Walnuts Grown in California; Order Amending Marketing Order No. 984, 56745-56750 [2023-17753]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 88, Number 160 (Monday, August 21, 2023)]
[Rules and Regulations]
[Pages 56745-56750]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-17753]



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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. 88, No. 160 / Monday, August 21, 2023 / Rules 
and Regulations

[[Page 56745]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 984

[Doc. No. 22-J-0011; AMS-SC-22-0010; SC22-981-1]


Walnuts Grown in California; Order Amending Marketing Order No. 
984

AGENCY: Agricultural Marketing Service, Department of Agriculture 
(USDA).

ACTION: Final rule.

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SUMMARY: This final rule amends Marketing Order No. 984, which 
regulates the handling of walnuts grown in California. USDA approved 
and adopted amendments proposed by the California Walnut Board (the 
Board) after due consideration of a public hearing record, and after 
California walnut producers voted in favor of such amendments in a 
referendum. This rule eliminates mandatory inspection and certification 
of inshell and shelled walnuts, and of shelled walnuts for processing; 
creates a new mechanism for determining and collecting handler 
assessments; adds the authority to charge interest for late payments; 
establishes an assessment rate of $0.0125 per inshell pound of walnuts; 
expands the definition of ``to handle'' to include ``receive''; and 
removes volume control authority. In addition, the Agricultural 
Marketing Service (AMS) made necessary changes to the marketing order 
to conform to the amendments adopted.

DATES: This rule is effective September 20, 2023.

FOR FURTHER INFORMATION CONTACT: Geronimo Quinones, Market Development 
Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue 
SW, Stop 0237, Washington, DC 20250-0237; Telephone: (202) 308-2339 or 
Matthew Pavone, Market Development Division, Specialty Crops Program, 
AMS, USDA, 1400 Independence Avenue SW, Stop 0237, Washington, DC 
20250-0237; Telephone: (202) 720-8085, or Email: 
[email protected] or [email protected].
    Small businesses may request information on this proceeding by 
contacting Richard E. Lower, Market Development Division, Specialty 
Crops Program, AMS, USDA, 1400 Independence Avenue SW, Stop 0237, 
Washington, DC 20250-0237; Telephone: (202) 720-8085, or Email: 
[email protected].

SUPPLEMENTARY INFORMATION: Prior documents in this proceeding: Notice 
of Hearing published in the April 1, 2022, issue of the Federal 
Register (87 FR 19020); a Recommended Decision published in the October 
25, 2022, issue of the Federal Register (87 FR 64385); and a 
Secretary's Decision and Referendum Order published in the March 7, 
2023, issue of the Federal Register (88 FR 14083).
    This action is governed by the provisions of sections 556 and 557 
of title 5 of the United States Code and, therefore, is excluded from 
the requirements of Executive Orders 12866, 13563, and 13175.
    Notice of this rulemaking action was provided to Tribal governments 
through the USDA Office of Tribal Relations.

