[Federal Register Volume 85, Number 14 (Wednesday, January 22, 2020)]
[Proposed Rules]
[Pages 3551-3553]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-00399]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 85, No. 14 / Wednesday, January 22, 2020 / 
Proposed Rules  

[[Page 3551]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 984

[Docket No. AMS-SC-19-0088; SC19-984-2 PR]


Walnuts Grown in California; Stays of Reserve Obligation and Its 
Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: This proposed rule would implement a recommendation from the 
California Walnut Board (Board) to stay the reserve obligation and its 
requirements currently prescribed under the Federal marketing order for 
walnuts grown in California. The proposed rule would also make 
conforming changes to remove references to the reserve obligation and 
its requirements.

DATES: Comments must be received by February 21, 2020.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent to the Docket Clerk, 
Marketing Order and Agreement Division, Specialty Crops Program, AMS, 
USDA, 1400 Independence Avenue SW, STOP 0237, Washington, DC 20250-
0237; Fax: (202) 720-8938; or internet: http://www.regulations.gov. 
Comments should reference the document number and the date and page 
number of this issue of the Federal Register and will be made available 
for public inspection in the Office of the Docket Clerk during regular 
business hours, or can be viewed at: http://www.regulations.gov. All 
comments submitted in response to this rule will be included in the 
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.

FOR FURTHER INFORMATION CONTACT: Terry Vawter, Regional Director, 
California Marketing Field Office, Marketing Order and Agreement 
Division, Specialty Crops Program, AMS, USDA; Telephone: (559) 487-
5905, Fax: (559) 487-5906; or Email: [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, 
proposes an amendment to regulations issued to carry out a marketing 
order as defined in 7 CFR 900.2(j). This proposed rule is issued under 
Marketing Order No. 984, as amended (7 CFR part 984), regulating the 
handling of walnuts grown in California. Part 984 (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 locally administers the Order and is comprised of 
growers and handlers of walnuts operating within California, and a 
public member.
    The Department of Agriculture (USDA) is issuing this proposed rule 
in conformance with Executive Orders 13563 and 13175. This proposed 
rule falls within a category of regulatory actions that the Office of 
Management and Budget (OMB) exempted from Executive Order 12866 review. 
Additionally, because this proposed 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).
    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This proposed rule is not intended to have 
retroactive effect.
    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.
    This proposed rule would stay the regulations related to reserve 
walnuts under the Order. Section 984.89(b)(2) states that the Secretary 
of Agriculture (Secretary) ``may terminate or suspend the operation of 
any or all of the provisions of this subpart, whenever he finds that 
such provisions do not tend to effectuate the declared policy of the 
act.'' The current authority to establish a reserve obligation has not 
been used by the Board since the 1987-88 marketing year, when the Board 
began working toward increasing demand rather than controlling supply.
    Section 984.21 defines ``handler inventory'' as ``all walnuts, 
inshell or shelled (except those held in satisfaction of a reserve 
obligation), wherever located, then held by a handler or for his or her 
account.''
    Sections 984.23 and 984.26 define ``free'' and ``reserve'' walnuts, 
respectively; and Sec.  984.33 defines ``hold,'' the action that 
requires handlers to maintain possession of the kernelweight of walnuts 
necessary to meet his or her reserve obligation.
    The reserve obligation requirements in Sec. Sec.  984.48 and 984.49 
include provisions that require the Board recommend to the Secretary 
free, reserve, and export percentages of walnuts at the start of each 
marketing year (September 1). A recommendation for changes to the 
percentages must be made to the Secretary on or before February 15 of 
each marketing year, if such changes are prudent. The export 
percentages are reviewed by the Board's Export Committee, which is 
comprised of Board members who are industry experts in exporting 
walnuts.
    Sections 984.49, 984.50, 984.51, 984.54, 984.56, 984.64, 984.66, 
984.67, and 984.69 include establishing a free, reserve, and export 
percentage

