Organic Research, Promotion, and Information Order; Referendum Procedures, 5438-5445 [2017-00599]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 82, Number 11 (Wednesday, January 18, 2017)]
[Proposed Rules]
[Pages 5438-5445]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-00599]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1255

[Document Number AMS-SC-16-0112; PR-B]
RIN 0581-AD55


Organic Research, Promotion, and Information Order; Referendum 
Procedures

AGENCY: Agricultural Marketing Service, Department of Agriculture.

ACTION: Proposed rule.

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SUMMARY: This proposed rule invites comments on procedures for 
conducting a referendum to determine whether the issuance of a proposed 
Organic Research, Promotion, and Information Order (proposed Order) is 
favored by certified organic producers, certified organic handlers, and 
importers of certified organic products. The organic market includes a 
range of agricultural commodities such as fruits, vegetables, dairy, 
meat, poultry, breads, grains, snack foods, condiments, beverages, and 
packaged and prepared foods, as well as non-food items such as fiber 
(linen and clothing), personal care products, pet food, and flowers. 
The procedures would also be used for any subsequent referendum under 
the proposed Order. The proposed Order is being published separately in 
this issue of the Federal Register. This document also announces the 
Agricultural Marketing Service's (AMS) intent to request approval by 
the Office of Management and Budget (OMB) of new information collection 
requirements to implement the program.

DATES: Comments must be received by March 20, 2017. Pursuant to the 
Paperwork Reduction Act (PRA), comments on the information collection 
burden that would result from this proposal must be received by March 
20, 2017.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments may be submitted on the Internet at: 
https://www.regulations.gov or to the Promotion and Economics Division, 
Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW., Room 
0632-S, Stop 0244, Washington, DC 20250-0244; facsimile: (202) 205-
2800. All comments should reference the docket number and the date and 
page number of this issue of the Federal Register and will be made 
available for public inspection, including name and address, if 
provided, in the above office during regular business hours or it can 
be viewed at https://www.regulations.gov.
    Pursuant to the PRA, comments regarding the accuracy of the burden 
estimate, ways to minimize the burden, including the use of automated 
collection techniques or other forms of information technology, or any 
other aspect of this collection of information, should be sent to the 
above address. In addition, comments concerning the information 
collection should also be sent to the Desk Office for Agriculture, 
Office of Information and Regulatory Affairs, OMB, New Executive Office 
Building, 725 17th Street NW., Room 725, Washington, DC 20503.

FOR FURTHER INFORMATION CONTACT: Heather Pichelman, Division Director, 
Promotion and Economics Division, Specialty Crops Programs, AMS, USDA, 
1400 Independence Avenue SW., Room 0632-S, Stop 0244, Washington, DC 
20250-0244; facsimile: (202) 205-2800; or electronic mail: 
Heather.Pichelman@ams.usda.gov.

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

[[Page 5439]]

Executive Order 12866 and Executive Order 13563

    This rule has been determined to be not significant for purposes of 
Executive Order 12866, as supplemented by Executive Order 13563, and 
therefore has not been reviewed by the Office of Management and Budget 
(OMB).

Executive Order 12988

What is the purpose of this action?

