[Federal Register Volume 64, Number 165 (Thursday, August 26, 1999)]
[Proposed Rules]
[Pages 46754-46765]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-22107]
[[Page 46753]]
_______________________________________________________________________
Part II
Department of Agriculture
_______________________________________________________________________
Agricultural Marketing Service
_______________________________________________________________________
7 CFR Part 1217
Olive Oil Promotion, Research, and Information Order and Referendum
Procedures; Proposed Rules
Federal Register / Vol. 64, No. 165 / Thursday, August 26, 1999 /
Proposed Rules
[[Page 46754]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 1217
[FV-99-703-PR1]
Proposed Olive Oil Promotion, Research, and Information Order
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed rule.
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SUMMARY: The U.S. Department of Agriculture (the Department or USDA) is
seeking comments regarding the establishment of an industry-funded
promotion, research, and information program for olive oil. A proposed
program--the Olive Oil Promotion, Research, and Information Order
(Order)--was submitted to USDA by the North American Olive Oil
Association. Under the Order, olive oil first handlers and importers
would pay an assessment of $0.01 per pound. First handlers would remit
the assessment on domestic olive oil to the proposed Olive Oil Council
(Council). The assessment on imported olive oil would be collected by
the U.S. Customs Service and remitted to the Council. First handlers of
less than 6,000 pounds of olive oil annually and importers of less than
6,000 pounds of olive oil annually would be exempt from assessment. The
proposed program would be implemented under the Commodity Promotion,
Research, and Information Act of 1996 (Act).
DATES: Comments must be received by October 25, 1999.
ADDRESSES: Interested persons are invited to submit written comments
concerning this proposed rule to the Docket Clerk, Research and
Promotion Branch, Fruit and Vegetable Programs, Agricultural Marketing
Service, USDA, Stop 0244, Room 2535 South Building, 1400 Independence
Avenue, SW, Washington, DC 20250-0244. Comments should be submitted in
triplicate and will be made available for public inspection at the
above address during regular business hours. Comments may also be
submitted electronically to: malinda.farmer@usda.gov. All comments
should reference the docket number and the date and page number of this
issue of the Federal Register. A copy of this rule may be found at:
www.ams.usda.gov/fv/rpdocketlist.htm. Pursuant to the Paperwork
Reduction Act (PRA), send comments regarding the accuracy of the burden
estimate, ways to minimize the burden, including the use of automated
collection techniques or other forms of information technology, or any
other aspect of this collection of information to the above address.
Comments concerning the information collection under the PRA should
also be sent to the Desk Officer for Agriculture, Office of Information
and Regulatory Affairs, Office of Management and Budget, Washington, DC
20503.
FOR FURTHER INFORMATION CONTACT: Oliver L. Flake, Research and
Promotion Branch, Fruit and Vegetable Programs, AMS, USDA, Stop 0244,
1400 Independence Avenue, SW, Room 2535 South Building, Washington, DC
20250-0244; telephone (202) 720-9915 or fax (202) 205-2800.
SUPPLEMENTARY INFORMATION: This proposed Order is issued pursuant to
the Commodity Promotion, Research, and Information Act of 1996, 7
U.S.C. 7401-7425; Pub. L. 104-127, enacted April 4, 1996, hereinafter
referred to as the Act.
Executive Order 12988
This proposed rule has been reviewed under Executive Order 12988,
Civil Justice Reform. It is not intended to have retroactive effect.
Section 524 of the Act provides that the Act shall not affect or
preempt any other Federal or State law authorizing promotion or
research relating to an agricultural commodity.
Under section 519 of the Act, a person subject to the Order may
file a petition with the Secretary stating that the Order, any
provision of the Order, or any obligation imposed in connection with
the Order, is not established in accordance with the law, and
requesting a modification of the Order or an exemption from the Order.
Any petition filed challenging the Order, any provision of the Order,
or any obligation imposed in connection with the Order, shall be filed
within two years after the effective date of the Order, provision, or
obligation subject to challenge in the petition. The petitioner will
have the opportunity for a hearing on the petition. Thereafter, the
Secretary of Agriculture (Secretary) will issue a ruling on a petition.
The Act provides that the district court of the United States for any
district in which the petitioner resides or conducts business shall
have the jurisdiction to review a final ruling on the petition, if the
petitioner files a complaint for that purpose not later than 20 days
after the date of the entry of the Secretary's final ruling.
Executive Order 12866
This proposed rule has been determined not significant for purposes
of Executive Order 12866 and therefore has not been reviewed by the
Office of Management and Budget (OMB).
Regulatory Flexibility Act
In accordance with the Regulatory Flexibility Act (RFA) [5 U.S.C.
601 et seq.], the Agency is required to examine the impact of the
proposed rule on small entities. The purpose of the RFA is to fit
regulatory actions to the scale of businesses subject to such actions
so that small businesses will not be disproportionately burdened.
The Act authorizes generic programs of promotion, research, and
information for agricultural commodities. Congress found that it is in
the national public interest and vital to the welfare of the
agricultural economy of the United States to maintain and expand
existing markets and develop new markets and uses for agricultural
commodities through industry-funded, government-supervised, generic
commodity promotion programs.
This program is intended to develop and finance an effective and
coordinated program of promotion, research, and consumer information to
maintain and expand the markets for olive oil. A proposal was submitted
by the North American Olive Oil Association (proponent). The proponent
has proposed that olive oil first handlers and importers approve the
program in a referendum in advance of its implementation. Handlers,
importers, and at-large members would serve on the 14-member Council
that would administer the program under USDA's oversight. In addition,
any person subject to the program may file with the Secretary a
petition stating that the Order or any provision is not in accordance
with law and requesting a modification of the Order or an exemption
from the Order. Further, first handlers of less than 6,000 pounds of
olive oil annually and importers of less than 6,000 pounds of olive oil
annually would be exempt from assessment.
The proponent states that, of a total of 43 domestic first
handlers, 13 would be covered by the program. Thirty first handlers
would be exempt from paying assessments under the proposed Order
because they handle less than 6,000 pounds of olive oil annually.
Therefore, the only burden on first handlers of less than 6,000 pounds
would be the filing of a request for an exemption and recordkeeping to
document their exempt status. The required information would be the
minimum necessary to effectively carry out the requirements of the
program, and their use is necessary to fulfill the intent of the Act.
Such records shall be kept for at least two years. The exemption form
can be
[[Page 46755]]
completed with readily available information, and first handlers
already keep records as a normal business practice. The added burden to
the majority of first handlers for an olive oil promotion, research,
and information program is therefore expected to be minimal.
In addition, there is a minimal burden on importers. The import
assessments would be collected by the U.S. Customs Service (Customs) at
time of entry into the United States. Importers would be required to
keep records and to provide information to the Council or the Secretary
when requested. However, it is not anticipated that importers would be
required to submit forms to the Council. Importers who seek nomination
to serve on the Council would be required to complete one form which
would be submitted to the Secretary.
There would be an additional, minimal burden on the first handlers
and importers who seek nomination to serve on the Council and who
choose to vote in referenda.
The estimated annual cost of providing the information to the
Council by an estimated 408 respondents (43 first handlers, 360
importers, and 5 at-large representatives) would be $3,920 or $600 for
all first handlers or $13.95 per first handler, 3,270 for all importers
or $9.08 per importer, and $50 for all at-large representatives or
$5.00 per at-large representative.
The Department would oversee program operations and, if the program
is implemented, would conduct a referendum (1) not later than seven
years after assessments began to determine whether olive oil first
handlers and importers support continuation of the program, (2) at the
request of the Council established under the Order, or (3) at the
request of 10 percent or more of the number of persons eligible to vote
in referenda. Additionally, the Secretary may conduct a referendum at
any time to determine whether the continuation, suspension, or
termination of the Order or a provision of the Order is favored by
those eligible to vote in referenda.
There are approximately 13 first handlers and 320 importers of
olive oil who would be subject to the program. Most of the first
handlers and importers would be classified as small businesses under
the criteria established by the Small Business Administration (SBA) (13
CFR 121.601). The SBA defines small agricultural handlers and importers
as those whose annual receipts are less than $5 million.
