Vol. 78 Wednesday, 

No. 1 January 2, 2013 

Part III 

Department of Agriculture 

Agricultural Marketing Service 

7 CFR Part 1222 

Paper and Paper-Based Packaging Promotion, Research and Information 

Order; Proposed Rule 


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188 Federal Register / Vol. 78, No. 1 / Wednesday, January 2, 2013 / Proposed Rules 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Part 1222 

[Document Number AMS–FV–11–0069 PR– 

A1] 

RIN 0581–AD21 

Paper and Paper-Based Packaging 

Promotion, Research and Information 

Order 

AGENCY: Agricultural Marketing Service, 

Department of Agriculture. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule invites 

comments on a proposed Paper and 

Paper-Based Packaging Promotion, 

Research and Information Order (Order). 

The purpose of the program would be to 

maintain and expand markets for paper 

and paper-based packaging. A 

referendum would be held among 

eligible manufacturers and importers to 

determine whether they favor 

implementation of the program prior to 

it going into effect. The program would 

be financed by an assessment on paper 

and paper-based packaging 

manufacturers (domestic producers) and 

importers and would be administered 

by a board of industry members 

appointed by the Secretary of 

Agriculture (Secretary). The assessment 

rate would initially be $0.35 per short 

ton. This proposed rule also announces 

the Agricultural Marketing Service’s 

(AMS) intent to request approval by the 

Office of Management and Budget 

(OMB) of new information collection 

requirements to implement the program. 

DATES: Comments must be received by 

March 4, 2013. Pursuant to the 

Paperwork Reduction Act (PRA), 

comments on the information collection 

burden that would result from this 

proposal must be received by March 4, 

2013. 

ADDRESSES: Interested persons are 

invited to submit written comments 

concerning this proposal. Comments 

may be submitted on the Internet at: 

http://www.regulations.gov or to the 

Promotion and Economics Division, 

Fruit and Vegetable Program, AMS, 

USDA, 1400 Independence Avenue 

SW., Room 1406–S, Stop 0244, 

Washington, DC 20250–0244; facsimile: 

(202) 205–2800. All comments should 

reference the docket number and the 

date and page number of this issue of 

the Federal Register and will be made 

available for public inspection, 

including name and address, if 

provided, in the above office during 

regular business hours or it can be 

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

Pursuant to the PRA, comments 

regarding the accuracy of the burden 

estimate, ways to minimize the burden, 

including the use of automated 

collection techniques or other forms of 

information technology, or any other 

aspect of this collection of information, 

should be sent to the above address. In 

addition, comments concerning the 

information collection should also be 

sent to the Desk Office for Agriculture, 

Office of Information and Regulatory 

Affairs, OMB, New Executive Office 

Building, 725 17th Street NW., Room 

725, Washington, DC 20503. 

FOR FURTHER INFORMATION CONTACT: 

Maureen T. Pello, Marketing Specialist, 

Promotion and Economics Division, 

Fruit and Vegetable Program, 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 

proposed rule is issued pursuant to the 

Commodity Promotion, Research and 

Information Act of 1996 (1996 Act) (7 

U.S.C. 7411–7425). 

Background 

This proposed rule invites comments 

on a proposed industry-funded research, 

promotion and information program for 

paper and paper-based packaging. The 

program would cover four types of 

paper and paper-based packaging— 

printing, writing and related paper 

(used to make products for printing, 

writing and other communication 

purposes), kraft packaging paper (used 

for products like grocery bags and 

sacks), containerboard (used to make 

corrugated boxes, shipping containers 

and related products), and paperboard 

(used for food and beverage packaging, 

tubes and other miscellaneous 

products). The program would be 

financed by an assessment on U.S. 

manufacturers and importers of paper 

and paper-based packaging and would 

be administered by a board of industry 

members appointed by the Secretary. 

The assessment rate would initially be 

$0.35 per short ton. (One short ton 

equals 2,000 pounds.) Entities that 

manufacture or import less than 100,000 

short tons per marketing year would be 

exempt from the payment of 

assessments. The purpose of the 

program would be to maintain and 

expand markets for paper and paperbased packaging. 

A referendum would be held among 

eligible U.S. manufacturers and 

importers to determine whether they 

favor implementation of the program 

prior to it going into effect. The proposal 

was submitted to USDA by the Paper 

and Paper-Based Packaging Panel 

(Panel). The Panel is a group of 14 

industry members that was formed in 

May 2010 to oversee development of the 

program. The American Forest & Paper 

Association (AF&PA), a national trade 

association, provided technical 

assistance to the Panel. This rule also 

announces AMS’s intent to request 

approval by the OMB of new 

information collection requirements to 

implement the program. 

Authority in 1996 Act 

The proposed Order is authorized 

under the 1996 Act which authorizes 

USDA to establish agricultural 

commodity research and promotion 

orders which may include a 

combination of promotion, research, 

industry information and consumer 

information activities funded by 

mandatory assessments. Commodity 

promotion programs provide a unique 

opportunity for an industry to inform 

consumers about their particular 

commodity and have the ability to 

provide significant conservation 

benefits to producers and the public. 

These programs are designed to 

strengthen the position of agricultural 

commodity industries in the 

marketplace, maintain and expand 

markets and uses for agricultural 

commodities, develop new uses for 

agricultural commodities and assist 

producers in meeting their conservation 

objectives. As defined under section 

513(1)(D) of the 1996 Act, agricultural 

commodities include the products of 

forestry, which includes paper and 

paper-based packaging. 

The 1996 Act provides for a number 

of optional provisions that allow the 

tailoring of orders for different 

commodities. Section 516 of the 1996 

Act provides permissive terms for 

orders, and other sections provide for 

alternatives. For example, section 514 of 

the 1996 Act provides for orders 

applicable to (1) Producers, (2) first 

handlers and others in the marketing 

chain as appropriate, and (3) importers 

(if imports are subject to assessments). 

Section 516 states that an order may 

include an exemption of de minimis 

quantities of an agricultural commodity; 

different payment and reporting 

schedules; coverage of research, 

promotion, and information activities to 

expand, improve, or make more efficient 

the marketing or use of an agricultural 

commodity in both domestic and 

foreign markets; provision for reserve 

funds; provision for credits for generic 


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1 Johnson, Tony G., Ronald J., Walters, Brian F., 

Sorenson, Colin, Woodall, Christopher W., Morgan, 

Todd A., National Pulpwood Production, 2008, 

USDA, p. 15 (www.treesearch.fs.fed.us/pubs/ 

37960). 

2Cut-size office papers are used in office 

machines and are sold in sheet form typically 8.5′′ 

x 11,′′ 8.5′′ x 14′′ or 11′′ x 11.′′ Folio sheets are cutsize papers sold in sheet form in sizes of 17′′ x 22′′ 

or larger. These would be included in the printing, 

writing and related paper category. 

3Manufacturing data was compiled by the 

AF&PA from its 51st Annual Survey of Paper, 

Paperboard and Pulp, 2011. 

and branded activities; and assessment 

of imports. 

In addition, section 518 of the 1996 

Act provides for referenda to ascertain 

approval of an order to be conducted 

either prior to its going into effect or 

within three years after assessments first 

begin under the order. An order also 

may provide for its approval in a 

referendum based upon different voting 

patterns. Section 515 provides for 

establishment of a board or council from 

among producers, first handlers and 

others in the marketing chain as 

appropriate, and importers, if imports 

are subject to assessment. 

Industry Background 

Paper and paper-based packaging is 

produced from pulp. Pulp is made by 

chemically or mechanically separating 

fibers from wood or by recycling 

recovered paper and paper-based 

packaging products. The separated, 

moist fibers are then pressed together 

and dried into flexible sheets. 

U.S. Pulpwood Production 1

Wood used to make pulp is known as 

pulpwood. Total pulpwood production 

includes roundwood chipped at mills 

and other primary industry mill 

residues. Roundwood includes both 

softwood and hardwood. Roundwood 

pulpwood continues to be the primary 

fiber source used in pulp manufacturing 

in the United States. Wood residues 

consist primarily of mill residue chips, 

a byproduct of sawmilling and veneer 

mill operations. 

According to U.S. Forest Service 

statistics, in 2008, U.S. pulpwood 

production totaled 89.2 million cords. 

Of that total, softwood roundwood and 

residues accounted for 69 percent (61.4 

million cords). Hardwood roundwood 

and residues accounted for 31 percent 

(27.7 million cords). By region, the 

South accounted for 76.4 percent of 

total U.S. pulpwood production (68.1 

million cords). The West accounted for 

9.9 percent (8.8 million cords), the 

Midwest accounted for 7.1 percent (6.3 

million cords), and the Northeast 

accounted for 6.6 percent (5.9 million 

cords) of total U.S. pulpwood 

production. 

Manufacturers and Converting 

Operations 

The U.S. paper industry encompasses 

two broad segments—primary 

producers/manufacturers (mills) and 

converters. Primary manufacturers make 

rolls of paper and paper-based 

packaging (commonly referred to as roll 

stock) from pulp produced in the same 

mill or pulp supplied by another mill. 

Primary manufacturers would be 

covered under the program. 

Converters turn roll stock into final 

products such as boxes, corrugated 

boxes, shipping containers, envelopes, 

magazines, catalogs, copy paper and 

bags/sacks. Converting operations can 

take place in a primary producer mill or 

off-site. When converting is done in a 

primary producer mill, the roll 

produced before it is converted into a 

final product or sold to an off-site 

converter would be covered under the 

program. Converting operations (and 

thus converted products) would not be 

covered under the program. An 

exception is the case of cut-size printing 

and writing papers (including folio 

sheets) made by primary producers that 

are cut prior to leaving the mill.2 These 

are classified as primary products (not 

converted products) under the 

Harmonized Tariff Schedule of the 

United States (HTSUS) and would, 

therefore, be assessed under the 

program. 

Types of Paper and Paper-Based 

Packaging 

There are six major types of paper and 

paper-based packaging produced by 

manufacturers: (1) Printing, writing and 

related paper; (2) kraft packaging paper; 

(3) containerboard; 4) paperboard; (5) 

tissue paper; and (6) newsprint. The 

proposed Order would cover the first 

four of the six types mentioned above. 

Printing, writing and related paper is 

coated or uncoated paper, including 

thermal but excluding carbonless paper, 

which is subsequently converted into 

products used for printing, writing and 

other communication purposes, such as 

file folders, envelopes, catalogues, 

magazines and brochures. Demand for 

carbonless paper has declined 

significantly due to other technologies. 

Thus, the Panel concluded that the 

carbonless segment of the industry 

would not be able to absorb the cost of 

a promotion program at this time. 

Kraft packaging paper is coarse, 

unbleached, semi-bleached or fully 

bleached grades of paper that are 

subsequently converted into products 

such as grocery bags, multiwall sacks, 

waxed paper and other products. 

‘‘Kraft’’ refers to a process for 

transforming wood into a high quality, 

strong pulp for making paper and paperbased packaging. Bleaching is the 

chemical processing of pulp to remove 

the natural brown color and thus make 

the pulp and pulp products whiter. 

Containerboard includes all forms of 

linerboard, which is used as the facing 

material in the production of corrugated 

or solid fiber shipping boxes, and 

medium, which is used as the inner 

fluting material in the manufacture of 

such boxes. Containerboard is used to 

manufacture corrugated boxes, shipping 

containers, point-of-sale displays, 

pallets and other products. 

Paperboard is solid bleached kraft 

board, recycled board and unbleached 

kraft board, which is converted into 

products such as folding boxes, tubes, 

cans and drums. Paperboard is also used 

to package food, beverages and other 

nondurable consumer products such as 

pharmaceuticals, clothing, footwear and 

cosmetics. Nondurable goods are used 

immediately or have a lifespan of 3 

years or less. 

The two types of paper and paperbased packaging that would not be 

covered under the program are tissue 

paper and newsprint. With the 

exception of restroom hand-dryers 

versus paper towels, tissue paper 

products are not facing competition 

from alternative products. The opposite 

is true for newsprint. Demand for 

newsprint has drastically declined due 

to the shift toward digital 

communications. However, the Panel 

concluded that the newsprint segment 

of the industry would not be able to 

incur the cost of a promotion program 

at this time. 

U.S. Manufacturing by Region 3

In 2011, about 68.5 million short tons 

of U.S. paper and paper-based 

packaging to be covered under the 

program were produced. Of the 68.5 

million short tons, 63.2 percent was 

manufactured in the South, 17.1 percent 

was manufactured in the Midwest, 10.5 

percent was manufactured in the 

Northeast, and 9.2 percent was 

manufactured in the West. In terms of 

type, 50.1 percent was containerboard, 

29.1 percent was printing, writing and 

related paper, 18.3 percent was 

paperboard, and 2.5 percent was kraft 

packaging paper. 

Export Markets 

According to U.S. Census data, in 

2011, exports of the four types of paper 

and paper-based packaging to be 

covered under the proposed Order 


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4AF&PA’s Statistics of Pulp, Paper and 

Paperboard, p. 7. 

5Employment data was compiled by the AF&PA 

from the U.S. Bureau of Labor Statistics, http:// 

www.bls.gov/data. 

6AF&PA’s Statistics, p. 7. 

7AF&PA’s Statistics, p. 7 and 12. 

8Printing activity index is from http:// 

www.federalreserve.gov/releases/g17/ipdisk/ 

ip_nsa.txt. The Federal Reserve Board reports 

production of nondurable goods, as well as other 

items, as indexes rather than in terms of tons, 

pounds or units. The base year is 2007, which 

means that if the index reaches 105 in 2008, 

production has increased 5 percent relative to the 

2007 level. If the index falls to 95, it means that 

production has declined 5 percent relative to the 

2007 level. 

totaled about 11.5 million short tons, or 

17 percent of domestic production. In 

terms of major export markets in 2011, 

18.0 percent went to Western Europe, 

16.0 percent each went to Canada and 

Mexico, 11.0 percent went to the Far 

East and Oceania, 9.0 percent went to 

South America and 8.0 percent went to 

China. Of the 11.5 million short tons, 

46.0 percent was containerboard, 26.0 

percent was paperboard, 22.0 percent 

was printing, writing and related paper, 

and 6.0 percent was kraft packaging 

paper. 

Imports 

According to U.S. Customs and 

Border Protection (Customs) data, in 

2011, imports to be covered under the 

program totaled 7.5 million short tons. 

Of that total, about 58.6 percent was 

from Canada, 22.2 percent from Western 

Europe, 9.8 percent was from China, 

Japan and the Far East, 2.7 percent was 

from South America and the remainder 

was from other countries. In terms of 

type, 72.0 percent of the imports were 

printing, writing and related paper, 13.1 

percent was paperboard, 10.1 percent 

was containerboard and 4.8 percent was 

kraft packaging paper. 

Need for a Program 

According to AF&PA data, markets for 

paper and paper-based packaging that 

would be covered under the program 

declined by 15 percent between 2000 

and 2010. U.S. shipments of cut-size 

office papers (one sector of the printing 

and writing category) grew with 

employment in white collar-intensive 

industries between 2000 and 2006. 

However, between 2006 and 2010, 

shipments fell 20 percent 4 while 

employment in white collar-intensive 

industries declined by 5 percent. 

Moreover, in 2010, while employment 

in white collar-intensive industries 

stabilized,5 office paper shipments 

declined another 5 percent.6 This is 

illustrated in the following chart. 

Markets for other printing and writing 

papers (exclusive of cut-size office 

papers) declined 27 percent between 

2006 and 2010.7 Digital forms of 

communication such as Internet 

advertising and the widespread 

availability of news, books and other 

digital information have contributed to 

this displacement. This is illustrated in 

the following chart.8


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9AF&PA monthly Kraft Paper Statistical Reports. 

10Retail food and beverage store sales data is from 

the U.S. Census Bureau (http://www.census.gov/ 

retail) and was adjusted for inflation by the AF&PA 

using U.S. Bureau of Labor Statistics’ consumer 

price index for food and beverages (http:// 

www.bls.gov/data/#prices). 

11AF&PA’s Statistics, p. 9. 

