Federal Register Notice 3-2-16

10755

Rules and Regulations

Federal Register
Vol. 81, No. 41
Wednesday, March 2, 2016

This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents. Prices of
new books are listed in the first FEDERAL
REGISTER issue of each week.

DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 65
[Document No. AMS–LPS–16–0002]
RIN 0581–AD29

Removal of Mandatory Country of
Origin Labeling Requirements for Beef
and Pork Muscle Cuts, Ground Beef,
and Ground Pork
Agricultural Marketing Service
(AMS), USDA.
ACTION: Final rule.
AGENCY:

This final rule amends the
Country of Origin Labeling (COOL)
regulations to remove muscle cut beef
and pork, and ground beef and pork
from mandatory COOL requirements.
The COOL regulations are issued
pursuant to the Agricultural Marketing
Act of 1946 (Act). The Agency is issuing
this rule to conform with amendments
to the Act contained in the Consolidated
Appropriations Act, 2016.
DATES: This final rule is effective on
March 2, 2016.
FOR FURTHER INFORMATION CONTACT: Julie
Henderson, Director, COOL Division,
AMS, USDA by telephone on 202/720–
4486 or via email at COOL@
ams.usda.gov; or Erin Morris, Associate
Administrator, AMS, USDA, by
telephone on 202/690–4024, or via
email at: [email protected].
SUPPLEMENTARY INFORMATION:
SUMMARY:

asabaliauskas on DSK3SPTVN1PROD with RULES

Executive Summary
Purpose of the Regulatory Action
The Consolidated Appropriations Act,
2016 amended the Act to remove
muscle cut beef and pork, and ground
beef and pork from COOL requirements
in order to bring the United States into
compliance with its international trade
obligations. The Agency is issuing this
rule to conform to these amendments.

VerDate Sep<11>2014

17:00 Mar 01, 2016

Jkt 238001

Background
The Farm Security and Rural
Investment Act of 2002 (2002 Farm Bill)
(Pub. L. 107–171), the 2002
Supplemental Appropriations Act (2002
Appropriations) (Pub. L. 107–206), and
the Food, Conservation and Energy Act
of 2008 (2008 Farm Bill) (Pub. L. 110–
234) amended the Agricultural
Marketing Act of 1946 (Act) (7 U.S.C.
1621 et seq.) to require retailers to notify
their customers of the country of origin
of covered commodities. Covered
commodities included muscle cuts of
beef (including veal), lamb, chicken,
goat, and pork; ground beef, ground
lamb, ground chicken, ground goat, and
ground pork; wild and farm-raised fish
and shellfish; perishable agricultural
commodities; macadamia nuts; pecans;
ginseng; and peanuts. AMS published a
final rule for all covered commodities
on January 15, 2009 (74 FR 2658), which
took effect on March 16, 2009. On May
23, 2013, AMS issued a final rule to
amend the country of origin labeling
provisions for muscle cut covered
commodities (78 FR 31367). The
Consolidated Appropriations Act, 2016
(Pub. L. 114–113) amended the Act to
remove mandatory COOL requirements
for muscle cut beef and pork, and
ground beef and pork. The Agency is
issuing this rule to conform to these
statutory amendments.
Summary of the Major Provisions of the
Regulatory Action in Question
Under this final rule, beef and pork
muscle cuts and ground beef and pork
are removed from the list of covered
commodities subject to the COOL
regulation. Accordingly, changes have
been made to the relevant Code of
Federal Regulations (CFR) sections,
including definitions, country of origin
notification, and recordkeeping.
Costs and Benefits
The estimated economic benefits
associated with this final rule,
previously assessed as costs, are likely
to be significant. The estimated benefits
for producers, processors, wholesalers,
and retailers of previously covered beef
and pork products are difficult to assess,
as they are essentially the converse of
the costs attributed to the 2009/2013
rules.. However, the benefits from
incremental cost savings are likely to be
less than the cumulative impact of these
rules, $1.8 billion, as affected firms have

PO 00000

Frm 00001

Fmt 4700

Sfmt 4700

adjusted their operations to
accommodate COOL requirements more
efficiently since implementation of the
initial COOL measure in 2009, and the
amended measure in 2013. A complete
discussion of the cost and benefits can
be found under the Executive Order
12866 section.
Summary of Changes to the COOL
Regulations
This rule removes certain mandatory
COOL requirements from retailers (as
defined by the law and regulations) and
their suppliers. Retailers are no longer
required by the rule to provide country
of origin information for the beef and
pork that they sell, and firms that
supply beef and pork to these retailers
no longer must provide them with this
information. In addition, firms in the
supply chain for beef and pork are also
relieved from the requirements
associated with mandatory COOL, from
cattle and hogs downstream to muscle
cut and ground beef and pork sold at
covered retail establishments.
Definitions
The definitions of beef (§ 65.110),
ground beef (§ 65.155), ground pork
(§ 65.175), and pork (§ 65.215) are
removed from the regulation. The
definition of the term covered
commodity (§ 65.135(a)(1) and (2)) is
amended to remove references to beef,
pork, ground beef, and ground pork. The
definitions of production step
(§ 65.230), raised (§ 65.235) and United
States country of origin (§ 65.260(a)) are
amended to remove references to beef
and pork. In addition, the definition of
a processed food item (§ 65.220) is
amended to remove the example of
teriyaki flavored pork loin.
Country of Origin Notification
Country of origin notification
(§ 65.300(h)) is amended to remove
references to ground beef and ground
pork.
Recordkeeping
Responsibilities of suppliers
(§ 65.500(b)(1)) is amended to remove
references to beef, pork, and cattle.
Executive Order 12866 and Executive
Order 13563
Executive Orders 12866 and 13563
direct agencies to assess all costs and
benefits of available regulatory
alternatives, and, if regulation is

