Paper and Paper-Based Packaging Promotion, Research and Information Order; Clarifying Changes

AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Proposed rule.

SUMMARY:

The Agricultural Marketing Service (AMS) proposes multiple clarifying amendments to the Paper and Paper-Based Packaging Promotion, Research and Information Order (Order). The amendments include revising the definition of importer; adding a definition for partnership; clarifying the nominations process; clarifying language about in person and electronic voting for any Board meetings; updating the timing of financial reporting; and revising requirements for when exemptions can be requested. These actions would modify language in the Order to bring it up to date with current industry practices.

DATES:

Comments must be received by August 14, 2024.

ADDRESSES:

Interested persons are invited to submit written comments concerning this proposed rule. Comments may be mailed to the Docket Clerk, Market Development Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW, STOP 0237, Washington, DC 20250-0237; Fax: (202) 720-8938; or submitted electronically by Email: SM.USDA.MRP.AMS.MDDComment@usda.gov; or via Federal e-rulemaking portal at https://www.regulations.gov. Comments should reference the document number and the date and page number of this issue of the Federal Register . All comments submitted in response to this proposed rule will be included in the rulemaking record and will be made available to the public. Please be advised that the identity of the individuals or entities submitting the comments will be made public on the internet at the address provided above. A plain language summary of this proposed rule is available at https://www.regulations.gov in the docket for this rulemaking.

FOR FURTHER INFORMATION CONTACT:

Samantha Mareno, Agricultural Marketing Specialist, Market Development Division, Specialty Crops Program, Agricultural Marketing Service, U.S. Department of Agriculture, 1400 Independence Avenue SW, Room 1406-S, STOP 0244, Washington, DC 20250-0244; Telephone: (720) 827-4907; or Email: Samantha.Mareno@usda.gov.

SUPPLEMENTARY INFORMATION:

This proposed rule affecting the Order (7 CFR part 1222) is authorized by the Commodity Promotion, Research, and Information Act of 1996 (Act) (7 U.S.C. 7411-7425).

Executive Orders 12866, 13563 and 14094

AMS is issuing this proposed rule in conformance with Executive Orders 12866, 13563, and 14094. 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. Executive Order 14094 reaffirms, supplements, and updates Executive Order 12866 and further directs agencies to solicit and consider input from a wide range of affected and interested parties through a variety of means. This proposed rule is not a significant regulatory action within the meaning of Executive Order 12866. Accordingly, this action has not been reviewed by the Office of Management and Budget under section 6 of the Executive Order.

Executive Order 13175

This action has been reviewed in accordance with the requirements of Executive Order 13175, Consultation and Coordination with Indian Tribal Governments. AMS has assessed the impact of this proposed rule on Indian Tribes and determined that this proposed rule would not have Tribal implications that require consultation under Executive Order 13175. AMS hosts a quarterly teleconference with Tribal leaders where matters of mutual interest regarding the marketing of agricultural products are discussed. Information about the proposed changes to the regulations will be shared during an upcoming quarterly call, and Tribal leaders will be informed about the proposed revisions to the regulation and the opportunity to submit comments. AMS will work with the USDA Office of Tribal Relations to ensure meaningful consultation is provided as needed with regard to these proposed changes to the Order.

Executive Order 12988

This proposal has been reviewed under Executive Order 12988, Civil Justice Reform. It is not intended to have retroactive effect. Section 524 of the 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 Act (7 U.S.C. 7418), 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, 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 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

Under the Order, which became effective on January 23, 2014, the Paper and Packaging Board (Board), with oversight by USDA, administers a nationally coordinated program of research, promotion and information designed to strengthen the paper and paper-based packaging industry. The program covers four types of paper and paper-based packaging—printing and writing paper (used to make products for printing, writing and other communication purposes), kraft packaging paper (used for products like grocery bags and sacks), containerboard (used to make corrugated boxes, shipping containers and related products), and paperboard (used for food and beverage packaging, tubes, and other miscellaneous products). The program is financed by assessments on domestic manufacturers and importers of paper and paper-based packaging.

This proposed rulemaking would make multiple clarifying amendments to the Order. These amendments include revising the definition of importer; adding a definition for partnership; clarifying the nomination process; clarifying language about in person and electronic voting for any Board meetings; updating the timing of financial reporting; and revising requirements concerning when exemptions may be requested. The Board, which is composed of domestic manufacturers from across the country and importers, unanimously recommended the proposed changes to the Order on August 19, 2023. This action would modify language in the Order to bring it up to date with current industry practices.

