[Federal Register Volume 84, Number 127 (Tuesday, July 2, 2019)]
[Rules and Regulations]
[Pages 31459-31462]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-13923]



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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. 84, No. 127 / Tuesday, July 2, 2019 / Rules 
and Regulations  

[[Page 31459]]



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: Final rule.

-----------------------------------------------------------------------

SUMMARY: This rule changes 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 rule also makes administrative changes to 
other provisions of the Order.

DATES: Effective: August 1, 2019.

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) 720-9915; or electronic mail: 
[email protected].

SUPPLEMENTARY INFORMATION: This rule 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' '' (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 rule 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 rule reduces the size of the Board from 12 members to 8 
members, reduces 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), eliminates the at-large 
seat, and changes 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 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 will 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.

[[Page 31460]]

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 this amendment, the total number of Board members will 
decrease from the current 12 members to 8 members. The 8-member Board 
will be comprised of 7 manufacturers and 1 importer. Of the 7 
manufacturers, 4 members will be from the South, and 3 members will be 
from all other parts of the U.S. According to the Board, this action 
will make the reduced number of seats easier to fill and reflect the 
current distribution of the industry.
    The Board 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 will have 10 members 
consisting of 5 members representing the South, 4 members representing 
the other parts of the U.S., and 1 importer. This will require the 
Board to fill two seats in the South region whose terms will expire 
December 31, 2019. The original recommendation was for the 2021 Board 
to have 8 members consisting of 4 members representing the South, 3 
members from other parts of the U.S., and 1 importer. However, this 
would require half of the board seats to be filled in one year, the 
five commenters requested that the 2021 Board have 9 members consisting 
of 5 members representing the South, 3 members representing other parts 
of the U.S., and 1 importer; and the 2022 Board and subsequent Boards 
have 8 members consisting of 4 members representing the South, 3 
members representing other parts of the U.S., and 1 importer. 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 will 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 will 
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 will 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 will reflect the accurate 
OMB control number.

Final 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 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 in 2017. Thus, the majority of 
manufacturers would not be considered small businesses.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    Based on U.S. Customs and Border Protection (Customs) data, it is 
estimated that in 2017 there were approximately 1700 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 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

[[Page 31461]]

to Customs data, the value of paper and paper-based packaging imports 
in 2017 was about $5.9 billion.
    The rule reduces the size of the Board from 12 members to 8, 
reduces the number of regions for manufacturers from four (South, 
Northeast, Midwest, and West) to two (South, and other parts of the 
United States), eliminates the at-large member, and changes the 
nomination process as specified in Sec. Sec.  1222.40 and 1222.41. The 
revisions 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 revised 8-member Board will be comprised of 7 manufacturers and 
1 importer. Of the 7 manufacturers, 4 members will be from the South, 
and 3 members will be from all other parts of the U.S. According to the 
Board, this action makes the reduced number of seats easier to fill and 
reflects the current distribution of the industry.
    This rule is also changing the nomination procedures. The Board 
unanimously recommended eliminating the election process and 
recommended a new nomination process, whereby all the submitted names 
of the eligible candidates are submitted to the Secretary with 
recommendations by the Board. This action allows the Board the 
flexibility to provide a slate that reflects the diverse membership of 
the paper and paper-based packaging industry in terms of various 
segments of the industry.
    The new nomination process allows 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 evaluates all the 
nominees and recommends at least two names for each open seat. Other 
qualified persons interested in serving in the open seats, but not 
recommended by the Board, are to be submitted and designated as 
additional nominees for consideration by the Secretary.
    The changes to the size of the Board, number of regions, and 
nomination process are administrative in nature and have no economic 
impact on entities covered under the program. These changes are thought 
to 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 
have to complete a background questionnaire. Those requirements are 
addressed later in this rule in the section titled Reporting and 
Recordkeeping Requirements.
    Regarding alternatives, the Board considered recommending no 
changes and considered 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 
will establish a Board that better reflects the industry.
    Lastly, this rule makes 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 rule does not result in a change to the 
information collection and recordkeeping requirements previously 
approved and does not impose 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. USDA has not 
identified any relevant Federal rules that duplicate, overlap, or 
conflict with this 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.
    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 using a new 
nominations process. The Board meetings are open to the public and 
interested persons are invited to participate and express their views.
    A proposed rule concerning this action was published in the Federal 
Register on April 12, 2019 (84 FR 14891). A 30-day comment period 
ending May 13, 2019, was provided to allow interested persons to submit 
comments.

Analysis of Comments

    Five comments were received in response to the proposed rule. All 
of the comments supported reducing the size of the Board from 12 to 8 
members, reducing the number of regions from 5 (South, Northeast, 
Midwest, West, and at-large) to 2 (South and all other parts of the 
U.S.), and revising the nomination process. All of the comments also 
stated their support for a transitional approach in reducing the Board 
from 12 to 8 members. They were supportive of the Board's original 
proposal to have a two-year term for a member from the South region 
during the transition; however, as stated previously, the 1996 Act and 
Order require members serve for a term of three-years, except for the 
initial appointments, so this change is not being implemented.
    All five commenters stated their concern that losing half of the 
Board in a single year would be disruptive and cause a sudden loss of 
institutional knowledge within the Board. Therefore, in the 
alternative, they suggested adding an additional year to the 
transitional period, for a total of three years. So, 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. The 
2021 Board would have 9 members consisting of 5 members representing 
the South, 3 members representing other parts of the U.S., and 1 
importer. Finally, the 2022 Board and subsequent Boards would have 8 
members consisting of 4 members representing the South, 3 members 
representing other parts of the U.S., and 1 importer. We agree with the 
commenters that adding an additional year to transition from a

[[Page 31462]]

current 12 member Board to an 8 member Board in 2022 and beyond will 
make it less disruptive to the Board's operations going forward. 
Accordingly, we are adopting the modifications and this final rule with 
changes to the composition of the Board from the current Board of 12 
members to 8 members over the next three-years, reducing the number of 
manufacturing regions from 5 (South, Northeast, Midwest, West and at-
large) to 2 (South and all other parts of the U.S.), and modifications 
to the nomination process.
    After consideration of all relevant material presented, including 
the information and recommendations submitted by the Board, the 
comments received, and other available information, it is hereby found 
that this rule, as hereinafter set forth, is consistent with and will 
effectuate the purposes of the 1996 Act.

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 
amended as follows:

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

0
1. The authority citation for 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:


Sec.  1222.40  Establishment and membership.

* * * * *
    (b) Composition of Board. The 2020 Board shall be composed of 10 
members. The 2021 Board shall be composed of 9 members. The 2022 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. For the 2021 Board, 8 members shall be manufacturers, 
and for the 2022 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, five 
members shall be from the South for the 2021 Board, and four members 
shall be from the South for the 2022 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. Revise Sec.  1222.88 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. Revise Sec.  1222.108 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: June 25, 2019.
Bruce Summers,
Administrator.
[FR Doc. 2019-13923 Filed 7-1-19; 8:45 am]
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