[Federal Register Volume 84, Number 71 (Friday, April 12, 2019)]
[Proposed Rules]
[Pages 14891-14894]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-07317]


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 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. 84, No. 71 / Friday, April 12, 2019 / 
Proposed Rules  

[[Page 14891]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1222

[Document Number AMS-SC-18-0072]


Paper and Paper-Based Packaging Promotion, Research and 
Information Order; Change in Membership and Nominations

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposal invites comments on changing the membership and 
nomination procedures of the Paper and Packaging Board (Board). The 
Paper and Paper-Based Packaging Promotion, Research and Information 
Order (Order) is administered by the Board with oversight by the U.S. 
Department of Agriculture (USDA). This proposal would also make 
administrative changes to other provisions of the Order.

DATES: Comments must be received by May 13, 2019.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. Comments may be submitted on the internet at: 
http://www.regulations.gov or to the Promotion and Economics Division, 
Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW, Room 
1406-S, Stop 0244, Washington, DC 20250-0244; facsimile: (202) 205-
2800. 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, including name and address, if 
provided, in the above office during regular business hours or it can 
be viewed at http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Marlene Betts, Marketing Specialist, 
Promotion and Economics Division, Specialty Crops Program, AMS, USDA, 
1400 Independence Avenue SW, Room 1406-S, Stop 0244, Washington, DC 
20250-0244; telephone: (202) 720-5057; facsimile: (202) 205-2800; or 
electronic mail: [email protected].

SUPPLEMENTARY INFORMATION: This proposal affecting 7 CFR part 1222 (the 
Paper and Paper-Based Packaging Promotion, Research and Information 
Order (Order)) is authorized under the Commodity Promotion, Research, 
and Information Act of 1996 (1996 Act) (7 U.S.C. 7411-7425).

Executive Orders 12866, 13563, and 13771

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

Executive Order 13175

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

Executive Order 12988

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

Background

    This proposal invites comments on reducing the size of the Board 
from 12 members to 8 members, reducing the number of regions for 
manufacturer representation on the Board from four (South, Northeast, 
Midwest, and West) to two (South and Other parts of the United States), 
eliminating the at-large seat, and changing the nomination process 
under the Order. The Order is administered by the Board with oversight 
by USDA. Under the Order, assessments are collected from manufacturers 
and importers and used for projects to promote the use of paper and 
paper-based packaging.

Board Membership and Regional Representation

    Currently, the 1996 Act and Sec.  1222.40(c) require the Board to 
review its membership and size of the Board to reflect changes in its 
geographical distribution and quantity of paper and paper-based 
packaging manufactured in the U.S. and the quantity of paper and paper-
based packaging imported into the U.S. This is the first review of the 
Board's membership and size since the Board's implementation in 2014. 
The Board reviewed data to determine if the geographical distribution 
of paper and paper-based packaging manufactured in

[[Page 14892]]

the U.S. and the quantity imported into the U.S. and Board membership 
needed to be changed. The proposed action was unanimously recommended 
by the Board in June 2018 and would contribute to the effective 
administration of the program.
    Section 1222.40 provides that the Board should consist of 12 
members--11 manufacturers and 1 importer. Section 1222.40 also requires 
that the Board be comprised of manufacturers and importers of paper and 
paper-based packaging that manufacture or import 100,000 short tons or 
more of paper and paper-based packaging during the year. Of the 11 
manufacturers, 10 shall be from the following four regions: South--6 
members; Northeast--1 member; Midwest--2 members; and West--1. One 
manufacturer at-large member may be from any region and shall 
manufacture at least 100,000 short tons but no more than 250,000 short 
tons of paper and paper-based packaging. If there are no eligible 
nominees, the seat shall be allocated to the largest producing region.
    In 2017, approximately 61.3 million short tons of U.S. paper and 
paper-based packaging was produced and covered under the program. Of 
the 61.3 million short tons, it is estimated that 64 percent was 
manufactured in the South, 17 percent was manufactured in the Midwest, 
9 percent was manufactured in the Northeast, and 10 percent was 
manufactured in the West. While the U.S. production of paper and paper-
based packaging has dropped from 66.1 million short tons in 2014 to 
61.3 million short tons in 2017, the number of domestic companies that 
pay assessments into the program has decreased from 53 to 39, which 
equals a 26 percent decrease in three years. Due to the consolidation 
in the industry, the Board believes that the proposed changes to the 
Board size and its regions would better reflect the distribution of the 
manufacturing of paper and paper-based packaging and the imports of 
paper and paper-based packaging.
    With the proposed amendment, the total number of Board members 
would decrease from the current 12 members to 8 members. The proposed 
8-member Board would be comprised of 7 manufacturers and 1 importer. Of 
the 7 manufacturers, 4 members would be from the South, and 3 members 
would be from all other parts of the U.S. According to the Board, this 
proposed action should make the reduced number of seats easier to fill 
and reflect the current distribution of the industry.
    The Board has recommended a transitional approach to reduce the 
Board from 12 members to 8 members over a three-year period. The 2019 
Board currently has 12 members. The 2020 Board would have 10 members 
consisting of 5 members representing the South, 4 members representing 
the other parts of the U.S., and 1 importer. This would require the 
Board to fill two seats in the South region whose terms will expire 
December 31, 2019. The 2021 Board would have 8 members consisting of 4 
members representing the South, 3 members from other parts of the U.S., 
and 1 importer. This would require the Board to fill two seats--an 
importer seat and one seat representing other parts of the U.S. whose 
terms would expire on December 31, 2020. These changes are authorized 
under Sec.  1222.40(c). Lastly, the Board recommended one seat from the 
South whose term will expire on December 31, 2021, be for a two-year 
term rather than a three-year term. Section 515 of the 1996 Act (7 
U.S.C. 7414) and Sec.  1222.42 state that members shall serve for a 
term of three-years, except for the initial appointments. Therefore, a 
term shorter than three-years is not being implemented as recommended.