    This proposed rule invites comments on procedures for conducting a 
referendum to determine whether covered domestic certified organic 
producers, certified organic handlers and importers of organic products 
favor issuance of a proposed Order.\1\ Accordingly, this rule would add 
subpart B to part 1255 that would establish procedures for conducting 
the referendum. The procedures would cover definitions, voting 
instructions, use of subagents, ballots, the referendum report, and 
confidentiality of information. The U.S. Department of Agriculture 
(USDA) would conduct the referendum. The program would be implemented 
if it is favored by a majority of domestic certified organic producers, 
certified organic handlers and importers of organic products voting in 
the referendum. The procedures would be applicable for the initial 
referendum and future referenda under the proposed Order.
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    \1\ For clarification, the phrase ``organic products'' used 
throughout the proposed Order and referendum procedures is 
synonymous with the terms: ``certified products'' or ``certified 
organic products''. The words ``certified organic'' are used to 
modify the terms ``certified organic handler'' at section 1255.9 and 
``certified organic producer'' at section 1255.10 for the purpose of 
reiterating the concept that certified products originate from 
certified entities.
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    This document also announces AMS's intent to request approval by 
the OMB of new information collection requirements to implement the 
program. The proposed Order is being published separately in this issue 
of the Federal Register.
    What are the key statutes and regulations governing this action?
    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. It is not intended to have retroactive effect. 
Section 524 of the Commodity Promotion, Research, and Information Act 
of 1996 (7 U.S.C. 7411-7425) (Act) provides that it shall not affect or 
preempt any other Federal or state law authorizing promotion or 
research relating to an agricultural commodity.
    The Act authorizes USDA to establish agricultural commodity 
research and promotion orders which may include a combination of 
promotion, research, industry information, and consumer information 
activities funded by mandatory assessments. These programs are designed 
to maintain and expand markets and uses for agricultural commodities. 
To date, there are 10 commodity promotion programs (i.e., research and 
promotion programs or R&P programs) operating under the authority of 
the Act. On February 7, 2014, section 10004 of the Agricultural Act of 
2014 (2014 Farm Bill) (Pub. L. 113-79) amended section 501 of the 
Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7401), 
which authorizes generic commodity promotion programs under the various 
commodity promotion laws, to allow for an organic commodity promotion 
order. Specifically, the definition of ``agricultural commodity'' under 
section 513(1)(E) of the Act was amended to include ``products, as a 
class, that are produced on a certified organic farm (as defined in 7 
U.S.C. 6502); and certified to be sold or labeled as ``organic'' or 
``100 percent organic'' (as defined in part 205 of title 7, Code of 
Federal Regulations (or a successor regulation)). Should this proposed 
rule become final, pursuant to section 10004 of the 2014 Farm Bill, the 
regulatory language currently exempting organic commodities from 
assessment by generic commodity promotion programs created under the 
various commodity promotion laws (7 U.S.C. 7401(e)) shall no longer be 
in effect. Such commodities would then become ``dual-covered 
commodities'', and persons producing, handling and importing them would 
need to elect to pay assessments to the commodity-specific program, or 
the organic commodity promotion program.
    The 2014 Farm Bill amendments to the Act allowed the organic 
industry to submit a proposal for an organic R&P program. As the 
membership-based business association for the organic industry in North 
America, the Organic Trade Association (OTA) took on the role as a 
proponent group in the development of an organic R&P program proposal. 
OTA represents businesses across the organic supply chain and addresses 
all things organic, including food, fiber/textiles, personal care 
products, and new sectors as they develop. To develop the proposal, OTA 
established and collaborated with the 7-member GRO Organic Core 
Committee. The GRO Organic Core Committee is a subset of OTA's larger 
Organic Research and Promotion Program Steering Committee. It included 
OTA subcommittee chairs and other industry leaders who built on the 
outreach and input from the larger committee to guide the development 
of a proposed Order.
    Under section 519 of the Act, a person subject to an order may file 
a written petition with USDA stating that an order, any provision of an 
order, or any obligation imposed in connection with an order, is not 
established in accordance with the law, and request a modification of 
an order or an exemption from an order. Any petition filed challenging 
an order, any provision of an order, or any obligation imposed in 
connection with an order, shall be filed within two years after the 
effective date of an order, provision, or obligation subject to 
challenge in the petition. The petitioner will have the opportunity for 
a hearing on the petition. Thereafter, USDA will issue a ruling on the 
petition. The Act provides that the district court of the United States 
for any district in which the petitioner resides or conducts business 
shall have the jurisdiction to review a final ruling on the petition, 
if the petitioner files a complaint for that purpose not later than 20 
days after the date of the entry of USDA's final ruling.

What are organic products?

    To make an organic claim or use the USDA Organic Seal, the final 
product must follow the applicable production, handling and labeling 
regulations and go through the organic certification process specified 
at 7 CFR part 205. To become certified, producers and handlers must 
apply to a USDA-accredited certifying agent, develop and implement an 
organic system plan, and be inspected. Organic certification allows 
producers and handlers to sell their raw, processed, and multi-
ingredient products as organic. Each production or handling operation 
that produces or handles crops, livestock, livestock products, or other 
agricultural products that are intended to be sold, labeled, or 
represented as ``100 percent organic,'' ``organic,'' or ``made with 
organic (specified ingredients or food group(s))'' must be certified 
according to the USDA organic regulations (7 CFR part 205).\2\
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    \2\ USDA organic regulations at 7 CFR 205.101 provides for some 
exclusions and exemptions from certification. For example, a 
production or handling operation that sells agricultural products as 
``organic'' but whose gross agricultural income from organic sales 
totals $5,000 or less annually is exempt from organic certification 
but must comply with the applicable organic production and handling 
requirements as specified at 7 CFR 205.101(a)(1).

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[[Page 5440]]

Who would be assessed under this program?

    Consistent with the definition of ``covered person'' at 7 U.S.C. 
7401, which describes who may be subject to an organic commodity 
promotion order as ``a producer, handler, marketer, or importer of an 
organic agricultural commodity'', the definition for ``assessed 
entity'' at section 1255.4 states that this order is applicable to any 
certified organic producer or certified organic handler that has gross 
organic sales in excess of $250,000 for the previous marketing year, 
any importer with a transaction value greater than $250,000 in organic 
products during the previous marketing year, and any voluntarily 
assessed entity. The proposed Order would provide for an initial 
assessment rate of one-tenth of one percent of net organic sales for 
domestic certified organic producers and certified organic handlers 
with gross organic sales greater than $250,000 in the previous 
marketing year. Net organic sales would be equal to total gross sales 
in certified organic products minus (a) the cost of certified organic 
ingredients, feed, and inputs used in the production of certified 
products, and (b) the cost of any non-organic agricultural ingredients 
used in the production of certified products.\3\ Certified organic 
handlers may also deduct the cost of certified organic products 
purchased from producers. Importers with transaction value that exceeds 
$250,000 in organic products during the prior year would remit one-
tenth of one percent of the declared transaction value of those 
certified organic products at the time of importation. This means that 
importers would remit assessments to the Board upon taking ownership of 
the imported product.
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    \3\ Examples of organic input costs that may be deducted from 
gross sales include fertilizer, lime, and soil conditioners; 
agricultural chemicals and other organic materials for pest control; 
seeds, plants, vines and trees; livestock purchased or leased; and 
feed purchased for livestock and poultry.
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    Under the permissive terms under section 516 of the Act, the term 
``assessed entity'' also allows orders to provide exemptions for 
covered persons. More specifically, certified organic producers and 
certified organic handlers with gross organic sales less than or equal 
to $250,000 of certified organic products for the previous marketing 
year would be exempt, and have the option to choose to pay assessments 
into the program as ``voluntarily assessed'' entities. Importers with 
$250,000 or less in transaction value of imported organic products 
during the prior marketing year are exempt from remitting assessments 
to the board, and could also opt to be voluntarily assessed. Finally, 
certified organic producers, certified organic handlers, and importers 
of dual-covered commodities would be eligible to apply for an 
exemption.\4\ Such entities also have the option to choose to pay 
assessments into the program as ``voluntarily assessed'' entities, 
which would make them eligible to participate in the referendum. The 
purpose of the program would be to strengthen the position of certified 
organic products in the marketplace, support research to benefit the 
organic industry, and improve access to information and data across the 
organic sector.
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    \4\ The 2014 Farm Bill amendments to 7 U.S.C. 7401 also included 
a requirement for an organic research and promotion order to allow 
covered persons (which can include producers, handlers, and 
importers, depending upon the order) to elect whether to be assessed 
under the organic commodity promotion order or another applicable 
agricultural commodity promotion order. For example, an organic 
blueberry producer would have the option to pay into the blueberry 
program or the organic program.
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What products would be covered under this program?

