Vol. 78 Wednesday, 

No. 219 November 13, 2013 

Part IV 

Department of Agriculture 

Agricultural Marketing Service 

7 CFR Part 1211 

Hardwood Lumber and Hardwood Plywood Promotion, Research and 

Information Order; Proposed Rule 


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68298 Federal Register / Vol. 78, No. 219 / Wednesday, November 13, 2013 / Proposed Rules 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Part 1211 

[Document Number AMS–FV–11–0074; 

PR–A1] 

RIN 0581–AD24 

Hardwood Lumber and Hardwood 

Plywood Promotion, Research and 

Information Order 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Proposed rule. 

SUMMARY: This rule invites comments 

on a proposed Hardwood Lumber and 

Hardwood Plywood Promotion, 

Research and Information Order (Order). 

Hardwood lumber and hardwood 

plywood are used in products like 

flooring, furniture, moldings, doors, and 

kitchen cabinets. The program would be 

financed by an assessment on hardwood 

lumber manufacturers and hardwood 

plywood manufacturers and would be 

administered by a board of industry 

members selected by the Secretary of 

Agriculture (Secretary). The assessment 

rate varies according to the product 

manufactured. The purpose of the 

program would be to strengthen the 

position of hardwood lumber and 

hardwood plywood in the marketplace 

and maintain and expand markets for 

hardwood lumber and hardwood 

plywood. A referendum would be held 

among eligible hardwood lumber 

manufacturers and hardwood plywood 

manufacturers to determine whether 

they favor implementation of the 

program prior to it going into effect. 

This rule also announces the 

Agricultural Marketing Service’s (AMS) 

intent to request approval by the Office 

of Management and Budget (OMB) of 

new information collection 

requirements to implement the program. 

DATES: Comments must be received by 

January 13, 2014. Pursuant to the 

Paperwork Reduction Act (PRA), 

comments on the information collection 

burden that would result from this 

proposal must be received by January 

13, 2014. 

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: 

Patricia A. Petrella, Marketing 

Specialist, Promotion and Economics 

Division, Fruit and Vegetable Program, 

AMS, USDA, 1400 Independence 

Avenue SW., Room 1406, Stop 0244, 

Washington, DC 20250–0244; telephone: 

(301) 334–2891; facsimile (301) 334– 

2896; or electronic mail: 

Patricia.Petrella@ams.usda.gov. 

SUPPLEMENTARY INFORMATION: This rule 

is issued pursuant to the Commodity 

Promotion, Research and Information 

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

7425). 

Executive Order 12866 and Executive 

Order 13563 

Executive Order 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 

has been designated as ‘‘non-significant 

regulatory action’’ under section 3(f) of 

Executive Order 12866. Accordingly, 

the Office of Management and Budget 

(OMB) has waived the review process. 

Executive Order 12988 

This rule has been reviewed under 

Executive Order 12988, Civil Justice 

Reform. It is not intended to have 

retroactive effect. Section 524 of the 

1996 Act provides that it shall not affect 

or preempt any other Federal or State 

law authorizing promotion or research 

relating to an agricultural commodity. 

Under section 519 of the 1996 Act, a 

person subject to an order may file a 

written petition with the U.S. 

Department of Agriculture (USDA) 

stating that an order, any provision of an 

order, or any obligation imposed in 

connection with an order, is not 

established in accordance with the law, 

and request a modification of an order 

or an exemption from an order. Any 

petition filed challenging an order, any 

provision of an order, or any obligation 

imposed in connection with an order, 

shall be filed within two years after the 

effective date of an order, provision, or 

obligation subject to challenge in the 

petition. The petitioner will have the 

opportunity for a hearing on the 

petition. Thereafter, USDA will issue a 

ruling on the petition. The 1996 Act 

provides that the district court of the 

United States for any district in which 

the petitioner resides or conducts 

business shall have the jurisdiction to 

review a final ruling on the petition, if 

the petitioner files a complaint for that 

purpose not later than 20 days after the 

date of the entry of USDA’s final ruling. 

Background 

This rule invites comments on a 

proposed industry-funded promotion, 

research and information program for 

hardwood lumber and hardwood 

plywood. Hardwood lumber products 

are used in residential and commercial 

construction including flooring, 

furniture, moldings, doors and kitchen 

cabinets. Industrial products include 

pallets, wood dunning, and railroad ties. 

The program would be financed by an 

assessment on hardwood lumber, 

hardwood lumber products, hardwood 

lumber value-added products, and 

hardwood plywood manufacturers and 

would be administered by a board of 

industry members selected by the 

Secretary. The initial assessment rate 

would be: (1) $1.00 per $1,000 in sales 

of hardwood lumber and hardwood 

lumber products; (2) $0.75 per $1,000 in 

sales of hardwood lumber value-added 

products; and (3) $3.00 per $1,000 in 

sales of hardwood plywood. These 

assessments should generate about $10 

million annually. The program would 

exempt those hardwood lumber 

manufacturers with annual sales of less 

than $2 million and hardwood plywood 

manufacturers with annual sales of less 

than $10 million. Exports would be 

exempted from the program and imports 

would not be covered under the 

program. The purpose of the program 

would be to strengthen the position of 

hardwood lumber, hardwood lumber 

products, hardwood lumber valueVerDate Mar<15>2010 17:45 Nov 12, 2013 Jkt 232001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4702 E:\FR\FM\13NOP2.SGM 13NOP2

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Federal Register / Vol. 78, No. 219 / Wednesday, November 13, 2013 / Proposed Rules 68299 

1National Hardwood Lumber Association Rules 

for the Measurement and Inspection of Hardwood 

and cypress, Effective January 1, 2011 v1.1. 

2 Judd Johnson, Hardwood Market Report, 2011. 

3USDA Forest Service, Dr. William Luppold, 

Princeton, WV. 

added products and hardwood plywood 

in the marketplace and maintain and 

expand markets for United States 

hardwood lumber, hardwood lumber 

products, hardwood lumber valueadded products and hardwood 

plywood. 

A referendum would be held among 

eligible hardwood lumber 

manufacturers and hardwood plywood 

manufacturers to determine whether 

they favor implementation of the 

program prior to it going into effect. The 

proposal was submitted to USDA by the 

Blue Ribbon Committee (BRC), a 

committee of 14 hardwood lumber and 

hardwood plywood industry leaders 

representing small and large 

manufacturers and geographically 

distributed throughout the United 

States. 

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 promulgated 

under the 1996 Act which authorizes 

USDA to establish agricultural 

commodity research and promotion 

orders which may include a 

combination of promotion, research, 

industry information, and consumer 

information activities funded by 

mandatory assessments. These programs 

are designed to maintain and expand 

markets and uses for agricultural 

commodities. As defined under section 

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

commodities include the products of 

forestry, which includes hardwood 

lumber and hardwood plywood. 

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. 

However, the 1996 Act does not define 

the term de minimis and USDA is not 

limited to using the definition of de 

minimis as specified in another law or 

agreement. The de minimis quantity is 

defined for a particular program and 

industry. 

Section 516 also includes different 

payment and reporting schedules; 

coverage of research, promotion, and 

information activities to expand, 

improve, or make more efficient the 

marketing or use of an agricultural 

commodity in both domestic and 

foreign markets; provision for reserve 

funds; provision for credits for generic 

and branded activities; and assessment 

of imports. 

In addition, section 518 of the 1996 

Act provides for referenda to ascertain 

approval of an order to be conducted 

either prior to its going into effect or 

within three years after assessments first 

begin under the order. An order also 

may provide for its approval in a 

referendum based upon different voting 

patterns. Section 515 provides for 

establishment of a board or council from 

among producers, first handlers and 

others in the marketing chain as 

appropriate, and importers, if imports 

are subject to assessment. 

Industry Background 

The hardwood lumber industry is 

comprised of manufacturers of nonstructural products used primarily in 

construction and renovation of homes, 

transport packaging and industrial 

applications. Hardwoods are timber 

from the wood of a cypress tree or a 

deciduous, broad-leafed tree which 

could include: aspen, birch, cypress, 

popular, maple, cherry, walnut and oak. 

Hardwood lumber products that are 

used in residential and commercial 

construction include flooring, furniture, 

moldings, doors and kitchen cabinets. 

Industrial hardwood products include 

pallets, wood dunning, and railroad ties. 

Hardwood plywood products are made 

by applying a high quality hardwood 

veneer to a backing and used in 

manufacturing of furniture and wood 

paneling. Hardwood lumber valueadded products that would be assessed 

under the Order could include such 

products as solid wood unfinished strip 

flooring, all-sides surfaced boards, 

finger-jointed strips ripped to width, 

and moldings, but does not include 

multi-component or further 

manufactured products such as 

furniture, cabinets, cabinet doors, 

prefinished or engineered flooring, or 

dimension or glued components for 

cabinets or furniture. 

Hardwood sawmills also may 

manufacture other sawn products 

including crossties, pallet cants, frame 

stock, and board road. The specific mix 

of products produced by a hardwood 

sawmill is influenced by mill location; 

local, national, and international market 

conditions; quality and size of logs; 

species availability; mill design; 

business practices; and other factors. 

Hardwood lumber can be sold green, 

air dried, or kiln dried. Green and air 

dried lumber is normally measured and 

sold under National Hardwood Lumber 

Association (NHLA) rules 1 but can be 

measured and sold under proprietary 

rules established by an individual firm. 

Kiln dried lumber can be sold rough or 

dressed in the same quarter inch 

thickness increments as green lumber. 

Since drying normally reduces the 

width of boards, lumber may be sold on 

measurement taken before going into the 

kiln (net measurement prior to kiln 

drying is commonly referred to as gross 

tally) or remeasured after the kiln drying 

process (net tally). Kiln dried lumber is 

normally measured and also sold under 

NHLA rules but can be measured and 

sold under proprietary procedures 

established by an individual firm.2

Regional U.S. Timber Production 3

According to the USDA Forest Service 

the volume of hardwood lumber 

produced in 2010 was 7,581 MMBF 

(million board feet). Some of the main 

species produced in the United States 

are red oak, hard maple, white oak, and 

sweet gum. The major producing States 

in the east are Pennsylvania, Tennessee, 

Virginia, North Carolina, and West 

Virginia. The bulk of timber production 

in the western United States is confined 

to Oregon and Washington. Red alder 

and maple trees dominate the region. 

The USDA Forest Service, for 2010 

stated total production of hardwood 

lumber in the eastern region was 3,579 

MMBF and in the central region was 

4,002 MMBF. 

U.S. Hardwood Lumber Consumption 

and Output by Region 

According to the industry’s Hardwood 

Market Report (provides weekly reports 

on North America hardwood lumber 

and products since 1922), output of 

hardwood nonstructural products 

peaked in 1999 at 12.6 MMBF and fell 

to a record low in 2009 at 5.73 MMBF. 

Consumption of U.S. hardwoods has 

declined significantly primarily due to 

the U.S. housing crisis beginning in 

2006. Use of U.S. hardwood products 

has decreased almost 50 percent since 

2009. Demand has improved moderately 

from the 2009 low point. Hardwood 

consumption in 2012 was 43.6 percent 

below the 1999 level. 

The U.S. cabinet industry consumed 

42.7 percent less lumber in 2010 as 

compared to 2009 as more imported 

species and alternative materials 

replaced U.S. hardwoods. The flooring 

industry was the largest consumer of 


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68300 Federal Register / Vol. 78, No. 219 / Wednesday, November 13, 2013 / Proposed Rules 

4Forest Products Journal, Volume 58, No. 5, 

Forest Products Society. 

5 Dr. William G. Luppold, Ph.D. USDA Forest 

Service, 2012. 

6 Dr. William G. Luppold, Ph.D. and Matthew S. 

Baumgardner, Examination of Lumber Price Trends 

for Major Hardwood Species, 2007. 

U.S. hardwood lumber, however, use of 

hardwoods in this sector has declined 

from 1.5 BBF (billion board feet) in 2005 

to 0.6 BBF in 2010 as competing 

products and imports replace domestic 

hardwood lumber. The furniture 

industry has seen a fundamental shift in 

consumption by U.S. manufacturers. In 

1999, the furniture industry consumed 

2.6 BBF of hardwood lumber and today 

only 350 million board feet. This is a 

decrease of 2.25 BBF. It is estimated that 

the U.S. has lost 70 percent of the entire 

furniture manufacturing industry. 

Hardwood Lumber Markets 4

During the mid-1990’s, domestic 

hardwood lumber consumption surged 

as use by construction and remodeling 

(CR) producers increased. The nearly 

1.1 BBF increase in lumber usage by the 

CR group over a 5-year period (1992– 

1997) was largely the result of increased 

use of hardwood material in home 

construction, as well as larger homes 

being built. Industrial product 

manufacturers were the largest users of 

hardwood lumber, consuming nearly 5 

BBF in 1997. 

Hardwood lumber consumption by 

the wood household and office and 

institutional furniture industries 

increased between 1992 and 1997, but 

this increase was offset by decreased use 

in upholstered furniture. The decreased 

use of lumber by upholstered furniture 

manufacturers was the result of 

increased use of plywood in furniture. 

Hardwood lumber consumption by 

the pallet industry also declined more 

than 400 MMBF between 1997 and 

2002. This reduction was not a function 

of reduced pallet use but of increased 

recycling of pallets and pallet parts. One 

factor that encouraged the pallet 

industry to adopt recycling was 

increased prices of lower grade oak 

lumber resulting from increased flooring 

production. 

Competition 5

Hardwood lumber competes with 

several alternative products and 

imported species. Competitive products 

used in furniture, cabinets and mill 

work include composite products such 

as medium density fiberboard and 

particle board, composite material, 

plastic, and imported lumber. 

Competitive products used in flooring 

include composite laminated flooring 

product, products that look like wood, 

bamboo, and imported hardwood 

flooring. In addition, competitive 

industrial pallet products include 

recycled pallet parts, composite 

products, plastic, and cardboard. 

