[Federal Register Volume 60, Number 57 (Friday, March 24, 1995)]
[Proposed Rules]
[Pages 15522-15523]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-7336]



 ========================================================================
 Proposed Rules
                                                 Federal Register
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 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. 60, No. 57 / Friday, March 24, 1995 / 
Proposed Rules  

[[Page 15522]]

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Docket No. FV94-981-4 PR]


Almonds Grown in California; Reduction of Expenses and Assessment 
Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule with request for comments.

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SUMMARY: This proposed rule invites comments on revising the expenses 
and assessment rate previously established under Marketing Order No. 
981 for the 1994-95 crop year. This proposal would reduce the budget of 
expenses and rate which almond handlers may be assessed for funding 
expenses by the Almond Board of California (Board) that are reasonable 
and necessary to administer the program.

DATES: Comments received by April 24, 1995, will be considered prior to 
issuance of a final rule.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this action. Comments must be sent in triplicate to the 
Docket Clerk, Fruit and Vegetable Division, AMS, USDA, P.O. Box 96456, 
Room 2523-S, Washington, DC 20090-6456, FAX 202-720-5698. Comments 
should reference the docket 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.

FOR FURTHER INFORMATION CONTACT: Kathleen M. Finn, Marketing 
Specialist, Marketing Order Administration Branch, Fruit and Vegetable 
Division, AMS, USDA, P.O. Box 96456, room 2536-S, Washington, DC 20090-
6456, telephone 202-720-1509, or FAX (202) 720-5698; or Martin Engeler, 
Assistant Officer-In-Charge, California Marketing Field Office, Fruit 
and Vegetable Division, AMS, USDA, 2202 Monterey Street, Suite 102B, 
Fresno, California 93721, telephone 209-487-5901, or FAX (209) 487-
5906.

