National Dairy Promotion and Research Program; Final Rule on Amendments to the Order, 14777-14793 [2011-6322]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 76, Number 53 (Friday, March 18, 2011)]
[Rules and Regulations]
[Pages 14777-14793]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-6322]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1150

[Docket No. DA-08-07: AMS-DA-08-0050]
RIN 0581-AC87


National Dairy Promotion and Research Program; Final Rule on 
Amendments to the Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This document implements amendments to the Dairy Promotion and 
Research Order (Order). This action is pursuant to the Farm Security 
and Rural Investment Act of 2002 (2002 Farm Bill) and the Food, 
Conservation, and Energy Act of 2008 (2008 Farm Bill). The 2002 Farm 
Bill mandates that the Order be amended to implement an assessment on 
imported dairy products to fund promotion and research and to add 
importer representation, initially two members, to the National Dairy 
Promotion and Research Board (Board). The 2008 Farm Bill specifies a 
mandatory assessment rate of 7.5 cents per hundredweight of milk, or 
equivalent thereof, on dairy products imported into the United States. 
This final rule, in accordance with the 2008 Farm Bill, also amends the 
term ``United States'' in the Dairy Production Stabilization Act of 
1983 (Act) to mean all States, the District of Columbia, and the 
Commonwealth of Puerto Rico. Producers in these areas will be assessed 
15 cents per hundredweight for all milk produced and marketed.

DATES: Effective Dates: These amendments are effective April 1, 2011 
except for Sec.  1150.152(b) which is effective August 1, 2011.

FOR FURTHER INFORMATION CONTACT: Whitney Rick, USDA, AMS, Dairy 
Programs, Promotion and Research Branch, Stop 0233-Room 2958-S, 1400 
Independence Avenue, SW., Washington, DC 20250-0233, (202) 720-6909, 
Whitney.Rick@ams.usda.gov.

SUPPLEMENTARY INFORMATION: This final rule is being issued pursuant to 
the Dairy Production Stabilization Act of 1983 (7 U.S.C. 4501-4514), 
Public Law 98-180, enacted November 29, 1983, as amended May 13, 2002, 
by Public Law

[[Page 14778]]

107-171 and further amended June 18, 2008, by Public Law 110-246. Prior 
Documents in this proceeding: Proposed Rule and Opportunity to File 
Comments, Including Written Exceptions, on Proposed Amendments to the 
Order: Issued May 12, 2009; published May 19, 2009 (74 FR 23359).

Executive Orders 12866 and 13563

    This rule has been determined to be significant pursuant to 
Executive Order 12866 and, therefore, has been reviewed by the Office 
of Management and Budget. The updated cost-benefit analysis for this 
final rule is available at https://www.ams.usda.gov/dairyimportassessment.
    A requirement of 7 U.S.C. 4514 and 6407 requires the U.S. 
Department of Agriculture to conduct an independent analysis of the 
dairy checkoff programs. The independent analysis, conducted by Cornell 
University, has consistently shown that the program has had a positive 
and statistically significant impact on per capita dairy consumption. 
Specifically, generic advertising and promotion of dairy products 
increases both the quantities consumed and prices. For 2008, it was 
estimated the farm milk price was $0.21 to $0.26 per hundredweight 
higher and the quantity demanded was 2.3 percent higher because of the 
program. Results from this analysis show that the average Benefit-Cost 
Ratios for the Dairy Program was 5.49 (nonfat solids basis) and 7.07 
(milk fat basis) from 1998 through 2008. This means that each dollar 
invested in generic dairy marketing by dairy farmers during the period 
would return between $5.49 and $7.07, on average, in net revenue to 
farmers. Additionally, the Report to Congress estimates the elasticity 
of advertising to be .034 on a nonfat basis and 0.027 on a fat basis. 
For further details, see https://www.ams.usda.gov/AMSv1.0/FindaReporttoCongress.
    Assessments to U.S. dairy producers under the Order are relatively 
small compared to producer revenue. If dairy producers in Alaska, 
Hawaii, the District of Columbia, and the Commonwealth of Puerto Rico 
had paid assessments of $0.15 per hundredweight of milk marketed in 
2008, it is estimated that $1.1 million would have been paid. This is 
about 0.5 percent of the $195 million total value of milk produced and 
marketed in these areas.
    The total of assessments collected from importers under the 
National Dairy Promotion and Research Program are expected to be 
relatively small compared to the value of dairy imports. If importers 
had been assessed $0.075 per hundredweight, or equivalent thereof, for 
imported dairy products in 2008 as specified in this rule, it is 
estimated that about $4.9 million would have been paid. This is about 
0.2 percent of the $2.6 billion value of the dairy products imported in 
2008.
    Examination of import volumes for 2008 indicates that tariff rate 
quotas (TRQs) constrain dairy imports in varying degrees. TRQs do not 
seem to be a significant hindrance to the volume imported for many 
dairy products. Significant quantities of dairy products imported are 
not subject to TRQs.
    The U.S. Dairy Export Council, a subsidiary of the Board, directs a 
global ingredients program and promotes dairy ingredients domestically 
and U.S. dairy ingredients internationally. Through importer 
representation on the Board and possible establishment of qualified 
dairy product promotion, research, or nutrition education programs 
(qualified programs) by importers, imported products could be promoted 
to a greater extent than under the current program.

Civil Rights Analysis

    The potential civil rights implications of this rule on affected 
parties have been considered to ensure that no person or group shall be 
discriminated against on the basis of race, color, national origin, 
gender, religion, age, disability, sexual orientation, marital or 
family status, political beliefs, parental status, or protected genetic 
information. This review included persons that are employees of the 
entities that are subject to these regulations. This final rule does 
not require affected entities to relocate or alter their operations in 
ways that could adversely affect such persons or groups. Moreover, the 
amendments would not exclude from participation any persons or groups, 
deny any persons or groups the benefits of the program, or subject any 
persons or groups to discrimination.

Executive Order 12988

    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This final rule is not intended to have a 
retroactive effect. Section 4512(a) of the Act provides that nothing in 
the National Dairy Promotion and Research Program (National Program) 
may be construed to preempt or supersede any other program relating to 
dairy product promotion organized and operated under the laws of the 
United States or any State.
    The Dairy Production Stabilization Act of 1983 (Act) authorizes the 
National Program. The Act provides that administrative proceedings must 
be exhausted before parties may file suit in court. Under section 4509 
of the Act, 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 to be 
exempted from the Order. A person subject to an Order is afforded the 
opportunity for a hearing on the petition. After a hearing, the 
Secretary would rule on the petition. The Act provides that the 
district court of the United States in any district in which the person 
is an inhabitant, or has his principal place of business, has 
jurisdiction to review the Secretary's ruling on the petition, provided 
a complaint is filed not later than 20 days after the date of the entry 
of the ruling.

