94-32066. Fresh Cut Flowers and Fresh Cut Greens Promotion and Information Order  

  • [Federal Register Volume 59, Number 249 (Thursday, December 29, 1994)]
    [Unknown Section]
    [Page 0]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 94-32066]
    
    
    [[Page Unknown]]
    
    [Federal Register: December 29, 1994]
    
    
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    DEPARTMENT OF AGRICULTURE
    Agricultural Marketing Service
    
    7 CFR Part 1208
    
    [FV-94-708FR]
    RIN: 0581-AB20
    
     
    
    Fresh Cut Flowers and Fresh Cut Greens Promotion and Information 
    Order
    
    AGENCY: Agricultural Marketing Service, USDA.
    
    ACTION: Final rule.
    
    -----------------------------------------------------------------------
    
    SUMMARY: The U.S. Department of Agriculture (Department) is issuing the 
    Fresh Cut Flowers and Fresh Cut Greens Promotion and Information Order 
    (Order). The Order establishes a national industry-funded promotion and 
    information program for fresh cut flowers and fresh cut greens (cut 
    flowers and greens). The Order requires handlers to pay an assessment 
    based on their gross sales of cut flowers and greens, regardless of the 
    country of origin, to the National PromoFlor Council (Council). 
    Composed of floral industry representatives, who are wholesalers, 
    producers, importers, and retailers, the Council will use the 
    assessments collected to conduct a generic promotion and information 
    program to maintain, expand, and develop markets for cut flowers and 
    greens.
    
    EFFECTIVE DATE: December 29, 1994.
    
    FOR FURTHER INFORMATION CONTACT: Arthur Pease, Research and Promotion 
    Branch, Fruit and Vegetable Division, AMS, USDA, P.O. Box 96456, Room 
    2535-S, Washington, DC 20090-6456, telephone (202) 720-6930.
    
    SUPPLEMENTARY INFORMATION: This final Order is issued under the Fresh 
    Cut Flowers and Fresh Cut Greens Promotion and Information Act of 1993 
    [Pub. L. 103-190] approved December 14, 1993, hereinafter referred to 
    as the Act.
        Prior documents in this proceeding:
        Proposed Rule--Fresh Cut Flowers and Fresh Cut Greens Promotion and 
    Information Order published June 28, 1994, (59 FR 33400).
        This final rule has been issued in conformance with Executive Order 
    12866 and the Office of Management and Budget has determined that it is 
    a ``significant regulatory action''.
        This rule has been reviewed under Executive Order 12778, Civil 
    Justice Reform. It is not intended to have retroactive effect. This 
    rule does not preempt any State or local laws, regulations, or 
    policies, unless they present an irreconcilable conflict with this 
    rule.
        The Act provides that administrative proceedings must be exhausted 
    before parties may file suit in court. Under Sec. 8 of the Act, after 
    an order is implemented, a person subject to the order may file a 
    petition with the Secretary stating that the order or any provision of 
    the order, or any obligation imposed in connection with the order, is 
    not in accordance with law and requesting a modification of the order 
    or an exemption from the order. The petitioner is afforded the 
    opportunity for a hearing on the petition. After such hearing, the 
    Secretary will make a ruling on the petition. The Act provides that the 
    district courts of the United States in any district in which a person 
    who is a petitioner resides or carries on business are vested with 
    jurisdiction to review the Secretary's ruling on the petition, if a 
    complaint for that purpose is filed within 20 days after the date of 
    the entry of the ruling.
    
    Regulatory Flexibility Act
    
        Pursuant to requirements set forth in the Regulatory Flexibility 
    Act (RFA), the Administrator of the Agricultural Marketing Service 
    (AMS) has considered the economic impact of this final action on small 
    entities.
        The purpose of the RFA is to fit regulatory actions to the scale of 
    business subject to such actions in order that small businesses will 
    not be unduly or disproportionately burdened.
        Only those wholesale handlers, retail distribution centers, 
    producers, and importers who have annual sales of $750,000 or more of 
    cut flowers and greens and sell those products to exempt handlers, 
    retailers, or consumers are considered to be qualified handlers and 
    assessed under the order. There are approximately 900 wholesalers, 150 
    importers, and 200 domestic producers who are qualified handlers.
        The majority of these qualified handlers are classified as small 
    businesses. As defined by the Small Business Administration [13 CFR 
    121.601] small agricultural service firms, which includes the qualified 
    handlers who are required to pay assessments under the order, have been 
    defined as those having annual receipts of less than $5 million.
        Statistics reported by the National Agricultural Statistics Service 
    show that 1993 sales at wholesale of domestic cut flowers and greens 
    total approximately $535 million while the value of imports during 1993 
    was approximately $382 million. The leading States in the United States 
    producing cut flowers and greens, by wholesale value, are California, 
    which produces approximately 60 percent of the domestic crop, followed 
    by Florida, Colorado, Washington, New York, Hawaii, and Pennsylvania. 
    Major countries exporting cut flowers and greens into the United 
    States, by value, are Columbia, which accounts for approximately 60 
    percent, followed by The Netherlands, Mexico, and Costa Rica.
        During the first three years the order is in effect, the rate of 
    assessment may not exceed 0.5 percent of the gross sales of cut flowers 
    and greens. After the order has been in effect for three years, the 
    assessment rate may be increased or decreased by no more that 0.25 
    percent each year when recommended by two-thirds of the members of the 
    Council and approved by the Secretary. However, at no time may the 
    assessment rate exceed 1.0 percent of gross sales of cut flowers and 
    greens. Notice and comment rulemaking will be required to change the 
    assessment rate.
        Although the maximum assessment collection is expected to total 
    about $10 million annually, the economic impact of a 1.0 percent or 
    less assessment on each qualified handler will not be significant.
        While the proposed order imposes certain recordkeeping requirements 
    on qualified handlers, information required under the order can be 
    compiled from records currently maintained. Thus, any added burden 
    resulting from increased recordkeeping is not expected to be 
    significant when compared to the benefits that will accrue to such 
    businesses. The order's provisions have been carefully reviewed, and 
    every effort has been made to minimize any unnecessary recordkeeping 
    costs or requirements.
        Although the order imposes some additional costs and requirements 
    on qualified handlers, it is anticipated that the program under the 
    order will help to increase the demand for cut flowers and greens. 
    Therefore, any additional costs are expected to be offset by the 
    benefits derived from expanded markets and sales benefiting all 
    segments of the floral industry. Accordingly, the Administrator of the 
    AMS has determined that the provisions of the order will not have a 
    significant economic impact on a substantial number of small entities.
    
    Paperwork Reduction Act
    
        In accordance with the Paperwork Reduction Act of 1980 [44 U.S.C. 
    Chapter 35] the forms, reporting, and recordkeeping requirements 
    included in this action were submitted for approval to the Office of 
    Management and Budget (OMB) and assigned OMB No. 0581-0168, except for 
    Council member nominee information sheets that were previously assigned 
    OMB No. 0505-0001. On the effective date of the program, the 
    information collection burden will be combined with the other AMS 
    research and promotion programs included under assigned OMB No. 0581-
    0093. Information collection requirements that are included in this 
    action are:
        (1) A periodic report by each qualified handler who handles cut 
    flowers and greens. The estimated maximum number of respondents is 
    1,250, each submitting an average of 12 responses per year, with an 
    estimated average reporting burden of 10 minutes per response.
        (2) An application requesting postponement of assessment payments. 
    The estimated maximum number of respondents is 25, each submitting an 
    average of 4 responses per year, with an estimated average reporting 
    burden of 20 minutes per response.
        (3) A refund application form for persons who desire a refund of 
    their assessments. The estimated maximum number of respondents is 210, 
    each submitting 1 response prior to the initial referendum, or an 
    annual average of 70 respondents, with an estimated average reporting 
    burden of 15 minutes per response.
        (4) An exemption application for wholesale handlers, retail 
    distribution centers, producers, and importers of cut flowers and 
    greens with gross annual sales under $750,000 and will be exempt from 
    assessments and recordkeeping requirements. The estimated number of 
    respondents for this form is 500, each submitting one response per 
    year, with an estimated average burden of 15 minutes per response.
        (5) A referendum ballot to be used to determine whether qualified 
    handlers favor continuance of the order. The estimated number of 
    respondents completing this ballot will be 1,250, each submitting one 
    response approximately every 3 years, or an annual average of 417 
    respondents, with an estimated average reporting burden of 15 minutes 
    per response.
        (6) A nominee background statement form for Council member and 
    alternate member nominees. The estimated number of respondents for this 
    form is 50 for the initial nominations to the Council and approximately 
    17 respondents annually thereafter. Each respondent will submit one 
    response per year, with an estimated average reporting burden of 30 
    minutes per response.
        (7) A requirement to maintain records sufficient to verify reports 
    submitted under the order. The estimated maximum number of 
    recordkeepers necessary to comply with this requirement is 1,750 each 
    of whom will have an estimated annual burden of 15 minutes.
    
