[Federal Register Volume 76, Number 53 (Friday, March 18, 2011)]
[Rules and Regulations]
[Pages 14777-14793]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-6322]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 1150
[Docket No. DA-08-07: AMS-DA-08-0050]
RIN 0581-AC87
National Dairy Promotion and Research Program; Final Rule on
Amendments to the Order
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: This document implements amendments to the Dairy Promotion and
Research Order (Order). This action is pursuant to the Farm Security
and Rural Investment Act of 2002 (2002 Farm Bill) and the Food,
Conservation, and Energy Act of 2008 (2008 Farm Bill). The 2002 Farm
Bill mandates that the Order be amended to implement an assessment on
imported dairy products to fund promotion and research and to add
importer representation, initially two members, to the National Dairy
Promotion and Research Board (Board). The 2008 Farm Bill specifies a
mandatory assessment rate of 7.5 cents per hundredweight of milk, or
equivalent thereof, on dairy products imported into the United States.
This final rule, in accordance with the 2008 Farm Bill, also amends the
term ``United States'' in the Dairy Production Stabilization Act of
1983 (Act) to mean all States, the District of Columbia, and the
Commonwealth of Puerto Rico. Producers in these areas will be assessed
15 cents per hundredweight for all milk produced and marketed.
DATES: Effective Dates: These amendments are effective April 1, 2011
except for Sec. 1150.152(b) which is effective August 1, 2011.
FOR FURTHER INFORMATION CONTACT: Whitney Rick, USDA, AMS, Dairy
Programs, Promotion and Research Branch, Stop 0233-Room 2958-S, 1400
Independence Avenue, SW., Washington, DC 20250-0233, (202) 720-6909,
[email protected].
SUPPLEMENTARY INFORMATION: This final rule is being issued pursuant to
the Dairy Production Stabilization Act of 1983 (7 U.S.C. 4501-4514),
Public Law 98-180, enacted November 29, 1983, as amended May 13, 2002,
by Public Law
[[Page 14778]]
107-171 and further amended June 18, 2008, by Public Law 110-246. Prior
Documents in this proceeding: Proposed Rule and Opportunity to File
Comments, Including Written Exceptions, on Proposed Amendments to the
Order: Issued May 12, 2009; published May 19, 2009 (74 FR 23359).
Executive Orders 12866 and 13563
This rule has been determined to be significant pursuant to
Executive Order 12866 and, therefore, has been reviewed by the Office
of Management and Budget. The updated cost-benefit analysis for this
final rule is available at http://www.ams.usda.gov/dairyimportassessment.
A requirement of 7 U.S.C. 4514 and 6407 requires the U.S.
Department of Agriculture to conduct an independent analysis of the
dairy checkoff programs. The independent analysis, conducted by Cornell
University, has consistently shown that the program has had a positive
and statistically significant impact on per capita dairy consumption.
Specifically, generic advertising and promotion of dairy products
increases both the quantities consumed and prices. For 2008, it was
estimated the farm milk price was $0.21 to $0.26 per hundredweight
higher and the quantity demanded was 2.3 percent higher because of the
program. Results from this analysis show that the average Benefit-Cost
Ratios for the Dairy Program was 5.49 (nonfat solids basis) and 7.07
(milk fat basis) from 1998 through 2008. This means that each dollar
invested in generic dairy marketing by dairy farmers during the period
would return between $5.49 and $7.07, on average, in net revenue to
farmers. Additionally, the Report to Congress estimates the elasticity
of advertising to be .034 on a nonfat basis and 0.027 on a fat basis.
For further details, see http://www.ams.usda.gov/AMSv1.0/FindaReporttoCongress.
Assessments to U.S. dairy producers under the Order are relatively
small compared to producer revenue. If dairy producers in Alaska,
Hawaii, the District of Columbia, and the Commonwealth of Puerto Rico
had paid assessments of $0.15 per hundredweight of milk marketed in
2008, it is estimated that $1.1 million would have been paid. This is
about 0.5 percent of the $195 million total value of milk produced and
marketed in these areas.
The total of assessments collected from importers under the
National Dairy Promotion and Research Program are expected to be
relatively small compared to the value of dairy imports. If importers
had been assessed $0.075 per hundredweight, or equivalent thereof, for
imported dairy products in 2008 as specified in this rule, it is
estimated that about $4.9 million would have been paid. This is about
0.2 percent of the $2.6 billion value of the dairy products imported in
2008.
Examination of import volumes for 2008 indicates that tariff rate
quotas (TRQs) constrain dairy imports in varying degrees. TRQs do not
seem to be a significant hindrance to the volume imported for many
dairy products. Significant quantities of dairy products imported are
not subject to TRQs.
The U.S. Dairy Export Council, a subsidiary of the Board, directs a
global ingredients program and promotes dairy ingredients domestically
and U.S. dairy ingredients internationally. Through importer
representation on the Board and possible establishment of qualified
dairy product promotion, research, or nutrition education programs
(qualified programs) by importers, imported products could be promoted
to a greater extent than under the current program.
Civil Rights Analysis
The potential civil rights implications of this rule on affected
parties have been considered to ensure that no person or group shall be
discriminated against on the basis of race, color, national origin,
gender, religion, age, disability, sexual orientation, marital or
family status, political beliefs, parental status, or protected genetic
information. This review included persons that are employees of the
entities that are subject to these regulations. This final rule does
not require affected entities to relocate or alter their operations in
ways that could adversely affect such persons or groups. Moreover, the
amendments would not exclude from participation any persons or groups,
deny any persons or groups the benefits of the program, or subject any
persons or groups to discrimination.
Executive Order 12988
This final rule has been reviewed under Executive Order 12988,
Civil Justice Reform. This final rule is not intended to have a
retroactive effect. Section 4512(a) of the Act provides that nothing in
the National Dairy Promotion and Research Program (National Program)
may be construed to preempt or supersede any other program relating to
dairy product promotion organized and operated under the laws of the
United States or any State.
The Dairy Production Stabilization Act of 1983 (Act) authorizes the
National Program. The Act provides that administrative proceedings must
be exhausted before parties may file suit in court. Under section 4509
of the Act, any person subject to the Order may file with the Secretary
a petition stating that the Order, any provision of the Order, or any
obligation imposed in connection with the Order is not in accordance
with the law and requesting a modification of the Order or to be
exempted from the Order. A person subject to an Order is afforded the
opportunity for a hearing on the petition. After a hearing, the
Secretary would rule on the petition. The Act provides that the
district court of the United States in any district in which the person
is an inhabitant, or has his principal place of business, has
jurisdiction to review the Secretary's ruling on the petition, provided
a complaint is filed not later than 20 days after the date of the entry
of the ruling.
Executive Order 13175
This final rule has been reviewed in accordance with the
requirements of Executive Order 13175, Consultation and Coordination
with Indian Tribal Governments. The review reveals that this regulation
will not have substantial and direct effects on Tribal governments and
will not have significant Tribal implications.
Executive Order 13132
This final rule has been reviewed in accordance with the
requirements of Executive Order 13132, Federalism. USDA has determined
that this final rule conforms with the Federalism principles set forth
in the Executive Order, and that this final rule does not have
Federalism implications.
Regulatory Flexibility Act
In accordance with the Regulatory Flexibility Act (5 U.S.C. 601-
612), the Agricultural Marketing Service has considered the economic
impact of this action on small entities and has certified that this
final rule will not have a significant economic impact on a substantial
number of small entities. The purpose of the Regulatory Flexibility Act
is to fit regulatory actions to the scale of businesses subject to such
actions so that small businesses will not be disproportionately
burdened.
The Dairy Production Stabilization Act of 1983 authorizes a
national program for dairy product promotion, research and nutrition
education. Congress found that it is in the public interest to
authorize the establishment of an orderly procedure for financing
(through assessments on all milk produced in the United States for
commercial use and on imported dairy products) and carrying out a
coordinated program of promotion designed to strengthen the dairy
industry's position in the marketplace
[[Page 14779]]
and to maintain and expand domestic and foreign markets and uses for
fluid milk and dairy products.
As directed by the 2008 Farm Bill, approximately 360 producers in
Alaska, Hawaii, the District of Columbia, and the Commonwealth of
Puerto Rico will become subject to the provisions of the Order as of
the effective date of this final rule. The Small Business
Administration [13 CFR 121.201] defines small dairy producers as those
having annual receipts of not more than $750,000 annually. Most of the
producers who will become subject to the provisions of the Order are
considered small entities.
Assessments to dairy producers under the Order are relatively small
compared to producer revenue. If dairy producers in Alaska, Hawaii, the
District of Columbia, and the Commonwealth of Puerto Rico had paid
assessments of $0.15 per hundredweight of milk marketed in 2008, it is
estimated that $1.1 million would have been paid. This is about 0.5
percent of the $195 million total value of milk produced and marketed
in these areas.
The assessment for dairy producers in Alaska, Hawaii, the District
of Columbia, and the Commonwealth of Puerto Rico will be collected by
persons who pay the producers for milk produced and marketed, and the
money will be remitted to the Board.\1\ These responsible persons,
usually milk handlers, incur the costs of calculating the assessment
due from each dairy producer; forwarding a form monthly to the Board;
and sending checks or other negotiable instruments of legal tender to
the Board and designated qualified programs. The responsible persons
maintain any records that are necessary to account for the collection
of the 15-cent assessment. Books and records for producers and persons
collecting assessments subject to the Order shall be maintained for two
years beyond the fiscal period of their applicability. These books and
records would be made available to employees or agents of the Board or
the Department for inspection during normal business hours if necessary
for verification purposes.
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\1\ Any producer that sells milk directly to consumers shall
remit the assessment directly to the Board.
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For the purpose of the Regulatory Flexibility Act, a dairy products
manufacturer is a small business if it has fewer than 500 employees.
For purposes of determining a milk handler's size, if the plant is part
of a larger company operating multiple plants that collectively exceed
the 500-employee limit, the plant is considered a large business even
if the local plant has fewer than 500 employees. While the number of
anticipated responsible persons collecting assessments under the Order
in Alaska, Hawaii, the District of Columbia, and the Commonwealth of
Puerto Rico are not known, it is expected that most would be considered
small businesses.
According to U.S. Customs and Border Protection (CBP), there were
about 3,000 importers of dairy products listed in Sec. 1150.152 (b) in
2007 and 2008. Although data is not available concerning the sizes of
these firms, it is reasonable to assume that most of them would be
considered small businesses. Although many types of businesses import
dairy products, the most common classification for dairy product
importers is Grocery and Related Product Merchant Wholesalers (North
American Industry Classification System, category 4244). The Small
Business Administration [13 CFR 121.201] defines such entities with
fewer than 100 employees as small businesses. According to 2006
statistical data from the U.S. Census Bureau, 95.2 percent of these
types of businesses had fewer than 100 employees (http://www.census.gov/econ/susb/).
