[Federal Register Volume 74, Number 41 (Wednesday, March 4, 2009)]
[Rules and Regulations]
[Pages 9344-9346]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-4591]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 984

[Doc. No. AMS-FV-08-0093; FV09-984-2 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, without change, an interim final rule which decreased 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 began September 1 and ends August 31. The assessment rate will 
remain in effect indefinitely unless modified, suspended, or 
terminated.

DATES: Effective Date: April 3, 2009.

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

[[Page 9345]]

    The following table compares major budget expenditures recommended 
by the Board in May 2008 and September 2008 for the 2008-09 marketing 
year:

------------------------------------------------------------------------
                                                Original    Revised 2008-
          Budget expense categories              2008-09         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 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.

Final Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), 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.
    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 continues in effect the action that decreased 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 $0.0131 per 
kernelweight pound of assessable walnuts. The assessment rate of 
$0.0131 is $0.0027 lower than the rate previously 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

[[Page 9346]]

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    Revised 2008-
          Budget expense categories              2008-09         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 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 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.
    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. In addition, as 
noted in the initial regulatory flexibility analysis, USDA has not 
identified any relevant Federal rules that duplicate, overlap, or 
conflict with this rule.
    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.
    An interim final rule concerning this action was published in the 
Federal Register on December 4, 2008 (73 FR 73761). 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 February 2, 2009, and 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/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.

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 73 FR 73761 on December 4, 2008, is adopted as a final 
rule without change.

    Dated: February 26, 2009.
Robert C. Keeney,
Acting Associate Administrator, Agricultural Marketing Service.
[FR Doc. E9-4591 Filed 3-3-09; 8:45 am]
BILLING CODE 3410-02-P