
statement within 90 calendar days after the end of the fiscal year to 
which it applies.


Sec.  1240.47  Assessments.

    (a) The Board's programs and expenses shall be paid by assessments 
on producers of natural grass sod products in the United States, other 
income of the Board, and other funds available to the Board.
    (b) Each natural grass sod producer shall be required to pay an 
assessment to the Board in the amount of one-tenth (\1/10\ th) of one 
penny ($0.01) per square foot, or the equivalent thereof, of all 
natural grass sod products that the natural grass sod producer sells in 
the United States.
    (c) Twenty-four months after this subpart becomes effective and 
periodically thereafter, the Board shall review the assessment rate 
and, if so approved by a vote of at least two-thirds (\2/3\) of the 
Board, submit a recommendation for a change in the assessment rate to 
the Secretary. The assessment rate may not exceed one-eighth (\1/8\ th) 
of one penny ($0.01) per square foot of natural grass sod products sold 
without approval by a majority of natural grass sod producers in a 
referendum conducted pursuant to the procedures in this part.
    (d) Upon the effective date of this subpart, all natural grass sod 
producers shall be responsible for maintaining proper and sufficient 
sales receipts and records in order to accurately calculate their 
assessments owed to the Board pursuant to this subpart. After each 
quarterly period, or such other time period set by the Board, natural 
grass sod producers shall calculate the amount of assessments they owe 
the Board and remit such payment to the Board no later than the last 
calendar day of the month following the end of the quarterly period, or 
such other time period set by the Board, in which the natural grass sod 
products were sold.
    (e) If any natural grass sod producer fails to pay the assessment 
within 60 calendar days of the date it is due, the Board may impose a 
late payment charge and interest. The one-time late payment charge 
shall be equal to 10 percent of the assessments due before interest 
charges have accrued. In addition to the late payment charge, 1.5 
percent per month interest on the outstanding balance, including any 
late payment charge and accrued interest, will be added to any accounts 
for which payment has not been received by the Board within 60 calendar 
days after the assessments are due. Such interest will continue to 
accrue monthly until the outstanding balance is paid to the Board. 
Persons failing to remit total assessments due in a timely manner may 
also be subject to actions under Federal debt collection procedures or 
other means as the Board recommends to the Secretary.
    (f) The Board may accept advance payment of assessments from any 
natural grass sod producer that will be credited toward any amount for 
which that person may become liable. The Board may not pay interest on 
any advance payment.
    (g) If the Board is not in place by the date the first assessments 
are to be collected, the Secretary shall receive assessments and shall 
return such assessments, and any interest earned to the Board when it 
is formed.


Sec.  1240.48  Exemptions from assessments.

    (a) A natural grass sod producer (producer) who operates under an 
approved National Organic Program (7 CFR part 205) (NOP) organic 
production or handling system plan may be exempt from the payment of 
assessments under this part, provided that:
    (1) Only agricultural products certified as ``organic'' or ``100 
percent organic'' (as defined in the NOP) are eligible for exemption;
    (2) The exemption shall apply to all certified ``organic'' or ``100 
percent organic'' (as defined in the NOP) products of a producer 
regardless of whether the agricultural commodity subject to the 
exemption is produced by a person that also produces conventional or 
nonorganic agricultural products of the same agricultural commodity as 
that for which the exemption is claimed;
    (3) The producer maintains a valid certificate of organic operation 
as issued under the Organic Foods Production Act of 1990 (7 U.S.C. 
6501-6522) (OFPA) and the NOP regulations issued under OFPA (7 CFR part 
205); and

[[Page 99167]]

    (4) Any producer so exempted shall continue to be obligated to pay 
assessments under this part that are associated with any agricultural 
products that do not qualify for an exemption under this section.
    (b) To apply for exemption under this section, a producer shall 
submit a request to the Board on an Organic Exemption Request Form 
(form AMS-15) at any time during the year initially, and annually 
thereafter on or before January 1, for as long as the producer 
continues to be eligible for the exemption.
    (c) The request for exemption shall include the following:
    (1) The applicant's full name, company name, address, telephone and 
fax numbers, and email address;
    (2) Certification that the applicant maintains a valid certificate 
of organic operation issued under OFPA and NOP;
    (3) Certification that the applicant produces organic products 
eligible to be labeled ``organic'' or ``100 percent organic'' under 
NOP;
    (4) A requirement that the applicant attach a copy of their 
certificate of organic operation issued by a USDA-accredited certifying 
agent under OFPA and NOP;
    (5) Certification, as evidenced by signature and date, that all 
information provided by the applicant is true; and
    (6) Such other information as may be required by the Board, with 
the approval of the Secretary.
    (d) If a producer 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) An exempt producer shall provide a copy of the Certificate of 
Exemption to each person to whom the producer sells natural grass sod 
products.
    (f) The producer shall maintain records showing the exempt 
producer's name and address and the exemption number assigned by the 
Board.
    (g) The exemption will apply at the first reporting period 
following the issuance of the Certificate of Exemption.

