[Federal Register Volume 69, Number 209 (Friday, October 29, 2004)]
[Rules and Regulations]
[Pages 63043-63045]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-24160]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 984

[Docket No. FV04-984-2 IFR]


Walnuts Grown in California; Decreased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule decreases the assessment rate established for the 
Walnut Marketing Board (Board) for the 2004-05 and subsequent marketing 
years from $0.0101 to $0.0094 per kernelweight pound of assessable 
walnuts. The Board locally administers the marketing order (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.

DATES: Effective October 30, 2004. Comments received by December 28, 
2004, will be considered prior to issuance of a final rule.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent to the Docket Clerk, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, 1400 Independence Avenue SW., Stop 0237, Washington, DC 
20250-0237; Fax: (202) 720-8938, or E-mail: [email protected]; 
or Internet: http://www.regulations.gov. Comments should reference the 
docket number and the date and page number of this issue of the Federal 
Register and will be available for public inspection in the Office of 
the Docket Clerk during regular business hours, or can be viewed at: 
http://www.ams.usda.gov/fv/moab.html.

FOR FURTHER INFORMATION CONTACT: Toni Sasselli, Program Analyst, or 
Kurt J. Kimmel, Regional Manager, 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.''
    The Department of Agriculture (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, 2004, 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 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 decreases the assessment rate established for the Board 
for the 2004-05 and subsequent marketing years from $0.0101 to $0.0094 
per kernelweight pound of assessable walnuts.
    The 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 2003-04 and subsequent marketing years, the Board 
recommended, and USDA approved, an assessment rate of $0.0101 per

[[Page 63044]]

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 10, 2004, and unanimously recommended 
2004-05 expenditures of $2,749,500 and an assessment rate of $0.0094 
per kernelweight pound of assessable walnuts. In comparison, last 
year's budgeted expenditures were $2,863,350. The assessment rate of 
$0.0094 is $0.0007 lower than the $0.0101 rate currently in effect. The 
lower assessment rate is necessary because this year's crop is 
estimated by the California Agricultural Statistics Service (CASS) to 
be 325,000 tons (292,500,000 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 2004-05 
include $2,037,500 for research and marketing programs ($1,393,500 for 
market research and development, $550,000 for production research, and 
$94,000 to the California Agricultural Statistics Service for a crop 
estimate), $332,000 for employee expenses (administrative and office 
salaries, payroll taxes, workers compensation, and other employee 
benefits), $97,000 for office expenses (rent, office supplies, 
telephone, fax, postage, printing, equipment maintenance, and 
furniture), $96,000 for other operating expenses (management travel, 
field travel, insurance, and financial audits), $5,000 for controlled 
(compliance check) purchases, $75,000 for a production research 
director, and $107,000 as a reserve for contingency. Budgeted expenses 
for these items in 2003-04 were $2,438,000, $334,625, $83,000, $82,000, 
$5,000, $73,000, and $15,725, 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 292,500,000 kernelweight pounds which should provide 
$2,749,500 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 established in this rule 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 determine whether modification of 
the assessment rate is needed. Further rulemaking will be undertaken as 
necessary. The Board's 2004-05 budget and those for subsequent 
marketing years will be reviewed and, as appropriate, approved by USDA.

Initial 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 initial 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 decreases the assessment rate established for the Board 
and collected from handlers for the 2004-05 and subsequent marketing 
years from $0.0101 to $0.0094 per kernelweight pound of assessable 
walnuts. The Board unanimously recommended 2004-05 expenditures of 
$2,749,500. The decreased assessment rate should generate sufficient 
income to meet the Board's 2004-05 anticipated expenses. The lower 
assessment rate is primarily due to a lower budget and based on an 
estimated crop of 325,000 tons for the year (292,500,000 kernelweight 
pounds estimated merchantable).
    Major categories in the budget recommended by the Board for 2004-05 
include $2,037,500 for research and marketing programs ($1,393,500 for 
market research and development, $550,000 for production research, and 
$94,000 to the California Agricultural Statistics Service for a crop 
estimate), $332,000 for employee expenses (administrative and office 
salaries, payroll taxes, workers compensation, and other employees 
benefits), $97,000 for office expenses (rent, office supplies, 
telephone, fax, postage, printing, equipment maintenance, and 
furniture), $96,000 for other operating expenses (management travel, 
field travel, Board expenses, insurance, and financial audits), $5,000 
for controlled (compliance check) purchases, $75,000 for a production 
research director, and $107,000 as a reserve for contingency. Budgeted 
expenses for these items in 2003-04 were $2,438,000, $334,625, $83,000, 
$82,000, $5,000, $73,000, and $15,725, 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 $0.0094 per kernelweight pound assessment 
rate was then determined by dividing the total recommended budget by 
the 292,500,000 kernelweight pound estimate of assessable walnuts for 
the year. Unexpended funds may be used temporarily to defray expenses 
of the

[[Page 63045]]

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 2004-05 could range between $0.50 and $0.70 per kernelweight 
pound of assessable walnuts. Therefore, the estimated assessment 
revenue for the 2004-05 marketing year as a percentage of total grower 
revenue could range between 1.3 and 1.9 percent.
    This action decreases 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 10, 
2004, meeting was a public meeting and all entities, both large and 
small, were able to express views on this issue. Finally, interested 
persons are invited to submit information on the regulatory and 
informational impacts of this action on small businesses.
    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.
    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.
    Pursuant to 5 U.S.C. 553, it is also found and determined upon good 
cause that it is impracticable, unnecessary, and contrary to the public 
interest to give preliminary notice prior to putting this rule into 
effect, and 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 2004-05 marketing year began on August 1, 
2004, and the order requires that the rate of assessment for each 
marketing year apply to all merchantable walnuts handled during the 
year; (2) this action decreases the assessment rate for merchantable 
California walnuts; (3) handlers are aware of this action which was 
unanimously recommended by the Board at a public meeting and is similar 
to other assessment rate actions issued in past years; and (4) this 
interim final rule provides a 60-day comment period, and all comments 
timely received will be considered prior to finalization of this rule.

List of Subjects in 7 CFR Part 984

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


0
For the reasons set forth in the preamble, 7 CFR part 984 is amended as 
follows:

PART 984--WALNUTS GROWN IN CALIFORNIA

0
1. The authority citation for 7 CFR part 984 continues to read as 
follows:

    Authority: 7 U.S.C. 601-674.


0
2. Section 984.347 is revised to read as follows:


Sec.  984.347  Assessment rate.

    On and after August 1, 2004, an assessment rate of $0.0094 per 
kernelweight pound is established for California merchantable walnuts.

    Dated: October 22, 2004.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 04-24160 Filed 10-28-04; 8:45 am]
BILLING CODE 3410-02-P