E7-13548. Soybean Promotion and Research Program; Section 610 Review

AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Confirmation of regulations.

SUMMARY:

This document summarizes the results of an Agricultural Marketing Service (AMS) review of the Soybean Promotion, Research, and Consumer Information Program under the criteria contained in section 610 of the Regulatory Flexibility Act (RFA). Based upon its review, AMS has determined that the Soybean Research and Promotion Order (Order) should be continued without change.

ADDRESSES:

Interested persons may obtain a copy of the review. Requests for copies should be sent to Kenneth R. Payne, Chief, Marketing Programs, Livestock and Seed Program, AMS, USDA, Room 2628-S, STOP 0251, 1400 Independence Avenue, SW., Washington, DC 20250-0251; Phone: [phone]; Fax: [phone]; or, online at www.regulations.gov.

FOR FURTHER INFORMATION CONTACT:

Kenneth R. Payne, Chief, Marketing Programs Branch, Livestock and Seed Program, AMS, USDA, Room 2638-S, STOP 0251, 1400 Independence Avenue, SW., Washington, DC 20250-0251 or e-mail [e-mail].

SUPPLEMENTARY INFORMATION:

The Order (7 CFR 1220) is authorized under the Soybean Promotion, Research, and Consumer Information Act (Act) (7 U.S.C. 6301 et seq.). This program is a national producer program for soybean and soybean product promotion, research, consumer information, and industry information as part of a comprehensive strategy to strengthen the soybean industry's position in the marketplace by maintaining and expanding existing domestic and foreign markets and uses for soybeans and soybean products, and to develop new markets and uses for soybean and soybean products. Soybean producers fund this program through a mandatory assessment of one-half of one percent (0.5 percent) of the net market price per bushel on soybeans marketed. Assessments collected under this program are used for promotion, research, consumer information, and industry information.

The national program is administered by the United Soybean Board (Board), which has 64 producer members. Board members serve 3-year terms and represent 28 states and 2 geographic units.

On February 18, 1999, AMS published in the Federal Register (64 FR 8014), a plan to review certain regulations, including the Soybean Promotion, Research, and Consumer Information Program, known as the Soybean Checkoff Program (Program), under criteria contained in section 610 of the Regulatory Flexibility Act (RFA) (U.S.C. 601-612). Updated plans were published in the Federal Register on January 4, 2002 (67 FR 525), August 14, 2003 (68 FR 48574), and March 24, 2006 (71 FR 14827). The reviews are being conducted over the next 10 years under section 610 of the RFA. Because many AMS regulations impact small entities, AMS decided, as a matter of policy, to review certain regulations which, although they may not meet the threshold requirement under section 610 of the RFA, warranted review.

As part of its review of the Program, AMS published a notice of review and request for written comments on the Soybean Research and Promotion Order in the December 2, 2005 issue of the Federal Register (70 FR 72257). Comments were due January 31, 2006. Comments were received from 18 various State soybean associations, a national trade association, and several soybean producers.

The review was undertaken to determine whether the Order should be continued without change, amended, or rescinded (consistent with the objectives of the Act) to minimize the impacts on small entities. In conducting this review, AMS considered the following factors: (1) The continued need for the Order; (2) the nature of complaints or comments from the public concerning the Order; (3) the complexity of the Order; (4) the extent to which the Order overlaps, duplicates, or conflicts with other Federal rules and, to the extent feasible, with state and local governmental rules; and (5) the length of time since the Order has been evaluated or the degree to which technology, economic conditions, or other factors have changed in the area affected by the Order.

Comments: USDA received comments from 18 various State soybean associations, national trade associations, and soybean producers regarding the Order and/or the regulations in response to the published notice of review.

A comment from the chairman of the United Soybean Board discussed background information about the Program as well as rationale for the continuation of the Order. The comment from the Board chairman addressed the intent of the 610 review. The chairman also referenced the results of the 2004 request for a referendum, in which only 3,206 valid requests for a referendum were cast. A total of 66,388 valid votes were required to prompt a referendum. Additionally, the comment referred to the recent return on investment study, which evaluated Program activities from 1995-2001, and determined that for every $1 invested, producers received $6.75 in returns.

Thirteen comments addressed the process used by the Board for selecting contractors. To obtain contractors, the Board periodically announces Request for Proposals (RFP) for potential contractors who provide specific services for the Board. As part of the oversight responsibility, USDA reviews and approves all contracts between the Board and contractors. The Board continually evaluates the work of all contractors, who are subject to audits. Competitive bidding is used by the Board and subcontractors, when deemed necessary.