E:\FR\FM\02MRR1.SGM

02MRR1

10756

Federal Register / Vol. 81, No. 41 / Wednesday, March 2, 2016 / Rules and Regulations

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, of
reducing costs, of harmonizing rules,
and of promoting flexibility. This final
rule has been designated as an
‘‘economically significant regulatory
action’’ under section 3(f) of Executive
Order 12866, and, therefore, has been
reviewed by the Office of Management
and Budget (OMB).
Regulations must be designed in the
most cost-effective manner possible to
obtain the regulatory objective while
imposing the least burden on society.
The purpose of this rule is to amend the
COOL regulation to remove beef and
pork products from the list of covered
commodities as required by the
Consolidated Appropriations Act, 2016.
As a result, the rulemaking represents a
deregulatory action, and the logical
approach for the economic analysis is to
reverse the previous assessment for
those portions of the analysis relating to
beef and pork.
The estimated economic benefits
associated with this final rule,
previously assessed as costs, are likely
to be significant. The estimated benefits
for producers, processors, wholesalers,

and retailers of previously covered beef
and pork products are as much as $1.8
billion in cost avoidance. However, the
benefits from incremental cost savings
are likely to be less than this upper
bound, as affected firms have adjusted
their operations to accommodate COOL
requirements more efficiently since
implementation of the initial COOL
measure in 2009, and the amended
measure in 2013.
The costs of this rule are the loss in
benefits to consumers who desired such
country of origin information for muscle
cut beef and pork, and ground beef and
pork products sold at retail. As
discussed in previous rulemakings,
these costs are difficult to determine
quantitatively. The original rulemaking
did not estimate a quantitative value of
these preferences but noted their
existence. USDA found that the lack of
voluntary country of origin labeling
programs, including labeling for beef
and pork products, was evidence that
consumers did not have strong enough
preferences to support price premiums
sufficient for firms in the supply chain
to recoup the costs of labeling.
Statement of Need
Justification for this final rule is to
conform to changes made to COOL
provisions by the Consolidated
Appropriations Act, 2016. There are no
alternatives to federal regulatory

intervention for implementing this
statutory directive.
The COOL provisions of the Act
changed federal labeling requirements
to remove muscle cuts of beef and pork
and ground beef and ground pork from
the list of covered commodities for the
COOL regulation.
Analysis of Benefits and Costs
The baseline for this analysis is the
present state of the affected industries
with mandatory COOL.
Benefits: The benefits of the rule
removing beef and pork products from
mandatory COOL are the reduction in
costs to those affected parties associated
with meeting the rule requirements.
This includes implementation costs
related to capital, labor, and other
inputs. Following the economic analysis
from previous rulemaking (74 FR 2658;
78 FR 31367), the overall impact of the
cost savings to directly affected firms
will be an increase in economic activity
resulting in an overall net benefit
(benefits minus costs) from this
rulemaking.
Number of firms and number of
establishments affected: This rule is
estimated to directly or indirectly affect
approximately 1,027,204 establishments
owned by approximately 992,781 firms.
Table 1 provides estimates of the
affected firms and establishments.

TABLE 1—NUMBER OF AFFECTED ENTITIES
Type

Firms

Beef and Pork
Cattle and Calves 1 ...........................................................................................................................................
Hogs and Pigs 2 ................................................................................................................................................
Stockyards, Dealers & Market Agencies 3 .......................................................................................................
Livestock Processing & Slaughtering 4 .............................................................................................................
Meat & Meat Product Wholesale 5 ...................................................................................................................
General Line Grocery Wholesalers 6 .......................................................................................................................
Retailers 7 .................................................................................................................................................................
Totals
Producers .........................................................................................................................................................
Handlers, Processors, & Wholesalers ..............................................................................................................
Retailers ............................................................................................................................................................

asabaliauskas on DSK3SPTVN1PROD with RULES

Grand Total ...............................................................................................................................................

It is assumed that all firms and
establishments identified in Table 1 will
be affected by the rule, although some
may not produce or sell products within
the scope of this rule. While this
assumption likely overstates the number
1 NASS,

USDA. 2012 Census of Agriculture.

