[Federal Register Volume 63, Number 243 (Friday, December 18, 1998)]
[Rules and Regulations]
[Pages 69994-69996]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-33574]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 984

[Docket No. FV99-984-1 FR]


Walnuts Grown in California; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule increases the assessment rate established for the 
Walnut Marketing Board (Board) under Marketing Order No. 984 for the 
1998-99 and subsequent marketing years from $0.0116 to $0.0133 per 
kernelweight pound of certified merchantable walnuts. 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 on August 1 and ends July 31. The assessment rate will remain in 
effect indefinitely unless modified, suspended, or terminated.

EFFECTIVE DATE: December 19, 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: (559) 487-5901; Fax: 
(559) 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 complying with this regulation, or obtain a guide on complying with 
fruit, vegetable, and specialty crop marketing agreements and orders 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) 205-
6632, or E-mail: Jay__N__G[email protected]. You may view the marketing 
agreement and order small business compliance guide at the following 
web site: http://www.ams.usda.gov/fv/moab.html.

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 of Agriculture (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 on August 1, 1998, 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 increases the assessment rate established for the Board 
for the 1998-99 and subsequent marketing years from $0.0116 to $0.0133 
per kernelweight pound of certified merchantable walnuts.
    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 11, 1998, and unanimously recommended 
1998-99 expenditures of $2,620,274 and an assessment rate of $0.0133 
per kernelweight pound of certified merchantable walnuts. In 
comparison, last year's budgeted expenditures were $2,391,289. The 
assessment rate of $0.0133 is $0.0017 higher than the rate currently in 
effect. The quantity of assessable walnuts for 1998-99 is estimated at 
198,000,000 kernelweight pounds, which is 9,000,000 kernelweight pounds 
less than 1997-98. With the anticipated decrease in assessable walnuts 
and increased budget expenditures, a higher assessment rate is needed 
to generate sufficient revenue to administer the program for the 1998-
99 marketing year as shown in the following table.

[[Page 69995]]



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                                                                    Assessment
                                                                      income      1998-99 budget    Difference
----------------------------------------------------------------------------------------------------------------
Current Rate--$0.0116...........................................      $2,296,800      $2,620,274       -$323,474
New Rate--$0.0133...............................................       2,633,400       2,620,274        +$13,126
----------------------------------------------------------------------------------------------------------------

    The following table compares major budget expenditures recommended 
by the Board for the 1998-99 and 1997-98 marketing years:

------------------------------------------------------------------------
        Budget expense categories             1998-99         1997-98
------------------------------------------------------------------------
General Expenses........................        $246,643        $240,326
Office Expenses.........................         163,815         147,126
Research Expenses.......................       2,115,016       2,128,837
Production Research Director............          59,800          50,000
Reserve for Contingencies...............          35,000          25,000
------------------------------------------------------------------------

    The assessment rate recommended by the Board was derived by 
dividing anticipated expenses by expected merchantable certifications 
of California walnuts. As mentioned earlier, merchantable 
certifications for the year are estimated at 198,000,000 kernelweight 
pounds which should provide $2,663,400 in assessment income. 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 (Sec. 984.69).
    The assessment rate established in this rule 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 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 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 1998-99 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 walnuts in the 
production area and approximately 48 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.
    Last year, 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. Based on an 
average price of $2.10 per kernelweight pound at point of first sale, 
the majority of handlers of California walnuts may be classified as 
small entities.
    This rule increases the assessment rate established for the Board 
and collected from handlers for the 1998-99 and subsequent marketing 
years from $0.0116 to $0.0133 per kernelweight pound of certified 
merchantable walnuts. The Board unanimously recommended 1998-99 
expenditures of $2,620,274 and an assessment rate of $0.0133 per 
kernelweight pound of certified merchantable walnuts. The assessment 
rate of $0.0133 is $0.0017 higher than the current rate. The quantity 
of assessable walnuts for the 1998-99 marketing year is estimated at 
198,000,000 kernelweight pounds. Thus, the $0.0133 rate should provide 
$2,633,400 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 (Sec. 984.69).
    The following table compares major budget expenditures recommended 
by the Board for the 1998-99 and 1997-98 marketing years:

------------------------------------------------------------------------
        Budget expense categories             1998-99         1997-98
------------------------------------------------------------------------
General Expenses........................        $246,643        $240,326
Office Expenses.........................         163,815         147,126
Research Expenses.......................       2,115,016       2,128,837
Production Research Director............          59,800          50,000
Reserve for Contingencies...............          35,000          25,000
------------------------------------------------------------------------


[[Page 69996]]

    The higher assessment rate is needed to provide sufficient revenue 
to administer the program for the 1998-99 marketing year as shown in 
the following table.

----------------------------------------------------------------------------------------------------------------
                                                                    Assessment
                                                                      income      1998-99 budget    Difference
----------------------------------------------------------------------------------------------------------------
Current Rate--$0.0116...........................................      $2,296,800      $2,620,274       -$323,474
New Rate--$0.0133...............................................       2,633,400       2,620,274        +$13,126
----------------------------------------------------------------------------------------------------------------

    The Board reviewed and unanimously recommended 1998-99 expenditures 
of $2,620,274 which included increases in administrative and office 
expenses, and production research salary, and a decrease for research 
programs. Prior to arriving at this budget, the Board considered 
information and recommendations 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. After a desired expenditure 
level was determined, the assessment rate of $0.0133 per kernelweight 
pound of assessable walnuts was determined by dividing the total 
recommended budget by the quantity of assessable walnuts, estimated at 
198,000,000 kernelweight pounds for the 1998-99 marketing year. This is 
approximately $13,000 above the anticipated expenses, which the Board 
determined to be acceptable.
    A review of historical information and information pertaining to 
the current marketing year indicates that the grower price for the 
1998-99 season could range between $1.45 and $1.58 per kernelweight 
pound of walnuts. Therefore, the estimated assessment revenue for the 
1998-99 marketing year as a percentage of total grower revenue should 
be less than one percent.
    This action increases 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 11, 
1998, meeting was a public meeting and all entities, both large and 
small, were able to express views on this issue.
    This rule 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.
    A proposed rule concerning this action was published in the Federal 
Register on November 3, 1998 (63 FR 59246). Copies of the proposed rule 
were also mailed or sent via facsimile to all walnut handlers. Finally, 
the proposal was made available through the Internet by the Office of 
the Federal Register. A 15-day comment period ending November 18, 1998, 
was provided for interested persons to respond to the proposal. No 
comments were received. Another proposed rule duplicating the earlier 
proposal was published on November 6, 1998 (63 FR 59891). The duplicate 
proposal also provided a 15-day comment period which ended November 23, 
1998. No comments were received in response to the duplicate proposal.
    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.
    Pursuant to 5 U.S.C. 553, it is also found and determined that good 
cause exists for not postponing the effective date of this rule until 
30 days after publication in the Federal Register because: (1) The 
Board needs to have sufficient funds to pay its expenses which are 
incurred on a continuous basis; (2) the marketing year began on August 
1, 1998, and the marketing order requires that the rate of assessment 
for each marketing year apply to all assessable walnuts handled during 
such marketing year; (3) handlers are aware of this rule which was 
recommended at a public meeting; and (4) a 15-day comment period was 
provided for interested persons to provide input on the assessment rate 
increase and 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. Section 984.347 is revised to read as follows:


Sec. 984.347  Assessment rate.

    On and after August 1, 1998, an assessment rate of $0.0133 per 
kernelweight pound is established for California merchantable walnuts.

    Dated: December 14, 1998.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-33574 Filed 12-17-98; 8:45 am]
BILLING CODE 3410-02-P