[Federal Register Volume 85, Number 81 (Monday, April 27, 2020)]
[Proposed Rules]
[Pages 23248-23252]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-08395]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 1210
[Document Number AMS-SC-19-0109]
Watermelon Research and Promotion Plan; Realignment
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed rule.
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SUMMARY: This proposal invites comments on realigning the
representation on the National Watermelon Promotion Board (Board)
prescribed in the Watermelon Research and Promotion Plan (Plan) by
reducing the number of production districts and reducing the number
importers on the Board, accordingly. This action would contribute to
effective administration of the program.
DATES: Comments must be received by May 27, 2020.
ADDRESSES: Interested persons are invited to submit written comments
concerning this proposed rule. All comments must be submitted through
the Federal e-rulemaking portal at http://www.regulations.gov and
should reference the document number and the
[[Page 23249]]
date and page number of this issue of the Federal Register. All
comments submitted in response to this proposed rule will be included
in the rulemaking record and will be made available to the public.
Please be advised that the identity of the individuals or entities
submitting comments will be made public on the internet at http://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Stacy Jones King, Agricultural
Marketing Specialist, Promotion and Economics Division, Specialty Crops
Program, AMS, USDA, 1400 Independence Avenue SW, Room 1406-S, Stop
0244, Washington, DC 20250-0244; telephone: (202) 731-2117; facsimile:
(202) 205-2800; or electronic mail: [email protected].
SUPPLEMENTARY INFORMATION: This proposal affecting 7 CFR part 1210 is
authorized under the Watermelon Research and Promotion Act (Act) (7
U.S.C. 4901-4916).
Executive Orders 12866, 13563, and 13771
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, reducing costs, harmonizing rules and promoting flexibility.
This action falls within a category of regulatory actions that the
Office of Management and Budget (OMB) exempted from Executive Order
12866 review. Additionally, because this rule does not meet the
definition of a significant regulatory action it does not trigger the
requirements contained in Executive Order 13771. See OMB's Memorandum
titled ``Interim Guidance Implementing Section 2 of the Executive Order
of January 30, 2017, titled `Reducing Regulation and Controlling
Regulatory Costs' '' (February 2, 2017).
Executive Order 13175
This action has been reviewed in accordance with the requirements
of Executive Order 13175, Consultation and Coordination with Indian
Tribal Governments. The review reveals that this regulation would not
have substantial and direct effects on Tribal governments and would not
have significant Tribal implications.
Executive Order 12988
This proposal has been reviewed under Executive Order 12988, Civil
Justice Reform. It is not intended to have retroactive effect. The Act
provides that it shall not affect or preempt any other State or Federal
law authorizing promotion or research relating to an agricultural
commodity.
Under section 1650 of the Act (7 U.S.C. 4909), a person may file a
written petition with USDA if they believe that the Plan, any provision
of the Plan, or any obligation imposed in connection with the Plan, is
not in accordance with the law. In any petition, the person may request
a modification of the Plan or an exemption from the Plan. The
petitioner will have the opportunity for a hearing on the petition.
Afterwards, an Administrative Law Judge (ALJ) will issue a decision. If
the petitioner disagrees with the ALJ's ruling, the petitioner has 30
days to appeal to the Judicial Officer, who will issue a ruling on
behalf of USDA. If the petitioner disagrees with USDA's ruling, the
petitioner may file, within 20 days, an appeal in the U.S. District
Court for the district in which the petitioner resides or conducts
business.
Background
This proposal invites comments on realigning the Board's
representation and procedures under the Plan. The Board administers the
Plan with oversight by USDA. The Plan is a nationally coordinated
program of research, development, advertising, and promotion designed
to strengthen the watermelon's position in the marketplace and to
establish, maintain, and expand markets for watermelons. The program is
financed by assessments on producers growing 10 acres or more of
watermelons, handlers of watermelons, and importers of 150,000 pounds
of watermelons or more per year. The Plan specifies that handlers are
responsible for collecting and submitting both the producer and handler
assessments to the Board, reporting their handling of watermelons, and
maintaining records necessary to verify their reporting(s). Importers
are responsible for payment of assessments to the Board on watermelons
imported into the United States through U.S. Customs and Border
Protection (Customs).
