[Federal Register Volume 61, Number 91 (Thursday, May 9, 1996)]
[Rules and Regulations]
[Pages 21053-21065]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11602]
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DEPARTMENT OF AGRICULTURE
7 CFR Part 1280
[No. LS-95-010]
Sheep Promotion Research, and Information Program: Rules and
Regulations
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: This final rule implements provisions of a Sheep and Wool
Promotion, Research, Education, and Information Order (Order), which
will establish a national, industry-funded sheep and wool promotion,
research, and information program. This final rule establishes the
collection and remittance process, puts into effect the reporting
requirements, identifies and establishes the Harmonized Tariff Schedule
(HTS) classification numbers, conversion factors, and assessment rates
for imported sheep, sheep meat, wool, and wool products subject to
assessment, establishes procedures for calculating, collecting, and
remitting assessments on imported sheep, sheep meat, wool, and wool
products and establishes the basis for excluding certain imported sheep
and sheep products from assessment. Because the
[[Page 21054]]
Sheep Promotion, Research, and Information Act of 1994 (Act) provides
that imported raw wool will be exempted from the collecting provisions,
imported raw wool is not subject to assessment.
EFFECTIVE DATE: This final rule will become effective July 1, 1996.
FOR FURTHER INFORMATION CONTACT:
Ralph L. Tapp, Chief; Marketing Programs Branch; Livestock and Seed
Division; Agricultural Marketing Service (AMS), USDA, Room 2606-S; P.O.
Box 96456; Washington, DC 20090-6456, telephone number 202/720-1115.
SUPPLEMENTARY INFORMATION: Prior document in this proceeding: Proposed
Rule--Sheep Promotion and Research Program: Rules and Regulations--60
Federal Register (FR) 51737 (October 3, 1995).
Regulatory Impact Analysis
Executive Orders 12866 and 12778 and the Regulatory Flexibility Act
This final rule has been determined to be not significant for
purposes of Executive Order 12866 and therefore has not been reviewed
by the Office of Management and Budget (OMB).
This final rule has been reviewed under Executive Order 12778,
Civil Justice Reform. It is not intended to have a retroactive effect.
This rule will not preempt any State or local laws, regulations, or
policies unless they present an irreconcilable conflict with this rule.
The Act provides that 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
an exemption from certain provisions or obligations of the Order. The
petitioner will have the opportunity for a hearing on the petition.
Thereafter, the Secretary will issue a decision on the petition. The
Act provides that the district court of the United States in any
district in which the petitioner resides or carries on business has
jurisdiction to review the Secretary's decision, if the petitioner
files a complaint for that purpose not later than 20 days after the
date of the entry of the Secretary's decision. The petitioner must
exhaust his or her administrative remedies before he or she can
initiate any such proceeding in the district court.
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA) (5 U.S.C. 601 et seq.), AMS has considered the economic
impact of this final action on small entities. The purpose of RFA is to
fit regulatory actions to the scale of businesses subject to such
actions in order that small businesses will not be unduly burdened.
There are an estimated 87,350 domestic sheep producers and feeders
and an estimated 700 remittance persons who will be subject to the
rules and regulations issued pursuant to the Order. There are also an
estimated 9,000 importers who will become subject to these rules and
regulations. Nearly every sheep producer, feeder, and importer will be
classified as a small business under the criteria established by the
Small Business Administration (13 CFR Sec. 121.601).
The Act provides for the establishment of a coordinated program of
promotion and research designed to strengthen the sheep industry's
position in the marketplace and to maintain and expand foreign and
domestic markets and uses for sheep and sheep products. This program
will be financed by assessments on domestic and imported sheep and
sheep products which includes wool and wool products. Pursuant to the
Act, an Order approved in referendum was published on May 2, 1996, in
the Federal Register (XX FR XXXXX). The final Order became effective on
May 3, 1996, except for provisions concerning assessments. Those Order
provisions become effective July 1, 1996.
This final rule establishes the collection and remittance process,
puts into effect the reporting requirements of an Order, identifies and
establishes HTS classification numbers, conversion factors, and
assessment rates for imported sheep and sheep products (sheep meat,
wool, and wood products) subject to the assessment, establishes
procedures for calculating, collecting, and remitting assessments on
imported sheep, sheep meat, wool, and wool products and establishes the
basis for excluding certain imported sheep and sheep products from
assessment. Because the Act exempts imported raw wool from the
collecting provisions, imported raw wool is not a subject to
assessment.
This final rule will implement applicable Order provisions in the
manner provided therein. Accordingly, the Administrator of AMS has
determined that this rule will not have a significant economic impact
on a substantial number of small entities.
