Almonds Grown in California; Amended Assessment Rate

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Docket No. FV97-981-4 PR]

Almonds Grown in California; Amended Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: This proposed rule would increase 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

[[Page 36234]]

which regulates the handling of almonds grown in California.

Authorization to assess almond handlers would enable the Board to incur

expenses that are reasonable and necessary to administer the program.

DATES: Comments must be received by July 22, 1997.

ADDRESSES: Interested persons are invited to submit written comments

concerning this proposal. Comments must be sent in triplicate to the

Docket Clerk, Fruit and Vegetable Division, AMS, USDA, room 2525-S,

P.O. Box 96456, Washington, DC 20090-6456; Fax: (202) 720-5698.

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.

FOR FURTHER INFORMATION CONTACT: Martin Engeler or Mary Kate Nelson,

Marketing Specialists, or Kurt J. Kimmel, 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. 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

Agreement and Order No. 981, both as amended (7 CFR part 981),

regulating the handling of almonds 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 proposal 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 would be applicable to all assessable

almonds beginning August 1, 1997, and continuing until amended,

suspended, or terminated. This proposal would 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 proposal would 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 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 had an opportunity to participate

and provide input.

The Board met on May 9, 1997, and unanimously 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 would be higher

than last year's established rate of 1 cent per pound; however, the

Board also recommended a credit-back program whereby handlers could

receive credit for their own promotional activities of up to 1 cent per

pound against their assessment obligation. Handlers not participating

in this program would remit the entire 2 cents to the Board. For

administrative purposes, the Board would 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.

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.

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. Production of edible almonds

for the year is estimated at 681,600,000 pounds which should 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 would 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 activities. 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 would 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.

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

[[Page 36235]]

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 proposed rule would 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 would 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 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 are estimated

at 681,600,000 pounds which should provide $10,224,000 in assessment

income. 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 would be adequate to cover budgeted expenses. Funds

in the reserve would 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 would 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 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

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 proposed rule would 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.

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, would tend to effectuate the declared policy of

the Act.

A 15-day comment period is provided to allow interested persons to

respond to this proposal. Fifteen days is 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 begins 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.

List of Subjects in 7 CFR Part 981

Almonds, Marketing agreements, Nuts, Reporting and recordkeeping

requirements.

For the reasons set forth in the preamble, it is proposed that 7

CFR part 981 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.

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: June 30, 1997.

Eric M. Forman,

Acting Director, Fruit and Vegetable Division.

[FR Doc. 97-17606 Filed 7-3-97; 8:45 am]

BILLING CODE 3410-02-P