[Federal Register Volume 85, Number 144 (Monday, July 27, 2020)]
[Rules and Regulations]
[Pages 45057-45059]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-15715]



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 Rules and Regulations
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  Federal Register / Vol. 85 , No. 144 / Monday, July 27, 2020 / Rules 
and Regulations  

[[Page 45057]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1217

[Document Number AMS-SC-20-0031]


Softwood Lumber Research, Promotion, Consumer Education and 
Industry Information Order; Change to the Board Membership Eligibility 
Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule changes the eligibility requirements for nominees 
representing domestic manufacturers on the Softwood Lumber Board 
(Board) under the Agricultural Marketing Service's (AMS) regulations 
regarding a national research and promotion program for softwood 
lumber. This change will help facilitate program operations.

DATES: Effective August 26, 2020.

FOR FURTHER INFORMATION CONTACT: Andrea Ricci, Marketing Specialist, 
Promotion and Economics Division, Specialty Crops Program, AMS, USDA, 
755 E Nees Avenue #25985, Fresno, CA 93720; telephone: (202) 572-1442; 
or electronic mail: [email protected].

SUPPLEMENTARY INFORMATION: This rule affecting 7 CFR part 1217 (herein 
the ``Order'') is authorized by the Commodity Promotion, Research, and 
Information Act of 1996 (1996 Act) (7 U.S.C. 7411-7425).

Executive Orders 12866, 13563, and 13771

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

Executive Order 13175

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

Executive Order 12988

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

Background

    This rule changes the eligibility requirements for nominees 
representing domestic manufacturers on the Board. The Board administers 
the Softwood Lumber Research, Promotion, Consumer Education and 
Industry Information Order (Order) with oversight by the USDA. Pursuant 
to the Order, assessments are collected from domestic manufacturers and 
importers, and are used for research and promotion projects designed to 
strengthen the position of softwood lumber in the marketplace. This 
change was recommended to the Secretary by the Board at its February 
26, 2020, meeting, and will contribute to the effective administration 
of the program.
    Section 1217.40 provides for the establishment of the Board. The 
Board is comprised of manufacturers for the U.S. market who manufacture 
and domestically ship or import 15 million board feet or more of 
softwood lumber in the United States during a fiscal period. In 
November 2018, the Board recommended revising the Board composition 
from 19 to 14 members over a three-year period. The Board took into 
consideration the consolidation of the softwood lumber industry since 
the inception of the program, along with the number of companies 
eligible to be represented on the Board. Additionally, the Board 
recommended that U.S. Board members reside in the region they 
represent. This was intended to ensure that entities from outside the 
U.S. that own softwood lumber entities within the U.S. could only 
represent a U.S. region on the Board if the individual seeking 
nomination resided in the respective region. The recommendation was 
finalized in a rule that was published in the Federal Register on 
September 25, 2019 (84 FR 50294). The 2021 Board and each subsequent 
Board shall be comprised of 14 members, 10 of whom shall represent 
domestic manufacturers and four of whom shall represent importers. 
Domestic manufacturer Board members represent three regions: U.S. South 
Region; U.S. West Region; and Northeast and Lake

[[Page 45058]]

States Region. The Order prescribes that domestic manufacturer 
representatives reside in the region they represent.

Board Recommendation

    The Board met on February 26, 2020, and recommended the Order be 
revised to allow a domestic manufacturer's representative to seek 
nomination in any of the regions where the manufacturer they represent 
has manufacturing operations. The current Order limits manufacturer 
representatives to seek nomination only in the region where he or she 
resides. The Board conducted nominations under the newly implemented 
provisions and found that clarification in the Order was needed to 
reflect the multi-regional nature of manufacturers rather than the 
individual nominee. Several domestic manufacturers have operations in 
multiple U.S. regions. Revising the Order to allow a person to seek 
nomination in one of the regions where the manufacturer they represent 
has operations will provide flexibility to the Order, while maintaining 
the intent that Board members representing domestic manufacturers 
reside in the U.S. This change will help facilitate program operations. 
Therefore, Sec.  1217.40 (b)(1), (b)(1)(i), (b)(1)(ii), and (b)(1)(iii) 
will be revised accordingly.