Paperwork Reduction
In accordance with the Paperwork Reduction Act of 1980 (44 U.S.C.
Chapter 35), OMB has approved the information collection and
recordkeeping requirements contained in Part 1280 for domestic
producers, feeders, handlers, and processors of sheep and wool, and
assigned control number 0581-0093.
Based on comparable research and promotion programs, it should
require approximately 0.5 hours per response for producers, feeders,
handlers, and persons other than the person making payment to the
producer, feeder, or handler, to complete a reporting form on a monthly
basis.
For importers, the Department of Agriculture (Department) intends
to rely to a great extent on records maintained by the U.S. Customs
Service (Customs) and by importers under Customs's requirements for its
administration and enforcement of the provisions of the final
regulations.
Any person subject to the assessment, collection, and remittance
provisions of the Act and the Order would be expected to maintain and
make available to the Secretary such books and records as necessary to
carry out the provisions of the Order and these regulations. Such books
and records must be maintained for at least 2 years beyond the fiscal
period of their applicability.
Background
The Act (7 U.S.C. 7101-7111) enacted on October 22, 1994,
authorizes the Secretary to establish a national sheep and wool
promotion, research, education, and information program designed to
strengthen the sheep industry's position in the marketplace, to
maintain and expand existing domestic and foreign markets and uses for
sheep and sheep products and to develop new markets and uses for sheep
and sheep products. The program will be funded by assessments on
domestic sheep producers, sheep feeders, and exporters of live sheep
and greasy wool of 1 cent per pound on live sheep sold and 2 cents per
pound on greasy wool sold. Importers will be assessed 1 cent per pound
on live sheep imported and the equivalent of 1 cent per pound of live
sheep for sheep products imported as well as 2 cents per pound of
degreased wool or the equivalent of degreased wool for wool and wool
products imported. Imported raw wool will be exempt from assessments.
Each person who processes or causes to be processed sheep or sheep
products of that person's own production and markets the processed
products will be assessed the equivalent of 1 cent per pound of live
sheep sold or 2 cents per pound of greasy wool sold. All assessment
rates may be adjusted in accordance with applicable provisions of the
Act.
[[Page 21055]]
The Order requires that each person who makes payment to a sheep
producer, feeder, or handler of sheep or sheep products be a collecting
person who collects the assessment from the producer, feeder, or
handler of sheep or sheep products and passes the collected assessment
on to the subsequent purchaser pursuant to the Act. Any person who buys
domestic live sheep or greasy wool for processing must collect the
assessment from the producer, feeder, or handler and remit it to the
National Sheep Promotion, Research, and Information Board (Board). Any
person who processes or causes to be processed sheep or sheep products
of the person's own production and markets the processed products is
required to pay an assessment and to remit that assessment to the
Board. Any person who exports live sheep or greasy wool is required to
pay an assessment and to remit it to the Board at the time of export.
Finally, each person who imports sheep and sheep products, other than
imported raw wool, is required to pay an assessment. Customs will
collect the assessments on imported sheep and sheep products upon
importation and forward them to AMS for disbursement to the Board.
The Order further defines a collecting person as any person who is
responsible for collecting an assessment pursuant to the Act, the
Order, and these regulations, including processors and any other
persons who are required to remit assessments to the Board, except that
a collecting person who is a market agency, i.e., commission merchant,
auction market, or livestock market in the business of receiving such
sheep or sheep products for sale on commission for or on behalf of a
producer or feeder, shall pass the collected assessment on to the
subsequent purchaser pursuant to the Act, the Order and these
regulations.
For the purposes of the collection of assessments on imported sheep
and sheep products by Customs, the Harmonized Tariff Schedule (HTS)
classification numbers published by the United States International
Trade Commission (USITC) will be used to identify imported sheep and
sheep products that are subject to the assessment. The HTS
classification system identifies each category of imported sheep, sheep
meat, wool, and products that contain wool fiber by a 10-digit
classification number and provides a brief description of the imported
product that corresponds to the various classification numbers.
Additionally, the HTS classification number may be further divided into
multiple fiber categories for products that contain a blend of fibers.
In determining which HTS classification numbers are assessed under
this final rule, the Department's primary objectives were to meet the
intent of the Act by maximizing participation of imported sheep, sheep
meat, wool, and wool products in the assessment collection provisions
of the Act and to minimize the burden of administering those
provisions. To make certain these objectives would be met, the
Department reviewed 5 years, 1989-1993, of historical import data for
sheep, sheep meat, wool and products containing wool fibers from the
Bureau of Census of the U.S. Department of Commerce. These data are
available on CD-ROM, entitled ``International Harmonized System
Commodity Classification by Country by Customs District.'' The
Department analyzed the total volume of imported sheep, sheep meat,
wool, and wool products subject to the assessment by identifying the
HTS classification numbers and corresponding conversion factors.
