[Federal Register Volume 82, Number 180 (Tuesday, September 19, 2017)]
[Rules and Regulations]
[Pages 43667-43670]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-19554]



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 Rules and Regulations
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 This section of the FEDERAL REGISTER contains regulatory documents 
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  Federal Register / Vol. 82, No. 180 / Tuesday, September 19, 2017 / 
Rules and Regulations  

[[Page 43667]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 986

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


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: Final rule.

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SUMMARY: This rule implements a recommendation from the American Pecan 
Council (Council) to establish the initial assessment rates for the 
2016-17 and subsequent fiscal years at $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 under the pecan marketing 
order (order). The Council locally 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 
will 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 will remain in effect indefinitely unless 
modified, suspended, or terminated.

DATES: Effective September 20, 2017.

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 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 rule in 
conformance with Executive Orders 13563 and 13175. This rule does not 
meet the definition of a significant regulatory action contained in 
section 3(f) of Executive Order 12866 and is not subject to review by 
the Office of Management and Budget (OMB). 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'[thinsp]'' (February 2, 
2017).
    This 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 
issued herein will be applicable to all assessable pecans beginning 
with the 2016-17 fiscal year that began 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 rule establishes assessment rates for the 2016-17 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. The assessment rates are 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 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 2016-17 and subsequent fiscal years, the Council 
recommended, and USDA approved, 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 
2016-17 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

[[Page 43668]]

expenditures and assessment rates established under this order.
    The major expenditures recommended by the Council for the 2016-17 
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 adequate assessment income to cover the 
budgeted expenses and establish the authorized reserve. Income derived 
from handler assessments should 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 will 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.
    Although these assessment rates will be in effect for an indefinite 
period, the Council will 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 will evaluate Council 
recommendations and other available information to determine whether 
modification of the assessment rate is needed. Further rulemaking will 
be undertaken as necessary. The Council's budget for subsequent fiscal 
years would be reviewed and, as appropriate, approved by USDA.

Final 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 rule on small entities. Accordingly, AMS has prepared this final 
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 2015-16 
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 per pound. 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 rule establishes the assessment rates to be collected from 
handlers for the 2016-17 and subsequent fiscal years. The Council 
unanimously recommended 2016-17 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 2016-17 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. This should provide 
adequate assessment income to cover the budgeted expenses and establish 
the authorized reserve. Income derived from handler assessments should 
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 will 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 AMS will adjust the budget accordingly.
    The major expenditures recommended by the Council for the 2016-17 
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. The Council's budget also includes a reserve of 
$500,000.
    These are initial budget expenditures and 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 that 
recommended postponing the

[[Page 43669]]

establishment of an assessment rate was also considered. The Council 
determined that 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 2016-17 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 2016-17 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 2016-17 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 establishes an assessment obligation imposed on 
handlers. While assessments impose some additional costs on handlers, 
the costs are minimal and uniform on 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.
    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 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 rule imposes 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. As noted in the initial regulatory 
flexibility analysis, USDA has not identified any relevant Federal 
rules that duplicate, overlap, or conflict with this final rule.
    AMS is committed to complying with the E-Government Act, to promote 
the use of the internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.
    A proposed rule concerning this action was published in the Federal 
Register on June, 13, 2017 (82 FR 27028). Copies of the proposed rule 
were also mailed or sent via facsimile to all known pecan handlers. 
Finally, the proposal was made available through the internet by USDA 
and the Office of the Federal Register. A 30-day comment period ending 
July 13, 2017, was provided for interested persons to respond to the 
proposal. Two comments were received during the comment period in 
response to the proposal. The commenters included a State Farm Bureau 
and Council staff.
    Both comments expressed support for finalizing the proposed rule as 
issued. Each commenter valued the opportunity to market and promote 
pecans. One comment further highlighted the industry's need for product 
research for market and economic development. Accordingly, no changes 
will be made to the rule as proposed, based on the comments received.
    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.
    After consideration of all relevant material presented, including 
the information and recommendation submitted by the Council and other 
available information, it is hereby found that this rule, as 
hereinafter set forth, will tend to effectuate the declared policy of 
the Act.
    Pursuant to 5 U.S.C. 553, it is also found and determined that good 
cause exists for not postponing the effective date of this rule until 
30 days after publication in the Federal Register because handlers are 
aware of this action, which was unanimously recommended by the Council 
at a public meeting. The proposed rule provided for a 30-day comment 
period and no comments opposing the proposal were received. 
Furthermore, the 2016-17 fiscal year ends on September 30, 2017, and 
the marketing order requires that the rate of assessment for each 
fiscal year apply to all pecans handled during such fiscal year. If 
this rule is not effective before September 30, 2017, the Council will 
not have sufficient funds to cover expenses it has incurred for the 
2016-17 crop year.

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 
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.


Sec. Sec.  986.1 through 986.99  [Designated as Subpart A]

0
2. Designate Sec. Sec.  986.1 through 986.99 as subpart A and add a 
heading for subpart A to read as follows:

Subpart A--Order Regulating Handling of Pecans

0
3. Add subpart B, consisting of Sec.  986.161, to read as follows:

Subpart B--Administrative Provisions


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 43670]]


    Dated: September 11, 2017.
Bruce Summers,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 2017-19554 Filed 9-18-17; 8:45 am]
BILLING CODE 3410-02-P