Pecans Grown in the States of Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas; Secretary's Decision and Referendum Order on Proposed Marketing Agreement and Order No. 986, 10138-10152 [2016-04043]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 81, Number 39 (Monday, February 29, 2016)]
[Proposed Rules]
[Pages 10138-10152]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-04043]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 986

[Docket No. AO-FV-15-0139; AMS-FV-15-0023; FV15-986-1]


Pecans Grown in the States of Alabama, Arkansas, Arizona, 
California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, 
North Carolina, New Mexico, Oklahoma, South Carolina, and Texas; 
Secretary's Decision and Referendum Order on Proposed Marketing 
Agreement and Order No. 986

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule and referendum order.

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SUMMARY: This Secretary's Decision proposes the issuance of a marketing 
agreement and order (order) under the Agricultural Marketing Agreement 
Act of 1937 to cover pecans grown in the states of Alabama, Arkansas, 
Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, 
Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and 
Texas, and provides growers with the opportunity to vote in a 
referendum to determine if they favor its establishment. The proposed 
order would provide authority to collect industry data and to conduct 
research and promotion activities. In addition, the order would provide 
authority for the industry to recommend grade, quality and size 
regulation, as well as pack and container regulation, subject to 
approval by the Department of Agriculture (USDA). The program would be 
financed by assessments on pecan handlers and would be locally 
administered, under USDA oversight, by a Council of seventeen growers 
and shellers (handlers) nominated by the industry and appointed by 
USDA.

DATES: The referendum will be conducted from March 9 through March 30, 
2016. Ballot materials will be sent to all known pecan growers in the 
proposed fifteen-state production area. To be eligible to vote, a 
grower must have produced a minimum average, annual amount of 50,000 
pounds of inshell pecans between August 1, 2011 and July 31, 2015, or 
must own a minimum of 30 pecan acres.

ADDRESSES: Marketing Order and Agreement Division, Specialty Crops 
Program, AMS, USDA, 1400 Independence Avenue SW., Stop 0237, 
Washington, DC 20250-0237.

FOR FURTHER INFORMATION CONTACT: Melissa Schmaedick, Senior Marketing 
Specialist; Telephone: (202) 557-4783, Fax: (435) 259-1502, or Michelle 
Sharrow, Rulemaking Branch Chief; Telephone: (202) 720-2491, Fax: (202) 
720-8938, or Email: Melissa.Schmaedick@ams.usda.gov or 
Michelle.Sharrow@ams.usda.gov.
    Small businesses may request information on this proceeding by 
contacting Antoinette Carter, Marketing Order and Agreement Division, 
Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW., Stop 
0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, Fax: (202) 
720-8938, or Email: Antoinette.Carter@ams.usda.gov.

SUPPLEMENTARY INFORMATION: Prior documents in this proceeding: Notice 
of Hearing issued on June 26, 2015, and published in the July 2, 2015, 
issue of the Federal Register (80 FR 38021); Recommended Decision and 
Opportunity to File Written Exceptions issued on October 20, 2015, and 
published in the October 28, 2015, issue of the Federal Register (80 FR 
66372).
    This administrative action is governed by the provisions of 
sections 556 and 557 of title 5 of the United States Code and, 
therefore, is excluded from the requirements of Executive Order 12866, 
13563, and 13175. Notice of this rulemaking action was provided to 
tribal governments through USDA's Office of Tribal Relations; no 
comments have been received.

Preliminary Statement

    This Secretary's Decision is issued pursuant to the provisions of 
the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 
601-674), hereinafter referred to as the ``Act,'' and the applicable 
rules of practice and procedure governing the formulation of marketing 
agreements and orders (7 CFR part 900). The proposed marketing order is 
authorized under section 8(c) of the Act.
    The proposed marketing agreement and order are based on the record 
of a public hearing held July 20 through July 21, 2015, in Las Cruces, 
New Mexico; July 23 through July 24, 2015, in Dallas, Texas; and, July 
27 through July 29,

[[Page 10139]]

2015, in Tifton, Georgia. The hearing was held to receive evidence on 
the proposed marketing order from growers, handlers, and other 
interested parties located throughout the proposed production area. 
Notice of this hearing was published in the Federal Register on July 2, 
2015.
    A request for public hearing on the proposed program was submitted 
to USDA on May 22, 2015, by the American Pecan Board (Board), a 
proponent group established in 2013 to represent the interests of 
growers and handlers throughout the proposed fifteen-state production 
area. A subsequent, modified draft of the proposed regulatory text was 
submitted on June 10, 2015.
    Witnesses at the hearing explained that the provisions of this 
proposal aim to assist the industry in addressing a number of 
challenges, namely: A lack of organized representation of industry-wide 
interests in a single organization; a lack of accurate data to assist 
the industry in its analysis of production, demand and prices; a lack 
of coordinated domestic promotion or research; and a forecasted 
increase in production as a result of new plantings. Witnesses believed 
that these factors combined have resulted in the under-performance of 
the pecan industry compared to other nut industries.
    Upon the basis of evidence introduced at the hearing and the record 
thereof, the Administrator of AMS on October 20, 2015, filed with the 
Hearing Clerk, USDA, a Recommended Decision and Opportunity to File 
Written Exceptions thereto by November 27, 2015. No exceptions were 
filed. That document also announced AMS's intent to request approval of 
new information collection requirements to implement the program. 
Written comments on the proposed information collection requirements 
were due by December 28, 2015. None were filed.
    USDA is providing two additional conforming changes to the proposed 
order language as published in the Recommended Decision. These 
conforming changes replace the word ``redefining'' in Sec.  986.55 
(c)(6) with ``reestablishment,'' and the word ``redefining'' in Sec.  
986.33(b) with ``reestablishment,'' thereby conforming to the 
terminology used in Sec.  986.58. The regulatory text included in this 
Secretary's Decision reflects these changes.
    Further, USDA is providing a correction to the Regulatory 
Flexibility Act (RFA) analysis published in the Recommended Decision. 
The RFA incorrectly referenced a Small Business Administration (SBA) 
threshold of $7 million in annual receipts to identify small handler 
entities, while hearing testimony correctly identified a $7.5 million 
threshold. The RFA included in this Secretary's Decision uses the 
correct SBA threshold of $7.5 million.
    The material issues presented on the record of hearing and 
addressed in the Recommended Decision are as follows:
    1. Whether the handling of pecans produced in the proposed 
production area is in the current of interstate or foreign commerce or 
directly burdens, obstructs, or affects such commerce;
    2. Whether the economic and marketing conditions are such that they 
justify a need for a Federal marketing agreement and order which would 
tend to effectuate the declared policy of the Act;
    3. What the definition of the production area and the commodity to 
be covered by the order should be;
    4. What the identity of the persons and the marketing transactions 
to be regulated should be;
    5. What the specific terms and provisions of the order should be, 
including:
    (a) The definitions of terms used therein which are necessary and 
incidental to attain the declared objectives and policy of the Act and 
order;
    (b) The establishment, composition, maintenance, procedures, powers 
and duties of an administrative Council for pecans that would be the 
local administrative agency for assisting USDA in the administration of 
the order;
    (c) The authority to incur expenses and the procedure to levy 
assessments on handlers to obtain revenue for paying such expenses;
    (d) The authority to conduct research and promotion activities;
    (e) The authority to recommend grade, quality and size regulation, 
as well as pack and container regulation, for pecans grown and handled 
in the proposed production area;
    (f) The establishment of requirements for handler reporting and 
recordkeeping;
    (g) The requirement for compliance with all provisions of the order 
and with any regulation issued under it;
    (h) An exemption for handlers of non-commercial quantities of 
pecans;
    (i) The requirement for periodic continuance referenda; and
    (j) Additional terms and conditions as set forth in Sec.  986.88 
through Sec.  986.93, and Sec.  986.97 through Sec.  986.99 that are 
common to marketing agreements only.

Small Business Considerations

    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has 
considered the economic impact of this action on small entities. 
Accordingly, the AMS has prepared this final regulatory flexibility 
analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions so that small businesses will not be 
unduly or disproportionately burdened. Small agricultural producers 
have been defined by the Small Business Administration (SBA) (13 CFR 
121.201) as those having annual receipts of less than $750,000. Small 
agricultural service firms, which include handlers that would be 
regulated under the proposed pecan order, are defined as those with 
annual receipts of less than $7,500,000.
    Interested persons were invited to present evidence at the hearing 
on the probable regulatory and informational impact of the proposed 
pecan marketing order program on small businesses. The record evidence 
is that while the program would impose some costs on the regulated 
parties, those costs would be outweighed by the benefits expected to 
accrue to the U. S. pecan industry.
    Specific evidence on the number of large and small pecan farms 
(above and below the SBA threshold figure of $750,000 in annual sales) 
was not presented at the hearing. However, percentages can be estimated 
based on record evidence.
    The 2014 season average grower prices per pound for improved and 
native seedling pecans were $2.12 and $0.88, respectively. A weighted 
grower price of $1.85 is computed by applying as weights the percentage 
split between improved and native acreage on a representative U.S. 
pecan farm, which are 78 and 22 percent, respectively. The average 
yield on the representative farm is 1,666.67 pounds per acre. 
Multiplying the $1.85 price by the average yield gives a total revenue 
per acre figure of $3,080. Dividing the $750,000 SBA annual sales 
threshold figure by the revenue per acre figure of $3,080 gives an 
estimate of 243 acres as the size of farm that would have annual sales 
about equal to $750,000, given the previous assumptions. Any farm of 
that size or larger would qualify as a large farm under the SBA 
definition.
    Data presented in the record show that about 52 percent of 
commercial U.S. pecan farms have 250 or more acres of pecans. Since the 
243 acre estimate above is close to 250 acres, it can be extrapolated 
that 52 percent is a reasonable approximation of the proportion of 
large farms and 48 percent is the proportion of small pecan farms. 
According to the record, this estimate

[[Page 10140]]

does not include ``backyard'' production.
    According to record evidence, there are an estimated 250 handlers 
in the U.S. Of these handlers, which include accumulators, there are an 
estimated 50 commercially viable shellers with production over 1 
million pounds of inshell pecans operating within the proposed 
production area. Fourteen of these shellers meet the SBA definition for 
large business entity and the remaining 36 are small business entities.
    Record evidence indicates that implementing the proposed order 
would not represent a disproportionate burden on small businesses. An 
economic impact study of the proposed authority for generic promotion 
presented at the hearing provided that the proposed program would 
likely benefit all industry participants.

