Walnuts Grown in California; Reporting Walnuts Grown Outside of the United States and Received by California Handlers

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 984

[Docket No. FV99-984-2 FR]

Walnuts Grown in California; Reporting Walnuts Grown Outside of

the United States and Received by California Handlers

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule revises the administrative rules and regulations of

the Federal marketing order for California walnuts (order) to require

handlers to report receipts of walnuts grown outside of the United

States. The order regulates the handling of walnuts grown in California

and is administered locally by the Walnut Marketing Board (Board).

Requiring handlers to report to the Board receipts of walnuts grown

outside of the United States will allow the Board to have better

information on the total available supply of walnuts within California,

which includes both California and foreign product. This will

facilitate program administration.

EFFECTIVE DATE: This rule becomes effective November 1, 1999.

FOR FURTHER INFORMATION CONTACT: Maureen T. Pello, Marketing

Specialist, California Marketing Field Office, Fruit and Vegetable

Programs, AMS, USDA, 2202 Monterey Street, suite 102B, Fresno,

California 93721; telephone: (559) 487-5901; Fax: (559) 487-5906; or

George Kelhart, Technical Advisor, Marketing Order Administration

Branch, Fruit and Vegetable Programs, AMS, USDA, P.O. Box 96456, room

2525-S, Washington, DC 20090-6456; telephone: (202) 720-2491, Fax:

(202) 720-5698. Small businesses may request information on complying

with this regulation by contacting Jay Guerber, Marketing Order

Administration Branch, Fruit and Vegetable Programs, AMS, USDA, P.O.

Box 96456, room 2525-S, Washington, DC 20090-6456; telephone (202) 720-

2491, Fax: (202) 720-5698, or E-mail: Jay.G[email protected].

SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing

Agreement and Order No. 984, both as amended (7 CFR part 984),

regulating the handling of walnuts grown in California, hereinafter

referred to as the ``order.'' The marketing agreement and order are

effective under the Agricultural Marketing Agreement Act of 1937, as

amended (7 U.S.C. 601-674), hereinafter referred to as the ``Act.''

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The Department of Agriculture (Department) is issuing this final

rule in conformance with Executive Order 12866.

This rule has been reviewed under Executive Order 12988, Civil

Justice Reform. This rule is not intended to have retroactive effect.

This rule will 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 section 608c(15)(A) of the

Act, any handler subject to an order may file with the Secretary 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 the Secretary 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 the

Secretary'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 revises the order's administrative rules and

regulations to require handlers to report to the Board receipts of

walnuts grown outside of the United States. This will allow the Board

to have better information on the total available supply of walnuts

within California, which includes both California and foreign product,

which will facilitate program administration. This action was

unanimously recommended by the Board at a meeting on September 11,

1998.

Section 984.76 of the order provides authority for the Board, with

the approval of the Secretary, to require handlers to furnish reports

and information to the Board as needed to enable the Board to perform

its duties under the order. The Board meets during the season to make

decisions on various programs authorized under the order. These

programs include quality control (minimum grade and size requirements

for both inshell and shelled walnuts placed into channels of commerce),

volume regulation, and projects regarding production research, and

marketing research and development.

The Board would like to have better information on the total supply

of walnuts within California, which includes both California and

foreign product. The Board will use this information in its marketing

policy deliberations each fall when it reviews the crop estimate,

handler carryover, and other factors to determine whether volume

regulation would be appropriate. In addition, the Board has some

concerns that, particularly in short crop years when handlers may

import more walnuts to meet customer demands, imported walnuts could be

included in handler inventory reports of California walnuts. Accurate

information regarding the supply of walnuts within California is needed

by the Board in its administration of the order.

According to the National Agricultural Statistics Service, the 10-

year average annual production of California walnuts is 235,000 inshell

tons. Bureau of Census data indicates that the 10-year average annual

import figure for walnuts is 1,036.5 shelled tons. However, during

short crop years in California such as the 1992-93 (203,000 inshell

tons) and 1996-97 (208,000 inshell tons) seasons, imports increased to

8,046 and 5,806 shelled tons, respectively.

Thus, the Board recommended that handlers be required to report to

the Board receipts of walnuts grown outside of the United States. This

report, WMB Form No. 7, will be submitted to the Board four times per

year as follows: On or before November 5 for such walnuts received

during the period August 1 to October 31; on or before February 5 for

such walnuts received during the period November 1 to January 31; on or

before May 5 for such walnuts received during the period February 1 to

April 30; and on or before August 5 for such walnuts received during

the period May 1 to July 31. The report will include the quantity of

such walnuts received, country of origin, and whether such walnuts were

inshell or shelled. Given the effective date of this final rule, the

first reporting date will be February 5, 2000, for walnuts received

during the period November 1 to January 31.

