[Federal Register Volume 62, Number 71 (Monday, April 14, 1997)]
[Rules and Regulations]
[Pages 18033-18037]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-9569]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1208

[FV-97-701FR]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule provides procedures that the Department of 
Agriculture (Department) will use in conducting the referendum to 
determine whether to continue the Fresh Cut Flowers and Fresh Cut 
Greens Promotion and Information Order (Order). In order to continue, 
the program must be approved by a simple majority of the qualified 
handlers voting in the referendum.

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

FOR FURTHER INFORMATION CONTACT: Sonia N. Jimenez, Research and 
Promotion Branch, Fruit and Vegetable Division, AMS, USDA, P.O. Box 
96456, Room 2535-S, Washington, DC 20090-6456, telephone (202) 720-9916 
or (888) 720-9917.

SUPPLEMENTARY INFORMATION: This rule is issued under the Fresh Cut 
Flowers and Fresh Cut Greens Promotion and Information Act of 1993 (7 
U.S.C. 6801 et seq.), hereinafter referred to as the Act, and the 
Order.
    This rule provides the procedures under which the referendum will 
be conducted.

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. It is not intended to have retroactive effect. This 
rule will not preempt any State or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 8 of the Act, 
after an Order is implemented, a person subject to the Order may file a 
petition with the Secretary stating that the Order or any provision of 
the Order, or any obligation imposed in connection with the Order, is 
not in accordance with law and requesting a modification of the Order 
or an exemption from the Order. The petitioner is afforded the 
opportunity for a hearing on the petition. After such hearing, the 
Secretary will make a ruling on the petition. The Act provides that the 
district courts of the United States in any district in which a person 
who is a petitioner resides or carries on business are vested with 
jurisdiction to review the Secretary's ruling on the petition, if a 
complaint for that purpose is filed within 20 days after the date of 
the entry of the ruling.

Executive Order 12866 and Regulatory Flexibility Act

    This rule has been determined not significant for purposes of 
Executive Order 12866, and therefore has not been reviewed by the 
Office of Management and Budget.
    In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.), the Agency has examined the impact of this rule on small 
entities. Accordingly, we have performed this Final Regulatory 
Flexibility Analysis.
    The Act, which authorizes the creation of a generic program of 
promotion and information for fresh cut flowers and greens, became 
effective on December 14, 1993.
    Section 7 of the Act provides that the Secretary of Agriculture 
(Secretary) shall conduct a referendum not later than 3 years after the 
issuance of an order to ascertain whether the order then in effect 
shall be continued. The Order was issued on December 29, 1994. 
Paragraph (a)(2) of section 7 of the Act requires that the Order be 
approved by a simple majority of all votes cast in the referendum. In 
addition, paragraph (b) of section 7 of the Act specifies that each 
qualified handler eligible to vote in the referendum shall be entitled 
to cast one vote for each separate facility of the person that is an 
eligible separate facility. Eligible separate facility is defined in 
paragraph (b)(2) of section 7 of the Act as a handling or marketing 
facility of a qualified handler that is physically located away from 
other facilities of the qualified handler or that the business function 
of the separate facility is substantially different from the functions 
of other facilities owned or operated by the qualified handler and the 
annual sales of cut flowers and cut greens to retailers and exempt 
handlers from the facility are $750,000 or more annually.
    Only those wholesale handlers (including but not limited to, 
wholesale jobbers, bouquet and floral article manufacturers, auction 
houses that clear the sale of cut flowers and greens, and retail 
distribution centers), producers and importers who have annual sales of 
$750,000 or more of fresh cut flowers and greens and who sell those 
products to exempt handlers, retailers, or consumers are considered 
qualified handlers and assessed under the Order.
    The referendum procedures provide definitions of who is eligible to 
vote and instructions for referendum agents regarding subagents, 
publicity for the referendum and the results, ballots, voting, ballot 
handling and tabulation, reporting, and confidentiality of referendum 
materials. The representative period for establishing voter eligibility 
for the referendum will be announced by the Secretary in a separate 
referendum order published later in the Federal Register.
    There are approximately 525 wholesale handlers, 84 importers, and 
83 producers who are qualified handlers. Small agricultural service 
firms, which include the qualified handlers covered under the Order, 
have been defined by the Small Business Administration (SBA) (13 CFR 
121.601) as those whose annual receipts are less than $5 million. Only 
127 qualified handlers have been identified to have $5 million in 
annual sales.
    It is concluded that the majority of qualified handlers may be 
classified as small entities.
    Statistics reported by the National Agricultural Statistics Service 
show that in 1995 sales of domestic cut flowers and cut greens totaled 
approximately $521.3 million at the wholesale level. The leading 
producing states by wholesale value are California, with about 49 
percent of the total of flower and cut green production, followed by 
Florida, Colorado and Hawaii. Sales information for 1996 will not be 
available until after publication of this rule.
    Exports in 1996 of U.S. cut flowers were valued at $29.4 million, 
with about 52 percent of the value from exports to Canada, and 16 
percent from exports to the Netherlands, about 14 percent from exports 
to Germany, and 13 percent

