[Federal Register Volume 70, Number 235 (Thursday, December 8, 2005)]
[Rules and Regulations]
[Pages 72892-72895]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-23818]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 984

[Docket No. FV05-984-2 FR]


Walnuts Grown in California; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule increases the assessment rate established for the 
Walnut Marketing Board (Board) for the 2005-06 and subsequent marketing 
years 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 will remain in effect indefinitely unless 
modified, suspended, or terminated.

DATES: Effective Date: December 9, 2005.

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

[[Page 72893]]

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, 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 increases the assessment rate established for the Board 
for the 2005-06 and subsequent marketing years 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 marketing years, the Board 
recommended, and USDA approved, an assessment rate of $0.0094 per 
kernelweight of assessable walnuts that continued 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 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:
    Controlled Purchases................           5,000           5,000
    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 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 will be in effect 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 2005-06 budget and those for subsequent 
marketing years would 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

[[Page 72894]]

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 increases 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 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 (306,000,000 merchantable 
kernelweight pounds. 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:

------------------------------------------------------------------------
        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:
    Controlled Purchases................           5,000           5,000
    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 increases in several expense categories. 
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 increases 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.
    This rule imposes no additional reporting or recordkeeping 
requirements on either small or large California walnut handlers. As 
with all Federal marketing order programs, reports and

[[Page 72895]]

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 proposed rule concerning this action was published in the Federal 
Register on November 4, 2005 (70 FR 67096). Copies of the proposed rule 
were also mailed or sent via facsimile to all walnut handlers. Finally, 
the proposal was made available through the Internet by USDA and the 
Office of the Federal Register. A 10-day comment period ending on 
November 14, 2005, was provided for interested persons to respond to 
the proposal. 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.
    Pursuant to 5 U.S.C 553, it also found and determined that good 
cause exists for not postponing the effective date of this rule until 
30 days after publication in the Federal Register because handlers are 
already receiving the 2005 walnut crop from growers. The marketing year 
began on August 1, 2005, and the assessment rate applies to all walnuts 
received during the 2005-06 and subsequent seasons. The Board needs to 
have sufficient funds to pay its expenses which are incurred on a 
continuous basis. Further, handlers are aware of this rule which was 
recommended at a public meeting. Also a 10-day comment period was 
provided in the proposed rule and no comments were received.

List of Subjects in 7 CFR Part 984

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


0
For the reasons set forth in the preamble, 7 CFR part 984 is to be 
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, 2005, an assessment rate of $0.0096 per 
kernelweight pound is established for California merchantable walnuts.

    Dated: December 5, 2005.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 05-23818 Filed 12-5-05; 4:29 pm]
BILLING CODE 3410-02-P