[Federal Register Volume 80, Number 110 (Tuesday, June 9, 2015)]
[Proposed Rules]
[Pages 32493-32508]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-13719]



[[Page 32493]]

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1211

[Document Number AMS-FV-11-0074; PR-A2]
RIN 0581-AD24


Hardwood Lumber and Hardwood Plywood Promotion, Research and 
Information Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule; supplemental notice of proposed rulemaking.

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

SUMMARY: The U.S. Department of Agriculture (USDA) is proposing to 
amend the 2013 proposed rule for a Hardwood Lumber and Hardwood Plywood 
Promotion, Research and Information Order (Order). In that 2013 
proposed rule, USDA requested comments on a proposed industry-funded, 
national research and promotion program for hardwood lumber and 
hardwood plywood that would be administered by a board of industry 
members selected by the Secretary of Agriculture (Secretary). USDA is 
reopening the comment period only with respect to specific issues 
identified in this proposed rule. USDA is taking this action in 
response to the extensive comments received in response to that 2013 
proposed rule.

DATES: Comments must be received by July 9, 2015. Pursuant to the 
Paperwork Reduction Act (PRA), comments on information collection 
issues must be received by August 10, 2015.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this supplemental proposal. Comments may be submitted on the 
Internet at: http://www.regulations.gov or to the Promotion and 
Economics Division, Fruit and Vegetable Program, AMS, USDA, 1400 
Independence Avenue SW., Room 1406-S, Stop 0244, Washington, DC 20250-
0244; facsimile: (202) 205-2800. All comments should reference the 
document number and the date and page number of this issue of the 
Federal Register and will be made available for public inspection, 
including name and address, if provided, in the above office during 
regular business hours or it can be viewed at http://www.regulations.gov.
    Pursuant to the PRA, comments concerning the information collection 
should also be sent to the Desk Office for Agriculture, Office of 
Information and Regulatory Affairs, OMB, New Executive Office Building, 
725 17th Street NW., Room 725, Washington, DC 20503.

FOR FURTHER INFORMATION CONTACT: Patricia A. Petrella, Marketing 
Specialist, Promotion and Economics Division, Fruit and Vegetable 
Program, AMS, USDA, 1400 Independence Avenue SW., Room 1406, Stop 0244, 
Washington, DC 20250-0244; telephone: (301) 334-2891; facsimile (301) 
334-2896; or electronic mail: [email protected].

SUPPLEMENTARY INFORMATION: This proposal is issued pursuant to the 
Commodity Promotion, Research and Information Act of 1996 (1996 Act) (7 
U.S.C. 7411-7425).
    As part of this rulemaking process, a proposed rule was published 
in the Federal Register on November 13, 2013 (78 FR 68298), on 
establishing an industry-funded promotion, research and information 
program for hardwood lumber and hardwood plywood. That proposal 
provided for a 60-day comment period which ended on January 13, 2014. 
On January 16, 2014, a notice was published in the Federal Register 
that reopened and extended the comment period until February 18, 2014 
(79 FR 2805). A total of 939 comments were received during both comment 
periods.

Executive Order 12866 and Executive Order 13563

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This rule has been designated as ``non-significant 
regulatory action'' under section 3(f) of Executive Order 12866. 
Accordingly, the Office of Management and Budget (OMB) has waived the 
review process.

Executive Order 13175

    This action has been reviewed in accordance with the requirements 
of Executive Order 13175, Consultation and Coordination with Indian 
Tribal Governments. The review reveals that this regulation would not 
have substantial and direct effects on Tribal governments and would not 
have significant Tribal implications.

Executive Order 12988

    This proposal has been reviewed under Executive Order 12988, Civil 
Justice Reform. It is not intended to have retroactive effect. Section 
524 of the 1996 Act (7 U.S.C. 7423) provides that it shall not affect 
or preempt any other Federal or State law authorizing promotion or 
research relating to an agricultural commodity.
    Under section 519 of the 1996 Act (7 U.S.C. 7418), a person subject 
to an order may file a written petition with USDA stating that an 
order, any provision of an order, or any obligation imposed in 
connection with an order, is not established in accordance with the 
law, and request a modification of an order or an exemption from an 
order. Any petition filed challenging an order, any provision of an 
order, or any obligation imposed in connection with an order, shall be 
filed within two years after the effective date of an 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 1996 Act provides that the 
district court of the United States for any district in which the 
petitioner resides or conducts business shall have the jurisdiction to 
review a final ruling on the petition, if the petitioner files a 
complaint for that purpose not later than 20 days after the date of the 
entry of USDA's final ruling.

Background

    In June 2011, USDA received a proposal for a national research and 
promotion program for hardwood lumber and hardwood plywood from the 
Blue Ribbon Committee (BRC). The BRC is a committee of 14 hardwood 
lumber and hardwood plywood industry leaders representing small and 
large manufacturers geographically distributed throughout the United 
States.
    The BRC proposed a program that would be financed by an assessment 
on hardwood lumber and hardwood plywood manufacturers and administered 
by a board of industry members selected by the Secretary. The purpose 
of the program would be to strengthen the position of hardwood lumber 
and hardwood plywood in the marketplace and maintain and expand markets 
for hardwood lumber and hardwood plywood. A referendum would be held 
among eligible hardwood lumber and hardwood plywood manufacturers to 
determine whether they favor implementation of the program prior to it 
going into effect.

[[Page 32494]]

    As previously stated, a proposed rule regarding this action that 
was published in the Federal Register on November 13, 2013, provided 
for a 60-day comment period ending January 13, 2014. The comment period 
was reopened and extended an additional 30 days, or through February 
18, 2014. A total of 939 comments were received during both comment 
periods. Many of the comments included substantive questions about 
fundamental provisions of the program as proposed. Some of these 
questions included what products would be covered, how products would 
be assessed, how the exemption for small manufacturers would be 
administered, and how the referendum would be conducted. Some of the 
comments provided recommendations in these different areas. Several 
comments also expressed concern with the overall cost of the program on 
manufacturers.
    As a result, USDA is reopening the comment period to solicit 
additional comments on specific areas in the November 2013 proposal. 
USDA is proposing alternative language that would modify several 
previously proposed provisions (including adding two proposed 
definitions), taking into account the comments received. USDA is also 
asking specific questions regarding other aspects of the proposed 
program. This is intended to assist USDA in its further consideration 
of the proposal for a program. The specific areas open for comment are 
detailed in the section titled Scope of Supplemental Notice of Proposed 
Rulemaking.

Clarification Regarding Exports and Imports

    In this document, USDA is clarifying that exports would be covered 
under the program. The background section of the November 2013 proposed 
rule (78 FR 68298) inadvertently stated that exports would be exempted 
from the proposed program. USDA is also reiterating that imports would 
not be covered under the program. Several commenters raised this 
question during the comment period in response to the November 2013 
proposed rule.
    In this document, USDA is also informing stakeholders of a 
supplemental notice of proposed rulemaking published elsewhere in this 
issue of the Federal Register to amend a separate proposed rule also 
published in November 2013 concerning referenda procedures related to 
the proposed hardwood program (November 13, 2013; 78 FR 67979).

Scope of Supplemental Notice of Proposed Rulemaking

Proposed Modifications to Previously Proposed Provisions

    USDA is proposing to revise several provisions of the previously 
proposed Order (including adding two definitions) taking into account 
the comments received in response to the November 2013 proposed rule. 
USDA requests comments on the proposed revisions which are described in 
the following paragraphs.

Definitions

Green Air Dried (G/AD)

    USDA is proposing to add a term to Sec.  1211.11 to the Order 
detailed in the November 2013 proposed rule to define the term ``green 
air dried (G/AD)'' to mean green hardwood lumber or hardwood lumber 
that has been dried by exposure to air in a yard or shed, without 
artificial heat. This term is needed to address concerns raised by 
commenters regarding how green air dried lumber would be handled under 
the proposed program.

Green (G) Hardwood Lumber

    USDA is proposing to modify the term ``green (G) hardwood lumber'' 
as defined in the November 2013 proposed rule in proposed Sec.  1211.11 
to clarify that green (G) hardwood lumber does not include kiln dried 
or air dried lumber. This modification is needed to address concerns 
raised by commenters regarding how air dried lumber would be handled 
under the proposed program. Thus, the term ``green (G) hardwood 
lumber'' would mean hardwood lumber that has not been kiln dried or air 
dried.

Hardwood Lumber

    USDA is proposing to modify the term ``hardwood lumber'' as defined 
in the November 2013 proposed rule in proposed section 1211.12 to 
clarify that it includes yellow poplar in the list of trees referenced, 
and that the respective trees must be grown in the United States. This 
modification is proposed in response to comments received requesting 
that the term be clarified. Thus, the term hardwood lumber would mean 
timber from the wood of a cypress tree or a deciduous, broad leafed 
tree (including but not limited to aspen, birch, cypress, poplar, 
yellow poplar, maple, cherry, walnut and oak) grown in the United 
States that has been sawn into boards or blocks by a sawmill in the 
United States.

Hardwood Lumber Manufacturer

    USDA is proposing to modify the term ``hardwood lumber 
manufacturer'' as defined in the November 2013 proposed rule in 
proposed section 1211.13 to include not only entities that kiln dry but 
also entities that air dry green hardwood lumber. This modification is 
needed to address concerns raised by commenters regarding how air dried 
lumber would be handled under the proposed program. Thus, the term 
hardwood lumber manufacturer would mean a person who cuts raw, green 
hardwood logs into hardwood lumber or hardwood lumber products or a 
person who kiln dries or air dries green hardwood lumber to create 
hardwood lumber, hardwood lumber products or hardwood lumber value-
added products.

Hardwood Lumber Products

    USDA is proposing to modify the term ``hardwood lumber products'' 
as defined in the November 2013 proposed rule in proposed Sec.  1211.14 
to link the definition to a grade standard defined in the National 
Hardwood Lumber Association Rules for the Inspection of Hardwood & 
Cypress. This definition would also be modified to exclude industrial 
products. This modification is being proposed in response to comments 
received requesting that industrial products be excluded from the 
proposed program and that the term be linked to a grade standard.
    Thus, the term hardwood lumber products would mean hardwood G/AD/KD 
lumber that has been transformed into products that remain boards 
meeting or exceeding the level of ``Grade 3A Common'' as defined by 
National Hardwood Lumber Association Rules for the Inspection of 
Hardwood & Cypress effective January 1, 2015 (http://nhla.com/rulesbook), or equivalent standard, as recommended by the Board and 
approved by the Secretary. The Grade 3A Common standard would provide 
minimum requirements for covered hardwood in terms of width, length and 
other factors. This third party standard would be incorporated by 
reference, which would specify the current version of the cited third-
party standard and would include information on the availability of 
this standard to meet requirements for incorporation by reference. For 
purposes of this Order, hardwood lumber would not include industrial 
products which remain in board or block form such as ties, cants, crane 
mat material and pallet stock or products which are transformed from 
boards or blocks of lumber into other products

[[Page 32495]]

such as furniture, tight cooperage, cabinetry, and constructed pallets.

