[Federal Register Volume 69, Number 78 (Thursday, April 22, 2004)]
[Rules and Regulations]
[Pages 21692-21695]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-9135]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Docket No. FV04-981-1 FIR]


Almonds Grown in California; Decreased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (USDA) is adopting, as a final 
rule, without change, an interim final rule, which decreased the 
assessment rate established for the Almond Board of California (Board) 
for the 2003-04 and subsequent crop years from $0.025 to $0.020 per 
pound of almonds received. The Board locally administers 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 August 1 and ends July 31. The assessment rate will 
remain in effect indefinitely unless modified, suspended, or 
terminated.

EFFECTIVE DATE: May 24, 2004.

FOR FURTHER INFORMATION CONTACT: Toni Sasselli, Marketing Assistant, or 
Martin Engeler, Assistant Regional Manager, California Marketing Field 
Office, Marketing Order Administration Branch, Fruit and Vegetable 
Programs, AMS, USDA, 2202 Monterey Street, Suite 102B, Fresno, 
California 93721; telephone: (559) 487-5901, Fax: (559) 487-5906; or 
George Kelhart, Technical Advisor, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence 
Avenue, SW., STOP 0237, Washington, DC 20250-0237; telephone: (202) 
720-2491, Fax: (202) 720-8938.
    Small businesses may request information on complying with this 
regulation by contacting Jay Guerber, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence 
Avenue, SW., STOP 0237, Washington, DC 20250-0237; telephone: (202) 
720-2491, Fax: (202) 720-8938, or E-mail: [email protected].

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 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.''
    USDA 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

[[Page 21693]]

beginning August 1, 2003, 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 USDA 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 USDA 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 USDA'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 continues to decrease the assessment rate established for 
the Board for the 2003-04 and subsequent crop years from $0.025 to 
$0.020 per pound of almonds received.
    The California almond marketing order provides authority for the 
Board, with the approval of USDA, 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 1998-99 and subsequent crop years, the Board recommended, 
and USDA approved, an assessment rate that would continue in effect 
from crop year to crop year unless modified, suspended, or terminated 
by USDA upon recommendation and information submitted by the Board or 
other information available to USDA.
    The Board met on May 15, 2003, and unanimously recommended 2003-04 
expenditures of $20,358,304. In comparison, budgeted expenditures for 
2002-2003 were $19,407,437. An assessment rate of $0.025 was 
established for the 1998-99 crop year and remained in effect through 
the 2002-2003 crop year.
    The major expenditures recommended by the Board for the 2003-04 
crop year include $6,375,312 for advertising and market research, 
$7,587,750 for public relations and other promotion and education 
programs including a Market Access Program (MAP) administered by USDA's 
Foreign Agriculture Service (FAS), $1,500,000 for salaries and wages, 
$1,000,000 for nutrition research, $850,332 for production research, 
$823,948 for quality programs, $40,000 for econometric modeling and 
analysis, $254,903 for environmental programs, $200,000 for travel, 
$122,472 for office rent, $120,750 for a crop estimate, $159,836 for 