2 Ibid.
3 Grain Inspection, Packers and Stockyards
Program, USDA. Market Agencies Buying on
Commission and Dealers. December 2015. http://
gipsa.usda.gov/psp/regulated/dealersBOC_list.pdf.:
Grain Inspection, Packers and Stockyards Program,

VerDate Sep<11>2014

17:00 Mar 01, 2016

Jkt 238001

Operations

913,246
63,246
4,723
2,629
2,162
2,271
4,504

913,246
63,246
4,723
2,862
2,405
2,832
37,890

976,492
11,785
4,504

976,492
12,822
37,890

992,781

1,027,204

of affected firms and establishments, it
is consistent with previous regulatory
assessments of COOL. With the
exception of retailers, the number of
firms and operations has declined as
compared to the 2009 final rule.

Detailed data are not available on the
number of entities categorized by the
marketing channels in which they
operate and the specific products that
they sell. Such data would be needed to

USDA. Registered and Bonded Market Agencies
Selling Livestock on Commission. December 2015.
http://gipsa.usda.gov/psp/regulated/SOC_list.pdf.
4 NASS, USDA. Livestock Slaughter Annual
Summary, April 2015.
5 U.S. Census Bureau. 2012 Economic Census.
Business and Industry Subject Series. Sales/Receipt

Size of Establishment/Firm. EC1251SSSZ1. Issued
October 2015.
6 Ibid.
7 AMS, USDA. Perishable Agricultural
Commodities Act database.

PO 00000

Frm 00002

Fmt 4700

Sfmt 4700

E:\FR\FM\02MRR1.SGM

02MRR1

10757

Federal Register / Vol. 81, No. 41 / Wednesday, March 2, 2016 / Rules and Regulations
refine the estimates of the entities
directly affected by COOL.
Estimation of benefits: The process of
determining estimates of what were
previously costs, but are now
considered to be benefits (costs avoided)
of this rule have been detailed in both
the economic analyses for the 2009 and
2013 final rules, as well as proposed
and interim rulemaking actions
associated with those rules. Details of
the data, sources, and methods
underlying the economic analyses are
provided in the previous Final
Regulatory Impact Analyses (FRIA), the
Intermediate Regulatory Impact
Analysis (IRIA), and the previous

Preliminary Regulatory Impact Analysis
(PRIA) under the sections relating to
costs for the beef and pork industries.
This section presents the revised
benefits estimates and describes changes
made for this final analysis.
In the 2009 final rule (74 FR 2658),
the economic analysis provided
estimates of first-year incremental
outlays for directly affected firms. In
addition, the results of a computable
general equilibrium model were
included to show the economic impact
of the rule 10 years after the initial
implementation. The longer term
assessment was conducted to show that
over time the impact of the rule will

likely change as economic agents adapt
to the rule. The longer term assessment
also allowed for estimation of impacts of
COOL across the U.S. economy.
Table 2 below presents results of the
2009 rule economic analysis for beef
and pork, adjusted for inflation (2015
dollars).8 All impacted entities in the
supply chain are included in these
values, from the producer to the
processor, wholesaler and retailer. The
second, third and fourth columns show
the adjusted estimates of increased costs
for the first year of the rule’s
implementation.

TABLE 2—ESTIMATED IMPLEMENTATION COSTS FOR THE 2009 COOL REGULATION, IN 2015 DOLLARS
(Million $)
Beef

Pork

Total

Producers .....................................................................................................................................
Intermediaries ..............................................................................................................................
Retailers .......................................................................................................................................

$335.5
410.3
631.4

$115.5
111.1
102.3

$451.0
521.4
733.7

Total ......................................................................................................................................

1,377.2

328.9

1,706.1

The 2009 rule is now at the start of
its seventh year of implementation. The
economic analysis for the 2009 rule did
not examine the costs of implementing
COOL to affected entities beyond the
initial year. However, it was
acknowledged that the first year costs
were likely to be higher than subsequent
year costs due to changes in technology,
development of more efficient practices,
and greater familiarity with its

implementation. While such cost
reductions are likely, in the absence of
detail on subsequent years of
implementation we to assume that
removal of beef and pork from COOL
regulations results in a cost savings to
affected entities of at most $1.377
billion for the beef sector, $328 million
for the pork sector, and a total of $1.706
billion for both industries combined.
In 2013, an additional rule was
promulgated that amended the

requirements regarding labeling of
muscle cuts of covered commodities to
provide consumers with more specific
information. The economic assessment
for this rule determined the costs of
implementation to be the figures
reported in Table 3, adjusted to 2015
dollars. As Table 3 shows, the economic
assessment presented low, high, and
mid-point values for estimated outlays.

TABLE 3—ESTIMATED IMPLEMENTATION COSTS FOR THE 2013 COOL REGULATION, IN 2015 DOLLARS

asabaliauskas on DSK3SPTVN1PROD with RULES

Low estimate

Mid-point
estimate

High estimate

Labeling—Retail (million $) ..........................................................................................................
Commingling—Beef (million $) ....................................................................................................
Commingling—Pork (million $) ....................................................................................................

17.3
21.5
15.3

33.5
53.9
38.4

48.2
86.2
61.5

Total (million $) .....................................................................................................................

