[Federal Register Volume 84, Number 224 (Wednesday, November 20, 2019)]
[Proposed Rules]
[Pages 64028-64031]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-25083]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 84, No. 224 / Wednesday, November 20, 2019 / 
Proposed Rules  

[[Page 64028]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 986

[Doc. No. AMS-SC19-0029, SC19-986-2 PR]


Pecans Grown in the States of Alabama, Arkansas, Arizona, 
California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, 
North Carolina, New Mexico, Oklahoma, South Carolina, and Texas; 
Reporting Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: This proposed rule would implement a recommendation from the 
American Pecan Council (Council) to revise the reporting requirements 
prescribed under the Federal marketing order regulating the handling of 
pecans. This action would reduce the number of monthly reporting 
requirements, revise the requirements for inter-handler transfers, and 
make other conforming changes to the reporting requirements.

DATES: Comments must be received by December 20, 2019.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. Comments must be sent to the Docket Clerk, 
Marketing Order and Agreement Division, Specialty Crops Program, AMS, 
USDA, 1400 Independence Avenue SW, STOP 0237, Washington, DC 20250-
0237; Fax: (202) 720-8938; or internet: http://www.regulations.gov. All 
comments should reference the document number and the date and page 
number of this issue of the Federal Register and will be made available 
for public inspection in the Office of the Docket Clerk during regular 
business hours, or can be viewed at: http://www.regulations.gov. All 
comments submitted in response to this proposal will be included in the 
record and will be made available to the public. Please be advised that 
the identity of the individuals or entities submitting the comments 
will be made public on the internet at the address provided above.

FOR FURTHER INFORMATION CONTACT: Jennie M. Varela, Marketing 
Specialist, or Christian D. Nissen, Regional Director, Southeast 
Marketing Field Office, Marketing Order and Agreement Division, 
Specialty Crops Program, AMS, USDA; Telephone: (863) 324-3375, Fax: 
(863) 291-8614, or email: [email protected] or 
[email protected].
    Small businesses may request information on complying with this 
regulation by contacting Richard Lower, Marketing Order and Agreement 
Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue 
SW, STOP 0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, 
Fax: (202)720-8938, or email: [email protected].

SUPPLEMENTARY INFORMATION: This action, pursuant to 5 U.S.C. 553, 
proposes an amendment to regulations issued to carry out a marketing 
order as defined in 7 CFR 900.2(j). This proposed rule is issued under 
Marketing Agreement and Order No. 986, (7 CFR part 986), regulating the 
handling of pecans grown in the states of Alabama, Arkansas, Arizona, 
California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, 
North Carolina, New Mexico, Oklahoma, South Carolina, and Texas. Part 
986 (referred to as the ``Order'') is effective under the Agricultural 
Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), 
hereinafter referred to as the ``Act.'' The Council locally administers 
the Order and is comprised of growers and handlers of pecans operating 
within the production area, and one accumulator and one public member.
    The Department of Agriculture (USDA) is issuing this proposed rule 
in conformance with Executive Orders 13563 and 13175. This action falls 
within a category of regulatory actions that the Office of Management 
and Budget (OMB) exempted from Executive Order 12866 review. 
Additionally, because this proposed rule does not meet the definition 
of a significant regulatory action it does not trigger the requirements 
contained in Executive Order 13771. See OMB's Memorandum titled 
``Interim Guidance Implementing Section 2 of the Executive Order of 
January 30, 2017 titled `Reducing Regulation and Controlling Regulatory 
Costs'[thinsp]'' (February 2, 2017).
    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This proposed rule is not intended to have 
retroactive effect.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with USDA a petition 
stating that the order, any provision of the order, or any obligation 
imposed in connection with the order is not in accordance with law and 
request a modification of the order or to be exempted therefrom. A 
handler is afforded the opportunity for a hearing on the petition. 
After the hearing, USDA would rule on the petition. The Act provides 
that the district court of the United States in any district in which 
the handler is an inhabitant, or has his or her principal place of 
business, has jurisdiction to review USDA's ruling on the petition, 
provided an action is filed not later than 20 days after the date of 
the entry of the ruling.
    This proposed rule would revise the reporting requirements under 
the Order by reducing the number of monthly reports from six to three 
and revising the inter-handler report from a monthly to an annual 
report. This proposal also would make other conforming and clarifying 
changes to the reporting requirements. These changes would help reduce 
the regulatory burden on handlers by reducing reporting requirements. 
This proposal was unanimously recommended by the Council at its 
December 18, 2018, meeting.
    Sections 986.75, 986.76, and 986.77 of the Order provide authority 
to the Council to require handlers to submit reports of inventory, 
merchantable pecans handled, and pecans received by handlers, 
respectively, on such dates as the Council may prescribe. Section 
986.78 further provides, with the approval of the Secretary, authority 
for the Council to collect other reports and information from handlers 
needed to perform its duties.
    Section 986.162 outlines the reporting requirements for inter-
handler transfers, and Sec.  986.175 establishes the requirements for 
the annual year-end inventory report. Section 986.177 prescribes the 
monthly reporting

