Fresh Cut Flowers and Fresh Cut Greens Promotion and Information Order; Referendum Procedures

SUMMARY: The purpose of this rule is to provide procedures that the

Department of Agriculture (Department) will use in conducting the

referendum to determine whether to continue the Fresh Cut Flowers and

Fresh Cut Greens Promotion and Information Order (Order). In order to

continue, the program must be approved by a majority of the qualified

handlers voting in the referendum.

DATES: Comments must be received by April 3, 1997.

ADDRESSES: Interested persons are invited to submit written comments

concerning this proposed rule to: Research and Promotion Branch, Fruit

and Vegetable Division, Agricultural Marketing Service (AMS), USDA,

P.O. Box 96456, Room 2535-S, Washington, DC 20090-6456, fax (202) 205-

2800. Three copies of all written material should be submitted, and

they will be made available for public inspection at the Research and

Promotion Branch during regular business hours. All comments should

reference the docket number and the date and page number of this issue

of the Federal Register. Also send comments regarding the accuracy of

the burden estimate, ways to minimize the burden, including through the

use of automated collection techniques or other forms of information

technology, or any other aspect of this collection of information, to

the above address.

FOR FURTHER INFORMATION CONTACT: Sonia N. Jimenez, Research and

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

96456, Room 2535-S, Washington, DC 20090-6456, telephone (202) 720-9916

or (888) 720-9917.

SUPPLEMENTARY INFORMATION: This proposed rule is issued under the

Fresh Cut Flowers and Fresh Cut Greens Promotion and Information

Act of 1993 (7 U.S.C. 6801-et seq.), hereinafter referred to as the

Act, and the Order.

This rule provides the procedures under which the referendum would

be conducted.

Executive Order 12988

This rule has been reviewed under Executive Order 12988, 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 section 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.

Executive Order 12866 and Regulatory Flexibility Act

This rule has been determined not significant for purposes of

Executive Order 12866, and therefore has not been reviewed by the

Office of Management and Budget.

In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et

seq.), the Agency is required to examine the impact of the proposed

rule on small entities. Accordingly, we have performed this initial

regulatory flexibility analysis.

The Act, which authorizes the creation of a generic program of

promotion and information for fresh cut flowers and greens, became

effective on December 14, 1993.

Section 7 of the Act provides that the Secretary of Agriculture

(Secretary) shall conduct a referendum not later than 3 years after the

issuance of an order to ascertain whether the order then in effect

shall be continued. The Order was issued on December 29, 1994.

Paragraph (a)(2) of section 7 of the Act requires that the Order be

approved by a simple majority of all votes cast in the referendum. In

addition, paragraph (b) of section 7 of the Act specifies that each

qualified handler eligible to vote in the referendum shall be entitled

to cast one vote for each separate facility of the person that is an

eligible separate facility. Eligible separate facility is defined in

paragraph (b)(2) of section 7 of the Act as a handling or marketing

facility of a qualified handler that is physically located away from

other facilities of the qualified handler or that the business function

of the separate facility is substantially different from the functions

of other facilities owned or operated by the qualified handler and the

annual sales of cut flowers and cut greens to retailers and exempt

handlers from the facility are $750,000 or more annually.

Only those wholesale handlers (including but not limited to,

wholesale jobbers, bouquet and floral article manufacturers, auction

houses that clear the sale of cut flowers and greens, and retail

distribution centers), producers and importers who have annual sales of

$750,000 or more of fresh cut flowers and greens and who sell those

products to exempt handlers, retailers, or consumers are considered

qualified handlers and assessed under the Order.

There are approximately 525 wholesale handlers, 84 importers, and

83 producers who are qualified handlers. Small agricultural service

firms, which would include the qualified handlers covered under the

Order, have been defined by the Small Business Administration (SBA) (13

CFR 121.601) as those whose annual receipts are less than $5 million.

Only 127 qualified handlers have been identified to have $5 million in

annual sales.

[[Page 12977]]

It is concluded that the majority of qualified handlers may be

classified as small entities.

Statistics reported by the National Agricultural Statistics Service

show that in 1995 sales of domestic cut flowers and cut greens totaled

approximately $521.3 million at the wholesale level. The leading

producing states by wholesale value are California, with about 49

percent of the total of flower and cut green production, followed by

Florida, Colorado and Hawaii.

