[Federal Register Volume 85, Number 178 (Monday, September 14, 2020)]
[Rules and Regulations]
[Pages 56471-56475]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-17581]



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 Rules and Regulations
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  Federal Register / Vol. 85, No. 178 / Monday, September 14, 2020 / 
Rules and Regulations  

[[Page 56471]]



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.

ACTION: Final rule.

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SUMMARY: This rule realigns the representation on the National 
Watermelon Promotion Board (Board) under the Agricultural Marketing 
Service's (AMS) regulations regarding a national research and promotion 
program for watermelons. This rule reduces the number of production 
districts and the number of importers on the Board, accordingly. This 
rule also makes administrative changes to other provisions of the 
Watermelon Research and Promotion Plan (Plan).

DATES: Effective October 14, 2020.

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 final rule affecting 7 CFR part 1210 is 
authorized under the Watermelon Research and Promotion Act (Act) (7 
U.S.C. 4901-4916). The Watermelon Research and Promotion Plan is 
codified at 7 CFR part 1210.

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 final rule 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 final rule has been reviewed in accordance with the 
requirements of Executive Order 13175, Consultation and Coordination 
with Indian Tribal Governments. The review reveals that this rule will 
not have substantial and direct effects on Tribal governments and will 
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.
    Under section 1650 of the Act (7 U.S.C. 4909), a person subject to 
an order may file a written petition with USDA stating that the plan, 
any provision of the plan, or any obligation imposed in connection with 
the plan, is not established in accordance with the law, and request a 
modification thereof or an exemption therefrom. The petitioner will 
have the opportunity for a hearing on the petition. Thereafter, USDA 
will issue a ruling on the petition. 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 where the petitioner is an 
inhabitant or in which the person's principal place of business is 
located.

Background

    This rule realigns the Board's representation and procedures under 
the Plan. The realignment reduces the number of production districts 
under the Plan for producer and handler representation on the Board, 
and proportionally reduces the number of importer seats from twelve to 
nine. The Board administers the Plan with oversight by USDA. Under the 
Plan, assessments are collected from watermelon producers, handlers and 
importers. The assessments are used to strengthen watermelon's position 
in the marketplace and to establish, maintain, and expand markets for 
watermelons.

Board Membership

    Currently, Sec.  1210.320(a) 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 is 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. Production

    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 section 1210.501, 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,

[[Page 56472]]

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;
    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
------------------------------------------------------------------------
                                                          Percent of 3-
                         State                           year average of
                                                         U.S. production
------------------------------------------------------------------------
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
------------------------------------------------------------------------

    Upon review, the Board, at its October 26, 2019 meeting, 
recommended a reduction in the number of U.S. production districts from 
seven to five, resulting in a total of ten producer members and ten 
handler members. The proposed action recommended eliminating two 
districts, retaining two districts as drawn, and creating three new 
production districts 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.
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    \1\ Table values were rounded to the nearest percent.
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    As shown in Table 2, each district will represent close to 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--Percent of U.S. Production by District \1\
----------------------------------------------------------------------------------------------------------------
                                                                                   USDA analysis
                            District                              Board data (%)        (%)       Difference (%)
----------------------------------------------------------------------------------------------------------------
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
----------------------------------------------------------------------------------------------------------------

    Section 1210.501 will be revised accordingly.

Review of Imports

    Section 1210.320(e) 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.

[[Page 56473]]



                             Table 4--U.S. and Import Assessment Data for 2016-2018
----------------------------------------------------------------------------------------------------------------
                                                                     Domestic
                              Year                                    (U.S.)          Import           Total
                                                                    assessments     assessments
----------------------------------------------------------------------------------------------------------------
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
3-Year Average..................................................       2,326,114       1,087,984       3,414,098
Percent of Total................................................      68 percent      32 percent
----------------------------------------------------------------------------------------------------------------

    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.
    With this amendment, the new composition of board membership will 
be reflected in section 1210.502. According to the Board, this action 
will accurately reflect the distribution of the production and handling 
of watermelons, and the resulting reduced number of producer, handler, 
and importer seats will contribute to the effective administration of 
the program.

Final Regulatory Flexibility Act Analysis

    In accordance with the Regulatory Flexibility Act (RFA) (5 U.S.C. 
601-612), AMS is required to examine the economic impact of this rule 
on small entities. Accordingly, AMS has considered the economic impact 
of this action on such entities.
    The purpose of the RFA is to fit regulatory actions to the scale of 
businesses subject to such actions so that small businesses will not be 
disproportionately burdened. The Small Business Administration 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 valuation, 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 373 farms had watermelon acreage greater than or equal to 
100 acres, and 13,147 out of a total of 13,520 farms producing 
watermelons reported less than 100 acres of watermelon on their 
farms.\4\ Therefore, assuming watermelon producers operate no more than 
one farm, a majority 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 will 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 above-mentioned data the majority of watermelon producers, handlers 
and importers that will be affected by this rule will 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.
---------------------------------------------------------------------------