Eighteen comments received questioned how the Board manages the Program's finances. The Board's financial records are audited on an annual basis by an independent auditor. Through the Board's compliance program and auditing authority, Qualified State Soybean Boards (QSSB) are periodically reviewed to ensure proper accounting procedures are in place so that checkoff dollars are not commingled with non-checkoff dollars and are spent on authorized activities. AMS also reviews and approves the annual financial audit of the Board, the operating and administrative budgets of the Board, and amendments made to either budget as the fiscal year progresses. Producers and organizations representing soybean producers are encouraged to attend State meetings and provide input during the decision-making process.

For budgeting purposes, the Board has adopted the use of a Budget Allocation Model, which allows all producers the opportunity to direct programs and funding. This model is used in conjunction with the Board's committee structure to allocate checkoff funds for Board activity. The Board is required under the Order to have its financial records annually reviewed by an independent certified public accountant. To date, the audits have not reflected any substantive reasons for concern and have indicated that the Board does adhere to the administrative cap set forth in the Act. Board financial information and meeting minutes are available to QSSBs and the general public upon request to the Board and are distributed to Board members.

The Board, by representation of producers nominated by State boards and appointed by the Secretary, is responsible for decisions that impact the entire soybean industry. Therefore, AMS understands the value of transparency of the Board's decisions and actions. In fiscal year 2006, Beyond the Bean magazine was distributed quarterly to producers to communicate educational, action-oriented checkoff activities of the Board. Additionally, Board and committee meetings are open to the public. The public, which includes QSSB representatives and producers, are afforded the opportunity to participate in Board and committee meetings and are encouraged to provide input in the decision-making process.

Fifteen comments made recommendations that include changes to the Act, such as: Doubling the assessment rate, changing how Board members are selected, the removal of legislation authorizing the Coordinating Committee, allowing for the payment of membership dues with checkoff dollars, and allowing checkoff funds generated in States to remain under the sole discretion and control of the each respective State. However, implementation of these suggestions would require changes to language in the Act itself, which would require congressional action.

Fourteen comments recommended changes to the Order, including suggestions on how referendums are conducted and a request to correct an erroneously eliminated section that allows State checkoff programs to pay refunds and mandate that producers requesting a refund direct their total assessment to the Board. The Order was amended in January 2007 to add the eliminated section back into the Order. The Order currently allows for soybean producers to petition for a referendum every five years. Suggestions received from the public on how the Order can be revised concerning change the referendum process have been forwarded to the Board for further consideration.

Five comments addressed the Board's decision to establish the United States Soybean Export Council (USSEC). AMS has reviewed all agreements and contracts to ensure that all activities were performed and permissible under the Act and Order. Preliminary information pertaining to the creation of USSEC and impact upon ASA are anticipated and will be distributed to Board members. Such information will also be made available to the public upon request.

Five comments addressed the method used for calculating eligible soybean producers. According to the Act, the term “producer” is defined as “any person engaged in the growing of soybeans in the United States, who owns or shares the ownership and risk of loss of such soybeans.” USDA periodically reviews data available from the Farm Service Agency to determine the total number of producers eligible to participate in a request for referendum.

Two comments indicated that the period used for Minimum Assessment Provision by the Board should begin either September or October instead of the beginning of the calendar year. The calendar year is used in order to provide consistency among the various accounting periods used by the QSSBs.

Based upon this review, the USDA has determined that the Order is not unduly complex. The USDA has not identified any relevant Federal rules or State and local regulations that duplicate, overlap, or conflict with the Order's requirements. While there are organizations that exist to conduct soybean research, the Board works with these organizations complementarily. In many cases, the work being done by these research institutions is either fully or partially funded by the Board.

There are State programs that promote generic soybeans and soybean products. These State programs are, in most cases, affiliated with the Board as the QSSBs in their respective States or geographic units. Assessments are collected by QSSBs, portions of which are retained by their respective geographic units for local generic soybean promotion, research, and information.

Additionally, these are some organizations that exist solely to represent soybean producers. These organizations are voluntary in nature and serve different functions. The activities of these organizations concentrate in areas not covered by the Order, and therefore do not duplicate or conflict with the Order

Based upon the review, AMS has determined that the Order should continue without change. AMS plans to continue working with the soybean industry in maintaining an effective Program.

Authority: 7 U.S.C. 6301-6311.

Dated: July 9, 2007.

Lloyd C. Day,

Administrator, Agricultural Marketing Service.