Nomination Process

    Sections 1222.41 and 1222.46 provide authority for the Board to 
recommend amendments to the Order. Nominations to the Board are 
currently made by an election process. This process is conducted by the 
Board, which notifies all known manufacturers and importers of 100,000 
short tons or more of paper and paper-based packaging annually of the 
open Board seats. Manufacturers and importers may nominate eligible 
persons from their own company or any other eligible company for a seat 
on the Board. Once the Board receives the nominees, the Board conducts 
an election by mail ballot in each region where there is a vacancy. The 
votes are tabulated by region, with nominees receiving the highest 
number of votes placed at the top of the list, in descending order. Due 
to consolidation of companies from 53 to 39, the pool of eligible 
manufacturers to fill board seats has decreased, therefore the number 
of eligible nominees has decreased too. The Board recommended a new 
nomination process to help alleviate this situation.
    The Board would conduct outreach and issue a call for nominations 
for all open seats to all known manufacturers and importers of 100,000 
short tons or more of paper and paper-based packaging. The Board would 
evaluate all the nominees and recommend at least two names for each 
open seat as their first and second choice to be placed on the 
nomination slate. Other qualified persons interested in serving in the 
open seats, but not recommended by the Board will be submitted and 
designated as additional nominees for consideration by the Secretary.
    In addition, this proposal would change the OMB control number in 
Sec. Sec.  1222.88 and 1222.108 from 0581-0281 to 0581-0093, the 
control number assigned by OMB. This change would reflect the accurate 
OMB control number.

Initial Regulatory Flexibility Act Analysis

    In accordance with the Regulatory Flexibility Act (RFA) (5 U.S.C. 
601-612), AMS is required to examine the impact of the proposed rule on 
small entities. Accordingly, AMS has considered the economic impact of 
this action on such entities.
    The purpose of the RFA is to fit regulatory actions to the scale of 
businesses subject to such actions so that small businesses will not be 
disproportionately burdened. The Small Business Administration (SBA) 
defines, in 13 CFR part 121, small agricultural producers as those 
having annual receipts of no more than $750,000, and small agricultural 
service firms (first handlers and importers) as those having annual 
receipts of no more than $7.5 million.
    According to the Board, there are 39 manufacturers in the United 
States that produce the types of paper and paper-based packaging 
covered under the Order. Using an average price of $784 per short 
ton,\1\ a manufacturer who produces less than about 9,560 short tons of 
paper and paper-based packaging per year would be considered a small 
entity. It is estimated that no more than three manufacturers produced 
less than 9,560 short tons per year. Thus, the majority of 
manufacturers would not be considered small businesses.
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    \1\ Industry sources do not publish information on average price 
for paper and paper-based packaging. A reasonable estimate for 
average price of paper and paper-based packaging is the value per 
ton of paper and paper-based packaging exports. According to U.S. 
Census data, the average value of paper and paper-based packaging 
exports in 2017 was approximately $784 per short ton.
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    Based on U.S. Customs and Border Protection (Customs) data, it is 
estimated that in 2017 there were approximately 1,700 importers of 
paper and paper-based packaging. Fifty importers, or about 3 percent, 
imported more than $7.5 million worth of paper and paper-based 
packaging. Thus, the majority of importers would be considered small 
entities. However, all of the 20 entities that imported 100,000