This final rule imposes minimal reporting and recordkeeping
requirements on importers subject to the Order. Books and records for
importers subject to the Order shall be maintained for two years beyond
the calendar year in which the import occurs. These books and records
would be made available only to the Secretary for inspection during
normal business hours if necessary for verification purposes. The
proposed rule would have required importers subject to the Order to
make books and records available to the Board, but this will not be
required as a result of changes in this final rule. This rule requires
importers to calculate assessments due based upon documentation
concerning the cow's milk solids content of the imported products.
Products shall be assessed at the rate of $0.01327 per kilogram of
cow's milk solids.
In many cases, the importer would have this documentation on hand
as part of normal business practice. Importers must maintain books and
records sufficient to verify that products have been properly
classified according to the Harmonized Tariff Schedule (HTS). For some
HTS codes, this includes books and records indicating that the milk
solids content falls within a certain range. Default assessment rates
listed in the proposed rule are eliminated in this final rule.
Assessments to importers under the Order are expected to be
relatively small compared to the value of dairy imports. If importers
had been assessed $0.075 per hundredweight of milk, or equivalent
thereof, on imported dairy products in 2008, as specified in this rule,
it is estimated that about $4.9 million would have been paid. This is
about 0.2 percent of the $2.6 billion value of the imported dairy
products.
This final rule provides for organizations that conduct qualified
programs to receive assessment funds as designated by individual
importers. Additionally, this final rule includes a provision that
permits importers and organizations of importers, as approved by the
Secretary, to nominate importer representatives to the Board. Such
organizations would generally consist of importers who are considered
mostly small entities.
Paperwork Reduction Act
Information collection requirements and recordkeeping provisions
contained in 7 CFR part 1150 have been previously approved by the
Office of Management and Budget and assigned OMB Control Number 0581-
0093 under the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35).
Section 1601 of the 2002 Farm Bill (Pub. L. 107-171) and section 1601
of the 2008 Farm Bill (Pub. L. 110-246) exempt this rule from the
Paperwork Reduction Act. Although exempted, the requirements of the
Paperwork Reduction Act were considered in developing the provisions of
this final rule. The information collection requirements are minimal
but essential to carry out the intent of the Dairy Production
Stabilization Act of 1983. The final amended Order provisions have been
carefully reviewed and every effort has been made to minimize
recordkeeping costs or requirements.
Under the final amended Order provisions, importers will be
responsible to pay assessments. CBP will serve as the collecting agent
for assessments on imported dairy products and will remit the
assessments to the Board. Importers will be required to provide records
to the Secretary on occasions when additional information is needed as
evidence of compliance, or in cases when the importer seeks a
reimbursement of assessments. Such records must be retained for at
least two years beyond the calendar year of their applicability.
Additionally, each person making payment to a producer for milk
produced in the United States and marketed for commercial use collects
an assessment for all such milk handled.
[[Page 14780]]
These responsible persons calculate the assessments due from each dairy
producer. Under the final amended Order provisions, responsible persons
making payments to dairy producers in Alaska, Hawaii, the District of
Columbia, and the Commonwealth of Puerto Rico will be required to
collect and remit assessments and file reports with the Board. The
Order imposes certain recordkeeping requirements on responsible
persons; however, information required under the Order could be
compiled from currently maintained records. Any producer marketing milk
of that producer's own production directly to consumers is a
responsible person. Such records must be retained for at least two
years beyond the calendar year of their applicability.
The forms by which producer information is to be collected require
the minimum information necessary to effectively carry out the
requirements of the Order. There are no training requirements for
individuals filling out reports and remitting assessments to the Board.
The forms are designed to be simple and easy to understand, placing as
small a burden as possible on the persons required to file the
information.
The timing and frequency of collecting information are intended to
meet the needs of the National Program while minimizing the amount of
work necessary to fill out the required reports. In addition, the
information to be included on these forms is not available from other
sources because such information relates specifically to individual
producers and responsible persons who are subject to the provisions of
the Order. Therefore, there is no practical method for collecting the
required producer information without the use of these forms.
The assessment places a minimal burden on newly regulated producers
or importers who seek to direct monies to qualified programs. The
amount of time required to designate to a qualified program is
estimated to be 15 minutes to prepare a written request. Qualified
programs are certified by the Secretary to receive assessment money
from producers and importers for the purpose of promoting dairy
products.
The amended Order provisions would place a minimal burden on newly
regulated producers or importers who seek nomination to serve on the
Board. Importers and producers would be required to complete a
background information form for submission to the Secretary. The
estimated time for completing the form is 30 minutes, which includes
time for reviewing instructions, searching existing data sources,
gathering and maintaining the data needed, and completing and reviewing
the form. Additionally, there would be minimal burden on importer
organizations that voluntarily request to be approved by the Secretary
to participate in the National Program by making nominations to the
Board. The estimated time for reporting this is 30 minutes.
Currently, a producer who operates under an approved National
Organic Program (NOP) (7 CFR part 205) certificate and thus only
produces products that are eligible to be labeled as 100 percent
organic under the NOP, and is not a split operation, shall be exempt
from the payment of assessments. The final rule provides that an
importer who imports only products that are eligible to be labeled as
100 percent organic under the NOP (7 CFR part 205) and who is not a
split operation, would likewise be exempt from the payment of
assessments. The Order places a minimal burden on a producer or
importer applying for such an exemption. The producer or importer must
provide a request to the Board, on a form provided by the Board, at any
time initially and annually thereafter. The documentation is the same
for importers as for producers.
In addition, there are some requirements for information from
importers that are occasional. For example, if an importer files for
reimbursement or applies for reimbursement of assessments from the
Secretary for an overpayment, circumstances dictate the time that it
would take for the importer to gather the information necessary to make
the claim. Assembling and transmitting the necessary documentation to
the Secretary would place a minimal burden on importers.
AMS is committed to complying with the E-Government Act, to promote
the use of the Internet and other information technologies, and to
provide increased opportunity for citizen access to Government
information and services and for other purposes.
Background
The Dairy Production Stabilization Act of 1983 (Act) authorizes the
Order for dairy product promotion, research, and nutrition education as
part of a comprehensive strategy to increase human consumption of milk
and dairy products and to reduce milk surpluses. The National Program
functions to strengthen the dairy industry's position in the
marketplace by maintaining and expanding domestic and foreign
consumption of fluid milk and dairy products.
Section 1505 of the 2002 Farm Bill requires that the Order be
amended to implement a mandatory assessment on dairy products imported
into the United States and that the assessment be submitted to CBP at
the time entry documents are filed.
Section 1507 of the 2008 Farm Bill amended the term ``United
States'' in section 4502(1) of the Act to mean all of the States, the
District of Columbia, and the Commonwealth of Puerto Rico. This
amendment requires that Alaska, Hawaii, the District of Columbia, and
the Commonwealth of Puerto Rico be added to the existing regions of the
Board and that producers in these areas be assessed 15 cents per
hundredweight on all milk produced and marketed commercially.
Section 10607 of the 2002 Farm Bill provides for an exemption from
payment of assessments by organic milk producers and importers of
organic dairy products. Section 1150.157 of the Order currently
provides the specific requirements necessary for producers to receive
the exemption. See 70 FR 2744 for a complete discussion of
implementation of the provisions of section 10607 of the 2002 Farm Bill
as it relates to promotion and research programs for other agricultural
commodities. The same reasoning in 70 FR 2744 is applied in this final
rule and, accordingly, provides for an exemption for dairy importers.
A producer that operates under an approved National Organic Program
(NOP) (7 CFR part 205) certificate and thus only produces products that
are eligible to be labeled as 100 percent organic under the NOP, and is
not a split operation, would be exempt from the payment of assessments.
An importer who imports only products that are eligible to be labeled
as 100 percent organic under the NOP (7 CFR part 205), and is not a
split operation, also would be exempt from the payment of assessments.
To receive the exemption, producers and importers of products labeled
as 100 percent organic, and who do not produce or market any non-
organic products, would provide a request to the Board, on a form
provided by the Board, at any time initially and annually thereafter.
Additionally, the 2002 Farm Bill amendments authorize importers to
have representation on the Board. Initially, importers are required to
be represented by two importers appointed by the Secretary. Thereafter,
importer representation on the Board will be adjusted at least once
every three years, if necessary, to reflect the volume of imports
relative to domestic production of milk. The amendments also specify
[[Page 14781]]
that importer assessments may not be used for foreign market promotion
and that they be implemented in a manner consistent with United States
trade obligations.
The 2002 Farm Bill specifies that the assessment be 15 cents per
hundredweight, or equivalent thereof, on dairy products imported into
the United States. However, this rate was changed with the 2008 Farm
Bill; section 1507 specifies that the assessment will be 7.5 cents per
hundredweight of milk, or the equivalent thereof. The assessment is
equivalent to one-half the payment domestic dairy farmers are required
to remit.
Finally, the 2002 Farm Bill amended the policy statement in the Act
to make it clear that the purpose of the program is to expand the
consumption of dairy products, whether produced domestically or
imported. A program that promotes the substitution of a dairy product
from one source with a dairy product from another source would not be
consistent with this policy. Likewise, the Board and the Department
will consider carefully whether any brand advertising or promotion
would have a detrimental effect on other brands of dairy products
before giving approval. No program would be approved if it would
negatively affect similar domestic or imported dairy products.
Subtitle F of Title 1 of the 2002 Farm Bill at section 1601 and
Subtitle F of Title 1 of the 2008 Farm Bill at section 1601 provide for
the implementation timeframe and the promulgation of these regulations
without regard to the Paperwork Reduction Act (44 U.S.C. chapter 35);
the Statement of the Policy of the Secretary of Agriculture, effective
July 24, 1971 (36 FR 13804); and the notice and comment provisions of
section 533 of Title 5, United States Code. However, due to the
interest of affected parties, a proposed rule was published in the
Federal Register [74 FR 3359] on May 19, 2009, inviting comments.
Interested parties were provided 30 days to comment on the proposed
amendments.
The Department received 189 comments from individuals, trade
organizations, importer organizations, domestic dairy producers,
domestic and foreign dairy cooperatives, foreign governments, domestic
and foreign dairy companies, a foreign dairy promotion board, State
governments, attorneys, and international trading companies. The issues
raised in the comments that resulted in the greatest changes from the
proposed rule concerned the use of default assessment rates and
concerns over confidentiality and business information associated with
compliance, enforcement, and recordkeeping. Other provisions changed or
clarified in the final rule relate to milk solids content; Harmonized
Tariff Schedule codes; qualified programs; referendum provisions;
organic exemptions; duties of the board; and definitions of CBP,
importer, and qualified programs.