    Background
    
        The Act provides for the establishment by the Secretary of 
    Agriculture (Secretary), of a national cut flowers and greens promotion 
    and consumer information program which would be funded by assessments 
    levied on qualified handlers not to exceed 1 percent of their gross 
    sales of cut flowers and greens.
        The Act authorized the submission of proposals for a cut flowers 
    and greens promotion and consumer information order by industry 
    organizations or any other interested person affected by the Act. As 
    required by the Act, the order provides for the establishment of a 
    National PromoFlor Council. The Council is to be composed of 25 voting 
    members: 14 members representing qualified wholesale handlers of 
    domestic and imported cut flowers and greens; 3 members representing 
    producers who are qualified handlers of cut flowers and greens; 3 
    members representing importers who are qualified handlers of cut 
    flowers and greens; 3 members representing traditional retailers of cut 
    flowers and greens; and 2 members representing persons who produce cut 
    flowers and greens. Each member shall have an alternate.
        The Department issued a news release on February 17, 1994, 
    requesting proposals for an initial order or portions of an initial 
    order.
        In response to that news release an entire proposed order was 
    submitted by the PromoFlor Organizing Group, Inc. (POG). POG, an 
    industry group that was created and sponsored by 68 floral industry 
    organizations and more than 700 floral businesses developed a proposal 
    for the promotion and consumer information order for cut flowers and 
    greens. Once the Order is issued, POG will cease to exist except for 
    the period of time it takes for it to serve as the initial election 
    committee to assist in the nomination of members and alternates to the 
    initial Council. After the Council is appointed, the Council will be 
    the election committee.
        The Department published POG's proposed order as Proposal I. The 
    Department modified POG's proposed text (1) to make it consistent with 
    the Act and other similar national research and promotion programs 
    supervised by the Department, (2) to simplify the language and format 
    of some provisions, and (3) to add certain sections necessary for 
    proper administration of the Order by the Department.
        In addition to the proposal from POG, the Department published 
    proposals addressing the nomination of the Council's retailer members 
    and defining ``traditional retailer'' and ``traditional retail florist 
    organization'', submitted by Florists' Transworld Delivery Association 
    (FTD) (Proposal II) and the Produce Marketing Association (PMA) 
    (Proposal III). All three proposals were published in the June 28, 
    1994, issue of the Federal Register (59 FR 33400).
        Interested persons were invited to submit comments on the proposals 
    until August 29, 1994. Fifty-eight comments were received during the 
    comment period. One comment was received after the comment period.
        There were two comments opposing the Order, one submitted by a 
    retail florist who, among other objections, opposed it on the basis of 
    government interference in private business. The other comment in 
    opposition to the proposed Order was filed by the Office of Chief 
    Counsel for Advocacy of the U.S. Small Business Administration (OCCA) 
    which raised a number of issues including the constitutionality of the 
    Order.
        Of the 58 comments received, four expressed the opinion that the 
    phrase ``traditional retail florist'' be restricted only to those 
    independently owned retail florists whose major business is selling cut 
    flowers and greens to consumers. In contrast, the proposed definition 
    of ``traditional retailer'' submitted by PMA (Proposal III) included 
    all retailers whose primary business is the sale of floral products 
    including those who have a specific department dedicated to the sale of 
    such products. These four commenters also wanted to exclude from 
    Council membership, those marketers of cut flowers and greens who sell 
    floral items through supermarkets and department stores. In the same 
    vein, FTD argued that there should be a distinction between traditional 
    retail florists and other retail florists. It is FTD's position that 
    the traditional retail florists, should be small independent ``mom and 
    pop'' shops selling to consumers. The organization also stated that it 
    is the largest organization representing this segment of the floral 
    industry with 23,000 members, and as a cooperative, it should have a 
    permanent position on the Council. FTD further argued that other types 
    of retailers such as mass marketers and non-traditional retailers are 
    not as attuned to consumers and marketing programs as the retail 
    florists represented by FTD.
        Thirty-one comments expressed concern that too limited an 
    interpretation of the term ``traditional retail florist'' would 
    preclude a large segment of the floral industry from being represented 
    on the Council. In the United States, the so-called mass-marketers such 
    as supermarkets and other large merchandizing operations, represent 
    about 50 percent of the volume of flowers and greens sold and about 33 
    percent of the total dollar value of floral sales. These commenters 
    contend that the term ``traditional retail florist'' should be very 
    broad and should include any retailer whose primary business is the 
    sale of floral products, including cut flowers and greens, or has a 
    specific department dedicated to the sale of floral products including 
    cut flowers and greens.
        A total of thirty-six comments including PMA opposed the proposal 
    that FTD or any other wire service or organization be assigned a 
    permenant position representing retailers on the Council. The 
    commenters expressed views that retailers should not have to be 
    affiliated with a particular wire service affiliation or specific 
    organization but could contribute significantly to the floral 
    industry's promotional efforts and should be eligible to serve on the 
    Council. The commenters included floral organizations and businesses, 
    representing all segments of the floral industry from many different 
    areas of the country.
        After considering all of the comments received on the issues of 
    Council representation and the proper definition of ``traditional 
    retail florist'', it is determined that the term should be broadly 
    defined as proposed by PMA, and that the membership on the Council 
    should include as wide a spectrum as possible representing the retail 
    segment of the floral industry. The FTD proposal allotting one of the 
    Council member positions to FTD is not adopted. The Act already 
    requires that one position on the Council be represented by AFMC. 
    Having two of the three retailer positions on the Council allocated to 
    specific associations would significantly limit the representation by 
    other floral industry retail segments. However, this does not mean that 
    a FTD nominee could not be appointed to the Council by the Secretary. 
    Proposal III published in the June 28, 1994, issue of the Federal 
    Register is accepted and incorporated into the Order because it affords 
    a large cross-section of retailers an opportunity to serve on the 
    Council.
        Another comment made by FTD was that the uniform factor of 1.43 was 
    not high enough because it went further back in the channel of 
    distribution than the wholesalers selling to small retail florists. 
    This factor was recommended by the industry for those distribution 
    centers making non-sale transfers of fresh cut flowers and greens to 
    retail outlets and represents the markup on a sale from wholesaler to 
    retailer. This is equivalent to the same step in the marketing 
    distribution process that the traditional retailer described by FTD 
    uses when purchasing fresh cut flowers and greens from a wholesaler. 
    The sources used by wholesalers or distribution centers to acquire 
    fresh cut flowers and greens or the prices they pay should be 
    equivalent, because both would be expected to have the same access to 
    floral suppliers. Consequently, there are no actual differences as to 
    where in the marketing process assessments are levied.
        OCCA commented that in its view the Order is unconstitutional. We 
    disagree with this view. In addition, OCCA urged the Agricultural 
    Marketing Service (AMS) to perform a regulatory flexibility analysis. 
    AMS had already made the determination that a regulatory flexibility 
    analysis is not appropriate for a program of this nature and its 
    relatively small economic impact.
        OCCA also contended that the cost associated with recordkeeping and 
    the calculation of assessments due would be greater than AMS assumes. 
    The Department does not anticipate a significant increase in costs and 
    paperwork burden to those covered by the program because all of the 
    records required to be maintained under the Order are based on sales of 
    product or calculations based on the acquisition cost of product. These 
    types of records are normally kept by all businesses in the floral 
    industry, especially by wholesale handlers with annual sales of 
    $750,000 or more, and the calculation of assessments is a one step 
    procedure using such readily available records. Further, the industry 
    was provided 60 days to comment on all aspects of the proposed Order, 
    including the potential burden of calculating and paying assessments 
    and paperwork, and no individual, who would be a qualified handler 
    under the Order, expressed a concern in this area.
        OCCA further contended that AMS failed to take into account the 
    impact of the Order on small retail florists. As OCCA correctly stated, 
    retail florists are not assessed under the Order. However, it was 
    OCCA's position that wholesalers would pass on the assessment costs in 
    terms of higher prices. There is sufficient competition within the 
    wholesale floral industry with approximately 900 wholesale handlers, 
    150 importers, and 200 domestic producers who are considered to be 
    qualified handlers (those having annual sales of $750,000 or more) plus 
    an undetermined number of suppliers who are smaller than the qualified 
    handlers and who sell to the retail florists. Thus, we do not feel that 
    a one-half of one percent assessment at the wholesale level would 
    result in higher prices.
        OCCA also expressed concern with having POG serve as the initial 
    election committee, arguing that this would place too much power in the 
    hands of one segment of the industry. The POG represents a substantial 
    majority of the qualified handlers who would be paying assessments 
    under the program. This organization also has the knowledge and respect 
    of the floral industry necessary to perform this important function. 
    Balloting for nominees will be conducted by an independent certified 
    public accounting firm to ensure that the nominations are conducted in 
    an impartial manner. We believe that there is no reason to be concerned 
    by POG's role in the nominations process. As a matter of fact the 
    nomination process will be more efficient and less costly to the 
    industry if it is conducted as proposed.
        OCCA also recommended that FTD and PMA each be allocated a seat on 
    the Council. The Act requires that one position be assigned to the 
    American Floral Marketing Association. As we have already stated, it is 
    the Department's view that the retailer positions on the Council should 
    be open to as wide a retailer representation as possible so that no 
    segment of the retail floral industry is discriminated against. It 
    would be difficult to determine which organization has the most retail 
    members, and this action would further preclude other retailers, who 
    may not be members of the largest organization, from serving on the 
    Council. Therefore, the Order provision concerning these nominations 
    will remain as proposed.
        OCCA also commented on the need for referendum procedures. We are 
    aware that such procedures are needed and will promulgate those 
    procedures in advance of the referendum which is to be held no later 
    than 3 years after the Order is issued.
        OCCA questions the Act giving the Secretary of Agriculture 
    (Secretary), and more specifically the AMS which administers these 
    programs, latitude in determining whether the order tends to effectuate 
    the policy of the Act. However, this is consistent with the statutory 
    scheme.
        PMA also, recommended that nominations be limited to national 
    organizations. We are in agreement with this recommendation. The 
    acceptance of nominations only from national retail florists 
    organizations was already included in Sec. 1208.32(b) of the proposed 
    Order which is retained in the final Order. In addition, the definition 
    of ``traditional retail florists organization'' is accepted as proposed 
    in Proposal III, and that definition requires nationwide membership. 
    Further, PMA is in favor of keeping the two retailer seats that were 
    not designated for AFMC open to as large a segment of the floral 
    industry as possible. The provisions of this Order are also in 
    agreement with this recommendation.
        Fifteen comments did not address any specific issues or proposals 
    but indicated general support for the Order and the program.
        POG, which proposed an entire order for fresh cut flowers and 
    greens that was published in the June 28, 1994, issue of the Federal 
    Register as Proposal I, submitted a comment recommending that several 
    changes be made in the final Order.
        In Sec. 1208.10 of the proposed Order, POG believes that the 
    definition of the term `` gross sales price'' needs further 
    clarification. The definition in the proposal contained the phrase 
    ``total amount of the transaction in a sale of fresh cut flowers and 
    greens.'' Because there are numerous different methods used by 
    wholesalers, importers, and producers in pricing cut flowers and greens 
    in the industry, POG believes that further clarification is necessary 
    so that qualified handlers will not be confused when calculating 
    assessments due. Some qualified handlers invoice such charges as 
    boxing, sleeving, cooling, and delivery separately while others include 
    such charges in the price of the cut flowers and greens. Therefore, POG 
    contends that an equitable basis for determining what constitutes the 
    gross sales price, needs to be further explained in the Order to ensure 
    that all qualified handlers are aware of the basis for calculating 
    assessments. The Department accepts a change in the definition of 
    ``gross sales price'' in Sec. 1208.10 which includes other charges that 
    are normally associated with the pricing of cut flowers and greens but 
    placed the methodology for determining variations under the assessment 
    provisions in Sec. 1208.50.
        Minor clarification changes of the wording in Secs. 1208.16(a), 
    1208.18, 1208.18(a), and 1208.31(c) were accepted and incorporated in 
    the Order.
        POG recommended an amendment to Sec. 1208.31(h) which would change 
    the time period for conducting the nomination process from 90 days to 
    120 days before the terms of office begins and which would have 
    appointments made at least 30 days before the terms of office begin. 
    This recommendation is not adopted. The nomination process can begin at 
    any time, and the appointment process may or may not take the full 90 
    days. Incorporating the recommended change would restrict any 
    flexibility the Secretary has in the appointment process. Further, all 
    nominees submitted for appointment normally have prepared themselves 
    for assuming their member roles when accepting the nomination.
        POG also recommended a change in Sec. 1208.34(b) to eliminate the 
    exception that a person serving an initial term of office of two years 
    could only serve one additional 3-year term of office. This change 
    recommended by POG is denied on the basis that the Department believes 
    that for the sake of clarity it is necessary to specify that those 
    persons serving initial two-year terms of office are eligible to serve 
    one additional term of office on the Council.
        Changes in Secs. 1208.34(c) and (d) recommended by POG that the 
    wording describing when the terms of office begin for the initial 
    members of the Council be better clarified. Wording recommended by POG 
    for clarification of the provisions is accepted and incorporated in the 
    Order.
        POG's recommended change in Sec. 1208.36(b) that would change the 
    word ``cast'' to ``voting'' is unnecessary, and thus not adopted.
        The change POG recommended in Sec. 1208.42(b), which would add 
    another term ``postharvest physiology'' to the list of authorized 
    research projects, is accepted and incorporated into the Order.
        POG's comment on removing all of the references in Sec. 1208.50(a) 
    to the various subparagraphs in Sec. 1208.16 and just referring to the 
    section is accepted and incorporated into the Order, because the 
    proposal language is repetitious and unnecessary.
        POG's comments on Secs. 1208.50(b), 1208.54(a), 1208.70(c), and 
    1208.82 are for wording changes that would clarify the intent but not 
    the meaning of the sections. These wording changes are accepted and 
    incorporated into the Order.
        POG asked that Sec. 1208.80 regarding a requirement that all 
    substantive actions proposed by the Council be submitted to the 
    Secretary should be deleted. POG argues that since all financial 
    matters, programs, and projects require approval by the Secretary, 
    there is no need to further require that the Secretary approve all 
    substantive Council actions. POG'S request is not adopted because the 
    section merely reflects the fact that the Secretary has oversight 
    responsibility over the program. Thus, it is reasonable to expect that 
    in order to properly carry out such responsibility the Secretary should 
    have the authority to approve the Council's actions.
        The Professional Allied Florists Association of Metropolitan 
    Detroit submitted a comment requesting that a portion of the assessment 
    collected by the Council be distributed to local organizations for 
    local promotion. The Act does not authorize such disbursements, but any 
    promotion initiated by the Council will certainly compliment any local 
    promotions and should help increase the consumption of cut flowers and 
    greens.
        One comment was received from an individual but did not address any 
    issues concerning the proposed Order. Another comment was received 
    after the close of the comment period. These comments have been 
    included in the rulemaking record.
        The American Institute of Certified Public Accountants (AICPA) 
    submitted a comment concerning Sec. 1208.55 of the Order which deals 
    with the postponement of assessments. The AICPA stated that the 
    requirement that an independent certified public accountant express an 
    opinion that a handler is insolvent or that a handler will be unable to 
    continue to operate if required to pay the assessment when due is not 
    possible under professional accounting standards. We concur with the 
    AICPA's that procedures need to be developed whereby a handler would be 
    required to have an independent accountant perform an agreed upon 
    procedure under applicable professional standards after a postponement 
    is requested. Procedures for the actual processing of postponement 
    requests will be developed after the Order becomes effective and a 
    Council is appointed. AICPA also commented that in Sec. 1208.70(c) of 
    the Order, the phrase ``books and records'' should be replaced by 
    ``financial statements'' because these documents are what auditors 
    audit. This comment is accepted with modification in that the term 
    ``financial records and documents'' will be used, and the section is 
    changed accordingly.
        Other minor conforming changes made in this final rule include the 
    requirement in Sec. 1208.31(f) that ballots for voting for nominees be 
    distributed only to persons assessed. This is changed because the Act 
    does not require that producers voting for the at-large producer member 
    nominees (east and west of the Mississippi River) necessarily have to 
    be producers who pay assessments.
        After consideration of all relevant material presented, including 
    the initial proposals, comments received, and other available 
    information, it is found that the Order and all the terms and 
    conditions thereof, tends to effectuate the declared policy of the Act.
        Pursuant to 5 U.S.C. 553, it is also found and determined that good 
    cause exists for not postponing the effective date of this action until 
    30 days after publication in the Federal Register because a lengthy 
    period is required to nominate and appoint the Council, the 
    administrative agency provided for in the Order, before it can start to 
    function. The floral industry has requested that the program become 
    operational as soon as possible so that assessments can collected 
    shortly after the beginning of the 1995 calendar year, which is the 
    floral industry's largest sales period, and so that promotional and 
    other activities can be in place as soon as possible. Before the 
    program can begin, it will be necessary for the Council to recommend a 
    budget of anticipated expenses to the Department for review, 
    modification, or approval. Also, it will be necessary for the Council 
    to hire a staff and establish an office to carry out the needed 
    administrative functions. Further, interested persons were afforded a 
    60-day comment period, and no useful purpose would be served in 
    delaying the effective date. Therefore, this final rule is effective on 
    the date of publication in the Federal Register.
    
