Proposed Rule2023-22502
Natural Grass Sod Promotion, Research, and Information Order
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
October 16, 2023
Issuing agencies
Agriculture DepartmentAgricultural Marketing Service
Abstract
This proposed rule invites comments on the establishment of an industry-funded promotion, research, and information program for natural grass sod products. The proposed Natural Grass Sod Promotion, Research, and Information Order (Order) was submitted to the U.S. Department of Agriculture (USDA) by Turfgrass Producers International (TPI), a group of natural grass sod producers. The proposed Order also announces the Agricultural Marketing Service's (AMS) intent to request approval from the Office of Management and Budget (OMB) of new information collection requirements to implement the program.
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[Federal Register Volume 88, Number 198 (Monday, October 16, 2023)]
[Proposed Rules]
[Pages 71306-71323]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-22502]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 1240
[Doc. No. AMS-LP-21-0028]
RIN 0581-AE07
Natural Grass Sod Promotion, Research, and Information Order
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed rule.
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SUMMARY: This proposed rule invites comments on the establishment of an
industry-funded promotion, research, and information program for
natural grass sod products. The proposed Natural Grass Sod Promotion,
Research, and Information Order (Order) was submitted to the U.S.
Department of Agriculture (USDA) by Turfgrass Producers International
(TPI), a group of natural grass sod producers. The proposed Order also
announces the Agricultural Marketing Service's (AMS) intent to request
approval from the Office of Management and Budget (OMB) of new
information collection requirements to implement the program.
DATES: Comments must be received on or before December 15, 2023 to be
assured of consideration. Pursuant to the Paperwork Reduction Act (44
U.S.C. chapter 35) (PRA), comments of the information collection burden
that would result from this proposal must be received on or before
December 15, 2023 to be assured of consideration.
ADDRESSES: Interested persons are invited to submit comments concerning
this document by using the electronic process available at <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Written comments may also be submitted to Jeana
Harbison, Director; Research and Promotion Division; Livestock and
Poultry Program, AMS, USDA; Room 2625-S, STOP 0251, 1400 Independence
Avenue SW, Washington, DC 20250-0251. All comments should reference the
document number and the date and page number of this issue of the
Federal Register. All comments received will be posted without change,
including any personal information provided, at <a href="https://www.regulations.gov">https://www.regulations.gov</a> and will be included in the record and made
available to the public.
Pursuant to the PRA, comments regarding the accuracy of the burden
estimate, ways to minimize the burden, including the use of automated
collection techniques or other forms of information technology, should
be sent to the address above. In addition, comments concerning the
information collection should be sent to the Desk Office for
Agriculture; Office of Information and Regulatory Affairs; Office of
Management and Budget; New Executive Office Building; 725 17th Street
NW, Room 725; Washington, DC 20503.
FOR FURTHER INFORMATION CONTACT: Jeana Harbison; Director; Research and
Promotion Division; Telephone: (202) 527-3398 or Email:
<a href="/cdn-cgi/l/email-protection#5e143b3f303f701370163f2c3c372d31301e2b2d3a3f70393128"><span class="__cf_email__" data-cfemail="4a002f2b242b640764022b3828233925240a3f392e2b642d253c">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
This proposed rule is issued pursuant to the Commodity Promotion,
Research, and Information Act of 1996 (the Act) (7 U.S.C. 7411-7425).
Executive Order 12866, 13563, and 14094
Executive Orders (E.O.) 12866 and 13563 direct agencies to assess
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, reducing costs, harmonizing rules, and promoting flexibility.
Executive Order 14094 updates and modernizes E.O. 12866 and directs
agencies to conduct proactive outreach to engage interested and
affected parties through a variety of means, such as through field
offices, and alternative platforms and media. This rulemaking has been
designated as not a ``significant regulatory action'' under section
3(f) of Executive Order 12866. Accordingly, the Office of
[[Page 71307]]
Management and Budget (OMB) has not reviewed this action.
Executive Order 12988
This proposed rule has been reviewed under E.O. 12988, Civil
Justice Reform. It is not intended to have retroactive effect. Section
524 of the Act (7 U.S.C. 7423) provides that it shall not affect or
preempt any other Federal or State law authorizing promotion or
research relating to an agricultural commodity.
Under section 519 of the Act (7 U.S.C. 7418), a person subject to
the Order may file a petition with the Secretary of Agriculture
(Secretary) stating that the Order, any provision of the Order, or any
obligation imposed in connection with the Order, is not established in
accordance with the law, and may request a modification of the Order or
an exemption from the Order. Any petition filed challenging the Order,
any provision of the Order, or any obligation imposed in connection
with the Order, shall be filed within 2 years after the effective date
of the Order, provision, or obligation subject to challenge in the
petition. The petitioner will have the opportunity for a hearing on the
petition. Thereafter, the Secretary will issue a ruling on the
petition. The Act provides that the district court of the United States
for any district in which the petitioner resides or conducts business
shall have the jurisdiction to review a final ruling on the petition,
if the petitioner files a complaint for that purpose not later than 20
days after the date of the entry of the Secretary's final ruling.
Executive Order 13175
This proposed rule has been reviewed under E.O. 13175--Consultation
and Coordination with Indian Tribal Governments, which requires Federal
agencies to consult and coordinate with Tribes on a government-to-
government basis on: (1) policies that have Tribal implication,
including regulation, legislative comments, or proposed legislation;
and (2) 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.
AMS has assessed the impact of this proposed rule on Indian Tribes
and determined that this rulemaking would not have Tribal implications
that require consultation under E.O. 13175. AMS hosts a quarterly
teleconference with Tribal leaders where matters of mutual interest
regarding the marketing of agricultural products are discussed.
Information about the proposed regulation will be shared during an
upcoming quarterly call, and Tribal leaders will be informed about the
proposed regulation and the opportunity to submit comments. AMS will
work with the USDA Office of Tribal Relations to ensure meaningful
consultation is provided as needed with regards to the regulations.
Background
The proposed Order is an industry effort to establish a national
program with a Board composed of natural grass sod producers and one
public member to promote and strengthen consumer demand for natural
grass. Initially, producers would pay one-tenth (1/10th) of one penny
($0.01) per square foot, or the equivalent thereof, of natural grass
sod products. No natural grass sod producer would be exempt from paying
the assessment unless producing a certified organic product under the
National Organic Program. A referendum to determine whether producers
favor the Order would take place before the Order would go into effect.
This proposed rule also announces AMS's intent to request approval by
the OMB of new information collection requirements to implement the
program.
Authority in 1996 Act
The proposed Order is authorized by the Act (7 U.S.C. 7411-7425),
which authorizes USDA to establish agricultural commodity research and
promotion orders that may include a combination of promotion, research,
industry information, and consumer information activities funded by
mandatory assessments. Consistent with section 512 of the Act (7 U.S.C.
7411), the proposed Order would maintain and expand existing markets
and develop new markets and uses for natural grass. Section 515 of the
Act (7 U.S.C. 7413), provides for establishment of a Board composed of
producers and one public member. As defined in section 513 of the Act
(7 U.S.C. 7412), agricultural commodities include ``products processed
or manufactured from products specified in the preceding subparagraphs,
as determined appropriate by the Secretary.'' 7 U.S.C. 7412(1)(F). The
Act also includes provisions that authorize the Secretary to tailor
programs to the specific characteristics of different commodities,
including section 514 of the Act (7 U.S.C. 7413) that provides USDA
discretion in determining to whom the Order should apply among the
following: (1) producers, (2) first handlers and others in the
marketing chain as appropriate, and (3) importers (if imports are
subject to assessments). 7 U.S.C. 4713(a)(1). Natural grass falls
within the Act's definition of an agricultural commodity, and natural
grass sod producers fall within the categories of ``first handlers''.
Section 516 of the Act (7 U.S.C. 7415), states that an Order may
include different payment and reporting schedules; coverage of
research, promotion, and information activities to expand, improve, or
make more efficient the marketing or use of an agricultural commodity
in both domestic and foreign markets; provision for reserve funds; and
provision for credits for generic and branded activities. In addition,
section 518 of the Act (7 U.S.C. 7417) provides for a referendum to
ascertain approval of an order to be conducted either prior to it going
into effect or within 3 years after assessments first begin under the
order. The Act also provides three different methods for determining
approval of an order in a referendum.
Industry Overview
The 2017 survey by USDA-National Agricultural Statistics Service
(NASS) places the value of the U.S. natural grass sod industry at over
$1.1 billion, produced on 1,465 farms totaling 339,451 acres. These
farms exist nationwide with documented active natural grass sod farms
in no fewer than 49 States. The widespread distribution of natural
grass sod farms is due in part to the diversity of natural grass
species, allowing them to adapt to different climates. Grass species
such as Bentgrass, Fine fescue, Tall fescue, and Kentucky bluegrass
thrive in USDA plant hardiness zones 1a through 6a, while Bermudagrass,
Buffalograss, Centipedegrass, Seashore Paspalum, St. Augustinegrass,
and Zoysiagrass perform well in zones 7a through 10a. There are also
various species of native grasses and other adapted grasses that are
gaining popularity in various regions. All these products are produced
by natural grass sod farmers throughout the United States and are
included in the definition of natural grass products as indicated in
this Order.
The $1.1 billion of natural grass sod produced in 2017 by U.S.
natural grass sod farms enters the market where it contributes
significantly to the industries that focus on sustainable growth
through public and private initiatives supporting environmentally
responsible investments, as well as those industries that support it.
These sectors include the home lawn care, sports field, golf course,
roadside, and other markets that are essential
[[Page 71308]]
components of local economies nationwide. Seed industries, primarily in
the Midwest and Pacific Northwest, supply seed for sod farms growing
cool-season grasses including ryegrass, fescues, bluegrasses, and
native or adapted mixtures. This industry produces over 600 million
pounds of natural grass seed in Oregon alone, much of which is
distributed to U.S. natural grass sod farms to produce sod that is then
sold to other segments of the green industry. In addition to
contributing to rural agricultural economies, natural grass sod also
contributes significantly to urban economies. In states that track sod
sales data, landscape contractors in urban and suburban areas purchase
between 39.2 percent and 68.2 percent of total sales, followed by sales
to athletic complexes and golf courses that make up between 18.2
percent and 44.5 percent of total sales.\1\ The supply chain that moves
much of this natural grass sod further contributes to local economies
through home improvement centers, lawn and landscaping services,
equipment and materials purchases, and more. It is estimated that the
U.S. lawn care industry alone was worth up to $93 billion in 2018,
employed more than 1 million people, and represented 513,305
businesses.\2\
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\1\ Waltz, Clint, 2018 Sod Producers Report, Annual Survey
Examines Inventory and Price. UAC Winter Magazine, Winter 2018, at
44. See also Miller, Grady, 2018 Sod Producers Report for North
Carolina, <a href="http://Turffiles.ncsu.edu">Turffiles.ncsu.edu</a>, <a href="https://www.turffiles.ncsu.edu/2018/04/2018-sod-producers-report-for-north-carolina/">https://www.turffiles.ncsu.edu/2018/04/2018-sod-producers-report-for-north-carolina/</a> (last visited Jun.
9, 2021); Richards, Steve. 2018 SC Sod Producers Survey Results
(2018, Clemson University).
\2\ National Association of Landscape Professionals (NALP),
Landscape Industry Statistics, <a href="http://Landscapeprofessionals.org">Landscapeprofessionals.org</a>, <a href="https://www.landscapeprofessionals.org/LP/About/Industry-Statistics/LP/Media/landscape-industry-statistics.aspx">https://www.landscapeprofessionals.org/LP/About/Industry-Statistics/LP/Media/landscape-industry-statistics.aspx</a> (last visited Jun. 9,
2021).
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Need for a Program
The need for a national research and promotion program is evidenced
by trends that discourage consumers from using natural grass products.
Natural grass sod producers in many areas of the United States are
experiencing social and market trends that are increasingly impacting
consumer perception and the value of natural grass. These trends can
ignore the value of natural grass lawns and athletic fields in urban
and suburban environments and have resulted in consumers reducing the
amount of grass they manage and/or replacing it with other products.
