Walnuts Grown in California; Decreased Assessment Rate

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 984

[Docket No. FV97-984-1 IFR]

Walnuts Grown in California; Decreased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This interim final rule decreases the assessment rate

established for the Walnut Marketing Board (Board) under Marketing

Order No. 984 for the 1997-98 and subsequent marketing years. The Board

is responsible for local administration of the marketing order which

regulates the handling of walnuts grown in California. Authorization to

assess walnut handlers enables the Board to incur expenses that are

reasonable and necessary to administer the program. The 1997-98

marketing year covers the period August 1 through July 31. The

assessment rate will continue in effect indefinitely unless modified,

suspended, or terminated.

DATES: Effective October 31, 1997. Comments received by December 29,

1997, 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 in triplicate to the Docket

Clerk, Fruit and Vegetable Programs, AMS, USDA, Room 2525-S, P.O. Box

96456, Washington, DC 20090-6456; Fax: (202) 720-5698. 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

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inspection in the Office of the Docket Clerk during regular business

hours.

FOR FURTHER INFORMATION CONTACT: Diane Purvis, Marketing Assistant, or

Mary Kate Nelson, Marketing Specialist, California Marketing Field

Office, Fruit and Vegetable Programs, AMS, USDA, 2202 Monterey Street,

Suite 102B, Fresno, California 93721; telephone: (209) 487-5901, Fax:

(209) 487-5906; or George Kelhart, Marketing Order Administrative

Branch, Fruit and Vegetable Programs, AMS, USDA, Room 2525-S, P.O. Box

96456, Washington, DC 20090-6456; telephone: (202) 720-2491; Fax: (202)

720-5698. Small businesses may request information on compliance with

this regulation by contacting Jay Guerber, Marketing Order

Administration Branch, Fruit and Vegetable Programs, AMS, USDA, Room

2525-S, P.O. Box 96456, Washington, DC 20090-6456; telephone: (202)

720-2491; Fax: (202) 720-5698.

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 marketing agreement and order are

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 (Department) 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 August 1, 1997, and continuing 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 a petition with the

Secretary 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 the Secretary 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 the

Secretary'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 1997-98 and subsequent marketing years from $0.0117 to $0.0116

per kernelweight pound of certified merchantable walnuts.

The California walnut marketing order provides authority for the

Board, with the approval of the Department, 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 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 1996-97 and subsequent marketing years, the Board

recommended, and the Department approved, an assessment rate that would

continue in effect from marketing year to marketing year indefinitely

unless modified, suspended, or terminated by the Secretary upon

recommendation and information submitted by the Board or other

information available to the Secretary.

The Board met on September 12, 1997, and unanimously recommended

1997-98 expenditures of $2,391,289 and an assessment rate of $0.0116

per kernelweight pound of merchantable walnuts certified. In

comparison, last year's budgeted expenditures were $2,301,869. The

assessment rate of $0.0116 is $0.0001 less than the rate currently in

effect. The lower assessment rate is needed to bring expected

assessment income closer to the amount necessary to administer the

program for the 1997-98 marketing year. The quantity of assessable

walnuts for 1997-98 is estimated at 207,000,000 kernelweight pounds, or

9,000,000 kernelweight pounds higher than 1996-97. With more assessable

walnuts, the current rate of assessment would have generated

substantially more funds than needed to meet the Board's financial

obligations. Income would have exceeded anticipated expenses by about

$31,000. The decrease in the assessment rate in conjunction with the

anticipated increase in assessable walnuts should provide adequate

assessment income to meet this year's expenses.

The major expenditures recommended by the Board for the 1997-98

marketing year include $240,326 for general expenses, $147,126 for

office expenses, $1,928,837 for research expenses, $50,000 for a

production research director, and $25,000 for the reserve. Budgeted

expenses for these items in 1996-97 were $232,684, $150,508,

$1,840,677, $48,000, and $30,000, respectively.

The assessment rate recommended by the Board was derived by

dividing anticipated expenses by expected merchantable certifications

of California walnuts for 1997-98. As mentioned earlier, merchantable

certifications for the year are estimated at 207,000,000 kernelweight

pounds, which should provide $2,401,200 in assessment income (about

$10,000 more than estimated 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 five

months after the end of the year.

The assessment rate established in this rule will continue in

effect indefinitely unless modified, suspended, or terminated by the

Secretary 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 the Department.

