[Federal Register Volume 75, Number 178 (Wednesday, September 15, 2010)]
[Rules and Regulations]
[Pages 55944-55947]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-22982]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 984

[Doc. No. AMS-FV-10-0060; FV10-984-1 IR]


Walnuts Grown in California; Decreased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim rule with request for comments.

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SUMMARY: This rule decreases the assessment rate established for the 
California Walnut Board (Board) for the 2010-11 and subsequent 
marketing years from $0.0177 to $0.0174 per kernelweight pound of 
assessable walnuts. The Board locally administers the marketing order 
that 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: September 16, 2010; comments received by November 15, 2010 will 
be considered prior to issuance of a final rule.

[[Page 55945]]


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 document 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 submitted in response to this rule 
will be included in the record and will be made available to the 
public. Please be advised that the identity of the individuals or 
entities submitting the comments will be made public on the Internet at 
the address provided above.

FOR FURTHER INFORMATION CONTACT: Jeff Smutny, 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 Antoinette Carter, 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 will be applicable to all assessable walnuts beginning 
on September 1, 2010, and continue until amended, suspended, or 
terminated.
    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 will 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 2010-11 and subsequent marketing years from $0.0177 to $0.0174 
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 growers 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 2009-10 and subsequent marketing years, the Board 
recommended, and USDA approved, an assessment rate of $0.0177 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 June 11, 2010, and unanimously recommended 2010-11 
expenditures of $6,812,100 and a modified assessment rate of $0.0174 
per kernelweight pound of assessable walnuts. In comparison, last 
year's budgeted expenditures were $5,894,100. The assessment rate of 
$0.0174 is $0.0003 per pound lower than the rate currently in effect. 
The quantity of assessable walnuts for the 2010-11 marketing year is 
estimated at 435,000 tons (inshell), which is 65,000 tons more than the 
370,000 tons assessed during the 2009-10 marketing year. At the 
recommended lower assessment rate of $0.0174 per kernelweight pound, 
the Board should collect approximately $6,812,100 in assessment income, 
which would be adequate to cover its 2010-11 budgeted expenses of 
$6,812,000.
    The following table compares major budget expenditures recommended 
by the Board for the 2009-10 and 2010-11 marketing years:

------------------------------------------------------------------------
      Budget expense categories            2009-10           2010-11
------------------------------------------------------------------------
Employee expenses...................          $535,000          $577,500
Travel/Board Expenses/Annual Audit..           161,000           208,000
Office Expenses.....................           123,750           118,850
Program Expenses Including Research:
    Controlled Purchases............             5,000            20,000
    Crop Acreage Survey.............                 0            95,000
    Crop Estimate...................           120,000           105,000
    Production Research Director....            80,000            88,500
    Production Research.............           725,000         1,042,000
    Grades and Standards Research...           100,000           125,000
    Domestic Market Development.....         4,030,500         4,400,000
    Reserve for Contingency.........            13,850            32,250
------------------------------------------------------------------------


[[Page 55946]]

    The assessment rate recommended by the Board was derived by 
dividing anticipated expenses by expected shipments of California 
walnuts certified as merchantable. The 435,000-ton (inshell) estimate 
for merchantable shipments is an average of the two prior years' 
shipments. The Board met on June 11, 2010, and unanimously approved 
using a two prior years' average to formulate the 2010-11 estimate. 
Pursuant to Sec.  984.51(b) of the order, this figure is converted to a 
merchantable kernelweight basis using a factor of 0.45 (435,000 tons x 
2,000 pounds per ton x 0.45), which yields 391,500,000 kernelweight 
pounds. At $0.0174 per pound, the new assessment rate should generate 
$6,812,100 in assessment income and allow the Board to cover its 
expenses.
    Section 984.69 of the order authorizes the Board to maintain a 
financial reserve of not more than two years' budgeted expenses. Excess 
assessment funds may be retained in the reserve or may be used 
temporarily to defray expenses of the subsequent marketing year, but if 
so used, must be made available to the handlers from whom they were 
collected within five months after the end of the marketing year.
    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 will 
be undertaken as necessary. The Board's 2010-11 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) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) 
has considered the economic impact of this action 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 approximately 4,500 growers of California walnuts in the 
production area and approximately 58 handlers subject to regulation 
under the marketing order. Small agricultural producers are defined by 
the Small Business Administration (SBA) (13 CFR 121.201) as those 
having annual receipts of less than $750,000. Small agricultural 
service firms are defined as those whose annual receipts are less than 
$7,000,000.
    USDA's National Agricultural Statistics Service (NASS) reports that 
California walnuts were harvested from a total of 223,000 bearing acres 
during 2009-10. The average yield for the 2009-10 crop was 1.96 tons 
per acre, which was higher than the 1.65 tons per acre average for the 
previous five years. NASS reported the value of the 2009-10 crop at 
$1,690 per ton, which was higher than the previous five-year average of 
$1,632 per ton.
    At the time of the 2007 Census of Agriculture, which is the most 
recent information available, approximately 89 percent of California's 
walnut farms were smaller than 100 acres. Fifty-four percent were 
between 1 and 15 acres. A 100-acre farm with an average yield of 1.96 
tons per acre would have been expected to produce about 196 tons of 
walnuts during 2009-10. At $1,690 per ton, that farm's production would 
have had an approximate value of $331,240. 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 
$331,240 in 2009-10. This is well below the SBA threshold of $750,000; 
thus, the majority of California's walnut growers could 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 2009-10 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 2010-11 and subsequent marketing 
years from $0.0177 to $0.0174 per kernelweight pound of assessable 
walnuts. The Board unanimously recommended 2010-11 expenditures of 
$6,812,100 and an assessment rate of $0.0174 per kernelweight pound of 
assessable walnuts, which is $0.0003 lower than the assessment rate 
currently in effect. The quantity of assessable walnuts for the 2010-11 
marketing year is estimated to be 65,000 tons greater than the quantity 
assessed for the 2009-10 marketing year. Therefore, even at the reduced 
assessment rate, the Board should collect approximately $6,812,100 in 
assessment income, which should be adequate to cover its budgeted 
expenses.
    The following table compares major budget expenditures recommended 
by the Board for the 2009-10 and 2010-11 marketing years:

