This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

39281

Vol. 65, No. 123

Monday, June 26, 2000

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Docket No. FV00–981–1 FIR]

Almonds Grown in California; Release

of the Reserve Established for the

1999–2000 Crop Year

AGENCY: Agricultural Marketing Service,

USDA.

ACTION: Final rule.

SUMMARY: The Department of

Agriculture (Department) is adopting, as

a final rule, without change, the

provisions of an interim final rule

relaxing volume regulation percentages

implemented under the California

almond marketing order (order) during

the 1999–2000 crop year (August 1

through July 31). The order regulates the

handling of almonds grown in

California and is locally administered

by the Almond Board of California

(Board). This rule continues the

scheduled release of reserve almonds

into normal salable channels. One-third

of the reserve was released on May 2,

2000, the second-third was released on

June 1, 2000, and the final-third will be

released on July 1, 2000. Releasing the

reserve is necessary to provide a

sufficient quantity of almonds to meet

anticipated trade demand and carryover

needs.

EFFECTIVE DATE: July 26, 2000.

FOR FURTHER INFORMATION CONTACT:

Martin Engeler, 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, room

2525-S, P.O. Box 96456, Washington,

DC 20090–6456; telephone: (202) 720–

2491, Fax: (202) 720–5698.

Small businesses may request

information on complying with this

regulation by contacting Jay Guerber,

Marketing Order Administration

Branch, Fruit and Vegetable Programs,

AMS, USDA, P.O. Box 96456, room

2525-S, Washington, DC 20090–6456;

telephone: (202) 720–2491, Fax: (202)

720–5698, or E-mail:

Jay.Guerber@usda.gov.

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 is issuing this rule in

accordance with Executive Order 12866.

This rule has been reviewed under

Executive Order 12988, Civil Justice

Reform. Under the provisions of the

marketing order now in effect, salable

and reserve percentages may be

established for almonds during any crop

year. This rule continues the scheduled

relaxation of the salable and reserve

percentages for marketable California

almonds during the 1999–2000 crop

year, which began August 1, 1999, and

ends July 31, 2000. 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. A

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 in

equity to review the Secretary’s ruling

on the petition, provided a bill in equity

is filed not later than 20 days after the

date of the entry of the ruling.

The order regulates the handling of

almonds grown in California and is

locally administered by the Board.

During the 1999–2000 season, handlers

were required to withhold as a reserve,

from normal competitive markets, 22.36

percent of the almonds which they

received from growers. The remaining

77.64 percent of the crop could be sold

by handlers to any market at any time.

These percentages are referred to as

reserve and salable percentages,

respectively. This rule continues to

relax this regulation on handlers by

continuing the scheduled release of all

almonds held as reserve for sale to

normal market channels. This is

necessary to provide a sufficient

quantity of almonds to meet anticipated

trade demand and carryover needs. This

action was unanimously recommended

by the Board at a meeting on April 10,

2000.

Section 981.47 of the almond

marketing order provides authority for

the Secretary, based on

recommendations by the Board and the

analysis of other available information,

to establish salable and reserve

percentages for almonds during a crop

year. To aid the Secretary in fixing the

salable and reserve percentages,

§ 981.49 of the order requires the Board

to submit information to the Department

on estimates of the marketable

production of almonds, trade demand

needs for the year, carryin inventory at

the beginning of the year, and the

desirable carryout inventory at the end

of the year. Reserve almonds may be

disposed of in authorized reserve

outlets, such as certified organic

markets or for use in almond oil,

almond butter, and animal feed. Reserve

almonds can also be released for sale

into normal marketing channels based

on a revision of the aforementioned

factors and other information. Authority

for the Board to recommend revisions in

the volume regulation percentages is

provided in § 981.48 of the order. Such

revisions must be recommended by May

15.

