FR Doc E7-16199

[Federal Register: August 17, 2007 (Volume 72, Number 159)]
[Proposed Rules]
[Page 46183-46185]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17au07-35]

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 984

[Docket No. AMS-FV-07-0089; FV07-984-1 PR]

Walnuts Grown in California; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule would increase the assessment rate established for
the Walnut Marketing Board (Board) for the 2007-08 and subsequent
fiscal periods from $0.0101 to $0.0122 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
begins August 1 and ends July 31. The assessment rate would remain in
effect indefinitely unless modified, suspended, or terminated.

DATES: Comments must be received by September 4, 2007.

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 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, or can be viewed at: http://www.regulations.gov
.

FOR FURTHER INFORMATION CONTACT: Shereen Marino, Marketing Specialist,
California Marketing Field Office, 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:
Shereen.Marino@usda.gov, or Kurt.Kimmel@usda.gov.

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 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 proposed herein would be applicable to all
assessable walnuts beginning on August 1, 2007, 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 would increase the assessment rate established for the
Board for the 2007-08 and subsequent fiscal periods from $0.0101 to
$0.0122 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

[[Page 46184]]

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 2006-07 and subsequent fiscal periods, the Board
recommended, and USDA approved, an assessment rate of $0.0101 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 May 31, 2007, and unanimously recommended 2007-08
expenditures of $3,777,120 and an assessment rate of $0.0122 per
kernelweight pound of assessable walnuts. In comparison, last year's
budgeted expenditures were $3,222,860. The assessment rate of $0.0122
per kernelweight pound of assessable walnuts is $0.0021 per pound
higher than the rate currently in effect. The increased assessment rate
is necessary to cover increased expenses including increased salaries,
operating expenses and research for the 2007-08 marketing year. The
higher assessment rate should generate sufficient income to cover
anticipated 2007-08 expenses.
The following table compares major budget expenditures recommended
by the Board for the 2006-07 and 2007-08 marketing years:

------------------------------------------------------------------------
Budget expense categories 2006-07 2007-08
------------------------------------------------------------------------
Administrative Staff/Field Salaries & Benefits $415,000 $438,600
Travel/Board Expenses......................... 75,000 86,000
Office Costs/Annual Audit..................... 142,500 139,500
Program Expenses Including Research Controlled 5,000 5,000
Purchases....................................
Crop Acreage Survey........................... ........... 85,000
Crop Estimate................................. 100,000 100,000
Production Research........................... 725,000 730,000
Domestic Market Development................... 1,750,000 2,002,000
Reserve for Contingency....................... 10,360 191,020
------------------------------------------------------------------------

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 309,600,000 kernelweight pounds which should provide
$3,777,120 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 estimate for merchantable shipments is based on historical
data, which is the prior year's production of 344,000 tons (inshell).
Pursuant to Sec. 984.51(b) of the order, this figure was converted to
a merchantable kernelweight basis using a factor of .45 (344,000 tons x
2,000 pounds/ton x .45).
The proposed assessment rate would 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 would be in effect for an indefinite
period, the Board would 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 would evaluate Board
recommendations and other available information to determine whether
modification of the assessment rate is needed. Further rulemaking would
be undertaken as necessary. The Board's 2007-08 budget and those for
subsequent fiscal periods would be reviewed and, as appropriate,
approved by USDA.

Initial 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 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 53 handlers of California walnuts subject
to regulation under the marketing order and approximately 4,800 growers
in the production area. Small agricultural service firms are defined by
the Small Business Administration (SBA) (13 CFR 121.201) as those whose
annual receipts are less than $6,500,000, and small agricultural
producers are defined as those whose annual receipts are less than
$750,000.
Current industry information shows that 18 of the 53 handlers (34
percent) shipped over $6,500,000 of merchantable walnuts and could be
considered large handlers by the SBA. Thirty-five of the 53 walnut
handlers (66 percent) shipped under $6,500,000 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 two-year average yield per
acre for 2005 and 2006 is approximately 1.63 tons. A grower with 290
acres with an average yield of 1.63 tons per acre would produce
approximately 473 tons. The season average of grower prices for 2005
and 2006 (published by NASS) is $1,585 per ton. At that average price,
the 473 tons produced on 290 acres would yield approximately $750,000
in annual revenue. The 2002 Agricultural Census indicated two percent
of walnut farms were between 250 and 500 acres in size. The 290 acres
would produce, on average, about $750,000 in annual revenue from
walnuts and is near the lower end of the 250 to 500 acreage range
category of the 2002 census. Thus, it can be concluded that the number
of large walnut farms in 2006 is likely to be around two 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 would increase the assessment rate established for the
Board and collected from handlers for the 2007-08 and subsequent
marketing years from $0.0101 per kernelweight pound of assessable
walnuts to $0.0122 per kernelweight pound of assessable walnuts. The
Board unanimously recommended 2007-08 expenditures of $3,777,120 and an
assessment rate of $0.0122 per kernelweight pound of assessable
walnuts. The proposed assessment rate of $0.0122 is $0.0021 higher than
the rate currently in effect. The quantity of assessable walnuts for
the 2007-08 marketing year is estimated

[[Page 46185]]

at 344,000 tons. Thus, the $0.0122 rate should provide $3,777,120 in
assessment income and be adequate to meet this year's expenses. The
increased assessment rate is primarily due to increased budget
expenditures.
The following table compares major budget expenditures recommended
by the Board for the 2006-07 and 2007-08 fiscal years:

The Board reviewed and unanimously recommended 2007-08 expenditures
of $3,777,120. 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 309,600,000 kernelweight pounds which should provide
$3,777,120 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 2005
and 2006 were $1,570 and $1,600 per ton respectively. These prices
provide a reasonable price range within which the 2007-08 season
average price is likely to fall. Dividing these average grower prices
by 2,000 pounds per ton provides an inshell price per pound range of
between $0.785 and $0.80. Dividing these inshell prices per pound by
the 0.45 conversion factor (inshell to kernelweight) established in the
order yields a 2007-08 price range estimate of $1.74 and $1.78 per
kernelweight pound of assessable walnuts.
To calculate the percentage of grower revenue represented by the
assessment rate, the assessment rate of $0.0122 (per kernelweight
pound) is divided into the low and high estimates of the price range.
The estimated assessment revenue for the 2007-08 marketing year as a
percentage of total grower revenue would likely range between 0.701 and
0.685 percent.
This action would increase 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 May 31, 2007,
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 comments on this proposed rule, including the
regulatory and informational impacts of this action on small
businesses.
This proposed rule would impose 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 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/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.
A 15-day comment period is provided to allow interested persons to
respond to this proposed rule. Fifteen days is deemed appropriate
because: (1) The 2007-08 marketing year will begin on August 1, 2007,
and the marketing order requires that the rate of assessment for each
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

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

For the reasons set forth in the preamble, 7 CFR part 984 is
proposed to be 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, 2007, an assessment rate of $0.0122 per
kernelweight pound is established for California merchantable walnuts.

Dated: August 13, 2007.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. E7-16199 Filed 8-16-07; 8:45 am]

BILLING CODE 3410-02-P