Impact of Generic Promotion Through a Marketing Order

    The record shows that generic promotion over a wide variety of 
agricultural products stimulates product demand and translates into 
higher prices for growers than would have been the case without 
promotion.
    Promotional impact studies of other tree nuts (almonds and 
walnuts), and of Texas pecans, show price increases as high as 6 
percent, but the record indicates that 0 to 3 percent is a more 
representative range. Since the other tree nut promotion programs are 
well-established, the record shows that a representative middle (most 
likely) scenario would be a price increase from promotion of 1.5 
percent for the early years of a new pecan promotion program. Low and 
high scenarios were 0.5 and 3.0 percent, respectively.
    The record indicates that an analytical method used historical 
yearly prices from 1997 to 2014 in a simulation covering that period to 
obtain an expected average price without promotion. In a subsequent 
step, the simulation applied a demand increase of 1.5 percent to the 
entire distribution of prices to represent the impact of promotion. The 
projected increases in grower prices from promotion for improved and 
native pecans were 6.3 and 3.6 cents per pound, respectively, as shown 
in Table 1. These two price increase projections represent a range of 
results. Based on a range of simulated price increases as high as 3 
percent, the low and high price increase projections for improved 
pecans were 4.0 and 9.6 cents, respectively. For native varieties, the 
results ranged from 2.7 to 4.2 cents.
    The record indicates that a key analytical step was developing an 
example farm with specific characteristics to explain market 
characteristics and marketing order impacts. An important 
characteristic of this ``representative farm'' is the acreage 
allocation between improved and native pecans of 78 and 22 percent, 
respectively. This is similar to the proportion of the U.S. pecan crop 
in recent years allocated to improved and native varieties. Average 
yield per acre of the representative farm (covering all states and 
varieties) is 1,666.67 pounds per acre.
    The acreage split of 78 and 22 percent are used as weights to 
compute weighted average prices (combining improved and native pecans) 
of 5.7 and 2.3 cents, respectively, as shown in the fourth column of 
Table 1.
    The record shows that the proposed initial ranges of marketing 
order assessments per pound are 2 to 3 cents for improved pecans and 1 
to 2 cents for native pecans. The midpoints of these ranges (2.5 and 
1.5 cents, respectively) are used to compute a benefit-cost ratio from 
promotion, with a weighted average assessment cost of 2.3 cents, as 
shown in Table 2. Assessments would be collected from handlers, not 
growers, but for purposes of this analysis, it is assumed that 100 
percent of the assessment cost would be passed through to growers.
    Table 1 shows that dividing the projected benefit of 5.7 cents per 
pound (weighted price increase from promotion) by the estimated 
assessment cost of 2.3 cents (weighted assessment rate per pound), 
yields a benefit-cost ratio of 2.5. Each dollar spent on pecan 
promotion through a Federal marketing order is expected to result in 
$2.50 in increased revenue to the pecan growers of the United States.

           Table 1--Estimated Benefit-Cost Ratio of Pecan Promotion Through a Federal Marketing Order
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                                                        Improved pecans      Native pecans         Weighted
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Benefit: Projected price increase from pecan                        6.3                 3.6                 5.7
 promotion (cents per pound)........................
Cost: FMO Assessment rate (cents per pound).........                2.5                 1.5                 2.3
Benefit-cost ratio..................................                2.52                2.40                2.50
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* Weights for improved and native pecans are 78% and 22%, respectively, which is the acreage allocation of a
  representative U.S. pecan farm, according to the record.

    Examining potential costs and benefits from promotion across 
different farm sizes is done in Table 2. Record evidence showed that 
the minimum size of a commercial pecan farm is 30 acres, and that a 
representative average yield across the entire production area is 
1,666.67 pounds per acre. This combination of acreage and yield results 
in a minimum threshold level of commercial production of 50,000 pounds. 
Witnesses stated that expenditures for the minimum necessary level of 
inputs for commercial pecan production cannot be justified for any 
operation smaller than this.
    In Table 2, a very small farm is defined as being at the minimum 
commercial threshold level of 30 acres and 50,000 pounds. Small and 
large farms are represented by farm size levels of 175 and 500 acres, 
respectively. Multiplying those acreage levels by the average yield for 
the entire production area gives total annual production level 
estimates of 291,667 and 833,335 pounds, respectively.
    Multiplying the 2014 grower price per pound of $2.14 by the 291,677 
pounds of production from the small farm (175 acres) yields an annual 
crop value estimate of about $618,000. This computation shows that the 
small farm definition from the record is consistent with the SBA 
definition of a small farm (annual sales value of up to $750,000).
    Table 2 shows for the three representative pecan farm sizes the 
allocation of total production levels between improved and native 
varieties (78 and 22 percent, respectively).
    Although marketing order assessments are paid by handlers, not 
growers, it is nevertheless useful to estimate the impact on growers, 
based on the assumption that handlers may pass part or all of the 
assessment cost onto growers from whom they purchase pecans. To compute 
the marketing order burden for each farm size, the improved and native 
production quantities are multiplied by 2.5 and 1.5 cents per pound of 
improved and native pecans, respectively. For the representative small 
farm (175 acres), summing the improved and native assessments yields a 
total annual assessment cost of $6,650.

[[Page 10141]]

For the large farm, the total assessment cost is $19,000.
    A parallel computation is made to obtain the total dollar benefit 
for each farm size. The improved and native quantities for the 
representative farm sizes are multiplied by the corresponding projected 
price increases of 6.3 and 3.6 cents. Summing the improved and native 
benefits for the small and large farm size yields projected annual 
total benefits for the small and large representative farm sizes of 
$16,643 and $47,550, respectively. The results of dividing the benefits 
for each farm size by the corresponding costs is 2.5, which equals the 
benefit-cost ratio shown in Table 2.

           Table 2--Costs and Benefits of Promotion for Three Sizes of Representative U.S. Pecan Farms
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                                                          Very small farm       Small farm         Large farm
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Representative Pecan Farms: Acres and Production:
    Acres per farm.....................................                 30                175                500
    Production on Representative Farms (Acres                       50,000            291,667            833,335
     multiplied by estimated U.S. average yield of
     1666.67 pounds per acre)..........................
    Improved pecan production (78% of farm acres)......             39,000            227,500            650,001
    Native pecan production (22% of farm acres)........             11,000             64,167            183,334
Cost per farm: Grower burden of proposed program
 represented as cost per pound:
    Improved (2.5 cents)...............................               $975             $5,688            $16,250
    Native (1.5 cents).................................               $165               $963             $2,750
                                                        --------------------------------------------------------
        Total Estimated Cost per Farm..................             $1,140             $6,650            $19,000
Benefit per farm: Price increase per pound from pecan
 promotion multiplied by improved and native
 production:
    Improved (6.3 cents)...............................             $2,457            $14,333            $40,950
    Native (3.6 cents).................................               $396             $2,310             $6,600
                                                        --------------------------------------------------------
        Total Estimated Benefit per Farm...............             $2,853            $16,643            $47,550
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    The computations in Table 2 provide an illustration, based on 
evidence from the record, that there would be no disproportionate 
impact on smaller size farms from establishing a marketing order and 
implementing a promotion program. Costs are assessed per pound and thus 
represent an equal burden regardless of size. The projected benefits 
from promotion are realized through increases in price per pound and 
are thus distributed proportionally among different sizes of farms.
    All of the grower and handler witnesses, both large and small, 
testified that the projected price increases from promotion of pecans 
(6.3 and 3.6 cents per pound for improved and native pecans, 
respectively) were reasonable estimates of the benefits from generic 
promotion of pecans. A number of them expressed the view that the price 
increase estimates were conservative and that, over time, the price 
impact would be larger.
    As mentioned above, marketing order assessments are paid by 
handlers, not growers. However, since handlers may pass some or all of 
the assessment cost onto growers, it is useful to provide this 
illustration of potential impact on both growers and handlers.
    Using the most recent three years of prices as examples of typical 
U.S. annual grower prices, Table 3 summarizes evidence from the record 
that shows the proposed marketing order assessment rates as percentages 
of grower and handler prices received. Based on record evidence that a 
representative handler margin is 57.5 cents per pound, handler prices 
are estimated by summing the grower price and handler margin.

                Table 3--Proposed Marketing Order Assessment Rates as a Percentage of Prices for Pecans Received by Growers and Handlers
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                                                                     Grower and handler prices                       Assessment rates as a % of prices
                                                              ---------------------------------------  Assessment                 received
                                                                                                       rates ***  --------------------------------------
                                                                   2012         2013         2014                   2012  (%)    2013  (%)    2014  (%)
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Grower price *
    Improved.................................................        $1.73        $1.90        $2.12       $0.025          1.4          1.3          1.2
    Native...................................................         0.88         0.92         0.88        0.015          1.7          1.6          1.7
Handler price **
    Improved.................................................         2.31         2.48         2.70        0.025         1.08         1.01         0.93
    Native...................................................         1.46         1.50         1.46        0.015         1.03         1.00         1.03
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* Season average grower price per pound from NASS/USDA.
** Grower price plus average handler margin of 57.5 cents per pound, based on hearing evidence.
*** Midpoints of proposed initial marketing order assessment rates: Improved (2 to 3 cents); Native (1 to 2 cents). For growers this represents the cost
  of the marketing order burden and for handlers this represents the cost of the assessment paid.

    For both improved and native pecans, using 2012 to 2014 prices as 
examples, Table 3 shows that the potential burden of the proposed 
program can be calculated at between 1 and 2 percent of operating 
expenses for growers and are approximately 1 percent of operating 
expenses for handlers. Grower and handler witnesses, both large and 
small, covering both improved and native pecans, testified that the 
proposed initial marketing order assessment rates

[[Page 10142]]

would not represent a significant burden to their businesses and that 
the benefits of the proposed generic promotion program substantially 
outweigh the cost. Sheller witnesses (large and small) that would 
likely become handlers under a Federal marketing order testified that 
the additional recordkeeping required to collect assessments to send to 
the marketing order board (American Pecan Council) would not be a 
significant additional burden and that the benefits would substantially 
outweigh the costs. Several witnesses stated that one reason that 
collecting the assessments would have only a minor impact is that they 
already perform similar functions for promotion and other pecan-related 
programs (or other commodity programs) organized under state law.