Promotion, Research, and Information


Sec.  1240.50  Programs.

    (a) The Board shall develop and submit to the Secretary for 
approval programs authorized by this subpart. Such programs shall 
provide for promotion, research, information and other activities, 
including consumer and industry information and advertising.
    (b) No program shall be implemented prior to its approval by the 
Secretary. Once a program is so approved, the Board shall take 
appropriate steps to implement it.
    (c) The Board must evaluate each program authorized under this 
subpart to ensure that it contributes to an effective and coordinated 
program of research, promotion, and information. The Board must submit 
the evaluations to the Secretary. If the Board finds that a program 
does not contribute to an effective program of promotion, research, or 
information, then the Board shall terminate such program.
    (d) No program authorized under this subpart shall reference a 
brand or trade name of any natural grass sod product without the 
approval of the Board and the Secretary.


Sec.  1240.51  Independent evaluation.

    At least once every 5 years, the Board shall authorize and fund 
from funds otherwise available to the Board, an independent evaluation 
of the effectiveness of this subpart and the programs conducted by the 
Board pursuant to the Act. The Board shall submit to the Secretary, and 
make available to the public, the results of each periodic independent 
evaluation conducted under this section.


Sec.  1240.52  Patents, Copyrights, Trademarks, Inventions, Product 
Formulations, and Publications.

    (a) Any patents, copyrights, trademarks, inventions, product 
formulations, and publications developed through the use of funds 
received by the Board under this subpart shall be the property of the 
U.S. Government, as represented by the Board, and shall along with any 
rents, royalties, residual payments, or other income from the rental, 
sales, leasing, franchising, or other uses of such patents, copyrights, 
trademarks, inventions, product formulations, or publications, inure to 
the benefit of the Board, shall be considered income subject to the 
same fiscal, budget, and audit controls as other funds of the Board, 
and may be licensed subject to approval by the Secretary. Upon 
termination of this subpart, Sec.  1240.73 shall apply to determine 
disposition of all such property.
    (b) Should patents, copyrights, trademarks, inventions, product 
formulations, or publications be developed through the use of funds 
collected by the Board under this subpart together with funds 
contributed by another organization or person, the ownership and 
related rights to such patents, copyrights, trademarks, inventions, 
product formulations, or publications shall be determined by an 
agreement between the Board and the party contributing funds toward the 
development of such patents, copyrights, trademarks, inventions, 
product formulations, or publications in a manner consistent with 
paragraph (a) of this section, subject to the approval by the 
Secretary.

Reports, Books, and Records


Sec.  1240.60  Reports.

    (a) Natural grass sod producers will be required to provide 
periodically to the Board such information as the Board, with the 
approval of the Secretary, may require. Such information may include, 
but not be limited to:
    (1) The name and contact information of the natural grass sod 
producer;
    (2) The quantity of natural grass sod products sold;
    (3) The date that any assessments were paid; and
    (4) The natural grass sod producer's taxpayer identification number 
(TIN), employer identification number (EIN), or other identification as 
may be applicable.
    (b) Such information shall be reported to the Board no later than 
the 30th calendar day of the month following the end of the quarterly 
period in which the natural grass sod products were sold and shall 
accompany the collected payment of assessments as specified in Sec.  
1240.47. First quarter data (January-March) shall be reported to the 
Board no later than the April 30th; second quarter data (April-June) 
shall be reported no later than July 31st; third quarter data (July-
September) shall be reported no later than October 31st; and fourth 
quarter data (October-December) shall be reported no later than January 
31st of the following marketing year.
    (c) In addition to the information required to be regularly 
reported to the Board, the Board may request additional information 
from natural grass sod producers as deemed necessary by the Board, 
subject to approval by the Secretary.


