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Proposed Rule

Hardwood Lumber and Hardwood Plywood Promotion, Research and Information Order; Referendum Procedures

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AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Proposed rule.

SUMMARY:

This proposed rule invites comments on procedures for conducting a referendum to determine whether issuance of a proposed Hardwood Lumber and Hardwood Plywood Promotion, Research and Information Order (Order) is favored by domestic manufacturers of hardwood lumber and hardwood plywood. Hardwood lumber and hardwood plywood are used in products like flooring, furniture, moldings, doors, and kitchen cabinets. The procedures would also be used for any subsequent referendum under the Order. The proposed Order is being published separately in this issue of the Federal Register. This proposed rule also announces the Agricultural Marketing Service's (AMS) intent to request approval by the Office of Management and Budget (OMB) of new 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 rule. 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 document 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.

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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.

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SUPPLEMENTARY INFORMATION:

This proposed rule is issued pursuant to the Commodity Promotion, Research and Information Act of 1996 (1996 Act) (7 U.S.C. 7411-7425).

Executive Order 12866 and Executive Order 13563

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This action has been designated as “non-significant regulatory action” under section 3(f) of Executive Order 12866. Accordingly, OMB has waived the review process.

Executive Order 13175

This action has been reviewed in accordance with the requirements of Executive Order 13175, Consultation and Coordination with Indian Tribal Governments. The review reveals that this regulation would not have substantial and direct effects on Tribal governments and would not have significant Tribal implications.

Executive Order 12988

This proposed 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 Start Printed Page 67980affect or preempt any other Federal or state law authorizing promotion or research relating to an agricultural commodity.

Under section 519 of the 1996 Act, a person subject to an order may file a written petition with the U.S. Department of Agriculture (USDA) stating that an order, any provision of an order, or any obligation imposed in connection with an order, is not established in accordance with the law, and request a modification of an order or an exemption from an order. Any petition filed challenging an order, any provision of an order, or any obligation imposed in connection with an order, shall be filed within two years after the effective date of an order, provision, or obligation subject to challenge in the petition. The petitioner will have the opportunity for a hearing on the petition. Thereafter, USDA will issue a ruling on the petition. The 1996 Act provides that the district court of the United States for any district in which the petitioner resides or conducts business shall have the jurisdiction to review a final ruling on the petition, if the petitioner files a complaint for that purpose not later than 20 days after the date of the entry of USDA's final ruling.

This proposed rule invites comments on procedures for conducting a referendum to determine whether manufacturers of hardwood lumber and hardwood plywood favor issuance of a proposed hardwood lumber and plywood Order. Hardwood lumber and hardwood plywood are used in products like flooring, furniture, moldings, doors, and kitchen cabinets. USDA would conduct the referendum. The program would be implemented if it is approved by a majority of the volume of covered hardwood lumber and hardwood plywood represented in the referendum by those who, during a representative period determined by the Secretary, were engaged in the manufacturing of covered hardwood lumber. Covered hardwood is defined in this proposed rule and includes hardwood lumber, hardwood lumber products, hardwood value-added lumber products, and hardwood plywood. The procedures would also be used for any subsequent referendum under the Order. The proposed Order is being published separately in this issue of the Federal Register. This proposal also announces AMS's intent to request approval by the OMB of new information collection requirements to implement the program.

The 1996 Act authorizes USDA to establish agricultural commodity research and promotion orders which may include a combination of promotion, research, industry information, and consumer information activities funded by mandatory assessments. These programs are designed to maintain and expand markets and uses for agricultural commodities. As defined under Section 513(1)(D) of the 1996 Act, agricultural commodities include the products of forestry, which includes hardwood lumber.

The 1996 Act provides for alternatives within the terms of a variety of provisions. Paragraph (e) of Section 518 of the 1996 Act provides three options for determining industry approval of a new research and promotion program: (1) By a majority of those persons voting; (2) by persons voting for approval who represent a majority of the volume of the agricultural commodity; or (3) by a majority of those persons voting for approval who also represent a majority of the volume of the agricultural commodity. 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 an order.

