Softwood Lumber Research, Promotion, Consumer Education and Industry Information Order, 61002-61025 [2010-24202]
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Federal Register / Vol. 75, No. 190 / Friday, October 1, 2010 / Proposed Rules
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 1217
[Document Number AMS–FV–10–0015; PR–
A1]
RIN 0581–AD03
Softwood Lumber Research,
Promotion, Consumer Education and
Industry Information Order
AGENCY:
Agricultural Marketing Service,
USDA.
ACTION:
Proposed rule.
This rule invites comments
on a proposed Softwood Lumber
Research, Promotion, Consumer
Education and Industry Information
Order (Order). Softwood lumber is used
in products like flooring, siding and
framing. The program would be
financed by an assessment on softwood
lumber domestic manufacturers and
importers and would be administered
by a board of industry members selected
by the Secretary of Agriculture
(Secretary). The initial assessment rate
would be $0.35 per thousand board feet
of softwood lumber shipped within or
imported to the United States. The
purpose of the program would be to
strengthen the position of softwood
lumber in the marketplace, maintain
and expand markets for softwood
lumber, and develop new uses for
softwood lumber within the United
States. A referendum would be held
among eligible domestic manufacturers
and importers to determine whether
they favor implementation of the
program prior to it going into effect.
This rule also announces the
Agricultural Marketing Service’s (AMS)
intent to request approval by the Office
of Management and Budget (OMB) of
new information collection
requirements to implement the program.
DATES: Comments must be received by
November 30, 2010. Pursuant to the
Paperwork Reduction Act (PRA),
comments on the information collection
burden that would result from this
proposal must be received by November
30, 2010.
ADDRESSES: Interested persons are
invited to submit written comments
concerning this proposal. Comments
may be submitted on the Internet at:
https://www.regulations.gov or to the
Research and Promotion Branch, Fruit
and Vegetable Programs, AMS, USDA,
1400 Independence Avenue, SW., Room
0632–S, Stop 0244, Washington, DC
20250–0244; facsimile: (202) 205–2800.
All comments should reference the
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docket number and the date and page
number of this issue of the Federal
Register and will be made available for
public inspection, including name and
address, if provided, in the above office
during regular business hours or it can
be viewed at https://
www.regulations.gov.
Pursuant to the PRA, comments
regarding the accuracy of the burden
estimate, ways to minimize the burden,
including the use of automated
collection techniques or other forms of
information technology, or any other
aspect of this collection of information,
should be sent to the above address. In
addition, comments concerning the
information collection should also be
sent to the Desk Office for Agriculture,
Office of Information and Regulatory
Affairs, OMB, New Executive Office
Building, 725 17th Street, NW., Room
725, Washington, DC 20503.
FOR FURTHER INFORMATION CONTACT:
Maureen T. Pello, Marketing Specialist,
Research and Promotion Branch, Fruit
and Vegetable Programs, AMS, USDA,
P.O. Box 831, Beavercreek, Oregon
97004; telephone: (503) 632–8848;
facsimile (503) 632–8852; or electronic
mail: Maureen.Pello@ams.usda.gov.
SUPPLEMENTARY INFORMATION: This rule
is issued pursuant to the Commodity
Promotion, Research, and Information
Act of 1996 (1996 Act) (7 U.S.C. 7411–
7425).
Executive Order 12866
This rule has been determined to be
not significant for purposes of Executive
Order 12866 and therefore has not been
reviewed by the OMB.
Executive Order 12988
This rule 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 the U.S.
Department of Agriculture (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
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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.
Background
This rule invites comments on a
proposed industry-funded research,
promotion, and information program for
softwood lumber. Softwood lumber is
used in products like flooring, siding
and framing. The program would be
financed by an assessment on softwood
lumber domestic manufacturers and
importers and would be administered
by a board of industry members selected
by the Secretary. The initial assessment
rate would be $0.35 per thousand board
feet of softwood lumber shipped within
or imported to the United States.
Entities that domestically ship or import
less than 15 million board feet per fiscal
year would be exempt from the payment
of assessments. Additionally, no entity
would pay assessments on the first 15
million board feet of softwood lumber
shipped domestically or imported
during the year. Exports from the United
States would also be exempt from
assessments. The purpose of the
program would be to strengthen the
position of softwood lumber in the
marketplace, maintain and expand
markets for softwood lumber, and
develop new uses for softwood lumber
within the United States.
A referendum would be held among
eligible domestic manufacturers and
importers to determine whether they
favor implementation of the program
prior to it going into effect. The proposal
was submitted to USDA by the Blue
Ribbon Commission (BRC), a committee
of 21 chief executive officers and heads
of businesses that domestically
manufacture and import softwood
lumber. This rule also announces AMS’s
intent to request approval by the OMB
of new information collection
requirements to implement the program.
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. These programs
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are designed to maintain and expand
markets and uses for agricultural
commodities. As defined under section
513(1)(D) of the 1996 Act, agricultural
commodities include the products of
forestry, which includes softwood
lumber.
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
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
The softwood lumber industry is
comprised of sawmills that make
products from softwood trees.
Softwoods include the botanical group
of trees that have needle-like or scalelike leaves, or conifers. Softwood
lumber includes certain products
manufactured from softwoods (or
coniferous trees). Softwood lumber is
used in products like flooring, siding,
and framing.
Softwood lumber sizes are identified
by the thickness and width of the board
when it is first cut from the log. This is
known as ‘‘rough cut’’ when the wood is
still green and wet. Once the wood
dries, it shrinks. After the wood dries,
the surface of the board is smoothed to
make the wood a uniform size. This is
known as ‘‘planing’’ the wood. Once
planed, the wood is considered
finished. In the industry, the term
nominal is used to describe the size of
the rough cut board, prior to finishing.
For example, a 2 x 4 board is a nominal
size. The actual size of a 2 x 4 board is
1.5 inches in thickness by 3.5 inches in
width. The length of the board is
typically the actual length. Usually
there is a 1⁄2 inch difference in
measurements over 2 inches and 1⁄4 inch
difference in measurements less than 2
inches. For purposes of the proposed
Order and the tables in this rule,
nominal sizes are used. One nominal
board foot is a unit of measurement of
softwood lumber represented by a board
12-inches long, 12-inches wide, and 1inch thick or its cubic equivalent. A
board foot calculation for softwood
lumber 1 inch or more in thickness is
based on its nominal thickness and
width by the actual length. Softwood
lumber with a nominal thickness of less
than 1 inch is calculated as 1 inch.
Regional U.S. Timber Production 1
According to USDA’s Forest Service,
the main species of softwoods in the
southern United States are pines that
grow fast and can be sold for lumber in
25 to 30 years. Southern pines are often
treated with preservatives. About a third
of the region’s lumber is sold to treaters
for further processing (i.e., apply
preservatives).2
Most of the northern U.S. softwood
lumber industry is in Maine where the
predominant species are white spruce
and balsam fir. These trees are typically
used for light framing such as wall
studs. Second growths of red pine
planted in the 1930s and later have been
harvested by a few firms in the lake
States. Red pine is also easy to treat and
much of it is processed. White pine
trees are also prevalent in the northern
United States. They are used for
paneling, millwork, and joinery.
Millwork includes woodwork that has
been made at a mill, and joinery is the
trade of constructing articles by joining
together pieces of wood.
The bulk of timber production in the
western United States is on the coast of
the Pacific Northwest. Douglas fir and
hemlock trees dominate while farther
south in northern California, redwood
trees, suitable for outdoor structures like
fences, siding and decks, are common.
East of these regions, ponderosa pine
dominates and is used for millwork and
joinery. Northern Idaho and Montana
contain lodgepole pine and other
species suitable for light framing.
U.S. Softwood Lumber Output by
Region 3
According to USDA’s Forest Service,
for 2007–2008, total output (production)
of softwood lumber by U.S. sawmills
averaged about 29.5 billion board feet
annually. Of the 29.5 billion board feet,
12.6 billion board feet were from the
U.S. South, 14.4 billion board feet were
from the U.S. West, and 2.5 billion
board feet were from the Northeast and
Lake States. Data for the western States
is from the Western Wood Products
Association 4 and data for the other two
regions is from the U.S. Census Bureau.5
Softwood Lumber Markets 6
The residential market is the largest
consumer of softwood lumber in the
United States. This includes single and
multifamily homes, mobile homes, and
remodeling. The residential market
accounted for 75 percent of the total
U.S. softwood lumber market in 2006
and 63 percent of the market in 2009.
Table 1 below shows this data from
2003 through 2009.
TABLE 1—U.S. SOFTWOOD LUMBER MARKETS FROM 2003–2009 VOLUME
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[Billion board feet]
Single
family
homes
2003 .........................
2004 .........................
Multi-family
homes
20.2
22.2
1.7
1.8
1 Spelter, H., D. McKeever, D. Toth, Profile 2009:
Softwood Sawmills in the United States, USDA, p.
7.
2 Micklewright, J.T., Wood preservation statistics,
American Wood Preservers Assocation, p. 25.
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Mobile
homes
Residential remodeling
1.1
1.1
19.3
20.3
3 Spelter,
Non-residential, buildings
3.6
3.9
McKeever and Toth, Profile 2009, p. 15.
Wood Products Association, 2008
Statistical Yearbook, p. 32.
4 Western
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Non-residential, other
0.6
0.5
Industrial and
other
Total U.S.
10.2
11.1
56.7
60.8
5 U.S. Census Bureau, 2009, Construction,
https://www.census.gov/mcd/.
6 Spelter, McKeever and Toth, Profile 2009, p. 2–
5.
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TABLE 1—U.S. SOFTWOOD LUMBER MARKETS FROM 2003–2009 VOLUME—Continued
[Billion board feet]
Single
family
homes
2005
2006
2007
2008
2009
.........................
.........................
.........................
.........................
.........................
Multi-family
homes
24.5
21.3
14.9
8.4
5.3
Mobile
homes
1.9
1.9
1.7
1.4
0.7
Residential remodeling
1.2
0.9
0.8
0.6
0.4
Non-residential, buildings
20.9
21.4
19.7
17.5
14.2
Non-residential, other
Total U.S.
0.6
0.6
0.6
0.6
0.6
11.7
11.3
11.4
9.6
7.8
64.6
61.0
53.1
42.0
32.6
1
1
1
1
1
1
2
3.8
3.6
4.0
3.9
3.6
Industrial and
other
18
18
18
18
21
23
24
Shares (percent)
2003
2004
2005
2006
2007
2008
2009
.........................
.........................
.........................
.........................
.........................
.........................
.........................
36
36
38
35
28
20
16
3
3
3
3
3
3
2
During normal economic conditions,
single family homes comprise the
largest share of the softwood lumber
market in the United States. Single
family home use rose from 20.2 billion
board feet in 2003 to 24.5 billion board
feet in 2005 and fell to 5.3 billion board
feet in 2009. Single family homes
comprised 38 percent of the market for
softwood lumber in 2005 and 16 percent
of the market by 2009.
Home building is cyclical in nature
(follows a pattern of highs and lows) as
compared to other end uses for
softwood lumber. Residential
remodeling and other uses experienced
downturns between 2006 and 2009, but
less severe than the market for single
family homes. Softwood lumber used
for residential remodeling fell from 21.4
billion board feet in 2006 to 14.2 billion
board feet in 2009. As a percentage of
softwood lumber market share,
residential remodeling rose from 35
percent in 2006 to 44 percent in 2009.
Export Markets 7
Export markets are another outlet for
softwood lumber. Two decades ago, U.S.
exports were about seven times greater
than they were in recent years, but a
strong U.S. dollar from the mid-1990s
2
2
2
2
1
1
1
34
33
32
35
37
42
44
6
6
6
6
8
9
11
onward helped to reduce exports.
Additionally, different size and grade
standards for softwood lumber in export
markets complicate production when
log sizes have to be converted from
imperial units (feet) to metric (meters).
Most manufacturers have thus focused
on North American sales. However, in
slow periods such as in recent years,
efforts have been made to supply export
markets to the extent possible.
Competition 8
Softwood lumber competes with
several alternative products. Steel and
concrete dominate larger residential and
nonresidential projects. Brick, concrete,
and vinyl are often used in low-rise
residential and nonresidential
buildings. Within the last decade, woodplastic composite lumber has become
popular for outdoor decking, railing,
trim, and fencing. Other wood-based
products such as laminated veneer are
becoming more popular in place of
softwood lumber.
Imports
According to U.S. Department of
Commerce, Census Bureau, Foreign
Trade Statistics data 9, imports of
softwood lumber from 2007 through
2009 averaged about 13 billion board
feet annually. During those years,
imports from Canada averaged 12
billion board feet annually, comprising
about 92 percent of total imports;
imports from western Europe averaged
434 million board feet annually,
comprising about 3 percent of total
imports; and imports from Chile
averaged 255 million board feet
annually, comprising about 2 percent of
total imports. Imports from other
countries accounted for the remaining 3
percent of total imports for 2007
through 2009.
Price and Cost Trends 10
Prices in the lumber industry can
change rapidly in response to shifts in
demand or supply. Prices are set
competitively, with many buyers and
sellers bidding in a business that tends
to be cyclical in nature. As shown in
Table 2 below, revenue for the State of
Oregon per thousand board feet was
about $309 in 2003, rose to $420 in
2004, and fell to $219 in 2008. In
comparison, revenue for the State of
Georgia per thousand board feet was
about $323 in 2003, rose to $418 in
2005, and fell to $262 in 2008.
TABLE 2—TYPICAL SAWMILL OPERATING COSTS 2003–2008
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Oregon
Costs
($ per thousand
board feet)
2003
2004
2005
2006
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
7 Spelter,
8 Ibid.,
McKeever and Toth, Profile 2009, p. 15.
p. 15.
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Revenue
($ per thousand
board feet)
295
330
349
335
9 https://www.fas.usda.gov/gats;
Georgia
Costs
($ per thousand
board feet)
309
420
370
316
accessed 5/1/10.
311
335
349
349
10 Spelter,
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323
378
418
330
McKeever and Toth, Profile 2009, p. 5–
6.
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Revenue
($ per thousand
board feet)
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TABLE 2—TYPICAL SAWMILL OPERATING COSTS 2003–2008—Continued
Oregon
Costs
($ per thousand
board feet)
2007 .........................................................................................
2008 .........................................................................................
Several factors contributed to the
revenue changes shown in Table 2.
Some mills in the interior western
United States were forced to close
because of constraints on the
availability of timber. A dispute with
Canada over lumber imports that
resulted in a 15 percent export levy for
some U.S.-bound shipments and quotas
on others after October 2006 impacted
supply.
Wood, labor, and operating costs also
impact revenue. The cost of wood in the
United States is negotiated between
buyers and sellers. Companies often
enter into long-term supply contracts
with timber owners where the price is
negotiated quarterly based on sales and
market conditions. Labor is the second
biggest component of lumber costs.
According to the U.S. Department of
Labor, U.S. wages have increased about
3 percent per year during this decade.11
At the same time, labor productivity in
sawmilling has increased by a like
amount leaving unit labor costs flat. The
other main cost for sawmills is energy,
but most mills use their own residues to
generate heat for their drying needs.
This has lessened the impact of rising
energy prices on sawmills. As shown in
Table 2, total operating costs in Oregon
per thousand board feet averaged $295
in 2003, rose to $349 in 2005, and fell
to $238 in 2008. In comparison, total
operating costs in Georgia per thousand
board feet averaged $311 in 2003, rose
to $349 in 2005 and 2006, and fell to
$328 in 2008.
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Need for a Program
The softwood lumber industry is
experiencing one of the worst markets
in history. The collapse of the housing
market caused prices to fall from $404
per thousand board feet in 2004 to $222
per thousand board feet in 2009.12
Competition from other building
products like cement and vinyl has also
11 U.S. Department of Labor, Bureau of Labor
Statistics, 2009, Employment cost index,
Washington, DC, https://data.bls.gov/PDQ/
outside.jsp?survey=ci. Accessed 3/27/09.
12 Price data was obtained from Random Lengths
Publications, Inc., and is a framing composite price
that is designed as a broad measure of price
movement in the lumber market. (https://
www.randomlengths.com.)
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Revenue
($ per thousand
board feet)
297
238
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Costs
($ per thousand
board feet)
260
219
helped to reduce demand for softwood
lumber.
Additionally, at the request of the
U.S. and Canadian governments, the
U.S. Endowment for Forestry and
Communities (Endowment) and the
Binational Softwood Lumber Council
(BSLC) were formed in 2006 in
accordance with the 2006 Softwood
Lumber Agreement. The Endowment is
a non-profit organization that works
with public and private sectors to
advance the interests of the forestry
community. The Endowment conducted
a study to assess the feasibility of a
softwood lumber research and
promotion program. In the past, the
industry attempted voluntary efforts to
promote forest products, but they were
sporadic, underfunded, and narrowly
targeted. These campaigns did not last
long enough to succeed. The
Endowment recommended to the
industry that Canadian and U.S.
companies pursue a shared vision and
achieve broad agreement on creating a
unified softwood lumber research and
promotion program. In 2008, the
Endowment held an industry meeting in
Seattle, Washington, to discuss the
merits of such a program and obtain
industry feedback.
As a result of the Endowment’s
efforts, the BRC was subsequently
formed to pursue an industry research
and promotion program. The BRC is
comprised of 21 members representing
the United States and Canada. Funding
and support for the BRC’s efforts come
from the BSLC, a non-profit
organization whose mission is to
promote increased cooperation between
the U.S. and Canadian softwood lumber
industries and to strengthen and expand
markets for softwood lumber products
in both countries. The BRC submitted
an initial proposal for a program to
USDA in February 2010.
The BRC proposed a program that
would be financed by an assessment on
softwood lumber domestic
manufacturers and importers and
administered by a board of industry
members selected by the Secretary. The
initial assessment rate would be $0.35
per thousand board feet shipped within
or imported to the United States and
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Georgia
Revenue
($ per thousand
board feet)
300
328
269
262
could be increased up to a maximum of
$0.50 per thousand board feet. Entities
that domestically ship or import less
than 15 million board feet would be
exempt along with shipments exported
outside of the United States. Larger
entities would not pay assessments on
the first 15 million board feet shipped
or imported. The purpose of the
program would be to strengthen the
position of softwood lumber in the
marketplace, maintain and expand
markets for softwood lumber, and
develop new uses for softwood lumber
within the United States. A referendum
would be held among eligible domestic
manufacturers and importers to
determine whether they favor
implementation of the program prior to
it going into effect. A majority of
domestic manufacturers and importers
by both number and volume represented
in the referendum would have to
support the program for it to be
implemented. The specific provisions of
the program are discussed below.
Provisions of Proposed Program
Definitions
Pursuant to section 513 of the 1996
Act, §§ 1217.1 through 1217.30 of the
proposed Order define certain terms
that would be used throughout the
Order. Several of the terms are common
to all research and promotion programs
authorized under the 1996 Act while
other terms are specific to the proposed
softwood lumber Order.
Section 1217.1 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 1217.2 would define the term
‘‘Blue Ribbon Commission’’ to mean the
21-member committee representing
businesses that manufacture softwood
lumber in the United States or import
softwood lumber to the United States
formed to pursue an industry research,
promotion, and information program.
As specified in proposed § 1217.41, the
BRC would conduct the initial
nominations for the Softwood Lumber
Board and submit them to the Secretary.
This would be the only role of the BRC
under the program.
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Section 1217.3 would define the term
‘‘Board’’ or ‘‘Softwood Lumber Board’’ to
mean the administrative body
established pursuant to § 1217.40, or
such other name as recommended by
the Board and approved by the
Secretary.
Section 1217.4 would define the term
‘‘board foot’’ or ‘‘BF’’ to mean a unit of
measurement of softwood lumber
represented by a board 12-inches long,
12-inches wide, and 1-inch thick or its
cubic equivalent. A board foot
calculation for softwood lumber 1 inch
or more in thickness is based on its
nominal thickness and width by the
actual length. Softwood lumber with a
nominal thickness of less than 1 inch is
calculated as 1 inch.
The term ‘‘nominal’’ means the size by
which softwood lumber is known and
sold in the marketplace. As previously
mentioned, it differs from the actual size
and is based on the thickness and width
of a board when it is first cut from a log,
or rough cut, prior to drying and
planing. Nominal size would be defined
in § 1217.16 of the Order. The term
‘‘planing’’ means the act of smoothing
the surface of a board to make the wood
a uniform size and would be defined in
§ 1217.20 of the Order.
Section 1217.6 would define the term
‘‘Customs’’ to mean the United States
Customs and Border Protection or U.S.
Customs Service, an agency of the
United States Department of Homeland
Security.
Section 1217.8 would define the term
‘‘domestic manufacturer’’ to mean any
person who is a first handler and is
engaged in the manufacturing, sale and
shipment of softwood lumber in the
United States during a fiscal period and
who owns, or shares the ownership and
risk of loss of manufacturing of
softwood lumber or a person who is
engaged in the business of
manufacturing, or causes to be
manufactured, sold and shipped such
softwood lumber in the United States
beyond personal use. The term would
not include any person who remanufactures softwood lumber that had
already been subject to assessment
under the Order.
Section 1217.9 would define the term
‘‘export’’ to mean to manufacture and
ship softwood lumber from within the
United States to locations outside of the
United States.
Section 1217.10 would define the
term ‘‘fiscal period’’ or ‘‘fiscal year’’ to
mean a calendar year from January 1
through December 31, or other period as
recommended by the Board and
approved by the Secretary.
Section 1217.12 would define the
term ‘‘information’’ to mean activities or
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programs designed to disseminate the
results of research, new and existing
marketing programs, new and existing
marketing strategies, new and existing
uses and applications, and to enhance
the image of softwood lumber and the
forests from which it comes. This would
include consumer education, which
would mean any action taken to provide
information to, and broaden the
understanding of, the general public
regarding softwood lumber. This would
also include industry information,
which would mean information and
programs that would enhance the image
of the softwood lumber industry.
Section 1217.13 would define the
term ‘‘manufacture’’ to mean the process
of transforming softwood logs into
softwood lumber.
Section 1217.14 would define the
term ‘‘manufacturer for the U.S. market’’
to mean domestic manufacturers and
importers of softwood lumber. Such
importers may not have manufactured
the softwood lumber, but would be
importing softwood lumber that had
been manufactured from softwood logs.
The term is intended to facilitate equity
between the domestic and importing
members of the softwood lumber
industry.
Section 1217.15 would define the
term ‘‘marketing’’ to mean the sale or
other disposition of softwood lumber in
interstate, foreign, or intrastate
commerce. The sale or disposition of
softwood lumber within a State would
constitute marketing.
Section 1217.18 would define the
terms ‘‘part’’ and ‘‘subpart.’’ The term
‘‘part’’ would mean the Softwood
Lumber Research, Promotion, Consumer
Education, and Industry Information
Order and all rules, regulations, and
supplemental orders issued pursuant to
the Act and the Order. The Order would
be a ‘‘subpart’’ of the part.
Section 1217.21 would define the
terms programs, plans and projects to
mean research, promotion and
information programs, plans, or projects
established under the Order.
Section 1217.22 would define the
term ‘‘promotion’’ to mean any action
taken, including paid advertising,
public relations and other
communications, and promoting the
results of research, that presents a
favorable image of softwood lumber and
the forests from which it comes to the
public and to any and all consumers
and those who influence consumption
of softwood lumber with the intent of
improving the perception, markets and
competitive position of softwood
lumber and stimulating sales of
softwood lumber.
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Section 1217.23 would define the
term ‘‘research’’ to mean any activity
that advances the position of softwood
lumber in the marketplace that includes
any type of test, study, or analysis
designed to advance the image,
desirability, use, marketability, sales,
product development, or quality of
softwood lumber; new applications;
improving softwood lumber’s position
in building and fire codes; softwood
lumber product testing and safety; and
evaluating the effectiveness of market
development and promotion efforts
including life cycle studies, forestry,
sustainable forest management,
environmental preferability,
competitiveness, efficiency, pest and
disease control, water quality and other
management aspects of forestry and the
forests from which softwood lumber
originates.
Section 1217.25 would define the
term ‘‘softwood lumber’’ to mean all
softwood lumber and softwood lumber
products described in section 804(a)
within Title VIII (Softwood Lumber Act
of 2008 or SLA of 2008) of the Tariff Act
of 1930 (19 U.S.C. 1202–1683g), as
amended by section 3301 of the Food,
Conservation and Energy Act of 2008
(Pub. L. 110–246, enacted June 18,
2008). An interim final rule issued by
Customs and effective on September 18,
2008 (73 FR 49934; August 25, 2008),
prescribed an importer declaration
program and entry requirements
applicable to such softwood lumber and
softwood lumber products. The
declaration program and entry
requirements were required under
section 803 of the SLA of 2008. Section
804 of the SLA of 2008 sets forth the
scope of softwood lumber and softwood
lumber products covered by that Act.
Accordingly, all softwood lumber and
softwood lumber products classified
under subheading 4407.10.00,
4409.10.10, 4409.10.20, or 4409.10.90 of
the Harmonized Tariff Schedule of the
United States (HTSUS) are subject to the
importer declaration program and entry
requirements and would be covered
under this Order and are described in
the following paragraphs: 13
(1) Coniferous wood, sawn or chipped
lengthwise, sliced or peeled, whether or
not planed, sanded or finger-jointed, of
a thickness exceeding 6 millimeters;
(2) Coniferous wood siding (including
strips and friezes for parquet flooring,
not assembled) continuously shaped
(tongued, grooved, rabbeted, chamfered,
v-jointed, beaded, molded, rounded, or
the like) along any of its edges or faces,
13 The HTS numbers referred to in this discussion
are as of January 1, 2008.
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whether or not planed, sanded, or
finger-jointed;
(3) Other coniferous wood (including
strips and friezes for parquet flooring,
not assembled) continuously shaped
(tongued, grooved, rabbeted, chamfered,
v-jointed, beaded, molded, rounded, or
the like) along any of its edges or faces
(other than wood moldings and wood
dowel rods) whether or not planed,
sanded, or finger-jointed;
(4) Coniferous wood flooring
(including strips and friezes for parquet
flooring, not assembled) continuously
shaped (tongued, grooved, rabbeted,
chamfered, v-jointed, beaded, molded,
rounded, or the like) along any of its
edges or faces, whether or not planed,
sanded, or finger jointed; and
(5) Coniferous drilled and notched
lumber and angle cut lumber.
In addition, any product classified
under subheading 4409.10.05 of the
HTSUS that is continually shaped along
its end and or side edges, and unless
excepted or excluded from the importer
declaration requirement, softwood
lumber products that are stringers,
radius cut box-spring frame
components, fence pickets, truss
components, pallet components, and
door and window frame parts classified
under subheading 4418.90.46.95,
4421.90.70.40, or 4421.90.97.40 of the
HTSUS are covered under the SLA of
2008 and would be covered under the
Order.
The following are not subject to the
importer declaration program under
section 803 of the SLA of 2008 (see
section 804(b)) because they are defined
as excluded from the program and
would thus not be covered under this
Order:
(1) Trusses and truss kits, properly
classified under subheading 4418.90 of
the HTSUS;
(2) I–Joist beams;
(3) Assembled box-spring frames;
(4) Pallets and pallet kits, properly
classified under subheading 4415.20 of
the HTSUS;
(5) Garage doors;
(6) Edge-glued wood, properly
classified under subheading
4421.90.97.40 of the HTSUS;
(7) Complete door frames;
(8) Complete window frames;
(9) Furniture;
(10) Articles brought into the United
States temporarily and for which an
exemption from duty is claimed under
subchapter XIII of chapter 98 of the
HTSUS; and
(11) Household and personal effects.
Also, the following products are not
subject to the importer declaration
program established under section 803
of the SLA of 2008 (see section 804(c))
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because they are defined as excepted
from the program:
(1) Stringers (pallet components used
for runners), if the stringers have at least
two notches on the side, positioned at
equal distance from the center, to
properly accommodate forklift blades,
and properly classified under
subheading 4421.90.97.40 of the
HTSUS;
(2) Box-spring frame kits, if the kits
contain two wooden side rails, two
wooden end (or top) rails; and varying
numbers of wooden slats; and the side
rails and the end rails are radius-cut at
both ends. Box spring frame kits must
be individually packaged, and contain
the exact number of wooden
components needed to make the boxspring frame described on the entry
documents, with no further processing
required. None of the components
contained in the package may exceed 1
inch in actual thickness or 83 inches in
length.
(3) Radius-cut box-spring-frame
components, not exceeding 1 inch in
actual thickness or 83 inches in length,
ready for assembly without further
processing, if radius cuts are present on
both ends of the boards and are
substantial cuts so as to completely
round one corner.
(4) Fence pickets requiring no further
processing and properly classified
under subheading 4421.90.70 of the
HTSUS, 1 inch or less in actual
thickness, up to 8 inches wide, and 6
feet or less in length, and having finials
or decorative cuttings that clearly
identify them as fence pickets (in the
case of dog-eared fence pickets, the
corners of the boards should be cut off
so as to remove pieces of wood in the
shape of isosceles right angle triangles
with sides measuring 3⁄4 of an inch or
more).
(5) Softwood lumber originating in the
United States that is exported to another
country for minor processing and
imported into the United States if the
processing occurring in another country
is limited to kiln drying, planing to
create smooth-to-size board, and
sanding; and the importer establishes to
Customs’ satisfaction upon entry that
the softwood lumber originated in the
United States.
(6) Any softwood lumber or softwood
lumber product that originated in the
United States, if the importer, exporter,
foreign manufacturer or original
domestic manufacturer establishes to
Customs’ satisfaction upon entry that
the softwood lumber entered and
documented as originating in the United
States was first manufactured in the
United States.
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(7) Softwood lumber or softwood
lumber products contained in a single
family home package or kit, regardless
of classification under the HTSUS, if the
importer declares that the following
requirements have been met: (i) The
package or kit constitutes a full package
of the number of wooden pieces
specified in the plan, design or
blueprint necessary to produce a home
of at least 700 square feet produced to
a specified plan, design or blueprint; (ii)
The package or kit contains all
necessary internal and external doors
and windows, nails, screws, glue,
subfloor, sheathing, beams, posts, and
connectors, and if included in the
purchase contract, the decking, trim,
drywall and roof shingles specified in
the plan, design or blueprint; (iii) Prior
to importation, the package or kit is sold
to a United States retailer that sells
complete home packages or kits
pursuant to a valid purchase contract
referencing the particular home design
plan or blueprint, and the contract is
signed by a customer not affiliated with
the importer; and (iv) Softwood lumber
products entered as part of the package
or kit, whether in a single entry or
multiple entries on multiple days, and
are to be used solely for the construction
of the single family home specified by
the home design plan, or blueprint
matching the Customs import entry.
For each entry of softwood lumber
products contained in a single family
home package for which the importer
declares that these four requirements are
met, the importer must retain and make
available to Customs upon request the
following documentation:
(1) A copy of the appropriate home
design plan, or blueprint matching the
Customs entry in the United States;
(2) A purchase contract from a retailer
of home kits or packages signed by a
customer not affiliated with the
importer;
(3) A listing of all parts in the package
or kit being entered into the United
States that conforms to the home design
package being imported; and
(4) If a single contract involves
multiple entries, an identification of all
of the items required to be listed under
item (3) that are included in each
individual shipment.
The reporting and recordkeeping
burden for the information required by
Customs has been approved by the OMB
and is addressed in the referenced
Custom’s interim final rule.
Section 1217.26 would define the
term ‘‘softwood’’ to mean one of the
botanical groups of trees that have
needle-like or scale-like leaves, or
conifers.
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Sections 1217.5, 1217.7, 1217.11,
1217.17, 1217.19, 1217.24, 1217.27,
1217.28, 1217.29, and 1217.30 would
define the terms ‘‘conflict of interest,’’
‘‘Department or UDSA,’’ ‘‘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, §§ 1217.40 through 1217.47 of the
proposed Order would detail the
establishment and membership of the
proposed Softwood Lumber Board,
nominations and appointments, the
term of office, removal and vacancies,
procedure, reimbursement and
attendance, powers and duties, and
prohibited activities.
Section 1217.40 would specify the
Board establishment and membership.
The Board would be composed of
manufacturers for the U.S. market who
manufacture and domestically ship or
import 15 million board feet or more of
softwood lumber in the United States
during a fiscal period. Seats on the
Board would be apportioned based on
the volume of softwood lumber
manufactured and shipped within the
United States by domestic
manufacturers and the volume of
softwood lumber imported into the
United States.
The Board would be composed of 18
or 19 members, depending upon
whether an additional importer member
was appointed to the Board. Twelve
members would be domestic
manufacturers and would be allocated
to three regions in the United States
based on the volume of softwood
lumber manufactured in and shipped
from the respective region. Of the 12
members, 6 would be from the U.S.
South Region, 5 would be from the U.S.
West Region, and 1 member would be
from the Northeast and Lake States
Region and any other part of the United
States not included in the southern and
western regions. Specific areas within
each domestic region would be
specified in § 1217.40(b)(1) of the
proposed Order.
Six members would be importers who
import the majority of their softwood
lumber from two regions in Canada and
would be allocated based on the volume
of softwood lumber imported from those
two respective regions. Of the six
Canadian importers, four would
represent the Canadian West Region and
two would represent the Canadian East
Region. Specific areas within each
Canadian region would be specified in
§ 1217.40(b)(2) of the proposed Order.
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Any additional 19th member would
represent a region representing all
countries except Canada.
The volume of softwood lumber
imported from other countries besides
Canada is relatively low, averaging
about 8 percent of total imports from
2007 through 2009. However, all entities
paying assessments to the Board would
have the opportunity to be represented
on the Board. Thus, the BRC
recommended that, if the Secretary, at
the request of the Board or on his or her
own, determines that it would be
consistent with the provisions of the
Act, the Secretary could appoint an
additional importer to the Board to
represent the region outside of the
regions specified for Canada. Nominees
would be solicited as prescribed for
other regions, and all the names of
eligible candidates would be submitted
to the Secretary for consideration. Such
nominees would have to certify that the
majority of their softwood lumber is
imported from the region (which would
include imports from all countries
except Canada).
The BRC 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, based on a 3-year average, the
geographical distribution of the volume
of softwood lumber manufactured and
shipped within the United States by
domestic manufacturers and the volume
of softwood lumber imported into the
United States. If warranted, the Board
would recommend to the Secretary that
the Board membership be reapportioned
appropriately to reflect such changes.
The distribution of volumes between
regions also shall be considered. Any
changes in Board composition would be
implemented by the Secretary through
rulemaking.
Section 1217.41 of the proposed
Order would specify Board nominations
and appointments. The initial
nominations would be submitted to the
Secretary by the BRC. The BRC would
publicize the nomination process, using
trade press or other means it deems
appropriate, and outreach to all
manufacturers for the U.S. market who
domestically ship and/or import 15
million board feet or more of softwood
lumber per fiscal year. The BRC 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
BRC would submit the nominations to
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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 BRC.
Regarding subsequent nominations,
the Board would solicit nominations as
described in the preceding paragraph.
Nominees would have the opportunity
to provide the Board a short background
statement outlining their qualifications
and desire to serve on the Board. They
must domestically ship and/or import
15 million board feet or more of
softwood lumber per fiscal year. Entities
that are both a domestic manufacturer
and an importer could seek nomination
to the Board and vote in the nomination
process described below as either a
domestic manufacturer or an importer,
but not both. Such nominees who
domestically manufacture the majority
of their softwood lumber could seek
nomination and vote as a domestic
manufacturer, and such nominees who
import the majority of their softwood
lumber could seek nomination and vote
as an importer.
Domestic manufacturers who
manufacture softwood lumber in more
than one region could seek nomination
in only the region in which they
manufacture the majority of their
softwood lumber. 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 domestic
manufacturers in each respective region
for a vote. Domestic manufacturers who
manufacture softwood lumber in more
than one region could only vote in the
region in which they manufacture the
majority of their softwood lumber. 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.
Importer nominees would certify that
the majority of their softwood lumber
was imported from the respective region
for which they were seeking
representation on the Board. They
would provide documentation to verify
this if requested by the Board. The
names of importer nominees would then
be placed on a ballot by region. The
ballots along with the background
statements would be mailed to
importers in each respective region for
a vote. Importers who import softwood
lumber from more than one region could
only vote in the region from which they
import the majority of their softwood
lumber. The votes would be tabulated
for each region with the nominee
receiving the highest number of votes at
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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 BRC also recommended that no
two Board members be employed by a
single corporation, company,
partnership, or any other legal entity.
This is to ensure that no one entity has
control on the Board.
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 1217.42 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
selected 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 BRC.
Section 1217.43 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.
If a position became vacant,
nominations to fill the vacancy would
be conducted using the nominations
process as proposed in § 1217.41 of the
Order. A vacancy would not be required
to be filled if the unexpired term is less
than six months.
Section 1217.44 of the proposed
Order would specify procedures of the
Board. A majority of the Board members
(10) would constitute a quorum,
provided that at least three of the
members present were importers and six
were domestic manufacturers. If
participation by telephone or other
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means were permitted, members
participating by such means would
count towards the quorum requirements
or other voting requirements as
authorized under the Order. Proxy
voting would not be permitted. A
motion would carry if supported by 10
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 (12 members for an 18 member
Board and 13 members for a 19 member
Board). If a Board has vacant positions,
recommendations to change the
assessment rate or to adopt a budget
would have to pass by an affirmative
vote of two-thirds of the Board
members, exclusive of the vacant seats.
For example, if a 19 member Board
had a vacancy, there would be 18 Board
members. If the Board held a meeting,
and 9 members were present (of which
6 were domestic manufacturers) in
person and 4 (of which 3 were
importers) participated by telephone,
there would be a quorum (13) for the
meeting. If the Board were voting on the
upcoming year’s budget, 12 members
(.66 × 18 members) would have to vote
in favor of the budget for it to pass.
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
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 10 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.
Section 1217.46 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 create an executive
committee and form other committees
and subcommittees as necessary; to hire
staff or contractors; to provide
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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 a budget to USDA
for approval 60 calendar days prior to
the start of the fiscal year; 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 its
activities to manufacturers for the U.S.
market; to make public an accounting of
funds received and expended; to
receive, investigate and report to the
Secretary complaints of violations of the
Order; and to recommend amendments
to the Order as appropriate.
Section 1217.47 of the proposed
Order would specify prohibited
activities that are common to all
promotion programs authorized under
the 1996 Act. In summary, 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.
Expenses and Assessments
Pursuant to sections 516 and 517 of
the 1996 Act, §§ 1217.50 through
1217.53 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
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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. For
example, the Board could receive
Federal grant funds, subject to approval
by the Secretary, for a specific research
project. 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 8 percent of its
available funds for administration,
maintenance, and the functioning of the
Board. This limitation would begin two
fiscal years after the Board’s first
meeting. Reimbursements to USDA
would not be considered administrative
costs. As an example, if the Board
received $15 million in assessments
during fiscal year 5, and had available
$1 million in reserve funds, the Board’s
available funds would be $16 million. In
this scenario, the Board would be
limited to spending no more than $1.28
million (.08 × $16 million) on
administrative costs. While section 515
of the 1996 Act limits such spending to
15 percent of a board’s budget, the BRC
believes that 8 percent is appropriate.
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
$15 million, it could carry over no more
than $15 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
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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 manufacturers for the U.S. market,
other income, and other funds available
to the Board. The Order would provide
for an initial assessment rate of $0.35
per thousand board feet. Domestic
manufacturers would pay assessments
based on the volume of softwood
lumber shipped within the United
States and importers would pay
assessments based on the volume of
softwood lumber 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. The
assessment rate could be no less than
$0.35 per thousand board feet and no
more than $0.50 per thousand board
feet. Any change in the assessment rate
within this range would be subject to
rulemaking by the Secretary.
Anticipated income generated within
the assessment range is addressed in the
section titled Initial 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 softwood lumber
was shipped. 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 lumber shipped in
January 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
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directly to the Board within 30 calendar
days after importation.
Most of the imported softwood
lumber that would be covered under the
program would have a quantity
associated with it in cubic meters. To
compute the assessments owed, the
quantity of softwood lumber in cubic
meters would have to be converted to
thousand board feet, and then that
number would be multiplied by the
applicable assessment rate. One cubic
meter is equal to 423.776001 board feet.
The factor used to convert one cubic
meter to one thousand board feet is
423.776001 divided by 1,000, or
0.423776001. For example, if 500,000
cubic meters of softwood lumber
covered under the program is imported,
and the assessment rate is $0.35 per
thousand board feet, the assessments
owed would be $74,160.80 (500,000 ×
0.423776001 × $.35).
Some imported lumber covered under
the program may not have a quantity
associated with it. It would include
products like window and door frame
parts. The importer declares an export
price (or value) for the product,
consistent with the SLA of 2008. To
compute the assessments owed for such
product, the value in dollars must be
computed to thousand board feet, and
that quantity must be multiplied by the
applicable assessment rate. The factor
used to convert dollar value to one
thousand board feet is 0.0031746, and is
based on a 10-year average of $315 per
one thousand board feet. For example,
if $500,000 worth of softwood lumber is
imported under the program, and the
assessment rate is $0.35 per thousand
board feet, the assessments owed would
be $555.54 ($500,000 × 0.0031746 ×
$.35).
Additionally, under the program, the
Board could recommend to the
Secretary, upon an affirmative vote of at
least two-thirds of the Board members,
a change in the factor used to convert
value in dollars to one thousand board
feet.
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 four
exemptions. First, manufacturers for the
U.S. market who domestically ship or
import less than 15 million board feet
during a fiscal year would be exempt
from paying assessments. Domestic
manufacturers and importers would
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apply to the Board for an exemption
prior to the start of the fiscal year. This
would be an annual exemption; entities
would have to reapply each year. They
would have to certify that they expect
to domestically ship or import less than
15 million board feet for the applicable
fiscal year. The Board could request past
shipment or import data to support the
exemption request. The Board would
then issue, if deemed appropriate, a
certificate of exemption to the eligible
manufacturer for the U.S. market.
Once approved, domestic
manufacturers would not have to pay
assessments to the Board for the
applicable fiscal year. Approved
importers 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.
Manufacturers for the U.S. market
who did not apply to the Board for an
exemption and domestically shipped or
imported less than 15 million board feet
of softwood lumber 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. Board staff would
determine the assessments paid and
refund the domestic manufacturer
accordingly. On the other hand,
manufacturers for the U.S. market who
receive an exemption certificate but
domestically ship or import more than
15 million board feet of softwood
lumber 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.
If an entity is a domestic
manufacturer and importer of softwood
lumber, such entity’s domestic
shipments and imports would count
towards the 15 million board footexemption. For example, if an entity
domestically ships 12 million board feet
and imports 10 million board feet
during a fiscal year, the entity would
pay assessments on 7 million board feet
of softwood lumber.
The Board could recommend
additional procedures to administer the
exemption as appropriate. Any
procedures would be implemented
through rulemaking by the Secretary.
The second exemption under the
proposed Order would be for
manufacturers for the U.S. market who
domestically ship or import more than
15 million board feet of softwood
lumber annually. Domestic
manufacturers would not pay
assessments on their first 15 million
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board feet of softwood lumber shipped
during the applicable fiscal year.
Importers would receive a refund from
the Board for the applicable assessments
collected by Customs no later than 60
calendar days after receipt of such
assessments by the Board.
The third exemption under the
proposed Order would be for exports, or
shipments of softwood lumber by
domestic manufacturers to locations
outside of the United States. The Board
would develop procedures for approval
by USDA for refunding assessments that
may be inadvertently paid on such
shipments and establish any necessary
safeguards as appropriate. Safeguard
procedures would be implemented by
the Secretary through rulemaking. If the
Board determined that exports should
be assessed, it would make that
recommendation to the Secretary. Any
such action would be implemented by
USDA through rulemaking.
The fourth exemption under the
proposed Order would be for organic
lumber. A domestic manufacturer who
operates under an approved National
Organic Program (NOP) (7 CFR part 205)
system plan, only manufactures and
ships softwood lumber that is eligible to
be labeled as 100 percent organic under
the NOP and is not a split operation
would be exempt from payment of
assessments. Likewise, an importer who
imports only softwood lumber that is
eligible to be labeled as 100 percent
organic under the NOP and who does
not import any nonorganic softwood
lumber would be exempt from the
payment of assessments.
Promotion, Research and Information
Pursuant to section 516 of the 1996
Act, §§ 1217.60 through 1217.62 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
programs, plans and projects regarding
promotion, research, education, and
other activities, including consumer and
industry information and advertising
designed to, among other things, build
markets for softwood lumber, enhance
the image and reputation of softwood
lumber and the forests from which it
comes, and develop new applications
for softwood lumber. The Board would
be required to evaluate each plan and
program to ensure that it contributes to
an effective promotion program.
Softwood lumber of all origins would
have to be treated equally by the Board,
and no program, plan, or project could
be false, misleading, or disparage
against another agricultural commodity.
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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. 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, §§ 1217.70 through 1217.72 specify
the reporting and recordkeeping
requirements under the proposed Order
as well as requirements regarding
confidentiality of information.
Manufacturers for the U.S. market
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; the board feet of
softwood lumber shipped within the
United States; the board feet of softwood
lumber for which assessments were
paid; and the board feet of softwood
lumber that was exported.
Manufacturers would submit this report
at the same time they remit their
assessments to the Board. Domestic
manufacturers who received a certificate
of exemption from the Board would not
have to submit such a report to the
Board. However, exempt domestic
manufacturers who shipped over the
exemption threshold of 15 million board
feet during the fiscal year would have to
submit such reports to the Board with
the payment of assessments on a
quarterly basis as specified in § 1217.53.
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 board feet of
softwood lumber imported to the United
States; the board feet of softwood
lumber for which assessments were
paid; and country of export for such
softwood lumber. 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
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because Customs would collect this
information upon entry.
Additionally, manufacturers for the
U.S. market, 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 for the U.S.
market 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 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.
jlentini on DSKJ8SOYB1PROD with PROPOSALS2
Miscellaneous Provisions
Referenda
Pursuant to section 518 of the 1996
Act, § 1217.81(a) of the proposed Order
specifies that the program would not go
into effect unless it is approved by a
majority of domestic manufacturers and
importers voting in a referendum who
also represent a majority of the volume
of softwood lumber represented in the
referendum who, during a
representative period determined by the
Secretary, were engaged in the domestic
manufacturing or importation of
softwood lumber into the United States.
For example, if 500 domestic
manufacturers and importers
representing 100 million board feet of
softwood lumber voted in a referendum,
251 domestic manufacturers and
importers representing over 50 million
board feet would have to vote in favor
of the Order for it to pass in the
referendum.
Section 1217.81(b) of the proposed
Order specifies criteria for subsequent
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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 5 years after the Order
becomes effective, and every 5 years
thereafter, to determine whether
domestic manufacturers and importers
favor continuation of the Order. The
Order would continue if favored by a
majority of domestic manufacturers and
importers voting in the referendum that
also represented a majority of the
volume of softwood lumber 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 1217.80 and §§ 1217.82
through 1217.88 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 program
authorized under the 1996 Act.
Initial Regulatory Flexibility Act
Analysis
In accordance with the Regulatory
Flexibility Act (RFA) (5 U.S.C. 601–
612), AMS is required to examine the
impact of the proposed rule on small
entities. Accordingly, AMS has
considered the economic impact of this
action on small entities.
The purpose of the RFA is to fit
regulatory actions to the scale of
businesses subject to such actions so
that small businesses will not be
disproportionately burdened. The 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
(domestic manufacturers and importers)
as those having annual receipts of no
more than $7.0 million.
According to USDA’s Forest Service,
it is estimated that, between 2007 and
2009, there were an average of 595
domestic manufacturers of softwood
lumber in the United States annually.14
This number represents separate
14 Spelter,
McKeever and Toth, Profile 2009, p.
15.
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business entities; one business entity
may include multiple sawmills. Using
an average price of $280 per thousand
board feet, a domestic manufacturer
who ships less than 25 million board
feet per year would be considered a
small entity. It is estimated that,
between 2007 and 2009, about 363
domestic manufacturers, or about 61
percent 15, shipped less than 25 million
board feet annually.
Likewise, according to Customs data,
it is estimated that, between 2007 and
2009, there were about 883 importers of
softwood lumber annually. About 798
importers, or about 90 percent, imported
less than $7.0 million worth of softwood
lumber annually. Thus, the majority of
domestic manufacturers and importers
of softwood lumber would be
considered small entities.
Regarding value of the commodity,
with domestic production averaging
29.5 billion board feet (2007 and 2008),
and using an average price for those
years of $268 per thousand board feet 16,
the average annual value for softwood
lumber is about $7.9 billion. According
to Customs data, the average annual
value for softwood lumber imports for
2007 and 2008 is about $4.7 billion.
This rule invites comments on a
proposed industry-funded research,
promotion, and information program for
softwood lumber. Softwood lumber is
used in products like flooring, siding
and framing. The program would be
financed by an assessment on softwood
lumber domestic manufacturers and
importers and would be administered
by a board of industry members selected
by the Secretary. The initial assessment
rate would be $0.35 per thousand board
feet shipped within or imported to the
United States and could be increased to
$0.50 per thousand board feet. Entities
that ship or import less than 15 million
board feet would be exempt along with
shipments exported outside of the
United States. No entity would pay
assessments on the first 15 million
board feet shipped or imported. The
purpose of the program would be to
strengthen the position of softwood
lumber in the marketplace, maintain
and expand markets for softwood
lumber, and develop new uses for
softwood lumber within the United
States. A referendum would be held
among eligible domestic manufacturers
and importers to determine whether
15 Percentages were obtained from the American
Lumber Standard Committee, Inc. (ALSC). The
ALSC administers an accreditation program for the
grademarking of lumber produced under the
American Softwood Lumber Standard (Voluntary
Product Standard 20).
16 Spelter, McKeever and Toth, Profile 2009, p. 2–
5.
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they favor implementation of the
program prior to it going into effect. A
majority of entities by both number and
volume would have to support the
program for it to be implemented. The
program is authorized under the 1996
Act.
Regarding the economic impact of the
proposed Order on affected entities,
softwood lumber domestic
manufacturers and importers would be
required to pay assessments to the
Board. As previously mentioned, the
initial assessment rate would be $0.35
per thousand board feet shipped within
or imported to the United States and
could be increased to no more than
$0.50 per thousand board feet.
The Order would provide for an
exemption for domestic manufacturers
and importers who ship or import less
than 15 million board feet annually. Of
the 595 domestic manufacturers, it is
estimated that about 232, or 39 percent,
ship less than 15 million board feet per
year and would thus be exempt from
paying assessments under the proposed
Order. Of the 883 importers, it is
estimated that about 780, or 88 percent,
import less than 15 million board feet
per year and would also be exempt from
paying assessments. Thus, about 363
domestic manufacturers and 103
importers would pay assessments under
the Order. It is estimated that if $17.5
million were collected in assessments
($0.35 per thousand board feet
assessment rate with 50 billion board
feet assessed), 25 percent, or about $4
million, would be paid by importers and
75 percent, or about $13 million, would
be paid by domestic manufacturers.
Regarding the impact on the industry
as a whole, the proposed program is
expected to grow markets for softwood
lumber by stopping the erosion of
market share in single family residential
market, increasing the market share in
multi-family residential construction,
significantly increasing the use of
softwood lumber in non-residential
markets, and rebuilding softwood
lumber’s share in the outdoor living
market. The BRC estimates the longterm market growth opportunity in the
non-residential market and the raised
wood segment of the residential market
is between 10 and 12 billion board feet.
USDA’s Forest Service in a 2007 study
estimated a more conservative potential
growth at around 8 billion board feet.17
While the benefits of the proposed
program are difficult to quantify, the
benefits are expected to outweigh the
program’s costs.
Regarding alternatives, the BRC
considered various options to the
proposed range in assessment rates and
options to the proposed exemption. The
BRC believes that $20 million in
assessment income is the threshold for
an effective program that could help to
improve the market for softwood
lumber. Table 3 below shows the range
in assessments projected at various
industry shipment levels per year.
TABLE 3—PROJECTED INCOME GENERATED AT VARIOUS ASSESSMENT RATES AND SHIPMENT LEVELS 1
Annual shipment levels
(billion board feet)
Assessment options
(per thousand board feet)
40
$0.25 ..............................................
$0.35 ..............................................
$0.50 ..............................................
1 Assumes
50
60
$10 million ....................................
$14 million ....................................
$20 million ....................................
$12.5 million .................................
$17.5 million .................................
$25 million ....................................
$15 million
$21 million
$30 million
no exemption.
Regarding exemption levels, the BRC
explored projected assessment income
at exemption levels of 15, 20, and 30
million board feet. With a 15 million
board foot exemption, the BRC projected
a deduction of 11.3 percent in
assessment income. Table 4 below
shows the BRC’s projected income
levels at various assessment options in
light of the proposed 15 million board
foot exemption.
TABLE 4—PROJECTED INCOME GENERATED AT VARIOUS ASSESSMENT RATES AND SHIPMENT LEVELS 1
Annual shipment levels
(billion board feet)
Assessment options
(per thousand board feet)
40
$0.25 ..............................................
$0.35 ..............................................
$0.50 ..............................................
jlentini on DSKJ8SOYB1PROD with PROPOSALS2
1 Assumes
50
60
$8.9 million ...................................
$12.4 million .................................
$17.7 million .................................
$11.1 million .................................
$15.5 million .................................
$22.2 million .................................
$13.3 million
$18.9 million
$26.6 million
15 million board foot exemption.
Ultimately the BRC concluded that an
assessment rate range of $0.35 to a
maximum of $0.50 per thousand board
feet with an exemption threshold of 15
million board feet was appropriate and
would generate sufficient income to
support an effective promotion program
for softwood lumber. At an initial
assessment rate of $0.35 per thousand
board feet, the BRC projects assessment
income between $12.4 million and
almost $19 million with shipment levels
ranging from 40 to 60 billion board feet,
respectively.
The industry explored the merits of a
voluntary promotion program. Over the
years, the industry organized various
public outreach, education and
promotion campaigns funded through
voluntary assessments. Although some
were partially effective, none fully
accomplished their objectives and the
gains either disappeared quickly or
eroded over time once the campaigns
were terminated.
This action would impose additional
reporting and recordkeeping burden on
17 Spelter, H.D. McKeever, M. Alderman, Profile
2007: Softwood Sawmills in the United States and
Canada, USDA, p. 10.
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domestic manufacturer and importers of
softwood lumber. Domestic
manufacturers and importers interested
in serving on the Board may 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, domestic
manufacturers and importers would
have the opportunity to cast a ballot and
vote for candidates to serve on the
Board. Domestic 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, domestic manufacturers
and importers who ship or import less
than 15 million board feet annually
could submit a request to the Board for
an exemption from paying assessments
on this volume. Domestic manufacturers
and importers would also be asked to
submit a report regarding their
shipments/imports that would
accompany their assessments paid to
the Board. Domestic 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, domestic manufacturers and
importer who wanted 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 are being
submitted to the OMB for approval
under OMB Control No. 0581–NEW.
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, as
previously mentioned, the Endowment
conducted a study to assess the
feasibility of a softwood lumber research
and promotion program. According to
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the BRC, at the beginning of the study
(early 2008), in-depth interviews were
conducted among North American
softwood lumber industry leaders to
explore the level of interest in a generic
promotion program to help grow the
market for softwood lumber. A sample
of 35 companies was selected which
was intended to reflect various levels of
size and ownership types. Of the 35
companies surveyed, 86 percent by
number representing 54 percent of the
volume favored exploring a mandatory
promotion program for softwood
lumber.
In early 2009, the BRC was formed
and began a comprehensive process to
develop a program. According to the
BRC, its membership is diverse and
represents 44 percent of softwood
lumber shipments within the U.S.
market. Efforts were made to inform
various associations throughout the
country through presentations at their
meetings.
While USDA has performed this
initial RFA analysis regarding the
impact of the proposed rule on small
entities, in order to have as much data
as possible for a more comprehensive
analysis, we invite comments
concerning potential effects. USDA is
also requesting comments regarding the
number and size of entities covered
under the proposed Order.
Paperwork Reduction Act
In accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C.
Chapter 35), AMS announces its
intention to request an approval of a
new information collection and
recordkeeping requirements for the
proposed lumber 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:
Awaiting renewal.
Title: National Research, Promotion,
and Consumer Information Programs.
OMB Number: 0581–NEW.
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 softwood lumber
industry. The program would be
financed by an assessment on softwood
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lumber domestic manufacturers and
importers and would be administered
by a board of industry members selected
by the Secretary. The program would
provide for an exemption for the first 15
million board feet of softwood lumber
shipped by domestic manufacturers
within the United States or imported
into the United States during the year.
A referendum would be held among
eligible domestic 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 help build
the market for softwood lumber.
In summary, the information
collection requirements under the
program concern Board nominations,
the collection of assessments, and
referenda. For Board nominations,
domestic 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, domestic
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, domestic
manufacturers and importers who ship
or import less than 15 million board feet
annually could submit a request,
‘‘Application for Exemption from
Assessments,’’ to the Board for an
exemption from paying assessments.
Domestic manufacturers and importers
would be asked to submit a ‘‘Shipment/
Import Report’’ that would accompany
their assessments paid to the Board and
report the quantity of softwood lumber
shipped domestically or imported
during the applicable period, the
quantity exported from the United
States, the quantity for which
assessments were paid, and the country
of export (for imports). Domestic
manufacturers who ship less than 15
million board feet annually and are
exempt from paying assessments 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.
As previously mentioned, the majority
of importer assessments would be
collected by Customs. Customs would
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remit the funds to the Board and the
other information would be available
from Customs (i.e., country of export,
quantity of softwood lumber 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. Importers could also
request a refund of any assessments
paid to Customs.
There would also be an additional
burden on domestic manufacturers and
importers voting in referenda. The
referendum ballot, which represents the
information collection requirement
relating to referenda, is addressed in a
proposed rule on referendum
procedures which is published
separately in this issue of the Federal
Register.
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: Domestic manufacturers
and importers.
Estimated Number of Respondents:
50.
Estimated Number of Responses per
Respondent: 1.
Estimated Total Annual Burden on
Respondents: 12.5 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: Domestic manufacturers
and importers.
Estimated Number of Respondents:
50.
Estimated Number of Responses per
Respondent: 1.
Estimated Total Annual Burden on
Respondents: 12.5 hours.
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(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:
300.
Estimated Number of Responses per
Respondent: 1.
Estimated Total Annual Burden on
Respondents: 75 hours.
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(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: Domestic manufacturers
and importers.
Estimated number of Respondents: 13
(38 for initial nominations to the Board,
0 for the second year, and up to 13
annually thereafter).
Estimated number of Responses per
Respondent: 1 every 3 years. (0.3)
Estimated Total Annual Burden on
Respondents: 19 hours for the initial
nominations to the Board, 0 hours for
the second year of operation, and up to
6.5 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
domestic manufacturer or importer
reporting on softwood lumber shipped
domestically or imported. Upon
approval of an application, domestic
manufacturers and importers would
receive exemption certification.
Respondents: Domestic manufacturers
(232) and importers (780) who ship
domestically or import less than 15
million board feet of softwood lumber
annually.
Estimated number of Respondents:
1,012.
Estimated number of Responses per
Respondent: 1.
Estimated Total Annual Burden on
Respondents: 253 hours.
(6) Shipment/Import Report
Estimate of Burden: Public reporting
burden for this collection of information
is estimated to average 0.5 hour per
domestic manufacturer or importer.
Respondents: Domestic manufacturers
who ship over 15 million board feet
annually (363) and importers who remit
their assessments directly to the Board
(assume 5 percent of 103 importers, or
5).
Estimated number of Respondents:
368.
Estimated number of Responses per
Respondent: 4.
Estimated Total Annual Burden on
Respondents: 736 hours.
(7) 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 domestic
manufacturers and importers.
Estimated Number of Respondents: 1.
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61015
Estimated Number of Responses per
Respondent: 1.
Estimated Total Annual Burden on
Respondents: 0.5 hour.
(8) Refund of Assessments Paid on
Organic Softwood Lumber
Estimate of Burden: Public reporting
burden for this collection of information
is estimated to average 0.25 hour.
Respondents: Organic importers.
Estimated Number of Respondents: 1.
Estimated Number of Responses per
Respondent: 1.
Estimated Total Annual Burden on
Respondents: 0.25 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: Domestic
manufacturers (595) and importers
(883).
Estimated number of recordkeepers:
1,478.
Estimated total recordkeeping hours:
739 hours.
As noted above, under the proposed
program, domestic 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
domestic manufacturers and importers,
information required under the
proposed Order could be compiled from
records currently maintained. Such
records shall be retained for at least two
years beyond the fiscal year of their
applicability.
An estimated 1,478 respondents
would provide information to the Board
(595 domestic manufacturers and 883
importers). The estimated cost of
providing the information to the Board
by respondents would be $24,387. This
total has been estimated by multiplying
739 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 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.
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The proposed forms would require
the minimum information necessary to
effectively carry out the requirements of
the program, and their use is necessary
to fulfill the intent of the 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 domestic
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.
Request for Public Comment Under the
Paperwork Reduction Act
Comments are invited 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 softwood lumber; (d) the
accuracy of USDA’s estimate of the
number of domestic manufacturers and
importers of softwood lumber 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.
Comments concerning the
information collection requirements
contained in this action should
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reference OMB No. 0581–NEW. In
addition, the docket number, date, and
page number of this issue of the Federal
Register also should be referenced.
Comments should be sent to the same
addresses referenced in the ADDRESSES
section of this rule.
OMB is required to make a decision
concerning the collection of information
contained in this rule between 30 and
60 days after publication. Therefore, a
comment to OMB is best assured of
having its full effect if OMB receives it
within 30 days of publication.
USDA made modifications to the
proponent’s proposal to conform with
other similar national research and
promotion programs implemented
under the 1996 Act.
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
domestic manufacturers and importers
voting for approval in a referendum who
also represent a majority of the volume
of softwood lumber represented in the
referendum. Referendum procedures
will be published separately in this
issue of the Federal Register.
A 60-day comment period is provided
to allow interested persons to respond
to this proposal. All written comments
received in response to this rule by the
date specified will be considered prior
to finalizing this action.
1217.7 Department or USDA.
1217.8 Domestic manufacturer.
1217.9 Export.
1217.10 Fiscal period or year.
1217.11 Importer.
1217.12 Information.
1217.13 Manufacture.
1217.14 Manufacturer for the U.S. market.
1217.15 Marketing.
1217.16 Nominal size.
1217.17 Order.
1217.18 Part and subpart.
1217.19 Person.
1217.20 Planing.
1217.21 Programs, plans and projects.
1217.22 Promotion.
1217.23 Research.
1217.24 Secretary.
1217.25 Softwood lumber.
1217.26 Softwoods.
1217.27 State.
1217.28 Suspend.
1217.29 Terminate.
1217.30 United States.
List of Subjects in 7 CFR Part 1217
1217.60 Programs, plans and projects.
1217.61 Independent evaluation.
1217.62 Patents, copyrights, inventions,
product formulations, and publications.
Administrative practice and
procedure, Advertising, Consumer
information, Marketing agreements,
Softwood Lumber promotion, Reporting
and recordkeeping requirements.
For the reasons set forth in the
preamble, it is proposed that Title 7,
Chapter XI of the Code of Federal
Regulations be amended by adding part
1217 to read as follows:
PART 1217—SOFTWOOD LUMBER
RESEARCH, PROMOTION,
CONSUMER EDUCATION AND
INDUSTRY INFORMATION ORDER
Subpart A—Softwood Lumber Research,
Promotion, Consumer Education and
Industry Information Order
Definitions
Sec.
1217.1 Act.
1217.2 Blue Ribbon Commission or BRC.
1217.3 Board.
1217.4 Board foot.
1217.5 Conflict of interest.
1217.6 Customs.
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Softwood Lumber Board
1217.40
1217.41
1217.42
1217.43
1217.44
1217.45
1217.46
1217.47
Establishment and membership.
Nominations and appointments.
Term of office.
Removal and vacancies.
Procedure.
Reimbursement and attendance.
Powers and duties.
Prohibited activities.
Expenses and Assessments
1217.50
1217.51
1217.52
1217.53
Budget and expenses.
Financial statements.
Assessments.
Exemption from assessment.
Promotion, Research and Information
Reports, Books, and Records
1217.70
1217.71
1217.72
Reports.
Books and records.
Confidential treatment.
Miscellaneous
1217.80 Right of the Secretary.
1217.81 Referenda.
1217.82 Suspension or termination.
1217.83 Proceedings after termination.
1217.84 Effect of termination or
amendment.
1217.85 Personal liability.
1217.86 Separability.
1217.87 Amendments.
1217.88 OMB control numbers.
Subpart B—[Reserved]
Authority: 7 U.S.C. 7411–7425; 7 U.S.C.
7401.
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§ 1217.8
Subpart A—Softwood Lumber
Research, Promotion, Consumer
Education, and Industry Information
Order
Definitions
§ 1217.1
Act.
Act means the Commodity Promotion,
Research, and Information Act of 1996
(7 U.S.C. 7411–7425), and any
amendments thereto.
§ 1217.2
Blue Ribbon Commission.
Blue Ribbon Commission or BRC
means the 21-member committee
representing businesses that
manufacture softwood lumber in the
United States or import softwood
lumber to the United States formed to
pursue an industry research, promotion,
and information program.
§ 1217.3
Board.
Board or Softwood Lumber Board
means the administrative body
established pursuant to § 1217.40, or
such other name as recommended by
the Board and approved by the
Department.
§ 1217.4
§ 1217.9
§ 1217.10
Board foot.
§ 1217.5
§ 1217.12
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.
Customs.
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Customs means the United States
Customs and Border Protection or U.S.
Customs Service, an agency of the
United States Department of Homeland
Security.
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.
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Fiscal period or year.
Fiscal period or year means a calendar
year from January 1 through December
31, or such other period as
recommended by the Board and
approved by the Secretary.
§ 1217.11
§ 1217.7
Export.
Export means to manufacture and
ship softwood lumber from within the
United States to locations outside of the
United States.
Board foot or BF means a unit of
measurement of softwood lumber
represented by a board 12-inches long,
12-inches wide, and 1-inch thick or its
cubic equivalent. A board foot
calculation for softwood lumber 1 inch
or more in thickness is based on its
nominal thickness and width and the
actual length. Softwood lumber with a
nominal thickness of less than 1 inch is
calculated as 1 inch.
§ 1217.6
Domestic manufacturer.
Domestic manufacturer means any
person who is a first handler and is
engaged in the manufacturing, sale and
shipment of softwood lumber in the
United States during a fiscal period and
who owns, or shares the ownership and
risk of loss of manufacturing of
softwood lumber or a person who is
engaged in the business of
manufacturing, or causes to be
manufactured, sold and shipped such
softwood lumber in the United States
beyond personal use. This term does not
include any person who remanufactures softwood lumber that has
already been subject to assessment
under this Order.
Importer.
Importer means any person who
imports softwood lumber 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 softwood lumber 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 softwood lumber.
Information.
Manufacture.
Manufacture means the process of
transforming softwood logs into
softwood lumber.
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Manufacturer for the U.S.
Manufacturer for the U.S. market
means domestic manufacturers and
importers of softwood lumber as defined
in this Order.
§ 1217.15
Marketing.
Marketing means the sale or other
disposition of softwood lumber in
interstate, foreign, or intrastate
commerce.
§ 1217.16
Nominal size.
Nominal size means the size by which
softwood lumber is known and sold in
the marketplace that differs from actual
size and is based on the thickness and
width of a board when it is first cut from
a log, or rough cut, prior to drying and
planing.
§ 1217.17
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.
§ 1217.18
Part and subpart.
Part means the Softwood Lumber
Research, Promotion, Consumer
Education, and Industry 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.
§ 1217.19
Person.
Person means any individual, group
of individuals, partnership, company,
corporation, association, affiliate,
cooperative, or any other legal entity.
§ 1217.20
Information means activities or
programs designed to disseminate the
results of research, new and existing
marketing programs, new and existing
marketing strategies, new and existing
uses and applications, and to enhance
the image of softwood lumber and the
forests from which it comes. These
include:
(a) Consumer education, which means
any action taken to provide information
to, and broaden the understanding of,
the general public regarding softwood
lumber; and
(b) Industry information, which
means information and programs that
would enhance the image of the
softwood lumber industry.
§ 1217.13
§ 1217.14
market.
61017
Planing.
Planing means the act of smoothing
the surface of a board to make the wood
a uniform size.
§ 1217.21
Programs, plans and projects.
Programs, plans and projects mean
those research, promotion and
information programs, plans, or projects
established pursuant to this Order.
§ 1217.22
Promotion.
Promotion means any action taken,
including paid advertising, public
relations and other communications,
and promoting the results of research,
that presents a favorable image of
softwood lumber to the public and to
any and all consumers and those who
influence consumption of softwood
lumber with the intent of improving the
perception, markets and competitive
position of softwood lumber and
stimulating sales of softwood lumber.
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§ 1217.23
Federal Register / Vol. 75, No. 190 / Friday, October 1, 2010 / Proposed Rules
Research.
§ 1217.30
Research means any activity that
advances the position of softwood
lumber in the marketplace that includes
any type of test, study, or analysis
designed to advance the image,
desirability, use, marketability, sales,
product development, or quality of
softwood lumber; new applications;
improving softwood lumber’s position
in building and fire codes; softwood
lumber product testing and safety; and
evaluating the effectiveness of market
development and promotion efforts
including life cycle studies, forestry,
sustainable forest management,
environmental preferrability,
competitiveness, efficiency, pest and
disease control, water quality and other
management aspects of forestry and the
forests from which softwood lumber
originates.
§ 1217.24
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.
§ 1217.25
Softwood lumber.
Softwood lumber means all softwood
lumber and softwood lumber products
described in section 804(a) of Title VIII
of the Tariff Act of 1930, as amended
(19 U.S.C. 1202–1683g). This definition
does not include those products
excluded or excepted under sections
804(b) and (c) of that Act.
§ 1217.26
Softwood.
Softwood means one of the botanical
groups of trees that have needle-like or
scale-like leaves, or conifers.
§ 1217.27
State.
State means any of the several 50
States of the United States, the District
of Columbia, the Commonwealth of
Puerto Rico, and the territories and
possessions of the United States.
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§ 1217.28
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.
§ 1217.29
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.
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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.
Softwood Lumber Board
§ 1217.40
Establishment and membership.
(a) Establishment of the Board. There
is hereby established a Softwood
Lumber Board to administer the terms
and provisions of this Order and
promote the use of softwood lumber.
The Board shall be composed of
manufacturers for the U.S. market who
manufacture and domestically ship or
import 15 million board feet or more of
softwood lumber in the United States
during a fiscal period. Seats on the
Board shall be apportioned based on the
volume of softwood lumber
manufactured and shipped within the
United States by domestic
manufacturers and the volume of
softwood lumber imported into the
United States.
(b) The Board shall be composed of 18
or 19 members, depending upon
whether an additional importer member
is appointed to the Board, pursuant to
paragraph (b)(2)(iii) of this section. The
Board shall be established as follows:
(1) Domestic manufacturers. Twelve
members shall be domestic
manufacturers from the following three
regions:
(i) Six members shall be from the U.S.
South Region, which consists of the
States of Alabama, Arkansas, Florida,
Georgia, Louisiana, Mississippi, North
Carolina, Oklahoma, South Carolina,
Tennessee, and Texas;
(ii) Five members shall be from the
U.S. West Region, which consists of the
States of Alaska, Arizona, California,
Colorado, Hawaii, Idaho, Montana,
Nevada, New Mexico, North Dakota,
Oregon, South Dakota, Utah,
Washington, and Wyoming; and
(iii) One member shall be from the
Northeast and Lake States Region,
which consists of the States of
Connecticut, Delaware, Illinois, Indiana,
Iowa, Kansas, Kentucky, Maine,
Maryland, Massachusetts, Michigan,
Minnesota, Missouri, Nebraska, New
Hampshire, New Jersey, New York,
Ohio, Pennsylvania, Rhode Island,
Virginia, Vermont, West Virginia,
Wisconsin, and all other parts of the
United States not listed in paragraphs
(b)(1)(i), (b)(1)(ii), or (b)(1)(iii) of this
section.
(2) Importers. Six members shall be
importers who represent the following
regions and import the majority of their
softwood lumber from the respective
region:
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(i) Four members shall import
softwood lumber from the Canadian
West Region, which consists of the
provinces of British Columbia and
Alberta; and
(ii) Two members shall import
softwood lumber from the Canadian
East Region, which consists of the
Canadian territories and all other
Canadian provinces not listed in
paragraph (b)(2)(i) of this section that
import softwood lumber into the United
States.
(iii) If the Secretary, at the request of
the Board or on his or her own,
determines that it would be consistent
with the provisions of the Act, the
Secretary may appoint an additional
importer to the Board to represent a
region not otherwise specified in
paragraphs (b)(2)(i) and (b)(2)(ii) of this
section. Nominees would be solicited as
prescribed in paragraph (b) of § 1217.41,
or in the case of the Secretary acting on
his or her own will be handled by the
Secretary, and all the names of eligible
candidates would be submitted to the
Secretary for consideration. Such
nominees must certify that the majority
of their softwood lumber is imported
from such region. In addition,
representation for the region not
otherwise specified in paragraphs (b)(i)
and (ii) of this section would be subject
to the Board review and
reapportionment provided for in
paragraph (c) of this section.
(c) In each five-year period, but not
more frequently than once in each threeyear period, the Board shall:
(1) Review, based on a three-year
average, the geographical distribution of
the volume of softwood lumber
manufactured and shipped within the
United States by domestic
manufacturers and the volume of
softwood lumber imported into the
United States; and
(2) If warranted, recommend to the
Secretary the reapportionment of the
Board membership to reflect changes in
the geographical distribution of the
volume of softwood lumber
manufactured and shipped within the
United States by domestic
manufacturers and the volume of
softwood lumber imported into the
United States. The destination of
volumes between regions also shall be
considered. Any changes in Board
composition shall be implemented by
the Secretary through rulemaking.
§ 1217.41
Nominations and appointments.
(a) Initial nominations will be
submitted to the Secretary by the Blue
Ribbon Commission. Before considering
any nominations, the BRC shall
publicize the nomination process, using
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trade press or other means it deems
appropriate, and shall outreach to all
manufacturers for the U.S. market who
domestically manufacture and/or import
15 million board feet or more of
softwood lumber per fiscal year in order
to generate nominees that reflect the
different operations within the softwood
lumber industry. The BRC may use
regional caucuses, mail or other
methods to elicit potential nominees.
The BRC shall submit the nominations
to the Secretary and recommend two
nominees for each Board position
specified in paragraphs (b)(1) and
(b)(2)(i) and (b)(2)(ii) of § 1217.40. All
nominees solicited pursuant to
§ 1217.40(b)(2)(iii) shall be submitted to
the Secretary through the BRC. From the
nominations submitted by the BRC, the
Secretary shall select the members of
the Board.
(b) Subsequent nominations shall be
conducted as follows:
(1) The Board shall outreach to all
segments of the softwood lumber
industry. Subsequent nominees must
domestically manufacture and/or import
15 million board feet or more of
softwood lumber per fiscal year;
(2) Domestic manufacturers and
importer nominees may provide the
Board a short background statement
outlining their qualifications to serve on
the Board;
(3) Nominees that are both a domestic
manufacturer and an importer may seek
nomination to the Board and vote in the
nomination process as either a domestic
manufacturer or an importer, but not
both: Provided, That, such nominees
who domestically manufacture the
majority of their softwood lumber may
seek nomination and vote as a domestic
manufacturer, and such nominees who
import the majority of their softwood
lumber may seek nomination and vote
as an importer. Such nominees must
domestically manufacture and import
15 million board feet or more of
softwood lumber per fiscal year;
(4) Domestic manufacturers who
manufacture softwood lumber in more
than one region may seek nomination
only in the region in which they
manufacture the majority of their
softwood lumber. The names of
domestic manufacturer nominees shall
be placed on a ballot by region. The
ballots along with the background
statements shall be mailed to domestic
manufacturers in each respective region
for a vote. Domestic manufacturers who
manufacture softwood lumber in more
than one region may only vote in the
region in which they manufacture the
majority of their softwood lumber. The
votes shall be tabulated for each region
with the nominee receiving the highest
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number of votes 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) Importer nominees shall certify
that the majority of their softwood
lumber is imported from the respective
region for which they are seeking to
represent on the Board and shall
provide documentation to verify this if
requested by the Board. The names of
importer nominees shall be placed on a
ballot by region. The ballots along with
the background statements shall be
mailed to importers in each respective
region for a vote. Importers who import
softwood lumber from more than one
region may only vote in the region from
which they import the majority of their
softwood lumber. The votes shall 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 shall be
submitted to the Secretary.
(6) The Board must submit
nominations to the Secretary at least six
months before the new Board term
begins. From the nominations submitted
by the Board, the Secretary shall select
the members of the Board;
(7) No two members shall be
employed by a single corporation,
company, partnership, or any other legal
entity; and
(8) 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.
§ 1217.42
Term of office.
(a) With the exception of the initial
Board, each Board member will serve a
three-year term or until the Secretary
selects his or her successor. Each term
of office shall begin on January 1 and
end on December 31. No member may
serve more than two consecutive terms,
excluding any term of office less than
three years.
(b) For the initial board, the terms of
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
Blue Ribbon Commission.
§ 1217.43
Removal and vacancies.
(a) In the event that any member of
the Board ceases to work for or be
affiliated with a domestic manufacturer
or importer or ceases to do business in
the region he or she represents, such
position shall become vacant.
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61019
(b) The Board may recommend to the
Secretary that a member be removed
from office if the member consistently
refuses to perform his or her duties or
engages in dishonest acts or willful
misconduct. The Secretary may remove
the member if he or she finds that the
Board’s recommendation shows
adequate cause. Further, without
recommendation of the Board, a
member may be removed by the
Secretary upon showing of adequate
cause, including the failure by a
member to submit reports or remit
assessments required under this part, if
the Secretary determines that such
member’s continued service would be
detrimental to the achievement of the
purposes of the Act.
(c) If a position becomes vacant,
nominations to fill the vacancy will be
conducted using the nominations
process set forth in this Order. A
vacancy will not be required to be filled
if the unexpired term is less than six
months.
§ 1217.44
Procedure.
(a) A majority of the Board members
(10) will constitute a quorum so long as
at least three of the members present are
importer members and six of the
members present are domestic
manufacturers. If participation by
telephone or other means is permitted,
members participating by such means
shall count as present in determining
quorum or other voting requirements set
forth in this section.
(b) All votes at meetings of the Board
and executive committee will be cast in
person or by electronic voting or other
means as the Board and Secretary deem
appropriate to allow members
participating by telephone or other
electronic means to cast votes. Voting by
proxy will not be allowed.
(c) Each member of the Board will be
entitled to one vote on any matter put
to the Board and the motion will carry
if supported by 10 Board members,
except for recommendations to change
the assessment rate or to adopt a budget,
both of which require affirmation by at
least two-thirds (12 members for an 18
member Board and 13 members for a 19
member Board) of the Board members.
If a Board has vacant positions,
recommendations to change the
assessment rate or to adopt a budget
must pass by an affirmative vote of at
least two-thirds of the Board members,
exclusive of the vacant seats.
(d) The Board must give members and
the Secretary timely notice of all Board,
executive and committee meetings.
(e) In lieu of voting at a properly
convened meeting, and when, in the
opinion of the Board’s chairperson, such
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action is considered necessary, the
Board may take action by mail,
telephone, electronic mail, facsimile, or
any other means of communication.
Any action taken under this procedure
is valid only if:
(1) All members and the Secretary are
notified and the members are provided
the opportunity to vote;
(2) Ten (10) Board members vote in
favor of the action (unless two-thirds
vote of the Board members is required
under the Order); and
(3) All votes are promptly confirmed
in writing and recorded in the Board
minutes.
§ 1217.45
Reimbursement and attendance.
Board members will serve without
compensation. Board members will be
reimbursed for reasonable travel
expenses, as approved by the Board,
which they incur when performing
Board business.
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§ 1217.46
Powers and duties.
The Board shall have the following
powers and duties:
(a) To administer this Order in
accordance with its terms and
conditions and to collect assessments;
(b) To develop and recommend to the
Secretary for approval such bylaws as
may be necessary for the functioning of
the Board and such rules, regulations as
may be necessary to administer the
Order, including activities authorized to
be carried out under the Order;
(c) To meet, organize, and select from
among its members a chairperson and,
such other officers as may be necessary;
(d) To create an executive committee
of five members of the Board comprised
of the chairperson and four other
members elected by the Board. The
duties of the executive committee shall
be specified in bylaws that are
recommended by the Board and
approved by the Secretary;
(e) To create other committees or
subcommittees, which may include
individuals other than Board members,
as the Board deems necessary from its
membership and other representatives it
deems appropriate;
(f) To employ or contract with such
persons, other than the members, as it
may deem necessary to assist the Board
in carrying out its duties, and to
determine the compensation and define
the duties of each;
(g) To notify manufacturers for the
U.S. market of all Board meetings
through press releases or other means
and to give the Secretary the same
notice of Board meetings, executive
committee, and subcommittee meetings
that is given to members in order that
the Secretary’s representative(s) may
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attend such meetings, and to keep and
report minutes of each meeting to the
Secretary;
(h) To develop and administer
programs, plans, and projects and enter
into contracts or agreements, which
must be approved by the Secretary
before becoming effective, for
promotion, research, and information,
including consumer and industry
information, research and advertising
designed to strengthen the softwood
lumber industry’s position in the
marketplace and to maintain, develop,
and expand markets for softwood
lumber. The payment of costs for such
activities shall be with funds collected
pursuant to the Order, including funds
collected pursuant to § 1217.50(f). Each
contract or agreement shall provide that:
(1) The contractor or agreeing party
shall develop and submit to the Board
a program, plan, or project together with
a budget that specifies the cost to be
incurred to carry out the activity;
(2) The contractor or agreeing party
shall keep accurate records of all of its
transactions and make periodic reports
to the Board of activities conducted,
submit accounting for funds received
and expended, and make such other
reports as the Secretary or Board may
require;
(3) The Secretary may audit the
records of the contracting or agreeing
party periodically; and
(4) Any subcontractor who enters into
a contract with a Board contractor and
who receives or otherwise uses funds
allocated by the Board shall be subject
to the same provisions as the contractor.
(i) To prepare and submit to the
Secretary for approval 60 calendar days
in advance of the beginning of a fiscal
period, rates of assessment and a budget
of the anticipated expenses to be
incurred in the administration of the
Order, including the probable cost of
each promotion, research, and
information activity proposed to be
developed or carried out by the Board;
(j) To borrow funds necessary for
startup expenses of the Order;
(k) To invest assessments collected
and other funds received pursuant to
the Order and use earnings from
invested assessments to pay for
activities carried out pursuant to the
Order;
(l) To recommend changes to the
assessment rates as provided in this
part;
(m) To cause its books to be audited
by a certified public accountant at the
end of each fiscal period and at such
other times as the Secretary may
request, and to submit a report of each
audit directly to the Secretary;
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(n) To periodically prepare and make
public and to make available to
manufacturers for the U.S. market
reports of its activities and, at least once
each fiscal period, to make public an
accounting of funds received and
expended;
(o) To maintain minutes, books, and
records and prepare and submit to the
Secretary such reports from time to time
as may be required for appropriate
accounting with respect to the receipt
and disbursement of funds entrusted to
it, and to submit to the Secretary such
information pertaining to this part or
subpart as he or she may request;
(p) To act as an intermediary between
the Secretary and any manufacturer for
the U.S. market;
(q) To investigate and to receive and
investigate and report to the Secretary
complaints of violations of the Order;
and
(r) To develop and recommend such
rules and regulations to the Secretary for
approval as may be necessary for the
development and execution of plans or
activities to effectuate the purposes of
the Act.
§ 1217.47
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 or
misleading or disparaging to another
agricultural commodity. Softwood
lumber of all origins shall be treated
equally.
Expenses and Assessments
§ 1217.50
Budget and expenses.
(a) At least 60 calendar days prior to
the beginning of each fiscal period, and
as may be necessary thereafter, the
Board shall prepare and submit to the
Department a budget for the fiscal
period 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
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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.
(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, and is encouraged to seek
other appropriate funding sources to
carry out activities authorized by the
Order. Such contributions shall be free
from any encumbrances by the donor
and the Board shall retain complete
control of their use. The Board may
receive funds from outside sources (i.e.,
Federal or State grants, Foreign
Agricultural Service funds), 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.
(h) For fiscal years beginning two
years after the date the of the first Board
meeting, the Board may not expend for
administration, maintenance, and the
functioning of the Board an amount that
is greater than 8 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
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Secretary shall not be considered
administrative costs.
(i) The Board may establish an
operating monetary reserve and may
carry over to subsequent fiscal periods
excess funds in any reserve so
established: Provided, That, the funds in
the reserve do not exceed one fiscal
period’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.
§ 1217.51
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-todate 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.
§ 1217.52
Assessments.
(a) The Board’s programs and
expenses shall be paid by assessments
on manufacturers for the U.S. market,
other income of the Board, and other
funds available to the Board.
(b) Subject to the exemptions
specified in § 1217.53, each
manufacturer for the U.S. market shall
pay an assessment to the Board at the
rate of $0.35 per thousand board feet of
softwood lumber except that no person
shall pay an assessment on the first 15
million board feet of softwood lumber
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otherwise subject to assessment in a
fiscal year. Domestic manufacturers
shall pay assessments based on the
volume of softwood lumber shipped
within the United States and importers
shall pay assessments based on the
volume softwood lumber imported to
the United States.
(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 by at least two-thirds
of the Board members, a change in the
assessment rate. In no event may the
rate be less than $0.35 per thousand
board feet nor more than $0.50 per
thousand board feet. 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 thirtieth calendar day of
the month following the end of the
quarter in which the softwood lumber
was shipped.
(e) Each importer of softwood lumber
shall pay through Customs to the Board
an assessment on softwood lumber and
softwood lumber products imported
into the United States as described in
section 804(a) of Title VIII of the Tariff
Act of 1930, as amended (19 U.S.C.
1202–1683g).
(f) The following conversion factors
shall be used to determine the
equivalent volume of softwood lumber
in thousand board feet. The factor used
to convert one cubic meter to one
thousand board feet is 0.423776001. The
current assessment rate per one cubic
meter is $0.1483. The factor used to
convert the value in dollars to one
thousand board feet is 0.0031746 and is
based on an average of $315 per one
thousand board feet. The current
assessment rate per dollar value is
$0.0011. The Board may recommend to
the Secretary, upon affirmative vote by
at least two-thirds of the Board
members, a change in the factors used
to convert value in dollars to one
thousand board feet. Such a change is
subject to rulemaking by the Secretary.
(g) 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 importation.
(h) When a domestic 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
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remit total assessments due in a timely
manner may also be subject to actions
under Federal debt collection
procedures.
(i) The Board may accept advance
payment of assessments from any
manufacturer for the U.S. market that
will be credited toward any amount for
which that person may become liable.
The Board may not pay interest on any
advance payment.
(j) 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.
jlentini on DSKJ8SOYB1PROD with PROPOSALS2
§ 1217.53
Exemption from assessment.
(a) Manufacturers for the U.S. market
who domestically ship and/or import
less than 15 million board feet annually.
(1) Domestic manufacturers who ship
less than 15 million board feet of
softwood lumber within the United
States in a fiscal 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 fiscal year. This is an annual
exemption and domestic manufacturers
must reapply each year. Such
manufacturers shall certify that they
will ship less than 15 million board feet
of softwood lumber during the fiscal
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
shipment data to support the exemption
request. The Board will then issue, if
deemed appropriate, a certificate of
exemption to the eligible domestic
manufacturer. It is the responsibility of
the domestic manufacturer to retain a
copy of the certificate of exemption.
(2) Importers who import into the
United States less than 15 million board
feet of softwood lumber in a fiscal year
are exempt from paying assessments.
Such importers must apply to the Board,
on a form provided by the Board, for a
certificate of exemption prior to the start
of the fiscal year. This is an annual
exemption and importers must reapply
each year. Such importers shall certify
that they will import less than 15
million board feet of softwood lumber
during the fiscal year for which the
exemption is claimed. Upon receipt of
an application for exemption, the Board
shall determine whether an exemption
is granted. The Board may request past
import data to support the exemption
request. The Board will then issue, if
deemed appropriate, a certificate of
exemption to the eligible importer. It is
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the responsibility of the importer to
retain a copy of the certificate of
exemption. The Board shall refund such
importers their assessments as collected
by Customs no later than 60 calendar
days after receipt of such assessments
by the Board. No interest shall be paid
on the assessments collected by
Customs.
(3) Domestic manufacturers who did
not apply to the Board for an exemption
and shipped less than 15 million board
feet of softwood lumber within the
United States during the fiscal year shall
receive a refund from the Board for the
applicable assessments within 30
calendar days after the end of the fiscal
year. Board staff shall determine the
assessments paid and refund the
amount due to the domestic
manufacturer accordingly.
(4) Importers who did not apply to the
Board for an exemption and imported
less than 15 million board feet of
softwood lumber during the fiscal year
shall receive a refund from the Board for
the applicable assessments within 30
calendar days after the end of the fiscal
year.
(5) If an entity is both a domestic
manufacturer and an importer, such
entity’s domestic shipments and
imports during a fiscal year shall count
towards the 15 million board feet
exemption.
(6) Domestic manufacturers and
importers who received an exemption
certificate from the Board but shipped
or imported 15 million board feet or
more of softwood lumber during the
fiscal year shall pay the Board the
applicable assessments owed on the
domestic shipments or imports over the
15 million board foot-exemption
threshold within 30 calendar days after
the end of the fiscal year and submit any
necessary reports to the Board pursuant
to § 1217.70.
(7) The Board may develop additional
procedures to administer this exemption
as appropriate. Such procedures shall be
implemented through rulemaking by the
Secretary.
(b) Manufacturers for the U.S. market
who domestically ship or import over 15
million board feet annually.
(1) Domestic manufacturers who
domestically ship more than 15 million
board feet per fiscal year shall not pay
assessments on their first 15 million
board feet of softwood lumber shipped
during the applicable fiscal year.
(2) Importers who import more than
15 million board feet per fiscal year
shall be exempt from paying
assessments on their first 15 million
board feet of softwood lumber imported
during the applicable fiscal year. Such
importers shall receive a refund from
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the Board for the applicable assessments
collected by Customs. The Board shall
refund such importers their assessments
no later than 60 calendar days after
receipt by the Board.
(c) Export. Shipments of softwood
lumber by domestic manufacturers to
locations outside of the United States
are exempt from assessment. The Board
shall establish procedures for approval
by the Secretary for refunding
assessments that may be paid on such
shipments and establish any necessary
safeguards as deemed appropriate.
Safeguard procedures would be
implemented by the Secretary through
rulemaking. The Board may also
recommend to the Secretary that such
shipments be assessed if it deems
appropriate. Such action shall be
implemented by the Secretary through
rulemaking.
(d) Organic.
(1) Organic Act means section 2103 of
the Organic Foods Production Act of
1990 (7 U.S.C. 6502).
(2) A domestic manufacturer who
operates under an approved National
Organic Program (NOP) (7 CFR part 205)
system plan, only manufactures and
ships softwood lumber 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 domestic
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
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
softwood lumber 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
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on 100 percent of organic softwood
lumber, 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 domestic manufacturers in
paragraph (d)(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 Harmonized
Tariff Schedule of the United States
(HTSUS) classification valid for 1 year
from the date of issue. This HTSUS
classification should be entered by the
importer on the Customs entry
documentation. Any line item entry of
100 percent organic softwood lumber
bearing this HTSUS classification
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
jlentini on DSKJ8SOYB1PROD with PROPOSALS2
§ 1217.60
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, education and
other activities including consumer and
industry information and advertising
designed to:
(1) Maintain, develop, expand and
grow markets for softwood lumber;
(2) Enhance and strengthen the image,
reputation and public acceptance of
softwood lumber and the forests from
which it comes;
(3) Develop new markets and
marketing strategies for softwood
lumber;
(4) Expand the knowledge and
understanding of the strength, safety
and technical applications and
encourage innovation in the use of
softwood lumber;
(5) Transfer and disseminate the
knowledge and understanding of the
strength, safety, environmental and
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sustainable benefits and technical
applications of softwood lumber; and
(6) Develop, expand and grow existing
and new opportunities and applications
for softwood lumber.
(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
plan or program.
§ 1217.61
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.
§ 1217.62 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, publications, or product
formulations, 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, § 1217.83
shall apply to determine disposition of
all such property.
Reports, Books, and Records
§ 1217.70
Reports.
(a) Each manufacturer for the U.S.
market will be required to provide
periodically to the Board such
information as the Board, with the
approval of the Secretary, may require.
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Such information may include, but not
be limited to:
(1)(i) For domestic manufacturers:
(A) The name, address and telephone
number of the domestic manufacturer;
(B) The board feet of softwood lumber
shipped within the United States;
(C) The board feet of softwood lumber
for which assessments were paid; and
(D) The board feet of softwood lumber
that was exported.
(ii) Such information shall accompany
the collected payment of assessments on
a quarterly basis specified in § 1217.52.
(2) For importers:
(i) The name, address and telephone
number of the importer;
(ii) The board feet of softwood lumber
imported;
(iii) The board feet of softwood
lumber for which assessments were
paid; and
(iv) The country of export.
(b) For importers who pay their
assessments directly to the Board, such
information shall accompany the
payment of collected assessments
within 30 calendar days after
importation specified in § 1217.52.
§ 1217.71
Books and records.
Each manufacturer for the U.S.
market, including those exempt under
§ 1217.53, 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. Domestic
manufacturers who only export
softwood lumber shall also retain such
books and records. Such books and
records must be made available during
normal business hours for inspection by
the Board’s or Secretary’s employees or
agents. A manufacturer for the U.S.
market must maintain the books and
records for two years beyond the fiscal
period to which they apply.
§ 1217.72
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 other
manufacturers for the U.S. market. 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
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the Secretary deems relevant shall be
disclosed by them, and then only 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 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
§ 1217.80
Right of the Secretary.
All fiscal matters, programs 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.
jlentini on DSKJ8SOYB1PROD with PROPOSALS2
§ 1217.81
Referenda.
(a) Initial referendum. The Order shall
not become effective unless the Order is
approved by a majority of domestic
manufacturers and importers voting in
the referendum who also represent a
majority of the volume of softwood
lumber represented in the referendum
who, during a representative period
determined by the Secretary, have been
engaged in the domestic manufacturing
or importation of softwood lumber. A
single entity who domestically
manufactures and imports softwood
lumber may cast one vote in the
referendum.
(b) Subsequent referenda. The
Secretary shall conduct subsequent
referenda:
(1) For the purpose of ascertaining
whether manufacturers for the U.S.
market favor the amendment,
continuation, suspension, or
termination of the Order;
(2) Five years after this Order becomes
effective and every five years thereafter,
to determine whether softwood lumber
manufacturers for the U.S. market favor
the continuation of the Order. The
Order shall continue if it is favored by
a majority of domestic manufacturers
and importers voting in the referendum
who also represent a majority of the
volume of softwood lumber represented
in the referendum who, during a
representative period determined by the
Secretary, have been engaged in the
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domestic manufacturing or importation
of softwood lumber;
(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.
§ 1217.82
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 period whenever the Secretary
determines that its suspension or
termination is favored by a majority of
domestic 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 domestic manufacturing
or importation of softwood lumber.
(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.
§ 1217.83
Proceedings after termination.
(a) Upon termination of this subpart,
the Board shall recommend to the
Secretary up to nine of its members,
representing all regions specified in
§ 1217.40(b), three of whom shall be
importers and six of whom shall be
domestic manufacturers, 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;
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Fmt 4701
Sfmt 4702
(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 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 softwood
lumber industry organizations in the
United States whose mission is generic
softwood lumber promotion, research,
and information programs.
§ 1217.84 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.
§ 1217.85
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.
§ 1217.86
Separability.
If any provision of this subpart is
declared invalid or the applicability of
it to any person or circumstances is held
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invalid, the validity of the remainder of
this subpart, or the applicability thereof
to other persons or circumstances shall
not be affected thereby.
§ 1217.87
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.
§ 1217.88
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–NEW.
Subpart B—[Reserved]
Dated: September 22, 2010.
David R. Shipman,
Acting Administrator, Agricultural Marketing
Service.
[FR Doc. 2010–24202 Filed 9–30–10; 8:45 am]
BILLING CODE 3410–02–P
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 1217
[Document Number AMS–FV–10–0015;
PR–B]
RIN 0581–AD03
Softwood Lumber Research,
Promotion, Consumer Education and
Industry Information Order;
Referendum Procedures
Agricultural Marketing Service,
USDA.
ACTION: Proposed rule.
AGENCY:
This proposed rule invites
comments on procedures for conducting
a referendum to determine whether
issuance of a proposed Softwood
Lumber Research, Promotion, Consumer
Education and Industry Information
Order (Order) is favored by domestic
manufacturers and importers of
softwood lumber. Softwood lumber is
used in products like flooring, siding
and framing. The procedures would also
be used for any subsequent referendum
under the Order. The proposed Order is
being published separately in this issue
of the Federal Register. This proposed
rule also announces the Agricultural
Marketing Service’s (AMS) intent to
request approval by the Office of
Management and Budget (OMB) of new
jlentini on DSKJ8SOYB1PROD with PROPOSALS2
SUMMARY:
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18:31 Sep 30, 2010
Jkt 223001
information collection requirements to
implement the program.
DATES: Comments must be received by
November 30, 2010. Pursuant to the
Paperwork Reduction Act (PRA),
comments on the information collection
burden that would result from this
proposal must be received by November
30, 2010.
ADDRESSES: Interested persons are
invited to submit written comments
concerning this rule. Comments may be
submitted on the Internet at: https://
www.regulations.gov or to the Research
and Promotion Branch, Fruit and
Vegetable Programs, AMS, USDA, 1400
Independence Avenue, SW., Room
0632–S, Stop 0244, Washington, DC
20250–0244; facsimile: (202) 205–2800.
All comments should reference the
docket number and the date and page
number of this issue of the Federal
Register and will be made available for
public inspection, including name and
address, if provided, in the above office
during regular business hours or it can
be viewed at https://
www.regulations.gov.
Pursuant to the PRA, comments
regarding the accuracy of the burden
estimate, ways to minimize the burden,
including the use of automated
collection techniques or other forms of
information technology, or any other
aspect of this collection of information,
should be sent to the above address. In
addition, comments concerning the
information collection should also be
sent to the Desk Office for Agriculture,
Office of Information and Regulatory
Affairs, OMB, New Executive Office
Building, 725 17th Street, NW., Room
725, Washington, DC 20503.
FOR FURTHER INFORMATION CONTACT:
Maureen T. Pello, Marketing Specialist,
Research and Promotion Branch, Fruit
and Vegetable Programs, AMS, USDA,
P.O. Box 831, Beavercreek, Oregon
97004; telephone: (503) 632–8848;
facsimile (503) 632–8852; or electronic
mail: Maureen.Pello@ams.usda.gov.
SUPPLEMENTARY INFORMATION: This rule
is issued pursuant to the Commodity
Promotion, Research, and Information
Act of 1996 (1996 Act) (7 U.S.C. 7411–
7425).
Executive Order 12866
This rule has been determined to be
not significant for purposes of Executive
Order 12866 and therefore has not been
reviewed by the OMB.
Executive Order 12988
This rule has been reviewed under
Executive Order 12988, Civil Justice
Reform. It is not intended to have
retroactive effect. Section 524 of the
PO 00000
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61025
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 the U.S.
Department of Agriculture (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.
This rule invites comments on
procedures for conducting a referendum
to determine whether domestic
manufacturers and importers of
softwood lumber favor issuance of a
proposed softwood lumber Order.
Softwood lumber is used in products
like flooring, siding and framing. USDA
would conduct the referendum. The
program would be implemented if it is
favored by a majority of domestic
manufacturers and importers of
softwood lumber voting in the
referendum who also represent a
majority of the volume of softwood
lumber represented in the referendum.
The procedures would also be used for
any subsequent referendum under the
Order. The proposed Order is being
published separately in this issue of the
Federal Register. This rule also
announces AMS’s intent to request
approval by the OMB of new
information collection requirements to
implement the program.
The 1996 Act 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. These programs are
designed to maintain and expand
markets and uses for agricultural
commodities. As defined under section
513(1)(D) of the 1996 Act, agricultural
E:\FR\FM\01OCP2.SGM
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]]>Agencies
[Federal Register Volume 75, Number 190 (Friday, October 1, 2010)]
[Proposed Rules]
[Pages 61002-61025]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-24202]
[[Page 61001]]
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Part III
Department of Agriculture
-----------------------------------------------------------------------
Agricultural Marketing Service
-----------------------------------------------------------------------
7 CFR Part 1217
Softwood Lumber Research, Promotion, Consumer Education and Industry
Information Order; Proposed Rules
Federal Register / Vol. 75 , No. 190 / Friday, October 1, 2010 /
Proposed Rules
[[Page 61002]]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 1217
[Document Number AMS-FV-10-0015; PR-A1]
RIN 0581-AD03
Softwood Lumber Research, Promotion, Consumer Education and
Industry Information Order
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This rule invites comments on a proposed Softwood Lumber
Research, Promotion, Consumer Education and Industry Information Order
(Order). Softwood lumber is used in products like flooring, siding and
framing. The program would be financed by an assessment on softwood
lumber domestic manufacturers and importers and would be administered
by a board of industry members selected by the Secretary of Agriculture
(Secretary). The initial assessment rate would be $0.35 per thousand
board feet of softwood lumber shipped within or imported to the United
States. The purpose of the program would be to strengthen the position
of softwood lumber in the marketplace, maintain and expand markets for
softwood lumber, and develop new uses for softwood lumber within the
United States. A referendum would be held among eligible domestic
manufacturers and importers to determine whether they favor
implementation of the program prior to it going into effect. This rule
also announces the Agricultural Marketing Service's (AMS) intent to
request approval by the Office of Management and Budget (OMB) of new
information collection requirements to implement the program.
DATES: Comments must be received by November 30, 2010. Pursuant to the
Paperwork Reduction Act (PRA), comments on the information collection
burden that would result from this proposal must be received by
November 30, 2010.
ADDRESSES: Interested persons are invited to submit written comments
concerning this proposal. Comments may be submitted on the Internet at:
https://www.regulations.gov or to the Research and Promotion Branch,
Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW.,
Room 0632-S, Stop 0244, Washington, DC 20250-0244; facsimile: (202)
205-2800. All comments should reference the docket number and the date
and page number of this issue of the Federal Register and will be made
available for public inspection, including name and address, if
provided, in the above office during regular business hours or it can
be viewed at https://www.regulations.gov.
Pursuant to the PRA, comments regarding the accuracy of the burden
estimate, ways to minimize the burden, including the use of automated
collection techniques or other forms of information technology, or any
other aspect of this collection of information, should be sent to the
above address. In addition, comments concerning the information
collection should also be sent to the Desk Office for Agriculture,
Office of Information and Regulatory Affairs, OMB, New Executive Office
Building, 725 17th Street, NW., Room 725, Washington, DC 20503.
FOR FURTHER INFORMATION CONTACT: Maureen T. Pello, Marketing
Specialist, Research and Promotion Branch, Fruit and Vegetable
Programs, AMS, USDA, P.O. Box 831, Beavercreek, Oregon 97004;
telephone: (503) 632-8848; facsimile (503) 632-8852; or electronic
mail: Maureen.Pello@ams.usda.gov.
SUPPLEMENTARY INFORMATION: This rule is issued pursuant to the
Commodity Promotion, Research, and Information Act of 1996 (1996 Act)
(7 U.S.C. 7411-7425).
Executive Order 12866
This rule has been determined to be not significant for purposes of
Executive Order 12866 and therefore has not been reviewed by the OMB.
Executive Order 12988
This rule 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 the U.S. Department of Agriculture (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.
Background
This rule invites comments on a proposed industry-funded research,
promotion, and information program for softwood lumber. Softwood lumber
is used in products like flooring, siding and framing. The program
would be financed by an assessment on softwood lumber domestic
manufacturers and importers and would be administered by a board of
industry members selected by the Secretary. The initial assessment rate
would be $0.35 per thousand board feet of softwood lumber shipped
within or imported to the United States. Entities that domestically
ship or import less than 15 million board feet per fiscal year would be
exempt from the payment of assessments. Additionally, no entity would
pay assessments on the first 15 million board feet of softwood lumber
shipped domestically or imported during the year. Exports from the
United States would also be exempt from assessments. The purpose of the
program would be to strengthen the position of softwood lumber in the
marketplace, maintain and expand markets for softwood lumber, and
develop new uses for softwood lumber within the United States.
A referendum would be held among eligible domestic manufacturers
and importers to determine whether they favor implementation of the
program prior to it going into effect. The proposal was submitted to
USDA by the Blue Ribbon Commission (BRC), a committee of 21 chief
executive officers and heads of businesses that domestically
manufacture and import softwood lumber. This rule also announces AMS's
intent to request approval by the OMB of new information collection
requirements to implement the program.
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. These programs
[[Page 61003]]
are designed to maintain and expand markets and uses for agricultural
commodities. As defined under section 513(1)(D) of the 1996 Act,
agricultural commodities include the products of forestry, which
includes softwood lumber.
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 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
The softwood lumber industry is comprised of sawmills that make
products from softwood trees. Softwoods include the botanical group of
trees that have needle-like or scale-like leaves, or conifers. Softwood
lumber includes certain products manufactured from softwoods (or
coniferous trees). Softwood lumber is used in products like flooring,
siding, and framing.
Softwood lumber sizes are identified by the thickness and width of
the board when it is first cut from the log. This is known as ``rough
cut'' when the wood is still green and wet. Once the wood dries, it
shrinks. After the wood dries, the surface of the board is smoothed to
make the wood a uniform size. This is known as ``planing'' the wood.
Once planed, the wood is considered finished. In the industry, the term
nominal is used to describe the size of the rough cut board, prior to
finishing. For example, a 2 x 4 board is a nominal size. The actual
size of a 2 x 4 board is 1.5 inches in thickness by 3.5 inches in
width. The length of the board is typically the actual length. Usually
there is a \1/2\ inch difference in measurements over 2 inches and \1/
4\ inch difference in measurements less than 2 inches. For purposes of
the proposed Order and the tables in this rule, nominal sizes are used.
One nominal board foot is a unit of measurement of softwood lumber
represented by a board 12-inches long, 12-inches wide, and 1-inch thick
or its cubic equivalent. A board foot calculation for softwood lumber 1
inch or more in thickness is based on its nominal thickness and width
by the actual length. Softwood lumber with a nominal thickness of less
than 1 inch is calculated as 1 inch.
Regional U.S. Timber Production \1\
---------------------------------------------------------------------------
\1\ Spelter, H., D. McKeever, D. Toth, Profile 2009: Softwood
Sawmills in the United States, USDA, p. 7.
---------------------------------------------------------------------------
According to USDA's Forest Service, the main species of softwoods
in the southern United States are pines that grow fast and can be sold
for lumber in 25 to 30 years. Southern pines are often treated with
preservatives. About a third of the region's lumber is sold to treaters
for further processing (i.e., apply preservatives).\2\
---------------------------------------------------------------------------
\2\ Micklewright, J.T., Wood preservation statistics, American
Wood Preservers Assocation, p. 25.
---------------------------------------------------------------------------
Most of the northern U.S. softwood lumber industry is in Maine
where the predominant species are white spruce and balsam fir. These
trees are typically used for light framing such as wall studs. Second
growths of red pine planted in the 1930s and later have been harvested
by a few firms in the lake States. Red pine is also easy to treat and
much of it is processed. White pine trees are also prevalent in the
northern United States. They are used for paneling, millwork, and
joinery. Millwork includes woodwork that has been made at a mill, and
joinery is the trade of constructing articles by joining together
pieces of wood.
The bulk of timber production in the western United States is on
the coast of the Pacific Northwest. Douglas fir and hemlock trees
dominate while farther south in northern California, redwood trees,
suitable for outdoor structures like fences, siding and decks, are
common. East of these regions, ponderosa pine dominates and is used for
millwork and joinery. Northern Idaho and Montana contain lodgepole pine
and other species suitable for light framing.
U.S. Softwood Lumber Output by Region \3\
---------------------------------------------------------------------------
\3\ Spelter, McKeever and Toth, Profile 2009, p. 15.
---------------------------------------------------------------------------
According to USDA's Forest Service, for 2007-2008, total output
(production) of softwood lumber by U.S. sawmills averaged about 29.5
billion board feet annually. Of the 29.5 billion board feet, 12.6
billion board feet were from the U.S. South, 14.4 billion board feet
were from the U.S. West, and 2.5 billion board feet were from the
Northeast and Lake States. Data for the western States is from the
Western Wood Products Association \4\ and data for the other two
regions is from the U.S. Census Bureau.\5\
---------------------------------------------------------------------------
\4\ Western Wood Products Association, 2008 Statistical
Yearbook, p. 32.
\5\ U.S. Census Bureau, 2009, Construction, https://www.census.gov/mcd/.
---------------------------------------------------------------------------
Softwood Lumber Markets \6\
---------------------------------------------------------------------------
\6\ Spelter, McKeever and Toth, Profile 2009, p. 2-5.
---------------------------------------------------------------------------
The residential market is the largest consumer of softwood lumber
in the United States. This includes single and multifamily homes,
mobile homes, and remodeling. The residential market accounted for 75
percent of the total U.S. softwood lumber market in 2006 and 63 percent
of the market in 2009. Table 1 below shows this data from 2003 through
2009.
Table 1--U.S. Softwood Lumber Markets From 2003-2009 Volume
[Billion board feet]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Single Multi- Non- Non-
family family Mobile Residential residential, residential, Industrial Total U.S.
homes homes homes remodeling buildings other and other
--------------------------------------------------------------------------------------------------------------------------------------------------------
2003........................................ 20.2 1.7 1.1 19.3 3.6 0.6 10.2 56.7
2004........................................ 22.2 1.8 1.1 20.3 3.9 0.5 11.1 60.8
[[Page 61004]]
2005........................................ 24.5 1.9 1.2 20.9 3.8 0.6 11.7 64.6
2006........................................ 21.3 1.9 0.9 21.4 3.6 0.6 11.3 61.0
2007........................................ 14.9 1.7 0.8 19.7 4.0 0.6 11.4 53.1
2008........................................ 8.4 1.4 0.6 17.5 3.9 0.6 9.6 42.0
2009........................................ 5.3 0.7 0.4 14.2 3.6 0.6 7.8 32.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Shares (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2003........................................ 36 3 2 34 6 1 18
2004........................................ 36 3 2 33 6 1 18
2005........................................ 38 3 2 32 6 1 18
2006........................................ 35 3 2 35 6 1 18
2007........................................ 28 3 1 37 8 1 21
2008........................................ 20 3 1 42 9 1 23
2009........................................ 16 2 1 44 11 2 24
--------------------------------------------------------------------------------------------------------------------------------------------------------
During normal economic conditions, single family homes comprise the
largest share of the softwood lumber market in the United States.
Single family home use rose from 20.2 billion board feet in 2003 to
24.5 billion board feet in 2005 and fell to 5.3 billion board feet in
2009. Single family homes comprised 38 percent of the market for
softwood lumber in 2005 and 16 percent of the market by 2009.
Home building is cyclical in nature (follows a pattern of highs and
lows) as compared to other end uses for softwood lumber. Residential
remodeling and other uses experienced downturns between 2006 and 2009,
but less severe than the market for single family homes. Softwood
lumber used for residential remodeling fell from 21.4 billion board
feet in 2006 to 14.2 billion board feet in 2009. As a percentage of
softwood lumber market share, residential remodeling rose from 35
percent in 2006 to 44 percent in 2009.
Export Markets \7\
---------------------------------------------------------------------------
\7\ Spelter, McKeever and Toth, Profile 2009, p. 15.
---------------------------------------------------------------------------
Export markets are another outlet for softwood lumber. Two decades
ago, U.S. exports were about seven times greater than they were in
recent years, but a strong U.S. dollar from the mid-1990s onward helped
to reduce exports. Additionally, different size and grade standards for
softwood lumber in export markets complicate production when log sizes
have to be converted from imperial units (feet) to metric (meters).
Most manufacturers have thus focused on North American sales. However,
in slow periods such as in recent years, efforts have been made to
supply export markets to the extent possible.
Competition \8\
---------------------------------------------------------------------------
\8\ Ibid., p. 15.
---------------------------------------------------------------------------
Softwood lumber competes with several alternative products. Steel
and concrete dominate larger residential and nonresidential projects.
Brick, concrete, and vinyl are often used in low-rise residential and
nonresidential buildings. Within the last decade, wood-plastic
composite lumber has become popular for outdoor decking, railing, trim,
and fencing. Other wood-based products such as laminated veneer are
becoming more popular in place of softwood lumber.
Imports
According to U.S. Department of Commerce, Census Bureau, Foreign
Trade Statistics data \9\, imports of softwood lumber from 2007 through
2009 averaged about 13 billion board feet annually. During those years,
imports from Canada averaged 12 billion board feet annually, comprising
about 92 percent of total imports; imports from western Europe averaged
434 million board feet annually, comprising about 3 percent of total
imports; and imports from Chile averaged 255 million board feet
annually, comprising about 2 percent of total imports. Imports from
other countries accounted for the remaining 3 percent of total imports
for 2007 through 2009.
---------------------------------------------------------------------------
\9\ https://www.fas.usda.gov/gats; accessed 5/1/10.
---------------------------------------------------------------------------
Price and Cost Trends \10\
---------------------------------------------------------------------------
\10\ Spelter, McKeever and Toth, Profile 2009, p. 5-6.
---------------------------------------------------------------------------
Prices in the lumber industry can change rapidly in response to
shifts in demand or supply. Prices are set competitively, with many
buyers and sellers bidding in a business that tends to be cyclical in
nature. As shown in Table 2 below, revenue for the State of Oregon per
thousand board feet was about $309 in 2003, rose to $420 in 2004, and
fell to $219 in 2008. In comparison, revenue for the State of Georgia
per thousand board feet was about $323 in 2003, rose to $418 in 2005,
and fell to $262 in 2008.
Table 2--Typical Sawmill Operating Costs 2003-2008
----------------------------------------------------------------------------------------------------------------
Oregon Georgia
---------------------------------------------------------------------------
Costs ($ per Revenue ($ per Costs ($ per Revenue ($ per
thousand board thousand board thousand board thousand board
feet) feet) feet) feet)
----------------------------------------------------------------------------------------------------------------
2003................................ 295 309 311 323
2004................................ 330 420 335 378
2005................................ 349 370 349 418
2006................................ 335 316 349 330
[[Page 61005]]
2007................................ 297 260 300 269
2008................................ 238 219 328 262
----------------------------------------------------------------------------------------------------------------
Several factors contributed to the revenue changes shown in Table
2. Some mills in the interior western United States were forced to
close because of constraints on the availability of timber. A dispute
with Canada over lumber imports that resulted in a 15 percent export
levy for some U.S.-bound shipments and quotas on others after October
2006 impacted supply.
Wood, labor, and operating costs also impact revenue. The cost of
wood in the United States is negotiated between buyers and sellers.
Companies often enter into long-term supply contracts with timber
owners where the price is negotiated quarterly based on sales and
market conditions. Labor is the second biggest component of lumber
costs. According to the U.S. Department of Labor, U.S. wages have
increased about 3 percent per year during this decade.\11\ At the same
time, labor productivity in sawmilling has increased by a like amount
leaving unit labor costs flat. The other main cost for sawmills is
energy, but most mills use their own residues to generate heat for
their drying needs. This has lessened the impact of rising energy
prices on sawmills. As shown in Table 2, total operating costs in
Oregon per thousand board feet averaged $295 in 2003, rose to $349 in
2005, and fell to $238 in 2008. In comparison, total operating costs in
Georgia per thousand board feet averaged $311 in 2003, rose to $349 in
2005 and 2006, and fell to $328 in 2008.
---------------------------------------------------------------------------
\11\ U.S. Department of Labor, Bureau of Labor Statistics, 2009,
Employment cost index, Washington, DC, https://data.bls.gov/PDQ/outside.jsp?survey=ci. Accessed 3/27/09.
---------------------------------------------------------------------------
Need for a Program
The softwood lumber industry is experiencing one of the worst
markets in history. The collapse of the housing market caused prices to
fall from $404 per thousand board feet in 2004 to $222 per thousand
board feet in 2009.\12\ Competition from other building products like
cement and vinyl has also helped to reduce demand for softwood lumber.
---------------------------------------------------------------------------
\12\ Price data was obtained from Random Lengths Publications,
Inc., and is a framing composite price that is designed as a broad
measure of price movement in the lumber market. (https://www.randomlengths.com.)
---------------------------------------------------------------------------
Additionally, at the request of the U.S. and Canadian governments,
the U.S. Endowment for Forestry and Communities (Endowment) and the
Binational Softwood Lumber Council (BSLC) were formed in 2006 in
accordance with the 2006 Softwood Lumber Agreement. The Endowment is a
non-profit organization that works with public and private sectors to
advance the interests of the forestry community. The Endowment
conducted a study to assess the feasibility of a softwood lumber
research and promotion program. In the past, the industry attempted
voluntary efforts to promote forest products, but they were sporadic,
underfunded, and narrowly targeted. These campaigns did not last long
enough to succeed. The Endowment recommended to the industry that
Canadian and U.S. companies pursue a shared vision and achieve broad
agreement on creating a unified softwood lumber research and promotion
program. In 2008, the Endowment held an industry meeting in Seattle,
Washington, to discuss the merits of such a program and obtain industry
feedback.
As a result of the Endowment's efforts, the BRC was subsequently
formed to pursue an industry research and promotion program. The BRC is
comprised of 21 members representing the United States and Canada.
Funding and support for the BRC's efforts come from the BSLC, a non-
profit organization whose mission is to promote increased cooperation
between the U.S. and Canadian softwood lumber industries and to
strengthen and expand markets for softwood lumber products in both
countries. The BRC submitted an initial proposal for a program to USDA
in February 2010.
The BRC proposed a program that would be financed by an assessment
on softwood lumber domestic manufacturers and importers and
administered by a board of industry members selected by the Secretary.
The initial assessment rate would be $0.35 per thousand board feet
shipped within or imported to the United States and could be increased
up to a maximum of $0.50 per thousand board feet. Entities that
domestically ship or import less than 15 million board feet would be
exempt along with shipments exported outside of the United States.
Larger entities would not pay assessments on the first 15 million board
feet shipped or imported. The purpose of the program would be to
strengthen the position of softwood lumber in the marketplace, maintain
and expand markets for softwood lumber, and develop new uses for
softwood lumber within the United States. A referendum would be held
among eligible domestic manufacturers and importers to determine
whether they favor implementation of the program prior to it going into
effect. A majority of domestic manufacturers and importers by both
number and volume represented in the referendum would have to support
the program for it to be implemented. The specific provisions of the
program are discussed below.
Provisions of Proposed Program
Definitions
Pursuant to section 513 of the 1996 Act, Sec. Sec. 1217.1 through
1217.30 of the proposed Order define certain terms that would be used
throughout the Order. Several of the terms are common to all research
and promotion programs authorized under the 1996 Act while other terms
are specific to the proposed softwood lumber Order.
Section 1217.1 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 1217.2 would define the term ``Blue Ribbon Commission'' to
mean the 21-member committee representing businesses that manufacture
softwood lumber in the United States or import softwood lumber to the
United States formed to pursue an industry research, promotion, and
information program. As specified in proposed Sec. 1217.41, the BRC
would conduct the initial nominations for the Softwood Lumber Board and
submit them to the Secretary. This would be the only role of the BRC
under the program.
[[Page 61006]]
Section 1217.3 would define the term ``Board'' or ``Softwood Lumber
Board'' to mean the administrative body established pursuant to Sec.
1217.40, or such other name as recommended by the Board and approved by
the Secretary.
Section 1217.4 would define the term ``board foot'' or ``BF'' to
mean a unit of measurement of softwood lumber represented by a board
12-inches long, 12-inches wide, and 1-inch thick or its cubic
equivalent. A board foot calculation for softwood lumber 1 inch or more
in thickness is based on its nominal thickness and width by the actual
length. Softwood lumber with a nominal thickness of less than 1 inch is
calculated as 1 inch.
The term ``nominal'' means the size by which softwood lumber is
known and sold in the marketplace. As previously mentioned, it differs
from the actual size and is based on the thickness and width of a board
when it is first cut from a log, or rough cut, prior to drying and
planing. Nominal size would be defined in Sec. 1217.16 of the Order.
The term ``planing'' means the act of smoothing the surface of a board
to make the wood a uniform size and would be defined in Sec. 1217.20
of the Order.
Section 1217.6 would define the term ``Customs'' to mean the United
States Customs and Border Protection or U.S. Customs Service, an agency
of the United States Department of Homeland Security.
Section 1217.8 would define the term ``domestic manufacturer'' to
mean any person who is a first handler and is engaged in the
manufacturing, sale and shipment of softwood lumber in the United
States during a fiscal period and who owns, or shares the ownership and
risk of loss of manufacturing of softwood lumber or a person who is
engaged in the business of manufacturing, or causes to be manufactured,
sold and shipped such softwood lumber in the United States beyond
personal use. The term would not include any person who re-manufactures
softwood lumber that had already been subject to assessment under the
Order.
Section 1217.9 would define the term ``export'' to mean to
manufacture and ship softwood lumber from within the United States to
locations outside of the United States.
Section 1217.10 would define the term ``fiscal period'' or ``fiscal
year'' to mean a calendar year from January 1 through December 31, or
other period as recommended by the Board and approved by the Secretary.
Section 1217.12 would define the term ``information'' to mean
activities or programs designed to disseminate the results of research,
new and existing marketing programs, new and existing marketing
strategies, new and existing uses and applications, and to enhance the
image of softwood lumber and the forests from which it comes. This
would include consumer education, which would mean any action taken to
provide information to, and broaden the understanding of, the general
public regarding softwood lumber. This would also include industry
information, which would mean information and programs that would
enhance the image of the softwood lumber industry.
Section 1217.13 would define the term ``manufacture'' to mean the
process of transforming softwood logs into softwood lumber.
Section 1217.14 would define the term ``manufacturer for the U.S.
market'' to mean domestic manufacturers and importers of softwood
lumber. Such importers may not have manufactured the softwood lumber,
but would be importing softwood lumber that had been manufactured from
softwood logs. The term is intended to facilitate equity between the
domestic and importing members of the softwood lumber industry.
Section 1217.15 would define the term ``marketing'' to mean the
sale or other disposition of softwood lumber in interstate, foreign, or
intrastate commerce. The sale or disposition of softwood lumber within
a State would constitute marketing.
Section 1217.18 would define the terms ``part'' and ``subpart.''
The term ``part'' would mean the Softwood Lumber Research, Promotion,
Consumer Education, and Industry Information Order and all rules,
regulations, and supplemental orders issued pursuant to the Act and the
Order. The Order would be a ``subpart'' of the part.
Section 1217.21 would define the terms programs, plans and projects
to mean research, promotion and information programs, plans, or
projects established under the Order.
Section 1217.22 would define the term ``promotion'' to mean any
action taken, including paid advertising, public relations and other
communications, and promoting the results of research, that presents a
favorable image of softwood lumber and the forests from which it comes
to the public and to any and all consumers and those who influence
consumption of softwood lumber with the intent of improving the
perception, markets and competitive position of softwood lumber and
stimulating sales of softwood lumber.
Section 1217.23 would define the term ``research'' to mean any
activity that advances the position of softwood lumber in the
marketplace that includes any type of test, study, or analysis designed
to advance the image, desirability, use, marketability, sales, product
development, or quality of softwood lumber; new applications; improving
softwood lumber's position in building and fire codes; softwood lumber
product testing and safety; and evaluating the effectiveness of market
development and promotion efforts including life cycle studies,
forestry, sustainable forest management, environmental preferability,
competitiveness, efficiency, pest and disease control, water quality
and other management aspects of forestry and the forests from which
softwood lumber originates.
Section 1217.25 would define the term ``softwood lumber'' to mean
all softwood lumber and softwood lumber products described in section
804(a) within Title VIII (Softwood Lumber Act of 2008 or SLA of 2008)
of the Tariff Act of 1930 (19 U.S.C. 1202-1683g), as amended by section
3301 of the Food, Conservation and Energy Act of 2008 (Pub. L. 110-246,
enacted June 18, 2008). An interim final rule issued by Customs and
effective on September 18, 2008 (73 FR 49934; August 25, 2008),
prescribed an importer declaration program and entry requirements
applicable to such softwood lumber and softwood lumber products. The
declaration program and entry requirements were required under section
803 of the SLA of 2008. Section 804 of the SLA of 2008 sets forth the
scope of softwood lumber and softwood lumber products covered by that
Act. Accordingly, all softwood lumber and softwood lumber products
classified under subheading 4407.10.00, 4409.10.10, 4409.10.20, or
4409.10.90 of the Harmonized Tariff Schedule of the United States
(HTSUS) are subject to the importer declaration program and entry
requirements and would be covered under this Order and are described in
the following paragraphs: \13\
---------------------------------------------------------------------------
\13\ The HTS numbers referred to in this discussion are as of
January 1, 2008.
---------------------------------------------------------------------------
(1) Coniferous wood, sawn or chipped lengthwise, sliced or peeled,
whether or not planed, sanded or finger-jointed, of a thickness
exceeding 6 millimeters;
(2) Coniferous wood siding (including strips and friezes for
parquet flooring, not assembled) continuously shaped (tongued, grooved,
rabbeted, chamfered, v-jointed, beaded, molded, rounded, or the like)
along any of its edges or faces,
[[Page 61007]]
whether or not planed, sanded, or finger-jointed;
(3) Other coniferous wood (including strips and friezes for parquet
flooring, not assembled) continuously shaped (tongued, grooved,
rabbeted, chamfered, v-jointed, beaded, molded, rounded, or the like)
along any of its edges or faces (other than wood moldings and wood
dowel rods) whether or not planed, sanded, or finger-jointed;
(4) Coniferous wood flooring (including strips and friezes for
parquet flooring, not assembled) continuously shaped (tongued, grooved,
rabbeted, chamfered, v-jointed, beaded, molded, rounded, or the like)
along any of its edges or faces, whether or not planed, sanded, or
finger jointed; and
(5) Coniferous drilled and notched lumber and angle cut lumber.
In addition, any product classified under subheading 4409.10.05 of
the HTSUS that is continually shaped along its end and or side edges,
and unless excepted or excluded from the importer declaration
requirement, softwood lumber products that are stringers, radius cut
box-spring frame components, fence pickets, truss components, pallet
components, and door and window frame parts classified under subheading
4418.90.46.95, 4421.90.70.40, or 4421.90.97.40 of the HTSUS are covered
under the SLA of 2008 and would be covered under the Order.
The following are not subject to the importer declaration program
under section 803 of the SLA of 2008 (see section 804(b)) because they
are defined as excluded from the program and would thus not be covered
under this Order:
(1) Trusses and truss kits, properly classified under subheading
4418.90 of the HTSUS;
(2) I-Joist beams;
(3) Assembled box-spring frames;
(4) Pallets and pallet kits, properly classified under subheading
4415.20 of the HTSUS;
(5) Garage doors;
(6) Edge-glued wood, properly classified under subheading
4421.90.97.40 of the HTSUS;
(7) Complete door frames;
(8) Complete window frames;
(9) Furniture;
(10) Articles brought into the United States temporarily and for
which an exemption from duty is claimed under subchapter XIII of
chapter 98 of the HTSUS; and
(11) Household and personal effects.
Also, the following products are not subject to the importer
declaration program established under section 803 of the SLA of 2008
(see section 804(c)) because they are defined as excepted from the
program:
(1) Stringers (pallet components used for runners), if the
stringers have at least two notches on the side, positioned at equal
distance from the center, to properly accommodate forklift blades, and
properly classified under subheading 4421.90.97.40 of the HTSUS;
(2) Box-spring frame kits, if the kits contain two wooden side
rails, two wooden end (or top) rails; and varying numbers of wooden
slats; and the side rails and the end rails are radius-cut at both
ends. Box spring frame kits must be individually packaged, and contain
the exact number of wooden components needed to make the box-spring
frame described on the entry documents, with no further processing
required. None of the components contained in the package may exceed 1
inch in actual thickness or 83 inches in length.
(3) Radius-cut box-spring-frame components, not exceeding 1 inch in
actual thickness or 83 inches in length, ready for assembly without
further processing, if radius cuts are present on both ends of the
boards and are substantial cuts so as to completely round one corner.
(4) Fence pickets requiring no further processing and properly
classified under subheading 4421.90.70 of the HTSUS, 1 inch or less in
actual thickness, up to 8 inches wide, and 6 feet or less in length,
and having finials or decorative cuttings that clearly identify them as
fence pickets (in the case of dog-eared fence pickets, the corners of
the boards should be cut off so as to remove pieces of wood in the
shape of isosceles right angle triangles with sides measuring \3/4\ of
an inch or more).
(5) Softwood lumber originating in the United States that is
exported to another country for minor processing and imported into the
United States if the processing occurring in another country is limited
to kiln drying, planing to create smooth-to-size board, and sanding;
and the importer establishes to Customs' satisfaction upon entry that
the softwood lumber originated in the United States.
(6) Any softwood lumber or softwood lumber product that originated
in the United States, if the importer, exporter, foreign manufacturer
or original domestic manufacturer establishes to Customs' satisfaction
upon entry that the softwood lumber entered and documented as
originating in the United States was first manufactured in the United
States.
(7) Softwood lumber or softwood lumber products contained in a
single family home package or kit, regardless of classification under
the HTSUS, if the importer declares that the following requirements
have been met: (i) The package or kit constitutes a full package of the
number of wooden pieces specified in the plan, design or blueprint
necessary to produce a home of at least 700 square feet produced to a
specified plan, design or blueprint; (ii) The package or kit contains
all necessary internal and external doors and windows, nails, screws,
glue, subfloor, sheathing, beams, posts, and connectors, and if
included in the purchase contract, the decking, trim, drywall and roof
shingles specified in the plan, design or blueprint; (iii) Prior to
importation, the package or kit is sold to a United States retailer
that sells complete home packages or kits pursuant to a valid purchase
contract referencing the particular home design plan or blueprint, and
the contract is signed by a customer not affiliated with the importer;
and (iv) Softwood lumber products entered as part of the package or
kit, whether in a single entry or multiple entries on multiple days,
and are to be used solely for the construction of the single family
home specified by the home design plan, or blueprint matching the
Customs import entry.
For each entry of softwood lumber products contained in a single
family home package for which the importer declares that these four
requirements are met, the importer must retain and make available to
Customs upon request the following documentation:
(1) A copy of the appropriate home design plan, or blueprint
matching the Customs entry in the United States;
(2) A purchase contract from a retailer of home kits or packages
signed by a customer not affiliated with the importer;
(3) A listing of all parts in the package or kit being entered into
the United States that conforms to the home design package being
imported; and
(4) If a single contract involves multiple entries, an
identification of all of the items required to be listed under item (3)
that are included in each individual shipment.
The reporting and recordkeeping burden for the information required
by Customs has been approved by the OMB and is addressed in the
referenced Custom's interim final rule.
Section 1217.26 would define the term ``softwood'' to mean one of
the botanical groups of trees that have needle-like or scale-like
leaves, or conifers.
[[Page 61008]]
Sections 1217.5, 1217.7, 1217.11, 1217.17, 1217.19, 1217.24,
1217.27, 1217.28, 1217.29, and 1217.30 would define the terms
``conflict of interest,'' ``Department or UDSA,'' ``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, Sec. Sec. 1217.40 through
1217.47 of the proposed Order would detail the establishment and
membership of the proposed Softwood Lumber Board, nominations and
appointments, the term of office, removal and vacancies, procedure,
reimbursement and attendance, powers and duties, and prohibited
activities.
Section 1217.40 would specify the Board establishment and
membership. The Board would be composed of manufacturers for the U.S.
market who manufacture and domestically ship or import 15 million board
feet or more of softwood lumber in the United States during a fiscal
period. Seats on the Board would be apportioned based on the volume of
softwood lumber manufactured and shipped within the United States by
domestic manufacturers and the volume of softwood lumber imported into
the United States.
The Board would be composed of 18 or 19 members, depending upon
whether an additional importer member was appointed to the Board.
Twelve members would be domestic manufacturers and would be allocated
to three regions in the United States based on the volume of softwood
lumber manufactured in and shipped from the respective region. Of the
12 members, 6 would be from the U.S. South Region, 5 would be from the
U.S. West Region, and 1 member would be from the Northeast and Lake
States Region and any other part of the United States not included in
the southern and western regions. Specific areas within each domestic
region would be specified in Sec. 1217.40(b)(1) of the proposed Order.
Six members would be importers who import the majority of their
softwood lumber from two regions in Canada and would be allocated based
on the volume of softwood lumber imported from those two respective
regions. Of the six Canadian importers, four would represent the
Canadian West Region and two would represent the Canadian East Region.
Specific areas within each Canadian region would be specified in Sec.
1217.40(b)(2) of the proposed Order. Any additional 19th member would
represent a region representing all countries except Canada.
The volume of softwood lumber imported from other countries besides
Canada is relatively low, averaging about 8 percent of total imports
from 2007 through 2009. However, all entities paying assessments to the
Board would have the opportunity to be represented on the Board. Thus,
the BRC recommended that, if the Secretary, at the request of the Board
or on his or her own, determines that it would be consistent with the
provisions of the Act, the Secretary could appoint an additional
importer to the Board to represent the region outside of the regions
specified for Canada. Nominees would be solicited as prescribed for
other regions, and all the names of eligible candidates would be
submitted to the Secretary for consideration. Such nominees would have
to certify that the majority of their softwood lumber is imported from
the region (which would include imports from all countries except
Canada).
The BRC 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, based on a 3-year average, the geographical distribution
of the volume of softwood lumber manufactured and shipped within the
United States by domestic manufacturers and the volume of softwood
lumber imported into the United States. If warranted, the Board would
recommend to the Secretary that the Board membership be reapportioned
appropriately to reflect such changes. The distribution of volumes
between regions also shall be considered. Any changes in Board
composition would be implemented by the Secretary through rulemaking.
Section 1217.41 of the proposed Order would specify Board
nominations and appointments. The initial nominations would be
submitted to the Secretary by the BRC. The BRC would publicize the
nomination process, using trade press or other means it deems
appropriate, and outreach to all manufacturers for the U.S. market who
domestically ship and/or import 15 million board feet or more of
softwood lumber per fiscal year. The BRC 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 BRC 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 BRC.
Regarding subsequent nominations, the Board would solicit
nominations as described in the preceding paragraph. Nominees would
have the opportunity to provide the Board a short background statement
outlining their qualifications and desire to serve on the Board. They
must domestically ship and/or import 15 million board feet or more of
softwood lumber per fiscal year. Entities that are both a domestic
manufacturer and an importer could seek nomination to the Board and
vote in the nomination process described below as either a domestic
manufacturer or an importer, but not both. Such nominees who
domestically manufacture the majority of their softwood lumber could
seek nomination and vote as a domestic manufacturer, and such nominees
who import the majority of their softwood lumber could seek nomination
and vote as an importer.
Domestic manufacturers who manufacture softwood lumber in more than
one region could seek nomination in only the region in which they
manufacture the majority of their softwood lumber. 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
domestic manufacturers in each respective region for a vote. Domestic
manufacturers who manufacture softwood lumber in more than one region
could only vote in the region in which they manufacture the majority of
their softwood lumber. 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.
Importer nominees would certify that the majority of their softwood
lumber was imported from the respective region for which they were
seeking representation on the Board. They would provide documentation
to verify this if requested by the Board. The names of importer
nominees would then be placed on a ballot by region. The ballots along
with the background statements would be mailed to importers in each
respective region for a vote. Importers who import softwood lumber from
more than one region could only vote in the region from which they
import the majority of their softwood lumber. The votes would be
tabulated for each region with the nominee receiving the highest number
of votes at
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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 BRC also recommended that no two Board members be employed by a
single corporation, company, partnership, or any other legal entity.
This is to ensure that no one entity has control on the Board.
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 1217.42 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 selected 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 BRC.
Section 1217.43 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. If a position became vacant, nominations to fill the
vacancy would be conducted using the nominations process as proposed in
Sec. 1217.41 of the Order. A vacancy would not be required to be
filled if the unexpired term is less than six months.
Section 1217.44 of the proposed Order would specify procedures of
the Board. A majority of the Board members (10) would constitute a
quorum, provided that at least three of the members present were
importers and six were domestic manufacturers. If participation by
telephone or other means were permitted, members participating by such
means would count towards the quorum requirements or other voting
requirements as authorized under the Order. Proxy voting would not be
permitted. A motion would carry if supported by 10 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 (12 members for an 18 member Board and 13 members
for a 19 member Board). If a Board has vacant positions,
recommendations to change the assessment rate or to adopt a budget
would have to pass by an affirmative vote of two-thirds of the Board
members, exclusive of the vacant seats.
For example, if a 19 member Board had a vacancy, there would be 18
Board members. If the Board held a meeting, and 9 members were present
(of which 6 were domestic manufacturers) in person and 4 (of which 3
were importers) participated by telephone, there would be a quorum (13)
for the meeting. If the Board were voting on the upcoming year's
budget, 12 members (.66 x 18 members) would have to vote in favor of
the budget for it to pass.
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 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 10 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.
Section 1217.46 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 create an executive committee and form
other 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 a budget to USDA
for approval 60 calendar days prior to the start of the fiscal year; 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 its activities to manufacturers for the U.S. market; to make
public an accounting of funds received and expended; to receive,
investigate and report to the Secretary complaints of violations of the
Order; and to recommend amendments to the Order as appropriate.
Section 1217.47 of the proposed Order would specify prohibited
activities that are common to all promotion programs authorized under
the 1996 Act. In summary, 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.
Expenses and Assessments
Pursuant to sections 516 and 517 of the 1996 Act, Sec. Sec.
1217.50 through 1217.53 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
[[Page 61010]]
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. For
example, the Board could receive Federal grant funds, subject to
approval by the Secretary, for a specific research project. 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 8 percent of
its available funds for administration, maintenance, and the
functioning of the Board. This limitation would begin two fiscal years
after the Board's first meeting. Reimbursements to USDA would not be
considered administrative costs. As an example, if the Board received
$15 million in assessments during fiscal year 5, and had available $1
million in reserve funds, the Board's available funds would be $16
million. In this scenario, the Board would be limited to spending no
more than $1.28 million (.08 x $16 million) on administrative costs.
While section 515 of the 1996 Act limits such spending to 15 percent of
a board's budget, the BRC believes that 8 percent is appropriate.
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 $15
million, it could carry over no more than $15 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 manufacturers for the U.S. market, other income, and
other funds available to the Board. The Order would provide for an
initial assessment rate of $0.35 per thousand board feet. Domestic
manufacturers would pay assessments based on the volume of softwood
lumber shipped within the United States and importers would pay
assessments based on the volume of softwood lumber 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. The
assessment rate could be no less than $0.35 per thousand board feet and
no more than $0.50 per thousand board feet. Any change in the
assessment rate within this range would be subject to rulemaking by the
Secretary. Anticipated income generated within the assessment range is
addressed in the section titled Initial 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
