Walnuts Grown in California; Decreased Assessment Rate

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 984

[Docket No. FV99-984-3 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 rule decreases the assessment rate established for the

Walnut Marketing Board (Board) for the 1999-2000 and subsequent

marketing years from $0.0133 per kernelweight pound to $0.0118 per

kernelweight pound of walnuts handled. The Board is responsible for

local administration of the marketing order which regulates the

handling of walnuts grown in California (order). 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 decrease is

possible because the 1999-2000 assessable poundage is expected to total

252,000,000 kernelweight pounds (almost 30 percent higher than last

year). The $0.0118 per kernelweight pound assessment rate will allow

the Board to cover its 1999-2000 expenses. The assessment rate will

remain in effect indefinitely unless modified, suspended, or

terminated.

DATES: October 19, 1999. Comments received by December 17, 1999, 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, Fruit

and Vegetable Programs, AMS, USDA, room 2525-S, PO Box 96456,

Washington, DC 20090-6456; Fax: (202) 720-5698; or E-mail:

[email protected]. 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.

FOR FURTHER INFORMATION CONTACT: Diane Purvis, Marketing Assistant,

California Marketing Field Office, Fruit and Vegetable Programs, AMS,

USDA, 2202 Monterey Street, suite 102B, Fresno, California 93721;

telephone: (559) 487-5901; Fax (559) 487-5906; or George Kelhart,

Technical Advisor, Marketing Order Administration Branch, Fruit and

Vegetable Programs, AMS, USDA, room 2525-S, PO Box 96456, Washington,

DC 20090-6456; telephone: (202) 720-2491, Fax: (202) 720-5698. Small

businesses may request information on complying with this regulation by

contacting Jay Guerber, Marketing Order Administration Branch, Fruit

and Vegetable Programs, AMS, USDA, PO Box 96456, room 2525-S,

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

5698, or E-mail: Jay.G[email protected].

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, 1999, 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 decreases the assessment rate established for the Board

for the 1999-2000 and subsequent marketing years from $0.0133 per

kernelweight pound to $0.0118 per kernelweight pound of walnuts. The

assessment rate decrease is possible because the 1999-2000 assessable

poundage is expected to total 252,000,000 kernelweight pounds (almost

30 percent higher than last year). The $0.0118 per kernelweight pound

assessment rate will allow the Board to cover its 1999-2000 expenses.

The 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 1998-99 and subsequent marketing years, the Board

recommended, and the Department approved, an assessment rate of $0.0133

per kernelweight pound of walnuts that would continue in effect from

marketing year to marketing year unless modified, suspended, or

terminated by the Secretary upon recommendation and

[[Page 56132]]

information submitted by the Board or other information available to

the Secretary.

The Board met on September 10, 1999, and unanimously recommended

1999-2000 expenditures of $2,967,356 and an assessment rate of $0.0118

per kernelweight pound of walnuts. In comparison, last year's budgeted

expenditures were $2,620,274. The assessment rate of $0.0118 is $0.0015

lower than the rate currently in effect. The lower assessment rate was

recommended because this year's crop is estimated by the California

Agricultural Statistics Service (CASS) to be the largest on record at

280,000 tons. The Board estimates that about 252,000,000 kernelweight

pounds of the crop will be certified as merchantable and thus be

subject to assessments. The recommended assessment rate should allow

the Board to more than cover its expected expenses for 1999-2000.

The major expenditures recommended by the Board for the 1999-2000

year include $2,413,038 for marketing and production research expenses,

$289,709 for general expenses, $179,809 for office expenses, $59,800

for a production research director, and $25,000 as a contingency.

Budgeted expenses for these items in 1998-99 were $2,115,016 for

marketing and production research expenses, $246,643 for general

expenses, $163,815 for office expenses, $59,800 for a production

research director, and $35,000 as a contingency, respectively.

The assessment rate recommended by the Board was derived by

dividing anticipated expenses by expected merchantable certifications

of California walnuts. Walnut shipments for the year are estimated at

about 252,000,000 kernelweight pounds which should provide $2,973,600

in assessment income. 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 (Sec. 984.69). 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 1999-2000

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 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. Thus, both statutes have small

entity orientation and compatibility.

There are approximately 5,000 producers of walnuts in the

production area and approximately 48 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.

During the 1997-98 marketing year, as a percentage, about 33

percent of the handlers shipped over 2.4 million kernelweight pounds of

walnuts and 67 percent of the handlers shipped under 2.4 million

kernelweight pounds. Using an average f.o.b. price of $2.10 per

kernelweight pound, the majority of California walnut handlers may be

classified as small entities.

This rule decreases the assessment rate established for the Board

and collected from handlers for the 1999-2000 and subsequent marketing

years from $0.0133 per kernelweight pound to $0.0118 per kernelweight

pound of walnuts. The Board unanimously recommended 1999-2000

expenditures of $2,967,356 and an assessment rate of $0.0118 per

kernelweight pound. The assessment rate of $0.0118 is $0.0015 lower

than the 1998-99 rate. The quantity of assessable walnuts for the 1999-

2000 marketing year is estimated at 252,000,000 kernelweight pounds.

Thus, the $0.0118 rate should provide $2,973,600 in assessment income

and be adequate to cover this year's expenses. The lower assessment

rate was recommended because this year's crop is estimated by the CASS

to be the largest on record at 280,000 tons.

The major expenditures recommended by the Board for the 1999-2000

year include $2,413,038 for marketing and production research expenses,

$289,709 for general expenses, $179,809 for office expenses, $59,800

for a production research director, and $25,000 as a contingency.

Budgeted expenses for these items in 1998-99 were $2,115,016 for

marketing and production research expenses, $246,643 for general

expenses, $163,815 for office expenses, $59,800 for a production

research director, and $35,000 as a contingency, respectively.

The Board reviewed and unanimously recommended 1999-2000

expenditures of $2,967,356 which included increases in administrative

and office expenses 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 Board also considered

alternative assessment rates of $0.0120 and $0.0123 per kernelweight

pound in case the crop and amount of assessable walnuts are

underestimated. However, the Board ultimately derived the rate of

$0.0118 per kernelweight pound of assessable walnuts by dividing the

total recommended budget by the 252,000,000 kernelweight pound estimate

of assessable walnuts for the 1999-2000 marketing year.

A review of historical information and preliminary information

pertaining to the upcoming marketing year indicates that the grower

price for the 1999-2000 season should average about $0.65 per

kernelweight pound of walnuts. Therefore, the estimated assessment

revenue for the 1999-2000 marketing year as a percentage of total

grower revenue should be less than 2 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

[[Page 56133]]

persons were invited to attend the meeting and participate in Board

deliberations on all issues. Like all Board meetings, the September 10,

1999, 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.

A small business guide on complying with fruit, vegetable, and

speciality crop marketing agreements and orders may be viewed at the

following web site: http://www.ams.usda.gov/fv/moab.html. 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 1999-2000 marketing year began on August 1,

1999, and the order requires that the rate of assessment for each

marketing year apply to all assessable walnuts handled during such

marketing year; (2) this action decreases the assessment rate for

assessable walnuts beginning with the 1999-2000 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:

Sec. 984.347 Assessment rate.

On and after August 1, 1999, an assessment rate of $0.0118 per

kernelweight pound is established for California merchantable walnuts.

Dated: October 12, 1999.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 99-27133 Filed 10-15-99; 8:45 am]

BILLING CODE 3410-02-P