The Department identified over 700 HTS classification numbers
during a review of the import library published by the Department's
Economic Research Service (ERS). The Department has determined that of
the approximately 700 HTS classification numbers, slightly more than
600 are considered active or potentially subject to assessment. These
numbers are continually updated, deleted, or expanded, thereby
eliminating existing HTS categories or creating new ones. Based on the
projected revenue for imported sheep and sheep products, from the
slightly more than 600 active HTS classification numbers for sheep and
sheep products, the Department identified in the October 3, 1995,
Federal Register (60 FR 51737) 340 HTS classification numbers that
account for over 99 percent of the total projected import revenues.
Accordingly, the Department has limited the collection of assessments
to this lower level, thereby not including a significant number of low-
volume HTS categories.
Limiting the number of imported sheep and sheep products that would
be subject to assessments would reduce the administrative cost and
burden on Customs and importers, and would reduce administrative costs
to the Board, while allowing the Board to collect the vast majority of
potential import assessments consistent with the Act.
The USITC recently published an updated list of all of the HTS
classification numbers. Some HTS classification numbers published in
the October 3, 1995, proposed rule have been changed and one has been
divided into two numbers. In light of the recent update, the Department
has expanded the HTS classification numbers that will be subject to the
assessment from 340, as initially proposed, to 341. Therefore, the
following revisions to Table I, Imported Sheep and Sheep Products
Assessment Table, used in the sheep and wool promotion, research and
information program were necessary:
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Old number New number Comment
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5703100000.............................. 5703100020 Use same conversion factor.
5703100080 Do.
5705002010.............................. 5705002005 Do.
6104591000.............................. 6104591005 Do.
6115199020.............................. 6115198020 Do.
6115932910.............................. 6115939010 Do.
6204693020.............................. 6204696020 Do.
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Because import assessments are based on a live-weight equivalent
for imported sheep meat and degreased wool, or its equivalent for wool
and wool products, the Department has decided to use conversion factors
developed and published by ERS to convert imported sheep products to
the required live-weight equivalents, degreased wool, or degreased wool
equivalents, to determine the amount of assessment due on each HTS
category upon importation. These conversion factors are available for
the over 700 HTS classification numbers and are updated and maintained
as an import library. For sheep meat, these conversion factors take
into account removal of bone, weight lost in processing or cooking, and
the nonsheep components of the sheep products. For wool and products
[[Page 21056]]
containing wool fibers, these conversion factors take into account
fiber loss during processing, fabric trim loss, and cutting loss for
wool, and other non-sheep components of wool and wool products. The
Department has decided to use these conversion factors for calculating
the assessment because calculating carcass equivalents and wool content
for each individual product before entry would be both costly and
impractical.
The factors for calculating the assessment on imported sheep, sheep
meat, wool, and products containing wool fiber include the (1) HTS
classification number, (2) conversion factor, (3) assessment rate as
established under the Act, and (4) dressing percentage. Based on a 9-
year average, 1980-1989, the average dressing percentage for sheep in
the United States is 50.2 percent, as published by ERS in the 1992
edition of Conversion Factors, Weights and Measures of Agricultural
Commodities and Their Products.
Imported live sheep require no conversion because each animal will
be assessed based on its live weight.
Examples of calculating the assessment on sheep, sheep meat, wool,
and products containing wool fibers are as follows:
Example I
Live Sheep
To calculate the assessment for live sheep, an importer would
multiply the total weight of imported live sheep by 1 cent per pound.
The following example illustrates a typical calculation for imported
live sheep:
HTS 0104100000, Live sheep:
Live Weight........................... 125 lbs
Assessment rate....................... x $0.01/lb
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Assessment........................ $1.25
Examples II and III
Sheep Meat
To calculate the assessment for imported sheep meat, an importer
would (1) multiply the total weight of imported sheep meat by the
conversion to determine the total carcass weight equivalent, then (2)
divide the total carcass weight equivalent by 50.2 percent to calculate
the live animal equivalent, and (3) multiply the live animal equivalent
by 1 cent per pound. The following examples illustrate two typical
sheep meat calculations:
1. Sheep Meat (Bone-in)
HTS 0204100000, Carcasses and half
carcasses of lamb, fresh or chilled:
Net Weight........................... 1,000 lbs
Conversion factor.................... x 1.00
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Carcass weight equivalent............ = 1,000 lbs
Average dressing percent............. 