Executive Order 13175

    This final rule 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 
will not have substantial and direct effects on Tribal governments and 
will not have significant Tribal implications.

Executive Order 13132

    This final rule has been reviewed in accordance with the 
requirements of Executive Order 13132, Federalism. USDA has determined 
that this final rule conforms with the Federalism principles set forth 
in the Executive Order, and that this final rule does not have 
Federalism implications.

Regulatory Flexibility Act

    In accordance with the Regulatory Flexibility Act (5 U.S.C. 601-
612), the Agricultural Marketing Service has considered the economic 
impact of this action on small entities and has certified that this 
final rule will not have a significant economic impact on a substantial 
number of small entities. The purpose of the Regulatory Flexibility Act 
is to fit regulatory actions to the scale of businesses subject to such 
actions so that small businesses will not be disproportionately 
burdened.
    The Dairy Production Stabilization Act of 1983 authorizes a 
national program for dairy product promotion, research and nutrition 
education. Congress found that it is in the public interest to 
authorize the establishment of an orderly procedure for financing 
(through assessments on all milk produced in the United States for 
commercial use and on imported dairy products) and carrying out a 
coordinated program of promotion designed to strengthen the dairy 
industry's position in the marketplace

[[Page 14779]]

and to maintain and expand domestic and foreign markets and uses for 
fluid milk and dairy products.
    As directed by the 2008 Farm Bill, approximately 360 producers in 
Alaska, Hawaii, the District of Columbia, and the Commonwealth of 
Puerto Rico will become subject to the provisions of the Order as of 
the effective date of this final rule. The Small Business 
Administration [13 CFR 121.201] defines small dairy producers as those 
having annual receipts of not more than $750,000 annually. Most of the 
producers who will become subject to the provisions of the Order are 
considered small entities.
    Assessments to dairy producers under the Order are relatively small 
compared to producer revenue. If dairy producers in Alaska, Hawaii, the 
District of Columbia, and the Commonwealth of Puerto Rico had paid 
assessments of $0.15 per hundredweight of milk marketed in 2008, it is 
estimated that $1.1 million would have been paid. This is about 0.5 
percent of the $195 million total value of milk produced and marketed 
in these areas.
    The assessment for dairy producers in Alaska, Hawaii, the District 
of Columbia, and the Commonwealth of Puerto Rico will be collected by 
persons who pay the producers for milk produced and marketed, and the 
money will be remitted to the Board.\1\ These responsible persons, 
usually milk handlers, incur the costs of calculating the assessment 
due from each dairy producer; forwarding a form monthly to the Board; 
and sending checks or other negotiable instruments of legal tender to 
the Board and designated qualified programs. The responsible persons 
maintain any records that are necessary to account for the collection 
of the 15-cent assessment. Books and records for producers and persons 
collecting assessments subject to the Order shall be maintained for two 
years beyond the fiscal period of their applicability. These books and 
records would be made available to employees or agents of the Board or 
the Department for inspection during normal business hours if necessary 
for verification purposes.
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    \1\ Any producer that sells milk directly to consumers shall 
remit the assessment directly to the Board.
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    For the purpose of the Regulatory Flexibility Act, a dairy products 
manufacturer is a small business if it has fewer than 500 employees. 
For purposes of determining a milk handler's size, if the plant is part 
of a larger company operating multiple plants that collectively exceed 
the 500-employee limit, the plant is considered a large business even 
if the local plant has fewer than 500 employees. While the number of 
anticipated responsible persons collecting assessments under the Order 
in Alaska, Hawaii, the District of Columbia, and the Commonwealth of 
Puerto Rico are not known, it is expected that most would be considered 
small businesses.
    According to U.S. Customs and Border Protection (CBP), there were 
about 3,000 importers of dairy products listed in Sec.  1150.152 (b) in 
2007 and 2008. Although data is not available concerning the sizes of 
these firms, it is reasonable to assume that most of them would be 
considered small businesses. Although many types of businesses import 
dairy products, the most common classification for dairy product 
importers is Grocery and Related Product Merchant Wholesalers (North 
American Industry Classification System, category 4244). The Small 
Business Administration [13 CFR 121.201] defines such entities with 
fewer than 100 employees as small businesses. According to 2006 
statistical data from the U.S. Census Bureau, 95.2 percent of these 
types of businesses had fewer than 100 employees (https://www.census.gov/econ/susb/).
    This final rule imposes minimal reporting and recordkeeping 
requirements on importers subject to the Order. Books and records for 
importers subject to the Order shall be maintained for two years beyond 
the calendar year in which the import occurs. These books and records 
would be made available only to the Secretary for inspection during 
normal business hours if necessary for verification purposes. The 
proposed rule would have required importers subject to the Order to 
make books and records available to the Board, but this will not be 
required as a result of changes in this final rule. This rule requires 
importers to calculate assessments due based upon documentation 
concerning the cow's milk solids content of the imported products. 
Products shall be assessed at the rate of $0.01327 per kilogram of 
cow's milk solids.
    In many cases, the importer would have this documentation on hand 
as part of normal business practice. Importers must maintain books and 
records sufficient to verify that products have been properly 
classified according to the Harmonized Tariff Schedule (HTS). For some 
HTS codes, this includes books and records indicating that the milk 
solids content falls within a certain range. Default assessment rates 
listed in the proposed rule are eliminated in this final rule.
    Assessments to importers under the Order are expected to be 
relatively small compared to the value of dairy imports. If importers 
had been assessed $0.075 per hundredweight of milk, or equivalent 
thereof, on imported dairy products in 2008, as specified in this rule, 
it is estimated that about $4.9 million would have been paid. This is 
about 0.2 percent of the $2.6 billion value of the imported dairy 
products.
    This final rule provides for organizations that conduct qualified 
programs to receive assessment funds as designated by individual 
importers. Additionally, this final rule includes a provision that 
permits importers and organizations of importers, as approved by the 
Secretary, to nominate importer representatives to the Board. Such 
organizations would generally consist of importers who are considered 
mostly small entities.