Preliminary Statement

    This action finalizes amendments 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 final rule was formulated on the record of a public 
hearing held via videoconference technology on April 19 and 20, 2022. 
The hearing was conducted pursuant to the provisions of the Act, and 
the applicable rules of practice and procedure governing the 
formulation of marketing agreements and orders (7 CFR part 900). Notice 
of this hearing was published in the Federal Register on April 1, 2022 
(87 FR 19020), and outlined each of the proposed amendments to the 
Order.
    Upon the basis of evidence introduced at the hearing and the record 
thereof, the Administrator of AMS on November 4, 2022, filed with the 
Hearing Clerk, USDA, a Recommended Decision and Opportunity to File 
Written Exceptions thereto by November 25, 2022. No exceptions were 
filed.
    A Secretary's Decision and Referendum Order published in the 
Federal Register on March 7, 2023 (88 FR 14083), directed that a 
referendum be conducted during the period of April 3 through April 21, 
2023, among eligible California walnut growers to determine whether 
they favored the amendments to the Order. To become effective, per the 
Order, the proposed amendments required approval by at least two-thirds 
of those growers voting, or by voters representing at least two-thirds 
of the volume of walnuts represented by voters voting in the 
referendum. The amendment to eliminate mandatory inspection and 
certification of inshell and shelled walnuts, and of shelled walnuts 
for processing was favored by 81.06 percent of the growers voting in 
the referendum, representing 87.95 percent of the total volume of 
walnuts produced by those voting. The amendment to create a new 
mechanism for determining handler assessments and to add the authority 
to charge interest for late payments was favored by 81.39 percent of 
the growers voting in the referendum, representing 86.74 percent of the 
total volume of walnuts produced by those voting. The amendment to 
establish an assessment rate of $0.0125 per inshell pound of walnuts 
was favored by 77.25 percent of the growers voting in the referendum, 
representing 84.69 percent of the total volume of walnuts produced by 
those voting. The amendment to create a new mechanism for collecting 
handler assessments and to expand the definition of ``to handle'' to 
include ``receive'' was favored by 85.56 percent of the growers voting 
in the referendum, representing 89.16 percent of the total volume of 
walnuts produced by those voting. The amendment to remove volume 
control authority was favored by 86.34 percent of the growers voting in 
the referendum, representing 91.40 percent of the total volume of 
walnuts produced by those voting.
    The amendments favored by voters included in this final rule remove 
from the Order quality and size regulations, including mandatory 
inspection and

[[Page 56746]]

certification requirements, and retain the authority to allow the Board 
to recommend new handling regulations in the future; modify the method 
of calculation of assessments to be based on inshell pounds and add the 
authority to allow the Board to recommend late payment charges and/or 
interest; establish an initial assessment rate of $0.0125 per inshell 
pound of walnuts; expand the definition of ``to handle'' to include 
``receive''; and remove volume control authority, including reserve 
pool authority, and revise subsequent sections of the Order to remove 
volume control provisions.
    AMS also recommended changes as necessary to the Order to conform 
to the amendments adopted, or to correct minor inconsistencies and 
typographical errors. Accordingly, AMS did the following: added 
language regarding exemptions in Sec.  984.67; removed the reference to 
the term ``merchantable'' in Sec.  984.22 and from the headings and 
paragraphs in Sec. Sec.  984.72 and 984.472(a) and (c); revised the 
heading in Sec.  984.21 from ``Eligibility'' to ``Handler inventory''; 
revised Sec. Sec.  984.69(e) and 984.89(b)(4) to replace the term 
``fiscal period'' with ``marketing year''; revised the figure in Sec.  
984.347; and revised 984.69(e) to replace ``current season's 
certifications'' with ``current marketing year''.
    AMS reinserted language regarding exemptions under Sec.  984.67 
after determining that the language was inadvertently omitted in a 
prior rulemaking conducted in May 2020. AMS removed the term 
``merchantable'' in Sec.  984.22 and from the headings and paragraphs 
in Sec. Sec.  984.72 and 984.472(a) and (c) after determining that 
there would be no grade and size regulations in effect to distinguish 
``merchantable'' walnuts from other walnuts due to the elimination of 
mandatory inspection and certification. AMS revised the heading in 
Sec.  984.21 from ``Eligibility'' to ``Handler inventory'' after 
determining that the heading, ``Eligibility'', did not reflect the 
purposes of the provision, which defines handler inventory. AMS revised 
Sec. Sec.  984.69(e) and 984.89(b)(4) to replace the term ``fiscal 
period'' with ``marketing year'' after determining that the term 
``fiscal period'' is not defined in the Order, whereas ``marketing 
year'' is defined and already used throughout the Order. This rule 
revises Sec.  984.347 to establish an assessment rate of $0.0125 per 
pound of inshell walnuts.\1\ Finally, 7 CFR 984.69(d) currently refers 
to permitting advanced assessments when assessments based on the 
``current season's certifications'' are not yet available. AMS 
determined that because Sec.  984.51 will be removed, assessments will 
no longer be based on certifications, and we amended the language in 
revised Sec.  984.69(e) to refer to ``assessments from the current 
marketing year.'' The regulatory text included in this final rule 
reflects these changes.
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    \1\ A typographical error in the April 1, 2022, hearing notice 
listed a proposed assessment rate of $0.125 per pound of inshell 
walnuts, which was subsequently corrected at the hearing and in the 
Recommended and Secretary's Decisions.
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Small Business Considerations

