FR Doc 05-23818

[Federal Register: December 8, 2005 (Volume 70, Number 235)]
[Rules and Regulations]
[Page 72892-72895]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08de05-2]

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 984

[Docket No. FV05-984-2 FR]

Walnuts Grown in California; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule increases the assessment rate established for the
Walnut Marketing Board (Board) for the 2005-06 and subsequent marketing
years from $0.0094 to $0.0096 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 August 1 and ends
July 31. The assessment rate will remain in effect indefinitely unless
modified, suspended, or terminated.

DATES: Effective Date: December 9, 2005.

FOR FURTHER INFORMATION CONTACT: Shereen Marino, Marketing Specialist,
California Marketing Field Office, Fruit and Vegetable Programs, AMS,
USDA; Telephone: (559) 487-5901, Fax: (559) 487-5906; or George
Kelhart, Technical Advisor, 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. 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:
Jay.Guerber@usda.gov.

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 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

[[Page 72893]]

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
on August 1, 2005, 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 increases the assessment rate established for the Board
for the 2005-06 and subsequent marketing years from $0.0094 to $0.0096
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 2004-05 and subsequent marketing years, the Board
recommended, and USDA approved, an assessment rate of $0.0094 per
kernelweight of assessable walnuts that continued 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 September 9, 2005, and unanimously recommended
2005-06 expenditures of $2,937,600 and an assessment rate of $0.0096
per kernelweight pound of assessable walnuts. In comparison, last
year's budgeted expenditures were $2,749,500. The assessment rate of
$0.0096 per kernelweight pound of assessable walnuts is $0.0002 per
pound higher than the rate currently in effect. The increased
assessment rate is necessary because this year's crop is estimated by
the California Agricultural Statistics Service (CASS) to be 340,000
tons (306,000,000 kernelweight pounds merchantable), and the budget is
about 6.4 percent more than last year's budget. The crop is smaller
than expected due to sunburn caused by warmer than normal temperatures
during the growing season. The higher assessment rate should generate
sufficient income to cover anticipated 2005-06 expenses.
The following table compares major budget expenditures recommended
by the Board for the 2004-05 and 2005-06 marketing years:

------------------------------------------------------------------------
Budget expense categories 2004-05 2005-06
------------------------------------------------------------------------
Administrative Staff/Field Salaries & $332,000 $360,000
Benefits...............................
Travel/Board Expenses................... 69,000 80,000
Office Costs/Annual Audit............... 124,000 132,500
Program Expenses Including Research:
Controlled Purchases................ 5,000 5,000
Crop Acreage Survey................. .............. 85,000
Crop Estimate....................... 94,000 95,000
Production Research Director........ 76,500 75,000
Production Research................. 548,500 500,000
Domestic Market Development......... 1,393,500 1,550,000
Reserve for Contingency............. 107,000 55,100
------------------------------------------------------------------------

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 306,000,000 kernelweight pounds which should provide
$2,937,600 in assessment income and allow the Board to cover its
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 5 months after the end of the year,
according to Sec. 984.69.
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 will be in effect 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 2005-06 budget and those for subsequent
marketing years would be reviewed and, as appropriate, approved by
USDA.

Final Regulatory Flexibility Analysis

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

[[Page 72894]]

