Honey Research, Promotion, and Consumer Information Order; Proposed Amendments and Referendum Order

AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Proposed rule.

SUMMARY:

This proposed rule would make a number of changes to the honey research and promotion program. The honey program is operated by the National Honey Board (Board) under the supervision of the Agricultural Marketing Service (AMS), an agency of the United States Department of Agriculture (USDA or the Department). The program is currently financed by assessments paid by honey producers, producer-packers, and importers. These amendments are authorized by amendments to the Honey Research, Promotion, and Consumer Information Act (Act). The Order needs to be amended as a result of these changes to the Act.

DATES:

The voting period for the referendum will be September 5 through 29, 2000.

FOR FURTHER INFORMATION CONTACT:

Kathie M. Birdsell, 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) 720-9917 (toll free); facsimile (202) 205-2800.

SUPPLEMENTARY INFORMATION:

The honey research and promotion program will be changed by amending the Honey Research, Promotion, and Consumer Information Order (Order) (7 CFR part 1240) . The changes to the Order are being made as a result of changes made by Congress to the Honey Research, Promotion, and Consumer Information Act (Act) (Pub. L. 98-690; enacted October 30, 1984; 7 U.S.C. 4601-4613, as amended) on June 23, 1998 (Pub. L. 105-185). The honey program operates under the Act.

Prior documents. A proposed rule on amending the Order was published in the Federal Register on February 28, 2000 (65 FR 10600) with a 60-day comment period. The comment period ended on April 28, 2000.

In addition, USDA published a proposed rule on the referendum procedures which will be used in the referendum on the votable amendments in the Federal Register on May 15, 2000 (65 FR 30924) with a 30-day comment period. The final rule on the referendum procedures is being published separately in this issue of the Federal Register. Current producers, producer-packers, handlers, and importers who were also producers, producer-packers, handlers, and importers during 1998 and 1999 (representative period) will be eligible to vote in the referendum.

Question and Answer Overview

Why Is the Honey Program Being Changed?

The honey program is being changed because the Act which authorizes the program was amended in 1998. The amendments to the Act require the same changes to be made to the program.

What Are the Major Changes That Would Be Made to the Honey Program?

The major changes affect (1) assessments under the program, (2) the composition and size of the National Honey Board (Board) which administers the program under Department of Agriculture (USDA) supervision, (3) the types of activities the Board may conduct, and (4) exemption and recordkeeping procedures.

How Would the Assessments be Changed?

The honey program is currently funded by an assessment of 1 cent per pound on honey produced in the United States and 1 cent per pound on imported honey and honey products. The assessment on domestically produced honey would be increased from 1 cent per pound to 1.5 cents per pound as follows: producers would pay 0.75 cent per pound (down from 1 cent per pound), and handlers would pay 0.75 cent per pound (a new assessment). Producer-packers would pay 1.5 cents on the U.S. honey that they produce and handle. The importer assessment would be increased from 1 cent per pound to 1.5 cents per pound to equal the new rate for domestic honey. Previously, there was no handler assessment. The industry must approve these changes in the referendum or they will not be made.

What Is the Purpose of the Assessment Increase?

The assessment increase would be needed to fund the additional Board activities that would be required if the industry approves them in the referendum. These extra activities include spending 8 percent of its income on production research and developing purity standards and a monitoring system.

How Would the Size and Composition of the Board Change?

The Board is currently composed of seven producers, two importers (or one importer and one exporter), two handlers, one representative of a cooperative, one public member, and their alternates.

Regardless of the vote in the referendum, the importer-exporter positions on the Board will be changed to two importer positions to provide more importer input into Board deliberations. In addition, the public member position will be eliminated based on the amended Act.

If approved in the referendum, two handler-importer positions would be added to the Board. This would increase representation of handlers and importers on the Board in order to reflect their increased financial obligations under the program.

How will the activities of the Board change?

Regardless of the outcome of the referendum, the Board will be allowed to develop a voluntary quality assurance program that will be enforced by USDA.

If approved in the referendum, the Board would use 8 percent of its funds annually for beekeeping and production research to support U.S. honey producers. In addition, the Board would be allowed to develop purity standards and an inspection and monitoring system to enhance the image of honey and honey products for the benefit of the entire industry.

How would exemption and recordkeeping requirements change?

Producers, producer-packers, handlers (if covered by the program), and importers who sell (1) less than 6,000 pounds of honey annually and (2) the honey is sold through local retail outlets, such as roadside stands, farmers markets, or groceries will no longer have to request an exemption from the Board in order to avoid paying assessments under the program. In addition, producers would be required to keep records for a period of two years just like producer-packers, handlers, and importers. The Board and the Department need access to certain industry records in order to enforce the assessment and reporting provisions of the program.

Who will be allowed to vote on the amendments?

Current producers, producer-packers, and importers who were subject to assessments in calendar years 1998 and 1999 will be allowed to vote in the referendum. In addition, current handlers who were in operation in calendar years 1998 and 1999 and would be subject to assessments if the changes to the program are made will also be allowed to vote.

How will the referendum be conducted?

The referendum will be conducted by mail ballot from AMS headquarters in Washington, D.C. AMS will mail ballots and voting information to all known producers, producer-packers, handlers, and importers on or before August 29, 2000. AMS will issue a news release when the ballots are mailed and again half way through the voting period to remind voters to submit their ballots. All of the amendments will be voted on as a package. The ballot will be postage-paid to save the voter the cost of mailing it to AMS.

Ballots must be received by AMS no later than Friday, September 29, 2000, in order to be counted in the referendum. Therefore, voters are encouraged to mail their ballots several days in advance of the deadline.

What do I do if I do not receive a ballot?

You may call the referendum agents at 1-888-720-9917 (toll-free) to discuss whether you are eligible to vote and to request a ballot and voting materials.

How many voters need to approve the amendments in order for them to become effective?

That depends on the number of ballots submitted. The votable amendments must be approved (1) by a majority of the eligible producers, producer-packers, handlers, and importers voting in the referendum and (2) that majority must have produced, handled, and imported 50 percent or more of the honey produced and handled and the honey and honey products imported by all eligible voters during 1998 and 1999.

How will AMS determine the number of pounds of honey that I produced, handled, or imported?

To simplify the voting process, each ballot for a producer, producer-packer, and importer will include the number of pounds of honey that the voter paid assessments in 1998 and 1999. The handler ballot will include an estimate of the number of pounds of honey the handler would have paid assessments on during that same period. This information will be provided to AMS by the Board.

If I produce, handle, and import honey, will I receive more than one ballot?

Yes. If you produce, handle, and import honey, you will receive three ballots: (1) one for the number of pounds of domestic honey that you produced in 1998 and 1999; (2) one for the number of pounds of domestic honey that you handled in 1998 and 1999; and (3) one for the number of pounds of foreign honey and honey products that you imported in 1998 and 1999.

Does that mean that I will pay three assessments if the votable amendments are approved in the referendum?

Yes. If you produce, handle, and import honey, you will pay: (1) 0.75 cent on each pound of domestic honey that you produce; (2) 0.75 cent on each pound of domestic honey that you handle; and (3) 1.5 cents on each pound of honey and honey products that you import.

If the voters approve the votable amendments, when will they take effect?

It is likely that all of the amendments would take effect on January 2, 2001. However, some of them would take several months to implement. For example, in order to make the changes in Board members, new nominations would have to be made by the National Honey Nominations Committee and submitted to the Secretary of Agriculture for consideration. This process takes several months. Therefore, it is possible that the new Board appointments would not be made until mid-2001. In addition, the U.S. Customs Service, which collects the assessments on imported honey and honey products, needs time to change the import assessment at all ports of entry. Therefore, it is likely that the new assessment rates would not become effective before April 1, 2001.

What happens if the honey industry does not approve the votable amendments?

If the honey industry does not approve the votable amendments, then only the non-votable amendments will take effect. This means: (1) The two importer-exporter positions on the Board will be changed to two importer positions; (2) the public member position will be eliminated; (3) nomination and eligibility requirements for handlers, importers, and representatives of cooperatives will become effective for the next term of office; (4) at least 50 percent of the Board members will have to be producers; (5) the Board could develop a voluntary quality assurance program with enforcement by USDA; (6) small companies will no longer be required to file for an exemption under the program in order to avoid paying assessments; and (7) producers will be required to maintain records.

Executive Orders 12866 and 12988

This rule has been determined to be “not significant” for purposes of Executive Order (E.O.) 12866 and, therefore, has not been reviewed by the Office of Management and Budget.

In addition, this rule has been reviewed under E.O. 12988, Civil Justice Reform. The rule is not intended to have retroactive effect and would not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

The Act allows producers, producer-packers, importers, and handlers (if covered by the program) to file a written petition with the Secretary of Agriculture (Secretary) if they believe that the Order, any provision of the Order, or any obligation imposed in connection with the Order is not in accordance with law. In the petition, the person may request a modification of the Order or an exemption from the Order. Petitions must be filed not later than two years after: (1) The effective date of the Order, provision, or obligation challenged in the petition; or (2) the date on which the petitioner became subject to the Order, provision, or obligation challenged in the petition. The petitioner will have the opportunity for a hearing on the petition. Afterwards, the Secretary will issue a ruling on the petition.

If the petitioner disagrees with the Secretary's ruling, the petitioner may file, within 20 days, an appeal in the U.S. District Court for the district where the petitioner resides or conducts business.

Regulatory Flexibility Analysis. In accordance with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.), the Agricultural Marketing Service (AMS) has examined the impact of the proposed changes to the honey program on small honey producers, producer-packers, handlers, and importers.

The Small Business Administration (SBA) (13 CFR 121.201) defines small agricultural producers as those having annual receipts of no more than $500,000. Small producer-packers, handlers, and importers fit into the SBA definition for small agricultural service firms with annual receipts of less than $5 million.

According to National Honey Board (Board) records, 2,885 producers paid $1,864,590 in assessments in 1999. That represents $646 in assessments on 64,600 pounds of honey per producer. At the average wholesale price for honey in 1999 of 65.5 cents per pound, the average producer had $42,313 in receipts, well below the $500,000 threshold.

Similarly, Board records indicate that 348 importers paid $1,743,021 in assessments in 1999. That represents $5,008 in assessments on 500,800 pounds of honey per importer. At the average wholesale price for honey of 65.5 cents per pound, the average importer had $328,024 in receipts, well below the $5 million threshold.