[[Page 18034]]

from exports to Japan. Exports of cut greens are not reported by the 
Bureau of the Census as a separate item; they are included in a 
``basket'' export category that includes other types of fresh cut plant 
exports such as branches without flowers or buds, evergreens, and 
grasses, which are suitable for ornamental purposes. In 1996 the value 
of these exports was $52.0 million. In 1995, the value of exports was 
$45.8 million.
    The value of imports of cut flowers in 1996 was $557.7 million. 
Major countries exporting cut flowers to the United States, by value, 
are Colombia which accounts for about 66 percent of the value, followed 
by the Netherlands (10 percent), Ecuador (12 percent), Costa Rica (3 
percent), and Mexico (3 percent). Imports of cut greens are reported in 
a category that includes some other fresh cut plant items suitable for 
ornamental purposes such as grasses, branches without flowers or buds, 
and other plant parts, but excludes fresh evergreens. In 1996 this 
``basket category'' of imports had a value of $27.6 million. The value 
of imports of cut flowers in 1995 was $495.2 million with a ``basket 
category'' of $24.1 million.
    This rule provides the procedures under which qualified handlers 
may vote on whether they want the fresh cut flowers and fresh cut 
greens promotion and information program to be continued. Qualified 
handlers of $750,000 or more in annual gross sales are eligible to vote 
in the referendum. There are approximately 692 eligible voters 
representing approximately 923 votes some of which represent separate 
facilities. It will take an average of 15 minutes for each voter to 
read the voting instructions and complete the referendum ballot. The 
total burden on the total number of voters will be 77 hours.
    The Department is keeping all these individuals informed throughout 
the referendum process to ensure that they are aware of and are able to 
participate in the process. In addition, trade associations and related 
industry media will receive news releases and other information 
regarding the referendum process.
    Voting in the referendum is optional. However, if qualified 
handlers choose to vote, the burden of voting will be offset by the 
benefits of having the opportunity to vote on whether they want to 
continue the program or not.
    The Department considered requiring eligible voters to vote in 
person at various Department offices across the country. However, 
conducting the referendum from one central location by mail ballot is 
more cost effective for this program. Also, the Department will provide 
easy access to information for potential voters through a toll free 
telephone line. A referendum will be conducted in June to maximize 
industry participation.
    Lastly, in the initial regulatory flexibility analysis comments 
were requested regarding the impact of the rule on small entities. No 
such comments were received.

Paperwork Reduction Act

    In accordance with the Office of Management and Budget (OMB) 
regulations (5 CFR Part 1320) which implements the Paperwork Reduction 
Act of 1995 (44 U.S.C. Chapter 35), the referendum ballot has been 
approved by the Office of Management and Budget (OMB) and has been 
assigned OMB number 0581-0093. It is estimated that there are 692 
qualified handlers, representing 923 votes, who will be eligible to 
vote in the referendum. It will take an average of 15 minutes for each 
voter to read the voting instructions and complete the referendum 
ballot. The total burden on the total number of voters will be 77 
hours.

Background

    The Act authorized the Secretary to establish a national cut 
flowers and cut greens promotion and consumer information program. The 
program is funded by an assessment of \1/2\ percent of gross sales of 
cut flowers and greens which is levied on qualified handlers. The 
program is administered by the National PromoFlor Council (Council) 
under the supervision of the Department of Agriculture (Department).
    Assessments are used to pay for: Research, promotion, and consumer 
information; administration, maintenance, and functioning of the Board; 
and expenses incurred by the Secretary in implementing and 
administering the Order, including referendum costs.
    Section 7 of the Act requires that a referendum be conducted not 
later than 3 years after the issuance of the Order among eligible 
qualified handlers of fresh cut flowers and fresh cut greens to 
determine whether they favor continuance of the Order. The Order shall 
continue in effect if it is approved by a simple majority of qualified 
handlers voting in the referendum.
    In accordance with section 3(4) of the Act, qualified handler is 
defined in the Order as a person operating in the cut flowers and 
greens marketing system that sells domestic or imported cut flowers and 
greens to retailers and exempt handlers and whose annual sales of cut 
flowers and greens to retailers and exempt handlers are $750,000 or 
more. The term also includes, but is not limited to, the following 
entities when they have the requisite volume of $750,000 sales of cut 
flowers and greens a year: A wholesale handler; a manufacturer of 
bouquets or floral articles for sale to retailers if the cut flowers 
and greens used are a substantial portion of the value of the 
manufactured floral article; an auction house that clears the sale of 
cut flowers and greens to retailers and exempt handlers through a 
central clearinghouse; a distribution center that is owned or 
controlled by a retailer if the predominant retail business activity is 
floral sales; an importer whose principal activity is the importation 
of cut flowers and greens into the United States and sells to retailers 
and exempt handlers or directly to consumers; and a producer that sells 
cut flowers and cut greens directly to retailers or consumers.
    Paragraph (b) of section 7 of the Act specifies that each qualified 
handler eligible to vote in the referendum shall be entitled to cast 
one vote for each separate facility of the person that is an eligible 
separate facility. Eligible separate facility is defined in paragraph 
(b)(2) of section 7 of the Act as a handling or marketing facility of a 
qualified handler that is physically located away from other facilities 
of the qualified handler or that the business function of the separate 
facility is substantially different from the functions of other 
facilities owned or operated by the qualified handler and the annual 
sales of cut flowers and cut greens to retailers and exempt handlers 
from the facility are $750,000 or more annually.
    This rule provides the procedures under which fresh cut flowers and 
greens qualified handlers may vote on whether they want the fresh cut 
flowers and greens promotion and consumer information program to 
continue. Qualified handlers of $750,000 gross sales annually can vote 
in the referendum. There are approximately 692 eligible voters 
representing approximately 923 votes.
    This rule adds a new subpart which establishes procedures to be 
used in the referendum. This subpart will be in effect for the 
referendum period only and will not be part of the Code of Federal 
Regulations. This subpart covers definitions, voting, instructions, use 
of subagents, ballots, the referendum report, and confidentiality of 
information.
    A proposed rule was published in the March 19, 1997, issue of the 
Federal Register (62 FR 12976). Ten comments were received and are 
addressed in this rule. The comments were from qualified

[[Page 18035]]

handlers and the National PromoFlor Council.
    A comment was received from a cut flowers and greens wholesale 
handler. The commentor expressed the view that it would be 
unconstitutional for a company to qualify for more than one vote 
because the company has decided to distribute their product through 
multiple locations instead of one central location. The commentor 
opposes multiple votes for a single company.
    As previously explained in this rule, paragraph (b) of section 7 of 
the Act specifies that each qualified handler eligible to vote in the 
referendum shall be entitled to cast one vote for each separate 
facility that is an eligible separate facility. Separate facility is 
defined in the Act as a handling or marketing facility of a qualified 
handler that is physically located away from other facilities of the 
qualified handler or that the business function of the separate 
facility is substantially different from the functions of other 
facilities owned or operated by the qualified handler and the annual 
sales of cut flowers and greens to retailers and exempt handlers from 
the facility are $750,000 or more annually.
    A facility may be located separately from the main operation of the 
qualified handlers or the function of the facility may be substantially 
different in order to qualify under the definition of separate 
facility. Each separate facility must handle $750,000 annually in sales 
to retailers and exempted handlers. The concept of one vote per 
facility is not unknown for this type of program and referendum. It 
became part of the legislation authorizing this program. Alternatively, 
the statute could have, but did not, provide for a weighted vote, under 
which both the number of votes and annual sales volume of voters, for 
and against continuation of the program, would have been tabulated.
    The commentor also stated that the Council forces companies under 
$750,000 annual sales to pay the assessment because the companies that 
they buy from are forced to pay the assessment. In addition, the 
commentor stated that it is unconstitutional to force people to pay 
their tax and not allow them a vote.
    The Act requires qualified handlers of $750,000 annual sales to pay 
the assessment. Exempt handlers are not required to pay the assessment. 
It is a business decision between the parties involved, and not a 
statutory requirement or provision, as to whether the qualified handler 
passes the cost to the exempt handler and whether the exempt handler 
pays that charge. Each qualified handler as defined under the Act is 
eligible to vote in the referendum.
    The commentor requested the USDA to stop the Council from using 
funds to influence the vote in the referendum. Funds collected under 
this program may not be used for activities that are not authorized 
under the Act. The Department monitors activities in this area very 
carefully. The Council may explain what the program is doing and its 
impact on sales. It may also encourage the industry to vote. However, 
it may not encourage the industry to vote in a particular way.
    Finally, the commentor requested a definition of qualified handler 
in the voting process. The definition of qualified handlers used for 
the referendum is the same used for determining who is qualified under 
the program. The status of the handler, i.e., paying or not paying 
assessments, against or in favor of the program, does not affect the 
definition of who is a qualified handler under the program and eligible 
to vote. Every qualified handler as defined in the Act and the Order is 
eligible to vote in the referendum.
    Five commentors stated that the timing for the referendum is 
unfortunate in that it falls within the peak sales months for the 
industry. In addition, the commentors stated that the period from July 
to September is ideal for all qualified handlers to have the time to 
adequately evaluate the impact of the program. Furthermore, the 
commentors requested that the referendum be conducted in September.
    The Council, however, submitted a comment in favor of holding the 
referendum in June for the following reasons: timely preparation and 
submission of a 1998 budget for the Department's approval prior to the 
start of the new fiscal period; a June referendum will allow the 
Council to buy media in the ``up front market'' when the selection of 
commercial slots is better and the prices are discounted; a June 
referendum will allow the Council to produce these commercials in an 
area at a considerable savings; the handlers are ready for a 
referendum; the Council is reporting to the industry the effects of the 
program and the return on investment to handlers; qualified handlers 
feel well informed about the program and are prepared to make an 
informed decision; the Council communicates its programs twice a month 
through its newsletter; qualified handlers have received video tapes 
and an annual report with information about the program; almost every 
trade publication has carried information about the Council for the 
last year; the Council is present at every major show and convention to 
answer questions; and the Council has a toll free number to answer 
questions.
    The Department agrees that the referendum must be conducted during 
a period that maximizes voting representation. June is after the peak 
period of Secretary's Day and Mother's Day. In addition, if the program 
is supported in the referendum, conducting the referendum in June will 
allow enough time for the Council to plan a budget and marketing plan 
for the 1998 fiscal year which begins on October 1, 1997. The 
Department believes that conducting the referendum in June will 
maximize participation in the referendum and will assist the Council in 
the planning of next year's program in the event the program is 
approved in the referendum. In addition, the industry is familiar with 
the program which has been in effect since December 1994 and has had 
time to form a view on whether the program should continue. Further, 
voting is not a time-consuming process.
    One commentor stated that qualified handlers that paid assessments 
in the past and are out of business or whose businesses have changed 
and are no longer qualified handlers should be allowed to vote in the 
referendum.
    A qualified handlers whose gross sales of fresh cut flowers and 
greens were $750,000 during the representative period and who is a 
qualified handler at the time of the referendum, is eligible to vote. 
The representative period, the period used to determine who is an 
eligible qualified handler for referendum purposes, will be announced 
in a referendum order that will be published separately in the Federal 
Register. A handler who is not a qualified handler at the time of the 
referendum should not be eligible to vote because this individual is 
not currently covered by the program and is not required to pay 
assessments into the program.
    Two of the comments received addressed issues not directly related 
to the referendum procedures. Instead they related to the program in 
general including the financial impact of assessments.
    Accordingly, no changes to the text of the regulation as proposed 
are made in this final rule. After consideration of all relevant 
material presented, it is found that this final rule effectuates the 
declared policy of the Act.

