Pecan Research, Promotion, and Information Order, 59610-59638 [2020-19031]

Download as PDF 59610 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules FOR FURTHER INFORMATION CONTACT: DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 1223 [Document Number AMS–SC–20–0013; PR– A1] Pecan Research, Promotion, and Information Order Agricultural Marketing Service. Proposed rule. AGENCY: ACTION: This proposal invites comments on the establishment of the Pecan Research, Promotion, and Information Order (Order). The purpose of the program would be to strengthen the position of pecans in the marketplace, maintain and expand markets for pecans, and develop new uses for pecans. The program would be financed by an assessment on pecan producers and importers. This proposal also invites comments on the procedures for conducting a referendum to determine whether the continuation of the proposed Order is favored by domestic producers and importers of pecans. In addition, this proposal 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 November 23, 2020. Pursuant to the Paperwork Reduction Act (PRA), comments on the information collection burden that would result from this proposal must be received by November 23, 2020. ADDRESSES: Interested persons are invited to submit written comments concerning this proposed rule. All comments must be submitted through the Federal e-rulemaking portal at http://www.regulations.gov and should reference the document number, and the date and page number of this issue of the Federal Register. All comments submitted in response to this proposed rule will be included in the rulemaking record and will be made available to the public. Please be advised that the identity of the individuals or entities submitting comments will be made public at http://www.regulations.gov. Pursuant to the PRA, comments regarding the accuracy of the burden estimate, ways to minimize the burden, including the use of automated collection techniques or other forms of information technology, or any other aspect of this collection of information, should be sent to the above address. SUMMARY: VerDate Sep<11>2014 18:29 Sep 21, 2020 Jkt 250001 Andrea Ricci, Marketing Specialist, Promotion and Economics Division, Specialty Crops Program, AMS, USDA, 755 E Nees Avenue #25985, Fresno, CA 93720; telephone: (202) 572–1442; or electronic mail: Andrea.Ricci@usda.gov. SUPPLEMENTARY INFORMATION: This proposal is issued pursuant to the Commodity Promotion, Research, and Information Act of 1996 (1996 Act) (7 U.S.C. 7411–7425). Executive Orders 12866, 13563, and 13771 Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. This action falls within a category of regulatory actions that the Office of Management and Budget (OMB) exempted from Executive Order 12866 review. Additionally, because this rule does not meet the definition of a significant regulatory action, it does not trigger the requirements contained in Executive Order 13771. See OMB’s Memorandum titled ‘‘Interim Guidance Implementing Section 2 of the Executive Order of January 30, 2017, titled ‘Reducing Regulation and Controlling Regulatory Costs’ ’’ (February 2, 2017). Executive Order 13175 This action has been reviewed in accordance with the requirements of Executive Order 13175, Consultation and Coordination with Indian Tribal Governments. The review reveals that this regulation would not have substantial and direct effects on Tribal governments and would not have significant Tribal implications. Executive Order 12988 This proposal has been reviewed under Executive Order 12988, Civil Justice Reform. It is not intended to have retroactive effect. Section 524 of the 1996 Act (7 U.S.C. 7423) provides that it shall not affect or preempt any other Federal or State law authorizing promotion or research relating to an agricultural commodity. Section 519 of the 1996 Act (7 U.S.C. 7418) provides that a person subject to an order may file a written petition with the U.S. Department of Agriculture (USDA) stating that an order, any PO 00000 Frm 00002 Fmt 4701 Sfmt 4702 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, must be filed within two years after the effective date of an order, provision, or obligation subject to challenge in the petition. The petitioner would have the opportunity for a hearing on the petition. Thereafter, USDA will issue a ruling on the petition. The 1996 Act provides that the district court of the United States for any district in which the petitioner resides or conducts business shall have the jurisdiction to review a final ruling on the petition, if the petitioner files a complaint for that purpose not later than 20 days after the date of the entry of USDA’s final ruling. Background This proposal invites comments on the establishment of the Pecan Research, Promotion, and Information Order (Order). The program would be financed by an assessment on producers and importers and would be administered by a board of industry members selected by the Secretary. The initial assessment rate would be $0.02 per pound of inshell pecans and $0.04 per pound of shelled pecans produced within or imported to the United States. Entities that produce or import less than 50,000 pounds of inshell pecans (25,000 pounds of shelled pecans) on average for four fiscal periods (the fiscal period for which the exemption is claimed and the previous three fiscal periods) would be exempt from the payment of assessments. The purpose of the program would be to strengthen the position of pecans in the marketplace, maintain and expand markets for pecans, and develop new uses for pecans. The proposal was submitted to USDA by the National Pecan Federation (NPF), an organization representing pecan growers and shellers across the United States whose mission is to promote, protect, and improve business conditions for the pecan industry. This proposal also invites comments on the procedures for conducting a referendum to determine whether the continuation of the proposed Order is favored by domestic producers and importers of pecans. A referendum would be held among eligible domestic producers and importers no later than three years after assessments begin to determine whether they favor continuation of the program. In E:\FR\FM\22SEP2.SGM 22SEP2 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules addition, this proposal announces the intent of AMS to request approval by OMB of new information collection requirements to implement the program. Legal Basis for Action The proposed Order is authorized under the 1996 Act which authorizes USDA to establish agricultural commodity research and promotion orders which may include a combination of promotion, research, industry information, and consumer information activities funded by mandatory assessments. These programs are designed to maintain and expand markets and uses for agricultural commodities. The 1996 Act provides several optional provisions that allow the tailoring of orders for different commodities. Section 516 of the 1996 Act provides permissive terms for orders, and other sections provide for alternatives. For example, section 514 of the 1996 Act provides for orders applicable to (1) producers, (2) first handlers and others in the marketing chain as appropriate, and (3) importers (if imports are subject to assessments). Section 516 states that an order may include an exemption of de minimis quantities of an agricultural commodity; different payment and reporting schedules; coverage of research, promotion, and information activities to expand, improve, or make more efficient the marketing or use of an agricultural commodity in both domestic and foreign markets; provision for reserve funds; provision for credits for generic and branded activities; and assessment of imports. In addition, section 518 of the 1996 Act provides for referenda to ascertain approval of an order to be conducted either prior to its going into effect or VerDate Sep<11>2014 18:29 Sep 21, 2020 Jkt 250001 within three years after assessments first begin under the order. Pursuant to section 518 of the Act, an order may also provide for its approval in a referendum based upon different voting patterns. Section 515 provides for establishment of a board from among producers, first handlers and others in the marketing chain as appropriate, and importers, if imports are subject to assessment. USDA currently oversees a marketing order for pecans grown in Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas, which is authorized under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601–674). The purpose of marketing orders, in general, is to stabilize market conditions, allowing industries to work together to solve marketing problems, and to improve profitability. The pecan marketing order authorizes collection of industry data; research and promotion activities; regulations on grade, size, quality, pack and container; and is financed by assessments paid by handlers of pecans grown in the production area. The purpose of research and promotion programs, in general, is to provide a framework for agricultural industries to pool their resources and combine efforts to develop new markets, strengthen existing markets and conduct important research and promotion activities. The proposed pecan research and promotion program would be national in scope, financed by an assessment on pecan producers and importers, and authorize research and promotion activities. The purpose of the proposed Order would be to strengthen PO 00000 Frm 00003 Fmt 4701 Sfmt 4702 59611 the position of pecans in the marketplace, maintain and expand markets for pecans, and develop new uses for pecans. USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this proposed rule. Industry Background The pecan industry is comprised of producers, shellers, accumulators, wholesalers, and importers that produce, process, and supply pecans for market. Pecans include any and all varieties or sub varieties, inshell or shelled of the Genus, species: Carya illinoinensis. Pecans are grown primarily in Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas. According to the most recent Census of Agriculture (2017), there are 15,608 operations with bearing acreage of pecans. Bearing acreage is greatest in Georgia with about 30 percent of the nationwide total, followed by Texas at 27 percent, Oklahoma at 22 percent, New Mexico at 11 percent, and Arizona at 4 percent. These five states generally account for about 95 percent of U.S. pecan production. U.S. Supply and Consumption Pecans are an alternate bearing crop, causing variability in production from year to year. Based on data from the National Agricultural Statistics Service (NASS), the 2014 to 2019 six-year average of total U.S. pecan production was almost 265 million pounds on an inshell basis, as shown in Table 1. Together, Georgia and New Mexico produced more than half of pecan production nationwide. E:\FR\FM\22SEP2.SGM 22SEP2 59612 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules Table 1. State Pecan Production 1,000 Lbs. State Inshell basis Georgia 88,000 New Mexico 80,150 Texas 42,517 Arizona 26,717 Oklahoma 13,533 Louisiana 7,406 California 4,686 Arkansas 2,850 Alabama 1,850 Mississippi 1,150 Missouri 1,090 South Carolina 350 Florida 145 Total U.S. 1 264,765 Source: NASS, 2014-2019 average. Note: 1 Sum may not equal Total U.S. due to rounding. From 2013 through 2016, pecan production averaged about 263 million pounds per year, and reached a peak in 2017 at nearly 305 million pounds. The following year, however, domestic production dropped 21 percent due to the destruction of the Georgia pecan crop by Hurricane Michael. The trend of U.S. pecan production is depicted in Chart 1. Chart 1. U.S. Pecan Production (Inshell basis) 310,000 300,000 290,000 Ul ..Q ,-:i 280,000 270,000 0 0 0 ~ ,-I 260,000 250,000 240,000 230,000 2014 2015 2016 2017 2018 18:29 Sep 21, 2020 Jkt 250001 PO 00000 Frm 00004 Fmt 4701 Sfmt 4725 E:\FR\FM\22SEP2.SGM 22SEP2 EP22SE20.023</GPH> Source: NASS. VerDate Sep<11>2014 2019 EP22SE20.024</GPH> 2013 59613 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules In 2018, Hurricane Michael swept across the southern half of Georgia as a Category 3 storm. According to the University of Georgia Pecan Extension, this storm resulted in a loss of nearly half the expected 2018 crop and a loss of 17 percent of the state’s pecan acreage. The effects of Hurricane Michael remain present as the 2019 Georgia crop was down nearly 30 percent from the average production of Table 2. U.S. Year Production 2013 2014 2015 2016 2017 2018 2019 2014-2019 6-yr avg Pct of supply Beginning Stocks 183,840 166,909 264,765 Inshell basis) Stocks Utilization 1 593,455 617,678 166,909 174,874 156,450 167,701 181,390 204,288 183,984 203,341 599,738 670,229 685,260 655,813 724,228 181,390 204,288 183,984 203,341 180,055 157,208 160,469 188,116 135,256 151,370 270,095 275,103 261,140 305,471 313,160 317,216 392,803 185,798 208,262 658,824 187,989 160,020 310,815 40% 28% 32% 6% 11% 15% -4% 11% 41% Per Capita Consumption (Lbs. I 6 143,285 186,619 170,574 220,069 176,122 230,899 265,287 174,874 5 0.85 0.86 0.81 0.95 0. 96 0.97 1. 20 0. 96 2 9% 24% 47% 10% -11% 12% 24% 23% 14% -3% -6% 35% 33% V Sources: 3 1 NASS; 2 Customs and Border Protection; 4 Agricultural Service. Production + Beginning Stocks + Imports; 6Utilization - (Ending Stocks + Exports); I U.S. Population. Nearly half of the U.S. supply of pecans is consumed domestically each year. Per capita consumption has trended upward for the last four years, reaching a high of 1.20 inshell pounds in 2019. Compared to 2018 and to the 2013 to 2018 six-year average, 2019 per capita consumption is up 23 percent and 33 percent, respectively. Exports The U.S. exports about 24 percent of its pecan supply on average each year. Shelled pecans make up 60 percent of VerDate Sep<11>2014 (1,000 Lbs., Ending 1 266,330 264,150 254,290 268,770 304,850 240,930 255,600 2018 2019 V 2013-2018 6-yr avg Notes: Supply and Utilization of Pecans Table 2 shows U.S. pecan supply and utilization. Domestic production generally accounts for about 40 percent of the domestic supply, while imports account for nearly one-third, with beginning stocks just under 30 percent. Almost all pecans imported into the U.S. are from Mexico. Of these, 70 percent are shelled, and 30 percent are inshell. 18:29 Sep 21, 2020 Jkt 250001 U.S. pecan exports, while inshell are 40 percent. Europe and Canada are the primary markets for shelled pecans with, on average, 49 percent and 24 percent, respectively, of total shelled exports. In Europe, the largest consumers of U.S. shelled pecans are the Netherlands, the United Kingdom, and Germany with 39 percent, 24 percent, and 15 percent, respectively, of total shelled exports to Europe. On average, about 94 percent of U.S. inshell exports go to Asia. Together, Hong Kong PO 00000 Frm 00005 Fmt 4701 Sfmt 4702 and China make up 72 percent of the Asian market for inshell pecan exports from the United States. Competition The pecan industry competes with other tree nut industries such as almonds, pistachios and walnuts. As Table 3 illustrates, sales by volume of pecans are 95 percent lower than sales of almonds, 74 percent lower than sales of walnuts, but 40 percent higher than sales of pistachios. E:\FR\FM\22SEP2.SGM 22SEP2 EP22SE20.025</GPH> 2019 1 the six years prior to the storm. Prior to Hurricane Michael, Georgia was the top pecan-producing state in the U.S. Considering this, along with the state’s recovery efforts, the University of Georgia Pecan Extension expects Georgia pecan production to rebound in the coming years. Pecan production nationwide began to increase in 2019, climbing six percent from 2018. 59614 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules Table 3. Shelled Nut Sales (1,000 Lbs.) Year 2013 2014 2015 2016 2017 2018 2019 Pecans 106,569 101,858 87,225 116,930 126,396 88,373 115,937 Almonds 1 2,010,000 1,870,000 1,900,000 2,140,000 2,270,000 2,280,000 2,550,000 Pistachios 45,400 50,800 33,100 114,400 52,807 121,000 82,000 Walnuts 306,000 374,000 400,000 438,000 390,000 450,000 412,000 2014-2019 6-yr avg 106,120 2,168,333 75,685 410,667 40 -74 Pecan comparison Source: NASS. Note: 1 Almonds -95% is shelled utilized production. Prices received by growers, as shown in Table 4, are 25 percent lower for pecans than for almonds. Compared to other nuts, grower-received prices for pecans are 18 percent lower than those Table 4. Grower-Received Prices Year 2013 2014 2015 2016 2017 2018 2019 $ $ $ $ $ $ $ Pecans 1. 73 1. 96 2.20 2.59 2.33 1. 75 1. 84 2014-2019 6-yr avg $ 2.11 Pistachios $ 3.48 $ 3.57 $ 3.29 $ 1. 68 $ 1. 69 $ 2.65 $ 2.62 Walnuts $ 1. 86 $ 1. 67 $ 0.84 $ 0.93 $ 1. 25 $ 0.68 $ 0.99 $ $ $ 2.83 -25% 2.58 -18% years, pecan prices were at their highest in 2016 before dropping in the following two years. Prices increased slightly 1. 06 100 between 2018 and 2019 but are still down about 12 percent compared to the average of the previous six years. VerDate Sep<11>2014 18:29 Sep 21, 2020 Jkt 250001 PO 00000 Frm 00006 Fmt 4701 Sfmt 4702 E:\FR\FM\22SEP2.SGM 22SEP2 EP22SE20.026</GPH> EP22SE20.027</GPH> Chart 2 shows the trend of prices for pecans from 2013 to 2019. In recent ($/Lb.) Almonds $ 3.21 $ 4.00 $ 3.13 $ 2.39 $ 2.53 $ 2.50 $ 2.43 Pecan comparison Source: NASS. Price Trends for pistachios, but double those for walnuts. Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules 59615 Chart 2. Pecan Prices $2.70 $2.50 $2.30 ..Q ~ $2 .10 {f}- $1. 90 $1.70 $1.50 2013 2014 2015 2016 2017 2018 2019 Need for a Program According to the NPF, the greatest challenge the pecan industry is facing is supply surpassing demand. Data from the International Nut and Dried Fruit Council and from the research compiled by the Boston Consulting Group, contracted by the NPF, show that the supply of pecans may exceed demand by 19 percent in 2028.1 The NPF believes the establishment of a national research and promotion program for pecans would help the industry address this challenge. NPF concluded that without a program funded by assessments from both domestically produced and imported pecans, the industry would not be able to meet the challenge of the approaching supply and demand imbalance. In 2016, the U.S. pecan industry favored the establishment of a marketing order for pecans grown in Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas. The program authorizes collection of industry data; research and promotion activities; regulation of grade, size, quality, pack and container; and is financed by assessments paid by handlers of pecans grown in the production area. Over the past several years the marketing order program has launched marketing campaigns to increase demand for pecans. 1 Based on historic compound annual growth rates (CAGR’s) in global pecan supply and demand for 10 years from 2008 to 2018; resultant CAGR’s of 6 percent for global supply and demand applied to 2018 estimates to forecast 2028 figures. VerDate Sep<11>2014 18:29 Sep 21, 2020 Jkt 250001 According to the NPF, the proposed research and promotion program will benefit domestic producers and importers of pecans, thereby justifying the collection of assessments on both domestic production and imports. The NPF proposal indicates that imported product accounts for approximately 39 percent of pecans being supplied to the U.S., with domestic production accounting for the other 61 percent. With mandatory assessments being collected only on domestic production, this has created a gap in the dollars available to fund marketing campaigns focused on creating increased demand for pecans in the U.S. and globally. As domestic production and imports increase, the need for a robust promotion campaign is apparent, which would only be accomplished with both domestic producers and importers contributing financially. The NPF concluded that the marketing order would continue to have an important role within the industry and the intent is that the two programs would work together to benefit the entire pecan industry. Provisions of Proposed Program Definitions Pursuant to section 513 of the 1996 Act, §§ 1223.1 through 1223.24 of proposed 7 CFR part 1223 (referred to as the proposed Order) define certain terms that would be used throughout final 7 CFR part 1223 (referred to as the Order). Several of the terms are common to all research and promotion programs authorized under the 1996 Act, while other terms are specific to the proposed Order. PO 00000 Frm 00007 Fmt 4701 Sfmt 4702 Section 1223.1 would define the term ‘‘Act’’ to mean the Commodity Promotion, Research, and Information Act of 1996 (7 U.S.C. 7411–7425), and any amendments thereto. Section 1223.2 would define the term ‘‘American Pecan Council’’ or ‘‘APC’’ to mean that governing body of the Federal Marketing Order established pursuant to 7 CFR part 986, unless otherwise noted. As specified in proposed § 1223.41, the APC would conduct the initial nominations for producers of the American Pecan Promotion Board and submit them to the Secretary. Section 1223.3 would define the term ‘‘American Pecan Promotion Board’’ or ‘‘Board’’ to mean the administrative body established pursuant to § 1223.40. Section 1223.5 would define ‘‘Customs’’ or ‘‘CBP’’ to mean the Customs and Border Protection, an agency of the United Sates Department of Homeland Security. Section 1223.7 would define ‘‘first handler’’ to mean any person who receives, shells, cracks, accumulates, warehouses, roasts, packs, sells, consigns, transports, exports, or ships (except as a common or contract carrier of pecans owned by another person), or in any other way puts inshell or shelled pecans in the stream of commerce. The term first handler includes a producer who handles or markets pecans of the producer’s own production. Section 1223.8 would define the term ‘‘fiscal period’’ to mean the period from October 1 to September 30, or such other period as recommended by the Board and approved by the Secretary. Section 1223.10 would define the term ’’information’’ to mean information E:\FR\FM\22SEP2.SGM 22SEP2 EP22SE20.028</GPH> Source: NASS. 59616 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules and programs that are designed to increase efficiency in processing and to develop new markets, marketing strategies, increase market efficiency, and activities that are designed to enhance the image of pecans on a national or international basis. This includes consumer information, which means any action taken to provide information to, and broaden the understanding of, the general public regarding the consumption, use, nutritional attributes, and care of pecans. This would also include industry information, which means information and programs that would lead to the development of new markets, new marketing strategies, or increased efficiency for the pecan industry, and activities to enhance the image of the pecan industry. Section 1223.11 would define the term ‘‘inshell pecans’’ to mean nuts whose kernel is maintained inside the shell. Section 1223.12 would define the terms ‘‘market’’ or ‘‘marketing.’’ The term ‘‘marketing’’ would mean the sale or other disposition of pecans in any channel of commerce. The term ‘‘market’’ would mean to sell or otherwise dispose of pecans in interstate, foreign, or intrastate commerce. Section 1223.14 would define the terms ‘‘part’’ and ‘‘subpart.’’ The term ‘‘part’’ would mean all rules, regulations, and supplemental orders issued pursuant to the Act and the Order. The Pecan Promotion, Research, and Information Order would be a ‘‘subpart’’ (specifically subpart A) of such part. Section 1223.15 would define the term ‘‘pecans’’ to mean and includes any and all varieties or subvarieties, inshell or shelled, of the Genus, species: Carya illinoinensis grown or imported into the United States. Section 1223.17 would define the term ‘‘producer’’ to mean synonymous with grower and any person engaged in the production and sale of pecans in the United States who owns, or who shares in the ownership and risk of loss of such pecans. Section 1223.18 would define the terms programs, plans, and projects to mean research, promotion and VerDate Sep<11>2014 18:29 Sep 21, 2020 Jkt 250001 information programs, plans, or projects established under the Order. Section 1223.19 would define the term ‘‘promotion’’ to mean any action taken to present a favorable image of pecans to the general public and the food industry for the purpose of improving the competitive position of pecans both in the United States and abroad and stimulating the sale of pecans. This includes paid advertising and public relations. Section 1223.20 would define the term ‘‘research’’ to mean any type of test, study, or analysis designed to advance the image, desirability, use, marketability, production, product development, or quality of pecans, including research relating to nutritional value, cost of production, new product development, varietal development, nutritional value, health research, and marketing of pecans. Section 1223.22 would define the term ‘‘shelled pecans’’ to mean pecans whose shells have been removed leaving only edible kernels, kernel pieces or pecan meal. One pound of shelled pecans is the equivalent of two pounds inshell pecans. Sections 1223.4, 1223.6, 1223.9, 1223.13, 1223.16, 1223.21, 1223.23, 1223.24, and 1223.25 would define the terms ‘‘conflict of interest,’’ ‘‘Department or USDA,’’ ‘‘importer,’’ ‘‘Order,’’ ‘‘person,’’ ‘‘Secretary,’’ ‘‘suspend,’’ ‘‘terminate,’’ and ‘‘United States,’’ respectively. The definitions are the same as or are based on the definitions specified in section 513 of the Act. Establishment of the Board Pursuant to section 515 of the 1996 Act, §§ 1223.40 through 1223.47 of the proposed Order would detail the establishment and membership of the proposed American Pecan Promotion Board (Board), nominations and appointments, term of office, removal and vacancies, procedure, compensation and reimbursement, powers and duties, and prohibited activities. Section 1223.40 would specify the Board establishment and membership. The 1996 Act requires the composition of a board to reflect the geographical distribution of production of the commodity in the U.S. as well as the quantity or value of the commodity PO 00000 Frm 00008 Fmt 4701 Sfmt 4702 imported into the United States. In accordance with this requirement, the NPF recommended the Board would consist of 17 members: 10 domestic producers and 7 importers. To determine whether the NPF’s proposed board representation is reflective of the appropriate geographical distribution, USDA used the following resources: The NASS for U.S. production data; the 2007, 2012, and 2017 Census of Agriculture (published by NASS) for bearing acreage data by state; Customs import data for shelled and inshell pecans (HTS Codes 0802901500 and 0802901000, respectively); and the Global Agricultural Trade System (GATS) of the Foreign Agricultural Service (FAS) for data on U.S. exports of inshell pecans to Mexico. All data presented in this document is based on a calendar year for consistency in timeframe. Due to the alternate-bearing nature of the crop, USDA concluded that the most appropriate way to illustrate production and import volume is a six-year average of years 2014 through 2019. U.S. Production Every five years, following the Census of Agriculture, NASS reviews production for each commodity and evaluates the inclusion of states in its annual estimating program. Given limited available resources, NASS has reduced the number of states included in its annual estimation of pecan production to five states as of 2019, down from 12 states in 2014 after the 2012 Census of Agriculture. NASS had reported annual estimates of pecan production for 15 states as early as 2007. Using bearing acreage data from the 2007, 2012, and 2017 Census of Agriculture, USDA estimated 2017 production in the seven states for which no data was issued by NASS. USDA calculated an average yield per acre for each of these seven states using bearing acreage data from the 2007 and 2012 Census of Agriculture and NASS production data for the corresponding years. Next, USDA applied these calculations of yield to bearing acreage data from the 2017 Census of Agriculture to estimate 2017 production. Table 5 shows the result. E:\FR\FM\22SEP2.SGM 22SEP2 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules 59617 Table 5. Pecan Production Volume by State 2014-2019 Six-Year Average States Lbs. (Inshell basis) Alabama 1,850,000 Arizona 26,783,333 3,102,365 Arkansas 1 California Florida . Georgia 4,686,000 1 1,958,448 2 90,900,000 676,226 Kansas 1 Louisiana Mississippi 7,406,000 1,217,850 1 1,415,427 Missouri 1 New Mexico 81,950,000 North Carolina Oklahoma 1 South Carolina Texas 1 216,949 13,300,000 714,239 43,366,667 U.S. Total 279,543,504 Source: NASS. Notes: 1 2017 production estimated by USDA; 2 Georgia production estimated using a weighted average with lower weights applied to production in years 2018 and 2019 to discount anomalous effects of 2018 Hurricane Michael. VerDate Sep<11>2014 18:29 Sep 21, 2020 Jkt 250001 year weighted average of 90.9 million pounds, inshell, of Georgia production. Prior to Hurricane Michael, Georgia was the top pecan producer in the United States. Considering this, along with the state’s recovery efforts, the University of Georgia Pecan Extension expects Georgia pecan production to rebound in the coming years. According to the proposal, domestic board representation would be split into three regions: Eastern, Central, and Western. The Eastern Region includes Alabama, Florida, Georgia, North Carolina, South Carolina, and any other U.S. states the majority of whose land mass is in the Eastern Time Zone, plus any U.S. territories in the Atlantic Ocean. The Central Region includes Arkansas, Kansas, Louisiana, Mississippi, Missouri, Oklahoma, Texas, and any other U.S. states the majority of PO 00000 Frm 00009 Fmt 4701 Sfmt 4702 whose land mass is in the Central Time Zone. Finally, the Western Region includes Arizona, California, New Mexico, and any other U.S. states the majority of whose land mass is in the Mountain or Pacific Time Zones, plus Alaska, Hawaii, and any U.S. territories in the Pacific Ocean. Table 6 lists the three regions including their states and territories, along with regional six-year average production, and portion of total U.S. production. The Eastern and Central Regions, with 34 percent and 25 percent of total U.S. production, respectively, would each have three seats on the Board as recommended by the NPF. The Western Region, with 41 percent of total U.S. production would have four seats on the Board as recommended by the NPF, for a total of 10 seats representing domestic U.S. production. E:\FR\FM\22SEP2.SGM 22SEP2 EP22SE20.029</GPH> In 2018, Hurricane Michael swept across the southern half of Georgia as a Category 3 storm. According to the University of Georgia Pecan Extension, this storm resulted in a loss of nearly half the expected 2018 crop and a loss of 17 percent of the state’s pecan acreage. The effects of Hurricane Michael remain present as the 2019 Georgia crop was down nearly 30 percent from the average production of the six years prior to the storm. To more accurately represent the geographical distribution of U.S. pecan production, USDA adjusted the six-year average of production for Georgia by applying weights to each year’s production figures. Equal weights of 20 percent were applied to years 2014 through 2017, and weights of 10 percent each were applied to years 2018 and 2019. The result, as shown in Table 5, is a six- 59618 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules Table 6. Pecan Production Volume by Region 2014-2019 Six-Year Average Lbs. (Inshell basis) States Alabama Florida ~ H ~ Georgia 0 (].J -rl -J...J 95,639,636 North Carolina CTI (/) (].J (U South Carolina p::; µ:J Eastern Time Zone States Atlantic Territories Arkansas Kansas rl Louisiana ~ (U 0 H -rl Mississippi -J...J 70,484,535 CTI ~ Missouri (].J (].J u p::; Oklahoma Texas Central Time Zone States Arizona California ~ New Mexico H ~ 0 (].J Mountain Time Zone States -rl -J...J CTI 113,419,333 (/) Pacific Time Zone States (].J (].J :s p::; Alaska Hawaii Pacific Territories Total u. s. Production 279,543,504 Source: NASS. u .s. 34% 25% 41% exports of inshell pecans to Mexico. This calculation assumes that all U.S. inshell pecan exports to Mexico ultimately return to the United States as shelled kernels. According to the NPF, this is a reasonable assumption. The result of this calculation is shown in Table 7. Table 7. Revised Pecan Import Calculation 2014-2019 Six-Year Average, Lbs. (Inshell basis) Total Imports 1 Exports 2 Revised Imports 3 244,539,780 36,278,137 208,261,643 1 2 Sources: Customs and Border Protection; Foreign Agricultural Service. Notes: 2 u. s. inshell exports to Mexico; 3 Total Imports Exports. VerDate Sep<11>2014 18:29 Sep 21, 2020 Jkt 250001 PO 00000 Frm 00010 Fmt 4701 Sfmt 4725 E:\FR\FM\22SEP2.SGM 22SEP2 EP22SE20.031</GPH> Regarding import volume, USDA estimated about 208 million pounds, inshell, using a six-year average for years 2014 through 2019. To arrive at this estimate, USDA considered the routine industry practice of domestic inshell pecans being exported to Mexico for shelling, and then reentering the United States as shelled kernels. These shelled kernels may be documented as imported product, but they were actually produced in the United States. To account for this scenario, USDA deducted from total imports U.S. of EP22SE20.030</GPH> Imports 9c 0 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules In Table 8, revised imports are added to domestic production to estimate the total U.S. supply of pecans. With 279.5 million pounds, on an inshell basis, U.S. production accounts for 57 percent u. s. of the total domestic supply; and, with just over 208 million pounds, on an inshell basis, imports account for 43 percent of the total U.S. supply. In its proposal, the NPF recommended 17 59619 total board members, including ten domestic producers and seven importers. Table 8. Board Representation 2014-2019 Six-Year Average, Lbs. (Inshell basis) Production 1 Imports 2 Total U.S. Supply 3 279,543,504 208,261,643 487,805,148 57% 43% 100% Sources: 1 NASS; 2 Customs and Border Protection, Foreign Agricultural Service. 2 Revised Exports); 3 Imports calculated in Table 7 (Total Imports - U. s. Production + Imports. The NPF proposed to have no alternate Board members. It wants to ensure that industry members who seek representation and serve on the Board are committed to their service and participate in all Board meetings. At least once every five years, the Board must review the geographical distribution of United States production of pecans and the quantity or value of imports. The review would be conducted through an audit of state crop production, Customs data, and Board assessment records. If warranted, the Board would recommend to the Secretary of Agriculture that the Board membership be reapportioned appropriately to reflect such changes. The distribution of production between regions also shall be considered. Any changes in Board composition would be implemented by the Secretary through rulemaking. Section 1223.41 of the proposed Order would specify Board nominations and appointments. The initial nominations for producers would be submitted to the Secretary by the American Pecan Council (APC). The APC would publicize the nomination process, using trade press or other means it deems appropriate. The APC would use regional caucuses, mail or other methods to solicit potential nominees and would work with USDA to help ensure that all interested persons are apprised of the nomination process. The APC would submit the nominations and recommend two nominees for each Board position for the Secretary’s consideration. USDA would conduct initial importer nominations. This includes publicizing the nomination process, using trade press or other means it deems VerDate Sep<11>2014 18:29 Sep 21, 2020 Jkt 250001 appropriate, and conducting outreach to all importers. USDA would receive the nominations and submit two nominees for each Board position for the Secretary’s consideration. Regarding subsequent nominations, the Board would solicit nominations as described in the following paragraph. Nominees must produce more than 50,000 pounds of inshell pecans (25,000 pounds of shelled pecans) on average for four fiscal periods (the fiscal period for which the nominations are being conducted and the previous three fiscal periods). The Board would seek nominations for each vacant seat from producers who paid their assessments to the Board in the most recent fiscal period. Producers that produce in more than one region could seek nomination in only the region in which they produce the majority of their pecans. Interested producers could also submit a background statement outlining their qualifications to serve on the Board. The names of producer nominees would be placed on a ballot by region. The ballots, along with any background statements, would be mailed to producers in each respective region for a vote. Producers who produce pecans in more than one region could only vote in the region in which they produce the majority of their pecans. The votes would be tabulated for each region with the nominee receiving the highest number of votes at the top of the list in descending order by vote. Two candidates for each position would be submitted to the Secretary for consideration. The Board would also solicit candidates for importer nominees. All qualified national organizations representing importers would have the PO 00000 Frm 00011 Fmt 4701 Sfmt 4702 opportunity to nominate members to serve on the Board. To be certified by the Secretary as a qualified national organization, an organization would have to have been established for more than a year; be comprised primarily of importers of pecans; receive a portion of its operating funds from importers; and demonstrate it would be willing and able to further the Act and Order’s purposes. Interested importers could also submit a background statement outlining their qualifications to serve on the Board. The names of importer nominees would then be placed on a ballot. The ballots, along with any background statements, would be mailed to importers for a vote. The votes would be tabulated with the nominee receiving the highest number of votes at the top of the list in descending order by vote. Two candidates for each position would then be submitted to the Secretary for consideration. The Board would submit nominations to the Secretary at least six months before the new Board term begins. The NPF also recommended that no two Board members be employed by a single corporation, company, partnership, or any other legal entity. The NPF stated this is to help ensure that no one entity has control on the Board. In order to provide the Board flexibility, the Board could recommend to the Secretary modifications to its nomination procedures. Any such modifications would be implemented through rulemaking by the Secretary. Section 1223.42 of the proposed Order would specify the term of office. Except for the initial Board, each Board member would serve a three-year term or until the Secretary selected his or her successor. Each term of office would E:\FR\FM\22SEP2.SGM 22SEP2 EP22SE20.032</GPH> Notes: 59620 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules begin on October 1 and end on September 30. No member could serve more than two consecutive terms, excluding any term of office less than three years. For the initial Board, the members’ terms would be staggered for two, three, and four years and would be determined at random. The initial members would be able to serve one successive three-year term. Section 1223.43 of the proposed Order would specify criteria for the removal of members and for filling vacancies. If a Board member ceased to work for or be affiliated with the category of members from which the member was appointed or in the region he or she represented, such position would become vacant. The Board could recommend to the Secretary that a member be removed from office if the member consistently refused to perform his or her duties or engaged in dishonest acts or willful misconduct. Further, without recommendation of the Board, a member may be removed by the Secretary upon showing of adequate cause, including the continued failure by a member to submit reports or remit assessments required under this part, if the Secretary determines that such member’s continued service would be detrimental to the achievement of the purposes of the Act. If a position became vacant, nominations to fill the vacancy would be conducted using the nomination process as proposed in § 1223.41 of the Order. A vacancy would not be required to be filled if the unexpired term is less than six months. Section 1223.44 of the proposed Order would specify procedures of the Board. A