Walnuts Grown in California; Increased Assessment Rate, 91643-91646 [2016-30307]
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91643
Rules and Regulations
Federal Register
Vol. 81, No. 243
Monday, December 19, 2016
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.
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 984
[Doc. No. AMS–SC–16–0062; SC16–984–2
FR]
Walnuts Grown in California; Increased
Assessment Rate
Agricultural Marketing Service,
USDA.
ACTION: Final rule.
AGENCY:
This rule implements a
recommendation from the California
Walnut Board (Board) to increase the
assessment rate established for the
2016–17 and subsequent marketing
years from $0.0379 to $0.0465 per
kernelweight pound of assessable
walnuts. The Board locally administers
the marketing order and is comprised of
growers and handlers of walnuts
operating within the area of production.
Assessments upon walnut handlers are
used by the Board to fund reasonable
and necessary expenses of the program.
The marketing year began on September
1 and ends August 31. The assessment
rate will remain in effect indefinitely
unless modified, suspended, or
terminated.
SUMMARY:
DATES:
Effective December 20, 2016.
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FOR FURTHER INFORMATION CONTACT:
Terry Vawter, Senior Marketing
Specialist, or Jeffrey Smutny, Regional
Director, California Marketing Field
Office, Marketing Order and Agreement
Division, Specialty Crops Program,
AMS, USDA; Telephone: (559) 487–
5901, Fax: (559) 487–5906, or Email:
Terry.Vawter@ams.usda.gov or
Jeffrey.Smutny@ams.usda.gov.
Small businesses may request
information on complying with this
regulation by contacting Richard Lower,
Marketing Order and Agreement
Division, Specialty Crops Program,
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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 Email:
Richard.Lower@ams.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 Orders
12866, 13563, and 13175.
This rule has been reviewed under
Executive Order 12988, Civil Justice
Reform. Under the 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 September 1, 2016, and
continue until amended, suspended, or
terminated.
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 for the 2016–17 and subsequent
marketing years from $0.0379 to $0.0465
per kernelweight pound of assessable
walnuts.
The order provides authority for the
Board, with the approval of USDA, to
formulate an annual budget of expenses
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and collect assessments from handlers
to administer the program. All members
of the Board, but one, are growers and
handlers of California walnuts. They are
familiar with the Board’s needs and
with the costs for goods and services in
their local area and are thus in a
position to formulate an appropriate
budget and assessment rate. The
assessment rate is formulated and
discussed in a public meeting. Thus, all
directly affected persons have an
opportunity to participate and provide
input.
For the 2015–16 and subsequent
marketing years, the Board
recommended, and USDA approved, an
assessment rate of $0.0379 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 June 9, 2016, and
unanimously recommended 2016–17
expenditures of $23,143,050 and an
assessment rate of $0.0465 per
kernelweight pound of assessable
walnuts. In comparison, last year’s
budgeted expenditures were
$22,668,980. The assessment rate of
$0.0465 is $0.0086 per pound higher
than the rate currently in effect. The
quantity of assessable walnuts for the
2016–17 marketing year is estimated at
553,000 tons inshell or 497,700,000
kernelweight pounds, which is the
three-year average of walnut production.
At the recommended higher assessment
rate of $0.0465 per kernelweight pound,
the Board should collect approximately
$23,143,050 in assessment income,
making income and expenses equal. The
Board estimates it will begin the 2016–
17 marketing year with $9,827,284 in its
monetary reserve, which is well within
the requirements of the order.
The Board noted that sales of
California walnuts in the domestic
market have been declining in recent
years, and embarked upon an enhanced
market development and promotion
program in the 2015–16 marketing year
that was designed to reverse the trend.
Noting that making such a commitment
for a single year would likely not result
in long-term gains, they voted to
continue such market development and
promotion programs. Thus, it is
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maintaining its programs at a level near
that of the 2015–16 marketing year.
In addition, personnel changes will
result in an overlap of duties and
expenses, as some positions will be
added so that experience and continuity
can be maintained despite staff
retirements. Thus, employee costs are
expected to be higher this marketing
year. Added to that, the implementation
of the Food Safety Modernization Act
(FSMA) may result in added costs to the
industry and, in some cases, to the
Board as well. For that reason, the
Grades and Standards Committee and
the Production Research Committee
requested increased budgets.