[[Page 64029]]

requirements for pecans received by handlers and for pecans purchased 
outside the United States. Section 986.178 includes requirements for a 
monthly report of shipments and inventory, a monthly report of exports, 
and a monthly report of pecans exported to Mexico for shelling to be 
returned to the United States.
    During the promulgation of the Order, the data collection component 
was considered one of the most important aspects of the Order. 
Consequently, when discussing establishing reporting requirements, the 
Council wanted to ensure the data needed was being collected so 
valuable reports could be provided to the industry. The Council 
recommended the initial reporting requirements in 2017, which required 
handlers to submit six different reports each month and an annual 
report including pecans received, shipped, held in inventory, 
transferred, exported for sale or shelling, and purchased from outside 
the United States. To facilitate this information collection, the 
Council held handler information sessions throughout 2018 to explain 
the reporting process and gather feedback on which, if any, reports 
were difficult to complete.
    At its December 18, 2018, meeting, the Council revisited the 
reporting requirements, reviewing feedback from the handler sessions. 
During the handler sessions, some industry members stated it was 
expensive and time consuming to submit accurate reports each month. 
Council staff also indicated that handlers were submitting incomplete 
and inaccurate reports, making it difficult to summarize the data and 
distribute accurate, timely statistical reports. It was also reported 
that Council staff were fielding calls daily regarding reporting 
requirements and the burden placed on handlers. The monthly inter-
handler transfer report was also cited specifically as needing to be 
changed.
    To address these concerns, the Council discussed ways to reduce the 
number of reporting requirements and to address the concerns 
surrounding the inter-handler transfer report. To accomplish this, the 
Council recommended combining four of the monthly reporting 
requirements into two, and converting the inter-handler transfer report 
from a monthly report into an annual report to reduce and simplify the 
reporting process. These changes would reduce the number of monthly 
reports from six to three.
    The Council recommended combining the monthly report of pecans 
received and the report of shipments and inventory into one summary 
report. The report of pecans received currently includes handler 
information, the month covered by the report, the total weight and type 
of inshell pecans received, and the weight by variety of improved 
pecans received. The report also includes information regarding total 
assessments owed and total pounds reported to date. The report of 
shipments and inventory includes handler information, the month covered 
by the report, shipments of shelled and inshell pecans, current 
inventory, and pecans in inventory already committed for shipment.
    In addition to combining the reports, the Council also recommended 
eliminating reporting pecans received by variety. Many handlers submit 
information on mixed loads, and found it burdensome, and in some cases 
impossible, to identify the variety of pecans received. Further, 
Council staff estimated over 76 percent of all pecans received cannot 
be identified by variety. Some varieties are also limited in use, so 
disclosing their tonnage would not be possible without potentially 
revealing proprietary information.
    Handlers also expressed difficulty in understanding which reports 
applied to them and whether they needed to submit additional reports 
throughout the fiscal year. Consequently, the Council revised the 
summary report to include guidance that assists handlers in determining 
whether any other reports are necessary.
    The Council agreed the information on pecans received could easily 
be combined with the report of shipments and inventory to create one 
monthly summary report. The Council believes this consolidated report 
would be easier for handlers to complete and still provide the 
necessary information.
    Two other reports the Council agreed could be combined are the 
report of pecans purchased outside the United States and the report of 
pecans shipped to Mexico for shelling and then returned to the United 
States. The monthly report of pecans purchased outside the United 
States includes the name of the handler importing pecans, the month 
covered by the report, the date imported, country of origin, volume, 
and variety of pecans imported. The report of inshell pecans exported 
to Mexico for shelling includes handler information, the month covered 
by the report, dates of shipments, the total weight of inshell pecans 
shipped for shelling, and the weight of shelled pecans returned to the 
United States.
    Initially, the Council recommended separate reports to ensure the 
import data collected was accurate. The industry was concerned import 
data available at the time was not accounting for domestic product sent 
to Mexico for processing then returned to the United States. Hence, it 
was difficult to estimate current supply. However, feedback from the 
industry indicated handlers could provide the necessary data to account 
for both foreign purchases and domestic product being shelled then 
returned from Mexico in a consolidated report rather than submitting 
two separate reports. Thus, the Council recommended combining these two 
reports.
    The current inter-handler transfer report is submitted monthly. The 
report includes information on the month of transfer, type of pecans 
transferred, the volume transferred, the amount of assessments owed on 
the pecans transferred, handler information, and signatures of the two 
handlers involved. It also indicates if the transferring handler or 
receiving handler would be responsible for reporting and paying the 
assessments.
    When established, the inter-handler transfer form was intended to 
relieve small handlers of the burden of reporting and submitting 
assessments by allowing them to transfer those requirements to a second 
handler purchasing the pecans. In practice, handlers have struggled to 
track the volume of all the shipments within a month, and often the 
forms submitted were incomplete or did not include both handler 
signatures.
    Inter-handler transfers usually occur between the same two handlers 
throughout the year. Consequently, the Council recommended to simplify 
the process of meeting the inter-handler transfer requirements by 
establishing one report that would cover the transfers between the same 
two handlers for the whole fiscal year. Agreements between new handlers 
require submission of a new form with the Council.
    The changes proposed by the Council would require handlers to 
submit a report following the first transfer of the fiscal year. By 
filing the Inter-Handler Transfer Form with the Council, the receiving 
and transferring handlers establish an agreement that remains in effect 
for the entire fiscal year. The receiving and transferring handlers 
need to complete their portions of the form and file it annually with 
the Council. It would also remove the requirement for the report to 
include the associated volume transferred. Instead, the volume 
associated with the inter-handler transfer would be reported by the 
receiving handler. Handlers will still maintain the option of 
designating who is responsible for paying the assessments on the pecans 
transferred,