majority of the Board members (9) would constitute a quorum. A motion would carry if supported by one vote more than 50 percent of the total votes represented by the Board members present. Proxy voting would not be permitted. The proposed Order would also provide for the Board to take action by mail, telephone, electronic mail, facsimile, or any other electronic means when the chairperson believes it is necessary. Actions taken under these procedures would be valid only if all members and the Secretary were notified of the meeting and all members were provided the opportunity to vote and at least nine Board members voted in favor of the action. Additionally, all votes would have to be confirmed in writing and recorded in Board minutes. The proposed Order would specify that Board members would serve without compensation. However, Board members would be reimbursed for reasonable travel expenses, as approved VerDate Sep<11>2014 18:29 Sep 21, 2020 Jkt 250001 by the Board, incurred when performing Board business. Section 1223.46 of the proposed Order would specify powers and duties of the Board. These are similar in promotion programs authorized under the 1996 Act. They include, among other things, to administer the Order and collect assessments; to develop bylaws and recommend regulations necessary to administer the Order; to select a chairperson and other Board officers; to create committees and subcommittees as necessary; to hire staff or contractors; to develop programs and enter into contracts to implement programs; to prepare and submit a budget for approval by USDA in accordance with the Order; to invest Board funds appropriately; have its books audited by an outside certified public accountant at the end of each fiscal period and at other times as requested by the Secretary; to provide appropriate notice of meetings to the industry and USDA and keep minutes of such meetings; to report its activities to producers and importers; to make public an accounting of funds received and expended; to receive, investigate and report to the Secretary complaints of violations of the Order; and to recommend amendments to the Order as appropriate. Section 1223.47 of the proposed Order would specify prohibited activities that are common to all promotion programs authorized under the 1996 Act. In summary, the Board nor its employees and agents could engage in actions that would be a conflict of interest; use Board funds to lobby (influencing legislation or governmental action or policy, by local, state, national, and foreign governments or subdivision thereof, other than recommending to the Secretary amendments to the Order); or engage in any advertising or activities that may be false, misleading or disparaging to another agricultural commodity. Expenses and Assessments Pursuant to sections 516 and 517 of the 1996 Act, §§ 1223.50 through 1223.53 of the proposed Order detail requirements regarding the Board’s budget and expenses, financial statements, assessments, and exemption from assessments. At least 60 calendar days before the start of the fiscal period, and as necessary during the year, the Board would submit a budget to USDA covering its projected expenses. The budget must include a summary of anticipated revenue and expenses for each program along with a breakdown of staff and administrative expenses. Except for the initial budget, the Board’s PO 00000 Frm 00012 Fmt 4701 Sfmt 4702 budgets should include comparative data for at least one preceding fiscal period. Each budget must provide for adequate funds to cover the Board’s anticipated expenses. Any amendment or addition to an approved budget must be approved by USDA, including shifting of funds from one program, plan or project to another. Shifts of funds that do not result in an increase in the Board’s approved budget would not need prior approval from USDA. For example, if the Board’s approved budget provided for $1 million in consumer advertising and $500,000 in research projects, a shift of $50,000 from consumer advertising to research would require USDA approval. However, a shift within the $1 million consumer advertising line item would not require prior USDA approval. The Board would be authorized to incur reasonable expenses for its maintenance and functioning. During its first year of operation, the Board could borrow funds for startup costs and capital outlay. Any borrowed funds would be subject to the same fiscal, budget and audit controls as other funds of the Board. The Board could also accept voluntary contributions and seek other funding sources to carry out activities authorized under the Order. Any contributions received by the Board would be free from encumbrances by the donor and the Board would retain control over use of the funds. However, the Board could receive funds from outside sources targeted for specific authorized projects. For example, the Board could receive Federal grant funds, subject to approval by the Secretary, for a specific research project. The Board would also be required to reimburse USDA for costs incurred by USDA in overseeing the Order’s operations, including all costs associated with referenda. The Board would be limited to spending no more than 15 percent of its assessment and other income received for administration, maintenance, and the functioning of the Board for that fiscal period. This limitation would be applicable for fiscal periods beginning three or more years after the establishment of the Board. Reimbursements to USDA would not be considered administrative costs. As an example, if the Board received $9 million in assessments during fiscal period five, and $1 million in Federal grant funding, the Board’s assessment and other income would be $10 million for that fiscal period. In this scenario, the Board would be limited to spending E:\FR\FM\22SEP2.SGM 22SEP2 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules no more than $1.5 million (.15 × $10 million) on administrative costs. The Board could also maintain a monetary reserve and carry over excess funds from one fiscal period to the next. However, such reserve funds could not exceed two fiscal period’s budgeted expenses. For example, if the Board’s budgeted expenses for a fiscal period were $8 million, it could carry over no more than $16 million in reserve. With approval of the Secretary, reserve funds could be used to pay expenses. The Board could invest its revenue collected under the Order in the following: (1) Obligations of the United States or any agency of the United States; (2) General obligations of any State or any political subdivision of a State; (3) Interest bearing accounts or certificates of deposit of financial institutions that are members of the Federal Reserve; and 4) Obligations fully guaranteed as to principal interest by the United States. The Board would be required to submit to USDA financial statements on a monthly or quarterly basis, or at any other time as requested by the Secretary. Financial statements should include, at a minimum, a balance sheet, statement of activities (budget versus actual), an income statement, and an expense budget. Assessments The Board’s programs and expenses would be funded through assessments on producers and importers, other income, and other funds available to the Board. The Order would provide for an initial assessment rate of $0.02 per pound of all inshell pecans and $0.04 per pound on all shelled pecans. Each producer would pay on the amount of pecans produced in the United States. The importer of record would pay assessments based on the amount of pecans imported to the United States. The Order provides that it is the responsibility of the first handler, as defined in § 1223.7, to collect and remit assessments owed to the Board. First handlers would collect assessments from each producer based on pounds of pecans received. The first handler would remit those assessments, along with the required reports, to the Board. As an example, first handler A receives 100,000 pounds inshell pecans from producer X, 250,000 pounds shelled pecans from producer Y, and 750,000 inshell pecans from producer Z. First handler A would collect $2,000 (100,000 pounds × $0.02 per pound inshell pecans) from producer X, $10,000 (250,000 pounds × $0.04 per pound shelled pecans) from producer Y, and $15,000 (750,000 pounds × $0.02 VerDate Sep<11>2014 18:29 Sep 21, 2020 Jkt 250001 per pound inshell pecan) from producer Z. First handler A would remit the assessment collected totaling $27,000 ($2,000 + $10,000 + $15,000) to the Board. If a producer is acting as its own first handler, the producer would be required to remit its individual assessments. Assessments owed would be due to the Board by the 10th calendar day of the month following the end of the previous month. As an example, assessments for pecans received in June would be due to the Board by July 10th. Importer assessments would be collected through Customs. If Customs did not collect the assessment from an importer, the importer would be responsible for paying the assessment directly to the Board by the 10th calendar day of the month following the end of the previous month after the pecans were imported into the United States. Domestic inshell pecans are routinely exported to Mexico, shelled, and imported into the United States as shelled pecans. The intent of the Order is not to double assess such pecans. For pecans produced in the United States, shipped to locations outside the United States for shelling, and imported back into the United States, assessments would be owed on the pecans produced in the United States and would be remitted by the first handler. If assessments are being collected through Customs, the importer would need to request a refund from the Board and provide proof that assessments had been previously remitted by the first handler. For importers who remit assessments directly to the Board, the importers would have to provide documentation that assessments had been paid by the first handler. As an example, if producer A, acting as its own first handler, exports 100,000 pounds of inshell pecans to Mexico to be shelled, that individual would be required to remit to the Board assessments owed on the 100,000 pounds of inshell pecans. When Importer B imports the 50,000 pounds of shelled pecans, the importer would need to provide documentation that substantiates that assessments were remitted by the producer A. Section 1223.52(e)(2) of the Order would prescribe the Harmonized Tariff Schedule (HTS) of the United States categories covered under the program. Imported commodities are assigned codes via the HTS with the first numbers denoting the heading, which is a broad description of the commodity, and the subsequent numbers denoting the subheadings, which specify the commodity in greater detail. In the event an HTS number subject to assessment changed and the change is PO 00000 Frm 00013 Fmt 4701 Sfmt 4702 59621 merely a replacement of a previous number and has no impact on the description of the pecans involved, assessments would continue to be collected based on the new number. Section 1223.520 of the Order would provide authority for the Board to impose a late payment charge and interest for assessments not received within 30 calendar days of the date assessments were due. There would be a one-time late payment charge of five percent of the assessments due. In addition, there would be a one percent per month interest charge on the outstanding balance, including any late payment and accrued interest. Interest would accrue monthly until the outstanding balance would be paid to the Board. De Minimis The proposed Order would provide an exemption to assessment of producers whose production volume was less than 50,000 pounds of inshell pecans (25,000 pounds of shelled pecans) on average for four fiscal periods (the fiscal period for which the exemption is claimed and the previous three fiscal periods). The exemption would also apply to importers whose import volume was less than 50,000 pounds of inshell pecans (25,000 pounds of shelled pecans) on average for four fiscal periods (the fiscal period for which the exemption is claimed and the previous three fiscal periods). The Federal Marketing Order (FMO) regulating the handling of pecans defines a producer or grower as one who produces ‘‘a minimum of 50,000 pounds of inshell pecans’’ or who owns ‘‘a minimum of 30 pecan acres’’. Record evidence in the 2015 FMO promulgation hearings—including witness testimonies and a study entitled ‘‘Economic Analysis of the Implementation of a Federal Marketing Order for Pecans’’— verified that 50,000 pounds of inshell pecans or 30 pecan acres was an acceptable threshold for distinguishing a commercial pecan producer from a hobby farmer. This proposal prescribes an average of four fiscal periods of production or imports to determine whether an entity is subject to assessment. For quantifying the number of domestic producers of pecans, data from the 2017 Census of Agriculture, representing a single year, is the best resource available to USDA. Regarding importers, USDA used a sixyear average instead of a four-year average to maintain consistency across analyses in this proposal. Finally, all data used in this analysis is reflective of a calendar year, not a fiscal year. NASS, who publishes the Census of E:\FR\FM\22SEP2.SGM 22SEP2 59622 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules Agriculture, reports data on a calendar year basis. USDA analyzed Customs data by calendar year for consistency with NASS. In 2017, NASS estimated pecan production for 12 states. Every five years, following the Census of Agriculture, NASS reviews production for each commodity and evaluates the inclusion of states in its annual estimating program. To determine the number of domestic producers that would be assessed or exempt from assessment, USDA first estimated the minimum number of acres required to produce 50,000 pounds, inshell, of pecans for 12 states. To accomplish this, USDA divided the de minimis threshold of 50,000 pounds, inshell, by the 2017 yield estimates for each of the 12 states. These yield estimates, along with the resulting minimum number of acres to produce 50,000 pounds, inshell, of pecans are shown in Table 9. Next, USDA used each state’s minimum number of acres to find the number of operations that had pecan bearing acreage that would enable them to produce at least 50,000 pounds, inshell, of pecans, based on data from the 2017 Census of Agriculture. Table 9. 2017 State Yield and Minimum Acreage for Assessment Min. Acres for Yield 50,000 Lbs. State (Inshell) Alabama 220 227 Arizona 1,750 29 Arkansas 257 195 Florida 302 166 Georgia Louisiana Mississippi Missouri New Mexico North Carolina Oklahoma Texas Source: NASS. Table 10 depicts the number of producers and importers that would be assessed and exempt from assessment under the de minimis threshold of 50,000 pounds, inshell, of pecans. According to the 2017 Census of Agriculture, there were 15,608 operations with bearing acreage of 892 56 650 310 267 2,115 242 163 426 77 161 187 24 207 307 117 pecans in the U.S. in 2017. Based on data from Customs and Border Protection (Customs), there were 190 entities that imported shelled or inshell pecans between 2014 and 2019. USDA estimates that of the total 15,798 producers and importers of pecans, 1,061, or seven percent, would be assessed and 14,737, or 93 percent, would be exempt from assessment. USDA seeks comment on whether this de minimis provides a good representation of the industry for assessments collected and board representation. Table 10. Entities Exempt and Assessed at De Minimis Threshold Entities Total Assessed Exempt Producers 1 15,608 2 14,618 190 71 119 15,798 1,061 14,737 2 Customs and Border Protection, 2014-2019 VerDate Sep<11>2014 18:29 Sep 21, 2020 Jkt 250001 PO 00000 Frm 00014 Fmt 4701 Sfmt 4725 E:\FR\FM\22SEP2.SGM 22SEP2 EP22SE20.033</GPH> EP22SE20.034</GPH> Importers Total Sources: 1 NASS, 2017; average. 990 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules Using NASS data, USDA estimates 2017 pecan production to amount to more than 316 million pounds, inshell. Customs data shows total imports of shelled and inshell pecans to average 244.5 million pounds, on an inshell basis, from 2014 to 2019.2 Together, total volume of pecans in the U.S. market is almost 561 million pounds, inshell, as shown in Table 11. Assessed volume amounts to 251 million pounds, inshell, for producers and 244 million pounds, inshell, for importers. Total assessed volume multiplied by the 59623 assessment rate of $0.02 per pound of inshell pecans (equivalent to $0.04 per pound of shelled pecans) results in a total assessment revenue of nearly $10 million.3 Table 11. Estimated Volume and Assessment Revenue Volume (Lbs., Inshell Basis) Assessment Entities Total Assessed Revenue Producers 1 316,171,267 251,309,740 $ 5,026,195 2 In addition to the proposed exemption of 50,000 pounds of pecans on an inshell basis or 25,000 pounds of pecans on a shelled basis, USDA considered other options for a de minimis threshold. First, USDA considered a de minimis exemption for growers with less than 30 acres of pecans, aligning with one of the definitions of producer or grower in the FMO. A de minimis exemption of less than 30 acres could not apply to pecan importers, and therefore would not be fairly applied to all those subject to the program. Thus, this exemption is not contained in this proposal. In the pecan FMO, handlers who handle at least 1,000 pounds of pecans, on an inshell basis, are subject to assessment. If this de minimis exemption of less than 1,000 pounds of pecans, on an inshell basis, were applied to pecan growers, then about 50 percent of growers would be subject to assessment. Of these assessed growers, nearly half would operate between 5 and 15 bearing acres of pecans, therefore placing a significant burden on smaller growers to fund the program. Thus, this exemption is not contained in this proposal. Finally, USDA considered a de minimis exemption which mirrors the definition of a small pecan grower and small pecan importer according to the Small Business Administration (SBA). The SBA size standard for a small pecan grower is annual sales receipts of no more than $1 million. The SBA size standard for small pecan importer (equivalent to ‘‘Postharvest crop activities’’) is annual receipts equal to no more than $30 million. Tying the de minimis exemption to these differing SBA size standards becomes problematic when considering equitable contributions to the proposed program. This is true not only when evaluating contributions from each sector but also within the respective sectors. A de minimis exemption tied to annual sales receipts may overly burden growers and importers who produce or import high annual sales receipts of pecans. AMS seeks comments on the proposed de minimis exemption, particularly on whether the proposed level is appropriate to ensure equitable contribution and representation from both domestic producers and importers, or if modification to the exemption level is needed. Please provide data to substantiate any recommendation. The proposed Order would provide for two exemptions. First, as described in the previous section, producers who produce domestically and importers that import less than 50,000 pounds of inshell pecans (25,000 pounds of shelled pecans) on average for four fiscal periods (the fiscal period for which the exemption is claimed and the previous three fiscal periods) would be exempt. Producers or importers seeking an exemption would apply to the Board for an exemption prior to the start of the fiscal period. This would be an annual exemption; entities would have to reapply each year. They would have to certify that they expect to produce domestically or import less than 50,000 pounds of inshell pecans (25,000 pounds of shelled pecans) on average for four fiscal periods (the fiscal period for which the exemption is claimed and the previous three fiscal periods). The Board could request documentation to support the exemption claim, such as past sales or import data. The Board would then issue, if deemed appropriate, a certificate of exemption to the eligible producer or importer. Producers and importers who received an exemption but domestically produced or imported more than 50,000 pounds of inshell pecans (25,000 pounds of shelled pecans) on average for four fiscal periods (the fiscal period for which the exemption is claimed and the previous three fiscal periods) during the fiscal period would be obligated to pay the applicable assessments. Producers and importers who are exempt from assessments would be eligible for a refund of assessments collected. Requests for assessment refunds would be submitted to the Board within 90 days of the last day of the fiscal period when assessments were collected. The Board would refund such assessments no later than 60 calendar days after receipt of information justifying the exemption. 2 For quantifying the number of domestic producers of pecans, data from the 2017 Census of Agriculture, representing a single year, is the best resource available to USDA. The Census of Agriculture is only published every five years. Regarding importers, USDA used a six-year average to maintain consistency across analyses in this proposal. 3 In its proposal, NPF estimated that 4,300 growers would be subject to assessment under this proposed Order, and that assessment revenue would range from $10.5 million to $11.6 million. The variance in the number of assessed growers and the amount of assessment revenue estimated by USDA and by NPF is due to differing methods of analysis, and different assumptions made. VerDate Sep<11>2014 18:29 Sep 21, 2020 Jkt 250001 Exemptions PO 00000 Frm 00015 Fmt 4701 Sfmt 4702 E:\FR\FM\22SEP2.SGM 22SEP2 EP22SE20.035</GPH> Importers 244,539,780 243,662,767 4,873,255 $ Total 560,711,047 494,972,508 9,899,450 $ 1 2 Sources: NASS, 2017; Customs and Border Protection, 2014-2019 average. 59624 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules The Board could develop additional procedures to administer the exemption as appropriate. Such procedures would be implemented through rulemaking by the Secretary. The second exemption under the proposed Order would be for organic pecans. Under section 501 of the Federal Agriculture Improvement and Reform Act of 1996 (FAIR Act) (7 U.S.C. 7401), a producer who operates under an approved National Organic Program (NOP) (7 CFR part 205) system plan, and domestically produces pecans that are certified ‘‘organic’’ or ‘‘100 percent organic’’ (as defined in the NOP) would be eligible for exemption. The exemption would apply to all certified ‘‘organic’’ or ‘‘100 percent organic’’ pecans regardless of whether the pecans are produced by a person who produces conventional or nonorganic pecans. Likewise, an importer who imports pecans that are certified as ‘‘organic’’ or ‘‘100 percent organic’’ under the NOP, or certified as ‘‘organic’’ or ‘‘100 percent organic’’ under a U.S. equivalency arrangement established under the NOP, would be exempt from the payment of assessments. Refunds From Escrow Account Pursuant to section 517 of the 1996 Act, § 1223.54 of the proposed Order would specify the refund procedures if the initial referendum does not pass. The NPF has proposed that the proposed Order be voted in a referendum of producers and importers no later than three years after assessments first begin under the Order. The Board shall establish an interest bearing escrow account with a financial institution that is a member of the Federal Reserve System and would deposit into such account an amount equal to ten percent of the assessments collected during the period beginning on the effective date of the Order and ending on the date the Secretary announces the results of the required referendum. If the required referendum fails, the Board shall promptly pay refunds of assessments to all producers and importers that have paid assessments during the period beginning on the effective date of the Order and ending on the date the Secretary announces the results of the required referendum in the manner specified in the proposed Order. Producers and importers shall notify the Board, in a manner specified by the Secretary, within 60 days after the announcement of the referendum of their demand to receive a refund. If the amount deposited in the escrow account is less than the amount of all refunds that producers and importers VerDate Sep<11>2014 18:29 Sep 21, 2020 Jkt 250001 subject to the Order have a right to receive, the Board shall prorate the amount deposited in such account among all producers and importers who desire a refund of assessments paid no later than 90 days after the required referendum results are announced by the Secretary. If the proposed Order is approved by the required referendum conducted under this section, the Board would close the escrow account and all funds would be available to the Board under § 1223.50. Promotion, Research and Information Pursuant to section 516 of the 1996 Act, §§ 1223.55 through 1223.57 of the proposed Order would detail requirements regarding promotion, research and information programs, plans and projects authorized under the Order. The Board would develop and submit to the Secretary for approval programs, plans and projects regarding promotion, research, education, and other activities, including consumer and industry information and advertising designed to, among other things, maintain and expand markets for pecans, and develop new uses for pecans. The Board would be required to evaluate each plan and program to ensure that it contributes to an effective promotion program. The Order would also require that, at least once every five years, the Board fund an independent evaluation of the effectiveness of the Order and programs conducted by the Board. Finally, the Order would specify that any patents, copyrights, trademarks, inventions, product formulations and publications developed through the use of funds received by the Board would be the property of the U.S. Government, as represented by the Board. These along with any rents, royalties and the like from their use would be considered income subject to the same fiscal, budget, and audit controls as other funds of the Board, and could be licensed with approval of the Secretary. Reports, Books and Records Pursuant to section 515 of the 1996 Act, §§ 1223.60 through 1223.62 specify the reporting and recordkeeping requirements under the proposed Order as well as requirements regarding confidentiality of information. Producers and first handlers would be required to submit periodically to the Board certain information as the Board may request. Since first handlers would be obligated to collect and remit assessments owed to the Board, the first handlers would be required to submit a report at the time assessments are PO 00000 Frm 00016 Fmt 4701 Sfmt 4702 remitted. Producers who are acting as their own first handler would also be required to submit a report at the time assessments are remitted. Specifically, the report submitted to the Board would include, but is not be limited to, the producer and handlers’ name, address, and telephone number; the pounds produced or handled; and the pounds of pecans for which assessments were paid. Producers who received a certificate of exemption from the Board would not have to submit such a report to the Board. Likewise, importers who pay their assessments directly to the Board would be required to submit a report to the Board that would include, but not be limited to, the importer’s name, address, and telephone number; the pounds of pecans imported to the United States; the pounds of pecans for which assessments were paid. Importers would submit this report at the same time they remit their assessments to the Board. Importers who paid their assessments through Customs would not have to submit such reports because Customs would collect this information upon entry. Additionally, producers, first handlers and importers including those who were exempt, would be required to maintain books and records needed to verify any required reports. Such books and records would be required to be made available during normal business hours for inspection by the Board’s or USDA’s employees or agents. Producers, first handlers, and importers would be required to maintain such books and records for three years beyond the applicable fiscal period. The Order would also require that all information obtained from persons subject to the Order as a result of proposed recordkeeping and reporting requirements would be kept confidential by all officers, employees, and agents of the Board and USDA. Such information could only be disclosed if the Secretary considered it relevant, and the information were revealed in a judicial proceeding or administrative hearing brought at the direction or at the request of the Secretary or to which the Secretary or any officer of USDA were a party. Other exceptions for disclosure of confidential information would include the issuance of general statements based on reports or on information relating to a number of persons subject to the Order, if the statements did not identify the information furnished by any person, or the publication, by direction of the Secretary, of the name of any person violating the Order and a statement of E:\FR\FM\22SEP2.SGM 22SEP2 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules the particular provisions of the Order violated. Miscellaneous Provisions Referenda Pursuant to section 518 of the 1996 Act, § 1223.71(a)(1) of the proposed Order specifies that the program would be implemented, and a referendum conducted not later than three years after assessments first begin under the Order. The Order would continue if approved by a majority of producers and importers voting in the referendum who, during a representative period determined by the Secretary, were engaged in the production or importation of pecans into the United States. Section 1223.71(b) of the proposed Order specifies criteria for subsequent referenda. Under the Order, a referendum would be held to ascertain whether the program should continue, be amended, or terminated. This section specifies that a referendum would be held every seven years to determine whether producers and importers favor continuation of the Order. The Order would continue if favored by a majority of producers and importers voting in the referendum. Additionally, a referendum could be conducted at the request of the Board. A referendum could also be conducted at the request of 10 percent or more of the number of persons eligible to vote in a referendum under the Order. Finally, a referendum could be conducted at any time as determined by the Secretary. Other Miscellaneous Provisions Sections 1223.70 and 1223.72 through 1223.78 describe the rights of the Secretary; authorize the Secretary to suspend or terminate the Order when deemed appropriate; prescribe proceedings after termination; address personal liability, separability, and amendments; and provide OMB control numbers. These provisions are common to all research and promotion program authorized under the 1996 Act. Referenda Procedures Sections 1223.100 through 1223.107 of the proposed Order would specify procedures for the conduct of referenda. The sections cover the definitions, voting instructions, use of subagents, ballots, the referendum report, and confidentiality of information. Producers and importers eligible to vote in the referenda would mean any person, during the representative period, that was subject to the Order. Each eligible producer or importer would be entitled to cast only one ballot. USDA would conduct the VerDate Sep<11>2014 18:29 Sep 21, 2020 Jkt 250001 referenda. USDA would announce the voting period; mail ballots to eligible producers and importers; tabulate the results; prepare a report; and announce the results to the public. The ballots and other information or reports that would disclose any person’s vote would be held confidential. The procedures would be applicable for the initial referendum and future referenda. Initial Regulatory Flexibility Analysis Pursuant to the requirements set forth in the Regulatory Flexibility Act (5 U.S.C. 601–612), USDA has considered the economic impact of this action on small entities. USDA has prepared this Initial Regulatory Flexibility Analysis, the purpose of which is to fit regulatory actions to the scale of businesses subject to such actions in order that small businesses would not be unduly or disproportionately burdened. Need for Regulation NPF stated in its proposal that the greatest challenge facing the pecan industry is supply outpacing demand. Based on worldwide planting and crop data, NPF estimates that supply would exceed demand by 15 percent in 2027. NPF believes that the establishment of a national research and promotion program for pecans, funded by assessments on both domestic producers and importers, would help the industry address this challenge. In 2016, the U.S. pecan industry favored the establishment of a marketing order for pecans grown in Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas. The program authorizes collection of industry data; research and promotion activities; regulations on grade, size, quality, pack and container; and is financed by assessments paid by handlers of pecans grown in the production area. Over the past several years, the marketing order program has launched marketing campaigns to increase demand for pecans. According to the NPF, the proposed research and promotion program will benefit domestic producers and importers of pecans, thereby justifying the collection of assessments on both domestic production and imports. The NPF proposal indicates that imported product accounts for approximately 39 percent of pecans being supplied to the United States. With mandatory assessments applied to both domestic production and imports, the proposed Order would be able to fund marketing campaigns focused on creating increased demand for pecans in the PO 00000 Frm 00017 Fmt 4701 Sfmt 4702 59625 United States and globally. The NPF concluded that the marketing order would continue to have an important role within the industry and the intent is that the two programs would work together for the benefit of the entire pecan industry. The research and promotion program would concentrate its efforts on activities that would maintain and expand markets for pecans, strengthening its position in the marketplace. The marketing order would continue its primary responsibility of collection and distribution of industry data to empower stakeholders with accurate and timely information. Additionally, the marketing order provides the authority for the pecan industry to recommend on grade, size, quality, pack and container requirements. Objectives of the Action The purpose of the program would be to strengthen the position of pecans in the marketplace, maintain and expand markets for pecans, and develop new uses for pecans. Legal Basis for Action The proposed Order is authorized under the 1996 Act which authorizes USDA to establish agricultural commodity research and promotion orders which may include a combination of promotion, research, industry information, and consumer information activities funded by mandatory assessments. These programs are designed to maintain and expand markets and uses for agricultural commodities. USDA currently administers a marketing order for pecans grown in Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas which is authorized under the Agricultural Marketing Agreement Act of 1937. The purpose of marketing orders, in general, is to stabilize market conditions, allowing industries to work together to solve marketing problem, improving profitability. Marketing order programs’ mandatory assessments are paid by handlers within the designated production areas. The pecan marketing order authorizes collection of industry data; research and promotion activities; regulations on grade, size, quality, pack and container; and is financed by assessments paid by handlers of pecans grown in the production area. The proposed pecan research and promotion program is national in scope, financed by an assessment on pecan producers and importers, and authorizes E:\FR\FM\22SEP2.SGM 22SEP2 59626 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules research and promotion activities. The purpose of the proposed Order would be to strengthen the position of pecans in the marketplace, maintain and expand markets for pecans, and develop new uses for pecans. USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this proposed rule. Potentially Affected Small Entities In 13 CFR part 121, the Small Business Administration (SBA) defines the threshold at which an operation would be considered ‘‘small’’ based on its North American Industry Classification System (NAICS) Code. For Tree Nut Farming operations (NAICS Code 111335) and Fruit and Tree Nut Combination Farming operations (NAICS Code 111336), an operation is considered to be ‘‘small’’ if its annual receipts total no more than $1 million. This standard applies to U.S. pecan producers. Importers and first handlers of inshell and shelled pecans (HTS Codes 0802901000 and 0802901500, respectively) belong to the industry classification of Postharvest Crop Activities (NAICS Code 115114). ‘‘Postharvest crop activities’’ include nut hulling and shelling, sorting, grading, packing, and cooling. An operation that meets this definition is considered to be ‘‘small’’, per the SBA, if its annual receipts equal no more than $30 million. Table 12 depicts the number of pecan producers, importers, and handlers that would be considered small under these SBA standards. According to the 2017 Census of Agriculture, published by NASS in 2019, there were 15,608 farms with pecan bearing acreage. Of these 15,608 farms, 440 sold pecans whose market value met or exceeded $1 million. Based on these figures, 97 percent of U.S. pecan producers are considered to be ‘‘small’’ under the SBA standards. USDA recognizes the potential inclusion in its count of ‘‘small’’ farms those farms whose sales of pecans were exactly $1 million in market value; however, USDA lacks the data to remedy this, and the number of farms who meet this criterion is likely quite small. Table 12. Entities Considered Small According to SBA Size Standards Entities Total Small Large Producers 1 15,608 15,168 440 Importers 2 190 186 4 104 15,902 78 15,432 26 470 Total Sources: 1 NASS 2017 Census of Agriculture; 2 Customs and Border Protection, 2014-2019 average; 3American Pecan Council, 2018 crop year. Notes: 1 Small is annual receipts no greater than $1 million; receipts no greater than $30 million. According to data from Customs, there were 190 importers of inshell and shelled pecans from 2014 to 2019. Of these, four importers had a six-year average sales value of pecans which exceeded $30 million. The portion of pecan importers that would be considered to be ‘‘small’’ under the SBA standards, therefore, is 98 percent. The definition of a ‘‘small’’ importer also applies to a first handler; that is, annual receipts which exceed $30 million. According to the American Pecan Council (APC), there were 104 first handlers who reported pecans handled in crop year 2018. Of these, the APC estimates that about 75 percent recorded annual receipts exceeding $30 million. Of the 15,902 total entities expected to be impacted by this action, including producers, importers, and first handlers, about 97 percent would be considered to be ‘‘small’’ according to their respective SBA size standards. Compliance Requirements This proposal would impose a reporting and recordkeeping burden on producers, importers, and first handlers of pecans. Producers and importers who VerDate Sep<11>2014 18:29 Sep 21, 2020 Jkt 250001 domestically produce or import less than 50,000 pounds of inshell pecans (25,000 pounds of shelled pecans) on average for four fiscal periods (the fiscal period for which the exemption is claimed and the previous three fiscal periods) could submit to the Board an application for exemption from paying assessments. Of the 15,168 domestic producers considered to be small under SBA standards, 14,618 of them, or 96 percent, produced less than 50,000 pounds, inshell, of pecans, and would be exempt from assessment. Of the 186 importers considered to be small under SBA standards, 119 of them, or 64 percent, imported less than 50,000 pounds, inshell of pecans, and would also be exempt from assessment. The reporting and recordkeeping burden to file an application for exemption from assessment would impact a total of 14,737 producers and importers considered to be small under their respective SBA size standards. Importers, and first handlers, who collect the assessments from producers, would be required to file a report listing pecans imported or received from each producer. This report would place a reporting and recordkeeping burden on PO 00000 Frm 00018 Fmt 4701 Sfmt 4702 2 ' 3 Small is annual a total of 149 importers and first handlers considered to be small under their SBA size standard of annual receipts of no more than $30 million. These forms are being submitted to OMB for approval under OMB Control No. 0581–NEW. Specific burdens for the forms are detailed later in this document in the section titled Paperwork Reduction Act. As with all Federal promotion programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. Alternatives To Minimize Impacts of the Rule Regarding alternatives, USDA considered de minimis exemptions of 30 acres of pecans, 1,000 pounds, inshell, of pecan volume, and $1 million in annual pecan sales receipts. These alternatives, which are fully discussed in the section titled De Minimis, were rejected in favor of the industryproposed de minimis exemption of 50,000 pounds, inshell, or 25,000 pounds, shelled. USDA also considered the alternative of no action; that is, the status quo. This alternative, however, E:\FR\FM\22SEP2.SGM 22SEP2 EP22SE20.036</GPH> Handlers 3 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules would leave the pecan industry without the tools of a research and promotion program to strengthen the position of pecans in the marketplace, maintain and expand markets for pecans, and develop new uses for pecans. In place of a research and promotion program, the NPF discussed amending the Agricultural Marketing Agreement Act of 1937, which provides authority for the pecan marketing order. The NPF stated in its proposal for a pecan research and promotion program that it decided not to move forward with this alternative due to the time and costs involved in amending U.S. law. Outreach Regarding outreach efforts, NPF conducted sessions earlier in 2020 throughout the United States in different States and regions. Many were held in conjunction with regional and state organization meetings where both pecan producers and importers participated. They also presented at the National Pecan Shellers Association (NPSA) mid-winter conference. NPSA supports and promotes the interest of pecan shellers and the global industry. Approximately 13 sessions were held across the United States. NPF also had information regarding the proposed program published in April 2020 editions of the ‘‘The Pecan Grower’’ and ‘‘Pecan South’’ magazines. ‘‘The Pecan Grower’’ is the official publication of the Georgia Pecan Growers Association, with nearly three-thousand subscribers including growers, researchers, extension agents and agribusinesses. ‘‘Pecan South’’ is a magazine for growers, processors, commercial vendors, and those interested in pecans. It provides to its forty-six hundred plus subscribers U.S. pecan production information; industry news and events; and market-related issues, both domestic and international. In the articles, NPF elaborated the work it has been doing to establish a research and promotion program for pecans that would assess producers and importers. 