[Federal Register Volume 63, Number 36 (Tuesday, February 24, 1998)]
[Rules and Regulations]
[Pages 9133-9135]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-4594]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 984

[Docket No. FV97-984-1 FIR]


Walnuts Grown in California; Decreased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (Department) is adopting, as a 
final rule, without change, the provisions of an interim final rule 
which decreased the assessment rate established for the Walnut 
Marketing Board (Board) under Marketing Order No. 984 for the 1997-98 
and subsequent marketing years. The Board is responsible for local 
administration of the marketing order which regulates the handling of 
walnuts grown in California. Authorization to assess walnut handlers 
enables the Board to incur expenses that are reasonable and necessary 
to administer the program. The marketing year began August 1 and ends 
July 31. The assessment rate will remain in effect indefinitely unless 
modified, suspended, or terminated.

EFFECTIVE DATE: March 26, 1998.

FOR FURTHER INFORMATION CONTACT: Diane Purvis, Marketing Assistant, or 
Mary Kate Nelson, Marketing Specialist, California Marketing Field 
Office, Fruit and Vegetable Programs, AMS, USDA, 2202 Monterey Street, 
suite 102B, Fresno, California 93721; telephone: (209) 487-5901, Fax: 
(209) 487-5906; or George Kelhart, Technical Advisor, Marketing Order 
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, room 
2525-S, P.O. Box 96456, Washington, DC 20090-6456; telephone: (202) 
720-2491, Fax: (202) 205-6632. Small businesses may request information 
on compliance with this regulation by contacting Jay Guerber, Marketing 
Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 
room 2525-S, P.O. Box 96456, Washington, DC 20090-6456; telephone: 
(202) 720-2491, Fax: (202) 205-6632.

SUPPLEMENTARY INFORMATION: This 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.''
    The Department is issuing this rule in conformance with Executive 
Order 12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. Under the marketing 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 as issued herein will be applicable to all assessable 
walnuts beginning August 1, 1997, and continue until amended, 
suspended, or terminated. 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 rule continues in effect the assessment rate of $0.0116 per 
kernelweight pound of certified merchantable walnuts established for 
the Board for the 1997-98 and subsequent marketing years.
    The California walnut marketing order provides authority for the 
Board, with the approval of the Department, to formulate an annual 
budget of expenses and collect assessments from handlers to administer 
the program. The members of the Board are producers and handlers of 
California walnuts. They are familiar with the Board's needs and with 
the costs for goods and services in their local area and are thus in a 
position to formulate an appropriate budget and assessment rate. The 
assessment rate is formulated and discussed in a public meeting. Thus, 
all directly affected persons have an opportunity to participate and 
provide input.
    For the 1997-98 and subsequent marketing years, the Board 
recommended, and the Department approved, an assessment rate that would 
continue in effect from marketing year to marketing year unless 
modified, suspended, or terminated by the Secretary upon recommendation 
and information submitted by the Board or other information available 
to the Secretary.
    The Board met on September 12, 1997, and unanimously recommended 
1997-98 expenditures of $2,391,289 and an assessment rate of $0.0116 
per kernelweight pound of certified merchantable walnuts. In 
comparison, last year's budgeted expenditures were $2,301,869. The 
assessment rate of $0.0116 is $0.0001 lower than the rate formerly in 
effect. The lower assessment rate is needed to bring expected 
assessment income closer to the amount necessary to administer the 
program for the 1997-98 marketing year. The quantity of assessable 
walnuts for 1997-98 is estimated at 207,000,000 kernelweight pounds, or 
9,000,000 kernelweight pounds higher than estimated for 1996-97. With 
more assessable walnuts, the former rate of assessment would have 
generated substantially more funds than needed to meet the Board's 
financial obligations. Assessment income would have exceeded 
anticipated expenses by about $31,000. The decrease in the assessment 
rate in conjunction with the anticipated increase in assessable walnuts 
should provide adequate assessment income to meet this year's expenses.
    The major expenditures recommended by the Board for the 1997-98 
year include $240,326 for general expenses, $147,126 for office 
expenses, $1,928,837 for research expenses, $50,000 for a production 
research director, and $25,000 for the reserve. Budgeted expenses for 
these items in 1996-97 were $232,684, $150,508, $1,840,677, $48,000, 
and $30,000, respectively.
    The assessment rate recommended by the Board was derived by 
dividing anticipated expenses by expected merchantable certifications 
of California