Sec.  1240.61  Books and records.

    Each natural grass sod producer shall maintain any books and 
records necessary to carry out the provisions of this subpart and 
regulations issued thereunder, including such records as are necessary 
to verify any required reports. Such books and records must be made 
available during normal business hours for inspection by the Board's or 
Secretary's employees or agents. Natural grass sod producers must 
maintain the books and records for 3 years beyond the fiscal year to 
which they apply.

[[Page 99168]]

Sec.  1240.62  Confidential treatment.

    All information obtained from books, records, or reports under the 
Act, this subpart, and the regulations issued thereunder shall be kept 
confidential by all persons, including all employees and former 
employees of the Board and all officers and employees and former 
officers and employees of contracting and subcontracting agencies or 
agreeing parties having access to such information. Such information 
shall not be available to Board members or natural grass sod producers. 
Only those persons having a specific need for such information solely 
to effectively administer the provisions of this subpart shall have 
access to such information. Only such information so obtained as the 
Secretary deems relevant shall be disclosed by them, and then only in a 
judicial proceeding or administrative hearing brought at the direction, 
or at the request, of the Secretary, or to which the Secretary or any 
officer of the United States is a party and involving this subpart. 
Nothing in this section shall be deemed to prohibit:
    (a) The issuance of general statements based upon the reports of 
the number of persons subject to this subpart or statistical data 
collected therefrom, which statements do not identify the information 
furnished by any person; and
    (b) The publication, by direction of the Secretary, of the name of 
any person who has been adjudged to have violated this part, together 
with a statement of the particular provisions of this part or subpart 
violated by such person.


Sec.  1240.63  Qualification of natural grass sod organizations.

    (a) Organizations receiving qualification from the Secretary will 
be entitled to submit requests for funding to the Board pursuant to 
Sec.  1240.38. Only one natural grass sod producer organization per 
State may be qualified and only one natural grass sod producer 
organization per group of States may be qualified.
    (b) Any natural grass sod producer organization whose primary 
purpose is to represent natural grass sod producers within a State or 
group of States may request qualification.
    (c) Qualification shall be based, in addition to other available 
information, upon a factual report submitted by the organization that 
shall contain such information as the Secretary deems relevant for 
making such determination, including the following:
    (1) The geographic territory covered by the organization's active 
membership;
    (2) The nature and size of the organization's active membership and 
proportion of active membership accounted for by natural grass sod 
producers;
    (3) The extent to which natural grass sod producers are represented 
on the organization's board of directors;
    (4) Evidence of stability and permanency of the organization;
    (5) Sources from which the organization's operating funds are 
derived;
    (6) The functions of the organization; and
    (7) The ability and willingness of the organization to further the 
purpose and objectives of the Act.
    (d) The primary consideration in determining the eligibility of an 
organization shall be whether its natural grass sod producer membership 
consists of a sufficiently large number of natural grass sod producers 
who produce a relatively significant volume of sod as to reasonably 
warrant its qualification to submit requests for funding to the Board. 
In addition, only those organizations having a board of directors 
composed of a majority of natural grass sod producers shall be 
eligible. Any natural grass sod producer organization found eligible by 
the Secretary under this section will be qualified by the Secretary, 
and the Secretary's determination as to eligibility shall be final.

Miscellaneous


Sec.  1240.70  Right of the Secretary.

    All fiscal matters, programs, contracts, rules or regulations, 
reports, or other substantive actions proposed and prepared by the 
Board shall be submitted to the Secretary for approval.


Sec.  1240.71   Referenda.

    (a) Initial referendum. The Order shall not become effective unless 
the Order is approved by a simple majority (50 percent plus one vote) 
of the natural grass sod producers voting in the initial referendum 
that have been engaged in the production and sale of natural grass sod 
products in the United States during a representative period determined 
by the Secretary. Each natural grass sod producer may cast one vote in 
the initial referendum.
    (b) Subsequent referenda. The Secretary shall conduct subsequent 
referenda:
    (1) Not later than 7 years after this Order becomes effective and 
every 7 years thereafter, to determine whether natural grass sod 
producers favor the continuation of this subpart. This subpart shall 
continue if it is approved by a simple majority (50 percent plus one 
vote) of natural grass sod producers voting in the subsequent 
referendum that have been engaged in the production and sale of natural 
grass sod products in the United States during a representative period 
determined by the Secretary. Each natural grass sod producer may cast 
one vote in the subsequent referenda;
    (2) At the request of two-thirds of the members of the Board 
established in this subpart;
    (3) At the request of 10 percent or more of the total number of 
eligible natural grass sod producers; or
    (4) At any time as determined by the Secretary.
    (c) Referendum procedures. The initial referendum and all 
subsequent referenda shall be conducted pursuant to the procedures 
outlined in subpart B.


