[Federal Register Volume 84, Number 211 (Thursday, October 31, 2019)]
[Rules and Regulations]
[Pages 58522-58564]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-23749]



[[Page 58521]]

Vol. 84

Thursday,

No. 211

October 31, 2019

Part IV





 Department of Agriculture





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 Agricultural Marketing Service





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7 CFR Part 990





Establishment of a Domestic Hemp Production Program; Interim Rule

  Federal Register / Vol. 84 , No. 211 / Thursday, October 31, 2019 / 
Rules and Regulations  

[[Page 58522]]


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DEPARTMENT OF AGRICULTURE

 Agricultural Marketing Service

7 CFR Part 990

[Doc. No. AMS-SC-19-0042; SC19-990-2 IR]


Establishment of a Domestic Hemp Production Program

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule establishes a new part specifying the rules and 
regulations to produce hemp. This action is mandated by the Agriculture 
Improvement Act of 2018, which amended the Agricultural Marketing Act 
of 1946. This rule outlines provisions for the Department of 
Agriculture (USDA) to approve plans submitted by States and Indian 
Tribes for the domestic production of hemp. It also establishes a 
Federal plan for producers in States or territories of Indian Tribes 
that do not have their own USDA-approved plan. The program includes 
provisions for maintaining information on the land where hemp is 
produced, testing the levels of delta-9 tetrahydrocannabinol, disposing 
of plants not meeting necessary requirements, licensing requirements, 
and ensuring compliance with the requirements of the new part.

DATES: 
    Effective date: This rule is effective October 31, 2019 through 
November 1, 2021.
    Comment due dates: Comments received by December 30, 2019 will be 
considered prior to issuance of a final rule. Pursuant to the Paperwork 
Reduction Act (PRA), comments on the information collection burden must 
be received by December 30, 2019.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule and the proposed information collection. Comments 
should be submitted via the Federal eRulemaking portal at 
www.regulations.gov. Comments may also be filed with Docket Clerk, 
Marketing Order and Agreement Division, Specialty Crops Program, AMS, 
USDA, 1400 Independence Avenue SW, STOP 0237, Washington, DC 20250-
0237; or Fax: (202) 720-8938. 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: www.regulations.gov. All comments submitted in response to 
this rule will be included in the record and will be made available to 
the public.

FOR FURTHER INFORMATION CONTACT: Bill Richmond, Chief, U.S. Domestic 
Hemp Production Program, 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] or Patty Bennett, Director, Marketing Order 
and Agreement Division, Specialty Crops Program, AMS, USDA at the same 
address and phone number above or Email: [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 Section 10113 of 
Public Law 115-334, the Agriculture Improvement Act of 2018 (2018 Farm 
Bill). Section 10113 amended the Agricultural Marketing Act of 1946 
(AMA) by adding Subtitle G (sections 297A through 297D of the AMA). 
Section 297B of the AMA requires the Secretary of Agriculture 
(Secretary) to evaluate and approve or disapprove State or Tribal plans 
regulating the production of hemp. Section 297C of the AMA requires the 
Secretary to establish a Federal plan for producers in States and 
territories of Indian Tribes not covered by plans approved under 
section 297B. Lastly, section 297D of the AMA requires the Secretary to 
promulgate regulations and guidelines relating to the production of 
hemp, including sections 297B and 297C, in consultation with the U.S. 
Attorney General. USDA is committed to issuing the final rule 
expeditiously after reviewing public comments and obtaining additional 
information during the initial implementation. This interim final rule 
will be effective for two years and then be replaced with a final rule.

I. Introduction

    Hemp is a commodity that can be used for numerous industrial and 
horticultural purposes including fabric, paper, construction materials, 
food products, cosmetics, production of cannabinoids (such as 
cannabidiol or CBD), and other products.\1\ While hemp was produced 
previously in the U.S. for hundreds of years, its usage diminished in 
favor of alternatives. Hemp fiber, for instance, which had been used to 
make rope and clothing, was replaced by less expensive jute and abaca 
imported from Asia. Ropes made from these materials were lighter and 
more buoyant, and more resistant to salt water than hemp rope, which 
required tarring. Improvements in technology further contributed to the 
decline in hemp usage. The cotton gin, for example, eased the 
harvesting of cotton, which replaced hemp in the manufacture of 
textiles.
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    \1\ The 2018 Farm Bill explicitly preserved the authority of the 
U.S. Food and Drug Administration (FDA) to regulate hemp products 
under the Federal Food, Drug, and Cosmetic Act (FD&C Act) and 
section 351 of the Public Health Service Act (PHS Act). See section 
297D(c)(1) (``Nothing in this subchapter shall affect or modify . . 
. the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.); 
section 351 of the Public Health Service Act (42 U.S.C. 262); or the 
authority of the Commissioner of Food and Drugs and the Secretary of 
Health and Human Services . . .'' under those Acts). Accordingly, 
products containing cannabis and cannabis-derived compounds are 
subject to the same authorities and requirements as FDA-regulated 
products containing any other substance.
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    Hemp production in the U.S. has seen a resurgence in the last five 
years; however, it remains unclear whether consumer demand will meet 
the supply. High prices for hemp, driven primarily by demand for use in 
producing CBD, relative to other crops, have driven increases in 
planting. Producer interest in hemp production is largely driven by the 
potential for high returns from sales of hemp flowers to be processed 
into CBD oil.
    USDA regulates the importation of all seeds for planting to ensure 
safe agricultural trade. Hemp seeds can be imported into the United 
States from Canada if accompanied by either: (1) A phytosanitary 
certification from Canada's national plant protection organization to 
verify the origin of the seed and confirm that no plant pests are 
detected; or (2) a Federal Seed Analysis Certificate (SAC, PPQ Form 
925) for hemp seeds grown in Canada. Hemp seeds imported into the 
United States from countries other than Canada may be accompanied by a 
phytosanitary certificate from the exporting country's national plant 
protection organization to verify the origin of the seed and confirm 
that no plant pests are detected. Accordingly, since importation of 
seed is covered under USDA Animal and Plant Health Inspection Service 
(APHIS) regulations, this rule does not further address hemp seed 
imports or exports. For imports of hemp plant material,

[[Page 58523]]

APHIS will have jurisdiction for any pest related issues if they arise.
    The 2018 Farm Bill allows for the interstate transportation and 
shipment of hemp in the United States. This rule does not affect the 
exportation of hemp. Should there be sufficient interest in exporting 
hemp in the future, USDA will work with industry and other Federal 
agencies to help facilitate this process.
    Prior to the 2018 Farm Bill, Cannabis sativa L. with delta-9 
tetrahydrocannabinol (THC) levels greater than 0.3% fell within the 
definition of ``marihuana'' under the Controlled Substances Act (CSA), 
21 U.S.C. 801 et seq., and was therefore a Schedule I controlled 
substance unless it fell under a narrow range of exceptions (e.g., the 
``mature stalks'' of the plant).\2\ As a result, many aspects of 
domestic production of what is now defined as hemp was limited to 
persons registered under the CSA to do so. Under the Agricultural Act 
of 2014 (2014 Farm Bill), Public Law 113-79, State departments of 
agriculture and institutions of higher education were permitted to 
produce hemp as part of a pilot program for research purposes. The 
authority for hemp production provided in the 2014 Farm Bill was 
extended by the 2018 Farm Bill, which was signed into law on December 
20, 2018.
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    \2\ Although the statutory spelling is ``marihuana'' in the 
Controlled Substances Act, this rule uses the more commonly used 
spelling of marijuana.
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    The 2018 Farm Bill requires USDA to promulgate regulations and 
guidelines to establish and administer a program for the production of 
hemp in the United States. Under this new authority, a State or Indian 
Tribe that wants to have primary regulatory authority over the 
production of hemp in that State or territory of that Indian Tribe may 
submit, for the approval of the Secretary, a plan concerning the 
monitoring and regulation of such hemp production. For States or Indian 
Tribes that do not have approved plans, the Secretary is directed to 
establish a Departmental plan to monitor and regulate hemp production 
in those areas.
    There are similar requirements that all hemp producers must meet. 
These include: Licensing requirements; maintaining information on the 
land on which hemp is produced; procedures for testing the THC 
concentration levels for hemp; procedures for disposing of non-
compliant plants; compliance provisions; and procedures for handling 
violations.
    After extensive consultation with the Attorney General, USDA is 
issuing this interim final rule to establish the domestic hemp 
production program and to facilitate the production of hemp, as set 
forth in the 2018 Farm Bill. This interim rule will help expand 
production and sales of domestic hemp, benefiting both U.S. producers 
and consumers. With the publication of the interim rule, USDA will 
begin to implement the hemp program including reviewing State and 
Tribal plans and issuing licenses under the USDA hemp plan. There is 
also a 60-day comment period during which interested persons may submit 
comments on this interim rule. The comment period will close on 
December 30, 2019. After reviewing and evaluating the comments, USDA 
will draft and publish a final rule within two years of the date of 
publication. USDA will evaluate all information collected during this 
period to adjust, if necessary, this rule before finalizing.
    For the purposes of this new part, and as defined in the 2018 Farm 
Bill, the term ``hemp'' means the plant species Cannabis sativa L. and 
any part of that plant, including the seeds thereof and all 
derivatives, extracts, cannabinoids, isomers, acids, salts, and salts 
of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol 
concentration of not more than 0.3 percent on a dry weight basis. 
Delta-9 tetrahydrocannabinol, or THC, is the primary intoxicating 
component of cannabis. Cannabis with a THC level exceeding 0.3 percent 
is considered marijuana, which remains classified as a schedule I 
controlled substance regulated by the Drug Enforcement Administration 
(DEA) under the CSA.
    The term ``State'' means any of one of the fifty States of the 
United States of America, the District of Columbia, the Commonwealth of 
Puerto Rico, and any other territory or possession of the United 
States. The term ``Indian Tribe'' or ``Tribe'' is the same definition 
as in section 4 of the Indian Self-Determination and Education 
Assistance Act (25 U.S.C. 5304). The interim rule also includes the 
definition of ``territory of an Indian Tribe'' to provide clarity to 
the term because the Act does not define it. The definition adopts the 
definition ``Indian Country'' in 18 U.S.C. 1151 because it is a 
commonly acceptable approach to determine a tribal government's 
jurisdiction. Under an approved Tribal plan, the Indian Tribe will have 
regulatory authority over Indian Country under its jurisdiction.\3\ A 
full list of terms and definitions relating to this part can be found 
under ``Definitions'' in section IV.
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    \3\ We note that if an Alaskan Native Corporation wants to 
produce hemp on land it owns in fee simple, it would need to have a 
State or USDA license, whichever is applicable, because that land 
does not qualify as Indian Country and it does not have jurisdiction 
over that land.
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II. State and Tribal Plans

    If a State or Indian Tribes wants to have primary regulatory 
authority over the production of hemp in that State or territory of 
that Indian Tribe they may submit, for the approval of the Secretary, a 
plan concerning the monitoring and regulation of such hemp production. 
State or Tribal plans must be submitted to USDA and approved prior to 
their implementation. Nothing preempts or limits any law of a State or 
Tribe that regulates the production of hemp and is more stringent than 
the provisions in the 2018 Farm Bill. State and Tribal plans developed 
to regulate the production of hemp must include certain requirements 
when submitted for USDA approval. These requirements are outlined in 
the following sections.

A. Land Used for Production

    Plans will need to contain a process by which relevant information 
regarding the land used for hemp production in their jurisdiction is 
collected and maintained. All information on hemp production sites must 
be collected for each producer covered by the State or Tribal plan. The 
information required to be collected includes a legal description of 
the land and geospatial location, which the USDA Farm Service Agency 
(FSA) can help provide, for each field, greenhouse, or other site where 
hemp is produced. Geospatial location is required because many rural 
locations do not have specific addresses and these coordinates will 
assist with the proper identification of hemp production locations. Per 
statute, States and Tribes will need to retain these records for three 
years.
    In addition to the land information required to be submitted to the 
appropriate State or Tribe, licensed producers must also report their 
hemp crop acreage to the FSA. When reporting to FSA, producers must 
provide their State or Tribe-issued license or authorization number. 
The requirement that producers report hemp crop acreage to FSA 
establishes an identification system for hemp production nationwide and 
complies with the information sharing requirements of the 2018 Farm 
Bill. A link to FSA information on how to report hemp crop acreage to 
FSA is available at https://www.fsa.usda.gov/Assets/USDA-FSA-Public/
usdafiles/FactSheets/2019/crop-acreage-

[[Page 58524]]

reporting-19.pdf and will be provided on the USDA hemp production 
program web site. USDA believes that most producers who will plant hemp 
already report land use data to FSA for other crops and to apply for 
various FSA programs, including those for hemp. FSA offices are located 
in various counties within each State and are designed to be a single 
location where customers can access services from USDA agencies 
including FSA, AMS, Natural Resources Conservation Service (NRCS) and 
Rural Development (RD). These offices currently serve the agricultural 
industry within their communities and provide producers access to an 
office for establishing farm and producer records, a place for 
producers to record their licensing information, and a place to report 
crop acreage. The producer may, with supporting documentation, also 
update its FSA farm records for leases, sub-leases, or ownership of 
land.
    Under the hemp pilot program authorized under the terms of the 2014 
Farm Bill, various States developed seed certification programs to help 
producers identify hemp seed that would work well in their specific 
geographical areas. USDA will not include a seed certification program 
in this rule because the same seeds grown in different geographical 
locations and growing conditions can react differently. For example, 
the same seed used in one State to produce hemp plants with THC 
concentrations less than 0.3%, can produce hemp plants with THC 
concentrations of more than 0.3% when planted in a different State. We 
have also found that the technology necessary to determine seed 
planting results in different locations is not advanced enough at this 
time to make a seed-certification scheme feasible. Additionally, we do 
not have accurate data at this time on the origin of most hemp seed 
planted in the U.S.

B. Sampling and Testing for Delta-9 Tetrahydrocannabinol

    State and Tribal plans must incorporate procedures for sampling and 
testing hemp to ensure the cannabis grown and harvested does not exceed 
the acceptable hemp THC level. Sampling procedures, among other 
requirements, must ensure that a representative sample of the hemp 
production is physically collected and delivered to a DEA-registered 
laboratory for testing. Within 15 days prior to the anticipated harvest 
of cannabis plants, a Federal, State, local, or Tribal law enforcement 
agency or other Federal, State or Tribal designated person shall 
collect samples from the flower material from such cannabis plants for 
delta-9 tetrahydrocannabinol concentration level testing. If producers 
delay harvest beyond 15 days, the plant will likely have a higher THC 
level at harvest than the sample that is being tested. This requirement 
will yield the truest measurement of the THC level at the point of 
harvest. Accepting that a pre-harvest inspection is best to identify 
suspicious plants and activities, and that the sample should be taken 
as close to harvest as possible, the time was selected based on what 
would be a reasonable time for a farmer to harvest an entire field. 
This 15-day post-sample harvest window was also designed to allow for 
variables such as rain and equipment delays. We are requesting comments 
and information regarding the 15-day sampling and harvest timeline.
    Testing procedures must ensure the testing is completed by a DEA-
registered laboratory using a reliable methodology for testing the THC 
level. The THC concentration of all hemp must meet the acceptable hemp 
THC level. Samples must be tested using post-decarboxylation or other 
similarly reliable analytical methods where the total THC concentration 
level reported accounts for the conversion of delta-9-
tetrahydrocannabinolic acid (THCA) into THC. Testing methodologies 
currently meeting these requirements include those using gas or liquid 
chromatography with detection. The total THC, derived from the sum of 
the THC and THCA content, shall be determined and reported on a dry 
weight basis. In order to provide flexibility to States and Tribes in 
administering their own hemp production programs, alternative sampling 
and testing protocols will be considered if they are comparable and 
similarly reliable to the baseline mandated by section 297B(a)(2)(ii) 
of the AMA and established under the USDA plan and procedures. USDA 
procedures for sampling and testing will be issued concurrently with 
this rule and will be provided on the USDA website.
    Sections 297B(a)(2)(A)(iii) and 297C(a)(2)(C) require that cannabis 
plants that have a THC concentration level of greater than 0.3% on a 
dry weight basis be disposed of in accordance with the applicable 
State, Tribal, or USDA plan. Because of this requirement, producers 
whose cannabis crop is not hemp will likely lose most of the economic 
value of their investment. Thus, USDA believes that there must be a 
high degree of certainty that the THC concentration level is accurately 
measured and is in fact above 0.3% on a dry weight basis before 
requiring disposal of the crop.
    The National Institute of Standards and Technology (NIST) Reference 
on Constants, Units, and Uncertainty states that ``measurement result 
is complete only when accompanied by a quantitative statement of its 
uncertainty. The uncertainty is required in order to decide if the 
result is adequate for its intended purpose and to ascertain if it is 
consistent with other similar results.'' \4\ Simply stated, knowing the 
measurement of uncertainty is necessary to evaluate the accuracy of 
test results.
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    \4\ https://physics.nist.gov/cuu/Uncertainty/international1.html.
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    This interim rule requires that laboratories calculate and include 
the measurement of uncertainty (MU) when they report THC test results. 
Hemp producers must utilize laboratories that use appropriate, 
validated methods and procedures for all testing activities and who 
also evaluate measurement of uncertainty. Laboratories should meet the 
AOAC International \5\ standard method performance requirements for 
selecting an appropriate method.
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    \5\ USDA established the Association of Official Agricultural 
Chemists in 1884. In 1965, it changed its name to the Association of 
Official Analytical Chemists and became an independent organization 
in 1979. In 1991, it adopted its current, legal name as AOAC 
International.
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    This interim rule defines ``measurement of uncertainty'' as ``the 
parameter, associated with the result of a measurement, that 
characterizes the dispersion of the values that could reasonably be 
attributed to the particular quantity subject to measurement.'' This 
definition is based on the definition of ``uncertainty (of 
measurement)'' in section 2.2.3 of the Joint Committee for Guides in 
Metrology \6\ 100:800, Evaluation of measurement data--Guide to the 
expression of uncertainty in measurement (JCGM Guide). NIST Technical 
Note 1297, Guidelines for Evaluating and Expressing the Uncertainty of 
NIST Measurement Results (TN 1297), is based on the JCGM Guide. USDA 
also relied on the Eurachem/Co-Operation on International Traceability 
in Analytical Chemistry's ``Guide on Use of Uncertainty Information in 
Compliance

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Assessment, First Edition 2007''. Colloquially, the measurement of 
uncertainty is similar to a margin of error. When the measurement of 
uncertainty, normally expressed as a +/- with a number, (e.g., +/- 
0.05) is combined with the reported measurement, it produces a range 
and the actual measurement has a known probability of falling within 
that range (typically 95%).
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    \6\ The Joint Committee for Guides in Metrology is composed of 
international organizations working in the field of metrology. Its 
membership includes the Bureau International des Poids et Mesures, 
the Organisation Internationale de M[eacute]trologie L[eacute]gale, 
the International Organization for Standardization, the 
International Electrotechnical Commission, the International Union 
of Pure and Applied Chemistry, the International Union of Pure and 
Applied Physics, the International Federation of Clinical Chemistry 
and Laboratory Medicine, and the International Laboratory 
Accreditation Cooperation.
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    This interim rule requires that laboratories report the measurement 
of uncertainty as part of any hemp test results. The rule also includes 
a definition of ``acceptable hemp THC level'' to account for the 
uncertainty in the test results. The reported THC concentration level 
of a sample may not be the actual concentration level in the sample. 
The actual THC concentration level is within the distribution or range 
when the reported THC concentration level is combined with the 
measurement of uncertainty.
    It bears emphasis that this rule does not alter Federal law with 
regard to the definition of hemp or marihuana. As stated above, the 
2018 Farm Bill defines hemp as the plant species Cannabis sativa L. and 
any part of that plant, including the seeds thereof and all 
derivatives, extracts, cannabinoids, isomers, acids, salts, and salts 
of isomers, whether growing or not, with a delta-9 THC of not more than 
0.3 percent on a dry weight basis. Likewise, the Federal (CSA) 
definition of marihuana continues to include those parts of the 
cannabis plant as specified in 21 U.S.C. 802(16) (and derivatives 
thereof) that contain more than 0.3 percent delta-9 THC on a dry weight 
basis. The foregoing provisions of Federal law remain in effect for 
purposes of Federal criminal prosecutions as well as Federal civil and 
administrative proceedings arising under the CSA. However, for purposes 
of this rule (i.e., for purposes of determining the obligations of 
licensed hemp growers under the applicable provisions of the 2018 Farm 
Bill), the term ``acceptable hemp THC level'' is used to account for 
the uncertainty in the test results.
    The definition of ``acceptable hemp THC level'' explains how to 
interpret test results with the measurement of uncertainty with an 
example. The application of the measurement of uncertainty to the 
reported delta-9 tetrahydrocannabinol content concentration level on a 
dry weight basis produces a distribution, or range. If 0.3% or less is 
within the distribution or range, then the sample will be considered to 
be hemp for the purpose of compliance with the requirements of State, 
Tribal, or USDA hemp plans. For example, if a laboratory reports a 
result as 0.35% with a measurement of uncertainty of +/-0.06, the 
distribution or range is 0.29% to 0.41%. Because 0.3% is within that 
distribution or range, the sample, and the lot it represents, is 
considered hemp for the purpose of compliance with the requirements of 
State, Tribal, or USDA hemp plans. However, if the measurement of 
uncertainty for that sample was 0.02%, the distribution or range is 
0.33% to 0.37%. Because 0.3% or less is not within that distribution or 
range, the sample is not considered hemp for the purpose of plan 
compliance, and the lot it represents will be subject to disposal. Thus 
the ``acceptable hemp THC level'' is the application of the measurement 
of uncertainty to the reported delta-9 tetrahydrocannabinol content 
concentration level on a dry weight basis producing a distribution or 
range that includes 0.3% or less. As such, the regulatory definition of 
``acceptable hemp THC level'' describes how State, Tribal, and USDA 
plans must account for uncertainty in test results in their treatment 
of cannabis. Again, this definition affects neither the statutory 
definition of hemp, 7 U.S.C. 1639o(1), in the 2018 Farm Bill nor the 
definition of ``marihuana,'' 21 U.S.C. 802(16), in the CSA.
    The laboratories conducting hemp testing must be registered by the 
DEA to conduct chemical analysis of controlled substances (in 
accordance with 21 CFR 1301.13). Registration is necessary because 
laboratories could potentially handle cannabis that tests above the 
0.3% concentration of THC on a dry weight basis, which is, by 
definition, marijuana and a Schedule 1 controlled substance. 
Instructions for laboratories to obtain DEA registration, along with a 
list of approved laboratories, will be posted on the USDA Domestic Hemp 
Production Program website.
    USDA is considering establishing a fee-for-service hemp laboratory 
approval process for labs that wish to offer THC testing services. USDA 
approved laboratories would be approved by the USDA, AMS, Laboratory 
Approval Service, which administers the Laboratory Approval Program 
(LAP). USDA-approved laboratories would need to comply with the LAP 
requirements, as established under ``Laboratory Approval Program--
General Policies & Procedures'' (www.ams.usda.gov/services/lab-testing/lab-approval), which describes the general policies and procedures for 
a laboratory to apply for and maintain status in a LAP. Under the LAP, 
an individual program for hemp would be developed, with a set of 
documented requirements to capture specific regulatory, legal, quality 
assurance and quality control, and analytical testing elements. A 
requirement for a testing laboratory to be approved by USDA would be in 
addition to the requirement in the final rule that the laboratory be 
registered with DEA.
    In addition to requiring ISO 17025 accreditation, which assesses 
general competence of testing laboratories, the LAP would provide a way 
for USDA to accredit that laboratories perform to a standard level of 
quality. When DEA registers a lab to handle narcotics, they do not 
require the lab to be accredited. This is an important factor, as the 
issue of providing assurance as to proper testing was raised on 
numerous occasions during the USDA outreach process that was conducted 
prior to developing this rule. The LAP would give USDA the proper 
oversight of the laboratories doing the testing, providing quality 
assurance and control procedures that ensure a validated and qualified 
analysis, and defensible data. Should USDA establish a lab approval 
process, a list of USDA approved laboratories that are also registered 
with the DEA would be posted on the USDA Domestic Hemp Production 
Program website. Although this proposal is not reflected in the 
regulatory text of this interim final rule, USDA is seeking comment on 
it to determine whether to incorporate it in the subsequent final rule.
    Alternatively, USDA is considering requiring all laboratories 
testing hemp to have ISO 17025 accreditation. We are requesting comment 
on this requirement as well and are interested to learn about the 
number of labs that already have this accreditation, the associated 
burden, and the potential benefits of such a requirement.

C. Disposal of Non-Compliant Plants

    State and Tribal plans are also required to include procedures for 
ensuring effective disposal of plants produced in violation of this 
part. If a producer has produced cannabis exceeding the acceptable hemp 
THC level, the material must be disposed of in accordance with the CSA 
and DEA regulations because such material constitutes marijuana, a 
schedule I controlled substance under the CSA. Consequently, the 
material must be collected for destruction by a person authorized under 
the CSA to handle marijuana, such as a DEA-registered reverse 
distributor, or a duly authorized Federal, State, or local law 
enforcement officer.

[[Page 58526]]

D. Compliance With Enforcement Procedures Including Annual Inspection 
of Hemp Producers

    State and Tribal plans must include compliance procedures to ensure 
hemp is being produced in accordance with the requirements of this 
part. This includes requirements to conduct annual inspections of, at a 
minimum, a random sample of hemp producers to verify hemp is not being 
produced in violation of this part. These plans also must include a 
procedure for handling violations. In accordance with the 2018 Farm 
Bill, States and Tribes with their own hemp production plans have 
certain flexibilities in determining whether hemp producers have 
violated their approved plans. However, there are certain compliance 
requirements that all State and Tribal plans must contain. This 
includes procedures to identify and attempt to correct certain 
negligent acts, such as failing to provide a legal description of the 
land on which the hemp is produced, not obtaining a license or other 
required authorizations from the State or tribal government or 
producing plants exceeding the acceptable hemp THC level. States and 
Tribes may require additional information in their plans. In the 
context of this part, negligence is defined as a failure to exercise 
the level of care that a reasonably prudent person would exercise in 
complying with the regulations set forth under this part. This 
definition employed in this rule is derived from the definition of 
negligence in Black's Law Dictionary. See BLACK'S LAW DICTIONARY (10th 
ed. 2014) (defining negligence as ``[t]he failure to exercise the 
standard of care that a reasonably prudent person would have exercised 
in a similar situation'').
    This rule specifies that hemp producers do not commit a negligent 
violation if they produce plants that exceed the acceptable hemp THC 
level and use reasonable efforts to grow hemp and the plant does not 
have a THC concentration of more than 0.5 percent on a dry weight 
basis. USDA recognizes that hemp producers may take the necessary steps 
and precautions to produce hemp, such as using certified seed, using 
other seed that has reliably grown compliant plants in other parts of 
the country, or engaging in other best practices, yet still produce 
plants that exceed the acceptable hemp THC level. USDA seeks comments 
whether there are other reasonable efforts to be considered. We believe 
that a hemp producer in that scenario has exercised a level of care 
that a reasonably prudent person would exercise if the plant does not 
have a THC concentration of more than 0.5 percent on a dry weight 
basis. USDA arrived at that percentage by examining the test results of 
samples taken from several States that have a hemp research program 
under the 2014 Farm Bill and by reviewing results from plants grown 
from certified seed as well as uncertified seed and tested using 
different testing protocols. Under this scenario, although a producer 
would not be considered ``negligent,'' they would still need to dispose 
of the plants if the THC concentration exceeded the acceptable hemp THC 
level.
    In developing the compliance requirements of State and Tribal 
plans, USDA recognizes that there may be significant differences across 
States and Tribes in how they will administer their respective hemp 
programs. Accordingly, as long as, at a minimum, the requirements of 
the 2018 Farm Bill are met, States and Tribes are free to determine 
whether or not a licensee under their applicable plan has taken 
reasonable steps to comply with plan requirements.
    In cases where a State or Tribe determines a negligent violation 
has occurred, a corrective action plan shall be established. The 
corrective action plan must include a reasonable date by which the 
producer will correct the negligent violation. Producers operating 
under a corrective action plan must also periodically report to the 
State or Tribal government, as applicable, on their compliance with the 
plan for a period of not less than two calendar years following the 
violation. A producer who negligently violates a State or Tribal plan 
three times in a five-year period will be ineligible to produce hemp 
for a period of five years from the date of the third violation. 
Negligent violations are not subject to criminal enforcement action by 
local, Tribal, State, or Federal government authorities.
    State and Tribal plans also must contain provisions relating to 
producer violations made with a culpable mental state greater than 
negligence, meaning, acts made intentionally, knowingly, or with 
recklessness. This definition is derived from the definition of 
negligence in Black's Law Dictionary. See BLACK'S LAW DICTIONARY (10th 
ed. 2014) (giving as a definition of negligence ``[t]he failure to 
exercise the standard of care that a reasonably prudent person would 
have exercised in a similar situation''). If it is determined a 
violation was committed with a culpable mental state greater than 
negligence, the State department of agriculture or tribal government, 
as applicable, shall immediately report the producer to the Attorney 
General, USDA, and the chief law enforcement officer of the State or 
Tribe. State and Tribal plans also must prohibit any person convicted 
of a felony related to a controlled substance under State or Federal 
law before, on, or after the enactment of the 2018 Farm Bill from 
participating in the State or Tribal plan and from producing hemp for 
10-years following the date of conviction. An exception applies to a 
person who was lawfully growing hemp under the 2014 Farm Bill before 
December 20, 2018, and whose conviction also occurred before that date.
    To meet this requirement, the State or Indian Tribe will need to 
review criminal history reports for each applicant. When an applicant 
is a business entity, the State or Indian Tribe must review the 
criminal history report for each key participant in the business. The 
State and Tribe may determine the appropriate method for obtaining the 
criminal history report for their licensees in their plan. Finally, any 
person found by the USDA, State, or Tribal government to have 
materially falsified any information submitted to this program will be 
ineligible to participate.

