USA CUN13 SOIL Orchard Replant Open Field Page 1 of 17

- NOMINATING PARTY : The United States of America FILE NAME: USA CUN13 SOIL ORCHARD REPLANT Open Field BRIEF DESCRIPTIVE TI TLE OF NOMINATION : Methy l Bromide Critical Use Nomination for Preplant Soil Use for Orchard Replant in Open Fields (Submitted in 20 11 for the 2013 Use Season) CROP NAME (OPEN FIEL D OR PROTECTED): Orchard Replant Open Field QUANTITY OF METHYL B ROMIDE NOMINATED:

Year N OMINATION A MOUNT 2013 6,230 kg NOMINATING PARTY CONTACT DETAILS: Contact Person: John Thompson Title: Division Dire ctor Address: Office of Environmental Policy U.S. Department of State 2201 C Street, N.W. Room 2658 Washington, D.C. 20520 U.S.A. Telephone: (202) 647 - 9799 Fax: (202) 647 - 5947 E - ma il: thompsonje2@state.gov Following the requirements of Decision IX/6 paragraph (a)(1) The United States of America has determined that the specific use detailed in this Critical Use Nomination is critical because the lack of availability of methyl bromide for this use would resu lt in a significant market disruption . .  Yes  No Signature Nam e Date Title: (Details on this page are requested under Decision Ex. I/4(7), for posting on the Ozone Secretariat website under Decision Ex. I/4(8) .) This form is to be used by holders of single
- year exemptions to reapply for a subsequent year’s exemption (for example, a Party holding a single
- year exemption for 2005 and/or 2006 seeking further exemptions for 2007). It does not replace the format for requesting a critical
- use exemption for the first time. In assessing nominations submitted in this format, TEAP and MBTOC will also refer to the original nomination on which the Party’s first
-

year exemption was approved, as well as any supplementary i nformation provided by the Party in relation to that original nomination. As this earlier information is retained by MBTOC, a Party need not re - submit that earlier information.USA CUN13 SOIL Orchard Replant Open Field Page 2 of 17

CONTACT OR EXPERT(S) FOR FURTHER TECHNICAL DETAILS: Contact/Expert Perso n: Jack Housenger Title: Director Address: Biological and Economic Analysis Division Office of Pesticide Programs U.S. Environmental Protection Agency 1200 Pennsylvania Avenue, N.W. Mailcode 7503P Washington, D.C. 20460 U.S.A. Telephone: (703) 308 - 8200 Fax: (703) 308 - 7042 E - ma il: Housenger.Jack@epa.gov LIST OF DOCUMENTS SENT TO THE OZONE SECRETARIAT IN OFFICIAL NOMINATION PACKAGE: 1. PAPER DOCUMENTS: Title of paper documents and appendices No. of pages Date sent to Ozone Secretariat

2. ELECTRONIC COPIES OF ALL PAPER DOCUMENTS: *Title of each electronic file (for naming convention see notes above) No. of kilobytes Date sent to Ozone

Secretariat USA CUN13 SOIL ORCHARD REPLANT Open Field * Identical to paper documentsUSA CUN13 SOIL Orchard Replant Open Field Page 3 of 17



### METHYL BROMIDE CRITICAL USE RENOMINATION FOR PREPLANT SOIL USE ( OPEN FIELD OR PROTECTED ENVIRONMENT) ORCHARD REPLANT 1. SUMMARY OF THE NEED FOR METHYL BROMIDE AS A CRITICAL USE The U.S. nomination for critical use of meth yl bromide for or chard replant in 2013 is for a portion of replant sites in California where alternatives are not suitable, either because of regulatory

restrictions or phy sical characteristics, such as unacceptable soil ty pe or moisture or topograph y. For 2013, five requ ests for critical use exemptions were received

— stone fruit, table & raisin grapes, wine grapes, almonds, and walnuts. These areas represent a small portion of the entire orchard replant in California. The USG has reviewed all factors affecting transiti on rates in this sector. Based on this assessment the transition rate has been greatl y increased for most portions of this sector. For the area covered in this nomination, the USG believes that the narrative discussion included in this document is techni call y valid. The USG has nominated amounts of methyl bromide based onl y on those sub - sectors that cannot transition away from methy l bromide at the accelerated rate. Methy l bromide continues to be a critical tool for sites that are not amenable to other treatments due to features such as soil ty pe or soil moisture, or regulatory restrictions, or activity

against certain pests, such as Armillaria root rot (e.g., Zasada et al. , 2010; UC Pest Management Guidelines, 2008). In addition, new regulations to red uce volatile organic compound emissions may cause a delay

of fumigation bey ond October into November and December in some locations (e.g. San Joaquin Valley) when soils are colder. This may result in reduced efficacy of the primary

