[Federal Register Volume 78, Number 179 (Monday, September 16, 2013)]
[Proposed Rules]
[Pages 57006-57032]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-22330]
[[Page 57005]]
Vol. 78
Monday,
No. 179
September 16, 2013
Part II
Department of Agriculture
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Agricultural Marketing Service
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7 CFR Part 1222
Paper and Paper-Based Packaging Promotion, Research and Information
Order; Proposed Rule
Federal Register / Vol. 78, No. 179 / Monday, September 16, 2013 /
Proposed Rules
[[Page 57006]]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 1222
[Document Number AMS-FV-11-0069; PR-A2]
RIN 0581-AD21
Paper and Paper-Based Packaging Promotion, Research and
Information Order
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed rule and referendum order.
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SUMMARY: This document proposes a Paper and Paper-Based Packaging
Promotion, Research and Information Order (Order). The purpose of the
program would be to maintain and expand markets for paper and paper-
based packaging. The program would be financed by an assessment on
paper and paper-based packaging manufacturers (domestic producers) and
importers and would be administered by a board of industry members
appointed by the Secretary of Agriculture (Secretary). The assessment
rate would initially be $0.35 per short ton. This document also
announces that the U.S. Department of Agriculture (USDA) is conducting
a referendum among eligible manufacturers and importers to determine
whether they favor implementation of the program. The program would be
implemented if it is favored by a majority of current U.S.
manufacturers and importers voting in the referendum who also represent
a majority of the volume of paper and paper-based packaging represented
in the referendum who, during a representative period determined by the
Secretary, were engaged in the manufacturing or importation of paper
and paper-based packaging into the United States. A separate final rule
on referendum procedures is being published in this issue of the
Federal Register.
DATES: The voting period is October 28 through November 8, 2013. To be
eligible to vote, current paper and paper-based packaging domestic
manufacturers and importers must have domestically manufactured and/or
imported 100,000 short tons or more of paper and paper-based packaging
during the representative period from January 1 through December 31,
2012. Anyone who believes that they are eligible to vote in the
referendum and does not receive a ballot in the mail, may request one
from the Referendum Agents by calling the toll free number provided in
the ADDRESSES section below. Ballots will be mailed to all known
domestic manufacturers and importers of paper and paper-based packaging
on or before October 21, 2013. Ballots must be received by the
referendum agents no later than the close of business 4:30 p.m.
(Eastern Standard Time) on November 8, 2013.
ADDRESSES: Copies of the proposed Order may be obtained from the
Referendum Agents, Promotion and Economics Division, Fruit and
Vegetable Program, AMS, USDA, 1400 Independence Avenue SW., Room 1406-
S, Stop 0244, Washington, DC 20250-0244; telephone: (202) 720-9915 or
(888) 720-9917 (toll free); or facsimile: (202) 205-2800; or can be
viewed at http://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Kimberly Coy, Marketing Specialist,
Promotion and Economics Division, Fruit and Vegetable Program, AMS,
USDA, 1400 Independence Avenue SW., Room 1406-S, Stop 0244, Washington,
DC 20250-0244; telephone: (202) 720-9915 or (888) 720-9917 (toll free);
or facsimile: (202) 205-2800; or electronic mail:
[email protected].
SUPPLEMENTARY INFORMATION: This proposed rule is issued pursuant to the
Commodity Promotion, Research and Information Act of 1996 (1996 Act) (7
U.S.C. 7411-7425).
As part of this rulemaking process, a proposed rule was published
in the Federal Register on January 2, 2013 (78 FR 188). That rule
provided for a 60-day comment period which ended on March 4, 2013.
Seventy-five comments were received. The comments are addressed later
in this document.
Background
This document proposes an industry-funded research, promotion and
information program for paper and paper-based packaging. The program
would cover four types of paper and paper-based packaging--printing,
writing and related paper (used to make products for printing, writing
and other communication purposes), kraft packaging paper (used for
products like grocery bags and sacks), containerboard (used to make
corrugated boxes, shipping containers and related products), and
paperboard (used for food and beverage packaging, tubes and other
miscellaneous products). The program would be financed by an assessment
on U.S. manufacturers and importers of paper and paper-based packaging
and would be administered by a board of industry members appointed by
the Secretary. The assessment rate would initially be $0.35 per short
ton. (One short ton equals 2,000 pounds). Entities that domestically
manufacture or import less than 100,000 short tons per marketing year
would be exempt from the payment of assessments. The purpose of the
program would be to maintain and expand markets for paper and paper-
based packaging.
The proposal was submitted to USDA by the Paper and Paper-Based
Packaging Panel (Panel). The Panel is a group of 14 industry members
that was formed in May 2010 to oversee development of the program. The
American Forest & Paper Association (AF&PA), a national trade
association, provided technical assistance to the Panel.
Authority in 1996 Act
The proposed Order is authorized under the 1996 Act which
authorizes USDA to establish agricultural commodity research and
promotion orders which may include a combination of promotion,
research, industry information and consumer information activities
funded by mandatory assessments. Commodity promotion programs provide a
unique opportunity for an industry to inform consumers about their
particular commodity and have the ability to provide significant
conservation benefits to producers and the public. These programs are
designed to strengthen the position of agricultural commodity
industries in the marketplace, maintain and expand markets and uses for
agricultural commodities, develop new uses for agricultural commodities
or assist producers in meeting their conservation objectives. As
defined under section 513(1)(D) of the 1996 Act, agricultural
commodities include the products of forestry, which includes paper and
paper-based packaging.
The 1996 Act provides for a number of optional provisions that
allow the tailoring of orders for different commodities. Section 516 of
the 1996 Act provides permissive terms for orders, and other sections
provide for alternatives. For example, section 514 of the 1996 Act
provides for orders applicable to (1) producers, (2) first handlers and
others in the marketing chain as appropriate, and (3) importers (if
imports are subject to assessments). Section 516 states that an order
may include an exemption of de minimis quantities of an agricultural
commodity; different payment and reporting schedules; coverage of
research, promotion, and information activities to expand, improve, or
make more efficient
[[Page 57007]]
the marketing or use of an agricultural commodity in both domestic and
foreign markets; provision for reserve funds; provision for credits for
generic and branded activities; and assessment of imports.
In addition, section 518 of the 1996 Act provides for referenda to
ascertain approval of an order to be conducted either prior to its
going into effect or within three years after assessments first begin
under the order. An order also may provide for its approval in a
referendum based upon different voting patterns. Section 515 provides
for establishment of a board or council from among producers, first
handlers and others in the marketing chain as appropriate, and
importers, if imports are subject to assessment.
Industry Background
Paper and paper-based packaging is produced from pulp. Pulp is made
by chemically or mechanically separating fibers from wood or by
recycling recovered paper and paper-based packaging products. The
separated, moist fibers are then pressed together and dried into
flexible sheets.
U.S. Pulpwood Production \1\
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\1\ Johnson, Tony G., Ronald J., Walters, Brian F., Sorenson,
Colin, Woodall, Christopher W., Morgan, Todd A., National Pulpwood
Production, 2008, USDA, p. 15 (www.treesearch.fs.fed.us/pubs/37960).
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Wood used to make pulp is known as pulpwood. Total pulpwood
production includes roundwood chipped at mills and other primary
industry mill residues. Roundwood includes both softwood and hardwood.
Roundwood pulpwood continues to be the primary fiber source used in
pulp manufacturing in the United States. Wood residues consist
primarily of mill residue chips, a byproduct of sawmilling and veneer
mill operations.
According to U.S. Forest Service statistics, in 2008, U.S. pulpwood
production totaled 89.2 million cords. Of that total, softwood
roundwood and residues accounted for 69 percent (61.4 million cords).
Hardwood roundwood and residues accounted for 31 percent (27.7 million
cords). By region, the South accounted for 76.4 percent of total U.S.
pulpwood production (68.1 million cords). The West accounted for 9.9
percent (8.8 million cords), the Midwest accounted for 7.1 percent (6.3
million cords), and the Northeast accounted for 6.6 percent (5.9
million cords) of total U.S. pulpwood production.
Manufacturers and Converting Operations
The U.S. paper industry encompasses two broad segments--primary
producers/manufacturers (mills) and converters. Primary manufacturers
make rolls of paper and paper-based packaging (commonly referred to as
roll stock) from pulp produced in the same mill or pulp supplied by
another mill. Primary manufacturers would be covered under the program.
Converters turn roll stock into final products such as boxes,
corrugated boxes, shipping containers, envelopes, magazines, catalogs,
copy paper and bags/sacks. Converting operations can take place in a
primary producer mill or off-site. When converting is done in a primary
producer mill, the roll produced before it is converted into a final
product or sold to an off-site converter would be covered under the
program. Converting operations (and thus converted products) would not
be covered under the program. An exception is the case of cut-size
printing and writing papers (including folio sheets) made by primary
producers that are cut prior to leaving the mill.\2\ These are
classified as primary products (not converted products) under the
Harmonized Tariff Schedule of the United States (HTSUS) and would,
therefore, be assessed under the program.
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\2\ Cut-size office papers are used in office machines and are
sold in sheet form typically 8.5'' x 11'', 8.5'' x 14'' or 11'' x
11''. Folio sheets are cut-size papers sold in sheet form in sizes
of 17'' x 22'' or larger. These would be included in the printing,
writing and related paper category.
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Types of Paper and Paper-Based Packaging
There are six major types of paper and paper-based packaging
produced by manufacturers: (1) Printing, writing and related paper; (2)
kraft packaging paper; (3) containerboard; (4) paperboard; (5) tissue
paper; and (6) newsprint. The proposed Order would cover the first four
of the six types mentioned above.
Printing, writing and related paper is coated or uncoated paper,
including thermal but excluding carbonless paper, which is subsequently
converted into products used for printing, writing and other
communication purposes, such as file folders, envelopes, catalogues,
magazines and brochures. Demand for carbonless paper has declined
significantly due to other technologies. Thus, the Panel concluded and
the Department concurs that the carbonless segment of the industry
would not be able to absorb the cost of a promotion program at this
time.
Kraft packaging paper is coarse, unbleached, semi-bleached or fully
bleached grades of paper that are subsequently converted into products
such as grocery bags, multiwall sacks, waxed paper and other products.
``Kraft'' refers to a process for transforming wood into a high
quality, strong pulp for making paper and paper-based packaging.
Bleaching is the chemical processing of pulp to remove the natural
brown color and thus make the pulp and pulp products whiter.
Containerboard includes all forms of linerboard, which is used as
the facing material in the production of corrugated or solid fiber
shipping boxes, and medium, which is used as the inner fluting material
in the manufacture of such boxes. Containerboard is used to manufacture
corrugated boxes, shipping containers, point-of-sale displays, pallets
and other products.
Paperboard is solid bleached kraft board, recycled board and
unbleached kraft board, which is converted into products such as
folding boxes, tubes, cans and drums. Paperboard is also used to
package food, beverages and other nondurable consumer products such as
pharmaceuticals, clothing, footwear and cosmetics. Nondurable goods are
used immediately or have a lifespan of 3 years or less.
The two types of paper and paper-based packaging that would not be
covered under the program are tissue paper and newsprint. With the
exception of restroom hand-dryers versus paper towels, tissue paper
products are not facing competition from alternative products. The
opposite is true for newsprint. Demand for newsprint has drastically
declined due to the shift toward digital communications. However, the
Panel concluded and the Department concurs that the newsprint segment
of the industry would not be able to incur the cost of a promotion
program at this time.
U.S. Manufacturing by Region \3\
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\3\ Manufacturing data was compiled by the AF&PA from its 51st
Annual Survey of Paper, Paperboard and Pulp, 2011.
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In 2011, about 68.5 million short tons of U.S. paper and paper-
based packaging to be covered under the program were produced. Of the
68.5 million short tons, it is estimated that 63.2 percent was
manufactured in the South, 17.1 percent was manufactured in the
Midwest, 10.5 percent was manufactured in the Northeast, and 9.2
percent was manufactured in the West. In terms of type, it is estimated
that 50.1 percent was containerboard, 29.1
[[Page 57008]]
percent was printing, writing and related paper, 18.3 percent was
paperboard, and 2.5 percent was kraft packaging paper.
Export Markets
According to U.S. Census data, in 2011, exports of the four types
of paper and paper-based packaging to be covered under the proposed
Order totaled about 11.5 million short tons, or 17 percent of domestic
production. In terms of major export markets in 2011, it is estimated
that 18.0 percent went to Western Europe, 16.0 percent each went to
Canada and Mexico, 11.0 percent went to the Far East and Oceania, 9.0
percent went to South America and 8.0 percent went to China. Of the
11.5 million short tons, it is estimated that 46.0 percent was
containerboard, 26.0 percent was paperboard, 22.0 percent was printing,
writing and related paper, and 6.0 percent was kraft packaging paper.
Imports
According to U.S. Customs and Border Protection (Customs) data, in
2011, imports to be covered under the program totaled 7.5 million short
tons. Of that total, about 58.6 percent was from Canada, 22.2 percent
from Western Europe, 9.8 percent was from China, Japan and the Far
East, 2.7 percent was from South America and the remainder was from
other countries. In terms of type, about 72.0 percent of the imports
were printing, writing and related paper, 13.1 percent was paperboard,
10.1 percent was containerboard and 4.8 percent was kraft packaging
paper.
Need for a Program
According to AF&PA data, markets for paper and paper-based
packaging that would be covered under the program declined by 15
percent between 2000 and 2010. U.S. shipments of cut-size office papers
(one sector of the printing and writing category) grew with employment
in white collar-intensive industries between 2000 and 2006. However,
between 2006 and 2010, shipments fell 20 percent \4\ while employment
in white collar-intensive industries declined by 5 percent. Moreover,
in 2010, while employment in white collar-intensive industries
stabilized,\5\ office paper shipments declined another 5 percent.\6\
This is illustrated in the following chart.
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\4\ AF&PA's Statistics of Pulp, Paper and Paperboard, p. 7.
\5\ Employment data was compiled by the AF&PA from the U.S.
Bureau of Labor Statistics, http://www.bls.gov/data.
\6\ AF&PA's Statistics, p. 7.
[GRAPHIC] [TIFF OMITTED] TP16SE13.000
Markets for other printing and writing papers (exclusive of cut-
size office papers) declined 27 percent between 2006 and 2010.\7\
Digital forms of communication such as Internet advertising and the
widespread availability of news, books and other digital information
have contributed to this displacement. This is illustrated in the
following chart.\8\
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\7\ AF&PA's Statistics, p. 7 and 12.
\8\ Printing activity index is from http://www.federalreserve.gov/releases/g17/ipdisk/ip_nsa.txt. The Federal
Reserve Board reports production of nondurable goods, as well as
other items, as indexes rather than in terms of tons, pounds or
units. The base year is 2007, which means that if the index reaches
105 in 2008, production has increased 5 percent relative to the 2007
level. If the index falls to 95, it means that production has
declined 5 percent relative to the 2007 level.
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[[Page 57009]]
[GRAPHIC] [TIFF OMITTED] TP16SE13.001
According to AF&PA data, kraft paper markets declined 23 percent
between 2000 and 2010,\9\ even as food store sales rose by 1
percent.\10\ This is illustrated in the following chart.
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\9\ AF&PA monthly Kraft Paper Statistical Reports.
\10\ Retail food and beverage store sales data is from the U.S.
Census Bureau (http://www.census.gov/retail) and was adjusted for
inflation by the AF&PA using U.S. Bureau of Labor Statistics'
consumer price index for food and beverages (http://www.bls.gov/data/#prices).
[GRAPHIC] [TIFF OMITTED] TP16SE13.002
Paperboard markets also have declined over the past decade.\11\
Paperboard is mainly facing competition from plastics, but also from
foils and, to a lesser extent, glass. Between 2000 and 2010, U.S.
paperboard markets contracted 10 percent as compared with a fairly
stable demand (i.e., a 1 percent increase) for nondurable consumer
goods. Additionally, paperboard markets stagnated when nondurable
consumer goods demand grew in the mid-2000s.\12\ This is illustrated in
the chart below.
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\11\ AF&PA's Statistics, p. 9.
\12\ http://www.federalreserve.gov/releases/g17/ipdisk/ip_nsa.txt.
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[[Page 57010]]
[GRAPHIC] [TIFF OMITTED] TP16SE13.003
AF&PA data show that containerboard markets have remained fairly
steady as compared to the other four types of paper and paper-based
packaging to be covered under the program. U.S. containerboard markets
declined 2 percent between 2000 and 2010,\13\ while demand for
nondurable consumer goods, which accounts for most of the demand for
corrugated boxes, rose 1 percent. As shown below, from 2000 through
2007, containerboard markets largely kept pace with nondurable consumer
goods, with containerboard demand growing 4 percent and nondurable
goods up 5 percent.\14\ This is illustrated in the following chart.
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\13\ AF&PA's Statistics, p. 9 and 20.
\14\ http://www.federalreserve.gov/releases/g17/ipdisk/ip_nsa.txt.
