Popcorn Promotion, Research, and Consumer Information Order; Referendum Procedures

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

Department of Agriculture (Department) will use in conducting the

referendum to determine whether the issuance of the proposed Popcorn

Promotion, Research, and Consumer Information Order is favored by a

majority of the processors voting in the referendum and that the

majority process more than 50 percent of the popcorn certified as being

processed by those voting in the referendum.

DATES: This rule is effective from March 22, 1997, through August 31,

1997.

FOR FURTHER INFORMATION CONTACT: Stacey L. Bryson, Research and

Promotion Branch, Fruit and Vegetable Division, AMS, USDA, Room 2535-S,

P.O. Box 96456, Washington, D.C. 20090-6456. Telephone (888) 720-9917

or (202) 720-6930.

SUPPLEMENTARY INFORMATION: A referendum will be conducted among

eligible popcorn processors to determine whether the issuance of the

proposed Popcorn Promotion, Research, and Consumer Information Order

(Order) (7 CFR part 1215) is favored by a majority of persons voting in

the referendum. The Order is authorized under the Popcorn Promotion,

Research and Consumer Information Act (Act) (Pub. L. 104-427, 7 U.S.C.

7481-7491).

Executive Order 12988

This final rule has been reviewed under Executive Order 12988,

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

This final rule will not preempt any State or local laws, regulations,

or policies, unless they present an irreconcilable conflict with this

rule. In accordance with Sec. 580 of the Act, nothing in the popcorn

statute preempts or supersedes any other program relating to popcorn

promotion organized and operated under the laws of the United States or

any State.

The Act provides that administrative proceedings must be exhausted

before parties may file suit in court. Under section 577 of the Act, 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 has examined the impact of this rule on small

entities. Accordingly, we have performed this Final Regulatory

Flexibility Analysis.

The Act which authorized the creation of a generic program of

promotion and research for popcorn became effective on April 4, 1996.

Section 576 of the Act provides that the Secretary shall conduct a

referendum, within the 60-day period immediately preceding the

effective date of the Order, to determine whether the issuance of the

Order is favored by a majority of the processors voting in the

referendum. Paragraph (2) of section 576 of the Act requires that the

Order become effective only if favored by a majority of the processors

voting in the referendum and if the majority processed more than 50

percent of the popcorn certified as having been processed during the

representative period by the processors voting.

Small agricultural service firms, which would include processors

who would be covered under the proposed Order, have been defined by the

Small Business Administration (13 CFR 121.601) as those whose annual

receipts are less than $5 million. The Department estimates that there

are approximately 35 processors who would pay the assessments out of an

industry of 67 processors in total. Almost 50 percent of the industry

would be exempt from the program; those processors marketing 4 million

pounds or less of popcorn annually would be exempt. Further, only 2 of

the 35 eligible processors have been identified as small entities.

According to the Popcorn Institute, a trade association consisting

of popcorn processors representing the industry, annual sales of

popcorn were 77.240 million pounds less in 1994 than they were in 1993,

when sales totaled approximately 1.156 billion pounds.

The peak period for popcorn sales for home consumption is the fall.

Sales remain constant throughout the winter months and taper off during

the spring and summer.

Almost all of the popcorn consumed throughout the world is grown in

the United States, and Americans consume more popcorn than the citizens

of any other country. Popcorn is grown in 19 states. According to the

latest Census on Agriculture, the top five major popcorn-producing

states in 1992 were, in descending order, Indiana (23 percent),

Illinois (19 percent), Nebraska (18 percent), Ohio (10 percent), and

Missouri (7 percent). This is the most recent official information on

popcorn production released by the U.S. government.

U.S. exports of popcorn totaled nearly 290 million pounds in 1995,

with a value of $64.7 million. According to the Snack Food Association,

retail sales of popcorn in the United States totaled $1.469 billion in

1994.

This rule establishes the procedures under which eligible popcorn

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processors may vote on whether they want the proposed popcorn promotion

and research program to be implemented. The proposed Order is being

published separately in this issue of the Federal Register.

The referendum procedures provide definitions of who is eligible to

vote and instructions for referendum agents regarding subagents,

publicity for the referendum and the results, ballots, voting, ballot

handling and tabulation, reporting, and confidentiality of referendum

materials. The representative period for establishing voter eligibility

for the referendum will be determined by the Secretary in a separate

referendum order published with the proposed order. Persons who have

processed over 4 million pounds of popcorn for market during the

representative period will be eligible to vote. There are an estimated

35 eligible processors of which only two have been identified as small

entities. The referendum will be conducted by mail ballot.

