[Federal Register Volume 64, Number 165 (Thursday, August 26, 1999)]
[Proposed Rules]
[Pages 46754-46765]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-22107]



[[Page 46753]]

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Part II





Department of Agriculture





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Agricultural Marketing Service



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7 CFR Part 1217



Olive Oil Promotion, Research, and Information Order and Referendum 
Procedures; Proposed Rules

  Federal Register / Vol. 64, No. 165 / Thursday, August 26, 1999 / 
Proposed Rules  

[[Page 46754]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1217

[FV-99-703-PR1]


Proposed Olive Oil Promotion, Research, and Information Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: The U.S. Department of Agriculture (the Department or USDA) is 
seeking comments regarding the establishment of an industry-funded 
promotion, research, and information program for olive oil. A proposed 
program--the Olive Oil Promotion, Research, and Information Order 
(Order)--was submitted to USDA by the North American Olive Oil 
Association. Under the Order, olive oil first handlers and importers 
would pay an assessment of $0.01 per pound. First handlers would remit 
the assessment on domestic olive oil to the proposed Olive Oil Council 
(Council). The assessment on imported olive oil would be collected by 
the U.S. Customs Service and remitted to the Council. First handlers of 
less than 6,000 pounds of olive oil annually and importers of less than 
6,000 pounds of olive oil annually would be exempt from assessment. The 
proposed program would be implemented under the Commodity Promotion, 
Research, and Information Act of 1996 (Act).

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

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposed rule to the Docket Clerk, Research and 
Promotion Branch, Fruit and Vegetable Programs, Agricultural Marketing 
Service, USDA, Stop 0244, Room 2535 South Building, 1400 Independence 
Avenue, SW, Washington, DC 20250-0244. Comments should be submitted in 
triplicate and will be made available for public inspection at the 
above address during regular business hours. Comments may also be 
submitted electronically to: [email protected]. All comments 
should reference the docket number and the date and page number of this 
issue of the Federal Register. A copy of this rule may be found at: 
www.ams.usda.gov/fv/rpdocketlist.htm. Pursuant to the Paperwork 
Reduction Act (PRA), send comments regarding the accuracy of the burden 
estimate, ways to minimize the burden, including the use of automated 
collection techniques or other forms of information technology, or any 
other aspect of this collection of information to the above address. 
Comments concerning the information collection under the PRA should 
also be sent to the Desk Officer for Agriculture, Office of Information 
and Regulatory Affairs, Office of Management and Budget, Washington, DC 
20503.

FOR FURTHER INFORMATION CONTACT: Oliver L. Flake, Research and 
Promotion Branch, Fruit and Vegetable Programs, AMS, USDA, Stop 0244, 
1400 Independence Avenue, SW, Room 2535 South Building, Washington, DC 
20250-0244; telephone (202) 720-9915 or fax (202) 205-2800.

SUPPLEMENTARY INFORMATION: This proposed Order is issued pursuant to 
the Commodity Promotion, Research, and Information Act of 1996, 7 
U.S.C. 7401-7425; Pub. L. 104-127, enacted April 4, 1996, hereinafter 
referred to as the Act.

Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. It is not intended to have retroactive effect. 
Section 524 of the Act provides that the Act shall not affect or 
preempt any other Federal or State law authorizing promotion or 
research relating to an agricultural commodity.
    Under section 519 of the Act, a person subject to the Order may 
file a petition with the Secretary stating that the Order, any 
provision of the Order, or any obligation imposed in connection with 
the Order, is not established in accordance with the law, and 
requesting a modification of the Order or an exemption from the Order. 
Any petition filed challenging the Order, any provision of the Order, 
or any obligation imposed in connection with the Order, shall be filed 
within two years after the effective date of the Order, provision, or 
obligation subject to challenge in the petition. The petitioner will 
have the opportunity for a hearing on the petition. Thereafter, the 
Secretary of Agriculture (Secretary) will issue a ruling on a petition. 
The Act provides that the district court of the United States for any 
district in which the petitioner resides or conducts business shall 
have the jurisdiction to review a final ruling on the petition, if the 
petitioner files a complaint for that purpose not later than 20 days 
after the date of the entry of the Secretary's final ruling.

Executive Order 12866

    This proposed rule has been determined not significant for purposes 
of Executive Order 12866 and therefore has not been reviewed by the 
Office of Management and Budget (OMB).

Regulatory Flexibility Act

    In accordance with the Regulatory Flexibility Act (RFA) [5 U.S.C. 
601 et seq.], the Agency is required to examine the impact of the 
proposed rule on small entities. The purpose of the RFA is to fit 
regulatory actions to the scale of businesses subject to such actions 
so that small businesses will not be disproportionately burdened.
    The Act authorizes generic programs of promotion, research, and 
information for agricultural commodities. Congress found that it is in 
the national public interest and vital to the welfare of the 
agricultural economy of the United States to maintain and expand 
existing markets and develop new markets and uses for agricultural 
commodities through industry-funded, government-supervised, generic 
commodity promotion programs.
    This program is intended to develop and finance an effective and 
coordinated program of promotion, research, and consumer information to 
maintain and expand the markets for olive oil. A proposal was submitted 
by the North American Olive Oil Association (proponent). The proponent 
has proposed that olive oil first handlers and importers approve the 
program in a referendum in advance of its implementation. Handlers, 
importers, and at-large members would serve on the 14-member Council 
that would administer the program under USDA's oversight. In addition, 
any person subject to the program may file with the Secretary a 
petition stating that the Order or any provision is not in accordance 
with law and requesting a modification of the Order or an exemption 
from the Order. Further, first handlers of less than 6,000 pounds of 
olive oil annually and importers of less than 6,000 pounds of olive oil 
annually would be exempt from assessment.
    The proponent states that, of a total of 43 domestic first 
handlers, 13 would be covered by the program. Thirty first handlers 
would be exempt from paying assessments under the proposed Order 
because they handle less than 6,000 pounds of olive oil annually. 
Therefore, the only burden on first handlers of less than 6,000 pounds 
would be the filing of a request for an exemption and recordkeeping to 
document their exempt status. The required information would be the 
minimum necessary to effectively carry out the requirements of the 
program, and their use is necessary to fulfill the intent of the Act. 
Such records shall be kept for at least two years. The exemption form 
can be

[[Page 46755]]