[GRAPHIC] [TIFF OMITTED] TP16SE13.004
In light of these market conditions, the Panel was formed in May
2010 to assess the merits of a national promotion program. While there
have been a number of ongoing campaigns designed to promote specific
sectors of the paper industry, the impact of these programs has been
limited due to funding. Additionally, while the programs have been
useful, their messages have been tailored to specific segments of the
industry. Ultimately, the Panel concluded that a national program that
would generate about $25 million annually with a unified message that
crosses all segments would benefit the entire industry.
Provisions of Proposed Program
Definitions
Pursuant to section 513 of the 1996 Act, sections 1222.1 through
1222.29 of the proposed Order would define certain terms that would be
used throughout the Order. Several of the terms are common to all
research and promotion programs authorized under
[[Page 57011]]
the 1996 Act while other terms are specific to the proposed paper and
paper-based packaging Order.
Section 1222.1 would define the term ``Act'' to mean the Commodity
Promotion, Research and Information Act of 1996 (7 U.S.C. 7411-7425),
and any amendments thereto.
Section 1222.2 would define the term ``Board'' to mean the Paper
and Paper-Based Packaging Board established pursuant to section
1222.40, or such other name as recommended by the Board and approved by
the Department.
Section 1222.4 would define the term ``converted products'' to mean
products made from paper and paper-based packaging.
Section 1222.5 would define the term ``Customs'' or ``CBP'' to mean
the U.S. Customs and Border Protection, an agency of the U.S.
Department of Homeland Security.
Section 1222.7 would define the term ``fiscal period'' and
``marketing year'' to mean the 12-month period ending on December 31 or
such other period as recommended by the Board and approved by the
Secretary.
Section 1222.9 would define the term ``information'' to mean
information and programs for consumers, customers and industry,
including educational activities, information and programs designed to
enhance and broaden the understanding of the use and attributes of
paper and paper-based packaging, increase efficiency in manufacturing
paper and paper-based packaging, maintain and expand existing markets,
and develop new markets and marketing strategies. These include:
(a) Consumer education and information, which means any action
taken to provide information to, and broaden the understanding of, the
general public regarding paper and paper-based packaging; and
(b) Industry information, which means information and programs that
would enhance the image of the paper and paper-based packaging
industry.
Section 1222.12 would define the term ``manufacture'' or
``produce'' to mean the process of transforming pulp into paper and
paper-based packaging.
Section 1222.13 would define the term ``manufacturer'' or
``producer'' to mean any person who manufactures paper and paper-based
packaging in the United States.
Section 1222.16 would define the term ``Panel'' to mean the Paper
and Paper-Based Packaging Panel formed to oversee development of a
paper and paper-based packaging promotion, research and information
program. As specified in section 1222.41, the Panel would conduct the
initial nominations for the Board and submit them to the Secretary.
This would be the only role of the Panel under the program.
Section 1222.17 would define the term ``paper and paper-based
packaging'' to mean:
(1) Printing, writing and related paper, which is coated or
uncoated paper, including thermal but excluding carbonless paper, that
is subsequently converted into products used for printing, writing and
other communication purposes, such as file folders, envelopes,
catalogues, magazines and brochures;
(2) Kraft packaging paper, which is coarse unbleached, semi-
bleached or fully bleached grades of paper that is subsequently
converted into products such as grocery bags, multiwall sacks, waxed
paper and other products;
(3) Containerboard, which is all forms of linerboard and medium,
that is used to manufacture corrugated boxes, shipping containers and
related products; and
(4) Paperboard, which is solid bleached kraft board, recycled board
and unbleached kraft board that is subsequently converted into a wide
variety of end uses, including folding boxes, food and beverage
packaging, tubes, cans, and drums, and other miscellaneous products.
Paperboard does not include construction-related products such as
gypsum wallboard facings and panel board.
As previously mentioned, the Order would cover only the four types
of paper and paper-based packaging as defined above, not tissue,
newsprint or converted products.
Sections 1222.10, 1222.11, 1222.14 and 1222.22 would define the
terms ``kraft process,'' ``linerboard,'' ``medium,'' and ``pulp,''
respectively. These terms are used in the definition of paper and
paper-based packaging specified in section 1222.17.
Section 1222.20 would define the term ``programs, plans and
projects'' to mean those research, promotion and information programs,
plans or projects established pursuant to the Order.
Section 1222.21 would define the term ``promotion'' to mean any
action, including paid advertising and the dissemination of
information, utilizing public relations or other means, to enhance and
broaden the understanding of the use and attributes of paper and paper-
based packaging for the purpose of maintaining and expanding markets
for paper and paper-based packaging.
Section 1222.23 would define the term ``research'' to mean any type
of test, study, or analysis designed to enhance the image,
desirability, use, marketability, manufacturing, recyclability,
reusability or quality of paper and paper-based packaging, including
research directed to product characteristics and product development,
including new uses of existing products, new products or improved
technology in the manufacturing of paper and paper-based packaging.
Section 1222.25 would define the term ``short ton'' or ``ton'' to
mean a measure of weight equal to 2,000 pounds.
Sections 1222.3, 1222.6, 1222.8, 1222.15, 1222.19, 1222.24,
1222.26, 1222.27, 1222.28 and 1222.29 would define the terms ``conflict
of interest,'' ``Department or USDA,'' ``importer,'' ``Order,''
``person,'' ``Secretary,'' ``State,'' ``suspend,'' ``terminate,'' and
``United States,'' respectively. The definitions are the same as those
specified in section 513 of the Act.
Establishment of the Board
Pursuant to section 515 of the 1996 Act, sections 1222.40 through
1222.47 of the proposed Order would detail the establishment and
membership of the proposed Paper and Paper-Based Packaging Board,
nominations and appointments, the term of office, removal and
vacancies, procedure, reimbursement and attendance, powers and duties,
and prohibited activities.
Section 1222.40 would specify the Board establishment and
membership. The Board would be composed of domestic manufacturers and
importers who manufacture or import to the United States 100,000 short
tons or more of paper and paper-based packaging during a fiscal period.
Seats on the Board would be apportioned based on the geographic
distribution of the quantity of paper and paper-based packaging
manufactured in the United States and the quantity of paper and paper-
based packaging imported to the United States.
The Board would be composed of 12 members. Eleven members would be
manufacturers and 1 member would be an importer. Of the 11 domestic
manufacturers, 10 would be allocated to four regions within the United
States based on the quantity of paper and paper-based packaging
manufactured within the respective region. Of the 10 members, 6 would
be from the South, two would be from the Midwest, and one each would be
from the Northeast and the West. Specific areas within each domestic
region would be specified in section 1222.40(b)(1). One manufacturer
representative may be from any region (``at large'') and must produce
at least 100,000 short tons but no more than 250,000 short tons of
paper and paper-
[[Page 57012]]
based packaging annually. This is to help ensure that the views of
smaller entities that are subject to assessments are represented on the
Board. If there are no eligible nominees, this seat would be allocated
to the largest producing region.
The Panel also opted to have no alternate Board members. It wants
to ensure that industry members who seek representation and serve on
the Board are committed to their service and participate in all Board
meetings.
Every 5 years, but no more often than once every 3 years, the Board
must review the geographical distribution of the quantity of paper and
paper-based packaging manufactured within the United States and the
quantity of paper and paper-based packaging imported to the United
States. If warranted, the Board would recommend to the Secretary that
the Board membership be reapportioned appropriately to reflect such
changes, which could include an increase in the number of importer
seats. The distribution of quantities between domestic regions would
also be considered as well as changes in the size of the Board. Any
changes in Board composition would be implemented by the Secretary
through rulemaking.
Section 1222.41 of the proposed Order would specify Board
nominations and appointments. The initial nominations would be
submitted to the Secretary by the Panel. The Panel would publicize the
nomination process, using trade press or other means it deems
appropriate, and outreach to all known manufacturers and importers who
manufacture or import 100,000 short tons or more of paper and paper-
based packaging in a marketing year. The Panel would use regional
caucuses, mail or other methods to solicit potential nominees and would
work with USDA to help ensure that all interested persons are apprised
of the nomination process. The Panel would submit the nominations to
the Secretary and recommend two nominees for each Board position. The
Secretary would select the members of the Board from the nominations
submitted by the Panel.
Regarding subsequent nominations, the Board would solicit
nominations as described in the preceding paragraph. Eligible persons
may nominate themselves or other eligible candidates. Nominees would
have the opportunity to provide the Board a short background statement
outlining their qualifications to serve on the Board. Nominees must
domestically produce or import 100,000 short tons or more of paper and
paper-based packaging annually. Entities that are both a domestic
manufacturer and an importer could seek nomination to the Board as
either a domestic manufacturer or an importer, but not both.
For the domestic seats allocated by region, manufacturers must
produce paper and paper-based packaging in the region for which they
seek nomination. Domestic manufacturers who manufacture paper and
paper-based packaging in more than one region could seek nomination in
only one region of their choice. The names of domestic manufacturer
nominees would be placed on a ballot by region. The ballots along with
the background statements would be mailed to manufacturers who produce
100,000 short tons or more annually for a vote. Manufacturers may vote
in each region in which they manufacture paper and paper-based
packaging. The votes would be tabulated for each region with the
nominee receiving the highest number of votes at the top of the list in
descending order by vote. The top two candidates for each position
would be submitted to the Secretary.
The names of nominees for the ``at large'' domestic manufacturer
seat would also be placed on a ballot. The ballots along with the
background statements would be mailed to all manufacturers who
manufacture 100,000 short tons or more of paper and paper-based
packaging annually. The votes would be tabulated and the nominees
receiving the highest number of votes would be placed at the top of the
list in descending order by vote. The top two candidates would be
submitted to the Secretary.
The names of importer nominees would also be placed on a ballot.
The ballots along with the background statements would be mailed to
importers who import 100,000 short tons or more annually for a vote.
The votes would be tabulated with the nominee receiving the highest
number of votes at the top of the list in descending order by vote. The
top two candidates for each position would then be submitted to the
Secretary.
The Board would submit nominations to the Secretary at least 6
months before the new Board term begins. The Secretary would select the
members of the Board from the nominations submitted by the Board.
The Panel also recommended that no two Board members be employed by
a single corporation, company, partnership or any other legal entity.
This is to help ensure that representation on the Board is balanced.
In order to provide the Board flexibility, the Board could
recommend to the Secretary modifications to its nomination procedures.
Any such modifications would be implemented through rulemaking by the
Secretary.
Section 1222.42 of the proposed Order would specify the term of
office. With the exception of the initial Board, each Board member
would serve a three-year term or until the Secretary appointed his or
her successor. Each term of office would begin on January 1 and end on
December 31. No member could serve more than two consecutive terms,
excluding any term of office less than three years. For the initial
board, the terms of Board members would be staggered for two, three and
four years and would be recommended to the Secretary by the Panel.
Section 1222.43 of the proposed Order would specify criteria for
the removal of members and for filling vacancies. If a Board member
ceased to work for or be affiliated with a domestic manufacturer or
importer or ceased to do business in the region he or she represented,
such position would become vacant. Additionally, the Board could
recommend to the Secretary that a member be removed from office if the
member consistently refused to perform his or her duties or engaged in
dishonest acts or willful misconduct. The Secretary could remove the
member if he or she finds that the Board's recommendation shows
adequate cause. The Secretary could also remove a member due to
adequate cause absent a Board recommendation. If a position became
vacant, nominations to fill the vacancy would be conducted using the
nominations process as proposed in section 1222.41 of the Order. A
vacancy would not be required to be filled if the unexpired term is
less than six months.
Section 1222.44 of the proposed Order would specify procedures of
the Board. A majority of the Board members would constitute a quorum.
Thus, for the 12-member Board, 7 members would constitute a quorum. If
the Board had two vacancies and consisted of only 10 members, 6 members
would constitute a quorum. A motion would carry if supported by a
majority of Board members, except for recommendations to change the
assessment rate or to adopt a budget, both of which would require
affirmation by at least two-thirds of the Board members. Thus, for a
12-member Board, 8 members would have to vote in favor of a budget for
it to pass. For a 10-member Board (two vacancies), 7 members would have
to vote in favor of a budget for it to pass. Proxy voting would not be
permitted.
The proposed Order would also provide for the Board to take action
by mail, telephone, electronic mail, facsimile, or any other electronic
means when the chairperson believes it is
[[Page 57013]]
necessary. Actions taken under these procedures would be valid only if
all members and the Secretary were notified of the meeting and all
members were provided the opportunity to vote and at least a majority
of Board members voted in favor of the action (unless two-thirds vote
were required under the Order). Additionally, all votes would have to
be confirmed in writing and recorded in Board minutes.
The proposed Order would specify that Board members would serve
without compensation. However, Board members would be reimbursed for
reasonable travel expenses, as approved by the Board, incurred when
performing Board business. Similarly, persons who serve on
subcommittees or other committees who may not be Board members would
also be reimbursed for reasonable travel expenses, as approved by the
Board, incurred when performing Board business.
Section 1222.46 of the proposed Order would specify powers and
duties of the Board. These are similar in promotion programs authorized
under the 1996 Act. They include, among other things, to administer the
Order and collect assessments; to develop bylaws and recommend
regulations necessary to administer the Order; to select a chairperson
and other Board officers; to form committees and subcommittees as
necessary; to hire staff or contractors; to provide appropriate notice
of meetings to the industry and USDA and keep minutes of such meetings;
to develop programs and enter into contracts to implement programs; to
submit fiscal year budgets to USDA in accordance with section 1222.50;
to borrow funds necessary to cover startup costs of the Order; to
invest Board funds appropriately; to recommend changes in the
assessment rate as appropriate and within the limits of the Order; to
have its books audited by an outside certified public accountant at the
end of each fiscal period and at other times as requested by the
Secretary; to report and make public reports of its program activities;
to make public an accounting of funds received and expended at least
once each fiscal year; to receive, investigate and report to the
Secretary complaints of violations of the Order; to recommend
amendments to the Order as appropriate; and to work to achieve an
effective, continuous and coordinated program of promotion, research
and information and to carry out programs, plans and projects designed
to provide maximum benefits to the paper and paper-based packaging
industry.
Section 1222.47 of the proposed Order would specify prohibited
activities that are common to all promotion programs authorized under
the 1996 Act. In summary, neither the Board nor its employees and
agents could engage in actions that would be a conflict of interest;
use Board funds to lobby (influencing legislation or governmental
action or policy, by local, state, national, and foreign governments or
subdivision thereof, other than recommending to the Secretary
amendments to the Order); and engage in any advertising or activities
that may be false, misleading or disparaging to another agricultural
commodity. Additionally, paper and paper-based packaging from all
origins would be treated equally.
Expenses and Assessments
Pursuant to sections 516 and 517 of the 1996 Act, sections 1222.50
through 1222.53 of the proposed Order detail requirements regarding the
Board's budget and expenses, financial statements, assessments, and
exemption from assessments. At least 60 calendar days before the start
of the fiscal period, and as necessary during the year, the Board would
submit a budget to USDA covering its projected expenses. The budget
must include a summary of anticipated revenue and expenses for each
program along with a breakdown of staff and administrative expenses.
Except for the initial budget, the Board's budgets should include
comparative data for at least one preceding fiscal period.
Each budget must provide for adequate funds to cover the Board's
anticipated expenses. Any amendment or addition to an approved budget
must be approved by USDA, including shifting of funds from one program,
plan or project to another. Shifts of funds that do not result in an
increase in the Board's approved budget would not have to have prior
approval from USDA. For example, if the Board's approved budget
provided for $1 million in consumer advertising and $500,000 in
research projects, a shift of $50,000 from consumer advertising to
research would require USDA approval. However, a shift within the $1
million consumer advertising line item would not require prior USDA
approval.
The Board would be authorized to incur reasonable expenses for its
maintenance and functioning. During its first year of operation, the
Board could borrow funds for startup costs and capital outlay. Any
borrowed funds would be subject to the same fiscal, budget and audit
controls as other funds of the Board.
The Board could also accept voluntary contributions. Any
contributions received by the Board would be free from encumbrances by
the donor and the Board would retain control over use of the funds. The
Board would also be required to reimburse USDA for costs incurred by
USDA in overseeing the Order's operations, including all costs
associated with referenda.
The Board would be limited to spending no more than 15 percent of
its available funds for administration, maintenance, and the
functioning of the Board. This limitation would begin three fiscal
years after the Board's first meeting. As an example, if the Board
received $20 million in assessments during fiscal year 5, and had
available $1 million in reserve funds, the Board's available funds
would be $21 million. In this scenario, the Board would be limited to
spending no more than $3.2 million (.15 x $21 million) on
administrative costs. Reimbursements to USDA would not be considered
administrative costs.
The Board could also maintain a monetary reserve and carry over
excess funds from one fiscal period to the next. However, such reserve
funds could not exceed one fiscal year's budgeted expenses. For
example, if the Board's budgeted expenses for a fiscal year were $20
million, it could carry over no more than $20 million in reserve. With
approval of the Secretary, reserve funds could be used to pay expenses.