The 2002 Farm Bill mandates that the import assessment be
implemented in a manner consistent with United States trade
obligations. USDA has consulted with the Office of the United States
Trade Representative to ensure that this final rule is consistent with
the international trade obligations of the Federal Government.
Summary of Comments and Changes From the Proposed Rule
Default Assessment Rates
Under the proposed rule, an importer with adequate documentation
concerning the milk solids content of an imported dairy product would
pay an assessment based upon milk solids content. Further, the proposed
rule stated that an importer without adequate documentation concerning
the milk solids content of an imported dairy product would pay a
default assessment rate per HTS code. For most products, the default
assessment rate for each HTS code would have been based upon estimated
maximum milk solids content.
Several commenters objected to the proposal to set default rates at
the maximum milk solids content for most products. The commenters
argued that this would be unequal treatment for importers in comparison
to domestic producers. The Department does not agree with the
commenters' unequal treatment assertions. However, the Department has
determined that in order to provide one clear and consistent method for
importers to calculate the assessment, to simplify program
administration, and to best effectuate the purposes of the Act, default
assessment rates should not be included in the Order provisions.
Accordingly, importers will be required to pay based upon cow's milk
solids content of imported dairy products.
Since the mandatory 7.5-cents assessment is per one hundred pounds
of milk, this final rule applies a standard rate of assessment per unit
of milk solids. On average during the period January 2006 through
December 2007, a hundredweight of U.S. producer milk contained 12.45
pounds of milk solids (3.68 percent butterfat and 8.77 percent nonfat
milk solids). Since the assessment rate stated in the 2008 Farm Bill is
7.5 cents per hundredweight of milk or its equivalent, this final rule
establishes the assessment rate per volume of imported milk solids as
$0.00602 per pound ($0.075/12.45 pounds) or $0.01327 per kg (1 kg =
2.204623 pounds.) This rate shall be applied to the cow's milk solids
content for any imported product listed in the table displayed in
section 1150.152(b)(1).
Several commenters also indicated that in some cases it is overly
burdensome for the importer to obtain documentation concerning the milk
solids content of the imported dairy products. The Department disagrees
with these comments. Where documentation of cow's milk solids content
is not presently available, the importer could ask the seller or
manufacturer to provide such information. Cow's milk solids product
content could be communicated to the importer through an invoice,
packing slip, bill of lading, laboratory test results, a letter from
the manufacturer on the manufacturer's letterhead, or similar
documents.
Compliance and Enforcement
Several commenters recommended that the final rule be amended to
include provisions restricting access to confidential business
information provided in connection with import assessments. As
proposed, the rule gave the Board the discretion to verify milk solids
content reported by importers to the CBP to determine if additional
money is due the Board or if an amount is due to an importer. The
commenters noted that the verification of milk solids content of some
products requires more specific information on product composition than
is currently required under applicable labeling and import regulations.
Specifically, one commenter noted that verifying the calculation of the
milk solids content of a particular product requires revealing the
exact proportion of constituent components of that product, and as
such, verification reports are likely to contain confidential,
proprietary, and commercially sensitive data. In light of this, this
section is modified to require the Secretary, not the Board, to verify
information reported by importers.
Section 1150.171(b) of the proposed rule would require importers of
dairy products to submit reports as requested by the Board or the
Department as necessary to verify that provisions pursuant to Sec.
1150.152(b) have been carried out correctly, including verification
that correct amounts were paid based upon milk solids content of
[[Page 14782]]
the imported dairy products pursuant to Sec. 1150.152(b). The proposed
rule indicated that each importer of dairy products shall maintain and
make available for inspection by employees of the Board and the
Secretary such books and records to verify that provisions pursuant to
Sec. 1150.152(b) have been carried out correctly, including
verification that correct amounts were paid based upon milk solids
content of the import dairy products. As noted in the earlier
discussion regarding provisions restricting access to confidential
business information provided in connection with import assessments,
these sections are hereby modified so that only the Secretary has
access to confidential information. With this rule, CBP shall forward
assessments directly to the Board. CBP shall provide information
concerning the payments of individual importers to USDA instead of the
Board. Additionally, each importer of dairy products shall maintain and
make available for inspection by the Secretary, not the Board, such
books and records as needed to verify provisions pursuant to Sec.
1150.152(b) have been carried out correctly.
Costs and Benefits; National Treatment; and U.S. Trade Obligations
Several commenters argued that import assessments would amount to
unfair treatment because some imported products will not benefit to the
same extent as others. While not all imported dairy products are
promoted, or receive little promotion, the same situation similarly
exists with domestic dairy production; the Board does not specifically
promote all dairy products. This is evidenced in the cost-benefit
analysis, noting that the Board does not specifically advertise or
promote ice cream, even though dairy farmers pay a 15-cent per
hundredweight assessment for milk used in the production of ice cream.
Other examples would be food preparations, infant formula, and milk
chocolate, all of which contain dairy products. Thus, the import
assessment will be collected on all specified imported dairy products
and imported products containing cow's milk solids, whether or not the
Board chooses to promote such products. The National Program provides
benefits relative to all dairy products, whether or not they are
specifically promoted. With increased dairy consumption, the market for
milk solids tightens. Prices are higher for the entire array of
products that contain milk solids, both domestic and imported. Even
products that are not directly promoted through the National Program
receive this benefit.
It is important to note that not all domestic producers or
importers would receive benefits equally. Some importers may benefit
more than others due to the portfolio of dairy products promoted by the
Board. An equivalent case can be made for domestic dairy producers. A
dairy producer in a region with high cheese production may benefit from
cheese promotions more than a dairy producer in a low cheese production
area. Some commenters argued that dairy producers would receive equal
benefits from the National Program because most of the milk is pooled
under the Federal milk marketing order system or a similar State
program. However, the Federal milk marketing order system and similar
State programs do not cover all milk marketed and do not set the prices
that dairy producers receive; rather, they require handlers to pay
minimum prices. Handlers may, and often do, pay producers or their
cooperative more than minimum prices required by the pools.
Furthermore, pools in different regions of the country vary in milk
utilization, and thus minimum prices required by the pools may reflect
different levels of benefits from the National Program.
One commenter noted that the current dairy promotion program
primarily promotes fluid milk sales, and to a lesser degree, sales of
American-style cheeses. The commenter also stated that the U.S. does
not import fluid milk from Mexico, and that Mexican-style cheese
imported into the U.S. is far different than American-style cheeses. To
that end, the commenter noted that imports of dairy products from
Mexico are primarily specialized proteins (and specialty cheese) which
are mainly used in food products that are not dairy products and that
the current promotion program would not benefit them or the products
they import. Similarly, another commenter noted that a large proportion
of imported dairy products into the U.S. are ingredients with a variety
of applications, some dairy and some non-dairy in nature. It was argued
that these imported ingredients will not benefit from the promotion
program, particularly when used in non-dairy products.
With respect to the aforementioned comments, and as correctly noted
by one of the commenters, domestic producers are assessed per
hundredweight on all milk produced and marketed commercially, and the
disposition or final usage of the raw milk is not a fact in determining
the assessment. Likewise, the Farm Bills require an assessment on
imported dairy products, regardless of the final disposition of the
product or usage. Additionally, contrary to the comments provided by
some commenters; the current National Program does promote dairy
ingredients by marketing dairy ingredient benefits to food and beverage
manufacturers and to help launch new or improved products. The National
Program offers a variety of insights on ingredient marketing,
nutrition, processing and testing. In 2008, the National Program spent
approximately $4.9 million on ingredient research and promotion.
Furthermore, importers would benefit from potentially higher prices.
Also, with the changes to the provision of the Order made by this final
rule, imported dairy products and ingredients could be promoted to a
greater extent than with the current National Program.
Several commenters also indicated that 2007, the year considered by
the cost-benefit analysis for the proposed rule, was an anomalous year.
Had data from other years been examined, the commenters indicated the
Department would have observed that Tariff Rate Quotas (TRQs) would
have been of a greater restraint. For the final rule, the cost-benefit
analysis has been updated based upon data from 2008. Similarly, the
Department found that TRQs seem to constrain dairy imports in varying
degrees for some products, but not for others.
With respect to TRQs, one commenter proposed that importers be
refunded for any year in which the TRQ fill rate for a particular
product exceeds 85 percent. At this level, the commenter asserted that
imports are constrained, limiting the benefits of the National Program.
It is important to note that TRQs are rarely 100-percent filled due to
licensing requirements of imported dairy products. However, the fact
that a TRQ is filled or nearly filled is not a clear indication that
importers do not receive benefits from the National Program. It is
reasonable to conclude that some TRQs would have had lesser fill rates
without the National Program. Furthermore, importers potentially
benefit from the generally higher prices brought about by the National
Program. For these reasons, the commenter's proposal is not adopted.
In varying degrees of detail, several opponents of the proposed
rule claimed that implementation of an assessment on imported dairy
products would be a potential violation of the national treatment
obligations under the World Trade Organization (WTO). Opponents of the
import assessment asserted several reasons, including several
references to potential violations of the General Agreement on Trade
and Tariffs (GATT). As required by Section 4503(d)
[[Page 14783]]
of the Act, the Secretary has consulted with the Office of the United
States Trade Representative (USTR) to ensure that the Order is
implemented in a manner consistent with the international trade
obligations of the Federal Government.
Neutral Promotion of Dairy Products With Respect to Origin
With the passage of the 2002 Farm Bill, the policy statement in the
Act was amended to make it clear that the purpose of the National
Program is to expand the consumption of dairy products, whether
produced domestically or imported. A program that promotes the
substitution of a dairy product from one source with a dairy product
from another source for consumption in the U.S. market is not
consistent with this policy. Several commenters suggested that the
proposed changes only generally remove the requirement that programs
promote products of the United States, but indicated the changes are
not sufficiently clear that going forward that they must be neutral
with respect to country of origin. Additionally, the commenters
suggested that the Board and Dairy Management Inc. (DMI), the staffing
and management organization for the National Program, would have to
ensure that any of its activities, including salaries and expenses from
conducting export promotion marketing or coordination and management of
export promotion, that are funded all or in-part by the Board would be
neutral with respect to State or country of origin, including any
promotion tools. Further, the commenters suggested that the Order
require AMS to certify the neutrality of all policies and activities of
the National Program prior to the distribution of any importer
assessment monies to the Board. Several commenters also raised concerns
that the ``Real Seal'' and other programs that are only available to
domestic products, if not eliminated or completely revised, would, in
their view, adversely affect conditions of competition for imports,
thereby potentially violating GATT Article III:4.