The following table compares major
budget expenditures recommended by
the Board for the 2015–16 and 2016–17
marketing years:
Budget expense categories
2015–16
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Employee Expenses ................................................................................................................................................
Travel/Board Expenses/Annual Audit ......................................................................................................................
Office Expenses .......................................................................................................................................................
Controlled Purchases ..............................................................................................................................................
Crop Acreage Survey ..............................................................................................................................................
Crop Estimate ..........................................................................................................................................................
Production Research Director .................................................................................................................................
Production Research ...............................................................................................................................................
Sustainability Project ...............................................................................................................................................
Grades and Standards Research ............................................................................................................................
Domestic Market Development ...............................................................................................................................
Reserve for Contingency .........................................................................................................................................
The assessment rate recommended by
the Board was derived by dividing
anticipated assessment revenue needed
by estimated shipments of California
walnuts certified as merchantable. The
553,000 ton (inshell) estimate for
merchantable shipments is an average of
shipments during three prior years.
Pursuant to § 984.51(b) of the order, this
figure is converted to a merchantable
kernelweight basis using a factor of 0.45
(553,000 tons × 2,000 pounds per ton ×
0.45), which yields 497,700,000
kernelweight pounds. At $0.0465 per
pound, the new assessment rate should
generate $23,143,050 in assessment
income, which is equal to estimated
expenses.
Section 984.69 of the order authorizes
the Board to carry over excess funds
into subsequent marketing years as a
reserve, provided that funds already in
the reserve do not exceed approximately
two years’ budgeted expenses. Current
reserve funds total $9,827,284 and are
well within that requirement.
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
effective for an indefinite period, the
Board will continue to meet prior to or
during each marketing year to
recommend a budget of expenses and
consider recommendations for
modification of the assessment rate. The
dates and times of Board meetings are
available from the Board or USDA.
Board meetings are open to the public,
and interested persons may express
their views at these meetings. USDA
will evaluate Board recommendations
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and other available information to
determine whether modification of the
assessment rate is needed. Further
rulemaking will be undertaken as
necessary. The Board’s 2016–17 budget
and those for subsequent marketing
years would be reviewed and, as
appropriate, approved by USDA.
Final Regulatory Flexibility Analysis
Pursuant to requirements set forth in
the Regulatory Flexibility Act (RFA) (5
U.S.C. 601–612), 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
businesses 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 5,700
growers of California walnuts in the
production area and approximately 90
handlers subject to regulation under the
order. The Small Business
Administration (SBA) defines small
agricultural businesses as those having
annual receipts of less than $750,000,
and small agricultural service firms are
defined as those having annual receipts
of less than $7,500,000 (13 CFR
121.201).
According to USDA’s National
Agricultural Statistics Service’s
(NASS’s) 2012 Census of Agriculture,
approximately 86 percent of California’s
walnut farms were smaller than 100
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2016–17
$ 1,846,500
191,000
254,000
10,000
10,000
130,000
94,500
1,700,000
75,000
600,000
18,478,440
32,790
$ 2,292,000
206,000
262,000
10,000
0
130,000
175,000
1,800,000
75,000
800,000
18,398,040
59,010
acres. Further, NASS reports that the
average yield for 2014 was 1.97 tons per
acre, and the average price received for
2014 was $3,230 per ton.
A 100-acre farm with an average yield
of 1.97 tons per acre would therefore
have been expected to produce about
197 tons of walnuts during the 2014–15
marketing year. At $3,230 per ton, that
farm’s production would have had an
approximate value of $636,310. Since
Census of Agriculture information
indicates that the majority of
California’s walnut farms are smaller
than 100 acres, it could be concluded
that the majority of the growers had
receipts of less than $636,310 in 2014–
15, which is well below the SBA
threshold of $750,000. Thus, the
majority of California’s walnut growers
would be considered small growers
according to SBA’s definition.
According to information supplied by
the Board, approximately two-thirds of
California’s walnut handlers shipped
merchantable walnuts valued under
$7,500,000 during the 2014–15
marketing year and would, therefore, be
considered small businesses according
to the SBA definition.
This rule increases the assessment
rate established for the Board and
collected from handlers for the 2016–17
and subsequent marketing years from
$0.0379 to $0.0465 per kernelweight
pound of assessable walnuts. At its
meeting on June 9, 2016, the Board
unanimously recommended 2016–17
expenditures of $23,143,050 and an
assessment rate of $0.0465 per
kernelweight pound of assessable
walnuts. The assessment rate of $0.0465
is $0.0086 higher than the 2015–16 rate.
The quantity of assessable walnuts for
the 2016–17 marketing year is estimated
at 553,000 tons inshell weight, or
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497,700,000 kernelweight pounds.
Thus, the $0.0465 rate should provide
$23,143,050 in assessment income,
which is equal to the estimated
expenses.
The increased assessment rate is due
to continuing domestic marketing and
promotion programs, as well as to
increased personnel and committee
expenses. The Board believes that
California walnut sales can be improved
in the domestic market through
continued promotional activities. In
addition, the Grades and Standards
Committee and Production Research
Committee have asked for additional
funds in case the implementation of
FSMA requires new methods or
processes for growing, harvesting, and
shipping walnuts.
The major expenses for the 2016–17
marketing year include: $2,292,000 for
employee expenses; $206,000 for travel,
Board expenses, and annual audit
expenses; $262,000 for office expenses;
$10,000 for controlled purchases; $0 for
the crop acreage survey; $130,000 for
the crop estimate; $175,000 for the
salary of the Production Research
Director; $1,800,000 for production
research; $75,000 for sustainability;
$800,000 for grades and standards
research; $18,398,040 for domestic
market development projects; and
$59,010 for the contingency reserve.
In comparison, the major expenses for
the 2015–16 marketing year included:
$1,846,500 for employee expenses;
$191,000 for travel, board expenses, and
annual audit expenses; $254,000 for
office expenses; $10,000 for controlled
purchases; $100,000 for the crop acreage
survey; $130,000 for the crop estimate;
$94,500 for the salary of the Production
Research Director; $1,700,000 for
production research; $75,000 for
sustainability; $600,000 for grades and
standards research; $18,478,440 for
domestic market development projects;
and $32,790 for the contingency reserve.
The Board reviewed and unanimously
recommended 2016–17 expenditures of
$23,143,050 at its meeting on June 9,
2016. Prior to arriving at this budget, the
Board considered a recommendation
from the Budget and Personnel
Committee (Committee), which also
reviewed the proposed budget. The
Committee debated the relative value of
the increased assessment rate, given the
focus on domestic promotion programs.
It also considered information from
various other committees, who
deliberated and formulated their own
budgets of expenses and made their
recommendations to the Committee.
Those committees include the Market
Development, Production Research, and
Grades and Standards Committees.
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The Budget and Personnel Committee
considered alternative expenditure
levels, such as reducing the proposed
budgets recommended by the other
committees and changing the funding
for domestic marketing projects, as well
as not increasing the assessment rate.
The Committee ultimately decided that
the proposed expenditures and
assessment rate were reasonable and
necessary to assist in improving
domestic sales, maintaining staff
continuity, and preparing for potential
FSMA mandates. Thus, the Committee
unanimously agreed to recommend the
budget to the Board.
The assessment rate of $0.0465 per
kernelweight pound of assessable
walnuts was derived by dividing
anticipated assessment revenue needed
by expected shipments of California
walnuts certified as merchantable.
Merchantable shipments for the year are
estimated at 497,700,000 pounds. It was
determined that $23,143,050 in
assessment income was needed, and
assessment income will equal expenses
of $23,143,050.
Unexpended funds may be retained in
a financial reserve, provided that funds
in the financial reserve do not exceed
approximately two years’ budgeted
expenses.
According to NASS, the season
average grower prices for the years 2013
and 2014 were $3,710 and $3,230 per
ton, respectively. These prices provide a
range within which the 2016–17 season
average price could fall. Dividing these
average grower prices by 2,000 pounds
per ton provides an inshell price per
pound range of $1.62 to $1.86. Dividing
these inshell per pound prices by the
0.45 conversion factor (inshell to
kernelweight) established in the order
yields a 2016–17 price range estimate of
$3.60 to $4.13 per kernelweight pound
of assessable walnuts.
To calculate the percentage of grower
revenue represented by the assessment
rate, the assessment rate of $0.0465 per
kernelweight pound is divided by the
low and high estimates of the price
range. The estimated assessment
revenue for the 2016–17 marketing year
as a percentage of total grower revenue
will thus likely range between 1.13 and
1.29 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. 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
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91645
were invited to attend the meeting and
encouraged to participate in Board
deliberations on all issues. Like all
Board meetings, the June 9, 2016,
meeting was a public meeting, and all
entities, both large and small, were free
to express views on this issue.
In accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C.
Chapter 35), the order’s information
collection requirements have been
previously approved by the Office of
Management and Budget (OMB) and
assigned OMB No. 0581–0178
(Vegetable and Specialty Crop
Marketing Orders). No changes in those
requirements as a result of this action
are necessary. Should any changes
become necessary, they would be
submitted to OMB for approval.
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. USDA has not
identified any relevant Federal rules
that duplicate, overlap, or conflict with
this action.
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.
A proposed rule concerning this
action was published in the Federal
Register on September 16, 2016 (FR 81
63718). Copies of the rule were
provided to all walnut handlers, as well
as to Board members. Finally, the
proposal was made available through
the internet by USDA and the Office of
the Federal Register. A 30-day comment
period, ending October 17, 2016, was
provided for interested persons to
respond to the proposal. Two comments
were received: one supportive of the
increase and the other questioning the
impact of the rule on small businesses.
The commenter who questioned the
increase noted that the budget for the
2016–17 marketing year contained not
only funds to continue the expanded
marketing programs but also to fund
additional staff members hired to work
alongside existing staff who are
preparing to retire. The Board’s goal is
for the newly hired staff members to
learn from the retiring employees so that
minimal staff expertise is lost. While the
commenter did not object to the
practice, the commenter questioned
why small California walnut handlers,
who comprise the majority of walnut
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handlers, have to bear the burden of the
increased assessment rate.
As previously noted, assessments are
minimal and uniform on all handlers.
Thus, small handlers bear a
proportional burden compared to larger
handlers. The increase was
recommended unanimously by the
Board, which is made up of small and
large handlers, as well as small and
large growers, representing the entire
California walnut industry. The Board
made the unanimous recommendation
based upon deliberations by four of its
standing committees: the Market
Development Committee, Production
Research Committee, Grades and
Standards Committee, and Budget and
Personnel Committee. All four
committees reviewed the proposed
expenses and crop size, and considered
alternative assessment rates. All of the
committees recommended the increased
assessment rate and determined that the
budget was prudent, resulting in a
unanimous recommendation from the
Board.
Accordingly, no changes will be made
to the rule as proposed, based on the
comments received.
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/
rules-regulations/moa/small-businesses.
Any questions about the compliance
guide should be sent to Richard Lower
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 handlers are already receiving
2016–17 crop walnuts from growers, the
crop year began on September 1, 2016,
and the assessment rate applies to all
walnuts received during the 2016–17
and subsequent seasons. Further,
handlers are aware of this rule, which
was recommended at a public meeting.
Also, a 30-day comment period was
provided for in the proposed rule.
List of Subjects in 7 CFR Part 984
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, 2016, an
assessment rate of $0.0465 per
kernelweight pound is established for
California merchantable walnuts.
Dated: December 12, 2016.
Bruce Summers,
Associate Administrator, Agricultural
Marketing Service.
[FR Doc. 2016–30307 Filed 12–16–16; 8:45 am]
BILLING CODE 3410–02–P
DEPARTMENT OF HOMELAND
SECURITY
8 CFR PARTS 1, 210, 212, 214, 215,
231, 235, 245, 245a, 247, 253, 264, 274a,
and 286
[Docket No. USCBP–2013–0011; CBP Dec.
No. 16–27]
RIN 1651–AA96
Definition of Form I–94 To Include
Electronic Format
U.S. Customs and Border
Protection, DHS.
ACTION: Final rule.
AGENCY:
This final rule adopts,
without change, interim amendments to
the Department of Homeland Security
(DHS) regulations which were
published in the Federal Register on
March 27, 2013, as CBP Dec. No. 13–06.
These amendments enabled DHS to
transition the issuance of the Form I–94
(Arrival/Departure Record) to an
automated process. In the automated
process, DHS creates a Form I–94 in an
electronic format based on passenger,
passport and visa information DHS
obtains electronically from air and sea
carriers and the Department of State
(DOS) as well as through the inspection
process. This document addresses the
comments received in response to the
interim rule and discusses some
operational modifications to the Form I–
94 process that were implemented after
publication of the interim rule.