54.1

125.8

195.9

Again, these costs were estimated for
the initial year of implementation, with
the recognition that over time increased
efficiencies would lead to reduced
annual costs. However, as with the 2009
rule, the 2013 regulation did not
provide cost estimates beyond the first
year. For consistency, we again assume
the cost savings for this third year of the
2013 rule’s implementation is
equivalent to the first year, recognizing
that it is likely to be an upper limit

value. Assuming the mid-point of the
range, removing beef and pork products
from the 2013 COOL regulation would
save these industries a total of roughly
$126 million per year in costs.
Withdrawing beef and pork products
completely from both the 2009 and the
2013 COOL regulations therefore is
expected to save these industries a
combined $1.832 billion. Specifically,
this translates into total cost savings for
the industry as $799.7 million saved by

beef producers and intermediaries,
$265.0 million saved by pork producers,
and $767.2 million saved by retailers for
both beef and pork covered
commodities.
The benefits per firm and per
establishment represent industry
averages for aggregated segments of the
supply chain. Large firms and
establishments may see greater savings
relative to small operations due to the
volume of commodities that they handle

8 Bureau of Labor Statistics. http://www.bls.gov/
data/inflation_calculator.htm.

VerDate Sep<11>2014

17:00 Mar 01, 2016

Jkt 238001

PO 00000

Frm 00003

Fmt 4700

Sfmt 4700

E:\FR\FM\02MRR1.SGM

02MRR1

10758

Federal Register / Vol. 81, No. 41 / Wednesday, March 2, 2016 / Rules and Regulations

and the increased complexity of their
operations. In addition, different types
of businesses within each segment are
likely to benefit differently. Thus, the
range of benefits gained by individual
businesses within each segment is

expected to be large, with some firms
seeing greater gains than others.9
Average benefits, in the form of cost
savings per operation for each of the
three types of operations is shown in
Table 4. These values were calculated

from Table 1, and total cost savings
estimations of $451.0 million for
producers, $613.7 million for
intermediaries such as handlers,
processors and wholesalers, and $767.2
million for retailers.

TABLE 4—NUMBER OF OPERATIONS AND AVERAGE COST SAVINGS PER AFFECTED ENTITY
Type

Operations

asabaliauskas on DSK3SPTVN1PROD with RULES

Producers .................................................................................................................................................................
Intermediaries ..........................................................................................................................................................
Retailers ...................................................................................................................................................................

Average cost
savings

976,492
12,822
37,890

$462
47,863
20,248

Net Effects on the Economy: As
discussed in the 2009 final rule, the
impacts described fall to those directly
involved in the production, distribution,
and marketing of covered commodities.
However, they do not represent the net
impacts to the United States economy.
In the 2009 rulemaking, the impact of
the regulation on overall economy was
examined using a Computable General
Equilibrium (CGE) model developed by
the USDA’s Economic Research Service.
Given that this is a deregulatory action
that reduces costs and in the interest of
expediency, the CGE model was not reestimated with COOL compliance costs
for beef and pork covered commodities
removed as economic ‘‘shocks’’ to the
model. However, reasonable
assumptions can be applied to the
earlier results to arrive at approximate
estimates of the impact of this
rulemaking action on the broader U.S.
economy.
The 2009 economic impact analysis
demonstrated that production and
marketing cost increases associated with
COOL regulations for covered
commodities ultimately led to reduced
output within the covered industries, in
other industries, or both. As a result, the
net impact on the general economy of
regulations that increased supply-side
costs for covered commodities was
negative.
In the 2009 rule (74 FR 2658), it was
determined that the overall impact on
the U.S. economy from that rule (which
also included lamb, chicken, fruits,
vegetables, and other commodities) was
$234.1 million in 2015 dollars. The
assumptions used in developing this
value were that consumers’ preferences
for the commodities would not change,
and that the adjustments were made
over a 10-year time period. This value
represents the decline in consumer
purchasing power as a result of the
initial implementation costs filtering

through the economy after 10 years of
adjustment.
Because removal of beef and pork
from COOL regulations should have the
opposite effect, it is likely that the longterm impact on the overall economy
from withdrawing beef and pork from
COOL requirements would be a
reduction in this loss of purchasing
power. In the 2009 FRIA, 59 percent of
the total initial implementation costs
were attributable to beef and pork. If we
assume the same proportion applies to
the CGE model, the reduction in
purchasing power to U.S. consumers
attributable to cost increases for beef
and pork would be approximately $138
million after 10 years of adjustment.
Conversely, then, removal of COOL
requirements for beef and pork through
this rulemaking may result in an
improvement of approximately $138
million in U.S. consumers’ purchasing
power after 10 years of adjustment.
Costs: As discussed in previous
assessments of COOL regulation, the
expected benefits from implementation
of the rule (i.e., the current regulations)
were likely to be negligible and were
difficult to quantify. With this rule
removing beef and pork products from
COOL, those consumers who had
previously benefited from the
information will now experience a
reduction in economic welfare due to
the loss of this information. This
reduction in welfare is the cost of
exempting beef and pork from COOL
requirements.
COOL provides consumers with
information about a credence attribute.
Another credence attribute that
consumers sometimes confuse with
COOL is food safety. However, as noted
in previous rulemaking actions, COOL
is simply a labeling rule, not a food
safety rule. As a result, there are no
costs to consumers from removing

COOL requirements for beef and pork
products from a food safety perspective.
Alternatives considered: Section 759
of Division A of the Consolidated
Appropriations Act, 2016 mandates the
withdrawal of beef and pork muscle
cuts, ground beef, and ground pork.
This rule would implement the Act
accordingly. The only effective means of
achieving the results mandated by the
Consolidated Appropriations Act, 2016,
is through rule promulgation.