AMS provides the day-to-day oversight for all activities related to
the National Program. AMS oversight activities include reviewing and
approving DMI and the Board's budgets, budget amendments, contracts,
advertising campaigns, investment plans, and all materials developed
for public distribution. Additionally, AMS ensures that all expenditure
of promotion funds is consistent with the Act and the Order, and the
Agency's other responsibilities relate to nominating and appointing
Board members, amending the orders, conducting referenda, and
conducting periodic program audits. Further, AMS representatives attend
full Board meetings, committee meetings, and other staff and member
meetings of consequence to the National Program. Given AMS's extensive
oversight activity and policies relating to program review, it is
neither necessary nor appropriate to implement additional provisions at
this time to ensure appropriate expenditure of funds with respect to
neutrality. Additionally, as of the effective date of these amendments,
all of the National Program's activities will be consistent with
respect to neutrality and country of origin. Several commenters
accurately noted that by striking the words ``produced in the United
States'' from the definition of milk, programs like the ``Real Seal''
and ``3-A-Day'' partners, and promotional offers will become available
to international dairy brands and importers. Such programs will no
longer be allowed to refer specifically to domestically produced dairy
products if funded by the Board. Also research carried out with
assessment funds would be available to all of the importers subject to
the assessment.
Additionally, commenters raised concerns about other specific
National Program activities, such as the promotion of American
artisanal cheese and ``The New Look of School Milk'' program. As of the
effective date of these amendments, all of these activities must comply
with the new policy statement with respect to neutrality and country of
origin.
Separately, several commenters raised the concern of whether or not
the prohibitions and restrictions with respect to neutrality apply to
qualified programs and the promotion of State brands. Section 4512(a)
of the Act (Administrative Provisions) states ``Nothing in this
subchapter may be construed to preempt or supersede any other program
relating to dairy product promotion organized and adopted under the
laws of the United States or any State.'' This statutory policy
provides qualified programs with as much freedom to continue their
present operation and is consistent with a coordinated effort. As such,
the policy is retained and qualified programs may continue to promote
State brands. Research has shown that promotion of State brands, to the
extent they reflect a type of brand, can increase dairy category sales
and is consistent with the intent of the Act to raise the demand and
consumption for dairy products generally. Review and/or approval
authority of the Board and the Department regarding branded advertising
or promotion by qualified State or regional programs will remain as it
presently exists and is not modified under this proceeding. Several
commenters questioned whether this proceeding would impact the ability
of qualified programs to build demand for locally produced milk and
dairy products; it does not. Similarly, this does not impact the
ability of importer qualified programs to build demand for imported
dairy products.
One commenter questioned whether the provision striking the use of
the words ``produced in the United States'' was contrary to the
recently implemented Country of Origin Labeling (COOL) legislation (7
U.S.C. 1638-1638d). COOL provisions require certain food retailers
(supermarkets and grocery stores) to provide additional information
(country of origin information) to consumers on specific food items at
the point of purchase. COOL does not apply to dairy products. The COOL
program is not related to this proceeding and there are no applicable
provisions or requirements that overlap with this final rule.
Export and Foreign Market Promotion
As provided in the 2008 Farm Bill, the Board's budget may provide
for the expenditure of revenues available to the Board to develop
international markets for, and to promote within such markets, the
consumption of dairy products produced or manufactured in the United
States through 2012. Several commenters questioned how importers would
be assured that their assessments would not be used to fund development
of foreign markets for U.S. products. Commenters also suggested that
allowing up to 100 percent of domestic producer assessments to go into
export promotion could result in allowing import assessments to pay
more than their ``share'' of domestic promotion thereby subsidizing the
export promotion activities. They also noted that if uncapped levels of
domestic assessments are allowed to go into export promotion, import
assessments could fund a disproportionate share, up to 100 percent, of
the domestic program and therefore, underwrite the domestic gains to
producers.
Accordingly, some commenters proposed that USDA should track
imported dairy products on a milk equivalent basis as a percentage of
domestic commercial disappearance. The commenters noted that if imports
are 5 percent of the domestic market, for instance, then the Board must
fund 95 percent of domestic promotion from
[[Page 14784]]
U.S. dairy producers. Other commenters suggested that the Order should
state that the funds for foreign market promotion in any year cannot
exceed the level of the year prior to the beginning of import
assessments, plus the level of increase in producer checkoff
contribution in the previous year. These proposals are not adopted
because the Act specifically states that the Order shall provide the
authority for the Board to expend in the maintenance and expansion of
foreign markets an amount not to exceed the amount collected from the
United States producers for a fiscal year. Dairy product market share
is not the authorized measure in determining the amount of the Board's
expenditure on export and foreign market promotion.
Section 4501(b) of the Act states that domestic promotion under the
National Program must include imported dairy products, and section
4504(e)(2) of the Act states that with respect to foreign market
efforts, ``* * * the Board's budget may provide for the expenditure of
revenues available to the Board to develop international markets for,
and to promote within such markets, the consumption of dairy products
produced or manufactured in the United States.'' For clarification,
with this final rule, section 1150.140(n) has been expanded to indicate
that the duties of the Board are to encourage the coordination of
programs of promotion, research, and nutrition education designed to
strengthen the dairy industry's position in the marketplace and to
maintain and expand: (1) Domestic markets and domestic uses for fluid
milk and dairy products produced in the United States or imported into
the United States; and (2) foreign markets and foreign uses for fluid
milk and dairy products produced in the United States.
Notwithstanding the aforementioned, the USDA Report to Congress as
required in section 4514(4) of the Act must provide an accounting for
the receipt and disbursement of all funds received by the Board. This
includes funds received from importers. AMS will require the Board to
provide an accounting and evaluation of all activities targeted at the
promotion of imported dairy products to be included in its annual
Report to Congress.
Products To Be Assessed
Commenters argued that the proposed rule included assessments on
products that fall outside the scope of accepted international
definitions for dairy products. Several commenters suggested limiting
the number of products to be assessed to those in Chapter 4 of the HTS,
referring to the Explanatory Notes (ENs) for the definitions in the
``General'' section for Chapter 4.\2\ The Department does not agree
that the ENs define dairy products, but rather they simply define the
products that are to be covered under Chapter 4. One commenter
indicated that the only products that should be included are those that
would be defined as a milk product or a composite milk product under
Codex Alimentarius standards. The Codex Alimentarius Commission was
established in 1963 to reduce trade barriers and facilitate trade in
safe foods of a defined quality. The WTO utilizes the Codex standards
with the goals of formulating and harmonizing international food
standards, ensuring their global compliance, and resolving trade
disputes. The Codex milk and milk product standards cover a number of
dairy products, including but not limited to butter, milkfat products,
evaporated milk, condensed milk, edible casein products, milk powders,
dairy fat spreads, whey cheeses, processed cheeses, and numerous
varieties of natural cheeses. However, the definitions of ``milk and
milk products'' in the Codex standards are not germane to the
definition of ``dairy products'' in the final rule as these products
will be assessed consistent with the definition of dairy products as
defined by the Act. Therefore, this suggestion also is not adopted.
---------------------------------------------------------------------------
\2\ In understanding the language of the HTS, ENs, which are
drafted by the World Customs Organization, may be utilized. Although
not dispositive, ENs provide a commentary on the scope of each
heading of the HTS, and are the official interpretation of the
Harmonized System at the international level. (See the U.S. Treasury
decision number 80 from 1989, 54 FR 35127, 35128, August 23, 1989).
---------------------------------------------------------------------------
In this final rule, 265 of the 266 HTS codes listed in section
1150.152(b) of the proposed rule are adopted. HTS code number
1901.90.9082 is for corn-soya milk blends that do not contain over 5.5
percent by weight of butterfat and are not considered dairy products as
described in additional note 1 to Chapter 4 of the HTS. After
consultation with CBP, it is concluded that products imported under
this HTS code would not likely contain milk solids. Accordingly,
products imported under this HTS code are not included in the import
assessment.
Proposal for Payments To Be Remitted to USDA
Several interested parties suggested alternatives that would
require import assessments first to be remitted to the Department
rather than to the Board after submission to CBP. These alternatives
are not adopted. Section 4504(g)(6)(A) of the Act specifically states
that the order shall provide that each importer of imported dairy
products shall pay an assessment to the Board in the manner prescribed
by the Order.
Establishment and Membership/Term of Office
The Order is administered by a 36-member Board appointed by the
Secretary representing 13 geographic regions of the United States. In
order to complement the current geographical make up of the existing
regions, the proposed rule indicated that each of the four new
jurisdictions be added to the region of closest geographic proximity.
No comments were received in opposition to this proposal, and it is
adopted as proposed.
Therefore, Alaska is added to Region 1, currently comprised of
Oregon and Washington; Hawaii is added to Region 2, currently
California; and the District of Columbia and the Commonwealth of Puerto
Rico are added to Region 10, currently comprised of Florida, Georgia,
North Carolina, South Carolina and Virginia. Each person making payment
to a producer in Alaska, Hawaii, the District of Columbia, and the
Commonwealth of Puerto Rico for milk produced and marketed for
commercial use, is required to collect an assessment on all milk
handled for the account of the producer at the rate of 15 cents per
hundredweight and must remit the assessment to the Board. Any producer
marketing milk of that producer's own production in the form of milk or
dairy products to consumers, either directly or through retail or
wholesale outlets, must remit to the Board an assessment on such milk
at the rate of 15 cents per hundredweight. Each person responsible for
the remittance of the assessment for milk marketings from producers in
Alaska, Hawaii, the District of Columbia, and the Commonwealth of
Puerto Rico must remit to the Board not later than the last day of the
month following the month in which the milk was marketed.
Several interested parties raised concern regarding proposed
importer representation on the Board. In accordance with the Act, the
proposed rule indicates that importers will initially be represented by
two importer representatives. Assessments collected from importers will
be held in escrow until importer representatives are appointed. The
interested parties proposed that the Order should provide for permanent
representation of at least two importers or importer representatives on
the Board. This proposal is not adopted. The 2002 Farm
[[Page 14785]]
Bill specifies that the Secretary shall review once every three years
the average volume of domestic production of dairy products compared to
the average volume of imports of dairy products into the United States
during the previous three years. On the basis of the review, the
Secretary shall reapportion the importer representation on the Board to
reflect the proportional share of the U.S. market by domestic
production and imported dairy products. As noted in the proposed rule,
in order to provide a basis for comparison of domestic production of
dairy products to imported products, estimated total milk solids will
be used. Statistics for total milk solids of domestic dairy products
are published annually by USDA National Agricultural Statistics
Service. The calculation of total milk solids for imported products for
reapportionment purposes would be the same as the calculation of total
milk solids for assessment purposes.
In response to commenter's requests for specific information
regarding importer representation and appointment to the Board, the
Secretary will issue a separate notice in the Federal Register and a
news release seeking nominations for importer representatives to the
Board at a future date to be determined. The Secretary will appoint two
individuals from those nominated to serve as the initial importer
representatives on the Board. In order to properly stagger the two
terms, the importer representative terms of office dates [Section
1150.132(a)(2)] are modified and one importer representative will serve
a term ending October 31, 2013, and one importer representative will
serve a term ending October 31, 2014.