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. Paperwork Reduction Act In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), AMS announces its intention to request an approval of a new information collection and recordkeeping requirements for the proposed pecan program. VerDate Sep<11>2014 18:29 Sep 21, 2020 Jkt 250001 Title: Advisory Committee or Research and Promotion Background Information. OMB Number for background form AD–755: (Approved under OMB No. 0505–0001). Expiration Date of Approval: 03/31/ 2022. Title: National Research, Promotion, and Consumer Information Programs. Expiration Date of Approval: 3 years from approval date. Type of Request: New information collection for research and promotion programs. Abstract: The information collection requirements in the request are essential to carry out the intent of the 1996 Act. The information collection concerns a proposal received by USDA for a national research and promotion program for the pecan industry. The program would be financed by an assessment on pecan producers and importers and would be administered by a board of industry members selected by the Secretary. The program would provide for an exemption for producers who produce domestically and importers that import less than 50,000 pounds of inshell pecans (25,000 pounds of shelled pecans) on average for four fiscal periods (the fiscal period for which the exemption is claimed and the previous three fiscal periods). A referendum would be held among eligible producers and importers to determine whether they favor implementation of the program not later than three years after assessments first begin under the Order. The purpose of the program would be to strengthen the position of pecans in the marketplace, maintain and expand markets for pecans, and develop new uses for pecans within the United States. In summary, the information collection requirements under the program concern Board nominations, exemption applications, the collection and refund of assessments, and referenda. For Board nominations, producers and importers interested in serving on the Board would be asked to submit a ‘‘Nomination Form’’ to the Board indicating their desire to serve or to nominate another industry member to serve on the Board. Interested persons could also submit a background statement outlining qualifications to serve on the Board. Except for the initial Board nominations, producers and importers would have the opportunity to submit a ‘‘Nomination Ballot’’ to the Board where they would vote for candidates to serve on the Board. Nominees would also have to submit a background information form, ‘‘AD– 755,’’ to the Secretary to ensure they are PO 00000 Frm 00019 Fmt 4701 Sfmt 4702 59627 qualified to serve on the Board. Organizations representing importers would be able to be certified by the Secretary and have an opportunity to nominate importer members. Those such organizations would submit form ‘‘Application for Certification of Organization.’’ Regarding assessments, producers and importers who domestically produce and import less than 50,000 pounds of inshell pecans (25,000 pounds of shelled pecans) on average for four fiscal periods (the fiscal period for which the exemption is claimed and the previous three fiscal periods), would be exempt from assessments. Producers or importers would apply to the Board for an exemption prior to the start of the fiscal period. This would be an annual exemption; entities would have to reapply each year. Producers or importers could submit a request, ‘‘Application for Exemption from Assessments,’’ to the Board for an exemption from paying assessments. Producers and importers who would qualify as ‘‘organic’’ or ‘‘100 percent organic’’ under the NOP could submit an ‘‘Organic Exemption Form’’ to the Board and request an exemption from assessments. First handlers who receive assessments from producers would be asked to submit a ‘‘First Handler/ Importer Report’’ that would accompany their assessments paid to the Board and report the quantity of pecans received during the applicable period, the quantity for which assessments were paid, contact information for whom they collected the assessment, and the country of export (for imports). Additionally, only importers who pay their assessments directly to the Board would be required to submit a report. As previously mentioned, the majority of importer assessments would be collected by Customs. Customs would remit the funds to the Board and the other information would be available from Customs (i.e., country of export, quantity of pecans imported). Importers and producers who are exempt and whose assessments were collected, either by Customs or a first handler, could also request a refund of any assessments paid to the Board. Producers and importers would also file a form to request a refund of assessments paid if the referendum fails to pass. A referendum is proposed to be conducted three years after the assessments first begin to determine if producers and importers favor continuance of the Order. Lastly, producers and importers eligible to vote in a referendum would have to complete a ballot to determine E:\FR\FM\22SEP2.SGM 22SEP2 59628 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules whether the research and promotion program would continue. Information collection requirements that are included in this proposal include: (1) Nomination Form Estimate of Burden: Public recordkeeping burden for this collection of information is estimated to average 0.25 hour per application. Respondents: Producers and importers. Estimated Number of Respondents: 50. Estimated Number of Responses per Respondent: 1. Estimated Total Annual Burden on Respondents: 12.5 hours. (2) Background Statement Estimate of Burden: Public recordkeeping burden for this collection of information is estimated to average 0.25 hour per application. Respondents: Producers and importers. Estimated Number of Respondents: 50. Estimated Number of Responses per Respondent: 1. Estimated Total Annual Burden on Respondents: 12.5 hours. (3) Nomination Ballot Estimate of Burden: Public recordkeeping burden for this collection of information is estimated to average 0.25 hour per application. Respondents: Producers and importers. Estimated Number of Respondents: 900. Estimated Number of Responses per Respondent: 1. Estimated Total Annual Burden on Respondents: 225 hours. (4) Background Information FormAD– 755 (OMB Form No. 0505–0001) 18:29 Sep 21, 2020 Jkt 250001 (6) Application for Exemption From Assessments Estimate of Burden: Public reporting burden for this collection of information is estimated to average 0.25 hour per producers or importer reporting on pecans produced domestically or imported. Upon approval of an application, producers and importers would receive exemption certification. Respondents: Producers and importers who produce or import less than 50,000 pounds of inshell pecans (25,000 pounds of shelled pecans) on average for four fiscal periods (the fiscal period for which the exemption is claimed and the previous three fiscal periods). Estimated Number of Respondents: 14,737. Estimated Number of Responses per Respondent: 1. Estimated Total Annual Burden on Respondents: 3,684 hours. (7) Organic Exemption Form Estimate of Burden: Public recordkeeping burden for this collection of information is estimated to average 0.5 hours per exemption form. Respondents: Organic producers and importers. Estimated Number of Respondents: 50. Estimated Number of Responses per Respondent: 1. Estimated Total Annual Burden on Respondents: 25 hours. (8) First Handler/Importer Report Estimate of Burden: Public reporting for this collection of information is estimated to average 0.5 hour per response for each Board nominee. Respondents: Producers and importers. Estimated Number of Respondents: 11 (34 for initial nominations to the Board, 0 for the second year, and up to 11 annually thereafter). Estimated Number of Responses per Respondent: 1 every 3 years. (0.3) Estimated Total Annual Burden on Respondents: 17 hours for the initial nominations to the Board, 0 hours for the second year of operation, and up to 5.5 hours annually thereafter. VerDate Sep<11>2014 (5) Application for Certification of Organization Estimate of Burden: Public reporting burden for this collection of information is estimated to average 0.25 hour. Respondents: Importer organizations. Estimated Number of Respondents: 5. Estimated Number of Responses per Respondent: 1. Estimated Total Annual Burden on Respondents: 2.5 hours. Estimate of Burden: Public reporting burden for this collection of information is estimated to average 0.5 hour per first handler or importer. Respondents: First handlers who collect assessments from producers who produce over 50,000 pounds of inshell pecans (25,000 pounds of shelled pecans) on average for four fiscal periods (the fiscal period for which the exemption is claimed and the previous three fiscal periods) and importers that do not remit through Customs. Estimated Number of Respondents: 175. Estimated Number of Responses per Respondent: 12. PO 00000 Frm 00020 Fmt 4701 Sfmt 4702 Estimated Total Annual Burden on Respondents: 1,050 hours. (9) Application for Reimbursement of Assessments Estimate of Burden: Public reporting burden for this collection of information is estimated to average 0.25 hour. Respondents: Producers and importers. Estimated Number of Respondents: 170. Estimated Number of Responses per Respondent: 1. Estimated Total Annual Burden on Respondents: 42.5 hours. (10) Application for Refund of Assessments Paid From Escrow Estimate of Burden: Public reporting burden for this collection of information is estimated to average 0.25 hour. Respondents: Producers and importers. Estimated Number of Respondents: 900. Estimated Number of Responses per Respondent: 1. Estimated Total Annual Burden on Respondents: 225 hours. (11) Referendum Ballot Estimate of Burden: Public reporting burden for this collection of information is estimated to average 0.25 hour. Respondents: Producers and importers. Estimated Number of Respondents: 900. Estimated Number of Responses per Respondent: 0.14 (after first referendum they would occur once every 7 years). Estimated Total Annual Burden on Respondents: 31.50 hours. (12) A Requirement To Maintain Records Sufficient To Verify Reports Submitted Under the Order Estimate of Burden: Public recordkeeping burden for keeping this information is estimated to average 0.5 hours per record keeper maintaining such records. Recordkeepers: Producers, first handlers and importers. Estimated number of recordkeepers: 15,902. Estimated total recordkeeping hours: 7,951 hours. As noted above, under the proposed program, producers through first handlers, and importers would be required to pay assessments and file reports with and submit assessments to the Board (importers through Customs). While the proposed Order would impose certain recordkeeping requirements on producers, first handlers, and importers, information E:\FR\FM\22SEP2.SGM 22SEP2 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules required under the proposed Order could be compiled from records currently maintained. Such records shall be retained for at least three years beyond the fiscal period of their applicability. An estimated 15,902 respondents would provide information to the Board (15,608 producers, 104 first handlers, and 190 importers). The estimated cost of providing the information to the Board by respondents would be $630,994. This total has been estimated by multiplying 13,278.5 hours by ($36.08 hourly wage × 0.317 benefits = $11.44 (benefits) + $36.08 (wage) = $47.52), $47.52 for the average mean hourly earnings of producers and importers plus benefits. Data for computation of the hourly rate for producers (Occupation Code 11– 9013: Farmers, Ranchers, and other Agricultural Managers = $38.63) and importers (Occupation Code 13–1020: Buyers and Purchasing Agents = $33.53) was obtained from the U.S. Department of Labor’s Bureau of Labor Statistics. The average of the producer and importer wages is $36.08. Data for computation of this hourly wage were obtained from the U.S. Department of Labor Statistics’ publication, ‘‘May 2019 National Occupation Employment and Wage Estimates in the United States,’’ updated May 31, 2019. This publication can also be found at the following website: https://www.bls.gov/oes/ current/oes_nat.htm#45-0000. Data for the benefit costs of 31.7 percent was obtained by U.S. Department of Labor’s Bureau of Labor Statistics press release dated Dec. 14, 2018. 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. USDA currently oversees a marketing order for pecans grown in Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas, which is authorized under the Marketing Agricultural Agreement Act of 1937. This program collects information to facilitate the administration of the program. The information collected by the marketing order has been carefully reviewed and it was determined that the information collected could not be utilized to facilitate the administration of the research and promotion program. The proposed forms would require the minimum information necessary to VerDate Sep<11>2014 18:29 Sep 21, 2020 Jkt 250001 effectively carry out the requirements of the program, and their use is necessary to fulfill the intent of the 1996 Act. Such information can be supplied without data processing equipment or outside technical expertise. In addition, there are no additional training requirements for individuals filling out reports and remitting assessments to the Board. The forms would be simple, easy to understand, and place as small a burden as possible on the person required to file the information. Collecting information monthly would coincide with normal industry business practices. The timing and frequency of collecting information are intended to meet the needs of the industry while minimizing the amount of work necessary to fill out the required reports. The requirement to keep records for three years is consistent with normal industry practices. In addition, the information to be included on these forms is not available from other sources because such information relates specifically to individual producers, first handlers and importers who are subject to the provisions of the 1996 Act. Therefore, there is no practical method for collecting the required information without the use of these forms. Request for Public Comment Under the Paperwork Reduction Act Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of functions of the proposed Order and USDA’s oversight of the proposed Order, including whether the information would have practical utility; (b) the accuracy of USDA’s estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (c) the accuracy of USDA’s estimate of the principal producing areas in the United States for pecans; (d) the accuracy of USDA’s estimate of the number of producers, first handlers and importers of pecans 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 PO 00000 Frm 00021 Fmt 4701 Sfmt 4702 59629 page number of this issue of the Federal Register also should be referenced. Comments should be sent to the same addresses referenced in the ADDRESSES section of this rule. OMB is required to make a decision concerning the collection of information contained in this rule between 30 and 60 days after publication. Therefore, a comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication. USDA made modifications to the proponent’s proposal to conform with other similar national research and promotion programs implemented under the 1996 Act. While the proposal set forth below has not received the approval of USDA, it is determined that this proposed Order is consistent with and would effectuate the purposes of the 1996 Act. A 60-day comment period is provided to allow interested persons to respond to this proposal. All written comments received in response to this rule by the date specified will be considered prior to finalizing this action. List of Subjects in 7 CFR Part 1223 Administrative practice and procedure, Advertising, Consumer information, Marketing agreements, Pecan promotion, Reporting and recordkeeping requirements. ■ For the reasons set forth in the preamble, it is proposed that title 7, chapter XI of the Code of Federal Regulations be amended by adding part 1223 to read as follows: PART 1223—PECAN PROMOTION, RESEARCH, AND INFORMATION ORDER Subpart A—Pecan Promotion, Research, and Information Order Definitions Sec. 1223.1 Act. 1223.2 American Pecan Council. 1223.3 American Pecan Promotion Board. 1223.4 Conflict of interest. 1223.5 Customs or CBP. 1223.6 Department or USDA. 1223.7 First handler. 1223.8 Fiscal period. 1223.9 Importer. 1223.10 Information. 1223.11 Inshell pecans. 1223.12 Market or marketing. 1223.13 Order. 1223.14 Part and subpart. 1223.15 Pecans. 1223.16 Person. 1223.17 Producer. 1223.18 Programs, plans, and projects. 1223.19 Promotion. 1223.20 Research. 1223.21 Secretary. 1223.22 Shelled pecans. E:\FR\FM\22SEP2.SGM 22SEP2 59630 1223.23 1223.24 1223.25 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules Suspend. Terminate. United States. pursuant to 7 CFR part 986 unless otherwise noted. American Pecan Promotion Board 1223.40 Establishment and membership. 1223.41 Nominations and appointments. 1223.42 Term of office. 1223.43 Vacancies. 1223.44 Procedure. 1223.45 Compensation and reimbursement. 1223.46 Powers and duties. 1223.47 Prohibited activities. Expenses and Assessments 1223.50 Budget and expenses. 1223.51 Financial statements. 1223.52 Assessments. 1223.53 Exemption procedures. 1223.54 Refund escrow accounts. Reports, Books, and Records 1223.60 Reports. 1223.61 Books and records. 1223.62 Confidential treatment. Miscellaneous 1223.70 Right of the Secretary. 1223.71 Referenda. 1223.72 Suspension and termination. 1223.73 Proceedings after termination. 1223.74 Effect of termination or amendment. 1223.75 Personal liability. 1223.76 Separability. 1223.77 Amendments. 1223.78 OMB control numbers. Subpart A—Pecan Promotion, Research, and Information Order Definitions Act. Act means the Commodity Promotion, Research, and Information Act of 1996 (7 U.S.C. 7411–7425), and any amendments thereto. VerDate Sep<11>2014 18:29 Sep 21, 2020 Jkt 250001 Customs or CBP. Customs or CBP means Customs and Border Protection, an agency of the United States Department of Homeland Security. § 1223.6 Department or USDA. Department or USDA means the U.S. Department of Agriculture, or any officer or employee of the Department to whom authority has heretofore been delegated, or to whom authority may hereafter be delegated, to act in the Secretary’s stead. § 1223.8 Authority: 7 U.S.C. 7411–7425; 7 U.S.C. 7401. American Pecan Council or APC means that governing body of the Federal Marketing Order established Conflict of interest. Conflict of interest means a situation in which a member or employee of the Board has a direct or indirect financial interest in a person who performs a service for, or enters into a contract with, the Board for anything of economic value. First handler. First handler means any person who receives, shells, cracks, accumulates, warehouses, roasts, packs, sells, consigns, transports, exports, or ships (except as a common or contract carrier of pecans owned by another person), or in any other way puts inshell or shelled pecans in the stream of commerce. The term first handler includes a producer who handles or markets pecans of the producer’s own production. Subpart C—Administrative Provisions 1223.520 Late payment and interest charges for past due assessments. American Pecan Council. § 1223.4 § 1223.7 Subpart B—Referendum Procedures 1223.100 General. 1223.101 Definitions. 1223.102 Voting. 1223.103 Instructions. 1223.104 Subagents. 1223.105 Ballots. 1223.106 Referendum report. 1223.107 Confidential information. § 1223.2 American Pecan Promotion American Pecan Promotion Board or the Board means the administrative body established pursuant to § 1223.40. § 1223.5 Promotion, Research, and Information 1223.55 Programs, plans, and projects. 1223.56 Independent evaluation. 1223.57 Patents, copyrights, trademarks, information, publications, and product formulations. § 1223.1 § 1223.3 Board. Fiscal period. (a) Consumer information, which means any action taken to provide information to, and broaden the understanding of, the general public regarding the consumption, use, nutritional attributes, and care of pecans; and (b) Industry information, which means information and programs that will lead to the development of new markets, new marketing strategies, or increased efficiency for the pecan industry, and activities to enhance the image of the pecan industry. § 1223.11 Inshell pecans. Inshell pecans are nuts whose kernel is maintained inside the shell. § 1223.12 Market or marketing. (a) Marketing means the sale or other disposition of pecans in any channel of commerce. (b) To market means to sell or otherwise dispose of pecans in interstate, foreign, or intrastate commerce. § 1223.13 Order. Order means an order issued by the Secretary under section 514 of the Act that provides for a program of generic promotion, research, and information regarding agricultural commodities authorized under the Act. § 1223.14 Part and subpart. This part is comprised of all rules, regulations, and supplemental orders issued pursuant to the Act and the Order. The Pecan Promotion, Research, and Information Order comprises subpart A of this part. § 1223.15 Pecans. Fiscal period means October 1 to September 30, or such other period as recommended by the Board and approved by the Secretary. Pecans means and includes any and all varieties or subvarieties, inshell or shelled, of the Genus, species: Carya illinoinensis grown or imported into the United States. § 1223.9 § 1223.16 Importer. Importer means any person who imports pecans into the United States as a principal or as an agent, broker, or consignee of any person who produces or handles pecans outside of the United States for sale in the United States, and who is listed in the import records as the importer of record for such pecans. § 1223.10 Information. Information means information and programs that are designed to increase efficiency in processing and to develop new markets, marketing strategies, increase market efficiency, and activities that are designed to enhance the image of pecans on a national or international basis. These include: PO 00000 Frm 00022 Fmt 4701 Sfmt 4702 Person. Person means any individual, group of individuals, partnership, corporation, association, cooperative, or any other legal entity. § 1223.17 Producer. Producer is synonymous with grower and means any person engaged in the production and sale of pecans in the United States who owns, or who shares in the ownership and risk of loss of such pecans. § 1223.18 Programs, plans, and projects. Programs, plans, and projects mean those research, promotion, and information programs, plans, or projects established pursuant to this subpart. E:\FR\FM\22SEP2.SGM 22SEP2 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules § 1223.19 Promotion. Promotion means any action taken to present a favorable image of pecans to the general public and the food industry for the purpose of improving the competitive position of pecans both in the United States and abroad and stimulating the sale of pecans. This includes paid advertising and public relations. § 1223.20 Research. Research means any type of test, study, or analysis designed to advance the image, desirability, use, marketability, production, product development, or quality of pecans, including research relating to nutritional value, cost of production, new product development, varietal development, nutritional value, health research, and marketing of pecans. § 1223.21 Secretary. Secretary means the Secretary of Agriculture of the United States, 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. § 1223.22 Shelled pecans. Shelled pecans are pecans whose shells have been removed leaving only edible kernels, kernel pieces or pecan meal. One pound of shelled pecans is the equivalent of two pounds inshell pecans. § 1223.23 Suspend. Suspend means to issue a rule under section 553 of title 5, U.S.C., to temporarily prevent the operation of an order or part thereof during a particular period of time specified in the rule. § 1223.24 Terminate. Terminate means to issue a rule under section 553 of title 5, U.S.C., to cancel permanently the operation of an order or part thereof beginning on a date certain specified in the rule. § 1223.25 United States. United States means collectively the 50 states, the District of Columbia, the Commonwealth of Puerto Rico, and the territories and possessions of the United States. American Pecan Promotion Board § 1223.40 § 1223.41 Establishment and membership. (a) Establishment of the American Pecan Promotion Board. There is hereby established an American Pecan Promotion Board, called the Board in this part, comprised of seventeen (17) members, appointed by the Secretary from nominations as follows: VerDate Sep<11>2014 18:29 Sep 21, 2020 Jkt 250001 (1) Ten (10) producer members: Three (3) each from the Eastern Region and Central Region and four (4) from the Western Region as follows: (i) Eastern Region shall mean the States of Alabama, Florida, Georgia, North Carolina, South Carolina plus any states in the United States, the majority of whose land mass is in the Eastern Time Zone, plus any U.S. territories in the Atlantic Ocean; (ii) Central Region shall mean the States of Arkansas, Kansas, Louisiana, Mississippi, Missouri, Oklahoma, Texas plus any states in the United States, the majority of whose land mass is in the Central Time Zone; and (iii) Western Region shall mean the States of Arizona, California, New Mexico plus any states in the United States, the majority of whose land mass is in the Mountain or Pacific Time Zones, plus Alaska and Hawaii and any U.S. territories in the Pacific Ocean. (2) Seven (7) importers. (b) Adjustment of membership. At least once every five years, the Board will review the geographical distribution of United States production of pecans and the quantity or value of imports. The review will be conducted through an audit of state crop production and Customs figures and Board assessment records. If warranted, the Board will recommend to the Secretary that the membership on the Board be altered to reflect any changes in the geographical distribution of domestic pecan production and the quantity or value of imports. If the level of imports fluctuates versus domestic pecan production, importer members may be added to or reduced from the Board. (c) Board’s ability to serve the diversity of the industry. When making recommendations for appointments, the industry should take into account the diversity of the population served and the knowledge, skills, and abilities of the members to serve a diverse population, size of the operations, methods of production and distribution, and other distinguishing factors to ensure that the recommendations of the Board take into account the diverse interest of persons responsible for paying assessments, and others in the marketing chain, if appropriate. Nominations and appointments. (a) Initial nominations for producers will be submitted to the Secretary by the American Pecan Council (APC), or the Department if appropriate. Before considering any nominations, the APC shall publicize the nomination process, using trade press or other means it deems appropriate, to reach out to all PO 00000 Frm 00023 Fmt 4701 Sfmt 4702 59631 known producers for the U.S. market. The APC may use regional caucuses, mail or other methods to elicit potential nominees. The APC shall submit the nominations to the Secretary and recommend two nominees for each Board position specified in paragraph (a)(1) of § 1223.40. The Department will conduct initial nominations for the importer members. The Secretary shall appoint the members of the Board. (b) Subsequent nominations shall be conducted as follows: (1) Nomination of producer members will be conducted by the Board. The Board staff will seek nominations for each vacant producer seat from each region from producers who have paid their assessments to the Board in the most recent fiscal period and who produced more than 50,000 pounds of inshell pecans (25,000 pounds of shelled pecans) on average for four fiscal periods (the fiscal period for which nominations are being conducted and the previous three fiscal periods). Producers who produce pecans in more than one region may seek nomination only in the region in which they produce the majority of their pecans. Nominations will be submitted to the Board office and placed on a ballot that will be sent to producers in each region for a vote. Producers may only vote in the region in which they produce the majority of their pecans. The votes shall be tabulated for each region with the nominee receiving the highest number of votes at the top of the list in descending order by vote. Two candidates for each position shall be submitted to the Secretary; and (2) Nomination of importer members will be conducted by the Board. All qualified national organizations representing importer interests will have the opportunity to nominate members to serve on the Board. If the Secretary determines that there are no qualified national organizations representing importer interests, individual importers who have paid assessments to the Board in the most recent fiscal period and imported more than 50,000 pounds of inshell pecans (25,000 pounds of shelled pecans) on average for four fiscal periods (the fiscal period for which nominations are being conducted and the previous three fiscal periods) may submit nominations. The names of importer nominees shall be placed on a ballot and mailed to importers for a vote. The votes shall be tabulated with the nominee receiving the highest number of votes at the top of the list in descending order by vote. Two candidates for each importer Board position shall be submitted to the Secretary. To be certified by the E:\FR\FM\22SEP2.SGM 22SEP2 59632 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules Secretary as a qualified national organization representing importer interests, an organization must meet the following criteria, as evidenced by a report submitted by the organization to the Secretary: (i) The organization’s voting membership must be comprised primarily of importers of pecans; (ii) The organization has a history of stability and permanency and has been in existence for more than one year; (iii) The organization must derive a portion of its operating funds from importers; (iv) The organization must demonstrate it is willing and able to further the Act and Order’s purposes; and (v) To be certified by the Secretary as a qualified national organization representing importer interests, an organization must agree to take reasonable steps to publicize to nonmembers the availability of open Board importer positions. (c) Producer and importer nominees may provide the Board a short background statement outlining their qualifications to serve on the Board. (d) Nominees must be in compliance with the applicable provisions of this subpart. (e) The Board must submit nominations to the Secretary at least six months before the new Board term begins. The Secretary shall appoint the members of the Board. (f) No two members shall be employed by a single corporation, company, partnership, or any other legal entity. (g) The Board may recommend to the Secretary modifications to its nomination procedures as it deems appropriate. Any such modifications shall be implemented through rulemaking by the Secretary. § 1223.42 Term of office. (a) With the exception of the initial Board, each Board member will serve a three-year term or until the Secretary selects his or her successor. Each term of office shall begin on October 1 and end on September 30. No member may serve more than two consecutive terms, excluding any term of office less than three years. (b) For the initial board, the terms of Board members shall be staggered for two, three, and four years. Determination of which of the initial members shall serve a term of two, three, or four years shall be determined at random. Those members serving an initial term of two, three, or four years may serve one successive three-year term. VerDate Sep<11>2014 18:29 Sep 21, 2020 Jkt 250001 § 1223.43 Vacancies. (a) In the event that any member of the Board ceases to work for or be affiliated with the category of members from which the member was appointed to the Board, such position shall automatically become vacant. (b) If a member of the Board consistently refuses to perform the duties of a member of the Board, or if a member of the Board engages in acts of dishonesty or willful misconduct, the Board may recommend to the Secretary that the member be removed from office. If the Secretary finds the recommendation of the Board shows adequate cause, the Secretary shall remove such member from office. (c) Without recommendation of the Board, a member may be removed by the Secretary upon showing of adequate cause, including the continued failure by a member to submit reports or remit assessments required under this part, if the Secretary determines that such member’s continued service would be detrimental to the achievement of the purposes of the Act. (d) Should the position of a member become vacant, successors for the unexpired terms of such member shall be appointed in the manner specified in §§ 1223.40 and 1223.41, except that said nomination and replacement shall not be required if said unexpired terms are less than six months. § 1223.44 Procedure. (a) At a Board meeting, it will be considered a quorum when a majority of members are present. (b) At the start of each fiscal period, the Board will select a chairperson and vice chairperson who will conduct meetings and appoint committee membership throughout that period. (c) All Board and committee members will receive a minimum of 10 days advance notice of all Board and committee meetings, unless an emergency meeting is declared by the Chairperson. (d) Each member of the Board will be entitled to one vote on any matter put to the Board, and the motion will carry if supported by one vote more than 50 percent of the total votes represented by the Board members present. (e) It will be considered a quorum at a committee meeting when at least one more than half of those assigned to the committee are present. Committees may also consist of individuals other than Board members and such individuals may vote in committee meetings. These committee members shall be appointed by the Chairperson and shall serve without compensation but shall be PO 00000 Frm 00024 Fmt 4701 Sfmt 4702 reimbursed for reasonable travel expenses, as approved by the Board. (f) In lieu of voting at a properly convened meeting and, when in the opinion of the Chairperson of the Board such action is considered necessary, the Board may take action if supported by one vote more than 50 percent of the members by mail, telephone, electronic mail, facsimile, or any other means of communication, and all telephone votes shall be confirmed promptly in writing. In that event, all members and the Secretary must be notified and all members must be provided the opportunity to vote. Any action so taken shall have the same force and effect as though such action had been taken at a properly convened meeting of the Board. All votes shall be recorded in Board minutes. (g) There shall be no voting by proxy. (h) The Chairperson shall be a voting member. (i) The organization of the Board and the procedures for the conducting of meetings of the Board shall be in accordance with its bylaws, which shall be established by the Board and approved by the Secretary. § 1223.45 Compensation and reimbursement. The members of the Board when acting as members, shall serve without compensation but shall be reimbursed for reasonable travel expenses, as approved by the Board, incurred by them in the performance of their duties as Board members. § 1223.46 Powers and duties. The Board shall have the following powers and duties: (a) To administer this subpart in accordance with its terms and conditions and to collect assessments; (b) To develop and recommend to the Secretary for approval such bylaws as may be necessary for the functioning of the Board, and such rules as may be necessary to administer this subpart, including activities authorized to be carried out under this subpart; (c) To meet, organize, and select from among the members of the Board a chairperson, other officers, committees, and subcommittees, as the Board determines to be appropriate; (d) To employ persons, other than the Board members, or to enter into contracts, other than with Board members, as the Board considers necessary to assist the Board in carrying out its duties and to determine the compensation and specify the duties of such persons, or to determine the contractual terms of such parties; (e) To develop programs and projects, and enter into contracts or agreements, E:\FR\FM\22SEP2.SGM 22SEP2 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules which must be approved by the Secretary before becoming effective, for the development and carrying out of programs or projects of research, information, or promotion, and the payment of costs thereof with funds collected pursuant to this subpart. Each contract or agreement shall provide that any person who enters into a contract or agreement with the Board shall develop and submit to the Board a proposed activity; keep accurate records of all of its transactions relating to the contract or agreement; account for funds received and expended in connection with the contract or agreement; make periodic reports