The most common alternative for athletic fields in schools, municipal
parks, and open grounds is often plastic, artificial turf. However, in
home lawns or public spaces, these alternative products also include
patios, decks, mulch, concrete or brick pavers, and rubberized
playgrounds. Data from the 2020 Synthetic Turf Council Market Report
for North America, which is the primary competitor for natural grass in
public spaces, school grounds, and parks, indicates that the synthetic
turf industry has grown 15 percent since 2017 with a current value of
$2.7 billion. It also states that it will continue to grow at a rate of
5.7 percent through 2022, with sports fields representing 63 percent of
the market and rapid growth in landscape applications.\3\ The landscape
and sports field markets represent the two largest customer segments
for natural grass sod producers for those who report data on customers.
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\3\ 2020 Synthetic Turf Market Report for North America,
Synthetic Turf Council <a href="https://www.syntheticturfcouncil.org/news/512350/Synthetic-Turf-Council-STC-Releases-2020-Synthetic-Turf-Market-Report-for-North-America.htm">https://www.syntheticturfcouncil.org/news/512350/Synthetic-Turf-Council-STC-Releases-2020-Synthetic-Turf-Market-Report-for-North-America.htm</a> (last visited June 2, 2021).
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As proposed by the industry, a natural sod checkoff would help
educate consumers and other stakeholders about the value that plants,
including natural grass, impart on urban and suburban areas. Plants,
including natural grass, are often viewed as requiring large amounts of
inputs from water, fertilizer, and chemicals with few valuable outputs.
As a result, when balancing natural grass systems on inputs alone with
no recognition or assessment of outputs, the resulting analysis often
results in an inaccurate determination that natural grasses are
resource intensive. However, when accounting for new technologies such
as drought-tolerant varieties, reduced mowing, and improvements in
irrigation, as well as the many ecosystem services (carbon
sequestration, oxygen production, groundwater recharge, filtering of
pollutants, stormwater and runoff reduction) that are provided by
lawns, parks, and roadsides, a more accurate characterization is that
managed landscapes, including natural grass sod, provide many benefits
in urban and suburban areas.
The aforementioned perception of natural grass is embedded in
language used by numerous governing bodies that produce building codes
and standards for private and public spaces. These codes provide
incentives for builders to reduce or remove natural grass from
residential, business, and public spaces with the intent of reducing
inputs. However, many such requirements do not factor in the many
benefits that plants, including natural grasses, provide to these areas
or recognize that simply eliminating them from the system is not a
sustainable approach for urban and suburban construction.
Artificial turf is the primary competitor to natural grass for
athletic fields on school grounds, public parks, and collegiate or
professional sports venues. The growth of the artificial turf market is
increasingly reducing the market for natural grass sports fields.
TPI is the proponent group that submitted the proposed Order to
USDA on June 18, 2021, requesting the establishment of a natural grass
sod research and promotion program. Since at least 2013, U.S. natural
grass sod producers have been considering the implementation of a
natural grass sod research and promotion program. Although State and
local sod associations have explored the option of establishing
voluntary research and promotion programs in previous years, they were
deemed impractical and unsustainable without the administration and
enforcement provided by USDA's AMS through the authority provided in
the Act. In 2017, TPI, a trade association representing natural grass
sod farmers, equipment manufacturers, seed producers, and other
industry participants with members located in almost every U.S. State
and over 30 countries, decided to formally investigate USDA's research
and promotion programs. From 2017 to 2019, TPI spoke with
representatives at trade associations with aligned interests, USDA's
AMS, a public policy consultant, and legal counsel to determine if a
research and promotion program for the U.S. natural grass sod industry
was feasible. After much deliberation and interest from U.S. natural
grass sod producers, the industry, led by TPI, decided that the time
was right for the natural grass sod industry to pursue a national
research and promotion program.
In 2019, after visiting with the trade associations with aligned
interests and USDA's AMS, the industry decided to host a webinar to get
feedback from natural grass sod producers regarding their interest in
developing a national grass sod research and promotion program. On May
19th, 2020, U.S. sod producers participated in a 2-hour online seminar
to learn more about USDA's research and promotion programs. After this
webinar, attendees were polled to determine their interest in
developing a national research and promotion program for the natural
grass sod industry and 64 percent stated they were very interested, 20
percent stated they were interested, 13 percent stated they were
interested in learning more, and only 3 percent stated they were not
[[Page 71309]]
interested.\4\ Attendees in this webinar were also polled to determine
their interest in serving on the sod research and promotion drafting
committee, of which 14 sod producers were selected.
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\4\ Industry Analysis and Justification for Natural Grass Sod
Promotion, Research, and Information Order, Turfgrass Producers
International <a href="https://www.ams.usda.gov/sites/default/files/media/SodIndustryAnalysisandJustificationDraft.pdf">https://www.ams.usda.gov/sites/default/files/media/SodIndustryAnalysisandJustificationDraft.pdf</a> (last visited June 28,
2021).
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This drafting committee has finalized the proposed Order contained
herein for submission to USDA. The proposed Order contains all of the
relevant information on research and promotion programs, including the
proposed assessment rate that was determined through an analysis of
U.S. natural grass sod production farm and acreage data from the 2017
USDA-NASS Census of Agriculture along with internal data from TPI. A
wide range of farm sizes, annual acres harvested, and assessment rates
were assembled for analysis to determine an assessment rate that would
(1) be amenable to sod producers; (2) not be overly burdensome; and (3)
result in enough funds to have an impact on the market. At the end of
these discussions, the entire formation committee of 14 members of
different farm sizes, regions, and products all agreed that the
proposed assessment rate met each of those conditions.
Specific Provisions
The proposed Order is authorized under the 1996 Act which
authorizes USDA to establish agricultural commodity research and
promotion orders and is consistent with existing orders for other
commodities. The proposed order is also a part of an industry effort to
establish a national program with a Board composed of natural grass sod
producers and one public member to promote and strengthen consumer
demand for natural grass. Many parties including USDA's AMS, a public
policy consultant, and private legal counsel were all consulted and
determined that a research and promotion program for the U.S. natural
grass sod industry was feasible. In addition to this determination, the
industry hosted a 2-hour webinar where feedback was given from natural
grass sod producers regarding their interest in developing a national
grass sod research and promotion program. More than a majority (64
percent) of the attendees stated that they were very interested in
establishing a research and promotion program for U.S. natural grass
sod while only 3 percent stated they were not interested. Fourteen sod
producers who attended the webinar created the sod research and
promotion drafting committee, which drafted the proposed Order that
contains all the relevant information on research and promotion
programs.
Because the regulatory text proposed herein contains the complete
proposed Order, this section will highlight key proposed provisions.
Definitions
Pursuant to section 513 of the Act (7 U.S.C. 7412), Sec. 1240.20
of the proposed Order defines certain terms that would be used
throughout the Order. Several of the terms are common to all research
and promotion programs authorized under the Act while other terms are
specific to the proposed natural grass sod Order.
Proposed Sec. 1240.20 would define the term ``Act'' to mean the
Commodity Promotion, Research, and Information Act of 1996 (7 U.S.C.
7412), and any amendments thereto.
This proposed Order would require natural grass sod producers to
pay assessments toward the Natural Grass Sod Research and Promotion
program. Therefore, ``natural grass sod producer'' is defined as any
person who produces natural grass sod products in the United States.
The proposed Order defines ``Natural Grass'' as a plant species in
the Poaceae family, or living plants in other taxa serving a similar
purpose, as often found in sites such as lawns, sports fields, golf
courses, parks, cemeteries, roadsides, and others.
The term ``natural grass sod product'' refers to natural grass
produced for retail, wholesale, or commercial sale, including
monostands or blends or mixtures of Bentgrass, Bermudagrass,
Buffalograss, Centipedegrass, Fine fescue, Kentucky bluegrass,
Ryegrass, Seashore Paspalum, St. Augustinegrass, Tall fescue,
Zoysiagrass, Bahiagrass, other native or adapted plants harvested and
sold as sod, and products containing natural grass with artificial
elements that are sold as sod. For purposes of this Order, natural
grass sod product excludes all artificial and synthetic turf or grass
products, natural grass seed, sprigs, and plugs.
Establishment of the Board
Pursuant to section 515 of the Act (7 U.S.C. 7413), Sec. Sec.
1240.30 through 1240.39 of the proposed Order detail the establishment
and membership of the proposed Natural Grass Sod Board, nominations,
appointments, the term of office, removal and vacancies, procedures,
compensation and reimbursement, powers and duties, and prohibited
activities.
Section 1240.30(b) specifies the Board would be composed of 11
members. Three members would represent North/Cool-Season Region, four
would represent the South/Warm-Season Region, three would represent the
Transition Zone/California Region, and one would be a public member.
See table 1 below for a detailed list of States in each region. The
total number of Board members could not be increased. The division of
representation would be intended to reflect the relative percentage
square footage of assessments paid by natural grass sod producers into
the research and promotion program. See table 1 for a summary of
geographical distribution of farms, acres, and receipts. At least once
every 5 years but no more frequently than once every 3 years, the Board
would review the geographical distribution of the square footage of
natural grass sod products sold within the United States. Any changes
in Board composition implemented by the Secretary would be made through
rulemaking. All Board members would be appointed by the Secretary from
nominations as set forth in the proposed Sec. 1240.31.
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\5\ See 2017 Census of Agriculture, USDA National Agricultural
Statistics Service <a href="https://www.nass.usda.gov/Publications/AgCensus/2017/index.php">https://www.nass.usda.gov/Publications/AgCensus/2017/index.php</a> (last visited Nov. 16, 2020).
Table 1--Farms, Acres and Sales by Proposed Regions \5\
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Number of
Region members States Farms Acres Sales
----------------------------------------------------------------------------------------------------------------
North/Cool Season.................... 3 AK, CO, CT, DE, ID, IL, IN, 508 75,151 $282,742,266
IA, ME, MA, MI, MN, MT, NE,
NH, NJ, NY, ND, OH, OR, PA,
RI, SD, UT, VT, WA, WI, WY.
South/Warm Season.................... 4 AL, AZ, FL, GA, HI, LA, MS, 609 177,179 563,044,248
NV, NM, SC, TX, US
Territories.
Transition Zone/California........... 3 AR, CA, DC, KS, KY, MD, MO, 343 84,068 292,805,000
NC, OK, TN, VA, WV.
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[[Page 71310]]
Any natural grass sod producer who does not have outstanding
assessments may seek nomination for any vacant position in the region
they produce and sell natural grass sod products. Nominees that produce
and sell in multiple regions may seek nomination in one region of their
choice. To seek nomination to the Board, the interested natural grass
sod producer would provide the Board a short background statement
outlining their qualifications. Any public member interested in seeking
nomination would provide the Board a short background statement
outlining their qualifications.
Section 1240.32 of the proposed Order would specify the nominee's
agreement to serve. Natural grass sod producers and public members
nominated to serve on the Board would be required to submit to the
Secretary a written agreement to serve on the Board if appointed by the
Secretary, disclose any relationship with any natural grass promotion
entity or organization that has been or is being considered for a
contractual relationship with the Board, and withdraw from
participation in deliberations, decision-making, and voting on matters
that concern the relationship of an entity or organization considered
for a contractual relationship.
Section 1240.33 of the proposed Order would specify the
appointments by the Secretary and terms of office, respectively.
Except for the initial Board, the Board members would serve 3 years
or until the Secretary selects his or her successor. The initial Board
member terms would be staggered at 1, 2, and 3 years. Each region
initial would have one member who serves 2-year terms and two members
who serve 3-year terms. Additionally, the South/Warm-Season Region
would have one member who serves a 2-year term. The public member
initial term would be a 3-year term. The Secretary would determine
which of the initial members shall serve a term of 1, 2, or 3 years.
Members who serve on the initial Board would be eligible to serve a
second term of 3 years.
Sections 1240.34 and 1240.35 of the proposed Order would specify
reasons for removal and how vacancies would be filled. The Secretary
would be able to remove a Board member if he or she determines there is
failure or refusal by the Board member to perform his or her duties
properly or if the Board member engages in an act of dishonesty or
willful misconduct. Refusing to follow the Act's and Order's purpose
would also be a reason for removal. If a member is removed from office
or resigns, the position would automatically become vacant. If a member
becomes disqualified for ceasing to produce natural grass or ceases to
do business in the region he or she represents, this position would be
vacated within 6 months from the date of disqualifying event.