Additional Marketing Order Program Benefits

    Statements of support for additional benefits that could come from 
a Federal marketing order came from grower and handler witnesses, both 
large and small, covering both improved and native pecans. The 
additional benefits cited included: (1) Additional and more accurate 
market information, including data on production, inventory, and total 
supplies, (2) funding of research on health and nutrition aspects of 
pecans, improved technology relating to the pecan supply chain and crop 
health, consumer trends, and other topics, and (3) uniform, industry-
wide quality standards for pecans, as well as packaging standards and 
shipping protocols. Witnesses testified that the burden of funding and 
participating in marketing order programs with these features would be 
minor, and that the benefits would substantially outweigh the costs.
    The proposed order would impose some reporting and recordkeeping 
requirements on handlers. However, testimony indicated that the 
expected burden that would be imposed with respect to these 
requirements would be negligible. Most of the information that would be 
reported to the Council is already compiled by handlers for other uses 
and is readily available. Reporting and recordkeeping requirements 
issued under other tree nut programs impose an average annual burden on 
each regulated handler of about 8 hours. It is reasonable to expect 
that a similar burden may be imposed under this proposed marketing 
order on the estimated 250 handlers of pecans in the proposed 
production area.
    The record evidence also indicates that the benefits to small as 
well as large handlers are likely to be greater than would accrue under 
the alternatives to the order proposed herein; namely, no marketing 
order.
    In determining that the proposed order and its provisions would not 
have a disproportionate economic impact on a substantial number of 
small entities, all of the issues discussed above were considered. 
Based on hearing record evidence and USDA's analysis of the economic 
information provided, the proposed order provisions have been carefully 
reviewed to ensure that every effort has been made to eliminate any 
unnecessary costs or requirements.
    Although the proposed order may impose some additional costs and 
requirements on handlers, it is anticipated that the order will help to 
strengthen demand for pecans. Therefore, any additional costs would be 
offset by the benefits derived from expanded sales benefiting handlers 
and growers alike. Accordingly, it is determined that the proposed 
order would not have a disproportionate economic impact on a 
substantial number of small handlers or growers.
    Finally, the Act requires that, prior to the issuance of a 
marketing order, a referendum be conducted among the affected growers 
to determine if they favor issuance of the order.

Paperwork Reduction Act

    In compliance with OMB regulations (5 CFR part 1320) which 
implement the Paperwork Reduction Act of 1995 (Pub. L. 104-13), the 
ballot material that will be used in conducting the referendum has been 
submitted to and approved by OMB. The forms to be used for nomination 
and selection of the initial administrative committee have also been 
reviewed and approved by OMB.
    Any additional information collection and recordkeeping 
requirements that may be imposed under the order would be submitted to 
OMB for approval. Those requirements would not become effective prior 
to OMB approval.

Civil Justice Reform

    The marketing agreement and order proposed herein have been 
reviewed under Executive Order 12988, Civil Justice Reform. They are 
not intended to have retroactive effect. If adopted, the proposed order 
would not preempt any State or local laws, regulations, or policies, 
unless they present an irreconcilable conflict with this proposal.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with the Department a 
petition stating that the order, any provision of the order, or any 
obligation imposed in connection with the order is not in accordance 
with law and request a modification of the order or to be exempted 
there from. A handler is afforded the opportunity for a hearing on the 
petition. After the hearing, the USDA would rule on the petition. The 
Act provides that the district court of the United States in any 
district in which the handler is an inhabitant, or has his or her 
principal place of business, has jurisdiction to review the 
Department's ruling on the petition, provided an action is filed not 
later than 20 days after the date of the entry of the ruling.

Findings and Conclusions

    The findings and conclusions, rulings, and general findings and 
determinations included in the Recommended Decision set forth in the 
October 28, 2015, issue of the Federal Register (80 FR 66372), and as 
further revised in this Secretary's Decision, are hereby approved and 
adopted.

Rulings on Exceptions

    In arriving at the findings and conclusions and the regulatory 
provisions of this decision, all exceptions to the proposed order were 
carefully considered in conjunction with the record evidence. To the 
extent that the findings and conclusions and the regulatory provisions 
of this decision are at variance with the exceptions, such exceptions 
are denied.

Marketing Agreement and Order

    Annexed hereto and made a part hereof is the document entitled 
``Order Regulating the Handling of Pecans Grown in the States of 
Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, 
Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, 
South Carolina, and Texas.'' This document has been decided upon as the 
detailed and appropriate means of effectuating the foregoing findings 
and conclusions.
    It is hereby ordered, That this entire decision be published in the 
Federal Register.

Referendum Order

    It is hereby directed that a referendum be conducted in accordance 
with the procedure for the conduct of referenda (7 CFR 900.400-407) to 
determine whether the issuance of the annexed order regulating the 
handling of pecans grown in the States of Alabama, Arkansas, Arizona, 
California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, 
North Carolina, New

[[Page 10143]]

Mexico, Oklahoma, South Carolina, and Texas is approved or favored by 
producers, as defined under the terms of the order, who during the 
representative period were engaged in the production of pecans in the 
production area.
    The representative period for the conduct of such referendum is 
hereby determined to be August 1, 2014, through July 31, 2015.
    The agents of the Secretary to conduct such referendum are hereby 
designated to be Christian Nissen and Jennie Varela, Southeast 
Marketing Field Office, Marketing Order and Agreement Division, 
Specialty Crops Program, AMS, USDA, 1124 First Street South, Winter 
Haven, Florida 33880; telephone: (863) 324-3375; or fax: (863) 291-
8614, or Email: Christian.Nissen@ams.usda.gov or 
Jennie.Varela@ams.usda.gov, respectively.

Order Regulating the Handling of Pecans Grown in the States of Alabama, 
Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, 
Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South 
Carolina, and Texas.\1\
---------------------------------------------------------------------------

    \1\ This order shall not become effective unless and until the 
requirements of Sec.  900.14 of the rules of practice and procedure 
governing proceedings to formulate marketing agreements and 
marketing orders have been met.
---------------------------------------------------------------------------

Findings and Determinations

    Pursuant to the provisions of the Agricultural Marketing Agreement 
of 1937, as amended (7 U.S.C. 601 et seq.)and the applicable rules of 
practice and procedure effective thereunder (7 CFR part 900), a public 
hearing was held upon a proposed marketing agreement and order 
regulation the handling of pecans grown in the States of Alabama, 
Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, 
Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South 
Carolina, and Texas.
    Upon the basis of evidence introduced at such hearing and the 
record thereof, it is found that:
    (1) The proposed marketing agreement and order, and all of the 
terms and conditions thereof, will tend to effectuate the declared 
policy of the Act;
    (2) The proposed marketing agreement and order regulate the 
handling of pecans grown in the proposed production area in the same 
manner as, and are applicable only to, persons in the respective 
classes of commercial and industrial activity specified in the 
marketing agreement and order upon which a hearing has been held;
    (3) The proposed marketing agreement and order are limited in its 
application to the smallest regional production area that is 
practicable, consistent with carrying out the declared policy of the 
Act, and the issuance of several orders applicable to subdivisions of 
the production area would not effectively carry out the declared policy 
of the Act;
    (4) The proposed marketing agreement and order prescribe, such 
different terms applicable to different parts of the production area as 
are necessary to give due recognition to the differences in the 
production and marketing of pecans grown in the proposed production 
area; and
    (5) All handling of pecans grown in the proposed production area as 
defined in the proposed marketing agreement and order is in the current 
of interstate or foreign commerce or directly burdens, obstructs, or 
affects such commerce.

Order Relative to Handling

    It is therefore ordered, That on and after the effective date 
hereof, all handling of pecans grown in the States of Alabama, 
Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, 
Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South 
Carolina, and Texas, shall be in conformity to, and in compliance with, 
the terms and conditions of the said order as hereby proposed to be 
amended as follows:
    The provisions of the proposed marketing agreement and order 
contained in the Recommended Decision issued on October 20, 2015, and 
published in the Federal Register on October 28, 2015 (80 FR 66372), 
and as further revised in this decision, shall be and are the terms and 
provisions of this proposed agreement and order and are set forth in 
full herein. Sections 986.97 through 986.99 apply only to the proposed 
marketing agreement and not the proposed order.

List of Subjects in 7 CFR Part 986

    Marketing agreements, Pecans, Reporting and recordkeeping 
requirements.

    For the reasons set out in the preamble, The Agricultural Marketing 
Service proposes to add 7 CFR part 986 to read as follows:

PART 986--PECANS GROWN IN THE STATES OF ALABAMA, ARKANSAS, ARIZONA, 
CALIFORNIA, FLORIDA, GEORGIA, KANSAS, LOUISIANA, MISSOURI, 
MISSISSIPPI, NORTH CAROLINA, NEW MEXICO, OKLAHOMA, SOUTH CAROLINA, 
AND TEXAS

Subpart A--Order Regulating Handling of Pecans

Definitions

Sec.
986.1 Accumulator.
986.2 Act.
986.3 Affiliation.
986.4 Blowouts.
986.5 To certify.
986.6 Confidential data or information.
986.7 Container.
986.8 Council.
986.9 Crack.
986.10 Cracks.
986.11 Custom harvester.
986.12 Department or USDA.
986.13 Disappearance.
986.14 Farm Service Agency.
986.15 Fiscal year.
986.16 Grade and size.
986.17 Grower.
986.18 Grower-cleaned production.
986.19 Handler.
986.20 To handle.
986.21 Handler inventory.
986.22 Handler-cleaned production.
986.23 Hican.
986.24 Inshell pecans.
986.25 Inspection service.
986.26 Inter-handler transfer.
986.27 Merchantable pecans.
986.28 Pack.
986.29 Pecans.
986.30 Person.
986.31 Production area.
986.32 Proprietary capacity.
986.33 Regions.
986.34 Representative period.
986.35 Secretary.
986.36 Sheller.
986.37 Shelled pecans.
986.38 Stick-tights.
986.39 Trade supply.
986.40 Unassessed inventory.
986.41 Varieties.
986.42 Warehousing.
986.43 Weight.

Administrative Body

986.45 American Pecan Council.
986.46 Council nominations and voting.
986.47 Alternate members.
986.48 Eligibility.
986.49 Acceptance.
986.50 Term of office.
986.51 Vacancy.
986.52 Council expenses.
986.53 Powers.
986.54 Duties.
986.55 Procedure.
986.56 Right of the Secretary.
986.57 Funds and other property.
986.58 Reapportionment and reestablishment of regions.

