[Federal Register Volume 86, Number 231 (Monday, December 6, 2021)]
[Proposed Rules]
[Pages 68934-68937]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-26236]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 986

[Doc. No. AMS-SC-21-0080; SC21-986-2]


Decreased Assessment Rate for Pecans Grown in 15 States

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would implement a recommendation from the 
American Pecan Council (Council) to decrease the assessment rate 
established for the 2021-22 and subsequent fiscal years. The proposed 
assessment rate would remain in effect indefinitely unless modified, 
suspended, or terminated.

DATES: Comments must be received by January 5, 2022.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposed rule. Comments must be submitted to the Docket 
Clerk electronically by Email: [email protected] 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 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: Abigail Campos, Marketing Specialist, 
or Christian D. Nissen, Regional Director, Southeast Region Branch, 
Market Development 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, Market Development Division, 
Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW, STOP 
0237,

[[Page 68935]]

Washington, DC 20250-0237; Telephone: (202) 720-2491, or Email: 
[email protected].

SUPPLEMENTARY INFORMATION: This action, pursuant to 5 U.S.C. 553, 
proposes to amend 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 Marketing Order No. 986, as amended (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 12866 and 13563. 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.
    This proposed rule has been reviewed under Executive Order 13175--
Consultation and Coordination with Indian Tribal Governments, which 
requires agencies to consider whether their rulemaking actions would 
have tribal implications. AMS has determined that this proposed rule is 
unlikely to have substantial direct effects on one or more Indian 
tribes, on the relationship between the Federal Government and Indian 
tribes, or on the distribution of power and responsibilities between 
the Federal Government and Indian tribes.
    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. Under the Order now in effect, pecan handlers are 
subject to assessments. Funds to administer the Order are derived from 
such assessments. It is intended that the assessment rates would be 
applicable to all assessable pecans for the 2021-22 fiscal year, and 
continue until amended, suspended, or terminated.
    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. Such 
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.
    The Order provides that based on the recommendation of the Council 
or other available data, the Secretary shall fix three base rates of 
assessments for inshell pecans handled during each fiscal year. This 
proposed rule would decrease the assessment rates from $0.03 per pound 
for improved varieties and $0.02 per pound for native and seedling 
varieties and for substandard pecans, the rates that were established 
for the 2016-17 and subsequent fiscal years, to $0.01 per pound for 
improved varieties and $0.00 per pound for native and seedling 
varieties and for substandard pecans handled for the 2021-22 and 
subsequent fiscal years.
    The Order authorizes the Council, with the approval of USDA, to 
formulate an annual budget of expenses and collect assessments from 
handlers to administer the program. The members of the Council are 
familiar with the Council's needs and with the costs of goods and 
services in their local area and can formulate an appropriate budget 
and assessment rates. The assessment rates are formulated and discussed 
in a public meeting and all directly affected persons have an 
opportunity to participate and provide input.
    For the 2016-17 and subsequent fiscal years, the Council 
recommended, and USDA approved, assessment rates of $0.03 per pound for 
improved varieties and $0.02 per pound for native and seedling 
varieties and for substandard pecans handled. The assessment rates 
continue in effect from fiscal year to fiscal year unless modified, 
suspended, or terminated by USDA upon recommendation and information 
submitted by the Council or other information available to USDA.
    The Council held a virtual meeting on September 22, 2021, and 
recommended 2021-22 expenditures of $9,002,508, and a decreased 
assessment rate of $0.01 per pound of improved varieties, and $0.00 per 
pound for native and seedling varieties and for substandard pecans. In 
comparison, the previous fiscal year's budget expenditures were 
$11,741,400. The assessment rate for improved varieties of $0.01 and 
the assessment rate of $0.00 for native and seedling varieties and for 
substandard pecans are $0.02 lower than the rates currently in effect.
    On February 12, 2021, USDA established the Pecan Promotion, 
Research and Information Order, a new research and promotion program. 
Under the new program, research and promotion activities for pecans 
would be funded through the collection of assessments from U.S. growers 
and importers.
    With the new program in effect, the Council recommended reducing 
expenditures for research and promotion under the Order. With these 
reductions, total budgeted expenditures for 2021-22 are estimated at 
$9,002,508 which is $2,738,892 less than the $11,741,400 budgeted for 
2020-21. The Council unanimously voted to decrease the assessment rates 
to reflect the reduction in expenditures, and to offset the assessments 
collected under the new program so the assessment burden on the 
industry does not increase.
    The major expenditures for the Council for the 2021-22 year include 
$2,510,000 for international relations, $2,180,000 for marketing, and 
$1,447,066 for general administration. Budgeted expenses for these 
items in 2020-21 were $1,968,000, $6,715,000, and $1,425,000, 
respectively.
    The Council derived the recommended assessment rates by considering 
anticipated expenses, expected shipments of pecans, Market Access 
Program (MAP) funds, and the amount of funds available in the 
authorized reserve. Assessable shipments for the year are an estimated 
315 million pounds of improved varieties, which should provide 
approximately $3,150,000 in assessment income (315,000,000 pounds 
multiplied by $0.01). Income derived from handler assessments 
calculated at the proposed rate, along with interest income, MAP funds, 
and funds from the Council's authorized reserve, would be adequate to 
cover projected budgeted expenses of $9,002,508. Funds in the reserve 
are

