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contains regulatory documents having general

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Rules and Regulations Federal Register

57839 

Vol. 72, No. 196 

Thursday, October 11, 2007 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Part 984 

[Docket No. AMS–FV–07–0089; FV07–984– 

1 FR] 

Walnuts Grown in California; Increased 

Assessment Rate 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Final rule. 

SUMMARY: This rule increases 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 began 

August 1 and ends July 31. The 

assessment rate will remain in effect 

indefinitely unless modified, 

suspended, or terminated. 

DATES: Effective Date: October 12, 2007. 

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 issued herein will 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 increases 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 

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: 


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57840 Federal Register / Vol. 72, No. 196 / Thursday, October 11, 2007 / Rules and Regulations 

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 Purchases .................................................................................. 5,000 5,000 

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 § 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 

§ 984.51(b) of the order, this figure was 

converted to a merchantable 

kernelweight basis using a factor of .45 

(344,000 tons × 2,000 pounds/ton × .45). 

The assessment rate established in 

this rule 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 2007–08 budget 

and those for subsequent fiscal periods 

will 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 

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 increases 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 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 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: 

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 


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Federal Register / Vol. 72, No. 196 / Thursday, October 11, 2007 / Rules and Regulations 57841 

Budget expense categories 2006–07 2007–08 

Program Expenses Including Research Controlled Purchases .................................................................................. 5,000 5,000 

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 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 

§ 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 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 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 May 31, 2007, 

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 

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. 

As noted in the final regulatory 

flexibility analysis, 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 August 17, 2007 (72 FR 

46183). 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 15-day comment 

period ending September 4, 2007, was 

provided to allow 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 the 

2007–08 marketing year began 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; and 

handlers are already receiving 2007–08 

crop walnuts from growers. The Board 

needs to have sufficient funds to meet 

its expenses which are incurred on a 

continuous basis. Further, handlers are 

aware of this rule which was 

unanimously recommended at a public 

meeting. Also, a 15-day comment period 

was provided for in the proposed rule 

and no comments were received. 

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 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: 

§ 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: October 9, 2007. 

Lloyd C. Day, 

Administrator, Agricultural Marketing 

Service. 

[FR Doc. 07–5041 Filed 10–9–07; 11:20 am] 

BILLING CODE 3410–02–P 


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