    List of Subjects in 7 CFR Part 1208
    
        Administrative practice and procedure, Advertising, Consumer 
    information, Marketing agreements, Cut flowers, Cut greens, Promotion, 
    Reporting and recordkeeping requirements.
    
        For the reasons set forth in the preamble title 7 of the Code of 
    Federal Regulations is hereby amended by adding a new Part 1208 to read 
    as follows:
    
    PART 1208--FRESH CUT FLOWERS AND FRESH CUT GREENS PROMOTION AND 
    INFORMATION
    
    Subpart A--Fresh Cut Flowers and Fresh Cut Greens Promotion and 
    Information Order
    
    Definitions
    
    Sec.
    1208.1  Act
    1208.2  Consumer information
    1208.3  Council
    1208.4  Cut flowers  
    1208.5  Cut greens
    1208.6  Cut flowers and greens
    1208.7  Department
    1208.8  Exempt handler
    1208.9  Fiscal year
    1208.10  Gross sales price
    1208.11  Order
    1208.12  Part and subpart
    1208.13  Person
    1208.14  Promotion
    1208.15  Producer that is a qualified handler
    1208.16  Qualified handler
    1208.17  Research
    1208.18  Retailer
    1208.19  Secretary
    1208.20  Substantial portion
    1208.21  State
    1208.22  Traditional retailer
    1208.23  Traditional retail florist organization
    1208.24  United States
    
    Establishment of the Council
    
    1208.30  Establishment and membership of the Council
    1208.31  Election and appointment of members and alternates other 
    than retailers
    1208.32  Designation and appointment of retailer members and 
    alternates
    1208.33  Failure to nominate
    1208.34  Terms of office and compensation
    1208.35  Vacancies
    1208.36  Procedure
    1208.37  Executive committee
    
    Activities of the Council
    
    1208.40  Duties of the Council
    1208.41  Budgets and expenses
    1208.42  Plans, projects, budgets, and contracts
    1208.43  Other contracts and agreements
    
    Assessments
    
    1208.50  Assessments
    1208.51  Influencing governmental action
    1208.52  Charges for late payments
    1208.53  Adjustment of accounts
    1208.54  Refunds of assessments and escrow account
    1208.55  Postponement of collections
    1208.56  Determinations
    
    Suspension or Termination
    
    1208.60  Suspension and termination
    1208.61  Proceedings after termination
    1208.62  Effect of termination or amendment
    
    Reports, Books, and Records
    
    1208.70  Books, records, reports, cost control, and audits of the 
    Council
    1208.71  Reports, books, and records of persons subject to this 
    subpart
    1208.72  Confidential treatment
    
    Miscellaneous
    
    1208.80  Right of the Secretary
    1208.81  Personal liability
    1208.82  Patents, copyrights, inventions, publications, and product 
    formulations
    1208.83  Amendments
    1208.84  Separability
    1208.85  OMB control numbers
    
        Authority: The Fresh Cut Flowers and Fresh Cut Greens Promotion 
    and Information Act of 1993, 7 U.S.C. 6801 et seq.
    
    Definitions
    
    
    Sec. 1208.1  Act.
    
        Act means the Fresh Cut Flowers and Fresh Cut Greens Promotion and 
    Information Act of 1993, Pub. L. 103-190, 7 U.S.C. Secs. 6801 et seq., 
    and any amendments thereto.
    
    
    Sec. 1208.2  Consumer information.
    
        Consumer information means any action or program that provides 
    information to consumers and other persons on appropriate uses for cut 
    flowers and greens under varied circumstances, or on the care and 
    handling of cut flowers and greens.
    
    
    Sec. 1208.3  Council.
    
        Council means the Fresh Cut Flowers and Fresh Cut Greens Promotion 
    Council established pursuant to Sec. 1208.30 of this subpart and which 
    shall be referred to as the National PromoFlor Council.
    
    
    Sec. 1208.4  Cut flowers.
    
        Cut flowers include all flowers cut from growing plants that are 
    used as fresh-cut flowers and that are produced under cover or in field 
    operations, but not including foliage plants, floral supplies, or 
    flowering plants.
    
    
    Sec. 1208.5  Cut greens.
    
        Cut greens include all cultivated or noncultivated decorative 
    foliage cut from growing plants that are used as fresh-cut decorative 
    foliage (except Christmas trees) and that are produced under cover or 
    in field operations, but not including foliage plants, floral supplies, 
    or flowering plants.
    
    
    Sec. 1208.6  Cut flowers and greens.
    
        The term cut flowers and greens means either cut flowers or cut 
    greens, even though the cut flowers or cut greens are sold as separate 
    commodities by a person in the floral marketing system, or cut flowers 
    and cut greens collectively when both commodities are sold by a person 
    in the floral marketing system.
    
    
    Sec. 1208.7  Department.
    
        Department means the United States Department of Agriculture.
    
    
    Sec. 1208.8  Exempt handler.
    
        Exempt handler means a person who would otherwise be considered to 
    be a qualified handler except that the person's annual sales of cut 
    flowers and greens to retailers and other exempt handlers is less than 
    $750,000.
    
    
    Sec. 1208.9  Fiscal year.
    
        Fiscal year means a 12-month period recommended by the Council and 
    approved by the Secretary.
    
    
    Sec. 1208.10  Gross sales price.
    