alternative 1,3 - D. Township caps also limit the use of 1,3 - D. I odomethane registration is pending in California. DMDS is not currentl y registered in California and does not have a label for orchard replant. 2. SUMMARIZE WHY KEY AL TERNATIVES ARE NOT F EASIBLE Alternatives ar e considered not feasible where 1) they have not been sufficiently tested or protocols have not been sufficientl y developed for their use, 2) costs are excessive, 3) application difficulties exist due to such factors as hilly terrain or equipment requireme nts, 4) areas of environmental sensitivity or characteristics reduce their efficacy , 5) regulatory restrictions prevent their use, 6) pest pressure is to such an extent that alternatives are not effective. There is a critical need for methy l bromide whe re there are legally mandated township caps for 1,3 - D, or because surface moisture requirements cannot be met (e.g., soils cannot be adequatel y dried prior to use of 1,3 - D). New regulations to reduce volatile organic compound emissions may reduce the effi cacy

of 1,3 - D b y requiring a delay in fumigation to November or December when soils are colder. The best alternatives currently registered for orchard replant are 1,3 - D orUSA CUN13 SOIL Orchard Replant Open Field Page 4 of 17

1,3 - D with chloropicrin, and/or metam - sodium, especiall y in coarse - textured soils ( e.g., Browne et al ., 2010; Wang et al. , 2010; Beede et al. , 2010 ). Under certain soil and moisture conditions (less than 12% to 1.5 meters) 1,3 - D is an effective management tool for replant disease and is currentl y used to replant the majority of orchard and viney ard sites. Preliminary results with steam to disinfest soils for replant (e.g., Browne et al. , 2010; Fennimore and Goodhue, 2009 ) and other non - chemical treatments are undergoing multi - year trials to assess efficacy and costs. Iodomethane , which may be an effective alternative, was registered in December 2010in California but at lower use rates than the rest of the U.S. and with buffer distances up to 10 fold greater (e.g., Browne et al ., 2010; Cabrera et al ., 2010). DMDS is not registered in C alifornia and the federal label does not include orchard replant at this time. 3. IS THE USE OF METHYL BROMIDE COVERED BY A CERTIFICATION STANDARD? Methy l bromide is not covered by a certification standard for orchard replant. 4. IF PART OF THE CROP A REA IS TREATED WITH METHYL BROMIDE, INDICATE THE REASON WHY METHYL BROMIDE I S NOT USED IN THE OT HER AREA, AND IDENTIFY W HAT ALTERNATIVE STRA TEGIES ARE USED TO CONTROL THE TARGET P ATHOGENS AND WEEDS W ITHOUT METHYL BROMIDE THERE. The current best alternati ves for orchard replant are formulations of 1,3 - D or 1,3 - D with chloropicrin, and/or metam - sodium, especially in light soils (e.g., Browne et al ., 2010; Wang et al. , 2010; Beede et al. , 2010; B Caprile and McKenry , 2006; Wang et al. , 2009). These alternat ives are used effectively under optimal soil temperature and moisture conditions (high moisture at surface and less than 12% at depths to 1.5 meters) and meth yl bromide is not critical. There is a critical need for methy l bromide in orchards in California where alternatives cannot be used, either because of township caps for 1,3 - D, local permit requirements for chloropicrin, buffer zone limitations, or surface moisture requirements cannot be met. If rain does not occur, growers without sprinkler sy stems h ave difficult y applying water for 1,3 - D application. 5. WOULD IT BE FEASIBLE TO EXPAND THE USE OF THESE METHODS TO COVER AT LEAST PART OF THE CROP THAT HAS REQUESTED USE OF METHYL BROMIDE? WHAT CHANGES WOULD BE NEC ESSARY TO ENABLE THIS? According to Bro wne et al . (2010) orchardists have shifted heavil y towards use of 1,3 - dichloropropene instead of methyl bromide , but this transition does not apply to orchards with high clay content and orchards with township cap restrictions . Previously , McKenry et al . (2007, 2006) and Caprile and McKenry (2006) have reported on methods that can help to replant many orchard sites without methyl bromide. One requirement is the use of nematode - tolerant rootstocks, which are currently being tested (e.g., Zasada et al. , 201 0; Beede et al ., 2010; McKenry and Buzo, 2009).USA CUN13 SOIL Orchard Replant Open Field Page 5 of 17

Regulations to meet air quality standards for ground level ozone are likel y to change fumigation practices. Pesticides that have been identified as volatile organic compounds (VOC) react with nitrous oxides (NOx) to form ozone. In California, the most at - risk period for fumigation has been identified as May

