[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
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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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