Pecan Promotion, Research, and Information Order

AGENCY:

Agricultural Marketing Service.

ACTION:

Final rule.

SUMMARY:

This rule establishes the Pecan Promotion, Research, and Information Order (Order). This rule also establishes the procedures for conducting a referendum to determine whether the continuation of the proposed Order is favored by domestic producers and importers of pecans. In addition, this rule announces the Agricultural Marketing Service's (AMS) approval of new pecan information collection requirements by the Office of Management and Budget (OMB) for the operation of the Order.

DATES:

Effective Date February 12, 2021. Collection of assessments as required by §§ 1223.52 and 1223.53 and compliance with reporting and recordkeeping requirements under §§ 1223.60 and 1223.61 will begin October 1, 2021.

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: Andrea.Ricci@usda.gov.

SUPPLEMENTARY INFORMATION:

This is issued pursuant to the Commodity Promotion, Research, and Information Act of 1996 (1996 Act) (7 U.S.C. 7411-7425).

As part of this rulemaking process, a proposed rule was published in the Federal Register on September 22, 2020 (85 FR 59610). That rule provided for a 60-day comment period, which ended on November 23, 2020. Fifty-four comments were received. All comments are addressed later in this final rule.

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 will not have substantial and direct effects on Tribal governments and will not have significant Tribal implications.

Executive Order 12988

This action 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 the 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 would 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 establishes the Pecan Promotion, Research, and Information Order (7 CFR part 1223) (Order). The purpose of the program is to strengthen the position of pecans in the marketplace, maintain and expand markets for pecans, and develop new uses for pecans. The proposal was submitted to USDA by the National Pecan Federation (NPF), an organization representing pecan growers and shellers across the United States whose mission is to promote, protect, and improve business conditions for the pecan industry. The program will be financed by an assessment on producers and importers and will be administered by a board of industry members selected by the Secretary. The initial assessment rate will be $0.02 per pound of inshell pecans and $0.04 per pound of shelled pecans produced within or imported to the United States. Entities that produce or import less than 50,000 pounds of inshell pecans (25,000 pounds of shelled pecans) on average for four fiscal periods (the fiscal period for which the exemption is claimed and the previous three fiscal periods) will be exempt from the payment of assessments. Assessment collection, along with the appropriate reporting and recordkeeping, will become effective October 1, 2021. This date aligns with the Order's fiscal period.

A referendum will be conducted among producers and importers to determine if pecan producers and importers favor the continuation of the program three years after the collection of assessment begins.

Legal Basis for Action

The Order is authorized under the 1996 Act which authorizes USDA to establish agricultural commodity research and promotion orders which may include a combination of promotion, research, industry information, and consumer information activities funded by mandatory assessments. These programs are designed to maintain and expand markets and uses for agricultural commodities.

The 1996 Act provides several optional provisions that allow the tailoring of orders for different commodities. Section 516 of the 1996 Act provides permissive terms for orders, and other sections provide for alternatives. For example, section 514 of the 1996 Act provides for orders applicable to (1) producers, (2) first handlers and others in the marketing chain as appropriate, and (3) importers (if imports are subject to assessments). Section 516 states that an order may include an exemption of de minimis quantities of an agricultural commodity; different payment and reporting schedules; coverage of research, promotion, and information activities to expand, improve, or make more efficient the marketing or use of an agricultural commodity in both domestic and foreign markets; a provision for reserve funds; a provision for credits for generic and branded activities; and assessment of imports.

In addition, section 518 of the 1996 Act provides for referenda to ascertain approval of an order to be conducted either prior to its going into effect or within three years after assessments first begin under the order. Pursuant to section 518 of the 1996 Act, an order may also provide for its approval in a referendum based upon different voting patterns. Section 515 provides for establishment of a board from among producers, first handlers and others in the marketing chain as appropriate, and importers, if imports are subject to assessment.

USDA currently oversees a marketing order for pecans grown in Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas, (7 CFR part 986) which is authorized under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674). The purpose of marketing orders, in general, is to stabilize market conditions, allowing industries to work together to solve marketing problems, and to improve profitability. The pecan marketing order authorizes collection of industry data; research and promotion activities; regulations on grade, size, quality, pack and container; and is financed by assessments paid by handlers of pecans grown in the production area.

The purpose of research and promotion programs, in general, is to provide a framework for agricultural industries to pool their resources and combine efforts to develop new markets, strengthen existing markets and conduct important research and promotion activities. The pecan research and promotion program will be national in scope, financed by an assessment on pecan producers and importers, and authorize research and promotion activities. USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.

Industry Background

The pecan industry is comprised of producers, shellers, accumulators, wholesalers, and importers that produce, process, and supply pecans for market. Pecans include any and all varieties or subvarieties, inshell or shelled, of Carya illinoinensis. Pecans are grown primarily in Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas. According to the most recent Census of Agriculture (2017), there are 15,608 operations with bearing acreage of pecans. Bearing acreage is greatest in Georgia with about 30 percent of the nationwide total, followed by Texas at 27 percent, Oklahoma at 22 percent, New Mexico at 11 percent, and Arizona at 4 percent. These five states generally account for about 95 percent of U.S. pecan production.

U.S. Supply and Consumption

Pecans are an alternate bearing crop, causing variability in production from year to year. Based on data from the National Agricultural Statistics Service (NASS), the 2014 to 2019 six-year average of total U.S. pecan production was almost 265 million pounds on an inshell basis, as shown in Table 1. Together, Georgia and New Mexico produced more than half of pecan volume nationwide.