DATES: This final rule is effective
January 18, 2017.
SUMMARY:
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FOR FURTHER INFORMATION CONTACT:
Suzanne Shepherd, U.S. Customs and
Border Protection Office of Field
Operations by telephone (202) 344–2073
or by email, Suzanne.M.Shepherd@
dhs.gov.
SUPPLEMENTARY INFORMATION:
Abbreviations and Terms Used in This
Document
ACI–A Airports Council InternationalNorth America
ACIP American Council on International
Personnel
ADIS Arrival and Departure Information
System
AILA American Immigration Lawyers
Association
APA Administrative Procedure Act
APIS Advance Passenger Information
Systems
CBP U.S. Customs and Border Protection
CBSA Canadian Border Services Agency
CCD Consular Consolidated Database
CFR Code of Federal Regulations
DHS Department of Homeland Security
DIS Deferred Inspection Site
DMV Departments of Motor Vehicles
DOS Department of State
DOT Department of Transportation
ESTA Electronic System of Travel
Authorization
FAQ Frequently Asked Question
FNU First Name Unknown
FOIA Freedom of Information Act
ICAO International Civil Aviation
Organization
ICE U.S. Immigration and Customs
Enforcement
IFR Interim Final Rule
INA Immigration and Nationality Act
´
INM Instituto Nacional de Migracion
INS Immigration and Naturalization Service
LNU Last Name Unknown
MRZ Machine Readable Zone
NAFSA NAFSA: Association of
International Educators
OIS Office of Immigration Statistics
OMB Office of Management and Budget
OTTI Office of Travel and Tourism
Industries
PIA Privacy Impact Assessment
PII Personally Identifiable Information
POE Port of Entry
SAVE USCIS’s Systematic Alien
Verification for Entitlements program
SEVIS Student and Exchange Visitor
Information System
SEVP Student and Exchange Visitor
Information Program
SHRM Society for Human Resource
Management
SSA Social Security Administration
USCIS U.S. Citizenship and Immigration
Services
USDA U.S. Department of Agriculture
VWP Visa Waiver Program
Executive Summary
The Form I–94 (Arrival/Departure
Record) is issued by DHS to certain
nonimmigrant foreign nationals upon
arrival in the United States or when
they change status in the United States.
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]]>Agencies
[Federal Register Volume 81, Number 243 (Monday, December 19, 2016)]
[Rules and Regulations]
[Pages 91643-91646]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-30307]
========================================================================
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. 81, No. 243 / Monday, December 19, 2016 /
Rules and Regulations
[[Page 91643]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 984
[Doc. No. AMS-SC-16-0062; SC16-984-2 FR]
Walnuts Grown in California; Increased Assessment Rate
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This rule implements a recommendation from the California
Walnut Board (Board) to increase the assessment rate established for
the 2016-17 and subsequent marketing years from $0.0379 to $0.0465 per
kernelweight pound of assessable walnuts. The Board locally administers
the marketing order and is comprised of growers and handlers of walnuts
operating within the area of production. Assessments upon walnut
handlers are used by the Board to fund reasonable and necessary
expenses of the program. The marketing year began on September 1 and
ends August 31. The assessment rate will remain in effect indefinitely
unless modified, suspended, or terminated.
DATES: Effective December 20, 2016.
FOR FURTHER INFORMATION CONTACT: Terry Vawter, Senior Marketing
Specialist, or Jeffrey Smutny, Regional Director, California Marketing
Field Office, Marketing Order and Agreement Division, Specialty Crops
Program, AMS, USDA; Telephone: (559) 487-5901, Fax: (559) 487-5906, or
Email: Terry.Vawter@ams.usda.gov or Jeffrey.Smutny@ams.usda.gov.
Small businesses may request information on complying with this
regulation by contacting Richard Lower, Marketing Order and Agreement
Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue
SW., STOP 0237, Washington, DC 20250-0237; Telephone: (202) 720-2491,
Fax: (202)720-8938, or Email: Richard.Lower@ams.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 Orders 12866, 13563, and 13175.
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. Under the 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 September 1, 2016, and continue until amended, suspended, or
terminated.
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 for the 2016-17 and
subsequent marketing years from $0.0379 to $0.0465 per kernelweight
pound of assessable walnuts.