1 through October 31. Several areas in California, including the San Joaquin Valley and some areas of Ventura Count y, will be subject to new regulatio ns. The San Joaquin Valley contains about two - thirds of the almond and stone fruit land, and about one - half of the walnut land. All sources of NOx and VOCs are being evaluated by the California Department of Pesticide Regulation (CDPR), which has the authorit y to regulate the use of soil fumigants. CDPR has issued a rule to reduce the emissions, including restrictions on timing and methods of fumigation. For example, for orchard replant, the onl y method of application allowed for methy l bromide or chlor opicrin is HDPE tarped, deep - shank, broadcast fumigation. Strip applications are not allowed in the May - October period. In the past, most orchard replant fumigations occurred during this period. Use of 1,3 D, however, may

not be impacted as much as othe r soil treatments. 6. SUMMARY OF RECENT RESEARCH Research in California continues to highlight methods for orchard replant to improve tree survival and orchard health. Future nematode control (one of the most important pests in replant situations) without methy l bromide will depend on integrating various techniques including cultural practices, genetic resistance, and alternative pesticides (Zasada et al. , 2010). Recent research results for this sector were outlined in presentations to the 2010 Annual International Research Conferences on Methy l Bromide Alternatives and Emissions Reductions (Browne et al. , 2010; Klonsky et al. , 2010; Wang et al. , 2010; Cabrera et al., 2010; Beede et al. , 2010). In addition, presentations to the 2009 research conference s provided results in ongoing projects (Beede et al. , 2009; Browne et al. , 2009; McKenry and Buzo, 2009; Klonsky et al. , 2009; Fennimore and Goodhue, 2009; Wang et al. , 2009). Almonds and Stone Fruit: Research including USDA Pacific Area - wide Pest Manag ement Program for Integrated Alternatives to Methy l Bromide has been ongoing for stone fruit and almond (Browne et al. , 2010; Browne et al. , 2009; Browne et al ., 2008; Fennimore and Goodhue, 2009; Klonsky et al. , 2009; McKenry and Buzo, 2009). Objectives of the area - wide research are 1) To develop and demonstrate optimized integrated pest management (IPM) strategies for control of almond and stone fruit replant disease without MB; 2) To provide comprehensive economic assessments of alternatives replant man agement strategies; 3) Conduct educational outreach facilitation adoption of effective methyl bromide alternatives in almond and stone fruit industries. Stone fruit and almond replant trials continue since their establishment in 2006. Research in 2010 included two new almond replant trials and continued monitoring of tree growth, yield, and pest data from six almond and peach trials (Browne et al ., 2010). Among the results of the research were: 1) Prunus replant disease (PRD) was prevented by soil treatments of chloropicrin with 1,3 - D, PicClor 60, or iodomethane; 2) These treatments were more effectiveUSA CUN13 SOIL Orchard Replant Open Field Page 6 of 17

than methy l bromide or 1,3 - D without chloropicrin; 3) Adequate to optimal PRD management was achieved with spot treatments requiring treating onl y 10 - 17% of the orchard area; 4) GPS controlled spot fumigation is available for commercial use; 5) Drip spot treatments have shown promise, but may

require different formulations to incorporate into current irrigation sy stems; 6) Crop rotations with sudan grass c an improve replanted orchard growth, but this may not be an economical strategy ; 7) There is a great need for improved rootstocks that will help reduce or eliminate the need for pre - plant fumigation; 8) Alternatives that resulted in at least comparable yi e ld to methy l bromide generall y cost less (Klonsky et al. , 2010). Fennimore and Goodhue (2009) estimated costs of steam disinfestation of soils for almond replant with a commercial steam applicator from Italy and steam injection. The machine can disinfest an 8 x 1.5 m plot per heating, which could treat up to 0.66 ha per day . In addition, researchers are planning to test a tractor - pulled augur and a s ys tem to inject steam into soils. If research supports acceptable efficacy , costs of the sterilizing mach ine are estimated to be $2196 per acre ($5425 per ha) compared to $2500 per acre ($6175 per ha) for methyl bromide treatment. The steam augur s ys tem was estimated to cost $341 per acre ($842 per ha) for planting 90 trees. Experiments to measure efficacy of steam disinfestation are planned. McKenry and Buzo (2009) studied the possibilities of a “starve and switch” approach to almond replant and management of Prunus replant disease. Herbicides are used to kill remnant roots of previous plantings to destro y nematode nutrients and switch to a tolerant or resistant rootstock. While costs appear to be acceptable, the availability of acceptable rootstocks for almond replant is lacking. Grapes: Multi - season field trials, as part of the USDA Pacific Area - wide P est Management Program, continue to identify methods to manage viney ard pests (Wang et al. , 2010; Wang et al. , 2009; Wang et al. , 2008; Wang et al. , 2007). Trials conducted to identify effective fumigation for nematode control revealed that various treatm ents with 1,3 - D + chloropicrin were at least comparable to meth yl bromide - treated soil (Wang et al. , 2010). No nematodes were found in any of the fumigated plots over a y ear after fumigation. Unfumigated plots had populations of ring, pin, stubb y - root an d dagger nematodes. Trials targeting citrus nematode were conducted 1) to determine nematode sensitivity to DMDS, 2) to evaluate the effect of time of exposure, soil moisture, and temperature on DMDS efficacy , and 3) to compare the effectiveness of DMDS in two different soil ty pes (Cabrera et al., 2010). Results of experiments suggest that at higher doses soil ty pe and soil temperature were not important factors for DMDS efficacy . At higher doses nematodes were killed after short exposure. The experim ents did not appear to combine DMDS with chloropicrin, which will be the commerciall y available formulation. Recent treatments were mustard cover crop, methy l bromide shanked at 448 kg/ha under HDPE, 1,3 - D + 35% chloropicrin shanked with no tarp at 610 and at 305 kg/ha with no tarp or with VIF, and InLine drip at 305 kg/ha with no tarp or VIF. Preliminary results indicated that control of total Pythium spp. was successful in all fumigated plots except InL ine without tarps. Total Fusarium was significantly reduced on b y meth yl bromide. L ive citrus nematodes were only found in the untreated plots. No other species of nematodes were found alive in any fumigatedUSA CUN13 SOIL Orchard Replant Open Field Page 7 of 17