The United States produces very little olive oil compared to the
amount it imports. Assuming a yield of 18 percent from the olives USDA
reports as utilized for oil, production was 738 tons in 1998, compared
to 648 tons in 1997. Imports, however, were 181,850 tons in 1998 and
180,186 tons in 1997. Italy accounted for 73 percent of imports in
1998, followed by Spain at 11 percent, Turkey at 8 percent, and Greece
at 3 percent. A number of countries provided the remaining 5 percent.
The total value of imports in 1998 was about $347 million, compared to
$432 million in 1997. Exports of oil are significant, but are much
smaller than imports. In 1998, the quantity reported was 8,934 tons,
worth $6 million. This compares to 10,323 tons exported in 1997, worth
$7 million. Exports exceed production because some imports are further
processed or repackaged in the United States and then exported.
According to 1996 importer records, over 300 companies import olive
oil into the United States; however, most of these companies import a
very small quantity of oil with each importing less than 1 percent of
the total amount.
Domestic first handlers of olive oil are located primarily in the
states of Texas and California. We understand that approximately 70
percent of these first handlers are small companies, handling less than
6,000 pounds of olive oil per year and would fall within the exemption
from assessment provided in the proposed Order.
Additionally, according to Nielsen Retail Sales data, the retail
sector accounts for 45 percent of the sales of olive oil, the food
service sector accounts for approximately 50 percent, and the
commercial ingredient sector accounts for about 5 percent of olive oil
consumption.
The proposed Order would authorize an initial assessment rate of
$0.01 per pound paid by first handlers and importers of 6,000 pounds or
more of olive oil annually. The proposed Order authorizes the
assessment rate to be raised to a maximum of $0.02 per pound as long as
the increase in any one year does not exceed $0.002 per pound.
Section 516(a)(1) of the Act provides authority to the Secretary to
exempt from the Order any de minimis quantity of an agricultural
commodity otherwise covered by the Order. As stated above, the
proponent recommends that first handlers and importers of less than
6,000 pounds of olive oil annually be exempt from assessment.
At the initial proposed rate of assessment of $0.01 per pound of
olive oil, the Council would collect between $3 million and $4 million
annually.
USDA will keep all individuals informed throughout the referendum
process to ensure that they are aware of and are able to participate in
the referendum. USDA will publicize information regarding the
referendum process so that trade associations and related industry
media can be kept informed.
In addition, the olive oil industry would nominate first handlers,
importers, and at-large representatives of the olive oil market to
serve as members on the Council. The Council would nominate the public
member of the Council. The Council would recommend the assessment rate,
programs and projects, a budget, and any rules and regulations that
might be necessary for the administration of the program. USDA would
ensure that the nominees represent the olive oil industry in accordance
with the Act and the proposed Order.
Proposed recordkeeping and reporting requirements for the olive oil
promotion, research, and information program would be designed to
minimize the burden on first handlers and importers. The olive oil
promotion program would be designed to strengthen the position of olive
oil in the marketplace, maintain and expand existing markets, and
develop new uses and markets for olive oil.
The estimated annual cost of providing the information to the
Council by an estimated 408 respondents (43 first handlers, 360
importers, and 5 at-large representatives) would be $3,920 or $600 for
all first handlers or $13.95 per first handler, $3,270 for all
importers or $9.08 per importer, and $50 for all at-large
representatives or $5.00 per at-large representative.
With regard to alternatives to this proposed rule, the Act itself
provides for authority to tailor a program according to the individual
needs of an industry. Provision is made for permissive terms in an
order in section 516 of the Act, and other sections provide for
alternatives. For example, section 514 of the Act provides for orders
applicable to (1) producers, (2) first handlers and other persons in
the marketing chain as appropriate, and (3) importers (if imports are
subject to assessment). Section 516 authorizes an order to provide for
exemption of de minimis quantities of an agricultural commodity;
different payment and reporting schedules; types of research,
promotion, and information activities in both domestic and foreign
markets; reserve funds; credits for generic and branded activities; and
the assessment of imports.
[[Page 46756]]
In addition, section 518 of the Act provides for referenda to
ascertain approval of an order to be conducted either prior to its
going into effect or within three years after assessments first begin
under the order. An order also may provide for its approval in a
referendum to be based upon (1) a majority of those persons voting; (2)
persons voting for approval who represent a majority of the volume of
the agricultural commodity; or (3) a majority of those persons voting
for approval who also represent a majority of the volume of the
agricultural commodity. Section 515 of the Act provides for
establishment of a board from among producers, first handlers, others
in the marketing chain as appropriate, and importers, if importers are
subject to assessment.
This proposal includes provisions for market expansion and
improvement; reserve funds; and an initial referendum to be conducted
prior to the Order going into effect. Approval will be based upon a
majority of the eligible persons voting in the referendum.
While we have performed this Initial Regulatory Flexibility
Analysis regarding the impact of this proposed Order on small entities,
in order to obtain all the data necessary for a comprehensive analysis,
we invite comments concerning the potential effects of the proposed
Order. In particular, we are interested in obtaining more information
on the number and kind of small and large entities that may incur
benefits or costs from implementation of the proposed Order and
information on the expected benefits or costs.
Paperwork Reduction Act
In accordance with the Office of Management and Budget (OMB)
regulation (5 CFR Part 1320) which implements the Paperwork Reduction
Act of 1995 (44 U.S.C. Chapter 35), the information collection and
recordkeeping requirements that may be imposed by this Order have been
submitted to OMB for approval.
Title: National Research, Promotion, and Consumer Information
Programs.
OMB Number for background form (number 1 below): 0505-0001.
Expiration Date of Approval: July 31, 2001.
OMB Number for other information collections: New Collection.
Expiration Date of Approval: 3 Years from date of approval.
Type of Request: Revision of currently approved information
collections for advisory committees and boards and for research and
promotion programs.
Abstract: The information collection requirements in the request
are essential to carry out the intent of the Act.
In addition, there will be an additional burden on first handlers
and importers who vote in referenda. The referendum ballot, which
represents the information collection requirement relating to
referenda, is addressed in a proposed rule on referendum procedures
which is published separately in this issue of the Federal Register.
Under the proposed program, first handlers would be required to
submit assessments and reports to the Council. Assessments on imports
would be collected by Customs at the time of entry into the United
States. Therefore, it is not anticipated that importers who are subject
to assessments would be required to file any forms with the Council.
Handlers and importers of less than 6,000 pounds of olive oil
annually would be required to file an application in order to receive
an exemption from assessments.
In addition, the proposed Order would impose certain recordkeeping
requirements on first handlers and importers. However, the information
required under the proposed Order could be compiled from records
currently maintained. Such records shall be retained for at least two
years beyond the marketing year of their applicability.
The estimated annual cost of providing the information to the
Council by an estimated 408 respondents (43 first handlers, 360
importers, and 5 at-large representatives) would be $3,920 or $600 for
all first handlers or $13.95 per first handler, $3,270 for all
importers or $9.08 per importer, and $50 for all at-large
representatives or $5.00 per at-large representative.
The proposed Order's provisions have been carefully reviewed, and
every effort has been made to minimize any unnecessary recordkeeping
costs or requirements.
The proposed forms would require the minimum information necessary
to effectively carry out the requirements of the program, and their use
is necessary to fulfill the intent of the Order. Such information can
be supplied without data processing equipment or outside technical
expertise. In addition, there are no additional training requirements
for individuals filling out reports and remitting assessments to the
Council. The forms would be simple, easy to understand, and place as
small a burden as possible on the person required to file the
information.
The information required has been designed to coincide with normal
industry business practices to minimize the burden on the industry. The
required information is not available from other sources because such
information relates specifically to individuals who are covered by the
Order. Therefore, there is no practical method for collecting the
required information without the use of these forms.
Information collection requirements that are included in this
proposal include:
(1) A background information form to be completed by candidates
nominated for appointment to the Council. Estimate of Burden: Public
reporting for this collection of information is estimated to average
0.5 hours per response for each respondent.
Respondents: First handlers, importers, and at-large
representatives.
Estimated Number of Respondents: 13 (average of 28 for the initial
nominations to the Council and approximately 10 respondents annually
thereafter for each 3-year period).
Estimated Number of Responses per Respondent: 1 every 3 years.
Estimated Total Annual Burden on Respondents: 14 hours for the
initial nominations to the Council and 5 hours annually thereafter.