The Department will keep all eligible processors of record informed

throughout the referendum process to ensure awareness and

participation. In addition, trade associations and related industry

media will receive news releases and other information regarding the

referendum process.

Voting in the referendum is optional. However, if processors choose

to vote, the burden of voting would be offset by the benefits of having

the opportunity to vote on whether they want the program.

It is estimated that there are 35 popcorn processors who will be

eligible to vote in the referendum. It will take an average 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 2.9 hours.

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 will provide

easy access to information for potential voters through a toll free

telephone line.

If the program is implemented, the estimated cost in providing the

required information to the Board under the Order by the estimated 67

respondents would be $19.28 per respondent annually. This total has

been estimated by multiplying 129.15 (total burden hours requested) by

$10.00 per hour, a sum deemed to be reasonable if the respondents were

compensated for their time.

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, which

represents the information collection and recordkeeping requirements

that may be imposed by this rule, was approved by OMB on December 16,

1996.

Title: National Research, Promotion, and Consumer Information

Programs.

OMB Number: 0581-0093.

Expiration Date of Approval: October 31, 1997.

Type of Request: Revision of a currently approved information

collection for research and promotion programs.

Abstract: The information collection requirements in this request

are essential to carry out the intent of the Act.

The burden associated with the ballot is as follows:

Estimate of Burden: Public reporting burden for this collection of

information is estimated to average .25 hours per response for each

processor.

Respondents: Processors.

Estimated Number of Respondents: 35.

Estimated Number of Responses per Respondent: 1 every 3 years

(.33).

Estimated Total Annual Burden on Respondents: 2.9 hours.

In the proposed rule published on September 30, 1996, comments were

invited on: (a) Whether the proposed collection of information is

necessary for the proper performance of functions of the Order and the

Department's oversight of the program, including whether the

information will have practical utility; (b) the accuracy of the AMS's

estimate of the burden of the proposed collection of information

including the validity of the methodology and assumption used; (c) ways

to enhance the quality, utility, and clarity of the information to be

collected; and (d) ways to minimize the burden of the collection of

information on those who are to respond, including the use of

appropriate automated, electronic, mechanical, or other technological

collections techniques or other forms of information technology.

By the November 29, 1996, deadline for comments on the information

collections associated with the referendum rules, two comments were

received, from the Popcorn Institute. In its comments, the Institute

states that it agrees with the Department's estimate of the burdens

associated with the ballot. The Institute also states that the ballot

must contain the necessary information to determine whether each voter

is an eligible processor pursuant to the referendum rules. The

Department agrees with this. In fact, paragraph (a)(2) of Sec. 1215.503

of the proposed rule requires the voters to provide the total volume of

popcorn processed during the representative period. Further, all

ballots will contain a certification by the voter that all information

provided on the ballot is correct.

In addition, the Institute recommended that the Department develop

and utilize procedures to verify the information collected by the

anticipated 35 potential respondents. This issue is addressed below in

the discussion of the Institute's comment on the referendum procedures.

The Institute further commented that the burden of voting could be

reduced if the respondents were allowed to utilize electronic means of

communicating their votes to the Department. The Institute states that,

by using electronic procedures, the Department would not have to rely

on conventional mail for the delivery of ballots. It could confirm the

receipt of ballots confidentially and could more easily develop a list

of voters which could be used for public inspection and potential

challenges. Although the Department is receptive to the concept of

utilizing new technological methods for casting votes in the future, we

are not equipped to implement such a method and ensure confidentiality

and the identification of each ballot's origin by electronic means at

this time. Consequently, it is not possible to establish a procedure to

utilize electronic methods during the initial referendum on this

program. The Department believes that mail balloting is the most

efficient and appropriate method for the upcoming referendum. Further,

the popcorn industry will have access to the Agricultural Marketing

Service's web site (http://www.usda.gov/ams/titlepag.htm), which will

provide information about the proposed program and the referendum.

Background

The purpose of the Act is to provide an orderly procedure for

developing and financing an effective and coordinated program of

promotion, research, and consumer information to strengthen the markets

for popcorn. The program would be funded by an assessment of no more

than 8 cents per hundredweight levied on popcorn processors. Processors

who process and market 4 million pounds or less of popcorn annually

would be exempt from paying

[[Page 13535]]

the assessment. Assessments would be used to pay for: promotion,

research, consumer information, and industry information;

administration, maintenance, and functioning of the Popcorn Board which

would operate the program under the Secretary's supervision; and

expenses incurred by the Secretary in implementing and administering

the program, including referendum costs.