From 2013 through 2016, pecan production averaged about 263 million pounds per year, and reached a peak in 2017 at nearly 305 million pounds. The following year, however, domestic production dropped 21 percent due to the destruction of the Georgia pecan crop by Hurricane Michael. The trend of U.S. pecan production is depicted in Chart 1.

In 2018, Hurricane Michael swept across the southern half of Georgia as a Category 3 storm. According to the University of Georgia Pecan Extension, this storm resulted in a loss of nearly half the expected 2018 crop and a loss of 17 percent of the state's pecan acreage. The effects of Hurricane Michael remain present as the 2019 Georgia crop was down nearly 30 percent from the average production of the six years prior to the storm. Prior to Hurricane Michael, Georgia was the top pecan-producing state in the U.S. Considering this, along with the state's recovery efforts, the University of Georgia Pecan Extension expects Georgia pecan production to rebound in the coming years. Pecan production nationwide began to increase in 2019, climbing six percent from 2018.

Table 2 shows U.S. pecan supply and utilization. Domestic production generally accounts for about 40 percent of the domestic supply, while imports account for nearly one-third, with beginning stocks just under 30 percent. Almost all pecans imported into the U.S. are from Mexico. Of these, 70 percent are shelled, and 30 percent are inshell.

Nearly half of the U.S. supply of pecans is consumed domestically each year. Per capita consumption has trended upward for the last four years, reaching a high of 1.20 inshell pounds in 2019. Compared to 2018 and to the 2013 to 2018 six-year average, 2019 per capita consumption is up 23 percent and 33 percent, respectively.

Exports

The U.S. exports about 24 percent of its pecan supply on average each year. Shelled pecans make up 60 percent of U.S. pecan exports, while inshell are 40 percent. Europe and Canada are the primary markets for shelled pecans with, on average, 49 percent and 24 percent, respectively, of total shelled exports. In Europe, the largest consumers of U.S. shelled pecans are the Netherlands, the United Kingdom, and Germany with 39 percent, 24 percent, and 15 percent, respectively, of total shelled exports to Europe. On average, about 94 percent of U.S. inshell exports go to Asia. Together, Hong Kong and China make up 72 percent of the Asian market for inshell pecan exports from the United States.

Competition

The pecan industry competes with other tree nut industries such as almonds, pistachios and walnuts. As Table 3 illustrates, sales by volume of pecans are 95 percent lower than sales of almonds, 74 percent lower than sales of walnuts, but 40 percent higher than sales of pistachios.

Prices received by growers, as shown in Table 4, are 25 percent lower for pecans than for almonds. Compared to other nuts, grower-received prices for pecans are 18 percent lower than those for pistachios, but double those for walnuts.

Price Trends

Chart 2 shows the trend of prices for pecans from 2013 to 2019. In recent years, pecan prices were at their highest in 2016 before dropping in the following two years. Prices increased slightly between 2018 and 2019 but are still down about 12 percent compared to the average of the previous six years.

Need for a Program

According to the NPF, the greatest challenge the pecan industry is facing is supply surpassing demand. Data from the International Nut and Dried Fruit Council and from the research compiled by the Boston Consulting Group, contracted by the NPF, show that the supply of pecans may exceed demand by 19 percent in 2028. The NPF believes the establishment of a national research and promotion program for pecans will help the industry address this challenge. NPF concluded that without a program funded by assessments from both domestically produced and imported pecans, the industry will not be able to meet the challenge of the approaching supply and demand imbalance.

In 2016, the U.S. pecan industry favored the establishment of a marketing order for pecans grown in Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas. The program authorizes collection of industry data; research and promotion activities; regulation of grade, size, quality, pack and container; and is financed by assessments paid by handlers of pecans grown in the production area. Over the past several years the marketing order program has launched marketing campaigns to increase demand for pecans. According to the NPF, the research and promotion program will benefit domestic producers and importers of pecans, thereby justifying the collection of assessments on both domestic production and imports.

The NPF proposal indicates that imported product accounts for approximately 39 percent of pecans being supplied to the U.S., with domestic production accounting for the other 61 percent. With mandatory assessments being collected only on domestic production, this has created a gap in the dollars available to fund marketing campaigns focused on creating increased demand for pecans in the U.S. and globally. Per the NPF, the increase in domestic production and imports has created the need for a robust promotion campaign, which would only be accomplished through financial contribution by both domestic producers and importers. The NPF concluded that the marketing order would continue to have an important role within the industry and the intent is that the two programs would work together to benefit the entire pecan industry.

Provisions of Program

Pursuant to section 513 of the 1996 Act, §§ 1223.1 through 1223.25 of 7 CFR part 1223 (referred to as the “Order”) define certain terms that will be used throughout the Order. Several of the terms are common to all research and promotion programs authorized under the 1996 Act, while other terms are specific to the pecans Order.

Pursuant to section 515 of the 1996 Act, §§ 1223.40 through 1223.47 of the Order detail the establishment of the American Pecan Promotion Board (Board), nominations and appointments, the term of office, removal and vacancies, procedure, compensation and reimbursement, powers and duties, and prohibited activities.

Pursuant to sections 516 and 517 of the 1996 Act, §§ 1223.50 through 1223.54 of the Order detail requirements regarding the Board's budget and expenses, financial statements, assessments, and exemption from assessments.

The Board's programs and expenses shall be funded through assessments on producers and importers, other income, and other funds available to the Board. The Order provides for an initial assessment rate of $0.02 per pound on all inshell pecans and $0.04 per pound on all shelled pecans. Each producer will pay on the amount of pecans produced in the United States. The importer of record will pay assessments based on the amount of pecans imported to the United States.