Hardwood Lumber Value-Added Product Manufacturer

    USDA is proposing to modify the term ``hardwood lumber value-added 
product manufacturer'' as defined in the November 2013 proposed rule in 
proposed Sec.  1211.15 to include not only entities that kiln dry but 
also entities that air dry green hardwood lumber. This modification is 
needed to address questions raised by commenters regarding how air 
dried lumber would be handled under the proposed program.
    Thus, the term hardwood lumber value-added product manufacturer 
would mean a person who operates a sawmill to manufacture hardwood 
lumber value-added products (the hardwood lumber may be air dried or 
kiln dried), or a person who operates a kiln to dry hardwood lumber 
that is then used to manufacture hardwood lumber value-added products.

Hardwood Lumber Value-Added Products

    USDA is proposing to modify the term ``hardwood lumber value-added 
products'' as defined in the November 2013 proposed rule in proposed 
Sec.  1211.16 to exclude industrial products. This modification is 
being proposed in response to comments received requesting that 
industrial products be excluded from the proposed program.
    Thus, the term hardwood lumber value-added products would mean 
products which remain in the general shape of hardwood lumber boards, 
but have undergone additional processing beyond surfacing or cutting to 
a particular size. Hardwood lumber value-added products would include 
products such as solid wood unfinished strip flooring, all-sides 
surfaced boards, finger-jointed strips ripped to width, and moldings. 
For purposes of this Order, hardwood lumber value-added products would 
not include industrial products which remain in board or block form 
such as ties, cants, crane mat material, and pallet stock or products 
which are transformed from boards or blocks of lumber into other 
products, such as furniture, tight cooperage, cabinetry, and 
constructed pallets. Further, it would not include multi-component or 
further manufactured products such as furniture, cabinets, cabinet 
doors, prefinished or engineered flooring, pallets, or dimension or 
glued components for cabinets or furniture.

Manufacturer

    USDA is proposing to modify the term ``manufacturer'' as defined in 
the November 2013 proposed rule in proposed Sec.  1211.22 to mean any 
person who is engaged in the business of manufacturing covered hardwood 
lumber in the United States as defined in this Order. The definition as 
proposed in the 2013 proposed rule included the term ``domestic'' which 
appeared to cause some confusion regarding whether imports were covered 
under the proposed program. USDA is proposing to revise the definition 
for the purpose of clarity.

Sale

    USDA is proposing to modify the term ``sale'' as defined in the 
November 2013 proposed rule in proposed section 1211.31 to address 
questions posed regarding whether the proposed program was assessing 
the commodity at the appropriate point in production. The definition as 
proposed in the November 2013 proposed rule linked a sale to the dollar 
value of covered hardwood purchased rather than the dollar value of 
covered hardwood sold. USDA is proposing to modify this definition 
based on comments received.
    Thus, the term sale for purposes of calculating assessments, would 
mean the total dollar value of hardwood lumber, hardwood lumber 
products, hardwood lumber value-added products, or hardwood plywood 
that are sold from a hardwood lumber manufacturer or hardwood plywood 
manufacturer. Sales, for purposes of the assessment, would not include 
freight or discounts, and brokered sales would not be included within 
the meaning of the sale.

Hardwood Lumber and Hardwood Plywood Promotion, Research and 
Information Board

Nominations and Appointments

    USDA is proposing to modify the initial nomination procedures for 
the first Board as specified in the November 2013 proposed rule in 
proposed paragraph (a) of Sec.  1211.42. The November 2013 proposed 
rule provides that the BRC solicit potential nominees and submit the 
nominations to the Secretary. Some commenters noted the importance of 
trying to ensure that the nomination process is highly publicized so 
that interested persons are aware of the process. In response, USDA is 
proposing to modify this section to require the BRC and USDA to work 
together to publicize the nomination process so that eligible 
candidates are aware of the opportunity to serve on the Board.

Assessments

    USDA is proposing to modify portions of the assessment provisions 
as specified in the November 2013 proposed rule. Specifically, 
paragraph (a) of Sec.  1211.52 regarding assessments would be revised 
to clarify that assessments would be applicable to hardwood plywood and 
hardwood lumber, both in its green (rough) form and as it is kiln dried 
or air dried to create hardwood lumber products and hardwood lumber 
value-added products. The reference to air dried was omitted in the 
November 2013 proposed rule. This modification is needed to address 
questions raised by commenters regarding how air dried lumber would be 
handled under the proposed program.
    USDA is also proposing to modify paragraph (b) of Sec.  1211.52 as 
specified in the November 2013 proposed rule in an effort to clarify 
how covered hardwood would be assessed under the program. USDA received 
many comments during the comment period with regard to the assessment 
section. Many commenters opined that the calculations were complicated 
and may not be workable.
    USDA is proposing to simplify the table used as an illustration in 
Sec.  1211.52(b) by omitting references to descriptions of products and 
using instead the terms defined in the proposed program. The table 
would read as follows:

 
------------------------------------------------------------------------
                                                    Allowable deductions
      Covered hardwood           Assessment rate             \1\
------------------------------------------------------------------------
Hardwood lumber.............  $1/$1,000 in sales..  N/A.
Hardwood lumber products....  $1/$1,000 in sales..  --dollar value of
                                                     green hardwood
                                                     lumber purchases.

[[Page 32496]]

 
Hardwood lumber value-added   $0.75/$1,000 in       --dollar value of
 products.                     sales of value-       green hardwood
                               added products plus   lumber purchases.
                               $1.00 per $1,000 in
                               sales of green (G/
                               AD/KD) hardwood
                               lumber.
Hardwood plywood............  $3/$1,000 in sales..  N/A.
------------------------------------------------------------------------
\1\ The deductions are necessary to take into account assessments
  already paid on green (G/AD/KD) hardwood lumber purchased by the
  manufacturer to make the product or value-added product.

    The table would also be revised to clarify that the assessment rate 
for hardwood lumber value-added products includes $0.75 per $1,000 in 
sales of value added products, plus $1.00 per $1,000 in sales of green 
(G/AD/KD) hardwood lumber, minus the dollar value of the green (G/AD/
KD) hardwood lumber purchases used to make the products.
    USDA is also proposing to clarify the remainder of Sec.  1211.52(b) 
that explains in narrative form how the assessments are computed 
depending on the type of covered hardwood. The proposed paragraphs 
would read as follows:
    (1) Hardwood lumber manufacturers that cut raw, green hardwood logs 
into hardwood lumber or kiln dry or air dry hardwood lumber that can be 
further processed into products would pay at the rate of $1.00 per 
$1,000 in sales of green (G/AD/KD) hardwood lumber;
    (2) Hardwood lumber manufacturers that manufacture hardwood lumber 
products would pay at a rate of $1.00 per $1,000 in sales of hardwood 
lumber products minus the dollar value of green (G/AD/KD) hardwood 
lumber purchases;
    (3) Hardwood lumber value-added product manufacturers would pay a 
rate of $0.75 per $1,000 in sales of hardwood lumber value-added 
products, plus $1.00 per $1,000 in sales of green (G/AD/KD) hardwood 
lumber, minus the dollar value of the green hardwood lumber purchases 
(G/AD/KD); and
    (4) Hardwood plywood manufacturers would pay at the rate of $3.00 
per $1,000 in sales of hardwood plywood lumber.
    (5) Brokered sales of hardwood lumber or hardwood lumber products 
would be excluded from the calculation of assessments.
    (6) Vertically integrated manufacturers that manufacture hardwood 
lumber, then transfer the lumber from one business unit to another 
within the same company to manufacture non-assessed product, would pay 
assessments based on the fair market value of the non-assessed product, 
minus the fair market value of the green (G/AD/KD) hardwood lumber, 
minus the fair market value of the green (G/AD/KD) hardwood lumber 
purchases times $0.001. This formula is necessary to ensure that 
covered hardwood lumber in a vertically integrated company is 
appropriately assessed.

Exemptions From Assessment

    USDA is proposing to modify Sec.  1211.53 of the November 2013 
proposed rule pertaining to exemptions from assessment. Paragraph (b) 
of that section requires manufacturers who meet the exemption threshold 
to apply to the Board for an exemption certificate every year. 
Commenters raised concerns with the burden of this on small companies. 
Thus, USDA is proposing to revise this paragraph so that the exemption 
certificates issued by the Board remain valid for as long as the annual 
sales of the respective manufacturers remain below the exemption 
threshold. Paragraph (b) in Sec.  1211.53 is proposed to be modified 
accordingly. It should be noted that even with this modification to 
Sec.  1211.53, exempt manufacturers would still be required to keep 
records pursuant to Sec.  1211.71.

Organic Exemption From Assessment

    Section 1211.53(e) as proposed in the November 2013 proposed rule 
stated that to be eligible for an organic exemption, a hardwood lumber 
or hardwood plywood manufacturer who operated under a National Organic 
Program (NOP) (7 CFR part 205) system plan, could only manufacture and 
have annual sales of covered hardwood lumber eligible to be labeled as 
100 percent organic under the NOP and could not be a split operation.
    This limitation was based on legislative authority in section 501 
of the Federal Agriculture Improvement and Reform Act of 1996 (FAIR 
Act) (7 U.S.C. 7401), which established certain provisions for generic 
commodity promotion programs created under the various commodity 
promotion laws. Section 501 of the FAIR Act was previously amended in 
May 2002, by section 10607 of the Farm Security and Rural Investment 
Act (2002 Farm Bill) (Pub. L. 107-171) to exempt persons that produced 
and marketed solely 100 percent organic products, and who did not 
otherwise produce or market any conventional or nonorganic products, 
from the payment of an assessment for commodity promotion activities 
under a commodity promotion law.
    However, section 10004 of the Agricultural Act of 2014 (2014 Farm 
Bill) (Pub. L. 113-79) subsequently expanded the organic assessment 
exemption to apply to any agricultural commodity that is certified as 
``organic'' or ``100 percent organic'' as defined by NOP regardless of 
whether the person requesting the exemption also produces, handles, 
markets, or imports conventional or nonorganic products.
    USDA is proposing to modify Sec.  1211.53(e) so that it is 
consistent with the FAIR Act as amended by the 2014 Farm Bill. The 
exemption would then allow manufacturers of ``organic'' and ``100 
percent organic'' hardwood lumber certified under NOP, regardless of 
whether the person requesting the exemption also produces, handles, 
markets, or imports conventional or nonorganic products, to be eligible 
for an exemption from assessments.

