Proposed Olive Oil Promotion, Research, and Information Order

SUMMARY: The U.S. Department of Agriculture (the Department or USDA) is

seeking comments regarding the establishment of an industry-funded

promotion, research, and information program for olive oil. A proposed

program--the Olive Oil Promotion, Research, and Information Order

(Order)--was submitted to USDA by the North American Olive Oil

Association. Under the Order, olive oil first handlers and importers

would pay an assessment of $0.01 per pound. First handlers would remit

the assessment on domestic olive oil to the proposed Olive Oil Council

(Council). The assessment on imported olive oil would be collected by

the U.S. Customs Service and remitted to the Council. First handlers of

less than 6,000 pounds of olive oil annually and importers of less than

6,000 pounds of olive oil annually would be exempt from assessment. The

proposed program would be implemented under the Commodity Promotion,

Research, and Information Act of 1996 (Act).

DATES: Comments must be received by October 25, 1999.

ADDRESSES: Interested persons are invited to submit written comments

concerning this proposed rule to the Docket Clerk, Research and

Promotion Branch, Fruit and Vegetable Programs, Agricultural Marketing

Service, USDA, Stop 0244, Room 2535 South Building, 1400 Independence

Avenue, SW, Washington, DC 20250-0244. Comments should be submitted in

triplicate and will be made available for public inspection at the

above address during regular business hours. Comments may also be

submitted electronically to: [email protected]. All comments

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

issue of the Federal Register. A copy of this rule may be found at:

www.ams.usda.gov/fv/rpdocketlist.htm. Pursuant to the Paperwork

Reduction Act (PRA), send comments regarding the accuracy of the burden

estimate, ways to minimize the burden, including the use of automated

collection techniques or other forms of information technology, or any

other aspect of this collection of information to the above address.

Comments concerning the information collection under the PRA should

also be sent to the Desk Officer for Agriculture, Office of Information

and Regulatory Affairs, Office of Management and Budget, Washington, DC

20503.

FOR FURTHER INFORMATION CONTACT: Oliver L. Flake, Research and

Promotion Branch, Fruit and Vegetable Programs, AMS, USDA, Stop 0244,

1400 Independence Avenue, SW, Room 2535 South Building, Washington, DC

20250-0244; telephone (202) 720-9915 or fax (202) 205-2800.

SUPPLEMENTARY INFORMATION: This proposed Order is issued pursuant to

the Commodity Promotion, Research, and Information Act of 1996, 7

U.S.C. 7401-7425; Pub. L. 104-127, enacted April 4, 1996, hereinafter

referred to as the Act.

Executive Order 12988

This proposed rule has been reviewed under Executive Order 12988,

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

Section 524 of the Act provides that the Act shall not affect or

preempt any other Federal or State law authorizing promotion or

research relating to an agricultural commodity.

Under section 519 of the Act, a person subject to the Order may

file a petition with the Secretary stating that the Order, any

provision of the Order, or any obligation imposed in connection with

the Order, is not established in accordance with the law, and

requesting a modification of the Order or an exemption from the Order.

Any petition filed challenging the Order, any provision of the Order,

or any obligation imposed in connection with the Order, shall be filed

within two years after the effective date of the Order, provision, or

obligation subject to challenge in the petition. The petitioner will

have the opportunity for a hearing on the petition. Thereafter, the

Secretary of Agriculture (Secretary) will issue a ruling on a petition.

The Act provides that the district court of the United States for any

district in which the petitioner resides or conducts business shall

have the jurisdiction to review a final ruling on the petition, if the

petitioner files a complaint for that purpose not later than 20 days

after the date of the entry of the Secretary's final ruling.

Executive Order 12866

This proposed 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 (OMB).

Regulatory Flexibility Act

In accordance with the Regulatory Flexibility Act (RFA) [5 U.S.C.

601 et seq.], the Agency is required to examine the impact of the

proposed rule on small entities. The purpose of the RFA is to fit

regulatory actions to the scale of businesses subject to such actions

so that small businesses will not be disproportionately burdened.

The Act authorizes generic programs of promotion, research, and

information for agricultural commodities. Congress found that it is in

the national public interest and vital to the welfare of the

agricultural economy of the United States to maintain and expand

existing markets and develop new markets and uses for agricultural

commodities through industry-funded, government-supervised, generic

commodity promotion programs.

This program is intended to develop and finance an effective and

coordinated program of promotion, research, and consumer information to

maintain and expand the markets for olive oil. A proposal was submitted

by the North American Olive Oil Association (proponent). The proponent

has proposed that olive oil first handlers and importers approve the

program in a referendum in advance of its implementation. Handlers,

importers, and at-large members would serve on the 14-member Council

that would administer the program under USDA's oversight. In addition,

any person subject to the program may file with the Secretary a

petition stating that the Order or any provision is not in accordance

with law and requesting a modification of the Order or an exemption

from the Order. Further, first handlers of less than 6,000 pounds of

olive oil annually and importers of less than 6,000 pounds of olive oil

annually would be exempt from assessment.

The proponent states that, of a total of 43 domestic first

handlers, 13 would be covered by the program. Thirty first handlers

would be exempt from paying assessments under the proposed Order

because they handle less than 6,000 pounds of olive oil annually.

Therefore, the only burden on first handlers of less than 6,000 pounds

would be the filing of a request for an exemption and recordkeeping to

document their exempt status. The required information would be the

minimum necessary to effectively carry out the requirements of the

program, and their use is necessary to fulfill the intent of the Act.

Such records shall be kept for at least two years. The exemption form

can be

[[Page 46755]]

completed with readily available information, and first handlers

already keep records as a normal business practice. The added burden to

the majority of first handlers for an olive oil promotion, research,

and information program is therefore expected to be minimal.

In addition, there is a minimal burden on importers. The import

assessments would be collected by the U.S. Customs Service (Customs) at

time of entry into the United States. Importers would be required to

keep records and to provide information to the Council or the Secretary

when requested. However, it is not anticipated that importers would be

required to submit forms to the Council. Importers who seek nomination

to serve on the Council would be required to complete one form which

would be submitted to the Secretary.

There would be an additional, minimal burden on the first handlers

and importers who seek nomination to serve on the Council and who

choose to vote in referenda.

The estimated annual cost of providing the information to the

Council by an estimated 408 respondents (43 first handlers, 360

importers, and 5 at-large representatives) would be $3,920 or $600 for

all first handlers or $13.95 per first handler, 3,270 for all importers

or $9.08 per importer, and $50 for all at-large representatives or

$5.00 per at-large representative.

The Department would oversee program operations and, if the program

is implemented, would conduct a referendum (1) not later than seven

years after assessments began to determine whether olive oil first

handlers and importers support continuation of the program, (2) at the

request of the Council established under the Order, or (3) at the

request of 10 percent or more of the number of persons eligible to vote

in referenda. Additionally, the Secretary may conduct a referendum at

any time to determine whether the continuation, suspension, or

termination of the Order or a provision of the Order is favored by

those eligible to vote in referenda.

There are approximately 13 first handlers and 320 importers of

olive oil who would be subject to the program. Most of the first

handlers and importers would be classified as small businesses under

the criteria established by the Small Business Administration (SBA) (13

CFR 121.601). The SBA defines small agricultural handlers and importers

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

The United States produces very little olive oil compared to the

amount it imports. Assuming a yield of 18 percent from the olives USDA

reports as utilized for oil, production was 738 tons in 1998, compared

to 648 tons in 1997. Imports, however, were 181,850 tons in 1998 and

180,186 tons in 1997. Italy accounted for 73 percent of imports in

1998, followed by Spain at 11 percent, Turkey at 8 percent, and Greece

at 3 percent. A number of countries provided the remaining 5 percent.

