[Federal Register Volume 86, Number 118 (Wednesday, June 23, 2021)]
[Rules and Regulations]
[Pages 32721-32723]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-13039]



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 Rules and Regulations
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  Federal Register / Vol. 86, No. 118 / Wednesday, June 23, 2021 / 
Rules and Regulations  

[[Page 32721]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 984

[Doc. No. AMS-SC-20-0075; SC20-984-2 FR]


Walnuts Grown in California; Decreased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule implements a recommendation from the 
California Walnut Board (Board) to decrease the assessment rate 
established for the 2020-21 and subsequent marketing years. The 
assessment rate will remain in effect indefinitely unless modified, 
suspended, or terminated.

DATES: Effective July 23, 2021.

FOR FURTHER INFORMATION CONTACT: Bianca Bertrand, Management and 
Program Analyst, California Marketing Field Office, Marketing Order and 
Agreement Division, Specialty Crops Program, AMS, USDA; Telephone: 
(559) 487-5901, Fax: (559) 487-5906, or Email: 
[email protected] or Gary Olson, Acting Regional Director; 
Telephone: (503) 326-2055, 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, or 
Email: [email protected].

SUPPLEMENTARY INFORMATION: This action, pursuant to 5 U.S.C. 553, 
implements an amendment to regulations issued to carry out 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, (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 the area of production, and a public member.
    The Department of Agriculture (USDA) is issuing this rule in 
conformance with Executive Orders 13563 and 13175. In accordance with 
Executive Order 13175, AMS has not identified any tribal implications 
as a result of this rule. This rule falls within a category of 
regulatory actions that the Office of Management and Budget (OMB) 
exempted from Executive Order 12866 review.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. Under the Order now in effect, California walnut 
handlers are subject to assessments. Funds to administer the Order are 
derived from such assessments. It is intended that the assessment rate 
be applicable to all assessable walnuts for the 2020-21 marketing year, 
and continue until amended, suspended, or terminated.
    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. Such 
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 rule decreases the assessment rate from $0.0400 per 
kernelweight pound assessable walnuts, the rate that was established 
for the 2017-18 and subsequent marketing years, to $0.0250 per 
kernelweight pound of assessable walnuts handled for the 2020-21 and 
subsequent marketing years.
    The Order provides authority for the Board, with the approval of 
USDA, to formulate an annual budget of expenses and collect assessments 
from handlers to administer the program. The members are familiar with 
the Board's needs and with the costs of goods and services in their 
local area and are thus able to formulate an appropriate budget and 
assessment rate. The assessment rate is formulated and discussed in a 
public meeting and all directly affected persons have an opportunity to 
participate and provide input.
    For the 2017-18 and subsequent marketing periods, the Board 
recommended, and USDA approved, an assessment rate of $0.0400 per 
kernelweight pound of assessable walnuts handled. That assessment rate 
continued until modified, suspended, or terminated by USDA upon 
recommendation and information submitted by the Board or other 
information available to USDA.
    On September 11, 2020, the Board unanimously recommended 2020-21 
expenditures of $17,990,000 and an assessment rate of $0.0250 per 
kernelweight pound of assessable walnuts. In comparison, last year's 
budgeted expenditures were $25,760,000. The assessment rate of $0.0250 
is $0.0150 lower than the rate currently in effect. The Board 
recommended decreasing the assessment rate to reduce the assessment 
burden on handlers. Funds from assessments and from the Board's reserve 
will be sufficient to cover proposed expenses, while maintaining the 
Board's reserve within the requirements of the Order at no more than 
two years' budgeted expenses.
    The major expenditures recommended by the Board for the 2020-21 
marketing year include $1,930,000 for employee expenses, $283,000 for 
office expenses, $1,600,000 for production research, $825,000 for 
grades and standards activities, and $13,112,000 for domestic market 
development. Budgeted expenses for these items in 2019-20 were 
$1,896,000, $293,000, $2,000,000, $825,000, and $20,700,000, 
respectively.
    The Board derived the recommended assessment rate by considering 
anticipated expenses; estimated certification (``certification'' means

[[Page 32722]]

having the walnuts inspected) of 650,000 tons (inshell), based on a 
three-year average; and the amount of funds available in the authorized 
reserve.
    Pursuant to Sec.  984.51(b) of the Order, the estimated production 
is converted to a merchantable kernelweight basis using a factor of 
0.45 (650,000 tons x 2,000 pounds per ton x 0.45), which yields 
585,000,000 kernelweight pounds. At $0.0250 per pound, the assessment 
rate will generate $14,625,000 in assessment income and, along with 
funds from the reserve, will meet estimated expenses of $17,990,000.
    Funds in the reserve (currently $20,133,075) will be kept within 
the maximum permitted in Sec.  984.69 of the Order of approximately two 
marketing years' budgeted expenses. The reserve at the end of the 2020-
21 marketing year is anticipated to be $13,258,075.
    The assessment rate established in this rule will continue in 
effect indefinitely unless modified, suspended, or terminated by USDA 
upon recommendation and information submitted by the Board or other 
available information.
    Although the assessment rate will be effective for an indefinite 
period, the Board will continue to meet prior to or during each 
marketing year to recommend a budget of expenses and consider 
recommendations for modification of the assessment rate. The dates and 
times of Board meetings are available from the Board or USDA. Board 
meetings are open to the public and interested persons may express 
their views at these meetings. USDA will evaluate Board recommendations 
and other available information to determine whether modification of 
the assessment rate is needed. Further rulemaking would be undertaken 
as necessary. The Board's 2020-21 budget and those for subsequent 
marketing years will be reviewed and, as appropriate, approved by USDA.