This proposal invites comments on realignment of the Board by
reducing the number of production districts under the Plan for producer
and handler representation on the Board, and proportionally reducing
the number of importer seats on the Board from twelve to nine. The
Board administers the Plan with oversight by USDA. These changes were
recommended by the Board after a review of the production volume and
assessments paid in each production district as well as the assessments
paid by importers. The Plan requires that such a review be conducted at
least every 5 years. These changes would help facilitate program
operations and the Board voted to forward this recommendation to the
Secretary at their October 26, 2019 meeting.
Section 1210.320(a) of the Plan specifies that the Board shall be
comprised of producers, handlers, importers, and one public
representative appointed by the Secretary. Pursuant to Sec.
1210.320(b), the Plan originally divided the United States into seven
districts of comparable production volumes of watermelons, and each
district was allocated two producer members and two handler members.
Section 1210.320(d) specifies that importer representation on the Board
shall be proportionate to the percentage of assessments paid by
importers to the Board, except that at least one representative of
importers shall serve on the Board.
The current Board is comprised of 41 members--14 producers (two
from each district), 14 handlers (two from each district), 12
importers, and one public member.
Review of U.S. Districts
Section 1210.320(c) requires the Board, at least every five years,
to review the districts to determine whether realignment is necessary.
In conducting the review, the Board must consider: (1) The most recent
three years of USDA production reports or Board assessment reports if
USDA production reports are unavailable; (2) shifts and trends in
quantities of watermelon produced, and (3) other relevant factors. As a
result of the review, the Board may recommend to USDA that the
districts be realigned.
Pursuant to Sec. 1210.501 of the Plan, the seven current districts
are as follows:
District 1--The State of Florida;
District 2--The States of Kentucky, North Carolina, South Carolina,
Tennessee, Virginia and West Virginia;
District 3--The State of Georgia;
District 4--The States of Connecticut, Delaware, Illinois, Indiana,
Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey,
New York, Ohio, Pennsylvania, Rhode Island, Vermont, Wisconsin, and
Washington, DC;
District 5--The State of California;
District 6--The State of Texas;
[[Page 23250]]
District 7--The States of Alabama, Alaska, Arizona, Arkansas,
Colorado, Hawaii, Idaho, Iowa, Kansas, Louisiana, Minnesota,
Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North
Dakota, Oklahoma, Oregon, South Dakota, Utah, Washington, and Wyoming.
The districts listed above were recommended by the Board in 2016
and established through rulemaking by USDA in 2017 (82 FR 44966).
In 2019, the Board's Executive Committee conducted a review of the
U.S. watermelon production districts to determine whether realignment
was necessary. The committee held teleconferences on August 14 and
September 11, 2019, and reviewed production data for 2016, 2017 and
2018 from USDA's National Agricultural Statistics Service's (NASS)
Vegetables Annual Summary for 2018 and Market News Reports. Due to
changes in the geographical coverage of USDA's data collection on
watermelon production, Board assessment data was used for the states
for which USDA data was not available. To protect personally
identifiable information (PII) of watermelon producers and handlers,
the average of 2016-2018 assessment data was converted to a percentage
of production. The combined data is shown in Table 1 below.
Table 1--State Production Based on USDA and Board Assessment Data 2016-
2018
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% of 3-year
State average of U.S.
production
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Alabama.............................................. 0.2
Arizona.............................................. 2.9
Arkansas............................................. 0.8
California........................................... 13.8
Colorado............................................. 0.4
Delaware............................................. 2.8
Florida.............................................. 17.9
Georgia.............................................. 18.0
Hawaii............................................... 0.1
Illinois............................................. 1.8
Indiana.............................................. 10.6
Kentucky............................................. 0.2
Louisiana............................................ 0.1
Maryland............................................. 1.9
Michigan............................................. 2.3
Mississippi.......................................... 0.2
Missouri............................................. 4.3
Nebraska............................................. 0.2
New Mexico........................................... 0.6
New York............................................. 0.6
North Carolina....................................... 4.0
Ohio................................................. 0.1
Oklahoma............................................. 0.2
Oregon............................................... 1.0
South Carolina....................................... 1.8
Texas................................................ 11.8
Virginia............................................. 0.3
Washington........................................... 1.1
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Upon review, the Board recommended at their October 26, 2019
meeting to reduce the number of U.S. production districts from seven to
five, thus eliminating two districts, retaining two districts as drawn,
and creating three new districts. The proposed districts would be as
follows:
District 1--The State of Florida (no change);
District 2--The State of Georgia (formerly District 3).