------------------------------------------------------------------------
      Budget expense categories            2009-10           2010-11
------------------------------------------------------------------------
Employee expenses...................          $535,000          $577,500
Travel/Board Expenses/Annual Audit..           161,000           208,000
Office Expenses.....................           123,750           118,850
Program Expenses Including Research:
    Controlled Purchases............             5,000            20,000
    Crop Acreage Survey.............                 0            95,000
    Crop Estimate...................           120,000           105,000
    Production Research Director....            80,000            88,500
    Production Research.............           725,000         1,042,000
    Grades and Standards Research...           100,000           125,000
    Domestic Market Development.....         4,030,500         4,400,000
    Reserve for Contingency.........            13,850            32,250
------------------------------------------------------------------------


[[Page 55947]]

    The Board reviewed and unanimously recommended 2010-11 expenditures 
of $6,812,100. 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 of $0.0174 per kernelweight pound of assessable 
walnuts was derived by dividing anticipated expenses of $6,812,100 by 
expected 2010-11 shipments of California walnuts certified as 
merchantable. Merchantable shipments for the year are estimated at 
391,500,000 kernelweight pounds, which should provide $6,812,100 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 they were 
collected within five months after the end of the year, according to 
Sec.  984.69 of the order.
    According to NASS, the season average grower prices for the years 
2008 and 2009 were $1,280 and $1,690 per ton, respectively. Although no 
official NASS data is yet available regarding the 2010 average grower 
price, the 2008 and 2009 prices provide a range within which the 2010-
11 season average price could fall. Dividing these average grower 
prices by 2,000 pounds per ton provides an inshell price per pound 
range of $0.640 to $0.845. Dividing these inshell prices per pound by 
the 0.45 conversion factor (inshell to kernelweight) established in the 
order yields a 2010-11 price range estimate of $1.42 to $1.88 per 
kernelweight pound of assessable walnuts.
    To calculate the percentage of grower revenue represented by the 
assessment rate, the assessment rate of $0.0174 per kernelweight pound 
is divided by the low and high estimates of the price range. The 
estimated assessment revenue for the 2010-11 marketing year, stated as 
a percentage of total grower revenue, will thus likely range between 
1.22 and 0.927 percent.
    This action decreases the assessment obligation imposed on 
handlers. Assessments are applied uniformly on all handlers, and some 
of the cost savings may be passed on to growers. 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 June 11, 2010, meeting was a public meeting, and all 
entities, both large and small, were able to express their views on 
this issue. Finally, interested persons are invited to submit comments 
on this interim rule, including the regulatory and informational 
impacts of this action on small businesses.
    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 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 the 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/MarketingOrdersSmallBusinessGuide. Any questions 
about the compliance guide should be sent to Antoinette Carter at the 
previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    After consideration of all relevant material presented, including 
the Board's recommendation, and other information, it is 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 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 2010-11 marketing year begins on September 1, 2010, and the 
marketing order requires that the rate of assessment for each marketing 
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

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


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, 2010, an assessment rate of $0.0174 per 
kernelweight pound is established for California merchantable walnuts.

    Dated: September 10, 2010.
David R. Shipman,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 2010-22982 Filed 9-14-10; 8:45 am]
BILLING CODE 3410-02-P