    Understanding that section 7412(1)(E)(ii) of the Act specified that 
the scope of an ``agricultural commodity'' as limited to products that 
are ``certified to be sold or labeled as ``organic'' or ``100 percent 
organic'', this proposal would assess only the value added of the 
certified organic ingredient content of ``made with organic'' products 
rather than the entire certified product. Consequently, the scope of 
covered products spans a range of agricultural commodities such as 
fruits, vegetables, dairy, meat, poultry, breads, grains, snack foods, 
condiments, beverages, and packaged and prepared foods, as well as non-
food items such as fiber (linen and clothing), personal care products, 
pet food, and flowers. While the USDA organic regulations do not detail 
standards specific to non-food items, items that are agricultural 
products (e.g., pet food) and that meet the certification requirements 
of the USDA organic regulations can be certified and labeled 
``organic'', irrespective of the end use of the product.\5\ There are 
currently 38 Harmonized Tariff Schedule (HTS) codes representative of 
imported organic agricultural products. These codes and their product 
descriptions are listed in the table below.
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    \5\ In August 2005, the NOP issued a Policy Memorandum 11-2 to 
certifying agents, stating that agricultural products which meet the 
NOP certification standards can be certified and labeled 
``organic,'' irrespective of the end use of the product. Policy Memo 
11-2 is available on the AMS Web site in the NOP Handbook at: https://www.ams.usda.gov/rules-regulations/organic/handbook.

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          HTS Code                          HTS Description
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0409000005..................  NATURAL, HONEY, CERTIFIED FOR ORGANIC.
0703200005..................  GARLIC, FRESH WHOLE BULBS, CERTIFIED
                               ORGANIC.
0709604015..................  SWT BELL PEPPER, FRT OF CAPSICUM/PIMENTA,
                               GRNHSE, CERT ORGANIC.
0709604065..................  SWT BELL PEPER, OTH, FRUIT, CAPSICUM/
                               PIMENTA, CERT ORGANIC, OTHER.
0802120005..................  SHELLED ALMONDS, CERTIFIED ORGANIC
0803900025..................  FRESH BANANAS, CERTIFIED ORGANIC
0804400020..................  AVOCADOS, HASS&HASS LIKE, CERTIFIED
                               ORGANIC
0804504045..................  FRESH MANGOES ENTERED SEPT 1 TO MAY 31,
                               CERTIFIED ORGANIC
0804506045..................  FRESH MANGOES ENTERED JUNE 1 TO AUG 31,
                               CERTIFIED ORGANIC
0808100045..................  APPLES, FRESH, VALUED> $0.22 PER KG,
                               CERTIFIED ORGANIC
0808302015..................  PEARS, ORGANIC, ENTERED 4/1-6/30, FRESH
0808304015..................  PEARS, ORGANIC, ENTERED 7/1-3/31, FRESH
0808402015..................  QUINCES; FRESH, APR 1 THRU JUNE 30,
                               CERTIFIED ORGANIC
0808404015..................  QUINCES; ORGANIC, ENTERED 7/1-3/31, FRESH
0810400026..................  BLUEBERRIES, FRESH, CULTIVATED, CERTIFIED
                               ORGANIC
0901110015..................  ARABICA COFFEE NOT ROAST/DECAFFEINATED,
                               CERTIFIED ORGANIC
0901110045..................  COFFEE, NOT ROASTED, NOT DECAFFEINATED,
                               OTHER, CERTIFIED ORGANIC
0901120015..................  COFFEE, DECAFFEINATED, NOT ROASTED,
                               CERTIFIED ORGANIC
0901210035..................  COFFEE, ROASTED; NOT DECAFFEINATED, <=2KG
                               RET CONT, CERT ORGANIC
0901210055..................  COFFEE, ROASTED, N/DECAFFEINATED, NOT 2KG
                               OR LESS, CERT ORGANIC

[[Page 5441]]