    The rule revises sections 1210.321, 1210.403, 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, section 
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 revisions are administrative in nature; therefore, there should be 
no economic impact on producers, handlers, or importers.
    Under the program, the United States is currently divided 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.
    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 another scenario in 
realigning the districts. This scenario (Scenario 1) would have divided 
the U.S. into four production districts as follows:
    District 1 would be comprised of the States of Florida, North 
Carolina, and South Carolina;

[[Page 56474]]

    District 2 would be comprised of the States of Connecticut, 
Delaware, Georgia, Maryland, Massachusetts, Maine, New Hampshire, New 
Jersey, New York, Pennsylvania, Rhode Island, Vermont, Virginia, West 
Virginia, and Washington, DC;
    District 3 would be comprised of the States of Alabama, Arkansas, 
Illinois, Indiana, Kentucky, Louisiana, Mississippi, Ohio, Oklahoma, 
Tennessee, and Texas.
    District 4 would be comprised of the States of Alaska, Arizona, 
California, Colorado, Hawaii, Idaho, Iowa, Kansas, Michigan, Minnesota, 
Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oregon, 
South Dakota, Utah, Washington, Wisconsin, and Wyoming.
    In accordance with the Plan, both scenarios preserve the 
composition of 2 producers and 2 handlers per district. Ultimately the 
Board recommended Scenario 2 at their October 26, 2019, 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.
    The changes to the size of the Board, number of production 
districts, and number of importer members are administrative in nature 
and have no economic impact on entities covered under the program. As 
some producers and handlers operate in multiple districts, they would 
be able to seek nomination for a district of their choice.

Reporting and Recordkeeping Requirements

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the Plan's information collection requirements have been 
previously approved by OMB under OMB control number 0581-0093. This 
rule does not result in a change to the information collection and 
recordkeeping requirements previously approved and does not impose 
additional reporting requirements or recordkeeping burden on domestic 
producers, handlers, or importers of watermelon.
    As with all Federal research and promotion programs, reports and 
forms are periodically reviewed to reduce information requirements and 
duplication by industry and public-sector agencies. USDA has not 
identified any relevant Federal rules that duplicate, overlap, or 
conflict with this rule. AMS is committed to complying with the E-
Government Act, to promote the use of the internet and other 
information technologies to provide increased opportunities for citizen 
access to Government information and services, and for other purposes.
    The Board met on October 26, 2019, and recommended realignment of 
the Board by reducing the number of production districts and 
proportionally reducing the number of importer seats on the Board from 
twelve to nine.
    A proposed rule concerning this action was published in the Federal 
Register on April 27, 2020 (85 FR 23248). A 30-day comment period 
ending May 27, 2020, was provided to allow interested persons to submit 
comments.

Analysis of Comments

    Eleven comments were received in response to the proposed rule. Of 
those eleven comments, ten supported the proposed realignment and 
reduction in production districts and the reduction of three importer 
seats. One comment expressed concerns with the proposal.
    The comments that supported the proposed changes concur that the 
proposal accurately reflects changes in the volume of imports and the 
geographical distribution of watermelon production in the United 
States. Further, the consolidation of some districts also reflects 
consolidations throughout the watermelon industry and will make it 
easier for the Board to find qualified candidates to fill vacancies. 
Several commenters mentioned that as an added benefit, the reduction in 
Board membership will also reduce costs for Board meetings, thereby 
leaving more funds available for watermelon research and promotion 
activities.
    One comment expressed concerns with the proposed rule. The 
commenter expressed concern that the justification for the Board's 
recommendation was ambiguous because the ``other relevant factors'' 
considered as part of the Sec.  1210.320(c) review were not formally 
defined or explained in the proposal. At its October 26, 2019 Board 
meeting, which was open to the public, the Board discussed three 
relevant factors in addition to the production and import data 
presented in the proposal. First, Board members shared their 
observations that consolidation in the watermelon industry over the 
past decade had substantially reduced the number of eligible producers 
and handlers in the production districts as they are currently drawn. A 
related issue also discussed was the fact that despite concerted 
outreach efforts, obtaining enough candidates and nominees to be 
considered for appointment to the Board had become extremely difficult 
in recent years. Finally, several members observed that attendance at 
Board meetings has declined to the point where it is consistently 
difficult to ensure a quorum.
    No changes have been made to the proposed rule based on the 
comments received.
    After consideration of all relevant matters presented, including 
the information and recommendation submitted by the Board, the comments 
received, and other relevant information, it is hereby found that this 
rule, as hereinafter set forth, is consistent with and would effectuate 
the purposes of the Act.

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 
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. In Sec.  1210.321, revise 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. In Sec.  1210.403, revise 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.
* * * * *

[[Page 56475]]


0
4. Revise Sec.  1210.501 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.
    (g) 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. Revise Sec.  1210.502 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, Agricultural Marketing Service.
[FR Doc. 2020-17581 Filed 9-11-20; 8:45 am]
BILLING CODE P