[Federal Register: October 3, 2008 (Volume 73, Number 193)]
[Rules and Regulations]
[Page 57485-57488]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03oc08-1]
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Rules and Regulations
Federal Register
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[[Page 57485]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 984
[Docket No. AMS-FV-08-0054; FV08-984-1 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
California Walnut Board (Board) for the 2008-09 marketing year from
$0.0122 to $0.0158 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 2008-09 marketing year began on September
1, 2008, and ends on August 31, 2009. The assessment rate will remain
in effect indefinitely unless modified, suspended, or terminated.
DATES: Effective Date: October 6, 2008.
FOR FURTHER INFORMATION CONTACT: Martin J. Engeler, Senior Marketing
Specialist, 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: Martin.Engeler@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 Order
No. 984, 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 established herein will be applicable to all
assessable walnuts beginning on September 1, 2008, 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 2008-09 and subsequent marketing years from $0.0122 to $0.0158
per kernelweight pound of assessable walnuts. The 2008-09 marketing
year begins on September 1, 2008, and ends on August 31, 2009.
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 2007-08 and subsequent marketing years, the Board
recommended, and USDA approved, an assessment rate of $0.0122 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 28, 2008, and unanimously recommended 2008-09
expenditures of $4,594,300 and an assessment rate of $0.0158 per
kernelweight pound of assessable walnuts. In comparison, 2007-08
budgeted expenditures were $3,777,120. The assessment rate of $0.0158
per kernelweight pound of assessable walnuts is $0.0036 per pound
higher than the 2007-08 assessment rate. The increased assessment rate
is necessary to cover increased expenses in the areas of domestic
market promotion, production research activities, and Board operating
expenses. The higher assessment rate should generate sufficient income
to cover anticipated 2008-09 expenses.
The following table compares major budget expenditures recommended
by the Board for the 2007-08 and 2008-09 marketing years:
[[Page 57486]]
------------------------------------------------------------------------
Budget expense categories 2007-08 2008-09
------------------------------------------------------------------------
Employee Expenses................. $438,600 $410,500
Travel/Board Expenses............. 86,000 100,000
Office Costs/Annual Audit......... 139,500 142,500
Program Expenses Including
Research
Controlled Purchases.......... 5,000 5,000
Crop Acreage Survey........... 85,000
Crop Estimate................. 100,000 110,000
Production Research*.......... 730,000 835,000
Domestic Market Development... 2,002,000 2,935,000
Reserve for Contingency....... 191,020 56,300
------------------------------------------------------------------------
*Includes Research Director's compensation and a contingency for
production research issues.
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 290,773,800 kernelweight pounds which should provide
$4,594,300 in assessment income and allow the Board to cover its
expenses. Unexpended funds may be retained in a financial reserve,
provided that funds in the financial reserve do not exceed
approximately two year's budgeted expenses. If not retained in a
financial reserve, 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 of the order.
The estimate for merchantable shipments is based on historical
data, which is the prior year's production of 323,082 tons (inshell).
Pursuant to Sec. 984.51(b) of the order, this figure was converted to
a merchantable kernelweight basis using a factor of 0.45 (323,082 tons
x 2,000 pounds per ton x 0.45).
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 2008-09 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 (5 U.S.C. 601-612) (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 currently 58 handlers of California walnuts subject to
regulation under the marketing order and approximately 4,000 producers
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.
Industry information for the most recent complete season indicates
that 18 of 53 handlers (34 percent) shipped over $6,500,000 of
merchantable walnuts and could be considered large handlers by the SBA.
Thirty-five of 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 287
acres with an average yield of 1.63 tons per acre would produce
approximately 468 tons. The season average of grower prices for 2005
and 2006 published by NASS is $1,600 per ton. At that average price,
the 468 tons produced on 287 acres would yield slightly less than
$750,000 in annual revenue. The 2002 Agricultural Census indicated two
percent of walnut farms were between 250 and 500 acres in size. The 287
acres would produce, on average, slightly less than the small business
threshold level of $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 was likely 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 2008-09 and subsequent marketing
years from $0.0122 per kernelweight pound of assessable walnuts to
$0.0158 per kernelweight pound of assessable walnuts. The Board
unanimously recommended 2008-09 expenditures of $4,594,300 and an
assessment rate of $0.0158 per kernelweight pound of assessable
walnuts. The assessment rate of $0.0158 is $0.0036 higher than the
2007-08 assessment rate. The quantity of assessable walnuts for the
2008-09 marketing year is estimated at 323,082 tons, or 290,773,800
kernelweight pounds. Thus, the $0.0158 rate should provide $4,594,300
in assessment income and be adequate to meet the 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 2007-08 and 2008-09 fiscal years:
[[Page 57487]]
------------------------------------------------------------------------
Budget expense categories 2007-08 2008-09
------------------------------------------------------------------------
Employee Expenses................. $438,600 $410,500
Travel/Board Expenses............. 86,000 100,000
Office Costs/Annual Audit......... 139,500 142,500
Program Expenses Including
Research:
Controlled Purchases.......... 5,000 5,000
Crop Acreage Survey........... 85,000 .................