E. Information Sharing

    State and Tribal plans also must contain procedures for reporting 
specific information to USDA. This is separate from the requirement to 
report hemp crop acreage with FSA as discussed above. The information 
required here includes contact information for each hemp producer 
covered under the plan including name, address, telephone number, and 
email address (if available). If the producer is a business entity, the 
information must include the full name of the business, address of the 
principal business location, full name and title of the key 
participants, an email address if available, and EIN number of the 
business entity. Producers must report the legal description and 
geospatial location for each hemp production area, including each 
field, greenhouse, or other site, used by them, as stated in section A 
of this preamble. The report also shall include the status of the 
license or other required authorization from the State or Tribal 
government, as applicable, for each producer under a hemp production 
plan. States and Tribes will submit this information to USDA not later 
than 30 days after the date it is received using the appropriate 
reporting requirements as determined by USDA. These reporting 
requirements are found at Sec.  990.70 in this rule. Further 
explanation of the specific information to be submitted, the 
appropriate format, and the specific due

[[Page 58527]]

dates for the information is discussed below. This information 
submitted from each State and Tribal plan, along with the equivalent 
information collected from individuals participating under the USDA 
plan, will be assembled and maintained by USDA and made available in 
real time to Federal, State, and local law enforcement as required by 
the 2018 Farm Bill. All information supporting, verifying, or 
documenting the information submitted to USDA must be maintained by the 
States and Tribes for at least three years.

F. Certification of Resources

    All State and Tribal plans submitted for USDA approval must also 
have a certification stating the State or Tribe has the resources and 
personnel necessary to carry out the practices and procedures described 
in their plan. Section 297B of the AMA requires this certification and 
the information is important to USDA's approval of State and Tribal 
plans in that all such plans must be supported by adequate resources to 
effectively administer them.

G. Plan Approval, Technical Assistance and USDA Oversight

    During the plan development process, States and Tribes are 
encouraged to contact USDA so we may provide technical assistance in 
developing plan specifics. USDA will not review, approve or disapprove 
plans until after the effective date of this interim rule. Once USDA 
formally receives a plan, USDA will have 60 days to review the 
submitted plan. USDA may approve plans which comply with the 2018 Farm 
Bill and with the provisions of this rule. If a plan does not comply 
with all requirements of the Act and this part it will be rejected. 
USDA will consult with the Attorney General throughout this process.
    When plans are rejected, USDA will provide a letter of notification 
outlining the deficiencies identified. The State or tribal government 
may then submit an amended plan for review. If the State or Tribe 
disagrees with the determination made by USDA regarding the plan, a 
request for reconsideration can be submitted to USDA using the appeal 
process as outlined in section V. of this rule. Plans submitted by 
States and Tribes must be approved by USDA before they can be 
implemented.
    USDA will use the information outlined here and as directed in the 
2018 Farm Bill when evaluating State and Tribal plans for approval. 
States and Tribes can submit their plans to USDA through electronic 
mail at [email protected] or by postal carrier to USDA. The 
specific address is provided on the USDA Domestic Hemp Production 
Program website.
    If the State or Tribal plan application is complete and meets the 
criteria of this part, USDA shall issue an approval letter. Approved 
State and Tribal plans, including their respective rules, regulations 
and procedures, shall be posted on USDA's hemp program website.
    Once a plan has received approval from USDA, it will remain in 
effect unless revoked by USDA pursuant to the revocation procedures 
discussed below, or unless the State or Tribe makes substantive 
revisions to their plan or their laws that alter the way the plan meets 
the requirements of this regulation. Additionally, changes to the 
provisions or procedures under this rule or to the language in the 2018 
Farm Bill may require plan revision and resubmission to USDA for 
approval. Should States or Tribes have questions regarding the need to 
resubmit their plans, they should contact USDA for guidance. Statutory 
amendments could result in revocation of some or all plans.
    A State or tribal government may submit an amended plan to USDA for 
approval if: (1) The Secretary disapproves a State or Tribal plan; or 
(2) The State or Tribe makes substantive revisions to their plan or to 
their laws that alter the way the plan meets the requirements of this 
regulation, or as necessary to bring the plan into compliance with 
changes in other applicable law or regulations.
    If the plan, previously approved by USDA, needs to be amended 
because of changes to the State or Tribe's laws or regulations, such 
resubmissions should be provided to USDA within a calendar year from 
when the new State or tribal law or regulations are effective. 
Producers will be held to the requirements of the previous plan until 
such modifications are approved by USDA. If State or tribal government 
regulations in effect under the USDA-approved plan change but the State 
or tribal government does not resubmit a modified plan within the 
calendar year of the effective date of the change, USDA will issue a 
notification to the State or tribal government that approval of its 
plan will be revoked. The revocation will be effective no earlier than 
the beginning of the next calendar year. When USDA sends the 
notification to the State or Tribe, it will accept applications for 
USDA licenses from producers in the State or territory of the Indian 
Tribe for 90 days after the notification even if that time period does 
not coincide with the annual period in which USDA normally accepts 
applications under Sec.  990.21.
    USDA has the authority to audit States and Tribes to determine if 
they are in compliance with the terms and conditions of their approved 
plans. If a State or Tribe is noncompliant with their plan, USDA will 
work with that State or Tribe to develop a corrective action plan 
following the first case of noncompliance. However, if additional 
instances of noncompliance occur, USDA has the authority to revoke the 
approval of the State or Tribal plan for one year. USDA believes that 
one year is sufficient time for a noncompliant State or Tribe to 
evaluate problems with their plan and make the necessary adjustments. 
Should USDA determine the approval of a State or Tribal plan should be 
revoked, such a revocation would begin after the end of the current 
calendar year, so producers will have the opportunity to adjust their 
operations as necessary. This one-year window will allow producers to 
apply for a license under the USDA plan so that their operations do not 
become disrupted due to the revocation of the State or Tribal plan.
    For the 2020 planting season, the 2018 Farm Bill provides that 
States and institutions of higher education can continue operating 
under the authorities of the 2014 Farm Bill. The 2018 Farm Bill 
extension of the 2014 Farm Bill authority expires 12 months after the 
effective date of this rule.

III. Department of Agriculture Plan

    This rule also establishes a USDA plan to regulate hemp production 
by producers in areas where hemp production is legal but is not covered 
by an approved State or Tribal plan. All hemp produced outside of 
States and Tribes with approved plans must meet the requirements of the 
USDA plan. The requirements of the USDA plan are similar to those under 
State and Tribal plans.

A. USDA Hemp Producer License

1. Application
    To produce hemp under the USDA plan, producers must apply for and 
be issued a license from USDA. USDA will begin accepting applications 
30 days after the effective date of this interim rule. USDA is delaying 
acceptance of applications for 30 days to allow States and Tribal 
governments to submit their plans first. This is to prevent USDA from 
reviewing and issuing USDA licenses to producers when there is a 
likelihood that there will soon be a State or Tribal plan in place and 
producers will obtain their licenses from the State or Tribe.

[[Page 58528]]

    While a State or Tribal government has a draft hemp production plan 
pending for USDA approval, USDA will not issue USDA hemp production 
licenses to individual producers located in those States or Tribal 
Nations. Once USDA approves a draft hemp production plan from a State 
or Tribe, it will deny any license applications from individuals 
located in the applicable State or Tribal Nation. If USDA disapproves a 
State or Tribal hemp production plan, individual producers located in 
the State or Tribal Nation may apply for a USDA hemp production 
license.
    For the first year after USDA begins to accept applications, 
applications can be submitted any time. For all subsequent years, 
license applications and license renewal applications must be submitted 
between August 1 and October 31. For hemp grown outdoors, harvesting 
usually occurs in the late summer and early fall. This application 
period is close to or after the harvest season when producers are 
preparing for the next growing season. USDA requests comments on 
whether this application period is sufficient. USDA may consider an 
alternative application window if experience demonstrates the need for 
one. Having an established application period provides adequate time 
for USDA to effectively and efficiently review and decide on 
applications, while also providing producers with a licensing decision 
well before planting season. All applications must comply with the 
requirements as described below. The license application will be 
available online at the USDA Domestic Hemp Production Program website. 
Applications may be submitted electronically or by mail. Copies can be 
also requested by email at [email protected].
    The application will require contact information such as name, 
address, telephone number, and email address (if available). If the 
applicant represents a business entity, and that entity will be the 
producer, the application will require the full name of the business, 
address of the principal business location, full name and title of the 
key participants on behalf of the entity, an email address if 
available, and EIN number of the business entity.
    All applications must be accompanied by a completed criminal 
history report. If the application is for a business entity, a 
completed criminal history report must be provided for each key 
participant.
    Key participants are a person or persons who have a direct or 
indirect financial interest in the entity producing hemp, such as an 
owner or partner in a partnership. A key participant also includes 
persons in a corporate entity at executive levels including chief 
executive officer, chief operating officer and chief financial officer. 
This does not include other management positions like farm, field or 
shift managers. USDA is requiring a criminal history records report for 
key participants because those persons are likely to have control over 
hemp production, whether production is owned by an individual, 
partnership, or a corporation. USDA considers those individuals to be 
responsible for ensuring compliance with the regulatory requirements 
and thereby active participants in the Domestic Hemp Production 
Program. If those persons have a disqualifying felony, they can no 
longer participate in the program as provided for by section 
297B(e)(3)(B)(i) of the 2018 Farm Bill. An exception applies to a 
person who was lawfully growing hemp under the 2014 Farm Bill before 
December 20, 2018, and whose conviction also occurred before that date.
    USDA will not accept criminal history reports completed more than 
60 days before the submission of an application, which provides USDA 
with an expectation that the findings of the report are reasonably 
current and accurate.
    The criminal history report must indicate the applicant has not 
been convicted of a State or Federal felony related to a controlled 
substance for the 10 years prior to the date of when the report was 
completed. An exception applies to a person who was lawfully growing 
hemp under the 2014 Farm Bill before December 20, 2018, and whose 
conviction also occurred before that date.
    In addition to providing the information specified, the application 
will also require license applicants to certify they will adhere to the 
provisions of the plan.
    Once all the necessary information has been provided, applications 
will be reviewed by USDA for completeness and to determine an 
applicant's eligibility. USDA will approve or deny license applications 
unless the applicant is from a State or Tribal Nation that has a plan 
submitted to or approved by USDA. Applicants will be notified if they 
have been granted or denied a license either by mail or email.
    If an application is denied, the applicant will receive a 
notification letter or email specifying why the application was denied. 
If denied, applicants will have the option of resubmitting a revised 
application if the application was rejected for being incomplete. 
Applicants may resubmit after October 31 as long as the original 
application was submitted between August 1 and October 31. If the 
application was rejected for other reasons, the applicant will have the 
opportunity to appeal the USDA's decision in accordance with the 
appeals process outlined in the regulation.
2. USDA Hemp Producer Licenses
    Once a license application has been approved, USDA will issue the 
producer license. Licenses are not transferrable in any manner. An 
applicant whose application has been approved will not be considered a 
licensed producer under the USDA plan until the applicant receives 
their producer license. Licenses do not renew automatically and must be 
renewed every three years. Because of the felony ban, we believe it is 
necessary to review producers' criminal history to ensure that they 
have not committed a felony since the most recent license approval that 
would disqualify them.
    Applications for renewal will be subject to the same terms and 
approved under the same criteria as initial applications unless there 
has been an intervening change in the applicable law or regulations 
since approval of the initial or last application. In such a case the 
subsequently enacted law or regulation shall govern renewal of the 
license. Licenses will be valid until December 31 of the year that is 
at least three years after the license is issued. This date is not tied 
to the harvest and planting season. Rather it is tied to the window for 
applications (Aug. 1-Oct. 31) and the 60 days for USDA to make a 
decision. For example, if a producer applies for a license August 1, 
2020 and is granted a license on September 15, 2020, the license would 
expire December 31, 2023. A December 31 expiration date will allow 
licensed producers time to apply for a license renewal prior to their 
prior license's expiration and prevent a gap in licensing.
    Once a producer has been issued a USDA license, the producer must 
report their hemp crop acreage to FSA. Producers must provide specific 
information to FSA, as identified in this part, including, but not 
limited to: The specific location where hemp is produced, and the 
acreage, greenhouse, building, or site where hemp is produced. The 
specific location where hemp is produced must be identified, to the 
extent practicable, by the geospatial location.
    If at any time, there is a change to the information submitted in 
the license application, a license modification is required. A license 
modification is

[[Page 58529]]

required if, for example, the licensed business is sold to a new owner 
or when hemp will be produced in a new location not described on the 
original application. Producers must notify USDA immediately should 
there be any change in the information provided on the license 
application. USDA will provide guidance on where producers will submit 
this information on its website.

B. Sampling and Testing for THC

    All hemp production must be sampled and tested for THC 
concentration levels. Samples must be collected by a USDA-approved 
sampling agent, or a Federal, State or local law enforcement agent 
authorized by USDA to collect samples. It is the responsibility of the 
licensed producer to pay any fees associated with sampling. USDA will 
issue guidance on sampling procedures that will satisfy sampling 
requirements to coincide with publication of this rule. This guidance 
will be provided on the USDA website.
    The sampling procedures are designed to produce a representative 
sample for testing. They describe procedures for entering a growing 
area and collecting the minimum number of plant specimens necessary to 
accurately represent the THC content, through laboratory testing, of 
the sample to be tested.
    THC levels in representative samples must test at or below the 
acceptable hemp THC level. Testing will be conducted using post-
decarboxylation or other similarly reliable methods where the total THC 
concentration level measured includes the potential to convert delta-9-
tetrahydrocannabinolic acid (THCA) into THC. Further, test results 
should be determined and reported on a dry weight basis, meaning the 
percentage of THC, by weight, in a cannabis sample, after excluding 
moisture from the sample. The moisture content is expressed as the 
ratio of the amount of moisture in the sample to the amount of dry 
solid in the sample.
    Based on USDA's review of scientific studies, internal research and 
information gathered from the United Nations Office on Drugs and Crime: 
Recommended Methods for the Identification and Analysis of Cannabis and 
Cannabis Products (ISBN 978-92-1-148242-3), USDA has determined that 
testing methodologies meeting these requirements include gas or liquid 
chromatography with detection.
    USDA requires that all samples tested for THC concentration levels 
be conducted in DEA registered laboratories. These laboratories must 
also meet standards of performance described in this regulation. 
Standards of performance ensure the validity and reliability of test 
results, and that analytical method selection, validation, and 
verification is appropriate (fit for purpose) and that the laboratory 
can successfully perform the testing. Furthermore, the standards ensure 
consistent, accurate, analytical performance and that the analytical 
tests performed are sufficiently sensitive for the purposes of the 
detectability requirements under this part.
    Laboratories who conduct THC testing must also be registered with 
DEA to handle controlled substances under the CSA and DEA regulations 
(21 CFR part 1301). USDA is adopting this requirement because of the 
potential for these laboratories to handle cannabis products testing 
above 0.3% THC. Such products are, by definition, marijuana, and a 
controlled substance. DEA registration requirements verify a 
laboratory's ability to properly handle controlled substances.
    As previously explained in the requirements for State and Tribal 
plans, USDA is also considering requiring that testing for THC 
concentration levels be conducted in USDA approved laboratories for 
USDA plan licensees. USDA approved laboratories are authorized under 
the USDA, AMS, Laboratory Approval Service, which administers the 
Laboratory Approval Program (LAP). USDA-approved laboratories would 
need to comply with the LAP requirements, as established under 
``Laboratory Approval Program--General Policies & Procedures'' 
(www.ams.usda.gov/services/lab-testing/lab-approval), which describes 
the general policies and procedures for a laboratory to apply for and 
maintain status in a LAP. Under the LAP, an individual program for hemp 
would be developed, with a set of documented requirements to capture 
specific regulatory, legal, quality assurance and quality control, and 
analytical testing elements. A requirement for a testing laboratory to 
be approved by USDA would be in addition to the requirement in the 
final rule that the laboratory be registered with DEA.
    USDA is considering a LAP for USDA licensees because it would be 
tailored to a commodity to meet specific requirements in support of 
domestic and international trade. In addition to requiring ISO 17025 
accreditation, which assesses general competence of testing 
laboratories, the LAP would provide a way for USDA to certify that 
laboratories perform to a standard level of quality. This is an 
important factor, as the issue of providing assurance as to proper 
testing was raised on numerous occasions during the USDA outreach 
process conducted prior to developing this rule. The LAP would give 
USDA the proper oversight of the laboratories doing the testing, 
providing quality assurance and control procedures that ensure a 
validated and qualified analysis, and defensible data. Should USDA 
require that testing laboratories be approved by USDA, a list of USDA 
approved laboratories would be posted on the USDA Domestic Hemp 
Production Program website. Although this proposal is not reflected in 
the regulatory text of this interim rule, USDA is seeking comment on it 
to determine whether to incorporate it in the subsequent final rule.
    Alternatively, USDA is considering requiring all laboratories 
testing hemp to have ISO 17025 accreditation. We are requesting comment 
on this requirement as well.
    It is the responsibility of the licensed producer to select the 
DEA-registered laboratory that will conduct the testing and to pay any 
fees associated with testing. Laboratories performing THC testing for 
hemp produced under this program will be required to share test results 
with the licensed producer and USDA. USDA will provide instructions to 
all approved labs on how to electronically submit test results to USDA. 
Laboratories may provide test results to licensed producers in whatever 
manner best aligns with their business practices, but producers must be 
able to produce a copy of test results. For this reason, providing test 
results to producers through a web portal or through electronic mail, 
so the producer will have ready access to print the results when 
needed, is preferred.
    Samples exceeding the acceptable hemp THC level are marijuana and 
will be handled in accordance with the procedures discussed in sections 
C and D below.
    Any licensee may request that the laboratory retest samples if it 
is believed the original THC concentration level test results were in 
error. The licensee requesting the retest of the second sample would 
pay the cost of the test. The retest results would be issued to the 
licensee requesting the retest and a copy would be provided to USDA or 
its agent.

C. Disposal of Non-Compliant Product

    If the results of a test conclude that the THC levels exceed the 
acceptable hemp THC level, the approved laboratory will promptly notify 
the producer and USDA or its authorized agent. If a licensed producer 
is notified that they have produced cannabis exceeding the acceptable 
hemp THC level, the cannabis must be disposed of

[[Page 58530]]

in accordance with the CSA and DEA regulations as such product is 
marijuana and not hemp. The material must be collected for destruction 
by a person authorized under the CSA to handle marijuana, such as a 
DEA-registered reverse distributor, or a duly authorized Federal, 
State, or local law enforcement officer, or official.
    Licensed producers notified they have produced product exceeding 
the acceptable hemp THC level must arrange for disposal of the lot 
represented by the sample in accordance with the CSA and DEA 
regulations as specified above. Specific DEA procedures for arranging 
for the disposal of non-compliant product will be listed on the USDA 
Domestic Hemp Production Program website.
    Producers must document the disposal of all marijuana. This can be 
accomplished by either providing USDA with a copy of the documentation 
of disposal provided by the reverse distributor or by using the 
reporting requirements established by USDA. These reports must be 
submitted to USDA following the completion of the disposal process.

D. Compliance

    USDA has established certain compliance requirements for USDA 
licensees as part of this rulemaking. This includes the ability for 
USDA to conduct audits of USDA licensees and to issue corrective action 
plans for negligent violations. Negligent violations by a producer may 
lead to suspension or revocation of a producer's license.
    USDA may conduct random audits of licensees to verify hemp is being 
produced in accordance with the provisions of this part. The format of 
the audit will vary and may include a ``desk-audit'' where USDA 
requests records from a licensee or the audit may be a physical visit 
to a licensee's facility. When USDA visits a licensee's facility, the 
licensee must provide access to any fields, greenhouses, storage 
facilities or other locations where the licensee produces hemp. USDA 
may also request records from the licensee to include production and 
planting data, testing results, and other information as determined by 
USDA.
    USDA will conduct an audit of all USDA licensees no more than every 
three years based on available resources.
    USDA will issue a summary of the audit to the licensee after the 
completed audit. Licensees who are found to have a negligent violation 
will be subject to a corrective action plan. A negligent violation 
includes: (1) Failure to provide a legal description of the land on 
which the hemp is produced; (2) not obtaining a license before engaging 
in production; or (3) producing plants exceeding the acceptable hemp 
THC level. Similar to the requirements for State and Tribal plans, USDA 
will not consider hemp producers as committing a negligent violation if 
they produce plants exceeding the acceptable hemp THC level if they use 
reasonable efforts to grow hemp and the plant does not have a THC 
concentration of more than 0.5 percent on a dry weight basis.
    For sampling and testing violations, USDA will consider the entire 
harvest from a distinct lot in determining whether a violation 
occurred. This means that if testing determines that each sample of 
five plants from distinct lots has a THC concentration exceeding the 
acceptable hemp THC level (or 0.5 percent if the hemp producer has made 
reasonable efforts to grow hemp), USDA considers this as one negligent 
violation. If an individual produces hemp without a license, this will 
be considered one violation. USDA will establish and review a 
corrective action plan with the licensee and its implementation may be 
verified during a future audit or site visit.
    When USDA determines that a negligent violation has occurred, USDA 
will issue a Notice of Violation. This Notice of Violation will include 
a corrective action plan. The corrective action plan will include a 
reasonable date by which the producer will correct the negligent 
violation or violations and require the producer to periodically report 
to USDA on its compliance with the plan for a period of not less than 
the next two calendar years. A producer who has negligently violated 
this part three times in a five-year period is ineligible to produce 
hemp for a period of five years from the date of the third violation. 
Negligent violations are not subject to criminal enforcement. However, 
USDA will report the production of hemp without a license issued by 
USDA to the Attorney General.
    Hemp found to be produced in violation of this part, such as hemp 
produced on a property not disclosed by the licensed producer, or 
without a license, would be subject to the same disposal provisions as 
for cannabis testing above the acceptable hemp THC level. Further, if 
it is determined a violation was committed with a culpable mental state 
greater than negligence, USDA will report the violation to the Attorney 
General and the chief law enforcement officer of the State or Tribe as 
applicable.
    The 2018 Farm Bill limited the participation of certain convicted 
felons in hemp production. A person with a State or Federal felony 
conviction relating to a controlled substance is subject to a 10-year 
ineligibility restriction on producing hemp under the Act. An exception 
applies to a person who was lawfully growing hemp under the 2014 Farm 
Bill before December 20, 2018, and whose conviction also occurred 
before that date.

E. Suspension of a USDA License

    A USDA license may be suspended if USDA or its representative 
receives credible information that a licensee has either: (1) Engaged 
in conduct violating a provision of this part; or (2) failed to comply 
with a written order from the AMS Administrator related to a negligent 
violation of this part. Examples of credible information are 
information from local authorities of harvested plants without testing 
or planting of hemp seed in non-approved locations.
    Any producer whose license has been suspended shall not handle or 
remove hemp or cannabis from the location where hemp or other cannabis 
was located at the time when USDA issued its notice of suspension 
without prior written authorization from USDA. Any person whose license 
has been suspended shall not produce hemp during the period of 
suspension. A suspended license may be restored after a waiting period 
of one year. A producer whose license has been suspended may be 
required to comply with a corrective action plan to fully restore their 
license.
    A USDA license shall be immediately revoked if the licensee: (1) 
Pleads guilty to, or is convicted of, any felony related to a 
controlled substance; \7\ or (2) made any materially false statement 
with regard to this part to USDA or its representatives with a culpable 
mental state greater than negligence; or (3) was found to be growing 
cannabis exceeding the acceptable hemp THC level with a culpable mental 
state greater than negligence or negligently violated the provision of 
this part three times in five years.
---------------------------------------------------------------------------

    \7\ For a corporation, if a key participant has a disqualifying 
felony conviction, the corporation may remove that person from a key 
participant position. Failure to remove that person will result in a 
license revocation.
---------------------------------------------------------------------------

    If the licensed producer wants to appeal any suspension or 
revocation decision made by USDA under this section, they can do so 
using the appeal process specified in section V.

F. Reporting and Recordkeeping

    The 2018 Farm Bill requires USDA to develop a process to maintain 
relevant

[[Page 58531]]

information regarding the farm on which hemp is produced. USDA's FSA is 
best suited to collect this information for the domestic hemp 
production program. FSA has staff throughout the United States who are 
trained to work with farmers to verify land uses. Many hemp producers 
are likely to be familiar with the FSA since they already operate 
traditional farms, and therefore already provide data to FSA on acres 
and crops planted. Consequently, licensed producers will be required to 
report their hemp crop acreage with FSA, and to provide FSA with 
specific information regarding field acreage, greenhouse, or indoor 
square footage of hemp planted. This information must include street 
address, geospatial location or other comparable identification method 
specifying where the hemp will be produced, and the legal description 
of the land. Geospatial location or other methods of identifying the 
production locations are necessary as not all rural locations have 
specific addresses. This information is required for each field, 
greenhouse, building, or site where hemp will be grown. USDA will use 
this information to assemble and maintain the data USDA must make 
available in real time to Federal, State, and local law enforcement as 
required by the 2018 Farm Bill and as specified in section G below. 
Specific procedures for reporting hemp acreage to FSA will be posted on 
the USDA Domestic Hemp Production Program website. This information 
will be maintained by USDA for at least three calendar years.
    Licensed producers will be required to maintain copies of all 
records and reports necessary to demonstrate compliance with the 
program. These records include those that support, document, or verify 
the information provided in the forms submitted to USDA. Records and 
reports must be kept for a minimum of three years.
    Under the USDA plan, there will be additional reporting 
requirements for licensed producers. These include specific reporting 
requirements to collect the information needed by the licensing 
application, and the record and reporting requirements needed to 
document disposal of cannabis produced in violation of the provisions 
of this rule. Specific requirements may be referenced herein at Sec.  
990.71.

G. Information Sharing

    USDA will develop and maintain a database of all relevant and 
required information regarding hemp as specified by the 2018 Farm Bill. 
This database will be accessible in real time to Federal, State, local 
and Tribal law enforcement officers through a Federal Government law 
enforcement system. USDA AMS will administer and populate this 
database, which will include information submitted by States and 
Tribes, laboratories, information submitted by USDA licensed producers, 
and information submitted to FSA.
    USDA will use this information to create a comprehensive list of 
all domestic hemp producers. USDA will also gather the information 
related to the land used to produce domestic hemp. This information 
will be comprehensive and include data both from State and Tribal plans 
and include a legal description of the land on which hemp is grown by 
each hemp producer and the corresponding geospatial location. Finally, 
USDA will also gather information regarding the status of all licenses 
issued under State and tribal governments and under the USDA plan.
    This information will be made available in real time to Federal, 
State, local and Tribal law enforcement as required by the 2018 Farm 
Bill.
    USDA has prepared a System of Records Notice (SORN) and a Privacy 
Impact Analysis to be issued concurrently with this rule.

