[Federal Register: May 6, 2008 (Volume 73, Number 88)]
[Rules and Regulations]
[Page 25397-25417]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06my08-21]
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Part IV
Department of Agriculture
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Agricultural Marketing Service
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7 CFR Part 1221
Sorghum Promotion, Research, and Information Order; Final Rule
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 1221
[Docket No. AMS-LS-07-0056, LS-07-02]
Sorghum Promotion, Research, and Information Order
AGENCY: Agricultural Marketing Service (AMS), USDA.
ACTION: Final rule.
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SUMMARY: This rule establishes an industry-funded promotion, research,
and information program for sorghum, which includes but is not limited
to, grain sorghum, sorghum forage, sorghum hay, sorghum haylage,
sorghum billets, and sorghum silage. For the purpose of clarity, the
term sorghum means all the above mentioned types of sorghum unless
specifically identified otherwise. The Sorghum Promotion, Research, and
Information Order (Order) is implemented under the authority of the
Commodity Promotion, Research, and Information Act of 1996 (Act). The
Order will establish a national Sorghum Promotion, Research, and
Information Board (Board) comprised initially of 13 sorghum producers.
Producers and importers will pay assessments based on the value of the
sorghum they produce or import. A referendum will be conducted 3 years
after assessments begin to determine if sorghum producers and importers
favor the program.
DATES: Effective May 7, 2008. Collection of assessments and appropriate
reporting will begin on July 1, 2008.
FOR FURTHER INFORMATION CONTACT: Kenneth R. Payne, Chief, Marketing
Programs Branch; Telephone: (202) 720-1115; Fax: (202) 720-1125, or E-
mail Kenneth.Payne@usda.gov.
SUPPLEMENTARY INFORMATION: This Order is issued pursuant to the Act of
1996 (7 U.S.C. 7411-7425) enacted April 4, 1996, hereafter referred to
as the Act. A proposed Order was published November 23, 2007 [72 FR
65842].
Executive Order 12988
This final rule has been reviewed under Executive Order 12988,
Civil Justice Reform. It is not intended to have retroactive effect.
Section 524 of the Act provides that the Act 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 Act, a person subject to the 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 may request a modification of the Order or an exemption from
the Order. Any petition filed challenging the Order, any provision of
the Order, or any obligation imposed in connection with the Order,
shall be filed within 2 years after the effective date of the Order,
provision, or obligation subject to challenge in the petition. The
petitioner will have the opportunity for a hearing on the petition.
Thereafter, the Secretary will issue a ruling on the petition. The Act
provides that the district court of the U.S. for any district in which
the petitioner resides or conducts business shall have the jurisdiction
to review a final ruling on the petition if the petitioner files a
complaint for that purpose not later than 20 days after the date of the
entry of the Secretary's final ruling.
Executive Order 13132
This final rule has been reviewed under Executive Order 13132,
Federalism. This Order directs agencies to construe, in regulations and
otherwise, a Federal statute to preempt State law only when the statute
contains an express preemption provision. Section 524 of the Act
provides that the Act shall not affect or preempt any other Federal or
State law authorizing promotion or research relating to an agricultural
commodity.
Six States currently have State-legislated sorghum research and
promotion programs. In accordance with the Act, this final rule will
not preempt any of these State-legislated programs. Further, section
1221.112(j) of the final Order provides for an annual allocation to
State programs based on the State's proportional contribution of total
assessments collected by the national sorghum checkoff program.
In 2005 and 2006, representatives of the six State-legislated
sorghum promotion programs were among other sorghum industry
representatives who met with AMS representatives to discuss the
possibility of implementing a national sorghum checkoff program. State
program representatives participated in the development of the
provisions of the proposed Order during these meetings and through
direct communication with the National Sorghum Producers (NSP) during
the drafting of its proposal.
Not only were the States informed throughout the development of the
national sorghum checkoff program, they were instrumental in the
sorghum industry's decision to institute a national sorghum checkoff
program. In addition to receiving support from NSP and the U.S. Grains
Council, an organization that is dedicated to expanding export
opportunities and markets for sorghum and sorghum products, industry
and producer organizations from four of the largest grain sorghum
production States: Kansas, Nebraska, Texas, and Oklahoma expressed
their support for the proposed Order. New Mexico, a producer of grain
sorghum and sorghum silage, also expressed support. Within these
States, the following organizations indicated their interest in
establishing the program: The Texas Grain Sorghum Board; the Texas
Grain Sorghum Association; the Kansas Grain Sorghum Producers
Association; the Kansas Grain Sorghum Commission; the Nebraska Grain
Sorghum Producers Association; the Oklahoma Grain Sorghum Association;
and the New Mexico Grain Sorghum Association.
Executive Order 12866
This final rule has been determined not significant for purposes of
Executive Order 12866 and therefore has not been reviewed by the Office
of Management and Budget (OMB).
Regulatory Flexibility Act
In accordance with the Regulatory Flexibility Act (RFA) (5 U.S.C.
601-612), USDA is required to examine the impact of this rule on small
entities. The purpose of the 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 Act authorizes generic programs of promotion, research, and
information for agricultural commodities. Congress found that it is in
the national public interest and vital to the welfare of the
agricultural economy of the United States to maintain and expand
existing markets and develop new markets and uses for agricultural
commodities through industry-funded, Government-supervised, commodity
promotion programs.
The Order is intended to develop and finance, through assessments,
an effective and coordinated program of promotion, research, and
information to maintain and expand the markets for sorghum. While the
Order will impose certain reporting and recordkeeping requirements on
persons subject to the Order, the information required under the Order
can generally be compiled from records currently maintained.
Under the Order, first handlers will remit assessments collected
from
[[Page 25399]]
producers to the Board. First handlers will also be required to keep
records and provide information to the Board that it deems necessary.
Currently, first handlers already complete and maintain the same or
similar information for existing State sorghum and soybean programs, as
well as for the Soybean Checkoff Program (7 CFR part 1220). Reporting
forms will require the minimum information necessary to fulfill the
intent of the Act. Such records and reports will be retained for 2
years beyond the fiscal year of their applicability. First handlers
will also be required to make available, to the Secretary, their books
and records in order to determine compliance with the Order.
In addition to paying assessments, producers and importers will
have a reporting and recordkeeping burden. This burden relates to
producers and importers who will seek nomination to serve on the Board,
request an organic exemption, request a refund of assessments paid, or
vote in a nation-wide referendum. The Order requires producers and
importers to keep records and to provide information to the Board or
the Secretary when requested and to keep records to qualify for a
refund. However, it is not anticipated that producers will be required
to regularly submit assessment and other related information to the
Board. Information may be obtained through an audit of producers'
records to confirm information provided by first handlers or as part of
the Board's compliance program.
When seeking nominations to serve on the Board, producers will be
required to complete two forms that would be submitted to the
Secretary.
Any producer paying assessments may request a refund of assessments
paid by submitting an application to the Board. Refunds will be made
only if the program is not approved in referendum.
With regard to imports of sorghum, U.S. Customs and Border
Protection (Customs) will collect and remit assessments from importers
to the Board. Customs will also provide information to the Board
regarding the value and volume of imported sorghum, and therefore it is
not anticipated that importers will have any regular reporting burden.
The Order requires importers to keep records and to provide information
to the Board or the Secretary, when requested, and to keep records to
qualify for a refund. Information may be obtained through an audit of
importers' records to confirm information provided by Customs or as
part of the Board's compliance program.
Importers will have similar reporting and recordkeeping
requirements as producers concerning nominations to serve on the Board,
organic exemptions, refunds of assessments paid, or referendums.
The Small Business Administration (SBA) [13 CFR 121.201] defines
small agricultural service businesses as those whose annual receipts
are less than $6.5 million. According to the National Agricultural
Statistics Service (NASS) 2002 Census of Agriculture, there are 22
grain sorghum producing States and approximately 3,000 wholesale grain
merchants who will be considered first handlers under the Order, in
these 22 States. By calculating the average values of product sold by
grain merchants in each of the 22 grain sorghum producing States, one
can determine that 16 States have wholesale grain industries where, on
average, the wholesalers each sold in excess of $6.5 million per year.
This gives a rough approximation that as many as 73 percent of
wholesale grain elevators in grain sorghum producing States may have
annual sales in excess of $6.5 million and therefore are determined not
to be small businesses.
Based upon data collected from State sorghum boards, NSP estimates
that approximately 1,150 first handlers of grain sorghum will be
affected. This number represents the number of wholesale grain
merchants who buy grain sorghum of the 3,000 wholesale grain merchants
approximated. Although State promotion, research, and information
programs do not currently exist for sorghum forage, sorghum hay,
sorghum haylage, sorghum billets, or sorghum silage, NSP estimates that
approximately 700 first handlers of these products will be affected.
This was determined through discussions with State sorghum promotions
program representatives and State organizations representing sorghum
producers. We assume that some of these 700 first handlers will be
small businesses.
Under SBA criteria, importers of sorghum are considered
agricultural service businesses. The Order defines an importer as a
person who imports more than 1,000 bushels of grain sorghum, or 5,000
tons of sorghum forage, sorghum hay, sorghum haylage, sorghum billets,
or sorghum silage during a calendar year.
At present, a relatively small amount of grain sorghum is imported
into the United States, and the exact number of sorghum importers who
will be affected by the proposed Order is not known. It is believed
that most grain sorghum imports are related to sorghum seed breeding
activities at the present time. For the purpose of this RFA, we
therefore will assume that some importers are small businesses.
For 2005, United States International Trade Commission (USITC)
database reports indicate that there were 24,549 bushels of grain
sorghum imported, valued at $96,800. Based upon 2005 NASS data, this
total would equal approximately 0.01 percent of the value of the
domestic grain sorghum crop. In 2006, USITC database reports indicate
that there were 2,547 bushels of grain sorghum imported, valued at
$46,000. Using 2006 NASS data, this would again equal approximately
0.01 percent of the value of the domestic grain sorghum crop. Using
data from USITC reports for January--August 2007, the amount of grain
sorghum imported is currently 75,497 bushels, valued at $374,000. Based
upon NASS projections for the upcoming marketing year, grain sorghum
imports would equal approximately 0.02 percent of the value of the 2007
domestic grain sorghum crop.
The SBA defines small agricultural producers as those having annual
receipts of not more than $750,000 annually. According to the NASS 2002
Census of Agriculture, the average grain sorghum farm size is 204
acres. The USDA Economic Research Service's (ERS) Feed Grains Data Base
Yearbook Tables indicate that for 2002 the weighted average farm price
for grain sorghum was $2.32 per bushel and that, on average, 50.6
bushels per acre were produced. Based on these figures, the average
value of grain sorghum produced would be $23,948. Accordingly, most
grain sorghum producers subject to this Order are determined to be
small businesses.
Sufficient data are not available to make similar calculations for
the burden of assessments on sorghum forage, sorghum hay, sorghum
haylage, sorghum billets, sorghum silage and sorghum seed producers.
For the purpose of this RFA, we will assume that these producers are
small businesses.
ERS' report Feed Outlook, August 14, 2007, forecasted grain sorghum
production of 475 million bushels in 2007, making it the largest
production year since 2001. If this level of production were realized,
the proposed Board would collect $9.4 million in assessments on grain
sorghum. While ERS does not provide a production forecast for sorghum
silage, NASS reports that 4,642,000 tons of sorghum silage was produced
in 2006. NASS does not estimate the value of sorghum silage, but at $18
per ton, an estimate provided by NSP, the Board would collect
approximately $2.9 million from
[[Page 25400]]
sorghum silage. Were production and prices to remain at these record
levels, the Board could collect approximately $12.3 million from
domestic production of grain and silage sorghum and $2,244 from
imported grain sorghum.