There are approximately 121 handlers and 400 producer-packers who would pay assessments on the domestic honey that they handle if the votable amendments to the Order are approved in the referendum. In 1999, 184,296,200 pounds of domestic honey were handled. At the average wholesale price for honey of 65.5 cents per pound, the value of that honey was $120,714,011 or $231,696 per handler or producer-packer, which is also below the $5 million threshold.

Therefore, a majority of the producers, producer-packers, handlers, and importers who would be affected by the changes to the Order may be considered small entities. In addition, an estimated three handler/importer organizations whose membership includes these entities would be affected by the changes to the Order.

The votable amendments would add a 0.75 cent per pound assessment on honey handlers, decrease the producer assessment from 1 cent per pound to 0.75 cent per pound, and increase the assessment on imported honey from 1 cent per pound to 1.5 cents per pound. An assessment of 0.75 cent per pound represents only 1.1 percent of the 1999 average price of honey of 65.5 cents per pound (wholesale). The 1.5 cent per pound assessment on imports would be a 50 percent increase for importers. However, 1.5 cents represents only 2.3 percent of the 1999 average wholesale price. Therefore, the assessment changes are not expected to create a burden for small entities.

Basing projections on the assessments remitted or reported over the five-year period from 1995 to 1999, the Board would collect approximately $4,860,000 in assessments annually, a $1.3 million increase in revenue from assessments collected in 1999, if the amendments are approved.

The proposed amendments would have many benefits for the producers, producer-packers, handlers, and importers directly affected by them. They would also have benefits for consumers and various segments of the marketing chain, including food service operators.

The non-votable changes in the nomination procedures for Board members would benefit handlers, importers, and marketing cooperatives by giving them increased input on the individuals who are nominated by the National Honey Nominations Committee (Committee). The proposed eligibility requirements for persons serving as importer members and alternates on the Board and the proposed requirement to eliminate the authority for an exporter to serve in an importer position on the Board would also benefit importers by providing them more representation on the Board and, thus, more input into Board decisions on how their assessment dollars are spent.

If the votable amendments are approved, importer representation would be further increased by the addition of two handler-importer members and alternates to the Board. These proposed positions would also give handlers increased representation on the Board, reflecting the fact that they would start paying assessments.

The non-votable change in the term of office for the Committee will greatly facilitate the ability of state beekeeper associations to submit nominees to serve on the Committee to USDA in a timely manner and help assure that the Secretary is able to appoint new members to the Committee prior to the beginning of the term of office. The non-votable requirement that 50 percent of the members of the Board must be producers reflects the amended provisions of the Act.

In addition, producers, handlers, and importers would benefit from the non-votable changes on reconstituting the Board. Reconstitution of Board members would be based on changes in the geographical distribution of honey production in the United States and on changes in the proportion of assessments paid on domestic honey and on imported honey and honey products, and this should provide more equitable treatment and fairness of representation on the Board for producers, handlers, and importers alike.

The votable amendment which would require the Board to reserve 8 percent of the assessments it collects on research to increase the efficiency of the honey industry and to enhance the image of honey and honey products has the potential to provide the consumer with new products; to provide beekeepers with better production methods; to ensure that any quality or purity standards are fair to both the domestic industry and imports; and to add new markets for honey.

All segments of the honey industry could benefit from the non-votable amendments to implement a quality assurance program and a related inspection and monitoring system because they have the potential to increase wholesale and retail confidence in the quality of the honey that is marketed. This means that consumers, food service operators, and manufacturers would be likely to have more confidence in the quality of honey and honey products available on the market. This, in turn, is expected to generate increased sales of honey in the United States and abroad, which would benefit producers, handlers, and importers alike. Handlers would also have confidence in the purity of the honey they are buying from producers or importers.

The minimum purity standards and inspection and monitoring system that will be voted upon in the referendum have the potential to further increase confidence within the honey industry and among consumer and commercial buyers.

The non-votable amendment which would add reporting and recordkeeping requirements for producers would assist the Board in periodically collecting production information to help identify industry trends for use in program planning and evaluation. This information would help guide the Board in its decision making as well as be provided to industry members for their use in making individual marketing decisions. The amendment would also assist the Board in enforcing the assessment and reporting provisions of the Order which would help ensure that everyone who is subject to assessments is paying assessments.

The non-votable amendment that eliminates the requirement for persons who are eligible to claim an exemption to file an application for an application would significantly reduce the paperwork burden on the industry as well as reduce the Board's costs in managing the program.

The non-votable amendment which sets guidelines for the timing of referenda reduces the possibility that the operations of the Board will be disrupted so frequently that the effectiveness of the Board's programs would be compromised.

In addition, removing obsolete provisions from the Order would make the Order more understandable to the public, the industry, and the Board and its staff.

Paperwork and recordkeeping impact. The Transaction Report used in the assessment collection process would have to be revised to reflect the new assessments rates.

One non-votable amendment would require producers to maintain and make available to the Board and the Secretary books and records. Another would require producers to periodically report to the Board information pertaining to the quantity of honey produced and the total number of bee colonies maintained. Currently, only handlers, importers, and producer-packers are required to maintain records and provide reports to the Board or the Secretary. This information is necessary for enforcement of the Act. It is most likely that the information requested from producers would be obtained through periodic audits.

Based on this expanded reporting authority, there are also plans to collect information periodically from producers for statistical purposes. At this time, the Board's plans are tentative on how and when producers are to report the prescribed statistical information due to mailing costs and certain other factors relating to the content and design of the proposed information collection. The form or mailer for collecting the information will be submitted to OMB for approval prior to its use and the industry will be notified.

Another non-votable amendment would reduce the reporting burden for certain producers, producer-packers, handlers, and importers who qualify for exemption from assessment based on the quantity of honey or honey products produced, handled, or imported. Pursuant to the 1998 changes to the Act, the Order would no longer require individuals to file an application with the Board in order to attain exempt status.

The recordkeeping and reporting requirements related to the proposed amendments to the Order are designed to minimize the burden on producers, producer-packers, handlers, and importers. In addition, any information collection that cannot occur through forms already in use would pose a minimal additional burden.

The estimated total annual cost of maintaining records and providing the information to the Board and USDA by an estimated 5,873 respondents (5,000 producers, 400 producer-packers, 121 handlers, 348 importers, 3 handler/importer organizations, and 1 cooperative representative) would be $40,839 or $5.03 per producer, $31.03 per producer-packer, $26.36 per handler, $0.11 per importer, $15 per handler/importer organization, and $5.00 per cooperative representative, and represents an overall increase in burden for each of these groups.

The impact of the recordkeeping requirement provided for in this proposed rule on small entities would be minimal. This recordkeeping requirement is consistent with prudent business practices and should not impose any undue costs or significant burdens on a vast majority of the small entities affected. It is anticipated that a significant number of these small entities currently keep these records for commercial and/or tax purposes.

With regard to alternatives, the provisions of the amendments to the Order in this proposal have been carefully reviewed, and every effort has been made to minimize any unnecessary recordkeeping costs or requirements while maintaining consistency with the provisions of the Act, as amended.

The proposed forms to be modified would require the minimum information necessary to effectively carry out the requirements of the program, and their use is necessary to fulfill the intent of the Act, as well as the proposed amendments to the Order. The information required has been designed to coincide with normal industry business practices to minimize the burden on the industry.

There are no federal rules that duplicate, overlap, or conflict with this rule.

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 (PRA) (44 U.S.C. Chapter 35), AMS has submitted the information collection and recordkeeping requirements that may be imposed if the proposed amendments become effective to OMB for approval under OMB Control Nos. 0581-0093 and 0505-0001.

Title: National Research, Promotion, and Consumer Information Programs.

OMB Number: 0581-0093.

Expiration Date of Approval: November 30, 2000.

Type of Request: Revision of currently approved information collections for advisory committees and boards and for research and promotion programs.

Abstract: The proposed recordkeeping and information collection requirements are essential to carry out the intent of the Act, as amended.

In addition, there would also be a new burden on handlers voting for the first time in the upcoming referendum, and producer-packers and importers would be entitled to cast votes as handlers as well as producers or importers. The referendum ballot, which represents the information collection requirements relating to the referendum, is addressed in the final rule on the referendum procedures which is being published separately in this issue of the Federal Register.

A non-votable amendment to the Order would increase the recordkeeping burden on producers. The Order currently requires handlers, importers, and producer-packers to retain their books and records for at least two years beyond the marketing year of their applicability. The Order would be changed to conform to the Act, as amended, by also requiring producers to maintain and retain books and records for two years. It is anticipated that producers already maintain and retain the books and records which contain this information for commercial and/or tax purposes. Therefore, this recordkeeping requirement is consistent with prudent business practices and should not impose any undue costs or significant burdens on a vast majority of producers.

Another non-votable amendment to the Order would add authority for the Board to require producers to maintain records and, at such time and such manner that the Board may prescribe, report information pertaining to the quantity of honey produced and the total number of bee colonies maintained. Currently, the Board's authority to request reports extends only to handlers, importers, and producer-packers. It is most likely that this information would be obtained from producers through periodic audits.

Based on this expanded reporting authority, the Board also plans to collect information periodically from producers for statistical purposes. At this time, the Board's plans are tentative on how and when producers are to report the prescribed statistical information due to mailing costs and certain other factors relating to the content and design of the possible information collection.

A votable amendment would impose a new 0.75 cents per pound assessment on handlers of honey and honey products, decrease the producer assessment from 1 cent to 0.75 cents per pound, and increase the assessment on imported honey and honey products from 1 cent to 1.5 cents per pound. If the amendments are approved in the referendum, the Transaction Report, which is currently used to report purchase and assessment information, would be modified to reflect the new assessment rates.

Information provided on the Transaction Report is collected under OMB No. 0581-0093. There would be a slight increase in the reporting burden for handlers and producer-packers in order to complete additional assessment information covering their handling activity on the Transaction Report. However, the added reporting burden would be minimal. The extra information to be collected represents a small portion of the total information that handlers and producer-packers are already required to fill out and submit on the same form for each purchase.

The background information form used by the Secretary to determine if nominees to the Board are eligible to serve would be revised and submitted as a new form (AMS-755). It would be added to the information collection under OMB No. 0581-0093. This form is completed and submitted to USDA by individuals who are nominated for member and alternate positions on the Board.

To conform to the 1998 amendments to the Act, another non-votable amendment would revise qualification requirements for serving on the Board. This information would be collected on the Board's Candidate Profile (No. 4 below), and would be used by the Board's staff and the National Honey Nominations (Committee) to determine the qualifications of candidates to the Board. The Candidate Profile would be submitted as a new form and added to the information collection under OMB No. 0581-0093. It is anticipated that the basic background information to be collected would be readily accessible or otherwise maintained from records currently maintained by those persons who would be candidates to serve on the Board.

