[Federal Register Volume 80, Number 127 (Thursday, July 2, 2015)]
[Proposed Rules]
[Pages 38021-38032]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-16259]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 986

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


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Notice of public hearing on proposed marketing agreement and 
order.

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SUMMARY: Notice is hereby given of a public hearing to consider a 
proposed marketing agreement and order under the Agricultural Marketing 
Agreement Act of 1937 to cover pecans grown in the states of Alabama, 
Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, 
Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South 
Carolina, and Texas. The proposal was submitted on behalf of the pecan 
industry by the American Pecan Board, the proponent group which is 
comprised of pecan growers and handlers from across the proposed 
production area. The proposed order would provide authority to collect 
industry data and to conduct research and promotion activities. In 
addition, the order would provide authority for the industry to 
recommend grade, quality and size regulation, as well as pack and 
container regulation, subject to approval by the Department of 
Agriculture (USDA). The program would be financed by assessments on 
pecan handlers and would be locally administered, under USDA oversight, 
by a council of seventeen growers and shellers (handlers) nominated by 
the industry and appointed by USDA.

DATES: The hearing dates are:
    1. July 20 through July 21, 2015, Las Cruces, New Mexico. If an 
additional hearing session is necessary at this location, the hearing 
will continue on July 22.
    2. July 23 through July 24, 2015, Dallas, Texas. If an additional 
hearing session is necessary at this location, the hearing will 
continue on July 25.
    3. July 27 through July 29, 2015, Tifton, Georgia. If an additional 
hearing session is necessary at this location, the hearing will 
continue on July 30, 2015.
    All hearing sessions are scheduled to begin at 8:00 a.m. and will 
conclude at 5:00 p.m., or any other time as determined by the presiding 
administrative law judge with the exception of the hearing session 
potentially held on July 22 and 25, which will conclude at noon. 
ADDRESSES: The hearing locations are: 1. New Mexico Farm and Ranch 
Heritage Museum, Rio Hondo Room and Auditorium, 4100 Dripping Springs 
Road, Las Cruces, New Mexico, 88011.
    2. Hilton Double Tree, Azalea Room, 1981 North Central Expressway, 
Richardson, Texas 75080.
    3. Hilton Garden Inn, Magnolia Room, 201 Boo Drive, Tifton, 
Georgia, 31793.

FOR FURTHER INFORMATION CONTACT: Melissa Schmaedick, Marketing Order 
and Agreement Division, Rulemaking Branch, Fruit and Vegetable Program, 
Agricultural Marketing Service (AMS), USDA, Post Office Box 1035, Moab, 
UT 84532, telephone: (202) 557-4783, fax: (435) 259-1502; or Michelle 
P. Sharrow, Marketing Order and Agreement Division, Rulemaking Branch, 
Fruit and Vegetable Program, AMS, USDA, 1400 Independence Avenue SW., 
Stop 0237, Washington, DC 20250-0237; telephone: (202) 720-2491, fax: 
(202) 720-8938. Small businesses may request information on this 
proceeding by contacting Jeff Smutny, Marketing Order and Agreement 
Division, Fruit and Vegetable Program, AMS, USDA, 1400 Independence 
Avenue SW., Stop 0237, Washington, DC 20250-0237; telephone: (202) 720-
2491, fax: (202) 720-8938.

SUPPLEMENTARY INFORMATION: This administrative action is instituted 
pursuant to the Agricultural Marketing Agreement Act of 1937, as 
amended (7 U.S.C. 601-674), hereinafter referred to as the ``Act.'' The 
proposed marketing order is authorized under section 8(c) of the Act. 
This action is governed by the provisions of sections 556 and 557 of 
title 5 of the United States Code and, therefore, is excluded from the 
requirements of Executive Order 12866.
    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) seeks to 
ensure that within the statutory authority of a program, the regulatory 
and informational requirements are tailored to the size and nature of 
small businesses. Interested persons are invited to present evidence at 
the hearing on the possible regulatory and informational impacts of the 
proposal on small businesses.
    The marketing agreement and order proposed herein have been 
reviewed under Executive Order 12988, Civil Justice Reform. They are 
not intended to have retroactive effect.