The Board met in May and July of

1999 to review projected crop estimates

and marketing conditions for the 1999–

2000 crop year. A record crop of 830

million kernelweight pounds was

projected for the season. This would

produce an estimated 796.8 marketable

39282 Federal Register / Vol. 65, No. 123 / Monday, June 26, 2000 / Rules and Regulations

kernelweight pounds after an

adjustment for processing losses and

exempt product. When combined with

estimated carryin and adjusted for

desired carryout, an estimated 827.2

million pounds was available for

marketing during the 1999–2000 crop

year. Trade demand was estimated by

the Board at 649 million pounds; thus,

a projected oversupply of almonds of

about 178.2 million pounds existed for

the 1999–2000 crop year. The Board

also considered other factors such as

price levels and fluctuations, increased

plantings and yields, and weatherrelated variations in production, and

ultimately recommended establishment

of a reserve for the 1999–2000 season.

The Department established salable and

reserve percentages of 77.64 and 22.36

percent, respectively, for almonds

received by handlers during the 1999–

2000 crop year, pursuant to a regulation

published in the Federal Register on

November 2, 1999 (64 FR 59107).

The Board met on April 10, 2000, to

consider disposition of the reserve. At

that time, the Board evaluated

marketing and other conditions in the

industry, and recommended revisions to

the marketing policy estimates initially

used in establishing the reserve. A

comparison of the initial estimates and

revised estimates are contained in the

following table.

MARKETING POLICY ESTIMATES—1999 CROP

[Kernelweight basis in millions of pounds]

07/12/99

initial

estimates

04/10/00

revised

estimates

Estimated Production:

1. 1999 Production ......................................................................................................................................... 830.0 827.4

2. Loss and Exempt—4.0% ............................................................................................................................ 33.2 33.1

3. Marketable Production ................................................................................................................................ 796.8 794.3

Estimated Trade Demand:

4. Domestic ..................................................................................................................................................... 190.0 203.0

5. Export ......................................................................................................................................................... 459.0 492.0

6. Total ............................................................................................................................................................ 649.0 695.0

Inventory Adjustment:

7. Carryin 8/1/99 ............................................................................................................................................. 100.4 91.8

8. Desirable Carryover 7/31/00 ...................................................................................................................... 70.0 191.1

9. Adjustment (Item 8 minus item 7) .............................................................................................................. ¥30.4 99.3

Salable/Reserve:

10. Adjusted Trade Demand (Item 6 plus item 9) .......................................................................................... 618.6 794.3

11. Reserve (Item 3 minus item 10) ............................................................................................................... 178.2 0.0

12. Salable % (Item 10 divided by item 3 × 100) ........................................................................................... 1 77.64 100.0

13. Reserve % (100% minus item 12) ........................................................................................................... 1 22.36 0.0

1Percent.

In arriving at these estimates, the

Board revised its 1999–2000 crop

estimate of 830 million pounds to 827.4

million pounds, and marketable

production of 796.8 million pounds to

794.3 million pounds. The carryin on

August 1, 1999, was initially estimated

to be 100.4 million pounds. That figure

was revised to reflect actual carryin of

91.8 million pounds. Thus, the total

available supply for the 1999–2000 crop

year is slightly lower than initially

estimated.