The Board also recommended that, with each report, the handler

submit a copy of a product tag issued by the Dried Fruit Association of

California (DFA) for compliance purposes. The DFA is a private agency

designated under the marketing order to provide inspection services for

handlers to ensure that California walnuts meet minimum grade and size

requirements in effect under the order. The product tag will indicate

the name of the person from whom the walnuts were received, the date

the walnuts were received by the handler, the number of containers and

U.S. Custom's Service entry number, whether the product is inshell or

shelled, the quantity of walnuts, country of origin, the name of the

DFA inspector who issued the tag, and the date such tag was issued. The

Board believes product tags are necessary to verify handler receipt

reports for imported walnuts. Accordingly, a new Sec. 984.476 is added

to the orders' administrative rules and regulations.

Final Regulatory Flexibility Analysis and Paperwork Reduction Act

Pursuant to requirements set forth in the Regulatory Flexibility

Act (RFA), the AMS has considered the economic impact of this rule on

small entities. Accordingly, AMS has prepared this final regulatory

flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of

business 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. Thus, both statutes have small

entity orientation and compatibility.

There are approximately 5,000 producers of walnuts in the

production area and approximately 50 handlers subject to regulation

under the order. Small agricultural producers have been defined by the

Small Business Administration (13 CFR 121.601) as those having annual

receipts less than $500,000, and small agricultural service firms are

defined as those whose annual receipts are less than $5,000,000. The

majority of producers of California walnuts may be classified as small

entities.

During the 1997-98 season, as a percentage, 33 percent of the

handlers shipped over 2.4 million kernelweight pounds of walnuts, and

67 percent of the handlers shipped under 2.4 million kernelweight

pounds of walnuts. Based on an average price of $2.10 per kernelweight

pound at the point of first sale, the majority of handlers of

California walnuts may be classified as small entities.

This rule adds a new Sec. 984.476 to the order's administrative

rules and regulations which requires handlers to report to the Board

receipts of walnuts grown outside of the United States. This will allow

the Board to have better information on the total available supply of

walnuts, including California and foreign product, which will

facilitate program administration. Authority for requiring handlers to

submit this information to the Board is provided in Sec. 984.76 of the

order.

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Regarding the impact of this action on affected entities, this rule

should impose minimal additional costs. The Board estimates that about

six handlers have imported walnuts over the past few years. Such

handlers will be required to submit an additional report to the Board

four times per year along with tags issued by the DFA verifying

receipts of foreign product. The DFA currently provides inspection

services for all handlers of California walnuts and will be available

at no additional cost to issue product tags to handlers receiving

imports. Handlers will then submit these tags to the Board for

verification purposes.

An alternative to this action would be to not collect information

from handlers on receipts of imported walnuts. However, as previously

mentioned, the Board would like to have better information on the total

available supply of walnuts within California, which includes both

California and foreign product. The only way this information can be

obtained by the Board is to collect it from handlers. This information

will facilitate program administration by improving the Board's base of

information from which to make decisions.

The Board also recommended that a system be established for

monitoring walnuts grown outside of the United States that are received

by California handlers. Under the proposed monitoring system, DFA

inspectors would check whether or not foreign product had been

inspected and met the requirements of section 8e of the Act. Under

section 8e, whenever certain specified commodities are regulated under

a Federal marketing order, imports of that commodity must meet the same

or comparable grade, size, quality, and maturity requirements as those

in effect for the domestic commodity. Walnuts are included under

section 8e, and thus importers of walnuts are required to have such

walnuts inspected. However, it is the USDA's responsibility to ensure

that imported walnuts meet the requirements of section 8e. Thus, we are

not proceeding with this recommendation.

Finally, the Board considered whether it would be useful to collect

information on walnuts grown outside of California, but within the

United States. However, Board members agreed that the amount of such

walnuts was so small, it was not worth requiring handlers to report

such information.