plot. Pruning weight (a measure of plant health) was highest in the soils treated with meth yl bromide, 1,3 - D + 35% chloropicrin (high rate), 1,3 - D + 35% chloropicrin (low rate with VIF), and InLine with VIF. In addition, VIF significantly reduced fumigant emissions. Walnuts: According to the request from the California Walnut Commission, “walnut growers appear to be shifting to tree site or strip applications, a short - sighted change driven b y economic pressure.” Results of research on walnut was recentl y reported (Beede et al. , 2010; Beede et al. , 2009; Beede et al ., 2008) and is an ongoing attempt to: 1) identify cost - effective commercial fumigant alternatives to meth yl bromide including nematode control, 2) test new application technologies, and 3) initiate outreach to growers for walnut production, and 4) test clonal vs . seedling plant mater ial. Soils treated with 1,3 - D with and without chloropicrin gave effective nematode control. Clonal rootstocks were larger than the Paradox trees (Beede et al. , 2010). Research continues to indicate that the continued use of the common rootstock Parado x is not advisable. Research continues to search for resistance to ring and lesion nematode pests. Various treatments (different rates and application methods) with 1,3 - D, chloropicrin, and methyl bromide were evaluated. Conclusions from recent research (Beede et al. , 2010; Beede et al. , 2009) confirm previous findings that 1,3 - D and chloropicrin show comparable pathogenic nematode management potential to methyl bromide. New trials were set - up in 2010 to compare rootstocks against the rejection and ne matode components of the replant disease. Research toward a better rootstock is annually summarized in Annual Walnut Research Reports (available at http://walnutresearch.ucdavis.edu/ ). 7. ECONOMIC FEAS IBILITY OF ALTERNATIVES In this stud y net revenue is calculated as gross revenue minus operating costs. This is a measure of the direct losses of income that may be suffered by

the users. It should be noted that net revenue does not represent net inco me to the users. Net income, which indicates profitability of an operation of an enterprise, is gross revenue minus the sum of operating and fixed costs. Net income should be smaller than the net revenue measured in this study . Fixed costs were not incl uded because it is often difficult to measure and verify . The economic anal ys is of the orchard replant application compares data on yields, crop prices, revenues and costs using methy l bromide and using alternative pest control regimens in order to estimate the costs from the loss of methyl bromide availability . The alternatives identified as technicall y feasible - in cases of low pest infestation 1

– are different combinations of chloropicrin, metam sodium and 1,3 - D.

1 The USG does not request methyl bromide for use in areas of low to moderate pest pressure. Only cases where key

pests are present at moderate to high levels require methy l bromide for pest pressure.USA CUN13 SOIL Orchard Replant Open Field Page 8 of 17

