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AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Proposed rule.

SUMMARY:

This proposed rule would amend the Beef Promotion and Research Order (Order) established under the Beef Promotion and Research Act of 1985 (Act) to reduce assessment levels for imported beef and beef products based on revised determinations of live animal equivalencies and to update and expand the Harmonized Tariff System numbers and categories, which identify imported live cattle, beef, and beef products to conform with recent updates in the numbers and categories used by the U.S. Customs and Border Protection (USCBP).

DATES:

Written comments regarding changes to this proposed rule must be received by December 5, 2005.

ADDRESSES:

Send any written comments to Kenneth R. Payne, Chief; Marketing Programs Branch, Room 2638-S; Livestock and Seed Program; Agricultural Marketing Service (AMS), USDA; STOP 0251; 1400 Independence Avenue, SW.; Washington, DC 20250-0251. Comments may be sent by facsimile to 202/720-1125 and by electronic mail to BeefComments@usda.gov or www.regulations.gov. State that your comments refer to Docket No. LS-01-06. Comments received may be inspected at this location between 8 a.m. and 4:30 p.m., Monday through Friday, except holidays, or on the Internet at http://www.ams.usda.gov/​lsg/​mpb/​rp-beef.htm.

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FOR FURTHER INFORMATION CONTACT:

Kenneth R. Payne, Chief, Marketing Programs Branch on 202/720-1115, fax 202/720-1125, or by e-mail at Kenneth.Payne@usda.gov.

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SUPPLEMENTARY INFORMATION:

Executive Order 12866

The Office of Management and Budget (OMB) has waived the review process required by Executive Order 12866 for this action.

Executive Order 12988

This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have a retroactive effect.

Section 11 of the Act provides that nothing in the Act may be construed to preempt or supersede any other program relating to beef promotion organized and operated under the laws of the United States or any State. There are no administrative proceedings that must be exhausted prior to any judicial challenge to the provisions of this rule.

Regulatory Flexibility Act

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.), the Administration has considered the economic effect of this action on small entities and has determined that this proposed rule will not have a significant economic impact on a substantial number of small business entities. The effect of the Order upon small entities was discussed in the July 18, 1986 Federal Register [51 FR 26132]. 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 approximately 270 importers who import beef or edible beef products into the United States and 198 importers who import live cattle into the United States. The majority of these operations subject to the Order are considered small businesses under the criteria established by the Small Business Administration (SBA) [13 CFR 121.201]. SBA defines small agricultural businesses as those with annual receipts of less than $5 million.

The proposed rule imposes no significant burden on the industry. It would merely update and expand the HTS numbers and categories to conform to recent updates in the numbers and categories used by USCBP. This proposed rule also adjusts the live animal equivalencies used to determine the amount of assessments collected on imported beef and beef products. This adjustment reflects an increase in the average dressed weight of cows slaughtered under Federal inspection that has occurred since the inception of the Beef Checkoff Program. Total import assessments collected under the Beef Checkoff Program in 2004 were $8,322,145 including both live cattle and beef and beef products. The Department estimates that the proposed adjustment for 2005 could result in a decrease in importer assessment of approximately $800,000. Accordingly, the Administrator of AMS has determined that this action will not have a significant impact on a substantial number of small entities.

Paperwork Reduction Act

In accordance with OMB regulations [5 CFR part 1320] that implement the Paperwork Reduction Act of 1995 [44 U.S.C. Chapter 35], the information collection and recordkeeping requirements contained in the Order and Rules and Regulations have previously been approved by OMB under OMB control number 0581-0202 and merged into OMB control number 0581-0093.

Background and Proposed Change

The Act authorized the establishment of a national beef promotion and research program. The final Order was published in the Federal Register on July 18, 1986, (51 FR 21632) and the collection of assessments began on October 1, 1986. The program is administered by the Cattlemen's Beef Promotion and Research Board (Board) appointed by the Secretary of Agriculture (Secretary) from industry nominations composed of 104 cattle producers and importers. The program is funded by a $1-per-head assessment on producer marketing of cattle in the United States and on imported cattle as well as an equivalent amount on imported beef and beef products.

Importers pay assessments on imported cattle, beef, and beef products. USCBP collects and remits the assessment to the Board. The term “importer” is defined as “any person who imports cattle, beef, or beef products from outside the United States.” Imported beef or beef products is defined as “products which are imported into the United States which the Secretary determines contain a substantial amount of beef including those products which have been assigned one or more of the following Start Printed Page 58096numbers in the Tariff Schedule of the United States.”

In 1989, USCBP implemented a new numbering system, the Harmonized Tariff Schedule (HTS), to replace the Tariff Schedule of the United States (TSUS) system. The Department updated the TSUS to HTS, in a final rule, published in the Federal Register on April 20, 1989, (54 FR 15915) to conform with updates made by USCBP. Since the inception of HTS, it has undergone many changes. First, the original 11 digit system has been replaced with a 10 digit system. Additionally, most of the categories regarding imported beef and beef products have been subdivided and the new categories have been assigned HTS numbers. One of the purposes of this proposed rule is to update, expand, and revise the table found under § 1260.172 (7 CFR § 1260.172) to reflect the current HTS numbers.