        Gross sales price means the total amount of the transaction in a 
    sale of cut flowers and greens from a handler to a retailer or exempt 
    handler including but not limited to charges such as containers, pre-
    cooling, packing, sleeving, delivery, freight, shipping, or other 
    charges necessary to the protection and preservation of the cut flowers 
    and greens.
    
    
    Sec. 1208.11  Order.
    
        Order means this subpart.
    
    
    Sec. 1208.12  Part and subpart.
    
        Part means the Fresh Cut Flowers and Fresh Cut Greens Promotion and 
    Information Order and all rules and regulations issued pursuant to the 
    Act. The order itself shall be a subpart of such part.
    
    
    Sec. 1208.13  Person.
    
        Person means any individual, group of individuals, firm, 
    partnership, corporation, joint stock company, association, society, 
    cooperative, or other legal entity.
    
    
    Sec. 1208.14  Promotion.
    
        Promotion means any action determined by the Secretary to advance 
    the image, desirability, or marketability of cut flowers and greens, 
    including paid advertising.
    
    
    Sec. 1208.15  Producer that is a qualified handler.
    
        Producer that is a qualified handler means an entity that is 
    engaged: In the domestic production, for sale in commerce, of cut 
    flowers and greens and that owns or shares in the ownership and risk of 
    loss of the cut flowers and greens; or as a first processor of 
    noncultivated greens, in receiving the greens from a person who gathers 
    the greens for handling; and is subject to assessments as a qualified 
    handler under the order.
    
    
    Sec. 1208.16  Qualified handler.
    
        Qualified handler means a person operating in the cut flowers and 
    greens marketing system that sells domestic or imported cut flowers and 
    greens to retailers and exempt handlers and whose annual sales of cut 
    flowers and greens to retailers and exempt handlers are $750,000 or 
    more. The term does not include a person who only physically transports 
    or delivers cut flowers and greens. However, the term does include, but 
    is not limited to, the following entities when they have the requisite 
    volume of sales of cut flowers and greens as provided in Secs. 1208.50 
    and 1208.57:
        (a) A qualified wholesale handler--a person in business as a floral 
    wholesale jobber (i.e., a person who conducts a commission or other 
    wholesale business in buying and selling cut flowers and greens) or as 
    a floral supplier (i.e., a person engaged in acquiring cut flowers and 
    greens to be manufactured into floral articles or otherwise processed 
    for resale) if the annual value of the qualified wholesale handlers 
    sale of cut flowers and greens to retailers and exempt handlers is 
    $750,000 or more;
        (b) A manufacturer of bouquets for sale to retailers if the cut 
    flowers and greens used in such articles are a substantial portion of 
    the value of the manufactured floral articles;
        (c) A manufacturer of floral articles (other than bouquets) for 
    sale to retailers if the cut flowers and greens used in such articles 
    are a substantial portion of the value of the manufactured floral 
    articles;
        (d) An auction house that clears the sale of cut flowers and greens 
    to retailers and exempt handlers through a central clearinghouse;
        (e) A distribution center that is owned or controlled by a retailer 
    if the predominant retail business activity of the retailer is floral 
    sales. In addition to sales, non-sale transfers of cut flowers and 
    greens by the distribution center to retail outlets, shall be counted 
    for the purpose of applying the $750,000 minimum volume rule to the 
    center and the value of such transfers shall be determined as provided 
    in Secs. 1208.50 and 1208.57;
        (f) An importer that is a qualified handler--a person whose 
    principal activity is the importation of cut flowers and greens into 
    the United States (either directly or as an agent, broker, or consignee 
    of any person or nation that produces or handles cut flowers and greens 
    outside of the United States for sale in the United States) and who 
    sells such cut flowers and greens to retailers and exempt handlers or 
    directly to consumers, if the annual combined value of such sales 
    determined as provided in Secs. 1208.50 and 1208.57 totals $750,000 or 
    more;
        (g) A producer that is a qualified handler, e.g., a person who 
    produces cut flowers and greens and who sells such cut flowers and 
    greens directly to retailers or consumers if the annual combined value 
    of such sales determined as provided in Secs. 1208.50 and 1208.57 
    totals $750,000 or more.
    
    
    Sec. 1208.17  Research.
    
        Research means market research and studies limited to the support 
    of advertising, market development, and other promotion efforts and 
    consumer information efforts relating to cut flowers and greens, 
    including educational activities.
    
    
    Sec. 1208.18  Retailer.
    
        Retailer means a person who sells cut flowers and greens to 
    consumers. The term includes:
        (a) All retail outlets that sell cut flowers and greens to 
    consumers including retail florists, supermarkets, and other mass 
    market retail outlets that sell such cut flowers or greens, except 
    distribution centers defined in Sec. 1208.16(e) (i.e., centers that are 
    owned or controlled by a retailer if the predominant retail business 
    activity of the retailer is floral sales and whose sales and non-sale 
    transfers of cut flowers and greens to retail outlets total $750,000 or 
    more, determined as provided in this subpart) even though such centers 
    may also make direct sales to consumers.
        (b) Distribution centers owned or controlled by a retailer (or 
    distribution centers owned or controlled cooperatively by a group of 
    such retailers) when the predominant business activity of the retailer 
    or retailers is not the sale of cut flowers and greens to consumers; 
    and
        (c) Distribution centers independently owned but operated primarily 
    to provide food products to retail stores.
    
    
    Sec. 1208.19  Secretary.
    
        Secretary means the Secretary of Agriculture of the United States 
    or any officer or employee of the Department to whom authority has 
    heretofore been delegated, or to whom authority may hereafter be 
    delegated, to act in the Secretary's stead.
    
    
    Sec. 1208.20  Substantial portion.
    
        Substantial portion means that portion of the total value of 
    manufactured floral articles that represents the value of the cut 
    flowers and greens in such articles (expressed as a percentage factor) 
    which the Council, with the approval of the Secretary, finds to be 
    great enough to cause such articles to be classed as cut flowers and 
    greens under this subpart.
    
    
    Sec. 1208.21  State.
    
        State means each of the several States of the United States, the 
    District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth 
    of the Northern Mariana Islands, the United States Virgin Islands, 
    Guam, American Samoa, the Republic of the Marshall Islands, the 
    Federated States of Micronesia, and the Republic of Palau (until such 
    time as the Compact of Free Association is ratified).
    
    
    Sec. 1208.22  Traditional retailer.
    
        Traditional retailer means any retailer, as defined in 
    Sec. 1208.18, whose primary business is the sale of floral products, 
    including fresh cut flowers and cut greens, or who has a specific 
    department dedicated to the sale of floral products, including fresh 
    cut flowers and cut greens.
    
    
    Sec. 1208.23  Traditional retail florist organization.
    
        Traditional florist organization means membership organizations of 
    traditional retailers with activities and membership which are 
    nationwide in scope.
    
    
    Sec. 1208.24  United States.
    
        United States means the States collectively.
    
    Establishment of the Council
    
    
    Sec. 1208.30  Establishment and membership of the Council.
    
        (a) A Fresh Cut Flowers and Fresh Cut Greens Promotion Council 
    which shall be named the National PromoFlor Council is hereby 
    established to administer the terms and provisions of this subpart. The 
    Council shall consist of 25 members nominated by the floral industry 
    and appointed by the Secretary, as provided in this subpart, each of 
    whom shall have an alternate nominated and appointed in the same manner 
    as members of the Council are nominated and appointed.
        (b) The membership of the Council shall be divided as follows:
        (1) 14 members and their alternates shall represent qualified 
    wholesale handlers of domestic or imported cut flowers and greens;
        (2) Three members and their alternates shall represent producers 
    that are qualified handlers of cut flowers and greens;
        (3) Three members and their alternates shall represent importers 
    that are qualified handlers of cut flowers and greens;
        (4) Three members and their alternates shall represent traditional 
    retailers of cut flowers and greens;
        (5) One member and alternate shall represent persons who produce 
    cut flowers and greens in locations east of the Mississippi River; and
        (6) One member and alternate shall represent persons who produce 
    cut flowers and greens in locations west of the Mississippi River.
    
    
    Sec. 1208.31  Election and appointment of members and alternates other 
    than retailers.
    