Section 1240.36 of the proposed Order would specify procedures of
the Board. A majority of voting Board members present at a meeting
would constitute a quorum. Each voting member of the Board would be
entitled to one vote on most matters put to the Board and the motion
would carry if supported by a simple majority of the total votes.
Recommendations to change the assessment rate, adopt a budget, or call
for a referendum would require affirmation by two-thirds (\2/3\) of the
Board members. When, in the opinion of the chairperson of the Board,
such action is considered necessary, the members could vote by internet
service, videoconference, teleconference, or any other means of
communication. Actions taken under these procedures would be valid only
if all members were notified of the meeting and all members were
provided the opportunity to vote. Proxy voting would not be permitted.
All votes would be recorded in Board minutes. The procedures for
conducting Board meetings would be established by the Board and
approved by the Secretary.
Section 1240.37 of the proposed Order would specify that all
members of the Board would serve without compensation; however,
reimbursement for reasonable travel expenses incurred when performing
Board duties would be provided as approved by the Board.
Section 1240.38 of the proposed Order would specify the powers and
duties of the Board. These powers and duties would include, among other
things, to administer the Order and collect assessments; to develop
bylaws and recommend rulemaking necessary to administer the Order; to
select a chairperson and other Board officers; to form other committees
and subcommittees as necessary; to hire staff or contractors as
appropriate to carry out the Board's duties; to develop and carry out
generic promotion, research, and information activities related to
natural grass products; to develop and administer programs, plans, and
projects to benefit the natural grass industry; to submit a budget to
USDA for approval prior to the start of the fiscal year; to borrow
funds necessary to cover startup costs of the Order; to maintain such
records and books available to the Secretary for inspection and audit
upon request; to have its books audited by an outside certified public
accountant at the end of each fiscal period and at other times as
requested by the Secretary; to notify natural grass sod producers and
the Secretary of all Board meetings through press releases or other
means; to act as intermediary between the Secretary and any natural
grass sod producer; to furnish to the Secretary any information or
records he or she may request; to receive, investigate and report to
the Secretary complaints of violations of the Order; to recommend to
the Secretary changes to the Order as the Board considers appropriate;
to strengthen and provide maximum benefits to the natural grass sod
industry; to invest Board funds appropriately; to pay the cost of
activities with assessments collected under and earnings from invested
assessments and other funds; to recommend changes to assessments as
appropriate; to appoint and convene committees to assist in the
development of research, promotion, advertising, and information
programs for natural grass; to periodically prepare and make public
reports of program activities and, at least once each fiscal period, to
make public an accounting of funds received and expended; and to
allocate a percentage of the assessments collected on the sale of
natural grass sod products in a State or a region to one or more
programs proposed by a Qualified Organization, under contract, to
receive funding.
Section 1240.39 of the proposed Order would specify prohibited
activities that are common to all promotion programs authorized under
the Act. The Board members and employees would not engage in any
actions that would be a conflict of interest; use funds collected by
the Board to lobby (influencing any legislation or governmental action
or policy by local, State, national, and foreign governments, or
subdivisions thereof, other than recommending to the Secretary
amendments to the Order); or engage in any advertising, including
promotion, research, or information activities authorized to be carried
out under the Order that may be false, misleading, or disparaging to
another agricultural commodity.
Expenses and Assessments
Pursuant to sections 516 (7 U.S.C. 7415) and 517 (7 U.S.C. 7416) of
the Act, Sec. Sec. 1240.45 through 1240.47 of the proposed Order would
detail requirements regarding the Board's budget and expenses,
financial statements, and assessments. At least 60 calendar days before
the start of the fiscal period, and as necessary during the year, the
Board would submit a
[[Page 71311]]
budget to the Secretary detailing its projected expenses. The budget
would include a list of objectives and strategies, a summary of
anticipated revenue, and expenses for each program along with a
breakdown of staff and administrative expenses. Except for the initial
budget, the Board's budgets would include comparative data for at least
one preceding fiscal period. Each budget would provide for adequate
funds to cover the Board's anticipated expenses. Any amendment or
addition to an approved budget would have to be approved by Secretary,
including shifting of funds from one program, plan, or project to
another. The Board would reimburse the Secretary for all expenses
incurred in the implementation, administration, enforcement,
supervision of the Order, including all referendum costs in connection
with the Order.
During the first year of the Board's operation, the Board could
borrow money for the payment of startup expenses limited to the first
year of operation. The Board could accept voluntary contributions to
carry out activities so long as the contributions are identified in the
Board's annual operating budget and are free from any encumbrance by
the donor. The Board would retain control over use of any funds. The
Board could also receive funds from Federal or State grants with
approval of the Secretary for specific authorized projects.
Beginning 3 years after establishment of the Board, the Board would
be limited to spending no more than 15 percent of its available funds
for administration, maintenance, and functioning of the Board.
Reimbursements to USDA would not be considered administrative costs. As
an example, if the Board received $2 million in assessments during a
fiscal period, and had available $500,000 in reserve funds, the Board's
available funds would be $2,500,000. In this scenario, the Board would
be limited to spending no more than $375,000 (0.15 x $2.5 million) on
administrative costs. The 15 percent spending limit is consistent with
section 515 of the Act (7 U.S.C. 7413). The Board could establish an
operating monetary reserve and carry over excess funds from one fiscal
period to the next, provided the funds did not exceed two fiscal year
budgets. For example, if the Board's budgeted expenses for a fiscal
period were $2 million, it could carry over no more than $4 million in
reserve.
Section 1240.46 of the proposed Order would specify the financial
statement requirements. The Board would be required to submit to USDA
financial statements on a quarterly basis, or at any other time
requested by the Secretary. Financial statements would include, at a
minimum, a balance sheet, an income statement, investments, and an
expense budget.
Section 1240.47 of the proposed Order would specify the
assessments. The Board's programs and expenses would be funded by
assessments on natural grass sod products and other funds available to
the Board. Under the proposed Order, natural grass sod producers would
pay one-tenth (\1/10\th) of one penny ($0.01) per square foot, or the
equivalent thereof, of all-natural grass sod products that the natural
grass sod producer sells in the United States. For example, a farm that
harvested 10,000 square feet of sod would pay $10 in assessments
(10,000 x .001). This assessment rate was determined through an
analysis of U.S. natural grass sod production farm and acreage data
from the 2017 USDA-NASS Census of Agriculture along with internal data
from TPI. A wide range of farm sizes, annual acres harvested, and
assessment rates were assembled for analysis to determine an assessment
rate that would (1) be amenable to sod producers; (2) not be overly
burdensome; and (3) result in enough funds to have an impact on the
market. At the end of these discussions, the entire formation committee
of 14 members of different farm sizes, regions, and products all agreed
that the proposed assessment rate met each of those conditions.
Twenty-four months after the Order would become effective and
periodically thereafter, the Board would review the assessment rate
and, if approved by a vote of at least two-thirds (\2/3\) of the Board,
submit a recommendation for a change in the assessment rate to the
Secretary. The assessment rate would not exceed one-eighth (\1/8\th) of
one penny ($0.01) per square foot of natural grass sod products sold
without approval by a majority of natural grass sod producers in a
referendum.
In terms of assessment collection, the natural grass sod producer
would remit assessments for natural grass product sold to the Board
every quarter with a remittance form.
Based on 2017 USDA NASS production acreage, TPI estimates
assessments would be valued at approximately $14.9 million annually.
Assessments would be collected from approximately 1,459 natural grass
sod producers.
In addition, individuals producing certified organic natural grass
sod, according to 7 CFR part 205, would be exempt from paying
assessments. Producers would apply to the Board annually for a
certificate of exemption using a form provided by the Board.
Pursuant to section 517(f) of the Act (7 U.S.C. 7416) and section
1240.45(j) of this Order, the Board would be permitted to invest
assessments collected under the Order in the following: (1) obligations
of the United States or any agency of the United States; (2) general
obligations of any State or any political subdivision of a State; (3)
interest-bearing accounts or certificates of deposit of financial
institutions that are members of the Federal Reserve; and (4)
obligations fully guaranteed as to principal interest by the United
States.
The program would be funded by the industry through assessments
paid by natural grass sod producers, as defined in the Proposed Order.
Based on the proposed assessment rate and an analysis of industry
statistics provided by USDA and maintained by TPI, publicly available
farm statistics as well as TPI, the program is estimated to collect
$14,900,000 annually in assessments and will conduct research,
marketing, and promotion programs that will benefit the entire
industry. The benefits of such programs are expected to outweigh the
costs of the program. Evaluations of similar research and promotion
programs by independent economists, required to be conducted every 5
years, have shown positive financial benefits with benefit-cost ratios
in the range of $2.14 to $17.40 for every dollar invested in the
programs.\6\ After reviewing and considering all relevant information,
AMS has determined that the assessments collected from the natural
grass sod producers will be relatively small in comparison to their
revenue.
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\6\ See US Gov't Accountability Office, GAO-18-54, AGRICULTURAL
PROMOTION PROGRAMS USDA Could Build on Existing Efforts to Further
Strengthen Its Oversight (2017), <a href="https://www.gao.gov/assets/690/688519.pdf">https://www.gao.gov/assets/690/688519.pdf</a>.
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Under voluntary programs, the current universe of assessment payers
does not always include all the industry participants who would likely
benefit from generic research and promotion activities. Therefore, a
mandatory research and promotion program would be best positioned to
have the greatest industry impact with the broadest level of industry
support by eliminating free riders. A free rider is an entity who
benefits from a service without having to pay for it. The research and
promotion program would be able to combine assessment funds from
natural grass sod producers and have a broad impact on the industry by
developing new markets, strengthening existing
[[Page 71312]]
markets, conducting important consumer and scientific research, and
promoting industry initiatives and activities.
Promotion, Research, and Information
Pursuant to section 516 of the Act (7 U.S.C. 7415), Sec. Sec.
1240.50 through 1240.52 of the Order would describe the promotion,
research, and information projects authorized by the Order. The Board
would develop and submit to the Secretary for approval programs, plans,
or projects that would provide promotion, research, and information.
These activities would also provide information to consumers and
industry groups. The Board could only implement a program or project
upon approval by the Secretary. The Board would evaluate each program
to ensure it contributes to an effective promotion program and complies
with the Act and Order.
At least once every 5 years, the Board would fund an independent
evaluation to determine the effectiveness of the Order and programs
pursuant to the Act. The findings of the evaluation would be made
available to the Secretary and the general public. Finally, the
proposed Order would specify that any patents, copyrights, trademarks,
inventions, product formulations and publications developed with funds
received by the Board would be the property of the U.S. Government, as
represented by the Board. These, along with any rents, royalties, and
the like from their use would be considered income subject to the same
fiscal, budget, and audit controls as other funds of the Board, and
could be licensed with approval of the Secretary.
Report, Books, and Records
Pursuant to section 515 of the Act (7 U.S.C. 7413), Sec. Sec.
1240.60 through 1240.62 of the proposed Order specify the reporting and
recordkeeping requirements under the proposed Order as well as
requirements regarding confidentiality of information. Each natural
grass sod producer would be required to submit an assessment remittance
form and assessments to the Board on a quarterly basis. The information
required in the form would include, but not be limited to, the name and
contact information of the natural grass sod producer, the quantity of
natural grass sod products sold, and the natural grass sod producer's
identification numbers, as applicable. Records would be made available
to the Board or USDA during normal business hours and retained for at
least 3 years past the fiscal year.
In addition to books and records, the proposed Order would also
require that all information obtained from persons subject to the Order
as a result of proposed recordkeeping and reporting requirements would
be kept confidential by all officers, employees, and agents of the
Board and USDA. Pursuant to the Act, such information could only be
disclosed if the Secretary considered it relevant, and the information
were revealed in a judicial proceeding or administrative hearing
brought at the direction or at the request of the Secretary or to which
the Secretary or any officer of USDA was a party. Other exceptions for
disclosure of confidential information would include the issuance of
general statements based on reports or on information relating to a
number of persons subject to the proposed Order, if the statements did
not identify the information furnished by any person, or the
publication, by direction of the Secretary, of the name of any person
violating the Order and a statement of the particular provisions of the
Order violated.
