Proposed Rule2024-18287
Walnuts Grown in California; Increased Assessment Rate
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
August 16, 2024
Issuing agencies
Agriculture DepartmentAgricultural Marketing Service
Abstract
This proposed rulemaking would implement a recommendation from the California Walnut Board (Board) to increase the assessment rate established for the 2024-2025 and subsequent marketing years from $0.011 to $0.0125 per inshell pound of California walnuts. The proposed assessment rate would remain in effect indefinitely unless modified, suspended, or terminated.
Full Text
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<title>Federal Register, Volume 89 Issue 159 (Friday, August 16, 2024)</title>
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[Federal Register Volume 89, Number 159 (Friday, August 16, 2024)]
[Proposed Rules]
[Pages 66639-66641]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-18287]
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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. 89, No. 159 / Friday, August 16, 2024 /
Proposed Rules
[[Page 66639]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 984
[Doc. No. AMS-SC-24-0039]
Walnuts Grown in California; Increased Assessment Rate
AGENCY: Agricultural Marketing Service, Department of Agriculture
(USDA).
ACTION: Proposed rule.
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SUMMARY: This proposed rulemaking would implement a recommendation from
the California Walnut Board (Board) to increase the assessment rate
established for the 2024-2025 and subsequent marketing years from
$0.011 to $0.0125 per inshell pound of California walnuts. The proposed
assessment rate would remain in effect indefinitely unless modified,
suspended, or terminated.
DATES: Comments must be received by September 16, 2024.
ADDRESSES: Interested persons are invited to submit written comments
concerning this proposed rulemaking. Comments can be sent to the Docket
Clerk, Market Development Division, Specialty Crops Program, AMS, USDA,
1400 Independence Avenue SW, STOP 0237, Washington, DC 20250-0237.
Comments can also be sent to the Docket Clerk electronically by Email:
<a href="/cdn-cgi/l/email-protection#5a173b28313f2e33343d15283e3f28193537373f342e1a2f293e3b743d352c"><span class="__cf_email__" data-cfemail="c18ca0b3aaa4b5a8afa68eb3a5a4b382aeacaca4afb581b4b2a5a0efa6aeb7">[email protected]</span></a> or via the internet at: <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Comments should reference the document number and
the date and page number of this issue of the Federal Register.
Comments submitted in response to this proposed rulemaking will be
included in the record, will be made available to the public, and can
be viewed at: <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Please be advised that the
identity of the individuals or entities submitting the comments will be
made public on the internet at the address provided above.
FOR FURTHER INFORMATION CONTACT: Joshua R. Wilde, Marketing Specialist,
or Barry Broadbent, Chief, Northwest Region Branch, Market Development
Division, Specialty Crops Program, AMS, USDA; Telephone: (503) 326-
2724, or Email: <a href="/cdn-cgi/l/email-protection#2a604559425f4b0478047d43464e4f6a5f594e4b044d455c"><span class="__cf_email__" data-cfemail="a1ebced2c9d4c08ff38ff6c8cdc5c4e1d4d2c5c08fc6ced7">[email protected]</span></a> or <a href="/cdn-cgi/l/email-protection#34765546464d1a76465b555056515a4074414750551a535b42"><span class="__cf_email__" data-cfemail="3e7c5f4c4c47107c4c515f5a5c5b504a7e4b4d5a5f10595148">[email protected]</span></a>.
Small businesses may request information on complying with this
regulation by contacting Richard 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:
<a href="/cdn-cgi/l/email-protection#67350e040f061503492b08100215271214030649000811"><span class="__cf_email__" data-cfemail="396b505a51584b5d1775564e5c4b794c4a5d58175e564f">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: This action, pursuant to 5 U.S.C. 553,
proposes to amend regulations issued to carry out a marketing order as
defined in 7 CFR 900.2(j). This proposed rulemaking 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 comprises growers
and handlers of California walnuts operating within the area of
production, and a public member.
The Agricultural Marketing Service (AMS) is issuing this proposed
rulemaking in conformance with Executive Orders 12866, 13563, and
14094. Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, reducing costs, harmonizing rules, and promoting flexibility.
Executive Order 14094 reaffirms, supplements, and updates Executive
Orders 12866 and further directs agencies to solicit and consider input
from a wide range of affected and interested parties through a variety
of means. This proposed action falls within a category of regulatory
actions that the Office of Management and Budget (OMB) exempted from
Executive Order 12866 review.
This proposed rulemaking has been reviewed under Executive Order
13175--Consultation and Coordination with Indian Tribal Governments,
which requires Federal agencies to consider whether their rulemaking
actions would have Tribal implications. AMS has determined that this
proposed rulemaking is unlikely to have substantial direct effects on
one or more Indian Tribes, on the relationship between the Federal
Government and Indian Tribes, or on the distribution of power and
responsibilities between the Federal Government and Indian Tribes.
This proposed rulemaking 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 would be applicable to all assessable California
walnuts for the 2024-2025 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 proposed rulemaking would increase the assessment rate for
California walnuts handled under the Order from $0.011 per inshell
pound, the rate that was established for the 2023-2024 and subsequent
marketing years, to $0.0125 per inshell pound for the 2024-2025 and
subsequent marketing years.