The critical use nomination (CUN) f or this sector does not include areas where soil conditions are ideal and township caps do not restrict the use of 1,3 - D. This CUN only applies to areas where township caps or certain soil ty pes do not permit the use or effective use of 1,3 - D. Where 1,3 - D is not permitted there are no effective nematicide alternatives to methy l bromide. Trees that survive are not likel y to be as health y and could suffer yi eld losses. If a nematode infestation causes the death of trees, then replacement trees would also suffer the same infestation unless there use of an effective nematicide, or possibly several y ears of fallow. Without effective fumigation growers who replant orchards can face losses from: • Delay ed planting • Fallow • Additional use of herbicides • Tree loss • Replant costs to replace tree losses • Loss of trees replanted • Yield loss of fruit or nuts • Delay ed achievement of full yield potential • Earlier loss of productivity of whole orchard If the alternatives do not work as effectively as methyl bro mide, then it is possible that other losses could occur, such as additional replanting, higher yi eld losses, and shorter lifespan of the whole orchard or viney ard reducing the abilit y to amortize the initial investment costs. The benefits of fumigation fo r orchard or viney ard replant can be measured by future yields (orchard crops require several ye ars to begin bearing) when production may be adversel y affected b y poor tree growth and high pest populations. In addition, fumigant treatments result in healthier young plants. Other fumigants besides methyl bromide are used for fumigation, but in some cases, such as where there are heav y soils or township caps on 1,3 - D, these alternatives may not be available. The effects of orchard replant disease and nem atode damage to young seedlings are experienced within the first three ye ars of orchard establishment, and are commonly observed within the first ye ar. Costs associated with individual tree replacement include delay ed production as newl y replanted trees l ag behind previously planted ones. In more severe cases, when replant disorder or high nematode populations are not properl y managed at the time of orchard establishment, the entire orchard or viney ard might be lost. Because of the long life of these per ennial crops, optimal soil preparation, along with appropriate rootstocks, is a priority for successful production.USA CUN13 SOIL Orchard Replant Open Field Page 9 of 17

Ty pically , the alternatives to methyl bromide would be evaluated using a partial budget anal ys is to estimate the impacts of changes in prod uction practices. That is, the consequences on a ty pical hectare of the crop grown are evaluated, rather than attempt to assess the impacts in the context of a whole enterprise, which could include multiple crops under cultivation. This approach allows the Agency to compare estimated losses to net operating revenue, which is defined as the difference between gross revenue and variable operating costs, on a per - hectare basis. The anal ys is ignores fixed costs, which are highl y dependent on land ownership and the size and diversity

of the grower’s operation, and therefore difficult to define on a per - hectare basis. As such, this analy sis may understate the impacts as a percentage of the grower’s income. An anal ys is of a single year, however, does not capture the full benefit of fumigation. Establishing an orchard involves considerable costs, including the maintenance of the orchard during the non - bearing years. The returns to this investment occur in the future. Therefore, another approach to evaluating the benefits fumigation is to calculate the net present value of the orchard under different streams of costs and returns. Net present value (NPV) is a way of comparing different investments by summing the discounted costs and returns over time to calculate the value of the investment. The formula for NPV is: 

## 

 

  T t t t t r NPV 0 ) 1 ( Cost Revenue where t is the time period (y ear), T is the last y ear the orchard is in production and r is the discount rate. This anal ysis uses a rate of 7% to represent a private discoun t rate or an individual’s trade - off of money between time periods 2 . Since revenues and costs are not adjusted for future inflation, all measures are in real terms. Since the choice of discount rate is somewhat arbitrary , BEAD also presents the internal r ate of return (IRR), which is the discount rate that makes NPV = 0. One interpretation of this value is that it represents the maximum rate of return on an investment that an individual must be willing to accept before the investment would be considered. That is, if the IRR is 5%, only individuals willing to accept a rate of return less than 5% would find the investment worthwhile. California W

alnuts and Almonds The current practice for walnut replant is to fumigate with methyl bromide and chloropicrin . An alternative is to use 1,3 - D with chloropicrin, but 1,3 - D does not penetrate heavier soils as well as methyl bromide and may not provide as effective control of nematodes and soil pathogens. Some growers may

not be able to obtain permission to use 1, 3 - D under California township caps, but in this case that possibility is not considered. Comparing methyl bromide and 1,3 - D, both with chloropicrin, for establishing an orchard will be the basis for evaluating the benefits of methyl bromide.

2 The United States Office of Management and Budget suggests using a 3% and 7% rate when evaluating the cost and benefits of government regulation, where 7% is an estimate of the before - tax rate of return to private capital (OMB, 2003).USA CUN13 SOIL Orchard Replant Open Field Page 10 of 17