Sec.  1240.72  Suspension or termination.

    (a) The Secretary shall suspend or terminate this part or subpart 
or a provision thereof, if the Secretary finds that this part or 
subpart or a provision thereof obstructs or does not tend to effectuate 
the purposes of the Act, or if the Secretary determines that this 
subpart or a provision thereof is not favored by eligible natural grass 
sod producers in a subsequent referendum.
    (b) The Secretary shall suspend or terminate this subpart at the 
end of the fiscal year whenever the Secretary determines that its 
suspension or termination is favored by a simple majority of eligible 
natural grass sod producers voting in a subsequent referendum.
    (c) If, as a result of a subsequent referendum, the Secretary 
determines that this subpart is not approved, the Secretary shall:
    (1) Not later than 180 calendar days after making the 
determination, suspend or terminate the collection of assessments under 
this subpart.
    (2) As soon as practical, suspend or terminate activities under 
this subpart in an orderly manner.


Sec.  1240.73  Proceedings after termination.

    (a) Upon termination of this subpart, the Board shall recommend to 
the Secretary up to five of its members to serve as trustees for the 
purpose of liquidating the Board's affairs. Such persons, upon 
designation by the Secretary, shall become trustees of all funds and 
property then in the possession or under control of the Board, 
including claims for any funds unpaid or property not delivered, or any 
other existing claim at the time of such termination.
    (b) The said trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;

[[Page 99169]]

    (2) Carry out the obligations of the Board under any contracts or 
agreements entered into pursuant to this subpart;
    (3) From time to time account for all receipts and disbursements 
and deliver all property on hand, together with all books and records 
of the Board and trustees, to such person or persons as the Secretary 
directs; and
    (4) Upon request of the Secretary, execute such assignments or 
other instruments necessary or appropriate to vest in such persons 
title and right to all funds, property, and claims vested in the Board 
or the trustees pursuant to this subpart.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to this subpart shall be subject to 
the same obligations imposed upon the Board and upon the trustees.
    (d) Any residual funds not required to defray the necessary 
expenses of liquidation shall be turned over to the Secretary to be 
disposed of, to the extent practical, to one or more organizations in 
the United States whose mission is generic natural grass sod promotion, 
research, and information programs.


Sec.  1240.74   Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this subpart or of any regulation issued pursuant 
thereto, or the issuance of any amendment to either thereof, shall not:
    (a) Affect or waive any right, duty, obligation, or liability which 
shall have arisen, or which may thereafter arise in connection with any 
provision of this subpart, or any regulation issued thereunder;
    (b) Release or extinguish any violation of this subpart or any 
regulation issued thereunder; or
    (c) Affect or impair any rights or remedies of the United States, 
or of the Secretary or of any other persons, with respect to any such 
violation.


Sec.  1240.75  Personal liability.

    No member or employee of the Board shall be held personally 
responsible, either individually or jointly with others, in any way 
whatsoever, to any person for errors in judgment, mistakes, or other 
acts, either of commission or omission, as such member or employee, 
except for acts of dishonesty or willful misconduct.


Sec.  1240.76   Severability.

    If any provision of this subpart is declared invalid or the 
applicability of it to any person or circumstances is held invalid, the 
validity of the remainder of this subpart, or the applicability thereof 
to other persons or circumstances shall not be affected thereby.


Sec.  1240.77   Amendments.

    Amendments to this subpart may be proposed from time to time by the 
Board or any interested person affected by the provisions of the Act, 
including the Secretary.


Sec.  1240.78   OMB control number.

    The control numbers assigned to the information collection 
requirements by the OMB pursuant to the PRA of 1995, 44 U.S.C. chapter 
35, are OMB control numbers 0505-0001 (Background Information Form), 
0581-0093 (Organic Exemption), and 0581-0349.
* * * * *

Melissa Bailey,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2024-28389 Filed 12-9-24; 8:45 am]
BILLING CODE P`