District 3--The States of Alabama, Arkansas, Louisiana,
Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, and
Texas.
District 4--The States of Connecticut, Delaware, Illinois, Indiana,
Kentucky, Maryland, Massachusetts, Maine, Michigan, New Hampshire, New
Jersey, New York, Ohio, Pennsylvania, Rhode Island, Vermont, Virginia,
West Virginia, Wisconsin, and Washington, DC.
District 5--The States of Alaska, Arizona, California, Colorado,
Hawaii, Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska,
Nevada, New Mexico, North Dakota, Oregon, South Dakota, Utah,
Washington, and Wyoming.
As shown in Table 2, each district would represent, on average, 20
percent of the total U.S. production, with a range of approximately 18
to 24.5 percent. USDA has reviewed NASS, Market News, and Board
assessment data, and as shown in Table 2, determined that the
production estimates are consistent with the Board's recommendation.
Table 2--Proposed Percent of U.S. Production by District \1\
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USDA analysis
District Board data (%) (%) Difference (%)
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1........................................... 17.8 18.2 +0.4
2........................................... 18.0 18.0 None.
3........................................... 19.0 19.2 +0.2
4........................................... 20.6 20.7 +0.1
5........................................... 24.5 23.9 -0.6
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Section 1210.501 of the Plan would be revised accordingly.
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\1\ Table values were rounded to the nearest percent.
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Review of Imports
Section 1210.320(e) of the Plan requires USDA to evaluate the
average annual percentage of assessments paid by importers during the
three-year period preceding the date of the evaluation and adjust, to
the extent practicable, the number of importer representatives on the
Board.
Table 4 below shows domestic and import assessment data for
watermelons for the years 2016, 2017 and 2018. The data is from the
Board's financial audits for 2016, 2017 \2\ and 2018.
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\2\ National Watermelon Promotion Board, Financial Statements
and Supplementary Information, Years Ending March 31, 2016, 2017,
and 2018, BDO USA, LLP.
Table 4--U.S. and Import Assessment Data for 2016-2018
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Domestic (U.S.)
Year assessments Import assessments Total
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2016.................................... $2,319,704................ $1,172,834................ $3,492,538
2017.................................... 2,347,522................. 1,049,875................. 3,397,397
2018.................................... 2,311,116................. 1,041,244................. 3,352,360
[[Page 23251]]
3-Year Average.......................... 2,326,114................. 1,087,984................. 3,414,098
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Percent of Total.................... 68 percent................ 32 percent................ ..............
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Based on this data, the three-year average annual import
assessments for watermelons for 2016-2018 was $1,087,984, approximately
32 percent of the Board's assessment income. To make the number of
importers on the Board proportionate to the assessments paid as well as
to the percentages of U.S. watermelon produced by the reduced number of
production districts, the number of importers should decrease from
twelve to nine members.
In order to clearly summarize the change in board membership for
producers, handlers, and importers, Sec. 1210.502 of the Plan would be
revised to reflect the new composition of the Board.
Initial Regulatory Flexibility Act Analysis
In accordance with the Regulatory Flexibility Act (RFA) (5 U.S.C.
601-612), AMS is required to examine the economic impact of the
proposed rule on the small entities. Accordingly, AMS has considered
the economic impact of this action on such entities.
The purpose of the RFA is to fit regulatory actions to the scale of
businesses subject to such actions so that small businesses will not be
disproportionately burdened. The Small Business Administration defines,
in 13 CFR part 121, small agricultural producers as those having annual
receipts of no more than $1,000,000 and small agricultural service
firms (handlers and importers) as those having annual receipts of no
more than $30 million.
According to the Board, there are 505 producers, 140 handlers, and
252 importers who were required to pay assessments under the Plan in
2018. NASS data for the 2018 crop year estimated about 350.5
hundredweight (cwt.) of watermelons were produced per acre in the
United States, and the 2018 grower price was $16.90 per cwt.\3\ Thus,
the value of watermelon production per acre in 2018 averaged about
$5,923 (350.5 cwt. x $16.90). At that average price, a producer would
have to farm over 169 acres to receive an annual income from
watermelons of $1,000,000 ($1,000,000 divided by $5,923 per acre equals
approximately 169 acres). Using 2017 USDA Census of Agriculture data, a
maximum of 119 farms had watermelon acreage greater than or equal to
250 acres, and 13,401 out of a total of 13,520 farms producing
watermelons reported less than 250 acres of watermelon on their
farms.\4\ Therefore, assuming watermelon producers operate no more than
one farm, a majority (99 percent) of all U.S. watermelon farms would be
classified as small businesses.