[[Page 38022]]

    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with the Secretary a 
petition stating that the order, any provision of the order, or any 
obligation imposed in connection with the order is not in accordance 
with law and request a modification of the order or to be exempted 
therefrom. A handler is afforded the opportunity for a hearing on the 
petition. The Act provides that the district court of the United States 
in any district in which the handler is an inhabitant, or has his or 
her principal place of business, has jurisdiction to review the 
Secretary's ruling on the petition, provided an action is filed not 
later than 20 days after the date of the entry of the ruling.

Background

    The hearing is called pursuant to the provisions of the Act and the 
applicable rules of practice and procedure governing the formulation of 
marketing agreements and orders (7 CFR part 900).
    A request for public hearing on the proposed program was submitted 
to USDA on May 22, 2015, by the American Pecan Board (Board), a 
proponent group established in 2013 to represent the interests of 
growers and handlers throughout the proposed fifteen-state production 
area. A subsequent, modified draft of the proposed regulatory text was 
submitted June 10, 2015.
    The Board was established as a result of industry interest in 
establishing a Federal program to assist the industry in addressing a 
number of challenges, namely: A lack of organized representation of 
industry-wide interests in a single organization; a lack of accurate 
data to assist the industry in its analysis of production, demand and 
prices; a lack of coordinated domestic promotion or research; and a 
forecasted increase in production as a result of new plantings. The 
Board believes that these factors combined have resulted in the under-
performance of the pecan industry vis a vis other nut industries.
    According to the Board, pecans are grown for-profit in fifteen 
states. A 2012 Census of Agriculture by the U.S. Department of 
Agriculture, National Agricultural Statistics Service indicates a total 
of 543,486 pecan acres in the U.S. While accurate data for the pecan 
industry is limited, the Board believes that the majority of these 
represent commercial production within the proposed production area. 
Industry grower organizations estimate that there are approximately 
2,500 commercial growers, where ``commercial'' is defined by a minimum 
number of acres or product harvested for the business to be 
commercially viable. Therefore, the estimate of commercial growers does 
not include backyard production or ``hobby farmers.''
    The number of handlers is estimated to be 250. Shellers, a sub-
category of handlers, handle the majority of product sold into the 
domestic market. There are an estimated 50 commercial shellers 
currently operating, with 36 meeting the Small Business 
Administration's definition of small business entity. According to 
USDA, U.S. pecan production accounts for 80 percent of worldwide 
production. Pecans rank third in tree-nut consumption in the United 
States.

