Federal Register / Vol. 76, No. 78 / Friday, April 22, 2011 / Proposed Rules 22757 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Part 1217 

[Document Number AMS–FV–10–0015; PR– 

A2] 

RIN 0581–AD03 

Softwood Lumber Research, 

Promotion, Consumer Education and 

Industry Information Order 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Proposed rule and referendum 

order. 

SUMMARY: This rule proposes a 

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. This rule also 

announces that the U.S. Department of 

Agriculture (USDA) is conducting a 

referendum among eligible domestic 

softwood lumber manufacturers and 

importers to determine whether they 

favor implementation of the program. 

The program would be implemented if 

it is favored by a majority of those 

voting in the referendum who also 

represent a majority of the volume of 

softwood lumber represented in the 

referendum. A separate final rule on 

referendum procedures is being 

published in this issue of the Federal 

Register. 

DATES: The voting period is May 23 

through June 10, 2011. To be eligible to 

vote, softwood lumber domestic 

manufacturers and importers must have 

domestically manufactured and/or 

imported 15 million board feet or more 

of softwood lumber during the 

representative period from January 1 

through December 31, 2010. Ballots will 

be mailed to all known domestic 

manufacturers and importers of 

softwood lumber on or before May 16, 

2011. Ballots must be received by the 

referendum agents no later than the 

close of business 4:30 p.m. (Eastern 

Standard Time) on June 10, 2011. 

ADDRESSES: Copies of the proposed 

Order may be obtained from the 

Referendum Agent, Research and 

Promotion Branch, Fruit and Vegetable 

Programs, AMS, USDA, 1400 

Independence Avenue, SW., Room 

0632–S, Stop 0244, Washington, DC 

20250–0244; telephone: (202) 720–9915 

or (888) 720–9917 (toll free); or 

facsimile: (202) 205–2800; or can be 

viewed at http://www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

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). 

As part of this rulemaking process, a 

proposed rule was published in the 

Federal Register on October 1, 2010 (75 

FR 61002). That rule provided for a 60- 

day comment period which ended on 

November 30, 2010. Fifty-five comments 

were received. The comments are 

addressed later in this document. 

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 Office of Management 

and Budget (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 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 proposes an industryfunded 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, assessed 

entities would not 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. 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 that USDA 

is conducting a referendum among 

eligible domestic manufacturers and 

importers to determine whether they 

favor implementation of the program. 

The program would be implemented if 

it is favored by a majority of those 

voting in the referendum who also 

represent a majority of the volume of 

softwood lumber represented in the 

referendum. 

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 

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22758 Federal Register / Vol. 76, No. 78 / Friday, April 22, 2011 / Proposed Rules 

1Spelter, H., D. McKeever, D. Toth, Profile 2009: 

Softwood Sawmills in the United States, USDA, 

p. 7. 

2Micklewright, J.T., Wood preservation statistics, 

American Wood Preservers Assocation, p. 25. 

3Spelter, McKeever and Toth, Profile 2009, p. 15. 

4Western Wood Products Association, 2008 

Statistical Yearbook, p. 32. 

5U.S. Census Bureau, 2009, Construction, http:// 

www.census.gov/mcd/. 

6Spelter, McKeever and Toth, Profile 2009, 

p. 2–5. 

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 

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 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

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 (most recent data 

available to USDA), 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 

Single 

family 

homes 

Multifamily 

homes 

Mobile 

homes 

Residential 

remodeling 

Nonresidential, 

buildings 

Nonresidential, 

other 

Industrial 

and other 

Total 

U.S. 

Volume (billion board feet) 

2003 .................................................................................. 20 .2 1 .7 1 .1 19 .3 3 .6 0 .6 10 .2 56.7 

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Federal Register / Vol. 76, No. 78 / Friday, April 22, 2011 / Proposed Rules 22759 

7Spelter, McKeever and Toth, Profile 2009, p. 15. 

8 Ibid. 

9http://www.fas.usda.gov/gats; accessed 3/12/11. 10Spelter, McKeever and Toth, Profile 2009, 

p. 5–6. 

TABLE 1—U.S. SOFTWOOD LUMBER MARKETS FROM 2003–2009—Continued 

Single 

family 

homes 

Multifamily 

homes 

Mobile 

homes 

Residential 

remodeling 

Nonresidential, 

buildings 

Nonresidential, 

other 

Industrial 

and other 

Total 

U.S. 

2004 .................................................................................. 22 .2 1 .8 1 .1 20 .3 3 .9 0 .5 11 .1 60.8 

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

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

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 (Census),9 imports 

of softwood lumber from 2008 through 

2010 averaged about 10.2 billion board 

feet annually. During those years, 

imports from Canada averaged 9.6 

billion board feet annually, comprising 

about 94 percent of total imports; 

imports from western Europe averaged 

224 million board feet annually, 

comprising about 2.2 percent of total 

imports; and imports from Chile 

averaged 174 million board feet 

annually, comprising about 1.8 percent 

of total imports. Imports from other 

countries accounted for the remaining 2 

percent of total imports for 2008 

through 2010. 

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 

Oregon Georgia 

Costs 

($ per 

thousand 

board feet) 

Revenue 

($ per 

thousand 

board feet) 

Costs 

($ per 

thousand 

board feet) 

Revenue 

($ per 

thousand 

board feet) 

2003 ................................................................................................................. 295 309 311 323 

2004 ................................................................................................................. 330 420 335 378 

2005 ................................................................................................................. 349 370 349 418 

2006 ................................................................................................................. 335 316 349 330 

2007 ................................................................................................................. 297 260 300 269 

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22760 Federal Register / Vol. 76, No. 78 / Friday, April 22, 2011 / Proposed Rules 

11U.S. Department of Labor, Bureau of Labor 

Statistics, 2009, Employment cost index, 

Washington, DC, http://data.bls.gov/PDQ/ 

outside.jsp?survey=ci. accessed 3/27/09. 

12Price 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 (http:// 

www.randomlengths.com). 

TABLE 2—TYPICAL SAWMILL OPERATING COSTS 2003–2008—Continued 

Oregon Georgia 

Costs 

($ per 

thousand 

board feet) 

Revenue 

($ per 

thousand 

board feet) 

Costs 

($ per 

thousand 

board feet) 

Revenue 

($ per 

thousand 

board feet) 

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. 

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. Prices 

rose slightly in 2010 to $284 per 

thousand board feet.12 Competition 

from other building products like 

cement and vinyl has also 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 

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. Assessed 

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 

will 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 must 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. 

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Federal Register / Vol. 76, No. 78 / Friday, April 22, 2011 / Proposed Rules 22761 

This would be the only role of the BRC 

under the program. 

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 Customs and Border 

Protection or CBP, 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 in 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 

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. 

This definition is intended to provide a 

common term for 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. 

Sections 1217.25 and 1217.26 would 

define the terms softwood and softwood 

lumber, respectively. It is noted that 

these section numbers are reversed in 

this proposed rule so that the terms 

appear alphabetically in the Order. 

Thus, the definition for softwood was 

renumbered from § 1217.26 to § 1217.25, 

and the definition for softwood lumber 

was renumbered from § 1217.25 to 

§ 1217.26. 

Section 1217.25 would then define 

the term ‘‘softwood’’ to mean one of the 

botanical groups of trees that have 

needle-like or scale-like leaves, or 

conifers. 