[[Page 9134]]

walnuts for the 1997-98 marketing year. As mentioned earlier, 
merchantable certifications for the year are estimated at 207,000,000 
kernelweight pounds, which should provide $2,401,200 in assessment 
income (about $10,000 more than estimated expenses). Unexpended funds 
may be used temporarily to defray expenses of the subsequent marketing 
year, but must be made available to the handlers from whom collected 
within five months after the end of the year.
    The assessment rate will continue in effect indefinitely unless 
modified, suspended, or terminated by the Secretary upon recommendation 
and information submitted by the Board or other available information.
    Although this assessment rate is effective 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 the Department. 
Board meetings are open to the public and interested persons may 
express their views at these meetings. The Department will evaluate 
Board recommendations and other available information to determine 
whether modification of the assessment rate is needed. Further 
rulemaking will be undertaken as necessary. The Board's 1997-98 budget 
and those for subsequent marketing years will be reviewed and, as 
appropriate, approved by the Department.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (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 California walnuts in 
the production area and approximately 50 handlers subject to regulation 
under the marketing 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 California walnut producers and handlers 
may be classified as small entities.
    This rule continues in effect the decreased assessment rate of 
$0.0116 per kernelweight pound of certified merchantable walnuts 
established for the Board and collected from handlers for the 1997-98 
and subsequent marketing years. The Board unanimously recommended 1997-
98 expenditures of $2,391,289 and that assessment rate. The assessment 
rate of $0.0116 is $0.0001 lower than the 1996-97 rate. The quantity of 
assessable walnuts for 1997-98 is estimated at 207,000,000 kernelweight 
pounds. Thus, the $0.0116 rate should provide $2,401,200 in assessment 
income and be adequate to meet this year's expenses. Unexpended funds 
may be used temporarily to defray expenses of the subsequent marketing 
year, but must be made available to the handlers from whom collected 
within five months after the end of the year.
    The lower assessment rate is needed to bring expected assessment 
income closer to the amount necessary to administer the program for the 
1997-98 marketing year. The quantity of assessable walnuts for 1997-98 
is estimated at 207,000,000 kernelweight pounds, or 9,000,000 
kernelweight pounds higher than estimated for 1996-97. With more 
assessable walnuts, the former rate of assessment would have generated 
substantially more funds than needed to meet the Board's financial 
obligations. Assessment income would have exceeded anticipated expenses 
by about $31,000. The decrease in the assessment rate in conjunction 
with the anticipated increase in assessable walnuts should provide 
adequate assessment income to meet this year's expenses.
    The Board's increase in budgeted expenses from $2,301,869 to 
$2,391,289 is due primarily to increases in the following line item 
categories--administrative and office salaries, research programs, and 
the production research director. Expenses for these items for 1997-98, 
with last year's budgeted expenses in parentheses, are: administrative 
and office salaries--$148,080 ($142,000), research programs--$1,928,837 
($1,840,677), and production research director--$50,000 ($48,000). 
Prior to arriving at this budget, the Board considered information from 
various sources, such as the Board's Budget and Personnel Committee, 
the Research Committee, and the Market Development Committee. 
Alternative expenditure levels were discussed by these groups, based 
upon the relative value of various research projects to the walnut 
industry. The assessment rate of $0.0116 per kernelweight pound of 
certified merchantable walnuts was then determined by dividing the 
total recommended budget by the quantity of assessable walnuts, 
estimated at 207,000,000 kernelweight pounds for the 1997-98 marketing 
year. This would produce assessment income of about $2,401,900. This is 
approximately $10,000 above the anticipated expenses, which the Board 
determined to be acceptable.
    Data for recent seasons and projections for the upcoming season 
indicate that anticipated 1997-98 assessment revenue as a percentage of 
total grower revenue could range between 2 and 2.5 percent.
    This action continues in effect the assessment obligation imposed 
on handlers. While assessments impose some additional costs on 
handlers, the costs are minimal and uniform on all handlers. Some of 
the additional costs may be passed on to producers. However, these 
costs are offset by the benefits derived by the operation of the 
marketing order. In addition, the Board's meeting was widely publicized 
throughout the California walnut industry and all interested persons 
were invited to attend the meeting and participate in Board 
deliberations on all issues. Like all Board meetings, the September 12, 
1997, meeting was a public meeting and all entities, both large and 
small, were able to express views on this issue.
    This action imposes no 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.
    The Department has not identified any relevant Federal rules that 
duplicate, overlap, or conflict with this rule.
    An interim final rule concerning this action was published in the 
Federal Register on October 30, 1997, (62 FR 58641). Copies of that 
rule were also mailed to all walnut handlers. Finally, the interim 
final rule was made available through the Internet by the Office of the 
Federal Register. A 60-day comment period was provided for interested 
persons to respond to the interim final rule. The comment period ended 
on December 29, 1997, and no comments were received.

[[Page 9135]]

    After consideration of all relevant material 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.

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

    Accordingly, the interim final rule amending 7 CFR part 984 which 
was published at 62 FR 58641 on October 30, 1997, is adopted as a final 
rule without change.

    Dated: February 17, 1998.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-4594 Filed 2-23-98; 8:45 am]
BILLING CODE 3410-02-P