[[Page 10144]]

Expenses, Assessments and Marketing Policy

986.60 Budget.
986.61 Assessments.
986.62 Inter-handler transfers.
986.63 Contributions.
986.64 Accounting.
986.65 Marketing policy.

Authorities Relating To Research, Promotion, Data Gathering, Packaging, 
Grading, Compliance and Reporting

986.67 Recommendations for regulations.
986.68 Authority for research and promotion activities.
986.69 Authorities regulating handling.
986.70 Handling for special purposes.
986.71 Safeguards.
986.72 Notification of regulation.

Reports, Books and Other Records

986.75 Reports of handler inventory.
986.76 Reports of merchantable pecans handled.
986.77 Reports of pecans received by handlers.
986.78 Other handler reports.
986.79 Verification of reports.
986.80 Certification of reports.
986.81 Confidential information.

Administrative Provisions

986.86 Exemptions.
986.87 Compliance.
986.88 Duration of immunities.
986.89 Separability.
986.90 Derogation.
986.91 Liability.
986.92 Agents.
986.93 Effective time.
986.94 Termination.
986.95 Proceedings after termination.
986.96 Amendments.
986.97 Counterparts.
986.98 Additional participants.
986.99 Order with marketing agreement.
Subpart B--[Reserved]

    Authority:  7 U.S.C. 601-674.

Subpart A--Order Regulating Handling of Pecans

Definitions


Sec.  986.1  Accumulator.

    Accumulator means a person who compiles inshell pecans from other 
persons for the purpose of resale or transfer.


Sec.  986.2  Act.

    Act means Public Act No. 10, 73d Congress, as amended and as 
reenacted and amended by the Agricultural Marketing Agreement Act of 
1937, as amended (7 U.S.C. 601 et seq.).


Sec.  986.3  Affiliation.

    Affiliation. This term normally appears as ``affiliate of'' or 
``affiliated with,'' and means a person such as a grower or sheller who 
is: A grower or handler that directly, or indirectly through one or 
more intermediaries, owns or controls, or is controlled by, or is under 
common control with the grower or handler specified; or a grower or 
handler that directly, or indirectly through one or more 
intermediaries, is connected in a proprietary capacity, or shares the 
ownership or control of the specified grower or handler with one or 
more other growers or handlers. As used in this part, the term 
``control'' (including the terms ``controlling,'' ``controlled by,'' 
and ``under the common control with'') means the possession, direct or 
indirect, of the power to direct or cause the direction of the 
management and policies of a handler or a grower, whether through 
voting securities, membership in a cooperative, by contract or 
otherwise.


Sec.  986.4  Blowouts.

    Blowouts mean lightweight or underdeveloped inshell pecan nuts that 
are considered of lesser quality and market value.


Sec.  986.5  To certify.

    To certify means the issuance of a certification of inspection of 
pecans by the inspection service.


Sec.  986.6  Confidential data or information.

    Confidential data or information submitted to the Council consists 
of data or information constituting a trade secret or disclosure of the 
trade position, financial condition, or business operations of a 
particular entity or its customers.


Sec.  986.7  Container.

    Container means a box, bag, crate, carton, package (including 
retail packaging), or any other type of receptacle used in the 
packaging or handling of pecans.


Sec.  986.8  Council.

    Council means the American Pecan Council established pursuant to 
Sec.  986.45, American Pecan Council.


Sec.  986.9  Crack.

    Crack means to break, crack, or otherwise compromise the outer 
shell of a pecan so as to expose the kernel inside to air outside the 
shell.


Sec.  986.10  Cracks.

    Cracks refer to an accumulated group or container of pecans that 
have been cracked in harvesting or handling.


Sec.  986.11  Custom harvester.

    Custom harvester means a person who harvests inshell pecans for a 
fee.


Sec.  986.12  Department or USDA.

    Department or USDA means the United States Department of 
Agriculture.


Sec.  986.13  Disappearance.

    Disappearance means the difference between the sum of grower-
cleaned production and handler-cleaned production (whether from 
improved orchards or native and seedling groves) and the sum of inshell 
and shelled merchantable pecans reported on an inshell weight basis.


Sec.  986.14  Farm Service Agency.

    Farm Service Agency or FSA means that agency of the U.S. Department 
of Agriculture.


Sec.  986.15  Fiscal year.

    Fiscal year means the twelve months from October 1 to September 30, 
both inclusive, or any other such period deemed appropriate by the 
Council and approved by the Secretary.


Sec.  986.16  Grade and size.

    Grade and size means any of the officially established grades of 
pecans and any of the officially established sizes of pecans as set 
forth in the United States standards for inshell and shelled pecans or 
amendments thereto, or modifications thereof, or other variations of 
grade and size based thereon recommended by the Council and approved by 
the Secretary.


Sec.  986.17  Grower.

    (a) Grower is synonymous with producer and means any person engaged 
within the production area in a proprietary capacity in the production 
of pecans if such person:
    (1) Owns an orchard and harvests its pecans for sale (even if a 
custom harvester is used); or
    (2) Is a lessee of a pecan orchard and has the right to sell the 
harvest (even if the lessee must remit a percentage of the crop or rent 
to a lessor).
    (b) The term ``grower'' shall only include those who produce a 
minimum of 50,000 pounds of inshell pecans during a representative 
period (average of four years) or who own a minimum of 30 pecan acres 
according to the FSA, including acres calculated by the FSA based on 
pecan tree density. In the absence of any FSA delineation of pecan 
acreage, the regular definition of an acre will apply. The Council may 
recommend changes to this definition subject to the approval of the 
Secretary.


Sec.  986.18  Grower-cleaned production.

    Grower-cleaned production means production harvested and processed 
through a cleaning plant to determine volumes of improved pecans, 
native and seedling pecans, and substandard pecans to transfer to a 
handler for sale.

[[Page 10145]]

Sec.  986.19  Handler.

    Handler means any person who handles inshell or shelled pecans in 
any manner described in Sec.  986.20.


Sec.  986.20  To handle.

    To handle means to receive, shell, crack, accumulate, warehouse, 
roast, pack, sell, consign, transport, export, or ship (except as a 
common or contract carrier of pecans owned by another person), or in 
any other way to put inshell or shelled pecans into any and all markets 
in the stream of commerce either within the area of production or from 
such area to any point outside thereof. The term ``to handle'' shall 
not include: Sales and deliveries within the area of production by 
growers to handlers; grower warehousing; custom handling (except for 
selling, consigning or exporting) or other similar activities paid for 
on a fee-for-service basis by a grower who retains the ownership of the 
pecans; or transfers between handlers.


Sec.  986.21  Handler inventory.

    Handler inventory means all pecans, shelled or inshell, as of any 
date and wherever located within the production area, then held by a 
handler for their account.


Sec.  986.22  Handler-cleaned production.

    Handler-cleaned production is production that is received, 
purchased or consigned from the grower by a handler prior to processing 
through a cleaning plant, and then subsequently processed through a 
cleaning plant so as to determine volumes of improved pecans, native 
and seedling pecans, and substandard pecans.


Sec.  986.23  Hican.

    Hican means a tree resulting from a cross between a pecan and some 
other type of hickory (members of the genus Carya) or the nut from such 
a hybrid tree.


Sec.  986.24  Inshell pecans.

    Inshell pecans are nuts whose kernel is maintained inside the 
shell.


Sec.  986.25  Inspection Service.

    Inspection service means the Federal-State Inspection Service or 
any other inspection service authorized by the Secretary.


Sec.  986.26  Inter-handler transfer.

    Inter-handler transfer means the movement of inshell pecans from 
one handler to another inside the production area for the purposes of 
additional handling. Any assessments or requirements under this part 
with respect to inshell pecans so transferred may be assumed by the 
receiving handler.


Sec.  986.27  Merchantable pecans.

    (a) Inshell. Merchantable inshell pecans mean all inshell pecans 
meeting the minimum grade regulations that may be effective pursuant to 
Sec.  986.69, Authorities regulating handling.
    (b) Shelled. Merchantable shelled pecans means all shelled pecans 
meeting the minimum grade regulations that may be effective pursuant to 
Sec.  986.69, Authorities regulating handling.


Sec.  986.28  Pack.

    Pack means to clean, grade, or otherwise prepare pecans for market 
as inshell or shelled pecans.


Sec.  986.29  Pecans.

    (a) Pecans means and includes any and all varieties or subvarieties 
of Genus: Carya, Species: illinoensis, expressed also as Carya 
illinoinensis (syn. C. illinoenses) including all varieties thereof, 
excluding hicans, that are produced in the production area and are 
classified as:
    (1) Native or seedling pecans harvested from non-grafted or 
naturally propagated tree varieties;
    (2) Improved pecans harvested from grafted tree varieties bred or 
selected for superior traits of nut size, ease of shelling, production 
characteristics, and resistance to certain insects and diseases, 
including but not limited to: Desirable, Elliot, Forkert, Sumner, 
Creek, Excel, Gracross, Gratex, Gloria Grande, Kiowa, Moreland, Sioux, 
Mahan, Mandan, Moneymaker, Morrill, Cunard, Zinner, Byrd, McMillan, 
Stuart, Pawnee, Eastern and Western Schley, Wichita, Success, Cape 
Fear, Choctaw, Cheyenne, Lakota, Kanza, Caddo, and Oconee; and
    (3) Substandard pecans that are blowouts, cracks, stick-tights, and 
other inferior quality pecans, whether native or improved, that, with 
further handling, can be cleaned and eventually sold into the stream of 
commerce.
    (b) The Council, with the approval of the Secretary, may recognize 
new or delete obsolete varieties or sub-varieties for each category.


Sec.  986.30  Person.

    Person means an individual, partnership, corporation, association, 
or any other business unit.


Sec.  986.31  Production area.

    Production area means the following fifteen pecan-producing states 
within the United States: Alabama, Arkansas, Arizona, California, 
Florida, Georgia, Kansas, Louisiana, Mississippi, Missouri, North 
Carolina, New Mexico, Oklahoma, South Carolina, and Texas.


Sec.  986.32  Proprietary capacity.

    Proprietary capacity means the capacity or interest of a grower or 
handler that, either directly or through one or more intermediaries or 
affiliates, is a property owner together with all the appurtenant 
rights of an owner, including the right to vote the interest in that 
capacity as an individual, a shareholder, member of a cooperative, 
partner, trustee or in any other capacity with respect to any other 
business unit.