Section 1217.26 would define the 

term ‘‘softwood lumber’’ to mean 

softwood lumber and products 

manufactured from softwood as 

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), and as 

assessed under § 1217.52 of this Order. 

The definition for softwood lumber in 

this proposed rule was modified to 

better state what is subject to this 

proposed program and to make clear 

what softwood lumber is subject to 

assessment. Further, modifications were 

made to § 1217.52 regarding the 

collection of assessments in this 

proposed rule. 

Accordingly, softwood lumber and 

softwood lumber products described in 

section 804 of the SLA of 2008 and 

classified under subheading 4407.10.00, 

4409.10.10, 4409.10.20, and 4409.10.90 

of the HTSUS and would be covered 

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13The HTSUS numbers referred to in this 

discussion are as of January 1, 2008. However, HTS 

subheading 4407.10.00 is now HTS subheading 

4407.10.01. 

under this Order is 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, 

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 is covered 

under the SLA of 2008 and would be 

covered under this Order. All product 

classified under 4418.90.25 would also 

be covered under this Order. 

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 USDA,’’ ‘‘importer,’’ 

‘‘Order,’’ ‘‘person,’’ ‘‘Secretary,’’ ‘‘State,’’ 

‘‘suspend,’’ ‘‘terminate,’’ and ‘‘United 

States,’’ respectively. The definitions are 

the same as those specified in section 

513 of the 1996 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 it is appropriate to appoint an 

additional importer member 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. 

An additional member would represent 

a region representing all countries 

except Canada and the United States, if 

appropriate. 

The volume of softwood lumber 

imported from other countries besides 

Canada is relatively low, averaging 

about 6 percent of total imports from 

2008 through 2010. 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 

(domestic versus importer regions and 

within domestic and importing regions). 

The number of Board members may also 

be changed. 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 depending on 

whether the majority of their business is 

domestic manufacturing or imports. 

Such nominees who domestically 

manufacture the majority of their 

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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 

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 

for Board members. 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 office for 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 for subsequent nominations 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 

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, and thus 10 members would 

constitute a quorum and the majority 

needed to carry a motion except for 

changes to the assessment rate and the 

adoption of the budget where 12 

members must agree. 

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 to 

powers and duties of boards in other 

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. 

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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. 

As an example, § 1217.60 of the 

proposed Order provides authority for 

the Board to conduct research as 

defined in § 1217.23 that includes 

projects to improve softwood lumber’s 

position in building and fire codes. 

While the Board may conduct such 

research, it could not engage in efforts 

to influence government officials to 

modify building and fire codes or 

establish new codes. 

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 

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 

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 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. 

Additionally, domestic product that 

could not be categorized in the HTSUS 

numbers listed in § 1217.52(h) if it were 

an import would not be covered under 

the Order. Further, softwood lumber 

originating in the United States that is 

shipped to locations outside of the 

United States and then shipped back to 

the United States would be covered 

under the Order, provided it could be 

categorized in the HTSUS numbers 

listed in § 1217.52(h). 

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 by the 30th 

calendar day of the month following the 

end of the quarter in which the 

softwood lumber was imported. 

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, USDA converted the 

quantity of softwood lumber in cubic 

meters to the thousand board feet 

equivalent, and then that number was 

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). 

Section 1217.52(h) of the Order would 

prescribe the HTSUS categories covered 

under the program. In the event an 

HTSUS number subject to assessment 

changed and the change is merely a 

replacement of a previous number and 

has no impact on the description of the 

softwood lumber involved, assessments 

would continue to be collected based on 

the new number. 

Articles brought into the United 

States temporarily and for which an 

exemption is claimed under subchapter 

XIII of chapter 98 of the HTSUS would 

not be covered under this Order. If 

assessments are collected by Customs 

for these products, the importer may 

apply to the Board for a refund of 

assessments. 

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. 

As previously mentioned, § 1217.52 

regarding the collection of assessments 

has been modified in this proposed rule 

to make clear what softwood lumber is 

subject to assessment. Additionally, 

§ 1217.52 was modified to link 

assessable imported product directly to 

HTSUS codes. 

Further, all imported softwood 

lumber covered under the Order would 

have a quantity associated with it in 

cubic meters or an equivalent measure. 

Thus, the factor listed in the first 

proposed rule used to convert value in 

dollars to a quantity has been removed 

because it is no longer necessary. 

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 

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 present a copy of the 

certificate to Customs. If accepted by 

Customs, such imported softwood 

lumber would not be subject to 

assessments. If Customs collects the 

assessment, the Board would refund 

such importers their assessments no 

later than 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 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 together 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 

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. 

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. 

As previously mentioned, softwood 

lumber manufactured in the United 

States that is shipped to locations 

outside of the United States for minor 

processing and then shipped back to the 

United States would be subject to 

assessment. 

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 is not a split 

operation 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 

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22766 Federal Register / Vol. 76, No. 78 / Friday, April 22, 2011 / Proposed Rules 

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. 

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 

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 to the Order as a result of 

proposed recordkeeping and reporting 

requirements would be kept 

confidential by all officers, employees, 

and agents of the Board and USDA. 

Such information could only be 

disclosed if the Secretary considered it 

relevant, and the information were 

revealed in a judicial proceeding or 

administrative hearing brought at the 

direction or at the request of the 

Secretary or to which the Secretary or 

any officer of USDA were a party. Other 

exceptions for disclosure of confidential 

information would include the issuance 

of general statements based on reports 

or on information relating to a number 

of persons subject to the Order, if the 

statements did not identify the 

information furnished by any person, or 

the publication, by direction of the 

Secretary, of the name of any person 

violating the Order and a statement of 

the particular provisions of the Order 

violated. 

Miscellaneous Provisions 

Referenda 

Pursuant to section 518 of the 1996 

Act, § 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 

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 programs 

authorized under the 1996 Act. 

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 

prepared this regulatory flexibility 

analysis. 

The purpose of the RFA is to fit 

regulatory actions to the scale of 

businesses subject to such actions so 

that small businesses will not be 

disproportionately burdened. The Small 

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14Spelter, McKeever and Toth, Profile 2009, p. 

15. 15Percentages 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). 

16Spelter, McKeever and Toth, Profile 2009, 

p. 2–5. 

17Spelter, H.D. McKeever, M. Alderman, Profile 

2007: Softwood Sawmills in the United States and 

Canada, USDA, p. 10. 

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 (most recent data available to 

USDA), there were an average of 595 

domestic manufacturers of softwood 

lumber in the United States annually.14

This number represents separate 

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 proposes an industryfunded 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 will 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 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 an ideal 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

Assessment options (per thousand board feet) 

Annual shipment levels 

(billion board feet) 

40 50 60 

$0.25 ................................................................................................................................... $10 million ........ $12.5 million ..... $15 million. 

$0.35 ................................................................................................................................... $14 million ........ $17.5 million ..... $21 million. 

$0.50 ................................................................................................................................... $20 million ........ $25 million ........ $30 million. 

1Assumes no exemption. 

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22768 Federal Register / Vol. 76, No. 78 / Friday, April 22, 2011 / Proposed Rules 

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

Assessment options (per thousand board feet) 

Annual shipment levels 

(billion board feet) 

40 50 60 

$0.25 ................................................................................................................................... $8.9 million ....... $11.1 million ..... $13.3 million. 