Importer nominations may be submitted by individual importers of
dairy products and by organizations representing dairy importers, as
approved by the Secretary. Nominees must be importers of dairy products
and subject to the assessment to fund the National Program. The primary
considerations in determining if organizations adequately represent
importers of dairy products shall be whether its membership consists
primarily of importers of dairy products and whether a substantial
interest of the organization is in the importation of dairy products
and the promotion of the nutritional attributes of dairy products.
Individual importers submitting nominations to represent importers on
the Board must establish, to the satisfaction of the Secretary that the
person submitting the nomination is an importer of dairy products.
Approval of importers and organizations representing importers will
occur in a manner prescribed by the Secretary. An importer means a
person that imports dairy products into the United States as a
principal or as an agent, broker, or consignee of any person who
produces or handles dairy products outside of the United States for
sale in the United States, and who is listed as the importer of record
for such dairy products.
Several interested parties also raised concerns regarding
sufficient importer representation on the Board's Executive Committee.
The Board's current Executive Committee is comprised of all members of
the Board. Section 1150.140(b) of this rule specifically provides that
the Board's Executive Committee be comprised of membership that equally
reflect each of the different geographic regions in the United States
in which milk is produced and importer representation on the Board.
Accordingly, this provision is made final without modifications.
One commenter questioned importer representation of two seats on
the Board, citing that domestic producers in regions 1, 8, 10, and 13
collectively represent a significant number of producers and production
and accordingly are afforded only one seat. The Act and the Order are
clear with respect to the formulas used to determine the number of
members from each region of the Board. The number of members for each
region on the Board is determined by dividing the total pounds of milk
produced in the United States for the calendar year previous to the
date of review by 36, which provides a factor of pound of milk per
member, and then dividing the total pounds of milk for each region by
such factor. With respect to importer representation, the law states
clearly that importers initially shall be represented by two members.
Several commenters requested additional information and guidance as
to how decisions are made by the Board or how conflicts are resolved
with respect to conflicting promotions. Currently, joint committees of
the Board are responsible for setting program priorities, planning
activities and projects, and evaluating results. With respect to
decisions, the Board's current by-laws state that any action of the
Board requires the concurring votes of at least a majority of those
present and voting. Importer representatives on the Board will take
part in this process upon appointment.
Importer Contributions to Qualified Programs
Several interested parties recommended that USDA hold in escrow any
funds earmarked by an importer for contribution to a qualified program
until importer programs are qualified by the Secretary. Further,
several commenters noted that the proposed rule does not specify how
assessments above the 5 cents are to be directed if a qualified program
is not designated. Commenters also noted that the purposes of the rule
would be best met if the qualified portion were held until it could be
disbursed pro rata to all qualified programs relating to imported
products.
Currently, if a producer does not designate or if the producer's
paying handler does not establish that producer's participation in a
qualified program, the full assessment is remitted to the Board.
Similarly, if an importer does not designate or if participation in a
qualified program is not established, the Board would retain the full
assessment. Accordingly, the commenters' suggested alternative
provisions to hold the qualified programs' portion relating to imported
products and disburse pro rata, or until an importer qualified program
is established, would not be appropriate and are not adopted.
The proposed rule stated that importers will be required to submit
7.5 cents per hundredweight of milk, or equivalent thereof, on imported
dairy products to the Board, of which an importer may direct the Board
to forward up to 2.5 cents per hundredweight of milk, or equivalent
thereof, to a qualified program. Commenters stated that domestic milk
producers are required to send only one-third of their assessment to
the Board, whereas importers would be required to contribute two-thirds
of their assessment to the Board. The commenters also suggested that as
proposed, the Order does not comply with international obligations that
dictate fairness and ``equal treatment'' towards imported products. One
commenter argued that importers will disproportionally support
operations of the Board, while domestic U.S. milk producers will
disproportionately enjoy the benefits of Board promotions.
The proposed provisions specify that the rate of assessment is 7.5
cents per hundredweight, or equivalent thereof, on imported dairy
products, but that an importer can instruct the Board to direct up to
2.5 cents per hundredweight for contributions to a qualified program.
The Act requires domestic producers to
[[Page 14786]]
pay 15 cents per hundredweight to the Board, and allows them to receive
a credit up to 10 cents per hundredweight of the assessment when
contributing to qualified programs. In effect, this provision requires
that all domestic producers contribute 5 cents per hundredweight of
milk to the Board. Likewise, this rule requires importers to pay an
equivalent amount to the Board. With this final rule, an importer may
inform the Secretary to direct the Board to forward up to 2.5 cents per
hundredweight of milk, or the equivalent thereof, to a qualified
program. As indicated by one commenter, importers are not required to
provide any greater assessment to the overall national promotion
program than are domestic producers. Alternatives to allow an importer
to direct two-thirds of the 7.5 cents per hundredweight of milk, or
equivalent thereof, to a qualified program are not adopted.
One commenter questioned whether or not the amount of money
designated for importer organizations to conduct promotion, research,
or nutrition education programs will equate with the same level of
assessments collected with respect to imported product. Importers only
are permitted to designate up to 2.5 cents of the 7.5 cents per
hundredweight of milk, or milk equivalent thereof, to qualified
programs. By law, 5 cents must go to the Board, and therefore the
amount of money designated for importer organizations cannot equal the
same level of assessments collected on imported dairy products.
The final rule differs from the proposed rule with respect to an
importer's designation to a qualified program. With the proposed rule,
the importer would have instructed the Board to forward payments to a
qualified program. With this final rule, the importer will notify the
Secretary to direct the Board to forward payments to a qualified
program. The Secretary will compute the funds due each qualified
program. This change was made in order to maintain confidentiality of
importer records concerning import quantity volumes and quantities of
milk solids imported.
One commenter noted that the proposed rule states that any
organization which conducts a dairy product promotion and research or
nutrition education program authorized by Federal or State law may
apply for certification so that producers may receive credit for
contributions to such programs, and whether the credit treatment should
also be extended to imported product where producers in the country of
origin have contributed to generic dairy promotional programs. As
indicated in the proposal, the credit only applies to contributions to
programs operating under Federal or State laws of the United States or
that have been an active and ongoing producer program before enactment
of the Act. Therefore, no provisions are included to extend credit
allowances for contributions to dairy product promotion programs in
foreign countries.
Importer Establishment of Qualified Programs
Several commenters noted that while the proposed rule modifies the
Order language regarding qualified programs to include those financed
primarily by importers, the process by which a program becomes
qualified imposes a great burden on importers. These commenters stated
that the requirement that the qualified program be authorized under
State or Federal law, or has been active and on-going prior to
enactment of the Act, will be difficult for importers to achieve since
there are no such importer organizations that predate the Act.
Additionally, several commenters indicated that authorization under
State or Federal law requires that the program be specifically enabled
by a state legislature or Congress. One commenter proposed specific
language modifying section 1150.153 to include new provisions
applicable specifically for importers, noting the Act does not provide
any detailed definition of State and regional programs. Additionally,
several commenters suggested that the Department revisit this section,
citing whether the authority for the Secretary to give credit to
national organizations exists under the Order.
The Order currently provides in Sec. 1150.153 that any
organization which conducts a State or regional dairy product
promotion, research, or nutrition education program that has been
active and ongoing before enactment of the Act, or is operated under
the laws of the United States or any State, may apply to the Secretary
for certification so that producers may receive credit for
contributions to such programs towards assessments owed by the
producer.
The proposed rule provided that an organization authorized by
Federal or state law or an organization that had been active and
ongoing before enactment of the Act may apply to the Secretary for
certification of qualification so that producers or importers may
direct contributions to such programs. While AMS disagrees with any
suggestion in the comments that the proposed provisions regarding
qualified programs were not authorized by statute or consistent with
the Order, we conclude, taking into account comments received, that
section 1150.153 should be further revised to add reference to any
importer organizations that conduct dairy product promotion, research,
or nutrition education programs. Organizations seeking to become an
importer qualified program need only submit an application provided by
USDA to the Secretary and meet the four criteria as outlined in section
1150.153 to be approved. The process is equivalent to the process used
by domestic organizations seeking to become a qualified dairy producer
program. The revision would provide a more practical and reasonable
option for importers to direct contributions to such programs.
Miscellaneous clarifying changes are made to sections 1150.152,
1150.153, and the definition of qualified program in section 1150.153
to retain existing order language with regard to producer organizations
to more clearly state provisions concerning qualified programs and
credits for producers and for importers.
Referendum
Several commenters suggested that in order for the Department to
provide due process for those importers of dairy products and dairy
producers in Alaska, Hawaii, the District of Columbia, and the
Commonwealth of Puerto Rico that will become subject to the assessment,
a referendum must be held to determine whether or not those affected
parties support implementation of the assessment. Commenters assert
that implementation of the assessment without conducting a referendum
is a violation of the Equal Protection guarantees of the Fifth
Amendment. Expressing a different view, several commenters also noted
that the Congressional mandate to require an assessment on both
domestic production and on imported dairy products has been a matter of
law in the United States since 2002.
The Act specifies the circumstances under which a referendum may be
conducted. Section 4507(b) of the Act states, ``* * * after September
30, 1985, the Secretary may conduct a referendum at any time, and shall
hold a referendum on request of a representative group comprising 10
per centum or more of the number of producers and importers subject to
the order, to determine whether the producers and importers subject to
the order, favor the termination or suspension of the order.'' The Act
does not provide for the
[[Page 14787]]
conduct of a referendum on proposed changes to the Order, as stated by
a number of commenters. The 2002 and 2008 Farm Bills provide for the
promulgation and implementation of these regulations without regard to
notice and comment provisions of section 533 of Title 5, United States
Code. Accordingly, no changes are made as a result of the comments
received.
The proposed rule did not include necessary changes to include
importers under ``Subpart--Procedure for Conduct of Referenda in
Connection with the Dairy Promotion and Research Order.'' With this
final rule, the appropriate changes have been made.
Definitions
The proposed rule included definitions for three new terms and
definition revisions of three terms to reflect the provisions of the
Act. The terms ``United States'' and ``milk'' are reproduced verbatim
from the Act. The terms ``CBP'' and ``importer'' were modified slightly
from the language of the Act for clarity. The term ``qualified
program'' was modified to reflect that importer programs may be
established that are not necessarily State or regional in scope. The
definition of ``qualified program'' has been changed from the proposed
rule in that it refers to section 1150.153, which has changes from the
proposed rule as previously discussed.
Several commenters objected to the removal of ``produced in the
United States'' from the term milk, due to the impact this change
necessitates in the requirement that dairy products be promoted
neutrally and without respect to origin. Additionally, commenters
objected to modification of the term ``United States'' which would
necessitate inclusion of producers in Hawaii, Alaska, the District of
Columbia, and the Commonwealth of Puerto Rico in the program without
providing a referendum on amendments to the program as other U.S.
contributors were given. For the reasons stated in previous discussions
of comments, the definition changes to the Order are not changed as a
result of the comments received.
