[Federal Register Volume 83, Number 92 (Friday, May 11, 2018)]
[Rules and Regulations]
[Pages 21841-21843]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-10106]



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 Rules and Regulations
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  Federal Register / Vol. 83, No. 92 / Friday, May 11, 2018 / Rules and 
Regulations  

[[Page 21841]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 984

[Doc. No. AMS-SC-16-0053; SC16-984-1 FR]


Walnuts Grown in California; Order Amending Marketing Order 984

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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

SUMMARY: This final rule amends Marketing Order No. 984, which 
regulates the handling of walnuts grown in California. The amendment, 
which was proposed by the California Walnut Board (Board), was approved 
by growers in the referendum. This action authorizes the Board to 
borrow from a commercial lending institution to fund operations and 
marketing/research expenses for the program.

DATES: This rule is effective June 11, 2018.

FOR FURTHER INFORMATION CONTACT: Geronimo Quinones, Marketing 
Specialist, or Julie Santoboni, Rulemaking Branch Chief, Marketing 
Order and Agreement Division, Specialty Crops Program, AMS, USDA, 1400 
Independence Avenue SW, Stop 0237, Washington, DC 20250-0237; 
Telephone: (202) 720-2491, Fax: (202) 720-8938, or Email: 
[email protected] or [email protected].
    Small businesses may request information on complying with this 
regulation by contacting Richard Lower, Marketing Order and Agreement 
Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue 
SW, STOP 0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, 
Fax: (202) 720-8938, or Email: [email protected].

SUPPLEMENTARY INFORMATION: This action, pursuant to 5 U.S.C. 553, 
finalizes an amendment to a marketing order as defined in 7 CFR 
900.2(j). This rule is issued under Marketing Order No. 984, as amended 
(7 CFR part 984), regulating the handling of walnuts grown in 
California. Part 984 hereinafter (referred to as the ``Order'') is 
effective under the Agricultural Marketing Agreement Act of 1937, as 
amended (7 U.S.C. 601-674), hereinafter referred to as the ``Act.'' The 
Board, which is responsible for the local administration of the Order, 
is comprised of walnut growers and handlers operating within the 
production area. The applicable rules of practice and procedure 
governing the formulation of Marketing Agreements and Orders (7 CFR 
part 900) authorize amendment of the Order through this informal 
rulemaking action.
    The Department of Agriculture (USDA) is issuing this rule in 
conformance with Executive Orders 13563 and 13175. 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'[thinsp]'' (February 2, 2017).
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to have retroactive effect. 
This rule shall not be deemed to preclude, preempt, or supersede any 
State program covering walnuts grown in California.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with USDA a petition 
stating that the order, any provision of the order, or any obligation 
imposed in connection with the order is not in accordance with law and 
request a modification of the order or to be exempted therefrom. A 
handler is afforded the opportunity for a hearing on the petition. 
After the hearing, USDA would rule on the petition. The Act provides 
that the district court of the United States in any district in which 
the handler is an inhabitant, or has his or her principal place of 
business, has jurisdiction to review USDA's ruling on the petition, 
provided an action is filed not later than 20 days after the date of 
the entry of the ruling.
    Section 1504 of the Food, Conservation, and Energy Act of 2008 
(2008 Farm Bill) (Pub. L. 110-246) amended section 18c(17) of the Act, 
which in turn required the addition of supplemental rules of practice 
to 7 CFR part 900 (73 FR 49307). The amendment of section 18c(17) of 
the Act and additional supplemental rules of practice authorize the use 
of informal rulemaking (5 U.S.C. 553) to amend Federal fruit, 
vegetable, and nut marketing agreements and orders. USDA may use 
informal rulemaking to amend marketing orders based on the nature and 
complexity of the proposed amendments, the potential regulatory and 
economic impacts on affected entities, and any other relevant matters.
    The Agricultural Marketing Service (AMS) considered the nature and 
complexity of the proposed amendment, the potential regulatory and 
economic impacts on affected entities, and other relevant matters, and 
determined that amending the Order as proposed by the Board could 
appropriately be accomplished through informal rulemaking.
    The proposed amendment was unanimously recommended by the Board 
following deliberations at a public meeting held on February 19, 2016.
    A proposed rule soliciting comments on the amendment was issued on 
September 12, 2016, and published in the Federal Register on September 
16, 2016 (81 FR 63721). Two comments were received, both in support of 
the amendment. A proposed rule and referendum order was issued on May 
19, 2017, and published in the Federal Register on May 26, 2017 (82 FR 
24255). This document also directed that a referendum among walnut 
growers be conducted August 7, 2017 through August 18, 2017 to 
determine whether they favored the proposal. To become effective, the 
amendment had to be approved by either two-thirds of the growers voting 
in the referendum or by those representing at least two-thirds of the 
volume of walnuts produced by those voting in the referendum. The 
amendment was favored by 61 percent

[[Page 21842]]

of the growers voting and by 68 percent of the volume represented, the 
second of which exceeds the two-thirds volume requirement.
    The amendment in this final rule authorizes the Board to borrow 
from a commercial lending institution during times of cash shortages to 
help ensure continuity of operations.