SUPPLEMENTARY INFORMATION: This proposed rule is issued under Marketing 
Agreement and Order No. 981, both as amended [7 CFR part 981], 
regulating the handling of almonds grown in California. The marketing 
agreement and order are 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 (Department) is issuing this proposed 
rule in conformance with Executive Order 12866.
    This proposed rule has been reviewed under Executive Order 12778, 
Civil Justice Reform. Under the provisions of the marketing order now 
in effect, California almonds are subject to assessments. It is 
intended that the assessment rate as proposed herein will be applicable 
to all assessable almonds handled during the 1994-95 crop year, which 
began July 1, 1994, and ends June 30, 1995. This proposed rule would 
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), any 
handler subject to an order may file with the Secretary 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 
requesting 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 the Secretary 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 in equity to review the Secretary's 
ruling on the petition, provided a bill in equity is filed not later 
than 20 days after the date of the entry of the ruling.
    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA), the Administrator of the Agricultural Marketing 
Service (AMS) has considered the economic impact of this rule on small 
entities.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and the rules issued thereunder, are unique in 
that they are brought about through group action of essentially small 
entities acting on their own behalf. Thus, both statutes have small 
entity orientation and compatibility.
    There are approximately 7,000 producers of California almonds under 
this marketing order, and approximately 115 handlers. Small 
agricultural producers have been defined by the Small Business 
Administration [13 CFR 121.601] as those having annual receipts of less 
than $500,000, and small agricultural service firms are defined as 
those whose annual receipts are less than $5,000,000. The majority of 
California almond producers and handlers may be classified as small 
entities.
    A budget of expenses and rate of assessment for the 1994-95 crop 
year was recommended on May 18, 1994, by the Board, the agency 
responsible for local administration of the program. An interim final 
rule was issued in the Federal Register on July 14, 1994, [59 FR 35847] 
and a final rule was issued in the September 8, 1994 Federal Register 
[59 FR 46321]. Approved expenditures total $9,435,262 with an approved 
assessment rate of 2.25 cents per pound. Of the 2.25 cents per pound, 
handlers could receive credit-back against their assessment obligation 
up to one cent per pound for their own promotional expenditures. 
Specific explanations of various expenditure categories and comparisons 
with a prior period are contained in the aforementioned final rule.
    The Board met on September 14, 1994, and recommended, by a seven to 
two vote, postponing its paid advertising campaign and directly related 
activities until further notice. It also voted to postpone assessment 
billings pending evaluation of legal issues and future program 
activities. Generic public relations activities and other promotion-
related activities to which the Board was contractually committed at 
that time are to be continued. This action was taken as a result of 
uncertainty created by legal [[Page 15523]] decisions regarding the 
Board's former advertising and promotion program.
    Specifically, the Ninth Circuit Court of Appeals ruled in December 
1993, that aspects of the Board's former advertising and promotion 
program in the 1980's were unconstitutional. On remand, the district 
court subsequently awarded plaintiff handlers refunds of assessments 
and other money spent under the program. This decision was issued on 
September 6, 1994, which led to the Board's actions to postpone 
advertising activities at its September 14, 1994, meeting. The district 
court's remand decision is currently being appealed. In addition, 
several handlers filed legal challenges to the Board's current credit-
back advertising and promotion program, pursuant to Section 
608(c)(15)(A) of the Act.
    The Board again met on November 30, 1994, and recommended, by a 
seven to three vote, reducing the assessment rate by eliminating the 
portion applicable to credit-back to handlers for their own promotional 
activities (one cent), and by eliminating the portion of the remaining 
assessment applicable to generic promotion activities. The resulting 
assessment rate the Board recommended handlers pay was .47 cents per 
pound. Concurrently, the Board again postponed assessment billings 
pending further evaluation of the Board's financial status. These 
actions were taken because of the apparent lack of support by some 
handlers at the present time for generic promotion and credit-back 
programs, demonstrated by legal challenges filed by such handlers 
representing a significant portion of the industry volume. One Board 
member commented that since the handlers who have filed legal 
challenges are not likely to pay the advertising assessment, it is not 
equitable for the remainder of the industry to shoulder the expense of 
an advertising program.
    The Board met again on February 1, 1995, and recommended, by a six 
to four vote, to further reduce the assessment rate. The Board 
recommended an assessment rate of .25 cents per pound. This action was 
taken after the Board further evaluated its financial position and 
current and future program activities.
    If implemented and collected, an assessment rate of .25 cents per 
pound will generate income of $1,675,000 based on an estimated 
assessable crop of 670 million pounds. When combined with cash and cash 
equivalents held by the Board, this would provide the Board with 
sufficient income to meet its administrative expenses and those 
promotional expenses to which it is contractually obligated for the 
remainder of the current fiscal year.
    To reduce the budget of expenses previously approved ($9,435,262), 
the Board deleted the funds budgeted for reserve replenishment 
($300,000) and at its November 30, 1994, meeting, postponed a major 
portion ($3.9 million) of the $4.7 million funds budgeted for 
promotional activities. These revisions would reduce the budget to 
$5,235,262. The reduced budget would provide the Board with sufficient 
capital to carry into the next fiscal year to finance operations prior 
to collection of future assessments.
    Concerns were raised that the reduction of the assessment rate mid-
way through the crop year may generate complaints from those handlers 
who relied on the final rule of September 8, 1994, which established an 
assessment rate of 2.25 cents per pound, of which handlers could 
receive credit-back up to one cent per pound for their own promotional 
expenditures. Some handlers have incurred expenses that would be 
eligible for credit-back under the provisions of that rule.
    If the assessment rate is reduced with no portion being creditable, 
there will be no assessment for these handlers to claim credit-back 
against. However, an assessment rate of .25 cents per pound is 
significantly lower than the current rate of 2.25 cents. Under the 
current established assessment of 2.25 cents, if handlers claimed 
credit-back for the entire one cent, they would still be required to 
pay 1.25 cents per pound to the Board. Handlers would pay significantly 
less even if they conducted advertising for which they believed credit-
back would be obtained. In addition, benefits are derived from 
advertising undertaken by these handlers.
    This action would reduce the assessment obligation imposed on 
handlers. The assessments would be uniform for all handlers. The 
assessment cost would be offset by the benefits derived by the 
operation of the marketing order. Therefore, the Administrator of the 
AMS has determined that this action would not have a significant 
economic impact on a substantial number of small entities.
    Interested persons are invited to submit their views and comments 
on this proposal. Comments received within 30 days of publication of 
this proposed rule in the Federal Register will be considered prior to 
any final action being taken.
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

    1. The authority citation for 7 CFR part 981 continues to read as 
follows:

    Authority: 7 U.S.C. 601-674.

    2. Section 981.341 is revised to read as follows:


Sec. 981.341  Expenses and assessment rate.

    Expenses of $5,235,262 by the Almond Board of California are 
authorized for the crop year ending June 30, 1995. An assessment rate 
for the crop year payable by each handler in accordance with 
Sec. 981.81 is fixed at .25 cents per kernel pound of almonds. Of the 
.25 cents assessment rate, none is available for handler credit-back 
pursuant to Sec. 981.441.

    Dated: March 21, 1995.
Sharon Bomer Lauritsen,
Deputy Director, Fruit and Vegetable Division.
[FR Doc. 95-7336 Filed 3-23-95; 8:45 am]
BILLING CODE 3410-02-W