Crop Estimate................. 100,000 110,000
Production Research *......... 730,000 835,000
Domestic Market Development... 2,002,000 2,935,000
Reserve for Contingency....... 191,020 56,300
------------------------------------------------------------------------
* Includes Research Director's compensation and contingency for
production research issues.
The Board reviewed and unanimously recommended 2008-09 expenditures
of $4,594,300. 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 290,773,800 kernelweight pounds which should provide
$4,594,300 in assessment income and allow the Board to cover its
expenses. Unexpended funds may be retained in a financial reserve,
provided that funds in the financial reserve do not exceed
approximately two year's budgeted expenses. If not retained in a
financial reserve, 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 of the order.
According to NASS, the season average grower price for years 2006
and 2007 were $1,630 and $2,320 per ton, respectively. These prices
provide a range within which the 2008-09 season average price could
fall. Dividing these average grower prices by 2,000 pounds per ton
provides an inshell price per pound range of $0.815 to $1.16. Dividing
these inshell prices per pound by the 0.45 conversion factor (inshell
to kernelweight) established in the order yields a 2008-09 price range
estimate of $1.81 to $2.58 per kernelweight pound of assessable
walnuts.
To calculate the percentage of grower revenue represented by the
assessment rate, the assessment rate of $0.0158 per kernelweight pound
is divided by the low and high estimates of the price range. The
estimated assessment revenue for the 2008-09 marketing year as a
percentage of total grower revenue would thus likely range between
0.612 and 0.873 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 28, 2008,
meeting was a public meeting and all entities, both large and small,
were provided the opportunity 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 initial 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 July 25, 2008 (73 FR 43378).
Copies of the proposed rule were also mailed or sent via facsimile
to 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 August 11, 2008, was provided to allow interested
persons to respond to the proposal.
One comment was received during the comment period in response to
the proposed rule. The comment was submitted by the Executive Director
of the Board. The commenter points out that the proposed rule would
establish the 2008-09 marketing year as a 13-month period from August
1, 2008, through August 31, 2009, and the assessment rate increase
would be effective as of August 1, 2008. The commenter further states
that the order was recently amended to change the marketing year from
August through July to September through August. Accordingly, when the
Board formulated its 2007-08 budget in May 2007, it established a 13-
month period beginning on August 1, 2007, and ending on August 31,
2008, as its marketing year to accommodate the order amendment.
Expenditures were planned and budgeted accordingly. The Board
subsequently recommended its 2008-09 marketing year budget in May 2008
to cover a 12-month period beginning September 1, 2008, and ending
August 31, 2009. The Board also intended for the assessment rate to be
effective with the new marketing year beginning September 1, 2008.
The commenter also noted that one section of the proposed rule
incorrectly references total budgeted expenses of $4,954,300. The
correct amount, as referenced correctly in another section of rule
should be $4,594,300. The commenter also states that Budget Expense
Category tables in the proposed rule are incorrect because it omits a
$30,000 item for production research contingencies and should need
$835,000 instead of $805,000. Finally, the commenter indicated that the
statement at the asterisk, which explains that the Research Director's
compensation is included in the Production Research budget, should be
modified to state that production research contingencies are also
included in that budget.
As a result of this comment, modifications to the proposed rule are
being made in this final rule. In order
[[Page 57488]]
to ensure consistency and continuity in the Board's financial planning
and operations, and to recognize the recent order amendment revising
the marketing year, the assessment rate change and the 2008-09
marketing year will become effective September 1, 2008. Additional
modification is made to correct the erroneous references to the total
expenditures. Finally, the rule is further modified to change the
Budget Expense Category tables to include the amount budgeted for
production research contingencies and the statement at the asterisk to
indicate the production research contingencies are part of the
Production Research budget. Although the tables were not necessarily
intended to capture all the Board's expenses, the modifications may
provide more clarity.
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/AMSv1.0/
ams.fetchTemplateData.do?template=TemplateN&page=MarketingOrdersSmallBus
inessGuide. 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 is 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 2008-09
marketing year began on September 1, 2008, and the marketing order
requires that the rate of assessment for each year apply to all
assessable walnuts handled during the year; the Board needs to have
sufficient funds to pay its expenses which are incurred on a continuous
basis; and 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. Also, a 15-day comment
period was provided for in the proposed rule and no comments in
opposition to the rule were received.
List of Subjects in 7 CFR Part 984
Walnuts, Marketing agreements, 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 September 1, 2008, an assessment rate of $0.0158 per
kernelweight pound is established for California merchantable walnuts.
Dated: September 29, 2008.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. E8-23390 Filed 10-2-08; 8:45 am]
BILLING CODE 3410-02-P