The Board could invest its revenue collected under the Order in the
following: (1) Obligations of the United States or any agency of the
United States; (2) General obligations of any State or any political
subdivision of a State; (3) Interest bearing accounts or certificates
of deposit of financial institutions that are members of the Federal
Reserve; and (4) Obligations fully guaranteed as to principal interest
by the United States.
The Board would be required to submit to USDA financial statements
on a quarterly basis, or at any other time as requested by the
Secretary. Financial statements should include, at a minimum, a balance
sheet, an income statement and an expense budget.
Assessments
The Board's programs and expenses would be funded through
assessments on U.S. manufacturers and importers, other income, and
other funds available to the Board. The Order would provide for an
initial assessment rate of $0.35 per short ton of paper and paper-based
packaging domestically manufactured or imported. Domestic manufacturers
would pay assessments based on the quantity of paper and paper-based
packaging manufactured or produced;
[[Page 57014]]
the assessment would be on the rollstock. An exception previously
mentioned is the case of cut-size printing and writing papers
(including folio sheets) in which case the assessment would be on the
cut-size paper. Importers would pay assessments based on the quantity
of paper and paper-based packaging imported to the United States.
Two years after the Order becomes effective and periodically
thereafter, the Board would review the assessment rate and, if
appropriate, recommend a change in the rate. At least two-thirds of the
Board members would have to favor a change in the assessment rate. Any
change in the assessment rate would be subject to rulemaking by the
Secretary. Anticipated income generated at the $0.35 per short ton
assessment rate is addressed in the section titled ``Regulatory
Flexibility Act Analysis.''
Domestic manufacturers would be required to pay their assessments
owed to the Board by the 30th calendar day of the month following the
end of the quarter in which the paper and paper-based packaging was
manufactured. Thus, the January to December fiscal year would have four
quarters ending the last day of March, June, September, and December,
respectively. Assessments would be due April 30th, July 30th, October
30th and January 30th. As an example, assessments for paper and paper-
based packaging produced in January, February or March would be due to
the Board by April 30th.
Importer assessments would be collected through Customs. If Customs
did not collect the assessment from an importer, then the importer
would be responsible for paying the assessment directly to the Board
within 30 calendar days after the end of the quarter in which the paper
and paper-based packaging was imported. Imported paper and paper-based
packaging identified by the numbers of the HTSUS listed in sections
1222.52(e) would be covered under the Order. The majority of the paper
and paper-based packaging imports are in kilograms. One kilogram is
equal to 2.20462262 pounds and one short ton is equal to 2,000 pounds.
Thus, the $0.35 per short ton assessment rate is equal to a rate of
$.000386 per kilogram ($0.35/2,000 pounds times 2.20462262 pounds/
kilogram).
The Order would provide authority for the Board to impose a late
payment charge and interest for assessments overdue to the Board by 60
calendar days. The late payment charge and rate of interest would be
prescribed in the Order's regulations issued by the Secretary.
Exemptions
The Order would provide for two exemptions. First, U.S.
manufacturers and importers who domestically produce or import less
than 100,000 short tons during a marketing year would be exempt from
paying assessments. If an entity is a U.S. manufacturer and an
importer, such entity's combined quantity of paper and paper-based
packaging manufactured and imported annually would count towards the
100,000 short ton exemption.
Manufacturers would apply to the Board for an exemption prior to
the start of the fiscal year. This would be an annual exemption;
manufacturers would have to reapply each year. They would have to
certify that they expect to domestically manufacture less than 100,000
short tons for the applicable fiscal year. The Board could request past
production data to support the exemption request. The Board would then
issue, if deemed appropriate, a certificate of exemption to the
eligible manufacturer. Once approved, domestic manufacturers would not
have to pay assessments to the Board for the applicable fiscal year.
Importers that imported less than 100,000 short tons of paper and
paper-based packaging during the prior marketing year would
automatically be considered exempt for the fiscal year that assessments
are due, and would not be required to apply to the Board for a
certificate of exemption. Customs data would be reviewed to determine
applicable importers.
Importers that imported more than 100,000 short tons of paper and
paper-based packaging during the prior marketing year, but believe and
can document that they will import less than 100,000 short tons during
the current year could apply to the Board for a certificate of
exemption. The Board would then issue, if deemed appropriate, a
certificate of exemption to the eligible importer.
Importers which are exempt would have their assessments as
collected by Customs refunded by the Board within 60 calendar days
after receipt of such assessments by the Board. No interest would be
paid on the assessments collected by Customs or the Board.
Manufacturers who did not apply to the Board for an exemption and
domestically manufactured less than 100,000 short tons during the
fiscal year would receive a refund from the Board for the applicable
assessments within 30 calendar days after the end of the fiscal year.
The Board would determine the assessments paid and refund the
manufacturer accordingly.
Importers who did not apply to the Board for an exemption, imported
more than 100,000 short tons of paper and paper-based packaging during
the prior marketing year, and imported less than 100,000 short tons
during the fiscal year for which assessments are due, would receive a
refund from the Board for the applicable assessments within 30 calendar
days after the end of the fiscal year. The Board would determine the
assessments paid and refund the manufacturer accordingly.
On the other hand, manufacturers and importers who receive an
exemption certificate or an automatic exemption but domestically
manufacture or import 100,000 short tons or more of paper and paper-
based packaging during the fiscal year would have to pay the Board the
applicable assessments owed within 30 calendar days after the end of
the fiscal year and submit any necessary reports to the Board.
The Board could recommend additional procedures to administer the
exemption as appropriate. Any procedures would be implemented through
rulemaking by the Secretary.
The exemption procedures in this proposed rule were modified to
reduce the paperwork burden on importers that historically import less
than 100,000 short tons of paper and paper-based packaging during the
marketing year. Accordingly, modifications were made to section
1222.53(a) regarding the exemption procedures.
The second exemption under the proposed Order would be for organic
paper and paper-based packaging. A domestic manufacturer who operates
under an approved National Organic Program (NOP) (7 CFR part 205)
system plan, only manufactures paper and paper-based packaging that is
eligible to be labeled as 100 percent organic under the NOP, and is not
a split operation, would be exempt from the payment of assessments.
Likewise, an importer who imports only paper and paper-based packaging
that is eligible to be labeled as 100 percent organic under the NOP, is
not a split operation, and who does not import any nonorganic paper and
paper-based packaging would be exempt from the payment of assessments.
Promotion, Research and Information
Pursuant to section 516 of the 1996 Act, sections 1222.60 through
1222.62 of the proposed Order would detail requirements regarding
promotion, research and information programs, plans and projects
authorized under the Order. The Board would develop and submit to the
Secretary for approval
[[Page 57015]]
programs, plans and projects regarding promotion, research, education
and other activities, including consumer and industry information and
advertising. The Board would be required to evaluate each plan and
program to ensure that it contributes to an effective promotion
program. The Order would also require that, at least once every five
years, the Board fund an independent evaluation of the effectiveness of
the Order and programs conducted by the Board. The Secretary has
authority at any time to suspend or terminate the Order if he or she
determines that it obstructs or does not tend to effectuate the purpose
of the Act.
Finally, the Order would specify that any patents, copyrights,
trademarks, inventions, product formulations and publications developed
through the use of funds received by the Board would be the property of
the U.S. Government, as represented by the Board. These along with any
rents, royalties and the like from their use would be considered income
subject to the same fiscal, budget, and audit controls as other funds
of the Board, and could be licensed with approval of the Secretary.
Reports, Books and Records
Pursuant to section 515 of the 1996 Act, sections 1222.70 through
1222.72 would specify the reporting and recordkeeping requirements
under the proposed Order as well as requirements regarding
confidentiality of information.
Manufacturers and importers would be required to submit
periodically to the Board certain information as the Board may request.
Specifically, domestic manufacturers would submit a report to the Board
that would include, but not be limited to, the manufacturer's name,
address, and telephone number; and the quantity of paper and paper-
based packaging manufactured by type. Manufacturers would submit this
report by the 30th calendar day of the month following the end of the
quarter in which the paper and paper-based packaging was manufactured.
The report would accompany the payment of assessments as specified in
section 1222.52. Manufacturers who received a certificate of exemption
from the Board would not have to submit such a report to the Board.
However, exempt manufacturers who produced 100,000 short tons or more
during the fiscal year would have to submit such reports to the Board
as specified in section 1222.53(a)(6).
Likewise, importers who pay their assessments directly to the Board
would be required to submit a report to the Board that would include,
but not be limited to, the importer's name, address, and telephone
number; the quantity of paper and paper-based packaging imported to the
United States by type; and country of export for such paper and paper-
based packaging. Importers would submit this report at the same time
they remit their assessments to the Board. Importers who paid their
assessments through Customs would not have to submit such reports to
the Board because Customs would collect this information upon entry.
Additionally, domestic manufacturers and importers, including those
who were exempt, would be required to maintain books and records needed
to verify any required reports. Such books and records must be made
available during normal business hours for inspection by the Board's or
USDA's employees or agents. Manufacturers and importers would be
required to maintain such books and records for two years beyond the
applicable fiscal period.
The Order would also require that all information obtained from
persons subject to the Order as a result of proposed recordkeeping and
reporting requirements would be kept confidential by all officers,
employees, and agents of the Board and USDA. Such information could
only be disclosed if the Secretary considered it relevant, and the
information were revealed in a judicial proceeding or administrative
hearing brought at the direction or at the request of the Secretary or
to which the Secretary or any officer of USDA were a party. Other
exceptions for disclosure of confidential information would include the
issuance of general statements based on reports or on information
relating to a number of persons subject to the Order, if the statements
did not identify the information furnished by any person, or the
publication, by direction of the Secretary, of the name of any person
violating the Order and a statement of the particular provisions of the
Order violated.
Miscellaneous Provisions
Referenda
Pursuant to section 518 of the 1996 Act, section 1222.81(a) of the
proposed Order specifies that the program would not go into effect
unless it is approved by a majority of current U.S. manufacturers and
importers voting in a referendum who also represent a majority of the
volume of paper and paper-based packaging represented in the referendum
who, during a representative period determined by the Secretary, were
engaged in the manufacturing or importation of paper and paper-based
packaging into the United States. For example, if 50 U.S. manufacturers
and importers representing 50 million short tons of paper and paper-
based packaging voted in a referendum, 26 manufacturers and importers
representing over 26 million short tons would have to vote in favor of
the Order for it to pass in the referendum.
Section 1222.81(b) of the proposed Order specifies criteria for
subsequent referenda. Under the Order, a referendum would be held to
ascertain whether the program should continue, be amended, or be
terminated. This section specifies that a referendum would be held 7
years after the Order becomes effective, and every 7 years thereafter,
to determine whether manufacturers and importers favor continuation of
the Order. The Order would continue if favored by a majority of
manufacturers and importers voting in the referendum that also
represented a majority of the volume of paper and paper-based packaging
represented in the referendum.
Additionally, a referendum could be conducted at the request of the
Board. A referendum could also be conducted at the request of 10
percent or more of the number of persons eligible to vote in a
referendum under the Order. Finally, a referendum could be conducted at
any time as determined by the Secretary.
Other Miscellaneous Provisions
Sections 1222.80 and sections 1222.82 through 1222.88 describe the
rights of the Secretary; authorize the Secretary to suspend or
terminate the Order when deemed appropriate; prescribe proceedings
after termination; address personal liability, separability, and
amendments; and provide OMB control numbers. These provisions are
common to all research and promotion programs authorized under the 1996
Act.
Executive Order 12866 and Executive Order 13563
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This rule is not a significant regulatory action under
section 3(f) of Executive Order 12866, Regulatory Planning and Review,
as
[[Page 57016]]
supplemented by Executive Order 13563. The Office of Management and
Budget has not reviewed it under that Order.
We expect the economic impact of this rule to be minimal. The
program is intended to include broad, fact-based messages highlighting
the renewability, recyclability and reusability of paper and paper-
based packaging. Paper produced in the United States relies on fiber
from sustainably managed forests and fiber recovered for recycling as
its raw material. Broad messages about the recyclability of paper
should enhance recovery efforts. Increasing paper recovering for
recycling would increase the amount of paper diverted from landfills.
Messaging to encourage the use of renewable and recyclable paper and
paper-based packaging could help increase the use of bio-based
products; paper and paper-based packaging are considered bio-based
products because they are composed of wood fiber.
The industry could also educate the public about the sustainability
of paper and paper-based packaging. In the United States, more trees
are grown than harvested. Between 1953 and 2006, the standing inventory
of trees (i.e., the volume of growing trees) in U.S. forests increased
by 49 percent and has increased by more than 20 percent since 1970.\15\
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\15\ National Report of Sustainable Forests (2010), Page II-112,
U.S. Forest Service www.fs.fed.us/research/sustain/).
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Additionally, many paper products are manufactured using renewable
energy. In 2008, an estimated 65 percent of the energy needed to
operate U.S. pulp and paper mills was generated from renewable fuels
derived largely from biomass.\16\ Broad campaigns to educate consumers
about these factors should help all segments of the industry.
---------------------------------------------------------------------------
\16\ This is based on a 2008 survey of AF&PA member companies
that produced pulp, paper and paperboard.
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The program would also help the forest products industry maintain
870,000 jobs across the nation and begin to create new jobs.\17\ In
addition to these jobs, numerous other jobs in related sectors are
dependent upon the economic health of this industry.
---------------------------------------------------------------------------
\17\ Forest products industry employment was calculated by
summing March 2012 Bureau of Labor Statistics employment data for
the following categories: paper and paper products, logging, wood
products, wood kitchen cabinets and countertops.
---------------------------------------------------------------------------
The proposed program would be funded by industry through an
assessment. The program would collect approximately $25 million in
assessments from the top producing U.S. manufacturers and importers to
conduct marketing and educate consumers about a variety of paper
products, thus, benefiting all paper manufacturers and importers,
including many small operations that would be exempt from the
assessment. While the benefits of the program are difficult to
quantify, they are expected to outweigh program costs. If the new
program preserves just 0.24 percent of the paper and allied products
industry sales by slowing demand declines for some grades and/or
increasing demand growth for other grades, the economy could experience
3,360 additional jobs.\18\ For example, the Cotton Board has seen a
Benefit-Cost Ratio for producers and the government of $8.80 return for
each dollar invested; and since 1990, the Benefit-Cost Ratio for
importers is a $14.80 return for each dollar invested. Other research
and promotion programs have seen similar benefits.
---------------------------------------------------------------------------
\18\ This is an AF&PA estimate and was computed as follow. The
paper and paper products industry currently employs 395,000 people,
according to the Bureau of Labor Statistics. The grades of paper and
paper-based packaging to be covered by the proposed program
accounted for about 83.3 percent of total paper and paper-based
packaging in 2011. Hence, an estimated 329,000 direct jobs (83.3
percent of 395,000) are associated with grades that would be covered
by the program. Multipliers compiled by the Economic Policy
Institute indicate that 100 jobs in the paper industry support an
additional 325 jobs outside the industry (supplier industries,
government entities and schools, and local communities where paper
industry employees spend their wages). Thus, 329,000 paper industry
jobs support 1.4 million jobs throughout the economy ((329,000 jobs)
+ (329,000 jobs x 3.25)). If the proposed program preserves just
0.24 percent of the paper and allied products industry sales by
slowing demand declines for some grades and/or increasing demand
growth for other grades, the economy will have 3,360 additional jobs
(0.24 percent x 1.4 million).
---------------------------------------------------------------------------
The assessments collected from U.S. manufacturers and importers are
expected to be relatively small compared to U.S. manufacturer revenue
and the value of paper and paper-based packaging imports. Many
businesses make the decision to not pass these costs to consumers and
instead keep it as a cost to do business because the costs are so small
compared to the total revenue. To calculate the percentage of revenue
represented by the assessment rate, the $0.35 per short ton assessment
rate is divided by the average price, and that number is multiplied by
100. For domestic manufacturers, using a 2011 average price of $760 per
short ton,\19\ the percentage of revenue represented by the assessment
rate would be .046 percent. For importers, using an average price of
$824 per short ton ($6.2 billion in 2011 imports divided by 7.5 million
short tons of imports x 100),\20\ the percentage revenue represented by
the assessment rate would be .042 percent. Thus, for both domestic
manufacturers and importers covered under the proposed program, the
percentage revenue represented by the assessment rate would be well
under 1 percent (just under 5/100ths of a percent) of the average value
per ton produced or imported.
---------------------------------------------------------------------------
\19\ Industry sources do not publish information on average
price for paper and paper-based packaging. A reasonable estimate for
average price of paper and paper-based packaging is the value per
ton of paper and paper-based packaging exports. According to U.S.
Census data, the average value of paper and paper-based packaging
exports in 2011 was approximately $760 per short ton.
\20\ U.S. Customs and Border Protection data.
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Regulatory Flexibility Act Analysis
In accordance with the Regulatory Flexibility Act (RFA) (5 U.S.C.
601-612), Agricultural Marketing Service's (AMS) is required to examine
the impact of the proposed rule on small entities. Accordingly, AMS
prepared this regulatory flexibility analysis.