completed with readily available information, and first handlers 
already keep records as a normal business practice. The added burden to 
the majority of first handlers for an olive oil promotion, research, 
and information program is therefore expected to be minimal.
    In addition, there is a minimal burden on importers. The import 
assessments would be collected by the U.S. Customs Service (Customs) at 
time of entry into the United States. Importers would be required to 
keep records and to provide information to the Council or the Secretary 
when requested. However, it is not anticipated that importers would be 
required to submit forms to the Council. Importers who seek nomination 
to serve on the Council would be required to complete one form which 
would be submitted to the Secretary.
    There would be an additional, minimal burden on the first handlers 
and importers who seek nomination to serve on the Council and who 
choose to vote in referenda.
    The estimated annual cost of providing the information to the 
Council by an estimated 408 respondents (43 first handlers, 360 
importers, and 5 at-large representatives) would be $3,920 or $600 for 
all first handlers or $13.95 per first handler, 3,270 for all importers 
or $9.08 per importer, and $50 for all at-large representatives or 
$5.00 per at-large representative.
    The Department would oversee program operations and, if the program 
is implemented, would conduct a referendum (1) not later than seven 
years after assessments began to determine whether olive oil first 
handlers and importers support continuation of the program, (2) at the 
request of the Council established under the Order, or (3) at the 
request of 10 percent or more of the number of persons eligible to vote 
in referenda. Additionally, the Secretary may conduct a referendum at 
any time to determine whether the continuation, suspension, or 
termination of the Order or a provision of the Order is favored by 
those eligible to vote in referenda.
    There are approximately 13 first handlers and 320 importers of 
olive oil who would be subject to the program. Most of the first 
handlers and importers would be classified as small businesses under 
the criteria established by the Small Business Administration (SBA) (13 
CFR 121.601). The SBA defines small agricultural handlers and importers 
as those whose annual receipts are less than $5 million.
    The United States produces very little olive oil compared to the 
amount it imports. Assuming a yield of 18 percent from the olives USDA 
reports as utilized for oil, production was 738 tons in 1998, compared 
to 648 tons in 1997. Imports, however, were 181,850 tons in 1998 and 
180,186 tons in 1997. Italy accounted for 73 percent of imports in 
1998, followed by Spain at 11 percent, Turkey at 8 percent, and Greece 
at 3 percent. A number of countries provided the remaining 5 percent. 
The total value of imports in 1998 was about $347 million, compared to 
$432 million in 1997. Exports of oil are significant, but are much 
smaller than imports. In 1998, the quantity reported was 8,934 tons, 
worth $6 million. This compares to 10,323 tons exported in 1997, worth 
$7 million. Exports exceed production because some imports are further 
processed or repackaged in the United States and then exported.
    According to 1996 importer records, over 300 companies import olive 
oil into the United States; however, most of these companies import a 
very small quantity of oil with each importing less than 1 percent of 
the total amount.
    Domestic first handlers of olive oil are located primarily in the 
states of Texas and California. We understand that approximately 70 
percent of these first handlers are small companies, handling less than 
6,000 pounds of olive oil per year and would fall within the exemption 
from assessment provided in the proposed Order.
    Additionally, according to Nielsen Retail Sales data, the retail 
sector accounts for 45 percent of the sales of olive oil, the food 
service sector accounts for approximately 50 percent, and the 
commercial ingredient sector accounts for about 5 percent of olive oil 
consumption.
    The proposed Order would authorize an initial assessment rate of 
$0.01 per pound paid by first handlers and importers of 6,000 pounds or 
more of olive oil annually. The proposed Order authorizes the 
assessment rate to be raised to a maximum of $0.02 per pound as long as 
the increase in any one year does not exceed $0.002 per pound.
    Section 516(a)(1) of the Act provides authority to the Secretary to 
exempt from the Order any de minimis quantity of an agricultural 
commodity otherwise covered by the Order. As stated above, the 
proponent recommends that first handlers and importers of less than 
6,000 pounds of olive oil annually be exempt from assessment.
    At the initial proposed rate of assessment of $0.01 per pound of 
olive oil, the Council would collect between $3 million and $4 million 
annually.
    USDA will keep all individuals informed throughout the referendum 
process to ensure that they are aware of and are able to participate in 
the referendum. USDA will publicize information regarding the 
referendum process so that trade associations and related industry 
media can be kept informed.
    In addition, the olive oil industry would nominate first handlers, 
importers, and at-large representatives of the olive oil market to 
serve as members on the Council. The Council would nominate the public 
member of the Council. The Council would recommend the assessment rate, 
programs and projects, a budget, and any rules and regulations that 
might be necessary for the administration of the program. USDA would 
ensure that the nominees represent the olive oil industry in accordance 
with the Act and the proposed Order.
    Proposed recordkeeping and reporting requirements for the olive oil 
promotion, research, and information program would be designed to 
minimize the burden on first handlers and importers. The olive oil 
promotion program would be designed to strengthen the position of olive 
oil in the marketplace, maintain and expand existing markets, and 
develop new uses and markets for olive oil.
    The estimated annual cost of providing the information to the 
Council by an estimated 408 respondents (43 first handlers, 360 
importers, and 5 at-large representatives) would be $3,920 or $600 for 
all first handlers or $13.95 per first handler, $3,270 for all 
importers or $9.08 per importer, and $50 for all at-large 
representatives or $5.00 per at-large representative.
    With regard to alternatives to this proposed rule, the Act itself 
provides for authority to tailor a program according to the individual 
needs of an industry. Provision is made for permissive terms in an 
order in section 516 of the Act, and other sections provide for 
alternatives. For example, section 514 of the Act provides for orders 
applicable to (1) producers, (2) first handlers and other persons in 
the marketing chain as appropriate, and (3) importers (if imports are 
subject to assessment). Section 516 authorizes an order to provide for 
exemption of de minimis quantities of an agricultural commodity; 
different payment and reporting schedules; types of research, 
promotion, and information activities in both domestic and foreign 
markets; reserve funds; credits for generic and branded activities; and 
the assessment of imports.

[[Page 46756]]

    In addition, section 518 of the Act provides for referenda to 
ascertain approval of an order to be conducted either prior to its 
going into effect or within three years after assessments first begin 
under the order. An order also may provide for its approval in a 
referendum to be based upon (1) a majority of those persons voting; (2) 
persons voting for approval who represent a majority of the volume of 
the agricultural commodity; or (3) a majority of those persons voting 
for approval who also represent a majority of the volume of the 
agricultural commodity. Section 515 of the Act provides for 
establishment of a board from among producers, first handlers, others 
in the marketing chain as appropriate, and importers, if importers are 
subject to assessment.
    This proposal includes provisions for market expansion and 
improvement; reserve funds; and an initial referendum to be conducted 
prior to the Order going into effect. Approval will be based upon a 
majority of the eligible persons voting in the referendum.
    While we have performed this Initial Regulatory Flexibility 
Analysis regarding the impact of this proposed Order on small entities, 
in order to obtain all the data necessary for a comprehensive analysis, 
we invite comments concerning the potential effects of the proposed 
Order. In particular, we are interested in obtaining more information 
on the number and kind of small and large entities that may incur 
benefits or costs from implementation of the proposed Order and 
information on the expected benefits or costs.

Paperwork Reduction Act

    In accordance with the Office of Management and Budget (OMB) 
regulation (5 CFR Part 1320) which implements the Paperwork Reduction 
Act of 1995 (44 U.S.C. Chapter 35), the information collection and 
recordkeeping requirements that may be imposed by this Order have been 
submitted to OMB for approval.
    Title: National Research, Promotion, and Consumer Information 
Programs.
    OMB Number for background form (number 1 below): 0505-0001.
    Expiration Date of Approval: July 31, 2001.
    OMB Number for other information collections: New Collection.
    Expiration Date of Approval: 3 Years from date of approval.
    Type of Request: Revision of currently approved information 
collections for advisory committees and boards and for research and 
promotion programs.
    Abstract: The information collection requirements in the request 
are essential to carry out the intent of the Act.
    In addition, there will be an additional burden on first handlers 
and importers who vote in referenda. The referendum ballot, which 
represents the information collection requirement relating to 
referenda, is addressed in a proposed rule on referendum procedures 
which is published separately in this issue of the Federal Register.
    Under the proposed program, first handlers would be required to 
submit assessments and reports to the Council. Assessments on imports 
would be collected by Customs at the time of entry into the United 
States. Therefore, it is not anticipated that importers who are subject 
to assessments would be required to file any forms with the Council.
    Handlers and importers of less than 6,000 pounds of olive oil 
annually would be required to file an application in order to receive 
an exemption from assessments.
    In addition, the proposed Order would impose certain recordkeeping 
requirements on first handlers and importers. However, the information 
required under the proposed Order could be compiled from records 
currently maintained. Such records shall be retained for at least two 
years beyond the marketing year of their applicability.
    The estimated annual cost of providing the information to the 
Council by an estimated 408 respondents (43 first handlers, 360 
importers, and 5 at-large representatives) would be $3,920 or $600 for 
all first handlers or $13.95 per first handler, $3,270 for all 
importers or $9.08 per importer, and $50 for all at-large 
representatives or $5.00 per at-large representative.
    The proposed Order's provisions have been carefully reviewed, and 
every effort has been made to minimize any unnecessary recordkeeping 
costs or requirements.
    The proposed forms would require the minimum information necessary 
to effectively carry out the requirements of the program, and their use 
is necessary to fulfill the intent of the Order. Such information can 
be supplied without data processing equipment or outside technical 
expertise. In addition, there are no additional training requirements 
for individuals filling out reports and remitting assessments to the 
Council. The forms would be simple, easy to understand, and place as 
small a burden as possible on the person required to file the 
information.
    The information required has been designed to coincide with normal 
industry business practices to minimize the burden on the industry. The 
required information is not available from other sources because such 
information relates specifically to individuals who are covered by the 
Order. Therefore, there is no practical method for collecting the 
required information without the use of these forms.
    Information collection requirements that are included in this 
proposal include:
    (1) A background information form to be completed by candidates 
nominated for appointment to the Council. Estimate of Burden: Public 
reporting for this collection of information is estimated to average 
0.5 hours per response for each respondent.
    Respondents: First handlers, importers, and at-large 
representatives.
    Estimated Number of Respondents: 13 (average of 28 for the initial 
nominations to the Council and approximately 10 respondents annually 
thereafter for each 3-year period).
    Estimated Number of Responses per Respondent: 1 every 3 years.
    Estimated Total Annual Burden on Respondents: 14 hours for the 
initial nominations to the Council and 5 hours annually thereafter.
    (2) An annual report by each first handler of olive oil. Estimate 
of Burden: Public reporting burden for this collection of information 
is estimated to average 0.5 hours per each handler reporting on olive 
oil handled.
    Respondents: Handlers.
    Estimated Number of Respondents: 43.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 21.5 hours.
    (3) An exemption application for first handlers and importers of 
less than 6,000 pounds of olive oil annually.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average .50 hours per response for each 
exempt first handler and importer.
    Respondents: Exempt first handlers and importers.
    Estimated Number of Respondents: 70.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 35 hours.
    (4) Importer application for reimbursement of assessment.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 0.25 hours per importer requesting 
a reimbursement.

