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

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URL: https://www.frixlaw.com/law-library/documents/fr%3A97-9569

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** April 14, 1997
- **Citation:** 62 FR 18033

## Text

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1208

[FV-97-701FR]

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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule provides 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 simple majority of the qualified
handlers voting in the referendum.

EFFECTIVE DATE: This rule is effective from May 14, 1997 through August
15, 1997.

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 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 will
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 will 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 has examined the impact of this rule on small
entities. Accordingly, we have performed this Final 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.
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 announced by the Secretary in a separate
referendum order published later in the Federal Register.
There are approximately 525 wholesale handlers, 84 importers, and
83 producers who are qualified handlers. Small agricultural service
firms, which 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.
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. Sales information for 1996 will not be
available until after publication of this rule.
Exports in 1996 of U.S. cut flowers were valued at $29.4 million,
with about 52 percent of the value from exports to Canada, and 16
percent from exports to the Netherlands, about 14 percent from exports
to Germany, and 13 percent

[[Page 18034]]

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 1996 the value
of these exports was $52.0 million. In 1995, the value of exports was
$45.8 million.
The value of imports of cut flowers in 1996 was $557.7 million.
Major countries exporting cut flowers to the United States, by value,
are Colombia which accounts for about 66 percent of the value, followed
by the Netherlands (10 percent), Ecuador (12 percent), Costa Rica (3
percent), and Mexico (3 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 1996 this
``basket category'' of imports had a value of $27.6 million. The value
of imports of cut flowers in 1995 was $495.2 million with a ``basket
category'' of $24.1 million.
This 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 is keeping 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 will 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 will 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 will provide
easy access to information for potential voters through a toll free
telephone line. A referendum will be conducted in June to maximize
industry participation.
Lastly, in the initial regulatory flexibility analysis comments
were requested regarding the impact of the rule on small entities. No
such comments were received.

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 rule provides the procedures under which fresh cut flowers and
greens qualified handlers may vote on whether they want the 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 rule adds a new subpart which establishes procedures to be
used in the referendum. This subpart will be in effect for the
referendum period only and will 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.
A proposed rule was published in the March 19, 1997, issue of the
Federal Register (62 FR 12976). Ten comments were received and are
addressed in this rule. The comments were from qualified

[[Page 18035]]