The 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. All members of the Board, but
one, are growers and handlers of California walnuts. They are familiar
with the Board's needs and with the costs for goods and services in
their local area and are thus in a position to formulate an appropriate
budget and assessment rate. The assessment rate is formulated and
discussed in a public meeting. Thus, all directly affected persons have
an opportunity to participate and provide input.
For the 2015-16 and subsequent marketing years, the Board
recommended, and USDA approved, an assessment rate of $0.0379 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 June 9, 2016, and unanimously recommended 2016-17
expenditures of $23,143,050 and an assessment rate of $0.0465 per
kernelweight pound of assessable walnuts. In comparison, last year's
budgeted expenditures were $22,668,980. The assessment rate of $0.0465
is $0.0086 per pound higher than the rate currently in effect. The
quantity of assessable walnuts for the 2016-17 marketing year is
estimated at 553,000 tons inshell or 497,700,000 kernelweight pounds,
which is the three-year average of walnut production. At the
recommended higher assessment rate of $0.0465 per kernelweight pound,
the Board should collect approximately $23,143,050 in assessment
income, making income and expenses equal. The Board estimates it will
begin the 2016-17 marketing year with $9,827,284 in its monetary
reserve, which is well within the requirements of the order.
The Board noted that sales of California walnuts in the domestic
market have been declining in recent years, and embarked upon an
enhanced market development and promotion program in the 2015-16
marketing year that was designed to reverse the trend. Noting that
making such a commitment for a single year would likely not result in
long-term gains, they voted to continue such market development and
promotion programs. Thus, it is
[[Page 91644]]
maintaining its programs at a level near that of the 2015-16 marketing
year.
In addition, personnel changes will result in an overlap of duties
and expenses, as some positions will be added so that experience and
continuity can be maintained despite staff retirements. Thus, employee
costs are expected to be higher this marketing year. Added to that, the
implementation of the Food Safety Modernization Act (FSMA) may result
in added costs to the industry and, in some cases, to the Board as
well. For that reason, the Grades and Standards Committee and the
Production Research Committee requested increased budgets.
The following table compares major budget expenditures recommended
by the Board for the 2015-16 and 2016-17 marketing years:
------------------------------------------------------------------------
Budget expense categories 2015-16 2016-17
------------------------------------------------------------------------
Employee Expenses....................... $ 1,846,500 $ 2,292,000
Travel/Board Expenses/Annual Audit...... 191,000 206,000
Office Expenses......................... 254,000 262,000
Controlled Purchases.................... 10,000 10,000
Crop Acreage Survey..................... 10,000 0
Crop Estimate........................... 130,000 130,000
Production Research Director............ 94,500 175,000
Production Research..................... 1,700,000 1,800,000
Sustainability Project.................. 75,000 75,000
Grades and Standards Research........... 600,000 800,000
Domestic Market Development............. 18,478,440 18,398,040
Reserve for Contingency................. 32,790 59,010
------------------------------------------------------------------------
The assessment rate recommended by the Board was derived by
dividing anticipated assessment revenue needed by estimated shipments
of California walnuts certified as merchantable. The 553,000 ton
(inshell) estimate for merchantable shipments is an average of
shipments during three prior years. Pursuant to Sec. 984.51(b) of the
order, this figure is converted to a merchantable kernelweight basis
using a factor of 0.45 (553,000 tons x 2,000 pounds per ton x 0.45),
which yields 497,700,000 kernelweight pounds. At $0.0465 per pound, the
new assessment rate should generate $23,143,050 in assessment income,
which is equal to estimated expenses.
Section 984.69 of the order authorizes the Board to carry over
excess funds into subsequent marketing years as a reserve, provided
that funds already in the reserve do not exceed approximately two
years' budgeted expenses. Current reserve funds total $9,827,284 and
are well within that requirement.
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 effective for an indefinite
period, the Board will continue to meet prior to or during each
marketing year to recommend a budget of expenses and consider
recommendations for modification of the assessment rate. The dates and
times of Board meetings are available from the Board or 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 2016-17 budget and those for subsequent
marketing years would be reviewed and, as appropriate, approved by
USDA.
Final Regulatory Flexibility Analysis
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA) (5 U.S.C. 601-612), 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
businesses 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 5,700 growers of California walnuts in the
production area and approximately 90 handlers subject to regulation
under the order. The Small Business Administration (SBA) defines small
agricultural businesses as those having annual receipts of less than
$750,000, and small agricultural service firms are defined as those
having annual receipts of less than $7,500,000 (13 CFR 121.201).
