Paper and Paper-Based Packaging Promotion, Research and Information Order; Change in Membership and Nominations
| Published date | 02 July 2019 |
| Record Number | 2019-13923 |
| Section | Rules and Regulations |
| Court | Agricultural Marketing Service |
Federal Register, Volume 84 Issue 127 (Tuesday, July 2, 2019)
[Federal Register Volume 84, Number 127 (Tuesday, July 2, 2019)]
[Rules and Regulations]
[Pages 31459-31462]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-13923]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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Federal Register / Vol. 84, No. 127 / Tuesday, July 2, 2019 / Rules
and Regulations
[[Page 31459]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 1222
[Document Number AMS-SC-18-0072]
Paper and Paper-Based Packaging Promotion, Research and
Information Order; Change in Membership and Nominations
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: This rule changes the membership and nomination procedures of
the Paper and Packaging Board (Board). The Paper and Paper-Based
Packaging Promotion, Research and Information Order (Order) is
administered by the Board with oversight by the U.S. Department of
Agriculture (USDA). This rule also makes administrative changes to
other provisions of the Order.
DATES: Effective: August 1, 2019.
FOR FURTHER INFORMATION CONTACT: Marlene Betts, Marketing Specialist,
Promotion and Economics Division, Specialty Crops Program, AMS, USDA,
1400 Independence Avenue SW, Room 1406-S, Stop 0244, Washington, DC
20250-0244; telephone: (202) 720-9915; or electronic mail:
[email protected].
SUPPLEMENTARY INFORMATION: This rule affecting 7 CFR part 1222 (the
Paper and Paper-Based Packaging Promotion, Research and Information
Order (Order)) is authorized under the Commodity Promotion, Research,
and Information Act of 1996 (1996 Act) (7 U.S.C. 7411-7425).
Executive Orders 12866, 13563, and 13771
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, reducing costs, harmonizing rules and promoting flexibility.
This action falls within a category of regulatory actions that the
Office of Management and Budget (OMB) exempted from Executive Order
12866 review. Additionally, because this rule does not meet the
definition of a significant regulatory action it does not trigger the
requirements contained in Executive Order 13771. See OMB's Memorandum
titled ``Interim Guidance Implementing Section 2 of the Executive Order
of January 30, 2017, titled `Reducing Regulation and Controlling
Regulatory Costs' '' (February 2, 2017).
Executive Order 13175
This action has been reviewed in accordance with the requirements
of Executive Order 13175, Consultation and Coordination with Indian
Tribal Governments. The review reveals that this regulation would not
have substantial and direct effects on Tribal governments and would not
have significant Tribal implications.
Executive Order 12988
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. It is not intended to have retroactive effect. Section
524 of the 1996 Act (7 U.S.C. 7423) provides that it shall not affect
or preempt any other Federal or State law authorizing promotion or
research relating to an agricultural commodity.
Under section 519 of the 1996 Act (7 U.S.C. 7418), a person subject
to an order may file a written petition with 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, shall be
filed within two years after the effective date of an order, provision,
or obligation subject to challenge in the petition. The petitioner will
have the opportunity for a hearing on the petition. Thereafter, USDA
will issue a ruling on the petition. The 1996 Act provides that the
district court of the United States for any district in which the
petitioner resides or conducts business shall have the jurisdiction to
review a final ruling on the petition, if the petitioner files a
complaint for that purpose not later than 20 days after the date of the
entry of USDA's final ruling.
Background
This rule reduces the size of the Board from 12 members to 8
members, reduces the number of regions for manufacturer representation
on the Board from four (South, Northeast, Midwest, and West) to two
(South and Other parts of the United States), eliminates the at-large
seat, and changes the nomination process under the Order. The Order is
administered by the Board with oversight by USDA. Under the Order,
assessments are collected from manufacturers and importers and used for
projects to promote the use of paper and paper-based packaging.
Board Membership and Regional Representation
Currently, the 1996 Act and Sec. 1222.40(c) require the Board to
review its membership and size of the Board to reflect changes in its
geographical distribution and quantity of paper and paper-based
packaging manufactured in the U.S. and the quantity of paper and paper-
based packaging imported into the U.S. This is the first review of the
Board's membership and size since the Board's implementation in 2014.
The Board reviewed data to determine if the geographical distribution
of paper and paper-based packaging manufactured in the U.S. and the
quantity imported into the U.S. and Board membership needed to be
changed. The proposed action was unanimously recommended by the Board
in June 2018 and will contribute to the effective administration of the
program.
