Walnuts Grown in California; Proposed Amendment to Marketing Order 984 and Referendum Order, 24255-24257 [2017-10676]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 82, Number 101 (Friday, May 26, 2017)]
[Proposed Rules]
[Pages 24255-24257]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-10676]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

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. 82, No. 101 / Friday, May 26, 2017 / Proposed 
Rules

[[Page 24255]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 984

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


Walnuts Grown in California; Proposed Amendment to Marketing 
Order 984 and Referendum Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed amendment and referendum order.

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SUMMARY: This rule proposes one amendment to Marketing Order No. 984 
(order), which regulates the handling of walnuts grown in California, 
and provides growers with the opportunity to vote in a referendum to 
determine if they favor the change. This amendment was proposed by the 
California Walnut Board (Board), which is responsible for the local 
administration of the order and is comprised of walnut growers and 
handlers operating within the production area. The amendment would 
authorize the Board to borrow from a commercial lending institution to 
fund operations and marketing/research expenses. This proposed 
amendment is intended to reflect a customary business practice that 
will provide greater flexibility to the Board while increasing its 
effectiveness.

DATES: The referendum will be conducted from August 7, 2017, through 
August 18, 2017. The representative period for the purpose of the 
referendum is September 1, 2015, through August 31, 2016.

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: 
Geronimo.Quinones@ams.usda.gov or Julie.Santoboni@ams.usda.gov.
    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: Richard.Lower@ams.usda.gov.

SUPPLEMENTARY INFORMATION: This proposal is issued under Marketing 
Order No. 984, as amended (7 CFR part 984), regulating the handling of 
walnuts grown in California, hereinafter referred to as the ``order.'' 
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 Department of Agriculture (USDA) is issuing this rule in 
conformance with Executive Orders 12866, 13563, and 13175.
    This proposal has been reviewed under Executive Order 12988, Civil 
Justice Reform. This proposal 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. 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.
    Section 1504 of the Food, Conservation, and Energy Act of 2008 
(2008 Farm Bill) (Pub. L. 110-246) amended section 8c(17) of the Act, 
which in turn required the addition of supplemental rules of practice 
to 7 CFR part 900 (73 FR 49307; August 21, 2008). The 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 
amendment, the potential regulatory and economic impacts on affected 
entities, and any other relevant matters.
    AMS has considered these factors and has determined that the 
amendment proposal is not unduly complex and the nature of the proposed 
amendment is appropriate for utilizing the informal rulemaking process 
to amend the order.
    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 proposed 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. AMS will conduct a grower referendum to 
determine support for the proposed amendment. If appropriate, a final 
rule will then be issued to effectuate the amendment favored by growers 
in the referendum.
    The Board's proposed amendment would amend the order by authorizing 
the Board to borrow from a commercial lending institution during times 
of cash shortage to help ensure continuity of operations.

Proposal--Borrowing From a Commercial Lending Institution

    Section 984.69 of the order, Assessments, authorizes the Board to 
collect assessments from handlers to administer the program.
    This proposal would provide the Board with authority to borrow from 
a commercial lending institution during times of cash shortages. In the 
past, the Board has utilized reserve funds collected through handler 
assessments to help finance the advertising/marketing program. However, 
due to the increased size of the domestic advertising program, relying 
on reserve funds as a means to meet obligations could make the program 
unsustainable in the long term. History shows the most costly part of 
the program runs during the first six months of the marketing year, and 
those expenditures must be paid by mid-year. Since the payments must be 
made before all assessment fees

[[Page 24256]]

are invoiced and collected, a cash shortage may occur during the year. 
Authorizing the Board to borrow from a commercial lending institution 
would help manage and sustain the program during times of low income 
while also ensuring continuity of operations.
    Therefore, for the reasons stated above, it is proposed that Sec.  
984.69, Assessments, be amended by adding a new paragraph that would 
provide the Board with authority to borrow from a commercial lending 
institution when no other funding is available.

