[Federal Register Volume 67, Number 33 (Tuesday, February 19, 2002)]
[Proposed Rules]
[Pages 7290-7309]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-3797]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 67, No. 33 / Tuesday, February 19, 2002 / 
Proposed Rules  

[[Page 7290]]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1219

[FV-01-705-PR#2]
RIN 0581-AB92


Proposed Hass Avocado Promotion, Research, and Information Order

AGENCY: Agricultural Marketing Service, Agriculture.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would establish an industry-funded 
promotion, research, and information program for the Hass avocados. 
This program is authorized under the Hass Avocado Research, Promotion, 
and Information Act (Act). USDA published four proposals (Proposals 1-
4) for comment reflecting all or portions of an Order. This proposed 
rule adopts Proposal 1 with changes, including appropriate provisions 
from Proposals 2, 3, and 4. Under the proposed Order, producers and 
importers would pay an initial assessment of 2.5 cents per pound of 
Hass domestic and imported avocados to the Hass Avocado Board (Board). 
The Board would be appointed by USDA to conduct research, promotion, 
industry information, and consumer information needed for the 
maintenance, expansion, and development of domestic markets for Hass 
avocados.

DATES: Agricultural Marketing Service will publish a referendum order 
and the dates for the referendum in the Federal Register at a future 
date.

FOR FURTHER INFORMATION CONTACT: Julie Morin, Research and Promotion 
Branch, FV, AMS, USDA, Stop 0244, 1400 Independence Avenue, S.W., Room 
2535-S, Washington, D.C. 20250-0244, telephone (202) 720-6930 or (888) 
720-9917, fax (202) 205-2800, e-mail [email protected].

SUPPLEMENTARY INFORMATION: This proposed Order is issued under the Hass 
Avocado Research, Promotion, and Information Act of 2000 (Act) [7 
U.S.C. 7801-7813], enacted on October 23, 2000.
    Prior documents: A proposed rule was published in the Federal 
Register on July 13, 2001 [66 FR 36870], with a 45-day comment period. 
Subsequently, the USDA published a notice in the Federal Register on 
August 28, 2001, extending the comment period by 15 days, to September 
12, 2001. In addition, USDA published a proposed rule on the referendum 
procedures in the Federal Register on July 13, 2001 [66 FR 36886], with 
a 45-day comment period. The comment period on this rule was also 
extended 15 days. These comment periods were extended one day due to 
mail service being shut down on September 11-12, 2001.

Question and Answer Overview

Why Is USDA Proposing a Program for Hass Avocados?

    The U.S. Department of Agriculture (USDA or the Department) 
received a proposal from the California Avocado Commission and partial 
proposals from Hass avocado interests in Chile, Mexico, and New Zealand 
to implement a program under the Act. The USDA issued the proposed rule 
to obtain comments on the proposals and to obtain information on the 
potential impact of the proposed program on the Hass avocado industry 
before developing a final proposed program and conducting a referendum 
on it.

What Is the Purpose of the Hass Avocado Program?

    The purpose of the program is to increase consumption of Hass 
avocados in the United States.

How Will the Hass Avocado Program Be Implemented?

    A referendum will be conducted on the proposed Order. The Order 
will be implemented if it is approved by a simple majority of the 
eligible voters in the referendum.

When Will the Referendum Be Held?

    A final rule providing referendum procedures will be published in 
this issue of the Federal Register. A referendum order will be 
published in the Federal Register after a bond or irrevocable letter of 
credit has been posted by the California Avocado Commission. The 
representative period for eligibility for voting in the referendum and 
the dates for registration and for voting will be announced in the 
referendum order.

Who Will Be Covered by the Program?

    Producers and importers of Hass avocados will pay assessments under 
the program, and first handlers will be involved in the assessment 
collection process.

Who Will Sit on the Board?

    The Act provides that there will be a 12-member Board consisting of 
seven domestic Hass avocado producers, two importers, and three 
additional members who can either be importers or domestic producers. 
The three ``swing'' seats will be allocated to producers and importers 
so as to assure as nearly as possible that the composition of the Board 
reflects the proportion of domestic production and imports supplying 
the United States market. The proportion shall be based on the average 
volume of domestic production and imports in the United States over the 
previous three years. Each member will have an alternate.

How Will Members of the Board Be Selected?

    The Order will provide for a nomination and election process to 
identify industry members who are interested and willing to serve on 
the Board. In the initial nomination process, the California Avocado 
Commission (Commission) will conduct an election to determine who will 
be nominated for each domestic producer seat. USDA will conduct an 
election among importers to determine who will be nominated to fill the 
importer seats. Two names must be submitted for each member and 
alternate position. From the names submitted, USDA will appoint the 
members and alternates of the Board.

If the Hass Avocado Program is Implemented and There Are Concerns About 
How It Is Operating, What Can the Department of Agriculture Do?

    Three years after the program is implemented, USDA could conduct a 
referendum to determine whether the Hass avocado industry supports 
continuation of the program: (1) At any time; (2) at the request of 30 
percent or more of the producers and importers required to pay 
assessments; or (3) at the request of the Board.

[[Page 7291]]

Executive Orders 12866 and 12988

    This proposed rule has been determined to be not significant for 
purposes of Executive Order 12866 and, therefore, has not been reviewed 
by the Office of Management and Budget.
    This proposed rule has been reviewed under E.O.12988, Civil Justice 
Reform. It is not intended to have retroactive effect. Section 1212 of 
the Act states that the Act may not be construed to preempt or 
supersede any other program relating to Hass avocado promotion, 
research, industry information, and consumer information organized and 
operated under the laws of the United States or of a state.
    Under Section 1207 of the Act, a person subject to the Order may 
file a petition with USDA stating that the Order, any provision of the 
Order, or any obligation imposed in connection with the Order, is not 
established in accordance with 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, USDA will issue a ruling on 
the petition. The Act provides that the district court of the United 
States in 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 USDA's final ruling.

Regulatory Flexibility Act

    In accordance with the Regulatory Flexibility Act (RFA) [5 U.S.C. 
601 et seq.], the Agency has examined 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 California avocado industry initiated this program by asking 
the U.S. Congress (Congress) to pass legislation to authorize USDA to 
create a generic program of promotion and research for Hass avocados. 
Congress found that this program is vital to the welfare of Hass 
avocado producers and other persons concerned with producing, 
marketing, and processing Hass avocados.
    This program is intended to: Develop and finance an effective and 
coordinated program of research, promotion, industry information, and 
consumer information regarding Hass avocados; strengthen the position 
of the Hass avocado industry in U.S. markets; maintain, develop, and 
expand domestic markets for Hass avocados; and treat persons producing, 
handling, and importing avocados fairly.
    Hass avocado producers and importers must approve the program in a 
referendum in advance of its implementation and would serve on the 
Board that would administer the program under the Department of 
Agriculture's supervision. In addition, any person subject to the 
program may file with USDA a petition stating that the Order or any 
provision of the Order is not in accordance with law and requesting a 
modification of the Order or an exemption from the Order. 
Administrative proceedings were discussed earlier in this proposed 
rule.
    In this program, first handlers would be required to collect 
assessments from producers, file reports, and submit assessments to the 
Board. Importers would be required to remit to the Board assessments 
not collected by the U.S. Customs Service (Customs) and to file reports 
with the Board. Exports of U.S. Hass avocados would be exempt from 
assessment. While the proposed Order would impose certain recordkeeping 
requirements on producers, handlers, and importers, information 
required under the proposed Order could be compiled from records 
currently maintained and would involve clerical or accounting skills. 
The forms 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 Act. There would be an estimated 6,315 
respondents providing information to the Board or to USDA: 6,000 
producers, 100 first handlers, 200 importers, 10 exempt handlers, and 
five importer associations. The burden associated with the information 
collections would be $40,020 for all producers or $6.67 per producer, 
$6,500 for all first handlers or $65 per first handler, $50 for all 
importers or $0.25 per importer, $25 for exempt handlers or $2.50 per 
exempt handler, and $25 for all importer associations or $2.50 per 
importer association. These totals have been estimated by multiplying 
total burden hours requested by $10.00 per hour, a sum deemed to be 
reasonable should the respondents be compensated for their time.
    The Department would oversee the operation of the program. Three 
years after the program is implemented, USDA could conduct a referendum 
to determine whether the Hass avocado industry supports continuation of 
the program at any time, at the request of 30 percent or more of the 
producers and importers required to pay assessments, or at the request 
of the Board.
    There are approximately 6,000 producers, 200 importers, and 100 
first handlers of Hass avocados that would be covered by the program. 
The program would also affect 10 exempt handlers, a state association 
of avocado producers, and several importer associations.
    The Small Business Administration [13 CFR 121.201] defines small 
agricultural producers as those having annual receipts of $750,000 or 
less annually and small agricultural service firms as those having 
annual receipts of $5 million or less. Importers, first handlers, and 
exempt handlers would be considered agricultural service firms. Using 
these criteria, most producers and importers to be covered by the 
proposed program would be considered small businesses, and most 
handlers would not. The associations affected by this proposed rule 
consist of producers or importers and would reflect the size of these 
entities.
    According to the USDA's National Agricultural Statistics Service 
(NASS), total U.S. production of all varieties of avocados during the 
2000-2001 season was 234,320 tons, all of which was utilized fresh 
(except for a small processed quantity that NASS included in fresh 
utilization to protect the confidentiality of individual operations). 
The value of the 2000-2001 crop was $321 million. Production in 2000-
2001 was up 28 percent from the previous year's total of 183,300 tons, 
which had a value of $379 million.
    In 2000-2001, California accounted for more than 89 percent of U.S. 
production, followed by Florida (nearly 11 percent) and Hawaii (about 
0.1 percent). Hass avocados account for about 85 percent of the total 
California avocado crop.
    Avocados are imported in both fresh and processed forms. In 2000, 
fresh avocado imports accounted for about 75 percent of the total 
tonnage of fresh and processed avocados imported. Imported fresh 
avocados totaled 86,667 tons, up about 42 percent from 1999. Processed 
avocados accounted for 25,214 tons, up 21 percent from 1999.
    The total import value for fresh and processed avocados was $149 
million in 2000, up from $105 million in 1999. The total tonnage 
imported was up 37 percent in 2000, to 111,880 tons. The trend in 
imports is up, and imports have more than doubled since 1997. Almost 
all prepared or preserved avocado imports come from Mexico. In recent 
years, Chile has accounted for more

[[Page 7292]]

than 50 percent of fresh imports, followed by Mexico, the Dominican 
Republic, and New Zealand.
    The United States is a net importer of avocados, and exports of 
avocados are much smaller than imports. In 2000, total exports were 
2,756 tons, down 60 percent from the year before, and only about 2 
percent as large as imports. The value of exports in 2000 was $3.6 
million, down from $7.6 million in 1999. There are just a few major 
destinations of U.S. exports. Canada, Japan, Spain, and the United 
Kingdom purchased about 87 percent of the U.S. avocado exports in 2000.
    The proposed Hass avocado Order would authorize assessments on 
producers (to be collected by first handlers) and on importers 
(collected by Customs) of Hass avocados at an initial rate of 2.5 cents 
a pound. Exports of domestic Hass avocados are exempt from assessment. 
At the initial rate of assessment, about $10 million will be collected 
to administer the program: about 65 percent from domestic production 
and 35 percent from imports. The Act authorizes assessments on fresh, 
frozen, and processed Hass avocados. However, initially only fresh Hass 
avocados will be assessed.
    An exempt handler is a person who would otherwise be considered a 
first handler, except that all Hass avocados purchased by the person 
have already been subject to assessments under the Order. Others 
affected by the program would be a state association (currently, the 
Commission), which would receive 85 percent of the assessments paid by 
domestic producers, and importer associations which would receive 85 
percent of the assessments paid by their members. The state association 
could use the assessment funds to promote California Hass avocados in 
the United States, and the importer associations could use the 
assessments to promote Hass avocados on a country-of-origin basis in 
the United States. The funds remaining with the Board would be used to 
promote Hass avocados in the United States. The Board would also enter 
into contracts with the state association as provided for in the Act.
    Associations and related industry media would receive news releases 
and other information regarding the implementation and referendum 
process. Furthermore, all the information would be available 
electronically.
    If the program is implemented, the Hass avocado industry would 
nominate individuals to serve as members and alternates of the Board. 
USDA would ensure that the nominees represent the Hass avocado industry 
as specified in the Act.
    The Board would develop guidelines for compliance with the program. 
The Board would recommend changes in the assessment rate; programs, 
plans, and projects; a budget; and any rules and regulations that might 
be necessary for the administration of the program. Rules and 
regulations that might be necessary for the administration of the 
program would be provisions to assess other types of avocados that are 
so similar to the Hass variety that they are indistinguishable to 
consumers in fresh form. The Board could also recommend the assessment 
of imported frozen and processed Hass avocados. The Board also has the 
authority to recommend the exemption of certain processed avocado 
products for sale to a retailer if the avocado portion of the product 
does not constitute a substantial value of the product. The 
administrative expenses of the Board are limited by the Act to no more 
than 10 percent of its assessment income.
    There is a federal marketing order program for avocados grown in 
south Florida [7 CFR Part 915]. According to NASS, in Florida, there is 
little or no production of Hass avocados. Under the program, Hass 
avocados are covered by the grade regulations, but not by the maturity 
regulations. Since California is the source for more than 95 percent of 
avocados produced in the United States and Florida does not produce 
Hass avocados, there is little duplication between this Order and the 
federal marketing order.
    There is also a state avocado program in California, which is 
administered by the Commission. The chief objective of the program is 
to increase consumer awareness of and demand for avocados on behalf of 
the state's 6,000 growers. Under the program, growers pay a percentage-
of-revenue fee to fund a variety of market development programs. In 
1998-1999, California producers paid $13,165,544 in assessments at a 
rate of 4 cents of the gross dollar value. In 1999-2000, the assessment 
rate was 3.5 percent of the gross dollar value. The state assessment 
may not exceed 6.5 percent of the gross dollar value of the year's 
sales of avocados by all producers to handlers, or which are sold by 
handlers on behalf of growers. Expenditures for administrative purposes 
under the program may not exceed 2.5 percent of the gross dollar value 
of sales. The assessments are collected from the growers by handlers, 
who remit the money to the Commission.
    Paragraph (b)(1) of section 1212 of the Act states that nothing in 
the Act may be construed to provide for the control of production or 
otherwise limit the right of any Hass avocado grower, handler, and 
importer to produce, handle, or import Hass avocados. Paragraph (b)(2) 
of section 1212 of the Act states that the Order must treat all persons 
producing, handling, and importing Hass avocados fairly and that the 
Order must be implemented in an equitable manner. Further, paragraph 
(c) of section 1212 states that nothing in the Act may be construed to 
preempt or supersede any other program relating to Hass avocado 
promotion, research, industry information, and consumer information 
organized and operated under the laws of the United States or of a 
state.
    Alternatives to the proposed Hass avocado program are limited by 
the Act. The Act requires USDA to publish proposals received for a Hass 
avocado program under the Act. USDA published four proposals for 
comment reflecting all or portions of an Order. The Act is very 
specific on many provisions which must be included in the programs. 
However, the Act does include a few alternatives which USDA has 
included as permissive terms-rather than required-in this proposed 
rule. These alternatives include the identification and assessment of 
avocado varieties that are so similar to Hass avocados that they are 
indistinguishable to consumers in fresh form, the exemption of certain 
processed Hass avocado products for sale to a retailer if the Hass 
avocado portion of the product does not constitute a substantial value 
of the product, and the identification and assessment of imported 
frozen and processed Hass avocado products.

