[Federal Register Volume 82, Number 112 (Tuesday, June 13, 2017)]
[Proposed Rules]
[Pages 27028-27031]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-12031]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 82, No. 112 / Tuesday, June 13, 2017 / 
Proposed Rules  

[[Page 27028]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 986

[Doc. No. AMS-SC-17-0027; SC17-986-1 PR]


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; 
Establishment of Assessment Rates

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would implement a recommendation from the 
American Pecan Council (Council) to establish the initial assessment 
rates for the 2016-2017 and subsequent fiscal years at $0.03 per pound 
for improved varieties, $0.02 per pound for native and seedling 
varieties, and $0.02 for substandard pecans handled under the pecan 
marketing order (order). The Council administers the order and is 
comprised of growers and handlers of pecans operating within the 
production area and a public member. Assessments upon pecan handlers 
would be used by the Council to fund reasonable and necessary expenses 
of the program. The fiscal year begins October 1 and ends September 30. 
The assessment rates would remain in effect indefinitely unless 
modified, suspended, or terminated.

DATES: Comments must be received by July 13, 2017.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposed rule. Comments must be sent to the Docket 
Clerk, Marketing Order and Agreement Division, Specialty Crops Program, 
AMS, USDA, 1400 Independence Avenue SW., STOP 0237, Washington, DC 
20250-0237; Fax: (202) 720-8938; or internet: http://www.regulations.gov. Comments should reference the document number and 
the date and page number of this issue of the Federal Register and will 
be available for public inspection in the Office of the Docket Clerk 
during regular business hours, or can be viewed at: http://www.regulations.gov. All comments submitted in response to this 
proposed rule will be included in the record and will be made available 
to the public. Please be advised that the identity of the individuals 
or entities submitting the comments will be made public on the internet 
at the address provided above.

FOR FURTHER INFORMATION CONTACT: Jennie M. Varela, Marketing 
Specialist, or Christian D. Nissen, Regional Director, Southeast 
Marketing Field Office, Marketing Order and Agreement Division, 
Specialty Crops Program, AMS, USDA; Telephone: (863) 324-3375, Fax: 
(863) 291-8614, or Email: [email protected] or 
[email protected].
    Small businesses may request information on complying with this 
regulation by contacting Richard Lower, Marketing Order and Agreement 
Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue 
SW., STOP 0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, 
Fax: (202)720-8938, or Email: [email protected].

SUPPLEMENTARY INFORMATION: This proposed rule is issued under Marketing 
Agreement and Order No. 986, (7 CFR part 986), regulating the handling 
of pecans grown in the states of Alabama, Arkansas, Arizona, 
California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, 
North Carolina, New Mexico, Oklahoma, South Carolina, and Texas, 
hereinafter referred to as the ``order.'' The order is effective under 
the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 
601-674), hereinafter referred to as the ``Act.''
    The Department of Agriculture (USDA) is issuing this proposed rule 
in conformance with Executive Orders 13563 and 13175.
    This action falls within a category of regulatory actions that the 
Office of Management and Budget (OMB) has 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).
    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. Under the marketing order now in effect, pecan 
handlers are subject to assessments. Funds to administer the order are 
derived from such assessments. It is intended that the assessment rates 
as proposed herein would be applicable to all assessable pecans 
beginning on October 1, 2016, and continue until amended, suspended, or 
terminated.
    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 USDA 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. Such 
handler is afforded the opportunity for a hearing on the petition. 
After the hearing, USDA would rule on the petition. The Act provides 
that the district court of the United States in any district in which 
the handler is an inhabitant, or has his or her principal place of 
business, has jurisdiction to review USDA's ruling on the petition, 
provided an action is filed not later than 20 days after the date of 
the entry of the ruling.
    This proposed rule would establish continuing assessment rates for 
the 2016-2017 and subsequent fiscal years at $0.03 per pound for 
improved varieties and $0.02 per pound for native and seedling 
varieties and for substandard pecans handled. It is intended that the 
assessment rates as proposed herein would be applicable to all 
assessable pecans beginning on October 1, 2016, and continue until 
amended, suspended, or terminated.
    The order provides authority for the Council, with the approval of 
USDA, to formulate an annual budget of expenses and collect assessments 
from handlers to administer the program. The members of the Council are 
growers and handlers of pecans and a public member. They are familiar 
with the Council's needs and with the costs for goods and services in 
their respective