The total value of imports in 1998 was about $347 million, compared to

$432 million in 1997. Exports of oil are significant, but are much

smaller than imports. In 1998, the quantity reported was 8,934 tons,

worth $6 million. This compares to 10,323 tons exported in 1997, worth

$7 million. Exports exceed production because some imports are further

processed or repackaged in the United States and then exported.

According to 1996 importer records, over 300 companies import olive

oil into the United States; however, most of these companies import a

very small quantity of oil with each importing less than 1 percent of

the total amount.

Domestic first handlers of olive oil are located primarily in the

states of Texas and California. We understand that approximately 70

percent of these first handlers are small companies, handling less than

6,000 pounds of olive oil per year and would fall within the exemption

from assessment provided in the proposed Order.

Additionally, according to Nielsen Retail Sales data, the retail

sector accounts for 45 percent of the sales of olive oil, the food

service sector accounts for approximately 50 percent, and the

commercial ingredient sector accounts for about 5 percent of olive oil

consumption.

The proposed Order would authorize an initial assessment rate of

$0.01 per pound paid by first handlers and importers of 6,000 pounds or

more of olive oil annually. The proposed Order authorizes the

assessment rate to be raised to a maximum of $0.02 per pound as long as

the increase in any one year does not exceed $0.002 per pound.

Section 516(a)(1) of the Act provides authority to the Secretary to

exempt from the Order any de minimis quantity of an agricultural

commodity otherwise covered by the Order. As stated above, the

proponent recommends that first handlers and importers of less than

6,000 pounds of olive oil annually be exempt from assessment.

At the initial proposed rate of assessment of $0.01 per pound of

olive oil, the Council would collect between $3 million and $4 million

annually.

USDA will keep all individuals informed throughout the referendum

process to ensure that they are aware of and are able to participate in

the referendum. USDA will publicize information regarding the

referendum process so that trade associations and related industry

media can be kept informed.

In addition, the olive oil industry would nominate first handlers,

importers, and at-large representatives of the olive oil market to

serve as members on the Council. The Council would nominate the public

member of the Council. The Council would recommend the assessment rate,

programs and projects, a budget, and any rules and regulations that

might be necessary for the administration of the program. USDA would

ensure that the nominees represent the olive oil industry in accordance

with the Act and the proposed Order.

Proposed recordkeeping and reporting requirements for the olive oil

promotion, research, and information program would be designed to

minimize the burden on first handlers and importers. The olive oil

promotion program would be designed to strengthen the position of olive

oil in the marketplace, maintain and expand existing markets, and

develop new uses and markets for olive oil.

The estimated annual cost of providing the information to the

Council by an estimated 408 respondents (43 first handlers, 360

importers, and 5 at-large representatives) would be $3,920 or $600 for

all first handlers or $13.95 per first handler, $3,270 for all

importers or $9.08 per importer, and $50 for all at-large

representatives or $5.00 per at-large representative.

With regard to alternatives to this proposed rule, the Act itself

provides for authority to tailor a program according to the individual

needs of an industry. Provision is made for permissive terms in an

order in section 516 of the Act, and other sections provide for

alternatives. For example, section 514 of the Act provides for orders

applicable to (1) producers, (2) first handlers and other persons in

the marketing chain as appropriate, and (3) importers (if imports are

subject to assessment). Section 516 authorizes an order to provide for

exemption of de minimis quantities of an agricultural commodity;

different payment and reporting schedules; types of research,

promotion, and information activities in both domestic and foreign

markets; reserve funds; credits for generic and branded activities; and

the assessment of imports.

[[Page 46756]]

In addition, section 518 of the Act provides for referenda to

ascertain approval of an order to be conducted either prior to its

going into effect or within three years after assessments first begin

under the order. An order also may provide for its approval in a

referendum to be based upon (1) a majority of those persons voting; (2)

persons voting for approval who represent a majority of the volume of

the agricultural commodity; or (3) a majority of those persons voting

for approval who also represent a majority of the volume of the

agricultural commodity. Section 515 of the Act provides for

establishment of a board from among producers, first handlers, others

in the marketing chain as appropriate, and importers, if importers are

subject to assessment.

This proposal includes provisions for market expansion and

improvement; reserve funds; and an initial referendum to be conducted

prior to the Order going into effect. Approval will be based upon a

majority of the eligible persons voting in the referendum.

While we have performed this Initial Regulatory Flexibility

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

in order to obtain all the data necessary for a comprehensive analysis,

we invite comments concerning the potential effects of the proposed

Order. In particular, we are interested in obtaining more information

on the number and kind of small and large entities that may incur

benefits or costs from implementation of the proposed Order and

information on the expected benefits or costs.

Paperwork Reduction Act

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

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

Act of 1995 (44 U.S.C. Chapter 35), the information collection and

recordkeeping requirements that may be imposed by this Order have been

submitted to OMB for approval.

Title: National Research, Promotion, and Consumer Information

Programs.

OMB Number for background form (number 1 below): 0505-0001.

Expiration Date of Approval: July 31, 2001.

OMB Number for other information collections: New Collection.

Expiration Date of Approval: 3 Years from date of approval.

Type of Request: Revision of currently approved information

collections for advisory committees and boards and for research and

promotion programs.

Abstract: The information collection requirements in the request

are essential to carry out the intent of the Act.

In addition, there will be an additional burden on first handlers

and importers who vote in referenda. The referendum ballot, which

represents the information collection requirement relating to

referenda, is addressed in a proposed rule on referendum procedures

which is published separately in this issue of the Federal Register.

Under the proposed program, first handlers would be required to

submit assessments and reports to the Council. Assessments on imports

would be collected by Customs at the time of entry into the United

States. Therefore, it is not anticipated that importers who are subject

to assessments would be required to file any forms with the Council.

Handlers and importers of less than 6,000 pounds of olive oil

annually would be required to file an application in order to receive

an exemption from assessments.

In addition, the proposed Order would impose certain recordkeeping

requirements on first handlers and importers. However, the information

required under the proposed Order could be compiled from records

currently maintained. Such records shall be retained for at least two

years beyond the marketing year of their applicability.

The estimated annual cost of providing the information to the

Council by an estimated 408 respondents (43 first handlers, 360

importers, and 5 at-large representatives) would be $3,920 or $600 for

all first handlers or $13.95 per first handler, $3,270 for all

importers or $9.08 per importer, and $50 for all at-large

representatives or $5.00 per at-large representative.

The proposed Order's provisions have been carefully reviewed, and

every effort has been made to minimize any unnecessary recordkeeping

costs or requirements.

The proposed forms would require the minimum information necessary

to effectively carry out the requirements of the program, and their use

is necessary to fulfill the intent of the Order. Such information can

be supplied without data processing equipment or outside technical

expertise. In addition, there are no additional training requirements

for individuals filling out reports and remitting assessments to the

Council. The forms would be simple, easy to understand, and place as

small a burden as possible on the person required to file the

information.

The information required has been designed to coincide with normal

industry business practices to minimize the burden on the industry. The

required information is not available from other sources because such

information relates specifically to individuals who are covered by the

Order. Therefore, there is no practical method for collecting the

required information without the use of these forms.

Information collection requirements that are included in this

proposal include:

(1) A background information form to be completed by candidates

nominated for appointment to the Council. Estimate of Burden: Public

reporting for this collection of information is estimated to average

0.5 hours per response for each respondent.

Respondents: First handlers, importers, and at-large

representatives.

Estimated Number of Respondents: 13 (average of 28 for the initial

nominations to the Council and approximately 10 respondents annually

thereafter for each 3-year period).

Estimated Number of Responses per Respondent: 1 every 3 years.

Estimated Total Annual Burden on Respondents: 14 hours for the

initial nominations to the Council and 5 hours annually thereafter.