    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA), AMS considered the economic impact of this 
action on small entities. Accordingly, AMS 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 and amendments 
thereto are unique in that they are normally brought about through 
group action of essentially small entities for their own benefit. The 
RFA requires, where feasible, an estimate of the number of small 
businesses affected by the rule. This regulatory flexibility analysis 
estimates the proportion of small businesses because it is not feasible 
to estimate numbers.
    According to the hearing record, there are approximately 4,500 
producers and 85 handlers in the production area. Record evidence 
includes reference to a study showing that the walnut industry 
contributes 85,000 jobs to the economy, directly and indirectly.
    The Small Business Administration (SBA) establishes size standards 
that determine whether a business entity is defined as a small 
business. The size standards are based on the entity's economic 
activity, or industry, and generally use the North American Industry 
Classification System (NAICS). The size standards are expressed in 
annual receipts in millions of dollars or in number of employees, and 
indicate the maximum allowed for an entity to be considered a small 
business.
    The SBA defines small agricultural service firms (handlers) as 
those having annual receipts (sales) equal to or less than $34 million 
(Postharvest Crop Activities, NAICS code 115114). Small walnut 
producers are defined as those having annual receipts equal to or less 
than $3.75 million (Tree Nut Farming, NAICS code 111335). (See 13 CFR 
121.201.)
    Effective May 2, 2022, SBA issued a final rule updating small 
business size standards for agriculture (86 FR 18607). The tree nut 
farming (NAICS 111335) size standard changed from $1 million to $3.25 
million. Effective December 19, 2022, SBA issued a final rule again 
updating the tree nut size small business size standard, raising it to 
$3.75 million.
    The witnesses who identified themselves as small producers did so 
using the SBA size standard in effect at the time of the hearing ($1.0 
million of gross annual receipts); they are also small under the 
current standard of $3.75 million of gross annual receipts.
    Record evidence showed that approximately 82 percent of California 
walnut handlers (70 out of 85) shipped walnuts valued under $34 million 
during the 2018-2019 marketing year and would therefore be considered 
small handlers according to the SBA definition.
    Data in the hearing record from the 2017 Agricultural Census, 
published by USDA'S National Agricultural Statistics Service (NASS), 
showed that 4,885 California farms growing walnuts (86.06 percent of 
the total) had walnut sales of less than $1 million which is well below 
the SBA small business size threshold of equal to or less than $3.75 
million. In the 2017 Agricultural Census, the largest sales value size 
category for walnuts was $1.0 million.
    To obtain an alternative estimate of the number and percentage of 
small walnut farms, using NASS data from the hearing record, the first 
step was computing a 3-year average crop value, which was roughly 
$1.077 billion for the period 2018-19 to 2020-21. The average walnut 
bearing acreage over that same 3-year period was 372,500 acres. 
Dividing crop value by bearing acreage shows a per acre revenue 
estimate of $2,891. Using these numbers, it would take approximately 
1,297 acres ($3,750,000 divided by $2,891) to yield roughly $3,750,000 
in annual walnut sales. The 2017 Agricultural Census data show that 
5,330 walnut farms in 2017 (93.9 percent of the total) were below 1,000 
acres. One thousand acres is the Census size category closest to the 
1,297-acre estimate for an average walnut farm to have $3.75 million in 
annual receipts). Therefore, 5,330 of the California walnut farms 
counted in the 2017 Agricultural Census (93.9 percent or more), would 
be considered small businesses according to the current SBA definition 
of $3.75 million or less in gross annual receipts.
    During the hearing held April 19 and 20, 2022, interested parties 
were invited to present evidence on the probable regulatory impact of 
the amendments to the Order on small businesses. The hearing record 
showed that none of the

[[Page 56747]]

amendments would have a significant economic impact on a substantial 
number of small agricultural growers or firms.