(2) An annual report by each first handler of olive oil. Estimate
of Burden: Public reporting burden for this collection of information
is estimated to average 0.5 hours per each handler reporting on olive
oil handled.
Respondents: Handlers.
Estimated Number of Respondents: 43.
Estimated Number of Responses per Respondent: 1.
Estimated Total Annual Burden on Respondents: 21.5 hours.
(3) An exemption application for first handlers and importers of
less than 6,000 pounds of olive oil annually.
Estimate of Burden: Public reporting burden for this collection of
information is estimated to average .50 hours per response for each
exempt first handler and importer.
Respondents: Exempt first handlers and importers.
Estimated Number of Respondents: 70.
Estimated Number of Responses per Respondent: 1.
Estimated Total Annual Burden on Respondents: 35 hours.
(4) Importer application for reimbursement of assessment.
Estimate of Burden: Public reporting burden for this collection of
information is estimated to average 0.25 hours per importer requesting
a reimbursement.
[[Page 46757]]
Respondents: Importers.
Estimated Number of Respondents: 40.
Estimated Number of Responses per Respondent: 12.
Estimated Total Annual Burden on Respondents: 120 hours.
(5) A requirement to maintain records sufficient to verify reports
submitted under the Order.
Estimate of Burden: Public recordkeeping burden for keeping this
information is estimated to average 0.5 hours per recordkeeper
maintaining such records.
Recordkeepers: First handlers and importers.
Estimated number of Recordkeepers: 403.
Estimated Total Recordkeeping Hours: 201.5 hours.
Comments are invited on: (a) Whether the proposed collection of
information is necessary for the proper performance of functions of the
Order and the Department's oversight of the program, including whether
the information will have practical utility; (b) the accuracy of USDA's
estimate of the burden of the proposed collection of information,
including the validity of the methodology and assumption used; (c) ways
to enhance the quality, utility, and clarity of the information to be
collected; and (d) ways to minimize the burden of the collection of
information on those who are to respond, including the use of
appropriate automated, electronic, mechanical, or other technological
collection techniques or other forms of information technology.
The Act provides for the submission of proposals for a promotion,
research, and information order by industry organizations or any other
interested person affected by an order.
Comments concerning the information collection requirements
contained in this action should reference the docket number and the
date and page number of this issue of the Federal Register. Comments
addressing the nomination background information form should reference
OMB No. 0505-0001. In addition, the docket number, date, and page
number of this issue of the Federal Register also should be referenced.
Comments should be sent to the USDA Docket Clerk and the OMB Desk
Officer for Agriculture at the addresses and within the time frames
listed above. All responses to this notice will be summarized and
included in the request for OMB approval.
OMB is required to make a decision concerning the collection of
information contained in this rule between 30 and 60 days after
publication. Therefore, a comment to OMB is best assured of having its
full effect if OMB receives it within 30 days of publication.
Background
The Act authorizes the Secretary, under a generic authority, to
establish agricultural commodity research and promotion orders. The Act
provides for a number of optional provisions that allow the tailoring
of orders for different commodities. Section 516 of the Act provides
permissive terms for orders, and other sections provide for
alternatives. For example, section 514 of the Act provides for orders
applicable to (1) producers, (2) first handlers and others in the
marketing chain as appropriate, and (3) importers (if importers are
subject to assessment). Section 516 authorizes an order to provide for
exemption of de minimis quantities of an agricultural commodity;
different payment and reporting schedules; types of research,
promotion, and information activities in both domestic and foreign
markets; reserve funds; credits for generic and branded activities; and
the assessment of imports. In addition, section 518 of the Act provides
for referenda to ascertain approval of an order to be conducted either
prior to its going into effect or within three years after assessments
first begin under the order. The order also may provide for its
approval in a referendum based upon different voting patterns. Section
515 provides for establishment of a board from among producers, first
handlers and others in the marketing chain as appropriate, and
importers, if imports are subject to assessment.
This proposed Order includes provisions for market expansion and
improvement, reserve funds, and an initial referendum to be conducted
prior to the Order going into effect. Approval will be based upon a
majority of the eligible first handlers and importers voting in the
referendum.
The proponent has requested the establishment of a national
promotion, research, and information order for olive oil pursuant to
the Act. The Act authorizes the establishment and operation of generic
promotion programs which may include a combination of promotion,
research, industry information, and consumer information activities
funded by mandatory assessments. These programs are designed to
maintain and expand markets and uses for agricultural commodities. This
proposal would provide for the development and financing of an
effective and coordinated program of research, promotion, and
information for olive oil. The purpose of the program would be to
strengthen the position of olive oil in the marketplace and to develop,
maintain, and expand markets for olive oil.
The program would not become effective until approved by first
handlers and importers in a referendum to be conducted by USDA. Section
518 of the Act provides for the Department (1) to conduct an initial
referendum, preceding a proposed order's effective date, among persons
who would pay assessments under the program or (2) to implement a
proposed order, pending the conduct of a referendum, among persons
subject to assessments, within three years after assessments first
begin.
In accordance with section 518(e) of the Act, the results of the
referendum must be determined one of three ways: (1) Approval by a
majority of those persons voting; (2) approval by persons voting who
represent a majority of the volume of the commodity covered by the
program; or (3) approval by a majority of the persons voting who also
represent a majority of the volume of the commodity produced, handled,
or imported by the persons voting.
The proponent proposes that the Department conduct an initial
referendum preceding the proposed Order's effective date and that
approval of the Order be determined by a simple majority of the
eligible first handlers and importers voting in the referendum.
In accordance with the Act, the Department would oversee the
program's operations. In addition, the Act requires the Secretary to
conduct subsequent referenda: (1) Not later than seven years after
assessments first begin under the Order; or (2) at the request of the
Council established under the Order; or (3) at the request of 10
percent or more of the number of persons eligible to vote. The
proponent group has requested that a referendum be conducted not later
than seven years after assessments first begin under the proposed Order
to determine if first handlers and importers want the program to
continue.
In addition to these criteria, the Act provides that the Secretary
may conduct a referendum at any time to determine whether the
continuation, suspension, or termination of the Order or a provision of
the Order is favored by persons eligible to vote.
According to the proponent, the largest obstacle to successful
marketing of olive oil is the widespread lack of awareness of its
characteristics and uses. Most consumers are aware that it costs three
times as much as other food oils, but do not understand the differences
between olive oils (a tree crop product) and vegetable or seed oils
[[Page 46758]]
that are an annual crop and are basically a secondary product to the
high value oilseed meal that is used for animal feed.
Currently, only 22 percent of U.S. households purchase olive oil.
Preliminary research by the proponent indicates that more than 50
percent of those who do not use olive oil say that they do not know how
to use it. This indicates the magnitude of the task for the olive oil
industry.
Similarly, there is also a need for educating the trade audience,
such as chefs and others involved in the food service industry. Such
sectors need more accurate information about the characteristics of
olive oil and the types of foods and recipes that can be enhanced with
olive oil.
Only in recent years has there emerged an awareness of the
nutritional benefits of olive oil. A strong marketing program is needed
to inform consumers about the nutritional benefits of olive oil and how
it can be used within a nutritious diet.
Unlike other oils that are relatively uniform in characteristics,
all extra virgin olive oils, virgin olive oils, and pure olive oils
have different flavor characteristics. Different varieties and growing
regions have a considerable influence on the flavor of oils. An
effective promotion program is needed to educate the public and trade
sectors on the types of olive oils and their uses in various food
preparations.
Currently, no organization in the industry has sufficient resources
to mount an effective information and publicity program for olive oil,
to educate chefs on the uses of olive oil, and to develop the
information that consumers and chefs require.
Most of the companies that market olive oil to the retail sector,
food service sector, and commercial ingredient sector do not have the
resources to promote the product. They look to the industry to develop
the information that consumers and chefs require.
The olive oil industry has attempted to create marketing programs
to no avail. These programs lacked adequate funding to reach the
domestic audience and impact the marketplace for olive oil. For
example, the proponent began a public relations program in 1991 with a
budget of $100,000, but the maximum funds it has been able to raise for
promotion by voluntary contributions has leveled off at $250,000. The
total budget for the proponent is only $325,000. The budget of the
California Olive Oil Council is less than $25,000. The Texas Olive Oil
Council does not have a fixed budget.
