[Federal Register Volume 63, Number 177 (Monday, September 14, 1998)]
[Rules and Regulations]
[Pages 48995-48997]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-24535]



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 Rules and Regulations
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  Federal Register / Vol. 63, No. 177 / Monday, September 14, 1998 / 
Rules and Regulations  

[[Page 48995]]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Docket No. FV98-981-2 FR]


Almonds Grown in California; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule increases the assessment rate from $0.02 to $0.025 
per pound of almonds established for the Almond Board of California 
(Board) under Marketing Order No. 981 for the 1998-99 and subsequent 
crop years. The Board is responsible for local administration of the 
marketing order which regulates the handling of almonds grown in 
California. Authorization to assess almond handlers enables the Board 
to incur expenses that are reasonable and necessary to administer the 
program. The crop year began on August 1 and ends July 31. The 
assessment rate will remain in effect indefinitely unless modified, 
suspended, or terminated.

EFFECTIVE DATE: September 15, 1998.

FOR FURTHER INFORMATION CONTACT: Diane Purvis, Marketing Assistant, or 
Martin J. Engeler, Marketing Specialist, California Marketing Field 
Office, Fruit and Vegetable Programs, AMS, USDA, 2202 Monterey Street, 
Suite 102B, Fresno, California 93721; telephone: (209) 487-5901; Fax: 
(209) 487-5906; or George Kelhart, Technical Advisor, Marketing Order 
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, room 
2525-S, P.O. Box 96456, Washington, DC 20090-6456; telephone: (202) 
720-2491, Fax: (202) 205-6632. Small businesses may request information 
on compliance with this regulation by contacting Jay Guerber, Marketing 
Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 
room 2525-S, P.O. Box 96456, Washington, DC 20090-6456; telephone: 
(202) 720-2491, Fax: (202) 205-6632.

SUPPLEMENTARY INFORMATION: This 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 marketing 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 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 issued herein will be applicable to all assessable 
almonds beginning August 1, 1998, and continue until amended, 
suspended, or terminated. 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) 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 rule increases the assessment rate established for the Board 
for the 1998-99 and subsequent crop years from $0.02 per pound to 
$0.025 per pound.
    The California 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 an opportunity to participate and 
provide input.
    For the 1997-98 and subsequent crop years, the Board recommended, 
and the Department approved, an assessment rate that would continue in 
effect from crop year to crop year unless modified, suspended, or 
terminated by the Secretary upon recommendation and information 
submitted by the Board or other information available to the Secretary.
    The Board met on June 4, 1998, and unanimously recommended 1998-99 
expenditures of $13,049,437 and an assessment rate of $0.025 per pound 
of almonds. In comparison, last year's budgeted expenditures were 
$11,333,876. The assessment rate of $0.025 is $.005 higher than the 
rate currently in effect. The higher rate is needed primarily because 
of a smaller crop this year. The 1997-98 crop was initially estimated 
at 681,600,000 pounds compared to 528,000,000 pounds estimated for the 
1998-99 crop year. The higher assessment rate, when combined with other 
revenue sources, will generate adequate revenue to fund the recommended 
expenses and programs. The Board also recommended to continue the 
credit-back program whereby handlers can receive credit for their own 
promotional activities of up to $0.0125 per pound against their 
assessment obligation. Handlers not participating in this program will 
remit the entire $0.025 to the Board.
    The major expenditures recommended by the Board for the 1998-99 
crop year include $4,500,000 for paid generic advertising, $2,500,000 
for other domestic promotion programs, $1,495,000 for international 
promotion, $1,144,842 for salaries, $700,000 for nutrition research, 
$548,207 for

[[Page 48996]]

production research, $155,000 for market research, $125,000 for travel, 
$124,700 for quality control programs, $100,700 for crop estimates, and 
$100,000 for compliance audits. Budgeted expenses for these items in 
1997-98 were $3,408,000 for paid generic advertising, $3,174,000 for 
other domestic promotion programs, $794,043 for international 
promotion, $881,534 for salaries, $695,000 for nutrition research, 
$568,679 for production research, $125,000 for market research, $90,000 
for travel, $152,175 for quality control programs, $95,400 for crop 
estimates, and $92,500 for compliance audits.
    The assessment rate recommended by the Board was derived by 
considering anticipated expenses and production levels of California 
almonds, and additional pertinent factors. In its recommendation, the 
Board utilized an estimate of 528,000,000 pounds of assessable almonds 
for the 1998-99 crop year. If realized, this will provide estimated 
assessment revenue of $6,600,000 from all handlers, and an additional 
$3,630,000 from those handlers who do not participate in the credit-
back program, for a total of $10,230,000. In addition, it is 
anticipated that $2,819,437 will be provided by other sources, 
including interest income, Market Access Program reimbursement from the 
Department for international promotion activities, revenue generated 
from the Board's annual research conference, miscellaneous income, 
funds derived from the Board's authorized monetary reserve, and a grant 
from the State of California. When combined, revenue from these sources 
will be adequate to cover budgeted expenses. Any unexpended funds from 
the 1998-99 crop year may be carried over to cover expenses during the 
succeeding crop year. Funds in the reserve at the end of the 1998-99 
crop year are estimated to be approximately $3,500,000, which is within 
the maximum of approximately six months budgeted expenses as permitted 
by the order (Sec. 981.81).
    The assessment rate established in this rule will continue in 
effect indefinitely unless modified, suspended, or terminated by the 
Secretary upon recommendation and information submitted by the Board or 
other available information.
    Although this assessment rate will be in effect for an indefinite 
period, the Board will 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 the Department. Board meetings 
are open to the public and interested persons may express their views 
at these meetings. The Department will evaluate Board recommendations 
and other available information to determine whether modification of 
the assessment rate is needed. Further rulemaking will be undertaken as 
necessary. The Board's 1998-99 budget has been approved; and those for 
subsequent crop years will be reviewed and, as appropriate, approved by 
the Department.
    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 final 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 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 almonds in the 
production area and approximately 102 handlers subject to regulation 
under the marketing order. Small agricultural producers have been 
defined by the Small Business Administration (13 CFR 121.601) as those 
having annual receipts less than $500,000, and small agricultural 
service firms are defined as those whose annual receipts are less than 
$5,000,000.
    Currently, about 57 percent of the handlers ship under $5,000,000 
worth of almonds and 43 percent ship over $5,000,000 worth of almonds 
on an annual basis. In addition, based on reported acreage, production, 
and grower prices, and the total number of almond growers, the average 
annual grower revenue is estimated to be approximately $160,000. 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 rule increases the assessment rate established for the Board 
and collected from handlers for the 1998-99 and subsequent crop years 
from $0.02 per pound to $0.025 per pound. The Board unanimously 
recommended 1998-99 expenditures of $13,049,437 and an assessment rate 
of $0.025 per pound. This is compared to $11,333,876 budgeted for the 
1997-98 crop year and an assessment rate of $0.025 for 1998-99 that is 
$.005 higher than the 1997-98 rate. The quantity of assessable almonds 
for the 1998-99 crop year is estimated at 528,000,000 pounds. Income 
from assessments and other sources is expected to generate sufficient 
revenue to fund this year's expenses and programs. Any unexpended funds 
from the 1998-99 crop year may be carried over to cover expenses during 
the succeeding crop year.
    The major expenditures recommended by the Board for the 1998-99 
crop year include $4,500,000 for paid generic advertising, $2,500,000 
for other domestic promotion programs, $1,495,000 for international 
promotion, $1,144,842 for salaries, $700,000 for nutrition research, 
$548,207 for production research, $155,000 for market research, 
$125,000 for travel, $124,700 for quality control programs, $100,700 
for crop estimates, and $100,000 for compliance audits.
    Comparable expenditures recommended by the Board for the 1997-98 
crop year were $3,408,000 for paid generic advertising, $3,174,000 for 
other domestic promotion programs, $794,043 for international 
promotion, $881,534 for salaries, $695,000 for nutrition research, 
$568,679 for production research, $125,000 for market research, $90,000 
for travel, $152,175 for quality control programs, $95,400 for crop 
estimates, and $92,500 for compliance audits.
    The higher assessment rate is needed primarily because of a smaller 
crop this year. The 1997-98 assessable crop was initially estimated at 
681,600,000 pounds, compared to 528,000,000 for the 1998-99 crop year. 
The higher assessment rate will help generate adequate revenue to fund 
the recommended expenses and programs.
    Prior to arriving at the recommended expenditure level and 
assessment rate, the Board considered alternatives and ultimately 
concurred on the recommended programs and expenditure level, and 
determined a rate of $0.025 per pound of assessable almonds is 
necessary to generate adequate revenue to fund the recommended expenses 
and programs.
    A review of historical information and preliminary information 
pertaining to the upcoming crop year indicates that the grower price 
for the 1998-99 season could range between $1.50 and $2.00 per pound of 
almonds. Therefore, the estimated assessment revenue for the 1998-99 
crop year as a percentage of total grower revenue could range between 
.97 and 1.3 percent.

[[Page 48997]]

    This action increases 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 producers. However, these costs 
are 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 June 4, 1998, 
meeting was a public meeting and all entities, both large and small, 
were able to express views on this issue.
    This rule imposes 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.
    The Department has not identified any relevant Federal rules that 
duplicate, overlap, or conflict with this rule.
    A proposed rule concerning this action was published in the Federal 
Register on July 24, 1998 (63 FR 39755). Copies of the proposed rule 
were also mailed or sent via facsimile to all almond handlers. Finally, 
the proposal was made available through the Internet by the Office of 
the Federal Register.
    A 30-day comment period ending August 24, 1998, was provided for 
interested persons to respond to the proposal. One comment in support 
of the proposed rule was received from a large cooperative handler. 
This handler supports increasing the assessment rate and continuing the 
credit-back program mentioned earlier.
    The proposed regulatory language in Sec. 981.343 incorrectly stated 
that the assessment rate of $0.025 per pound of assessable almonds 
would apply on and after June 4, 1998. The date should have been August 
1, 1998, and has been corrected.
    After consideration of all relevant material presented, including 
the information and recommendation submitted by the Board, the comment 
received, and other available information, it is hereby found that this 
rule, as hereinafter set forth, will tend to effectuate the declared 
policy of the Act.
    Pursuant to 5 U.S.C. 553, it 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 the 1998-99 
crop year began on August 1, 1998, and the marketing order requires the 
assessment rate to apply to all almonds received during the 1998-99 and 
subsequent crop years. Further, handlers are already receiving 1998-99 
crop year almonds from growers, the Board needs to have sufficient 
funds to cover its expenses that are incurred on a continuous basis, 
and handlers are aware of this rule which was recommended unanimously 
at a public meeting. Also, a 30-day comment period was provided for in 
the proposed rule, and a comment was received in support of this action 
from a large cooperative almond handler.

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.

    2. Section 981.343 is revised to read as follows:


Sec. 981.343  Assessment rate.

    On and after August 1, 1998, an assessment rate of $0.025 per pound 
is established for California almonds. Of the $0.025 assessment rate, 
$0.0125 per assessable pound is available for handler credit-back.

    Dated: September 8, 1998.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-24535 Filed 9-11-98; 8:45 am]
BILLING CODE 3410-02-U