The Order provides that it is the responsibility of the first handler to collect and remit assessments owed to the Board. First handlers will collect assessments from each producer based on pounds of pecans received. The first handler will remit those assessments, along with the required reports, to the Board. If a producer is acting as its own first handler, the producer will be required to remit its individual assessments. Assessments owed will be due to the Board by the 10th calendar day of the month following the end of the previous month. As an example, assessments for pecans received in June will be due to the Board by July 10th.

Importer assessments will be collected through Customs and Border Protection (Customs). If Customs does not collect the assessment from an importer, the importer will be responsible for paying the assessment directly to the Board by the 10th calendar day of the month following the month the pecans were imported into the United States.

The Order provides authority for the Board to impose a late payment charge and interest for assessments not received within 30 calendar days of the date assessments were due. The late payment charge and rate of interest are prescribed in Subpart C of the Order.

The Order provides for two exemptions from assessment requirements. First, producers who produce domestically and importers that import less than 50,000 pounds of inshell pecans (25,000 pounds of shelled pecans) on average for four fiscal periods (the fiscal period for which the exemption is claimed and the previous three fiscal periods) will be exempt. Producers or importers seeking an exemption shall apply to the Board for an exemption prior to the start of the fiscal period. This is an annual exemption; entities must reapply each year. The Board will issue, if deemed appropriate, a certificate of exemption to the eligible producer or importer.

The second exemption under the Order is for organic pecans. The exemption applies to all certified “organic” or “100 percent organic” pecans, regardless of whether the pecans are produced by a person who produces conventional or nonorganic pecans. Likewise, an importer who imports pecans that are certified as “organic” or “100 percent organic” under the NOP, or certified as “organic” or “100 percent organic” under a U.S. equivalency arrangement established under the NOP, will be exempt from the payment of assessments.

Pursuant to section 516 of the 1996 Act, §§ 1223.55 through 1223.57 of the Order detail requirements regarding promotion, research and information programs, plans and projects authorized under the Order.

Pursuant to section 515 of the 1996 Act, §§ 1223.60 through 1223.62 of the Order specify the reporting and recordkeeping requirements under the Order as well as requirements regarding confidentiality of information.

Pursuant to section 518 of the 1996 Act, § 1223.71(a)(1) of the Order specifies that a referendum will be conducted not later than three years after assessments first begin under the Order. The Order will not continue unless it is approved by a majority of those persons voting in the referendum for approval.

Section 1223.71(b) of the Order specifies criteria for subsequent referenda. Under the Order, a referendum will be held to ascertain whether the program should continue, be amended, or terminated.

Sections 1223.70 and 1223.72 through 1223.78 describe the rights of the Secretary; authorize the Secretary to suspend or terminate the Order when deemed appropriate; prescribe proceedings after termination; address personal liability, separability, and amendments; and provide OMB control numbers. These provisions are common to all research and promotion programs authorized under the 1996 Act.

Sections 1223.100 through 1223.107 of the Order specify procedures for the conduct of referenda. The sections cover the definitions, voting instructions, use of subagents, ballots, the referendum report, and confidentiality of information.

Regulatory Flexibility Analysis

Pursuant to the requirements set forth in the Regulatory Flexibility Act (5 U.S.C. 601-612), USDA has considered the economic impact of this action on small entities. USDA has prepared this Final Regulatory Flexibility Analysis, the purpose of which 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.

Need for Regulation

NPF stated in its proposal that the greatest challenge facing the pecan industry is supply outpacing demand. Based on worldwide planting and crop data, NPF estimated that supply would exceed demand by 15 percent in 2027. NPF believes that the establishment of a national research and promotion program for pecans, funded by assessments on both domestic producers and importers, will help the industry address this challenge.

In 2016, the U.S. pecan industry favored the establishment of a marketing order for pecans grown in Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas. The program authorizes collection of industry data; research and promotion activities; regulations on grade, size, quality, pack and container; and is financed by assessments paid by handlers of pecans grown in the production area. Over the past several years, the marketing order program has launched marketing campaigns to increase demand for pecans.

According to the NPF, the research and promotion program will benefit domestic producers and importers of pecans, thereby justifying the collection of assessments on both domestic production and imports. The NPF proposal indicates that imported product accounts for approximately 39 percent of pecans being supplied to the United States. With mandatory assessments applied to both domestic production and imports, the Order will be able to fund marketing campaigns focused on creating increased demand for pecans in the United States and globally. The NPF concluded that the marketing order would continue to have an important role within the industry and the intent is that the two programs would work together for the benefit of the entire pecan industry. The research and promotion program would concentrate its efforts on activities that would maintain and expand markets for pecans, strengthening its position in the marketplace. The marketing order would continue its primary responsibility of collection and distribution of industry data to empower stakeholders with accurate and timely information. Additionally, the marketing order provides the authority for the pecan industry to make recommendations on grade, size, quality, pack and container requirements.

Objectives of the Action

The purpose of the Order is to strengthen the position of pecans in the marketplace, maintain and expand markets for pecans, and develop new uses for pecans.

Legal Basis for Action

The Order is authorized under the 1996 Act which authorizes USDA to establish agricultural commodity research and promotion orders which may include a combination of promotion, research, industry information, and consumer information activities funded by mandatory assessments. These programs are designed to maintain and expand markets and uses for agricultural commodities.

USDA currently administers a marketing order for pecans grown in Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas which is authorized under the Agricultural Marketing Agreement Act of 1937. The purpose of marketing orders, in general, is to stabilize market conditions, allowing industries to work together to solve marketing problem, improving profitability. Marketing order programs' mandatory assessments are paid by handlers within the designated production areas. The pecan marketing order authorizes collection of industry data; research and promotion activities; regulations on grade, size, quality, pack and container; and is financed by assessments paid by handlers of pecans grown in the production area.