Proposed Marketing Order

    The proposed marketing order would authorize data collection, 
research and promotion activities, and grade, size, quality, pack and 
container regulation. According to the request, the proposed program 
would increase demand, stabilize grower prices, create sustainable 
handler margins, and provide a consistent supply of quality pecans for 
consumers.
    If implemented, an administrative council of 17 grower and handler 
industry representatives, including designated representation for small 
businesses, would be established. The program would be financed with 
assessments collected from handlers handling pecans grown within the 
proposed production area.
    Presently, there is no single organization that represents both 
pecan grower and handler interests industry-wide. There are two state 
pecan commissions (Georgia and Texas), ten state producer 
organizations, one national grower association, and one national 
shellers' association. Promotion and research activities are currently 
conducted as funding is available by the independent organizations 
mentioned above, with little coordination among projects. U.S. grade 
standards are currently in effect on a voluntary basis. These include, 
``United States Standards for Grades of Pecans in the Shell'' (1976) 
and ``United States Standards for Grades of Shelled Pecans'' (1969).
    The proposal for an order has been widely discussed within the 
fifteen-state pecan production area for roughly two years. Since May of 
2013, the Board has undertaken extensive outreach efforts to build 
industry support for the proposed program. According to the Board, 38 
presentations have been given at grower and sheller conferences and 
board meetings, state conventions, and industry field days. In 
addition, the Board has participated in local pecan meetings throughout 
the rural areas of the proposed production area to increase awareness, 
seek input and gather support for the program. Five regional 
information sessions were held in 2014 with pecan stakeholders 
including the Southeastern Pecan Growers Association, National Pecan 
Shellers Association, Western Pecan Growers Association, Georgia Pecan 
Growers Association, and Texas Pecan Growers Association.
    None of the recommendations or proposals discussed herein have 
received approval by the Secretary of Agriculture.
    Testimony is invited at the hearing on the proposed marketing 
agreement and order (hereinafter referred to as the order) and all of 
its provisions, as well as any appropriate modifications or 
alternatives. USDA will make such changes as may be necessary to ensure 
that all provisions of any potential marketing agreement and marketing 
order that may result from this hearing conform with each other.
    The public hearing is held for the purpose of:
    (a) Receiving evidence about the economic and marketing conditions 
that relate to the proposed order and to appropriate modifications 
thereof;
    (b) Determining whether the handling of pecans produced in the 
production area is in the current of interstate commerce or directly 
burdens, obstructs, or affects interstate commerce and foreign 
commerce;
    (c) Determining whether there is a need for a marketing agreement 
and order for pecans;
    (d) Determining the economic impact of the proposed order on the 
industry in the proposed production area and on the public affected by 
such program; and
    (e) Determining whether the proposed order or any appropriate 
modification thereof would tend to effectuate the declared policy of 
the Act.
    All persons wishing to submit written material as evidence at the 
hearing should be prepared to submit four copies of such material at 
the hearing. Four copies of prepared testimony for presentation at the 
hearing should also be made available. To the extent practicable, eight 
additional copies of evidentiary exhibits and testimony prepared as an 
exhibit should be made available to USDA representatives on the day of 
appearance at the hearing. Any requests for preparation of USDA data 
for this rulemaking hearing should be made at least 10 days prior to 
the beginning of the hearing.

[[Page 38023]]

    From the time the notice of hearing is issued and until the 
issuance of a Secretary's decision in this proceeding, USDA employees 
involved in the decisional process are prohibited from discussing the 
merits of the hearing issues on an ex-parte basis with any person 
having an interest in the proceeding. The prohibition applies to 
employees in the following organizational units: Office of the 
Secretary of Agriculture; Office of the Administrator, AMS; Office of 
the General Counsel; and the Fruit and Vegetable Program, AMS.

Procedural Matters Are Not Subject to the Above Prohibition and May Be 
Discussed at Any Time

    Provisions of the proposed marketing agreement and order follow. 
Those sections identified with an asterisk (*) apply only to the 
proposed marketing agreement and are proposed by the USDA.

List of Subjects in 7 CFR Part 986

    Marketing agreements, Pecans, Reporting and recordkeeping 
requirements.

    The marketing agreement and order proposed by the American Pecan 
Board for a Federal 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 would add a new part 986 to read as follows:

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

Subpart A--Order Regulating Handling of Pecans

Definitions

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

Administrative Body

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

Expenses, Assessments and Marketing Policy

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

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

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

Reports, Books and Other Records

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

Administrative Provisions

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

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

Subpart A--Order Regulating Handling of Pecans

Definitions


Sec.  986.1  Accumulator.

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


Sec.  986.2  Act.

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


Sec.  986.3  Affiliation.

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


Sec.  986.4  Blowouts.

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


Sec.  986.5  To certify.

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

[[Page 38024]]

Sec.  986.6  Confidential data or information.

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


Sec.  986.7  Container.

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


Sec.  986.8  Council.

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


Sec.  986.9  Crack or cracks.

    Crack means to break, crack, or otherwise compromise the outer 
shell of a pecan so as to expose the kernel inside to air outside the 
shell. Cracks refer to an accumulated group or container of pecans that 
have been cracked in harvesting or handling.


Sec.  986.10  Custom harvester.

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


Sec.  986.11  Department or USDA.

    Department or USDA means the United States Department of 
Agriculture.


Sec.  986.12  Disappearance.

    Disappearance means the difference between the sum of grower-
cleaned production and handler-cleaned production (whether from 
improved orchards or native and seedling groves) and the sum of 
available supply of merchantable pecans and merchantable equivalent of 
shelled pecans.


Sec.  986.13  Farm Service Agency.

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


Sec.  986.14  Fiscal year.

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


Sec.  986.15  Grade and size.