Sections 984.68 and 984.69 authorize the Board, with the approval
of AMS, to formulate an annual budget of expenses
[[Page 66640]]
and collect assessments from handlers to administer the program. The
members of the Board are familiar with the Board's needs and with the
costs of goods and services in their local area and are 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 2023-2024 and subsequent marketing years, the Board
recommended, and AMS approved, an assessment rate of $0.011 per inshell
pound of California walnuts within the production area. That rate
continues in effect from marketing year to marketing year until
modified, suspended, or terminated by AMS upon recommendation and
information submitted by the Board or other information available to
AMS.
The Board met on May 15, 2024, and unanimously recommended 2024-
2025 marketing year expenditures of $19,886,800 and an assessment rate
of $0.0125 per inshell pound of California walnuts for the 2024-2025
marketing year. In comparison, last year's budgeted expenditures were
$16,811,250. The proposed assessment rate of $0.0125 per inshell pound
is $0.0015 higher than the rate currently in effect. The Board
recommended increasing the assessment rate to better align assessment
revenue with budgeted expenses, due in part to a smaller estimated
crop. The Board projects handler receipts of 730,000 tons (equivalent
to 1.46 billion pounds) of assessable California walnuts for the 2024-
2025 marketing year, down from the approximately 820,000 tons (1.64
billion pounds) handled during the 2023-2024 marketing year.
The major expenditures recommended by the Board for the 2024-2025
marketing year include $13,330,200 for domestic marketing, $2,838,600
for employee expenses, $2,425,000 for production and post-harvest
research, $435,000 for office expenses, $473,000 for travel and other
operating expenses, and $385,000 for crop and acreage reporting. For
comparison, budgeted expenses for these items during the 2023-2024
marketing year were $10,588,750, $2,472,500, $2,425,000, $350,000,
$390,000, and $585,000, respectively.
The Board derived the recommended assessment rate by considering
anticipated expenses, the estimated volume of assessable walnuts, and
the amount of funds available in the authorized reserve. The expected
730,000 tons (1.46 billion pounds) of California walnuts from the 2024-
2025 marketing year crop would generate $18,250,000 in assessment
revenue at the proposed assessment rate (1.46 billion pounds multiplied
by the $0.0125 assessment rate). The remaining $1,636,800 needed to
cover budgeted expenditures would come from an approved administrative
services agreement with the California Walnut Commission, which shares
staff and office expenses with the Board. The income generated from
assessments, along with non-assessment revenue, should be sufficient to
meet the Board's estimated program expenditures of $19,886,800. Funds
available in the financial reserve (currently about $14,665,274) would
be kept within the maximum permitted by the Order (approximately two
years' budgeted expenses as authorized in Sec. 984.69).
The proposed assessment rate would continue in effect indefinitely
unless modified, suspended, or terminated by AMS upon recommendation
and information submitted by the Board or other available information.
Although this assessment rate would be in effect 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 AMS. Board
meetings are open to the public and interested persons may express
their views at these meetings. AMS would 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 2024-2025 marketing year budget, and those
for subsequent marketing years, will be reviewed and, as appropriate,
approved by AMS.
Initial Regulatory Flexibility Analysis
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA) (5 U.S.C. 601-612), AMS has considered the economic impact of
this proposed rulemaking on small entities. Accordingly, AMS has
prepared this initial 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 68 handlers subject to regulation under the
Order and approximately 4,500 growers of California walnuts in the
production area. At the time this analysis was prepared, the Small
Business Administration (SBA) defined small agricultural service firms
as those having annual receipts of less than $34,000,000 (North
American Industry Classification System (NAICS) code 115114,
Postharvest Crop Activities), and small agricultural producers of
walnuts as those having annual receipts of less than $3,750,000 (NAICS
code 111335, Tree Nut Farming) (13 CFR 121.201).
Data from USDA's National Agricultural Statistics Service (NASS),
indicate a three-year average value of utilized walnut production of
$828.2 million for the most recent seasons for which data is available
(2020-2021 through 2022-2023 marketing years). Dividing that figure by
the number of walnut growers (4,500) yields an average annual crop
value per grower of approximately $184,000. This figure is well below
the SBA small agricultural producer threshold of $3,750,000 in annual
sales. Assuming a normal distribution, this provides evidence that a
large majority of walnut growers would likely be considered small
agricultural producers according to the SBA definition. Additionally,
data from NASS's 2017 Agricultural Census show that 86 percent of
California farms growing walnuts at the time had walnut sales of less
than $1 million.
Based on information from the Board, approximately 78 percent of
California's walnut handlers shipped assessable walnuts valued under
$34 million during the 2023-2024 marketing year and would, therefore,
be considered small handlers according to the SBA definition.
Considering the abovementioned, it is reasonable to conclude that a
substantial majority of both walnut growers and handlers would be
considered small business entities according to current SBA
definitions.