Board Recommendation To Revise Order

In subpart A of the Order, several sections would be revised to clarify terms for the Board and the paper and paper-based packaging industry. Section 1222.7 currently defines fiscal period and marketing year. Proposed section 1222.7 would revise fiscal period to fiscal year as the term is better understood by the industry. The definition of importer in § 1222.8 would be revised to further clarify that importers are persons who import paper and paper-based packaging from outside the United States, that is subsequently released from custody by U.S. Customs and Border Protection (Customs) and introduced into the stream of commerce into the United States. Specifically, those persons are included who hold title of the foreign manufactured paper and paper-based packaging. The proposed revision is similar to the current definition of eligible importer in § 1222.101 (f) of Subpart B—Referendum Procedures.

Sections 1222.12 and 1222.13 currently include the term produce and producer respectively in the definition of manufacture and manufacturer. The term produce and producer are not used in the paper and paper-based packaging industry. Therefore, this proposed rule would remove these terms from the definition of manufacture and manufacturer.

Lastly, a new term for partnership would be added at § 1222.19 to state that a partnership includes, but is not limited to, spouses and joint ventures. This change is intended to clarify who is responsible for paying assessments. With this change, the existing sections 1222.19 through 1222.29 would be renumbered.

Section 1222.41 currently outlines the Board nominations and appointments process. Section 1222.41(c)(1) would be updated to clarify the process for conducting outreach and specifically issue a call for nominations to all current manufacturers and importers who have paid assessments during the prior fiscal year. Furthermore, section 1222.41(c)(4) and (c)(5) would be amended to remove repetitive language. Lastly, section 1222.41(c)(10) would be changed to specify that no two members shall be employed by a single manufacturer or importer that pays assessments under the Order to avoid confusion as to who can serve on the Board.

Section 1222.43(a) allows the Secretary to remove a Board member or employee for failure or refusal to perform their duties, per the Board's recommendation. This would be revised to remove the employee clause to be consistent with language in other research and promotion orders.

Section 1222.44 outlines the Board's procedures for conducting Board meetings. Section 1222.44(c) currently states that votes shall be cast in person at an assembled meeting. Additionally, section 1222.44 (d) allows for other means of voting in lieu of voting at an assembled meeting. Both sections would be revised to include options for electronic voting, or other means.

Section 1222.47 outlines prohibited activities for the Board. Section 1222.47(c) currently states no program, plan or project including advertising shall be false, misleading, or disparaging to another agriculture commodity. To be consistent in writing style, the proposed language would be modified to state any program, plan or project including advertising that is false, misleading, or disparaging to another agriculture commodity. This section would be updated to ensure clarity in wording.

Section 1222.50(i) outlines the operating monetary reserve for the Board and states that the funds in the reserve may not exceed one fiscal year's budget of expenses. This would be revised to increase the funds in the reserve so they may not exceed two fiscal years, which is consistent with other research and promotion orders.

Section 1222.51(b) describes when financial statements are to be submitted to the Department. The current timeframe is 30 days after the time period to which it applies, which is too restrictive because the Board reports financial statements on a quarterly basis. Therefore, this paragraph would be updated to specify that the financial statements are to be submitted quarterly and no later than 70 days after the period to which it applies.

Section 1222.51(c) refers to the annual financial statement that is submitted to the Department. Currently, the annual financial statement is due to the Department within 90 days after the end of the fiscal year. The Board has had difficulty in meeting this short deadline. Therefore, this rule would extend the timeframe to no later than 120 days to allow the Board more time to submit the statement to the Department.

Section 1222.52(e) currently states that importers of paper and paper-based packaging shall pay assessments through Customs to the Board. Customs does not currently collect import assessments for the Board and therefore, paragraph (e) would be revised by deleting “through Customs”, instead stating that each importer shall pay their assessment to the Board.

Section 1222.52(f) would also be revised by deleting the current language stating Customs collects assessments. Since Customs does not collect the assessment, the paragraph would be revised to state that each importer is responsible for paying assessments directly to the Board.

Section 1222.53(a)(1) currently specifies the minimum quantity necessary to be eligible for an exemption from assessments and requires manufacturers to apply for an exemption prior to the start of the marketing year. The rule would remove this requirement, allowing them to apply for an exemption at any time during a marketing year, not just before the year starts.

Section 1222.53(a)(2) (iii) provides that importers' assessments are collected by Customs and the Board shall refund the importer who has filed for exemption. Because Customs doesn't collect assessments, this section would be updated to reflect that the importer would pay the Board directly.

Section 1222.53(a)(5) currently details how the quantity of paper and paper-based packaging counts towards an exemption. This paragraph would be revised to ensure that in determining whether a manufacturer or import qualifies for the exemption, the combined quantity of all paper and paper-based packaging manufactured or imported during a marketing year shall count towards the 100,000 short ton exemption.

Section 1222.81(2) refers to the frequency of referenda and outlines the criteria for continuation. This section would be updated to clarify that only eligible domestic manufacturers or eligible importers are included in the referendum voting. This change does not change who can vote and does not change voting restrictions.

Section 1222.82(b) currently states that the Secretary has the right to suspend or terminate the program whenever it is favored by the industry. This section would be updated to make the language used more concise to avoid confusion by the industry.

