2024-15238. Softwood Lumber Research, Promotion, Consumer Education, and Information Order; Adjustment to Membership

Table 1—Domestic Manufacturers and Importers by SBA Size Standards, 2022

	Domestic manufacturers		Importers		Totals
	Entities	Volume (MMBF)	Entities	Volume (MMBF)	Entities	Volume (MMBF)
Small	150	950	753	1,034	903	1,984
Large	174	36,616	110	14,904	284	51,520
Total	324	37,566	863	15,938	1,187	53,504
Sources: Forest Economic Advisors; Customs and Border Protection.

Table 1 shows that there was a combined total of 1,187 domestic manufacturers and importers of softwood lumber in the industry in 2022. Of these, 903 entities, or 76 percent, shipped or imported less than 15.15 mmbf and would be considered small based on the SBA definition. These 903 entities domestically manufactured or imported 1.984 billion board feet (bbf) in 2022, less than 4 percent of total volume. The final rule will not disproportionately burden small domestic manufacturers and importers of softwood lumber.

This final rule revises § 1217.44 to add the alternate position, revise § 1217.40 to specifically add four alternates and a public member on the Board and make conforming changes throughout the Order. The Order is administered by the Board with oversight by the USDA. In accordance with program requirements, assessments are collected from domestic manufacturers and importers, and used for research and promotion projects designed to strengthen the position of softwood lumber in the marketplace. Adding two domestic manufacturer alternates, one importer alternate, and one public member and one public member alternate positions will provide more opportunities for diverse candidates to serve on the Board.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the information collection and recordkeeping requirements imposed by the Order were approved previously under OMB control number 0581-0093. This final rule will not result in a change to the information collection and recordkeeping requirements previously approved and would impose no additional reporting and recordkeeping burden on domestic manufacturers and importers of softwood lumber.

As with all Federal promotion programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this final rule.

Regarding alternatives, the Board considered not changing the current Board makeup and continuing to have issues meeting quorum and diverse members serving on the Board. The Board decided against this option to avoid meeting delays and continued concerns with nominations.

Regarding outreach efforts, the full Board determined making these changes will give further opportunity for the industry to engage with the Board and expand the availability of positions to those from under-represented communities and populations. This final rule was discussed by the Industry Relations and Governance Committee on June 29, 2022, and the full Board unanimously recommended rulemaking on August 11, 2022. Further discussions among the Board took place on May 17, 2023.

A proposed rulemaking concerning this action was published in the Federal Register on February 21, 2024 (89 FR 12987). The proposed rulemaking was distributed to all stakeholders of the Board via a newsletter. A copy of the proposed rulemaking was also made available through the internet by AMS via https://www.regulations.gov. A 30-day comment period ending March 22, 2024, was provided for interested persons to respond to the proposal.

Comment Analysis

During the proposed rulemaking's 30-day comment period, AMS received two comments, which may be viewed on https://www.regulations.gov. One comment did not address the merits of the proposed rulemaking. The second comment was submitted by the Softwood Lumber Board and is in favor of the proposed rulemaking. However, the Board had two points to clarify. Firstly, the Board's intent with adding alternate members is to create succession and development opportunities among perspective nominees, not necessarily junior-level professionals as stated in the proposed rulemaking. Secondly, they elaborated that alternates for domestic manufacturers and importers should not automatically be moved into a member position if there is a vacancy. To keep the Board balanced in terms of large, small, and flexible companies represented, the Board prefers vacant positions to go through a normal nomination process.

AMS agrees with the comments from the Softwood Lumber Board and updated the text in the preamble to this final rule and the regulatory text.

List of Subjects in 7 CFR Part 1217

• Administrative practice and procedure
• Advertising
• Agricultural research
• Confidential business information
• Consumer protection
• Forest and forest products
• Inventions and patents
• Marketing agreements
• Reporting and recordkeeping requirements

For the reasons set forth in the preamble, the Agriculture Marketing Service amends 7 CFR part 1217 as follows:

PART 1217—SOFTWOOD LUMBER RESEARCH, PROMOTION, CONSUMER EDUCATION AND INDUSTRY INFORMATION ORDER

1. The authority citation for part 1217 continues to read as follows:

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

2. Revise § 1217.5 to read as follows:

§ 1217.5

Conflict of interest.

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

3. In § 1217.40, revise paragraphs (a) and (b) to read as follows:

§ 1217.40

Establishment and membership.

