Walnuts Grown in California; Increased Assessment Rate, 57485-57488 [E8-23390]
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57485
Rules and Regulations
Federal Register
Vol. 73, No. 193
Friday, October 3, 2008
This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents. Prices of
new books are listed in the first FEDERAL
REGISTER issue of each week.
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
Agricultural Marketing Service,
USDA.
ACTION: Final rule.
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AGENCY:
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,
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17:58 Oct 02, 2008
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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.
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.
SUPPLEMENTARY INFORMATION:
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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:
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03OCR1
57486
Federal Register / Vol. 73, No. 193 / Friday, October 3, 2008 / Rules and Regulations
Budget expense categories
2007–08
Employee Expenses ....................................................................................................................................
Travel/Board Expenses ...............................................................................................................................
Office Costs/Annual Audit ............................................................................................................................
Program Expenses Including Research
Controlled Purchases ...........................................................................................................................
Crop Acreage Survey ...........................................................................................................................
Crop Estimate .......................................................................................................................................
Production Research* ...........................................................................................................................
Domestic Market Development ............................................................................................................
Reserve for Contingency ......................................................................................................................
2008–09
$438,600
86,000
139,500
$410,500
100,000
142,500
5,000
85,000
100,000
730,000
2,002,000
191,020
5,000
110,000
835,000
2,935,000
56,300
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*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
§ 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
§ 984.51(b) of the order, this figure was
converted to a merchantable
kernelweight basis using a factor of 0.45
(323,082 tons × 2,000 pounds per ton ×
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
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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
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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:
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Federal Register / Vol. 73, No. 193 / Friday, October 3, 2008 / Rules and Regulations
Budget expense categories
2007–08
Employee Expenses ....................................................................................................................................
Travel/Board Expenses ...............................................................................................................................
Office Costs/Annual Audit ............................................................................................................................
Program Expenses Including Research:
Controlled Purchases ...........................................................................................................................
Crop Acreage Survey ...........................................................................................................................
Crop Estimate .......................................................................................................................................
Production Research * ..........................................................................................................................
Domestic Market Development ............................................................................................................
Reserve for Contingency ......................................................................................................................
57487
2008–09
$438,600
86,000
139,500
$410,500
100,000
142,500
5,000
85,000
100,000
730,000
2,002,000
191,020
5,000
..............................
110,000
835,000
2,935,000
56,300
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* 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
§ 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.
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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.
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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 13month 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
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Federal Register / Vol. 73, No. 193 / Friday, October 3, 2008 / Rules and Regulations
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: https://www.ams.usda.gov/
AMSv1.0/ams.fetchTemplateData.do?
template=TemplateN&page=Marketing
OrdersSmallBusinessGuide. Any
questions about the compliance guide
should be sent to Jay Guerber at the
previously mentioned address in the
■
FOR FURTHER INFORMATION CONTACT
Reserve Requirements of Depository
Institutions
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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.
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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 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
FEDERAL RESERVE SYSTEM
12 CFR Part 204
[Regulation D; Docket No. R–1297]
Board of Governors of the
Federal Reserve System.
ACTION: Final rule.
AGENCY:
SUMMARY: The Board is amending
Regulation D, Reserve Requirements of
Depository Institutions, to reflect the
annual indexing of the reserve
requirement exemption amount and the
low reserve tranche for 2009. The
Regulation D amendments set the
amount of total reservable liabilities of
each depository institution that is
subject to a zero percent reserve
requirement in 2009 at $10.3 million, up
from $9.3 million in 2008. This amount
is known as the reserve requirement
exemption amount. The Regulation D
amendment also sets the amount of net
transaction accounts at each depository
institution that is subject to a three
percent reserve requirement in 2009 at
$44.4 million, up from $43.9 million in
2008. This amount is known as the low
reserve tranche. The adjustments to both
of these amounts are derived using
statutory formulas specified in the
Federal Reserve Act.
The Board is also announcing changes
in two other amounts, the nonexempt
deposit cutoff level and the reduced
reporting limit, that are used to
determine the frequency at which
depository institutions must submit
deposit reports.
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Effective date: November 3,
2008.
Compliance dates: For depository
institutions that report deposit data
weekly, the new low reserve tranche
and reserve requirement exemption
amount will apply to the fourteen-day
reserve computation period that begins
Tuesday, December 2, 2008, and the
corresponding fourteen-day reserve
maintenance period that begins
Thursday, January 1, 2009. For
depository institutions that report
deposit data quarterly, the new low
reserve tranche and reserve requirement
exemption amount will apply to the
seven-day reserve computation period
that begins Tuesday, December 16,
2008, and the corresponding seven-day
reserve maintenance period that begins
Thursday, January 15, 2009. For all
depository institutions, these new
values of the nonexempt deposit cutoff
level, the reserve requirement
exemption amount, and the reduced
reporting limit will be used to
determine the frequency at which a
depository institution submits deposit
reports effective in either June or
September 2009.
FOR FURTHER INFORMATION CONTACT:
Sophia Allison, Senior Counsel (202/
452–3565), Legal Division, or Margaret
Gillis DeBoer, Senior Financial Analyst
(202/452–3139), Division of Monetary
Affairs; for users of
Telecommunications Device for the Deaf
(TDD) only, contact (202/263–4869);
Board of Governors of the Federal
Reserve System, 20th and C Streets,
NW., Washington, DC 20551.
SUPPLEMENTARY INFORMATION: Section
19(b)(2) of the Federal Reserve Act (12
U.S.C. 461(b)(2)) requires each
depository institution to maintain
reserves against its transaction accounts
and nonpersonal time deposits, as
prescribed by Board regulations, for the
purpose of implementing monetary
policy.
Section 11(a)(2) of the Federal Reserve
Act (12 U.S.C. 248(a)(2)) authorizes the
Board to require reports of liabilities
and assets from depository institutions
to enable the Board to conduct monetary
policy. The Board’s actions with respect
to each of these provisions are discussed
in turn below.
DATES:
1. Reserve Requirements
Pursuant to section 19(b) of the
Federal Reserve Act (Act), transaction
account balances maintained at each
depository institution are subject to
reserve requirement ratios of zero, three,
or ten percent. Section 19(b)(11)(A) of
the Act (12 U.S.C. 461(b)(11)(A))
provides that a zero percent reserve
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]]>Agencies
[Federal Register Volume 73, Number 193 (Friday, October 3, 2008)]
[Rules and Regulations]
[Pages 57485-57488]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-23390]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
week.
========================================================================
Federal Register / Vol. 73, No. 193 / Friday, October 3, 2008 / Rules
and Regulations
[[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