Miscellaneous

Referenda

    USDA is proposing to modify the referenda criteria as specified in 
the November 2013 proposed rule in paragraphs (a) and (b) of proposed 
Sec.  1211.81 to require approval by a majority of manufacturers voting 
in the referendum who also represent a majority of the volume (board 
foot or equivalent) of covered hardwood, represented in the referendum 
and by those who, during a representative period determined by the 
Secretary, were engaged in the manufacturing of covered hardwood. Only 
manufacturers who would pay or paid assessments under the program 
(those with annual sales over the respective exemption threshold) would 
be eligible to vote in referenda.
    USDA is proposing this modification in response to the many 
comments received regarding the criteria proposed in the November 2013 
proposed rule. That rule proposed approval by a majority of the volume 
of covered

[[Page 32497]]

hardwood represented in the referendum. Several commenters expressed 
concern that this voting criteria favored large manufacturers and 
disadvantaged small companies.

Suspension and Termination

    USDA is also proposing to modify the paragraph (b) of Sec.  1211.82 
as specified in the November 2013 proposed rule regarding suspension 
and termination to mirror the proposed change to Sec.  1211.81 
regarding referenda. Section 1211.82(b) as proposed in the November 
2013 proposed rule would require the Secretary to suspend or terminate 
the proposed program at the end of a fiscal period based on a majority 
of the volume (board foot equivalent) of covered hardwood represented 
in a referendum by those who, during a representative period determined 
by the Secretary, were engaged in the manufacturing of covered 
hardwood.
    USDA is proposing to revise Sec.  1211.82(b) to require the 
Secretary to suspend or terminate the program if suspension or 
termination is favored by a majority of manufacturers voting in a 
referendum who represent a majority of the volume (board foot or 
equivalent) represented in the referendum, and who, during a 
representative period determined by the Secretary, were engaged in the 
manufacturing of covered hardwood. As explained in the section above 
titled Referenda, USDA is proposing this change in response to several 
comments received regarding the referenda criteria.

Questions Regarding Other Aspects of the Proposed Program

    USDA received numerous comments in response to the November 2013 
proposed rule that raised other substantive issues with regard to the 
proposed program. To address these issues, USDA is posing the following 
questions for comment. Responses should cite the number and subsection 
of the question being answered. USDA requests that commenters provide 
specific data, statistics, or any other evidence as appropriate upon 
which those comments are based.

1. Hardwood Plywood

    Several comments questioned the inclusion of hardwood plywood in 
the proposed program. Commenters opined that hardwood plywood competes 
with hardwood lumber, and that plywood is too different to include in 
the program. As USDA continues to evaluate the merits of including 
hardwood plywood in the proposed program, USDA seeks comments on the 
following questions:
    a. What are the benefits and the drawbacks for including hardwood 
lumber and hardwood plywood together in the same research and promotion 
program?
    b. How would the proposed program benefit the hardwood plywood 
sector of the industry?
    c. What types of promotion programs could be envisioned by the 
industry for hardwood plywood and how would this impact the hardwood 
lumber sector of the industry?
    d. What impact would excluding hardwood plywood have on the 
expected amount of assessments to be collected under the proposed 
program?
    e. What impact would excluding hardwood plywood have on the 
proposed Board structure?

2. Assessments

    As previously mentioned, several comments were received regarding 
the proposed assessment section. USDA has clarified the section in this 
supplemental proposed rule, but also seeks comments on the following 
questions:
    a. Should the assessment computation be revised? If so, how should 
it be revised and what would be the impact on the projected amount of 
assessments to be collected under the proposed program?
    b. Should the proposed rates of assessment on any of the four types 
of covered hardwood be revised? If so, to what level and what would be 
the impact on the projected amount of assessments to be collected under 
the proposed program?

Proposed Editorial Changes

    The proposed regulatory text contained in this document includes 
other changes to make the proposed program's provisions more clear and 
improve readability. The editorial changes are summarized in Table 1 
below.

                   Table 1--Proposed Editorial Changes
------------------------------------------------------------------------
 Description in revised
     regulatory text         Proposed revision          Explanation
   (proposed section)
------------------------------------------------------------------------
1211.9..................  Add the words           Clarify that the Board
                           ``recommended by the    would recommend a
                           Board'' after the       source to the
                           word ``source''.        Secretary for fair
                                                   market value.
1211.10.................  Add the word            Clarify that the terms
                           ``fiscal'' before the   ``fiscal period'' and
                           word ``year''.          ``fiscal year'' have
                                                   the same meaning.
1211.20.................  Add the abbreviation    Clarify that KD, a
                           ``KD'' to the term      common abbreviation
                           kiln dried.             used in the industry,
                                                   means kiln dried.
1211.41(e)(1) and (2)...  Substitute the term     Clarify that when the
                           ``manufactured'' for    Board reviews data
                           the term ``produced''   every 5-years to
                           and omit the phrase     assess whether
                           ``within the United     changes are necessary
                           States''.               to the Board's
                                                   structure to ensure
                                                   it continues to
                                                   reflect the
                                                   geographic
                                                   distribution of
                                                   covered hardwood, the
                                                   Board's review is on
                                                   covered hardwood
                                                   manufactured, and
                                                   that the review is
                                                   not limited to sales
                                                   within the United
                                                   States.
1211.42(a) and (b)(1)...  Change the phrase       Clarify the
                           ``nominees must have    eligibility
                           annual sales of more    requirements for
                           than $2 million of      Board membership.
                           covered hardwood
                           lumber or have annual
                           sales of more than
                           $10 million of
                           hardwood plywood per
                           fiscal year'' to
                           ``nominees must have
                           annual sales of $2
                           million or more of
                           hardwood lumber,
                           hardwood products,
                           and hardwood value-
                           added products, or
                           have annual sales of
                           $10 million or more
                           of hardwood plywood
                           per fiscal year''.

[[Page 32498]]

 
1211.53(d)..............  Change the phrase       Clarify the exemption
                           ``Hardwood lumber       thresholds under the
                           manufacturers who       proposed program.
                           received an exemption
                           certificate from the
                           Board but have annual
                           sales of more than $2
                           million or hardwood
                           plywood manufacturers
                           that have annual
                           sales of more than
                           $10 million during
                           the fiscal year'' to
                           ``Hardwood lumber
                           manufacturers who
                           received an exemption
                           certificate from the
                           Board but have annual
                           sales of $2 million
                           or more or hardwood
                           plywood manufacturers
                           that have annual
                           sales of $10 million
                           or more during the
                           fiscal year''.
1211.81(b)..............  Change the penultimate  Clarify when the
                           sentence from ``The     Secretary must
                           Secretary will also     conduct a referendum
                           conduct a referendum    under the proposed
                           if requested by the     program.
                           Board or by 10
                           percent or more of
                           all non-exempt
                           manufacturers paying
                           an assessment'' to
                           ``The Secretary will
                           also conduct a
                           referendum if
                           requested by the
                           Board or if requested
                           by 10 percent or more
                           of all manufacturers
                           eligible to vote in a
                           referendum''.
------------------------------------------------------------------------

Regulatory Flexibility Act Analysis

    In accordance with the Regulatory Flexibility Act (RFA) (5 U.S.C. 
601-612), AMS is required to examine the impact of the proposed rule on 
small entities. Accordingly, AMS has considered the economic impact of 
this action on such entities.\1\
---------------------------------------------------------------------------

    \1\ The complete Regulatory Flexibility Act Analysis appears in 
the proposed rule at 78 FR 68307 (Nov. 13, 2013).
---------------------------------------------------------------------------

    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 Small Business Administration defines, 
in 13 CFR part 121, small agricultural producers as those having annual 
receipts of no more than $750,000 and small agricultural service firms 
(manufacturers) as those having annual receipts of no more than $7.0 
million. According to information submitted by the proponents, it is 
estimated that there are 2,804 hardwood lumber manufacturers and 36 
hardwood plywood manufacturers in the United States. This number 
represents separate business entities and includes exempted and 
assessed entities under the Order; one business entity may include 
multiple sawmills. It is estimated that 85 to 90 percent of the 
manufacturers are small businesses.
    In this document, USDA is proposing to amend the November 2013 
proposed rule for a national research and promotion program for 
hardwood lumber and hardwood plywood. In that 2013 proposed rule, USDA 
requested comments on a proposed industry-funded Order for hardwood 
lumber and hardwood plywood that would be administered by a board of 
industry members selected by the Secretary. USDA is reopening the 
comment period only with respect to specific issues identified in this 
proposed rule. USDA is taking this action in response to the extensive 
comments received in response to that November 2013 proposed rule. The 
proposed program is authorized under the 1996 Act.
    Regarding the economic impact of the changes proposed in this 
supplemental notice, most of the changes are for the purpose of 
clarification and would have no economic impact on affected entities. 
These changes include the following: Adding a new term to Sec.  1211.11 
to define the term green air dried; clarifying the following terms--
green (G) hardwood lumber (Sec.  1211.11), hardwood lumber (Sec.  
1211.12), hardwood lumber manufacturer (Sec.  1211.13), hardwood lumber 
products, including an incorporation by reference (Sec.  1211.14), 
hardwood lumber value-added product manufacturer (Sec.  1211.15), 
manufacturer (Sec.  1211.22), and sale (Sec.  1211.31); modifying the 
initial nomination process to help ensure the process is appropriately 
publicized (Sec.  1211.42); clarifying the assessment section (Sec.  
1211.52); modifying the organic exemption so that it is consistent with 
the FAIR Act as amended by the 2014 Farm Bill (Sec.  1211.53(e)), and 
making the proposed editorial changes as previously specified in Table 
1 of this document. The proposed change to the referenda criteria in 
Sec.  1211.81 to require approval by a majority of those voting and by 
a majority of the volume represented in a referendum would also have no 
economic impact on affected entities.
    Proposed changes to three of the sections detailed in this 
supplemental notice would have some economic impact on the proposed 
program. Excluding industrial products from the terms hardwood lumber 
products in Sec.  1211.14 and hardwood lumber value-added product 
manufacturer in Sec.  1211.15 would likely reduce the amount of 
assessments collected under the program. We do not have information 
regarding to what extent assessments would be reduced or whether the 
number of entities covered under the proposed program would be reduced. 
Comments providing any information of the impact of this change on the 
amount of assessments anticipated under the proposed program or the 
number of entities expected to be covered under the program are 
requested.
    The third proposed change that would have an economic impact on the 
proposed program concerns Sec.  1211.53(b) regarding requirements for 
small manufacturers. USDA received many comments during the comment 
period regarding potential effects on small companies. Several 
commenters expressed concern that the proposed program would increase 
their costs and that the program would be burdensome to their 
businesses.
    In response to these comments, USDA is proposing to reduce the 
information collection requirements on small manufacturers. As 
previously mentioned in this document, Sec.  1211.53(b) of the November 
2013 proposed rule would require small manufacturers who meet the 
exemption threshold to apply to the Board annually for an exemption 
certificate. Commenters argued that this would be very burdensome on 
small companies. Thus, USDA is proposing to revise the

[[Page 32499]]

November 2013 proposed rule so that certificates of exemption issued by 
the Board remain valid for as long as the annual sales of the 
respective manufacturers remain below the exemption thresholds. USDA is 
proposing to revise Sec.  1211.53(b) accordingly, and is also proposing 
to revise the related reporting burden requirements as detailed in the 
section below titled Paperwork Reduction Act.