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\3\ Vegetables, 2018 Summary, March 2019, USDA, p. 10.; https://downloads.usda.library.cornell.edu/usda-esmis/files/02870v86p/gm80j322z/5138jn50j/vegean19.pdf.
\4\ 2017 Census of Agriculture, April 11, 2019, USDA, National
Agricultural Statistics Service, p. 39; https://www.nass.usda.gov/Publications/AgCensus/2017/Full_Report/Volume_1,_Chapter_1_US/usv1.pdf.
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Also based on the Board's data, using a price of $0.169 per pound
and the number of pounds handled annually, none of the watermelon
handlers have receipts over the $30 million threshold.5 6
Therefore, all watermelon handlers would be considered small
businesses. A handler would have to ship over 177 million pounds of
watermelons to be considered large (177,514,793 x $0.169 f.o.b. equals
approximately $30,000,000).
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\5\ Vegetables, 2018 Summary, March 2019, USDA, https://downloads.usda.library.cornell.edu/usda-esmis/files/02870v86p/gm80j322z/5138jn50j/vegean19.pdf.
\6\ National Watermelon Promotion Board assessment records,
2016-2018.
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Based on 2018 Customs data, over 99 percent of watermelon importers
shipped less than $30 million worth of watermelons that year. Based on
the foregoing, the majority of watermelon producers, handlers and
importers that would be affected by this proposed rule would be
classified as small entities.
Regarding the value of the commodity, based on 2018 NASS data, the
value of the U.S. watermelon crop was about $656.6 million.\7\
According to Customs data, the value of 2018 imports was about $312.4
million.
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\7\ Vegetables, 2018 Summary, March 2019, USDA, p. 10.
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This proposal invites comments on revising Sec. Sec. 1210.321,
1210.423, 1210.501 and 1210.502 of the Plan to reduce the number of
U.S. production districts from seven to five, thus eliminating two
districts, retaining two districts as drawn, and creating three new
districts. Accordingly, Sec. 1210.320 requires the number of importer
members to also decrease proportionately from 12 to 9 members, for a
total of 30 Board members.
The Plan currently divides the United States into seven districts
of comparable production volumes of watermelons, and each district is
allocated two producer members and two handler members. Further,
importer representation on the Board must be, to the extent
practicable, proportionate to the percentage of assessments paid by
importers, except there must be at least one importer on the Board.
At least every five years, the Board is required to evaluate, based
on the preceding three-year period, the average production in each
production district and the average annual percentage of assessments
paid by importers. The Board conducted this review in 2019 and
recommended reducing the number of districts from seven to five.
Authority for these changes is provided in Sec. 1210.320 of the Plan.
Regarding the economic impact of the proposed rule on affected
entities, neither the reduction in the number of production districts
nor the reduction in Board membership imposes any additional costs on
industry members. The recommended changes are necessary to improve the
Board's ability to ensure both a quorum at Board meetings and a
sufficient number of potential nominees. Further, the accompanying
reduction of importer seats from twelve to nine provides for the
equitable representation of producers, handlers and importers on the
Board.
Regarding alternatives, the Board considered two scenarios in
realigning the districts. Scenario 1 would divide the U.S. into four
production districts, and Scenario 2 would divide the U.S. into five
production districts. In accordance with the Plan, both scenarios
preserve the composition of 2 producers and 2 handlers per district.
Ultimately the Board recommended Scenario 2, retaining the State of
Florida as District 1, changing the district designation for Georgia
from District 3 to District 2, and creating new Districts 3, 4, and 5
as follows:
[[Page 23252]]
(a) District 3 would be comprised of the States of Alabama,
Arkansas, Louisiana, Mississippi, North Carolina, Oklahoma, South
Carolina, Tennessee, and Texas;
(b) District 4 would be comprised of the States of Connecticut,
Delaware, Illinois, Indiana, Kentucky, Maryland, Massachusetts, Maine,
Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania,
Rhode Island, Vermont, Virginia, West Virginia, Wisconsin, and
Washington, DC; and
(c) District 5 would be comprised of the States of Alaska, Arizona,
California, Colorado, Hawaii, Idaho, Iowa, Kansas, Minnesota, Missouri,
Montana, Nebraska, Nevada, New Mexico, North Dakota, Oregon, South
Dakota, Utah, Washington, and Wyoming.