IV. Definitions

    In support of the foregoing regulations and hemp production plan 
descriptions, USDA is establishing definitions for certain terms. The 
following terms are integral to implement the 2018 Farm Bill and 
establish the scope and applicability of the regulations of this part.
    The term ``Act'' refers to the Agricultural Marketing Act of 1946. 
The 2018 Farm Bill amended the Agricultural Marketing Act of 1946 by 
adding Subtitle G which is a new authority for the Secretary of 
Agriculture to administer a national hemp production program. Section 
297D of Subtitle G authorizes and directs USDA to promulgate 
regulations to implement this program.
    The Agricultural Marketing Service (AMS) of the U.S. Department of 
Agriculture is the agency the Secretary of Agriculture has charged with 
the responsibility to oversee the administration of this new program.
    The term ``applicant'' means any State or Indian Tribe that has 
applied for USDA approval of a State or tribal hemp production plan for 
the State or Indian Tribe they represent. This term also applies to any 
person or business in a State or territory of an Indian Tribe not 
subject to a State or tribal plan, who applies for a hemp production 
license under the USDA plan established under this part.
    The term ``cannabis'' is the Latin name of the plant that, 
depending on its THC concentration level, is further defined as either 
``hemp'' or ``marijuana.'' Cannabis is a genus of flowering plants in 
the family Cannabaceae of which Cannabis sativa is a species, and 
Cannabis indica and Cannabis ruderalis are subspecies thereof. For the 
purposes of this part, Cannabis refers to any form of the plant where 
the delta-9 tetrahydrocannabinol concentration on a dry weight basis 
has not yet been determined. This term is important in describing 
regulations that apply to plant production, sampling or handling prior 
to determining its THC content.
    The Controlled Substances Act (CAS) is the statute, codified in 21 
U.S.C. 801-971, establishing Federal U.S. drug policy under which the 
manufacture, importation, exportation, possession, use, and 
distribution of certain substances is regulated. Because cannabis 
containing THC concentration levels of higher than 0.3 percent is 
deemed to be marijuana, a schedule I controlled substance, its 
regulation falls under the authorities of the CSA. Therefore, for 
compliance purposes, the requirements of the CSA are relied upon for 
the disposal of cannabis that contains THC concentrations above the 
stated limit of this part.
    The rule includes a definition of ``conviction'' to explain what is 
considered a conviction and what is not. Specifically, a plea of guilty 
or nolo contendere or any finding of guilt is a conviction. However, if 
the finding of guilt is subsequently overturned on appeal, pardoned, or 
expunged, then it is not considered a conviction for purposes of part 
990. This definition of ``conviction'' is consistent with how some 
other agencies who conduct criminal history record searches determine 
disqualifying crimes.
    A ``corrective action plan'' is a plan set forth by a State, tribal 
government, or USDA for a licensed hemp producer to correct a negligent 
violation of or non-compliance with a hemp production plan, its terms, 
or any other regulation set forth under this part. This term is defined 
in accordance with the 2018 Farm Bill, which mandates certain non-
compliance actions to be addressed through corrective action plans.
    ``Culpable mental state greater than negligence'' is a term used in 
the 2018 Farm Bill to determine when certain actions would be subject 
to specific compliance actions. This term means to act intentionally, 
knowingly, willfully, recklessly, or with criminal negligence.
    The term ``decarboxylated'' refers to the completion of the 
chemical reaction

[[Page 58532]]

that converts THC-acid (THCA) into delta-9-THC, the intoxicating 
component of cannabis. The decarboxylated value is also calculated 
using a conversion formula that sums delta-9-THC and eighty-seven and 
seven tenths (87.7) percent of THCA. This term, commonly used in 
scientific references to laboratory procedures, is the precursor to the 
term ``post-decarboxylation,'' a term used in the 2018 Farm Bill's 
mandate over cannabis testing methodologies to identify THC 
concentration levels. This definition is based on the regulations 
administered by the Kentucky Department of Agriculture as part of the 
Kentucky industrial hemp research pilot program.
    ``Delta-9 tetrahydrocannabinol,'' also referred to as ``Delta-9 
THC'' or ``THC'' is the primary psychoactive component of cannabis, and 
its regulation forms the basis for the regulatory action of this part. 
As mandated by the Act, legal hemp production must be verified as 
having THC concentration levels of 0.3 percent on a dry weight basis or 
below. For the purposes of this part, delta-9 THC and THC are 
interchangeable.
    ``DEA'' means the ``Drug Enforcement Administration,'' a United 
States Federal law enforcement agency under the United States 
Department of Justice. The DEA is the lead agency for domestic 
enforcement of the Controlled Substances Act. The DEA plays an 
important role in the oversight of the disposal of marijuana, a 
schedule I controlled substance, under the regulations of this part. 
The DEA is also instrumental in registering USDA-approved laboratories 
to legally handle controlled substances, including cannabis samples 
that test above the 0.3 THC concentration level.
    ``Dry weight basis'' refers to a method of determining the 
percentage of a chemical in a substance after removing the moisture 
from the substance. Percentage of THC on a dry weight basis means the 
percentage of THC, by weight, in a cannabis item (plant, extract, or 
other derivative), after excluding moisture from the item.
    The Farm Service Agency (FSA) is an agency of the U.S. Department 
of Agriculture, that provides services to farm operations including 
loans, commodity price supports, conservation payments, and disaster 
assistance. For the purposes of this program, FSA will assist in 
information collection on land being used for hemp production.
    ``Gas chromatography'' or GC, is a scientific method (specifically, 
a type of chromatography technique) used in analytical chemistry to 
separate, detect, and quantify each component in a mixture. It relies 
on the use of heat for separating and analyzing compounds that can be 
vaporized without decomposition. Under the terms of this part, GC is 
one of the valid methods by which laboratories may test for THC 
concentration levels.
    For the purposes of this part, ``geospatial location'' means a 
location designated through a global system of navigational satellites 
used to determine the precise ground position of a place or object.
    This term ``handle'' is commonly understood by AMS and used across 
many of its administered programs. For the purposes of this part, 
``handle'' refers to the actions of cultivating or storing hemp plants 
or hemp plant parts prior to the delivery of such plant or plant part 
for further processing. In cases where cannabis plants exceed the 
acceptable hemp THC level, handle may also refer to the disposal of 
those plants.
    ``Hemp'' is defined by the 2018 Farm Bill as ``the plant species 
Cannabis sativa L. and any part of that plant, including the seeds 
thereof and all derivatives, extracts, cannabinoids, isomers, acids, 
salts, and salts of isomers, whether growing or not, with a delta-9 
tetrahydrocannabinol concentration of not more than 0.3 percent on a 
dry weight basis.'' The statutory definition is self-explanatory, and 
USDA is adopting the same definition without change for part 990.
    ``High-performance liquid chromatography (HPLC) or (LC)'' is a 
scientific method (specifically, a type of chromatography) used in 
analytical chemistry used to separate, identify, and quantify each 
component in a mixture. It relies on pumps to pass a pressurized liquid 
solvent containing the sample mixture through a column filled with a 
solid adsorbent material to separate and analyze compounds. Under the 
terms of this part, HPLC is one of the valid methods by which 
laboratories may test for THC concentration levels. Ultra-Performance 
Liquid Chromatography (UPLC) is an additional method that may also be 
used as well as other liquid or gas chromatography with detection.
    ``Indian Tribe'' is defined in the 2018 Farm Bill by reference to 
section 4 of the Indian Self-Determination and Education Assistance Act 
(25 U.S.C. 5304). The statutory definition is self-explanatory, and 
USDA is adopting the same definition without change for part 990.
    A ``key participant'' is a person or persons who have a direct or 
indirect financial interest in the entity producing hemp, such as an 
owner or partner in a partnership. A key participant also includes 
persons in a corporate entity at executive levels including chief 
executive officer, chief operating officer and chief financial officer. 
This does not include such management as farm, field or shift managers.
    ``Law enforcement agency'' refers to all Federal, State, or local 
law enforcement agencies. Under the 2018 Farm Bill, State submissions 
of proposed hemp production plans to USDA must be made in consultation 
with their respective Governors and chief law enforcement officers. 
Moreover, the 2018 Farm Bill contemplates the involvement of law 
enforcement in compliance actions related to offenses identified as 
being made under a ``culpable mental state.'' To assist law enforcement 
in the fulfillment of these duties, the 2018 Farm Bill also mandates an 
information sharing system that provides law enforcement with real-time 
data.
    The term ``lot'' refers to a contiguous area in a field, 
greenhouse, or indoor growing structure containing the same variety or 
strain of cannabis throughout. In addition, ``lot'' is a common term in 
agriculture that refers to the batch or contiguous, homogeneous whole 
of a product being sold to a single buyer at a single time. Under the 
terms of this part, ``lot'' is to be defined by the producer in terms 
of farm location, field acreage, and variety (i.e., cultivar) and to be 
reported as such to the FSA.
    As defined in the CSA, ``marihuana'' (or ``marijuana'') means all 
parts of the plant Cannabis sativa L., whether growing or not; the 
seeds thereof; the resin extracted from any part of such plant; and 
every compound, manufacture, salt, derivative, mixture, or preparation 
of such plant, its seeds or resin. The term `marihuana' does not 
include hemp, as defined in section 297A of the Agricultural Marketing 
Act of 1946, and does not include the mature stalks of such plant, 
fiber produced from such stalks, oil or cake made from the seeds of 
such plant, any other compound, manufacture, salt, derivative, mixture, 
or preparation of such mature stalks (except the resin extracted 
therefrom), fiber, oil, or cake, or the sterilized seed of such plant 
which is incapable of germination (7 U.S.C. 1639o(1)). ``Marihuana'' 
also means all cannabis that tests as having a concentration level of 
THC on a dry weight basis of higher than 0.3 percent.
    ``Negligence'' is a term used in the 2018 Farm Bill to describe 
when certain actions are subject to specific compliance actions. For 
the purposes of this part, the term means failure to exercise the level 
of care that a reasonably prudent person would exercise in complying 
with the regulations set forth under this part.

[[Page 58533]]

    Used in relation to the other terms and regulations in this part, 
``phytocannabinoids'' are cannabinoid chemical compounds found in the 
cannabis plant, two of which are Delta-9 tetrahydrocannabinol (delta-9 
THC) and cannabidiol (CBD). Testing methodologies under this part will 
refer to the presence of ``phytocannabinoids'' as either THC or CBD.
    Under the terms of this program, ``plan'' refers to a set of 
criteria or regulations under which a State or tribal government, or 
USDA, monitors and regulates the production of hemp. ``Plan'' may refer 
to a State or Tribal plan, whether approved by USDA or not, or the USDA 
hemp production plan.
    The 2018 Farm Bill mandates that all cannabis be tested for THC 
concentration levels using ``postdecarboxylation'' or similar methods. 
In the context of this part, ``postdecarboxylation'' means testing 
methodologies for THC concentration levels in hemp, where the total 
potential delta-9-tetrahydrocannabinol content, derived from the sum of 
the THC and THCA content, is determined and reported on a dry weight 
basis. The postdecarboxylation value of THC can be calculated by using 
a chromatograph technique using heat, known as gas chromatography, 
through which THCA is converted from its acid form to its neutral form, 
THC. The result of this test calculates total potential THC. The 
postdecarboxylation value of THC can also be calculated by using a 
high-performance liquid chromatograph technique, which keeps the THCA 
intact, and requires a conversion calculation of that THCA to calculate 
total potential THC. See also the definition for decarboxylation.
    The term ``produce,'' when used as a verb, is a common agricultural 
term that is often used synonymously with ``grow'' and means to 
propagate plants for market, or for cultivation for market, in the 
United States. In the context of this part, ``produce'' refers to the 
propagation of cannabis to produce hemp.
    The 2018 Farm Bill mandates that USDA maintain a real-time 
informational database that identifies registered hemp production 
sites, whether under a State, tribal, or USDA plan, for the purposes of 
compliance and tracking with law enforcement. AMS will maintain this 
system with the information collection assistance of FSA. In order to 
maintain consistency and uniformity of hemp production locations, USDA 
is recommending that FSA collect this information through their crop 
acreage reporting system. In this context, a common use of the term 
``producer'' is essential to maintaining a substantive database. For 
this reason, the definition of ``producer'' incorporates the FSA 
definition of ``producer'' with the additional qualifier that the 
producer is licensed or authorized to produce hemp under the Hemp 
Program.
    ``Secretary'' means the Secretary of Agriculture of the United 
States.
    Section 297A of the Act defines ``State'' to mean any of one of the 
fifty States of the United States of America, the District of Columbia, 
the Commonwealth of Puerto Rico, and any other territory or possession 
of the United States. The statutory definition is self-explanatory, and 
USDA is adopting the same definition without change for part 990.
    This term ``State department of agriculture'' is defined by the 
2018 Farm Bill as the agency, commission, or department of a State 
government responsible for agriculture in the State. The statutory 
definition is self-explanatory, and USDA is adopting the same 
definition without change for part 990.
    The term ``store'' is part of the term ``handle'' under this part 
and means to deposit hemp plants or hemp plant product in a storehouse, 
warehouse or other identified location by a producer for safekeeping 
prior to delivery to a recipient for further processing.
    As defined by the 2018 Farm Bill, the term ``tribal government'' 
means the governing body of an Indian Tribe. The statutory definition 
is self-explanatory, and USDA is adopting the same definition without 
change for part 990.
    The ``U.S. Attorney General'' is the Attorney General of the United 
States.
    ``USDA'' is synonymous with the United States Department of 
Agriculture.
    In the context of this part, ``licensee'' or ``USDA licensed hemp 
producer'' means a person or business authorized by USDA to grow hemp 
under the terms established in this part and who produces hemp.

V. Appeals

    An applicant for a USDA hemp production program license may appeal 
a license denial to the AMS Administrator. Licensees may appeal denials 
of license renewals, license suspensions, or license revocations to the 
AMS Administrator. All appeals must be submitted in writing and 
received within 30 days of the denial. This submission deadline should 
provide adequate time to prepare the necessary information required to 
formulate the appeal. States or Tribes may appeal USDA decisions either 
denying, suspending or revoking State or Tribal hemp production plans. 
As with the USDA license plans, these appeals must be submitted in 
writing to the AMS Administrator and explain the reasoning behind the 
appeal, e.g. why the Administrator's decision is not justified or is 
improper. The appeal should include any additional information or 
documentation the appellant or licensee believes USDA should consider 
when reviewing its decision. The Administrator will take into account 
the applicant or licensee's justification for why the license should 
not be denied, suspended, or revoked, and then issue a final 
determination. Determinations made by the Administrator under the 
appeals process will be final unless the applicant or licensee requests 
a formal adjudicatory proceeding to review the decision, which will be 
conducted pursuant to the U.S. Department of Agriculture's Rules of 
Practice Governing Formal Adjudicatory Proceedings, 7 CFR part 1, 
subpart H. If the applicant or licensee does not request that the 
Administrator initiate a formal adjudicatory proceeding within 30 days 
of the Administrator's adverse ruling, such ruling becomes final. The 
following paragraphs explain when and how a State or Tribe may appeal a 
USDA decision. State or Tribal plans may include similar appeal 
procedures; this following section is not applicable to individuals 
subject to State or Tribal plans.\

Appeals Under a State or Tribe Hemp Production Plan

    A State or Tribe may appeal the denial of a proposed hemp 
production plan, or the proposed suspension or revocation of a plan by 
the USDA. USDA will consult with States and Tribes to help ensure their 
draft plans meet statutory requirements, and that existing plan 
requirements are monitored and enforced by States and Tribes. If, 
however, a proposed State or Tribal plan is denied, or an existing plan 
is suspended or terminated, the decision may be appealed.
    If the AMS Administrator sustains a State or Tribe's appeal of a 
denied hemp plan application, the proposed State or Tribal hemp 
production plan shall be established as proposed. If the AMS 
Administrator denies an appeal, prospective producers located in the 
State or Tribe may apply for hemp licenses under the terms of the USDA 
hemp production plan. Similarly, if an appeal to a proposed State or 
Tribal plan revocation is denied, producers located in the impacted 
State or Tribal

[[Page 58534]]

territory may apply for licenses under the USDA plan.
    The appeal of a State or Tribal hemp production plan suspension or 
termination must explain the reasoning behind the appeal and be filed 
within the time-period provided in the letter of notification or within 
30 business days from receipt of the notification, whichever occurs 
later. This timeframe should be adequate for the assembly of the 
information required to be submitted as part of the appeal.

VI. Interstate Commerce

    Nothing in this rule prohibits the interstate commerce of hemp. No 
State or Indian Tribe may prohibit the transportation or shipment of 
hemp produced in accordance with this part and with section 7606 of the 
2014 Farm Bill through the State or the territory of the Indian Tribe, 
as applicable.\8\
---------------------------------------------------------------------------

    \8\ See section 10114 of the 2018 Farm Bill and the USDA General 
Counsel's Legal Opinion on the Authorities for Hemp Production at 
https://www.ams.usda.gov/content/legal-opinion-authorities-hemp-production.
---------------------------------------------------------------------------

VII. Outreach

    As part of this rulemaking process, USDA engaged in numerous 
discussions with industry stakeholders prior to issuing this rule. This 
included numerous meetings with different State and tribal groups and 
representatives, industry organizations, groups and individuals with 
experience in the hemp industry, and representatives of law 
enforcement.
    In addition, USDA also conducted a listening session on March 13, 
2019, that had more than 2,100 participants, and included comments from 
46 separate speakers representing States, Tribes, producers, end-users, 
hemp organizations, and others. The recording of the listening session 
is available on the USDA website. On May 1 and 2, 2019, USDA also 
participated in tribal consultation meetings.
    As required by the Farm Bill, the Secretary has developed these 
regulations and guidelines in consultation with the Attorney General. 
In addition, USDA will submit an annual report to the Committee on 
Agriculture of the House of Representatives and the Committee on 
Agriculture, Nutrition, and Forestry of the Senate containing updates 
on the implementation of the hemp requirements in the Farm Bill.

VIII. Severability

    This interim rule includes a severability provision. This is a 
standard provision in regulations. This section provides that if any 
provision of part 990 is found to be invalid, the remainder of the part 
shall not be affected.

Paperwork Reduction Act

    In accordance with section 3507(d) of the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3501 et seq.), through this document AMS announces 
its intent to request approval from OMB for a new information 
collection OMB No. 0581-NEW and comments are invited on this new 
information collection. All comments received on this information 
collection will be summarized and included in the final request for OMB 
approval.
    Based on our review of the hemp production under the 2014 Farm 
Bill, we estimate that there will be approximately 6,700 \9\ producers 
under State and Tribal plans, approximately 1,000 producers under the 
USDA plan, and 100 State and Tribal plans. We estimate that each 
producer will have an average of two lots of hemp with most producers 
growing one lot per year but larger producers growing many different 
lots. Each lot will need to be tested for THC concentration.
---------------------------------------------------------------------------

    \9\ The 6,700 figure represents the average number of growers 
operating under State and Tribal plans over the three years of the 
program. In actuality, we estimate 5,500 such growers in 2020, 6,700 
growers in 2021 and 8,000 growers in 2022 who will participate 
through State and Tribal programs.
---------------------------------------------------------------------------

    Comments are invited on: (1) Whether the proposed collection of 
information is necessary for the proper performance of the functions of 
the agency, including whether the information will have practical 
utility; (2) the accuracy of the agency's estimate of the burden of the 
proposed collection of information, including the validity of the 
methodology and assumptions used; (3) ways to enhance the quality, 
utility, and clarity of the information to be collected; and (4) ways 
to minimize the burden of the collection of information on those who 
are to respond, including the use of appropriate automated, electronic, 
mechanical, or other technological collection techniques or other forms 
of information technology.
    Title: Domestic Hemp Production Program; 7 CFR 990.
    OMB Number: 0581-NEW.
    Type of Request: New Collection.
    Abstract: The proposed information collection and reporting 
requirements will facilitate the effective administration and oversight 
of the Domestic Hemp Production Program, as described above. The Hemp 
Program includes provisions, among others, requiring licensed producers 
to maintain information on the land where hemp is produced, hemp 
testing for delta-9 tetrahydrocannabinol, and disposal of plants not 
meeting necessary requirements. Additionally, as explained above, all 
licensed producers must report hemp crop acreage to the USDA Farm 
Service Agency (FSA). The licensed producer must maintain information 
that supports, verifies, or documents information on all reports for a 
minimum of three years. This includes, but is not limited to, the 
producer's completed criminal history report, any records of required 
disposal, notifications of THC test results, and the license. This new 
information collection proposes to create seven new forms. These forms 
will be available on the USDA domestic hemp website, or copies can be 
requested from [email protected]. AMS is in the process of 
building a database for applicants and producers to submit applications 
and reports. The forms and information collected on those forms are 
described below. The information reported for data collected under 
State and Tribal plans incorporates the burden to producers licensed 
under State and Tribal plans associated with providing the required 
information.
    State and Tribal Hemp Producer Report. Every State or Tribe with an 
approved plan must provide AMS with information on the hemp producers 
covered under their plan using the State and Tribal Hemp Producer 
Report form. States and Tribes are required to submit this information 
to USDA not later than 30 days after the date it is received using this 
report. This report should be submitted to USDA on the first day of 
each month. If this date falls on a holiday or weekend, the report is 
due the next business day. This information should be submitted to USDA 
using a digital format compatible with USDA's information sharing 
systems, whenever possible.
    If there are no changes from the previous reporting cycle, States 
and Tribes could check the box indicating there were no changes during 
the current reporting cycle. This information will be collected and 
maintained by USDA and made available in real time to Federal, State, 
and local law enforcement. States and Tribes will need to retain the 
information used to populate this form for three calendar years.
State and Tribal Hemp Producer Report
    Estimate of Burden: Public burden for States and Tribes completing 
and maintaining this form is estimated to be an average of 0.34 hours 
per response.
    Respondents: States and Tribes with USDA approved hemp production 
plans.

[[Page 58535]]

    Estimated Number of Respondents: 100.
    Estimated Number of Responses per Respondent: 12.
    Estimated Total Annual Responses: 1,200.
    Estimated Total Annual Hours per Respondent: 0.333 hours.
    Estimated Total Annual Reporting Hours: 400 hours (rounded).
    Estimated Number of Record Keepers: 100.
    Estimated Total Annual Hours per Record Keeper: 0.083 hours.
    Estimated Record Keeping Hours: 8.3 hours.
    Estimated Total Annual Burden Hours (Including 8.3 hours): 408.3 
hours.
Information and Record Keeping for State and Tribal Producer Report 
Responses
    Estimate of Burden: Public burden for State and Tribal producers 
providing and maintaining the information for this form is estimated to 
be an average of 0.25 hours per response.
    Estimated Number of Respondents: 8,000.
    Estimated Number of Responses per Respondent: 0.3330.
    Estimated Total Annual Responses: 2,664.
    Estimated Total Annual Hours per Respondent: 0.167 hours.
    Estimated Total Annual Burden Hours: 444.9 hours (2,664 x 0.1670 
hours (10 mins)).
    Estimated Number of Record Keepers: 2,664.
    Estimated Total Annual Hours per Record Keeper: 0.083 hours.
    Estimated Record Keeping Hours: 221.1 hours.
    Estimated Total Annual Burden and Record Keeping Hours for State 
and Tribal Producer Responses (Including 221.1 hours): 666 hours.
    State and Tribal Hemp Disposal Report: States or Indian Tribes 
operating under approved hemp production plans must notify USDA of any 
occurrence of non-conforming plants or plant material and provide the 
disposal record of those plants and materials monthly. This includes 
plants or plant material which test above the acceptable hemp THC level 
or hemp otherwise produced in violation of this part. This information 
should be submitted to USDA using a digital format compatible with 
USDA's information sharing systems, whenever possible.
State and Tribal Hemp Disposal Report
    Estimate of Burden: Public burden for the States and Tribes 
completing and maintaining this form is estimated to be an average of 
0.34 hours per response.
    Respondents: States and Tribes with USDA approved hemp production 
plans.
    Estimated Number of Respondents: 100.
    Estimated Number of Responses per Respondent: 12.
    Estimated Total Annual Responses: 1,200.
    Estimated Total Annual Hours per Respondent: 0.333 hours.
    Estimated Total Annual Reporting Hours: 400 hours (rounded).
    Estimated Number of Record Keepers: 100.
    Estimated Total Annual Hours per Record Keeper: 0.083 hours.
    Estimated Record Keeping Hours: 8.3 hours.
    Estimated Total Annual Burden Hours (Including the 8.3 hours: 408.3 
hours.
Information and Record Keeping for State and Tribal Producer Report 
Responses
    Estimate of Burden: Public burden for State and Tribal producers 
providing and maintaining the information for this form is estimated to 
be an average of 0.25 hours per response.
    Estimated Number of Respondents: 2,680.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Responses: 2,680.
    Estimated Total Annual Hours per Respondent: 0.167 hours.
    Estimated Total Annual Burden Hours: 447.6 hours.
    Estimated Number of Record Keepers: 2,680.
    Estimated Total Annual Hours per Record Keeper: 0.083 hours.
    Estimated Record Keeping Hours: 222.4 hours.
    Estimated Total Annual Burden and Record Keeping Hours for State 
and Tribal Producer Responses (Including 222.4 hours): 670 hours.
    State and Tribal Hemp Annual Report: Each year, AMS is required to 
provide an annual report to Congress regarding the implementation 
Subtitle G of the AMA. In order to ensure that AMS has the best 
available information on U.S. hemp production to populate this report, 
AMS is requiring States and Tribes to submit an annual report to AMS. 
This report includes a summary for all hemp planted, destroyed, and 
harvested under each State or Tribe's hemp production plan. States and 
Tribes would submit this information to USDA using the ``State and 
Tribal Hemp Annual Report'' form annually by December 15.
State and Tribal Hemp Annual Report
    Estimate of Burden: Public burden for completing and maintaining 
the information on this form is estimated to be an average of 0.42 
hours per response.
    Respondents: States and Tribes with USDA approved hemp production 
plans.
    Estimated Number of Respondents: 100.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Responses: 100.
    Estimated Total Annual Hours per Respondent: 0.333 hours.
    Estimated Total Annual Reporting Hours: 33.3 hours.
    Estimated Number of Record Keepers: 100.
    Estimated Total Annual Hours per Record Keeper: 0.083 hours.
    Estimated Record Keeping Hours: 8.3 hours.
    Estimated Total Annual Burden Hours (Including the 8.3 hours): 41.6 
hours.
Information and Record Keeping for State and Tribal Producer Report 
Responses
    Estimate of Burden: Public burden for completing and maintaining 
the information for this form is estimated to be an average of 0.25 
hours per response.
    Estimated Number of Respondents: 6,700.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Responses: 6,700.
    Estimated Total Annual Hours per Respondent: 0.167 hours.
    Estimated Total Annual Burden Hours: 1,118.9 hours.
    Estimated Number of Record Keepers: 6,700.
    Estimated Total Annual Hours per Record Keeper: 0.083 hours.
    Estimated Record Keeping Hours: 556.10 hours.
    Estimated Total Annual Burden and Record Keeping Hours for State 
and Tribal Producer Responses (Including 556.1 hours): 1,675 hours.
    USDA Hemp Producer Licensing Application: To obtain a license from 
USDA, producers would need to complete the ``USDA Hemp Plan Producer 
Licensing Application'' form. This form will collect the information 
identified in Sec.  990.21. By signing the application, the applicant 
would certify, should they become a licensed producer, they would abide 
by all rules and regulations relating to the USDA

