[Federal Register Volume 69, Number 115 (Wednesday, June 16, 2004)]
[Proposed Rules]
[Pages 33584-33587]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-13690]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Docket No. FV04-981-3 PR]


Almonds Grown in California; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule would increase the assessment rate established for 
the Almond Board of California (Board) for the 2004-05 and subsequent 
crop years from $0.020 to $0.025 per pound of almonds received. Of the 
$0.025 per pound assessment, $0.014 would be available as credit-back 
for handlers who conduct their own promotional activities. 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

[[Page 33585]]

necessary to administer the program. The crop year begins August 1 and 
ends July 31. The assessment rate will remain in effect indefinitely 
unless modified, suspended, or terminated.

DATES: Comments must be received by June 28, 2004.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent to the Docket Clerk, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, 1400 Independence Avenue SW., STOP 0237, Washington, DC 
20250-0237; Fax: (202) 720-8938, E-mail: [email protected], or 
Internet: http://www.regulations.gov. 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, or can be viewed at: 
http://www.ams.usda.gov/fv/moab.html.

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.''
    The Department of Agriculture (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 proposed herein would be applicable to all 
assessable almonds beginning August 1, 2004, 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 would increase the assessment rate established for the 
Board for the 2004-05 and subsequent crop years from $0.020 to $0.025 
per pound of almonds received. Of the $0.025 per pound assessment, 
$0.014 would be available as credit-back for handlers who conduct their 
own promotional activities.
    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 2003-04 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 20, 2004, and recommended 2004-05 expenditures 
of $24,027,344. In comparison, last year's budgeted expenditures were 
$20,547,385. The recommended assessment rate of $0.025 would be $0.005 
higher than the rate currently in effect, and the credit-back portion 
of the assessment rate would be $0.004 more than the rate currently in 
effect.
    The major expenditures recommended by the Board for the 2004-05 
crop year include $7,115,000 for advertising and market research, 
$9,215,000 for public relations and other promotion and education 
programs including a Market Access Program (MAP) administered by USDA's 
Foreign Agricultural Service (FAS), $1,730,000 for salaries, $1,200,000 
for nutrition research, $947,321 for production research, $808,000 for 
food quality programs, $460,042 for environmental research, $200,000 
for travel, $130,000 for office rent, $125,000 for a crop estimate, and 
$95,000 for an acreage survey. Budgeted expenses for these items in 
2003-2004 were $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 Agricultural Service (FAS), $1,500,000 for salaries and wages, 
$1,000,000 for nutrition research, $850,332 for production research, 
$823,948 for food quality programs, $254,903 for environmental 
research, $200,000 for travel, $122,472 for office rent, $120,750 for a 
crop estimate, and $90,780 for an acreage survey.
    The Board recommended increasing the assessment rate from $0.020 
per pound to $0.025 per pound of almonds handled. Of the $0.025 per 
pound assessment, $0.014 per pound would be 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 increasing the assessment rate to 
generate adequate revenue to fund the Board's 2004-05 budgeted expenses 
and to maintain a financial reserve. Section 981.81(c) authorizes a 
financial reserve of approximately one-half year's budgeted expenses. 
One-half of the 2004-05 crop year's budgeted expenses of $24,027,344 
equals $12,013,672. The Board's financial reserve at the end of the 
2004-05 crop year is projected to be $3,067,437, which is well within 
the authorized reserve.

[[Page 33586]]

    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 1,056,000,000 pounds of assessable 
almonds for the 2004-05 crop year. If realized, this would provide 
estimated assessment revenue of $11,616,000 from all handlers, and an 
additional $8,131,200 from those handlers who do not participate in the 
credit-back program, for a total of $19,747,200. In addition, it is 
anticipated that $7,347,581 will be provided by other sources, 
including interest income, MAP funds, grant funds, miscellaneous 
income, and reserve/carryover funds. When combined, revenue from these 
sources would be adequate to cover budgeted expenses. Any unexpended 
funds from the 2004-05 crop year may be carried over to cover expenses 
during the succeeding crop year. Funds in the reserve at the end of the 
2004-05 crop year are estimated to be approximately $3,067,437, which 
would be within the amount permitted by the order.
    The proposed assessment rate would 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 would 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 USDA. Board meetings are open 
to the public and interested persons may express their views at these 
meetings. USDA would evaluate Board recommendations and other available 
information to determine whether modification of the assessment rate is 
needed. Further rulemaking would be undertaken as necessary. The 
Board's 2004-05 budget and those for subsequent crop years would be 
reviewed and, as appropriate, approved by USDA.