Material Issues

    This action amends the Order to eliminate mandatory inspection and 
certification of inshell and shelled walnuts, and of shelled walnuts 
for processing; create a new mechanism for determining and collecting 
handler assessments; add the authority to charge interest for late 
payments; establish an assessment rate of $0.0125 per inshell pound of 
walnuts; expand the definition of ``to handle'' to include ``receive''; 
and remove volume control authority.
    The hearing record showed that a key reason for the amendments is 
to reduce the costs and administrative burden to handlers and the Board 
while providing a cost savings to growers. Witnesses (both large and 
small) testified to major technological improvements in sorting, 
processing and storage, and the adoption of new varieties, as key 
evidence of how current industry practices result in walnut quality 
that exceeds USDA standards, making the mandatory inspection 
requirement redundant. Record evidence also showed that the elimination 
of mandatory inspection and certification will result in cost savings 
of approximately $6 million per year and will benefit all handlers and 
producers.
    The new assessment mechanism is based on walnuts received instead 
of walnuts certified, and the calculation of assessments is based on 
receipts submitted to the Board. Invoicing begins after January 15, and 
billings are generated in January, April, and July and as prescribed by 
the Board. Payments are due to the Board in February, May, and August. 
Hearing evidence showed that this new mechanism is an equitable change 
that decreases the administrative burden for all handlers and the 
Board.
    Hearing evidence also showed that producers and handlers of all 
sizes will benefit from the amendments adopted and that there will be 
no negative implications on small agricultural firms. Handlers will 
benefit from reduced operational process redundancies, resulting in 
lower associated costs and administrative burdens. In addition, 
producers will benefit from higher grower returns through cost savings 
passed on from increased handler efficiencies. Consumers are also 
anticipated to benefit from lower prices resulting from reduced handler 
costs.
    Lastly, the volume control authority in the Order has been 
suspended for over 30 years. The record showed that a key reason for 
removing volume control authority from the Order is that the walnut 
industry is comprised of mostly small businesses which do not intend to 
use volume regulation in the future.
    These amendments align the Order with current market-driven 
practices that result in a more efficient industry for producers and 
handlers of all sizes. USDA did not identify any relevant Federal rules 
that duplicate, overlap or conflict with this final rule. These 
amendments are intended to improve the operation and administration of 
the Order and to assist in the marketing of California walnuts.
    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.

Paperwork Reduction Act

    Current information collection requirements that are part of the 
Federal marketing order for California walnuts (7 CFR part 984) are 
approved under OMB No. 0581-0178 Vegetables and Specialty Crops. No 
changes in these requirements are anticipated because of this 
proceeding. Should any such changes become necessary, they would be 
submitted to OMB for approval.
    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.

Civil Justice Reform

    The amendments to the Order herein have been reviewed under 
Executive Order 12988, Civil Justice Reform. They are not intended to 
have retroactive effect. The amendments do not preempt any State or 
local laws, regulations, or policies, unless they present an 
irreconcilable conflict with this rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under Sec.  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 no later than 20 days after the date of 
entry of the ruling.

Order Amending the Order Regulating the Handling of Walnuts Grown in 
California 2
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    \2\ 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.
---------------------------------------------------------------------------

Findings and Determinations

    The findings and determinations hereinafter set forth are 
supplementary to the findings and determinations that 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.
(a) Findings and Determinations Upon the Basis of the Hearing Record
    Pursuant to the provisions of the Agricultural Marketing Agreement 
Act of 1937, as amended (7 U.S.C. 601-674), and the applicable rules of 
practice and procedure effective thereunder (7 CFR part 900), a public 
hearing was held upon proposed further amendment of Marketing Order No. 
984, regulating the handling of walnuts grown in California.
    Upon the basis of the record, it is found that:
    (1) The marketing order, as amended, and as hereby 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 further amended, 
regulates the handling of walnuts grown in the production area in the 
same manner as, and is applicable only to, persons in the respective 
classes of commercial and industrial activity specified in the 
marketing order upon which a hearing has been held;
    (3) The marketing order, as amended, and as hereby further amended, 
is limited in its application to the smallest regional production area 
that 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 further amended, 
prescribes, insofar as practicable, such

[[Page 56748]]

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 grown in California; and
    (5) All handling of walnuts grown 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 amended as follows:
    The provisions of the proposed marketing order amending the Order 
contained in the Recommended Decision published in the October 25, 
2022, issue of the Federal Register (87 FR 64385), and as revised in 
the Secretary's Decision (88 FR 14083), will be and are the terms and 
provisions of this order amending the Order and are set forth in full 
herein.

