[Federal Register Volume 81, Number 137 (Monday, July 18, 2016)]
[Proposed Rules]
[Pages 46616-46619]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-16814]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 81, No. 137 / Monday, July 18, 2016 /
Proposed Rules
[[Page 46616]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 981
[Doc. No. AMS-SC-16-0045; SC16-981-2 PR]
Almonds Grown in California; Increased Assessment Rate
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would implement a recommendation from the
Almond Board of California (Board) to increase the assessment rate
established for the 2016-17 through the 2018-19 crop years from $0.03
to $0.04 per pound of almonds handled under the marketing order
(order). Of the $0.04 per pound assessment, 60 percent (or $0.024 per
pound) would be available as credit-back for handlers who conduct their
own promotional activities. The assessment rate would return to $0.03
for the 2019-20 and subsequent crop years, and the amount available for
handler credit-back would return to $0.018 per pound (60 percent). The
Board locally administers the order and is comprised of growers and
handlers of almonds grown in California. Assessments upon almond
handlers are used by the Board to fund reasonable and necessary
expenses of the program. The crop year begins August 1 and ends July
31. The $0.04 assessment rate would remain in effect until July 31,
2019. Beginning August 1, 2019, the assessment rate would return to
$0.03 and would remain in effect indefinitely unless modified,
suspended, or terminated.
DATES: Comments must be received by August 2, 2016.
ADDRESSES: Interested persons are invited to submit written comments
concerning this proposed rule. Comments must be sent to the Docket
Clerk, Marketing Order and Agreement Division, Specialty Crops Program,
AMS, USDA, 1400 Independence Avenue SW., STOP 0237, Washington, DC
20250-0237; Fax: (202) 720-8938; or Internet: http://www.regulations.gov. Comments should reference the document number and
the date and page number of this issue of the Federal Register and will
be available for public inspection in the Office of the Docket Clerk
during regular business hours, or can be viewed at: http://www.regulations.gov. All comments submitted in response to this
proposed rule will be included in the record and will be made available
to the public. Please be advised that the identity of the individuals
or entities submitting the comments will be made public on the internet
at the address provided above.
FOR FURTHER INFORMATION CONTACT: Andrea Ricci, Marketing Specialist or
Jeffery 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: with
[email protected] or [email protected].
Small businesses may request information on complying with this
regulation by contacting Antoinette Carter, 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:
[email protected].
SUPPLEMENTARY INFORMATION: This proposed rule is issued under Marketing
Order No. 981, as amended (7 CFR part 981), regulating the handling of
almonds 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 proposed rule
in conformance with Executive Orders 12866, 13563, and 13175.
This proposed rule has been reviewed under Executive Order 12988,
Civil Justice Reform. Under the marketing order now in effect,
California almond handlers are subject to assessments. Funds to
administer the order are derived from such assessments. It is intended
that the assessment rate as proposed herein would be applicable to all
assessable almonds beginning on August 1, 2016, through July 31, 2019.
Beginning August 1, 2019, the assessment rate would return to the
current $0.03 and would remain in effect indefinitely unless modified,
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 proposed rule would increase the assessment rate for the 2016-
17 through 2018-19 crop years from $0.03 to $0.04 per pound of almonds
received. Of the $0.04 per pound assessment, 60 percent (or $0.024 per
pound) would be available as credit-back for handlers who conduct their
own promotional activities. The assessment rate would return to $0.03
for the 2019-20 and subsequent crop years, and the amount available for
handler credit-back would return to $0.018 per pound (60 percent).
The California almond 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 growers and handlers of
California almonds. They are familiar with the Board's needs and with
the costs for goods and services in their local area and thus are in a
position to formulate an appropriate budget and assessment rate. The
assessment rate is formulated and discussed in a public meeting.
Therefore, all directly affected persons have an opportunity to
participate and provide input.
For the 2005-06 and subsequent crop years, the Board recommended,
and
[[Page 46617]]
USDA approved, an assessment rate of $0.03 per pound that would
continue in effect from crop year to crop year unless modified,
suspended, or terminated by USDA upon recommendation and information
submitted by the Board or other information available to USDA. Of the
$0.03 per pound assessment, 60 percent ($0.018) per pound was made
available as credit-back for handlers who conducted their own
promotional activities.