Initial Regulatory Flexibility Act
In accordance with the Regulatory Flexibility Act (RFA) (5 U.S.C.
601-612), AMS is required to examine the impact of this rulemaking on
small entities. Accordingly, AMS has prepared this initial regulatory
flexibility analysis (RFA).
The purpose of RFA is to fit regulatory actions to the scale of
businesses subject to such actions so that small businesses will not be
disproportionately burdened. The Small Business Administration defines,
in 13 CFR part 121, small agricultural producers as those having annual
receipts of no more than $750,000.
The affected industry falls under the North American Industry
Classification System (NAICS) code: 111421--Sod Farming.
Need for a Program
The TPI, who represents natural grass sod farmers, equipment
manufacturers, seed producers, and other industry participants, is the
proponent group that submitted the proposed Order to USDA on June 16,
2021, requesting the establishment of a natural grass sod promotion,
research, and information program. In 2017, TPI began to explore the
creation of a promotion and research program. TPI worked with natural
grass sod producers and other industry organizations to gauge interest
in the development of such a program. In 2020 a drafting committee was
formed to develop a draft Order. The drafting committee comprised
fourteen natural grass sod producers representing a wide variety of
natural grass sod farms. The producers represented a range of farm
size, years in business, and familiarity with other research and
promotion programs. The drafting committee proposed Order was part of
the submission by TPI to USDA for consideration of a program. The
proposed Order submitted by TPI intends to educate the public on the
value of natural grass products, market and promote the benefits of
natural grass on a national scale, provide U.S. sod farmers with
marketing tools, and provide information to organizations for use in
the development of model codes and standards for building codes.
The synthetic turf industry has grown 15 percent since 2017 with a
current value of $2.7 billion and continues to grow at a rate of 5.7
percent through 2022, with sports fields representing 63 percent of the
market and rapid growth in landscape applications.\7\ The rise in
synthetic turf numbers comes from social and market trends that have
driven consumer perception of natural grass lawns and athletic fields
in urban and suburban environments. These trends have caused consumers
to misunderstand the value of natural grass lawns and athletic fields
in urban and suburban environments. This has caused consumers to reduce
the amount of grass they manage and/or replace it with other products
like plastic, artificial turf, patios, decks, mulch, concrete, brick
pavers, and rubberized playgrounds. These misconceptions have had a
significant impact on natural grass sod producers in many areas of the
United States.
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\7\ 2020 Synthetic Turf Market Report for North America,
Synthetic Turf Council <a href="https://www.syntheticturfcouncil.org/news/512350/Synthetic-Turf-Council-STC-Releases-2020-Synthetic-Turf-Market-Report-for-North-America.htm">https://www.syntheticturfcouncil.org/news/512350/Synthetic-Turf-Council-STC-Releases-2020-Synthetic-Turf-Market-Report-for-North-America.htm</a> (last visited June 2, 2021).
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Objectives of the Action
As noted in the preamble above, the program would conduct research,
marketing, and promotion activities that will benefit the entire
industry. Primary goals of the program include educating consumers and
stakeholders of the benefits of natural grass and providing producers
with marketing tools they can use to grow their business. The purpose
of the program would be to strengthen the position of natural grass sod
in the marketplace, maintain and expand markets for natural grass sod,
and develop new uses for natural grass sod.
Legal Basis for the Rule
The Proposed Order is authorized by the 1996 Act, which provides
USDA the
[[Page 71313]]
authorization to establish research and promotion programs for
agricultural commodities. Under the Act, ``agricultural commodities''
are defined to include agricultural products as well as ``products
processed or manufactured from products specified in the preceding
subparagraphs, as determined appropriate by the Secretary.'' The Act
also includes provisions that authorize the Secretary to tailor
programs to the specific characteristics of each different commodity,
including section 7413 that provides USDA discretion in determining to
whom the Order should apply among the following: ``(A) the producers of
an agricultural commodity; (B) the first handlers of the agricultural
commodity and other persons in the marketing chain as appropriate; and
(C) the importers of the agricultural commodity, if imports of the
agricultural commodity are subject to assessment. . .''.
Natural grass sod products fall within the Act's definition of an
agricultural commodity and natural grass sod producers, as defined in
the proposed Order, fall within the categories of ``first handlers''
and ``other persons in the marketing chain.'' The proposed Order, which
will establish a program of promotion, research, and information to
promote consumer demand for natural grass sod products and strengthen
the position of the natural grass sod industry in the marketplace, is
consistent with the Congressional intent of the Act to maintain and
expand existing markets as well as develop new markets and uses for
agricultural commodities. As such, USDA is authorized to establish the
Natural Grass Sod Promotion, Research, and Information program by
approving the proposed Order.
As part of the approval process set forth in the Act, the industry
must formulate an Order and submit it to USDA for review and final
approval. Implementation of the Order, like all rulemaking, is subject
to public notice and comment, and is subject to ongoing referenda where
participants are given the opportunity to vote to determine whether the
program shall continue to operate. If approved by the USDA and through
the ongoing referenda, the Order becomes a regulation codified in the
U.S. Code of Federal Regulations and carries the force of law.
There are no known Federal rules that duplicate, overlap, or
conflict with the Proposed Order.
Alternatives to the Rule
USDA considered the alternative of no action; that is, the status
quo. This alternative, however, would leave the industry without the
tools of a research and promotion program to strengthen the position in
the marketplace, maintain and expand markets, and develop new uses.
Although there has been sporadic success attempting to fund efforts
as described above at the local level with pooled resources of
producers and/or associations, voluntary research and promotion efforts
at the national level have historically been marginally successful due
to the lack of funds available to undertake larger programs. There are
several entities that fund natural grass research and promotion efforts
at state and regional levels, but none of which have the capacity to
fund these efforts on a large scale. For instance, many State sod
associations funds research and promotion at levels under $10,000
annually. TPI funds research and promotion through its foundation, The
Lawn Institute, at up to $50,000 to $100,000 annually. However, these
types of funds are raised through voluntary contributions and
fundraising efforts such as auctions, raffles, activities, etc., and,
while they have successfully been able to impact natural grass research
and promotion on a small scale, none of these efforts can achieve what
is proposed through a natural grass sod checkoff. A natural grass sod
checkoff would not only be able to raise significant funds for these
efforts, but the checkoff could also respond to changing needs in
research and promotion. Through the collection of an assessment on
natural grass sod products on a national scale, the research and
promotion program will be able to leverage pooled assessment funds and
have a more consistent and wide-scale industry impact.
The natural grass sod production industry has been discussing a
research and promotion program since at least 2013. TPI and other
interested stakeholders have held numerous meetings and conducted
outreach across the industry to gauge interest in a research and
promotion program for natural grass sod products. As noted above, a
majority of the natural grass sod producers who actively participated
in the May 19, 2020, webinar supported the development of such a
program for consideration. This resulted in the creation of the sod
research and promotion drafting committee, which drafted the proposed
order that is under consideration in this proposed rule.
After careful analysis and discussions, the natural grass sod
industry determined that a research and promotion program would be best
positioned to have the greatest industry impact with the broadest level
of industry support.
Impact on Small Businesses
The Small Business Administration (SBA) defines, in 13 CFR part
121, small agricultural producers as those having annual receipts of no
more than $750,000. According to the 2017 USDA NASS data, 1,034 firms--
approximately 70 percent of producers--would be classified as small
agricultural producers based on value of sales per farm. Table 2
compares the average value of sales per farm to the average assessment
per farm for each category. Because the assessment is calculated on a
production basis, the proportionate burden is the same across the
industry, regardless of firm size. On a farm basis, small natural grass
sod producers would pay between $174 and $7,111 in assessments annually
per firm, while large natural grass sod producers would pay between
$13,297 and $63,420.
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\8\ 2017 USDA NASS Census <a href="https://www.nass.usda.gov/Publications/AgCensus/2017/Full_Report/Volume_1,_Chapter_1_US/st99_1_0039_0039.pdf">https://www.nass.usda.gov/Publications/AgCensus/2017/Full_Report/Volume_1,_Chapter_1_US/st99_1_0039_0039.pdf</a>.
Table 2 \8\--Number of Farms, Acres, Value of Sales, and Average Proposed Assessment per Farm
----------------------------------------------------------------------------------------------------------------
NAICS code 111421 2017 Dollars
----------------------------------------------------------------------------------------------------------------
Avg. annual
Farms Acres Avg. value of assessment per
sales per farm farm
----------------------------------------------------------------------------------------------------------------
Total Industry...................... 1,459 339,551 $787,467 $10,138
Small Firms (<$750,000)............. 1,034 74,938 233,459 2,886
Large Firms (>750,000).............. 425 264,614 11,526,586 33,134
----------------------------------------------------------------------------------------------------------------
[[Page 71314]]
The proposed assessment rate of 1/10th of one penny per square foot
was decided upon by the industry in part because it was determined that
rate would not create any undue burdens to sod farms of any size,
including small businesses. Data from the National Quarterly Sod
Report; 2020 Summer Quarter \9\ indicate a range of natural grass sod
prices across the United States from $0.16 to $0.50 per square foot
results in additional costs of between 0.62 percent and 0.2 percent.
Furthermore, when evaluating the prices based on weighted averages
instead of ranges, the additional costs incurred are between 0.42
percent and 0.24 percent.
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\9\ USDA Agricultural Marketing Service, Livestock, Poultry, and
Grain Market News <a href="https://www.ams.usda.gov/mnreports/ams_2930.pdf">https://www.ams.usda.gov/mnreports/ams_2930.pdf</a>.
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This level of assessment should have minimal impact on sod farms of
any size, large or small, and was part of the consideration for the
drafting committee in supporting the proposed rate. For instance, a sod
farm that is considered a small business may harvest as little as 10
acres annually. At the proposed assessment rate and pricing data from
the National Sod Report, the annual contribution of that farm to the
research and promotion program would be $435 per year, while generating
sales revenue between $69,696 and $217,800.
Required Reporting and Recordkeeping
The required reporting and recordkeeping to remit assessments do
not require specialized skills or training. The transactional
documentation will be added to documents already generated and
maintained by natural grass sod producers. Reporting requirements are
expected to be the same for both large and small entities.
It is estimated it will take approximately 2 hours annually, or 30
minutes every quarter, to complete and submit the remittance form to
the Board. This is estimated to cost each natural grass sod producer
$102 per year. For the purpose of estimating the cost of reporting and
recordkeeping, this proposed rule uses $51 per hour. To arrive at this
amount, AMS took the mean hourly earnings of farmers, ranchers, and
other agricultural managers ($36.93) from the U.S. Department of Labor,
Bureau of Labor Statistics, May 2020 National Occupational Employment
and Wages Estimates.\10\ The average mean hourly wage rate of $36.93
plus an additional 38.1 percent to account for benefits and
compensation,\11\ for a total hourly wage of $51, was used to calculate
annual cost. Costs of benefits and compensation guidance was obtained
from the Bureau of Labor Statistics News Release issued December 14,
2018.\12\
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\10\ Occupational Employment and Wages, May 2020; 11-9013
Farmers, Ranchers, and Other Agricultural Managers <a href="https://www.bls.gov/oes/current/oes119013.htm">https://www.bls.gov/oes/current/oes119013.htm</a>.
\11\ News Release Bureau of Labor Statistics, Employer Costs for
Employee Compensation--June 17, 2021, <a href="https://www.bls.gov/news.release/pdf/ecec.pdf">https://www.bls.gov/news.release/pdf/ecec.pdf</a>.
\12\ Economic News Release: Employer Costs for Employee
Compensation Summary for December 2020 <a href="https://www.bls.gov/news.release/ecec.nr0.htm">https://www.bls.gov/news.release/ecec.nr0.htm</a>.
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AMS is committed to complying with the E-Government Act, to promote
the use of the internet and other information technologies to provide
increased opportunities for citizen access to Government information
and services, and for other purposes.
Regarding outreach efforts, USDA would keep these individuals
informed throughout the program implementation and referendum process
to ensure that they are aware of and are able to participate in the
program implementation process. USDA would also publicize information
regarding the referendum process so that trade associations and related
industry media can be kept informed.