An estimate of the grain sorghum assessments that would have been
paid by producers in 2002 can be calculated by multiplying the average
farm size (204 acres) by the average production (50.6 bushels per acre)
by the price received ($2.32 per bushel) by the proposed grain sorghum
assessment rate of 6 tenths of one percent of the value of the grain
sorghum (0.006). The burden to each farm can be estimated to be
approximately $144 for 2002. In this example, the year 2002 was
selected because it is the most recent NASS Census of Agriculture
reporting farm size.
Sufficient data are not available to make a more accurate forecast
of assessment collections on sorghum forage, sorghum hay, sorghum
haylage, sorghum billets, and sorghum silage production. In addition to
sorghum first handlers, importers, and producers, there are other
entities affected by the Order. State, regional and national
organizations representing sorghum producers and importers will have a
role in the Order. There will be some burden on producer organizations
that want to participate in the program by becoming certified to make
nominations to the Board. USDA estimates that two organizations within
each State will request certification.
Shortly after the effective date of this Order, USDA will publish a
notice in the Federal Register announcing that it will accept
applications for certification of organizations to participate in the
nomination of Board members pursuant to criteria in section 1221.107.
Certified organizations will be required to re-submit applications for
certification periodically. It is anticipated that this will occur
every 5 years.
Additionally, there will be a burden on State sorghum producer
organizations requesting qualification by the Secretary to receive
funding from the Board pursuant to section 1221.112(j). Only one
organization within each State will be qualified by the Secretary to
receive funding from the Board, and preference will be given to
existing State legislated sorghum promotion organizations.
Organizations will be required to submit an application for
qualification to the Secretary pursuant to section 1221.128. It is
estimated that one organization will be qualified per State although it
is not required that each State have a qualified organization.
Qualified organizations receiving funding through the Order will be
required to re-submit applications for qualification periodically. It
is anticipated that this will occur every 5 years.
While the exact number of certified and qualified organizations is
not known, nonetheless their membership, to a great extent, are
producers who are largely small entities, and, when applicable,
importers who we assume some of which are small entities.
The Act provides authority to tailor a program according to the
individual needs of an industry. Section 514 of the Act provides for
orders applicable to producers, first handlers, and other persons in
the marketing chain as appropriate. Provision is made for permissive
terms in an order in Section 516 of the Act and authorizes an order to
provide for coverage of 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. In addition, Section 518 of the Act provides for a
referendum to ascertain approval of an order to be conducted either
prior to its going into effect or within 3 years after assessments
first begin under the order. An order also may provide for its approval
in a referendum to be based upon (1) a majority of those persons
voting; (2) persons voting for approval who represent a majority of the
volume of the agricultural commodity; or (3) a majority of those
persons voting for approval who also represent a majority of the volume
of the agricultural commodity. Section 515 of the Act provides for
establishment of a board from among producers, first handlers, and
others in the marketing chain as appropriate.
This Order includes provisions for a delayed referendum. Approval
will be based upon the majority of those persons voting for approval
who were engaged in the production or importation of sorghum during the
representative period established by the Secretary.
We have not identified any relevant Federal rules that are
currently in effect that duplicate, overlap, or conflict with this
rule.
Paperwork Reduction Act
In accordance with OMB regulation (5 CFR part 1320) that implements
the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35) (PRA), AMS
has submitted to OMB a new information collection that has been
assigned OMB control number 0581-0246.
Abstract: The information collection requirements in the request
are essential to carry out the intent of the Act.
Under the Order, first handlers will be required to collect
assessments from producers, file reports with, and submit assessments
to the Board. While the Order will impose certain recordkeeping
requirements on first handlers, information required under the Order
can be compiled from records currently maintained. Such records must be
retained for at least 2 years beyond the marketing year of their
applicability. Each first handler will be responsible for the
collection of assessments and remittance of the assessments to the
Board. It is anticipated that the bulk of assessments will be submitted
to the Board by first handlers who purchase sorghum. A producer will be
considered a first handler when that person markets sorghum of their
own production directly to a consumer.
The Order's provisions have been carefully reviewed, and every
effort has been made to minimize any unnecessary recordkeeping costs or
requirements.
The forms on which information is to be collected require the
minimum information necessary to effectively carry out the requirements
of the Order. 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 forms are designed to be
simple and easy to understand and place as small a burden as possible
on the person required to file the information.
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. In addition, the
information to be included on these forms is not available from other
sources because such information relates specifically to individual
producers and first handlers who are subject to the provisions of the
Act. Therefore, there is no practical method for collecting the
required information without the use of these forms.
For the purpose of estimating the cost of reporting and
recordkeeping, $18.55 is used, which is the mean hourly earnings of
first line supervisors and managers of farming, fishing, and forestry
workers as obtained from the U.S. Department of Labor Bureau of Labor
Statistics National Compensation Survey of Occupational Wages.
[[Page 25401]]
Information collection requirements include:
(1) 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
producer or importer nominated to serve on the Board.
Respondents: Producers and importers.
Estimated Number of Respondents: (26 for initial nominations to the
Board, 8 in the second year, 10 in the third year, and 8 in the fourth
year, sequencing 8, 10 and 8 annually, thereafter).
Estimated Number of Responses per Respondent: 0.33.
Estimated Total Annual Burden on Respondents: 4.29 hours for the
initial nominations to the Sorghum Board and sequencing 1.3, 1.6, and
1.3 annually thereafter.
Total Cost: (Number of respondents x responses per respondent x
$18.55) $79.58 initial, and sequencing $24.12, $29.68, and $24.12
annually thereafter.
(2) 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 0.1 hour per record keeper
maintaining such records.
Recordkeepers: Producers, importers, and first handlers.
Estimated Number of Recordkeepers: 35,050.
Estimated Total Recordkeeping Hours: (Number of recordkeepers x 0.1
hours) 3,502 hours.
Total Cost: (Number of record keepers x 0.1 hour per record keeper
x $18.55) $64,962.
(3) Remittance Form by Each First Handler.
Estimate of Burden: Public reporting burden for this collection of
information is estimated to average 0.25 hour per first handler.
Respondents: First handlers.
Estimated Number of Respondents: (1,150 first handlers of grain
plus 700 first handlers of silage and hay) 1,850.
Estimated Number of Responses per Respondent: 12.
Estimated Total Annual Burden on Respondents: (Number of first
handlers x total number of reports x 0.25 hour per report) 5,550 hours.
Total Cost: (5,550 hours x $18.55) $102,952.50.
(4) Application for Refund Form.
Estimate of Burden: Public reporting burden for this collection of
information is estimated to average 0.167 hour per response.
Respondents: Producers and importers.
Estimated Number of Respondents: (25 percent of 33,200 total
producers) 8,300.
Estimated Number of Responses per Respondent: 6.
Estimated Total Annual Burden: (8,300 producers x 6 reports per
year x 0.167 hour per report) 8,317 hours.
Total Cost: (8,317 hours x $18.55) $154,280.
(5) Application for Certification of Organizations.
Estimate of Burden: Public reporting burden for this collection of
information is estimated to average 0.5 hour per response.
Respondents: National, State, or regional sorghum associations or
organizations.
Estimated Number of Respondents: (Two organizations certified in
each of 22 sorghum producing States) 44.
Estimated Number of Responses per Respondent: (Estimating
recertification every 5 years) 0.2.
Estimated Total Annual Burden: (44 organizations x 0.2 responses x
0.5 hour per response) 4.4 hours.
Total Cost: (4.4 hours x $18.55) $81.62.
(6) Application for Qualification of Organizations.
Estimate of Burden: Public reporting burden for this collection of
information is estimated to average 0.5 hour per response.
Respondents: State associations or organizations.
Estimated Number of Respondents: (1 organization certified in each
of 22 sorghum producing States) 22.
Estimated Number of Responses per Respondent: (Estimating
requalification every 5 years) 0.2.
Estimated Total Annual Burden: (22 organizations x 0.2 responses x
0.5 hour per response) 2.2 hours.
Total Cost: $40.81.
(7) Nominations for Appointments to the Sorghum Board Form.
Estimate of Burden: Public reporting burden for this collection of
information is estimated to average 0.5 hour per response.
Respondents: National, State, or regional sorghum associations and
organizations.
Estimated Number of Respondents: (Certified organizations) 22.
Estimated Number of Responses per Respondent: one per year.
Estimated Total Annual Burden: (22 organizations x 1 response x 0.5
hour per response) 11 hours.
Total Cost: (11 hours x $18.55) $204.
(8) Organic Exemption Form.
Estimate of Burden: Public recordkeeping burden for this collection
of information is estimated to average 0.5 hour per exemption form.
Respondents: Producers and importers.
Estimated Number of Respondents: 10.
Estimated Number of Responses per Respondent: (Annual exemption
application required) 1.0.
Estimated Total Annual Burden on Respondents: 5.0 hour.
Total Cost: (5 hours x $18.55) $92.75.
(9) Referendum Ballot.
Estimate of Burden: Public recordkeeping burden for this collection
of information is estimated to average 0.1 hour per referendum ballot.
Respondents: Producers and importers.
Estimated Number of Respondents: 8,300.
Estimated Number of Responses per Respondent: (Estimating
referendums every 5 years) 0.2.
Estimated Total Annual Burden on Respondents: 166 hours.
Total Cost: (166 hours x $18.55) $3,079.30.
In the proposed rule published November 23, 2007, [72 FR 65842]
comments were invited on: (a) Whether the proposed collection of
information is necessary for the proper performance of functions of the
proposed Order and the USDA's oversight of the program, including
whether the information will have practical utility; (b) the accuracy
of USDA's estimate of the burden of the proposed collection of
information, including the validity of the methodology and assumption
used; (c) ways to enhance the quality, utility, and clarity of the
information to be collected; and (d) ways to minimize the burden of the
collection of information on those who are to respond, including the
use of appropriate automated, electronic, mechanical, or other
technological collection techniques or other forms of information
technology.
No separate comments were received regarding the information
collection section. However, one comment was received concerning
recordkeeping and is discussed in the comment section.
Background
NSP submitted a draft Order to USDA on December 28, 2006, along
with letters of support from nine industry organizations. These letters
represented producer organizations from five sorghum producing States,
NSP, and the U.S. Grains Council.
According to NSP, a national promotion, sorghum checkoff program
will allow the industry to address a number of production and marketing
problems it currently faces. Three main
[[Page 25402]]
problems currently affecting sorghum producers are as follows: Lack of
yield improvement and technology; aggressive market competition; and
lagging ethanol research. The sorghum industry has declined in recent
years in both production and acreage.
State grain sorghum promotion, research, and information programs
currently exist in Kansas, Texas, Nebraska, Oklahoma, Louisiana, and
Arkansas. These promotion, research, and information programs are based
on volumetric assessments, so as volumes of grain sorghum change, so do
the promotion, research, and information assessments. This variability
leads to sporadic research funding. Also, State programs cannot
generate a sufficient scale of funding to effectuate large coordinated
research programs.
The national sorghum checkoff program addresses both of these
concerns.
The assessment provisions of the Order are based on value, so
variability of funding will lessen. Also, the revenue generated by a
national sorghum checkoff program is anticipated to reach levels that
can adequately fund large coordinated research programs in sorghum.
The proponent requested that the implementation referendum be
conducted within 3 years after assessments begin, which is consistent
with the provisions of the Act. Approval will be based upon a majority
of eligible persons voting for approval who have engaged in the
production or importation of sorghum during the representative period
established by the Secretary.
The program will be administered by a 13-member Board appointed by
the Secretary from industry nominations. The Board will recommend to
the Secretary the assessment rate, programs and projects, budgets, and
any rules and regulations that might be necessary for the
administration of the program. The Board will consist of five producers
nominated from the State with the largest production, three from the
State with the second largest production, one from the State with the
third largest production, and four producers to serve as at-large
representatives, among which two representatives are appointed from
States other than the top three sorghum producing States.