Paperwork Reduction Act

    In accordance with OMB regulations [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. These 
requirements will not become effective prior to OMB approval.
    Title: National Research, Promotion, and Consumer Information 
Programs.
    OMB Number: 0581-0197.
    Expiration Date of Approval: October 31, 2004.
    Type of Request: New information collection for advisory committees 
and boards and for research and promotion programs.
    Abstract: The information collection requirements in this request 
are

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essential to carry out the intent of the Act.
    In addition, there will be the additional burden on producers and 
importers voting in referenda. The information collection requirements 
relating to referenda are registration for the referendum and the 
ballot. These burdens are addressed in the final rule on referendum 
procedures that is published separately in this issue of Federal 
Register.
    Under the proposed program, first handlers would be required to 
collect assessments from producers and file reports with and submit 
assessments to the Board. While the proposed Order would impose certain 
recordkeeping requirements on producers, handlers, and importers, 
information required under the proposed Order could be compiled from 
records currently maintained.
    There are an estimated 6,315 respondents: 6,000 producers, 100 
first handlers, 200 importers, 10 exempt handlers, and five importer 
associations. The burden would be $40,020 for all producers or $6.67 
per producer; $6,500 for all first handlers or $65 per first handler; 
$50 for all importers or $0.25 per importer; $25 for all exempt 
handlers or $2.50 per exempt handler; and $25 for all importer 
associations or $2.50 per importer association. These totals have been 
estimated by multiplying total burden hours requested by $10.00 per 
hour, a sum deemed to be reasonable should the respondents be 
compensated for their time. (There are currently no importer 
associations, but some are expected to be created if the Order is 
implemented.)
    The proposed Order's provisions have been carefully reviewed, and 
every effort has been made to minimize any unnecessary recordkeeping 
costs or requirements, including efforts to utilize information already 
maintained by handlers for the Commission.
    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 Act. 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 
Board. The forms would be simple, easy to understand, and place as 
small a burden as possible on the person required to file the 
information. Collecting information monthly coincides with normal 
business practices.
    Collecting information less frequently would hinder the Board from 
effectively carrying out the provisions of the program. Requiring 
reports less frequently than monthly would impose additional 
recordkeeping requirements by requiring information from several months 
to be consolidated prior to filling out the form rather than just 
copying end-of-month figures already available onto the forms. The 
timing and frequency of collecting information are intended to meet the 
needs of the industry while minimizing the amount of work necessary to 
fill out the required reports.
    Therefore, there is no practical method for collecting the required 
information without the use of these forms.
    Information collection requirements in this proposal are:
    (1) A monthly report by each first handler who handles Hass 
avocados.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 0.50 hours per each respondent 
reporting on Hass avocados handled.
    Respondents: First handlers.
    Estimated Number of Respondents: 100.
    Estimated Number of Responses per Respondent: 12.
    Estimated Total Annual Burden on Respondents: 600 hours.
    (2) A periodic report by each importer who imports Hass avocados.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 0.25 hours per each importer 
respondent reporting on Hass avocados imported.
    Respondents: Importers.
    Estimated Number of Respondents: 200.
    Estimated Number of Responses per Respondent: 1 every ten years 
(0.10).
    Estimated Total Annual Burden on Respondents: 5 hours.
    (3) An exemption application for handlers who will be exempt from 
assessments.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 0.25 hours per response for each 
exempt producer and importer.
    Respondents: Exempt handlers.
    Estimated Number of Respondents: 10.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 2.5 hours.
    (4) Voting in the nomination process.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 0.5 hours per response.
    Respondents: Producers and importers.
    Estimated number of Respondents: 6,200.
    Estimated Number of Responses per Respondent: 1 every 3 years 
(0.33).
    Estimated Total Annual Burden on Respondents: 1,023 hours.
    (5) A background questionnaire for nominees.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 0.5 hours per response for each 
producer and importer nominated to the Board.
    Respondents: Producers and importers.
    Estimated Number of Respondents: 24 for the initial nominations to 
the Board and approximately 12 respondents annually thereafter.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 12 hours for the 
initial nominations to the Board and 6 hours annually thereafter.
    (6) A requirement to maintain records sufficient to verify reports 
submitted under the Order for two years.
    Estimate of Burden: Public recordkeeping burden for keeping this 
information is estimated to average 0.5 hours per recordkeeper 
maintaining such records.
    Recordkeepers: Producers, first handlers, and importers.
    Estimated number of Recordkeepers: 6,300.
    Estimated Total Recordkeeping Hours: 3,150 hours.
    (7) A requirement for importer associations to submit information 
in order to be certified by the Department.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 0.5 hours per response for each 
importer association.
    Respondents: Importer associations.
    Estimated Number of Respondents: 5.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 2.5 hours.

Background

    The Hass Avocado Research, Promotion, and Information Act (Act) 
authorizes the Department to establish a Hass avocado research, 
promotion, and information program. The program would be funded by an 
assessment of 2.5 cents per pound of Hass avocados levied on producers 
and importers of Hass avocados. The rate could be raised up to a 
maximum rate of 5 cents per pound. Exports of U.S. Hass avocados would 
be exempt from assessment. The Act authorizes assessments on domestic 
Hass avocados and on imports of fresh, frozen, and processed Hass 
avocados.

[[Page 7294]]

Initially, only fresh domestic and imported Hass avocados will be 
assessed.
    The Hass Avocado Board (Board) would use the funds to pay for 
research, promotion, industry information, and consumer information; 
administration, maintenance, and functioning of the Board; and expenses 
incurred by USDA in implementing and administering the Order, including 
referendum costs.
    The Board would be composed of 12 voting members: 7 producers, 2 
importers, and 3 producers and importers (swing seats). The three 
``swing'' seats will be allocated to producers and importers so as to 
assure as nearly possible that the composition of the Board reflects 
the proportion of domestic production and imports supplying the United 
States market, based on the three-year average of domestic production 
and imports.
    First handlers would be responsible for the collection of 
assessments from the producer and payment to the Board. First handlers 
would be required to maintain records for each producer for whom Hass 
avocados is handled, including Hass avocados produced by the handler. 
In addition, first handlers would be required to file reports regarding 
the collection, payment, or remittance of the assessments and the 
disposition of exported Hass avocados, which are exempt from 
assessment. All information obtained through handler reports would be 
kept confidential.
    An exempt handler is a person who would otherwise be considered a 
first handler, except that all Hass avocados purchased by the person 
have already been subject to assessments under the Order. Others 
affected by the program would be a state association of avocado 
producers (currently, the Commission), which would receive 85 percent 
of the assessments paid by domestic producers, and importer 
associations which would receive 85 percent of the assessments paid by 
their members. The state association could use the assessment funds to 
promote California Hass avocados in the United States, and the importer 
associations could use the assessments to promote Hass avocados on a 
country-of-origin basis in the United States. The funds remaining with 
the Board would be used to promote Hass avocados generically in the 
United States. The Board would also enter into contracts with the state 
association as provided for in the Act.
    Customs would collect assessments on imported Hass avocados and 
would remit those assessments to the Board for a fee.
    The Act requires the USDA to conduct a referendum during the 60-day 
period preceding the proposed Order's effective date. Hass avocado 
producers and importers would vote in the referendum to determine 
whether they favor the Order's implementation. The proposed Order must 
be approved by a majority of the eligible producers and importers 
voting in the referendum. After the program has been in operation for 
three years, referenda could be conducted at any time, when requested 
by 30 percent of the Hass avocado producers and importers covered by 
the Order, or when requested by the Board.
    The Act provides for the submission of proposals for a Hass avocado 
research, promotion, and information program by industry organizations 
or any other interested person affected by the Act.
    The USDA issued a news release on January 8, 2001, requesting 
proposals for an initial Order or portions of an initial Order by 
February 7, 2001. A second news release, extending the deadline for 
submission of proposals to March 9, 2001, was issued on February 2, 
2001.
    An entire proposed Order and proposed referendum procedures were 
submitted by the Commission (Proposal 1). In addition, proposals 
containing portions of an Order were submitted by the Asociacion de 
Productores y Empacadores Exportadores de Aguacate de Michoacan (APEAM) 
(Proposal 2); the Chilean Exporters Association (ASOEX), Chilean Fruit 
Growers Federation (FEDEFRUTA), and Comite de Paltas de Chile (Proposal 
3); and the New Zealand Avocado Growers Association (NZAGA) and the New 
Zealand Avocado Industry Council (NZAIC) (Proposal 4). The Chilean and 
New Zealand proposals were considered jointly because they are 
identical in every respect except for the provision on the importer 
definition, which is included in the Chilean proposal, but not in the 
New Zealand proposal. Proposals 2, 3, and 4 contained alternatives to 
provisions in Proposal 1 as well as provisions not included in Proposal 
1.
    Upon receipt of the proposals, USDA, the proponents of the four 
proposals, as well as representatives of the governments of Chile, 
Mexico, and New Zealand, engaged in an extensive dialogue with multiple 
opportunities to present views concerning the provisions contained in 
the submitted proposals. Upon completion of this review process, USDA 
published a proposed rule on July 13, 2001, for comment.
    In the supplementary information section of the proposed rule, USDA 
summarized the four proposals received, identifying and separating out 
those provisions that were duplicative of other proposals, as well as 
those provisions that were not authorized by the Act. That discussion 
follows.
Proposal 1
    The proposed Order submitted by the Commission was summarized as 
follows: Sections 1219.1 through 1219.26 of the proposed Order define 
certain terms, such as Hass avocado, handler, producer, and importer, 
which are used in the proposed Order.
    Sections 1219.30 through 1219.42 include provisions relating to the 
establishment, adjustment, and membership; nominations; appointment; 
terms of office; vacancies; reimbursement; powers; and duties of the 
Board.
    The Board would be the body organized to administer the Order 
through the implementation of programs, plans, projects, budgets, and 
contracts to promote and disseminate information about Hass avocados, 
under the supervision of USDA. Further, the Board would be authorized 
to incur expenses necessary for the performance of its duties and to 
set a reserve fund.
    Sections 1219.50 through 1219.57 authorize the collection of 
assessments, specify who pays them and how, and specifies persons who 
would be exempt from paying the assessment. The assessment rate may not 
exceed 5 cents per pound of Hass avocados. The assessment sections also 
outline the procedures to be followed by first handlers and importers 
for remitting assessments; and establish interest charges for unpaid or 
late assessments.
    Sections 1219.60 through 1219.64 concern reporting and 
recordkeeping requirements for persons subject to the Order and protect 
the confidentiality of information obtained from such books, records, 
or reports and the maintenance of a list of handlers required by the 
Act.
    Sections 1219.70 through 1214.77 describe the rights of the 
Secretary of Agriculture (Secretary), the authority for the Department 
to suspend or terminate the Order, proceedings after termination, the 
effect of termination or amendment, personal liability of Board members 
and staff, separability, amendments, and OMB control number.
    The Department modified the Commission's proposal to make it 
consistent with the Act, as necessary as well as provide clarity, 
consistency, and correctness with respect to word usage and 
terminology. For example, the Department alphabetized definitions in 
Secs. 1219.1 through 1219.26; organized sections of the Order to be 
more consistent with current programs and renumbered them accordingly; 
deleted

