[Federal Register Volume 70, Number 116 (Friday, June 17, 2005)]
[Proposed Rules]
[Pages 35182-35184]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-12006]


-----------------------------------------------------------------------

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Docket No. FV05-981-2 PR]


Almonds Grown in California; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This rule would increase the assessment rate established for 
the Almond Board of California (Board) for the 2005-06 and subsequent 
crop years from $0.025 to $0.030 per pound of almonds received. Of the 
$0.030 per pound assessment, 60 percent (or $0.018 per pound) 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 necessary to administer the program. The crop year 
begins August 1 and ends July 31. The assessment rate would remain in 
effect indefinitely unless modified, suspended, or terminated.

DATES: Comments must be received by June 27, 2005.

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: Maureen T. Pello, Senior Marketing 
Specialist, 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, 2005, 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 2005-06 and subsequent crop years from $0.025 to $0.030 
per pound of almonds received. Of the $0.030 per pound assessment, 60 
percent (or $0.018 per pound) would be available as credit-back for 
handlers who conduct their own promotional activities.
    The 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 2004-05 and subsequent crop years, the Board recommended, 
and USDA approved, an assessment rate that would continue in effect 
from crop year

[[Page 35183]]

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 12, 2005, and unanimously recommended 2005-06 
expenditures of $28,756,000. In comparison, last year's budgeted 
expenditures were $24,077,344. The recommended assessment rate of 
$0.030 would be $0.005 higher than the rate currently in effect, and 
the credit-back portion of the assessment rate ($0.018 per pound) would 
be $0.004 more than the credit-back portion currently in effect.
    The major expenditures recommended by the Board for the 2005-06 
crop year include $15,423,000 for domestic advertising, market 
research, and public relations; $4,920,000 for operational expenses; 
$4,873,000 for international public relations and other promotion and 
education programs, including a Market Access Program (MAP) 
administered by USDA's Foreign Agricultural Service (FAS); $1,200,000 
for nutrition research; $850,000 for production research; $830,000 for 
food quality programs; and $500,000 for environmental research, plus 
other minor sums. Budgeted expenses for these items in 2004-05 were 
$12,540,000 for domestic advertising, market research, and public 
relations; $3,611,981 for operational expenses; $4,340,000 for 
international public relations and other promotion and education 
programs, including a MAP administered by USDA's FAS; $1,200,000 for 
nutrition research; $947,321 for production research; $858,000 for food 
quality programs; and $460,042 for environmental research, plus other 
minor sums.
    The Board recommended increasing the assessment rate from $0.025 
per pound to $0.030 per pound of almonds handled. Of the $0.030 per 
pound assessment, 60 percent (or $0.018 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 increased assessment rate is needed 
because the 2005-06 crop is projected at 816 million pounds of 
assessable almonds, down from the 1.0368 billion pound 2004-05 crop, 
and projected assessment revenue will likely be reduced. The increased 
rate should generate adequate revenue to fund the Board's 2005-06 
budgeted expenses and to maintain a small financial reserve. Section 
981.81(c) authorizes a financial reserve of approximately one-half 
year's budgeted expenses. One-half of the 2005-06 crop year's budgeted 
expenses of $28,756,000 equals $14,378,000. The Board's financial 
reserve at the end of the 2005-06 crop year is projected to be $1.1 
million which is well within the authorized reserve.
    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 816 million pounds of assessable almonds 
for the 2005-06 crop year. If realized, this would provide estimated 
assessment revenue of $9,792,000 from all handlers, and an additional 
$9,180,000 from those handlers who do not participate in the credit-
back program, for a total of $18,972,000. In addition, it is 
anticipated that $10,851,797 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 2005-06 crop year may be carried over to cover expenses 
during the succeeding crop year. Funds in the reserve at the end of the 
2005-06 crop year are estimated to be approximately $1.1 million 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 2005-06 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 115 handlers subject to regulation 
under the order. Small agricultural producers are defined by the Small 
Business Administration (13 CFR 121.201) as those having annual 
receipts of less than $750,000, and small agricultural service firms 
are defined as those whose annual receipts are less than $6,000,000.
    Data for the most recently completed crop year indicate that about 
48 percent of the handlers shipped over $6,000,000 worth of almonds and 
about 52 percent of handlers shipped under $6,000,000 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 $261,248. 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 2005-06 and subsequent crop 
years from $0.025 to $0.030 per pound of almonds. Of the $0.030 per 
pound assessment, 60 percent (or $0.018 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 12, 2005, and unanimously recommended 2005-06 
expenditures of $28,756,000 and an assessment rate of $0.030 per pound. 
Of the $0.030 per pound assessment, 60 percent (or $0.018 per pound) 
would be available as credit-back for handlers who conduct their own 
promotional activities. The proposed assessment rate of $0.030 would be 
$0.005 higher than the current rate, and the credit-back portion of 
$0.018 per pound would be $0.004 more than the current credit-back 
portion. The quantity of assessable almonds for the 2005-06 crop year 
is estimated at 816,000,000 pounds. The

[[Page 35184]]

proposed assessment rate would provide estimated assessment revenue of 
$9,792,000 from all handlers, and an additional $9,180,000 from those 
handlers who do not participate in the credit-back program, for a total 
of $18,972,000. In addition, it is anticipated that $10,851,797 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 2005-
06 would be $1,137,797 which would be within the maximum permitted 
under the order.
    The major expenditures recommended by the Board for the 2005-06 
crop year include $15,423,000 for domestic advertising, market 
research, and public relations; $4,920,000 for operational expenses; 
$4,873,000 for international public relations and other promotion and 
education programs, including a MAP administered by USDA's FAS; 
$1,200,000 for nutrition research; $850,000 for production research; 
$830,000 for food quality programs; and $500,000 for environmental 
research, plus other minor sums. Budgeted expenses for these items in 
2004-05 were $12,540,000 for domestic advertising, market research, and 
public relations; $3,611,981 for operational expenses; $4,340,000 for 
international public relations and other promotion and education 
programs, including a MAP administered by USDA's FAS; $1,200,000 for 
nutrition research; $947,321 for production research; $858,000 for food 
quality programs; and $460,042 for environmental research, plus other 
minor sums.
    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 $0.030 
per pound, with 60 percent (or $0.018 per pound) 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 2005-06 season could range between $3.00 and $3.50 per 
pound of almonds. Therefore, the estimated assessment revenue for the 
2005-06 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 1.00 and 0.86 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 12, 2005, 
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 2005-06 crop year begins on August 1, 2005, and the 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 unanimously 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, 2005, an assessment rate of $0.030 per pound 
is established for California almonds. Of the $0.030 assessment rate, 
60 percent per assessable pound is available for handler credit-back.

    Dated: June 10, 2005.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 05-12006 Filed 6-16-05; 8:45 am]
BILLING CODE 3410-02-P