 
0901220035..................  COFFEE, ROASTED, DECAFFEINATED, <=2KG
                               RETAIL CONT, CERT ORGANIC
0902101015..................  FLAVORED GREEN TEA IMMED PACKING NOT
                               EXCEED 3KG, CERT ORGANIC
0902109015..................  GREEN TEA (NOT FERM) IMMED PACKINGS NTE
                               3KG, N/FLVR, CERT ORGNC
0902209015..................  OTHER GREEN TEA (NOT FERMENTED), N/
                               FLAVORED, CERTIFIED ORGANIC
0902300015..................  BLACK TEA FERMENT/PRT FRMNTED, IN TEA
                               BAGS, <=3KG, CERT ORGANIC
0910110010..................  GINGER, NOT GROUND, CERTIFIED ORGANIC
1001190025..................  DURUM WHEAT, CERTIFIED ORGANIC, EXCEPT
                               SEED
1005902015..................  CORN (MAIZE) - YELLOW DENT CORN, CERTIFIED
                               ORGANCI
1006309015..................  RICE: OTHER SEMI OR WHOLLY MILLED POL/GLZ
                               OR NOT, CERT ORGANIC
1201900010..................  SOYBEANS, ORGANIC, WHETHER OR NOT BROKEN,
                               NESOI
1204000025..................  FLAXSEED (LINSEED), FOR USE AS OIL STOCK,
                               W/N BROKEN, ORGANIC
1509102030..................  CER OR LB EX VRGN OLVE OIL N/CHEM MOD CON
                               LT 18KG
1509102040..................  OLIV OIL, NOT CHEM. MOD. VIRGIN, WT<8KG,
                               ORG, OTH THAN XTRA VIR
1509104030..................  OLIVE OIL, NOT CHEM MOD, VIRGIN, OTH, CERT
                               ORG, LAB EXTRA VIRGIN
1509104040..................  OLIVE OIL, NOT CHEM MOD, VIRGIN, OTH CERT
                               ORG, NT LAB EXTRA VIR
2204100065..................  SPARKLING WINE, OR FRESH GRAPES VALUED
                               >$1.59 PER LITER, ORG
2204215035..................  RED WINE, >$1.05 PER L, ALCHL STRGTH BY
                               VOLM <=14% CONT<=2L, ORG
2204215050..................  WHITEWINE >$1.05 L, ALCHOL STRNGTH BY
                               VOLUM <=14% CONT<=2L, ORG
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Initial Regulatory Flexibility Act Analysis

    In accordance with the Regulatory Flexibility Act (RFA) (5 U.S.C. 
601-612), AMS is required to examine the impact of the proposed rule on 
small entities. Accordingly, AMS has considered the economic impact of 
this action on these entities.
    The purpose of the RFA is to fit regulatory actions to the scale of 
businesses subject to such actions so that small businesses will not be 
disproportionately burdened. The Small Business Administration (SBA) 
defines, in 13 CFR part 121, small agricultural producers as those 
having annual receipts of no more than $750,000 and small agricultural 
support services firms (handlers and importers) as those having annual 
receipts of no more than $7.5 million.
    In 2014, there were a total of 19,466 certified organic operations 
in the U.S. and its territories.\6\ This total includes both certified 
organic producers and certified organic handlers. The number of 
operations that were certified solely as organic handlers, according to 
NOP, totaled 8,327 entities. The remaining 11,139 certified organic 
entities include operations that are certified only as producers and 
operations that are certified as both producers and handlers. Organic 
producers are also required to be certified as organic handlers in 
order to sell, process, or package agricultural products, except in 
such cases where a producer is simply selling, transporting or 
delivering crops or livestock to a handler (7 CFR 205.2).
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    \6\ NOP Organic Integrity database. Available at: https://apps.ams.usda.gov/integrity/.
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    Data from USDA's National Agricultural Statistics Service (NASS) 
2014 Organic Survey show that about 91 percent of certified organic 
producers had 2014 organic sales value of $750,000 or less. Applying 
this proportion to the 11,139 certified organic producers referenced 
earlier results in 10,126 producing entities being considered small.
    There is no one catch-all definition by the SBA of what constitutes 
a small handler of agricultural products. Therefore, to maintain 
consistency with other federal programs and marketing orders, AMS 
defines a small handler as one which has no more than $7.5 million in 
annual receipts as defined by the SBA under subsector 115 of the North 
American Industry Classification System (NAICS), ``Support Activities 
for Agriculture and Forestry''.\7\ According to the 2012 County 
Business Patterns and 2012 Economic Census released June 22, 2015, 
about 95 percent of firms classified under subsector 115 of NAICS had 
less than $7.5 million in annual receipts and would be considered 
small. Applying this proportion to the number of certified organic 
handlers results in an estimated 7,895 handler operations out of 8,327 
being considered small under the SBA definition.
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    \7\ U.S. Small Business Administration, ``Table of Small 
Business Size Standards Matched to North American Industry 
Classification System Codes'', February 26, 2016.
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    According to data from the U.S. Customs and Border Protection 
(CBP), there were 2,135 importers of organic products with codes in the 
HTS in 2014. Of these, about 98 percent had annual sales revenue of 
less than $7.5 million in 2014. Adding the 2,135 number of organic 
importers to the 19,466 combined number of certified organic producers 
and handlers results in a total of 21,601 operations with sales of 
certified organic products in the U.S. Of this total, 20,121 entities, 
or 93 percent, would be considered to be small under the SBA 
definitions.
    The Organic Industry Survey, which was carried out by the Nutrition 
Business Journal (NBJ) on behalf of OTA, reported 2014 retail sales of 
all organic commodities at $39.1 billion. Imports of the 38 organic 
products with HTS codes listed previously amounted to more than $1.2 
billion in 2014. In 2014, NASS, which collects data on farm-level 
production and sales, reported total certified organic sales of nearly 
$5.5 billion, up 54 percent from three years previously.\8\
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    \8\ National Agricultural Statistics Service, 2014 Organic 
Survey, U.S. Department of Agriculture (September 2015), p. 1, 
available at https://usda.mannlib.cornell.edu/usda/current/OrganicProduction/OrganicProduction-09-17-2015.pdf.
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    This proposed rule invites comments on procedures for conducting a 
referendum to determine whether issuance of a proposed Order is favored 
by domestic certified producers, certified handlers and importers of 
certified organic products. Organic agricultural ingredients are used 
in a range of products (e.g. food items (fruits, vegetables, dairy, 
meat, poultry, breads, grains, snack foods, condiments, beverages, and 
packaged and prepared foods), and non-food items (fiber (linen and 
clothing), supplements, personal care products, pet food, household 
products, and flowers)). The procedures would also be used for any 
subsequent referendum under the proposed Order. USDA would conduct the 
referendum.
    The Act provides for alternatives within the terms of a variety of 
provisions. Paragraph (e) of section 518 of the Act provides three 
options for determining industry approval of a new research and 
promotion program: (1) By a majority of those persons voting; (2) by 
persons voting for approval who represent a majority of the volume of 
the agricultural commodity; or (3) by a