small entities acting on their own behalf. Thus, both statutes have
small entity orientation and compatibility.
There are approximately 50 handlers of California walnuts subject
to regulation under the marketing order and approximately 5,500 growers
in the production area. Small agricultural service firms are defined by
the Small Business Administration (13 CFR 121.201) as those whose
annual receipts are less than $6,000,000, and small agricultural
producers are defined as those whose annual receipts are less than
$750,000.
Current industry information shows that 15 of the 50 handlers (30
percent) shipped over $6,000,000 of merchantable walnuts and could be
considered large handlers by the Small Business Administration. Thirty-
five of the 50 walnut handlers (70 percent) shipped under $6,000,000 of
merchantable walnuts and could be considered small handlers.
The number of large walnut growers (annual walnut revenue greater
than $750,000) can be estimated as follows. According to the National
Agricultural Statistics Service (NASS), the average yield per acre for
2002-04 is 1.457 tons. A grower with 420 acres would produce
approximately 612 tons. The average of grower prices for 2002-04
(published by NASS) is $1,227 per ton. At that average price, the 612
tons produced on 420 acres would yield approximately $750,000 in annual
revenue. The 2002 Agricultural Census indicated 56 percent of walnut
farms were 500 acres or larger, which is close to the 420 acres
required to produce $750,000 in revenue. Thus, it can be concluded that
the number of large walnut farms in 2005 is still likely to be under
one percent. Based on the foregoing, it can be concluded that the
majority of California walnut handlers and producers may be classified
as small entities.
This rule increases the assessment rate established for the Board
and collected from handlers for the 2005-06 and subsequent marketing
years from $0.0094 per kernelweight pound of assessable walnuts to
$0.0096 per kernelweight pound of assessable walnuts. The Board
unanimously recommended 2005-06 expenditures of $2,937,600 and an
assessment rate of $0.0096 per kernelweight pound of assessable
walnuts. The assessment rate of $0.0096 is $0.0002 higher than the rate
currently in effect. The quantity of assessable walnuts for the 2005-06
marketing year is estimated at 340,000 tons (306,000,000 merchantable
kernelweight pounds. Thus, the $0.0096 rate should provide $2,937,600
in assessment income and be adequate to meet this year's expenses. The
increased assessment rate is primarily due to increased budget
expenditures and based on an estimated crop of 340,000 tons for the
year (306,000,000 kernelweight pounds estimated merchantable).
The following table compares major budget expenditures recommended
by the Board for the 2004-05 and 2005-06 fiscal years:

The Board reviewed and unanimously recommended 2005-06 expenditures
of $2,937,600, which included increases in several expense categories.
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 306,000,000
kernelweight pounds which should provide $2,937,600 in assessment
income and allow the Board to cover its 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 5 months after the end of the year, according to Sec. 984.69.
According to NASS, the season average grower prices for years 2003
and 2004 were $1,160 and $1,350 per ton respectively. Dividing these
average grower prices by 2,000 pounds per ton provides an inshell price
per pound range of between $.58 and $.68. Adjusting by a few cents
above and below those prices ($0.55 to $0.70 per inshell pound)
provides a reasonable price range within which the 2005-06 season
average price is likely to fall. Dividing these inshell prices per
pound by the 0.45 conversion factor designated in the order yields a
2005-06 price range estimate of $1.22 and $1.56 per kernelweight pound
of assessable walnuts.
To calculate the percentage of grower revenue represented by the
assessment rate, the assessment rate of $0.0096 (per kernelweight
pound) is divided into the low and high estimates of the price range.
The estimated assessment revenue for the 2005-06 marketing year as a
percentage of total grower revenue would likely range between .8 and .6
percent.
This action increases 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
would 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 9,
2005, meeting was a public meeting and all entities, both large and
small, were able to express views on this issue.
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

[[Page 72895]]

forms are periodically reviewed to reduce information requirements and
duplication by industry and public sector agencies.
USDA has not identified any relevant Federal rules that duplicate,
overlap, or conflict with this rule.
A proposed rule concerning this action was published in the Federal
Register on November 4, 2005 (70 FR 67096). Copies of the proposed rule
were also mailed or sent via facsimile to all walnut handlers. Finally,
the proposal was made available through the Internet by USDA and the
Office of the Federal Register. A 10-day comment period ending on
November 14, 2005, was provided for interested persons to respond to
the proposal. 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/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 also found and determined that good
cause exists for not postponing the effective date of this rule until
30 days after publication in the Federal Register because handlers are
already receiving the 2005 walnut crop from growers. The marketing year
began on August 1, 2005, and the assessment rate applies to all walnuts
received during the 2005-06 and subsequent seasons. The Board needs to
have sufficient funds to pay its expenses which are incurred on a
continuous basis. Further, handlers are aware of this rule which was
recommended at a public meeting. Also a 10-day comment period was
provided in the proposed rule and no comments were received.

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 to be
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 August 1, 2005, an assessment rate of $0.0096 per
kernelweight pound is established for California merchantable walnuts.

Dated: December 5, 2005.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 05-23818 Filed 12-5-05; 4:29 pm]

BILLING CODE 3410-02-P