[[Page 3552]]

obligation; establishing minimum kernel content for any lot of walnuts 
acceptable for disposition for credit against a handler's reserve 
obligation; mandating inspection of walnuts; establishing the reserve 
obligation; instructions regarding the disposition of reserve and 
substandard walnuts; a requirement that the Board assist handlers in 
meeting their reserve obligation; various exemptions from the reserve 
obligation; and authorizing the Board to use funds derived from 
assessments to defray expenses related to reserve walnut pool expenses, 
respectively.
    Sections 984.450, 984.456, and 984.464 establish requirements 
relative to grade and size, inspection, and disposition of reserve 
walnuts, respectively.
    This proposed suspension is expected to streamline Board operations 
by eliminating the need for the Export Committee and removing the need 
for the Board to consider free, reserve, and export percentages at its 
meetings at the start of each marketing year.
    The reserve obligation and its requirements would be suspended but 
remain part of the Order until the Board makes a recommendation to 
reinstate or terminate them. This proposed rule would also remove 
related references to the reserved obligation and its requirements. The 
Secretary would review any such recommendation by the Board.
    This proposed rule would stay Sec. Sec.  984.23, 984.26, 984.33, 
984.49, 984.54, 984.56, 984.66, and 984.456 in their entirety.
    This proposed rule would amend Sec. Sec.  984.21, 984.48, 984.50, 
984.51, 984.64, 984.69, 984.450, 984.451, and 984.464 to remove 
references to the reserve obligation and its requirements.
    This proposed stay requires no changes to any existing Board forms.

Initial Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this action on small entities. Accordingly, AMS has 
prepared this initial regulatory flexibility analysis.
    The purpose of the RFA 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. 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 90 handlers subject to regulation under the 
Order and approximately 5,000 walnut growers in the production area. 
The Small Business Administration (SBA) defines small agricultural 
service firms as those having annual receipts of less than $30,000,000, 
and small agricultural producers as those having annual receipts of 
less than $1,000,000 (13 CFR 121.201).
    Based upon information from the National Agricultural Statistics 
Service (NASS), the price reported for July 2019 was $7,060 per ton 
($3.53 per pound) of walnuts. Data from NASS indicate that the average 
walnut production is 1.93 tons per acre. Given that volume and price, a 
grower would have to farm at least 74 acres to receive $1,000,000, not 
accounting for input costs. NASS data on farm size indicate that only 
approximately 42 percent of walnut growers farm more than 74 acres. 
Thus, most walnut growers may be considered small entities.
    Given data from the Board regarding walnut receipts by handlers, 
including walnut acquisitions and the $7,060 per ton price, only 38 
percent of handlers would have annual receipts of $30,000,000. Thus, 
most walnut handlers may be considered small entities.
    This proposed stay is expected to positively impact the Board, 
including members of the Export Committee, by staying regulations that 
have not been used in decades. No longer having to gather data, discuss 
the information, and then make recommendations to the Secretary 
regarding a reserve obligation would allow the Board's meeting early in 
the marketing year to run more efficiently.
    This proposed rule would stay the reserve obligation and its 
requirements under the Order for the 2019-20 marketing year and beyond, 
until the Board recommends to the Secretary that the requirements be 
reinstated or terminated. The proposed rule would also remove related 
references to the reserve obligation and its requirements in the Order.
    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
chapter 35), the Order's information collection requirements are 
approved by the Office of Management and Budget (OMB) under OMB No. 
0581-0178 Vegetable and Specialty Crops. No changes to those 
requirements are necessary as a result of this action.
    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.
    In addition, USDA has not identified any relevant Federal rules 
that duplicate, overlap, or conflict with this rule.
    The Board held a strategic planning session on February 12-13, 
2019, and thoroughly discussed this action. The Marketing Order Review 
Committee (MORC) of the Board met on August 14, 2019, to further 
discuss the reserve obligation and its requirements and made a 
recommendation for the change at the Board's September 13, 2019 
meeting. The strategic planning sessions, the MORC meeting, and the 
Board meeting on September 13, 2019, were public meetings widely 
publicized throughout the California walnut industry, and all 
interested persons were invited to attend the meetings and encouraged 
to participate in Board deliberations.
    Interested persons are invited to submit comments on this proposed 
rule, including the regulatory and informational impacts of this action 
on small businesses.
    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/rules-regulations/moa/small-businesses. Any questions 
about the compliance guide should be sent to Richard Lower at the 
previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    This proposed rule invites comments on staying the reserve 
authority under the Order. Any comments received will be considered 
prior to the finalization of this rule.
    After consideration of all relevant material presented, including 
the Board's recommendation, and other information, it is found that 
this proposed rule, as hereinafter set forth, would tend to effectuate 
the declared policy of the Act.

List of Subjects in 7 CFR Part 984

    Marketing agreements, Reporting and recordkeeping requirements, and 
Walnuts.

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

PART 984--WALNUTS GROWN IN CALIFORNIA

0
1. The authority citation for 7 CFR part 984 continues to read as 
follows:

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


Sec.  984.21  [Amended]

0
2. Revise Sec.  984.21 to read as follows:

[[Page 3553]]

    Handler inventory as of any date means all walnuts, inshell or 
shelled, wherever located, then held by a handler or for his or her 
account.