Paperwork Reduction Act

    Information collection requirements and recordkeeping provisions 
contained in 7 CFR part 1150 have been previously approved by the 
Office of Management and Budget and assigned OMB Control Number 0581-
0093 under the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35). 
Section 1601 of the 2002 Farm Bill (Pub. L. 107-171) and section 1601 
of the 2008 Farm Bill (Pub. L. 110-246) exempt this rule from the 
Paperwork Reduction Act. Although exempted, the requirements of the 
Paperwork Reduction Act were considered in developing the provisions of 
this final rule. The information collection requirements are minimal 
but essential to carry out the intent of the Dairy Production 
Stabilization Act of 1983. The final amended Order provisions have been 
carefully reviewed and every effort has been made to minimize 
recordkeeping costs or requirements.
    Under the final amended Order provisions, importers will be 
responsible to pay assessments. CBP will serve as the collecting agent 
for assessments on imported dairy products and will remit the 
assessments to the Board. Importers will be required to provide records 
to the Secretary on occasions when additional information is needed as 
evidence of compliance, or in cases when the importer seeks a 
reimbursement of assessments. Such records must be retained for at 
least two years beyond the calendar year of their applicability.
    Additionally, each person making payment to a producer for milk 
produced in the United States and marketed for commercial use collects 
an assessment for all such milk handled.

[[Page 14780]]

These responsible persons calculate the assessments due from each dairy 
producer. Under the final amended Order provisions, responsible persons 
making payments to dairy producers in Alaska, Hawaii, the District of 
Columbia, and the Commonwealth of Puerto Rico will be required to 
collect and remit assessments and file reports with the Board. The 
Order imposes certain recordkeeping requirements on responsible 
persons; however, information required under the Order could be 
compiled from currently maintained records. Any producer marketing milk 
of that producer's own production directly to consumers is a 
responsible person. Such records must be retained for at least two 
years beyond the calendar year of their applicability.
    The forms by which producer information is to be collected require 
the minimum information necessary to effectively carry out the 
requirements of the Order. There are no training requirements for 
individuals filling out reports and remitting assessments to the Board. 
The forms are designed to be simple and easy to understand, placing as 
small a burden as possible on the persons required to file the 
information.
    The timing and frequency of collecting information are intended to 
meet the needs of the National Program while minimizing the amount of 
work necessary to fill out the required reports. In addition, the 
information to be included on these forms is not available from other 
sources because such information relates specifically to individual 
producers and responsible persons who are subject to the provisions of 
the Order. Therefore, there is no practical method for collecting the 
required producer information without the use of these forms.
    The assessment places a minimal burden on newly regulated producers 
or importers who seek to direct monies to qualified programs. The 
amount of time required to designate to a qualified program is 
estimated to be 15 minutes to prepare a written request. Qualified 
programs are certified by the Secretary to receive assessment money 
from producers and importers for the purpose of promoting dairy 
products.
    The amended Order provisions would place a minimal burden on newly 
regulated producers or importers who seek nomination to serve on the 
Board. Importers and producers would be required to complete a 
background information form for submission to the Secretary. The 
estimated time for completing the form is 30 minutes, which includes 
time for reviewing instructions, searching existing data sources, 
gathering and maintaining the data needed, and completing and reviewing 
the form. Additionally, there would be minimal burden on importer 
organizations that voluntarily request to be approved by the Secretary 
to participate in the National Program by making nominations to the 
Board. The estimated time for reporting this is 30 minutes.
    Currently, a producer who operates under an approved National 
Organic Program (NOP) (7 CFR part 205) certificate and thus only 
produces products that are eligible to be labeled as 100 percent 
organic under the NOP, and is not a split operation, shall be exempt 
from the payment of assessments. The final rule provides that an 
importer who imports only products that are eligible to be labeled as 
100 percent organic under the NOP (7 CFR part 205) and who is not a 
split operation, would likewise be exempt from the payment of 
assessments. The Order places a minimal burden on a producer or 
importer applying for such an exemption. The producer or importer must 
provide a request to the Board, on a form provided by the Board, at any 
time initially and annually thereafter. The documentation is the same 
for importers as for producers.
    In addition, there are some requirements for information from 
importers that are occasional. For example, if an importer files for 
reimbursement or applies for reimbursement of assessments from the 
Secretary for an overpayment, circumstances dictate the time that it 
would take for the importer to gather the information necessary to make 
the claim. Assembling and transmitting the necessary documentation to 
the Secretary would place a minimal burden on importers.
    AMS is committed to complying with the E-Government Act, to promote 
the use of the Internet and other information technologies, and to 
provide increased opportunity for citizen access to Government 
information and services and for other purposes.

Background

    The Dairy Production Stabilization Act of 1983 (Act) authorizes the 
Order for dairy product promotion, research, and nutrition education as 
part of a comprehensive strategy to increase human consumption of milk 
and dairy products and to reduce milk surpluses. The National Program 
functions to strengthen the dairy industry's position in the 
marketplace by maintaining and expanding domestic and foreign 
consumption of fluid milk and dairy products.
    Section 1505 of the 2002 Farm Bill requires that the Order be 
amended to implement a mandatory assessment on dairy products imported 
into the United States and that the assessment be submitted to CBP at 
the time entry documents are filed.
    Section 1507 of the 2008 Farm Bill amended the term ``United 
States'' in section 4502(1) of the Act to mean all of the States, the 
District of Columbia, and the Commonwealth of Puerto Rico. This 
amendment requires that Alaska, Hawaii, the District of Columbia, and 
the Commonwealth of Puerto Rico be added to the existing regions of the 
Board and that producers in these areas be assessed 15 cents per 
hundredweight on all milk produced and marketed commercially.
    Section 10607 of the 2002 Farm Bill provides for an exemption from 
payment of assessments by organic milk producers and importers of 
organic dairy products. Section 1150.157 of the Order currently 
provides the specific requirements necessary for producers to receive 
the exemption. See 70 FR 2744 for a complete discussion of 
implementation of the provisions of section 10607 of the 2002 Farm Bill 
as it relates to promotion and research programs for other agricultural 
commodities. The same reasoning in 70 FR 2744 is applied in this final 
rule and, accordingly, provides for an exemption for dairy importers.
    A producer that operates under an approved National Organic Program 
(NOP) (7 CFR part 205) certificate and thus only produces products that 
are eligible to be labeled as 100 percent organic under the NOP, and is 
not a split operation, would be exempt from the payment of assessments. 
An importer who imports only products that are eligible to be labeled 
as 100 percent organic under the NOP (7 CFR part 205), and is not a 
split operation, also would be exempt from the payment of assessments. 
To receive the exemption, producers and importers of products labeled 
as 100 percent organic, and who do not produce or market any non-
organic products, would provide a request to the Board, on a form 
provided by the Board, at any time initially and annually thereafter.
    Additionally, the 2002 Farm Bill amendments authorize importers to 
have representation on the Board. Initially, importers are required to 
be represented by two importers appointed by the Secretary. Thereafter, 
importer representation on the Board will be adjusted at least once 
every three years, if necessary, to reflect the volume of imports 
relative to domestic production of milk. The amendments also specify