Through the promulgation of a research and promotion order, the
industry intends to effectively promote the consumption of olive oil
through publicity on its nutritional and health benefits, its unique
taste characteristics, and its versatility.
In addition, the Order would provide the necessary structure and
budget to support scientific and other forms of research that would
benefit the olive oil industry. For example, a wide variety of research
projects are needed to further study the health and other potential
benefits of olive oil as well as to address issues such as adulteration
and botulism.
Members of the industry have already begun discussions regarding
the types of programs and projects that should be launched nationally
to achieve these objectives. A partial listing of these potential
programs and projects include: Developing a publicity program to reach
consumers, chefs, food writers, cook book authors, and others;
providing representation of the olive oil industry at major food and
nutrition shows; conducting food service and retail recipe contests;
preparing collateral materials for industry; conducting in-store food
demonstrations featuring olive oil; conducting news conferences and
issuing news releases; researching the medical benefits of olive oil;
and researching how olive oil works with different food applications in
the commercial ingredient sector.
Industry support was assessed at a meeting of the Olive Oil Task
Force held in December 1997. This task force is a coalition
representing members of the North American Olive Oil Council, the
California Olive Oil Council, and the Texas Olive Oil Council, as well
as companies in the olive oil business. Members of the retail, food
service, and commercial ingredient sectors were represented on the task
force. These task force members as well as all known companies in the
olive oil industry were invited to the meeting to discuss the benefits
and usefulness of a research and promotion order for olive oil.
At this meeting and through subsequent discussions, participants
agreed that current regional marketing programs will not be successful
in boosting the domestic market for olive oil. In addition,
participants reached a broad-based and almost unanimous agreement that
the olive oil business would substantially benefit from a national
research and promotion order.
All of these factors led the olive oil industry to seek a national
promotion program to find ways to further increase the consumption of
olive oil.
Section 516(f) of the Act allows an order to authorize the levying
of assessments on imports of the commodity covered by the program or on
products containing that commodity, at a rate comparable to the rate
determined for the domestic agricultural commodity covered by the
order. The proponent has proposed that imports be assessed.
The assessment levied on domestically produced and imported olive
oil would be used to pay for promotion, research, and consumer and
industry information as well as administration, maintenance, and
functioning of the Council. Expenses incurred by the Secretary in
implementing and administering the Order, including referenda costs,
also would be paid from assessments.
Sections 516(e)(1) and (2) of the Act state that an Order may
provide credits of assessments for generic and branded activities. The
proponent has elected not to propose credits for generic or branded
activities. Therefore, the terms ``generic activities'' and ``branded
activities'' are not defined in the Order, and credits for assessments
would not be made.
First handlers would be required to pay assessments and submit
reports to the Council. Importers would be required to pay assessments,
which would be collected by Customs at the time of entry into the
United States. Both first handlers and importers would be required to
keep records under the proposed program. First handlers and importers
of less than 6,000 pounds of olive oil annually would be exempt from
assessments. However, they would be required to file an exemption
request in order to be exempt from assessments and reporting under the
Order. First handlers and importers seeking nomination to serve on the
Council would be required to complete a confidential questionnaire to
determine their eligibility to serve.
All information obtained from persons subject to this Order as a
result of recordkeeping and reporting requirements would be kept
confidential by all officers, employees, and agents of the Department
and of the Council. However, this information may be disclosed only if
the Secretary considers the information relevant, and the information
is revealed in a judicial proceeding or administrative hearing brought
at the direction or on the request of the Secretary or to which the
Secretary or any officer of the Department is a party. Other exceptions
for disclosure of confidential information would include the issuance
of general statements based on reports
[[Page 46759]]
or on information relating to a number of persons subject to an order
if the statements do not identify the information furnished by any
person or the publication, by direction of the Secretary of the name of
any person violating the Order and a statement of the particular
provisions of the Order violated by the person.
The proposed Order provides for the Department to conduct an
initial referendum preceding the proposed Order's effective date.
Therefore, the proposed Order must be approved by a majority of the
eligible first handlers and importers voting in the referendum. The
proposed Order also provides for subsequent referenda to be conducted
(1) no later than seven years after assessments first begin under the
Order, (2) at the request of the Council established under the Order,
or (3) when requested by 10 percent or more of first handlers and
importers covered by the Order. In addition, the Secretary may conduct
a referendum at any time.
The Act requires that such a proposed order provide for the
establishment of a board to administer the program under USDA
supervision. The proponent's proposal provides for a 14-member Olive
Oil Council, as stated earlier.
To ensure fair and equitable representation of the olive oil
industry on the Council, the Act requires membership on the Council to
reflect the geographical distribution of the production of olive oil
and the quantity or value of imports. To that end, this proposal
provides that three members of the Council would be importers and
marketers of consumer brands; one member would be an importer and
marketer or packer of a private label; one member would be an importer
of bulk olive oil; two members would be importers and marketers to the
food service trade; two members would be first handlers of domestic
olive oil; and five at-large members would represent one or more of the
following segments of the olive oil market: The health community;
professional chefs; food service operators; and food media/consultants.
Upon implementation of the Order and pursuant to the Act, the
Council would at least once in each five-year period, but not more
frequently than once in each three-year period, review the geographical
distribution of olive oil production in the United States and the
quantity of imports and make a recommendation to the Secretary after
considering the results of its review and other information it deems
relevant regarding the reapportionment of Council membership.
Members would serve for three-year terms, except that the members
appointed to the initial Council would serve proportionately for two-,
three-, and four-year terms. No member would serve more than two
consecutive terms.
The proposed Order submitted by the proponent is summarized as
follows:
Sections 1217.01 through 1217.22 of the proposed Order define
certain terms, such as olive oil, first handler, importer, information,
promotion, and research, which are used in the proposed Order.
Sections 1217.30 through 1217.37 include provisions relating to the
Council: Establishment and membership, nominations, term of office,
vacancies, procedure for conducting meetings, compensation and
reimbursements for Council members, the Council's powers and duties,
and prohibited activities.
Sections 1217.40 through 1217.41 establish the authority for the
Council to develop research, promotion, and information projects and
requirements for contracts, subject to oversight of the Secretary.
Sections 1217.50 through 1217.54 cover budget review and approval;
financial statements; the collection of assessments; exemption from
assessments; the use of assessments, including reimbursement of
necessary expenses incurred by the Council for the performance of its
duties, which includes expenses incurred for the Department's oversight
responsibilities; a late-payment charge on past-due assessments; and an
operating reserve.
The proponent recommends an initial assessment rate of $0.01 per
pound on domestic and imported olive oil to be paid by handlers of
domestic olive oil and importers.
The Council may raise the rate of assessment by no more than $0.002
per pound in any year, up to a maximum rate of $0.02, with approval of
the Secretary.
The federal debt collection procedures referenced in
Sec. 1217.52(g) include those set forth in 7 CFR 3.1 through 3.36 for
all research and promotion programs administered by USDA (60 FR 12533,
March 7, 1995).
Sections 1217.55 through 1217.56 require that the Council perform
an independent evaluation of its programs at least once every five
years and address patents, copyrights, trademarks, information,
publications, and product formulations developed through the use of
assessment funds.
Sections 1217.60 through 1217.62 concern reporting and
recordkeeping requirements for persons subject to the Order and protect
the confidentiality of information from such books, records, or
reports.
Sections 1217.70 through 1217.78 describe the rights of the
Secretary; require an initial referendum before the program is
implemented; authorize the Secretary to suspend or terminate the Order
when deemed appropriate; prescribe proceedings after suspension or
termination; specify effects of termination or amendment; and address
personal liability, separability, and amendments.
The Department has modified the proponent's proposal to make it
consistent with the Act and other similar national research and
promotion programs for consistency throughout the text and for clarity.
In the definitions the following terms were added: ``conflict of
interest,'' ``Department,'' ``order,'' ``suspend,'' and ``terminate.''
Additionally, the term ``first handler'' was added to the definitions
and replaced ``handler'' throughout the text.
The definition of ``information'' was rewritten to include
activities designed to enhance olive oil's image, to add definitions of
``consumer information'' and ``producer information,'' and to conform
with the Act. The terms ``marketing'' and ``research'' were also
changed to conform with the Act.
