Volume 1 1 UNITED STATES DEPARTMENT OF AGRICULTURE + + + + + OFFICE OF ADMINISTRATIVE LAW JUDGES + + + + + PUBLIC HEARING + + + + + _________________________ : IN RE: WALNUTS GROWN IN : Docket No. CALIFORNIA, PROPOSED : AO-SC-20-J-0011 AMENDMENT TO MARKETING : AMS-SC-19-0082 ORDER NO. 984 : SC-19-984-1 : _________________________: Volume I Monday, April 20, 2020 Videoconference The above-entitled matter came on for hearing, pursuant to notice, at 11:00 a.m. Eastern Daylight Time. BEFORE: THE HONORABLE CHANNING D. STROTHER Chief Administrative Law Judge Neal R. Gross and Co., Inc. (202) 234-4433 Washington DC www.nealrgross.com Volume 1 2 APPEARANCES: On Behalf of the U.S. Department of Agriculture: RUPA CHILUKURI, ESQ. TRACY MCGOWAN, ESQ. U.S. Department of Agriculture Office of General Counsel Trial Attorney 1400 Independence Avenue, SW Room 2331-C Washington, D.C. 20250 202-702-4982 [email protected] MELISSA SCHMAEDICK U.S. Department of Agriculture Agricultural Marketing Service Senior Marketing Specialist 1400 Independence Avenue, SW Washington, D.C. 20250 435-260-9964 [email protected] On Behalf of the California Walnut Board: MICHELLE CONNELLY Executive Director. California Walnut Board 101 Parkshore Drive Suite 250 Folsom, California 95630 916-932-7070 [email protected] Neal R. Gross and Co., Inc. (202) 234-4433 Washington DC www.nealrgross.com Volume 1 3 ALSO PRESENT: JEFFREY DAVIS, USDA ANDREW HATCH, USDA, Document Curator DONALD HINMAN, USDA, AMS PUSHPINDER KUMAR, USDA TERRY VAWTER, USDA WILLIAM CARRIERE, CWB CHUCK CRAIN, CWB HEATHER DONOHO, CWB ROBERT DRIVER, CWB RACHAEL GOODHUE, Ph.D., CWB JACK MARIANI, CWB ROBERT NORENE, CWB WILLIAM TOS, JR., CWB JOHN MACTAVISH, Grower ERIN HOAGLAND, OALJ, Attorney Advisor Neal R. Gross and Co., Inc. (202) 234-4433 Washington DC www.nealrgross.com Volume 1 4 C O N T E N T S WITNESS PAGE Donald Hinman. .45 Chuck Crain. .76 Jack Mariani . 141 Bill Carriere. 187 Rachael Goodhue. 217 Bill Tos . 256 Robert Driver. 275 Donald Norene. 298 Eric Heidman . 334 Exhibit No. Description Mark Recd 1 Notice of Hearing. 31 36 2 Notice of Hearing Correction . 31 37 3 Certificate of Mailing: Notice . 32 37 4 Certificate of Mailing: Correction . 33 37 5 Certificate of Press Release: Notice . 33 38 6 Certificate of Press Release Correction . 33 39 7 Certificate of Notification of Officials: Notice. 34 39 8 Certificate of Notification of Officials: Correction. 34 39 9 Notice of Ex Parte 1 . 41 43 10 Notice of Ex Parte 2 . 43 44 11 D. Hinman Walnut Testimony . 47 59 12 D. Hinman Walnut Tables 1-5. 49 59 13 D. Hinman Walnut Table 6 . 53 59 14 Chuck Crain CWB Testimony. .129 129 15 Chuck Crain CWB Testimony. .129 129 Exhibit: Power Point Industry Overview 16 Chuck Crain CWB Testimony Exhibit: . .129 129 17 Jack Mariani CWB Testimony . .132 183 18 Jack Mariani CWB Testimony Exhibit . .131 183 PowerPoint Overview of the Proposal, Program Communication Samples Neal R. Gross and Co., Inc. (202) 234-4433 Washington DC www.nealrgross.com Volume 1 5 Exhibit No. Description Mark Recd 19 Bill Carriere CWB Testimony . .215 216 20 Rachael Goodhue CWB Testimony . .217 256 21 Rachael Goodhue CWB Testimony . .217 256 Exhibit: Kaiser Economic Analysis 22 Bill Tos CWB Testimony . .256 273 23 Testimony of Robert Driver,. .276 296 California Walnut Board 24 Testimony of Donald Norene,. .299 332 California Walnut Board 29 Testimony of Eric Heidman, . .335 348 Diamond Foods, Inc. Neal R. Gross and Co., Inc. (202) 234-4433 Washington DC www.nealrgross.com Volume 1 6 1 P-R-O-C-E-E-D-I-N-G-S 2 (11:45 a.m.) 3 JUDGE STROTHER: I'm Judge Channing 4 Strother. I'm the presiding Administrative Law 5 Judge in this proceeding. Good morning, 6 everyone. We're gathered in this virtual setting 7 to conduct an amendatory hearing on recommended 8 changes to the federal marketing order for 9 California walnuts. 10 By the way, folks may want to grab a 11 pencil and a piece of paper. There are some 12 things I'm going to say in this lengthy 13 introduction that folks may want to make a note 14 of. 15 This proceeding has been assigned the 16 following docket or case numbers: J-0011, AMS-SC- 17 0082, and SC-19-984-1. By the way, this is April 18 20, it's 11:46. 19 The California Walnut Board locally 20 administers the Marketing Order Program, whose 21 regulations are contained in Title 7 of the Code 22 of Federal Regulations, Part 984. The Board Neal R. Gross and Co., Inc. (202) 234-4433 Washington DC www.nealrgross.com Volume 1 7 1 recommended the amendments that we will be 2 discussing today. Federal Register notice 3 containing these proposed amendments was 4 published February 11, 2020. That's at 85 5 Federal Register 7669. 