        (a) PromoFlor Organizing Group, Inc., an industry organizing 
    committee, is designated as an election committee for the purpose of 
    receiving the names of individuals who are engaged in the industry and 
    who are prepared to serve as members (other than retailer members) of 
    the Council or as alternates if elected as nominees and if selected by 
    the Secretary for such positions.
        (b) The election committee shall, within five (5) days of the 
    issuance of this subpart and with the assistance of the Secretary, 
    request the submission of names of candidates for nominees from those 
    segments of the industry for which nominees must be selected by an 
    election process. These segments are: qualified wholesale handlers; 
    importers who are qualified handlers; producers of cut flowers and 
    greens who are qualified handlers; and producers of cut flowers and 
    greens without regard to whether they are qualified handlers. 
    Notification of the industry of the selection process by the election 
    committee shall be by a news release to industry publications and where 
    appropriate, newspapers of general circulation. In order to be assured 
    of a place on the slate of candidates, the names of candidates must be 
    received by the election committee not later than fifteen (15) days 
    after the date of the first such news release.
        (c) Names of candidates shall be sought for the following seats on 
    the Council:
        (1) 14 members and their respective alternates to represent 
    qualified wholesale handlers of domestic or imported cut flowers and 
    greens. Two such members and their respective alternates to represent 
    the United States at large and two such members and their respective 
    alternates to represent each of the following regions:
        Region 1 (Pacific): Alaska, California, Hawaii, Oregon, Washington, 
    the Commonwealth of the Northern Mariana Islands, Guam, the Federated 
    States of Micronesia, American Samoa, the Republic of the Marshall 
    Islands, and the Republic of Palau.
        Region 2 (Inter-Mountain): Arizona, Arkansas, Colorado, Idaho, 
    Kansas, Louisiana, Montana, Nebraska, Nevada, New Mexico, North Dakota, 
    Oklahoma, South Dakota, Texas, Utah, and Wyoming.
        Region 3 (North Central): Illinois, Indiana, Iowa, Michigan, 
    Minnesota, Missouri, and Wisconsin.
        Region 4 (Northeast): Connecticut, Maine, Massachusetts, New 
    Hampshire, New Jersey, New York, Rhode Island, and Vermont.
        Region 5 (Mid-Atlantic): Delaware, District of Columbia, Kentucky, 
    Maryland, Ohio, Pennsylvania, Virginia, and West Virginia.
        Region 6 (Southeast): Alabama, Florida, Georgia, Mississippi, North 
    Carolina, Puerto Rico, South Carolina, Tennessee, and the United States 
    Virgin Islands.
        (2) Three at-large members and their alternates to represent 
    importers that are qualified handlers of cut flowers and greens.
        (3) Three members and their alternates to represent producers of 
    cut flowers and greens that are qualified handlers of cut flowers and 
    greens. There shall be one such member and alternate from each of the 
    following production areas:
        Production Area 1: California.
        Production Area 2: Alaska, Arizona, Arkansas, Colorado, Hawaii, 
    Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Michigan, Minnesota, 
    Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, 
    Oklahoma, Oregon, South Dakota, Texas, Utah, Washington, Wisconsin, and 
    Wyoming.
        Production Area 3: Alabama, Connecticut, Delaware, Florida, 
    Georgia, Kentucky, Maine, Maryland, Massachusetts, Mississippi, New 
    Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, 
    Rhode Island, South Carolina, Tennessee, Vermont, Virginia, and West 
    Virginia.
        (4) Two members and their respective alternates to represent 
    persons who produce cut flowers and greens in locations east and west 
    of the Mississippi River, respectively. There shall be one such member 
    and alternate from the east, and one such member and alternate from the 
    west.
        (d) Names of candidates for nominees may be submitted by state, 
    regional (either regions within a state or regions that include more 
    than one state as appropriate), or national industry organizations, 
    provided that the organization has members engaged in the appropriate 
    segment of the industry and from the region or production area if 
    applicable, or by petition. The names of candidates submitted by an 
    industry organization shall be accompanied by statements showing the 
    role of the organization in the industry and general information about 
    the membership it represents. No industry organization may submit more 
    than two names of candidates for each seat on the Council. The names of 
    candidates submitted by petition shall be accompanied by petitions in 
    support of such candidate, signed by not less than ten (10) persons 
    engaged in the appropriate segment of the industry and from the region 
    or production area, if applicable, that the candidate will represent if 
    ultimately selected by the Secretary. Submission of names of all 
    candidates, whether by organizations or by petition, must include a 
    certification by the candidate that the candidate is within the segment 
    of the industry and the region or production area for which the 
    candidate is nominated and, if elected as a nominee and if subsequently 
    appointed by the Secretary, the candidate is willing to serve as a 
    member or alternate member on the Council.
        (e) The names of candidates so submitted shall be reviewed and 
    organized by the election committee for the preparation of slates of 
    candidates. Separate slates for each segment and region of the industry 
    shall be prepared as appropriate. There must be at least four 
    candidates for each position on the Council for which nominees must be 
    selected by election. No candidate may seek nomination for more than 
    one seat on the Council. In a case where a candidate is nominated more 
    than once, the election committee will decide which place on the ballot 
    the candidate's name will appear. If insufficient candidates have been 
    proposed for any seat, the election committee shall select additional 
    candidates as required. The slates shall be prepared not later than 5 
    days after the date for receiving names of candidates by the election 
    committee.
        (f) After all candidates have been listed on the slates of 
    candidates, the slates shall be supplied to an independent certified 
    public accounting (CPA) firm contracted by the election committee. The 
    ballots shall be printed and distributed by the CPA firm by U.S. mail, 
    or other means selected by the election committee, not later than 15 
    days after the slates of candidates are received from the election 
    committee. To the maximum extent practicable, ballots will be 
    distributed to all persons who are eligible to vote for candidates 
    under this subpart in the segment of the industry, the region, or in 
    the United States as a whole, as applicable, to which the ballot 
    pertains. Ballots that are not returned to the CPA firm within 20 days 
    shall be declared invalid. The votes for each candidate on the ballots 
    shall be tallied by the CPA firm at the end of the voting period and 
    the results furnished to the election committee. The election committee 
    shall issue a news release setting forth the names of the candidates 
    and the number of votes received by each candidate within 5 days after 
    the voting period has ended. Those candidates on each of the ballots 
    who rank first, second, third, and fourth in the number of votes 
    received for each seat on the Council shall be declared the nominees 
    for each such seat.
        (g) The names of those declared the nominees for each of the seats 
    on the Council representing the various segments of the industry and 
    the designated regions or production areas, where applicable, shall be 
    submitted to the Secretary in order of rank with the number of votes 
    received by each such nominee shown after the nominee's name and with 
    the recommendation that the nominee with the most votes for each of 
    such seats be declared the member of the Council and the nominee with 
    the next greatest number of votes for each of such seats be declared 
    the alternate member. The Secretary shall then appoint from the 
    nominees so provided the members and their alternates for each of such 
    seats on the Council.
        (h) Subsequent elections of nominees and appointment of members and 
    alternates as terms expire shall be conducted by the Council or the 
    Council staff in the manner similar to that described above except that 
    the Council shall act as the election committee for which provision is 
    made in this section. The nomination and election process shall be 
    completed at least 90 days before the beginning of each nominee's term 
    of office.
        (i) The Council shall periodically review the cut flower and greens 
    market in the United States for changes in the geographic distribution 
    of importing, producing, and marketing facilities and shall, if 
    appropriate, recommend changes in the regions and production areas 
    described in this section to the Secretary for approval.
    
    
    Sec. 1208.32  Designation and appointment of retailer members and 
    alternates.
    
        (a) Four nominations for one of the traditional retailer members of 
    the Council and that member's alternate shall be received from the 
    American Floral Marketing Council (AFMC) or a successor entity.
        (b) Four nominations for each of two members of the Council and 
    their alternates shall be received from national traditional retail 
    florist organizations other than the AFMC. In order to be eligible to 
    submit nominations for members and alternates to serve on the Council, 
    such organizations must certify that their activities and membership 
    are nationwide in scope. No more than four nominations for each seat 
    may be submitted by each organization.
        (c) The Secretary shall choose from among the names submitted by 
    the AFMC the names of the member and alternate who shall fill the seat 
    on the Council representing the AFMC. The Secretary shall choose from 
    among the names submitted by national traditional retail florist 
    organizations other than the AFMC the two members and their alternates 
    who shall fill the other two seats on the Council representing 
    traditional retailers.
    
    
    Sec. 1208.33  Failure to nominate.
    
        If any group of qualified wholesale handlers, producers that are 
    qualified handlers, importers that are qualified handlers, persons who 
    produce cut flowers and greens, or traditional retailers fails to 
    nominate individuals for appointments as members or alternates of the 
    Council, the Secretary may appoint individual(s) from the appropriate 
    segment(s), region(s), or area(s) of the industry to fill the vacancy 
    or vacancies. The failure of any nominee to promptly indicate the 
    nominee's willingness to serve in such manner as may be prescribed by 
    the Secretary shall be treated as a failure to nominate.
    
    
    Sec. 1208.34  Term of office and compensation.
    
        (a) The term of office for each member or alternate member of the 
    Council shall be three years. As provided in the Act, the initial 
    appointments on the Council shall be as follows: nine of the member 
    appointments shall be for two-year terms, eight of the appointments 
    shall be for three-year terms, and eight of the appointments shall be 
    for four-year terms. Alternate members shall have the same terms of 
    office as their respective members. The term of office on the initial 
    Council shall be apportioned as follows:
        (1) One of the two qualified wholesale handler members representing 
    each of Regions 1, 2, 4, and 5 shall serve two-year terms of office; 
    one of the two qualified wholesale handler members representing each of 
    Regions 3, 4, and 6 shall serve three-year terms of office; and one of 
    the two qualified wholesale handler members representing each of 
    Regions 1, 2, 3, 5, and 6 shall serve four-year terms of office.
        (2) The two qualified wholesale handler members representing the 
    United States at large shall serve terms of office of two years and 
    three years respectively.
        (3) The members representing producers that are qualified handlers 
    from Production Areas 1 and 2 shall serve three-year terms of office, 
    and the member representing producers that are qualified handlers from 
    Production Area 3 shall serve a four-year term of office.
        (4) The three members representing importers that are qualified 
    handlers shall serve terms of office of two, three, and four years 
    respectively.
        (5) The members representing producers that produce cut flowers and 
    greens east and west of the Mississippi River shall each serve two-year 
    terms of office.
        (6) The member representing retailers nominated by the AFMC shall 
    serve a two-year term of office. The two members representing retailers 
    not nominated by the AFMC shall serve three-year and four-year terms of 
    office respectively.
        (b) No member of the Council may serve more than two consecutive 
    terms of three years, except that any member serving an initial term of 
    four years or two years may serve an additional term of three years.
        (c) The term of office for the initial Council shall begin 
    immediately following appointment by the Secretary. Should the term of 
    office of the initial Council begin before January 1, 1995, the time 
    between appointment and January 1, 1995, shall not count towards the 
    initial term of office. Should the term of office of the initial 
    Council begin later than January 1, 1995, all time until the following 
    January will count as a full year toward the terms of office set out in 
    this section. In subsequent years, the term of office shall begin on 
    January 1 or such other period which may be recommended by the Council 
    and approved by the Secretary.
        (d) Members of the Council shall serve without compensation, but 
    each member or alternate member acting in place of a member shall be 
    reimbursed for the expenses incurred in performing duties as a member 
    of the Council.
    
    
    Sec. 1208.35  Vacancies.
    
        (a) Should any Council member position become vacant, the alternate 
    of that member shall automatically assume the position of said member. 
    Candidates for the vacant alternate member position which resulted from 
    the alternate filling the vacant member position shall be nominated in 
    the manner specified in Secs. 1208.31 and 1208.32. Provided, That a 
    vacancy will not be required to be filled if the unexpired term is less 
    than six months.
        (b) Should the positions of both a member and such member's 
    alternate become vacant, Candidates to serve the unexpired terms of 
    office for such member and alternate shall be nominated in the manner 
    specified in Secs. 1208.31 and 1208.32. Provided, That a vacancy will 
    not be required to be filled if the unexpired term is less than six 
    months.
        (c) If a member of the Council consistently refuses to perform the 
    duties of a member of the Council, if a member of the Council fails to 
    submit reports and remit assessments required under this part, or if a 
    member of the Council is known to be engaged in acts of dishonesty or 
    willful misconduct, the Council may recommend to the Secretary that the 
    member be removed from office. If the Secretary finds that the 
    recommendation of the Council shows adequate cause, the Secretary shall 
    remove such member from office. Further, without recommendation of the 
    Council, a member may be removed by the Secretary upon a showing of 
    adequate cause, if the Secretary determines that the person's continued 
    service would be detrimental to the achievement of the purposes of the 
    Act.
    
    
    Sec. 1208.36  Procedure.
    