12http://www.federalreserve.gov/releases/g17/ 

ipdisk/ip_nsa.txt. 

According to AF&PA data, kraft paper 

markets declined 23 percent between 

2000 and 2010,9 even as food store sales 

rose by 1 percent.10

Paperboard markets also have 

declined over the past decade.11

Paperboard is mainly facing competition 

from plastics, but also from foils and, to 

a lesser extent, glass. Between 2000 and 

2010, U.S. paperboard markets 

contracted 10 percent as compared with 

a fairly stable demand (i.e., a 1 percent 

increase) for nondurable consumer 

goods. Additionally, paperboard 

markets stagnated when nondurable 

consumer goods demand grew in the 

mid-2000s.12 This is illustrated below. 


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13AF&PA’s Statistics, p. 9 and 20. 14http://www.federalreserve.gov/releases/g17/ 

ipdisk/ip_nsa.txt. 

AF&PA data show that containerboard 

markets have remained fairly steady as 

compared to the other four types of 

paper and paper-based packaging to be 

covered under the program. U.S. 

containerboard markets declined 2 

percent between 2000 and 2010,13 while 

demand for nondurable consumer 

goods, which accounts for most of the 

demand for corrugated boxes, rose 1 

percent. As shown below, from 2000 

through 2007, containerboard markets 

largely kept pace with nondurable 

consumer goods, with containerboard 

demand growing 4 percent and 

nondurable goods up 5 percent.14 This 

is illustrated in the following chart. 

In light of these market conditions, 

the Panel was formed in May 2010 to 

assess the merits of a national 

promotion program. While there have 

been a number of ongoing campaigns 

designed to promote specific sectors of 

the paper industry, the impact of these 

programs has been limited due to 

funding. Additionally, while the 

programs have been useful, their 

messages have been tailored to specific 

segments of the industry. Ultimately, 

the Panel concluded that a national 

program that would generate about $25 

million annually with a unified message 

that crosses all segments would benefit 

the entire industry. 

Provisions of Proposed Program 

Definitions 

Pursuant to section 513 of the 1996 

Act, sections 1222.1 through 1222.29 of 

the proposed Order would define 

certain terms that would be used 

throughout the Order. Several of the 

terms are common to all research and 

promotion programs authorized under 


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the 1996 Act while other terms are 

specific to the proposed paper and 

paper-based packaging Order. 

Section 1222.1 would define the term 

‘‘Act’’ to mean the Commodity 

Promotion, Research and Information 

Act of 1996 (7 U.S.C. 7411–7425), and 

any amendments thereto. 

Section 1222.2 would define the term 

‘‘Board’’ to mean the Paper and PaperBased Packaging Board established 

pursuant to section 1222.40, or such 

other name as recommended by the 

Board and approved by the Department. 

Section 1222.4 would define the term 

‘‘converted products’’ to mean products 

made from paper and paper-based 

packaging. 

Section 1222.5 would define the term 

‘‘Customs’’ or ‘‘CBP’’ to mean the U.S. 

Customs and Border Protection, an 

agency of the U.S. Department of 

Homeland Security. 

Section 1222.7 would define the term 

‘‘fiscal period’’ and ‘‘marketing year’’ to 

mean the 12-month period ending on 

December 31 or such other period as 

recommended by the Board and 

approved by the Secretary. 

Section 1222.9 would define the term 

‘‘information’’ to mean information and 

programs for consumers, customers and 

industry, including educational 

activities, information and programs 

designed to enhance and broaden the 

understanding of the use and attributes 

of paper and paper-based packaging, 

increase efficiency in manufacturing 

paper and paper-based packaging, 

maintain and expand existing markets, 

and develop new markets and marketing 

strategies. These include: 

(a) Consumer education and 

information, which means any action 

taken to provide information to, and 

broaden the understanding of, the 

general public regarding paper and 

paper-based packaging; and 

(b) Industry information, which 

means information and programs that 

would enhance the image of the paper 

and paper-based packaging industry. 

Section 1222.12 would define the 

term ‘‘manufacture’’ or ‘‘produce’’ to 

mean the process of transforming pulp 

into paper and paper-based packaging. 

Section 1222.13 would define the 

term ‘‘manufacturer or producer’’ to 

mean any person who manufactures 

paper and paper-based packaging in the 

United States. 

Section 1222.16 would define the 

term ‘‘Panel’’ to mean the Paper and 

Paper-Based Packaging Panel formed to 

oversee development of a paper and 

paper-based packaging promotion, 

research and information program. As 

specified in section 1222.41, the Panel 

would conduct the initial nominations 

for the Board and submit them to the 

Secretary. This would be the only role 

of the Panel under the program. 

Section 1222.17 would define the 

term ‘‘paper and paper-based 

packaging’’ to mean: 

(1) Printing, writing and related 

paper, which is coated or uncoated 

paper, including thermal but excluding 

carbonless paper, that is subsequently 

converted into products used for 

printing, writing and other 

communication purposes, such as file 

folders, envelopes, catalogues, 

magazines and brochures; 

(2) Kraft packaging paper, which is 

coarse unbleached, semi-bleached or 

fully bleached grades of paper that is 

subsequently converted into products 

such as grocery bags, multiwall sacks, 

waxed paper and other products; 

(3) Containerboard, which is all forms 

of linerboard and medium, that is used 

to manufacture corrugated boxes, 

shipping containers and related 

products; and 

(4) Paperboard, which is solid 

bleached kraft board, recycled board 

and unbleached kraft board that is 

subsequently converted into a wide 

variety of end uses, including folding 

boxes, food and beverage packaging, 

tubes, cans, and drums, and other 

miscellaneous products. Paperboard 

does not include construction-related 

products such as gypsum wallboard 

facings and panel board. 

As previously mentioned, the Order 

would cover only the four types of 

paper and paper-based packaging as 

defined above, not tissue, newsprint or 

converted products. 

Sections 1222.10, 1222.11, 1222.14 

and 1222.22 would define the terms 

‘‘kraft process,’’ ‘‘linerboard,’’ 

‘‘medium,’’ and ‘‘pulp,’’ respectively. 

These terms are used in the definition 

of paper and paper-based packaging 

specified in section 1222.17. 

Section 1222.20 would define the 

term ‘‘programs, plans and projects’’ to 

mean those research, promotion and 

information programs, plans or projects 

established pursuant to the Order. 

Section 1222.21 would define the 

term ‘‘promotion’’ to mean any action, 

including paid advertising and the 

dissemination of information, utilizing 

public relations or other means, to 

enhance and broaden the understanding 

of the use and attributes of paper and 

paper-based packaging for the purpose 

of maintaining and expanding markets 

for paper and paper-based packaging. 

Section 1222.23 would define the 

term ‘‘research’’ to mean any type of 

test, study, or analysis designed to 

enhance the image, desirability, use, 

marketability, manufacturing, 

recyclability, reusability or quality of 

paper and paper-based packaging, 

including research directed to product 

characteristics and product 

development, including new uses of 

existing products, new products or 

improved technology in the 

manufacturing of paper and paper-based 

packaging. 

Section 1222.25 would define the 

term ‘‘short ton’’ or ‘‘ton’’ to mean a 

measure of weight equal to 2,000 

pounds. 

Sections 1222.3, 1222.6, 1222.8, 

1222.15, 1222.19, 1222.24, 1222.26, 

1222.27, 1222.28 and 1222.29 would 

define the terms ‘‘conflict of interest,’’ 

‘‘Department or UDSA,’’ ‘‘importer,’’ 

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

‘‘State,’’ ‘‘suspend,’’ ‘‘terminate,’’ and 

‘‘United States,’’ respectively. The 

definitions are the same as those 

specified in section 513 of the Act. 

Establishment of the Board 

Pursuant to section 515 of the 1996 

Act, sections 1222.40 through 1222.47 

of the proposed Order would detail the 

establishment and membership of the 

proposed Paper and Paper-Based 

Packaging Board, nominations and 

appointments, the term of office, 

removal and vacancies, procedure, 

reimbursement and attendance, powers 

and duties, and prohibited activities. 

Section 1222.40 would specify the 

Board establishment and membership. 

The Board would be composed of 

domestic manufacturers and importers 

who manufacture or import to the 

United States 100,000 short tons or 

more of paper and paper-based 

packaging during a fiscal period. Seats 

on the Board would be apportioned 

based on the geographic distribution of 

the quantity of paper and paper-based 

packaging manufactured in the United 

States and the quantity of paper and 

paper-based packaging imported to the 

United States. 

The Board would be composed of 12 

members. Eleven members would be 

manufacturers and 1 member would be 

an importer. Of the 11 domestic 

manufacturers, 10 would be allocated to 

four regions within the United States 

based on the quantity of paper and 

paper-based packaging manufactured 

within the respective region. Of the 10 

members, 6 would be from the South, 

two would be from the Midwest, and 

one each would be from the Northeast 

and the West. Specific areas within each 

domestic region would be specified in 

section 1222.40(b)(1). One manufacturer 

representative may be from any region 

(‘‘at large’’) and must produce at least 

100,000 short tons but no more than 

250,000 short tons of paper and paperVerDate Mar<15>2010 17:46 Dec 31, 2012 Jkt 229001 PO 00000 Frm 00007 Fmt 4701 Sfmt 4702 E:\FR\FM\02JAP3.SGM 02JAP3

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194 Federal Register / Vol. 78, No. 1 / Wednesday, January 2, 2013 / Proposed Rules 

based packaging annually. This is to 

help ensure that the views of smaller 

entities that are subject to assessments 

are represented on the Board. If there 

are no eligible nominees, this seat 

would be allocated to the largest 

producing region. 

The Panel also opted to have no 

alternate Board members. It wants to 

ensure that industry members who seek 

representation and serve on the Board 

are committed to their service and 

participate in all Board meetings. 

Every 5 years, but no more often than 

once every 3 years, the Board must 

review the geographical distribution of 

the quantity of paper and paper-based 

packaging manufactured within the 

United States and the quantity of paper 

and paper-based packaging imported to 

the United States. If warranted, the 

Board would recommend to the 

Secretary that the Board membership be 

reapportioned appropriately to reflect 

such changes, which could include an 

increase in the number of importer 

seats. The distribution of quantities 

between domestic regions would also be 

considered as well as changes in the 

size of the Board. Any changes in Board 

composition would be implemented by 

the Secretary through rulemaking. 

Section 1222.41 of the proposed 

Order would specify Board nominations 

and appointments. The initial 

nominations would be submitted to the 

Secretary by the Panel. The Panel would 

publicize the nomination process, using 

trade press or other means it deems 

appropriate, and outreach to all known 

manufacturers and importers who 

manufacture or import 100,000 short 

tons or more of paper and paper-based 

packaging in a marketing year. The 

Panel would use regional caucuses, mail 

or other methods to solicit potential 

nominees and would work with USDA 

to help ensure that all interested 

persons are apprised of the nomination 

process. The Panel would submit the 

nominations to the Secretary and 

recommend two nominees for each 

Board position. The Secretary would 

select the members of the Board from 

the nominations submitted by the Panel. 

Regarding subsequent nominations, 

the Board would solicit nominations as 

described in the preceding paragraph. 

Eligible persons may nominate 

themselves or other eligible candidates. 

Nominees would have the opportunity 

to provide the Board a short background 

statement outlining their qualifications 

to serve on the Board. Nominees must 

domestically produce or import 100,000 

short tons or more of paper and paperbased packaging annually. Entities that 

are both a domestic manufacturer and 

an importer could seek nomination to 

the Board as either a domestic 

manufacturer or an importer, but not 

both. 

For the domestic seats allocated by 

region, manufacturers must produce 

paper and paper-based packaging in the 

region for which they seek nomination. 

Domestic manufacturers who 

manufacture paper and paper-based 

packaging in more than one region 

could seek nomination in only one 

region of their choice. The names of 

domestic manufacturer nominees would 

be placed on a ballot by region. The 

ballots along with the background 

statements would be mailed to 

manufacturers who produce 100,000 

short tons or more annually for a vote. 

Manufacturers may vote in each region 

in which they manufacture paper and 

paper-based packaging. The votes would 

be tabulated for each region with the 

nominee receiving the highest number 

of votes at the top of the list in 

descending order by vote. The top two 

candidates for each position would be 

submitted to the Secretary. 

The names of nominees for the ‘‘at 

large’’ domestic manufacturer seat 

would also be placed on a ballot. The 

ballots along with the background 

statements would be mailed to all 

manufacturers who manufacture 

100,000 short tons or more of paper and 

paper-based packaging annually. The 

votes would be tabulated and the 

nominees receiving the highest number 

of votes would be placed at the top of 

the list in descending order by vote. The 

top two candidates would be submitted 

to the Secretary. 

The names of importer nominees 

would also be placed on a ballot. The 

ballots along with the background 

statements would be mailed to 

importers who import 100,000 short 

tons or more annually for a vote. The 

votes would be tabulated with the 

nominee receiving the highest number 

of votes at the top of the list in 

descending order by vote. The top two 

candidates for each position would then 

be submitted to the Secretary. 

The Board would submit nominations 

to the Secretary at least 6 months before 

the new Board term begins. The 

Secretary would select the members of 

the Board from the nominations 

submitted by the Board. 

The Panel also recommended that no 

two Board members be employed by a 

single corporation, company, 

partnership or any other legal entity. 

This is to help ensure that 

representation on the Board is balanced. 

In order to provide the Board 

flexibility, the Board could recommend 

to the Secretary modifications to its 

nomination procedures. Any such 

modifications would be implemented 

through rulemaking by the Secretary. 

Section 1222.42 of the proposed 

Order would specify the term of office. 

With the exception of the initial Board, 

each Board member would serve a 

three-year term or until the Secretary 

appointed his or her successor. Each 

term of office would begin on January 1 

and end on December 31. No member 

could serve more than two consecutive 

terms, excluding any term of office less 

than three years. For the initial board, 

the terms of Board members would be 

staggered for two, three and four years 

and would be recommended to the 

Secretary by the Panel. 

Section 1222.43 of the proposed 

Order would specify criteria for the 

removal of members and for filling 

vacancies. If a Board member ceased to 

work for or be affiliated with a domestic 

manufacturer or importer or ceased to 

do business in the region he or she 

represented, such position would 

become vacant. Additionally, the Board 

could recommend to the Secretary that 

a member be removed from office if the 

member consistently refused to perform 

his or her duties or engaged in dishonest 

acts or willful misconduct. The 

Secretary could remove the member if 

he or she finds that the Board’s 

recommendation shows adequate cause. 

The Secretary could also remove a 

member due to adequate cause absent a 

Board recommendation. If a position 

became vacant, nominations to fill the 

vacancy would be conducted using the 

nominations process as proposed in 

section 1222.41 of the Order. A vacancy 

would not be required to be filled if the 

unexpired term is less than six months. 

Section 1222.44 of the proposed 

Order would specify procedures of the 

Board. A majority of the Board members 

would constitute a quorum. Thus, for 

the 12-member Board, 7 members would 

constitute a quorum. If the Board had 

two vacancies and consisted of only 10 

members, 6 members would constitute a 

quorum. A motion would carry if 

supported by a majority of Board 

members, except for recommendations 

to change the assessment rate or to 

adopt a budget, both of which would 

require affirmation by at least two-thirds 

of the Board members. Thus, for a 12- 

member Board, 8 members would have 

to vote in favor of a budget for it to pass. 

For a 10-member Board (two vacancies), 

7 members would have to vote in favor 

of a budget for it to pass. Proxy voting 

would not be permitted. 

The proposed Order would also 

provide for the Board to take action by 

mail, telephone, electronic mail, 

facsimile, or any other electronic means 

when the chairperson believes it is 


tkelley on DSK3SPTVN1PROD with 
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necessary. Actions taken under these 

procedures would be valid only if all 

members and the Secretary were 

notified of the meeting and all members 

were provided the opportunity to vote 

and at least a majority of Board 

members voted in favor of the action 

(unless two-thirds vote were required 

under the Order). Additionally, all votes 

would have to be confirmed in writing 

and recorded in Board minutes. 