Shipment figures for the year-to-date

were analyzed. Through March 2000,

total industry shipments of almonds

were 525.5 million pounds, significantly

higher than shipments for a comparable

period in any prior year. Based on

historical shipping patterns and

shipments to date this season, the Board

anticipates strong shipment levels to

continue for the remainder of the

season. Therefore, the Board revised its

trade demand estimate from 649 million

pounds to 695 million pounds. A final crop estimate for the 2000–

2001 crop year will not be available

until June 29. A preliminary crop

estimate of 675 million pounds was

issued by the California Agricultural

Statistics Service (CASS) on May 11,

2000. The industry continues to believe

that next year’s crop will be

significantly smaller than the current

crop. Several factors have contributed to

this conclusion. In addition to the usual

pattern of a shorter crop following a

large crop, the weather throughout the

production area during the month of

February was generally cool, rainy, and

windy. During this period, almond trees

were in bloom, and the weather

conditions were not conducive to good

flower pollination. Field observations

since the bloom period confirm that the

2000–2001 crop will be significantly

smaller, perhaps smaller than the

preliminary estimate. It is believed that

next year’s crop will not provide a

sufficient supply of almonds to meet

trade needs and provide an adequate

carryout at the end of the 2000–2001

crop year. Therefore, to provide more

almonds to satisfy the current year’s

trade demand and to augment next

year’s supplies, the Board recommended

releasing the 1999–2000 crop year

reserve. The Board also considered the

timing of releasing reserve product to

salable market channels. The Board

determined that a gradual release

schedule would best serve the industry.

This would prevent a large quantity of

almonds from being made available for

sale by handlers immediately, which

could put downward pressure on prices

and create disorderly marketing

conditions. Thus, the Board

unanimously recommended releasing

one-third of the reserve as soon as

possible, one-third on June 1, 2000, and

the final-third on July 1, 2000. The

resulting salable and reserve

percentages were 85.09 percent and

14.91 percent, respectively, on May 2,

2000; 92.55 percent and 7.45 percent,

respectively, on June 1, 2000; and will

be 100 and 0 percent, respectively, on

July 1, 2000. Pursuant to requirements set forth in

the Regulatory Flexibility Act (RFA), the

Administrator of the Agricultural

Marketing Service (AMS) has

considered the economic impact of this

action on small entities. Accordingly,

Federal Register / Vol. 65, No. 123 / Monday, June 26, 2000 / Rules and Regulations 39283

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 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 105 handlers

of California almonds who are subject to

regulation under the marketing order

and approximately 6,000 producers in

the regulated area. Small agricultural

service firms are defined by the Small

Business Administration (13 CFR

121.201) as those having annual receipts

of less than $5,000,000, and small

agricultural producers are defined as

those whose annual receipts are less

than $500,000.

Based on the most current data

available, about 54 percent of almond

handlers ship under $5,000,000 worth

of almonds and 46 percent ship over

$5,000,000 worth on an annual basis. In

addition, based on production and

grower prices reported by the National

Agricultural Statistics Service (NASS),

and the total number of almond

growers, the average annual grower

revenue is approximately $195,000. 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,

excluding receipts from other sources.

Pursuant to §§ 981.47 and 981.49,

during the 1999–2000 crop year,

handlers were required to withhold as a

reserve, from normal competitive

markets, 22.36 percent of the almonds

which they received from growers (64

FR 59107, November 2, 1999). The

remaining 77.64 percent of the crop

could be sold by handlers to any market

at any time. Volume regulation was

implemented because the available

supply of almonds for the 1999–2000

crop year, adjusted by carryin and

desired carryout, was estimated to be

about 827 million pounds, which

exceeded the estimated trade demand

needs of about 649 million pounds.

Pursuant to § 981.48 of the order, this

rule continues the scheduled release of

reserve almonds. A total of 7.45 percent

of the reserve was released on May 2,

2000, another 7.45 percent was released

on June 1, 2000, and the final 7.45

percent will be released on July 1, 2000.

Releasing the reserve is necessary to

provide a sufficient quantity of almonds

to meet anticipated trade demand and

carryover needs. Shipment levels

through March, 2000 and anticipated

strong shipments for the remainder of

the season led to an increased trade

demand estimate from 649 million

pounds to 695 million pounds. In

addition, because a smaller 2000–2001

crop is expected, the industry would

like to increase the amount of 1999–

2000 carryout inventory from 70 million

pounds to 191.2 million pounds to

augment supplies during the next crop

year. The timing of the releases was

structured so that all 178 million

pounds of reserve product would not

enter the market at one time.

