[Federal Register Volume 87, Number 72 (Thursday, April 14, 2022)]
[Rules and Regulations]
[Pages 22108-22110]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-08001]


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

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 986

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


Decreased Assessment Rate for Pecans Grown in 15 States

AGENCY: Agricultural Marketing Service, Department of Agriculture 
(USDA).

ACTION: Final rule.

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

SUMMARY: This rule decreases the assessment rate established for the 
2021-22 fiscal year and subsequent fiscal years. The assessment rate 
will remain in effect indefinitely unless modified, suspended, or 
terminated.

DATES: Effective May 16, 2022.

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

SUPPLEMENTARY INFORMATION: This action, pursuant to 5 U.S.C. 553, 
amends regulations issued to carry out a marketing order as defined in 
7 CFR 900.2(j). This 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 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 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. USDA has determined this 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 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 will 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 
rule decreases 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 Agricultural 
Marketing Service (AMS), 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 AMS 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 AMS upon recommendation and information 
submitted by the Council or other information available to AMS.
    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

[[Page 22109]]

$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 are 
funded through the collection of assessments from U.S. growers and 
foreign 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 new rate, along with interest income, MAP funds, and 
funds from the Council's authorized reserve, should be adequate to 
cover projected budgeted expenses of $9,002,508. Funds in the reserve 
are estimated to be $2,800,000 at the end of the 2021-22 fiscal year, 
which is within the maximum permitted by Sec.  986.64 of the Order 
(approximately three fiscal years' expenses).
    The assessment rate will continue in effect indefinitely unless 
modified, suspended, or terminated by AMS upon recommendation and 
information submitted by the Council or other available information.
    Although these assessment rates will 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 AMS. 
Council meetings are open to the public and interested persons may 
express their views at these meetings. AMS will 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 will be reviewed and, as appropriate, 
approved by AMS.

Final 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 rule on small entities. 
Accordingly, AMS has prepared this final 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 per pound. 
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 per pound 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 action decreases 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 
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 assessment rates are $0.02 per pound 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, will 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 
will be carried 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,

[[Page 22110]]

program activities should 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 
new 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 will 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. Like all Council meetings, the September 22, 2021, meeting was 
a public meeting and all entities, both large and small, were able to 
express views on this issue.
    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 are 
necessary as a result of this rule. Should any changes become 
necessary, they would be submitted to OMB for approval.
    This rule imposes no 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. As noted in the initial regulatory 
flexibility analysis, AMS 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.
    A proposed rule concerning this action was published in the Federal 
Register on December 6, 2021 (86 FR 68934). Copies of the proposed rule 
were also mailed or sent via email to all pecan handlers. The proposal 
was made available through the internet by AMS and the Office of the 
Federal Register. A 30-day comment period ending January 5, 2022, was 
provided for interested persons to respond to the proposal.
    No comments were received. Accordingly, no changes will be made to 
the rule as proposed.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: 
https://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, AMS has determined that this rule will tend to 
effectuate the declared policy of the Act.

List of Subjects in 7 CFR Part 986

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

    For the reasons set forth in the preamble, the Agricultural 
Marketing Service is amending 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 rate.

    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. 2022-08001 Filed 4-13-22; 8:45 am]
BILLING CODE P