Replacing methyl bromide with 1,3 - D, is estimated to result in a 4% decrease in y ields during production (Carpenter et al. , 2000). Yield losses are due to soil pathogens that infect the trees at an earl y age, stunting their growth. Table 1 presents the expected di fferences in production and revenue for California walnut, where operating costs are taken from Buchner et al. (2002). Elements of harvest costs are assumed to be directly proportional to yield and we adjust costs accordingl y. Table 1. Gross revenue, op erating costs, and net operating revenues, California walnuts orchard at full production. Methyl bromide + Chloropicrin 1,3 - D + Chloropicrin (% change) 1 Yield (kg/hectare) 1,505 1,445 ( - 4.0%) Price ($/kg) 1.43 1.43 Gross Revenue ($/hectare) 5,315 5, 101 ( - 4.0%) Operating Costs ($/hectare) 1,403 1,403 Harvest Costs ($/hectare) 895 867 ( - 2.8%) Net Operating Revenue ($/hectare) 3,018 2,660 ( - 11.9%) Sources: USDA NASS (2002 - 2006), Buchner et al. (2002), BEAD calculations. Figures may not sum due t o rounding. 1 Percent change in comparison to methyl bromide with chloropicrin. The anal ys is from Table 1 indicates that even relatively minor changes in yield can have large effects on net operating revenue. A 4% change in yield results in a 12% change in net operating revenue. The anal ys is suggests that methyl bromide is worth about $150/hectare each y ear in terms of improved yi eld during the lifespan of the walnut orchard. If growers did not have access to methy l bromide or 1,3 - D (because of township caps, for example), the consequences would be far more dire. The anal ys is in Table 1 does not consider the investment producers must make in establishing an orchard and maintaining it through several non - bearing y ears. Table 2 presents the information on the net operating revenues, NPV and IRR for a walnut orchard under the four treatment options. Field preparation costs are similar for any t ype of fumigation, but fumigation costs differ according to the mix of chemicals and the cost of application. C hemical costs are average per - hectare cost of products, which incorporates ty pical application rates. Tree planting costs are identical regardless of fumigant. BEAD assumes that some trees must be replanted the following ye ar. We assume that 4%, or two trees, are replanted following fumigation with methy l bromide and chloropicrin (Buchner et al. , 2002) but 6% are replanted with 1,3 - D and chloropicrin. The higher replant rates represent the lower survival rate if nematodes are controlled but orchard repl ant disorder or pathogens are not. Trees begin to produce in the fourth y ear, initially at 10% of production, climbing to full production in the eighth ye ar (Buchner et al. , 2002). Returns during full production are shown in Table 2.USA CUN13 SOIL Orchard Replant Open Field Page 11 of 17

Table 2. Net ope rating revenue, net present value (NPV), and internal rate of return (IRR) of a walnut orchard.

Year Stage Methyl bromide + chloropicrin 1,3 - D +

chloropicrin 1 Field Preparation - 585 - 585 Fumigation 1

- 3,127 - 1,855 Establishment - 3,789 - 3,789 2 Non - b earing 2

- 978 - 1,018 3 Non - bearing - 897 - 897 4 Initial production 3

- 637 - 657 5 Partial production 5

- 417 - 457 6 Partial production 6

- 106 - 165 7 Partial production 6 1,331 1,213 8 Full production 7 3,018 2,660 9 - 25 Full production 7 3,018 2,660 NP V (7% discount rate) 9,495 9,495 I nternal R ate of R eturn 13.8% 13.9% Sources: Buchner et al. (2002), and BEAD calculations. Net operating revenues are not discounted; negative numbers represent costs greater than income. Net present value is calculate d assuming 7% discount rate. 1 Fumigation costs include chemical costs and application costs. 2 In addition to operating costs, non - bearing costs include replanting trees. 3 Initial production is 10% of full production. 4 Production in the fifth year i s 20% of full for combination treatments. 5 Production in the sixth year is 30% of full for combination treatments. 6 Production in the seventh year is 60% of full production for combination treatments. Assuming a 7% discount rate, establishing a wa lnut orchard, fumigating with methyl bromide and chloropicrin, yi elds future returns valued at almost $9,500/hectare today . This is about $530 more per hectare than an hectare treated with 1,3 - D and chloropicrin, although the lower initial cost of fumigat ing with 1,3 - D and chloropicrin means that the internal rate of return on the two investments are approximately equal. The I RR for an orchards treated with methy l bromide or 1,3 - D are similar, and close to 14%. These results would also apply almonds gr own on heavier soils. Where almonds are replanted after an existing almond orchard, poor vegetative growth has been observed and tree mortality has been estimated as high as 50% (Browne et al ., 2006). This would be the case where no fumigant is used on re plant sites. With a one y ear fallow, but no fumigant treatment, a 25 - 40% yi eld loss might be experienced (depending on rootstock) with a 24 - 35% reduction compared to methyl bromide treatment (Carpenter et al ., 2000). BEAD estimates that nearly 43% of alm ond hectares planted and 86% of walnut plantings are currentl y treated with methyl bromide. The benefits of methyl bromide would eventually accrue to almost 97,000 bearing hectares of almonds and 74,000 hectares of walnut. At full production, additional yi eld is valued at about $370/hectare, therefore methy l bromide adds about $63.3 million annually

to the value of California nut production. Currently , metam sodium provides little benefit to producers on heav y soils. However, if chloropicrin and methyl bromide were not available, control of soil pathogens would depend on metam sodium. Without these fumigations,USA CUN13 SOIL Orchard Replant Open Field Page 12 of 17

some orchards would probably not be established at all; thus these figures may understate the full value of the meth yl bromide. California Stone Fruit Planting orchards with stone fruit trees requires a large investment of resources as well as numerous choices to establish a long - bearing and productive orchard. Many of the pests associated with these crops and fumigation requirements are simi lar from crop to crop and location to location. However, management of these pests differs depending on particular crop, soil ty pe, climatic region, availability and cost of orchard land, availability of resistant rootstock to specific key