The proposed Order would specify 

that Board members would serve 

without compensation. However, Board 

members would be reimbursed for 

reasonable travel expenses, as approved 

by the Board, incurred when performing 

Board business. Similarly, persons who 

serve on subcommittees or other 

committees who may not be Board 

members would also be reimbursed for 

reasonable travel expenses, as approved 

by the Board, incurred when performing 

Board business. 

Section 1222.46 of the proposed 

Order would specify powers and duties 

of the Board. These are similar in 

promotion programs authorized under 

the 1996 Act. They include, among 

other things, to administer the Order 

and collect assessments; to develop 

bylaws and recommend regulations 

necessary to administer the Order; to 

select a chairperson and other Board 

officers; to form committees and 

subcommittees as necessary; to hire staff 

or contractors; to provide appropriate 

notice of meetings to the industry and 

USDA and keep minutes of such 

meetings; to develop programs and enter 

into contracts to implement programs; 

to submit fiscal year budgets to USDA 

in accordance with section 1222.50; to 

borrow funds necessary to cover startup 

costs of the Order; to invest Board funds 

appropriately; to recommend changes in 

the assessment rate as appropriate and 

within the limits of the Order; to have 

its books audited by an outside certified 

public accountant at the end of each 

fiscal period and at other times as 

requested by the Secretary; to report and 

make public reports of its program 

activities; to make public an accounting 

of funds received and expended at least 

once each fiscal year; to receive, 

investigate and report to the Secretary 

complaints of violations of the Order; to 

recommend amendments to the Order as 

appropriate; and to work to achieve an 

effective, continuous and coordinated 

program of promotion, research and 

information and to carry out programs, 

plans and projects designed to provide 

maximum benefits to the paper and 

paper-based packaging industry. 

Section 1222.47 of the proposed 

Order would specify prohibited 

activities that are common to all 

promotion programs authorized under 

the 1996 Act. In summary, neither the 

Board nor its employees and agents 

could engage in actions that would be 

a conflict of interest; use Board funds to 

lobby (influencing legislation or 

governmental action or policy, by local, 

state, national, and foreign governments 

or subdivision thereof, other than 

recommending to the Secretary 

amendments to the Order); and engage 

in any advertising or activities that may 

be false, misleading or disparaging to 

another agricultural commodity. 

Additionally, paper and paper-based 

packaging from all origins would be 

treated equally. 

Expenses and Assessments 

Pursuant to sections 516 and 517 of 

the 1996 Act, sections 1222.50 through 

1222.53 of the proposed Order detail 

requirements regarding the Board’s 

budget and expenses, financial 

statements, assessments, and exemption 

from assessments. At least 60 calendar 

days before the start of the fiscal period, 

and as necessary during the year, the 

Board would submit a budget to USDA 

covering its projected expenses. The 

budget must include a summary of 

anticipated revenue and expenses for 

each program along with a breakdown 

of staff and administrative expenses. 

Except for the initial budget, the Board’s 

budgets should include comparative 

data for at least one preceding fiscal 

period. 

Each budget must provide for 

adequate funds to cover the Board’s 

anticipated expenses. Any amendment 

or addition to an approved budget must 

be approved by USDA, including 

shifting of funds from one program, plan 

or project to another. Shifts of funds that 

do not result in an increase in the 

Board’s approved budget would not 

have to have prior approval from USDA. 

For example, if the Board’s approved 

budget provided for $1 million in 

consumer advertising and $500,000 in 

research projects, a shift of $50,000 from 

consumer advertising to research would 

require USDA approval. However, a 

shift within the $1 million consumer 

advertising line item would not require 

prior USDA approval. 

The Board would be authorized to 

incur reasonable expenses for its 

maintenance and functioning. During its 

first year of operation, the Board could 

borrow funds for startup costs and 

capital outlay. Any borrowed funds 

would be subject to the same fiscal, 

budget and audit controls as other funds 

of the Board. 

The Board could also accept 

voluntary contributions. Any 

contributions received by the Board 

would be free from encumbrances by 

the donor and the Board would retain 

control over use of the funds. The Board 

would also be required to reimburse 

USDA for costs incurred by USDA in 

overseeing the Order’s operations, 

including all costs associated with 

referenda. 

The Board would be limited to 

spending no more than 15 percent of its 

available funds for administration, 

maintenance, and the functioning of the 

Board. This limitation would begin 

three fiscal years after the Board’s first 

meeting. As an example, if the Board 

received $20 million in assessments 

during fiscal year 5, and had available 

$1 million in reserve funds, the Board’s 

available funds would be $21 million. In 

this scenario, the Board would be 

limited to spending no more than $3.2 

million (.15 × $21 million) on 

administrative costs. Reimbursements to 

USDA would not be considered 

administrative costs. 

The Board could also maintain a 

monetary reserve and carry over excess 

funds from one fiscal period to the next. 

However, such reserve funds could not 

exceed one fiscal year’s budgeted 

expenses. For example, if the Board’s 

budgeted expenses for a fiscal year were 

$20 million, it could carry over no more 

than $20 million in reserve. With 

approval of the Secretary, reserve funds 

could be used to pay expenses. 

The Board could invest its revenue 

collected under the Order in the 

following: (1) Obligations of the United 

States or any agency of the United 

States; (2) General obligations of any 

State or any political subdivision of a 

State; (3) Interest bearing accounts or 

certificates of deposit of financial 

institutions that are members of the 

Federal Reserve; and (4) Obligations 

fully guaranteed as to principal interest 

by the United States. 

The Board would be required to 

submit to USDA financial statements on 

a quarterly basis, or at any other time as 

requested by the Secretary. Financial 

statements should include, at a 

minimum, a balance sheet, an income 

statement and an expense budget. 

Assessments 

The Board’s programs and expenses 

would be funded through assessments 

on U.S. manufacturers and importers, 

other income, and other funds available 

to the Board. The Order would provide 

for an initial assessment rate of $0.35 

per short ton of paper and paper-based 

packaging domestically manufactured or 

imported. Domestic manufacturers 

would pay assessments based on the 

quantity of paper and paper-based 

packaging manufactured or produced; 


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196 Federal Register / Vol. 78, No. 1 / Wednesday, January 2, 2013 / Proposed Rules 

the assessment would be on the 

rollstock. An exception previously 

mentioned is the case of cut-size 

printing and writing papers (including 

folio sheets) in which case the 

assessment would be on the cut-size 

paper. Importers would pay assessments 

based on the quantity of paper and 

paper-based packaging imported to the 

United States. 

Two years after the Order becomes 

effective and periodically thereafter, the 

Board would review the assessment rate 

and, if appropriate, recommend a 

change in the rate. At least two-thirds of 

the Board members would have to favor 

a change in the assessment rate. Any 

change in the assessment rate would be 

subject to rulemaking by the Secretary. 

Anticipated income generated at the 

$0.35 per short ton assessment rate is 

addressed in the section titled ‘‘Initial 

Regulatory Flexibility Act Analysis.’’ 

Domestic manufacturers would be 

required to pay their assessments owed 

to the Board by the 30th calendar day 

of the month following the end of the 

quarter in which the paper and paperbased packaging was manufactured. 

Thus, the January to December fiscal 

year would have four quarters ending 

the last day of March, June, September, 

and December, respectively. 

Assessments would be due April 30th, 

July 30th, October 30th and January 

30th. As an example, assessments for 

paper and paper-based packaging 

produced in January, February or March 

would be due to the Board by April 

30th. 

Importer assessments would be 

collected through Customs. If Customs 

did not collect the assessment from an 

importer, then the importer would be 

responsible for paying the assessment 

directly to the Board within 30 calendar 

days after the end of the quarter in 

which the paper and paper-based 

packaging was imported. Imported 

paper and paper-based packaging 

identified by the numbers of the HTSUS 

listed in sections 1222.52(e) would be 

covered under the Order. The majority 

of the paper and paper-based packaging 

imports are in kilograms. One kilogram 

is equal to 2.20462262 pounds and one 

short ton is equal to 2,000 pounds. 

Thus, the $0.35 per short ton assessment 

rate is equal to a rate of $.000386 per 

kilogram ($0.35/2,000 pounds times 

2.20462262 pounds/kilogram). 

The Order would provide authority 

for the Board to impose a late payment 

charge and interest for assessments 

overdue to the Board by 60 calendar 

days. The late payment charge and rate 

of interest would be prescribed in the 

Order’s regulations issued by the 

Secretary. 

Exemptions 

The Order would provide for two 

exemptions. First, U.S. manufacturers 

and importers who domestically 

produce or import less than 100,000 

short tons during a marketing year 

would be exempt from paying 

assessments. If an entity is a U.S. 

manufacturer and an importer, such 

entity’s combined quantity of paper and 

paper-based packaging manufactured 

and imported annually would count 

towards the 100,000 short ton 

exemption. Manufacturers 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 

manufacture or import less than 100,000 

short tons for the applicable fiscal year. 

The Board could request past 

production or import data to support the 

exemption request. The Board would 

then issue, if deemed appropriate, a 

certificate of exemption to the eligible 

manufacturer or importer. 

Once approved, domestic 

manufacturers would not have to pay 

assessments to the Board for the 

applicable fiscal year. Approved 

importers would have their assessments 

as collected by Customs refunded by the 

Board within 60 calendar days after 

receipt of such assessments by the 

Board. No interest would be paid on the 

assessments collected by Customs. 

Manufacturers and importers who did 

not apply to the Board for an exemption 

and domestically manufactured or 

imported less than 100,000 short tons 

during the fiscal year would receive a 

refund from the Board for the applicable 

assessments within 30 calendar days 

after the end of the fiscal year. The 

Board would determine the assessments 

paid and refund the manufacturer or 

importer accordingly. On the other 

hand, manufacturers and importers who 

receive an exemption certificate but 

domestically manufacture or import 

100,000 short tons or more of paper and 

paper-based packaging during the fiscal 

year would have to pay the Board the 

applicable assessments owed within 30 

calendar days after the end of the fiscal 

year and submit any necessary reports 

to the Board. 

The Board could recommend 

additional procedures to administer the 

exemption as appropriate. Any 

procedures would be implemented 

through rulemaking by the Secretary. 

The second exemption under the 

proposed Order would be for organic 

paper and paper-based packaging. A 

domestic manufacturer who operates 

under an approved National Organic 

Program (NOP) (7 CFR part 205) system 

plan, only manufactures paper and 

paper-based packaging that is eligible to 

be labeled as 100 percent organic under 

the NOP and is not a split operation 

would be exempt from the payment of 

assessments. Likewise, an importer who 

imports only paper and paper-based 

packaging that is eligible to be labeled 

as 100 percent organic under the NOP, 

is not a split operation and who does 

not import any nonorganic paper and 

paper-based packaging would be exempt 

from the payment of assessments. 

Promotion, Research and Information 

Pursuant to section 516 of the 1996 

Act, sections 1222.60 through 1222.62 

of the proposed Order would detail 

requirements regarding promotion, 

research and information programs, 

plans and projects authorized under the 

Order. The Board would develop and 

submit to the Secretary for approval 

programs, plans and projects regarding 

promotion, research, education and 

other activities, including consumer and 

industry information and advertising. 

The Board would be required to 

evaluate each plan and program to 

ensure that it contributes to an effective 

promotion program. The Order would 

also require that, at least once every five 

years, the Board fund an independent 

evaluation of the effectiveness of the 

Order and programs conducted by the 

Board. 

Finally, the Order would specify that 

any patents, copyrights, trademarks, 

inventions, product formulations and 

publications developed through the use 

of funds received by the Board would be 

the property of the U.S. Government, as 

represented by the Board. These along 

with any rents, royalties and the like 

from their use would be considered 

income subject to the same fiscal, 

budget, and audit controls as other 

funds of the Board, and could be 

licensed with approval of the Secretary. 

Reports, Books, and Records 

Pursuant to section 515 of the 1996 

Act, sections 1222.70 through 1222.72 

would specify the reporting and 

recordkeeping requirements under the 

proposed Order as well as requirements 

regarding confidentiality of information. 

Manufacturers and importers would 

be required to submit periodically to the 

Board certain information as the Board 

may request. Specifically, domestic 

manufacturers would submit a report to 

the Board that would include, but not be 

limited to, the manufacturer’s name, 

address, and telephone number; and the 

quantity of paper and paper-based 

packaging manufactured by type. 


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Federal Register / Vol. 78, No. 1 / Wednesday, January 2, 2013 / Proposed Rules 197 

15National Report of Sustainable Forests (2010), 

Page II–112, U.S. Forest Service (www.fs.fed.us/ 

research/sustain/). 

16This is based on a 2008 survey of AF&PA 

member companies that produced pulp, paper and 

paperboard. 

Manufacturers would submit this report 

by the 30th calendar day of the month 

following the end of the quarter in 

which the paper and paper-based 

packaging was manufactured. The 

report would accompany the payment of 

assessments as specified in section 

1222.52. Manufacturers who received a 

certificate of exemption from the Board 

would not have to submit such a report 

to the Board. However, exempt 

manufacturers who produced 100,000 

short tons or more during the fiscal year 

would have to submit such reports to 

the Board as specified in section 

1222.53(a)(6). 

Likewise, importers who pay their 

assessments directly to the Board would 

be required to submit a report to the 

Board that would include, but not be 

limited to, the importer’s name, address, 

and telephone number; the quantity of 

paper and paper-based packaging 

imported to the United States by type; 

and country of export for such paper 

and paper-based packaging. Importers 

would submit this report at the same 

time they remit their assessments to the 

Board. Importers who paid their 

assessments through Customs would not 

have to submit such reports to the Board 

because Customs would collect this 

information upon entry. 

Additionally, manufacturers and 

importers, including those who were 

exempt, would be required to maintain 

books and records needed to verify any 

required reports. Such books and 

records must be made available during 

normal business hours for inspection by 

the Board’s or USDA’s employees or 

agents. Manufacturers and importers 

would be required to maintain such 

books and records for two years beyond 

the applicable fiscal period. 

The Order would also require that all 

information obtained from persons 

subject to the Order as a result of 

proposed recordkeeping and reporting 

requirements would be kept 

confidential by all officers, employees, 

and agents of the Board and USDA. 

Such information could only be 

disclosed if the Secretary considered it 

relevant, and the information were 

revealed in a judicial proceeding or 

administrative hearing brought at the 

direction or at the request of the 

Secretary or to which the Secretary or 

any officer of USDA were a party. Other 

exceptions for disclosure of confidential 

information would include the issuance 

of general statements based on reports 

or on information relating to a number 

of persons subject to the Order, if the 

statements did not identify the 

information furnished by any person, or 

the publication, by direction of the 

Secretary, of the name of any person 

violating the Order and a statement of 

the particular provisions of the Order 

violated. 

Miscellaneous Provisions 

Referenda 

Pursuant to section 518 of the 1996 

Act, section 1222.81(a) of the proposed 

Order specifies that the program would 

not go into effect unless it is approved 

by a majority of U.S. manufacturers and 

importers voting in a referendum who 

also represent a majority of the volume 

of paper and paper-based packaging 

represented in the referendum who, 

during a representative period 

determined by the Secretary, were 

engaged in the manufacturing or 

importation of paper and paper-based 

packaging into the United States. For 

example, if 50 U.S. manufacturers and 

importers representing 50 million short 

tons of paper and paper-based 

packaging voted in a referendum, 26 

manufacturers and importers 

representing over 26 million short tons 

would have to vote in favor of the Order 

for it to pass in the referendum. 

Section 1222.81(b) of the proposed 

Order specifies criteria for subsequent 

referenda. Under the Order, a 

referendum would be held to ascertain 

whether the program should continue, 

be amended, or be terminated. This 

section specifies that a referendum 

would be held 7 years after the Order 

becomes effective, and every 7 years 

thereafter, to determine whether 

manufacturers and importers favor 

continuation of the Order. The Order 

would continue if favored by a majority 

of manufacturers and importers voting 

in the referendum that also represented 

a majority of the volume of paper and 

paper-based packaging represented in 

the referendum. 

Additionally, a referendum could be 

conducted at the request of the Board. 