Importers will be entitled to one seat if the value of assessments
collected on imported sorghum reaches or exceeds the production of the
State with the third largest sorghum production. Currently, imports of
grain sorghum are very limited and not at a value that would trigger
the provision of appointing an importer representative to serve on the
Board. For example, Nebraska was the third largest producer of grain
sorghum in 2006 at approximately 19,200,000 bushels. Imports of grain
sorghum in 2006, according to USITC data, were 2,547 bushels.
For the purpose of establishing the initial Board, USDA grain
sorghum production data will be used to determine the top three grain
sorghum producing States. Section 515(3) of the Act provides for
periodic reapportionment of the Board. The Act provides that at least
once every 5 years, but not more frequently than once every 3 years the
Board shall review the geographical distribution of the production of
the agricultural commodity covered by the Order including the quantity
or value. If warranted, the Board will recommend reapportionment of the
Board membership.
The key to understanding reapportionment in the Order is the
definition of production. For the purpose of reapportionment under
Section 1221.100 of the Order, production means the total assessments
collected by the Board during the last 5 crop years, excluding the high
and low years.
Section 1221.100(f) of the Order specifically uses the term
production and does not refer to a quantity such as ``bushels''
harvested per acre. The intent of this is to use assessment collections
as the basis for reapportionment.
The Order uses this definition since it best accounts for the
difference in geographic regions found in the sorghum belt where
sorghum prices vary widely. Furthermore, NASS does not report pricing
for sorghum forage, sorghum hay, sorghum haylage, sorghum billets, and
sorghum silage, so the Board assessment records will provide a method
to track the value of all types of sorghum. Using the assessment
collections will permit the Board to analyze sorghum production in a
consistent manner and base reapportionment decisions on a value as
provided for in the Act.
The Order establishes an assessment in section 1221.116 that will
be paid by sorghum producers and importers. The assessment will be
collected and remitted to the Board by first handlers. The term
producer is defined in the proposal as any person who is engaged in the
production and sale of sorghum in the United States and who owns or
shares the ownership and risk of loss of the sorghum.
Importer is defined as any person importing more than 1,000 bushels
of grain sorghum; or 5,000 tons of sorghum forage, sorghum hay, sorghum
haylage, sorghum billets, or sorghum silage into the United States in a
calendar year as a principal or as an agent, broker, or consignee of
any person who produces or purchases sorghum outside of the United
States for sale in the United States, and who is listed as the importer
of record for such sorghum. First handler is defined as the first
person who buys or takes possession (excluding a common or contract
carrier of sorghum owned by another) of more than 1,000 bushels of
grain sorghum; or 5,000 tons of sorghum forage, sorghum hay, sorghum
haylage, sorghum billets, or sorghum silage from producers in a
calendar year for marketing. The term first handler includes a producer
who markets sorghum of the producer's own production directly to
consumers. It may also mean the Commodity Credit Corporation (CCC) in
any case in which sorghum is pledged as collateral for a loan issued
under any CCC price support loan program and the sorghum is forfeited
by the producer in lieu of loan repayment.
The definition of first handler is constructed so that any
commercial grain elevator will meet the requirement of the definition
by buying more than the minimum amount of grain sorghum in a calendar
year and therefore will assess all grain sorghum purchased. The
definition of first handler is designed to exclude small cattle feeding
operations and dairies that would buy less than 1,000 bushels of grain
sorghum or 5,000 tons of sorghum forage, sorghum hay, sorghum haylage,
sorghum billets, or sorghum silage. The Order does not have a de
minimis clause applicable to producers, but it does define first
handler and importer in a way as to exclude very small entities.
As mentioned above, the approximately 1,850 first handlers of
sorghum will collect and remit assessments to the Board. First handlers
will remit assessments to the Board on a monthly basis along with a
report detailing the volume of sorghum on which assessments were
collected as well as identifying the State in which the sorghum was
produced. Information regarding the origin of the sorghum's production
is necessary so that the Board can make recommendations to USDA
regarding reapportionment of its membership.
Section 1221.119 of the Order provides for refunds. Any producer or
importer from whom an assessment is collected and remitted to the
Board, or who pays an assessment directly to the Board, through the
announcement of the results of the implementing referendum,
[[Page 25403]]
upon failure of the referendum will then have the right to receive from
the Board a refund of assessments paid. Any producer or importer
requesting a refund will be required to submit an application on the
prescribed form to the Board within 60 days from the date the
assessments were paid by such producer or importer, but no later than
the date the results of the required referendum are announced by the
Secretary. Section 1221.112(j) provides for an allocation of a portion
of all assessments collected to be made available to qualified State
sorghum producer organizations. Each year the Board will establish an
allocation amount of no less than 15 percent but no more than 25
percent of the total assessments collected on all sorghum available for
any fiscal period, less the expenses incurred by the Secretary for
administration and supervision of the Order. The funds can be made
available for use by qualified sorghum producer organizations pursuant
to section 1221.128 for State programs of generic promotion, research,
and information. Amounts allocated by the Board for State generic
promotion, research, and information programs will be based on requests
submitted to the Board by qualified sorghum producer organizations. An
important aspect of the availability of an allocation to a qualified
State organization is that the organization will not automatically
receive a 15-25 percent allocation. Each year the qualified
organizations will have to submit requests for the funds, which can be
for no more than their allocated amount. A detailed plan describing
projects with budgets would be a part of this request to demonstrate
that the allocation will be used in a way consistent with the Act and
Order.
An example of how an allocation amount could be determined is as
follows:
A particular qualified State organization contributes 40 percent
of the total assessments collected by the Board for the previous
annual fiscal period. Total assessments collected less the USDA
expenses for the previous fiscal period were $12,300,000. The Board
has set the allocation amount at 25 percent. The qualified
organization representing that State may submit requests up to
$1,230,000 ($12,300,000 x 40 percent x 25 percent).
The Order provides for exemptions from assessments under specific
conditions. Any importer of less than and including 1,000 bushels of
grain sorghum; or 5,000 tons of sorghum forage, sorghum hay, sorghum
haylage, sorghum billets, or sorghum silage per calendar year may claim
an exemption from the assessment required under section 1221.116. An
importer desiring an exemption must apply to the Board for a
certificate of exemption and certify that the importer will import less
than the above stated quantities of sorghum. The Board will then issue
a certificate of exemption and the importers who receive a certificate
of exemption will be eligible for reimbursement of assessments
collected by Customs. The Board may require persons receiving an
exemption from assessments to provide to the Board reports on the
disposition of exempt sorghum and, in the case of importers, proof of
payment of assessments.
A producer or importer who operates under an approved National
Organic Program (NOP) (7 CFR part 205) system plan; produces only
products that are eligible to be labeled as 100 percent organic under
the NOP may be exempt from the payment of assessments. The producer or
importer must submit a request to the Board annually as long as the
producer continues to be eligible for the exemption.
The Order is summarized as follows: Sections 1221.1 through 1221.32
of the Order define certain terms such as producer, handler, and
importer which are used in the Order.
Sections 1221.100 through 1221.111 include provisions relating to
the Board. These provisions cover establishment and membership,
nominations nominee's agreement to serve, appointment, term of office,
vacancies, removal, certification of organizations, procedure,
compensation and reimbursement, powers and duties, and prohibited
activities.
Section 1221.112 through 1221.120 covers expenses and assessments.
Sections 1221.112 through 1221.115 include provisions relating to
budget and expenses, financial statements, operating reserve, and
investment of funds. Section 1221.116 through 1221.120 include
provisions related to assessments and specify assessment rates, and the
imposition of late payment charges. Also included are provisions for
exemptions, refund, escrow accounts, refunds, and procedures for
obtaining a refund. Section 1221.116 was changed by AMS in the proposed
rule to specify that if Customs does not collect an assessment from an
importer, the importer is responsible for paying the assessment to the
Board.
Section 1221.221 through 1221.223 covers programs, plans, and
projects detailing the types of activities to be engaged by the Board.
Also covered are provisions for an independent evaluation and the
protection of patents, copyrights, inventions, trademarks, information,
publications, and product formulations derived from assessment funded
activities.
Section 1221.124 through 1221.127 includes provisions for reporting
requirements on first handlers and importers; books and records; use of
information; and the confidential treatment of all personally
identifiable information obtained from books and records of persons
subject to the Order.
Section 1221.128 covers the qualification by the Secretary of State
organizations that would be eligible to receive funding from the Board.
Section 1221.128 was changed by AMS in the proposed rule by adding
paragraph (e) to express the primary considerations in determining the
qualification of an organization to receive funding.
Sections 1221.129 through 1221.138 discusses the rights of the
Secretary; referenda; suspension or termination; proceeding after
termination; effects of termination or amendment; personal liability;
separability; amendments; rules and regulations; and OMB numbers.
The changes suggested by the commenters are discussed below, along
with changes made by USDA upon further review. Also, USDA has made
other miscellaneous changes for the purpose of clarity and accuracy.
For the readers' convenience, the discussion of comments is organized
by topic headings.
Comments
USDA published a proposed Order on November 23, 2007 [72 FR 65849]
with a request for comments on the proposal to be received by January
22, 2008. USDA received 215 timely comments on the proposed Order. Five
comments were received after the close of the comment period. No new
issues were raised by these comments. Twenty-three of the comments were
from State and national organizations representing producers or
providing agricultural related services from the States of Arkansas,
Nebraska, Kansas, Texas, Oklahoma, and Colorado. One of these
organizations represents itself as the largest importer of sorghum into
the United States. Five of these organizations submitted comments in
opposition to the proposed Order. One hundred sixty-seven comments were
submitted by producers in support of the proposed Order from the States
of Arkansas, Colorado, Kansas, Texas, New Mexico, South Dakota,
Nebraska, and Missouri. Twenty-two producers submitted comments
opposing the proposal in part or in whole.
[[Page 25404]]
Supporting Comments
One hundred thirty-seven comments identified the pooling of
resources as a significant benefit of a national mandatory sorghum
checkoff program. Several of these comments cited the Soybean and
Cotton Checkoff programs as successful farmer funded self-help programs
that have contributed substantially to the benefit of their respective
industries. These comments stressed that for sorghum to remain a viable
rotation crop, a national sorghum checkoff program must be implemented.
Some comments addressed funded research as a resulting benefit of
establishing a national mandatory sorghum checkoff program.
Eight comments, in support of the proposal, specifically identified
the proposed funding allocation to States as an appropriate way to help
support State level research and promotion initiatives while
emphasizing the financial strength of a national sorghum checkoff
program.
One hundred twelve comments, in support of the proposal, identified
weed control as an area where a national sorghum checkoff program could
fund major research. Comments from producers and large and small
production States specifically mentioned shatter cane and other grasses
as important areas of weed control research that could be performed by
the national sorghum checkoff program.
Sixty-four comments addressed the need for national level research
relating to the development of cellulosic ethanol production. These
comments were submitted by producers of both grain and forage type
sorghums.
Sixty-eight comments suggested that research into improving sorghum
yields has been historically underfunded, especially when compared to
the tremendous amount of resources devoted by private companies into
corn and soybean yield research. These comments were submitted by
producers from large and small production States.
Twenty comments specifically mentioned that a national sorghum
checkoff program could more effectively fund sorghum breeding and
genetics programs. Some of these comments suggested that improved
varieties would encourage greater planted acreage and production, which
would expand and stabilize sorghum markets.
Twenty-six comments, in favor of the proposal, specifically
mentioned that a national sorghum checkoff program could address the
issues of developing new markets, domestic and foreign, for grain
sorghum.