This action imposes some additional reporting and recordkeeping

burden on handlers that receive walnuts grown outside of the United

States. It is estimated that six handlers may import walnuts during the

season. Such handlers will be required to submit a receipt report to

the Board four times per year. It is estimated that it will take such

handlers 5 minutes to complete each report. Thus, the additional annual

burden should total no more than 2 hours for the industry. The

information will be collected on WMB Form No. 7. That form has been

approved by the Office of Management and Budget (OMB) under OMB Control

No. 0581-0178. As with other similar marketing order programs, reports

and forms are periodically reviewed to reduce information requirements

and duplication by industry and public sector agencies.

The Department has identified one relevant Federal rule regarding

requirements for walnuts grown outside of the United States. As

previously stated, walnuts are included under section 8e. Thus,

importers of walnuts are required to have such walnuts inspected by the

USDA's inspection service. Importers whose walnuts meet section 8e

requirements do not have to submit any paperwork to the USDA. However,

importers whose walnuts fail section 8e requirements, or whose walnuts

are exempt from section 8e because such walnuts are so immature that

they cannot be used for drying and sale as dried walnuts (green

walnuts), or are being sent to designated outlets (animal feed,

processing, or charity) have to submit paperwork to the USDA. However,

only a small amount of information requested by the USDA in these

instances or by the Board through this rule, will be duplicative.

In addition, the Board's meeting on September 11, 1998, where this

action was deliberated was a public meeting widely publicized

throughout the walnut industry. This issue was also deliberated at an

earlier Board meeting on February 2, 1998, and at a Grades and

Standards Subcommittee meeting on June 5, 1998. All interested persons

were invited to attend these meetings and participate in the industry's

deliberations. A proposed rule concerning this action was published in

the Federal Register on August 19, 1999 (64 FR 45208). Copies of the

rule were mailed to all handlers, Board members, and alternate members.

The rule was also made available through the Internet by the Office of

the Federal Register. A 60-day comment period ending October 18, 1999,

was provided to allow interested persons to respond to the proposal. No

comments were received.

A small business guide on complying with fruit, vegetable, and

speciality crop marketing agreements and orders may be viewed at the

following web site: http://www.ams.usda.gov/fv/moab.html. Any questions

about the compliance guide should be sent to Jay Guerber at the

previously mentioned address in the FOR FURTHER INFORMATION CONTACT

section.

After consideration of all relevant matter presented, including the

information and recommendation submitted by the Board and other

available information, it is hereby found that this rule, as

hereinafter set forth, will tend to effectuate the declared policy of

the Act.

It is further found that good cause exists for not postponing the

effective date of this rule until 30 days after publication in the

Federal Register (5 U.S.C. 553) because: (1) The Board would like to

begin collecting this report as soon as possible in order to have

better information on the total supply of walnuts within California;

(2) the first report would be due to the Board on or before February 5,

2000; (3) handlers are aware of this rule which was unanimously

recommended at a public meeting; and (4) a 60-day comment period was

provided in the proposed rule; no comments were received.

List of Subjects in 7 CFR Part 984

Marketing agreements, Nuts, Reporting and recordkeeping

requirements, Walnuts.

For the reasons set forth in the preamble, 7 CFR part 984 is

amended as follows:

PART 984--WALNUTS GROWN IN CALIFORNIA

1. The authority citation for 7 CFR part 984 continues to read as

follows:

Authority: 7 U.S.C. 601-674.

2. A new Sec. 984.476 is added to read as follows:

Sec. 984.476 Report of walnut receipts from outside of the United

States.

Each handler who receives walnuts from outside of the United States

shall file with the Board, on WMB Form No. 7, a report of the receipt

of such walnuts. The report shall be filed beginning with the February

5, 2000, report as follows: On or before November 5 for such walnuts

received during the period August 1 to October 31; on or before

February 5 for such walnuts received during the period November 1 to

January 31; on or before May 5 for such walnuts received during the

period February 1 to April 30; and on or before August 5 for such

walnuts received during the period May 1 to July 31. The report shall

include the quantity

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of such walnuts received, the country of origin for such walnuts, and

whether such walnuts are inshell or shelled. With each report, the

handler shall submit a copy of a product tag issued by a DFA of

California inspector for each receipt of such walnuts that includes the

name of the person from whom such walnuts were received, the date such

walnuts were received by the handler, the number of containers and the

U.S. Custom's Service entry number, whether such walnuts are inshell or

shelled, the quantity of such walnuts received, the country of origin

for such walnuts, the name of the DFA of California inspector who

issued the product tag, and the date such tag was issued.

Dated: October 26, 1999.

Eric M. Forman,

Acting Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 99-28376 Filed 10-28-99; 8:45 am]

BILLING CODE 3410-02-P