Paperwork Reduction Act

    In accordance with the PRA of 1995 (44 U.S.C. Chapter 35), in the 
November 2013 proposed rule, AMS announced its intention to request 
approval of new information collection and recordkeeping requirements 
for the proposed hardwood lumber and hardwood plywood program. In this 
proposal, AMS requests comments on proposed revisions to the 
information collection requirements contained in the November 2013 
proposed rule.
    Title: Hardwood Lumber and Hardwood Plywood Promotion, Research and 
Information Order.
    OMB Number: 0581-NEW.
    Expiration Date of Approval: 3 years from approval date.
    Type of Request: Proposed revisions to a new information collection 
for research and promotion programs.
    Abstract: AMS is proposing to amend the November 2013 proposed rule 
for a national research and promotion program for hardwood lumber and 
hardwood plywood that would reduce the information collection 
requirements under the proposed program. AMS is taking this action in 
response to comments received in response to the November 2013 proposed 
rule. The information collection requirements in the request are 
essential to carry out the intent of the 1996 Act.
    In the 2013 proposed rule, AMS proposed that manufacturers of 
hardwood lumber, hardwood products, and hardwood value-added products 
with annual sales of less than $2 million, and hardwood plywood 
manufacturers with annual sales of less than $10 million could submit a 
written request to the Board for an exemption from paying assessments. 
The request would be made on the form ``Application for Exemption from 
Assessments.''
    As mentioned previously, the November 2013 proposed rule stated 
that manufacturers would need to submit this form every year to the 
Board. Based on comments received, AMS is proposing to revise this 
requirement so that companies with annual sales under the exemption 
thresholds need only submit this form once to the Board.
    Information collection requirements that are included in this 
proposal include:

Application for Exemption From Assessments

    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 0.25 hour per manufacturer 
reporting on covered hardwood sold. Upon approval of an application, 
manufacturers would receive an exemption certification.
    Respondents: Hardwood lumber manufacturers and hardwood plywood 
manufacturers who have annual sales of less than $2 million or less 
than $10 million, respectively.
    Estimated Number of Respondents: 497 (1,490 for the first year, 0 
for the second year and potentially 2 annually thereafter).
    Estimated Number of Responses per Respondent: 0.10 (1 every 10 
years).
    Estimated Total Annual Burden on Respondents: 124 (372 hours for 
the first year, 0 hours for the second year and potentially 1 hour 
thereafter).
    Comments concerning the revised information collection requirements 
contained in this action should reference OMB No. 0581-NEW. In 
addition, the document number of this issue of the Federal Register 
should also be referenced. Comments should be sent to the same 
addresses referenced in the ADDRESSES section of this proposed rule.
    As with all Federal promotion programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies. Finally, USDA has 
not identified any relevant Federal rules that duplicate, overlap, or 
conflict with this proposed rule.
    AMS is committed to complying with the E-Government Act, to promote 
the use of the Internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.
    Comments are invited on: (a) Whether the proposed collection of 
information is necessary for the proper performance of functions of the 
proposed Order and USDA's oversight of the proposed Order, including 
whether the information would have practical utility; (b) the accuracy 
of USDA's estimate of the burden of the proposed collection of 
information including the validity of the methodology and assumptions 
used; (c) ways to enhance the quality, utility, and clarity of the 
information to be collected; and (d) ways to minimize the burden of the 
collection of information on those who are to respond, including the 
use of appropriate automated, electronic, mechanical, or other 
technological collection techniques or other forms of information 
technology.

Incorporation by Reference

    USDA is proposing to modify the term ``hardwood lumber products'' 
as defined in the November 2013 proposed rule in proposed section 
1211.14 to link the definition to a grade standard defined in the 
National Hardwood Lumber Association Rules for the Inspection of 
Hardwood & Cypress. The standard ``Grade 3A Common,'' effective January 
1, 2015, was discussed in greater detail in the section-by-section 
analysis. The standard can be obtained from the National Hardwood 
Lumber Association, PO Box 34518, Memphis, TN 38184; phone (901) 377-
1818; http://www.nhla.com/ and inspected at the Promotion and Economics 
Division, Fruit and Vegetable Program, AMS, USDA, 1400 Independence 
Avenue SW., Room 1406-S, Stop 0244, Washington, DC 20250-0244; 
facsimile: (202) 205-2800.
    While the proposal set forth below has not received the approval of 
USDA, it is determined that the proposed Order, and the revisions 
proposed herein, is consistent with and would effectuate the purposes 
of the 1996 Act.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposal. Thirty-days is deemed appropriate because 
this proposal supplements a November 2013 proposed rule for a national 
promotion program for hardwood lumber and plywood. All written comments 
received in response to this proposed rule by the date specified will 
be considered prior to finalizing this action.
    The entire proposed Order is published for ease of reference.

List of Subjects in 7 CFR Part 1211

    Administrative practice and procedure, Advertising, Consumer 
information, Incorporation by reference, Marketing agreements, Hardwood 
lumber promotion, Hardwood plywood promotion, Reporting and 
recordkeeping requirements.

    For the reasons set forth in the preamble, it is proposed that 
title 7, chapter XI of the Code of Federal Regulations as proposed to 
be added on November 13, 2013 (78 FR 68298), be amended as follows:

[[Page 32500]]

PART 1211--HARDWOOD LUMBER AND HARDWOOD PLYWOOD PROMOTION, RESEARCH 
AND INFORMATION ORDER

Subpart A--Hardwood Lumber and Hardwood Plywood Promotion, Research and 
Information Order

Definitions

Sec.
1211.1 Act.
1211.2 Blue Ribbon Committee.
1211.3 Board.
1211.4 Brokered sale.
1211.5 Concentration yard.
1211.6 Conflict of interest.
1211.7 Covered hardwood.
1211.8 Department or USDA.
1211.9 Fair market value.
1211.10 Fiscal period or fiscal year.
1211.11 Green air dried (G/AD) and Green (G) hardwood lumber.
1211.12 Hardwood lumber.
1211.13 Hardwood lumber manufacturer.
1211.14 Hardwood lumber products.
1211.15 Hardwood lumber value-added product manufacturer.
1211.16 Hardwood lumber value-added products.
1211.17 Hardwood plywood.
1211.18 Hardwood plywood manufacturer.
1211.19 Information.
1211.20 Kiln dried.
1211.21 Market or marketing.
1211.22 Manufacturer.
1211.23 Manufacturing.
1211.24 Member.
1211.25 Order.
1211.26 Part and subpart.
1211.27 Person.
1211.28 Programs, plans and projects.
1211.29 Promotion.
1211.30 Research.
1211.31 Sale.
1211.32 Secretary.
1211.33 State.
1211.34 Suspend.
1211.35 Terminate.
1211.36 Transfer.
1211.37 United States.

Hardwood Lumber and Hardwood Plywood Promotion, Research and 
Information Board

1211.41 Establishment and membership.
1211.42 Nominations and appointments.
1211.43 Term of office.
1211.44 Removal and vacancies.
1211.45 Procedure.
1211.46 Reimbursement and attendance.
1211.47 Powers and duties of the Board.
1211.48 Prohibited activities.

Expenses and Assessments

1211.50 Budget and expenses.
1211.51 Financial statements.

Assessments

1211.52 Assessments.
1211.53 Exemption from assessment.

Promotion, Research and Information

1211.60 Programs, plans, and projects.
1211.61 Independent evaluation.
1211.62 Patents, copyrights, trademarks, information, publications, 
and product formulations.

Reports, Books and Records

1211.70 Reports.
1211.71 Books and records.
1211.72 Confidentiality of information.

Miscellaneous

1211.80 Right of the Secretary.
1211.81 Referenda.
1211.82 Suspension and termination.
1211.83 Proceedings after termination.
1211.84 Effect of termination or amendment.
1211.85 Personal liability.
1211.86 Separability.
1211.87 Amendments.
1211.88 OMB control number.

    Authority: 7 U.S.C. 7411-7425, 7 U.S.C. 7401.

Subpart A--Hardwood Lumber and Hardwood Plywood Promotion, Research 
and Information Order


Sec.  1211.1  Act.

    Act means the Commodity Promotion, Research and Information Act of 
1996 (7 U.S.C. 7411-7425), and any amendments thereto.


Sec.  1211.2  Blue Ribbon Committee.

    Blue Ribbon Committee means the 14-member committee representing 
businesses that manufacture hardwood lumber, hardwood lumber products, 
hardwood lumber value-added products and hardwood plywood in the United 
States formed to pursue an industry promotion, research and information 
program.


Sec.  1211.3  Board.

    Board or Hardwood Lumber and Hardwood Plywood Promotion, Research 
and Information Board means the administrative body established 
pursuant to this Part. It may be referred to by such other name as the 
Board recommends and the Secretary approves.


Sec.  1211.4  Brokered sale.

    Brokered sale is a sale in which product is purchased from a person 
and resold to a different person without taking physical possession of 
the product.


Sec.  1211.5  Concentration yard.