(2) An annual report by each first handler of olive oil. Estimate

of Burden: Public reporting burden for this collection of information

is estimated to average 0.5 hours per each handler reporting on olive

oil handled.

Respondents: Handlers.

Estimated Number of Respondents: 43.

Estimated Number of Responses per Respondent: 1.

Estimated Total Annual Burden on Respondents: 21.5 hours.

(3) An exemption application for first handlers and importers of

less than 6,000 pounds of olive oil annually.

Estimate of Burden: Public reporting burden for this collection of

information is estimated to average .50 hours per response for each

exempt first handler and importer.

Respondents: Exempt first handlers and importers.

Estimated Number of Respondents: 70.

Estimated Number of Responses per Respondent: 1.

Estimated Total Annual Burden on Respondents: 35 hours.

(4) Importer application for reimbursement of assessment.

Estimate of Burden: Public reporting burden for this collection of

information is estimated to average 0.25 hours per importer requesting

a reimbursement.

[[Page 46757]]

Respondents: Importers.

Estimated Number of Respondents: 40.

Estimated Number of Responses per Respondent: 12.

Estimated Total Annual Burden on Respondents: 120 hours.

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

submitted under the Order.

Estimate of Burden: Public recordkeeping burden for keeping this

information is estimated to average 0.5 hours per recordkeeper

maintaining such records.

Recordkeepers: First handlers and importers.

Estimated number of Recordkeepers: 403.

Estimated Total Recordkeeping Hours: 201.5 hours.

Comments are 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 USDA'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

collection techniques or other forms of information technology.

The Act provides for the submission of proposals for a promotion,

research, and information order by industry organizations or any other

interested person affected by an order.

Comments concerning the information collection requirements

contained in this action should reference the docket number and the

date and page number of this issue of the Federal Register. Comments

addressing the nomination background information form should reference

OMB No. 0505-0001. In addition, the docket number, date, and page

number of this issue of the Federal Register also should be referenced.

Comments should be sent to the USDA Docket Clerk and the OMB Desk

Officer for Agriculture at the addresses and within the time frames

listed above. All responses to this notice will be summarized and

included in the request for OMB approval.

OMB is required to make a decision concerning the collection of

information contained in this rule between 30 and 60 days after

publication. Therefore, a comment to OMB is best assured of having its

full effect if OMB receives it within 30 days of publication.

Background

The Act authorizes the Secretary, under a generic authority, to

establish agricultural commodity research and promotion orders. The Act

provides for a number of optional provisions that allow the tailoring

of orders for different commodities. Section 516 of the Act provides

permissive terms for orders, and other sections provide for

alternatives. For example, section 514 of the Act provides for orders

applicable to (1) producers, (2) first handlers and others in the

marketing chain as appropriate, and (3) importers (if importers are

subject to assessment). Section 516 authorizes an order to provide for

exemption of de minimis quantities of an agricultural commodity;

different payment and reporting schedules; types of research,

promotion, and information activities in both domestic and foreign

markets; reserve funds; credits for generic and branded activities; and

the assessment of imports. In addition, section 518 of the Act provides

for referenda to ascertain approval of an order to be conducted either

prior to its going into effect or within three years after assessments

first begin under the order. The order also may provide for its

approval in a referendum based upon different voting patterns. Section

515 provides for establishment of a board from among producers, first

handlers and others in the marketing chain as appropriate, and

importers, if imports are subject to assessment.

This proposed Order includes provisions for market expansion and

improvement, reserve funds, and an initial referendum to be conducted

prior to the Order going into effect. Approval will be based upon a

majority of the eligible first handlers and importers voting in the

referendum.

The proponent has requested the establishment of a national

promotion, research, and information order for olive oil pursuant to

the Act. The Act authorizes the establishment and operation of generic

promotion programs which may include a combination of promotion,

research, industry information, and consumer information activities

funded by mandatory assessments. These programs are designed to

maintain and expand markets and uses for agricultural commodities. This

proposal would provide for the development and financing of an

effective and coordinated program of research, promotion, and

information for olive oil. The purpose of the program would be to

strengthen the position of olive oil in the marketplace and to develop,

maintain, and expand markets for olive oil.

The program would not become effective until approved by first

handlers and importers in a referendum to be conducted by USDA. Section

518 of the Act provides for the Department (1) to conduct an initial

referendum, preceding a proposed order's effective date, among persons

who would pay assessments under the program or (2) to implement a

proposed order, pending the conduct of a referendum, among persons

subject to assessments, within three years after assessments first

begin.

In accordance with section 518(e) of the Act, the results of the

referendum must be determined one of three ways: (1) Approval by a

majority of those persons voting; (2) approval by persons voting who

represent a majority of the volume of the commodity covered by the

program; or (3) approval by a majority of the persons voting who also

represent a majority of the volume of the commodity produced, handled,

or imported by the persons voting.

The proponent proposes that the Department conduct an initial

referendum preceding the proposed Order's effective date and that

approval of the Order be determined by a simple majority of the

eligible first handlers and importers voting in the referendum.

In accordance with the Act, the Department would oversee the

program's operations. In addition, the Act requires the Secretary to

conduct subsequent referenda: (1) Not later than seven years after

assessments first begin under the Order; or (2) at the request of the

Council established under the Order; or (3) at the request of 10

percent or more of the number of persons eligible to vote. The

proponent group has requested that a referendum be conducted not later

than seven years after assessments first begin under the proposed Order

to determine if first handlers and importers want the program to

continue.

In addition to these criteria, the Act provides that the Secretary

may conduct a referendum at any time to determine whether the

continuation, suspension, or termination of the Order or a provision of

the Order is favored by persons eligible to vote.

According to the proponent, the largest obstacle to successful

marketing of olive oil is the widespread lack of awareness of its

characteristics and uses. Most consumers are aware that it costs three

times as much as other food oils, but do not understand the differences

between olive oils (a tree crop product) and vegetable or seed oils

[[Page 46758]]

that are an annual crop and are basically a secondary product to the

high value oilseed meal that is used for animal feed.

Currently, only 22 percent of U.S. households purchase olive oil.

Preliminary research by the proponent indicates that more than 50

percent of those who do not use olive oil say that they do not know how

to use it. This indicates the magnitude of the task for the olive oil

industry.

Similarly, there is also a need for educating the trade audience,

such as chefs and others involved in the food service industry. Such

sectors need more accurate information about the characteristics of

olive oil and the types of foods and recipes that can be enhanced with

olive oil.

Only in recent years has there emerged an awareness of the

nutritional benefits of olive oil. A strong marketing program is needed

to inform consumers about the nutritional benefits of olive oil and how

it can be used within a nutritious diet.

Unlike other oils that are relatively uniform in characteristics,

all extra virgin olive oils, virgin olive oils, and pure olive oils

have different flavor characteristics. Different varieties and growing

regions have a considerable influence on the flavor of oils. An

effective promotion program is needed to educate the public and trade

sectors on the types of olive oils and their uses in various food

preparations.

Currently, no organization in the industry has sufficient resources

to mount an effective information and publicity program for olive oil,

to educate chefs on the uses of olive oil, and to develop the

information that consumers and chefs require.

Most of the companies that market olive oil to the retail sector,

food service sector, and commercial ingredient sector do not have the

resources to promote the product. They look to the industry to develop

the information that consumers and chefs require.

The olive oil industry has attempted to create marketing programs

to no avail. These programs lacked adequate funding to reach the

domestic audience and impact the marketplace for olive oil. For

example, the proponent began a public relations program in 1991 with a

budget of $100,000, but the maximum funds it has been able to raise for

promotion by voluntary contributions has leveled off at $250,000. The

total budget for the proponent is only $325,000. The budget of the

California Olive Oil Council is less than $25,000. The Texas Olive Oil

Council does not have a fixed budget.