USDA received a proposal for a national research and promotion program for hardwood lumber from the Blue Ribbon Committee (BRC). The BRC is a committee of 14 industry leaders that manufacture covered hardwood lumber. 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 and hardwood plywood manufacturers and would be administered by a board of industry members selected by the Secretary of Agriculture (Secretary). The initial assessment rate would be: (1) $1.00 per $1,000 in sales of hardwood lumber and hardwood lumber products; (2) $.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, maintain and expand markets for hardwood lumber and plywood.

The BRC proposed that a referendum be held among eligible manufacturers to determine whether they favor implementation of the program prior to it going into effect. The BRC recommended that the program would be implemented if it is approved 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, were engaged in the manufacturing of covered hardwood lumber. Hardwood lumber manufacturers with annual sales of $2 million or more and hardwood plywood manufacturers with annual sales of $10 million or more annually would be eligible to vote in the referendum.

Accordingly, this rule would add subpart B to part 1211 that would establish procedures for conducting the referendum. The procedures would cover definitions, voting instructions, use of subagents, ballots, the referendum report, and confidentiality of information. The procedures would be applicable for the initial referendum and future referenda.

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.

Regarding the economic impact of the proposed Order on affected entities, hardwood lumber domestic manufacturers 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 Start Printed Page 67981lumber products; (2) $.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. 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 notice and comment rulemaking.

The Order would provide for an exemption for hardwood lumber, products, 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.

Regarding the impact on the industry as a whole, the proposed program is expected to grow markets for hardwood lumber and plywood by increasing the market share 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.[1]

This proposed rule invites comments on procedures for conducting a referendum to determine whether hardwood lumber and hardwood plywood manufacturers favor issuance of a proposed hardwood lumber and hardwood plywood Order. Hardwood lumber and hardwood plywood are used in products like flooring, furniture, moldings, doors and kitchen cabinets. USDA would conduct the referendum. The program would be implemented if it is approved 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, were engaged in the manufacturing of covered hardwood lumber. The procedures would also be used for any subsequent referendum under the Order. The procedures are authorized under paragraph (e) of Section 518 the 1996 Act.

Regarding the economic impact of this rule on affected entities, eligible hardwood lumber and hardwood plywood manufacturers would have the opportunity to participate in the referendum. The Order would provide for an exemption for hardwood lumber, products, 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. Exempt manufacturers would not be eligible to participate in the referendum. It is estimated that 1,340 hardwood lumber manufacturers and 10 hardwood plywood manufacturers would pay assessments under the Order and thus be eligible to vote in the referendum. Voting in the referendum is optional. If hardwood lumber and hardwood plywood manufacturers chose to vote, the burden of voting would be offset by the benefits of having the opportunity to vote on whether or not they want to be covered by the program.

Regarding alternatives, USDA considered requiring eligible voters to vote in person at various USDA offices across the country. USDA also considered electronic voting, but the use of computers is not universal. Conducting the referendum from one central location by mail ballot would be more cost effective and reliable. USDA would provide easy access to information for potential voters through a toll free telephone line.

This action would impose an additional reporting burden on eligible hardwood lumber and hardwood plywood manufacturers. Eligible manufacturers would have the opportunity to complete and submit a ballot to USDA indicating whether or not they favor implementation of the proposed Order. The specific burden for the ballot is 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, USDA would keep these individuals informed throughout the program implementation and referendum process to ensure that they are aware of and are able to participate in the program implementation process. USDA would also publicize information regarding the referendum process so that trade associations and related industry media can be kept informed.

USDA has performed this initial RFA analysis regarding the impact of this proposed rule on small businesses.

Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the referendum ballot, which represents the information collection and recordkeeping requirements that may be imposed by this rule, has been submitted to OMB for approval.

Title: Hardwood Lumber and Hardwood Plywood Promotion, Research and Information Program (Referendum Ballot).

OMB Number: 0581-NEW.

Expiration Date of Approval: 3 years from OMB date of approval.

Type of Request: New information collection for research and promotion programs.

Abstract: The information collection requirements in the request are essential to carry out the intent of the 1996 Act. The information collection concerns a proposal received by USDA for a national research and promotion program for hardwood lumber and hardwood plywood. The program would be financed by an assessment on hardwood lumber and hardwood plywood manufacturers. 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. A referendum would be held among eligible manufacturers to determine whether they favor implementation of the program prior to it going into effect. The purpose of the program would be to strengthen the position of hardwood lumber and hardwood plywood in the marketplace, Start Printed Page 67982maintain and expand markets for hardwood lumber and plywood.