        (a) Thirteen (13) Council members, including alternates acting in 
    place of members of the Council, shall constitute a quorum: Provided, 
    That such alternates shall serve only when the member is absent from a 
    meeting or is disqualified. Any action of the Council shall require the 
    concurring votes of a majority of those present and voting. At 
    assembled meetings, all votes shall be cast in person.
        (b) In lieu of voting at an assembled meeting, and, when in the 
    opinion of the chairperson of the Council such action is considered 
    necessary, or for matters of an emergency nature when there is not 
    enough time to call an assembled meeting, the Council may act upon a 
    majority of concurring votes of its members cast by mail, telegraph, 
    telephone, facsimile, or by other means of communication: Provided, 
    That each member or alternate acting for a member receives an accurate, 
    full, and substantially identical explanation of each proposition. 
    Telephone votes shall be promptly confirmed in writing. All votes shall 
    be recorded in the Council minutes.
    
    
    Sec. 1208.37  Executive committee.
    
        (a) The Council is authorized to appoint an executive committee of 
    not more than nine persons from among its members. Initially, the 
    executive committee shall be composed of the following:
        (1) Four members representing qualified wholesale handlers;
        (2) Two members representing producers that are qualified handlers;
        (3) Two members representing importers that are qualified handlers; 
    and
        (4) One member representing traditional retailers.
        (b) After the initial appointments, each appointment to the 
    executive committee shall be made so as to ensure that the committee 
    reflects, to the maximum extent practicable, the membership composition 
    of the Council as a whole.
        (c) Each initial appointment to the executive committee shall be 
    for a term of two years. After the initial appointments, each 
    appointment to the executive committee shall be for a term of one year.
        (d) The Council may delegate to the executive committee the 
    authority of the Council under this subpart to hire and manage staff 
    and conduct the routine business of the Council consistent with such 
    policies as are determined by the Council.
    
    Activities of the Council
    
    
    Sec. 1208.40  Duties of the Council.
    
        The Council shall have the following duties, in addition to the 
    duties specified in other sections of this subpart:
        (a) Administer this subpart in accordance with the terms and 
    provisions of this subpart;
        (b) Make rules and regulations to effectuate the terms and 
    provisions of this subpart;
        (c) Appoint members of the Council to serve on the executive 
    committee, as provided in Sec. 1208.37;
        (d) Employ such persons as the Council determines are necessary, 
    and set the compensation and define the duties of the persons;
        (e) Develop budgets for the implementation of this subpart and 
    submit the budgets to the Secretary for approval, and propose and 
    develop (or receive and evaluate), approve, and submit to the Secretary 
    for approval plans and projects for cut flowers and greens promotion, 
    consumer information, or related research;
        (f) Implement plans and projects for cut flowers and greens 
    promotion, consumer information, or related research, or contract or 
    enter into agreements with appropriate persons to implement the plans 
    and projects and pay the costs of the implementation of contracts and 
    agreements with funds received under this subpart;
        (g) Keep minutes, books, and records which clearly reflect all of 
    the acts and transactions of the Council. Minutes of all meetings shall 
    be promptly provided to the Secretary;
        (h) Evaluate ongoing and completed plans and projects for cut 
    flowers and greens promotion, consumer information, or related 
    research;
        (i) Receive, investigate, and report to the Secretary complaints of 
    violations of this subpart and direct that the staff of the Council 
    periodically review the list of importers of cut flowers and greens 
    provided by the Customs Service to determine whether persons on the 
    list are subject to this subpart;
        (j) Recommend to the Secretary amendments to this subpart;
        (k) Invest, pending disbursement under a plan or project, funds 
    collected through assessments only in: Obligations of the United States 
    or any agency of the United States, general obligations of any State or 
    any political subdivision of a State, any interest-bearing account or 
    certificate of deposit of a bank that is a member of the Federal 
    Reserve System, or obligations fully guaranteed as to principal and 
    interest by the United States. Income from any such invested funds may 
    be used only for a purpose for which the invested funds may be used.
        (l) Prepare and submit to the Secretary such reports as may be 
    prescribed for appropriate accounting with respect to the receipt and 
    disbursement of funds entrusted to the Council monthly, or at such 
    times as prescribed by the Secretary. Monthly financial statements 
    shall be submitted to the Department and shall include at least:
        (1) A balance sheet, and
        (2) An expense budget comparison showing expenditures during the 
    month, year-to-date expenditures, and an unexpended budget. Upon 
    request, a summary of checks issued by the Council is to be made 
    available. Reports shall be submitted within 30 days after the end of 
    each month.
        (m) To cause the books of the Council to be audited by an 
    independent certified public accountant at the end of each fiscal 
    period, and at such other times as the Council or the Secretary may 
    deem necessary. The report of each audit shall show the receipt and 
    expenditure of funds collected pursuant to this part, and shall be 
    submitted to the Secretary.
        (n) To give the Secretary the same notification, written or oral, 
    as provided to Council members concerning all conference calls and 
    meetings, including executive, advisory, subcommittee, and other 
    meetings related to Council matters, and to grant the Secretary access 
    to all such calls and meetings;
        (o) To follow the Department's equal opportunity/civil rights 
    policies; and
        (p) Provide the Secretary such information as the Secretary may 
    require.
    
    
    Sec. 1208.41  Budgets and expenses
    
        (a) The Council shall promptly adopt and forward to the Secretary 
    for approval its determination of the beginning and ending dates of an 
    annual fiscal period to be used by the Council for budgeting and 
    accounting purposes.
        (b) The Council shall submit annual budgets of its anticipated 
    expenses and disbursement in the administration of this subpart, 
    including the projected costs for the promotion of cut flowers and 
    greens, consumer information, and related research plans and projects 
    to the Secretary for approval. The first budget, which shall be 
    submitted promptly after the effective date of this subpart, shall 
    cover such period as may remain before the beginning of the next fiscal 
    year. If such fiscal period is 90 days or less, the first budget shall 
    cover such period, as well as the next fiscal year. Thereafter, the 
    Council shall submit budgets for each succeeding fiscal year not less 
    than 30 days before the beginning of such fiscal year.
        (c) The Council is authorized to incur such expenses (including 
    provision for a reasonable reserve for operating contingencies) as the 
    Secretary finds are reasonable and likely to be incurred by the Council 
    for its maintenance and functioning and to enable it to exercise its 
    powers and perform its duties in accordance with this subpart. Expenses 
    authorized in this paragraph shall be paid from assessments collected 
    pursuant to Sec. 1208.50, or other funds available to the Council.
        (d) The Council shall reimburse the Secretary, from assessments 
    collected pursuant to Sec. 1208.50, or from other funds available to 
    the Council, for administrative costs incurred by the Department to 
    carry out its responsibilities pursuant to this subpart after December 
    29, 1994.
        (e) The Council shall establish an interest-bearing escrow account 
    with a bank that is a member of the Federal Reserve System and shall 
    deposit in such account an amount equal to the percentage determined by 
    the Council to be held in reserve for the payment of refunds pursuant 
    to Sec. 1208.54.
        (f) The Council may, with the approval of the Secretary, borrow 
    money for the payment of administrative expenses, subject to the same 
    fiscal, budget, and audit controls as other funds of the Council.
    
    
    Sec. 1208.42  Plans, projects, budgets, and contracts.
    
