Fresh Cut Flowers and Fresh Cut Greens Promotion and Information Order

SUMMARY: The U.S. Department of Agriculture (Department) is seeking

comments on a proposal for a national, industry-funded promotion and

information program for fresh cut flowers and fresh cut greens (cut

flowers and greens). An order for the proposed program--the Fresh Cut

Flowers and Fresh Cut Greens Promotion and Information Order--was

submitted to the Department by the Promoflor Organizing Group, Inc. The

Department is also seeking comments on proposals submitted by the

Florists' Transworld Delivery Association and the Produce Marketing

Association which cover only one portion of the proposed order. Under

the proposed order, handlers would pay an assessment based on their

gross sales of cut flowers and greens, regardless of the country of

origin, to the proposed National PromoFlor Council. Composed of

handlers, growers, importers, and retailers, the Council would use the

assessments collected to conduct a generic promotion and information

program to maintain, expand, and develop markets for cut flowers and

greens.

DATES: Comments must be received by August 29, 1994.

ADDRESSES: Interested persons are invited to submit written comments

concerning the proposed order to: Docket Clerk, Research and Promotion

Branch, Fruit and Vegetable Division, Agricultural Marketing Service,

USDA, P.O. Box 96456, Room 2535-S, Washington, DC 20090-6456. Three

copies of all written material should be submitted, and they will be

made available for public inspection at the Office of the Docket Clerk

during regular business hours. All comments should reference the docket

number and the date and page number of this issue of the Federal

Register. Comments concerning the information collection requirements

contained in this action should also be sent to the Office of

Information and Regulatory Affairs, Office of Management and Budget,

Washington, DC 20503, Attention: Desk Officer for the Agricultural

Marketing Service, USDA.

FOR FURTHER INFORMATION CONTACT: Arthur Pease, Research and Promotion

Branch, Fruit and Vegetable Division, AMS, USDA, P.O. Box 96456, Room

2535-S, Washington, DC 20090-6456, telephone (202) 720-6930.

SUPPLEMENTARY INFORMATION: This proposed order is issued under the

Fresh Cut Flowers and Fresh Cut Greens Promotion and Information Act of

1993 [Pub. L. 103-190] approved December 14, 1993, hereinafter referred

to as the Act.

The Department of Agriculture is issuing this rule in conformance

with Executive Order 12866, and the Office of Management and Budget has

determined that it is a ``significant regulatory action.''

This rule has been reviewed under Executive Order 12778, Civil

Justice Reform. It is not intended to have retroactive effect. This

rule would not preempt any State or local laws, regulations, or

policies, unless they present an irreconcilable conflict with this

rule.

The Act provides that administrative proceedings must be exhausted

before parties may file suit in court. Under Sec. 8 of the Act, after

an order is implemented, a person subject to the order may file a

petition with the Secretary stating that the order or any provision of

the order, or any obligation imposed in connection with the order, is

not in accordance with law and requesting a modification of the order

or an exemption from the order. The petitioner is afforded the

opportunity for a hearing on the petition. After such hearing, the

Secretary will make a ruling on the petition. The Act provides that the

district courts of the United States in any district in which a person

who is a petitioner resides or carries on business are vested with

jurisdiction to review the Secretary's ruling on the petition, if a

complaint for that purpose is filed within 20 days after the date of

the entry of the ruling.

Regulatory Flexibility Act

Pursuant to requirements set forth in the Regulatory Flexibility

Act (RFA), the Administrator of the Agricultural Marketing Service

(AMS) has considered the economic impact of this proposed action on

small entities.

The purpose of the RFA is to fit regulatory actions to the scale of

business subject to such actions in order that small businesses will

not be unduly or disproportionately burdened.

Only those wholesale handlers, retail distribution centers,

producers, and importers who have annual sales of $750,000 or more of

cut flowers and greens and sell those products to exempt handlers,

retailers, or consumers would be considered to be qualified handlers

and assessed under the order. There are approximately 900 wholesalers,

150 importers, and 200 domestic producers who would be qualified

handlers.

The majority of these qualified handlers would be classified as

small businesses. As defined by the Small Business Administration [13

CFR 121.601] small agricultural service firms, which would include the

qualified handlers who would be required to pay assessments under the

order, have been defined as those having annual receipts of less than

$5,000,000.

Statistics reported by the National Agricultural Statistics Service

show that 1993 sales at wholesale of domestic cut flowers and greens

total approximately $535 million while the value of imports during 1993

was approximately $382 million. The leading States in the United States

producing cut flowers and greens, by wholesale value, are California,

which produces approximately 60 percent of the domestic crop, followed

by Florida, Colorado, Washington, New York, Hawaii, and Pennsylvania.

Major countries exporting cut flowers and greens into the United

States, by value, are Colombia, which accounts for approximately 60

percent, followed by The Netherlands, Mexico, and Costa Rica.

During the first three years the order is in effect, the rate of

assessment may not exceed 0.5 percent of the gross sales of cut flowers

and greens. After the order has been in effect for three years, the

assessment rate may be increased or decreased by no more that 0.25

percent each year when recommended by two-thirds of the members of the

National PromoFlor Council (Council) and approved by the Secretary.

However, at no time may the assessment rate exceed 1.0 percent of gross

sales of cut flowers and greens. Notice and comment rulemaking would be

required to change the assessment rate.

Although the maximum assessment collection is expected to total

about $10 million annually, the economic impact of a 1.0 percent or

less assessment on each qualified handler would not be significant.

While the proposed order would impose certain recordkeeping

requirements on qualified handlers, information required under the

proposed order could be compiled from records currently maintained.

Thus, any added burden resulting from increased recordkeeping would not

be significant when compared to the benefits that should accrue to such

businesses. The proposed order's provisions have been carefully

reviewed, and every effort has been made to minimize any unnecessary

recordkeeping costs or requirements.

Although the order would impose some additional costs and

requirements on qualified handlers, it is anticipated that the program

under the proposed order would help to increase the demand for cut

flowers and greens. Therefore, any additional costs should be offset by

the benefits derived from expanded markets and sales benefiting all

segments of the floral industry. Accordingly, the Administrator of the

AMS has determined that the provisions of the proposed order would not

have a significant economic impact on a substantial number of small

entities.

Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1980 [44 U.S.C.

Chapter 35] the forms, reporting, and recordkeeping requirements

included in this action have been submitted for approval to the Office

of Management and Budget (OMB). Information collection requirements

that are included in this proposal include:

(1) A periodic report by each qualified handler who handles cut

flowers and greens. The estimated maximum number of respondents is

1,250, each submitting an average of 12 responses per year, with an

estimated average reporting burden of 10 minutes per response.

(2) An application requesting postponement of assessment payments.

The estimated maximum number of respondents is 25, each submitting an

average of 4 responses per year, with an estimated average reporting

burden of 20 minutes per response.

(3) A refund application form for persons who desire a refund of

their assessments. The estimated maximum number of respondents is 210,

each submitting 1 response prior to the initial referendum, or an

annual average of 70 respondents, with an estimated average reporting

burden of 15 minutes per response.

(4) An exemption application for wholesale handlers, retail

distribution centers, producers, and importers of cut flowers and

greens with gross annual sales under $750,000 and would be exempt from

assessments and recordkeeping requirements. The estimated number of

respondents for this form is 500, each submitting one response per

year, with an estimated average burden of 15 minutes per response.

(5) A referendum ballot to be used to determine whether qualified

handlers favor continuance of the order. The estimated number of

respondents completing this ballot would be 1,250, each submitting one

response approximately every 3 years, or an annual average of 417

respondents, with an estimated average reporting burden of 15 minutes

per response.

(6) A nominee background statement form for Council member and

alternate member nominees. The estimated number of respondents for this

form is 50 for the initial nominations to the Council and approximately

17 respondents annually thereafter. Each respondent would submit one

response per year, with an estimated average reporting burden of 30

minutes per response.

(7) A requirement to maintain records sufficient to verify reports

submitted under the order. The estimated maximum number of

recordkeepers necessary to comply with this requirement is 1,750 each

of whom would have an estimated annual burden of 15 minutes.

Comments concerning the information collection requirements

contained in this action should also be sent to the Office of

Information and Regulatory Affairs; Office of Management and Budget;

Washington, DC 20503. Attention: Desk Officer for Agricultural

Marketing Service, USDA.

Background

The Act authorizes the Secretary of Agriculture (Secretary) to

establish a national cut flowers and greens promotion and consumer

information program. The program would be funded by an assessment

levied on qualified handlers not to exceed 1 percent of their gross

sales of cut flowers and greens.