pests, and loca l regulatory restrictions of some fumigants. In general, when fumigation is deemed necessary , few choices are available to the orchard manager. We assess the benefits of fumigation with meth yl bromide by comparing production under alternative approaches for controlling orchard replant disease. In this case, we focus on prune production in California that is broadly representative of stone fruit production with high fumigant use. This represents a heav y soil environment where meth yl bromide and chloropic rin are used. We compare this use to fumigation with 1,3 - D and chloropicrin, 1,3 - D and metam sodium, and 1,3 - D alone to evaluate the benefits of methy l bromide and chloropicrin. This result would also apply

to cherry , peach and nectarine, and plum grown on heavier soils. We assume in this analy sis that 1,3 - D is available for use as a fumigant, which will not necessaril y be the case, due to township caps in California. If neither methyl bromide or 1,3 - D are available, the consequences are expected to be more dire. Replacing methyl bromide with 1,3 - D, while maintaining the use of chloropicrin, is estimated to result in a 4% decrease in prune yi elds during production (Carpenter et al. , 2000). Yield losses are due to soil pathogens that infect the trees at an earl y age, stunting their growth. Table 3 presents the expected differences in production and revenue for California prune, where operating costs are taken from Buchner et al. (2001). Harvest costs are assumed to be directl y proportional to yield. Differences in net operating revenue for even small changes in yield can be substantial. This analy sis suggests that the benefits of methy l bromide alone are approximately

$125/hectare.USA CUN13 SOIL Orchard Replant Open Field Page 13 of 17

Table 3. Gross revenue, operating costs, and net operating revenu es, California prune orchard at full production. Methyl bromide + chloropicrin 1,3 - D +

chloropicrin (% change) 1 Yield (dried ton/hectare) 4.4 4.2 ( - 4.0%) Price ($/ton) 1,125 1,125 Gross Revenue ($/hectare) 5,002 4,802 ( - 4.0%) Operating Costs ($/he ctare) 2,080 2,080 Harvest Costs ($/hectare) 1,894 1,818 ( - 4.0%) Net Operating Revenue ($/hectare) 1,028 904 ( - 12.1%) Sources: USDA NASS (2002 - 2006), Buchner et al. (2001), BEAD calculations. Figures may not sum due to rounding. 1 Percent change in c omparison to methyl bromide with chloropicrin. The anal ys is in Table 3 does not consider the investment producers must make in establishing an orchard and maintaining it through several non - bearing y ears. Table 4 presents the information on net operating revenue, NPV, and I RR for a prune orchard under the treatment options. Field preparation costs are similar for an y t ype of fumigation, but fumigation costs differ according to the mix of chemicals and the cost of application. Chemical costs are average per - hectare cost of products, which incorporates ty pical application rates. Trees are planted the following spring and costs are identical regardless of fumigant. BEAD assumes that some trees must be replanted the following ye ar. We assume that 2% are r eplanted following fumigation with methyl bromide an chloropicrin (Buchner et al. , 2001); 3% are replanted with 1,3 - D and chloropicrin; The higher replant rate represents the lower survival rate if nematodes are controlled but soil pathogens are not and am ount to two or four trees. Trees begin to produce in the fourth year, initially at 20% of production, climbing to full production in the seventh y ear (Buchner et al. , 2001). Returns during full production are shown in Table 4.USA CUN13 SOIL Orchard Replant Open Field Page 14 of 17

Table 4. Net operating revenue, net present value (NPV), and internal rate of return (IRR) of a prune orchard.

Year Stage Methyl bromide + chloropicrin 1,3 - D +

chloropicrin 0 Field Preparation - 618 - 618 Fumigation 1

- 2,519 - 2,025 1 Establishment - 3,137 - 3,137 2 Non - bearing 2

- 995 - 1,018 3 Non - bearing - 1,294 - 1,294 4 Initial production 3

- 1,336 - 1,361 5 Partial production 5

- 1,023 - 1,072 6 Partial production 2 - 82 7 Full production 1,028 904 8 - 40 Full production 1,028 904 NPV (7% discount rate) - 874 - 1,529 I nternal R ate of R eturn 6.3% 5.7% Sources: Buchner et al. (2001), and BEAD calculations. Net operating revenues are not discounted; negative numbers represent costs greater than income. Net present value is calculated assuming 7% discount rate. 1 Fumigation costs include chemical costs and application costs. 2 In addition to operating costs, non - bearing costs include replanting trees. 3 Initial production is 20% of full production. On - set of production is delayed one year if 1,3 - D is used alone. 4 Production in the fifth year is 40% of full for combination treatments. 5 Production in the sixth year is 67% of full for combination treatments. Assuming a 7% rate of interest, prune production does not appear to be a good investment using any of the fumigation o ptions. It may be that the information we have on production costs are somewhat high. Relatively speaking, however, methy l bromide provides substantial benefits over 1,3 - D. Failure to adequatel y control soil pathogens substantiall y reduces the return to investing in a prune orchard. This result would also apply to cherry , peach and nectarine, and plum grown on heavier soils.USA CUN13 SOIL Orchard Replant Open Field Page 15 of 17