Sec.  984.23  [Stayed]

0
3. Section 984.23 is stayed indefinitely.


Sec.  984.26  [Stayed]

0
4. Section Sec.  984.26 is stayed indefinitely.


Sec.  984.33  [Stayed]

0
5. Section Sec.  984.33 is stayed indefinitely.


Sec.  984.48  [Amended]

0
6. In Sec.  984.48, paragraphs (a)(6) and (7) are stayed indefinitely.


Sec.  984.49  [Stayed]

0
7. Section Sec.  984.49 is stayed indefinitely.


Sec.  984.50  [Amended]

0
12. In Sec.  984.50, paragraph (e) is stayed indefinitely.
0
13. In Sec.  984.51, revise paragraphs (a) and (c) to read as follows:


Sec.  984.51  Inspection and certification of inshell and shelled 
walnuts.

    (a) Before or upon handling of any walnuts, each handler at his or 
her own expense shall cause such walnuts to be inspected to determine 
whether they meet the then-applicable grade and size regulations. Such 
inspection shall be performed by the inspection service or services 
designated by the Board with the approval of the Secretary; Provided, 
That if more than one inspection service is designated, the functions 
performed by each services shall be separate, and shall not duplicate 
each other. Handlers shall obtain a certificate for each inspection and 
cause a copy of each certificate issued by the inspection service to be 
furnished to the Board. Each certificate shall show the identity of the 
handler, quantity of walnuts, the date of inspection, and for inshell 
walnuts, the grade and size of such walnuts as set forth in the United 
States Standards for Walnuts (Juglans regia) in the Shell. The Board, 
with the approval of the Secretary, may prescribe procedures for the 
administration of this provision.
* * * * *
    (c) Upon inspection, walnuts shall be identified by tags, stamps, 
or other means of identification prescribed by the Board and affixed to 
the container by the handler under the supervision of the Board or of a 
designated inspector and such identification shall not be altered or 
removed except at directed by the Board. The assessment requirements in 
Sec.  984.69 shall be incurred at the time of certification.


Sec.  984.54  [Stayed]

0
14. Section 984.54 is stayed indefinitely.


Sec.  984.56  [Stayed]

0
15. Section 984.56 is stayed indefinitely.
0
16. Revise Sec.  984.64 to read as follows:


Sec.  984.64  Disposition of substandard walnuts.

    Substandard walnuts may be disposed of only for manufacture into 
oil, livestock feed, or such other uses as the Board determines to be 
noncompetitive with existing domestic and export markets for 
merchantable walnuts and with proper safeguards to prevent such walnuts 
from thereafter entering channels of trade in such markets. Each 
handler shall submit, in such form and at such intervals as the Board 
may determine, reports of:
    (a) His production and holdings of substandard walnuts and; (b) The 
disposition of all substandard walnuts to any other person, showing the 
quantity, lot, date, name and address of the person to whom delivered, 
the approved use and such other information pertaining thereto as the 
Board may specify.


Sec.  984.66  [Stayed]

0
17. Section 984.66 is stayed indefinitely.
0
18. Amend Sec.  984.67 by:
0
a. Stay paragraph (a) indefinitely, and;
0
b. Revise paragraph (b)(1) to read as follows:


Sec.  984.67  Exemptions.

* * * * *
    (b) * * *
    (1) Sales by growers direct to consumers. Any walnut grower may 
handle walnuts of his production free of the regulatory and assessment 
provisions of this part if he sells such walnuts in the area of 
production directly to consumers under the following types of 
exemptions:
* * * * *


Sec.  984.69  [Amended]

0
19. In Sec.  984.69 paragraph (b) is stayed indefinitely.


Sec.  984.450  [Amended]

0
20. In Sec.  984.450 paragraphs (a) and (b) are stayed indefinitely.


Sec.  984.451  [Amended]

0
21. In Sec.  984.451 paragraph (c) is stayed indefinitely.


Sec.  984.456  [Stayed]

0
22. Section 984.456 is stayed indefinitely.


Sec.  984.464  [Amended]

0
23. In Sec.  984.464 paragraph (a) is stayed indefinitely.

    Dated: January 9, 2020.
Bruce Summers,
Administrator, Agricultural Marketing Service.
[FR Doc. 2020-00399 Filed 1-21-20; 8:45 am]
 BILLING CODE 3410-02-P