Final Regulatory Flexibility Analysis

    Pursuant to 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. Accordingly, AMS has prepared this final 
regulatory flexibility analysis.
    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.
    There are approximately 5,700 growers of California walnuts in the 
production area and approximately 90 handlers subject to regulation 
under the Order. The Small Business Administration (SBA) defines small 
agricultural growers as those having annual receipts of less than 
$750,000 and defines small agricultural service firms as those whose 
annual receipts are less than $7,500,000 (13 CFR 121.201).
    According to USDA's National Agricultural Statistics Service's 
(NASS's) 2012 Census of Agriculture, approximately 86 percent of 
California's walnut farms were smaller than 100 acres. Further, NASS 
reports that the average yield for 2014 was 1.97 tons per acre, and the 
average price received for 2014 was $3,230 per ton. A 100-acre farm 
with an average yield of 1.97 tons per acre would therefore have been 
expected to produce about 197 tons of walnuts during 2014-15 marketing 
year. At $3,230 per ton, that farm's production would have had an 
approximate value of $636,310. Since Census of Agriculture information 
indicates that the majority of California's walnut farms are smaller 
than 100 acres, it could be concluded that the majority of the growers 
had receipts of less than $636,310 in 2014-15, which is below the SBA 
threshold of $750,000. Thus, the majority of California's walnut 
growers would be considered small growers according to SBA's 
definition. According to information supplied by the Board, 
approximately two-thirds of California's walnut handlers shipped 
merchantable walnuts valued under $7,500,000 during the 2014-15 
marketing year and would, therefore, be considered small handlers 
according to the SBA definition.
    The Board's proposed amendment authorizing the Board to borrow from 
commercial lending institutions was unanimously recommended at a public 
meeting on February 19, 2016. This amendment will help to ensure 
continuity in operations.
    The Board reviewed and identified the most costly portion of its 
domestic advertising program. That portion of the program operates 
during the first six months of the Board's marketing year and costs 
must be paid by mid-year. Since assessment revenues are collected 
throughout the marketing year, not enough is on hand when these large 
payments are due. In the past, the Board has used reserve funds to help 
pay for marketing and advertising expenses. However, due to the 
increased size of the advertising program, the Board cannot rely on 
reserve funds to cover the costs. Based on this fact, the Board 
believes the program could become unsustainable in the long term.
    While this action could result in a temporary increase in handler 
assessment costs, these increases would be small and uniform on all 
handlers and proportional to the size of their businesses. These costs 
are expected to be offset by the benefits derived from a sustained 
marketing and advertising program. Additionally, these costs would help 
to ensure that the Board has sufficient funds to meet its financial 
obligations. Such stability is expected to allow the Board to conduct a 
program that would benefit all entities, regardless of size. California 
walnut growers should see an improved business environment and a more 
sustainable business model because of the improved business efficiency.
    Alternatives were considered to this proposal, including making no 
change at this time. However, the Board believes it would be beneficial 
to have the means and funds necessary to effectively administer the 
program.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the Order's information collection requirements have been 
previously approved by OMB and assigned OMB No. 0581-0178, ``Vegetable 
and Specialty Crops.'' No changes in those requirements as a result of 
this action are necessary. Should any changes become necessary, they 
would be submitted to OMB for approval.
    This amendment will not impose any additional reporting or 
recordkeeping requirements on either small or large California walnut 
handlers.
    As with all Federal marketing order programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies. In addition, 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's meeting was widely publicized throughout the California 
walnut production area. All interested persons were invited to attend 
and participate in Board deliberations on all issues. The February 19, 
2016, meeting was public, and all entities, both large and small, were 
encouraged to express their views on the proposal.
    A proposed rule concerning this action was published in the Federal 
Register on September 16, 2016 (81 FR 63721). Copies of the proposed 
rule were mailed or sent via facsimile to all Board members and walnut 
growers. Finally, the rule was made available through the internet by 
USDA and the Office of the Federal Register. A 60-day comment period 
ending November 15, 2016, was provided to allow interested persons to 
respond to the proposal. Two comments were received, both in support of 
the amendment. No changes were made to the proposed amendments as a 
result of the comments received.
    A proposed rule and referendum order was then issued on May 19, 
2017, and published in the Federal Register on May 26, 2017 (82 FR 
24255). This document directed that a referendum among walnut growers 
be conducted during the period of August 7, 2017 through August 18, 
2017 to determine whether they favored the proposed amendment to the 
Order. To become effective, the amendment had to be approved by at 
least two-thirds of the growers voting, or two-thirds of the volume of 
walnuts represented by voters in the referendum. The amendment was 
favored by 61 percent of the growers voting and by 68 percent of the 
volume represented, the latter of which exceeds the two-thirds volume 
requirement.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/MarketingOrdersSmallBusinessGuide.