List of Subjects in 7 CFR Part 1208

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

[[Page 18036]]

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

    For the reasons set forth in the preamble, Title 7 of Chapter XI of 
the Code of Federal Regulations is amended as follows:
    1. Part 1208 is amended by adding a new subpart C to read as 
follows:

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

Subpart C--Procedure for the Conduct of Referenda in Connection With 
the Fresh Cut Flowers and Fresh Cut Greens Promotion and Information 
Order

Sec.
1208.200  General.
1208.201  Definitions.
1208.202  Voting.
1208.203  Instructions.
1208.204  Subagents.
1208.205  Ballots.
1208.206  Referendum report.
1208.207  Confidential information.

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

Subpart C--Procedure for the Conduct of Referenda in Connection 
With the Fresh Cut Flowers and Fresh Cut Greens Promotion and 
Information Order


Sec. 1208.200  General.

    A referendum to determine whether qualified handlers favor 
continuance of the Fresh Cut Flowers and Fresh Cut Greens Promotion and 
Information Order shall be conducted in accordance with these 
procedures.


Sec. 1208.201  Definitions.

    Unless otherwise defined below, the definition of terms used in 
these procedures shall have the same meaning as the definitions in the 
Order.
    (a) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to redelegate, or any officer or employee 
of the Department to whom authority has been delegated or may hereafter 
be delegated to act in the Administrator's stead.
    (b) Order means the Fresh Cut Flowers and Fresh Cut Greens 
Promotion and Information Order.
    (c) Referendum agent or agent means the individual or individuals 
designated by the Secretary to conduct the referendum.
    (d) Representative period means the period designated by the 
Secretary.
    (e) Person means any individual, group of individuals, firm, 
partnership, corporation, joint stock company, association, society, 
cooperative, or any other legal entity. For the purpose of this 
definition, the term ``partnership'' includes, but is not limited to:
    (1) A husband and wife who has title to, or leasehold interest in, 
fresh cut flowers and greens facilities and equipment as tenants in 
common, joint tenants, tenants by the entirety, or, under community 
property laws, as community property, and
    (2) So-called ``joint ventures'', wherein one or more parties to 
the agreement, informal or otherwise, contributed capital and others 
contributed labor, management, equipment, or other services, or any 
variation of such contributions by two or more parties so that it 
results in the handling of fresh cut flowers and greens and the 
authority to transfer title to the fresh cut flowers and greens 
handled.
    (f) Eligible qualified handler means a person who is a qualified 
handler under Sec. 1208.16 of the Order that operates in the cut 
flowers and greens marketing system and sells domestic or imported cut 
flowers and greens to retailers and exempt handlers and has annual 
sales of cut flowers and greens to retailers and exempt handlers that 
are $750,000 or more.
    (g) Separate facility means a handling or marketing facility of a 
qualified handler that is physically located away from other facilities 
of the qualified handler or that the business function of the separate 
facility is substantially different from the functions of other 
facilities owned or operated by the qualified handler and the annual 
sales of cut flowers and cut greens to retailers and exempt handlers 
from the facility are $750,000 or more annually.