Section 1217.37 Prohibited activities, Sec. 1217.41 Contracts, and
Sec. 1217.55 Independent evaluation were part of the original proposal
but were subsections or cited in the proposal. The Department has
expanded each of these for consistency with similar national research
and promotion programs. In addition, the following sections and
paragraphs were added to the proponent's proposal: Sec. 1217.36 (r) and
(s); Sec. 1217.51 Financial Statements; Sec. 1217.53(c) and (d);
Sec. 1217.70 Right of the Secretary; Sec. 1217.71 Referenda; and
Sec. 1217.72(b) and (c).
Section 1217.16 was changed from Plans and Projects to Programs,
Plans, and Projects and Sec. 1217.35 was changed from Expenses to
Compensation and reimbursement in order to more accurately reflect the
subject covered in the section.
Section 1217.50(h) has been added in order to be consistent with
the Act. Paragraph (e)(5) Limitation on spending of section 515 of the
Act states that a board ``may not expend for administration (except for
reimbursements to the Secretary * * *)'' an amount that exceeds 15
percent of the board's income during any fiscal year. This provision
has been added as the proposal submitted did not indicate a limitation
for such spending. In this same section, in order to be more
[[Page 46760]]
consistent with similar national research and promotion programs, a
list of subjects to be covered in the budget was included. In addition,
paragraphs (c), (d), and (f), which discuss amendments to the approved
budget, authorization to incur expenses for a reasonable reserve, and
the acceptance and use of voluntary contributions were added for
clarity and for consistency with other similar national research and
promotion programs.
Other minor changes which do not materially affect the text were
made as appropriate.
The Department has determined that this proposed Order is
consistent with and would effectuate the purposes of the Act.
The proposal set forth below has not received the approval of the
Secretary.
List of Subjects in 7 CFR Part 1217
Administrative practice and procedure, Advertising, Consumer
Information, Marketing agreements, Olive oil promotion, Reporting and
recordkeeping requirements.
For the reasons set forth in the preamble, it is proposed that
Title 7 of Chapter XI of the Code of Federal Regulations be amended as
follows:
1. Part 1217 is added to read as follows:
PART 1217--OLIVE OIL PROMOTION, RESEARCH, AND INFORMATION ORDER
Subpart A--Olive Oil Promotion, Research, and Information Order
Definitions
Sec.
1217.1 Act.
1217.2 Conflict of interest.
1217.3 Council.
1217.4 Department.
1217.5 First handler.
1217.6 Fiscal period and marketing year.
1217.7 Handle.
1217.8 Importer.
1217.9 Information.
1217.10 Marketer.
1217.11 Marketing.
1217.12 Olive oil.
1217.13 Order.
1217.14 Part and subpart.
1217.15 Person.
1217.16 Programs, plans, and projects.
1217.17 Promotion.
1217.18 Research.
1217.19 Secretary.
1217.20 Suspend.
1217.21 Terminate.
1217.22 United States.
Olive Oil Council
1217.30 Establishment and membership.
1217.31 Nominations.
1217.32 Term of office.
1217.33 Vacancies.
1217.34 Procedure.
1217.35 Compensation and reimbursement.
1217.36 Powers and duties.
1217.37 Prohibited activities.
Research, Promotion, and Information
1217.40 Research, promotion, and information.
1217.41 Contracts.
Expenses and Assessments
1217.50 Budget and expenses.
1217.51 Financial statements.
1217.52 Assessments.
1217.53 Exemption from assessment.
1217.54 Operating reserve.
1217.55 Independent evaluation.
1217.56 Patents, copyrights, inventions, product formulations, and
publications.
Reports, Books, and Records
1217.60 Reports.
1217.61 Books and records.
1217.62 Confidential treatment.
Miscellaneous
1217.70 Right of the Secretary.
1217.71 Referenda.
1217.72 Suspension or termination.
1217.73 Proceedings after termination.
1217.74 Effect of termination or amendment.
1217.75 Personal liability.
1217.76 Separability.
1217.77 Amendments.
1217.78 OMB control numbers.
Authority: 7 U.S.C. 7401-7425.
Subpart A--OLIVE OIL PROMOTION, RESEARCH, AND INFORMATION ORDER
Definitions
Sec. 1217.1 Act.
Act means the Commodity Promotion, Research, and Information Act of
1996 (7 U.S.C. 7401-7425; Pub. L. 104-127; 110 Stat. 1029, as amended),
or any amendments thereto.
Sec. 1216.2 Conflict of interest.
Conflict of interest means a situation in which a member or
employee of the Council has a direct or indirect financial interest in
a person who performs a service for, or enters into a contract with,
the Council for anything of economic value.
Sec. 1217.3 Council.
Council means the administrative body established pursuant to
Sec. 1217.30.
Sec. 1217.4 Department.
Department means the United States Department of Agriculture.
Sec. 1217.5 First handler.
First handler means the first person (excluding a common or
contract carrier) who buys or takes possession of olive oil from a
producer for marketing. If a producer markets olive oil directly to
consumers, the producer shall be considered to be a first handler with
respect to the olive oil produced by the producer.
Sec. 1217.6 Fiscal period and marketing year.
Fiscal period and marketing year mean the 12-month period ending on
December 31 or such other consecutive 12-month period as shall be
recommended by the Council and approved by the Secretary.
Sec. 1217.7 Handle.
Handle means to process, package, sell, transport, purchase, or in
any other way place olive oil, or cause it to be placed, in the current
of commerce.
Sec. 1217.8 Importer.
Importer means any person who imports olive oil into the United
States as principal or as an agent, broker, consignee, or
representative of any person who produces or handles olive oil outside
of the United States for sale in the United States, and who is listed
in the import records as the importer of record for such olive oil.
Sec. 1217.9 Information.
Information means information and programs that are designed to
increase efficiency in processing and to develop new markets, marketing
strategies, increased market efficiency, and activities that are
designed to enhance the image of olive oil on a national or
international basis. These include:
(a) Consumer information, which means any action taken to provide
information to, and broaden the understanding of, the general public
regarding the consumption, use, nutritional attributes, and care of
olive oil; and
(b) Industry information, which means information and programs that
will lead to the development of new markets, new marketing strategies,
or increased efficiency for the olive oil industry, and activities to
enhance the image of olive oil.
Sec. 1217.10 Marketer.
Marketer means any person engaged in the sale or other disposition
of olive oil in any channel of commerce.
Sec. 1217.11 Marketing.
Marketing means the sale or other disposition of olive oil in any
channel of commerce.
Sec. 1217.12 Olive oil.
Olive oil is the oil obtained solely from the fruit of the olive
tree (Olea europaea sativa Hoffm. Et Link) and, for purposes of this
Order, includes olive pomace oil.
[[Page 46761]]
Sec. 1217.13 Order.
Order means an order issued by the Secretary under section 514 of
the Act that provides for a program of generic promotion, research, and
information regarding agricultural commodities authorized under the
Act.
Sec. 1217.14 Part and subpart.
Part means the Olive Oil Research, Promotion, and Consumer
Information Order and all rules, regulations, and supplemental orders
issued thereunder, and the Order shall be a subpart of such part.
Sec. 1217.15 Person.
Person means any individual, group of individuals, partnership,
corporation, cooperative, or any other legal entity.
Sec. 1217.16 Programs, plans, and projects.
Programs, plans, and projects means those research, promotion, and
information plans, studies, or projects established pursuant to
Sec. 1217.30.
Sec. 1217.17 Promotion.
Promotion means any action, including paid advertising and the
dissemination of culinary and nutritional information and public
relations, to present a favorable image of olive oil to the public for
the purpose of improving the competitive position of olive oil in the
marketplace and to stimulate sales in the retail, food service, and
industrial markets.
Sec. 1217.18 Research.
Research means any type of test, study, or analysis designed to
advance the image, desirability, use, marketability, production,
product development, or quality of olive oil.
Sec. 1217.19 Secretary.
Secretary means the Secretary of Agriculture of the United States,
or any other officer or employee of the Department to whom authority
has heretofore been delegated, or to whom authority may hereafter be
delegated, to act in the Secretary's stead.
Sec. 1217.20 Suspend.
