Pork Promotion, Research, and Consumer Information Act of 1985 Increase in Assessment Rate

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1230

RIN 0581-AB36

[No. LS-94-010]

Pork Promotion, Research, and Consumer Information Act of 1985--

Increase in Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: Pursuant to the Pork Promotion, Research, and Consumer

Information Act of 1985 (Act) and the Pork Promotion, Research, and

Consumer Information Order (Order) thereunder, this proposed rule would

increase the rate of assessment of 0.35 percent of market value of

porcine animals to 0.45 percent; and adjust the amount of assessment

per pound due on imported pork and pork products to reflect the

proposed 0.10 percent increase in the assessment rate and the decrease

in the 1994 average price for domestic barrows and gilts. The proposed

assessment increase and the proposed adjustment in assessments on

imported pork and pork products would increase annual funding of the

promotion, research, and consumer information program by an estimated

$10 million to $12 million over a 12-month period.

DATES: Written comments must be received by March 17, 1995.

ADDRESSES: Send two copies of comments to Ralph L. Tapp, Chief;

Marketing Programs Branch; Livestock and Seed Division; Agricultural

Marketing Service (AMS), USDA; P.O. Box 96456, Room 2624-S; Washington,

DC 20090-6456. Comments will be available for public inspection during

regular business hours at the above office in Room 2624 South

Agricultural Building, 14th and Independence Avenue SW., Washington,

DC.

FOR FURTHER INFORMATION CONTACT: Ralph L. Tapp, Chief, Marketing

Programs Branch, 202/720-1115.

SUPPLEMENTARY INFORMATION:

Executive Order 12866 and Regulatory Flexibility Act

The Department is issuing this rule in conformance with Executive

Order 12866.

This proposed rule has been reviewed under Executive Order 12778,

Civil Justice Reform. This proposed rule is not intended to have a

retroactive effect. The Act states that the statute is intended to

occupy the field of promotion and consumer education involving pork and

pork products and of [[Page 8580]] obtaining funds thereof from pork

producers and that the regulation of such activity (other than a

regulation or requirement relating to a matter of public health or the

provision of State or local funds for such activity) that is in

addition to or different from the Act may not be imposed by a State.

The Act provides that administrative proceedings must be exhausted

before parties may file suit in court. Under section 1625 of the Act, a

person subject to an order may file a petition with the Secretary

stating that such order, a provision of such order or an obligation

imposed in connection with such order is not in accordance with law;

and requesting a modification of the order or an exemption from the

order. Such person is afforded the opportunity for a hearing on the

petition. After the hearing, the Secretary would rule on the petition.

The Act provides that the district court of the United States in the

district in which the person resides or does business has jurisdiction

to review the Secretary's determination, if a complaint is filed not

later than 20 days after the date such person receives notice of such

determination.

Information available to the Department indicates that nearly all

of the estimated 278,000 pork producers and many of the estimated 200

importers can be classified as small entities. This proposed rule would

increase the rate of the assessment from 0.35 percent of the market

value of porcine animals to 0.45 percent, and would increase the cents

per pound and per kilogram of assessments on imported pork and pork

products subject to assessment. Adjusting the rate of assessment from

0.35 to 0.45 percent and increasing the assessment on imported pork and

pork products would result in an estimated increase in assessments of

$10 million to $12 million over a 12-month period. However, the gross

market value of all swine marketed in the United States during 1993

exceeded $10.6 billion. The economic impact of the proposed assessments

will not be a significant part of the total market value of swine.

This proposed rule also would adjust importer assessments to

reflect the increase in the assessment rate from 0.35 to 0.45 percent

and to reflect a decrease in the 1994 average market price for domestic

barrows and gilts. The combined effect of the assessment rate increase

and the decrease in the average market price would increase the

assessments on imported pork and pork products subject to assessments

by two- to four-hundredths of a cent per pound, or as expressed in

cents per kilogram, four- to nine-hundredths of a cent per kilogram.

Adjusting the assessments on imported pork and pork products would

result in an estimated increase in assessments of $175,000 over a 12-

month period.

Accordingly, the Administrator of AMS has determined that this

action will not have a significant economic impact on a substantial

number of small entities.

The information collection requirements contained in part 1230,

subparts A and B, have been previously approved by the Office of

Management and Budget (OMB) and have been assigned OMB Control Number

0851-0151.

The Act (7 U.S.C. 4801-4819) approved December 23, 1985, authorized

the establishment of a national pork promotion, research, and consumer

information program. The program is funded by an assessment rate of

0.35 percent of the market value of all porcine animals marketed in the

United States and an equivalent amount of assessment on imported

porcine animals, pork, and pork products. The final Order establishing

a pork promotion, research, and consumer information program was

published in the September 5, 1986, issue of the Federal Register (51

FR 31896; as corrected, at 51 FR 26283, and amended at 53 FR 1909, and

53 FR 30243). Assessments began on December 1, 1986.

The Order requires that producers pay to the Board an assessment of

0.35 percent of the market value of each porcine animal upon sale.