[[Page 7295]]

redundant provisions; deleted referendum procedures and drafted a 
separate rule on referendum procedures; and changed the proposal to 
make it consistent with the Act and USDA policy.
    In the definitions section, the definitions of ``crop year'' and 
``Association'' were added to provide clarity, and the definition of 
``retailer'' was removed because a specific definition was not 
warranted.
    In the apportionment of three swing positions in 
Sec. 1219.30(b)(3), USDA specified that Customs or USDA may provide 
import data in order to ensure accuracy. Section 1219.31(a)(3) was 
changed to indicate that two nominees must be submitted for each 
producer vacancy and two nominees must be submitted for each alternate 
vacancy because this is the standard practice for similar national 
programs. In Sec. 1219.36(d), USDA specified that nominations and 
replacement shall not be required if the unexpired term is less than 
six months, and, in Sec. 1219.35, a term of office for alternates was 
added to enhance administration of the program. In Sec. 1219.36, 
authority for the Board to select alternates to fill vacant alternate 
positions by majority vote was revised to state that the Board may 
select, by majority vote, nominees to submit to the Department for 
appointment. The Commission's proposal provided for the Board to 
appoint the replacement members, but only the Department may appoint 
persons to serve on the Board as members or alternates. A paragraph on 
bylaws was added to Sec. 1219.38 as paragraph (b) to ensure that the 
activities of the Board are consistent with the Order. In 
Sec. 1219.38(k), the citation for the Act which requires periodic 
evaluations was corrected so that it complies with provisions of the 
Federal Agricultural Improvement and Reform Act of 1996 [7 U.S.C. 7401 
et. seq.]
    Under Sec. 1219.52, the Department revised the Commission's 
proposed limitation on administrative expenses of the Board to 10 
percent of the funds available for generic promotion and research to 
reflect the fact that as much as 85 percent of the assessments 
collected under the program could be remitted to the Association and 
importer associations. The Act limits the administrative expenses of 
the Board in carrying out its generic programs, plans, and projects. In 
addition, the provision for the Board to make payments of assessments 
to the Association and importer associations within 30 days following 
the month in which the assessments were received because this language 
was inconsistent with other provisions which require payments to the 
Association and importer associations within 30 days of receipt of the 
assessments by the Board. USDA modified Sec. 1219.56 to specify that 
the Board will apply overpayments of assessments against the amount due 
in succeeding months unless the person requests a refund.
    A requirement for producers and exempt handlers to maintain records 
and file reports with the Board or the Department was added to 
Sec. 1219.60(a) in order to facilitate enforcement of the Order and to 
make the Order consistent with current practice for similar national 
programs. In Sec. 1219.61, authority for the Board to use agents to 
conduct audits--not just Board and USDA employees--was added to 
increase flexibility. Since agents were added in Sec. 1219.61 for 
audits, they were also added to Sec. 1219.63(a) on confidentiality to 
ensure that information obtained in audits is protected.
    Lastly, a section on the rights of the Secretary was added so that 
the program would be consistent with other national programs and 
specify the rights of the Secretary.
Proposal 2
    A partial proposal was submitted by APEAM. APEAM is an association 
of persons who export avocados produced in Mexico to the United States.
    USDA published several of the provisions submitted by APEAM. Other 
provisions were not published either because they were covered by 
Proposal 1 or because they were not authorized by the Act.
    The provisions that were published for comment were as follows: (1) 
A definition of first handler; (2) a definition of fiscal period; (3) a 
provision requiring the Department to use data from import 
associations, Customs, and the Bureau of the Census for determining the 
level of imports in making its determination of the composition of the 
initial Board; (4) a provision defining ``substantial activity'' as it 
pertains to eligibility requirements for importer members; (5) a 
provision authorizing importer associations in general or by country of 
origin; (6) a provision authorizing the Department to certify only one 
importer association per country of origin; (7) authority for importer 
associations to include representatives of foreign avocado exporting 
industries; (8) a provision authorizing importer associations to invest 
funds received from the Board and conduct promotion and research on a 
country of origin basis; (9) a provision requiring final payments for a 
crop year to be received no later than May 31; and (10) a provision 
requiring the administrative staff of the Board to periodically review 
the list of Hass avocado producers and requiring the Association to 
provide a list of producers to the Department or to the administrative 
staff of the Board.
    The following provisions were not published because they were 
covered by Proposal 1: (1) A provision requiring the Board to remit 
funds to importer associations no later than 30 days after such funds 
are received by the Board; (2) a requirement to allocate producer and 
importer members in the three swing positions in such a manner that, to 
the extent possible, importers will have proportional representation on 
the Board as a whole; (3) a requirement to reallocate the three swing 
positions to producers and importers in such a manner that, to the 
extent possible, there will be proportional representation on the Board 
as a whole.
    The following provisions were not published because they were not 
authorized by the Act: (1) Authority for the Department to appoint a 
board to govern importer associations; (2) authority for Customs to 
send import assessments directly to importer associations; (3) a 
requirement for the Board to remit 85 percent of all import assessments 
to importer associations; (4) authority for importers to pay 
assessments 30 days after the end of the month in which the imported 
Hass avocados are sold in the United States; and (5) authority for the 
Board to enter into a contract or agreement with an importer 
association.
Proposals 3 and 4
    Proposal 3 was submitted by ASOEX and FEDEFRUTA and the Chilean 
Avocado Committee. ASOEX and FEDEFRUTA are the principal trade 
associations representing fruit exporters and producers in Chile. 
Proposal 4 was submitted by NZAGA and NZAIC. NZAGA is a voluntary 
association of avocado growers representing avocado production in New 
Zealand. USDA published several of the provisions submitted by ASOEX, 
FEDEFRUTA, NZAGA, and NZAIC. Other provisions were not published either 
because they were covered by Proposals 1 and 2 or because they were not 
authorized by the Act.
    The provisions that were published were: (1) An eligibility 
requirement for importer members on the Board; (2) a requirement for 
the Board's generic programs to be conducted throughout the year; (3) a 
requirement for the Board to consult with the Commission and

[[Page 7296]]

country-of-origin importer associations when developing generic 
programs; (4) a provision limiting the Board's administrative expenses 
for generic programs to 1.5 percent of total assessments; (5) a 
requirement for importer associations to be formed as soon as possible 
after the effective date of the Order; (6) a requirement for importer 
associations to establish bylaws; (7) authority for importer 
associations to use existing organizations for establishing their 
associations and their promotional and research programs; and (8) 
certification requirements for importer associations.
    Provisions that were not published because they were covered by 
Proposals 1 or 2 were: (1) A requirement for overall representation of 
importers on the Board to be based on the proportion of domestic and 
import assessments; (2) a requirement for the Department to notify all 
importer associations on nominations for the initial Board within 30 
days of the effective date of the Order; (3) a requirement for the 
Department to develop nomination procedures for importer members; and 
(4) a requirement for the Department to prepare a ballot containing the 
names of all persons nominated by all importer associations.
    The provisions that were not published because they were not 
authorized by the Act were: (1) A requirement for USDA to serve as an 
advisor to importer associations; (2) a requirement for all importers 
and foreign producers and exporters to participate in importer 
associations; (3) authorization for the assessment of all varieties of 
avocados; (4) a requirement for the Board to contract with importer 
associations; (5) authority for importers to pay import assessments 60 
days after the sale of avocados in the United States; (6) a requirement 
for importer associations to receive 85 percent of all import 
assessments, prorated by each country of origin; (7) authority for 
producers and importers to receive credit toward their assessments 
under the proposed program for contributions to generic state or 
country-of-origin promotion programs at a regional, state, or local 
level; (8) authority for importer associations to use import 
assessments for reasonable administrative expenses; and (9) a 
requirement to include a vote by volume in referenda.
Comments
    Nine comments were timely received on the proposed rule. The 
comments contained several recommendations, a number of which have been 
adopted. There was one late comment.
    Two of the comments received were submitted on behalf of the 
proponent of Proposal 1, the Commission. USDA also received a letter 
concerning the proponent's opposition to the 15-day extension for 
comments to be received and its view with regard to the impact of the 
extension on the rulemaking process. We disagree and continue to 
believe that the extension was appropriate and to the benefit of all 
interested parties, including the proponent.
    The proponents of Proposals 2, 3, and 4 each commented on the 
proposed rule published on July 13, 2001, as did representatives of the 
governments of Chile and New Zealand. Two importers of avocados also 
submitted comments on the proposed rule. In general, the comments 
submitted by or on behalf of the Commission were in favor of a Hass 
Avocado Promotion, Research, and Information Order. The comments from 
New Zealand representatives were also generally in favor of such a 
program. Both groups, however, offered their own concerns or changes.
    The comments received from the Chilean representatives, APEAM, and 
the two importers opposed implementation of the Hass avocado program 
while offering their recommendations for changes if the program was to 
be implemented. The late comment (from an association of Mexican 
avocado packers and exporters) generally reflected the issues and 
concerns raised by the proponents of Proposal 2 and did not contain any 
issues or comments that were not already raised in the comments that 
were received by the deadline.
    Many of the comments reflected a continuing dialogue in connection 
with the variety of proposals previously received by USDA. In this 
regard, the comments compare and contrast the provisions of the 
proposals as well as the views of and comments submitted by others. 
Following is a discussion of the comments received that reflects our 
views with regard to them.
    Several of the comments raised constitutional and World Trade 
Organization (WTO) issues. The constitutional issue is framed in terms 
of a recent United States Supreme Court (Court) decision United States 
v. United Foods, Inc. [121 S. Ct. 2334 (2001)] (United Foods). The WTO 
issues also were discussed in the preliminary phases of this rulemaking 
process.
    In the July 13, 2001, proposed rule, we noted that on June 25, 
2001, the Court issued the United Foods decision that held that the use 
of mandatory assessments to fund promotional speech in the mushroom 
research and promotion program violated the First Amendment of the U.S. 
Constitution. In general, comments in opposition to the proposed Hass 
avocado promotion program raised a constitutional argument and objected 
to the mandatory nature of the program. Such comments recommended that 
assessments for promotional activities under the proposed Hass avocado 
program be voluntary. The comment filed on behalf of the Commission, 
which supported Proposal 1, disagreed with that analysis. USDA believes 
and continues to be of the view that the Hass avocado program, as 
previously proposed and with the changes included in this action, is 
constitutionally sound.
    In addition, the New Zealand comment (Proposal 4) suggested that 
the requirement that all Board members and alternates be domiciled in 
the United States was probably unconstitutional. We disagree. Further 
discussion of this requirement will occur later in our subsequent 
responses to comments.
    With regard to the WTO issues raised as to the consistency with 
international trade obligations, some comments argued that the proposed 
Hass avocado program was not consistent with these trade obligations. 
These comments identified a number of provisions as discriminatory. In 
that regard, comments focused on the timing of payments of assessments 
on domestic and imported avocados. One comment noted the failure to 
assess all varieties of avocados. Other examples were also offered. The 
comment filed on behalf of the Commission argued the contrary. We 
continue to view this program as consistent with applicable 
international trade obligations.
    Comments discussed individual sections of the four proposals and in 
a number of instances offered views of provisions that appeared in the 
alternative, comparing and contrasting such sections. A summary of 
these comments appears in the following discussion.
    A comment was received comparing the definition of first handler in 
Sec. 1219.9 of Proposal 1 with the definition of that term in Proposal 
2. The comment deferred to USDA with regard to this definition. The 
alternative definition is not substantially different from the 
definition in Proposal 1. Accordingly, we are adopting the definition 
from Proposal 1.
    Section 1219.10 of Proposal 1 establishes the fiscal period or 
marketing year as the period beginning on November 1 of any year and 
extending through the last day of October of the following year. 
Proposal 2 provides for a period beginning on

[[Page 7297]]