A referendum could also be conducted 

at the request of 10 percent or more of 

the number of persons eligible to vote in 

a referendum under the Order. Finally, 

a referendum could be conducted at any 

time as determined by the Secretary. 

Other Miscellaneous Provisions 

Sections 1222.80 and sections 1222.82 

through 1222.88 describe the rights of 

the Secretary; authorize the Secretary to 

suspend or terminate the Order when 

deemed appropriate; prescribe 

proceedings after termination; address 

personal liability, separability, and 

amendments; and provide OMB control 

numbers. These provisions are common 

to all research and promotion program 

authorized under the 1996 Act. 

Executive Order 12866 and Executive 

Order 13563 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. This rule is 

not a significant regulatory action under 

section 3(f) of Executive Order 12866, 

Regulatory Planning and Review, as 

supplemented by Executive Order 

13563. The Office of Management and 

Budget has not reviewed it under that 

Order. 

We expect the economic impact of 

this rule to be minimal. The program is 

intended to include broad, fact-based 

messages highlighting the renewability, 

recyclability and reusability of paper 

and paper-based packaging. Paper 

produced in the United States relies on 

fiber from sustainably managed forests 

and fiber recovered for recycling as its 

raw material. Broad messages about the 

recyclability of paper should enhance 

recovery efforts. Increasing paper 

recovering for recycling would increase 

the amount of paper diverted from 

landfills. Messaging to encourage the 

use of renewable and recyclable paper 

and paper-based packaging could help 

increase the use of bio-based products; 

paper and paper-based packaging are 

considered bio-based products because 

they are composed of wood fiber. 

The industry could also educate the 

public about the sustainability of paper 

and paper-based packaging. In the 

United States, more trees are grown than 

harvested. Between 1953 and 2006, the 

standing inventory of trees (i.e., the 

volume of growing trees) in U.S. forests 

increased by 49 percent and has 

increased by more than 20 percent since 

1970.15

Additionally, many paper products 

are manufactured using renewable 

energy. In 2008, an estimated 65 percent 

of the energy needed to operate U.S. 

pulp and paper mills was generated 

from renewable fuels derived largely 

from biomass.16 Broad campaigns to 

educate consumers about these factors 


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198 Federal Register / Vol. 78, No. 1 / Wednesday, January 2, 2013 / Proposed Rules 

17Forest products industry employment was 

calculated by summing March 2012 Bureau of Labor 

Statistics employment data for the following 

categories: Paper and paper products, logging, wood 

products, wood kitchen cabinets and countertops. 

18This is an AF&PA estimate and was computed 

as follows. The paper and paper products industry 

currently employs 395,000 people, according to the 

Bureau of Labor Statistics. The grades of paper and 

paper-based packaging to be covered by the 

proposed program accounted for about 83.3 percent 

of total paper and paper-based packaging in 2011. 

Hence, an estimated 329,000 direct jobs (83.3 

percent of 395,000) are associated with grades that 

would be covered by the program. Multipliers 

compiled by the Economic Policy Institute indicate 

that 100 jobs in the paper industry support an 

additional 325 jobs outside the industry (supplier 

industries, government entities and schools, and 

local communities where paper industry employees 

spend their wages). Thus, 329,000 paper industry 

jobs support 1.4 million jobs throughout the 

economy ((329,000 jobs) + (329,000 jobs × 3.25)). If 

the proposed program preserves just 0.24 percent of 

the paper and allied products industry sales by 

slowing demand declines for some grades and/or 

increasing demand growth for other grades, the 

economy will have 3,360 additional jobs (0.24 

percent × 1.4 million). 

19 Industry sources do not publish information on 

average price for paper and paper-based packaging. 

A reasonable estimate for average price of paper and 

paper-based packaging is the value per ton of paper 

and paper-based packaging exports. According to 

U.S. Census data, the average value of paper and 

paper-based packaging exports in 2011 was 

approximately $760 per short ton. 

20U.S. Customs and Border Protection data. 

should help all segments of the 

industry. 

The program would also help the 

forest products industry maintain 

870,000 jobs across the nation and begin 

to create new jobs.17 In addition to these 

jobs, numerous other jobs in related 

sectors are dependent upon the 

economic health of this industry. 

The proposed program would be 

funded by industry through an 

assessment. The program would collect 

approximately $25 million in 

assessments from the top producing 

U.S. manufacturers and importers to 

conduct marketing and educate 

consumers about a variety of paper 

products, thus, benefiting all paper 

manufacturers and importers, including 

many small operations that would be 

exempt from the assessment. While the 

benefits of the program are difficult to 

quantify, they are expected to outweigh 

program costs. If the new program 

preserves just 0.24 percent of the paper 

and allied products industry sales by 

slowing demand declines for some 

grades and/or increasing demand 

growth for other grades, the economy 

could experience 3,360 additional 

jobs.18 For example, the Cotton Board 

has seen a Benefit-Cost Ratio for 

producers and the government of $8.80 

return for each dollar invested; and 

since 1990, the Benefit-Cost Ratio for 

importers is a $14.80 return for each 

dollar invested. Other research and 

promotion programs have seen similar 

benefits. 

The assessments collected from U.S. 

manufacturers and importers are 

expected to be relatively small 

compared to U.S. manufacturer revenue 

and the value of paper and paper-based 

packaging imports. Many businesses 

make the decision to not pass these 

costs to consumers and instead keep it 

as a cost to do business because the 

costs are so small compared to the total 

revenue. To calculate the percentage of 

revenue represented by the assessment 

rate, the $0.35 per short ton assessment 

rate is divided by the average price, and 

that number is multiplied by 100. For 

domestic manufacturers, using a 2011 

average price of $760 per short ton,19

the percentage of revenue represented 

by the assessment rate would be .046 

percent. For importers, using an average 

price of $824 per short ton ($6.2 billion 

in 2011 imports divided by 7.5 million 

short tons of imports × 100),20 the 

percentage revenue represented by the 

assessment rate would be .042 percent. 

Thus, for both domestic manufacturers 

and importers covered under the 

proposed program, the percentage 

revenue represented by the assessment 

rate would be well under 1 percent (just 

under 5/100ths of a percent) of the 

average value per ton produced or 

imported. 

Initial Regulatory Flexibility Act 

Analysis 

In accordance with the Regulatory 

Flexibility Act (RFA) (5 U.S.C. 601– 

612), AMS is required to examine the 

impact of the proposed rule on small 

entities. Accordingly, AMS has 

considered the economic impact of this 

action on small entities. 

The purpose of the RFA is to fit 

regulatory actions to the scale of 

businesses subject to such actions so 

that small businesses will not be 

disproportionately burdened. The Small 

Business Administration defines, in 13 

CFR part 121, small agricultural 

producers as those having annual 

receipts of no more than $750,000 and 

small agricultural service firms 

(manufacturers and importers) as those 

having annual receipts of no more than 

$7.0 million. 

According to the AF&PA, in 2011, 

there were 84 manufacturers in the 

United States that produced one or more 

of the four types of paper and paperbased packaging to be covered under the 

proposed Order. Using an average price 

of $760 per short ton, a manufacturer 

who produced less than 9,210 short tons 

of paper and paper-based packaging per 

year would be considered a small entity. 

It is estimated that no more than four 

manufacturers produced less than 9,210 

short tons in 2011. Thus, the majority of 

manufacturers would not be considered 

small businesses. 

According to Customs data, it is 

estimated that, in 2011, there were 

about 2,612 importers of paper and 

paper-based packaging. Eighty-five 

importers, or about 3.2 percent, 

imported more than $7.0 million worth 

of paper and paper-based packaging. 

Thus, the majority of importers would 

be considered small entities. However, 

no importer who imported 100,000 

short tons or more (the Order’s proposed 

exemption threshold) imported less 

than $7.0 million worth of paper and 

paper-based packaging (19 importers). 

Therefore, none of the 19 importers to 

be covered under the proposed Order 

would be considered small businesses. 

Regarding value of the commodity, 

with domestic production at about 68.5 

million short tons in 2011, and using an 

average price of $760 per short ton, the 

value of domestic paper and paperbased packaging in 2011 was about $52 

billion. According to Customs data, the 

value of imported paper and paperbased packaging imports for 2011 was 

about $6.2 billion. 

This rule invites comments on a 

proposed industry-funded research, 

promotion, and information program for 

paper and paper-based packaging. The 

program would be financed by an 

assessment on domestic manufacturers 

and importers and would be 

administered by a board of industry 

members appointed by the Secretary. 

The initial assessment rate would be 

$0.35 per short ton. Entities that 

domestically manufacture or import less 

than 100,000 short tons per marketing 

year would be exempt from the payment 

of assessments. The purpose of the 

program would be to maintain and 

expand markets for paper and paperbased packaging. A referendum would 

be held among eligible manufacturers 

and importers to determine whether 

they favor implementation of the 

program prior to it going into effect. A 

majority of entities by both number and 

volume would have to support the 

program for it to be implemented. The 

program is authorized under the 1996 

Act. 

The Order would provide for an 

exemption for domestic manufacturers 

and importers who manufacture or 

import less than 100,000 short tons 

annually. Of the 84 domestic 

manufacturers in 2011, it is estimated 

that about 33, or 39 percent, produced 

less than 100,000 short tons per year 

and would thus be exempt from paying 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 78, No. 1 / Wednesday, January 2, 2013 / Proposed Rules 199 

assessments under the proposed Order. 

Of the 2,612 importers in 2011, it is 

estimated that about 2,593, or 99 

percent, imported less than 100,000 

short tons per year and would also be 

exempt from paying assessments. Thus, 

about 51 domestic manufacturers and 19 

importers would pay assessments under 

the Order. Using 2011 data and 

deducting exempt tonnage, it is 

estimated that if 72.5 million short tons 

of paper and paper-based packaging 

(67.2 million short tons domestic and 

5.3 million short tons imported) were 

assessed at a rate of $0.35 per short ton, 

about $25.4 million would be collected 

in assessments. Of that $25.4 million, 

92.5 percent ($23.5 million) would be 

paid by domestic manufacturers and 7.5 

percent ($1.9 million) would be paid by 

importers. 

Regarding alternatives, the Panel 

considered various options to the 

program’s coverage, the proposed 

assessment rate and exemption 

threshold. The Panel considered the 

merits of assessing all U.S. production 

of the four types of paper and paperbased packaging to be covered under the 

program, whether imports should be 

included, and different assessment rates 

to generate a range in income from $10 

million to $30 million. The Panel also 

considered the merits of a 25,000 short 

ton versus a 100,000 short ton 

exemption. The table below details 

various rates of assessment and 

approximate income generated using 

2011 data and the 100,000 short tonexemption threshold. 

APPROXIMATE ASSESSMENT INCOME AT

VARIOUS ASSESSMENT RATES

Approximate assessment 

income 

U.S. production 

and imports with a 

100,000 short tonexemption 

(72.5 million short 

tons) 

$10.0 million ................... $0.138 

$20.0 million ................... $0.276 

$25.4 million ................... $0.350 

$30.0 million ................... $0.413 

After much consideration, the Panel 

concluded that an exemption threshold 

of 100,000 short tons would be 

appropriate with imports covered under 

the program as well. The Panel 

concluded that this exemption level 

would help reduce the financial and 

reporting burden on smaller entities but 

provide the Board sufficient income to 

administer the program and conduct 

research and promotion activities. 

This action would impose additional 

reporting and recordkeeping burdens on 

manufacturers and importers of paper 

and paper-based packaging. 

Manufacturers and importers interested 

in serving on the Board would be asked 

to submit a nomination form to the 

Board indicating their desire to serve or 

nominating another industry member to 

serve on the Board. Interested persons 

could also submit a background 

statement outlining their qualifications 

to serve on the Board. Except for the 

initial Board nominations, 

manufacturers and importers would 

have the opportunity to cast a ballot and 

vote for candidates to serve on the 

Board. Manufacturer and importer 

nominees to the Board would have to 

submit a background form to the 

Secretary to ensure they are qualified to 

serve on the Board. 

Additionally, manufacturers and 

importers who manufacture or import 

less than 100,000 short tons annually 

could submit a request to the Board for 

an exemption from paying assessments 

on this volume. Manufacturers and 

importers would also be asked to submit 

a report to the Board regarding their 

production/imports. Manufacturers and 

importers who would qualify as 100 

percent organic under the NOP could 

submit a request to the Board for an 

exemption from assessments. Importers 

could also request a refund of any 

assessments paid to Customs. 

Finally, manufacturers and importer 

who wanted to participate in a 

referendum to vote on whether the 

Order should become effective would 

have to complete a ballot for submission 

to the Secretary. These forms are being 

submitted to the OMB for approval 

under OMB Control No. 0581–NEW. 

Specific burdens for the forms are 

detailed later in this document in the 

section titled ‘‘Paperwork Reduction 

Act’’. As with all Federal promotion 

programs, reports and forms are 

periodically reviewed to reduce 

information requirements and 

duplication by industry and public 

sector agencies. Finally, USDA has not 

identified any relevant Federal rules 

that duplicate, overlap, or conflict with 

this rule. 

AMS is committed to complying with 

the E-Government Act, to promote the 

use of the Internet and other 

information technologies to provide 

increased opportunities for citizen 

access to Government information and 

services, and for other purposes. 

Regarding outreach efforts, the Panel 

represents a broad cross-section of 

manufacturers and importers that would 

be covered under the program. Of the 14 

Panel members, 11 are AF&PA members 

and 3 are non-AF&PA members. 

According to the Panel, Panel and 

AF&PA members represent about 81 

percent of the domestic industry that 

would be covered by the program. Panel 

members representing 69 percent of the 

domestic production have signed forms 

indicating their support for the program. 

Over the past year, the Panel, and 

AF&PA staff and industry company 

employees, on behalf of the Panel, have 

made presentations on the proposed 

Order to all three major associations 

representing paper-based packaging and 

many of the associations representing 

the printing and writing paper segment 

of the industry. In September 2011, the 

Panel mailed information regarding the 

program to all Panel-known companies 

that would pay assessments under the 

program. This included manufacturers 

and importers and both AF&PA 

members and non-members. The Panel 

also mailed a letter to other parties in 

the supply chain to continue to educate 

them about the program. The AF&PA 

continues to communicate to its 

members and non-members about the 

program. Finally, Panel members plan 

to continue outreach to the CEOs of 

their industry peers to explain the 

program and help garner support. 

While USDA has performed this 

initial RFA analysis regarding the 

impact of the proposed rule on small 

entities, in order to have as much data 

as possible for a more comprehensive 

analysis, we invite comments 

concerning potential effects. USDA is 

also requesting comments regarding the 

number and size of entities covered 

under the proposed Order. 

Civil Rights Impact Analysis 

Consideration has been given to the 

potential civil rights implications of this 

proposed rule on affected parties to 

ensure that no person or group shall be 

discriminated against on the basis of 

race, color, national origin, gender, 

religion, age, disability, sexual 

orientation, marital or family status, 

political beliefs, parental status or 

protected genetic information. Although 

detailed information is not available on 

the domestic manufacturers and 

importers who would be subject to the 

program or the users of paper and 

paper-based packaging, broad 

consideration was given to the 

employees of such entities and those 

individuals who wish to use 

information collected under this 

mandatory program. This proposed rule 

does not require affected entities to 

relocate or alter their operations in ways 

that could adversely affect such persons 

or groups. Moreover, the program would 

not exclude from participation any 

persons or groups, deny any persons or 

groups the benefits of the program, or 


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200 Federal Register / Vol. 78, No. 1 / Wednesday, January 2, 2013 / Proposed Rules 

subject any persons or groups to 

discrimination. 

Executive Order 13175 

This rule has been reviewed in 

accordance with the requirements of 

Executive Order 13175, Consultation 

and Coordination with Indian Tribal 

Governments. The review reveals that 

this regulation would not have 

substantial and direct effects on Tribal 

governments and would not have 

significant Tribal implications. 

Executive Order 12988 

This rule has been reviewed under 

Executive Order 12988, Civil Justice 

Reform. It is not intended to have 

retroactive effect. Section 524 of the 

1996 Act provides that it shall not affect 

or preempt any other Federal or State 

law authorizing promotion or research 

relating to an agricultural commodity. 