9 Some affected entities may not experience net
savings. For example, although this rulemaking will

reduce the cost of compliance activities conducted
by firms in the beef and pork supply chain, the

savings may, in some cases, be passed on to others
in the supply chain or consumers.

VerDate Sep<11>2014

17:00 Mar 01, 2016

Jkt 238001

PO 00000

Frm 00004

Fmt 4700

Sfmt 4700

Regulatory Flexibility Analysis
This rule has been reviewed under the
requirements of the Regulatory
Flexibility Act (RFA) (5 U.S.C. 601 et
seq.). The purpose of RFA is to consider
the economic impact of a rule on small
businesses and evaluate alternatives that
would accomplish the objectives of the
rule without unduly burdening small
entities or erecting barriers that would
restrict their ability to compete in the
marketplace. The Agency believes that
this rule will have a significant
economic impact on a substantial
number of small entities, but this impact
will be in the form of removing
regulatory burdens. The Agency has
prepared the following final regulatory
flexibility analysis of the rule’s likely
economic impact on small businesses
pursuant to section 604 of the
Regulatory Flexibility Act.
The rule is the direct result of
statutory obligations to implement
Section 759 of Division A of the
Consolidated Appropriations Act, 2016.
The intent of this law is to remove
muscle cut beef and pork, and ground
beef and pork from a regulation that
provides consumers with information
on the country of origin of covered
commodities at certain retail
establishments. Specifically, the law
withdraws these commodities from
Federal country of origin labeling

E:\FR\FM\02MRR1.SGM

02MRR1

asabaliauskas on DSK3SPTVN1PROD with RULES

Federal Register / Vol. 81, No. 41 / Wednesday, March 2, 2016 / Rules and Regulations
requirements for products sold by
retailers subject to COOL.
The objective of the current COOL
regulation is to regulate the activities of
covered retailers and their suppliers to
enable retailers to fulfill their statutory
and regulatory obligations. COOL
requires retailers to provide country of
origin information for all of the covered
commodities that they sell. It also
requires all firms that supply covered
commodities to these retailers to
provide the retailers with the
information needed to correctly label
the covered commodities. In addition,
all other firms in the supply chain for
the covered commodities are potentially
affected by the rule because country of
origin information needs to be
maintained and transferred along the
entire supply chain. In general, the
supply chains for the covered
commodities consist of farms,
processors, wholesalers, importers, and
retailers. This rule withdraws muscle
cut beef and pork, and ground beef and
pork from the list of covered
commodities, and subsequently
withdraws all entities along the supply
chain for these commodities from the
requirements of COOL regulation.
Section 604 of the RFA requires the
Agency to provide an estimate of the
number of small entities to which the
rule will apply. A listing of the number
of entities in the supply chains for each
of the covered commodities can be
found in Table 1. However, in the case
of this rule, these entities will benefit
from reduced costs, rather than incur
additional costs. Retailers covered by
this rule must meet the definition of a
retailer as defined by Perishable
Agricultural Commodities Act of 1930
(PACA). In utilizing this definition, the
number of retailers affected by this rule
is considerably smaller than the total
number of retailers nationwide.
Because of the removal from country
of origin requirements, COOL
information will no longer be required
to be passed along the supply chain and
made available to consumers at the
retail level. As a result, each participant
in the supply chain as identified in
Table 1 will benefit from reductions in
recordkeeping costs, as well as changes
or modifications to their business
practices. It is estimated that
approximately 1,027,000 establishments
owned by approximately 993,000 firms
will be either directly or indirectly
affected by this rule.
This rule potentially will have an
impact on all participants in the supply
chain, although the nature and extent of
the impact will depend on the
participant’s function within the
marketing chain. On a total basis, the

VerDate Sep<11>2014

17:00 Mar 01, 2016

Jkt 238001

economic assessment estimated benefits
in the form of cost savings of up to
$451.0 million for producers, $613.7
million for intermediaries such as
handlers, processors and wholesalers,
and $767.2 million for retailers for a
total of $1.832 billion.
On a per operation basis, the rule
likely will have the largest benefit on
intermediaries (handlers, processors,
wholesalers, and importers) and
retailers, while the impact on individual
producers is likely to be relatively
small. These impacts were shown in
Table 6 of the economic impact
analysis.
There are two measures used by the
Small Business Administration (SBA) to
identify businesses as small: Sales
receipts or number of employees. In
terms of sales, SBA classifies as small
those grocery stores with less than $25
million in annual sales and specialty
food stores with less than $6.5 million
in annual sales (13 CFR 121.201).
Warehouse clubs and superstores with
less than $25 million in annual sales are
also defined as small. SBA defines as
small those agricultural producers with
less than $750,000 in annual sales. Of
the other businesses potentially affected
by the rule, SBA classifies as small
those manufacturing firms with less
than 500 employees and wholesalers
with less than 100 employees.
Retailers: While there are many
potential retail outlets for the covered
commodities, food stores, warehouse
clubs, and superstores are the primary
retail outlets for food consumed at
home. The number of retailers subject to
the COOL rule is considerably smaller
than the number of food retailers
nationwide. There are 4,504 retail firms
as defined by PACA that would be
subject to the rule. An estimated 88
percent (3,964 out of 4,504) of the
retailers subject to the rule were
reported to be small.
Retailer benefits under this rule are
estimated at $767.2 million. Benefits are
estimated at $170,337 per retail firm and
$47,863 per retail establishment.
Retailers will save on recordkeeping
costs, costs associated with supplying
country of origin information to
consumers, and handling costs.
Wholesalers: Any establishment that
supplies retailers with one or more of
the covered commodities will no longer
be required to provide country of origin
information to retailers. Of wholesalers
potentially affected by the rule, SBA
defines those having less than 100
employees as small. Importers of
covered commodities will also be
affected by the rule and are categorized
as wholesalers in the data.

PO 00000

Frm 00005

Fmt 4700

Sfmt 4700

10759

General-line wholesalers were
assumed to handle at least one and
possibly all of the covered commodities.
As a result, the number of general-line
wholesale businesses was included
among entities affected by the rule. In
2012 there were 2,271 firms in total, and
2,108 firms had less than 100
employees. Therefore, approximately 93
percent of the general-line grocery
wholesaler can be classified as small
businesses.
In addition to general-line
wholesalers, there are specialty
wholesalers which deal in certain types
of products. According to the 2012
Economic Census, there was a total of
2,162 meat and meat products
wholesalers firms. Of these, 2,043 firms
had less than 100 employees, meaning
approximately 95 percent of meat
wholesalers were considered small
firms.
The 2012 Economic Census reports
that 2,629 livestock processing and
slaughtering firms were in operation.
Almost 90 percent or 2,354 of these
firms qualified as small businesses
under the SBA definition.
The USDA’s Packers and Stockyards
Program provides regularly updated
data on the number of livestock buyers,
dealers and auction markets. While this
information does not include sales and/
or employment data, it is expected that
the large majority of these entities are
small businesses.
It is estimated that intermediaries
(importers and domestic wholesalers,
handlers, and processors) would benefit
from cost savings under the rule by
approximately $613.7 million, or
$52,075 per intermediary firm and
$47,863 per establishment. Wholesalers
will save recordkeeping costs, costs
associated with supplying country of
origin and method of production
information to retailers, costs associated
with segmenting products by country of
origin and method of production, and
additional handling costs.
Producers: Producers of cattle and
hogs will be affected because covered
meat commodities are produced from
livestock. SBA defines a small
agricultural producer as having annual
receipts less than $750,000. According
to the 2012 Census of Agriculture, there
were 913,246 farms that raised beef
cows, and roughly 45,000 were
estimated to have annual receipts
greater than $750,000. Thus, about 95
percent of these beef cattle farms were
classified as small businesses according
to the SBA definition. Similarly, an
estimated 80 percent of hog farms were
considered small.
At the production level, agricultural
producers maintained records to

E:\FR\FM\02MRR1.SGM

02MRR1

10760

Federal Register / Vol. 81, No. 41 / Wednesday, March 2, 2016 / Rules and Regulations

establish country of origin information.
This information was conveyed as the
animals and products derived from
them moved through the supply chains.
Producer costs included the cost of
establishing and maintaining a
recordkeeping system for the country of
origin information, animal or product
identification, and labor and training.
The savings benefits for producers are
expected to be $451.0 million, or an
estimated $462 per firm.10
Additional alternatives considered:
Section 604 of the RFA requires the
Agency to describe the steps taken to
minimize the significant economic
impact on small entities including a
discussion of alternatives considered.
As the effect of this rule is reduced
burdens rather than increased costs on
firms, and because there were no
alternatives for implementing the
legislation, no alternatives to lessen the
burden of this rule on small businesses
were considered.
Paperwork Reduction Act
Pursuant to the Paperwork Reduction
Act (PRA) (44 U.S.C 3501–3520) the
information collection provisions
contained in this rule were previously
approved by OMB and assigned OMB
Control Number 0581–0250. AMS is
publishing a notice and request for
comment seeking OMB approval to
revise this information collection in this
edition of the Federal Register.

asabaliauskas on DSK3SPTVN1PROD with RULES

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.’’ Executive Order 13175
requires Federal agencies to consult and
coordinate with tribes on a governmentto-government basis on policies that
have tribal implications, including
regulations, legislative comments or
proposed legislation, and other policy
statements or actions that have
substantial direct effects on one or more
Indian tribes, on the relationship
between the Federal Government and
Indian tribes or on the distribution of
power and responsibilities between the
Federal Government and Indian tribes.
The Agricultural Marketing Service
(AMS) has assessed the impact of this
rule on Indian tribes and determined
that this rule does not, to our
knowledge, have tribal implications that
require tribal consultation under E.O.
13175. If a Tribe requests consultation,
AMS will work with the Office of Tribal
10 As

noted in more detail above, these savings
may be shifted to others in the supply chain or
consumers.