The purpose of the RFA is to fit regulatory actions to the scale of
businesses subject to such actions so that small businesses will not be
disproportionately burdened. The Small Business Administration defines,
in 13 CFR part 121, small agricultural producers as those having annual
receipts of no more than $750,000 and small agricultural service firms
(manufacturers and importers) as those having annual receipts of no
more than $7.0 million.
According to the AF&PA, in 2011, there were 84 manufacturers in the
United States that produced one or more of the four types of paper and
paper-based packaging to be covered under the proposed Order. Using an
average price of $760 per short ton, a manufacturer who produced less
than 9,210 short tons of paper and paper-based packaging per year would
be considered a small entity. It is estimated that no more than four
manufacturers produced less than 9,210 short tons in 2011. Thus, the
majority of manufacturers would not be considered small businesses.
According to Customs data, it is estimated that, in 2011, there
were about 2,612 importers of paper and paper-based packaging. Eighty-
five importers, or about 3.2 percent, imported more than $7.0 million
worth of paper and paper-based packaging. Thus, the majority of
importers would be considered small entities. However, no importer who
imported 100,000 short tons or more (the Order's proposed exemption
threshold) imported less than $7.0 million worth of paper and paper-
based packaging (19 importers). Therefore, none of the 19 importers to
[[Page 57017]]
be covered under the proposed Order would be considered small
businesses.
Regarding value of the commodity, with domestic production at about
68.5 million short tons in 2011, and using an average price of $760 per
short ton, the value of domestic paper and paper-based packaging in
2011 was about $52 billion. According to Customs data, the value of
imported paper and paper-based packaging imports for 2011 was about
$6.2 billion.
This document proposes an industry-funded research, promotion, and
information program for paper and paper-based packaging. The program
would be financed by an assessment on domestic manufacturers and
importers and would be administered by a board of industry members
appointed by the Secretary. The initial assessment rate would be $0.35
per short ton. Entities that domestically manufacture or import less
than 100,000 short tons per marketing year would be exempt from the
payment of assessments. In addition domestic manufacturers and
importers who would qualify as 100 percent organic under the NOP could
submit an ``Organic Exemption Form'' to the Board and request an
exemption from assessments. The purpose of the program would be to
maintain and expand markets for paper and paper-based packaging. A
referendum will be held among eligible manufacturers and importers to
determine whether they favor implementation of the program prior to it
going into effect. A majority of entities voting the in the referendum
by both number, and by volume represented in the referendum, would have
to support the program for it to be implemented. The program is
authorized under the 1996 Act.
The Order would provide for two exemptions. First, domestic
manufacturers and importers who would qualify as 100 percent organic
under the NOP could submit an ``Organic Exemption Form'' to the Board
and request an exemption from assessments. Second, U.S. manufacturers
and importers who domestically produce or import less than 100,000
short tons during a marketing year would be exempt from paying
assessments. Of the 84 domestic manufacturers in 2011, it is estimated
that about 33 to 39 percent, produced less than 100,000 short tons per
year and would thus be exempt from paying assessments under the
proposed Order. Of the 2,612 importers in 2011, it is estimated that
about 2,593, or 99 percent, imported less than 100,000 short tons per
year and would also be exempt from paying assessments. Thus, about 51
domestic manufacturers and 19 importers would pay assessments under the
Order. Using 2011 data and deducting exempt tonnage, it is estimated
that if 72.5 million short tons of paper and paper-based packaging
(67.2 million short tons domestic and 5.3 million short tons imported)
were assessed at a rate of $0.35 per short ton, about $25.4 million
would be collected in assessments. Of that $25.4 million, 92.5 percent
($23.5 million) would be paid by domestic manufacturers and 7.5 percent
($1.9 million) would be paid by importers.
Regarding alternatives, the Panel considered various options to the
program's coverage, the proposed assessment rate and exemption
threshold. The Panel considered the merits of assessing all U.S.
production of the four types of paper and paper-based packaging to be
covered under the program, whether imports should be included, and
different assessment rates to generate a range in income from $10
million to $30 million. The Panel also considered the merits of a
25,000 short ton versus a 100,000 short ton exemption. The table below
details various rates of assessment and approximate income generated
using 2011 data and the 100,000 short ton-exemption threshold.
Approximate Assessment Income at Various Assessment Rates
------------------------------------------------------------------------
U.S. production
and imports with
a 100,000 short
Approximate assessment income ton-exemption
(72.5 million
short tons)
------------------------------------------------------------------------
$10.0 million........................................ $0.138
$20.0 million........................................ 0.276
$25.4 million........................................ 0.350
$30.0 million........................................ 0.413
------------------------------------------------------------------------
After much consideration, the Panel concluded and the Department
concurs that an exemption threshold of 100,000 short tons would be
appropriate with imports covered under the program as well. The Panel
concluded and the Department concurs that this exemption level would
help reduce the financial and reporting burden on smaller entities but
provide the Board sufficient income to administer the program and
conduct research and promotion activities.
This action would impose additional reporting and recordkeeping
burdens on manufacturers and importers of paper and paper-based
packaging. Manufacturers and importers interested in serving on the
Board would be asked to submit a nomination form to the Board
indicating their desire to serve or nominating another industry member
to serve on the Board. Interested persons could also submit a
background statement outlining their qualifications to serve on the
Board. Except for the initial Board nominations, manufacturers and
importers would have the opportunity to cast a ballot and vote for
candidates to serve on the Board. Manufacturer and importer nominees to
the Board would have to submit a background form to the Secretary to
ensure they are qualified to serve on the Board.
Additionally, manufacturers and importers who manufacture or import
less than 100,000 short tons annually could submit a request to the
Board for an exemption from paying assessments on this volume.
Manufacturers and importers would also be asked to submit a report to
the Board regarding their production/imports. Manufacturers and
importers who would qualify as 100 percent organic under the NOP could
submit a request to the Board for an exemption from assessments.
Importers could also request a refund of any assessments paid to
Customs.
Finally, manufacturers and importer who want to participate in a
referendum to vote on whether the Order should become effective would
have to complete a ballot for submission to the Secretary. These forms
have been submitted to the OMB for approval under OMB Control No. 0581-
0281. Specific burdens for the forms are detailed later in this
document in the section titled ``Paperwork Reduction Act''. As with all
Federal promotion programs, reports and forms are periodically reviewed
to reduce information requirements and duplication by industry and
public sector agencies. Finally, USDA has not identified any relevant
Federal rules that duplicate, overlap, or conflict with this rule.
AMS is committed to complying with the E-Government Act, to promote
the use of the Internet and other information technologies to provide
increased opportunities for citizen access to Government information
and services, and for other purposes.
Regarding outreach efforts, the Panel represents a broad cross-
section of manufacturers and importers that would be covered under the
program. Of the 14 Panel members, 11 are AF&PA members and 3 are non-
AF&PA members. According to the Panel, Panel and AF&PA members
represent about 81 percent of the domestic industry that would be
covered by the program. Panel members representing 69 percent of the
domestic production have signed forms indicating their support for the
program. Over the past year, the Panel, and
[[Page 57018]]
AF&PA staff and industry company employees, on behalf of the Panel,
have made presentations on the proposed Order to all three major
associations representing paper-based packaging and many of the
associations representing the printing and writing paper segment of the
industry. In September 2011, the Panel mailed information regarding the
program to all Panel-known companies that would pay assessments under
the program. This included manufacturers and importers and both AF&PA
members and non-members. The Panel also mailed a letter to other
parties in the supply chain to continue to educate them about the
program. The AF&PA continues to communicate to its members and non-
members about the program. Panel members plan to continue outreach to
the CEOs of their industry peers to explain the program and help garner
support.
Finally, the numbers used in the RFA analysis herein represent the
total universe of domestic manufacturers and importers known to USDA
and not those who may be eligible to vote in the referendum.
Civil Rights Impact Analysis
Consideration has been given to the potential civil rights
implications of this proposed rule on affected parties to ensure that
no person or group shall be discriminated against on the basis of race,
color, national origin, gender, religion, age, disability, sexual
orientation, marital or family status, political beliefs, parental
status or protected genetic information. Although detailed information
is not available on the domestic manufacturers and importers who would
be subject to the program or the users of paper and paper-based
packaging, broad consideration was given to the employees of such
entities and those individuals who wish to use information collected
under this mandatory program. This proposed rule does not require
affected entities to relocate or alter their operations in ways that
could adversely affect such persons or groups. Moreover, the program
would not exclude from participation any persons or groups, deny any
persons or groups the benefits of the program, or subject any persons
or groups to discrimination.
Executive Order 13175
This action has been reviewed in accordance with the requirements
of Executive Order 13175, Consultation and Coordination with Indian
Tribal Governments. The review reveals that this regulation would not
have substantial and direct effects on Tribal governments and would not
have significant Tribal implications.
Executive Order 12988
This action has been reviewed under Executive Order 12988, Civil
Justice Reform. It is not intended to have retroactive effect. Section
524 of the 1996 Act provides that it shall not affect or preempt any
other Federal or State law authorizing promotion or research relating
to an agricultural commodity.
Under section 519 of the 1996 Act, a person subject to an order may
file a written petition with USDA stating that an order, any provision
of an order, or any obligation imposed in connection with an order, is
not established in accordance with the law, and request a modification
of an order or an exemption from an order. Any petition filed
challenging an order, any provision of an order, or any obligation
imposed in connection with an order, shall be filed within two years
after the effective date of an order, provision, or obligation subject
to challenge in the petition. The petitioner will have the opportunity
for a hearing on the petition. Thereafter, USDA will issue a ruling on
the petition. The 1996 Act provides that the district court of the
United States for any district in which the petitioner resides or
conducts business shall have the jurisdiction to review a final ruling
on the petition, if the petitioner files a complaint for that purpose
not later than 20 days after the date of the entry of USDA's final
ruling.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
Chapter 35), AMS has requested approval of a new information collection
and recordkeeping requirements for the proposed paper and paper-based
packaging program.
Title: Advisory Committee or Research and Promotion Background
Information.
OMB Number for background form AD-755: (Approved under OMB No.
0505-0001).
Expiration Date of Approval: May 31, 2015.
Title: Paper and Paper-Based Packaging Promotion, Research and
Information Order.
OMB Number: 0581-0281.
Expiration Date of Approval: 3 years from approval date.
Type of Request: New information collection for research and
promotion programs.
Abstract: The information collection requirements in the request
are essential to carry out the intent of the 1996 Act. The information
collection concerns a proposal received by USDA for a national research
and promotion program for the paper and paper-based packaging industry.
The program would be financed by an assessment on domestic
manufacturers and importers and would be administered by a board of
industry members appointed by the Secretary. The program would provide
for an exemption for manufacturers and importers who manufacture or
import less than 100,000 short tons of paper and paper-based packaging
during the year. A referendum will be held among eligible manufacturers
and importers to determine whether they favor implementation of the
program prior to it going into effect. The purpose of the program would
be to maintain and expand markets for paper and paper-based packaging.
In summary, the information collection requirements under the
program concern Board nominations, the collection of assessments, and
referenda. For Board nominations, manufacturers and importers
interested in serving on the Board would be asked to submit a
``Nomination Form'' to the Board indicating their desire to serve or to
nominate another industry member to serve on the Board. Interested
persons could also submit a background statement outlining
qualifications to serve on the Board. Except for the initial Board
nominations, manufacturers and importers would have the opportunity to
submit a ``Nomination Ballot'' to the Board where they would vote for
candidates to serve on the Board. Nominees would also have to submit a
background information form, ``AD-755,'' to the Secretary to ensure
they are qualified to serve on the Board.
Regarding assessments, manufacturers and importers who manufacture
or import less than 100,000 short tons annually could submit a request,
``Application for Exemption from Assessments,'' to the Board for an
exemption from paying assessments. Manufacturers and importers would be
asked to submit a ``Production/Import Report'' that would be submitted
to the Board on a quarterly basis that would specify the quantity of
paper and paper-based packaging manufactured or imported during the
applicable period and the country of export (for imports).
Manufacturers who manufacture less than 100,000 short tons annually
would be exempt from paying assessments and would not be required to
submit this report. Additionally, only importers who pay their
assessments directly to the Board would be required to submit this
report. If the importer assessments are collected by Customs, Customs
would remit the funds to the Board and
[[Page 57019]]
the other information would be available from Customs (i.e., country of
export, quantity imported). Finally, domestic manufacturers and
importers who would qualify as 100 percent organic under the NOP could
submit an ``Organic Exemption Form'' to the Board and request an
exemption from assessments.
There would also be an additional burden on manufacturers and
importers voting in referenda. The referendum ballot, which represents
the information collection requirement relating to referenda, is
addressed in a final rule on referendum procedures which is published
separately in this issue of the Federal Register.
Information collection requirements that are included in this
proposal include:
(1) Nomination Form
Estimate of Burden: Public recordkeeping burden for this collection
of information is estimated to average 0.25 hour per application.
Respondents: Manufacturers and importers.
Estimated Number of Respondents: 20.
Estimated Number of Responses per Respondent: 1.
Estimated Total Annual Burden on Respondents: 5 hours.
(2) Background Statement
Estimate of Burden: Public recordkeeping burden for this collection
of information is estimated to average 0.25 hour per application.
Respondents: Manufacturers and importers.
Estimated Number of Respondents: 20.
Estimated Number of Responses per Respondent: 1.
Estimated Total Annual Burden on Respondents: 5 hours.
(3) Nomination Ballot
Estimate of Burden: Public recordkeeping burden for this collection
of information is estimated to average 0.25 hour per application.
Respondents: Domestic manufacturers and importers.
Estimated Number of Respondents: 75 (56 manufacturers and 19
importers who manufacture/import 100,000 short tons or more annually).
Estimated Number of Responses per Respondent: 1.
Estimated Total Annual Burden on Respondents: 18.75 hours.
(4) Background Information Form AD-755 (OMB Form No. 0505-0001)
Estimate of Burden: Public reporting for this collection of
information is estimated to average 0.5 hour per response for each
Board nominee.
Respondents: Manufacturers and importers.
Estimated Number of Respondents: 12 (24 for initial nominations to
the Board, 0 for the second year, and up to 8 annually thereafter).
Estimated Number of Responses per Respondent: 1 every 3 years.
(0.3)
Estimated Total Annual Burden on Respondents: 12 hours for the
initial nominations to the Board, 0 hours for the second year of
operation, and up to 4 hours annually thereafter.
(5) Application for Exemption From Assessments
Estimate of Burden: Public reporting burden for this collection of
information is estimated to average 0.25 hour per manufacturer or
importer reporting on paper and paper-based packaging manufactured or
imported. Upon approval of an application, manufacturers and importers
would receive exemption certification.
Respondents: Domestic manufacturers (33) and importers (2,593) who
manufacture or import less than 100,000 short tons of paper and paper-
based packaging annually.
Estimated number of Respondents: 2,626.
Estimated number of Responses per Respondent: 1.
Estimated Total Annual Burden on Respondents: 656.50 hours.
(6) Production/Import Report
Estimate of Burden: Public reporting burden for this collection of
information is estimated to average 0.5 hour per manufacturer or
importer.
Respondents: Manufacturers who manufacture 100,000 short tons or
more annually (51) and importers who remit their assessments directly
to the Board (computation is based on the scenario where all 19
importers pay their assessments to the Board).
Estimated number of Respondents: 70.
Estimated number of Responses per Respondent: 4.
Estimated Total Annual Burden on Respondents: 140 hours.
(7) Refund of Assessments
Estimate of Burden: Public reporting burden for this collection of
information is estimated to average 0.25 hour.
Respondents: Manufacturers and importers.
Estimated Number of Respondents: 10.
Estimated Number of Responses per Respondent: 1.
Estimated Total Annual Burden on Respondents: 2.5 hours.
(8) Organic Exemption Form
Estimate of Burden: Public recordkeeping burden for this collection
of information is estimated to average 0.5 hours per exemption form.
Respondents: Organic manufacturers and importers.
Estimated Number of Respondents: 1.
Estimated Number of Responses per Respondent: 1.
Estimated Total Annual Burden on Respondents: 0.5 hour.
(9) A Requirement To Maintain Records Sufficient To Verify Reports
Submitted Under the Order
Estimate of Burden: Public recordkeeping burden for keeping this
information is estimated to average 0.5 hours per record keeper
maintaining such records.
Recordkeepers: Manufacturers (84) and importers (2,612).
Estimated number of recordkeepers: 2,696.
Estimated total recordkeeping hours: 1,348 hours.
As noted above, under the proposed program, manufacturers and
importers would be required to pay assessments and file reports with
and submit assessments to the Board (importers through Customs). While
the proposed Order would impose certain recordkeeping requirements on
manufacturers and importers, information required under the proposed
Order could be compiled from records currently maintained. Such records
must be retained for at least two years beyond the fiscal year of their
applicability.
An estimated 2,696 respondents would provide information to the
Board (84 domestic manufacturers and 2,612 importers). The estimated
cost of providing the information to the Board by respondents would be
$72,204. This total has been estimated by multiplying 2,188 total hours
required for reporting and recordkeeping by $33, the average mean
hourly earnings of various occupations involved in keeping this
information. Data for computation of this hourly rate was obtained from
the U.S. Department of Labor, Bureau of Labor Statistics.