Through the promulgation of a research and promotion order, the

industry intends to effectively promote the consumption of olive oil

through publicity on its nutritional and health benefits, its unique

taste characteristics, and its versatility.

In addition, the Order would provide the necessary structure and

budget to support scientific and other forms of research that would

benefit the olive oil industry. For example, a wide variety of research

projects are needed to further study the health and other potential

benefits of olive oil as well as to address issues such as adulteration

and botulism.

Members of the industry have already begun discussions regarding

the types of programs and projects that should be launched nationally

to achieve these objectives. A partial listing of these potential

programs and projects include: Developing a publicity program to reach

consumers, chefs, food writers, cook book authors, and others;

providing representation of the olive oil industry at major food and

nutrition shows; conducting food service and retail recipe contests;

preparing collateral materials for industry; conducting in-store food

demonstrations featuring olive oil; conducting news conferences and

issuing news releases; researching the medical benefits of olive oil;

and researching how olive oil works with different food applications in

the commercial ingredient sector.

Industry support was assessed at a meeting of the Olive Oil Task

Force held in December 1997. This task force is a coalition

representing members of the North American Olive Oil Council, the

California Olive Oil Council, and the Texas Olive Oil Council, as well

as companies in the olive oil business. Members of the retail, food

service, and commercial ingredient sectors were represented on the task

force. These task force members as well as all known companies in the

olive oil industry were invited to the meeting to discuss the benefits

and usefulness of a research and promotion order for olive oil.

At this meeting and through subsequent discussions, participants

agreed that current regional marketing programs will not be successful

in boosting the domestic market for olive oil. In addition,

participants reached a broad-based and almost unanimous agreement that

the olive oil business would substantially benefit from a national

research and promotion order.

All of these factors led the olive oil industry to seek a national

promotion program to find ways to further increase the consumption of

olive oil.

Section 516(f) of the Act allows an order to authorize the levying

of assessments on imports of the commodity covered by the program or on

products containing that commodity, at a rate comparable to the rate

determined for the domestic agricultural commodity covered by the

order. The proponent has proposed that imports be assessed.

The assessment levied on domestically produced and imported olive

oil would be used to pay for promotion, research, and consumer and

industry information as well as administration, maintenance, and

functioning of the Council. Expenses incurred by the Secretary in

implementing and administering the Order, including referenda costs,

also would be paid from assessments.

Sections 516(e)(1) and (2) of the Act state that an Order may

provide credits of assessments for generic and branded activities. The

proponent has elected not to propose credits for generic or branded

activities. Therefore, the terms ``generic activities'' and ``branded

activities'' are not defined in the Order, and credits for assessments

would not be made.

First handlers would be required to pay assessments and submit

reports to the Council. Importers would be required to pay assessments,

which would be collected by Customs at the time of entry into the

United States. Both first handlers and importers would be required to

keep records under the proposed program. First handlers and importers

of less than 6,000 pounds of olive oil annually would be exempt from

assessments. However, they would be required to file an exemption

request in order to be exempt from assessments and reporting under the

Order. First handlers and importers seeking nomination to serve on the

Council would be required to complete a confidential questionnaire to

determine their eligibility to serve.

All information obtained from persons subject to this Order as a

result of recordkeeping and reporting requirements would be kept

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

and of the Council. However, this information may be disclosed only if

the Secretary considers the information relevant, and the information

is revealed in a judicial proceeding or administrative hearing brought

at the direction or on the request of the Secretary or to which the

Secretary or any officer of the Department is a party. Other exceptions

for disclosure of confidential information would include the issuance

of general statements based on reports

[[Page 46759]]

or on information relating to a number of persons subject to an order

if the statements do not identify the information furnished by any

person or the publication, by direction of the Secretary of the name of

any person violating the Order and a statement of the particular

provisions of the Order violated by the person.

The proposed Order provides for the Department to conduct an

initial referendum preceding the proposed Order's effective date.

Therefore, the proposed Order must be approved by a majority of the

eligible first handlers and importers voting in the referendum. The

proposed Order also provides for subsequent referenda to be conducted

(1) no later than seven years after assessments first begin under the

Order, (2) at the request of the Council established under the Order,

or (3) when requested by 10 percent or more of first handlers and

importers covered by the Order. In addition, the Secretary may conduct

a referendum at any time.

The Act requires that such a proposed order provide for the

establishment of a board to administer the program under USDA

supervision. The proponent's proposal provides for a 14-member Olive

Oil Council, as stated earlier.

To ensure fair and equitable representation of the olive oil

industry on the Council, the Act requires membership on the Council to

reflect the geographical distribution of the production of olive oil

and the quantity or value of imports. To that end, this proposal

provides that three members of the Council would be importers and

marketers of consumer brands; one member would be an importer and

marketer or packer of a private label; one member would be an importer

of bulk olive oil; two members would be importers and marketers to the

food service trade; two members would be first handlers of domestic

olive oil; and five at-large members would represent one or more of the

following segments of the olive oil market: The health community;

professional chefs; food service operators; and food media/consultants.

Upon implementation of the Order and pursuant to the Act, the

Council would at least once in each five-year period, but not more

frequently than once in each three-year period, review the geographical

distribution of olive oil production in the United States and the

quantity of imports and make a recommendation to the Secretary after

considering the results of its review and other information it deems

relevant regarding the reapportionment of Council membership.

Members would serve for three-year terms, except that the members

appointed to the initial Council would serve proportionately for two-,

three-, and four-year terms. No member would serve more than two

consecutive terms.

The proposed Order submitted by the proponent is summarized as

follows:

Sections 1217.01 through 1217.22 of the proposed Order define

certain terms, such as olive oil, first handler, importer, information,

promotion, and research, which are used in the proposed Order.

Sections 1217.30 through 1217.37 include provisions relating to the

Council: Establishment and membership, nominations, term of office,

vacancies, procedure for conducting meetings, compensation and

reimbursements for Council members, the Council's powers and duties,

and prohibited activities.

Sections 1217.40 through 1217.41 establish the authority for the

Council to develop research, promotion, and information projects and

requirements for contracts, subject to oversight of the Secretary.

Sections 1217.50 through 1217.54 cover budget review and approval;

financial statements; the collection of assessments; exemption from

assessments; the use of assessments, including reimbursement of

necessary expenses incurred by the Council for the performance of its

duties, which includes expenses incurred for the Department's oversight

responsibilities; a late-payment charge on past-due assessments; and an

operating reserve.

The proponent recommends an initial assessment rate of $0.01 per

pound on domestic and imported olive oil to be paid by handlers of

domestic olive oil and importers.

The Council may raise the rate of assessment by no more than $0.002

per pound in any year, up to a maximum rate of $0.02, with approval of

the Secretary.

The federal debt collection procedures referenced in

Sec. 1217.52(g) include those set forth in 7 CFR 3.1 through 3.36 for

all research and promotion programs administered by USDA (60 FR 12533,

March 7, 1995).

Sections 1217.55 through 1217.56 require that the Council perform

an independent evaluation of its programs at least once every five

years and address patents, copyrights, trademarks, information,

publications, and product formulations developed through the use of

assessment funds.

Sections 1217.60 through 1217.62 concern reporting and

recordkeeping requirements for persons subject to the Order and protect

the confidentiality of information from such books, records, or

reports.

Sections 1217.70 through 1217.78 describe the rights of the

Secretary; require an initial referendum before the program is

implemented; authorize the Secretary to suspend or terminate the Order

when deemed appropriate; prescribe proceedings after suspension or

termination; specify effects of termination or amendment; and address

personal liability, separability, and amendments.

The Department has modified the proponent's proposal to make it

consistent with the Act and other similar national research and

promotion programs for consistency throughout the text and for clarity.