Exports in 1995 of U.S. cut flowers were valued at $23.9 million,

with about 64 percent of the value from exports to Canada, and 26

percent of the value from exports to Japan. Exports of cut greens are

not reported by the Bureau of the Census as a separate item; they are

included in a ``basket'' export category that includes other types of

fresh cut plant exports such as branches without flowers or buds,

evergreens, and grasses, which are suitable for ornamental purposes. In

1995 the value of these exports was $45.6 million.

The value of imports of cut flowers in 1995 was $495.2 million.

Major countries exporting cut flowers to the United States, by value,

are Colombia which accounts for about 65 percent of the value, followed

by the Netherlands (11.6 percent), Ecuador (10.2 percent), and Mexico

(3.8 percent). Imports of cut greens are reported in a category that

includes some other fresh cut plant items suitable for ornamental

purposes such as grasses, branches without flowers or buds, and other

plant parts, but excludes fresh evergreens. In 1995 this ``basket

category'' of imports had a value of $24.1 million.

This proposed rule provides the procedures under which qualified

handlers may vote on whether they want the fresh cut flowers and fresh

cut greens promotion and information program to be continued. Qualified

handlers of $750,000 or more in annual gross sales are eligible to vote

in the referendum. There are approximately 692 eligible voters

representing approximately 923 votes some of which represent separate

facilities. It will take an average of 15 minutes for each voter to

read the voting instructions and complete the referendum ballot. The

total burden on the total number of voters will be 77 hours.

The Department would keep all these individuals informed throughout

the referendum process to ensure that they are aware of and are able to

participate in the process. In addition, trade associations and related

industry media would receive news releases and other information

regarding the referendum process.

Voting in the referendum is optional. However, if qualified

handlers choose to vote, the burden of voting would be offset by the

benefits of having the opportunity to vote on whether they want to

continue the program or not.

The Department considered requiring eligible voters to vote in

person at various Department offices across the country. However,

conducting the referendum from one central location by mail ballot is

more cost effective for this program. Also, the Department would

provide easy access to information for potential voters through a toll

free telephone line. It is anticipated that a referendum would be

conducted in June to maximize industry participation.

While we have performed this Initial Regulatory Flexibility

Analysis regarding the impact of this proposed rule on small entities,

in order to have all the data necessary for a more comprehensive

analysis of the effects of this rule on small entities, we are inviting

comments concerning potential effects. In particular, we are interested

in determining the number and kind of small entities that may incur

benefits or costs from implementation of this proposed rule and

information on the expected benefits or costs.

Paperwork Reduction Act

In accordance with the Office of Management and Budget (OMB)

regulations (5 CFR Part 1320) which implements the Paperwork Reduction

Act of 1995 (44 U.S.C. Chapter 35), the referendum ballot has been

approved by the Office of Management and Budget (OMB) and has been

assigned OMB number 0581-0093. It is estimated that there are 692

qualified handlers, representing 923 votes, who will be eligible to

vote in the referendum. It will take an average of 15 minutes for each

voter to read the voting instructions and complete the referendum

ballot. The total burden on the total number of voters will be 77

hours.

Background

The Act authorized the Secretary to establish a national cut

flowers and cut greens promotion and consumer information program. The

program is funded by an assessment of \1/2\ percent of gross sales of

cut flowers and greens which is levied on qualified handlers. The

program is administered by the National PromoFlor Council (Council)

under the supervision of the Department of Agriculture (Department).

Assessments are used to pay for: research, promotion, and consumer

information; administration, maintenance, and functioning of the Board;

and expenses incurred by the Secretary in implementing and

administering the Order, including referendum costs.

Section 7 of the Act requires that a referendum be conducted not

later than 3 years after the issuance of the Order among eligible

qualified handlers of fresh cut flowers and fresh cut greens to

determine whether they favor continuance of the Order. The Order shall

continue in effect if it is approved by a simple majority of qualified

handlers voting in the referendum.

In accordance with section 3(4) of the Act, qualified handler is

defined in the Order as 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 also includes, but is not limited to, the following

entities when they have the requisite volume of $750,000 sales of cut

flowers and greens a year: A wholesale handler; a manufacturer of

bouquets or floral articles for sale to retailers if the cut flowers

and greens used are a substantial portion of the value of the

manufactured floral article; an auction house that clears the sale of

cut flowers and greens to retailers and exempt handlers through a

central clearinghouse; a distribution center that is owned or

controlled by a retailer if the predominant retail business activity is

floral sales; an importer whose principal activity is the importation

of cut flowers and greens into the United States and sells to retailers

and exempt handlers or directly to consumers; and a producer that sells

cut flowers and cut greens directly to retailers or consumers.