[[Page 58536]]

plan, and to the truth and accuracy of the information provided in the 
application.
    For the first application cycle, USDA will accept license 
applications for the first year after the effective date of the rule. 
After this initial period, license applications must be submitted 
between August 1 and October 31 of each year. Licenses do not renew 
automatically and must be renewed every three years. Applications for 
license renewal would be subject to the same terms and approved under 
the same criteria as initial license applications, unless there has 
been an intervening change in the applicable law or regulations since 
approval of the initial or last application. In such a case, the 
subsequently enacted change in law or regulation shall govern renewal 
of the license. Licenses will be valid until December 31 of the year 
three after the year in which license is issued. For example, if you 
apply for a license August 1, 2020 and are granted a license on 
September 15, 2020, the license would expire December 31, 2022. The 
license application will be available online at the USDA domestic hemp 
production program website, or copies can be requested by email at 
[email protected]. Applications may be submitted electronically or 
through U.S. mail.
USDA Hemp Plan Producer Licensing Application
    Estimate of Burden: Public burden for completing and maintaining 
this form is estimated to be an average of 0.25 hours per response.
    Respondents: Producers applying for the USDA plan.
    Estimated Number of Respondents: 1,000.
    Estimated Number of Responses per Respondent: 0.3333.
    Estimated Total Annual Responses: 333.
    Estimated Total Annual Hours per Respondent: 0.167 hours.
    Estimated Total Annual Reporting Hours: 55.6 hours.
    Estimated Number of Record Keepers: 333.
    Estimated Total Annual Hours per Record Keeper: 0.083 hours.
    Estimated Record Keeping Hours: 27.7 hours.
    Estimated Total Annual Burden Hours (Including the 27.7 hours): 
83.3 hours.
    USDA Hemp Plan Disposal Notification: Producers licensed by USDA 
must test hemp prior to harvest, dispose of all non-compliant cannabis 
plants, and report to USDA disposal of all non-compliant cannabis 
plants. Producers must document the disposal of all marijuana in 
accordance with Sec.  990.27. Reporting can be accom plished by either 
providing USDA with a copy of the documentation of disposal provided by 
the reverse distributor or by submitting a ``USDA Hemp Plan Producer 
Disposal Form'' to document the disposal process.
USDA Hemp Plan Producer Disposal Form
    Estimate of Burden: Public burden for completing and maintaining 
this form is estimated to be an average of 0.42 hours per response.
    Respondents: Producers covered under the USDA plan.
    Estimated Number of Respondents: 400.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Responses: 400.
    Estimated Total Annual Hours per Respondent: 0.333 hours.
    Estimated Total Annual Reporting Hours: 133.3 hours.
    Estimated Number of Record Keepers: 400.
    Estimated Total Annual Hours per Record Keeper: 0.083 hours.
    Estimated Record Keeping Hours: 33.3 hours.
    Estimated Total Annual Burden Hours (Including the 33.3 hours): 
166.6 hours (rounded).
    End of Year Harvest Reporting Requirements: The Farm Bill requires 
AMS to prepare and submit an annual report to Congress on the 
implementa tion of the domestic hemp production program. To ensure AMS 
has adequate planting, production, and harvest data necessary for this 
report, we are requiring producers to submit an annual harvest report. 
Each producer would need to submit to USDA an annual report of their 
total acreage planted, harvested, and, if applicable, disposed. If a 
producer has multiple growing and harvesting cycles throughout the year 
(e.g., greenhouse and producers in warm climates) they should all be 
summarized and submitted on this form. Producers would submit this 
information to USDA using the ``USDA Hemp Plan Producer Annual Report'' 
form by December 15 each year.
USDA Hemp Plan Producer Annual Report
    Estimate of Burden: Public burden for completing and maintaining 
this form is estimated to be an average of 0.42 hours per response.
    Respondents: Producers applying for the USDA plan.
    Estimated Number of Respondents: 1,000.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Responses: 1,000.
    Estimated Total Annual Hours per Respondent: 0.333 hours.
    Estimated Total Annual Reporting Hours: 333.3 hours.
    Estimated Number of Record Keepers: 1,000.
    Estimated Total Annual Hours per Record Keeper: 0.083 hours.
    Estimated Record Keeping Hours: 83.3 hours.
    Estimated Total Annual Burden Hours (Including the 83.3 hours): 
416.6 hours rounded.
    Report of Acreage: Producers shall report name, address, license or 
authorizing number, geospatial location for each lot or greenhouse 
where hemp will be produced and hemp crop acreage to FSA. This will 
establish an identification system for hemp production nationwide and 
complies with the information sharing requirements of the 2018 Farm 
Bill.
Report of Acreage FSA 578
    Estimate of Burden: Public burden for completing and maintaining 
this form is estimated to be an average of 0.58 hours per response.
    Respondents: Producers under State, Tribal or the USDA plan.
    Estimated Number of Respondents: 7,700.
    Estimated Annual Number of Responses per Respondent: 1.
    Estimated Total Annual of Responses: 7,700.
    Estimated Total Annual Hours per Respondent: 0.5 hours.
    Estimated Total Annual Reporting Hours: 3,850.
    Estimated Number of Record Keepers: 7,700.
    Estimated Total Annual Hours per Record Keeper: 0.083 hours.
    Estimated Record Keeping Hours: 639.1 hours.
    Estimated Total Annual Burden Hours (Including the 639.1 hours): 
4,489.1 hours.
    Laboratory Test Results Report: The Farm Bill requires that all 
domestically produced hemp be tested for total THC content on a dry 
weight basis. All test results, whether passing, failing, or re-tests 
must be reported to USDA.
Laboratory Test Results Report
    Estimate of Burden: Public burden for completing and maintaining 
this form is estimated to be an average of 1.08 hours per response.
    Respondents: Laboratories testing hemp for THC content.

[[Page 58537]]

    Estimated Number of Respondents: 7,700.
    Estimated Annual Number of Responses per Respondent: 2.
    Estimated Total Annual of Responses: 15,400.
    Estimated Total Annual Hours per Respondent: 0.5 hours.
    Estimated Total Annual Reporting Hours: 7,700.
    Estimated Number of Record Keepers: 7,700.
    Estimated Total Annual Hours per Record Keeper: 0.083 hours.
    Estimated Record Keeping Hours: 639.1 hours.
    Estimated Total Annual Burden Hours (Including the 639.1 hours): 
8,339.1 hours.
    This new information collection assumes 9,100 total respondents, 
17,363 burden hours, and annual costs of $989,714.94. This is 
calculated by multiplying the mean hourly wage of $57 by 17,363 hours. 
The mean hourly wage of a compliance officer, as reported in the May 
2018 Occupational Employment Statistics Survey of the Bureau of Labor 
and Statistics, was $35 per hour. Assuming 39 percent of total 
compensation accounts for benefits, assumed total compensation of a 
compliance officer is $57 per hour.
[GRAPHIC] [TIFF OMITTED] TR31OC19.008

E-Government Act

    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. We recognize using an electronic 
system will promote efficiencies in developing and implementing the new 
USDA Domestic Hemp Production Program. Since this is a new program, AMS 
is working to make this process as effective and user-friendly as 
possible.

Civil Rights Review

    AMS has considered the potential civil rights implications of this 
rule on minorities, women, and persons with disabilities to ensure that 
no person or group shall be discriminated against on the basis of race, 
color, national origin, gender, religion, age, disability, sexual 
orientation, marital or family status, political beliefs, parental 
status, or protected genetic information. This review included persons 
that are employees of the entities who are subject to these 
regulations. This interim rule does not require affected entities to 
relocate or alter their operations in ways that could adversely affect 
such persons or groups. Further, this rule would not deny any persons 
or groups the benefits of the program or subject any persons or groups 
to discrimination.
    A 60-day comment period is provided to allow interested persons to 
respond to this interim rule. All written comments received in response 
to this rule by the date specified will be considered.

Executive Order 13132 Federalism

    AMS has examined the effects of provisions in the interim final 
rule on the relationship between the Federal Government and the States, 
as required by Executive Order 13132 on ``Federalism.'' Our conclusion 
is that this rule does have federalism implications because the rule 
has substantial direct effects on States, on the relationship between 
the national government and States, and on the distribution of power 
and responsibilities among the various levels of government. The 
federalism implications of the rule, however, flow from and are 
consistent with the underlying statute. Section 297B of the AMA, 7 
U.S.C. 1639p, directs USDA to review and approve State plans that meet 
statutory requirements and to audit a State's compliance with its State 
plans. Overall, the final rule attempts to

[[Page 58538]]

balance both the autonomy of the States with the necessity to create a 
Federal framework for the regulation of hemp production.
    Section 3(b) of E.O. 13132 recognizes that national action limiting 
the policymaking discretion of States will be imposed ``. . . only 
where there is constitutional and statutory authority for the action 
and the national activity is appropriate in light of the presence of a 
problem of national significance.'' Section 297B of the AMA is the 
statutory authority underlying the rules for USDA to review, approve, 
disapprove, or revoke State plans for hemp production. Until the 
passage of the 2018 Farm Bill, hemp was a schedule I controlled 
substance as it fell within the CSA definition of marijuana. When hemp 
was exempted from the definition of marijuana as part of the 2018 Farm 
Bill, in connection with removing it from that list, Congress 
established a national regulatory framework for the production of hemp. 
Because cannabis plants with a THC level higher than 0.3 are marijuana 
and on the Federal controlled substances list, ensuring that hemp 
produced under this program is not marijuana is of national 
significance.
    In addition to establishing a national regulatory framework for 
hemp production, Congress expressly preempted State law with regard to 
the interstate transportation of hemp. Section 10114 of the 2018 Farm 
Bill States that ``[n]o State or Indian Tribe shall prohibit the 
transportation or shipment of hemp or hemp products produced in 
accordance with subtitle G of the Agricultural Marketing Act of 1946 
(as added by section 10113) through the State or the territory of the 
Indian Tribe, as applicable.'' Thus, States and Indian Tribes may not 
prevent the movement of hemp through their States or territories even 
if they prohibit its production. Congress also expressly preempted a 
State's ability to prosecute negligent violations of its plan as a 
criminal act in section 297B(e)(2)(c). That preemption is incorporated 
into this rule.
    Section 3(d)(2) of the E.O. 13132 requires the Federal Government 
to defer to the States to establish standards where possible. Section 
4(a), however, expressly contemplates preemption when there is a 
conflict between exercising State and Federal authority under Federal 
statute. Section 297C of the AMA requires State plans to include six 
practice and procedures and a certification. It also expressly states 
that it does not preempt a State's ability to adopt more stringent 
requirements or to prohibit the production of hemp. Section 297D of the 
AMA requires USDA to promulgate regulations to implement subtitle G of 
the AMA which includes section 297B. Subpart B of the final rule 
repeats those requirements, providing more detail where necessary. 
States have wide latitude to develop the required practice and 
procedures. Subpart B includes more details on the testing and sampling 
of hemp plants to establish a national standard to determine whether 
the plants meet the statutory definition of hemp. Likewise, the final 
rule requires States to follow DEA requirements for disposal of 
marijuana for cannabis plants exceeding the acceptable hemp THC level. 
Finally, the interim final rule also reaffirms that States may adopt 
more stringent standards and prohibit hemp production within their 
jurisdiction.
    Section 6 of E.O. 13132 requires consultation with State officials 
in development of the regulations. AMS conducted significant outreach 
with State officials including individual meetings, participation in 
conferences with State officials, and listening session where State 
officials from all States were invited. During our consultation with 
the States, representatives from various State agencies and offices 
expressed the following concerns about sampling and testing procedures. 
Most requested that USDA adopt uniform, national requirements to 
facilitate the marketing of hemp. Some States advocated that USDA defer 
to each State to determine the appropriate procedures for its plan. 
USDA recognizes the value of a national standard to promote consistency 
while allowing States the flexibility to adopt procedures that fit 
their circumstances. As explained above, USDA is adopting performance 
standards for sampling and testing. As long as the procedures in the 
State plans meet those standards, AMS will find those procedures 
acceptable.
    As AMS implements this new program, we will continue to consult 
with State officials to obtain their feedback on implementation. We 
encourage States to submit comments on this interim final rule during 
the comment period which closes on December 30, 2019.
    Finally, we have considered the cost burden that this rule would 
impose on States as discussed in the Regulatory Impact Analysis of this 
document.
    AMS has assessed this final rule in light of the principles, 
criteria, and requirements in Executive Order 13132. We conclude that 
this final rule: Is not inconsistent with that E.O.; will not impose 
significant additional costs and burdens on the States; and will not 
affect the ability of the States to discharge traditional State 
governmental functions.

E.O. 13175 Consultation and Coordination With Indian Tribal Governments

    AMS has examined the effects of provisions in the final rule on the 
relationship between the Federal Government and Tribal governments, as 
required by E.O. 13175 on ``Consultation and Coordination with Indian 
Tribal Governments.'' We conclude that the final rule does have 
substantial direct effects on tribal governments, on the relationship 
between the national government and tribal governments, and on the 
distribution of power and responsibilities among the various levels of 
government. The effects of the rule, however, flow from and are 
consistent with the underlying statute. Section 297B of the AMA, 7 
U.S.C. 1639p, directs USDA to review and approve Tribal plans that meet 
statutory requirements and to audit a tribal government's compliance 
with its Tribal plans. Overall, the final rule attempts to balance both 
the autonomy of the tribal governments with the necessity to create a 
Federal framework for the regulation of hemp production.
    As with State plans, tribal governments will have wide latitude in 
adopting the required procedures including adopting requirements that 
are more stringent than the statutory ones. For reasons stated above in 
the federalism analysis, AMS is adopting national standards for 
sampling, testing, and disposal of non-compliant plants that Tribal 
plans must adhere to.
    AMS has conducted extensive outreach to tribal governments. On May 
1 and 2, 2019, USDA held a formal tribal consultation on the 2018 Farm 
Bill including a session on hemp production. In addition to the 
listening sessions for the general public, USDA hosted one for tribal 
governments following the formal tribal consultation on May 2, 2019. 
USDA officials attended meetings with representatives of tribal 
governments.
    During those outreach events, tribal representatives from several 
Tribal Governments expressed their opinion that the 2018 Farm Bill 
permitted the USDA Secretary to allow AMS to approve Tribe plans ahead 
of issuing regulations of the USDA plan. Approving plans immediately 
would allow those Tribes (and States) with a plan to begin planting for 
the commercial production of hemp in 2019. The USDA Secretary released 
a Notice to Trade (NTT) on February 27, 2019 to explain that tribal and 
State

[[Page 58539]]

plans would not be reviewed or approved until AMS finalized regulations 
ahead of the 2020 planting season. Additionally, the NTT stated that 
until regulations were in place, States, Tribes, and institutions of 
higher education can continue operating under authorities of the 2014 
Farm Bill. The 2018 Farm Bill extension of the 2014 authority expires 
12 months after USDA has established the plan and regulations required 
under the 2018 Farm Bill. A second Notice to Trade was issued on May 
27, 2019 to clarify again that Tribal governments through the 
authorities in the 2014 Farm Bill are permitted grow industrial hemp 
for research purposes during the 2019 growing season. USDA appreciates 
the urgency in which the Indian Tribes wish to engage in this new 
economic opportunity. We have worked expeditiously to develop and 
promulgate this interim final rule so that States and Tribes will be 
able to submit their plans in time for the 2020 season.
    Some tribal representatives stated that the Act requires that the 
tribal plans have the specified practice and procedures and USDA is not 
authorized to evaluate them as part of the review and approval process. 
We note that the statute requires that USDA approve plans that include 
procedures that meet the statutory requirements. For example, section 
297B(a)(2)(A)(iii) required a procedure for effective disposal and USDA 
must evaluate whether the plan's procedure is effective.
    Although Indian Tribes will incur costs in complying with final 
rule, those costs should be outweighed by the benefits that the Indian 
Tribes realize in commercial hemp production occurring within their 
territories.

Executive Orders 12866, 13563, and 13771

    USDA is issuing this rule in conformance with Executive Orders 
12866 and 13563, which 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, which 
include 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 rule meets the definition of an economically significant 
regulatory action under Executive Order 12866, as it is likely to 
result in an annual effect on the economy of $100 million or more. USDA 
considers this to be a deregulatory action as it allows the development 
of a niche market that cannot exist under current regulation. This 
action will expand production options and enable interested farmers to 
grow hemp.
    USDA requests public comment on the estimated impacts of the rule, 
specifically whether there is information or data that may inform 
whether or not the market will experience a significant shift, either 
positive or negative, in the developing hemp market and on consumers. 
In addition, USDA seeks comments and requests any data or information 
on what impacts the regulation may have on current and future 
innovation in the areas of industrial hemp usages and how much such 
impacts on innovation may affect rural communities.
    Regulations must be designed in the most cost-effective manner 
possible to obtain the regulatory objective while imposing the least 
burden on society. This rule would establish a national regulatory 
oversight program for the production of hemp. This program is necessary 
to effectuate the Farm Bill mandate to coordinate State and tribal 
government hemp production regulations with the newly established 
Federal regulations for hemp production in States not regulated by 
State or Tribal plans. This program is intended to provide consistency 
in production, sampling and testing of hemp product to ensure 
compliance with the acceptable hemp THC level.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to have retroactive effect. 
The discussion on E.O. 13132, Federalism, above, addressed the extent 
in which the 2018 Farm Bill and the interim rule preempt State law. The 
discussion on E.O. 13179, Consultation and Coordination with Tribal 
governments, above, addresses the impact that the interim rule impacts 
tribal governments. The discussion above regarding appeals under new 
part 990, subpart D, describes the administrative procedures that must 
be exhausted prior to a judicial challenge.

Regulatory Impact Analysis/Initial Regulatory Flexibility Analysis

Introduction

    The future of the hemp industry in the United States (U.S.) is 
anything but certain. While hemp was produced previously in the U.S. 
for hundreds of years, its usage diminished in favor of alternatives. 
Hemp fiber, for instance, which had been used to make rope and 
clothing, was replaced by less expensive jute and abaca imported from 
Asia. Ropes made from these materials were lighter and more buoyant, 
and more resistant to salt water than hemp rope, which required 
tarring. Improvements in technology further contributed to the decline 
in hemp usage. The cotton gin, for example, eased the harvesting of 
cotton, which replaced hemp in the manufacture of textiles.\10\
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    \10\ Presentation to USDA by Dr. Eric Walker, Assistant 
Professor in the Department of Plant Sciences at the University of 
Tennessee, on May 21, 2019.
---------------------------------------------------------------------------

    Hemp production in the U.S. has seen a massive resurgence in the 
last five years; however, it remains unclear whether consumer demand 
will meet the supply. From 2017 to 2018, acreage planted for hemp 
tripled, reaching 77,844 acres. Hemp planted acreage in 2018 was eight 
times the acreage planted just two years prior in 2016. Acreage in 2019 
is expected to at least double from 2018.\11\
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    \11\ Vote Hemp, U.S. Hemp Crop Reports.
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    High prices for hemp, driven primarily by demand for use in 
producing CBD, relative to other crops, have driven increases in 
planting. Prices for hemp products vary from source to source. Prices 
for hemp fiber range from $0.07 per pound to $0.67 per pound, and 
prices for hemp grain or seed range from $0.65 per pound to $1.70 per 
pound. Prices for hemp flowers, in which concentrations of the 
cannabinoid cannabidiol, or CBD, are located, range from $3.50 to 
$30.00 per pound or more, depending on the CBD content. Producer 
interest in hemp production is largely driven by the potential for high 
returns from sales of hemp flowers to be processed into CBD oil. From 
2017 to 2018, the number of licensed producers of hemp more than 
doubled to reach 3,543 producers.
    The hemp plant is a varietal of the species Cannabis sativa. While 
belonging to the same species as the plant that produces marijuana, 
hemp is distinctive from marijuana in its chemical makeup. The 
marijuana plant contains high levels of the cannabinoid delta-9 
tetrahydrocannabinol (THC), which is the chemical that produces 
psychoactive effects. Hemp may contain no greater than 0.3 percent THC 
on a dry weight basis.
    The 2018 Farm Bill explicitly preserved the authority of the U.S. 
Food and Drug Administration (FDA) to regulate hemp products under the 
Federal Food, Drug, and Cosmetic Act (FD&C Act) and section 351 of the 
Public Health Service Act (PHS Act). Accordingly, products containing 
cannabis and cannabis-derived

[[Page 58540]]

compounds are subject to the same authorities and requirements as FDA-
regulated products containing any other substance.

Legislative History

    The production of hemp has a long history in the United States 
(U.S.). Prior to the mid-20th century, hemp had been cultivated in the 
U.S. for hundreds of years to make flags, sails, rope, and paper. The 
first regulation of hemp occurred in 1937 with the Marihuana Tax Act, 
which required all producers of the species Cannabis sativa to register 
with and apply for a license from the Federal Government. The ``Hemp 
for Victory'' Campaign during World War II promoted production of hemp 
for rope to be used by U.S. military forces, but at the end of the war, 
the requirements in the Marihuana Tax Act resumed. In 1970, Congress 
passed the Controlled Substances Act, granting the Attorney General the 
authority to regulate production of hemp.
    The Agricultural Act of 2014, also known as the 2014 Farm Bill, 
defined hemp as the plant Cannabis sativa L. and any part of that plant 
with concentrations of THC no greater than 0.3 percent on a dry weight 
basis. Prior to the 2014 Farm Bill, hemp had never been designated in a 
Federal law as different from cannabis generally. The 2014 Farm Bill 
authorized institutions of higher education and State departments of 
agriculture to allow for cultivation of hemp as part of a pilot program 
as authorized by State law for research. Research allowed under pilot 
programs included market research, so hemp was cultivated and sold as 
inputs into various consumer products under the 2014 Farm Bill. This 
analysis assumes that such cultivation would have continued and even 
expanded in the absence of the 2018 Farm Bill.

Need for Regulation

    The Agriculture Improvement Act of 2018, known as the 2018 Farm 
Bill, removed hemp from the list of controlled substances, 
decontrolling hemp production in all U.S. States, and in territories of 
Indian Tribes, unless prohibited by State or Tribal Law. This action 
eliminates the uncertain legal status at the Federal level of hemp 
production and allows the U.S. Department of Agriculture (USDA) to 
provide hemp producers with crop insurance programs, potentially 
reducing risk to producers and providing easier access to capital. The 
statute also prohibits interference in the interstate transport of hemp 
by States, including those States which prohibit hemp production and 
sales. As a result, hemp producers will have access to nationwide 
markets. The rule is necessary to facilitate this market by creating a 
set of minimum standards to ensure that hemp being produced under this 
program meets all statutory requirements. Moreover, both the 
declassification of hemp, and the prohibition on interference with 
interstate transportation apply to hemp that is grown under an approved 
State or Tribal plan, or under a Federal license. As a result, this 
regulation facilitates provisions of the Farm Bill that would otherwise 
be self-implementing.
Overview of the Action
    The 2018 Farm Bill granted regulatory authority of domestic hemp 
production to the State departments of agriculture, Tribal governments, 
and USDA. States and Tribes must submit to USDA plans which include 
provisions for maintaining information regarding the land on which hemp 
is produced, for testing the levels of THC, for disposal of plants that 
do not meet necessary requirements, and for procedures to ensure 
compliance with the requirements of the new part. State and Tribal 
Plans must be approved by USDA. This rule outlines requirements by 
which the USDA would approve plans submitted by States and Tribal 
governments for oversight of hemp production. The 2018 Farm Bill also 
directs USDA to develop a plan for use by hemp producers in States or 
Tribes where no State or Tribal Plan has been approved and which do not 
prohibit the cultivation of hemp. These actions will promote 
consistency in regulations governing the legal production of hemp 
across the country.

Baseline Definition

    In order to measure the impacts of this rule on affected entities, 
AMS defines the baseline such that sales of hemp products from 2014 
through 2019 will be treated as attributable to the 2014 Farm Bill 
only. While the 2018 Farm Bill permits commercial production of hemp, 
and the 2014 Farm Bill permits production of hemp for research purposes 
only, AMS assumes some of the increasing trend of U.S. hemp production 
would have continued under the provisions of the 2014 Farm Bill in the 
absence of the 2018 Farm Bill. AMS assumes, therefore, that only 50 
percent of the growth in sales of hemp products from 2020 and beyond 
will be attributable to the 2018 Farm Bill. This assumption considers 
the rate at which hemp acreage has increased in recent years, the 
number of States whose hemp pilot programs produced a crop in recent 
years, and the number of States which have passed legislation following 
the signing of the 2018 Farm Bill in anticipation of this rule's 
enactment in time for the 2020 growing season. As this rule enables the 
2018 Farm Bill, 50 percent of the growth in sales of hemp products 
beginning in 2020 will be attributable to this rule.
    The 2018 Farm Bill provided that States, Tribes, and institutions 
of higher education may continue to operate under the authorities of 
the 2014 Farm Bill for the 2019 planting season. Under the 2018 Farm 
Bill, the authority of the 2014 Farm Bill expires one year from the 
time that USDA establishes the plan and regulations required under the 
2018 Farm Bill. As this will occur in the fall of 2019, growers could 
continue to grow hemp under the provisions of the 2014 Farm Bill in the 
2020 planting season. For the purpose of this analysis, however, AMS 
defines the 2020 planting season as the first year of this rule's 
impact, with 50 percent of the growth in sales in 2020 being counted as 
attributable to the 2018 Farm Bill and this enabling rule. This 
analysis considers the impact of this rule on affected entities from 
2020 to 2022. This analysis utilizes hemp market data from industry 
associations, state departments of agriculture, and universities.
    While the 2018 Farm Bill permits commercial production of hemp, and 
the 2014 Farm Bill permits production of hemp for research purposes 
only, AMS assumes the increasing trend of U.S. hemp production would 
have continued under the provisions of the 2014 Farm Bill in the 
absence of the 2018 Farm Bill. AMS assumes, therefore, that 50 percent 
of the growth in sales of hemp products from 2020 and beyond will be 
attributable to the 2018 Farm Bill. This assumption considers the rate 
at which hemp acreage has increased in recent years, the number of 
States whose hemp pilot programs produced a crop in recent years, and 
the number of States which have passed legislation following the 
signing of the 2018 Farm Bill in anticipation of this rule's enactment 
in time for the 2020 growing season. As this rule enables the 2018 Farm 
Bill, 50 percent of the growth in sales of hemp products beginning in 
2020 will be attributable to this rule.
    The 2018 Farm Bill provided that States, Tribes, and institutions 
of higher education may continue to operate under the authorities of 
the 2014 Farm Bill for the 2019 planting season. Under the 2018 Farm 
Bill, the authority of the 2014 Farm Bill expires one year from the 
time that USDA establishes the plan and regulations required under the 
2018

[[Page 58541]]

Farm Bill. As this will occur in the fall of 2019, growers could 
continue to grow hemp under the provisions of the 2014 Farm Bill in the 
2020 planting season. For the purpose of this analysis, however, AMS 
defines the 2020 planting season as the first year of this rule's 
impact, with 50 percent of the growth in sales in 2020 being counted as 
attributable to the 2018 Farm Bill and this enabling rule. This 
analysis considers the impact of this rule on affected entities from 
2020 to 2022. This analysis utilizes hemp market data from industry 
associations, state departments of agriculture, and universities.

Affected Entities

    Hemp producers in States and territories of Indian Tribes that 
allow for hemp production will be impacted by this rule.
    State departments of agriculture and Tribal governments will also 
be affected by this rule. State departments of agriculture and Tribal 
governments will bear the responsibility to ensure that hemp producers 
abide by the State and Tribal plans for regulating hemp. Prior to the 
passage of the 2018 Farm Bill, at least 40 States had enacted hemp 
legislation.\12\ With the passage of the 2018 Farm Bill, nearly all of 
the remaining U.S. States have followed suit. Discussions with State 
departments of agriculture that currently oversee hemp pilot programs 
indicate that the authorization requirements for growing hemp for 
research purposes are similar to those included in State Plans 
submitted to USDA for approval. The 2018 Farm Bill, however, includes 
greater requirements for authorization than what the 2014 Farm Bill 
mandated, such as information sharing and a criminal history report for 
licensees. States that oversaw pilot programs under the 2014 Farm Bill, 
therefore, will likely need additional resources to run the State 
programs under the 2018 Farm Bill. States and Indian Tribes that did 
not have a pilot program under the 2014 Farm Bill and that submit plans 
to USDA for a program under the 2018 Farm Bill may require hiring of 
new staff to oversee the program. States and Tribes will also be 
subject to reporting and recordkeeping requirements resulting from this 
rule. If a State or Tribe chooses not to develop its own plan, then 
hemp producers within that State or Tribe may utilize the plan 
developed by USDA, unless prohibited by State or Tribal Law.
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    \12\ Vote Hemp, 2017 U.S. Hemp Crop Report.
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Regulatory Impact Analysis

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives when an action 
is deemed to have significant impacts. If regulation is necessary, then 
agencies must select the action that maximizes net benefits, including 
potential economic, environmental, public health and safety effects, 
and equity.
    Executive Order 13771 mandates that agencies provide the best 
approximation of total costs associated with a new or repealed 
regulation. AMS has prepared this Regulatory Impact Analysis with the 
purpose of accomplishing these objectives.
    USDA considers this to be a deregulatory action under Executive 
Order 13771 as it allows for the development of a niche market that 
cannot exist under current regulation. This rule removes barriers to 
entry and enables domestic farmers to grow hemp.