Price and Cost Trends 6

Over the last 40 years, trends in 

interspecies and intergrade hardwood 

lumber prices have been irregular. In the 

early 1960s, high and midgrade hard 

maple commanded high prices while 

red oak was the least valuable lumber 

regardless of grade. In the 1980s, high 

and midgrade oak prices surged, but 

prices of all grades of maple and yellowpoplar declined. During the 1990s, 

maple prices increased in all grades 

while the price of oak increased only in 

the lower grades. It is important to 

understand changes in interspecies and 

intergrade pricing as well as the market 

forces causing these changes because 

lumber price reflects the use of these 

products relative to availability. In 

addition, species of wood produced in 

different regions of the country can have 

different desirable attributes that may be 

reflected in the price. 

The price of hardwood lumber 

depend on a series of demand and 

supply interactions in numerous final 

markets including furniture, pallets, 

flooring, and kitchen cabinets and on 

four market levels: final consumer, 

secondary (furniture etc.), primary 

(lumber), and timber. Each species and 

grade designation varies in visual and 

physical characteristics. 

Need for a Program 

According to the proponents, the 

hardwood lumber industry is 

experiencing one of the worst markets 

in history. The U.S. cabinet industry 

consumed 42.7 percent less lumber in 

2010 as compared to 2009 as more 

species and alternative materials 

replaced U.S. hardwoods. The flooring 

industry was the largest consumer of 

U.S. hardwood lumber. Use of U.S. 

hardwoods in this sector has declined 

from 1.5 BBF in 2005 to 0.6 BBF in 2010 

as competing products and imports 

replace domestic lumber. The furniture 

industry has seen a fundamental shift in 

consumption by U.S. manufacturers. 

The proponents reported that in 1999, 

the furniture industry consumed 2.6 

BBF of hardwood lumber and today 

only 350 million board feet. That is a 

decrease of 2.25 BBF. Estimates are that 

the U.S. has lost 70 percent of the entire 

furniture manufacturing sector. 

Additionally, at the request of the 

U.S. and Canadian governments, the 

U.S. Endowment for Forestry and 

Communities (Endowment) was formed 

in 2006. The Endowment is a non-profit 

organization that works with public and 

private sectors to advance the interests 

of the forestry community. In the past, 

the industry attempted voluntary 

assessment efforts to conduct marketing 

programs, but they were sporadic, 

underfunded, and narrowly targeted. 

Since early 2008 the Endowment has 

directly invested monies to study and 

catalyze the potential of commodity 

checkoffs to help grow the market for 

wood and wood products. 

As a result of the Endowment’s 

efforts, the BRC was subsequently 

formed to pursue an industry research 

and promotion program. The BRC is 

comprised of 14 members representing 

the United States. The BRC submitted 

an initial proposal for a program to 

USDA in June 2011. 

The BRC proposed a program that 

would be financed by an assessment on 

hardwood lumber manufacturers and 

hardwood plywood manufacturers and 

administered by a board of industry 

members selected by the Secretary. The 

initial assessment rate would be: (1) 

$1.00 per $1,000 in sales of hardwood 

lumber and hardwood lumber products; 

(2) $0.75 per $1,000 in sales of 

hardwood lumber value-added 

products; and (3) $3.00 per $1,000 in 

sales of hardwood plywood. These 

assessments should generate about $10 

million annually. The program would 

exempt those hardwood lumber 

manufacturers with annual sales of less 

than $2 million and hardwood plywood 

manufacturers with annual sales of less 

than $10 million. Exports from the 

United States would also be exempt 

from assessments. The purpose of the 

program would be to strengthen the 

position of hardwood lumber and 

hardwood plywood in the marketplace 

and maintain and expand markets for 

hardwood lumber and hardwood 

plywood. A referendum would be held 

among eligible hardwood manufacturers 

and hardwood plywood manufacturers 

to determine whether they favor 

implementation of the program prior to 

it going into effect. A majority of eligible 

manufacturers by volume of the 

commodity represented in the 

referendum would have to support the 

program for it to be implemented. The 

specific provisions of the program are 

discussed below. 

Provisions of Proposed Program 

Definitions 

Pursuant to section 513 of the 1996 

Act, §§ 1211.1 through 1211.37 of the 

proposed Order define certain terms 

that would be used throughout the 


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Federal Register / Vol. 78, No. 219 / Wednesday, November 13, 2013 / Proposed Rules 68301 

Order. Several of the terms are common 

to all research and promotion programs 

authorized under the 1996 Act while 

other terms are specific to the proposed 

hardwood lumber Order. 

Section 1211.1 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 1211.2 would define the term 

‘‘Blue Ribbon Committee’’ to mean the 

committee representing businesses that 

manufacture hardwood lumber in the 

United States formed to pursue an 

industry research, promotion, and 

information program. As specified in 

proposed § 1211.42, the BRC would 

conduct the initial nominations for the 

Hardwood Lumber and Hardwood 

Plywood Board and submit them to the 

Secretary. This would be the only role 

of the BRC under the program. 

Section 1211.3 would define the term 

‘‘Board’’ or ‘‘Hardwood Lumber and 

Hardwood Plywood Board’’ to mean the 

administrative body established 

pursuant to § 1211.41, or such other 

name as recommended by the Board and 

approved by the Secretary. 

Section 1211.4 would define the term 

‘‘Brokered sale’’ to mean a product that 

is purchased from a person and resold 

to a different person without taking 

physical possession of the product. This 

term is necessary for assessment 

purposes because in order to be liable 

for the assessment collection the 

individual must take possession of the 

product. 

Section 1211.5 would define the term 

‘‘Concentration yard’’ to mean an 

operation with kilns that purchases 

hardwood lumber from sawmills, or 

wholesalers or by means of a brokered 

sale and may grade, sort, dry and/or 

surface the lumber. It excludes 

distribution yards which do not have 

kilns. 

Section 1211.7 would define the term 

‘‘Covered hardwood’’ to mean 

hardwood lumber, hardwood lumber 

products, hardwood value-added 

lumber products, and hardwood 

plywood to which an assessment has 

been or may be levied pursuant to the 

Order. 

Section 1211.9 would define the term 

‘‘Fair market value’’ to mean, with 

respect to covered hardwood, the value 

of the lumber as reported by a credible 

and reliable source. Such source shall 

be determined by the Secretary from 

recommendations from the Board. 

Section 1211.10 would define the 

term ‘‘Fiscal period’’ or ‘‘Fiscal year’’ to 

mean a calendar year from January 1 

through December 31, or such other 

period as recommended by the Board 

and approved by the Secretary. 

Section 1211.11 would define the 

term ‘‘Green lumber’’ to mean hardwood 

lumber that has not been kiln dried. 

Section 1211.12 would define the 

term ‘‘Hardwood lumber’’ to mean 

timber from the wood of a cypress tree 

or a deciduous, broad leafed tree that 

could include but not limited to: aspen, 

birch, cypress, popular, maple, cherry, 

walnut and oak that has been sawn into 

boards or blocks by a sawmill in the 

United States. 

Section 1211.13 would define the 

term ‘‘Hardwood lumber manufacturer’’ 

to mean a person who cuts raw 

hardwood logs into hardwood lumber, 

hardwood lumber products, or a person 

who kiln dries green hardwood lumber 

to create hardwood lumber, hardwood 

lumber products or hardwood lumber 

value-added products. 

Section 1211.14 would define the 

term ‘‘Hardwood lumber products’’ to 

mean hardwood lumber that has been 

transformed from timber or green 

lumber into products that remain boards 

or blocks such as surfaced boards, ties, 

cants, or pallet stock (the hardwood 

lumber contained in pallet stock is 

assessed if produced and transferred 

within the same company). The transfer 

definition is discussed under section 

1121.36. For purposes of this order, the 

term hardwood lumber products does 

not include products which are 

transformed from boards or blocks of 

lumber into other products, such as 

furniture, cabinetry, and constructed 

pallets because the proponents 

proposed to assess the raw or green 

hardwood lumber used in certain but 

not all products. Further, hardwood 

lumber is used in many finished 

products which could become difficult 

to administer. 

Section 1211.15 would define the 

term ‘‘Hardwood lumber value-added 

product manufacturer’’ to mean a 

person who has a sawmill or who uses 

kilns to dry hardwood lumber that is 

then used to manufacture hardwood 

lumber value-added products. 

Section 1211.16 would define the 

term ‘‘Hardwood lumber value-added 

products’’ to mean products which 

remain in the general shape of boards, 

but have undergone additional 

processing beyond surfacing or cutting 

to a particular size. Hardwood lumber 

value-added products include solid 

wood strip flooring, all-sides surfaced 

boards, finger-jointed strips ripped to 

width, and moldings but does not 

include multi-component or further 

manufactured finished products such as 

furniture, cabinets, pallets, or 

componentry for cabinets or furniture. 

Section 1211.17 would define the 

term ‘‘Hardwood plywood’’ to mean a 

panel product, the decorative face of 

which is made from hardwood lumber 

or veneer, intended for interior use 

composed of an assembly of layers or 

piles of veneer or veneers in 

combination with lumber core, 

particleboard, medium density 

fiberboard core, hardwood core, or 

special core or special back material 

joined with an adhesive. 

Section 1211.18 would define the 

term ‘‘Hardwood plywood 

manufacturers’’ to mean a person who 

utilizes hardwood logs or veneer to 

create hardwood plywood. 

Section 1211.19 would define the 

term ‘‘Information’’ to mean activities or 

programs designed to disseminate the 

results of research, new and existing 

marketing programs, new and existing 

marketing strategies, new and existing 

uses and applications, and to enhance 

the image of hardwood lumber and 

hardwood plywood and the forests from 

which it comes. This would include 

consumer information, which would 

mean any action taken to provide 

information to, and broaden the 

understanding of, the general public 

regarding covered hardwood. This 

would also include industry 

information, which would mean 

information and programs that would 

enhance the image of the hardwood 

lumber and hardwood plywood 

industry. 

Section 1211.20 would define the 

term ‘‘Kiln dried’’ to mean hardwood 

lumber that has been seasoned in a kiln 

by means of artificial heat, humidity 

and circulation. 

Section 1211.21 would define the 

term ‘‘Market or Marketing’’ to mean the 

sale or other disposition of covered 

hardwood in interstate, foreign, or 

intrastate commerce. 

Section 1211.22 would define the 

term ‘‘Manufacturer’’ to mean domestic 

manufacturers of covered hardwood 

lumber as defined in this Order. 

Section 1211.23 would define the 

term ‘‘Manufacturing’’ to mean the 

process of transforming logs into 

hardwood lumber, or the process of 

creating hardwood lumber products, 

value-added hardwood lumber 

products, or hardwood plywood. 

Section 1211.24 would define the 

term ‘‘Member’’ to mean a member 

appointed by the Secretary to the 

Hardwood Lumber and Hardwood 

Plywood Promotion, Research and 

Information Board. 

Section 1211.25 would define the 

term ‘‘Order’’ to mean an order issued 

by the Secretary under Section 514 of 

the Act that provides for a program of 


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68302 Federal Register / Vol. 78, No. 219 / Wednesday, November 13, 2013 / Proposed Rules 

generic promotion, research, and 

information of covered hardwood under 

the Act. 

Section 1211.26 would define the 

terms ‘‘part’’ and ‘‘subpart.’’ The term 

‘‘part’’ would mean the Hardwood 

Lumber and Hardwood Plywood 

Promotion, Research and Information 

Order and all rules, regulations, and 

supplemental orders issued pursuant to 

the Act and the Order. The Order would 

be a ‘‘subpart’’ of the part. 

Section 1211.27 would define the 

term ‘‘Person’’ to mean any individual, 

group of individuals, partnership, 

corporation, association, joint stock 

company, cooperative, or any other legal 

entity. 

Section 1211.28 would define the 

terms ‘‘Programs, plans and projects’’ to 

mean research, promotion, and 

information programs, plans, or projects 

established under the Order. 

Section 1211.29 would define the 

term ‘‘promotion’’ to mean any action 

taken, including paid advertising, 

public relations and other 

communications, and promoting the 

results of research, that presents a 

favorable image of covered hardwood to 

the public and to any and all 

consumers, with the intent of improving 

the perception, markets and competitive 

position of covered hardwood lumber 

and stimulating sales of covered 

hardwood lumber. 

Section 1211.30 would define the 

term ‘‘research’’ to mean any activity 

that advances the position of covered 

hardwood in the marketplace that 

includes any type of test, study, or 

analysis designed to advance the 

knowledge, image, desirability, use, 

marketability, production, product 

development, or quality of covered 

hardwood. This term includes the 

communication of the results of any 

research conducted under this Order. 

Section 1211.31 would define the 

term ‘‘Sales’’ to mean the total dollar 

purchases of covered hardwood that are 

purchased from a hardwood lumber or 

plywood manufacturer subject to the 

assessment. ‘‘Sales’’ for purposes of the 

assessment does not include freight or 

discounts, and brokered sales are not 

included within the meaning of sale. 

Section 1211.37 would define the 

term ‘‘Transfer’’ to mean when a 

vertically integrated manufacturing 

plant in which post-manufacturing 

operations turns covered hardwoods 

into a non-assessed product while 

remaining under the control of the same 

person. This function regularly occurs 

in the industry. Such a vertically 

integrated manufacturing plant shall 

assign a sales price based on the fair 

market value of the covered hardwood 

at the time it leaves the initial 

manufacturing operation to determine 

the assessment to be paid. Fair market 

value is defined in section 1211.9 of the 

proposed order. 

Sections 1211.6, 1211.8, 1211.25, 

1211.27, 1211.28, 1211.32, 1211.33, 

1211.34, 1211.35, and 1211.37 would 

define the terms ‘‘Conflict of interest,’’ 

‘‘Department or UDSA,’’ ‘‘Order,’’ 

‘‘Person,’’ ‘‘Programs, plans and 

projects,’’ ‘‘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, §§ 1211.41 through 1211.49 of the 

proposed Order would detail the 

establishment and membership of the 

proposed Hardwood Lumber and 

Hardwood Plywood, Promotion, 

Research and Information Board, 

nominations and appointments, the 

term of office, removal and vacancies, 

procedure, reimbursement and 

attendance, powers and duties, 

contracting, and prohibited activities. 

Section 1211.41 would specify the 

Board establishment and membership. 