[[Page 46757]]

    Respondents: Importers.
    Estimated Number of Respondents: 40.
    Estimated Number of Responses per Respondent: 12.
    Estimated Total Annual Burden on Respondents: 120 hours.
    (5) A requirement to maintain records sufficient to verify reports 
submitted under the Order.
    Estimate of Burden: Public recordkeeping burden for keeping this 
information is estimated to average 0.5 hours per recordkeeper 
maintaining such records.
    Recordkeepers: First handlers and importers.
    Estimated number of Recordkeepers: 403.
    Estimated Total Recordkeeping Hours: 201.5 hours.
    Comments are invited on: (a) Whether the proposed collection of 
information is necessary for the proper performance of functions of the 
Order and the Department's oversight of the program, including whether 
the information will have practical utility; (b) the accuracy of USDA's 
estimate of the burden of the proposed collection of information, 
including the validity of the methodology and assumption used; (c) ways 
to enhance the quality, utility, and clarity of the information to be 
collected; and (d) ways to minimize the burden of the collection of 
information on those who are to respond, including the use of 
appropriate automated, electronic, mechanical, or other technological 
collection techniques or other forms of information technology.
    The Act provides for the submission of proposals for a promotion, 
research, and information order by industry organizations or any other 
interested person affected by an order.
    Comments concerning the information collection requirements 
contained in this action should reference the docket number and the 
date and page number of this issue of the Federal Register. Comments 
addressing the nomination background information form should reference 
OMB No. 0505-0001. In addition, the docket number, date, and page 
number of this issue of the Federal Register also should be referenced. 
Comments should be sent to the USDA Docket Clerk and the OMB Desk 
Officer for Agriculture at the addresses and within the time frames 
listed above. All responses to this notice will be summarized and 
included in the request for OMB approval.
    OMB is required to make a decision concerning the collection of 
information contained in this rule between 30 and 60 days after 
publication. Therefore, a comment to OMB is best assured of having its 
full effect if OMB receives it within 30 days of publication.

Background

    The Act authorizes the Secretary, under a generic authority, to 
establish agricultural commodity research and promotion orders. The Act 
provides for a number of optional provisions that allow the tailoring 
of orders for different commodities. Section 516 of the Act provides 
permissive terms for orders, and other sections provide for 
alternatives. For example, section 514 of the Act provides for orders 
applicable to (1) producers, (2) first handlers and others in the 
marketing chain as appropriate, and (3) importers (if importers are 
subject to assessment). Section 516 authorizes an order to provide for 
exemption of de minimis quantities of an agricultural commodity; 
different payment and reporting schedules; types of research, 
promotion, and information activities in both domestic and foreign 
markets; reserve funds; credits for generic and branded activities; and 
the assessment of imports. In addition, section 518 of the Act provides 
for referenda to ascertain approval of an order to be conducted either 
prior to its going into effect or within three years after assessments 
first begin under the order. The order also may provide for its 
approval in a referendum based upon different voting patterns. Section 
515 provides for establishment of a board from among producers, first 
handlers and others in the marketing chain as appropriate, and 
importers, if imports are subject to assessment.
    This proposed Order includes provisions for market expansion and 
improvement, reserve funds, and an initial referendum to be conducted 
prior to the Order going into effect. Approval will be based upon a 
majority of the eligible first handlers and importers voting in the 
referendum.
    The proponent has requested the establishment of a national 
promotion, research, and information order for olive oil pursuant to 
the Act. The Act authorizes the establishment and operation of generic 
promotion programs which may include a combination of promotion, 
research, industry information, and consumer information activities 
funded by mandatory assessments. These programs are designed to 
maintain and expand markets and uses for agricultural commodities. This 
proposal would provide for the development and financing of an 
effective and coordinated program of research, promotion, and 
information for olive oil. The purpose of the program would be to 
strengthen the position of olive oil in the marketplace and to develop, 
maintain, and expand markets for olive oil.
    The program would not become effective until approved by first 
handlers and importers in a referendum to be conducted by USDA. Section 
518 of the Act provides for the Department (1) to conduct an initial 
referendum, preceding a proposed order's effective date, among persons 
who would pay assessments under the program or (2) to implement a 
proposed order, pending the conduct of a referendum, among persons 
subject to assessments, within three years after assessments first 
begin.
    In accordance with section 518(e) of the Act, the results of the 
referendum must be determined one of three ways: (1) Approval by a 
majority of those persons voting; (2) approval by persons voting who 
represent a majority of the volume of the commodity covered by the 
program; or (3) approval by a majority of the persons voting who also 
represent a majority of the volume of the commodity produced, handled, 
or imported by the persons voting.
    The proponent proposes that the Department conduct an initial 
referendum preceding the proposed Order's effective date and that 
approval of the Order be determined by a simple majority of the 
eligible first handlers and importers voting in the referendum.
    In accordance with the Act, the Department would oversee the 
program's operations. In addition, the Act requires the Secretary to 
conduct subsequent referenda: (1) Not later than seven years after 
assessments first begin under the Order; or (2) at the request of the 
Council established under the Order; or (3) at the request of 10 
percent or more of the number of persons eligible to vote. The 
proponent group has requested that a referendum be conducted not later 
than seven years after assessments first begin under the proposed Order 
to determine if first handlers and importers want the program to 
continue.
    In addition to these criteria, the Act provides that the Secretary 
may conduct a referendum at any time to determine whether the 
continuation, suspension, or termination of the Order or a provision of 
the Order is favored by persons eligible to vote.
    According to the proponent, the largest obstacle to successful 
marketing of olive oil is the widespread lack of awareness of its 
characteristics and uses. Most consumers are aware that it costs three 
times as much as other food oils, but do not understand the differences 
between olive oils (a tree crop product) and vegetable or seed oils

[[Page 46758]]