        The Council shall develop and implement plans and projects for the 
    promotion of, and the dissemination of information about, cut flowers 
    and greens, as well as for research related to cut flowers and greens 
    in accordance with the following:
        (a) The Council shall develop, or contract for the development of, 
    plans and projects for advertising, sales promotion, other promotion, 
    and for dissemination of consumer information, with respect to cut 
    flowers and greens, and may disburse such funds as necessary for these 
    purposes after such plans or projects have been submitted to, and 
    approved by, the Secretary. Any such plan or project shall be directed 
    toward increasing the general demand for cut flowers and greens and 
    shall not make reference to a private brand or trade name, point of 
    origin, or source of supply, except that the Council may offer such 
    plans and projects of the Council for use by commercial parties such as 
    local, regional, State, or national floral industry organizations, and 
    then only under terms and conditions prescribed by the Council and 
    approved by the Secretary. No plan or project may make use of unfair or 
    deceptive acts or practices with respect to quality or value.
        (b) The Council shall develop, or contract for the development of, 
    plans and projects for research on the development of both established 
    and new markets for cut flowers and greens and for research with 
    respect to postharvest physiology, distribution, sale, marketing, use, 
    and promotion of cut flowers and greens, as well as the dissemination 
    of consumer information concerning cut flowers and greens. The Council 
    is authorized to develop, or contract for the development of, such 
    plans and projects for other research with respect to the marketing, 
    promotion, and dissemination of information about cut flowers and 
    greens as it finds appropriate. The Council may disburse such funds as 
    necessary for these purposes after such plans or projects have been 
    submitted to, and approved by, the Secretary.
        (c) The Council shall submit to the Secretary, for approval before 
    implementation, any contracts for development of plans and projects, as 
    well as such plans and projects as may be developed by or approved by 
    the Council for advertising, promotion, dissemination of information, 
    and research. All such submissions to the Secretary shall be 
    accompanied by a proposed budget showing the estimated expense to be 
    incurred and the availability of revenue from which such expense may be 
    paid. On approval of any such submission, the Council may proceed with 
    the contract, plan or project and incur the expenses necessary to carry 
    it out. Contracts or agreements to be submitted to the Secretary and 
    entered into if approved by the Secretary shall, among such other 
    matters as may be required, provide that:
        (1) The contracting or agreeing party shall develop and submit to 
    the Council a plan or project, together with a budget that includes the 
    estimated costs to be incurred for the plan or project;
        (2) The plan or project shall become effective on the approval of 
    the Secretary; and
        (3) The contracting or agreeing party shall:
        (i) Keep accurate records of all of the transactions of the party;
        (ii) Account for funds received and expenses;
        (iii) Make periodic reports to the Council of activities conducted; 
    and
        (iv) Make such other reports as the Council or the Secretary may 
    require.
        (d) The Council, from time to time, may seek advice from and 
    consult with experts from the production, import, wholesale, and retail 
    segments of the cut flowers and greens industry to assist in the 
    development of promotion, consumer information, and related research 
    plans and projects. For these purposes, the Council may appoint special 
    committees composed of persons other than Council members. A committee 
    so appointed may not provide advice or recommendations to a 
    representative of an agency, or an officer, of the Federal Government, 
    and shall consult directly with the Council.
    Sec. 1208.43  Other contracts and agreements.
        The Council may enter into contracts or agreements for 
    administrative services, including contracts of employment, as may be 
    required to conduct its business in accordance with such fiscal period 
    budgets as may have been approved by the Secretary. To the extent 
    appropriate to the contract involved, contracts entered into by the 
    Council under the authority of this section shall contain provisions 
    comparable to those described in Sec. 1208.42(c).
    Assessments
    Sec. 1208.50  Assessments.
        (a) Each qualified handler, as defined in Sec. 1208.16, shall pay 
    to the Council an assessment in an amount determined in accordance with 
    this subpart, on each sale of cut flowers and greens to a retailer or 
    an exempt handler (as defined in Sec. 1208.8) and on each non-sale 
    transfer of cut flowers and greens to a retailer by a qualified handler 
    that is a distribution center; as well as each direct sale of cut 
    flowers and greens to a consumer by a producer that is a qualified 
    handler, or by an importer that is a qualified handler. Such 
    assessments shall be remitted by each qualified handler to the Council 
    or its agent within 60 days after the end of the month in which the 
    sale or non-sale transfer subject to assessment under this subpart took 
    place. Such assessments shall be paid at the following rates:
        (1) During the first three years after December 29, 1994.
        (i) Except as provided in paragraph (a)(1)(ii) of this section, the 
    rate shall be one-half of 1 (0.5) percent of the gross sales price of 
    the cut flowers and greens sold;
        (ii) In the case of non-sale transfers to a retailer by a qualified 
    handler that is a distribution center and in the case of direct sales 
    by importers or producers, the rate shall be one-half of 1 (0.5) 
    percent of the amount of each transaction's valuation for assessment as 
    provided in paragraph (b);
        (2) After the first three years from December 29, 1994, the uniform 
    assessment rate may be increased or decreased annually by not more than 
    one-quarter of 1 (0.25) percent of the gross sales price of a product 
    sold; or in the case of other transactions the amount of such 
    transactions, except that the assessment rate may not exceed 1 percent 
    of the gross sales price or the transaction amount. Changes in the rate 
    of assessment may only be made if such changes are adopted by a two-
    thirds majority vote of the Council and approved by the Secretary 
    (after public notice and opportunity for comment as provided in the 
    Act) as being necessary to carry out the objectives of the Act. Any 
    such change so approved by the Secretary may be put into effect without 
    a referendum but shall be announced not less than 30 days prior to the 
    beginning of a fiscal year.
        (b) Each non-sale transfer of cut flowers and greens to a retailer 
    from a qualified handler that is a distribution center shall be treated 
    as a sale of cut flowers and greens to a retailer and shall be 
    assessable. Each direct sale of cut flowers and greens to a consumer by 
    a producer who is a qualified handler or an importer who is a qualified 
    handler shall be assessable. These transactions shall be determined to 
    have the following valuations for assessment purposes:
        (1) In the case of a non-sale transfer of cut flowers and greens 
    from a distribution center that is a qualified handler and each direct 
    sale of cut flowers and greens to a consumer by an importer that is a 
    qualified handler, the amount of the valuation of the cut flowers and 
    greens for assessment purposes shall be the price paid by the 
    distribution center or importer to acquire the cut flowers and greens, 
    and determined by multiplying the acquisition price by a uniform factor 
    of 1.43 to represent the markup of a wholesale handler on a sale to a 
    retailer. (2) In the case of a direct sale to a consumer by a producer 
    who is a qualified handler, the valuation of the cut flowers and greens 
    for assessment purposes shall be equal to an amount determined by 
    multiplying the price paid by the consumer by a uniform factor of 0.50 
    to represent the cost of producing the article and the markup of a 
    wholesale handler on a sale to a retailer.
        (3) The Council may consider and adopt changes in the uniform 
    factors specified in paragraphs (b) (1) and (2) of this section. Any 
    such change shall not become effective until it has been adopted by a 
    majority vote of the Council and approved by the Secretary after public 
    notice and opportunity to comment on such change as provided in the 
    Act. Changes so adopted and approved shall become effective at the 
    beginning of the next fiscal year.
        (c) The collection of assessments shall commence on or after a date 
    established by the Secretary, and shall continue until terminated by 
    the Secretary. If the Council is not constituted on the date the first 
    assessments are to be remitted, the Secretary shall have the authority 
    to receive assessments on behalf of the Council and may hold such 
    assessments in an interest bearing account until the Council is 
    constituted, and the funds may be transferred to the Council.
        (d) Assessments shall be determined on the basis of the gross sales 
    price. The Council, with the approval of the Secretary, may make 
    uniform adjustments in determining the gross sales price when such 
    adjustments reflect changes in trade practices or ensure equitable 
    treatment of all qualified handlers paying assessments.
        (e) No assessments may be levied on any sale of cut flowers and 
    greens for export from the United States. The Council is authorized to 
    establish procedures for the verification of exports.
        (f) In general, assessment funds (less refunds, if any) shall be 
    used:
        (1) For payment of costs incurred in implementing and administering 
    this subpart;
        (2) To provide for a reasonable reserve to be maintained from 
    assessments to be available for contingencies; and
        (3) To cover the administrative costs incurred by the Secretary in 
    implementing and administering this Act.
    
    
    Sec. 1208.51  Influencing governmental action.
    
        No funds collected by the Council shall in any manner be used for 
    the purpose of influencing legislation or government action or policy, 
    except to develop and recommend to the Secretary amendments to this 
    subpart.
    
    
    Sec. 1208.52  Charges for late payments.
    
        Any assessment due the Council pursuant to Sec. 1208.50 that is not 
    paid on time shall be increased 1.5 percent each month it remains 
    unpaid beginning with the day following the date such assessment was 
    due. If not paid in full, any remaining amount due, which shall include 
    any unpaid charges previously made pursuant to this section, shall be 
    increased at the same rate on the corresponding day of each month 
    thereafter until paid. For the purpose of this section, any assessment 
    that was determined at a date later than prescribed by this subpart 
    because of a failure to submit a report when due shall be considered to 
    have been payable by the date it would have been due if the report had 
    been filed when due. The timeliness of a payment to the Council shall 
    be based on the applicable postmark date or the date actually received 
    by the Council, whichever is earlier.
    
    
    Sec. 1208.53  Adjustment of accounts.
    
        Whenever the Council or the Secretary determines through an audit 
    of a person's reports, records, books, or accounts or through some 
    other means that additional money is due the Council or that money is 
    due such person from the Council, such person shall be notified of the 
    amount due. The person shall then remit any amount due the Council by 
    the next date for remitting assessments. Overpayments shall be credited 
    to the account of the person remitting the overpayment and shall be 
    applied against amounts due in succeeding months.
    
    
    Sec. 1208.54  Refunds of assessments and escrow account.
    
        (a) Any qualified handler may demand and receive from the escrow 
    account, subject to the limitation on such payments provided in 
    paragraph (c), a one-time refund of any assessments paid by or on 
    behalf of the handler if the handler requests the refund before the 
    initial referendum on this subpart is held and this subpart is rejected 
    by the voters when it is submitted to the referendum. Such a refund 
    will be paid only if all of the following conditions are met:
        (1) The handler has paid the assessments sought to be refunded and 
    has submitted proof of such payment;
        (2) The handler does not support the program established under this 
    subpart and so states in the handler's demand for a refund;
        (3) The handler's demand for a refund is made on a form specified 
    by the Council and filed not less than 10 days prior to the date when 
    the initial referendum, conducted pursuant to Sec. 1208.60(a) to 
    ascertain whether this subpart shall remain in effect, is scheduled to 
    begin; and
        (4) This subpart is not approved by a simple majority of the votes 
    cast by qualified handlers in the initial referendum.
        (b) The Council shall establish an escrow account to be used for 
    assessment refunds, as needed, and shall place into the account an 
    amount equal to 10 percent of the total amount of assessments collected 
    during the period beginning on December 29, 1994 and ending on the date 
    the results of the initial referendum are issued and the initial 
    referendum is completed.
        (c) If the amount in the escrow account is not sufficient to refund 
    the total amount of assessments demanded by all qualified handlers 
    determined eligible for refunds and this subpart is not approved in the 
    referendum, the Council shall prorate the amount of all such refunds 
    among all eligible qualified handlers that demand the refund. If there 
    is any amount in excess of the amount needed to pay refunds and 
    expenses, it shall be returned pro rata to those who paid assessments. 
    If this subpart is approved in the referendum, there shall be no 
    refunds made, and all funds in the escrow account shall be returned to 
    the Council for use by the Council in accordance with the other 
    provisions of this subpart.
    
    
    Sec. 1208.55  Postponement of collections.
    
        (a) The Council may grant a postponement of the payment of an 
    assessment under this subpart for any qualified handler that 
    establishes that it is financially unable to make the payment. In order 
    that a qualified handler that is financially unable to pay an 
    assessment may have the opportunity to petition the Council to postpone 
    payment of such an assessment, as provided in the Act, the Council 
    shall develop forms and procedures for this purpose as expeditiously as 
    possible and submit them to the Secretary for approval and issuance 
    after notice and an opportunity for public comment thereon. Such 
    procedures shall, among other things, require that the handler 
    demonstrate the handler's inability to pay through the submission of an 
    opinion prepared by an independent certified public accountant (at the 
    handler's expense) and any other documentation specified therein to the 
    effect that the handler is insolvent or will be unable to continue to 
    operate if the handler is required to pay the assessment when due.
        (b) The procedures for obtaining a postponement of payment to be 
    developed by the Council for submission to the Secretary shall also 
    include provisions with respect to the period of postponement, the 
    conditions of payment that may be imposed and the basis, if any, on 
    which further extensions of the time for payment will be granted so as 
    to appropriately reflect the demonstrated needs of the qualified 
    handler.
    
    
    Sec. 1208.56  Determinations.
    