Sec. 1208.202  Voting.

    (a) Each person who is an eligible qualified handler as defined in 
this subpart, at the time of the referendum and during the 
representative period, shall be entitled to cast one vote for each 
separate facility of the person that is an eligible separate facility.
    (b) Proxy voting is not authorized, but an officer or employee of 
an eligible qualified handler, or an administrator, executor, or 
trustee of an eligible qualified handler entity may cast a ballot on 
behalf of such qualified handler entity. Any individual so voting in a 
referendum shall certify that such individual is an officer or employee 
of the eligible qualified handler, or an administrator, executor, or 
trustee of an eligible qualified handler entity, and that such 
individual has the authority to take such action. Upon request of the 
referendum agent, the individual shall submit adequate evidence of such 
authority.
    (c) All ballots are to be cast by mail.


Sec. 1208.203  Instructions.

    The referendum agent shall conduct the referendum, in the manner 
herein provided, under the supervision of the Administrator. The 
Administrator may prescribe additional instructions, not inconsistent 
with the provisions hereof, to govern the procedure to be followed by 
the referendum agent. Such agent shall:
    (a) Determine the time of commencement and termination of the 
period during which ballots may be cast.
    (b) Provide ballots and related material to be used in the 
referendum. Ballot material shall provide for recording essential 
information including that needed for ascertaining whether the person 
voting, or on whose behalf the vote is cast, is an eligible voter;
    (c) Give reasonable advance public notice of the referendum:
    (1) By utilizing available media or public information sources, 
without incurring advertising expense, to publicize the dates, places, 
method of voting, eligibility requirements, and other pertinent 
information. Such sources of publicity may include, but are not limited 
to, print and radio; and
    (2) By such other means as the agent may deem advisable.
    (d) Mail to eligible qualified handlers, whose names and addresses 
are known to the referendum agent, the instructions on voting, a 
ballot, and a summary of the terms and conditions of the Order. No 
person who claims to be eligible to vote shall be refused a ballot.
    (e) At the end of the voting period, collect, open, number, and 
review the ballots and tabulate the results in the presence of an agent 
of the Office of Inspector General.
    (f) Prepare a report on the referendum.
    (g) Announce the results to the public.


Sec. 1208.204  Subagents.

    The referendum agent may appoint any individual or individuals 
deemed necessary or desirable to assist the agent in performing such 
agent's functions hereunder. Each individual so appointed may be 
authorized by the agent to perform any or all of the functions which, 
in the absence of such appointment, shall be performed by the agent.


Sec. 1208.205  Ballots.

    The referendum agent and subagents shall accept all ballots cast; 
but, should they, or any of them, deem that a ballot should be 
questioned for any reason, the agent or subagent shall endorse above

[[Page 18037]]

their signature, on the ballot, a statement to the effect that such 
ballot was questioned, by whom questioned, the reasons therefore, the 
results of any investigations made with respect thereto, and the 
disposition thereof. Ballots invalid under this subpart shall not be 
counted.


Sec. 1208.206  Referendum report.

    Except as otherwise directed, the referendum agent shall prepare 
and submit to the Administrator a report on results of the referendum, 
the manner in which it was conducted, the extent and kind of public 
notice given, and other information pertinent to analysis of the 
referendum and its results.


Sec. 1208.207  Confidential information.

    The ballots and other information or reports that reveal, or tend 
to reveal, the vote of any person covered under the Act and the voting 
list shall be held confidential and shall not be disclosed.

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