[Federal Register Volume 60, Number 151 (Monday, August 7, 1995)]
[Rules and Regulations]
[Pages 40063-40064]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-19330]



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

DEPARTMENT OF AGRICULTURE
7 CFR Part 984

[Docket No. FV95-984-1FR]


Walnuts Grown in California; Suspension of Deadline for Relaxing 
Reserve Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Suspension order.

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

SUMMARY: This document suspends the deadline by which the Walnut 
Marketing Board (Board) may recommend a relaxation in reserve 
requirements established for a marketing year under the walnut 
marketing order. Suspension of the deadline will allow the Board, which 
locally administers the order, to make such a decision based on more 
current supply and shipment information. This suspension will provide 
the walnut industry an opportunity for more orderly marketing.

EFFECTIVE DATE: August 7, 1995.

FOR FURTHER INFORMATION CONTACT: Mark Hessel, Marketing Specialist, 
California Marketing Field Office, Fruit and Vegetable Division, AMS, 
USDA, 2202 Monterey Street, suite 102B, Fresno, California 93721; 
telephone: (209) 487-5901, or FAX (209) 487-5906; or Mark Kreaggor, 
Marketing Specialist, Marketing Order Administration Branch, Fruit and 
Vegetable Division, AMS, USDA, room 2526-S, P.O. Box 96456, Washington, 
D.C. 20050-6456; telephone: (202) 720-3610, or FAX (202) 720-5698.

SUPPLEMENTARY INFORMATION: This suspension order is issued under 
Marketing Agreement and Order No. 984 (7 CFR part 984), regulating the 
handling of walnuts grown in California. The order is effective under 
the Agricultural Marketing Agreement Act of 1937, as amended, (7 U.S.C. 
601-674), hereinafter referred to as the ``Act.''
    The Department of Agriculture (Department) is issuing this action 
in conformance with Executive Order 12866.
    This action has been reviewed under Executive Order 12778, Civil 
Justice Reform. This suspension is not intended to have retroactive 
effect. This action will not preempt any State or local laws, 
regulations, or policies, unless they present an irreconcilable 
conflict with this rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with the Secretary a 
petition stating that the order, any provision of the order, or any 
obligation imposed in connection with the order is not in accordance 
with law and requesting a modification of the order or to be exempted 
therefrom. A handler is afforded the opportunity for a hearing on the 
petition. After a hearing the Secretary would rule on the petition. The 
Act provides that the district court of the United States in any 
district in which the handler is an inhabitant, or has his or her 
principal place of business, has jurisdiction in equity to review the 
Secretary's ruling on the petition, provided a bill in equity is filed 
not later than 20 days after the date of the entry of the ruling.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Administrator of the Agricultural Marketing Service 
(AMS) has considered the economic impact of this action on small 
entities.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and rules issued thereunder, are unique in that 
they are brought about through group action of essentially small 
entities acting on their own behalf. Thus, both statutes have small 
entity orientation and compatibility.

    There are approximately 65 handlers of California walnuts who are 
subject to regulation under the walnut marketing order, and 
approximately 5,000 producers in the regulated area. Small agricultural 
service firms have been defined by the Small Business Administration 
(13 CFR 121.601) as those whose annual receipts are less than 
$5,000,000 and small agricultural producers have been defined as those 
having annual receipts of less than $500,000. The majority of 
California walnut handlers and producers may be classified as small 
entities.

    The walnut marketing order provides authority for volume control in 
the form of free, reserve, and export percentages. The free percentage 
is the percentage of certified merchantable walnuts that may be shipped 
freely to any market during the marketing year. The reserve percentage 
is the amount of certified merchantable walnuts that may be shipped to 
export markets, government agencies, charitable institutions, poultry 
or animal feed, walnut oil, or other markets noncompetitive with 
markets for certified merchantable free walnuts. The export percentage 
is the percentage of reserve walnuts that may be shipped to export 
markets. Certified merchantable walnuts are walnuts which have been 
inspected and certified by the Dried Fruit Association of California as 
meeting the minimum grade and size requirements specified under the 
order.

    The marketing order also provides that handlers may meet their 
reserve requirements by either delivering reserve walnuts to the Board 
for disposition by the Board or by selling or disposing of their own 
walnuts, as agents of the Board, in specified reserve outlets. Any 
reserve walnuts the Board receives would be pooled and sold by the 
Board in markets specified for reserve walnuts at the highest returns 
available. The proceeds from the sale of pooled walnuts, minus all 
expenses incurred by the Board in receiving, holding, and disposing of 
the walnuts, would be distributed to handlers who delivered walnuts to 
the pool in proportion to each handler's contribution.