The pecan research and promotion program is national in scope, financed by an assessment on pecan producers and importers, and authorizes research and promotion activities. The purpose of the Order is to strengthen the position of pecans in the marketplace, maintain and expand markets for pecans, and develop new uses for pecans. USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.

Potentially Affected Small Entities

In 13 CFR part 121, the Small Business Administration (SBA) defines the threshold at which an operation would be considered “small” based on its North American Industry Classification System (NAICS) Code. For Tree Nut Farming operations (NAICS Code 111335) and Fruit and Tree Nut Combination Farming operations (NAICS Code 111336), an operation is considered to be “small” if its annual receipts total no more than $1 million. This standard applies to U.S. pecan producers.

Importers and first handlers of inshell and shelled pecans (HTS Codes 0802901000 and 0802901500, respectively) belong to the industry classification of Postharvest Crop Activities (NAICS Code 115114). “Postharvest crop activities” include nut hulling and shelling, sorting, grading, packing, and cooling. An operation that meets this definition is considered to be “small”, per the SBA, if its annual receipts equal no more than $30 million. Table 5 depicts the number of pecan producers, importers, and handlers that would be considered small under these SBA standards.

According to the 2017 Census of Agriculture, published by NASS in 2019, there were 15,608 farms with pecan bearing acreage. Of these 15,608 farms, 440 sold pecans whose market value met or exceeded $1 million. Based on these figures, 97 percent of U.S. pecan producers are considered to be “small” under the SBA standards. USDA recognizes the potential inclusion in its count of “small” farms those farms whose sales of pecans were exactly $1 million in market value; however, USDA lacks the data to remedy this, and the number of farms who meet this criterion is likely quite small.

According to data from Customs, there were 190 importers of inshell and shelled pecans from 2014 to 2019. Of these, four importers had a six-year average sales value of pecans which exceeded $30 million. The portion of pecan importers that would be considered to be “small” under the SBA standards, therefore, is 98 percent.

The definition of a “small” importer also applies to a first handler; that is, annual receipts which exceed $30 million. According to the American Pecan Council (APC), there were 104 first handlers who reported pecans handled in crop year 2018. Of these, the APC estimates that about 75 percent recorded annual receipts exceeding $30 million.

Of the 15,902 total entities expected to be impacted by this action, including producers, importers, and first handlers, about 97 percent would be considered to be “small” according to their respective SBA size standards. While the benefits of the Order are difficult to quantify, the benefits are expected to outweigh the program's costs.

Compliance Requirements

This action imposes a reporting and recordkeeping burden on producers, importers, and first handlers of pecans. Producers and importers who domestically produce or import less than 50,000 pounds of inshell pecans (25,000 pounds of shelled pecans) on average for four fiscal periods (the fiscal period for which the exemption is claimed and the previous three fiscal periods) may submit to the Board an application for exemption from paying assessments. Of the 15,168 domestic producers considered to be small under SBA standards, 14,618 of them, or 96 percent, produced less than 50,000 pounds, inshell, of pecans, and will be exempt from assessment. Of the 186 importers considered to be small under SBA standards, 119 of them, or 64 percent, imported less than 50,000 pounds, inshell of pecans, and will also be exempt from assessment. The reporting and recordkeeping burden to file an application for exemption from assessment will impact a total of 14,737 producers and importers considered to be small under their respective SBA size standards. Importers, and first handlers, who collect the assessments from producers, will be required to file a report listing pecans imported or received from each producer. This report will place a reporting and recordkeeping burden on a total of 149 importers and first handlers considered to be small under their SBA size standard of annual receipts of no more than $30 million.

These forms have been submitted to OMB for approval under OMB Control No. 0581-NEW. Specific burdens for the forms are detailed later in this document in the section titled Paperwork Reduction Act. As with all Federal promotion programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

Alternatives To Minimize Impacts of the Rule

Regarding alternatives, USDA considered de minimis exemptions of 30 acres of pecans, 1,000 pounds, inshell, of pecan volume, and $1 million in annual pecan sales receipts. These alternatives, which are fully discussed in the section titled De Minimis in the proposed rule, were rejected in favor of the industry-proposed de minimis exemption of 50,000 pounds, inshell, or 25,000 pounds, shelled. USDA also considered the alternative of no action; that is, the status quo. This alternative, however, would leave the pecan industry without the tools of a research and promotion program to strengthen the position of pecans in the marketplace, maintain and expand markets for pecans, and develop new uses for pecans. In place of a research and promotion program, the NPF discussed amending the Agricultural Marketing Agreement Act of 1937, which provides authority for the pecan marketing order. The NPF stated in its proposal for a pecan research and promotion program that it decided not to move forward with this alternative due to the time and costs involved in amending U.S. law.

Outreach

Regarding outreach efforts, NPF conducted sessions earlier in 2020 throughout the United States in different States and regions. Many were held in conjunction with regional and state organization meetings where both pecan producers and importers participated. They also presented at the National Pecan Shellers Association (NPSA) mid-winter conference. NPSA supports and promotes the interest of pecan shellers and the global industry. Approximately 13 sessions were held across the United States. NPF also had information regarding the proposed program published in April 2020 editions of the “The Pecan Grower” and “Pecan South” magazines. “The Pecan Grower” is the official publication of the Georgia Pecan Growers Association, with nearly three thousand subscribers including growers, researchers, extension agents and agribusinesses. “Pecan South” is a magazine for growers, processors, commercial vendors, and those interested in pecans. It provides to its more than forty-six hundred subscribers U.S. pecan production information; industry news and events; and market-related issues, both domestic and international. In the articles, NPF elaborated the work it has been doing to establish a research and promotion program for pecans that would assess producers and importers.