April 1 of any year and extending through the last day of March of the 
following year. A comment pointed out that the period beginning on 
November 1 corresponded to the domestic marketing season while the 
period beginning on April 1 corresponded to the growing season in 
Mexico. The comment argued that the definition in Proposal 1 should be 
adopted, noting that the Commission has a substantial database on 
historical U.S. production organized on a November 1 fiscal year basis 
and that each exporting country may have a different growing season. We 
agree that the fiscal period or marketing year should begin on November 
1. It should also be noted that Sec. 1219.10 provides for changing to 
another consecutive 12-month period, as recommended by the Board and 
approved by the Department. Therefore, we are adopting Sec. 1219.10 of 
Proposal 1. We are also adopting without change the definition of crop 
year in Sec. 1219.5 of Proposal 1. That section provides for the crop 
year also to begin on November 1.
    The definition of importer appears in Sec. 1219.14. A comment 
raised concern regarding this section of Proposal 1 as modified by 
USDA. The comment stated that the language is overly broad and would 
include non-U.S. residents and non-U.S. citizens. We disagree. There 
are two definitions of importer in the Act. The one in Sec. 1203(8) of 
the Act is a general definition, and the other appears in Sec. 1205(c) 
of the Act as a special definition concerning eligibility for 
membership on the Board. The provision in the Order at issue implements 
the general definition of the Act. It is intended to be broad so as to 
cover all importers subject to assessments. This provision is not 
applicable to Sec. 1219.30 of the Order, where a special and separate 
definition for importer appears in connection with an importer's 
eligibility for membership on the Board.
    A number of proposals were published concerning Sec. 1219.30 
Establishment and membership with language and provisions appearing in 
Proposals 1, 2, 3, and 4. One comment related to the requirement in 
Sec. 1219.30(a) that all Board members and alternates be domiciled in 
the United States. The comment expressed the view that this requirement 
was undemocratic, probably unconstitutional, and not consistent with 
the Act. We disagree. We believe that it is more practical and 
reasonable for effective program administration, management, and 
participation in this program to include domicile as an eligibility 
requirement.
    One comment compared the language of Proposal 2 with that of 
Proposal 1 with regard to the apportionment of Board members as 
specified in Sec. 1219.30(b)(3). The comment noted that the source of 
data to be used by the Department in determining proportional 
representation on the initial Board was broad based for both the level 
of domestic production and the level of imports. The comment further 
noted that Proposal 2 had provided for different sources of information 
for domestic production and for imports. The comment stated that all 
sources of information should be referred to for both. We agree, but we 
have eliminated references to individual sources of information, as 
proposed, in favor of a more general statement referring to all sources 
of information available to the Secretary. An appropriate change to 
Sec. 1219.30(b)(3) has been made.
    In Proposal 1, Sec. 1219.30(d) provides that an importer means a 
person who is involved in, as a substantial activity, the importation 
of Hass avocados. The term substantial activity is not further defined. 
However, in Proposals 2 and 3, a person would be considered to be 
involved in the importation of Hass avocados as a substantial activity 
if the person has imported 75 percent or more of the total annual 
volume of all Hass avocados produced, handled, or imported by such 
person. Two comments objected to the 75 percent provision in Proposals 
2 and 3.
    One comment indicated that the purpose of the term substantial 
activity in the statute was to insure that importers who serve on the 
Board were not merely people who might import a few boxes of Hass 
avocados occasionally and that the term was meant to guarantee that 
importer members on the Board were truly involved in the importation 
and marketing of Hass avocados. The comment went on to note that: The 
statute does not provide for a 75 percent or other threshold; a 
dictionary definition of the word substantial speaks in terms of volume 
and not proportion; a 75 percent provision was beyond the scope of and 
contrary to the statute; the provision could have the effect of 
disqualifying some of the largest importers and most knowledgeable 
marketers; and the provision would be burdensome on the Department in 
connection with the auditing the books of importers to determine 
eligibility.
    The other comment that opposed the 75 percent provision in 
Proposals 2 and 3 noted that the 75 percent provision for imports as a 
proportion of total Hass avocados handled would prevent almost all of 
the importers of New Zealand Hass avocados from qualifying now and in 
the future without changes to commercial relationships with U.S. 
handlers. The comment went on to recommend the use of Proposal 1 
language which does not define substantial activity or more preferably 
the definition of importer in Sec. 1219.14 of Proposal 1 instead of 
Sec. 1219.30(d) of Proposals 2 and 3.
    We disagree with both comments. Under the statute, the Board is 
divided between producer and importer members. The Secretary appoints 
such members to the Board. In determining who is eligible to serve as 
an importer member on the Board, the statute provides for a substantial 
activity test. In order to implement such a provision, the Order needs 
to provide specific detail to enable the Department to measure 
substantial activity. One comment suggested a quantity basis to compare 
one potential importer with another that would be indicative of size 
and knowledge. We believe that a more reasonable application of the 
substantial activity test would be to base a person's eligibility on 
the person's individual business activity and which industry function 
(producing or importing) predominates. This is a reasonable measure and 
regulatory approach. This also would provide a clear and understandable 
benchmark for the Department to use to measure substantial activity. 
Therefore, we are adding to Sec. 1219.30(d) a provision that states ``a 
substantial activity means that the volume of a person's Hass avocado 
imports must exceed the volume of the person's production or handling 
of domestic Hass avocados.''
    One comment was received regarding the initial nomination and 
appointment of producer members and alternates as provided in 
Sec. 1219.31 of Proposal 1. The comment proposed that the Department be 
allowed to choose an alternate member from either the nominee for the 
Board member who is not appointed to the Board or from the two nominees 
for the alternate member position. This suggested change has merit. 
Therefore, we have revised Sec. 1219.31 of Proposal 1 accordingly with 
some modification of the language recommended in the comment. We 
further believe that similar change to Sec. 1219.32 concerning the 
initial nomination and appointment of importer members and alternates 
is appropriate and have accordingly made this change.
    Two comments were received on the provisions in Sec. 1219.32 of 
Proposal 1 that deal with the initial nomination and appointment of 
importer members and alternates. The comment requested clarification as 
to whether importers or importer associations would vote in the initial 
nomination process. The

[[Page 7298]]

comment pointed out that there are currently no importer associations 
representing the interests of Hass avocado importers. As published in 
the July 13, 2001, proposed rule, the language in Sec. 1219.32 of 
Proposal 1 included references to both importers and importer 
associations. The inclusion of importer associations in this provision 
was incorrect and the applicable reference has been deleted. Individual 
importers will vote in the nomination process.
    One comment also requested that country-of-origin exporter 
associations be notified by USDA of the nomination process for initial 
importer members and their alternates. Prior to the nomination process, 
the Department will use all available resources to help assure that the 
maximum number of importers are identified, but this does not merit a 
change in the proposed language for the Order. The comment went on to 
suggest alternative language for Sec. 1219.32 including changes to the 
text concerning subsequent nominations. Section 1219.33 addresses 
subsequent nominations which will be subject to further rulemaking as 
appropriate. Accordingly, no further changes were made to Sec. 1219.32.
    Regarding Sec. 1219.33 of Proposal 1, a comment expressed concern 
that the Board itself may put procedures in place for subsequent 
nominations of importer members and alternates of the Board. However, 
this section provides that any procedures recommended by the Board 
require the approval of the Department. Prior to implementing any 
procedures, the Department would engage in rulemaking and publish 
recommended procedures for public comment before they are approved by 
the Department.
    The comment also requested that Sec. 1219.38(s) of Proposal 1 be 
revised to require the Board to report annually to importer 
associations. This section requires the Board to make public reports of 
its activities at least once each fiscal period. This means that the 
information would be available to all interested persons, including 
importer associations. Accordingly, no change is needed in 
Sec. 1219.38(s).
    A comment was submitted on Sec. 1219.40(e) of Proposal 1. The 
comment requested the deletion of the requirement for the Department to 
receive advance notice of committee meetings. The comment offered that 
this requirement is an example of micromanagement and will result in 
excessive costs for the Department, presumably because the Department 
would have the opportunity to attend committee meetings which would, in 
turn, increase the administrative costs billed by the Department to the 
Board. We disagree. This provision is necessary for proper program 
administration and will ensure that the Department is appropriately 
informed of program activities. Therefore, Sec. 1219.40(e) of Proposal 
1 is adopted without change.
    Two comments were received on Sec. 1219.50(e) of Proposals 3 and 4 
that requires the Board's programs be conducted throughout the year to 
reflect periods when imported and domestic Hass avocados are in the 
U.S. marketplace. One comment opposed this provision, raising a variety 
of concerns. These concerns included statutory authority, vagueness, 
and the diminishment of Board authority by imposing a requirement that 
substitutes scheduling for strategy. We disagree. In the prior 
discussion of the definition of fiscal period or marketing year in 
Proposal 2, this same comment noted that there are different growing 
seasons in different exporting countries. The provision in 
Sec. 1219.50(e) reflects this. We believe that it is reasonable to 
provide in the Order language that programs shall be conducted 
throughout the year and that the Board will be fully able to accomplish 
such a result consistent with this provision.
    The second comment supported this provision but recommended 
modifying it to provide that the Board's generic programs may not be 
conducted predominately during the time that domestic Hass avocados are 
in the marketplace. We believe that this change is unnecessary. 
Therefore, we have adopted Sec. 1219.50(e) of Proposals 3 and 4 without 
change.
    Three comments related to Sec. 1219.50(f) of Proposals 3 and 4 
which would require the Board to consult with both the state 
association and importer associations on programs, plans, and projects 
for generic promotion and research. Two comments supported the 
requirement, and one comment stated that the consultation should be 
discretionary rather than mandatory. The Board's generic programs will 
be carried out by the state association with funds paid by both 
domestic producers and importers. Therefore, it would be beneficial to 
provide for and require such consultation. Accordingly, we adopt 
Sec. 1219.50(f) of Proposals 3 and 4 by adding a new paragraph (f) to 
Sec. 1219.50 of Proposal 1.
    Under the Act, the Board is required to remit 85 percent of 
domestic assessments to the Commission and may remit up to 85 percent 
of import assessments to one or more importer associations. If the 
entire 85 percent of domestic assessments are remitted to the 
Commission, and the entire 85 percent of import assessments are 
remitted to importer associations, the Board would retain 15 percent of 
total assessments to conduct its generic programs. The Act also limits 
the Board's administrative expenses to 10 percent of its income. The 
intent of the cap on administrative expenses is to ensure that a 
majority of the Board's expenditures are program-related. After 
assessments have been distributed to the Commission and to importer 
associations, the remaining funds will be used by the Board for generic 
promotion and research. In order to implement the statutory cap on 
administrative expenses, Sec. 1219.52(a)(1) of Proposal 1 states that 
the Board's administrative expenses shall not exceed 10 percent of the 
funds received by the Board for generic programs. A different approach 
was taken in Proposals 3 and 4. In Sec. 1219.52(a)(1) of Proposals 3 
and 4, the Board's administrative expenses are limited to 1.5 percent 
of total assessment income. This assumes that only 15 percent of the 
Board's income would remain with the Board and be available to be used 
for generic promotion and research.
    Comments were received from two parties on the 1.5 percent cap 
specified in Sec. 1219.52(a)(1) of Proposals 3 and 4. One comment 
supported this limitation as long as importer associations actually 
receive 85 percent of the import assessments paid to the Board. In 
addition, the comment expressed the view that the 1.5 percent 
limitation should be lowered if importer associations receive less than 
85 percent of the import assessments. We are not adopting this 
recommendation or the provisions of Sec. 1219.52(a)(1) in Proposals 3 
and 4 because they would be difficult to administer. The second comment 
on Sec. 1219.52(a)(1) of Proposals 3 and 4 stated that efforts to 
control administrative expenses in the program were desirable but the 
1.5 percent seemed unreasonably low. The comment suggested a change in 
the language of the Order to clarify that there would a 10 percent 
limitation on funds actually retained by the Board. We agree with the 
substance of the second comment, but no change is needed to 
Sec. 1219.52(a)(1) of Proposal 1. As noted above, this section already 
limits administrative expenses to 10 percent of the funds available to 
or retained by the Board for generic promotion and research.
    Comments were received concerning importer association provisions 
in Sec. 1219.54 of Proposals 1, 3, and 4 and the unnumbered section of 
Proposal 2. These comments reflected a variety of issues that have been 
raised in

[[Page 7299]]

connection with the establishment and function of importer associations 
under the Act and the Order. With regard to the unnumbered section in 
Proposal 2, statutory concerns were raised as to compelled membership 
and limiting certification to only one importer association per country 
of origin. The statutory authority for Sec. 1219.54(u) of Proposals 3 
and 4 was questioned while the list of information required for 
certification was not opposed as long as it was considered 
discretionary and as long as the import association contemplated in 
Sec. 1219.54(l) of Proposal 1 was applicable rather than that referred 
to in paragraph (u). In addition, a comment offered support for 
Sec. 1219.54 (u) and (v) of Proposals 3 and 4 with modifications that 
included establishing importer associations before the effective date 
of the Order; limiting one importer association per exporting country; 
and requiring participation of all importers of Hass avocados in one or 
more importer associations based on the country of origin of imports. 
The same comment offered an addition to Sec. 1219.54 in the form of new 
paragraphs (w) and (x) concerning Board transfers, to importer 
associations, of 85 percent of all assessments paid on imports, 
prorating each country of origin, and concerning information required 
for the Department to certify associations. Paragraph (w) is not 
authorized by the Act. Paragraph (x) is discussed in relationship to a 
new Sec. 1219.58 on importer associations.
    We have reviewed all relevant provisions of Proposals 1, 2, 3, and 
4 concerning importer associations, taking into account the comments 
received, including modifications and additions to proposed language. 
We have considered these proposals and comments and created a new 
Sec. 1219.58 relating to importer associations. Paragraph (a) of the 
new section adopts the language from paragraph (m) of Sec. 1219.54 from 
Proposal 1. As a result, paragraph (l) of Sec. 1219.54 of Proposal 1 
has been revised to provide a reference to the new Sec. 1219.58, and 
paragraphs (n) and (o) will be redesignated as paragraphs (m) and (n), 
respectively.
    Further, we are deleting the second sentence of proposed 
Sec. 1219.54 concerning first handlers and producers who are also 
handlers. The definition of first handler in Sec. 1219.9 is applicable 
and, therefore, such a sentence is unnecessary.
    Proposal 2 includes an unnumbered section that provides for the 
establishment of importer associations. One comment supported the 
adoption of this section, including the sentence in paragraph (a) of 
the unnumbered section that states that one importer association could 
represent all importers of Hass avocados or importers from a particular 
country. We agree with this comment and have adopted this sentence as 
part of paragraph (b) of Sec. 1219.58, with modifications for clarity.
    The unnumbered section also provides that the Department would not 
certify more than one importer association per country of origin. One 
comment supported this provision. Another comment opposed the adoption 
of this requirement. We inadvertently indicated in the July 13, 2001, 
proposal that an Order could prohibit the Department from certifying 
more than one importer association per country of origin. The text of 
this appeared in Proposal 2. Such a provision is not authorized by the 
statute. Therefore, the sentence in paragraph (a) of the unnumbered 
section of Proposal 2 that would limit the number of importer 
associations that could be certified is not adopted.
    One comment supported the adoption of paragraph (b) of the 
unnumbered section in Proposal 2 that provides that an importer 
association may be composed of importers as well as representatives of 
the foreign avocado exporting industries. Another comment supported the 
adoption of a paragraph (u) of Sec. 1219.54 in Proposals 3 and 4. In 
addition to authorizing importer associations to be composed of 
importers, foreign producers, and exporters, paragraph (u) provides 
that importer associations establish their own bylaws and utilize 
existing organizations for establishment of their associations and 
coordination of their promotional and research efforts.
    We agree that importer associations may be composed of importers as 
well as representatives of the foreign avocado exporting industries. 
Therefore, we have adopted paragraph (b) of the unnumbered section of 
Proposal 2 as part of paragraph (b) of the new Sec. 1219.58. We believe 
the language in this paragraph is more appropriate than the similar 
language in paragraph (u). We also agree that importer associations 
should establish their own bylaws and may utilize existing organization 
for establishment of their associations and coordination of their 
promotional and research efforts. Therefore, we have adopted these 
provisions of paragraph (u) from Sec. 1219.54 of Proposals 3 and 4 as 
part of paragraph (b) of the new Sec. 1219.58.
    Paragraph (u) also provides that importer associations be 
established within a reasonable amount of time after the effective date 
of this subpart. This provision was supported by one comment and 
opposed by another. The comment in opposition of this provision stated 
that the Act gives no authority to require the establishment of 
importer associations within a reasonable time. We agree. The timing of 
the establishment of an importer association is at the discretion of 
importers. It should not be a requirement of the Order. Therefore, we 
are not adopting this provision of paragraph (u) of Sec. 1219.54 of 
Proposals 3 and 4.
    Another comment opposed the unpublished provision of Proposal 2 
that would require all importers to join an importer association. The 
comment stated that this provision is not authorized by the Act and 
goes far beyond the intent of Congress in authorizing the establishment 
of importer associations. We agree. In identifying in the July 13, 
2001, proposed rule the provisions in Proposals 3 and 4 that were not 
published because they were not authorized by the Act, we included the 
requirement that all importers join an importer association.
    One comment recommended that the proposed Order allow importer 
associations to be certified by the Department before the effective 
date of the proposed Order. This would be impractical because importer 
associations cannot be certified by the Department prior to the 
effective date of the proposed Order. Therefore, this recommendation is 
not adopted.
    Paragraph (v) of Sec. 1219.54 in Proposals 3 and 4 includes 
criteria to be used by the Department in determining whether to certify 
importer associations. One comment included revised language for this 
section as a new paragraph (x). Paragraph (x)(2) of the comment 
generally parallels paragraph (v)(2) of Sec. 1219.54 of Proposals 3 and 
4. However, the new paragraph (x)(2) would add to the criteria for 
certification evidence that an importer association is composed not 
only of importers but of foreign exporters. We disagree with this 
change. The inclusion of foreign exporters is not a requirement for 
importer associations under the Order. Therefore, it would not be 
appropriate to include this criteria, and we have adopted paragraph 
(v)(2) of Sec. 1219.54 of Proposals 3 and 4 as published on July 13, 
2001.
    In addition, paragraph (x) does not include paragraph (v)(3) of 
Sec. 1219.54 of Proposals 3 and 4. We disagree with the removal of this 
paragraph. The paragraph states that one of the criteria for 
certification is certification of the importer association's ability 
and willingness to further the aims and objectives of the Order. We 
believe this

