[Federal Register: November 16, 2006 (Volume 71, Number 221)]
[Rules and Regulations]
[Page 66645-66648]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16no06-2]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 984
[Docket No. FV06-984-2 IFR]
Walnuts Grown in California; Increased Assessment Rate
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Interim final rule with request for comments.
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SUMMARY: This rule increases the assessment rate established for the
Walnut Marketing Board (Board) for the 2006-07 and subsequent marketing
years from $0.0096 to $0.0101 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 will remain in effect indefinitely unless
modified, suspended, or terminated.
DATES: November 17, 2006. Comments received by January 16, 2007 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,
Marketing Order Administration Branch, Fruit and Vegetable Programs,
AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC
20250-0237; Fax: (202) 720-8938, E-mail: moab.docketclerk@usda.gov, 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 made available for public inspection in the Office
of the Docket Clerk during regular business hours, or can be viewed at:
http://www.ams.usda.gov/fv/moab.html.
FOR FURTHER INFORMATION CONTACT: Shereen Marino, Marketing Specialist,
or Kurt 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,
[[Page 66646]]
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, 2006, 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 2006-07 and subsequent marketing years from $0.0096 to $0.0101
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 2005-06 and subsequent marketing years, the Board
recommended, and USDA approved, an assessment rate of $0.0096 per
kernelweight 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 September 8, 2006, and unanimously recommended
2006-07 expenditures of $3,222,860 and an assessment rate of $0.0101
per kernelweight pound of assessable walnuts. In comparison, last
year's budgeted expenditures were $2,937,600. The assessment rate of
$0.0101 per kernelweight pound of assessable walnuts is $0.0005 per
pound higher than the rate currently in effect. The higher assessment
rate is necessary to cover increased expenses including increased
salaries, operating expenses and research for the 2006-07 marketing
year.
The following table compares major budget expenditures recommended
by the Board for the 2005-06 and 2006-07 marketing years:
------------------------------------------------------------------------
Budget expense categories 2005-06 2006-07
------------------------------------------------------------------------
Administrative Staff/Field Salaries & $360,000 $415,000
Benefits...............................
Travel/Board Expenses................... 80,000 75,000
Office Costs/Annual Audit............... 132,500 142,500
Program Expenses Including Research:
Controlled Purchases................ 5,000 5,000
Crop Acreage Survey................. 85,000 ..............
Crop Estimate....................... 95,000 100,000
Production Research Director........ 75,000 75,000
Production Research................. 500,000 650,000
Domestic Market Development......... 1,550,000 1,750,000
Reserve for Contingency............. 55,100 10,360
------------------------------------------------------------------------
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 318,600,000 kernelweight pounds which should provide
$3,217,860 in assessment income. Assessment income combined with
interest income should 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 the California
Agricultural Statistics Service's crop estimate for the crop year of
354,000 tons (inshell). Pursuant to Sec. 981.51(b) of the order, this
figure was converted to a merchantable kernelweight basis using a
factor of .45 (354,000 tons x 2,000 pounds/ton x .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
[[Page 66647]]
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 2006-07 budget and those for subsequent
marketing years will 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. Thus, both statutes have small
entity orientation and compatibility.
There are currently 44 handlers of California walnuts subject to
regulation under the marketing order and approximately 5,150 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 suggests that 16 of the 44 handlers
(36 percent) shipped over $6,500,000 of merchantable walnuts and could
be considered large handlers by the SBA. Twenty-eight of the 44 walnut
handlers (64 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 average yield per acre for
2003-05 is 1.567 tons. A grower with 353 acres with average yields
would produce approximately 553 tons. The average of grower prices for
2003-05 (published by NASS) is $1,357 per ton. At that average price,
the 553 tons produced on 353 acres would yield approximately $750,000
in annual revenue. The 2002 Agricultural Census indicated 56 walnut
farms (just under one percent of the 7,025 walnut farmers in 2002) were
500 acres or larger. The 500 acre threshold in the census data is
somewhat larger than the 353 acres that would produce $750,000 in
revenue with average yields and average prices. Thus, it can be
concluded that the number of large walnut farms in 2006 is still likely
to be not much above 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 2006-07 and subsequent marketing
years from $0.0096 to $0.0101 per kernelweight pound of assessable
walnuts. The Board unanimously recommended 2006-07 expenditures of
$3,222,860 and an assessment rate of $0.0101 per kernelweight pound of
assessable walnuts. The assessment rate of $0.0101 is $0.0005 higher
than the 2005-06 rate. The quantity of assessable walnuts for the 2006-
07 marketing year is estimated at 318,600,000 merchantable kernelweight
pounds. Thus, the $0.0101 rate should provide $3,217,860 in assessment
income. Assessment income combined with interest income should 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 2005-06 and 2006-07 marketing years:
------------------------------------------------------------------------
Budget expense categories 2005-06 2006-07
------------------------------------------------------------------------
Administrative Staff/Field Salaries & $360,000 $415,000
Benefits...............................
Travel/Board Expenses................... 80,000 75,000
Office Costs/Annual Audit............... 132,500 142,500
Program Expenses Including Research:
Controlled Purchases................ 5,000 5,000
Crop Acreage Survey................. 85,000
Crop Estimate....................... 95,000 100,000
Production Research Director........ 75,000 75,000
Production Research................. 500,000 650,000
Domestic Market Development......... 1,550,000 1,750,000
Reserve for Contingency............. 55,100 10,360
------------------------------------------------------------------------
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. 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 2004
and 2005 were $1,390 and $1,520 per ton, respectively. Dividing these
average grower prices by 2,000 pounds per ton provides an inshell price
per pound range of between $.70 and $.76. Adjusting by a few cents
above and below those prices ($0.67 to $0.79 per inshell pound)
provides a reasonable price range within which the 2006-07 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
2006-07 price range estimate of $1.49 and $1.76 per kernelweight pound
of assessable walnuts.
To calculate the percentage of grower revenue represented by the
assessment rate, the assessment rate of $0.0101 (per kernelweight
pound) is divided by the low and high estimates of the price range and
then multiplied by 100. The estimated assessment revenue for the 2006-
07 marketing year as a percentage of total grower revenue would likely
range between .7 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
[[Page 66648]]
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 8, 2006, 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 AMS is committed to complying with the E-Government Act, to
promote the use of the 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.
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 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 handlers have begun shipping walnuts for the 2006-07
marketing year. The marketing year began on August 1, 2006, and the
assessment rate applies to all walnuts shipped during the 2006-07 and
subsequent seasons. With the assessment rate in effect prior to
publication of this rule, the Board would not generate sufficient
revenue to meet its budgeted expenses for the 2006-07 marketing year.
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 unanimously recommended at a public meeting and is
similar to other assessment rate actions issued in prior years. This
interim final rule provides a 60-day comment period, and any comments
received will be considered prior to finalization of this rule.
List of Subjects in 7 CFR Part 984
Marketing agreements, Walnuts, Nuts, Reporting and recordkeeping
requirements.
0
For the reasons set forth in the preamble, 7 CFR part 984 is 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, 2006, an assessment rate of $0.0101 per
kernelweight pound is established for California merchantable walnuts.
Dated: November 14, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 06-9251 Filed 11-14-06; 1:09 pm]
BILLING CODE 3410-02-P