Suspend means to issue a rule under section 553 of title 5, United
States Code, or part thereof, to temporarily prevent the operation of
an order during a particular period of time specified in the rule.
Sec. 1217.21 Terminate.
Terminate means to issue a rule under section 553 of title 5,
United States Code, or part thereof, to cancel permanently the
operation of an order beginning on a date certain specified in the
rule.
Sec. 1217.22 United States.
United States means collectively the 50 states of the United States
of America, the District of Columbia, and the Commonwealth of Puerto
Rico, and the territories and possessions of the United States.
Olive Oil Council
Sec. 1217.30 Establishment and membership.
(a) The Olive Oil Council is hereby established to administer the
terms and provisions of the Order. The Council shall consist of 14
members as follows:
(1) Three members shall be importers and marketers of name brands;
(2) One member shall be an importer and marketer or packer of a
private label;
(3) One member shall be an importer of bulk olive oil;
(4) Two members shall be importers and marketers to the food
service trade;
(5) Two members shall represent the first handlers of domestic
olive oil; and
(6) Five members shall be at-large representatives of one or more
of the following segments of the olive oil market: the health
community; professional chefs; food service operators; retailers; and
food media/consultants.
(b) In accordance with regulations approved by the Secretary, at
least every five years and not more than every three years, the Council
shall review the geographical distribution of first handlers of
domestic olive oil throughout the United States and the volume of
imported olive oil and, if warranted, recommend to the Secretary the
reapportionment of Council membership or the addition of members to
reflect changes in the geographical distribution of the handling of
olive oil and the volume of imported olive oil.
Sec. 1217.31 Nominations.
(a) The Secretary shall solicit nominations for the initial Council
from importers, handlers, and other professionals associated with the
olive oil industry.
(b) Procedure for subsequent nominations.
(1) The Council shall announce at least 180 days in advance of the
expiration of members' terms that such terms are expiring and shall
solicit nominations for such positions. The announcement shall include,
at a minimum, the following information:
(i) A list of the vacancies for which nominees may be submitted and
qualifications for nomination; and
(ii) The date by which the names of nominees shall be submitted to
the Secretary for consideration in accordance with paragraph (b)(3) of
this section.
(2) Importer members shall be nominated by importers, and handler
members shall be nominated by handlers. The at-large members may be
nominated by other professionals associated with the olive oil
industry.
(3) Nominations should be submitted to the Secretary not less than
90 days prior to the expiration of members' terms.
(4) Two nominees must be submitted to the Secretary for each
vacancy.
(c) The Secretary shall appoint the members of the Council from
nominations made in accordance with paragraph (b) of this section.
(1) The Secretary may reject any nominee submitted. If there is an
insufficient number of nominees from whom to appoint members to the
Council as a result of the Secretary's rejecting such nominees,
additional nominees shall be submitted to the Secretary in a manner
prescribed by the Secretary.
(2) Whenever the industry fails to nominate individuals for
appointment to the Council, the Secretary may appoint members in such a
manner as the Secretary determines appropriate.
Sec. 1217.32 Term of office.
The members of the Council shall serve for terms of three years,
except the members of the initial Council shall be designated for and
shall serve terms as follows: Five members shall serve for two-year
terms; five shall serve for three-year terms; and four shall serve for
four-year terms. No member shall serve more than two consecutive terms.
Sec. 1217.33 Vacancies.
(a) In the event any member of the Council ceases to be a member of
the category of members from which the member was appointed to the
Council, such position shall automatically become vacant.
(b) If a member of the Council consistently refuses to perform the
duties of a member of the Council, or if a member of the Council
engages in acts of dishonesty or willful misconduct, the Council may
recommend to the Secretary that the member be removed from office. If
the Secretary finds the recommendation of the Council shows adequate
cause, the Secretary shall remove such member from office.
(c) Should any member position become vacant, the Secretary shall
solicit nominations in the manner set forth in Sec. 1217.32, except
that said nomination and replacement shall not be required if said
unexpired terms are less than six months.
[[Page 46762]]
Sec. 1217.34 Procedure.
(a) At a properly convened meeting of the Council, eight members
shall constitute a quorum. Any action of the Council shall require the
concurring votes of a majority of those present and voting. At
assembled meetings, all votes shall be cast in person.
(b) In matters of an emergency nature when there is not enough time
to call an assembled meeting of the Council, the Council may act upon
the concurring votes of a majority of its members by mail, telephone,
facsimile, or by other means of communication: Provided, that each
proposition is explained accurately, fully, and substantially
identically to each member. All telephone votes shall be promptly
confirmed in writing and recorded in the Council minutes.
Sec. 1217.35 Compensation and Reimbursement.
Members of the Council, when acting as members, shall serve without
compensation but shall be reimbursed for reasonable travel expenses, as
approved by the Council, incurred by them in the performance of their
duties as Council members.
Sec. 1217.36 Powers and duties.
The Council shall have the following powers and duties:
(a) To administer this subpart in accordance with its terms and
provisions of the Act;
(b) With the approval of the Secretary, to invest funds, pending
disbursement pursuant to a plan or project, only in: obligations of the
United States or any agency thereof; in general obligations of any
State or any political subdivision thereof; in any interest-bearing
account or certificate of deposit of a bank which is a member of the
Federal Reserve System; or in obligations fully guaranteed as to
principal and interest by the United States;
(c) To appoint from its members an executive committee and to
delegate to the committee authority to administer the terms and
provisions of this subpart under the direction of the Council and
within the policies determined by the Council;
(d) To receive, investigate, and report to the Secretary complaints
of violations of this part; and
(e) To recommend to the Secretary amendments to this part.
(f) To meet and organize and to select from among its members a
chairperson, other officers, and committees and subcommittees, as the
Council determines to be appropriate;
(g) To develop and recommend to the Secretary for approval such
bylaws as may be necessary for the functioning of the Council and such
rules as may be necessary to administer the Order, including activities
authorized to be carried out under the Order;
(h) To employ such persons as it may deem necessary and to
determine the compensation and define the duties of each;
(i) To prepare and submit to the Secretary for the Secretary's
approval, a budget on a fiscal period basis of its anticipated expenses
in the administration of this part including the probable costs of all
programs or projects and to recommend a rate of assessment with respect
thereto;
(j) To receive and review or on its own develop programs and
projects and to enter into contracts or agreements with the approval of
the Secretary for the development and carrying out of programs or
projects of promotion, and information;
(k) To maintain minutes, books, and records which shall be
available to the Secretary for inspection and audit, and to prepare and
submit such reports from time to time to the Secretary, as the
Secretary may prescribe, and to make appropriate accounting with
respect to the receipt and disbursement of funds entrusted to it;
(l) To periodically prepare and make public reports of its
activities carried out, and, at least once each fiscal period, to make
public an accounting of funds received and expended;
(m) To cause its books to be audited by a certified public
accountant at the end of each fiscal period and to submit a copy of
each audit to the Secretary;
(n) To give to the Secretary the same notice of meetings of the
Council and subcommittees (including those conducted by telephone) as
is given to members in order that representatives of the Secretary may
attend such meetings;
(o) To submit to the Secretary such information pertaining to this
subpart as the Secretary may request;
(p) To notify olive oil importers and first handlers of all Council
meetings through news releases or other means;
(q) To develop and recommend such rules and regulations to the
Secretary for approval as may be necessary for the development and
execution of plans, projects, or activities to effectuate the declared
purpose of the Act.
(r) To act as intermediary between the Secretary and any producer,
first handler, or importer.
(s) To work to achieve an effective, continuous, and coordinated
program of promotion, research, information, evaluation, and industry
information designed to strengthen the olive oil industry's position in
the marketplace; maintain and expand existing markets and uses for
olive oil; and to carry out programs, plans, and projects designed to
provide maximum benefits to the olive oil industry.
Sec. 1217.37 Prohibited activities.
(a) The Council may not engage in and shall prohibit the employees
and agents of the Council from engaging in:
(1) Any action that would be a conflict of interest; or
(2) Using funds collected by the Council under the Order to
undertake any action for the purpose of influencing legislation or
governmental action or policy, including local, state, national, and
foreign governments, other than recommending to the Secretary
amendments to the Order.
