Walnuts Grown in California; Decreased Assessment Rate

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 984

[Docket No. FV97-984-1 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 (Department) is adopting, as a

final rule, without change, the provisions of an interim final rule

which decreased 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 marketing year began August 1 and ends

July 31. The assessment rate will remain in effect indefinitely unless

modified, suspended, or terminated.

EFFECTIVE DATE: March 26, 1998.

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, Technical Advisor, 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) 205-6632. 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) 205-6632.

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 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 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 the Secretary 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 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 continues in effect the assessment rate of $0.0116 per

kernelweight pound of certified merchantable walnuts established for

the Board for the 1997-98 and subsequent marketing years.

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 1997-98 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 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 certified merchantable walnuts. In

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

assessment rate of $0.0116 is $0.0001 lower than the rate formerly 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 estimated for 1996-97. With

more assessable walnuts, the former rate of assessment would have

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

financial obligations. Assessment 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

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

[[Page 9134]]

walnuts for the 1997-98 marketing year. 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 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 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. 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 have been

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 continues in effect the decreased assessment rate of

$0.0116 per kernelweight pound of certified merchantable walnuts

established for the Board and collected from handlers for the 1997-98

and subsequent marketing years. The Board unanimously recommended 1997-

98 expenditures of $2,391,289 and that assessment rate. The assessment

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

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

pounds. Thus, the $0.0116 rate should provide $2,401,200 in assessment

income and be adequate to meet this year's 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 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 estimated for 1996-97. With more

assessable walnuts, the former rate of assessment would have generated

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

obligations. Assessment 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 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).

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

certified merchantable walnuts 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 continues in effect 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 are 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.

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.

An interim final rule concerning this action was published in the

Federal Register on October 30, 1997, (62 FR 58641). Copies of that

rule were also mailed to all walnut handlers. Finally, the interim

final rule was made available through the Internet by 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 December 29, 1997, and no comments were received.

[[Page 9135]]

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

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

Accordingly, the interim final rule amending 7 CFR part 984 which

was published at 62 FR 58641 on October 30, 1997, is adopted as a final

rule without change.

Dated: February 17, 1998.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 98-4594 Filed 2-23-98; 8:45 am]

BILLING CODE 3410-02-P