The Act provides for the submission of proposals for a cut flowers

and greens promotion and consumer information order by industry

organizations or any other interested person affected by the Act. The

Act requires that such a proposed order provide for the establishment

of a National PromoFlor Council. The Council would be composed of 25

voting members: 14 members representing qualified wholesale handlers of

domestic and imported cut flowers and greens; 3 members representing

producers who are qualified handlers of cut flowers and greens; 3

members representing importers who are qualified handlers of cut

flowers and greens; 3 members representing traditional retailers of cut

flowers and greens; and 2 members representing persons who produce cut

flowers and greens. Each member shall have an alternate.

The Department issued a news release on February 17, 1994,

requesting proposals for an initial order or portions of an initial

order.

Proposal I

An entire proposed order was submitted by the PromoFlor Organizing

Group, Inc. (PromoFlor). PromoFlor is an industry group created and

sponsored by 68 floral industry organizations and more than 700 floral

businesses solely for the purpose of developing and implementing a

promotion and consumer information order for cut flowers and greens.

PromoFlor represents a substantial number of industry members who would

be assessed under the proposed order. Once the order is established,

PromoFlor would no longer exist.

The Department is publishing PromoFlor's proposed order as Proposal

I. The Department has modified PromoFlor's proposed text (1) to make it

consistent with the Act and other similar national research and

promotion programs supervised by the Department, (2) to simplify the

language and format of some provisions, and (3) to add certain sections

necessary for proper administration of the Order by the Department.

The proposed order submitted by PromoFlor is summarized as follows:

Sections 1208.1-1208.22 of the proposed order define certain terms,

such as floral products, qualified handler, producer, and retailer,

which are used in the proposed order.

Sections 1208.30-1208.37 include provisions relating to the

establishment, membership, nomination procedures, appointment, terms of

office, and reimbursement of members of the Council. Also PromoFlor

would be designated as an election committee for the initial nomination

of members to the Council. After the Council is appointed, the Council

would be the election committee.

Sections 1208.40-1208.43 include powers and duties of the Council,

which would be the body organized to administer the order through the

implementation of plans, projects, budgets, and contracts to promote

and disseminate information about cut flowers and greens, under the

supervision of the Secretary. Further, the Council would be authorized

to incur expenses necessary for the performance of its duties.

Sections 1208.50-1208.57 would authorize the collection of

assessments, specify who pays them and how, set forth procedures for

granting a postponement of the payment of an assessment for any

qualified handler who is financially unable to pay such assessment, set

forth procedures for the handling of a one-time refund should the order

fail to be approved in referendum, authorize the Council to make

determinations as to who are qualified handlers and who are exempt

handlers, and for establishing an operating monetary reserve.

The initial assessment rate would be 0.5 percent of a qualified

handler's gross sales during the first three years the order is in

effect. Thereafter, the rate may be increased or decreased by no more

than 0.25 percent per year. A uniform factor would be used for

determining the assessment due on non-sale transfers to retailers and

sales by importers who are qualified handlers directly to consumers.

Another uniform factor would be used for determining the assessment due

on sales directly to consumers by producers who are qualified handlers.

Sales of cut flowers and greens to export markets would be exempt from

assessment.

The assessment sections also outline the procedures to be followed

by qualified handlers for remitting assessments; establish a 1.5

percent per month interest charge for unpaid or late assessments; and

provide for refunds of assessments paid if the program does not

continue after the initial referendum.

Sections 1208.60-1208.62 authorize the Secretary to suspend or

terminate the order when deemed appropriate, and prescribes proceedings

after suspension or termination.

Sections 1208.70-1208.72 concern reporting and recordkeeping

requirements for persons subject to the order and protect the

confidentiality of information obtained from such books, records, or

reports.

Sections 1208.80-1208.85 are miscellaneous provisions including the

provisions involving authority of the Secretary; personal liability of

Council members and employees; separability of order provisions;

handling of intellectual property, such as patents, arising from funds

collected by the Council; and amendments to the order.

In addition to the proposal from PromoFlor, the Department received

proposals addressing the nomination of the Council's retailer members

from Florists' Transworld Delivery Association (FTD) (see Proposal II)

and the Produce Marketing Association (PMA) (see Proposal III).

Proposal II

FTD's proposal specifies that one of the three retailer members be

appointed from nominations submitted by the American Floral Marketing

Council (AFMC) in accordance with the Act, that one retailer member be

appointed from nominations submitted by FTD, and that one retailer

member be appointed from nominations submitted by a coalition of

traditional retail florist organizations. The FTD proposal also defines

``traditional retail florist organization'' as an organization having

membership exceeding 1,000 of which 75 percent would be traditional cut

flowers and greens retailers and such organization spends a portion of

its revenue on marketing cut flowers and greens. The FTD proposal

defines ``traditional cut flowers and greens retailer'' as small

business establishments that operate from owned or leased premises and

derive 40 percent of their total volume of sales from cut flowers and

greens. This definition would not allow for mass-market retailers such

as supermarket chains to be eligible to nominate candidates as members

on the Council. The FTD proposal further states that no traditional

retail florist organization, including AFMC, would be eligible to

nominate members for more than one of the three retailer member

positions. It is FTD's position that it is the largest traditional

retail florist organization in the industry and that it should be

entitled to one member and alternate on the Council.

Proposal III

The Produce Marketing Association (PMA) also submitted proposed

definitions of ``traditional retailer'' and ``traditional retail

florist organization'' which would be used in determining eligibility

to nominate retailer members for the Council. PMA is the national trade

association that represents the mass-market floral industry though its

division, the Floral Marketing Association. It is PMA's position that

the definition of the term ``traditional'' should be very broad and

include any retailer whose primary business is the sale of floral

products, including cut flowers and greens or has a specific department

dedicated to the sale of floral products including cut flowers and

greens. Also, PMA recommended that nominations be limited to national

organizations. Further, PMA is in favor of keeping the two retailer

seats that were not designated for AFMC open to as large a segment of

the floral industry as possible.

In addition to these proposals, the Department has received letters

from several other floral industry groups regarding qualifications for

the retailer member seats on the Council. They include American Floral

Services, Inc., Redbook Floral Services, Teleflora, and Wholesale

Florists and Florist Suppliers of America. Copies of these letters will

be available for public inspection in addition to the comments received

in response to this proposed rule.

The Department will analyze all written views received to date as

well as written comments on the three proposals published below before

issuing a final order.

List of Subjects in 7 CFR Part 1208

Administrative practice and procedure, Advertising, Consumer

information, Marketing agreements, Cut flowers, Cut greens, Promotion,

Reporting and recordkeeping requirements.

The proposals set forth below have not received the approval of the

Secretary.

It is hereby proposed that chapter XI of Title 7 of the Code of

Federal Regulations be amended as follows:

Proposal I

1. Part 1208 is proposed to be added to read as follows:

PART 1208--FRESH CUT FLOWERS AND FRESH CUT GREENS PROMOTION AND

INFORMATION

Subpart A--Fresh Cut Flowers and Fresh Cut Greens Promotion and

Information Order

Definitions

Sec.

1208.1 Act

1208.2 Consumer information

1208.3 Council

1208.4 Cut flowers

1208.5 Cut greens

1208.6 Cut flowers and greens

1208.7 Department

1208.8 Exempt handler

1208.9 Fiscal year

1208.10 Gross sales price

1208.11 Order

1208.12 Part and subpart

1208.13 Person

1208.14 Promotion

1208.15 Producer that is a qualified handler

1208.16 Qualified handler

1208.17 Research

1208.18 Retailer

1208.19 Secretary

1208.20 Substantial portion

1208.21 State

1208.22 United States

Establishment of the Council

1208.30 Establishment and membership of the Council

1208.31 Election and appointment of members and alternates other

than retailers

1208.32 Designation and appointment of retailer members and

alternates

1208.33 Failure to nominate

1208.34 Terms of office and compensation

1208.35 Vacancies

1208.36 Procedure

1208.37 Executive committee

Activities of the Council

1208.40 Duties of the Council

1208.41 Budgets and expenses

1208.42 Plans, projects, budgets, and contracts thereof

1208.43 Other contracts and agreements

Assessments

1208.50 Assessments

1208.51 Influencing governmental action

1208.52 Charges for late payments

1208.53 Adjustment of accounts

1208.54 Refunds of assessments and escrow account

1208.55 Postponement of collections

1208.56 Determinations

Suspension or Termination

1208.60 Suspension and termination

1208.61 Proceedings after termination

1208.62 Effect of termination or amendment

Reports, Books, and Records

1208.70 Books, records, reports, cost control, and audits of the

Council

1208.71 Reports, books, and records of persons subject to this

subpart

1208.72 Confidential treatment

Miscellaneous

1208.80 Right of the Secretary

1208.81 Personal liability

1208.82 Patents, copyrights, inventions, publications, and product

formulations

1208.83 Amendments

1208.84 Separability

1208.85 OMB control numbers

Authority: 7 U.S.C. 1601-6814.