handlers and the National PromoFlor Council.
A comment was received from a cut flowers and greens wholesale
handler. The commentor expressed the view that it would be
unconstitutional for a company to qualify for more than one vote
because the company has decided to distribute their product through
multiple locations instead of one central location. The commentor
opposes multiple votes for a single company.
As previously explained in this rule, 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 that is an eligible separate facility. Separate facility is
defined in 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 greens to retailers and exempt handlers from
the facility are $750,000 or more annually.
A facility may be located separately from the main operation of the
qualified handlers or the function of the facility may be substantially
different in order to qualify under the definition of separate
facility. Each separate facility must handle $750,000 annually in sales
to retailers and exempted handlers. The concept of one vote per
facility is not unknown for this type of program and referendum. It
became part of the legislation authorizing this program. Alternatively,
the statute could have, but did not, provide for a weighted vote, under
which both the number of votes and annual sales volume of voters, for
and against continuation of the program, would have been tabulated.
The commentor also stated that the Council forces companies under
$750,000 annual sales to pay the assessment because the companies that
they buy from are forced to pay the assessment. In addition, the
commentor stated that it is unconstitutional to force people to pay
their tax and not allow them a vote.
The Act requires qualified handlers of $750,000 annual sales to pay
the assessment. Exempt handlers are not required to pay the assessment.
It is a business decision between the parties involved, and not a
statutory requirement or provision, as to whether the qualified handler
passes the cost to the exempt handler and whether the exempt handler
pays that charge. Each qualified handler as defined under the Act is
eligible to vote in the referendum.
The commentor requested the USDA to stop the Council from using
funds to influence the vote in the referendum. Funds collected under
this program may not be used for activities that are not authorized
under the Act. The Department monitors activities in this area very
carefully. The Council may explain what the program is doing and its
impact on sales. It may also encourage the industry to vote. However,
it may not encourage the industry to vote in a particular way.
Finally, the commentor requested a definition of qualified handler
in the voting process. The definition of qualified handlers used for
the referendum is the same used for determining who is qualified under
the program. The status of the handler, i.e., paying or not paying
assessments, against or in favor of the program, does not affect the
definition of who is a qualified handler under the program and eligible
to vote. Every qualified handler as defined in the Act and the Order is
eligible to vote in the referendum.
Five commentors stated that the timing for the referendum is
unfortunate in that it falls within the peak sales months for the
industry. In addition, the commentors stated that the period from July
to September is ideal for all qualified handlers to have the time to
adequately evaluate the impact of the program. Furthermore, the
commentors requested that the referendum be conducted in September.
The Council, however, submitted a comment in favor of holding the
referendum in June for the following reasons: timely preparation and
submission of a 1998 budget for the Department's approval prior to the
start of the new fiscal period; a June referendum will allow the
Council to buy media in the ``up front market'' when the selection of
commercial slots is better and the prices are discounted; a June
referendum will allow the Council to produce these commercials in an
area at a considerable savings; the handlers are ready for a
referendum; the Council is reporting to the industry the effects of the
program and the return on investment to handlers; qualified handlers
feel well informed about the program and are prepared to make an
informed decision; the Council communicates its programs twice a month
through its newsletter; qualified handlers have received video tapes
and an annual report with information about the program; almost every
trade publication has carried information about the Council for the
last year; the Council is present at every major show and convention to
answer questions; and the Council has a toll free number to answer
questions.
The Department agrees that the referendum must be conducted during
a period that maximizes voting representation. June is after the peak
period of Secretary's Day and Mother's Day. In addition, if the program
is supported in the referendum, conducting the referendum in June will
allow enough time for the Council to plan a budget and marketing plan
for the 1998 fiscal year which begins on October 1, 1997. The
Department believes that conducting the referendum in June will
maximize participation in the referendum and will assist the Council in
the planning of next year's program in the event the program is
approved in the referendum. In addition, the industry is familiar with
the program which has been in effect since December 1994 and has had
time to form a view on whether the program should continue. Further,
voting is not a time-consuming process.
One commentor stated that qualified handlers that paid assessments
in the past and are out of business or whose businesses have changed
and are no longer qualified handlers should be allowed to vote in the
referendum.
A qualified handlers whose gross sales of fresh cut flowers and
greens were $750,000 during the representative period and who is a
qualified handler at the time of the referendum, is eligible to vote.
The representative period, the period used to determine who is an
eligible qualified handler for referendum purposes, will be announced
in a referendum order that will be published separately in the Federal
Register. A handler who is not a qualified handler at the time of the
referendum should not be eligible to vote because this individual is
not currently covered by the program and is not required to pay
assessments into the program.
Two of the comments received addressed issues not directly related
to the referendum procedures. Instead they related to the program in
general including the financial impact of assessments.
Accordingly, no changes to the text of the regulation as proposed
are made in this final rule. After consideration of all relevant
material presented, it is found that this final rule effectuates the
declared policy of the Act.

List of Subjects in 7 CFR Part 1208

Administrative practice and procedure, Advertising, Consumer
information, Marketing agreements, Cut

[[Page 18036]]

flowers, Cut greens, Promotion, Reporting and recordkeeping
requirements.

For the reasons set forth in the preamble, Title 7 of Chapter XI of
the Code of Federal Regulations is 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. 1208.202 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. 1208.203 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 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 the 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

[[Page 18037]]

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: April 8, 1997.
Sharon Bomer Lauritsen,
Acting Director, Fruit and Vegetable Division.
[FR Doc. 97-9569 Filed 4-11-97; 8:45 am]
BILLING CODE 3410-02-P

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A97-9569. Public record. Not legal advice.