Expected Benefits and Costs of the Rule

    The 2018 Farm Bill grants authorization for production of hemp to 
all States and Indian Tribes, unless prohibited by State or Tribal Law. 
This rule enables States, Tribes, and USDA to regulate this 
authorization. This rule is expected to generate benefits and costs to 
hemp producers and State departments of agriculture and Tribal 
governments. The benefits of this rule are expected to outweigh the 
costs, however, and the burden on the impacted entities is anticipated 
to be minimal.

Benefits and Costs of Production

    Farmers grow hemp for three products: Floral material, fiber, and 
grain. Based on data from State departments of agriculture and from 
surveys by the National Industrial Hemp Regulators, a working group 
comprised of industrial hemp program managers from State departments of 
agriculture, AMS estimates that about two-thirds of hemp acreage 
planted is for floral material, while the remaining third is divided 
evenly between fiber and grain.
    The nascent market for industrial hemp causes estimates of yield 
and price for hemp products to vary widely from source to source. Table 
1 shows a range of potential gross revenues received by producers using 
ranges of yield and price estimates from Vote Hemp, the University of 
Kentucky, the Kentucky Department of Agriculture, and the Congressional 
Research Service.\13\ Using low and high estimates for yield and price 
from these sources, AMS calculated a potential range of gross revenue 
to producers of hemp products of $2,443 per acre to $25,682 per acre.
---------------------------------------------------------------------------

    \13\ Vote Hemp, U.S. Hemp Crop Report available at https://www.votehemp.com/u-s-hemp-crop-report/.
    Mark, Tyler and Shepherd, Jonathan, Hemp & Enterprise CBD Budget 
Model available at http://hemp.ca.uky.edu/.
    Johnson, Renee, Hemp as an Agricultural Commodity, Congressional 
Research Service, June 2018.
[GRAPHIC] [TIFF OMITTED] TR31OC19.009

    Variable costs per acre to producers, as estimated by the 
University of Kentucky, are shown in Table 2. These variable costs are 
weighted by the portion of planted acreage for each product as 
estimated in Table 1. The

[[Page 58542]]

result is a weighted variable cost of $19,421 to produce one acre of 
hemp products.
[GRAPHIC] [TIFF OMITTED] TR31OC19.010

    To estimate producer returns above variable cost, the weighted 
variable cost per acre is subtracted from the low and high estimates of 
gross revenue per acre under the scenario of lowest yield and lowest 
price received per acre and the scenario of highest yield and highest 
price received per acre. Under the low estimate of gross revenue per 
acre, a hemp producer who plants two-thirds of an acre for flowers, and 
the remaining one-third acre split between fiber and grain loses 
$16,978 per acre. Under the high estimate of gross revenue per acre, a 
hemp producer sees a return of $6,260 above variable costs. It is 
important to consider that fixed costs are not included among these 
estimates; therefore, net returns will likely be lower than these 
results.
    In addition to the previously-mentioned variable costs to grow 
hemp, AMS considered the opportunity costs to the hemp producer of 
crops that may have otherwise been planted. Using data from the 
National Agricultural Statistics Service (NASS), AMS calculated an 
average gross return per acre of cropland, weighted by area planted or 
bearing, of $591. This estimate represents the potential revenue per 
acre of the crop that a potential hemp producer foregoes to plant hemp 
instead of other crops including traditional field crops. However, hemp 
may also attract new producers not currently growing other crops. 
Subtracting this opportunity cost from the average gross revenue per 
acre (discussed in more detail below) yields a net social benefit 
estimate of approximately $2,060 per acre. For individual growers, 
however, returns may vary widely--and even be negative.
    The per acre net return estimates are based largely on crop 
enterprise budgets which represent expected costs and returns assuming 
the grower actually brings a crop to market. There are many things that 
can preclude actually bringing a planted crop to market including; loss 
due to weather, pests, or disease, reduced output due to inexperience 
with the crop, and growing a crop that exceeds the acceptable hemp THC 
level.
    The gross social benefit of the crop is best represented by what 
customers are willing to pay for the crop. To generate a social benefit 
per acre, we looked at data from the 2018 Processor/Handler Production 
Reports to the Kentucky Department of Agriculture. In 2018 Kentucky 
farmers were paid $17.75 million for harvested hemp materials from 
6,700 planted acres. This results in a societal willingness to pay 
(assuming Kentucky is sufficiently representative of the United States) 
of around $2,650 per acre. Using this average accounts for acres with 
unusually high returns as well as acres with low or no returns.
    So, while individual growers may see returns ranging from a loss of 
$17,578 to a return of $5,669 per acre, society can expect a benefit of 
$2,058 (= $2,650-$591) per acre.

Estimated Number of Producers

    In each year since the 2014 Farm Bill, the number of licensed 
producers and the amount of acreage planted has increased 
substantially. According to Vote Hemp, there were a total of 3,543 
producer licenses issued by States in 2018, up from 1,456 in 2017, and 
817 licenses in 2016. Planted acreage in 2018 was 77,844 acres, up from 
25,723 in 2017, and 9,649 acres in 2016. No official estimates of hemp 
planted acreage, or the number of producer licenses exist for 2019 as 
of yet; however, industry members agree that 2019 planted acreage will 
likely at least double acreage planted in 2018. If this occurs, then 
hemp planted acreage will reach almost 160,000 acres in 2019. See Table 
3 below. This increase in acreage is likely due in part to new 
producers entering the market and in part to current producers 
expanding their acreage.
    Based on data from the State departments of agriculture in 
Colorado, Kentucky, and Oregon, which together make up 47 percent of 
planted acreage and 45 percent of producer licenses nationwide, average 
planted acreage per producer is 24 acres. Assuming that all 77,844 
additional acres in 2019 are planted by new producers entering the 
market, and that each one plants the average of 24 acres, then 2019 
should see approximately 3,244 new producers. This is a reasonable 
assumption given the growth in licenses year over year. Based on this, 
there should be approximately 6,787 U.S. hemp producers in 2019, as 
shown in Table 3. For purposes of this analysis, we expect the number 
of producers to increase at the same rate as increased hemp sales as 
discussed below.
[GRAPHIC] [TIFF OMITTED] TR31OC19.011


[[Page 58543]]



Projected Growth in Gross Revenues

    The Hemp Business Journal estimates sales of U.S. hemp-based 
products from 2018 to 2022. The growth rates of these sales from year 
to year are shown in Chart 1. It is important to remember that even 
though the 2018 Farm Bill removed hemp from the list of controlled 
substances, it preserved the authority of the Food and Drug 
Administration (FDA) to regulate products which contain cannabis. Sales 
of hemp-based products are expected to increase about 15 percent from 
2018 to 2019. In 2020, sales are expected to grow about 14 percent, in 
2021, 19 percent, and in 2022, 16 percent. While these growth rates 
represent consumer sales and may not necessarily accurately depict the 
state of the hemp market at the producer level, these estimates are the 
best available to AMS at this time. Although certain cannabis-derived 
compounds are generally prohibited to be added to food and dietary 
supplements, because of their status as pharmaceutical ingredients, the 
FDA has authority to issue a regulation allowing the use of such 
ingredients in food and dietary supplements. FDA has stated that they 
are actively considering this issue. If FDA does not provide clarity 
about their plans for future regulation of CBD, there will continue to 
be uncertainty and downward pressure on the CBD portion of the hemp 
market. This is important because the Hemp Business Journal estimates 
appear to assume that there are no prohibitions on adding CBD to 
consumer products. As a result, full realization of the benefits 
estimated here could be delayed pending regulatory certainty.
BILLING CODE 3410-02-P
[GRAPHIC] [TIFF OMITTED] TR31OC19.012

[GRAPHIC] [TIFF OMITTED] TR31OC19.013


[[Page 58544]]


    Data from the 2018 Processor/Handler Production Reports to the 
Kentucky Department of Agriculture also show that gross sales by 
processors reached $57.75 million in 2018. Of this, gross returns to 
farmers was approximately 31 percent of total processor gross sales. 
Applying 31 percent to the consumer sales estimates in the chart above 
provides an estimate of gross producer returns (and social willingness 
to pay) over the next four years.
[GRAPHIC] [TIFF OMITTED] TR31OC19.014

BILLING CODE 3410-02-C
    If gross producer returns are 31 percent of total consumer sales, 
estimated total producer returns in 2018 were approximately $315 
million. In 2019, estimated total producer returns will be 
approximately $362 million, in 2020, approximately $413 million, in 
2021, approximately $491 million, and in 2022, approximately $570 
million. Not all of the producer sales in Chart 3 are the direct result 
of this rule, however. The forecasts shown in Chart 1 were published by 
the Hemp Business Journal in the summer of 2018, before the 2018 Farm 
Bill was passed by Congress. This indicates that the hemp market was 
expected to grow regardless of the hemp provisions in the 2018 Farm 
Bill.
    Total costs for State licensing, sampling, and testing under the 
pilot programs generally amounted to about $1,000 per producer. This 
includes administration of certified seed schemes in certain States. 
Measurable impacts to the hemp industry resulting from this rule will 
not occur until 2020. It is difficult to estimate the increase in total 
returns to producers as a result of this rule. AMS estimates that this 
rule is responsible for as much as 50 percent of the increase in total 
producer returns from year to year. This assumption considers the rate 
at which hemp acreage has increased in recent years, the number of 
States whose hemp pilot programs produced a crop in recent years, and 
the number of States which have passed legislation following the 
signing of the 2018 Farm Bill in anticipation of this rule's enactment 
in time for the 2020 growing season.
    Because we would expect hemp production to continue to grow under 
preexisting State programs, we do not believe it is appropriate to 
attribute all production growth beyond 2020 to this rule. Since roughly 
half of the States had operating programs in 2018, we assumed that half 
of future projected growth could have occurred in the absence of this 
rule. Based on the total estimated producer returns, AMS estimates that 
increases in hemp sales directly resulting from the rule will be 
approximately $25.5 million in 2020, $64.5 million, cumulative, in 
2021, and $104 million, cumulative, in 2022. Media reports about the 
2018 Farm Bill's approach to hemp seem to indicate that there may be 
future innovation that would increase producer returns and investment. 
We request comment about the potential for innovation and the 
uncertainty and its impact on the market vis a vis steady state.

Costs of State and Tribal Plans

    Under most State pilot programs administered under the 2014 Farm 
Bill, hemp producers paid fees to State departments of agriculture for 
State licenses to grow hemp, and for sampling and testing of THC 
content. These fees generally fully fund the program's operation and 
are a reasonable proxy for the costs to States of administering a plan. 
Total costs for State licensing, sampling, and testing under the pilot 
programs generally amounted to about $1,000 per producer. Discussions 
with State departments of agriculture that oversee hemp pilot programs 
indicate that the provisions for growing hemp for research purposes 
will be similar to those in the State Plans submitted to USDA for 
approval. While the 2018 Farm Bill added additional requirements for 
growing hemp that were not in the 2014 Farm Bill, it is difficult to 
determine how these additional requirements will impact fees for 
licensing, sampling, and testing paid by producers to States. For the 
purpose of this analysis, AMS finds that a cost of $1,000 per producer 
is the most reasonable estimate of these annual fees and, by extension 
the cost to States and Tribes of administering a regulatory program. We 
have no reason at this time to assume that the Federal government will 
be any more or less efficient at implementing the Federal program for 
producers who operate under a USDA license rather than a State or 
Tribal program. The Federal plan does not require licensed producers to 
use certified seed, nor will USDA provide producers with access to 
certified seed. Accordingly, we use this same $1,000 estimate as a 
proxy for the cost of administering a program by the Federal Government 
as well.
    In addition to these fees, a producer bears the burden of gathering 
the information for and filling out an application for licensing. AMS 
estimates that the time required of a producer to apply for a license 
to grow hemp will be approximately 10 minutes or 0.17 hours. The mean 
hourly wage of a compliance officer, as reported in the May 2018 
Occupational Employment

[[Page 58545]]

Statistics Survey of the Bureau of Labor and Statistics, was $35 per 
hour. Assuming 39 percent of total compensation accounts for benefits, 
total compensation of a compliance officer is $57 per hour. Multiplying 
this wage by the time spent to complete a license application results 
in an annual burden cost to producers of about $10 per license 
application.
    State departments of agriculture and Tribal governments will likely 
need to increase their staff to successfully oversee hemp programs. 
States with pilot programs typically employ about four full-time staff 
members to manage their industrial hemp programs. The estimated 
increase in hemp acreage in 2019 indicates a likely increase in 
licenses and applications; therefore, States with hemp programs may 
need to hire additional employees. States and Tribes without hemp pilot 
programs under the 2014 Farm Bill that have their own plans in place 
under the 2018 Farm Bill will also need to hire new staff members. The 
fees paid by producers to States and Tribes to participate in the hemp 
program will likely cover the staffing costs.

Costs of USDA Plan

    AMS has developed a Federal Plan for hemp producers to utilize when 
their State or Tribe does not have its own plan in place. The Federal 
Plan requires an initial application for a license. The license must 
then be renewed every three years. A criminal history report is 
required with every license application. The costs to a producer of 
completing a license application and of submitting a criminal history 
report will be quantified in the ``Costs of Reporting and 
Recordkeeping'' section. The Federal Plan also includes sampling and 
testing provisions, which will result in costs to producers. USDA will 
bear the costs of program administration and does not intend to charge 
producers a licensing fee unless Congress provides the authority to 
USDA to charge fees for this program in the future. On average, the 
annual fee that producers paid to States to participate in the pilot 
programs, which included licensing, was $1,000 per license. This will 
be used as a proxy for the cost to USDA of program administration.
    Sampling and testing costs under the Federal Plan are tied to 
acreage and how licensees designate the lots where hemp is grown. 
Projected costs for sampling and testing an average 24-acre lot are 
summarized in Table 4.
[GRAPHIC] [TIFF OMITTED] TR31OC19.015

    The hourly total compensation, which includes wage and benefits, 
for a federally-contracted inspector who conducts sampling is $152, and 
the hourly total compensation for a federally-employed lab technician 
who tests the sample is $161. The standard rate for reimbursement for 
miles driven at the Federal level is $0.58 per mile. With information 
from State departments of agriculture, AMS calculated a range of time 
spent on sampling, and an average of time spent driving and miles 
driven by an inspector to and from the sampling location. The range of 
time spent on testing and of costs for testing and reporting were 
calculated using input from licensing and testing specialists within 
AMS. Depending upon the quality of the sample taken and the time spent 
on sampling and testing, the total cost of sampling and testing to a 
producer ranges from $599 to $830 per tested sample per 24-acre lot. 
AMS notes that transportation costs are fixed under this analysis 
assuming all lots tested are at the same farm. If a producer grows 
multiple varieties of hemp, or designates multiple lots of hemp with 
the same variety, then each lot is subject to individual sampling and 
testing. Total sampling and testing costs, therefore, depend upon the 
number and size of lots.

Costs of Reporting and Recordkeeping

    The 2018 Farm Bill requires AMS to prepare and submit an annual 
report containing updates on the implementation of the domestic hemp 
production program to the Committee on Agriculture of the House of 
Representatives and the Committee on Agriculture, Nutrition, and 
Forestry of the Senate. To help collect the information necessary to 
complete this report, and to collect additional information, as 
necessary, to administer the hemp program, AMS has developed seven new 
forms. These forms require specific information be submitted by States 
and Tribes operating their own domestic hemp plans, from producers 
participating in the USDA Plan, and from laboratories testing for THC 
content. The annual burden in time and cost has been evaluated for each 
form. These time and cost figures have been

[[Page 58546]]

approximated to the nearest whole number.
Respondents: States and Tribes Operating Their Own Plans
    States and Tribes with approved plans are required to report 
certain information to USDA. USDA will collect this information from 
States and Tribes through three forms: The ``State and Tribal Hemp 
Producer Report'' form, the ``State and Tribal Hemp Disposal Report'' 
form, and the ``State and Tribal Hemp Annual Report'' form. AMS 
estimates that the time required of States and Tribes to fill in the 
information for each of these forms will be 20 minutes or 0.33 hours. 
The time required of producers to supply the information for the 
``State and Tribal Hemp Producer Report'' form and the ``State and 
Tribal Hemp Disposal Report'' form will be 10 minutes, or 0.17 hours, 
apiece. The ``State and Tribal Hemp Producer Report'' form and the 
``State and Tribal Hemp Disposal Report'' form are due to USDA every 
month. The annual time burden for States and Tribes to respond to each 
of these two forms, therefore, is 4 hours per respondent. The annual 
time burden for producers to supply the information for each of these 
forms will be 10 minutes, or 0.167 hours, per respondent, plus an 
additional 5 minute recordkeeping burden per form. The ``State and 
Tribal Hemp Annual Report'' form must be submitted to USDA once per 
year; the annual time burden, therefore, remains 0.33 hours per 
respondent. The ``State and Tribal Hemp Annual Report'' form is 
anticipated to place a burden on producers participating in the State 
and Tribal Plan of 15 minutes per producer (10 minutes for reporting 
and 5 minutes for recordkeeping).
    Each of these forms required from States and Tribes is expected to 
generate a recordkeeping burden of 5 minutes or 0.08 hours, apiece, per 
recordkeeper. Altogether, the annual time burden of reporting and 
recordkeeping per State and Tribe operating under its own plan is 
estimated to be 9 hours. The mean hourly wage of a compliance officer, 
as reported in the May 2018 Occupational Employment Statistics Survey 
of the Bureau of Labor and Statistics, was $35 per hour. Assuming 39 
percent of total compensation accounts for benefits, total compensation 
of a compliance officer is $57 per hour. Multiplying this by 9 hours 
results in a total annual burden cost to each State and Tribe operating 
under its own plan of $490. AMS estimates that 100 States and Tribes 
will operate under their own plans. The annual burden for these 100 
States and Tribes of reporting and recordkeeping is 858 hours costing 
$49,046 per year.
    The information necessary for States and Tribes to submit the 
``States and Tribal Hemp Producer Report comes from the information 
supplied by producers in their license applications. AMS estimates that 
8,000 producers will submit license applications over three years. AMS 
estimates a cost of approximately $10 per license application (based on 
approximately 10 minutes of burden). These costs will not occur 
uniformly over the three years as both new and existing processors will 
need to provide this information in the first year of the program. As 
result, AMS estimates a cost to producers operating under State and 
Tribal plans of $55,000 in 2020, $12,000 in 2021, and $13,000 in 2022--
or an average cost of $27,000 per year.
    In addition, producers will be required to prove that they do not 
have prior drug related convictions that would disqualify them from 
participation in the program. States have some flexibility in what they 
require of applicants to make this demonstration. However, for purposes 
of this analysis, we will use the same cost for States and Tribes that 
we use for USDA licensees, which is $54 per licensee. This results in 
estimated costs of $291,000 in 2020, $65,000 in 2021, and $70,000 in 
2022--or an average cost of $142,000.
    Additionally, AMS estimates that an average of 2,680 \14\ producers 
will supply information to States and Tribes for the ``State and Tribal 
Hemp Disposal Report'' form each year at an estimated cost of $38,000 
per year.
---------------------------------------------------------------------------

    \14\ There is no way to know for certain how many samples will 
test beyond the 0.3 percent threshold for THC on a dry-weight basis; 
however, based on information discussions with States that have a 
hemp program under the 2014 Farm Bill, AMS estimates that 20 percent 
of lots per year will produce cannabis that tests high for THC 
content.
---------------------------------------------------------------------------

    The total average annual burden on producers to supply information 
to States and Tribes associated with these two reports will be 1,169 
hours, with an estimated cost (including criminal history information) 
of $230,000.
    In addition, growers of crops that test above the acceptable hemp 
THC level are responsible for the proper disposal of those non-
compliant crops. While the rule makes the producer responsible for the 
costs of this disposal, such disposal represents a real expenditure of 
societal resources; as such they are a cost of the rule irrespective of 
who is directly responsible for those costs. The opportunity cost of 
lost sales is already incorporated in our calculation of benefits since 
our average benefits per acre are based on total sales and total 
planted acres and non-compliant acres (which have zero value as hemp) 
are included in the average expected benefit. However, the additional 
physical costs of disposal are not represented in the calculation of 
benefits. As a result, we need to calculate the additional cost imposed 
by the disposal requirement.
    We have no information on the cost of disposing of non-compliant 
hemp. So, we developed an assumed disposal cost of $200 per acre based 
on the estimated cost of the physical activities related to disposal. 
According to the University of Kentucky crop enterprise budgets for 
hemp, the cost of harvesting and transporting hemp grown for fiber is 
roughly $100 per acre.\15\ We double this amount to account for the 
likelihood that there will be additional oversight and documentation 
required to demonstrate legal disposal. However, we still have no way 
to estimate any additional cost associated with the physical 
destruction required after the crop is removed from the farm.
---------------------------------------------------------------------------

    \15\ We used hemp grown for fiber as the basis for our 
assumption because hemp grown for flower or seed use more refined 
methods of harvesting that are no longer necessary if the resultant 
product (flower or seed) no longer has market value.
---------------------------------------------------------------------------

    Using this rough cost estimate, the average annual quantified cost 
of disposal under State and Tribal programs is $6.432 million.
Respondents: Producers Participating in the USDA Plan
    To produce hemp under the USDA Plan, a producer, which may be an 
individual producer or a business, would need to complete the ``USDA 
Hemp Plan Producer Licensing Application'' form and be issued a 
license. AMS estimates the time required of a producer to fill out this 
form to be 10 minutes or 0.17 hours. The recordkeeping required for 
this form is estimated to be 5 minutes, or 0.08 hours. The total burden 
per respondent of this form is 15 minutes, or .25 hours. Licenses under 
the USDA Plan must be renewed every three years. Assuming that there 
will be 1,000 participants in the USDA Plan, AMS estimates that over a 
three-year period, there will be 667 respondents in each year. The 
total annual burden for this form, therefore, will be 167 hours with a 
cost of $9,541.
    In addition to the ``USDA Hemp Plan Producer Licensing 
Application'' form to be submitted once every three years, producers 
must submit criminal history reports for each of their key 
participants. AMS estimates each

[[Page 58547]]

producer to have three key participants that would submit criminal 
history reports to USDA. The cost of a criminal history report is $18 
apiece, which results in a cost of $54 per participant. As stated 
previously, AMS estimates that it will receive 333 license renewals in 
each year over a three-year period. The average annual cost of the 
criminal history reports that will accompany these renewals is $17,982 
annually.
    Similar to the required annual report submitted by States and 
Tribes to USDA, producers operating under the USDA Plan must submit the 
``USDA Hemp Plan Producer Annual Report'' to USDA each year. AMS 
estimates the time burden of submitting this form to be 20 minutes, or 
0.33 hours. The recordkeeping burden of this form is estimated to be 5 
minutes, or 0.08 hours. Together, the burden of this form is 25 
minutes, or 0.42 hours, per respondent. AMS estimates 1,000 
participants in the USDA Plan. The total burden of this form, 
therefore, is 417 hours, costing $23,808 annually.
    When a hemp sample tests above the acceptable hemp THC level, the 
material from the production area which the sample represents must be 
destroyed by a person authorized under the CSA to handle marijuana, 
such as a DEA-registered reverse distributor, or a duly authorized 
Federal, State, or local law enforcement officer or their designee. 
Producers must document the disposal of all marijuana. This can be 
accomplished by either providing USDA with a copy of the documentation 
of disposal provided by the reverse distributor or with the ``USDA Hemp 
Plan Producer Disposal Form''. AMS estimates the time required to 
complete this form to be 20 minutes, or 0.33 hours, which would be 
split between the producer and authorized agent who carries out the 
disposal. The recordkeeping required for this form would amount to 5 
minutes, or 0.08 hours, per respondent. The total burden of this form 
is, therefore, 15 minutes, or 0.25 hours, for a producer, and 10 
minutes, or 0.17 hours, for an authorized agent. Together, the burden 
is 25 minutes, or 0.42 hours, per respondent.
    Using the same assumptions regarding the prevalence of non-
compliant crops and the costs of disposal that were used in generating 
the estimates of hemp disposal reporting (and disposal) for State and 
Tribal programs, the 1,000 producers that will participate in the USDA 
Plan will generate 400 samples will test high for THC content. The 
total reporting burden of this form will amount to 167 hours and cost 
$9,523 annually. Additionally, producers operating under USDA licenses 
are expected to incur quantified disposal costs of $960,000 annually.
    Altogether, the annual burden of the ``USDA Hemp Plan Producer 
Licensing Application'', the ``USDA Hemp Plan Producer Disposal Form'', 
and the ``USDA Hemp Plan Producer Annual Report'' amounts to an annual 
total of 666 hours and a cost of $37,962. Adding in the criminal 
history report cost brings the total to $55,962 annually.
Respondents: Laboratories
    The Farm Bill requires that all domestically produced hemp be 
tested for total THC content on a dry-weight basis, whether produced 
under a State or Tribal Plan or the USDA Plan. To facilitate this, AMS 
is requiring all laboratories testing hemp for THC to submit all test 
results, whether passing or failing, via the ``Laboratory Test Results 
Report''. AMS estimates this form to generate a total annual reporting 
burden of 30 minutes, or 0.5 hours, per test or submitted form, and a 
total annual recordkeeping burden of 5 minutes, or 0.08 hours, per 
producer. Together, the reporting and recordkeeping burden for this 
form is 35 minutes, or .58 hours.
    There is no way to know for certain how many tests laboratories 
will conduct in a single year and how many of them will be subject to 
re-testing. AMS estimates, however, that laboratories will receive two 
samples representing two lots of hemp material from 7,700 producers, 
resulting in 15,400 tests annually. The total annual burden of these 
tests and the accompanying ``Laboratory Test Results Report'' form is, 
therefore, 8,399 hours, and costs of $478,743.
Respondents: All Producers
    The Farm Service Agency (FSA) collects information on crop acreage 
through the ``Report of Acreage'' form. All hemp producers will be 
required to fill in the information for this form once they receive 
their license or authorization from USDA, a State, or Tribe. AMS 
estimates this form to generate a reporting burden of 30 minutes, or 
0.5 hours, and a recordkeeping burden of 5 minutes, or 0.08 hours. AMS 
assumes that an average of 7,700 producers will respond to this form 
each year, resulting in a total annual burden of 4,466 hours, and a 
cost of $254,562.
Total Reporting and Recordkeeping Costs for All Respondents
    Altogether, the annual burden for reporting and recordkeeping for 
all respondents is 17,362 hours, costing a total of $$989,634 per year. 
This is the sum of the annual burden of reporting and recordkeeping to 
States and Tribes operating their own plans, to producers participating 
in the State and Tribal Plans, to producers participating in the USDA 
Plan, including the cost of a criminal history report for three key 
participants, and to laboratories testing samples for THC content.

Alternatives to the Rule

    The actions in this rule are mandated by the 2018 Farm Bill, which 
enables States, Tribes, and USDA to establish rules and regulations for 
the domestic production of hemp. The statute requires USDA to develop 
criteria for approval of plans submitted by State and Tribal 
governments for regulation of domestic hemp production. If no State or 
Tribal Plan has been approved, then hemp producers in these States or 
Tribes may utilize the plan developed by USDA. These plans will promote 
a greater level of consistency in regulations governing the legal 
production of hemp across the United States.
    In developing the sampling procedures for the Federal Plan, AMS 
considered the protocols for sampling used by State departments of 
agriculture and by countries that regulate hemp production. In 
addition, AMS reviewed sampling methods recommended by Codex 
Alimentarius, which is the central part of the Joint Food and 
Agriculture Organization (FAO)/World Health Organization (WHO) Food 
Standards Program and was established by FAO and WHO to protect 
consumer health and promote fair practices in food trade. After 
research and review of multiple sampling protocols, AMS adopted the 
best option among the alternatives.
    The 2018 Farm Bill mandates testing using post-decarboxylation or 
other similarly reliable methods where the total THC concentration 
level considers the potential to convert delta-9-tetrahydrocannabinolic 
acid (THC-A) into THC. Testing methodologies meeting these requirements 
include those using gas or liquid chromatography with detection. These 
methods are the industry standard for post-decarboxylation testing. 
While these methods were chosen by AMS as the best option for testing, 
alternative sampling and testing protocols will be considered if they 
are comparable to the baseline mandated by the 2018 Farm Bill and 
established under the USDA Plan and Procedures.
    Alternatives to the selected procedures for sampling and testing 
for THC content included connecting a

[[Page 58548]]

producer lot of cultivated hemp to a standard unit of measure. AMS 
considered describing one lot as one acre of hemp. This alternative was 
abandoned, however, as it would have required every acre of hemp to be 
sampled and tested, which would have resulted in high costs to 
producers and overwhelming volume to laboratories.

