[Federal Register Volume 59, Number 123 (Tuesday, June 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-15643]


[Federal Register: June 28, 1994]


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Part VIII





Department of Agriculture





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Agricultural Marketing Service



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7 CFR Part 1208



Fresh Cut Flowers and Fresh Cut Greens Promotion and Information Order; 
Proposed Rule
DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1208

[FV-94-708PR]
RIN 0581-AB20


Fresh Cut Flowers and Fresh Cut Greens Promotion and Information 
Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The U.S. Department of Agriculture (Department) is seeking 
comments on a proposal for a national, industry-funded promotion and 
information program for fresh cut flowers and fresh cut greens (cut 
flowers and greens). An order for the proposed program--the Fresh Cut 
Flowers and Fresh Cut Greens Promotion and Information Order--was 
submitted to the Department by the Promoflor Organizing Group, Inc. The 
Department is also seeking comments on proposals submitted by the 
Florists' Transworld Delivery Association and the Produce Marketing 
Association which cover only one portion of the proposed order. Under 
the proposed order, handlers would pay an assessment based on their 
gross sales of cut flowers and greens, regardless of the country of 
origin, to the proposed National PromoFlor Council. Composed of 
handlers, growers, importers, and retailers, the Council would use the 
assessments collected to conduct a generic promotion and information 
program to maintain, expand, and develop markets for cut flowers and 
greens.

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

ADDRESSES: Interested persons are invited to submit written comments 
concerning the proposed order to: Docket Clerk, Research and Promotion 
Branch, Fruit and Vegetable Division, Agricultural Marketing Service, 
USDA, P.O. Box 96456, Room 2535-S, Washington, DC 20090-6456. Three 
copies of all written material should be submitted, and they will be 
made available for public inspection at the Office of the Docket Clerk 
during regular business hours. All comments should reference the docket 
number and the date and page number of this issue of the Federal 
Register. Comments concerning the information collection requirements 
contained in this action should also be sent to the Office of 
Information and Regulatory Affairs, Office of Management and Budget, 
Washington, DC 20503, Attention: Desk Officer for the Agricultural 
Marketing Service, USDA.

FOR FURTHER INFORMATION CONTACT: Arthur Pease, Research and Promotion 
Branch, Fruit and Vegetable Division, AMS, USDA, P.O. Box 96456, Room 
2535-S, Washington, DC 20090-6456, telephone (202) 720-6930.

SUPPLEMENTARY INFORMATION: This proposed order is issued under the 
Fresh Cut Flowers and Fresh Cut Greens Promotion and Information Act of 
1993 [Pub. L. 103-190] approved December 14, 1993, hereinafter referred 
to as the Act.
    The Department of Agriculture is issuing this rule in conformance 
with Executive Order 12866, and the Office of Management and Budget has 
determined that it is a ``significant regulatory action.''
    This rule has been reviewed under Executive Order 12778, Civil 
Justice Reform. It is not intended to have retroactive effect. This 
rule would not preempt any State or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under Sec. 8 of the Act, after 
an order is implemented, a person subject to the order may file a 
petition with the Secretary stating that the order or any provision of 
the order, or any obligation imposed in connection with the order, is 
not in accordance with law and requesting a modification of the order 
or an exemption from the order. The petitioner is afforded the 
opportunity for a hearing on the petition. After such hearing, the 
Secretary will make a ruling on the petition. The Act provides that the 
district courts of the United States in any district in which a person 
who is a petitioner resides or carries on business are vested with 
jurisdiction to review the Secretary's ruling on the petition, if a 
complaint for that purpose is filed within 20 days after the date of 
the entry of the ruling.

Regulatory Flexibility Act

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Administrator of the Agricultural Marketing Service 
(AMS) has considered the economic impact of this proposed action on 
small entities.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened.
    Only those wholesale handlers, retail distribution centers, 
producers, and importers who have annual sales of $750,000 or more of 
cut flowers and greens and sell those products to exempt handlers, 
retailers, or consumers would be considered to be qualified handlers 
and assessed under the order. There are approximately 900 wholesalers, 
150 importers, and 200 domestic producers who would be qualified 
handlers.
    The majority of these qualified handlers would be classified as 
small businesses. As defined by the Small Business Administration [13 
CFR 121.601] small agricultural service firms, which would include the 
qualified handlers who would be required to pay assessments under the 
order, have been defined as those having annual receipts of less than 
$5,000,000.
    Statistics reported by the National Agricultural Statistics Service 
show that 1993 sales at wholesale of domestic cut flowers and greens 
total approximately $535 million while the value of imports during 1993 
was approximately $382 million. The leading States in the United States 
producing cut flowers and greens, by wholesale value, are California, 
which produces approximately 60 percent of the domestic crop, followed 
by Florida, Colorado, Washington, New York, Hawaii, and Pennsylvania. 
Major countries exporting cut flowers and greens into the United 
States, by value, are Colombia, which accounts for approximately 60 
percent, followed by The Netherlands, Mexico, and Costa Rica.
    During the first three years the order is in effect, the rate of 
assessment may not exceed 0.5 percent of the gross sales of cut flowers 
and greens. After the order has been in effect for three years, the 
assessment rate may be increased or decreased by no more that 0.25 
percent each year when recommended by two-thirds of the members of the 
National PromoFlor Council (Council) and approved by the Secretary. 
However, at no time may the assessment rate exceed 1.0 percent of gross 
sales of cut flowers and greens. Notice and comment rulemaking would be 
required to change the assessment rate.
    Although the maximum assessment collection is expected to total 
about $10 million annually, the economic impact of a 1.0 percent or 
less assessment on each qualified handler would not be significant.
    While the proposed order would impose certain recordkeeping 
requirements on qualified handlers, information required under the 
proposed order could be compiled from records currently maintained. 
Thus, any added burden resulting from increased recordkeeping would not 
be significant when compared to the benefits that should accrue to such 
businesses. The proposed order's provisions have been carefully 
reviewed, and every effort has been made to minimize any unnecessary 
recordkeeping costs or requirements.
    Although the order would impose some additional costs and 
requirements on qualified handlers, it is anticipated that the program 
under the proposed order would help to increase the demand for cut 
flowers and greens. Therefore, any additional costs should be offset by 
the benefits derived from expanded markets and sales benefiting all 
segments of the floral industry. Accordingly, the Administrator of the 
AMS has determined that the provisions of the proposed order would not 
have a significant economic impact on a substantial number of small 
entities.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1980 [44 U.S.C. 
Chapter 35] the forms, reporting, and recordkeeping requirements 
included in this action have been submitted for approval to the Office 
of Management and Budget (OMB). Information collection requirements 
that are included in this proposal include:
    (1) A periodic report by each qualified handler who handles cut 
flowers and greens. The estimated maximum number of respondents is 
1,250, each submitting an average of 12 responses per year, with an 
estimated average reporting burden of 10 minutes per response.
    (2) An application requesting postponement of assessment payments. 
The estimated maximum number of respondents is 25, each submitting an 
average of 4 responses per year, with an estimated average reporting 
burden of 20 minutes per response.
    (3) A refund application form for persons who desire a refund of 
their assessments. The estimated maximum number of respondents is 210, 
each submitting 1 response prior to the initial referendum, or an 
annual average of 70 respondents, with an estimated average reporting 
burden of 15 minutes per response.
    (4) An exemption application for wholesale handlers, retail 
distribution centers, producers, and importers of cut flowers and 
greens with gross annual sales under $750,000 and would be exempt from 
assessments and recordkeeping requirements. The estimated number of 
respondents for this form is 500, each submitting one response per 
year, with an estimated average burden of 15 minutes per response.
    (5) A referendum ballot to be used to determine whether qualified 
handlers favor continuance of the order. The estimated number of 
respondents completing this ballot would be 1,250, each submitting one 
response approximately every 3 years, or an annual average of 417 
respondents, with an estimated average reporting burden of 15 minutes 
per response.
    (6) A nominee background statement form for Council member and 
alternate member nominees. The estimated number of respondents for this 
form is 50 for the initial nominations to the Council and approximately 
17 respondents annually thereafter. Each respondent would submit one 
response per year, with an estimated average reporting burden of 30 
minutes per response.
    (7) A requirement to maintain records sufficient to verify reports 
submitted under the order. The estimated maximum number of 
recordkeepers necessary to comply with this requirement is 1,750 each 
of whom would have an estimated annual burden of 15 minutes.
    Comments concerning the information collection requirements 
contained in this action should also be sent to the Office of 
Information and Regulatory Affairs; Office of Management and Budget; 
Washington, DC 20503. Attention: Desk Officer for Agricultural 
Marketing Service, USDA.

Background

    The Act authorizes the Secretary of Agriculture (Secretary) to 
establish a national cut flowers and greens promotion and consumer 
information program. The program would be funded by an assessment 
levied on qualified handlers not to exceed 1 percent of their gross 
sales of cut flowers and greens.
    The Act provides for the submission of proposals for a cut flowers 
and greens promotion and consumer information order by industry 
organizations or any other interested person affected by the Act. The 
Act requires that such a proposed order provide for the establishment 
of a National PromoFlor Council. The Council would be composed of 25 
voting members: 14 members representing qualified wholesale handlers of 
domestic and imported cut flowers and greens; 3 members representing 
producers who are qualified handlers of cut flowers and greens; 3 
members representing importers who are qualified handlers of cut 
flowers and greens; 3 members representing traditional retailers of cut 
flowers and greens; and 2 members representing persons who produce cut 
flowers and greens. Each member shall have an alternate.
    The Department issued a news release on February 17, 1994, 
requesting proposals for an initial order or portions of an initial 
order.

Proposal I

    An entire proposed order was submitted by the PromoFlor Organizing 
Group, Inc. (PromoFlor). PromoFlor is an industry group created and 
sponsored by 68 floral industry organizations and more than 700 floral 
businesses solely for the purpose of developing and implementing a 
promotion and consumer information order for cut flowers and greens. 
PromoFlor represents a substantial number of industry members who would 
be assessed under the proposed order. Once the order is established, 
PromoFlor would no longer exist.
    The Department is publishing PromoFlor's proposed order as Proposal 
I. The Department has modified PromoFlor's proposed text (1) to make it 
consistent with the Act and other similar national research and 
promotion programs supervised by the Department, (2) to simplify the 
language and format of some provisions, and (3) to add certain sections 
necessary for proper administration of the Order by the Department.
    The proposed order submitted by PromoFlor is summarized as follows:
    Sections 1208.1-1208.22 of the proposed order define certain terms, 
such as floral products, qualified handler, producer, and retailer, 
which are used in the proposed order.
    Sections 1208.30-1208.37 include provisions relating to the 
establishment, membership, nomination procedures, appointment, terms of 
office, and reimbursement of members of the Council. Also PromoFlor 
would be designated as an election committee for the initial nomination 
of members to the Council. After the Council is appointed, the Council 
would be the election committee.
    Sections 1208.40-1208.43 include powers and duties of the Council, 
which would be the body organized to administer the order through the 
implementation of plans, projects, budgets, and contracts to promote 
and disseminate information about cut flowers and greens, under the 
supervision of the Secretary. Further, the Council would be authorized 
to incur expenses necessary for the performance of its duties.
    Sections 1208.50-1208.57 would authorize the collection of 
assessments, specify who pays them and how, set forth procedures for 
granting a postponement of the payment of an assessment for any 
qualified handler who is financially unable to pay such assessment, set 
forth procedures for the handling of a one-time refund should the order 
fail to be approved in referendum, authorize the Council to make 
determinations as to who are qualified handlers and who are exempt 
handlers, and for establishing an operating monetary reserve.
    The initial assessment rate would be 0.5 percent of a qualified 
handler's gross sales during the first three years the order is in 
effect. Thereafter, the rate may be increased or decreased by no more 
than 0.25 percent per year. A uniform factor would be used for 
determining the assessment due on non-sale transfers to retailers and 
sales by importers who are qualified handlers directly to consumers. 
Another uniform factor would be used for determining the assessment due 
on sales directly to consumers by producers who are qualified handlers. 
Sales of cut flowers and greens to export markets would be exempt from 
assessment.
    The assessment sections also outline the procedures to be followed 
by qualified handlers for remitting assessments; establish a 1.5 
percent per month interest charge for unpaid or late assessments; and 
provide for refunds of assessments paid if the program does not 
continue after the initial referendum.
    Sections 1208.60-1208.62 authorize the Secretary to suspend or 
terminate the order when deemed appropriate, and prescribes proceedings 
after suspension or termination.
    Sections 1208.70-1208.72 concern reporting and recordkeeping 
requirements for persons subject to the order and protect the 
confidentiality of information obtained from such books, records, or 
reports.
    Sections 1208.80-1208.85 are miscellaneous provisions including the 
provisions involving authority of the Secretary; personal liability of 
Council members and employees; separability of order provisions; 
handling of intellectual property, such as patents, arising from funds 
collected by the Council; and amendments to the order.
    In addition to the proposal from PromoFlor, the Department received 
proposals addressing the nomination of the Council's retailer members 
from Florists' Transworld Delivery Association (FTD) (see Proposal II) 
and the Produce Marketing Association (PMA) (see Proposal III).

Proposal II

    FTD's proposal specifies that one of the three retailer members be 
appointed from nominations submitted by the American Floral Marketing 
Council (AFMC) in accordance with the Act, that one retailer member be 
appointed from nominations submitted by FTD, and that one retailer 
member be appointed from nominations submitted by a coalition of 
traditional retail florist organizations. The FTD proposal also defines 
``traditional retail florist organization'' as an organization having 
membership exceeding 1,000 of which 75 percent would be traditional cut 
flowers and greens retailers and such organization spends a portion of 
its revenue on marketing cut flowers and greens. The FTD proposal 
defines ``traditional cut flowers and greens retailer'' as small 
business establishments that operate from owned or leased premises and 
derive 40 percent of their total volume of sales from cut flowers and 
greens. This definition would not allow for mass-market retailers such 
as supermarket chains to be eligible to nominate candidates as members 
on the Council. The FTD proposal further states that no traditional 
retail florist organization, including AFMC, would be eligible to 
nominate members for more than one of the three retailer member 
positions. It is FTD's position that it is the largest traditional 
retail florist organization in the industry and that it should be 
entitled to one member and alternate on the Council.

Proposal III

    The Produce Marketing Association (PMA) also submitted proposed 
definitions of ``traditional retailer'' and ``traditional retail 
florist organization'' which would be used in determining eligibility 
to nominate retailer members for the Council. PMA is the national trade 
association that represents the mass-market floral industry though its 
division, the Floral Marketing Association. It is PMA's position that 
the definition of the term ``traditional'' should be very broad and 
include any retailer whose primary business is the sale of floral 
products, including cut flowers and greens or has a specific department 
dedicated to the sale of floral products including cut flowers and 
greens. Also, PMA recommended that nominations be limited to national 
organizations. Further, PMA is in favor of keeping the two retailer 
seats that were not designated for AFMC open to as large a segment of 
the floral industry as possible.
    In addition to these proposals, the Department has received letters 
from several other floral industry groups regarding qualifications for 
the retailer member seats on the Council. They include American Floral 
Services, Inc., Redbook Floral Services, Teleflora, and Wholesale 
Florists and Florist Suppliers of America. Copies of these letters will 
be available for public inspection in addition to the comments received 
in response to this proposed rule.
    The Department will analyze all written views received to date as 
well as written comments on the three proposals published below before 
issuing a final order.

List of Subjects in 7 CFR Part 1208

    Administrative practice and procedure, Advertising, Consumer 
information, Marketing agreements, Cut flowers, Cut greens, Promotion, 
Reporting and recordkeeping requirements.

    The proposals set forth below have not received the approval of the 
Secretary.
    It is hereby proposed that chapter XI of Title 7 of the Code of 
Federal Regulations be amended as follows:

Proposal I

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

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

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

Definitions

Sec.
1208.1  Act
1208.2  Consumer information
1208.3  Council
1208.4  Cut flowers
1208.5  Cut greens
1208.6  Cut flowers and greens
1208.7  Department
1208.8  Exempt handler
1208.9  Fiscal year
1208.10  Gross sales price
1208.11  Order
1208.12  Part and subpart
1208.13  Person
1208.14  Promotion
1208.15  Producer that is a qualified handler
1208.16  Qualified handler
1208.17  Research
1208.18  Retailer
1208.19  Secretary
1208.20  Substantial portion
1208.21  State
1208.22  United States

Establishment of the Council

1208.30  Establishment and membership of the Council
1208.31  Election and appointment of members and alternates other 
than retailers
1208.32  Designation and appointment of retailer members and 
alternates
1208.33  Failure to nominate
1208.34  Terms of office and compensation
1208.35  Vacancies
1208.36  Procedure
1208.37  Executive committee

Activities of the Council

1208.40  Duties of the Council
1208.41  Budgets and expenses
1208.42  Plans, projects, budgets, and contracts thereof
1208.43  Other contracts and agreements

Assessments

1208.50  Assessments
1208.51  Influencing governmental action
1208.52  Charges for late payments
1208.53  Adjustment of accounts
1208.54  Refunds of assessments and escrow account
1208.55  Postponement of collections
1208.56  Determinations

Suspension or Termination

1208.60  Suspension and termination
1208.61  Proceedings after termination
1208.62  Effect of termination or amendment

Reports, Books, and Records

1208.70  Books, records, reports, cost control, and audits of the 
Council
1208.71  Reports, books, and records of persons subject to this 
subpart
1208.72  Confidential treatment

Miscellaneous

1208.80  Right of the Secretary
1208.81  Personal liability
1208.82  Patents, copyrights, inventions, publications, and product 
formulations
1208.83  Amendments
1208.84  Separability
1208.85  OMB control numbers

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

Definitions


Sec. 1208.1  Act.

    Act means the Fresh Cut Flowers and Fresh Cut Greens Promotion and 
Information Act of 1993, Pub. L. 103-190, 7 U.S.C. Secs. 6801 et seq., 
and any amendments thereto.


Sec. 1208.2  Consumer information.

    Consumer information means any action or program that provides 
information to consumers and other persons on appropriate uses for cut 
flowers and greens under varied circumstances, or on the care and 
handling of cut flowers and greens.


Sec. 1208.3  Council.

    Council means the Fresh Cut Flowers and Fresh Cut Greens Promotion 
Council established pursuant to Sec. 1208.30 of this subpart and which 
shall be referred to as the National PromoFlor Council.


Sec. 1208.4  Cut flowers.

    Cut flowers include all flowers cut from growing plants that are 
used as fresh-cut flowers and that are produced under cover or in field 
operations, but not including foliage plants, floral supplies, or 
flowering plants.


Sec. 1208.5  Cut greens.

    Cut greens include all cultivated or noncultivated decorative 
foliage cut from growing plants that are used as fresh-cut decorative 
foliage (except Christmas trees) and that are produced under cover or 
in field operations, but not including foliage plants, floral supplies, 
or flowering plants.


Sec. 1208.6  Cut flowers and greens.

    The term cut flowers and greens means either cut flowers or cut 
greens, even though the cut flowers or cut greens are sold as separate 
commodities by a person in the floral marketing system, or cut flowers 
and cut greens collectively when both commodities are sold by a person 
in the floral marketing system.


Sec. 1208.7  Department.

    Department means the United States Department of Agriculture.


Sec. 1208.8  Exempt handler.

    Exempt handler means a person who would otherwise be considered to 
be a qualified handler except that the person's annual sales of cut 
flowers and greens to retailers and other exempt handlers is less than 
$750,000.


Sec. 1208.9  Fiscal year.

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


Sec. 1208.10  Gross sales price.

    Gross sales price means the total amount of the transaction in a 
sale of cut flowers and greens from a handler to a retailer or exempt 
handler.


Sec. 1208.11  Order.

    Order means this subpart.


Sec. 1208.12  Part and subpart.

    Part means the Fresh Cut Flowers and Fresh Cut Greens Promotion and 
Information Order and all rules and regulations issued pursuant to the 
Act. The order itself shall be a subpart of such part.


Sec. 1208.13  Person.

    Person means any individual, group of individuals, firm, 
partnership, corporation, joint stock company, association, society, 
cooperative, or other legal entity.


Sec. 1208.14  Promotion.

    Promotion means any action determined by the Secretary to advance 
the image, desirability, or marketability of cut flowers and greens, 
including paid advertising.


Sec. 1208.15  Producer that is a qualified handler.

    Producer that is a qualified handler means an entity that is 
engaged: In the domestic production, for sale in commerce, of cut 
flowers and greens and that owns or shares in the ownership and risk of 
loss of the cut flowers and greens; or as a first processor of 
noncultivated greens, in receiving the greens from a person who gathers 
the greens for handling; and is subject to assessments as a qualified 
handler under the order.


Sec. 1208.16  Qualified handler.

    Qualified handler means a person operating in the cut flowers and 
greens marketing system that sells domestic or imported cut flowers and 
greens to retailers and exempt handlers and whose annual sales of cut 
flowers and greens to retailers and exempt handlers are $750,000 or 
more. The term does not include a person who only physically transports 
or delivers cut flowers and greens. However, the term does include, but 
is not limited to, the following entities when they have the requisite 
volume of sales of cut flowers and greens as provided in Secs. 1208.50 
and 1208.57:
    (a) A qualified wholesale handler--a person in business as a floral 
wholesale jobber (i.e., a person who conducts a commission or other 
wholesale business in buying and selling cut flowers and greens) or as 
a floral supplier (i.e., a person engaged in acquiring cut flowers and 
greens to be manufactured into floral articles or otherwise processed 
for resale) if the annual value of the qualified wholesale handlers 
sale of cut flowers and greens to retailers and exempt handlers is more 
than $750,000;
    (b) A manufacturer of bouquets for sale to retailers if the cut 
flowers and greens used in such articles are a substantial portion of 
the value of the manufactured floral articles;
    (c) A manufacturer of floral articles (other than bouquets) for 
sale to retailers if the cut flowers and greens used in such articles 
are a substantial portion of the value of the manufactured floral 
articles;
    (d) An auction house that clears the sale of cut flowers and greens 
to retailers and exempt handlers through a central clearinghouse;
    (e) A distribution center that is owned or controlled by a retailer 
if the predominant retail business activity of the retailer is floral 
sales. In addition to sales, non-sale transfers of cut flowers and 
greens by the distribution center to retail outlets, shall be counted 
for the purpose of applying the $750,000 minimum volume rule to the 
center and the value of such transfers shall be determined as provided 
in Secs. 1208.50 and 1208.57;
    (f) An importer that is a qualified handler--a person whose 
principal activity is the importation of cut flowers and greens into 
the United States (either directly or as an agent, broker, or consignee 
of any person or nation that produces or handles cut flowers and greens 
outside of the United States for sale in the United States) and who 
sells such cut flowers and greens to retailers and exempt handlers or 
directly to consumers, if the annual combined value of such sales 
determined as provided in Secs. 1208.50 and 1208.57 totals $750,000 or 
more;
    (g) A producer that is a qualified handler, e.g., a person who 
produces cut flowers and greens and who sells such cut flowers and 
greens directly to retailers or consumers if the annual combined value 
of such sales determined as provided in Secs. 1208.50 and 1208.57 
totals $750,000 or more.


Sec. 1208.17  Research.

    Research means market research and studies limited to the support 
of advertising, market development, and other promotion efforts and 
consumer information efforts relating to cut flowers and greens, 
including educational activities.


Sec. 1208.18  Retailer.

    Retailer means a person that sells cut flowers and greens to 
consumers. The term includes:
    (a) All retail outlets that sell cut flowers and greens to 
consumers including retail florists, supermarkets, and other mass 
market retail outlets that sell such flowers or greens, except 
distribution centers defined in Sec. 1208.16(e) (i.e., centers that are 
owned or controlled by a retailer if the predominant retail business 
activity of the retailer is floral sales and whose sales and non-sale 
transfers of cut flowers and greens to retail outlets exceeds $750,000, 
determined as provided in this subpart) even though such centers may 
also make direct sales to consumers.
    (b) Distribution centers owned or controlled by a retailer (or 
distribution centers owned or controlled cooperatively by a group of 
such retailers) when the predominant business activity of the retailer 
or retailers is not the sale of cut flowers and greens to consumers; 
and
    (c) Distribution centers independently owned but operated primarily 
to provide food products to retail stores.


Sec. 1208.19  Secretary.

    Secretary means the Secretary of Agriculture of the United States 
or any officer or employee of the Department to whom authority has 
heretofore been delegated, or to whom authority may hereafter be 
delegated, to act in the Secretary's stead.


Sec. 1208.20  Substantial portion.

    Substantial portion means that portion of the total value of 
manufactured floral articles that represents the value of the cut 
flowers and greens in such articles (expressed as a percentage factor) 
which the Council, with the approval of the Secretary, finds to be 
great enough to cause such articles to be classed as cut flowers and 
greens under this subpart.


Sec. 1208.21  State.

    State means each of the several States of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth 
of the Northern Mariana Islands, the United States Virgin Islands, 
Guam, American Samoa, the Republic of the Marshall Islands, the 
Federated States of Micronesia, and the Republic of Palau (until such 
time as the Compact of Free Association is ratified).


Sec. 1208.22  United States.

    United States means the States collectively.

Establishment of the Council


Sec. 1208.30  Establishment and membership of the Council.

    (a) A Fresh Cut Flowers and Fresh Cut Greens Promotion Council 
which shall be named the National PromoFlor Council is hereby 
established to administer the terms and provisions of this subpart. The 
Council shall consist of 25 members nominated by the floral industry 
and appointed by the Secretary, as provided in this subpart, each of 
whom shall have an alternate nominated and appointed in the same manner 
as members of the Council are nominated and appointed.
    (b) The membership of the Council shall be divided as follows:
    (1) 14 members and their alternates shall represent qualified 
wholesale handlers of domestic or imported cut flowers and greens;
    (2) Three members and their alternates shall represent producers 
that are qualified handlers of cut flowers and greens;
    (3) Three members and their alternates shall represent importers 
that are qualified handlers of cut flowers and greens;
    (4) Three members and their alternates shall represent traditional 
retailers of cut flowers and greens;
    (5) One member and alternate shall represent persons who produce 
cut flowers and greens in locations east of the Mississippi River; and
    (6) One member and alternate shall represent persons who produce 
cut flowers and greens in locations west of the Mississippi River.


Sec. 1208.31  Election and appointment of members and alternates other 
than retailers.

    (a) PromoFlor Organizing Group, Inc., an industry organizing 
committee, is designated as an election committee for the purpose of 
receiving the names of individuals who are engaged in the industry and 
who are prepared to serve as members (other than retailer members) of 
the Council or as alternates if elected as nominees and if selected by 
the Secretary for such positions.
    (b) The election committee shall, within five (5) days of the 
issuance of this subpart and with the assistance of the Secretary, 
request the submission of names of candidates for nominees from those 
segments of the industry for which nominees must be selected by an 
election process. These segments are: qualified wholesale handlers; 
importers who are qualified handlers; producers of cut flowers and 
greens who are qualified handlers; and producers of cut flowers and 
greens without regard to whether they are qualified handlers. 
Notification of the industry of the selection process by the election 
committee shall be by a news release to industry publications and where 
appropriate, newspapers of general circulation. In order to be assured 
of a place on the slate of candidates, the names of candidates must be 
received by the election committee not later than fifteen (15) days 
after the date of the first such news release.
    (c) Names of candidates shall be sought for the following seats on 
the Council:
    (1) 14 members and their respective alternates representing 
qualified wholesale handlers of domestic or imported cut flowers and 
greens. Two such members and their respective alternates for the United 
States at large and two such members and their respective alternates 
for each of the following regions:
    (i) Region 1 (Pacific): Alaska, California, Hawaii, Oregon, 
Washington, the Commonwealth of the Northern Mariana Islands, Guam, the 
Federated States of Micronesia, American Samoa, the Republic of the 
Marshall Islands, and the Republic of Palau.
    (ii) Region 2 (Inter-Mountain): Arizona, Arkansas, Colorado, Idaho, 
Kansas, Louisiana, Montana, Nebraska, Nevada, New Mexico, North Dakota, 
Oklahoma, South Dakota, Texas, Utah, and Wyoming.
    (iii) Region 3 (North Central): Illinois, Indiana, Iowa, Michigan, 
Minnesota, Missouri, and Wisconsin.
    (iv) Region 4 (Northeast): Connecticut, Maine, Massachusetts, New 
Hampshire, New Jersey, New York, Rhode Island, and Vermont.
    (v) Region 5 (Mid-Atlantic): Delaware, District of Columbia, 
Kentucky, Maryland, Ohio, Pennsylvania, Virginia, and West Virginia.
    (vi) Region 6 (Southeast): Alabama, Florida, Georgia, Mississippi, 
North Carolina, Puerto Rico, South Carolina, Tennessee, and the United 
States Virgin Islands.
    (2) Three at-large members and their alternates representing 
importers that are qualified handlers of cut flowers and greens.
    (3) Three members and their alternates representing producers of 
cut flowers and greens that are qualified handlers of cut flowers and 
greens. There shall be one such member and alternate from each of the 
following production areas:
    (i) Production Area 1: California.
    (ii) Production Area 2: Alaska, Arizona, Arkansas, Colorado, 
Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Michigan, 
Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North 
Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Washington, 
Wisconsin, and Wyoming.
    (iii) Production Area 3: Alabama, Connecticut, Delaware, Florida, 
Georgia, Kentucky, Maine, Maryland, Massachusetts, Mississippi, New 
Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, 
Rhode Island, South Carolina, Tennessee, Vermont, Virginia, and West 
Virginia.
    (4) Two members and their respective alternates representing 
persons who produce cut flowers and greens in locations east and west 
of the Mississippi River, respectively. There shall be one such member 
and alternate from the east, and one such member and alternate from the 
west.
    (d) Names of candidates for nominees may be submitted by state, 
regional (either regions within a state or regions that include more 
than one state as appropriate), or national industry organizations, 
provided that the organization has members engaged in the appropriate 
segment of the industry and from the region or production area if 
applicable, or by petition. The names of candidates submitted by an 
industry organization shall be accompanied by statements showing the 
role of the organization in the industry and general information about 
the membership it represents. No industry organization may submit more 
than two names of candidates for each seat on the Council. The names of 
candidates submitted by petition shall be accompanied by petitions in 
support of such candidate, signed by not less than ten (10) persons 
engaged in the appropriate segment of the industry and from the region 
or production area, if applicable, that the candidate will represent if 
ultimately selected by the Secretary. Submission of names of all 
candidates, whether by organizations or by petition, must include a 
certification by the candidate that the candidate is within the segment 
of the industry and the region or production area for which the 
candidate is nominated and, if elected as a nominee and if subsequently 
appointed by the Secretary, the candidate is willing to serve as a 
member or alternate member on the Council.
    (e) The names of candidates so submitted shall be reviewed and 
organized by the election committee for the preparation of slates of 
candidates. Separate slates for each segment and region of the industry 
shall be prepared as appropriate. There must be at least four 
candidates for each position on the Council for which nominees must be 
selected by election. No candidate may seek nomination for more than 
one seat on the Council. In a case where a candidate is nominated more 
than once, the election committee will decide which place on the ballot 
the candidate's name will appear. If insufficient candidates have been 
proposed for any seat, the election committee shall select additional 
candidates as required. The slates shall be prepared not later than 5 
days after the date for receiving names of candidates by the election 
committee.
    (f) After all candidates have been listed on the slates of 
candidates, the slates shall be supplied to an independent certified 
public accounting (CPA) firm contracted by the election committee. The 
ballots shall be printed and distributed by the CPA firm by U.S. mail, 
or other means selected by the election committee, not later than 15 
days after the slates of candidates are received from the election 
committee. To the maximum extent practicable, ballots will be 
distributed to all persons that will be assessed under this subpart in 
the segment of the industry, the region, or in the United States as a 
whole, as applicable, to which the ballot pertains. Ballots that are 
not returned to the CPA firm within 20 days shall be declared invalid. 
The votes for each candidate on the ballots shall be tallied by the CPA 
firm at the end of the voting period and the results furnished to the 
election committee. The election committee shall issue a news release 
setting forth the names of the candidates and the number of votes 
received by each candidate within 5 days after the voting period has 
ended. Those candidates on each of the ballots who rank first, second, 
third, and fourth in the number of votes received for each seat on the 
Council shall be declared the nominees for each such seat.
    (g) The names of those declared the nominees for each of the seats 
on the Council representing the various segments of the industry and 
the designated regions or production areas, where applicable, shall be 
submitted to the Secretary in order of rank with the number of votes 
received by each such nominee shown after the nominee's name and with 
the recommendation that the nominee with the most votes for each of 
such seats be declared the member of the Council and the nominee with 
the next greatest number of votes for each of such seats be declared 
the alternate member. The Secretary shall then appoint from the 
nominees so provided the members and their alternates for each of such 
seats on the Council.
    (h) Subsequent elections of nominees and appointment of members and 
alternates as terms expire shall be conducted by the Council or the 
Council staff in the manner similar to that described above except that 
the Council shall act as the election committee for which provision is 
made in this section. The nomination and election process shall be 
completed at least 90 days before the beginning of each nominee's term 
of office.
    (i) The Council shall periodically review the cut flower and greens 
market in the United States for changes in the geographic distribution 
of importing, producing, and marketing facilities and shall, if 
appropriate, recommend changes in the regions and production areas 
described in this section to the Secretary for approval.


Sec. 1208.32  Designation and appointment of retailer members and 
alternates.

    (a) Four nominations for one of the traditional retailer members of 
the Council and that member's alternate shall be received from the 
American Floral Marketing Council (AFMC) or a successor entity.
    (b) Four nominations for each of two members of the Council and 
their alternates shall be received from national traditional retail 
florist organizations other than the AFMC. In order to be eligible to 
submit nominations for members and alternates to serve on the Council, 
such organizations must certify that their activities and membership 
are nationwide in scope. No more than four nominations for each seat 
may be submitted by each organization.
    (c) The Secretary shall choose from among the names submitted by 
the AFMC the names of the member and alternate who shall fill the seat 
on the Council representing the AFMC. The Secretary shall choose from 
among the names submitted by national traditional retail florist 
organizations other than the AFMC the two members and their alternates 
who shall fill the other two seats on the Council representing 
traditional retailers.


Sec. 1208.33  Failure to nominate.

    If any group of qualified wholesale handlers, producers that are 
qualified handlers, importers that are qualified handlers, persons who 
produce cut flowers and greens, or traditional retailers fails to 
nominate individuals for appointments as members or alternates of the 
Council, the Secretary may appoint individual(s) from the appropriate 
segment(s), region(s), or area(s) of the industry to fill the vacancy 
or vacancies. The failure of any nominee to promptly indicate the 
nominee's willingness to serve in such manner as may be prescribed by 
the Secretary shall be treated as a failure to nominate.


Sec. 1208.34  Term of office and compensation.

    (a) The term of office for each member or alternate member of the 
Council shall be three years. As provided in the Act, the initial 
appointments on the Council shall be as follows: nine of the member 
appointments shall be for two-year terms, eight of the appointments 
shall be for three-year terms, and eight of the appointments shall be 
for four-year terms. Alternate members shall have the same terms of 
office as their respective members. The term of office on the initial 
Council shall be apportioned as follows:
    (1) One of the two qualified wholesale handler members representing 
each of Regions 1, 2, 4, and 5 shall serve two-year terms of office; 
one of the two qualified wholesale handler members representing each of 
Regions 3, 4, and 6 shall serve three-year terms of office; and one of 
the two qualified wholesale handler members representing each of 
Regions 1, 2, 3, 5, and 6 shall serve four-year terms of office.
    (2) The two qualified wholesale handler members representing the 
United States at large shall serve terms of office of two years and 
three years respectively.
    (3) The members representing producers that are qualified handlers 
from Production Areas 1 and 2 shall serve three-year terms of office, 
and the member representing producers that are qualified handlers from 
Production Area 3 shall serve a four-year term of office.
    (4) The three members representing importers that are qualified 
handlers shall serve terms of office of two, three, and four years 
respectively.
    (5) The members representing producers that produce cut flowers and 
greens east and west of the Mississippi River shall each serve two-year 
terms of office.
    (6) The member representing retailers nominated by the AFMC shall 
serve a two-year term of office. The two members representing retailers 
not nominated by the AFMC shall serve three-year and four-year terms of 
office respectively.
    (b) No member of the Council may serve more than two consecutive 
terms of three years, except that any member serving an initial term of 
four years or two years may serve an additional term of three years.
    (c) The term of office for the initial Council shall begin 
immediately following appointment by the Secretary. Time in the interim 
period, from appointment until the term begins pursuant to this 
section, shall not count towards the initial term of office. Should the 
term of office of the initial Council begin later than January 1, all 
time until the following January will count toward the terms of office 
set out in this section. In subsequent years, the term of office shall 
begin on January 1 or such other period which may be recommended by the 
Council and approved by the Secretary.
    (d) Members of the Council shall serve without compensation, but 
each member shall be reimbursed for the expenses incurred in performing 
duties as a member of the Council.


Sec. 1208.35  Vacancies.

    (a) Should any Council member position become vacant, the alternate 
of that member shall automatically assume the position of said member. 
Candidates for the vacant alternate member position which resulted from 
the alternate filling the vacant member position shall be nominated in 
the manner specified in Secs. 1208.31 and 1208.32. Provided, That a 
vacancy will not be required to be filled if the unexpired term is less 
than six months.
    (b) Should the positions of both a member and such member's 
alternate become vacant, Candidates to serve the unexpired terms of 
office for such member and alternate shall be nominated in the manner 
specified in Secs. 1208.31 and 1208.32. Provided, That a vacancy will 
not be required to be filled if the unexpired term is less than six 
months.
    (c) If a member of the Council consistently refuses to perform the 
duties of a member of the Council, if a member of the Council fails to 
submit reports and remit assessments required under this part, or if a 
member of the Council is known to be engaged in acts of dishonesty or 
willful misconduct, the Council may recommend to the Secretary that the 
member be removed from office. If the Secretary finds that the 
recommendation of the Council shows adequate cause, the Secretary shall 
remove such member from office. Further, without recommendation of the 
Council, a member may be removed by the Secretary upon a showing of 
adequate cause, if the Secretary determines that the person's continued 
service would be detrimental to the achievement of the purposes of the 
Act.


Sec. 1208.36  Procedure.

    (a) Thirteen (13) Council members, including alternates acting in 
place of members of the Council, shall constitute a quorum: Provided, 
That such alternates shall serve only when the member is absent from a 
meeting or is disqualified. Any action of the Council shall require the 
concurring votes of a majority of those present and voting. At 
assembled meetings, all votes shall be cast in person.
    (b) In lieu of voting at an assembled meeting, and, when in the 
opinion of the chairperson of the Council such action is considered 
necessary, or for matters of an emergency nature when there is not 
enough time to call an assembled meeting, the Council may act upon a 
majority of concurring votes of its members cast by mail, telegraph, 
telephone, facsimile, or by other means of communication: Provided, 
That each member or alternate acting for a member receives an accurate, 
full, and substantially identical explanation of each proposition. 
Telephone votes shall be promptly confirmed in writing. All votes shall 
be recorded in the Council minutes.


Sec. 1208.37  Executive committee.

    (a) The Council is authorized to appoint an executive committee of 
not more than nine persons from among its members. Initially, the 
executive committee shall be composed of the following:
    (1) four members representing qualified wholesale handlers;
    (2) two members representing producers that are qualified handlers;
    (3) two members representing importers that are qualified handlers; 
and
    (4) one member representing traditional retailers.
    (b) After the initial appointments, each appointment to the 
executive committee shall be made so as to ensure that the committee 
reflects, to the maximum extent practicable, the membership composition 
of the Council as a whole.
    (c) Each initial appointment to the executive committee shall be 
for a term of two years. After the initial appointments, each 
appointment to the executive committee shall be for a term of one year.
    (d) The Council may delegate to the executive committee the 
authority of the Council under this subpart to hire and manage staff 
and conduct the routine business of the Council consistent with such 
policies as are determined by the Council.

Activities of the Council


Sec. 1208.40  Duties of the Council.

    The Council shall have the following duties, in addition to the 
duties specified in other sections of this subpart:
    (a) Administer this subpart in accordance with the terms and 
provisions of this subpart;
    (b) Make rules and regulations to effectuate the terms and 
provisions of this subpart;
    (c) Appoint members of the Council to serve on the executive 
committee, as provided in Sec. 1208.37;
    (d) Employ such persons as the Council determines are necessary, 
and set the compensation and define the duties of the persons;
    (e) Develop budgets for the implementation of this subpart and 
submit the budgets to the Secretary for approval, and propose and 
develop (or receive and evaluate), approve, and submit to the Secretary 
for approval plans and projects for cut flowers and greens promotion, 
consumer information, or related research;
    (f) Implement plans and projects for cut flowers and greens 
promotion, consumer information, or related research, or contract or 
enter into agreements with appropriate persons to implement the plans 
and projects and pay the costs of the implementation of contracts and 
agreements with funds received under this subpart;
    (g) Keep minutes, books, and records which clearly reflect all of 
the acts and transactions of the Council. Minutes of all meetings shall 
be promptly provided to the Secretary;
    (h) Evaluate ongoing and completed plans and projects for cut 
flowers and greens promotion, consumer information, or related 
research;
    (i) Receive, investigate, and report to the Secretary complaints of 
violations of this subpart and direct that the staff of the Council 
periodically review the list of importers of cut flowers and greens 
provided by the Customs Service to determine whether persons on the 
list are subject to this subpart;
    (j) Recommend to the Secretary amendments to this subpart;
    (k) Invest, pending disbursement under a plan or project, funds 
collected through assessments only in: Obligations of the United States 
or any agency of the United States, general obligations of any State or 
any political subdivision of a State, any interest-bearing account or 
certificate of deposit of a bank that is a member of the Federal 
Reserve System, or obligations fully guaranteed as to principal and 
interest by the United States. Income from any such invested funds may 
be used only for a purpose for which the invested funds may be used.
    (l) Prepare and submit to the Secretary such reports as may be 
prescribed for appropriate accounting with respect to the receipt and 
disbursement of funds entrusted to the Council monthly, or at such 
times as prescribed by the Secretary.
    Monthly financial statements shall be submitted to the Department 
and shall include at least:
    (1) A balance sheet, and
    (2) An expense budget comparison showing expenditures during the 
month, year-to-date expenditures, and an unexpended budget. Upon 
request, a summary of checks issued by the Council is to be made 
available. Reports shall be submitted within 30 days after the end of 
each month.
    (m) To cause the books of the Council to be audited by an 
independent certified public accountant at the end of each fiscal 
period, and at such other times as the Council or the Secretary may 
deem necessary. The report of each audit shall show the receipt and 
expenditure of funds collected pursuant to this part, and shall be 
submitted to the Secretary.
    (n) To give the Secretary the same notification, written or oral, 
as provided to Council members concerning all conference calls and 
meetings, including executive, advisory, subcommittee, and other 
meetings related to Council matters, and to grant the Secretary access 
to all such calls and meetings;
    (o) To follow the Department's equal opportunity/civil rights 
policies; and
    (p) Provide the Secretary such information as the Secretary may 
require.


Sec. 1208.41  Budgets and expenses.

    (a) The Council shall promptly adopt and forward to the Secretary 
for approval its determination of the beginning and ending dates of an 
annual fiscal period to be used by the Council for budgeting and 
accounting purposes.
    (b) The Council shall submit annual budgets of its anticipated 
expenses and disbursement in the administration of this subpart, 
including the projected costs for the promotion of cut flowers and 
greens, consumer information, and related research plans and projects 
to the Secretary for approval. The first budget, which shall be 
submitted promptly after the effective date of this subpart, shall 
cover such period as may remain before the beginning of the next fiscal 
year. If such fiscal period is 90 days or less, the first budget shall 
cover such period, as well as the next fiscal year. Thereafter, the 
Council shall submit budgets for each succeeding fiscal year not less 
than 30 days before the beginning of such fiscal year.
    (c) The Council is authorized to incur such expenses (including 
provision for a reasonable reserve for operating contingencies) as the 
Secretary finds are reasonable and likely to be incurred by the Council 
for its maintenance and functioning and to enable it to exercise its 
powers and perform its duties in accordance with this subpart. Expenses 
authorized in this paragraph shall be paid from assessments collected 
pursuant to Sec. 1208.50, or other funds available to the Council.
    (d) The Council shall reimburse the Secretary, from assessments 
collected pursuant to Sec. 1208.50, or from other funds available to 
the Council, for administrative costs incurred by the Department to 
carry out its responsibilities pursuant to this subpart after the 
effective date of this subpart.
    (e) The Council shall establish an interest-bearing escrow account 
with a bank that is a member of the Federal Reserve System and shall 
deposit in such account an amount equal to the percentage determined by 
the Council to be held in reserve for the payment of refunds pursuant 
to Sec. 1208.55.
    (f) The Council may, with the approval of the Secretary, borrow 
money for the payment of administrative expenses, subject to the same 
fiscal, budget, and audit controls as other funds of the Council.


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

    The Council shall develop and implement plans and projects for the 
promotion of, and the dissemination of information about, cut flowers 
and greens, as well as for research related to cut flowers and greens 
in accordance with the following:
    (a) The Council shall develop, or contract for the development of, 
plans and projects for advertising, sales promotion, other promotion, 
and for dissemination of consumer information, with respect to cut 
flowers and greens, and may disburse such funds as necessary for these 
purposes after such plans or projects have been submitted to, and 
approved by, the Secretary. Any such plan or project shall be directed 
toward increasing the general demand for cut flowers and greens and 
shall not make reference to a private brand or trade name, point of 
origin, or source of supply, except that the Council may offer such 
plans and projects of the Council for use by commercial parties such as 
local, regional, State, or national floral industry organizations, and 
then only under terms and conditions prescribed by the Council and 
approved by the Secretary. No plan or project may make use of unfair or 
deceptive acts or practices with respect to quality or value.
    (b) The Council shall develop, or contract for the development of, 
plans and projects for research on the development of both established 
and new markets for cut flowers and greens and for research with 
respect to distribution, sale, marketing, use, and promotion of cut 
flowers and greens, as well as the dissemination of consumer 
information concerning cut flowers and greens. The Council is 
authorized to develop, or contract for the development of, such plans 
and projects for other research with respect to the marketing, 
promotion, and dissemination of information about cut flowers and 
greens as it finds appropriate. The Council may disburse such funds as 
necessary for these purposes after such plans or projects have been 
submitted to, and approved by, the Secretary.
    (c) The Council shall submit to the Secretary, for approval before 
implementation, any contracts for development of plans and projects, as 
well as such plans and projects as may be developed by or approved by 
the Council for advertising, promotion, dissemination of information, 
and research. All such submissions to the Secretary shall be 
accompanied by a proposed budget showing the estimated expense to be 
incurred and the availability of revenue from which such expense may be 
paid. On approval of any such submission, the Council may proceed with 
the contract, plan or project and incur the expenses necessary to carry 
it out. Contracts or agreements to be submitted to the Secretary and 
entered into if approved by the Secretary shall, among such other 
matters as may be required, provide that:
    (1) The contracting or agreeing party shall develop and submit to 
the Council a plan or project, together with a budget that includes the 
estimated costs to be incurred for the plan or project;
    (2) the plan or project shall become effective on the approval of 
the Secretary; and
    (3) the contracting or agreeing party shall:
    (i) keep accurate records of all of the transactions of the party;
    (ii) account for funds received and expenses;
    (iii) make periodic reports to the Council of activities conducted; 
and
    (iv) make such other reports as the Council or the Secretary may 
require.
    (d) The Council, from time to time, may seek advice from and 
consult with experts from the production, import, wholesale, and retail 
segments of the cut flowers and greens industry to assist in the 
development of promotion, consumer information, and related research 
plans and projects. For these purposes, the Council may appoint special 
committees composed of persons other than Council members. A committee 
so appointed may not provide advice or recommendations to a 
representative of an agency, or an officer, of the Federal Government, 
and shall consult directly with the Council.


Sec. 1208.43   Other contracts and agreements.

    The Council may enter into contracts or agreements for 
administrative services, including such contracts of employment, as may 
be required to conduct its business in accordance with such fiscal 
period budgets as may have been approved by the Secretary. To the 
extent appropriate to the contract involved, contracts entered into by 
the Council under the authority of this section shall contain 
provisions comparable to those described in Sec. 1208.42(c).

Assessments


Sec. 1208.50   Assessments.

    (a) Each qualified handler, as defined in Sec. 1208.16--including 
but not limited to wholesale handlers, as defined in Sec. 1208.16(a); 
bouquet manufacturers as described in Sec. 1208.16(b); manufacturers of 
floral articles, as described in Sec. 1208.16(c); auction houses that 
clear sales of cut flowers and greens, as described in Sec. 1208.16(d); 
distribution centers owned or controlled by retailers if the principal 
business activity is floral sales, as described in Sec. 1208.16(e); 
importers that are qualified handlers as defined in Sec. 1208.16(f); 
producers that are qualified handlers as defined in Sec. 1208.16(g)--
shall pay to the Council an assessment in an amount determined in 
accordance with this subpart, on each sale of cut flowers and greens to 
a retailer or an exempt handler (as defined in Sec. 1208.8) and on each 
non-sale transfer of cut flowers and greens to a retailer by a 
qualified handler that is a distribution center; as well as each direct 
sale of cut flowers and greens to a consumer by a producer that is a 
qualified handler, or by an importer that is a qualified handler. Such 
assessments shall be remitted by each qualified handler to the Council 
or its agent within 60 days after the end of the month in which the 
sale or non-sale transfer subject to assessment under this subpart took 
place. Such assessments shall be paid at the following rates:
    (1) During the first three years after the effective date of this 
subpart:
    (i) Except as provided in paragraph (a)(1)(ii) of this section, the 
rate shall be one-half of 1 (0.5) percent of the gross sales price of 
the cut flowers and greens sold;
    (ii) In the case of non-sale transfers to a retailer by a qualified 
handler that is a distribution center and in the case of direct sales 
by importers or producers, the rate shall be one-half of 1 (0.5) 
percent of the amount of each transaction's valuation for assessment as 
provided in paragraph (b);
    (2) After the first three years that this subpart is in effect, the 
uniform assessment rate may be increased or decreased annually by not 
more than one-quarter of 1 (0.25) percent of the gross sales price of a 
product sold; or in the case of other transactions the amount of such 
transactions, except that the assessment rate may not exceed 1 percent 
of the gross sales price or the transaction amount. Changes in the rate 
of assessment may only be made if such changes are adopted by a two-
thirds majority vote of the Council and approved by the Secretary 
(after public notice and opportunity for comment as provided in the 
Act) as being necessary to carry out the objectives of the Act. Any 
such change so approved by the Secretary may be put into effect without 
a referendum but shall be announced not less than 30 days prior to the 
beginning of a fiscal year.
    (b) Each non-sale transfer of cut flowers and greens to a retailer 
from a qualified handler that is a distribution center shall be treated 
as a sale of cut flowers and greens to a retailer and shall be 
assessable. Each direct sale of cut flowers and greens to a consumer by 
a producer or an importer who is a qualified handler shall be 
assessable. These transactions shall be determined to have the 
following valuations for assessment purposes:
    (1) In the case of a non-sale transfer of cut flowers and greens 
from a distribution center that is a qualified handler and each direct 
sale of cut flowers and greens to a consumer by an importer that is a 
qualified handler, the amount of the valuation of the cut flowers and 
greens for assessment purposes shall be the price paid by the 
distribution center or importer to acquire the cut flowers and greens, 
and determined by multiplying the acquisition price by a uniform factor 
of 1.43 to represent the markup of a wholesale handler on a sale to a 
retailer.
    (2) In the case of a direct sale to a consumer by a producer who is 
a qualified handler, the valuation of the cut flowers and greens for 
assessment purposes shall be equal to an amount determined by 
multiplying the price paid by the consumer by a uniform factor of 0.50 
to represent the cost of producing the article and the markup of a 
wholesale handler on a sale to a retailer.
    (3) The Council may consider and adopt changes in the uniform 
factors specified in subparagraphs (1) and (2) above. Any such change 
shall not become effective until it has been adopted by a majority vote 
of the Council and approved by the Secretary after public notice and 
opportunity to comment on such change as provided in the Act. Changes 
so adopted and approved shall become effective at the beginning of the 
next fiscal year.
    (c) The collection of assessments shall commence on or after a date 
established by the Secretary, and shall continue until terminated by 
the Secretary. If the Council is not constituted on the date the first 
assessments are to be remitted, the Secretary shall have the authority 
to receive assessments on behalf of the Council and may hold such 
assessments in an interest bearing account until the Council is 
constituted, and the funds may be transferred to the Council.
    (d) No assessments may be levied on any sale of cut flowers and 
greens for export from the United States. The Council is authorized to 
establish procedures for the verification of exports.
    (e) In general, assessment funds (less refunds, if any) shall be 
used:
    (1) For payment of costs incurred in implementing and administering 
this subpart;
    (2) To provide for a reasonable reserve to be maintained from 
assessments to be available for contingencies; and
    (3) To cover the administrative costs incurred by the Secretary in 
implementing and administering this Act.


Sec. 1208.51  Influencing governmental action.

    No funds collected by the Council shall in any manner be used for 
the purpose of influencing legislation or government action or policy, 
except to develop and recommend to the Secretary amendments to this 
subpart.


Sec. 1208.52  Charges for late payments.

    Any assessment due the Council pursuant to Sec. 1208.50 that is not 
paid on time shall be increased 1.5 percent each month it remains 
unpaid beginning with the day following the date such assessment was 
due. If not paid in full, any remaining amount due, which shall include 
any unpaid charges previously made pursuant to this section, shall be 
increased at the same rate on the corresponding day of each month 
thereafter until paid. For the purpose of this section, any assessment 
that was determined at a date later than prescribed by this subpart 
because of a failure to submit a report when due shall be considered to 
have been payable by the date it would have been due if the report had 
been filed when due. The timeliness of a payment to the Council shall 
be based on the applicable postmark date or the date actually received 
by the Council, whichever is earlier.


Sec. 1208.53  Adjustment of accounts.

    Whenever the Council or the Secretary determines through an audit 
of a person's reports, records, books, or accounts or through some 
other means that additional money is due the Council or that money is 
due such person from the Council, such person shall be notified of the 
amount due. The person shall then remit any amount due the Council by 
the next date for remitting assessments. Overpayments shall be credited 
to the account of the person remitting the overpayment and shall be 
applied against amounts due in succeeding months.


Sec. 1208.54  Refunds of assessments and escrow account.

    (a) Any qualified handler may demand and receive from the escrow 
account, subject to the limitation on such payments provided in 
paragraph (c), a one-time refund of any assessments paid by or on 
behalf of the handler if the handler requests the refund before the 
initial referendum on this subpart is held and this subpart is rejected 
by the voters when it is submitted to the referendum in accordance with 
Sec. 1208.60(a). Such a refund will be paid only if all of the 
following conditions are met:
    (1) The handler has paid the assessments sought to be refunded and 
has submitted proof of such payment;
    (2) The handler does not support the program established under this 
subpart and so states in the handler's demand for a refund;
    (3) The handler's demand for a refund is made on a form specified 
by the Council and filed not less than 10 days prior to the date when 
the initial referendum, conducted pursuant to Sec. 1208.60(a) to 
ascertain whether this subpart shall remain in effect, is scheduled to 
begin; and
    (4) This subpart is not approved by a simple majority of the votes 
cast by qualified handlers in the initial referendum.
    (b) The Council shall establish an escrow account to be used for 
assessment refunds, as needed, and shall place into the account an 
amount equal to 10 percent of the total amount of assessments collected 
during the period beginning on the date this subpart becomes effective 
and ending on the date the results of the initial referendum are issued 
and the initial referendum is completed.
    (c) If the amount in the escrow account is not sufficient to refund 
the total amount of assessments demanded by all qualified handlers 
determined eligible for refunds and this subpart is not approved in the 
referendum, the Council shall prorate the amount of all such refunds 
among all eligible qualified handlers that demand the refund. If there 
is any amount in excess of the amount needed to pay refunds and 
expenses, it shall be returned pro rata to those who paid assessments. 
If this subpart is approved in the referendum, there shall be no 
refunds made, and all funds in the escrow account shall be returned to 
the Council for use by the Council in accordance with the other 
provisions of this subpart.


Sec. 1208.55  Postponement of collections.

    (a) The Council may grant a postponement of the payment of an 
assessment under this subpart for any qualified handler that 
establishes that it is financially unable to make the payment. In order 
that a qualified handler that is financially unable to pay an 
assessment may have the opportunity to petition the Council to postpone 
payment of such an assessment, as provided in the Act, the Council 
shall develop forms and procedures for this purpose as expeditiously as 
possible and submit them to the Secretary for approval and issuance 
after notice and an opportunity for public comment thereon. Such 
procedures shall, among other things, require that the handler 
demonstrate the handler's inability to pay through the submission of an 
opinion prepared by an independent certified public accountant (at the 
handler's expense) and any other documentation specified therein to the 
effect that the handler is insolvent or will be unable to continue to 
operate if the handler is required to pay the assessment when due.
    (b) The procedures for obtaining a postponement of payment to be 
developed by the Council for submission to the Secretary shall also 
include provisions with respect to the period of postponement, the 
conditions of payment that may be imposed and the basis, if any, on 
which further extensions of the time for payment will be granted so as 
to appropriately reflect the demonstrated needs of the qualified 
handler.


Sec. 1208.56  Determinations.

    (a) The Council is authorized to make the determinations required 
by this subpart as to the status of persons as qualified handlers and 
exempt handlers including determinations of the status of persons as 
qualified wholesale handlers, distribution centers that are qualified 
handlers, producers that are qualified handlers, importers that are 
qualified handlers, as well as such other determinations of status and 
facts as may be required for the effective administration of this 
subpart. Based on such determinations, the Council from time to time 
shall publish lists of exempt handlers who are not required to pay 
assessments, and lists of qualified handlers who are required to pay 
assessments under this subpart.
    (b) For the purpose of applying the $750,000 annual sales 
limitation to a specific person in order to determine the status of the 
person as a qualified handler or an exempt handler or to a specific 
facility in order to determine the status of the facility as an 
eligible separate facility for the purpose of referenda, the Council is 
authorized to determine the annual sales volume of a person or 
facility.
    (c) Any such determination shall be based on the sales of cut 
flowers and greens by the person or facility during the most recently-
completed calendar year, except that in the case of a new business or 
other operation for which complete data on sales during all or part of 
the most recently-completed calendar year are not available to the 
Council, the determination may be made using an alternative time period 
or other alternative procedures as the Council may find appropriate. In 
making such determinations, the Council is authorized to make 
attributions in accordance with the following rules and for the purpose 
of determining the annual sales volume of a person or a separate 
facility of a person, sales attributable to a person shall include:
    (1) In the case of an individual, sales attributable to the spouse, 
children, grandchildren, parents, and grandparents of the person;
    (2) In the case of a partnership or member of a partnership, sales 
attributable to the partnership and other partners of the partnership;
    (3) In the case of an individual or a partnership, sales 
attributable to any corporation or other entity in which the individual 
or partnership owns more than 50 percent of the stock or (if the entity 
is not a corporation) that the individual or partnership controls; and
    (4) In the case of a corporation, sales attributable to any 
corporate subsidiary or other corporation or entity in which the 
corporation owns more than 50 percent of the stock or (if the entity is 
not a corporation) that the corporation controls.
    (d) The Council is also authorized to attribute any stock ownership 
interest as may be required to carry out this subpart. In doing so a 
stock ownership interest in the entity that is owned by the spouse, 
children, grandchildren, parents, grandparents, or partners of an 
individual, or by a partnership in which a person is a partner, or by a 
corporation more than 50 percent of the stock of which is owned by a 
person, shall be treated as owned by the individual or person.
    (e) For the purpose of this subpart, the Council, with the approval 
of the Secretary, may require a person who sells cut flowers and greens 
to retailers to submit reports to the Council on annual sales by the 
person and on stock ownership.

Suspension or Termination


Sec. 1208.60  Suspension and termination.

    If the Secretary finds that this subpart, or any provision of this 
subpart, obstructs or does not tend to effectuate the policy of the 
Act, the Secretary shall terminate or suspend the operation of this 
subpart or the provision of this subpart under such terms as the 
Secretary determines are appropriate. Such termination or suspension 
shall not be considered an order within the meaning of such term in the 
Act.


Sec. 1208.61  Proceedings after termination.