    Concentration yard means an operation with kilns that purchases 
hardwood lumber from sawmills, or wholesalers by means of a brokered 
sale, and may grade, sort, dry and/or surface the hardwood lumber. It 
excludes distribution yards that do not have kilns.


Sec.  1211.6  Conflict of interest.

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


Sec.  1211.7  Covered hardwood.

    Covered hardwood means hardwood lumber, hardwood lumber products, 
hardwood lumber value-added lumber products, and hardwood plywood to 
which an assessment has been or may be levied pursuant to the Order.


Sec.  1211.8  Department or USDA.

    Department or USDA means the United States Department of 
Agriculture or any officer or employee of the Department to whom 
authority has been delegated, or to whom authority may hereafter be 
delegated, to act for the Secretary.


Sec.  1211.9  Fair market value.

    Fair market value means, with respect to covered hardwood, the 
value of the hardwood lumber as determined by a source recommended by 
the Board and approved by the Secretary.


Sec.  1211.10  Fiscal period or fiscal year.

    Fiscal period or fiscal year means a calendar year from January 1 
through December 31, or such other period as recommended by the Board 
and approved by the Secretary.


Sec.  1211.11  Green air dried (G/AD) and Green (G) hardwood lumber.

    Greed air dried (G/AD) means green hardwood lumber or hardwood 
lumber that has been dried by exposure to air in a yard or shed, 
without artificial heat.
    Green (G) hardwood lumber means hardwood lumber that has not been 
kiln dried or air dried.


Sec.  1211.12  Hardwood lumber.

    Hardwood lumber means timber from the wood of a cypress tree or a 
deciduous, broad-leafed tree (including but not limited to aspen, 
birch, cypress, poplar, yellow poplar, maple, cherry, walnut and oak) 
grown in the United States that has been sawn into boards or blocks by 
a sawmill in the United States.


Sec.  1211.13  Hardwood lumber manufacturer.

    Hardwood lumber manufacturer means a person who cuts raw, green 
hardwood logs into hardwood lumber or hardwood lumber products or a 
person who kiln dries or air dries green hardwood lumber to create 
hardwood lumber, hardwood lumber products or hardwood lumber value-
added products.


Sec.  1211.14  Hardwood lumber products.

    Hardwood lumber products means hardwood G/AD/KD lumber that has

[[Page 32501]]

been transformed into products that remain boards meeting or exceeding 
the level of ``Grade 3A Common'' in the Rules for the Inspection of 
Hardwood & Cypress, effective January 1, 2015 (http://nhla.com/rulesbook), or equivalent proprietary standard, as recommended by the 
Board and approved by the Secretary. For purposes of this Order, 
hardwood lumber does not include industrial products which remain in 
board or block form such as ties, cants, crane mat material, and pallet 
stock or products which are transformed from boards or blocks of lumber 
into other products such as furniture, tight cooperage, cabinetry, and 
constructed pallets. ``Grade 3A Common,'' Rules for the Inspection of 
Hardwood & Cypress, effective January 1, 2015, is incorporated by 
reference into this section with the approval of the Director of the 
Federal Register under 5 U.S.C. 552(a) and 1 CFR part 51. To enforce 
any edition other than that specified in this section, USDA must 
publish notice of change in the Federal Register and the material must 
be available to the public. All approved material is available for 
inspection at the Promotion and Economics Division, Fruit and Vegetable 
Program, AMS, USDA, 1400 Independence Avenue SW., Room 1406-S, Stop 
0244, Washington, DC 20250-0244; facsimile: (202) 205-2800, and is 
available from National Hardwood Lumber Association, P.O. Box 34518, 
Memphis, TN 38184; phone (901) 377-1818; http://www.nhla.com/. It is 
also available for inspection at the National Archives and Records 
Administration (NARA). For information on the availability of this 
material at NARA, call (202) 741-6030 or go to http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.


Sec.  1211.15  Hardwood lumber value-added product manufacturer.

    Hardwood lumber value-added product manufacturer means a person who 
operates a sawmill to manufacture hardwood lumber value-added products 
(the hardwood lumber may be air dried or kiln dried), or a person who 
operates a kiln to dry hardwood lumber that is then used to manufacture 
hardwood lumber value-added products.


Sec.  1211.16  Hardwood lumber value-added products.

    Hardwood lumber value-added products means products which remain in 
the general shape of hardwood lumber boards, but have undergone 
additional processing beyond surfacing or cutting to a particular size. 
Hardwood lumber value-added products include products such as solid 
wood unfinished strip flooring, all-sides surfaced boards, finger-
jointed strips ripped to width, and moldings. For purposes of this 
Order, hardwood lumber value-added products does not include industrial 
products which remain in board or block form such as ties, cants, crane 
mat material, and pallet stock or products which are transformed from 
boards or blocks of lumber into other products, such as furniture, 
tight cooperage, cabinetry, and constructed pallets. Further, it does 
not include multi-component or further manufactured products such as 
furniture, cabinets, cabinet doors, prefinished or engineered flooring, 
pallets, or dimension or glued components for cabinets or furniture.


Sec.  1211.17  Hardwood plywood.

    Hardwood plywood means a panel product, the decorative face of 
which is made from hardwood veneer intended for interior use composed 
of an assembly of layers or plies of veneer or veneers in combination 
with lumber core, particleboard, medium density fiberboard core, 
hardboard core, or special core or special back material joined with an 
adhesive.


Sec.  1211.18  Hardwood plywood manufacturer.

    Hardwood plywood manufacturer means a person who utilizes hardwood 
logs, veneer, or lumber to create hardwood plywood.


Sec.  1211.19  Information.

    Information means activities and programs that are designed to 
develop new markets, marketing strategies, increase market efficiency, 
and activities that are designed to enhance the image of hardwood 
lumber, hardwood lumber products, hardwood lumber value-added products, 
and hardwood plywood and the forests from which it comes in the United 
States. These include:
    (a) Consumer information, which means any action taken to provide 
information to the general public regarding the harvesting, 
consumption, use, and care of covered hardwood; and
    (b) Industry information, which means any action taken to provide 
information and programs that will lead to the development of new 
markets, new marketing strategies, or increased efficiency for covered 
hardwood, and activities to enhance the image of the hardwood lumber, 
hardwood lumber products, hardwood lumber value-added products, and 
hardwood plywood industries.


Sec.  1211.20  Kiln dried (KD).

    Kiln dried (KD) means hardwood lumber that has been seasoned in a 
kiln by means of artificial heat, humidity and circulation.


Sec.  1211.21  Market or marketing.

    Marketing means the sale or other disposition of covered hardwood 
in any channel of commerce. To market means to sell or otherwise 
dispose of covered hardwood in any channel of commerce.


Sec.  1211.22  Manufacturer.

    Manufacturer means any person who is engaged in the business of 
manufacturing covered hardwood lumber in the United States as defined 
in this Order.


Sec.  1211.23  Manufacturing.

    Manufacturing means the process of transforming logs into hardwood 
lumber, or the process of creating hardwood lumber products, hardwood 
lumber value-added products, or hardwood plywood.


Sec.  1211.24  Member.

    Member means a member appointed by the Secretary to the Hardwood 
Lumber and Hardwood Plywood Promotion, Research and Information Board.


Sec.  1211.25  Order.

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


Sec.  1211.26  Part and subpart.

    Part means the Hardwood Lumber and Hardwood Plywood Promotion, 
Research and Information Order and all rules, regulations, and 
supplemental orders issued pursuant to the Act and the Order. The order 
shall be a subpart of such part.


Sec.  1211.27  Person.

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


Sec.  1211.28  Programs, plans and projects.

    Programs, plans and projects mean those research, promotion and 
information programs, plans, or projects established pursuant to this 
Order.


Sec.  1211.29  Promotion.

    Promotion means any action taken to present a favorable image of 
hardwood lumber, hardwood lumber products, hardwood lumber value-added 
products, and hardwood plywood to the general public and to any and all

[[Page 32502]]

consumers and those who influence consumption of covered hardwood 
lumber with the intent of improving the perception, markets and 
competitive position of covered hardwood lumber and stimulating sales 
of covered hardwood lumber.


Sec.  1211.30  Research.

    Research means any type of test, study, or analysis designed to 
advance the knowledge, image, desirability, use, marketability, 
production, product development, or quality of covered hardwood. The 
term research includes the communication of the results of any research 
conducted under this Part.


Sec.  1211.31  Sale.

    For purposes of calculating the assessment, provided for in section 
1211.52, a sale means the total dollar value of hardwood lumber, 
hardwood lumber products, hardwood lumber value-added products, or 
hardwood plywood that are sold from a hardwood lumber manufacturer or 
hardwood plywood manufacturer. Sales, for purposes of the assessment, 
do not include freight or discounts. Brokered sales are not included 
within the meaning of sale.


Sec.  1211.32  Secretary.

    Secretary means the Secretary of Agriculture of the United States 
or any officer or employee of the Secretary to whom the Secretary has 
delegated the authority to act on behalf of the Secretary.


Sec.  1211.33  State.

    State means any of the several 50 States of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, and the 
territories and possessions of the United States.


Sec.  1211.33  Suspend.

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


Sec.  1211.34  Terminate.

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


Sec.  1211.35  Transfer.

    Transfer means when a vertically integrated manufacturing plant in 
which post-manufacturing operations turn an assessed hardwood product 
(covered hardwood) into a non-assessed product while remaining under 
the control of the same person.


Sec.  1211.36  United States or U.S.

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

Hardwood Lumber and Hardwood Plywood Promotion, Research and 
Information Board


Sec.  1211.41  Establishment and membership.