Definitions in Section 1222.101 would be updated to be consistent with terms defined in Subpart A. Specifically, paragraph (e) currently includes producer in the definition for eligible domestic manufacturer. This section would be revised to remove the word producer. Paragraph (i) currently includes the term produce in the definition of manufacture and would be revised to remove the term produce from the definition.

Lastly, section 1222.102(a) currently outlines the voting eligibility of domestic manufacturers and importers. This section would be revised to include clarifying language to avoid confusion in the eligibility.

Initial Regulatory Flexibility Act Analysis

Pursuant to the requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), AMS has considered the economic impact of this action on small entities that would be affected by this rule. The purpose of the RFA is to fit regulatory action to scale of businesses subject to such action so that small businesses will not be disproportionately burdened. Manufacturers and importers would be considered agricultural service firms. The Small Business Administration defines small agricultural service firms as those having annual receipts of no more than $30 million (13 CFR part 121).

According to the Board, there are approximately 47 manufacturers in the United States that manufacture the types of paper and paper-based packaging covered under the Order. Using an average price of $1,350 per short ton, a manufacturer who manufactures less than 22,220 short tons of paper and paper-based packaging per year would be considered a small entity. The Board estimated that no entity manufactured less than 22,220 short tons in 2022; thus, no domestic manufacturers would be considered small businesses.

Based on Customs data, there were 3,272 importers of paper and paper-based packaging in 2022. Of these, 40 importers, or 1 percent, had annual receipts of more than $30 million of paper and paper-based packaging. Thus, the majority of importers would be considered small entities.

This proposed rule would make multiple clarifying changes to the Order. The changes include revising the definition of importer; adding a definition for partnership; clarifying the nominations process; clarifying language about in person and electronic voting for any Board meetings; updating the timing of financial reporting; and revising requirements concerning when exemptions will be requested.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the information collection and recordkeeping requirements that are imposed by the Order have been approved previously under OMB control number 0581-0093. This proposed rule would not result in a change to the information collection and recordkeeping requirements previously approved and would impose no additional reporting and recordkeeping burden on domestic manufacturers and importers of paper and paper-based packaging.

As with all Federal research and promotion programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. AMS has not identified any relevant Federal rules that duplicate, overlap, or conflict with this proposed 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.

Regarding alternatives, the Board considered not making the clarifying changes to the Order and leaving it as it is currently. The Board decided against leaving the Order unchanged as confusion would continue and potentially worsen over time. Therefore, that alternative was rejected.

Regarding outreach efforts, the Board determined that making these proposed changes would clarify the issues and answer questions that have arisen over the last eight years and would help resolve similar questions in the future. This proposal was discussed by the Board in June and November 2022, and the full Board unanimously recommended the changes on August 19, 2023. AMS has performed this initial RFA analysis regarding the impact of this action on small entities and invites comments concerning potential effects of this action.

While this proposed rule as set forth below has not yet received the approval of AMS, it has been determined that it is consistent with and would effectuate the purposes of the Order. A 30-day comment period is provided to allow interested persons to respond to this proposal. All written comments received in response to this proposed rule by the date specified will be considered prior to finalizing this action.

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, the Agricultural Marketing Service proposes to amend 7 CFR part 1222 as follows:

PART 1222—PAPER AND PAPER-BASED PROMOTION, RESEARCH AND INFORMATION ORDER

1. The authority citation for 7 CFR part 1222 continues to read as follows:

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

2. In § 1222.7, revise to read as follows:

3. In § 1222.8, revise to read as follows:

4. In § 1222.12, revise to read as follows:

5. In § 1222.13, revise to read as follows:

6. Redesignate §§ 1222.19 through 1222.29 as §§ 1222.20 through 1222.30, respectively.

7. Add new § 1222.19 to read as follows:

8. In § 1222.41, revise paragraphs (c)(1), (c)(4), (c)(5) and (c)(10) to read as follows:

9. In § 1222.43, revised paragraph (a) to read as follows:

10. In § 1222.44, revise paragraphs (c) and (d) to read as follows:

11. In § 1222.47, revise paragraph (c) to read as follows:

12. In § 1222.50, revise paragraph (i) to read as follows:

13. In § 1222.51, revise paragraphs (b) and (c) to read as follows:

14. In § 1222.52, revise the introductory text of paragraph (e), and paragraph (f) to read as follows:

15. § 1222.53, revise paragraphs (a)(1), (2)(iii) and (5) to read as follows:

16. In § 1222.81, revise paragraphs (b)(2) to read as follows:

17. In § 1222.82, revise paragraph (b) to read as follows:

18. In § 1222.101, revise paragraph (e) and (i) to read as follows:

Subpart B—Referendum Procedures

19. In § 1222.102, revise paragraph (a) to read as follows: