[Federal Register Volume 62, Number 129 (Monday, July 7, 1997)]
[Proposed Rules]
[Pages 36233-36235]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-17606]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Docket No. FV97-981-4 PR]


Almonds Grown in California; Amended Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would increase the assessment rate for the 
Almond Board of California (Board) under Marketing Order No. 981 for 
the 1997-98 and subsequent crop years. The Board is responsible for 
local administration of the marketing order

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which regulates the handling of almonds grown in California. 
Authorization to assess almond handlers would enable the Board to incur 
expenses that are reasonable and necessary to administer the program.

DATES: Comments must be received by July 22, 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. 
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: Martin Engeler or Mary Kate Nelson, 
Marketing Specialists, or Kurt J. Kimmel, Regional Manager, California 
Marketing Field Office, Fruit and Vegetable Division, 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, Fruit and Vegetable Division, AMS, USDA, 
room 2525-S, P.O. Box 96456, Washington, DC 20090-6456; telephone (202) 
720-2491, Fax: (202) 720-5698.

SUPPLEMENTARY INFORMATION: This 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, hereinafter 
referred to as the ``order.'' 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 proposal 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 issued herein would be applicable to all assessable 
almonds beginning August 1, 1997, and continuing until amended, 
suspended, or terminated. This proposal 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) 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. 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 to review the 
Secretary'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 proposal would increase the assessment rate established for 
the Board for the 1997-98 and subsequent crop years from 1 cent to 2 
cents per pound of almonds received by handlers.
    The almond marketing order provides authority for the Board, with 
the approval of the Department, to formulate an annual budget of 
expenses and collect assessments from handlers to administer the 
program. The members of the Board are producers 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 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 had an opportunity to participate 
and provide input.
    The Board met on May 9, 1997, and unanimously recommended 1997-98 
expenditures of $11,333,876.49 and an assessment rate of 2 cents per 
pound of almonds received by handlers. In comparison, last year's 
budgeted expenditures were $6,426,500. The primary reason for the 
increase for the upcoming crop year is the inclusion of funding for a 
generic paid advertising program. The assessment rate would be higher 
than last year's established rate of 1 cent per pound; however, the 
Board also recommended a credit-back program whereby handlers could 
receive credit for their own promotional activities of up to 1 cent per 
pound against their assessment obligation. Handlers not participating 
in this program would remit the entire 2 cents to the Board. For 
administrative purposes, the Board would separate the assessment into 
two portions when billing handlers; an administrative portion of 1 cent 
per pound and an advertising portion of 1 cent per pound. 
Implementation of the advertising portion of the assessment and the 
generic advertising program may be impacted by the outcome of 
litigation relative to advertising and promotion conducted under 
marketing orders. The Board recommended not implementing the 
advertising portion of the assessment until further action of the Board 
is taken.
    The Board recommended that the major expenditures for the 1997-98 
fiscal period should include $4,084,000 for information and research 
programs, $3,408,000 for paid generic advertising, $881,534 for 
salaries, $794,043 for international programs, $568,679 for production 
research, $95,400 for crop estimates, and $90,000 for travel. Budgeted 
expenses for major items in 1996-97 were $3,333,500 for information and 
research, $731,534 for salaries, $660,500 for international programs, 
$558,131 for production research, $91,160 for crop estimates, and 
$97,470 for travel.
    The assessment rate recommended by the Board was derived by 
considering anticipated expenses and production levels of California 
almonds, and additional pertinent factors. Production of edible almonds 
for the year is estimated at 681,600,000 pounds which should provide 
revenue of $6,816,000 from administrative assessments (681,600,000 
pounds at 1 cent per pound). In addition, it is anticipated that 
$3,408,000 would be derived from the portion of assessments eligible 
for credit-back but received by the Board from handlers who do not 
obtain credit for their own activities. Income derived from handler 
assessments, along with interest income, Market Access Program 
reimbursement for international promotion activities, research 
conference revenue, miscellaneous income, and funds derived from the 
Board's authorized monetary reserve would be adequate to cover budgeted 
expenses. Any unexpended funds from the 1997-98 crop year may be 
carried over to cover expenses during the first four months of the 
1998-99 crop year.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this 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 
business subject to such actions in order