(a) Establishment of the Board. There is hereby established a Softwood Lumber Board to administer the terms and provisions of the Order and promote the use of softwood lumber. The Board shall be composed of manufacturers for the U.S. market who manufacture and domestically ship or import 15 million board feet or more of softwood lumber in the United States during a fiscal period. Seats on the Board shall be apportioned based on the volume of softwood lumber production that is manufactured and shipped within the United States by domestic manufacturers and the volume of softwood lumber imported into the United States. Seats on the Board shall also be apportioned based on size of operation within each geographic region, as specified in paragraphs (b)(l) and (2) of this section. For purposes of this section, “large” means manufacturers for the U.S. market who account for the top two-thirds of the total annual volume of assessable softwood lumber and “small” means those who account for the remaining one-third of the total annual volume of assessable softwood lumber. If there are no eligible nominees for a large or small seat within a region, that seat may be filled by a nominee representing an eligible manufacturer for the U.S. market of any size. Should the size of a manufacturer for the U.S. market change during a member's or alternate's term of office, that member or alternate may serve for the remainder of the term.

(b) Composition of the Board. The Board shall be composed of 15 members and four alternates, as follows:

(1) Domestic manufacturers. Domestic manufacturers must reside in the United States. Ten members and two alternates shall represent domestic manufacturers who reside in the following three regions:

(i) Five members and one alternate shall represent manufacturers of softwood lumber in the U.S. South Region, which consists of the states of Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and West Virginia. Of these five members, two members must represent large, two members must represent small, and one member may represent domestic manufacturers of any size. The region's alternate may represent domestic manufacturers of any size;

(ii) Four members and one alternate shall represent manufacturers of softwood lumber in the U.S. West Region, which consists of the states of Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington, and Wyoming. Of these four members, two members must represent large, one member must represent small, and one member may represent domestic manufacturers of any size. The region's alternate may represent domestic manufacturers of any size; and

(iii) One member shall represent manufacturers of softwood lumber in the Northeast and Lake States Region, which consists of the states of Connecticut, Delaware, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Vermont, Wisconsin and all other parts of the United States not listed in paragraph (b)(1)(i), (ii), or (iii) of this section. This member may represent domestic manufacturers of any size.

(2) Importers. Four members and one alternate shall represent importers. Of these four members, two members must represent large, one member must represent small, and one member may represent importers of any size. The alternate may represent importers of any size from any region. At least three of the members must import softwood lumber from the following regions:

(i) Two members must import softwood lumber from the Canadian West Region, which consists of the provinces of British Columbia and Alberta; and

(ii) One member must import softwood lumber from the Canadian East Region, which consists of the Canadian territories and all other Canadian provinces not listed in paragraph (b)(2)(i) of this section that import softwood lumber into the United States.

(3) Public Member. One member and one alternate of the Board shall represent the public. The public member and alternate may not be manufacturers for the U.S. market as defined in section 1217.14.

* * * * *

4. Amend § 1217.41 by:

a. Revising paragraphs (b) and (c);

b. Redesignating paragraphs (e) through (g) as paragraphs (f) through (h), respectively;

c. Adding new paragraph (e); and

d. Revising redesignated paragraph (g).

The revisions and addition read as follows:

§ 1217.41

Nominations and appointments.

* * * * *

(b) Domestic manufacturers, importer, and public member nominees, for both member and alternate positions, may provide the Board a short background statement outlining their qualifications to serve on the Board;

(c) Domestic manufacturer, importer, public member and all alternate nominees may seek nomination to the Board for all open or vacant seats for which the nominees are eligible;

* * * * *

(e) Nominations for the public member shall be made by the Board. The Board shall submit the names of at least two nominees for the public member seat and at least two nominees for the public member alternate seat to the Secretary.

* * * * *

(g) No two members or alternates shall be employed by a single corporation, company, partnership, or any other legal entity. This includes subsidiaries and affiliates thereof; and

* * * * *

5. Revise § 1217.42 to read as follows:

§ 1217.42

Term of office.

(a) Board members and alternates will serve a three-year term or until the Secretary selects his or her successor. Each term of office shall begin on January 1 and end on December 31. No member or alternate may serve more than two consecutive terms, excluding any term of office less than three years. A Board member may serve as an alternate during the years he or she is ineligible to serve in a member position.

(b) For the initial Board alternates, their terms shall be staggered for two, three, and four years. Determination of which alternates shall serve a term of two, three, or four years shall be recommended to the Secretary by the Board.

