[Federal Register Volume 70, Number 27 (Thursday, February 10, 2005)]
[Rules and Regulations]
[Pages 7002-7004]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-2603]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 984

[Docket No. FV04-984-2 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, an interim final rule which decreased 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.

EFFECTIVE DATE: March 14, 2005.

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.''
    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, 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 in effect the action that decreased 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 
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 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 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

[[Page 7003]]

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.

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 in effect the action that decreased 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 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 continues in effect the action that decreased 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.
    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.

[[Page 7004]]

    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 October 29, 2004 (69 FR 63043). 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 USDA 
and 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 28, 2004, and one comment was 
received.
    The commenter believes that the Board and this marketing order 
program should be terminated in favor of a free market system. However, 
the Act authorizes this marketing order program. Further, this comment 
does not relate to the Board's assessment rate decrease. Thus, no 
changes are being made based on the comment submitted.
    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 69 FR 63043 on October 29, 2004, is adopted as a final 
rule without change.

    Dated: February 7, 2005.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 05-2603 Filed 2-9-05; 8:45 am]
BILLING CODE 3410-02-P