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


Sec.  986.16  Grower.

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


Sec.  986.17  Grower-cleaned production.

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


Sec.  986.18  Handler.

    Handler means any person who handles inshell or shelled pecans in 
any manner described in Sec.  986.19.


Sec.  986.19  To handle.

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


Sec.  986.20  Handler inventory.

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


Sec.  986.21  Handler-cleaned production.

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


Sec.  986.22  Hican.

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


Sec.  986.23  Inshell pecans.

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


Sec.  986.24  Inspection service.

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


Sec.  986.25  Inter-handler transfer.

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


Sec.  986.26  Merchantable pecans.

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


Sec.  986.27  Pack.

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


Sec.  986.28  Pecans.

    (a) Pecans means and includes any and all varieties or subvarieties 
of Genus: Carya, Species: illinoensis, expressed also as Carya 
illinoinensis (syn. C. illinoenses) including all varieties thereof, 
excluding hicans, that are produced in the production area and are 
classified as:
    (1) Native or seedling pecans harvested from non-grafted or 
naturally propagated tree varieties;

[[Page 38025]]

    (2) Improved pecans harvested from grafted tree varieties bred or 
selected for superior traits of nut size, ease of shelling, production 
characteristics, and resistance to certain insects and diseases, 
including but not limited to: Desirable, Elliot, Forkert, Sumner, 
Creek, Excel, Gloria Grande, Kiowa, Moreland, Sioux, Mahan, Mandan, 
Moneymaker, Morrill, Cunard, Zinner, Byrd, McMillan, Stuart, Pawnee, 
Eastern and Western Schley, Wichita, Success, Cape Fear, Choctaw, 
Cheyenne, Lakota, Kanza, Caddo, and Oconee; and
    (3) Substandard pecans that are blowouts, cracks, stick-tights, and 
other inferior quality pecans, whether native or improved, that, with 
further handling, can be cleaned and eventually sold into the stream of 
commerce.
    (b) The Council, with the approval of the Secretary, may recognize 
new or delete obsolete varieties or sub-varieties for each category.


Sec.  986.29  Person.

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


Sec.  986.30  Production area.

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


Sec.  986.31  Proprietary capacity.

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


Sec.  986.32  Regions.

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


Sec.  986.33  Representative period.

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


Sec.  986.34  Secretary.

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


Sec.  986.35  Sheller.

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


Sec.  986.36  Shelled pecans.

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


Sec.  986.37  Stick-tights.

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


Sec.  986.38  Trade supply.

    Trade supply means the quantity of merchantable inshell or shelled 
pecans that growers will supply to handlers during a fiscal year for 
sale in the United States and abroad.


Sec.  986.39  Unassessed inventory.

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


Sec.  986.40  Varieties.

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


Sec.  986.41  Warehousing.

    Warehousing means to hold unassessed inventory.


Sec.  986.42  Weight.

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

Administrative Body


Sec.  986.45  American Pecan Council.

    The American Pecan Council is hereby established consisting of 17 
members selected by the Secretary, each of whom shall have an alternate 
member nominated and selected in the same way and with the same 
qualifications as the member. The 17 members shall include nine (9) 
grower seats, six (6) sheller seats, and two (2) at-large seats 
allocated to one accumulator and one public member. The grower and 
sheller nominees and their alternates shall be growers and shellers at 
the time of their nomination and for the duration of their tenure. 
Grower and sheller members and their alternates shall be selected by 
the Secretary from nominees submitted by the Council. The two at-large 
seats shall be nominated by the Council and appointed by the Secretary.
    (a) Each region shall be allocated the following member seats:
    (1) Eastern Region: three (3) growers and two (2) shellers
    (2) Central Region: three (3) growers and two (2) shellers
    (3) Western Region: three (3) growers and two (2) shellers
    (b) Within each region, the grower and sheller seats shall be 
defined as follows:
    (1) Grower seats: Each region shall have a grower Seat 1 and Seat 2 
allocated to growers whose acreage is equal to or exceeds 176 pecan 
acres. Each region shall also have a grower Seat 3 allocated to a 
grower whose acreage does not exceed 175 pecan acres.
    (2) Sheller seats: Each region shall have a sheller Seat 1 
allocated to a sheller who handles more than 12.5 million pounds of 
inshell pecans in the fiscal year preceding nomination, and a sheller 
Seat 2 allocated to a sheller who handles less than or equal to 12.5 
million pounds of inshell pecans in the fiscal year preceding 
nomination.
    (c) The Council may recommend, subject to the approval of the 
Secretary, revisions to the above requirements for grower and sheller 
seats to accommodate changes within the industry.