6. Revise § 1217.43 to read as follows:

§ 1217.43

Removal and vacancies.

(a) In the event that any member or alternate of the Board ceases to work for or be affiliated with the domestic manufacturer or importer, or ceases to do business in the group or region from which the member or alternate was appointed to the Board, such position shall automatically become vacant.

(b) The Board may recommend to the Secretary that a member or alternate be removed from office if the member or alternate consistently refuses to perform his or her duties or engages in dishonest acts or willful misconduct. The Secretary may remove the member or alternate if he or she finds that the Board's recommendation shows adequate cause. Further, without recommendation of the Board, a member or alternate may be removed by the Secretary upon showing of adequate cause, including the failure by a member or alternate to submit reports or remit assessments required under this part, if the Secretary determines that such member's or alternate's continued service would be detrimental to the achievement of the purposes of the Act.

(c) If a position becomes vacant, nominations to fill the vacancy may be conducted using the nominations process set forth in § 1217.41 or the Board may nominate eligible persons. A vacancy will not be required to be filled if the unexpired term is less than 6 months.

§§ 1217.44 through 1217.47

[Redesignated as §§ 1217.45 through 1217.48]

7. Redesignate paragraphs §§ 1217.44 through 1217.47 as §§ 1217.45 through 1217.48, respectively.

8. Add new § 1217.44 to read as follows:

§ 1217.44

Alternates.

An alternate member of the Board, during the absence of a member from the same group (domestic manufacturer, importer, or public member) and region (as applicable) may serve in the place and stead of such member and perform such duties as assigned. In the event that both a member of the Board and the alternate are unable to attend a meeting, the Board may not designate any other alternate from a different group or region to serve in such member's or alternate's place and stead for the meeting.

9. Revise newly redesignated § 1217.45 to read as follows:

§ 1217.45

Procedure.

(a) A majority of Board members (exclusive of vacant seats) will constitute a quorum so long as at least two of the members present are importer members and five of the members present are domestic manufacturers. An alternate will be counted for the purpose of determining a quorum only if a member from his or her group and region is absent or disqualified from participating. If participation by telephone or other means is permitted, members participating by such means shall count as present in determining quorum or other voting requirements set forth in this section.

(b) All votes at meetings of the Board, executive committee, and other committees will be cast in person or by electronic voting or other means as the Board and Secretary deem appropriate to allow members participating by telephone or other electronic means to cast votes. Voting by proxy will not be allowed.

(c) Each member of the Board will be entitled to one vote on any matter put to the Board and the motion will carry if supported by a majority of Board members (exclusive of vacant seats), except for recommendations to change the assessment rate or to adopt a budget, both of which require affirmation by at least a majority of Board members plus two (exclusive of vacant seats).

(d) The Board must give its members, alternates, and the Secretary timely notice of all Board, executive committee, and other committee meetings.

(e) In lieu of voting at a properly convened meeting, and when, in the opinion of the Board's chairperson, such action is considered necessary, the Board may take action by mail, telephone, electronic mail, facsimile, or any other means of communication. Any action taken under this procedure is valid only if:

(1) All members, alternates, and the Secretary are notified.

(2) Members and alternates acting in a member's stead are provided the opportunity to vote. A majority of Board members or alternates acting in the member's stead (exclusive of vacant seats) vote in favor of the action (unless a vote of a majority of Board members plus two (exclusive of vacant seats) is required under the Order); and

(3) All votes are promptly confirmed in writing and recorded in the Board minutes.

10. Revise redesignated § 1217.46 to read as follows:

§ 1217.46

Reimbursement and attendance.

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

11. Revise redesignated § 1217.47 to read as follows:

§ 1217.47

Powers and duties.

The Board shall have the following powers and duties:

(a) To administer this Order in accordance with its terms and conditions and to collect assessments;

(b) To develop and recommend to the Secretary for approval such bylaws as may be necessary for the functioning of the Board and such rules, regulations as may be necessary to administer the Order, including activities authorized to be carried out under the Order;

(c) To meet, organize, and select from among its members a chairperson and, such other officers as may be necessary;

(d) To create an executive committee of five members of the Board comprised of the chairperson and four other members elected by the Board. The duties of the executive committee shall be specified in bylaws that are recommended by the Board and approved by the Secretary;

(e) To create other committees or subcommittees, which may include individuals other than Board members, as the Board deems necessary from its membership and other representatives it deems appropriate;