On June 9, 2020, AMS published a Notice to Trade alerting the industry that it had received a proposal from the NPF requesting the establishment of a research and promotion program for pecans. A proposed rule providing a 60-day comment period was published in the Federal Register on September 22, 2020 (85 FR 59610). AMS published a Notice to Trade on September 22, 2020, alerting the industry that it was seeking comments on the proposal. Subsequently, AMS sent a postcard and an email to all known pecan producers and importers notifying them of the Federal Register published proposal.

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.

Paperwork Reduction Act

In accordance with the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. Chapter 35), AMS requested approval of new information collection and recordkeeping requirements for the pecan program.

Title: Advisory Committee or Research and Promotion Background Information.

OMB Number for background form AD-755: (Approved under OMB No. 0505-0001).

Expiration Date of Approval: 03/31/2022.

Title: National Research, Promotion, and Consumer Information Programs.

Expiration Date of Approval: 3 years from approval date.

Type of Request: New information collection for research and promotion programs.

Abstract: The information collection requirements in the request are essential to carry out the intent of the 1996 Act. The information collection concerns a new national research and promotion program for the pecan industry. The program will be financed by an assessment on pecan producers and importers and will be administered by a board of industry members selected by the Secretary. The program will provide for an exemption for producers who produce domestically and importers that import less than 50,000 pounds of inshell pecans (25,000 pounds of shelled pecans) on average for four fiscal periods (the fiscal period for which the exemption is claimed and the previous three fiscal periods). A referendum will be held among eligible producers and importers to determine whether they favor implementation of the program not later than three years after assessments first begin under the Order. The purpose of the program will be to strengthen the position of pecans in the marketplace, maintain and expand markets for pecans, and develop new uses for pecans within the United States.

In summary, the information collection requirements under the program concern Board nominations, exemption applications, the collection and refund of assessments, and referenda. For Board nominations, producers and importers interested in serving on the Board will be asked to submit a “Nomination Form” to the Board indicating their desire to serve or to nominate another industry member to serve on the Board. Interested persons may also submit a background statement outlining qualifications to serve on the Board. Except for the initial Board nominations, producers and importers will have the opportunity to submit a “Nomination Ballot” to the Board where they will vote for candidates to serve on the Board. Nominees will also have to submit a background information form, “AD-755,” to the Secretary to ensure they are qualified to serve on the Board. Organizations representing importers will be able to be certified by the Secretary and have an opportunity to nominate importer members. Those such organizations must submit the form “Application for Certification of Organization.”

Regarding assessments, producers and importers who domestically produce and import less than 50,000 pounds of inshell pecans (25,000 pounds of shelled pecans) on average for four fiscal periods (the fiscal period for which the exemption is claimed and the previous three fiscal periods), will be exempt from assessments. Producers or importers shall apply to the Board for an exemption prior to the start of the fiscal period. This will be an annual exemption; entities will have to reapply each year. Producers or importers may submit a request, “Application for Exemption from Assessments,” to the Board for an exemption from paying assessments. Producers and importers who qualify as “organic” or “100 percent organic” under the NOP may submit an “Organic Exemption Form” to the Board and request an exemption from assessments.

First handlers who receive assessments from producers will be asked to submit a “First Handler/Importer Report” that will accompany their assessments paid to the Board and report the quantity of pecans received during the applicable period, the quantity for which assessments were paid, contact information for whom they collected the assessment, and the country of export (for imports). Additionally, only importers who pay their assessments directly to the Board will be required to submit a report. As previously mentioned, the majority of importer assessments will be collected by Customs. Customs will remit the funds to the Board and the other information will be available from Customs (i.e., country of export, quantity of pecans imported).

Importers and producers who are exempt and whose assessments were collected, either by Customs or a first handler, may also request a refund of any assessments paid to the Board. Producers and importers may also file a form to request a refund of assessments paid if the referendum fails to pass. A referendum will be conducted not later than three years after the assessments first begin to determine if producers and importers favor continuance of the Order.

Lastly, producers and importers eligible to vote in a referendum will have to complete a ballot to determine whether the research and promotion program would continue.

Information collection requirements that are included in this rule include:

(1) Nomination Form

Estimate of Burden: Public recordkeeping burden for this collection of information is estimated to average 0.25 hour per application.

Respondents: Producers and importers.

Estimated Number of Respondents: 50.

Estimated Number of Responses per Respondent: 1.

Estimated Total Annual Burden on Respondents: 12.5 hours.

(2) Background Statement

Estimate of Burden: Public recordkeeping burden for this collection of information is estimated to average 0.25 hour per application.

Respondents: Producers and importers.

Estimated Number of Respondents: 50.

Estimated Number of Responses per Respondent: 1.

Estimated Total Annual Burden on Respondents: 12.5 hours.

(3) Nomination Ballot

Estimate of Burden: Public recordkeeping burden for this collection of information is estimated to average 0.25 hour per application.

Respondents: Producers and importers.

Estimated Number of Respondents: 900.

Estimated Number of Responses per Respondent: 1.

Estimated Total Annual Burden on Respondents: 225 hours.

(4) Background Information Form AD-755 (OMB Form No. 0505-0001)

Estimate of Burden: Public reporting for this collection of information is estimated to average 0.5 hour per response for each Board nominee.

Respondents: Producers and importers.

Estimated number of Respondents: 11 (34 for initial nominations to the Board, 0 for the second year, and up to 11 annually thereafter).

Estimated number of Responses per Respondent: 1 every 3 years. (0.3)

Estimated Total Annual Burden on Respondents: 17 hours for the initial nominations to the Board, 0 hours for the second year of operation, and up to 5.5 hours annually thereafter.