Sec.  986.46  Council nominations and voting.

    Nomination of Council members and alternate members shall follow 
the procedure set forth in this section, or as may be changed as 
recommended by the Council and approved by the Secretary. All nominees 
must meet the requirements set forth in Sec. Sec.  986.45,

[[Page 38026]]

American Pecan Council, and 986.48, Eligibility, or as otherwise 
identified by the Secretary, to serve on the Council.
    (a) Initial members. Nominations for initial Council members and 
alternate members shall be conducted by the Secretary by either holding 
meetings of shellers and growers, by mail, or by email, and shall be 
submitted on approved nomination forms. Eligibility to cast nomination 
ballots, accounting of nomination ballot results, and identification of 
member and alternate nominees shall follow the procedures set forth in 
this section, or by any other criteria deemed necessary by the 
Secretary. The Secretary shall select and appoint the initial members 
and alternate members of the Council.
    (b) Successor members. Subsequent nominations of Council members 
and alternate members shall be conducted as follows:
    (1) Call for nominations. (i) Nominations for the grower member 
seats for each region shall be received from growers in that region on 
approved forms containing the information stipulated in this section.
    (ii) If a grower is engaged in producing pecans in more than one 
region, such grower shall nominate in the region in which they grow the 
largest volume of their production.
    (iii) Nominations for the sheller member seats for each region 
shall be received from shellers in that region on approved forms 
containing the information stipulated in this section.
    (iv) If a sheller is engaged in handling in more than one region, 
such sheller shall nominate in the region in which they shelled the 
largest volume in the preceding fiscal year.
    (2) Voting for nominees. (i) Only growers, through duly authorized 
officers or employees of growers, if applicable, may participate in the 
nomination of grower member nominees and their alternates. Each grower 
shall be entitled to cast only one nomination ballot for each of the 
three grower seats in their region.
    (ii) If a grower is engaged in producing pecans in more than one 
region, such grower shall cast their nomination ballot in the region in 
which they grow the largest volume of their production. Notwithstanding 
this stipulation, such grower may vote their volume produced in any or 
all of the three regions.
    (iii) Only shellers, through duly authorized officers or employees 
of shellers, if applicable, may participate in the nomination of the 
sheller member nominees and their alternates. Each sheller shall be 
entitled to cast only one nomination ballot for each of the two sheller 
seats in their region.
    (iv) If a sheller is engaged in handling in more than one region, 
such sheller shall cast their nomination ballot in the region in which 
they shelled the largest volume in the preceding fiscal year. 
Notwithstanding this stipulation, such sheller may vote their volume 
handled in all three regions.
    (v) If a person is both a grower and a sheller of pecans, such 
person may not participate in both grower and sheller nominations. Such 
person must elect to participate either as a grower or a sheller.
    (3) Nomination procedure for grower seats. (i) The Council shall 
mail to all growers who are on record with the Council within the 
respective regions a grower nomination ballot indicating the nominees 
for each of the three grower member seats, along with voting 
instructions. Growers may cast ballots on the proper ballot form either 
at meetings of growers, by mail, or by email as designated by the 
Council. For ballots to be considered, they must be submitted on the 
proper forms with all required information, including signatures.
    (ii) On the ballot, growers shall indicate their nomination for the 
grower seats and also indicate their average annual volume of inshell 
pecan production for the preceding four fiscal years.
    (iii) Seat 1 (growers with equal to or more than 176 acres of 
pecans). The nominee for this seat in each region shall be the grower 
receiving the highest volume of production votes from the respective 
region, and the grower receiving the second highest volume of 
production votes shall be the alternate member nominee for this seat. 
In case of a tie vote, the nominee shall be selected by a drawing.
    (iv) Seat 2 (growers with equal to or more than 176 acres of 
pecans). The nominee for this seat in each region shall be the grower 
receiving the highest number of votes from their respective region, and 
the grower receiving the second highest number of votes shall be the 
alternate member nominee for this seat. In case of a tie vote, the 
nominee shall be selected by a drawing.
    (v) Seat 3 (grower with 175 or fewer acres of pecans). The nominee 
for this seat in each region shall be the grower receiving the highest 
number of votes from the respective region, and the grower receiving 
the second highest number of votes shall be the alternate member 
nominee for this seat. In case of a tie vote, the nominee shall be 
selected by a drawing.
    (4) Nomination procedure for sheller seats. (i) The Council shall 
mail to all shellers who are on record with the Council within the 
respective regions the sheller ballot indicating the nominees for each 
of the two sheller member seats in their respective regions, along with 
voting instructions. Shellers may cast ballots on approved ballot forms 
either at meetings of shellers, by mail, or by email as designated by 
the Council. For ballots to be considered, they must be submitted on 
the approved forms with all required information, including signatures.
    (ii) Seat 1 (shellers handling more than 12.5 million lbs. of 
inshell pecans in the preceding fiscal year). The nominee for this seat 
in each region shall be assigned to the sheller receiving the highest 
number of votes from the respective region, and the sheller receiving 
the second highest number of votes shall be the alternate member 
nominee for this seat. In case of a tie vote, the nominee shall be 
selected by a drawing.
    (iii) Seat 2 (shellers handling equal to or less than 12.5 million 
lbs. of inshell pecans in the preceding fiscal year). The nominee for 
this seat in each region shall be assigned to the sheller receiving the 
highest number of votes from the respective region, and the sheller 
receiving the second highest number of votes shall be the alternate 
member nominee for this seat. In case of a tie vote, the nominee shall 
be selected by a drawing.
    (5) Reports to the Secretary. Nominations in the foregoing manner 
received by the Council shall be reported to the Secretary on or before 
15 of each July of any year in which nominations are held, together 
with a certified summary of the results of the nominations and other 
information deemed by the Council to be pertinent or requested by the 
Secretary. From those nominations, the Secretary shall select the 
fifteen grower and sheller members of the Council and an alternate for 
each member. If the Council fails to report nominations to the 
Secretary in the manner herein specified, the Secretary may select the 
members without nomination. If nominations for the public and 
accumulator at-large members are not submitted by September 15th of any 
year in which their nomination is due, the Secretary may select such 
members without nomination.
    (6) At-large members. The grower and sheller members of the Council 
shall select one public member and one accumulator member and 
respective alternates for consideration, selection and appointment by 
the Secretary. The