The Board met on April 12, 2016, and unanimously recommended 2016-
17 expenditures of $69,897,626 and an assessment rate of $0.04 per
pound of almonds received. In comparison, last year's budgeted
expenditures were $58,998,976. The proposed assessment rate of $0.04 is
$0.01 higher than the rate currently in effect, and the credit-back
portion of the assessment rate ($0.024 per pound) would be $0.006 more
than the credit-back portion currently in effect.
The Board estimates a production increase of thirty percent, or 600
million pounds, by the 2019-20 crop year. This increase is nearly as
much as their largest market currently consumes. Due to the size of the
increase in forecasted production, the Board anticipates that increased
market development projects and new marketing programs are required to
successfully market the additional supply. Accordingly, the Board has
recommended a new ``Nut of Choice'' marketing program.
The Board also anticipates needing additional funding for the
industry's new ``Crop of Choice'' research program, as well as
additional research to address concerns such as: Changing water supply
and quality systems; air quality and how it relates to harvesting,
pesticide, and energy use; and bee health.
The three-year higher assessment rate is needed to fund the
increase in marketing and research activities. The Board anticipates
that by the 2019-20 crop year, the increase in production assessed at
the reinstated $0.03 per pound rate should generate sufficient revenue
to cover the anticipated expenditures at that time. Therefore,
beginning August 1, 2019, the assessment rate would return to $0.03 per
pound.
The following table compares major budget expenditures recommended
by the Board for the 2015-16 and 2016-17 crop years:
------------------------------------------------------------------------
Budget expense categories 2015-16 2016-17
------------------------------------------------------------------------
Operations Expenses..................... $7,904,000 $8,404,000
Board Accelerated Innovation Management 1,500,000 1,000,000
(AIM) Initiatives......................
Crop of Choice Initiatives.............. 0 5,625,000
Reputation Management................... 1,826,350 2,000,000
Production Research..................... 1,843,331 1,843,331
Environmental Research.................. 1,039,790 1,039,790
Scientific Affairs/Nutrition............ 1,640,000 1,640,000
Global Market Development............... 38,583,756 38,583,756
Nut of Choice Initiatives............... 0 5,100,000
Technical & Regulatory Affairs.......... 1,045,500 1,045,500
Industry Services....................... 2,436,220 2,436,220
Almond Quality & Food Safety............ 790,800 790,800
Corporate Technology.................... 389,229 389,229
------------------------------------------------------------------------
The assessment rate recommended by the Board was derived by
considering the anticipated 30 percent production increase in the next
three years, anticipated expenditures plus additional program expenses,
current production level, and maintaining adequate operating reserve
funds. In its recommendation, the Board utilized an estimate of
1,835,290,000 pounds of assessable almonds for the 2016-17 crop year.
If realized, this would provide estimated assessment revenue of
$62,262,213, which reflects credit-back reimbursements and organic
exemptions. In addition, it is anticipated that $20,907,722 will be
provided by other sources, including interest income, Market Access
Program (MAP) funds, and operating reserve funds. When combined,
revenue from these sources would be adequate to cover budgeted
expenses.
Section 981.81 of the order authorizes the Board to maintain
operating reserve funds consisting of an administrative-research
portion and a marketing promotion portion, and states that the amount
allocated to each portion shall not exceed six months' budgeted
expenses for that activity area. Funds in the reserve at the end of the
2016-17 crop year are estimated to be approximately $16,581,222, well
within the amount permitted by the order.
The proposed assessment rate would continue in effect until July
31, 2019. Beginning August 1, 2019, the assessment rate would return to
$0.03 and would 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 would be in effect for a specified
period, the Board would continue to meet prior to or during each crop
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 would evaluate Board recommendations and other available
information to determine whether modification of the assessment rate is
needed. Further rulemaking would be undertaken as necessary. The
Board's 2016-17 budget and those for subsequent crop years would be
reviewed and, as appropriate, approved by USDA.
Initial 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 proposed rule on small
entities. Accordingly, AMS has prepared this initial regulatory
flexibility analysis.
The purpose of the RFA is to fit regulatory actions to the scale of
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 6,800 almond growers in the production area
and approximately 100 handlers subject to regulation under the
marketing order.