The Board would be composed of 28 

members comprised of owners or 

employees of hardwood lumber 

manufacturers or hardwood plywood 

manufacturers for the U.S. market who 

manufacture and domestically sell $2 

million or more of hardwood lumber, 

products and/or value-added products, 

or $10 million or more of hardwood 

plywood in the United States during a 

fiscal period. Seats on the Board would 

be apportioned based on the volume of 

covered hardwood produced and sold in 

the geographical areas. For the purposes 

of the geographical distribution of the 

Board membership, the proponents used 

State data from the 2008 Current 

Industrial Report. That report has been 

discontinued and State estimates were 

also discontinued four years ago. In the 

future the Board could use data from the 

U.S. Forest Service’s Timber Product 

Output Program or other source 

approved by the Secretary. 

The Board would be composed of 28 

members. Twenty-two members would 

be hardwood lumber manufacturers and 

would be allocated to districts in the 

United States based on the volume of 

hardwood lumber produced in and sold 

from the respective district. Of the 22 

members, six would be from District 1, 

four members would be from District 2, 

five members would be from District 3, 

six members would be from District 4, 

and one member would be from District 

5. One member would be a hardwood 

lumber value-added manufacturer that 

manufactures flooring products. This 

would allow the unfinished flooring 

industry to be represented on the Board. 

This seat can be from any State within 

the United States. Five members would 

be hardwood plywood manufacturers. 

Of the five members designated as 

hardwood plywood manufacturers, 

three members would be from the States 

that are west of the Mississippi River 

and two members would be from the 

States east of the Mississippi River. 

The BRC also opted to have no 

alternate Board members. This would 

encourage industry members who seek 

representation and serve on the Board to 

be committed to their service and 

participate in all Board meetings. 

Every 5 years the Board must review 

the geographical distribution of the 

volume of covered hardwood produced 

and sold within the United States by 

hardwood lumber manufacturers and 

hardwood plywood manufacturers. If 

warranted, the Board would recommend 

to the Secretary that the Board 

membership be reapportioned 

appropriately to reflect such changes. 

The distribution of volumes between 

districts also shall be considered. Any 

changes in Board composition would be 

implemented by the Secretary through 

notice and comment rulemaking. 

Section 1211.42 of the proposed 

Order would specify Board nominations 

and appointments. The initial 

nominations would be submitted to the 

Secretary by the BRC. This would be the 

only role of the BRC under the program. 

The BRC would publicize the 

nomination process, using trade press or 

other means it deems appropriate, and 

outreach to all hardwood lumber, 

hardwood lumber products and 

hardwood lumber value-added 

manufacturers who sold $2 million or 

more of any assessed products per fiscal 

year. The BRC would also publicize the 

nomination process to hardwood 

plywood manufacturers who sold $10 

million or more of hardwood plywood 

per fiscal year. The BRC could use 

regional caucuses, mail or other 

methods to solicit potential nominees 

and would work with USDA to help 

ensure that all interested persons are 

apprised of the nomination process. The 

BRC could also solicit nominees 

through existing regional hardwood 

lumber, hardwood lumber products, 

hardwood lumber value-added products 

and hardwood plywood organizations. 

The BRC would submit the nominations 

to the Secretary and recommend two 

nominees for each Board position. The 

nominations to the Board should 

reasonably represent large, medium, and 

small-sized operations. In addition to 


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the BRC nominations for the initial 

board, nominees may be submitted 

directly to USDA if accompanied by the 

signatures of at least 20 persons who 

would pay assessments under the Order. 

The BRC suggested that 20 signatures 

would be appropriate to show support 

for such nominee. In addition, nominees 

for the initial Board may provide a short 

background statement outlining their 

qualifications and desire to serve on the 

Board. The Secretary would select the 

members of the Board from the 

submitted nominations. 

Regarding subsequent nominations, 

the Board would solicit nominations as 

described in the previous paragraph, 

except that nominations may not be 

submitted directly to the Secretary by 

third parties after the initial Board 

nominations. Nominees would have the 

opportunity to provide the Board a short 

background statement outlining their 

qualifications and desire to serve on the 

Board. 

Manufacturers who manufacture 

covered hardwood in more than one 

district could seek nomination in only 

the district in which they manufacture 

the majority of their volume of covered 

hardwood. The names of manufacturer 

nominees would be placed on a ballot 

by district. The ballots along with the 

background statements would be mailed 

to manufacturers in each respective 

district for a vote. Manufacturers who 

manufacture covered hardwood in more 

than one district could only vote in the 

district in which they manufacture the 

majority of their hardwood lumber or 

hardwood plywood. The votes would be 

tabulated for each district 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. No two 

members would be employed by a 

single corporation, company, 

partnership, or any other legal entity in 

the United States. 

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. 

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 notice and comment 

rulemaking by the Secretary. 

Section 1211.43 of the proposed 

Order would specify the term of office. 

With the exception of the initial Board, 

each Board member would serve a 

three-year term or until the Secretary 

selected his or her successor. Each term 

of office would begin on January 1 and 

end on December 31. No member could 

serve more than two consecutive terms, 

excluding any term of office less than 

three years. For the initial board, the 

terms of Board members would be 

staggered for two, three, and four years 

so that the subsequent terms of office of 

approximately one-third of the Board 

expire in any given year. 

Section 1211.44 of the proposed 

Order would specify criteria for the 

removal of members and for filling 

vacancies. If a Board member ceased to 

own or work for or be affiliated with a 

manufacturer or ceased to do business 

in the district 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 can remove the member if he 

or she finds that the Board’s 

recommendation shows adequate cause. 

The Secretary may remove a member of 

the Board without Board 

recommendation, upon showing of 

adequate cause, including the failure to 

submit reports or remit assessments 

required under this part, if the Secretary 

determines that such member’s 

continued service would be detrimental 

to the achievement of the purposes of 

the Act. If a position became vacant, 

nominations to fill the vacancy would 

be conducted using the nominations 

process as proposed in § 1211.42 of the 

Order. A vacancy would not be required 

to be filled if the unexpired term is less 

than six months. 

Section 1211.45 of the proposed 

Order would specify procedures of the 

Board. A majority of the Board members 

(15) would constitute a quorum. A 

member may attend a meeting by 

electronic means and be considered 

present for purposes of a quorum. All 

votes at a convened Board meeting or 

any committees will be cast in person or 

by electronic or telephoning if 

participating in the meeting in this 

manner. Proxy voting would not be 

permitted. A motion would carry if 

supported by more than a majority of 

those Board members present or 

participating by electronic means. 

The proposed Order would also 

provide for the Board to take action, in 

lieu of voting at a properly convened 

meeting, by mail, telephone, electronic 

mail, facsimile, or any other electronic 

means when the chairperson believes it 

is necessary. Actions taken under these 

procedures would be valid only if all 

members and the Secretary were 

notified of the meeting and all members 

were provided the opportunity to vote 

and if supported by more than 50 

percent of Board members present or 

participating by electronic or other 

means. Additionally, all votes would 

have to be confirmed in writing and 

recorded in Board minutes. 

The proposed Order would specify 

that Board members would serve 

without compensation. However, Board 

members would be reimbursed for 

reasonable travel expenses, as approved 

by the Board, incurred when performing 

Board business. 

Section 1211.47 of the proposed 

Order would specify powers and duties 

of the Board. These are similar in 

promotion programs authorized under 

the 1996 Act. They include, among 

other things, to administer the Order 

and collect assessments; to develop 

bylaws and recommend regulations 

necessary to administer the Order; to 

select a chairperson and other Board 

officers; to create an executive 

committee and form other committees 

and subcommittees as necessary; to hire 

staff or contractors; to provide 

appropriate notice of meetings to the 

industry and USDA and keep minutes of 

such meetings; to develop programs and 

enter into contracts to implement 

programs subject to USDA approval; to 

submit a budget to USDA for approval 

60 calendar days prior to the start of the 

fiscal year; to borrow funds necessary to 

cover startup costs of the Order; to 

invest Board funds pursuant to the Act; 

to have its books audited by an outside 

certified public accountant at the end of 

each fiscal period and at other times as 

requested by the Secretary; to report its 

activities to manufacturers for the U.S. 

market; to make public an accounting of 

funds received and expended; to 

receive, investigate and report to the 

Secretary complaints of violations of the 

Order or regulations; to act as an 

intermediary between the Secretary and 

any manufacturer, to recommend 

changes to the assessment rate as 

provided in this part; to borrow funds 

necessary for startup expenses of the 

Order; and to recommend amendments 

to the Order as appropriate. 

Section 1211.48 of the proposed 

Order would specify contract 

responsibilities of the Board. Also, this 

section would include procedures for 

developing contracts with vendors and 

items that each contract should include. 

All contracts entered into by the Board 

must be approved by the Secretary 

before becoming effective. 

Section 1211.49 of the proposed 

Order would specify prohibited 

activities that are common to all 

promotion programs authorized under 


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the 1996 Act. In summary, the Board 

nor its employees and agents could 

engage in actions that would be a 

conflict of interest; use Board funds to 

lobby (influencing legislation or 

governmental action or policy, by local, 

state, Federal, and foreign governments 

or subdivision thereof, other than 

recommending to the Secretary 

amendments to the Order); and engage 

in any advertising or activities that may 

be false, misleading or disparaging to 

another agricultural commodity. 

Expenses and Assessments 

Pursuant to sections 516 and 517 of 

the 1996 Act, §§ 1211.50 through 

1211.53 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 

for approval 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 at 

least one preceding fiscal period’s 

budget for comparative purposes. 

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. 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 all 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 date of the 

establishment of the Board. 

Reimbursements to USDA would not be 

considered administrative costs. As an 

example, if the Board received $15 

million in assessments during fiscal 

year 5, and had available $1 million in 

reserve funds, the Board’s available 

funds would be $16 million. In this 

scenario, the Board would be limited to 

spending no more than $2.4 million (.15 

× $16 million) on 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 

$15 million, it could carry over no more 

than $15 million in reserve. With 

approval of the Secretary, reserve funds 

could be used to pay expenses. 

The Board could invest its revenue 

collected under the Order in the 

following: (1) Obligations of the United 

States or any agency of the United 

States; (2) General obligations of any 

State or any political subdivision of a 

State; (3) Interest bearing accounts or 

certificates of deposit of financial 

institutions that are members of the 

Federal Reserve; and (4) Obligations 

fully guaranteed as to principal interest 

by the United States. 

The Board would be required to 

submit to USDA financial statements on 

a quarterly basis, or at any other time as 

requested by the Secretary. Financial 

statements should include, at a 

minimum, a balance sheet, an income 

statement, and an expense budget. 

Assessments 

The Board’s programs and expenses 

would be funded through assessments 

on covered hardwood, other income, 

and other funds available to the Board. 

The Order would provide for an initial 

assessment rate of: (1) $1.00 per $1,000 

in sales of hardwood lumber and 

hardwood lumber products; (2) $0.75 

per $1,000 in sales of hardwood lumber 

value-added products; and (3) $3.00 per 

$1,000 in sales of hardwood plywood. 

Hardwood plywood is a higher valueadded product than the other lumber 

categories, and therefore is assessed at a 

higher level. 

The intent is to assess the green (raw) 

hardwood lumber. Sales rather than 

production or volume provides a better 

measurement to apply assessments 

because of the regional differences in 

the production of the different species 

of wood. There are no consistent 

uniform measurements or sizes of green 

hardwood lumber because of the many 

different species of hardwood and its 

uses. In addition, the quantity of 

hardwood lumber contained in assessed 

hardwood lumber products and valueadded products varies according to the 

products manufactured. 

The following table summarizes the 

assessment rates mentioned above: 

Description Assessment rate Allowable deductions 

Hardwood lumber ................ —hardwood logs turned into lumber (raw green lumber).$1/$1,000 in sales ............. N/A. 

Hardwood lumber product ... —stays a board or block (a little more processed than 

green lumber).

$1/$1,000 in sales ............. —deduct the hardwood 

lumber purchase. 

Hardwood value-added 

products.

—flooring and molding (stays the shape of a board but 

has undergone additional processing—does NOT include multi-component or further manufactured 

products such as furniture, cabinets, cabinet doors, 

prefinished or engineered flooring, pallets, or dimension or glued components for cabinets or furniture..

$0.75/$1,000 in sales ........ —deduct the hardwood 

lumber purchase. 

Hardwood plywood .............. —plywood ...................................................................... $3/$1,000 in sales ............. N/A. 

Manufacturers like sawmills cut (raw) 

green hardwood logs into hardwood 

lumber that remain boards or blocks or 

sometimes kiln dry green hardwood 

lumber to create hardwood lumber that 

can be further processed into hardwood 

lumber products by them or other 

manufacturers. This green hardwood 

lumber would be assessed at $1.00 per 

$1,000 in sales of covered hardwood 

lumber. 

Other manufacturers like 

concentration yards cut or buy (raw) 

green hardwood logs and kiln dry the 

green hardwood lumber to further 


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manufacture hardwood lumber 

products. Sawmills can also further 

manufacture boards or blocks into 

hardwood lumber products. These 

hardwood lumber products include: 

Products that remain hardwood lumber 

boards or blocks such as surface boards, 

ties, cants, strips, crane mat material or 

pallet stock (the hardwood lumber 

contained in pallet stock is assessed if 

produced and transferred within the 

same company). The hardwood lumber 

products manufactured (covered 

hardwood) would be assessed at $1.00 

per $1,000 in sales of hardwood minus 

the dollar value of any green hardwood 

lumber purchases. For example, if a 

concentration yard has annual sales of 

hardwood lumber products of $5 

million and has annual green hardwood 

lumber purchases of $1 million, the 

calculated assessment would be $4 

million. The $1 million dollars of green 

hardwood lumber purchases is 

subtracted from the annual sales of 

hardwood lumber products because a 

manufacturer has already paid the 

assessment on the green hardwood 

lumber. 