The proposed Order's provisions have been carefully reviewed, and
every effort has been made to minimize any unnecessary recordkeeping
costs or requirements, including efforts to utilize information already
submitted under other programs administered by USDA and other state
programs.
The proposed forms would require the minimum information necessary
to effectively carry out the requirements of
[[Page 57020]]
the program, and their use is necessary to fulfill the intent of the
1996 Act. 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. The forms would be simple, easy
to understand, and place as small a burden as possible on the person
required to file the information.
Collecting information quarterly would coincide with normal
industry business practices. The timing and frequency of collecting
information are intended to meet the needs of the industry while
minimizing the amount of work necessary to fill out the required
reports. The requirement to keep records for two years is consistent
with normal industry practices. In addition, the information to be
included on these forms is not available from other sources because
such information relates specifically to individual manufacturers and
importers who are subject to the provisions of the 1996 Act. Therefore,
there is no practical method for collecting the required information
without the use of these forms.
Analysis of Comments
The previously proposed rule concerning this action published in
the Federal Register on January 2, 2013. Copies of that rule were
mailed by USDA to all known domestic manufacturers and importers. The
rule was also made available through the Internet by USDA and published
in the Federal Register. The rule provided a 60-day comment period
ending March 4, 2013. Seventy-five comments were received. Of the 75
comments, 5 were duplicates. Of the remaining 70 comments, 62 supported
the proposed Order, 6 were opposed, and 2 commented without taking a
position on the program. Of the 62 comments in support, 60 supported
the rule with no changes, 1 requested clarification on a component of
the Order, and 1 recommended a change. In addition, the two commenters
that did not take a position also recommended changes to the program.
The comments are addressed in the following paragraphs.
Comments in Full Support
The 60 comments which supported the Order with no changes noted the
difficult economic conditions that the paper and paper based packaging
industry is experiencing. Several commenters stated that the pressures
faced from loss of manufacturing jobs has significantly affected, and
has the possibility of affecting even more jobs in the industry. Many
of the commenters mentioned that the industry supplies numerous jobs in
rural areas. They believe that without the Order, many plants across
the Country would be forced to close, adversely affecting the families
in the rural communities. Many commenters stated that the industry has
faced declining markets due to digital competition. They stated that
educating the consumer is key to facing this competition. The common
theme among all positive comments was the need to provide fact-based
messaging to highlight the renewability, reusability, and recyclability
of paper and paper based package to aid the public in better
understating paper products and change the misconceptions and attitudes
about paper.
Comments in Support, With Modification or Requesting Clarification
Two commenters who supported the Order reiterated their comments in
full support. However, one of the commenters requested clarification on
the exemption process, and one recommended a change to the composition
of the Board.
The commenter that requested clarification on the de minimis
exemption requested details regarding the exemption approval process
and requested information on any factors other than production or
import volumes that may be considered in making the determination of
who receives an exemption. In addition, the commenter requested
specific details regarding the process for resolving disputes.
Section 1222.53(a) of the Order provides for an exemption from
assessments for U.S. manufacturers and importers who domestically
produce or import less than 100,000 short tons during a marketing year.
If an entity is a U.S. manufacturer and an importer, such entity's
combined quantity of paper and paper-based packaging manufactured and
imported annually would count towards the 100,000 short ton exemption.
Manufacturers would apply to the Board for an exemption prior to
the start of the fiscal year. This would be an annual exemption;
manufacturers would have to reapply each year. They would have to
certify that they expect to domestically manufacture less than 100,000
short tons for the applicable fiscal year. Manufacturers may be asked
to provide to the Board past production data to verify they produced
under the threshold in the prior year.
Importers exempt from assessments in the prior fiscal year would
automatically be considered exempt for the fiscal year that assessments
are due. Customs data would be reviewed to verify applicable importers.
Importers that imported over the threshold in the prior year but
believe and can document that they will import less than 100,000 short
tons during the current year may apply to the Board for an exemption
certificate. Documentation provided to the Board may include multiple
past years of import data to support their exemption request.
Once approved, domestic manufacturers would not have to pay
assessments to the Board for the applicable fiscal year. Importers
which are exempt would have their assessments as collected by Customs
refunded by the Board within 60 calendar days after receipt of such
assessments by the Board. No interest would be paid on the assessments
collected by Customs or the Board.
Manufacturers and importers that received an exemption certificate
or an automatic exemption from the Board but manufactured or imported
100,000 short tons or more of paper and paper-based packaging during
the marketing year shall pay the Board the applicable assessments owed
on the quantity manufactured or imported within 30 calendar days after
the end of the marketing year and submit any necessary reports to the
Board pursuant to section 1222.70 of the Order.
If there is a dispute, the Board could request additional past
production or import data to support the exemption request.
Manufacturers and importers could provide other information if
appropriate. For example, if a company's production was reduced because
of an event like a fire in a plant, the company could provide
supporting data to the Board. The Board would then issue, if deemed
appropriate, a certificate of exemption to the eligible manufacturer or
importer. The Board could also recommend additional procedures to
administer the exemption as appropriate. Any procedures would be
implemented through rulemaking by the Secretary. Additional details
about the exemption are in section 1222.53(a) of this Order.
One commenter that supported the Order suggested that the number of
Board seats for importers be increased from one to two, and that one of
the members of the Board should be European.
Section 1222.40 of the proposed Order provides for a Board composed
of 12 members. Eleven members would be manufacturers and 1 member would
be an importer.
Using this distribution, manufacturer members on the Board would
account
[[Page 57021]]
for 92 percent of Board membership, while importer members would
account for 8 percent of Board membership. In 2011, approximately 68.5
million short tons of U.S. paper and paper-based packaging to be
covered under the program were produced. According to Customs data, in
2011, imports to be covered under the program totaled 7.5 million short
tons. Therefore, in 2011 a total of 76 million short tons would have
been covered under the program of which, 90 percent was from domestic
manufacturing and nine percent was from imports. Taking into account
the amount of domestic and imported product, the composition of the
Board as proposed is reasonable since it reflects the volume of imports
and domestic production. Furthermore, every 5 years, but no more often
than once every 3 years, the Board must review the geographical
distribution of the quantity of paper and paper-based packaging
manufactured within the United States and the quantity of paper and
paper-based packaging imported to the United States. If warranted, the
Board would recommend to the Secretary that the Board membership be
reapportioned appropriately to reflect such changes, which could
include an increase in the number of importer seats. The distribution
of quantities between domestic regions would also be considered as well
as changes in the size of the Board. Any changes in Board composition
would be implemented by the Secretary through rulemaking. Accordingly,
the Department is not making any changes to the proposed Order based on
this comment.
Comments Opposed
Six comments received were opposed to the proposed program. The six
commenters touched on six major themes including: (1) Likening the
assessment to a tax, (2) the affordability of the program, (3) the
ability of the industry to advertise for themselves, (4) government
control of the program, (5) the feasibility of a research and promotion
program for the paper and paper-based packaging industry, and (6)
justification for the exemptions suggested in the Order. Based on our
evaluation of these comments, no changes will be made to the Order.
These comments are discussed below.
Four commenters expressed concerned that the assessment collected
would be a tax on the industry. In addition, one commenter questioned
the use of government resources to run the program. The proposed
program would be paid for by the paper and paper-based packaging
industry through assessments on domestic manufacturers and importers of
100,000 short tons or more of paper and paper-based packaging annually.
Research and promotion programs are self-help programs funded by their
respective industry and do not receive taxpayer funds. Furthermore, the
Board would be required to reimburse USDA for costs incurred by USDA in
overseeing the Order's operations, including all costs associated with
referenda.
Three commenters questioned the affordability of the program for
paper and paper-based packaging manufacturers. One commenter stated
that they cannot afford and likely would not benefit from the
promotion. Another commenter opinioned that levying $0.35 per short ton
would add more cost to paper, and that cost would be passed on to
customers. A third commenter stated that the assessment would add more
cost to paper and paper-based packaging.
As previously discussed, the economic downturn as well as
competition from digital media, has had an adverse effect on the paper
and paper-based packing industry. However, USDA has received sufficient
justification to warrant proceeding to a referendum so that industry
members may vote as to whether a paper and paper-based packaging
research and promotion program should be implemented. Additionally, as
previously mentioned, USDA received several comments that referenced
the state of the economy and jobs in the rural community attributed to
paper and paper-based packaging manufacturing as reasons that the
program is essential.
The purpose of the proposed Order is to enhance and broaden the
understanding of the use and attributes of paper and paper-based
packaging for the purpose of maintaining and expanding markets for
paper and paper-based packaging. The proposed Order does not regulate
the price of paper and paper-based packaging. Cost distribution is a
business decision of the individuals affected by the Order.
Four commenters were concerned about the government's role in
marketing and advertising for the paper and paper-based packaging
industry. Specifically, one commenter stated that it would be
impossible for the scope of advertising achieved by USDA to reach the
consumer. Two commenters opinioned that the government should not have
a role in the promotion of paper, and companies should be allowed to
promote for themselves. An additional comment on the subject stated
that companies should be allowed to create their own marketing plans.
The 1996 Act provides the authority for agricultural industries to
develop programs for generic research and promotion for their
respective industries. Under these programs, it is the Board (composed
of industry members) that develops their own budgets and marketing
plan. USDA provides oversight of these programs. The Board, with the
approval of the Secretary, would decide how the funds are used. Generic
promotion, research, and industry information activities play a unique
role in advancing the demand for their respective commodities, since
such activities may increase the total market demand for the commodity.
While, the Board may conduct strategic planning for the industry as a
whole, individual companies are not precluded from doing their own
advertising and promotion.
One commenter who questioned the government's involvement with the
proposed program stated that the program should be voluntary and not
mandatory. The proposed Order is authorized under the 1996 Act which
authorizes USDA to establish agricultural commodity research and
promotion orders which may include a combination of promotion,
research, industry information and consumer information activities
funded by mandatory assessments. Research and promotions programs
overseen by USDA are self-help, government speech programs, initiated
by members of the industry. Industry members that would be affected by
the program would be given the opportunity to vote in a referendum to
determine if the program should be approved prior to the Order going
into effect. For the proposed Order to become effective, it must be
approved by a majority of manufacturers and importers voting for
approval in a referendum, who also represent a majority of the volume
of paper and paper-based packaging represented in the referendum. In
order to provide notification of an impending vote to those who USDA
believes would be regulated under the proposed program, USDA is mailing
a copy of this rule to all known industry members and will do a
subsequent mailing of ballots, instructions and a summary of the
program to all known potential eligible voters. In addition, any one
that believes they are eligible to vote in the referendum may request a
ballot by calling the toll free number in the ADDRESSES section of this
document.
Three commenters who opposed the program questioned the feasibility
of check-off programs for the paper and paper-based packaging industry.
One of the commenters opinioned that check-
[[Page 57022]]
off programs are great for consumer based industries, but offer little
value to industrial companies. Another commenter stated that check-off
programs are ineffective and cost prohibitive, and referenced dairy and
orange juice check-off programs to support their statement. A third
commenter stated that they personally have derived little or no benefit
from the Cotton Research and Promotion program into which they are
currently paying assessments.
The commenter that referenced dairy and orange juice check-off
programs provided four additional points to support their statement. In
reference to the dairy program, the commenter stated that despite the
massive outlay of funds since 1983 and a national campaign to promote
dairy products: (1) Per capita consumption of milk has been on a
downward trend since 1945; (2) Overall milk consumption has declined 3
percent a year in four out of the last five years; (3) Growth in
consumption of fluid milk has not kept pace with population growth; and
(4) In the highly competitive beverage market, milk has lost
significant share since 1980, from 37 percent in 1980 to 19 percent in
2011.
In response to the aforementioned comment, per capita consumption
of all milk has declined in the post-war era, but that decline has been
reversed since the institution of the National Dairy Promotion and
Research Program in 1983 (0.25 percent increase per year since).
Overall milk consumption has risen in each of the last 5 years and
continues to grow. Finally, independent analysis contracted by USDA
shows that there is a significant positive return to fluid milk
processors, contrary to the commenter's assertion \21\.
---------------------------------------------------------------------------
\21\ Sources: USDA (AMS, ERS, FAS, FSA, NASS), Department of
Labor (BLS), Department of Commerce (Bureau of Census), and ERS
calculations.
---------------------------------------------------------------------------
In response to the comment regarding the effectiveness of the
orange juice program, a Florida Citrus Commission considered the
possibility of a research and promotion program. However, the industry
decided not to move forward with a proposal prior to submitting a
proposal to USDA.
In response to the commenters that question the feasibility of
research and promotion programs for industrial industries, other
research and promotion programs administered by USDA cover commodities
that are from various sources and made into multiple products. The
purpose of generic promotion programs is to increase the total market
for a product to the benefit of an industry, even when the commodity
may be made into various products.
In response to the commenter that stated that they have received
little to no benefit from their payment into the Cotton Research and
Promotion Program, an in-depth independent economic effectiveness study
conducted in early 2011 on the effectiveness of the Cotton Research and
Promotion Program concluded that the Cotton Research and Promotion
Program generates a positive return for U.S. cotton producers and
importers of cotton products \22\.
---------------------------------------------------------------------------
\22\ Cotton Research and Promotion Program Annual Report--2010-
2011.
---------------------------------------------------------------------------
One commenter had two concerns regarding the exemptions in the
proposed Order. First, the commenter stated that the proposed rule does
not provide justification for excluding tissue paper and newsprint. The
two types of paper and paper-based packaging that would not be covered
under the program are tissue paper and newsprint. With the exception of
restroom hand-dryers versus paper towels, tissue paper products are not
facing competition from alternative products. The opposite is true for
newsprint. Demand for newsprint has drastically declined due to the
shift toward digital communications. However, the Panel concluded and
the Department concurs that the newsprint segment of the industry would
not be able to incur the cost of a promotion program at this time.
Second, the commenter did not believe that there is justification
for an organic exemption. A domestic manufacturer who operates under an
approved National Organic Program (NOP) (7 CFR part 205) system plan,
only manufactures paper and paper-based packaging that is eligible to
be labeled as 100 percent organic under the NOP, and is not a split
operation, would be exempt from the payment of assessments. Likewise,
an importer who imports only paper and paper-based packaging that is
eligible to be labeled as 100 percent organic under the NOP, is not a
split operation, and who does not import any nonorganic paper and
paper-based packaging would be exempt from the payment of assessments.
Section 2103 of the Organic Food Production Act of 1990 (7 U.S.C. 6501-
6522) includes the consumption of non-food products. For example, under
the Cotton Research and Promotion Program, organic cotton products are
exempt from assessment, including non-food products. Thus, organic
paper and paper-based products would be exempt from assessment under
the proposed Order. Domestic manufacturers and importers would have to
provide sufficient information to the Board to warrant an organic
exemption.
Additional Comments
In addition, two comments were received that neither supported nor
opposed the program, but raised concerns or made recommendations. One
commenter raised a concern that although they would be exempt from the
program, the paperwork required to request an exemption would be
burdensome. The other commenter suggested that the proposed assessment
should be based on 1,000 kg metric ton, as the commenter prescribes is
the preferred measurement system as promulgated by Executive Order
12770 from 1991.
In response to the comment regarding metric usage, while Executive
Order 12770, issued on July 25, 1991, directed agencies to convert to
the metric system, Executive Order 12770 Section 2(a)(1) states that
metric usage shall not be required to the extent that such use is
impractical or is likely to cause significant inefficiencies or loss of
markets to United States firms. Furthermore, the paper and paper-based
packaging industry utilizes short ton for measurement as an industry
standard. Therefore, no change has been made to the Proposed Order
based on this comment.
In response to the comment about exemption paperwork, USDA is
working to develop a process whereby an importer could provide Customs
a copy of the exemption certificate issued by the Board. However, the
only available alternative at this time is for Customs to collect the
assessment, and the Board to refund such importers their assessment no
later than 60 calendar days after receipt by the Board. USDA recognizes
that submitting the certificate of exemption may be burdensome for some
importers. Therefore, section 1222.53(a) of the Proposed Order is
changed to adjust the requirements of importers to submit a certificate
of exemption to receive an exemption from the Board. Instead, importers
that would have been exempt from assessments in the prior fiscal year
would automatically be considered exempt for the fiscal year that
assessments are due. However, as stated above, Customs would collect
the assessment, and the Board would refund exempt importers their
assessment no later than 60 calendar days after receipt by the Board.
