[Federal Register Volume 69, Number 29 (Thursday, February 12, 2004)]
[Rules and Regulations]
[Pages 6910-6912]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-3036]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 984

[Docket No. FV04-984-1 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 that decreased the 
assessment rate established for the Walnut Marketing Board (Board) for 
the 2003-04 and subsequent marketing years from $0.0120 to $0.0101 per 
kernelweight pound of assessable walnuts. The decreased assessment rate 
should generate sufficient income to meet the Board's 2003-04 
anticipated expenses of $2,863,350. The lower assessment rate is 
primarily due to a lower budget and a larger crop. The Board locally 
administers the marketing order (order) that 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 15, 2004.

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, 2003, and continue until amended, 
suspended, or terminated. This rule will not preempt any State or local 
laws, 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

[[Page 6911]]

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 2003-04 and subsequent marketing years from $0.0120 
to $0.0101 per kernelweight pound of assessable walnuts.
    The California Walnut marketing order provides authority for the 
Board, with the approval of 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 2002-03 and subsequent marketing years, the Board 
recommended, and USDA approved, an assessment rate of $0.0120 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 12, 2003, and unanimously recommended 
2003-04 expenditures of $2,863,350 and an assessment rate of $0.0101 
per kernelweight pound of assessable walnuts. In comparison, last 
year's budgeted expenditures were $2,970,000. The assessment rate of 
$0.0101 is $0.0019 lower than the $0.0120 rate previously in effect. 
The lower assessment rate is necessary because this year's crop is 
estimated by the California Agricultural Statistics Service (CASS) to 
be 315,000 tons (283,500,000 kernelweight pounds merchantable), and the 
budget is about 4 percent less than last year's budget. Sufficient 
income should be generated at the lower rate for the Board to meet its 
anticipated expenses.
    Major categories in the budget recommended by the Board for 2003-04 
include $2,348,000 for program expenses, which includes marketing and 
production research projects, the salary for the production research 
director, the cost of the Board's crop acreage survey and production 
estimate, and compliance purchases, $334,625 for employee expenses such 
as administrative and office salaries, payroll taxes and workers 
compensation, and other employee benefits, $83,000 for office expenses 
such as rent, office supplies, telephone, fax, postage, printing, 
equipment maintenance, and furniture, $82,000 for other operating 
expenses, such as management travel, field travel, Board expenses, 
general insurance and financial audits, and $15,725 as a reserve for 
contingencies. Budgeted expenses for these items in 2002-03 were 
$2,438,403, $333,100, $80,500, $79,500, and $38,497, 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 283,500,000 kernelweight pounds, which should provide 
$2,863,350 in assessment income and allow the Board to cover its 
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 5 months after the end of the year, 
according to Sec. 984.69.
    The assessment rate will continue in effect indefinitely unless 
modified, suspended, or terminated by USDA 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 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 determine whether modification of 
the assessment rate is needed. Further rulemaking will be undertaken as 
necessary. The Board's 2003-04 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 5,800 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 58 walnut producers, or about 1 percent of the 5,800 total 
producers, would be considered large producers with annual incomes over 
$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 2003-04 and subsequent 
marketing years from $0.0120 to $0.0101 per kernelweight pound of 
assessable walnuts. The Board unanimously recommended 2003-04 
expenditures of $2,863,350 and an assessment rate of $0.0101 per 
kernelweight pound of assessable walnuts. The decreased assessment rate 
should generate sufficient income to meet the Board's 2003-04 
anticipated expenses. The lower assessment rate is primarily due to a 
lower budget and a larger crop.

[[Page 6912]]

    Major categories in the budget recommended by the Board for 2003-04 
include $2,348,000 for program expenses, which includes marketing and 
production research projects, the salary for the production research 
director, the cost of the Board's crop acreage survey and production 
estimate, and compliance purchases, $334,625 for employee expenses such 
as administrative and office salaries, payroll taxes and workers 
compensation, and other employee benefits, $83,000 for office expenses 
such as rent, office supplies, telephone, fax, postage, printing, 
equipment maintenance, and furniture, $82,000 for other operating 
expenses, such as management travel, field travel, Board expenses, 
general insurance, and financial audits, and $15,725 as a reserve for 
contingencies. Budgeted expenses for these items in 2002-03 were 
$2,438,403, $333,100, $80,500, $79,500, and $38,497, 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 $0.0101 per kernelweight pound assessment 
rate was then determined by dividing the total recommended budget by 
the 283,500,000 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 
according to Sec. 984.69.
    A review of historical information and preliminary information 
pertaining to the current marketing year indicates that the grower 
price for 2003-04 could range between $0.50 and $0.70 per kernelweight 
pound of assessable walnuts. Therefore, the estimated assessment 
revenue for the 2003-04 marketing year as a percentage of total grower 
revenue could range between 1.4 and 2 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 12, 
2003, 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, 2003 (68 FR 65629). 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 20, 2004, 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

    Walnuts, Marketing agreements, Nuts, Reporting and recordkeeping 
requirements.

PART 984--WALNUTS GROWN IN CALIFORNIA

0
Accordingly, the interim final rule amending 7 CFR part 984 which was 
published at 68 FR 65629 on November 21, 2003, is adopted as a final 
rule without change.

    Dated: February 5, 2004.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 04-3036 Filed 2-11-04; 8:45 am]
BILLING CODE 3410-02-P