[[Page 21843]]

Any questions about the compliance guide should be sent to Richard 
Lower at the previously mentioned address in the FOR FURTHER 
INFORMATION CONTACT section.

Order Amending the Order Regulating the Handling of Walnuts Grown in 
California

    (a) Findings and Determinations Upon the Basis of the Rulemaking 
Record.
    The findings are supplementary to the findings and determinations 
which were previously made in connection with the issuance of the 
Order; and all said previous findings and determinations are hereby 
ratified and affirmed, except insofar as such findings and 
determinations may be in conflict with the findings and determinations 
set forth herein.
    1. The Order, as amended, and as hereby further amended, and all of 
the terms and conditions thereof, will tend to effectuate the declared 
policy of the Act;
    2. The Order, as amended, and as hereby further amended, regulates 
the handling of walnuts grown in California in the same manner as, and 
is applicable only to, persons in the respective classes of commercial 
and industrial activity specified in the Order;
    3. The Order, as amended, and as hereby further amended, is limited 
in application to the smallest regional production area which is 
practicable, consistent with carrying out the declared policy of the 
Act, and the issuance of several orders applicable to subdivisions of 
the production area would not effectively carry out the declared policy 
of the Act;
    4. The Order, as amended, and as hereby further amended, 
prescribes, insofar as practicable, such different terms applicable to 
different parts of the production area as are necessary to give due 
recognition to the differences in the production and marketing of 
walnuts produced or packed in the production area; and
    5. All handling of walnuts produced in the production area as 
defined in the Order is in the current of interstate or foreign 
commerce or directly burdens, obstructs, or affects such commerce.
    (b) Determinations. It is hereby determined that:
    1. Handlers (excluding cooperative associations of producers who 
are not engaged in processing, distributing, or shipping of walnuts 
covered under the Order) who during the period September 1, 2015, 
through August 31, 2016, handled not less than 50 percent of the volume 
of such walnuts covered by said Order, as hereby amended, have not 
signed an amended marketing agreement; and
    2. The issuance of this amendatory Order, amending the aforesaid 
Order, is favored or approved by producers representing at least two-
thirds of the volume of walnuts produced by those voting in a 
referendum on the question of approval and who, during the period of 
September 1, 2015, through August 31, 2016, have been engaged within 
the production area in the production of such walnuts.
    3. The issuance of this amendatory Order advances the interests of 
growers of walnuts in the production area pursuant to the declared 
policy of the Act.

Order Relative to Handling

    It is therefore ordered, that on and after the effective date 
hereof, all handling of walnuts grown in California shall be in 
conformity to, and in compliance with, the terms and conditions of the 
said Order as hereby amended as follows:
    The provisions of the proposed Marketing Order amending the Order 
contained in the proposed rule issued by the Associate Administrator on 
September 12, 2016, and published in the Federal Register on September 
16, 2016 (81 FR 63721), shall be and are the terms and provisions of 
this order amending the Order and are set forth in full herein.

List of Subjects in 7 CFR Part 984

    Walnuts, Marketing agreements, Reporting and recordkeeping 
requirements.

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

PART 984--WALNUTS GROWN IN CALIFORNIA

0
1. The authority citation for part 984 continues to read as follows:

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

0
2. Amend 984.69 by redesignating paragraph (d) as paragraph (e) and 
adding a new paragraph (d) to read as follows:


Sec.  984.69  Assessments.

* * * * *
    (d) Advanced assessments and commercial loans. To provide funds for 
the administration of the provisions of this part during the part of a 
fiscal period when neither sufficient operating reserve funds nor 
sufficient revenue from assessments on the current season's 
certifications are available, the Board may accept payment of 
assessments in advance or may borrow money from a commercial lending 
institution for such purposes.
* * * * *

    Dated: May 8, 2018.
Bruce Summers,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 2018-10106 Filed 5-10-18; 8:45 am]
BILLING CODE 3410-02-P