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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 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 $5,000,000 
worth of almonds and 42 percent ship over $5,000,000 worth of almonds 
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.
    This proposed rule would increase the assessment rate established 
for the Board for the 1997-98 and subsequent crop years from 1 cent to 
2 cents per pound of almonds, of which up to 1 cent would be credited 
to handlers for their own promotional activities. The Board unanimously 
recommended 1997-98 expenditures of $11,333,876.49 and an assessment 
rate of 2 cents per pound of almonds. The assessment rate of 2 cents is 
1 cent more than the rate currently in effect. The primary reason for 
the increase for the upcoming crop year is the inclusion of funding for 
a generic paid advertising program.
    The Board recommended that the major expenditures for the 1997-98 
crop year should include $4,084,000 for information and research 
programs, $3,408,000 for paid generic advertising, $881,534 for 
salaries, $794,043 for international programs, $568,679 for production 
research, $95,400 for crop estimates, and $90,000 for travel. 
Alternative rates of assessment were considered during the budgeting 
process. Keeping the assessment rate at 1 cent was considered but not 
recommended because it would not generate the income necessary to 
administer the program. In order to fund the programs recommended by 
the Board for the 1997-98 season, it was determined that the assessment 
rate recommended by the Board, when applied to the preliminary crop 
estimate, would be necessary to generate sufficient revenue. Costs of 
various programs, desired and overall spending levels, and desired 
levels of monetary reserve were considered during the budgeting 
process.
    Handlers' receipts of assessable almonds for the year are estimated 
at 681,600,000 pounds which should provide $10,224,000 in assessment 
income. Income derived from handler assessments, along with interest 
income, Market Access Program reimbursement, research conference 
revenue, miscellaneous income, and funds derived from the Board's 
authorized reserve would be adequate to cover budgeted expenses. Funds 
in the reserve would be kept within the maximum permitted by the order.
    A review of historical information and preliminary information 
pertaining to the upcoming crop year indicates that the grower price 
for the 1997-98 season could range between $1.00 and $1.50 per pound of 
almonds. Therefore, the estimated assessment revenue for the 1997-98 
crop year as a percentage of total grower revenue could range between 1 
and 1.5 percent.
    While this rule would impose some additional costs on handlers, the 
costs would be minimal and in the form of uniform assessments on all 
handlers. Some of the additional costs may be passed on to producers.
    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 May 
9, 1997, 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 information on the regulatory and 
informational impacts of this action on small businesses.
    This proposed rule would not impose any 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.
    The Department has not identified any relevant Federal rules that 
duplicate, overlap, or conflict with this rule.
    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, would tend to effectuate the declared policy of 
the Act.
    A 15-day comment period is provided to allow interested persons to 
respond to this proposal. Fifteen days is deemed appropriate because: 
(1) The Board needs to have sufficient funds to pay its expenses which 
are incurred on a continuous basis; (2) the 1997-98 crop year begins on 
August 1, 1997, and the marketing order requires that the rate of 
assessment for the crop year apply to all assessable California almonds 
handled during the crop year; and (3) handlers are aware of this action 
which was unanimously recommended by the Board at a public meeting and 
is similar to other budget actions issued in past years.

List of Subjects in 7 CFR Part 981

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

    For the reasons set forth in the preamble, it is proposed that 7 
CFR part 981 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. 981.343  [Amended]

    2. Section 981.343 is amended by removing ``July 1, 1996,'' and 
adding in its place ``August 1, 1997,'', by removing ``$0.01 cent'' and 
adding in its place ``2 cents,'' and by adding as the last sentence 
``Of the 2 cent assessment rate, 1 cent per assessable pound is 
available for handler credit-back.''

    Dated: June 30, 1997.
Eric M. Forman,
Acting Director, Fruit and Vegetable Division.
[FR Doc. 97-17606 Filed 7-3-97; 8:45 am]
BILLING CODE 3410-02-P