Section 1222.40 provides that the Board should consist of 12
members--11 manufacturers and 1 importer. Section 1222.40 also requires
that the Board be comprised of manufacturers and importers of paper and
paper-based packaging that manufacture or import 100,000 short tons or
more of paper and paper-based packaging during the year. Of the 11
manufacturers, 10 shall be from the following four regions: South--6
members; Northeast--1 member; Midwest--2 members; and West--1.
[[Page 31460]]
One manufacturer at-large member may be from any region and shall
manufacture at least 100,000 short tons but no more than 250,000 short
tons of paper and paper-based packaging. If there are no eligible
nominees, the seat shall be allocated to the largest producing region.
In 2017, approximately 61.3 million short tons of U.S. paper and
paper-based packaging was produced and covered under the program. Of
the 61.3 million short tons, it is estimated that 64 percent was
manufactured in the South, 17 percent was manufactured in the Midwest,
9 percent was manufactured in the Northeast, and 10 percent was
manufactured in the West. While the U.S. production of paper and paper-
based packaging has dropped from 66.1 million short tons in 2014 to
61.3 million short tons in 2017, the number of domestic companies that
pay assessments into the program has decreased from 53 to 39, which
equals a 26 percent decrease in three years. Due to the consolidation
in the industry, the Board believes that the proposed changes to the
Board size and its regions would better reflect the distribution of the
manufacturing of paper and paper-based packaging and the imports of
paper and paper-based packaging.
With this amendment, the total number of Board members will
decrease from the current 12 members to 8 members. The 8-member Board
will be comprised of 7 manufacturers and 1 importer. Of the 7
manufacturers, 4 members will be from the South, and 3 members will be
from all other parts of the U.S. According to the Board, this action
will make the reduced number of seats easier to fill and reflect the
current distribution of the industry.
The Board recommended a transitional approach to reduce the Board
from 12 members to 8 members over a three-year period. The 2019 Board
currently has 12 members. The 2020 Board will have 10 members
consisting of 5 members representing the South, 4 members representing
the other parts of the U.S., and 1 importer. This will require the
Board to fill two seats in the South region whose terms will expire
December 31, 2019. The original recommendation was for the 2021 Board
to have 8 members consisting of 4 members representing the South, 3
members from other parts of the U.S., and 1 importer. However, this
would require half of the board seats to be filled in one year, the
five commenters requested that the 2021 Board have 9 members consisting
of 5 members representing the South, 3 members representing other parts
of the U.S., and 1 importer; and the 2022 Board and subsequent Boards
have 8 members consisting of 4 members representing the South, 3
members representing other parts of the U.S., and 1 importer. These
changes are authorized under Sec. 1222.40(c). Lastly, the Board
recommended one seat from the South whose term will expire on December
31, 2021, be for a two-year term rather than a three-year term. Section
515 of the 1996 Act (7 U.S.C. 7414) and Sec. 1222.42 state that
members shall serve for a term of three-years, except for the initial
appointments. Therefore, a term shorter than three-years is not being
implemented as recommended.
Nomination Process
Sections 1222.41 and 1222.46 provide authority for the Board to
recommend amendments to the Order. Nominations to the Board are
currently made by an election process. This process is conducted by the
Board, which notifies all known manufacturers and importers of 100,000
short tons or more of paper and paper-based packaging annually of the
open Board seats. Manufacturers and importers may nominate eligible
persons from their own company or any other eligible company for a seat
on the Board. Once the Board receives the nominees, the Board conducts
an election by mail ballot in each region where there is a vacancy. The
votes are tabulated by region, with nominees receiving the highest
number of votes placed at the top of the list, in descending order. Due
to consolidation of companies from 53 to 39, the pool of eligible
manufacturers to fill board seats has decreased, therefore the number
of eligible nominees has decreased too. The Board recommended a new
nomination process to help alleviate this situation.
The Board will conduct outreach and issue a call for nominations
for all open seats to all known manufacturers and importers of 100,000
short tons or more of paper and paper-based packaging. The Board will
evaluate all the nominees and recommend at least two names for each
open seat as their first and second choice to be placed on the
nomination slate. Other qualified persons interested in serving in the
open seats, but not recommended by the Board, will be submitted and
designated as additional nominees for consideration by the Secretary.
In addition, this proposal will change the OMB control number in
Sec. Sec. 1222.88 and 1222.108 from 0581-0281 to 0581-0093, the
control number assigned by OMB. This change will reflect the accurate
OMB control number.
Final Regulatory Flexibility Act Analysis
In accordance with the Regulatory Flexibility Act (RFA) (5 U.S.C.
601-612), AMS is required to examine the impact of the rule on small
entities. Accordingly, AMS has considered the economic impact of this
action on such entities.
The purpose of the RFA is to fit regulatory actions to the scale of
businesses subject to such actions so that small businesses will not be
disproportionately burdened. The Small Business Administration (SBA)
defines, in 13 CFR part 121, small agricultural producers as those
having annual receipts of no more than $750,000, and small agricultural
service firms (first handlers and importers) as those having annual
receipts of no more than $7.5 million.
According to the Board, there are 39 manufacturers in the United
States that produce the types of paper and paper-based packaging
covered under the Order. Using an average price of $784 per short
ton,\1\ a manufacturer who produces less than about 9,560 short tons of
paper and paper-based packaging per year would be considered a small
entity. It is estimated that no more than three manufacturers produced
less than 9,560 short tons per year in 2017. Thus, the majority of
manufacturers would not be considered small businesses.
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\1\ Industry sources do not publish information on average price
for paper and paper-based packaging. A reasonable estimate for
average price of paper and paper-based packaging is the value per
ton of paper and paper-based packaging exports. According to U.S.
Census data, the average value of paper and paper-based packaging
exports in 2017 was approximately $784 per short ton.
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Based on U.S. Customs and Border Protection (Customs) data, it is
estimated that in 2017 there were approximately 1700 importers of paper
and paper-based packaging. Fifty importers, or about 3 percent,
imported more than $7.5 million worth of paper and paper-based
packaging. Thus, the majority of importers would be considered small
entities. However, all of the 20 entities that imported 100,000 short
tons or more (the Order's exemption threshold) also imported more than
$7.5 million worth of paper and paper-based packaging. Therefore, none
of the 20 importers covered under the Order would be considered small
businesses.
Based on domestic production of approximately 61.3 million short
tons in 2017 and an average price of $784 per short ton, the domestic
paper and paper-based packaging industry is valued at approximately
$48.1 billion. According
[[Page 31461]]
to Customs data, the value of paper and paper-based packaging imports
in 2017 was about $5.9 billion.
The rule reduces the size of the Board from 12 members to 8,
reduces the number of regions for manufacturers from four (South,
Northeast, Midwest, and West) to two (South, and other parts of the
United States), eliminates the at-large member, and changes the
nomination process as specified in Sec. Sec. 1222.40 and 1222.41. The
revisions are administrative in nature; therefore, there should be no
economic impact on manufacturers and importers.
Currently, the Order requires 12 Board members, 11 domestic
manufacturers and one importer. Of the 11 domestic manufacturers, 6
represent the South, 2 represent the Midwest, 1 represents the
Northeast, 1 represents the West, and 1 at-large member represents any
region and must manufacture at least 100,000 short tons, but not more
than 250,000 short tons. Due to mergers and closings, the number of
eligible companies (manufacturers and importers of 100,000 tons or more
of paper and paper-based packaging annually) has decreased from 53 to
39 eligible manufacturers since the inception of the Order in 2014.
With an overall pool of 39 eligible U.S. manufacturers, an 8-member
Board can effectively represent the interest of the paper and paper-
based packaging industry.
The revised 8-member Board will be comprised of 7 manufacturers and
1 importer. Of the 7 manufacturers, 4 members will be from the South,
and 3 members will be from all other parts of the U.S. According to the
Board, this action makes the reduced number of seats easier to fill and
reflects the current distribution of the industry.
This rule is also changing the nomination procedures. The Board
unanimously recommended eliminating the election process and
recommended a new nomination process, whereby all the submitted names
of the eligible candidates are submitted to the Secretary with
recommendations by the Board. This action allows the Board the
flexibility to provide a slate that reflects the diverse membership of
the paper and paper-based packaging industry in terms of various
segments of the industry.
The new nomination process allows the Board to conduct outreach to
all known manufacturers and importers of 100,000 short tons or more of
paper and paper-based packaging, whereby the Board evaluates all the
nominees and recommends at least two names for each open seat. Other
qualified persons interested in serving in the open seats, but not
recommended by the Board, are to be submitted and designated as
additional nominees for consideration by the Secretary.
The changes to the size of the Board, number of regions, and
nomination process are administrative in nature and have no economic
impact on entities covered under the program. These changes are thought
to help increase the pool of candidates as companies operate in
multiple regions and seek nomination for a region of their choice.
Eligible manufacturers and importers interested in serving on the Board
have to complete a background questionnaire. Those requirements are
addressed later in this rule in the section titled Reporting and
Recordkeeping Requirements.
Regarding alternatives, the Board considered recommending no
changes and considered a variety of mechanisms for nominating
candidates. The Board explored whether other industry organizations
should be tasked with nominating candidates but determined that it
would unnecessarily complicate the nominations process. However, due to
mergers and closings, the number of eligible companies has decreased,
making it more difficult to fill Board seats. Therefore, the Board
concluded that reducing the Board size, reducing the number of regions,
eliminating the at-large member, and revising the nomination process
will establish a Board that better reflects the industry.
Lastly, this rule makes changes to Sec. Sec. 1222.80 and 1222.108
to correct the OMB control numbers that are assigned to the Paper and
Packaging Board by OMB.
Reporting and Recordkeeping Requirements
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
Chapter 35), the information collection requirements that are imposed
by the part have been previously approved by OMB under OMB control
number 0581-0093. This rule does not result in a change to the
information collection and recordkeeping requirements previously
approved and does not impose additional reporting requirements or
recordkeeping burden on manufacturers or importers of paper and paper-
based packaging.
As with all Federal promotion programs, reports and forms are
periodically reviewed to reduce information requirements and
duplication by industry and public-sector agencies. USDA has not
identified any relevant Federal rules that duplicate, overlap, or
conflict with this rule. AMS is committed to complying with the E-
Government Act, to promote the use of the internet and other
information technologies to provide increased opportunities for citizen
access to Government information and services, and for other purposes.
The Board met on June 28, 2018, and unanimously recommended
reducing the size of the Board, reducing the number of regions, and
eliminating the election process for nominations and using a new
nominations process. The Board meetings are open to the public and
interested persons are invited to participate and express their views.
A proposed rule concerning this action was published in the Federal
Register on April 12, 2019 (84 FR 14891). A 30-day comment period
ending May 13, 2019, was provided to allow interested persons to submit
comments.
Analysis of Comments
Five comments were received in response to the proposed rule. All
of the comments supported reducing the size of the Board from 12 to 8
members, reducing the number of regions from 5 (South, Northeast,
Midwest, West, and at-large) to 2 (South and all other parts of the
U.S.), and revising the nomination process. All of the comments also
stated their support for a transitional approach in reducing the Board
from 12 to 8 members. They were supportive of the Board's original
proposal to have a two-year term for a member from the South region
during the transition; however, as stated previously, the 1996 Act and
Order require members serve for a term of three-years, except for the
initial appointments, so this change is not being implemented.
All five commenters stated their concern that losing half of the
Board in a single year would be disruptive and cause a sudden loss of
institutional knowledge within the Board. Therefore, in the
alternative, they suggested adding an additional year to the
transitional period, for a total of three years. So, the 2020 Board
would have 10 members consisting of 5 members representing the South, 4
members representing the other parts of the U.S., and 1 importer. The
2021 Board would have 9 members consisting of 5 members representing
the South, 3 members representing other parts of the U.S., and 1
importer. Finally, the 2022 Board and subsequent Boards would have 8
members consisting of 4 members representing the South, 3 members
representing other parts of the U.S., and 1 importer. We agree with the
commenters that adding an additional year to transition from a
[[Page 31462]]
current 12 member Board to an 8 member Board in 2022 and beyond will
make it less disruptive to the Board's operations going forward.
Accordingly, we are adopting the modifications and this final rule with
changes to the composition of the Board from the current Board of 12
members to 8 members over the next three-years, reducing the number of
manufacturing regions from 5 (South, Northeast, Midwest, West and at-
large) to 2 (South and all other parts of the U.S.), and modifications
to the nomination process.
After consideration of all relevant material presented, including
the information and recommendations submitted by the Board, the
comments received, and other available information, it is hereby found
that this rule, as hereinafter set forth, is consistent with and will
effectuate the purposes of the 1996 Act.
List of Subjects in 7 CFR Part 1222
Administrative practice and procedure, Advertising, Consumer
information, Marketing agreements, Paper and paper-based packaging
promotion, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, 7 CFR part 1222 is
amended as follows:
PART 1222--PAPER AND PAPER-BASED PACKAGING PROMOTION, RESEARCH AND
INFORMATION ORDER
0
1. The authority citation for part 1222 continues to read as follows:
Authority: 7 U.S.C. 7411-7425; 7 U.S.C. 7401.
0
2. Revise Sec. 1222.40(b) to read as follows:
Sec. 1222.40 Establishment and membership.
* * * * *
(b) Composition of Board. The 2020 Board shall be composed of 10
members. The 2021 Board shall be composed of 9 members. The 2022 Board
and each subsequent Board shall be composed of 8 members. The Boards
shall be established as follows:
(1) Manufacturers. For the 2020 Board, 9 members shall be
manufacturers. For the 2021 Board, 8 members shall be manufacturers,
and for the 2022 Board and each subsequent Board, 7 members shall be
manufacturers, from the following two regions:
(i) Five members shall be from the South for the 2020 Board, five
members shall be from the South for the 2021 Board, and four members
shall be from the South for the 2022 Board and each subsequent Board.
The South shall consist of the states of Alabama, Arkansas, Delaware,
Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North
Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and
West Virginia; and
(ii) Four members shall be from all other parts of the United
States for the 2020 Board, and three members shall be from all other
parts of the United States for the 2021 Board and each subsequent
Board. All other parts of the United States consist of those states not
listed in paragraph (b)(1)(i) of this section.
(2) Importers. One member shall be an importer.
* * * * *
0
3. Revise Sec. 1222.41(c) to read as follows:
Sec. 1222.41 Nominations and appointments.
* * * * *
(c) Subsequent nominations shall be conducted as follows:
(1) The Board shall conduct outreach to all known manufacturers and
importers manufacturing or importing 100,000 short tons or more of
paper and paper-based packaging in a marketing year. Manufacturers and
importers may submit nominations to the Board;
(2) Manufacturer and importer nominees may provide the Board a
short background statement outlining their qualifications to serve on
the Board;
(3) Nominees may seek nomination to the Board for all vacant seats
for which the nominees are qualified;
(4) For domestic seats allocated by region, domestic manufacturers
must manufacture paper and paper-based packaging in the region for
which they seek nomination. Nominees that manufacture in both regions
may seek nomination in one region of their choice. The Board will issue
the call for nominations to all known manufacturers and recommend
nominees for each open seat and the additional nominees to the
Secretary;
(5) Nominees that are both a manufacturer and an importer may seek
nomination to the board as either a manufacturer or importer so long as
they meet the qualifications. The Board will issue the call for
nominations to all known importers and recommend nominees for each open
seat and the additional nominees to the Secretary;
(6) The Board will evaluate all the nominees and recommend at least
two names for each open seat. Other qualified persons interested in
serving in the open seats, but not recommended by the Board, will be
designated by the Board as additional nominees for consideration by the
Secretary;
(7) The Board must submit nominations to the Secretary at least six
months before the new Board term begins. From the nominations submitted
by the Board, the Secretary shall select the members of the Board;
(8) Any manufacturer or importer nominated to serve on the Board
shall file with the Secretary at the time of the nomination a
background questionnaire;
(9) From the nominations made pursuant to this section, the
Secretary shall appoint members of the Board on the basis of
representation provided in Sec. 1222.40(b);
(10) No two members shall be employed by a single corporation,
company, partnership or any other legal entity; and,
(11) The Board may recommend to the Secretary modifications to its
nomination procedures as it deems appropriate. Any such modification
shall be implemented through rulemaking by the Secretary.
0
4. Revise Sec. 1222.88 to read as follows:
Sec. 1222.88 OMB control number.
The control numbers assigned to the information collection
requirements by the Office of Management and Budget pursuant to the
Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, are OMB control
number 0505-0001 (Board nominee background statement) and OMB control
number 0581-0093.
0
5. Revise Sec. 1222.108 to read as follows:
Sec. 1222.108 OMB control number.
The control number assigned to the information collection
requirement in this subpart by the Office of Management and Budget
pursuant to the Paperwork Reduction Act of 1995, 44 U.S.C. is OMB
control number 0581-0093.
Dated: June 25, 2019.
Bruce Summers,
Administrator.
[FR Doc. 2019-13923 Filed 7-1-19; 8:45 am]
BILLING CODE 3410-02-P