[[Page 38027]]

public member and alternate public member may not have any financial 
interest, individually or corporately, or affiliation with persons 
vested in the pecan industry. The accumulator member and alternate 
accumulator member must meet the criteria set forth in Sec.  986.1, 
Accumulator, and may reside or maintain a place of business in any 
region.
    (7) Nomination forms. The Council may distribute nomination forms 
at meetings, by mail, by email, or by any other form of distribution 
recommended by the Council and approved by the Secretary.
    (i) Grower nomination forms. Each nomination form submitted by a 
grower shall include the following information:
    (A) The name of the nominated grower
    (B) The name and signature of the nominating grower
    (C) Two additional names and respective signatures of growers in 
support of the nomination
    (D) Any other such information recommended by the Council and 
approved by the Secretary
    (ii) Sheller nomination forms. Each nomination form submitted by a 
sheller shall include the following:
    (A) The name of the nominated sheller
    (B) The name and signature of the nominating sheller
    (C) One additional name and signature of a sheller in support of 
the nomination
    (D) Any other such information recommended by the Council and 
approved by the Secretary
    (8) Changes to the nomination and voting procedures. The Council 
may recommend, subject to the approval of the Secretary, a change to 
these procedures should the Council determine that a revision is 
necessary.


Sec.  986.47  Alternate members.

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


Sec.  986.48  Eligibility.