[[Page 5442]]

majority of those persons voting for approval who also represent a 
majority of the volume of the agricultural commodity. In addition, 
section 518 of the Act provides for referenda to ascertain approval of 
an order to be conducted either prior to its going into effect or 
within three years after assessments first begin under an order. OTA 
recommended that the program be implemented if it is favored by a 
majority of assessed entities voting in the referendum. For example, if 
10,000 certified organic producers, certified organic handlers, and 
importers voted in a referendum, 5,001 would have to vote in favor of 
the proposed Order for it to pass in the referendum. It is proposed 
that a single assessed entity may cast one vote in the referendum. A 
single entity is recognized by its individual tax identification 
number. This is a modification from the proponent's proposal, which 
recommended a single assessed entity would have one vote for each 
organic certificate held.
    Regarding the economic impact of this rule on affected entities, 
eligible domestic certified producers, certified handlers and importers 
of certified organic products would have the opportunity to participate 
in the referendum. The proposed Order would exempt: (a) Producers and 
handlers with gross sales of $250,000 or less of certified organic 
products for the previous marketing year, (b) importers with $250,000 
or less in transaction value of imported organic products during the 
prior marketing year, and (c) certified organic producers, certified 
organic handlers, and importers of dual-covered commodities who select 
to pay into the commodity-specific program instead of the organic 
program. Entities under the $250,000 thresholds stated above would have 
the option to choose to pay assessments into the program as 
``voluntarily assessed'' entities, which would make them eligible to 
participate in the referendum. Certified producers, certified handlers 
and importers of certified organic products exercising their exemptions 
would not be eligible to participate in the referendum.
    AMS used 2014 data from multiple sources, such as the USDA Economic 
Research Service (ERS), USDA NASS, USDA Foreign Agricultural Service 
(FAS), USDA National Organic Program (NOP), U.S. Customs and Border 
Protection (CBP), and OTA industry surveys for consistency in 
estimating potential assessment income at producer, handler and 
importer levels. Based on an assumption that there is no participation 
by voluntarily assessed entities, of the 11,139 producers, 8,327 
handlers, and 2,135 importers, it is estimated that about 2,691 
producers, 5,015 handlers, and 326 importers would pay assessments 
under the proposed Order and thus be eligible to vote in the 
referendum. Assessment revenue that would be collected at the proposed 
exemption level of $250,000 in gross annual revenue from organic sales 
would be $25.3 million.\9\ Of this assessment revenue, about 14 percent 
would come from producers, 81 percent would come from handlers, and 5 
percent would be from importers. In terms of the total value of exempt 
sales and the total number of exempt entities at the proposed exemption 
level, AMS estimates that about 5 percent of gross organic sales value 
would be exempt, and 63 percent of certified organic producers and 
handlers and organic importers, combined, would be exempt. At the 
producer level, 12 percent of certified organic sales value would be 
exempt, and 76 percent of entities would be exempt. For handlers, 3 
percent of certified organic sales value and 40 percent of entities 
would be exempt. Of the total importers of organic products, 4 percent 
of organic sales value would be exempt, and 85 percent of entities 
would be exempt.
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    \9\ No expense data exists for handlers, so input costs have not 
been deducted from total sales at the handler level. This means that 
handler assessable sales is likely lower than what is reported; 
however, all assumptions made in estimating potential assessment 
revenue have been made to generate a conservative figure.
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    Voting in the referendum is optional. If domestic certified organic 
producers, certified organic handlers and importers choose to vote, the 
burden of voting would be offset by the benefits of having the 
opportunity to vote on whether or not they favor the proposed program.
    Regarding alternatives, USDA considered requiring voters to vote in 
person at various USDA offices across the country. USDA also considered 
electronic voting, but the use of computers is not universal. 
Conducting the referendum from one central location by mail ballot 
would be more cost effective and reliable. USDA would provide easy 
access to information for potential voters through a toll free 
telephone line.
    This action would impose an additional reporting burden on assessed 
entities. Those who would be assessed would have the opportunity to 
complete and submit a ballot to USDA indicating whether or not they 
favor implementation of the proposed Order. The specific burden for the 
ballot is detailed later in this document in the section titled 
Paperwork Reduction Act. As with all Federal promotion programs, 
reports and forms are periodically reviewed to reduce information 
requirements and duplication by industry and public sector agencies. 
Finally, USDA has not identified any relevant Federal rules that 
duplicate, overlap, or conflict with this rule.
    AMS is committed to complying with the E-Government Act, to promote 
the use of the Internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.
    Regarding outreach efforts, USDA would keep these individuals 
informed throughout the program implementation and referendum process 
to ensure that they are aware of and are able to participate in the 
program implementation process. USDA would also publicize information 
regarding the referendum process so that trade associations and related 
industry media can be kept informed.
    USDA has performed this initial RFA analysis regarding the impact 
of this proposed rule on small businesses.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the referendum ballot, which represents the information 
collection and recordkeeping requirements that may be imposed by this 
rule, has been submitted to OMB for approval.
    Title: Organic Research, Promotion, and Information Order.
    OMB Number: 0581-NEW.
    Expiration Date of Approval: 3 years from OMB date of approval.
    Type of Request: New information collection for an organic 
research, promotion, and information program.
    Abstract: The information collection requirements in the request 
are essential to carry out the intent of the Act. The information 
collection concerns a proposal received by USDA for a national research 
and promotion program for the organic industry. The program would be 
financed by an assessment on importers and domestic certified organic 
producers and certified organic handlers of organic products, and would 
be administered by a board of industry members selected by the 
Secretary. The program would exempt: (a) Certified organic producers 
and certified organic handlers with gross sales $250,000 or less of 
certified organic products for the previous marketing year, (b) 
importers with $250,000 or less in transaction value of imported 
organic products during the prior marketing year, and (c) certified