List of Subjects in 7 CFR Part 984

    Marketing agreements, Nuts, Reporting and recordkeeping 
requirements.

Recommended Further Amendment of the Marketing Order

    For the reasons set out in the preamble, the Agricultural Marketing 
Service amends 7 CFR part 984 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. Revise Sec.  984.12 to read as follows:


Sec.  984.12  Substandard walnuts.

    Substandard walnuts means all walnuts (whether inshell or shelled) 
that do not meet the minimum standard prescribed for merchantable 
walnuts whenever regulations are in effect pursuant to Sec.  984.50.

0
3. Revise Sec.  984.13 to read as follows:


Sec.  984.13  To handle.

    To handle means to receive, pack, sell, consign, transport, or ship 
(except as a common or contract carrier of walnuts owned by another 
person), or in any other way to put walnuts, inshell or shelled, into 
the current of commerce either within the area of production or from 
such area to any point outside thereof, or for a manufacturer or 
retailer within the area of production to purchase directly from a 
grower. However, sales and deliveries by a grower to handlers, hullers, 
or other processors within the area of production shall not, in itself, 
be considered as handling by a grower. The term ``to handle'' shall not 
include sales and deliveries within the area of production between 
handlers.

0
4. Amend Sec.  984.21 by revising the section heading to read as 
follows:


Sec.  984.21  Handler inventory.

* * * * *


Sec.  984.22  [Amended]

0
5. Amend Sec.  984.22 by removing the word ``merchantable'' in 
paragraphs (a) and (b).


Sec. Sec.  984.23 and 984.26  [Removed and Reserved]

0
6. Amend Sec. Sec.  984.23 and 984.26 by lifting the stay of May 7, 
2020, and removing and reserving the sections.

0
7. Revise Sec.  984.32 to read as follows:


Sec.  984.32  To certify.

    To certify means the issuance of a certification of inspection of 
walnuts in accordance with regulations issued pursuant to Sec.  984.50.


Sec.  984.33  [Removed and Reserved]

0
8. Amend Sec.  984.33 by lifting the stay of May 7, 2020, and removing 
and reserving the section.

0
9. Amend Sec.  984.37 by revising paragraphs (b) and (c)(4) to read as 
follows:


Sec.  984.37  Nominations.

* * * * *
    (b) Nominations for handler members shall be submitted on ballots 
mailed by the Board to all handlers in their respective Districts. All 
handlers' votes shall be weighted by the weight of inshell walnuts 
handled by each handler during the preceding marketing year. Each 
handler in the production area may vote for handler member nominees and 
their alternates. However, no handler with less than 35% of the crop 
shall have more than one member and one alternate member. The person 
receiving the highest number of votes for each handler member position 
shall be the nominee for that position.
    (c) * * *
    (4) Nominations for handler members representing handlers that do 
not handle 35% or more of the crop shall be submitted on ballots mailed 
by the Board to those handlers. The votes of these handlers shall be 
weighted by the weight of inshell walnuts handled by each handler 
during the preceding marketing year. Each handler in the production 
area may vote for handler member nominees and their alternates of this 
paragraph (c)(4). However, no handler shall have more than one person 
on the Board either as member or alternate member. The person receiving 
the highest number of votes for a handler member position of this 
paragraph (c)(4) shall be the nominee for that position.
* * * * *

0
10. Amend Sec.  984.48 by:
0
a. Revising paragraph (a) introductory text;
0
b. Removing the words ``merchantable and substandard'' in paragraph 
(a)(3);
0
c. Lifting the stay of May 7, 2020, on paragraphs (a)(6) and (7) and 
removing both paragraphs; and
0
d. Redesignating paragraphs (a)(8) and (9) as paragraphs (a)(6) and 
(7), respectively.
    The revision reads as follows:


Sec.  984.48  Marketing estimates and recommendations.

