[Federal Register Volume 62, Number 69 (Thursday, April 10, 1997)]
[Proposed Rules]
[Pages 17569-17572]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-9187]


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 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. 62, No. 69 / Thursday, April 10, 1997 / 
Proposed Rules  

[[Page 17569]]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Docket No. FV-97-981-2 PR]


Almonds Grown in California; Interhandler Transfers of Reserve 
Obligation

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposal invites comments on implementing regulations to 
authorize interhandler transfers of reserve obligations. This rule also 
announces the Agricultural Marketing Service's (AMS) intention to 
request a revision to the currently approved information collection 
requirements issued under the marketing order. The almond marketing 
order regulates the handling of almonds grown in California and is 
administered locally by the Almond Board of California (Board). This 
rule would allow the Board to implement authority contained in the 
marketing order to authorize handlers to transfer reserve withholding 
obligations to other handlers. It would provide handlers with an 
additional option to satisfy reserve obligations. If implemented, this 
rule would enhance the utility and flexibility of the volume control 
regulations while benefiting producers, handlers, and consumers.

DATES: Comments must be received by June 9, 1997.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. Comments must be sent in triplicate to the 
Docket Clerk, Fruit and Vegetable Division, AMS, USDA, room 2525-S, 
P.O. Box 96456, Washington, DC 20090-6456, Fax (202) 720-5698. All 
comments should reference the docket number and the date and page 
number of this issue of the Federal Register and will be made 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, F&V, AMS, USDA, room 
2530-S, P.O. Box 96456, Washington, DC 20090-6456; telephone: (202) 
720-1509, Fax (202) 720-5698; or Martin Engeler, California Marketing 
Field Office, Marketing Order Administration Branch, F&V, AMS, USDA, 
2202 Monterey Street, suite 102B, Fresno, California 93721; telephone: 
(209) 487-5901, Fax (209) 487-5906. Small businesses may request 
information on compliance with this regulation by contacting Jay 
Guerber, Marketing Order Administration Branch, F&V, AMS, USDA, room 
2525-S, P.O. Box 96456, Washington, DC, 20090-6456, telephone: (202) 
720-2491 or Fax (202) 720-5698.

SUPPLEMENTARY INFORMATION: This proposal is issued under Marketing 
Agreement and Order No. 981 (7 CFR part 981), both as amended, 
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 (Department) is issuing this rule in 
conformance with Executive Order 12866.
    This proposal has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to have retroactive effect. 
This proposal will not preempt any State or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with 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 request a modification of the order or to be exempted 
therefrom. A 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 to review the Secretary's 
ruling on the petition, provided an action is filed not later than 20 
days after date of the entry of the ruling.
    This proposal invites comments on implementing regulations 
authorizing interhandler transfers of reserve obligations. Sections 
981.45 through 981.60 set forth the authority to implement volume 
control regulations under the order by establishing salable and reserve 
percentages of almonds. Annually, the Board meets to review projected 
crop estimates and marketing conditions for the coming season. 
Variations in production can cause wide fluctuations in prices. These 
swings in supplies and price levels can result in market instability 
and uncertainty for growers, handlers, buyers, and consumers.
    If it is determined a reserve is warranted, the Board recommends to 
the Secretary the salable and reserve percentages to be placed on the 
almond crop. If a reserve is established, handlers are required to 
refrain from selling to normal market outlets a quantity of almonds 
equal to the reserve percentage. This percentage becomes the handlers' 
reserve withholding obligation. Handlers must either maintain product 
in inventory for possible release at a later date or dispose of product 
to secondary reserve outlets to satisfy their reserve obligation. The 
last season a reserve was in effect was during the 1994-95 crop year.
    Section 981.55 of the order was amended by final order dated June 
26, 1996 (61 FR 32917) to include a provision that allows handlers to 
transfer reserve withholding obligation to other handlers. Prior to the 
amendment to the order, Sec. 981.55 authorized only the transfer of 
almonds (not reserve almonds) or reserve credits to other handlers. 
Reserve credits are issued to handlers when they dispose of almonds to 
secondary outlets in satisfaction of their reserve obligation. Handlers 
can transfer excess credits to other handlers. The receiving handler 
can use the credit to meet all or a portion of its reserve obligation. 
This section of the order further states that the terms and conditions 
implementing the provision must be recommended by the Board and 
approved by the Secretary. Adding a third option by