Under section 519 of the 1996 Act, a 

person subject to an order may file a 

written petition with the U.S. 

Department of Agriculture (USDA) 

stating that an order, any provision of an 

order, or any obligation imposed in 

connection with an order, is not 

established in accordance with the law, 

and request a modification of an order 

or an exemption from an order. Any 

petition filed challenging an order, any 

provision of an order, or any obligation 

imposed in connection with an order, 

shall be filed within two years after the 

effective date of an order, provision, or 

obligation subject to challenge in the 

petition. The petitioner will have the 

opportunity for a hearing on the 

petition. Thereafter, USDA will issue a 

ruling on the petition. The 1996 Act 

provides that the district court of the 

United States for any district in which 

the petitioner resides or conducts 

business shall have the jurisdiction to 

review a final ruling on the petition, if 

the petitioner files a complaint for that 

purpose not later than 20 days after the 

date of the entry of USDA’s final ruling. 

Paperwork Reduction Act 

In accordance with the Paperwork 

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

Chapter 35), AMS announces its 

intention to request an approval of a 

new information collection and 

recordkeeping requirements for the 

proposed paper and paper-based 

packaging program. 

Title: Advisory Committee or 

Research and Promotion Background 

Information. 

OMB Number for background form 

AD–755: (Approved under OMB No. 

0505–0001). 

Expiration Date of Approval: May 31, 

2015. 

Title: Paper and Paper-Based 

Packaging Promotion, Research and 

Information Order. 

OMB Number: 0581–NEW. 

Expiration Date of Approval: 3 years 

from approval date. 

Type of Request: New information 

collection for research and promotion 

programs. 

Abstract: The information collection 

requirements in the request are essential 

to carry out the intent of the 1996 Act. 

The information collection concerns a 

proposal received by USDA for a 

national research and promotion 

program for the paper and paper-based 

packaging industry. The program would 

be financed by an assessment on 

domestic manufacturers and importers 

and would be administered by a board 

of industry members appointed by the 

Secretary. The program would provide 

for an exemption for manufacturers and 

importers who manufacture or import 

less than 100,000 short tons of paper 

and paper-based packaging during the 

year. A referendum would be held 

among eligible manufacturers and 

importers to determine whether they 

favor implementation of the program 

prior to it going into effect. The purpose 

of the program would be to maintain 

and expand markets for paper and 

paper-based packaging. 

In summary, the information 

collection requirements under the 

program concern Board nominations, 

the collection of assessments, and 

referenda. For Board nominations, 

manufacturers and importers interested 

in serving on the Board would be asked 

to submit a ‘‘Nomination Form’’ to the 

Board indicating their desire to serve or 

to nominate another industry member to 

serve on the Board. Interested persons 

could also submit a background 

statement outlining qualifications to 

serve on the Board. Except for the initial 

Board nominations, manufacturers and 

importers would have the opportunity 

to submit a ‘‘Nomination Ballot’’ to the 

Board where they would vote for 

candidates to serve on the Board. 

Nominees would also have to submit a 

background information form, ‘‘AD– 

755,’’ to the Secretary to ensure they are 

qualified to serve on the Board. 

Regarding assessments, manufacturers 

and importers who manufacture or 

import less than 100,000 short tons 

annually could submit a request, 

‘‘Application for Exemption from 

Assessments,’’ to the Board for an 

exemption from paying assessments. 

Manufacturers and importers would be 

asked to submit a ‘‘Production/Import 

Report’’ that would be submitted to the 

Board on a quarterly basis that would 

specify the quantity of paper and paperbased packaging manufactured or 

imported during the applicable period 

and the country of export (for imports). 

Manufacturers who manufacture less 

than 100,000 short tons annually would 

be exempt from paying assessments and 

would not be required to submit this 

report. Additionally, only importers 

who pay their assessments directly to 

the Board would be required to submit 

this report. If the importer assessments 

are collected by Customs, Customs 

would remit the funds to the Board and 

the other information would be 

available from Customs (i.e., country of 

export, quantity imported). Finally, 

domestic manufacturers and importers 

who would qualify as 100 percent 

organic under the NOP could submit an 

‘‘Organic Exemption Form’’ to the Board 

and request an exemption from 

assessments. 

There would also be an additional 

burden on manufacturers and importers 

voting in referenda. The referendum 

ballot, which represents the information 

collection requirement relating to 

referenda, is addressed in a proposed 

rule on referendum procedures which is 

published separately in this issue of the 

Federal Register. 

Information collection requirements 

that are included in this proposal 

include: 

(1) Nomination Form 

Estimate of Burden: Public 

recordkeeping burden for this collection 

of information is estimated to average 

0.25 hour per application. 

Respondents: Manufacturers and 

importers. 

Estimated Number of Respondents: 

20. 

Estimated Number of Responses per 

Respondent: 1. 

Estimated Total Annual Burden on 

Respondents: 5 hours. 

(2) Background Statement 

Estimate of Burden: Public 

recordkeeping burden for this collection 

of information is estimated to average 

0.25 hour per application. 

Respondents: Manufacturers and 

importers. 

Estimated Number of Respondents: 

20. 

Estimated Number of Responses per 

Respondent: 1. 

Estimated Total Annual Burden on 

Respondents: 5 hours. 

(3) Nomination Ballot 

Estimate of Burden: Public 

recordkeeping burden for this collection 

of information is estimated to average 

0.25 hour per application. 

Respondents: Domestic manufacturers 

and importers. 


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Estimated Number of Respondents: 75 

(56 manufacturers and 19 importers 

who manufacture/import 100,000 short 

tons or more annually). 

Estimated Number of Responses per 

Respondent: 1. 

Estimated Total Annual Burden on 

Respondents: 18.75 hours. 

(4) Background Information Form AD– 

755 (OMB Form No. 0505–0001) 

Estimate of Burden: Public reporting 

for this collection of information is 

estimated to average 0.5 hour per 

response for each Board nominee. 

Respondents: Manufacturers and 

importers. 

Estimated Number of Respondents: 12 

(24 for initial nominations to the Board, 

0 for the second year, and up to 8 

annually thereafter). 

Estimated Number of Responses per 

Respondent: 1 every 3 years. (0.3) 

Estimated Total Annual Burden on 

Respondents: 12 hours for the initial 

nominations to the Board, 0 hours for 

the second year of operation, and up to 

4 hours annually thereafter. 

(5) Application for Exemption From 

Assessments 

Estimate of Burden: Public reporting 

burden for this collection of information 

is estimated to average 0.25 hour per 

manufacturer or importer reporting on 

paper and paper-based packaging 

manufactured or imported. Upon 

approval of an application, 

manufacturers and importers would 

receive exemption certification. 

Respondents: Domestic manufacturers 

(33) and importers (2,593) who 

manufacture or import less than 100,000 

short tons of paper and paper-based 

packaging annually. 

Estimated number of Respondents: 

2,626. 

Estimated number of Responses per 

Respondent: 1. 

Estimated Total Annual Burden on 

Respondents: 656.50 hours. 

(6) Production/Import Report 

Estimate of Burden: Public reporting 

burden for this collection of information 

is estimated to average 0.5 hour per 

manufacturer or importer. 

Respondents: Manufacturers who 

manufacture 100,000 short tons or more 

annually (51) and importers who remit 

their assessments directly to the Board 

(computation is based on the scenario 

where all 19 importers pay their 

assessments to the Board). 

Estimated number of Respondents: 

70. 

Estimated number of Responses per 

Respondent: 4. 

Estimated Total Annual Burden on 

Respondents: 140 hours. 

(7) Refund Of Assessments 

Estimate of Burden: Public reporting 

burden for this collection of information 

is estimated to average 0.25 hour. 

Respondents: Manufacturers and 

importers. 

Estimated Number of Respondents: 

10. 

Estimated Number of Responses per 

Respondent: 1. 

Estimated Total Annual Burden on 

Respondents: 2.5 hours. 

(8) Organic Exemption Form 

Estimate of Burden: Public 

recordkeeping burden for this collection 

of information is estimated to average 

0.5 hours per exemption form. 

Respondents: Organic manufacturers 

and importers. 

Estimated Number of Respondents: 1. 

Estimated Number of Responses per 

Respondent: 1. 

Estimated Total Annual Burden on 

Respondents: 0.5 hour. 

(9) A Requirement To Maintain Records 

Sufficient To Verify Reports Submitted 

Under the Order 

Estimate of Burden: Public 

recordkeeping burden for keeping this 

information is estimated to average 0.5 

hours per recordkeeper maintaining 

such records. 

Recordkeepers: Manufacturers (84) 

and importers (2,612). 

Estimated number of recordkeepers: 

2,696. 

Estimated total recordkeeping hours: 

1,348 hours. 

As noted above, under the proposed 

program, manufacturers and importers 

would be required to pay assessments 

and file reports with and submit 

assessments to the Board (importers 

through Customs). While the proposed 

Order would impose certain 

recordkeeping requirements on 

manufacturers and importers, 

information required under the 

proposed Order could be compiled from 

records currently maintained. Such 

records shall be retained for at least two 

years beyond the fiscal year of their 

applicability. 

An estimated 2,696 respondents 

would provide information to the Board 

(84 domestic manufacturers and 2,612 

importers). The estimated cost of 

providing the information to the Board 

by respondents would be $72,204. This 

total has been estimated by multiplying 

2,188 total hours required for reporting 

and recordkeeping by $33, the average 

mean hourly earnings of various 

occupations involved in keeping this 

information. Data for computation of 

this hourly rate was obtained from the 

U.S. Department of Labor, Bureau of 

Labor Statistics. 

The proposed Order’s provisions have 

been carefully reviewed, and every 

effort has been made to minimize any 

unnecessary recordkeeping costs or 

requirements, including efforts to utilize 

information already submitted under 

other programs administered by USDA 

and other state programs. 

The proposed forms would require 

the minimum information necessary to 

effectively carry out the requirements of 

the program, and their use is necessary 

to fulfill the intent of the 1996 Act. Such 

information can be supplied without 

data processing equipment or outside 

technical expertise. In addition, there 

are no additional training requirements 

for individuals filling out reports and 

remitting assessments to the Board. The 

forms would be simple, easy to 

understand, and place as small a burden 

as possible on the person required to file 

the information. 

Collecting information quarterly 

would coincide with normal industry 

business practices. The timing and 

frequency of collecting information are 

intended to meet the needs of the 

industry while minimizing the amount 

of work necessary to fill out the required 

reports. The requirement to keep 

records for two years is consistent with 

normal industry practices. In addition, 

the information to be included on these 

forms is not available from other sources 

because such information relates 

specifically to individual manufacturers 

and importers who are subject to the 

provisions of the 1996 Act. Therefore, 

there is no practical method for 

collecting the required information 

without the use of these forms. 

Request for Public Comment Under the 

Paperwork Reduction Act 

Comments are invited on: (a) Whether 

the proposed collection of information 

is necessary for the proper performance 

of functions of the proposed Order and 

USDA’s oversight of the proposed 

Order, including whether the 

information would have practical 

utility; (b) the accuracy of USDA’s 

estimate of the burden of the proposed 

collection of information, including the 

validity of the methodology and 

assumptions used; (c) the accuracy of 

USDA’s estimate of the principal 

manufacturing areas in the United 

States for paper and paper-based 

packaging; (d) the accuracy of USDA’s 

estimate of the number of manufacturers 

and importers of paper and paper-based 

packaging that would be covered under 

the program; (e) ways to enhance the 

quality, utility, and clarity of the 

information to be collected; and (f) ways 


tkelley on DSK3SPTVN1PROD with 
202 Federal Register / Vol. 78, No. 1 / Wednesday, January 2, 2013 / Proposed Rules 

to minimize the burden of the collection 

of information on those who are to 

respond, including the use of 

appropriate automated, electronic, 

mechanical, or other technological 

collection techniques or other forms of 

information technology. 

Comments concerning the 

information collection requirements 

contained in this action should 

reference OMB No. 0581–NEW. In 

addition, the docket number, date, and 

page number of this issue of the Federal 

Register also should be referenced. 

Comments should be sent to the same 

addresses referenced in the ADDRESSES

section of this rule. 

OMB is required to make a decision 

concerning the collection of information 

contained in this rule between 30 and 

60 days after publication. Therefore, a 

comment to OMB is best assured of 

having its full effect if OMB receives it 

within 30 days of publication. 

USDA made modifications to the 

proponent’s proposal to conform with 

other similar national research and 

promotion programs implemented 

under the 1996 Act. 

While the proposal set forth below 

has not received the approval of USDA, 

it is determined that this proposed 

Order is consistent with and would 

effectuate the purposes of the 1996 Act. 

As previously mentioned, for the 

proposed Order to become effective, it 

must be approved by a majority of 

manufacturers and importers voting for 

approval in a referendum who also 

represent a majority of the volume of 

paper and paper-based packaging 

represented in the referendum. 

Referendum procedures will be 

published separately in this issue of the 

Federal Register. 

A 60-day comment period is provided 

to allow interested persons to respond 

to this proposal. All written comments 

received in response to this rule by the 

date specified will be considered prior 

to finalizing this action. 

List of Subjects in 7 CFR Part 1222 

Administrative practice and 

procedure, Advertising, Consumer 

information, Marketing agreements, 

Paper and Paper-Based-Packaging 

promotion, Reporting and 

recordkeeping requirements. 

■ For the reasons set forth in the 

preamble, it is proposed that Title 7, 

Chapter XI of the Code of Federal 

Regulations, be amended by adding Part 

1222 to read as follows: 

PART 1222—PAPER AND PAPERBASED PACKAGING PROMOTION, 

RESEARCH AND INFORMATION 

ORDER 

Subpart A—Paper and Paper-Based 

Packaging Promotion, Research and 

Information Order 

Definitions 

Sec. 

1222.1 Act. 

1222.2 Board. 

1222.3 Conflict of interest. 

1222.4 Converted products. 

1222.5 Customs or CBP. 

1222.6 Department or USDA. 

1222.7 Fiscal period and marketing year. 

1222.8 Importer. 

1222.9 Information. 

1222.10 Kraft process. 

1222.11 Linerboard. 

1222.12 Manufacture or produce. 

1222.13 Manufacturer or producer. 

1222.14 Medium. 

1222.15 Order. 

1222.16 Panel. 

1222.17 Paper and paper-based packaging. 

1222.18 Part and subpart. 

1222.19 Person. 

1222.20 Program, plans and projects. 

1222.21 Promotion. 

1222.22 Pulp. 

1222.23 Research. 

1222.24 Secretary. 

1222.25 Short ton or ton. 

1222.26 State. 

1222.27 Suspend. 

1222.28 Terminate. 

1222.29 United States. 

Paper and Paper-Based Packaging Board 

1222.40 Establishment and membership. 

1222.41 Nominations and appointments. 

1222.42 Term of office. 

1222.43 Removal and vacancies. 

1222.44 Procedure. 

1222.45 Reimbursement and attendance. 

1222.46 Powers and duties. 

1222.47 Prohibited activities. 

Expenses and Assessments 

1222.50 Budget and expenses. 

1222.51 Financial statements. 

1222.52 Assessments. 

1222.53 Exemption from assessment. 

Promotion, Research and Information 

1222.60 Programs, plans and projects. 

1222.61 Independent evaluation. 

1222.62 Patents, copyrights, trademarks, 

inventions, product formulations, and 

publications. 

Reports, Books, and Records 

1222.70 Reports. 

1222.71 Books and records. 

1222.72 Confidential treatment. 

Miscellaneous 

1222.80 Right of the Secretary. 

1222.81 Referenda. 

1222.82 Suspension or termination. 

1222.83 Proceedings after termination. 

1222.84 Effect of termination or 

amendment. 

1222.85 Personal liability. 

1222.86 Separability. 

1222.87 Amendments. 

1222.88 OMB control numbers. 

Subpart B—[Reserved] 

Authority: 7 U.S.C. 7411–7425; 7 U.S.C. 

7401. 