8. RESULTANT CHANGES TO REQUESTED EXEMPTION QUANTITIES TABLE 5. N OMINATION A MOUNT : C A G& TF

L - St one Fru it C A G& TF L - Ra isin Grape C A W alnut

Co mmissio n Al mo nd

Hulle rs & Proce ssors C A W ine

Grape s R ep la nt S ec to r T ot al / Av er age Qu anti ty Re ques ted fo r 2012: Am ou nt (k gs) 12,700 626 1,844 1,660 1,494 18,324 Qu an ti ty Re co mme nded by MB TO C/ TE

AP fo r 2012 : Am ou nt (k gs) 12,700 626 1,844 1,660 1,494 18,324 Am ou nt (k gs) 12,700 626 1,844 1,660 1,494 18,324 Area (ha) 635 31 92 83 75 916 Ra te 20 20 20 20 20 20 Tr ans itio n fr om 2012 Base lin e Ad jus ted Val ue Pe rcent ag e

(%) -66% -66% -66% -66% -66% -66% Am ou nt (k gs) 4,318 213 627 564 508 6,230 Area (ha) 22 1 3 3 3 31 Ra te 200 200 200 200 200 200 OR CHAR D RE PLAN T SE CTOR

Qu anti ty Appr oved by Pa rt ie s fo r 2012: Qua ntity R equire d for 2013 N om

ination : CITATIONS Beede, R. H., Kluepfel, D . A., McKenry , M. 2010. Update on a preplant methy l bromide alternatives trial in a walnut replant site. Annual International Research Conference on Methy l Bromide Alternatives (2010). http://mb ao.org/2010/Proceedings/025BeedeB.pdf Beede, R. H., Kluepfel, D. A., McKenry , M. 2009. Update on a preplant methy l bromide alternatives trial in a walnut replant site. Annual International Research Conference on Methy l Bromide Alternatives (2009). http://www.mbao.org/2009/Proceedings/034BeedeBMBAOabstr2009.pdf Beede, R. H., Kluepfel, D. A., McKenry , M., Yakabe, L. Garcia, T. 2008. Examination of preplant methyl bromide alter

natives in a walnut tree replant site. Annual International Research Conference on Meth yl Bromide Alternatives (2008). http://www.mbao.org/2008/Proceedings/016KluepfelDMBAOa bstr2008.pdf Browne, G., Lampinen, B., Doll, D., Holtz, B., Upadhy ay a, S., Schmidt, L., Wang, D., Fennimore, S., Hanson, B., Gao, S., Klonsk y, K, and Johnson, S. 2010. Integrated pre - plant alternatives to meth yl bromide for almonds and other stone fruits . Annual International Research Conference on Methy l Bromide Alternatives (2010). http://mbao.org/2010/Proceedings/028BrowneG.pdf Browne, G., Holtz, B., Upadhy ay a, S., Lampinen, B., Doll, D., Schmidt, L ., Edstrom, J., Shafii, M., Hanson, B., Wang, D., Gao, S., and Klonsky , K. 2009. Integrated pre - plant alternatives to methyl bromide for almonds and other stone fruits. Annual International Research Conference on Methy l Bromide Alternatives (200 9). http://www.mbao.org/2009/Proceedings/033BrowneGmbao2009fin.pdf Browne, G., Lampinen, B., Holtz, B., Doll, D., Edstrom, J., Schmidt, L ., Upadhy ay a, S., Shafii, M., Hanson, B., Wang, D., Gao, S., Goodell, N., and Klonsky , K. 2008. Integrated pre - plantUSA CUN13 SOIL Orchard Replant Open Field Page 16 of 17

alternatives to meth yl bromide for almonds and other stone fruits. Annual International Research Conference on Methy l Bromide Alternatives (2008). http://www.mbao.org/2008/Proceedings/012BrowneGmbao2008fin.pdf Browne, G. T., Connell, J. H., Schneider, S. M. 2006. Almond replant disease and its management with alternative pre - plant soil fumigation tre atments and rootstocks. Plant Disease 90:869 - 876. Buchner, R. P., Edstrom, J. P., Hasey , J.K, Krueger, W. H., Olson, W. H., Reil, W. O., Klonsky , K. M., and DeMoura, R. L . 2002. Sample costs to establish a walnut orchard and produce walnuts. University

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