(f) To employ or contract with such persons, other than the members or alternates, as it may deem necessary to assist the Board in carrying out its duties, and to determine the compensation and define the duties of each;

(g) To notify manufacturers for the U.S. market of all Board meetings through press releases or other means and to give the Secretary the same notice of Board meetings, executive committee, and subcommittee meetings that is given to members and alternates in order that the Secretary's representative(s) may attend such meetings, and to keep and report minutes of each meeting to the Secretary;

(h) To develop and administer programs, plans, and projects and enter into contracts or agreements, which must be approved by the Secretary before becoming effective, for promotion, research, and information, including consumer and industry information, research and advertising designed to strengthen the softwood lumber industry's position in the marketplace and to maintain, develop, and expand markets for softwood lumber. The payment of costs for such activities shall be with funds collected pursuant to the Order, including funds collected pursuant to § 1217.50(f). Each contract or agreement shall provide that:

(1) The contractor or agreeing party shall develop and submit to the Board a program, plan, or project together with a budget that specifies the cost to be incurred to carry out the activity;

(2) The contractor or agreeing party shall keep accurate records of all of its transactions and make periodic reports to the Board of activities conducted, submit accounting for funds received and expended, and make such other reports as the Secretary or Board may require;

(3) The Secretary may audit the records of the contracting or agreeing party periodically; and

(4) Any subcontractor who enters into a contract with a Board contractor and who receives or otherwise uses funds allocated by the Board shall be subject to the same provisions as the contractor.

(i) To prepare and submit to the Secretary for approval 60 calendar days in advance of the beginning of a fiscal period, rates of assessment and a budget of the anticipated expenses to be incurred in the administration of the Order, including the probable cost of each promotion, research, and information activity proposed to be developed or carried out by the Board;

(j) To borrow funds necessary for startup expenses of the Order;

(k) To invest assessments collected and other funds received pursuant to the Order and use earnings from invested assessments to pay for activities carried out pursuant to the Order;

(l) To recommend changes to the assessment rates as provided in this part;

(m) To cause its books to be audited by a certified public accountant at the end of each fiscal period and at such other times as the Secretary may request, and to submit a report of each audit directly to the Secretary;

(n) To periodically prepare and make public and to make available to manufacturers for the U.S. market reports of its activities and, at least once each fiscal period, to make public an accounting of funds received and expended;

(o) To maintain minutes, books, and records and prepare and submit to the Secretary such reports from time to time as may be required for appropriate accounting with respect to the receipt and disbursement of funds entrusted to it, and to submit to the Secretary such information pertaining to this part or subpart as he or she may request;

(p) To act as an intermediary between the Secretary and any manufacturer for the U.S. market;

(q) To receive, investigate and report to the Secretary complaints of violations of the Order; and

(r) To develop and recommend such rules and regulations to the Secretary for approval as may be necessary for the development and execution of plans or activities to effectuate the purposes of the Act.

12. Revise redesignated § 1217.48 to read as follows:

§ 1217.48

Prohibited activities.

The Board may not engage in, and shall prohibit the employees and agents of the Board from engaging in:

(a) Any action that would be a conflict of interest;

(b) Using funds collected by the Board under the Order to undertake any action for the purpose of influencing legislation or governmental action or policy, by local, state, national, and foreign governments or subdivision thereof, other than recommending to the Secretary amendments to the Order; and

(c) No program, plan or project including advertising shall be false or misleading or disparaging to another agricultural commodity. Softwood lumber of all geographic origins shall be treated equally.

13. In § 1217.52, revise paragraph (h) to read as follows:

§ 1217.52

Assessments.

* * * * *

(h) The HTSUS categories and assessment rates on imported softwood lumber are listed in the following table. The assessment rates are computed using the following conversion factors: One cubic meter (m3) equals 0.423776001 thousand board feet, and one square meter (m2) equals 0.010763104 thousand board feet. Accordingly, the assessment rate per cubic meter and square meter is as follows.

Table 1 to Paragraph ( h )

Softwood lumber (by HTSUS number)	Assessment $/cubic meter	Assessment $/square meter
4407.11.00	0.1737	0.004412
4407.12.00	0.1737	0.004412
4407.13.00	0.1737	0.004412
4407.14.00	0.1737	0.004412
4407.19.00	0.1737	0.004412
4409.10.05	0.1737	0.004412
4409.10.10	0.1737	0.004412
4409.10.20	0.1737	0.004412
4409.10.90	0.1737	0.004412
4418.99.10	0.1737	0.004412