Subpart A—Paper and Paper-Based 

Packaging Promotion, Research and 

Information Order 

Definitions 

§ 1222.1 Act. 

Act means the Commodity Promotion, 

Research and Information Act of 1996 (7 

U.S.C. 7411–7425), and any 

amendments thereto. 

§ 1222.2 Board. 

Board means the Paper and PaperBased Packaging Board established 

pursuant to § 1222.40, or such other 

name as recommended by the Board and 

approved by the Department. 

§ 1222.3 Conflict of interest. 

Conflict of interest means a situation 

in which a member or employee of the 

Board has a direct or indirect financial 

interest in a person who performs a 

service for, or enters into a contract 

with, the Board for anything of 

economic value. 

§ 1222.4 Converted products. 

Converted products means products 

made from paper and paper-based 

packaging. 

§ 1222.5 Customs or CBP. 

Customs or CBP means the U.S. 

Customs and Border Protection, an 

agency of the U.S. Department of 

Homeland Security. 

§ 1222.6 Department or USDA. 

Department or USDA means the U.S. 

Department of Agriculture, or any 

officer or employee of the Department to 

whom authority has heretofore been 

delegated, or to whom authority may 

hereafter be delegated, to act in the 

Secretary’s stead. 

§ 1222.7 Fiscal period and marketing year. 

Fiscal and marketing year means the 

12-month period ending on December 

31 or such other period as 

recommended by the Board and 

approved by the Secretary. 

§ 1222.8 Importer. 

Importer means any person who 

imports paper and paper-based 

packaging from outside the United 

States for sale in the United States as a 

principal or as an agent, broker, or 

consignee of any person who 


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manufactures paper and paper-based 

packaging outside the United States for 

sale in the United States, and who is 

listed in the import records as the 

importer of record for such paper and 

paper-based packaging. 

§ 1222.9 Information. 

Information means information and 

programs for consumers, customers and 

industry, including educational 

activities, information and programs 

designed to enhance and broaden the 

understanding of the use and attributes 

of paper and paper-based packaging, 

increase efficiency in manufacturing 

paper and paper-based packaging, 

maintain and expand existing markets, 

and develop new markets and marketing 

strategies. These include: 

(a) Consumer education and 

information, which means any action 

taken to provide information to, and 

broaden the understanding of, the 

general public regarding paper and 

paper-based packaging; and 

(b) Industry information, which 

means information and programs that 

would enhance the image of the paper 

and paper-based packaging industry. 

§ 1222.10 Kraft process. 

Kraft process means a process that 

transforms wood into a high quality 

strong pulp for making paper and paperbased packaging. 

§ 1222.11 Linerboard. 

Linerboard means a grade of 

containerboard that is used as facing 

material in the manufacture of 

corrugated or solid fiber shipping boxes. 

§ 1222.12 Manufacture or produce. 

Manufacture or produce means the 

process of transforming pulp into paper 

and paper-based packaging. 

§ 1222.13 Manufacturer or producer. 

Manufacturer or producer means any 

person who manufactures paper and 

paper-based packaging in the United 

States. 

§ 1222.14 Medium. 

Medium means a grade of 

containerboard used as the inner fluting 

material in the manufacture of 

corrugated or solid fiber shipping boxes. 

§ 1222.15 Order. 

Order means an order issued by the 

Secretary under section 514 of the Act 

that provides for a program of generic 

promotion, research, and information 

regarding agricultural commodities 

authorized under the Act. 

§ 1222.16 Panel. 

Panel means the Paper and PaperBased Packaging Panel formed to pursue 

development of a paper and paper-based 

packaging promotion, research and 

information program. 

§ 1222.17 Paper and paper-based 

packaging. 

(a) Paper and paper-based packaging 

means: 

(1) Printing, writing and related 

paper, which is coated or uncoated 

paper that is subsequently converted 

into products used for printing, writing 

and other communication purposes, 

such as file folders, envelopes, 

catalogues, magazines and brochures. 

For purposes of this Order, printing, 

writing and related paper includes 

thermal paper but does not include 

carbonless paper; 

(2) Kraft packaging paper, which is 

coarse unbleached, semi-bleached or 

fully bleached grades of paper that are 

subsequently converted into products 

such as grocery bags, multiwall sacks, 

waxed paper and other products; 

(3) Containerboard, which is all forms 

of linerboard and medium that is used 

to manufacture corrugated boxes, 

shipping containers and related 

products; and 

(4) Paperboard, which is solid 

bleached kraft board, recycled board 

and unbleached kraft board that is 

subsequently converted into a wide 

variety of end uses, including folding 

boxes, food and beverage packaging, 

tubes, cans, and drums, and other 

miscellaneous products. Paperboard 

does not include construction-related 

products such as gypsum wallboard 

facings and panel board. 

(b) For purposes of this Order, paper 

and paper-based packaging does not 

include tissue paper, newsprint or 

converted products. 

§ 1222.18 Part and subpart. 

Part means the Paper and Paper-Based 

Packaging Promotion, Research and 

Information Order and all rules, 

regulations, and supplemental orders 

issued pursuant to the Act and the 

Order. The Order shall be a subpart of 

such part. 

§ 1222.19 Person. 

Person means any individual, group 

of individuals, partnership, corporation, 

association, cooperative, or any other 

legal entity. 

§ 1222.20 Programs, plans and projects. 

Programs, plans and projects means 

those research, promotion and 

information programs, plans or projects 

established pursuant to the Order. 

§ 1222.21 Promotion. 

Promotion means any action, 

including paid advertising and the 

dissemination of information, utilizing 

public relations or other means, to 

enhance and broaden the understanding 

of the use and attributes of paper and 

paper-based packaging for the purpose 

of maintaining and expanding markets 

for paper and paper-based packaging. 

§ 1222.22 Pulp. 

Pulp means the material that is 

produced by chemically or 

mechanically separating cellulose fibers 

from wood or recycling recovered fiber. 

§ 1222.23 Research. 

Research means any type of test, 

study, or analysis designed to enhance 

the image, desirability, use, 

marketability, manufacturing, 

recyclability, reusability or quality of 

paper and paper-based packaging, 

including research directed to product 

characteristics and product 

development, including new uses of 

existing products, new products or 

improved technology in the 

manufacturing of paper and paper-based 

packaging. 

§ 1222.24 Secretary. 

Secretary means the Secretary of 

Agriculture of the United States, or any 

other officer or employee of the 

Department to whom authority has been 

delegated, or to whom authority may 

hereafter be delegated, to act in the 

Secretary’s stead. 

§ 1222.25 Short ton or ton. 

Short ton or ton means a measure of 

weight equal to 2,000 pounds. 

§ 1222.26 State. 

State means any of the 50 States of the 

United States, the District of Columbia, 

the Commonwealth of Puerto Rico, or 

any territory or possession of the United 

States. 

§ 1222.27 Suspend. 

Suspend means to issue a rule under 

section 553 of title 5 U.S.C. to 

temporarily prevent the operation of an 

order or part thereof during a particular 

period of time specified in the rule. 

§ 1222.28 Terminate. 

Terminate means to issue a rule under 

section 553 of title 5 U.S.C. to cancel 

permanently the operation of an order 

or part thereof beginning on a date 

certain specified in the rule. 

§ 1222.29 United States. 

United States means collectively the 

50 States, the District of Columbia, the 

Commonwealth of Puerto Rico and the 

territories and possessions of the United 

States. 


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Paper and Paper-Based Packaging 

Board 

§ 1222.40 Establishment and membership. 

(a) Establishment of the Board. There 

is hereby established a Paper and PaperBased Packaging Board to administer 

the terms and provisions of this Order. 

The Board shall be composed of 

manufacturers and importers of paper 

and paper-based packaging that 

manufacture or import 100,000 short 

tons or more of paper and paper-based 

packaging during a marketing year. 

Seats on the Board shall be apportioned 

as set forth in paragraph (b) of this 

section based on the geographical 

distribution of the quantity of paper and 

paper-based packaging manufactured in 

the United States and the quantity of 

paper and paper-based packaging 

imported to the United States. 

(b) The Board shall be composed of 12 

members and shall be established as 

follows: 

(1) Manufacturers. Eleven members 

shall be manufacturers. Of the 11 

manufacturers, 10 shall be from the 

following four regions: 

(i) Six members shall be from the 

South, which consists of the states of 

Alabama, Arkansas, Delaware, Florida, 

Georgia, Kentucky, Louisiana, 

Maryland, Mississippi, North Carolina, 

Oklahoma, South Carolina, Tennessee, 

Texas, Virginia, West Virginia, and all 

other parts of the United States not 

listed in paragraphs (b)(1)(ii), (b)(1)(iii), 

and (b)(1)(iv) of this section; 

(ii) One member shall be from the 

Northeast, which consists of the states 

of Connecticut, Maine, Massachusetts, 

New Hampshire, New Jersey, New York, 

Pennsylvania, Rhode Island and 

Vermont; 

(iii) Two members shall be from the 

Midwest, which consists of the states of 

Colorado, Illinois, Indiana, Iowa, 

Kansas, Michigan, Minnesota, Missouri, 

North Dakota, Ohio, South Dakota, 

Wisconsin and Wyoming; and 

(iv) One member shall be from the 

West, which consists of the states of 

Alaska, Arizona, California, Hawaii, 

Idaho, Montana, New Mexico, Nevada, 

Oregon, Utah, and Washington. 

(v) One manufacturer member at large 

may be from any region and shall 

manufacture at least 100,000 short tons 

but no more than 250,000 short tons of 

paper and paper-based packaging 

annually. If there are no eligible 

nominees, this seat shall be allocated to 

the largest producing region specified in 

paragraphs (b)(1)(i) through (b)(1)(iv). 

(2) Importers. One member shall be an 

importer. 

(c) At least once in every five-year 

period, but not more frequently than 

once in every three-year period, the 

Board will review the geographical 

distribution of the quantity of paper and 

paper-based packaging manufactured 

within the United States and the 

quantity of paper and paper-based 

packaging imported to the United 

States. The review will be conducted 

using the Board’s annual assessment 

receipts and, if available, other reliable 

reports from the industry. If warranted, 

the Board will recommend to the 

Secretary that the membership or size of 

the Board be adjusted to reflect changes 

in geographical distribution of the 

quantity of paper and paper-based 

packaging manufactured in the United 

States and the quantity of paper and 

paper-based packaging imported to the 

United States. Any changes in Board 

composition shall be implemented by 

the Secretary through rulemaking. 

§ 1222.41 Nominations and appointments. 

(a) Nominees must manufacture or 

import 100,000 short tons or more of 

paper and paper-based packaging in a 

marketing year. 

(b) Initial nominations shall be 

submitted to the Secretary by the Panel. 

Before considering any nominations, the 

Panel shall publicize the nomination 

process, using trade press or other 

means it deems appropriate, and shall 

conduct outreach to all known 

manufacturers and importers 

manufacturing or importing 100,000 

short tons or more of paper and paperbased packaging in a marketing year to 

generate nominees that reflect the range 

of operations within the paper and 

paper-based packaging industry. The 

Panel may use regional caucuses, mail 

or other methods to elicit potential 

nominees. The Panel shall work with 

USDA to ensure that all eligible 

candidates are aware of the opportunity 

to serve on the Board. The Panel shall 

submit the nominations to the Secretary 

and recommend two nominees for each 

Board position specified in § 1222.40(b). 

The Secretary shall select the initial 

members of the Board from the 

nominations submitted by the Panel. 

(c) Subsequent nominations shall be 

conducted as follows: 

(1) The Board shall conduct outreach 

to all known manufacturers and 

importers manufacturing or importing 

100,000 short tons or more of paper and 

paper-based packaging in a marketing 

year. Manufacturers and importers may 

submit nominations to the Board; 

(2) Manufacturer and importer 

nominees may provide the Board a short 

background statement outlining their 

qualifications to serve on the Board; 

(3) Nominees that are both a 

manufacturer and an importer may seek 

nomination to the Board as either a 

manufacturer or an importer, but not 

both; 

(4) For the domestic seats allocated by 

region, domestic manufacturers must 

manufacture paper and paper-based 

packaging in the region for which they 

seek nomination. Nominees that 

manufacture in more than one region 

may seek nomination in one region of 

their choice. Nominees must specify for 

which region they are seeking 

nomination. The names of manufacturer 

nominees shall be placed on a ballot by 

region. The ballots along with the 

background statements shall be mailed 

to all manufacturers who manufacture 

100,000 short tons or more of paper and 

paper-based packaging per marketing 

year. Manufacturers may vote in each 

region in which they manufacture paper 

and paper-based packaging. The votes 

shall be tabulated for each region and 

the nominees receiving the highest 

number of votes shall be placed at the 

top of the list in descending order by 

vote. The top two candidates for each 

position shall be submitted to the 

Secretary; 

(5) The names of nominees for at large 

domestic manufacturers shall be placed 

on a ballot. The ballots along with the 

background statements shall be mailed 

to all manufacturers who manufacture 

100,000 short tons or more of paper and 

paper-based packaging per marketing 

year. The votes shall be tabulated and 

the nominees receiving the highest 

number of votes shall be placed at the 

top of the list in descending order by 

vote. The top two candidates shall be 

submitted to the Secretary; 

(6) The names of importer nominees 

shall be placed on a ballot. The ballots 

along with background statements shall 

be mailed to importers who import 

100,000 short tons or more of paper and 

paper-based packaging per marketing 

year. The votes shall be tabulated and 

the nominees receiving the highest 

number of votes shall be placed at the 

top of the list in descending order by 

vote. The top two candidates for each 

position shall be submitted to the 

Secretary; 

(7) The Board must submit 

nominations to the Secretary at least six 

months before the new Board term 

begins; 

(8) Any manufacturer or importer 

nominated to serve on the Board shall 

file with the Secretary at the time of the 

nomination a background questionnaire; 

(9) From the nominations made 

pursuant to this section, the Secretary 

shall appoint the members of the Board 

on the basis of representation provided 

in § 1222.40(b); 


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(10) No two members shall be 

employed by a single corporation, 

company, partnership or any other legal 

entity; and 

(11) The Board may recommend to the 

Secretary modifications to its 

nomination procedures as it deems 

appropriate. Any such modifications 

shall be implemented through 

rulemaking by the Secretary. 

§ 1222.42 Term of office. 

(a) With the exception of the initial 

Board, each Board member shall serve 

for a term of three years or until the 

Secretary selects his or her successor. 

Each term of office shall begin on 

January 1 and end on December 31. No 

member may serve more than two full 

consecutive three-year terms, except as 

provided in paragraph (b) of this 

section. 

(b) For the initial Board, the terms of 

the Board members shall be staggered 

for two, three and four years. 

Determination of which of the initial 

members shall serve a term of two, three 

or four years shall be recommended to 

the Secretary by the Panel. 

§ 1222.43 Removal and vacancies. 

(a) The Board may recommend to the 

Secretary that a member be removed 

from office if the member consistently 

fails or refuses to perform his or her 

duties properly or engages in dishonest 

acts or willful misconduct. If the 

Secretary determines that any person 

appointed under this subpart 

consistently fails or refuses to perform 

his or her duties properly or engages in 

acts of dishonesty or willful 

misconduct, the Secretary shall remove 

the person from office. A person 

appointed under this subpart or any 

employee of the Board may be removed 

by the Secretary if the Secretary 

determines that the person’s continued 

service would be detrimental to the 

purposes of the Act. 

(b) If a member resigns, is removed 

from office, or in the event of death of 

any member or if any member of the 

Board ceases to work for or be affiliated 

with a manufacturer or importer, or if a 

manufacturer ceases to do business in 

the region he or she represents, such 

position shall become vacant. 

(c) If a position becomes vacant 

nominations to fill the vacancy will be 

conducted using the nominations 

process set forth in this Order or the 

Board may recommend to the Secretary 

that he or she appoint a successor from 

the most recent list of nominations for 

the position. 

(d) A vacancy will not be required to 

be filled if the unexpired term is less 

than six months. 

§ 1222.44 Procedure. 

(a) A majority of the Board members 

shall constitute a quorum. 