[[Page 27029]]

local areas and are thus in a position to formulate an appropriate 
budget and assessment rates. The assessment rates are formulated and 
discussed in a public meeting. Thus, all directly affected persons have 
an opportunity to participate and provide input.
    For the 2016-2017 fiscal year, the Council recommended, and USDA 
approved, the Council's budget and the assessment rates that would 
continue in effect from fiscal year to fiscal year unless modified, 
suspended, or terminated by USDA upon recommendation and information 
submitted by the Council or other information available to USDA.
    The Council met on November 17, 2016, and unanimously recommended 
2016-2017 budget expenditures of $6,000,000 and assessment rates of 
$0.03 per pound for improved varieties, $0.02 per pound for native and 
seedling varieties, and $0.02 per pound for substandard pecans handled. 
These are the first budget of expenditures and assessment rates 
established under this order.
    The major expenditures recommended by the Council for the 2016-2017 
year include $3,850,000 for marketing and promotion, $900,000 for 
administration, $250,000 for reporting and statistics, and $200,000 for 
compliance.
    The assessment rates recommended by the Council were derived by 
dividing anticipated expenses by expected shipments of pecans. Pecan 
shipments for the year are estimated at 260,000,000 pounds, with about 
75 percent, or an estimated 195 million pounds of improved varieties, 
and about 25 percent of native and seedling varieties and substandard 
pecans. This should provide approximately $6,000,000 in assessment 
income. Income derived from handler assessments would be adequate to 
cover budgeted expenses. As the Council has no established reserve, its 
budget also allocated $500,000 for reserve funds to be carried into the 
next fiscal year. This would be within the maximum permitted by the 
order of approximately three fiscal years' expenses. If the assessment 
rates generate less money than is anticipated, the Council and the 
Agricultural Marketing Service (AMS) will adjust the budget 
accordingly.
    The proposed assessment rates would continue in effect indefinitely 
unless modified, suspended, or terminated by USDA upon recommendation 
and information submitted by the Council or other available 
information.
    Although these assessment rates would be in effect for an 
indefinite period, the Council would continue to meet prior to or 
during each fiscal year to recommend a budget of expenses and consider 
recommendations for modification of the assessment rates. The dates and 
times of Council meetings are available from the Council or USDA. 
Council meetings are open to the public and interested persons may 
express their views at these meetings. USDA would evaluate Council 
recommendations and other available information to determine whether 
modification of the assessment rates is needed. Further rulemaking 
would be undertaken as necessary. The Council's budget for subsequent 
fiscal years would be reviewed and, as appropriate, approved by USDA.
    The Council also recommended reporting requirements, to include 
information on pecans received, shipped, exported, or in inventory, 
which would facilitate the collection of the assessments. These 
requirements are being considered under a separate action.

Initial Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), AMS has considered the economic impact of 
this proposed rule on small entities. Accordingly, AMS has prepared 
this initial regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
businesses subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and the rules issued thereunder, are unique in 
that they are brought about through group action of essentially small 
entities acting on their own behalf.
    There are approximately 2,500 producers of pecans in the production 
area and approximately 250 handlers subject to regulation under the 
marketing order. Small agricultural producers are defined by the Small 
Business Administration as those having annual receipts less than 
$750,000, and small agricultural service firms are defined as those 
whose annual receipts are less than $7,500,000 (13 CFR 121.201).
    According to information from the National Agricultural Statistics 
Service (NASS), the average grower price for pecans during the 2015-
2016 season was $2.20 per pound and 254 million pounds were utilized. 
The value for pecans in that year totaled $558.8 million ($2.20 per 
pound multiplied by 254 million pounds). Taking the total value of 
production for pecans and dividing it by the total number of pecan 
producers provides a return per grower of $223,520. Using the average 
price and utilization information, and assuming a normal distribution, 
the majority of growers have annual receipts of less than $750,000. 
Evidence presented at the order promulgation hearing indicates an 
average handler margin of $0.58 per pound for in-shell pecans for an 
estimated handler price of $2.78. With a total 2015 production of 254 
million pounds, the total value of production in 2015 was $706.12 
million ($2.78 per pound multiplied by 254 million pounds). Taking the 
total value of production for pecans and dividing it by the total 
number of pecan handlers provides a return per handler of $2,824,480. 
Using this estimated price, the utilization volume, number of handlers, 
and assuming a normal distribution, the majority of handlers have 
annual receipts of less than $7,500,000. Thus, the majority of 
producers and handlers of pecans grown in the states of Alabama, 
Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, 
Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South 
Carolina, and Texas may be classified as small entities.
    This proposal would establish the assessment rates to be collected 
from handlers for the 2016-2017 and subsequent fiscal years. The 
Council unanimously recommended 2016-2017 expenditures of $6,000,000 
and an assessment rate of $0.03 per pound for improved varieties, $0.02 
per pound for native and seedling varieties, and $0.02 per pound for 
substandard pecans handled. The quantity of pecans for the 2016-2017 
year is estimated at 260,000,000 pounds, with about 75 percent, or 195 
million pounds of improved varieties, and about 25 percent of native 
and seedling varieties and substandard pecans. Thus, the proposed rates 
should provide $6,000,000 in assessment income and be adequate to meet 
this year's expenses. If the assessment rates generate less money than 
is anticipated, the Council and AMS will adjust the budget accordingly.
    The major expenditures recommended by the Council for the 2016-2017 
fiscal year include $3,850,000 for marketing and promotion, $900,000 
for administration, $250,000 for reporting and statistics, and $200,000 
for compliance.
    These are the first budget of expenditures and assessment rates 
established under this order. The Council's budget also includes a 
reserve of $500,000.