This action is expected to have a

positive effect on producers and

handlers of almonds. It gradually

removes the regulatory requirement that

handlers hold product in reserve or sell

it to reserve outlets. Handlers will be

able to sell reserve almonds into normal

markets at prevailing prices (currently

in the range of $1.15 per pound to $1.60

per pound) as opposed to selling them

into lower value reserve outlets (ranging

from 8 to 15 cents per pound for oil or

4 to 5 cents per pound for animal feed).

Although reserve almonds can be sold

to organic markets or for use in the

manufacture of almond butter at higher

prices than other reserve outlets, the

quantity that can be sold is limited

because those markets are relatively

small. Handlers and growers should be

able to achieve higher total revenue for

their product by selling to normal

markets, because trade demand for

almonds has increased significantly

from early season estimates, and price

levels have also improved in recent

months.

Releasing reserve almonds into the

market in three stages has helped ensure

that a large supply of almonds is not

available for sale by handlers at the

same time, which could have created a

temporary oversupply and had a

negative impact on price levels. The

staged release also helped to ensure that

additional product will be available for

carryin to the following crop year to

augment anticipated short supplies.

This action is intended to promote

orderly marketing conditions for the

remainder of the 1999–2000 crop year

and also leading into the 2000–2001

crop year, for the benefit of producers

and handlers, regardless of size.

One alternative considered was to

release all of the reserve product to

normal market channels as soon as

possible. This alternative was not

recommended because it was believed

that too much product would be

available at one time, creating a shortterm oversupply situation, which could

have negatively impacted prices and

market conditions. Another alternative

considered was to release one-third of

the reserve as soon as possible, and if

the May 11, 2000, crop estimate issued

by CASS for the 2000–2001 crop was

less than 525 million pounds, to release

the entire reserve as soon as possible

after that. If the May crop estimate was

more than 525 million pounds, this

alternative would have released onethird of the reserve as soon as possible

after May 11, and the final one-third on

July 1, 2000. This was not

recommended. The Board decided that

three equal releases were preferable.

All the scenarios considered had the

common goal of releasing all the 1999–

2000 crop year reserve to the salable

category. The Board ultimately

recommended releasing one-third of the

reserve as soon as possible (May 2,

2000), one-third on June 1, 2000, and

the final one-third on July 1, 2000. The

Board believed this would best achieve

orderly marketing objectives. Adequate

supplies should be available to meet

market needs for the remainder of the

crop year and for carryin to the next

crop year, thus satisfying market needs

and maintaining market and price

stability.

This rule will not impose any

additional reporting and recordkeeping

requirements on either small or large

handlers. As with all Federal marketing

order programs, reports and forms are

periodically reviewed to help reduce

information requirements and

duplication by industry and public

sector agencies. In addition, the

Department has not identified any

relevant Federal rules that duplicate,

overlap, or conflict with this rule.

Further, the Board’s meeting was

widely publicized throughout the

almond industry and all interested

persons were invited to attend the

meeting and participate in Board

deliberations. Like all Board meetings,

the April 10, 2000, meeting was a public

meeting and all entities, both large and

small, were able to express their views

on this issue.

Also, the Board has a number of

appointed committees to review certain

issues and make recommendations to

the Board. The Board’s Reserve

Committee met on April 10, 2000, and

discussed this issue in detail. That

meeting was also a public meeting and

both large and small entities were able

to participate and express their views.

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

39284 Federal Register / Vol. 65, No. 123 / Monday, June 26, 2000 / Rules and Regulations

address in the FOR FURTHER INFORMATION

CONTACT section.

An interim final rule concerning this

action was published in the Federal

Register on May 1, 2000 (65 FR 25233).

Copies of the rule were mailed by the

Board’s staff to all Board members and

almond handlers. In addition, the rule

was made available through the Internet

by the Office of the Federal Register.

That rule provided for a 15-day

comment period which ended on May

16, 2000. One comment was received.

The comment was submitted by the

Board in support of the release, noting

that the Board met on May 16, 2000, and

reaffirmed its position to release the

reserve in three stages.