[[Page 14781]]

that importer assessments may not be used for foreign market promotion 
and that they be implemented in a manner consistent with United States 
trade obligations.
    The 2002 Farm Bill specifies that the assessment be 15 cents per 
hundredweight, or equivalent thereof, on dairy products imported into 
the United States. However, this rate was changed with the 2008 Farm 
Bill; section 1507 specifies that the assessment will be 7.5 cents per 
hundredweight of milk, or the equivalent thereof. The assessment is 
equivalent to one-half the payment domestic dairy farmers are required 
to remit.
    Finally, the 2002 Farm Bill amended the policy statement in the Act 
to make it clear that the purpose of the program is to expand the 
consumption of dairy products, whether produced domestically or 
imported. A program that promotes the substitution of a dairy product 
from one source with a dairy product from another source would not be 
consistent with this policy. Likewise, the Board and the Department 
will consider carefully whether any brand advertising or promotion 
would have a detrimental effect on other brands of dairy products 
before giving approval. No program would be approved if it would 
negatively affect similar domestic or imported dairy products.
    Subtitle F of Title 1 of the 2002 Farm Bill at section 1601 and 
Subtitle F of Title 1 of the 2008 Farm Bill at section 1601 provide for 
the implementation timeframe and the promulgation of these regulations 
without regard to the Paperwork Reduction Act (44 U.S.C. chapter 35); 
the Statement of the Policy of the Secretary of Agriculture, effective 
July 24, 1971 (36 FR 13804); and the notice and comment provisions of 
section 533 of Title 5, United States Code. However, due to the 
interest of affected parties, a proposed rule was published in the 
Federal Register [74 FR 3359] on May 19, 2009, inviting comments. 
Interested parties were provided 30 days to comment on the proposed 
amendments.
    The Department received 189 comments from individuals, trade 
organizations, importer organizations, domestic dairy producers, 
domestic and foreign dairy cooperatives, foreign governments, domestic 
and foreign dairy companies, a foreign dairy promotion board, State 
governments, attorneys, and international trading companies. The issues 
raised in the comments that resulted in the greatest changes from the 
proposed rule concerned the use of default assessment rates and 
concerns over confidentiality and business information associated with 
compliance, enforcement, and recordkeeping. Other provisions changed or 
clarified in the final rule relate to milk solids content; Harmonized 
Tariff Schedule codes; qualified programs; referendum provisions; 
organic exemptions; duties of the board; and definitions of CBP, 
importer, and qualified programs.
    The 2002 Farm Bill mandates that the import assessment be 
implemented in a manner consistent with United States trade 
obligations. USDA has consulted with the Office of the United States 
Trade Representative to ensure that this final rule is consistent with 
the international trade obligations of the Federal Government.

Summary of Comments and Changes From the Proposed Rule

Default Assessment Rates

    Under the proposed rule, an importer with adequate documentation 
concerning the milk solids content of an imported dairy product would 
pay an assessment based upon milk solids content. Further, the proposed 
rule stated that an importer without adequate documentation concerning 
the milk solids content of an imported dairy product would pay a 
default assessment rate per HTS code. For most products, the default 
assessment rate for each HTS code would have been based upon estimated 
maximum milk solids content.
    Several commenters objected to the proposal to set default rates at 
the maximum milk solids content for most products. The commenters 
argued that this would be unequal treatment for importers in comparison 
to domestic producers. The Department does not agree with the 
commenters' unequal treatment assertions. However, the Department has 
determined that in order to provide one clear and consistent method for 
importers to calculate the assessment, to simplify program 
administration, and to best effectuate the purposes of the Act, default 
assessment rates should not be included in the Order provisions. 
Accordingly, importers will be required to pay based upon cow's milk 
solids content of imported dairy products.
    Since the mandatory 7.5-cents assessment is per one hundred pounds 
of milk, this final rule applies a standard rate of assessment per unit 
of milk solids. On average during the period January 2006 through 
December 2007, a hundredweight of U.S. producer milk contained 12.45 
pounds of milk solids (3.68 percent butterfat and 8.77 percent nonfat 
milk solids). Since the assessment rate stated in the 2008 Farm Bill is 
7.5 cents per hundredweight of milk or its equivalent, this final rule 
establishes the assessment rate per volume of imported milk solids as 
$0.00602 per pound ($0.075/12.45 pounds) or $0.01327 per kg (1 kg = 
2.204623 pounds.) This rate shall be applied to the cow's milk solids 
content for any imported product listed in the table displayed in 
section 1150.152(b)(1).
    Several commenters also indicated that in some cases it is overly 
burdensome for the importer to obtain documentation concerning the milk 
solids content of the imported dairy products. The Department disagrees 
with these comments. Where documentation of cow's milk solids content 
is not presently available, the importer could ask the seller or 
manufacturer to provide such information. Cow's milk solids product 
content could be communicated to the importer through an invoice, 
packing slip, bill of lading, laboratory test results, a letter from 
the manufacturer on the manufacturer's letterhead, or similar 
documents.