6 As required by 7 CFR Section 7 900.8(c)(1), this Federal Register notice will 8 later be put into the record as an exhibit. 9 There is also a corrected notice which will also 10 go into the record as a separate exhibit. 11 As set out in the notice summary in 12 the Federal Register posting, it proposed 13 amendments that amend Federal Marketing Order 984 14 to add authority for the Board to provide credit 15 for certain market promotion expenses paid by 16 handlers against their annual assessments due 17 under the order, and it would establish 18 requirements to effectuate that new authority. 19 The purpose of this hearing is for 20 USDA to gather evidence and testimony either in 21 support of or in opposition to the Board's 22 recommendation. My role as Administrative Law Neal R. Gross and Co., Inc. (202) 234-4433 Washington DC www.nealrgross.com Volume 1 8 1 Judge during this proceeding is to ensure that 2 the conduct followed adheres to the procedures 3 described in Title 7 of the CFR Part 900, titled 4 General Regulations, Rules of Practice and 5 Procedure, gathering procedures to formulate 6 marketing agreements and marketing orders. 7 Additionally, it's my responsibility 8 to ensure that the information gathered during 9 this hearing is pertinent to the subject matter 10 of the notice. If a witness makes comments or 11 testifies to subject matter outside the scope of 12 the contents of the Federal Register notice, I 13 have authority to interrupt and not, to not allow 14 the witness to continue. 15 However, I will not be issuing a 16 decision at the conclusion of this hearing. USDA 17 will refer to the information gathered during 18 this hearing, as well as public comments 19 submitted at a later juncture in the 20 administrative process. And it will determine 21 whether to move forward with the Board's 22 recommendation. Neal R. Gross and Co., Inc. (202) 234-4433 Washington DC www.nealrgross.com Volume 1 9 1 The United States Department of 2 Agriculture oversees the Board's activities to 3 ensure compliance with the laws, regulations, and 4 policies and conducts rulemaking proceedings such 5 as this one in response to the Board's 6 recommendations. Though USDA has used Zoom over 7 the past year for various meetings, we are using 8 it for the first time now for an amendatory 9 hearing. 10 I will administer the hearing that 11 will allow for testimony from interested parties, 12 cross-examination of witnesses, and submission of 13 supporting documents in the form of evidence, in 14 the form of the exhibits. All of this is 15 specified in Title 7 CFR Part 900. 16 In order to do this, USDA has 17 established the following procedural guidelines. 18 By the way, the, I don't think -- I don't think 19 I'll read the hyperlink, but there is a USDA AMS 20 webpage that has these procedural guidelines in 21 effect there, as well as copies of all the 22 exhibits. Neal R. Gross and Co., Inc. (202) 234-4433 Washington DC www.nealrgross.com Volume 1 10 1 While using this video virtual 2 platform, certain people will be visible on the 3 screen at any given moment as the hearing 4 progresses, myself, attorneys, Board Manager and 5 the person giving testimony or otherwise 6 speaking. Members of the audience will not be 7 visible during the hearing unless they elect to 8 question the witness or volunteer to testify or 9 raise an objection. 10 Similarly, certain people have their 11 microphones activated, myself, the witness 12 testifying, and including during cross- 13 examination the person asking questions and the 14 witness responding to those questions. All other 15 participants' lines will be muted during the 16 hearing. 17 We will begin the hearing with an 18 introduction, which will be a notice of 19 appearances of all USDA personnel, including 20 technical support people, and of industry 21 proponents, so that we are all aware of who will 22 be managing different functions of this Neal R. Gross and Co., Inc. (202) 234-4433 Washington DC www.nealrgross.com Volume 1 11 1 proceeding. Each will be asked to state and 2 spell their name, give their professional title, 3 and describe their role in the hearing. 4 Through our pre-registration process 5 we have developed a list of witnesses desiring to 6 testify. I will call those witnesses in order as 7 this list has been presented to me. In addition, 8 prior to testifying, each witness will be sworn 9 in and asked to state and spell their name for 10 the hearing record prior to speaking.