[[Page 17570]]

amendment to the order was intended to provide more flexibility for 
handlers in satisfying their reserve obligation.
    At a Board meeting held on February 18, 1997, the Board unanimously 
recommended implementing the third option under Section 981.55 
concerning reserve withholding obligation transfers by making 
appropriate changes to the rules and regulations. This proposal would 
enhance the utility and flexibility of the volume control regulations. 
It would provide handlers with an additional method of satisfying 
reserve obligations.
    Currently, Sec. 981.455 contains three paragraphs setting forth 
rules and regulations regarding interhandler transfers of almonds. 
These paragraphs set forth procedures for: (1) Transferring non-reserve 
almonds; (2) transferring reserve credits; and (3) transferring 
inedible almond obligations. The Board's proposal recommends adding a 
new paragraph including procedures for transferring reserve withholding 
obligations.
    This rule would expand the options available to handlers in the 
event a reserve is implemented. The ability to transfer reserve 
obligations would particularly benefit those handlers who do not stay 
in business all year and do not have facilities for storage of reserve 
almonds. Such handlers are traditionally the smaller handlers in the 
industry. Storage and other costs associated with maintaining reserve 
inventory or disposing of product to secondary outlets could be 
reduced. This rule would provide another option for handlers to choose 
from in satisfying their reserve obligations that may better suit their 
operation.
    The objective of the reserve provisions is to keep a certain 
quantity of almonds off the market in order to maintain market 
stability. The additional flexibility in the reserve provisions is 
expected to improve compliance among handlers, which in turn would 
maintain the integrity of the volume control regulations.
    In order to ensure that adequate procedures are in place to monitor 
transfer of reserve obligations among handlers, the Board recommended 
modifying ABC Form 11 which currently covers interhandler transfers of 
reserve credits. New information would be added to the form to properly 
document reserve obligation transfers. Almond handlers wanting to 
transfer their reserve obligation to another handler would complete one 
portion of revised Form 11 and forward the form to the receiving 
handler. The receiving handler would complete their portion of the form 
and submit it to the Board. Authorized Board personnel would review, 
and if appropriate, approve the transfer. The Board would then submit 
copies of the forms to involved parties.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this action 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 
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 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 97 handlers of California almonds who are 
subject to regulation under the marketing order and approximately 7,000 
almond producers in the regulated area. Small agricultural service 
firms have been defined by the Small Business Administration (13 CFR 
121.601) as those having annual receipts of less than $5,000,000, and 
small agricultural producers are defined as those having annual 
receipts of less than $500,000.
    Currently, about 58 percent of the handlers ship under $5 million 
of almonds and 42 percent ship over $5 million on an annual basis. In 
addition, based on acreage, production, and grower prices reported by 
the National Agricultural Statistics Service, and the total number of 
almond growers, the average annual grower revenue is approximately 
$156,000. In view of the foregoing, it can be concluded that the 
majority of handlers and producers of California almonds may be 
classified as small entities.
    Sections 981.45 through 981.60 of the almond marketing order 
provide authority to implement volume control regulations by 
establishing salable and reserve percentages of almonds. If it is 
determined a reserve is warranted, the Board recommends to the 
Secretary the salable and reserve percentages to be placed on the 
almond crop. If a reserve is established, handlers are required to not 
sell to normal market outlets a quantity of almonds equal to the 
reserve percentage. Handlers must either maintain product in inventory 
for possible release at a later date or dispose of product to lower 
value reserve outlets to satisfy their reserve obligation. These lower 
value outlets are primarily crushing for oil and animal feed.
    Section 981.55 of the order provides authority for the interhandler 
transfer of almonds and reserve credits. This section was recently 
amended to include authority for interhandler transfer of reserve 
obligations. This proposed rule would implement the authority to 
transfer reserve withholding obligations by revising Sec. 981.455 of 
the administrative rules and regulations accordingly. This proposal 
would provide another option, in addition to those that appear in that 
section, for handlers to satisfy their reserve obligations. The ability 
to transfer reserve obligations would particularly benefit those 
handlers who do not stay in business all year and do not have 
facilities for storage of reserve almonds. Such handlers are 
traditionally the smaller handlers in the industry. Storage and other 
costs associated with maintaining reserve inventory or disposing of 
product to secondary outlets could be reduced. This rule would provide 
another option for handlers to choose from in satisfying their reserve 
obligations that may better suit their operation.
    In past years, handlers either had to maintain product in inventory 
or dispose of it in approved reserve outlets to satisfy their 
withholding obligation, as discussed earlier. Those handlers choosing 
to maintain product in inventory must locate storage facilities and 
incur storage costs they may not otherwise incur, until the reserve is 
lifted. Storage costs vary, depending upon factors such as the type of 
facilities utilized and quantities involved. These costs are generally 
in the range of one cent per pound per month, with additional charges 
for moving product into and out of storage facilities. These costs 
could be incurred for approximately six months to a year and a half 
depending on the ultimate disposition of the reserve.
    Those handlers choosing to dispose of their reserve to approved 
outlets may save on storage costs, but receive a lower return on the 
sales than they may receive if sold in normal market channels if the 
reserve is ultimately released. Price levels for almonds used for 
crushing into oil are in the range of 28 to 35 cents per pound, while 
animal feed brings about two to three cents per pound. Price levels for 
sales to normal market outlets vary significantly from year to year 
depending on available supplies and market conditions. The additional 
option that would be provided by this proposal would allow handlers to 
make arrangements to transfer their reserve obligation to other 
handlers. Handlers could choose the most cost effective method of 
satisfying