A hardwood lumber value-added 

product manufacturer who operates a 

sawmill or a concentration yard that 

manufactures hardwood lumber valueadded products would be assessed as 

follows: Total assessment would be 

$0.75 for every $1,000 in value-added 

product sales, plus $1 for every $1,000 

in green and kiln dried lumber sales, 

minus $1 for every $1,000 in green and 

kiln dried lumber purchases. This 

computation is necessary to capture the 

purchases and sales of green hardwood 

lumber by this manufacturer that may 

be used to manufacture hardwood 

value-added products. Hardwood 

lumber value-added products include 

solid wood unfinished strip flooring, 

all-sides surfaced boards, moldings; and 

these products would be assessed at a 

lesser amount to take into account the 

amount of hardwood lumber contained 

in the finished product. In addition, the 

assessed value of any green hardwood 

lumber purchases made would be 

subtracted since that assessment has 

already been paid by a manufacturer. 

For example, if a hardwood lumber 

value-added products manufacturer has 

annual sales of hardwood lumber valueadded products of $16 million, $4 

million in sales of green hardwood 

lumber, and annual green hardwood 

lumber purchases of $10 million, the 

calculated assessment would be $6,000 

($16 million × .75 plus $4 million × 1.0 

minus $10 million × 1.0 equals $6 

million divided by $1000 equals $6,000 

in assessment owed). The following 

worksheet illustrates how assessments 

are calculated: 

See computation example below: 

Annual SALES of hardwood lumber value-added products llllll 

(a) 

Multiply (a) by .75 for every $1,000 in sales llllll 

(b) 

Annual SALES of hardwood lumber (raw) green and kiln dried lumber llllll 

(c) 

Multiply (c) by $1 for every $1,000 in (raw) green and kiln dried lumber llllll 

(d) 

Add (b) and (d) llllll 

(e) 

Annual PURCHASES of hardwood lumber (raw) green and kiln dried lumber llllll 

(f) 

Multiply (f) by $1 for every $1,000 purchases of hardwood lumber (raw) green and kiln dried lumber llllll 

(g) 

Subtract (g) from (e) = TOTAL ASSESSMENT DUE llllll 

Due 

The assessment rate for kiln dried and 

pallet sales that are manufactured by 

vertically integrated pallet 

manufacturers would be based on the 

fair market value of the green, kiln dried 

and pallet sales that the vertically 

integrated manufacturer cut and 

transferred or sold to themselves. 

Subtracted from that value is dollar 

sales of green or kiln dried lumber. 

Finally, subtracted from that value are 

annual green hardwood purchases times 

$.001. This formula is necessary to take 

into account covered hardwood lumber 

that is cut and transferred within the 

same company and covered hardwood 

lumber purchases from other 

manufacturers used in the 

manufacturing of pallets. Pallets may be 

manufactured using covered hardwood 

from different manufacturers. Pallet 

manufactured products include 

hardwood pallet lumber, cants, crane 

mats and pallet stock produced and 

transferred within the same company. 

For example, if an integrated pallet 

manufacturer has a fair market value of 

hardwood pallet lumber sales of $10 

million, $5 million in sales of hardwood 

lumber, and annual hardwood lumber 

purchases of $4 million; the calculated 

assessment would be $1,000 ($10 

million minus $5 million minus $4 

million multiplied by $.001). 

The fair market value of lumber 

would be determined by a credible and 

reliable source. Such source shall be 

determined by the Secretary from 

recommendations from the Board. The 

proponents have indicated there are 

currently two companies that could 

compute the fair market values of 

hardwood lumber that the Board could 

recommend to the Secretary to define 

this value. 

Brokered sales of hardwood lumber or 

hardwood lumber products are 

excluded from the calculation of 

assessments as the proponents 

determined these transactions would be 

difficult to administer under the 

program. 

Hardwood plywood manufacturers 

would pay at a rate of $3.00 per $1,000 

in sales of hardwood lumber plywood. 

Hardwood plywood is a higher valueadded product than the other lumber 

categories and is assessed at higher 

level. For example, if a hardwood 

plywood manufacturer has $25 million 

in sales of hardwood plywood the 

assessment would be $75,000. 

Manufacturers would pay assessments 

based on sales of hardwood lumber, 

hardwood lumber products, hardwood 

lumber value-added products and 

hardwood plywood. The Board can 

recommend to the Secretary a change in 

the assessment rate. Any such change 

would be implemented through notice 

and comment rulemaking by the 

Secretary. Manufacturers would be 

required to pay their assessments owed 

to the Board on a quarterly basis, on a 

form that the Board shall develop, no 

later than the 30th calendar day of the 

month following the end of the quarter 

in which the hardwood lumber, 

hardwood lumber products, valueadded, or hardwood plywood was 

marketed. Thus, the January to 


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December fiscal year would have four 

quarters ending the last day of March, 

June, September, and December, 

respectively. Assessments would be due 

April 30th, July 30th, October 30th, and 

January 30th. As an example, 

assessments for lumber marketed in 

January would be due to the Board by 

April 30th. 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, hardwood lumber 

manufacturers, hardwood lumber 

product manufacturers and hardwood 

lumber value-added products 

manufacturers with combined annual 

sales of less than $2 million of any 

covered hardwood during a fiscal year 

would be exempt from paying 

assessments. In addition, hardwood 

plywood manufacturers with annual 

sales of less than $10 million during a 

fiscal year are exempt from paying 

assessments. 

Manufacturers 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. Manufacturers 

would have to certify that they expect 

to market less than the respective sales 

for each covered entity under the 

proposed Order for the applicable fiscal 

year. The Board could request past sales 

data to support the exemption request. 

The Board would then issue, if deemed 

appropriate, a certificate of exemption 

to the eligible manufacturer. 

Once approved, manufacturers would 

not have to pay assessments to the 

Board for the applicable fiscal year 

unless they exceed the threshold. 

Hardwood lumber manufacturers and 

hardwood plywood manufacturers who 

did not apply to the Board for an 

exemption and had sales of less than $2 

million or sales less than $10 million, 

respectively, during the fiscal year 

would receive a refund from the Board 

for the applicable assessments within 30 

calendar days after the end of the fiscal 

year. Board staff would determine the 

assessments paid and refund the 

manufacturer accordingly. On the other 

hand, hardwood lumber manufacturers 

and hardwood plywood manufacturers 

who receive an exemption certificate 

but have sales more than $2 million and 

$10 million, respectively, 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 notice and comment 

rulemaking by the Secretary. 

A manufacturer of covered hardwood 

lumber who operates under an approved 

National Organic Program (NOP) (7 CFR 

part 205) system plan, only 

manufactures covered hardwood lumber 

that is eligible to be labeled as 100 

percent organic under the NOP and is 

not a split operation would be exempt 

from payment of assessments. 

Promotion, Research and Information 

Pursuant to section 516 of the 1996 

Act, §§ 1211.60 through 1211.62 of the 

proposed Order would detail 

requirements regarding promotion, 

research and information programs, 

plans and projects authorized under the 

Order and approved by the Secretary. 

The Board would develop and submit to 

the Secretary for approval programs, 

plans and projects regarding promotion, 

research, education, and other activities, 

including consumer and industry 

information and advertising designed to, 

among other things, build markets for 

covered hardwood. The Board would be 

required to evaluate each plan and 

program to ensure that it contributes to 

an effective promotion program. 

Research projects could include the 

energy efficiency and preferability of 

covered hardwood. Covered Hardwood 

of all origins would have to be treated 

equally by the Board, and no program, 

plan, or project could be false, 

misleading, or disparage against another 

agricultural commodity. 

The Order would also require that, at 

least once every five years, the Board 

fund an independent evaluation of the 

effectiveness of the Order and programs 

conducted by the Board. Finally, the 

Order would specify that any patents, 

copyrights, trademarks, inventions, 

product formulations and publications 

developed through the use of funds 

received by the Board would be the 

property of the U.S. Government, as 

represented by the Board. These along 

with any rents, royalties and the like 

from their use would be considered 

income subject to the same fiscal, 

budget, and audit controls as other 

funds of the Board, and could be 

licensed with approval of the Secretary. 

Reports, Books and Records 

Pursuant to section 515 of the 1996 

Act, §§ 1211.70 through 1211.72 specify 

the reporting and recordkeeping 

requirements under the proposed Order 

as well as requirements regarding 

confidentiality of information. 

Hardwood lumber and plywood 

manufacturers would be required to 

submit periodically to the Board certain 

information as the Board may 

recommend with approval of the 

Secretary. Specifically, manufacturers 

would submit a report to the Board that 

would include, but not be limited to, the 

manufacturer’s name, address, and 

telephone number; the annual sales of 

covered hardwood lumber and 

hardwood plywood; and the sales of 

covered hardwood lumber and 

hardwood plywood for which 

assessments were paid. Hardwood 

lumber and plywood manufacturers 

would submit this report at the same 

time they remit their assessments to the 

Board. Hardwood lumber and plywood 

manufacturers who received a certificate 

of exemption from the Board would not 

have to submit such a report to the 

Board. However, exempt hardwood 

lumber manufacturers and hardwood 

plywood manufacturers who have sales 

over the exemption threshold of $2 

million and $10 million, respectively, 

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. 

Additionally, hardwood 

manufacturers including those who are 

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. Hardwood manufacturers 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 


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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, § 1211.81(a) of the proposed Order 

specifies that the program would not go 

into effect unless it is approved by a 

majority of hardwood manufacturers 

and hardwood plywood manufacturers 

who represent a majority of the volume 

of covered hardwood lumber 

represented in the referendum who, 

during a representative period 

determined by the Secretary, were 

engaged in the manufacturing of 

covered hardwood lumber. 

Section 1211.81(b) of the proposed 

Order specifies criteria for subsequent 

referenda. Under the Order, a 

referendum would be held to ascertain 

whether the program should continue, 

be amended, or be terminated. This 

section specifies that a referendum 

would be held 5 years after the Order 

becomes effective, and every 7 years 

thereafter, to determine whether 

hardwood lumber manufacturers and 

hardwood plywood manufacturers favor 

continuation of the Order. The Order 

would continue if favored by hardwood 

manufacturers and hardwood plywood 

manufacturers who represent a majority 

of the volume of covered hardwood 

lumber represented in the referendum 

who, during a representative period 

determined by the Secretary, was 

engaged in the manufacturing of 

covered hardwood lumber. 

Additionally, a referendum could be 

conducted at the request of the 

Secretary. 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 1211.80 and §§ 1211.82 

through 1211.88 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. 

In addition, the Secretary shall 

suspend or terminate an order or a 

provision of an order if Secretary finds 

that an order or a provision of an order 

obstructs or does not tend to effectuate 

the purpose of this subtitle, or if the 

Secretary determines that the order or a 

provision of an order is not favored by 

persons voting in a referendum. 

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) as those having annual 

receipts of no more than $7.0 million. 

According to information submitted by 

the proponents, it is estimated that there 

are 2,804 hardwood lumber 

manufacturers and 36 hardwood 

plywood manufacturers in the United 

States annually. This number represents 

separate business entities and includes 

exempted and assessed entities under 

the Order; one business entity may 

include multiple sawmills. It is 

estimated that 85 to 90 percent of the 

manufacturers are small businesses. 

This rule invites comments on a 

proposed industry-funded promotion, 

research, and information program for 

hardwood lumber and hardwood 

plywood. Hardwood lumber products 

are used in residential and commercial 

construction includes flooring, 

furniture, moldings, doors and kitchen 

cabinets. Industrial products include 

pallets, wood dunning, and railroad ties. 

The program would be financed by an 

assessment on hardwood lumber, 

hardwood lumber products, hardwood 

lumber value-added, and hardwood 

plywood manufacturers and would be 

administered by a board of industry 

members selected by the Secretary. The 

initial assessment rate would be: (1) 

$1.00 per $1,000 in sales of hardwood 

lumber and hardwood lumber products; 

(2) $0.75 per $1,000 in sales of 

hardwood lumber value-added 

products; and (3) $3.00 per $1,000 in 

sales of hardwood plywood. These 

assessments should generate about $10 

million annually. The program would 

exempt small hardwood lumber 

manufacturers with annual sales of less 

than $2 million and small hardwood 

plywood manufacturers with annual 

sales of less than $10 million. Exports 

would be exempted from the program 

and imports would not be covered 

under the program. The purpose of the 

program would be to strengthen the 

position of covered hardwood in the 

marketplace and maintain and expand 

markets for United States covered 

hardwood. By strengthening demand, a 

research and promotion program 

benefits all businesses both small and 

large. A referendum would be held 

among eligible hardwood lumber 

manufacturers and hardwood plywood 

manufacturers to determine whether 

they favor implementation of the 

program prior to it going into effect. The 

program is authorized under the 1996 

Act. In addition, the numbers used in 

the RFA analysis herein represent the 

total universe of manufacturers known 

to USDA and not those who may be 

eligible to vote in the referendum. 

Regarding the economic impact of the 

proposed Order on affected entities, 

hardwood lumber, hardwood lumber 

products, hardwood lumber valueadded product, and hardwood plywood 

manufacturers would be required to pay 

assessments to the Board. As previously 

mentioned, the initial assessment rate 

would be: (1) $1.00 per $1,000 in sales 

of hardwood lumber and hardwood 

lumber products; (2) $0.75 per $1,000 in 

sales of hardwood lumber value-added 

products; and (3) $3.00 per $1,000 in 

sales of hardwood plywood. The 

percentage of revenue represented by 

the assessment rate would be 0.01 

percent for sales of hardwood lumber 

and hardwood lumber products, 0.0075 

percent for sales of hardwood lumber 

value-added products, and 0.03 percent 

for sales of hardwood plywood. 

Assessment revenue is expected to be 

around $10 million dollars. Thus, the 

percentage revenue represented by the 

assessment rate would be well under 

one percent of sales. Any change in the 

assessment rate may be changed only 

upon approval of the Board and only 

after the Secretary has conducted 

rulemaking. 

The Order would provide for two 

exemptions. First, hardwood lumber 

manufacturers, hardwood lumber 

product manufacturers and hardwood 

lumber value-added products 

manufacturers with annual sales less 

than $2 million of any assessed covered 

hardwood combined during a fiscal year 

would be exempt from paying 

assessments. In addition, hardwood 

plywood manufacturers with annual 

sales of less than $10 million during a 

fiscal year are exempt from paying 

assessments. It would be a burden on 


emcdonald on DSK67QTVN1PROD with PROPOSALS2
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7Ward, Ronald, Commodity Checkoff Programs 

and Generic Advertising Choices, 2nd Quarter 2006, 

21/(2)). 

small entities to assess the smaller 

manufacturers under this program. 