In the definitions the following terms were added: ``conflict of

interest,'' ``Department,'' ``order,'' ``suspend,'' and ``terminate.''

Additionally, the term ``first handler'' was added to the definitions

and replaced ``handler'' throughout the text.

The definition of ``information'' was rewritten to include

activities designed to enhance olive oil's image, to add definitions of

``consumer information'' and ``producer information,'' and to conform

with the Act. The terms ``marketing'' and ``research'' were also

changed to conform with the Act.

Section 1217.37 Prohibited activities, Sec. 1217.41 Contracts, and

Sec. 1217.55 Independent evaluation were part of the original proposal

but were subsections or cited in the proposal. The Department has

expanded each of these for consistency with similar national research

and promotion programs. In addition, the following sections and

paragraphs were added to the proponent's proposal: Sec. 1217.36 (r) and

(s); Sec. 1217.51 Financial Statements; Sec. 1217.53(c) and (d);

Sec. 1217.70 Right of the Secretary; Sec. 1217.71 Referenda; and

Sec. 1217.72(b) and (c).

Section 1217.16 was changed from Plans and Projects to Programs,

Plans, and Projects and Sec. 1217.35 was changed from Expenses to

Compensation and reimbursement in order to more accurately reflect the

subject covered in the section.

Section 1217.50(h) has been added in order to be consistent with

the Act. Paragraph (e)(5) Limitation on spending of section 515 of the

Act states that a board ``may not expend for administration (except for

reimbursements to the Secretary * * *)'' an amount that exceeds 15

percent of the board's income during any fiscal year. This provision

has been added as the proposal submitted did not indicate a limitation

for such spending. In this same section, in order to be more

[[Page 46760]]

consistent with similar national research and promotion programs, a

list of subjects to be covered in the budget was included. In addition,

paragraphs (c), (d), and (f), which discuss amendments to the approved

budget, authorization to incur expenses for a reasonable reserve, and

the acceptance and use of voluntary contributions were added for

clarity and for consistency with other similar national research and

promotion programs.

Other minor changes which do not materially affect the text were

made as appropriate.

The Department has determined that this proposed Order is

consistent with and would effectuate the purposes of the Act.

The proposal set forth below has not received the approval of the

Secretary.

List of Subjects in 7 CFR Part 1217

Administrative practice and procedure, Advertising, Consumer

Information, Marketing agreements, Olive oil 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 1217 is added to read as follows:

PART 1217--OLIVE OIL PROMOTION, RESEARCH, AND INFORMATION ORDER

Subpart A--Olive Oil Promotion, Research, and Information Order

Definitions

Sec.

1217.1 Act.

1217.2 Conflict of interest.

1217.3 Council.

1217.4 Department.

1217.5 First handler.

1217.6 Fiscal period and marketing year.

1217.7 Handle.

1217.8 Importer.

1217.9 Information.

1217.10 Marketer.

1217.11 Marketing.

1217.12 Olive oil.

1217.13 Order.

1217.14 Part and subpart.

1217.15 Person.

1217.16 Programs, plans, and projects.

1217.17 Promotion.

1217.18 Research.

1217.19 Secretary.

1217.20 Suspend.

1217.21 Terminate.

1217.22 United States.

Olive Oil Council

1217.30 Establishment and membership.

1217.31 Nominations.

1217.32 Term of office.

1217.33 Vacancies.

1217.34 Procedure.

1217.35 Compensation and reimbursement.

1217.36 Powers and duties.

1217.37 Prohibited activities.

Research, Promotion, and Information

1217.40 Research, promotion, and information.

1217.41 Contracts.

Expenses and Assessments

1217.50 Budget and expenses.

1217.51 Financial statements.

1217.52 Assessments.

1217.53 Exemption from assessment.

1217.54 Operating reserve.

1217.55 Independent evaluation.

1217.56 Patents, copyrights, inventions, product formulations, and

publications.

Reports, Books, and Records

1217.60 Reports.

1217.61 Books and records.

1217.62 Confidential treatment.

Miscellaneous

1217.70 Right of the Secretary.

1217.71 Referenda.

1217.72 Suspension or termination.

1217.73 Proceedings after termination.

1217.74 Effect of termination or amendment.

1217.75 Personal liability.

1217.76 Separability.

1217.77 Amendments.

1217.78 OMB control numbers.

Authority: 7 U.S.C. 7401-7425.

Subpart A--OLIVE OIL PROMOTION, RESEARCH, AND INFORMATION ORDER

Definitions

Sec. 1217.1 Act.

Act means the Commodity Promotion, Research, and Information Act of

1996 (7 U.S.C. 7401-7425; Pub. L. 104-127; 110 Stat. 1029, as amended),

or any amendments thereto.

Sec. 1216.2 Conflict of interest.

Conflict of interest means a situation in which a member or

employee of the Council has a direct or indirect financial interest in

a person who performs a service for, or enters into a contract with,

the Council for anything of economic value.

Sec. 1217.3 Council.

Council means the administrative body established pursuant to

Sec. 1217.30.

Sec. 1217.4 Department.

Department means the United States Department of Agriculture.

Sec. 1217.5 First handler.

First handler means the first person (excluding a common or

contract carrier) who buys or takes possession of olive oil from a

producer for marketing. If a producer markets olive oil directly to

consumers, the producer shall be considered to be a first handler with

respect to the olive oil produced by the producer.

Sec. 1217.6 Fiscal period and marketing year.

Fiscal period and marketing year mean the 12-month period ending on

December 31 or such other consecutive 12-month period as shall be

recommended by the Council and approved by the Secretary.

Sec. 1217.7 Handle.

Handle means to process, package, sell, transport, purchase, or in

any other way place olive oil, or cause it to be placed, in the current

of commerce.

Sec. 1217.8 Importer.

Importer means any person who imports olive oil into the United

States as principal or as an agent, broker, consignee, or

representative of any person who produces or handles olive oil outside

of the United States for sale in the United States, and who is listed

in the import records as the importer of record for such olive oil.

Sec. 1217.9 Information.

Information means information and programs that are designed to

increase efficiency in processing and to develop new markets, marketing

strategies, increased market efficiency, and activities that are

designed to enhance the image of olive oil on a national or

international basis. These include:

(a) Consumer information, which means any action taken to provide

information to, and broaden the understanding of, the general public

regarding the consumption, use, nutritional attributes, and care of

olive oil; and

(b) Industry information, which means information and programs that

will lead to the development of new markets, new marketing strategies,

or increased efficiency for the olive oil industry, and activities to

enhance the image of olive oil.

Sec. 1217.10 Marketer.

Marketer means any person engaged in the sale or other disposition

of olive oil in any channel of commerce.

Sec. 1217.11 Marketing.

Marketing means the sale or other disposition of olive oil in any

channel of commerce.

Sec. 1217.12 Olive oil.

Olive oil is the oil obtained solely from the fruit of the olive

tree (Olea europaea sativa Hoffm. Et Link) and, for purposes of this

Order, includes olive pomace oil.

[[Page 46761]]

Sec. 1217.13 Order.

Order means an order issued by the Secretary under section 514 of

the Act that provides for a program of generic promotion, research, and

information regarding agricultural commodities authorized under the

Act.

Sec. 1217.14 Part and subpart.

Part means the Olive Oil Research, Promotion, and Consumer

Information Order and all rules, regulations, and supplemental orders

issued thereunder, and the Order shall be a subpart of such part.

Sec. 1217.15 Person.

Person means any individual, group of individuals, partnership,

corporation, cooperative, or any other legal entity.

Sec. 1217.16 Programs, plans, and projects.

Programs, plans, and projects means those research, promotion, and

information plans, studies, or projects established pursuant to

Sec. 1217.30.

Sec. 1217.17 Promotion.

