[Federal Register Volume 70, Number 213 (Friday, November 4, 2005)]
[Proposed Rules]
[Pages 67096-67098]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-22047]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 70, No. 213 / Friday, November 4, 2005 / 
Proposed Rules  

[[Page 67096]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 984

[Docket No. FV05-984-2 PR]


Walnuts Grown in California; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This rule would increase the assessment rate established for 
the Walnut Marketing Board (Board) for the 2005-06 and subsequent 
fiscal periods from $0.0094 to $0.0096 per kernelweight pound of 
assessable walnuts. The Board locally administers the marketing order 
which regulates the handling of walnuts grown in California. 
Assessments upon walnut handlers are used by the Board to fund 
reasonable and necessary expenses of the program. The marketing year 
began August 1 and ends July 31. The assessment rate would remain in 
effect indefinitely unless modified, suspended, or terminated.

DATES: Comments must be received by November 14, 2005.

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, E-mail: [email protected]. 
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: Shereen Marino, Marketing Specialist, 
California Marketing Field Office, Fruit and Vegetable Programs, AMS, 
USDA; 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 order is 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 proposed herein would be applicable to all 
assessable walnuts beginning on August 1, 2005, 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 would increase the assessment rate established for the 
Board for the 2005-06 and subsequent fiscal periods from $0.0094 to 
$0.0096 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 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 at a public meeting. Thus, 
all directly affected persons have an opportunity to participate and 
provide input.
    For the 2004-05 and subsequent fiscal periods, the Board 
recommended, and USDA approved, an assessment rate of $0.0094 per 
kernelweight 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 9, 2005, and unanimously recommended 
2005-06 expenditures of $2,937,600 and an assessment rate of $0.0096 
per kernelweight pound of assessable walnuts. In comparison, last 
year's budgeted expenditures were $2,749,500. The assessment rate of 
$0.0096 per kernelweight pound of assessable walnuts is $0.0002 per 
pound higher than the rate currently in effect. The increased 
assessment rate is necessary because this year's crop is estimated by 
the California Agricultural Statistics Service (CASS) to be 340,000 
tons (306,000,000 kernelweight pounds merchantable), and the budget is 
about 6.4 percent more than last year's budget. The crop is smaller 
than expected due to sunburn caused by warmer than

[[Page 67097]]

normal temperatures during the growing season. The higher assessment 
rate should generate sufficient income to cover anticipated 2005-06 
expenses.
    The following table compares major budget expenditures recommended 
by the Board for the 2004-05 and 2005-06 marketing years:

------------------------------------------------------------------------
        Budget expense categories             2004-05         2005-06
------------------------------------------------------------------------
Administrative Staff/Field Salaries &           $332,000        $360,000
 Benefits...............................
Travel/Board Expenses...................          69,000          80,000
Office Costs/Annual Audit...............         124,000         132,500
Program Expenses Including Research                5,000           5,000
 Controlled Purchases...................
Crop Acreage Survey.....................  ..............          85,000
Crop Estimate...........................          94,000          95,000
Production Research Director............          76,500          75,000
Production Research.....................         548,500         500,000
Domestic Market Development.............       1,393,500       1,550,000
Reserve for Contingency.................         107,000          55,100
------------------------------------------------------------------------