that are an annual crop and are basically a secondary product to the 
high value oilseed meal that is used for animal feed.
    Currently, only 22 percent of U.S. households purchase olive oil. 
Preliminary research by the proponent indicates that more than 50 
percent of those who do not use olive oil say that they do not know how 
to use it. This indicates the magnitude of the task for the olive oil 
industry.
    Similarly, there is also a need for educating the trade audience, 
such as chefs and others involved in the food service industry. Such 
sectors need more accurate information about the characteristics of 
olive oil and the types of foods and recipes that can be enhanced with 
olive oil.
    Only in recent years has there emerged an awareness of the 
nutritional benefits of olive oil. A strong marketing program is needed 
to inform consumers about the nutritional benefits of olive oil and how 
it can be used within a nutritious diet.
    Unlike other oils that are relatively uniform in characteristics, 
all extra virgin olive oils, virgin olive oils, and pure olive oils 
have different flavor characteristics. Different varieties and growing 
regions have a considerable influence on the flavor of oils. An 
effective promotion program is needed to educate the public and trade 
sectors on the types of olive oils and their uses in various food 
preparations.
    Currently, no organization in the industry has sufficient resources 
to mount an effective information and publicity program for olive oil, 
to educate chefs on the uses of olive oil, and to develop the 
information that consumers and chefs require.
    Most of the companies that market olive oil to the retail sector, 
food service sector, and commercial ingredient sector do not have the 
resources to promote the product. They look to the industry to develop 
the information that consumers and chefs require.
    The olive oil industry has attempted to create marketing programs 
to no avail. These programs lacked adequate funding to reach the 
domestic audience and impact the marketplace for olive oil. For 
example, the proponent began a public relations program in 1991 with a 
budget of $100,000, but the maximum funds it has been able to raise for 
promotion by voluntary contributions has leveled off at $250,000. The 
total budget for the proponent is only $325,000. The budget of the 
California Olive Oil Council is less than $25,000. The Texas Olive Oil 
Council does not have a fixed budget.
    Through the promulgation of a research and promotion order, the 
industry intends to effectively promote the consumption of olive oil 
through publicity on its nutritional and health benefits, its unique 
taste characteristics, and its versatility.
    In addition, the Order would provide the necessary structure and 
budget to support scientific and other forms of research that would 
benefit the olive oil industry. For example, a wide variety of research 
projects are needed to further study the health and other potential 
benefits of olive oil as well as to address issues such as adulteration 
and botulism.
    Members of the industry have already begun discussions regarding 
the types of programs and projects that should be launched nationally 
to achieve these objectives. A partial listing of these potential 
programs and projects include: Developing a publicity program to reach 
consumers, chefs, food writers, cook book authors, and others; 
providing representation of the olive oil industry at major food and 
nutrition shows; conducting food service and retail recipe contests; 
preparing collateral materials for industry; conducting in-store food 
demonstrations featuring olive oil; conducting news conferences and 
issuing news releases; researching the medical benefits of olive oil; 
and researching how olive oil works with different food applications in 
the commercial ingredient sector.
    Industry support was assessed at a meeting of the Olive Oil Task 
Force held in December 1997. This task force is a coalition 
representing members of the North American Olive Oil Council, the 
California Olive Oil Council, and the Texas Olive Oil Council, as well 
as companies in the olive oil business. Members of the retail, food 
service, and commercial ingredient sectors were represented on the task 
force. These task force members as well as all known companies in the 
olive oil industry were invited to the meeting to discuss the benefits 
and usefulness of a research and promotion order for olive oil.
    At this meeting and through subsequent discussions, participants 
agreed that current regional marketing programs will not be successful 
in boosting the domestic market for olive oil. In addition, 
participants reached a broad-based and almost unanimous agreement that 
the olive oil business would substantially benefit from a national 
research and promotion order.
    All of these factors led the olive oil industry to seek a national 
promotion program to find ways to further increase the consumption of 
olive oil.
    Section 516(f) of the Act allows an order to authorize the levying 
of assessments on imports of the commodity covered by the program or on 
products containing that commodity, at a rate comparable to the rate 
determined for the domestic agricultural commodity covered by the 
order. The proponent has proposed that imports be assessed.
    The assessment levied on domestically produced and imported olive 
oil would be used to pay for promotion, research, and consumer and 
industry information as well as administration, maintenance, and 
functioning of the Council. Expenses incurred by the Secretary in 
implementing and administering the Order, including referenda costs, 
also would be paid from assessments.
    Sections 516(e)(1) and (2) of the Act state that an Order may 
provide credits of assessments for generic and branded activities. The 
proponent has elected not to propose credits for generic or branded 
activities. Therefore, the terms ``generic activities'' and ``branded 
activities'' are not defined in the Order, and credits for assessments 
would not be made.
    First handlers would be required to pay assessments and submit 
reports to the Council. Importers would be required to pay assessments, 
which would be collected by Customs at the time of entry into the 
United States. Both first handlers and importers would be required to 
keep records under the proposed program. First handlers and importers 
of less than 6,000 pounds of olive oil annually would be exempt from 
assessments. However, they would be required to file an exemption 
request in order to be exempt from assessments and reporting under the 
Order. First handlers and importers seeking nomination to serve on the 
Council would be required to complete a confidential questionnaire to 
determine their eligibility to serve.
    All information obtained from persons subject to this Order as a 
result of recordkeeping and reporting requirements would be kept 
confidential by all officers, employees, and agents of the Department 
and of the Council. However, this information may be disclosed only if 
the Secretary considers the information relevant, and the information 
is revealed in a judicial proceeding or administrative hearing brought 
at the direction or on the request of the Secretary or to which the 
Secretary or any officer of the Department is a party. Other exceptions 
for disclosure of confidential information would include the issuance 
of general statements based on reports

[[Page 46759]]

or on information relating to a number of persons subject to an order 
if the statements do not identify the information furnished by any 
person or the publication, by direction of the Secretary of the name of 
any person violating the Order and a statement of the particular 
provisions of the Order violated by the person.
    The proposed Order provides for the Department to conduct an 
initial referendum preceding the proposed Order's effective date. 
Therefore, the proposed Order must be approved by a majority of the 
eligible first handlers and importers voting in the referendum. The 
proposed Order also provides for subsequent referenda to be conducted 
(1) no later than seven years after assessments first begin under the 
Order, (2) at the request of the Council established under the Order, 
or (3) when requested by 10 percent or more of first handlers and 
importers covered by the Order. In addition, the Secretary may conduct 
a referendum at any time.
    The Act requires that such a proposed order provide for the 
establishment of a board to administer the program under USDA 
supervision. The proponent's proposal provides for a 14-member Olive 
Oil Council, as stated earlier.
    To ensure fair and equitable representation of the olive oil 
industry on the Council, the Act requires membership on the Council to 
reflect the geographical distribution of the production of olive oil 
and the quantity or value of imports. To that end, this proposal 
provides that three members of the Council would be importers and 
marketers of consumer brands; one member would be an importer and 
marketer or packer of a private label; one member would be an importer 
of bulk olive oil; two members would be importers and marketers to the 
food service trade; two members would be first handlers of domestic 
olive oil; and five at-large members would represent one or more of the 
following segments of the olive oil market: The health community; 
professional chefs; food service operators; and food media/consultants.
    Upon implementation of the Order and pursuant to the Act, the 
Council would at least once in each five-year period, but not more 
frequently than once in each three-year period, review the geographical 
distribution of olive oil production in the United States and the 
quantity of imports and make a recommendation to the Secretary after 
considering the results of its review and other information it deems 
relevant regarding the reapportionment of Council membership.
    Members would serve for three-year terms, except that the members 
appointed to the initial Council would serve proportionately for two-, 
three-, and four-year terms. No member would serve more than two 
consecutive terms.
    The proposed Order submitted by the proponent is summarized as 
follows:
    Sections 1217.01 through 1217.22 of the proposed Order define 
certain terms, such as olive oil, first handler, importer, information, 
promotion, and research, which are used in the proposed Order.
    Sections 1217.30 through 1217.37 include provisions relating to the 
Council: Establishment and membership, nominations, term of office, 
vacancies, procedure for conducting meetings, compensation and 
reimbursements for Council members, the Council's powers and duties, 
and prohibited activities.
    Sections 1217.40 through 1217.41 establish the authority for the 
Council to develop research, promotion, and information projects and 
requirements for contracts, subject to oversight of the Secretary.
    Sections 1217.50 through 1217.54 cover budget review and approval; 
financial statements; the collection of assessments; exemption from 
assessments; the use of assessments, including reimbursement of 
necessary expenses incurred by the Council for the performance of its 
duties, which includes expenses incurred for the Department's oversight 
responsibilities; a late-payment charge on past-due assessments; and an 
operating reserve.
    The proponent recommends an initial assessment rate of $0.01 per 
pound on domestic and imported olive oil to be paid by handlers of 
domestic olive oil and importers.
    The Council may raise the rate of assessment by no more than $0.002 
per pound in any year, up to a maximum rate of $0.02, with approval of 
the Secretary.
    The federal debt collection procedures referenced in 
Sec. 1217.52(g) include those set forth in 7 CFR 3.1 through 3.36 for 
all research and promotion programs administered by USDA (60 FR 12533, 
March 7, 1995).
    Sections 1217.55 through 1217.56 require that the Council perform 
an independent evaluation of its programs at least once every five 
years and address patents, copyrights, trademarks, information, 
publications, and product formulations developed through the use of 
assessment funds.
    Sections 1217.60 through 1217.62 concern reporting and 
recordkeeping requirements for persons subject to the Order and protect 
the confidentiality of information from such books, records, or 
reports.
    Sections 1217.70 through 1217.78 describe the rights of the 
Secretary; require an initial referendum before the program is 
implemented; authorize the Secretary to suspend or terminate the Order 
when deemed appropriate; prescribe proceedings after suspension or 
termination; specify effects of termination or amendment; and address 
personal liability, separability, and amendments.
    The Department has modified the proponent's proposal to make it 
consistent with the Act and other similar national research and 
promotion programs for consistency throughout the text and for clarity.
    In the definitions the following terms were added: ``conflict of 
interest,'' ``Department,'' ``order,'' ``suspend,'' and ``terminate.'' 
Additionally, the term ``first handler'' was added to the definitions 
and replaced ``handler'' throughout the text.
    The definition of ``information'' was rewritten to include 
activities designed to enhance olive oil's image, to add definitions of 
``consumer information'' and ``producer information,'' and to conform 
with the Act. The terms ``marketing'' and ``research'' were also 
changed to conform with the Act.
    Section 1217.37 Prohibited activities, Sec. 1217.41 Contracts, and 
Sec. 1217.55 Independent evaluation were part of the original proposal 
but were subsections or cited in the proposal. The Department has 
expanded each of these for consistency with similar national research 
and promotion programs. In addition, the following sections and 
paragraphs were added to the proponent's proposal: Sec. 1217.36 (r) and 
(s); Sec. 1217.51 Financial Statements; Sec. 1217.53(c) and (d); 
Sec. 1217.70 Right of the Secretary; Sec. 1217.71 Referenda; and 
Sec. 1217.72(b) and (c).
    Section 1217.16 was changed from Plans and Projects to Programs, 
Plans, and Projects and Sec. 1217.35 was changed from Expenses to 
Compensation and reimbursement in order to more accurately reflect the 
subject covered in the section.
    Section 1217.50(h) has been added in order to be consistent with 
the Act. Paragraph (e)(5) Limitation on spending of section 515 of the 
Act states that a board ``may not expend for administration (except for 
reimbursements to the Secretary * * *)'' an amount that exceeds 15 
percent of the board's income during any fiscal year. This provision 
has been added as the proposal submitted did not indicate a limitation 
for such spending. In this same section, in order to be more