    (a) Upon the termination of this subpart, the Council shall 
recommend not more than five of its members to the Secretary to serve 
as trustees for the purpose of liquidating the assets of the Council. 
Such persons, upon designation by the Secretary, shall become trustees 
of all the funds and property owned, in the possession of, or under the 
control of the Council, including any claims unpaid or property not 
delivered, or any other claim existing at the time of such termination.
    (b) The trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Council under any contract or 
agreement entered into by it under this subpart;
    (3) Make refunds from the escrow account to those persons who 
applied for refunds of assessments paid and who are eligible to receive 
such refunds. Such refunds shall be made within 30 days after the 
referendum results are issued.
    (4) From time to time account for all receipts and disbursements, 
and deliver all property on hand, together with all books and records 
of the Council and of the trustees, to such persons as the Secretary 
may direct; and
    (5) Upon the request of the Secretary, execute such assignments or 
other instruments necessary or appropriate to vest in such persons full 
title and right to all of the funds, property, and claims vested in the 
Council or the trustees under this subpart.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered under this subpart shall be subject to the 
same obligations imposed upon the Council and upon the trustees.
    (d) Any residual funds not required to defray the necessary 
expenses of liquidation shall be turned over to the Secretary to be 
used, to the extent practicable, in the interest of continuing one or 
more of the promotion, research, consumer information, or industry 
information programs, plans, or projects authorized under this subpart.


Sec. 1208.62  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this subpart or of any regulation or rule issued under 
this subpart, or the issuance of any amendment to such provisions, 
shall not:
    (a) Affect or waive any right, duty, obligation, or liability that 
shall have arisen or may hereafter arise in connection with any 
provision of this subpart or any such regulation or rule;
    (b) Release or extinguish any violation of this subpart or any such 
regulation or rule; or
    (c) Affect or impair any rights or remedies of the United States, 
the Secretary, or any person with respect to any such violation.

Reports, Books, and Records


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

    (a) The Council shall maintain the books and records that the 
Secretary may require to account for the receipt and disbursement of 
all funds entrusted to the Council in accordance with the provisions of 
this subpart, and shall prepare and submit to the Secretary, from time 
to time as prescribed by the Secretary, all reports that the Secretary 
may require.
    (b) The Council shall, as soon as practicable after the effective 
date of this subpart and after consultation with the Secretary and 
other appropriate persons, implement a system of cost controls based on 
normally accepted business practices that will ensure that the annual 
budgets of the Council include only amounts for administrative expenses 
that cover the minimum administrative activities and personnel needed 
to properly administer and enforce this subpart, and conduct, 
supervise, and evaluate plans and projects under this subpart.
    (c) The Council shall cause the books and records of the Council to 
be audited by an independent auditor that is a certified public 
accountant at the end of each fiscal year. All audits must be performed 
in accordance with either standards issued by the American Institute of 
Certified Public Accountants or by the General Accounting Office. A 
report of each audit shall be submitted to the Secretary.


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

    (a) Each qualified handler shall prepare and file reports 
containing such information as may be required by the Council with the 
approval of the Secretary. Such information shall include:
    (1) Data showing the volume of sales and non-sale transfers of cut 
flowers and greens made during the reporting period;
    (2) The amount of the assessment on such sales or non-sale 
transfers; and
    (3) Any other data that may be required by the Council with the 
approval of the Secretary.
    (b) Each person subject to this subpart shall maintain and make 
available for inspection by agents of the Council and the Secretary 
such books and records as are determined by the Council with the 
approval of the Secretary, as necessary to carry out the provisions of 
this subpart and the regulations issued hereunder, including such 
records as are necessary to verify any reports required. Such records 
shall be retained for at least two years beyond the fiscal period of 
their applicability.


Sec. 1208.72  Confidential treatment.

    (a) Information obtained from books, records, or reports required 
to be maintained or filed under the Act and this subpart shall be kept 
confidential by all persons, including agents and former agents of the 
Council, all officers and employees and all former officers and 
employees of the Department, and by all officers and employees and all 
former officers and employees of contracting agencies having access to 
such information, and shall not be available to Council members. Only 
those persons having a specific need for such information to 
effectively administer the provisions of this subpart shall have access 
to such information. In addition, only such information so furnished or 
acquired as the Secretary deems relevant shall be disclosed by them, 
and then only in a suit or administrative hearing brought at the 
discretion, or upon the request, of the Secretary, or to which the 
Secretary or any officer of the United States is a party, and involving 
this subpart. Nothing in this paragraph shall be deemed to prohibit:
    (1) The issuance of general statements, based upon the reports, of 
the number of persons subject to this subpart or statistical data 
collected from such reports, which statements do not identify the 
information furnished by any such persons, and
    (2) The publication, by direction of the Secretary, of the name of 
any individual, group of individuals, partnership, corporation, 
association, cooperative, or other entity that has been adjudged to 
have violated this subpart, together with a statement of the particular 
provisions of the subpart so violated.
    (b) No information on how a person voted in a referendum conducted 
under the Act shall be made public.

Miscellaneous


Sec. 1208.80  Right of the Secretary.

    All fiscal matters, programs or projects, by-laws, rules or 
regulations, reports, or other substantive actions proposed and 
prepared by the Council shall be submitted to the Secretary for 
approval.


Sec. 1208.81  Personal liability.

    No member or employee of the Council shall be held personally 
responsible, either individually or jointly, in any way whatsoever, to 
any person for errors in judgement, mistakes, or other acts of either 
commission or omission of such member or employee under this subpart, 
except for acts of dishonesty or willful misconduct.


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

    Any patents, copyrights, inventions, publications, or product 
formulations developed through the use of funds received by the Council 
under this subpart shall be the property of the United States 
Government as represented by the Council and shall, along with any 
rents, royalties, residual payments, or other income from the rental, 
sale, leasing, franchising, or other uses of such patents, copyrights, 
inventions, publications, or product formulations, inure to the benefit 
of the Council. Upon termination of this subpart, Sec. 1208.62 shall 
apply to determine disposition of all such property.


Sec. 1208.83  Amendments.

    Amendments to this subpart may be proposed, from time to time, by 
the Council or by any interested person affected by the provisions of 
the Act, including the Secretary.


Sec. 1208.84  Separability.

    If any provision of this subpart is declared invalid, or the 
applicability thereof to any person or circumstances is held invalid, 
the validity of the remainder of this subpart or the applicability 
thereof to other persons or circumstances shall not be affected 
thereby.


Sec. 1208.85  OMB control numbers.

    The control number assigned to the information collection 
requirements by the Office of Management and Budget pursuant to the 
Paperwork Reduction Act of 1980, Public Law 96-511, is OMB number 0581-
0096, except Council member nominee information sheets are assigned OMB 
number 0505-0001.

Proposal II

    2. Part 1208 is proposed to be added as set forth above, with the 
exception of Sec. 1208.32, which would read as follows:


Sec. 1208.32  Designation and appointment of retailer members and 
alternates.

    (a) Nominations for one of the traditional retailer members of the 
Council and that member's alternate shall be made by the American 
Floral Marketing Council (AFMC) or a successor entity.
    (b) Nominations for one of the traditional retailer members of the 
Council and that member's alternate shall be made by the Florists' 
Transworld Delivery Association, which is the largest traditional 
retail florist organization and expends the largest amount of marketing 
funds in the industry, or a successor entity.
    (c) Nominations for one of the traditional retailer members of the 
Council and that member's alternate shall be made by a coalition of 
traditional retail florist organizations defined as follows:
    (1) For the purpose of nominating members to the Council, a 
traditional retail florist organization is defined as an organization, 
including its committees and/or subsidiaries, whose voting membership 
(i) exceeds 1,000, (ii) is comprised of more than 75 percent 
traditional cut flowers and greens retailers, and (iii) expends a 
portion of its annual revenue on marketing of fresh cut flowers and 
greens.
    (2) For the purpose of nominating members to the Council, a 
traditional cut flowers and greens retailer is defined as a small 
business establishment operating from owned or leased premises and 
deriving 40 percent of its total volume of sales from the sale of fresh 
cut flowers and greens.
    (d) No traditional retail florist organization, including AFMC, 
shall be eligible to submit nominees for more than one of the three 
Council retailer member positions.

Proposal III

    3. Part 1208 is proposed to be added as set forth above, with the 
exception of Secs. 1208.21 and 1208.22, which would read as follows:


Sec. 1208.21  Traditional retailer.

    Traditional retailer means any retailer, as defined in 
Sec. 1208.17, whose primary business is the sale of floral products, 
including fresh cut flowers and cut greens, or who has a specific 
department dedicated to the sale of floral products, including fresh 
cut flowers and cut greens.


Sec. 1208.22  Traditional retail florist organization.

    Traditional florist organization means membership organizations of 
traditional retailers with activities and membership which are 
nationwide in scope.

    Dated: June 22, 1994.
Lon Hatamiya,
Administrator.
[FR Doc. 94-15643 Filed 6-27-94; 8:45 am]
BILLING CODE 3410-02-P