[[Page 5443]]

organic producers, certified organic handlers, and importers of dual-
covered commodities, as applicable. Exports of certified organic 
products from the United States would also be exempt from assessments. 
A referendum would be held among eligible domestic certified organic 
producers, certified organic handlers and importers of certified 
organic products to determine whether they favor implementation of the 
program prior to it going into effect. The purpose of this program 
would be to: (1) Develop and finance an effective and coordinated 
program of research, promotion, industry information, and consumer 
education regarding organic commodities; and (2) maintain and expand 
existing markets for organic commodities.
    The information collection requirements in this rule concern the 
referendum that would be held to determine whether the program is 
favored by the industry. Domestic certified organic producers and 
certified organic handlers with gross organic sales greater than 
$250,000, importers with transaction value that exceeds $250,000 in 
organic products during the prior year, and ``voluntarily assessed'' 
entities would be eligible to participate in the referendum. The ballot 
would be completed by eligible domestic certified organic producers, 
certified organic handlers, and importers who want to indicate whether 
or not they support implementation of the program. The following burden 
estimate assumes 0% voluntarily assessed participation.

Referendum Ballot

    Estimate of Burden: Public recordkeeping burden for this collection 
of information is estimated to average 0.25 hours per application.
    Respondents: Domestic certified organic producers, certified 
organic handlers, and importers.
    Estimated Number of Respondents: 8,032 (7,706 domestic producers 
and handlers and 326 importers).
    Estimated Number of Responses per Respondent: 1 every 7 years 
(0.14).
    Estimated Total Annual Burden on Respondents: 281.12 hours.
    The ballot would be added to the other information collections 
approved under OMB No. 0581-NEW.
    An estimated 8,032 respondents would provide information to the 
Board (7,706 domestic producers and handlers and 326 importers). The 
estimated cost of providing the information to the Board by respondents 
would be $9,754.99. This total has been estimated by the adding the 
cost of the hours required for producer and handling reporting (269.71 
hours multiplied by $33.60 (the average mean hourly earnings of 
certified producers and handlers) and importer reporting (11.41 hours 
multiplied by $30.85, the average mean hourly earnings of importers). 
Data for computation of the hourly rate for producers and handlers 
(Occupation code 11-9013: Farmers, Ranchers, and other Agricultural 
Managers) and importers (Occupation code 13-1020: Buyers and Purchasing 
Agents) was obtained from the U.S. Department of Labor, Bureau of Labor 
Statistics.
    The proposed Order's provisions have been carefully reviewed, and 
every effort has been made to minimize any unnecessary recordkeeping 
costs or requirements, including efforts to utilize information already 
submitted under other programs administered by USDA and other state 
programs.