(b) Each member of the Board shall be 

entitled to one vote on any matter put 

to the Board and the motion will carry 

if supported by a majority of Board 

members, except for recommendations 

to change the assessment rate or to 

adopt a budget, both of which require 

affirmation by two-thirds of the total 

number of Board members. 

(c) At an assembled meeting, all votes 

shall be cast in person. 

(d) In lieu of voting at an assembled 

meeting and, when in the opinion of the 

chairperson of the Board such action is 

considered necessary, the Board may 

take action if supported by a majority of 

members (unless two-thirds is required 

under the Order) by mail, telephone, 

electronic mail, facsimile, or any other 

means of communication. In that event, 

all members must be notified and 

provided the opportunity to vote. Any 

action so taken shall have the same 

force and effect as though such action 

had been taken at an assembled 

meeting. All votes shall be recorded in 

Board minutes. 

(e) There shall be no proxy voting. 

§ 1222.45 Reimbursement and attendance. 

Board members shall serve without 

compensation, but shall be reimbursed 

for reasonable travel expenses, as 

approved by the Board, which they 

incur when performing Board business. 

§ 1222.46 Powers and duties. 

The Board shall have the following 

powers and duties: 

(a) To administer this subpart in 

accordance with its terms and 

conditions and to collect assessments; 

(b) To develop and recommend to the 

Secretary for approval such bylaws as 

may be necessary for the functioning of 

the Board, and such rules and 

regulations as may be necessary to 

administer the Order, including 

activities authorized to be carried out 

under the Order; 

(c) To meet not less than annually, 

organize, and select from among the 

members of the Board a chairperson, 

vice chairperson, secretary/treasurer, 

other officers, and committees and 

subcommittees, as the Board determines 

to be appropriate. The committee and 

subcommittees may include persons 

other than Board members, including 

representatives of Board members, as 

the Board deems necessary and 

appropriate, provided Board members 

or their representative constitute a 

majority of all committees and 

subcommittees; 

(d) To employ or contract with 

persons, other than the Board members, 

as the Board considers necessary to 

assist the Board in carrying out its 

duties, and to determine the 

compensation and specify the duties of 

the persons; 

(e) To notify manufacturers and 

importers of all Board meetings through 

a press release or other means and to 

give the Secretary the same notice of 

meetings of the Board (including 

committee, subcommittee, and the like) 

as is given to members so that the 

Secretary’s representative(s) may attend 

such meetings, and to keep and report 

minutes of each meeting of the Board to 

the Secretary; 

(f) To develop and submit programs, 

plans and projects to the Secretary for 

the Secretary’s approval, and enter into 

contracts or agreements related to such 

programs, plans and projects, which 

must be approved by the Secretary 

before becoming effective, for the 

development and carrying out of 

programs, plans or projects of 

promotion, research and information. 

The payment of costs for such activities 

shall be from funds collected pursuant 

to this Order. Each contract or 

agreement shall provide that: 

(1) The contractor or agreeing party 

shall develop and submit to the Board 

a program, plan or project together with 

a budget or budgets that shall show the 

estimated cost to be incurred for such 

program, plan or project; 

(2) The contractor or agreeing party 

shall keep accurate records of all its 

transactions and make periodic reports 

to the Board of activities conducted, 

submit accounting for funds received 

and expended, and make such other 

reports as the Secretary or the Board 

may require; 

(3) The Secretary may audit the 

records of the contracting or agreeing 

party periodically; and 

(4) Any subcontractor who enters into 

a contract with a Board contractor and 

who receives or otherwise uses funds 

allocated by the Board shall be subject 

to the same provisions as the contractor. 

(g) To prepare and submit for the 

approval of the Secretary fiscal year 

budgets in accordance with § 1222.50; 

(h) To borrow funds necessary for 

startup expenses of the Order during the 

first year of operation by the Board; 

(i) To invest assessments collected 

and other funds received pursuant to 

the Order and use earnings from 

invested assessments to pay for 

activities carried out pursuant to the 

Order; 

(j) To recommend changes to the 

assessment rates as provided in this 

part; 


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(k) To cause its books to be audited 

by an independent auditor at the end of 

each fiscal year and at such other times 

as the Secretary may request, and to 

submit a report of the audit directly to 

the Secretary; 

(l) To periodically prepare and make 

public reports of program activities and, 

at least once each fiscal year, to make 

public an accounting of funds received 

and expended; 

(m) To maintain such minutes, books 

and records and prepare and submit 

such reports and records from time to 

time to the Secretary as the Secretary 

may prescribe; to make appropriate 

accounting with respect to the receipt 

and disbursement of all funds entrusted 

to it; and to keep records that accurately 

reflect the actions and transactions of 

the Board; 

(n) To act as an intermediary between 

the Secretary and any manufacturer or 

importer; 

(o) To receive, investigate, and report 

to the Secretary complaints of violations 

of the Order; 

(p) To recommend to the Secretary 

such amendments to the Order as the 

Board considers appropriate; and 

(q) To work to achieve an effective, 

continuous, and coordinated program of 

promotion, research, and information 

and to carry out programs, plans, and 

projects designed to provide maximum 

benefits to the paper and paper-based 

packaging industry. 

§ 1222.47 Prohibited activities. 

The Board may not engage in, and 

shall prohibit the employees and agents 

of the Board from engaging in: 

(a) Any action that would be a conflict 

of interest; 

(b) Using funds collected by the Board 

under the Order to undertake any action 

for the purpose of influencing 

legislation or governmental action or 

policy, by local, state, national, and 

foreign governments or subdivision 

thereof, other than recommending to the 

Secretary amendments to the Order; and 

(c) No program, plan or project 

including advertising shall be false, 

misleading or disparaging to another 

agricultural commodity. Paper and 

paper-based packaging of all geographic 

origins shall be treated equally. 

Expenses and Assessments 

§ 1222.50 Budget and expenses. 

(a) At least 60 calendar days prior to 

the beginning of each fiscal year, and as 

may be necessary thereafter, the Board 

shall prepare and submit to the 

Department a budget for the fiscal year 

covering its anticipated expenses and 

disbursements in administering this 

part. The budget for research, promotion 

or information may not be implemented 

prior to approval by the Secretary. Each 

such budget shall include: 

(1) A statement of objectives and 

strategy for each program, plan or 

project; 

(2) A summary of anticipated revenue, 

with comparative data for at least one 

preceding fiscal year, except for the 

initial budget; 

(3) A summary of proposed 

expenditures for each program, plan or 

project; and 

(4) Staff and administrative expense 

breakdowns, with comparative data for 

at least one preceding fiscal year, except 

for the initial budget. 

(b) Each budget shall provide 

adequate funds to defray its proposed 

expenditures and to provide for a 

reserve as set forth in this Order. 

(c) Subject to this section, any 

amendment or addition to an approved 

budget must be approved by the 

Department, including shifting funds 

from one program, plan or project to 

another. Shifts of funds that do not 

result in an increase in the Board’s 

approved budget and are consistent 

with governing bylaws need not have 

prior approval by the Department. 

(d) The Board is authorized to incur 

such expenses, including provision for 

a reserve, as the Secretary finds 

reasonable and likely to be incurred by 

the Board for its maintenance and 

functioning, and to enable it to exercise 

its powers and perform its duties in 

accordance with the provisions of this 

subpart. Such expenses shall be paid 

from funds received by the Board. 

(e) With approval of the Department, 

the Board may borrow money for the 

payment of startup expenses subject to 

the same fiscal, budget, and audit 

controls as other funds of the Board. 

Any funds borrowed shall be expended 

only for startup costs and capital outlays 

and are limited to the first year of 

operation by the Board. 

(f) The Board may accept voluntary 

contributions. Such contributions shall 

be free from any encumbrance by the 

donor and the Board shall retain 

complete control of their use. The Board 

may receive funds from outside sources 

with approval of the Secretary for 

specific authorized projects. 

(g) The Board shall reimburse the 

Secretary for all expenses incurred by 

the Secretary in the implementation, 

administration, enforcement and 

supervision of the Order, including all 

referendum costs in connection with the 

Order. 

(h) For fiscal years beginning three 

years after the date the of the 

establishment of the Board, the Board 

may not expend for administration, 

maintenance, and the functioning of the 

Board an amount that is greater than 15 

percent of the assessment and other 

income received by and available to the 

Board for the fiscal year. For purposes 

of this limitation, reimbursements to the 

Secretary shall not be considered 

administrative costs. 

(i) The Board may establish an 

operating monetary reserve and may 

carry over to subsequent fiscal years 

excess funds in any reserve so 

established: Provided, That, the funds in 

the reserve do not exceed one fiscal 

year’s budget of expenses. Subject to 

approval by the Secretary, such reserve 

funds may be used to defray any 

expenses authorized under this subpart. 

(j) Pending disbursement of 

assessments and all other revenue under 

a budget approved by the Secretary, the 

Board may invest assessments and all 

other revenues collected under this part 

in: 

(1) Obligations of the United States or 

any agency of the United States; 

(2) General obligations of any State or 

any political subdivision of a State; 

(3) Interest bearing accounts or 

certificates of deposit of financial 

institutions that are members of the 

Federal Reserve System; 

(4) Obligations fully guaranteed as to 

principal interest by the United States; 

or 

(5) Other investments as authorized 

by the Secretary. 

§ 1222.51 Financial statements. 

(a) The Board shall prepare and 

submit financial statements to the 

Department on a quarterly basis, or at 

any other time as requested by the 

Secretary. Each such financial statement 

shall include, but not be limited to, a 

balance sheet, income statement, and 

expense budget. The expense budget 

shall show expenditures during the time 

period covered by the report, year-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. 

§ 1222.52 Assessments. 

(a) The Board’s programs and 

expenses shall be paid by assessments 

on manufacturers and importers, other 

income of the Board, and other funds 

available to the Board. 

(b) Subject to the exemptions 

specified in § 1222.53, each 


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manufacturer and importer shall pay an 

assessment to the Board in the amount 

of 35 cents per short ton or its 

equivalent manufactured and imported. 

The assessment shall be on the roll of 

paper and paper-based packaging 

manufactured or imported, except that 

the assessment for cut-size printing and 

writing paper imported or made by 

domestic manufacturers prior to leaving 

the manufacturer’s mill shall be on the 

cut-size paper. 

(c) At least 24 months after the Order 

becomes effective and periodically 

thereafter, the Board shall review and 

may recommend to the Secretary, upon 

an affirmative vote of at least two-thirds 

of the Board, a change in the assessment 

rate. A change in the assessment rate is 

subject to rulemaking by the Secretary. 

(d) Domestic manufacturers shall 

remit to the Board the amount due no 

later than the 30th calendar day of the 

month following the end of the quarter 

in which the paper and paper-based 

packaging was manufactured. 

(e) Each importer of paper and paperbased packaging shall pay through 

Customs to the Board an assessment on 

the paper and paper-based packaging 

imported into the United States 

identified in the Harmonized Tariff 

Schedule of the United States (HTSUS) 

numbers listed in the table below. 

Paper and paper-based 

packaging 

Assessment 

$/kg 

4802.54.1000 ............................ .000386 

4802.54.3100 ............................ .000386 

4802.54.5000 ............................ .000386 

4802.54.6100 ............................ .000386 

4802.55.1000 ............................ .000386 

4802.55.2000 ............................ .000386 

4802.55.4000 ............................ .000386 

4802.55.6000 ............................ .000386 

4802.55.7020 ............................ .000386 

4802.55.7040 ............................ .000386 

4802.56.1000 ............................ .000386 

4802.56.2000 ............................ .000386 

4802.56.4000 ............................ .000386 

4802.56.6000 ............................ .000386 

4802.56.70 ................................ .000386 

4802.57.1000 ............................ .000386 

4802.57.2000 ............................ .000386 

4802.57.4000 ............................ .000386 

4802.58.1000 ............................ .000386 

4802.58.20 ................................ .000386 

4802.58.5000 ............................ .000386 

4802.58.60 ................................ .000386 

4802.61.1000 ............................ .000386 

4802.61.2000 ............................ .000386 

4802.61.30 ................................ .000386 

4802.61.5000 ............................ .000386 

4802.61.60 ................................ .000386 

4802.62.1000 ............................ .000386 

4802.62.2000 ............................ .000386 

4802.62.3000 ............................ .000386 

4802.62.5000 ............................ .000386 

4802.62.60 ................................ .000386 

4802.69 ..................................... .000386 

4804.11.0000 ............................ .000386 

4804.19.0000 ............................ .000386 

Paper and paper-based 

packaging 

Assessment 

$/kg 

4804.21.0000 ............................ .000386 

4804.29.0000 ............................ .000386 

4804.31.40 ................................ .000386 

4804.31.6000 ............................ .000386 

4804.39.4020 ............................ .000386 

4804.39.4049 ............................ .000386 

4804.39.60 ................................ .000386 

4804.41.2000 ............................ .000386 

4804.41.4000 ............................ .000386 

4804.42.00 ................................ .000386 

4804.49.0000 ............................ .000386 

4804.51.0000 ............................ .000386 

4804.52.00 ................................ .000386 

4804.59.0000 ............................ .000386 

4805.11.0000 ............................ .000386 

4805.12 ..................................... .000386 

4805.19 ..................................... .000386 

4805.24 ..................................... .000386 

4805.25.0000 ............................ .000386 

4805.91.1010 ............................ .000386 

4805.91.9000 ............................ .000386 

4805.92.4010 ............................ .000386 

4805.92.4030 ............................ .000386 

4805.93.4010 ............................ .000386 

4805.93.4030 ............................ .000386 

4805.93.4050 ............................ .000386 

4805.93.4060 ............................ .000386 

4807.00.9100 ............................ .000386 

4807.00.9400 ............................ .000386 

4810.13.11 ................................ .000386 

4810.13.1900 ............................ .000386 

4810.13.20 ................................ .000386 

4810.13.5000 ............................ .000386 

4810.13.6000 ............................ .000386 

4810.13.70 ................................ .000386 

4810.14.11 ................................ .000386 

4810.14.1900 ............................ .000386 

4810.14.20 ................................ .000386 

4810.14.5000 ............................ .000386 

4810.14.6000 ............................ .000386 

4810.14.70 ................................ .000386 

4810.19.1100 ............................ .000386 

4810.19.1900 ............................ .000386 

4810.19.20 ................................ .000386 

4810.22.1000 ............................ .000386 

4810.22.50 ................................ .000386 

4810.22.6000 ............................ .000386 

4810.22.70 ................................ .000386 

4810.29.10 ................................ .000386 

4810.29.5000 ............................ .000386 

4810.29.6000 ............................ .000386 

4810.29.70 ................................ .000386 

4810.31.1020 ............................ .000386 

4810.31.1040 ............................ .000386 

4810.31.3000 ............................ .000386 

4810.31.6500 ............................ .000386 

4810.32.10 ................................ .000386 

4810.32.3000 ............................ .000386 

4810.32.6500 ............................ .000386 

4810.39.1200 ............................ .000386 

4810.39.1400 ............................ .000386 

4810.39.3000 ............................ .000386 

4810.39.6500 ............................ .000386 

4810.92.12 ................................ .000386 

4810.92.65 ................................ .000386 

4810.99.1050 ............................ .000386 

4810.99.6500 ............................ .000386 

4811.51.2010 ............................ .000386 

4811.51.2020 ............................ .000386 

4811.51.2030 ............................ .000386 

4811.59.4020 ............................ .000386 

4811.90.8030 ............................ .000386 

(f) If Customs does not collect an 

assessment from an importer, the 

importer is responsible for paying the 

assessment directly to the Board within 

30 calendar days after the end of the 

quarter in which the paper and paperbased packaging was imported. 

(g) When a manufacturer or importer 

fails to pay the assessment within 60 

calendar days of the date it is due, the 

Board may impose a late payment 

charge and interest. The late payment 

charge and rate of interest shall be 

prescribed in regulations issued by the 

Secretary. All late assessments shall be 

subject to the specified late payment 

charge and interest. Persons failing to 

remit total assessments due in a timely 

manner may also be subject to actions 

under federal debt collection 

procedures. 