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 rule 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 in order 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 4,400 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).
    The Board reported that approximately 82 percent of California's 
walnut handlers shipped merchantable walnuts valued under $30 million 
during the 2018-2019 marketing year and would, therefore, be considered 
small handlers according to the SBA definition.
    Data from the 2017 Agricultural Census, published by USDA's 
National Agricultural Statistics Service (NASS), show that 86 percent 
of California farms growing walnuts had walnut sales of less than $1 
million.
    An alternative computation includes more recent NASS data, starting 
with a three-year average value of utilized production of $1.263 
billion for the most recent seasons for which data is available (2017/
18 through 2019/20). Dividing that figure by the number of walnut 
growers (4,400) yields an average annual crop value per grower of 
approximately $287,045. This figure is well below the SBA small 
agricultural producer threshold of $1,000,000 in annual sales. Assuming 
a normal distribution, this provides evidence that a large majority of 
walnut growers can be considered small agricultural producers according 
to the SBA definition.
    This rule decreases the assessment rate collected from handlers for 
the 2020-21 and subsequent marketing years from $0.0400 to $0.0250 per 
kernelweight pound of assessable walnuts. The Board unanimously 
recommended 2020-21 expenditures of $17,990,000 and an assessment rate 
of $0.0250 per kernelweight pound of assessable walnuts. The assessment 
rate of $0.0250 is $0.0150 lower than the rate currently in effect. The 
quantity of assessable walnuts for the 2020-21 marketing year is 
estimated at 650,000 tons (inshell), which is equivalent to 585,000,000 
kernelweight pounds. Thus, the $0.0250 rate should provide $14,625,000 
in assessment income. The Board anticipates that the income derived 
from handler assessments, along with funds from the Board's authorized 
reserve, will be adequate to cover budgeted expenses for the 2020-2021 
marketing year.
    The major expenditures recommended by the Board for the 2020-21 
marketing year include $1,930,000 for employee expenses, $283,000 for 
office expenses, $1,600,000 for production research, $825,000 for 
grades and standards activities, and $13,112,000 for domestic market 
development. Budgeted expenses for these items in 2019-20 were 
$1,896,000, $293,000, $2,000,000, $825,000, and $20,700,000, 
respectively.
    The Board unanimously recommended decreasing the assessment rate to 
reduce the assessment burden on handlers, and recommended utilizing 
funds from the authorized reserve to help cover the portion of the 
Board expenses.
    Prior to arriving at this budget and assessment rate, the Board 
considered information from various sources, such as the Board's 
Executive Committee. The Board discussed alternative expenditure 
levels, based upon the relative value of various activities to the 
California walnut industry. The Board recommended the assessment rate 
of $0.0250 to provide $14,625,000 in assessment income based on the 
estimation. The Board determined that assessment revenue, along with 
funds from the authorized reserve will be adequate to cover budgeted 
expenses for the 2020-21 marketing year.
    Based upon information from the National Agricultural Statistics 
Service (NASS), the grower price reported for walnuts in 2019 was 
$1,970 per ton ($0.99 per pound) of walnuts. In order to determine the 
estimated assessment revenue as a percentage of the total grower 
revenue, we calculate the assessment rate ($0.0250 per kernelweight 
pound) times the estimated production (585,000,000 kernelweight 
pounds), which equals the assessment revenue of $14,625,000. The grower 
revenue is calculated by multiplying the grower price of $1,970 per ton 
($0.99 per kernelweight pound) times the estimated production 
(585,000,000 kernelweight pounds), which equals the grower revenue of 
$579,150,000. The final step, dividing the assessment revenue by the 
grower revenue, indicates that, for the 2020-21 marketing year, the 
estimated assessment revenue as a percentage of total grower revenue 
would be about 2.5 percent.
    This rule decreases the assessment obligation imposed on handlers. 
Assessments are applied uniformly on all handlers, and some of the 
costs may be passed on to growers. However, decreasing the assessment 
rate reduces the burden on handlers and may also reduce the burden on 
growers.

[[Page 32723]]

    The Board's meeting was widely publicized throughout the California 
walnut industry. All interested persons were invited to attend the 
meeting and participate in Board deliberations on all issues. Like all 
Board meetings, the September 11, 2020, meeting was a public meeting 
and all entities, both large and small, were able to express views on 
this issue. Finally, interested persons were invited to submit comments 
on this rule, including the regulatory and information collection 
impacts of this action on small businesses.
    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 the OMB and assigned OMB No. 0581-0178 Vegetable 
and Specialty Crops. No changes in those requirements will be necessary 
as a result of this rule. Should any changes become necessary, they 
would be submitted to OMB for approval.
    This rule 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.
    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.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this final rule.
    A proposed rule concerning this action was published in the Federal 
Register on March 5, 2021 (86 FR 12837). The Board notified all 
California walnut handlers of the proposed assessment rate decrease. 
The proposed rule was made available through the internet by USDA and 
the Office of the Federal Register. A 30-day comment period ending 
April 5, 2021, was provided for interested persons to respond to the 
proposal. No comments were received. Accordingly, no changes will be 
made to the proposed rule.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: 
https://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 material presented, including 
the information and recommendation submitted by the Board and other 
information available, it is hereby found that this rule 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, 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. Section 984.347 is revised to read as follows:


Sec.  984.347  Assessment rate.

    On and after September 1, 2020, an assessment rate of $0.0250 per 
kernelweight pound is established for California merchantable walnuts.

Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2021-13039 Filed 6-22-21; 8:45 am]
BILLING CODE P