Assessment Rate Cap
Seventy-two supporting comments recommended changing text in
section 1221.116, Assessments, to clarify that the assessment rates on
grain and silage may not be raised above a cap of 1 percent. These
comments suggest changing the text in section 1221.116 so that the
maximum modification of the assessment rate would be 0.4 percent of net
market value in 1221.116(c)(1) and 0.65 percent of net market value in
1221.116(c)(2). This would cap the assessment rates for all sorghum at
1 percent of net market value. We agree that a clarification is
appropriate. However, USDA has changed section 1221.116(c)(1), section
1221.116(c)(2), and section 1221.116(e) so that the Order reflects the
intent of the original submission by the proponent. The cap for the
assessment rates at 1 percent of the net market value will appear only
in section 1221.116(e). Further, any change in the assessment rates
must be promulgated through regulations approved by the Secretary.
Other Changes for Consistency With NSP Submission
Several supportive commenters recommended five changes to the
regulatory text in the Order to make the text consistent with the
intent of the original submission of the proponent and to correct
miscellaneous grammatical errors.
The comments recommended changing 1221.104(c)(5) by adding ``at
large national representatives shall also have their staggered terms
assigned by the Secretary''; removing an unnecessary semicolon from
1221.117; correcting a section reference in 1221.123 from 1221.131 to
1221.132; changing an ``or'' to ``and'' in 1221.130(b)(3) so that a
petition for a referendum would require 10 percent of eligible
producers and importers (A similar change was also supported by an
organization that opposes the proposal); adding ``and Importers'' to
1221.130(c) to reflect that both producers and importers, who are
eligible, may vote in referendums. These changes have merit and have
been made in the final rule.
Opposing Comments
Twenty-two comments from producers and five comments from
organizations were submitted opposing the implementation of the
proposal or portions thereof. A number of topics were discussed.
Board Membership
Five organizations, opposing the proposal, submitted comments
regarding Board membership and asserted that the proposed Board
structure favors the largest production States. Further, that the
largest production State would control 40 percent of the Board's
membership. They believe that this would allow the largest production
States to influence the spending of resources for promotion and
research to the exclusion of small production States.
One commenter suggested that as an alternative to creating a
national sorghum checkoff program, the sorghum industry should continue
under the current system of State legislated and voluntary State level
sorghum checkoff programs and be encouraged to establish a coordinating
checkoff board comprised of State programs.
One commenter recommended adoption of a method of apportionment
that would prevent any State from having more than 25 percent of Board
seats. One commenter noted that the Board would have broad powers under
1221.112 and 1221.116 and that the interest of small production States
would not be represented under the proposed Board structure.
To address this issue, the apportionment method suggested by the
commenter distributes Board seats using a combination of representation
assigned to the top five production States and dividing the remainder
of sorghum production areas into four regions. States and regions would
then be allotted representation based on the value production. States
or regions with production valued at less than $75 million would get
one member. States of regions with production valued between $75
million and $225 million would receive two members, and States or
regions with production valued above $225 million would receive three
members. Importers would receive membership using the same criteria
based on the value of imported product. Under this system the size of
the Board would expand and contract as acreage and crop prices change,
and a five year average of crop value would be calculated annually to
determine Board membership.
Other commenters reviewed this alternative representation mechanism
and offered comments regarding its merits. These comments noted that
under the alternative representation mechanism, the number of Board
members would continue to increase as sorghum production increases thus
potentially leading to an overly large board and increased
administrative costs associated with travel and Board meetings. These
commenters also suggested that the alternative representation plan does
not
[[Page 25405]]
substantially contribute to minimizing majority membership for the
largest production States.
The alternative apportionment method suggested by the commenter is
significantly different from the proposal and has not been subject to
public comment. Nonetheless, USDA believes that a board comprised of 13
members is an appropriate and reasonable size for the anticipated
revenue of the national sorghum checkoff program. Further, based on
review of the comments, grain sorghum production is heavily
concentrated in three States. Based on 2007 NASS production data, three
States account for 79 percent of the total United States production.
Therefore, USDA believes it reasonable to have Board representation
reflect this production. Additionally, under the representation
mechanism proposed in the Order, certified organizations are
responsible for the submission of qualified nominees from all
geographic areas to fill at-large positions for nomination and
appointment to the Board by the Secretary. Also, representation on the
Board will be reviewed at least once every five years and the Board may
recommend to the Secretary that representation be altered to reflect
any change in geographical distribution of domestic sorghum production.
Sorghum imported into the United States will also be reviewed. Board
members are appointed by the Secretary and are expected to make
decisions that would benefit the entire sorghum industry. Therefore,
USDA is finalizing this section as proposed.
Allocation of Assessments to States
Several opposing commenters stated that the ``pass-back''
allocation (section 1221.112(j) is too small and recommended an
increase to 50 percent citing the Beef Promotion and Research Order and
the Soybean Promotion, Research, and Consumer Information Order as
examples. Other commenters suggested that the funding allocation should
be automatically provided to States at 50 percent. Several commenters
asserted that the proposal's funding allocation provision will not
provide adequate funding to maintain State checkoff programs given
different research needs in small production States. Several of these
opposing commenters suggested that research needs are different in
small production States because grain sorghum utilization varies among
small States. They asserted that small production States are interested
in weed control research and verification and not interested in
breeding programs or ethanol research. Further, they stated that
without proper representation on the Board, combined with loss of
individual assessment funding, they believed research vital to their
interest will go unfunded. They contended, their assessments would go
to fund research that would not benefit small production States, and
university researchers in small production States would lose funding.
They noted that other national programs, such as the Soybean Promotion,
Research, and Consumer Information Order in particular, have
implemented programs that left State programs at least as well off
after implementation of the national program.
As previously noted, eight comments, in support of the proposal,
specifically identified the proposed funding allocation to States as an
appropriate way to help support State level research and promotion
initiatives while emphasizing the financial strength of a national
sorghum checkoff program.
Seven supportive commenters rebutted these comments opposed to the
proposed State funding allocation. Several of the supporting commenters
noted that the State funding allocation was not intended to be a
funding mechanism for State checkoff boards but, rather a method to
fund promotion and research initiatives specific to States that are not
currently addressed by national promotion and research initiatives.
Some commenters noted that, currently, State checkoffs are responsible
for costs associated with collecting assessments while under the
proposal they would have no such costs because the national Board would
collect assessments. These commenters suggested that, in addition to
the State funding allocation, these qualified State programs could
apply for and receive additional funding from the Board on a project-
by-project basis.
One supportive commenter responding to the opposing comments on
State funding allocation stated that the commenter had visited
personally with a number of university researchers regarding the State
funding allocation. This commenter stated that these researchers had no
reservation competing on a national level for research funding and that
in doing so felt that the research proposals with the most merit would
rise to priority and receive funding. Other supportive commenters noted
that while the Beef Promotion and Research Order and the Soybean
Promotion, Research, and Consumer Information Order retain 50 percent
of assessments, other checkoffs do not.
The Lamb Promotion, Research, and Information Order and Blueberry
Promotion, Research, and Information Order provide no funding
allocation back to States. The Cotton Research and Promotion Order, the
oldest program, passes back 5 percent to States and the Peanut
Promotion, Research, and Information Order currently returns 20 percent
to States. The National Pork Promotion, Research, and Consumer
Information Order, on average, returns about 16 percent to States.
While several existing national checkoff programs provide varying
degrees of funding to State research, promotion, and information
efforts, some of these programs have percentages established by statute
while other programs have percentages established in their order's
provisions. The proposed Order provided for an annual allocation to
State programs based on a State's proportional contribution of total
assessments collected by the national sorghum checkoff program. The
allocation amount would be no less than 15 percent but no more than 25
percent of total assessments collected. 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.
Also, a 50 percent funding allocation should be subject to public
comment. Further, the national program does not preempt existing State
checkoff programs. Thus, States are not precluded from establishing or
continuing a State checkoff program in addition to a national sorghum
checkoff Program. Accordingly, these suggestions are not adopted.
Referendum
A number of opposing commenters stated they were against a delayed
referendum. Some commenters cited their organization's policies that
state that commodity checkoff programs should be approved by producer
referendum prior to implementation or change of a program. Other
commenters suggested that no one should be subject to assessment
without the opportunity to vote in a referendum beforehand.
A number of supporting commenters reviewed the opposing comments
regarding the delayed referendum and submitted additional comments.
These commenters stated that accurately identifying all sorghum
producers who would be eligible to vote in the referendum is not
possible prior to the collection of assessments, thereby making it
impractical to conduct an up-front referendum. Other commenters cited
that it would be problematic and impractical to conduct an up-front
referendum due to the significant expense of a referendum when there
are
[[Page 25406]]
no funds available to reimburse USDA for the expense.
Section 518 of the Act provides for both required referenda and
optional referenda for determining whether persons covered by an order
favor the order. The Act provides for an optional referendum procedure
that authorizes an up-front referendum for which, USDA has historically
required the proponent industry to post a bond well in advance of an
order's effective date to cover all costs associated with development
of an order as well as referendum expenses.
The Act allows for a referendum to be conducted up to three years
after the effective date of the Order. This allows all persons subject
to the Order a sufficient amount of time to observe the management and
functioning of the new program before making a decision regarding its
continuation. Further, the Order provides an opportunity to request and
receive a refund of assessments if the initial referendum fails.
Accordingly, USDA is finalizing the Order with the delayed referendum
requirement. Prior to the referendum, USDA will issue regulations for
public comment regarding the process in which the referendum will be
conducted.
First Handlers
A number of comments and requests for clarification were made
regarding first handlers and their role in the sorghum promotion,
research, and information program. Among the topics raised were:
Reimbursement payments to first handlers for cost associated with
collections; economic impact analysis; redefining first handlers;
recording the State of origin of sorghum; first handler representation
on the Board; clarifying the time of assessment collection; and
clarification of the date of sale.
Payments to First Handlers
A commenter stated the commenter's belief that first handlers would
bear the burden of implementing the checkoff and, therefore requested
that USDA consider reimbursing first handlers up to 10 percent of
sorghum checkoff assessments collected to offset the direct costs
incurred in collecting, submitting, and maintaining records for the
national sorghum promotion, research, and information program. While
first handlers are subject to the Order, the Act does not provide for
such reimbursement of administrative expenses to first handlers or
anyone else in the marketing chain. Accordingly, USDA does not accept
this proposed change.
Definition of First Handler
A commenter suggested that the definition of first handler be
changed because 1,000 bushels is too low of a limit to exclude a
handler from their obligation to pay the assessment. This commenter
also suggested that grain buyers may not know at the beginning of the
year how much sorghum they will buy, thus placing them in the position
of either refunding assessments if they don't reach the 1,000 bushel
limit or assessing after-the-fact once they reach the trigger. Either
way, the commenter suggested, that this would cause an undue burden on
the handler.
We disagree. The definition of first handler is constructed so that
every commercial grain elevator, under current industry practices,
would exceed the threshold since they typically buy more than the
minimum threshold amount of sorghum in a calendar year. Therefore, all
sorghum purchased by first handlers would be assessed.
The definition of first handler is designed to exclude small cattle
feeding operations and dairies that would buy less than 1,000 bushels
of grain sorghum or 5,000 tons of sorghum forage, sorghum hay, sorghum
haylage, sorghum billets, or sorghum silage. According to NASS data,
the average U.S. sorghum production in 2007 was 74.2 bushels per acre.
Any commercial grain elevator that purchases 13.5 acres of sorghum will
have met the definition. According to the NASS' 2002 Census of
Agriculture, the average grain sorghum farm size was 204 acres. If a
commercial grain elevator has even one grain sorghum producing
customer, they would likely meet the limit more than 15 times over.
Accordingly, USDA believes that the 1,000 bushel limit is appropriate
and will not burden commercial grain buyers. Accordingly, this
suggestion to change the definition of first handler is not adopted.