    In a marketing year (August 1-July 31) that a reserve program is 
implemented, 

[[Page 40064]]
the Board recommends the initial percentages in September and has the 
option of recommending an increase in the free and export percentages 
and a decrease in the reserve percentage later in the marketing year. 
If the Department concurs with the Board's recommendation, the 
recommended percentages may be established or modified.
    Section 984.49(b)(1) establishes a deadline of February 15 for the 
Board to recommend to the Secretary an increase in the free percentage 
and a decrease in the reserve percentage. On February 10, 1995, the 
Board unanimously recommended suspension of that deadline. This action 
will suspend the phrase ``On or before February 15 of the marketing 
year,'' in section 984.49(b)(1) and will authorize the Board to 
recommend an increase in the free percentage and a decrease in the 
reserve percentage at any time during the marketing year, which ends on 
July 31.
    In the past, many export markets were undeveloped and the domestic 
market provided better returns than export markets. The reserve 
percentage was used as a tool to keep the domestic walnut market from 
being oversupplied and the export percentage was used as a tool to 
place an orderly flow of California walnuts into the export market at 
prices that were competitive with foreign walnuts. Even though the free 
walnuts were allowed to be shipped to export markets, free walnuts were 
not price competitive with walnuts from other countries and 
consequently were not diverted to export markets. Under former 
marketing conditions, sufficient information relating to the domestic 
market was available prior to February 15 so that the Board could make 
an appropriate recommendation for final free and reserve percentages.
    Under present marketing conditions, walnut export markets are well 
established and have returns equal to or higher than those received in 
the domestic market. As a result, the Board can recommend setting an 
export percentage of 0 percent which will preclude the shipment of 
reserve walnuts to export markets. The export market will then be 
supplied with only free walnuts. By setting a reserve percentage and 
keeping the export percentage at 0 percent, the Board can remove a 
quantity of walnuts in excess of domestic and export market demands.
    When large shipments of reserve walnuts were exported, the February 
15 deadline for recommending a decrease in the reserve gave handlers 
approximately five months to export the remainder of their reserve 
after the final reserve percentage was known. Since exports have now 
become a viable market for free walnuts, the Board may need more 
flexibility to consider later data on free shipments to revise its 
estimate of trade demand. The Board may also need more flexibility to 
consider the July forecast of the next crop to decide if the desirable 
carryout should be increased to supplement a short crop.
    In addition, the order requires handlers to file monthly shipment 
reports that are due on the fifth day of the following month. Each 
additional monthly report the Board receives from handlers after the 
February 15 deadline, gives the Board a more accurate picture of the 
levels of shipments of walnuts for the current marketing year. More 
information is also available at that time on the foreign walnut crop, 
the pecan supply which directly, competes with walnuts, exchange rates, 
and foreign and domestic economic conditions. This information will 
allow the Board to better estimate the current and prospective domestic 
and export demand and supply conditions for California walnuts. 
Finally, later in the marketing year, the Board can better estimate the 
amount of the current crop of walnuts that should be carried over to 
the next marketing year. By allowing decisions to be made later in the 
season on a reserve program, the industry can better evaluate marketing 
conditions.
    The Board estimates that sufficient information will be available 
by early June, but marketing conditions may cause the Board to wait 
longer before making a final recommendation on the free and reserve 
percentages. The suspension of the February 15 deadline will allow the 
Board more flexibility in dealing with the dynamic marketing conditions 
of the California walnut industry and in turn provide for more orderly 
marketing of walnuts.
    A proposed suspension order was published in the Federal Register 
on June 2, 1995, (60 FR 28744). That action provided a 30-day comment 
period which ended on July 3, 1995. No comments were received.
    Based on available information, the Administrator of the AMS has 
determined that this action will not have a significant economic impact 
on a substantial number of small entities.
    After consideration of all relevant matter presented, including the 
information and recommendation submitted by the Board, it is determined 
that, under the conditions presently existing in the walnut industry, 
the February 15 deadline in section 984.49(b)(1) does not tend to 
effectuate the declared policy of the Act.
    It is further found that good cause exists for not postponing the 
effective date of this rule until 30 days after publication in the 
Federal Register (5 U.S.C. 533) because: (1) The Board will meet 
September 1995 to consider the need for volume control during the 1995-
96 marketing year; (2) preliminary industry discussions on the need for 
volume control during 1995-96 are expected to begin soon and prompt 
implementation of the suspension will foster more meaningful 
discussions; (3) the industry is aware of this action, which was 
unanimously recommended by the Board at a public meeting and all 
interested persons in attendance were given the opportunity to provide 
input; and (4) interested persons were given the opportunity to submit 
written comments on the suspension of the February 15 deadline and none 
were received.

List of Subjects in 7 CFR Part 984

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

    For the reasons set forth in the preamble, 7 CFR part 984 is 
amended as follows:

PART 984--WALNUTS GROWN IN CALIFORNIA

    1. The authority citation for 7 CFR part 984 continues to read as 
follows:

    Authority: 7 U.S.C. 601-674.


Sec. 984.49  [Suspended in part]

    2. In Sec. 984.49 paragraph (b)(1), the words ``On or before 
February 15 of the marketing year,'' are suspended.

    Dated: July 31, 1995.
David R. Shipman,
Acting Deputy Assistant Secretary, Marketing and Regulatory Programs.
[FR Doc. 95-19330 Filed 8-4-95; 8:45 am]
BILLING CODE 3410-02-P