$0.35 ................................................................................................................................... $12.4 million ..... $15.5 million ..... $18.9 million. 

$0.50 ................................................................................................................................... $17.7 million ..... $22.2 million ..... $26.6 million. 

1Assumes 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. 

This action would impose additional 

reporting and recordkeeping burden on 

domestic manufacturer and importers of 

softwood lumber. 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 

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 and are 

not a split operation 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 have been 

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 

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. The 

Endowment interviewed 35 companies, 

which included a cross section of 

various levels of size and ownership 

types within the softwood lumber 

industry. 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. Articles and notices were also 

published in various newspapers and 

newsletters about the proposed 

program. 

Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. 

Chapter 35), AMS has requested 

approval of a new information 

collection and recordkeeping 

requirements for the proposed 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: July 31, 

2012. 

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. 

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Federal Register / Vol. 76, No. 78 / Friday, April 22, 2011 / Proposed Rules 22769 

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 

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 will 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 

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 and are 

not a split operation 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 

final rule on referendum procedures 

which is published separately in this 

issue of the Federal Register. 

Information collection requirements 

that are included in this proposal 

include: 

(1) NOMINATION FORM 

Estimate of Burden: Public 

recordkeeping burden for this collection 

of information is estimated to average 

0.25 hour per application. 

Respondents: 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. 

(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. 

(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 15 million board feet or more 

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 

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22770 Federal Register / Vol. 76, No. 78 / Friday, April 22, 2011 / Proposed Rules 

of information is estimated to average 

0.5 hours per exemption form. 

Respondents: Organic domestic 

manufacturers and importers. 

Estimated Number of Respondents: 1. 

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. 

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. 

Analysis of Comments 

The previously proposed rule 

concerning this action published in the 

Federal Register on October 1, 2010, 

provided a 60-day comment period 

ending November 30, 2010. Fifty-five 

comments were received. Of the 55 

comments, 3 were duplicates. Of the 

remaining 52 comments, 41 supported 

the proposed Order, 7 were opposed, 3 

commented without taking a position on 

the program and 1 comment was not 

related to this rulemaking action. Of the 

41 comments in support, 27 supported 

the rule with no changes and 14 

recommended changes. The comments 

are addressed in the following 

paragraphs. 

Comments in Full Support 

The 27 comments which supported 

the proposed Order with no changes 

noted the difficult economic conditions 

that the softwood lumber industry is 

experiencing. They stated that 

marketing campaigns from competing 

products have contributed to softwood 

lumber’s loss of market share. Several 

commenters mentioned the need to 

promote the environmental benefits of 

wood and how this would likely result 

in a greater acceptance of lumber for 

residential, commercial, and outdoor 

construction in the United States. 

Several commenters also stated that a 

program to promote the benefits of 

softwood lumber and stimulate demand 

would benefit rural communities where 

many softwood lumber mills are 

located. 

Comments in Support, with 

Modification 

Fourteen comments which supported 

the proposed Order reiterated the 

comments in full support, but also 

suggested some changes. Four 

comments raised concerns regarding the 

definition of domestic manufacturer in 

§ 1217.8 and the definition of softwood 

lumber in § 1217.26 and which products 

would be assessed. One commenter 

stated that domestic manufacturers do 

not include entities that remanufacture 

softwood lumber that has already been 

assessed, but the definition of softwood 

lumber includes things like coniferous 

wood siding and wood flooring which 

are remanufactured products that would 

likely be assessed when originally 

shipped from a sawmill. The commenter 

stated that such products should not be 

assessed again. The commenter also 

believes there is a difference in the way 

domestic and imported fence pickets 

and cedar fencing would be treated 

under the program, stating that 

imported fence pickets and cedar 

fencing would be exempt from 

assessment and that such domestically 

manufactured products should also be 

exempt. The commenter recommended 

that the proposed Order be clarified 

accordingly. 

The commenter is correct in that 

under § 1217.8 of the proposed Order, 

the term domestic manufacturer would 

not include any person who 

remanufactures softwood lumber that 

has already been subject to assessment. 

Pursuant to § 1217.8, domestic 

manufacturers are first handlers, and a 

first handler is defined in the 1996 Act 

as the first person who buys or takes 

possession of an agricultural commodity 

like softwood lumber directly from a 

producer (i.e., tree farmer) for 

marketing. Thus, softwood lumber that 

is manufactured domestically, sold, and 

shipped within the United States to 

another manufacturer who makes 

another softwood lumber product would 

only be assessed once. For example, if 

domestic manufacturer A (a first 

handler) manufactures softwood 

lumber, pays an assessment, and ships 

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the lumber to domestic manufacturer B 

who remanufactures the lumber into a 

product such as coniferous wood siding 

or wood flooring that is covered under 

the definition of softwood lumber in 

§ 1217.26, such product(s) would not be 

subject to another assessment. 

Additionally, if the first domestic 

manufacturer (first handler) 

manufactures softwood lumber and 

makes a product that would not be 

covered under the softwood lumber 

definition if it were an import, such 

product would not be assessed. For 

example, if domestic manufacturer A 

manufactures softwood lumber and 

makes cedar fence pickets or cedar 

fencing, such products would be exempt 

from assessment. However, if domestic 

manufacturer A manufactures softwood 

lumber, sells and ships the lumber to 

manufacturer B who makes fence 

pickets or cedar fencing, manufacturer 

A would pay assessments. 

As previously mentioned, USDA has 

modified § 1217.26 regarding the 

definition of softwood lumber and 

§ 1217.52 regarding the collection of 

assessments on imports. While 

modifications have been made to the 

proposed rule to facilitate program 

administration, no changes have been 

made to the proposed Order based on 

this comment. 

Two comments raised concern that 

softwood lumber produced domestically 

that is exported for minor processing 

and subsequently re-imported would be 

exempt from assessment. The 

commenters expressed concern that 

softwood lumber manufactured in the 

United States for U.S. consumption 

would avoid assessment. USDA concurs 

with the comment. Accordingly, 

§ 1217.52 has been modified to specify 

that softwood lumber that originates in 

the United States, is shipped to 

locations outside of the United States, 

and is then shipped back to the United 

States would be covered under the 

proposed Order and subject to 

assessments, provided it could be 

categorized in the HTSUS numbers 

listed in § 1217.52(h). 

Three comments in support of the 

program made suggestions regarding the 

composition of the Board. One 

commenter stated that the Canadian east 

includes three production areas that 

supply the U.S. market—Ontario, 

Quebec, and four maritime provinces 

and that the Board member seats 

representing the Canadian East Region 

should be increased from two to three. 

Section 1217.40(b) of the proposed 

Order provides that on the 18 or 19 

member Board, 4 members shall import 

softwood lumber from the Canadian 

West Region, which consists of British 

Columbia and Alberta, and 2 members 

shall import softwood lumber from the 

Canadian East Region, which consists of 

the Canadian territories and all other 

Canadian provinces other than British 

Columbia and Alberta. According to 

Customs data, imports of softwood 

lumber from the proposed Canadian 

East Region comprised one-third or less 

of the total Canadian softwood lumber 

imports from 2008 through 2010. The 

proposed Order provides that 2 of the 6 

Canadian importers on the Board, or 

one-third, shall be from the Canadian 

East Region. Thus, the allocation of 

membership reflects the current 

distribution of the volume softwood 

lumber imports between the eastern and 

western regions of Canada. Should this 

distribution change, § 1217.40(c)(2) of 

the proposed Order provides authority 

for reapportionment of the Board 

membership through rulemaking by the 

Secretary. The proposed Order requires 

the Board to review in each 5-year 

period, based on a 3-year average, the 

geographical distribution of the volume 

of softwood lumber manufactured and 

shipped within the United States and 

the volume of softwood lumber 

imported into the United States. The 

destination of volumes between regions 

must also be considered. Thus, no 

changes have been made to the 

proposed Order based on this comment. 

One comment also recommended that 

members of the Board be allowed to 

designate an alternate with participation 

and voting rights in case the member is 

unable to participate in a meeting. The 

BRC recommended that the Board have 

no alternates. 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. 

Further, the 1996 Act does not require 

alternates. Additionally, the proposed 

Order provides flexibility for the Board 

to permit participation in meetings by 

telephone or other means. Specifically, 

§ 1217.44(a) states that, if participation 

by telephone or other means is 

permitted, members participating by 

such means would count as present in 

determining quorum or other applicable 

voting requirements. No changes have 

been made to the proposed Order based 

on this comment. 

One comment in support of the 

proposed Order recommended that the 

lumber retail and distribution sector be 

represented on the Board. The 

commenter cited section 515 of the 1996 

Act that authorizes the Secretary to 

appoint members and alternates to a 

board from among producers and first 

handlers and others in the marketing 

chain as appropriate. The commenter is 

correct regarding the authority in the 

1996 Act. However, the BRC 

recommended that the Board be 

composed of domestic manufacturers 

and importers only. If at a future time 

the Board determined that 

representation from other industry 

sectors was warranted, the Board could 

make a recommendation to the 

Secretary. Such a change would require 

rulemaking by the Secretary. If other 

industry sectors were to also pay 

assessments, the Secretary would 

conduct a referendum among those new 

sectors, domestic manufacturers and 

importers to determine if the change 

was supported by the industry. 

Additionally, the Order provides that 

Board committees and subcommittees 

could include individuals other than 

Board members. Representatives from 

other industry sectors could serve on 

these committee and subcommittees. No 

changes have been made to the 

proposed Order based on this comment. 

One comment in support of the 

program suggested several changes to 

various sections of the proposed Order. 

First, in § 1217.47(b) regarding 

prohibited activities, the commenter 

suggested adding the phrase ‘‘other than 

recommending to the Secretary 

amendments to this Order.’’ However, 

§ 1217.47(b) currently reads that the 

Board may not engage in, and shall 

prohibit the employees and agents of the 

Board from engaging in: ‘‘* * * (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 

***’’ Thus, the language suggested by 

the commenter is already in proposed 

§ 1217.47(b). Thus, no change has been 

made to the proposed Order based on 

this comment. 

In § 1217.47(c), the commenter 

suggested adding the word ‘‘geographic’’ 

before the word ‘‘origins’’ so the 

paragraph would read as follows: ‘‘No 

program, plan or project including 

advertising shall be false or misleading 

or disparaging to another agricultural 

commodity. Softwood lumber of all 

geographic origins shall be treated 

equally.’’ The commenter believes this 

would clarify that origins refers to 

regions and not species. USDA concurs 

with the comment and has modified 

paragraph (c) of § 1217.47 accordingly. 

Eight comments in support of the 

program made recommendations 

regarding assessments and program 

coverage. One comment suggested 

reducing the assessment rate and 

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expanding program coverage to other 

wood products like wood panel 

products and engineered wood 

products. The proposal and supporting 

data submitted by proponent BRC 

pertained to softwood lumber. USDA 

does not have sufficient data to warrant 

expanding program coverage. Regarding 

the assessment rate, the BRC reviewed 

various options in assessment rates and 

exemption levels and concluded that 

$20 million in assessment income is an 

ideal threshold for an effective program 

that could help to improve the market 

for softwood lumber. Ultimately the 

BRC determined that an assessment 

range of $0.35 to a maximum of $0.50 

per thousand board feet with an 

exemption threshold of 15 million board 

feet would generate sufficient income to 

support an effective promotion program 

for softwood lumber. A lower 

assessment rate would not generate 

sufficient funds to meet the goals of this 

program. No change has been made to 

the proposed Order based on this 

comment. 

One comment recommended that 

assessments be based on the ability of 

the residential market to support an 

increase in the cost of softwood lumber. 

The commenter also opined that the 

Order should not establish marketing, 

research, or promotion programs that 

require assessments greater than the 

current residential market can support. 

The Board may consider such 

information when it formulates its 

budget each year. The proposed Order 

provides for a range in the assessment 

rate from $0.35 to $0.50 per thousand 

board feet. The range is intended to 

provide the Board flexibility to respond 

to such economic conditions. Thus, 

there is already a mechanism in place 

for the Board to consider market 

conditions. No change has been made to 

the proposed Order based on this 

comment. 

Six comments requested that the 

collection of assessments be delayed 

until January 2012 due to the economic 

hardship that the softwood lumber 

industry is currently facing. Allowing 

for the assessment rate to start in 

January 2012 would provide the 

industry with additional time to prepare 

for the program. Accordingly, 

assessments would be collected under 

the program no earlier than January 

2012. 

Two comments suggested making a 

change to § 1217.50(f) by adding the 

phrase ‘‘that are inconsistent with the 

goals of the Order’’ after the phrase ‘‘free 

from any encumbrances’’ so the section 

would read as follows: ‘‘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 that are inconsistent with 

the goals of this Order by the donor and 

the Board shall retain complete control 

of their use * * *’’ USDA has 

determined that this addition is not 

necessary because USDA would not 

permit any action that was inconsistent 

with the Order. No change has been 

made to the proposed Order based on 

this comment. 

Two comments suggested that the 

proposed Order be revised so that the 

Board had the option to pursue 

international markets with assessment 

funds or in conjunction with Foreign 

Agricultural Service (FAS) funds. Under 

the proposed Order, § 1217.53(c) would 

exempt exports of softwood lumber 

from the United States from assessment. 

Thus, since exports would not be 

assessed, assessment funds could not be 

used to promote exports. However, this 

section also provides authority for the 

Board to recommend to the Secretary 

that exports be assessed if deemed 

appropriate. Should exports ever be 

assessed and covered under the 

program, assessment funds could then 

be used for international promotion. 

Additionally, § 1217.50(f) specifies that 

the Board may receive funds from 

outside sources, including FAS, with 

approval of the Secretary, for specific 

authorized projects. Thus, the Order as 

proposed has a mechanism in place to 

conduct international promotion in the 

future. No change to the proposed Order 

has been made based on this comment. 

Four comments in support of the 

program expressed concern regarding 

the minimum quantity exemption under 

the proposed Order. One comment 

recommended lowering the exemption 

level of 15 million board feet to reduce 

the unit cost incurred by those paying 

into the program. The commenter 

referenced the term de minimis as it is 

used in the North American Free Trade 

Agreement and the World Trade 

Organization glossary. One commenter 

requested that exemption procedures be 

developed so that entities exempt under 

the Order would not pay assessments 

and then have their funds later refunded 

back. The commenter opined that this 

would place a heavy burden on smaller 

importers because Customs would 

collect the assessment and the funds 

would be tied up for about 90 days until 

refunded by the Board. 

Finally, two comments requested 

assurance that companies who import 

and domestically manufacture softwood 

lumber receive only one 15 million 

board foot exemption. 

Section 516(a)(1) of the 1996 Act 

provides authority for the Secretary to 

exempt from an order any de minimis 

quantity of an agricultural commodity 

otherwise covered by the order. 

However, the 1996 Act does not define 

the term de minimis and USDA is not 

limited to using the definition of de 

minimis as specified in another law or 

agreement. The de minimis quantity is 

defined for a particular program and 

industry. The BRC reviewed various 

options for the exemption and 

determined that 15 million board feet 

would be appropriate because such a 

level would still provide the Board with 

resources to have a program that could 

be successful. USDA concurs with this 

exemption level because this level 

would exempt small operations that 

would otherwise be burdened by the 

assessment. 

In response to the commenters’ 

request for assurance that a company 

who imports and domestically 

manufactures softwood lumber would 

only be eligible for one 15 million board 

foot exemption, USDA confirms that 

limitation. For example, if company A 

imports 20 million board feet of 

softwood lumber and domestically 

manufactures and ships within the 

United States 40 million board feet of 

softwood lumber during a fiscal year, 

company A’s exemption would be 

limited to one 15 million board feet 

exemption on the total 60 million board 

feet assessable under this proposed 

program. No changes to the proposed 

Order have been made based on these 

comments. 

In response to the comment about 

exemption procedures, USDA is 

working to develop a process whereby 

an importer could provide Customs a 

copy of the exemption certificate issued 

by the Board. However, the only 

available alternative at this time is for 

Customs to collect the assessment, and 

the Board to refund such importers their 

assessments no later than 60 calendar 

days after receipt of by the Board. 

Section 1217.53(a) has been revised 

accordingly. 

Three comments in support of the 

program expressed concern with the 

exemption for organic softwood lumber. 

Two commenters were concerned with 

a potential loophole. One commenter 

requested that the exemption be 

removed from the proposed Order. 

Specifically, the commenter argued that 

softwood lumber cannot be labeled or 

marketed as organic product under the 

Organic Food Production Act of 1990 

because it is not marketed for human or 

livestock consumption. The commenter 

referenced the cotton promotion 

program and exemption for organic 

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cotton, but added that cottonseed oil is 

used in a number of food products (i.e., 

cottonseed oil for humans and 

cottonseed meal for livestock and 

poultry). 

The reference to the term 

consumption under the Organic Food 

Production Act of 1990 includes the 

consumption of non-food products. For 

example, under the cotton research and 

promotion program, organic cotton 

products are exempt from assessment, 

including non-food products. Thus, 

organic softwood lumber would be 

exempt from assessment under the 

proposed Order. Regarding the concern 

about a loophole, domestic 

manufacturers and importers would 

have to provide sufficient information to 

the Board to warrant an organic 

exemption. No changes have been made 

to the proposed Order based on these 

comments. 

Three comments in support of the 

program expressed concern with the 

section of the proposed Order on 

programs, plans, and projects. One 

commenter wants to ensure that the 

Board has the flexibility to use the 

Forest Products Laboratory in 

Wisconsin for research projects and 

would not be limited to certain USDA 

laboratories. Section 1217.60 of the 

proposed order provides that the Board 

would have such flexibility. Another 

comment opined that an appropriate 

amount of funds raised should be 

reinvested in marketing, research, and 

promotion towards the use of softwood 

lumber in construction, renovation and 

repair of residential and light 

commercial structures. Under proposed 

§ 1217.60, the Board would have the 

flexibility to conduct such research 

projects as it determines are appropriate 

and within the scope of the Order. 

Another commenter argued that the 

proposed rule was unclear as to what 

programs and/or organizations would be 

eligible to receive Board funds. As an 

example, the commenter asked whether 

existing codes and standards activities 

would be eligible expenses under the 

program. Pursuant to § 1217.60, the 

Board, with approval of the Secretary, 

could fund projects for purposes 

authorized under the Order. The Board 

could not fund programs to influence 

government action such as the 

development of codes and standards or 

lobbying for changes in codes and 

standards. No changes have been made 

to the proposed Order based on these 

comments. 

Comments Opposed 

Seven comments received were 

opposed to the proposed program. One 

commenter argued that there was no 

need for the program to spend American 

tax dollars and that another Federal 

bureaucracy is unnecessary. The 

proposed program would be paid for by 

the softwood lumber industry through 

assessments on domestic manufacturers 

and importers of 15 million board feet 

or more annually. Research and 

promotion programs overseen by USDA 

are self-help programs funded by their 

respective industry and do not receive 

taxpayer funds. 

One commenter opined that, with the 

economy today now is not the time to 

assess lumber companies an extra $0.35 

per thousand board feet. Another 

commenter opined that the economic 

downturn in the softwood lumber 

industry was not due to the lack of 

advertising dollars spent promoting 

softwood lumber but is more directly 

related to the housing crisis in the 

United States. As previously discussed, 

the economic downturn has had an 

adverse effect on the softwood lumber 

industry. USDA also recognizes the 

impact of the housing crisis on the 

softwood lumber industry. However, 

USDA has received sufficient 

justification to warrant proceeding to a 

referendum so that industry members 

may vote as to whether a softwood 

lumber research and promotion program 

should be implemented. Additionally, 

as previously mentioned, USDA 

received several comments that 

referenced the state of the economy and 

requested that assessments be collected 

no earlier than January 2012. Allowing 

for the assessment rate to start in 

January 2012 would provide the 

industry with additional time to prepare 

for the program. USDA has accepted 

those comments and ensures that, if the 

program passes in referendum, 

assessments would be collected no 

earlier than January 2012. 

One commenter asked why all forest 

product industry segments would not 

participate in the assessment since 

assessment funds would be used to 

promote the use of forest products. The 

proposed program and justification that 

USDA received from the BRC was for 

softwood lumber only and is consistent 

with the enabling statute. It is AMS’ 

understanding that other forest product 

industry segments discussed the 

possibility of joining with softwood 

lumber segments but the decision was 

made to pursue promotion efforts 

separately. 

Two commenters opined that 

softwood lumber is different from beef 

and milk (that have active promotion 

programs) in that the softwood lumber 

industry encompasses many different 

factions, species, and sources. They 

argued that it would be difficult to see 

a singular promotion campaign for 

softwood lumber (like ‘‘Got Milk?’’). 

Other similar promotion programs 

administered by USDA cover 

commodities that are from various 

sources and made into multiple 

products. Potatoes are produced in the 

U.S. and imported from Canada and 

other places and made into French fries, 

potato chips, and also used in many 

recipes. Generic promotion programs 

increase the total market for a product 

to the benefit of an industry, even when 

the commodity may be made into 

various products. 

One commenter opined that it was 

difficult to support an unknown 

program with unknown financial costs 

and details. The program as proposed 

would provide for an initial assessment 

rate of $0.35 per thousand board feet. 

The assessment rate could be raised 

through rulemaking by the Secretary up 

to a maximum of $0.50 per thousand 

board feet. With the 15 million board 

foot exemption and the initial $0.35 per 

thousand board foot assessment rate, it 

is estimated that between $12.4 and 

almost $19 million would be raised 

annually with shipment levels ranging 

from 40 to 60 billion board feet, 

respectively. While the benefits of the 

program are difficult to quantify prior to 

it going into effect, § 1217.61 of the 

proposed Order would require the 

Board to conduct at least once every 5 

years an independent evaluation of the 

effectiveness of the Order and the 

programs conducted. Thus, the 

proposed Order would include a 

mechanism whereby its effectiveness 

would be periodically evaluated. 

Similar evaluations are required of other 

research and promotion programs 

overseen by USDA and can be viewed 

at http://www.ams.usda.gov/ 

FVPromotion. 

Two commenters stated that most of 

their product line is sold in a niche 

market and that they would not benefit 

from the program. They are concerned 

that, if they are forced to sponsor efforts 

in other markets, they could not survive 

in their own market niche. Another 

commenter wants to continue to have 

freedom of choice as to where they 

decide to put their funds. One 

commenter expressed concern that the 

program would favor large mills 

producing into the commodity markets. 

Generic promotion, research, and 

information activities for agricultural 

commodities play a unique role in 

advancing the demand for such 

commodities, since such activities 

increase the total market for a product 

to the benefit of consumers and all 

producers. These generic activities are 

of particular benefit to small producers 

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18Spelter, McKeever and Toth, Profile 2009, p. 2. 

who lack the resources or market power 

to advertise on their own. As 

contemplated by the 1996 Act, generic 

activities increase the general market 

demand for an agricultural commodity. 

The Board, with the approval of the 

Secretary, would decide how the funds 

are used and all sectors of the industry 

would be encouraged to participate in 

the deliberations. 

One commenter stated that softwood 

lumber does not compete with other 

construction material like concrete and 

steel, which is the primary target of the 

program. The commenter stated further 

that the domestic industry does compete 

with imported softwood lumber, 

primarily from Europe and South 

Africa. According to USDA’s Forest 

Service, softwood lumber competes 

with numerous alternatives in domestic 

end uses, including steel, concrete, 

brick, concrete block, poured concrete, 

vinyl, wood-plastic composite lumber, 

and laminated veneer.18 Additionally, 

according to Census data, the major 

source of imported softwood lumber is 

from Canada. As previously mentioned, 

from 2007 through 2009, imports from 

Canada comprised about 92 percent of 

the total softwood lumber imports into 

the United States. The purpose of 

research and promotion programs is to 

maintain and expand the market for the 

respective commodity. If the market for 

softwood lumber in the United States is 

expanded, both domestic and imported 

softwood lumber would benefit. 

No changes have been made to the 

proposed Order based on these seven 

opposing comments. 

Additional Comments 

Three comments were received that 

neither supported nor opposed the 

program, but raised concerns or made 

recommendations. One comment 

recommended that USDA first seek 

funds from the BSCL to jump start the 

program because it already has funds 

from the United States and Canada. 

However, the 1996 Act requires 

promotion programs to be funded by the 

industry itself. Specifically, section 517 

of the 1996 Act provides that while an 

order issued under the 1996 Act is in 

effect, assessment shall be paid by first 

handlers (domestic manufacturers) with 

respect to the agricultural commodity 

produced and marketed and by 

importers with respect to the 

agricultural commodity imported into 

the United States, if the imported 

agricultural commodity is covered by 

the order. Further, the Board could 

accept donations to conduct its 

programs. Thus, no change has been 

made to the proposed Order based on 

this comment. 

The commenter also recommended 

collecting $20 million in assessments as 

a start-up, and then after 2 years, have 

an informed vote, adding that a proper 

assessment rate could then be justified. 

While the 1996 Act allows for a 

referendum to be conducted not later 

than 3 years after assessments first begin 

under an order, the BRC recommended 

that an initial referendum be conducted 

prior to the order going into effect. The 

BRC also recommended that a 

referendum be conducted every 5 years 

thereafter to determine whether the 

program should continue. The BRC’s 

proposal is consistent with the 1996 Act 

and an initial referendum will be 

conducted prior to program 

implementation. No change has been 

made to the proposed Order based on 

this comment. 

One comment raised concerns 

regarding imports. The commenter 

expressed concern with § 1217.52(g) in 

the proposed rule which stated that if 

Customs does not collect an assessment 

from the importer, the importer must 

pay the assessment directly to the Board 

within 30 calendar days after 

importation. The commenter noted that 

domestic manufacturers would pay 

assessments to the Board no later than 

the 30th calendar day of the month 

following the end of the quarter in 

which the softwood lumber was 

shipped. Given this difference in 

payment times between domestic 

manufacturers and importers who pay 

assessments directly to the Board, 

USDA revised the proposed Order to 

require importers who submit their 

assessments to the Board to pay such 

assessments no later than the 30th 

calendar day of the month following the 

end of the quarter in which the 

softwood lumber was imported. This 

would bring the payment time frame for 

import assessments paid directly to the 

Board in line with the domestic 

industry. Section 1217.52(g) has been 

renumbered as § 1217.52(j) and revised 

accordingly. 

The commenter expressed concern 

with assessing the importer of record. 

The commenter stated that imported 

volume would incur additional Customs 

brokerage and other related charges that 

would disproportionately impact the 

importer of record. The commenter also 

was concerned that one company could 

use multiple entities for importation 

and circumvent the assessment by 

importing less than the 15 million board 

foot exemption threshold through each 

entity. The commenter is also concerned 

that smaller Canadian companies who 

ship to the United States through larger 

wholesalers and brokers may not receive 

the benefit of an exemption for their 

first 15 million board feet of softwood 

lumber imported. The commenter stated 

further that smaller Canadian softwood 

lumber producers are generally not the 

importer of record but are represented 

by brokers and wholesalers who take 

ownership of the product and import it 

into the United States. The commenter 

is concerned that the larger entities 

could pass the assessment on to the 

smaller Canadian producer for 100 

percent of the product although the first 

15 million board feet should be exempt. 

The commenter suggested that, while 

the SLA is in effect, the assessment 

could be applied to those Canadian 

producers accessing the U.S. market 

according to the applicable Export 

Import Control Bureau Number that has 

been assigned to Canadian companies 

who produce softwood lumber destined 

for the United States. 

Section 517(a)(2) of the 1996 Act 

provides authority to assess importers 

under an order, and section 513(6) 

defines the term importer to mean any 

person who imports an agricultural 

commodity from outside of the United 

States for sale in the United States as a 

principal or as an agent, broker, or 

consignee of any person. The 1996 Act 

provides no authority to assess foreign 

producers. Transactions between foreign 

producers and brokers/wholesalers are 

outside the scope of an order. 

Additionally, each importer assessed 

under the program must be a separate 

entity with a separate tax identification 

number. Otherwise, all entities under 

the same tax identification number 

would be considered one entity subject 

to the Order. This information would be 

reviewed periodically by the Board 

during audits to check compliance with 

the program. Thus, no change has been 

made to the proposed Order based on 

this comment. 

One commenter suggested that the 

exemption level of 15 million board feet 

be raised to 100 million board feet and/ 

or that the exemption be made available 

to qualified Small Business 

Administration companies. As 

previously mentioned, the BRC 

reviewed various options for the 

exemption and determined that 15 

million board feet would be appropriate. 