    (a) There is hereby established a Hardwood Lumber and Hardwood 
Plywood Promotion, Research and Information Board composed of 28 
members who are either owners or employees of hardwood lumber 
manufacturers or hardwood plywood manufacturers who are appointed by 
the Secretary. Of the 28 members, 22 shall be hardwood lumber 
manufacturers, one shall be a hardwood lumber value-added manufacturer 
who manufactures flooring products, and five shall be hardwood plywood 
manufacturers.
    (b) The five members designated for hardwood plywood manufacturers 
shall be appointed as follows:
    (1) Three members shall be from the States that are west of the 
Mississippi River; and
    (2) Two members shall be from the States that are east of the 
Mississippi River.
    (c) The one member designated as a hardwood lumber value-added 
products manufacturer of covered hardwood flooring products shall be 
appointed from nominees from any State within the United States.
    (d) The remaining 22 members designated as hardwood lumber 
manufacturers, (exclusive of the hardwood flooring manufacturer) shall 
be apportioned as follows:
    (1) Six members from District 1, which consists of the States of 
Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, 
New Jersey, New York, Pennsylvania, Rhode Island, Vermont, and West 
Virginia and the District of Columbia;
    (2) Four members from District 2, which consists of the States of 
Florida, Georgia, North Carolina, South Carolina, Virginia, the 
Commonwealth of Puerto Rico, and the U.S. territories;
    (3) Five members from District 3, which consists of the States of 
Alabama, Arkansas, Louisiana, Mississippi, Oklahoma, Tennessee, and 
Texas;
    (4) Six members from District 4, which consists of the States of 
Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, 
Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin; 
and
    (5) One member from District 5, which consists of the States of 
Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, 
New Mexico, Oregon, Utah, Washington, and Wyoming.
    (e) Once every five years, the Board will review data, including 
assessment records, government, industry statistics, and other reliable 
data, concerning the manufacturing of covered hardwood lumber. The 
Board shall:
    (1) Review the geographical distribution of the volume of covered 
hardwood manufactured and sold by hardwood lumber, hardwood lumber 
products, hardwood lumber value-added products, and hardwood plywood 
manufacturers; and
    (2) If warranted, recommend to the Secretary the reapportionment of 
the Board membership to reflect changes in the geographical 
distribution of the volume of covered hardwood manufactured and sold by 
hardwood lumber, hardwood lumber products, hardwood lumber value-added 
products, and hardwood plywood manufacturers. Any changes in Board 
composition shall be implemented by the Secretary through rulemaking.


Sec.  1211.42  Nominations and appointments.

    (a) Initial nominations will be submitted to the Secretary by the 
Blue Ribbon Committee (BRC). Before considering any nominations, the 
BRC shall publicize the nomination process, using trade press or other 
means it deems appropriate, and shall outreach to all manufacturers 
with annual sales of $2 million or more of hardwood lumber, hardwood 
lumber products, and hardwood lumber value-added products and with 
annual sales of $10 million or more of hardwood plywood per fiscal year 
in order to generate nominees that reflect the different operations 
within the hardwood lumber industry. The BRC may use regional caucuses, 
mail or other methods to elicit potential nominees. The BRC and USDA 
shall work together to publicize the nomination process so that 
eligible candidates are aware of the opportunity to serve on the Board. 
The BRC shall submit the nominations to the Secretary and recommend two 
nominees for each Board position specified. In addition, nominees for 
the initial Board may be submitted directly to the Secretary if 
accompanied by the signatures of at least 20 persons who pay 
assessments or will pay assessments under the Order. From the 
nominations submitted by the BRC or directly to the Secretary, the 
Secretary shall select the members of the Board.

[[Page 32503]]

    (b) Subsequent nominations shall be conducted as follows:
    (1) The Board shall outreach to all segments of the hardwood lumber 
industry. The Board may also solicit nominees using existing regional 
organizations. Initial and subsequent nominees must have annual sales 
of $2 million or more of hardwood lumber, hardwood products, and 
hardwood value-added products, or have annual sales of $10 million or 
more of hardwood plywood per fiscal year;
    (2) Manufacturer nominees may provide the Board a short background 
statement outlining their qualifications to serve on the Board;
    (3) Manufacturers who manufacture covered hardwood lumber in more 
than one district may seek nomination only in the district in which 
they manufacture the majority of the volume of their covered hardwood 
lumber. The names of hardwood manufacturer nominees shall be placed on 
a ballot by district. The ballots along with the background statements 
shall be mailed to manufacturers in each respective district for a 
vote. Manufacturers who manufacture covered hardwood lumber in more 
than one district may only vote in the district in which they 
manufacture the majority of the volume of their covered hardwood 
lumber. The Board must submit nominations to the Secretary at least six 
months before the new Board term begins. Before considering any 
nominations, the Board shall publicize the nomination process, using 
trade press or other means it deems appropriate, and shall outreach to 
all sizes of manufacturers of covered hardwood in order to generate 
nominees that reflect the different size of operations within the 
hardwood lumber industry. The Board may use district caucuses or other 
methods to elicit potential nominees. The votes shall be tabulated for 
each district with the nominee receiving the highest number of votes at 
the top of the list in descending order by vote. The top two candidates 
for each position shall be submitted to the Secretary.
    (4) No two members shall be employed by a single corporation, 
company, partnership, or any other legal entity; and
    (5) The Board may recommend to the Secretary modifications to its 
nomination procedures as it deems appropriate. Any such modifications 
shall be implemented through rulemaking by the Secretary.


Sec.  1211.43  Term of office.

    (a) With the exception of the initial Board, each Board member will 
serve a three-year term or until the Secretary selects his or her 
successor. Each term of office shall begin on January 1 and end on 
December 31, and no member may serve more than two consecutive terms, 
excluding any term of office less than three years.
    (b) For the initial Board, the terms of Board members shall be 
staggered for two, three, and four years so that the terms of 
approximately one-third of the Board expire in any given year.


Sec.  1211.44  Removal and vacancies.

    (a) In the event that any member of the Board ceases to own or work 
for a hardwood lumber or hardwood plywood manufacturer, or ceases to do 
business in the district he or she represents, such position shall 
become vacant.
    (b) The Board may recommend to the Secretary that a member be 
removed from office if the member consistently refuses to perform his 
or her duties or engages in dishonest acts or willful misconduct. The 
Secretary shall remove the member if he or she finds that the Board's 
recommendation shows adequate cause. Further, without recommendation of 
the Board, a member may be removed by the Secretary upon showing of 
adequate cause, including the failure by a member to submit reports or 
remit assessments required under this part. If the Secretary determines 
that each member's continued service would be detrimental to the 
achievement of the purposes of the Act.
    (c) If a position becomes vacant, nominations to serve the 
unexpired term will be handled using the nominations process set forth 
in this Order. If the unexpired term has less than six months 
remaining, the Secretary may leave the position vacant.


Sec.  1211.45  Procedure.

    (a) At a Board meeting, a majority of the Board members duly 
appointed by the Secretary will constitute a quorum. A member attending 
the meeting by telephone or other electronic means shall be considered 
present for purposes of quorum.
    (b) All votes at meetings of the Board and any committees will be 
cast in person or by electronic voting, including by telephone. Voting 
by proxy will not be allowed.
    (c) 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 more 
than 50 percent of the Board members present or participating by 
electronic means.
    (d) The Board must give members and the Secretary timely notice of 
all Board and committee meetings.
    (e) In lieu of voting at a properly convened meeting, and when, in 
the opinion of the Board's chairperson, such action is considered 
necessary, the Board may take action by mail, telephone, electronic 
mail, facsimile, or any other means of communication. Any action taken 
under this procedure is valid only if:
    (1) All members and the Secretary are notified and the members are 
provided the opportunity to vote;
    (2) A majority of the members vote in favor of the action; and
    (3) All votes are promptly confirmed in writing and recorded in the 
Board minutes.


Sec.  1211.46  Reimbursement and attendance.

    Board members will serve without compensation. Board members will 
be reimbursed for reasonable travel expenses, as approved by the Board, 
which they incur when performing Board business.


Sec.  1211.47  Powers and duties of the Board.

    The Board shall have the following powers and duties:
    (a) To administer this Order in accordance with its terms and 
conditions and to collect assessments;
    (b) To develop and recommend to the Secretary for approval such 
bylaws, rules, and regulations as may be necessary for the functioning 
of the Board and for administering the Order, including activities 
authorized to be carried out under the Order;
    (c) To meet, organize, and select from among its members a 
chairperson and such other officers as the Board deems necessary;
    (d) To create any committees, including an executive committee, or 
subcommittees, as the Board deems necessary from its membership. 
Subcommittees may include individuals other than Board members;
    (e) To employ or contract persons, other than the Board 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 or to contract such services from an organization and to enter 
into contracts or agreements in order to carry out authorized 
functions;
    (f) To provide appropriate notice of meetings to the industry and 
USDA and keep minutes of such meetings;
    (g) To develop and administer programs, plans, and projects and 
enter into contracts or agreements, which must be approved by the 
Secretary before becoming effective, for promotion, research and 
information, including consumer and industry information, research and 
advertising

[[Page 32504]]

designed to strengthen hardwood lumber industry's position in the 
marketplace and to maintain, develop, and expand markets for covered 
hardwood lumber. The payment of costs for such activities shall be with 
funds collected pursuant to the Order, including funds collected 
pursuant to section 1211.50(f). Each contract or agreement shall 
provide that:
    (1) The contractor or agreeing party shall develop and submit to 
the Board a program, plan, or project together with a budget that 
specifies the cost to be incurred to carry out the activity;
    (2) The contractor or agreeing party shall keep accurate records of 
all of its transactions and make periodic reports to the Board of 
activities conducted, submit accounting for funds received and 
expended, and make such other reports as the Secretary or Board may 
require;
    (3) The Secretary may audit the records of the contracting or 
agreeing party periodically; and
    (4) Any subcontractor who enters into a contract with a Board 
contractor and who receives or otherwise uses funds allocated by the 
Board shall be subject to the same provisions as the contractor.
    (h) To prepare and submit to the Secretary for approval 60 calendar 
days in advance of the beginning of a fiscal period, rates of 
assessment and a budget of the anticipated expenses to be incurred in 
the administration of the Order, including the probable cost of each 
promotion, research and information activity proposed to be developed 
or carried out by the Board;
    (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 act as an intermediary between the Secretary and any 
manufacturer;
    (k) To cause its books to be audited by a certified public 
accountant at the end of each fiscal year and at such other times as 
the Secretary may request, and to submit a report of the audit to the 
Secretary;
    (l) To recommend changes to the assessment rate as provided in this 
part;
    (m) To borrow funds necessary for startup expenses of the Order;
    (n) To receive, investigate, and report to the Secretary complaints 
of violations of the Order, including investigating complaints of 
violation, and ensuring consistent, uniform and appropriate application 
of this Part;
    (o) To consider and recommend to the Secretary new products and the 
application of the assessment to such products.
    (p) To recommend to the Secretary such amendments to the Order as 
the Board considers appropriate;
    (q) To periodically prepare and make public and to make available 
to manufacturers reports of its activities and, at least once each 
fiscal period, to make public an accounting of funds received and 
expended;
    (r) To invest assessment funds collected but not yet disbursed 
pursuant to this Part. Investments shall be in any interest-bearing 
account or certificate of deposit of a bank that is a member of the 
Federal Reserve System, obligations fully guaranteed as to principal 
and interest by the United States or any agency of the United States, 
or general obligations of any State or any political subdivision of a 
State.
    (s) To work to achieve an effective, continuous, and coordinated 
program of promotion, research, consumer information, evaluation, and 
industry information designed to strengthen the hardwood lumber, 
hardwood lumber products, hardwood lumber value-added products, and 
hardwood plywood industry's position in the market; maintain and expand 
existing markets and uses for covered hardwood; and to carry out 
programs, plans, and projects designed to provide maximum benefits to 
the hardwood lumber, hardwood lumber products, hardwood lumber value-
added products and hardwood plywood industries.