This rule will add a new subpart which establishes procedures to be

used in the initial referendum required by the Act. This subpart will

be in effect for the referendum period only and will not be part of the

Code of Federal Regulations. The proposed Order would go into effect

only if the Secretary determines that the Order is approved by no less

than a majority of the processors voting in the referendum and if the

majority processed more than 50 percent of the popcorn certified as

having been processed during the representative period by the

processors voting.

The referendum procedures provide definitions of who is eligible to

vote and instructions for referendum agents regarding subagents,

publicity for the referendum and the results, ballots, voting, ballot

handling and tabulation, reporting, and confidentiality of referendum

materials. The representative period for establishing voter eligibility

for the referendum shall be determined by the Secretary. Persons who

have processed over 4 million pounds of popcorn for market during the

representative period will be eligible to vote. There are an estimated

35 eligible processors. The referendum will be conducted by mail

ballot.

A proposed rule on the Order was published in the September 30,

1996, issue of the Federal Register (61 FR 51046). On the same date, a

proposed rule was published on the referendum procedures (61 FR 51055).

As stated above, the comment period on the information collection

requirements associated with this rule ended on November 29, 1996, and

one comment was received on the information collection requirements.

The comment period on the substance of the referendum procedures ended

on October 30, 1996. One comment was also received, from the Popcorn

Institute, on the procedures.

In its comment on the procedures, the Institute recommends that the

representative period for determining voter eligibility be January 1

through December 31, 1996. This would be the most recent full calendar

year preceding a referendum in 1997. The Institute states that this

representative period will ensure that the information is readily

available for respondents to include on the ballots. The Department

accepts the suggested representative period. As is common practice, the

representative period will be established in the referendum order which

is being published with the proposed order. The referendum order also

establishes the voting period and identifies the referendum agents. The

proposed order and referendum order will be published separately in

this issue of the Federal Register.

In its comment, the Institute also states that it is important that

the rule ensure that those entities that are comprised of multi-

ownership arrangements are entitled to only one vote; however, if two

popcorn companies are owned by the same holding company and both

processing companies will be paying assessments individually under the

proposed program, both entities should be entitled to vote separately.

However, the definition of ``person'' in paragraph (e) of Sec. 1215.501

provides for these situations. Under the definition of ``person'' in

the regulations those entities that are comprised of multi-ownership

arrangements are entitled to only one vote. For example, a partnership

which owns a processing facility would only receive one vote regardless

of the number of partners participating in ownership. However, the

definition also provides that two companies that pay assessments

separately would be entitled to vote separately in the referendum.

Further, the Institute expresses the position that anyone who has

reason to challenge a ballot should be allowed to do so.

To accomplish this, the Institute recommends that Sec. 1215.505 be

expanded to require the referendum agent to ``make available for public

inspection for 10 days following the end of the referendum period a

list of each person casting a vote in the referendum.''

The Department believes that voter eligibility can be

satisfactorily determined without a challenge process. The referendum

will be conducted by mail ballot. Ballots will be sent only to

potential eligible voters. Due to the anticipated small number of

voters, the referendum agents anticipate the ability to determine the

eligibility of a majority of the voters in advance of the referendum.

The referendum agents will also take steps to verify any questionable

ballots as provided in Sec. 1215.505, which has been slightly changed

to clarify terminology. The term ``challenged'' has been changed to

``questioned.'' All ballot handling is done in the presence of an

official from the Department's Office of the Inspector General (OIG),

and the referendum agents or the OIG official may request documentation

from any or all voters. We believe this course of action addresses the

commenters concerns as well as allows for the timely tabulation of

referendum results.

The Institute's final issue relates to the technical classification

of an eligible processor as discussed in Sec. 1215.501. There are

several references to ``ownership of the popcorn process'' or

``ownership of all or a portion of the popcorn process.'' The Institute

believes these references are confusing and recommends that they be

changed to ``ownership of the popcorn processed'' or ``ownership of all

or a portion of the popcorn processed.'' The Department has modified

the proposed rule accordingly.

After consideration of all relevant material presented, it is found

that this final rule effectuates the declared policy of the Act.