Definitions

Sec. 1208.1 Act.

Act means the Fresh Cut Flowers and Fresh Cut Greens Promotion and

Information Act of 1993, Pub. L. 103-190, 7 U.S.C. Secs. 6801 et seq.,

and any amendments thereto.

Sec. 1208.2 Consumer information.

Consumer information means any action or program that provides

information to consumers and other persons on appropriate uses for cut

flowers and greens under varied circumstances, or on the care and

handling of cut flowers and greens.

Sec. 1208.3 Council.

Council means the Fresh Cut Flowers and Fresh Cut Greens Promotion

Council established pursuant to Sec. 1208.30 of this subpart and which

shall be referred to as the National PromoFlor Council.

Sec. 1208.4 Cut flowers.

Cut flowers include all flowers cut from growing plants that are

used as fresh-cut flowers and that are produced under cover or in field

operations, but not including foliage plants, floral supplies, or

flowering plants.

Sec. 1208.5 Cut greens.

Cut greens include all cultivated or noncultivated decorative

foliage cut from growing plants that are used as fresh-cut decorative

foliage (except Christmas trees) and that are produced under cover or

in field operations, but not including foliage plants, floral supplies,

or flowering plants.

Sec. 1208.6 Cut flowers and greens.

The term cut flowers and greens means either cut flowers or cut

greens, even though the cut flowers or cut greens are sold as separate

commodities by a person in the floral marketing system, or cut flowers

and cut greens collectively when both commodities are sold by a person

in the floral marketing system.

Sec. 1208.7 Department.

Department means the United States Department of Agriculture.

Sec. 1208.8 Exempt handler.

Exempt handler means a person who would otherwise be considered to

be a qualified handler except that the person's annual sales of cut

flowers and greens to retailers and other exempt handlers is less than

$750,000.

Sec. 1208.9 Fiscal year.

Fiscal year means a 12-month period recommended by the Council and

approved by the Secretary.

Sec. 1208.10 Gross sales price.

Gross sales price means the total amount of the transaction in a

sale of cut flowers and greens from a handler to a retailer or exempt

handler.

Sec. 1208.11 Order.

Order means this subpart.

Sec. 1208.12 Part and subpart.

Part means the Fresh Cut Flowers and Fresh Cut Greens Promotion and

Information Order and all rules and regulations issued pursuant to the

Act. The order itself shall be a subpart of such part.

Sec. 1208.13 Person.

Person means any individual, group of individuals, firm,

partnership, corporation, joint stock company, association, society,

cooperative, or other legal entity.

Sec. 1208.14 Promotion.

Promotion means any action determined by the Secretary to advance

the image, desirability, or marketability of cut flowers and greens,

including paid advertising.

Sec. 1208.15 Producer that is a qualified handler.

Producer that is a qualified handler means an entity that is

engaged: In the domestic production, for sale in commerce, of cut

flowers and greens and that owns or shares in the ownership and risk of

loss of the cut flowers and greens; or as a first processor of

noncultivated greens, in receiving the greens from a person who gathers

the greens for handling; and is subject to assessments as a qualified

handler under the order.

Sec. 1208.16 Qualified handler.

Qualified handler means a person operating in the cut flowers and

greens marketing system that sells domestic or imported cut flowers and

greens to retailers and exempt handlers and whose annual sales of cut

flowers and greens to retailers and exempt handlers are $750,000 or

more. The term does not include a person who only physically transports

or delivers cut flowers and greens. However, the term does include, but

is not limited to, the following entities when they have the requisite

volume of sales of cut flowers and greens as provided in Secs. 1208.50

and 1208.57:

(a) A qualified wholesale handler--a person in business as a floral

wholesale jobber (i.e., a person who conducts a commission or other

wholesale business in buying and selling cut flowers and greens) or as

a floral supplier (i.e., a person engaged in acquiring cut flowers and

greens to be manufactured into floral articles or otherwise processed

for resale) if the annual value of the qualified wholesale handlers

sale of cut flowers and greens to retailers and exempt handlers is more

than $750,000;

(b) A manufacturer of bouquets for sale to retailers if the cut

flowers and greens used in such articles are a substantial portion of

the value of the manufactured floral articles;

(c) A manufacturer of floral articles (other than bouquets) for

sale to retailers if the cut flowers and greens used in such articles

are a substantial portion of the value of the manufactured floral

articles;

(d) An auction house that clears the sale of cut flowers and greens

to retailers and exempt handlers through a central clearinghouse;

(e) A distribution center that is owned or controlled by a retailer

if the predominant retail business activity of the retailer is floral

sales. In addition to sales, non-sale transfers of cut flowers and

greens by the distribution center to retail outlets, shall be counted

for the purpose of applying the $750,000 minimum volume rule to the

center and the value of such transfers shall be determined as provided

in Secs. 1208.50 and 1208.57;

(f) An importer that is a qualified handler--a person whose

principal activity is the importation of cut flowers and greens into

the United States (either directly or as an agent, broker, or consignee

of any person or nation that produces or handles cut flowers and greens

outside of the United States for sale in the United States) and who

sells such cut flowers and greens to retailers and exempt handlers or

directly to consumers, if the annual combined value of such sales

determined as provided in Secs. 1208.50 and 1208.57 totals $750,000 or

more;

(g) A producer that is a qualified handler, e.g., a person who

produces cut flowers and greens and who sells such cut flowers and

greens directly to retailers or consumers if the annual combined value

of such sales determined as provided in Secs. 1208.50 and 1208.57

totals $750,000 or more.

Sec. 1208.17 Research.

Research means market research and studies limited to the support

of advertising, market development, and other promotion efforts and

consumer information efforts relating to cut flowers and greens,

including educational activities.

Sec. 1208.18 Retailer.

Retailer means a person that sells cut flowers and greens to

consumers. The term includes:

(a) All retail outlets that sell cut flowers and greens to

consumers including retail florists, supermarkets, and other mass

market retail outlets that sell such flowers or greens, except

distribution centers defined in Sec. 1208.16(e) (i.e., centers that are

owned or controlled by a retailer if the predominant retail business

activity of the retailer is floral sales and whose sales and non-sale

transfers of cut flowers and greens to retail outlets exceeds $750,000,

determined as provided in this subpart) even though such centers may

also make direct sales to consumers.

(b) Distribution centers owned or controlled by a retailer (or

distribution centers owned or controlled cooperatively by a group of

such retailers) when the predominant business activity of the retailer

or retailers is not the sale of cut flowers and greens to consumers;

and

(c) Distribution centers independently owned but operated primarily

to provide food products to retail stores.

Sec. 1208.19 Secretary.

Secretary means the Secretary of Agriculture of the United States

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.

Sec. 1208.20 Substantial portion.

Substantial portion means that portion of the total value of

manufactured floral articles that represents the value of the cut

flowers and greens in such articles (expressed as a percentage factor)

which the Council, with the approval of the Secretary, finds to be

great enough to cause such articles to be classed as cut flowers and

greens under this subpart.

Sec. 1208.21 State.

State means each of the several States of the United States, the

District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth

of the Northern Mariana Islands, the United States Virgin Islands,

Guam, American Samoa, the Republic of the Marshall Islands, the

Federated States of Micronesia, and the Republic of Palau (until such

time as the Compact of Free Association is ratified).

Sec. 1208.22 United States.

United States means the States collectively.

Establishment of the Council

Sec. 1208.30 Establishment and membership of the Council.

(a) A Fresh Cut Flowers and Fresh Cut Greens Promotion Council

which shall be named the National PromoFlor Council is hereby

established to administer the terms and provisions of this subpart. The

Council shall consist of 25 members nominated by the floral industry

and appointed by the Secretary, as provided in this subpart, each of

whom shall have an alternate nominated and appointed in the same manner

as members of the Council are nominated and appointed.