According to USDA's National Agricultural Statistics Service's
(NASS's) 2012 Census of Agriculture, approximately 86 percent of
California's walnut farms were smaller than 100 acres. Further, NASS
reports that the average yield for 2014 was 1.97 tons per acre, and the
average price received for 2014 was $3,230 per ton.
A 100-acre farm with an average yield of 1.97 tons per acre would
therefore have been expected to produce about 197 tons of walnuts
during the 2014-15 marketing year. At $3,230 per ton, that farm's
production would have had an approximate value of $636,310. Since
Census of Agriculture information indicates that the majority of
California's walnut farms are smaller than 100 acres, it could be
concluded that the majority of the growers had receipts of less than
$636,310 in 2014-15, which is well below the SBA threshold of $750,000.
Thus, the majority of California's walnut growers would be considered
small growers according to SBA's definition.
According to information supplied by the Board, approximately two-
thirds of California's walnut handlers shipped merchantable walnuts
valued under $7,500,000 during the 2014-15 marketing year and would,
therefore, be considered small businesses according to the SBA
definition.
This rule increases the assessment rate established for the Board
and collected from handlers for the 2016-17 and subsequent marketing
years from $0.0379 to $0.0465 per kernelweight pound of assessable
walnuts. At its meeting on June 9, 2016, the Board unanimously
recommended 2016-17 expenditures of $23,143,050 and an assessment rate
of $0.0465 per kernelweight pound of assessable walnuts. The assessment
rate of $0.0465 is $0.0086 higher than the 2015-16 rate. The quantity
of assessable walnuts for the 2016-17 marketing year is estimated at
553,000 tons inshell weight, or
[[Page 91645]]
497,700,000 kernelweight pounds. Thus, the $0.0465 rate should provide
$23,143,050 in assessment income, which is equal to the estimated
expenses.
The increased assessment rate is due to continuing domestic
marketing and promotion programs, as well as to increased personnel and
committee expenses. The Board believes that California walnut sales can
be improved in the domestic market through continued promotional
activities. In addition, the Grades and Standards Committee and
Production Research Committee have asked for additional funds in case
the implementation of FSMA requires new methods or processes for
growing, harvesting, and shipping walnuts.
The major expenses for the 2016-17 marketing year include:
$2,292,000 for employee expenses; $206,000 for travel, Board expenses,
and annual audit expenses; $262,000 for office expenses; $10,000 for
controlled purchases; $0 for the crop acreage survey; $130,000 for the
crop estimate; $175,000 for the salary of the Production Research
Director; $1,800,000 for production research; $75,000 for
sustainability; $800,000 for grades and standards research; $18,398,040
for domestic market development projects; and $59,010 for the
contingency reserve.
In comparison, the major expenses for the 2015-16 marketing year
included: $1,846,500 for employee expenses; $191,000 for travel, board
expenses, and annual audit expenses; $254,000 for office expenses;
$10,000 for controlled purchases; $100,000 for the crop acreage survey;
$130,000 for the crop estimate; $94,500 for the salary of the
Production Research Director; $1,700,000 for production research;
$75,000 for sustainability; $600,000 for grades and standards research;
$18,478,440 for domestic market development projects; and $32,790 for
the contingency reserve.
The Board reviewed and unanimously recommended 2016-17 expenditures
of $23,143,050 at its meeting on June 9, 2016. Prior to arriving at
this budget, the Board considered a recommendation from the Budget and
Personnel Committee (Committee), which also reviewed the proposed
budget. The Committee debated the relative value of the increased
assessment rate, given the focus on domestic promotion programs. It
also considered information from various other committees, who
deliberated and formulated their own budgets of expenses and made their
recommendations to the Committee. Those committees include the Market
Development, Production Research, and Grades and Standards Committees.
The Budget and Personnel Committee considered alternative
expenditure levels, such as reducing the proposed budgets recommended
by the other committees and changing the funding for domestic marketing
projects, as well as not increasing the assessment rate. The Committee
ultimately decided that the proposed expenditures and assessment rate
were reasonable and necessary to assist in improving domestic sales,
maintaining staff continuity, and preparing for potential FSMA
mandates. Thus, the Committee unanimously agreed to recommend the
budget to the Board.