[[Page 14893]]

short tons or more (the Order's exemption threshold) also imported more 
than $7.5 million worth of paper and paper-based packaging. Therefore, 
none of the 20 importers covered under the Order would be considered 
small businesses.
    Based on domestic production of approximately 61.3 million short 
tons in 2017 and an average price of $784 per short ton, the domestic 
paper and paper-based packaging industry is valued at approximately 
$48.1 billion. According to Customs data, the value of paper and paper-
based packaging imports in 2017 was about $5.9 billion.
    The proposed amendments would reduce the size of the Board from 12 
members to 8, reduce the number of regions for manufacturers from four 
(South, Northeast, Midwest, and West) to two (South, and other parts of 
the United States), eliminate the at-large member, and change the 
nomination process as specified in Sec. Sec.  1222.40 and 1222.41. The 
proposed amendments are administrative in nature; therefore, there 
should be no economic impact on manufacturers and importers.
    Currently, the Order requires 12 Board members, 11 domestic 
manufacturers and one importer. Of the 11 domestic manufacturers, 6 
represent the South, 2 represent the Midwest, 1 represents the 
Northeast, 1 represents the West, and 1 at-large member represents any 
region and must manufacture at least 100,000 short tons, but not more 
than 250,000 short tons. Due to mergers and closings, the number of 
eligible companies (manufacturers and importers of 100,000 tons or more 
of paper and paper-based packaging annually) has decreased from 53 to 
39 eligible manufacturers since the inception of the Order in 2014. 
With an overall pool of 39 eligible U.S. manufacturers, an 8-member 
Board can effectively represent the interest of the paper and paper-
based packaging industry.
    The proposed 8-member Board would be comprised of 7 manufacturers 
and 1 importer. Of the 7 manufacturers, 4 members would be from the 
South, and 3 members would be from all other parts of the U.S. 
According to the Board, this proposed action would make the reduced 
number of seats easier to fill and reflect the current distribution of 
the industry.
    This proposed rule is also recommending a change to the current 
nomination procedures. The Board unanimously recommended eliminating 
the election process and proposed a new nomination process, whereby all 
the submitted names of the eligible candidates would be submitted to 
the Secretary with recommendations by the Board. This action would 
allow the Board the flexibility to provide a slate that would reflect 
the diverse membership of the paper and paper-based packaging industry 
in terms of various segments of the industry.
    The new nomination process would allow the Board to conduct 
outreach to all known manufacturers and importers of 100,000 short tons 
or more of paper and paper-based packaging, whereby the Board would 
evaluate all the nominees and recommend at least two names for each 
open seat. Other qualified persons interested in serving in the open 
seats, but not recommended by the Board will be submitted and 
designated as additional nominees for consideration by the Secretary.
    The proposed changes to the size of the Board, number of regions, 
and nomination process is administrative in nature and would have no 
economic impact on entities covered under the program. These changes 
would help increase the pool of candidates as companies operate in 
multiple regions and seek nomination for a region of their choice. 
Eligible manufacturers and importers interested in serving on the Board 
would have to complete a background questionnaire. Those requirements 
are addressed later in this proposal in the section titled Reporting 
and Recordkeeping Requirements.
    Alternatives to the proposal that were considered by the Board 
included recommending no changes and considering a variety of 
mechanisms for nominating candidates. The Board explored whether other 
industry organizations should be tasked with nominating candidates but 
determined that it would unnecessarily complicate the nominations 
process. However, due to mergers and closings, the number of eligible 
companies has decreased making it more difficult to fill Board seats. 
Therefore, the Board concluded that reducing the Board size, reducing 
the number of regions, eliminating the at-large member, and revising 
the nomination process would provide a Board that would better reflect 
the industry.
    Lastly, this rule proposes changes to Sec. Sec.  1222.80 and 
1222.108 to correct the OMB control numbers that are assigned to the 
Paper and Packaging Board by OMB.

Reporting and Recordkeeping Requirements

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the information collection requirements that are imposed 
by the part have been previously approved by OMB under OMB control 
number 0581-0093. This proposed rule would not result in a change to 
the information collection and recordkeeping requirements previously 
approved and would impose no additional reporting requirements or 
recordkeeping burden on manufacturers or importers of paper and paper-
based packaging.
    As with all Federal promotion programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public-sector agencies. Finally, USDA has 
not identified any relevant Federal rules that duplicate, overlap, or 
conflict with this proposed rule.
    The Board met on June 28, 2018, and unanimously recommended 
reducing the size of the Board, reducing the number of regions and 
eliminating the election process for nominations and proposing a new 
nominations process. The Board meetings are open to the public and 
interested persons are invited to participate and express their views.
    AMS has performed this initial RFA regarding the impact of this 
proposed action on small entities and invites comments concerning 
potential effects of this action.
    USDA has determined that this proposed rule is consistent with and 
would effectuate the purposes of the 1996 Act.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposal. All written comments received in response to 
this proposed rule by the date specified will be considered prior to 
finalizing this action.