This proposal would increase the assessment rate collected from
handlers for the 2024-2025 and subsequent marketing years from $0.011
to $0.0125 per inshell pound of California walnuts. The Board
unanimously recommended 2024-2025 marketing year expenditures of
$19,886,800 and an assessment rate of $0.0125 per inshell pound of
California walnuts. The proposed assessment rate of $0.0125 is $0.0015
higher than the rate currently in effect. The Board expects the
industry to handle 730,000 tons (1.46 billion pounds) of California
walnuts during the 2024-2025
[[Page 66641]]
marketing year. Thus, the $0.0125 per inshell pound assessment rate
should provide $18,250,000 in assessment income (1.4 billion pounds
multiplied by $0.0125). The Board also expects to receive $1,636,800
from an administrative services agreement with the California Walnut
Commission. Income derived from these sources should be adequate to
meet budgeted expenditures for the 2024-2025 marketing year.
The major expenditures recommended by the Board for the 2024-2025
marketing year include $13,330,200 for domestic marketing, $2,838,600
for employee expenses, $2,425,000 for production and post-harvest
research, $435,000 for office expenses, $473,000 for travel and other
operating expenses, and $385,000 for crop and acreage reporting. For
comparison, budgeted expenses for these items during the 2023-2024
marketing year were $10,588,750, $2,472,500, $2,425,000, $350,000,
$390,000, and $585,000, respectively.
The Board recommended increasing the assessment rate to meet
necessary expenses, due in part to a smaller estimated crop for the
2024-2025 marketing year. The Board estimates shipments for the 2024-
2025 marketing year to be approximately 730,000 tons (equivalent to
1.46 billion pounds). Given the Board's estimate for 2024-2025
marketing year walnut shipments, the current assessment rate of $0.011
would generate $16,060,000 in assessment income (1.46 billion pounds
multiplied by $0.011 assessment rate), which would not cover budgeted
expenses. By increasing the assessment rate to $0.0125, assessment
income would be $18,250,000 (1.46 billion pounds multiplied by $0.0125
assessment rate). This amount should provide sufficient funds to meet
anticipated 2024-2025 marketing year expenses without needing to draw
from the Board's financial reserve.
Prior to arriving at this budget and assessment rate
recommendation, the Board considered information from various sources,
such as the Board's Executive Committee, and discussed various
alternatives, including maintaining the current assessment rate of
$0.011 per inshell pound of assessable walnuts and increasing the
assessment rate by a different amount. However, the Board determined
that the recommended assessment rate would be necessary to effectively
achieve the Board's goals of covering budgeted expenses for the 2024-
2025 marketing year and maintaining adequate funds in its financial
reserve. Consequently, these alternative assessment rates were
rejected.
Based upon information from the National Agricultural Statistics
Service (NASS), the average grower price reported for walnuts over the
past three crop years (2020-2023) was approximate $1,093 per ton
($0.547 per pound). In order to determine the estimated assessment
revenue as a percentage of the total grower revenue, we calculate the
assessment rate ($0.0125 per inshell pound) divided by the grower price
($0.547 per pound) and multiply that number by 100. Therefore,
estimated assessment revenue as a percentage of total grower revenue
for the 2024-2025 marketing year would be about 2.3 percent (0.0125/
0.547 * 100 = 2.29)
This proposed action would increase 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, these costs
are expected to be offset by the benefits derived by the operation of
the Order.
The Board's meetings are widely publicized throughout the
California walnut industry and all interested persons are invited to
attend the meetings and participate in Board deliberations on all
issues. Like all Board meetings, the May 15, 2024, meeting was a public
meeting and all entities, both large and small, were able to express
views on this issue. Finally, interested persons are invited to submit
comments on this proposed rulemaking, 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 OMB and assigned OMB No. 0581-0178, Vegetable
and Specialty Crops. No changes in those requirements would be
necessary as a result of this proposed rulemaking. Should any changes
become necessary, they would be submitted to OMB for approval.
This proposed rulemaking would 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.
AMS has not identified any relevant Federal rules that duplicate,
overlap, or conflict with this proposed rulemaking.
A small business guide on complying with fruit, vegetable, and
specialty crop marketing agreements and orders may be viewed at:
<a href="https://www.ams.usda.gov/rules-regulations/moa/small-businesses">https://www.ams.usda.gov/rules-regulations/moa/small-businesses</a>. 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 recommendations submitted by the Committee and
other available information, AMS has determined that this proposed
rulemaking is consistent with and would effectuate the purposes of the
Act.
A 30-day comment period is provided to allow interested persons to
respond to this proposed rulemaking. All written comments timely
received will be considered before a final determination is made on
this rulemaking.
List of Subjects in 7 CFR Part 984
Marketing agreements, Reporting and recordkeeping requirements, and
Walnuts.
For the reasons set forth in the preamble, the Agricultural
Marketing Service proposes to amend 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. Section 984.347 is revised to read as follows:
Sec. 984.347 Assessment rate.
On and after September 1, 2024, an assessment rate of $0.0125 per
inshell pound is established for California walnuts.
Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2024-18287 Filed 8-15-24; 8:45 am]
BILLING CODE P
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