compliance audits and analysis, and $90,780 for an acreage survey.
    Budgeted expenses for these items in 2002-03 were $6,125,312 for 
advertising and market research, $6,877,750 for public relations and 
other promotion and education programs including a MAP program 
administered by FAS, $1,760,000 for salaries and wages, $1,000,000 for 
nutrition research, $622,131 for production research, $472,964 for 
quality programs, $172,500 for econometric modeling and analysis, 
$230,550 for travel, $122,850 for office rent, $120,762 for a crop 
estimate, $125,000 for compliance audits and analysis, and $98,713 for 
acreage survey.
    In September 2003, the Board recommended an increase in 2003-04 
expenses due to an increased availability of funds from FAS. USDA 
approved an increased expenditure level of $20,547,385.
    The Board met again on November 6, 2003, and recommended decreasing 
the assessment rate from $0.025 per pound to $0.020 per pound of 
almonds handled. Of the $0.020 per pound assessment, $0.01 per pound is 
available as credit-back for handlers who conduct their own promotional 
activities consistent with Sec.  981.441 of the order's regulations and 
subject to Board approval. The Board recommended reducing the 
assessment rate because the 2002-03 financial audit revealed that the 
Board's financial reserve exceeded the amount authorized under Sec.  
981.81(c) of the order.
    Section 981.81(c) authorizes a financial reserve of approximately 
one-half year's budgeted expenses. One-half of the 2003-04 crop year's 
budgeted expenses of $20,547,385 equals $10,273,692. The financial 
audit revealed a reserve of $12,681,596 at the end of the 2002-03 crop 
year, which is $2,407,904 more than the authorized reserve.
    Section 981.81(b) of the order requires excess funds held in the 
financial reserve to be refunded to handlers or used to reduce the 
assessment rate in the subsequent crop year. The Board considered both 
options, and recommended the latter. By reducing the assessment rate 
and projected assessment revenue, the Board's estimated financial 
reserve at the end of the 2003-04 crop year will be $7,338,087, which 
is within the parameters authorized under the order.
    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 907,200,000 pounds of assessable almonds 
for the 2003-04 crop year. If realized, this will provide estimated 
assessment revenue of $9,072,000 from all handlers, and an additional 
$4,989,600 from those handlers who do not participate in the credit-
back program, for a total of $14,061,600. In addition, it is 
anticipated that $13,678,872 will be provided by other sources, 
including interest income, MAP funds, miscellaneous income, and 
reserve/carryover funds. When combined, revenue from these sources will 
be adequate to cover budgeted expenses. Any unexpended funds from the 
2003-04 crop year may be carried over to cover expenses during the 
succeeding crop year. As previously mentioned, funds in the reserve at 
the end of the 2003-04 crop year are estimated to be approximately 
$7,338,087, which is within the amount permitted by the order.
    The assessment rate will continue in effect indefinitely unless 
modified, suspended, or terminated by USDA upon recommendation and 
information submitted by the Board or other available information.
    Although this assessment rate is effective 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 USDA. Board meetings are open 
to the public and interested persons may express their views at these 
meetings. USDA 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 
2003-04 budget and those for