In the January 2, 2013, proposed rule, comments were also invited
on the information collection requirements prescribed in the Paperwork
Reduction
[[Page 57023]]
Act section of this rule. Specifically, comments were solicited on: (a)
Whether the proposed collection of information is necessary for the
proper performance of functions of the proposed Order and USDA's
oversight of the proposed Order, including whether the information
would have practical utility; (b) the accuracy of USDA's estimate of
the burden of the proposed collection of information, including the
validity of the methodology and assumptions used; (c) the accuracy of
USDA's estimate of the principal manufacturing areas in the United
States for paper and paper-based packaging; (d) the accuracy of USDA's
estimate of the number of manufacturers and importers of paper and
paper-based packaging that would be covered under the program; (e) ways
to enhance the quality, utility, and clarity of the information to be
collected; and (f) ways to minimize the burden of the collection of
information on those who are to respond, including the use of
appropriate automated, electronic, mechanical, or other technological
collection techniques or other forms of information technology. No
comments were received regarding information collection.
While the proposal set forth below has not received the approval of
USDA, it is determined that this proposed Order is consistent with and
would effectuate the purposes of the 1996 Act.
As previously mentioned, for the proposed Order to become
effective, it must be approved by a majority of manufacturers and
importers voting for approval in a referendum, who also represent a
majority of the volume of paper and paper-based packaging represented
in the referendum. Referendum procedures will be published separately
in this issue of the Federal Register.
Referendum Order
Pursuant to the 1996 Act, a referendum will be conducted to
determine whether eligible domestic manufacturers and importers favor
issuance of the proposed Order. Section 518 of the 1996 Act authorizes
USDA to conduct a referendum prior to the Order going into effect.
The representative period for establishing voter eligibility for
the referendum shall be the period from January 1 through December 31,
2012. Domestic manufacturers must have manufactured 100,000 short tons
or more of paper and paper-based packaging within the United States and
importers must have imported 100,000 short tons or more of paper and
paper-based packaging to the United States during the representative
period to be eligible to vote. In addition, entities eligible to vote
must be currently engaged in the domestic manufacturing or importation
of paper and paper-based packaging. If the Order becomes effective,
entities that are not be eligible to vote in the referendum because
they manufactured and/or imported less than 100,000 short tons of paper
and paper-based packaging during the representative period, may be
subject to assessments if they domestically manufacture and/or import
100,000 short tons or more of paper and paper-based packaging during
subsequent marketing year. The Order shall become effective if it is
approved by a majority of eligible U.S. manufacturers and importers
voting in the referendum who also represent a majority of the volume of
paper and paper-based packaging represented in the referendum.
The referendum procedures that were issued pursuant to the 1996 Act
shall be used to conduct the referendum (7 CFR 1222.100 through
1222.108). The referendum shall be conducted by mail from October 28
through November 8, 2013. Ballots must be received by the referendum
agents no later than the close of business 4:30 p.m. (Eastern Standard
Time) on November 8, 2013, to be counted.
Marlene Betts and Kimberly Coy of the USDA, AMS, Promotion and
Economics Division, are designated as the referendum agents to conduct
the referendum. Prior to the first day of the voting period, the
referendum agents will mail the ballots to be cast in the referendum
and voting instructions to all eligible voters. Any domestic
manufacturer or importer who does not receive a ballot should contact
the referendum agents cited in the FOR FURTHER INFORMATION CONTACT
section no later than one week before the end of the voting period.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
Chapter 35), the referendum ballot was submitted to the OMB and
approved under OMB Control No. 0581-0282.
List of Subjects in 7 CFR Part 1222
Administrative practice and procedure, Advertising, Consumer
information, Marketing agreements, Paper and paper-based-packaging
promotion, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, it is proposed that 7
CFR part 1222, as added elsewhere in this issue of the Federal
Register, be amended as follows:
PART 1222--PAPER AND PAPER-BASED PACKAGING PROMOTION, RESEARCH AND
INFORMATION ORDER
0
1. The authority citation for part 1222 continues to read as follows:
Authority: 7 U.S.C. 7411-7425; 7 U.S.C. 7401.
0
2. Subpart A is added to read as follows:
Subpart A--Paper and Paper-Based Packaging Promotion, Research and
Information Order
Definitions
Sec.
1222.1 Act.
1222.2 Board.
1222.3 Conflict of interest.
1222.4 Converted products.
1222.5 Customs or CBP.
1222.6 Department or USDA.
1222.7 Fiscal period and marketing year.
1222.8 Importer.
1222.9 Information.
1222.10 Kraft process.
1222.11 Linerboard.
1222.12 Manufacture or produce.
1222.13 Manufacturer or producer.
1222.14 Medium.
1222.15 Order.
1222.16 Panel.
1222.17 Paper and paper-based packaging.
1222.18 Part and subpart.
1222.19 Person.
1222.20 Program, plans and projects.
1222.21 Promotion.
1222.22 Pulp.
1222.23 Research.
1222.24 Secretary.
1222.25 Short ton or ton.
1222.26 State.
1222.27 Suspend.
1222.28 Terminate.
1222.29 United States.
Paper and Paper-Based Packaging Board
1222.40 Establishment and membership.
1222.41 Nominations and appointments.
1222.42 Term of office.
1222.43 Removal and vacancies.
1222.44 Procedure.
1222.45 Reimbursement and attendance.
1222.46 Powers and duties.
1222.47 Prohibited activities.
Expenses and Assessments
1222.50 Budget and expenses.
1222.51 Financial statements.
1222.52 Assessments.
1222.53 Exemption from assessment.
Promotion, Research and Information
1222.60 Programs, plans and projects.
1222.61 Independent evaluation.
1222.62 Patents, copyrights, trademarks, inventions, product
formulations, and publications.
Reports, Books, and Records
1222.70 Reports.
1222.71 Books and records.
1222.72 Confidential treatment.
[[Page 57024]]
Miscellaneous
1222.80 Right of the Secretary.
1222.81 Referenda.
1222.82 Suspension or termination.
1222.83 Proceedings after termination.
1222.84 Effect of termination or amendment.
1222.85 Personal liability.
1222.86 Separability.
1222.87 Amendments.
1222.88 OMB control numbers.
Subpart A--Paper and Paper-Based Packaging Promotion, Research and
Information Order
Definitions
Sec. 1222.1 Act.
Act means the Commodity Promotion, Research and Information Act of
1996 (7 U.S.C. 7411-7425), and any amendments thereto.
Sec. 1222.2 Board.
Board means the Paper and Paper-Based Packaging Board established
pursuant to Sec. 1222.40, or such other name as recommended by the
Board and approved by the Department.
Sec. 1222.3 Conflict of interest.
Conflict of interest means a situation in which a member or
employee of the Board has a direct or indirect financial interest in a
person who performs a service for, or enters into a contract with, the
Board for anything of economic value.
Sec. 1222.4 Converted products.
Converted products means products made from paper and paper-based
packaging.
Sec. 1222.5 Customs or CBP.
Customs or CBP means the U.S. Customs and Border Protection, an
agency of the U.S. Department of Homeland Security.
Sec. 1222.6 Department or USDA.
Department or USDA means the U.S. Department of Agriculture, or any
officer or employee of the Department to whom authority has heretofore
been delegated, or to whom authority may hereafter be delegated, to act
in the Secretary's stead.
Sec. 1222.7 Fiscal period and marketing year.
Fiscal period and marketing year means the 12-month period ending
on December 31 or such other period as recommended by the Board and
approved by the Secretary.
Sec. 1222.8 Importer.
Importer means any person who imports paper and paper-based
packaging from outside the United States for sale in the United States
as a principal or as an agent, broker, or consignee of any person who
manufactures paper and paper-based packaging outside the United States
for sale in the United States, and who is listed in the import records
as the importer of record for such paper and paper-based packaging.
Sec. 1222.9 Information.
Information means information and programs for consumers, customers
and industry, including educational activities, information and
programs designed to enhance and broaden the understanding of the use
and attributes of paper and paper-based packaging, increase efficiency
in manufacturing paper and paper-based packaging, maintain and expand
existing markets, and develop new markets and marketing strategies.
These include:
(a) Consumer education and information, which means any action
taken to provide information to, and broaden the understanding of, the
general public regarding paper and paper-based packaging; and
(b) Industry information, which means information and programs that
would enhance the image of the paper and paper-based packaging
industry.
Sec. 1222.10 Kraft process.
Kraft process means a process that transforms wood into a high
quality strong pulp for making paper and paper-based packaging.
Sec. 1222.11 Linerboard.
Linerboard means a grade of containerboard that is used as facing
material in the manufacture of corrugated or solid fiber shipping
boxes.
Sec. 1222.12 Manufacture or produce.
Manufacture or produce means the process of transforming pulp into
paper and paper-based packaging.
Sec. 1222.13 Manufacturer or producer.
Manufacturer or producer means any person who manufactures paper
and paper-based packaging in the United States.
Sec. 1222.14 Medium.
Medium means a grade of containerboard used as the inner fluting
material in the manufacture of corrugated or solid fiber shipping
boxes.
Sec. 1222.15 Order.
Order means an order issued by the Secretary under section 514 of
the Act that provides for a program of generic promotion, research, and
information regarding agricultural commodities authorized under the
Act.
Sec. 1222.16 Panel.
Panel means the Paper and Paper-Based Packaging Panel formed to
pursue development of a paper and paper-based packaging promotion,
research and information program.
Sec. 1222.17 Paper and paper-based packaging.
(a) Paper and paper-based packaging means:
(1) Printing, writing and related paper, which is coated or
uncoated paper that is subsequently converted into products used for
printing, writing and other communication purposes, such as file
folders, envelopes, catalogues, magazines and brochures. For purposes
of this Order, printing, writing and related paper includes thermal
paper but does not include carbonless paper;
(2) Kraft packaging paper, which is coarse unbleached, semi-
bleached or fully bleached grades of paper that are subsequently
converted into products such as grocery bags, multiwall sacks, waxed
paper and other products;
(3) Containerboard, which is all forms of linerboard and medium
that is used to manufacture corrugated boxes, shipping containers and
related products; and
(4) Paperboard, which is solid bleached kraft board, recycled board
and unbleached kraft board that is subsequently converted into a wide
variety of end uses, including folding boxes, food and beverage
packaging, tubes, cans, and drums, and other miscellaneous products.
Paperboard does not include construction-related products such as
gypsum wallboard facings and panel board.
(b) For purposes of this Order, paper and paper-based packaging
does not include tissue paper, newsprint or converted products.
Sec. 1222.18 Part and subpart.
Part means the Paper and Paper-Based Packaging Promotion, Research
and Information Order and all rules, regulations, and supplemental
orders issued pursuant to the Act and the Order. The Order shall be a
subpart of such part.
Sec. 1222.19 Person.
Person means any individual, group of individuals, partnership,
corporation, association, cooperative, or any other legal entity.
Sec. 1222.20 Programs, plans and projects.
Programs, plans and projects means those research, promotion and
information programs, plans or projects established pursuant to the
Order.
[[Page 57025]]
Sec. 1222.21 Promotion.
Promotion means any action, including paid advertising and the
dissemination of information, utilizing public relations or other
means, to enhance and broaden the understanding of the use and
attributes of paper and paper-based packaging for the purpose of
maintaining and expanding markets for paper and paper-based packaging.
Sec. 1222.22 Pulp.
Pulp means the material that is produced by chemically or
mechanically separating cellulose fibers from wood or recycling
recovered fiber.
Sec. 1222.23 Research.
Research means any type of test, study, or analysis designed to
enhance the image, desirability, use, marketability, manufacturing,
recyclability, reusability or quality of paper and paper-based
packaging, including research directed to product characteristics and
product development, including new uses of existing products, new
products or improved technology in the manufacturing of paper and
paper-based packaging.
Sec. 1222.24 Secretary.
Secretary means the Secretary of Agriculture of the United States,
or any other officer or employee of the Department to whom authority
has been delegated, or to whom authority may hereafter be delegated, to
act in the Secretary's stead.
Sec. 1222.25 Short ton or ton.
Short ton or ton means a measure of weight equal to 2,000 pounds.
Sec. 1222.26 State.
State means any of the 50 States of the United States, the District
of Columbia, the Commonwealth of Puerto Rico, or any territory or
possession of the United States.
Sec. 1222.27 Suspend.
Suspend means to issue a rule under section 553 of title 5 U.S.C.
to temporarily prevent the operation of an order or part thereof during
a particular period of time specified in the rule.
Sec. 1222.28 Terminate.
Terminate means to issue a rule under section 553 of title 5 U.S.C.
to cancel permanently the operation of an order or part thereof
beginning on a date certain specified in the rule.
Sec. 1222.29 United States.
United States means collectively the 50 States, the District of
Columbia, the Commonwealth of Puerto Rico and the territories and
possessions of the United States.
Paper and Paper-Based Packaging Board
Sec. 1222.40 Establishment and membership.
(a) Establishment of the Board. There is hereby established a Paper
and Paper-Based Packaging Board to administer the terms and provisions
of this Order. The Board shall be composed of manufacturers and
importers of paper and paper-based packaging that manufacture or import
100,000 short tons or more of paper and paper-based packaging during a
marketing year. Seats on the Board shall be apportioned as set forth in
paragraph (b) of this section based on the geographical distribution of
the quantity of paper and paper-based packaging manufactured in the
United States and the quantity of paper and paper-based packaging
imported to the United States.
(b) The Board shall be composed of 12 members and shall be
established as follows:
(1) Manufacturers. Eleven members shall be manufacturers. Of the 11
manufacturers, 10 shall be from the following four regions:
(i) Six members shall be from the South, which consists of the
states of Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky,
Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South
Carolina, Tennessee, Texas, Virginia, West Virginia, and all other
parts of the United States not listed in paragraphs (b)(1)(ii),
(b)(1)(iii), and (b)(1)(iv) of this section;
(ii) One member shall be from the Northeast, which consists of the
states of Connecticut, Maine, Massachusetts, New Hampshire, New Jersey,
New York, Pennsylvania, Rhode Island and Vermont;
(iii) Two members shall be from the Midwest, which consists of the
states of Colorado, Illinois, Indiana, Iowa, Kansas, Michigan,
Minnesota, Missouri, North Dakota, Ohio, South Dakota, Wisconsin and
Wyoming; and
(iv) One member shall be from the West, which consists of the
states of Alaska, Arizona, California, Hawaii, Idaho, Montana, New
Mexico, Nevada, Oregon, Utah, and Washington.
(v) One manufacturer member at large may be from any region and
shall manufacture at least 100,000 short tons but no more than 250,000
short tons of paper and paper-based packaging annually. If there are no
eligible nominees, this seat shall be allocated to the largest
producing region specified in paragraphs (b)(1)(i) through (b)(1)(iv).
(2) Importers. One member shall be an importer.
(c) At least once in every five-year period, but not more
frequently than once in every three-year period, the Board will review
the geographical distribution of the quantity of paper and paper-based
packaging manufactured within the United States and the quantity of
paper and paper-based packaging imported to the United States. The
review will be conducted using the Board's annual assessment receipts
and, if available, other reliable reports from the industry. If
warranted, the Board will recommend to the Secretary that the
membership or size of the Board be adjusted to reflect changes in
geographical distribution of the quantity of paper and paper-based
packaging manufactured in the United States and the quantity of paper
and paper-based packaging imported to the United States. Any changes in
Board composition shall be implemented by the Secretary through
rulemaking.
Sec. 1222.41 Nominations and appointments.
(a) Nominees must manufacture or import 100,000 short tons or more
of paper and paper-based packaging in a marketing year.
(b) Initial nominations shall be submitted to the Secretary by the
Panel. Before considering any nominations, the Panel shall publicize
the nomination process, using trade press or other means it deems
appropriate, and shall conduct outreach to all known manufacturers and
importers manufacturing or importing 100,000 short tons or more of
paper and paper-based packaging in a marketing year to generate
nominees that reflect the range of operations within the paper and
paper-based packaging industry. The Panel may use regional caucuses,
mail or other methods to elicit potential nominees. The Panel shall
work with USDA to ensure that all eligible candidates are aware of the
opportunity to serve on the Board. The Panel shall submit the
nominations to the Secretary and recommend two nominees for each Board
position specified in Sec. 1222.40(b). The Secretary shall select the
initial members of the Board from the nominations submitted by the
Panel.
(c) Subsequent nominations shall be conducted as follows:
(1) The Board shall conduct outreach to all known manufacturers and
importers manufacturing or importing 100,000 short tons or more of
paper and paper-based packaging in a marketing year. Manufacturers and
importers may submit nominations to the Board;
(2) Manufacturer and importer nominees may provide the Board a
short background statement outlining their qualifications to serve on
the Board;
[[Page 57026]]
(3) Nominees that are both a manufacturer and an importer may seek
nomination to the Board as either a manufacturer or an importer, but
not both;
(4) For the domestic seats allocated by region, domestic
manufacturers must manufacture paper and paper-based packaging in the
region for which they seek nomination. Nominees that manufacture in
more than one region may seek nomination in one region of their choice.
Nominees must specify for which region they are seeking nomination. The
names of manufacturer nominees shall be placed on a ballot by region.
The ballots along with the background statements shall be mailed to all
manufacturers who manufacture 100,000 short tons or more of paper and
paper-based packaging per marketing year. Manufacturers may vote in
each region in which they manufacture paper and paper-based packaging.