(b) The membership of the Council shall be divided as follows:

(1) 14 members and their alternates shall represent qualified

wholesale handlers of domestic or imported cut flowers and greens;

(2) Three members and their alternates shall represent producers

that are qualified handlers of cut flowers and greens;

(3) Three members and their alternates shall represent importers

that are qualified handlers of cut flowers and greens;

(4) Three members and their alternates shall represent traditional

retailers of cut flowers and greens;

(5) One member and alternate shall represent persons who produce

cut flowers and greens in locations east of the Mississippi River; and

(6) One member and alternate shall represent persons who produce

cut flowers and greens in locations west of the Mississippi River.

Sec. 1208.31 Election and appointment of members and alternates other

than retailers.

(a) PromoFlor Organizing Group, Inc., an industry organizing

committee, is designated as an election committee for the purpose of

receiving the names of individuals who are engaged in the industry and

who are prepared to serve as members (other than retailer members) of

the Council or as alternates if elected as nominees and if selected by

the Secretary for such positions.

(b) The election committee shall, within five (5) days of the

issuance of this subpart and with the assistance of the Secretary,

request the submission of names of candidates for nominees from those

segments of the industry for which nominees must be selected by an

election process. These segments are: qualified wholesale handlers;

importers who are qualified handlers; producers of cut flowers and

greens who are qualified handlers; and producers of cut flowers and

greens without regard to whether they are qualified handlers.

Notification of the industry of the selection process by the election

committee shall be by a news release to industry publications and where

appropriate, newspapers of general circulation. In order to be assured

of a place on the slate of candidates, the names of candidates must be

received by the election committee not later than fifteen (15) days

after the date of the first such news release.

(c) Names of candidates shall be sought for the following seats on

the Council:

(1) 14 members and their respective alternates representing

qualified wholesale handlers of domestic or imported cut flowers and

greens. Two such members and their respective alternates for the United

States at large and two such members and their respective alternates

for each of the following regions:

(i) Region 1 (Pacific): Alaska, California, Hawaii, Oregon,

Washington, the Commonwealth of the Northern Mariana Islands, Guam, the

Federated States of Micronesia, American Samoa, the Republic of the

Marshall Islands, and the Republic of Palau.

(ii) Region 2 (Inter-Mountain): Arizona, Arkansas, Colorado, Idaho,

Kansas, Louisiana, Montana, Nebraska, Nevada, New Mexico, North Dakota,

Oklahoma, South Dakota, Texas, Utah, and Wyoming.

(iii) Region 3 (North Central): Illinois, Indiana, Iowa, Michigan,

Minnesota, Missouri, and Wisconsin.

(iv) Region 4 (Northeast): Connecticut, Maine, Massachusetts, New

Hampshire, New Jersey, New York, Rhode Island, and Vermont.

(v) Region 5 (Mid-Atlantic): Delaware, District of Columbia,

Kentucky, Maryland, Ohio, Pennsylvania, Virginia, and West Virginia.

(vi) Region 6 (Southeast): Alabama, Florida, Georgia, Mississippi,

North Carolina, Puerto Rico, South Carolina, Tennessee, and the United

States Virgin Islands.

(2) Three at-large members and their alternates representing

importers that are qualified handlers of cut flowers and greens.

(3) Three members and their alternates representing producers of

cut flowers and greens that are qualified handlers of cut flowers and

greens. There shall be one such member and alternate from each of the

following production areas:

(i) Production Area 1: California.

(ii) Production Area 2: Alaska, Arizona, Arkansas, Colorado,

Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Michigan,

Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North

Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Washington,

Wisconsin, and Wyoming.

(iii) Production Area 3: Alabama, Connecticut, Delaware, Florida,

Georgia, Kentucky, Maine, Maryland, Massachusetts, Mississippi, New

Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania,

Rhode Island, South Carolina, Tennessee, Vermont, Virginia, and West

Virginia.

(4) Two members and their respective alternates representing

persons who produce cut flowers and greens in locations east and west

of the Mississippi River, respectively. There shall be one such member

and alternate from the east, and one such member and alternate from the

west.

(d) Names of candidates for nominees may be submitted by state,

regional (either regions within a state or regions that include more

than one state as appropriate), or national industry organizations,

provided that the organization has members engaged in the appropriate

segment of the industry and from the region or production area if

applicable, or by petition. The names of candidates submitted by an

industry organization shall be accompanied by statements showing the

role of the organization in the industry and general information about

the membership it represents. No industry organization may submit more

than two names of candidates for each seat on the Council. The names of

candidates submitted by petition shall be accompanied by petitions in

support of such candidate, signed by not less than ten (10) persons

engaged in the appropriate segment of the industry and from the region

or production area, if applicable, that the candidate will represent if

ultimately selected by the Secretary. Submission of names of all

candidates, whether by organizations or by petition, must include a

certification by the candidate that the candidate is within the segment

of the industry and the region or production area for which the

candidate is nominated and, if elected as a nominee and if subsequently

appointed by the Secretary, the candidate is willing to serve as a

member or alternate member on the Council.

(e) The names of candidates so submitted shall be reviewed and

organized by the election committee for the preparation of slates of

candidates. Separate slates for each segment and region of the industry

shall be prepared as appropriate. There must be at least four

candidates for each position on the Council for which nominees must be

selected by election. No candidate may seek nomination for more than

one seat on the Council. In a case where a candidate is nominated more

than once, the election committee will decide which place on the ballot

the candidate's name will appear. If insufficient candidates have been

proposed for any seat, the election committee shall select additional

candidates as required. The slates shall be prepared not later than 5

days after the date for receiving names of candidates by the election

committee.

(f) After all candidates have been listed on the slates of

candidates, the slates shall be supplied to an independent certified

public accounting (CPA) firm contracted by the election committee. The

ballots shall be printed and distributed by the CPA firm by U.S. mail,

or other means selected by the election committee, not later than 15

days after the slates of candidates are received from the election

committee. To the maximum extent practicable, ballots will be

distributed to all persons that will be assessed under this subpart in

the segment of the industry, the region, or in the United States as a

whole, as applicable, to which the ballot pertains. Ballots that are

not returned to the CPA firm within 20 days shall be declared invalid.

The votes for each candidate on the ballots shall be tallied by the CPA

firm at the end of the voting period and the results furnished to the

election committee. The election committee shall issue a news release

setting forth the names of the candidates and the number of votes

received by each candidate within 5 days after the voting period has

ended. Those candidates on each of the ballots who rank first, second,

third, and fourth in the number of votes received for each seat on the

Council shall be declared the nominees for each such seat.

(g) The names of those declared the nominees for each of the seats

on the Council representing the various segments of the industry and

the designated regions or production areas, where applicable, shall be

submitted to the Secretary in order of rank with the number of votes

received by each such nominee shown after the nominee's name and with

the recommendation that the nominee with the most votes for each of

such seats be declared the member of the Council and the nominee with

the next greatest number of votes for each of such seats be declared

the alternate member. The Secretary shall then appoint from the

nominees so provided the members and their alternates for each of such

seats on the Council.

(h) Subsequent elections of nominees and appointment of members and

alternates as terms expire shall be conducted by the Council or the

Council staff in the manner similar to that described above except that

the Council shall act as the election committee for which provision is

made in this section. The nomination and election process shall be

completed at least 90 days before the beginning of each nominee's term

of office.

(i) The Council shall periodically review the cut flower and greens

market in the United States for changes in the geographic distribution

of importing, producing, and marketing facilities and shall, if

appropriate, recommend changes in the regions and production areas

described in this section to the Secretary for approval.

Sec. 1208.32 Designation and appointment of retailer members and

alternates.

(a) Four nominations for one of the traditional retailer members of

the Council and that member's alternate shall be received from the

American Floral Marketing Council (AFMC) or a successor entity.

(b) Four nominations for each of two members of the Council and

their alternates shall be received from national traditional retail

florist organizations other than the AFMC. In order to be eligible to

submit nominations for members and alternates to serve on the Council,

such organizations must certify that their activities and membership

are nationwide in scope. No more than four nominations for each seat

may be submitted by each organization.

(c) The Secretary shall choose from among the names submitted by

the AFMC the names of the member and alternate who shall fill the seat

on the Council representing the AFMC. The Secretary shall choose from

among the names submitted by national traditional retail florist

organizations other than the AFMC the two members and their alternates

who shall fill the other two seats on the Council representing

traditional retailers.

Sec. 1208.33 Failure to nominate.

If any group of qualified wholesale handlers, producers that are

qualified handlers, importers that are qualified handlers, persons who

produce cut flowers and greens, or traditional retailers fails to

nominate individuals for appointments as members or alternates of the

Council, the Secretary may appoint individual(s) from the appropriate

segment(s), region(s), or area(s) of the industry to fill the vacancy

or vacancies. The failure of any nominee to promptly indicate the

nominee's willingness to serve in such manner as may be prescribed by

the Secretary shall be treated as a failure to nominate.