(5) Application for Certification of Organization

Estimate of Burden: Public reporting burden for this collection of information is estimated to average 0.25 hour.

Respondents: Importer organizations.

Estimated Number of Respondents: 5.

Estimated Number of Responses per Respondent: 1.

Estimated Total Annual Burden on Respondents: 2.5 hours.

(6) Application for Exemption From Assessments

Estimate of Burden: Public reporting burden for this collection of information is estimated to average 0.25 hour per producers or importer reporting on pecans produced domestically or imported. Upon approval of an application, producers and importers would receive exemption certification.

Respondents: Producers and importers who produce or import less than 50,000 pounds of inshell pecans (25,000 pounds of shelled pecans) on average for four fiscal periods (the fiscal period for which the exemption is claimed and the previous three fiscal periods).

Estimated number of Respondents: 14,737.

Estimated number of Responses per Respondent: 1.

Estimated Total Annual Burden on Respondents: 3,684 hours.

(7) Organic Exemption Form

Estimate of Burden: Public recordkeeping burden for this collection of information is estimated to average 0.5 hours per exemption form.

Respondents: Organic producers and importers.

Estimated Number of Respondents: 50.

Estimated Number of Responses per Respondent: 1.

Estimated Total Annual Burden on Respondents: 25 hours.

(8) First Handler/Importer Report

Estimate of Burden: Public reporting burden for this collection of information is estimated to average 0.25 hour per first handler or importer.

Respondents: First handlers who collect assessments from producers who produce over 50,000 pounds of inshell pecans (25,000 pounds of shelled pecans) on average for four fiscal periods (the current fiscal period and the previous three fiscal periods) and importers that do not remit through Customs.

Estimated number of Respondents: 175.

Estimated number of Responses per Respondent: 12.

Estimated Total Annual Burden on Respondents: 525 hours.

(9) Application for Reimbursement of Assessments

Estimate of Burden: Public reporting burden for this collection of information is estimated to average 0.25 hour.

Respondents: Producers and importers.

Estimated Number of Respondents: 170.

Estimated Number of Responses per Respondent: 1.

Estimated Total Annual Burden on Respondents: 42.5 hours.

(10) Application for Refund of Assessments Paid From Escrow

Estimate of Burden: Public reporting burden for this collection of information is estimated to average 0.25 hour.

Respondents: Producers and importers.

Estimated Number of Respondents: 900.

Estimated Number of Responses per Respondent: 1.

Estimated Total Annual Burden on Respondents: 225 hours.

(11) Referendum Ballot

Estimate of Burden: Public reporting burden for this collection of information is estimated to average 0.25 hour.

Respondents: Producers and importers.

Estimated Number of Respondents: 900.

Estimated Number of Responses per Respondent: 0.14 (after first referendum one would occur once every 7 years).

Estimated Total Annual Burden on Respondents: 31.50 hours.

(12) A Requirement To Maintain Records Sufficient To Verify Reports Submitted Under the Order

Estimate of Burden: Public recordkeeping burden for keeping this information is estimated to average 0.5 hours per record keeper maintaining such records.

Recordkeepers: Producers, first handlers and importers.

Estimated number of recordkeepers: 15,902.

Estimated total recordkeeping hours: 7,951 hours.

As noted above, under the program, producers through first handlers, and importers will be required to pay assessments and file reports with and submit assessments to the Board (importers through Customs). While the Order will impose certain recordkeeping requirements on producers, first handlers, and importers, information required under the Order may be compiled from records currently maintained. Such records shall be retained for at least three years beyond the fiscal period of their applicability.

An estimated 15,902 respondents will provide information to the Board (15,608 producers, 104 first handlers, and 190 importers). The estimated cost of providing the information to the Board by respondents would be $606,046. This total has been estimated by multiplying 12,753.5 hours by ($36.08 hourly wage × 0.317 benefits = $11.44 (benefits) + $36.08 (wage) = $47.52), $47.52 for the average mean hourly earnings of producers and importers plus benefits.

Data for computation of the hourly rate for producers (Occupation Code 11-9013: Farmers, Ranchers, and other Agricultural Managers = $38.63) and importers (Occupation Code 13-1020: Buyers and Purchasing Agents = $33.53) was obtained from the U.S. Department of Labor's Bureau of Labor Statistics. The average of the producer and importer wages is $36.08. Data for computation of this hourly wage were obtained from the U.S. Department of Labor Statistics' publication, “May 2019 National Occupation Employment and Wage Estimates in the United States,” updated May 31, 2019. This publication can also be found at the following website: https://www.bls.gov/oes/current/oes_nat.htm#45-0000 . Data for the benefit costs of 31.7 percent was obtained by U.S. Department of Labor's Bureau of Labor Statistics press release dated Dec. 14, 2018.

The Order's provisions have been carefully reviewed, and every effort has been made to minimize any unnecessary recordkeeping costs or requirements, including efforts to utilize information already submitted under other programs administered by USDA and other state programs. USDA currently oversees a marketing order for pecans grown in Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas, which is authorized under the Agricultural Marketing Agreement Act of 1937. This program collects information to facilitate the administration of the program. The information collected by the marketing order has been carefully reviewed and it was determined that the information collected could not be utilized to facilitate the administration of the research and promotion program. The forms will require the minimum information necessary to effectively carry out the requirements of the program, and their use is necessary to fulfill the intent of the 1996 Act. Such information can be supplied without data processing equipment or outside technical expertise. In addition, there are no additional training requirements for individuals filling out reports and remitting assessments to the Board. The forms will be simple, easy to understand, and place as small a burden as possible on the person required to file the information.