Although AMS has performed this initial RFA analysis regarding the
impact of the proposed rule on small entities, in order to have as much
data as possible for a more comprehensive analysis, we invite comments
concerning potential effects.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
chapter 35), AMS announces its intention to request approval for a new
information collection for the proposed natural grass sod program.
Title: Natural Grass Sod Research, Promotion, and Information
Order.
OMB Number: 0581-NEW.
Expiration Date of Approval: 3 years from approval date.
Type of Request: New information collection for research and
promotion program.
Abstract: The information collection requirements are essential to
carry out the intent of the Act. The information collection pertains to
a proposal submitted by TPI for the development of a national research
and promotion program for natural grass sod. The program would be
administered by a Board of producer members selected by the Secretary.
Natural grass sod producers would be assessed under the program for
natural grass products. The program would provide an exemption from
assessment for any organic natural grass products under the approved
National Organic Program (7 CFR part 205). The purpose of the proposed
program is to help build the market for natural grass.
The proposed forms would require the minimum information necessary
to effectively carry out the requirements of the proposed Order, and
their use is necessary to fulfill the intent of the Act.
The information collection requirements under the program address
Board nominations, collection of assessments, and the organic
exemption. For Board nominations, natural grass sod producers and the
public member must complete the ``Nomination for Appointment'' form to
obtain names of nominees for appointment as members of the Board. Each
individual must also complete a ``Nominee's Agreement to Serve'' form
to allow the individual to disclose any relationship that could be of
conflict while serving on the Board. Together with the AD-755 form,
which details background information, this form would ensure the
individual is qualified to serve on the Board. Assessments would be
collected using the ``Quarterly Report and Remittance of Amount Due''
form. In conjunction, the ``Organic Exemption Request'' form would
deduct any natural grass sod under the National Organic Program.
For the purpose of estimating the cost of reporting and
recordkeeping, this proposed rule uses $51 per hour. To arrive at this
amount, AMS used the mean hourly earnings of farmers, ranchers, and
other agricultural managers ($36.93) from the U.S. Department of Labor,
Bureau of Labor Statistics, May 2020 National Occupational Employment
and Wages Estimates.\13\ The mean hourly earnings rate of $36.93 plus
an additional 38.1 percent to account for benefits and
compensation,\14\ for total hourly earnings of $51, was used to
calculate annual cost. Costs of benefits and compensation guidance was
obtained from the Bureau of Labor Statistics News Release issued
December 14, 2018.\15\
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\13\ Occupational Employment and Wages, May 2020; 11-9013
Farmers, Ranchers, and Other Agricultural Managers <a href="https://www.bls.gov/oes/current/oes119013.htm">https://www.bls.gov/oes/current/oes119013.htm</a>.
\14\ News Release Bureau of Labor Statistics, Employer Costs for
Employee Compensation--June 17, 2021, <a href="https://www.bls.gov/news.release/pdf/ecec.pdf">https://www.bls.gov/news.release/pdf/ecec.pdf</a>.
\15\ Economic News Release: Employer Costs for Employee
Compensation Summary for December 2020 <a href="https://www.bls.gov/news.release/ecec.nr0.htm">https://www.bls.gov/news.release/ecec.nr0.htm</a>.
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Information collection requirements that are included in this
proposal are:
[[Page 71315]]
(1) LP-7 Application for Self-Certification of Nominating Organizations
(OMB Form No. 0581-NEW)
Estimate of Burden: Public reporting burden for this collection of
information is estimated to average 0.5 hours per response for each
nominating organization.
Respondents: Natural grass sod producers and State or regional sod
associations (15 State or regional sod associations).
Estimated Number of Respondents: 25.
Estimated Number of Responses per Respondent: (Estimate
recertification every 5 years) 0.2.
Estimated Total Annual Burden on Respondents: (25 organizations and
producers x 0.2 responses x 0.5 hour per response) 2.50 hours.
Total Cost: (2.50 hours x $51) $127.50.
(2) LP-4 Nomination for Appointment to the Board (OMB Form No. 0581-
NEW)
Estimate of Burden: Public reporting burden for this collection of
information is estimated to average 0.5 hours per response.
Respondents: Natural grass sod producers.
Estimated Number of Respondents: 20.
Estimated Number of Responses per Respondent: One per year.
Estimated Total Annual Burden on Respondents: (20 responses x 0.5
hour per response) 10 hours.
Total Cost: (10 hours x $51) $510.
(3) LP-6 Quarterly Report and Remittance of Amount Due for Assessment
(OMB Form No. 0581-NEW)
Estimate of Burden: Public reporting burden for this collection of
information is estimated to average 0.5 hours per form.
Respondents: Natural grass sod producers.
Estimated Number of Respondents: 1,460.
Estimated Number of Responses per Respondent: 2 per year.
Estimated Total Annual Burden on Respondents: (1,460 Number of
respondents x 2 total number of reports x 0.50 hour per report) 2,920
hours.
Total Cost: (2,920 hours x $51) $148,920.
(4) AMS-15 Organic Exemption (OMB Form No. 0581-0093)
Estimate of Burden: Public recordkeeping burden for this collection
of information is estimated to average 0.25 hours per exemption form.
Respondents: Natural grass sod producers.
Estimated Number of Respondents: 10.
Estimated Number of Responses per Respondent: (Annual organic
exemption required) 1.
Estimated Total Annual Burden on Respondents: (10 Number of
respondents x 1 total number of reports x 0.25 hours per report) 2.50
hours.
Total Cost: (2.50 hours x $51) $127.50.
(5) AD-755 Background Information on Form (OMB Form No. 0505-0001)
Estimate of Burden: Public reporting for this collection of
information is estimated to average 0.5 hours per response for each
natural grass sod producer and public member nominated to serve on the
Board.
Respondents: Natural grass sod producers.
Estimated Number of Respondents: 14.33 (20 for initial nominations
to the Board, 12 every year except 14 every third year in subsequent
years).
Estimated Number of Responses per Respondent: 1.
Estimated Total Annual Burden on Respondents: 10 hours for the
initial nominations to the Board and 7 hours annually thereafter.
Total Cost: (Number of respondents x responses per respondent x
$51) $510 initial, and $357 annually thereafter.
(6) Requirement To Maintain Records Sufficient To Verify Reports
Submitted Under the Order
Estimate of Burden: Public recordkeeping burden for keeping this
information is estimated to average 2 hours per recordkeeper
maintaining such records.
Recordkeepers: Natural grass sod producers.
Estimated Number of Recordkeepers: 1,400.
Estimated Total Recordkeeping Hours: (1,400 Number of recordkeepers
x 2.0 hours) 2,800 hours.
Total Cost: (1,400 Number of recordkeepers x 2.0 hours per
recordkeeper x $51) $142,800.
As noted above, under the proposed Order, natural grass sod
producers would be required to pay assessments, file reports with, and
submit assessments to the Board. While the proposed Order would impose
certain recordkeeping requirements on natural grass sod producers,
information required under the proposed Order could be compiled from
records currently maintained. The Order would require such records to
be retained for at least 3 years beyond the fiscal year of their
applicability.
The proposed Order's provisions have been carefully reviewed, and
every effort has been made to minimize any unnecessary recordkeeping
costs or requirements, including efforts to utilize information already
submitted under other programs administered by USDA and other State
programs.
The proposed forms would require the minimum information necessary
to effectively carry out the requirements of the program, and their use
is necessary to fulfill the intent of the Act. Such information can be
supplied without data processing equipment or outside technical
expertise. In addition, there are no additional training requirements
for individuals filling out reports and remitting assessments to the
Board. The forms would be simple, easy to understand, and place as
small a burden as possible on the person required to file the
information.
Collecting information quarterly would coincide with normal
industry business practices. The timing and frequency of collecting
information are intended to meet the needs of the industry while
minimizing the amount of work necessary to fill out the required
reports. The requirement to keep records for three years is consistent
with normal industry practices. In addition, the information to be
included on these forms is not available from other sources because
such information relates specifically to individual domestic producers
who are subject to the provisions of the Act. Therefore, there is no
practical method for collecting the required information without the
use of these forms.
Request for Public Comment Under the Paperwork Reduction Act
Comments are invited on: (a) Whether the proposed collection of
information is necessary for the proper performance of functions of the
Order and AMS's oversight of the program, including whether the
information will have practical utility; (b) the accuracy of AMS's
estimate of the burden of the proposed collection of information,
including the validity of the methodology and assumptions used; (c) the
accuracy of AMS's estimate of the number of natural grass sod producers
that would be covered under the program; (d) ways to enhance the
quality, utility, and clarity of the information to be collected; and
(e) ways to minimize the burden of the collection of information on
those who are to respond, including the use of appropriate automated,
electronic, mechanical, or other technological collection techniques or
other forms of information technology.
Comments concerning the information collection requirements
[[Page 71316]]
contained in this action should reference the OMB number, docket
number, date, and page number of this issue of the Federal Register.
Comments should be sent to the address referenced in the ADDRESSES
section of this proposed rule.
This proposed rule invites comments on the establishment of an
industry-funded research, promotion, and information program for
natural grass products. Comments should clearly indicate whether or not
you support any or all of the provisions proposed. Indicate the reason
for your position and include relevant information and data to further
support your position.
List of Subjects in 7 CFR Part 1240
Administrative practice and procedure, Advertising, Consumer
information, Marketing agreements, Natural grass sod, Reporting and
recordkeeping requirements.
0
For the reasons set forth in the preamble, the Agricultural Marketing
Service proposes to amend title 7, chapter XI of the Code of Federal
Regulations by adding part 1240 to read as follows:
PART 1240--NATURAL GRASS SOD PROMOTION, RESEARCH, AND INFORMATION
ORDER
Subpart A--Natural Grass Sod Promotion, Research, and Information Order
Sec.
1240.10 General.
1240.20 Definitions.
Natural Grass Sod Board
1240.30 Establishment and membership.
1240.31 Nominations and appointments.
1240.32 Nominee's Agreement to Serve.
1240.33 Term of office.
1240.34 Removal.
1240.35 Vacancies.
1240.36 Procedure.
1240.37 Reimbursement and attendance.
1240.38 Powers and duties.
1240.39 Prohibited activities.
Expenses and Assessments
1240.45 Budget and expenses.
1240.46 Financial statements.
1240.47 Assessments.
Promotion, Research, and Information
1240.50 Programs.
1240.51 Independent evaluation.
1240.52 Patents, copyrights, trademarks, inventions, product
formulations, and publications.
Reports, Books, and Records
1240.60 Reports.
1240.61 Books and records.
1240.62 Confidential treatment.
1240.63 Qualification of natural grass sod organizations.
Miscellaneous
1240.70 Right of the Secretary.
1240.71 Referenda.
1240.72 Suspension or termination.
1240.73 Proceedings after termination.
1240.74 Effect of termination or amendment.
1240.75 Personal liability.
1240.76 Separability.
1240.77 Amendments.
1240.78 OMB control number.
Subpart B--[Reserved]
Authority: 7 U.S.C. 7411-7425; 7 U.S.C. 7401.
Subpart A--Natural Grass Sod Promotion, Research, and Information
Order
Sec. 1240.10 General.
The terms defined/specified in this subpart shall apply to the
natural grass sod promotion, research, and information Board authorized
under the Act.
Sec. 1240.20 Definitions.
Act means the Commodity Promotion, Research and Information Act of
1996 (7 U.S.C. 7411-7425), and any amendments thereto.
Board means the Natural Grass Sod Promotion, Research, and
Information Board established pursuant to Sec. 1240.30, or such other
name as recommended by the Board and approved by USDA.
Conflict of interest means a situation in which a member or
employee of the Board has a direct or indirect financial interest in a
person who performs a service for, or enters into a contract with, the
Board for anything of economic value.
Department or USDA means the U.S. Department of Agriculture, or any
officer or employee of the Department to whom authority has heretofore
been delegated, or to whom authority may hereafter be delegated, to act
in the Secretary's stead.
Eligible natural grass sod producer refers to a natural grass sod
producer that has sold natural grass sod products in the United States
during the Representative Period and is eligible to vote in the initial
referendum or Subsequent Referenda.
Fiscal Year and marketing year means the 12-month period ending on
December 31 or such other period as recommended by the Board and
approved by the Secretary.
Information means information and programs for consumers,
customers, architects, city planners, and various industry participants
and trades personnel, including educational activities, information,
and programs designed to enhance and broaden the understanding of the
use and attributes of natural grass, increase efficiency in producing
natural grass sod products, maintain and expand existing markets, and
develop new markets and marketing strategies. These include:
(1) Consumer education and information, which means any action
taken to provide information to, and broaden the understanding of, the
general public regarding natural grass; and
(2) Industry information, which means information and Programs that
would enhance the image of the natural grass industry.
Initial referendum refers to the referendum required to approve
this subpart as outlined in Sec. 1240.71.
Natural grass refers to plant species in the Poaceae family, or
living plants in other taxa serving a similar purpose, as often found
in sites such as lawns, sports fields, golf courses, parks, cemeteries,
roadsides and others.
Natural grass sod producer means any person who produces natural
grass sod products in the United States.
Natural grass sod product refers to natural grass produced for
retail, wholesale, or commercial sale, including monostands or blends
or mixtures of Bentgrass, Bermudagrass, Buffalograss, Centipedegrass,
Fine fescue, Kentucky bluegrass, Ryegrass, Seashore Paspalum, St.
Augustinegrass, Tall fescue, Zoysiagrass, Bahiagrass, other native or
adapted plants harvested and sold as sod, and products containing
natural grass with artificial elements that are sold as sod. For
purposes of this Order, natural grass sod product excludes all
artificial and synthetic turf or grass products, natural grass seed,
sprigs, and plugs.
Order means an order issued by the Secretary under section 7413 of
the Act that provides for a program of generic promotion, research, and
information regarding agricultural commodities authorized under the
Act.
Part and subpart means the Natural Grass Sod Promotion, Research,
and Information Order and all rules, regulations, and supplemental
orders issued pursuant to the Act and the Order. The Natural Grass Sod
Promotion, Research, and Information Order shall be a subpart of such
part.
Person means any individual, group of individuals, partnership,
corporation, association, cooperative, or any other legal entity.
Produce means the process of growing and/or harvesting natural
grass sod products for the purpose of selling such products either
individually or in combination with other products, real
[[Page 71317]]
property, or services in the United States.
Program means those generic research, promotion, and information
programs, plans, or projects established pursuant to the Order.
Promotion means any action, including paid advertising and the
dissemination of Information, utilizing public relations or other
means, to enhance and broaden the understanding of the use and
attributes of natural grass for the purpose of maintaining and
expanding markets for natural grass sod products.
Qualified organization means any organization that has the primary
purpose of representing natural grass sod producers, has natural grass
sod producers as members, has a board of directors comprised of a
majority of natural grass sod producers, and is approved by the
Secretary pursuant to the qualification process set forth in Sec.
1240.63.
Quarterly period means one of the four 3-month periods that are
based upon a calendar year cycle (i.e., January 1-March 31, April 1-
June 30, July 1-September 30, and October 1-December 31).
Representative period means the time period designated by the
Secretary pursuant to section 518 (7 U.S.C. 7417) of the Act.
Research means any type of test, study, or analysis designed to
enhance the image, desirability, use, marketability, production,
environmental quality, or sustainability of natural grass, including
research directed to product characteristics and product development
like new products or improved technology in the production of natural
grass sod products.
Secretary means the Secretary of Agriculture of the United States,
or any other officer or employee of the Department to whom authority
has been delegated, or to whom authority may hereafter be delegated, to
act in the Secretary's stead.
State means any of the 50 States of the United States, the District
of Columbia, the Commonwealth of Puerto Rico, or any territory or
possession of the United States.
Subsequent Referenda refers to any referendum conducted pursuant to
Sec. 1240.71 of this subpart after this subpart becomes effective.
Suspend means to issue a rule under 5 U.S.C. 553 to temporarily
prevent the operation of an Order or part thereof during a particular
period of time specified in the rule.
Terminate means to issue a rule under 5 U.S.C. 553 to cancel
permanently the operation of an Order or part thereof beginning on a
date certain specified in the rule.
United States means collectively the 50 States, the District of
Columbia, the Commonwealth of Puerto Rico and the territories and
possessions of the United States.
Natural Grass Sod Promotion, Research, and Information Board
Sec. 1240.30 Establishment and membership.
(a) Establishment of the Board. There is hereby established a
Natural Grass Sod Promotion, Research, and Information Board to
administer the terms and provisions of this part. The Board shall be
composed of natural grass sod producers that sell natural grass sod
products in the United States during a marketing year and a public
member. Seats on the Board shall be apportioned as set forth in
paragraph (b) of this section based on the geographical distribution of
the quantity of natural grass sod products sold in the United States.
(b) Composition of Board. The Board shall be composed of 11 members
who are natural grass sod producers and one public member. The Board
shall be established as follows:
(1) North/Cool-Season Region. Three members shall be appointed from
the North/Cool-Season Region, which includes the following States:
Alaska, Colorado, Connecticut, Delaware, Idaho, Illinois, Indiana,
Iowa, Maine, Massachusetts, Michigan, Minnesota, Montana, Nebraska, New
Hampshire, New Jersey, New York, North Dakota, Ohio, Oregon,
Pennsylvania, Rhode Island, South Dakota, Utah, Vermont, Washington,
Wisconsin, and Wyoming.
(2) South/Warm-Season Region. Four members shall be appointed from
the South/Warm-Season Region, which includes the following States:
Alabama, Arizona, Florida, Georgia, Hawaii, Louisiana, Mississippi,
Nevada, New Mexico, South Carolina, Texas, and all territories and
possessions of the United States, including but not limited to, the
Commonwealth of Puerto Rico.
(3) Transition Zone/California Region. Three members shall be
appointed from the Transition Zone/California Region, which includes
the following States: Arkansas, California, the District of Columbia,
Kansas, Kentucky, Maryland, Missouri, North Carolina, Oklahoma,
Tennessee, Virginia, and West Virginia.
(4) States with the highest volume of natural grass sod production.
The three (3) States with the highest volume of natural grass sod
production, as determined by the Secretary on an annual basis, shall
have at least one (1) natural grass sod producer to serve as a
representative on the Board, in their respective Region.
(5) Public member. One public member. The public member may not be
a natural grass sod producer or have a financial interest in the
production, sales, marketing or distribution of natural grass sod.
Nominations to the Secretary for the public member position may be
obtained through self-nomination to the Board and from Board members in
such a manner as recommended by the Board and approved by the Secretary
and shall be appointed by the Secretary. Should the Board fail to
nominate a public member, the Secretary may appoint such member.
(c) Reapportionment. At least once in every 5-year period, but not
more frequently than once in every 3-year period, the Board will review
the geographical distribution of the square footage of natural grass
sod Products sold within the United States. The review will be
conducted using the Board's annual assessment receipts, industry data
provided by USDA, and, if available, other reliable reports from the
industry. If warranted, the Board will recommend to the Secretary that
the membership, geographical regions, and/or size of the Board be
adjusted to reflect changes in geographical distribution of the square
footage of natural grass sod products sold in the United States. Any
changes in Board composition shall be implemented by the Secretary
through rulemaking.
Sec. 1240.31 Nominations and appointments.
(a) Initial nominations shall be submitted to the Secretary by the
industry organizations that have a board composed of a majority of
natural grass sod producers; by individual natural grass sod producers:
and from members of the public. The Secretary shall select the initial
members of the Board from the nominations submitted.
(b) Subsequent nominations shall be conducted as follows:
(1) The Board shall conduct outreach to all known natural grass sod
producers that sell natural grass sod products in a marketing year as
well as any known industry organizations that have a board comprised of
a majority of natural grass sod producers. Natural grass sod producers
and industry organizations may submit nominations to the Board;
(2) Natural grass sod producer nominees and the public member
nominee may provide the Board a short background statement outlining
their qualifications to serve on the Board;
[[Page 71318]]
(3) Nominees may seek nomination to the Board for all vacant seats
for which the nominees are qualified;
(4) Natural grass sod producers must produce and sell natural grass
sod products in the region for which they seek nomination. Nominees
that produce and sell in multiple regions may seek nomination in one
region of their choice. The Board will issue the call for nominations
to all known natural grass sod producers and recommend nominees for
each open seat and the additional nominees to the Secretary;
(5) The public member shall be nominated by a Qualified
Organization and through self-nomination to the Board. The public
member shall have no direct financial interest in the commercial
production or marketing of natural grass sod except as a consumer and
shall not be a director, stockholder, officer or employee of any firm
so engaged. The Board shall prescribe such additional qualifications,
administrative rules and procedures for selection and voting for each
candidate as it deems necessary and the Secretary approves.
(6) The Board will evaluate all the nominees and recommend at least
two names for each open seat. Other qualified persons interested in
serving in the open seats, but not recommended by the Board, will be
designated by the Board as additional nominees for consideration by the
Secretary;
(7) The Board must submit nominations to the Secretary at least 90
days before the new Board term begins. From the nominations submitted
by the Board, the Secretary shall select the members of the Board;
(8) Any natural grass sod producer and public member nominated to
serve on the Board shall file with the Secretary at the time of the
nomination a background questionnaire;
(9) From the nominations made pursuant to this section, the
Secretary shall appoint members of the Board on the basis of
representation provided in Sec. 1240.30(b);
(10) No two Board members shall be employed by a single
corporation, company, partnership or any other legal entity that pays
assessments under this Subpart; and,
(11) The Board may recommend to the Secretary modifications to its
nomination procedures as it deems appropriate. Any such modification
shall be implemented through rulemaking by the Secretary.
Sec. 1240.32 Nominee's agreement to serve.
Any producer or person nominated to serve on the Board shall file
with the Secretary at the time of the nomination a written agreement
to: (a) serve on the Board if appointed; (b) disclose any relationship
with any National Grass Sod Producer or with any organization that has
or is being considered for a contractual relationship with the Board;
and (c) withdraw from participation in deliberations, decision-making,
or voting on matters that concern the relationship disclosed.
Sec. 1240.33 Term of office.
(a) With the exception of the initial Board, each Board member
shall serve for a term of 3 years or until the Secretary selects his or
her successor. Each term of office shall begin and end on dates
determined by the Board. No member may serve more than two full
consecutive 3-year terms, except as provided in paragraph (b) of this
section.
(b) For the initial Board, the terms of the Board members shall be
staggered for 1, 2 and 3 years. Each region initially shall have one
member who serves 2-year terms and two members who serve 3-year terms.
In addition, the South/Warm-Season Region shall have one member who
serves a 1-year term. The Secretary shall determine which of the
initial members shall serve a term of 1, 2, or 3 years. The public
member shall serve an initial three-year term.
(c) Members serving the initial terms of all durations will be
eligible to serve a second term of 3 years. Members who are appointed
to serve the remainder of a term are eligible to serve two additional
3-year terms. A public member serving the initial term is not eligible
to serve two additional 3-year terms.
Sec. 1240.34 Removal.
The Board may recommend to the Secretary that a member be removed
from office if the member consistently fails or refuses to perform his
or her duties properly or engages in dishonest acts or willful
misconduct, which removal is subject to the Secretary's approval. If
the Secretary determines that a member fails or refuses to perform his
or her duties properly or engages in acts of dishonestly or willful
misconduct, the Secretary shall remove the person from office. A person
appointed under this subpart may be removed by the Secretary if the
Secretary determines that the person's continued service would be
detrimental to the purposes of the Act.
Sec. 1240.35 Vacancies.
(a) If a member is removed from office or resigns, or in the event
of death of any member, such position shall automatically become
vacant.
(b) If a member becomes disqualified for ceasing to produce natural
grass sod products or ceasing to do business in the region he or she
represents, such position shall be vacated within a period of 6 months
from the date of the disqualifying event.
(c) If a position becomes vacant, nominations to fill the vacancy
will be conducted using the nominations process set forth in this
subpart or the Board may recommend to the Secretary that he or she
appoint a successor from the most recent list of nominations for the
position.
(d) A vacancy will not be required to be filled if the unexpired
term is less than 6 months.