    (a) Each marketing year the Board shall hold a meeting, prior to 
October 20, for the purpose of recommending to the Secretary a 
marketing policy for such year. Each year such recommendation shall be 
adopted by the affirmative vote of at least 60% of the Board and shall 
include the following:
* * * * *


Sec.  984.49  [Removed and Reserved]

0
11. Amend Sec.  984.49 by lifting the suspension of paragraph (b)(1) of 
August 7, 1995, and the stay of May 7, 2020, and removing and reserving 
the section.

0
12. Amend Sec.  984.50 by lifting the stay of May 7, 2020, on paragraph 
(e) and revising the section to read as follows:


Sec.  984.50  Grade, quality, and size regulations.

    (a) The Board may recommend, subject to the approval of the 
Secretary, regulations that:
    (1) Establish handling requirements for particular grades, sizes, 
or qualities, or any combination thereof, of any or all varieties or 
classifications of walnuts during any period;
    (2) Establish different handling requirements and tolerance limits 
for particular grades, sizes, or qualities, or any combination thereof, 
for different market destinations;
    (3) Establish different handling requirements for the processing of 
shelled walnuts and the handling thereof; and

[[Page 56749]]

    (4) Establish inspection and certification requirements for the 
purposes of this paragraph (a) and paragraph (b) of this section.
    (b) During any period, regulations issued under this section are in 
effect, no handler shall handle or process walnuts into manufactured 
items or products unless they meet the applicable requirements under 
this section as evidenced by certification acceptable to the Board.
    (c) Regulations issued under this section may be amended, modified, 
suspended, or terminated whenever it is determined:
    (1) That such action is warranted upon recommendation of the Board 
and approval by the Secretary, or other available information; or
    (2) That regulations issued under this section no longer tend to 
effectuate the declared policy of the Act.


Sec. Sec.  984.51 and 984.52  [Removed and Reserved]

0
13. Remove and reserve Sec. Sec.  984.51 and 984.52


Sec. Sec.  984.54 and 984.56  [Removed and Reserved]

0
14. Amend Sec. Sec.  984.54 and 984.56 by lifting the stay of May 7, 
2020, and removing and reserving the sections.

0
15. Revise Sec.  984.64 to read as follows:


Sec.  984.64  Disposition of substandard walnuts.

    During any period when regulations are in effect pursuant to Sec.  
984.50, 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 his production and holdings of substandard 
walnuts and 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  [Removed and Reserved]

0
16. Amend Sec.  984.66 by lifting the stay of May 7, 2020, and removing 
and reserving the section.

0
17. Amend Sec.  984.67 by:
0
a. Lifting the stay of May 7, 2020, on paragraph (a) and removing the 
paragraph;
0
b. Redesignating paragraphs (b) and (c) as paragraphs (a) and (b), 
respectively; and
0
c. Revising newly designated paragraph (a).
    The revision reads as follows:


Sec.  984.67  Exemptions.

    (a) 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:
    (i) At roadside stands and farmers' markets;
    (ii) In quantities not exceeding an aggregate of 500 pounds of 
inshell walnuts or 200 pounds of shelled walnuts during any marketing 
year (at locations other than those specified in paragraph (a)(1)(i) of 
this section); and
    (iii) If shipped by parcel post or express in quantities not 
exceeding 10 pounds of inshell walnuts or 4 pounds of shelled walnuts 
to any one consumer in any one calendar day.
    (2) Green walnuts. Walnuts which are green and which are so 
immature that they cannot be used for drying and sale as dried walnuts 
may be handled without regard to the provisions of this part.
    (3) Noncompetitive outlets. Any person may handle walnuts, free of 
the provisions of this part, for use by charitable institutions, relief 
agencies, governmental agencies for school lunch programs, and 
diversion to animal feed or oil manufacture pursuant to an authorized 
governmental diversion program.
* * * * *

0
18. Amend Sec.  984.69 by lifting the stay of May 7, 2020, on paragraph 
(b) and revising the section to read as follows:


Sec.  984.69  Assessments.