State of Origin of Sorghum
A commenter suggested that the requirement for first handlers to
keep records of the State of Origin of their sorghum purchases is a
burden that is not part of their regular course of business. This
requirement is essential to the Board's determination of
representation, which is based on assessment collections for each
State. The information is also needed in identifying the appropriate
State to receive funding allocations. A similar requirement is part of
the Soybean Promotion, Research, and Consumer Information Order's
recordkeeping requirements as well as other State programs and has not
proven to be a substantial burden. The burden estimated under this
program is minimal and necessary for carrying out the provisions of the
Order. Accordingly, this comment is not adopted.
First Handler Representation on Board
A commenter criticized the lack of representation of first handlers
on the Board stating that first handlers deserved representation
because of the disproportionate economic impact they will incur as a
result of implementing the checkoff. We disagree. The program's effect
on first handlers is not unreasonable. Further, the representation
provisions of the Order are appropriate as they afford representation
to those persons who pay the assessments. Accordingly, this comment is
not adopted.
Time of Assessment Collection
A commenter asked for clarification of the term handled as it
relates to the timing of the assessment collection. While the
collection of assessments is on handled sorghum the assessment occurs
at the time the producer sells the sorghum and the net market value is
established. Also, the commenter suggested that the wording of section
1221.124(1) be changed to clarify that records would only be required
for sorghum bushels on which assessments have been collected. We
disagree. The information required in subparagraph (a)(1) is needed by
the Board to carry out its responsibilities under the Order.
Accordingly, no change is made as a result of this comment.
Date of Sale
A commenter asked for clarification of the date of sale. The
commenter suggested that in the context of the grain trade, a better
term might be date of settlement which would reflect the date when the
assessment is deducted from the producer's payment in fulfillment of a
contract. USDA believes that this comment has merit, but also believes
that a more appropriate term would be date on which assessments were
paid. Therefore, USDA is changing 1221.125(b)(5) to read as follows:
``(5) date on which assessments were paid; and''. Further, this change
makes the term consistent with 1221.124(4). The commenter also
suggested making a similar change in section 1221.116. However, USDA
does not believe any change is necessary in this section.
[[Page 25407]]
Miscellaneous Comments
Nomination and Appointment
Two commenters, one in support and one in opposition to the Order,
expressed concern that USDA removed a paragraph of text from the
original submission that would have allowed the Board to make
adjustments in procedures for the nomination to, appointment to, or
representation on the Board without amending the Order. This sentence
would have been included in 1221.100(f) at the end of the paragraph.
The Order provides for a review every five years of sorghum production
and importation to determine whether there is equitable representation
on the Board. However, given the organization and structure of the
Board, rulemaking is appropriate and necessary to make such
adjustments. Accordingly, no changes are made as a result of these
comments.
Assessment Remittance
Several commenters requested that USDA consider changing the
assessment remittance requirement from monthly to quarterly. An
appropriate remittance schedule is critical to the Board's functioning.
While no change is made to the final rule, USDA, in consultation with
the Board, will review this issue after the program has been fully
implemented. Consequently, unless otherwise prescribed in future
regulations, assessments are due by the 15th of the following month in
which assessments are collected.
Freezing of Assessment Rate
A commenter suggested that the assessment rate be frozen for a
period of three years until after the referendum is conducted. We
disagree. Section 1221.116(e) provides that the Board may make
recommendations to the Secretary to raise or lower the assessment rate
by no more than 0.2 percent of net market value received by the
producer in any given year. We believe that the Board needs such
discretion to recommend changes to assessments in order to fully
exercise its authority to develop promotion, research, and information
programs, plans, and projects. Accordingly, no change to the Order's
provisions is made as a result of this comment.
Non-Preemption of State Checkoffs
A commenter asked for clarification regarding the non-preemption of
State checkoffs due to concern that recordkeeping for a State and
national checkoff would be burdensome. While the national sorghum
program imposes certain reporting and recordkeeping requirements,
information required under the Order can be completed from records
already maintained. Such information is the same or similar to existing
State sorghum and soybean programs, as well as the Soybean Checkoff
program (7 CFR part 1220). Six States currently have State-legislated
sorghum research and promotion programs. Further, the Order's
provisions have been carefully reviewed and every effort has been made
to minimize any unnecessary reporting or recordkeeping requirements.
Accordingly, no change is made as a result of this comment.
Economic Impact Analysis
A commenter requested that USDA conduct a comprehensive economic
impact analysis prior to implementing the Order. We believe that
comprehensive analysis of the Order has been conducted under applicable
Executive Orders, the Regulatory Flexibility Act and the Paperwork
Reduction Act. In addition, in 2005 and 2006, representatives of the
six State-legislated sorghum promotion programs were among other
sorghum industry representatives who met with AMS representatives to
discuss the possibility of implementing a national sorghum checkoff
program. State program representatives participated in the development
of the provisions of the proposed Order during these meetings and
through direct communication with the NSP during the drafting of its
proposal.
Books and Records
AMS is changing section 1221.125(a) to make clear that producers as
well as first handlers and importers are required to maintain and make
available during normal business hours for inspection by employees or
agents of the Board or the Secretary, such books and records as are
necessary to carry out the provisions of the Order and regulations.
Such changes better conform Order language to the provisions of the
Act.
Budget and Expenses
AMS is changing section 1221.112(l) to make clear that remaining
funds available to the Board after calculating State allocations should
be applied, to the extent practicable, to promotion, research, and
information programs, plans, or projects provided for in section
1221.121. Also, the term ``generic'' and a more detailed description of
the request made by qualified sorghum producer organizations is added
to section 1221.112 for clarity.
After consideration of all relevant materials presented, including
the proposal and comments received, the Department has determined that
this Order is consistent with and will effectuate the purposes of the
1996 Act.
It is found that good cause exist for not postponing the effective
date of this rule until 30 days after publication in the Federal
Register (5 U.S.C. 553) because given that the collection and
remittance of assessments begin on July 1, 2008, the initial Board
should be appointed as soon as possible in order to carry out the
purposes of the program.
List of Subjects in 7 CFR Part 1221
Administrative practice and procedure, Advertising, Sorghum and
sorghum product, Consumer information, Marketing agreements, Reporting
and recordkeeping requirements.
0
For the reasons set forth in the preamble, Title 7 of Chapter XI of the
Code of Federal Regulations is amended to add part 1221 to read as
follows:
PART 1221--SORGHUM PROMOTION, RESEARCH, AND INFORMATION ORDER
Subpart A--Sorghum Promotion, Research, and Information Order
Definitions
Sec.
1221.1 Act.
1221.2 Board.
1221.3 Calendar year.
1221.4 Certified organization.
1221.5 Conflict of interest.
1221.6 Crop year.
1221.7 Customs.
1221.8 Department.
1221.9 First handler.
1221.10 Fiscal period.
1221.11 Handle.
1221.12 Harvest.
1221.13 Importer.
1221.14 Information.
1221.15 Market.
1221.16 Net market price.
1221.17 Net market value.
1221.18 Order.
1221.19 Part and subpart.
1221.20 Person.
1221.21 Producer.
1221.22 Production.
1221.23 Promotion.
1221.24 Qualified sorghum producer organization.
1221.25 Referendum.
1221.26 Research.
1221.27 Secretary.
1221.28 Sorghum.
1221.29 State.
1221.30 Suspend.
1221.31 Terminate.
1221.32 United States.
Sorghum Promotion, Research, and Information Board
1221.100 Establishment and representation.
[[Page 25408]]
1221.101 Nominations.
1221.102 Nominee's agreement to serve.
1221.103 Appointment.
1221.104 Term of office.
1221.105 Vacancies.
1221.106 Removal.
1221.107 Certification of organizations.
1221.108 Procedure.
1221.109 Compensation and reimbursement.
1221.110 Powers and duties.
1221.111 Prohibited activities.
Expenses and Assessments
1221.112 Budget and expenses.
1221.113 Financial statements.
1221.114 Operating reserve.
1221.115 Investment of funds.
1221.116 Assessments.
1221.117 Exemptions.
1221.118 Refund escrow accounts.
1221.119 Refunds.
1221.120 Procedure for obtaining a refund.
Promotion, Research, and Information
1221.121 Programs, plans, and projects.
1221.122 Independent evaluation.
1221.123 Patents, copyrights, inventions, trademarks, information,
publications, and product formulations.
Reports, Books, and Records
1221.124 Reports.
1221.125 Books and records.
1221.126 Use of information.
1221.127 Confidential treatment.
Qualification of Sorghum Producer Organizations
1221.128 Qualification.
Miscellaneous
1221.129 Right of the Secretary.
1221.130 Referenda.
1221.131 Suspension or termination.
1221.132 Proceedings after termination.
1221.133 Effect of termination or amendment.
1221.134 Personal liability.
1221.135 Separability.
1221.136 Amendments.
1221.137 Rules and regulations.
1221.138 OMB control numbers.
Subparts B through E--[Reserved]
Authority: 7 U.S.C. 7411-7425 and 7 U.S.C. 7401.
Subpart A--Sorghum Promotion, Research, and Information Order
Definitions
Sec. 1221.1 Act.
Act means the Commodity Promotion, Research, and Information Act of
1996 (7 U.S.C. 7411-7425), and any amendments thereto.
Sec. 1221.2 Board.
Board or Sorghum Promotion, Research, and Information Board means
the administrative body established pursuant to Sec. 1221.100, or such
other name as recommended by the Board and approved by the Secretary.
Sec. 1221.3 Calendar year.
Calendar year means the 12-month period from January 1 through
December 31.
Sec. 1221.4 Certified organization.
Certified organization means any organization that has been
certified by the Secretary pursuant to this part as eligible to submit
nominations for membership on the Board.
Sec. 1221.5 Conflict of interest.
Conflict of interest means a situation in which a representative or
employee of the Board has a direct or indirect financial interest in a
person or business that performs a service for, or enters into a
contract with, the Board for anything of economic value.
Sec. 1221.6 Crop year.
Crop year means the time period by which the USDA reports crop
production for sorghum and is indicated by the calendar year in which
sorghum is normally harvested.
Sec. 1221.7 Customs.
Customs means the U.S. Customs and Border Protection of the U.S.
Department of Homeland Security.
Sec. 1221.8 Department.
Department means the United States Department of Agriculture or any
officer or employee of the USDA to whom authority has heretofore been
delegated, or to whom authority may hereafter be delegated, to act in
the Secretary's stead.
Sec. 1221.9 First handler.
First handler means the first person who buys or takes possession
(excluding a common or contract carrier of sorghum owned by another) of
more than 1,000 bushels of grain sorghum; or 5,000 tons of sorghum
forage, sorghum hay, sorghum haylage, sorghum billets, or sorghum
silage from producers in a calendar year for marketing. The term first
handler includes a producer who markets sorghum of the producer's own
production directly to consumers. In any case in which sorghum is
pledged as collateral for a loan issued under any Commodity Credit
Corporation price support loan program and the sorghum is forfeited by
the producer in lieu of loan repayment, the Commodity Credit
Corporation will be considered a first handler.
Sec. 1221.10 Fiscal period.
Fiscal period means the 12-month period ending on December 31 or
such other consecutive 12-month period as shall be recommended by the
Board and approved by the Secretary.
Sec. 1221.11 Handle.
Handle means to engage in the receiving or acquiring of sorghum and
in the shipment (except as a common or contract carrier of sorghum
owned by another) or sale of sorghum, or other activity causing sorghum
to enter the current of commerce.
Sec. 1221.12 Harvest.
Harvest means combining or threshing sorghum for grain and/or
severing the stalks from the land with mechanized equipment.
Sec. 1221.13 Importer.
Importer means any person importing more than 1,000 bushels of
grain sorghum; or 5,000 tons of sorghum forage, sorghum hay, sorghum
haylage, sorghum billets, or sorghum silage into the United States in a
calendar year as a principal or as an agent, broker, or consignee of
any person who produces or purchases sorghum outside of the United
States for sale in the United States, and who is listed as the importer
of record for such sorghum.