to the Board of activities conducted under the contract or agreement; and make such other reports available as the Board or the Secretary considers relevant. Any contract or agreement shall provide that: (1) The contractor or agreeing party shall develop and submit to the Board a program, plan, or project together with a budget or budgets that shall show the estimated cost to be incurred for such program, plan, or project; (2) The contractor or agreeing party shall keep accurate records of all its transactions and make periodic reports to the Board of activities conducted, submit accounting for funds received and expended, and make such other reports as the Secretary or the Board may require; (3) The Secretary may audit the records of the contracting or agreeing party periodically; and (4) Any subcontractor who enters into a contract with a Board contractor and who receives or otherwise uses funds allocated by the Board shall be subject to the same provisions as the contractor; (f) To prepare and submit for approval of the Secretary fiscal period budgets in accordance with § 1223.50; (g) To invest assessments collected under this part in accordance with § 1223.50; (h) To maintain such records and books and prepare and submit such reports and records from time to time to the Secretary as the Secretary may prescribe; to make appropriate accounting with respect to the receipt and disbursement of all funds entrusted to it; and to keep records that accurately reflect the actions and transactions of the Board; (i) To cause its books to be audited by a competent auditor at the end of each fiscal period and at such other times as the Secretary may request, and to submit a report of the audit directly to the Secretary; (j) To give the Secretary the same notice of meetings of the Board as is given to members in order that the VerDate Sep<11>2014 18:29 Sep 21, 2020 Jkt 250001 Secretary’s representative(s) may attend such meetings, and to keep and report minutes of each meeting of the Board to the Secretary; (k) To act as intermediary between the Secretary and any producer, first handler, or importer; (l) To furnish to the Secretary any information or records that the Secretary may request; (m) To receive, investigate, and report to the Secretary complaints of violations of this subpart; (n) To recommend to the Secretary such amendments to this subpart as the Board considers appropriate; and (o) To work to achieve an effective, continuous, and coordinated program of promotion, research, consumer information, evaluation, and industry information designed to strengthen the pecan industry’s position in the marketplace; maintain and expand existing markets and uses for pecans; and to carry out programs, plans, and projects designed to provide maximum benefits to the pecan industry. § 1223.47 Prohibited activities. The Board may not engage in, and shall prohibit the employees and agents of the Board from engaging in: (a) Any action that would be a conflict of interest; and (b) Using funds collected by the Board under this subpart to undertake any action for the purpose of influencing legislation or governmental action or policy, by local, state, national, and foreign governments, other than recommending to the Secretary amendments to this subpart. (c) No program, plan, or project including advertising shall be false or misleading or disparaging to another agricultural commodity. Pecans of all origins shall be treated equally. Expenses and Assessments § 1223.50 Budget and expenses. (a) At least 60 days prior to the beginning of each fiscal period, and as may be necessary thereafter, the Board shall prepare and submit to the Secretary a budget for the fiscal period covering its anticipated expenses and disbursements in administering this subpart. Each such budget shall include: (1) A statement of objectives and strategy for each program, plan, or project; (2) A summary of anticipated revenue, with comparative data for at least one preceding year (except for the initial budget); (3) A summary of proposed expenditures for each program, plan, or project; and PO 00000 Frm 00025 Fmt 4701 Sfmt 4702 59633 (4) Staff and administrative expense breakdowns, with comparative data for at least one preceding year (except for the initial budget). (b) Each budget shall provide adequate funds to defray its proposed expenditures and to provide for a reserve as set forth in this subpart. (c) Subject to this section, any amendment or addition to an approved budget must be approved by the Secretary, including shifting funds from one program, plan, or project to another. Shifts of funds which do not cause an increase in the Board’s approved budget and which are consistent with governing bylaws need not have prior approval by the Secretary. (d) The Board is authorized to incur such expenses, including provision for a reasonable reserve, as the Secretary finds are reasonable and likely to be incurred by the Board for its maintenance and functioning, and to enable it to exercise its powers and perform its duties in accordance with the provisions of this subpart. Such expenses shall be paid from funds received by the Board. (e) With approval of the Secretary, the Board may borrow money for the payment of administrative expenses, subject to the same fiscal, budget, and audit controls as other funds of the Board. Any funds borrowed by the Board shall be expended only for startup costs and capital outlays and are limited to the first year of operation of the Board. (f) The Board may accept voluntary contributions, but these shall only be used to pay expenses incurred in the conduct of programs, plans, and projects. Such contributions shall be free from any encumbrance by the donor and the Board shall retain complete control of their use. (g) The Board may also receive funds provided through the Department’s Foreign Agricultural Service or from other sources, for authorized activities. (h) The Board shall reimburse the Secretary for all expenses incurred by the Secretary in the implementation, administration, and supervision of this subpart, including all referendum costs in connection with this subpart. (i) For fiscal periods beginning three (3) or more years after the date of the establishment of the Board, the Board may not expend for administration, maintenance, and functioning of the Board in any fiscal period an amount that exceeds 15 percent of the assessments and other income received by the Board for that fiscal period. Reimbursements to the Secretary required under paragraph (h) of this E:\FR\FM\22SEP2.SGM 22SEP2 59634 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules section are excluded from this limitation on spending. (j) The Board may establish an operating monetary reserve and may carry over to subsequent fiscal periods excess funds in any reserve so established: Provided that the funds in the reserve do not exceed the last two fiscal periods’ budget of expenses. Subject to approval by the Secretary, such reserve funds may be used to defray any expenses authorized under this part. (k) Pending disbursement of assessments and all other revenue under a budget approved by the Secretary, the Board may invest assessments and all other revenues collected under this part in: (1) Obligations of the United States or any agency of the United States; (2) General obligations of any State or any political subdivision of a State; (3) Interest bearing accounts or certificates of deposit of financial institutions that are members of the Federal Reserve System; (4) Obligations fully guaranteed as to principal interest by the United States; or (5) Other investments as authorized by the Secretary. § 1223.51 Financial statements. (a) The Board shall prepare and submit financial statements to the Secretary on a monthly or quarterly basis or at any other time as requested by the Secretary. Each such financial statement shall include, but not be limited to, a balance sheet, income statement, and expense budget. The expense budget shall show expenditures during the time period covered by the report, year-to-date expenditures, and the unexpended budget. (b) Each financial statement shall be submitted to the Secretary within 30 days after the end of the time period to which it applies. (c) The Board shall submit annually to the Secretary an annual financial statement within 90 days after the end of the fiscal period to which it applies. § 1223.52 Assessments. (a) The funds to cover the Board’s expenses shall be paid from assessments on producers and importers, other income of the Board, and other funds available to the Board including those collected pursuant to § 1223.57 and subject to the limitations contained in § 1223.57. (b) Each producer shall pay an assessment per pound of pecans produced in the United States. The collection of assessments on pecans produced in the United States will be VerDate Sep<11>2014 18:29 Sep 21, 2020 Jkt 250001 the responsibility of the first handler receiving the pecans from producers. In the case of the producer acting as its own first handler, the producer will be required to collect and remit its individual assessments. (1) First handlers may remit assessments to a third-party collection agent under this subpart. (2) First handlers may also remit assessments directly to the Board. (c) Such assessments shall be levied at $0.02 per pound on all inshell pecans and $0.04 per pound on all shelled pecans. The assessment rate may be reviewed and modified with the approval of the Secretary. A change in the assessment rate is subject to rulemaking by the Secretary. (d) All assessment payments and reports will be submitted to the office of the Board. All assessment payments for a fiscal period are to be received no later than the 10th of the month following the end of the previous month. A late payment charge shall be imposed on any producer and importer who fails to remit to the Board, the total amount for which any such producer and importer is liable on or before the due date established by the Board on forms approved by the Secretary. In addition to the late payment charge, an interest charge shall be imposed on the outstanding amount for which the producer and importer is liable. The rate of interest shall be prescribed in regulations issued by the Secretary. (e) Each importer of pecans shall pay an assessment to the Board on pecans imported for marketing in the United States, through Customs. (1) The assessment rate for imported pecans shall be the same or equivalent to the rate for pecans produced in the United States. (2) The import assessment shall be uniformly applied to imported pecans that are identified by the number 0802.90.10.00 and 0802.90.15.00 in the Harmonized Tariff Schedule (HTS) of the United States or any other numbers used to identify pecans in that schedule. (3) In the event that any HTS number is subject to assessment is changed and such change is merely a replacement of a previous number and has no impact on the description of pecans, assessment will continue to be collected based on the new numbers. (4) The assessment due on imported pecans shall be paid when they enter, or are withdrawn from warehouse, for consumption in the United States. (5) If Customs does not collect an assessment from an importer, the importer is responsible for paying the assessment directly to the Board no later than the 10th of the month following the PO 00000 Frm 00026 Fmt 4701 Sfmt 4702 end of the previous month after the assessed pecans were imported into the United States. (f) Persons failing to remit total assessments due in a timely manner may also be subject to actions under Federal debt collection procedures. (g) The Board may authorize other organizations to collect assessments on its behalf with the approval of the Secretary. § 1223.53 Exemption procedures. (a) De minimis. An exemption from payment of assessments as provided in § 1223.52, shall be provided to producers that domestically produce and importers that import less than 50,000 pounds of inshell pecans (25,000 pounds of shelled pecans) on average for four fiscal periods (the fiscal period for which the exemption is claimed and the previous three fiscal periods) as follows: (1) Any producer who desires to claim an exemption from assessments shall file an application on a form provided by the Board, for a certificate of exemption for each fiscal period claiming an exemption. Such producer shall certify that it will domestically produce less than 50,000 pounds of inshell pecans (25,000 pounds of shelled pecans) on average for four fiscal periods (the fiscal period for which the exemption is claimed and the previous three fiscal periods). It is the responsibility of the producer to retain a copy of the certificate of exemption. (2) Any importer who desires to claim an exemption from assessments shall file an application on a form provided by the Board, for a certificate of exemption for each fiscal period claiming an exemption. Such importer shall certify that it will import less than 50,000 pounds of inshell pecans (25,000 pounds of shelled pecans) on average for four fiscal periods (the fiscal period for which the exemption is claimed and the previous three fiscal periods). It is the responsibility of the importer to retain a copy of the certificate of exemption. (3) On receipt of an exemption application, the Board shall determine whether an exemption may be granted for that fiscal period. The Board will then issue, if deemed appropriate, a certificate of exemption to the producer or importer which is eligible to receive one covering that fiscal period. The Board may request persons applying for the exemption to provide supporting documentation, such as past sales receipts or import data. (4) The Board, with the Secretary’s approval, may require persons receiving an exemption from assessments to E:\FR\FM\22SEP2.SGM 22SEP2 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules provide to the Board reports on the disposition of exempt pecans and, in the case of importers, proof of payment of assessments. (5) The exemption will apply immediately following the issuance of the certificate of exemption. (6) Producers and importers who received an exemption certificate from the Board but domestically produced or imported more than 50,000 pounds of inshell pecans (25,000 shelled of pecans) on average for four fiscal periods (the fiscal period for which the exemption is claimed and the previous three fiscal periods) during the fiscal period shall pay the Board the applicable assessments owed and submit any necessary reports to the Board pursuant to § 1223.60. (b) Assessment refunds. Importers and producers who are exempt from assessment shall be eligible for a refund of assessments collected, either by Customs or a first handler. Requests for such assessment refunds must be submitted to the Board within 90 days of the last day in the fiscal period when assessments were collected on such producer’s or importer’s pecans. No interest will be paid on such assessments. The Board shall refund such assessments no later than 60 calendar days after receipt by the Board of information justifying the exemption from assessment. (c) Organic. (1) A producer who domestically produces pecans under an approved National Organic Program (7 CFR part 205) (NOP) organic production system plan may be exempt from the payment of assessments under this part, provided that: (i) Only agricultural products certified as ‘‘organic’’ or ‘‘100 percent organic’’ (as defined in the NOP) are eligible for exemption; (ii) The exemption shall apply to all certified ‘‘organic’’ or ‘‘100 percent organic’’ (as defined in the NOP) products of a producer regardless of whether the agricultural commodity subject to the exemption is produced by a person that also produces conventional or nonorganic agricultural products of the same agricultural commodity as that for which the exemption is claimed; (iii) The producer maintains a valid certificate of organic operation as issued under the Organic Foods Production Act of 1990 (7 U.S.C. 6501–6522) (OFPA) and the NOP regulations issued under OFPA (7 CFR part 205); and (iv) Any producer so exempted shall continue to be obligated to pay assessments under this part that are associated with any agricultural VerDate Sep<11>2014 18:29 Sep 21, 2020 Jkt 250001 products that do not qualify for an exemption under this section. (2) To apply for exemption under this section, an eligible producer shall submit a request to the Board on an Organic Exemption Request Form (Form AMS–15) at any time during the fiscal period initially, and annually thereafter on or before the start of the fiscal period, for as long as the producer continues to be eligible for the exemption. (3) A producer request for exemption shall include the following: (i) The applicant’s full name, company name, address, telephone and fax numbers, and email address; (ii) Certification that the applicant maintains a valid certificate of organic operation issued under the OFPA and the NOP; (iii) Certification that the applicant produces organic products eligible to be labeled ‘‘organic’’ or ‘‘100 percent organic’’ under the NOP; (iv) A requirement that the applicant attach a copy of their certificate of organic operation issued by a USDAaccredited certifying agent; (v) Certification, as evidenced by signature and date, that all information provided by the applicant is true; and (vi) Such other information as may be required by the Board, with the approval of the Secretary. (4) If a producer complies with the requirements of this section, the Board will grant an assessment exemption and issue a Certificate of Exemption to the producer within 30 days. If the application is disapproved, the Board will notify the applicant of the reason(s) for disapproval within the same timeframe. (5) An importer who imports pecans that are eligible to be labeled as ‘‘organic’’ or ‘‘100 percent organic’’ under the NOP, or certified as ‘‘organic’’ or ‘‘100 percent organic’’ under a U.S. equivalency arrangement established under the NOP, may be exempt from the payment of assessments. Such importer may submit documentation to the Board and request an exemption from assessment on certified ‘‘organic’’ or ‘‘100 percent organic’’ pecans on an Organic Exemption Request Form (Form AMS–15) at any time initially, and annually thereafter on or before the beginning of the fiscal period, as long as the importer continues to be eligible for the exemption. This documentation shall include the same information required of a producer in paragraph (c)(3) of this section. If the importer complies with the requirements of this section, the Board will grant the exemption and issue a Certificate of Exemption to the importer within the applicable timeframe. Any importer so PO 00000 Frm 00027 Fmt 4701 Sfmt 4702 59635 exempted shall continue to be obligated to pay assessments under this part that are associated with any imported agricultural products that do not qualify for an exemption under this section. (6) If Customs collects the assessment on exempt product under paragraph (c)(5) of this section that is identified as ‘‘organic’’ by a number in the Harmonized Tariff Schedule, the Board must reimburse the exempt importer the assessments paid upon receipt of such assessments from Customs. For all other exempt organic product for which Customs collects the assessment, the importer may apply to the Board for a reimbursement of assessments paid, and the importer must submit satisfactory proof to the Board that the importer paid the assessment on exempt organic product. (7) The exemption will apply immediately following the issuance of the Certificate of Exemption. § 1223.54 Refund escrow accounts. (a) The Board shall establish an interest bearing escrow account with a financial institution that is a member of the Federal Reserve System and will deposit into such account an amount equal to 10 percent of the assessments collected during the period beginning on the effective date of the Order and ending on the date the Secretary announces the results of the required referendum. (b) If the Order is not approved by the required referendum, the Board shall promptly pay refunds of assessments to all producers and importers that have paid assessments during the period beginning on the effective date of the Order and ending on the date the Secretary announces the results of the required referendum in the manner specified in paragraph (c) of this section. (c) If the amount deposited in the escrow account is less than the amount of all refunds that producers and importers subject to this subpart have a right to receive, the Board shall prorate the amount deposited in such account among all producers and importers who desire a refund of assessments paid no later than 90 days after the required referendum results are announced by the Secretary. (d) Any producer or importer requesting a refund shall submit an application on the prescribed form to the Board within 60 days from the date the results of the required referendum are announced by the Secretary. The producer and importer shall also submit documentation to substantiate that assessments were paid. Any such demand shall be made by such producer E:\FR\FM\22SEP2.SGM 22SEP2 59636 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules or importer in accordance with the provisions of this subpart and in a manner consistent with the regulations in this part. (e) If the Order is approved by the required referendum conducted under § 1223.71 then: (1) The escrow account shall be closed; and, (2) The funds shall be available to the Board for disbursement under § 1223.50. Promotion, Research, and Information § 1223.55 Programs, plans, and projects. (a) The Board shall receive and evaluate, or on its own initiative develop, and submit to the Secretary for approval any program, plan, or project authorized under this subpart. Such programs, plans, or projects shall provide for: (1) The establishment, issuance, effectuation, and administration of appropriate programs for promotion, research, and information, including producer and consumer information, with respect to pecans; and (2) The establishment and conduct of research with respect to the use, nutritional value, sale, distribution, and marketing of pecans, and the creation of new products thereof, to the end that the marketing and use of pecans may be encouraged, expanded, improved, or made more acceptable and to advance the image, desirability, or quality of pecans. (b) No program, plan, or project shall be implemented prior to its approval by the Secretary. Once a program, plan, or project is so approved, the Board shall take appropriate steps to implement it. (c) Each program, plan, or project implemented under this subpart shall be reviewed or evaluated periodically by the Board to ensure that it contributes to an effective program of promotion, research, or information. If it is found by the Board that any such program, plan, or project does not contribute to an effective program of promotion, research, or information, then the Board shall terminate such program, plan, or project. § 1223.56 Independent evaluation. The Board shall, not less often than every five years, authorize and fund, from funds otherwise available to the Board, an independent evaluation of the effectiveness of the Order and other programs conducted by the Board pursuant to the Act. The Board shall submit to the Secretary, and make available to the public, the results of each periodic independent evaluation conducted under this section. VerDate Sep<11>2014 18:29 Sep 21, 2020 Jkt 250001 § 1223.57 Patents, copyrights, trademarks, information, publications, and product formulations. Patents, copyrights, trademarks, information, publications, and product formulations developed through the use of funds received by the Board under this subpart shall be the property of the U.S. Government as represented by the Board and shall, along with any rents, royalties, residual payments, or other income from the rental, sales, leasing, franchising, or other uses of such patents, copyrights, trademarks, information, publications, or product formulations, inure to the benefit of the Board; shall be considered income subject to the same fiscal, budget, and audit controls as other funds of the Board; and may be licensed subject to approval by the Secretary. Upon termination of this subpart, § 1223.73 shall apply to determine disposition of all such property. Reports, Books, and Records § 1223.60 Reports. (a) Each first handler, producer, or importer subject to this subpart shall be required to provide to the Board periodically such information as required by the Board, with the approval of the Secretary, which may include but not be limited to the following: (1) First handler must report or producer acting as its own first handler: (i) Number of pounds handled; (ii) Number of pounds on which an assessment was collected; (iii) Name, address and other contact information from whom the first handler has collected the assessments on each pound handled; and (iv) Date collection was made on each pound handled. (2) Unless provided by Customs, importer must report: (i) Number of pounds imported; (ii) Number of pounds on which an assessment was paid; (iii) Name, address, and other contact information of the importer; and (iv) Date assessment was paid on each pound imported. (b) These reports shall accompany the payment of the collected assessments. § 1223.61 Books and records. Each producer, first handler, and importer subject to this subpart shall maintain and make available for inspection by the Secretary such books and records as are necessary to carry out the provisions of this part, including such records as are necessary to verify any reports required. Such records shall be retained for at least 3 years beyond the fiscal period of their applicability. PO 00000 Frm 00028 Fmt 4701 Sfmt 4702 § 1223.62 Confidential treatment. All information obtained from books, records, or reports under the Act and this part shall be kept confidential by all persons, including all employees and former employees of the Board, all officers and employees and former officers and employees of contracting and subcontracting agencies or agreeing parties having access to such information. Such information shall not be available to Board members, producers, importers, or first handlers. Only those persons having a specific need for such information to effectively administer the provisions of this subpart shall have access to such information. Only such information so obtained as the Secretary deems relevant shall be disclosed by them, and then only in a judicial proceeding or administrative hearing brought at the direction, or on the request, of the Secretary, or to which the Secretary or any officer of the United States is a party and involving this subpart. Nothing in this section shall be deemed to prohibit: (a) The issuance of general statements based upon the reports of the number of persons subject to this subpart or statistical data collected therefrom, which statements will not identify the information furnished by any person; and (b) The publication, by direction of the Secretary, of the name of any person who has been adjudged to have violated this subpart, together with a statement of the particular provisions of this subpart violated by such person. Miscellaneous § 1223.70 Right of the Secretary. All fiscal matters, programs, plans, or projects, rules or regulations, reports, or other substantive actions proposed and prepared by the Board shall be submitted to the Secretary for approval. § 1223.71 Referenda. (a) Required referendum. For the purpose of ascertaining whether the persons subject to this subpart favor the continuation, suspension, amendment, or termination of this subpart, the Secretary shall conduct a referendum among persons subject to assessments under § 1223.52 who, during a representative period determined by the Secretary, have engaged in the production or importation of pecans: (1) The required referendum shall be conducted not later than 3 years after assessments first begin under the Order; and (2) The Order will be approved in a referendum if a majority of producers and importers vote for approval in the referendum. E:\FR\FM\22SEP2.SGM 22SEP2 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules (b) Subsequent referenda. The Secretary shall conduct subsequent referenda: (1) For the purpose of ascertaining whether producers and importers favor the continuation, suspension, or termination of the Order; (2) Every seven years the Secretary shall hold a referendum to determine whether producers and importers of pecans favor the continuation of the Order. The Order shall continue if it is favored by a majority of producers and importers voting for approval in the referendum who have been engaged in the production or importation of pecans; (3) At the request of the Board established in this subpart; (4) At the request of 10 percent or more of the number of persons eligible to vote in a referendum as set forth under the Order; or (5) At any time as determined by the Secretary. § 1223.72 Suspension and termination. (a) The Secretary shall suspend or terminate this part or subpart or a provision thereof if the Secretary finds that this part or subpart or a provision thereof obstructs or does not tend to effectuate the purposes of the Act, or if the Secretary determines that this part or subpart or a provision thereof is not favored by persons voting in a referendum conducted pursuant to the Act. (b) The Secretary shall suspend or terminate this subpart at the end of the fiscal period whenever the Secretary determines that its suspension or termination is approved or favored by a majority of producers and importers voting for approval who, during a representative period determined by the Secretary, have been engaged in the production or importation of pecans. (c) If, as a result of a referendum the Secretary determines that this subpart is not approved, the Secretary shall: (1) Not later than 180 days after making the determination, suspend or terminate, as the case may be, collection of assessments under this subpart; and (2) As soon as practical, suspend or terminate, as the case may be, activities under this subpart in an orderly manner. § 1223.73 Proceedings after termination. (a) Upon the termination of this subpart, the Board shall recommend not more than three of its members to the Secretary to serve as trustees for the purpose of liquidating the affairs of the Board. Such persons, upon designation by the Secretary, shall become trustees of all of the funds and property then in the possession or under control of the VerDate Sep<11>2014 18:29 Sep 21, 2020 Jkt 250001 59637 Board, including claims for any funds unpaid or property not delivered, or any other claim existing at the time of such termination. (b) The said trustees shall: (1) Continue in such capacity until discharged by the Secretary; (2) Carry out the obligations of the Board under any contracts or agreements entered into pursuant to this subpart; (3) From time to time account for all receipts and disbursements and deliver all property on hand, together with all books and records of the Board and the trustees, to such person or persons as the Secretary may direct; and (4) Upon request of the Secretary execute such assignments or other instruments necessary and appropriate to vest in such person’s title and right to all funds, property, and claims vested in the Board or the trustees pursuant to this subpart. (c) Any person to whom funds, property, or claims have been transferred or delivered pursuant to this subpart shall be subject to the same obligations imposed upon the Board and upon the trustees. (d) Any residual funds not required to defray the necessary expenses of liquidation shall be turned over to the Secretary to be disposed of, to the extent practical, to the pecan producer organizations in the interest of continuing pecan promotion, research, and information programs. § 1223.76 § 1223.74 Effect of termination or amendment. (a) Administrator means the Administrator of the Agricultural Marketing Service, with power to redelegate, or any officer or employees 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) Eligible importer means any person who, during the representative period, was subject to the Order and required to pay assessments on pecans imported into the United States. (c) Eligible producer means any person who, during the representative period, was subject to the Order and required to pay assessments on pecans produced in the United States. (d) Order means subpart A of this part, the Pecan Promotion, Research, and Information Order. (e) Pecans means and includes any and all varieties or subvarieties, inshell and shelled, of Carya illinoinensis grown or imported into the United States. (f) Person means any individual, group of individuals, partnership, corporation, association, cooperative, or Unless otherwise expressly provided by the Secretary, the termination of this part, or the issuance of any amendment to this part, shall not: (a) Affect or waive any right, duty, obligation, or liability which shall have arisen, or which may thereafter arise in connection with any provision of this part; or (b) Release or extinguish any violation of this part; or (c) Affect or impair any rights or remedies of the United States, or of the Secretary or of any other persons, with respect to any such violation. § 1223.75 Personal liability. No member or employee of the Board shall be held personally responsible, either individually or jointly with others, in any way whatsoever, to any person for errors in judgment, mistakes, or other acts, either of commission or omission, as such member or employee, except for acts of dishonesty or willful misconduct. PO 00000 Frm 00029 Fmt 4701 Sfmt 4702 Separability. If any provision of this subpart is declared invalid or the applicability thereof to any person or circumstances is held invalid, the validity of the remainder of this subpart or the applicability thereof to other persons or circumstances shall not be affected thereby. § 1223.77 Amendments. Amendments to this subpart may be proposed from time to time by the Board or by any interested person affected by the provisions of the Act, including the Secretary. § 1223.78 OMB control numbers. The control number assigned to the information collection requirements by the Office of Management and Budget pursuant to the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, is OMB control number 0581–NEW, except for the Board nominee background statement form which is assigned OMB control number 0505– 0001. Subpart B—Referendum Procedures § 1223.100 General. Referenda to determine whether eligible pecan producers and importers favor the issuance, amendment, suspension, or termination of the Pecan Promotion, Research, and Information Order shall be conducted in accordance with this subpart. § 1223.101 E:\FR\FM\22SEP2.SGM Definitions. 22SEP2 59638 Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / Proposed Rules any other legal entity. For the purpose of this paragraph (f), the term ‘‘partnership’’ includes, but is not limited to: (1) A husband and a wife who have title to, or leasehold interest in, a pecan farm 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 and others contributed capital, labor, management, or other services, or any variation of such contributions by two or more parties. (g) Referendum agent or agent means the individual or individuals designated by the Secretary to conduct the referendum. (h) Representative period means the period designated by the Secretary. (i) United States means collectively the 50 states, the District of Columbia, the Commonwealth of Puerto Rico, and the territories and possessions of the United States. § 1223.102 Voting. (a) Each person who is an eligible producer or an eligible importer, as defined in this subpart, at the time of the referendum and during the representative period, shall be entitled to cast only one ballot in the referendum. However, each producer in a landlord-tenant relationship or a divided ownership arrangement involving totally independent entities cooperating only to produce pecans, in which more than one of the parties is a producer, shall be entitled to cast one ballot in the referendum covering only such producer’s share of the ownership. (b) Proxy voting is not authorized, but an officer or employee of a corporate producer or importer, or an administrator, executor, or trustee or an eligible entity may cast a ballot on behalf of such person. Any individual so voting in a referendum shall certify that such individual is an officer or employee of the eligible entity, or an administrator, executive, or trustee of an eligible entity and that such individual has the authority to take such action. Upon request of the referendum agent, the individual shall submit adequate evidence of such authority. (c) All ballots are to be cast by mail, overnight delivery, electronic mail, facsimile, or by other means as instructed by the Secretary. VerDate Sep<11>2014 18:29 Sep 21, 2020 Jkt 250001 § 1223.103 Instructions. The referendum agent shall conduct the referendum, in the manner provided in this section, under the supervision of the Administrator. The Administrator may prescribe additional instructions, not inconsistent with the provisions in this section, to govern the procedure to be followed by the referendum agent. Such agent shall: (a) Determine the period during which ballots may be cast. (b) Provide ballots and related material to be used in the referendum. The ballot shall provide for recording essential information, including that needed for ascertaining whether the person voting, or on whose behalf the vote is cast, is an eligible voter. (c) Give reasonable public notice of the referendum: (1) By utilizing available media or public information sources, without incurring advertising expense, to publicize the dates, places, method of voting, eligibility requirements, and other pertinent information. Such sources of publicity may include, but are not limited to, print and radio; and (2) By such other means as the agent may deem advisable. (d) Mail to eligible producers and eligible importers whose names and addresses are known to the referendum agent, the instructions on voting, a ballot, and a summary of the terms and conditions of the proposed Order. No person who claims to be eligible to vote shall be refused a ballot. (e) At the end of the voting period, collect, open, number, and review the ballots and tabulate the results in the presence of an agent of a third party authorized to monitor the referendum process. (f) Prepare a report on the referendum. (g) Announce the results to the public. § 1223.104 Subagents. The referendum agent may appoint any individual or individuals necessary or desirable to assist the agent in performing the referendum agent’s functions listed in 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. § 1223.105 Ballots. The referendum agent and subagents shall accept all ballots cast. However, if the agent or subagent deems that a ballot PO 00000 Frm 00030 Fmt 4701 Sfmt 9990 should be challenged for any reason, the agent or subagent shall endorse above their signature, on the ballot, a statement to the effect that such ballot was challenged, by whom challenged, the reasons therefore, the results of any investigations made with respect thereto, and the disposition thereof. Ballots invalid under this subpart shall not be counted. § 1223.106 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. § 1223.107 Confidential information. The ballots and other information or reports that reveal, or tend to reveal, the vote of any person covered under the Act and the voting list shall be held confidential and shall not be disclosed. Subpart C—Administrative Provisions § 1223.520 Late payment and interest charges for past due assessments. (a) A late payment charge will be imposed on any producer, first handler or importer who fails to make timely remittance to the Board of the total assessments for which they are liable. The late payment will be imposed on any assessments not received within 30 calendar days of the date when assessments are due. This one-time late payment charge will be 5 percent of the assessments due before interest charges have accrued. (b) In addition to the late payment charge, 1 percent per month interest on the outstanding balance, including any late payment and accrued interest, will be added to any accounts for which payment has not been received within 30 calendar days of the date when assessments are due. Interest will continue to accrue monthly until the outstanding balance is paid to the Board. Bruce Summers, Administrator, Agricultural Marketing Service. [FR Doc. 2020–19031 Filed 9–21–20; 8:45 am] BILLING CODE P E:\FR\FM\22SEP2.SGM 22SEP2