    (a) Requirement for payment. Each handler shall pay the Board, on 
demand, his or her pro rata share of the expenses authorized by the 
Secretary for each marketing year. Each handler's pro rata share shall 
be the rate of assessment per inshell pound of walnuts fixed by the 
Secretary times the pounds of walnuts received by him or her for his or 
her own account (except as to receipt from other handlers on which 
assessments have been paid). At any time during or after the marketing 
year the Secretary may increase the assessment rate as necessary to 
cover authorized expenses and each handler's pro rata share shall be 
adjusted accordingly.
    (b) Assessment rate. The assessment rate set out may be modified by 
the Secretary, based upon a recommendation of the Board or other 
available data.
    (c) Late payment. If a handler does not pay assessments within the 
time prescribed by the Board, the assessment may be increased by a late 
payment charge and/or an interest rate charge at amounts prescribed by 
the Board with approval of the Secretary.
    (d) Accounting. If at the end of a marketing year the assessments 
collected are in excess of expenses incurred, such excess shall be 
accounted for in accordance with one of the following:
    (1) If such excess is not retained in a reserve, as provided in 
paragraph (d)(2) or (3) of this section, it shall be refunded to 
handlers from whom collected, and each handler's share of such excess 
funds shall be the amount of assessments he or she has paid in excess 
of his or her pro rata share of the actual expenses of the Board.
    (2) Excess funds may be used temporarily by the Board to defray 
expenses of the subsequent marketing year provided each handler's share 
of such excess shall be made available to him or her by the Board 
within five months after the end of the year.
    (3) The Board may carry over such excess into subsequent marketing 
years as a reserve: Provided, that funds already in reserve do not 
exceed approximately two years' budgeted expenses. In the event that 
funds exceed two marketing years' budgeted expenses, future assessments 
will be reduced to bring the reserves to an amount that is less than or 
equal to two marketing years' budgeted expenses. Such reserve funds may 
be used:
    (i) To defray expenses, during any marketing year, prior to the 
time assessment income is sufficient to cover such expenses;
    (ii) To cover deficits incurred during any year when assessment 
income is less than expenses;
    (iii) To defray expenses incurred during any period when any or all 
provisions of this part are suspended; and
    (iv) To meet any other such costs recommended by the Board and 
approved by the Secretary.
    (e) Advanced assessments and commercial loans. To provide funds for 
the administration of the provisions of this part during the part of a 
marketing year when neither sufficient operating reserve funds nor 
sufficient revenue from assessments for the current marketing year are 
available, the Board may accept payment of assessments in

[[Page 56750]]

advance or may borrow money from a commercial lending institution for 
such purposes.
    (f) Termination. Any money collected from assessments hereunder and 
remaining unexpended in the possession of the Board upon termination of 
this part shall be distributed in such manner as the Secretary may 
direct.

0
19. Revise Sec.  984.72 to read as follows:


Sec.  984.72  Reports of walnuts handled.

    Each handler who handles walnuts, inshell or shelled, at any time 
during a marketing year shall submit to the Board in such form and at 
such intervals as the Board may prescribe, reports showing the quantity 
so handled and such other information pertinent thereto as the Board 
may specify.

0
20. Revise Sec.  984.77 to read as follows:


Sec.  984.77  Verification of reports.

    For the purpose of verifying and checking reports filed by handlers 
or the operations of handlers, the Secretary and the Board through its 
duly authorized representatives shall have access to any premises where 
walnuts and walnut records are held. Such access shall be available at 
any time during reasonable business hours. Authorized representatives 
shall be permitted to inspect any walnuts held and any and all records 
of the handler with respect to matters within the purview of this part. 
Each handler shall maintain complete records on the receiving, holding, 
and disposition of both inshell and shelled walnuts. Each handler shall 
furnish all labor necessary to facilitate such inspections at no 
expense to the Board or the Secretary. Each handler shall store all 
walnuts held by him or her in such manner as to facilitate inspection 
and shall maintain adequate storage records, which will permit accurate 
identification of respective lots and of all such walnuts held or 
disposed of theretofore. The Board, with the approval of the Secretary, 
may establish any methods and procedures needed to verify reports.