Executive Orders 12866 and 13771, and Regulatory Flexibility Analysis

    This rule does not meet the definition of a significant regulatory 
action contained in section 3(f) of Executive Order 12866, and is not 
subject to review by the Office of Management and Budget (OMB). 
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). Pursuant to the 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 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 marketing order. The Small Business Administration 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 well 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 amendment proposed by the Board would authorize the Board to 
borrow from commercial lending institutions. This would 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.
    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.

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 are necessary in those requirements 
as a result of this action. Should any changes become necessary, they 
would be submitted to OMB for approval.
    This proposed amendment would impose no 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 
the meeting and encouraged to participate in Board deliberations on 
this issue. Like all Board meetings, 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 rule were 
mailed or sent via facsimile to all Board

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members. 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 16, 2016, was provided to allow interested persons to 
respond to the proposal.
    Two comments were received in support of the proposal. Therefore, 
no changes have been made to the proposed amendment as a result of the 
comments received.

Findings and Conclusions

    The findings and conclusions and general findings and 
determinations included in the proposed rule set forth in the September 
16, 2016, issue of the Federal Register are hereby approved and 
adopted.

Marketing Order

    Annexed hereto and made a part hereof is the document entitled 
``Order Amending the Order Regulating the Handling of Walnuts Grown in 
California.'' This document has been decided upon as the detailed and 
appropriate means of effectuating the foregoing findings and 
conclusions. It is hereby ordered, that this entire rule be published 
in the Federal Register.

Referendum Order

    It is hereby directed that a referendum be conducted in accordance 
with the procedure for the conduct of referenda (7 CFR part 900.400-
407) to determine whether the annexed order amending the order 
regulating the handling of Walnuts Grown in California is approved by 
growers, as defined under the terms of the order, who during a 
representative period were engaged in the production of walnuts in the 
production area.
    The representative period for the conduct of such referendum is 
hereby determined to be September 1, 2015, through August 31, 2016.
    The agents of the Secretary to conduct such referendum are 
designated to be Terry Vawter and Jeffrey Smutny, California Marketing 
Field Office, Marketing Order and Agreement Division, Specialty Crops 
Program, AMS, USDA; Telephone: (559) 487-5901, or Email: 
Terry.Vawter@ams.usda.gov or Jeffrey.Smutny@ams.usda.gov, respectively.

List of Subjects in 7 CFR Part 984

    Walnuts, Marketing agreements, Reporting and recordkeeping 
requirements.

    Dated: May 19, 2017.
Bruce Summers,
Acting Administrator, Agricultural Marketing Service.

Order Amending the Order Regulating the Handling of Walnuts Grown in 
California \1\
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    \1\ This order shall not become effective unless and until the 
requirements of Sec.  900.14 of the rules of practice and procedure 
governing proceedings to formulate marketing agreements and 
marketing orders have been met.
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Findings and Determinations

    The findings hereinafter set forth are supplementary to the 
findings and determinations which were previously made in connection 
with the issuance of the marketing 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 marketing order, as amended, and as hereby proposed to be 
further amended, and all of the terms and conditions thereof, would 
tend to effectuate the declared policy of the Act;
    2. The marketing order, as amended, and as hereby proposed to be 
further amended, regulates the handling of walnuts grown in California 
in the same manner as, and are applicable only to, persons in the 
respective classes of commercial and industrial activity specified in 
the marketing order;
    3. The marketing order, as amended, and as hereby proposed to be 
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 marketing order, as amended, and as hereby proposed to be 
further amended, prescribe, 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 in the production area; and
    5. All handling of walnuts produced in the production area as 
defined in the marketing order is in the current of interstate or 
foreign commerce or directly burdens, obstructs, or affects such 
commerce.

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 proposed to be amended as follows:
    The provisions of the proposed marketing order amending the order 
contained in the proposed rule issued by the Administrator on September 
12, 2016, and published in the Federal Register (81 FR 63721) on 
September 16, 2016, will be and are the terms and provisions of this 
order amending the order and are set forth in full herein.

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


Sec.  984.69   Assessments.

* * * * *
    (d) 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.
* * * * *
[FR Doc. 2017-10676 Filed 5-25-17; 8:45 am]
 BILLING CODE 3410-02-P