[[Page 68936]]

estimated to be $2,800,000 at the end of the 2021-22 fiscal year, which 
would be within the maximum permitted by Sec.  986.64 of the Order 
(approximately three fiscal years' expenses).
    The proposed assessment rate would continue in effect indefinitely 
unless modified, suspended, or terminated by USDA upon recommendation 
and information submitted by the Council or other available 
information.
    Although these assessment rates would be in effect for an 
indefinite period, the Council will continue to meet prior to or during 
each fiscal year to recommend a budget of expenses and consider 
recommendations for modification of the assessment rates. The dates and 
times of Council meetings are available from the Council or USDA. 
Council meetings are open to the public and interested persons may 
express their views at these meetings. USDA would evaluate Council 
recommendations and other available information to determine whether 
modification of the assessment rates is needed. Further rulemaking 
would be undertaken as necessary. The Council's 2021-22 budget and 
those for subsequent fiscal years would be reviewed and, as 
appropriate, approved by USDA.

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 4,500 growers of pecans in the production 
area and approximately 150 handlers subject to regulation under the 
Order. Small agricultural growers are defined by the Small Business 
Administration (SBA) 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 the National Agricultural Statistics Service (NASS), 
the 2020-21 crop value was $435.28 million. With a crop size of 305.36 
million pounds, the season average grower price was $1.43. Dividing the 
$435.28 million crop value by the estimated number of pecan growers 
(4,500) yields an annual average receipts per grower estimate of 
$96,729. This is well below the SBA threshold for small growers.
    Evidence presented at the pecan marketing order promulgation 
hearing indicates an average handler margin of $0.58 per pound. Adding 
this margin to the average grower price of $1.43 for in-shell pecans 
yields an estimated annual handler price of $2.01 per pound. With a 
total 2020-21 utilization of 305.36 million pounds, the total estimated 
value of production at the handler level for the fiscal year was 
$613.77 million ($2.01 per pound multiplied by 305.36 million pounds). 
Dividing this $613.77 million figure by the number of handlers (150) 
yields an average annual receipts per handler estimate of $4.09 
million. This is well below the SBA threshold for small agricultural 
service firms. Assuming a normal distribution, the majority of pecan 
growers and handlers may be classified as small entities.
    This proposal would decrease the assessment rates collected from 
handlers for the 2021-22 and subsequent fiscal years from $0.03 to 
$0.01 per pound of improved varieties and from $0.02 to $0.00 per pound 
of native and seedling varieties and for substandard pecans handled. 
The Council recommended 2021-22 fiscal year expenditures of $9,002,508 
and proposed assessment rates of $0.01 per pound for improved varieties 
and $0.00 per pound for native and seedling varieties and for 
substandard pecans. The proposed assessment rates are $0.02 per pound 
for improved varieties and $0.01 per pound for native and seedling 
varieties lower than 2016-17 rates. The quantity of assessable pecans 
for the 2021-22 fiscal year is estimated at 315 million pounds. Thus, 
the $0.01 per pound for improved varieties and $0.00 per pound for 
native and seedling varieties and for substandard pecans rate should 
provide $3,150,000 in assessment income. Income derived from handler 
assessments, along with interest income, MAP funds, and funds from the 
Council's authorized reserve, would be adequate to cover budgeted 
expenses.
    The major expenditures projected by the Council for the 2021-22 
year include $2,510,000 for international relations, $2,180,000 for 