Paragraph (b) of section 7 of the Act specifies that each qualified

handler eligible to vote in the referendum shall be entitled to cast

one vote for each separate facility of the person that is an eligible

separate facility. Eligible separate facility is defined in paragraph

(b)(2) of section 7 of the Act as a handling or marketing facility of a

qualified handler that is physically located away from other facilities

of the qualified handler or that the business function of the separate

facility is substantially different from the functions of other

facilities owned or operated by the qualified handler and the annual

sales of cut flowers and cut greens to retailers and exempt handlers

from the facility are $750,000 or more annually.

This proposed rule provides the procedures under which fresh cut

flowers and greens qualified handlers may vote on whether they want the

[[Page 12978]]

fresh cut flowers and greens promotion and consumer information program

to continue. Qualified handlers of $750,000 gross sales annually can

vote in the referendum. There are approximately 692 eligible voters

representing approximately 923 votes.

This proposed rule would add a new subpart which would establish

procedures to be used in the referendum. This subpart would be in

effect for the referendum period only and would not be part of the Code

of Federal Regulations. This subpart covers definitions, voting,

instructions, use of subagents, ballots, the referendum report, and

confidentiality of information.

All written comments received in response to this rule by the date

specified herein will be considered prior to finalizing this action. We

encourage the industry to pay particular attention to the definitions

to be sure that they are appropriate for the fresh cut flowers and

greens industry.

A 15-day comment period is deemed appropriate for this rule

because: (1) These proposed regulations contain provisions that are the

same as or similar to referendum procedures for other research and

promotion programs; (2) the fresh cut flowers and greens industry is

aware that a referendum would be conducted this year; (3) comments

would be addressed before a final rule is published; and (4) this

rulemaking should be expedited in order to conduct a referendum in June

to maximize industry participation.

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.

For the reasons set forth in the preamble, it is proposed that

Title 7 of Chapter XI of the Code of Federal Regulations be amended as

follows:

1. Part 1208 is amended by adding a new Subpart C to read as

follows:

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

INFORMATION ORDER

Subpart C--Procedure for the Conduct of Referenda in Connection With

the Fresh Cut Flowers and Fresh Cut Greens Promotion and Information

Order

Sec.

1208.200 General.

1208.201 Definitions.

1208.202 Voting.

1208.203 Instructions.

1208.204 Subagents.

1208.205 Ballots.

1208.206 Referendum report.

1208.207 Confidential information.

Authority: 7 U.S.C. 6801 et seq.

Subpart C--Procedure for the Conduct of Referenda in Connection

With the Fresh Cut Flowers and Fresh Cut Greens Promotion and

Information Order

Sec. 1208.200 General.

A referendum to determine whether qualified handlers favor

continuance of the Fresh Cut Flowers and Fresh Cut Greens Promotion and

Information Order shall be conducted in accordance with these

procedures.

Sec. 1208.201 Definitions.

Unless otherwise defined below, the definition of terms used in

these procedures shall have the same meaning as the definitions in the

Order.

(a) Administrator means the Administrator of the Agricultural

Marketing Service, with power to redelegate, or any officer or employee

of the Department to whom authority has been delegated or may hereafter

be delegated to act in the Administrator's stead.

(b) Order means the Fresh Cut Flowers and Fresh Cut Greens

Promotion and Information Order.

(c) Referendum agent or agent means the individual or individuals

designated by the Secretary to conduct the referendum.

(d) Representative period means the period designated by the

Secretary.

(e) Person means any individual, group of individuals, firm,

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

cooperative, or any other legal entity. For the purpose of this

definition, the term ``partnership'' includes, but is not limited to:

(1) A husband and wife who has title to, or leasehold interest in,

fresh cut flowers and greens facilities and equipment as tenants in

common, joint tenants, tenants by the entirety, or, under community

property laws, as community property, and

(2) So-called ``joint ventures'', wherein one or more parties to

the agreement, informal or otherwise, contributed capital and others

contributed labor, management, equipment, or other services, or any

variation of such contributions by two or more parties so that it

results in the handling of fresh cut flowers and greens and the

authority to transfer title to the fresh cut flowers and greens

handled.