Collecting information monthly will coincide with normal industry business practices. The timing and frequency of collecting information are intended to meet the needs of the industry while minimizing the amount of work necessary to fill out the required reports. The requirement to keep records for three years is consistent with normal industry practices. In addition, the information to be included on these forms is not available from other sources because such information relates specifically to individual producers, first handlers and importers who are subject to the provisions of the 1996 Act. Therefore, there is no practical method for collecting the required information without the use of these forms.

In the September 22, 2020, proposed rule, comments were also invited on the information collection requirements prescribed in the Paperwork Reduction Act section of this rule. Specifically, comments were solicited on: (a) Whether the collection of information is necessary for the proper performance of functions of the Order and USDA's oversight of the Order, including whether the information would have practical utility; (b) the accuracy of USDA's estimate of the burden of the collection of information, including the validity of the methodology and assumptions used; (c) the accuracy of USDA's estimate of the principal producing areas in the United States for pecans; (d) the accuracy of USDA's estimate of the number of producers, first handlers and importers of pecans that will be covered under the program; (e) ways to enhance the quality, utility, and clarity of the information to be collected; and (f) ways to minimize the burden of the collection of information on those who are to respond, including the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.

Four comments were received regarding information collection. All four commenters believed that the estimated recordkeeping burden of 7,951 hours was overstated by 100 percent. They reasoned that none of the information required by the Order would be in addition to any of the information normally kept and already required by normal accounting, state and Federal Tax preparation and other USDA programs. The estimated recordkeeping burden hours are the hours associated with maintaining records to verify reports required by the Order. While it is understood that some of the information required under the Order may be compiled from records currently maintained, there may be additional records not currently maintained that would be needed to verify the reports required by the Order. Furthermore, the estimated burden is nominal and is a customary estimated burden associated with programs such as these. In addition, three of the commenters stated that the First Handler/Importer Report should be estimated at .08333 hours per record keeper, not the .5 hours in the proposed rule. This was based on their experience of having to file similar forms as required by the Federal marketing order. After further review of the form and similar forms required under other research and promotion programs, USDA decreased the burden estimate to 0.25 hours. This has been reflected in the PRA section above.

Analysis of Comments

Fifty-four comments were received in response to the proposed rule. Of those 54 comments, 28 indicated support for the proposed action, 16 provided general feedback or suggested changes, six opposed the action, two were outside the scope of the rulemaking, one was a duplicate, and there was one standalone comment regarding the PRA section.

General Comments in Support

A majority of the commenters expressed their confidence that the proposed program would grow consumer demand for pecans, expanding markets, while helping offset the current imbalance between supply and demand. Several commenters found that being able to assess both domestic and imported product would increase the resources available to create demand and would allow a more unified strategy. Comments were received from several state and national pecan associations voicing their support for the proposed program, agreeing that the proposed research and promotion program will provide the pecan industry with more funds to help promote and drive demand. Commenters discussed the challenges the pecan industry has faced the last several years, and that while the proposed program will not address all of these challenges, it is a step in the right direction. Six commenters simply expressed their support for the proposed program.

Comments in Opposition

Six comments received were opposed to the program. Four of the commenters stated that producers are already paying an assessment for the Federal marketing order program, which is tasked with promoting pecans, and are not in favor of having another promotion program that will assess producers. One commenter noted that the pecan industry already has many national and state level trade organizations and that the industry does not need another. Instead of the proposed program, the commenter advocated for a consolidated effort and strategy between these organizations to insure a more efficient research, promotion and marketing effort. As is addressed in this rule, Federal marketing orders and research and promotion orders are created pursuant to different laws and provide for different activities. The Federal marketing order assessment obligations are imposed on handlers, although some of the costs may be passed on to producers. Producers and importers are obligated to pay the assessment under the research and promotion Order. A comment submitted by the American Pecan Council (APC) (the Federal marketing order governing body) committed to ensuring, with the establishment of the new Order, that the domestic pecan industry does not pay more than the total assessment amount that is currently obligated under the Federal marketing order. It indicated it would therefore recommend reducing the assessment obligated under the Federal marketing order should the research and promotion program be established. Under Federal marketing orders assessment rates are intended to be applicable to each fiscal year. The pecan marketing order fiscal period is October 1 through September 30, which is the same as the Order. With the assessment obligation under the Order beginning October 1, 2021, this would allow the APC adequate time to review and recommend its assessment rate for its 2021-22 fiscal year, ensuring its commitment to the industry.

Commenters noted the continued decline in producer price over the last couple of years and that producers cannot afford to fund this program. According to NASS statistics, grower received price per pound (in shell basis) for the six-year period from 2013-2019, have ranged from a low of $1.73 in 2013, to a high of $2.59 in 2016, with the six-year average of $2.11. The reported prices for years 2017, 2018, and 2019, were $2.33, $1.75, and $1.84, respectively. Based on this historical information, pecan grower received prices for upcoming years could range between $1.73 and $2.59 per pound. Utilizing these historical figures, the estimated assessment cost as a percentage of grower received price, could range from approximately 1.15 percent to .78 percent ($0.02 divided by $1.73 and $2.59, respectively). While there is a cost associated with the program, they are expected to be offset by the identified benefits of the Order. As was stated previously, the purpose of the Order would be to create increased demand for pecans, strengthening the overall viability of the industry. One comment stated that the government should fund the program instead of producers. The 1996 Act prescribes that such programs are financed by an assessment on producers and importers, and does not provide the authority for the government to pay for such programs.