Sec. 1221.14 Information.
Information means information and programs that are designed to
develop new markets and marketing strategies; increase market
efficiency; enhance the image of sorghum on a national or international
basis; and assist producers in meeting their conservation objectives.
These include, but are not exclusive to:
(a) Consumer information, which means any action taken to provide
information to, and broaden the understanding of, the general public
regarding the consumption, use, nutritional attributes, and care of
sorghum;
(b) Industry information, which means information and programs that
will lead to the development of new markets, new marketing strategies,
or increased efficiency for the sorghum industry, and activities to
enhance the image of the sorghum industry.
Sec. 1221.15 Market.
Market means to sell or otherwise dispose of sorghum into
intrastate, interstate, or foreign commerce by buying, distributing, or
otherwise placing sorghum into commerce.
Sec. 1221.16 Net market price.
Net market price means the sales price, or other value, per
volumetric unit, received by a producer for sorghum after adjustments
for any premium or discount.
Sec. 1221.17 Net market value.
Net market value means:
[[Page 25409]]
(a) Except as provided in paragraph (b)and (c) of this section, the
value found by multiplying the net market price by the appropriate
quantity of the volumetric units or the minimum value in a production
contract received by a producer for sorghum after adjustments for any
premium or discount.
(b) For imported sorghum, the total value paid by the importer for
the sorghum as reported on the appropriate Customs form; or
(c) For sorghum pledged as collateral for a loan issued under any
Commodity Credit Corporation price support loan program, the principal
amount of the loan.
Sec. 1221.18 Order.
Order means an order issued by the Secretary under section 514 of
the Act that provides for a program of generic promotion, research, and
information regarding agricultural commodities authorized under the
Act.
Sec. 1221.19 Part and subpart.
Part means the Sorghum 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.
Sec. 1221.20 Person.
Person means any individual, group of individuals, partnership,
corporation, association, cooperative, or any other legal entity.
Sec. 1221.21 Producer.
Producer means any person who is engaged in the production and sale
of sorghum in the United States and who owns, or shares the ownership
and risk of loss of, the sorghum.
Sec. 1221.22 Production.
Production, as used in Sec. 1221.100, means:
(a) for the purpose of establishing the initial Board in paragraphs
(a), (b), (c), (d), and (e) of Sec. 1221.100, the volume of grain
sorghum produced during the last 5 crop years, excluding the high and
low years, and
(b) For the purpose of reapportionment in paragraphs (e) and (f) of
Sec. 1221.100, the total assessments collected by the Board during the
last 5 crop years, excluding the high and low years.
Sec. 1221.23 Promotion.
Promotion means any action taken to present a favorable image of
sorghum to the public and the end-user industry for the purpose of
improving the competitive position of sorghum and stimulating the sale
of sorghum. This includes paid advertising and public relations.
Sec. 1221.24 Qualified sorghum producer organization.
Qualified sorghum producer organization means a qualified State-
legislated sorghum promotion, research, and education commission or
organization, approved by the Secretary. For States without a qualified
State-legislated sorghum promotion, research, and education commission
or organization, qualified sorghum producer organization means any
qualified organization that has the primary purpose of representing
sorghum producers, has sorghum producers as members, and that is
approved by the Secretary.
Sec. 1221.25 Referendum.
Referendum means a referendum conducted by the Secretary pursuant
to the Act whereby producers and importers are provided the opportunity
to vote to determine whether the continuance of this subpart is favored
by a majority of eligible persons voting.
Sec. 1221.26 Research.
Research means any type of test, study, or analysis designed to
advance the knowledge, image, desirability, use, marketability,
production, product development, or quality of sorghum, including, but
not limited to, research relating to yield, nutritional value, cost of
production, new product development, inbred and hybrid development,
nutritional value, health research, and marketing of sorghum.
Sec. 1221.27 Secretary.
Secretary means the Secretary of Agriculture of the United States,
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.
Sec. 1221.28 Sorghum.
Sorghum means any harvested portion of Sorghum bicolor (L.) Moench
or any related species of the genus Sorghum of the family Poaceae. This
includes, but is not limited to, grain sorghum (including hybrid
sorghum seeds, inbred sorghum line seed, and sorghum cultivar seed),
sorghum forage, sorghum hay, sorghum haylage, sorghum billets, and
sorghum silage.
Sec. 1221.29 State.
State means any of the 50 States, the District of Columbia, the
Commonwealth of Puerto Rico, or any territory or possession of the
United States.
Sec. 1221.30 Suspend.
Suspend means to issue a rule under section 553 of title 5, U.S.C.,
to temporarily prevent the operation of an order or part thereof during
a particular period of time specified in the rule.
Sec. 1221.31 Terminate.
Terminate means to issue a rule under section 553 of title 5,
U.S.C., to cancel permanently the operation of an order or part thereof
beginning on a certain date specified in the rule.
Sec. 1221.32 United States.
United States or U.S. means collectively the 50 States, the
District of Columbia, the Commonwealth of Puerto Rico, and the
territories and possessions of the United States.
Sorghum Promotion, Research, and Information Board
Sec. 1221.100 Establishment and representation.
There is hereby established a Sorghum Promotion, Research, and
Information Board, hereinafter called the Board. Representation
includes, but is not limited to, fixed State seats determined by total
production with at-large seats to allow representation from a broad
geographical area. The Board shall initially be composed of 13
representatives, with the maximum number of producers from one State
limited to 6, appointed by the Secretary from nominations as follows:
(a) The largest production State based on total production shall
have 5 sorghum producers to serve as representatives.
(b) The second largest production State based on total production
shall have 3 sorghum producers to serve as representatives.
(c) The third largest production State based on total production
shall have one sorghum producer to serve as a representative.
(d) There shall be 4 sorghum producers to serve as at-large
national representatives with at least two representatives appointed
from States not described in paragraphs (a), (b), and (c) of this
section.
(e) If the value of assessments on imported sorghum reaches or
exceeds the production of the third largest sorghum production State,
there shall be one importer to serve as a representative plus an
additional at-large national representative, with the maximum number of
producers from one State being increased from six to seven.
(f) At least once every 5 years, the Board will review the
geographical distribution of production of sorghum in the United
States, the production of
[[Page 25410]]
sorghum in the United States, and the value of assessments on sorghum
imported into the United States. The review will be based on Board
assessment records and statistics from the USDA. If warranted, the
Board may recommend to the Secretary that representation on the Board
be altered to reflect any changes in geographical distribution of
domestic sorghum production. If, in the review, the Board determines
that the value of assessments on sorghum imported into the United
States exceeds 15 percent of the production of sorghum, the Board shall
recommend to the Secretary that the nomination procedures and
appointments to the Board be altered as necessary or appropriate to
facilitate the equitable representation of importers on the Board.
Sec. 1221.101 Nominations.
All nominations authorized under this section shall be made in the
following manner:
(a) Nominations for State-specific and at-large national seats
shall be obtained by the Secretary from eligible organizations
certified under Sec. 1221.107. Certified eligible organizations
representing producers in a State, or when making nominations for at-
large seats, shall submit to the Secretary at least two nominees for
each vacant seat. If the Secretary determines that a State is not
represented by a certified eligible organization, then the Secretary
may solicit nominations from other organizations or other persons
residing in the State.
(b) If so required pursuant to Sec. 1221.100(f), at least two
nominations for the importer representative shall be submitted by the
Board to the Secretary.
(c) After the establishment of the initial Board, the Secretary
shall announce when a vacancy does or will exist. Nominations for
subsequent Board representatives shall be submitted to the Secretary
not less than 90 days prior to the expiration of the terms of the
representatives whose terms are expiring, in the manner as described in
this section. In the case of vacancies due to reasons other than the
expiration of a term of office, successor Board members shall be
appointed pursuant to section 1221.105.
(d) When there is more than one certified eligible organization
representing a State or when the Secretary solicits nominations from
organizations and persons residing in that State, or when eligible
certified organizations are nominating persons for at-large positions,
eligible certified organizations may caucus and jointly nominate two
qualified producers for each position on the Board for which a
representative is to be appointed. If joint agreement is not reached
with respect to any such nominations, or if no caucus is held, each
eligible organization may submit to the Secretary two nominees for each
appointment to be made to represent that State, or to fill an at-large
position.
Sec. 1221.102 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 sorghum promotion entity 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 under
paragraph (b) of this section.
Sec. 1221.103 Appointment.
From the nominations made pursuant to Sec. 1221.101, the Secretary
shall appoint the representatives of the Board on the basis of
representation provided in Sec. 1221.100.
Sec. 1221.104 Term of office.
(a) The term of office for the representatives of the Board shall
be three years, except for the initial term, pursuant to paragraph (c)
of this section.
(b) Representatives may serve a maximum of 2 consecutive 3-year
terms.
(c) When the Board is first established, the Secretary shall
establish staggered terms as follows:
(1) Largest Production State--2 representatives shall serve a 2-
year term, 1 representative shall serve a 3-year term, and 2
representatives shall serve a 4-year term.
(2) Second Largest Production State--1 representative shall serve a
2-year term, 1 representative shall serve a 3-year term, and 1
representative shall serve a 4-year term.
(3) Third Largest Production State--The representative shall serve
a 3-year term.
(4) At-large national--1 representative shall serve a 2-year term,
2 representatives shall serve a 3-year term, and 1 representative shall
serve a 4-year term.
(5) States with multiple representatives shall have their staggered
terms assigned by the Secretary. At-large national representatives
shall also have their staggered terms assigned by the Secretary.
(6) Representatives serving initial terms of 2 or 4 years shall be
eligible to serve a single term of 3 years after their initial 2- or 4-
year term.
(d) Each representative shall continue to serve until a successor
is appointed by the Secretary and has accepted the position.
(e) Any successor appointed pursuant to Sec. 1221.105 serving 1
year or less may serve two consecutive 3-year terms.
Sec. 1221.105 Vacancies.
To fill any vacancy occasioned by the death, removal, resignation,
or disqualification of any member of the Board, a successor for the
unexpired term of such representative shall be appointed by the
Secretary pursuant to Sec. 1221.103 from the most recent list of
nominations for the position pursuant to Sec. 1221.101 or the
Secretary shall request nominations for a successor pursuant to Sec.
1221.101, except that said nomination and replacement shall not be
required if an unexpired term is less than 6 months.
Sec. 1221.106 Removal.
If the Secretary determines that any person appointed under this
part fails or refuses to perform his or her duties properly or engages
in an act of dishonesty or willful misconduct, the Secretary shall
remove the person from office. A person appointed under this part or
any employee of the Board may be removed by the Secretary if the
Secretary determines that the person's continued service would be a
detriment to the purposes of the Act.
Sec. 1221.107 Certification of organizations.
(a) The eligibility of State, regional, or national organizations
to participate in making nominations for membership on the Board shall
be certified by the Secretary. Those organizations that may seek
certification include:
(1) State-legislated sorghum promotion, research, and information
organizations;
(2) Organizations whose primary purpose is to represent sorghum
producers within a State, region, or at the national level; or,
(3) Organizations that have sorghum producers as members.
(b) Such eligibility shall be based, in addition to other
information, upon a report submitted by the organization that shall
contain information deemed relevant and specified by the Secretary for
the making of 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,
[[Page 25411]]
proportion of active membership accounted for by producers, a map
showing the sorghum producing counties in which the organization has
active members, the volume of sorghum produced in each such county, the
number of sorghum producers in each such county, and the size of the
organization's active sorghum producer membership in each such county;
(3) The extent to which the sorghum producer membership of such
organization is represented in setting the organization's policies;
(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.