[[Page 46618]]
Small agricultural producers are defined by the Small Business
Administration (SBA) as those having annual receipts of less than
$750,000, and small agricultural service firms are defined as those
whose annual receipts are less than $7,500,000 (13 CFR 121.201).
The National Agricultural Statistics Service (NASS) reported in its
2012 Agricultural Census that there were 6,841 almond farms in the
production area (California), of which 6,204 had bearing acres. The
following computation provides an estimate of the proportion of
producers (farms) and agricultural service firms (handlers) that would
be considered small under the SBA definitions.
The NASS Census data indicates that out of the 6,204 California
farms with bearing acres of almonds, 4,471 (72 percent) have fewer than
100-bearing acres.
In its most recently reported crop year (2014), NASS reported an
average yield of 2,150 pounds per acre, and a season average grower
price of $3.19 per pound. A 100-acre farm with an average yield of
2,150 pounds per acre would produce about 215,000 pounds of almonds. At
$3.19 per pound, that farm's production would be valued at $685,850.
Since Census of Agriculture indicates that the majority of
California's almond farms are smaller than 100 acres, it could be
concluded that the majority of growers had annual receipts from the
sale of almonds in 2014-15 of less than $685,850, well below the SBA
threshold of $750,000. Thus, over 70 percent of California's almond
growers would be considered small growers according to SBA's
definition.
According to information supplied by the Board, approximately 30
percent of California's almond handlers shipped almonds valued under
$7,500,000 during the 2014-15 crop year, and would therefore be
considered small handlers according to the SBA definition.
This proposal would increase the assessment rate collected from
handlers for the 2016-17 through the 2018-19 crop years from $0.03 to
$0.04 per pound of almonds received. Of the $0.04 per pound assessment,
60 percent (or $0.024 per pound) would be available as credit-back for
handlers who conduct their own promotional activities, consistent with
Sec. 981.441 of the order's regulations and subject to Board approval.
The Board unanimously recommended 2016-17 expenditures of $69,897,626
and an assessment rate of $0.04 per pound of almonds received. The
proposed assessment rate of $0.04 is $0.01 higher than the 2015-16
rate, and the credit-back portion of $0.024 per pound would be $0.006
higher than the current credit-back portion of $0.018. The quantity of
assessable almonds for the 2016-17 crop year is estimated at
1,835,290,000 pounds.
This would provide estimated assessment revenue of $62,262,213,
which reflects credit-back reimbursements and organic exemptions. In
addition, it is anticipated that $20,907,722 will be provided by other
sources, including interest income, MAP funds, and operating reserve
funds. When combined, revenue from these sources would be adequate to
cover budgeted expenses.
The major expenditures recommended by the Board for the 2016-17
crop year include $8,404,000 for Operations Expenses, $1,000,000 for
Board AIM Initiatives, $5,625,000 for Crop of Choice Initiatives,
$2,000,000 for Reputation Management, $1,843,331 for Production
Research, $1,039,790 for Environmental Research, $1,640,000 for
Scientific Affairs/Nutrition, $38,583,756 for Global Market
Development, $5,100,000 for Nut of Choice Initiatives, $1,045,500 for
Technical & Regulatory Affairs, $2,436,220 for Industry Services,
$790,800 for Almond Quality & Food Safety, and $389,229 for Corporate
Technology.
Budgeted expenses for these items in 2015-16 were $7,904,000 for
Operations Expenses, $1,500,000 for Board AIM Initiatives, $0 for Crop
of Choice Initiatives, $1,826,350 for Reputation Management, $1,843,331
for Production Research, $1,039,790 for Environmental Research,
$1,640,000 for Scientific Affairs/Nutrition, $38,583,756 for Global
Market Development, $0 for Nut of Choice Initiatives, $1,045,500 for
Technical & Regulatory Affairs, $2,436,220 for Industry Services,
$790,800 for Almond Quality & Food Safety, and $389,229 for Corporate
Technology.