Sec.  984.89  [Amended]

0
21. Amend Sec.  984.89 in paragraph (b)(4) by removing the term 
``fiscal period'' and adding in its place the term ``marketing year''.

0
22. Revise Sec.  984.347 to read as follows:


Sec.  984.347  Assessment rate.

    On and after September 1, 2023, an assessment rate shall be fixed 
at $0.0125 per inshell pound of California walnuts.


Sec.  984.450   [Removed and Reserved]

0
23. Amend Sec.  984.450 by lifting the stay of May 7, 2020, on 
paragraphs (a) and (b) and removing and reserving the section.


Sec.  984.451  [Removed and Reserved]

0
24. Amend Sec.  984.451 by lifting the stay of May 7, 2020, on 
paragraph (c) and removing and reserving the section.


Sec.  984.452   [Removed and Reserved]

0
25. Remove and reserve Sec.  984.452.


Sec.  984.456   [Removed and Reserved]

0
26. Amend Sec.  984.456 by lifting the stay of May 7, 2020, and 
removing and reserving the section.


Sec.  984.459   [Amended]

0
27. Amend Sec.  984.459 by removing and reserving paragraph (a)(3).


Sec.  984.464  [Removed and Reserved]

0
28. Amend Sec.  984.464 by lifting the stay of May 7, 2020, on 
paragraph (a) and removing and reserving the section.

0
29. Revise Sec.  984.472 to read as follows:


Sec.  984.472  Reports of walnuts, received, shipped, and committed.

    (a) Reports of walnuts shipped during a month shall be submitted to 
the Board on California Walnut Board (CWB) Form No. 6 not later than 
the 5th day of the following month. Such reports shall include all 
shipments during the preceding month and shall show for inshell and 
shelled walnuts: the quantity shipped; whether they were shipped into 
domestic or export channels; and for exports, the quantity by country 
of destination. If a handler makes no shipments during any month, he/
she shall submit a report marked ``None.'' If a handler has completed 
his/her shipments for the season, he/she shall mark the report 
``Completed,'' and he/she shall not be required to submit any 
additional CWB Form No. 6 reports during the remainder of that 
marketing year.
    (b) Reports of walnuts purchased directly from growers by handlers 
who are manufacturers or retailers shall be submitted to the Board on 
CWB Form No. 6, not later than the 5th day of the month following the 
month in which the walnuts were purchased. Such reports shall show the 
quantity of walnuts purchased.
    (c) Reports of walnuts on which handlers have made purchase 
commitments with buyers during the month, but which have not yet been 
shipped, shall be submitted to the Board on CWB Form No. 6, not later 
than the 5th day of the month following the month in which the walnuts 
were committed. Such reports shall show the quantity of walnuts 
committed in either inshell or shelled pounds. If the handler made no 
commitments during any month, he/she shall mark ``None'' in the 
``Purchase Commitments'' section of CWB Form No. 6.

0
30. Revise Sec.  984.476 to read as follows:


Sec.  984.476  Report of walnut receipts produced outside California or 
the United States.

    Each handler who receives walnuts from outside California or the 
United States shall file with the Board, on CWB Form No. 7, a report of 
the receipt of such walnuts. The report shall be filed as follows: On 
or before December 5 for such walnuts received during the period 
September 1 to November 30; on or before March 5 for such walnuts 
received during the period December 1 to February 28 (February 29 in a 
leap year); on or before June 5 for such walnuts received during the 
period March 1 to May 31; and on or before September 5 for such walnuts 
received during the period June 1 to August 31. The report shall 
include the quantity of such walnuts received, the country of origin 
for such walnuts, and whether such walnuts are inshell or shelled.

Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2023-17753 Filed 8-18-23; 8:45 am]
BILLING CODE P