It should be noted that the amendments to the Order contained in this proposed rule would reduce the reporting burden for those producers, producer-packers, and importers who previously have been required to file an application with the Board in order to qualify for exemption from assessments. Based on the changes to the Act in 1998, persons subject to the Act would no longer be required to file an application for exempt status.

The estimated total annual cost of maintaining records and providing the information to the Board and USDA by an estimated 5,873 respondents (5,000 producers, 400 producer-packers, 121 handlers, 348 importers, 3 handler/importer organizations, and 1 cooperative representative) would be $40,839 or $5.03 per producer, $31.03 per producer-packer, $26.36 per handler, $0.11 per importer, $15 per handler/importer organization, and $5.00 per cooperative representative, and represents an overall increase in burden for each of these groups.

The new recordkeeping requirement involving 2,700 hours for producers and producer-packers would be added to the program's recordkeeping burden under OMB No. 0581-0093. The previously approved recordkeeping burden totals 12,525 hours. This total is a miscalculation due to an overstatement in the number of respondents. Based on recalculation of the previous burden, the new annual recordkeeping burden would equal 5,451 hours, after including the additional 2,700 hours.

The estimated annual burden of 1,355 hours in providing additional information on the Transaction Report would be added to the previous burden under OMB No. 0581-0093. The previously approved burden totals 9,100 hours. However, this total is a miscalculation due to an overstatement in the number of respondents. Based on recalculation of the previous burden, the estimated new annual burden for completion of the Transaction Report would equal 8,128 hours, after including the additional 1,355 hours.

The estimated annual burden of 10 hours for completing the background information form (AMS-755) represents a new burden to be reported under OMB No. 0581-0093. The removal of the exemption application requirement would eliminate the estimated annual burden of 41.5 hours as reported under OMB No. 0581-0093. The estimated annual burden of 12.5 hours for completing the Candidate Profile represents a new burden to be reported under OMB No. 0581-0093 for the first time.

The provisions of the amendments to the Order in this proposal have been carefully reviewed, and every effort has been made to minimize any unnecessary recordkeeping or reporting costs or requirements.

The proposed forms to be modified would require the minimum information necessary to effectively carry out the requirements of the program, and their use is necessary to fulfill the intent of the Act, as well as the proposed amendments to 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 Board. These 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 information sought is not available from other sources because such information relates specifically to persons covered by the Act and Order. Therefore, there is no practical method for collecting the required information without the proposed recordkeeping requirements and use of forms described in this rule.

The new recordkeeping requirement included in this proposed rule is:

(1) A requirement for producers to maintain books and records to facilitate administration and enforcement of the Order.

Estimate of Burden: Public recordkeeping burden for keeping this information is estimated to average 0.5 hours per recordkeeper maintaining such records.

Respondents (Recordkeepers): Producers and producer-packers.

Estimated Number of Respondents (Recordkeepers): 5,400.

Estimated Number of Responses per Respondent (Recordkeeper): 1.

Estimated Total Annual Burden on Respondents (Recordkeepers): 2,700 hours.

Information collection requirements included in this proposed rule resulting in an increase or decrease in burden are:

(2) A Transaction Report to be completed by first handlers, producer-packers, and importers.

Estimate of Increased Burden: Public reporting burden for the collection of additional information from handlers and producer-packers is estimated to average an additional 3 minutes per each response [18 minutes (requested)−15 minutes (currently approved)=3 minutes (increase)].

Respondents: Handlers and producer-packers.

Estimated Number of Respondents: 521.

Estimated Number of Responses per Respondent: 52.

Estimated Total Annual Burden on Respondents: 8,128 hours [8,128 hours (requested)−9,100 hours (currently approved) = 972 (decrease)]. Note: The previously approved burden of 9,100 hours is not correct due to an overstatement in the number of respondents. If the previous burden were recalculated based on 521 respondents, it would equal 6,773 hours. This means that the 8,128 hours now requested would represent an increase in burden of 1,355 hours instead of a decrease of 972 hours.

(3) A background information form (AMS-755) to be completed by candidates nominated for appointment to the Board.

Estimate of Burden: Public reporting burden for the collection of information from two nominees for each of the estimated five member and five alternate position openings annually is estimated to average 0.5 hours per response.

Respondents: Producers, producer-packers, handlers, importers, and cooperative representatives.

Estimated Number of Respondents: 20

Estimated Number of Responses per Respondent: 1

Estimated Total Annual Burden on Respondents: 10.0 hours [10.0 hours (requested)−0.0 hours (new form) = 10.0 hours (increase)].

(4) A Candidate Profile form used by Board staff and the Committee to determine qualifications to serve on the Board.

Respondents: Handlers and producer-packers.

Estimated Number of Respondents: 521.

Estimated Number of Responses per Respondent: 52.

Estimated Total Annual Burden on Respondents: 8,128 hours [8,128 hours (requested)−9,100 hours (currently approved) = 972 (decrease)]. Note: The previously approved burden of 9,100 hours is not correct due to an overstatement in the number of respondents. If the previous burden were recalculated based on 521 respondents, it would equal 6,773 hours. This means that the 8,128 hours now requested would represent an increase in burden of 1,355 hours instead of a decrease of 972 hours.

The following information collection would be added by this rule:

(5) A report from honey handler/importer organizations for certification of eligibility to nominate Board members.

Estimate of Burden: Public reporting for this collection of information is estimated to average 1.5 hours per response for each organization.

Respondents: Honey handler and importer organizations.

Estimated Number of Respondents: 3.

Estimated Number of Responses per Respondent: 1.

Estimated Total Annual Burden on Respondents: 4.5 hours (new)

The following information collection would be eliminated by this rule:

(6) A producer or importer application to be completed by producers and importers seeking exemption from assessment.

Estimate of Burden: Public reporting burden for this collection of information from producers, producer-packers, and importers is estimated to average 0.083 hours per response.

Respondents: Producers, producer-packers, and importers.

Estimated Number of Respondents: 500.

Estimated Number of Responses per Respondent: 1.

Estimated Decrease in Total Annual Burden on Respondents: 41.5 hours [0.0 hours (form discontinued)−41.5 hours (currently approved) hours (decrease) = 41.5 hours (decrease)].

Comments on the regulatory and paperwork impact of the proposed amendments to the Order were invited in the February 28, 2000, proposed rule. Three comments were submitted by the April 28, 2000, deadline.

One commenter believes that the estimated total annual cost of maintaining records and providing information to the Board and USDA, as stated in the February 28, 2000, proposed rule, is overstated. The commenter asserted that the estimated number of responses per respondent on the Transaction Report may be overstated. According to the commenter, Board records showed that the actual number of responses was 30 for each respondent rather than the 52. With 30 responses per respondents, the revised total annual burden on respondents for the Transaction Report would be 4,689 hours. This would be a decrease of 4,411 hours from the currently approved annual burden. The commenter's observation that importers do not complete the Transaction Report is accurate. The PRA section of the February 28, 2000, proposed rule incorrectly indicated that importers are required to complete the report. However, importers were not included in the calculation of the estimated total annual burden on respondents. The commenter's estimated number of responses is based on the number of Transaction Reports received last year, and the number of Transaction Reports submitted will likely change from year to year. Therefore, no change is made as a result of this comment.

Another commenter believes that the estimated total annual cost of maintaining records and providing information to the Board and USDA is too low. According to the commenter, the annual cost per producer of $5.03 is low when considering the time involved in reading, studying, and writing comments regarding the proposed changes to the Order. However, the annual cost per producer only entails the actual time spent in maintaining and providing required information to the Board and USDA. This annual cost does not include the time spent by a commenter who voluntarily submits comments. Therefore, no change was made as a result of this comment.

Another commenter suggested that, for those who are both a producer-packer and a handler, the expense of recordkeeping would be more than the actual assessment. This may be correct. However, every effort has been made to minimize the costs of maintaining records and providing information. Therefore, no change is made as a result of this comment.

A comment was received in which the commenter suggested that requiring producers and first handlers' to submit reports would be unnecessary. However, the requirement is necessary for enforcement. Without authority to require reports, it would be difficult to conduct compliance investigations. Therefore, no change is made as a result of this comment.

Background

As explained above, the Act, which authorizes the honey research and promotion program, was amended in 1998. Subsequently, the U.S. Department of Agriculture (USDA or the Department) requested interested persons to submit proposals for making comparable changes to the program, which operates under the Honey Research, Promotion, and Consumer Information (Order).

The National Honey Board (Board)—with the support of three honey industry groups—submitted a proposal containing regulatory text for all of the changes authorized or required by the 1998 amendments to the Act. Proposals submitted by eight other organizations or persons did not include regulatory text. Therefore, the Department published the Board's proposal, with a few changes, as a proposed rule in the Federal Register on February 28, 2000 (65 FR 10600), with a 60-day comment period. The eight other submissions were made part of the rulemaking record and are considered comments on the proposed changes.

Proposal

The Board proposed the following amendments to the Order:

In §§ 1240.1 through 1240.28 of the Order, definitions would be added for the terms “Department,” “honey production,” “industry information,” “national honey marketing cooperative,” “plans and projects,” “qualified national organization representing handler interests,” and “qualified national organization representing importer interests.” Each of these new definitions was added to sections 4602 (19) through (24) of the Act as part of the 1998 amendments. Currently, the Order does not contain definitions for these terms. The definitions have also been arranged in alphabetical order for ease of reference.

Definitions would be revised for the terms “handle,” “honey,” “Honey Board,” and “research.” The definition of the term “handle” would be amended to exclude the purchase of honey or a honey product by a consumer or other end-user, which conforms to the revised definition set out in section 4602(7) of the Act.

The definition of the term “honey” would be modified to include comb honey. USDA has recognized in the past that the intent of the Act is to assess comb honey. This proposed revision would resolve any confusion in this area.

The term “Honey Board” would reappear under the definition heading of “National Honey Board” which then clarifies that the terms “National Honey Board,” “Honey Board,” and “Board” all refer to the National Honey Board created by the Act.

The definition of “research” would be revised to include studies that test the effectiveness of market development and promotion efforts as well as studies on bees as provided for in the 1998 amendments to section 4601(b) of the Act.

Section 1240.30 would be revised to change the composition of the Board to 14 members consisting of: seven producers; two handlers; two handlers who are also importers, if approved in referendum; two importers; and one representative (i.e., officer, director, or employee) of a national honey marketing cooperative. The public member position would be eliminated as well as specific representation for honey exporters. These changes are authorized by the 1998 amendments to section 4606(c)(2) of the Act. Except for the addition to the Board of two handlers who are also importers, these changes would become effective regardless of the outcome of the referendum. See also discussion on producer representation under USDA Changes to Proposal.

