[Federal Register Volume 85, Number 89 (Thursday, May 7, 2020)]
[Rules and Regulations]
[Pages 27107-27109]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-09160]



[[Page 27107]]

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 984

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


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule implements a recommendation from the California 
Walnut Board (Board) to suspend the reserve obligation and its 
requirements currently prescribed under the Federal marketing order for 
walnuts grown in California. This rule also removes references to the 
reserve obligation and its requirements.

DATES: Effective June 8, 2020.

FOR FURTHER INFORMATION CONTACT: Pushpinder Kumar, Marketing 
Specialist, or Terry Vawter, Regional Director, California Marketing 
Field Office, Marketing Order and Agreement Division, Specialty Crops 
Program, AMS, USDA; Telephone: (559) 487-5903, Fax: (559) 487-5906, 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 final rule, pursuant to 5 U.S.C. 553, 
amends regulations issued to carry out a marketing order as defined in 
7 CFR 900.2(j). This final 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 
operating within California, and a public member.
    The Department of Agriculture (USDA) is issuing this final 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 final 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 rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This 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 final rule suspends 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.  [thinsp]984.33 defines ``hold,'' the action 
that requires handlers to maintain possession of the kernel weight of 
walnuts necessary to meet his or her reserve obligation.
    The reserve obligation requirements in Sec. Sec.  [thinsp]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 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 suspension streamlines Board operations by eliminating the 
need for the Board's Export Committee to consider free, reserve, and 
export percentages at its meetings at the start of each marketing year.
    The reserve obligation and its requirements are suspended but 
remain part of the Order until the Board makes a recommendation to 
reinstate or terminate them. This final rule also removes related 
references to the reserve obligation and its requirements. The 
Secretary reviewed any such recommendation by the Board.
    This final rule suspends Sec. Sec.  [thinsp]984.23, 984.26, 984.33, 
984.49, 984.54, 984.56, 984.66, and 984.456 in their entirety.
    This final rule amends Sec. Sec.  [thinsp]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 action requires no changes to any existing Board forms.

[[Page 27108]]

Final Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (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 
businesses subject to such actions so that small businesses will not be 
unduly or disproportionately burdened. Marketing orders issued pursuant 
to the Act, and the 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 action is expected to positively impact the Board, including 
members of the Export Committee, by suspending 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 allows the Board's meeting early in the marketing 
year to run more efficiently.
    This final rule suspends 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. This action also removes related references 
to the reserve obligation and its requirements in the Order.
    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. USDA has not 
identified any relevant Federal rules that duplicate, overlap or 
conflict with this final 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.
    In addition, USDA has not identified any relevant Federal rules 
that duplicate, overlap, or conflict with this rule.
    The Board discussed this action at a strategic planning session 
held on February 12-13, 2019. The Board's Marketing Order Review 
Committee (MORC) 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.
    A proposed rule concerning this action was published in the Federal 
Register on January 22, 2020 (85 FR 3551). Copies of the proposed rule 
were provided to Board members and California walnut handlers. 
Additionally, the proposed rule was made available through the internet 
by USDA and the Office of the Federal Register. A 30-day comment period 
ending February 21, 2020, was provided to allow interested persons to 
respond to the proposal. No comments were received. Accordingly, USDA 
makes no changes to the rule as proposed.
    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.
    After consideration of all relevant matter presented, including the 
information and recommendation submitted by the Board and other 
available information, it is hereby found that this rule, as 
hereinafter set forth, will 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, AMS amends 7 CFR part 
984 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.


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


Sec.  984.21  Eligibility.

    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. Stay Sec.  984.23 indefinitely.


Sec.  984.26  [Stayed]

0
4. Stay Sec.  984.26 indefinitely.


Sec.  984.33  [Stayed]

0
5. Stay Sec.  984.33 indefinitely.


Sec.  984.48  [Amended]

0
6. In Sec.  984.48 stay paragraphs (a)(6) and (a)(7) indefinitely.

Sec.  984.49  [Stayed]

0
7. Stay Sec.  984.49 indefinitely.


Sec.  984.50  [Stayed]

0
8. Stay Sec.  984.50(e) indefinitely.

0
9. Amend Sec.  984.51 by revising 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 service shall be separate, and shall not duplicate 
each other. Handlers

[[Page 27109]]

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 as directed by the Board. The assessment requirements in 
Sec.  984.69 shall be incurred at the time of certification.


Sec.  984.54  [Stayed]

0
10. Stay Sec.  984.54 indefinitely.


Sec.  984.56  [Stayed]

0
11. Stay Sec.  984.56 indefinitely.

0
12. 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
13. Stay Sec.  984.66 indefinitely.

0
14. In Sec.  984.67 stay paragraph (a) indefinitely, and revise 
paragraph (b) to read as follows:


Sec.  984.67  Exemptions.

* * * * *
    (b) Exemptions from assessments and quality regulations--(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  [Stayed]

0
15. Stay Sec.  984.69(b) indefinitely.


Sec.  984.450  [Amended]

0
16. In Sec.  984.450 stay paragraphs (a) and (b) indefinitely.


Sec.  984.451  [Amended]

0
17. In Sec.  984.451 stay paragraph (c) indefinitely.


Sec.  984.456  [Stayed]

0
18. Stay Sec.  984.456 indefinitely.


Sec.  984.464  [Amended]

0
19. In Sec.  984.464 stay paragraph (a) indefinitely.

Bruce Summers,
Administrator, Agricultural Marketing Service.
[FR Doc. 2020-09160 Filed 5-6-20; 8:45 am]
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