[[Page 64030]]

as currently authorized in 986.162(5). The Council expects the proposed 
change to provide some reporting relief to small handlers and create a 
more efficient method of tracking transferred pecans.
    Along with these changes, the Council recommended conforming and 
clarifying adjustments to the remaining two reporting forms in 
Sec. Sec.  986.175 and 986.178. These changes include renumbering the 
forms to remain in sequential order, removing past dates that no longer 
apply, and updating terms to be consistent with the Order. The Council 
believes these revised reporting requirements are necessary to maintain 
compliance with the assessment requirements of the Order and provide 
accurate reports to the industry on the production and total supply of 
pecans.

Initial Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) 
has considered the economic impact of this proposed rule on small 
entities. Accordingly, AMS has prepared this initial regulatory 
flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
businesses subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act are unique in that they are brought about through 
group action of essentially small entities acting on their own behalf.
    There are approximately 2,500 growers of pecans in the production 
area and approximately 250 handlers subject to the Order. Small 
agricultural growers are defined by the Small Business Administration 
as those having annual receipts less than $1,000,000, and small 
agricultural service firms are defined as those whose annual receipts 
are less than $30,000,000 (13 CFR 121.201).
    According to information from the National Agricultural Statistics 
Service (NASS), the average grower price for pecans during the 2016-
2017 season was $2.59 per pound and 269 million pounds were utilized. 
The value for pecans that year totaled $697 million ($2.59 per pound 
multiplied by 269 million pounds). Taking the total value of production 
of pecans and dividing it by the total number of pecan growers provides 
an average return per grower of $278,684. Using the average price and 
utilization information, and assuming a normal distribution among 
growers, the majority of growers receive less than $1,000,000 annually.
    Evidence presented at the formal rulemaking hearing held in 2015 
indicated an average handler margin of $0.58 per pound. Adding this 
margin to the average grower price of $2.59 per pound of inshell pecans 
results in an estimated handler price of $3.17 per pound. With a total 
2017 production of 269 million pounds, the total value of production in 
2017 was $853 million ($3.17 per pound multiplied by 269 million 
pounds). Taking the total value of production of pecans and dividing it 
by the total number of pecan handlers provides an average return per 
handler of $3.4 million. Using this estimated price, the utilization 
volume, number of handlers, and assuming a normal distribution among 
handlers, the majority of handlers have annual receipts of less than 
$30,000,000. Thus, the majority of growers and handlers regulated by 
the Order may be classified as small entities.
    This proposed rule would revise the reporting requirements in the 
Order by reducing the number of monthly reports from six to three and 
revising the inter-handler report from a monthly to an annual report. 
This proposal also would make other conforming changes to the reporting 
requirements. This proposed rule would revise Sec. Sec.  986.162, 
986.175, 986.177, and 986.178. The authority for these actions is 
provided in Sec. Sec.  986.75, 986.76, 986.77, and 986.78 of the Order.
    It is not anticipated that this proposed rule would impose 
additional costs on handlers or growers, regardless of size. Handlers 
should see a savings in time and labor cost due to the reduced number 
of forms submitted each month. The change to an annual inter-handler 