Presently, the Board has 13 members consisting of: seven producers; two handlers; two importers or one importer and one exporter; one cooperative representative; and one public member. The cooperative representative must be an officer or employee of a honey marketing cooperative but does not necessarily have to be from a “national” honey marketing cooperative.

Section 1240.31 would be revised to remove obsolete language regarding the length of the terms of office of the initial Board members. This section would also be revised to provide that terms of office be staggered periodically as recommended by the Board and as determined by the Secretary to maintain continuity of Board membership and to avoid situations where a majority of the members' terms end at the same time. The Order currently provides for staggered terms only with respect to the seating of members on the initial Board. Section 4606(c)(8) of the Act as amended in 1998 provides for periodic staggering of Board terms. This amendment does not require approval in the referendum in order to take effect.

In § 1240.32 concerning nominations, a number of revisions would be made to conform the Order with the 1998 amendments to the Act with regard to the nomination process for Board members. For instance, references to state associations representing exporters would be deleted from § 1240.32(a) since section 4606(c)(2) of the amended Act no longer provides for exporter representation on the Board. Similarly, references to the Board member and alternate positions representing the general public would be removed from this section to correspond with the elimination of these positions by the 1998 amendments to the Act. References to the initial Committee formed after the Order was implemented as well as language on the first annual meeting of the Committee would also be deleted from § 1240.32 since such provisions are no longer relevant. Furthermore, as provided in section 4606(b)(2) of the amended Act, § 1240.32 would be amended to reflect the Secretary's authority to stagger the terms of Committee members. These revisions do not require approval in the referendum in order to take effect.

In addition, § 1240.32(a)(3) would be revised so that the term of office for Committee members would begin on July 1 instead of January 1. This change would accommodate the nomination of Committee members by state beekeeper associations, which often meet in the winter months. Currently, it is difficult for the associations to meet and elect their nominees, for the nominees to complete and submit background information forms, and for the Secretary to review the nominations and make a determination prior to the beginning of the term of office on January 1. Having the term of office commence on July 1 would allow adequate time for the nomination process to be completed prior to the beginning of the term. In addition, since the Committee's main meeting is usually in the fall, new members would be appointed by the Secretary in time to participate in that meeting if the term of office begins on July 1. This change would go into effect regardless of the outcome of the referendum.

Section 1240.32(b) would be revised with regard to the process the Committee would follow in considering recommendations of nominees and submitting nominations to the Secretary for handler, importer, handler-importer, and cooperative representative positions on the Board. Based on sections 4606(c)(2) (B) through (E) of the Act, as amended, the Committee would be required to consider the recommendations of “qualified organizations representing handler interests,” “qualified organizations representing importer interests,” and “qualified national honey marketing cooperatives.” The requirements for qualification or certification of these organizations are set forth in section 4606(c)(6) of the Act. These requirements were added to the Act to ensure that the recommendations being made to the Committee would be from organizations that truly represent the various industry segments. If, in a given instance, there is not a qualified national organization that represents handler or importer interests, the Committee would consider the recommendations of individual handlers who have paid assessments on the honey they have handled or the recommendations of individual importers who have paid assessments on the honey they have imported. This revision would become effective regardless of the outcome of the referendum.

Currently, candidates for nomination to the Board for handler or importer positions may be recommended to the Committee by any industry organization that represents the interests of handlers or importers. There are no certification or qualification requirements that need to be met by the industry organization making the recommendations.

With regard to nominations for the cooperative position on the Board, the current Order does not provide a process whereby recommendations are initiated by qualified national honey marketing cooperatives. The current Order also does not limit cooperative nominations to persons affiliated with honey marketing cooperatives that are “national” in character. The current Order does require that the representative be an officer or employee of the cooperative. In contrast, the proposed revision of § 1240.32(b) would expand eligibility to include all directors of a cooperative's board. This takes into account the possibility that one may serve on the board of directors of a cooperative but not necessarily be an officer of the cooperative.

The Act, as amended, requires the Committee to make the following nominations: (1) one producer member (and alternate) from each of the seven regions established by the Secretary; (2) two handler members (and two alternates) from recommendations made by qualified national organizations representing handler interests; (3) two importer members (and two alternates) from recommendations made by qualified national organizations representing importer interests; (4) two handler members who are also importers (i.e., handler-importers) and two alternates from recommendations made by qualified national organizations representing handler or importer interests; and (5) one member (and one alternate) who are officers, directors, or employees of a national honey marketing cooperative from recommendations made by qualified national honey marketing cooperatives. Therefore, this proposed rule would revise § 1240.32 of the Order to adopt this new Board composition and to remove the obsolete references to the current Board structure. The two handler-importer positions on the Board are subject to voter approval in the referendum before taking effect.

Section 1240.32(b) would also be revised to require that at least 75 percent of an importer's gross income generated by the sale of honey and honey products during any three of the preceding five years be from the sale of imported honey and honey products in order to be eligible for nomination to one of the importer member or alternate positions on the Board. This conforms to section 4606(c)(5)(B) of the Act as amended in 1998. Presently, the Order does not establish a minimum gross income level for importer member eligibility. This change would take effect regardless of the outcome of the referendum.

As mandated by section 4606(c)(4) of the Act, and not subject to voter approval in the referendum, § 1240.32(b)(6) in the proposal would be amended with respect to the administrative reconstitution of the Board if certain criteria are met. The 1998 amendments to the Act made changes in Board reconstitution requirements in order to provide more equitable treatment and fairness of representation on the Board. See discussion on Board reconstitution under USDA Changes to Proposal in which references to reconstitution of the Board would be moved from § 1240.32 to § 1240.33.

The proposal would require the Board to review every five years: (1) the geographic distribution of domestically produced honey assessed under the Order, (2) the changes in the annual average percentage of assessments owed by importers under the Order relative to assessments owed by producers and handlers of domestic honey and honey products, and (3) whether there are any changes in the proportion of assessments owed on imports by importers and handler-importers.

As a result of this review, and if necessary to reflect changes in the proportion of domestic and imported honey assessed, the Board would recommend for the Secretary's approval changes in the regional representation of honey producers. And, if the proportion of assessments owed by handler-importers compared with the proportion of assessments owed by importers changed by more than 6 percent from the base period or if the proportion of assessments owed by importers compared with the proportion of assessments owed by producers and handlers of domestic honey and honey products changed by more than 6 percent from the base period proportion, the Board would recommend to the Secretary: (1) The reallocation of handler-importer member positions as handler positions; (2) the reallocation of importer member positions as handler-importer positions; (3) the reallocation of handler-importer positions as importer member positions; or (4) the addition of Board members.

For the initial review conducted by the Board, the base period proportions would be the proportions determined by the Board for fiscal year 1996. Otherwise, the base period proportions would be the proportions determined during the prior review.

Recommendations made by the Board shall be based on the five-year average of annual assessments, excluding the two years containing the highest and lowest disparity between the proportion of assessments owed from imported and domestic honey or honey products and whether any change in the average in the annual assessments is from the assessments owed by importers or the assessments owed by handler-importers.

The provision on Board reconstitution in § 1240.32(b)(6) of the current Order provides authority for the Board to review the fairness of representation on the Board among producer regions, but not the adequacy of representation among handlers and importers serving on the board. In addition, the criteria for evaluating representation on the Board are more permissive in the current Order when compared to the assessment-based criteria provided for in the proposed new version. Also, the current Order, while requiring the Board to conduct a review every five years, does not mandate that the Board propose changes to representation among producer regions as a result of such review.

In § 1240.35 on Board meeting procedures, the quorum requirement would be changed from seven to eight members assuming the voters approve the amendments in the referendum allowing the size of the Board to increase from 13 to 14 members. This would maintain the practice that more than half of the Board members must be present at Board meetings for official Board action to be taken. Note, if the voters in the referendum do not approve the amendments, the number of Board members would decrease from 13 to 12 and the quorum requirement would not be raised. This would occur because the public member position would be eliminated regardless of the outcome of the referendum.

In § 1240.36, a grammatical change would be made, replacing the word “of” with the word “at” in the second sentence without changing the meaning. This change would go into effect regardless of the outcome of the referendum.

In § 1240.38, the Board's duty to investigate potential violations of the Order in paragraph (d) would be expanded to also include the authority to investigate violations of any rule or regulation implemented to carry out the Order. The Board would continue to be required to report any findings to the Secretary.

An editorial change would be made in § 1240.38(l) covering the Board's authority to appoint working committees. The provision currently states that members of committees be “drawn from” producers, handlers, importers, exporters, members of wholesale or retail outlets, or other members of the public. The proposed new language reads simply that the committees “may include” these representatives. This revision does not alter the eligibility of who is able to serve on working committees. This revision to § 1240.38(l) would go into effect regardless of the outcome of the referendum.

In addition, throughout § 1240.38 the words “plan” and “plans” are inserted in place of “project” and “projects” in certain instances. For example, the repeated use of the phrase “programs and projects” would read “programs and plans.” In addition to programs and projects being closely synonymous in meaning and somewhat redundant when used together, the use of “plan” or “plans” better describes the Board's planning activities. Also, the term “industry information” would be inserted alongside the other permissible program activities of research, promotion, and consumer education as provided for in section 4601(b)(1) of the amended Act and elsewhere. These changes to § 1240.38 would go into effect regardless of the outcome of the referendum.

In the text of § 1240.39 as well as the section title and the heading immediately preceding the section, “industry information” would be added to reflect the Board's authority to conduct this type of activity along with research, promotion, and consumer education. The addition of “industry information” as an authorized activity appears in section 4601(b)(1) of the Act and elsewhere. The word “programs” would also be added wherever the words “plans and/or projects” appear. This is consistent with the Act, which frequently uses the word “programs” in connection with research, promotion, industry information, and consumer education activities. These changes would go into effect regardless of the outcome of the referendum.

A new paragraph would be added to § 1240.39 authorizing the Board to conduct research designed to advance the cost-effectiveness, competitiveness, efficiency, pest and disease control, and other management aspects relating to beekeeping, honey production, and honey bees. The Board believes that the proposed changes to the Order authorized by the 1998 amendments to the Act would strengthen the honey industry by expanding research in areas that would help solve production problems, reduce costs of production, and enhance the image of honey as a pure and natural product. Such research authority is specifically provided for in sections 4601(a) through (b) of the Act.