In accordance with Sec. 1210.320, the Board recommended the
alignment scenario described in this proposed rule because it: (1)
Would provide for a proportional geographical representation on the
Board for producers and handlers; (2) would not create any producer or
handler vacancies on the Board; and (3) would increase the pool of
candidates to be considered for appointment to the Board by the
Secretary.
Reporting and Recordkeeping Requirements
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
Chapter 35), the Plan's information collection and recordkeeping
requirements have been approved previously under OMB number 0581-0093.
This proposed rule would not result in a change to the information
collection and recordkeeping requirements previously approved and would
impose no additional reporting requirements or recordkeeping burden on
domestic producers, handlers, or importers of watermelon.
As with all Federal promotion programs, reports and forms are
periodically reviewed to reduce information requirements and
duplication by industry and public sector agencies. Finally, USDA has
not identified any relevant Federal rules that duplicate, overlap, or
conflict with this proposed rule.
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.
Regarding outreach efforts, the Board's Executive Committee held
teleconferences on August 14 and September 11, 2019 to review the
production data to assess whether changes to the number of districts
and district boundaries were warranted. All Board and committee
meetings, including meetings held via teleconference, are open to the
public and interested persons are invited to participate and express
their views.
AMS has performed this initial RFA analysis regarding the impact of
these changes to the Plan on small entities and invites comments
concerning potential effects of this action.
USDA has determined that this proposed rule is consistent with and
would effectuate the purposes of the Act.
A 30-day comment period is provided to allow interested persons to
respond to this proposal. All written comments received in response to
this proposed rule by the date specified will be considered prior to
finalizing this action.
List of Subjects in 7 CFR Part 1210
Administrative practice and procedure, Advertising, Consumer
information, Marketing agreements, Reporting and recordkeeping
requirements, Watermelon promotion.
For the reasons set forth in the preamble, 7 CFR part 1210 is
proposed to be amended as follows:
PART 1210--WATERMELON RESEARCH AND PROMOTION PLAN
0
1. The authority citation for 7 CFR part 1210 continues to read as
follows:
Authority: 7 U.S.C. 4901-4916 and 7 U.S.C. 7401.
Subpart C--Rules and Regulations
0
2. Amend Sec. 1210.321 by revising the section heading and paragraph
(f)(1) to read as follows:
Sec. 1210.321 Realignment of districts.
* * * * *
(f) * * *
(1) No State in a multi-State district shall have more than three
producer and handler representatives concurrently on the Board.
* * * * *
0
3. Amend Sec. 1210.403 by revising paragraph (c) to read as follows:
Sec. 1210.403 Voting procedures.
* * * * *
(c) In multi-State districts, the convention chairperson will
direct the eligible producer voters and handler voters from each State
to caucus separately for the purpose of electing a State spokesperson
for each group. Election of each State spokesperson shall be by simple
majority of all individual voters in attendance. In lieu of written
ballots, a State spokesperson may be elected by voice vote or a show of
hands. The role of the State spokesperson is to coordinate State voting
and to cast all State votes.
* * * * *
0
4. Section 1210.501 is revised to read as follows:
Sec. 1210.501 Realignment of districts.
In accordance with Sec. 1210.320(c) of the Plan, the districts
shall be as follows:
(a) District 1--The State of Florida.
(b) District 2--The State of Georgia.
(c) District 3--The States of Alabama, Arkansas, Louisiana,
Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, and
Texas.
(d) District 4--The States of Connecticut, Delaware, Illinois,
Indiana, Kentucky, Maryland, Massachusetts, Maine, Michigan, New
Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island,
Vermont, Virginia, West Virginia, Wisconsin, and Washington, DC.
(e) District 5--The States of Alaska, Arizona, California,
Colorado, Hawaii, Idaho, Iowa, Kansas, Minnesota, Missouri, Montana,
Nebraska, Nevada, New Mexico, North Dakota, Oregon, South Dakota, Utah,
Washington, and Wyoming.
0
5. Section 1210.502 is revised to read as follows:
Sec. 1210.502 Board members.
The Board consists of 10 producers, 10 handlers, nine importers,
and one public member appointed by the Secretary.
Bruce Summers,
Administrator.
[FR Doc. 2020-08395 Filed 4-24-20; 8:45 am]
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