As a result of these changes to HTS, there are 20 new categories that cover imported live cattle subject to assessment compared with the previous 8 categories. The 30 categories identifying imported beef and beef products have been expanded to 54 categories. The chart, as published in the April 20, 1989, Federal Register final rule [54 FR 15918], is as follows:

This rule proposes to update and expand the chart published in the 1989 final rule to conform with recent changes to the HTS numbering system and revises the live weight equivalents used to calculate import assessments. Importers are currently paying the same assessment level for imported beef and beef products that was established when the Order was first published in 1986. At that time, the average dressed weight of cows slaughtered under Federal inspection was determined to be 509 pounds. The Department determined that using the average dressed weight of domestic cows slaughtered under Federal inspection would be most suitable because about 90 percent of imported beef and beef products were similar to domestic cow beef.

The Act requires that assessments on imported beef and beef products be determined by converting such imports into live animal equivalents to ascertain the corresponding number of head of cattle. Carcass weight is the principle factor in calculating live animal equivalents. Under the Order the Board may increase or decrease the level of assessments for imported beef and beef products based upon revised determination of live animal equivalencies.

The trend in cattle weight has been increasing. This is attributed to many factors such as genetic improvements, more refined feeding programs, better animal health, and better overall management. The weight of cattle will more than likely increase or hold steady. At the time the Order was published, the average dressed weight of cows slaughtered under Federal inspection in 1985 was 509 pounds compared to an average of 614 pounds for calendar year 2004.

The Department has received two recommendations concerning importer assessments. The Meat Importers Council of America (MICA) requested to increase the live animal equivalency rate that would reduce the amount of assessments collected from importers of beef and beef products. MICA suggests using the dressed cow weight for calendar year 2000 to recalculate levels of assessments. This average would be 579 pounds. In updating the average dressed cow weight for calendar year 2004, the average would be 614 pounds. The Board has recommended using an average dressed cow weight from 1987 to the most current data. The Board states that “establishing an average over this period of time takes into account short term highs and lows due to the cattle cycle, weather effects, and feed prices.” This average would be 555 pounds.

After consideration of both recommendations, the Department has concluded that it is preferable to calculate the average using the past 5-year average dressed weight of all cows slaughtered in the U.S. under Federal inspection.

There is not a consistent calculation method among the various countries regarding average carcass weights of cattle slaughtered for export, the Department proposes that the average carcass weight, which will be used in calculating the live animal equivalents, will be the 5-year average (2000, 2001, 2002, 2003, and 2004) carcass weight of cows slaughtered in the United States. The average carcass weight of domestic cattle is not subject to variations in carcass weights resulting from possible differing methods of calculation in any of the exporting countries. Historically, since the majority of cattle are imported from Canada and Mexico and the majority of beef and beef products are imported from Canada, Australia, and New Zealand, the average U.S. dressed cow weight would be the most suitable because of the similarity of domestic cow beef and beef products from these exporting countries.

Additionally, an average over this period of time achieves the goal of reflecting current genetics, production practices, and technology while also reflecting normal marketing conditions. A shorter time period, such as the most recent year, is subject to unusual marketing conditions. For example, severe drought or a sudden dip in milk prices may lead to a substantial shift in the normal marketing patterns for cull beef and dairy cows. A longer period, such as 10 or 15 years, does not achieve the goal of reflecting changes in animal genetics and industry production practices.

Accordingly, the Department has determined that the most recent 5-year weighted average balances the need to adjust for current genetics and technology while minimizing the influence of atypical marketing conditions on the average carcass weights of cows coming to slaughter. The 5-year weighted average would be 592 pounds.

Further, the Department has used standard conversion factors for determining the amount of a particular type of beef or beef product represents a carcass. These conversions factors take into account the removal of bone, weight lost in cooking or other processing, and the non-beef components of beef products. The conversion factors have been utilized to determine the rate of assessment charged to importers. The rate of assessment is calculated by dividing the conversion factor by the average carcass weight and multiplying the result by the $1-per-head assessment rate. The current rates being assessed by USCBP, as well as the most current HTS numbers, are as follows:Start Printed Page 58098

The proposed assessment rates for imported beef and beef products are set forth in the regulatory text of § 1260.172. In 2004, importers' contribution to the program totaled $8,322,145 including both live cattle and beef and beef products. The Department estimates that the proposed adjustment for 2005 could results in a decrease in importer assessment of approximately $800,000.

A 60-day comment period is provided for interested persons to comment.

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List of Subjects in 7 CFR part 1260

• Administrative practice and procedure
• Advertising
• Agricultural research
• Marketing agreements
• Meat and meat products, beef, and beef products

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For the reasons set forth in the preamble, it is proposed that title 7 of the CFR part 1260 be amended as follows:

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PART 1260—BEEF PROMOTION AND RESEARCH

1. The authority citation of part 1260 continues to read as follows:

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Authority: 7 U.S.C. 2901-2911.

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2. Paragraph (b)(2) of § 1260.172 is revised to read as follows:

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