Promotion means any action, including paid advertising and the

dissemination of culinary and nutritional information and public

relations, to present a favorable image of olive oil to the public for

the purpose of improving the competitive position of olive oil in the

marketplace and to stimulate sales in the retail, food service, and

industrial markets.

Sec. 1217.18 Research.

Research means any type of test, study, or analysis designed to

advance the image, desirability, use, marketability, production,

product development, or quality of olive oil.

Sec. 1217.19 Secretary.

Secretary means the Secretary of Agriculture of the United States,

or any other 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. 1217.20 Suspend.

Suspend means to issue a rule under section 553 of title 5, United

States Code, or part thereof, to temporarily prevent the operation of

an order during a particular period of time specified in the rule.

Sec. 1217.21 Terminate.

Terminate means to issue a rule under section 553 of title 5,

United States Code, or part thereof, to cancel permanently the

operation of an order beginning on a date certain specified in the

rule.

Sec. 1217.22 United States.

United States means collectively the 50 states of the United States

of America, the District of Columbia, and the Commonwealth of Puerto

Rico, and the territories and possessions of the United States.

Olive Oil Council

Sec. 1217.30 Establishment and membership.

(a) The Olive Oil Council is hereby established to administer the

terms and provisions of the Order. The Council shall consist of 14

members as follows:

(1) Three members shall be importers and marketers of name brands;

(2) One member shall be an importer and marketer or packer of a

private label;

(3) One member shall be an importer of bulk olive oil;

(4) Two members shall be importers and marketers to the food

service trade;

(5) Two members shall represent the first handlers of domestic

olive oil; and

(6) Five members shall be at-large representatives of one or more

of the following segments of the olive oil market: the health

community; professional chefs; food service operators; retailers; and

food media/consultants.

(b) In accordance with regulations approved by the Secretary, at

least every five years and not more than every three years, the Council

shall review the geographical distribution of first handlers of

domestic olive oil throughout the United States and the volume of

imported olive oil and, if warranted, recommend to the Secretary the

reapportionment of Council membership or the addition of members to

reflect changes in the geographical distribution of the handling of

olive oil and the volume of imported olive oil.

Sec. 1217.31 Nominations.

(a) The Secretary shall solicit nominations for the initial Council

from importers, handlers, and other professionals associated with the

olive oil industry.

(b) Procedure for subsequent nominations.

(1) The Council shall announce at least 180 days in advance of the

expiration of members' terms that such terms are expiring and shall

solicit nominations for such positions. The announcement shall include,

at a minimum, the following information:

(i) A list of the vacancies for which nominees may be submitted and

qualifications for nomination; and

(ii) The date by which the names of nominees shall be submitted to

the Secretary for consideration in accordance with paragraph (b)(3) of

this section.

(2) Importer members shall be nominated by importers, and handler

members shall be nominated by handlers. The at-large members may be

nominated by other professionals associated with the olive oil

industry.

(3) Nominations should be submitted to the Secretary not less than

90 days prior to the expiration of members' terms.

(4) Two nominees must be submitted to the Secretary for each

vacancy.

(c) The Secretary shall appoint the members of the Council from

nominations made in accordance with paragraph (b) of this section.

(1) The Secretary may reject any nominee submitted. If there is an

insufficient number of nominees from whom to appoint members to the

Council as a result of the Secretary's rejecting such nominees,

additional nominees shall be submitted to the Secretary in a manner

prescribed by the Secretary.

(2) Whenever the industry fails to nominate individuals for

appointment to the Council, the Secretary may appoint members in such a

manner as the Secretary determines appropriate.

Sec. 1217.32 Term of office.

The members of the Council shall serve for terms of three years,

except the members of the initial Council shall be designated for and

shall serve terms as follows: Five members shall serve for two-year

terms; five shall serve for three-year terms; and four shall serve for

four-year terms. No member shall serve more than two consecutive terms.

Sec. 1217.33 Vacancies.

(a) In the event any member of the Council ceases to be a member of

the category of members from which the member was appointed to the

Council, such position shall automatically become vacant.

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

duties of a member of the Council, or if a member of the Council

engages 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 the recommendation of the Council shows adequate

cause, the Secretary shall remove such member from office.

(c) Should any member position become vacant, the Secretary shall

solicit nominations in the manner set forth in Sec. 1217.32, except

that said nomination and replacement shall not be required if said

unexpired terms are less than six months.

[[Page 46762]]

Sec. 1217.34 Procedure.

(a) At a properly convened meeting of the Council, eight members

shall constitute a quorum. 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 matters of an emergency nature when there is not enough time

to call an assembled meeting of the Council, the Council may act upon

the concurring votes of a majority of its members by mail, telephone,

facsimile, or by other means of communication: Provided, that each

proposition is explained accurately, fully, and substantially

identically to each member. All telephone votes shall be promptly

confirmed in writing and recorded in the Council minutes.

Sec. 1217.35 Compensation and Reimbursement.

Members of the Council, when acting as members, shall serve without

compensation but shall be reimbursed for reasonable travel expenses, as

approved by the Council, incurred by them in the performance of their

duties as Council members.

Sec. 1217.36 Powers and duties.

The Council shall have the following powers and duties:

(a) To administer this subpart in accordance with its terms and

provisions of the Act;

(b) With the approval of the Secretary, to invest funds, pending

disbursement pursuant to a plan or project, only in: obligations of the

United States or any agency thereof; in general obligations of any

State or any political subdivision thereof; in any interest-bearing

account or certificate of deposit of a bank which is a member of the

Federal Reserve System; or in obligations fully guaranteed as to

principal and interest by the United States;

(c) To appoint from its members an executive committee and to

delegate to the committee authority to administer the terms and

provisions of this subpart under the direction of the Council and

within the policies determined by the Council;

(d) To receive, investigate, and report to the Secretary complaints

of violations of this part; and

(e) To recommend to the Secretary amendments to this part.

(f) To meet and organize and to select from among its members a

chairperson, other officers, and committees and subcommittees, as the

Council determines to be appropriate;

(g) To develop and recommend to the Secretary for approval such

bylaws as may be necessary for the functioning of the Council and such

rules as may be necessary to administer the Order, including activities

authorized to be carried out under the Order;

(h) To employ such persons as it may deem necessary and to

determine the compensation and define the duties of each;

(i) To prepare and submit to the Secretary for the Secretary's

approval, a budget on a fiscal period basis of its anticipated expenses

in the administration of this part including the probable costs of all

programs or projects and to recommend a rate of assessment with respect

thereto;

(j) To receive and review or on its own develop programs and

projects and to enter into contracts or agreements with the approval of

the Secretary for the development and carrying out of programs or

projects of promotion, and information;

(k) To maintain minutes, books, and records which shall be

available to the Secretary for inspection and audit, and to prepare and

submit such reports from time to time to the Secretary, as the

Secretary may prescribe, and to make appropriate accounting with

respect to the receipt and disbursement of funds entrusted to it;

(l) To periodically prepare and make public reports of its

activities carried out, and, at least once each fiscal period, to make

public an accounting of funds received and expended;

(m) To cause its books to be audited by a certified public

accountant at the end of each fiscal period and to submit a copy of

each audit to the Secretary;

(n) To give to the Secretary the same notice of meetings of the

Council and subcommittees (including those conducted by telephone) as

is given to members in order that representatives of the Secretary may

attend such meetings;

(o) To submit to the Secretary such information pertaining to this

subpart as the Secretary may request;

(p) To notify olive oil importers and first handlers of all Council

meetings through news releases or other means;

(q) To develop and recommend such rules and regulations to the

Secretary for approval as may be necessary for the development and

execution of plans, projects, or activities to effectuate the declared

purpose of the Act.

(r) To act as intermediary between the Secretary and any producer,

first handler, or importer.