VerDate Sep<11>2014

17:00 Mar 01, 2016

Jkt 238001

Relations to ensure meaningful
consultation is provided where changes,
additions and modifications identified
herein are not expressly mandated by
Congress.
Executive Order 12988
The contents of this rule were
reviewed under Executive Order 12988,
‘‘Civil Justice Reform.’’ This rule is not
intended to have a retroactive effect.
States and local jurisdictions are
preempted from creating or operating
country of origin labeling programs for
the commodities specified in the Act
and this regulation. With regard to other
Federal statutes, all labeling claims
made in conjunction with this
regulation must be consistent with other
applicable Federal requirements. There
are no administrative procedures that
must be exhausted prior to any judicial
challenge to the provisions of this rule.
Civil Rights Review
AMS considered the potential civil
rights implications of this rule on
minorities, women, or persons with
disabilities 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. Further, this rule will not deny
any persons or groups the benefits of the
program or subject any persons or
groups to discrimination.
Executive Order 13132
This rule has been reviewed under
Executive Order 13132, ‘‘Federalism.’’
This Order directs agencies to construe,
in regulations and otherwise, a Federal
statute to preempt State law only where
the statute contains an express
preemption provision or there is some
other clear evidence to conclude that
the Congress intended preemption of
State law, or where the exercise of State
authority conflicts with the exercise of
Federal authority under the Federal
statute. This program is required by the
2002 Farm Bill, as amended by the 2008
Farm Bill and the Consolidated
Appropriations Act, 2016.
In the January 15, 2009, final rule, the
Federalism analysis stated that to the
extent that State country of origin
labeling programs encompass
commodities that are not governed by
the COOL program, the States may

PO 00000

Frm 00006

Fmt 4700

Sfmt 4700

continue to operate them. It also
contained a preemption for those State
country of origin labeling programs that
encompass commodities that are
governed by the COOL program. This
final rule does not change the
preemption. With regard to consultation
with States, as directed by the Executive
Order 13132, AMS previously consulted
with the States that have country of
origin labeling programs. AMS has
cooperative agreements with all 50
States to assist in the enforcement of the
COOL program and has
communications with the States on a
regular basis.
It is found and determined that good
cause exists under 5 U.S.C. 553(b)(3) for
implementing this final rule on March
2, 2016 without prior notice and
opportunity for comment. This rule has
been determined to be a major rule for
purposes of the Congressional Review
Act (5 U.S.C. 801 et seq.); however, the
Agency finds that under 5 U.S.C. 808(2)
good cause exists to waive the 60-day
delay in the effective date. The
Consolidated Appropriations Act, 2016
amended the Act to remove the
requirements for labeling beef and pork
to bring the United States into
compliance with its international trade
obligations. Providing notice and
seeking comment are impractical,
unnecessary, and contrary to public
interest because AMS has no discretion
in implementing the statutory
provisions that remove beef and pork
from the COOL regulations.
Additionally, on December 7, 2015, the
World Trade Organization (‘‘WTO’’)
Arbitrators set the maximum
permissible levels of suspension of
concessions at Canadian $1.05 billion
(US $781 million) annually for Canada
and US $228 million annually for
Mexico. The WTO granted Canada and
Mexico authorization to suspend
concessions on December 21, 2015. For
these same reasons, pursuant to 5 U.S.C.
553, it is found and determined that
good cause exists to exempt this rule
from the requirement to delay the
effective date. Accordingly, this rule
will be effective on March 2, 2016.
List of Subjects in 7 CFR Part 65
Agricultural commodities, Food
labeling, Meat and meat products,
Reporting and recordkeeping
requirements.
For the reasons set forth in the
preamble, 7 CFR part 65 is amended as
follows:

E:\FR\FM\02MRR1.SGM

02MRR1

Federal Register / Vol. 81, No. 41 / Wednesday, March 2, 2016 / Rules and Regulations
PART 65—COUNTRY OF ORIGIN
LABELING OF LAMB, CHICKEN, AND
GOAT MEAT, PERISHABLE
AGRICULTURAL COMMODITIES,
MACADAMIA NUTS, PECANS,
PEANUTS, AND GINSENG
1. The authority citation for part 65
continues to read as follows:

■

2. Revise the heading for part 65 to
read as set forth above.

■

3. Remove §§ 65.110, 65.155, 65.175,
and 65.215.
■ 4. Amend § 65.135 by revising
paragraphs (a)(1) and (2) to read as
follows:
Covered commodity.