Final Regulatory Flexibility Act Analysis

    In accordance with the Regulatory Flexibility Act (RFA) (5 U.S.C. 
601-612), the Agricultural Marketing Service (AMS) is required to 
examine the impact of the action on small entities. Accordingly, AMS 
has considered the economic impact of this action on such entities.
    The purpose of the RFA is to fit regulatory actions to the scale of 
businesses subject to the actions so that small businesses will not be 
disproportionately burdened. The Small Business Administration (SBA) 
defines, in 13 CFR part 121, small agricultural service firms (domestic 
softwood lumber manufacturers and importers) as those having annual 
receipts of no more than $8 million.\1\
---------------------------------------------------------------------------

    \1\ SBA does have a small business size standard for 
``Sawmills'' of 500 employees (see https://www.sba.gov/sites/default/files/2019-08/SBA%20Table%20of%20Size%20Standards_Effective%20Aug%2019%2C%202019_Rev.pdf). Based on USDA's understanding of the lumber industry, using 
this criterion would be impractical as sawmills often use 
contractors rather than employees to operate and, therefore, many 
mills would fall under this criterion while being, in reality, a 
large business. Therefore, USDA used ``agricultural service firm'' 
as a more appropriate criterion for this analysis.
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    The Random Lengths Publications, Inc.'s yearly average framing 
lumber composite price was $356 per thousand board feet (mbf) in 2019. 
Dividing the $8 million threshold that defines an agricultural service 
firm as small by this price results in a maximum threshold of 22.5 
million board feet (mmbf) of softwood lumber per year that a domestic 
manufacturer or importer may ship to be considered a small entity for 
purposes of the RFA. Table 1 shows the number of entities and the 
amount of volume they represent that may be categorized as small or 
large based on the SBA definition.

                                           Table 1--Domestic Manufacturers and Importers by SBA Size Standards
                                                                         [2019]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Domestic manufacturers                 Importers                        Totals
                                                         -----------------------------------------------------------------------------------------------
                                                             Entities      Volume (MMBF)     Entities      Volume (MMBF)     Entities      Volume (MMBF)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Small...................................................             226           1,991             774           1,257           1,000           3,248
Large...................................................             290          32,229             106          32,582             396          64,811
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................             516          34,220             880          33,839           1,396          68,059
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sources: Forest Economic Advisors; Customs and Border Protection.

    As shown in Table 1, there are a total of 1,396 domestic 
manufacturers and importers of softwood lumber based on 2019 data. Of 
these, 1,000 entities, or 72 percent, shipped or imported less than 
22.5 mmbf and would be considered small based on the SBA definition. 
These 1,000 entities domestically manufactured or imported 3.25 billion 
board feet (bbf) in 2019, less than 5 percent of total volume. The 
revision to the Board eligibility requirements will not 
disproportionately burden small domestic manufacturers and importers of 
softwood lumber.
    This rule revises Sec.  1217.40 (b)(1), (b)(1)(i), (b)(1)(ii), and 
(b)(1)(iii) to allow domestic softwood lumber manufacturer 
representatives to seek nomination in any of the regions where the 
manufacturer they represent has manufacturing operations. The Order is 
administered by the Board with oversight by the USDA. In accordance 
with the program requirements, assessments are collected from domestic 
manufacturers and importers, and are used for research and promotion 
projects designed to strengthen the position of softwood lumber in the 
marketplace. Revising the Order to allow a person to seek nomination in 
one of the regions where the softwood lumber manufacturer has 
operations will provide flexibility to the Order, while maintaining the 
intent that Board members representing domestic manufacturers reside in 
the U.S.
    Regarding alternatives, the Board considered not changing the 
nominee eligibility requirements; however, the entire Board determined 
that making this change will better align the Order provisions with 
industry practices and will help facilitate Board operations. This 
change was discussed at the Industry Relations and Governance Committee 
meeting on February 18, 2020, and at the Board meeting on February 26, 
2020.
    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the information collection and recordkeeping requirements 
that are imposed by the Order have been approved previously under OMB 
control number 0581-0093. This rule will not result in a change to the 
information collection and recordkeeping requirements previously 
approved and will impose no additional reporting and recordkeeping 
burden on domestic manufacturers and importers of softwood lumber.
    As with all Federal promotion programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies. USDA has not 
identified any relevant Federal rules