Compliance and Enforcement

    Several commenters recommended that the final rule be amended to 
include provisions restricting access to confidential business 
information provided in connection with import assessments. As 
proposed, the rule gave the Board the discretion to verify milk solids 
content reported by importers to the CBP to determine if additional 
money is due the Board or if an amount is due to an importer. The 
commenters noted that the verification of milk solids content of some 
products requires more specific information on product composition than 
is currently required under applicable labeling and import regulations. 
Specifically, one commenter noted that verifying the calculation of the 
milk solids content of a particular product requires revealing the 
exact proportion of constituent components of that product, and as 
such, verification reports are likely to contain confidential, 
proprietary, and commercially sensitive data. In light of this, this 
section is modified to require the Secretary, not the Board, to verify 
information reported by importers.
    Section 1150.171(b) of the proposed rule would require importers of 
dairy products to submit reports as requested by the Board or the 
Department as necessary to verify that provisions pursuant to Sec.  
1150.152(b) have been carried out correctly, including verification 
that correct amounts were paid based upon milk solids content of

[[Page 14782]]

the imported dairy products pursuant to Sec.  1150.152(b). The proposed 
rule indicated that each importer of dairy products shall maintain and 
make available for inspection by employees of the Board and the 
Secretary such books and records to verify that provisions pursuant to 
Sec.  1150.152(b) have been carried out correctly, including 
verification that correct amounts were paid based upon milk solids 
content of the import dairy products. As noted in the earlier 
discussion regarding provisions restricting access to confidential 
business information provided in connection with import assessments, 
these sections are hereby modified so that only the Secretary has 
access to confidential information. With this rule, CBP shall forward 
assessments directly to the Board. CBP shall provide information 
concerning the payments of individual importers to USDA instead of the 
Board. Additionally, each importer of dairy products shall maintain and 
make available for inspection by the Secretary, not the Board, such 
books and records as needed to verify provisions pursuant to Sec.  
1150.152(b) have been carried out correctly.

Costs and Benefits; National Treatment; and U.S. Trade Obligations

    Several commenters argued that import assessments would amount to 
unfair treatment because some imported products will not benefit to the 
same extent as others. While not all imported dairy products are 
promoted, or receive little promotion, the same situation similarly 
exists with domestic dairy production; the Board does not specifically 
promote all dairy products. This is evidenced in the cost-benefit 
analysis, noting that the Board does not specifically advertise or 
promote ice cream, even though dairy farmers pay a 15-cent per 
hundredweight assessment for milk used in the production of ice cream. 
Other examples would be food preparations, infant formula, and milk 
chocolate, all of which contain dairy products. Thus, the import 
assessment will be collected on all specified imported dairy products 
and imported products containing cow's milk solids, whether or not the 
Board chooses to promote such products. The National Program provides 
benefits relative to all dairy products, whether or not they are 
specifically promoted. With increased dairy consumption, the market for 
milk solids tightens. Prices are higher for the entire array of 
products that contain milk solids, both domestic and imported. Even 
products that are not directly promoted through the National Program 
receive this benefit.
    It is important to note that not all domestic producers or 
importers would receive benefits equally. Some importers may benefit 
more than others due to the portfolio of dairy products promoted by the 
Board. An equivalent case can be made for domestic dairy producers. A 
dairy producer in a region with high cheese production may benefit from 
cheese promotions more than a dairy producer in a low cheese production 
area. Some commenters argued that dairy producers would receive equal 
benefits from the National Program because most of the milk is pooled 
under the Federal milk marketing order system or a similar State 
program. However, the Federal milk marketing order system and similar 
State programs do not cover all milk marketed and do not set the prices 
that dairy producers receive; rather, they require handlers to pay 
minimum prices. Handlers may, and often do, pay producers or their 
cooperative more than minimum prices required by the pools. 
Furthermore, pools in different regions of the country vary in milk 
utilization, and thus minimum prices required by the pools may reflect 
different levels of benefits from the National Program.
    One commenter noted that the current dairy promotion program 
primarily promotes fluid milk sales, and to a lesser degree, sales of 
American-style cheeses. The commenter also stated that the U.S. does 
not import fluid milk from Mexico, and that Mexican-style cheese 
imported into the U.S. is far different than American-style cheeses. To 
that end, the commenter noted that imports of dairy products from 
Mexico are primarily specialized proteins (and specialty cheese) which 
are mainly used in food products that are not dairy products and that 
the current promotion program would not benefit them or the products 
they import. Similarly, another commenter noted that a large proportion 
of imported dairy products into the U.S. are ingredients with a variety 
of applications, some dairy and some non-dairy in nature. It was argued 
that these imported ingredients will not benefit from the promotion 
program, particularly when used in non-dairy products.
    With respect to the aforementioned comments, and as correctly noted 
by one of the commenters, domestic producers are assessed per 
hundredweight on all milk produced and marketed commercially, and the 
disposition or final usage of the raw milk is not a fact in determining 
the assessment. Likewise, the Farm Bills require an assessment on 
imported dairy products, regardless of the final disposition of the 
product or usage. Additionally, contrary to the comments provided by 
some commenters; the current National Program does promote dairy 
ingredients by marketing dairy ingredient benefits to food and beverage 
manufacturers and to help launch new or improved products. The National 
Program offers a variety of insights on ingredient marketing, 
nutrition, processing and testing. In 2008, the National Program spent 
approximately $4.9 million on ingredient research and promotion. 
Furthermore, importers would benefit from potentially higher prices. 
Also, with the changes to the provision of the Order made by this final 
rule, imported dairy products and ingredients could be promoted to a 
greater extent than with the current National Program.
    Several commenters also indicated that 2007, the year considered by 
the cost-benefit analysis for the proposed rule, was an anomalous year. 
Had data from other years been examined, the commenters indicated the 
Department would have observed that Tariff Rate Quotas (TRQs) would 
have been of a greater restraint. For the final rule, the cost-benefit 
analysis has been updated based upon data from 2008. Similarly, the 
Department found that TRQs seem to constrain dairy imports in varying 
degrees for some products, but not for others.
    With respect to TRQs, one commenter proposed that importers be 
refunded for any year in which the TRQ fill rate for a particular 
product exceeds 85 percent. At this level, the commenter asserted that 
imports are constrained, limiting the benefits of the National Program. 
It is important to note that TRQs are rarely 100-percent filled due to 
licensing requirements of imported dairy products. However, the fact 
that a TRQ is filled or nearly filled is not a clear indication that 
importers do not receive benefits from the National Program. It is 
reasonable to conclude that some TRQs would have had lesser fill rates 
without the National Program. Furthermore, importers potentially 
benefit from the generally higher prices brought about by the National 
Program. For these reasons, the commenter's proposal is not adopted.
    In varying degrees of detail, several opponents of the proposed 
rule claimed that implementation of an assessment on imported dairy 
products would be a potential violation of the national treatment 
obligations under the World Trade Organization (WTO). Opponents of the 
import assessment asserted several reasons, including several 
references to potential violations of the General Agreement on Trade 
and Tariffs (GATT). As required by Section 4503(d)

[[Page 14783]]

of the Act, the Secretary has consulted with the Office of the United 
States Trade Representative (USTR) to ensure that the Order is 
implemented in a manner consistent with the international trade 
obligations of the Federal Government.