(b) No Council program, plan, or project shall make any false or
misleading claims on behalf of olive oil or false, misleading, or
disparaging statements with respect to the attributes or use of another
agricultural commodity.
Research, Promotion, and Information
Sec. 1217.40 Research, promotion, and information.
(a) The Council shall develop and submit to the Secretary for
approval any plans or projects authorized in this section. Such plans
or projects shall provide for:
(1) The establishment, issuance, effectuation, and administration
of appropriate plans or projects for research, promotion, and
information designed to strengthen the position of olive oil in the
marketplace, to maintain, develop, and expand markets for olive oil,
and to encourage further development of the domestic industry; and
(2) The establishment and conduct of marketing research and
development projects to the end that the acquisition of knowledge
pertaining to olive oil or its consumption and use may be encouraged or
expanded or to the end that the marketing and utilization of olive oil
may be encouraged, expanded, improved, or made more efficient.
(b) No program, plan, or project shall be implemented prior to its
approval by the Secretary. Once a program, plan, or project is so
approved, the Council shall take appropriate steps to implement it.
(c) Each program, plan, or project implemented under this subpart
shall be reviewed or evaluated periodically by the Council to ensure
that it contributes to an effective program of promotion, research, or
information. If it is found by the Council that any such program, plan,
or project does not contribute to an effective program of promotion,
[[Page 46763]]
research, or information, then the Council shall terminate such
program, plan, or project.
Sec. 1217.41 Contracts.
(a) The Council may enter into contracts or make agreements for the
development and carrying out of research, promotion, and information,
and pay for the costs of such contracts or agreements, after approval
from the Secretary.
(b) Each contract or agreement shall provide that:
(1) The contractor or agreeing party shall develop and submit to
the Council a program, plan, or project together with a budget or
budgets that shall show the estimated cost to be incurred for such
program, plan, or project;
(2) The contractor or agreeing party shall keep accurate records of
all its transactions and make periodic reports to the Council of
activities conducted, submit accounting for funds received and
expended, and make such other reports as the Secretary or the Council
may require;
(3) The Secretary may audit the records of any contracting or
agreeing party periodically; and
(4) Any subcontractor who enters into a contract with a Council
contractor and who receives or otherwise uses funds allocated by the
Council shall be subject to the same provisions as the contractor.
Expenses and Assessments
Sec. 1217.50 Budget and expenses.
(a) Prior to the beginning of each fiscal period, or as may be
necessary thereafter, the Council shall prepare and submit to the
Secretary a budget on a fiscal period basis of its anticipated expenses
and disbursements in the administration of the Order and probable costs
of research, promotion, and information. Each such budget shall
include:
(1) A statement of objectives and strategy for each program, plan,
or project;
(2) A summary of anticipated revenue, with comparative data for at
least one preceding year (except for the initial budget);
(3) A summary of proposed expenditures for each program, plan, or
project; and
(4) Staff and administrative expense breakdowns, with comparative
data for at least one preceding year (except for the initial budget).
(b) Each budget shall provide adequate funds to defray its proposed
expenditures and to provide for a reserve as set forth in this subpart.
(c) Subject to this section, any amendment or addition to an
approved budget must be approved by the Secretary, including shifting
funds from one program, plan, or project to another. Shifts of funds
which do not cause an increase in the Council's approved budget and
which are consistent with governing bylaws, approved by the Secretary,
need not have prior approval from the Secretary.
(d) The Council is authorized to incur such expenses, including
provision for a reasonable reserve, as the Secretary finds are
reasonable and likely to be incurred by the Council for its maintenance
and functioning and to enable it to exercise its powers and perform its
duties in accordance with the provisions of this subpart. Such expenses
shall be paid from funds received by the Council.
(e) With approval of the Secretary, the Council may borrow money
for the payment of administrative expenses, subject to the same fiscal,
budget, and audit controls as other funds of the Council. Any funds
borrowed by the Council shall be expended only for startup costs and
capital outlays and are limited to the first year of operation of the
Council.
(f) The Council may accept voluntary contributions, but these shall
only be used to pay expenses incurred in the conduct of programs,
plans, and projects. Such contributions shall be free from any
encumbrance by the donor, and the Council shall retain complete control
of their use.
(g) The Council shall reimburse the Secretary for all expenses
incurred by the Secretary in the implementation, administration, and
supervision of the Order, including all referendum costs in connection
with the Order.
(h) The Council may not expend for administration, maintenance, and
functioning of the Council in any fiscal year an amount that exceeds 15
percent of the assessments and other income received by the Council for
that fiscal year. Reimbursements to the Secretary required under
paragraph (g) of this section are excluded from this limitation on
spending.
Sec. 1217.51 Financial statements.
(a) As requested by the Secretary, the Council shall prepare and
submit financial statements to the Secretary on a regular basis. Each
such financial statement shall include, but not be limited to, a
balance sheet, income statement, and expense budget. The expense budget
shall show expenditures during the time period covered by the report,
year-to-date expenditures, and the unexpended budget.
(b) Each financial statement shall be submitted to the Secretary
within 30 days after the end of the time period to which it applies.
(c) The Council shall submit annually to the Secretary an annual
financial statement within 90 days after the end of the fiscal year to
which it applies.
Sec. 1217.52 Assessments.
(a) Each importer and first handler shall pay to the Council, upon
demand, the assessment as may be approved by the Secretary. Such
assessment shall be the amount established by the Secretary pursuant to
paragraph (b) of this section.
(b) Except as otherwise provided, the rate of assessment shall be
$0.01 per pound of olive oil imported or produced and handled in the
United States. The rate of assessment may be raised to a maximum of
$0.02 per pound as recommended by the Council and approved by the
Secretary, but it shall not be raised more than $0.002 per year in any
fiscal year.
(c) Importers of olive oil shall pay the assessment to the Council
through the U.S. Customs Service at the time of entry. The U.S. Customs
Service shall remit the assessment to the Council.
(d) The import assessment shall be uniformly applied to imported
olive oil identified by the numbers 1509.10.20, 1509.10.40, 1509.90.20,
1509.90.40, 1510.00.40, and 1510.00.60 in the Harmonized Tariff
Schedule of the United States.
(e) Assessments due from a first handler shall be paid to the
Council at such time and in such manner as the Council, with the
Secretary's approval, directs pursuant to regulations issued hereunder.
Such regulations may provide for different importer or first handler
payment schedules so as to recognize differences in marketing or
purchasing practices and procedures.
(f) The Council shall impose a late payment charge on any person
who fails to remit to the Council the total amount for which the person
is liable on or before the payment due date established under this
section. The late payment charge will be in the form of interest on the
outstanding portion of any amount for which the person is liable. The
rate of interest shall be prescribed in regulations issued by the
Secretary.
(g) Persons failing to remit total assessments due in a timely
manner may also be subject to actions by the Secretary under federal
debt collection procedures.
Sec. 1217.53 Exemption from assessment.
(a) A domestic first handler who handles less than 6,000 pounds of
olive oil per year or an importer who imports less than 6,000 pounds of
olive oil per
[[Page 46764]]
year shall be eligible for an exemption from the assessment.
(b) To claim such exemption, a first handler or importer shall
submit an application to the Council stating the basis on which the
person claims the exemption for such year.
(c) If, after a person claims an exemption from assessments for any
year under this section, and such person no longer meets the
requirements of this paragraph for an exemption, such person shall
provide additional information to the Council in the form and manner
prescribed by the Council, subject to approval by the Secretary, and
pay an assessment on all the olive oil handled or imported by such
person during the year for which the person claimed the exemption.
(d) Exempted individuals are subject to such safeguards as
prescribed in this part to prevent improper use of this exemption.
Sec. 1217.54 Operating reserve.
The Council may establish an operating monetary reserve and may
carry over to subsequent fiscal periods excess funds in any reserve so
established: Provided, That the funds in the reserve shall not exceed
one fiscal period's budget. Subject to approval by the Secretary, such
reserve funds may be used to defray any expenses authorized under this
part.
Sec. 1217.55 Independent evaluation.
The Council shall, not less often than every five years, authorize
and fund, from funds otherwise available to the Council, an independent
evaluation of the effectiveness of the Order and programs conducted by
the Council pursuant to the Act. The Council shall submit to the
Secretary, and make available to the public, the results of each
periodic independent evaluation conducted under this paragraph.
