[Federal Register Volume 83, Number 195 (Tuesday, October 9, 2018)]
[Proposed Rules]
[Pages 50531-50533]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-21841]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 986

[Doc. No. AMS-SC-18-0019; SC18-986-1 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; 
Revision of Reporting Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule invites comments on a proposal to revise 
the reporting requirements under the Federal marketing order for 
pecans. The revised reporting requirements would enable the American 
Pecan Council (Council) to collect information from handlers on the 
average handler price paid and the average shelled pecan yield. The 
Council would use this information to provide important statistical 
reports to the industry and meet requirements under the marketing 
order.

DATES: Comments must be received by November 8, 2018.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. 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. All 
comments should reference the document number and the date and page 
number of this issue of the Federal Register and will be made 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 proposal 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, pursuant to 5 U.S.C. 
553, would amend regulations issued to carry out a marketing order as 
defined in 7 CFR 900.2(j). 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. Part 
986 (referred to as 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 Council locally administers 
the Order and is comprised of growers and handlers of pecans operating 
within the production area, and one accumulator and one public member.
    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. This proposed rule is not intended to have 
retroactive effect.
    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. A 
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 revise the reporting requirements under 
the Order. If approved, this action would require all pecan handlers to 
report to the Council the average handler price paid and average 
shelled pecan yield as part of its existing year-end report. This 
information would be used by the Council to provide statistical reports 
to the industry and meet requirements under the Order. This proposal 
was unanimously recommended by the Council at its January 24, 2018, 
meeting and affirmed at its April 17, 2018 meeting.
    Section 986.76 provides the authority to collect reports on the 
quantity of pecans handled and other pertinent information as specified 
by the Council. Section 986.78 provides, with the

[[Page 50532]]

approval of the Secretary, authority for the Council to collect other 
reports and information from handlers needed to perform its duties. 
Section 986.175 specifies that handlers shall submit a year-end report 
to the Council that includes the amount of shelled and inshell pecans 
in inventory, total inventory calculated on an inshell basis, total 
weight and type of domestic pecans handled for the fiscal year, and 
information on assessments owed, paid, or due.
    This proposed rule would revise Sec.  986.175 to require that 
additional information be included in the year-end report. These 
revisions would require handlers to report the average price paid by 
handler and average yield of shelled pecans as part of the existing 
year-end report.
    At its January 24, 2018, and April 17, 2018, meetings, the Council 
reviewed the reporting requirements under the Order and determined 
there were additional data that would be beneficial to collect and 
summarize for the industry on an annual basis. Specifically, the 
Council recommended adding two additional items to be reported as part 
of the annual year-end reporting requirement, average price paid by 
handlers and shelled pecan yield.
    While the National Agricultural Statistics Service (NASS) reports 
average grower prices, this proposed reporting change would provide 
information regarding a handler's overall cost of acquiring pecans. 
Some handlers buy directly from growers, but many buy from other 
handlers or import pecans. Understanding the cost of pecans being 
handled is key information in determining the value of the overall crop 
and subsequent impacts on the market for pecans the following season. 
During the meetings, members noted that collecting the average price 
paid would also be necessary to complete the marketing policy report 
required under the Order. The marketing policy, as required by Sec.  
986.65, must include projected prices for the upcoming fiscal year, 
which would be influenced by handler costs. Further, the Council 
believes providing this information would improve the information 
available to the pecan industry. In particular the Council feels this 
information may give growers better information that can be used in 
making business decisions. The Council recommended adding this 
reporting requirement as there is currently no comprehensive source for 
handler cost information.
    The Council also discussed asking handlers to provide information 
regarding the weight of shelled pecans handled. During the formal 
rulemaking hearing to promulgate the Order, a witness testified 
regarding a conversion rate of multiplying the shelled weight by two to 
calculate inshell weight. That conversion rate was incorporated into 
the Order. Using this conversion, the weight of shelled pecans is 
approximately 50 percent of the inshell weight. This proportion is 
referred to as the ``shell-out'' or shelled pecan yield. However, there 
are natural variations in pecans and yield can vary depending on the 
thickness of the shells of different varieties and can also vary from 
year to year. These fluctuations make it challenging to accurately 
convert the total inshell volume harvested into shelled pounds, or 
shelled pounds into their inshell equivalent to provide an accurate 
estimate of overall supply.
    As with the handler price paid, there is currently no central 
industry source for information on the shelled pecan yield. The Council 
believes collecting this data would allow them to provide the industry 
with an updated annual average of this yield, which could be an 
indicator of quality, and over time provide a series of data on shelled 
pecan yield that would allow them to determine if changes to the 
current conversion rate are needed.
    Following the recommendation of the proposed changes made at the 
January 24, 2018 meeting, some members had questions about the specific 
data that would be collected. Based on these questions, the Council 
made some adjustments to the proposed form to clarify that handlers 
would report the average price paid for all inshell pecans purchased 
during the fiscal year, regardless of how the pecans are handled, 
including pecans from outside the production area. For the purposes of 
this form, the terms crop year and fiscal year are synonymous. The 
Council reviewed the revised reporting form at its April 17, 2018, 
meeting and affirmed that the new language met their original intent.
    The Council believes these revised reporting requirements are 
necessary to provide accurate reports to the industry regarding average 
price paid, yield for shelled pecans, and to meet requirements under 
the Order. The industry would use this information to complement the 
information provided by NASS in the development of its marketing policy 
and to collect accurate data to determine if the definition of weight 
in Sec.  986.43 needs to be amended.