Neutral Promotion of Dairy Products With Respect to Origin

    With the passage of the 2002 Farm Bill, the policy statement in the 
Act was amended to make it clear that the purpose of the National 
Program is to expand the consumption of dairy products, whether 
produced domestically or imported. A program that promotes the 
substitution of a dairy product from one source with a dairy product 
from another source for consumption in the U.S. market is not 
consistent with this policy. Several commenters suggested that the 
proposed changes only generally remove the requirement that programs 
promote products of the United States, but indicated the changes are 
not sufficiently clear that going forward that they must be neutral 
with respect to country of origin. Additionally, the commenters 
suggested that the Board and Dairy Management Inc. (DMI), the staffing 
and management organization for the National Program, would have to 
ensure that any of its activities, including salaries and expenses from 
conducting export promotion marketing or coordination and management of 
export promotion, that are funded all or in-part by the Board would be 
neutral with respect to State or country of origin, including any 
promotion tools. Further, the commenters suggested that the Order 
require AMS to certify the neutrality of all policies and activities of 
the National Program prior to the distribution of any importer 
assessment monies to the Board. Several commenters also raised concerns 
that the ``Real Seal'' and other programs that are only available to 
domestic products, if not eliminated or completely revised, would, in 
their view, adversely affect conditions of competition for imports, 
thereby potentially violating GATT Article III:4.
    AMS provides the day-to-day oversight for all activities related to 
the National Program. AMS oversight activities include reviewing and 
approving DMI and the Board's budgets, budget amendments, contracts, 
advertising campaigns, investment plans, and all materials developed 
for public distribution. Additionally, AMS ensures that all expenditure 
of promotion funds is consistent with the Act and the Order, and the 
Agency's other responsibilities relate to nominating and appointing 
Board members, amending the orders, conducting referenda, and 
conducting periodic program audits. Further, AMS representatives attend 
full Board meetings, committee meetings, and other staff and member 
meetings of consequence to the National Program. Given AMS's extensive 
oversight activity and policies relating to program review, it is 
neither necessary nor appropriate to implement additional provisions at 
this time to ensure appropriate expenditure of funds with respect to 
neutrality. Additionally, as of the effective date of these amendments, 
all of the National Program's activities will be consistent with 
respect to neutrality and country of origin. Several commenters 
accurately noted that by striking the words ``produced in the United 
States'' from the definition of milk, programs like the ``Real Seal'' 
and ``3-A-Day'' partners, and promotional offers will become available 
to international dairy brands and importers. Such programs will no 
longer be allowed to refer specifically to domestically produced dairy 
products if funded by the Board. Also research carried out with 
assessment funds would be available to all of the importers subject to 
the assessment.
    Additionally, commenters raised concerns about other specific 
National Program activities, such as the promotion of American 
artisanal cheese and ``The New Look of School Milk'' program. As of the 
effective date of these amendments, all of these activities must comply 
with the new policy statement with respect to neutrality and country of 
origin.
    Separately, several commenters raised the concern of whether or not 
the prohibitions and restrictions with respect to neutrality apply to 
qualified programs and the promotion of State brands. Section 4512(a) 
of the Act (Administrative Provisions) states ``Nothing in this 
subchapter may be construed to preempt or supersede any other program 
relating to dairy product promotion organized and adopted under the 
laws of the United States or any State.'' This statutory policy 
provides qualified programs with as much freedom to continue their 
present operation and is consistent with a coordinated effort. As such, 
the policy is retained and qualified programs may continue to promote 
State brands. Research has shown that promotion of State brands, to the 
extent they reflect a type of brand, can increase dairy category sales 
and is consistent with the intent of the Act to raise the demand and 
consumption for dairy products generally. Review and/or approval 
authority of the Board and the Department regarding branded advertising 
or promotion by qualified State or regional programs will remain as it 
presently exists and is not modified under this proceeding. Several 
commenters questioned whether this proceeding would impact the ability 
of qualified programs to build demand for locally produced milk and 
dairy products; it does not. Similarly, this does not impact the 
ability of importer qualified programs to build demand for imported 
dairy products.
    One commenter questioned whether the provision striking the use of 
the words ``produced in the United States'' was contrary to the 
recently implemented Country of Origin Labeling (COOL) legislation (7 
U.S.C. 1638-1638d). COOL provisions require certain food retailers 
(supermarkets and grocery stores) to provide additional information 
(country of origin information) to consumers on specific food items at 
the point of purchase. COOL does not apply to dairy products. The COOL 
program is not related to this proceeding and there are no applicable 
provisions or requirements that overlap with this final rule.

Export and Foreign Market Promotion

    As provided in the 2008 Farm Bill, the Board's budget may provide 
for the expenditure of revenues available to the Board to develop 
international markets for, and to promote within such markets, the 
consumption of dairy products produced or manufactured in the United 
States through 2012. Several commenters questioned how importers would 
be assured that their assessments would not be used to fund development 
of foreign markets for U.S. products. Commenters also suggested that 
allowing up to 100 percent of domestic producer assessments to go into 
export promotion could result in allowing import assessments to pay 
more than their ``share'' of domestic promotion thereby subsidizing the 
export promotion activities. They also noted that if uncapped levels of 
domestic assessments are allowed to go into export promotion, import 
assessments could fund a disproportionate share, up to 100 percent, of 
the domestic program and therefore, underwrite the domestic gains to 
producers.
    Accordingly, some commenters proposed that USDA should track 
imported dairy products on a milk equivalent basis as a percentage of 
domestic commercial disappearance. The commenters noted that if imports 
are 5 percent of the domestic market, for instance, then the Board must 
fund 95 percent of domestic promotion from

[[Page 14784]]