After consideration of all relevant

material presented, including the

Board’s recommendation and comment,

and other information, it is found that

this rule, as hereinafter set forth, will

tend to effectuate the declared policy of

the Act.

List of Subjects in 7 CFR Part 981

Almonds, Marketing agreements,

Nuts, Reporting and recordkeeping

requirements.

PART 981—ALMONDS GROWN IN

CALIFORNIA

Accordingly, the interim final rule

amending 7 CFR part 981 which was

published at 65 FR 25233 on May 1,

2000, is adopted as a final rule without

change.

Dated: June 19, 2000.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable

Programs.

[FR Doc. 00–16017 Filed 6–23–00; 8:45 am]

BILLING CODE 3410–02–P

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 984

[Docket No. FV00–984–1 FR]

Walnuts Grown in California; Report

Regarding Interhandler Transfers of

Walnuts

AGENCY: Agricultural Marketing Service,

USDA.

ACTION: Final rule.

SUMMARY: This rule will revise the

administrative rules and regulations of

the Federal marketing order for

California walnuts (order) regarding

reports of interhandler transfers of

walnuts. The order regulates the

handling of walnuts grown in California

and is administered locally by the

Walnut Marketing Board (Board).

Currently, handlers report to the Board

transfers of walnuts between handlers

on monthly shipment reports. This rule

will require handlers to report such

interhandler transfers on a separate

form. This action will facilitate program

administration by providing the Board

with more accurate and complete

information on transfers and shipments.

EFFECTIVE DATE: August 1, 2000.

FOR FURTHER INFORMATION CONTACT:

Maureen T. Pello, 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, P.O.

Box 96456, room 2525–S, Washington,

DC 20090–6456; telephone: (202) 720–

2491, Fax: (202) 720–5698.

Small businesses may request

information on complying with this

regulation by contacting Jay Guerber,

Marketing Order Administration

Branch, Fruit and Vegetable Programs,

AMS, USDA, P.O. Box 96456, room

2525–S, Washington, DC 20090–6456;

telephone: (202) 720–2491, Fax: (202)

720–5698, or E-mail:

Jay.Guerber@usda.gov.

SUPPLEMENTARY INFORMATION: This rule

is issued under Marketing Agreement

and Order No. 984, both as amended (7

CFR part 984), regulating the handling

of walnuts 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 final rule has been reviewed

under Executive Order 12988, Civil

Justice Reform. 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 will revise the order’s

administrative rules and regulations

regarding reports of interhandler

transfers of walnuts. Currently, handlers

report to the Board transfers of walnuts

between handlers on monthly shipment

reports. This rule will require handlers

to report such interhandler transfers on

a separate form. This action will

facilitate program administration by

providing the Board with more accurate

and complete information on transfers

and shipments. This action was

unanimously recommended by the

Board at a meeting on February 18,

2000.

Section 984.76 of the order provides

authority for the Board, with the

approval of the Secretary, to require

handlers to furnish reports and

information to the Board as needed to

enable the Board to perform its duties

under the order. The Board meets

during the season to make decisions on

various programs authorized under the

order. These programs include quality

control (minimum grade and size

requirements for both inshell and

shelled walnuts placed into channels of

commerce), volume regulation, and

projects regarding production research,

and marketing research and

development.

Section 984.59 of the order provides

authority for handlers to transfer

walnuts between handlers. Paragraph (a)

of that section states that inshell

walnuts may be sold or delivered by one

handler to another for packing or

shelling within California. In such

cases, the receiving handler assumes

marketing order obligations with respect

to the transferred walnuts, including

assessment and inspection

requirements. Paragraph (b) of § 984.59

pertains to transfers of walnuts when

volume regulation is in effect.

Specifically, handlers may, for purposes

of meeting their reserve obligation,

acquire walnuts from other handlers. In

such cases, the buying handler assumes

marketing order obligations with respect

to the transferred walnuts, including

assessment, reserve, and inspection

requirements. Paragraph (c) of § 984.59