The Board estimates a production increase of thirty percent, or 600
million pounds, by the 2019-20 crop year. This increase is nearly as
much as their largest market currently consumes. Increased market
development investment, as well as new marketing programs will be
required to successfully market the additional supply. Additional
investment in research is also needed to address concerns such as:
Changing water supply and quality systems; air quality and how it
relates to harvesting, pesticide, and energy use; and bee health.
Accordingly, the three-year higher assessment rate is needed to fund
the Board's new Nut of Choice marketing program and Crop of Choice
research activities. The Board anticipates that by the 2019-20 crop
year, the increased production assessed at the reinstated $0.03 per
pound rate should generate sufficient revenue to cover the anticipated
expenditures at that time.
Prior to arriving at this budget and assessment rate, the Board
held a strategic planning session in February 2016. The Board also
considered recommendations made from its various committees including
the Global Market Development Committee, Production Research Committee,
and Environmental Committee. Alternative expenditure levels were
discussed, based upon the relative value of various activities to the
almond industry. The Board ultimately determined that 2016-17
expenditures of $69,897,626 were appropriate, and the recommended
assessment rate plus, income from other sources and operation reverse
funds, would generate sufficient revenue to meet its expenses.
A review of historical information and preliminary information
pertaining to the upcoming crop year indicates that the grower price
for the 2016-17 season could range between $3.21 and $3.19 per pound of
almonds. Therefore, the estimated assessment revenue for the 2016-17
crop year (disregarding any amounts credited pursuant to Sec. 981.41
and Sec. 981.441) as a percentage of total grower revenue could range
between 1.24 and 1.25 percent, respectively.
This action would increase 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 growers. However, these costs
would be offset by the benefits derived by the operation of the
marketing order. In addition, the Board's meeting was widely publicized
throughout the California almond industry and all interested persons
were invited to attend the meeting and participate in Board
deliberations on all issues. Like all Board meetings, the April 12,
2016, meeting was a public meeting and all entities, both large and
small, were able to express views on this issue. Finally, interested
persons are invited to submit comments on this proposed rule, including
the regulatory and informational impacts of this action on small
businesses.
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
[[Page 46619]]
Management and Budget (OMB) and assigned OMB No. 0581-0178 (Vegetable
and Specialty Crops.) No changes in those requirements are necessary as
a result of this action. Should any changes become necessary, they
would be submitted to OMB for approval.
This proposed rule would impose no additional reporting or
recordkeeping requirements on either small or large California almond
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 the internet and other information technologies to provide
increased opportunities for citizen access to Government information
and services, and for other purposes.
USDA has not identified any relevant Federal rules that duplicate,
overlap, or conflict with this action.
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/rules-regulations/moa/small-businesses. Any questions
about the compliance guide should be sent to Antoinette Carter at the
previously-mentioned address in the FOR FURTHER INFORMATION CONTACT
section.
A 15-day comment period is provided to allow interested persons to
respond to this proposed rule. Fifteen days is deemed appropriate
because: (1) The 2016-17 crop year begins on August 1, 2016, and the
marketing order requires that the rate of assessment for each crop year
apply to all assessable almonds handled during such crop year; (2) the
Board needs to have sufficient funds to pay its expenses which are
incurred on a continuous basis; and (3) handlers are aware of this
action which was unanimously recommended by the Board at a public
meeting.
List of Subjects in 7 CFR Part 981
Almonds, Marketing agreements, Nuts, Reporting and recordkeeping
requirements.
For the reasons set forth in the preamble, 7 CFR part 981 is
proposed to be amended as follows:
PART 981--ALMONDS GROWN IN CALIFORNIA
0
1. The authority citation for 7 CFR part 981 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
0
2. Section 981.343 is revised to read as follows:
Sec. 981.343 Assessment rate.
For the period August 1, 2016, through July 31, 2019, the
assessment rate shall be $0.04 per pound for California almonds. Of the
$0.04 assessment rate, 60 percent per assessable pound is available for
handler credit-back. On and after August 1, 2019, an assessment rate of
$0.03 per pound is established for California almonds. Of the $0.03
assessment rate, 60 percent per assessable pound is available for
handler credit-back.
Dated: July 12, 2016.
Elanor Starmer,
Administrator, Agricultural Marketing Service.
[FR Doc. 2016-16814 Filed 7-15-16; 8:45 am]
BILLING CODE 3410-02-P