U.S. dairy producers. Other commenters suggested that the Order should 
state that the funds for foreign market promotion in any year cannot 
exceed the level of the year prior to the beginning of import 
assessments, plus the level of increase in producer checkoff 
contribution in the previous year. These proposals are not adopted 
because the Act specifically states that the Order shall provide the 
authority for the Board to expend in the maintenance and expansion of 
foreign markets an amount not to exceed the amount collected from the 
United States producers for a fiscal year. Dairy product market share 
is not the authorized measure in determining the amount of the Board's 
expenditure on export and foreign market promotion.
    Section 4501(b) of the Act states that domestic promotion under the 
National Program must include imported dairy products, and section 
4504(e)(2) of the Act states that with respect to foreign market 
efforts, ``* * * the Board's budget may provide for the expenditure of 
revenues available to the Board to develop international markets for, 
and to promote within such markets, the consumption of dairy products 
produced or manufactured in the United States.'' For clarification, 
with this final rule, section 1150.140(n) has been expanded to indicate 
that the duties of the Board are to encourage the coordination of 
programs of promotion, research, and nutrition education designed to 
strengthen the dairy industry's position in the marketplace and to 
maintain and expand: (1) Domestic markets and domestic uses for fluid 
milk and dairy products produced in the United States or imported into 
the United States; and (2) foreign markets and foreign uses for fluid 
milk and dairy products produced in the United States.
    Notwithstanding the aforementioned, the USDA Report to Congress as 
required in section 4514(4) of the Act must provide an accounting for 
the receipt and disbursement of all funds received by the Board. This 
includes funds received from importers. AMS will require the Board to 
provide an accounting and evaluation of all activities targeted at the 
promotion of imported dairy products to be included in its annual 
Report to Congress.

Products To Be Assessed

    Commenters argued that the proposed rule included assessments on 
products that fall outside the scope of accepted international 
definitions for dairy products. Several commenters suggested limiting 
the number of products to be assessed to those in Chapter 4 of the HTS, 
referring to the Explanatory Notes (ENs) for the definitions in the 
``General'' section for Chapter 4.\2\ The Department does not agree 
that the ENs define dairy products, but rather they simply define the 
products that are to be covered under Chapter 4. One commenter 
indicated that the only products that should be included are those that 
would be defined as a milk product or a composite milk product under 
Codex Alimentarius standards. The Codex Alimentarius Commission was 
established in 1963 to reduce trade barriers and facilitate trade in 
safe foods of a defined quality. The WTO utilizes the Codex standards 
with the goals of formulating and harmonizing international food 
standards, ensuring their global compliance, and resolving trade 
disputes. The Codex milk and milk product standards cover a number of 
dairy products, including but not limited to butter, milkfat products, 
evaporated milk, condensed milk, edible casein products, milk powders, 
dairy fat spreads, whey cheeses, processed cheeses, and numerous 
varieties of natural cheeses. However, the definitions of ``milk and 
milk products'' in the Codex standards are not germane to the 
definition of ``dairy products'' in the final rule as these products 
will be assessed consistent with the definition of dairy products as 
defined by the Act. Therefore, this suggestion also is not adopted.
---------------------------------------------------------------------------

    \2\ In understanding the language of the HTS, ENs, which are 
drafted by the World Customs Organization, may be utilized. Although 
not dispositive, ENs provide a commentary on the scope of each 
heading of the HTS, and are the official interpretation of the 
Harmonized System at the international level. (See the U.S. Treasury 
decision number 80 from 1989, 54 FR 35127, 35128, August 23, 1989).
---------------------------------------------------------------------------

    In this final rule, 265 of the 266 HTS codes listed in section 
1150.152(b) of the proposed rule are adopted. HTS code number 
1901.90.9082 is for corn-soya milk blends that do not contain over 5.5 
percent by weight of butterfat and are not considered dairy products as 
described in additional note 1 to Chapter 4 of the HTS. After 
consultation with CBP, it is concluded that products imported under 
this HTS code would not likely contain milk solids. Accordingly, 
products imported under this HTS code are not included in the import 
assessment.

Proposal for Payments To Be Remitted to USDA

    Several interested parties suggested alternatives that would 
require import assessments first to be remitted to the Department 
rather than to the Board after submission to CBP. These alternatives 
are not adopted. Section 4504(g)(6)(A) of the Act specifically states 
that the order shall provide that each importer of imported dairy 
products shall pay an assessment to the Board in the manner prescribed 
by the Order.

Establishment and Membership/Term of Office

    The Order is administered by a 36-member Board appointed by the 
Secretary representing 13 geographic regions of the United States. In 
order to complement the current geographical make up of the existing 
regions, the proposed rule indicated that each of the four new 
jurisdictions be added to the region of closest geographic proximity. 
No comments were received in opposition to this proposal, and it is 
adopted as proposed.
    Therefore, Alaska is added to Region 1, currently comprised of 
Oregon and Washington; Hawaii is added to Region 2, currently 
California; and the District of Columbia and the Commonwealth of Puerto 
Rico are added to Region 10, currently comprised of Florida, Georgia, 
North Carolina, South Carolina and Virginia. Each person making payment 
to a producer in Alaska, Hawaii, the District of Columbia, and the 
Commonwealth of Puerto Rico for milk produced and marketed for 
commercial use, is required to collect an assessment on all milk 
handled for the account of the producer at the rate of 15 cents per 
hundredweight and must remit the assessment to the Board. Any producer 
marketing milk of that producer's own production in the form of milk or 
dairy products to consumers, either directly or through retail or 
wholesale outlets, must remit to the Board an assessment on such milk 
at the rate of 15 cents per hundredweight. Each person responsible for 
the remittance of the assessment for milk marketings from producers in 
Alaska, Hawaii, the District of Columbia, and the Commonwealth of 
Puerto Rico must remit to the Board not later than the last day of the 
month following the month in which the milk was marketed.
    Several interested parties raised concern regarding proposed 
importer representation on the Board. In accordance with the Act, the 
proposed rule indicates that importers will initially be represented by 
two importer representatives. Assessments collected from importers will 
be held in escrow until importer representatives are appointed. The 
interested parties proposed that the Order should provide for permanent 
representation of at least two importers or importer representatives on 
the Board. This proposal is not adopted. The 2002 Farm

[[Page 14785]]