However, for purposes of collecting and remitting assessments, porcine

animals are divided into three separate categories (1) feeder pigs, (2)

slaughter hogs, and (3) breeding stock. The Order specifies that

purchasers of feeder pigs, slaughter hogs, and breeding stock shall

collect an assessment on these animals if assessments are due. The

Order further provides that for the purpose of collecting and remitting

assessments persons engaged as a commission merchant, auction market or

livestock market in the business of receiving such porcine animals for

sale on commission for or on behalf of a producer shall be deemed to be

a purchaser.

The Order requires importers of porcine animals to pay the U.S.

Customs Service (USCS), upon importation, the assessment of 0.35

percent of the porcine animal's declared value and importers of pork

and pork products to pay USCS, upon importation, the assessment of 0.35

percent of the market value of the live porcine animals from which such

pork and pork products were produced.

The procedures for collection and remittance of assessments are

specified in Sec. 1230.71 of the Order.

Pursuant to section 1620 of the Act, the assessment rate of 0.25

percent of the market value of porcine animals, pork, or pork products

sold or imported was established in the initial Order and was changed

to 0.35 percent on December 1, 1991. Based on the assessment rate of

0.35 percent, the total annual assessments collected during 1994 were

approximately $42 million. Assessments on imported pork and pork

products accounted for about $1.5 million of the total.

The Act and Sec. 1230.71 of the Order contain provisions for

increasing the initial rate of assessment. Section 1620(b)(2) of the

Act provides that the rate of the assessment in the initial Order may

be increased by not more than 0.1 percent per year upon recommendation

of the National Pork Producers Delegate Body whose producer and

importer members are appointed annually by the Secretary. The Act

further provides that the rate of assessment may be increased by no

more than 0.1 percent annually not to exceed 0.5 percent of the market

value unless the Delegate Body recommends a greater increase and the

increase is approved in a referendum.

The 1994 Delegate Body, at its annual meeting on March 3-5, 1994,

in Denver, Colorado, voted overwhelmingly to recommend to the Secretary

that the rate of assessment of 0.35 percent be increased to 0.45

percent. There were 170 Delegate Body members appointed by the

Secretary in 1994. At the Delegate Body meeting 154 delegates were

present during voting and voted 37,226 valid share votes. States and

importers are allotted one share per $1,000 of the aggregated amount of

assessment collected. There were 31,089 share votes cast in favor of

the 0.1 percent increase.

The following example will illustrate the effect of the 0.1 percent

increase on a per head basis. Based on the 1994 annual average five

market price of $39.57 per hundredweight for barrows and gilts with an

average weight of 248 pounds as reported in the USDA's publication

``Livestock, Meat, and Wool Weekly Summary and Statistics'' published

in January 1995, the total assessment per head at the assessment rate

of 0.45 percent would be 44 cents. At the assessment rate of 0.35

percent, the total per-head assessment would be 34 cents. Based on the

Delegate Body's recommendation in accordance with Sec. 1230.71(d) of

the Order, it is proposed that regulations be issued increasing the

rate of assessments from 0.35 to 0.45 percent. [[Page 8581]]

This proposed rule also would increase the amount of assessment on

all of the imported pork and pork products subject to assessment as

published in the Federal Register as a final rule September 8, 1994,

and effective on October 11, 1994 (59 FR 46323). This adjustment would

reflect the increase in the assessment rate to 0.45 percent and would

be consistent with the decrease in the annual average price of domestic

barrows and gilts for calendar year 1994 as reported by USDA, AMS,

Livestock and Grain Market News (LGMN) Branch. This adjustment in

assessments would make the equivalent market value of the live porcine

animal from which the imported pork and pork products were derived

reflect the recent decrease in the market value of domestic porcine

animals, thereby promoting comparability between the importer and

domestic assessments.

The methodology for determining the per-pound amounts for imported

pork and pork products was described in the supplementary information

accompanying the Order and published in the September 5, 1986, Federal

Register at 51 FR 31901. The weight of imported pork and pork products

is converted to a carcass weight equivalent by utilizing conversion

factors which are published in the USDA Statistical Bulletin No. 616

``Conversion Factors and Weights and Measures.'' These conversion

factors take into account the removal of bone, weight lost in cooking

or other processing, and the nonpork components of pork products.