Agencies

[Federal Register Volume 85, Number 184 (Tuesday, September 22, 2020)]
[Proposed Rules]
[Pages 59610-59638]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-19031]



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Vol. 85

Tuesday,

No. 184

September 22, 2020

Part II





Department of Agriculture





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 Agricultural Marketing Service





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7 CFR Part 1223





Pecan Research, Promotion, and Information Order; Proposed Rule

Federal Register / Vol. 85, No. 184 / Tuesday, September 22, 2020 / 
Proposed Rules

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1223

[Document Number AMS-SC-20-0013; PR-A1]


Pecan Research, Promotion, and Information Order

AGENCY: Agricultural Marketing Service.

ACTION: Proposed rule.

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SUMMARY: This proposal invites comments on the establishment of the 
Pecan Research, Promotion, and Information Order (Order). The purpose 
of the program would be to strengthen the position of pecans in the 
marketplace, maintain and expand markets for pecans, and develop new 
uses for pecans. The program would be financed by an assessment on 
pecan producers and importers. This proposal also invites comments on 
the procedures for conducting a referendum to determine whether the 
continuation of the proposed Order is favored by domestic producers and 
importers of pecans. In addition, this proposal 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 November 23, 2020. Pursuant to the 
Paperwork Reduction Act (PRA), comments on the information collection 
burden that would result from this proposal must be received by 
November 23, 2020.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposed rule. All comments must be submitted through 
the Federal e-rulemaking portal at http://www.regulations.gov and 
should reference the document number, and the date and page number of 
this issue of the Federal Register. All comments submitted in response 
to this proposed rule will be included in the rulemaking record and 
will be made available to the public. Please be advised that the 
identity of the individuals or entities submitting comments will be 
made public at http://www.regulations.gov.
    Pursuant to the PRA, comments regarding the accuracy of the burden 
estimate, ways to minimize the burden, including the use of automated 
collection techniques or other forms of information technology, or any 
other aspect of this collection of information, should be sent to the 
above address.

FOR FURTHER INFORMATION CONTACT: Andrea Ricci, Marketing Specialist, 
Promotion and Economics Division, Specialty Crops Program, AMS, USDA, 
755 E Nees Avenue #25985, Fresno, CA 93720; telephone: (202) 572-1442; 
or electronic mail: [email protected].

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

Executive Orders 12866, 13563, and 13771

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
This action falls within a category of regulatory actions that the 
Office of Management and Budget (OMB) exempted from Executive Order 
12866 review. Additionally, because this rule does not meet the 
definition of a significant regulatory action, it does not trigger the 
requirements contained in Executive Order 13771. See OMB's Memorandum 
titled ``Interim Guidance Implementing Section 2 of the Executive Order 
of January 30, 2017, titled `Reducing Regulation and Controlling 
Regulatory Costs' '' (February 2, 2017).

Executive Order 13175

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

Executive Order 12988

    This proposal has been reviewed under Executive Order 12988, Civil 
Justice Reform. It is not intended to have retroactive effect. Section 
524 of the 1996 Act (7 U.S.C. 7423) provides that it shall not affect 
or preempt any other Federal or State law authorizing promotion or 
research relating to an agricultural commodity.
    Section 519 of the 1996 Act (7 U.S.C. 7418) provides that a person 
subject to an order may file a written petition with the U.S. 
Department of Agriculture (USDA) stating that an order, any provision 
of an order, or any obligation imposed in connection with an order, is 
not established in accordance with the law, and request a modification 
of an order or an exemption from an order. Any petition filed 
challenging an order, any provision of an order, or any obligation 
imposed in connection with an order, must be filed within two years 
after the effective date of an order, provision, or obligation subject 
to challenge in the petition. The petitioner would have the opportunity 
for a hearing on the petition. Thereafter, USDA will issue a ruling on 
the petition. The 1996 Act provides that the district court of the 
United States for any district in which the petitioner resides or 
conducts business shall have the jurisdiction to review a final ruling 
on the petition, if the petitioner files a complaint for that purpose 
not later than 20 days after the date of the entry of USDA's final 
ruling.

Background

    This proposal invites comments on the establishment of the Pecan 
Research, Promotion, and Information Order (Order). The program would 
be financed by an assessment on producers and importers and would be 
administered by a board of industry members selected by the Secretary. 
The initial assessment rate would be $0.02 per pound of inshell pecans 
and $0.04 per pound of shelled pecans produced within or imported to 
the United States. Entities that produce or import less than 50,000 
pounds of inshell pecans (25,000 pounds of shelled pecans) on average 
for four fiscal periods (the fiscal period for which the exemption is 
claimed and the previous three fiscal periods) would be exempt from the 
payment of assessments.
    The purpose of the program would be to strengthen the position of 
pecans in the marketplace, maintain and expand markets for pecans, and 
develop new uses for pecans. The proposal was submitted to USDA by the 
National Pecan Federation (NPF), an organization representing pecan 
growers and shellers across the United States whose mission is to 
promote, protect, and improve business conditions for the pecan 
industry.
    This proposal also invites comments on the procedures for 
conducting a referendum to determine whether the continuation of the 
proposed Order is favored by domestic producers and importers of 
pecans. A referendum would be held among eligible domestic producers 
and importers no later than three years after assessments begin to 
determine whether they favor continuation of the program. In

[[Page 59611]]

addition, this proposal announces the intent of AMS to request approval 
by OMB of new information collection requirements to implement the 
program.

Legal Basis for Action

    The proposed Order is authorized under the 1996 Act which 
authorizes USDA to establish agricultural commodity research and 
promotion orders which may include a combination of promotion, 
research, industry information, and consumer information activities 
funded by mandatory assessments. These programs are designed to 
maintain and expand markets and uses for agricultural commodities.
    The 1996 Act provides several optional provisions that allow the 
tailoring of orders for different commodities. Section 516 of the 1996 
Act provides permissive terms for orders, and other sections provide 
for alternatives. For example, section 514 of the 1996 Act provides for 
orders applicable to (1) producers, (2) first handlers and others in 
the marketing chain as appropriate, and (3) importers (if imports are 
subject to assessments). Section 516 states that an order may include 
an exemption of de minimis quantities of an agricultural commodity; 
different payment and reporting schedules; coverage of research, 
promotion, and information activities to expand, improve, or make more 
efficient the marketing or use of an agricultural commodity in both 
domestic and foreign markets; provision for reserve funds; provision 
for credits for generic and branded activities; and assessment of 
imports.
    In addition, section 518 of the 1996 Act provides for referenda to 
ascertain approval of an order to be conducted either prior to its 
going into effect or within three years after assessments first begin 
under the order. Pursuant to section 518 of the Act, an order may also 
provide for its approval in a referendum based upon different voting 
patterns. Section 515 provides for establishment of a board from among 
producers, first handlers and others in the marketing chain as 
appropriate, and importers, if imports are subject to assessment.
    USDA currently oversees a marketing order for pecans grown in 
Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, 
Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, 
South Carolina, and Texas, which is authorized under the Agricultural 
Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674). The 
purpose of marketing orders, in general, is to stabilize market 
conditions, allowing industries to work together to solve marketing 
problems, and to improve profitability. The pecan marketing order 
authorizes collection of industry data; research and promotion 
activities; regulations on grade, size, quality, pack and container; 
and is financed by assessments paid by handlers of pecans grown in the 
production area.
    The purpose of research and promotion programs, in general, is to 
provide a framework for agricultural industries to pool their resources 
and combine efforts to develop new markets, strengthen existing markets 
and conduct important research and promotion activities. The proposed 
pecan research and promotion program would be national in scope, 
financed by an assessment on pecan producers and importers, and 
authorize research and promotion activities. The purpose of the 
proposed Order would be to strengthen the position of pecans in the 
marketplace, maintain and expand markets for pecans, and develop new 
uses for pecans. USDA has not identified any relevant Federal rules 
that duplicate, overlap, or conflict with this proposed rule.

Industry Background

    The pecan industry is comprised of producers, shellers, 
accumulators, wholesalers, and importers that produce, process, and 
supply pecans for market. Pecans include any and all varieties or sub 
varieties, inshell or shelled of the Genus, species: Carya 
illinoinensis. Pecans are grown primarily in Alabama, Arkansas, 
Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, 
Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and 
Texas. According to the most recent Census of Agriculture (2017), there 
are 15,608 operations with bearing acreage of pecans. Bearing acreage 
is greatest in Georgia with about 30 percent of the nationwide total, 
followed by Texas at 27 percent, Oklahoma at 22 percent, New Mexico at 
11 percent, and Arizona at 4 percent. These five states generally 
account for about 95 percent of U.S. pecan production.

U.S. Supply and Consumption

    Pecans are an alternate bearing crop, causing variability in 
production from year to year. Based on data from the National 
Agricultural Statistics Service (NASS), the 2014 to 2019 six-year 
average of total U.S. pecan production was almost 265 million pounds on 
an inshell basis, as shown in Table 1. Together, Georgia and New Mexico 
produced more than half of pecan production nationwide.

[[Page 59612]]

[GRAPHIC] [TIFF OMITTED] TP22SE20.023

    From 2013 through 2016, pecan production averaged about 263 million 
pounds per year, and reached a peak in 2017 at nearly 305 million 
pounds. The following year, however, domestic production dropped 21 
percent due to the destruction of the Georgia pecan crop by Hurricane 
Michael. The trend of U.S. pecan production is depicted in Chart 1.
[GRAPHIC] [TIFF OMITTED] TP22SE20.024


[[Page 59613]]


    In 2018, Hurricane Michael swept across the southern half of 
Georgia as a Category 3 storm. According to the University of Georgia 
Pecan Extension, this storm resulted in a loss of nearly half the 
expected 2018 crop and a loss of 17 percent of the state's pecan 
acreage. The effects of Hurricane Michael remain present as the 2019 
Georgia crop was down nearly 30 percent from the average production of 
the six years prior to the storm. Prior to Hurricane Michael, Georgia 
was the top pecan-producing state in the U.S. Considering this, along 
with the state's recovery efforts, the University of Georgia Pecan 
Extension expects Georgia pecan production to rebound in the coming 
years. Pecan production nationwide began to increase in 2019, climbing 
six percent from 2018.
    Table 2 shows U.S. pecan supply and utilization. Domestic 
production generally accounts for about 40 percent of the domestic 
supply, while imports account for nearly one-third, with beginning 
stocks just under 30 percent. Almost all pecans imported into the U.S. 
are from Mexico. Of these, 70 percent are shelled, and 30 percent are 
inshell.
[GRAPHIC] [TIFF OMITTED] TP22SE20.025

    Nearly half of the U.S. supply of pecans is consumed domestically 
each year. Per capita consumption has trended upward for the last four 
years, reaching a high of 1.20 inshell pounds in 2019. Compared to 2018 
and to the 2013 to 2018 six-year average, 2019 per capita consumption 
is up 23 percent and 33 percent, respectively.

Exports

    The U.S. exports about 24 percent of its pecan supply on average 
each year. Shelled pecans make up 60 percent of U.S. pecan exports, 
while inshell are 40 percent. Europe and Canada are the primary markets 
for shelled pecans with, on average, 49 percent and 24 percent, 
respectively, of total shelled exports. In Europe, the largest 
consumers of U.S. shelled pecans are the Netherlands, the United 
Kingdom, and Germany with 39 percent, 24 percent, and 15 percent, 
respectively, of total shelled exports to Europe. On average, about 94 
percent of U.S. inshell exports go to Asia. Together, Hong Kong and 
China make up 72 percent of the Asian market for inshell pecan exports 
from the United States.

Competition

    The pecan industry competes with other tree nut industries such as 
almonds, pistachios and walnuts. As Table 3 illustrates, sales by 
volume of pecans are 95 percent lower than sales of almonds, 74 percent 
lower than sales of walnuts, but 40 percent higher than sales of 
pistachios.

[[Page 59614]]

[GRAPHIC] [TIFF OMITTED] TP22SE20.026

    Prices received by growers, as shown in Table 4, are 25 percent 
lower for pecans than for almonds. Compared to other nuts, grower-
received prices for pecans are 18 percent lower than those for 
pistachios, but double those for walnuts.
[GRAPHIC] [TIFF OMITTED] TP22SE20.027

Price Trends

    Chart 2 shows the trend of prices for pecans from 2013 to 2019. In 
recent years, pecan prices were at their highest in 2016 before 
dropping in the following two years. Prices increased slightly between 
2018 and 2019 but are still down about 12 percent compared to the 
average of the previous six years.

[[Page 59615]]

[GRAPHIC] [TIFF OMITTED] TP22SE20.028

Need for a Program

    According to the NPF, the greatest challenge the pecan industry is 
facing is supply surpassing demand. Data from the International Nut and 
Dried Fruit Council and from the research compiled by the Boston 
Consulting Group, contracted by the NPF, show that the supply of pecans 
may exceed demand by 19 percent in 2028.\1\ The NPF believes the 
establishment of a national research and promotion program for pecans 
would help the industry address this challenge. NPF concluded that 
without a program funded by assessments from both domestically produced 
and imported pecans, the industry would not be able to meet the 
challenge of the approaching supply and demand imbalance.
---------------------------------------------------------------------------

    \1\ Based on historic compound annual growth rates (CAGR's) in 
global pecan supply and demand for 10 years from 2008 to 2018; 
resultant CAGR's of 6 percent for global supply and demand applied 
to 2018 estimates to forecast 2028 figures.
---------------------------------------------------------------------------

    In 2016, the U.S. pecan industry favored the establishment of a 
marketing order for pecans grown in Alabama, Arkansas, Arizona, 
California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, 
North Carolina, New Mexico, Oklahoma, South Carolina, and Texas. The 
program authorizes collection of industry data; research and promotion 
activities; regulation of grade, size, quality, pack and container; and 
is financed by assessments paid by handlers of pecans grown in the 
production area. Over the past several years the marketing order 
program has launched marketing campaigns to increase demand for pecans.
    According to the NPF, the proposed research and promotion program 
will benefit domestic producers and importers of pecans, thereby 
justifying the collection of assessments on both domestic production 
and imports.
    The NPF proposal indicates that imported product accounts for 
approximately 39 percent of pecans being supplied to the U.S., with 
domestic production accounting for the other 61 percent. With mandatory 
assessments being collected only on domestic production, this has 
created a gap in the dollars available to fund marketing campaigns 
focused on creating increased demand for pecans in the U.S. and 
globally. As domestic production and imports increase, the need for a 
robust promotion campaign is apparent, which would only be accomplished 
with both domestic producers and importers contributing financially. 
The NPF concluded that the marketing order would continue to have an 
important role within the industry and the intent is that the two 
programs would work together to benefit the entire pecan industry.

Provisions of Proposed Program

Definitions

    Pursuant to section 513 of the 1996 Act, Sec. Sec.  1223.1 through 
1223.24 of proposed 7 CFR part 1223 (referred to as the proposed Order) 
define certain terms that would be used throughout final 7 CFR part 
1223 (referred to as the Order). Several of the terms are common to all 
research and promotion programs authorized under the 1996 Act, while 
other terms are specific to the proposed Order.
    Section 1223.1 would define the term ``Act'' to mean the Commodity 
Promotion, Research, and Information Act of 1996 (7 U.S.C. 7411-7425), 
and any amendments thereto.
    Section 1223.2 would define the term ``American Pecan Council'' or 
``APC'' to mean that governing body of the Federal Marketing Order 
established pursuant to 7 CFR part 986, unless otherwise noted. As 
specified in proposed Sec.  1223.41, the APC would conduct the initial 
nominations for producers of the American Pecan Promotion Board and 
submit them to the Secretary.
    Section 1223.3 would define the term ``American Pecan Promotion 
Board'' or ``Board'' to mean the administrative body established 
pursuant to Sec.  1223.40.
    Section 1223.5 would define ``Customs'' or ``CBP'' to mean the 
Customs and Border Protection, an agency of the United Sates Department 
of Homeland Security.
    Section 1223.7 would define ``first handler'' to mean any person 
who receives, shells, cracks, accumulates, warehouses, roasts, packs, 
sells, consigns, transports, exports, or ships (except as a common or 
contract carrier of pecans owned by another person), or in any other 
way puts inshell or shelled pecans in the stream of commerce. The term 
first handler includes a producer who handles or markets pecans of the 
producer's own production.
    Section 1223.8 would define the term ``fiscal period'' to mean the 
period from October 1 to September 30, or such other period as 
recommended by the Board and approved by the Secretary.
    Section 1223.10 would define the term ''information'' to mean 
information

[[Page 59616]]

and programs that are designed to increase efficiency in processing and 
to develop new markets, marketing strategies, increase market 
efficiency, and activities that are designed to enhance the image of 
pecans on a national or international basis. This includes consumer 
information, which means any action taken to provide information to, 
and broaden the understanding of, the general public regarding the 
consumption, use, nutritional attributes, and care of pecans. This 
would also include industry information, which means information and 
programs that would lead to the development of new markets, new 
marketing strategies, or increased efficiency for the pecan industry, 
and activities to enhance the image of the pecan industry.
    Section 1223.11 would define the term ``inshell pecans'' to mean 
nuts whose kernel is maintained inside the shell.
    Section 1223.12 would define the terms ``market'' or ``marketing.'' 
The term ``marketing'' would mean the sale or other disposition of 
pecans in any channel of commerce. The term ``market'' would mean to 
sell or otherwise dispose of pecans in interstate, foreign, or 
intrastate commerce.
    Section 1223.14 would define the terms ``part'' and ``subpart.'' 
The term ``part'' would mean all rules, regulations, and supplemental 
orders issued pursuant to the Act and the Order. The Pecan Promotion, 
Research, and Information Order would be a ``subpart'' (specifically 
subpart A) of such part.
    Section 1223.15 would define the term ``pecans'' to mean and 
includes any and all varieties or subvarieties, inshell or shelled, of 
the Genus, species: Carya illinoinensis grown or imported into the 
United States.
    Section 1223.17 would define the term ``producer'' to mean 
synonymous with grower and any person engaged in the production and 
sale of pecans in the United States who owns, or who shares in the 
ownership and risk of loss of such pecans.
    Section 1223.18 would define the terms programs, plans, and 
projects to mean research, promotion and information programs, plans, 
or projects established under the Order.
    Section 1223.19 would define the term ``promotion'' to mean any 
action taken to present a favorable image of pecans to the general 
public and the food industry for the purpose of improving the 
competitive position of pecans both in the United States and abroad and 
stimulating the sale of pecans. This includes paid advertising and 
public relations.
    Section 1223.20 would define the term ``research'' to mean any type 
of test, study, or analysis designed to advance the image, 
desirability, use, marketability, production, product development, or 
quality of pecans, including research relating to nutritional value, 
cost of production, new product development, varietal development, 
nutritional value, health research, and marketing of pecans.
    Section 1223.22 would define the term ``shelled pecans'' to mean 
pecans whose shells have been removed leaving only edible kernels, 
kernel pieces or pecan meal. One pound of shelled pecans is the 
equivalent of two pounds inshell pecans.
    Sections 1223.4, 1223.6, 1223.9, 1223.13, 1223.16, 1223.21, 
1223.23, 1223.24, and 1223.25 would define the terms ``conflict of 
interest,'' ``Department or USDA,'' ``importer,'' ``Order,'' 
``person,'' ``Secretary,'' ``suspend,'' ``terminate,'' and ``United 
States,'' respectively. The definitions are the same as or are based on 
the definitions specified in section 513 of the Act.

Establishment of the Board

    Pursuant to section 515 of the 1996 Act, Sec. Sec.  1223.40 through 
1223.47 of the proposed Order would detail the establishment and 
membership of the proposed American Pecan Promotion Board (Board), 
nominations and appointments, term of office, removal and vacancies, 
procedure, compensation and reimbursement, powers and duties, and 
prohibited activities.
    Section 1223.40 would specify the Board establishment and 
membership. The 1996 Act requires the composition of a board to reflect 
the geographical distribution of production of the commodity in the 
U.S. as well as the quantity or value of the commodity imported into 
the United States. In accordance with this requirement, the NPF 
recommended the Board would consist of 17 members: 10 domestic 
producers and 7 importers.
    To determine whether the NPF's proposed board representation is 
reflective of the appropriate geographical distribution, USDA used the 
following resources: The NASS for U.S. production data; the 2007, 2012, 
and 2017 Census of Agriculture (published by NASS) for bearing acreage 
data by state; Customs import data for shelled and inshell pecans (HTS 
Codes 0802901500 and 0802901000, respectively); and the Global 
Agricultural Trade System (GATS) of the Foreign Agricultural Service 
(FAS) for data on U.S. exports of inshell pecans to Mexico. All data 
presented in this document is based on a calendar year for consistency 
in timeframe. Due to the alternate-bearing nature of the crop, USDA 
concluded that the most appropriate way to illustrate production and 
import volume is a six-year average of years 2014 through 2019.

U.S. Production

    Every five years, following the Census of Agriculture, NASS reviews 
production for each commodity and evaluates the inclusion of states in 
its annual estimating program. Given limited available resources, NASS 
has reduced the number of states included in its annual estimation of 
pecan production to five states as of 2019, down from 12 states in 2014 
after the 2012 Census of Agriculture. NASS had reported annual 
estimates of pecan production for 15 states as early as 2007.
    Using bearing acreage data from the 2007, 2012, and 2017 Census of 
Agriculture, USDA estimated 2017 production in the seven states for 
which no data was issued by NASS. USDA calculated an average yield per 
acre for each of these seven states using bearing acreage data from the 
2007 and 2012 Census of Agriculture and NASS production data for the 
corresponding years. Next, USDA applied these calculations of yield to 
bearing acreage data from the 2017 Census of Agriculture to estimate 
2017 production. Table 5 shows the result.

[[Page 59617]]

[GRAPHIC] [TIFF OMITTED] TP22SE20.029

    In 2018, Hurricane Michael swept across the southern half of 
Georgia as a Category 3 storm. According to the University of Georgia 
Pecan Extension, this storm resulted in a loss of nearly half the 
expected 2018 crop and a loss of 17 percent of the state's pecan 
acreage. The effects of Hurricane Michael remain present as the 2019 
Georgia crop was down nearly 30 percent from the average production of 
the six years prior to the storm. To more accurately represent the 
geographical distribution of U.S. pecan production, USDA adjusted the 
six-year average of production for Georgia by applying weights to each 
year's production figures. Equal weights of 20 percent were applied to 
years 2014 through 2017, and weights of 10 percent each were applied to 
years 2018 and 2019. The result, as shown in Table 5, is a six-year 
weighted average of 90.9 million pounds, inshell, of Georgia 
production. Prior to Hurricane Michael, Georgia was the top pecan 
producer in the United States. Considering this, along with the state's 
recovery efforts, the University of Georgia Pecan Extension expects 
Georgia pecan production to rebound in the coming years.
    According to the proposal, domestic board representation would be 
split into three regions: Eastern, Central, and Western. The Eastern 
Region includes Alabama, Florida, Georgia, North Carolina, South 
Carolina, and any other U.S. states the majority of whose land mass is 
in the Eastern Time Zone, plus any U.S. territories in the Atlantic 
Ocean. The Central Region includes Arkansas, Kansas, Louisiana, 
Mississippi, Missouri, Oklahoma, Texas, and any other U.S. states the 
majority of whose land mass is in the Central Time Zone. Finally, the 
Western Region includes Arizona, California, New Mexico, and any other 
U.S. states the majority of whose land mass is in the Mountain or 
Pacific Time Zones, plus Alaska, Hawaii, and any U.S. territories in 
the Pacific Ocean.
    Table 6 lists the three regions including their states and 
territories, along with regional six-year average production, and 
portion of total U.S. production. The Eastern and Central Regions, with 
34 percent and 25 percent of total U.S. production, respectively, would 
each have three seats on the Board as recommended by the NPF. The 
Western Region, with 41 percent of total U.S. production would have 
four seats on the Board as recommended by the NPF, for a total of 10 
seats representing domestic U.S. production.

[[Page 59618]]

[GRAPHIC] [TIFF OMITTED] TP22SE20.030

Imports

    Regarding import volume, USDA estimated about 208 million pounds, 
inshell, using a six-year average for years 2014 through 2019. To 
arrive at this estimate, USDA considered the routine industry practice 
of domestic inshell pecans being exported to Mexico for shelling, and 
then reentering the United States as shelled kernels. These shelled 
kernels may be documented as imported product, but they were actually 
produced in the United States. To account for this scenario, USDA 
deducted from total imports U.S. exports of inshell pecans to Mexico. 
This calculation assumes that all U.S. inshell pecan exports to Mexico 
ultimately return to the United States as shelled kernels. According to 
the NPF, this is a reasonable assumption. The result of this 
calculation is shown in Table 7.
[GRAPHIC] [TIFF OMITTED] TP22SE20.031


[[Page 59619]]


    In Table 8, revised imports are added to domestic production to 
estimate the total U.S. supply of pecans. With 279.5 million pounds, on 
an inshell basis, U.S. production accounts for 57 percent of the total 
domestic supply; and, with just over 208 million pounds, on an inshell 
basis, imports account for 43 percent of the total U.S. supply. In its 
proposal, the NPF recommended 17 total board members, including ten 
domestic producers and seven importers.
[GRAPHIC] [TIFF OMITTED] TP22SE20.032

    The NPF proposed to have no alternate Board members. It wants to 
ensure that industry members who seek representation and serve on the 
Board are committed to their service and participate in all Board 
meetings.
    At least once every five years, the Board must review the 
geographical distribution of United States production of pecans and the 
quantity or value of imports. The review would be conducted through an 
audit of state crop production, Customs data, and Board assessment 
records. If warranted, the Board would recommend to the Secretary of 
Agriculture that the Board membership be reapportioned appropriately to 
reflect such changes. The distribution of production between regions 
also shall be considered. Any changes in Board composition would be 
implemented by the Secretary through rulemaking.
    Section 1223.41 of the proposed Order would specify Board 
nominations and appointments. The initial nominations for producers 
would be submitted to the Secretary by the American Pecan Council 
(APC). The APC would publicize the nomination process, using trade 
press or other means it deems appropriate. The APC would use regional 
caucuses, mail or other methods to solicit potential nominees and would 
work with USDA to help ensure that all interested persons are apprised 
of the nomination process. The APC would submit the nominations and 
recommend two nominees for each Board position for the Secretary's 
consideration.
    USDA would conduct initial importer nominations. This includes 
publicizing the nomination process, using trade press or other means it 
deems appropriate, and conducting outreach to all importers. USDA would 
receive the nominations and submit two nominees for each Board position 
for the Secretary's consideration.
    Regarding subsequent nominations, the Board would solicit 
nominations as described in the following paragraph. Nominees must 
produce more than 50,000 pounds of inshell pecans (25,000 pounds of 
shelled pecans) on average for four fiscal periods (the fiscal period 
for which the nominations are being conducted and the previous three 
fiscal periods).
    The Board would seek nominations for each vacant seat from 
producers who paid their assessments to the Board in the most recent 
fiscal period. Producers that produce in more than one region could 
seek nomination in only the region in which they produce the majority 
of their pecans. Interested producers could also submit a background 
statement outlining their qualifications to serve on the Board. The 
names of producer nominees would be placed on a ballot by region. The 
ballots, along with any background statements, would be mailed to 
producers in each respective region for a vote. Producers who produce 
pecans in more than one region could only vote in the region in which 
they produce the majority of their pecans. The votes would be tabulated 
for each region with the nominee receiving the highest number of votes 
at the top of the list in descending order by vote. Two candidates for 
each position would be submitted to the Secretary for consideration.
    The Board would also solicit candidates for importer nominees. All 
qualified national organizations representing importers would have the 
opportunity to nominate members to serve on the Board. To be certified 
by the Secretary as a qualified national organization, an organization 
would have to have been established for more than a year; be comprised 
primarily of importers of pecans; receive a portion of its operating 
funds from importers; and demonstrate it would be willing and able to 
further the Act and Order's purposes. Interested importers could also 
submit a background statement outlining their qualifications to serve 
on the Board. The names of importer nominees would then be placed on a 
ballot. The ballots, along with any background statements, would be 
mailed to importers for a vote. The votes would be tabulated with the 
nominee receiving the highest number of votes at the top of the list in 
descending order by vote. Two candidates for each position would then 
be submitted to the Secretary for consideration.
    The Board would submit nominations to the Secretary at least six 
months before the new Board term begins.
    The NPF also recommended that no two Board members be employed by a 
single corporation, company, partnership, or any other legal entity. 
The NPF stated this is to help ensure that no one entity has control on 
the Board.
    In order to provide the Board flexibility, the Board could 
recommend to the Secretary modifications to its nomination procedures. 
Any such modifications would be implemented through rulemaking by the 
Secretary.
    Section 1223.42 of the proposed Order would specify the term of 
office. Except for the initial Board, each Board member would serve a 
three-year term or until the Secretary selected his or her successor. 
Each term of office would

[[Page 59620]]

begin on October 1 and end on September 30. No member could serve more 
than two consecutive terms, excluding any term of office less than 
three years. For the initial Board, the members' terms would be 
staggered for two, three, and four years and would be determined at 
random. The initial members would be able to serve one successive 
three-year term.
    Section 1223.43 of the proposed Order would specify criteria for 
the removal of members and for filling vacancies. If a Board member 
ceased to work for or be affiliated with the category of members from 
which the member was appointed or in the region he or she represented, 
such position would become vacant. The Board could recommend to the 
Secretary that a member be removed from office if the member 
consistently refused to perform his or her duties or engaged in 
dishonest acts or willful misconduct. Further, without recommendation 
of the Board, a member may be removed by the Secretary upon showing of 
adequate cause, including the continued failure by a member to submit 
reports or remit assessments required under this part, if the Secretary 
determines that such member's continued service would be detrimental to 
the achievement of the purposes of the Act. If a position became 
vacant, nominations to fill the vacancy would be conducted using the 
nomination process as proposed in Sec.  1223.41 of the Order. A vacancy 
would not be required to be filled if the unexpired term is less than 
six months.
    Section 1223.44 of the proposed Order would specify procedures of 
the Board. A majority of the Board members (9) would constitute a 
quorum. A motion would carry if supported by one vote more than 50 
percent of the total votes represented by the Board members present. 
Proxy voting would not be permitted.
    The proposed Order would also provide for the Board to take action 
by mail, telephone, electronic mail, facsimile, or any other electronic 
means when the chairperson believes it is necessary. Actions taken 
under these procedures would be valid only if all members and the 
Secretary were notified of the meeting and all members were provided 
the opportunity to vote and at least nine Board members voted in favor 
of the action. Additionally, all votes would have to be confirmed in 
writing and recorded in Board minutes.
    The proposed Order would specify that Board members would serve 
without compensation. However, Board members would be reimbursed for 
reasonable travel expenses, as approved by the Board, incurred when 
performing Board business.
    Section 1223.46 of the proposed Order would specify powers and 
duties of the Board. These are similar in promotion programs authorized 
under the 1996 Act. They include, among other things, to administer the 
Order and collect assessments; to develop bylaws and recommend 
regulations necessary to administer the Order; to select a chairperson 
and other Board officers; to create committees and subcommittees as 
necessary; to hire staff or contractors; to develop programs and enter 
into contracts to implement programs; to prepare and submit a budget 
for approval by USDA in accordance with the Order; to invest Board 
funds appropriately; have its books audited by an outside certified 
public accountant at the end of each fiscal period and at other times 
as requested by the Secretary; to provide appropriate notice of 
meetings to the industry and USDA and keep minutes of such meetings; to 
report its activities to producers and importers; to make public an 
accounting of funds received and expended; to receive, investigate and 
report to the Secretary complaints of violations of the Order; and to 
recommend amendments to the Order as appropriate.
    Section 1223.47 of the proposed Order would specify prohibited 
activities that are common to all promotion programs authorized under 
the 1996 Act. In summary, the Board nor its employees and agents could 
engage in actions that would be a conflict of interest; use Board funds 
to lobby (influencing legislation or governmental action or policy, by 
local, state, national, and foreign governments or subdivision thereof, 
other than recommending to the Secretary amendments to the Order); or 
engage in any advertising or activities that may be false, misleading 
or disparaging to another agricultural commodity.