Sec. 1240.36 Procedure.
(a) The Board shall publicly announce all scheduled Board meetings
through a direct communication, press release, or other means and give
the Secretary the same notice of meetings of the Board (including
committees, subcommittees, and the like) as is given to members so that
the Secretary's representative(s) may attend such meetings.
(b) A majority (50 percent plus one) of the Board members shall
constitute a quorum at any meeting of the Board.
(c) Each member of the Board shall be entitled to one (1) vote on
any matter put to the Board and the motion will carry if supported by a
majority (50 percent plus one vote) of Board members, except for
recommendations to change the assessment rate, adopt a budget, or call
for a referendum, which require affirmation by two-thirds of the total
number of Board members.
(d) At an assembled meeting, all votes shall be cast in person. At
a meeting in which some or all members attend via an internet service,
videoconference, or teleconference, members may cast votes remotely by
using available technology according to procedures that shall be
established by the Board.
(e) In lieu of voting at an assembled meeting and, when in the
opinion of the chairperson of the Board such action is considered
necessary, the Board may take action if supported by a majority of
members (unless two-thirds is required under the Order) by mail,
telephone, electronic mail, facsimile, or any other means of
communication. In that event, all members must be notified and provided
the opportunity to vote. Any action so taken shall have the same force
and effect as though such action had been taken at an assembled
meeting. All votes shall be recorded in Board minutes.
(f) There shall be no proxy voting.
(g) The organization of the Board and the procedures for conducting
meetings
[[Page 71319]]
of the Board shall be in accordance with its bylaws, which shall be
established by the Board and approved by the Secretary.
Sec. 1240.37 Reimbursement and attendance.
Board members shall serve without compensation, but shall be
reimbursed for reasonable travel expenses, as approved by the Board,
which they incur when performing Board business.
Sec. 1240.38 Powers and duties.
The Board shall have the following powers and duties:
(a) To administer this subpart in accordance with its terms and
conditions and to collect assessments;
(b) To develop and recommend to the Secretary for approval such
bylaws as may be necessary for the functioning of the Board, and such
rules and regulations as may be necessary to administer the Order,
including activities authorized to be carried out under the Order;
(c) To meet not less than annually, organize, and select from among
the members of the Board a chairperson, vice chairperson, secretary/
treasurer, other officers, and committees and subcommittees, as the
Board determines to be appropriate. The committees and subcommittees
may include persons other than Board members, including representatives
of natural grass sod producers, as the Board deems necessary and
appropriate, provided Board members constitute a majority of all
committees and subcommittees;
(d) To employ or contract with persons, other than the Board
members, as the Board considers necessary to assist the Board in
carrying out its duties, and to determine the compensation and specify
the duties of the persons;
(e) To develop and submit programs to the Secretary for the
Secretary's approval, and enter into contracts or agreements related to
such programs, which must be approved by the Secretary before becoming
effective, for the development and carrying out of Programs of
Promotion, Research, and Information. The payment of costs for such
activities shall be from funds collected pursuant to this Order. Each
contract or agreement shall provide that:
(1) The contractor or agreeing party shall develop and submit to
the Board a Program together with a budget or budgets that shall show
the estimated cost to be incurred for such Program;
(2) The contractor or agreeing party shall keep accurate records of
all its transactions and make periodic reports to the Board of
activities conducted, submit accounting for funds received and
expended, and make such other reports as the Secretary or the Board may
require;
(3) The Secretary may audit the records of the contracting or
agreeing party periodically; and
(4) Any subcontractor who enters into a contract with a Board
contractor and who receives or otherwise uses funds allocated by the
Board shall be subject to the same provisions as the contractor; and
(5) Any other provisions required by the Secretary.
(f) To allocate, to the extent practicable, up to fifty percent
(50%) of the assessments collected on the sale of natural grass sod
Products in a State or group of States, as defined in Sec. 1240.20,
less administrative costs, to one or more Programs proposed by a
Qualified Organization representing such State or group of States. On
an annual basis, the Board shall solicit proposals for Programs, select
the Programs that shall receive funding, and enter into contracts only
with the entities that will directly implement the Programs. If the
Qualified Organization is not the entity that will implement the
Program, the Board may reimburse the Qualified Organization for
reasonable administrative costs incurred while making such proposal.
For purposes of this Sec. 1240.38, the Secretary shall have the
authority to approve an organization that the Board nominates to be a
``Qualified Organization'' pursuant to the qualification process set
forth in Sec. 1240.63.
(g) To prepare and submit for the approval of the Secretary fiscal
year budgets in accordance with Sec. 1240.45.
(h) To borrow funds necessary for startup expenses or other capital
outlays of the Board as set forth in the subpart;
(i) To invest assessments collected and other funds received
pursuant to this subpart and use earnings from invested assessments to
pay for activities carried out pursuant to this subpart;
(j) To recommend changes to the assessment rates as provided in
this subpart;
(k) To cause its books to be audited by an independent auditor at
the end of each fiscal year and at such other times as the Secretary
may request, and to submit a report of the audit directly to the
Secretary;
(l) To periodically prepare and make public reports of program
activities and, at least once each fiscal year, to make public an
accounting of funds received and expended;
(m) To maintain such minutes, books and records, and prepare and
submit such reports and records from time-to-time to the Secretary as
the Secretary may prescribe; to make appropriate accounting with
respect to the receipt and disbursement of all funds entrusted to it;
and to keep records that accurately reflect the actions and
transactions of the Board;
(n) To act as an intermediary between the Secretary and any natural
grass sod producer;
(o) To receive, investigate, and report to the Secretary complaints
of violations of this subpart;
(p) To recommend to the Secretary such amendments to this subpart
as the Board considers appropriate; and
(q) To work to achieve an effective, continuous, and coordinated
Program of Promotion, Research, and Information and to carry out
programs designed to provide maximum benefits to the natural grass sod
industry.
Sec. 1240.39 Prohibited activities.
The Board may not engage in, and shall prohibit the employees and
agents of the Board from engaging in:
(a) Any action that would be a conflict of interest;
(b) Using funds collected by the Board under the Order to undertake
any action for the purpose of influencing legislation or governmental
action or policy, by local, state, national, and foreign governments or
subdivision thereof, other than recommending to the Secretary
amendments to this subpart; and
(c) Any Program or advertising that is false, misleading, or
disparaging to another agricultural commodity. Natural grass sod
products of all geographic origins shall be treated equally.
Expenses and Assessments
Sec. 1240.45 Budget and expenses.
(a) At least 60 calendar days prior to the beginning of each fiscal
year, and as may be necessary thereafter, the Board shall prepare and
submit to USDA a budget for the fiscal year covering its anticipated
expenses and disbursements in administering this Part. The budget for
Research, Promotion, or Information may not be implemented prior to
approval by the Secretary. Each such budget shall include:
(1) A statement of objectives and strategy for each Program;
(2) A summary of anticipated revenue, with comparative data for at
least one preceding fiscal year, except for the initial budget;
(3) A summary of proposed expenditures for each Program; and
(4) Staff and administrative expense breakdowns, with comparative
data for at least one preceding fiscal year, except for the initial
budget.
[[Page 71320]]
(b) Each budget shall provide adequate funds to defray its proposed
expenditures and to provide for a reserve as set forth in this subpart.
(c) Subject to this section, any amendment or addition to an
approved budget must be approved by the Department. Shifts of funds
that do not result in an increase in the Board's approved budget and
are consistent with governing bylaws need not have prior approval by
the Department.
(d) The Board is authorized to incur such expenses, including
provision for a reserve, as the Secretary finds reasonable and likely
to be incurred by the Board for its maintenance and functioning, and to
enable it to exercise its powers and perform its duties in accordance
with the provisions of this subpart. Such expenses shall be paid from
funds received by the Board.
(e) With approval from the Department, the Board may borrow funds
necessary for startup expenses or other capital outlays of the Board as
set forth in the subpart, which funds shall be subject to the same
fiscal, budget, and audit controls as other funds of the Board.
(f) The Board may accept voluntary contributions. Such
contributions shall be free from any encumbrance by the donor and the
Board shall retain complete control of their use. The Board may receive
funds from outside sources with approval of the Secretary for specific
authorized projects.
(g) The Board shall reimburse the Secretary for all expenses
incurred by the Secretary in the implementation, administration,
enforcement and supervision of this Subpart, including all referendum
costs in connection with this subpart.
(h) For fiscal years beginning 3 years after the date of the
establishment of the Board, the Board may not expend for
administration, maintenance, and the functioning of the Board an amount
that is greater than 15 percent of the assessment and other income
received by and available to the Board for the fiscal year. For
purposes of this limitation, reimbursements to the Secretary, and other
Board expenses outlined in guidance provided by the Secretary shall not
be considered administrative costs.
(i) The Board may establish an operating monetary reserve and may
carry over to subsequent Fiscal Years excess funds in any reserve so
established; provided that, the funds in the reserve do not exceed two
fiscal years' budget of expenses. Subject to approval by the Secretary,
such reserve funds may be used to defray any expenses authorized under
this subpart.
(j) Pending disbursement of assessments and all other revenue under
a budget approved by the Secretary, the Board may invest assessments
and all other revenues collected under this subpart in:
(1) Obligations of the United States or any agency of the United
States;
(2) General obligations of any State or any political subdivision
of a State;
(3) Interest bearing accounts or certificates of deposit of
financial institutions that are members of the Federal Reserve System;
(4) Obligations fully guaranteed as to principal interest by the
United States; or
(5) Other investments as authorized by the Secretary.
Sec. 1240.46 Financial statements.
(a) The Board shall prepare and submit financial statements to the
Department on a quarterly basis, or at any other time as requested by
the Secretary. Each such financial statement shall include, but not be
limited to, a balance sheet, income statement, and expense budget. The
expense budget shall show expenditures during the time period covered
by the report, year-to-date expenditures, and the unexpended budget.
(b) Each financial statement shall be submitted to the Department
within 30 calendar days after the end of the time period to which it
applies.
(c) The Board shall submit to the Department an annual financial
statement within 90 calendar days after the end of the fiscal year to
which it applies.
Sec. 1240.47 Assessments.
(a) The Board's programs and expenses shall be paid by assessments
on producers of natural grass sod products in the United States, other
income of the Board, and other funds available to the Board.
(b) Each natural grass sod producer shall be required to pay an
assessment to the Board in the amount of one-tenth (1/10th) of one
penny ($0.01) per square foot, or the equivalent thereof, of all
natural grass sod products that the natural grass sod producer sells in
the United States.
(c) Twenty-four months after this subpart becomes effective and
periodically thereafter, the Board shall review the assessment rate
and, if so approved by a vote of at least two-thirds (\2/3\) of the
Board, submit a recommendation for a change in the assessment rate to
the Secretary. The assessment rate may not exceed one-eighth (\1/8\th)
of one penny ($0.01) per square foot of natural grass sod products sold
without approval by a majority of natural grass sod producers in a
referendum conducted pursuant to the procedures in this part.
(d) Upon the effective date of this Subpart, all natural grass sod
producers shall be responsible for maintaining proper and sufficient
sales receipts and records in order to accurately calculate their
assessments owed to the Board pursuant to this Subpart. After each
quarterly period, or such other time period set by the Board, natural
grass sod producers shall calculate the amount of assessments they owe
the Board and remit such payment to the Board no later than the last
calendar day of the month following the end of the quarterly period, or
such other time period set by the Board, in which the natural grass sod
products were sold.
(e) If any natural grass sod producer fails to pay the assessment
within 60 calendar days of the date it is due, the Board may impose a
late payment charge and interest. The one-time late payment charge
shall be equal to ten percent (10 percent) of the assessments due
before interest charges have accrued. In addition to the late payment
charge, one and one-half percent (1.5 percent) per month interest on
the outstanding balance, including any late payment charge and accrued
interest, will be added to any accounts for which payment has not been
received by the Board within 60 calendar days after the assessments are
due. Such interest will continue to accrue monthly until the
outstanding balance is paid to the Board. Persons failing to remit
total assessments due in a timely manner may also be subject to actions
under Federal debt collection procedures or other means as the Board
recommends to the Secretary.