Sec. 1217.56 Patents, copyrights, inventions, product formulations,
and publications.
(a) Any patents, copyrights, inventions, or publications developed
through the use of funds collected by the Council under the provisions
of this subpart shall be the property of the U.S. Government as
represented by the Council, and shall, along with any rents, royalties,
residual payments, or other income from the rental, sale, leasing,
franchising, or other uses of such patents, copyrights, inventions, or
publications, inure to the benefit of the Council, and shall be
considered income subject to the same fiscal, budget, and audit
controls as other funds of the Board. Upon termination of this subpart,
Sec. 1217.73 shall apply to determine disposition of all such property.
(b) Should patents, copyrights, inventions or publications be
developed through the use of funds received by the Council under this
subpart and funds contributed by another organization or person, the
ownership and related rights to such patents, copyrights, inventions,
or publications shall be determined by an agreement between the Council
and the party contributing funds towards the development of such
patent, copyright, invention or publication in a manner consistent with
paragraph (a) of this section, subject to approval by the Secretary.
Reports, Books, and Records
Sec. 1217.60 Reports.
Each first handler and importer shall be required to report to the
administrative staff of the Council, at such times and in such manner
as it may prescribe, such information as may be necessary for the
Council to perform its duties. Such reports shall include, but shall
not be limited to the following:
(a) For first handlers, the total quantity of olive oil handled
during the reporting period; and a record of assessments paid,
including a statement from the handler that the assessment has been
paid on all olive oil handled during the reporting period.
(b) For importers, the total quantity of olive oil imported during
the reporting period and a record of each importation of olive oil
during such period, giving quantity, date, and port of entry.
(c) For persons who have an exemption from assessments under
Sec. 1217.53, such information as deemed necessary by the Council, and
approved by the Secretary, concerning the exemption including
disposition of exempted olive oil.
(d) Information reported to the administrative staff of the Council
regarding total quantity, assessments, and other specific information
must be kept confidential in accordance with Sec. 1217.62.
Sec. 1217.61 Books and records.
First handlers and importers shall maintain, and during normal
business hours make available for inspection by employees of the
Council or the Secretary, such books and records as are necessary to
carry out the provisions of this subpart and the regulations issued
thereunder, including such records as are necessary to verify any
required reports. Such records shall be maintained for two years beyond
the first period of their applicability.
Sec. 1217.62 Confidential treatment.
All information obtained from the books, records, or reports
required to be maintained shall be kept confidential by all persons,
including employees of the Council and all officers and employees and
former officers and employees of contracting and subcontracting
agencies or agreeing parties having access to such information, and
shall not be made available to Council members, first handlers, or
importers. Only such information as the Secretary deems relevant shall
be disclosed to the public and then only in a suit or administrative
hearing brought at the direction, or upon the request of the Secretary,
or to which the Secretary or any officer of the United States is a
party, and involving this subpart, except that nothing in this subpart
shall be deemed to prohibit:
(a) The issuance of general statements based upon the reports of a
number of first handlers or importers subject to any order, if such
statements do not either expressly or tacitly identify the information
furnished by any person;
(b) The publication by direction of the Secretary, of the name of
any person convicted of violating this subpart, together with a
statement of the particular provisions of the Order violated by such
person.
(c) Any disclosure of any confidential information by any employee
of the Council shall be considered willful misconduct.
Miscellaneous
Sec. 1218.70 Right of the Secretary.
All fiscal matters, programs, plans, or projects, rules or
regulations, reports, or other substantive actions proposed and
prepared by the Council shall be submitted to the Secretary for
approval.
Sec. 1217.71 Referenda.
(a) Implementation. For the purpose of ascertaining whether the
persons to be covered by the Order favor the Order going into effect,
the Secretary shall conduct an initial referendum among persons to be
subject to the assessment under Sec. 1217.52 who, during a
representative period determined by the Secretary, engaged in the
handling or importation of olive oil. The Order must be approved by a
simple majority of those voting.
(b) Subsequent referenda. The Secretary shall hold subsequent
referenda: Not later than seven years after assessments first begin
under the Order; at the request of the Council; or when petitioned by
10 percent or more of the olive oil first handlers and importers
eligible to vote to determine if they favor termination or suspension
[[Page 46765]]
of this subpart. In addition, the Secretary may hold a referendum at
any time.
Sec. 1217.72 Suspension or termination.
(a) The Secretary shall suspend or terminate this part or subpart
or a provision thereof at the end of the marketing year whenever the
Secretary determines that the subpart or a provision thereof obstructs
or does not tend to effectuate the purposes of the Act, or if the
Secretary determines that its suspension or termination is approved or
favored in a referendum by a simple majority of the persons voting in a
referendum who, during a representative period determined by the
Secretary, have been engaged in the handling or importation of olive
oil.
(b) If, as a result of a referendum, the Secretary determines that
this subpart is not approved, the Secretary shall:
(1) No later than 180 days after making the determination, suspend
or terminate, as the case may be, collection of assessments under this
subpart; and
(2) As soon as practical, suspend or terminate, as the case may be,
activities under this subpart in an orderly manner.
Sec. 1217.73 Proceedings after termination.
(a) Upon the termination of this subpart, the Council shall
recommend to the Secretary not more than five of its members to serve
as trustees for the purpose of liquidating the affairs of the Council.
Such persons, upon designation by the Secretary, shall become trustees
of all funds and property owned, in possession of, or under control of
the Council, including claims for any funds unpaid or property not
delivered or any other claim existing at the time of such termination.
(b) The said trustees shall:
(1) Continue in such capacity until discharged by the Secretary;
(2) Carry out the obligations of the Council under any contracts or
agreements entered into by it pursuant to the Order;
(3) From time to time account for all receipts and disbursements
and deliver all property on hand, together with all books and records
of the Council and of the trustees, to such person as the Secretary may
direct; and
(4) Upon the direction of the Secretary, execute such assignments
or other instruments necessary or appropriate to vest in such person
full title and right to all of the funds, property, and claims vested
in the Council or the trustees pursuant to the Order.
(c) Any person to whom funds, property, or claims have been
transferred or delivered pursuant to this subpart shall be subject to
the same obligations as imposed upon the Council and the trustees.
(d) Any residual funds not required to defray the necessary
expenses of liquidation shall be returned to the persons who
contributed such funds, or paid assessments, or, if not practicable,
shall be turned over to the Secretary to be utilized, to the extent
practicable, in the interest of continuing one or more of the olive oil
research or information programs authorized under the Order.
Sec. 1217.74 Effect of termination or amendment.
Unless otherwise expressly provided by the Secretary, the
termination of this subpart or any regulation issued thereunder, or the
issuance of any amendment to either thereof, shall not:
(a) Affect or waive any right, duty, obligation, or liability which
shall have arisen or which may thereafter arise in connection with any
provision of this subpart or any such rule or regulation issued
thereunder;
(b) Release or extinguish any violation of this subpart or of any
rule or regulation issued thereunder; or
(c) Affect or impair any rights or remedies of the United States,
the Secretary, or of any person, with respect to any such violation.
Sec. 1217.75 Personal liability.
No member or employee of the Council shall be held personally
responsible, either individually or jointly, in any way whatsoever to
any person for errors in judgment, mistakes, or other acts, either of
commission or omission, as such member or employee, except for acts of
dishonesty or willful misconduct.
Sec. 1217.76 Separability.
If any provision of this subpart is declared invalid or the
applicability thereof to any person or circumstance is held invalid,
the validity of the remainder of this subpart, or the applicability
thereof to other persons or circumstances shall not be affected
thereby.
Sec. 1217.77 Amendments.
Amendments to this subpart may be proposed, from time to time, by
the Council or by any interested persons affected by the provisions of
the Act, including the Secretary.
Sec. 1217.78 OMB control numbers.
The control number assigned to the information collection
requirements by the Office of Management and Budget pursuant to the
Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, is yet to be
determined. The Council nominee background statement form is assigned
OMB control number 0505-0001.
Dated: August 18, 1999.
Kathleen A. Merrigan,
Administrator, Agricultural Marketing Service.
[FR Doc. 99-22107 Filed 8-25-99; 8:45 am]
BILLING CODE 3410-02-P