[[Page 17571]]

their reserve obligations that best suits their operations. This 
proposed rule would provide more flexibility if volume control 
regulations under the almond marketing order are issued.
    A current form is being revised for handlers to supply the transfer 
information to the Board for its approval. The current form (ABC Form 
11) provides for handlers to transfer reserve credits. Information 
would be added to this form to collect information on transfers of 
withholding obligation. No additional burden would be added to the form 
because handlers would choose one of the options on the form. The forms 
current burden time of 5 minutes would not be changed. This action 
would not impose any significant additional reporting or recordkeeping 
requirements on either small or large almond handlers. The benefits of 
providing another tool to the industry to assist them in making 
business decisions far outweigh the estimated 5 minutes it would take 
to complete the form. Further, any additional reporting may be offset 
by reduced reporting for those handlers choosing to utilize this option 
in lieu of other options available for satisfying reserve obligations. 
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.
    The Department has not identified any relevant Federal rules that 
duplicate, overlap or conflict with this proposed rule. Information 
generated by State, Federal, and private sector reports pertains to 
almonds in general and does not contain specific producer and handler 
information. Therefore, such information would not be detailed enough 
to be used for the specific purposes required under the order.
    The amendment to the marketing order was voted on in a referendum 
and was overwhelmingly supported by almond growers. This proposal would 
establish procedures to implement the amendment that authorized 
transfers of reserve obligations. There are no alternatives that would 
result in the additional flexibility sought by the industry.
    In addition, the Board's meeting was widely publicized throughout 
the almond industry and all interested persons were invited to attend 
the meeting and participate in committee deliberations on all issues. 
Like all Board meetings, the February 18, 1997, meeting was a public 
meeting and all entities, both large and small, were able to express 
views on this issue. The Board itself is composed of ten members, of 
which five are handlers and five are growers, the majority of whom are 
small entities. Finally, interested persons are invited to submit 
information on the regulatory and informational impacts of this action 
on small businesses.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the AMS announces its intention to request a revision to a 
currently approved information collection for almonds grown in 
California.
    Title: Almonds Grown in California, Marketing Order 981.
    OMB Number: 0581-0071.
    Expiration Date of Approval: August 31, 1999.
    Type of Request: Intent to extend and revise a currently approved 
information collection.
    Abstract: The information collection requirements in this request 
are essential to carry out the intent of the AMAA, to provide the 
respondents the type of service they request, and to administer the 
California almond marketing order program, which has been operating 
since 1950.
    Several provisions of the marketing order were amended as a result 
of extensive formal rulemaking proceedings, including a referendum of 
growers. Section 981.55 of the Order was amended to authorize handlers 
to transfer reserve withholding obligations during the effective period 
of a reserve. On February 18, 1997, the Board unanimously recommended 