[[Page 27030]]

    These are initial assessment rates for the order. The order 
establishes a range of assessment rates that are permissible during the 
initial four years of the order. Specifically improved varieties shall 
be initially assessed at $0.02 to $0.03 per pound and native, seedling, 
and substandard pecans shall be initially assessed at $0.01 to $0.02 
per pound. Prior to arriving at this budget and assessment rates, the 
Council considered information from various sources, such as the 
Council's Governance Committee, and its Marketing, Research, and 
Development Committee. Alternative expenditure levels were discussed by 
these groups, based upon the relative value of various activities to 
the pecan industry.
    The Council also considered different assessment levels. Some 
members expressed concern regarding a $0.02 assessment on native, 
seedling, and substandard pecans given the prices of those pecans. 
Another member suggested the idea of establishing a lower rate for 
substandard pecans. The need to collect sufficient assessments to fund 
the start-up costs for the order and the development of a marketing 
program was also noted. After consideration and discussion, the Council 
unanimously supported the levels as recommended.
    A communication from one of the states in the production area 
recommending postponing the establishment of an assessment rate was 
also considered. The Council determined waiting until the next fiscal 
year to establish assessment rates would be costly in terms of time 
lost for a program that had been anticipated by the industry to improve 
its marketing. The Council also recognized that the industry had been 
notified through multiple outlets of communication of the possible 
range of assessments in the order. The Council expressed a preference 
to establish these rates and begin its work immediately rather than 
borrowing funds and being limited in its operations until the coming 
fiscal year. Therefore, these alternatives were rejected, and the 
Council ultimately determined that 2016-2017 expenditures of $6,000,000 
were appropriate, and the recommended assessment rates would generate 
sufficient revenue to meet its expenses.
    A review of historical information and preliminary information 
pertaining to the upcoming production year indicates the grower price 
for the 2016-2017 season could range between $1.73 and $2.31 per pound 
for improved varieties, and between $0.88 and $1.36 per pound for 
native and seedling pecans. Therefore, the estimated assessment revenue 
for the 2016-2017 crop year as a percentage of total grower revenue 
could range between 1.3 and 1.7 percent for improved pecans and 1.5 and 
2.2 percent for native and seedling pecans.
    This action would establish an assessment obligation imposed on 
handlers. While assessments impose some additional costs on handlers, 
the costs are minimal and uniform for all handlers. Some of the 
additional costs may be passed on to producers. However, these costs 
would be offset by the benefits derived by the operation of the 
marketing order. In addition, the Council's meeting was widely 
publicized throughout the pecan industry and all interested persons 
were invited to attend the meeting and participate in Council 
deliberations on all issues. Like all Council meetings, the November 
17, 2016, meeting was a public meeting and all entities, both large and 
small, were able to express views on this issue. Finally, interested 
persons are invited to submit comments on this proposed rule, including 
the regulatory and informational impacts of this action on small 
businesses.
    In accordance with the Paperwork Reduction Act of 1995, (44 U.S.C. 
Chapter 35), the order's information collection requirements have been 
previously approved by the Office of Management and Budget (OMB) and 
assigned OMB No. 0581-0291 ``Pecans Grown in AL, AR, AZ, CA, FL, GA, 
KS, LA, MO, MS, NC, NM, OK, SC and TX.'' No changes in those 
requirements are necessary as a result of this action. However, the 
Council is recommending reporting requirements, to include information 
on pecans received, shipped, exported, or in inventory, which would 
facilitate the collection of the assessments. These requirements are 
being considered under a separate action. Should any changes to the 
information collection requirements become necessary, they would be 
submitted to OMB for approval.
    This proposed rule would impose no additional reporting or 
recordkeeping requirements on either small or large pecan handlers. As 
with all Federal marketing order programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies.
    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.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this action.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/rules-regulations/moa/small-businesses. Any questions 
about the compliance guide should be sent to Richard Lower at the 
previously-mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposed rule. A 30-day period is deemed appropriate 
because: (1) The 2016-2017 fiscal year began on October 1, 2016, and 
the marketing order requires that the rate of assessment for each 
fiscal year apply to all pecans handled during such fiscal year; (2) 
the Council needs to have sufficient funds to pay its expenses which 
are incurred on a continuous basis; and (3) handlers are aware of this 
action which was unanimously recommended by the Council at a public 
meeting. All written comments timely received will be considered before 
a final determination is made on this matter.

List of Subjects in 7 CFR Part 986

    Marketing agreements, Pecans, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 7 CFR part 986 is 
proposed to be amended 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

0
1. The authority citation for 7 CFR part 986 continues to read as 
follows:

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

0
2. Amend part 986 by adding Subpart--Assessment Rates consisting of 
Sec.  986.161 to read as follows:

Subpart--Assessment Rates


Sec.  986.161   Assessment rates.

    On and after October 1, 2016, assessment rates of $0.03 per pound 
for pecans classified as improved, $0.02 per pound for pecans 
classified as native and seedling, and $0.02 per pound for pecans 
classified as substandard pecans are established.


[[Page 27031]]


    Dated: June 6, 2017.
Bruce Summers,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 2017-12031 Filed 6-12-17; 8:45 am]
 BILLING CODE 3410-02-P