transfer report in place of a monthly report should provide additional 
time savings to both handlers involved in the transaction. Council 
members, including those representing small businesses, recommended 
these changes in order to ease the reporting and regulatory burden on 
industry handlers. The benefits of this rule are expected to be equally 
available to all pecan growers and handlers, regardless of their size.
    The Council discussed other alternatives to this proposed action, 
including eliminating the inter-handler transfer option. However, 
removing the inter-handler transfer option from the Order could involve 
a lengthy process. Also, the inter-handler transfer was supported 
during promulgation of the marketing order as a way to ease reporting 
burdens on small businesses.
    Another alternative considered was leaving the current reporting 
requirements unchanged. When the current requirements were established, 
the Council was eager to collect as much data as possible. Despite 
considerable industry outreach, many handlers had difficulty meeting 
the reporting requirements. The Council believed it must respond to the 
issues raised by handlers and address the extensive resources being 
used by its staff to help handlers comply with the reporting 
requirements in the Order. Therefore, the alternatives were rejected.
    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the Order's information collection requirements have been 
previously approved by OMB and assigned OMB No. 0581-0291 ``Federal 
Marketing Order for Pecans.'' This proposed rule would require changes 
to the Council's existing forms by combining forms and shifting one 
form from a monthly report to an annual report. However, the changes 
are minor, and the currently approved burden would decrease due to the 
proposed changes. The revised forms have been submitted to OMB for 
approval.
    As with all Federal marketing order programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies. USDA has not 
identified any relevant Federal rules that duplicate, overlap, or 
conflict with this proposed rule.
    AMS is committed to complying with the E-Government Act, to promote 
the use of the internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.
    Further, the Council's meetings were widely publicized throughout 
the pecan industry and all interested persons were invited to attend 
the meetings and participate in Council deliberations on all issues. 
Additionally, the Council's meeting held on December 18, 2018, was a 
public meeting and all entities, both large and small, were able to 
express views on this issue. Finally, interested persons are invited to 
submit comments on this proposed rule, including the regulatory and 
information collection impacts of this proposed action on small 
businesses.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/rules-regulations/moa/small-businesses. Any questions 
about the compliance guide should be sent to Richard Lower at the 
previously-mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.

[[Page 64031]]

    A 30-day comment period is provided to allow interested persons to 
respond to this proposal. All written comments timely received will be 
considered before a final determination is made on this matter.

List of Subjects in 7 CFR Part 986

    Marketing agreements, Nuts, Pecans, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 7 CFR part 986 is 
proposed to be amended as follows:

PART 986--PECANS GROWN IN THE STATES OF ALABAMA, ARKANSAS, ARIZONA, 
CALIFORNIA, FLORIDA, GEORGIA, KANSAS, LOUISIANA, MISSOURI, 
MISSISSIPPI, NORTH CAROLINA, NEW MEXICO, OKLAHOMA, SOUTH CAROLINA, 
AND TEXAS

0
1. The authority citation for 7 CFR part 986 continues to read as 
follows:

    Authority: 7 U.S.C. 601-674.

0
2. Revise Sec.  986.162 to read as follows:


Sec.  986.162  Inter-handler transfers.