implementing accompanying regulations to correspond with this 
amendment. This notice entails modifying ABC Form 11, which covers 
reserve credit transfers, to include transfers of reserve withholding 
obligation.
    Handlers are already required to complete the form only during 
reserve years if they transfer reserve credits. This modification would 
authorize another option for handlers to dispose of their reserve 
obligation. This rule would necessitate adding data to this form 
requiring information from handlers on reserve obligation transfers. 
Almond handlers wanting to transfer their reserve obligation to another 
handler would complete their portion of the revised ABC Form 11. The 
initiating handler would forward the partially completed Form 11 to the 
handler agreeing to assume the obligation. When the receiving handler 
completes their portion of the form, it would transfer the form to 
authorized Board personnel for approval of the transfer. Following the 
authorization, the transfer would be deemed complete. Only handlers 
wanting to transfer reserve or reserve credits would be required to 
complete the form.
    The information collected is used only by authorized 
representatives of the USDA, including AMS, Fruit and Vegetable 
Division regional and headquarters staff, and authorized employees of 
the Board. Authorized Board employees and the industry are the primary 
users of the information and AMS is the secondary user.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 0.083 hours per response.
    Respondents: California almond growers, handlers and accepted users 
of inedible almonds.
    Estimated Number of Respondents: 7,658.
    Estimated Number of Responses per Respondent: 6,022.
    Estimated Total Annual Burden on Respondents: 2,512 hours.
    Comments: Comments are invited on: (1) Whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the agency, including whether the information will 
have practical utility; (2) the accuracy of the agency's estimate of 
the burden of the proposed collection of information, including the 
validity of the methodology and assumptions used; (3) ways to enhance 
the quality, utility, and clarity of the information to be collected; 
and (4) ways to minimize the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology.
    Comments should reference OMB No. 0581-0071 and the California 
Almond Marketing Order No. 981, and be sent to USDA in care of Kathleen 
Finn at the address above. All comments received will be available for 
public inspection during regular business hours at the same address.
    All responses to this notice will be summarized and included in the 
request for OMB approval. All comments will also become a matter of 
public record.
    A 60-day comment period is provided to allow interested persons to 
respond to this proposal.

List of Subjects in 7 CFR Part 981

    Almonds, Marketing agreements, Nuts, Reporting and recordkeeping 
requirements.


[[Page 17572]]


    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.


Sec. 981.455  [Amended]

    2. In Sec. 981.455, paragraph (c) is redesignated as paragraph (d) 
and a new paragraph (c) is proposed to be added to read as follows:


Sec. 981.455  Interhandler transfers.

* * * * *
    (c) Transfers of reserve withholding obligation. A handler may 
transfer reserve withholding obligation to other handlers pursuant to 
Sec. 981.55 after having filed with the Board an ABC Form 11 executed 
by both handlers. The Board shall approve the transfer upon receipt of 
the properly completed form.
* * * * *
    Dated: April 4, 1997.
Sharon Bomer Lauritsen,
Deputy Director, Fruit and Vegetable Division.
[FR Doc. 97-9187 Filed 4-9-97; 8:45 am]
BILLING CODE 3410-02-P