Net Benefits From the Rule

    AMS has provided the approximation of the total costs and benefits 
associated with this new regulation. Using the costs and benefits 
introduced in the preceding sections, AMS has calculated the net 
benefits of this rule in Table 5 using an upper bound estimate of 
costs. The results shown in Table 5 were calculated using many 
assumptions. These figures are only estimates using the data that was 
available to AMS. The absence of industry and government data along 
with the high degree of uncertainty regarding the future of the hemp 
market makes accurately capturing the impact of this rule on the hemp 
industry an impossible task. Regardless, AMS estimated the net benefits 
of this rule in years 2020, 2021, and 2022 as shown in Table 5. AMS has 
also calculated the net benefits of the rule using a lower bound 
estimate of costs. The results of that analysis are shown in Table 5a. 
The assumptions used to calculate the lower bound estimate are 
discussed later in this document.
    The costs and benefits associated with this rule will begin in the 
year 2020. From the signing of the 2018 Farm Bill to the enactment of 
this rule in time for the 2020 growing season, the domestic hemp market 
will be in a state of transition as cultivation of hemp moves from 
research only to commercialization. The hemp industry in 2018 
represents the baseline of this analysis, and the first year which will 
see impacts from this rule is 2020. The time between will be considered 
a transitional period as the hemp industry adjusts to incorporate the 
provisions authorized in the 2018 Farm Bill.
    The benefits of this rule primarily include producer sales that are 
estimated to be due to the hemp provisions in the 2018 Farm Bill and 
this rule which enables those provisions. Gross revenues represent the 
best proxy for consumer willingness to pay and social benefits.\16\ As 
the demand for and sales of hemp increase over time, the number of 
licensees is estimated to grow proportionally (for the purposes of this 
analysis). As a result, we estimate the number of licensees (State, 
Tribal, or Federal) to increase from roughly 6,494 in 2020 to 7,720 in 
2021, to 8,962 in 2022.
---------------------------------------------------------------------------

    \16\ We note that if gross willingness-to-pay is presented as a 
regulatory benefit, then marginal costs of production must be 
included as a line item in the regulatory cost analysis. An 
alternative, reduced-form approach would be to include only producer 
surplus (or the related concept of profits) and consumer surplus in 
the benefits analysis.
---------------------------------------------------------------------------

    The benefits and cost of this rule are shown in Tables 5 
(summarizing upper-bound cost estimates and associated net benefits) 
and 5a (summarizing lower-bound cost estimates and associated net 
benefits). In Table 5, the estimated net benefits of this rule amount 
to a loss of $4 million in 2020, a benefit of $23 million in 2021, and 
a benefit of $49 million in 2022. As noted previously, this calculation 
is based on an upper bound estimate of the costs of the rule. This 
estimate includes costs to all growers, not just the new entrants 
resulting from the rule. (In other words, we are incorporating a 
significant amount of cost that would have been incurred by producers 
even in the absence of this rule.)
    Benefits are based on a share of growth being attributable to the 
rule while the cost calculations include the costs of compliance borne 
by all producers, including those that are already growing hemp under 
the 2014 program and those that would expect to grow hemp under that 
program in the event that USDA did not promulgate this rule. This leads 
to costs being overstated relative to the benefits calculated. Many of 
the costs estimated as attributable to this rule actually represent 
expenditures of resources that would have taken place under the 2014 
program.
    We did this for two reasons. The first is simply to demonstrate 
what we think the full cost of a program similar to the one we are 
promulgating would be. The second is because the specific requirements 
of this rule may be slightly different from requirements already in 
place in States operating hemp programs under the 2014 Farm Bill and we 
did not want to ignore the fact that these changes may have costs. Put 
another way, producers under the 2014 plan may already have been 
required to submit license applications, but not applications that were 
identical to what is being required. The preexisting State requirement 
may have been more or less costly, but this assumed that new and 
existing growers would bear the full cost of providing the information 
required under this program. Because we believe the 2018 requirements 
for producers are very similar to the plans already in operation, we 
think the estimates used to this point represent an upper bound 
estimate.
    We have also developed a lower bound estimate of costs based on 
applying costs related to the rule only to those producers who would 
not have produced hemp in the absence of this rule. Requirements for 
States and Tribes are all new and will remain attributed to the rule. 
Similarly, the costs associated with producers reporting information to 
States and Tribes to facilitate State and Tribal reporting requirements 
will still be attributable to this rule.
    The largest changes in estimated costs result from a reduction in 
the number of acres (and, by extension growers) directly attributable 
to this rule. In the upper bound cost case we include the transactions 
cost (e.g., permit application, crop reporting, testing, disposal etc.) 
to every producer required to produce the $491 million worth of hemp in 
2021--or 7,700 producers. In the lower bound we recognize that $362 
million of that production is estimated to occur in 2019 before any new 
rule is published, so only $129 million could possibly be related to 
publication of a new rule. We also acknowledge that there were avenues 
available to further increase production under the 2014 program and 
that up to half of that $129 million in increased revenue could occur 
without this rule. As a result, only $65 million of that new growth in 
2021 is attributable to this rule. It only takes 1,000 new growers to 
meet this level of increased demand. So, the lower bound is based on 
the costs associated with those 1,000 growers vs. the 7,700 used in 
calculating the upper bound.
    This alignment of new producers to new growth allows costs and 
benefits to be measured relative to a consistent baseline. However, we 
also acknowledge that this rule will impose costs on entities beyond 
just those new entrants into the market who supply a portion of the 
projected growth in demand for hemp. For example, States and Tribes 
face new reporting requirements under this rule. Those reporting 
requirements are independent of the number of licensed producers in 
their programs that produce to meet existing demand as opposed to those 
who's production is enabled by this rule. So, the reporting burden for 
States and Tribes is the same in both the upper bound and lower bound 
estimates. On the other hand, since State administrative costs are 
directly tied to the number of program participants, those costs to the 
State only grow as a function of the number of new entrants into the 
market. As a result, administrative costs for States and Tribes (as 
well as the Federal Government) are estimated to be

[[Page 58549]]

significantly lower in the lower bound estimate.
    The following is a discussion of how each major cost or benefit 
category is modified to move from the upper bound estimate to the lower 
bound estimate.
    Both revenues and opportunity cost were already based on only the 
new acres enabled by the rule, so those estimates do not change.
    The estimate of State and Tribal administrative costs will decline. 
The upper bound cost estimate included the total cost of administering 
a hemp program. The lower bound recognizes that States and Tribes were 
already incurring administrative costs associated with existing 
production and would expect such costs to increase with increased 
production under the 2014 program. State and Tribal administrative 
costs would only increase as a result of new entrants directly enabled 
by the rule. Using 2021 as an example, 7,700 producers are required to 
produce all $491 million in projected demand for hemp. However, only 
1,000 producers are required to produce the approximately $65 million 
in projected demand attributable to the rule. Some of those producers 
will operate under State and Tribal programs and some under USDA 
license. Based on the proportions used in calculating the upper bound 
cost, we assume 13 percent of growers to be operating under USDA 
license and 87 percent to be operating under State license. So, of the 
7,700 producers operating in 2021 only 870 are expected to be growing 
under State or Tribal authority to meet demand increases attributable 
to the rule. So, the estimate of State and Tribal administrative costs 
goes from $6.7 million in the upper bound to $870,000 in the lower 
bound estimate.
    Similarly, we assume that all producers will be subject to some 
form of licensing. In the upper bound estimate, we attribute all 
licensing costs to this rule even though we know that most, if not all, 
States already have some form of licensing as part of their 2014 
programs. So, if we only account for the licensing costs of producers 
enabled under this rule, the upper bound estimate is $77,000 to $35,000 
in 2021.
    Like State and Tribal administrative costs, USDA administrative 
costs are tied to the number of entrants into the market in response to 
demand increases that can be fulfilled as a result of the rule. As 
previously discussed, this is estimated to be 130 producers in 2021 
(the 1,000 new producers minus the 870 who register under State or 
Tribal programs) at a cost of $130,000.
    Like licensing, we expect that most, if not all, State programs 
already have some form of product testing. As a result, only the 
testing of acres attributable to this rule should be included in the 
estimated cost of the rule. This results in a change from the upper 
bound estimate of $11.6 million to an estimated lower bound cost of 
$1.5 million. It should be noted, however, that existing sampling and 
testing regimes may be more or less stringent than the one imposed by 
this rule. As a result, this rule could impose additional costs, or 
represent cost savings, on producers not directly enabled by this rule. 
These cost changes are not reflected in the lower bound estimate.
    As previously mentioned the reporting and recordkeeping burden on 
the States is independent of the number of program participants and is 
the same in both upper and lower bound estimates. Also, the burden on 
producers to supply the information required to be reported by the 
States and Tribes is required of all producers, so the estimate of 
those costs also remains the same under upper and lower bound 
estimates.
    The reporting burden for producers operating under USDA license, on 
the other hand is a function of the number of new licensees and the 
lower bound estimates reflects this smaller number.
    The reporting of information to the Farm Services Agency is a new 
requirement that applies to all producers. As a result, the estimated 
cost associated with these provisions of the rule are identical in both 
upper and lower bound estimates. Similarly, the requirement of testing 
labs to submit information is new and applies to all tests irrespective 
of whether or not the producer is new as a result of this rule. 
Laboratory reporting costs are, therefore, also the same in the upper 
and lower bound estimates.
    Like sampling and testing, we assume that existing producers are 
already required to dispose of non-compliant crops. As a result, the 
estimated disposal cost (in 2021) goes from $7.4 million in the upper 
bound estimate to $960,000 in the lower bound estimate. Also, like 
sampling and testing, the validity of the estimate is a function of the 
relative costs of Federal disposal requirements relative to existing 
State disposal requirements. Any change in the costs of disposal 
(positive or negative) would apply to all producers, not just those new 
as a result of this rule.
    The benefits and cost of this rule using the lower bound cost 
estimate are shown in Table 5a. The estimated net benefits of this rule 
amount to $18 million in 2020, a benefit of $47 million in 2021, and a 
benefit of $79 million in 2022.
    The benefits of this rule primarily include producer sales that are 
estimated to be due to the hemp provisions in the 2018 Farm Bill and 
this rule which enables those provisions. Gross revenues represent the 
best proxy for consumer willingness to pay and social benefits. \17\ As 
the demand for and sales of hemp increase over time, the number of 
licensees is estimated to grow proportionally (for the purposes of this 
analysis). As a result, we estimate the number of licensees (State, 
Tribal, or Federal) to increase from roughly 7,584 in 2020 to 8,818 in 
2021, to 10,054 in 2022 and beyond.
---------------------------------------------------------------------------

    \17\ We note that if gross willingness-to-pay is presented as a 
regulatory benefit, then marginal costs of production must be 
included as a line item in the regulatory cost analysis. An 
alternative, reduced-form approach would be to include only producer 
surplus (or the related concept of profits) and consumer surplus in 
the benefits analysis.
---------------------------------------------------------------------------

BILLING CODE 3410-02-P

[[Page 58550]]

[GRAPHIC] [TIFF OMITTED] TR31OC19.016


[[Page 58551]]


[GRAPHIC] [TIFF OMITTED] TR31OC19.017

BILLING CODE 3410-02-C
    The net benefits in each of the three years have been discounted to 
reflect their present value and annualized. The results of these 
calculations are presented in Table 6 at using a discount rate of three 
percent and in Table 6a using a discount rate of seven percent. The 
final result of this analysis indicates that this rule is estimated to 
have annual net benefits of between 23 and 47 million dollars at a 
discount rate of three percent and between 21 and 44 million dollars at 
a discount rate of seven percent.

[[Page 58552]]



          Table 6--Annualized Costs, Benefits, and Net Benefit
                             [At 3 percent]
------------------------------------------------------------------------
                                            Lower bound     Upper bound
------------------------------------------------------------------------
Benefit.................................     $65,810,000     $65,810,000
Cost....................................      19,016,000      43,172,000
                                         -------------------------------
    Net Benefit.........................      46,794,000      22,638,000
------------------------------------------------------------------------


          Table 6a--Annualized Costs, Benefits, and Net Benefit
                             [At 7 percent]
------------------------------------------------------------------------
                                            Lower bound     Upper bound
------------------------------------------------------------------------
Benefit.................................     $62,440,000     $62,440,000
Cost....................................      18,053,000      41,283,000
                                         -------------------------------
    Net Benefit.........................      44,386,000      21,156,000
------------------------------------------------------------------------

Regulatory Flexibility Analysis

    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (5 U.S.C. 601-612), AMS has considered the economic 
impact of this action on small entities. AMS has prepared this 
Regulatory Flexibility Analysis and has determined that this rule will 
have a significant economic impact on a substantial number of small 
businesses because many small businesses will not be able to 
participate in the hemp market without this rule.

Reasons Action Is Being Considered

    The Agriculture Improvement Act of 2018 mandates that States and 
Tribes submit to USDA plans for regulation of hemp to include 
procedures for information management, testing for THC, and compliance 
with the regulation. State and Tribal plans must be approved by USDA. 
If no State or Tribal Plan has been approved, then hemp producers in 
those States or Tribes may use the plan developed by USDA, unless 
prohibited by State or Tribal Law.

Potentially Affected Small Entities

    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. Unfortunately, very little data exists that shows 
the annual receipts of industrial hemp producers. To conduct this 
analysis, however, AMS utilized State acreage data and an estimate of 
gross revenue per acre received by producers calculated using the 2018 
Processor/Handler Production Reports to the Kentucky Department of 
Agriculture. USDA seeks comments on other reliable data sources that 
may be available.
    AMS used State acreage data by producer from three of the four 
States with the largest amount of licensed acreage to serve as a proxy 
for the portion of small producers nationwide. Together, Colorado, 
Oregon, and Kentucky make up about 47 percent of planted acreage and 45 
percent of producer licenses nationwide, according to Vote Hemp data. 
While acreage data by producer was not available for Montana, its State 
department of agriculture reported that very few hemp operations in 
Montana received annual receipts in excess of $750,000 in 2018.
    Vote Hemp estimates that on average, about 70 percent of licensed 
acreage is planted. AMS applied this percentage to 2018 licensed 
acreage data from Colorado, Oregon, and Kentucky to estimate 2018 
cultivated acreage. The estimate of gross revenue per acre to producers 
of $3,293 was used to find the number of acres required to generate an 
annual receipt of $750,000. The result is shown in Table 7.
[GRAPHIC] [TIFF OMITTED] TR31OC19.018

    With a gross revenue of $3,293 per acre, a producer with no more 
than 228 acres would be considered small under SBA standards. Based on 
this estimate of gross revenue per acre, 99 percent of producers would 
meet the SBA definition of a small agricultural service firm. ``Using 
estimated costs from the RIA, anticipated costs per entity that want to 
enter the hemp industry are expected to be about $2,941 in 2020, and 
$2,900 in 2021. However, entry into this market is voluntary and 
benefits are anticipated to outweigh the estimated costs.''

Alternatives To Minimize Impacts of the Rule

    The actions in this rule are mandated by the 2018 Farm Bill, which 
enables States, Tribes, and USDA to establish rules and regulations for 
the domestic production of hemp. The statute requires USDA to develop 
criteria for approval of plans submitted by State and Tribal 
governments for regulation of domestic hemp production. If no State or 
Tribal Plan has been approved, then hemp producers in these States or 
Tribes may utilize the plan developed by USDA. These plans will promote 
consistency in regulations governing the legal production of hemp 
across the U.S.
    In developing the sampling procedures for the Federal Plan, AMS 
considered the protocols for sampling used by State departments of 
agriculture and by countries that regulate hemp production. In 
addition, AMS reviewed sampling methods recommended by Codex 
Alimentarius, which is the

[[Page 58553]]

central part of the Joint Food and Agriculture Organization (FAO)/World 
Health Organization (WHO) Food Standards Program and was established by 
FAO and WHO to protect consumer health and promote fair practices in 
food trade. After research and review of multiple sampling protocols, 
AMS adopted the best option among the alternatives.
    The 2018 Farm Bill mandates testing using post-decarboxylation or 
other similarly reliable methods where the total THC concentration 
level considers the potential to convert delta-9-tetrahydrocannabinolic 
acid (THC-A) into THC. Testing methodologies meeting these requirements 
include those using gas or liquid chromatography with detection. These 
methods are the industry standard for post-decarboxylation testing. 
While these methods were chosen by AMS as the best option for testing, 
alternative sampling and testing protocols will be considered if they 
are comparable to the baseline mandated by the 2018 Farm Bill and 
established under the USDA Plan and Procedures.
    Alternatives to the selected procedures for sampling and testing 
for THC content included connecting a producer lot of cultivated hemp 
to a standard unit of measure. AMS considered describing one lot as one 
acre of hemp. This alternative was abandoned, however, as it would have 
required every acre of hemp to be sampled and tested, which would have 
resulted in high costs to producers and overwhelming volume to 
laboratories.

Good Cause Analysis

    Pursuant to the Administrative Procedure Act (APA), notice and 
comment are not required prior to the issuance of a final rule if an 
agency, for good cause, finds that ``notice and public procedure 
thereon are impracticable, unnecessary, or contrary to the public 
interest.'' (5 U.S.C. 553(b)(B)).
    USDA recognizes that courts have held that the good cause exception 
to notice and comment rulemaking is to be narrowly construed and only 
reluctantly countenanced. USDA does not take lightly its decision to 
forego a formal notice and comment process, but under a totality of the 
circumstances analysis, has concluded that this interim final rule 
(IFR), accompanied by a 60-day comment period, best balances Congress's 
interest in the expeditious implementation of a regulatory program for 
domestic hemp production with its longstanding interest in ensuring 
that an agency's decisions be informed and responsive. The IFR will 
also provide sorely needed guidance to the many stakeholders whose 
coordinated efforts are critical to the success of the domestic hemp 
production economy, and will serve the public's interest by expediting 
hemp entry into that market.
    Congress's intention that USDA expeditiously develop a regulatory 
program for domestic hemp production is clear from language in the 
Agriculture Improvement Act of 2018, Public Law 115-334 (2018 Farm 
Bill), which the President signed into law on December 20, 2018. The 
2018 Farm Bill amended the Agricultural Marketing Act of 1946 (Act) (7 
U.S.C. 1621 et seq.) by adding subtitle G, Hemp Production. Upon 
enactment of the 2018 Farm Bill, hemp, as defined therein, is no longer 
a controlled substance. Section 10114 of the 2018 Farm Bill further 
clarifies that the interstate commerce of hemp is not prohibited, and 
that States and Indian Tribes cannot prohibit the transportation or 
shipment of hemp or hemp products produced in accordance with the 
Agricultural Marketing Act of 1946 through the State or territory of 
the Indian Tribe. However, the Act also states that it is unlawful to 
produce hemp unless produced pursuant to a State, Tribal, or USDA plan. 
See 7 U.S.C. 1639p(a)(1) and 1639q(c)(1). Congress provided that the 
Secretary approve or disapprove of any State or Tribal plan within 60 
days of its submission. 7 U.S.C. 1639(p)(b).
    In order to meet this 60-day approval deadline, Congress understood 
that USDA would need time to establish its own plan and develop a 
process for quickly (i.e., within 60 days of submission) approving or 
disapproving of State and Tribal plans. Although the Act does not 
contain an express end-date by which such regulations and guidelines 
must be issued, in section 10113 of the 2018 Farm Bill, Congress 
provided that ``[t]he Secretary shall promulgate regulations and 
guidelines to implement this subtitle as expeditiously as 
practicable.'' (emphasis added). ``To ensure that the Secretary moved 
forward with issuing regulations in as timely a fashion as possible,'' 
the Act requires the Secretary to ``periodically report to Congress 
with updates regarding implementation of this title.'' H.R. Rep. 115-
1072, at 738 (Dec. 10, 2018) (Conf. Rep.).
    USDA takes seriously Congress's directive to issue regulations as 
expeditiously as practicable. USDA also understands that while Congress 
did not expect USDA to issue regulations within 60 days, it also did 
not anticipate the process extending two years into 2021. This is 
apparent from Congress's continued legislation on hemp. In Section 107 
of the Additional Supplemental Appropriations for Disaster Relief Act, 
2019, Public Law 116-20, (Disaster Relief Act), Congress required: 
``Beginning not later than the 2020 reinsurance year, the Federal Crop 
Insurance Corporation [FCIC] shall offer coverage under the whole farm 
revenue protection insurance policy (or a successor policy or plan of 
insurance) for hemp (as defined in section 297A of the Agricultural 
Marketing Act of 1946 (7 U.S.C. 1639o)).'' Congress anticipated that 
regulations governing the interstate commerce of hemp would be issued 
prior to 2020; otherwise, the deadline in Section 107 of the Disaster 
Relief Act would be irrelevant. Additionally, several Members of 
Congress and Senators urged USDA to expedite the rulemaking or take 
steps to allow farmers to begin hemp production in 2019.
    Despite USDA's diligence, the complexity of establishing a new 
regulatory program for domestic hemp production, a crop that could not 
be legally grown on a commercial basis under Federal law for several 
decades, has taken a substantial amount of time and resources. Adding a 
formal notice and comment period on top of that would push the 
effective date of USDA's domestic hemp production regulatory program 
well beyond 2020 and into 2021. This IFR effectuates Congress's will, 
which is one of several factors that provide good cause to justify 
foregoing a notice and comment period.
    A second factor justifying good cause is that this rule not only 
affects AMS's ability to implement the congressionally mandated 
regulatory framework for a domestic program, but also provides critical 
guidance to numerous stakeholders that anxiously await the publication 
of this IFR. The FCIC's insurance policy program discussed above is 
just one of these. For FCIC to offer the whole farm revenue protection 
insurance policy in 2020 to lawful producers of hemp under the Act, the 
IFR must take effect this fall to provide the Risk Management Agency 
(RMA) sufficient time to take the necessary steps to authorize FCIC to 
offer the insurance coverage and for producers to engage in activities 
to qualify for the coverage for their hemp production.
    In addition, the FSA, the Rural Business-Cooperative Service, and 
the Natural Resources and Conservation Service provide financial 
incentives and support used by agricultural producers and private 
sector entities. These agencies similarly need regulatory guidance to 
develop commercial instruments such as loan documents, re-insurance 
contracts, and commodity

[[Page 58554]]

disaster program provisions that are typically done on a crop year 
basis.
    Individuals and commercial entities also need the IFR's guidance to 
engage in the production, harvesting, transportation, storage, and 
processing of hemp and hemp products. Absent an interim rule promptly 
implementing the regulatory program required by the 2018 Farm Bill, 
there are no procedures in place to determine whether a cannabis crop 
qualifies as hemp as defined in section 297A of the Agricultural 
Marketing Act of 1946. It is necessary to issue the IFR now to provide 
individuals and entities sufficient time to make the required plans and 
purchases and to obtain financing ahead of planting hemp in 2020.
    The banking industry is awaiting these regulations in order to 
develop guidance regarding deposits derived from hemp operations. 
Without these regulations, the banking industry is not willing to take 
the risk of accepting deposits or lending money to these businesses. 
Additionally, with the IFR effective this fall, producers will be able 
to plan and execute the steps necessary to plant during the 2020 crop 
year. Those steps include identifying the land and acreage for the 
planting, contract for seed and other supplies, obtain financing, and 
identify and contract with potential buyers. Those steps are also 
necessary for producers to qualify for the USDA programs and products 
described above.
    Finally, and importantly, law enforcement needs guidance from the 
IFR. While the States and Tribes may not prohibit the transportation of 
hemp produced under the 2014 Farm Bill, law enforcement does not 
currently have the means to quickly verify whether the cannabis being 
transported is hemp or marijuana. The IFR will assist law enforcement 
in identifying lawfully-produced hemp versus other forms of cannabis 
that may not be lawfully transported in interstate commerce.
    Adding a formal notice and comment period would push the effective 
date of USDA's regulatory program well beyond 2020 and into 2021 and 
delay the guidance these stakeholders sorely need.
    A third factor justifying good cause for this rule is that the 
Administrator has solicited comments through listening sessions and 
webinar that solicited the public participation and consultations with 
State and Tribal officials.\18\ He is also allowing for a 60-day 
comment period for this IFR. The Administrator recognizes the value of 
public comment to refine the IFR and will keep an open mind as to any 
and all comment submissions. All written comments timely received will 
be considered before a final determination is made on this matter.
---------------------------------------------------------------------------

    \18\ For example, public comments from the March 19, 2019 
webinar can be found at https://www.ams.usda.gov/rules-regulations/farmbill-hemp/webinar-comments.
---------------------------------------------------------------------------

    Finally, a fourth factor justifying good cause for the IFR is the 
public's interest in expediting the ability of the nation's farmers to 
enter the new agricultural market presented by hemp. As explained in 
the regulatory impact analysis above, USDA estimates that the industry 
should gain annualized benefits of almost $66 million once the rule 
becomes effective and the domestic hemp production program is 
implemented. Any delay in the issuing regulations will cause producers 
to forgo realizing those benefits in 2020. In fact, earlier this year, 
USDA faced litigation from a party who believed that the language in 7 
U.S.C. 1639(p)(b) required USDA to approve State and tribal plans 
submitted to it in 60 days as soon as the law went into effect. See 
Flandreau Santee Sioux Tribe v. United States Dep't of Agriculture et 
al., 4:19-cv-04094-KES (D.S.D.). The end of the spring planting season 
temporarily lowered the urgency felt by farmers seeking to enter the 
hemp market, but fall preparations for spring 2020's planting season 
are fast approaching. USDA has no doubt that it will again be subject 
to litigation if the IFR is not adopted in time for parties to prepare 
for the 2020 spring planting season.
    Accordingly, the Administrator finds that, under the totality of 
the circumstances presented, there is good cause to forego notice and 
comment through the issuance of a notice of proposed rulemaking. By 
publishing this rule and making it effective this fall, USDA is 
complying with Congress's will, providing sorely needed guidance to all 
stakeholders, permitting public comment, and serving the public's 
interest in engaging in a new and promising economic endeavor. For 
similar reasons, the Administrator also finds good cause for the IFR to 
be effective upon publication in the Federal Register.

List of Subjects in 7 CFR Part 990

    Acceptable hemp THC level, Agricultural commodities, Cannabis, 
Corrective action plan, Delta-9 tetrahydrocannabinol, Drugs, Dry weight 
basis, Hemp, High-performance liquid chromatography, Laboratories, 
Marijuana.

0
For the reasons set forth in the preamble, and under authority of 7 
U.S.C. 601-674 and Public Law 107-171, add 7 CFR part 990 to read as 
follows:

PART 990--DOMESTIC HEMP PRODUCTION PROGRAM

Subpart A--Definitions
Sec.
990.1 Meaning of terms.
Subpart B--State and Tribal Hemp Production Plans
990.2 State and Tribal plans; General authority.
990.3 State and Tribal plans; Plan requirements.
990.4 USDA approval of State and Tribal plans.
990.5 Audit of State or Tribal plan compliance.
990.6 Violations of State and Tribal plans.
990.7 Establishing records with USDA Farm Service Agency.
990.8 Production under Federal law.
Subpart C--USDA Hemp Production Plan
990.20 USDA requirements for the production of hemp.
990.21 USDA hemp producer license.
990.22 USDA hemp producer license approval.
990.23 Reporting hemp crop acreage with USDA Farm Service Agency.
990.24 Responsibility of a USDA licensed producer prior to harvest.
990.25 Standards of performance for detecting delta-9 
tetrahydrocannabinol (THC) concentration levels.
990.26 Responsibility of a USDA producer after laboratory testing is 
performed.
990.27 Non-compliant cannabis plants.
990.28 Compliance.
990.29 Violations.
990.30 USDA producers; License suspension.
990.31 USDA licensees; Revocation.
990.32 Recordkeeping requirements.
Subpart D--Appeals
990.40 General adverse action appeal process.
990.41 Appeals under the USDA hemp production plan.
990.42 Appeals under a State or Tribal hemp production plan.
Subpart E--Administrative Provisions
990.60 Agents.
990.61 Severability.
990.62 Expiration of this part.
990.63 Interstate transportation of hemp.
Subpart F--Reporting Requirements
990.70 State and Tribal hemp reporting requirements.
990.71 USDA plan reporting requirements.