Sec. 1208.34 Term of office and compensation.

(a) The term of office for each member or alternate member of the

Council shall be three years. As provided in the Act, the initial

appointments on the Council shall be as follows: nine of the member

appointments shall be for two-year terms, eight of the appointments

shall be for three-year terms, and eight of the appointments shall be

for four-year terms. Alternate members shall have the same terms of

office as their respective members. The term of office on the initial

Council shall be apportioned as follows:

(1) One of the two qualified wholesale handler members representing

each of Regions 1, 2, 4, and 5 shall serve two-year terms of office;

one of the two qualified wholesale handler members representing each of

Regions 3, 4, and 6 shall serve three-year terms of office; and one of

the two qualified wholesale handler members representing each of

Regions 1, 2, 3, 5, and 6 shall serve four-year terms of office.

(2) The two qualified wholesale handler members representing the

United States at large shall serve terms of office of two years and

three years respectively.

(3) The members representing producers that are qualified handlers

from Production Areas 1 and 2 shall serve three-year terms of office,

and the member representing producers that are qualified handlers from

Production Area 3 shall serve a four-year term of office.

(4) The three members representing importers that are qualified

handlers shall serve terms of office of two, three, and four years

respectively.

(5) The members representing producers that produce cut flowers and

greens east and west of the Mississippi River shall each serve two-year

terms of office.

(6) The member representing retailers nominated by the AFMC shall

serve a two-year term of office. The two members representing retailers

not nominated by the AFMC shall serve three-year and four-year terms of

office respectively.

(b) No member of the Council may serve more than two consecutive

terms of three years, except that any member serving an initial term of

four years or two years may serve an additional term of three years.

(c) The term of office for the initial Council shall begin

immediately following appointment by the Secretary. Time in the interim

period, from appointment until the term begins pursuant to this

section, shall not count towards the initial term of office. Should the

term of office of the initial Council begin later than January 1, all

time until the following January will count toward the terms of office

set out in this section. In subsequent years, the term of office shall

begin on January 1 or such other period which may be recommended by the

Council and approved by the Secretary.

(d) Members of the Council shall serve without compensation, but

each member shall be reimbursed for the expenses incurred in performing

duties as a member of the Council.

Sec. 1208.35 Vacancies.

(a) Should any Council member position become vacant, the alternate

of that member shall automatically assume the position of said member.

Candidates for the vacant alternate member position which resulted from

the alternate filling the vacant member position shall be nominated in

the manner specified in Secs. 1208.31 and 1208.32. Provided, That a

vacancy will not be required to be filled if the unexpired term is less

than six months.

(b) Should the positions of both a member and such member's

alternate become vacant, Candidates to serve the unexpired terms of

office for such member and alternate shall be nominated in the manner

specified in Secs. 1208.31 and 1208.32. Provided, That a vacancy will

not be required to be filled if the unexpired term is less than six

months.

(c) If a member of the Council consistently refuses to perform the

duties of a member of the Council, if a member of the Council fails to

submit reports and remit assessments required under this part, or if a

member of the Council is known to be engaged in acts of dishonesty or

willful misconduct, the Council may recommend to the Secretary that the

member be removed from office. If the Secretary finds that the

recommendation of the Council shows adequate cause, the Secretary shall

remove such member from office. Further, without recommendation of the

Council, a member may be removed by the Secretary upon a showing of

adequate cause, if the Secretary determines that the person's continued

service would be detrimental to the achievement of the purposes of the

Act.

Sec. 1208.36 Procedure.

(a) Thirteen (13) Council members, including alternates acting in

place of members of the Council, shall constitute a quorum: Provided,

That such alternates shall serve only when the member is absent from a

meeting or is disqualified. Any action of the Council shall require the

concurring votes of a majority of those present and voting. At

assembled meetings, all votes shall be cast in person.

(b) In lieu of voting at an assembled meeting, and, when in the

opinion of the chairperson of the Council such action is considered

necessary, or for matters of an emergency nature when there is not

enough time to call an assembled meeting, the Council may act upon a

majority of concurring votes of its members cast by mail, telegraph,

telephone, facsimile, or by other means of communication: Provided,

That each member or alternate acting for a member receives an accurate,

full, and substantially identical explanation of each proposition.

Telephone votes shall be promptly confirmed in writing. All votes shall

be recorded in the Council minutes.

Sec. 1208.37 Executive committee.

(a) The Council is authorized to appoint an executive committee of

not more than nine persons from among its members. Initially, the

executive committee shall be composed of the following:

(1) four members representing qualified wholesale handlers;

(2) two members representing producers that are qualified handlers;

(3) two members representing importers that are qualified handlers;

and

(4) one member representing traditional retailers.

(b) After the initial appointments, each appointment to the

executive committee shall be made so as to ensure that the committee

reflects, to the maximum extent practicable, the membership composition

of the Council as a whole.

(c) Each initial appointment to the executive committee shall be

for a term of two years. After the initial appointments, each

appointment to the executive committee shall be for a term of one year.

(d) The Council may delegate to the executive committee the

authority of the Council under this subpart to hire and manage staff

and conduct the routine business of the Council consistent with such

policies as are determined by the Council.

Activities of the Council

Sec. 1208.40 Duties of the Council.

The Council shall have the following duties, in addition to the

duties specified in other sections of this subpart:

(a) Administer this subpart in accordance with the terms and

provisions of this subpart;

(b) Make rules and regulations to effectuate the terms and

provisions of this subpart;

(c) Appoint members of the Council to serve on the executive

committee, as provided in Sec. 1208.37;

(d) Employ such persons as the Council determines are necessary,

and set the compensation and define the duties of the persons;

(e) Develop budgets for the implementation of this subpart and

submit the budgets to the Secretary for approval, and propose and

develop (or receive and evaluate), approve, and submit to the Secretary

for approval plans and projects for cut flowers and greens promotion,

consumer information, or related research;

(f) Implement plans and projects for cut flowers and greens

promotion, consumer information, or related research, or contract or

enter into agreements with appropriate persons to implement the plans

and projects and pay the costs of the implementation of contracts and

agreements with funds received under this subpart;

(g) Keep minutes, books, and records which clearly reflect all of

the acts and transactions of the Council. Minutes of all meetings shall

be promptly provided to the Secretary;

(h) Evaluate ongoing and completed plans and projects for cut

flowers and greens promotion, consumer information, or related

research;

(i) Receive, investigate, and report to the Secretary complaints of

violations of this subpart and direct that the staff of the Council

periodically review the list of importers of cut flowers and greens

provided by the Customs Service to determine whether persons on the

list are subject to this subpart;

(j) Recommend to the Secretary amendments to this subpart;

(k) Invest, pending disbursement under a plan or project, funds

collected through assessments only in: Obligations of the United States

or any agency of the United States, general obligations of any State or

any political subdivision of a State, any interest-bearing account or

certificate of deposit of a bank that is a member of the Federal

Reserve System, or obligations fully guaranteed as to principal and

interest by the United States. Income from any such invested funds may

be used only for a purpose for which the invested funds may be used.

(l) Prepare and submit to the Secretary such reports as may be

prescribed for appropriate accounting with respect to the receipt and

disbursement of funds entrusted to the Council monthly, or at such

times as prescribed by the Secretary.

Monthly financial statements shall be submitted to the Department

and shall include at least:

(1) A balance sheet, and

(2) An expense budget comparison showing expenditures during the

month, year-to-date expenditures, and an unexpended budget. Upon

request, a summary of checks issued by the Council is to be made

available. Reports shall be submitted within 30 days after the end of

each month.

(m) To cause the books of the Council to be audited by an

independent certified public accountant at the end of each fiscal

period, and at such other times as the Council or the Secretary may

deem necessary. The report of each audit shall show the receipt and

expenditure of funds collected pursuant to this part, and shall be

submitted to the Secretary.

(n) To give the Secretary the same notification, written or oral,

as provided to Council members concerning all conference calls and

meetings, including executive, advisory, subcommittee, and other

meetings related to Council matters, and to grant the Secretary access

to all such calls and meetings;

(o) To follow the Department's equal opportunity/civil rights

policies; and

(p) Provide the Secretary such information as the Secretary may

require.

Sec. 1208.41 Budgets and expenses.

(a) The Council shall promptly adopt and forward to the Secretary

for approval its determination of the beginning and ending dates of an

annual fiscal period to be used by the Council for budgeting and

accounting purposes.