One commenter expressed concern that exempt producers will not be aware of the need to submit a form to apply for the exemption and that it is too much of a burden on the handler to secure those forms from the exempt producers. It would be the task of the Board to educate the industry on the Order provisions, working directly with producers who would be required to submit the exemption forms.

Several commenters expressed concern regarding the composition of the proposed Board, stating that assurances need to be made that for the producer member positions just growers, not dual-role entities such as grower/shellers or grower/marketers, are represented on the Board. In making recommendations to the Secretary for appointments to the Board, the Order states that industry members should consider operation size, production and distribution methods, and other factors to ensure adequate representation of assessed entities. In addition, the Order provides that the Board has the authority to consider recommending additional eligibility requirements for members of the Board.

General Comments and Suggested Modifications

Some comments provided general comments or/and suggested modifications to the Order. One commenter suggested that the establishment of the American Pecan Promotion Board should be apportioned equally among the three identified regions, citing that this adjustment accounts more fairly for the nature of pecan production as an alternate-year bearing crop. The 1996 Act requires that the composition of the board reflect the geographical distribution of production. As was discussed in the proposed rule in the Establishment of the Board section, USDA did an in-depth analysis of production data from the past six years to account for the nature of pecans being an alternate bearing crop. The analysis took into consideration the crop loss in Georgia due to the hurricane in 2018 by applying lesser weight to the production volumes of 2018 and 2019 and placing greater weight on the production volumes of 2014 through 2017. Based on the analysis of the available data, the distribution of seats among the regions reflects the distribution of production in those regions. The Order allows for the Board to revisit the distribution of seats on the Board at least once every five years and recommend any changes to the Secretary for consideration.

Three commenters suggested that eligible producer members should have a majority of their income derived from the production of pecans to ensure that producer interests are represented on the Board. The commenters noted that it is common to have vertically integrated businesses that do not solely identify as producers, but also as shellers. The commenters argued that to be eligible to represent producers on the Board, the majority of income derived needs to be from the production of pecans and not shelling. One commenter believed that industry members should not be able to serve on the American Pecan Council and the Board at the same time. As was previously mentioned, the Order provides that when making recommendations to the Secretary for appointment of members to the Board industry members should consider size of operations, methods of production and distribution, and other factors to ensure adequate representation of assessed entities. The Order also provides that the Board may recommend amendments to the representation of membership provisions. Once the Board is established, it could consider recommending additional eligibility requirements for producer members.

Three commenters stated that the assessment should be higher on imported product. The 1996 Act requires that, should imports be assessed, the rate be comparable to that of the domestic product. Two commenters sought clarification regarding the entity obligated to pay the assessment rate required under the Federal marketing order in comparison to the assessment rate under the research and promotion program. Domestic handlers are obligated to pay assessments under the Federal marketing order. Domestic producers are obligated to pay assessments under the research and promotion program. In addition, the laws authorizing these programs do not allow for the assessment obligation to be met by a different entity than those subject to its respective law.

One commenter raised concerns over the entity that would conduct referenda under the Order, specifically stating that the proposed rule did not clearly define “referendum agents.” All referenda are administered by the USDA and its employees. Referendum agents are those USDA employees who conduct the referendum.

Several commenters expressed that the program should first and foremost support domestic producers. As was stated in the Background section of this rule, the purpose of research and promotion programs, in general, is to provide a framework for agricultural industries to pool their resources and combine efforts to develop new markets, strengthen existing markets and conduct important research and generic promotion activities.

One commenter expressed concerns regarding the proposed assessment's impact on small growers in Mexico. The commenter stated that while importers of record will be obligated to pay the assessment, the cost will eventually be passed-on to the grower. The Order obligates the importer of record to pay the assessment. Although, some of the costs may be passed on to producers, these costs are expected to be offset by the benefits derived by the operation of the Order. Furthermore, contracts between grower and importers are individual business decisions between the two parties. Such business decisions are outside the scope of the Order.

One commenter asked that all marketing logos and marketing materials be made available, with Board approval, to Mexican shellers and importers, for promoting pecans in the international marketplace. Once a Board is appointed, it will work with the industry to develop marketing materials and logos for industry use to generically promote pecans in the marketplace.

Two commenters asked several questions regarding the different initiatives regarding research, development of uses of pecans, and strategic planning. With the establishment of the Order and appointment of the Board, the Board will begin implementing programs, plans, and projects addressing research and marketing priorities.

Three commenters raised issues that are outside the scope of the authority of the Order. Two commenters voiced concerns regarding labeling regulations, while one commenter suggested working with Customs and Border Protection to develop new Harmonized Tariff codes for pecans.

In the proposed rule, USDA specifically requested comments on the proposed de minimis exemption, particularly on whether the proposed level was appropriate to ensure equitable contribution by and representation of both domestic producers and importers, or if modification to the exemption level was needed, asking commenters to provide data to substantiate any recommendations. One commenter opposed any exemption from the payment of assessments. The commenter did not provide data to substantiate its recommendation.

After review and consideration of the comments received, USDA is not making any changes to the proposed rule based on those comments. The USDA has determined that this Order is consistent with and will effectuate the purposes of the 1996 Act.

List of Subjects in 7 CFR Part 1223

• Administrative practice and procedure
• Advertising
• Consumer information
• Marketing agreements
• Pecan promotion
• Reporting and recordkeeping requirements

For the reasons set forth in the preamble, title 7, chapter XI of the Code of Federal Regulations is amended by adding part 1223 to read as follows:

PART 1223—PECAN PROMOTION, RESEARCH, AND INFORMATION ORDER

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

Subpart A—Pecan Promotion, Research, and Information Order

Definitions

Subpart B—Referendum Procedures

Subpart C—Administrative Provisions