Regarding the impact on the industry 

as a whole, the proposed program is 

expected to grow markets for covered 

hardwood by increasing the market 

share of covered hardwood in 

residential, commercial and industrial 

product areas. While the benefits of the 

proposed program are difficult to 

quantify, the benefits are expected to 

outweigh the program’s costs of 

approximately $10 million per year, 

which is less than one percent of sales. 

Academic researchers have estimated 

benefit-to-cost ratios for promotion 

programs across a broad range of 

commodities in the range of 4:1 to 6:1, 

indicating that for each dollar of 

promotion at least 4 to 6 times that 

amount is generated in new revenues, 

profit, or ‘‘economic surplus’’ to the 

industry.7

Regarding alternatives, the 

proponents, the BRC, considered 

various options to the proposed range in 

assessment rates and various products 

to be assessed. The BRC believes that 

$10 million in assessment income is the 

threshold for an effective program that 

could help to improve the market for 

covered hardwood. 

The exemption levels reflect what the 

industry considers a very small business 

that would be economically affected if 

covered under the program. In addition, 

the proponents considered the 

exemption levels and decided the 

exemption levels were adequate in order 

to allow them to obtain sufficient funds 

to operate an effective program. 

The industry explored the merits of a 

voluntary promotion program. One 

program, the Hardwood Council, united 

several major hardwood associations 

behind a marketing program and 

collected enough funds to establish a 

Web site and a limited number of 

marketing programs. Funding for this 

program declined as competing 

demands arose with the supporting 

associations. In 2009, a renewed effort 

was put forth organizing the Unified 

Hardwood Promotion campaign which 

was funded by various companies and 

trade associations which resulted in the 

development of a hardwood logo and 

tagline. However, given the fragmented 

nature of the industry and about 3,000 

small companies to reach, the level of 

funding needed was not achieved. 

This action would impose additional 

reporting and recordkeeping burden on 

manufacturers of hardwood lumber, 

hardwood lumber products, hardwood 

lumber value-added products, and 

hardwood plywood manufacturers. 

Hardwood lumber manufacturers and 

hardwood plywood manufacturers 

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 an 

additional background statement 

outlining their qualifications to serve on 

the Board. Hardwood lumber 

manufacturers and hardwood plywood 

manufacturers would have the 

opportunity to cast a ballot and vote for 

candidates to serve on the Board. 

Hardwood lumber manufacturers and 

hardwood plywood manufacturers’ 

nominees to the Board would have to 

submit a nomination form to the 

Secretary to ensure they are qualified to 

serve on the Board. 

Additionally, the Order would 

provide for an exemption for hardwood 

lumber, hardwood lumber products, and 

hardwood lumber value-added products 

manufacturers for the U.S. market with 

annual sales less than $2 million of any 

assessed product combined during a 

fiscal year. In addition, hardwood 

plywood manufacturers with annual 

sales of less than $10 million during a 

fiscal year are exempt from paying 

assessments. Hardwood lumber 

manufacturers, hardwood lumber 

product manufacturers, hardwood 

lumber value-added products 

manufacturers and hardwood plywood 

manufacturers would also be asked to 

submit a report regarding their sales that 

would accompany their assessments 

paid to the Board. Hardwood lumber 

manufacturers and hardwood plywood 

manufacturers who would qualify as 

100 percent organic under the NOP 

could submit a request to the Board for 

an exemption from assessments. 

Finally, hardwood lumber 

manufacturers and hardwood plywood 

manufacturers who want to participate 

in the 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 Blue 

Ribbon Committee was formed about 

one year ago and met in person and by 

conference call more than 10 times 

each. They have developed a Web site 

that has been available to the public that 

details a description of the program 

under development, related hardwood 

press articles, timeframes for program 

development, and Powerpoint 

presentations used to brief various 

hardwood lumber audiences. This 

information can be found at: 

www.hardwoodcheckoff.com. Members 

of the BRC have presented the 

hardwood checkoff program across the 

country at various industry meetings 

attended by as many as 300 industry 

participants. In depth articles describing 

the program have been published in 

industry media. 

While USDA has performed this 

initial RFA analysis regarding the 

impact of the proposed rule on small 

entities, in order to have as much data 

as possible for a more comprehensive 

analysis, we invite comments 

concerning potential effects. USDA is 

also requesting comments regarding the 

number and size of entities covered 

under the proposed Order. 

Paperwork Reduction Act 

In accordance with the Paperwork 

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

Chapter 35), AMS announces its 

intention to request an approval of a 

new information collection and 

recordkeeping requirements for the 

proposed lumber program. 

Title: Advisory Committee or 

Research and Promotion Background 

Information. 

OMB Number for background form 

AD–755: (Approved under OMB No. 

0505–0001). 

Expiration Date of Approval: 5/31/ 

2015. 

Title: Hardwood Lumber and 

Hardwood Plywood 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 


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national research and promotion 

program for the hardwood lumber 

industry. The program would be 

financed by an assessment on hardwood 

lumber manufacturers and hardwood 

lumber plywood manufactures and 

would be administered by a board of 

industry members selected by the 

Secretary. The program would provide 

for an exemption for hardwood lumber, 

hardwood lumber products, hardwood 

lumber value-added products 

manufactured for the U.S. market with 

annual sales less than $2 million of any 

assessed product combined during a 

fiscal year. In addition, hardwood 

plywood manufacturers with annual 

sales of less than $10 million during a 

fiscal year are exempt from paying 

assessments. A referendum would be 

held among eligible hardwood lumber 

manufacturers and hardwood plywood 

manufacturers to determine whether 

they favor implementation of the 

program prior to it going into effect. The 

purpose of the program would be to 

help build the market for hardwood 

lumber. 

In summary, the information 

collection requirements under the 

program concern Board nominations, 

the collection of assessments, and 

referenda. For Board nominations, 

hardwood lumber manufacturers and 

hardwood plywood manufacturers 

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, hardwood lumber 

manufacturers and hardwood plywood 

manufacturers would 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, hardwood 

manufacturers and hardwood plywood 

manufacturers who have sales under the 

exemption threshold of $2 million and 

$10 million, respectively, during the 

fiscal year could submit a request, 

‘‘Application for Exemption from 

Assessments,’’ to the Board for an 

exemption from paying assessments. 

Hardwood lumber manufacturers and 

plywood manufacturers would be asked 

to submit a ‘‘Sales Report’’ that would 

accompany their assessments paid to 

the Board and report the sales of 

hardwood lumber or hardwood 

plywood sold during the applicable 

period, and the quantity for which 

assessments were paid. Hardwood 

lumber manufacturers and hardwood 

plywood manufacturers who sold less 

than the exemption threshold of $2 

million and $10 million, respectively, 

during the fiscal year are exempt from 

paying assessments would not be 

required to submit this report. Finally, 

hardwood lumber manufacturers and 

hardwood plywood manufacturers 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 hardwood lumber 

manufacturers and hardwood plywood 

manufacturers 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: Hardwood lumber 

manufacturers and hardwood plywood 

manufacturers. 

Estimated Number of Respondents: 

56. 

Estimated Number of Responses per 

Respondent: 1. 

Estimated Total Annual Burden on 

Respondents: 14 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: Hardwood lumber 

manufacturers and hardwood plywood 

manufacturers. 

Estimated Number of Respondents: 

56. 

Estimated Number of Responses per 

Respondent: 1. 

Estimated Total Annual Burden on 

Respondents: 14 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: Hardwood lumber 

manufacturers and hardwood plywood 

manufacturers. 

Estimated Number of Respondents: 

250. 

Estimated Number of Responses per 

Respondent: 1. 

Estimated Total Annual Burden on 

Respondents: 62.5 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: Hardwood lumber 

manufacturers and hardwood plywood 

manufacturers. 

Estimated number of Respondents: 19 

(56 for initial nominations to the Board, 

0 for the second year, and up to 19 

annually thereafter). 

Estimated number of Responses per 

Respondent: 1 every 3 years. (0.3) 

Estimated Total Annual Burden on 

Respondents: 28 hours for the initial 

nominations to the Board, 0 hours for 

the second year of operation, and up to 

9.5 hours annually thereafter. 

(5) Application for Exemption from 

Assessments 

Estimate of Burden: Public reporting 

burden for this collection of information 

is estimated to average 0.25 hour per 

hardwood lumber manufacturer or 

hardwood plywood manufacturer 

reporting on hardwood lumber or 

hardwood plywood sold. Upon approval 

of an application, hardwood lumber or 

hardwood plywood manufacturers 

would receive exemption certification. 

Respondents: Hardwood lumber 

manufacturers and hardwood plywood 

manufacturers who have sales of $2 

million or less and $10 million or less, 

respectively, annually. 

Estimated number of Respondents: 

1490. 

Estimated number of Responses per 

Respondent: 1. 

Estimated Total Annual Burden on 

Respondents: 372.5 hours. 

(6) Sales Report 

Estimate of Burden: Public reporting 

burden for this collection of information 

is estimated to average 0.5 hour per 

manufacturer. 

Respondents: Hardwood lumber 

manufacturers who sales are more than 

$2 million (1340) and hardwood 

plywood manufacturers who sales are 

more than $10 million (10). 

Estimated number of Respondents: 

1350. 

Estimated number of Responses per 

Respondent: 4. 

Estimated Total Annual Burden on 

Respondents: 2,700 hours. 


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(7) Organic Exemption Form 

Estimate of Burden: Public 

recordkeeping burden for this collection 

of information is estimated to average 

0.5 hours per exemption form. 

Respondents: Organic hardwood 

lumber manufacturers and hardwood 

plywood manufacturers. 

Estimated Number of Respondents: 1. 

Estimated Number of Responses per 

Respondent: 1. 

Estimated Total Annual Burden on 

Respondents: 0.5 hour. 

(8) Refund of Assessments Paid on 

Hardwood Lumber 

Estimate of Burden: Public reporting 

burden for this collection of information 

is estimated to average 0.25 hour. 

Respondents: Hardwood lumber 

manufacturers and hardwood plywood 

manufacturers. 

Estimated Number of Respondents: 1. 

Estimated Number of Responses per 

Respondent: 1. 

Estimated Total Annual Burden on 

Respondents: 0.25 hour. 

(9) A Requirement To Maintain Records 

Sufficient To Verify Reports Submitted 

Under the Order 

Estimate of Burden: Public 

recordkeeping burden for keeping this 

information is estimated to average 0.5 

hours per record keeper maintaining 

such records. 

Recordkeepers: Hardwood lumber and 

plywood manufacturers 2,840. 

Estimated number of recordkeepers: 

2,840. 

Estimated total recordkeeping hours: 

1,420 hours. 

As noted above, under the proposed 

program, hardwood lumber 

manufacturers and hardwood plywood 

manufacturers would be required to pay 

assessments and file reports with and 

submit assessments to the Board. While 

the proposed Order would impose 

certain recordkeeping requirements on 

hardwood lumber manufacturers and 

hardwood plywood manufacturers, 

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 2,840 respondents 

would provide information to the Board. 

The estimated cost of providing the 

information to the Board by respondents 

would be $152,196. This total has been 

estimated by multiplying 4,612 total 

hours required for reporting and 

recordkeeping by $38, the average mean 

hourly earnings of various occupations 

involved in keeping this information. 

Data for computation of this hourly 

wage were obtained from the U.S. 

Department of Labor, Bureau of Labor 

Statistics, publication, ‘‘May 2011 

National Occupational Employment and 

Wage Estimates in the United States’’, 

updated March 29, 2012. 

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 hardwood 

lumber manufacturers and hardwood 

plywood manufacturers 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 hardwood lumber and 

plywood; (d) the accuracy of USDA’s 

estimate of the number of hardwood 

lumber manufacturers and hardwood 

plywood manufacturers of hardwood 

lumber that would be covered under the 

program; (e) ways to enhance the 

quality, utility, and clarity of the 

information to be collected; and (f) ways 

to minimize the burden of the collection 

of information on those who are to 

respond, including the use of 

appropriate automated, electronic, 

mechanical, or other technological 

collection techniques or other forms of 

information technology. 

Comments concerning the 

information collection requirements 

contained in this action should 

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. 

Request for Public Comment in 

Accordance With Executive Order 

13175 

This rule invites comments on its 

effect of the requirements of Executive 

Order 13175, Consultation and 

Coordination with Indian Tribal 

Governments. Comments should be 

directed as to whether this regulation 

would or would not have substantial 

and direct effects on Tribal governments 

and would not have significant Tribal 

implications. 

USDA made minor 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 hardwood 

manufacturers and hardwood plywood 

manufacturers who represent a majority 

of the volume of covered hardwood 

lumber represented in the referendum 

who, during a representative period 

determined by the Secretary, were 

engaged in the manufacturing of 

covered hardwood lumber. 

Referendum procedures will be 

published separately in this issue of the 

Federal Register. 


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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 1211 

Administrative practice and 

procedure, Advertising, Consumer 

information, Marketing agreements, 

Hardwood lumber promotion, 

Hardwood plywood 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 

1211 to read as follows: 

PART 1211—HARDWOOD LUMBER 

AND HARDWOOD PLYWOOD 

PROMOTION, RESEARCH AND 

INFORMATION ORDER 

Subpart A—Hardwood Lumber and 

Hardwood Plywood Promotion, 

Research and Information Order 

Definitions 

Sec. 

1211.1 Act. 

1211.2 Blue Ribbon Committee. 

1211.3 Board. 

1211.4 Brokered sale. 

1211.5 Concentration yard. 

1211.6 Conflict of interest. 

1211.7 Covered hardwood. 

1211.8 Department or USDA. 

1211.9 Fair market value. 

1211.10 Fiscal period or fiscal year. 

1211.11 Green hardwood lumber. 

1211.12 Hardwood lumber. 

1211.13 Hardwood lumber manufacturer. 

1211.14 Hardwood lumber products. 

1211.15 Hardwood lumber value-added 

product manufacturer. 

1211.16 Hardwood lumber value-added 

products. 