Secondly, the carcass weight equivalent is converted to a live animal

equivalent weight by dividing the carcass weight equivalent by 70

percent, which is the average dressing percentage of porcine animals in

the United States. Thirdly, the equivalent value of the live porcine

animal is determined by multiplying the live animal equivalent weight

by an annual average market price for barrows and gilts as reported by

the USDA, AMS, LGMN Branch. The annual average price, which was based

on price data from six major markets, is now based on only five markets

as one of the six markets--St. Louis--closed in 1994. This average

price is published on a yearly basis during the month of January in the

LGMN Branch's publication ``Livestock, Meat, and Wool Weekly Summary

and Statistics.'' Finally, the equivalent value is multiplied by the

applicable assessment rate of 0.45 percent due on imported pork and

pork products. The end result is expressed in an amount per pound for

each type of pork or pork product. To determine the amount per kilogram

for pork and pork products subject to assessment under the Act and

Order, the cent-per-pound assessments are multiplied by a metric

conversion factor 2.2046 and carried to the sixth decimal.

The formula in the preamble for the Order at 51 FR 31901

contemplated that it would be necessary to recalculate the equivalent

live animal value of imported pork and pork products to reflect

increases in the rate of assessments or changes in the annual average

price of domestic barrows and gilts to maintain equity of assessments

between domestic and porcine animals and imported pork and pork

products.

Substituting the proposed assessment rate of 0.45 in the formula

and using the 1994 average annual five market price for domestic

barrows and gilts of $39.57 per hundredweight would result in an

increase in assessments for all the Harmonized Tariff Systems (HTS)

numbers in the table in Sec. 1230.110, 59 FR 46323; September 8, 1994,

of an amount equal to two- to four-hundredths of a cent per pound, or

as expressed in cents per kilogram, four- to nine-hundredths of a cent

per kilogram. Based on Department of Commerce, Bureau of Census, data

on the volume of imported pork and pork products available for the

period January 1, 1994, through September 30, 1994, the proposed

increases in the assessment amounts would result in an estimated

$175,000 increase in importer assessments over a 12-month period.

List of Subjects in 7 CFR Part 1230

Administrative practice and procedure, Advertising, Agriculture

research, Marketing agreement, Meat and meat products, Pork and pork

products.

For the reasons set forth in the preamble, it is proposed that 7

CFR part 1230 be amended as set forth below:

PART 1230--PORK PROMOTION, RESEARCH, AND CONSUMER INFORMATION

1. The authority citation for 7 CFR Part 1230 continues to read as

follows:

Authority: 7 U.S.C. 4801-4819.

Subpart--[Amended]

2. Subpart B--Rules and Regulations is amended by revising

Sec. 1220.110 to read as follows:

Sec. 1230.110 Assessments on Imported Pork and Pork Products.

(a) The following HTS categories of imported live porcine animals

are subject to assessment at the rate specified.

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Live porcine

animals Assessment

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0103.10.0000.. 0.45 percent Customs Entered Value.

0103.91.0000.. 0.45 percent Customs Entered Value.

0103.92.0000.. 0.45 percent Customs Entered Value.

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(b) The following HTS categories of imported pork and pork products

are subject to assessment at the rates specified. Assessment

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Assessment

Pork and pork products -------------------------

Cents/lb Cents/kg

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0203.11.0000.................................. .25 .551150

0203.12.1010.................................. .25 .551150

0203.12.1020.................................. .25 .551150

0203.12.9010.................................. .25 .551150

0203.12.9020.................................. .25 .551150

0203.19.2010.................................. .30 .661380

0203.19.2090.................................. .30 .661380

0203.19.4010.................................. .25 .551150

0203.19.4090.................................. .25 .551150

0203.21.0000.................................. .25 .551150

0203.22.1000.................................. .25 .551150

0203.22.9000.................................. .25 .551150

0203.29.2000.................................. .30 .661380

0203.29.4000.................................. .25 .551150

0206.30.0000.................................. .25 .551150

0206.41.0000.................................. .25 .551150

0206.49.0000.................................. .25 .551150

0210.11.0010.................................. .25 .551150

0210.11.0020.................................. .25 .551150

0210.12.0020.................................. .25 .551150

0210.12.0040.................................. .25 .551150

0210.19.0010.................................. .30 .661380

0210.19.0090.................................. .30 .661380

1601.00.2010.................................. .35 .771610

1601.00.2090.................................. .35 .771610

1602.41.2020.................................. .38 .837748

1602.41.2040.................................. .38 .837748

1602.41.9000.................................. .25 .551150

1602.42.2020.................................. .38 .837748

1602.42.2040.................................. .38 .837748

1602.42.4000.................................. .25 .551150

1602.49.2000.................................. .35 .771610

1602.49.4000.................................. .30 .661380

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3. Subpart B--Rules and Regulations is amended by revising

Sec. 1230.1120 to read as follows:

Sec. 1230.112 Rate of assessment.

In accordance with Sec. 1230.71(d) the rate of assessment shall be

0.45 percent of market value.

Dated: February 9, 1995.

Lon Hatamiya,

Administrator.

[FR Doc. 95-3783 Filed 2-14-95; 8:45 am]

BILLING CODE 3410-02-P