This level, based on the data reviewed, 

is not unreasonable. Furthermore, 

raising the exemption to 100 million 

board feet or another level would not 

generate sufficient income to fund the 

program. Thus, no change has been 

made to the proposed Order based on 

this comment. 

One commenter suggested that USDA 

be more proactive to directly inform 

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every affected manufacturer of the 

impending vote. The commenter did not 

believe that publication of the proposed 

rule in the Federal Register and 

receiving information through various 

industry association networks was 

sufficient. In order to provide additional 

outreach to those who USDA believes 

would be regulated under the proposed 

rule, USDA is mailing a copy of this rule 

to all known potentially affected 

industry members and will do a 

subsequent mailing of ballots, 

instructions and a summary of the 

program to all industry members. 

In the October 1, 2010, proposed rule, 

comments were also invited on the 

information collection requirements 

prescribed in the Paperwork Reduction 

Act section of this rule. Specifically, 

comments were solicited on: (a) 

Whether the proposed collection of 

information is necessary for the proper 

performance of functions of the 

proposed Order and USDA’s oversight 

of the proposed Order, including 

whether the information would have 

practical utility; (b) the accuracy of 

USDA’s estimate of the burden of the 

proposed collection of information, 

including the validity of the 

methodology and assumptions used; (c) 

the accuracy of USDA’s estimate of the 

principal manufacturing areas in the 

United States for 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. 

No comments were received regarding 

information collection. 

While the proposal set forth below 

has not received the approval of USDA, 

it is determined that this proposed 

Order is consistent with and would 

effectuate the purposes of the 1996 Act. 

As previously mentioned, for the 

proposed Order to become effective, it 

must be approved by a majority of 

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. 

Referendum Order 

Pursuant to the 1996 Act, a 

referendum will be conducted to 

determine whether eligible domestic 

manufacturers and importers favor 

issuance of the proposed Order. Section 

518 of the 1996 Act authorizes USDA to 

conduct a referendum prior to the Order 

going into effect. 

The representative period for 

establishing voter eligibility for the 

referendum shall be the period from 

January 1 through December 31, 2010. 

Domestic manufacturers must have 

manufactured and shipped 15 million or 

more board feet of softwood lumber 

within the United States and importers 

must have imported 15 million board 

feet or more of softwood lumber to the 

United States during the representative 

period to be eligible to vote. The Order 

shall become effective if it is approved 

by a majority of those eligible persons 

voting in the referendum who also 

represent a majority of the volume of 

softwood lumber represented in the 

referendum. 

The referendum procedures that were 

issued pursuant to the 1996 Act shall be 

used to conduct the referendum (7 CFR 

1217.100 through 1217.108). The 

referendum shall be conducted by mail 

from May 23 through June 10, 2011. 

Ballots must be received by the 

referendum agents no later than the 

close of business, 4:30 p.m. (Eastern 

Standard Time) on June 10, 2011, to be 

counted. 

Maureen T. Pello of the USDA, AMS, 

Research and Promotion Branch is 

designated as the referendum agent to 

conduct the referendum. Prior to the 

first day of the voting period, the 

referendum agents will mail the ballots 

to be cast in the referendum and voting 

instructions to all eligible voters. Any 

domestic manufacturer or imporer who 

does not receive a ballot should contact 

the referendum agent cited in the FOR

FURTHER INFORMATION CONTACT section 

no later than one week before the end 

of the voting period. 

In accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. 

Chapter 35), the referendum ballot was 

submitted to the OMB and approved 

under OMB Control No. 0581–NEW. 

List of Subjects in 7 CFR Part 1217 

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 or Softwood Lumber Board. 

1217.4 Board foot. 

1217.5 Conflict of interest. 

1217.6 Customs or CBP. 

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. 

1217.26 Softwood lumber. 

1217.27 State. 

1217.28 Suspend. 

1217.29 Terminate. 

1217.30 United States. 

Softwood Lumber Board 

1217.40 Establishment and membership. 

1217.41 Nominations and appointments. 

1217.42 Term of office. 

1217.43 Removal and vacancies. 

1217.44 Procedure. 

1217.45 Reimbursement and attendance. 

1217.46 Powers and duties. 

1217.47 Prohibited activities. 

Expenses and Assessments 

1217.50 Budget and expenses. 

1217.51 Financial statements. 

1217.52 Assessments. 

1217.53 Exemption from assessment. 

Promotion, Research and Information 

1217.60 Programs, plans and projects. 

1217.61 Independent evaluation. 

1217.62 Patents, copyrights, inventions, 

product formulations, and publications. 

Reports, Books, and Records 

1217.70 Reports. 

1217.71 Books and records. 

1217.72 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. 

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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. 

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 or BRC. 

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 or Softwood Lumber 

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 Board foot. 

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. 

§ 1217.5 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. 

§ 1217.6 Customs or CBP. 

Customs or CBP means Customs and 

Border Protection, an agency of the 

United States Department of Homeland 

Security. 

§ 1217.7 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. 

§ 1217.8 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 in 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. 

§ 1217.9 Export. 

Export means to manufacture and 

ship softwood lumber from within the 

United States to locations outside of the 

United States. 

§ 1217.10 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 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. 

§ 1217.12 Information. 

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 Manufacture. 

Manufacture means the process of 

transforming softwood logs into 

softwood lumber. 

§ 1217.14 Manufacturer for the U.S. 

market. 

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 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 

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lumber with the intent of improving the 

perception, markets and competitive 

position of softwood lumber and 

stimulating sales of softwood lumber. 

§ 1217.23 Research. 

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. 

Softwood means one of the botanical 

groups of trees that have needle-like or 

scale-like leaves, or conifers. 

§ 1217.26 Softwood lumber. 

Softwood lumber means and includes 

softwood lumber and products 

manufactured from softwood as 

described in section 804(a) of Title VIII 

of the Tariff Act of 1930, as amended 

(19 U.S.C. 1202–1683g), and as assessed 

under § 1217.52. 

§ 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. 

§ 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. 

§ 1217.30 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: 

(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)(2)(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. The number of Board 

members may also be changed. Any 

changes in Board composition shall be 

implemented by the Secretary through 

rulemaking. 

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§ 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 

trade press or other means it deems 

appropriate, and shall outreach to all 

known 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), (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. Softwood lumber domestic 

manufacturers and importers may 

submit nominations to the Board. 

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 

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. 

(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 

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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 

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. 

§ 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 

attend such meetings, and to keep and 

report minutes of each meeting to the 

Secretary; 

(h) To develop and administer 

programs, plans, and projects and enter 

into contracts or agreements, which 

must be approved by the Secretary 

before becoming effective, for 

promotion, research, and information, 

including consumer and industry 

information, research and advertising 

designed to strengthen the softwood 

lumber industry’s position in the 

marketplace and to maintain, develop, 

and expand markets for softwood 

lumber. The payment of costs for such 

activities shall be with funds collected 

pursuant to the Order, including funds 

collected pursuant to § 1217.50(f). Each 

contract or agreement shall provide that: 

(1) The contractor or agreeing party 

shall develop and submit to the Board 

a program, plan, or project together with 

a budget that specifies the cost to be 

incurred to carry out the activity; 

(2) The contractor or agreeing party 

shall keep accurate records of all of its 

transactions and make periodic reports 

to the Board of activities conducted, 

submit accounting for funds received 

and expended, and make such other 

reports as the Secretary or Board may 

require; 

(3) The Secretary may audit the 

records of the contracting or agreeing 

party periodically; and 

(4) Any subcontractor who enters into 

a contract with a Board contractor and 

who receives or otherwise uses funds 

allocated by the Board shall be subject 

to the same provisions as the contractor. 