1211.17 Hardwood plywood. 

1211.18 Hardwood plywood manufacturer. 

1211.19 Information. 

1211.20 Kiln dried. 

1211.21 Market or marketing. 

1211.22 Manufacturer. 

1211.23 Manufacturing. 

1211.24 Member. 

1211.25 Order. 

1211.26 Part and subpart. 

1211.27 Person. 

1211.28 Programs, plans and projects. 

1211.29 Promotion. 

1211.30 Research. 

1211.31 Sale. 

1211.32 Secretary. 

1211.33 State. 

1211.34 Suspend. 

1211.35 Terminate. 

1211.36 Transfer. 

1211.37 United States or U.S. 

Hardwood Lumber and Hardwood Plywood 

Promotion, Research and Information Board 

1211.41 Establishment and membership. 

1211.42 Nominations and appointments. 

1211.43 Term of office. 

1211.44 Removal and vacancies. 

1211.45 Procedure. 

1211.46 Reimbursement and attendance. 

1211.47 Powers and duties of the Board. 

1211.48 Prohibited activities. 

Expenses and Assessments 

1211.50 Budget and expenses. 

1211.51 Financial statements. 

Assessments 

1211.52 Assessments. 

1211.53 Exemption from assessment. 

Promotion, Research and Information 

1211.60 Programs, plans, and projects. 

1211.61 Independent evaluation. 

1211.62 Patents, copyrights, trademarks, 

information, publications, and product 

formulations. 

Reports, Books and Records 

1211.70 Reports. 

1211.71 Books and records. 

1211.72 Confidentiality of information. 

Miscellaneous 

1211.80 Right of the Secretary. 

1211.81 Referenda. 

1211.82 Suspension and termination. 

1211.83 Proceedings after termination. 

1211.84 Effect of termination or 

amendment. 

1211.85 Personal liability. 

1211.86 Separability. 

1211.87 Amendments. 

1211.88 OMB control number. 

Subpart B—[Reserved] 

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

7401. 

Subpart A—Hardwood Lumber and 

Hardwood Plywood Promotion, 

Research and Information Order 

Definitions 

§ 1211.1 Act. 

Act means the Commodity Promotion, 

Research and Information Act of 1996 (7 

U.S.C. 7411–7425), and any 

amendments thereto. 

§ 1211.2 Blue Ribbon Committee. 

Blue Ribbon Committee means the 14- 

member committee representing 

businesses that manufacture hardwood 

lumber, hardwood lumber products, 

hardwood lumber value-added products 

and hardwood plywood in the United 

States formed to pursue an industry 

promotion, research and information 

program. 

§ 1211.3 Board. 

Board or Hardwood Lumber and 

Hardwood Plywood Promotion, 

Research and Information Board means 

the administrative body established 

pursuant to this part. It may be referred 

to by such other name as the Board 

recommends and the Secretary 

approves. 

§ 1211.4 Brokered sale. 

Brokered sale is a sale in which 

product is purchased from a person and 

resold to a different person without 

taking physical possession of the 

product. 

§ 1211.5 Concentration yard. 

Concentration yard means an 

operation with kilns that purchases 

hardwood lumber from sawmills, or 

wholesalers by means of a brokered sale, 

and may grade, sort, dry and/or surface 

the hardwood lumber. It excludes 

distribution yards that do not have 

kilns. 

§ 1211.6 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 an entity that performs a 

service for, or enters into a contract 

with, the Board for anything of 

economic value. 

§ 1211.7 Covered hardwood. 

Covered hardwood means hardwood 

lumber, hardwood lumber products, 

hardwood lumber value-added lumber 

products, and hardwood plywood to 

which an assessment has been or may 

be levied pursuant to the Order. 

§ 1211.8 Department or USDA. 

Department or USDA means the 

United States Department of Agriculture 

or any officer or employee of the 

Department to whom authority has been 

delegated, or to whom authority may 

hereafter be delegated, to act for the 

Secretary. 

§ 1211.9 Fair market value. 

Fair market value means, with respect 

to covered hardwood, the value of the 

hardwood lumber as determined by a 

source approved by the Secretary. 

§ 1211.10 Fiscal period or fiscal year. 

Fiscal period or year means a calendar 

year from January 1 through December 

31, or such other period as 

recommended by the Board and 

approved by the Secretary. 

§ 1211.11 Green hardwood lumber. 

Green hardwood lumber means 

hardwood lumber that has not been kiln 

dried. 

§ 1211.12 Hardwood lumber. 

Hardwood lumber means timber from 

the wood of a cypress tree or a 


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deciduous, broad-leafed tree (including 

but not limited to aspen, birch, cypress, 

poplar, maple, cherry, walnut and oak) 

that has been sawn into boards or blocks 

by a sawmill in the United States. 

§ 1211.13 Hardwood lumber manufacturer. 

Hardwood lumber manufacturer 

means a person who cuts (raw) green 

hardwood logs into hardwood lumber or 

hardwood lumber products or a person 

who kiln dries green hardwood lumber 

to create hardwood lumber, hardwood 

lumber products or hardwood lumber 

value-added products in the United 

States. 

§ 1211.14 Hardwood lumber products. 

Hardwood lumber products means 

hardwood lumber that has been 

transformed into surfaced boards, ties, 

cants, strips, or pallet stock. For 

purposes of this Order, hardwood 

lumber products do not mean products 

which are transformed from boards or 

blocks of lumber into products such as 

furniture, cabinetry, and pallets. 

§ 1211.15 Hardwood lumber value-added 

product manufacturer. 

Hardwood lumber value-added 

product manufacturer means a person 

who operates a sawmill or a kiln to dry 

hardwood lumber that is then used to 

manufacture hardwood lumber valueadded products. 

§ 1211.16 Hardwood lumber value-added 

products. 

Hardwood lumber value-added 

products means products which remain 

in the general shape of hardwood 

lumber boards, but have undergone 

additional processing beyond surfacing 

or cutting to a particular size. Hardwood 

lumber value-added products include 

products such as solid wood unfinished 

strip flooring, all-sides surfaced boards, 

finger-jointed strips ripped to width, 

and moldings. It does not include multicomponent or further manufactured 

products such as furniture, cabinets, 

cabinet doors, prefinished or engineered 

flooring, pallets, or dimension or glued 

components for cabinets or furniture. 

§ 1211.17 Hardwood plywood. 

Hardwood plywood means a panel 

product, the decorative face of which is 

made from hardwood veneer intended 

for interior use composed of an 

assembly of layers or plies of veneer or 

veneers in combination with lumber 

core, particleboard, medium density 

fiberboard core, hardboard core, or 

special core or special back material 

joined with an adhesive. 

§ 1211.18 Hardwood plywood 

manufacturer. 

Hardwood plywood manufacturer 

means a person who utilizes hardwood 

logs, veneer, or lumber to create 

hardwood plywood. 

§ 1211.19 Information. 

Information means activities and 

programs that are designed to develop 

new markets, marketing strategies, 

increase market efficiency, and 

activities that are designed to enhance 

the image of hardwood lumber, 

hardwood lumber products, hardwood 

lumber value-added products, and 

hardwood plywood and the forests from 

which it comes in the United States. 

These include: 

(a) Consumer information, which 

means any action taken to provide 

information to the general public 

regarding the harvesting, consumption, 

use, and care of covered hardwood; and 

(b) Industry information, which 

means any action taken to provide 

information and programs that will lead 

to the development of new markets, new 

marketing strategies, or increased 

efficiency for covered hardwood, and 

activities to enhance the image of the 

hardwood lumber, hardwood lumber 

products, hardwood lumber valueadded products, and hardwood 

plywood industries. 

§ 1211.20 Kiln dried. 

Kiln dried means hardwood lumber 

that has been seasoned in a kiln by 

means of artificial heat, humidity and 

circulation. 

§ 1211.21 Market or marketing. 

Marketing means the sale or other 

disposition of covered hardwood in any 

channel of commerce. To market means 

to sell or otherwise dispose of covered 

hardwood in any channel of commerce. 

§ 1211.22 Manufacturer. 

Manufacturer means domestic 

manufacturers of covered hardwood 

lumber as defined in this Order. 

§ 1211.23 Manufacturing. 

Manufacturing means the process of 

transforming logs into hardwood 

lumber, or the process of creating 

hardwood lumber products, hardwood 

lumber value-added products, or 

hardwood plywood. 

§ 1211.24 Member. 

Member means a member appointed 

by the Secretary to the Hardwood 

Lumber and Hardwood Plywood 

Promotion, Research and Information 

Board. 

§ 1211.25 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 of 

covered hardwood under the Act. 

§ 1211.26 Part and subpart. 

Part means the Hardwood Lumber 

and Hardwood Plywood 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. 

§ 1211.27 Person. 

Person means any individual, group 

of individuals, partnership, corporation, 

association, joint stock company, 

cooperative, or any other legal entity. 

§ 1211.28 Programs, plans and projects. 

Programs, plans and projects mean 

those research, promotion and 

information programs, plans, or projects 

established pursuant to this Order. 

§ 1211.29 Promotion. 

Promotion means any action taken to 

present a favorable image of hardwood 

lumber, hardwood lumber products, 

hardwood lumber value-added 

products, and hardwood plywood to the 

general public and to any and all 

consumers and those who influence 

consumption of covered hardwood 

lumber with the intent of improving the 

perception, markets and competitive 

position of covered hardwood lumber 

and stimulating sales of covered 

hardwood lumber. 

§ 1211.30 Research. 

Research means any type of test, 

study, or analysis designed to advance 

the knowledge, image, desirability, use, 

marketability, production, product 

development, or quality of covered 

hardwood. The term research includes 

the communication of the results of any 

research conducted under this part. 

§ 1211.31 Sale. 

For purposes of calculating the 

assessment, provided for in § 1211.52, a 

sale means the total dollar purchases of 

hardwood lumber, hardwood lumber 

products, hardwood lumber valueadded products, or hardwood plywood 

that are purchased from a hardwood 

lumber manufacturer or hardwood 

plywood manufacturer. Sales, for 

purposes of the assessment, do not 

include freight or discounts. Brokered 

sales are not included within the 

meaning of sale. 


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§ 1211.32 Secretary. 

Secretary means the Secretary of 

Agriculture of the United States or any 

officer or employee of the Secretary to 

whom the Secretary has delegated the 

authority to act on behalf of the 

Secretary. 

§ 1211.33 State. 

State means any of the several 50 

States of the United States, the District 

of Columbia, the Commonwealth of 

Puerto Rico, and the territories and 

possessions of the United States. 

§ 1211.34 Suspend. 

Suspend means to issue a rule under 

5 U.S.C. 553, to temporarily prevent the 

operation of an order or part thereof 

during a particular period of time 

specified in the rule. 

§ 1211.35 Terminate. 

Terminate means to issue a rule under 

5 U.S.C. 553, to cancel permanently the 

operation of an order or part thereof 

beginning on a date specified in the 

rule. 

§ 1211.36 Transfer. 

Transfer means when a vertically 

integrated manufacturing plant in which 

post-manufacturing operations turn an 

assessed hardwood product (covered 

hardwood) into a non-assessed product 

while remaining under the control of 

the same person. 

§ 1211.37 United States or U.S. 

United States or U.S. means 

collectively the 50 states, the District of 

Columbia, the Commonwealth of Puerto 

Rico, and the territories and possessions 

of the United States. 

Hardwood Lumber and Hardwood 

Plywood Promotion, Research and 

Information Board 

§ 1211.41 Establishment and membership. 

(a) There is hereby established a 

Hardwood Lumber and Hardwood 

Plywood Promotion, Research and 

Information Board composed of 28 

members who are either owners or 

employees of hardwood lumber 

manufacturers or hardwood plywood 

manufacturers who are appointed by the 

Secretary. Of the 28 members, 22 shall 

be hardwood lumber manufacturers, one 

shall be a hardwood lumber valueadded manufacturer who manufactures 

flooring products, and five shall be 

hardwood plywood manufacturers. 

(b) The five members designated for 

hardwood plywood manufacturers shall 

be appointed as follows: 

(1) Three members shall be from the 

States that are west of the Mississippi 

River; and 

(2) Two members shall be from the 

States that are east of the Mississippi 

River. 

(c) The one member designated as a 

hardwood lumber value-added products 

manufacturer of covered hardwood 

flooring products shall be appointed 

from nominees from any State within 

the United States. 

(d) The remaining 22 members 

designated as hardwood lumber 

manufacturers, (exclusive of the 

hardwood flooring manufacturer) shall 

be apportioned as follows: 

(1) Six members from District 1, 

which consists of the States of 

Connecticut, Delaware, Maine, 

Maryland, Massachusetts, New 

Hampshire, New Jersey, New York, 

Pennsylvania, Rhode Island, Vermont, 

and West Virginia and the District of 

Columbia; 

(2) Four members from District 2, 

which consists of the States of Florida, 

Georgia, North Carolina, South Carolina, 

Virginia, the Commonwealth of Puerto 

Rico, and the U.S. territories; 

(3) Five members from District 3, 

which consists of the States of Alabama, 

Arkansas, Louisiana, Mississippi, 

Oklahoma, Tennessee, and Texas; 

(4) Six members from District 4, 

which consists of the States of Illinois, 

Indiana, Iowa, Kansas, Kentucky, 

Michigan, Minnesota, Missouri, 

Nebraska, North Dakota, Ohio, South 

Dakota, and Wisconsin; and 

(5) One member from District 5, 

which consists of the States of Alaska, 

Arizona, California, Colorado, Hawaii, 

Idaho, Montana, Nevada, New Mexico, 

Oregon, Utah, Washington, and 

Wyoming. 

(e) Once every five years, the Board 

will review data, including assessment 

records, government, industry statistics, 

and other reliable data, concerning the 

manufacturing of covered hardwood 

lumber. The Board shall: 

(1) Review the geographical 

distribution of the volume of covered 

hardwood produced and sold within the 

United States by hardwood lumber, 

hardwood lumber products, hardwood 

lumber value-added products, and 

hardwood plywood manufacturers; and 

(2) If warranted, recommend to the 

Secretary the reapportionment of the 

Board membership to reflect changes in 

the geographical distribution of the 

volume of covered hardwood produced 

and sold within the United States by 

hardwood lumber, hardwood lumber 

products, hardwood lumber valueadded products, and hardwood 

plywood manufacturers. Any changes in 

Board composition shall be 

implemented by the Secretary through 

rulemaking. 