Bill specifies that the Secretary shall review once every three years 
the average volume of domestic production of dairy products compared to 
the average volume of imports of dairy products into the United States 
during the previous three years. On the basis of the review, the 
Secretary shall reapportion the importer representation on the Board to 
reflect the proportional share of the U.S. market by domestic 
production and imported dairy products. As noted in the proposed rule, 
in order to provide a basis for comparison of domestic production of 
dairy products to imported products, estimated total milk solids will 
be used. Statistics for total milk solids of domestic dairy products 
are published annually by USDA National Agricultural Statistics 
Service. The calculation of total milk solids for imported products for 
reapportionment purposes would be the same as the calculation of total 
milk solids for assessment purposes.
    In response to commenter's requests for specific information 
regarding importer representation and appointment to the Board, the 
Secretary will issue a separate notice in the Federal Register and a 
news release seeking nominations for importer representatives to the 
Board at a future date to be determined. The Secretary will appoint two 
individuals from those nominated to serve as the initial importer 
representatives on the Board. In order to properly stagger the two 
terms, the importer representative terms of office dates [Section 
1150.132(a)(2)] are modified and one importer representative will serve 
a term ending October 31, 2013, and one importer representative will 
serve a term ending October 31, 2014.
    Importer nominations may be submitted by individual importers of 
dairy products and by organizations representing dairy importers, as 
approved by the Secretary. Nominees must be importers of dairy products 
and subject to the assessment to fund the National Program. The primary 
considerations in determining if organizations adequately represent 
importers of dairy products shall be whether its membership consists 
primarily of importers of dairy products and whether a substantial 
interest of the organization is in the importation of dairy products 
and the promotion of the nutritional attributes of dairy products. 
Individual importers submitting nominations to represent importers on 
the Board must establish, to the satisfaction of the Secretary that the 
person submitting the nomination is an importer of dairy products. 
Approval of importers and organizations representing importers will 
occur in a manner prescribed by the Secretary. An importer means a 
person that imports dairy products into the United States as a 
principal or as an agent, broker, or consignee of any person who 
produces or handles dairy products outside of the United States for 
sale in the United States, and who is listed as the importer of record 
for such dairy products.
    Several interested parties also raised concerns regarding 
sufficient importer representation on the Board's Executive Committee. 
The Board's current Executive Committee is comprised of all members of 
the Board. Section 1150.140(b) of this rule specifically provides that 
the Board's Executive Committee be comprised of membership that equally 
reflect each of the different geographic regions in the United States 
in which milk is produced and importer representation on the Board. 
Accordingly, this provision is made final without modifications.
    One commenter questioned importer representation of two seats on 
the Board, citing that domestic producers in regions 1, 8, 10, and 13 
collectively represent a significant number of producers and production 
and accordingly are afforded only one seat. The Act and the Order are 
clear with respect to the formulas used to determine the number of 
members from each region of the Board. The number of members for each 
region on the Board is determined by dividing the total pounds of milk 
produced in the United States for the calendar year previous to the 
date of review by 36, which provides a factor of pound of milk per 
member, and then dividing the total pounds of milk for each region by 
such factor. With respect to importer representation, the law states 
clearly that importers initially shall be represented by two members.
    Several commenters requested additional information and guidance as 
to how decisions are made by the Board or how conflicts are resolved 
with respect to conflicting promotions. Currently, joint committees of 
the Board are responsible for setting program priorities, planning 
activities and projects, and evaluating results. With respect to 
decisions, the Board's current by-laws state that any action of the 
Board requires the concurring votes of at least a majority of those 
present and voting. Importer representatives on the Board will take 
part in this process upon appointment.

Importer Contributions to Qualified Programs

    Several interested parties recommended that USDA hold in escrow any 
funds earmarked by an importer for contribution to a qualified program 
until importer programs are qualified by the Secretary. Further, 
several commenters noted that the proposed rule does not specify how 
assessments above the 5 cents are to be directed if a qualified program 
is not designated. Commenters also noted that the purposes of the rule 
would be best met if the qualified portion were held until it could be 
disbursed pro rata to all qualified programs relating to imported 
products.
    Currently, if a producer does not designate or if the producer's 
paying handler does not establish that producer's participation in a 
qualified program, the full assessment is remitted to the Board. 
Similarly, if an importer does not designate or if participation in a 
qualified program is not established, the Board would retain the full 
assessment. Accordingly, the commenters' suggested alternative 
provisions to hold the qualified programs' portion relating to imported 
products and disburse pro rata, or until an importer qualified program 
is established, would not be appropriate and are not adopted.
    The proposed rule stated that importers will be required to submit 
7.5 cents per hundredweight of milk, or equivalent thereof, on imported 
dairy products to the Board, of which an importer may direct the Board 
to forward up to 2.5 cents per hundredweight of milk, or equivalent 
thereof, to a qualified program. Commenters stated that domestic milk 
producers are required to send only one-third of their assessment to 
the Board, whereas importers would be required to contribute two-thirds 
of their assessment to the Board. The commenters also suggested that as 
proposed, the Order does not comply with international obligations that 
dictate fairness and ``equal treatment'' towards imported products. One 
commenter argued that importers will disproportionally support 
operations of the Board, while domestic U.S. milk producers will 
disproportionately enjoy the benefits of Board promotions.
    The proposed provisions specify that the rate of assessment is 7.5 
cents per hundredweight, or equivalent thereof, on imported dairy 
products, but that an importer can instruct the Board to direct up to 
2.5 cents per hundredweight for contributions to a qualified program. 
The Act requires domestic producers to

[[Page 14786]]

pay 15 cents per hundredweight to the Board, and allows them to receive 
a credit up to 10 cents per hundredweight of the assessment when 
contributing to qualified programs. In effect, this provision requires 
that all domestic producers contribute 5 cents per hundredweight of 
milk to the Board. Likewise, this rule requires importers to pay an 
equivalent amount to the Board. With this final rule, an importer may 
inform the Secretary to direct the Board to forward up to 2.5 cents per 
hundredweight of milk, or the equivalent thereof, to a qualified 
program. As indicated by one commenter, importers are not required to 
provide any greater assessment to the overall national promotion 
program than are domestic producers. Alternatives to allow an importer 
to direct two-thirds of the 7.5 cents per hundredweight of milk, or 
equivalent thereof, to a qualified program are not adopted.
    One commenter questioned whether or not the amount of money 
designated for importer organizations to conduct promotion, research, 
or nutrition education programs will equate with the same level of 
assessments collected with respect to imported product. Importers only 
are permitted to designate up to 2.5 cents of the 7.5 cents per 
hundredweight of milk, or milk equivalent thereof, to qualified 
programs. By law, 5 cents must go to the Board, and therefore the 
amount of money designated for importer organizations cannot equal the 
same level of assessments collected on imported dairy products.
    The final rule differs from the proposed rule with respect to an 
importer's designation to a qualified program. With the proposed rule, 
the importer would have instructed the Board to forward payments to a 
qualified program. With this final rule, the importer will notify the 
Secretary to direct the Board to forward payments to a qualified 
program. The Secretary will compute the funds due each qualified 
program. This change was made in order to maintain confidentiality of 
importer records concerning import quantity volumes and quantities of 
milk solids imported.
    One commenter noted that the proposed rule states that any 
organization which conducts a dairy product promotion