[[Page 46760]]

consistent with similar national research and promotion programs, a 
list of subjects to be covered in the budget was included. In addition, 
paragraphs (c), (d), and (f), which discuss amendments to the approved 
budget, authorization to incur expenses for a reasonable reserve, and 
the acceptance and use of voluntary contributions were added for 
clarity and for consistency with other similar national research and 
promotion programs.
    Other minor changes which do not materially affect the text were 
made as appropriate.
    The Department has determined that this proposed Order is 
consistent with and would effectuate the purposes of the Act.
    The proposal set forth below has not received the approval of the 
Secretary.

List of Subjects in 7 CFR Part 1217

    Administrative practice and procedure, Advertising, Consumer 
Information, Marketing agreements, Olive oil promotion, Reporting and 
recordkeeping requirements.
    For the reasons set forth in the preamble, it is proposed that 
Title 7 of Chapter XI of the Code of Federal Regulations be amended as 
follows:
    1. Part 1217 is added to read as follows:

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

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

Definitions

Sec.
1217.1  Act.
1217.2  Conflict of interest.
1217.3  Council.
1217.4  Department.
1217.5  First handler.
1217.6  Fiscal period and marketing year.
1217.7  Handle.
1217.8  Importer.
1217.9  Information.
1217.10  Marketer.
1217.11  Marketing.
1217.12  Olive oil.
1217.13  Order.
1217.14  Part and subpart.
1217.15  Person.
1217.16  Programs, plans, and projects.
1217.17  Promotion.
1217.18  Research.
1217.19  Secretary.
1217.20  Suspend.
1217.21  Terminate.
1217.22  United States.

Olive Oil Council

1217.30  Establishment and membership.
1217.31  Nominations.
1217.32  Term of office.
1217.33  Vacancies.
1217.34  Procedure.
1217.35  Compensation and reimbursement.
1217.36  Powers and duties.
1217.37  Prohibited activities.

Research, Promotion, and Information

1217.40  Research, promotion, and information.
1217.41  Contracts.

Expenses and Assessments

1217.50  Budget and expenses.
1217.51  Financial statements.
1217.52  Assessments.
1217.53  Exemption from assessment.
1217.54  Operating reserve.
1217.55  Independent evaluation.
1217.56  Patents, copyrights, inventions, product formulations, and 
publications.

Reports, Books, and Records

1217.60  Reports.
1217.61  Books and records.
1217.62  Confidential treatment.

Miscellaneous

1217.70  Right of the Secretary.
1217.71  Referenda.
1217.72  Suspension or termination.
1217.73  Proceedings after termination.
1217.74  Effect of termination or amendment.
1217.75  Personal liability.
1217.76  Separability.
1217.77  Amendments.
1217.78  OMB control numbers.

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

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

Definitions


Sec. 1217.1  Act.

    Act means the Commodity Promotion, Research, and Information Act of 
1996 (7 U.S.C. 7401-7425; Pub. L. 104-127; 110 Stat. 1029, as amended), 
or any amendments thereto.


Sec. 1216.2  Conflict of interest.

    Conflict of interest means a situation in which a member or 
employee of the Council has a direct or indirect financial interest in 
a person who performs a service for, or enters into a contract with, 
the Council for anything of economic value.


Sec. 1217.3  Council.

    Council means the administrative body established pursuant to 
Sec. 1217.30.


Sec. 1217.4  Department.

    Department means the United States Department of Agriculture.


Sec. 1217.5  First handler.

    First handler means the first person (excluding a common or 
contract carrier) who buys or takes possession of olive oil from a 
producer for marketing. If a producer markets olive oil directly to 
consumers, the producer shall be considered to be a first handler with 
respect to the olive oil produced by the producer.


Sec. 1217.6  Fiscal period and marketing year.

    Fiscal period and marketing year mean the 12-month period ending on 
December 31 or such other consecutive 12-month period as shall be 
recommended by the Council and approved by the Secretary.


Sec. 1217.7  Handle.

    Handle means to process, package, sell, transport, purchase, or in 
any other way place olive oil, or cause it to be placed, in the current 
of commerce.


Sec. 1217.8  Importer.

    Importer means any person who imports olive oil into the United 
States as principal or as an agent, broker, consignee, or 
representative of any person who produces or handles olive oil outside 
of the United States for sale in the United States, and who is listed 
in the import records as the importer of record for such olive oil.


Sec. 1217.9  Information.

    Information means information and programs that are designed to 
increase efficiency in processing and to develop new markets, marketing 
strategies, increased market efficiency, and activities that are 
designed to enhance the image of olive oil on a national or 
international basis. These include:
    (a) Consumer information, which means any action taken to provide 
information to, and broaden the understanding of, the general public 
regarding the consumption, use, nutritional attributes, and care of 
olive oil; and
    (b) Industry information, which means information and programs that 
will lead to the development of new markets, new marketing strategies, 
or increased efficiency for the olive oil industry, and activities to 
enhance the image of olive oil.


Sec. 1217.10  Marketer.

    Marketer means any person engaged in the sale or other disposition 
of olive oil in any channel of commerce.


Sec. 1217.11  Marketing.

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


Sec. 1217.12  Olive oil.

    Olive oil is the oil obtained solely from the fruit of the olive 
tree (Olea europaea sativa Hoffm. Et Link) and, for purposes of this 
Order, includes olive pomace oil.

[[Page 46761]]

Sec. 1217.13  Order.

    Order means an order issued by the Secretary under section 514 of 
the Act that provides for a program of generic promotion, research, and 
information regarding agricultural commodities authorized under the 
Act.


Sec. 1217.14  Part and subpart.

    Part means the Olive Oil Research, Promotion, and Consumer 
Information Order and all rules, regulations, and supplemental orders 
issued thereunder, and the Order shall be a subpart of such part.


Sec. 1217.15  Person.

    Person means any individual, group of individuals, partnership, 
corporation, cooperative, or any other legal entity.


Sec. 1217.16  Programs, plans, and projects.

    Programs, plans, and projects means those research, promotion, and 
information plans, studies, or projects established pursuant to 
Sec. 1217.30.


Sec. 1217.17  Promotion.