Expenses and Assessments

    Pursuant to sections 516 and 517 of the 1996 Act, Sec. Sec.  
1223.50 through 1223.53 of the proposed Order detail requirements 
regarding the Board's budget and expenses, financial statements, 
assessments, and exemption from assessments. At least 60 calendar days 
before the start of the fiscal period, and as necessary during the 
year, the Board would submit a budget to USDA covering its projected 
expenses. The budget must include a summary of anticipated revenue and 
expenses for each program along with a breakdown of staff and 
administrative expenses. Except for the initial budget, the Board's 
budgets should include comparative data for at least one preceding 
fiscal period.
    Each budget must provide for adequate funds to cover the Board's 
anticipated expenses. Any amendment or addition to an approved budget 
must be approved by USDA, including shifting of funds from one program, 
plan or project to another. Shifts of funds that do not result in an 
increase in the Board's approved budget would not need prior approval 
from USDA. For example, if the Board's approved budget provided for $1 
million in consumer advertising and $500,000 in research projects, a 
shift of $50,000 from consumer advertising to research would require 
USDA approval. However, a shift within the $1 million consumer 
advertising line item would not require prior USDA approval.
    The Board would be authorized to incur reasonable expenses for its 
maintenance and functioning. During its first year of operation, the 
Board could borrow funds for startup costs and capital outlay. Any 
borrowed funds would be subject to the same fiscal, budget and audit 
controls as other funds of the Board.
    The Board could also accept voluntary contributions and seek other 
funding sources to carry out activities authorized under the Order. Any 
contributions received by the Board would be free from encumbrances by 
the donor and the Board would retain control over use of the funds. 
However, the Board could receive funds from outside sources targeted 
for specific authorized projects. For example, the Board could receive 
Federal grant funds, subject to approval by the Secretary, for a 
specific research project. The Board would also be required to 
reimburse USDA for costs incurred by USDA in overseeing the Order's 
operations, including all costs associated with referenda.
    The Board would be limited to spending no more than 15 percent of 
its assessment and other income received for administration, 
maintenance, and the functioning of the Board for that fiscal period. 
This limitation would be applicable for fiscal periods beginning three 
or more years after the establishment of the Board. Reimbursements to 
USDA would not be considered administrative costs. As an example, if 
the Board received $9 million in assessments during fiscal period five, 
and $1 million in Federal grant funding, the Board's assessment and 
other income would be $10 million for that fiscal period. In this 
scenario, the Board would be limited to spending

[[Page 59621]]

no more than $1.5 million (.15 x $10 million) on administrative costs.
    The Board could also maintain a monetary reserve and carry over 
excess funds from one fiscal period to the next. However, such reserve 
funds could not exceed two fiscal period's budgeted expenses. For 
example, if the Board's budgeted expenses for a fiscal period were $8 
million, it could carry over no more than $16 million in reserve. With 
approval of the Secretary, reserve funds could be used to pay expenses.
    The Board could invest its revenue collected under the Order in the 
following: (1) Obligations of the United States or any agency of the 
United States; (2) General obligations of any State or any political 
subdivision of a State; (3) Interest bearing accounts or certificates 
of deposit of financial institutions that are members of the Federal 
Reserve; and 4) Obligations fully guaranteed as to principal interest 
by the United States.
    The Board would be required to submit to USDA financial statements 
on a monthly or quarterly basis, or at any other time as requested by 
the Secretary. Financial statements should include, at a minimum, a 
balance sheet, statement of activities (budget versus actual), an 
income statement, and an expense budget.

Assessments

    The Board's programs and expenses would be funded through 
assessments on producers and importers, other income, and other funds 
available to the Board. The Order would provide for an initial 
assessment rate of $0.02 per pound of all inshell pecans and $0.04 per 
pound on all shelled pecans. Each producer would pay on the amount of 
pecans produced in the United States. The importer of record would pay 
assessments based on the amount of pecans imported to the United 
States.
    The Order provides that it is the responsibility of the first 
handler, as defined in Sec.  1223.7, to collect and remit assessments 
owed to the Board. First handlers would collect assessments from each 
producer based on pounds of pecans received. The first handler would 
remit those assessments, along with the required reports, to the Board. 
As an example, first handler A receives 100,000 pounds inshell pecans 
from producer X, 250,000 pounds shelled pecans from producer Y, and 
750,000 inshell pecans from producer Z. First handler A would collect 
$2,000 (100,000 pounds x $0.02 per pound inshell pecans) from producer 
X, $10,000 (250,000 pounds x $0.04 per pound shelled pecans) from 
producer Y, and $15,000 (750,000 pounds x $0.02 per pound inshell 
pecan) from producer Z. First handler A would remit the assessment 
collected totaling $27,000 ($2,000 + $10,000 + $15,000) to the Board. 
If a producer is acting as its own first handler, the producer would be 
required to remit its individual assessments. Assessments owed would be 
due to the Board by the 10th calendar day of the month following the 
end of the previous month. As an example, assessments for pecans 
received in June would be due to the Board by July 10th.
    Importer assessments would be collected through Customs. If Customs 
did not collect the assessment from an importer, the importer would be 
responsible for paying the assessment directly to the Board by the 10th 
calendar day of the month following the end of the previous month after 
the pecans were imported into the United States.
    Domestic inshell pecans are routinely exported to Mexico, shelled, 
and imported into the United States as shelled pecans. The intent of 
the Order is not to double assess such pecans. For pecans produced in 
the United States, shipped to locations outside the United States for 
shelling, and imported back into the United States, assessments would 
be owed on the pecans produced in the United States and would be 
remitted by the first handler. If assessments are being collected 
through Customs, the importer would need to request a refund from the 
Board and provide proof that assessments had been previously remitted 
by the first handler. For importers who remit assessments directly to 
the Board, the importers would have to provide documentation that 
assessments had been paid by the first handler. As an example, if 
producer A, acting as its own first handler, exports 100,000 pounds of 
inshell pecans to Mexico to be shelled, that individual would be 
required to remit to the Board assessments owed on the 100,000 pounds 
of inshell pecans. When Importer B imports the 50,000 pounds of shelled 
pecans, the importer would need to provide documentation that 
substantiates that assessments were remitted by the producer A.
    Section 1223.52(e)(2) of the Order would prescribe the Harmonized 
Tariff Schedule (HTS) of the United States categories covered under the 
program. Imported commodities are assigned codes via the HTS with the 
first numbers denoting the heading, which is a broad description of the 
commodity, and the subsequent numbers denoting the subheadings, which 
specify the commodity in greater detail. In the event an HTS number 
subject to assessment changed and the change is merely a replacement of 
a previous number and has no impact on the description of the pecans 
involved, assessments would continue to be collected based on the new 
number.
    Section 1223.520 of the Order would provide authority for the Board 
to impose a late payment charge and interest for assessments not 
received within 30 calendar days of the date assessments were due. 
There would be a one-time late payment charge of five percent of the 
assessments due. In addition, there would be a one percent per month 
interest charge on the outstanding balance, including any late payment 
and accrued interest. Interest would accrue monthly until the 
outstanding balance would be paid to the Board.

De Minimis

    The proposed Order would provide an exemption to assessment of 
producers whose production volume was less than 50,000 pounds of 
inshell pecans (25,000 pounds of shelled pecans) on average for four 
fiscal periods (the fiscal period for which the exemption is claimed 
and the previous three fiscal periods). The exemption would also apply 
to importers whose import volume was less than 50,000 pounds of inshell 
pecans (25,000 pounds of shelled pecans) on average for four fiscal 
periods (the fiscal period for which the exemption is claimed and the 
previous three fiscal periods). The Federal Marketing Order (FMO) 
regulating the handling of pecans defines a producer or grower as one 
who produces ``a minimum of 50,000 pounds of inshell pecans'' or who 
owns ``a minimum of 30 pecan acres''. Record evidence in the 2015 FMO 
promulgation hearings--including witness testimonies and a study 
entitled ``Economic Analysis of the Implementation of a Federal 
Marketing Order for Pecans''--verified that 50,000 pounds of inshell 
pecans or 30 pecan acres was an acceptable threshold for distinguishing 
a commercial pecan producer from a hobby farmer.
    This proposal prescribes an average of four fiscal periods of 
production or imports to determine whether an entity is subject to 
assessment. For quantifying the number of domestic producers of pecans, 
data from the 2017 Census of Agriculture, representing a single year, 
is the best resource available to USDA. Regarding importers, USDA used 
a six-year average instead of a four-year average to maintain 
consistency across analyses in this proposal. Finally, all data used in 
this analysis is reflective of a calendar year, not a fiscal year. 
NASS, who publishes the Census of

[[Page 59622]]

Agriculture, reports data on a calendar year basis. USDA analyzed 
Customs data by calendar year for consistency with NASS. In 2017, NASS 
estimated pecan production for 12 states. Every five years, following 
the Census of Agriculture, NASS reviews production for each commodity 
and evaluates the inclusion of states in its annual estimating program.
    To determine the number of domestic producers that would be 
assessed or exempt from assessment, USDA first estimated the minimum 
number of acres required to produce 50,000 pounds, inshell, of pecans 
for 12 states. To accomplish this, USDA divided the de minimis 
threshold of 50,000 pounds, inshell, by the 2017 yield estimates for 
each of the 12 states. These yield estimates, along with the resulting 
minimum number of acres to produce 50,000 pounds, inshell, of pecans 
are shown in Table 9. Next, USDA used each state's minimum number of 
acres to find the number of operations that had pecan bearing acreage 
that would enable them to produce at least 50,000 pounds, inshell, of 
pecans, based on data from the 2017 Census of Agriculture.
[GRAPHIC] [TIFF OMITTED] TP22SE20.033

    Table 10 depicts the number of producers and importers that would 
be assessed and exempt from assessment under the de minimis threshold 
of 50,000 pounds, inshell, of pecans. According to the 2017 Census of 
Agriculture, there were 15,608 operations with bearing acreage of 
pecans in the U.S. in 2017. Based on data from Customs and Border 
Protection (Customs), there were 190 entities that imported shelled or 
inshell pecans between 2014 and 2019. USDA estimates that of the total 
15,798 producers and importers of pecans, 1,061, or seven percent, 
would be assessed and 14,737, or 93 percent, would be exempt from 
assessment.
    USDA seeks comment on whether this de minimis provides a good 
representation of the industry for assessments collected and board 
representation.
[GRAPHIC] [TIFF OMITTED] TP22SE20.034


[[Page 59623]]


    Using NASS data, USDA estimates 2017 pecan production to amount to 
more than 316 million pounds, inshell. Customs data shows total imports 
of shelled and inshell pecans to average 244.5 million pounds, on an 
inshell basis, from 2014 to 2019.\2\ Together, total volume of pecans 
in the U.S. market is almost 561 million pounds, inshell, as shown in 
Table 11. Assessed volume amounts to 251 million pounds, inshell, for 
producers and 244 million pounds, inshell, for importers. Total 
assessed volume multiplied by the assessment rate of $0.02 per pound of 
inshell pecans (equivalent to $0.04 per pound of shelled pecans) 
results in a total assessment revenue of nearly $10 million.\3\
---------------------------------------------------------------------------

    \2\ For quantifying the number of domestic producers of pecans, 
data from the 2017 Census of Agriculture, representing a single 
year, is the best resource available to USDA. The Census of 
Agriculture is only published every five years. Regarding importers, 
USDA used a six-year average to maintain consistency across analyses 
in this proposal.
    \3\ In its proposal, NPF estimated that 4,300 growers would be 
subject to assessment under this proposed Order, and that assessment 
revenue would range from $10.5 million to $11.6 million. The 
variance in the number of assessed growers and the amount of 
assessment revenue estimated by USDA and by NPF is due to differing 
methods of analysis, and different assumptions made.
[GRAPHIC] [TIFF OMITTED] TP22SE20.035

    In addition to the proposed exemption of 50,000 pounds of pecans on 
an inshell basis or 25,000 pounds of pecans on a shelled basis, USDA 
considered other options for a de minimis threshold. First, USDA 
considered a de minimis exemption for growers with less than 30 acres 
of pecans, aligning with one of the definitions of producer or grower 
in the FMO. A de minimis exemption of less than 30 acres could not 
apply to pecan importers, and therefore would not be fairly applied to 
all those subject to the program. Thus, this exemption is not contained 
in this proposal.
    In the pecan FMO, handlers who handle at least 1,000 pounds of 
pecans, on an inshell basis, are subject to assessment. If this de 
minimis exemption of less than 1,000 pounds of pecans, on an inshell 
basis, were applied to pecan growers, then about 50 percent of growers 
would be subject to assessment. Of these assessed growers, nearly half 
would operate between 5 and 15 bearing acres of pecans, therefore 
placing a significant burden on smaller growers to fund the program. 
Thus, this exemption is not contained in this proposal.
    Finally, USDA considered a de minimis exemption which mirrors the 
definition of a small pecan grower and small pecan importer according 
to the Small Business Administration (SBA). The SBA size standard for a 
small pecan grower is annual sales receipts of no more than $1 million. 
The SBA size standard for small pecan importer (equivalent to 
``Postharvest crop activities'') is annual receipts equal to no more 
than $30 million. Tying the de minimis exemption to these differing SBA 
size standards becomes problematic when considering equitable 
contributions to the proposed program. This is true not only when 
evaluating contributions from each sector but also within the 
respective sectors. A de minimis exemption tied to annual sales 
receipts may overly burden growers and importers who produce or import 
high annual sales receipts of pecans.
    AMS seeks comments on the proposed de minimis exemption, 
particularly on whether the proposed level is appropriate to ensure 
equitable contribution and representation from both domestic producers 
and importers, or if modification to the exemption level is needed. 
Please provide data to substantiate any recommendation.

Exemptions

    The proposed Order would provide for two exemptions. First, as 
described in the previous section, producers who produce domestically 
and importers that import less than 50,000 pounds of inshell pecans 
(25,000 pounds of shelled pecans) on average for four fiscal periods 
(the fiscal period for which the exemption is claimed and the previous 
three fiscal periods) would be exempt.
    Producers or importers seeking an exemption would apply to the 
Board for an exemption prior to the start of the fiscal period. This 
would be an annual exemption; entities would have to reapply each year. 
They would have to certify that they expect to produce domestically or 
import less than 50,000 pounds of inshell pecans (25,000 pounds of 
shelled pecans) on average for four fiscal periods (the fiscal period 
for which the exemption is claimed and the previous three fiscal 
periods). The Board could request documentation to support the 
exemption claim, such as past sales or import data. The Board would 
then issue, if deemed appropriate, a certificate of exemption to the 
eligible producer or importer.
    Producers and importers who received an exemption but domestically 
produced or imported more than 50,000 pounds of inshell pecans (25,000 
pounds of shelled pecans) on average for four fiscal periods (the 
fiscal period for which the exemption is claimed and the previous three 
fiscal periods) during the fiscal period would be obligated to pay the 
applicable assessments.
    Producers and importers who are exempt from assessments would be 
eligible for a refund of assessments collected. Requests for assessment 
refunds would be submitted to the Board within 90 days of the last day 
of the fiscal period when assessments were collected. The Board would 
refund such assessments no later than 60 calendar days after receipt of 
information justifying the exemption.

[[Page 59624]]

    The Board could develop additional procedures to administer the 
exemption as appropriate. Such procedures would be implemented through 
rulemaking by the Secretary.
    The second exemption under the proposed Order would be for organic 
pecans. Under section 501 of the Federal Agriculture Improvement and 
Reform Act of 1996 (FAIR Act) (7 U.S.C. 7401), a producer who operates 
under an approved National Organic Program (NOP) (7 CFR part 205) 
system plan, and domestically produces pecans that are certified 
``organic'' or ``100 percent organic'' (as defined in the NOP) would be 
eligible for exemption. The exemption would apply to all certified 
``organic'' or ``100 percent organic'' pecans regardless of whether the 
pecans are produced by a person who produces conventional or nonorganic 
pecans. Likewise, an importer who imports pecans that are certified as 
``organic'' or ``100 percent organic'' under the NOP, or certified as 
``organic'' or ``100 percent organic'' under a U.S. equivalency 
arrangement established under the NOP, would be exempt from the payment 
of assessments.

Refunds From Escrow Account

    Pursuant to section 517 of the 1996 Act, Sec.  1223.54 of the 
proposed Order would specify the refund procedures if the initial 
referendum does not pass. The NPF has proposed that the proposed Order 
be voted in a referendum of producers and importers no later than three 
years after assessments first begin under the Order. The Board shall 
establish an interest bearing escrow account with a financial 
institution that is a member of the Federal Reserve System and would 
deposit into such account an amount equal to ten percent of the 
assessments collected during the period beginning on the effective date 
of the Order and ending on the date the Secretary announces the results 
of the required referendum.
    If the required referendum fails, the Board shall promptly pay 
refunds of assessments to all producers and importers that have paid 
assessments during the period beginning on the effective date of the 
Order and ending on the date the Secretary announces the results of the 
required referendum in the manner specified in the proposed Order. 
Producers and importers shall notify the Board, in a manner specified 
by the Secretary, within 60 days after the announcement of the 
referendum of their demand to receive a refund.
    If the amount deposited in the escrow account is less than the 
amount of all refunds that producers and importers subject to the Order 
have a right to receive, the Board shall prorate the amount deposited 
in such account among all producers and importers who desire a refund 
of assessments paid no later than 90 days after the required referendum 
results are announced by the Secretary.
    If the proposed Order is approved by the required referendum 
conducted under this section, the Board would close the escrow account 
and all funds would be available to the Board under Sec.  1223.50.

Promotion, Research and Information

    Pursuant to section 516 of the 1996 Act, Sec. Sec.  1223.55 through 
1223.57 of the proposed Order would detail requirements regarding 
promotion, research and information programs, plans and projects 
authorized under the Order. The Board would develop and submit to the 
Secretary for approval programs, plans and projects regarding 
promotion, research, education, and other activities, including 
consumer and industry information and advertising designed to, among 
other things, maintain and expand markets for pecans, and develop new 
uses for pecans. The Board would be required to evaluate each plan and 
program to ensure that it contributes to an effective promotion 
program. The Order would also require that, at least once every five 
years, the Board fund an independent evaluation of the effectiveness of 
the Order and programs conducted by the Board.
    Finally, the Order would specify that any patents, copyrights, 
trademarks, inventions, product formulations and publications developed 
through the use of funds received by the Board would be the property of 
the U.S. Government, as represented by the Board. These along with any 
rents, royalties and the like from their use would be considered income 
subject to the same fiscal, budget, and audit controls as other funds 
of the Board, and could be licensed with approval of the Secretary.

Reports, Books and Records

    Pursuant to section 515 of the 1996 Act, Sec. Sec.  1223.60 through 
1223.62 specify the reporting and recordkeeping requirements under the 
proposed Order as well as requirements regarding confidentiality of 
information.
    Producers and first handlers would be required to submit 
periodically to the Board certain information as the Board may request. 
Since first handlers would be obligated to collect and remit 
assessments owed to the Board, the first handlers would be required to 
submit a report at the time assessments are remitted. Producers who are 
acting as their own first handler would also be required to submit a 
report at the time assessments are remitted. Specifically, the report 
submitted to the Board would include, but is not be limited to, the 
producer and handlers' name, address, and telephone number; the pounds 
produced or handled; and the pounds of pecans for which assessments 
were paid. Producers who received a certificate of exemption from the 
Board would not have to submit such a report to the Board.
    Likewise, importers who pay their assessments directly to the Board 
would be required to submit a report to the Board that would include, 
but not be limited to, the importer's name, address, and telephone 
number; the pounds of pecans imported to the United States; the pounds 
of pecans for which assessments were paid. Importers would submit this 
report at the same time they remit their assessments to the Board. 
Importers who paid their assessments through Customs would not have to 
submit such reports because Customs would collect this information upon 
entry.
    Additionally, producers, first handlers and importers including 
those who were exempt, would be required to maintain books and records 
needed to verify any required reports. Such books and records would be 
required to be made available during normal business hours for 
inspection by the Board's or USDA's employees or agents. Producers, 
first handlers, and importers would be required to maintain such books 
and records for three years beyond the applicable fiscal period.
    The Order would also require that all information obtained from 
persons subject to the Order as a result of proposed recordkeeping and 
reporting requirements would be kept confidential by all officers, 
employees, and agents of the Board and USDA. Such information could 
only be disclosed if the Secretary considered it relevant, and the 
information were revealed in a judicial proceeding or administrative 
hearing brought at the direction or at the request of the Secretary or 
to which the Secretary or any officer of USDA were a party. Other 
exceptions for disclosure of confidential information would include the 
issuance of general statements based on reports or on information 
relating to a number of persons subject to the Order, if the statements 
did not identify the information furnished by any person, or the 
publication, by direction of the Secretary, of the name of any person 
violating the Order and a statement of

[[Page 59625]]

the particular provisions of the Order violated.

Miscellaneous Provisions

Referenda

    Pursuant to section 518 of the 1996 Act, Sec.  1223.71(a)(1) of the 
proposed Order specifies that the program would be implemented, and a 
referendum conducted not later than three years after assessments first 
begin under the Order. The Order would continue if approved by a 
majority of producers and importers voting in the referendum who, 
during a representative period determined by the Secretary, were 
engaged in the production or importation of pecans into the United 
States.
    Section 1223.71(b) of the proposed Order specifies criteria for 
subsequent referenda. Under the Order, a referendum would be held to 
ascertain whether the program should continue, be amended, or 
terminated. This section specifies that a referendum would be held 
every seven years to determine whether producers and importers favor 
continuation of the Order. The Order would continue if favored by a 
majority of producers and importers voting in the referendum. 
Additionally, a referendum could be conducted at the request of the 
Board. A referendum could also be conducted at the request of 10 
percent or more of the number of persons eligible to vote in a 
referendum under the Order. Finally, a referendum could be conducted at 
any time as determined by the Secretary.

Other Miscellaneous Provisions

    Sections 1223.70 and 1223.72 through 1223.78 describe the rights of 
the Secretary; authorize the Secretary to suspend or terminate the 
Order when deemed appropriate; prescribe proceedings after termination; 
address personal liability, separability, and amendments; and provide 
OMB control numbers. These provisions are common to all research and 
promotion program authorized under the 1996 Act.

Referenda Procedures

    Sections 1223.100 through 1223.107 of the proposed Order would 
specify procedures for the conduct of referenda. The sections cover the 
definitions, voting instructions, use of subagents, ballots, the 
referendum report, and confidentiality of information. Producers and 
importers eligible to vote in the referenda would mean any person, 
during the representative period, that was subject to the Order. Each 
eligible producer or importer would be entitled to cast only one 
ballot. USDA would conduct the referenda. USDA would announce the 
voting period; mail ballots to eligible producers and importers; 
tabulate the results; prepare a report; and announce the results to the 
public. The ballots and other information or reports that would 
disclose any person's vote would be held confidential. The procedures 
would be applicable for the initial referendum and future referenda.

Initial Regulatory Flexibility Analysis

    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (5 U.S.C. 601-612), USDA has considered the economic 
impact of this action on small entities. USDA has prepared this Initial 
Regulatory Flexibility Analysis, the purpose of which is to fit 
regulatory actions to the scale of businesses subject to such actions 
in order that small businesses would not be unduly or 
disproportionately burdened.

Need for Regulation

    NPF stated in its proposal that the greatest challenge facing the 
pecan industry is supply outpacing demand. Based on worldwide planting 
and crop data, NPF estimates that supply would exceed demand by 15 
percent in 2027. NPF believes that the establishment of a national 
research and promotion program for pecans, funded by assessments on 
both domestic producers and importers, would help the industry address 
this challenge.
    In 2016, the U.S. pecan industry favored the establishment of a 
marketing order for pecans grown in Alabama, Arkansas, Arizona, 
California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, 
North Carolina, New Mexico, Oklahoma, South Carolina, and Texas. The 
program authorizes collection of industry data; research and promotion 
activities; regulations on grade, size, quality, pack and container; 
and is financed by assessments paid by handlers of pecans grown in the 
production area. Over the past several years, the marketing order 
program has launched marketing campaigns to increase demand for pecans.
    According to the NPF, the proposed research and promotion program 
will benefit domestic producers and importers of pecans, thereby 
justifying the collection of assessments on both domestic production 
and imports. The NPF proposal indicates that imported product accounts 
for approximately 39 percent of pecans being supplied to the United 
States. With mandatory assessments applied to both domestic production 
and imports, the proposed Order would be able to fund marketing 
campaigns focused on creating increased demand for pecans in the United 
States and globally. The NPF concluded that the marketing order would 
continue to have an important role within the industry and the intent 
is that the two programs would work together for the benefit of the 
entire pecan industry. The research and promotion program would 
concentrate its efforts on activities that would maintain and expand 
markets for pecans, strengthening its position in the marketplace. The 
marketing order would continue its primary responsibility of collection 
and distribution of industry data to empower stakeholders with accurate 
and timely information. Additionally, the marketing order provides the 
authority for the pecan industry to recommend on grade, size, quality, 
pack and container requirements.

Objectives of the Action

    The purpose of the program would be to strengthen the position of 
pecans in the marketplace, maintain and expand markets for pecans, and 
develop new uses for pecans.

Legal Basis for Action

    The proposed Order is authorized under the 1996 Act which 
authorizes USDA to establish agricultural commodity research and 
promotion orders which may include a combination of promotion, 
research, industry information, and consumer information activities 
funded by mandatory assessments. These programs are designed to 
maintain and expand markets and uses for agricultural commodities.
    USDA currently administers a marketing order for pecans grown in 
Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, 
Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, 
South Carolina, and Texas which is authorized under the Agricultural 
Marketing Agreement Act of 1937. The purpose of marketing orders, in 
general, is to stabilize market conditions, allowing industries to work 
together to solve marketing problem, improving profitability. Marketing 
order programs' mandatory assessments are paid by handlers within the 
designated production areas. The pecan marketing order authorizes 
collection of industry data; research and promotion activities; 
regulations on grade, size, quality, pack and container; and is 
financed by assessments paid by handlers of pecans grown in the 
production area.
    The proposed pecan research and promotion program is national in 
scope, financed by an assessment on pecan producers and importers, and 
authorizes

[[Page 59626]]

research and promotion activities. The purpose of the proposed Order 
would be to strengthen the position of pecans in the marketplace, 
maintain and expand markets for pecans, and develop new uses for 
pecans. USDA has not identified any relevant Federal rules that 
duplicate, overlap, or conflict with this proposed rule.

Potentially Affected Small Entities

    In 13 CFR part 121, the Small Business Administration (SBA) defines 
the threshold at which an operation would be considered ``small'' based 
on its North American Industry Classification System (NAICS) Code. For 
Tree Nut Farming operations (NAICS Code 111335) and Fruit and Tree Nut 
Combination Farming operations (NAICS Code 111336), an operation is 
considered to be ``small'' if its annual receipts total no more than $1 
million. This standard applies to U.S. pecan producers.
    Importers and first handlers of inshell and shelled pecans (HTS 
Codes 0802901000 and 0802901500, respectively) belong to the industry 
classification of Postharvest Crop Activities (NAICS Code 115114). 
``Postharvest crop activities'' include nut hulling and shelling, 
sorting, grading, packing, and cooling. An operation that meets this 
definition is considered to be ``small'', per the SBA, if its annual 
receipts equal no more than $30 million. Table 12 depicts the number of 
pecan producers, importers, and handlers that would be considered small 
under these SBA standards.
    According to the 2017 Census of Agriculture, published by NASS in 
2019, there were 15,608 farms with pecan bearing acreage. Of these 
15,608 farms, 440 sold pecans whose market value met or exceeded $1 
million. Based on these figures, 97 percent of U.S. pecan producers are 
considered to be ``small'' under the SBA standards. USDA recognizes the 
potential inclusion in its count of ``small'' farms those farms whose 
sales of pecans were exactly $1 million in market value; however, USDA 
lacks the data to remedy this, and the number of farms who meet this 
criterion is likely quite small.
[GRAPHIC] [TIFF OMITTED] TP22SE20.036

    According to data from Customs, there were 190 importers of inshell 
and shelled pecans from 2014 to 2019. Of these, four importers had a 
six-year average sales value of pecans which exceeded $30 million. The 
portion of pecan importers that would be considered to be ``small'' 
under the SBA standards, therefore, is 98 percent.
    The definition of a ``small'' importer also applies to a first 
handler; that is, annual receipts which exceed $30 million. According 
to the American Pecan Council (APC), there were 104 first handlers who 
reported pecans handled in crop year 2018. Of these, the APC estimates 
that about 75 percent recorded annual receipts exceeding $30 million.
    Of the 15,902 total entities expected to be impacted by this 
action, including producers, importers, and first handlers, about 97 
percent would be considered to be ``small'' according to their 
respective SBA size standards.