[[Page 7300]]

criteria is of particular importance because importer associations that 
are certified to receive funds from the Board must agree to utilize the 
funds in conformance with the provisions of the Order. Therefore, we 
are adopting paragraph (v) of Sec. 1219.54 in its entirety as paragraph 
(c) of the new Sec. 1219.58.
    Finally, in regard to Sec. 1219.54(l) of Proposal 1, an importer 
association would receive an amount of assessment funds equal to 85 
percent of the assessments paid on the Hass avocados imported by its 
members. Section 1219.54(1) of Proposal 2 states that an importer 
association shall receive an amount of assessments equal to the product 
obtained by multiplying the aggregate amount of assessments 
attributable to the pounds of Hass avocados imported by its member 
importers by 85 percent. The language in Proposal 2 and the language in 
Proposal 1 create the same requirement. Unlike Proposal 1, however, 
Proposal 2 expresses the requirement in terms of a mathematical 
calculation. We are adopting the language from Sec. 1219.54(l) of 
Proposal 1 because it is not necessary to include the mathematical 
calculation in the Order.
    There was one comment on Sec. 1219.61 of Proposal 1 which covers 
books and records. Citing established research and promotion programs 
administered by the Department, the comment recommended that producers 
who are not also first handlers, and who are not responsible for 
remitting assessments to the Board, should not be subject to the 
recordkeeping requirement. We disagree. The Act itself provides that, 
not only first handlers and importers, but also producers are required 
to maintain books and records and make them available to the Department 
or the administrative staff of the Board. It may be necessary on 
occasion for the staff of the Board to audit the records of producers 
to verify the information provided in handler reports. Therefore, the 
comment is not adopted.
    A comment supported, with modifications, the requirement for a list 
of importers as provided for in Sec. 1219.64 of Proposal 1. We are not 
adopting the recommended modification that would require Customs to 
provide the list to importer associations and for such associations to 
review the list. Such a requirement is not consistent with section 
1205(m)(3) of the Act. However, we are deleting the second sentence of 
Sec. 1219.65 of Proposal 1 concerning the list of importers and Customs 
because they are not necessary in view of language in the Act. The Act 
requires Customs to provide this information to the Department and the 
staff of the Board on request. Another comment noted that the 
requirement in Sec. 1219.65 of Proposal 2 was redundant and 
unnecessary, adding that the Secretary would have the authority to 
obtain such a list in any event. Section 1219.65 provides that on 
request of the Secretary or the Board, the Association would provide to 
the Secretary or the administrative staff of the Board, a list of 
producers of Hass avocados. We disagree and believe that such a 
provision is appropriate for inclusion in the Order.
    Section 1219.70 Right of the Secretary provides that all fiscal 
matters, plans, projects, contracts, rule or regulations, reports, or 
other substantive actions proposed and prepared by the Board are 
required to be submitted to the Secretary for approval. A comment 
stated that this section should be eliminated. The comment believed the 
provision was redundant because all necessary provisions requiring 
submission of materials for the Secretary's approval were already in 
the Order. The comment particularly objected to inclusion of a 
requirement that the Secretary approve other substantive actions 
proposed and prepared by the Board indicating that the requirement was 
vague and ambiguous, would invite abuse of authority by USDA officials, 
and invite the subversion of the function of lawfully appointed Board 
members. We disagree. Research and promotion programs represent a 
federal and industry partnership that has been affirmed by Congress 
time and time again. The Department recognizes the expertise of the 
industry. At the same time, the Department has long-standing experience 
in administering and enforcing the provisions of these programs. The 
Department has and will continue to maintain the integrity of such 
programs. While industries may take advantage of the benefits of 
research and promotion programs, certain responsibilities attach, 
including those referenced in Sec. 1219.70. Therefore, no change is 
made.
    In addition, commenters made a number of recommendations which 
cannot be adopted because they are inconsistent with or not authorized 
by the Act. These comments appeared in a variety of contexts with some 
being raised in overall or general concerns and with others in terms of 
alternatives or modifications and others spanning provisions or a 
provision of the proposals. These recommendations include amending the 
proposed Order to provide for the following: a requirement for 
proportional representation of producers and importers on the Board as 
a whole; a requirement for all importers and country-of-origin 
producers and exporters to participate in importer associations; 
authority for the Board to assess all varieties of avocados; a 
requirement for the Board to contract with country-of-origin importer 
associations in the same manner and with the same effect as with the 
State association; authority for importers to pay import assessment 30 
days after the end of the month in which imported Hass avocados are 
sold in the United States; a requirement for importer associations to 
receive 85 percent of all import assessments, prorated by each country 
of origin; and authority for producers and importers to receive credit 
towards their assessments under the proposed program for contributions 
to generic state or country-of-origin promotion programs at a regional, 
state, or local level.
    Comments were also received relating to the procedures used in 
connection with notice and comment rulemaking. For example, one 
requested that its comments be published in their entirety in the 
Federal Register. All comments were posted in their entirety on the 
USDA-AMS website at the time they were received by the Department. In 
addition, comments are discussed and responded to in this rule, as 
appropriate, in the context of the discussions that appear herein. 
Another comment raised concerns regarding what is in effect an 
opportunity for rebuttal of the other comments. In this rulemaking, we 
have provided opportunity for comment that is consistent with 
applicable law and made every attempt to include the views of all 
interested persons as part of this proceeding.
    In summary, Proposal 1 is adopted with the following changes: 
Revising Sec. 1219.30(b)(3), Sec. 1219.30(d), Sec. 1219.31(b), 
Sec. 1219.32(a)(1) and (2), and Sec. 1219.32(b); correcting a citation 
in Sec. 1219.42(d); adding new paragraphs (e) and (f) from Proposals 3 
and 4 to Sec. 1219.50; revising Sec. 1219.54(b)(3) and (l); deleting 
paragraph (m) from Sec. 1219.54 and redesignating paragraphs (n) and 
(o) in that section; adding a new Sec. 1219.58 from Proposals 1, 3, and 
4 with modifications; revising Sec. 1219.64; and adding a new 
Sec. 1219.65 from Proposal 2. Other provisions of Proposals 2, 3, and 4 
are not adopted. Miscellaneous changes were also made to the following 
provisions for the purpose of clarity and consistency: Sec. 1219.12; 
Sec. 1219.39(c); Sec. 1219.52(a)(1); Sec. 1219.54(m)(3); 
Sec. 1219.58(b); Sec. 1219.63(a); Sec. 1219.71(a); and Sec. 1219.77.

[[Page 7301]]

    A referendum will be conducted among eligible Hass avocado 
producers and importers to determine whether they favor implementation 
of the Hass Avocado Promotion, Research, and Information Order. The 
referendum order will be published in the Federal Register at a later 
date following the publication of this proposed order and the final 
rule providing for referendum procedures. The representative period for 
eligibility for voting in the referendum and the dates for registration 
and for voting will be announced in the referendum order.

List of Subjects in 7 CFR Part 1219

    Administrative practice and procedure, Advertising, Consumer 
information, Hass avocados, Marketing agreements, Promotion, Reporting 
and recordkeeping requirements.

    For the reasons set forth in the preamble, AMS proposes to amend 7 
CFR chapter XI as follows:

PART 1219--HASS AVOCADO PROMOTION, RESEARCH, AND INFORMATION

    1. The authority citation for part 1219 continues to read as 
follows:

    Authority: 7 U.S.C. 7801-7813.

    2. Subpart A is added to part 1219 to read as follows:

Subpart A-Hass Avocado Promotion, Research, and Information Order

Definitions

Sec.
1219.1  Act.
1219.2  Association.
1219.3  Conflict of interest.
1219.4  Consumer information.
1219.5  Crop year.
1219.6  Customs.
1219.7  Department.
1219.8  Exempt handler.
1219.9  First handler.
1219.10  Fiscal period or marketing year.
1219.11  Handle.
1219.12  Hass avocado.
1219.13  Hass Avocado Board.
1219.14  Importer.
1219.15  Industry information.
1219.16  Marketing.
1219.17  Order.
1219.18  Part and subpart.
1219.19  Person.
1219.20  Producer.
1219.21  Programs, plans, and projects.
1219.22  Promotion.
1219.23  Research.
1219.24  Secretary.
1219.25  State.
1219.26  United States.

The Hass Avocado Board

1219.30  Establishment and membership.
1219.31  Initial nomination and appointment of producer members and 
alternates.
1219.32  Initial nomination and appointment of importer members and 
alternates.
1219.33  Subsequent nomination and appointment of Board members and 
alternates.
1219.34  Failure to nominate.
1219.35  Term of office.
1219.36  Vacancies.
1219.37  Alternate members.
1219.38  Powers and duties.
1219.39  Board procedure.
1219.40  Committee procedure.
1219.41  Compensation and expenses.
1219.42  Prohibited activities.

Budgets, Expenses, and Assessments

1219.50  Budgets, programs, plans, and projects.
1219.51  Contracts and agreements.
1219.52  Control of administrative costs.
1219.53  Budget and expenses.
1219.54  Assessments.
1219.55  Exemption from assessment.
1219.56  Adjustments of accounts.
1219.57  Patents, copyrights, trademarks, publications, and product 
formulations.
1219.58  Importer associations.

Books, Records, and Reports

1219.60  Reports.
1219.61  Books and records.
1219.62  Books and records of the Board.
1219.63  Confidential treatment.
1219.64  List of importers.
1219.65  List of producers.

Miscellaneous

1219.70  Right of the Secretary.
1219.71  Suspension or termination.
1210.72  Proceedings after termination.
1219.73  Effect of termination or amendment.
1219.74  Personal liability.
1219.75  Separability.
1219.76  Amendments.
1219.77  OMB control numbers.

Subpart A--Hass Avocado Promotion, Research, and Information Order

Definitions


Sec. 1219.1  Act.

    Act means the Hass Avocado Promotion, Research, and Information Act 
of 2000, Pub. L. 106-387, 7 U.S.C. 7801-7813, and any amendments 
thereto.


Sec. 1219.2  Association.

    Association means an avocado organization established by State 
statute in a State with the majority of Hass avocado production in the 
United States.


Sec. 1219.3  Conflict of interest.

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


Sec. 1219.4  Consumer information.

    Consumer information means any action or program that disseminates 
or otherwise provides information to consumers and other persons, on 
the use, nutritional attributes, and other information that will assist 
consumers and other persons in the United States in making evaluations 
and decisions regarding the purchase, preparation, and use of Hass 
avocados.


Sec. 1219.5  Crop year.

    Crop year means the period from November 1 of one year through 
October 31 of the following year, or such other one-year period 
recommended by the Board and approved by the Secretary.


Sec. 1219.6  Customs.

    Customs means the United States Customs Service.


Sec. 1219.7  Department.

    Department means the United States Department of Agriculture.


Sec. 1219.8  Exempt handler.

    Exempt handler means a person who would otherwise be considered a 
first handler, except that all Hass avocados purchased by the person 
have already been subject to assessments under the Order. A person who 
handles both Hass avocados that have already been subject to 
assessments under the Order and Hass avocados that have not been 
subject to assessments under the Order is a first handler.


Sec. 1219.9  First handler.

    First handler means a person operating in the Hass avocado 
marketing system that sells domestic or imported Hass avocados for 
consumption in the United States and who is responsible for remitting 
assessments to the Board. For the purposes of the Order, the term means 
the first person who handles Hass avocados for sale (except a common or 
contract carrier of Hass avocados owned by another person), including a 
producer who handles Hass avocados for sale of the producer's own 
production.


Sec. 1219.10  Fiscal period or marketing year.

    Fiscal period or marketing year means the period beginning on 
November 1 of any year and extending through the last day of October of 
the following year, or such other consecutive 12-month period as shall 
be recommended by the Board and approved by the Secretary.