(s) To work to achieve an effective, continuous, and coordinated

program of promotion, research, information, evaluation, and industry

information designed to strengthen the olive oil industry's position in

the marketplace; maintain and expand existing markets and uses for

olive oil; and to carry out programs, plans, and projects designed to

provide maximum benefits to the olive oil industry.

Sec. 1217.37 Prohibited activities.

(a) The Council may not engage in and shall prohibit the employees

and agents of the Council from engaging in:

(1) Any action that would be a conflict of interest; or

(2) Using funds collected by the Council under the Order to

undertake any action for the purpose of influencing legislation or

governmental action or policy, including local, state, national, and

foreign governments, other than recommending to the Secretary

amendments to the Order.

(b) No Council program, plan, or project shall make any false or

misleading claims on behalf of olive oil or false, misleading, or

disparaging statements with respect to the attributes or use of another

agricultural commodity.

Research, Promotion, and Information

Sec. 1217.40 Research, promotion, and information.

(a) The Council shall develop and submit to the Secretary for

approval any plans or projects authorized in this section. Such plans

or projects shall provide for:

(1) The establishment, issuance, effectuation, and administration

of appropriate plans or projects for research, promotion, and

information designed to strengthen the position of olive oil in the

marketplace, to maintain, develop, and expand markets for olive oil,

and to encourage further development of the domestic industry; and

(2) The establishment and conduct of marketing research and

development projects to the end that the acquisition of knowledge

pertaining to olive oil or its consumption and use may be encouraged or

expanded or to the end that the marketing and utilization of olive oil

may be encouraged, expanded, improved, or made more efficient.

(b) No program, plan, or project shall be implemented prior to its

approval by the Secretary. Once a program, plan, or project is so

approved, the Council shall take appropriate steps to implement it.

(c) Each program, plan, or project implemented under this subpart

shall be reviewed or evaluated periodically by the Council to ensure

that it contributes to an effective program of promotion, research, or

information. If it is found by the Council that any such program, plan,

or project does not contribute to an effective program of promotion,

[[Page 46763]]

research, or information, then the Council shall terminate such

program, plan, or project.

Sec. 1217.41 Contracts.

(a) The Council may enter into contracts or make agreements for the

development and carrying out of research, promotion, and information,

and pay for the costs of such contracts or agreements, after approval

from the Secretary.

(b) Each contract or agreement shall provide that:

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

the Council a program, plan, or project together with a budget or

budgets that shall show the estimated cost to be incurred for such

program, plan, or project;

(2) The contractor or agreeing party shall keep accurate records of

all its transactions and make periodic reports to the Council of

activities conducted, submit accounting for funds received and

expended, and make such other reports as the Secretary or the Council

may require;

(3) The Secretary may audit the records of any contracting or

agreeing party periodically; and

(4) Any subcontractor who enters into a contract with a Council

contractor and who receives or otherwise uses funds allocated by the

Council shall be subject to the same provisions as the contractor.

Expenses and Assessments

Sec. 1217.50 Budget and expenses.

(a) Prior to the beginning of each fiscal period, or as may be

necessary thereafter, the Council shall prepare and submit to the

Secretary a budget on a fiscal period basis of its anticipated expenses

and disbursements in the administration of the Order and probable costs

of research, promotion, and information. Each such budget shall

include:

(1) A statement of objectives and strategy for each program, plan,

or project;

(2) A summary of anticipated revenue, with comparative data for at

least one preceding year (except for the initial budget);

(3) A summary of proposed expenditures for each program, plan, or

project; and

(4) Staff and administrative expense breakdowns, with comparative

data for at least one preceding year (except for the initial budget).

(b) Each budget shall provide adequate funds to defray its proposed

expenditures and to provide for a reserve as set forth in this subpart.

(c) Subject to this section, any amendment or addition to an

approved budget must be approved by the Secretary, including shifting

funds from one program, plan, or project to another. Shifts of funds

which do not cause an increase in the Council's approved budget and

which are consistent with governing bylaws, approved by the Secretary,

need not have prior approval from the Secretary.

(d) The Council is authorized to incur such expenses, including

provision for a reasonable reserve, 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 the provisions of this subpart. Such expenses

shall be paid from funds received by the Council.

(e) With approval of the Secretary, the Council may borrow money

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

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

borrowed by the Council shall be expended only for startup costs and

capital outlays and are limited to the first year of operation of the

Council.

(f) The Council may accept voluntary contributions, but these shall

only be used to pay expenses incurred in the conduct of programs,

plans, and projects. Such contributions shall be free from any

encumbrance by the donor, and the Council shall retain complete control

of their use.

(g) The Council shall reimburse the Secretary for all expenses

incurred by the Secretary in the implementation, administration, and

supervision of the Order, including all referendum costs in connection

with the Order.

(h) The Council may not expend for administration, maintenance, and

functioning of the Council in any fiscal year an amount that exceeds 15

percent of the assessments and other income received by the Council for

that fiscal year. Reimbursements to the Secretary required under

paragraph (g) of this section are excluded from this limitation on

spending.

Sec. 1217.51 Financial statements.

(a) As requested by the Secretary, the Council shall prepare and

submit financial statements to the Secretary on a regular basis. Each

such financial statement shall include, but not be limited to, a

balance sheet, income statement, and expense budget. The expense budget

shall show expenditures during the time period covered by the report,

year-to-date expenditures, and the unexpended budget.

(b) Each financial statement shall be submitted to the Secretary

within 30 days after the end of the time period to which it applies.

(c) The Council shall submit annually to the Secretary an annual

financial statement within 90 days after the end of the fiscal year to

which it applies.

Sec. 1217.52 Assessments.

(a) Each importer and first handler shall pay to the Council, upon

demand, the assessment as may be approved by the Secretary. Such

assessment shall be the amount established by the Secretary pursuant to

paragraph (b) of this section.

(b) Except as otherwise provided, the rate of assessment shall be

$0.01 per pound of olive oil imported or produced and handled in the

United States. The rate of assessment may be raised to a maximum of

$0.02 per pound as recommended by the Council and approved by the

Secretary, but it shall not be raised more than $0.002 per year in any

fiscal year.

(c) Importers of olive oil shall pay the assessment to the Council

through the U.S. Customs Service at the time of entry. The U.S. Customs

Service shall remit the assessment to the Council.

(d) The import assessment shall be uniformly applied to imported

olive oil identified by the numbers 1509.10.20, 1509.10.40, 1509.90.20,

1509.90.40, 1510.00.40, and 1510.00.60 in the Harmonized Tariff

Schedule of the United States.

(e) Assessments due from a first handler shall be paid to the

Council at such time and in such manner as the Council, with the

Secretary's approval, directs pursuant to regulations issued hereunder.

Such regulations may provide for different importer or first handler

payment schedules so as to recognize differences in marketing or

purchasing practices and procedures.

(f) The Council shall impose a late payment charge on any person

who fails to remit to the Council the total amount for which the person

is liable on or before the payment due date established under this

section. The late payment charge will be in the form of interest on the

outstanding portion of any amount for which the person is liable. The

rate of interest shall be prescribed in regulations issued by the

Secretary.

(g) Persons failing to remit total assessments due in a timely

manner may also be subject to actions by the Secretary under federal

debt collection procedures.

Sec. 1217.53 Exemption from assessment.

(a) A domestic first handler who handles less than 6,000 pounds of

olive oil per year or an importer who imports less than 6,000 pounds of

olive oil per

[[Page 46764]]

year shall be eligible for an exemption from the assessment.

(b) To claim such exemption, a first handler or importer shall

submit an application to the Council stating the basis on which the

person claims the exemption for such year.