Initial 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 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 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 6,000 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 $199,000. Based on the foregoing, the majority of 
handlers and producers of almonds may be classified as small entities.
    This rule would increase the assessment rate established for the 
Board and collected from handlers for the 2004-05 and subsequent crop 
years from $0.020 to $0.025 per pound of almonds. Of the $0.025 per 
pound assessment, $0.014 per pound would be 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 met on May 20, 2004, and recommended 2004-2005 
expenditures of $24,027,344 and an assessment rate of $0.025 per pound. 
Of the $0.025 per pound assessment, $0.014 per pound would be available 
as credit-back for handlers who conduct their own promotional 
activities. The proposed assessment rate of $0.025 would be $0.005 
higher than the current rate, and the credit-back portion would be 
$0.004 more than the current rate. The quantity of assessable almonds 
for the 2004-05 crop year is estimated at 1,056,000,000 pounds. The 
proposed assessment rate would provide estimated assessment revenue of 
$11,616,000 from all handlers, and an additional $8,131,200 from those 
handlers who do not participate in the credit-back program, for a total 
of $19,747,200. In addition, it is anticipated that $7,347,581 will be 
provided by other sources, including interest income, MAP funds, grant 
funds, miscellaneous income, and reserve/carryover funds. When 
combined, revenue from these sources would be adequate to cover 
budgeted expenses. The projected financial reserve at the end of 2004-
05 would be $3,067,437, which would be within the maximum permitted 
under the order.
    The major expenditures recommended by the Board for the 2004-05 
crop year include $7,115,000 for advertising and market research, 
$9,215,000 for public relations and other promotion and education 
programs including a Market Access Program (MAP) administered by USDA's 
Foreign Agricultural Service (FAS), $1,730,000 for salaries, $1,200,000 
for nutrition research, $947,321 for production research, $808,000 for 
food quality programs, $460,042 for environmental research, $200,000 
for travel, $130,000 for office rent, $125,000 for a crop estimate, and 
$95,000 for an acreage survey. Budgeted expenses for these items in 
2003-2004 were $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 Agricultural Service (FAS), $1,500,000 for salaries and wages, 
$1,000,000 for nutrition research, $850,332 for production research, 
$823,948 for food quality programs, $254,903 for environmental 
research, $200,000 for travel, $122,472 for office rent, $120,750 for a 
crop estimate, and $90,780 for an acreage survey.
    The Board considered alternative assessment rate levels, including 
the portion available for handler credit-back. After deliberating the 
issue, the Board recommended increasing the assessment rate to $0.025 
per pound, with $0.014 available for handler credit-back. In arriving 
at its budget, the Board considered information from its various 
committees. Alternative expenditure levels were discussed by these 
groups, based on the value of various activities to the industry. The 
committees ultimately recommended appropriate activities and funding 
levels, which were adopted by the Board.
    A review of historical information and preliminary information 
pertaining to the upcoming crop year indicates that the average grower 
price for the 2004-05 season could range between $1.50 and $1.80 per 
pound of almonds. Therefore, the estimated assessment revenue for the 
2004-05 crop year (disregarding any amounts credited pursuant to 
Sec. Sec.  981.41 and 981.441) as a

[[Page 33587]]

percentage of total grower revenue could range between 1.2 and 1 
percent, respectively.
    This action would increase 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 
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 20, 2004, 
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 impose 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.
    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.
    A 10-day comment period is provided to allow interested persons to 
respond to this proposed rule. Ten days is deemed appropriate because: 
(1) The 2004-05 crop year begins on August 1, 2004, and the marketing 
order requires that the rate of assessment for each crop year apply to 
all assessable almonds handled during such crop year; (2) a final 
decision on the increase should be made as soon as possible so handlers 
can plan accordingly; (3) the Board needs to have sufficient funds to 
pay its expenses which are incurred on a continuous basis; and (4) 
handlers are aware of this action which was recommended by the Board at 
a public meeting and is similar to other assessment rate actions issued 
in past years.

List of Subjects in 7 CFR Part 981

    Almonds, Marketing agreements, Reporting and recordkeeping 
requirements.

    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.

    2. Section 981.343 is revised to read as follows:


Sec.  981.343  Assessment rate.

    On and after August 1, 2004, an assessment rate of $0.025 per pound 
is established for California almonds. Of the $0.025 assessment rate, 
$0.014 per assessable pound is available for handler credit-back.

    Dated: June 10, 2004.
Kenneth C. Clayton,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 04-13690 Filed 6-14-04; 12:56 pm]
BILLING CODE 3410-02-P