Sec. 1219.11  Handle.

    Handle means to pack, process, transport, purchase, or in any other 
way

[[Page 7302]]

to place or cause Hass avocados to which one has title or possession to 
be placed in the current of commerce. Such term shall not include the 
transportation or delivery of Hass avocados by the producer thereof to 
a handler.


Sec. 1219.12  Hass avocado.

    Hass avocado means the fruit grown in or imported into the United 
States of the species Persea americana Mill., or other type of avocados 
that, in the determination of the Board, with approval of the 
Secretary, is so similar to the Hass variety avocado as to be 
indistinguishable to consumers in fresh form. The term shall include 
all fruit in fresh, frozen, or any other processed form.


Sec. 1219.13  Hass Avocado Board.

    Hass Avocado Board or the Board means the administrative body 
established pursuant to Sec. 1219.40.


Sec. 1219.14  Importer.

    Importer means any person who imports Hass avocados into the United 
States. The term includes a person who holds title to Hass avocados 
produced outside of the United States immediately upon release by 
Customs, as well as any person who acts on behalf of others, as an 
agent, broker, or consignee, to secure the release of Hass avocados 
from Customs and the introduction of the released Hass avocados into 
the current of commerce and who is listed in the import records of 
Customs as the importer of record for such Hass avocados.


Sec. 1219.15  Industry information.

    Industry information means information, programs, and activities 
that are designed to increase efficiency in processing, enhance the 
development of new markets and marketing strategies, increase marketing 
efficiency, and enhance the image of Hass avocados and the Hass avocado 
industry in the United States.


Sec. 1219.16  Marketing.

    Marketing means any activity related to the sale or other 
disposition of Hass avocados in any channel of commerce.


Sec. 1219.17  Order.

    Order means this subpart.


Sec. 1219.18  Part and subpart.

    Part means the Order and all rules, regulations, and supplemental 
orders issued pursuant to the Act and the Order. The Order itself shall 
be a subpart of such part.


Sec. 1219.19  Person.

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


Sec. 1219.20  Producer.

    Producer means any person who is engaged in the business of 
producing Hass avocados in the United States for commercial use, who 
owns, or shares the ownership and risk of loss, of such Hass avocados.


Sec. 1219.21  Programs, plans, and projects.

    Programs, plans, and projects means those research, promotion, and 
information programs, plans, studies, or projects established pursuant 
to Sec. 1219.50.


Sec. 1219.22  Promotion.

    Promotion means any action to advance the image, desirability, or 
marketability of Hass avocados in the United States, including paid 
advertising, sales promotion, and publicity. Promotion activities are 
designed to improve the competitive position and stimulate sales of 
Hass avocados in the domestic marketplace.


Sec. 1219.23  Research.

    Research means any type of test, study, or analysis relating to 
market research, market development, and market efforts, or relating to 
the use, quality, or nutritional value of Hass avocados, other related 
food science research, or research designed to advance the knowledge, 
image, desirability, usage, or marketability of Hass avocados in the 
United States.


Sec. 1219.24  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. 1219.25  State.

    State means any of the several 50 States of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth 
of the Northern Mariana Islands, the United States Virgin Islands, 
Guam, American Samoa, the Republic of the Marshall Islands, and the 
Federated States of Micronesia.


Sec. 1219.26  United States.

    United States means collectively the several 50 States of the 
United States, the District of Columbia, the Commonwealth of Puerto 
Rico, the Commonwealth of the Northern Mariana Islands, the United 
States Virgin Islands, Guam, American Samoa, the Republic of the 
Marshall Islands, and the Federated States of Micronesia.

Hass Avocado Board


Sec. 1219.30  Establishment and membership.

    (a) A Hass Avocado Board, hereinafter called the Board, is hereby 
established to administer the terms and provisions of this subpart. The 
Board shall consist of 12 members nominated by the Hass avocado 
industry and appointed by the Secretary as provided in this subpart, 
each of whom shall have an alternate nominated and appointed in the 
same manner as members of the Board are nominated and appointed. Board 
members and alternates shall be domiciled in the United States.
    (b) The membership of the Board shall be divided as follows:
    (1) Seven members and their alternates shall be producers of Hass 
avocados that are subject to assessments under this subpart;
    (2) Two members and their alternates shall be importers of Hass 
avocados that are subject to assessments under this subpart; and
    (3) Three members shall be producers of Hass avocados that are 
subject to assessments under this subpart or importers of Hass avocados 
that are subject to assessments under this subpart. Producers and 
importers shall be allocated to these positions so as to assure as 
nearly as possible that the composition of the 12-member Board reflects 
the proportion of domestic production and imports supplying the United 
States market. Such proportion shall be based on the Secretary's 
determination of the average volume of domestic production and the 
average volume of imports into the United States market over the 
previous three years, based on all information available to the 
Secretary.
    (c) Three years after the assessment of funds commences pursuant to 
this subpart, and at the end of each three-year period thereafter, the 
Board shall review the production of domestic Hass avocados in the 
United States and the volume of imported Hass avocados on the basis of 
the amount of assessments collected from producers and importers over 
the immediately preceding three-year period and, if warranted, 
recommend to the Secretary the reapportionment of the positions 
authorized in paragraph (b)(3) of this section to reflect changes in 
the proportion of domestic Hass avocado production to the volume of 
imported Hass avocados, to the extent possible in the Act. Any 
adjustment under this paragraph shall be subject to the review and 
approval of the Secretary.

[[Page 7303]]

    (d) For purposes of this section, importer means a person who is 
involved in, as a substantial activity, the importation of Hass 
avocados for sale or marketing in the United States (either directly or 
as an agent, broker, or consignee of any person that produces Hass 
avocados outside of the United States for sale in the United States), 
who is subject to assessments under the Order, and who is listed by 
Customs as the importer of record for such Hass avocados. A substantial 
activity means that the volume of a person's Hass avocado imports must 
exceed the volume of the person's production or handling of domestic 
Hass avocados.


Sec. 1219.31  Initial nomination and appointment of producer members 
and alternates.

    (a) The Association will nominate producer members and alternates 
to serve on the Board in accordance with the following procedures.
    (1) Within 30 days of implementation of this subpart, the 
Association shall establish a list of producers in the United States 
who are eligible to serve on the Board and notify all producers that 
they may nominate persons to serve as members and alternates on the 
Board.
    (2) After names are received from the producers, the Association 
shall prepare a ballot with the names of all persons nominated and mail 
it to all producers to allow them the opportunity to vote for the 
persons who will represent their interests on the Board.
    (3) After tabulating the vote, the Association shall announce the 
results and submit two names for each producer member and two names for 
each alternate producer member to the Secretary from the persons 
receiving the highest number of votes.
    (b) The Secretary shall select the producer members and alternates 
of the Board from the names submitted by the Association. Following the 
selection of the producer members, the Secretary shall select the 
alternate producer members. In selecting the alternate members, the 
Secretary shall consider the names submitted by the Association for 
each alternate member position along with the individuals whose names 
were submitted by the Association for each Board member position but 
were not selected for that position.


Sec. 1219.32  Initial nomination and appointment of importer members 
and alternates.

    (a) The Department will conduct the nomination process for the 
initial importer members and alternates on the Board in accordance with 
the following procedures.
    (1) Within 30 days of implementation of this subpart, the 
Department shall notify all known importers and importer organizations 
that they may nominate persons to serve as importer members and 
alternates on the Board.
    (2) After names are received from the importers and importer 
organizations, the Department shall prepare a ballot with the names of 
all persons nominated and mail it to all known importers to allow them 
the opportunity to vote for the persons who will represent their 
interests on the Board.
    (3) After tabulating the vote, the Department shall announce the 
results and submit two names for each importer member and two names for 
each alternate importer member to the Secretary from the persons 
receiving the highest number of votes.
    (b) The Secretary shall select the importer members and alternates 
of the Board from the nominees elected by importers. Following the 
selection of the importer members, the Secretary shall select the 
alternate importer members. In selecting the alternate members, the 
Secretary shall consider the names for each alternate member position 
along with the individuals who were elected by importers for each Board 
member position but were not selected for that position.


Sec. 1219.33  Subsequent nomination and appointment of Board members 
and alternates.

    The Board's staff shall announce at least 150 days in advance of 
the expiration of members' and alternates' terms that such terms are 
expiring and shall solicit nominations in accordance with procedures 
recommended by the Board and approved by the Secretary. Nominations for 
such positions should be submitted to the Secretary no less than 90 
days prior to the expiration of the terms.


Sec. 1219.34  Failure to nominate.

    In any case in which producers or importers fail to nominate 
individuals for appointment to the Board, the Secretary may appoint 
individuals to fill vacancies from the appropriate segments of the 
industry.


Sec. 1219.35  Term of office.

    The members and alternate members of the Board shall serve for 
terms of three years, except the members of the initial Board shall 
serve terms as follows: Four members and four alternates shall serve 
for two-year terms; four members and four alternates shall serve for 
three-year terms; and four members and four alternates shall serve for 
four-year terms. No member shall serve more than two consecutive three-
year terms. Members and alternates serving initial two-year or four-
year terms may serve for one additional three-year term. A Board member 
may serve as an alternate during the years the member is ineligible for 
a member position. Each term of office will end on October 31, with new 
terms of office beginning on November 1.


Sec. 1219.36  Vacancies.

    (a) In the event any member or alternate of the Board ceases to be 
a member of the category of members from which the member was appointed 
to the Board, such member or alternate shall be disqualified from 
serving on the Board and the position shall automatically become 
vacant.
    (b) If a member of the Board consistently refuses to perform the 
duties of a member of the Board, or if a member of the Board engages in 
acts of dishonesty or willful misconduct, the Board may recommend to 
the Secretary that the member be removed from office. If the Secretary 
finds that the recommendation of the Board shows adequate cause, the 
member shall be removed from office.
    (c) Should any Board member position become vacant in the event of 
the death, removal, resignation, or disqualification, the alternate of 
that member shall automatically assume the position of said member. The 
alternate shall serve until the end of the member's normal term. If 
there is no alternate member to assume the position of member, the 
successor member and alternate shall be nominated and selected in the 
manner specified in Secs. 1219.31, 1219.32, or 1219.33.
    (d) Should any alternate member become vacant in the event of 
death, removal, resignation, or disqualification, the Board may 
nominate persons to serve for the unexpired term of such alternate 
member. The nomination shall be conducted at a regularly scheduled 
Board meeting as soon as practicable after the vacancy occurs. The 
Board may solicit the names of nominees from producers and importers 
prior to the meeting and from the floor of the meeting. All nominees 
must meet the qualifications for nomination. The Board shall submit two 
nominees for each vacancy to the Secretary. A vacancy will not be 
required to be filled if the unexpired term is less than six months.


Sec. 1219.37  Alternate members.

    An alternate member of the Board, during the absence of the member 
for whom the person is the alternate, shall act in the place and stead 
of such

[[Page 7304]]

member and perform such duties as assigned. In the event of the death, 
removal, resignation, or disqualification of any member, the alternate 
for that member shall automatically assume the position of said member. 
In the event that both a member of the Board and the alternate are 
unable to attend a meeting, the Board may not designate any other 
alternate to serve in such member's or alternate's place and stead for 
the meeting.


Sec. 1219.38  Powers and duties.

    The Board shall have the following powers and duties in addition to 
the responsibilities and authorities specified in other sections of 
this subpart:
    (a) To administer the Order in accordance with its terms and 
conditions and to collect assessments;
    (b) To develop and recommend to the Secretary for approval such 
bylaws as may be necessary for the functioning of the Board and such 
rules as may be necessary to administer the Order, including activities 
authorized to be carried out under the Order;
    (c) To meet, organize, and select from among the members of the 
Board a chairperson, other officers, committees, and subcommittees, at 
the start of each fiscal period, and at such other times as the Board 
determines to be appropriate;
    (d) To recommend to the Secretary rules and regulations to 
effectuate the terms and conditions of this subpart;
    (e) To employ such persons, other than the members, as the Board 
considers necessary to assist the Board in carrying out its duties and 
to determine the compensation and specify the duties of such persons;
    (f) 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 Board and within 
the policies determined by the Board and approved by the Secretary;
    (g) To develop budgets for the implementation of this subpart and 
submit the budgets to the Secretary for approval and to propose and 
develop (or receive and evaluate), approve, and submit to the Secretary 
for approval programs, plans, and projects for Hass avocado promotion, 
industry information, consumer information, or related research;
    (h) To develop and implement after the approval by the Secretary 
programs, plans, and projects for Hass avocado promotion, industry 
information, consumer information, or related research, to contract or 
enter into agreements with appropriate persons to implement the 
programs, plans, and projects, and to pay the costs of the 
implementation of contracts and agreements with funds collected under 
this subpart;
    (i) To maintain such records and books and prepare and submit such 
reports and records from time to time to the Secretary as the Secretary 
may prescribe; to make appropriate accounting with respect to the 
receipt and disbursement of all funds entrusted to it; and to keep 
records that accurately reflect the actions and transactions of the 
Board;
    (j) To work to achieve an effective, continuous, and coordinated 
program of promotion, research, consumer information, and industry 
information designed to strengthen the Hass avocado industry's position 
in the domestic marketplace; to maintain and expand existing domestic 
markets and uses for Hass avocados; to create new domestic markets; and 
to carry out programs, plans, and projects designed to provide maximum 
benefits to the Hass avocado industry;
    (k) To evaluate on-going and completed programs, plans, and 
projects for Hass avocado promotion, industry information, consumer 
information, or related research and to comply with the independent 
evaluation provisions of the Federal Agricultural Improvement and 
Reform Act of 1996 [7 U.S.C. 7401 et seq.];
    (l) To receive, investigate, and report to the Secretary complaints 
of violations of the Order;
    (m) To recommend to the Secretary amendments to this Order;
    (n) To invest, pending disbursement under a program, plan, or 
project, funds collected through assessments authorized under this Act 
only in:
    (1) Obligations of the United States or any agency of the United 
States;
    (2) General obligations of any State or any political subdivision 
of a State;
    (3) Any interest-bearing account or certificate of deposit of a 
bank that is a member of the Federal Reserve System; or
    (4) Obligations fully guaranteed as to principal and interest by 
the United States, except that income from any such invested funds may 
be used only for a purpose for which the invested funds may be used;
    (o) To borrow funds necessary for the startup expenses of the 
Order;
    (p) To cause the books of the Board to be audited by a qualified 
independent auditor at the end of each fiscal period and to submit a 
report of the audit directly to the Secretary;
    (q) To give the Secretary the same notice of meetings and 
teleconferences of the Board and its committees as is given to members 
in order that the Secretary's representative(s) may attend or 
participate in the meetings;
    (r) To act as intermediary between the Secretary and any producer, 
first handler, or importer;
    (s) 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; and
    (t) To notify Hass avocado producers, first handlers, and importers 
of all Board meetings through news releases or other means.