Sec.  986.33  Regions.

    (a) Regions within the production area shall consist of the 
following:
    (1) Eastern Region, consisting of: Alabama, Florida, Georgia, North 
Carolina, South Carolina
    (2) Central Region, consisting of: Arkansas, Kansas, Louisiana, 
Mississippi, Missouri, Oklahoma, Texas
    (3) Western Region, consisting of: Arizona, California, New Mexico
    (b) With the approval of the Secretary, the boundaries of any 
region may be changed pursuant to Sec.  986.58, Reapportionment and 
reestablishment of regions.


Sec.  986.34  Representative period.

    Representative period is the previous four fiscal years for which a 
grower's annual average production is calculated, or any other period 
recommended by the Council and approved by the Secretary.


Sec.  986.35  Secretary.

    Secretary means the Secretary of Agriculture of the United States, 
or any other officer or employee of the United States Department of 
Agriculture who is, or who may be, authorized to perform the duties of 
the Secretary of Agriculture of the United States.


Sec.  986.36  Sheller.

    Sheller refers to any person who converts inshell pecans to shelled 
pecans and sells the output in any and all markets in the stream of 
commerce, both within and outside of the production area; Provided, 
That the term ``sheller'' shall only include those who shell more than 
1 million pounds of inshell pecans in a fiscal year. The Council may 
recommend changes to this definition subject to the approval of the 
Secretary.


Sec.  986.37  Shelled pecans.

    Shelled pecans are pecans whose shells have been removed leaving 
only edible kernels, kernel pieces or pecan meal. Shelled pecans are 
synonymous with pecan meats.

[[Page 10146]]

Sec.  986.38  Stick-tights.

    Stick-tights means pecans whose outer shuck has adhered to the 
shell causing their value to decrease or be discounted.


Sec.  986.39  Trade supply.

    Trade supply means the quantity of merchantable inshell or shelled 
pecans that growers will supply to handlers during a fiscal year for 
sale in the United States and abroad or, in the absence of handler 
regulations Sec.  986.69 setting forth minimum grade regulations for 
merchantable pecans, the sum of handler-cleaned and grower-cleaned 
production.


Sec.  986.40  Unassessed inventory.

    Unassessed inventory means inshell pecans held by growers or 
handlers for which no assessment has been paid to the Council.


Sec.  986.41  Varieties.

    Varieties mean and include all cultivars, classifications, or 
subdivisions of pecans.


Sec.  986.42  Warehousing.

    Warehousing means to hold assessed or unassessed inventory.


Sec.  986.43  Weight.

    Weight means pounds of inshell pecans, received by handler within 
each fiscal year; Provided, That for shelled pecans the actual weight 
shall be multiplied by two to obtain an inshell weight.

Administrative Body


Sec.  986.45  American Pecan Council.

    The American Pecan Council is hereby established consisting of 17 
members selected by the Secretary, each of whom shall have an alternate 
member nominated with the same qualifications as the member. The 17 
members shall include nine (9) grower seats, six (6) sheller seats, and 
two (2) at-large seats allocated to one accumulator and one public 
member. The grower and sheller nominees and their alternates shall be 
growers and shellers at the time of their nomination and for the 
duration of their tenure. Grower and sheller members and their 
alternates shall be selected by the Secretary from nominees submitted 
by the Council. The two at-large seats shall be nominated by the 
Council and appointed by the Secretary.
    (a) Each region shall be allocated the following member seats:
    (1) Eastern Region: three (3) growers and two (2) shellers;
    (2) Central Region: three (3) growers and two (2) shellers;
    (3) Western Region: three (3) growers and two (2) shellers.
    (b) Within each region, the grower and sheller seats shall be 
defined as follows:
    (1) Grower seats: Each region shall have a grower Seat 1 and Seat 2 
allocated to growers whose acreage is equal to or exceeds 176 pecan 
acres. Each region shall also have a grower Seat 3 allocated to a 
grower whose acreage is less than 176 pecan acres.
    (2) Sheller seats: Each region shall have a sheller Seat 1 
allocated to a sheller who handles more than 12.5 million pounds of 
inshell pecans in the fiscal year preceding nomination, and a sheller 
Seat 2 allocated to a sheller who handles less than or equal to 12.5 
million pounds of inshell pecans in the fiscal year preceding 
nomination.
    (c) The Council may recommend, subject to the approval of the 
Secretary, revisions to the above requirements for grower and sheller 
seats to accommodate changes within the industry.


Sec.  986.46  Council nominations and voting.

    Nomination of Council members and alternate members shall follow 
the procedure set forth in this section, or as may be changed as 
recommended by the Council and approved by the Secretary. All nominees 
must meet the requirements set forth in Sec. Sec.  986.45, American 
Pecan Council, and 986.48, Eligibility, or as otherwise identified by 
the Secretary, to serve on the Council.
    (a) Initial members. Nominations for initial Council members and 
alternate members shall be conducted by the Secretary by either holding 
meetings of shellers and growers, by mail, or by email, and shall be 
submitted on approved nomination forms. Eligibility to cast votes on 
nomination ballots, accounting of nomination ballot results, and 
identification of member and alternate nominees shall follow the 
procedures set forth in this section, or by any other criteria deemed 
necessary by the Secretary. The Secretary shall select and appoint the 
initial members and alternate members of the Council.
    (b) Successor members. Subsequent nominations of Council members 
and alternate members shall be conducted as follows:
    (1) Call for nominations. (i) Nominations for the grower member 
seats for each region shall be received from growers in that region on 
approved forms containing the information stipulated in this section.
    (ii) If a grower is engaged in producing pecans in more than one 
region, such grower shall nominate in the region in which they grow the 
largest volume of their production.
    (iii) Nominations for the sheller member seats for each region 
shall be received from shellers in that region on approved forms 
containing the information stipulated in this section.
    (iv) If a sheller is engaged in handling in more than one region, 
such sheller shall nominate in the region in which they shelled the 
largest volume in the preceding fiscal year.
    (2) Voting for nominees. (i) Only growers, through duly authorized 
officers or employees of growers, if applicable, may participate in the 
nomination of grower member nominees and their alternates. Each grower 
shall be entitled to cast only one nomination ballot for each of the 
three grower seats in their region.
    (ii) If a grower is engaged in producing pecans in more than one 
region, such grower shall cast their nomination ballot in the region in 
which they grow the largest volume of their production. Notwithstanding 
this stipulation, such grower may vote their volume produced in any or 
all of the three regions.
    (iii) Only shellers, through duly authorized officers or employees 
of shellers, if applicable, may participate in the nomination of the 
sheller member nominees and their alternates. Each sheller shall be 
entitled to cast only one nomination ballot for each of the two sheller 
seats in their region.
    (iv) If a sheller is engaged in handling in more than one region, 
such sheller shall cast their nomination ballot in the region in which 
they shelled the largest volume in the preceding fiscal year. 
Notwithstanding this stipulation, such sheller may vote their volume 
handled in all three regions.
    (v) If a person is both a grower and a sheller of pecans, such 
person may not participate in both grower and sheller nominations. Such 
person must elect to participate either as a grower or a sheller.
    (3) Nomination procedure for grower seats. (i) The Council shall 
mail to all growers who are on record with the Council within the 
respective regions a grower nomination ballot indicating the nominees 
for each of the three grower member seats, along with voting 
instructions. Growers may cast ballots on the proper ballot form either 
at meetings of growers, by mail, or by email as designated by the 
Council. For ballots to be considered, they must be submitted on the 
proper forms with all required information, including signatures.
    (ii) On the ballot, growers shall indicate their vote for the 
grower nominee candidates for the grower seats and also indicate their 
average annual

[[Page 10147]]

volume of inshell pecan production for the preceding four fiscal years.
    (iii) Seat 1 (growers with equal to or more than 176 acres of 
pecans). The nominee for this seat in each region shall be the grower 
receiving the highest volume of production (pounds of inshell pecans) 
votes from the respective region, and the grower receiving the second 
highest volume of production votes shall be the alternate member 
nominee for this seat. In case of a tie vote, the nominee shall be 
selected by a drawing.
    (iv) Seat 2 (growers with equal to or more than 176 acres of 
pecans). The nominee for this seat in each region shall be the grower 
receiving the highest number of votes from their respective region, and 
the grower receiving the second highest number of votes shall be the 
alternate member nominee for this seat. In case of a tie vote, the 
nominee shall be selected by a drawing.
    (v) Seat 3 (grower with less than 176 acres of pecans). The nominee 
for this seat in each region shall be the grower receiving the highest 
number of votes from the respective region, and the grower receiving 
the second highest number of votes shall be the alternate member 
nominee for this seat. In case of a tie vote, the nominee shall be 
selected by a drawing.
    (4) Nomination procedure for sheller seats. (i) The Council shall 
mail to all shellers who are on record with the Council within the 
respective regions the sheller ballot indicating the nominees for each 
of the two sheller member seats in their respective regions, along with 
voting instructions. Shellers may cast ballots on approved ballot forms 
either at meetings of shellers, by mail, or by email as designated by 
the Council. For ballots to be considered, they must be submitted on 
the approved forms with all required information, including signatures.
    (ii) Seat 1 (shellers handling more than 12.5 million lbs. of 
inshell pecans in the preceding fiscal year). The nominee for this seat 
in each region shall be assigned to the sheller receiving the highest 
number of votes from the respective region, and the sheller receiving 
the second highest number of votes shall be the alternate member 
nominee for this seat. In case of a tie vote, the nominee shall be 
selected by a drawing.
    (iii) Seat 2 (shellers handling equal to or less than 12.5 million 
lbs. of inshell pecans in the preceding fiscal year). The nominee for 
this seat in each region shall be assigned to the sheller receiving the 
highest number of votes from the respective region, and the sheller 
receiving the second highest number of votes shall be the alternate 
member nominee for this seat. In case of a tie vote, the nominee shall 
be selected by a drawing.
    (5) Reports to the Secretary. Nominations in the foregoing manner 
received by the Council shall be reported to the Secretary on or before 
15 of each July of any year in which nominations are held, together 
with a certified summary of the results of the nominations and other 
information deemed by the Council to be pertinent or requested by the 
Secretary. From those nominations, the Secretary shall select the 
fifteen grower and sheller members of the Council and an alternate for 
each member, unless the Secretary rejects any nomination submitted. In 
the event the Secretary rejects a nomination, a second nomination 
process may be conducted to identify other nominee candidates, the 
resulting nominee information may be reported to the Secretary after 
July 15 and before September 15. If the Council fails to report 
nominations to the Secretary in the manner herein specified, the 
Secretary may select the members without nomination. If nominations for 
the public and accumulator at-large members are not submitted by 
September 15 of any year in which their nomination is due, the 
Secretary may select such members without nomination.
    (6) At-large members. The grower and sheller members of the Council 
shall select one public member and one accumulator member and 
respective alternates for consideration, selection and appointment by 
the Secretary. The public member and alternate public member may not 
have any financial interest, individually or corporately, or 
affiliation with persons vested in the pecan industry. The accumulator 
member and alternate accumulator member must meet the criteria set 
forth in Sec.  986.1, Accumulator, and may reside or maintain a place 
of business in any region.
    (7) Nomination forms. The Council may distribute nomination forms 
at meetings, by mail, by email, or by any other form of distribution 
recommended by the Council and approved by the Secretary.
    (i) Grower nomination forms. Each nomination form submitted by a 
grower shall include the following information:
    (A) The name of the nominated grower;
    (B) The name and signature of the nominating grower;
    (C) Two additional names and respective signatures of growers in 
support of the nomination;
    (D) Any other such information recommended by the Council and 
approved by the Secretary.
    (ii) Sheller nomination forms. Each nomination form submitted by a 
sheller shall include the following:
    (A) The name of the nominated sheller;
    (B) The name and signature of the nominating sheller;
    (C) One additional name and signature of a sheller in support of 
the nomination;
    (D) Any other such information recommended by the Council and 
approved by the Secretary.
    (8) Changes to the nomination and voting procedures.
    The Council may recommend, subject to the approval of the 
Secretary, a change to these procedures should the Council determine 
that a revision is necessary.