(f) The Board may accept advance payment of assessments from any
natural grass sod producer that will be credited toward any amount for
which that person may become liable. The Board may not pay interest on
any advance payment.
(g) If the Board is not in place by the date the first assessments
are to be collected, the Secretary shall receive assessments and shall
pay such assessments and any interest earned to the Board when it is
formed.
Promotion, Research, and Information
Sec. 1240.50 Programs.
(a) The Board shall develop and submit to the Secretary for
approval Programs authorized by this Subpart. Such Programs shall
provide for Promotion, Research, Information and
[[Page 71321]]
other activities, including consumer and industry information and
advertising.
(b) No Program shall be implemented prior to its approval by the
Secretary. Once a program is so approved, the Board shall take
appropriate steps to implement it.
(c) The Board must evaluate each program authorized under this
subpart to ensure that it contributes to an effective and coordinated
Program of Research, Promotion, and Information. The Board must submit
the evaluations to the Secretary. If the Board finds that a program
does not contribute to an effective Program of Promotion, Research, or
Information, then the Board shall terminate such Program.
(d) No Program authorized under this subpart shall reference a
brand or trade name of any natural grass sod product without the
approval of the Board and Secretary.
Sec. 1240.51 Independent evaluation.
At least once every five years, the Board shall authorize and fund
from funds otherwise available to the Board, an independent evaluation
of the effectiveness of this subpart and the Programs conducted by the
Board pursuant to the part. The Board shall submit to the Secretary,
and make available to the public, the results of each periodic
independent evaluation conducted under this section.
Sec. 1240.52 Patents, copyrights, trademarks, inventions, product
formulations, and publications.
(a) Any patents, copyrights, trademarks, inventions, product
formulations, and publications developed through the use of funds
received by the Board under this subpart shall be the property of the
U.S. Government, as represented by the Board, and shall along with any
rents, royalties, residual payments, or other income from the rental,
sales, leasing, franchising, or other uses of such patents, copyrights,
trademarks, inventions, product formulations, or publications, inure to
the benefit of the Board, shall be considered income subject to the
same fiscal, budget, and audit controls as other funds of the Board,
and may be licensed subject to approval by the Secretary. Upon
termination of this subpart, Sec. 1240.73 shall apply to determine
disposition of all such property.
(b) Should patents, copyrights, inventions, trademarks,
information, publications, or product formulations be developed through
the use of funds collected by the Board under this subpart together
with funds contributed by another organization or person, the ownership
and related rights to such patents, copyrights, inventions, trademarks,
information, publications, or product formulations shall be determined
by an agreement between the Board and the party contributing funds
toward the development of such patents, copyrights, inventions,
trademarks, information, publications, or product formulations in a
manner consistent with paragraph (a) of this section, subject to the
approval by the Secretary.
Reports, Books, and Records
Sec. 1240.60 Reports.
(a) Natural grass sod producers will be required to provide
periodically to the Board such information as the Board, with the
approval of the Secretary, may require. Such information may include,
but not be limited to:
(1) The name and contact information of the natural grass sod
producer;
(2) The quantity of natural grass sod products sold;
(3) The date that any assessments were paid; and
(4) The natural grass sod producer's TIN, EIN, or other
identification as may be applicable.
(b) Such information shall be reported to the Board no later than
the 30th calendar day of the month following the end of the quarterly
period in which the natural grass sod products were sold and shall
accompany the collected payment of assessments as specified in Sec.
1240.47. First quarter data (January-March) shall be reported to the
Board no later than the April 30th; second quarter data (April-June)
shall be reported no later than July 31st; third quarter data (July-
September) shall be reported no later than October 31st; and fourth
quarter data (October-December) shall be reported no later than January
31st of the following marketing year.
(c) In addition to the information required to be regularly
reported to the Board, the Board may request additional information
from natural grass sod producers as deemed necessary by the Board,
subject to approval by the Secretary.
Sec. 1240.61 Books and records.
Each natural grass sod producer shall maintain any books and
records necessary to carry out the provisions of this subpart and
regulations issued thereunder, including such records as are necessary
to verify any required reports. Such books and records must be made
available during normal business hours for inspection by the Board's or
Secretary's employees or agents. Natural grass sod producers must
maintain the books and records for 3 years beyond the fiscal year to
which they apply.
Sec. 1240.62 Confidential treatment.
All information obtained from books, records, or reports under the
Act, this subpart and the regulations issued thereunder shall be kept
confidential by all persons, including all employees and former
employees of the Board, all officers and employees and former officers
and employees of contracting and subcontracting agencies or agreeing
parties having access to such information. Such information shall not
be available to Board members or natural grass sod producers. Only
those Persons having a specific need for such information solely to
effectively administer the provisions of this subpart shall have access
to such information. Only such information so obtained as the Secretary
deems relevant shall be disclosed by them, and then only in a judicial
proceeding or administrative hearing brought at the direction, or at
the request, of the Secretary, or to which the Secretary or any officer
of the United States is a party, and involving this subpart. Nothing in
this section shall be deemed to prohibit:
(a) The issuance of general statements based upon the reports of
the number of persons subject to this subpart or statistical data
collected therefrom, which statements do not identify the information
furnished by any person; and
(b) The publication, by direction of the Secretary, of the name of
any person who has been adjudged to have violated this part, together
with a statement of the particular provisions of this part or subpart
violated by such Person.
Sec. 1240.63 Qualification of natural grass sod organizations.
(a) Organizations receiving qualification from the Secretary will
be entitled to submit requests for funding to the Board pursuant to
Sec. 1240.38. Only one natural grass sod producer organization per
State may be qualified and only one natural grass sod producer per
group of States may be qualified.
(b) Any natural grass sod producer organization whose primary
purpose is to represent natural grass sod producers within a State or
group of States may request qualification.
(c) Qualification shall be based, in addition to other available
information, upon a factual report submitted by the organization that
shall contain such information as the Secretary deems relevant for
making such determination, including the following:
[[Page 71322]]
(1) The geographic territory covered by the organization's active
membership;
(2) The nature and size of the organization's active membership and
proportion of active membership accounted for by natural grass sod
producers;
(3) The extent to which natural grass sod producers are represented
on the organization's board of directors;
(4) Evidence of stability and permanency of the organization;
(5) Sources from which the organizations operating funds are
derived;
(6) The functions of the organization; and
(7) The ability and willingness of the organization to further the
purpose and objectives of the Act.
(d) The primary consideration in determining the eligibility of an
organization shall be whether its natural grass sod producer membership
consists of a sufficiently large number of natural grass sod producers
who produce a relatively significant volume of Sod as to reasonably
warrant its qualification to submit requests for funding to the Board.
Any natural grass sod producer organization found eligible by the
Secretary under this section will be qualified by the Secretary, and
the Secretary's determination as to eligibility shall be final.
Miscellaneous
Sec. 1240.70 Right of the Secretary.
All fiscal matters, Programs, contracts, rules or regulations,
reports, or other substantive actions proposed and prepared by the
Board shall be submitted to the Secretary for approval.
Sec. 1240.71 Referenda.
(a) Initial referendum. The Order shall not become effective unless
the Order is approved by a simple majority (50 percent + one vote) of
the natural grass sod producers voting in the initial referendum that
have been engaged in the production and sale of natural grass sod
products in the United States during a representative period determined
by the Secretary. Each natural grass sod producer may cast one vote in
the initial referendum.
(b) Subsequent Referenda. The Secretary shall conduct Subsequent
Referenda:
(1) Not later than 7 years after this Order becomes effective and
every 7 years thereafter, to determine whether natural grass sod
producers favor the continuation of this Subpart. This subpart shall
continue if it is approved by a simple majority (50 percent + one vote)
of natural grass sod producers voting in the subsequent referendum that
have been engaged in the production and sale of natural grass sod
products in the United States during a representative period determined
by the Secretary. Each natural grass sod producer may cast one vote in
the Subsequent Referenda;
(2) At the request of the two-thirds of the members of the Board
established in this Subpart;
(3) At the request of 10 percent or more of the total number of
eligible natural grass sod producers; or
(4) At any time as determined by the Secretary.
(c) Referendum procedures. The initial referendum and all
Subsequent Referenda shall be conducted pursuant to the procedures
outlined in subpart B.
Sec. 1240.72 Suspension or termination.
(a) The Secretary shall Suspend or Terminate this part or subpart
or a provision thereof, if the Secretary finds that this part or
subpart or a provision thereof obstructs or does not tend to effectuate
the purposes of the Act, or if the Secretary determines that this
subpart or a provision thereof is not favored by eligible natural grass
sod producers in a subsequent referendum.
(b) The Secretary shall Suspend or Terminate this subpart at the
end of the fiscal year whenever the Secretary determines that its
suspension or termination is favored by a simple majority of eligible
natural grass sod producers voting in a subsequent referendum.
(c) If, as a result of a Subsequent Referendum, the Secretary
determines that this subpart is not approved, the Secretary shall:
(1) Not later than 180 calendar days after making the
determination, Suspend or Terminate, as the case may be, the collection
of assessments under this subpart.
(2) As soon as practical, Suspend or Terminate, as the case may be,
activities under this subpart in an orderly manner.
Sec. 1240.73 Proceedings after termination.
(a) Upon termination of this subpart, the Board shall recommend to
the Secretary up to five of its members to serve as trustees for the
purpose of liquidating the Board's affairs. Such persons, upon
designation by the Secretary, shall become trustees of all of the funds
and property then in the possession or under control of the Board,
including claims for any funds unpaid or property not delivered, or any
other existing claim at the time of such termination.
(b) The said trustees shall:
(1) Continue in such capacity until discharged by the Secretary;
(2) Carry out the obligations of the Board under any contracts or
agreements entered into pursuant to this subpart;
(3) From time to time account for all receipts and disbursements
and deliver all property on hand, together with all books and records
of the Board and trustees, to such Person or Persons as the Secretary
directs; and
(4) Upon request of the Secretary, execute such assignments or
other instruments necessary or appropriate to vest in such person's
title and right to all of the funds, property, and claims vested in the
Board or the trustees pursuant to this Subpart.
(c) Any Person to whom funds, property, or claims have been
transferred or delivered pursuant to this subpart shall be subject to
the same obligations imposed upon the Board and upon the trustees.
(d) Any residual funds not required to defray the necessary
expenses of liquidation shall be turned over to the Secretary to be
disposed of, to the extent practical, to one or more organizations in
the United States whose mission is generic promotion, Research, and
Information programs.
Sec. 1240.74 Effect of termination or amendment.
Unless otherwise expressly provided by the Secretary, the
termination of this subpart or of any regulation issued pursuant
thereto, or the issuance of any amendment to either thereof, shall not:
(a) Affect or waive any right, duty, obligation, or liability which
shall have arisen or which may thereafter arise in connection with any
provision of this subpart or any regulation issued thereunder;
(b) Release or extinguish any violation of this subpart or any
regulation issued thereunder; or
(c) Affect or impair any rights or remedies of the United States,
or of the Secretary or of any other persons, with respect to any such
violation.
Sec. 1240.75 Personal liability.
No member or employee of the Board shall be held personally
responsible, either individually or jointly with others, in any way
whatsoever, to any person for errors in judgment, mistakes, or other
acts, either of commission or omission, as such member or employee,
except for acts of dishonesty or willful misconduct.
Sec. 1240.76 Separability.
If any provision of this subpart is declared invalid or the
applicability of
[[Page 71323]]
it to any person or circumstances is held invalid, the validity of the
remainder of this subpart, or the applicability thereof to other
persons or circumstances shall not be affected thereby.
Sec. 1240.77 Amendments.
Amendments to this subpart may be proposed from time to time by the
Board or any interested Person affected by the provisions of the Act,
including the Secretary.
Sec. 1240.78 OMB control number.
The control numbers assigned to the information collection
requirements by the Office of Management and Budget pursuant to the
Paperwork Reduction Act of 1995, 44 U.S.C. chapter 35, are OMB control
numbers 0505-0001 (Background Information Form), 0581-0093 (Organic
Exemption), and 0581-NEW.
Subpart B--[Reserved]
Melissa Bailey,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2023-22502 Filed 10-13-23; 8:45 am]
BILLING CODE P
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</html>Indexed from Federal Register on October 16, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.