Another new paragraph would be added to § 1240.39 authorizing the Board to conduct activities which may lead to the development of new markets or marketing strategies for honey or honey products, as well as activities to increase the efficiency of the honey industry and to enhance the image of honey and honey products. The authority to conduct these activities is specifically provided for in section 4601(b)(1)(C) of the amended Act. This paragraph would become effective regardless of the outcome of the referendum.

Another new paragraph would be added to § 1240.39 to address the Board's authority to carry out activities and develop procedures for the inspection or monitoring of honey and honey products being sold for domestic consumption or for export from the United States. This includes the authority to develop minimum purity standards. Sections 4607(a)(8) and 4607(b) of the amended Act provide specific authority for the Board to develop and conduct these activities. Any program involving the establishment of minimum purity standards as well as systems for inspection or monitoring of honey or honey products would be subject to prior approval by the Secretary. In addition, the Board's power to develop purity standards or inspection or monitoring programs that are mandatory must first be approved by voters in the referendum.

Sections 1240.39 and 1240.40 would be amended to allow activities to be funded with donations or other funds available to the Board in addition to assessment funds. Section 4606(e)(1) of the amended Act created the specific authority for the Board to accept voluntary contributions to finance expenses covered in its budget including activities in research, promotion, consumer education, and industry information as well as expenses for the administration of the Board. These changes to §§ 1240.39 and 1240.40 would go into effect regardless of the outcome of the referendum.

In § 1240.40 on budget and expenses, industry information would be included in the types of activities for which the Board is authorized to incur expenses based on its authorization as a permissible activity under section 4601(b)(1) and elsewhere in the Act. This revision does not require approval in the referendum.

Also in § 1240.40, a new paragraph would be added to require the Board to reserve at least 8 percent of all assessments collected each year for expenditure on research programs designed to advance the cost-effectiveness, competitiveness, efficiency, pest and disease control, and other management aspects relating to beekeeping, honey production, and honey bees. The Board believes that the additional assessment funding for such research projects, including an 8 percent allocation for production research, would allow the industry to leverage its resources to make research both practical for and applicable to the industry's needs. Any allocated funds remaining at the end of the year would be carried forward for allocation and expenditure in subsequent years. The 8 percent figure was selected because it provides the funding level the industry felt would be adequate for the intended research. Allocating 8 percent of the Board's funds to this type of research is specifically provided for in section 4606(f)(2) of the amended Act. In order to become effective, this provision must be approved in the referendum.

Section 1240.41 would be amended so that handlers as well as producer-packers in their capacity as handlers would pay assessments. Currently, only producers and importers as well as producer-packers in their capacity as producers are subject to assessment under the Order.

First handlers would be responsible for paying assessments on the honey they handle as well as collecting and remitting assessments from producers. The total assessment on honey produced in the United States would be increased from $0.01 per pound to $0.015 per pound. Payment of this total amount would be allocated among producers, handlers, and producer-packers. The assessment rate to be levied on producers for honey produced and handled would be $0.0075 per pound of honey. This is a decrease from the current assessment rate of $0.01 per pound paid by producers. A new assessment levied on handlers would be $0.0075 per pound of honey handled. Producer-packers would pay a $0.0075 assessment on the honey they produce as well as a $0.0075 assessment on the honey for which they act as a first handler, even if the honey handled was from the producer-packer's own production.

The new assessment rates for producers, handlers, and producer-packers is authorized by section 4606(e)(3) of the Act. Sections 4608(a) and 4608(e) provide new requirements affecting first handlers with regard to the payment of the handler assessment as well as the collection and payment of the producer's assessment. These proposed changes to the Order at § 1240.41 covering the new assessment rates as well as the authority to subject handlers to assessment must first be approved in the referendum. If the amendments are not approved in the referendum, the current rate of $0.01 per pound payable by domestic producers would remain in effect, and handlers would not be subject to assessment.

Section 1240.41 would also be revised so that the total assessment on honey and honey products imported into the United States would be increased from $0.01 per pound to $0.015 per pound in order to equal the combined rate paid by producers and handlers on domestic honey. Of this $0.015 total, $0.0075 would represent the assessment due from the importer, and $0.0075 would represent the assessment due from a handler and paid by the importer on behalf of the handler. The full assessment on imported honey would be due at the time of entry of the honey into the United States. The authority for increasing the assessment on imported honey is found in section 4606(e)(3)(B) of the Act and is subject to referendum approval before being implemented. If the amendments are not approved in the referendum, the current rate of $0.01 per pound payable by importers on honey and honey products would remain in effect.

Section 1240.41 would also be amended so that importers are ultimately responsible for the payment of assessments in the event the U.S. Customs Service (Customs) did not collect the amounts owed at the time of entry. While the current Order makes reference to importers being subject to late payment charges, it does not expressly provide that importers are liable for paying the assessment directly to the Board if Customs fails to collect the amount. This change is authorized by section 4608(i)(2) of the Act. In addition, reference in the Order to the collection of assessments by the Secretary would be removed since the Secretary does not undertake the collection responsibility. These changes clarifying the Secretary's role as to assessment collection as well as the ultimate liability of importers for assessment payment do not require approval in the referendum.

Section 1240.41 would also be amended to make producers subject to late-payment charges and interest penalties on past-due assessments similar to handlers, importers, and producer-packers. Presently, the Order only mentions that a producer is responsible for payment of the assessment to the Board should the first handler fail to collect the assessment. Subjecting producers to late-payment charges and interest penalties for assessments owed to the Board would be consistent with the sanctions other program participants face for failing to pay amounts due to the Board. This change would go into effect regardless of the outcome of the referendum.

Since the honey price support loan program, as provided in the Agricultural Act of 1949 [7 U.S.C. § 1446(b)], has been discontinued, § 1240.41(g) of the current Order would be revised by referring to a more generic loan program. This generic reference would adequately accommodate any new recourse loan program or other loan program that might be developed by USDA's Farm Service Agency. The other features of this provision would not be changed. The Board's proposal would have this provision on loan programs appear at § 1240.41(m). However, see discussion under USDA Changes to Proposal in which this provision would appear at § 1240.41(k). This change does not require approval in the referendum.

In § 1240.42 on exemption from assessment, an exemption would be added for handlers handling less than 6,000 pounds of honey per year. The 6,000-pound limit is identical to the exemption amount for producers, producer-packers, and importers. Providing the exemption for handlers conforms to section 4606(e)(4)(B) of the amended Act. This amendment would not take effect unless the referendum is approved.

In addition, § 1240.42(c) in the current Order would be removed. This section requires that a person file an application with the Board in order to receive an exemption from paying assessments. With the removal of this provision, no direct action would be necessary for a producer, producer-packer, handler, or importer to qualify for exemption, other than to maintain relevant records.

Based on the number of persons eligible to claim an exemption, eliminating the application requirement would significantly reduce the reporting requirement for applicants as well as the consequent recordkeeping demands on the Board's staff. The elimination of the exemption application requirement in § 1240.42(c) conforms to the 1998 amendments to the Act, which struck a similar provision from section 4606(e)(4)(B), as redesignated. This change would go into effect regardless of the outcome of the referendum.

A minor editorial change would also be made to § 1240.42 by inserting the word “United” to precede “States” for purposes of clarification and correctness.

The Board proposes that § 1240.43 of the Order be removed in its entirety. This section authorizes the payment of refunds to States operating a similar assessment program. Coverage of this same subject in § 1240.42(f) would also be stricken. Both § 1240.43 and § 1240.42(f) of the Order discuss how States operating programs similar to those authorized by the Act may obtain refunds of assessments from the Board. These provisions were originally included in the Order because a program existed in California at the time. Since the California program no longer exists, and no other similar State plans exist, the provisions in the Order referencing State plans are no longer relevant and therefore would be removed. The elimination of these provisions from the Order would take effect regardless of the outcome of the referendum.

The section on operating reserves at § 1240.44 in the current Order would be redesignated as § 1240.43.

A new § 1240.44 would be added to authorize the Board to develop and recommend to the Secretary a system or program for monitoring the purity of honey and honey products being sold for domestic consumption and for export. The authority to develop and carry out such programs, including the establishment of minimum purity standards, is based on sections 4607(a) through (b) of the amended Act. This section must be approved in the referendum to become effective.

A new § 1240.45 would also be added to authorize the Board, subject to the approval of the Secretary, to develop and implement a voluntary quality assurance program concerning purity standards for honey and honey products. Components of this program could include, among other things, the establishment of an official seal of approval to be displayed on honey and honey products which meet the standards of purity established under the program, actions to encourage persons in the honey industry to participate in the program, actions to encourage consumers to purchase honey and honey products containing the official seal of approval, and periodic inspections by the Secretary of honey and honey products of individuals who participate in the program. The components provided in this new provision parallel those set forth in sections 4607(a) and (c) of the amended Act. This section does not require approval in the referendum.

A new § 1240.46 would also be added to the Order authorizing the Board to recommend, subject to the Secretary's approval, the establishment of minimum purity standards for honey. Authority for this provision is based on section 4607(a) of the amended Act. This section must be approved in the referendum to become effective.

New §§ 1240.44, 1240.45, and 1240.46 would address concerns about the disparate quality of honey available to consumers as well as the need to maintain a positive and wholesome marketing image for honey and honey products.

Section 1240.50 would be revised to make producers subject to reporting requirements similar to handlers, importers, and producer-packers. This would cover producers subject to assessment as well as those currently exempt. In 1996, section 4608(f)(1) of the Act was amended to add recordkeeping and reporting requirements for producers. Requiring producers to be subject to reporting requirements similar to others in the honey program would facilitate enforcement of the Order. Without this reporting requirement, it has been difficult for the Board to investigate producers for potential noncompliance with the Order. This reporting requirement would also assist the Board in periodically collecting production information to help identify industry trends for use in program planning and evaluation.

Section 1240.50 would also be revised to provide the Board the authority to request reports from producers and producer-packers on the quantity of honey produced and the total number of bee colonies maintained. This change is authorized by the 1998 amendments to the Act. Section 1240.50 already contains reporting requirements for handlers and producer-packers with regard to the total quantity of honey acquired or handled as well as the total quantity of honey imported in the case of importers. Section 1240.50 would also be revised so that these reporting requirements would include coverage for “honey products” in addition to “honey” as provided in the current Order for handlers, producer-packers, and importers. Section 4608(f)(1) provides authority for these changes.

The changes in reporting requirements in § 1240.50 involving producers, producer-packers, handlers, and importers would go into effect regardless of the outcome of the referendum.