Sec.  986.47  Alternate members.

    (a) Each member of the Council shall have an alternate member to be 
nominated in the same manner as the member.
    (b) An alternate for a member of the Council shall act in the place 
and stead of such member in their absence or in the event of their 
death, removal, resignation, or disqualification, until the next 
nomination and elections take place for the Council or the vacancy has 
been filled pursuant to Sec.  986.48, Eligibility.
    (c) In the event any member of the Council and their alternate are 
both unable to attend a meeting of the Council, any alternate for any 
other member representing the same group as the absent member may serve 
in the place of the absent member.


Sec.  986.48  Eligibility.

    (a) Each grower member and alternate shall be, at the time of 
selection and during the term of office, a grower or an officer, or 
employee, of a grower in the region and in the classification for which 
nominated.
    (b) Each sheller member and alternate shall be, at the time of 
selection and during the term of office, a sheller or an officer or 
employee of a sheller in the region and in the classification for which 
nominated.
    (c) A grower can be a nominee for only one grower member seat. If a 
grower is nominated for two grower member seats, he or she shall select 
the seat in which he or she desires to run, and the grower ballot shall 
reflect that selection.
    (d) Any member or alternate member who at the time of selection was 
employed by or affiliated with the

[[Page 10148]]

person who is nominated shall, upon termination of that relationship, 
become disqualified to serve further as a member and that position 
shall be deemed vacant.
    (e) No person nominated to serve as a public member or alternate 
public member shall have a financial interest in any pecan grower or 
handling operation.


Sec.  986.49  Acceptance.

    Each person to be selected by the Secretary as a member or as an 
alternate member of the Council shall, prior to such selection, qualify 
by advising the Secretary that if selected, such person agrees to serve 
in the position for which that nomination has been made.


Sec.  986.50  Term of office.

    (a) Selected members and alternate members of the Council shall 
serve for terms of four years: Provided, That at the end of the first 
four (4) year term and in the nomination and selection of the second 
Council only, four of the grower member and alternate seats and three 
of the sheller member and alternate seats shall be seated for terms of 
two years so that approximately half of the memberships' and 
alternates' terms expire every two years thereafter. Member and 
alternate seats assigned two-year terms for the seating of the second 
Council only shall be as follows:
    (1) Grower member Seat 2 in all regions shall be assigned a two-
year term;
    (2) Grower member Seat 3 in all regions shall, by drawing, identify 
one member seat to be assigned a two-year term; and,
    (3) Sheller Seat 2 in all regions shall be assigned a two-year 
term.
    (b) Council members and alternates may serve up to two consecutive, 
four-year terms of office. Subject to section (c) below, in no event 
shall any member or alternate serve more than eight consecutive years 
on the Council as either a member or an alternate. However, if 
selected, an alternate having served up to two consecutive terms may 
immediately serve as a member for two consecutive terms without any 
interruption in service. The same is true for a member who, after 
serving for up to two consecutive terms, may serve as an alternate if 
nominated without any interruption in service. A person having served 
the maximum number of terms as set forth above may not serve again as a 
member or an alternate for at least twelve consecutive months. For 
purposes of determining when a member or alternate has served two 
consecutive terms, the accrual of terms shall begin following any 
period of at least twelve consecutive months out of office.
    (c) Each member and alternate member shall continue to serve until 
a successor is selected and has qualified.
    (d) A term of office shall begin as set forth in the by-laws or as 
directed by the Secretary each year for all members.
    (e) The Council may recommend, subject to approval of the 
Secretary, revisions to the start day for the term of office, the 
number of years in a term, and the number of terms a member or an 
alternate can serve.


Sec.  986.51  Vacancy.

    Any vacancy on the Council occurring by the failure of any person 
selected to the Council to qualify as a member or alternate member due 
to a change in status making the member ineligible to serve, or due to 
death, removal, or resignation, shall be filled, by a majority vote of 
the Council for the unexpired portion of the term. However, that person 
shall fulfill all the qualifications set forth in this part as required 
for the member whose office that person is to fill. The qualifications 
of any person to fill a vacancy on the Council shall be certified in 
writing to the Secretary. The Secretary shall notify the Council if the 
Secretary determines that any such person is not qualified.


Sec.  986.52  Council expenses.

    The members and their alternates of the Council shall serve without 
compensation, but shall be reimbursed for the reasonable and necessary 
expenses incurred by them in the performance of their duties under this 
part.


Sec.  986.53  Powers.

    The Council shall have the following powers:
    (a) To administer the provisions of this part in accordance with 
its terms;
    (b) To make bylaws, rules and regulations to effectuate the terms 
and provisions of this part;
    (c) To receive, investigate, and report to the Secretary complaints 
of violations of this part; and
    (d) To recommend to the Secretary amendments to this part.


Sec.  986.54  Duties.

    The duties of the Council shall be as follows:
    (a) To act as intermediary between the Secretary and any handler or 
grower;
    (b) To keep minute books and records which will clearly reflect all 
of its acts and transactions, and such minute books and records shall 
at any time be subject to the examination of the Secretary;
    (c) To furnish to the Secretary a complete report of all meetings 
and such other available information as he or she may request;
    (d) To appoint such employees as it may deem necessary and to 
determine the salaries, define the duties, and fix the bonds of such 
employees;
    (e) To cause the books of the Council to be audited by one or more 
certified public accountants at least once for each fiscal year and at 
such other times as the Council deems necessary or as the Secretary may 
request, and to file with the Secretary three copies of all audit 
reports made;
    (f) To investigate the growing, shipping and marketing conditions 
with respect to pecans and to assemble data in connection therewith;
    (g) To investigate compliance with the provisions of this part; 
and,
    (h) To recommend by-laws, rules and regulations for the purpose of 
administering this part.


Sec.  986.55  Procedure.

    (a) The members of the Council shall select a chairman from their 
membership, and shall select such other officers and adopt such rules 
for the conduct of Council business as they deem advisable.
    (b) The Council may provide for meetings by telephone, or other 
means of communication, and any vote cast at such a meeting shall be 
confirmed promptly in writing. The Council shall give the Secretary the 
same notice of its meetings as is given to members of the Council.
    (c) Quorum. A quorum of the Council shall be any twelve voting 
Council members. The vote of a majority of members present at a meeting 
at which there is a quorum shall constitute the act of the Council; 
Provided, That:
    (1) Actions of the Council with respect to the following issues 
shall require a two-thirds (12 members) concurring vote of the Council:
    (i) Establishment of or changes to by-laws;
    (ii) Appointment or administrative issues relating to the program's 
manager or chief executive officer;
    (iii) Budget;
    (iv) Assessments;
    (v) Compliance and audits;
    (vi) Reestablishment of regions and reapportionment or reallocation 
of Council membership;
    (vii) Modifying definitions of grower and sheller;
    (viii) Research or promotion activities under Sec.  986.68;
    (ix) Grade, quality and size regulation under Sec.  986.69(a)(1) 
and (2);
    (x) Pack and container regulation under Sec.  986.69(a)(3); and,

[[Page 10149]]

    (2) Actions of the Council with respect to the securing of 
commercial bank loans for the purpose of financing start-up costs of 
the Council and its activities or securing financial assistance in 
emergency situations shall require a unanimous vote of all members 
present at an in-person meeting; Provided, That in the event of an 
emergency that warrants immediate attention sooner than a face-to-face 
meeting is possible, a vote for financing may be taken. In such event, 
the Council's first preference is a videoconference and second 
preference is phone conference, both followed by written confirmation 
of the members attending the meeting.


Sec.  986.56  Right of the Secretary.

    The members and alternates for members and any agent or employee 
appointed or employed by the Council shall be subject to removal or 
suspension by the Secretary at any time. Each and every regulation, 
decision, determination, or other act shall be subject to the 
continuing right of the Secretary to disapprove of the same at any 
time, and, upon such disapproval, shall be deemed null and void, except 
as to acts done in reliance thereon or in compliance therewith prior to 
such disapproval by the Secretary.


Sec.  986.57  Funds and other property.

    (a) All funds received pursuant to any of the provisions of this 
part shall be used solely for the purposes specified in this part, and 
the Secretary may require the Council and its members to account for 
all receipts and disbursements.
    (b) Upon the death, resignation, removal, disqualification, or 
expiration of the term of office of any member or employee, all books, 
records, funds, and other property in their possession belonging to the 
Council shall be delivered to their successor in office or to the 
Council, and such assignments and other instruments shall be executed 
as may be necessary to vest in such successor or in the Council full 
title to all the books, records, funds, and other property in the 
possession or under the control of such member or employee pursuant to 
this subpart.