        (a) The Council is authorized to make the determinations required 
    by this subpart as to the status of persons as qualified handlers and 
    exempt handlers including determinations of the status of persons as 
    qualified wholesale handlers, distribution centers that are qualified 
    handlers, producers that are qualified handlers, importers that are 
    qualified handlers, as well as such other determinations of status and 
    facts as may be required for the effective administration of this 
    subpart. Based on such determinations, the Council from time to time 
    shall publish lists of exempt handlers who are not required to pay 
    assessments, and lists of qualified handlers who are required to pay 
    assessments under this subpart.
        (b) For the purpose of applying the $750,000 annual sales 
    limitation to a specific person in order to determine the status of the 
    person as a qualified handler or an exempt handler or to a specific 
    facility in order to determine the status of the facility as an 
    eligible separate facility for the purpose of referenda, the Council is 
    authorized to determine the annual sales volume of a person or 
    facility.
        (c) Any such determination shall be based on the sales of cut 
    flowers and greens by the person or facility during the most recently-
    completed calendar year, except that in the case of a new business or 
    other operation for which complete data on sales during all or part of 
    the most recently-completed calendar year are not available to the 
    Council, the determination may be made using an alternative time period 
    or other alternative procedures as the Council may find appropriate. In 
    making such determinations, the Council is authorized to make 
    attributions in accordance with paragraphs (c) (1) through (4) of this 
    section and for the purpose of determining the annual sales volume of a 
    person or a separate facility of a person, sales attributable to a 
    person shall include:
        (1) In the case of an individual, sales attributable to the spouse, 
    children, grandchildren, parents, and grandparents of the person;
        (2) In the case of a partnership or member of a partnership, sales 
    attributable to the partnership and other partners of the partnership;
        (3) In the case of an individual or a partnership, sales 
    attributable to any corporation or other entity in which the individual 
    or partnership owns more than 50 percent of the stock or (if the entity 
    is not a corporation) that the individual or partnership controls; and
        (4) In the case of a corporation, sales attributable to any 
    corporate subsidiary or other corporation or entity in which the 
    corporation owns more than 50 percent of the stock or (if the entity is 
    not a corporation) that the corporation controls.
        (d) The Council is also authorized to attribute any stock ownership 
    interest as may be required to carry out this subpart. In doing so a 
    stock ownership interest in the entity that is owned by the spouse, 
    children, grandchildren, parents, grandparents, or partners of an 
    individual, or by a partnership in which a person is a partner, or by a 
    corporation more than 50 percent of the stock of which is owned by a 
    person, shall be treated as owned by the individual or person.
        (e) For the purpose of this subpart, the Council, with the approval 
    of the Secretary, may require a person who sells cut flowers and greens 
    to retailers to submit reports to the Council on annual sales by the 
    person and on stock ownership.
    
    Suspension or Termination
    
    
    Sec. 1208.60  Suspension and termination.
    
        If the Secretary finds that this subpart, or any provision of this 
    subpart, obstructs or does not tend to effectuate the policy of the 
    Act, the Secretary shall terminate or suspend the operation of this 
    subpart or the provision of this subpart under such terms as the 
    Secretary determines are appropriate. Such termination or suspension 
    shall not be considered an order within the meaning of such term in the 
    Act.
    
    
    Sec. 1208.61  Proceedings after termination.
    
        (a) Upon the termination of this subpart, the Council shall 
    recommend not more than five of its members to the Secretary to serve 
    as trustees for the purpose of liquidating the assets of the Council. 
    Such persons, upon designation by the Secretary, shall become trustees 
    of all the funds and property owned, in the possession of, or under the 
    control of the Council, including any claims unpaid or property not 
    delivered, or any other claim existing at the time of such termination.
        (b) The trustees shall:
        (1) Continue in such capacity until discharged by the Secretary;
        (2) Carry out the obligations of the Council under any contract or 
    agreement entered into by it under this subpart;
        (3) Make refunds from the escrow account to those persons who 
    applied for refunds of assessments paid and who are eligible to receive 
    such refunds. Such refunds shall be made within 30 days after the 
    referendum results are issued.
        (4) From time to time account for all receipts and disbursements, 
    and deliver all property on hand, together with all books and records 
    of the Council and of the trustees, to such persons as the Secretary 
    may direct; and
        (5) Upon the request of the Secretary, execute such assignments or 
    other instruments necessary or appropriate to vest in such persons full 
    title and right to all of the funds, property, and claims vested in the 
    Council or the trustees under this subpart.
        (c) Any person to whom funds, property, or claims have been 
    transferred or delivered under this subpart shall be subject to the 
    same obligations imposed upon the Council and upon the trustees.
        (d) Any residual funds not required to defray the necessary 
    expenses of liquidation shall be turned over to the Secretary to be 
    used, to the extent practicable, in the interest of continuing one or 
    more of the promotion, research, consumer information, or industry 
    information programs, plans, or projects authorized under this subpart.
    
    
    Sec. 1208.62  Effect of termination or amendment.
    
        Unless otherwise expressly provided by the Secretary, the 
    termination of this subpart or of any regulation or rule issued under 
    this subpart, or the issuance of any amendment to such provisions, 
    shall not:
        (a) Affect or waive any right, duty, obligation, or liability that 
    shall have arisen or may hereafter arise in connection with any 
    provision of this subpart or any such regulation or rule;
        (b) Release or extinguish any violation of this subpart or any such 
    regulation or rule; or
        (c) Affect or impair any rights or remedies of the United States, 
    the Secretary, or any person with respect to any such violation.
    
    Reports, Books, and Records
    
    
    Sec. 1208.70  Books, records, reports, cost control, and audits of the 
    Council.
    
        (a) The Council shall maintain the books and records that the 
    Secretary may require to account for the receipt and disbursement of 
    all funds entrusted to the Council in accordance with the provisions of 
    this subpart, and shall prepare and submit to the Secretary, from time 
    to time as prescribed by the Secretary, all reports that the Secretary 
    may require.
        (b) The Council shall, as soon as practicable after December 29, 
    1994 and after consultation with the Secretary and other appropriate 
    persons, implement a system of cost controls based on normally accepted 
    business practices that will ensure that the annual budgets of the 
    Council include only amounts for administrative expenses that cover the 
    minimum administrative activities and personnel needed to properly 
    administer and enforce this subpart, and conduct, supervise, and 
    evaluate plans and projects under this subpart.
        (c) The Council shall cause the books and records of the Council to 
    be audited by an independent certified public accountant at the end of 
    each fiscal year. All audits must be performed in accordance with 
    either standards issued by the American Institute of Certified Public 
    Accountants or by the General Accounting Office. A report of each audit 
    shall be submitted to the Secretary.
    
    
    Sec. 1208.71  Reports, books, and records of persons subject to this 
    subpart.
    
        (a) Each qualified handler shall prepare and file reports 
    containing such information as may be required by the Council with the 
    approval of the Secretary. Such information shall include:
        (1) Data showing the volume of sales and non-sale transfers of cut 
    flowers and greens made during the reporting period;
        (2) The amount of the assessment on such sales or non-sale 
    transfers; and
        (3) Any other data that may be required by the Council with the 
    approval of the Secretary.
        (b) Each person subject to this subpart shall maintain and make 
    available for inspection by agents of the Council and the Secretary 
    such books and records as are determined by the Council with the 
    approval of the Secretary, as necessary to carry out the provisions of 
    this subpart and the regulations issued hereunder, including such 
    records as are necessary to verify any reports required. Such records 
    shall be retained for at least two years beyond the fiscal period of 
    their applicability.
    
    
    Sec. 1208.72  Confidential treatment.
    
        (a) Information obtained from books, records, or reports required 
    to be maintained or filed under the Act and this subpart shall be kept 
    confidential by all persons, including agents and former agents of the 
    Council, all officers and employees and all former officers and 
    employees of the Department, and by all officers and employees and all 
    former officers and employees of contracting agencies having access to 
    such information, and shall not be available to Council members. Only 
    those persons having a specific need for such information to 
    effectively administer the provisions of this subpart shall have access 
    to such information. In addition, only such information so furnished or 
    acquired as the Secretary deems relevant shall be disclosed by them, 
    and then only in a suit or administrative hearing brought at the 
    discretion, or upon the request, of the Secretary, or to which the 
    Secretary or any officer of the United States is a party, and involving 
    this subpart. Nothing in this paragraph shall be deemed to prohibit:
        (1) The issuance of general statements, based upon the reports, of 
    the number of persons subject to this subpart or statistical data 
    collected from such reports, which statements do not identify the 
    information furnished by any such persons, and
        (2) The publication, by direction of the Secretary, of the name of 
    any individual, group of individuals, partnership, corporation, 
    association, cooperative, or other entity that has been adjudged to 
    have violated this subpart, together with a statement of the particular 
    provisions of the subpart so violated.
        (b) No information on how a person voted in a referendum conducted 
    under the Act shall be made public.
    
    Miscellaneous
    
    
    Sec. 1208.80  Right of the Secretary.
    
        All fiscal matters, programs or projects, by-laws, rules or 
    regulations, reports, or other substantive actions proposed and 
    prepared by the Council shall be submitted to the Secretary for 
    approval.
    
    
    Sec. 1208.81  Personal Liability.
    
        No member or employee of the Council shall be held personally 
    responsible, either individually or jointly, in any way whatsoever, to 
    any person for errors in judgement, mistakes, or other acts of either 
    commission or omission of such member or employee under this subpart, 
    except for acts of dishonesty or willful misconduct.
    
    
    Sec. 1208.82  Patents, copyrights, inventions, publications, and 
    product formulations.
    
        Any patents, copyrights, inventions, publications, or product 
    formulations developed through the use of funds received by the Council 
    under this subpart shall be the property of the United States 
    Government as represented by the Council and shall, along with any 
    rents, royalties, residual payments, or other income from the rental, 
    sale, leasing, franchising, or other uses of such patents, copyrights, 
    inventions, publications, or product formulations, inure to the benefit 
    of the Council. Upon termination of this subpart, Sec. 1208.61 shall 
    apply to determine disposition of all such property.
    
    
    Sec. 1208.83  Amendments.
    
        Amendments to this subpart may be proposed, from time to time, by 
    the Council or by any interested person affected by the provisions of 
    the Act, including the Secretary.
    
    
    Sec. 1208.84  Separability.
    
        If any provision of this subpart is declared invalid, or the 
    applicability thereof to any person or circumstances is held invalid, 
    the validity of the remainder of this subpart or the applicability 
    thereof to other persons or circumstances shall not be affected 
    thereby.
    
    
    Sec. 1208.85  OMB control numbers.
    
        The control number assigned to the information collection 
    requirements by the Office of Management and Budget pursuant to the 
    Paperwork Reduction Act of 1980, Public Law 96-511, is OMB number 0581-
    0096, except Council member nominee information sheets are assigned OMB 
    number 0505-0001.
    
        Dated: December 23, 1994.
    Patricia Jensen,
    Acting Assistant Secretary, Marketing and Regulatory Programs.
    [FR Doc. 94-32066 Filed 12-28-94; 8:45 am]
    BILLING CODE 3410-02-P
    
    
    

Document Information

Published:
12/29/1994
Department:
Agricultural Marketing Service
Entry Type:
Uncategorized Document
Action:
Final rule.
Document Number:
94-32066
Dates:
December 29, 1994.
Pages:
0-0 (1 pages)
Docket Numbers:
Federal Register: December 29, 1994, FV-94-708FR
CFR: (55)
7 CFR 1208.1
7 CFR 1208.2
7 CFR 1208.3
7 CFR 1208.4
7 CFR 1208.5
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