    Authority:  7 U.S.C. 1639o note, 1639p, 16939q, and 1639r.

Subpart A--Definitions


Sec.  990.1   Meaning of terms.

    Words used in this subpart in the singular form shall be deemed to 
impart the plural, and vice versa, as the case may demand. For the 
purposes of

[[Page 58555]]

provisions and regulations of this part, unless the context otherwise 
requires, the following terms shall be construed, respectively, to 
mean:
    Acceptable hemp THC level. When a laboratory tests a sample, it 
must report the delta-9 tetrahydrocannabinol content concentration 
level on a dry weight basis and the measurement of uncertainty. The 
acceptable hemp THC level for the purpose of compliance with the 
requirements of State, Tribal, or USDA hemp plans is when the 
application of the measurement of uncertainty to the reported delta-9 
tetrahydrocannabinol content concentration level on a dry weight basis 
produces a distribution or range that includes 0.3% or less. For 
example, if the reported delta-9 tetrahydrocannabinol content 
concentration level on a dry weight basis is 0.35% and the measurement 
of uncertainty is +/-0.06%, the measured delta-9 tetrahydrocannabinol 
content concentration level on a dry weight basis for this sample 
ranges from 0.29% to 0.41%. Because 0.3% is within the distribution or 
range, the sample is within the acceptable hemp THC level for the 
purpose of plan compliance. This definition of ``acceptable hemp THC 
level'' affects neither the statutory definition of hemp, 7 U.S.C. 
1639o(1), in the 2018 Farm Bill nor the definition of ``marihuana,'' 21 
U.S.C. 802(16), in the CSA.
    Act. Agricultural Marketing Act of 1946.
    Agricultural Marketing Service or AMS. The Agricultural Marketing 
Service of the U.S. Department of Agriculture.
    Applicant. An applicant is:
    (1) A State or Indian Tribe that has submitted a State or Tribal 
hemp production plan to USDA for approval under this part; or
    (2) A producer in a State or territory of an Indian Tribe who is 
not subject to a State or Tribal hemp production plan and who has 
submitted an application for a license under the USDA hemp production 
plan under this part.
    Cannabis. A genus of flowering plants in the family Cannabaceae of 
which Cannabis sativa is a species, and Cannabis indica and Cannabis 
ruderalis are subspecies thereof. Cannabis refers to any form of the 
plant in which the delta-9 tetrahydrocannabinol concentration on a dry 
weight basis has not yet been determined.
    Controlled Substances Act (CSA). The Controlled Substances Act as 
codified in 21 U.S.C. 801 et seq.
    Conviction. Means any plea of guilty or nolo contendere, or any 
finding of guilt, except when the finding of guilt is subsequently 
overturned on appeal, pardoned, or expunged. For purposes of this part, 
a conviction is expunged when the conviction is removed from the 
individual's criminal history record and there are no legal 
disabilities or restrictions associated with the expunged conviction, 
other than the fact that the conviction may be used for sentencing 
purposes for subsequent convictions. In addition, where an individual 
is allowed to withdraw an original plea of guilty or nolo contendere 
and enter a plea of not guilty and the case is subsequently dismissed, 
the individual is no longer considered to have a conviction for 
purposes of this part.
    Corrective action plan. A plan established by a State, Tribal 
government, or USDA for a licensed hemp producer to correct a negligent 
violation or non-compliance with a hemp production plan and this part.
    Criminal History Report. Criminal history report means the Federal 
Bureau of Investigation's Identity History Summary.
    Culpable mental state greater than negligence. To act 
intentionally, knowingly, willfully, or recklessly.
    Decarboxylated. The completion of the chemical reaction that 
converts THC-acid (THC-A) into delta-9-THC, the intoxicating component 
of cannabis. The decarboxylated value is also calculated using a 
conversion formula that sums delta-9-THC and eighty-seven and seven 
tenths (87.7) percent of THC-acid.
    Decarboxylation. The removal or elimination of carboxyl group from 
a molecule or organic compound.
    Delta-9 tetrahydrocannabinol or THC. Delta-9-THC is the primary 
psychoactive component of cannabis. For the purposes of this part, 
delta-9-THC and THC are interchangeable.
    Drug Enforcement Administration or DEA. The United States Drug 
Enforcement Administration.
    Dry weight basis. The ratio of the amount of moisture in a sample 
to the amount of dry solid in a sample. A basis for expressing the 
percentage of a chemical in a substance after removing the moisture 
from the substance. Percentage of THC on a dry weight basis means the 
percentage of THC, by weight, in a cannabis item (plant, extract, or 
other derivative), after excluding moisture from the item.
    Entity. A corporation, joint stock company, association, limited 
partnership, limited liability partnership, limited liability company, 
irrevocable trust, estate, charitable organization, or other similar 
organization, including any such organization participating in the hemp 
production as a partner in a general partnership, a participant in a 
joint venture, or a participant in a similar organization.
    Farm Service Agency or FSA. An agency of the United States 
Department of Agriculture.
    Gas chromatography or GC. A type of chromatography in analytical 
chemistry used to separate, identify, and quantify each component in a 
mixture. GC relies on heat for separating and analyzing compounds that 
can be vaporized without decomposition.
    Geospatial location. For the purposes of this part, ``geospatial 
location'' means a location designated through a global system of 
navigational satellites used to determine the precise ground position 
of a place or object.
    Handle. To harvest or store hemp plants or hemp plant parts prior 
to the delivery of such plants or plant parts for further processing. 
``Handle'' also includes the disposal of cannabis plants that are not 
hemp for purposes of chemical analysis and disposal of such plants.
    Hemp. The plant species Cannabis sativa L. and any part of that 
plant, including the seeds thereof and all derivatives, extracts, 
cannabinoids, isomers, acids, salts, and salts of isomers, whether 
growing or not, with a delta-9 tetrahydrocannabinol concentration of 
not more than 0.3 percent on a dry weight basis.
    High-performance liquid chromatography or HPLC. A type of 
chromatography technique in analytical chemistry used to separate, 
identify, and quantify each component in a mixture. HPLC relies on 
pumps to pass a pressurized liquid solvent containing the sample 
mixture through a column filled with a solid adsorbent material to 
separate and analyze compounds.
    Indian Tribe. As defined in section 4 of the Indian Self-
Determination and Education Assistance Act (25 U.S.C. 5304).
    Information sharing system. The database mandated under the Act 
which allows USDA to share information collected under State, Tribal, 
and USDA plans with Federal, State, Tribal, and local law enforcement.
    Key participants. A sole proprietor, a partner in partnership, or a 
person with executive managerial control in a corporation. A person 
with executive managerial control includes persons such as a chief 
executive officer, chief operating officer and chief financial officer. 
This definition does not include non-executive managers such as farm, 
field, or shift managers.

[[Page 58556]]

    Law enforcement agency. Any Federal, State, or local law 
enforcement agency.
    Lot. A contiguous area in a field, greenhouse, or indoor growing 
structure containing the same variety or strain of cannabis throughout 
the area.
    Marijuana. As defined in the CSA, ``marihuana'' means all parts of 
the plant Cannabis sativa L., whether growing or not; the seeds 
thereof; the resin extracted from any part of such plant; and every 
compound, manufacture, salt, derivative, mixture, or preparation of 
such plant, its seeds or resin. The term `marihuana' does not include 
hemp, as defined in section 297A of the Agricultural Marketing Act of 
1946, and does not include the mature stalks of such plant, fiber 
produced from such stalks, oil or cake made from the seeds of such 
plant, any other compound, manufacture, salt, derivative, mixture, or 
preparation of such mature stalks (except the resin extracted 
therefrom), fiber, oil, or cake, or the sterilized seed of such plant 
which is incapable of germination (7 U.S.C. 1639o). ``Marihuana'' means 
all cannabis that tests as having a concentration level of THC on a dry 
weight basis of higher than 0.3 percent.
    Measurement of Uncertainty (MU). The parameter, associated with the 
result of a measurement, that characterizes the dispersion of the 
values that could reasonably be attributed to the particular quantity 
subject to measurement.
    Negligence. Failure to exercise the level of care that a reasonably 
prudent person would exercise in complying with the regulations set 
forth under this part.
    Phytocannabinoid. Cannabinoid chemical compounds found in the 
cannabis plant, two of which are Delta-9 tetrahydrocannabinol (delta-9 
THC) and cannabidiol (CBD).
    Plan. A set of criteria or regulations under which a State or 
Tribal government, or USDA, monitors and regulates the production of 
hemp.
    Postdecarboxylation. In the context of testing methodologies for 
THC concentration levels in hemp, means a value determined after the 
process of decarboxylation that determines the total potential delta-9 
tetrahydrocannabinol content derived from the sum of the THC and THC-A 
content and reported on a dry weight basis. The postdecarboxylation 
value of THC can be calculated by using a chromatograph technique using 
heat, gas chromatography, through which THCA is converted from its acid 
form to its neutral form, THC. Thus, this test calculates the total 
potential THC in a given sample. The postdecarboxylation value of THC 
can also be calculated by using a high-performance liquid chromatograph 
technique, which keeps the THC-A intact, and requires a conversion 
calculation of that THC-A to calculate total potential THC in a given 
sample. See the definition for decarboxylation.
    Produce. To grow hemp plants for market, or for cultivation for 
market, in the United States.
    Producer. Producer means a producer as defined in 7 CFR 718.2 that 
is licensed or authorized to produce hemp under this part.
    Reverse distributor. A person who is registered with the DEA in 
accordance with 21 CFR 1317.15 to dispose of marijuana under the 
Controlled Substances Act.
    Secretary. The Secretary of Agriculture of the United States.
    State. Any one of the fifty States of the United States of America, 
the District of Columbia, the Commonwealth of Puerto Rico, and any 
other territory or possession of the United States.
    State department of agriculture. The agency, commission, or 
department of a State government responsible for agriculture in the 
State.
    Territory of the Indian Tribe has the same meaning as ``Indian 
Country'' in 18 U.S.C. 1151.
    Tribal government. The governing body of an Indian Tribe.
    USDA licensed hemp producer or licensee. A person, partnership, or 
corporation authorized by USDA to produce hemp.

Subpart B--State and Tribal Hemp Production Plans


Sec.  990.2  State and Tribal plans; General authority.

    States or Indian Tribes desiring to have primary regulatory 
authority over the production of hemp in the State or territory of the 
Indian Tribe for which it has jurisdiction shall submit to the 
Secretary for approval, through the State department of agriculture (in 
consultation with the Governor and chief law enforcement officer of the 
State) or the Tribal government, as applicable, a plan under which the 
State or Indian Tribe monitors and regulates that production.


Sec.  990.3   State and Tribal plans; Plan requirements.

    (a) General requirements. A State or Tribal plan submitted to the 
Secretary for approval must include the practice and procedures 
described in this paragraph (a).
    (1) A State or Tribal plan must include a practice to collect, 
maintain, and report to the Secretary relevant, real-time information 
for each producer licensed or authorized to produce hemp under the 
State or Tribal plan regarding:
    (i) Contact information as described in Sec.  990.70(a)(1);
    (ii) A legal description of the land on which the producer will 
produce hemp in the State or territory of the Indian Tribe including, 
to the extent practicable, its geospatial location; and
    (iii) The status and number of the producer's license or 
authorization.
    (2) A State or Tribal plan must include a procedure for accurate 
and effective sampling of all hemp produced, to include the 
requirements in this paragraph (a)(2).
    (i) Within 15 days prior to the anticipated harvest of cannabis 
plants, a Federal, State, local, or Tribal law enforcement agency or 
other Federal, State, or Tribal designated person shall collect samples 
from the flower material from such cannabis plants for delta-9 
tetrahydrocannabinol concentration level testing as described in 
Sec. Sec.  990.24 and 990.25.
    (ii) The method used for sampling from the flower material of the 
cannabis plant must be sufficient at a confidence level of 95 percent 
that no more than one percent (1%) of the plants in the lot would 
exceed the acceptable hemp THC level. The method used for sampling must 
ensure that a representative sample is collected that represents a 
homogeneous composition of the lot.
    (iii) During a scheduled sample collection, the producer or an 
authorized representative of the producer shall be present at the 
growing site.
    (iv) Representatives of the sampling agency shall be provided with 
complete and unrestricted access during business hours to all hemp and 
other cannabis plants, whether growing or harvested, and all land, 
buildings, and other structures used for the cultivation, handling, and 
storage of all hemp and other cannabis plants, and all locations listed 
in the producer license.
    (v) A producer shall not harvest the cannabis crop prior to samples 
being taken.
    (3) A State or Tribal plan must include a procedure for testing 
that is able to accurately identify whether the sample contains a 
delta-9 tetrahydrocannabinol content concentration level that exceeds 
the acceptable hemp THC level. The procedure must include a validated 
testing methodology that uses postdecarboxylation or other similarly 
reliable methods. The testing

[[Page 58557]]

methodology must consider the potential conversion of delta-9 
tetrahydrocannabinolic acid (THC-A) in hemp into THC and the test 
result measures total available THC derived from the sum of the THC and 
THC-A content. Testing methodologies meeting the requirements of this 
paragraph (a)(3) include, but are not limited to, gas or liquid 
chromatography with detection. The total THC concentration level shall 
be determined and reported on a dry weight basis.
    (i) Any test of a representative sample resulting in higher than 
the acceptable hemp THC level shall be conclusive evidence that the lot 
represented by the sample is not in compliance with this part. Lots 
tested and not certified by the DEA-registered laboratory at or below 
the acceptable hemp THC level may not be further handled, processed or 
enter the stream of commerce and the producer shall ensure the lot is 
disposed of in accordance with Sec.  990.27.
    (ii) Samples of hemp plant material from one lot shall not be 
commingled with hemp plant material from other lots.
    (iii) Analytical testing for purposes of detecting the 
concentration levels of THC shall meet the following standards:
    (A) Laboratory quality assurance must ensure the validity and 
reliability of test results;
    (B) Analytical method selection, validation, and verification must 
ensure that the testing method used is appropriate (fit for purpose), 
and that the laboratory can successfully perform the testing;
    (C) The demonstration of testing validity must ensure consistent, 
accurate analytical performance;
    (D) Method performance specifications must ensure analytical tests 
are sufficiently sensitive for the purposes of the detectability 
requirements of this part; and
    (E) An effective disposal procedure for hemp plants that are 
produced that do not meet the requirements of this part. The procedure 
must be in accordance with DEA reverse distributor regulations found at 
21 CFR 1317.15.
    (F) Measurement of uncertainty (MU) must be estimated and reported 
with test results. Laboratories shall use appropriate, validated 
methods and procedures for all testing activities and evaluate 
measurement of uncertainty.
    (4) A State or Indian Tribe shall promptly notify the Administrator 
by certified mail or electronically of any occurrence of cannabis 
plants or plant material that do not meet the definition of hemp in 
this part and attach the records demonstrating the appropriate disposal 
of all of those plants and materials in the lot from which the 
representative samples were taken.
    (5) A State or Tribal plan must include a procedure to comply with 
the enforcement procedures in Sec.  990.6.
    (6) A State or Tribal plan must include a procedure for conducting 
annual inspections of, at a minimum, a random sample of producers to 
verify that hemp is not produced in violation of this part. These 
procedures must enforce the terms of violations as stated in the Act 
and defined under Sec.  990.6.
    (7) A State or Tribal plan must include a procedure for submitting 
the information described in Sec.  990.70 to the Secretary not more 
than 30 days after the date on which the information is received. All 
such information must be submitted to the USDA in a format that is 
compatible with USDA's information sharing system.
    (8) The State or Tribal government must certify that the State or 
Indian Tribe has the resources and personnel to carry out the practices 
and procedures described in paragraphs (a)(1) through (7) of this 
section.
    (9) The State or Tribal plan must include a procedure to share 
information with USDA to support the information sharing requirements 
in 7 U.S.C. 1639q(d). The procedure must include the requirements 
described in this paragraph (a)(9).
    (i) The State or Tribal plan shall require producers to report 
their hemp crop acreage to the FSA, consistent with the requirement in 
Sec.  990.7.
    (ii) The State or Tribal government shall assign each producer with 
a license or authorization identifier in a format prescribed by USDA.
    (iii) The State or Tribal government shall require producers to 
report the total acreage of hemp planted, harvested, and, if 
applicable, disposed. The State or Tribal government shall collect this 
information and report it to AMS.
    (b) Relation to State and Tribal law. A State or Tribal plan may 
include any other practice or procedure established by a State or 
Indian Tribe, as applicable; Provided, That the practice or procedure 
is consistent with this part and Subtitle G of the Act.
    (1) No preemption. Nothing in this part preempts or limits any law 
of a State or Indian Tribe that:
    (i) Regulates the production of hemp; and
    (ii) Is more stringent than this part or Subtitle G of the Act.
    (2) References in plans. A State or Tribal plan may include a 
reference to a law of the State or Indian Tribe regulating the 
production of hemp, to the extent that the law is consistent with this 
part.


Sec.  990.4   USDA approval of State and Tribal plans.

    (a) General authority. No plans will be accepted by USDA prior to 
October 31, 2019. No later than 60 calendar days after the receipt of a 
State or Tribal plan for a State or Tribal Nation in which production 
of hemp is legal, the Secretary shall:
    (1) Approve the State or Tribal plan only if the State or Tribal 
plan complies with this part; or
    (2) Disapprove the State or Tribal plan if the State or Tribal plan 
does not comply with this part. USDA shall provide written notification 
to the State or Tribe of the disapproval and the cause for the 
disapproval.
    (b) Amended plans. A State or Tribal government, as applicable, 
must submit to the Secretary an amended plan if:
    (1) The Secretary disapproves a State or Tribal plan if the State 
or Tribe wishes to have primary jurisdiction over hemp production 
within its State or territory of the Indian Tribe; or
    (2) The State or Tribe makes substantive revisions to its plan or 
its laws which alter the way the plan meets the requirements of this 
part. If this occurs, the State or Tribal government must re-submit the 
plan with any modifications based on laws and regulation changes for 
USDA approval. Such re-submissions should be provided to USDA within 
365 days from the date that the State or Tribal laws and regulations 
are effective. Producers shall continue to comply with the requirements 
of the existing plan while such modifications are under consideration 
by USDA. If State or Tribal government laws or regulations in effect 
under the USDA-approved plan change but the State or Tribal government 
does not re-submit a modified plan within one year from the effective 
date of the new law or regulation, the existing plan is revoked.
    (3) USDA approval of State or Tribal government plans shall remain 
in effect unless an amended plan must be submitted to USDA because of a 
substantive revision to a State's or Tribe's plan, a relevant change in 
State or Tribal laws or regulations, or approval of the plan is revoked 
by USDA.
    (c) Technical assistance. The Secretary may provide technical 
assistance to help a State or Indian Tribe develop or amend a plan. 
This may include the review of draft plans or other informal 
consultation as necessary.

[[Page 58558]]

    (d) Approved State or Tribal plans. If the Secretary approves a 
State or Tribal plan, the Secretary shall notify the State or Tribe by 
letter or email.
    (1) In addition to the approval letter, the State or Tribe shall 
receive their plan approval certificate either as an attachment or 
assessable via website link.
    (2) The USDA shall post information regarding approved plans on its 
website.
    (3) USDA approval of State or Tribal government plans shall remain 
in effect unless:
    (i) The State or Tribal government laws and regulations in effect 
under the USDA-approved plan change, thus requiring such plan to be re-
submitted for USDA approval.
    (ii) A State or Tribal plan must be amended in order to comply with 
amendments to Subtitle G the Act and this part.
    (e) Producer rights upon revocation of State or Tribal plan. If 
USDA revokes approval of the State or Tribal plan due to noncompliance 
as defined in Sec.  990.5, producers licensed or authorized to produce 
hemp under the revoked State or Tribal plan may continue to produce for 
the remainder of the calendar year in which the revocation became 
effective. Producers may then apply to be licensed under the USDA plan 
for 90 days after the notification even if the time period does note 
coincide with the annual application window.


Sec.  990.5   Audit of State or Tribal plan compliance.

    The Secretary may conduct an audit of the compliance of a State or 
Indian Tribe with an approved plan.
    (a) Frequency of audits. Compliance audits may be scheduled, at 
minimum, once every three years and may include an onsite-visit, a 
desk-audit, or both. The USDA may adjust the frequency of audits if 
deemed appropriate based on program performance, compliance issues, or 
other relevant factors identified and provided to the State or Tribal 
governments by USDA.
    (b) Scope of audit review. The audit may include, but is not 
limited to, a review of the following:
    (1) The resources and personnel employed to administer and oversee 
its approved plan;
    (2) The process for licensing and systematic compliance review of 
hemp producers;
    (3) Sampling methods and laboratory testing requirements and 
components;
    (4) Disposal of non-compliant hemp plants or hemp plant material 
practices, to ensure that correct reporting to the USDA has occurred;
    (5) Results of and methodology used for the annual inspections of 
producers; and
    (6) Information collection procedures and information accuracy 
(i.e., geospatial location, contact information reported to the USDA, 
legal description of land).
    (c) Audit reports. (1) Audit reports will be issued to the State or 
Tribal government within 60 days after the audit concluded. If the 
audit reveals that the State or Tribal government is not in compliance 
with its USDA approved plan, USDA will advise the State or Indian Tribe 
of non-compliances and the corrective measures that must be completed 
to come into compliance with the regulations in this part. The USDA 
will require the State or Tribe to develop a corrective action plan, 
which will be reviewed and approved by the USDA, and the State or Tribe 
will be able to demonstrate its compliance with the regulations in this 
part through a second audit by USDA. If the State or Tribe requests 
USDA assistance to develop a corrective action plan in the case of a 
first instance of noncompliance, the State or Tribe must request this 
assistance not later than 30 days after the issuance of the audit 
report. The USDA will approve or deny the corrective action plan within 
60 days of its receipt.
    (2) If the USDA determines that the State or Indian Tribe is not in 
compliance after the second audit, the USDA may revoke its approval of 
the State or Tribal plan for a period not to exceed one year. USDA will 
not approve a State or Indian Tribe's plan until the State or Indian 
Tribe demonstrates upon inspection that it is in compliance with all 
regulations in this part.


Sec.  990.6  Violations of State and Tribal plans.

    (a) Producer violations. Producer violations of USDA-approved State 
and Tribal hemp production plans shall be subject to enforcement in 
accordance with the terms of this section.
    (b) Negligent violations. Each USDA-approved State or Tribal plan 
shall contain provisions relating to negligent producer violations as 
defined under this part. Negligent violations shall include, but not be 
limited to:
    (1) Failure to provide a legal description of land on which the 
producer produces hemp;
    (2) Failure to obtain a license or other required authorization 
from the State department of agriculture or Tribal government, as 
applicable; or
    (3) Production of cannabis with a delta-9 tetrahydrocannabinol 
concentration exceeding the acceptable hemp THC level. Hemp producers 
do not commit a negligent violation under this paragraph (b)(3) if they 
make reasonable efforts to grow hemp and the cannabis (marijuana) does 
not have a delta-9 tetrahydrocannabinol concentration of more than 0.5 
percent on a dry weight basis.
    (c) Corrective action for negligent violations. Each USDA-approved 
State or Tribal plan shall contain rules and regulations providing for 
the correction of negligent violations. Each correction action plan 
shall include, at minimum, the following terms:
    (1) A reasonable date by which the producer shall correct the 
negligent violation.
    (2) A requirement that the producer shall periodically report to 
the State department of agriculture or Tribal government, as 
applicable, on its compliance with the State or Tribal plan for a 
period of not less than the next 2 years from the date of the negligent 
violation.
    (3) A producer that negligently violates a State or Tribal plan 
approved under this part shall not as a result of that violation be 
subject to any criminal enforcement action by the Federal, State, 
Tribal, or local government.
    (4) A producer that negligently violates a USDA-approved State or 
Tribal plan three times in a 5-year period shall be ineligible to 
produce hemp for a period of 5 years beginning on the date of the third 
violation.
    (5) The State or Tribe shall conduct an inspection to determine if 
the corrective action plan has been implemented as submitted.
    (d) Culpable violations. Each USDA-approved State or Tribal plan 
shall contain provisions relating to producer violations made with a 
culpable mental state greater than negligence, including that:
    (1) If the State department of agriculture or Tribal government 
with an approved plan determines that a producer has violated the plan 
with a culpable mental state greater than negligence, the State 
department of agriculture or Tribal government, as applicable, shall 
immediately report the producer to:
    (i) The U.S. Attorney General; and
    (ii) The chief law enforcement officer of the State or Indian 
Tribe, as applicable.
    (2) Paragraphs (b) and (c) of this section shall not apply to 
culpable violations.
    (e) Felonies. Each USDA-approved State or Tribal plan shall contain 
provisions relating to felonies. Such provisions shall state that:

[[Page 58559]]

    (1) A person with a State or Federal felony conviction relating to 
a controlled substance is subject to a 10-year ineligibility 
restriction on participating in the plan and producing hemp under the 
State or Tribal plan from the date of the conviction. An exception 
applies to a person who was lawfully growing hemp under the 2014 Farm 
Bill before December 20, 2018, and whose conviction also occurred 
before that date.
    (2) Any producer growing hemp lawfully with a license, 
registration, or authorization under a pilot program authorized by 
section 7606 of the Agricultural Act of 2014 (7 U.S.C. 5940) before 
October 31, 2019 shall be exempted from paragraph (e)(1) of this 
section.
    (3) For producers that are entities, the State or Tribal plan shall 
determine which employee(s) of a producer shall be considered to be 
participating in the plan and subject to the felony conviction 
restriction for purposes of paragraph (e)(1) of this section.
    (f) False statement. Each USDA-approved State or Tribal plan shall 
state that any person who materially falsifies any information 
contained in an application to participate in such program shall be 
ineligible to participate in that program.
    (g) Appeals. For States and Tribes who wish to appeal an adverse 
action, subpart D of this part will apply.


Sec.  990.7  Establishing records with USDA Farm Service Agency.

    All producers licensed to produce hemp under an USDA-approved State 
or Tribal plan shall report hemp crop acreage with FSA and shall 
provide, at minimum, the following information:
    (a) Street address and, to the extent practicable, geospatial 
location for each lot or greenhouse where hemp will be produced. If an 
applicant operates in more than one location, that information shall be 
provided for all production sites.
    (b) If an applicant has production sites licensed under a USDA-
approved State or Tribal plan, those sites will be covered under the 
respective plan and will not need to be included under the producer's 
application to become licensed under the USDA plan.
    (c) Acreage dedicated to the production of hemp, or greenhouse or 
indoor square footage dedicated to the production of hemp.
    (d) License or authorization identifier.


Sec.  990.8   Production under Federal law.

    Nothing in this subpart prohibits the production of hemp in a State 
or the territory of an Indian Tribe for which a State or Tribal plan is 
not approved under this subpart if the production of that hemp is in 
accordance with subpart C of this part, and if the production of hemp 
is not otherwise prohibited by the State or Indian Tribe.

Subpart C--USDA Hemp Production Plan


Sec.  990.20  USDA requirements for the production of hemp.

    (a) General hemp production requirements. The production of hemp in 
a State or territory of an Indian Tribe where there is no USDA approved 
State or Tribal plan must be produced in accordance with this subpart 
provided that the production of hemp is not prohibited by the State or 
territory of an Indian Tribe where production will occur.
    (b) Convicted felon ban. A person with a State or Federal felony 
conviction relating to a controlled substance is subject to a 10-year 
ineligibility restriction on participating in the plan and producing 
hemp under the USDA plan from the date of the conviction. An exception 
applies to a person who was lawfully growing hemp under the 2014 Farm 
Bill before December 20, 2018, and whose conviction also occurred 
before December 20, 2018.
    (c) Falsifying material information on application. Any person who 
materially falsifies any information contained in an application to for 
a license under the USDA plan shall be ineligible to participate in the 
USDA plan.