(h) The Board may accept advance 

payment of assessments from any 

manufacturer or importer that will be 

credited toward any amount for which 

that person may become liable. The 

Board may not pay interest on any 

advance payment. 

(i) If the Board is not in place by the 

date the first assessments are to be 

collected, the Secretary shall receive 

assessments and shall pay such 

assessments and any interest earned to 

the Board when it is formed. 

§ 1222.53 Exemption from assessment. 

(a) Minimum quantity exemption. 

(1) Manufacturers that manufacture 

less than 100,000 short tons of paper 

and paper-based packaging in a 

marketing year are exempt from paying 

assessments. Such manufacturers must 

apply to the Board, on a form provided 

by the Board, for a certificate of 

exemption prior to the start of the 

marketing year. This is an annual 

exemption and manufacturers must 

reapply each year. Such manufacturers 

shall certify that they will manufacture 

less than 100,000 short tons of paper 

and paper-based packaging during the 

marketing year for which the exemption 

is claimed. Upon receipt of an 

application for exemption, the Board 

shall determine whether an exemption 

may be granted. The Board may request 

past manufacturing data to support the 

exemption request. The Board will 

issue, if deemed appropriate, a 

certificate of exemption to the eligible 

manufacturer. It is the responsibility of 

the manufacturer to retain a copy of the 

certificate of exemption. 

(2) Importers that import into the 

United States less than 100,000 short 

tons of paper and paper-based 

packaging in a marketing year are 

exempt from paying assessments. Such 

importers must apply to the Board, on 


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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 imports shall certify 

that they will import less than 100,000 

short tons of paper and paper-based 

packaging during the marketing year for 

which the exemption is claimed. Upon 

receipt of an application for exemption, 

the Board shall determine whether an 

exemption may be granted. The Board 

may request past import data to support 

the exemption request. The Board will 

issue, if deemed appropriate, a 

certificate of exemption to the eligible 

importer. It is the responsibility of the 

importer to retain a copy of the 

certificate of exemption. The Board 

shall refund such importers their 

assessments as collected by Customs no 

later than 60 calendar days after receipt 

of such assessments by the Board. No 

interest shall be paid on the assessments 

collected by Customs. 

(3) Manufacturers that did not apply 

to the Board for an exemption and that 

manufactured less than 100,000 short 

tons of paper and paper-based 

packaging during the marketing year 

shall automatically receive a refund 

from the Board for the applicable 

assessments within 30 calendar days 

after the end of the marketing year. 

Board staff shall determine the 

assessments paid and refund the 

amount due to the manufacturer 

accordingly. 

(4) Importers that did not apply to the 

Board for an exemption and that 

imported less than 100,000 short tons of 

paper and paper-based packaging during 

the marketing year shall automatically 

receive a refund from the Board for the 

applicable assessments within 30 

calendar days after the end of the 

marketing year. 

(5) If an entity is a manufacturer and 

an importer, such entity’s combined 

quantity of paper and paper-based 

packaging manufactured and imported 

during a marketing year shall count 

towards the 100,000 short tonexemption. 

(6) Manufacturers and importers that 

received an exemption certificate from 

the Board but manufactured or imported 

100,000 short tons or more of paper and 

paper-based packaging during the 

marketing year shall pay the Board the 

applicable assessments owed on the 

quantity manufactured or imported 

within 30 calendar days after the end of 

the marketing year and submit any 

necessary reports to the Board pursuant 

to § 1222.70. 

(7) The Board may develop additional 

procedures to administer this exemption 

as appropriate. Such procedures shall be 

implemented through rulemaking by the 

Secretary. 

(b) Organic. 

(1) Organic Act means section 2103 of 

the Organic Foods Production Act of 

1990 (7 U.S.C. 6501–6522). 

(2) A manufacturer who operates 

under an approved National Organic 

Program (NOP) (7 CFR part 205) system 

plan, only manufactures paper and 

paper-based packaging that is eligible to 

be labeled as 100 percent organic under 

the NOP and is not a split operation 

shall be exempt from payment of 

assessments. To obtain an organic 

exemption, an eligible manufacturer 

shall submit a request for exemption to 

the Board, on a form provided by the 

Board, at any time initially and annually 

thereafter on or before the start of the 

fiscal year as long as such manufacturer 

continues to be eligible for the 

exemption. The request shall include 

the following: The manufacturer’s name 

and address; a copy of the organic 

operation certificate provided by a 

USDA-accredited certifying agent as 

defined in the Organic Act, a signed 

certification that the applicant meets all 

of the requirements specified for an 

assessment exemption, and such other 

information as may be required by the 

Board and with the approval of the 

Secretary. The Board shall have 30 

calendar days to approve the exemption 

request. If the exemption is not granted, 

the Board will notify the applicant and 

provide reasons for the denial within 

the same time frame. 

(3) An importer who imports only 

paper and paper-based packaging that is 

eligible to be labeled as 100 percent 

organic under the NOP and is not a split 

operation shall be exempt from the 

payment of assessments. To obtain an 

organic exemption, an eligible importer 

must submit documentation to the 

Board and request an exemption from 

assessment on 100 percent of organic 

paper and paper-based packaging, on a 

form provided by the Board, at any time 

initially and annually thereafter on or 

before the beginning of the fiscal year as 

long as the importer continues to be 

eligible for the exemption. This 

documentation shall include the same 

information as required by 

manufacturers in paragraph (b)(2) of this 

section. If the importer complies with 

the requirements of this section, the 

Board will grant the exemption and 

issue a Certificate of Exemption to the 

importer. The Board will also issue the 

importer a 9-digit alphanumeric number 

valid for 1 year from the date of issue. 

This alphanumeric number should be 

entered by the importer to Customs at 

entry summary. Any line item entry of 

100 percent organic paper and paperbased packaging bearing this 

alphanumeric number assigned by the 

Board will not be subject to 

assessments. 

(4) Importers who are exempt from 

assessment in paragraph (d)(3) of this 

section shall also be eligible for 

reimbursement of assessments collected 

by Customs and may apply to the Board 

for a reimbursement. The importer 

would be required to submit satisfactory 

proof to the Board that the importer 

paid the assessment on exempt organic 

products. 

(5) The exemption will apply 

immediately following the issuance of 

the exemption certificate. 

Promotion, Research and Information 

§ 1222.60 Programs, plans and projects. 

(a) The Board shall develop and 

submit to the Secretary for approval 

programs, plans and projects authorized 

by this subpart. Such programs, plans 

and projects shall provide for 

promotion, research, information and 

other activities including consumer and 

industry information and advertising. 

(b) No program, plan or project shall 

be implemented prior to its approval by 

the Secretary. Once a program, plan or 

project is so approved, the Board shall 

take appropriate steps to implement it. 

(c) The Board must evaluate each 

program, plan and project authorized 

under this subpart to ensure that it 

contributes to an effective and 

coordinated program of research, 

promotion and information. The Board 

must submit the evaluations to the 

Secretary. If the Board finds that a 

program, plan or project does not 

contribute to an effective program of 

promotion, research, or information, 

then the Board shall terminate such 

program, plan or project. 

§ 1222.61 Independent evaluation. 

At least once every five years, the 

Board shall authorize and fund from 

funds otherwise available to the Board, 

an independent evaluation of the 

effectiveness of the Order and the 

programs conducted by the Board 

pursuant to the Act. The Board shall 

submit to the Secretary, and make 

available to the public, the results of 

each periodic independent evaluation 

conducted under this paragraph. 

§ 1222.62 Patents, copyrights, trademarks, 

inventions, product formulations, and 

publications. 

Any patents, copyrights, trademarks, 

inventions, product formulations, and 

publications developed through the use 

of funds received by the Board under 

this subpart shall be the property of the 

U.S. Government, as represented by the 


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Board, and shall along with any rents, 

royalties, residual payments, or other 

income from the rental, sales, leasing, 

franchising, or other uses of such 

patents, copyrights, trademarks, 

inventions, product formulations, or 

publications, inure to the benefit of the 

Board, shall be considered income 

subject to the same fiscal, budget, and 

audit controls as other funds of the 

Board, and may be licensed subject to 

approval by the Secretary. Upon 

termination of this subpart, § 1222.83 

shall apply to determine disposition of 

all such property. 

Reports, Books, and Records 

§ 1222.70 Reports. 

(a) Manufacturers and importers will 

be required to provide periodically to 

the Board such information as the 

Board, with the approval of the 

Secretary, may require. Such 

information may include, but not be 

limited to: 

(1) For manufacturers: 

(i) The name, address and telephone 

number of the manufacturer; and 

(ii) The quantity of paper and paperbased packaging manufactured by type. 

(2) For importers: 

(i) The name, address and telephone 

number of the importer; 

(ii) The quantity of paper and paperbased packaging imported by type; and 

(iii) The country of export. 

(b) For manufacturers, such 

information shall be reported to the 

Board no later than the 30th calendar 

day of the month following the end of 

the quarter in which the paper and 

paper-based packaging was 

manufactured and shall accompany the 

collected payment of assessments as 

specified in § 1222.52. First quarter data 

(January–March) shall be reported to the 

Board no later than the 30th calendar 

day of April; second quarter data 

(April–June) shall be reported no later 

than the 30th calendar day of July; third 

quarter data (July–September) shall be 

reported no later than the 30th calendar 

day of October; and fourth quarter data 

(October–December) shall be reported 

no later than the 30th calendar day of 

January of the following marketing year. 

(c) For importers who pay their 

assessments directly to the Board, such 

information shall accompany the 

payment of collected assessments 

within 30 calendar days after the end of 

the quarter in which the paper and 

paper-based packaging was imported 

specified in § 1222.52. 

§ 1222.71 Books and records. 

Each manufacturer and importer shall 

maintain any books and records 

necessary to carry out the provisions of 

this subpart and regulations issued 

thereunder, including such records as 

are necessary to verify any required 

reports. Such books and records must be 

made available during normal business 

hours for inspection by the Board’s or 

Secretary’s employees or agents. 

Manufacturers and importers must 

maintain the books and records for two 

years beyond the fiscal year to which 

they apply. 

§ 1222.72 Confidential treatment. 

All information obtained from books, 

records, or reports under the Act, this 

subpart and the regulations issued 

thereunder shall be kept confidential by 

all persons, including all employees and 

former employees of the Board, all 

officers and employees and former 

officers and employees of contracting 

and subcontracting agencies or agreeing 

parties having access to such 

information. Such information shall not 

be available to Board members or 

manufacturers and importers. Only 

those persons having a specific need for 

such information solely to effectively 

administer the provisions of this subpart 

shall have access to such information. 

Only such information so obtained as 

the Secretary deems relevant shall be 

disclosed by them, and then only in a 

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 

§ 1222.80 Right of the Secretary. 

All fiscal matters, programs, plans or 

projects, contracts, rules or regulations, 

reports, or other substantive actions 

proposed and prepared by the Board 

shall be submitted to the Secretary for 

approval. 

§ 1222.81 Referenda. 

(a) Initial referendum. The Order shall 

not become effective unless the Order is 

approved by a majority of manufacturers 

and importers voting in the referendum 

who also represent a majority of the 

volume of paper and paper-based 

packaging represented in the 

referendum and who, during a 

representative period determined by the 

Secretary, have been engaged in the 

manufacturing or importation of paper 

and paper-based packaging. A single 

entity who domestically manufactures 

and imports paper and paper-based 

packaging may cast one vote in the 

referendum. 

(b) Subsequent referenda. The 

Secretary shall conduct subsequent 

referenda: 

(1) For the purpose of ascertaining 

whether manufacturers and importers 

favor the amendment, continuation, 

suspension, or termination of the Order; 

(2) Not later than seven years after 

this Order becomes effective and every 

seven years thereafter, to determine 

whether manufacturers and importers 

favor the continuation of the Order. The 

Order shall continue if it is favored by 

a majority of manufacturers and 

importers voting in the referendum who 

also represent a majority of the volume 

of paper and paper-based packaging 

represented in the referendum and who, 

during a representative period 

determined by the Secretary, have been 

engaged in the manufacturing or 

importation of paper and paper-based 

packaging; 

(3) At the request of the Board 

established in this Order; 

(4) At the request of 10 percent or 

more of the number of persons eligible 

to vote in a referendum as set forth 

under the Order; or 

(5) At any time as determined by the 

Secretary. 

§ 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 year whenever the Secretary 

determines that its suspension or 

termination is favored by a majority of 

manufacturers and importers voting in 

the referendum who also represent a 

majority of the volume represented in 

the referendum who, during a 

representative period determined by the 

Secretary, have been engaged in the 

manufacturing or importation of paper 

and paper-based packaging. 


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(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. 

§ 1222.83 Proceedings after termination. 

(a) Upon termination of this subpart, 

the Board shall recommend to the 

Secretary up to five of its members to 

serve as trustees for the purpose of 

liquidating the Board’s affairs. Such 

persons, upon designation by the 

Secretary, shall become trustees of all of 

the funds and property then in the 

possession or under control of the 

Board, including claims for any funds 

unpaid or property not delivered, or any 

other existing claim at the time of such 

termination. 

(b) The said trustees shall: 

(1) Continue in such capacity until 

discharged by the Secretary; 

(2) Carry out the obligations of the 

Board under any contracts or 

agreements entered into pursuant to the 

Order; 

(3) From time to time account for all 

receipts and disbursements and deliver 

all property on hand, together with all 

books and records of the Board and 

trustees, to such person or person as the 

Secretary directs; and 

(4) Upon request of the Secretary 

execute such assignments or other 

instruments necessary or appropriate to 

vest in such persons title and right to all 

of the funds, property, and claims 

vested in the Board or the trustees 

pursuant to the Order. 

(c) Any person to whom funds, 

property, or claims have been 

transferred or delivered pursuant to the 

Order shall be subject to the same 

obligations imposed upon the Board and 

upon the trustees. 

(d) Any residual funds not required to 

defray the necessary expenses of 

liquidation shall be turned over to the 

Secretary to be disposed of, to the extent 

practical, to one or more paper and 

paper-based packaging organizations in 

the United States whose mission is 

generic promotion, research, and 

information programs. 

§ 1222.84 Effect of termination or 

amendment. 

Unless otherwise expressly provided 

by the Secretary, the termination of this 

subpart or of any regulation issued 

pursuant thereto, or the issuance of any 

amendment to either thereof, shall not: 

(a) Affect or waive any right, duty, 

obligation, or liability which shall have 

arisen or which may thereafter arise in 

connection with any provision of this 

subpart or any regulation issued 

thereunder; 

(b) Release or extinguish any violation 

of this subpart or any regulation issued 

thereunder; or 

(c) Affect or impair any rights or 

remedies of the United States, or of the 

Secretary or of any other persons, with 

respect to any such violation. 

§ 1222.85 Personal liability. 

No member or employee of the Board 

shall be held personally responsible, 

either individually or jointly with 

others, in any way whatsoever, to any 

person for errors in judgment, mistakes, 

or other acts, either of commission or 

omission, as such member or employee, 

except for acts of dishonesty or willful 

misconduct. 

§ 1222.86 Separability. 

If any provision of this subpart is 

declared invalid or the applicability of 

it to any person or circumstances is held 

invalid, the validity of the remainder of 

this subpart, or the applicability thereof 

to other persons or circumstances shall 

not be affected thereby. 

§ 1222.87 Amendments. 

Amendments to this subpart may be 

proposed from time to time by the Board 

or any interested person affected by the 

provisions of the Act, including the 

Secretary. 

§ 1222.88 OMB control numbers. 

The control numbers assigned to the 

information collection requirements by 

the Office of Management and Budget 

pursuant to the Paperwork Reduction 

Act of 1995, 44 U.S.C. Chapter 35, are 

OMB control number 0505–0001 (Board 

nominee background statement) and 

OMB control number 0581–NEW. 

Subpart B—[Reserved] 

Dated: December 18, 2012. 

David R. Shipman, 

Administrator. 

[FR Doc. 2012–30923 Filed 12–31–12; 8:45 am] 

BILLING CODE 3410–02–P 


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