(f) Eligible qualified handler means a person who is a qualified

handler under Sec. 1208.16 of the Order that operates in the cut

flowers and greens marketing system and sells domestic or imported cut

flowers and greens to retailers and exempt handlers and has annual

sales of cut flowers and greens to retailers and exempt handlers that

are $750,000 or more.

(g) Separate facility means a handling or marketing facility of a

qualified handler that is physically located away from other facilities

of the qualified handler or that the business function of the separate

facility is substantially different from the functions of other

facilities owned or operated by the qualified handler and the annual

sales of cut flowers and cut greens to retailers and exempt handlers

from the facility are $750,000 or more annually.

Sec. 1214.202 Voting.

(a) Each person who is an eligible qualified handler as defined in

this subpart, at the time of the referendum and during the

representative period, shall be entitled to cast one vote for each

separate facility of the person that is an eligible separate facility.

(b) Proxy voting is not authorized, but an officer or employee of

an eligible qualified handler, or an administrator, executor, or

trustee of an eligible qualified handler entity may cast a ballot on

behalf of such qualified handler entity. Any individual so voting in a

referendum shall certify that such individual is an officer or employee

of the eligible qualified handler, or an administrator, executor, or

trustee of an eligible qualified handler entity, and that such

individual has the authority to take such action. Upon request of the

referendum agent, the individual shall submit adequate evidence of such

authority.

(c) All ballots are to be cast by mail.

Sec. 1214.203 Instructions.

The referendum agent shall conduct the referendum, in the manner

herein provided, under the supervision of the Administrator. The

Administrator may prescribe additional instructions, not inconsistent

with the provisions hereof, to govern the procedure to be followed by

the referendum agent. Such agent shall:

(a) Determine the time of commencement and termination of the

period during which ballots may be cast.

(b) Provide ballots and related material to be used in the

referendum. Ballot material shall provide for recording essential

information including that needed for ascertaining whether the person

voting, or on whose

[[Page 12979]]

behalf the vote is cast, is an eligible voter;

(c) Give reasonable advance public notice of the referendum:

(1) By utilizing available media or public information sources,

without incurring advertising expense, to publicize the dates, places,

method of voting, eligibility requirements, and other pertinent

information. Such sources of publicity may include, but are not limited

to, print and radio; and

(2) By such other means as the agent may deem advisable.

(d) Mail to eligible qualified handlers, whose names and addresses

are known to the referendum agent, the instructions on voting, a

ballot, and a summary of the terms and conditions of the Order. No

person who claims to be eligible to vote shall be refused a ballot.

(e) At the end of the voting period, collect, open, number, and

review the ballots and tabulate the results in presence of an agent of

the Office of Inspector General.

(f) Prepare a report on the referendum.

(g) Announce the results to the public.

Sec. 1208.204 Subagents.

The referendum agent may appoint any individual or individuals

deemed necessary or desirable to assist the agent in performing such

agent's functions hereunder. Each individual so appointed may be

authorized by the agent to perform any or all of the functions which,

in the absence of such appointment, shall be performed by the agent.

Sec. 1208.205 Ballots.

The referendum agent and subagents shall accept all ballots cast;

but, should they, or any of them, deem that a ballot should be

questioned for any reason, the agent or subagent shall endorse above

their signature, on the ballot, a statement to the effect that such

ballot was questioned, by whom questioned, the reasons therefore, the

results of any investigations made with respect thereto, and the

disposition thereof. Ballots invalid under this subpart shall not be

counted.

Sec. 1208.206 Referendum report.

Except as otherwise directed, the referendum agent shall prepare

and submit to the Administrator a report on results of the referendum,

the manner in which it was conducted, the extent and kind of public

notice given, and other information pertinent to analysis of the

referendum and its results.

Sec. 1208.207 Confidential information.

The ballots and other information or reports that reveal, or tend

to reveal, the vote of any person covered under the Act and the voting

list shall be held confidential and shall not be disclosed.

Dated: March 14, 1997.

Robert C. Keeney,

Director, Fruit and Vegetable Division.

[FR Doc. 97-6985 Filed 3-17-97; 9:49 am]

BILLING CODE 3410-02-P