Sec.  1211.48  Prohibited activities.

    The Board may not engage in, and shall prohibit the employees and 
agents of the Board from engaging in:
    (a) Any action that is a conflict of interest;
    (b) Using funds collected by the Board under the Order to undertake 
any action for the purpose of influencing legislation or governmental 
action or policy, by local, state, national, and foreign governments, 
other than recommending to the Secretary amendments to this Part; and
    (c) No program, plan, or project including advertising shall be 
false or misleading, or disparaging to another agricultural commodity.

Expenses and Assessments


Sec.  1211.50  Budget and expenses.

    (a) At least 60 days before the beginning of each fiscal year, and 
as may be necessary thereafter, the Board shall prepare and submit to 
the Secretary a budget for the fiscal year covering its anticipated 
expenses and disbursements in administering the Order. Each such 
budget, which must be approved by the Secretary before it is 
implemented, shall include:
    (1) A statement of objectives and strategy for each program, plan, 
or project developed and approved by the Board;
    (2) A summary of anticipated revenue, with comparative data or at 
least one preceding year (except for the initial budget);
    (3) A summary of proposed expenditures for each program, plan, or 
project; and
    (4) Staff and administrative expense breakdowns, with comparative 
data for at least one preceding year (except for the initial budget).
    (b) Each budget shall provide adequate funds to defray its proposed 
expenditures and to provide for a reserve.
    (c) Subject to this section, any amendment or addition to an 
approved budget must be approved by the Department, including shifting 
funds from one program, plan, or project to another. Shifts of funds 
which do not cause an increase in the Board's approved budget and which 
are consistent with governing bylaws need not have prior approval by 
the Secretary.
    (d) The Board may incur such expenses, including provision for a 
reserve, as are reasonable and likely to be incurred for maintenance 
and functioning of the Board, and to enable it to exercise its powers 
and perform its duties in accordance with the provisions of the Order. 
Such expenses shall be paid from funds received by the Board.
    (e) With 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 year of operation by the 
Board.
    (f) The Board may accept voluntary contributions, and is encouraged 
to seek other appropriate funding sources to carry out activities 
authorized by the Order. Such contributions shall be free from any 
encumbrances by the donor and the Board shall retain complete control 
of their use. The Board may receive funds from outside sources (i.e., 
Federal or State grants, Foreign Agricultural Service funds), with 
approval of the Secretary, for specific authorized projects.
    (g) The Board shall reimburse the Secretary for all expenses the 
Secretary

[[Page 32505]]

incurs in the implementation, administration, and supervision of this 
Part, including all costs relating to the conducting of a referendum in 
connection with this Part.
    (h) For fiscal years beginning three years after the establishment 
of the Board, the Board may not expend for administration, maintenance, 
and functioning of the Board in any fiscal year an amount that exceeds 
15 percent of the assessments and other income received by the Board 
for that fiscal year. Reimbursements to the Secretary required under 
this section are excluded from this limitation on spending.
    (i) The Board may establish an operating monetary reserve and may 
carry over to subsequent fiscal periods excess funds in any reserve so 
established: Provided, That, the funds in the reserve do not exceed one 
fiscal period's budget of expenses. Subject to approval by the 
Secretary, such reserve funds may be used to defray any expenses 
authorized under this subpart.
    (j) Pending disbursement of assessments and all other revenue under 
a budget approved by the Secretary, the Board may invest assessments 
and all other revenues collected under this part 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) Interest bearing accounts or certificates of deposit of 
financial institutions that are members of the Federal Reserve System;
    (4) Obligations fully guaranteed as to principal interest by the 
United States; or
    (5) Other investments as authorized by the Secretary.


Sec.  1211.51  Financial statements.

    (a) Upon the Secretary's request, the Board shall prepare and 
submit financial statements to the Secretary on a monthly or quarterly 
basis, or at any other time as requested by the Secretary. Each such 
financial statement shall include, but not be limited to, a balance 
sheet, income statement, and expense budget. The expense budget shall 
show expenditures during the time period covered by the report, year-
to-date expenditures, and the unexpended budget.
    (b) Each financial statement shall be submitted to the Secretary 
within 30 days after the end of the time period to which it applies.
    (c) The Board shall submit to the Secretary an annual financial 
statement within 90 days after the end of the fiscal year to which it 
applies.

Assessments


Sec.  1211.52  Assessments.

    (a) The Board's programs and expenses shall be paid by assessments 
on manufacturers of covered hardwood, other income of the Board, and 
other funds available to the Board. This section authorizes hardwood 
lumber manufacturers to be assessed on hardwood plywood and hardwood 
lumber, both in its green (rough) form and as it is kiln dried or air 
dried to create hardwood lumber products and hardwood lumber value-
added products.
    (b) Subject to the exemption specified in Sec.  1211.53, each 
manufacturer shall pay the following assessment:

------------------------------------------------------------------------
                                                    Allowable deductions
      Covered hardwood           Assessment rate             \1\
------------------------------------------------------------------------
Hardwood lumber.............  $1/$1,000 in sales..  N/A.
Hardwood lumber products....  $1/$1,000 in sales..  --dollar value of
                                                     hardwood lumber
                                                     purchases.
Hardwood lumber value-added   $0.75/$1,000 in       --dollar value of
 products.                     sales of value-       hardwood lumber
                               added product plus    purchases.
                               $1.00 per $1,000 in
                               sales of green (G/
                               AD/KD) hardwood
                               lumber.
Hardwood plywood............  $3/$1,000 in sales..  N/A.
------------------------------------------------------------------------
\1\ The deductions are necessary to take into account assessments
  already paid on green (G/AD/KD) hardwood lumber purchased by the
  manufacturer to make the product or value-added product.

    (1) Hardwood lumber manufacturers that cut raw, green hardwood logs 
into hardwood lumber or kiln dry or air dry hardwood lumber that can be 
further processed into products shall pay at the rate of $1.00 per 
$1,000 in sales of green (G/AD/KD) hardwood lumber;
    (2) Hardwood lumber manufacturers that manufacture hardwood lumber 
products shall pay at a rate of $1.00 per $1,000 in sales of hardwood 
lumber products minus the dollar value of green (G/AD/KD) hardwood 
lumber purchases;
    (3) Hardwood lumber value-added product manufacturers shall pay a 
rate of $0.75 per $1,000 in sales of hardwood lumber value-added 
products, plus $1.00 per $1,000 in sales of green (G/AD/KD) hardwood 
lumber, minus the dollar value of the green (G/AD/KD) hardwood lumber 
purchases; and
    (4) Hardwood plywood manufacturers shall pay at the rate of $3.00 
per $1,000 in sales of hardwood plywood lumber.
    (5) Brokered sales of hardwood lumber or hardwood lumber products 
are excluded from the calculation of assessments.
    (6) Vertically integrated manufacturers that manufacture hardwood 
lumber, then transfer the lumber from one business unit to another 
within the same company to manufacture non-assessed product, shall pay 
assessments based on the fair market value of the non-assessed product, 
minus the fair market value of the green (G/AD/KD) hardwood lumber, 
minus the fair market value of the green (G/AD/KD) hardwood lumber 
purchases times $0.001. This formula is necessary to ensure that 
covered hardwood lumber in a vertically integrated company is 
appropriately assessed.
    (c) Assessments shall be remitted to the Board on a quarterly 
basis, accompanied by a form that the Board shall develop, no later 
than thirtieth calendar day of the month following the end of the 
quarter in which the covered hardwood lumber was marketed. Any 
information collected pursuant to the collection of assessments, shall 
be kept confidential as specified in Sec.  1211.72 so that no Board 
member or person subject to assessment shall have access to such 
information.
    (d) The assessment rate specified in this section may be changed 
only upon a recommendation by the Board to the Secretary for 
implementation through rulemaking.
    (e) If the assessment is not paid within 60 calendar days of the 
date it is due, the Board may impose a late payment charge and 
interest. The late payment charge and rate of interest shall be 
recommended by the Board to the Secretary through rulemaking. Persons 
failing to remit total assessments due in a timely manner may also be 
subject to actions under federal debt collection procedures.
    (f) The Board may accept advance payment of assessments that will 
be credited toward any amount for which that person may become liable. 
The Board may not pay interest on any advance payment.

[[Page 32506]]

    (g) If the Board is not in place by the date the first assessments 
are to be collected, the Secretary shall receive assessments and invest 
them on behalf of the Board, and shall pay such assessments and any 
interest earned to the Board when it is established.
    (h) The Board may authorize other organizations to collect 
assessments on its behalf with the approval of the Secretary.


Sec.  1211.53  Exemption from assessment.