    (a) Each grower member and alternate shall be, at the time of 
selection and during the term of office, a grower or an officer, or 
employee, of a grower in the region and in the classification for which 
nominated.
    (b) Each sheller member and alternate shall be, at the time of 
selection and during the term of office, a sheller or an officer or 
employee of a sheller in the region and in the classification for which 
nominated.
    (c) A grower can be a nominee for only one grower member seat. If a 
grower is nominated for two grower member seats, he or she shall select 
the seat in which he or she desires to run, and the grower ballot shall 
reflect that selection.
    (d) Any member or alternate member who at the time of selection was 
employed by or affiliated with the person who is nominated shall, upon 
termination of that relationship, become disqualified to serve further 
as a member and that position shall be deemed vacant.
    (e) No person nominated to serve as a public member or alternate 
public member shall have a financial interest in any pecan grower or 
handling operation.


Sec.  986.49  Acceptance.

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


Sec.  986.50  Term of office.

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


Sec.  986.51  Vacancy.

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


Sec.  986.52  Council expenses.

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

[[Page 38028]]

Sec.  986.53  Powers.

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


Sec.  986.54  Duties.

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


Sec.  986.55  Procedure.

    (a) The members of the Council shall select a chairman from their 
membership, and shall select such other officers and adopt such rules 
for the conduct of Council business as they deem advisable.
    (b) The Council may provide for meetings by telephone, or other 
means of communication, and any vote cast at such a meeting shall be 
confirmed promptly in writing. The Council shall give the Secretary the 
same notice of its meetings as is given to members of the Council.
    (c) Quorum. A quorum of the Council shall be any twelve voting 
Council members. The vote of a majority of members present at a meeting 
at which there is a quorum shall constitute the act of the Council; 
Provided, That:
    (1) Actions of the Council with respect to the following issues 
shall require a two-thirds (12 members) concurring vote of the Council 
members and must be approved at an in-person meeting:
    (i) Establishment of or changes to by-laws;
    (ii) Appointment or administrative issues relating to the program's 
manager or chief executive officer;
    (iii) Budget;
    (iv) Assessments;
    (v) Compliance and audits;
    (vi) Redistricting of region and reapportionment or reallocation of 
Council membership;
    (vii) Modifying definitions of grower and sheller.
    (viii) Research or promotion activities under Sec.  986.68;
    (ix) Grade, quality and size regulation under Sec. Sec.  
986.69(a)(1) and (2);
    (x) Pack and container regulation under Sec.  986.69(a)(3); and,
    (2) Actions of the Council with respect to the securing of 
commercial bank loans for the purpose of financing start-up costs of 
the Council and its activities or securing financial assistance in 
emergency situations shall require a unanimous vote of all members 
present at an in-person meeting; Provided, That in the event of an 
emergency that warrants immediate attention sooner than a face-to-face 
meeting is possible, a vote for financing may be taken. In such event, 
the Council's first preference is a videoconference and second 
preference is phone conference, both followed by written confirmation 
of the members attending the meeting.


Sec.  986.56  Right of the Secretary.

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


Sec.  986.57  Funds and other property.

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


Sec.  986.58  Reapportionment and redistricting.

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

Expenses, Assessments and Marketing Policy


Sec.  986.60  Budget.

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


Sec.  986.61  Assessments.

    (a) Each handler who first handles inshell pecans shall pay 
assessments to the Council. Assessments collected each fiscal year 
shall defray expenses which the Secretary finds reasonable and likely 
to be incurred by the Council during that fiscal year. Each handler's 
share of assessments paid to the Council shall be equal to the ratio 
between the total quantity of inshell pecans handled by them as the 
first handler thereof during the applicable fiscal year, and the total 
quantity of inshell pecans handled by

[[Page 38029]]

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


Sec.  986.62  Inter-handler transfers.

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


Sec.  986.63  Contributions.

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


Sec.  986.64  Accounting.

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

[[Page 38030]]

holding records, funds, or any other Council property during periods of 
suspension of this subpart, or during any period or periods when 
regulations are not in effect and if the Secretary determines such 
action appropriate, he or she may direct that such person or persons 
shall act as trustee or trustees for the Council.