(i) To prepare and submit to the 

Secretary for approval 60 calendar days 

in advance of the beginning of a fiscal 

period, rates of assessment and a budget 

of the anticipated expenses to be 

incurred in the administration of the 

Order, including the probable cost of 

each promotion, research, and 

information activity proposed to be 

developed or carried out by the Board; 

(j) To borrow funds necessary for 

startup expenses of the Order; 

(k) To invest assessments collected 

and other funds received pursuant to 

the Order and use earnings from 

invested assessments to pay for 

activities carried out pursuant to the 

Order; 

(l) To recommend changes to the 

assessment rates as provided in this 

part; 

(m) To cause its books to be audited 

by a certified public accountant at the 

end of each fiscal period and at such 

other times as the Secretary may 

request, and to submit a report of each 

audit directly to the Secretary; 

(n) To periodically prepare and make 

public and to make available to 

manufacturers for the U.S. market 

reports of its activities and, at least once 

each fiscal period, to make public an 

accounting of funds received and 

expended; 

(o) To maintain minutes, books, and 

records and prepare and submit to the 

Secretary such reports from time to time 

as may be required for appropriate 

accounting with respect to the receipt 

and disbursement of funds entrusted to 

it, and to submit to the Secretary such 

information pertaining to this part or 

subpart as he or she may request; 

(p) To act as an intermediary between 

the Secretary and any manufacturer for 

the U.S. market; 

(q) To receive, investigate and report 

to the Secretary complaints of violations 

of the Order; and 

(r) To develop and recommend such 

rules and regulations to the Secretary for 

approval as may be necessary for the 

development and execution of plans or 

activities to effectuate the purposes of 

the Act. 

§ 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 g funds collected by the 

Board under the Order to undertake any 

action for the purpose of influencing 

legislation or governmental action or 

policy, by local, state, national, and 

foreign governments or subdivision 

thereof, other than recommending to the 

Secretary amendments to the Order; and 

(c) No program, plan or project 

including advertising shall be false or 

misleading or disparaging to another 

agricultural commodity. Softwood 

lumber of all geographic origins shall be 

treated equally. 

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 

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or information may not be implemented 

prior to approval by the Secretary. Each 

such budget shall include: 

(1) A statement of objectives and 

strategy for each program, plan, or 

project; 

(2) A summary of anticipated revenue, 

with comparative data for at least one 

preceding fiscal year, except for the 

initial budget; 

(3) A summary of proposed 

expenditures for each program, plan, or 

project; and 

(4) Staff and administrative expense 

breakdowns, with comparative data for 

at least one preceding fiscal year, except 

for the initial budget. 

(b) Each budget shall provide 

adequate funds to defray its proposed 

expenditures and to provide for a 

reserve as set forth in this Order. 

(c) Subject to this section, any 

amendment or addition to an approved 

budget must be approved by the 

Department, including shifting funds 

from one program, plan, or project to 

another. 

(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 

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 

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 of 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 30th calendar day of the 

month following the end of the quarter 

in which the softwood lumber was 

shipped. 

(e) Domestic product that cannot be 

categorized in the Harmomized Tariff 

Schedule of the United States (HTSUS) 

numbers listed in paragraph (h) of this 

section if it were an import is not 

covered under this Order. 

(f) Softwood lumber originating in the 

United States that is exported to another 

country and shipped back to the United 

States is covered under this Order, 

provided that it can be categorized in 

the HTSUS numbers listed in paragraph 

(h) of this section. 

(g) Each importer of softwood lumber 

shall pay through Customs to the Board 

an assessment on softwood lumber 

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), provided that it 

can be categorized in the HTSUS 

numbers listed in paragraph (h) of this 

section. 

(h) The HTSUS categories and 

assessment rates on imported softwood 

lumber are listed in the table below. A 

factor 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. 

Accordingly, the assessment rate per 

cubic meter is as follows. 

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Softwood lumber Assessment 

$/cubic meter 

4407.10.01 .......................... $0.1483 

4409.10.05 .......................... 0.1483 

4409.10.10 .......................... 0.1483 

4409.10.20 .......................... 0.1483 

4409.10.90 .......................... 0.1483 

4418.90.25 .......................... 0.1483 

(i) In the event that any HTSUS 

number subject to assessment is 

changed and such change is merely a 

replacement of a previous number and 

has no impact on the description of the 

softwood lumber involved, assessments 

will continue to be collected based on 

the new number. 

(j) If Customs does not collect an 

assessment from an importer, the 

importer is responsible for paying the 

assessment directly to the Board no later 

than the 30th calendar day of the month 

following the end of the quarter in 

which the softwood lumber was 

imported. 

(k) Articles brought into the United 

States temporarily and for which an 

exemption is claimed under subchapter 

XIII of chapter 98 of the HTSUS are not 

covered under this Order. If assessments 

are collected by Customs for these 

products, the importer may apply to the 

Board for a refund of assessments. 

(l) 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 

remit total assessments due in a timely 

manner may also be subject to actions 

under Federal debt collection 

procedures. 

(m) 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. 

(n) 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. 

§ 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 

the responsibility of the importer to 

retain a copy of the certificate of 

exemption. The importer shall present a 

copy of the certificate to Customs. If 

accepted by Customs, such imported 

softwood lumber shall not be subject to 

assessments. If Customs collects the 

assessment, the Board shall refund such 

importers their assessments 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, the sum 

of 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 and/or import 15 

million board feet or more annually. 

(1) Domestic manufacturers who 

domestically ship 15 million board feet 

or more 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 15 million 

board feet or more 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 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 

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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. 6501– 

6522). 

(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 

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 

§ 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 

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. 

Such information may include, but not 

be limited to: 

(1) For domestic manufacturers: 

(i) The name, address and telephone 

number of the domestic manufacturer; 

(ii) The board feet of softwood lumber 

shipped within the United States; 

(iii) The board feet of softwood 

lumber for which assessments were 

paid; and 

(iv) The board feet of softwood lumber 

that was exported. 

(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 

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(iv) The country of export. 

(b) For domestic manufacturers, such 

information shall accompany the 

collected payment of assessments on a 

quarterly basis specified in § 1217.52. 

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 

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. 

§ 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 

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; 

(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 persons 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. 

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(c) Any person to whom funds, 

property, or claims have been 

transferred or delivered pursuant to the 

Order shall be subject to the same 

obligations imposed upon the Board and 

upon the trustees. 

(d) Any residual funds not required to 

defray the necessary expenses of 

liquidation shall be turned over to the 

Secretary to be disposed of, to the extent 

practical, to one or more 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 

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: April 13, 2011. 

Rayne Pegg, 

Administrator, Agricultural Marketing 

Service. 

[FR Doc. 2011–9397 Filed 4–21–11; 8:45 am] 

BILLING CODE 3410–02–P 

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