(b) The Council shall submit annual budgets of its anticipated

expenses and disbursement in the administration of this subpart,

including the projected costs for the promotion of cut flowers and

greens, consumer information, and related research plans and projects

to the Secretary for approval. The first budget, which shall be

submitted promptly after the effective date of this subpart, shall

cover such period as may remain before the beginning of the next fiscal

year. If such fiscal period is 90 days or less, the first budget shall

cover such period, as well as the next fiscal year. Thereafter, the

Council shall submit budgets for each succeeding fiscal year not less

than 30 days before the beginning of such fiscal year.

(c) The Council is authorized to incur such expenses (including

provision for a reasonable reserve for operating contingencies) as the

Secretary finds are reasonable and likely to be incurred by the Council

for its maintenance and functioning and to enable it to exercise its

powers and perform its duties in accordance with this subpart. Expenses

authorized in this paragraph shall be paid from assessments collected

pursuant to Sec. 1208.50, or other funds available to the Council.

(d) The Council shall reimburse the Secretary, from assessments

collected pursuant to Sec. 1208.50, or from other funds available to

the Council, for administrative costs incurred by the Department to

carry out its responsibilities pursuant to this subpart after the

effective date of this subpart.

(e) The Council shall establish an interest-bearing escrow account

with a bank that is a member of the Federal Reserve System and shall

deposit in such account an amount equal to the percentage determined by

the Council to be held in reserve for the payment of refunds pursuant

to Sec. 1208.55.

(f) The Council may, with the approval of the Secretary, borrow

money for the payment of administrative expenses, subject to the same

fiscal, budget, and audit controls as other funds of the Council.

Sec. 1208.42 Plans, projects, budgets, and contracts.

The Council shall develop and implement plans and projects for the

promotion of, and the dissemination of information about, cut flowers

and greens, as well as for research related to cut flowers and greens

in accordance with the following:

(a) The Council shall develop, or contract for the development of,

plans and projects for advertising, sales promotion, other promotion,

and for dissemination of consumer information, with respect to cut

flowers and greens, and may disburse such funds as necessary for these

purposes after such plans or projects have been submitted to, and

approved by, the Secretary. Any such plan or project shall be directed

toward increasing the general demand for cut flowers and greens and

shall not make reference to a private brand or trade name, point of

origin, or source of supply, except that the Council may offer such

plans and projects of the Council for use by commercial parties such as

local, regional, State, or national floral industry organizations, and

then only under terms and conditions prescribed by the Council and

approved by the Secretary. No plan or project may make use of unfair or

deceptive acts or practices with respect to quality or value.

(b) The Council shall develop, or contract for the development of,

plans and projects for research on the development of both established

and new markets for cut flowers and greens and for research with

respect to distribution, sale, marketing, use, and promotion of cut

flowers and greens, as well as the dissemination of consumer

information concerning cut flowers and greens. The Council is

authorized to develop, or contract for the development of, such plans

and projects for other research with respect to the marketing,

promotion, and dissemination of information about cut flowers and

greens as it finds appropriate. The Council may disburse such funds as

necessary for these purposes after such plans or projects have been

submitted to, and approved by, the Secretary.

(c) The Council shall submit to the Secretary, for approval before

implementation, any contracts for development of plans and projects, as

well as such plans and projects as may be developed by or approved by

the Council for advertising, promotion, dissemination of information,

and research. All such submissions to the Secretary shall be

accompanied by a proposed budget showing the estimated expense to be

incurred and the availability of revenue from which such expense may be

paid. On approval of any such submission, the Council may proceed with

the contract, plan or project and incur the expenses necessary to carry

it out. Contracts or agreements to be submitted to the Secretary and

entered into if approved by the Secretary shall, among such other

matters as may be required, provide that:

(1) The contracting or agreeing party shall develop and submit to

the Council a plan or project, together with a budget that includes the

estimated costs to be incurred for the plan or project;

(2) the plan or project shall become effective on the approval of

the Secretary; and

(3) the contracting or agreeing party shall:

(i) keep accurate records of all of the transactions of the party;

(ii) account for funds received and expenses;

(iii) make periodic reports to the Council of activities conducted;

and

(iv) make such other reports as the Council or the Secretary may

require.

(d) The Council, from time to time, may seek advice from and

consult with experts from the production, import, wholesale, and retail

segments of the cut flowers and greens industry to assist in the

development of promotion, consumer information, and related research

plans and projects. For these purposes, the Council may appoint special

committees composed of persons other than Council members. A committee

so appointed may not provide advice or recommendations to a

representative of an agency, or an officer, of the Federal Government,

and shall consult directly with the Council.

Sec. 1208.43 Other contracts and agreements.

The Council may enter into contracts or agreements for

administrative services, including such contracts of employment, as may

be required to conduct its business in accordance with such fiscal

period budgets as may have been approved by the Secretary. To the

extent appropriate to the contract involved, contracts entered into by

the Council under the authority of this section shall contain

provisions comparable to those described in Sec. 1208.42(c).

Assessments

Sec. 1208.50 Assessments.

(a) Each qualified handler, as defined in Sec. 1208.16--including

but not limited to wholesale handlers, as defined in Sec. 1208.16(a);

bouquet manufacturers as described in Sec. 1208.16(b); manufacturers of

floral articles, as described in Sec. 1208.16(c); auction houses that

clear sales of cut flowers and greens, as described in Sec. 1208.16(d);

distribution centers owned or controlled by retailers if the principal

business activity is floral sales, as described in Sec. 1208.16(e);

importers that are qualified handlers as defined in Sec. 1208.16(f);

producers that are qualified handlers as defined in Sec. 1208.16(g)--

shall pay to the Council an assessment in an amount determined in

accordance with this subpart, on each sale of cut flowers and greens to

a retailer or an exempt handler (as defined in Sec. 1208.8) and on each

non-sale transfer of cut flowers and greens to a retailer by a

qualified handler that is a distribution center; as well as each direct

sale of cut flowers and greens to a consumer by a producer that is a

qualified handler, or by an importer that is a qualified handler. Such

assessments shall be remitted by each qualified handler to the Council

or its agent within 60 days after the end of the month in which the

sale or non-sale transfer subject to assessment under this subpart took

place. Such assessments shall be paid at the following rates:

(1) During the first three years after the effective date of this

subpart:

(i) Except as provided in paragraph (a)(1)(ii) of this section, the

rate shall be one-half of 1 (0.5) percent of the gross sales price of

the cut flowers and greens sold;

(ii) In the case of non-sale transfers to a retailer by a qualified

handler that is a distribution center and in the case of direct sales

by importers or producers, the rate shall be one-half of 1 (0.5)

percent of the amount of each transaction's valuation for assessment as

provided in paragraph (b);

(2) After the first three years that this subpart is in effect, the

uniform assessment rate may be increased or decreased annually by not

more than one-quarter of 1 (0.25) percent of the gross sales price of a

product sold; or in the case of other transactions the amount of such

transactions, except that the assessment rate may not exceed 1 percent

of the gross sales price or the transaction amount. Changes in the rate

of assessment may only be made if such changes are adopted by a two-

thirds majority vote of the Council and approved by the Secretary

(after public notice and opportunity for comment as provided in the

Act) as being necessary to carry out the objectives of the Act. Any

such change so approved by the Secretary may be put into effect without

a referendum but shall be announced not less than 30 days prior to the

beginning of a fiscal year.

(b) Each non-sale transfer of cut flowers and greens to a retailer

from a qualified handler that is a distribution center shall be treated

as a sale of cut flowers and greens to a retailer and shall be

assessable. Each direct sale of cut flowers and greens to a consumer by

a producer or an importer who is a qualified handler shall be

assessable. These transactions shall be determined to have the

following valuations for assessment purposes:

(1) In the case of a non-sale transfer of cut flowers and greens

from a distribution center that is a qualified handler and each direct

sale of cut flowers and greens to a consumer by an importer that is a

qualified handler, the amount of the valuation of the cut flowers and

greens for assessment purposes shall be the price paid by the

distribution center or importer to acquire the cut flowers and greens,

and determined by multiplying the acquisition price by a uniform factor

of 1.43 to represent the markup of a wholesale handler on a sale to a

retailer.

(2) In the case of a direct sale to a consumer by a producer who is

a qualified handler, the valuation of the cut flowers and greens for

assessment purposes shall be equal to an amount determined by

multiplying the price paid by the consumer by a uniform factor of 0.50

to represent the cost of producing the article and the markup of a

wholesale handler on a sale to a retailer.