Request for Public Comment Under the Paperwork Reduction Act

    Comments are invited on: (a) Whether the proposed collection of 
information is necessary for the proper performance of functions of the 
proposed Order and USDA's oversight of the proposed Order, including 
whether the information would have practical utility; (b) the accuracy 
of USDA's estimate of the burden of the proposed collection of 
information, including the validity of the methodology and assumptions 
used; (c) the accuracy of USDA's estimate of the principal organic 
production areas in the United States; (d) the accuracy of USDA's 
estimate of the number of domestic certified organic producers, 
certified organic handlers, and importers of organic products that 
would be covered under the program (e) ways to enhance the quality, 
utility, and clarity of the information to be collected; and (f) ways 
to minimize the burden of the collection of information on those who 
are to respond, including the use of appropriate automated, electronic, 
mechanical, or other technological collection techniques or other forms 
of information technology.
    Comments concerning the information collection requirements 
contained in this action should reference OMB No. 0581-NEW. In 
addition, the docket number, date, and page number of this issue of the 
Federal Register also should be referenced. Comments should be sent to 
the same addresses referenced in the ADDRESSES section of this rule.
    A 60-day comment period is provided to allow interested persons to 
comment on this proposed information collection. All written comments 
received will be summarized and included in the request for OMB 
approval. All comments will also become a matter of public record.

List of Subjects in 7 CFR Part 1255

    Administrative practice and procedure, Advertising, Consumer 
information, Marketing agreements, Organic, Promotion, Reporting and 
recordkeeping requirements.

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

PART 1255--ORGANIC RESEARCH AND PROMOTION ORDER

0
1. The authority citation for part 1255 continues to read as follows:

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


0
2. Add Subpart B to read as follows:
Subpart B--Referendum Procedures
Sec.
1255.100 General.
1255.101 Definitions.
1255.102 Voting.
1255.103 Instructions.
1255.104 Subagents.
1255.105 Ballots.
1255.106 Referendum report.
1255.107 Confidential information.
1255.108 OMB Control number.

Subpart B--Referendum Procedures


Sec.  1255.100  General.

    Referenda to determine whether eligible certified organic 
producers, certified organic handlers and importers of organic products 
favor the issuance, continuance, amendment, suspension, or termination 
of the Organic Research, Promotion, and Information Order shall be 
conducted in accordance with this subpart.


Sec.  1255.101  Definitions.

    For the purposes of this subpart:
    (a) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to delegate, or any officer or employee 
of the U.S. Department of Agriculture to whom authority has been 
delegated or may hereafter be delegated to act in the Administrator's 
stead.
    (b) Assessed entity means any certified organic producer or 
certified organic handler that has gross organic sales in excess of 
$250,000 for the previous marketing year, any importer with a 
transaction value greater than $250,000 in organic products during the 
previous marketing year, and any voluntarily assessed entity.
    (c) Certification or certified. A determination made by a USDA-

[[Page 5444]]

accredited certifying agent that a production or handling operation is 
in compliance with the Organic Foods Production Act of 1990 (7 U.S.C. 
6501-6522) and the regulations in 7 CFR part 205 or to an authorized 
international standard, and any amendments thereto, and which is 
documented by a certificate of organic operation.
    (d) Certified operation. A crop or livestock production, wild-crop 
harvesting or handling operation, or portion of such operation that is 
certified by a USDA-accredited certifying agent as utilizing a system 
of organic production or handling as described by the Organic Foods 
Production Act of 1990 (7 U.S.C. 6501-6522) and the regulations in 7 
CFR part 205.
    (e) Certified organic handler means a person who handles certified 
organic products in accordance with the definition specified in 7 CFR 
205.100, the requirements specified in 7 CFR 205.270 through 7 CFR 
205.272, and all other applicable requirements of part 205 and 
receives, sells, consigns, delivers, or transports certified organic 
products into the current of commerce in the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, or any territory 
or possession of the United States.
    (f) Certified organic producer means a person who produces 
certified organic products in accordance with the definition specified 
in 7 CFR 205.100, the requirements specified in 7 CFR 205.202 through 7 
CFR 205.207 or 7 CFR 205.236 through 7 CFR 205.240, and all other 
applicable requirements of part 205.
    (g) Customs or CBP means the U.S. Customs and Border Protection, an 
agency of the U.S. Department of Homeland Security.
    (h) Department means the U.S. Department of Agriculture or any 
officer or employee of the Department to whom authority has heretofore 
been delegated, or to whom authority may hereafter be delegated, to act 
in the Secretary's stead.
    (i) Dual-covered commodity means an agricultural commodity that is 
produced on a certified organic farm and is covered under this part and 
any other agricultural commodity promotion order issued under a 
commodity promotion law.
    (j) Gross organic sales means the total amount the person received 
for all organic products during the fiscal year without subtracting any 
costs or expenses.
    (k) Importer means any person who imports certified organic 
products from outside the United States for sale in the United States 
as a principal or as an agent, broker, or consignee of any person who 
produces organic products outside the United States for sale in the 
United States, and who is listed in the import records as the importer 
of record for such organic products. Organic importers can be 
identified through organic certificates, import certificates, HTS 
codes, or any other demonstration that they meet the definition above.
    (l) Ingredient. Any substance used in the preparation of an 
agricultural product that is still present in the final commercial 
product as consumed.
    (m) National Organic Program means the program authorized by the 
Organic Foods Production Act of 1990 (OFPA) (7 U.S.C. 6501-6522) for 
the purpose of implementing its provisions.
    (n) Net organic sales means total gross sales in organic products 
minus:
    (1) The cost of certified organic ingredients, feed, and 
agricultural inputs used in the production of certified products; and
    (2) The cost of any non-organic agricultural ingredients used in 
the production of certified products.
    (o) Order means the Organic Research, Promotion, and Information 
Order.
    (p) Organic means a labeling term that refers to an agricultural 
product produced in accordance with the Organic Foods Production Act of 
1990 (OFPA) (7 U.S.C. 6501-6522) and the regulations in 7 CFR part 205.
    (q) Organic products means products produced and certified under 
the authority of the Organic Foods Production Act of 1990 (7 U.S.C. 
6501-6522) and the regulations in 7 CFR part 205 or to an authorized 
international standard, and any amendments thereto.
    (r) Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other legal entity. For 
the purpose of this definition, the term ``partnership'' includes, but 
is not limited to:
    (1) A husband and a wife who have title to, or leasehold interest 
in organic production, organic handling or organic import entity as 
tenants in common, joint tenants, tenants by the entirety, or, under 
community property laws, as community property; and
    (2) So called ``joint ventures'' wherein one or more parties to an 
agreement, informal or otherwise, contributed land, facilities, 
capital, labor, management, equipment, or other services, or any 
variation of such contributions by two or more parties, so that it 
results in the production, handling or importation of organic products 
and the authority to transfer title to the organic products.
    (s) Referendum agent or agent means the individual or individuals 
designated by the Secretary to conduct the referendum.
    (t) United States means collectively the 50 states of the United 
States, the District of Columbia, the Commonwealth of Puerto Rico, and 
the territories and possessions of the United States.
    (u) Voluntarily assessed entity means any covered person with gross 
organic sales or transaction value of $250,000 or less for the previous 
marketing year and thus not subject to assessment under this part, but 
elects to participate in the Order by remitting an assessment pursuant 
to Sec.  1255.52