(a) * * *
(1) Muscle cuts of lamb, chicken, and
goat;
(2) Ground lamb, ground chicken, and
ground goat;
*
*
*
*
*
■ 5. Revise § 65.220 to read as follows:
Processed food item.

asabaliauskas on DSK3SPTVN1PROD with RULES

Processed food item means a retail
item derived from a covered commodity
that has undergone specific processing
resulting in a change in the character of
the covered commodity, or that has been
combined with at least one other
covered commodity or other substantive
food component (e.g., chocolate,
breading, tomato sauce), except that the
addition of a component (such as water,
salt, or sugar) that enhances or
represents a further step in the
preparation of the product for
consumption, would not in itself result
in a processed food item. Specific
processing that results in a change in
the character of the covered commodity
includes cooking (e.g., frying, broiling,
grilling, boiling, steaming, baking,
roasting), curing (e.g., salt curing, sugar
curing, drying), smoking (hot or cold),
and restructuring (e.g., emulsifying and
extruding). Examples of items excluded
include roasted peanuts, breaded
chicken tenders, and fruit medley.
■ 6. Amend § 65.300 by revising
paragraph (h) to read as follows:
§ 65.300

Country of origin notification.

*

*
*
*
*
(h) Labeling ground lamb, ground
goat, and ground chicken. The
declaration for ground lamb, ground
goat, and ground chicken covered
commodities shall list all countries of
origin contained therein or that may be
reasonably contained therein. In

VerDate Sep<11>2014

17:00 Mar 01, 2016

Jkt 238001

7. Amend § 65.500 by revising
paragraph (b)(1) to read as follows:

RIN 2120–AK29

Recordkeeping requirements.

*

■

§ 65.220

DEPARTMENT OF TRANSPORTATION

§ 65.500

§§ 65.110, 65.155, 65.175, and 65.215
[Removed]

§ 65.135

determining what is considered
reasonable, when a raw material from a
specific origin is not in a processor’s
inventory for more than 60 days, that
country shall no longer be included as
a possible country of origin.
*
*
*
*
*
■

Authority: 7 U.S.C. 1621 et seq.

10761

*
*
*
*
(b) Responsibilities of suppliers. (1)
Any person engaged in the business of
supplying a covered commodity to a
retailer, whether directly or indirectly,
must make available information to the
buyer about the country(ies) of origin of
the covered commodity. This
information may be provided either on
the product itself, on the master
shipping container, or in a document
that accompanies the product through
retail sale. In addition, the supplier of
a covered commodity that is responsible
for initiating a country(ies) of origin
claim, which in the case of lamb,
chicken, and goat, is the slaughter
facility, must possess records that are
necessary to substantiate that claim for
a period of 1 year from the date of the
transaction. For that purpose, packers
that slaughter animals that are tagged
with an 840 Animal Identification
Number device without the presence of
any additional accompanying marking
(i.e., ‘‘CAN’’ or ‘‘M’’) may use that
information as a basis for a U.S. origin
claim. Packers that slaughter animals
that are part of another country’s
recognized official system (e.g.
Canadian official system, Mexico
official system) may also rely on the
presence of an official ear tag or other
approved device on which to base their
origin claims. Producer affidavits shall
also be considered acceptable records
that suppliers may utilize to initiate
origin claims, provided it is made by
someone having first-hand knowledge of
the origin of the covered commodity
and identifies the covered commodity
unique to the transaction.
*
*
*
*
*
Dated: February 26, 2016.
Elanor Starmer,
Acting Administrator, Agricultural Marketing
Service.
[FR Doc. 2016–04609 Filed 3–1–16; 8:45 am]
BILLING CODE 3410–02–P

PO 00000

Frm 00007

Fmt 4700

Sfmt 4700

Federal Aviation Administration
14 CFR Part 25
[Docket No.: FAA–2014–0001; Amdt. No.
25–142]

Harmonization of Airworthiness
Standards—Fire Extinguishers and
Class B and F Cargo Compartments;
Correction
Federal Aviation
Administration (FAA), DOT.
ACTION: Final rule; correction.
AGENCY:

The FAA is correcting a final
rule published on February 16, 2016. In
that rule, the FAA amended certain
airworthiness regulations for transport
category airplanes by upgrading fire
safety standards for Class B cargo
compartments; establishing fire safety
standards for a new type of cargo
compartment, Class F; and updating
related standards for fire extinguishers.
This amendment eliminated certain
regulatory differences between the
airworthiness standards of the FAA and
the European Aviation Safety Agency
(EASA), without affecting current
industry design practices. However, in
that document, the amendment number
for the final rule was incorrect, and this
document now posts the correct
amendment number.
DATES: This correction is effective on
March 2, 2016.
FOR FURTHER INFORMATION CONTACT: For
technical questions concerning this
action, contact Stephen M. Happenny,
Propulsion/Mechanical Systems Branch,
ANM–112, Transport Airplane
Directorate, Aircraft Certification
Service, Federal Aviation
Administration, 1601 Lind Ave. SW.,
Renton, WA 98055–4056; telephone
(425) 227–2147; facsimile (425) 227
1232; email: stephen.happenny@
faa.gov.
SUPPLEMENTARY INFORMATION:
SUMMARY:

Background
On February 16, 2016 (81 FR 7698),
the FAA published a final rule entitled,
‘‘Harmonization of Airworthiness
Standards—Fire Extinguishers and Class
B and F Cargo Compartments’’ (81 FR
7698).
This rule amended certain
airworthiness regulations for transport
category airplanes by upgrading fire
safety standards for Class B cargo
compartments; establishing fire safety
standards for a new type of cargo
compartment, Class F; and updating

E:\FR\FM\02MRR1.SGM

02MRR1