Sec.  986.65  Marketing policy.

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

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


Sec.  986.67  Recommendations for regulations.

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


Sec.  986.68  Authority for research and promotion activities.

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


Sec.  986.69  Authorities regulating handling.

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


Sec.  986.70  Handling for special purposes.

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


Sec.  986.71  Safeguards.

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


Sec.  986.72  Notification of regulation.

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

Reports, Books and Other Records


Sec.  986.75  Reports of handler inventory.

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


Sec.  986.76  Reports of merchantable pecans handled.

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


Sec.  986.77  Reports of pecans received by handlers.

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


Sec.  986.78  Other handler reports.

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


Sec.  986.79  Verification of reports.

    For the purpose of verifying and checking reports filed by handlers 
on their operations, the Secretary and the Council, through their duly 
authorized representatives, shall have access to any premises where 
pecans and pecan records are held. Such access shall be available at 
any time during reasonable business hours. Authorized representatives 
of the Council or the Secretary shall be permitted to inspect any 
pecans held and any and all records of the handler with respect to 
matters within the purview of this part. Each handler shall maintain 
complete records on the receiving, holding, and disposition of all 
pecans. Each handler shall furnish all labor necessary to facilitate 
such inspections at no expense

[[Page 38031]]

to the Council or the Secretary. Each handler shall store all pecans 
held by him in such manner as to facilitate inspection and shall 
maintain adequate storage records which will permit accurate 
identification with respect to inspection certificates of respective 
lots and of all such pecans held or disposed of theretofore. The 
Council, with the approval of the Secretary, may establish any methods 
and procedures needed to verify reports.


Sec.  986.80  Certification of reports.

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


Sec.  986.81  Confidential information.

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


Sec.  986.82  Books and other records.

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

Additional Provisions


Sec.  986.86  Exemptions.

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


Sec.  986.87  Compliance.

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


Sec.  986.88  Duration of immunities.

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


Sec.  986.89  Separability.

    If any provision of this part is declared invalid, or the 
applicability thereof to any person, circumstance, or thing is held 
invalid, the validity of the remaining provisions and the applicability 
thereof to any other person, circumstance, or thing shall not be 
affected thereby.


Sec.  986.90  Derogation.

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


Sec.  986.91  Liability.

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


Sec.  986.92  Agents.

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


Sec.  986.93  Effective time.

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


Sec.  986.94  Termination.

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


Sec.  986.95  Proceedings after termination.

    (a) Upon the termination of this part, the Council members serving 
shall continue as joint trustees for the purpose of liquidating all 
funds and property then in the possession or under the control of the 
Council, including claims for any funds unpaid or property not 
delivered at the time of such termination.
    (b) The joint trustees shall continue in such capacity until 
discharged by the Secretary; from time to time accounting for all 
receipts and disbursements; delivering all funds and property on hand, 
together with all books and records of the Council and of the joint 
trustees to such person as the Secretary shall direct; and, upon the 
request of the Secretary, executing such assignments or other 
instruments necessary and

[[Page 38032]]

appropriate to vest in such person full title and right to all of the 
funds, property, or claims vested in the Council or in said joint 
trustees.
    (c) Any funds collected pursuant to this part and held by such 
joint trustees or such person over and above the amounts necessary to 
meet outstanding obligations and the expenses necessarily incurred by 
the joint trustees or such other person in the performance of their 
duties under this subpart, as soon as practicable after the termination 
hereof, shall be returned to the handlers pro rata in proportion to 
their contributions thereto.
    (d) Any person to whom funds, property, or claims have been 
transferred or delivered by the Council, upon direction of the 
Secretary, as provided in this part, shall be subject to the same 
obligations and duties with respect to said funds, property, or claims 
as are imposed upon said joint trustees.


Sec.  986.96  Amendments.

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


*Sec.  986.97  Counterparts.

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


*Sec.  986.98  Additional parties.

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


*Sec.  986.99  Order with marketing agreement.

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

Subpart B--[Reserved]

    Dated: June 26, 2015.
Rex Barnes,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2015-16259 Filed 7-1-15; 8:45 am]
 BILLING CODE 3410-02-P