§ 1211.42 Nominations and appointments. 

(a) Initial nominations will be 

submitted to the Secretary by the Blue 

Ribbon Committee (BRC). Before 

considering any nominations, the BRC 

shall publicize the nomination process, 

using trade press or other means it 

deems appropriate, and shall outreach 

to all manufacturers with annual sales 

of more than $2 million of covered 

hardwood lumber and with annual sales 

of more than $10 million of hardwood 

plywood per fiscal year in order to 

generate nominees that reflect the 

different operations within the 

hardwood lumber industry. The BRC 

may use regional caucuses, mail or other 

methods to elicit potential nominees. 

The BRC shall submit the nominations 

to the Secretary and recommend two 

nominees for each Board position 

specified. In addition, nominees for the 

initial Board may be submitted directly 

to the Secretary if accompanied by the 

signatures of at least 20 persons who 

pay assessments or will pay assessments 

under the Order. From the nominations 

submitted by the BRC or directly to the 

Secretary, the Secretary shall select the 

members of the Board. 

(b) Subsequent nominations shall be 

conducted as follows: 

(1) The Board shall outreach to all 

segments of the hardwood lumber 

industry. The Board may also solicit 

nominees using existing regional 

organizations. Initial and subsequent 

nominees must have annual sales of 

more than $2 million of covered 

hardwood lumber or have annual sales 

of more than $10 million of hardwood 

plywood per fiscal year; 

(2) Manufacturer nominees may 

provide the Board a short background 

statement outlining their qualifications 

to serve on the Board; 

(3) Manufacturers who manufacture 

covered hardwood lumber in more than 

one district may seek nomination only 

in the district in which they 

manufacture the majority of the volume 

of their covered hardwood lumber. The 

names of hardwood manufacturer 

nominees shall be placed on a ballot by 

district. The ballots along with the 

background statements shall be mailed 

to manufacturers in each respective 

district for a vote. Manufacturers who 

manufacture covered hardwood lumber 

in more than one district may only vote 

in the district in which they 

manufacture the majority of the volume 

of their covered hardwood lumber. The 

Board must submit nominations to the 

Secretary at least six months before the 

new Board term begins. Before 

considering any nominations, the Board 

shall publicize the nomination process, 

using trade press or other means it 


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deems appropriate, and shall outreach 

to all sizes of manufacturers of covered 

hardwood in order to generate nominees 

that reflect the different size of 

operations within the hardwood lumber 

industry. The Board may use district 

caucuses or other methods to elicit 

potential nominees. The votes shall be 

tabulated for each district with the 

nominee receiving the highest number 

of votes at the top of the list in 

descending order by vote. The top two 

candidates for each position shall be 

submitted to the Secretary. 

(4) No two members shall be 

employed by a single corporation, 

company, partnership, or any other legal 

entity; and 

(5) 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. 

§ 1211.43 Term of office. 

(a) With the exception of the initial 

Board, each Board member will serve a 

three-year term or until the Secretary 

selects his or her successor. Each term 

of office shall begin on January 1 and 

end on December 31, and no member 

may serve more than two consecutive 

terms, excluding any term of office less 

than three years. 

(b) For the initial board, the terms of 

Board members shall be staggered for 

two, three, and four years so that the 

terms of approximately one-third of the 

board expire in any given year. 

§ 1211.44 Removal and vacancies. 

(a) In the event that any member of 

the Board ceases to own or work for a 

hardwood lumber or hardwood 

plywood manufacturer, or ceases to do 

business in the district he or she 

represents, such position shall become 

vacant. 

(b) The Board may recommend to the 

Secretary that a member be removed 

from office if the member consistently 

refuses to perform his or her duties or 

engages in dishonest acts or willful 

misconduct. The Secretary shall remove 

the member if he or she finds that the 

Board’s recommendation shows 

adequate cause. Further, without 

recommendation of the Board, a 

member may be removed by the 

Secretary upon showing of adequate 

cause, including the failure by a 

member to submit reports or remit 

assessments required under this part. If 

the Secretary determines that each 

member’s continued service would be 

detrimental to the achievement of the 

purposes of the Act. 

(c) If a position becomes vacant, 

nominations to serve the unexpired 

term will be handled using the 

nominations process set forth in this 

Order. If the unexpired term has less 

than six months remaining, the 

Secretary may leave the position vacant. 

§ 1211.45 Procedure. 

(a) At a Board meeting, a majority of 

the Board members duly appointed by 

the Secretary will constitute a quorum. 

A member attending the meeting by 

telephone or other electronic means 

shall be considered present for purposes 

of quorum. 

(b) All votes at meetings of the Board 

and any committees will be cast in 

person or by electronic voting, 

including by telephone. Voting by proxy 

will not be allowed. 

(c) Each member of the Board will be 

entitled to one vote on any matter put 

to the Board and the motion will carry 

if supported by more than 50 percent of 

the Board members present or 

participating by electronic means. 

(d) The Board must give members and 

the Secretary timely notice of all Board 

and committee meetings. 

(e) In lieu of voting at a properly 

convened meeting, and when, in the 

opinion of the Board’s chairperson, such 

action is considered necessary, the 

Board may take action by mail, 

telephone, electronic mail, facsimile, or 

any other means of communication. 

Any action taken under this procedure 

is valid only if: 

(1) All members and the Secretary are 

notified and the members are provided 

the opportunity to vote; 

(2) A majority of the members vote in 

favor of the action; and 

(3) All votes are promptly confirmed 

in writing and recorded in the Board 

minutes. 

§ 1211.46 Reimbursement and attendance. 

Board members will serve without 

compensation. Board members will be 

reimbursed for reasonable travel 

expenses, as approved by the Board, 

which they incur when performing 

Board business. 

§ 1211.47 Powers and duties of the Board. 

The Board shall have the following 

powers and duties: 

(a) To administer this Order in 

accordance with its terms and 

conditions and to collect assessments; 

(b) To develop and recommend to the 

Secretary for approval such bylaws, 

rules, and regulations as may be 

necessary for the functioning of the 

Board and for administering the Order, 

including activities authorized to be 

carried out under the Order; 

(c) To meet, organize, and select from 

among its members a chairperson and 

such other officers as the Board deems 

necessary; 

(d) To create any committees, 

including an executive committee, or 

subcommittees, as the Board deems 

necessary from its membership. 

Subcommittees may include individuals 

other than Board members; 

(e) To employ or contract 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 such persons or to contract 

such services from an organization and 

to enter into contracts or agreements in 

order to carry out authorized functions; 

(f) To provide appropriate notice of 

meetings to the industry and USDA and 

keep minutes of such meetings; 

(g) To develop and administer 

programs, plans, and projects and enter 

into contracts or agreements, which 

must be approved by the Secretary 

before becoming effective, for 

promotion, research and information, 

including consumer and industry 

information, research and advertising 

designed to strengthen hardwood 

lumber industry’s position in the 

marketplace and to maintain, develop, 

and expand markets for covered 

hardwood lumber. The payment of costs 

for such activities shall be with funds 

collected pursuant to the Order, 

including funds collected pursuant to 

§ 1211.50(f). Each contract or agreement 

shall provide that: 

(1) The contractor or agreeing party 

shall develop and submit to the Board 

a program, plan, or project together with 

a budget that specifies the cost to be 

incurred to carry out the activity; 

(2) The contractor or agreeing party 

shall keep accurate records of all of its 

transactions and make periodic reports 

to the Board of activities conducted, 

submit accounting for funds received 

and expended, and make such other 

reports as the Secretary or Board may 

require; 

(3) The Secretary may audit the 

records of the contracting or agreeing 

party periodically; and 

(4) Any subcontractor who enters into 

a contract with a Board contractor and 

who receives or otherwise uses funds 

allocated by the Board shall be subject 

to the same provisions as the contractor. 

(h) To prepare and submit to the 

Secretary for approval 60 calendar days 

in advance of the beginning of a fiscal 

period, rates of assessment and a budget 

of the anticipated expenses to be 

incurred in the administration of the 

Order, including the probable cost of 

each promotion, research and 


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information activity proposed to be 

developed or carried out by the Board; 

(i) To maintain such records and 

books 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; 

(j) To act as an intermediary between 

the Secretary and any manufacturer; 

(k) To cause its books to be audited 

by a certified public accountant 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 to the 

Secretary; 

(l) To recommend changes to the 

assessment rate as provided in this part; 

(m) To borrow funds necessary for 

startup expenses of the Order; 

(n) To receive, investigate, and report 

to the Secretary complaints of violations 

of the Order, including investigating 

complaints of violation, and ensuring 

consistent, uniform and appropriate 

application of this part; 

(o) To consider and recommend to the 

Secretary new products and the 

application of the assessment to such 

products. 

(p) To recommend to the Secretary 

such amendments to the Order as the 

Board considers appropriate; 

(q) To periodically prepare and make 

public and to make available to 

manufacturers reports of its activities 

and, at least once each fiscal period, to 

make public an accounting of funds 

received and expended; 

(r) To invest assessments funds 

collected but not yet disbursed pursuant 

to this part. Investments shall be in any 

interest-bearing account or certificate of 

deposit of a bank that is a member of the 

Federal Reserve System, obligations 

fully guaranteed as to principal and 

interest by the United States or any 

agency of the United States, or general 

obligations of any State or any political 

subdivision of a State. 

(s) To work to achieve an effective, 

continuous, and coordinated program of 

promotion, research, consumer 

information, evaluation, and industry 

information designed to strengthen the 

hardwood lumber, hardwood lumber 

products, hardwood lumber valueadded products, and hardwood 

plywood industry’s position in the 

market; maintain and expand existing 

markets and uses for covered hardwood; 

and to carry out programs, plans, and 

projects designed to provide maximum 

benefits to the hardwood lumber, 

hardwood lumber products, hardwood 

lumber value-added products and 

hardwood plywood industries. 

§ 1211.48 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 is 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, other than 

recommending to the Secretary 

amendments to this part; and 

(c) No program, plan, or project 

including advertising shall be false or 

misleading, or disparaging to another 

agricultural commodity. 

Expenses and Assessments 

§ 1211.50 Budget and expenses. 

(a) At least 60 days before the 

beginning of each fiscal year, and as 

may be necessary thereafter, the Board 

shall prepare and submit to the 

Secretary a budget for the fiscal year 

covering its anticipated expenses and 

disbursements in administering the 

Order. Each such budget, which must be 

approved by the Secretary before it is 

implemented, shall include: 

(1) A statement of objectives and 

strategy for each program, plan, or 

project developed and approved by the 

Boards; 

(2) A summary of anticipated revenue, 

with comparative data or at least one 

preceding 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 year (except for 

the initial budget). 

(b) Each budget shall provide 

adequate funds to defray its proposed 

expenditures and to provide for a 

reserve. 

(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 which do not 

cause an increase in the Board’s 

approved budget and which are 

consistent with governing bylaws need 

not have prior approval by the 

Secretary. 

(d) The Board may incur such 

expenses, including provision for a 

reserve, as are reasonable and likely to 

be incurred for maintenance and 

functioning of the Board, and to enable 

it to exercise its powers and perform its 

duties in accordance with the 

provisions of the Order. Such expenses 

shall be paid from funds received by the 

Board. 

(e) With approval of the Secretary, the 

Board may borrow money for the 

payment of administrative expenses, 

subject to the same fiscal, budget, and 

audit controls as other funds of the 

Board. Any funds borrowed by the 

Board shall be expended only for 

startup costs and capital outlays and are 

limited to the first year of operation by 

the Board. 

(f) The Board may accept voluntary 

contributions, and is encouraged to seek 

other appropriate funding sources to 

carry out activities authorized by the 

Order. Such contributions shall be free 

from any encumbrances by the donor 

and the Board shall retain complete 

control of their use. The Board may 

receive funds from outside sources (i.e., 

Federal or State grants, Foreign 

Agricultural Service funds), with 

approval of the Secretary, for specific 

authorized projects. 

(g) The Board shall reimburse the 

Secretary for all expenses the Secretary 

incurs in the implementation, 

administration, and supervision of this 

part, including all costs relating to the 

conducting of a referendum in 

connection with this part. 

(h) For fiscal years beginning three 

years after the establishment of the 

Board, the Board may not expend for 

administration, maintenance, and 

functioning of the Board in any fiscal 

year an amount that exceeds 15 percent 

of the assessments and other income 

received by the Board for that fiscal 

year. Reimbursements to the Secretary 

required under this section are excluded 

from this limitation on spending. 

(i) The Board may establish an 

operating monetary reserve and may 

carry over to subsequent fiscal periods 

excess funds in any reserve so 

established: Provided, That, the funds in 

the reserve do not exceed one fiscal 

period’s budget of expenses. Subject to 

approval by the Secretary, such reserve 

funds may be used to defray any 

expenses authorized under this subpart. 

(j) Pending disbursement of 

assessments and all other revenue under 

a budget approved by the Secretary, the 

Board may invest assessments and all 

other revenues collected under this part 

in: 

(1) Obligations of the United States or 

any agency of the United States; 

(2) General obligations of any State or 

any political subdivision of a State; 

(3) Interest bearing accounts or 

certificates of deposit of financial 


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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. 

§ 1211.51 Financial statements. 

(a) Upon the Secretary’s request, the 

Board shall prepare and submit 

financial statements to the Secretary on 

a monthly or quarterly basis, or at any 

other time as requested by the Secretary. 

Each such financial statement shall 

include, but not be limited to, a balance 

sheet, income statement, and expense 

budget. The expense budget shall show 

expenditures during the time period 

covered by the report, year-to-date 

expenditures, and the unexpended 

budget. 

(b) Each financial statement shall be 

submitted to the Secretary within 30 

days after the end of the time period to 

which it applies. 

(c) The Board shall submit to the 

Secretary an annual financial statement 

within 90 days after the end of the fiscal 

year to which it applies. 

Assessments 

§ 1211.52 Assessments. 

(a) The Board’s programs and 

expenses shall be paid by assessments 

on manufacturers of covered hardwood, 

other income of the Board, and other 

funds available to the Board. This 

section authorizes hardwood lumber 

manufacturers to be assessed on 

hardwood plywood and hardwood 

lumber, both in its green (raw) form and 

as it is kiln dried to create hardwood 

lumber products and hardwood lumber 

value-added products. 