The votes shall be tabulated for each region and the nominees receiving
the highest number of votes shall be placed at the top of the list in
descending order by vote. The top two candidates for each position
shall be submitted to the Secretary;
(5) The names of nominees for at large domestic manufacturers shall
be placed on a ballot. The ballots along with the background statements
shall be mailed to all manufacturers who manufacture 100,000 short tons
or more of paper and paper-based packaging per marketing year. The
votes shall be tabulated and the nominees receiving the highest number
of votes shall be placed at the top of the list in descending order by
vote. The top two candidates shall be submitted to the Secretary;
(6) The names of importer nominees shall be placed on a ballot. The
ballots along with background statements shall be mailed to importers
who import 100,000 short tons or more of paper and paper-based
packaging per marketing year. The votes shall be tabulated and the
nominees receiving the highest number of votes shall be placed at the
top of the list in descending order by vote. The top two candidates for
each position shall be submitted to the Secretary;
(7) The Board must submit nominations to the Secretary at least six
months before the new Board term begins;
(8) Any manufacturer or importer nominated to serve on the Board
shall file with the Secretary at the time of the nomination a
background questionnaire;
(9) From the nominations made pursuant to this section, the
Secretary shall appoint the members of the Board on the basis of
representation provided in Sec. 1222.40(b);
(10) No two members shall be employed by a single corporation,
company, partnership or any other legal entity; and
(11) The Board may recommend to the Secretary modifications to its
nomination procedures as it deems appropriate. Any such modifications
shall be implemented through rulemaking by the Secretary.
Sec. 1222.42 Term of office.
(a) With the exception of the initial Board, each Board member
shall serve for a term of three years or until the Secretary selects
his or her successor. Each term of office shall begin on January 1 and
end on December 31. No member may serve more than two full consecutive
three-year terms, except as provided in paragraph (b) of this section.
(b) For the initial Board, the terms of the Board members shall be
staggered for two, three and four years. Determination of which of the
initial members shall serve a term of two, three or four years shall be
recommended to the Secretary by the Panel.
Sec. 1222.43 Removal and vacancies.
(a) The Board may recommend to the Secretary that a member be
removed from office if the member consistently fails or refuses to
perform his or her duties properly or engages in dishonest acts or
willful misconduct. If the Secretary determines that any person
appointed under this subpart consistently fails or refuses to perform
his or her duties properly or engages in acts of dishonesty or willful
misconduct, the Secretary shall remove the person from office. A person
appointed under this subpart or any employee of the Board may be
removed by the Secretary if the Secretary determines that the person's
continued service would be detrimental to the purposes of the Act.
(b) If a member resigns, is removed from office, or in the event of
death of any member or if any member of the Board ceases to work for or
be affiliated with a manufacturer or importer, or if a manufacturer
ceases to do business in the region he or she represents, such position
shall become vacant.
(c) If a position becomes vacant nominations to fill the vacancy
will be conducted using the nominations process set forth in this Order
or the Board may recommend to the Secretary that he or she appoint a
successor from the most recent list of nominations for the position.
(d) A vacancy will not be required to be filled if the unexpired
term is less than six months.
Sec. 1222.44 Procedure.
(a) A majority of the Board members shall constitute a quorum.
(b) Each member of the Board shall be entitled to one vote on any
matter put to the Board and the motion will carry if supported by a
majority of Board members, except for recommendations to change the
assessment rate or to adopt a budget, both of which require affirmation
by two-thirds of the total number of Board members.
(c) At an assembled meeting, all votes shall be cast in person.
(d) In lieu of voting at an assembled meeting and, when in the
opinion of the chairperson of the Board such action is considered
necessary, the Board may take action if supported by a majority of
members (unless two-thirds is required under the Order) by mail,
telephone, electronic mail, facsimile, or any other means of
communication. In that event, all members must be notified and provided
the opportunity to vote. Any action so taken shall have the same force
and effect as though such action had been taken at an assembled
meeting. All votes shall be recorded in Board minutes.
(e) There shall be no proxy voting.
Sec. 1222.45 Reimbursement and attendance.
Board members shall serve without compensation, but shall be
reimbursed for reasonable travel expenses, as approved by the Board,
which they incur when performing Board business.
Sec. 1222.46 Powers and duties.
The Board shall have the following powers and duties:
(a) To administer this subpart in accordance with its terms and
conditions and to collect assessments;
(b) To develop and recommend to the Secretary for approval such
bylaws as may be necessary for the functioning of the Board, and such
rules and regulations as may be necessary to administer the Order,
including activities authorized to be carried out under the Order;
(c) To meet not less than annually, organize, and select from among
the members of the Board a chairperson, vice chairperson, secretary/
treasurer, other officers, and committees and subcommittees, as the
Board determines to be appropriate. The committee and subcommittees may
include persons other than Board members, including representatives of
Board members, as the Board deems necessary and appropriate, provided
Board members
[[Page 57027]]
or their representative constitute a majority of all committees and
subcommittees;
(d) To employ or contract with persons, other than the Board
members, as the Board considers necessary to assist the Board in
carrying out its duties, and to determine the compensation and specify
the duties of the persons;
(e) To notify manufacturers and importers of all Board meetings
through a press release or other means and to give the Secretary the
same notice of meetings of the Board (including committee,
subcommittee, and the like) as is given to members so that the
Secretary's representative(s) may attend such meetings, and to keep and
report minutes of each meeting of the Board to the Secretary;
(f) To develop and submit programs, plans and projects to the
Secretary for the Secretary's approval, and enter into contracts or
agreements related to such programs, plans and projects, which must be
approved by the Secretary before becoming effective, for the
development and carrying out of programs, plans or projects of
promotion, research and information. The payment of costs for such
activities shall be from funds collected pursuant to this Order. Each
contract or agreement shall provide that:
(1) The contractor or agreeing party shall develop and submit to
the Board a program, plan or project together with a budget or budgets
that shall show the estimated cost to be incurred for such program,
plan or project;
(2) The contractor or agreeing party shall keep accurate records of
all its transactions and make periodic reports to the Board of
activities conducted, submit accounting for funds received and
expended, and make such other reports as the Secretary or the Board may
require;
(3) The Secretary may audit the records of the contracting or
agreeing party periodically; and
(4) Any subcontractor who enters into a contract with a Board
contractor and who receives or otherwise uses funds allocated by the
Board shall be subject to the same provisions as the contractor.
(g) To prepare and submit for the approval of the Secretary fiscal
year budgets in accordance with Sec. 1222.50;
(h) To borrow funds necessary for startup expenses of the Order
during the first year of operation by the Board;
(i) To invest assessments collected and other funds received
pursuant to the Order and use earnings from invested assessments to pay
for activities carried out pursuant to the Order;
(j) To recommend changes to the assessment rates as provided in
this part;
(k) To cause its books to be audited by an independent auditor at
the end of each fiscal year and at such other times as the Secretary
may request, and to submit a report of the audit directly to the
Secretary;
(l) To periodically prepare and make public reports of program
activities and, at least once each fiscal year, to make public an
accounting of funds received and expended;
(m) To maintain such minutes, books and records and prepare and
submit such reports and records from time to time to the Secretary as
the Secretary may prescribe; to make appropriate accounting with
respect to the receipt and disbursement of all funds entrusted to it;
and to keep records that accurately reflect the actions and
transactions of the Board;
(n) To act as an intermediary between the Secretary and any
manufacturer or importer;
(o) To receive, investigate, and report to the Secretary complaints
of violations of the Order;
(p) To recommend to the Secretary such amendments to the Order as
the Board considers appropriate; and
(q) To work to achieve an effective, continuous, and coordinated
program of promotion, research, and information and to carry out
programs, plans, and projects designed to provide maximum benefits to
the paper and paper-based packaging industry.
Sec. 1222.47 Prohibited activities.
The Board may not engage in, and shall prohibit the employees and
agents of the Board from engaging in:
(a) Any action that would be a conflict of interest;
(b) Using funds collected by the Board under the Order to undertake
any action for the purpose of influencing legislation or governmental
action or policy, by local, state, national, and foreign governments or
subdivision thereof, other than recommending to the Secretary
amendments to the Order; and
(c) No program, plan or project including advertising shall be
false, misleading or disparaging to another agricultural commodity.
Paper and paper-based packaging of all geographic origins shall be
treated equally.
Expenses and Assessments
Sec. 1222.50 Budget and expenses.
(a) At least 60 calendar days prior to the beginning of each fiscal
year, and as may be necessary thereafter, the Board shall prepare and
submit to the Department a budget for the fiscal year covering its
anticipated expenses and disbursements in administering this part. The
budget for research, promotion or information may not be implemented
prior to approval by the Secretary. Each such budget shall include:
(1) A statement of objectives and strategy for each program, plan
or project;
(2) A summary of anticipated revenue, with comparative data for at
least one preceding fiscal year, except for the initial budget;
(3) A summary of proposed expenditures for each program, plan or
project; and
(4) Staff and administrative expense breakdowns, with comparative
data for at least one preceding fiscal year, except for the initial
budget.
(b) Each budget shall provide adequate funds to defray its proposed
expenditures and to provide for a reserve as set forth in this Order.
(c) Subject to this section, any amendment or addition to an
approved budget must be approved by the Department, including shifting
funds from one program, plan or project to another. Shifts of funds
that do not result in an increase in the Board's approved budget and
are consistent with governing bylaws need not have prior approval by
the Department.
(d) The Board is authorized to incur such expenses, including
provision for a reserve, as the Secretary finds reasonable and likely
to be incurred by the Board for its maintenance and functioning, and to
enable it to exercise its powers and perform its duties in accordance
with the provisions of this subpart. Such expenses shall be paid from
funds received by the Board.
(e) With approval of the Department, the Board may borrow money for
the payment of startup expenses subject to the same fiscal, budget, and
audit controls as other funds of the Board. Any funds borrowed shall be
expended only for startup costs and capital outlays and are limited to
the first year of operation by the Board.
(f) The Board may accept voluntary contributions. Such
contributions shall be free from any encumbrance by the donor and the
Board shall retain complete control of their use. The Board may receive
funds from outside sources with approval of the Secretary for specific
authorized projects.
(g) The Board shall reimburse the Secretary for all expenses
incurred by the Secretary in the implementation, administration,
enforcement and supervision of the Order, including all referendum
costs in connection with the Order.
[[Page 57028]]
(h) For fiscal years beginning three years after the date of the
establishment of the Board, the Board may not expend for
administration, maintenance, and the functioning of the Board an amount
that is greater than 15 percent of the assessment and other income
received by and available to the Board for the fiscal year. For
purposes of this limitation, reimbursements to the Secretary shall not
be considered administrative costs.
(i) The Board may establish an operating monetary reserve and may
carry over to subsequent fiscal years excess funds in any reserve so
established: Provided, That, the funds in the reserve do not exceed one
fiscal year's budget of expenses. Subject to approval by the Secretary,
such reserve funds may be used to defray any expenses authorized under
this subpart.
(j) Pending disbursement of assessments and all other revenue under
a budget approved by the Secretary, the Board may invest assessments
and all other revenues collected under this part in:
(1) Obligations of the United States or any agency of the United
States;
(2) General obligations of any State or any political subdivision
of a State;
(3) Interest bearing accounts or certificates of deposit of
financial institutions that are members of the Federal Reserve System;
(4) Obligations fully guaranteed as to principal interest by the
United States; or
(5) Other investments as authorized by the Secretary.
Sec. 1222.51 Financial statements.
(a) The Board shall prepare and submit financial statements to the
Department on a quarterly basis, or at any other time as requested by
the Secretary. Each such financial statement shall include, but not be
limited to, a balance sheet, income statement, and expense budget. The
expense budget shall show expenditures during the time period covered
by the report, year-to-date expenditures, and the unexpended budget.
(b) Each financial statement shall be submitted to the Department
within 30 calendar days after the end of the time period to which it
applies.
(c) The Board shall submit to the Department an annual financial
statement within 90 calendar days after the end of the fiscal year to
which it applies.
Sec. 1222.52 Assessments.
(a) The Board's programs and expenses shall be paid by assessments
on manufacturers and importers, other income of the Board, and other
funds available to the Board.
(b) Subject to the exemptions specified in Sec. 1222.53, each
manufacturer and importer shall pay an assessment to the Board in the
amount of 35 cents per short ton or its equivalent manufactured and
imported. The assessment shall be on the roll of paper and paper-based
packaging manufactured or imported, except that the assessment for cut-
size printing and writing paper imported or made by domestic
manufacturers prior to leaving the manufacturer's mill shall be on the
cut-size paper.
(c) At least 24 months after the Order becomes effective and
periodically thereafter, the Board shall review and may recommend to
the Secretary, upon an affirmative vote of at least two-thirds of the
Board, a change in the assessment rate. A change in the assessment rate
is subject to rulemaking by the Secretary.
(d) Domestic manufacturers shall remit to the Board the amount due
no later than the 30th calendar day of the month following the end of
the quarter in which the paper and paper-based packaging was
manufactured.
(e) Each importer of paper and paper-based packaging shall pay
through Customs to the Board an assessment on the paper and paper-based
packaging imported into the United States identified in the Harmonized
Tariff Schedule of the United States (HTSUS) numbers listed in the
table below.
------------------------------------------------------------------------
Assessment $/
Paper and paper-based packaging kg
------------------------------------------------------------------------
4802.54.1000............................................ $.000386
4802.54.3100............................................ .000386
4802.54.5000............................................ .000386
4802.54.6100............................................ .000386
4802.55.1000............................................ .000386
4802.55.2000............................................ .000386
4802.55.4000............................................ .000386
4802.55.6000............................................ .000386
4802.55.7020............................................ .000386
4802.55.7040............................................ .000386
4802.56.1000............................................ .000386
4802.56.2000............................................ .000386
4802.56.4000............................................ .000386
4802.56.6000............................................ .000386
4802.56.70.............................................. .000386
4802.57.1000............................................ .000386
4802.57.2000............................................ .000386
4802.57.4000............................................ .000386
4802.58.1000............................................ .000386
4802.58.20.............................................. .000386
4802.58.5000............................................ .000386
4802.58.60.............................................. .000386
4802.61.1000............................................ .000386
4802.61.2000............................................ .000386
4802.61.30.............................................. .000386
4802.61.5000............................................ .000386
4802.61.60.............................................. .000386
4802.62.1000............................................ .000386
4802.62.2000............................................ .000386
4802.62.3000............................................ .000386
4802.62.5000............................................ .000386
4802.62.60.............................................. .000386
4802.69................................................. .000386
4804.11.0000............................................ .000386
4804.19.0000............................................ .000386
4804.21.0000............................................ .000386
4804.29.0000............................................ .000386
4804.31.40.............................................. .000386
4804.31.6000............................................ .000386
4804.39.4020............................................ .000386
4804.39.4049............................................ .000386
4804.39.60.............................................. .000386
4804.41.2000............................................ .000386
4804.41.4000............................................ .000386
4804.42.00.............................................. .000386
4804.49.0000............................................ .000386
4804.51.0000............................................ .000386
4804.52.00.............................................. .000386
4804.59.0000............................................ .000386
4805.11.0000............................................ .000386
4805.12................................................. .000386
4805.19................................................. .000386
4805.24................................................. .000386
4805.25.0000............................................ .000386
4805.91.1010............................................ .000386
4805.91.9000............................................ .000386
4805.92.4010............................................ .000386
4805.92.4030............................................ .000386
4805.93.4010............................................ .000386
4805.93.4030............................................ .000386
4805.93.4050............................................ .000386
4805.93.4060............................................ .000386
4807.00.9100............................................ .000386
4807.00.9400............................................ .000386
4810.13.11.............................................. .000386
4810.13.1900............................................ .000386
4810.13.20.............................................. .000386
4810.13.5000............................................ .000386
4810.13.6000............................................ .000386
4810.13.70.............................................. .000386
4810.14.11.............................................. .000386
4810.14.1900............................................ .000386
4810.14.20.............................................. .000386
4810.14.5000............................................ .000386
4810.14.6000............................................ .000386
4810.14.70.............................................. .000386
4810.19.1100............................................ .000386
4810.19.1900............................................ .000386
4810.19.20.............................................. .000386
4810.22.1000............................................ .000386
4810.22.50.............................................. .000386
4810.22.6000............................................ .000386
4810.22.70.............................................. .000386
4810.29.10.............................................. .000386
4810.29.5000............................................ .000386
4810.29.6000............................................ .000386
4810.29.70.............................................. .000386
4810.31.1020............................................ .000386
4810.31.1040............................................ .000386
4810.31.3000............................................ .000386
4810.31.6500............................................ .000386
4810.32.10.............................................. .000386
4810.32.3000............................................ .000386
4810.32.6500............................................ .000386
4810.39.1200............................................ .000386
4810.39.1400............................................ .000386
4810.39.3000............................................ .000386
4810.39.6500............................................ .000386
4810.92.12.............................................. .000386
4810.92.65.............................................. .000386
4810.99.1050............................................ .000386
4810.99.6500............................................ .000386
4811.51.2010............................................ .000386
[[Page 57029]]
4811.51.2020............................................ .000386
4811.51.2030............................................ .000386
4811.59.4020............................................ .000386
4811.90.8030............................................ .000386
------------------------------------------------------------------------
(f) If Customs does not collect an assessment from an importer, the
importer is responsible for paying the assessment directly to the Board
within 30 calendar days after the end of the quarter in which the paper
and paper-based packaging was imported.