(c) If, after a person claims an exemption from assessments for any

year under this section, and such person no longer meets the

requirements of this paragraph for an exemption, such person shall

provide additional information to the Council in the form and manner

prescribed by the Council, subject to approval by the Secretary, and

pay an assessment on all the olive oil handled or imported by such

person during the year for which the person claimed the exemption.

(d) Exempted individuals are subject to such safeguards as

prescribed in this part to prevent improper use of this exemption.

Sec. 1217.54 Operating reserve.

The Council may establish an operating monetary reserve and may

carry over to subsequent fiscal periods excess funds in any reserve so

established: Provided, That the funds in the reserve shall not exceed

one fiscal period's budget. Subject to approval by the Secretary, such

reserve funds may be used to defray any expenses authorized under this

part.

Sec. 1217.55 Independent evaluation.

The Council shall, not less often than every five years, authorize

and fund, from funds otherwise available to the Council, an independent

evaluation of the effectiveness of the Order and programs conducted by

the Council pursuant to the Act. The Council shall submit to the

Secretary, and make available to the public, the results of each

periodic independent evaluation conducted under this paragraph.

Sec. 1217.56 Patents, copyrights, inventions, product formulations,

and publications.

(a) Any patents, copyrights, inventions, or publications developed

through the use of funds collected by the Council under the provisions

of this subpart shall be the property of the U.S. 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, or

publications, inure to the benefit of the Council, and shall be

considered income subject to the same fiscal, budget, and audit

controls as other funds of the Board. Upon termination of this subpart,

Sec. 1217.73 shall apply to determine disposition of all such property.

(b) Should patents, copyrights, inventions or publications be

developed through the use of funds received by the Council under this

subpart and funds contributed by another organization or person, the

ownership and related rights to such patents, copyrights, inventions,

or publications shall be determined by an agreement between the Council

and the party contributing funds towards the development of such

patent, copyright, invention or publication in a manner consistent with

paragraph (a) of this section, subject to approval by the Secretary.

Reports, Books, and Records

Sec. 1217.60 Reports.

Each first handler and importer shall be required to report to the

administrative staff of the Council, at such times and in such manner

as it may prescribe, such information as may be necessary for the

Council to perform its duties. Such reports shall include, but shall

not be limited to the following:

(a) For first handlers, the total quantity of olive oil handled

during the reporting period; and a record of assessments paid,

including a statement from the handler that the assessment has been

paid on all olive oil handled during the reporting period.

(b) For importers, the total quantity of olive oil imported during

the reporting period and a record of each importation of olive oil

during such period, giving quantity, date, and port of entry.

(c) For persons who have an exemption from assessments under

Sec. 1217.53, such information as deemed necessary by the Council, and

approved by the Secretary, concerning the exemption including

disposition of exempted olive oil.

(d) Information reported to the administrative staff of the Council

regarding total quantity, assessments, and other specific information

must be kept confidential in accordance with Sec. 1217.62.

Sec. 1217.61 Books and records.

First handlers and importers shall maintain, and during normal

business hours make available for inspection by employees of the

Council or the Secretary, such books and records as are necessary to

carry out the provisions of this subpart and the regulations issued

thereunder, including such records as are necessary to verify any

required reports. Such records shall be maintained for two years beyond

the first period of their applicability.

Sec. 1217.62 Confidential treatment.

All information obtained from the books, records, or reports

required to be maintained shall be kept confidential by all persons,

including employees of the Council and all officers and employees and

former officers and employees of contracting and subcontracting

agencies or agreeing parties having access to such information, and

shall not be made available to Council members, first handlers, or

importers. Only such information as the Secretary deems relevant shall

be disclosed to the public and then only in a suit or administrative

hearing brought at the direction, 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, except that nothing in this subpart

shall be deemed to prohibit:

(a) The issuance of general statements based upon the reports of a

number of first handlers or importers subject to any order, if such

statements do not either expressly or tacitly identify the information

furnished by any person;

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

any person convicted of violating this subpart, together with a

statement of the particular provisions of the Order violated by such

person.

(c) Any disclosure of any confidential information by any employee

of the Council shall be considered willful misconduct.

Miscellaneous

Sec. 1218.70 Right of the Secretary.

All fiscal matters, programs, plans, or projects, rules or

regulations, reports, or other substantive actions proposed and

prepared by the Council shall be submitted to the Secretary for

approval.

Sec. 1217.71 Referenda.

(a) Implementation. For the purpose of ascertaining whether the

persons to be covered by the Order favor the Order going into effect,

the Secretary shall conduct an initial referendum among persons to be

subject to the assessment under Sec. 1217.52 who, during a

representative period determined by the Secretary, engaged in the

handling or importation of olive oil. The Order must be approved by a

simple majority of those voting.

(b) Subsequent referenda. The Secretary shall hold subsequent

referenda: Not later than seven years after assessments first begin

under the Order; at the request of the Council; or when petitioned by

10 percent or more of the olive oil first handlers and importers

eligible to vote to determine if they favor termination or suspension

[[Page 46765]]

of this subpart. In addition, the Secretary may hold a referendum at

any time.

Sec. 1217.72 Suspension or termination.

(a) The Secretary shall suspend or terminate this part or subpart

or a provision thereof at the end of the marketing year whenever the

Secretary determines that the subpart or a provision thereof obstructs

or does not tend to effectuate the purposes of the Act, or if the

Secretary determines that its suspension or termination is approved or

favored in a referendum by a simple majority of the persons voting in a

referendum who, during a representative period determined by the

Secretary, have been engaged in the handling or importation of olive

oil.

(b) If, as a result of a referendum, the Secretary determines that

this subpart is not approved, the Secretary shall:

(1) No later than 180 days after making the determination, suspend

or terminate, as the case may be, collection of assessments under this

subpart; and

(2) As soon as practical, suspend or terminate, as the case may be,

activities under this subpart in an orderly manner.

Sec. 1217.73 Proceedings after termination.

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

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

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

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

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

the Council, including claims for any funds unpaid or property not

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

(b) The said trustees shall:

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

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

agreements entered into by it pursuant to the Order;

(3) From time to time account for all receipts and disbursements

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

of the Council and of the trustees, to such person as the Secretary may

direct; and

(4) Upon the direction of the Secretary, execute such assignments

or other instruments necessary or appropriate to vest in such person

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

in the Council or the trustees pursuant to the Order.

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

transferred or delivered pursuant to this subpart shall be subject to

the same obligations as imposed upon the Council and the trustees.

(d) Any residual funds not required to defray the necessary

expenses of liquidation shall be returned to the persons who

contributed such funds, or paid assessments, or, if not practicable,

shall be turned over to the Secretary to be utilized, to the extent

practicable, in the interest of continuing one or more of the olive oil

research or information programs authorized under the Order.

Sec. 1217.74 Effect of termination or amendment.

Unless otherwise expressly provided by the Secretary, the

termination of this subpart or any regulation issued thereunder, or the

issuance of any amendment to either thereof, shall not:

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

shall have arisen or which may thereafter arise in connection with any

provision of this subpart or any such rule or regulation issued

thereunder;

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

rule or regulation issued thereunder; or

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

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

Sec. 1217.75 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 judgment, mistakes, or other acts, either of

commission or omission, as such member or employee, except for acts of

dishonesty or willful misconduct.

Sec. 1217.76 Separability.

If any provision of this subpart is declared invalid or the

applicability thereof to any person or circumstance 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. 1217.77 Amendments.

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

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

the Act, including the Secretary.

Sec. 1217.78 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 1995, 44 U.S.C. Chapter 35, is yet to be

determined. The Council nominee background statement form is assigned

OMB control number 0505-0001.

Dated: August 18, 1999.

Kathleen A. Merrigan,

Administrator, Agricultural Marketing Service.

[FR Doc. 99-22107 Filed 8-25-99; 8:45 am]

BILLING CODE 3410-02-P