[Federal Register Volume 62, Number 157 (Thursday, August 14, 1997)]
[Rules and Regulations]
[Pages 43459-43461]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-21525]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Docket No. FV97-981-4 FR]


Almonds Grown in California; Amended Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule increases the assessment rate for the Almond 
Board of California (Board) under Marketing Order No. 981 for the 1997-
98 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.

EFFECTIVE DATE: August 1, 1997.

FOR FURTHER INFORMATION CONTACT: Martin Engeler, Assistant Regional 
Manager, California Marketing Field Office, Fruit and Vegetable 
Division, AMS, USDA, 2202 Monterey Street, Suite 102B, Fresno, 
California 93721; Telephone: (209) 487-5901, Fax: (209) 487-5906; or 
George Kelhart, Marketing Order Administration Branch, Fruit and 
Vegetable Division, AMS, USDA, Room 2525-S, P.O. Box 96456, Washington, 
DC 20090-6456; Telephone: (202) 690-3919, Fax: (202) 720-5698. Small 
businesses may request information on compliance with this regulation 
by contacting Jay Guerber, Marketing Order Administration Branch, Fruit 
and Vegetable Division, AMS, USDA, Room 2525-S, P.O. Box 96456, 
Washington, DC 20090-6456; Telephone: (202) 720-2491, Fax: (202) 720-
5698.

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 final 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, 1997, and continuing 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.

[[Page 43460]]

    This final rule increases the assessment rate established for the 
Board for the 1997-98 and subsequent crop years from 1 cent to 2 cents 
per pound of almonds received by handlers.
    The 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.
    The Board met on May 9, 1997, and recommended 1997-98 expenditures 
of $11,333,876.49 and an assessment rate of 2 cents per pound of 
almonds received by handlers. In comparison, last year's budgeted 
expenditures were $6,426,500. The primary reason for the increase for 
the upcoming crop year is the inclusion of funding for a generic paid 
advertising program. The assessment rate is higher than last year's 
established rate of 1 cent per pound; however, the Board also 
recommended a credit-back program whereby handlers can receive credit 
for their own promotional activities of up to 1 cent per pound against 
their assessment obligation. Handlers not participating in this program 
will remit the entire 2 cents to the Board. For administrative 
purposes, the Board will separate the assessment into two portions when 
billing handlers; an administrative portion of 1 cent per pound and an 
advertising portion of 1 cent per pound. The Board's initial 
recommendation indicated that implementation of the advertising portion 
of the assessment and the generic advertising program may be impacted 
by the outcome of litigation relative to advertising and promotion 
conducted under marketing orders. The Board recommended not 
implementing the advertising portion of the assessment until further 
action of the Board is taken. At a meeting held on July 1, 1997, the 
Board took action to implement the advertising portion of the 
assessment, after it is established. The Board also confirmed its 
intent to implement a generic paid advertising program.
    The Board recommended that the major expenditures for the 1997-98 
fiscal period should include $4,084,000 for information and research 
programs, $3,408,000 for paid generic advertising, $881,534 for 
salaries, $794,043 for international programs, $568,679 for production 
research, $95,400 for crop estimates, and $90,000 for travel. Budgeted 
expenses for major items in 1996-97 were $3,333,500 for information and 
research, $731,534 for salaries, $660,500 for international programs, 
$558,131 for production research, $91,160 for crop estimates, and 
$97,470 for travel.
    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 a production estimate of 681,600,000 pounds of edible 
almonds for the year. If realized, this will provide revenue of 
$6,816,000 from administrative assessments (681,600,000 pounds at 1 
cent per pound). In addition, it is anticipated that $3,408,000 will be 
derived from the portion of assessments eligible for credit-back but 
received by the Board from handlers who do not obtain credit for their 
own promotional activities. Estimates of marketable production of 
almonds have been revised downward to 652,800,000 pounds since the 
Board's recommendation, which would result in administrative 
assessments of $6,528,000 and estimated credit-back revenue of 
$3,264,000. However, if assessment revenues fall short of initial 
projections due to a smaller crop, the Board maintains sufficient 
financial reserves to compensate for any such shortage. Income derived 
from handler assessments, along with interest income, Market Access 
Program reimbursement for international promotion activities, research 
conference revenue, miscellaneous income, and funds derived from the 
Board's authorized monetary reserve will be adequate to cover budgeted 
expenses. Any unexpended funds from the 1997-98 crop year may be 
carried over to cover expenses during the first four months of the 
1998-99 crop year.
    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 is effective for an indefinite 
period, the Board will continue to meet prior to or during each fiscal 
period to recommend a budget of expenses and consider recommendations 
for modification of the assessment rate. The dates and times of 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 1997-98 budget 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 97 handlers of California almonds who are 
subject to regulation under the marketing order and approximately 7,000 
almond producers in the regulated area. Small agricultural service 
firms have been defined by the Small Business Administration (13 CFR 
121.601) as those having annual receipts of less than $5,000,000, and 
small agricultural producers are defined as those having annual 
receipts of less than $500,000.
    Currently, about 58 percent of the handlers ship under $5,000,000 
worth of almonds and 42 percent ship over $5,000,000 worth of almonds 
on an annual basis. In addition, based on acreage, production, and 
grower prices reported by the National Agricultural Statistics Service, 
and the total number of almond growers, the average annual grower 
revenue is approximately $156,000. 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 final rule will increase the assessment rate established for 
the Board for the 1997-98 and subsequent crop years from 1 cent to 2 
cents per pound of almonds, of which up to 1 cent will be credited to 
handlers for their own promotional activities. The Board unanimously 
recommended 1997-98 expenditures of $11,333,876.49 and an assessment 
rate of 2 cents per pound of almonds. The assessment rate