(c) The primary consideration in determining the eligibility of an
organization shall be whether its sorghum producer membership consists
of a sufficiently large number of sorghum producers who produce a
relatively significant volume of sorghum to reasonably warrant its
participation in the nomination of State specific and national at-large
members to the Board. Any sorghum producer organization found eligible
by the Secretary under this section shall be certified by the
Secretary, and the Secretary's determination as to eligibility shall be
final.
Sec. 1221.108 Procedure.
(a) At a Board meeting, it will be considered a quorum when a
simple majority of the voting representatives are present.
(b) At the start of each fiscal period, the Board will approve a
chairperson, vice chairperson, and secretary/treasurer who will conduct
meetings throughout that period.
(c) All Board representatives and the Secretary or the Secretary's
designee will be notified at least 30 days in advance of all Board and
committee meetings, unless an emergency meeting is declared.
(d) Each voting representative of the Board will be entitled to one
vote on any matter put to the Board, and the motion will carry if
supported by a simple majority of the total votes of the Board
representatives present at the meeting.
(e) It will be considered a quorum at a committee meeting when a
simple majority of those assigned to the committee are present at the
meeting. Committees may consist of individuals other than Board
representatives, and such individuals may vote in committee meetings.
Committee members shall serve without compensation but shall be
reimbursed for reasonable travel expenses, as approved by the Board.
(f) In lieu of voting at a properly convened 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 simple majority
of the Board representatives by mail, telephone, electronic mail,
facsimile, or any other means of communication. In that event, all
representatives 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 a properly convened meeting of the Board. All
telephone votes shall be confirmed promptly in writing. All votes shall
be recorded in Board minutes.
(g) There shall be no voting by proxy.
(h) The chairperson shall be a voting representative.
(i) 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. 1221.109 Compensation and reimbursement.
The representatives of the Board shall serve without compensation
but shall be reimbursed for reasonable travel expenses, as approved by
the Board, incurred by them in the performance of their duties as Board
representatives.
Sec. 1221.110 Powers and duties.
The Board shall have the following powers and duties:
(a) To administer the Order 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 as may be necessary to administer the Order, including activities
authorized to be carried out under the Order;
(c) To meet not less than annually, and organize, and select from
among the representatives of the Board a chairperson, other officers,
committees, and subcommittees, as the Board determines appropriate;
(d) To employ persons, other than the representatives, as the Board
considers necessary to assist the Board in carrying out its duties and
to determine the compensation and specify the duties of such persons;
(e) To develop programs, plans, and projects, and enter into
contracts or agreements, which must be approved by the Secretary before
becoming effective, for the development and carrying out of programs,
plans, or projects of research, information, or promotion, and the
payment of costs thereof with funds collected pursuant to this subpart.
Each contract or agreement shall provide that: Any person who enters
into a contract or agreement with the Board shall develop and submit to
the Board a proposed activity; keep accurate records of all of its
transactions relating to the contract or agreement; account for funds
received and expended in connection with the contract or agreement;
make periodic reports to the Board of activities conducted under the
contract or agreement; and, make such other reports available as the
Board or the Secretary considers relevant. Furthermore, any contract or
agreement shall provide that:
(1) The contractor or agreeing party shall develop and submit to
the Board a program, plan, or project together with a budget or budgets
that shall show the estimated cost to be incurred for such program,
plan, or project;
(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.
(f) To prepare and submit for approval of the Secretary fiscal
period budgets in accordance with Sec. 1221.112;
(g) To maintain such records and books 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;
(h) To cause its books to be audited by a competent auditor at the
end of each fiscal period and at such other times as the Secretary may
request, and to submit a report of the audit directly to the Secretary;
(i) To give the Secretary the same notice of Board and committee
meetings as is given to representatives in order that the Secretary's
representative(s) may attend such meetings;
[[Page 25412]]
(j) To act as intermediary between the Secretary and any producer,
first handler or importer;
(k) To furnish to the Secretary any information or records that the
Secretary may request;
(l) To receive, investigate, and report to the Secretary complaints
of violations of the Order;
(m) To recommend to the Secretary such amendments to the Order as
the Board considers appropriate; and with the approval of the
Secretary, to make rules and regulations to effectuate the terms and
provisions of this subpart;
(n) To work to achieve an effective, continuous, and coordinated
program of promotion, research, consumer information, evaluation, and
industry information designed to strengthen the sorghum industry's
position in the marketplace; maintain and expand existing markets and
uses for sorghum; and to carry out programs, plans, and projects
designed to provide maximum benefits to the sorghum industry;
(o) To provide not less than annually a report to producers and
importers accounting for the funds expended by the Board, and
describing programs implemented under the Act; and to make such report
available to the public upon request; and
(p) To invest funds in accordance with Sec. 1221.115.
Sec. 1221.111 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 is 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,
other than recommending to the Secretary amendments to this part; and
(c) Any advertising, including promotion, research, and information
activities authorized to be carried out under the Order that is false
or misleading or disparaging to another agricultural commodity.
Expenses and Assessments
Sec. 1221.112 Budget and expenses.
(a) Prior to the beginning of each fiscal period, and as may be
necessary thereafter, the Board shall prepare and submit to the
Secretary a budget for the fiscal period covering its anticipated
expenses and disbursements in administering this subpart. Each such
budget shall include:
(1) A statement of objectives and strategy for each program, plan,
or project;
(2) A summary of anticipated revenue, with comparative data for at
least one preceding year (except for the initial budget);
(3) A summary of proposed expenditures for each program, plan, or
project; and
(4) Staff and administrative expense breakdowns, with comparative
data for at least one preceding 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 that increases the budget must be approved by the
Secretary. Shifts of funds that do not result in an increase in the
Board's approved budget and that are consistent with this subpart and
the Board's governing bylaws need not have prior approval by the
Secretary.
(d) The Board is authorized to incur such expenses, including
provision for a reasonable reserve, as the Secretary finds are
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.
(e) With approval of the Secretary, the Board may borrow money for
the payment of administrative expenses, subject to the same fiscal,
budget, and audit controls as other funds of the Board. Any funds
borrowed by the Board shall be expended only for startup costs and
capital outlays and are limited to the first fiscal period of operation
of the Board.
(f) The Board may accept voluntary contributions, but these shall
only be used to pay expenses incurred in the conduct of programs,
plans, and projects in accordance with the Order. Such contributions
shall be free from any encumbrance by the donor and the Board shall
retain complete control of their use.
(g) In accordance with Sec. 1221.118(a), the Board shall deposit
funds in a refund escrow account and refrain from allocating this
amount for expenditure until the Order is approved by the required
referendum except as provided for in Sec. 1221.118.
(h) The Board shall allocate an appropriate amount each year to
allow for payment of future referendums.
(i) The Board shall reimburse the Secretary for all expenses
incurred by the Secretary in the implementation, administration, and
supervision of the Order, including all referendum costs in connection
with the Order.
(j) The Board shall determine annually an allocation amount no less
than 15 percent but no more than 25 percent of the total assessments
collected on all sorghum available for any fiscal period, less the
expenses pursuant to paragraph (i), for use by qualified sorghum
producer organizations pursuant to Sec. 1221.128 for State programs of
generic promotion, research, and information. Amounts allocated by the
Board for State generic promotion, research, and information programs
will be based on requests submitted to the Board by qualified sorghum
producer organizations when it is determined that these requests meet
the goals and objectives stated in the Act and Order. The request shall
include detailed programs, plans, or projects with budgets. Qualified
sorghum producer organizations shall not submit requests for State
generic promotion, research, and information programs that exceed the
annual allocation amount determined by the Board which shall be the
product of:
(1) The State's proportional contribution based on reports
submitted by first handlers pursuant to Sec. 1221.124(a) to total
assessments remitted on all sorghum for the previous fiscal period;
multiplied by
(2) The total assessments collected on all sorghum for the previous
fiscal period less expenses pursuant to paragraph (i) of this section.
(k) The Board may not expend for administration, maintenance, and
functioning of the Board in any fiscal period an amount that exceeds 10
percent of the assessments and other income received by the Board for
that fiscal period except for the initial fiscal period. Reimbursements
to the Secretary required under paragraph (i) of this section are
excluded from this limitation on spending.
(l) The Board shall allocate all other funds available for any
fiscal period, to the extent practicable, subject to paragraphs (g),
(h), (i), (j), and (k) of this section on programs, plans, or projects,
as provided for in Sec. 1221.121.
(m) The Board shall determine annually the allocation of total
funds pursuant to this section, with the approval of the Secretary.
Sec. 1221.113 Financial statements.
(a) As requested by the Secretary, the Board shall prepare and
submit financial statements to the Secretary on a monthly basis. Each
such financial statement shall include, but not be
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limited to, a balance sheet, income statement, and expense budget. The
expense budget shall show expenditures during the time period covered
by the report, fiscal period-to-date expenditures, and the unexpended
budget.
(b) Each financial statement shall be submitted to the Secretary
within 30 days after the end of the time period to which it applies.
(c) The Board shall submit annually to the Secretary an annual
financial statement within 90 days after the end of the fiscal period
to which it applies.
Sec. 1221.114 Operating reserve.
The Board may establish an operating monetary reserve and may carry
over to subsequent fiscal period excess funds in a reserve so
established, provided that funds in the reserve shall not exceed one
fiscal period's anticipated expenses.
Sec. 1221.115 Investment of funds.
The Board may invest, pending disbursement, funds it receives under
this subpart, only in obligations of the United States or any agency of
the United States; general obligations of any State or any political
subdivision of a State; interest bearing accounts or certificates of
deposit of financial institutions that are members of the Federal
Reserve system; or obligations that are fully guaranteed as to
principal and interest by the United States.
Sec. 1221.116 Assessments.
(a) The funds to cover the Board's expenses shall be paid from
assessments on producers and importers, donations from any person not
subject to assessments under this Order, and other funds available to
the Board and subject to the limitations contained therein.
(b) First handlers of domestic sorghum shall be responsible for
collecting assessments from producers on all domestically handled
sorghum. This includes sorghum of the first handler's own production.
Grain pledged as collateral for a Commodity Credit Corporation price
support loan program shall be considered handled sorghum. A first
handler shall not collect an assessment on sorghum from a producer when
said producer presents documentation demonstrating that an assessment
has previously been collected on said sorghum.
(c) The following assessment rates for sorghum shall apply:
(1) Grain sorghum shall be initially assessed at a rate of 0.6
percent of net market value received by the producer pursuant to
paragraph (e) of this section; and
(2) Sorghum forage, sorghum hay, sorghum haylage, sorghum billets,
and sorghum silage shall be initially assessed at a rate of 0.35
percent of net market value received by the producer pursuant to
paragraph (e) of this section.
(d) Importers of sorghum shall pay an assessment to the Board
through Customs on sorghum imported into the United States. The
following apply to imported sorghum:
(1) The assessment rates for imported sorghum shall be the same or
equivalent to the rates for sorghum produced in the United States.
(2) The import assessment shall be uniformly applied to imported
sorghum that is identified by the numbers 1007.00.0020 and 1007.00.0040
in the Harmonized Tariff Schedule of the United States.
(3) The assessments due on imported sorghum shall be paid when the
sorghum enters the United States.
(4) If Customs does not collect an assessment from an importer, the
importer is responsible for paying the assessment to the Board.
(e) The Board will review the assessment rates and may make
recommendations to modify the assessment rates to the Secretary.
Assessment rates may be raised or lowered no more than 0.2 percent of
net market value received by producers and importers in any one
calendar year. The maximum assessment rate cannot exceed 1 percent of
the net market value received by producers and importers.
(f) Each person responsible for collecting assessments under
paragraph (b) of this section shall remit the amount due to the Board
in such a manner as required by regulations recommended by the Board
and prescribed by the Secretary.