    Promotion means any action, including paid advertising and the 
dissemination of culinary and nutritional information and public 
relations, to present a favorable image of olive oil to the public for 
the purpose of improving the competitive position of olive oil in the 
marketplace and to stimulate sales in the retail, food service, and 
industrial markets.


Sec. 1217.18  Research.

    Research means any type of test, study, or analysis designed to 
advance the image, desirability, use, marketability, production, 
product development, or quality of olive oil.


Sec. 1217.19  Secretary.

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


Sec. 1217.20  Suspend.

    Suspend means to issue a rule under section 553 of title 5, United 
States Code, or part thereof, to temporarily prevent the operation of 
an order during a particular period of time specified in the rule.


Sec. 1217.21  Terminate.

    Terminate means to issue a rule under section 553 of title 5, 
United States Code, or part thereof, to cancel permanently the 
operation of an order beginning on a date certain specified in the 
rule.


Sec. 1217.22  United States.

    United States means collectively the 50 states of the United States 
of America, the District of Columbia, and the Commonwealth of Puerto 
Rico, and the territories and possessions of the United States.

Olive Oil Council


Sec. 1217.30  Establishment and membership.

    (a) The Olive Oil Council is hereby established to administer the 
terms and provisions of the Order. The Council shall consist of 14 
members as follows:
    (1) Three members shall be importers and marketers of name brands;
    (2) One member shall be an importer and marketer or packer of a 
private label;
    (3) One member shall be an importer of bulk olive oil;
    (4) Two members shall be importers and marketers to the food 
service trade;
    (5) Two members shall represent the first handlers of domestic 
olive oil; and
    (6) Five members shall be at-large representatives of one or more 
of the following segments of the olive oil market: the health 
community; professional chefs; food service operators; retailers; and 
food media/consultants.
    (b) In accordance with regulations approved by the Secretary, at 
least every five years and not more than every three years, the Council 
shall review the geographical distribution of first handlers of 
domestic olive oil throughout the United States and the volume of 
imported olive oil and, if warranted, recommend to the Secretary the 
reapportionment of Council membership or the addition of members to 
reflect changes in the geographical distribution of the handling of 
olive oil and the volume of imported olive oil.


Sec. 1217.31  Nominations.

    (a) The Secretary shall solicit nominations for the initial Council 
from importers, handlers, and other professionals associated with the 
olive oil industry.
    (b) Procedure for subsequent nominations.
    (1) The Council shall announce at least 180 days in advance of the 
expiration of members' terms that such terms are expiring and shall 
solicit nominations for such positions. The announcement shall include, 
at a minimum, the following information:
    (i) A list of the vacancies for which nominees may be submitted and 
qualifications for nomination; and
    (ii) The date by which the names of nominees shall be submitted to 
the Secretary for consideration in accordance with paragraph (b)(3) of 
this section.
    (2) Importer members shall be nominated by importers, and handler 
members shall be nominated by handlers. The at-large members may be 
nominated by other professionals associated with the olive oil 
industry.
    (3) Nominations should be submitted to the Secretary not less than 
90 days prior to the expiration of members' terms.
    (4) Two nominees must be submitted to the Secretary for each 
vacancy.
    (c) The Secretary shall appoint the members of the Council from 
nominations made in accordance with paragraph (b) of this section.
    (1) The Secretary may reject any nominee submitted. If there is an 
insufficient number of nominees from whom to appoint members to the 
Council as a result of the Secretary's rejecting such nominees, 
additional nominees shall be submitted to the Secretary in a manner 
prescribed by the Secretary.
    (2) Whenever the industry fails to nominate individuals for 
appointment to the Council, the Secretary may appoint members in such a 
manner as the Secretary determines appropriate.


Sec. 1217.32  Term of office.

    The members of the Council shall serve for terms of three years, 
except the members of the initial Council shall be designated for and 
shall serve terms as follows: Five members shall serve for two-year 
terms; five shall serve for three-year terms; and four shall serve for 
four-year terms. No member shall serve more than two consecutive terms.


Sec. 1217.33  Vacancies.

    (a) In the event any member of the Council ceases to be a member of 
the category of members from which the member was appointed to the 
Council, such position shall automatically become vacant.
    (b) If a member of the Council consistently refuses to perform the 
duties of a member of the Council, or if a member of the Council 
engages in acts of dishonesty or willful misconduct, the Council may 
recommend to the Secretary that the member be removed from office. If 
the Secretary finds the recommendation of the Council shows adequate 
cause, the Secretary shall remove such member from office.
    (c) Should any member position become vacant, the Secretary shall 
solicit nominations in the manner set forth in Sec. 1217.32, except 
that said nomination and replacement shall not be required if said 
unexpired terms are less than six months.

[[Page 46762]]

Sec. 1217.34  Procedure.

    (a) At a properly convened meeting of the Council, eight members 
shall constitute a quorum. Any action of the Council shall require the 
concurring votes of a majority of those present and voting. At 
assembled meetings, all votes shall be cast in person.
    (b) In matters of an emergency nature when there is not enough time 
to call an assembled meeting of the Council, the Council may act upon 
the concurring votes of a majority of its members by mail, telephone, 
facsimile, or by other means of communication: Provided, that each 
proposition is explained accurately, fully, and substantially 
identically to each member. All telephone votes shall be promptly 
confirmed in writing and recorded in the Council minutes.


Sec. 1217.35  Compensation and Reimbursement.

    Members of the Council, when acting as members, shall serve without 
compensation but shall be reimbursed for reasonable travel expenses, as 
approved by the Council, incurred by them in the performance of their 
duties as Council members.


Sec. 1217.36  Powers and duties.

    The Council shall have the following powers and duties:
    (a) To administer this subpart in accordance with its terms and 
provisions of the Act;
    (b) With the approval of the Secretary, to invest funds, pending 
disbursement pursuant to a plan or project, only in: obligations of the 
United States or any agency thereof; in general obligations of any 
State or any political subdivision thereof; in any interest-bearing 
account or certificate of deposit of a bank which is a member of the 
Federal Reserve System; or in obligations fully guaranteed as to 
principal and interest by the United States;
    (c) To appoint from its members an executive committee and to 
delegate to the committee authority to administer the terms and 
provisions of this subpart under the direction of the Council and 
within the policies determined by the Council;
    (d) To receive, investigate, and report to the Secretary complaints 
of violations of this part; and
    (e) To recommend to the Secretary amendments to this part.
    (f) To meet and organize and to select from among its members a 
chairperson, other officers, and committees and subcommittees, as the 
Council determines to be appropriate;
    (g) To develop and recommend to the Secretary for approval such 
bylaws as may be necessary for the functioning of the Council and such 
rules as may be necessary to administer the Order, including activities 
authorized to be carried out under the Order;
    (h) To employ such persons as it may deem necessary and to 
determine the compensation and define the duties of each;
    (i) To prepare and submit to the Secretary for the Secretary's 
approval, a budget on a fiscal period basis of its anticipated expenses 
in the administration of this part including the probable costs of all 
programs or projects and to recommend a rate of assessment with respect 
thereto;
    (j) To receive and review or on its own develop programs and 
projects and to enter into contracts or agreements with the approval of 
the Secretary for the development and carrying out of programs or 
projects of promotion, and information;
    (k) To maintain minutes, books, and records which shall be 
available to the Secretary for inspection and audit, and to prepare and 
submit such reports from time to time to the Secretary, as the 
Secretary may prescribe, and to make appropriate accounting with 
respect to the receipt and disbursement of funds entrusted to it;
    (l) To periodically prepare and make public reports of its 
activities carried out, and, at least once each fiscal period, to make 
public an accounting of funds received and expended;
    (m) To cause its books to be audited by a certified public 
accountant at the end of each fiscal period and to submit a copy of 
each audit to the Secretary;
    (n) To give to the Secretary the same notice of meetings of the 
Council and subcommittees (including those conducted by telephone) as 
is given to members in order that representatives of the Secretary may 
attend such meetings;
    (o) To submit to the Secretary such information pertaining to this 
subpart as the Secretary may request;
    (p) To notify olive oil importers and first handlers of all Council 
meetings through news releases or other means;
    (q) To develop and recommend such rules and regulations to the 
Secretary for approval as may be necessary for the development and 
execution of plans, projects, or activities to effectuate the declared 
purpose of the Act.
    (r) To act as intermediary between the Secretary and any producer, 
first handler, or importer.
    (s) To work to achieve an effective, continuous, and coordinated 
program of promotion, research, information, evaluation, and industry 
information designed to strengthen the olive oil industry's position in 
the marketplace; maintain and expand existing markets and uses for 
olive oil; and to carry out programs, plans, and projects designed to 
provide maximum benefits to the olive oil industry.