[[Page 43461]]

of 2 cents is 1 cent more than the rate currently in effect. The 
primary reason for the increase for the upcoming crop year is the 
inclusion of funding for a generic paid advertising program.
    The Board recommended that the major expenditures for the 1997-98 
crop year should include $4,084,000 for information and research 
programs, $3,408,000 for paid generic advertising, $881,534 for 
salaries, $794,043 for international programs, $568,679 for production 
research, $95,400 for crop estimates, and $90,000 for travel. 
Alternative rates of assessment were considered during the budgeting 
process. Keeping the assessment rate at 1 cent was considered but not 
recommended because it would not generate the income necessary to 
administer the program. In order to fund the programs recommended by 
the Board for the 1997-98 season, it was determined that the assessment 
rate recommended by the Board, when applied to the preliminary crop 
estimate, would be necessary to generate sufficient revenue. Costs of 
various programs, desired and overall spending levels, and desired 
levels of monetary reserve were considered during the budgeting 
process.
    Handlers' receipts of assessable almonds for the year were 
originally estimated at 681,600,000 pounds which would provide 
$10,224,000 in assessment income. The crop estimate was subsequently 
reduced to 652,800,000 pounds which if realized, would provide 
assessment revenue of $9,792,000. However, in either scenario, income 
derived from handler assessments, along with interest income, Market 
Access Program reimbursement, research conference revenue, 
miscellaneous income, and funds derived from the Board's authorized 
reserve will be adequate to cover budgeted expenses. Funds in the 
reserve will be kept within the maximum permitted by the order.
    A review of historical information and preliminary information 
pertaining to the upcoming crop year indicates that the grower price 
for the 1997-98 season could range between $1.00 and $1.50 per pound of 
almonds. Therefore, the estimated assessment revenue for the 1997-98 
crop year as a percentage of total grower revenue could range between 1 
and 1.5 percent.
    While this rule will impose some additional costs on handlers, the 
costs would be minimal and in the form of uniform assessments on all 
handlers. Some of the additional costs may be passed on to producers.
    However, these costs will 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 
9, 1997, 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 final rule will not impose any 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 issued by the Department 
on July 3, 1997, and published in the Federal Register on July 7, 1997 
(62 FR 36233). 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 15-day comment period was provided to allow interested persons to 
respond to the proposal. Fifteen days was deemed appropriate because: 
(1) The Board needs to have sufficient funds to pay its expenses which 
are incurred on a continuous basis; (2) the 1997-98 crop year began on 
August 1, 1997, and the marketing order requires that the rate of 
assessment for the crop year apply to all assessable California almonds 
handled during the crop year; and (3) handlers are aware of this action 
which was unanimously recommended by the Board at a public meeting and 
is similar to other budget actions issued in past years. No comments to 
the proposed rule were received.
    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, will tend to effectuate the declared policy of 
the Act.
    It is further found that good cause exists for not postponing the 
effective date of this rule until 30 days after publication in the 
Federal Register (5 U.S.C. 553) because handlers are already receiving 
1997-98 crop almonds from growers, the crop year began August 1, and 
the assessment rate applies to all almonds received during the 1997-98 
and subsequent seasons. Further, handlers are aware of this rule, which 
was recommended at a public meeting. Also, A 15-day comment period was 
provided for in the proposed rule, and no comments were received.

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.


Sec. 981.343  [Amended]

    2. Section 981.343 is amended by removing ``July 1, 1996,'' and 
adding in its place ``August 1, 1997,'', by removing ``$0.01 cent'' and 
adding in its place ``2 cents,'' and by adding as the last sentence 
``Of the 2 cent assessment rate, 1 cent per assessable pound is 
available for handler credit-back.''

    Dated: August 8, 1997.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 97-21525 Filed 8-13-97; 8:45 am]
BILLING CODE 3410-02-P