(g) Any unpaid assessment due to the Board pursuant to this section
shall be increased 2 percent each month beginning with the day
following the date such assessments were due. Any remaining amount due,
which shall include any unpaid charges previously made pursuant to this
paragraph, shall be increased at the same rate on the corresponding day
of each month thereafter until paid. For the purposes of this
paragraph, any assessment determined at a later date than the date
prescribed by this subpart because of a person's failure to timely
submit a report to the Board shall be considered to have been payable
by the date it would have been due if the report had been filed timely.
The timeliness of a payment to the Board shall be based on the
applicable postmark date or the date actually received by the Board.
(h) An additional charge shall be imposed on any person subject to
a late payment charge in the form of interest on the outstanding
portion of any amount for which the person is liable. The rate of
interest shall be prescribed by the Secretary.
(i) Persons failing to remit total assessments due in a timely
manner may also be subject to actions under Federal debt collection
procedures.
(j) The Board may authorize other organizations to collect
assessments on its behalf with the approval of the Secretary.
(k) The collection of assessments pursuant to this section shall
begin with respect to sorghum handled on or after the effective date
established by the Secretary and shall continue until terminated or
suspended by the Secretary.
(l) If the Board is not in place by the date the first assessments
are to be collected, the Secretary shall have the authority to receive
assessments and invest them on behalf of the Board, and shall pay such
assessments and any interest earned to the Board when it is formed. The
Secretary shall have the authority to promulgate rules and regulations
concerning assessments and the collection of assessments, if the Board
is not in place or is otherwise unable to develop such rules and
regulations.
(m) Payment remitted pursuant to this subpart shall be in the form
of a negotiable instrument made payable to the Board. Such remittances
and the reports specified in Sec. Sec. 1221.124 and 1221.125 shall be
mailed to the location designated by the Board.
Sec. 1221.117 Exemptions.
(a) Any importer of less than and including 1,000 bushels of grain
sorghum or 5,000 tons of sorghum forage, sorghum hay, sorghum haylage,
sorghum billets, or sorghum silage per calendar year may claim an
exemption from the assessment required under Sec. 1221.116.
(b) An importer desiring an exemption shall apply to the Board, on
a form provided by the Board, for a certificate of exemption. An
importer shall certify that the importer will import less than and
including 1,000 bushels of grain sorghum or 5,000 tons of sorghum
forage, sorghum hay, sorghum haylage, sorghum billets, or sorghum
silage.
(c) Upon receipt of an application, the Board shall determine
whether an exemption may be granted. The Board then will issue, if
deemed appropriate, a certificate of exemption to each person who is
eligible to receive one. It is the responsibility of these persons to
retain a copy of the certificate of exemption.
[[Page 25414]]
(d) Importers who receive a certificate of exemption shall be
eligible for reimbursement of assessments collected by Customs. These
importers shall apply to the Board for reimbursement of any assessments
paid. No interest will be paid on the assessments collected by Customs.
Requests for reimbursement shall be submitted to the Board within 90
days of the last day of the calendar year the sorghum was actually
imported.
(e) Any person who desires an exemption from assessments for a
subsequent calendar year shall reapply to the Board, on a form provided
by the Board, for a certificate of exemption.
(f) The Board may require persons receiving an exemption from
assessments to provide to the Board reports on the disposition of
exempt sorghum and, in the case of importers, proof of payment of
assessments.
(g) A producer or importer who operates under an approved National
Organic Program (NOP) (7 CFR part 205) system plan; produces or imports
only products that are eligible to be labeled as 100 percent organic
under the NOP, except as provided for in paragraph (m) of this section;
and is not, or does not import products from, a split operation shall
be exempt from the payment of assessments.
(h) To apply for an exemption under this section, the applicant
shall submit the request to the Board or other party as designated by
the Board, on a form provided by the Board, at any time initially and
annually thereafter on or before January 1 as long as the applicant
continues to be eligible for the exemption.
(i) The request shall include the following: The applicant's name
and address, a copy of the organic farm or organic handling operation
certificate provided by a USDA accredited certifying agent as defined
in section 2103 of the Organic Foods Production Act of 1990 (7 U.S.C.
6502), a signed certification that the applicant meets all of the
requirements specified for an assessment exemption, and such other
information as may be required by the Board and with the approval of
the Secretary.
(j) If the applicant complies with the requirements of this
section, the Board or designee will grant the exemption and issue a
Certificate of Exemption to the applicant. The Board will have 30 days
from the date of receiving the request to approve the exemption
request. If the application is disapproved, the Board will notify the
applicant of the reason(s) for disapproval within the same timeframe.
(k) The producer or importer shall provide a copy of the
Certificate of Exemption to each first handler. The first handler shall
maintain records showing the name and address of the exempt producer or
importer and the exemption number assigned by the Board.
(l) The exemption will apply at the first reporting period
following the issuance of the exemption.
(m) Agricultural commodities produced and marketed under an organic
system plan, as described in 7 CFR 205.201, but not sold, labeled, or
represented as organic, shall not disqualify a producer or importer
from exemption under this section, except that producers or importers
who produce or import both organic and non-organic agricultural
commodities as a result of split operations shall not qualify for
exemption. Reasons for conventional sales include lack of demand for
organic products, isolated use of antibiotics for humane purposes,
chemical or pesticide use as the result of State or emergency spray
programs, and crops from a buffer area as described in 7 CFR Part 205,
provided all other criteria are met.
Sec. 1221.118 Refund escrow accounts.
(a) The Board shall establish an interest bearing escrow account
with a financial institution that is a member of the Federal Reserve
System and will deposit into such account an amount equal to the
product obtained by multiplying the total amount of assessments
collected by the Board during the period beginning on the effective
date of the Order and ending on the date the Secretary announces the
results of the required referendum by ten percent (10 percent).
(b) Upon failure of the required referendum, the Board shall pay
refunds of assessments to eligible persons requesting refunds during
the period beginning on the effective date of the Order and ending on
the date the Secretary announces the results of the required referendum
in the manner specified in paragraph (c) of this section.
(c) If the amount deposited in the escrow account is less than the
amount of refunds requested, the Board shall prorate the amount
deposited in such account among all eligible persons who request a
refund of assessments paid no later than 90 days after the required
referendum results are announced by the Secretary.
(d) If the Order is approved by the required referendum conducted
under Sec. 1221.130 then:
(1) The escrow account shall be closed; and
(2) The funds shall be available to the Board for disbursement
under Sec. 1221.112.
Sec. 1221.119 Refunds.
Any producer or importer from whom an assessment is collected and
remitted to the Board, or who pays an assessment directly to the Board,
under authority of the Act and this subpart through the announcement of
the results of the required referendum, upon failure of the required
referendum shall have the right to receive from the Board a refund of
such assessment, or a prorated share thereof, upon submission of proof
satisfactory to the Board that the producer or importer paid the
assessment for which refund is sought. Any such demand shall be made by
such producer or importer in accordance with the provisions of this
subpart and in a manner consistent with regulations recommended by the
Board and prescribed by the Secretary.
Sec. 1221.120 Procedure for obtaining a refund.
Upon failure of the required referendum, each producer or importer
who paid an assessment pursuant to this subpart during the period
beginning on the effective date of the Order and ending on the date the
required referendum results are announced may obtain a refund of such
assessment only by following the procedures prescribed in this section
and any regulations recommended by the Board and prescribed by the
Secretary:
(a) A producer or importer shall obtain a Board-approved refund
application form from the Board. Such forms may be obtained by written
request to the Board and the request shall bear the producer's or
importer's signature or properly witnessed mark.
(b) Any producer or importer requesting a refund shall submit an
application on the prescribed form to the Board within 60 days from the
date the assessments were paid by such producer or importer but no
later than the date the results of the required referendum are
announced by the Secretary. The refund application shall show:
(1) Producer's or importer's name and address;
(2) Name and address of the person who collected applicant's
assessment;
(3) Number of bushels or tons of sorghum on which a refund is
requested;
(4) Total amount of refund requested;
(5) Date or inclusive dates on which assessments were paid; and
[[Page 25415]]
(6) The producer's or importer's signature or properly witnessed
mark.
(c) The documentation provided pursuant to Sec. 1221.125(b) to the
producer by the first handler responsible for collecting an assessment
pursuant to this subpart, or a copy thereof, or such other evidence
deemed satisfactory to the Board, shall accompany the producer's refund
application. An importer must submit documentation showing that the
assessment was paid along with a copy of the appropriate Customs form
stating the net market value of the sorghum.
(d) The Board shall initiate payment of refund requests, or pay a
prorated share thereof, within 90 days of the date the results of the
required referendum are released by the Secretary. Refunds shall be
paid in a manner consistent with Sec. 1221.119.
Promotion, Research, and Information
Sec. 1221.121 Programs, plans, and projects.
(a) The Board shall receive and evaluate, or on its own initiative
develop, and submit to the Secretary for approval any program, plan, or
project authorized under this subpart. Such programs, plans, or
projects shall provide for:
(1) The establishment, issuance, effectuation, and administration
of appropriate programs for promotion, research, and information,
including consumer and industry information, with respect to sorghum;
and
(2) The establishment and conduct of research with respect, but not
limited to: The yield, use, nutritional value and benefits, sale,
distribution, and marketing of sorghum, and the creation of new
products thereof, to the end that the marketing and use of sorghum may
be encouraged, expanded, improved, or made more acceptable; and to
advance the image, desirability, or quality of sorghum.
(b) No program, plan, or project shall be implemented prior to its
approval by the Secretary. Once a program, plan, or project is so
approved, the Board shall take appropriate steps to implement it.
(c) Each program, plan, or project implemented under this subpart
shall be reviewed or evaluated periodically by the Board to ensure that
it contributes to an effective program of promotion, research, or
information. If it is found by the Board that any such program, plan,
or project does not contribute to an effective program of promotion,
research, or information, then the Board shall terminate such program,
plan, or project.
(d) No program, plan, or project including advertising shall be
false or misleading or disparaging to another agricultural commodity.
Sorghum of all origins shall be treated equally.
Sec. 1221.122 Independent evaluation.
Pursuant to the Federal Agriculture Improvement and Reform Act of
1996 (7 U.S.C. 7401), the Board shall, not less often than every five
years, authorize and fund, from funds otherwise available to the Board,
an independent evaluation of the effectiveness of the Order and other
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 paragraph.
Sec. 1221.123 Patents, copyrights, inventions, trademarks,
information, publications, and product formulations.
(a) Any patents, copyrights, inventions, trademarks, information,
publications, or product formulations developed through the use of
funds collected by the Board under the provisions of 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, inventions, trademarks, information,
publications, or product formulations, 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. 1221.132 shall apply to determine disposition of all such
property.
(b) Should patents, copyrights, inventions, trademarks,
information, publications, or product formulations be developed through
the use of funds collected by the Board under this subpart and funds
contributed by another organization or person, ownership and related
rights to such patents, copyrights, inventions, trademarks,
information, publications, or product formulations shall be determined
by agreement between the Board and the party contributing funds towards
the development of such patents, copyrights, inventions, trademarks,
information, publications, or product formulations in a manner
consistent with paragraph (a) of this section.
Reports, Books, and Records
Sec. 1221.124 Reports.
(a) Each first handler, on a State-by-State basis, will be required
to provide to the Board periodically such information as may be
required by the Board, with the approval of the Secretary, which may
include but not be limited to the following:
(1) Number of bushels or tons of domestic sorghum within the State
that were marketed to the first handler;
(2) Number of bushels or tons of domestic sorghum within the State
on which an assessment was paid;
(3) The amount of assessments remitted on sorghum within the State;
(4) Date that any assessments were paid within the State;
(5) The explanation, if necessary, to show why the remittance is
less than the applicable assessment rate multiplied by the net market
price multiplied by the number of bushels or tons within the State that
were marketed to the first handler; and
(6) The first handler's tax identifi