Organic Exemption
Several commenters suggested that the current organic exemption, as
applied to domestic dairy producers, would almost never be available to
imports because importers rarely import organic products exclusively,
but rather a combination of organic and non-organic products.
Consequently, those commenters suggested the proposed Order include a
provision to exempt organic dairy product imports from the assessment.
The 2002 Farm Bill, section 10607 states, ``A person that produces and
markets solely 100 percent organic products, and that does not produce
any conventional or nonorganic products, shall be exempt from the
payment of an assessment under a commodity promotion law with respect
to any agricultural commodity that is produced on a certified organic
farm.'' In the final rule (70 FR 2744, January 14, 2005), AMS
determined that the phrase ``produces and markets'' should apply to the
function the person performs that compels the payment of an assessment.
For importers, this means to import the commodity. Accordingly, this
final rule subjects dairy importers to similar provisions and is
consistent with other research and promotion programs for other
agricultural commodities. The proposal to exempt organic dairy product
imports is not adopted. However, after further review, this final rule
adds an additional provision to the organic exemption provisions in
section 1150.157 to allow for a reimbursement of assessments collected
by the CBP. This provision is similar to the added provision regarding
reimbursement of assessments collected on U.S. produced milk solids or
milk solids other than cow's milk discussed in the following section. A
clarifying change also is made to this section.
Exclusion of Milk Solids of U.S. Origin
Under the proposed rule, milk solids of U.S. origin would have been
excluded from the calculation of dairy import assessments. However,
after additional consideration, AMS determined that it is more
reasonable and appropriate to include milk solids of U.S. origin in the
calculation of dairy importer assessments and allow importers to apply
for reimbursement from the Secretary. This final rule includes new
language in section 1150.155 to state that any importer of dairy
products against whose imports an assessment has been collected under
section 1150.152(b) and who believes that such assessment or any
portion of such assessment was made on U.S.-produced milk solids or
milk solids other than cow's milk may apply to the Secretary for a
reimbursement. The importer would be required to submit proof to the
Secretary that the import was produced with U.S.-produced milk solids
or milk solids other than cow's milk.
Effective Date
A commenter representing customs brokers and forwarders indicated
that it will take considerable time for customs brokers to make
software changes necessary to calculate import assessments. According
to the commenter, brokers are typically allotted 90 days to make any
program changes. Upon further consideration and taking into account
that CBP collects importer assessments, we believe that 120 days is
reasonable. Therefore, the effective date for implementing 1150.152(b),
Importer Assessments, shall be the first day of the month following 120
days after publication of this rule.
Miscellaneous Order Provisions
As noted in the discussion of Neutral Promotion of Dairy Products
with Respect to Origin, the Board will be required to make available
all domestic promotion programs and materials to all assessed parties.
One commenter proposed an additional provision be added to section
1150.140 [Duties of the Board] to clearly state that all domestic
promotional programs be available to all assessed parties. Section
1150.139(e) of the Order gives the Board the authority to disseminate
information to producers or eligible organizations through programs or
by direct contact utilizing the public postage system or other system.
The proposed rule modified this subsection of the Order to extend the
Board's information dissemination authority to include importers and
importer organizations. An additional provision as recommended by the
commenter is not necessary and is therefore not adopted.
In paragraph 1150.152(a)(6) and section 1150.187, obsolete language
and references have been deleted.
Additionally, for good cause, AMS has determined that it is
necessary to set an effective date of less than 30 days for adoption of
the provisions regarding nomination and appointment of importer
representatives to the Board. This will enable the Secretary to
solicit, appoint, and seat importers representatives on the Board in an
efficient and expedient manner.
List of Subjects in 7 CFR Part 1150
Dairy products, Milk, Promotion, Research.
For the reasons set forth in the preamble, 7 CFR part 1150 is
amended as follows:
PART 1150--DAIRY PROMOTION PROGRAM
0
1. The authority citation for 7 CFR part 1150 continues to read as
follows:
Authority: 7 U.S.C. 4501-4514 and 7 U.S.C. 7401.
0
2. Section 1150.106 is revised to read as follows:
[[Page 14788]]
Sec. 1150.106 United States.
United States means all of the States, the District of Columbia,
and the Commonwealth of Puerto Rico.
0
3. Section 1150.109 is revised to read as follows:
Sec. 1150.109 Qualified program.
Qualified program means any dairy product promotion, research or
nutrition education program which is certified as a qualified program
pursuant to Sec. 1150.153.
0
4. Section 1150.111 is revised to read as follows:
Sec. 1150.111 Milk.
Milk means any class of cow's milk.
0
5. Sections 1150.120 through 1150.122 are added to read as follows:
Sec. 1150.120 Imported dairy product.
Imported dairy product means any product that is imported into the
United States under any of the Harmonized Tariff Schedule (HTS)
classification numbers listed in Sec. 1150.152(b)(1).
Sec. 1150.121 Importer.
Importer means a person that imports imported dairy products into
the United States as a principal or as an agent, broker, or consignee
of any person who produces or handles dairy products outside of the
United States for sale in the United States, and who is listed as the
importer of record for such dairy products.
Sec. 1150.122 CBP.
CBP means the United States Customs and Border Protection of the
Department of Homeland Security.
0
6. Section 1150.131 is revised to read as follows:
Sec. 1150.131 Establishment and membership.
(a) There is hereby established a National Dairy Promotion and
Research Board.
(b) Thirty-six members of the Board shall be United States
producers. For purposes of nominating producers to the Board, the
United States shall be divided into thirteen geographic regions and the
number of Board members from each region shall be as follows:
(1) One member from region number one comprised of the following
States: Alaska, Oregon and Washington.
(2) Eight members from region number two comprised of the following
States: California and Hawaii.
(3) Four members from region number three comprised of the
following States: Arizona, Colorado, Idaho, Montana, Nevada, Utah and
Wyoming.
(4) Four members from region number four comprised of the following
States: Arkansas, Kansas, New Mexico, Oklahoma and Texas.
(5) Two members from region number five comprised of the following
States: Minnesota, North Dakota and South Dakota.
(6) Five members from region number six comprised of the following
State: Wisconsin.
(7) Two members from region number seven comprised of the following
States: Illinois, Iowa, Missouri and Nebraska.
(8) One member from region number eight comprised of the following
States: Alabama, Kentucky, Louisiana, Mississippi and Tennessee.
(9) Three members from region number nine comprised of the
following States: Indiana, Michigan, Ohio and West Virginia.
(10) One member from region number ten comprised of the following
States: Commonwealth of Puerto Rico, District of Columbia, Florida,
Georgia, North Carolina, South Carolina, and Virginia.
(11) Two members from region number eleven comprised of the
following States: Delaware, Maryland, New Jersey and Pennsylvania.
(12) Two members from region number twelve comprised of the
following State: New York.
(13) One member from region number thirteen comprised of the
following States: Connecticut, Maine, Massachusetts, New Hampshire,
Rhode Island and Vermont.
(c) Two members of the Board shall be importers who are subject to
assessments under Sec. 1150.152(b).
(d) The Board shall be composed of milk producers and importers
appointed by the Secretary either from nominations submitted pursuant
to Sec. 1150.133 or in accordance with Sec. 1150.136. A milk producer
may be nominated only to represent the region in which such producer's
milk is produced.
(e) At least every five years, and not more than every three years,
the Board shall review the geographic distribution of milk production
volume throughout the United States and, if warranted, shall recommend
to the Secretary a reapportionment of regions and/or a modification of
the number of producer members from regions in order to best reflect
the geographic distribution of milk production volume in the United
States.
(f) At least once every three years, after the initial appointment
of importer representatives on the Board, the Secretary shall review
the average volume of domestic production of dairy products compared to
the average volume of imports of dairy products into the United States
during the previous three years and, on the basis of that review, if
warranted, reapportion the importer representation on the Board to
reflect the proportional shares of the United States market served by
domestic production and imported dairy products. The basis for
comparison of domestic production of dairy products to imported
products shall be estimated total milk solids. The calculation of total
milk solids of imported dairy products for reapportionment purposes
shall be the same as the calculation of total milk solids of imported
dairy products for assessment purposes.
(g) In determining the volume of milk produced and total milk
solids of dairy products produced in the United States, the Board and
Secretary shall utilize the information received by the Board pursuant
to Sec. 1150.171(a) and data published by the Department.
0
7. In Sec. 1150.132, paragraph (a) is revised to read as follows:
Sec. 1150.132 Term of office.
(a) The members of the Board shall serve for terms of three years,
except that:
(1) The members appointed to the initial Board shall serve
proportionately, for terms of one, two and three years.
(2) The 2 importer members initially appointed to the Board shall
serve until October 31, 2013, and October 31, 2014.
* * * * *
0
8. In Sec. 1150.133, paragraphs (a), (c), and (d) are revised, and a
new paragraph (e) is added to read as follows:
Sec. 1150.133 Nominations.
* * * * *
(a) The Secretary shall solicit nominations for producer
representation on the Board from all eligible organizations. For
nominations of producers, if the Secretary determines that a
substantial number of producers are not members of, or their interests
are not represented by, such eligible organizations, the Secretary
shall also solicit nominations from such producers through general
farmer organizations or by other means.
* * * * *
(c) An eligible producer organization may submit nominations only
for positions on the Board that represent regions in which such
eligible organization can establish that it represents a substantial
number of producers. If there is more than one Board position for any
such region, the organization may submit nominations for each position.
(d) Where there is more than one eligible organization representing
[[Page 14789]]
producers in a specific geographic region, the organizations may caucus
and jointly nominate producers for each position representing that
region on the Board for which a member is to be appointed. If joint
agreement is not reached with respect to any such nominations, or if no
caucus is held, each eligible organization may submit to the Secretary
nominations for each appointment to be made to represent that region.
(e) Nominations for representation of importers may be submitted
by:
(1) Organizations that represent importers of dairy products, as
approved by the Secretary. The primary considerations in determining if
organizations adequately represent importers of dairy products shall be
whether its membership consists primarily of importers of dairy
products and whether a substantial interest of the organization is in
the importation of dairy products and the promotion of the nutritional
attributes of dairy products; and
(2) Individual importers of dairy products. Individual importers
submitting nominations to represent importers on the Board must
establish to the satisfaction of the Secretary that the persons
submitting the nominations are importers of dairy products.
0
9. In Sec. 1150.134, the introductory text and paragraph (b) are
revised to read as follows:
Sec. 1150.134 Nominee's agreement to serve.