Sec.  986.58  Reapportionment and reestablishment of regions.

    The Council may recommend, subject to approval of the Secretary, 
reestablishment of regions, reapportionment of members among regions, 
and may revise the groups eligible for representation on the Council. 
In recommending any such changes, the following shall be considered:
    (a) Shifts in acreage within regions and within the production area 
during recent years;
    (b) The importance of new production in its relation to existing 
regions;
    (c) The equitable relationship between Council apportionment and 
regions;
    (d) Changes in industry structure and/or the percentage of crop 
represented by various industry entities; and
    (e) Other relevant factors.

Expenses, Assessments and Marketing Policy


Sec.  986.60  Budget.

    As soon as practicable before the beginning of each fiscal year, 
and as may be necessary thereafter, the Council shall prepare a budget 
of income and expenditures necessary for the administration of this 
part. The Council may recommend a rate of assessment calculated to 
provide adequate funds to defray its proposed expenditures. The Council 
shall present such budget to the Secretary with an accompanying report 
showing the basis for its calculations, and all shall be subject to 
Secretary approval.


Sec.  986.61  Assessments.

    (a) Each handler who first handles inshell pecans shall pay 
assessments to the Council. Assessments collected each fiscal year 
shall defray expenses which the Secretary finds reasonable and likely 
to be incurred by the Council during that fiscal year. Each handler's 
share of assessments paid to the Council shall be equal to the ratio 
between the total quantity of inshell pecans handled by them as the 
first handler thereof during the applicable fiscal year, and the total 
quantity of inshell pecans handled by all regulated handlers in the 
production area during the same fiscal year. The payment of assessments 
for the maintenance and functioning of the Council may be required 
under this part throughout the period it is in effect irrespective of 
whether particular provisions thereof are suspended or become 
inoperative. Handlers may avail themselves of an inter-handler 
transfer, as provided for in Sec.  986.62, Inter-handler transfers.
    (b) Based upon a recommendation of the Council or other available 
data, the Secretary shall fix three base rates of assessment for 
inshell pecans handled during each fiscal year. Such base rates shall 
include one rate of assessment for any or all varieties of pecans 
classified as native and seedling; one rate of assessment for any or 
all varieties of pecans classified as improved; and one rate of 
assessment for any pecans classified as substandard.
    (c) Upon implementation of this part and subject to the approval of 
the Secretary, initial assessment rates per classification shall be set 
within the following prescribed ranges: Native and seedling classified 
pecans shall be assessed at one-cent to two-cents per pound; improved 
classified pecans shall be assessed at two-cents to three-cents per 
pound; and, substandard classified pecans shall be assessed at one-cent 
to two-cents per pound. These assessment ranges shall be in effect for 
the initial four years of the order.
    (d) Subsequent assessment rates shall not exceed two percent of the 
aggregate of all prices in each classification across the production 
area based on Council data, or the average of USDA reported average 
price received by growers for each classification, in the preceding 
fiscal year as recommended by the Council and approved by the 
Secretary. After four years from the implementation of this part, the 
Council may recommend, subject to the approval of the Secretary, 
revisions to this calculation or assessment ranges.
    (e) The Council, with the approval of the Secretary, may revise the 
assessment rates if it determines, based on information including crop 
size and value, that the action is necessary, and if the revision does 
not exceed the assessment limitation specified in this section and is 
made prior to the final billing of the assessment.
    (f) In order to provide funds for the administration of the 
provisions of this part during the first part of a fiscal year, before 
sufficient operating income is available from assessments, the Council 
may accept the payment of assessments in advance and may also borrow 
money for such purposes; Provided, That no loan may amount to more than 
50 percent of projected assessment revenue projected for the year in 
which the loan is secured, and the loan must be repaid within five 
years.
    (g) If a handler does not pay assessments within the time 
prescribed by the Council, the assessment may be increased by a late 
payment charge and/or an interest rate charge at amounts prescribed by 
the Council with approval of the Secretary.
    (h) On August 31 of each year, every handler warehousing inshell 
pecans shall be identified as the first handler of those pecans and 
shall be required to pay the assessed rate on the category of pecans in 
their possession on that date. The terms of this paragraph may be 
revised subject to the recommendation of the Council and approval by 
the Secretary.
    (i) On August 31 of each year, all inventories warehoused by 
growers

[[Page 10150]]

from the current fiscal year shall cease to be eligible for inter-
handler transfer treatment. Instead, such inventory will require the 
first handler that handles such inventory to pay the assessment thereon 
in accordance with the prevailing assessment rates at the time of 
transfer from the grower to the said handler. The terms of this 
paragraph may be revised subject to the recommendation of the Council 
and approval by the Secretary.


Sec.  986.62  Inter-handler transfers.

    Any handler inside the production area, except as provided for in 
Sec.  986.61 (h) and (i), Assessments, may transfer inshell pecans to 
another handler inside the production area for additional handling, and 
any assessments or other marketing order requirements with respect to 
pecans so transferred may be assumed by the receiving handler. The 
Council, with the approval of the Secretary, may establish methods and 
procedures, including necessary reports, to maintain accurate records 
for such transfers. All inter-handler transfers will be documented by 
forms or electronic transfer receipts approved by the Council, and all 
forms or electronic transfer receipts used for inter-handler transfers 
shall require that copies be sent to the selling party, the receiving 
party, and the Council. Such forms must state which handler has the 
assessment responsibilities.


Sec.  986.63  Contributions.

    The Council may accept voluntary contributions. Such contributions 
may only be accepted if they are free from any encumbrances or 
restrictions on their use and the Council shall retain complete control 
of their use. The Council may receive contributions from both within 
and outside of the production area.


Sec.  986.64  Accounting.

    (a) Assessments collected in excess of expenses incurred shall be 
accounted for in accordance with one of the following:
    (1) Excess funds not retained in a reserve, as provided in 
paragraph (a)(2) of this section shall be refunded proportionately to 
the persons from whom they were collected; or
    (2) The Council, with the approval of the Secretary, may carry over 
excess funds into subsequent fiscal periods as reserves: Provided, That 
funds already in reserves do not equal approximately three fiscal 
years' expenses. Such reserve funds may be used:
    (i) To defray expenses during any fiscal period prior to the time 
assessment income is sufficient to cover such expenses;
    (ii) To cover deficits incurred during any fiscal period when 
assessment income is less than expenses;
    (iii) To defray expenses incurred during any period when any or all 
provisions of this part are suspended or are inoperative; and
    (iv) To cover necessary expenses of liquidation in the event of 
termination of this part.
    (b) Upon such termination, any funds not required to defray the 
necessary expenses of liquidation shall be disposed of in such manner 
as the Secretary may determine to be appropriate. To the extent 
practical, such funds shall be returned pro rata to the persons from 
whom such funds were collected.
    (c) All funds received by the Council pursuant to the provisions of 
this part shall be used solely for the purposes specified in this part 
and shall be accounted for in the manner provided for in this part. The 
Secretary may at any time require the Council and its members to 
account for all receipts and disbursements.
    (d) Upon the removal or expiration of the term of office of any 
member of the Council, such member shall account for all receipts and 
disbursements and deliver all property and funds in their possession to 
the Council, and shall execute such assignments and other instruments 
as may be necessary or appropriate to vest in the Council full title to 
all of the property, funds, and claims vested in such member pursuant 
to this part.
    (e) The Council may make recommendations to the Secretary for one 
or more of the members thereof, or any other person, to act as a 
trustee for holding records, funds, or any other Council property 
during periods of suspension of this subpart, or during any period or 
periods when regulations are not in effect and if the Secretary 
determines such action appropriate, he or she may direct that such 
person or persons shall act as trustee or trustees for the Council.


Sec.  986.65  Marketing policy.

    By the end of each fiscal year, the Council shall make a report and 
recommendation to the Secretary on the Council's proposed marketing 
policy for the next fiscal year. Each year such report and 
recommendation shall be adopted by the affirmative vote of at least 
two-thirds (2/3) of the members of the Council and shall include the 
following and, where applicable, on an inshell basis:
    (a) Estimate of the grower-cleaned production and handler-cleaned 
production in the area of production for the fiscal year;
    (b) Estimate of disappearance;
    (c) Estimate of the improved, native, and substandard pecans;
    (d) Estimate of the handler inventory on August 31, of inshell and 
shelled pecans;
    (e) Estimate of unassessed inventory;
    (f) Estimate of the trade supply, taking into consideration 
imports, and other factors;
    (g) Preferable handler inventory of inshell and shelled pecans on 
August 31 of the following year;
    (h) Projected prices in the new fiscal year;
    (i) Competing nut supplies; and
    (j) Any other relevant factors.

Authorities Relating to Research, Promotion, Data Gathering, Packaging, 
Grading, Compliance and Reporting


Sec.  986.67  Recommendations for regulations.

    Upon complying with Sec.  986.65, Marketing policy, the Council may 
propose regulations to the Secretary whenever it finds that such 
proposed regulations may assist in effectuating the declared policy of 
the Act.


Sec.  986.68  Authority for research and promotion activities.

    The Council, with the approval of the Secretary, may establish or 
provide for the establishment of production research, marketing 
research and development projects, and marketing promotion, including 
paid generic advertising, designed to assist, improve, or promote the 
marketing, distribution, and consumption or efficient production of 
pecans including product development, nutritional research, and 
container development. The expenses of such projects shall be paid from 
funds collected pursuant to this part.


Sec.  986.69  Authorities regulating handling.

    (a) The Council may recommend, subject to the approval of the 
Secretary, regulations that:
    (1) Establish handling requirements or minimum tolerances for 
particular grades, sizes, or qualities, or any combination thereof, of 
any or all varieties or classifications of pecans during any period;
    (2) Establish different handling requirements or minimum tolerances 
for particular grades, sizes, or qualities, or any combination thereof 
for different varieties or classifications, for different containers, 
for different portions of the production area, or any combination of 
the foregoing, during any period;

[[Page 10151]]

    (3) Fix the size, capacity, weight, dimensions, or pack of the 
container or containers, which may be used in the packaging, 
transportation, sale, preparation for market, shipment, or other 
handling of pecans; and
    (4) Establish inspection and certification requirements for the 
purposes of paragraphs (a)(1) through (3) of this section.
    (b) Regulations issued hereunder may be amended, modified, 
suspended, or terminated whenever it is determined:
    (1) That such action is warranted upon recommendation of the 
Council and approval by the Secretary, or other available information; 
or
    (2) That regulations issued hereunder no longer tend to effectuate 
the declared policy of the Act.
    (c) The authority to regulate as put forward in this subsection 
shall not in any way constitute authority for the Council to recommend 
volume regulation, such as reserve pools, producer allotments, or 
handler withholding requirements which limit the flow of product to 
market for the purpose of reducing market supply.
    (d) The Council may recommend, subject to the approval of the 
Secretary, rules and regulations to effectuate this subpart.