The information collection requirements in this proposed rule concern the referendum that would be held to determine whether the program is favored by the industry. Hardwood lumber manufacturers with annual sales of $2 million or more and hardwood plywood manufacturers with annual sales of $10 million or more annually would be eligible to vote in the referendum. The ballot would be completed by eligible manufacturers who want to indicate whether or not they support implementation of the program.

Referendum Ballot

Estimate of Burden: Public recordkeeping burden for this collection of information is estimated to average 0.25 hour per application.

Respondents: Hardwood lumber and hardwood plywood manufacturers.

Estimated Number of Respondents: 1350 (1340 hardwood lumber manufacturers and 10 hardwood plywood manufacturers).

Estimated Number of Responses per Respondent: 1 every 5 years (0.2).

Estimated Total Annual Burden on Respondents: 67.50 hours.

The ballot would be added to the other information collections approved under OMB No. 0581-NEW.

An estimated 1350 respondents would provide information to the Board (1340 hardwood lumber manufacturers and 10 hardwood plywood manufacturers). The estimated cost of providing the information to the Board by respondents would be $2,227.50. This total has been estimated by multiplying 67.50 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.

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 hardwood plywood lumber; (d) the accuracy of USDA's estimate of the number of hardwood lumber and hardwood plywood manufacturers 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 document 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 proposed rule.

A 60-day comment period is provided to allow interested persons to comment on this proposed information collection. All written comments received will be summarized and included in the request for OMB approval. All comments will also become a matter of public record.

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List of Subjects in 7 CFR Part 1211

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For the reasons set forth in the preamble, it is proposed that Title 7, Chapter XI of the Code of Federal Regulations, as proposed to be amended elsewhere in this issue of the Federal Register, be further amended as follows:

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PART 1211—HARDWOOD LUMBER AND HARDWOOD PLYWOOD PROMOTION, RESEARCH AND INFORMATION ORDER

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1. The authority citation for part 1211 continues to read as follows:

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Authority: 7 U.S.C. 7411-7425; 7 U.S.C. 7401.

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2. Subpart B of

End Amendment Part
Subpart B—Referendum Procedures
1211.100
General.
1211.101
Definitions.
1211.102
Voting.
1211.103
Instructions.
1211.104
Subagents.
1211.105
Ballots.
1211.106
Referendum report.
1211.107
Confidential information.
1211.108
OMB Control number.

Subpart B—Referendum Procedures

General.

Referenda to determine whether eligible hardwood lumber and hardwood plywood manufacturers favor the issuance, continuance, amendment, suspension, or termination of the Hardwood Lumber and Hardwood Plywood Promotion, Research and Information Order shall be conducted in accordance with this subpart.

Definitions.

For the purposes of this subpart:

(a) Administrator means the Administrator of the Agricultural Marketing Service, with power to delegate, or any officer or employee of the U.S. Department of Agriculture to whom authority has been delegated or may hereafter be delegated to act in the Administrator's stead.

(b) Department or USDA means the U.S. Department of Agriculture or any officer or employee of the Department to whom authority has heretofore been delegated, or to whom authority may hereafter be delegated, to act in the Secretary's stead.

(c) Covered hardwood means 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.

(d) Eligible hardwood lumber and hardwood plywood manufacturer means any current hardwood lumber manufacturer with annual sales of $2 million or more and current hardwood plywood manufacturers with annual sales of $10 million or more in the United States during the representative period.

(e) Hardwood lumber means timber from the wood of a cypress tree or a 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.

(f) 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 Start Printed Page 67983fiberboard core, hardboard core, or special core or special back material joined with an adhesive.

(g) Manufacturing means the process of transforming logs into hardwood lumber, or the process of creating hardwood lumber products, value-added hardwood lumber products, or hardwood plywood.

(h) Order means the Hardwood Lumber Promotion, Research and Information Order.

(i) Person means any individual, group of individuals, partnership, corporation, association, cooperative, or any other legal entity. For the purpose of this definition, the term “partnership” includes, but is not limited to:

(1) A spouse who has title to, or leasehold interest in, a hardwood lumber manufacturing entity as tenants in common, joint tenants, tenants by the entirety, or, under community property laws, as community property; and

(2) So called “joint ventures” wherein one or more parties to an agreement, informal or otherwise, contributed land, facilities, capital, labor, management, equipment, or other services, or any variation of such contributions by two or more parties, so that it results in the manufacturing of covered hardwood lumber and the authority to transfer title to the hardwood lumber so manufactured.