    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 306,000,000 kernelweight pounds which should provide 
$2,937,600 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 proposed assessment rate would 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 would be in effect for an indefinite 
period, the Board would 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 would evaluate Board 
recommendations and other available information to determine whether 
modification of the assessment rate is needed. Further rulemaking would 
be undertaken as necessary. The Board's 2005-06 budget and those for 
subsequent fiscal periods would 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 50 handlers of California walnuts subject 
to regulation under the marketing order and approximately 5,500 growers 
in the production area. Small agricultural service firms are defined by 
the Small Business Administration (13 CFR 121.201) as those whose 
annual receipts are less than $6,000,000, and small agricultural 
producers are defined as those whose annual receipts are less than 
$750,000.
    Current industry information shows that 15 of the 50 handlers (30 
percent) shipped over $6,000,000 of merchantable walnuts and could be 
considered large handlers by the Small Business Administration. Thirty-
five of the 50 walnut handlers (70 percent) shipped under $6,000,000 of 
merchantable walnuts and could be considered small handlers.
    The number of large walnut growers (annual walnut revenue greater 
than $750,000) can be estimated as follows. According to the National 
Agricultural Statistics Service (NASS), the average yield per acre for 
2002-04 is 1.457 tons. A grower with 420 acres would produce 
approximately 612 tons. The average of grower prices for 2002-04 
(published by NASS) is $1,227 per ton. At that average price, the 612 
tons produced on 420 acres would yield approximately $750,000 in annual 
revenue. The 2002 Agricultural Census indicated 56 percent of walnut 
farms were 500 acres or larger, which is close to the 420 acres 
required to produce $750,000 in revenue. Thus, it can be concluded that 
the number of large walnut farms in 2005 is still likely to be under 
one percent. 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 would increase the assessment rate established for the 
Board and collected from handlers for the 2005-06 and subsequent 
marketing years from $0.0094 per kernelweight pound of assessable 
walnuts to $0.0096 per kernelweight pound of assessable walnuts. The 
Board unanimously recommended 2005-06 expenditures of $2,937,600 and an 
assessment rate of $0.0096 per kernelweight pound of assessable 
walnuts. The proposed assessment rate of $0.0096 is $0.0002 higher than 
the rate currently in effect. The quantity of assessable walnuts for 
the 2005-06 marketing year is estimated at 340,000 tons. Thus, the 
$0.0096 rate should provide $2,937,600 in assessment income and be 
adequate to meet this year's expenses. The increased assessment rate is 
primarily due to increased budget expenditures and based on an 
estimated crop of 340,000 tons for the year (306,000,000 kernelweight 
pounds estimated merchantable).
    The following table compares major budget expenditures recommended 
by the Board for the 2004-05 and 2005-06 fiscal years:

[[Page 67098]]



------------------------------------------------------------------------
        Budget expense categories             2004-05         2005-06
------------------------------------------------------------------------
Administrative Staff/Field Salaries &           $332,000        $360,000
 Benefits...............................
Travel/Board Expenses...................          69,000          80,000
Office Costs/Annual Audit...............         124,000         132,500
Program Expenses Including Research                5,000           5,000
 Controlled Purchases...................
Crop Acreage Survey.....................  ..............          85,000
Crop Estimate...........................          94,000          95,000
Production Research Director............          76,500          75,000
Production Research.....................         548,500         500,000
Domestic Market Development.............       1,393,500       1,550,000
Reserve for Contingency.................         107,000          55,100
------------------------------------------------------------------------

    The Board reviewed and unanimously recommended 2005-06 expenditures 
of $2,937,600, which included an increase in audit expenses. Prior to 
arriving at this budget, the Board considered alternative expenditure 
levels, but ultimately decided that the recommended levels were 
reasonable to properly administer the order. 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 306,000,000 
kernelweight pounds which should provide $2,937,600 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.
    According to NASS, the season average grower prices for years 2003 
and 2004 were $1,160 and $1,350 per ton respectively. Dividing these 
average grower prices by 2,000 pounds per ton provides an inshell price 
per pound range of between $.58 and $.68. Adjusting by a few cents 
above and below those prices ($0.55 to $0.70 per inshell pound) 
provides a reasonable price range within which the 2005-06 season 
average price is likely to fall. Dividing these inshell prices per 
pound by the 0.45 conversion factor designated in the order yields a 
2005-06 price range estimate of $1.22 and $1.56 per kernelweight pound 
of assessable walnuts.
    To calculate the percentage of grower revenue represented by the 
assessment rate, the assessment rate of $0.0096 (per kernelweight 
pound) is divided into the low and high estimates of the price range. 
The estimated assessment revenue for the 2005-06 marketing year as a 
percentage of total grower revenue would likely range between .8 and .6 
percent.
    This action would increase 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 
would be 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 9, 
2005, 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 proposed rule would impose 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.
    A 10-day comment period is provided to allow interested persons to 
respond to this proposed rule. Ten days is deemed appropriate because: 
(1) The 2005-06 marketing year began on August 1, 2005, and the 
marketing order requires that the rate of assessment for each year 
apply to all assessable walnuts handled during the year; (2) the Board 
needs to have sufficient funds to pay its expenses which are incurred 
on a continuous basis and; (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.

List of Subjects in 7 CFR Part 984

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

    For the reasons set forth in the preamble, 7 CFR part 984 is 
proposed to be 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, 2005, an assessment rate of $0.0096 per 
kernelweight pound is established for California merchantable walnuts.

    Dated: October 31, 2005.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 05-22047 Filed 11-3-05; 8:45 am]
BILLING CODE 3410-02-P