marketing, and $1,447,066 for general administration. Budgeted expenses 
for these items in 2020-21 were $2,510,000, $6,285,000, and $1,447,066, 
respectively.
    The Council recommended decreasing the assessment rates to reflect 
a reduction in research and promotion expenditures as these activities 
would be caried out by the new USDA research and promotion program also 
funded by the industry. Consequently, the Council recommended a 
corresponding decrease in the assessment rates to reflect the decrease 
in research and promotion expenditures.
    Prior to arriving at the estimated expenditures and assessment 
rates, the Council considered information from various sources, such as 
the Council's Governance Committee. Alternative expenditure levels were 
discussed by this Committee, based upon the relative value of various 
activities to the pecan industry, and the impact of the new research 
and promotion program. The Council determined that based on the 
information currently available, program activities would be 
appropriately funded, and no alternate expenditure levels were deemed 
appropriate.
    Using NASS data, a weighted average grower price for the past 3 
seasons (2018-19 through 2020-21) is $1.66 per pound. This provides a 
reasonable forecast of the average grower price for 2021-22 season. The 
proposed assessment rate of $0.01 per pound for improved varieties 
represents 0.6 percent of the $1.66 weighted average price (six tenths 
of one percent; $0.01 divided by $1.66 x 100).
    This action would decrease the assessment obligation imposed on 
handlers. Assessments are applied uniformly on all handlers, and some 
of the costs may be passed on to growers. However, decreasing the 
assessment rates reduces the burden on handlers and may also reduce the 
burden on growers.
    The September 22, 2021 Council meeting was widely publicized 
throughout the pecan industry. Meetings are held virtually or in a 
hybrid style. Participants have a choice whether to attend in person or 
virtually and can participate in the Council's deliberations on all 
issues. Interested persons are invited to submit comments on this 
proposed rule, including the regulatory and informational collection 
impacts of this action on small businesses.
    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 the OMB and assigned OMB No. 0581-0291 Federal 
Marketing Order for Pecans. No changes in those requirements would be 
necessary because of this proposed rule.

[[Page 68937]]

Should any changes become necessary, they would be submitted to OMB for 
approval.
    This proposed rule would not impose any additional reporting or 
recordkeeping requirements on either small or large pecan handlers. 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.
    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.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this proposed rule.
    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.
    After consideration of all relevant material presented, including 
the information and recommendations submitted by the Council and other 
available information, USDA has determined that this proposed rule is 
consistent with and will effectuate the purposes of the Act.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposed rule. 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, Pecans, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, Agricultural Marketing 
Service proposes to amend 7 CFR part 986 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. Section 986.161 is revised to read as follows:


Sec.  986.161  Assessment rates.

    On and after October 1, 2021, assessment rates of $0.01 per pound 
for pecans classified as improved, $0.00 per pound for pecans 
classified as native and seedling, and $0.00 per pound for pecans 
classified as substandard pecans are established.

Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2021-26236 Filed 12-3-21; 8:45 am]
BILLING CODE 3410-02-P