Sec. 1219.39  Board procedure.

    (a) At a properly convened meeting of the Board, seven (7) members, 
including alternates acting in place of members of the Board, shall 
constitute a quorum: Provided, that such alternates shall serve only 
when the member is absent from a meeting. Any action of the Board shall 
require the concurring votes of a majority of those present and voting. 
At assembled meetings, all votes shall be cast in person.
    (b) In lieu of voting at a properly convened meeting and, when in 
the opinion of the chairperson of the Board such action is considered 
necessary, the Board may take action if supported by one vote more than 
50 percent of the members by mail, telephone, electronic mail, 
facsimile, or other means of communication. Such alternative means for 
the Board taking action may be undertaken for various reasons. These 
reasons include the need to address matters of an emergency nature when 
there is not enough time to call an assembled meeting of the Board. All 
telephone votes shall be confirmed promptly in writing. In that event, 
all members must be notified and provided an opportunity to vote. Any 
action so taken shall have the same force and effect as though such 
action had been taken at a properly convened meeting of the Board. All 
votes shall be recorded in the Board minutes.
    (c) All Board members and alternates and the Secretary will be 
notified at least 10 days in advance of all Board meetings, except the 
chairperson of the Board can waive the 10-day requirement in matters of 
an emergency nature.
    (d) Each member of the Board will be entitled to one vote on any 
matter put to the Board, and the motion will carry if supported by one 
vote more than 50 percent of the total votes represented by the Board 
members present.
    (e) There shall be no voting by proxy.
    (f) The chairperson shall be a voting member of the Board.

[[Page 7305]]

Sec. 1219.40  Committee procedure.

    (a) The Board may establish committees as deemed necessary to carry 
out the purposes and objectives of the Order.
    (b) The chairperson of the Board shall appoint all committee 
chairpersons and shall appoint all members of each committee after 
consultation with the committee chairperson affected. Appointments are 
subject to approval by the Board and may be changed from time to time 
as determined by the chairperson of the Board with the concurrence of 
the Board.
    (c) The chairperson of the Board may appoint committee members from 
among the Board members and alternates and from the industry in 
general.
    (d) The rules and procedures under which committees conduct their 
activities shall be prescribed in the Board's bylaws.
    (e) Committee members and the Secretary will be notified at least 
10 days in advance of all committee meetings.
    (f) It will be considered a quorum at a committee meeting when at 
least one more than half of those assigned to the committee are 
present.
    (g) There shall be no voting by proxy on committees.
    (h) The chairperson of the Board shall be an ex-officio member of 
all committees.


Sec. 1219.41  Compensation and expenses.

    (a) The members and alternates of the Board and committee members 
shall serve without compensation but shall be reimbursed for reasonable 
out-of-pocket expenses, as approved by the Board, incurred by them in 
the performance of their duties.
    (b) The Board shall have in place sufficient internal controls to 
prevent reimbursements or expenditures for unreasonable or otherwise 
controversial travel and meeting expenses.


Sec. 1219.42  Prohibited activities.

    The Board may not engage in and shall prohibit its employees and 
agents from engaging in:
    (a) Any action that would be a conflict of interest. For the 
purposes of this subpart, Board members and employees thereof must 
disclose any relationship with any organization or company that has a 
contract with the Board or operates a State promotion program. No 
member may vote on any matter in which the member or member's business 
entity has a financial interest.
    (b) Using funds collected under this subpart for the purpose of 
influencing legislation or governmental action or policy, by local, 
national, and foreign governments, except to develop and make 
recommendations to the Secretary as provided for in this subpart.
    (c) In a program, plan, or project conducted under this subpart:
    (1) Making any reference to private brand names or making false, 
misleading, disparaging, or unwarranted claims on behalf of Hass 
avocados or
    (2) Making any false, misleading, or disparaging statements with 
respect to the attributes or use of any agricultural product. This 
section shall not preclude the Board from offering its programs, plans, 
and projects for use by commercial parties under such terms and 
conditions as the Board may prescribe as approved by the Secretary.
    (d) For the purposes of this section, a reference to State of 
origin or country of origin does not constitute a reference to a 
private brand name with regard to any funds credited to or disbursed by 
the Board to the Association or to any importer association established 
in accordance with Sec. 1219.54.

Budgets, Expenses, and Assessments


Sec. 1219.50  Budgets, programs, plans, and projects.

    (a) The Board shall submit to the Secretary, on a fiscal period 
basis, annual budgets of its anticipated expenses and disbursements of 
the Board in the administration of this subpart, including the 
projected costs of Hass avocado promotion, industry information, 
consumer information, and related research programs, plans, and 
projects. The first budget, which shall be submitted promptly after the 
effective date of this subpart, shall cover such period as may remain 
before the beginning of the next fiscal period. If such fiscal period 
is 90 days or less, the first budget shall cover such period, as well 
as the next fiscal period. Thereafter, the Board shall submit budgets 
for each succeeding fiscal period not less than 60 days before the 
beginning of such fiscal period.
    (b) The Board shall receive and evaluate, or on its own initiative 
develop programs, plans and projects for Hass avocado promotion, 
industry information, consumer information as well as related research. 
The Board shall submit to the Secretary for approval any program, plan, 
or project authorized in this subpart. Such programs, plans or projects 
shall provide for:
    (1) The establishment, implementation, issuance, effectuation, 
administration, and evaluation of appropriate programs, plans, or 
projects for advertising, sales promotion, other promotion, and 
consumer information with respect to Hass avocados directed toward 
increasing the general demand for Hass avocados in the United States. 
Funds shall be available as necessary to carry out this section;
    (2) The establishment, implementation, issuance, effectuation, 
administration, and evaluation of appropriate programs, plans, and 
projects designed to strengthen the position of the Hass avocado 
industry in the domestic marketplace; to maintain, develop, and expand 
markets for Hass avocados in the United States; to lead to the 
development of new marketing strategies; to advance the image and 
desirability of, increase the efficiency of, and encourage further 
development of the Hass avocado industry; and to provide for the 
disbursement of necessary funds for the purposes described in this 
section;
    (3) The establishment, implementation, issuance, effectuation, 
administration, and evaluation of programs, plans, and projects for 
marketing development research; research on the sale, distribution, 
marketing, use, quality, and nutritional value of Hass avocados; and 
other research with respect to Hass avocado marketing, promotion, 
industry information, or consumer information, including the creation 
of new products thereof. Information acquired from such plans and 
projects shall be disseminated as appropriate. Funds shall be available 
as necessary to carry out this section; and
    (4) The Board to 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 with funds 
collected pursuant to Sec. 1219.54.
    (c) A budget, program, plan, or project for Hass avocados 
promotion, industry information, consumer information, or related 
research may not be implemented prior to approval of the budget, 
program, plan, or project by the Secretary. If the Secretary fails to 
provide notice to the Board or approval or disapproval of a budget, 
program, plan, or project within 45 days after receipt, such budget, 
program, plan, or project shall be deemed approved by the Secretary and 
may be implemented by the Board.
    (d) The Board, from time to time, may seek advice and consult with 
experts from the production, import, wholesale, and retail segments of 
the Hass avocado industry to assist in the development of promotion, 
industry information, consumer information, and related research 
programs, plans, and projects. For these purposes, the Board may 
appoint special committees composed

[[Page 7306]]

of persons other than Board members. A committee so appointed shall 
consult directly with the Board.
    (e) Programs must be conducted throughout the year to reflect the 
periods when imported and domestic Hass avocados are in the U.S. 
marketplace.
    (f) The Board shall consult with both the Association and importer 
associations on programs, plans, and projects for generic promotions.


Sec. 1219.51  Contracts and agreements.

    (a) The Board shall enter into a contract or an agreement with the 
Association for the implementation of programs, plans, or projects for 
promotion, industry information, consumer information, or related 
research with respect to Hass avocados and for the payment of the cost 
of the contract or agreement with funds received by the Board under 
this subpart. The Board may disburse such funds as necessary for these 
purposes after such programs, plans, or projects have been submitted to 
and approved by the Secretary.
    (b) Any contract or agreement entered into shall provide that the 
contracting or agreeing party shall develop and submit to the Board a 
program, plan or project, together with a budget that includes the 
estimated costs to be incurred for the program, plan or project, and 
such program, plan or project shall become effective on the approval of 
the Secretary. For such contract or agreement, the contracting or 
agreeing party shall:
    (1) Keep accurate records of all transactions of the party;
    (2) Account for funds received and expended;
    (3) Make periodic reports to the Board of activities conducted; and
    (4) Make such other reports as the Board or the Secretary shall 
require.
    (c) The Secretary may audit the records of the contracting or 
agreeing party periodically.
    (d) Contractors and subcontractors are subject to the provisions of 
Sec. 1219.42.
    (e) The Board may enter into contracts or agreements for 
administrative services, including contracts for employment, as may be 
required to conduct its business. To the extent appropriate to the 
contract involved, contracts or agreements entered into by the Board 
under the authority of this section shall conform to the provisions 
described in Sec. 1219.51(b).


Sec. 1219.52  Control of administrative costs.

    (a) As soon as practicable after this subpart becomes effective and 
after consultation with the Secretary and other appropriate persons, 
the Board shall implement a system of cost controls based on normally 
accepted business practices to:
    (1) Ensure that the costs incurred by the Board in administering 
this part in any fiscal period shall not exceed 10 percent of the 
projected level of assessments and other income received by the Board 
for generic promotion and research programs for that fiscal period; and
    (2) Cover the minimum administrative activities and personnel 
needed to properly administer and enforce this subpart, and conduct, 
supervise, and evaluate programs, plans, and projects under this 
subpart.
    (b) Reimbursements to the Secretary required under Sec. 1219.53(b) 
are excluded from the limitation on spending.
    (c) To the extent possible, the Board shall use the resources, 
staffs, and facilities of existing avocado organizations as provided in 
Sec. 1219.54(a).


Sec. 1219.53  Budget and expenses.

    (a) The Board is authorized to incur such expenses, including 
provision for a reasonable reserve for operating contingencies, as the 
Secretary finds are reasonable and likely to be incurred by the Board 
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 Board, 
including assessments, contributions from any person not subject to 
assessments under this subpart, and other funds available to the Board.
    (b) The Board shall reimburse the Department:
    (1) For expenses not to exceed $25,000 incurred by the Secretary in 
connection with any referendum conducted under the Act;
    (2) For administrative costs incurred by the Secretary for 
supervisory work of up to two employee years annually after the Order 
or amendment to the Order has been issued and made effective; and
    (3) For costs incurred by the Secretary in implementation of the 
Order, for enforcement of the Act and the order, for subsequent 
referenda conducted under the Act, and in defending the Board in 
litigation arising out of action taken by the Board or otherwise in 
defense of the Order.
    (c) The Board shall establish and maintain the minimum level of 
annual administrative expenses necessary to efficiently and effectively 
carry out the programs authorized by the Act. The Board shall include 
its annual administrative expenses as a separate item in its annual 
report. The Board shall adhere to its fiduciary responsibilities and 
ensure that all monies are spent in accordance with the Act and the 
Order.
    (d) With the approval of the Secretary, the Board may borrow money 
for the payment of administrative expenses, subject to the same fiscal, 
budget, and audit controls as other funds of the Board. Any funds 
borrowed by the Board shall be expended only for startup costs and 
capital outlays and are limited to the first period of operation of the 
Board.
    (e) The Board may accept voluntary contributions, but these shall 
only be used to pay expenses incurred in the conduct of programs, 
plans, and projects. The contributions shall be free from any 
encumbrance by the donor, and the Board shall retain complete control 
of their use.


Sec. 1219.54  Assessments.