Sec. 1217.37  Prohibited activities.

    (a) The Council may not engage in and shall prohibit the employees 
and agents of the Council from engaging in:
    (1) Any action that would be a conflict of interest; or
    (2) Using funds collected by the Council under the Order to 
undertake any action for the purpose of influencing legislation or 
governmental action or policy, including local, state, national, and 
foreign governments, other than recommending to the Secretary 
amendments to the Order.
    (b) No Council program, plan, or project shall make any false or 
misleading claims on behalf of olive oil or false, misleading, or 
disparaging statements with respect to the attributes or use of another 
agricultural commodity.

Research, Promotion, and Information


Sec. 1217.40  Research, promotion, and information.

    (a) The Council shall develop and submit to the Secretary for 
approval any plans or projects authorized in this section. Such plans 
or projects shall provide for:
    (1) The establishment, issuance, effectuation, and administration 
of appropriate plans or projects for research, promotion, and 
information designed to strengthen the position of olive oil in the 
marketplace, to maintain, develop, and expand markets for olive oil, 
and to encourage further development of the domestic industry; and
    (2) The establishment and conduct of marketing research and 
development projects to the end that the acquisition of knowledge 
pertaining to olive oil or its consumption and use may be encouraged or 
expanded or to the end that the marketing and utilization of olive oil 
may be encouraged, expanded, improved, or made more efficient.
    (b) No program, plan, or project shall be implemented prior to its 
approval by the Secretary. Once a program, plan, or project is so 
approved, the Council shall take appropriate steps to implement it.
    (c) Each program, plan, or project implemented under this subpart 
shall be reviewed or evaluated periodically by the Council to ensure 
that it contributes to an effective program of promotion, research, or 
information. If it is found by the Council that any such program, plan, 
or project does not contribute to an effective program of promotion,

[[Page 46763]]

research, or information, then the Council shall terminate such 
program, plan, or project.


Sec. 1217.41  Contracts.

    (a) The Council may enter into contracts or make agreements for the 
development and carrying out of research, promotion, and information, 
and pay for the costs of such contracts or agreements, after approval 
from the Secretary.
    (b) Each contract or agreement shall provide that:
    (1) The contractor or agreeing party shall develop and submit to 
the Council a program, plan, or project together with a budget or 
budgets that shall show the estimated cost to be incurred for such 
program, plan, or project;
    (2) The contractor or agreeing party shall keep accurate records of 
all its transactions and make periodic reports to the Council of 
activities conducted, submit accounting for funds received and 
expended, and make such other reports as the Secretary or the Council 
may require;
    (3) The Secretary may audit the records of any contracting or 
agreeing party periodically; and
    (4) Any subcontractor who enters into a contract with a Council 
contractor and who receives or otherwise uses funds allocated by the 
Council shall be subject to the same provisions as the contractor.

Expenses and Assessments


Sec. 1217.50  Budget and expenses.

    (a) Prior to the beginning of each fiscal period, or as may be 
necessary thereafter, the Council shall prepare and submit to the 
Secretary a budget on a fiscal period basis of its anticipated expenses 
and disbursements in the administration of the Order and probable costs 
of research, promotion, and information. Each such budget shall 
include:
    (1) A statement of objectives and strategy for each program, plan, 
or project;
    (2) A summary of anticipated revenue, with comparative data for at 
least one preceding year (except for the initial budget);
    (3) A summary of proposed expenditures for each program, plan, or 
project; and
    (4) Staff and administrative expense breakdowns, with comparative 
data for at least one preceding year (except for the initial budget).
    (b) Each budget shall provide adequate funds to defray its proposed 
expenditures and to provide for a reserve as set forth in this subpart.
    (c) Subject to this section, any amendment or addition to an 
approved budget must be approved by the Secretary, including shifting 
funds from one program, plan, or project to another. Shifts of funds 
which do not cause an increase in the Council's approved budget and 
which are consistent with governing bylaws, approved by the Secretary, 
need not have prior approval from the Secretary.
    (d) The Council is authorized to incur such expenses, including 
provision for a reasonable reserve, as the Secretary finds are 
reasonable and likely to be incurred by the Council for its maintenance 
and functioning and to enable it to exercise its powers and perform its 
duties in accordance with the provisions of this subpart. Such expenses 
shall be paid from funds received by the Council.
    (e) With approval of the Secretary, the Council may borrow money 
for the payment of administrative expenses, subject to the same fiscal, 
budget, and audit controls as other funds of the Council. Any funds 
borrowed by the Council shall be expended only for startup costs and 
capital outlays and are limited to the first year of operation of the 
Council.
    (f) The Council may accept voluntary contributions, but these shall 
only be used to pay expenses incurred in the conduct of programs, 
plans, and projects. Such contributions shall be free from any 
encumbrance by the donor, and the Council shall retain complete control 
of their use.
    (g) The Council shall reimburse the Secretary for all expenses 
incurred by the Secretary in the implementation, administration, and 
supervision of the Order, including all referendum costs in connection 
with the Order.
    (h) The Council may not expend for administration, maintenance, and 
functioning of the Council in any fiscal year an amount that exceeds 15 
percent of the assessments and other income received by the Council for 
that fiscal year. Reimbursements to the Secretary required under 
paragraph (g) of this section are excluded from this limitation on 
spending.


Sec. 1217.51  Financial statements.

    (a) As requested by the Secretary, the Council shall prepare and 
submit financial statements to the Secretary on a regular basis. Each 
such financial statement shall include, but not be limited to, a 
balance sheet, income statement, and expense budget. The expense budget 
shall show expenditures during the time period covered by the report, 
year-to-date expenditures, and the unexpended budget.
    (b) Each financial statement shall be submitted to the Secretary 
within 30 days after the end of the time period to which it applies.
    (c) The Council shall submit annually to the Secretary an annual 
financial statement within 90 days after the end of the fiscal year to 
which it applies.


Sec. 1217.52  Assessments.

    (a) Each importer and first handler shall pay to the Council, upon 
demand, the assessment as may be approved by the Secretary. Such 
assessment shall be the amount established by the Secretary pursuant to 
paragraph (b) of this section.
    (b) Except as otherwise provided, the rate of assessment shall be 
$0.01 per pound of olive oil imported or produced and handled in the 
United States. The rate of assessment may be raised to a maximum of 
$0.02 per pound as recommended by the Council and approved by the 
Secretary, but it shall not be raised more than $0.002 per year in any 
fiscal year.
    (c) Importers of olive oil shall pay the assessment to the Council 
through the U.S. Customs Service at the time of entry. The U.S. Customs 
Service shall remit the assessment to the Council.
    (d) The import assessment shall be uniformly applied to imported 
olive oil identified by the numbers 1509.10.20, 1509.10.40, 1509.90.20, 
1509.90.40, 1510.00.40, and 1510.00.60 in the Harmonized Tariff 
Schedule of the United States.
    (e) Assessments due from a first handler shall be paid to the 
Council at such time and in such manner as the Council, with the 
Secretary's approval, directs pursuant to regulations issued hereunder. 
Such regulations may provide for different importer or first handler 
payment schedules so as to recognize differences in marketing or 
purchasing practices and procedures.
    (f) The Council shall impose a late payment charge on any person 
who fails to remit to the Council the total amount for which the person 
is liable on or before the payment due date established under this 
section. The late payment charge will be in the form of interest on the 
outstanding portion of any amount for which the person is liable. The 
rate of interest shall be prescribed in regulations issued by the 
Secretary.
    (g) Persons failing to remit total assessments due in a timely 
manner may also be subject to actions by the Secretary under federal 
debt collection procedures.


Sec. 1217.53  Exemption from assessment.