Board meetings are open to the public and interested persons may

express their views at these meetings. The Department 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 1997-98 budget

and those for subsequent marketing years will be reviewed and, as

appropriate, approved by the Department.

Pursuant to requirements set forth in the Regulatory Flexibility

Act (RFA), 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.

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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 5,000 producers of California walnuts in

the production area and approximately 50 handlers subject to regulation

under the marketing order. Small agricultural producers are defined by

the Small Business Administration (13 CFR 121.601) as those having

annual receipts less than $500,000, and small agricultural service

firms are defined as those whose annual receipts are less than

$5,000,000. The majority of California walnut producers and handlers

may be classified as small entities.

This rule decreases the assessment rate established for the Board

and collected from handlers for the 1997-98 and subsequent marketing

years from $0.0117 to $0.0116 per kernelweight pound of merchantable

walnuts certified. The Board unanimously recommended 1997-98

expenditures of $2,391,289 and an assessment rate of $0.0116 per

kernelweight pound of merchantable walnuts certified. The assessment

rate of $0.0116 is $0.0001 less than the 1996-97 rate. The quantity of

assessable walnuts for the 1997-98 marketing year is estimated at

207,000,000 kernelweight pounds. Thus, the $0.0116 rate should provide

$2,401,900 in assessment income and be adequate to meet this year's

expenses.

The Board's increase in budgeted expenses from $2,301,869 to

$2,391,289 is due primarily to increases in the following line item

categories--administrative and office salaries, research programs, and

the production research director. Expenses for these items for 1997-98,

with last year's budgeted expenses in parentheses, are: administrative

and office salaries--$148,080 ($142,000), research programs--$1,928,837

($1,840,677), and production research director--$50,000 ($48,000).

The primary reason for the reduced assessment rate is an

anticipated increase in merchantable walnuts expected to be certified

during the 1997-98 marketing year. As mentioned earlier, the quantity

of assessable walnuts for 1997-98 is estimated at 207,000,000

kernelweight pounds, or 9,000,000 kernelweight pounds higher than in

1996-97. The decrease in the assessment rate in conjunction with the

increase in shipments should provide adequate assessment income to meet

this year's expenses. Assessment income is expected to total

$2,401,900. This is about $10,000 more than 1997-98 budgeted expenses.

At the current rate, assessment income would have exceeded expenses by

about $31,000, which was unacceptable to the Board.

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 five months after the end of the year.

The Board reviewed and unanimously recommended 1997-98 expenditures

of $2,391,289, which included increases in administrative and office

salaries, and research programs. Prior to arriving at this budget, the

Board considered information from various sources, such as the Board's

Budget and Personnel Committee, the Research Committee, and the Market

Development Committee. Alternative expenditure levels were discussed by

these groups, based upon the relative value of various research

projects to the walnut industry. The assessment rate of $0.0116 per

kernelweight pound of merchantable walnuts certified was then

determined by dividing the total recommended budget by the quantity of

assessable walnuts, estimated at 207,000,000 kernelweight pounds for

the 1997-98 marketing year. This would produce assessment income of

about $2,401,900. This is approximately $10,000 above the anticipated

expenses, which the Board determined to be acceptable.

Data for recent seasons and projections for the upcoming season

indicate that anticipated 1997-98 assessment revenue as a percentage of

total grower revenue could range between 2 and 2.5 percent.

This action reduces the assessment obligation imposed on handlers.

While this rule imposes some additional costs on handlers, the costs

are minimal and in the form of uniform assessments on all handlers.

Some of the additional costs may be passed on to producers. However,

these costs will 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 12,

1997, 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 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.

The Department has not identified any relevant Federal rules that

duplicate, overlap, or conflict with this rule.

After consideration of all relevant matter 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 Board needs to have sufficient funds to pay

its expenses which are incurred on a continuous basis; (2) the 1997-98

marketing year began on August 1, 1997, and the marketing order

requires that the rate of assessment for each marketing year apply to

all assessable walnuts handled during such 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 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

Marketing agreements, Nuts, Reporting and recordkeeping

requirements, Walnuts.

For the reasons set forth in the preamble, 7 CFR part 984 is

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:

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Sec. 984.347 Assessment rate.

On and after August 1, 1997, an assessment rate of $0.0116 per

kernelweight pound is established for California merchantable walnuts.

Dated: October 24, 1997.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 97-28824 Filed 10-29-97; 8:45 am]

BILLING CODE 3410-02-P