    (a) Small hardwood lumber manufacturers and small hardwood plywood 
manufacturers shall be exempt from paying assessments as follows:
    (1) Hardwood lumber manufacturers, hardwood lumber product 
manufacturers, and hardwood lumber value-added products manufacturers 
with sales of any assessed product combined to be less than $2 million 
are exempt from paying assessments.
    (2) Hardwood plywood manufacturers with annual sales of less than 
$10 million are exempt from paying assessments.
    (b) Hardwood lumber manufacturers and hardwood plywood 
manufacturers who meet the exemption threshold shall apply for an 
exemption, on a form provided by the Board. The certificate of 
exemption shall remain valid for as long as the annual sales of the 
respective hardwood lumber manufacturer and hardwood plywood 
manufacturer remain under the exemption threshold. Upon receipt of an 
application for exemption, the Board shall determine whether an 
exemption may be granted. The Board will then issue, if deemed 
appropriate, a certificate of exemption to each manufacturer who is 
eligible to receive one. Each person shall retain a copy of the 
certificate of exemption. The Board may develop additional procedures 
to administer this exemption as appropriate. Such procedures shall be 
implemented through rulemaking by the Secretary.
    (c) Hardwood lumber manufacturers who did not apply to the Board 
for an exemption and have annual sales of less than $2 million or 
hardwood plywood manufacturers that have annual sales of less than $10 
million during the fiscal year shall receive a refund from the Board 
for the applicable assessments within 30 calendar days after the end of 
the fiscal year. Board staff shall determine the assessments paid and 
refund the amount due to the manufacturer accordingly.
    (d) Hardwood lumber manufacturers who received an exemption 
certificate from the Board but have annual sales of $2 million or more 
or hardwood plywood manufacturers that have annual sales of $10 million 
or more during the fiscal year shall pay the Board the applicable 
assessments owed on the annual sales of the covered hardwood within 30 
calendar days after the end of the fiscal year and submit any necessary 
reports to the Board pursuant to Sec.  1211.70.
    (e) Organic. (1) A hardwood lumber or hardwood plywood manufacturer 
who operates under an approved National Organic Program (7 CFR part 
205) (NOP) organic handling system plan may be exempt from the payment 
of assessments under this part provided that:
    (i) Only agricultural products certified as ``organic'' or ``100 
percent organic'' (as defined in the NOP) are eligible for exemption;
    (ii) The exemption shall apply to all certified ``organic'' or 
``100 percent organic'' (as defined in the NOP) products of a 
manufacturer regardless of whether the agricultural commodity subject 
to the exemption is manufactured by a person that also manufactures 
conventional or non-organic agricultural products of the same 
agricultural commodity as that for which the exemption is claimed;
    (iii) The manufacturer maintains a valid certificate of organic 
operation as issued under the Organic Foods Production Act of 1990 (7 
U.S.C. 6501-6522) (OFPA) and the NOP regulations issued under OFPA (7 
CFR part 205); and
    (iv) Any manufacturer so exempted shall continue to be obligated to 
pay assessments under this part that are associated with any 
agricultural products that do not qualify for an exemption under this 
section.
    (2) To apply for exemption under this section, an eligible 
manufacturer shall submit a request to the Board on an Organic 
Exemption Request Form (Form AMS-15) at any time during the year 
initially, and annually thereafter on or before the start of the fiscal 
year, as long as the manufacturer continues to be eligible for the 
exemption.
    (3) A manufacturer request for exemption shall include the 
following:
    (i) The applicant's full name, company name, address, telephone and 
fax numbers, and email address (optional);
    (ii) Certification that the applicant maintains a valid certificate 
of organic operation issued under the OFPA and the NOP;
    (iii) Certification that the applicant manufactures organic 
products eligible to be labeled ``organic'' or ``100 percent organic'' 
under the NOP;
    (iv) A requirement that the applicant attach a copy of their 
certificate of organic operation issued by a USDA-accredited certifying 
agent under the OFPA and the NOP;
    (v) Certification, as evidenced by signature and date, that all 
information provided by the applicant is true; and
    (vi) Such other information as may be required by the Board, with 
the approval of the Secretary.
    (4) If a manufacturer complies with the requirements of this 
section, the Board will grant an assessment exemption and issue a 
Certificate of Exemption to the manufacturer within 30 calendar days. 
If the application is disapproved, the Board will notify the applicant 
of the reason(s) for disapproval within the same timeframe.
    (5) The exemption will apply immediately following the issuance of 
a Certificate of Exemption.
    (f) The Board may develop additional procedures to administer this 
exemption as appropriate. Such procedures shall be implemented through 
rulemaking by the Secretary.

Promotion, Research and Information


Sec.  1211.60  Programs, plans, and projects.

    (a) The Board shall develop and submit to the Secretary for 
approval programs, plans, and projects authorized under this Part. Such 
programs, plans, or projects shall provide for the establishment, 
issuance, implementation, and administration of appropriate programs 
for promotion, research and information with respect to covered 
hardwood.
    (b) No program, plan, or project shall be implemented prior to its 
approval by the Secretary. Once the Secretary approves a program, plan, 
or project, the Board shall take appropriate steps to implement it.
    (c) The Board shall periodically review or evaluate each program, 
plan, or project implemented under this subpart to ensure that it 
contributes to an effective program of promotion, research or 
information. If the Board finds that any such program, plan, or project 
does not contribute to an effective program of promotion, research or 
information, then the Board shall terminate such program, plan, or 
project.


Sec.  1211.61  Independent evaluation.

    Within four years of the first Board meeting and at least once 
every five years thereafter, the Board shall authorize and fund an 
independent evaluation of the effectiveness of the Order and programs 
conducted by the Board pursuant to the Act. The Board shall submit to 
the Secretary and make available to the public the results of

[[Page 32507]]

each periodic independent evaluation conducted under this section.


Sec.  1211.62  Patents, copyrights, trademarks, information, 
publications, and product formulations.

    Patents, copyrights, trademarks, information, publications, and 
product formulations developed through the use of funds received by the 
Board under this part 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, sales, leasing, 
franchising, or other uses of such patents, copyrights, trademarks, 
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 by the Secretary. Upon termination of 
this part, Sec.  1211.83 shall apply to determine disposition of all 
such property.

Reports, Books and Records


Sec.  1211.70  Reports.

    (a) Each hardwood lumber manufacturer and hardwood lumber plywood 
manufacturer will be required to provide periodically to the Board 
staff such information as the Board, with the approval of the 
Secretary, may require. Such information may include, but not be 
limited to:
    (1) The name, address and telephone number of the manufacturer;
    (2) The annual sales of covered hardwood lumber; and
    (3) The annual sales of covered hardwood lumber for which 
assessments were paid.
    (b) Such information shall accompany the collected payment of 
assessments on a quarterly basis specified in Sec.  1211.52.


Sec.  1211.71  Books and records.

    Each manufacturer, including those exempt under Sec.  1211.53, 
shall maintain any books and records necessary to carry out the 
provisions of this subpart and regulations issued thereunder, including 
such records as are necessary to verify any required reports. Such 
books and records must be made available during normal business hours 
for inspection by the Board's or Secretary's employees or agents. A 
manufacturer must maintain the books and records for two years beyond 
the fiscal period to which they apply.


Sec.  1211.72  Confidentiality of information.

    All information obtained from books, records, or reports under the 
Act, this subpart and the regulations issued thereunder shall be kept 
confidential by all persons, including all employees and former 
employees of the Board, all officers and employees and former officers 
and employees of contracting and subcontracting agencies or agreeing 
parties having access to such information. Such information shall not 
be available to Board members or other manufacturers. Only those 
persons having a specific need for such information solely 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 by them, and then only in a judicial 
proceeding or administrative hearing brought at the direction, or at 
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 section shall be deemed to prohibit:
    (a) The issuance of general statements based upon the reports of 
the number of persons subject to this subpart or statistical data 
collected therefrom, which statements do not identify the information 
furnished by any person; and
    (b) The publication, by direction of the Secretary, of the name of 
any person who has been adjudged to have violated this part, together 
with a statement of the particular provisions of this part violated by 
such person.

Miscellaneous


Sec.  1211.80  Right of the Secretary.

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


Sec.  1211.81  Referenda.

    (a) Initial referendum. The Order shall not become effective unless 
the Order is approved by a majority of manufacturers voting in the 
referendum who also represent a majority of the volume (board foot or 
equivalent) of covered hardwood lumber represented in the referendum 
and who, during a representative period determined by the Secretary, 
were engaged in the manufacturing of covered hardwood lumber.
    (b) Subsequent referenda. Five years after the initial meeting of 
the Board, the Secretary shall hold a referendum to determine whether 
manufacturers favor the continuation of the Order. Thereafter, the 
Secretary shall conduct a referendum at least every seven years. The 
Order shall continue if it is favored by a majority of manufacturers 
voting in the referendum who also represent a majority of the volume 
(board foot or equivalent) of covered hardwood lumber represented in 
the referendum and who, during a representative period determined by 
the Secretary, were engaged in the manufacturing of covered hardwood 
lumber. The Secretary will also conduct a referendum if requested by 
the Board or if requested by 10 percent or more of all manufacturers 
eligible to vote in a referendum. In addition, the Secretary may hold a 
referendum at any time.


Sec.  1211.82  Suspension and termination.

    (a) The Secretary shall suspend or terminate this part or subpart 
or a provision thereof, if the Secretary finds that this 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 
subpart or a provision thereof is not favored by persons voting in a 
referendum conducted pursuant to the Act.
    (b) The Secretary shall suspend or terminate this subpart at the 
end of the fiscal period whenever the Secretary determines that its 
suspension or termination is favored by a majority of manufacturers 
voting in the referendum who represent a majority of the volume (board 
foot or equivalent) represented in the referendum, and who, during a 
representative period determined by the Secretary, have been engaged in 
the manufacturing of covered hardwood lumber.
    (c) If, as a result of a referendum the Secretary determines that 
this subpart is not approved, the Secretary shall:
    (1) Not later than one hundred and eighty (180) calendar days after 
making the determination, suspend or terminate, as the case may be, the 
collection of assessments under this subpart.
    (2) As soon as practical, suspend or terminate, as the case may be, 
activities under this subpart in an orderly manner.


Sec.  1211.83  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 then in the possession 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:

[[Page 32508]]

    (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 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 the trustees, to such person or persons as the 
Secretary may direct; and
    (4) Upon request of the Secretary, execute such assignments or 
other instruments necessary and appropriate to vest in such persons 
title and right to all 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 upon the trustees.
    (d) Any residual funds not required to defray the necessary 
expenses of liquidation shall be turned over to the Secretary to be 
disposed of, to the extent practical, to one or more hardwood lumber 
and hardwood plywood industry organizations in the interest of 
continuing hardwood lumber and hardwood plywood promotion, research and 
information programs.


Sec.  1211.84  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination or amendment of this part or any subpart 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 part; or
    (b) Release or extinguish any violation of this part; or
    (c) Affect or impair any rights or remedies of the United States, 
or of the Secretary, or of any other persons with respect to any such 
violation.


Sec.  1211.85  Personal liability.

    No member or employee 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 commission or omission, as such member or employee, 
except for acts of dishonesty or willful misconduct.


Sec.  1211.86  Separability.

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


Sec.  1211.87  Amendments.

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


Sec.  1211.88  OMB control number.

    The control numbers assigned to the information collection 
requirements of this part by the Office of Management and Budget 
pursuant to the Paperwork Reduction Act of 1995, 44 U.S.C. chapter 35, 
are OMB control number 0505-0001 (Board nominee background statement) 
and OMB control number 0581-NEW.

    Dated: June 1, 2015.
Erin Morris,
Associate Administrator.
[FR Doc. 2015-13719 Filed 6-8-15; 8:45 am]
 BILLING CODE 3410-02-P