In addition, § 1240.51 would be amended to require that producers as well as handlers, importers, and producer-packers maintain and make available for inspection their books and records. This applies to those subject to assessment as well as those currently exempt. Making producers subject to recordkeeping requirements similar to others in the program would facilitate enforcement of the Order. Without this requirement, it has been difficult for the Board to carry out compliance investigations against producers for possible violation of the Order. This change would go into effect regardless of the outcome of the referendum.

Section 1240.51 would also be revised to provide the authority for employees or agents of the Board or USDA to inspect the books and records of individuals subject to the Act and Order. The existing Order provides no authority for “agents” to inspect books and records. One reason for extending this authority to agents is to provide the Board the flexibility of utilizing the services of an outside auditing firm to assist with its compliance efforts. This change is authorized by section 4608(f)(2). This change would go into effect regardless of the outcome of the referendum.

In § 1240.52, a specific penalty would be added for persons convicted of disclosing confidential information. The penalty consists of a fine of up to $1,000, imprisonment for up to 1 year, or both, as well as removal from office or employment. These proposed changes to § 1240.52 of the Order are authorized by section 4608(g) of the Act and do not require approval in the referendum.

In § 1240.61, a change was made to remove the word “projects” and replace it with the word “plans.”

In § 1240.62 on suspension or termination of the Order, there would be a change to allow handlers, if subject to assessment, to vote in continuance referenda every five years or referenda on request as provided for in sections 4612(c) through (d) of the Act. This change would only go into effect if the referendum is approved. Obsolete provisions referring to the first continuance referendum would be removed regardless of the outcome of the referendum.

Section 1240.62 would also be revised with regard to petitions for referenda so handlers would be included in calculating the 10 percent which is needed for submitting a petition to have a referendum. The authority for this change is provided by section 4612(d)(1) of the Act and would only go into effect if the amendment making handlers subject to assessment is approved in the referendum.

Also added to § 1240.62 is a requirement that referenda at the request of the Board or by petition of program participants can be held no more than once every two years. If continuation of the Order is approved in a referendum held at the request of the Board or by petition, then the next periodic referendum to determine the continuation of the Order shall be held no sooner than five years from the date of the referendum on request. These changes are made pursuant to sections 4612(c) through (d) of the Act. These changes are not subject to approval in the referendum.

USDA Changes to Proposal

The Department has modified the Board's proposal to make it consistent with the Act when necessary as well as provide clarity, consistency, and correctness when appropriate with respect to word usage and terminology. For example, in some cases, references to “Honey Board” or “National Honey Board” were changed to “Board” for simplicity. In certain instances, gender-specific references were replaced with gender-neutral language.

The Department did not change the title of the Order, as proposed by the Board, to include a reference to “industry information” for consistency with the Act's title which was not changed by the 1998 amendments to the Act. However, a subpart designation has been added to apply to §§ 1240.01 through 1240.67.

In the definition of “Act,” the Department did not change the Act's name to reference “industry information” as proposed because, while the Act was amended, the title was not.

The Board proposed defining “National Honey Board” instead of “Honey Board” to include the Board's common reference. The Department retained “Honey Board” as the term defined but included “National Honey Board” as a synonym.

The definition of “part and subpart” was not changed to refer to the Order as it was proposed to be renamed by the Board.

The term “plans and projects” is not a new definition being added to the Order as indicated in the proposal. A definition for this term does appear in the present Order at § 1240.21. The proposal would amend the existing definition by adding the words “industry information” to the existing text.

A minor change in the definition of “Committee” was made for syntax and clarity.

In the definitions of “qualified national organization representing handler interests” at § 1240.23 and “qualified national organization representing importer interests” at § 1240.24, several section cross-references were added. A minor change was also made to the latter definition for purposes of syntax and clarity. In addition, portions of the text from each definition on eligibility requirements were moved to § 1240.32 on nominations and revised slightly for purposes of brevity and clarity. For example, “the association or organization” was shortened to “the organization” in almost every instance.

In the definition of “research” at § 1240.25, the words “products containing honey” were replaced with “honey products” for consistency with language in the Act and Order. The definition of “research” was also revised to add clarification to the proposal's reference to “studies on bees” in accordance with sections 4601(a)(9) through (10), 4601(b)(1)(C) through (D), and 4606(f)(2)(A) of the Act.

In § 1240.30 and elsewhere, the word “national” was placed in front of references to “honey marketing cooperative” to be consistent with usage of this term in section 4606(c)(2)(E) and elsewhere in the Act.

In § 1240.31 on terms of office, several changes were made in order to make the language consistent with USDA procedures and terminology, such as the substitution of gender-neutral language. Another revision added authority for the Secretary to make a determination on staggered Board terms individually. This change was made pursuant to language added to section 4606(c)(8) of the Act, which refers only to the Secretary's authority in making determinations on staggered terms. In the last sentence following “alternate” in § 1240.31, the word “member” was stricken to parallel similar word usage elsewhere in the section.

In § 1240.32, subparagraph (b)(6) as it appeared in the proposal was stricken since it covers actions of the Board as opposed to actions of the Committee, which is the subject of § 1240.32. The text of former subparagraph (b)(6) would be reinserted, with several modifications, as a new § 1240.33 titled “Board reconstitution.”

A new provision was added to § 1240.32(b)(8) on the basic eligibility requirements for those nominated to fill Board seats as handler-importers. To be nominated for the handler-importer position, a handler must also have been an importer of record of at least 40,000 pounds of honey during any three of the preceding five years. These requirements are contained in section 4606(c)(2)(C) of the Act. The creation of two handler-importer positions on the Board must be approved in the referendum to become effective.

In § 1240.32(b)(9), changes were made to underscore the possibility that a full slate of nominees may not be submitted should Board members serve in staggered terms. The proposal and current Order use set numbers in terms of filling the different Board positions. The language is modified to better convey that the number of nominations will directly correspond to the number of positions due to become vacant.

In § 1240.32(b)(12), language was added providing that organizations seeking certification as a qualified national organization for purposes of making nomination recommendations must agree to notify nonmembers of Board nomination opportunities as well as consider the nomination of nonmembers interested in serving on the Board. This language was added to conform with section 4606(c)(6)(F) of the Act.

Finally, a new § 1240.32(b)(13) was added to state that the certification of an organization by the Secretary shall be final, pursuant to section 4606(c)(6)(C) of the Act.

A new § 1240.33 contains the text on Board reconstitution. This topic is currently covered under § 1240.32(b)(6) in the Order. The Board's proposal to amend the Order also covers this topic in § 1240.32(b)(6). It is recommended that the subject of Board reconstitution be moved from § 1240.32 to § 1240.33 for purposes of organization and clarity. Section 1240.32 primarily covers the activities of the Committee and the nomination process for Board members. Board reconstitution covers the process whereby the Board evaluates possible changes in representation to the Board based on such factors as changes in the geographic distribution of honey producers, changes in the proportion of domestic and imported honey assessed, or the source of assessments on imported honey or honey products. It would be clearer from an organizational standpoint for this topic to be covered in a new § 1240.33.

In the new § 1240.33 covering Board reconstitution, the word “shall” was substituted in place of “may” before the word “recommend” in paragraph (b) of the proposed text to clarify the Board's responsibility to move forward with reconstituting the Board if warranted by the results of the review. Section 4606(c)(4)(B) of the Act requires the Board to recommend reconstitution of the Board to the Secretary if certain criteria as provided in the section are met. A provision was also added to emphasize that, notwithstanding any action on reconstitution, at least 50 percent of the members serving on the Board shall be honey producers, pursuant to section 4606(c)(7) of the Act. Several other minor editorial changes were made including use of the word “continuance” in place of “continuation” in modifying referendum.

The Board's proposal includes no modifications to § 1240.34 on vacancies. However, § 1240.34(a) needs to be revised to include the cross-reference to the new § 1240.33 on Board reconstitution in place of § 1240.32(b)(6).

Section 1240.34(a) of the existing Order provides an exception where a producer member or alternate serving on the Board may complete the term of office in situations where, due to Board adjustment of regions, the member or alternate is no longer from the region from which the person was appointed. Section 4606(c)(4) of the Act addresses changes in geographic regions for producer representation and reallocation of handler, importer, and handler-importer positions on the Board. For purposes of consistency, the exception in § 1240.34(a) allowing producers affected by geographic redistricting to finish out their term would be extended to allow those members serving in handler, importer, or handler-importer Board positions to complete their terms in situations where their position is subject to reallocation by the Board.

In § 1240.38 on Board duties and in § 1240.40(a), a requirement was added that budgets be submitted to the Secretary for approval 60 days in advance of the beginning of the fiscal period. The Act and current Order do not specify any time frame for submitting the budget to the Secretary. The 60-day period formalizes current USDA policy and allows adequate time for review and approval prior to the start of the fiscal period. A minor change was made to § 1240.38(e) by inserting “consumer” to precede “education” and deleting the word “development.” And “industry information” was added to the list of allowable program activities in § 1240.38(l) as provided for in 1998 amendments to the Act.

Several changes were made to the Board's proposal involving § 1240.39. A paragraph was added providing that the Board shall conduct “an independent evaluation” of the effectiveness of the Order and its programs at least once every five years. This requirement appears in Commodity Promotion and Evaluation [7 U.S.C. 7401]. Section 1240.39(e) of the current Order does contain a provision on periodic program evaluations; however, it does not require that the review be conducted by an independent source.

As a result of adding the paragraph on independent evaluations, the paragraphs in § 1240.39 were redesignated.

Also in § 1240.39, the proposed provision on activities and procedures for monitoring the purity of honey and honey products was modified by striking the words “and prevention” from the phrase “including programs or activities for identification and prevention of adulterated honey.” Pursuant to section 4607(b)(2) in the Act, the Board has the authority to “develop and recommend . . . a system for identifying honey.”

Finally, the phrase “research, education, industry information, and promotion” in § 1240.39 of the proposal was replaced with “research, promotion, consumer education, and industry information” to be consistent with similar references elsewhere in the section.

In § 1240.40(a), the words “industry information” were added to “research, promotion, and consumer education” to be consistent with similar references elsewhere in the provision.

In § 1240.40(c), the word “projects” was not changed to “plans” as suggested in the proposal. The word “projects” is retained so as to mirror the same language in section 4606(f)(2) of the Act on this point.

Section 1240.41(a) of the current Order and the proposal was removed because it is not necessary.

In the discussion of assessment rates in § 1240.41, changes were made to clarify that handlers, importers, and producer-packers are subject to assessments for both honey and honey used in honey products while producers are assessed only on honey produced. This is based on section 4606(e)(3) of the Act. “U.S.” was added where necessary to specify honey produced domestically versus honey produced outside the United States.