Sec.  990.21  USDA hemp producer license.

    (a) General application requirements--(1) Requirements and license 
application. Any person producing or intending to produce hemp must 
have a valid license prior to producing, cultivating, or storing hemp. 
A valid license means the license is unexpired, unsuspended, and 
unrevoked.
    (2) Application window. Applicants may submit an application for a 
new license to USDA between December 2, 2019 and November 2, 2020. In 
subsequent years, applicants may submit an application for a new 
license or renewal of an existing license to USDA from August 1 through 
October 31 of each year.
    (3) Required information on application. The applicant shall 
provide the information requested on the application form, including:
    (i) Contact information. Full name, residential address, telephone 
number and email address. If the applicant is a business entity, the 
full name of the business, the principal business location address, 
full name and title of the key participants, title, email address (if 
available) and employer identification number (EIN) of the business; 
and
    (ii) Criminal history report. A current criminal history report for 
all key participants dated within 60 days prior to the application 
submission date. A license application will not be considered complete 
without all required criminal history reports.
    (4) Submission of completed application forms. Completed 
application forms shall be submitted to USDA.
    (5) Incomplete application procedures. Applications missing 
required information shall be returned to the applicant as incomplete. 
The applicant may resubmit a completed application.
    (6) License expiration. USDA-issued hemp producer licenses shall be 
valid until December 31 of the year three years after the year in which 
license was issued.
    (b) License renewals. USDA hemp producer licenses must be renewed 
prior to license expiration. Licenses are not automatically renewed. 
Applications for renewal shall be subject to the same terms, 
information collection requirements, and approval criteria as provided 
in this subpart for initial applications unless there has been an 
amendment to the regulations in this part or the law since approval of 
the initial or last application.
    (c) License modification. A license modification is required if 
there is any change to the information submitted in the application 
including, but not limited to, sale of a business, the production, 
handling, or storage of hemp in a new location, or a change in the key 
participants producing under a license.


Sec.  990.22  USDA Hemp producer license approval.

    (a) A license shall not be issued unless:
    (1) The application submitted for USDA review and approval is 
complete and accurate.
    (2) The criminal history report(s) submitted with the license 
application confirms that all key participants to be covered by the 
license have not been convicted of a felony, under State or Federal 
law, relating to a controlled substance within the past ten (10) years 
unless the exception in Sec.  990.20(b) applies.
    (3) The applicant has submitted all reports required as a 
participant in the hemp production program by this part.

[[Page 58560]]

    (4) The application contains no materially false statements or 
misrepresentations and the applicant has not previously submitted an 
application with any materially false statements or misrepresentations.
    (5) The applicant's license is not currently suspended.
    (6) The applicant is not applying for a license as a stand-in for 
someone whose license has been suspended, revoked, or is otherwise 
ineligible to participate.
    (7) The State or territory of Indian Tribe where the person 
produces or intends to produce hemp does not have a USDA-approved plan 
or has not submitted a plan to USDA for approval and is awaiting USDA's 
decision. For the first year, USDA will not accept request for licenses 
under the USDA plan until December 2, 2019 to allow States and Tribes 
to submit their plans.
    (8) The State or territory of Indian Tribe where the person 
produces or intends to produce hemp does not prohibit the production of 
hemp.
    (b) USDA shall provide written notification to applicants whether 
the application has been approved or denied unless the applicant is 
from a State or territory of an Indian Tribe that has a plan submitted 
to USDA and is awaiting USDA approval.
    (1) If an application is approved, a license will be issued. 
Information regarding approved licenses will be available on the AMS 
website.
    (2) Licenses will be valid until December 31 of the year three 
after the year in which the license was issued.
    (3) Licenses may not be sold, assigned, transferred, pledged, or 
otherwise disposed of, alienated or encumbered.
    (4) If a license application is denied, the notification from USDA 
will explain the cause for denial. Applicants may appeal the denial in 
accordance with subpart D of this part.
    (c) If the applicant is producing in more than one location, the 
applicant may have more than one license to grow hemp. If the applicant 
has operations in a location covered under a State or Tribal plan, that 
operation must be licensed under the State or Tribal plan, not a USDA 
plan.


Sec.  990.23  Reporting hemp crop acreage with USDA Farm Service 
Agency.

    All USDA plan producers shall report hemp crop acreage with FSA and 
shall provide, at minimum, the following information:
    (a) Street address and, to the extent practicable, geospatial 
location of the lot, greenhouse, building, or site where hemp will be 
produced. All locations where hemp is produced must be reported to FSA.
    (b) Acreage dedicated to the production of hemp, or greenhouse or 
indoor square footage dedicated to the production of hemp.
    (c) The license number.


Sec.  990.24  Responsibility of a USDA licensed producer prior to 
harvest.

    (a) Within 15 days prior to the anticipated harvest of cannabis 
plants, a producer shall have an approved Federal, State, local law 
enforcement agency or other USDA designated person collect samples from 
the flower material of such cannabis material for delta-9 
tetrahydrocannabinol concentration level testing.
    (b) The method used for sampling from the flower material of the 
cannabis plant must be sufficient at a confidence level of 95 percent 
that no more than one percent (1%) of the plants in the lot would 
exceed the acceptable hemp THC level. The method used for sampling must 
ensure that a representative sample is collected that represents a 
homogeneous composition of the lot.
    (c) During a scheduled sample collection, the producer or an 
authorized representative of the producer shall be present at the 
growing site.
    (d) Representatives of the sampling agency shall be provided with 
complete and unrestricted access during business hours to all hemp and 
other cannabis plants, whether growing or harvested, and all land, 
buildings, and other structures used for the cultivation, handling, and 
storage of all hemp and other cannabis plants, and all locations listed 
in the producer license.
    (e) A producer shall not harvest the cannabis crop prior to samples 
being taken.


Sec.  990.25  Standards of performance for detecting delta-9 
tetrahydrocannabinol (THC) concentration levels.

    (a) Analytical testing for purposes of detecting the concentration 
levels of delta-9 tetrahydrocannabinol (THC) in the flower material of 
the cannabis plant shall meet the following standard:
    (1) Laboratory quality assurance must ensure the validity and 
reliability of test results;
    (2) Analytical method selection, validation, and verification must 
ensure that the testing method used is appropriate (fit for purpose) 
and that the laboratory can successfully perform the testing;
    (3) The demonstration of testing validity must ensure consistent, 
accurate analytical performance; and
    (4) Method performance specifications must ensure analytical tests 
are sufficiently sensitive for the purposes of the detectability 
requirements of this part.
    (b) At a minimum, analytical testing of samples for delta-9 
tetrahydrocannabinol concentration levels must use post-decarboxylation 
or other similarly reliable methods approved by the Secretary. The 
testing methodology must consider the potential conversion of delta-9 
tetrahydrocannabinolic acid (THCA) in hemp into delta-9 
tetrahydrocannabinol (THC) and the test result reflect the total 
available THC derived from the sum of the THC and THC-A content. 
Testing methodologies meeting the requirements of this paragraph (b) 
include, but are not limited to, gas or liquid chromatography with 
detection.
    (c) The total delta-9 tetrahydrocannabinol concentration level 
shall be determined and reported on a dry weight basis. Additionally, 
measurement of uncertainty (MU) must be estimated and reported with 
test results. Laboratories shall use appropriate, validated methods and 
procedures for all testing activities and evaluate measurement of 
uncertainty.
    (d) Any sample test result exceeding the acceptable hemp THC level 
shall be conclusive evidence that the lot represented by the sample is 
not in compliance with this part.


Sec.  990.26  Responsibility of a USDA producer after laboratory 
testing is performed.

    (a) The producer shall harvest the crop not more than fifteen (15) 
days following the date of sample collection.
    (b) If the producer fails to complete harvest within fifteen (15) 
days of sample collection, a secondary pre-harvested sample of the lot 
shall be required to be submitted for testing.
    (c) Harvested lots of hemp plants shall not be commingled with 
other harvested lots or other material without prior written permission 
from USDA.
    (d) Lots that meet the acceptable hemp THC level may enter the 
stream of commerce.
    (e) Lots tested and not certified by the DEA-registered laboratory 
not exceeding the acceptable hemp THC level may not be further handled, 
processed, or enter the stream of commerce and the licensee shall 
ensure the lot is disposed of in accordance with Sec.  990.27.
    (f) Any producer may request additional testing if it is believed 
that the original delta-9 tetrahydrocannabinol concentration level test 
results were in error.


Sec.  990.27  Non-compliant cannabis plants.

    (a) Cannabis plants exceeding the acceptable hemp THC level 
constitute

[[Page 58561]]

marijuana, a schedule I controlled substance under the Controlled 
Substances Act (CSA), 21 U.S.C. 801 et seq., and must be disposed of in 
accordance with the CSA and DEA regulations found at 21 CFR 1317.15.
    (b) Producers must notify USDA of their intent to dispose of non-
conforming plants and verify disposal by submitting required 
documentation.


Sec.  990.28  Compliance.

    (a) Audits. Producers may be audited by the USDA. The audit may 
include a review of records and documentation, and may include site 
visits to farms, fields, greenhouses, storage facilities, or other 
locations affiliated with the producer's hemp operation. The inspection 
may include the current crop year, as well as any previous crop 
year(s). The audit may be performed remotely or in person.
    (b) Frequency of audit verifications. Audit verifications may be 
performed once every three (3) years unless otherwise determined by 
USDA. If the results of the audit find negligent violations, a 
corrective action plan may be established.
    (c) Assessment of producer's hemp operations for conformance. The 
producer's operational procedures, documentation, and recordkeeping, 
and other practices may be verified during the onsite audit 
verification. The auditor may also visit the production, cultivation, 
or storage areas for hemp listed on the producer's license.
    (1) Records and documentation. The auditor shall assess whether 
required reports, records, and documentation are properly maintained 
for accuracy and completeness.
    (2) [Reserved]
    (d) Audit reports. Audit reports will be issued to the licensee 
within 60 days after the audit is concluded. If USDA determines under 
an audit that the producer is not compliant with this part, USDA shall 
require a corrective action plan. The producer's implementation of a 
corrective action plan may be reviewed by USDA during a future site 
visit or audit.


Sec.  990.29  Violations.

    Violations of this part shall be subject to enforcement in 
accordance with the terms of this section.
    (a) Negligent violations. A hemp producer shall be subject to 
enforcement for negligently:
    (1) Failing to provide an accurate legal description of land where 
hemp is produced;
    (2) Producing hemp without a license; and
    (3) Producing cannabis (marijuana) exceeding the acceptable hemp 
THC level. Hemp producers do not commit a negligent violation under 
this paragraph (a) if they make reasonable efforts to grow hemp and the 
cannabis (marijuana) does not have a delta-9 tetrahydrocannabinol 
concentration of more than 0.5 percent on a dry weight basis.
    (b) Corrective action for negligent violations. For each negligent 
violation, USDA will issue a Notice of Violation and require a 
corrective action plan for the producer. The producer shall comply with 
the corrective action plan to cure the negligent violation. Corrective 
action plans will be in place for a minimum of two (2) years from the 
date of their approval. Corrective action plans will, at a minimum, 
include:
    (1) The date by which the producer shall correct each negligent 
violation;
    (2) Steps to correct each negligent violation; and
    (3) A description of the procedures to demonstrate compliance must 
be submitted to USDA.
    (c) Negligent violations and criminal enforcement. A producer that 
negligently violates this part shall not, as a result of that violation 
be subject to any criminal enforcement action by any Federal, State, 
Tribal, or local government.
    (d) Subsequent negligent violations. If a subsequent violation 
occurs while a corrective action plan is in place, a new corrective 
action plan must be submitted with a heightened level of quality 
control, staff training, and quantifiable action measures.
    (e) Negligent violations and license revocation. A producer that 
negligently violates the license 3 times in a 5-year period shall have 
their license revoked and be ineligible to produce hemp for a period of 
5 years beginning on the date of the third violation.
    (f) Culpable mental state greater than negligence. If USDA 
determines that a licensee has violated the terms of the license or of 
this part with a culpable mental state greater than negligence:
    (1) USDA shall immediately report the licensee to:
    (i) The U.S. Attorney General; and
    (ii) The chief law enforcement officer of the State or Indian 
territory, as applicable, where the production is located; and
    (2) Paragraphs (a) and (b) of this section shall not apply to 
culpable violations.


Sec.  990.30  USDA producers; License suspension.

    (a) USDA may issue a notice of suspension to a producer if USDA or 
its representative receives some credible evidence establishing that a 
producer has:
    (1) Engaged in conduct violating a provision of this part; or
    (2) Failed to comply with a written order from the USDA-AMS 
Administrator related to negligence as defined in this part.
    (b) Any producer whose license has been suspended shall not handle 
or remove hemp or cannabis from the location where hemp or cannabis was 
located at the time when USDA issued its notice of suspension, without 
prior written authorization from USDA.
    (c) Any person whose license has been suspended shall not produce 
hemp during the period of suspension.
    (d) A producer whose license has been suspended may appeal that 
decision in accordance with subpart D of this part.
    (e) A producer whose license has been suspended and not restored on 
appeal may have their license restored after a waiting period of one 
year from the date of the suspension.
    (f) A producer whose license has been suspended may be required to 
complete a corrective action plan to fully restore the license.


Sec.  990.31  USDA licensees; Revocation.

    USDA shall immediately revoke the license of a USDA producer if 
such producer:
    (a) Pleads guilty to, or is convicted of, any felony related to a 
controlled substance; or
    (b) Made any materially false statement with regard to this part to 
USDA or its representatives with a culpable mental state greater than 
negligence; or
    (c) Is found to be growing cannabis exceeding the acceptable hemp 
THC level with a culpable mental state greater than negligence or 
negligently violated this part three times in five years.


Sec.  990.32  Recordkeeping requirements.

    (a) USDA producers shall maintain records of all hemp plants 
acquired, produced, handled, or disposed of as will substantiate the 
required reports.
    (b) All records and reports shall be maintained for at least three 
years.
    (c) All records shall be made available for inspection by USDA 
inspectors, auditors, or their representatives during reasonable 
business hours. The following records must be made available:
    (1) Records regarding acquisition of hemp plants;
    (2) Records regarding production and handling of hemp plants;
    (3) Records regarding storage of hemp plants; and

[[Page 58562]]

    (4) Records regarding disposal of all cannabis plants that do not 
meet the definition of hemp.
    (d) USDA inspectors, auditors, or their representatives shall have 
access to any premises where hemp plants may be held during reasonable 
business hours.
    (e) All reports and records required to be submitted to USDA as 
part of participation in the program in this part which include 
confidential data or business information, including but not limited to 
information constituting a trade secret or disclosing a trade position, 
financial condition, or business operations of the particular licensee 
or their customers, shall be received by, and at all times kept in the 
custody and control of, one or more employees of USDA or their 
representatives. Confidential data or business information may be 
shared with applicable Federal, State, Tribal, or local law enforcement 
or their designee in compliance with the Act.

Subpart D--Appeals


Sec.  990.40  General adverse action appeal process.

    (a) Persons who believe they are adversely affected by the denial 
of a license application under the USDA hemp production program may 
appeal such decision to the AMS Administrator.
    (b) Persons who believe they are adversely affected by the denial 
of a license renewal under the USDA hemp production program may appeal 
such decision to the AMS Administrator.
    (c) Persons who believe they are adversely affected by the 
termination or suspension of a USDA hemp production license may appeal 
such decision to the AMS Administrator.
    (d) States and territories of Indian Tribes that believe they are 
adversely affected by the denial of a proposed State or Tribal hemp 
plan may appeal such decision to the AMS Administrator.


Sec.  990.41  Appeals under the USDA hemp production plan.

    (a) Appealing a denied USDA-plan license application. A license 
applicant may appeal the denial of a license application.
    (1) If the AMS Administrator sustains an applicant's appeal of a 
licensing denial, the applicant will be issued a USDA hemp production 
license.
    (2) If the AMS Administrator denies an appeal, the applicant's 
license application will be denied. The applicant may request a formal 
adjudicatory proceeding within 30 days to review the decision. Such 
proceeding shall be conducted pursuant to the U.S. Department of 
Agriculture's Rules of Practice Governing Adjudicatory Proceedings, 7 
CFR part 1, subpart H.
    (b) Appealing a denied USDA-plan license renewal. A producer may 
appeal the denial of a license renewal.
    (1) If the AMS Administrator sustains a producer's appeal of a 
licensing renewal decision, the applicant's USDA hemp production 
license will be renewed.
    (2) If the AMS Administrator denies the appeal, the applicant's 
license will not be renewed. The denied producer may request a formal 
adjudicatory proceeding within 30 days to review the decision. Such 
proceeding shall be conducted pursuant to the U.S. Department of 
Agriculture's Rules of Practice Governing Formal Adjudicatory 
Proceedings, 7 CFR part 1, subpart H.
    (c) Appealing a USDA-plan license termination or suspension. A USDA 
hemp plan producer may appeal the termination or suspension of a 
license.
    (1) If the AMS Administrator sustains the appeal of a license 
termination or suspension, the producer will retain their license.
    (2) If the AMS Administrator denies the appeal, the producer's 
license will be terminated or suspended. The producer may request a 
formal adjudicatory proceeding within 30 days to review the decision. 
Such proceeding shall be conducted pursuant to the U.S. Department of 
Agriculture's Rules of Practice Governing Formal Adjudicatory 
Proceedings, 7 CFR part 1, subpart H.
    (d) Filing period. The appeal of a denied license application, 
denied license renewal, suspension, or termination must be filed within 
the time-period provided in the letter of notification or within 30 
business days from receipt of the notification, whichever occurs later. 
The appeal will be considered ``filed'' on the date received by the AMS 
Administrator. The decision to deny a license application or renewal, 
or suspend or terminate a license, is final unless a formal 
adjudicatory proceeding is requested within 30 days to review the 
decision. Such proceeding shall be conducted pursuant to the U.S. 
Department of Agriculture's Rules of Practice Governing Adjudicatory 
Proceedings, 7 CFR part 1, subpart H.
    (e) Where to file. Appeals to the Administrator must be filed in 
the manner as determined by AMS.
    (f) What to include. All appeals must include a copy of the adverse 
decision and a statement of the appellant's reasons for believing that 
the decision was not proper or made in accordance with applicable 
program regulations in this part, policies, or procedures.


Sec.  990.42  Appeals under a State or Tribal hemp production plan.

    (a) Appealing a State or Tribal hemp production plan application. A 
State or Tribe may appeal the denial of a proposed State or Tribal hemp 
production plan by the USDA.
    (1) If the AMS Administrator sustains a State or Tribe's appeal of 
a denied hemp plan application, the proposed State or Tribal hemp 
production plan shall be established as proposed.
    (2) If the AMS Administrator denies an appeal, the proposed State 
or Tribal hemp production plan shall not be approved. Prospective 
producers located in the State or territory of the Indian Tribe may 
apply for hemp licenses under the terms of the USDA plan. The State or 
Tribe may request a formal adjudicatory proceeding be initiated within 
30 days to review the decision. Such proceeding shall be conducted 
pursuant to the U.S. Department of Agriculture's Rules of Practice 
Governing Adjudicatory Proceedings, 7 CFR part 1, subpart H.
    (b) Appealing the suspension or termination of a State or Tribal 
hemp production plan. A State or Tribe may appeal the revocation by 
USDA of an existing State or Tribal hemp production plan.
    (1) If the AMS Administrator sustains a State or Tribe's appeal of 
a State or Tribal hemp production plan suspension or revocation, the 
associated hemp production plan may continue.
    (2) If the AMS Administrator denies an appeal, the State or Tribal 
hemp production plan will be suspended or revoked as applicable. 
Producers located in that State or territory of the Indian Tribe may 
continue to produce hemp under their State or Tribal license until the 
end the calendar year in which the State or Tribal plan's disapproval 
was effective or when the State or Tribal license expires, whichever is 
earlier. Producers may apply for a USDA license under subpart C of this 
part unless hemp production is otherwise prohibited by the State or 
Indian Tribe. The State or Indian Tribe may request a formal 
adjudicatory proceeding be initiated to review the decision. Such 
proceeding shall be conducted pursuant to the U.S. Department of 
Agriculture's Rules of Practice Governing Formal Adjudicatory 
Proceedings, 7 CFR part 1, subpart H.
    (c) Filing period. The appeal of a State or Tribal hemp production 
plan suspension or revocation must be filed within the time-period 
provided in the letter of notification or within 30

[[Page 58563]]

business days from receipt of the notification, whichever occurs later. 
The appeal will be considered ``filed'' on the date received by the AMS 
Administrator. The decision to deny a State or Tribal plan application 
or suspend or revoke approval of a plan, is final unless the decision 
is appealed in a timely manner.
    (d) Where to file. Appeals to the Administrator must be filed in 
the manner as determined by AMS.
    (e) What to include in appeal. All appeals must include a copy of 
the adverse decision and a statement of the appellant's reasons for 
believing that the decision was not proper or made in accordance with 
applicable program regulations in this part, policies, or procedures.

Subpart E--Administrative Provisions


Sec.  990.60  Agents.

    As provided under 7 CFR part 2, the Secretary may name any officer 
or employee of the United States or name any agency or division in the 
United States Department of Agriculture, to act as their agent or 
representative in connection with any of the provisions of this part.


Sec.  990.61   Severability.

    If any provision of this part is declared invalid or the 
applicability thereof to any person or circumstances is held invalid, 
the validity of the remainder of this part or the applicability thereof 
to other persons or circumstances shall not be affected thereby.


Sec.  990.62   Expiration of this part.

    This part expires on November 1, 2021 unless extended by 
notification in the Federal Register. State and Tribal plans approved 
under subpart B of this part remain in effect after November 1, 2021 
unless USDA disapproves the plan. USDA hemp producer licenses issued 
under subpart C of this part remain in effect until they expire unless 
USDA revokes or suspends the license.


Sec.  990.63   Interstate transportation of hemp.

    No State or Indian Tribe may prohibit the transportation or 
shipment of hemp or hemp products lawfully produced under a State or 
Tribal plan approved under subpart B of this part, under a license 
issued under subpart C of this part, or under 7 U.S.C. 5940 through the 
State or territory of the Indian Tribe, as applicable.

Subpart F--Reporting Requirements


Sec.  990.70  State and Tribal hemp reporting requirements.

    (a) State and Tribal hemp producer report. Each State and Tribes 
with a plan approved under this part shall submit to USDA, by the first 
of each month, a report providing the contact information and the 
status of the license or other authorization issued for each producer 
covered under the individual State and Tribal plans. If the first of 
the month falls on a weekend or holiday, the report is due by the first 
business day following the due date. The report shall be submitted 
using a digital format compatible with USDA's information sharing 
systems, whenever possible. The report shall contain the information 
described in this paragraph (a).
    (1)(i) For each new producer who is an individual and is licensed 
or authorized under the State or Tribal plan, the report shall include 
full name of the individual, license or authorization identifier, 
business address, telephone number, and email address (if available).
    (ii) For each new producer that is an entity and is licensed or 
authorized under the State or Tribal plan, the report shall include 
full name of the entity, the principal business location address, 
license or authorization identifier, and the full name, title, and 
email address (if available) of each employee for whom the entity is 
required to submit a criminal history record report.
    (iii) For each producer that was included in a previous report and 
whose reported information has changed, the report shall include the 
previously reported information and the new information.
    (2) The status of each producer's license or authorization.
    (3) The period covered by the report.
    (4) Indication that there were no changes during the current 
reporting cycle, if applicable.
    (b) State and Tribal hemp disposal report. If a producer has 
produced cannabis exceeding the acceptable hemp THC level, the cannabis 
must be disposed of in accordance with the Controlled Substances Act 
and DEA regulations found at 21 CFR 1317.15. States and Tribes with 
plans approved under this part shall submit to USDA, by the first of 
each month, a report notifying USDA of any occurrence of non-conforming 
plants or plant material and providing a disposal record of those 
plants and materials. This report would include information regarding 
name and contact information for each producer subject to a disposal 
during the reporting period, and date disposal was completed. If the 
first of the month fall on a weekend or holiday, reports are due by the 
first business day following the due date. The report shall contain the 
information described in this paragraph (b).
    (1) Name and address of the producer.
    (2) Producer license or authorization identifier.
    (3) Location information, such as lot number, location type, and 
geospatial location or other location descriptor for the production 
area subject to disposal.
    (4) Information on the agent handling the disposal.
    (5) Disposal completion date.
    (6) Total acreage.
    (c) Annual report. Each State or Tribe with a plan approved under 
this part shall submit an annual report to USDA. The report form shall 
be submitted by December 15 of each year and contain the information 
described in this paragraph (c).
    (1) Total planted acreage.
    (2) Total harvested acreage.
    (3) Total acreage disposed.
    (d) Test results report. Each producer must ensure that the DEA-
registered laboratory that conducts the test of the sample(s) from its 
lots reports the test results for all samples tested to USDA. The test 
results report shall contain the information described in this 
paragraph (d) for each sample tested.
    (1) Producer's license or authorization identifier.
    (2) Name of producer.
    (3) Business address of producer.
    (4) Lot identification number for the sample.
    (5) Name and DEA registration number of laboratory.
    (6) Date of test and report.
    (7) Identification of a retest.
    (8) Test result.


Sec.  990.71  USDA plan reporting requirements.

    (a) USDA hemp plan producer licensing application. USDA will accept 
applications from December 2, 2019 through November 2, 2020. Thereafter 
applicants, may submit a USDA Hemp Licensing Application to USDA from 
August 1 through October 31 of each year. Licenses will be valid until 
December 31 of the year three years after the license is issued. The 
license application will be used for both new applicants and for 
producers seeking renewal of their license. The application shall 
include the information described in this paragraph (a).
    (1) Contact information. (i) For an applicant who is an individual, 
the application shall include full name of the individual, business 
address, telephone number, and email address (if available).

[[Page 58564]]

    (ii) For an applicant that is an entity, the application shall 
include full name of the entity, the principal business location 
address, and the full name, title, and email address (if available) of 
each key participant of the entity.
    (2) Criminal history report. As part of a complete application, 
each applicant shall provide a current Federal Bureau of 
Investigation's Identity History Summary. If the applicant is a 
business entity, a criminal history report shall be provided for each 
key participant.
    (i) The applicant shall ensure the criminal history report 
accompanies the application.
    (ii) The criminal history report must be dated within 60 days of 
submission of the application submittal.
    (3) Consent to comply with program requirements. All applicants 
submitting a completed license application, in doing so, consent to 
comply with the requirements of this part.
    (b) USDA hemp plan producer disposal form. If a producer has 
produced cannabis exceeding the acceptable hemp THC level, the cannabis 
must be disposed of in accordance with the Controlled Substances Act 
and DEA regulations found at 21 CFR 1317.15. Forms shall be submitted 
to USDA no later than 30 days after the date of completion of disposal. 
The report shall contain the information described in this paragraph 
(b).
    (1) Name and address of the producer.
    (2) Producer's license number.
    (3) Geospatial location, or other valid land descriptor, for the 
production area subject to disposal.
    (4) Information on the agent handling the disposal.
    (5) Date of completion of disposal.
    (6) Signature of the producer.
    (7) Disposal agent certification of the completion of the disposal.
    (c) USDA hemp plan producer annual report. Each producer shall 
submit an annual report to USDA. The report form shall be submitted by 
December 15 of each year and contain the information described in this 
paragraph (c).
    (1) Producer's license number.
    (2) Producer's name.
    (3) Producer's address.
    (4) Lot, location type, geospatial location, total planted acreage, 
total acreage disposed, and total harvested acreage.
    (d) Test results report. Each producer must ensure that the DEA-
registered laboratory that conducts the test of the sample(s) from its 
lots reports the test results for all samples tested to USDA. The test 
results report shall contain the information described in this 
paragraph (d) for each sample tested.
    (1) Producer's license number.
    (2) Name of producer.
    (3) Business address of producer.
    (4) Lot identification number for the sample.
    (5) Name and DEA registration number of laboratory.
    (6) Date of test and report.
    (7) Identification of a retest.
    (8) Test result.

    Dated: October 28, 2019.
Bruce Summers,
Administrator, Agricultural Marketing Service.
[FR Doc. 2019-23749 Filed 10-30-19; 8:45 am]
 BILLING CODE 3410-02-P