(j) Referendum agent or agent means the individual or individuals designated by the Secretary to conduct the referendum.

(k) Representative period means the period designated by the Department.

(l) United States means collectively the 50 states, the District of Columbia, the Commonwealth of Puerto Rico, and the territories and possessions of the United States.

Voting.

(a) Each eligible manufacturer of covered hardwood lumber shall be entitled to cast only one ballot in the referendum. However, each manufacturer in a landlord/tenant relationship or a divided ownership arrangement involving totally independent entities cooperating only to manufacture covered hardwood lumber, in which more than one of the parties is a manufacturer, shall be entitled to cast one ballot in the referendum covering only such manufacturer's share of ownership.

(b) Proxy voting is not authorized, but an officer or employee of an eligible corporate manufacturer, or an administrator, executor or trustee of an eligible entity may cast a ballot on behalf of such entity. Any individual so voting in a referendum shall certify that such individual is an officer or employee of the eligible entity, or an administrator, executive, or trustee of an eligible entity and that such individual has the authority to take such action. Upon request of the referendum agent, the individual shall submit adequate evidence of such authority.

(c) A single entity who manufactures covered hardwood lumber may cast one vote in the referendum.

(d) All ballots are to be cast by mail or other means, as instructed by the Department.

Instructions.

The referendum agent shall conduct the referendum, in the manner provided in this subpart, under the supervision of the Administrator. The Administrator may prescribe additional instructions, consistent with the provisions of this subpart, to govern the procedure to be followed by the referendum agent. Such agent shall:

(a) Determine the period during which ballots may be cast;

(b) Provide ballots and related material to be used in the referendum. The ballot shall provide for recording essential information, including that needed for ascertaining whether the person voting, or on whose behalf the vote is cast, is an eligible voter;

(c) Give reasonable public notice of the referendum:

(1) By using available media or public information sources, without incurring advertising expense, to publicize the dates, places, method of voting, eligibility requirements, and other pertinent information. Such sources of publicity may include, but are not limited to, print and radio; and

(2) By such other means as the agent may deem advisable.

(d) Mail to eligible manufacturers whose names and addresses are known to the referendum agent, the instructions on voting, a ballot, and a summary of the terms and conditions of the proposed Order. No person who claims to be eligible to vote shall be refused a ballot;

(e) At the end of the voting period, collect, open, number, and review the ballots and tabulate the results in the presence of an agent of a third party authorized to monitor the referendum process;

(f) Prepare a report on the referendum; and

(g) Announce the results to the public.

Subagents.

The referendum agent may appoint any individual or individuals necessary or desirable to assist the agent in performing such agent's functions of this subpart. Each individual so appointed may be authorized by the agent to perform any or all of the functions which, in the absence of such appointment, shall be performed by the agent.

Ballots.

The referendum agent and subagents shall accept all ballots cast. However, if an agent or subagent deems that a ballot should be challenged for any reason, the agent or subagent shall endorse above their signature, on the ballot, a statement to the effect that such ballot was challenged, by whom challenged, the reasons therefore, the results of any investigations made with respect thereto, and the disposition thereof. Ballots invalid under this subpart shall not be counted.

Referendum report.

Except as otherwise directed, the referendum agent shall prepare and submit to the Administrator a report on the results of the referendum, the manner in which it was conducted, the extent and kind of public notice given, and other information pertinent to the analysis of the referendum and its results.

Confidential information.

The ballots and other information or reports that reveal, or tend to reveal, the vote of any person covered under the Order and the voter list shall be strictly confidential and shall not be disclosed.

OMB control number.

The control number assigned to the information collection requirement in this subpart by the Office of Management and Budget pursuant to the Paperwork Reduction Act of 1995, 44 U.S.C. is OMB control number 0581-NEW.

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Dated: November 6, 2013.

Rex A. Barnes,

Associate Administrator.

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Footnotes

1.  Ward, Ronald, Commodity Checkoff Programs and Generic Advertising Choices, 2nd Quarter 2006, 21(2).

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[FR Doc. 2013-27107 Filed 11-12-13; 8:45 am]

BILLING CODE 3410-02-P