Discussion of the assessment rate on imported honey and honey products was expanded for purposes of clarification. For example, one change clarifies that importers must pay assessments through Customs to the Board. Both the current Order and the proposal provide that the importer is required to pay the assessment to the Board at the time the honey or honey products enter the United States. There is no specific mention of Customs acting as the payment intermediary. Congress made a similar clarification in section 4608(c) of the Act.

In § 1240.41, language on the prescribed interest rate set by the Board and approved by the Secretary was removed and replaced with language specifying that the rate of interest shall be prescribed in regulations issued by the Secretary.

A new paragraph (i) was added to § 1240.41 specifying that persons failing to remit assessments in a timely manner may also be subject to actions under federal debt collection procedures.

Finally, in § 1240.41 on government loan programs, the “USDA Commodity Credit Corporation” was substituted for “CCC,” and other minor changes were made to the sentence to accommodate this change. Also, “USDA” was inserted before “loan program” in the first sentence for purposes of clarity. This provision was redesignated from § 1240.41(m) in the Board's proposal to § 1240.41(k).

Paragraphs (j) and (k) in § 1240.41 of the Board's proposal were redesignated as paragraphs (l) and (m) of § 1240.41.

In § 1240.42(a) on exemption from assessment, the words “or honey products” were added to the exemption language since the calculation of the 6,000 pound minimum amount to qualify for exemption from assessment can include both honey and honey products in the case of producer-packers, handlers, and importers. This is consistent with section 4606(e)(4)(A) of the Act as amended in 1998. In § 1240.42(c), the reference to a person who “claims” an exemption was replaced with language referring to a person who has been exempt. This change was made because section 4606(e)(4) of the Act eliminated the requirement of filing a claim with the Board as a prerequisite to being exempt from assessments. Several other minor changes in word order and phraseology were also made.

In § 1240.44 on activities involving the inspection and monitoring of honey, the words “and the Secretary shall have the authority to approve or disapprove” were added to mirror similar language in section 4607(d) of the Act and to underscore the Secretary's oversight authority. The proposal provides that the Board is “authorized to develop and recommend to the Secretary” a system or program for monitoring the purity of honey. However, the Board's proposal contains no mention of the Secretary's authority to approve such system or program as is provided for in the 1998 amendments to the Act.

Also in § 1240.44, the words “or program” were inserted to follow the word “system” in several instances for purposes of consistency throughout the section. Also, several other minor changes in punctuation were made to follow similar construction in section 4607(b) of the Act.

In § 1240.45, language regarding the Secretary's authority to approve or disapprove the establishment of a voluntary quality assurance program was inserted to be consistent with similar language in section 4607(d) of the Act and to underscore the Secretary's authority on this point. A paragraph was also added providing that a producer, handler, or importer must participate in the voluntary quality assurance program in order to be eligible to display the official seal of approval. This addition is based on sections 4607(c)(2)(A) and (c)(3) of the Act. Finally, a provision was inserted to provide that a voluntary quality assurance program and any related rule or regulation for its development and operation may be “in addition to or independent of” any program, rule, or regulation involving an inspection and monitoring system established under the authority of § 1240.44. This language was taken from sections 4607(a)(8) and (c)(1) of the amended Act.

In § 1240.46 on minimum purity standards, the words “develop and” were inserted before “recommend” and “and related rules and regulations” were added to immediately follow “minimum purity standards” for consistency with section 4607(a)(8) of the Act.

In § 1240.50, minor grammatical corrections were made. Also, the articles “the” and “a” were inserted at various points in the text.

In § 1240.51 on books and records, a change was made in reference to those subject to exemption since it is no longer necessary to file a claim with the Board in order to be exempt from assessments. In addition, the word “agent” was added for use with employees since section 4608(f)(2) of the amended Act provides authority for employees or agents of the Board or USDA to inspect and review books and records.

In § 1240.52 on confidential treatment, a revision is made so that the confidentiality provisions with respect to books, records, or reports would apply to officers and employees of the USDA and employees and agents of the Board. Members and alternates of the Board are specifically excluded from inspecting or reviewing books and records under section 4608(f)(2) of the amended Act in the first place. This change is authorized by section 4608(g)(1) of the amended Act. Presently, the Order as well as the Board's proposal extend the confidentiality provisions to “any person.”

In § 1240.52(a), a minor edit was made substituting the word “the” in place of “a” to precede “number.”

Section 1240.52(c) of the proposal, which covers the penalties for disclosure of confidential information, was removed. The specific penalties for violating the confidentiality provisions of the Act and Order, as provided for in section 4608(g) of the Act, are self-executing and, therefore, are not included in the Order.

In § 1240.62 on the suspension or termination of Order, several minor revisions were made such as adding “(5)” after the word “five” and adding “(2)” after the word “two”. Also the phrase “subject to assessment under the Order” was inserted in both paragraphs (b) and (c) to provide greater clarity and completeness.

Comments

A total of 30 comments were received on the proposed amendments. These include the original eight comments that were received in response to USDA's request for proposals in 1999, some of which were resubmitted by the commenter. Seventeen (17) commenters supported the amendments, 12 commenters opposed one or more of the amendments, and one commenter merely expressed an opinion on the direction the Board should take.

Twenty-seven (27) of the comments contained several recommendations, a number of which have been adopted. For the aspects of the comments that deal with the paperwork impact of the proposed changes to the Order, see the Regulatory Flexibility Act and Paperwork Reduction Act section of this proposed rule.

One comment was received from a commenter suggesting that a definition for “handler-importer” be included in the Order. The commenter recommended that this definition be added in order to clarify the representation requirements for a handler who also must meet certain import thresholds to qualify for nomination to the Board. The definition is also needed, according to the commenter, because the term “handler-importer” is used in several sections of the proposed Order. We accept the commenter's definition of “handler-importer” and have included it in the definitions as § 1240.10. Section numbers for all other definitions have been revised to account for the addition of this new definition.

A comment was submitted on § 1240.08 which defines the term “handle.” The commenter requested an explanation of what it means to sell honey and what is meant by “a current of commerce.” The term “handle” as defined in the proposed Order and Act is clear, and we find no reason to change the definition by revising or adding to general and common terms contained in the definition.

A comment was submitted on § 1240.12 which defines the term “honey production.” The commenter requested that the definition address the differences in organic and generic honey production. No change is made as a result of the commenter's request as the definition for “honey production” encompasses all beekeeping operations, which includes organic operations.

One comment was submitted on § 1240.26 which defines the term “research.” The commenter suggested that the definition should clearly indicate that all research activities are to be directed to domestic honey. However, the Act does not specify that research is to be directed to domestic honey. In addition, the funds that would pay for research would come from both domestic and import assessments. Research on imported honey may be needed in developing the proposed inspection and monitoring system, voluntary quality assurance program, and minimum purity standards. Therefore, no change to the term “research” was made as a result of this comment.

A comment was submitted on § 1240.32 which addresses nominations to the Board. The commenter suggested that wording be added to the section that would specify that state associations should be industry related rather than simply social associations which may be interested in the honey industry. The commenter requested that associations' articles of incorporation or bylaws be verified to prove they are industry related associations. The word “beekeeper” has been added so that “State association” reads “State beekeeper association” in § 1240.32 (a)(1) as a result of the comment. This change provides that only State beekeeper associations may nominate individuals to serve on a National Honey Nominations Committee.

One commenter requested that for clarity and consistency in § 1240.32 (b)(7) the word “such” be changed to “a.” This comment has been adopted by changing “such” to “an,” which is more grammatically correct.

A comment was received on § 1240.32 (b)(11) which outlines the criteria for an organization to be certified as a qualified national organization representing importer interests. The commenter suggested that criterion (iv) is too general in stating only that “geographic territory” be covered by the active membership of the organization. The commenter notes that a national organization should have members from across the nation. We agree with the commenter's suggestion and language to § 1240.32(b)(11)(iv) has been added that “substantial geographic territory” must be covered by the active membership of a national organization.

A comment was received on § 1240.32 (b)(12)(i) which requires national handler and importer organizations, that are qualified to submit recommendations for nominations, to notify handlers or importers who are not members of the organizations of opportunities for nomination to the Board. The commenter requested clarification as to exactly what type of notification must be given to nonmembers. The commenter suggested that a mailing from the Board or general notices in trade publications could sufficiently notify nonmembers. We agree that the requirement to notify nonmembers of nomination opportunities is not specific. Further, the commenter's suggestion of Board mailings and trade publication notices may be valid methods of notification. However, specifying means by which notification must be given would limit the methods open to organizations. For this reason, the Order is flexible in outlining the methods of notification so that organizations have the opportunity to notify nonmembers in the method that they deem most effective. However, wording was also added to § 1240.32 (b)(12)(ii) to clarify the requirement of notification of handlers or importers who are not members of the organizations of opportunities for nomination to the Board.

A second comment was received on § 1240.32(b)(12)(i). The commenter requested a change to this section that would clarify that qualified national organizations are not required to notify nonmembers of upcoming Board nomination opportunities. The commenter was concerned that wording in the Order implies that every member of the general public must be notified. The commenter asserted that notification through the trade press or other sources should be used and provides specific wording to be added to the Order. We agree that notification to every nonmember of qualified national organizations is not feasible and have added wording as discussed in the previous comment. However, as stated in the previous comment, it would not be appropriate to require a specific mode of notification.

A comment was received on § 1240.35(a) which outlines Board procedure. The commenter requested that the requirement of the number of members needed to constitute a quorum be changed from “eight” to “a majority” of members. The commenter suggested that this change will allow the Board size to be modified, as needed, without specifically changing the number required for a quorum. Since eight members are a majority of the proposed 14 member Board, this comment is accepted, and the section has been revised, as appropriate.

Another comment was submitted addressing § 1240.35(a). The commenter recommends that at least 50 percent of the Board members present to constitute a quorum be producers. The commenter notes that an amendment to the Act provides that at least 50 percent of the members to the Board be producers and that this concept should be applied to the quorum requirements for Board meetings. We agree that a quorum should reflect the membership of the Board, and, therefore, at least 50 percent of the members present at the meeting should be producers. In response, wording in this section has been changed as appropriate.

One comment was received on § 1240.38(k) which describes the Board's duties. The commenter suggested that this section should include the category “handler-importers” in the list of those to be notified by the Board of all Board meetings. The commenter was correct in noting that this section needed to be revised to account for the changes in Board membership. Therefore, the section has been revised accordingly.