(3) The Council may consider and adopt changes in the uniform

factors specified in subparagraphs (1) and (2) above. Any such change

shall not become effective until it has been adopted by a majority vote

of the Council and approved by the Secretary after public notice and

opportunity to comment on such change as provided in the Act. Changes

so adopted and approved shall become effective at the beginning of the

next fiscal year.

(c) The collection of assessments shall commence on or after a date

established by the Secretary, and shall continue until terminated by

the Secretary. If the Council is not constituted on the date the first

assessments are to be remitted, the Secretary shall have the authority

to receive assessments on behalf of the Council and may hold such

assessments in an interest bearing account until the Council is

constituted, and the funds may be transferred to the Council.

(d) No assessments may be levied on any sale of cut flowers and

greens for export from the United States. The Council is authorized to

establish procedures for the verification of exports.

(e) In general, assessment funds (less refunds, if any) shall be

used:

(1) For payment of costs incurred in implementing and administering

this subpart;

(2) To provide for a reasonable reserve to be maintained from

assessments to be available for contingencies; and

(3) To cover the administrative costs incurred by the Secretary in

implementing and administering this Act.

Sec. 1208.51 Influencing governmental action.

No funds collected by the Council shall in any manner be used for

the purpose of influencing legislation or government action or policy,

except to develop and recommend to the Secretary amendments to this

subpart.

Sec. 1208.52 Charges for late payments.

Any assessment due the Council pursuant to Sec. 1208.50 that is not

paid on time shall be increased 1.5 percent each month it remains

unpaid beginning with the day following the date such assessment was

due. If not paid in full, any remaining amount due, which shall include

any unpaid charges previously made pursuant to this section, shall be

increased at the same rate on the corresponding day of each month

thereafter until paid. For the purpose of this section, any assessment

that was determined at a date later than prescribed by this subpart

because of a failure to submit a report when due shall be considered to

have been payable by the date it would have been due if the report had

been filed when due. The timeliness of a payment to the Council shall

be based on the applicable postmark date or the date actually received

by the Council, whichever is earlier.

Sec. 1208.53 Adjustment of accounts.

Whenever the Council or the Secretary determines through an audit

of a person's reports, records, books, or accounts or through some

other means that additional money is due the Council or that money is

due such person from the Council, such person shall be notified of the

amount due. The person shall then remit any amount due the Council by

the next date for remitting assessments. Overpayments shall be credited

to the account of the person remitting the overpayment and shall be

applied against amounts due in succeeding months.

Sec. 1208.54 Refunds of assessments and escrow account.

(a) Any qualified handler may demand and receive from the escrow

account, subject to the limitation on such payments provided in

paragraph (c), a one-time refund of any assessments paid by or on

behalf of the handler if the handler requests the refund before the

initial referendum on this subpart is held and this subpart is rejected

by the voters when it is submitted to the referendum in accordance with

Sec. 1208.60(a). Such a refund will be paid only if all of the

following conditions are met:

(1) The handler has paid the assessments sought to be refunded and

has submitted proof of such payment;

(2) The handler does not support the program established under this

subpart and so states in the handler's demand for a refund;

(3) The handler's demand for a refund is made on a form specified

by the Council and filed not less than 10 days prior to the date when

the initial referendum, conducted pursuant to Sec. 1208.60(a) to

ascertain whether this subpart shall remain in effect, is scheduled to

begin; and

(4) This subpart is not approved by a simple majority of the votes

cast by qualified handlers in the initial referendum.

(b) The Council shall establish an escrow account to be used for

assessment refunds, as needed, and shall place into the account an

amount equal to 10 percent of the total amount of assessments collected

during the period beginning on the date this subpart becomes effective

and ending on the date the results of the initial referendum are issued

and the initial referendum is completed.

(c) If the amount in the escrow account is not sufficient to refund

the total amount of assessments demanded by all qualified handlers

determined eligible for refunds and this subpart is not approved in the

referendum, the Council shall prorate the amount of all such refunds

among all eligible qualified handlers that demand the refund. If there

is any amount in excess of the amount needed to pay refunds and

expenses, it shall be returned pro rata to those who paid assessments.

If this subpart is approved in the referendum, there shall be no

refunds made, and all funds in the escrow account shall be returned to

the Council for use by the Council in accordance with the other

provisions of this subpart.

Sec. 1208.55 Postponement of collections.

(a) The Council may grant a postponement of the payment of an

assessment under this subpart for any qualified handler that

establishes that it is financially unable to make the payment. In order

that a qualified handler that is financially unable to pay an

assessment may have the opportunity to petition the Council to postpone

payment of such an assessment, as provided in the Act, the Council

shall develop forms and procedures for this purpose as expeditiously as

possible and submit them to the Secretary for approval and issuance

after notice and an opportunity for public comment thereon. Such

procedures shall, among other things, require that the handler

demonstrate the handler's inability to pay through the submission of an

opinion prepared by an independent certified public accountant (at the

handler's expense) and any other documentation specified therein to the

effect that the handler is insolvent or will be unable to continue to

operate if the handler is required to pay the assessment when due.

(b) The procedures for obtaining a postponement of payment to be

developed by the Council for submission to the Secretary shall also

include provisions with respect to the period of postponement, the

conditions of payment that may be imposed and the basis, if any, on

which further extensions of the time for payment will be granted so as

to appropriately reflect the demonstrated needs of the qualified

handler.

Sec. 1208.56 Determinations.

(a) The Council is authorized to make the determinations required

by this subpart as to the status of persons as qualified handlers and

exempt handlers including determinations of the status of persons as

qualified wholesale handlers, distribution centers that are qualified

handlers, producers that are qualified handlers, importers that are

qualified handlers, as well as such other determinations of status and

facts as may be required for the effective administration of this

subpart. Based on such determinations, the Council from time to time

shall publish lists of exempt handlers who are not required to pay

assessments, and lists of qualified handlers who are required to pay

assessments under this subpart.

(b) For the purpose of applying the $750,000 annual sales

limitation to a specific person in order to determine the status of the

person as a qualified handler or an exempt handler or to a specific

facility in order to determine the status of the facility as an

eligible separate facility for the purpose of referenda, the Council is

authorized to determine the annual sales volume of a person or

facility.

(c) Any such determination shall be based on the sales of cut

flowers and greens by the person or facility during the most recently-

completed calendar year, except that in the case of a new business or

other operation for which complete data on sales during all or part of

the most recently-completed calendar year are not available to the

Council, the determination may be made using an alternative time period

or other alternative procedures as the Council may find appropriate. In

making such determinations, the Council is authorized to make

attributions in accordance with the following rules and for the purpose

of determining the annual sales volume of a person or a separate

facility of a person, sales attributable to a person shall include:

(1) In the case of an individual, sales attributable to the spouse,

children, grandchildren, parents, and grandparents of the person;

(2) In the case of a partnership or member of a partnership, sales

attributable to the partnership and other partners of the partnership;

(3) In the case of an individual or a partnership, sales

attributable to any corporation or other entity in which the individual

or partnership owns more than 50 percent of the stock or (if the entity

is not a corporation) that the individual or partnership controls; and

(4) In the case of a corporation, sales attributable to any

corporate subsidiary or other corporation or entity in which the

corporation owns more than 50 percent of the stock or (if the entity is

not a corporation) that the corporation controls.

(d) The Council is also authorized to attribute any stock ownership

interest as may be required to carry out this subpart. In doing so a

stock ownership interest in the entity that is owned by the spouse,

children, grandchildren, parents, grandparents, or partners of an

individual, or by a partnership in which a person is a partner, or by a

corporation more than 50 percent of the stock of which is owned by a

person, shall be treated as owned by the individual or person.

(e) For the purpose of this subpart, the Council, with the approval

of the Secretary, may require a person who sells cut flowers and greens

to retailers to submit reports to the Council on annual sales by the

person and on stock ownership.

Suspension or Termination

Sec. 1208.60 Suspension and termination.

If the Secretary finds that this subpart, or any provision of this

subpart, obstructs or does not tend to effectuate the policy of the

Act, the Secretary shall terminate or suspend the operation of this

subpart or the provision of this subpart under such terms as the

Secretary determines are appropriate. Such termination or suspension

shall not be considered an order within the meaning of such term in the

Act.

Sec. 1208.61 Proceedings after termination.

(a) Upon the termination of this subpart, the Council shall

recommend not more than five of its members to the Secretary to serve

as trustees for the purpose of liquidating the assets of the Council.