Any producer or importer nominated to serve on the Board shall file
with the Secretary at the time of the nomination a written agreement
to:
* * * * *
(b) Disclose any relationship with any organization that operates a
qualified program or has a contractual relationship with the Board; and
* * * * *
0
10. Section 1150.135 is revised to read as follows:
Sec. 1150.135 Appointments.
From the nominations made pursuant to Sec. 1150.133, the Secretary
shall appoint the members of the Board on the bases of representation
provided for in Sec. Sec. 1150.131(b) and 1150.131(c).
0
11. In Sec. 1150.139, paragraph (e) is revised to read as follows:
Sec. 1150.139 Powers of the Board.
* * * * *
(e) To disseminate information to producers, producer
organizations, importers, and importer organizations through programs
or by direct contact utilizing the public postage system or other
systems;
* * * * *
0
12. In Sec. 1150.140, paragraphs (b) and (n) are revised to read as
follows:
Sec. 1150.140 Duties of the Board.
* * * * *
(b) To appoint from its members an executive committee whose
membership shall equally reflect each of the different geographic
regions in the United States in which milk is produced and importer
representation on the Board, and to delegate to the committee authority
to administer the terms and provisions of this subpart under the
direction of the Board and within the policies determined by the Board;
* * * * *
(n) To encourage the coordination of programs of promotion,
research and nutrition education designed to strengthen the dairy
industry's position in the marketplace and to maintain and expand:
(1) domestic markets and domestic uses for fluid milk and dairy
products produced in the United States or imported into the United
States; and
(2) foreign markets and foreign uses for fluid milk and dairy
products produced in the United States.
0
13. In Sec. 1150.151, new paragraph (c) is added to read as follows:
Sec. 1150.151 Expenses.
* * * * *
(c) The Board is authorized to expend up to the amount of the
assessments collected from United States producers to promote dairy
products produced in the United States in foreign markets.
0
14. Section 1150.152 is revised to read as follows:
Sec. 1150.152 Assessments.
(a) Domestic Assessments. (1) Each person making payment to a
producer for milk produced in the United States and marketed for
commercial use shall collect an assessment on all such milk handled for
the account of the producer at the rate of 15 cents per hundredweight
of milk for commercial use, or the equivalent thereof, and shall remit
the assessment to the Board.
(2) Any producer marketing milk of that producer's own production
in the form of milk or dairy products to consumers, either directly or
through retail or wholesale outlets, shall remit to the Board an
assessment on such milk at the rate of 15 cents per hundredweight of
milk for commercial use or the equivalent thereof.
(3) In determining the assessment due from each producer pursuant
to Sec. 1150.152(a)(1) and (a)(2), a producer who is participating in
a qualified program(s) under Sec. 1150.153 shall receive a credit for
contributions to such program(s), but not to exceed 10 cents per
hundredweight of milk marketed.
(4) In order for a producer described in Sec. 1150.152(a)(1) to
receive the credit authorized in Sec. 1150.152(a)(3), either the
producer or a cooperative association on behalf of the producer must
establish to the person responsible for remitting the assessment to the
Board that the producer is contributing to a qualified program under
Sec. 1150.153. Producers who contribute to a qualified program
directly (other than through a payroll deduction) must establish with
the person responsible for remitting the assessment to the Board, with
validation by the qualified program, that they are making such
contributions.
(5) In order for a producer described in Sec. 1150.152(a)(2) to
receive the credit authorized in Sec. 1150.152(a)(3), the producer and
the applicable qualified program must establish to the Board that the
producer is contributing to the qualified program.
(6) The collection of assessments pursuant to Sec. 1150.152(a)(1)
and (a)(2) shall begin with respect to milk marketed on and after the
effective date of this section and shall continue until terminated by
the Secretary.
(7) Each person responsible for the remittance of the assessment
pursuant to Sec. 1150.152(a)(1) and (a)(2) shall remit the assessment
to the Board not later than the last day of the month following the
month in which the milk was marketed.
(8) Money remitted to the Board shall be in the form of a
negotiable instrument made payable to ``National Dairy Promotion and
Research Board.'' Remittances and reports specified in Sec.
1150.171(a) shall be mailed to the location designated by the Secretary
or the Board.
(b) Importer Assessments. (1) Each importer of dairy products
identified in the following table, except for as provided for in Sec.
1150.157, is responsible for paying an assessment of 7.5 cents per
hundredweight of U.S. milk, or equivalent thereof. The importer shall
use the assessment rate of $0.01327 per kilogram (kg) of milk solids to
calculate and pay the assessment.
[[Page 14790]]
------------------------------------------------------------------------
HTS Nos. for dairy import assessment
-------------------------------------------------------------------------
0401.10.0000
0401.20.2000
0401.20.4000
0401.30.0500
0401.30.2500
0401.30.5000
0401.30.7500
0402.10.1000
0402.10.5000
0402.21.0500
0402.21.2500
0402.21.3000
0402.21.5000
0402.21.7500
0402.21.9000
0402.29.1000
0402.29.5000
0402.91.1000
0402.91.3000
0402.91.7000
0402.91.9000
0402.99.1000
0402.99.3000
0402.99.4500
0402.99.5500
0402.99.7000
0402.99.9000
0403.10.1000
0403.10.5000
0403.10.9000
0403.90.0400
0403.90.1600
0403.90.2000
0403.90.4110
0403.90.4190
0403.90.4500
0403.90.5100
0403.90.5500
0403.90.6100
0403.90.6500
0403.90.7400
0403.90.7800
0403.90.8500
0403.90.9000
0403.90.9500
0404.10.0500
0404.10.1100
0404.10.1500
0404.10.2000
0404.10.5010
0404.10.5090
0404.10.9000
0404.90.1000
0404.90.3000
0404.90.5000
0404.90.7000
0405.10.1000
0405.10.2000
0405.20.2000
0405.20.3000
0405.20.4000
0405.20.6000
0405.20.7000
0405.20.8000
0405.90.1020
0405.90.1040
0405.90.2020
0405.90.2040
0406.10.0400
0406.10.0800
0406.10.1400
0406.10.1800
0406.10.2400
0406.10.2800
0406.10.3400
0406.10.3800
0406.10.4400
0406.10.4800
0406.10.5400
0406.10.5800
0406.10.6400
0406.10.6800
0406.10.7400
0406.10.7800
0406.10.8400
0406.10.8800
0406.20.1500
0406.20.2400
0406.20.2800
0406.20.3110
0406.20.3190
0406.20.3300
0406.20.3600
0406.20.3900
0406.20.4400
0406.20.4800
0406.20.5100
0406.20.5300
0406.20.6100
0406.20.6300
0406.20.6500
0406.20.6700
0406.20.6900
0406.20.7100
0406.20.7300
0406.20.7500
0406.20.7700
0406.20.7900
0406.20.8100
0406.20.8300
0406.20.8500
0406.20.8700
0406.20.8900
0406.20.9100
0406.30.0500
0406.30.1400
0406.30.1800
0406.30.2400
0406.30.2800
0406.30.3400
0406.30.3800
0406.30.4400
0406.30.4800
0406.30.5100
0406.30.5300
0406.30.6100
0406.30.6300
0406.30.6500
0406.30.6700
0406.30.6900
0406.30.7100
0406.30.7300
0406.30.7500
0406.30.7700
0406.30.7900
0406.30.8100
0406.30.8300
0406.30.8500
0406.30.8700
0406.30.8900
0406.30.9100
0406.40.4400
0406.40.4800
0406.40.5400
0406.40.5800
0406.40.7000
0406.90.0810
0406.90.0890
0406.90.1200
0406.90.1600
0406.90.1800
0406.90.3100
0406.90.3200
0406.90.3300
0406.90.3600
0406.90.3700
0406.90.4100
0406.90.4200
0406.90.4600
0406.90.4800
0406.90.4900
0406.90.5200
0406.90.5400
0406.90.6600
0406.90.6800
0406.90.7200
0406.90.7400
0406.90.7600
0406.90.7800
0406.90.8200
0406.90.8400
0406.90.8600
0406.90.8800
0406.90.9000
0406.90.9200
0406.90.9300
0406.90.9400
0406.90.9500
0406.90.9700
0406.90.9900
1517.90.5000
1517.90.6000
1702.11.0000
1702.19.0000
1704.90.5400
1704.90.5800
1806.20.2090
1806.20.2400
1806.20.2600
1806.20.2800
1806.20.3400
1806.20.3600
1806.20.3800
1806.20.8100
1806.20.8200
1806.20.8300
1806.20.8500
1806.20.8700
1806.20.8900
1806.32.0400
1806.32.0600
1806.32.0800
1806.32.1400
1806.32.1600
1806.32.1800
1806.32.6000
1806.32.7000
1806.32.8000
1806.90.0500
1806.90.0800
1806.90.1000
1806.90.1500
1806.90.1800
1806.90.2000
1806.90.2500
1806.90.2800
1806.90.3000
1901.10.1500
1901.10.3000
1901.10.3500
1901.10.4000
1901.10.4500
[[Page 14791]]
1901.20.0500
1901.20.1500
1901.20.2000
1901.20.2500
1901.20.3000
1901.20.3500
1901.20.4000
1901.20.4500
1901.20.5000
1901.90.2800
1901.90.3400
1901.90.3600
1901.90.4200
1901.90.4300
1901.90.7000
2105.00.1000
2105.00.2000
2105.00.3000
2105.00.4000
2106.90.0600
2106.90.0900
2106.90.2400
2106.90.2600
2106.90.2800
2106.90.3400
2106.90.3600
2106.90.3800
2106.90.6400
2106.90.6600
2106.90.6800
2106.90.7200
2106.90.7400
2106.90.7600
2106.90.7800
2106.90.8000
2106.90.8200
2202.90.1000
2202.90.2400
2202.90.2800
3501.10.1000
3501.10.5000
3501.90.6000
3502.20.0000
------------------------------------------------------------------------
(2) The assessment on imported dairy products shall be paid by the
importer to CBP at the time of entry summary for any products
identified in Sec. 1150.152(b)(1).
(3) The assessments collected by CBP pursuant to Sec.
1150.152(b)(2) of this section shall be transferred to the Board in
compliance with an agreement between CBP and the Secretary.
(4) The Secretary, at his or her discretion, shall verify the
information reported by importers to CBP to determine if additional
money is due the Board or an amount is due to an importer based on the
quantity imported and the milk solids content per unit. In the case of
money due to an importer from the Board, the Board will issue payment
promptly to the importer. In the case of money due from the importer to
the Board, the Secretary will send an invoice for payment directly to
the importer. The remittance will be due to the Secretary upon receipt
of the invoice. The Secretary will promptly forward such payments
received to the Board.