[[Page 21694]]

subsequent crop years will be reviewed and, as appropriate, approved by 
USDA.

Final Regulatory Flexibility Analysis

    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 6,250 producers of almonds in the 
production area and approximately 119 handlers subject to regulation 
under the marketing order. Small agricultural producers are defined by 
the Small Business Administration (13 CFR 121.201) as those having 
annual receipts less than $750,000, and small agricultural service 
firms are defined as those whose annual receipts are less than 
$5,000,000.
    Data for the most recently completed crop year indicate that about 
38 percent of the handlers shipped over $5,000,000 worth of almonds and 
about 62 percent of handlers shipped under $5,000,000 worth of almonds. 
In addition, based on production and grower price data reported by the 
California Agricultural Statistics Service (CASS), and the total number 
of almond growers, the average annual grower revenue is estimated to be 
approximately $190,000. Based on the foregoing, the majority of 
handlers and producers of almonds may be classified as small entities.
    This rule continues to decrease the assessment rate established for 
the Board and collected from handlers for the 2003-04 and subsequent 
crop years from $0.025 to $0.020 per pound of almonds. Of the $0.020 
per pound assessment, $0.01 per pound is available as credit-back for 
handlers who conduct their own promotional activities consistent with 
Sec.  981.441 of the order's regulations and subject to Board approval. 
The Board initially recommended, and USDA approved, 2003-04 
expenditures of $20,358,304 and an unchanged assessment rate of $0.025 
per pound in May 2003. In September 2003, the Board recommended an 
increase in 2003-04 expenses due to an increased availability of funds 
from FAS. USDA approved an increased expenditure level of $20,547,385.
    On November 6, 2003, the Board subsequently recommended reducing 
the assessment rate to $0.020 per pound due to excess funds in the 
financial reserve. The 2002-03 crop year financial audit revealed that 
the Board's financial reserves exceeded the order's limitation of 
approximately one-half year's budgeted expenses, by $2,407,904. The 
assessment rate of $0.020 is $0.005 lower than the prior rate. The 
quantity of assessable almonds for the 2003-04 crop year is estimated 
at 907,200,000 pounds. Thus, the $0.020 assessment rate should provide 
$14,061,000 in assessment income and be adequate to meet this year's 
expenses, when combined with other revenues including financial 
reserves. The projected financial reserve at the end of 2003-04 is 
$7,338,087, which is within the parameters of the order.
    The major expenditures recommended by the Board for the 2003-04 
crop year include $6,375,312 for advertising and market research, 
$7,587,750 for public relations and other promotion and education 
programs including a MAP program administered by USDA's FAS, $1,500,000 
for salaries and wages, $1,000,000 for nutrition research, $850,332 for 
production research, $823,948 for quality programs, $40,000 for 
econometric modeling and analysis, $254,903 for environmental programs, 
$200,000 for travel, $122,472 for office rent, $120,750 for a crop 
estimate, $159,836 for compliance audits and analysis, and $90,780 for 
an acreage survey.
    Budgeted expenses for these items in 2002-03 were $6,125,312 for 
advertising and market research, $6,877,750 for public relations and 
other promotion and education programs including a MAP administered by 
FAS, $1,760,000 for salaries and wages, $1,000,000 for nutrition 
research, $622,131 for production research, $472,964 for quality 
programs, $172,500 for econometric modeling and analysis, $230,550 for 
travel, $122,850 for office rent, $120,762 for a crop estimate, 
$125,000 for compliance audits and analysis, and $98,713 for an acreage 
survey.
    The Board considered two available alternatives to remedy the 
excess financial reserve situation as provided for in Sec.  981.81(b) 
of the order: refund the excess funds to handlers, or reduce the 
assessment rate. After deliberating the issue, the Board recommended 
reducing the assessment rate.
    A review of historical information and preliminary information 
pertaining to the upcoming crop year indicates that the average grower 
price for the 2003-04 season could range between $1.50 and $1.80 per 
pound of almonds. Therefore, the estimated assessment revenue for the 
2003-04 crop year (disregarding any amounts credited pursuant to 
Sec. Sec.  981.41 and 981.441) as a percentage of total grower revenue 
could range between 1.1 and 1.3 percent.
    This action continues to decrease the assessment obligation imposed 
on handlers. Assessments are applied uniformly on all handlers, and 
some of the costs may be passed on to producers. However, decreasing 
the assessment reduces the burden on handlers, and may reduce the 
burden on producers. 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 November 6, 
2003, meeting was a public meeting and all entities, both large and 
small, were able to express views on this issue.
    This action 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.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this rule.
    An interim final rule concerning this action was published in the 
Federal Register on January 8, 2004 (69 FR 1269). Copies of the rule 
were mailed or sent via facsimile to all almond handlers. Finally, a 
copy of the rule was made available through the Internet by USDA and 
the Office of the Federal Register. No comments were received in 
response to the interim final rule.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab.html. Any questions about the compliance 
guide should be sent to Jay Guerber at the previously mentioned address 
in the FOR FURTHER INFORMATION CONTACT section.
    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,

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will tend to effectuate the declared policy of the Act.

List of Subjects in 7 CFR Part 981

    Almonds, Marketing agreements, Reporting and recordkeeping 
requirements.

PART 981--ALMONDS GROWN IN CALIFORNIA

0
Accordingly, the interim final rule amending 7 CFR part 981, which was 
published at 69 FR 1269 on January 8, 2004, is adopted as a final rule 
without change.

    Dated: April 19, 2004.
Kenneth C. Clayton,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 04-9135 Filed 4-21-04; 8:45 am]
BILLING CODE 3410-02-P