Compliance Requirements

    This proposal would impose a reporting and recordkeeping burden on 
producers, importers, and first handlers of pecans. Producers and 
importers who domestically produce or import less than 50,000 pounds of 
inshell pecans (25,000 pounds of shelled pecans) on average for four 
fiscal periods (the fiscal period for which the exemption is claimed 
and the previous three fiscal periods) could submit to the Board an 
application for exemption from paying assessments. Of the 15,168 
domestic producers considered to be small under SBA standards, 14,618 
of them, or 96 percent, produced less than 50,000 pounds, inshell, of 
pecans, and would be exempt from assessment. Of the 186 importers 
considered to be small under SBA standards, 119 of them, or 64 percent, 
imported less than 50,000 pounds, inshell of pecans, and would also be 
exempt from assessment. The reporting and recordkeeping burden to file 
an application for exemption from assessment would impact a total of 
14,737 producers and importers considered to be small under their 
respective SBA size standards. Importers, and first handlers, who 
collect the assessments from producers, would be required to file a 
report listing pecans imported or received from each producer. This 
report would place a reporting and recordkeeping burden on a total of 
149 importers and first handlers considered to be small under their SBA 
size standard of annual receipts of no more than $30 million.
    These forms are being submitted to OMB for approval under OMB 
Control No. 0581-NEW. Specific burdens for the forms are detailed later 
in this document in the section titled Paperwork Reduction Act. As with 
all Federal promotion programs, reports and forms are periodically 
reviewed to reduce information requirements and duplication by industry 
and public sector agencies.

Alternatives To Minimize Impacts of the Rule

    Regarding alternatives, USDA considered de minimis exemptions of 30 
acres of pecans, 1,000 pounds, inshell, of pecan volume, and $1 million 
in annual pecan sales receipts. These alternatives, which are fully 
discussed in the section titled De Minimis, were rejected in favor of 
the industry-proposed de minimis exemption of 50,000 pounds, inshell, 
or 25,000 pounds, shelled. USDA also considered the alternative of no 
action; that is, the status quo. This alternative, however,

[[Page 59627]]

would leave the pecan industry without the tools of a research and 
promotion program to strengthen the position of pecans in the 
marketplace, maintain and expand markets for pecans, and develop new 
uses for pecans. In place of a research and promotion program, the NPF 
discussed amending the Agricultural Marketing Agreement Act of 1937, 
which provides authority for the pecan marketing order. The NPF stated 
in its proposal for a pecan research and promotion program that it 
decided not to move forward with this alternative due to the time and 
costs involved in amending U.S. law.

Outreach

    Regarding outreach efforts, NPF conducted sessions earlier in 2020 
throughout the United States in different States and regions. Many were 
held in conjunction with regional and state organization meetings where 
both pecan producers and importers participated. They also presented at 
the National Pecan Shellers Association (NPSA) mid-winter conference. 
NPSA supports and promotes the interest of pecan shellers and the 
global industry. Approximately 13 sessions were held across the United 
States. NPF also had information regarding the proposed program 
published in April 2020 editions of the ``The Pecan Grower'' and 
``Pecan South'' magazines. ``The Pecan Grower'' is the official 
publication of the Georgia Pecan Growers Association, with nearly 
three-thousand subscribers including growers, researchers, extension 
agents and agribusinesses. ``Pecan South'' is a magazine for growers, 
processors, commercial vendors, and those interested in pecans. It 
provides to its forty-six hundred plus subscribers U.S. pecan 
production information; industry news and events; and market-related 
issues, both domestic and international. In the articles, NPF 
elaborated the work it has been doing to establish a research and 
promotion program for pecans that would assess producers and importers.
    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.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), AMS announces its intention to request an approval of a 
new information collection and recordkeeping requirements for the 
proposed pecan program.
    Title: Advisory Committee or Research and Promotion Background 
Information.
    OMB Number for background form AD-755: (Approved under OMB No. 
0505-0001).
    Expiration Date of Approval: 03/31/2022.
    Title: National Research, Promotion, and Consumer Information 
Programs.
    Expiration Date of Approval: 3 years from approval date.
    Type of Request: New information collection for research and 
promotion programs.
    Abstract: The information collection requirements in the request 
are essential to carry out the intent of the 1996 Act. The information 
collection concerns a proposal received by USDA for a national research 
and promotion program for the pecan industry. The program would be 
financed by an assessment on pecan producers and importers and would be 
administered by a board of industry members selected by the Secretary. 
The program would provide for an exemption for producers who produce 
domestically and importers that import less than 50,000 pounds of 
inshell pecans (25,000 pounds of shelled pecans) on average for four 
fiscal periods (the fiscal period for which the exemption is claimed 
and the previous three fiscal periods). A referendum would be held 
among eligible producers and importers to determine whether they favor 
implementation of the program not later than three years after 
assessments first begin under the Order. The purpose of the program 
would be to strengthen the position of pecans in the marketplace, 
maintain and expand markets for pecans, and develop new uses for pecans 
within the United States.
    In summary, the information collection requirements under the 
program concern Board nominations, exemption applications, the 
collection and refund of assessments, and referenda. For Board 
nominations, producers and importers interested in serving on the Board 
would be asked to submit a ``Nomination Form'' to the Board indicating 
their desire to serve or to nominate another industry member to serve 
on the Board. Interested persons could also submit a background 
statement outlining qualifications to serve on the Board. Except for 
the initial Board nominations, producers and importers would have the 
opportunity to submit a ``Nomination Ballot'' to the Board where they 
would vote for candidates to serve on the Board. Nominees would also 
have to submit a background information form, ``AD-755,'' to the 
Secretary to ensure they are qualified to serve on the Board. 
Organizations representing importers would be able to be certified by 
the Secretary and have an opportunity to nominate importer members. 
Those such organizations would submit form ``Application for 
Certification of Organization.''
    Regarding assessments, producers and importers who domestically 
produce and import less than 50,000 pounds of inshell pecans (25,000 
pounds of shelled pecans) on average for four fiscal periods (the 
fiscal period for which the exemption is claimed and the previous three 
fiscal periods), would be exempt from assessments. Producers or 
importers would apply to the Board for an exemption prior to the start 
of the fiscal period. This would be an annual exemption; entities would 
have to reapply each year. Producers or importers could submit a 
request, ``Application for Exemption from Assessments,'' to the Board 
for an exemption from paying assessments. Producers and importers who 
would qualify as ``organic'' or ``100 percent organic'' under the NOP 
could submit an ``Organic Exemption Form'' to the Board and request an 
exemption from assessments.
    First handlers who receive assessments from producers would be 
asked to submit a ``First Handler/Importer Report'' that would 
accompany their assessments paid to the Board and report the quantity 
of pecans received during the applicable period, the quantity for which 
assessments were paid, contact information for whom they collected the 
assessment, and the country of export (for imports). Additionally, only 
importers who pay their assessments directly to the Board would be 
required to submit a report. As previously mentioned, the majority of 
importer assessments would be collected by Customs. Customs would remit 
the funds to the Board and the other information would be available 
from Customs (i.e., country of export, quantity of pecans imported).
    Importers and producers who are exempt and whose assessments were 
collected, either by Customs or a first handler, could also request a 
refund of any assessments paid to the Board. Producers and importers 
would also file a form to request a refund of assessments paid if the 
referendum fails to pass. A referendum is proposed to be conducted 
three years after the assessments first begin to determine if producers 
and importers favor continuance of the Order.
    Lastly, producers and importers eligible to vote in a referendum 
would have to complete a ballot to determine

[[Page 59628]]

whether the research and promotion program would continue.
    Information collection requirements that are included in this 
proposal include:
(1) Nomination Form
    Estimate of Burden: Public recordkeeping burden for this collection 
of information is estimated to average 0.25 hour per application.
    Respondents: Producers and importers.
    Estimated Number of Respondents: 50.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 12.5 hours.
(2) Background Statement
    Estimate of Burden: Public recordkeeping burden for this collection 
of information is estimated to average 0.25 hour per application.
    Respondents: Producers and importers.
    Estimated Number of Respondents: 50.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 12.5 hours.
(3) Nomination Ballot
    Estimate of Burden: Public recordkeeping burden for this collection 
of information is estimated to average 0.25 hour per application.
    Respondents: Producers and importers.
    Estimated Number of Respondents: 900.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 225 hours.
(4) Background Information FormAD-755 (OMB Form No. 0505-0001)
    Estimate of Burden: Public reporting for this collection of 
information is estimated to average 0.5 hour per response for each 
Board nominee.
    Respondents: Producers and importers.
    Estimated Number of Respondents: 11 (34 for initial nominations to 
the Board, 0 for the second year, and up to 11 annually thereafter).
    Estimated Number of Responses per Respondent: 1 every 3 years. 
(0.3)
    Estimated Total Annual Burden on Respondents: 17 hours for the 
initial nominations to the Board, 0 hours for the second year of 
operation, and up to 5.5 hours annually thereafter.
(5) Application for Certification of Organization
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 0.25 hour.
    Respondents: Importer organizations.
    Estimated Number of Respondents: 5.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 2.5 hours.
(6) Application for Exemption From Assessments
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 0.25 hour per producers or importer 
reporting on pecans produced domestically or imported. Upon approval of 
an application, producers and importers would receive exemption 
certification.
    Respondents: Producers and importers who produce or import less 
than 50,000 pounds of inshell pecans (25,000 pounds of shelled pecans) 
on average for four fiscal periods (the fiscal period for which the 
exemption is claimed and the previous three fiscal periods).
    Estimated Number of Respondents: 14,737.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 3,684 hours.
(7) Organic Exemption Form
    Estimate of Burden: Public recordkeeping burden for this collection 
of information is estimated to average 0.5 hours per exemption form.
    Respondents: Organic producers and importers.
    Estimated Number of Respondents: 50.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 25 hours.
(8) First Handler/Importer Report
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 0.5 hour per first handler or 
importer.
    Respondents: First handlers who collect assessments from producers 
who produce over 50,000 pounds of inshell pecans (25,000 pounds of 
shelled pecans) on average for four fiscal periods (the fiscal period 
for which the exemption is claimed and the previous three fiscal 
periods) and importers that do not remit through Customs.
    Estimated Number of Respondents: 175.
    Estimated Number of Responses per Respondent: 12.
    Estimated Total Annual Burden on Respondents: 1,050 hours.
(9) Application for Reimbursement of Assessments
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 0.25 hour.
    Respondents: Producers and importers.
    Estimated Number of Respondents: 170.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 42.5 hours.
(10) Application for Refund of Assessments Paid From Escrow
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 0.25 hour.
    Respondents: Producers and importers.
    Estimated Number of Respondents: 900.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 225 hours.
(11) Referendum Ballot
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 0.25 hour.
    Respondents: Producers and importers.
    Estimated Number of Respondents: 900.
    Estimated Number of Responses per Respondent: 0.14 (after first 
referendum they would occur once every 7 years).
    Estimated Total Annual Burden on Respondents: 31.50 hours.
(12) A Requirement To Maintain Records Sufficient To Verify Reports 
Submitted Under the Order
    Estimate of Burden: Public recordkeeping burden for keeping this 
information is estimated to average 0.5 hours per record keeper 
maintaining such records.
    Recordkeepers: Producers, first handlers and importers.
    Estimated number of recordkeepers: 15,902.
    Estimated total recordkeeping hours: 7,951 hours.
    As noted above, under the proposed program, producers through first 
handlers, and importers would be required to pay assessments and file 
reports with and submit assessments to the Board (importers through 
Customs). While the proposed Order would impose certain recordkeeping 
requirements on producers, first handlers, and importers, information

[[Page 59629]]

required under the proposed Order could be compiled from records 
currently maintained. Such records shall be retained for at least three 
years beyond the fiscal period of their applicability.
    An estimated 15,902 respondents would provide information to the 
Board (15,608 producers, 104 first handlers, and 190 importers). The 
estimated cost of providing the information to the Board by respondents 
would be $630,994. This total has been estimated by multiplying 
13,278.5 hours by ($36.08 hourly wage x 0.317 benefits = $11.44 
(benefits) + $36.08 (wage) = $47.52), $47.52 for the average mean 
hourly earnings of producers and importers plus benefits.
    Data for computation of the hourly rate for producers (Occupation 
Code 11-9013: Farmers, Ranchers, and other Agricultural Managers = 
$38.63) and importers (Occupation Code 13-1020: Buyers and Purchasing 
Agents = $33.53) was obtained from the U.S. Department of Labor's 
Bureau of Labor Statistics. The average of the producer and importer 
wages is $36.08. Data for computation of this hourly wage were obtained 
from the U.S. Department of Labor Statistics' publication, ``May 2019 
National Occupation Employment and Wage Estimates in the United 
States,'' updated May 31, 2019. This publication can also be found at 
the following website: https://www.bls.gov/oes/current/oes_nat.htm#45-0000. Data for the benefit costs of 31.7 percent was obtained by U.S. 
Department of Labor's Bureau of Labor Statistics press release dated 
Dec. 14, 2018.
    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. USDA currently oversees a marketing order for pecans grown in 
Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, 
Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, 
South Carolina, and Texas, which is authorized under the Marketing 
Agricultural Agreement Act of 1937. This program collects information 
to facilitate the administration of the program. The information 
collected by the marketing order has been carefully reviewed and it was 
determined that the information collected could not be utilized to 
facilitate the administration of the research and promotion program. 
The proposed forms would require the minimum information necessary to 
effectively carry out the requirements of the program, and their use is 
necessary to fulfill the intent of the 1996 Act. Such information can 
be supplied without data processing equipment or outside technical 
expertise. In addition, there are no additional training requirements 
for individuals filling out reports and remitting assessments to the 
Board. The forms would be simple, easy to understand, and place as 
small a burden as possible on the person required to file the 
information.
    Collecting information monthly would coincide with normal industry 
business practices. The timing and frequency of collecting information 
are intended to meet the needs of the industry while minimizing the 
amount of work necessary to fill out the required reports. The 
requirement to keep records for three years is consistent with normal 
industry practices. In addition, the information to be included on 
these forms is not available from other sources because such 
information relates specifically to individual producers, first 
handlers and importers who are subject to the provisions of the 1996 
Act. Therefore, there is no practical method for collecting the 
required information without the use of these forms.

Request for Public Comment Under the Paperwork Reduction Act

    Comments are invited on: (a) Whether the proposed collection of 
information is necessary for the proper performance of functions of the 
proposed Order and USDA's oversight of the proposed Order, including 
whether the information would have practical utility; (b) the accuracy 
of USDA's estimate of the burden of the proposed collection of 
information, including the validity of the methodology and assumptions 
used; (c) the accuracy of USDA's estimate of the principal producing 
areas in the United States for pecans; (d) the accuracy of USDA's 
estimate of the number of producers, first handlers and importers of 
pecans that would be covered under the program; (e) ways to enhance the 
quality, utility, and clarity of the information to be collected; and 
(f) ways to minimize the burden of the collection of information on 
those who are to respond, including the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology.
    Comments concerning the information collection requirements 
contained in this action should reference OMB No. 0581-NEW. In 
addition, the docket number, date, and page number of this issue of the 
Federal Register also should be referenced. Comments should be sent to 
the same addresses referenced in the ADDRESSES section of this rule.
    OMB is required to make a decision concerning the collection of 
information contained in this rule between 30 and 60 days after 
publication. Therefore, a comment to OMB is best assured of having its 
full effect if OMB receives it within 30 days of publication.
    USDA made modifications to the proponent's proposal to conform with 
other similar national research and promotion programs implemented 
under the 1996 Act.
    While the proposal set forth below has not received the approval of 
USDA, it is determined that this proposed Order is consistent with and 
would effectuate the purposes of the 1996 Act.
    A 60-day comment period is provided to allow interested persons to 
respond to this proposal. All written comments received in response to 
this rule by the date specified will be considered prior to finalizing 
this action.

List of Subjects in 7 CFR Part 1223

    Administrative practice and procedure, Advertising, Consumer 
information, Marketing agreements, Pecan promotion, Reporting and 
recordkeeping requirements.

0
For the reasons set forth in the preamble, it is proposed that title 7, 
chapter XI of the Code of Federal Regulations be amended by adding part 
1223 to read as follows:

PART 1223--PECAN PROMOTION, RESEARCH, AND INFORMATION ORDER

Subpart A--Pecan Promotion, Research, and Information Order

Definitions

Sec.
1223.1 Act.
1223.2 American Pecan Council.
1223.3 American Pecan Promotion Board.
1223.4 Conflict of interest.
1223.5 Customs or CBP.
1223.6 Department or USDA.
1223.7 First handler.
1223.8 Fiscal period.
1223.9 Importer.
1223.10 Information.
1223.11 Inshell pecans.
1223.12 Market or marketing.
1223.13 Order.
1223.14 Part and subpart.
1223.15 Pecans.
1223.16 Person.
1223.17 Producer.
1223.18 Programs, plans, and projects.
1223.19 Promotion.
1223.20 Research.
1223.21 Secretary.
1223.22 Shelled pecans.

[[Page 59630]]

1223.23 Suspend.
1223.24 Terminate.
1223.25 United States.

American Pecan Promotion Board

1223.40 Establishment and membership.
1223.41 Nominations and appointments.
1223.42 Term of office.
1223.43 Vacancies.
1223.44 Procedure.
1223.45 Compensation and reimbursement.
1223.46 Powers and duties.
1223.47 Prohibited activities.

Expenses and Assessments

1223.50 Budget and expenses.
1223.51 Financial statements.
1223.52 Assessments.
1223.53 Exemption procedures.
1223.54 Refund escrow accounts.

Promotion, Research, and Information

1223.55 Programs, plans, and projects.
1223.56 Independent evaluation.
1223.57 Patents, copyrights, trademarks, information, publications, 
and product formulations.

Reports, Books, and Records

1223.60 Reports.
1223.61 Books and records.
1223.62 Confidential treatment.

Miscellaneous

1223.70 Right of the Secretary.
1223.71 Referenda.
1223.72 Suspension and termination.
1223.73 Proceedings after termination.
1223.74 Effect of termination or amendment.
1223.75 Personal liability.
1223.76 Separability.
1223.77 Amendments.
1223.78 OMB control numbers.
Subpart B--Referendum Procedures
1223.100 General.
1223.101 Definitions.
1223.102 Voting.
1223.103 Instructions.
1223.104 Subagents.
1223.105 Ballots.
1223.106 Referendum report.
1223.107 Confidential information.
Subpart C--Administrative Provisions
1223.520 Late payment and interest charges for past due assessments.

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

Subpart A--Pecan Promotion, Research, and Information Order

Definitions


Sec.  1223.1  Act.

    Act means the Commodity Promotion, Research, and Information Act of 
1996 (7 U.S.C. 7411-7425), and any amendments thereto.


Sec.  1223.2  American Pecan Council.

    American Pecan Council or APC means that governing body of the 
Federal Marketing Order established pursuant to 7 CFR part 986 unless 
otherwise noted.


Sec.  1223.3  American Pecan Promotion Board.

    American Pecan Promotion Board or the Board means the 
administrative body established pursuant to Sec.  1223.40.


Sec.  1223.4  Conflict of interest.

    Conflict of interest means a situation in which a member or 
employee of the Board has a direct or indirect financial interest in a 
person who performs a service for, or enters into a contract with, the 
Board for anything of economic value.


Sec.  1223.5  Customs or CBP.

    Customs or CBP means Customs and Border Protection, an agency of 
the United States Department of Homeland Security.


Sec.  1223.6  Department or USDA.

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


Sec.  1223.7  First handler.

    First handler means any person who receives, shells, cracks, 
accumulates, warehouses, roasts, packs, sells, consigns, transports, 
exports, or ships (except as a common or contract carrier of pecans 
owned by another person), or in any other way puts inshell or shelled 
pecans in the stream of commerce. The term first handler includes a 
producer who handles or markets pecans of the producer's own 
production.


Sec.  1223.8  Fiscal period.

    Fiscal period means October 1 to September 30, or such other period 
as recommended by the Board and approved by the Secretary.


Sec.  1223.9  Importer.

    Importer means any person who imports pecans into the United States 
as a principal or as an agent, broker, or consignee of any person who 
produces or handles pecans outside of the United States for sale in the 
United States, and who is listed in the import records as the importer 
of record for such pecans.


Sec.  1223.10  Information.

    Information means information and programs that are designed to 
increase efficiency in processing and to develop new markets, marketing 
strategies, increase market efficiency, and activities that are 
designed to enhance the image of pecans on a national or international 
basis. These include:
    (a) Consumer information, which means any action taken to provide 
information to, and broaden the understanding of, the general public 
regarding the consumption, use, nutritional attributes, and care of 
pecans; and
    (b) Industry information, which means information and programs that 
will lead to the development of new markets, new marketing strategies, 
or increased efficiency for the pecan industry, and activities to 
enhance the image of the pecan industry.


Sec.  1223.11  Inshell pecans.

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


Sec.  1223.12  Market or marketing.

    (a) Marketing means the sale or other disposition of pecans in any 
channel of commerce.
    (b) To market means to sell or otherwise dispose of pecans in 
interstate, foreign, or intrastate commerce.


Sec.  1223.13  Order.

    Order means an order issued by the Secretary under section 514 of 
the Act that provides for a program of generic promotion, research, and 
information regarding agricultural commodities authorized under the 
Act.


Sec.  1223.14  Part and subpart.

    This part is comprised of all rules, regulations, and supplemental 
orders issued pursuant to the Act and the Order. The Pecan Promotion, 
Research, and Information Order comprises subpart A of this part.


Sec.  1223.15  Pecans.

    Pecans means and includes any and all varieties or subvarieties, 
inshell or shelled, of the Genus, species: Carya illinoinensis grown or 
imported into the United States.


Sec.  1223.16  Person.

    Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other legal entity.


Sec.  1223.17  Producer.

    Producer is synonymous with grower and means any person engaged in 
the production and sale of pecans in the United States who owns, or who 
shares in the ownership and risk of loss of such pecans.


Sec.  1223.18  Programs, plans, and projects.

    Programs, plans, and projects mean those research, promotion, and 
information programs, plans, or projects established pursuant to this 
subpart.

[[Page 59631]]

Sec.  1223.19  Promotion.

    Promotion means any action taken to present a favorable image of 
pecans to the general public and the food industry for the purpose of 
improving the competitive position of pecans both in the United States 
and abroad and stimulating the sale of pecans. This includes paid 
advertising and public relations.


Sec.  1223.20  Research.

    Research means any type of test, study, or analysis designed to 
advance the image, desirability, use, marketability, production, 
product development, or quality of pecans, including research relating 
to nutritional value, cost of production, new product development, 
varietal development, nutritional value, health research, and marketing 
of pecans.


Sec.  1223.21  Secretary.

    Secretary means the Secretary of Agriculture of the United States, 
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.


Sec.  1223.22  Shelled pecans.

    Shelled pecans are pecans whose shells have been removed leaving 
only edible kernels, kernel pieces or pecan meal. One pound of shelled 
pecans is the equivalent of two pounds inshell pecans.


Sec.  1223.23  Suspend.

    Suspend means to issue a rule under section 553 of title 5, U.S.C., 
to temporarily prevent the operation of an order or part thereof during 
a particular period of time specified in the rule.


Sec.  1223.24  Terminate.

    Terminate means to issue a rule under section 553 of title 5, 
U.S.C., to cancel permanently the operation of an order or part thereof 
beginning on a date certain specified in the rule.


Sec.  1223.25  United States.

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

American Pecan Promotion Board


Sec.  1223.40  Establishment and membership.

    (a) Establishment of the American Pecan Promotion Board. There is 
hereby established an American Pecan Promotion Board, called the Board 
in this part, comprised of seventeen (17) members, appointed by the 
Secretary from nominations as follows:
    (1) Ten (10) producer members: Three (3) each from the Eastern 
Region and Central Region and four (4) from the Western Region as 
follows:
    (i) Eastern Region shall mean the States of Alabama, Florida, 
Georgia, North Carolina, South Carolina plus any states in the United 
States, the majority of whose land mass is in the Eastern Time Zone, 
plus any U.S. territories in the Atlantic Ocean;
    (ii) Central Region shall mean the States of Arkansas, Kansas, 
Louisiana, Mississippi, Missouri, Oklahoma, Texas plus any states in 
the United States, the majority of whose land mass is in the Central 
Time Zone; and
    (iii) Western Region shall mean the States of Arizona, California, 
New Mexico plus any states in the United States, the majority of whose 
land mass is in the Mountain or Pacific Time Zones, plus Alaska and 
Hawaii and any U.S. territories in the Pacific Ocean.
    (2) Seven (7) importers.
    (b) Adjustment of membership. At least once every five years, the 
Board will review the geographical distribution of United States 
production of pecans and the quantity or value of imports. The review 
will be conducted through an audit of state crop production and Customs 
figures and Board assessment records. If warranted, the Board will 
recommend to the Secretary that the membership on the Board be altered 
to reflect any changes in the geographical distribution of domestic 
pecan production and the quantity or value of imports. If the level of 
imports fluctuates versus domestic pecan production, importer members 
may be added to or reduced from the Board.
    (c) Board's ability to serve the diversity of the industry. When 
making recommendations for appointments, the industry should take into 
account the diversity of the population served and the knowledge, 
skills, and abilities of the members to serve a diverse population, 
size of the operations, methods of production and distribution, and 
other distinguishing factors to ensure that the recommendations of the 
Board take into account the diverse interest of persons responsible for 
paying assessments, and others in the marketing chain, if appropriate.


Sec.  1223.41  Nominations and appointments.

    (a) Initial nominations for producers will be submitted to the 
Secretary by the American Pecan Council (APC), or the Department if 
appropriate. Before considering any nominations, the APC shall 
publicize the nomination process, using trade press or other means it 
deems appropriate, to reach out to all known producers for the U.S. 
market. The APC may use regional caucuses, mail or other methods to 
elicit potential nominees. The APC shall submit the nominations to the 
Secretary and recommend two nominees for each Board position specified 
in paragraph (a)(1) of Sec.  1223.40. The Department will conduct 
initial nominations for the importer members. The Secretary shall 
appoint the members of the Board.
    (b) Subsequent nominations shall be conducted as follows:
    (1) Nomination of producer members will be conducted by the Board. 
The Board staff will seek nominations for each vacant producer seat 
from each region from producers who have paid their assessments to the 
Board in the most recent fiscal period and who produced more than 
50,000 pounds of inshell pecans (25,000 pounds of shelled pecans) on 
average for four fiscal periods (the fiscal period for which 
nominations are being conducted and the previous three fiscal periods). 
Producers who produce pecans in more than one region may seek 
nomination only in the region in which they produce the majority of 
their pecans. Nominations will be submitted to the Board office and 
placed on a ballot that will be sent to producers in each region for a 
vote. Producers may only vote in the region in which they produce the 
majority of their pecans. The votes shall be tabulated for each region 
with the nominee receiving the highest number of votes at the top of 
the list in descending order by vote. Two candidates for each position 
shall be submitted to the Secretary; and
    (2) Nomination of importer members will be conducted by the Board. 
All qualified national organizations representing importer interests 
will have the opportunity to nominate members to serve on the Board. If 
the Secretary determines that there are no qualified national 
organizations representing importer interests, individual importers who 
have paid assessments to the Board in the most recent fiscal period and 
imported more than 50,000 pounds of inshell pecans (25,000 pounds of 
shelled pecans) on average for four fiscal periods (the fiscal period 
for which nominations are being conducted and the previous three fiscal 
periods) may submit nominations. The names of importer nominees shall 
be placed on a ballot and mailed to importers for a vote. The votes 
shall be tabulated with the nominee receiving the highest number of 
votes at the top of the list in descending order by vote. Two 
candidates for each importer Board position shall be submitted to the 
Secretary. To be certified by the

[[Page 59632]]

Secretary as a qualified national organization representing importer 
interests, an organization must meet the following criteria, as 
evidenced by a report submitted by the organization to the Secretary:
    (i) The organization's voting membership must be comprised 
primarily of importers of pecans;
    (ii) The organization has a history of stability and permanency and 
has been in existence for more than one year;
    (iii) The organization must derive a portion of its operating funds 
from importers;
    (iv) The organization must demonstrate it is willing and able to 
further the Act and Order's purposes; and
    (v) To be certified by the Secretary as a qualified national 
organization representing importer interests, an organization must 
agree to take reasonable steps to publicize to non-members the 
availability of open Board importer positions.
    (c) Producer and importer nominees may provide the Board a short 
background statement outlining their qualifications to serve on the 
Board.
    (d) Nominees must be in compliance with the applicable provisions 
of this subpart.
    (e) The Board must submit nominations to the Secretary at least six 
months before the new Board term begins. The Secretary shall appoint 
the members of the Board.
    (f) No two members shall be employed by a single corporation, 
company, partnership, or any other legal entity.
    (g) The Board may recommend to the Secretary modifications to its 
nomination procedures as it deems appropriate. Any such modifications 
shall be implemented through rulemaking by the Secretary.


Sec.  1223.42  Term of office.

    (a) With the exception of the initial Board, each Board member will 
serve a three-year term or until the Secretary selects his or her 
successor. Each term of office shall begin on October 1 and end on 
September 30. No member may serve more than two consecutive terms, 
excluding any term of office less than three years.
    (b) For the initial board, the terms of Board members shall be 
staggered for two, three, and four years. Determination of which of the 
initial members shall serve a term of two, three, or four years shall 
be determined at random. Those members serving an initial term of two, 
three, or four years may serve one successive three-year term.


Sec.  1223.43  Vacancies.

    (a) In the event that any member of the Board ceases to work for or 
be affiliated with the category of members from which the member was 
appointed to the Board, such position shall automatically become 
vacant.
    (b) If a member of the Board consistently refuses to perform the 
duties of a member of the Board, or if a member of the Board engages in 
acts of dishonesty or willful misconduct, the Board may recommend to 
the Secretary that the member be removed from office. If the Secretary 
finds the recommendation of the Board shows adequate cause, the 
Secretary shall remove such member from office.
    (c) Without recommendation of the Board, a member may be removed by 
the Secretary upon showing of adequate cause, including the continued 
failure by a member to submit reports or remit assessments required 
under this part, if the Secretary determines that such member's 
continued service would be detrimental to the achievement of the 
purposes of the Act.
    (d) Should the position of a member become vacant, successors for 
the unexpired terms of such member shall be appointed in the manner 
specified in Sec. Sec.  1223.40 and 1223.41, except that said 
nomination and replacement shall not be required if said unexpired 
terms are less than six months.


Sec.  1223.44  Procedure.

    (a) At a Board meeting, it will be considered a quorum when a 
majority of members are present.
    (b) At the start of each fiscal period, the Board will select a 
chairperson and vice chairperson who will conduct meetings and appoint 
committee membership throughout that period.
    (c) All Board and committee members will receive a minimum of 10 
days advance notice of all Board and committee meetings, unless an 
emergency meeting is declared by the Chairperson.
    (d) Each member of the Board will be entitled to one vote on any 
matter put to the Board, and the motion will carry if supported by one 
vote more than 50 percent of the total votes represented by the Board 
members present.
    (e) It will be considered a quorum at a committee meeting when at 
least one more than half of those assigned to the committee are 
present. Committees may also consist of individuals other than Board 
members and such individuals may vote in committee meetings. These 
committee members shall be appointed by the Chairperson and shall serve 
without compensation but shall be reimbursed for reasonable travel 
expenses, as approved by the Board.
    (f) In lieu of voting at a properly convened meeting and, when in 
the opinion of the Chairperson of the Board such action is considered 
necessary, the Board may take action if supported by one vote more than 
50 percent of the members by mail, telephone, electronic mail, 
facsimile, or any other means of communication, and all telephone votes 
shall be confirmed promptly in writing. In that event, all members and 
the Secretary must be notified and all members must be provided the 
opportunity to vote. Any action so taken shall have the same force and 
effect as though such action had been taken at a properly convened 
meeting of the Board. All votes shall be recorded in Board minutes.
    (g) There shall be no voting by proxy.
    (h) The Chairperson shall be a voting member.
    (i) The organization of the Board and the procedures for the 
conducting of meetings of the Board shall be in accordance with its 
bylaws, which shall be established by the Board and approved by the 
Secretary.


Sec.  1223.45  Compensation and reimbursement.

    The members of the Board when acting as members, shall serve 
without compensation but shall be reimbursed for reasonable travel 
expenses, as approved by the Board, incurred by them in the performance 
of their duties as Board members.


Sec.  1223.46  Powers and duties.

