[Federal Register Volume 67, Number 40 (Thursday, February 28, 2002)]
[Rules and Regulations]
[Pages 9185-9188]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-4707]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 984

[Docket No. FV01-984-1 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 (USDA) is adopting, as a final 
rule, without change, an interim final rule which decreased the 
assessment rate established for the Walnut Marketing Board (Board) for 
the 2001-02 and subsequent marketing years from $0.0134 to $0.0124 per

[[Page 9186]]

kernelweight pound of assessable walnuts. The Board locally administers 
the Federal marketing order which regulates the handling of walnuts 
grown in California (order). Authorization to assess walnut handlers 
enables the Board to incur expenses that are reasonable and necessary 
to administer the program. The marketing year runs from August 1 
through July 31. The assessment rate will remain in effect indefinitely 
unless modified, suspended, or terminated.

EFFECTIVE DATE: April 1, 2002.

FOR FURTHER INFORMATION CONTACT: Toni Sasselli, Marketing Assistant, or 
Richard P. Van Diest, Marketing Specialist, California Marketing Field 
Office, Marketing Order Administration Branch, 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, 1400 Independence 
Avenue, SW STOP 0237, Washington, DC 20250-0237; telephone: (202) 720-
2491, Fax: (202) 720-8938.
    Small businesses may request information on complying with this 
regulation by contacting Jay Guerber, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence 
Avenue, SW STOP 0237, Washington, DC 20250-0237; telephone: (202) 720-
2491, Fax: (202) 720-8938, or e-mail: [email protected].

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.''
    USDA 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, 2001, 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 USDA 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 USDA 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 USDA'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 to decrease the assessment rate established for 
the Board for the 2001-02 and subsequent marketing years from $0.0134 
to $0.0124 per kernelweight pound of assessable walnuts.
    The California walnut marketing order provides authority for the 
Board, with the approval of the USDA, 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 2000-01 and subsequent marketing years, the Board 
recommended, and USDA approved, an assessment rate of $0.0134 per 
kernelweight pound of assessable walnuts that would continue in effect 
from year to year unless modified, suspended, or terminated by USDA 
upon recommendation and information submitted by the Board or other 
information available to USDA.
    The Board met on September 7, 2001, and unanimously recommended 
2001-02 expenditures of $3,124,800 and an assessment rate of $0.0124 
per kernelweight pound of assessable walnuts. In comparison, last 
year's budgeted expenditures were $2,937,885. The assessment rate is 
$0.0010 lower than the $0.0134 rate formerly in effect. The lower 
assessment rate is necessary because this year's crop is estimated by 
the California Agricultural Statistics Service (CASS) to be 280,000 
tons (252,000,000 kernelweight pounds merchantable), which is about 17 
percent more than last year's estimate. Thus, sufficient income should 
be generated at the lower rate for the Board to meet its anticipated 
expenses.
    Major expenditures in the budget recommended by the Board for the 
2001-02 year include $2,566,569 for marketing and production research 
projects, $313,200 for employee expenses such as administrative and 
office salaries, payroll taxes and benefits, $130,600 for office 
expenses, including rent, office supplies, telephone/fax, printing, and 
furniture/fixtures/automobile, $76,000 for other operating expenses, 
including management and field travel, Board meeting expenses, 
insurance, and audit fees, and $38,431 as a reserve for contingency. 
Budgeted expenses for these items in 2000-01 were $2,450,255 for 
marketing and production research projects, $278,630 for employee 
expenses, $104,000 for office expenses, $80,000 for other operating 
expenses, and $25,000 as a reserve for contingency, respectively.
    The assessment rate recommended by the Board was derived by 
dividing anticipated expenses by expected shipments of California 
walnuts certified as merchantable. Merchantable shipments for the year 
are estimated at 252,000,000 kernelweight pounds which should provide 
$3,124,800 in assessment income and allow the Board to cover its 
expenses. As specified in Sec. 984.69, 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 5 
months after the end of the year.
    The assessment rate will continue in effect indefinitely unless 
modified, suspended, or terminated by USDA upon recommendation and 
other 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 USDA. Board 
meetings are open to the public and interested persons may express 
their views at these meetings. USDA will evaluate Board recommendations 
and other available information to

[[Page 9187]]

determine whether modification of the assessment rate is needed. 
Further rulemaking will be undertaken as necessary. The Board's 2001-02 
budget and those for subsequent marketing years will be reviewed and, 
as appropriate, approved by USDA.