    (a) Inter-handler transfers of inshell pecans, pursuant to Sec.  
986.62, shall be reported to the Council on APC Form 4. Handlers shall 
file reports by the tenth day of the month following the first transfer 
between two handlers. Should the tenth day of the month fall on a 
weekend or holiday, reports are due by the first business day following 
the tenth day of the month. This report must be renewed each fiscal 
year. The report shall contain the following information:
    (1) The fiscal year covered by the report;
    (2) The names and signatures for both the transferring and 
receiving handler; and
    (3) Handler assuming the reporting and assessment obligations on 
the pecans transferred.
    (b) [Reserved].
0
3. Amend Sec.  986.175 by revising paragraph (a) introductory text to 
read as follows:


Sec.  986.175  Handler inventory.

    (a) Handlers shall submit to the Council a year-end inventory 
report following August 31 each fiscal year. Handlers shall file such 
reports by September 10. Should September 10 fall on a weekend, reports 
are due by the first business day following September 10. Such reports 
shall be reported to the Council on APC Form 5 and include:
* * * * *
0
4. Amend Sec.  986.177 by:
0
a. Revising paragraph (a) introductory text, and paragraphs (a)(3) and 
(4);
0
b. Adding paragraphs (a)(6) through (a)(10);
0
c. Revising paragraph (b) introductory text; and
0
d. Adding paragraphs (b)(6) through (b)(9).
    The additions and revisions read as follows:


Sec.  986.177  Reports of pecans received by handlers.

    (a) Summary report. Handlers shall submit to the Council, by the 
tenth day of the month, a summary report of inshell domestic pecans 
received, and all shipments, inventory, and committed inventory for 
pecans following the month of activity. Should the tenth day of the 
month fall on a weekend or holiday, reports are due by the first 
business day following the tenth day of the month. The report shall be 
submitted to the Council on APC Form 1 and contain the following 
information:
* * * * *
    (3) The total weight and type of inshell pecans received during the 
reporting period;
    (4) The total weight and type of inshell pecans received year to 
date; and,
* * * * *
    (6) The weight of all shipments of pecans, inshell and shelled, and 
inter-handler transfers shipped and received during the reporting 
period;
    (7) The weight of all shipments of pecans, inshell and shelled, and 
inter-handler transfers shipped and received in the previous month and 
year to date;
    (8) Total inventory held by handler;
    (9) All the inventory committed (pecans not shipped, but sold or 
otherwise obligated) whether for domestic sale or export; and,
    (10) The weight of all shelled or inshell pecans under contract for 
purchase from other handlers.
    (b) Pecans purchased outside the United States and inshell pecans 
exported to Mexico for shelling and returned to the United States as 
shelled meats. Handlers shall submit to the Council, by the tenth day 
of the month following the month of activity, a summary report of 
shelled and inshell pecans imported during the preceding month. Should 
the tenth day of the month fall on a weekend or holiday, reports are 
due by the first business day following the tenth day of the month. The 
report shall be submitted to the Council on APC Form 2 and contain the 
following information:
* * * * *
    (6) The weight of inshell pecans exported to Mexico for shelling;
    (7) The date shelled pecans returned to the United States after 
shelling in Mexico;
    (8) The weight of shelled pecans returned to the United States 
after shelling in Mexico; and
    (9) The total weight of inshell pecans exported to Mexico for 
shelling, and shelled pecans returned from Mexico, year to date.
0
5. Amend Sec.  986.178 by revising paragraph (a) to read as follows:


Sec.  986.178  Other reports.

    (a) Exports by country of destination. Handlers shall submit to the 
Council, by the tenth day of the month following the month of shipment, 
a report of exports. Should the tenth day of the month fall on a 
weekend or holiday, reports are due by the first business day following 
the tenth day of the month. The report shall be reported to the Council 
on APC Form 3 and contain the following information:
    (1) The name and address of the handler;
    (2) The month covered by the report;
    (3) The total weight of pecans shipped for export, whether inshell, 
shelled, or substandard during the reporting period;
    (4) The total weight of pecans shipped for export, whether inshell, 
shelled, or substandard during the previous period and year to date; 
and,
    (5) The destination(s) of such exports.
* * * * *

    Dated: November 14, 2019.
Bruce Summers,
Administrator, Agricultural Marketing Service.
[FR Doc. 2019-25083 Filed 11-19-19; 8:45 am]
BILLING CODE 3410-02-P