    The Board shall have the following powers and duties:
    (a) To administer this subpart in accordance with its terms and 
conditions and to collect assessments;
    (b) To develop and recommend to the Secretary for approval such 
bylaws as may be necessary for the functioning of the Board, and such 
rules as may be necessary to administer this subpart, including 
activities authorized to be carried out under this subpart;
    (c) To meet, organize, and select from among the members of the 
Board a chairperson, other officers, committees, and subcommittees, as 
the Board determines to be appropriate;
    (d) To employ persons, other than the Board members, or to enter 
into contracts, other than with Board members, as the Board considers 
necessary to assist the Board in carrying out its duties and to 
determine the compensation and specify the duties of such persons, or 
to determine the contractual terms of such parties;
    (e) To develop programs and projects, and enter into contracts or 
agreements,

[[Page 59633]]

which must be approved by the Secretary before becoming effective, for 
the development and carrying out of programs or projects of research, 
information, or promotion, and the payment of costs thereof with funds 
collected pursuant to this subpart. Each contract or agreement shall 
provide that any person who enters into a contract or agreement with 
the Board shall develop and submit to the Board a proposed activity; 
keep accurate records of all of its transactions relating to the 
contract or agreement; account for funds received and expended in 
connection with the contract or agreement; make periodic reports to the 
Board of activities conducted under the contract or agreement; and make 
such other reports available as the Board or the Secretary considers 
relevant. Any contract or agreement shall provide that:
    (1) The contractor or agreeing party shall develop and submit to 
the Board a program, plan, or project together with a budget or budgets 
that shall show the estimated cost to be incurred for such program, 
plan, or project;
    (2) The contractor or agreeing party shall keep accurate records of 
all its transactions and make periodic reports to the Board of 
activities conducted, submit accounting for funds received and 
expended, and make such other reports as the Secretary or the Board may 
require;
    (3) The Secretary may audit the records of the contracting or 
agreeing party periodically; and
    (4) Any subcontractor who enters into a contract with a Board 
contractor and who receives or otherwise uses funds allocated by the 
Board shall be subject to the same provisions as the contractor;
    (f) To prepare and submit for approval of the Secretary fiscal 
period budgets in accordance with Sec.  1223.50;
    (g) To invest assessments collected under this part in accordance 
with Sec.  1223.50;
    (h) To maintain such records and books and prepare and submit such 
reports and records from time to time to the Secretary as the Secretary 
may prescribe; to make appropriate accounting with respect to the 
receipt and disbursement of all funds entrusted to it; and to keep 
records that accurately reflect the actions and transactions of the 
Board;
    (i) To cause its books to be audited by a competent auditor at the 
end of each fiscal period and at such other times as the Secretary may 
request, and to submit a report of the audit directly to the Secretary;
    (j) To give the Secretary the same notice of meetings of the Board 
as is given to members in order that the Secretary's representative(s) 
may attend such meetings, and to keep and report minutes of each 
meeting of the Board to the Secretary;
    (k) To act as intermediary between the Secretary and any producer, 
first handler, or importer;
    (l) To furnish to the Secretary any information or records that the 
Secretary may request;
    (m) To receive, investigate, and report to the Secretary complaints 
of violations of this subpart;
    (n) To recommend to the Secretary such amendments to this subpart 
as the Board considers appropriate; and
    (o) To work to achieve an effective, continuous, and coordinated 
program of promotion, research, consumer information, evaluation, and 
industry information designed to strengthen the pecan industry's 
position in the marketplace; maintain and expand existing markets and 
uses for pecans; and to carry out programs, plans, and projects 
designed to provide maximum benefits to the pecan industry.


Sec.  1223.47  Prohibited activities.

    The Board may not engage in, and shall prohibit the employees and 
agents of the Board from engaging in:
    (a) Any action that would be a conflict of interest; and
    (b) Using funds collected by the Board under this subpart to 
undertake any action for the purpose of influencing legislation or 
governmental action or policy, by local, state, national, and foreign 
governments, other than recommending to the Secretary amendments to 
this subpart.
    (c) No program, plan, or project including advertising shall be 
false or misleading or disparaging to another agricultural commodity. 
Pecans of all origins shall be treated equally.

Expenses and Assessments


Sec.  1223.50  Budget and expenses.

    (a) At least 60 days prior to the beginning of each fiscal period, 
and as may be necessary thereafter, the Board shall prepare and submit 
to the Secretary a budget for the fiscal period covering its 
anticipated expenses and disbursements in administering this subpart. 
Each such budget shall include:
    (1) A statement of objectives and strategy for each program, plan, 
or project;
    (2) A summary of anticipated revenue, with comparative data for at 
least one preceding year (except for the initial budget);
    (3) A summary of proposed expenditures for each program, plan, or 
project; and
    (4) Staff and administrative expense breakdowns, with comparative 
data for at least one preceding year (except for the initial budget).
    (b) Each budget shall provide adequate funds to defray its proposed 
expenditures and to provide for a reserve as set forth in this subpart.
    (c) Subject to this section, any amendment or addition to an 
approved budget must be approved by the Secretary, including shifting 
funds from one program, plan, or project to another. Shifts of funds 
which do not cause an increase in the Board's approved budget and which 
are consistent with governing bylaws need not have prior approval by 
the Secretary.
    (d) The Board is authorized to incur such expenses, including 
provision for a reasonable reserve, as the Secretary finds are 
reasonable and likely to be incurred by the Board for its maintenance 
and functioning, and to enable it to exercise its powers and perform 
its duties in accordance with the provisions of this subpart. Such 
expenses shall be paid from funds received by the Board.
    (e) With approval of the Secretary, the Board may borrow money for 
the payment of administrative expenses, subject to the same fiscal, 
budget, and audit controls as other funds of the Board. Any funds 
borrowed by the Board shall be expended only for startup costs and 
capital outlays and are limited to the first year of operation of the 
Board.
    (f) The Board may accept voluntary contributions, but these shall 
only be used to pay expenses incurred in the conduct of programs, 
plans, and projects. Such contributions shall be free from any 
encumbrance by the donor and the Board shall retain complete control of 
their use.
    (g) The Board may also receive funds provided through the 
Department's Foreign Agricultural Service or from other sources, for 
authorized activities.
    (h) The Board shall reimburse the Secretary for all expenses 
incurred by the Secretary in the implementation, administration, and 
supervision of this subpart, including all referendum costs in 
connection with this subpart.
    (i) For fiscal periods beginning three (3) or more years after the 
date of the establishment of the Board, the Board may not expend for 
administration, maintenance, and functioning of the Board in any fiscal 
period an amount that exceeds 15 percent of the assessments and other 
income received by the Board for that fiscal period. Reimbursements to 
the Secretary required under paragraph (h) of this

[[Page 59634]]

section are excluded from this limitation on spending.
    (j) The Board may establish an operating monetary reserve and may 
carry over to subsequent fiscal periods excess funds in any reserve so 
established: Provided that the funds in the reserve do not exceed the 
last two fiscal periods' budget of expenses. Subject to approval by the 
Secretary, such reserve funds may be used to defray any expenses 
authorized under this part.
    (k) Pending disbursement of assessments and all other revenue under 
a budget approved by the Secretary, the Board may invest assessments 
and all other revenues collected under this part in:
    (1) Obligations of the United States or any agency of the United 
States;
    (2) General obligations of any State or any political subdivision 
of a State;
    (3) Interest bearing accounts or certificates of deposit of 
financial institutions that are members of the Federal Reserve System;
    (4) Obligations fully guaranteed as to principal interest by the 
United States; or
    (5) Other investments as authorized by the Secretary.


Sec.  1223.51  Financial statements.

    (a) The Board shall prepare and submit financial statements to the 
Secretary on a monthly or quarterly basis or at any other time as 
requested by the Secretary. Each such financial statement shall 
include, but not be limited to, a balance sheet, income statement, and 
expense budget. The expense budget shall show expenditures during the 
time period covered by the report, year-to-date expenditures, and the 
unexpended budget.
    (b) Each financial statement shall be submitted to the Secretary 
within 30 days after the end of the time period to which it applies.
    (c) The Board shall submit annually to the Secretary an annual 
financial statement within 90 days after the end of the fiscal period 
to which it applies.


Sec.  1223.52  Assessments.

    (a) The funds to cover the Board's expenses shall be paid from 
assessments on producers and importers, other income of the Board, and 
other funds available to the Board including those collected pursuant 
to Sec.  1223.57 and subject to the limitations contained in Sec.  
1223.57.
    (b) Each producer shall pay an assessment per pound of pecans 
produced in the United States. The collection of assessments on pecans 
produced in the United States will be the responsibility of the first 
handler receiving the pecans from producers. In the case of the 
producer acting as its own first handler, the producer will be required 
to collect and remit its individual assessments.
    (1) First handlers may remit assessments to a third-party 
collection agent under this subpart.
    (2) First handlers may also remit assessments directly to the 
Board.
    (c) Such assessments shall be levied at $0.02 per pound on all 
inshell pecans and $0.04 per pound on all shelled pecans. The 
assessment rate may be reviewed and modified with the approval of the 
Secretary. A change in the assessment rate is subject to rulemaking by 
the Secretary.
    (d) All assessment payments and reports will be submitted to the 
office of the Board. All assessment payments for a fiscal period are to 
be received no later than the 10th of the month following the end of 
the previous month. A late payment charge shall be imposed on any 
producer and importer who fails to remit to the Board, the total amount 
for which any such producer and importer is liable on or before the due 
date established by the Board on forms approved by the Secretary. In 
addition to the late payment charge, an interest charge shall be 
imposed on the outstanding amount for which the producer and importer 
is liable. The rate of interest shall be prescribed in regulations 
issued by the Secretary.
    (e) Each importer of pecans shall pay an assessment to the Board on 
pecans imported for marketing in the United States, through Customs.
    (1) The assessment rate for imported pecans shall be the same or 
equivalent to the rate for pecans produced in the United States.
    (2) The import assessment shall be uniformly applied to imported 
pecans that are identified by the number 0802.90.10.00 and 
0802.90.15.00 in the Harmonized Tariff Schedule (HTS) of the United 
States or any other numbers used to identify pecans in that schedule.
    (3) In the event that any HTS number is subject to assessment is 
changed and such change is merely a replacement of a previous number 
and has no impact on the description of pecans, assessment will 
continue to be collected based on the new numbers.
    (4) The assessment due on imported pecans shall be paid when they 
enter, or are withdrawn from warehouse, for consumption in the United 
States.
    (5) If Customs does not collect an assessment from an importer, the 
importer is responsible for paying the assessment directly to the Board 
no later than the 10th of the month following the end of the previous 
month after the assessed pecans were imported into the United States.
    (f) Persons failing to remit total assessments due in a timely 
manner may also be subject to actions under Federal debt collection 
procedures.
    (g) The Board may authorize other organizations to collect 
assessments on its behalf with the approval of the Secretary.


Sec.  1223.53  Exemption procedures.

    (a) De minimis. An exemption from payment of assessments as 
provided in Sec.  1223.52, shall be provided to producers that 
domestically produce and importers that import less than 50,000 pounds 
of inshell pecans (25,000 pounds of shelled pecans) on average for four 
fiscal periods (the fiscal period for which the exemption is claimed 
and the previous three fiscal periods) as follows:
    (1) Any producer who desires to claim an exemption from assessments 
shall file an application on a form provided by the Board, for a 
certificate of exemption for each fiscal period claiming an exemption. 
Such producer shall certify that it will domestically produce less than 
50,000 pounds of inshell pecans (25,000 pounds of shelled pecans) on 
average for four fiscal periods (the fiscal period for which the 
exemption is claimed and the previous three fiscal periods). It is the 
responsibility of the producer to retain a copy of the certificate of 
exemption.
    (2) Any importer who desires to claim an exemption from assessments 
shall file an application on a form provided by the Board, for a 
certificate of exemption for each fiscal period claiming an exemption. 
Such importer shall certify that it will import less than 50,000 pounds 
of inshell pecans (25,000 pounds of shelled pecans) on average for four 
fiscal periods (the fiscal period for which the exemption is claimed 
and the previous three fiscal periods). It is the responsibility of the 
importer to retain a copy of the certificate of exemption.
    (3) On receipt of an exemption application, the Board shall 
determine whether an exemption may be granted for that fiscal period. 
The Board will then issue, if deemed appropriate, a certificate of 
exemption to the producer or importer which is eligible to receive one 
covering that fiscal period. The Board may request persons applying for 
the exemption to provide supporting documentation, such as past sales 
receipts or import data.
    (4) The Board, with the Secretary's approval, may require persons 
receiving an exemption from assessments to

[[Page 59635]]

provide to the Board reports on the disposition of exempt pecans and, 
in the case of importers, proof of payment of assessments.
    (5) The exemption will apply immediately following the issuance of 
the certificate of exemption.
    (6) Producers and importers who received an exemption certificate 
from the Board but domestically produced or imported more than 50,000 
pounds of inshell pecans (25,000 shelled of pecans) on average for four 
fiscal periods (the fiscal period for which the exemption is claimed 
and the previous three fiscal periods) during the fiscal period shall 
pay the Board the applicable assessments owed and submit any necessary 
reports to the Board pursuant to Sec.  1223.60.
    (b) Assessment refunds. Importers and producers who are exempt from 
assessment shall be eligible for a refund of assessments collected, 
either by Customs or a first handler. Requests for such assessment 
refunds must be submitted to the Board within 90 days of the last day 
in the fiscal period when assessments were collected on such producer's 
or importer's pecans. No interest will be paid on such assessments. The 
Board shall refund such assessments no later than 60 calendar days 
after receipt by the Board of information justifying the exemption from 
assessment.
    (c) Organic. (1) A producer who domestically produces pecans under 
an approved National Organic Program (7 CFR part 205) (NOP) organic 
production system plan may be exempt from the payment of assessments 
under this part, provided that:
    (i) Only agricultural products certified as ``organic'' or ``100 
percent organic'' (as defined in the NOP) are eligible for exemption;
    (ii) The exemption shall apply to all certified ``organic'' or 
``100 percent organic'' (as defined in the NOP) products of a producer 
regardless of whether the agricultural commodity subject to the 
exemption is produced by a person that also produces conventional or 
nonorganic agricultural products of the same agricultural commodity as 
that for which the exemption is claimed;
    (iii) The producer maintains a valid certificate of organic 
operation as issued under the Organic Foods Production Act of 1990 (7 
U.S.C. 6501-6522) (OFPA) and the NOP regulations issued under OFPA (7 
CFR part 205); and
    (iv) Any producer so exempted shall continue to be obligated to pay 
assessments under this part that are associated with any agricultural 
products that do not qualify for an exemption under this section.
    (2) To apply for exemption under this section, an eligible producer 
shall submit a request to the Board on an Organic Exemption Request 
Form (Form AMS-15) at any time during the fiscal period initially, and 
annually thereafter on or before the start of the fiscal period, for as 
long as the producer continues to be eligible for the exemption.
    (3) A producer request for exemption shall include the following:
    (i) The applicant's full name, company name, address, telephone and 
fax numbers, and email address;
    (ii) Certification that the applicant maintains a valid certificate 
of organic operation issued under the OFPA and the NOP;
    (iii) Certification that the applicant produces organic products 
eligible to be labeled ``organic'' or ``100 percent organic'' under the 
NOP;
    (iv) A requirement that the applicant attach a copy of their 
certificate of organic operation issued by a USDA-accredited certifying 
agent;
    (v) Certification, as evidenced by signature and date, that all 
information provided by the applicant is true; and
    (vi) Such other information as may be required by the Board, with 
the approval of the Secretary.
    (4) If a producer complies with the requirements of this section, 
the Board will grant an assessment exemption and issue a Certificate of 
Exemption to the producer within 30 days. If the application is 
disapproved, the Board will notify the applicant of the reason(s) for 
disapproval within the same timeframe.
    (5) An importer who imports pecans that are eligible to be labeled 
as ``organic'' or ``100 percent organic'' under the NOP, or certified 
as ``organic'' or ``100 percent organic'' under a U.S. equivalency 
arrangement established under the NOP, may be exempt from the payment 
of assessments. Such importer may submit documentation to the Board and 
request an exemption from assessment on certified ``organic'' or ``100 
percent organic'' pecans on an Organic Exemption Request Form (Form 
AMS-15) at any time initially, and annually thereafter on or before the 
beginning of the fiscal period, as long as the importer continues to be 
eligible for the exemption. This documentation shall include the same 
information required of a producer in paragraph (c)(3) of this section. 
If the importer complies with the requirements of this section, the 
Board will grant the exemption and issue a Certificate of Exemption to 
the importer within the applicable timeframe. Any importer so exempted 
shall continue to be obligated to pay assessments under this part that 
are associated with any imported agricultural products that do not 
qualify for an exemption under this section.
    (6) If Customs collects the assessment on exempt product under 
paragraph (c)(5) of this section that is identified as ``organic'' by a 
number in the Harmonized Tariff Schedule, the Board must reimburse the 
exempt importer the assessments paid upon receipt of such assessments 
from Customs. For all other exempt organic product for which Customs 
collects the assessment, the importer may apply to the Board for a 
reimbursement of assessments paid, and the importer must submit 
satisfactory proof to the Board that the importer paid the assessment 
on exempt organic product.
    (7) The exemption will apply immediately following the issuance of 
the Certificate of Exemption.


Sec.  1223.54  Refund escrow accounts.

    (a) The Board shall establish an interest bearing escrow account 
with a financial institution that is a member of the Federal Reserve 
System and will deposit into such account an amount equal to 10 percent 
of the assessments collected during the period beginning on the 
effective date of the Order and ending on the date the Secretary 
announces the results of the required referendum.
    (b) If the Order is not approved by the required referendum, the 
Board shall promptly pay refunds of assessments to all producers and 
importers that have paid assessments during the period beginning on the 
effective date of the Order and ending on the date the Secretary 
announces the results of the required referendum in the manner 
specified in paragraph (c) of this section.
    (c) If the amount deposited in the escrow account is less than the 
amount of all refunds that producers and importers subject to this 
subpart have a right to receive, the Board shall prorate the amount 
deposited in such account among all producers and importers who desire 
a refund of assessments paid no later than 90 days after the required 
referendum results are announced by the Secretary.
    (d) Any producer or importer requesting a refund shall submit an 
application on the prescribed form to the Board within 60 days from the 
date the results of the required referendum are announced by the 
Secretary. The producer and importer shall also submit documentation to 
substantiate that assessments were paid. Any such demand shall be made 
by such producer

[[Page 59636]]

or importer in accordance with the provisions of this subpart and in a 
manner consistent with the regulations in this part.
    (e) If the Order is approved by the required referendum conducted 
under Sec.  1223.71 then:
    (1) The escrow account shall be closed; and,
    (2) The funds shall be available to the Board for disbursement 
under Sec.  1223.50.

Promotion, Research, and Information


Sec.  1223.55  Programs, plans, and projects.

    (a) The Board shall receive and evaluate, or on its own initiative 
develop, and submit to the Secretary for approval any program, plan, or 
project authorized under this subpart. Such programs, plans, or 
projects shall provide for:
    (1) The establishment, issuance, effectuation, and administration 
of appropriate programs for promotion, research, and information, 
including producer and consumer information, with respect to pecans; 
and
    (2) The establishment and conduct of research with respect to the 
use, nutritional value, sale, distribution, and marketing of pecans, 
and the creation of new products thereof, to the end that the marketing 
and use of pecans may be encouraged, expanded, improved, or made more 
acceptable and to advance the image, desirability, or quality of 
pecans.
    (b) No program, plan, or project shall be implemented prior to its 
approval by the Secretary. Once a program, plan, or project is so 
approved, the Board shall take appropriate steps to implement it.
    (c) Each program, plan, or project implemented under this subpart 
shall be reviewed or evaluated periodically by the Board to ensure that 
it contributes to an effective program of promotion, research, or 
information. If it is found by the Board that any such program, plan, 
or project does not contribute to an effective program of promotion, 
research, or information, then the Board shall terminate such program, 
plan, or project.


Sec.  1223.56  Independent evaluation.

    The Board shall, not less often than every five years, authorize 
and fund, from funds otherwise available to the Board, an independent 
evaluation of the effectiveness of the Order and other programs 
conducted by the Board pursuant to the Act. The Board shall submit to 
the Secretary, and make available to the public, the results of each 
periodic independent evaluation conducted under this section.


Sec.  1223.57  Patents, copyrights, trademarks, information, 
publications, and product formulations.

    Patents, copyrights, trademarks, information, publications, and 
product formulations developed through the use of funds received by the 
Board under this subpart shall be the property of the U.S. Government 
as represented by the Board and shall, along with any rents, royalties, 
residual payments, or other income from the rental, sales, leasing, 
franchising, or other uses of such patents, copyrights, trademarks, 
information, publications, or product formulations, inure to the 
benefit of the Board; shall be considered income subject to the same 
fiscal, budget, and audit controls as other funds of the Board; and may 
be licensed subject to approval by the Secretary. Upon termination of 
this subpart, Sec.  1223.73 shall apply to determine disposition of all 
such property.

Reports, Books, and Records


Sec.  1223.60  Reports.

    (a) Each first handler, producer, or importer subject to this 
subpart shall be required to provide to the Board periodically such 
information as required by the Board, with the approval of the 
Secretary, which may include but not be limited to the following:
    (1) First handler must report or producer acting as its own first 
handler:
    (i) Number of pounds handled;
    (ii) Number of pounds on which an assessment was collected;
    (iii) Name, address and other contact information from whom the 
first handler has collected the assessments on each pound handled; and
    (iv) Date collection was made on each pound handled.
    (2) Unless provided by Customs, importer must report:
    (i) Number of pounds imported;
    (ii) Number of pounds on which an assessment was paid;
    (iii) Name, address, and other contact information of the importer; 
and
    (iv) Date assessment was paid on each pound imported.
    (b) These reports shall accompany the payment of the collected 
assessments.


Sec.  1223.61  Books and records.

    Each producer, first handler, and importer subject to this subpart 
shall maintain and make available for inspection by the Secretary such 
books and records as are necessary to carry out the provisions of this 
part, including such records as are necessary to verify any reports 
required. Such records shall be retained for at least 3 years beyond 
the fiscal period of their applicability.


Sec.  1223.62  Confidential treatment.

    All information obtained from books, records, or reports under the 
Act and this part shall be kept confidential by all persons, including 
all employees and former employees of the Board, all officers and 
employees and former officers and employees of contracting and 
subcontracting agencies or agreeing parties having access to such 
information. Such information shall not be available to Board members, 
producers, importers, or first handlers. Only those persons having a 
specific need for such information to effectively administer the 
provisions of this subpart shall have access to such information. Only 
such information so obtained as the Secretary deems relevant shall be 
disclosed by them, and then only in a judicial proceeding or 
administrative hearing brought at the direction, or on the request, of 
the Secretary, or to which the Secretary or any officer of the United 
States is a party and involving this subpart. Nothing in this section 
shall be deemed to prohibit:
    (a) The issuance of general statements based upon the reports of 
the number of persons subject to this subpart or statistical data 
collected therefrom, which statements will not identify the information 
furnished by any person; and
    (b) The publication, by direction of the Secretary, of the name of 
any person who has been adjudged to have violated this subpart, 
together with a statement of the particular provisions of this subpart 
violated by such person.

Miscellaneous


Sec.  1223.70  Right of the Secretary.

    All fiscal matters, programs, plans, or projects, rules or 
regulations, reports, or other substantive actions proposed and 
prepared by the Board shall be submitted to the Secretary for approval.


Sec.  1223.71  Referenda.

    (a) Required referendum. For the purpose of ascertaining whether 
the persons subject to this subpart favor the continuation, suspension, 
amendment, or termination of this subpart, the Secretary shall conduct 
a referendum among persons subject to assessments under Sec.  1223.52 
who, during a representative period determined by the Secretary, have 
engaged in the production or importation of pecans:
    (1) The required referendum shall be conducted not later than 3 
years after assessments first begin under the Order; and
    (2) The Order will be approved in a referendum if a majority of 
producers and importers vote for approval in the referendum.

[[Page 59637]]

    (b) Subsequent referenda. The Secretary shall conduct subsequent 
referenda:
    (1) For the purpose of ascertaining whether producers and importers 
favor the continuation, suspension, or termination of the Order;
    (2) Every seven years the Secretary shall hold a referendum to 
determine whether producers and importers of pecans favor the 
continuation of the Order. The Order shall continue if it is favored by 
a majority of producers and importers voting for approval in the 
referendum who have been engaged in the production or importation of 
pecans;
    (3) At the request of the Board established in this subpart;
    (4) At the request of 10 percent or more of the number of persons 
eligible to vote in a referendum as set forth under the Order; or
    (5) At any time as determined by the Secretary.


Sec.  1223.72  Suspension and termination.

    (a) The Secretary shall suspend or terminate this part or subpart 
or a provision thereof if the Secretary finds that this part or subpart 
or a provision thereof obstructs or does not tend to effectuate the 
purposes of the Act, or if the Secretary determines that this part or 
subpart or a provision thereof is not favored by persons voting in a 
referendum conducted pursuant to the Act.
    (b) The Secretary shall suspend or terminate this subpart at the 
end of the fiscal period whenever the Secretary determines that its 
suspension or termination is approved or favored by a majority of 
producers and importers voting for approval who, during a 
representative period determined by the Secretary, have been engaged in 
the production or importation of pecans.
    (c) If, as a result of a referendum the Secretary determines that 
this subpart is not approved, the Secretary shall:
    (1) Not later than 180 days after making the determination, suspend 
or terminate, as the case may be, collection of assessments under this 
subpart; and
    (2) As soon as practical, suspend or terminate, as the case may be, 
activities under this subpart in an orderly manner.


Sec.  1223.73  Proceedings after termination.

    (a) Upon the termination of this subpart, the Board shall recommend 
not more than three of its members to the Secretary to serve as 
trustees for the purpose of liquidating the affairs of the Board. Such 
persons, upon designation by the Secretary, shall become trustees of 
all of the funds and property then in the possession or under control 
of the Board, including claims for any funds unpaid or property not 
delivered, or any other claim existing at the time of such termination.
    (b) The said trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Board under any contracts or 
agreements entered into pursuant to this subpart;
    (3) From time to time account for all receipts and disbursements 
and deliver all property on hand, together with all books and records 
of the Board and the trustees, to such person or persons as the 
Secretary may direct; and
    (4) Upon request of the Secretary execute such assignments or other 
instruments necessary and appropriate to vest in such person's title 
and right to all funds, property, and claims vested in the Board or the 
trustees pursuant to this subpart.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to this subpart shall be subject to 
the same obligations imposed upon the Board and upon the trustees.
    (d) Any residual funds not required to defray the necessary 
expenses of liquidation shall be turned over to the Secretary to be 
disposed of, to the extent practical, to the pecan producer 
organizations in the interest of continuing pecan promotion, research, 
and information programs.


Sec.  1223.74  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this part, or the issuance of any amendment to this 
part, shall not:
    (a) Affect or waive any right, duty, obligation, or liability which 
shall have arisen, or which may thereafter arise in connection with any 
provision of this part; or
    (b) Release or extinguish any violation of this part; or
    (c) Affect or impair any rights or remedies of the United States, 
or of the Secretary or of any other persons, with respect to any such 
violation.


Sec.  1223.75  Personal liability.

    No member or employee of the Board shall be held personally 
responsible, either individually or jointly with others, in any way 
whatsoever, to any person for errors in judgment, mistakes, or other 
acts, either of commission or omission, as such member or employee, 
except for acts of dishonesty or willful misconduct.


Sec.  1223.76  Separability.

    If any provision of this subpart is declared invalid or the 
applicability thereof to any person or circumstances is held invalid, 
the validity of the remainder of this subpart or the applicability 
thereof to other persons or circumstances shall not be affected 
thereby.


Sec.  1223.77  Amendments.

    Amendments to this subpart may be proposed from time to time by the 
Board or by any interested person affected by the provisions of the 
Act, including the Secretary.


Sec.  1223.78  OMB control numbers.

    The control number assigned to the information collection 
requirements by the Office of Management and Budget pursuant to the 
Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, is OMB control 
number 0581-NEW, except for the Board nominee background statement form 
which is assigned OMB control number 0505-0001.

Subpart B--Referendum Procedures


Sec.  1223.100  General.

    Referenda to determine whether eligible pecan producers and 
importers favor the issuance, amendment, suspension, or termination of 
the Pecan Promotion, Research, and Information Order shall be conducted 
in accordance with this subpart.


Sec.  1223.101  Definitions.

    (a) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to redelegate, or any officer or 
employees 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) Eligible importer means any person who, during the 
representative period, was subject to the Order and required to pay 
assessments on pecans imported into the United States.
    (c) Eligible producer means any person who, during the 
representative period, was subject to the Order and required to pay 
assessments on pecans produced in the United States.
    (d) Order means subpart A of this part, the Pecan Promotion, 
Research, and Information Order.
    (e) Pecans means and includes any and all varieties or 
subvarieties, inshell and shelled, of Carya illinoinensis grown or 
imported into the United States.
    (f) Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or

[[Page 59638]]

any other legal entity. For the purpose of this paragraph (f), the term 
``partnership'' includes, but is not limited to:
    (1) A husband and a wife who have title to, or leasehold interest 
in, a pecan farm 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 and others 
contributed capital, labor, management, or other services, or any 
variation of such contributions by two or more parties.
    (g) Referendum agent or agent means the individual or individuals 
designated by the Secretary to conduct the referendum.
    (h) Representative period means the period designated by the 
Secretary.
    (i) United States means collectively the 50 states, the District of 
Columbia, the Commonwealth of Puerto Rico, and the territories and 
possessions of the United States.


Sec.  1223.102  Voting.

    (a) Each person who is an eligible producer or an eligible 
importer, as defined in this subpart, at the time of the referendum and 
during the representative period, shall be entitled to cast only one 
ballot in the referendum. However, each producer in a landlord-tenant 
relationship or a divided ownership arrangement involving totally 
independent entities cooperating only to produce pecans, in which more 
than one of the parties is a producer, shall be entitled to cast one 
ballot in the referendum covering only such producer's share of the 
ownership.
    (b) Proxy voting is not authorized, but an officer or employee of a 
corporate producer or importer, or an administrator, executor, or 
trustee or an eligible entity may cast a ballot on behalf of such 
person. Any individual so voting in a referendum shall certify that 
such individual is an officer or employee of the eligible entity, or an 
administrator, executive, or trustee of an eligible entity and that 
such individual has the authority to take such action. Upon request of 
the referendum agent, the individual shall submit adequate evidence of 
such authority.
    (c) All ballots are to be cast by mail, overnight delivery, 
electronic mail, facsimile, or by other means as instructed by the 
Secretary.


Sec.  1223.103  Instructions.

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


Sec.  1223.104  Subagents.

    The referendum agent may appoint any individual or individuals 
necessary or desirable to assist the agent in performing the referendum 
agent's functions listed in 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.  1223.105  Ballots.

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


Sec.  1223.106  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.  1223.107  Confidential information.

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

Subpart C--Administrative Provisions


Sec.  1223.520  Late payment and interest charges for past due 
assessments.

    (a) A late payment charge will be imposed on any producer, first 
handler or importer who fails to make timely remittance to the Board of 
the total assessments for which they are liable. The late payment will 
be imposed on any assessments not received within 30 calendar days of 
the date when assessments are due. This one-time late payment charge 
will be 5 percent of the assessments due before interest charges have 
accrued.
    (b) In addition to the late payment charge, 1 percent per month 
interest on the outstanding balance, including any late payment and 
accrued interest, will be added to any accounts for which payment has 
not been received within 30 calendar days of the date when assessments 
are due. Interest will continue to accrue monthly until the outstanding 
balance is paid to the Board.

Bruce Summers,
Administrator, Agricultural Marketing Service.
[FR Doc. 2020-19031 Filed 9-21-20; 8:45 am]
BILLING CODE P