AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Proposed rule.

SUMMARY:

This proposed rule would adjust representation on the Cattlemen's Beef Promotion and Research Board (Board), established under the Beef Promotion and Research Act of 1985 (Act), to reflect changes in domestic cattle inventories as well as changes in levels of imported cattle, beef, and beef products that have occurred since the Board was last reapportioned in July 2017. These adjustments are required by the Beef Promotion and Research Order (Order) and, if adopted, would result in an increase in Board membership from 99 to 101, effective with the Secretary of Agriculture's (Secretary) appointments for terms beginning early in the year 2021.

DATES:

Submit comments on or before February 28, 2020.

ADDRESSES:

Comments should be posted online at www.regulations.gov. Comments received will be posted without change, including any personal information provided. All comments should reference the docket number AMS-LP-19-0012, the date of submission, and the page number of this issue of the Federal Register. Comments may also be sent to Kahl Sesker, Agricultural Marketing Specialist; Research and Promotion Division; Livestock and Poultry Program, AMS, USDA; Room 2610-S, STOP 0251, 1400 Independence Avenue SW; Washington, DC 20250-0251; or via fax to (202) 720-1125. Comments will be made available for public inspection at the above address during regular business hours or via the internet at www.regulations.gov.

FOR FURTHER INFORMATION CONTACT:

Kahl Sesker, Research and Promotion Division, at (202) 253-8253; fax (202) 720-1125; or by email at Kahl.Sesker@usda.gov.

SUPPLEMENTARY INFORMATION:

Executive Orders 12866, 13563, and 13771

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health, and safety effects; distributive impacts; and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. This rule does not meet the definition of a significant regulatory action contained in section 3(f) of Executive Order 12866 and therefore, the Office of Management and Budget (OMB) has waived review of this action. Additionally, because this rule does not meet the definition of a significant regulatory action, it does not trigger the requirements contained in Executive Order 13771. See OMB's Memorandum titled “Interim Guidance Implementing Section 2 of the Executive Order of January 30, 2017, titled ‘Reducing Regulation and Controlling Regulatory Costs’ ” (February 2, 2017).

Executive Order 12988

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

Section 11 of the Act (7 U.S.C. 2910) 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 U.S. or any State. There are no administrative proceedings that must be exhausted prior to any judicial challenge to the provisions of this rule.

Executive Order 13175

This action 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 would not have substantial and direct efforts on Tribal governments or significant Tribal implications.

Paperwork Reduction Act

In accordance with OMB regulations (5 CFR 1320) that implement the Paperwork Reduction Act of 1995 (44 U.S.C. part 35), the information collection and recordkeeping requirements contained in the Order and accompanying Rules and Regulations have previously been approved by OMB and were assigned OMB control number 0581-0093.

Background and Proposed Action

The Board was initially appointed on August 4, 1986, pursuant to the provisions of the Act (7 U.S.C. 2901-2911), and the Order issued thereunder. Domestic representation on the Board is based on cattle inventory numbers, while importer representation is based on the conversion of the volume of imported cattle, beef, and beef products into live animal equivalencies.

Reapportionment

Section 1260.141(b) of the Order provides that the Board shall be composed of cattle producers and importers appointed by the Secretary from nominations submitted by certified producer and importer organizations. A producer may only be nominated to represent the State or unit in which that producer is a resident.

Section 1260.141(c) of the Order provides that at least every 3 years, but not more than every 2 years, the Board shall review the geographic distribution of cattle inventories throughout the United States and the volume of imported cattle, beef, and beef products and, if warranted, shall reapportion units and/or modify the number of Board members from units in order to reflect the geographic distribution of cattle production volume in the United States and the volume of cattle, beef, or beef products imported into the United States.

Section 1260.141(d) of the Order authorizes the Board to recommend to the Secretary modifications to the number of cattle per unit necessary for representation on the Board.

Section 1260.141(e)(1) provides that each geographic unit or State that includes a total cattle inventory equal to or greater than 500,000 head of cattle shall be entitled to one representative on the Board. Section 1260.141(e)(2) provides that States that do not have total cattle inventories equal to or greater than 500,000 head shall be grouped, to the extent practicable, into geographically-contiguous units, each of which have a combined total inventory of not less than 500,000 head. Such grouped units are entitled to at least one representative on the Board. Each unit is entitled to an additional Board member for each additional 1 million head of cattle within the unit, as provided in § 1260.141(e)(4). Further, as provided in § 1260.141(e)(3), importers are represented by a single unit, with their number of Board members based on a conversion of the total volume of imported cattle, beef, or beef products into live animal equivalencies.

The proposed producer representation is based on an average of the inventory of cattle in the various States on January 1 in 2017, 2018, and 2019 as reported by USDA's National Agricultural Statistics Service (NASS). The proposed importer representation is based on a combined total average of the 2016, 2017, and 2018 live cattle imports as published by USDA's Economic Research Service (ERS) and the average of the 2016, 2017, and 2018 live animal equivalents for imported beef and beef products.