(b) Subject to the exemption specified 

in § 1211.53, each manufacturer shall 

pay the following assessment: 

Description Assessment rate Allowable deductions 

Hardwood lumber ................ —hardwood logs turned into lumber (raw green lumber).$1/$1,000 in sales ............. N/A. 

Hardwood lumber product ... —stays a board or block (a little more processed than 

green lumber).

$1/$1,000 in sales ............. —deduct the hardwood 

lumber purchase. 

Hardwood lumber valueadded products.—flooring and molding (stays the shape of a board but 

has undergone additional processing—does NOT include multi-component or further manufactured 

products such as furniture, cabinets, cabinet doors, 

prefinished or engineered flooring, pallets, or dimension or glued components for cabinets or furniture.

$0.75/$1,000 in sales ........ —deduct the hardwood 

lumber purchase. 

Hardwood plywood .............. —plywood ...................................................................... $3/$1,000 in sales ............. N/A. 

(1) Hardwood lumber manufacturers 

that cut (raw) green hardwood logs into 

hardwood lumber or kiln dry hardwood 

lumber to create hardwood lumber that 

can be further processed into hardwood 

lumber products shall pay at the rate of 

$1.00 per $1,000.00 in sales of (raw) 

green hardwood lumber. 

(2) Hardwood lumber manufacturers 

that manufacture hardwood lumber 

products shall pay at a rate of $1.00 per 

$1,000 in sales of hardwood lumber 

minus the dollar value of (raw) green 

lumber purchases. 

(3) Hardwood lumber value-added 

product manufacturers shall pay a rate 

of $0.75 per $1,000.00 in sales of 

hardwood lumber value-added 

products: Provided, That, hardwood 

lumber value-added product 

manufacturers would deduct covered 

hardwood lumber purchases from their 

sales figures to take into account the 

assessment that was already paid on the 

(raw) green covered hardwood lumber. 

(4) Hardwood plywood manufacturers 

shall pay at the rate of $3.00 per $1,000 

in sales of hardwood plywood lumber. 

(5) Brokered sales of hardwood 

lumber or hardwood lumber products 

are excluded from the calculation of 

assessments. For an integrated pallet 

manufacturer that manufactures 

hardwood lumber then transfers within 

the same company to manufacture 

constructed pallets or crane mats, the 

hardwood lumber manufacturer shall 

pay at this rate on fair market value of 

the hardwood pallet lumber, pallet 

cants, pallet stock or crane mat material 

produced and transferred within the 

same company. The assessment rate 

would be based on the amount of green, 

kiln dried and pallet sales that they cut 

and transferred or sold to themselves. 

The dollar sales of green or kiln dried 

lumber is subtracted from the above 

value. Also subtracted from that value 

are annual green hardwood purchases 

times $.001. This formula is necessary 

to take into account covered hardwood 

lumber that is cut and transferred 

within the same company and covered 

hardwood lumber purchases from other 

manufacturers used in the 

manufacturing of pallets. Brokered sales 

of covered hardwood are excluded from 

the calculation of assessments. 

(c) Assessments shall be remitted to 

the Board on a quarterly basis, 

accompanied by a form that the Board 

shall develop, no later than thirtieth 

calendar day of the month following the 

end of the quarter in which the covered 

hardwood lumber was marketed. Any 

information collected pursuant to the 

collection of assessments, shall be kept 

confidential as specified in § 1211.72 so 

that no Board member or person subject 

to assessment shall have access to such 

information. 

(d) The assessment rate specified in 

this section may be changed only upon 

a recommendation by the Board to the 

Secretary for implementation through 

rulemaking. 

(e) If the assessment is not paid 

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 recommended by the Board to the 

Secretary through informal rulemaking. 

Persons failing to remit total 

assessments due in a timely manner 

may also be subject to actions under 

federal debt collection procedures. 

(f) The Board may accept advance 

payment of assessments that will be 

credited toward any amount for which 

that person may become liable. The 

Board may not pay interest on any 

advance payment. 

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

date the first assessments are to be 

collected, the Secretary shall receive 

assessments and invest them on behalf 

of the Board, and shall pay such 

assessments and any interest earned to 

the Board when it is established. 

(h) The Board may authorize other 

organizations to collect assessments on 

its behalf with the approval of the 

Secretary. 


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§ 1211.53 Exemption from assessment. 

(a) Small hardwood lumber 

manufacturers and small hardwood 

plywood manufacturers shall be exempt 

from paying assessments as follows: 

(1) Hardwood lumber manufacturers, 

hardwood lumber product 

manufacturers, and hardwood lumber 

value-added products manufacturers 

with sales of any assessed product 

combined to be less than $2 million are 

exempt from paying assessments. 

(2) Hardwood plywood manufacturers 

with annual sales of less than $10 

million are exempt from paying 

assessments. 

(b) Hardwood lumber manufacturers 

and hardwood plywood manufacturers 

who meet the exemption threshold shall 

apply for an exemption, on a form 

provided by the Board. This is an 

annual exemption and manufacturers 

must reapply each year. Upon receipt of 

an application for exemption, the Board 

shall determine whether an exemption 

may be granted. The Board will then 

issue, if deemed appropriate, a 

certificate of exemption to each 

manufacturer who is eligible to receive 

one. Each person shall retain a copy of 

the certificate of exemption. The Board 

may develop additional procedures to 

administer this exemption as 

appropriate. Such procedures shall be 

implemented through rulemaking by the 

Secretary. 

(c) Hardwood lumber manufacturers 

who did not apply to the Board for an 

exemption and have annual sales of less 

than $2 million or hardwood plywood 

manufacturers that have annual sales of 

less than $10 million during the fiscal 

year shall receive a refund from the 

Board for the applicable assessments 

within 30 calendar days after the end of 

the fiscal year. Board staff shall 

determine the assessments paid and 

refund the amount due to the 

manufacturer accordingly. 

(d) Hardwood lumber manufacturers 

who received an exemption certificate 

from the Board but have annual sales of 

more than $2 million or hardwood 

plywood manufacturers that have 

annual sales of more than $10 million 

during the fiscal year shall pay the 

Board the applicable assessments owed 

on the annual sales of the covered 

hardwood within 30 calendar days after 

the end of the fiscal year and submit any 

necessary reports to the Board pursuant 

to § 1211.70. 

(e) Organic. 

(1) Organic Act means section 2103 of 

the Organic Foods Production Act of 

1990 (7 U.S.C. 6502). 

(2) A hardwood lumber or hardwood 

plywood manufacturer who operates 

under an approved National Organic 

Program (NOP) (7 CFR part 205) system 

plan, only manufactures and has annual 

sales of covered hardwood lumber that 

is eligible to be labeled as 100 percent 

organic under the NOP and is not a split 

operation shall be exempt from payment 

of assessments. To obtain an organic 

exemption, an eligible 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. 

(f) The Board may develop additional 

procedures to administer this exemption 

as appropriate. Such procedures shall be 

implemented through rulemaking by the 

Secretary. 

Promotion, Research and Information 

§ 1211.60 Programs, plans, and projects. 

(a) The Board shall develop and 

submit to the Secretary for approval 

programs, plans, and projects 

authorized under this part. Such 

programs, plans, or projects shall 

provide for the establishment, issuance, 

implementation, and administration of 

appropriate programs for promotion, 

research and information with respect to 

covered hardwood. 

(b) No program, plan, or project shall 

be implemented prior to its approval by 

the Secretary. Once the Secretary 

approves a program, plan, or project, the 

Board shall take appropriate steps to 

implement it. 

(c) The Board shall periodically 

review or evaluate each program, plan, 

or project implemented under this 

subpart to ensure that it contributes to 

an effective program of promotion, 

research or information. If the Board 

finds that any such 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. 

§ 1211.61 Independent evaluation. 

Within four years of the first Board 

meeting and at least once every five 

years thereafter, the Board shall 

authorize and fund an independent 

evaluation of the effectiveness of the 

Order and 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 section. 

§ 1211.62 Patents, copyrights, trademarks, 

information, publications, and product 

formulations. 

Patents, copyrights, trademarks, 

information, publications, and product 

formulations developed through the use 

of funds received by the Board under 

this part shall be the property of the 

U.S. Government, as represented by the 

Board, and shall, along with any rents, 

royalties, residual payments, or other 

income from the rental, sales, leasing, 

franchising, or other uses of such 

patents, copyrights, trademarks, 

information, publications, or product 

formulations, inure to the benefit of the 

Board; shall be considered income 

subject to the same fiscal, budget, and 

audit controls as other funds of the 

Board; and may be licensed subject to 

approval by the Secretary. Upon 

termination of this part, § 1211.83 shall 

apply to determine disposition of all 

such property. 

Reports, Books and Records 

§ 1211.70 Reports. 

(a) Each hardwood lumber 

manufacturer and hardwood lumber 

plywood manufacturer will be required 

to provide periodically to the Board staff 

such information as the Board, with the 

approval of the Secretary, may require. 

Such information may include, but not 

be limited to: 

(1) The name, address and telephone 

number of the manufacturer; 

(2) The annual sales of covered 

hardwood lumber; and 

(3) The annual sales of covered 

hardwood lumber for which 

assessments were paid. 

(b) Such information shall accompany 

the collected payment of assessments on 

a quarterly basis specified in § 1211.52. 

§ 1211.71 Books and records. 

Each manufacturer, including those 

exempt under § 1211.53, shall maintain 

any books and records necessary to 

carry out the provisions of this subpart 

and regulations issued thereunder, 

including such records as are necessary 

to verify any required reports. Such 

books and records must be made 

available during normal business hours 


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for inspection by the Board’s or 

Secretary’s employees or agents. A 

manufacturer must maintain the books 

and records for two years beyond the 

fiscal period to which they apply. 

§ 1211.72 Confidentiality of information. 

All information obtained from books, 

records, or reports under the Act, this 

subpart and the regulations issued 

thereunder shall be kept confidential by 

all persons, including all employees and 

former employees of the Board, all 

officers and employees and former 

officers and employees of contracting 

and subcontracting agencies or agreeing 

parties having access to such 

information. Such information shall not 

be available to Board members or other 

manufacturers. 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 

§ 1211.80 Right of the Secretary. 

All fiscal matters, programs, plans, or 

projects, rules or regulations, reports, or 

other substantive actions proposed and 

prepared by the Board shall be 

submitted to the Secretary for approval. 

§ 1211.81 Referenda. 

(a) Initial referendum. The Order shall 

not become effective unless the Order is 

approved by a majority of the volume of 

covered hardwood lumber, represented 

in the referendums by those who, 

during a representative period 

determined by the Secretary, are 

engaged in the manufacture of covered 

hardwood lumber. 

(b) Subsequent referenda. Five years 

after the initial meeting of the Board, the 

Secretary shall hold a referendum to 

determine whether hardwood lumber 

and hardwood plywood manufacturers 

favor the continuation of the Order. 

Thereafter, the Secretary shall conduct a 

referendum at least every seven years. 

The Order shall continue if it is favored 

by a majority of the volume of covered 

hardwood lumber, represented in the 

referendum by those who, during a 

representative period determined by the 

Secretary, are engaged in the 

manufacture of covered hardwood 

lumber. The Secretary will also conduct 

a referendum if requested by the Board 

or if 10 percent or more of all nonexempt hardwood lumber 

manufacturers, hardwood plywood 

manufacturers paying an assessment. In 

addition, the Secretary may hold a 

referendum at any time. 

§ 1211.82 Suspension and termination. 

(a) The Secretary shall suspend or 

terminate this part or subpart or a 

provision thereof, if the Secretary finds 

that this part or subpart or a provision 

thereof obstructs or does not tend to 

effectuate the purposes of the Act, or if 

the Secretary determines that this 

subpart or a provision thereof is not 

favored by persons voting in a 

referendum conducted pursuant to the 

Act. 

(b) The Secretary shall suspend or 

terminate this subpart at the end of the 

fiscal period whenever the Secretary 

determines that its suspension or 

termination is favored by a majority of 

the volume represented in the 

referendum by those who, during a 

representative period determined by the 

Secretary, have been engaged in the 

manufacturing of covered hardwood 

lumber. 

(c) If, as a result of a referendum the 

Secretary determines that this subpart is 

not approved, the Secretary shall: 

(1) Not later than one hundred and 

eighty (180) calendar days after making 

the determination, suspend or 

terminate, as the case may be, the 

collection of assessments under this 

subpart. 

(2) As soon as practical, suspend or 

terminate, as the case may be, activities 

under this subpart in an orderly 

manner. 

§ 1211.83 Proceedings after termination. 

(a) Upon the termination of this 

subpart, the Board shall recommend to 

the Secretary not more than five of its 

members to serve as trustees for the 

purpose of liquidating the affairs of the 

Board. 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 claim existing 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 the 

trustees, to such person or persons as 

the Secretary may direct; and 

(4) Upon request of the Secretary, 

execute such assignments or other 

instruments necessary and appropriate 

to vest in such persons’ title and right 

to all 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 hardwood 

lumber and hardwood plywood 

industry organizations in the interest of 

continuing hardwood lumber and 

hardwood plywood promotion, 

Research and information programs. 

§ 1211.84 Effect of termination or 

amendment. 

Unless otherwise expressly provided 

by the Secretary, the termination or 

amendment of this part or any subpart 

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 

part; or 

(b) Release or extinguish any violation 

of this part; 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. 

§ 1211.85 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. 


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§ 1211.86 Separability. 

If any provision of this subpart is 

declared invalid or the applicability 

thereof 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. 

§ 1211.87 Amendments. 

Amendments to this subpart may be 

proposed from time to time by the Board 

or by any interested person affected by 

the provisions of the Act, including the 

Secretary. 

§ 1211.88 OMB control number. 

The control numbers assigned to the 

information collection requirements of 

this part 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: November 6, 2013. 

Rex A. Barnes, 

Associate Administrator. 

[FR Doc. 2013–27108 Filed 11–12–13; 8:45 am] 

BILLING CODE 3410–02–P 


emcdonald on DSK67QTVN1PROD with PROPOSALS2