Final Regulatory Flexibility Analysis

    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 5,500 producers of walnuts in the 
production area and about 43 handlers subject to regulation under the 
order. Small agricultural producers are defined by the Small Business 
Administration (13 CFR 121.201) as those having annual receipts of less 
than $750,000, and small agricultural service firms are defined as 
those having annual receipts of less than $5,000,000.
    Current industry information shows that 14 of the 43 handlers (32.5 
percent) shipped over $5,000,000 of merchantable walnuts and could be 
considered large handlers by the Small Business Administration. Twenty-
nine of the 43 walnut handlers (67.5 percent) shipped under $5,000,000 
of merchantable walnuts and could be considered small handlers. An 
estimated 5,442 walnut producers, or about 98.9 percent of the 5,500 
total producers, would be considered small producers with annual 
incomes less than $750,000. Based on the foregoing, it can be concluded 
that the majority of California walnut handlers and producers may be 
classified as small entities.
    This rule continues to decrease the assessment rate established for 
the Board and collected from handlers for the 2001-02 and subsequent 
marketing years from $0.0134 to $0.0124 per kernelweight pound of 
assessable walnuts. The Board unanimously recommended 2001-02 
expenditures of $3,124,800. The recommended $0.0010 decrease in the 
assessment rate is necessary because this year's estimate of assessable 
walnuts is about 17 percent more than last year's estimate. Thus, 
sufficient income should be generated at the current rate for the Board 
to meet its anticipated expenses.
    Major expenditures in the budget recommended by the Board for the 
2001-02 year include $2,566,569 for marketing and production research 
projects, $313,200 for employee expenses such as administrative and 
office salaries, payroll taxes and benefits, $130,600 for office 
expenses, including rent, telephone/fax, postage, printing, furniture, 
fixtures, and automobile, $76,000 for other operating expenses, 
including management and field travel, insurance, and audit fees, and 
$38,431 as a reserve for contingency. Budgeted expenses for these items 
in 2000-01 were $2,450,255 for marketing and production research 
projects, $278,630 for employee expenses, $104,000 for office expenses, 
$80,000 for other operating expenses, and $25,000 as a reserve for 
contingency, respectively.
    Prior to arriving at this budget, the Board considered information 
from various sources, such as the Board's Budget and Personnel 
Committee, Research Committee, and Marketing Development Committee. 
Alternative expenditure levels were discussed by these groups, based 
upon the relative value of various research projects to the walnut 
industry. The recommended $0.0124 per kernelweight pound assessment 
rate was then determined by dividing the total recommended budget by 
the 252,000,000 kernelweight pound estimate of assessable walnuts for 
the year. 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 5 months after the end of the year 
(Sec. 984.69).
    A review of historical information and preliminary information 
pertaining to the current marketing year indicates that the grower 
price for 2001-02 could range between $0.50 and $0.70 per kernelweight 
pound of assessable walnuts. Therefore, the estimated assessment 
revenue for the 2001-02 year as a percentage of total grower revenue 
could range between 1.7 and 2.5 percent.
    This action continues to decrease the assessment obligation imposed 
on handlers. Assessments are applied uniformly on all handlers, and 
some of the costs may be passed on to producers. However, decreasing 
the assessment rate reduces the burden on handlers, and may reduce the 
burden on producers. In addition, the Board's meeting was widely 
publicized throughout the 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 7, 
2001, 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.
    USDA 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 November 21, 2001 (66 FR 58362). Copies of that 
rule were also mailed or sent via facsimile to all walnut handlers. 
Finally, the interim final rule was made available through the Internet 
by the Office of the Federal Register and USDA. A 60-day comment period 
was provided for interested persons to respond to the interim final 
rule. The comment period ended on January 22, 2002, and no comments 
were received.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: 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 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.

PART 984--WALNUTS GROWN IN CALIFORNIA

    Accordingly, the interim final rule amending 7 CFR part 984 which 
was published at 66 FR 58362 on November 21, 2001, is adopted as a 
final rule without change.


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    Dated: February 22, 2002.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 02-4707 Filed 2-27-02; 8:45 am]
BILLING CODE 3410-02-P