    (a) A domestic first handler who handles less than 6,000 pounds of 
olive oil per year or an importer who imports less than 6,000 pounds of 
olive oil per

[[Page 46764]]

year shall be eligible for an exemption from the assessment.
    (b) To claim such exemption, a first handler or importer shall 
submit an application to the Council stating the basis on which the 
person claims the exemption for such year.
    (c) If, after a person claims an exemption from assessments for any 
year under this section, and such person no longer meets the 
requirements of this paragraph for an exemption, such person shall 
provide additional information to the Council in the form and manner 
prescribed by the Council, subject to approval by the Secretary, and 
pay an assessment on all the olive oil handled or imported by such 
person during the year for which the person claimed the exemption.
    (d) Exempted individuals are subject to such safeguards as 
prescribed in this part to prevent improper use of this exemption.


Sec. 1217.54  Operating reserve.

    The Council may establish an operating monetary reserve and may 
carry over to subsequent fiscal periods excess funds in any reserve so 
established: Provided, That the funds in the reserve shall not exceed 
one fiscal period's budget. Subject to approval by the Secretary, such 
reserve funds may be used to defray any expenses authorized under this 
part.


Sec. 1217.55  Independent evaluation.

    The Council shall, not less often than every five years, authorize 
and fund, from funds otherwise available to the Council, an independent 
evaluation of the effectiveness of the Order and programs conducted by 
the Council pursuant to the Act. The Council shall submit to the 
Secretary, and make available to the public, the results of each 
periodic independent evaluation conducted under this paragraph.


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

    (a) Any patents, copyrights, inventions, or publications developed 
through the use of funds collected by the Council under the provisions 
of this subpart shall be the property of the U.S. Government as 
represented by the Council, and shall, along with any rents, royalties, 
residual payments, or other income from the rental, sale, leasing, 
franchising, or other uses of such patents, copyrights, inventions, or 
publications, inure to the benefit of the Council, and shall be 
considered income subject to the same fiscal, budget, and audit 
controls as other funds of the Board. Upon termination of this subpart, 
Sec. 1217.73 shall apply to determine disposition of all such property.
    (b) Should patents, copyrights, inventions or publications be 
developed through the use of funds received by the Council under this 
subpart and funds contributed by another organization or person, the 
ownership and related rights to such patents, copyrights, inventions, 
or publications shall be determined by an agreement between the Council 
and the party contributing funds towards the development of such 
patent, copyright, invention or publication in a manner consistent with 
paragraph (a) of this section, subject to approval by the Secretary.

Reports, Books, and Records


Sec. 1217.60  Reports.

    Each first handler and importer shall be required to report to the 
administrative staff of the Council, at such times and in such manner 
as it may prescribe, such information as may be necessary for the 
Council to perform its duties. Such reports shall include, but shall 
not be limited to the following:
    (a) For first handlers, the total quantity of olive oil handled 
during the reporting period; and a record of assessments paid, 
including a statement from the handler that the assessment has been 
paid on all olive oil handled during the reporting period.
    (b) For importers, the total quantity of olive oil imported during 
the reporting period and a record of each importation of olive oil 
during such period, giving quantity, date, and port of entry.
    (c) For persons who have an exemption from assessments under 
Sec. 1217.53, such information as deemed necessary by the Council, and 
approved by the Secretary, concerning the exemption including 
disposition of exempted olive oil.
    (d) Information reported to the administrative staff of the Council 
regarding total quantity, assessments, and other specific information 
must be kept confidential in accordance with Sec. 1217.62.


Sec. 1217.61  Books and records.

    First handlers and importers shall maintain, and during normal 
business hours make available for inspection by employees of the 
Council or the Secretary, such books and records as are necessary to 
carry out the provisions of this subpart and the regulations issued 
thereunder, including such records as are necessary to verify any 
required reports. Such records shall be maintained for two years beyond 
the first period of their applicability.


Sec. 1217.62  Confidential treatment.

    All information obtained from the books, records, or reports 
required to be maintained shall be kept confidential by all persons, 
including employees of the Council and all officers and employees and 
former officers and employees of contracting and subcontracting 
agencies or agreeing parties having access to such information, and 
shall not be made available to Council members, first handlers, or 
importers. Only such information as the Secretary deems relevant shall 
be disclosed to the public and then only in a suit or administrative 
hearing brought at the direction, or upon the request of the Secretary, 
or to which the Secretary or any officer of the United States is a 
party, and involving this subpart, except that nothing in this subpart 
shall be deemed to prohibit:
    (a) The issuance of general statements based upon the reports of a 
number of first handlers or importers subject to any order, if such 
statements do not either expressly or tacitly identify the information 
furnished by any person;
    (b) The publication by direction of the Secretary, of the name of 
any person convicted of violating this subpart, together with a 
statement of the particular provisions of the Order violated by such 
person.
    (c) Any disclosure of any confidential information by any employee 
of the Council shall be considered willful misconduct.

Miscellaneous


Sec. 1218.70  Right of the Secretary.

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


Sec. 1217.71  Referenda.

    (a) Implementation. For the purpose of ascertaining whether the 
persons to be covered by the Order favor the Order going into effect, 
the Secretary shall conduct an initial referendum among persons to be 
subject to the assessment under Sec. 1217.52 who, during a 
representative period determined by the Secretary, engaged in the 
handling or importation of olive oil. The Order must be approved by a 
simple majority of those voting.
    (b) Subsequent referenda. The Secretary shall hold subsequent 
referenda: Not later than seven years after assessments first begin 
under the Order; at the request of the Council; or when petitioned by 
10 percent or more of the olive oil first handlers and importers 
eligible to vote to determine if they favor termination or suspension

[[Page 46765]]

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


Sec. 1217.72  Suspension or termination.

    (a) The Secretary shall suspend or terminate this part or subpart 
or a provision thereof at the end of the marketing year whenever the 
Secretary determines that the subpart or a provision thereof obstructs 
or does not tend to effectuate the purposes of the Act, or if the 
Secretary determines that its suspension or termination is approved or 
favored in a referendum by a simple majority of the persons voting in a 
referendum who, during a representative period determined by the 
Secretary, have been engaged in the handling or importation of olive 
oil.
    (b) If, as a result of a referendum, the Secretary determines that 
this subpart is not approved, the Secretary shall:
    (1) No later than 180 days after making the determination, suspend 
or terminate, as the case may be, collection of assessments under this 
subpart; and
    (2) As soon as practical, suspend or terminate, as the case may be, 
activities under this subpart in an orderly manner.


Sec. 1217.73  Proceedings after termination.

    (a) Upon the termination of this subpart, the Council shall 
recommend to the Secretary not more than five of its members to serve 
as trustees for the purpose of liquidating the affairs of the Council. 
Such persons, upon designation by the Secretary, shall become trustees 
of all funds and property owned, in possession of, or under control of 
the Council, including claims for any funds unpaid or property not 
delivered or any other claim existing at the time of such termination.
    (b) The said trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Council under any contracts or 
agreements entered into by it pursuant to the Order;
    (3) From time to time account for all receipts and disbursements 
and deliver all property on hand, together with all books and records 
of the Council and of the trustees, to such person as the Secretary may 
direct; and
    (4) Upon the direction of the Secretary, execute such assignments 
or other instruments necessary or appropriate to vest in such person 
full title and right to all of the funds, property, and claims vested 
in the Council or the trustees pursuant to the Order.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to this subpart shall be subject to 
the same obligations as imposed upon the Council and the trustees.
    (d) Any residual funds not required to defray the necessary 
expenses of liquidation shall be returned to the persons who 
contributed such funds, or paid assessments, or, if not practicable, 
shall be turned over to the Secretary to be utilized, to the extent 
practicable, in the interest of continuing one or more of the olive oil 
research or information programs authorized under the Order.


Sec. 1217.74  Effect of termination or amendment.

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


Sec. 1217.75  Personal liability.

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


Sec. 1217.76  Separability.

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


Sec. 1217.77  Amendments.

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


Sec. 1217.78  OMB control numbers.

    The control number assigned to the information collection 
requirements by the Office of Management and Budget pursuant to the 
Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, is yet to be 
determined. The Council nominee background statement form is assigned 
OMB control number 0505-0001.

    Dated: August 18, 1999.
Kathleen A. Merrigan,
Administrator, Agricultural Marketing Service.
[FR Doc. 99-22107 Filed 8-25-99; 8:45 am]
BILLING CODE 3410-02-P