(g) When a manufacturer or importer fails to pay the assessment
within 60 calendar days of the date it is due, the Board may impose a
late payment charge and interest. The late payment charge and rate of
interest shall be prescribed in regulations issued by the Secretary.
All late assessments shall be subject to the specified late payment
charge and interest. Persons failing to remit total assessments due in
a timely manner may also be subject to actions under federal debt
collection procedures.
(h) The Board may accept advance payment of assessments from any
manufacturer or importer that will be credited toward any amount for
which that person may become liable. The Board may not pay interest on
any advance payment.
(i) If the Board is not in place by the date the first assessments
are to be collected, the Secretary shall receive assessments and shall
pay such assessments and any interest earned to the Board when it is
formed.
Sec. 1222.53 Exemption from assessment.
(a) Minimum quantity exemption. (1) Manufacturers that manufacture
less than 100,000 short tons of paper and paper-based packaging in a
marketing year are exempt from paying assessments. Such manufacturers
must apply to the Board, on a form provided by the Board, for a
certificate of exemption prior to the start of the marketing year. This
is an annual exemption and manufacturers must reapply each year. Such
manufacturers shall certify that they will manufacture less than
100,000 short tons of paper and paper-based packaging during the
marketing year for which the exemption is claimed. Upon receipt of an
application for exemption, the Board shall determine whether an
exemption may be granted. The Board may request past manufacturing data
to support the exemption request. The Board will issue, if deemed
appropriate, a certificate of exemption to the eligible manufacturer.
It is the responsibility of the manufacturer to retain a copy of the
certificate of exemption.
(2) Importers that import into the United States less than 100,000
short tons of paper and paper-based packaging in a marketing year are
exempt from paying assessments. This is an annual exemption and
importers must qualify each year.
(i) Importers that imported less than 100,000 short tons of paper
and paper-based packaging during the prior marketing year shall
automatically be considered exempt during the upcoming marketing year.
Customs data will be reviewed to verify applicable importers.
(ii) Importers that imported more than 100,000 short tons of paper
and paper-based packaging during the prior marketing year, but believe
and can document that they will import less than 100,000 short tons of
paper and paper-based packaging during the upcoming marketing year, may
apply to the Board, on a form provided by the Board, for a certificate
of exemption prior to the start of the fiscal year. Such importers
shall certify that they will import less than 100,000 short tons of
paper and paper-based packaging during the marketing year for which the
exemption is claimed. Upon receipt of an application for exemption, the
Board shall determine whether an exemption may be granted. The Board
may request past import data and other documentation to support the
exemption request. The Board will issue, if deemed appropriate, a
certificate of exemption to the eligible importer. It is the
responsibility of the importer to retain a copy of the certificate of
exemption.
(iii) The Board shall refund such importers considered exempt their
assessments as collected by Customs no later than 60 calendar days
after receipt of such assessments by the Board. The Board will stop
refund of assessments to such importers who during the marketing year
import more than 100,000 short tons of paper and paper based packaging.
These importers will be notified accordingly. No interest shall be paid
on the assessments collected by Customs or the Board.
(3) Manufacturers that did not apply to the Board for an exemption
and that manufactured less than 100,000 short tons of paper and paper-
based packaging during the marketing year shall automatically receive a
refund from the Board for the applicable assessments within 30 calendar
days after the end of the marketing year. Board staff shall determine
the assessments paid and refund the amount due to the manufacturer
accordingly.
(4) Importers that did not apply to the Board for an exemption,
imported more than 100,000 short tons of paper and paper-based
packaging during the prior marketing year, and that imported less than
100,000 short tons of paper and paper-based packaging during the
marketing year shall automatically receive a refund from the Board for
the applicable assessments within 30 calendar days after the end of the
marketing year.
(5) If an entity is a manufacturer and an importer, such entity's
combined quantity of paper and paper-based packaging manufactured and
imported during a marketing year shall count towards the 100,000 short
ton-exemption.
(6) Manufacturers and importers that received an exemption
certificate or an automatic exemption from the Board but manufactured
or imported 100,000 short tons or more of paper and paper-based
packaging during the marketing year shall pay the Board the applicable
assessments owed on the quantity manufactured or imported within 30
calendar days after the end of the marketing year and submit any
necessary reports to the Board pursuant to Sec. 1222.70.
(7) The Board may develop additional procedures to administer this
exemption as appropriate. Such procedures shall be implemented through
rulemaking by the Secretary.
(b) Organic. (1) Organic Act means section 2103 of the Organic
Foods Production Act of 1990 (7 U.S.C. 6501-6522).
(2) A manufacturer who operates under an approved National Organic
Program (NOP) (7 CFR part 205) system plan, only manufactures paper and
paper-based packaging that is eligible to be labeled as 100 percent
organic under the NOP and is not a split operation shall be exempt from
payment of assessments. To obtain an organic exemption, an eligible
manufacturer shall submit a request for exemption to the Board, on a
form provided by the Board, at any time initially and annually
thereafter on or before the start of the fiscal year as long as such
manufacturer continues to be eligible for the exemption. The request
shall include the following: The manufacturer's name and address; a
copy of the organic operation certificate provided by a USDA-accredited
certifying agent as defined in the Organic Act, a signed certification
that the applicant meets all of the requirements specified for an
assessment exemption, and such other information as may be required by
the Board and with the approval of the Secretary. The Board shall have
30
[[Page 57030]]
calendar days to approve the exemption request. If the exemption is not
granted, the Board will notify the applicant and provide reasons for
the denial within the same time frame.
(3) An importer who imports only paper and paper-based packaging
that is eligible to be labeled as 100 percent organic under the NOP and
is not a split operation shall be exempt from the payment of
assessments. To obtain an organic exemption, an eligible importer must
submit documentation to the Board and request an exemption from
assessment on 100 percent of organic paper and paper-based packaging,
on a form provided by the Board, at any time initially and annually
thereafter on or before the beginning of the fiscal year as long as the
importer continues to be eligible for the exemption. This documentation
shall include the same information as required by manufacturers in
paragraph (b)(2) of this section. If the importer complies with the
requirements of this section, the Board will grant the exemption and
issue a Certificate of Exemption to the importer. The Board will also
issue the importer a 9-digit alphanumeric number valid for 1 year from
the date of issue. This alphanumeric number should be entered by the
importer to Customs at entry summary. Any line item entry of 100
percent organic paper and paper-based packaging bearing this
alphanumeric number assigned by the Board will not be subject to
assessments.
(4) Importers who are exempt from assessment in paragraph (d)(3) of
this section shall also be eligible for reimbursement of assessments
collected by Customs and may apply to the Board for a reimbursement.
The importer would be required to submit satisfactory proof to the
Board that the importer paid the assessment on exempt organic products.
(5) The exemption will apply immediately following the issuance of
the exemption certificate.
Promotion, Research and Information
Sec. 1222.60 Programs, plans and projects.
(a) The Board shall develop and submit to the Secretary for
approval programs, plans and projects authorized by this subpart. Such
programs, plans and projects shall provide for promotion, research,
information and other activities including consumer and industry
information and advertising.
(b) No program, plan or project shall be implemented prior to its
approval by the Secretary. Once a program, plan or project is so
approved, the Board shall take appropriate steps to implement it.
(c) The Board must evaluate each program, plan and project
authorized under this subpart to ensure that it contributes to an
effective and coordinated program of research, promotion and
information. The Board must submit the evaluations to the Secretary. If
the Board finds that a program, plan or project does not contribute to
an effective program of promotion, research, or information, then the
Board shall terminate such program, plan or project.
Sec. 1222.61 Independent evaluation.
At least once every five years, the Board shall authorize and fund
from funds otherwise available to the Board, an independent evaluation
of the effectiveness of the Order and the programs conducted by the
Board pursuant to the Act. The Board shall submit to the Secretary, and
make available to the public, the results of each periodic independent
evaluation conducted under this paragraph.
Sec. 1222.62 Patents, copyrights, trademarks, inventions, product
formulations, and publications.
Any patents, copyrights, trademarks, inventions, product
formulations, and publications developed through the use of funds
received by the Board under this subpart shall be the property of the
U.S. Government, as represented by the Board, and shall along with any
rents, royalties, residual payments, or other income from the rental,
sales, leasing, franchising, or other uses of such patents, copyrights,
trademarks, inventions, product formulations, or publications, inure to
the benefit of the Board, shall be considered income subject to the
same fiscal, budget, and audit controls as other funds of the Board,
and may be licensed subject to approval by the Secretary. Upon
termination of this subpart, Sec. 1222.83 shall apply to determine
disposition of all such property.
Reports, Books, and Records
Sec. 1222.70 Reports.
(a) Manufacturers and importers will be required to provide
periodically to the Board such information as the Board, with the
approval of the Secretary, may require. Such information may include,
but not be limited to:
(1) For manufacturers:
(i) The name, address and telephone number of the manufacturer; and
(ii) The quantity of paper and paper-based packaging manufactured
by type.
(2) For importers:
(i) The name, address and telephone number of the importer;
(ii) The quantity of paper and paper-based packaging imported by
type; and
(iii) The country of export.
(b) For manufacturers, such information shall be reported to the
Board no later than the 30th calendar day of the month following the
end of the quarter in which the paper and paper-based packaging was
manufactured and shall accompany the collected payment of assessments
as specified in Sec. 1222.52. First quarter data (January-March) shall
be reported to the Board no later than the 30th calendar day of April;
second quarter data (April-June) shall be reported no later than the
30th calendar day of July; third quarter data (July-September) shall be
reported no later than the 30th calendar day of October; and fourth
quarter data (October-December) shall be reported no later than the
30th calendar day of January of the following marketing year.
(c) For importers who pay their assessments directly to the Board,
such information shall accompany the payment of collected assessments
within 30 calendar days after the end of the quarter in which the paper
and paper-based packaging was imported specified in Sec. 1222.52.
Sec. 1222.71 Books and records.
Each manufacturer and importer shall maintain any books and records
necessary to carry out the provisions of this subpart and regulations
issued thereunder, including such records as are necessary to verify
any required reports. Such books and records must be made available
during normal business hours for inspection by the Board's or
Secretary's employees or agents. Manufacturers and importers must
maintain the books and records for two years beyond the fiscal year to
which they apply.
Sec. 1222.72 Confidential treatment.
All information obtained from books, records, or reports under the
Act, this subpart and the regulations issued thereunder shall be kept
confidential by all persons, including all employees and former
employees of the Board, all officers and employees and former officers
and employees of contracting and subcontracting agencies or agreeing
parties having access to such information. Such information shall not
be available to Board members or manufacturers and importers. Only
those persons having a specific need for such information solely to
effectively administer the provisions of this subpart shall have access
to such information. Only such information so obtained as the Secretary
deems relevant shall be disclosed by them, and then only in a
[[Page 57031]]
judicial proceeding or administrative hearing brought at the direction,
or at the request, of the Secretary, or to which the Secretary or any
officer of the United States is a party, and involving this subpart.
Nothing in this section shall be deemed to prohibit:
(a) The issuance of general statements based upon the reports of
the number of persons subject to this subpart or statistical data
collected therefrom, which statements do not identify the information
furnished by any person; and
(b) The publication, by direction of the Secretary, of the name of
any person who has been adjudged to have violated this part, together
with a statement of the particular provisions of this part violated by
such person.
Miscellaneous
Sec. 1222.80 Right of the Secretary.
All fiscal matters, programs, plans or projects, contracts, rules
or regulations, reports, or other substantive actions proposed and
prepared by the Board shall be submitted to the Secretary for approval.
Sec. 1222.81 Referenda.
(a) Initial referendum. The Order shall not become effective unless
the Order is approved by a majority of manufacturers and importers
voting in the referendum who also represent a majority of the volume of
paper and paper-based packaging represented in the referendum and who,
during a representative period determined by the Secretary, have been
engaged in the manufacturing or importation of paper and paper-based
packaging. A single entity who domestically manufactures and imports
paper and paper-based packaging may cast one vote in the referendum.
(b) Subsequent referenda. The Secretary shall conduct subsequent
referenda:
(1) For the purpose of ascertaining whether manufacturers and
importers favor the amendment, continuation, suspension, or termination
of the Order;
(2) Not later than seven years after this Order becomes effective
and every seven years thereafter, to determine whether manufacturers
and importers favor the continuation of the Order. The Order shall
continue if it is favored by a majority of manufacturers and importers
voting in the referendum who also represent a majority of the volume of
paper and paper-based packaging represented in the referendum and who,
during a representative period determined by the Secretary, have been
engaged in the manufacturing or importation of paper and paper-based
packaging;
(3) At the request of the Board established in this Order;
(4) At the request of 10 percent or more of the number of persons
eligible to vote in a referendum as set forth under the Order; or
(5) At any time as determined by the Secretary.
Sec. 1222.82 Suspension or termination.
(a) The Secretary shall suspend or terminate this part or subpart
or a provision thereof, if the Secretary finds that this part or
subpart or a provision thereof obstructs or does not tend to effectuate
the purposes of the Act, or if the Secretary determines that this
subpart or a provision thereof is not favored by persons voting in a
referendum conducted pursuant to the Act.
(b) The Secretary shall suspend or terminate this subpart at the
end of the fiscal year whenever the Secretary determines that its
suspension or termination is favored by a majority of manufacturers and
importers voting in the referendum who also represent a majority of the
volume represented in the referendum who, during a representative
period determined by the Secretary, have been engaged in the
manufacturing or importation of paper and paper-based packaging.
(c) If, as a result of a referendum the Secretary determines that
this subpart is not approved, the Secretary shall:
(1) Not later than one hundred and eighty (180) calendar days after
making the determination, suspend or terminate, as the case may be, the
collection of assessments under this subpart.
(2) As soon as practical, suspend or terminate, as the case may be,
activities under this subpart in an orderly manner.
Sec. 1222.83 Proceedings after termination.
(a) Upon termination of this subpart, the Board shall recommend to
the Secretary up to five of its members to serve as trustees for the
purpose of liquidating the Board's affairs. Such persons, upon
designation by the Secretary, shall become trustees of all of the funds
and property then in the possession or under control of the Board,
including claims for any funds unpaid or property not delivered, or any
other existing claim at the time of such termination.
(b) The said trustees shall:
(1) Continue in such capacity until discharged by the Secretary;
(2) Carry out the obligations of the Board under any contracts or
agreements entered into pursuant to the Order;
(3) From time to time account for all receipts and disbursements
and deliver all property on hand, together with all books and records
of the Board and trustees, to such person or person as the Secretary
directs; and
(4) Upon request of the Secretary execute such assignments or other
instruments necessary or appropriate to vest in such persons title and
right to all of the funds, property, and claims vested in the Board or
the trustees pursuant to the Order.
(c) Any person to whom funds, property, or claims have been
transferred or delivered pursuant to the Order shall be subject to the
same obligations imposed upon the Board and upon the trustees.
(d) Any residual funds not required to defray the necessary
expenses of liquidation shall be turned over to the Secretary to be
disposed of, to the extent practical, to one or more paper and paper-
based packaging organizations in the United States whose mission is
generic promotion, research, and information programs.
Sec. 1222.84 Effect of termination or amendment.
Unless otherwise expressly provided by the Secretary, the
termination of this subpart or of any regulation issued pursuant
thereto, or the issuance of any amendment to either thereof, shall not:
(a) Affect or waive any right, duty, obligation, or liability which
shall have arisen or which may thereafter arise in connection with any
provision of this subpart or any regulation issued thereunder;
(b) Release or extinguish any violation of this subpart or any
regulation issued thereunder; or
(c) Affect or impair any rights or remedies of the United States,
or of the Secretary or of any other persons, with respect to any such
violation.
Sec. 1222.85 Personal liability.
No member or employee of the Board shall be held personally
responsible, either individually or jointly with others, in any way
whatsoever, to any person for errors in judgment, mistakes, or other
acts, either of commission or omission, as such member or employee,
except for acts of dishonesty or willful misconduct.
Sec. 1222.86 Separability.
If any provision of this subpart is declared invalid or the
applicability of it to any person or circumstances is held invalid, the
validity of the remainder of this subpart, or the applicability thereof
[[Page 57032]]
to other persons or circumstances shall not be affected thereby.
Sec. 1222.87 Amendments.
Amendments to this subpart may be proposed from time to time by the
Board or any interested person affected by the provisions of the Act,
including the Secretary.
Sec. 1222.88 OMB control numbers.
The control numbers assigned to the information collection
requirements by the Office of Management and Budget pursuant to the
Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, are OMB control
number 0505-0001 (Board nominee background statement) and OMB control
number 0581-0281.
Dated: September 10, 2013.
Rex A. Barnes,
Associate Administrator.
[FR Doc. 2013-22330 Filed 9-13-13; 8:45 am]
BILLING CODE 3410-02-P