Pursuant to 5 U.S.C. 553, it is also found and determined that good

cause exists for not postponing the effective date of this rule until

30 days after publication in the Federal Register because: (1) These

procedures are the same as or similar to referendum procedures for

other research and promotion programs; (2) it is estimated that there

are no more than 35 eligible voters; (3) minimal preparation time is

needed to conduct the referendum; (4) therefore, no useful purpose

would be served in delaying the effective date for 30 days; and (5)

this action better reflects the statutory provisions concerning

issuance of an order.

List of Subjects in 7 CFR Part 1215

Administrative practice and procedure, Advertising, Consumer

information, Marketing agreements, Popcorn, Promotion, Reporting and

recordkeeping requirements.

For the reasons set forth in the preamble, Title 7, chapter XI of

the Code of Federal Regulations is amended as follows:

1. Part 1215, consisting of subpart C, is added to read as follows:

PART 1215--POPCORN PROMOTION, RESEARCH, AND CONSUMER INFORMATION

ORDER

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

the Popcorn Promotion, Research, and Consumer Information Order

Sec.

1215.500 General.

1215.501 Definitions.

1215.502 Voting.

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1215.503 Instructions.

1215.504 Subagents.

1215.505 Ballots.

1215.506 Referendum report.

1215.507 Confidential information.

Authority: 7 U.S.C. 7481-7491.

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

With the Popcorn Promotion, Research, and Consumer Information

Order

Sec. 1215.500 General.

A referendum to determine whether eligible processors favor the

issuance of the Order shall be conducted in accordance with these

procedures.

Sec. 1215.501 Definitions.

Unless otherwise defined below, the definitions 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 Popcorn Promotion, Research, and Consumer

Information Order.

(c) Referendum agent or subagent 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, partnership,

corporation, association, 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 have title to, or leasehold interest in,

processing 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 processing of popcorn and the authority to transfer

title to the popcorn so processed.

(f) Eligible processor means any person who processes over 4

million pounds of popcorn during the representative period and who:

(1) Owns or shares in the ownership of processing facilities and

equipment resulting in the ownership of the popcorn processed;

(2) Rents processing facilities and equipment resulting in the

ownership of all or a portion of the popcorn processed;

(3) Owns processing facilities and equipment but does not manage

them and, as compensation, obtains the ownership of a portion of the

popcorn processed; or

(4) Is a party in a landlord-tenant relationship or a divided

ownership arrangement involving totally independent entities

cooperating only to process popcorn who share the risk of loss and

receive a share of the popcorn processed. No other acquisition of legal

title to popcorn shall be deemed to result in persons becoming eligible

processors.

Sec. 1215.502 Voting.

(a) Each person who is an eligible processor as defined in this

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

period, shall be entitled to cast only one ballot in the referendum.

However, each processor in a landlord-tenant relationship or a divided

ownership arrangement involving totally independent entities

cooperating only to process popcorn, in which more than one of the

parties is a processor, shall be entitled to cast one ballot in the

referendum covering only such processor's share of the ownership.

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

an eligible corporate processor or an administrator, executor, or

trustee of an eligible processing entity may cast a ballot on behalf of

such processing entity. Any individual so voting in a referendum shall

certify that such individual is an officer or employee of the eligible

processor, or an administrator, executor, or trustee of an eligible

processing 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. 1215.503 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 procedures to be followed by

the referendum agent. Such agent shall:

(a) Prepare ballots and related material to be used in the

referendum. Ballot material shall provide for recording essential

information including that needed for ascertaining:

(1) Whether the person voting, or on whose behalf the vote is cast,

is an eligible voter, and

(2) The total volume of popcorn processed by the voting processor

during the representative period.

(b) Give reasonable advance public notice of the referendum by

utilizing available media or public information sources, without

incurring advertising expense, to publicize the dates, method of

voting, eligibility requirements, and other pertinent information. Such

sources of publicity may include, but are not limited to, print and

radio and such other means as the agent may deem advisable.

(c) Mail to each eligible processor whose name and address is known

to the agent, the instructions on voting and a ballot. No person who

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

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

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

of the Office of Inspector General.

(e) Prepare a report on the referendum.

(f) Announce the results to the public.

Sec. 1215.504 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 and all functions which, in the

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

Sec. 1215.505 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. 1215.506 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.

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Sec. 1215.507 Confidential information.

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

to reveal, the vote of any processor in the referendum shall be held

strictly confidential and shall not be disclosed.

Dated: March 18, 1997.

Robert C. Keeney,

Director, Fruit and Vegetable Division.

[FR Doc. 97-7293 Filed 3-20-97; 8:45 am]

BILLING CODE 3410-02-P