Rule2024-27605
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
November 26, 2024
Effective
December 26, 2024
Issuing agencies
Agriculture DepartmentAgricultural Marketing Service
Abstract
This final rule implements 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 assessment rate will remain in effect indefinitely unless modified, suspended, or terminated.
Full Text
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<title>Federal Register, Volume 89 Issue 228 (Tuesday, November 26, 2024)</title>
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[Federal Register Volume 89, Number 228 (Tuesday, November 26, 2024)]
[Rules and Regulations]
[Pages 93148-93151]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-27605]
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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: Final rule.
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SUMMARY: This final rule implements 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
assessment rate will remain in effect indefinitely unless modified,
suspended, or terminated.
DATES: Effective December 26, 2024.
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#115b7e627964703f433f46787d757451646275703f767e67"><span class="__cf_email__" data-cfemail="bff5d0ccd7cade91ed91e8d6d3dbdaffcaccdbde91d8d0c9">[email protected]</span></a> or <a href="/cdn-cgi/l/email-protection#25674457575c0b67574a444147404b5165505641440b424a53"><span class="__cf_email__" data-cfemail="296b485b5b50076b5b46484d4b4c475d695c5a4d48074e465f">[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#f8aa919b90998a9cd6b4978f9d8ab88d8b9c99d69f978e"><span class="__cf_email__" data-cfemail="a6f4cfc5cec7d4c288eac9d1c3d4e6d3d5c2c788c1c9d0">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: This action, pursuant to 5 U.S.C. 553,
amends 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 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 final rule
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 action
falls within a category of regulatory actions that the Office of
Management and Budget (OMB) exempted from Executive Order 12866 review.
This final rule 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 rule 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 final 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
will 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
[[Page 93149]]
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 final rule increases 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 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 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 estimated
730,000 tons (1.46 billion pounds) of California walnuts from the 2024-
2025 marketing year crop is expected to generate approximately
$18,250,000 in assessment revenue at the amended assessment rate (1.46
billion pounds multiplied by the $0.0125 assessment rate). The
remaining $1,636,800 needed to cover budgeted expenditures will 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, is expected to 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) will be kept within the maximum
permitted by the Order (approximately two years' budgeted expenses as
authorized in Sec. 984.69).
The assessment rate established herein will 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 will 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 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 2024-2025 marketing year
budget, and those for subsequent marketing years, will be reviewed and,
as appropriate, approved by AMS.
Final 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 final 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 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.
[[Page 93150]]
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 final rule increases 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 $0.0125 assessment rate is $0.0015 higher than
the rate previously in effect. The Board expects the industry to handle
730,000 tons (1.46 billion pounds) of California walnuts during the
2024-2025 marketing year. Thus, the $0.0125 per inshell pound
assessment rate is expected to 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 is expected to 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 is 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 is expected to be about 2.3 percent
(0.0125/0.547 * 100 = 2.29)
This action increases 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 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 OMB and assigned OMB No. 0581-0178, Vegetable
and Specialty Crops. No changes in those requirements will be necessary
as a result of this action. 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.
AMS has not identified any relevant Federal rules that duplicate,
overlap, or conflict with this rule.
A proposed rule was published in the Federal Register on August 16,
2024 (89 FR 66639). A 30-day comment period ending September 16, 2024,
was provided to all interested persons to respond to the proposal. AMS
received one comment in opposition to the proposal from a walnut grower
who expressed that the Board should rely on financial reserve funds
during difficult years, instead of increasing assessments, because the
Board is ``flush with money.'' However, consideration of the Board's
reserve fund was part of the Board's public deliberations. In recent
years, the Board has relied more on its financial reserves to fund
expenditures, and the current reserve balance is now below what the
Board generally considers to be ideal. The Order authorizes the Board
to maintain a financial reserve ``not to exceed two years' budgeted
expenses.'' The Board's financial reserve at the end of the 2024-25
marketing year is expected to be approximately $14,665,274, which is
within the maximum amount permitted under the Order. Accordingly, AMS
made no changes to the rule as proposed.
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
[[Page 93151]]
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 Board and other
available information, AMS has determined that this rule is consistent
with and will effectuate the declared policy of the Act.
List of Subjects in 7 CFR Part 984
Marketing agreements, Nuts, Reporting and recordkeeping
requirements.
For the reasons set forth 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. 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. 2024-27605 Filed 11-25-24; 8:45 am]
BILLING CODE P
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