[Federal Register Volume 73, Number 234 (Thursday, December 4, 2008)]
[Rules and Regulations]
[Pages 73761-73764]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-28766]



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  Federal Register / Vol. 73, No. 234 / Thursday, December 4, 2008 / 
Rules and Regulations  

[[Page 73761]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 984

[Docket No. AMS-FV-08-0093; FV09-984-2 IFR]


Walnuts Grown in California; Decreased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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

SUMMARY: This rule decreases the assessment rate established for the 
California Walnut Board (Board) for the 2008-09 and subsequent 
marketing years from $0.0158 to $0.0131 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 
begins September 1 and ends August 31. The assessment rate will remain 
in effect indefinitely unless modified, suspended, or terminated.

DATES: Effective December 5, 2008. Comments received by February 2, 
2009, 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 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.regulations.gov. All 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 the Web site 
referenced above.

FOR FURTHER INFORMATION CONTACT: Debbie Wray, Marketing Specialist, or 
Kurt J. Kimmel, Regional Manager, California Marketing Field Office, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA; Telephone: (559) 487-5901, Fax: (559) 487-5906, or E-mail: 
[email protected], or [email protected].
    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 Order 
No. 984, 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 issued herein will be applicable to all assessable 
walnuts beginning on September 1, 2008, 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 decreases the assessment rate established for the Board 
for the 2008-09 and subsequent marketing years from $0.0158 to $0.0131 
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 2008-09 and subsequent marketing years, the Board 
recommended, and USDA approved, an assessment rate of $0.0158 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 the USDA. The Board recommended this rate in 
May 2008 along with expenditures of $4,594,300 for 2008-09.
    The Board met on September 12, 2008, and unanimously recommended 
reducing its 2008-09 expenditures to $3,809,000 and reducing the 
assessment rate to $0.0131 per kernelweight pound

[[Page 73762]]

of assessable walnuts. The assessment rate of $0.0131 per kernelweight 
pound of assessable walnuts is $0.0027 per kernelweight pound lower 
than the rate currently in effect. The decreased assessment rate is 
primarily due to an $800,000 decrease in domestic market development 
expenditures previously recommended for the 2008-09 marketing year.
    The following table compares major budget expenditures recommended 
by the Board in May 2008 and September 2008 for the 2008-09 marketing 
year:

------------------------------------------------------------------------
                                          Original 2008-   Revised 2008-
        Budget expense categories               09              09
------------------------------------------------------------------------
Employee Expenses.......................        $410,500        $410,500
Travel/Board Expenses...................         100,000         100,000
Office Costs/Annual Audit...............         142,500         142,500
Program Expenses Including Research:
    Controlled Purchases................           5,000           5,000
    Crop Acreage Survey.................  ..............  ..............
    Crop Estimate.......................         110,000         110,000
    Production Research *...............         835,000         835,000
    Domestic Market Development.........       2,935,000       2,135,000
    Reserve for Contingency.............          56,300          71,000
------------------------------------------------------------------------
* Includes Research Director's compensation and a contingency for
  production research issues.

    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 290,773,800 kernelweight pounds which should provide 
slightly over $3,809,000 in assessment income and allow the Board to 
cover its expenses. Unexpended funds may be retained in a financial 
reserve, provided that funds in the financial reserve do not exceed 
approximately two years' budgeted expenses. If not retained in a 
financial reserve, 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 of the order.
    The estimate for merchantable shipments is based on historical 
data, which is the prior year's production of 323,082 tons (inshell). 
Pursuant to Sec.  984.51(b) of the order, this figure was converted to 
a merchantable kernelweight basis using a factor of 0.45 (323,082 tons 
x 2,000 pounds per ton x 0.45).
    The assessment rate established in this rule 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 would be undertaken 
as necessary. The Board's 2008-09 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.
    There are currently 55 handlers of California walnuts subject to 
regulation under the marketing order, and there are approximately 4,000 
growers in the production area. Small agricultural service firms are 
defined by the Small Business Administration (SBA) (13 CFR 121.201) as 
those having annual receipts of less than $7,000,000, and small 
agricultural producers are defined as those having annual receipts of 
less than $750,000.
    USDA's National Agricultural Statistics Service (NASS) reports that 
California walnuts were harvested from a total of 218,000 bearing acres 
during 2007-08. The average yield for the 2007-08 crop was 1.49 tons 
per acre, which is slightly lower than the 1.53 tons per acre average 
for the previous five years. NASS reported the value of the 2007-08 
crop at $2,320 per ton, which is considerably higher than the previous 
five-year average of $1,384 per ton.
    At the time of the 2002 Census of Agriculture, which is the most 
recent information available, approximately 83 percent of California's 
walnut farms were smaller than 100 acres. Forty-seven percent were 
between 1 and 15 acres. A 100-acre farm with an average yield of 1.49 
tons per acre would have been expected to produce about 149 tons of 
walnuts during 2007-08. At $2,320 per ton, that farm's production would 
have had an approximate value of $345,000. Assuming that the majority 
of California's walnut farms are still smaller than 100 acres, it could 
be concluded that the majority of the growers had receipts of less than 
$345,000 in 2007-08. This is well below the SBA threshold of $750,000; 
thus, the majority of California's walnut growers would be considered 
small growers according to SBA's definition.
    According to information supplied by the industry, approximately 
two-thirds of California's walnut handlers shipped merchantable walnuts 
valued under $7,000,000 during the 2007-08 marketing year and would 
therefore be considered small handlers according to the SBA definition.
    This rule decreases the assessment rate established for the Board 
and collected from handlers for the 2008-09 and subsequent marketing 
years from $0.0158 per kernelweight pound of assessable walnuts to 
$0.0131 per kernelweight pound of assessable walnuts. The Board 
unanimously recommended 2008-09 expenditures of $3,809,000 and an 
assessment rate of