List of Subjects in 7 CFR Part 1222

    Administrative practice and procedure, Advertising, Consumer 
information, Marketing agreements, Paper and paper-based packaging 
promotion, Reporting and recordkeeping requirements.

    For the reasons set forth in the preamble, 7 CFR part 1222 is 
proposed to be amended as follows:

PART 1222--PAPER AND PAPER-BASED PACKAGING PROMOTION, RESEARCH AND 
INFORMATION ORDER

0
1. The authority citation for 7 CFR part 1222 continues to read as 
follows:

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

0
2. Revise Sec.  1222.40(b) to read as follows:

[[Page 14894]]

Sec.  1222.40  Establishment and membership.

* * * * *
    (b) Composition of Board. The 2020 Board shall be composed of 10 
members. The 2021 Board and each subsequent Board shall be composed of 
8 members. The Boards shall be established as follows:
    (1) Manufacturers. For the 2020 Board, 9 members shall be 
manufacturers and for the 2021 Board and each subsequent Board, 7 
members shall be manufacturers, from the following two regions:
    (i) Five members shall be from the South for the 2020 Board and 
four members shall be from the South for the 2021 Board and each 
subsequent Board. The South shall consist of the states of Alabama, 
Arkansas, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, 
Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, 
Texas, Virginia, and West Virginia; and
    (ii) Four members shall be from all other parts of the United 
States for the 2020 Board and three members shall be from all other 
parts of the United States for the 2021 Board and each subsequent 
Board. All other parts of the United States consist of those states not 
listed in paragraph (b)(1)(i) of this section.
    (2) Importers. One member shall be an importer.
* * * * *
0
3. Revise Sec.  1222.41(c) to read as follows:


Sec.  1222.41  Nominations and appointments.

* * * * *
    (c) Subsequent nominations shall be conducted as follows:
    (1) The Board shall conduct outreach to all known manufacturers and 
importers manufacturing or importing 100,000 short tons or more of 
paper and paper-based packaging in a marketing year. Manufacturers and 
importers may submit nominations to the Board;
    (2) Manufacturer and importer nominees may provide the Board a 
short background statement outlining their qualifications to serve on 
the Board;
    (3) Nominees may seek nomination to the Board for all vacant seats 
for which the nominees are qualified;
    (4) For domestic seats allocated by region, domestic manufacturers 
must manufacture paper and paper-based packaging in the region for 
which they seek nomination. Nominees that manufacture in both regions 
may seek nomination in one region of their choice. The Board will issue 
the call for nominations to all known manufacturers and recommend 
nominees for each open seat and the additional nominees to the 
Secretary;
    (5) Nominees that are both a manufacturer and an importer may seek 
nomination to the board as either a manufacturer or importer so long as 
they meet the qualifications. The Board will issue the call for 
nominations to all known importers and recommend nominees for each open 
seat and the additional nominees to the Secretary;
    (6) The Board will evaluate all the nominees and recommend at least 
two names for each open seat. Other qualified persons interested in 
serving in the open seats, but not recommended by the Board, will be 
designated by the Board as additional nominees for consideration by the 
Secretary;
    (7) The Board must submit nominations to the Secretary at least six 
months before the new Board term begins. From the nominations submitted 
by the Board, the Secretary shall select the members of the Board;
    (8) Any manufacturer or importer nominated to serve on the Board 
shall file with the Secretary at the time of the nomination a 
background questionnaire;
    (9) From the nominations made pursuant to this section, the 
Secretary shall appoint members of the Board on the basis of 
representation provided in Sec.  1222.40(b);
    (10) No two members shall be employed by a single corporation, 
company, partnership or any other legal entity; and,
    (11) The Board may recommend to the Secretary modifications to its 
nomination procedures as it deems appropriate. Any such modification 
shall be implemented through rulemaking by the Secretary.
0
4. Section 1222.88 is revised to read as follows:


Sec.  1222.88  OMB control number.

    The control numbers assigned to the information collection 
requirements by the Office of Management and Budget pursuant to the 
Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, are OMB control 
number 0505-0001 (Board nominee background statement) and OMB control 
number 0581-0093.
0
5. Section 1222.108 is revised to read as follows:


Sec.  1222.108  OMB control number.

    The control number assigned to the information collection 
requirement in this subpart by the Office of Management and Budget 
pursuant to the Paperwork Reduction Act of 1995, 44 U.S.C. is OMB 
control number 0581-0093.

    Dated: April 7, 2019.
Bruce Summers,
Administrator.
[FR Doc. 2019-07317 Filed 4-11-19; 8:45 am]
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