(5) If an importer elects to have funds remitted to a qualified
program(s), the importer shall inform the Secretary of such designation
by sending a letter to an address provided by the Secretary. Importer
remittances for qualified program(s) shall not exceed 2.5 cents per
hundredweight of milk, or equivalent thereof, of the 7.5 cents per
hundredweight of milk, or equivalent thereof, paid by the importer
pursuant to Sec. 1150.152(b)(1). The Secretary shall compute the funds
due for each qualified program designated by importers and direct the
Board to forward such funds to each qualified program.
(6) Assessments collected on imported dairy products shall not be
used for foreign market promotion of United States dairy products.
(7) Any money received by the Board pursuant to Sec.
1150.152(b)(1) before the Secretary appoints the initial importer
representatives to the Board shall not be spent by the Board but shall
be held in escrow until such appointment.
(8) The collection of assessments pursuant to Sec. 1150.152(a) and
(b) shall continue until terminated by the Secretary.
0
15. In Sec. 1150.153, revise the section heading and paragraphs (a)
(b)(2), (b)(3), (b)(4), and (b)(5), and remove the phrase ``State or
regional'' from paragraphs (c) introductory text, (c)(2), (c)(2)(i),
(c)(2)(ii), and (c)(2)(iii), and (c)(2)(iv) to read as follows:
Sec. 1150.153 Qualified dairy product promotion, research or
nutrition education programs.
(a) Any producer organization that conducts a State or regional
dairy product promotion, research or nutrition education program,
authorized by Federal or State law; or has been an active and ongoing
producer program before enactment of the Act; or is an importer
organization that conducts a promotion, research, or nutrition
education program may apply to the Secretary for certification of
qualification so that:
(1) Producers may receive credit pursuant to Sec. 1150.152(a)(3)
for contributions to such program; and
(2) The Board may remit payments designated by importers pursuant
to Sec. 1150.152(b)(5).
(b) * * *
(2) Except for producer programs operated under the laws of the
United States or any State, and except for importer programs, have been
active and ongoing before enactment of the Act;
(3) For producer organizations, be financed primarily by producers,
either individually or through cooperative associations, or for
importer organizations, be financed primarily by importers;
(4) Not use a private brand or trade name in its advertising and
promotion of dairy products unless the Board recommends and the
Secretary concurs that such preclusion should not apply;
(5) Certify to the Secretary that any requests from producers or
importers for refunds under the program will be honored by forwarding
to either the Board or a qualified program designated by the producer
or importer that portion of such refunds equal to the amount that
otherwise would be applicable to that program pursuant to Sec.
1150.152(a)(3) or (b)(5); and
* * * * *
0
16. Section 1150.155 is revised to read as follows:
Sec. 1150.155 Adjustment of accounts.
(a) Whenever the Board or the Department determines through an
audit of a person's reports, records, books or accounts or through some
other means that additional money is due the Board or that money is due
such person from the Board in accordance with 1150.152(a), such person
shall be notified of the amount due. The person shall then remit any
amount due the Board by the next date for remitting assessments as
provided in Sec. 1150.152(a). Overpayments shall be credited to the
account of the person remitting the overpayment and shall be applied
against amounts due in succeeding months.
(b) Any importer of dairy products against whose imports an
assessment has been collected under Sec. 1150.152(b) who believes that
such assessment or any portion of such assessment was made on milk
solids of U.S. origin or milk solids other than cow's milk may apply to
the Secretary for a reimbursement. The importer would be required to
submit satisfactory proof to the Secretary that the importer paid the
assessment for milk solids from milk produced from the U.S. or milk
solids other than cow's milk solids. The Secretary will instruct the
Board to send such reimbursement to the importer.
0
17. In Sec. 1150.156, paragraph (a) is revised to read as follows:
Sec. 1150.156 Charges and penalties.
(a) Late-payment charge. Any unpaid assessments due to the Board
pursuant to Sec. 1150.152 shall be increased 1.5 percent each month
beginning with the day following the date such assessments
[[Page 14792]]
were due. Any remaining amount due, which shall include any unpaid
charges previously made pursuant to this section, shall be increased at
the same rate on the corresponding day of each month thereafter until
paid.
(1) For the purpose of this section, any assessment pursuant to
Sec. 1150.152(a) that was determined at a date later than prescribed
by this subpart because of a person's failure to submit a report to the
Board when due shall be considered to have been payable by the date it
would have been due if the report had been filed when due. The
timeliness of a payment to the Board shall be based on the applicable
postmark date or the date actually received by the Board, whichever is
earlier.
(2) For the purpose of this section, any assessment not collected
by CBP at the time entry summary documents are filed by the importer is
considered to be past due. If CBP does not collect an assessment from
an importer, the importer shall be responsible for paying the
assessment and any late charges to the Secretary in the form of a
negotiable instrument made payable to ``USDA.'' The payment shall be
mailed to a location designated by the Secretary or sent in an
electronic form approved by the Secretary.
* * * * *
0
18. Section 1150.157 is revised to read as follows:
Sec. 1150.157 Assessment exemption.
(a) A producer described in Sec. 1150.152(a)(1) and (a)(2) who
operates under an approved National Organic Program (NOP) (7 CFR part
205) system plan; produces only products that are eligible to be
labeled as 100 percent organic under the NOP, except as provided for in
paragraph (h) of this section; and is not a split operation shall be
exempt from the payment of assessments.
(b) To apply for exemption under this section, a producer pursuant
to Sec. 1150.152 (a)(1) and (a)(2) shall submit a request for
exemption to the Board on a form provided by the Board at any time
initially and annually thereafter on or before July 1 as long as the
producer continues to be eligible for the exemption.
(c) A producer request for exemption shall include the following:
the producer's name and address, a copy of the organic farm or organic
handling operation certificate provided by a USDA-accredited certifying
agent as defined in section 2103 of the Organic Foods Production Act of
1990 (7 U.S.C. 6502), a signed certification that the applicant meets
all of the requirements specified in paragraph (a) of this section for
an assessment exemption, and such other information as may be required
by the Board and with the approval of the Secretary.
(d) If a producer described in Sec. 1150.152(a)(1) and (a)(2)
complies with the requirements of this section, the Board will grant an
assessment exemption and issue a Certificate of Exemption to the
producer within 30 days. If the application is disapproved, the Board
will notify the applicant of the reason(s) for disapproval within the
same timeframe.
(e) The producer described in paragraph (c) of this section shall
provide a copy of the Certificate of Exemption to each person
responsible for remitting assessments to the Board on behalf of the
producer pursuant to Sec. 1150.152(a).
(f) The person responsible for remitting assessments to the Board
pursuant to Sec. 1150.152(a) shall maintain records showing the exempt
producer's name and address and the exemption number assigned by the
Board pursuant to Sec. 1150.172(a).
(g) An importer who imports only products that are eligible to be
labeled as 100 percent organic under the NOP (7 CFR part 205) and who
is not a split operation shall be exempt from the payment of
assessments. That importer may submit documentation to the Board and
request an exemption from assessment on 100 percent organic dairy
products--on a form provided by the Board--at any time initially and
annually thereafter as long as the importer continues to be eligible
for the exemption. This documentation shall include the same
information required of producers in paragraph (c) of this section. If
the importer complies with the requirements of this section, the Board
will grant the exemption and issue a Certificate of Exemption to the
importer. The Board will issue the importer a 9-digit alphanumeric
Harmonized Tariff Schedule (HTS) classification valid for 1 year from
the date of issue. This HTS classification should be entered by the
importer on the Customs entry documentation.
(h) The exemption will apply not later than the last day of the
month following the Certificate of Exemption issuance date.
(i) Agricultural commodities produced and marketed under an organic
system plan, as described in 7 CFR 205.201, but not sold, labeled, or
represented as organic, shall not disqualify a producer from exemption
under this section, except that producers who produce both organic and
non-organic agricultural commodities as a result of split operations
shall not qualify for exemption. Reasons for conventional sales include
lack of demand for organic products, isolated use of antibiotics for
humane purposes, chemical or pesticide use as the result of State or
emergency spray programs, and crops from a buffer area as described in
7 CFR part 205, provided all other criteria are met.
(j) Importers who are exempt from assessment in paragraph (g) of
this section shall be eligible for reimbursement of assessments
collected by the CBP and may apply to the Secretary for a
reimbursement. The importer would be required to submit satisfactory
proof to the Secretary that the importer paid the assessment on exempt
organic products.
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19. Section 1150.171 is revised to read as follows:
Sec. 1150.171 Reports.
(a) Each producer marketing milk of that producer's own production
directly to consumers and each person making payment to producers and
responsible for the collection of the assessment under Sec.
1150.152(a) shall be required to report at the time for remitting
assessments to the Board such information as may be required by the
Board or by the Secretary. Such information may include but not be
limited to the following:
(1) The quantity of milk purchased, initially transferred or which,
in any other manner, are subject to the collection of the assessment;
(2) The amount of assessment remitted;
(3) The basis, if necessary, to show why the remittance is less
than the number of hundredweights of milk multiplied by 15 cents; and
(4) The date any assessment was paid.
(b) Importers of dairy products shall submit reports as requested
by the Secretary as necessary to verify that provisions pursuant to
Sec. 1150.152(b) have been carried out correctly, including
verification that correct amounts were paid based upon milk solids
content of the imported dairy products pursuant to Sec.
1150.152(b)(1).
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20. Section 1150.172 is revised to read as follows:
Sec. 1150.172 Books and records.
(a) Each producer who is subject to this subpart, and other persons
subject to Sec. 1150.171(a), shall maintain and make available for
inspection by employees of the Board and the Secretary such books and
records as are necessary to carry out the provisions of this subpart
and the regulations issued
[[Page 14793]]
hereunder, including such records as are necessary to verify any
reports required. Such records shall be retained for at least two years
beyond the fiscal period of their applicability.
(b) Each importer of dairy products shall maintain and make
available for inspection by the Secretary such books and records to
verify that provisions pursuant to Sec. 1150.152(b) have been carried
out correctly, including verification that correct amounts were paid
based upon milk solids content of the imported dairy products. Such
records shall be retained for at least two years beyond the calendar
period of their applicability. Such information may include but not be
limited to invoices, packing slips, bills of lading, laboratory test
results, and letters from the manufacturer on the manufacturer's
letterhead stating the milk solids content of imported dairy products.
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21 Section 1150.187 is revised to read as follows:
Sec. 1150.187 Paperwork Reduction Act assigned number.
The information collection and recordkeeping requirements contained
in Sec. Sec. 1150.133, 1150.152, 1150.153, 1150.171, 1150.172, and
1150.273 of these regulations (7 CFR part 1150) have been approved by
the Office of Management and Budget (OMB) under the provisions of 44
U.S.C. chapter 35 and have been assigned OMB Control Number 0581-0093
as appropriate.
Dated: March 14, 2011.
David R. Shipman,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2011-6322 Filed 3-17-11; 8:45 am]
BILLING CODE 3410-02-P