[Federal Register Volume 62, Number 210 (Thursday, October 30, 1997)]
[Rules and Regulations]
[Pages 58641-58644]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-28824]


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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

[[Page 58642]]

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.

[[Page 58643]]

    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:

[[Page 58644]]

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