The assessment rate of $0.0465 per kernelweight pound of assessable
walnuts was derived by dividing anticipated assessment revenue needed
by expected shipments of California walnuts certified as merchantable.
Merchantable shipments for the year are estimated at 497,700,000
pounds. It was determined that $23,143,050 in assessment income was
needed, and assessment income will equal expenses of $23,143,050.
Unexpended funds may be retained in a financial reserve, provided
that funds in the financial reserve do not exceed approximately two
years' budgeted expenses.
According to NASS, the season average grower prices for the years
2013 and 2014 were $3,710 and $3,230 per ton, respectively. These
prices provide a range within which the 2016-17 season average price
could fall. Dividing these average grower prices by 2,000 pounds per
ton provides an inshell price per pound range of $1.62 to $1.86.
Dividing these inshell per pound prices by the 0.45 conversion factor
(inshell to kernelweight) established in the order yields a 2016-17
price range estimate of $3.60 to $4.13 per kernelweight pound of
assessable walnuts.
To calculate the percentage of grower revenue represented by the
assessment rate, the assessment rate of $0.0465 per kernelweight pound
is divided by the low and high estimates of the price range. The
estimated assessment revenue for the 2016-17 marketing year as a
percentage of total grower revenue will thus likely range between 1.13
and 1.29 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. 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 encouraged to participate in
Board deliberations on all issues. Like all Board meetings, the June 9,
2016, meeting was a public meeting, and all entities, both large and
small, were free to express views on this issue.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
Chapter 35), the order's information collection requirements have been
previously approved by the Office of Management and Budget (OMB) and
assigned OMB No. 0581-0178 (Vegetable and Specialty Crop Marketing
Orders). No changes in those requirements as a result of this action
are necessary. Should any changes become necessary, they would be
submitted to OMB for approval.
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. USDA has not
identified any relevant Federal rules that duplicate, overlap, or
conflict with this action.
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.
A proposed rule concerning this action was published in the Federal
Register on September 16, 2016 (FR 81 63718). Copies of the rule were
provided to all walnut handlers, as well as to Board members. Finally,
the proposal was made available through the internet by USDA and the
Office of the Federal Register. A 30-day comment period, ending October
17, 2016, was provided for interested persons to respond to the
proposal. Two comments were received: one supportive of the increase
and the other questioning the impact of the rule on small businesses.
The commenter who questioned the increase noted that the budget for
the 2016-17 marketing year contained not only funds to continue the
expanded marketing programs but also to fund additional staff members
hired to work alongside existing staff who are preparing to retire. The
Board's goal is for the newly hired staff members to learn from the
retiring employees so that minimal staff expertise is lost. While the
commenter did not object to the practice, the commenter questioned why
small California walnut handlers, who comprise the majority of walnut
[[Page 91646]]
handlers, have to bear the burden of the increased assessment rate.
As previously noted, assessments are minimal and uniform on all
handlers. Thus, small handlers bear a proportional burden compared to
larger handlers. The increase was recommended unanimously by the Board,
which is made up of small and large handlers, as well as small and
large growers, representing the entire California walnut industry. The
Board made the unanimous recommendation based upon deliberations by
four of its standing committees: the Market Development Committee,
Production Research Committee, Grades and Standards Committee, and
Budget and Personnel Committee. All four committees reviewed the
proposed expenses and crop size, and considered alternative assessment
rates. All of the committees recommended the increased assessment rate
and determined that the budget was prudent, resulting in a unanimous
recommendation from the Board.
Accordingly, no changes will be made to the rule as proposed, based
on the comments received.
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/rules-regulations/moa/small-businesses. Any questions
about the compliance guide should be sent to Richard Lower 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 handlers are
already receiving 2016-17 crop walnuts from growers, the crop year
began on September 1, 2016, and the assessment rate applies to all
walnuts received during the 2016-17 and subsequent seasons. Further,
handlers are aware of this rule, which was recommended at a public
meeting. Also, a 30-day comment period was provided for in the proposed
rule.
List of Subjects in 7 CFR Part 984
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
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, 2016, an assessment rate of $0.0465 per
kernelweight pound is established for California merchantable walnuts.
Dated: December 12, 2016.
Bruce Summers,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2016-30307 Filed 12-16-16; 8:45 am]
BILLING CODE 3410-02-P