    (a) Except as provided in Sec. 1219.55, the initial rate of 
assessment shall be 2.5 cents per pound on fresh Hass avocados produced 
and handled in the United States and on fresh Hass avocados imported 
into the United States. An equivalent rate shall be assessed on 
processed and frozen Hass avocados on which an assessment has not been 
paid. Such equivalent rate will be assessed on processed or frozen Hass 
avocados upon the recommendation of the Board with the approval of the 
Secretary. The rate of assessment may be increased or decreased as 
recommended by the Board and approved by the Secretary. Such an 
increase or decrease may occur not more than once annually. Any change 
in the assessment rate shall be announced by the Board at least 30 days 
prior to going into effect and shall not be subject to a vote in a 
referendum. The maximum assessment rate authorized is 5 cents per 
pound. No more than one assessment shall be made on any Hass avocados.
    (b) Domestic assessments. The collection of assessments on domestic 
Hass avocados will be the responsibility of the first handler.
    (1) In the case of a producer acting as the producer's own first 
handler, the producer will be required to collect and remit the 
assessments due to the Board.
    (2) Each first handler shall collect from the producer and pay to 
the Board an assessment of 2.5 cents per pound in accordance with this 
subpart. Assessments shall be remitted by each first handler to the 
Board or its agent within 30 days after the end of the month in which 
the sale or non-sale

[[Page 7307]]

transfer subject to assessment under this subpart took place.
    (3) The first handler shall maintain a separate record of the 
domestic Hass avocados of each producer whose domestic Hass avocados 
are handled, including the domestic Hass avocados owned by the handler 
and domestic Hass avocados that are exported.
    (4) Assessment of other types of fresh avocados may be added at the 
recommendation of the Board with the approval of the Secretary.
    (c) Import assessments. Each importer of fresh Hass avocados shall 
pay an assessment to the Board through Customs on fresh Hass avocados 
imported for marketing in the United States.
    (1) The assessment rate for imported fresh Hass avocados shall be 
the same or equivalent to the rate for fresh Hass avocados produced and 
handled in the United States.
    (2) The import assessment shall be uniformly applied to imported 
fresh Hass avocados that are identified by the number 08-04.00.00.10 in 
the Harmonized Tariff Schedule of the United States or any other 
numbers to identify fresh Hass avocados. Assessments on other types of 
imported fresh avocados or on processed Hass avocados, such as 
prepared, preserved, or frozen Hass avocados or Hass avocado paste, 
puree, and oil will be added at the recommendation of the Board with 
the approval of the Secretary.
    (3) The assessments due on imported Hass avocados shall be paid 
when they are released from custody by Customs and introduced into the 
stream of commerce in the United States.
    (d) All assessment payments and reports will be submitted to the 
Board's office. All final payments for a crop year are to be received 
no later than November 30 of that year, unless the Board determines 
that assessments due from the first handler shall be paid to the Board 
at a different time and manner, with approval of the Secretary.
    (e) A late payment charge prescribed by the Secretary shall be 
imposed on any first handler who fails to remit to the Board the total 
amount for which any such handler is liable on or before the due date. 
In addition to the late payment charge, an interest charge shall be 
imposed on the outstanding amount for which the handler is liable. The 
rate of interest shall be prescribed by the Secretary. The timeliness 
of a payment to the Board shall be based on the date the payment is 
actually received by the Board.
    (f) Regulations issued by the Secretary may provide for different 
first handler payment schedules of assessments on domestic Hass 
avocados, so as to recognize differences in marketing or purchasing 
practices and procedures.
    (g) Persons failing to remit total assessments due in a timely 
manner may also be subject to actions under federal debt collection 
procedures.
    (h) The Board may authorize other organizations to collect 
assessments on its behalf with approval of the Secretary.
    (i) The collection of assessments shall commence on or after a date 
established by the Secretary and shall continue until terminated by the 
Secretary. If the Board is not constituted on the date the first 
assessments are to be remitted, the Secretary shall have the authority 
to receive assessments on behalf of the Board and may hold such 
assessments in an interest-bearing account until the Board is 
constituted and the funds are transferred to the Board.
    (j) To facilitate the payment of assessments under this section, 
the Board shall publish lists of first handlers required to remit 
assessments under this subpart and exempt handlers.
    (k) The Association shall receive an amount of assessment funds 
equal to 85 percent of the assessments paid on Hass avocados produced 
in such State. Such funds shall be remitted to such State organization 
no later than 30 days after such funds are received by the Board. In 
addition, such funds and any proceeds from the investment of such funds 
shall be used by the Association to finance promotion, research, 
consumer information, and industry information programs, plans, and 
projects in the United States. However, no such funds shall be used for 
any administrative expenses incurred by the Association.
    (l) An association of Hass avocado importers established pursuant 
to Sec. 1219.58 shall receive an amount of assessment funds equal to 85 
percent of the assessments paid on Hass avocados imported by its 
members. Such funds shall be remitted to such importer association no 
later than 30 days after such funds are received by the Board. In 
addition, such funds and any proceeds from the investment of such funds 
shall be used by the importer association to finance promotion, 
research, consumer information, and industry information programs, 
plans, and projects in the United States. However, no such funds shall 
be used for any administrative expenses incurred by the importer 
association.
    (m) In general, assessment funds received by the Board shall be 
used:
    (1) For payment of costs incurred in implementing and administering 
this subpart;
    (2) To provide for a reasonable reserve to be maintained from 
assessments to be available for contingencies; and
    (3) To cover the administrative costs incurred by the Secretary in 
implementing and administering this Act, as set forth in 
Sec. 1219.53(b).
    (n) The Board may establish an operating monetary reserve which may 
carry over to subsequent fiscal periods: Provided that, the funds in 
the reserve do not exceed one fiscal period's budget. Subject to 
approval by the Secretary, reserve funds may be used to defray any 
expenses authorized under this part.


Sec. 1219.55  Exemption from assessment.

    (a) Any sale of Hass avocados for export from the United States is 
exempt from assessment.
    (b) The Board may require persons receiving an exemption from 
assessments to provide to the Board reports on the disposition of 
exempt Hass avocados.


Sec. 1219.56  Adjustments of accounts.

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


Sec. 1219.57  Patents, copyrights, trademarks, publications, and 
product formulations.

    (a) Any patents, copyrights, trademarks, inventions, information, 
publications, and product formulations developed through the use of 
funds received by the Board under this subpart shall be the property of 
the U.S. Government as represented by the Board, 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, trademarks, inventions, information, publications, or 
product formulations, inure to the benefit of the Board; shall be 
considered income subject to the same fiscal, budget, and audit 
controls as other funds of the Board; and may be licensed subject to 
approval of the Secretary. Section 1219.72 describes the procedures for 
termination.
    (b) Should patents, copyrights, trademarks, inventions, 
publications, or

[[Page 7308]]

product formulations be developed through the use of funds collected by 
the Board under this subpart and funds contributed by another 
organization or person, ownership and related rights to such patents, 
copyrights, trademarks, inventions, publications, or product 
formulations shall be determined by agreement between the Board and the 
party contributing funds towards the development of such patent, 
copyright, trademark, invention, publication, or product formulation in 
a manner consistent with paragraph (a) of this section.


Sec. 1219.58  Importer associations.

    (a) An association of avocado importers is eligible to receive 
assessment funds and any proceeds from the investment of such funds 
only if such importer association is:
    (1) Established pursuant to State law that requires detailed State 
regulation comparable to that applicable to the State organization of 
domestic avocado producers, as determined by the Secretary; or
    (2) Certified by the Secretary as meeting the requirements 
applicable to the Board as to its operations and obligations, including 
budgets, programs, plans, projects, audits, conflicts of interest, and 
reimbursements for administrative costs incurred by the Secretary.
    (b) An importer association may represent any importers of Hass 
avocados including importers of Hass avocados from a particular foreign 
country. An importer association may be composed of importers as well 
as representatives of foreign avocado exporting industries. An importer 
association should establish it own bylaws and may use existing 
organizations for the establishment of the association and coordination 
of the association's promotion and research efforts.
    (c) For the purposes of the Order, the information required for 
certification of the importer associations by the Secretary may 
include, but is not limited to, the following:
    (1) Evidence of incorporation under any state law with all 
appropriate legal requirements;
    (2) Evidence that the association is composed of importers that are 
located in any state and subject to assessments under the Order, no 
matter where the association has been incorporated or in which state 
the importers reside;
    (3) Certification of the association's ability and willingness to 
further the aims and objectives of the Order;
    (4) Evidence of stability and permanency; and
    (5) A description of the functions of the association.

Books, Records and Reports


Sec. 1219.60  Reports.

    (a) Each first handler of domestic Hass avocados, producer, and 
importer subject to this subpart shall report to the administrative 
staff of the Board, at such times and in such manner as the Board may 
prescribe, such information as may be necessary for the Board to 
perform its duties.
    (b) First handler reports shall include, but shall not be limited 
to, the following:
    (1) Number of pounds of domestic Hass avocados received during the 
reporting period;
    (2) Number of pounds on which assessments were collected;
    (3) Assessments collected during the reporting period;
    (4) Name and address of person(s) from whom the first handler 
collected the assessments on each pound handled;
    (5) Date collection was made on each pound handled;
    (6) Record of assessments paid, including a statement from the 
handler that assessments have been paid on all domestic Hass avocados 
handled during the reporting period; and
    (7) Number of pounds exported.
    (c) Each importer subject to this subpart may be required to report 
the following:
    (1) Number of pounds of Hass avocados imported during the reporting 
period;
    (2) Number of pounds on which an assessment was paid;
    (3) Name and address of the importer;
    (4) Date collection was made on each pound imported and to whom 
payment was made; and
    (5) Record of each importation of Hass avocados during such period, 
giving quantity, variety, date, and port of entry.


Sec. 1219.61  Books and records.

    Each producer, first handler, and importer subject to this subpart 
shall maintain and make available for inspection by the employees and 
agents of the Board and 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 reports required. Books and records shall be retained for 
at least two years beyond the fiscal period of their applicability.


Sec. 1219.62  Books and records of the Board.

    (a) The Board shall maintain such books and records as the 
Secretary may require. Such books and records shall be made available 
upon request by the Secretary for inspection and audit.
    (b) The Board shall prepare and submit to the Secretary, from time 
to time, such reports as the Secretary may require.
    (c) The Board shall account for the receipt and disbursement of all 
the funds entrusted to the Board.
    (d) The Board shall cause the books and records of the Board to be 
audited by an independent auditor at the end of each fiscal period. A 
report of each audit shall be submitted to the Secretary.


Sec. 1219.63  Confidential treatment.

    (a) All information obtained from the books, records, or reports 
under this Act, this subpart, and the regulations issued thereunder 
shall be kept confidential and shall not be disclosed to the public by 
any person, including all current and former officers, employees, staff 
and agents of the Department, the Board, and contracting and 
subcontracting agencies or agreeing parties having access to such 
information. Only those persons having a specific need for such 
information to effectively administer the provisions of this subpart 
shall have access to such information. Only such information so 
obtained as the Secretary deems relevant shall be disclosed, and then 
only in a judicial proceeding 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. Nothing in this subpart shall be deemed to prohibit:
    (1) The issuance of general statements based upon the reports of 
the number of persons subject to this subpart or statistical data 
collected from such reports, if such statements do not identify the 
information furnished by any person; or
    (2) The publication, by direction of the Secretary, of the name of 
any person who has been adjudged to have violated this subpart, 
together with a statement of the particular provisions of this subpart 
violated by such person.
    (b) Any disclosure of any confidential information by any employee 
or agent of the Board shall be considered willful misconduct.
    (c) No information on how a person voted in a referendum conducted 
under the Act shall be made public.


Sec. 1219.64  List of importers.

    The administrative staff of the Board shall periodically review the 
list of importers of Hass avocados to determine

[[Page 7309]]

whether persons on the list are subject to this subpart.


Sec. 1219.65  List of producers.

    The administrative staff of the Board shall periodically review the 
list of producers of Hass avocados to determine whether the persons on 
the list of subject to this subpart. On the request of the Secretary or 
the Board, the Association shall provide to the Secretary or the 
administrative staff of the Board the list of producers of Hass 
avocados.

Miscellaneous


Sec. 1219.70  Right of the Secretary.

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


Sec. 1219.71  Suspension or termination.

    (a) The Secretary shall suspend or terminate this part or subpart 
or a provision thereof if the Secretary finds that the part or subpart 
or a provision thereof obstructs or does not tend to effectuate the 
purposes of the Act, or if the Secretary determines that this part or 
subpart or a provision thereof is not favored by persons voting in a 
referendum conducted pursuant to the Order or the Act.
    (b) The Secretary shall suspend or terminate this subpart at the 
end of the marketing year whenever the Secretary determines that its 
suspension or termination is approved or favored by a majority of the 
producers and importers voting who, during a representative period 
determined by the Secretary, have been engaged in the production or 
importation of Hass avocados.
    (c) If, as a result of a referendum, the Secretary determines that 
this subpart is not approved, the Secretary shall:
    (1) Suspend or terminate, as appropriate, the collection of 
assessments not later than 180 days after making such determination; 
and
    (2) Suspend or terminate, as appropriate, all activities under this 
subpart in an orderly manner as soon as practicable.


Sec. 1219.72  Proceedings after termination.

    (a) Upon the termination of this subpart, the Board 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 Board. Such persons, 
upon designation by the Secretary, shall become trustees of all of the 
funds and property owned, in possession of or under control of the 
Board, 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 Board 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 Board and of the trustees, to such person or persons as the 
Secretary may direct; and
    (4) Upon the request of the Secretary, execute such assignments or 
other instruments necessary and appropriate to vest in such persons 
title and right to all of the funds, property, and claims vested in the 
Board or the trustees pursuant to the Order.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to the Order shall be subject to the 
same obligations imposed upon the Board 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 distributed to authorized 
Hass avocado producer and importer organizations in the interest of 
continuing Hass avocado promotion, research, and information programs.


Sec. 1219.73  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; or
    (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, 
or of the Secretary or of any person, with respect to any such 
violation.


Sec. 1219.74  Personal liability.

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


Sec. 1219.75  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. 1219.76  Amendments.

    Amendments to this subpart may be proposed, from time to time, by 
the Board or by any interested persons affected by the provisions of 
the Act, including the Secretary. Except for changes in the assessment 
rate, the provisions of the Act applicable to the Order are applicable 
to any amendment of the Order.


Sec. 1219.77  OMB control number.

    The control number assigned to the information collection 
requirements in this part by the Office of Management and Budget 
pursuant to the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, 
is OMB control number 0581-0197.

    Dated: February 12, 2002.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 02-3797 Filed 2-13-02; 2:00 pm]
BILLING CODE 3410-02-P