Sec.  986.70  Handling for special purposes.

    Regulations in effect pursuant to Sec.  986.69, Authorities 
regulating handling, may be modified, suspended, or terminated to 
facilitate handling of pecans for:
    (a) Relief or charity;
    (b) Experimental purposes; and
    (c) Other purposes which may be recommended by the Council and 
approved by the Secretary.


Sec.  986.71  Safeguards.

    The Council, with the approval of the Secretary, may establish 
through rules such requirements as may be necessary to establish that 
shipments made pursuant to Sec.  986.70, Handling for special purposes, 
were handled and used for the purpose stated.


Sec.  986.72  Notification of regulation.

    The Secretary shall promptly notify the Council of regulations 
issued or of any modification, suspension, or termination thereof. The 
Council shall give reasonable notice thereof to industry participants.

Reports, Books and Other Records


Sec.  986.75  Reports of handler inventory.

    Each handler shall submit to the Council in such form and on such 
dates as the Council may prescribe, reports showing their inventory of 
inshell and shelled pecans.


Sec.  986.76  Reports of merchantable pecans handled.

    Each handler who handles merchantable pecans at any time during a 
fiscal year shall submit to the Council in such form and at such 
intervals as the Council may prescribe, reports showing the quantity so 
handled and such other information pertinent thereto as the Council may 
specify.


Sec.  986.77  Reports of pecans received by handlers.

    Each handler shall file such reports of their pecan receipts from 
growers, handlers, or others in such form and at such times as may be 
required by the Council with the approval of the Secretary.


Sec.  986.78  Other handler reports.

    Upon request of the Council made with the approval of the Secretary 
each handler shall furnish such other reports and information as are 
needed to enable the Council to perform its duties and exercise its 
powers under this part.


Sec.  986.79  Verification of reports.

    For the purpose of verifying and checking reports filed by handlers 
on their operations, the Secretary and the Council, through their duly 
authorized representatives, shall have access to any premises where 
pecans and pecan records are held. Such access shall be available at 
any time during reasonable business hours. Authorized representatives 
of the Council or the Secretary shall be permitted to inspect any 
pecans held and any and all records of the handler with respect to 
matters within the purview of this part. Each handler shall maintain 
complete records on the receiving, holding, and disposition of all 
pecans. Each handler shall furnish all labor necessary to facilitate 
such inspections at no expense to the Council or the Secretary. Each 
handler shall store all pecans held by him in such manner as to 
facilitate inspection and shall maintain adequate storage records which 
will permit accurate identification with respect to inspection 
certificates of respective lots and of all such pecans held or disposed 
of theretofore. The Council, with the approval of the Secretary, may 
establish any methods and procedures needed to verify reports.


Sec.  986.80  Certification of reports.

    All reports submitted to the Council as required in this part shall 
be certified to the Secretary and the Council as to the completeness 
and correctness of the information contained therein.


Sec.  986.81  Confidential information.

    All reports and records submitted by handlers to the Council, which 
include data or information constituting a trade secret or disclosing 
the trade position, or financial condition or business operations of 
the handler shall be kept in the custody of one or more employees of 
the Council and shall be disclosed to no person except the Secretary.


Sec.  986.82  Books and other records.

    Each handler shall maintain such records of pecans received, held 
and disposed of by them as may be prescribed by the Council for the 
purpose of performing its duties under this part. Such books and 
records shall be retained and be available for examination by 
authorized representatives of the Council and the Secretary for the 
current fiscal year and the preceding three (3) fiscal years.

Additional Provisions


Sec.  986.86  Exemptions.

    (a) Any handler may handle inshell pecans within the production 
area free of the requirements of this part if such pecans are handled 
in quantities not exceeding 1,000 inshell pounds during any fiscal 
year.
    (b) Any handler may handle shelled pecans within the production 
area free of the requirements of this part if such pecans are handled 
in quantities not exceeding 500 shelled pounds during any fiscal year.
    (c) Mail order sales are not exempt sales under this part.
    (d) The Council, with the approval of the Secretary, may establish 
such rules, regulations, and safeguards, and require such reports, 
certifications, and other conditions, as are necessary to ensure 
compliance with this part.


Sec.  986.87  Compliance.

    Except as provided in this subpart, no handler shall handle pecans, 
the handling of which has been prohibited by the Secretary in 
accordance with provisions of this part, or the rules and regulations 
thereunder.


Sec.  986.88  Duration of immunities.

    The benefits, privileges, and immunities conferred by virtue of 
this part shall cease upon termination hereof, except with respect to 
acts done under and during the existence of this part.


Sec.  986.89  Separability.

    If any provision of this part is declared invalid, or the 
applicability thereof to any person, circumstance, or thing is held 
invalid, the validity of the remaining provisions and the

[[Page 10152]]

applicability thereof to any other person, circumstance, or thing shall 
not be affected thereby.


Sec.  986.90  Derogation.

    Nothing contained in this part is or shall be construed to be in 
derogation of, or in modification of, the rights of the Secretary or of 
the United States to exercise any powers granted by the Act or 
otherwise, or, in accordance with such powers, to act in the premises 
whenever such action is deemed advisable.


Sec.  986.91  Liability.

    No member or alternate of the Council nor any employee or agent 
thereof, shall be held personally responsible, either individually or 
jointly with others, in any way whatsoever, to any party under this 
part or to any other person for errors in judgment, mistakes, or other 
acts, either of commission or omission, as such member, alternate, 
agent or employee, except for acts of dishonesty, willful misconduct, 
or gross negligence. The Council may purchase liability insurance for 
its members and officers.


Sec.  986.92  Agents.

    The Secretary may name, by designation in writing, any person, 
including any officer or employee of the USDA or the United States to 
act as their agent or representative in connection with any of the 
provisions of this part.


Sec.  986.93  Effective time.

    The provisions of this part and of any amendment thereto shall 
become effective at such time as the Secretary may declare, and shall 
continue in force until terminated in one of the ways specified in 
Sec.  986.94.


Sec.  986.94  Termination.

    (a) The Secretary may at any time terminate this part.
    (b) The Secretary shall terminate or suspend the operation of any 
or all of the provisions of this part whenever he or she finds that 
such operation obstructs or does not tend to effectuate the declared 
policy of the Act.
    (c) The Secretary shall terminate the provisions of this part 
applicable to pecans for market or pecans for handling at the end of 
any fiscal year whenever the Secretary finds, by referendum or 
otherwise, that such termination is favored by a majority of growers; 
Provided, That such majority of growers has produced more than 50 
percent of the volume of pecans in the production area during such 
fiscal year. Such termination shall be effective only if announced on 
or before the last day of the then current fiscal year.
    (d) The Secretary shall conduct a referendum within every five-year 
period beginning from the implementation of this part, to ascertain 
whether continuance of the provisions of this part applicable to pecans 
are favored by two-thirds by number or volume of growers voting in the 
referendum. The Secretary may terminate the provisions of this part at 
the end of any fiscal year in which the Secretary has found that 
continuance of this part is not favored by growers who, during an 
appropriate period of time determined by the Secretary, have been 
engaged in the production of pecans in the production area: Provided, 
That termination of this part shall be effective only if announced on 
or before the last day of the then current fiscal year.
    (e) The provisions of this part shall, in any event, terminate 
whenever the provisions of the Act authorizing them cease to be in 
effect.


Sec.  986.95  Proceedings after termination.

    (a) Upon the termination of this part, the Council members serving 
shall continue as joint trustees for the purpose of liquidating all 
funds and property then in the possession or under the control of the 
Council, including claims for any funds unpaid or property not 
delivered at the time of such termination.
    (b) The joint trustees shall continue in such capacity until 
discharged by the Secretary; from time to time accounting for all 
receipts and disbursements; delivering all funds and property on hand, 
together with all books and records of the Council and of the joint 
trustees to such person as the Secretary shall direct; and, upon the 
request of the Secretary, executing such assignments or other 
instruments necessary and appropriate to vest in such person full title 
and right to all of the funds, property, or claims vested in the 
Council or in said joint trustees.
    (c) Any funds collected pursuant to this part and held by such 
joint trustees or such person over and above the amounts necessary to 
meet outstanding obligations and the expenses necessarily incurred by 
the joint trustees or such other person in the performance of their 
duties under this subpart, as soon as practicable after the termination 
hereof, shall be returned to the handlers pro rata in proportion to 
their contributions thereto.
    (d) Any person to whom funds, property, or claims have been 
transferred or delivered by the Council, upon direction of the 
Secretary, as provided in this part, shall be subject to the same 
obligations and duties with respect to said funds, property, or claims 
as are imposed upon said joint trustees.


Sec.  986.96  Amendments.

    Amendments to this part may be proposed from time to time by the 
Council or by the Secretary.


Sec.  986.97  Counterparts.

    Handlers may sign an agreement with the Secretary indicating their 
support for this marketing order. This agreement may be executed in 
multiple counterparts by each handler. If more than fifty percent of 
the handlers, weighted by the volume of pecans handled during an 
appropriate period of time determined by the Secretary, enter into such 
an agreement, then a marketing agreement shall exist for the pecans 
marketing order. This marketing agreement shall not alter the terms of 
this part. Upon the termination of this part, the marketing agreement 
has no further force or effect.


Sec.  986.98  Additional parties.

    After this part becomes effective, any handler may become a party 
to the marketing agreement if a counterpart is executed by the handler 
and delivered to the Secretary.


Sec.  986.99  Order with marketing agreement.

    Each signatory handler hereby requests the Secretary to issue, 
pursuant to the Act, an order for regulating the handling of pecans in 
the same manner as is provided for in this agreement.

Subpart B--[Reserved]

    Dated: February 22, 2016.
Elanor Starmer,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 2016-04043 Filed 2-26-16; 8:45 am]
 BILLING CODE P