One comment was submitted on § 1240.39(a)(2). The commenter noted that wording contained in the Order restricts the Board from engaging in quality control or grade standards. In light of the proposed amendments, we agree that the wording in this section should be changed. Therefore, references to quality control and grade standards were deleted.

Two comments were received in respect to § 1240.41(k) which addresses the process under which an assessment will be deducted on honey subject to a USDA loan program. The commenters requested that a provision be made that the assessment only be deducted from the proceeds of a loan or the loan deficiency payment if it is a non-recourse loan. One commenter suggested that wording in the Order may be confusing as to the collection of assessments on honey subject to a USDA loan program. The commenters assert that § 1240.41(k) only applies to loans in which collection from the assessment comes into question. We agree that no question exists on loans marketed through some channel of commerce. It is only when the producer forfeits the right to the product that the assessment would be deducted from the loan payment by USDA. Currently USDA only administers a recourse loan program for honey. Therefore, no change is made as a result of the commenter's request, that “non-recourse” be added to this section following “USDA” and before “loan.” The general reference to a USDA loan program contained in the Order sufficiently accounts for any new recourse, non-recourse, or other loan program that may be developed by USDA's Farm Service Agency.

One comment was received on § 1240.42(d) which describes exemptions from assessments. The commenter suggested that terminology be added to clarify that the Board's authority to recommend exempting exported honey from assessments be limited to exported domestic honey. No change is made as a result of this comment as the Order does not currently provide for the exemption of any exported honey from assessments. The commenter's proposed provision would need to be addressed by the Board if a recommendation is made for exempting exports from assessments. This same commenter submitted additional comments on § 1240.42 which are not addressed here as they were not applicable to the 1998 amendments to the Act or proposed changes to the Order but simply expressed opinions.

There were several comments on the proposed quality assurance program, purity standards, and inspection and monitoring system. Importers and persons with interests in foreign honey and honey products suggested that the purity standards could be viewed as non-tariff trade barriers and undermine U.S. policy which seeks to remove tariff and non-tariff trade barriers. We disagree. Both domestic and imported honey would be subject to the same standards. In addition, none of these provisions can be implemented without public rulemaking on the details of the programs.

These commenters also contend that an inspection and monitoring system would allow the Board to usurp the authority of the Food and Drug Administration (FDA). They requested that a provision be added that would require a comprehensive international study to be conducted by scientists from FDA before purity standards are implemented. We accept the basic concept of the recommendation that any system or program for monitoring the purity of honey and honey products should have fair and equal test parameters for domestic and imported honey. We also agree that any purity standards should be based on scientific studies of honey from the United States and each country of origin for foreign country. Therefore, we have revised §§ 1240.44 and 1240.46 accordingly. Regarding the request that the FDA conduct a global study on honey, we have not adopted this portion of the recommendation as the Act authorizes, under the honey program, an inspection and monitoring system, if approved in a referendum.

An importer also commented that the Board is not capable of carrying out an unbiased quality assurance or purity program. We disagree. In addition, the Board will be authorized to make recommendations to the Secretary, and the Secretary is not required to approve the recommendations. Further the amended Act authorizes USDA inspectors to carry out this function.

A domestic producer commented that any quality assurance or purity monitoring program would discriminate against domestic producers because it would not be feasible to conduct inspections in foreign production areas. The commenter's request is addressed by a change made in response to another comment in which wording has been included that any system or program for monitoring the purity of honey and honey products should have fair and equitable test parameters for domestic and imported honey. In addition any such systems and programs would have to be approved by the Secretary prior to implementation.

One comment was submitted on § 1240.50(a) which outlines the reports required of each handler, importer, producer, or producer-packer. The commenter suggested that the term in this section “producer-packers” should be changed to “producers-packers.” We find that the present wording is grammatically correct. Consequently, no change to the Order is needed as a result of this comment.

Comments were submitted on § 1240.51 which deals with books and records to be kept by those subject to the program. One commenter proposed that books and records be required to be maintained for seven years rather than the two years presently required. Though changes were made to this section as a result of the 1998 amendments, there was no change made regarding the time period requirement for maintaining books and records. Therefore, no change is made as a result of this comment.

Another comment was submitted on § 1240.51. The commenter stated that the wording in this section could suggest that any person exempt from assessments, including those not involved in the honey industry, are required to maintain books and records. The commenter proposed that “under this subpart” be added for clarification. We accept this commenter's suggestion and have added the suggested wording.

In addition, commenters made a number of recommendations which cannot be adopted because they are inconsistent with or not authorized by the amended Act. These recommendations include: require promotion of U.S. honey; change the referendum voting criteria; increase the statute of limitations for filing a petition under section 4609 of the Act from two years to 10 years; remove the definition of a national honey marketing cooperative; add changes to the definition of “exporter,” “honey production,” “marketing,” “producer,” and “promotion” allow only producers to serve on the Board; require that handlers and producers who are eligible to serve on the Board obtain a majority of their income from honey production; increase representation of importers on the Board; have two referenda (one for producers and importers and one for handlers); raise the import assessment up to 15 cents per pound; make the handler responsible for payment of the producer assessment should the first handler fail to collect from the producer; do not allow the quality assurance program to include a seal of approval; do not eliminate the public member position; do not add two handler-importer members to the Board; change the two handler positions on the Board to two producer-packer positions; do not eliminate the authority for one of the importer positions to be filled by an exporter; do not allow the Board to develop and implement a quality assurance program or an inspection and monitoring system; and do not allow the Board to collect information from producers.

In addition, some of the commenters' recommendations relate more to the regulations which would be developed to implement the quality assurance program. These regulations would be recommended by the Board, published for public comment by the Secretary, and then, if approved by the Secretary, would be implemented. The persons who submitted these comments can express their views to the Board as it develops the implementing regulations and participate in the rulemaking process that will follow.

There were also several recommendations that relate to the regulations that would be developed to implement the authority to develop purity standards and a monitoring and inspection system. If these amendments are approved in the referendum, the implementing regulations would also be recommended by the Board, published for public comment by the Secretary, and then, if approved by the Secretary, would be implemented. The commenters can exercise their right to vote in the referendum on these votable amendments. Then, if the amendments are approved, they can make their views known to the Board and participate in the rulemaking process.

In summary, a new § 1240.10 has been added and §§ 1240.32(b)(7), 1240.32(b)(11)(iv), 1240.32(b)(12)(i) and (ii), 1240.35(a), 1240.38(k), 1240.39(a)(2), 1240.41(k), 1240.44(b), 1240.46, and 1240.51 have been revised as a result of comments received that were deemed to have merit.

Referendum Order

It is hereby directed that a referendum be conducted among eligible honey producers, producer-packers, handlers, and importers to determine whether they favor amending the Honey Research, Promotion, and Information Order (Order). Current producers, producer-packers, handlers, and importers who produced, handled, and imported honey or honey products during 1998 and 1999 (representative period) and are not exempt from assessments are eligible to vote in the referendum.

The voting period for the referendum will be from September 5 through 29, 2000. Ballots will be mailed to all known honey producers, producer-packers, handlers, and importers on or before August 29, 2000. Eligible voters who do not receive a ballot by mail should call the following toll-free telephone number to receive a ballot: 1-888-720-9917. All ballots will be subject to verification. Ballots must be received by the referendum agents no later than September 29, 2000, to be counted.

Martha B. Ransom, Margaret B. Irby, and Kathie M. Birdsell, Research and Promotion Branch, Fruit and Vegetable Programs, AMS, USDA, Room 2535-s, Stop 0244, Washington, DC 20250-0244, are designated as the referendum agents of the Secretary to conduct the referendum. The Referendum Procedures (7 CFR 1240.200 through 1240.207) issued under the Order and published separately in this issue of the Federal Register will be used to conduct the referendum.

In the referendum, the voters will vote on whether the following amendments should be made to the Order: (1) Require the Board to reserve 8 percent of its funds annually for beekeeping and production research; (2) allow the Board to develop recommendations for purity standards and an inspection and monitoring system to enhance the image of honey and honey products; (3) add two handler-importers to the Board; (4) decrease the assessment honey producers pay from 1 cent per pound to 0.75 cents per pound; (5) add an assessment of 0.75 cents per pound paid by handlers; and (6) increase the assessment paid by importers from 1 cent per pound to 1.5 cents per pound on imported honey and honey products.

The following proposed amendments to the Order will become effective after the referendum, regardless of the outcome: (1) Change the two importer-exporter positions on the Board to two importer positions; (2) eliminate the public member position; (3) revise nomination and eligibility requirements for handlers, importers, and representatives of cooperatives to serve on the Board; (4) require that at least 50 percent of the Board members be honey producers; (5) allow the Board to develop a voluntary quality assurance program with enforcement by USDA; (6) eliminate the requirement for small companies to file for an exemption under the program; and (7) require producers to maintain records. In addition, revised and new definitions for certain terms would be added and obsolete language would be removed from the Order.

There were several additional amendments to the Act in 1998 that do not require amendment of the Order. One of these adds a two-year statute of limitations for persons filing petitions under section 4609 of the Act. In addition, the Act was amended to provide that each producer-packer and importer who votes in referenda will have one vote as a handler and one vote as a producer or importer, assuming that the producer-packer or importer would owe assessments as a handler in addition to owing assessments as a producer or importer, if the votable amendments are approved in the referendum. Further, the Act was amended to provide that the votable amendments will become effective if (1) the amendments are approved or favored by a majority of the producers, producer-packers, importers, and handlers voting in the referendum and (2) that majority produced, imported, and handled 50 percent or more of the pounds of honey and honey products produced, imported, and handled during the representative period by the voters in the referendum. The amended Act also provides that no individual provision of the amended Order shall be subject to a separate vote in the referendum.

If the votable amendments are approved, the same voting criteria for passage will apply in all subsequent referenda. If the votable amendments are not approved, handler approval will not be necessary in future referenda.

List of Subjects in 7 CFR Part 1240

• Administrative practice and procedure
• Advertising
• Consumer information
• Marketing agreements
• Honey promotion
• Reporting and recordkeeping requirements

For the reasons set forth in the preamble, it is proposed that 7 CFR Part 1240 be amended as follows:

PART 1240—HONEY RESEARCH, PROMOTION, AND CONSUMER INFORMATION

1. Revise the authority citation for Part 1240 to read as follows:

Authority: 7 U.S.C. 4601-4613; 7 U.S.C. 7401.

2. Revise the heading for 7 CFR Part 1240 to read as set forth above.

3. Add a heading for a new subpart A, consisting of §§ 1240.1 through 1240.67, to read as follows:

Subpart A—Honey Research, Promotion, and Consumer Information Order