[Federal Register Volume 60, Number 95 (Wednesday, May 17, 1995)]
[Rules and Regulations]
[Pages 26341-26343]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-12145]



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[[Page 26342]]

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Docket No. FV94-981-4 FR]


Almonds Grown in California; Reduction of Expenses and Assessment 
Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule revises the expenses and assessment rate previously 
established under Marketing Order No. 981 for the 1994-95 crop year. 
This rule reduces 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.

EFFECTIVE DATE: Effective July 1, 1994, through June 30, 1995.

FOR FURTHER INFORMATION CONTACT: Kathleen M. Finn, Marketing 
Specialist, Marketing Order Administration Branch, Fruit and Vegetable 
Division, AMS, USDA, P.O. Box 96456, room 2522-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 final 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 rule in 
conformance with Executive Order 12866.
    This 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 issued 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 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), 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 totalled $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 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 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 [[Page 26343]] 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.
    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 
will 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 will reduce the budget to 
$5,235,262. The reduced budget will 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.
    Under this assessment rate reduction, there is no assessment for 
these handlers to claim credit-back against. However, an assessment 
rate of .25 cents per pound is significantly lower than the previously 
established rate of 2.25 cents. Under the previous 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 will 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.
    A proposed rule concerning this rule was published in the March 24, 
1995, Federal Register (60FR 15523), with a 30-day comment period. Two 
comments were received.
    The first comment received was from an independent handler who was 
concerned that some handlers will make their final accountings to 
growers prior to the finalization of the proposed rule. If handlers 
make final payment to their growers based on the proposed assessment 
and USDA modifies the proposal, the commenter states that some of these 
handlers will file petitions against USDA for modifying the proposal 
under section 608c(15)(A) of the Act. However, this final rule does not 
modify the proposed rule and both handlers and growers had adequate 
notice of this change. In addition, the marketing order does not 
regulate contractual relationships between handlers and growers.
    The second comment was received from the Office of Chief Counsel 
for Advocacy of the United States Small Business Administration (SBA). 
The SBA contended that although it concurs with the cancellation of the 
advertising component of the order until legal disputes are resolved, 
USDA's assertion that this cancellation of the advertising program 
would not have a significant economic impact on a substantial number of 
small entities was illogical. SBA contends that rational businesses are 
not going to subject themselves to the increased paperwork generated by 
the advertising program for insignificant economic gain and USDA 
appears to be avoiding its responsibilities under the RFA.
    Although SBA's comment seems to relate to the implementation of the 
almond promotional program, rather than the elimination of that 
program, consideration was given to the impact of this rule on large 
and small handlers. As stated previously in this final rule and in the 
proposed rule, concerns were raised about the handlers who have 
incurred expenses that would be eligible for credit-back. It was 
determined that handlers will pay significantly less even if they 
conducted advertising for which they believed they would be entitled to 
credit-back as well as derive benefits from the advertising they 
conducted.
    Another determination made in this rule and in the proposed rule 
was that the action taken by the Board to minimize financial liability 
in the event the pending litigation is decided unfavorably to the 
Board, is sensible and reduces economic risk to handlers.
    For the above reasons, USDA disagrees with the SBA's assertion that 
this action fails to meet the requirements of the RFA. The program's 
impact on small businesses has been properly addressed in this document 
and in the proposed rule.
    This rule reduces the assessment obligation imposed on handlers. 
The assessments are uniform for all handlers. The assessment cost will 
be offset by the benefits derived by the operation of the marketing 
order. Therefore, the Administrator of the AMS has determined that this 
action will not have a significant economic impact on a substantial 
number of small entities.
    After consideration of the Board's recommendations and other 
relevant information presented, it is found that this final rule 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: (1) This 
rule reduces the assessment rate currently in effect; (2) this rule 
should be in effect as soon as possible because the 1994 crop year 
began on July 1, 1994; and (3) the proposed rule provided a 30-day 
comment period and the only comments received did not oppose the 
reduction.

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 
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.

    Note: The following section will not appear in the Code of 
Federal Regulations.

    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: May 11, 1995.
Sharon Bomer Lauritsen,
Deputy Director, Fruit and Vegetable Division.
[FR Doc. 95-12145 Filed 5-16-95; 8:45 am]
BILLING CODE 3410-02-P