Such persons, upon designation by the Secretary, shall become trustees

of all the funds and property owned, in the possession of, or under the

control of the Council, including any claims unpaid or property not

delivered, or any other claim existing at the time of such termination.

(b) The trustees shall:

(1) Continue in such capacity until discharged by the Secretary;

(2) Carry out the obligations of the Council under any contract or

agreement entered into by it under this subpart;

(3) Make refunds from the escrow account to those persons who

applied for refunds of assessments paid and who are eligible to receive

such refunds. Such refunds shall be made within 30 days after the

referendum results are issued.

(4) From time to time account for all receipts and disbursements,

and deliver all property on hand, together with all books and records

of the Council and of the trustees, to such persons as the Secretary

may direct; and

(5) Upon the request of the Secretary, execute such assignments or

other instruments necessary or appropriate to vest in such persons full

title and right to all of the funds, property, and claims vested in the

Council or the trustees under this subpart.

(c) Any person to whom funds, property, or claims have been

transferred or delivered under this subpart shall be subject to the

same obligations imposed upon the Council 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

used, to the extent practicable, in the interest of continuing one or

more of the promotion, research, consumer information, or industry

information programs, plans, or projects authorized under this subpart.

Sec. 1208.62 Effect of termination or amendment.

Unless otherwise expressly provided by the Secretary, the

termination of this subpart or of any regulation or rule issued under

this subpart, or the issuance of any amendment to such provisions,

shall not:

(a) Affect or waive any right, duty, obligation, or liability that

shall have arisen or may hereafter arise in connection with any

provision of this subpart or any such regulation or rule;

(b) Release or extinguish any violation of this subpart or any such

regulation or rule; or

(c) Affect or impair any rights or remedies of the United States,

the Secretary, or any person with respect to any such violation.

Reports, Books, and Records

Sec. 1208.70 Books, records, reports, cost control, and audits of the

Council.

(a) The Council shall maintain the books and records that the

Secretary may require to account for the receipt and disbursement of

all funds entrusted to the Council in accordance with the provisions of

this subpart, and shall prepare and submit to the Secretary, from time

to time as prescribed by the Secretary, all reports that the Secretary

may require.

(b) The Council shall, as soon as practicable after the effective

date of this subpart and after consultation with the Secretary and

other appropriate persons, implement a system of cost controls based on

normally accepted business practices that will ensure that the annual

budgets of the Council include only amounts for administrative expenses

that cover the minimum administrative activities and personnel needed

to properly administer and enforce this subpart, and conduct,

supervise, and evaluate plans and projects under this subpart.

(c) The Council shall cause the books and records of the Council to

be audited by an independent auditor that is a certified public

accountant at the end of each fiscal year. All audits must be performed

in accordance with either standards issued by the American Institute of

Certified Public Accountants or by the General Accounting Office. A

report of each audit shall be submitted to the Secretary.

Sec. 1208.71 Reports, books, and records of persons subject to this

subpart.

(a) Each qualified handler shall prepare and file reports

containing such information as may be required by the Council with the

approval of the Secretary. Such information shall include:

(1) Data showing the volume of sales and non-sale transfers of cut

flowers and greens made during the reporting period;

(2) The amount of the assessment on such sales or non-sale

transfers; and

(3) Any other data that may be required by the Council with the

approval of the Secretary.

(b) Each person subject to this subpart shall maintain and make

available for inspection by agents of the Council and the Secretary

such books and records as are determined by the Council with the

approval of the Secretary, as necessary to carry out the provisions of

this subpart and the regulations issued hereunder, including such

records as are necessary to verify any reports required. Such records

shall be retained for at least two years beyond the fiscal period of

their applicability.

Sec. 1208.72 Confidential treatment.

(a) Information obtained from books, records, or reports required

to be maintained or filed under the Act and this subpart shall be kept

confidential by all persons, including agents and former agents of the

Council, all officers and employees and all former officers and

employees of the Department, and by all officers and employees and all

former officers and employees of contracting agencies having access to

such information, and shall not be available to Council members. Only

those persons having a specific need for such information to

effectively administer the provisions of this subpart shall have access

to such information. In addition, only such information so furnished or

acquired as the Secretary deems relevant shall be disclosed by them,

and then only in a suit or administrative hearing brought at the

discretion, or upon 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 paragraph shall be deemed to prohibit:

(1) The issuance of general statements, based upon the reports, of

the number of persons subject to this subpart or statistical data

collected from such reports, which statements do not identify the

information furnished by any such persons, and

(2) The publication, by direction of the Secretary, of the name of

any individual, group of individuals, partnership, corporation,

association, cooperative, or other entity that has been adjudged to

have violated this subpart, together with a statement of the particular

provisions of the subpart so violated.

(b) No information on how a person voted in a referendum conducted

under the Act shall be made public.

Miscellaneous

Sec. 1208.80 Right of the Secretary.

All fiscal matters, programs or projects, by-laws, rules or

regulations, reports, or other substantive actions proposed and

prepared by the Council shall be submitted to the Secretary for

approval.

Sec. 1208.81 Personal liability.

No member or employee of the Council shall be held personally

responsible, either individually or jointly, in any way whatsoever, to

any person for errors in judgement, mistakes, or other acts of either

commission or omission of such member or employee under this subpart,

except for acts of dishonesty or willful misconduct.

Sec. 1208.82 Patents, copyrights, inventions, publications, and

product formulations.

Any patents, copyrights, inventions, publications, or product

formulations developed through the use of funds received by the Council

under this subpart shall be the property of the United States

Government as represented by the Council and shall, along with any

rents, royalties, residual payments, or other income from the rental,

sale, leasing, franchising, or other uses of such patents, copyrights,

inventions, publications, or product formulations, inure to the benefit

of the Council. Upon termination of this subpart, Sec. 1208.62 shall

apply to determine disposition of all such property.

Sec. 1208.83 Amendments.

Amendments to this subpart may be proposed, from time to time, by

the Council or by any interested person affected by the provisions of

the Act, including the Secretary.

Sec. 1208.84 Separability.

If any provision of this subpart is declared invalid, or the

applicability thereof 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. 1208.85 OMB control numbers.

The control number assigned to the information collection

requirements by the Office of Management and Budget pursuant to the

Paperwork Reduction Act of 1980, Public Law 96-511, is OMB number 0581-

0096, except Council member nominee information sheets are assigned OMB

number 0505-0001.

Proposal II

2. Part 1208 is proposed to be added as set forth above, with the

exception of Sec. 1208.32, which would read as follows:

Sec. 1208.32 Designation and appointment of retailer members and

alternates.

(a) Nominations for one of the traditional retailer members of the

Council and that member's alternate shall be made by the American

Floral Marketing Council (AFMC) or a successor entity.

(b) Nominations for one of the traditional retailer members of the

Council and that member's alternate shall be made by the Florists'

Transworld Delivery Association, which is the largest traditional

retail florist organization and expends the largest amount of marketing

funds in the industry, or a successor entity.

(c) Nominations for one of the traditional retailer members of the

Council and that member's alternate shall be made by a coalition of

traditional retail florist organizations defined as follows:

(1) For the purpose of nominating members to the Council, a

traditional retail florist organization is defined as an organization,

including its committees and/or subsidiaries, whose voting membership

(i) exceeds 1,000, (ii) is comprised of more than 75 percent

traditional cut flowers and greens retailers, and (iii) expends a

portion of its annual revenue on marketing of fresh cut flowers and

greens.

(2) For the purpose of nominating members to the Council, a

traditional cut flowers and greens retailer is defined as a small

business establishment operating from owned or leased premises and

deriving 40 percent of its total volume of sales from the sale of fresh

cut flowers and greens.

(d) No traditional retail florist organization, including AFMC,

shall be eligible to submit nominees for more than one of the three

Council retailer member positions.

Proposal III

3. Part 1208 is proposed to be added as set forth above, with the

exception of Secs. 1208.21 and 1208.22, which would read as follows:

Sec. 1208.21 Traditional retailer.

Traditional retailer means any retailer, as defined in

Sec. 1208.17, whose primary business is the sale of floral products,

including fresh cut flowers and cut greens, or who has a specific

department dedicated to the sale of floral products, including fresh

cut flowers and cut greens.

Sec. 1208.22 Traditional retail florist organization.

Traditional florist organization means membership organizations of

traditional retailers with activities and membership which are

nationwide in scope.

Dated: June 22, 1994.

Lon Hatamiya,

Administrator.

[FR Doc. 94-15643 Filed 6-27-94; 8:45 am]

BILLING CODE 3410-02-P