[[Page 45059]]

that duplicate, overlap, or conflict with this rule.
    AMS is committed to complying with the E-Government Act, to promote 
the use of the internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.
    A proposed rule concerning this action was published in the Federal 
Register on May 11, 2020 (85 FR 27690). A 30-day comment period ending 
June 10, 2020, was provided to allow interested persons to submit 
comments.

Analysis of Comments

    Two comments were received in response to the proposed rule. One 
commenter supported the change stating that it will give the board more 
flexibility in seeking the best qualified people to serve on the Board. 
The other comment was outside the scope of this action.
    After consideration of all relevant material presented, including 
the information and recommendations submitted by the Board, the comment 
received, and other available information, it is hereby found that this 
rule, as hereinafter set forth, is consistent with and will effectuate 
the purposes of the 1996 Act.

List of Subjects in 7 CFR Part 1217

    Administrative practice and procedure, Advertising, Consumer 
information, Marketing agreements, Softwood Lumber promotion, Reporting 
and recordkeeping requirements.

    For the reasons set forth in the preamble, 7 CFR part 1217, is 
amended as follows:

PART 1217--SOFTWOOD LUMBER RESEARCH, PROMOTION, CONSUMER EDUCATION 
AND INDUSTRY INFORMATION ORDER

0
1. The authority citation for 7 CFR part 1217 continues to read as 
follows:

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


0
2. In Sec.  1217.40, paragraphs (b)(1), (b)(1)(i), (b)(1)(ii), and 
(b)(1)(iii), are revised to read as follows:


Sec.  1217.40  Establishment and membership.

* * * * *
    (b) * * *
    (1) Domestic manufacturers. Domestic manufacturers must reside in 
the United States. For the 2020 Board, 11 members shall represent 
domestic manufacturers and for the 2021 Board and each subsequent 
Board, ten members shall represent domestic manufacturers who reside in 
the following three regions:
    (i) Five members shall represent manufacturers of softwood lumber 
in the U.S. South Region, which consists of the states of Alabama, 
Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, 
Oklahoma, South Carolina, Tennessee, Texas, Virginia, and West 
Virginia. For the 2020 Board, of these five members, two must represent 
large and three must represent small domestic manufacturers. For the 
2021 Board and each subsequent Board of these five members, two must 
represent large, two must represent small, and one may represent 
domestic manufacturers of any size;
    (ii) Five members shall represent manufacturers of softwood lumber 
in the U.S. West Region for the 2020 Board, and for the 2021 Board and 
each subsequent Board, four members shall manufacture softwood lumber 
in the U.S. West Region, which consists of the states of Alaska, 
Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New 
Mexico, North Dakota, Oregon, South Dakota, Utah, Washington, and 
Wyoming. For the 2020 Board, of these five members, four must represent 
large and one must represent small domestic manufacturers. For the 2021 
Board and each subsequent Board, of the four members, two must 
represent large, one must represent small, and one may represent 
domestic manufacturers of any size; and
    (iii) One member shall represent a manufacturer of softwood lumber 
in the Northeast and Lake States Region, which consists of the states 
of Connecticut, Delaware, Illinois, Indiana, Iowa, Kansas, Kentucky, 
Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, 
Nebraska, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, 
Rhode Island, Vermont, Wisconsin and all other parts of the United 
States not listed in paragraph (b)(1)(i), (ii), or (iii) of this 
section. This member may represent domestic manufacturers of any size.
* * * * *

Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2020-15715 Filed 7-24-20; 8:45 am]
BILLING CODE 3410-02-P