Initial Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) 
has considered the economic impact of this action 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 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 growers of pecans in the production 
area and approximately 250 handlers subject to regulation under the 
Order. Small agricultural growers 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 NASS, the average grower price for 
pecans during the 2016-2017 season was $2.59 per pound and 269 million 
pounds were utilized. The value for pecans that year totaled $697 
million ($2.59 per pound multiplied by 269 million pounds). Taking the 
total value of production for pecans and dividing it by the total 
number of pecan growers provides an average return per grower of 
$278,684. Using the average price and utilization information, and 
assuming a normal distribution among growers, the majority of growers 
receive less than $750,000 annually.
    Evidence presented at the formal rulemaking hearing indicates an 
average handler margin of $0.58 per pound. Adding this margin to the 
average grower price of $2.59 per pound of inshell pecans results in an 
estimated handler price of $3.17 per pound. With a total 2017 
production of 269 million pounds, the total value of production in 2017 
was $853 million ($3.17 per pound multiplied by 269 million pounds). 
Taking the total value of production for pecans and dividing it by the 
total number of pecan handlers provides an average return per handler 
of $3.4 million. Using this estimated price, the utilization volume, 
number of handlers, and assuming a normal distribution among handlers, 
the majority of handlers have annual receipts of less than $7,500,000. 
Thus, the majority of growers and handlers regulated under the Order 
may be classified as small entities.

[[Page 50533]]

    This proposed rule would revise the reporting requirements in Sec.  
986.175. This action would require all pecan handlers to report to the 
Council the average handler price paid and average shelled pecan yield 
as part of its existing year-end report. This information would be used 
by the Council to provide statistical reports to the industry and meet 
requirements under the Order. The authority for this proposal is 
provided in Sec. Sec.  986.76 and 986.78.
    It is not anticipated that this proposed rule would impose 
additional costs on handlers or growers, regardless of size. Council 
members, including those representing small businesses, indicated the 
average handler price paid and the average shelled pecan yield 
information is already recorded and maintained by handlers as a part of 
their daily business and the information should be readily accessible. 
Consequently, any additional costs associated with this change would be 
minimal and apply equally to all handlers.
    This action should also help the industry by providing additional 
data on pecans handled. This information would help with marketing and 
planning for the industry, as well as provide important information in 
preparing the annual marketing policy required by the Order. This 
change would also assist with the development of a dataset to determine 
if the conversion rate for shelled to inshell pecans needs to be 
revised. The benefits of this rule are expected to be equally available 
to all pecan growers and handlers, regardless of their size.
    The Council discussed other alternatives to this proposed action, 
including making no changes to the current reporting requirements. 
However, having the information on handler price paid and shelled pecan 
yield would provide important information for the industry.
    Another alternative considered was to create a new report for the 
collection of this information. However, the industry recently 
implemented a series of monthly reports that increased the reporting 
burden on handlers. Rather than add to the burden by creating a new 
report, the Council believed it would be more efficient to ask handlers 
for this information as part of the existing year-end reporting 
requirement. Therefore, the alternatives were rejected.
    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 ``Federal 
Marketing Order for Pecans.'' This proposed rule would require changes 
to the Council's existing APC Form 7. However, the changes are minor 
and the currently approved burden for the form should not be altered by 
the proposed changes to the form. The revised form has been submitted 
to OMB for approval.
    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. USDA has not 
identified any relevant Federal rules that duplicate, overlap, or 
conflict with this proposed 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.
    Further, the Council's meetings were widely publicized throughout 
the pecan industry and all interested persons were invited to attend 
the meetings and participate in Council deliberations on all issues. 
Additionally, the Council's Committee meetings held on January 24, 
2018, and April 17, 2018, were also public meetings 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 information collection 
impacts of this proposed action on small businesses.
    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 proposal. 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, Nuts, 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. Section 986.175 is amended by revising paragraphs (a) introductory 
text, (a)(7) and (8), and adding paragraphs (a)(9) and (10) to read as 
follows:


Sec.  986.175   Handler inventory.

    (a) Handlers shall submit to the Council a year end inventory 
report following August 31 each fiscal year. Handlers shall file such 
reports by September 10. Should September 10 fall on a weekend, reports 
are due by the first business day following September 10. Such reports 
shall be reported to the Council on APC Form 7. For the purposes of 
this form, ``crop year'' is the same as the ``fiscal year.'' The report 
shall include:
* * * * *
    (7) Total weight and type of domestic pecans handled for the fiscal 
year;
    (8) Total assessments owed, assessments paid to date, and remaining 
assessments due to be paid by the due date of the year-end inventory 
report for the fiscal year;
    (9) The average price paid for all inshell pecans purchased during 
the fiscal year regardless of how the pecans are handled, including 
pecans from outside the production area; and
    (10) The average yield of shelled pecans per pound of inshell 
pecans shelled during the fiscal year.

    Dated: October 3, 2018.
Bruce Summers,
Administrator, Agricultural Marketing Service.
[FR Doc. 2018-21841 Filed 10-5-18; 8:45 am]
 BILLING CODE 3410-02-P