In considering reapportionment, the Board reviewed cattle inventories as of January 1 in 2017, 2018, and 2019, as well as cattle, beef, and beef product import data for the period of January 1, 2016, to December 31, 2018. The Board determined that an average of the inventory of cattle on January 1 in 2017, 2018, and 2019 best reflect the number of cattle in each State or unit since publication of the last reapportionment rule in 2017 (82 FR 27611). The Board reviewed data published by ERS to determine proper importer representation. The Board recommended the use of the average of a combined total of the 2016, 2017, and 2018 cattle import data and the average of the 2016, 2017, and 2018 live animal equivalents for imported beef products. The method used to calculate the total number of live animal equivalents was the same as that used in the previous reapportionment of the Board. The live animal equivalent weight was changed in 2006 from 509 pounds to 592 pounds (71 FR 47074).

The Board's recommended reapportionment plan, if adopted, would increase the number of representatives on the Board from 99 to 101. From the Board's analysis of USDA cattle inventories and import equivalencies, Nebraska would gain one Board seat, Texas would gain one Board seat, and Wisconsin would gain one Board seat. Geographic changes would include dissolving the Southeast Unit so that Alabama and Georgia would be stand-alone States that have enough inventory to each qualify for a position on the Board. South Carolina would be added to the Mid-Atlantic Unit. Maryland would move from the Mid-Atlantic Unit to the Northeast Unit, leaving South Carolina and West Virginia to make up the new Mid-Atlantic Unit, which would qualify for one member. The new Northeast Unit would qualify for one member and be composed of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, Rhode Island, and Vermont. Importer representation would remain at seven.

The States and units affected by the reapportionment plan and the current and proposed member representation per unit are as follows:

The Board reapportionment as proposed by this rulemaking would take effect, if adopted, with the Secretary's appointments to fill positions early in the year 2021.

A 60-day comment period is provided to allow interested persons to respond to this proposal.

Initial Regulatory Flexibility Act

Pursuant to the requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.), AMS considered the economic effect of this action on small entities and determined that this proposed rule would not have a significant economic impact on a substantial number of 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.

Effective August 19, 2019, the SBA published an interim final rule (RIN 3245-AH17) that adjusts the monetary-based size standards for inflation. As a result of this rule, the size classification for small beef, veal, and cattle importing firms changed from sales of $750,000 or less to sales of $1,000,000 or less.

According to the NASS 2017 Census of Agriculture, the number of operations in the United States with cattle totaled 882,692.^[1] The most recent (2017) Census of Agriculture data show that roughly 4 percent of producers with cattle, or 31,601 operations, have annual receipts of $1,000,000 or more.^[2] Therefore, the vast majority of cattle producers, 96 percent, would be considered small businesses with the new SBA guidance. It should be noted that producers are only indirectly impacted by the proposed rule.

Cattle, beef, and veal importers are directly impacted by the proposed rule. The original number of importing firms was determined in consultation with the Meat Import Council of America. AMS estimates that approximately 270 firms import beef or beef products, and veal and veal products into the United States, and about 198 firms import live cattle into the United States. The 2012 Economic Census, produced by the U.S. Commerce Department, and accessible through the American Fact Finder website, provides the most recent data on firm size by sales revenue.^[3] However, data on the firm size of beef, veal, and cattle importers are not available in this or other economic databases, as there is no NAICS code specific enough for this industry segment.

The 2012 Economic Census does have information on the broader marketing chain, specifically the size distribution of meat and meat product wholesalers (NAICS 42447).^[4] These data show that 18 percent of firms in the industry classification of meat and meat product wholesalers are considered small businesses.

Recent import trade data was also considered for understanding the overall dynamics of this industry segment. The USDA Foreign Agricultural Service reports monthly trade data for traded agricultural products by product type. An analysis of these data over a five-year period show only minor changes in the annual import values for both beef and veal importers and cattle importers, suggesting little change in the sector overall.

The proposed rule imposes no new burden on the industry, as it only adjusts representation on the Board to reflect changes in domestic cattle inventory, as well as in cattle and beef imports. The adjustments are required by the Order and would result in an increase in Board membership from 99 to 101.

AMS is committed to complying with the E-Government Act of 2002 to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to government information and services, and for other purposes.

USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.

List of Subjects in 7 CFR Part 1260

• Administrative practice and procedure
• Advertising
• Agricultural research
• Imports
• Meat and meat products
• Reporting and recordkeeping requirements

For the reasons set forth in the preamble, AMS proposes to amend 7 CFR part 1260 as follows:

PART 1260—BEEF PROMOTION AND RESEARCH

1. The authority citation for 7 CFR part 1260 continues to read as follows:

Authority: 7 U.S.C. 2901-2911 and 7 U.S.C. 7401.

2. Revise § 1260.141 paragraph (a) to read as follows:

Footnotes