Sec.  1255.102  Voting.

    (a) Each assessed entity shall be entitled to cast one ballot in 
the referendum. Organic importers shall be entitled to request one 
ballot per business entity that meets the definition of importer.
    (b) Proxy voting is not authorized, but an officer or employee of 
an assessed entity, or an administrator, executor, or trustee of an 
assessed entity may cast a ballot on behalf of such entity. Any 
individual so voting in a referendum shall certify that such individual 
is an officer or employee of the assessed entity, or an administrator, 
executive, or trustee of an assessed entity and that such individual 
has the authority to take such action. Upon request of the referendum 
agent, the individual shall submit adequate evidence of such authority.
    (c) Each assessed entity may cast one ballot in the referendum.
    (d) All ballots are to be cast by mail, in person at a local Farm 
Services Agency office, or by other means, as instructed by the 
Department.
    (e) All assessed entities in good standing shall be eligible to 
vote in a subsequent referendum. To be in good standing, an entity must 
carry a valid (not revoked) organic certificate and:
    (1) A dual-covered entity must demonstrate that it has paid into 
the organic research and promotion program for a majority of the years 
since the most recent referendum; or
    (2) A voluntarily-assessed entity must demonstrate that it has paid 
into the organic research and promotion program for a majority of the 
years since the most recent referendum; or
    (3) An entity must demonstrate that it attained its organic 
certification since the most recent referendum; or
    (4) An assessed entity that does not meet any of the above 
descriptions must demonstrate that it has paid into the organic 
research and promotion program every year since the most recent 
referendum.

[[Page 5445]]

Sec.  1255.103  Instructions.

    The referendum agent shall conduct the referendum, in the manner 
provided in this subpart, under the supervision of the Administrator. 
The Administrator may prescribe additional instructions, consistent 
with the provisions of this subpart, to govern the procedure to be 
followed by the referendum agent. Such agent shall:
    (a) Determine the period during which ballots may be cast;
    (b) Provide ballots and related material to be used in the 
referendum. The ballot shall provide for recording essential 
information, including that needed for ascertaining whether the person 
voting, or on whose behalf the vote is cast, is an assessed entity;
    (c) Give reasonable public notice of the referendum:
    (1) By using available media or public information sources, without 
incurring advertising expense, to publicize the dates, places, method 
of voting, eligibility requirements, and other pertinent information. 
Such sources of publicity may include, but are not limited to, print 
and radio; and
    (2) By such other means as the agent may deem advisable.
    (d) The Secretary must provide public notice of instructions on 
voting and a summary of the terms and conditions of the Order. All 
assessed entities may request and receive by mail a ballot. No person 
who claims to be an assessed entity shall be refused a ballot;
    (e) At the end of the voting period, collect, open, number, and 
review the ballots and tabulate the results in the presence of an agent 
of a third party authorized to monitor the referendum process;
    (f) Prepare a report on the referendum; and
    (g) Announce the results to the public.


Sec.  1255.104  Subagents.

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


Sec.  1255.105  Ballots.

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


Sec.  1255.106  Referendum report.

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


Sec.  1255.107  Confidential information.

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


Sec.  1255.108  OMB control number.

    The control number assigned to the information collection 
requirement in this subpart by the Office of Management and Budget 
pursuant to the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35 
is OMB control number 0581-NEW.
* * * * *

    Dated: January 9, 2017.
Elanor Starmer,
Administrator, Agricultural Marketing Service.
[FR Doc. 2017-00599 Filed 1-17-17; 8:45 am]
BILLING CODE 3410-02-P