[[Page 73763]]

$0.0131 per kernelweight pound of assessable walnuts. The assessment 
rate of $0.0131 is $0.0027 lower than the rate currently in effect. The 
quantity of assessable walnuts for the 2008-09 marketing year is 
estimated at 323,082 tons. Thus, the $0.0131 rate should provide 
slightly over $3,809,000 in assessment income and be adequate to meet 
the year's expenses. The decreased assessment rate is primarily due to 
an $800,000 decrease in domestic market development expenditures.
    The following table compares major budget expenditures recommended 
by the Board in May 2008 and September 2008 for the 2008-09 marketing 
year:

------------------------------------------------------------------------
                                          Original 2008-   Revised 2008-
        Budget expense categories               09              09
------------------------------------------------------------------------
Employee Expenses.......................        $410,500        $410,500
Travel/Board Expenses...................         100,000         100,000
Office Costs/Annual Audit...............         142,500         142,500
Program Expenses Including Research:
    Controlled Purchases................           5,000           5,000
    Crop Acreage Survey.................  ..............  ..............
    Crop Estimate.......................         110,000         110,000
    Production Research *...............         835,000         835,000
    Domestic Market Development.........       2,935,000       2,135,000
    Reserve for Contingency.............          56,300          71,000
------------------------------------------------------------------------
* Includes Research Director's compensation and a contingency for
  production research issues.

    The Board reviewed and unanimously recommended 2008-09 expenditures 
of $3,809,000. 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 290,773,800 kernelweight pounds which should provide 
$3,809,000 in assessment income and allow the Board to cover its 
expenses. Unexpended funds may be retained in a financial reserve, 
provided that funds in the financial reserve do not exceed 
approximately two years' budgeted expenses. If not retained in a 
financial reserve, 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 of the order.
    According to NASS, the season average grower price for years 2006 
and 2007 were $1,630 and $2,320 per ton, respectively. These prices 
provide a range within which the 2008-09 season average price could 
fall. Dividing these average grower prices by 2,000 pounds per ton 
provides an inshell price per pound range of $0.815 to $1.16. Dividing 
these inshell prices per pound by the 0.45 conversion factor (inshell 
to kernelweight) established in the order yields a 2008-09 price range 
estimate of $1.81 to $2.58 per kernelweight pound of assessable 
walnuts.
    To calculate the percentage of grower revenue represented by the 
assessment rate, the assessment rate of $0.0131 per kernelweight pound 
is divided by the low and high estimates of the price range. The 
estimated assessment revenue for the 2008-09 marketing year as a 
percentage of total grower revenue would thus likely range between 
0.508 and 0.724 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 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 12, 
2008, 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 comments on this interim final rule, 
including 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.
    AMS is committed to complying with the E-Government Act, to promote 
the use of Internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.
    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/AMSv1.0/ams.fetchTemplateData.do?template=TemplateN&page=MarketingOrdersSmallBusinessGuide. 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 2008-09 marketing year began on September 1, 
2008, and the marketing order requires that the rate of assessment for 
each year apply to all assessable walnuts handled during the year; (2) 
the action decreases the assessment rate for assessable walnuts 
beginning with the 2008-09 marketing year; (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

[[Page 73764]]

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 September 1, 2008, an assessment rate of $0.0131 per 
kernelweight pound is established for California merchantable walnuts.

    Dated: November 26, 2008.
James E. Link,
Administrator, Agricultural Marketing Service.
[FR Doc. E8-28766 Filed 12-2-08; 11:15 am]
BILLING CODE 3410-02-P