[Federal Register Volume 63, Number 177 (Monday, September 14, 1998)]
[Rules and Regulations]
[Pages 48995-48997]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-24535]
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Rules and Regulations
Federal Register
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Federal Register / Vol. 63, No. 177 / Monday, September 14, 1998 /
Rules and Regulations
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 981
[Docket No. FV98-981-2 FR]
Almonds Grown in California; Increased Assessment Rate
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: This rule increases the assessment rate from $0.02 to $0.025
per pound of almonds established for the Almond Board of California
(Board) under Marketing Order No. 981 for the 1998-99 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. The crop year began on August 1 and ends July 31. The
assessment rate will remain in effect indefinitely unless modified,
suspended, or terminated.
EFFECTIVE DATE: September 15, 1998.
FOR FURTHER INFORMATION CONTACT: Diane Purvis, Marketing Assistant, or
Martin J. Engeler, Marketing Specialist, California Marketing Field
Office, Fruit and Vegetable Programs, AMS, USDA, 2202 Monterey Street,
Suite 102B, Fresno, California 93721; telephone: (209) 487-5901; Fax:
(209) 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) 205-6632. Small businesses may request information
on compliance with this regulation by contacting Jay Guerber, 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) 205-6632.
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 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, 1998, 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 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 increases the assessment rate established for the Board
for the 1998-99 and subsequent crop years from $0.02 per pound to
$0.025 per pound.
The California 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.
For the 1997-98 and subsequent crop years, the Board recommended,
and the Department approved, an assessment rate that would continue in
effect from crop year to crop year unless modified, suspended, or
terminated by the Secretary upon recommendation and information
submitted by the Board or other information available to the Secretary.
The Board met on June 4, 1998, and unanimously recommended 1998-99
expenditures of $13,049,437 and an assessment rate of $0.025 per pound
of almonds. In comparison, last year's budgeted expenditures were
$11,333,876. The assessment rate of $0.025 is $.005 higher than the
rate currently in effect. The higher rate is needed primarily because
of a smaller crop this year. The 1997-98 crop was initially estimated
at 681,600,000 pounds compared to 528,000,000 pounds estimated for the
1998-99 crop year. The higher assessment rate, when combined with other
revenue sources, will generate adequate revenue to fund the recommended
expenses and programs. The Board also recommended to continue the
credit-back program whereby handlers can receive credit for their own
promotional activities of up to $0.0125 per pound against their
assessment obligation. Handlers not participating in this program will
remit the entire $0.025 to the Board.
The major expenditures recommended by the Board for the 1998-99
crop year include $4,500,000 for paid generic advertising, $2,500,000
for other domestic promotion programs, $1,495,000 for international
promotion, $1,144,842 for salaries, $700,000 for nutrition research,
$548,207 for
[[Page 48996]]
production research, $155,000 for market research, $125,000 for travel,
$124,700 for quality control programs, $100,700 for crop estimates, and
$100,000 for compliance audits. Budgeted expenses for these items in
1997-98 were $3,408,000 for paid generic advertising, $3,174,000 for
other domestic promotion programs, $794,043 for international
promotion, $881,534 for salaries, $695,000 for nutrition research,
$568,679 for production research, $125,000 for market research, $90,000
for travel, $152,175 for quality control programs, $95,400 for crop
estimates, and $92,500 for compliance audits.
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 528,000,000 pounds of assessable almonds
for the 1998-99 crop year. If realized, this will provide estimated
assessment revenue of $6,600,000 from all handlers, and an additional
$3,630,000 from those handlers who do not participate in the credit-
back program, for a total of $10,230,000. In addition, it is
anticipated that $2,819,437 will be provided by other sources,
including interest income, Market Access Program reimbursement from the
Department for international promotion activities, revenue generated
from the Board's annual research conference, miscellaneous income,
funds derived from the Board's authorized monetary reserve, and a grant
from the State of California. When combined, revenue from these sources
will be adequate to cover budgeted expenses. Any unexpended funds from
the 1998-99 crop year may be carried over to cover expenses during the
succeeding crop year. Funds in the reserve at the end of the 1998-99
crop year are estimated to be approximately $3,500,000, which is within
the maximum of approximately six months budgeted expenses as permitted
by the order (Sec. 981.81).
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 will 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 the Department. 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 1998-99 budget has been approved; 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 7,000 producers of almonds in the
production area and approximately 102 handlers subject to regulation
under the marketing order. Small agricultural producers have been
defined by the Small Business Administration (13 CFR 121.601) as those
having annual receipts less than $500,000, and small agricultural
service firms are defined as those whose annual receipts are less than
$5,000,000.
Currently, about 57 percent of the handlers ship under $5,000,000
worth of almonds and 43 percent ship over $5,000,000 worth of almonds
on an annual basis. In addition, based on reported acreage, production,
and grower prices, and the total number of almond growers, the average
annual grower revenue is estimated to be approximately $160,000. 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 rule increases the assessment rate established for the Board
and collected from handlers for the 1998-99 and subsequent crop years
from $0.02 per pound to $0.025 per pound. The Board unanimously
recommended 1998-99 expenditures of $13,049,437 and an assessment rate
of $0.025 per pound. This is compared to $11,333,876 budgeted for the
1997-98 crop year and an assessment rate of $0.025 for 1998-99 that is
$.005 higher than the 1997-98 rate. The quantity of assessable almonds
for the 1998-99 crop year is estimated at 528,000,000 pounds. Income
from assessments and other sources is expected to generate sufficient
revenue to fund this year's expenses and programs. Any unexpended funds
from the 1998-99 crop year may be carried over to cover expenses during
the succeeding crop year.
The major expenditures recommended by the Board for the 1998-99
crop year include $4,500,000 for paid generic advertising, $2,500,000
for other domestic promotion programs, $1,495,000 for international
promotion, $1,144,842 for salaries, $700,000 for nutrition research,
$548,207 for production research, $155,000 for market research,
$125,000 for travel, $124,700 for quality control programs, $100,700
for crop estimates, and $100,000 for compliance audits.
Comparable expenditures recommended by the Board for the 1997-98
crop year were $3,408,000 for paid generic advertising, $3,174,000 for
other domestic promotion programs, $794,043 for international
promotion, $881,534 for salaries, $695,000 for nutrition research,
$568,679 for production research, $125,000 for market research, $90,000
for travel, $152,175 for quality control programs, $95,400 for crop
estimates, and $92,500 for compliance audits.
The higher assessment rate is needed primarily because of a smaller
crop this year. The 1997-98 assessable crop was initially estimated at
681,600,000 pounds, compared to 528,000,000 for the 1998-99 crop year.
The higher assessment rate will help generate adequate revenue to fund
the recommended expenses and programs.
Prior to arriving at the recommended expenditure level and
assessment rate, the Board considered alternatives and ultimately
concurred on the recommended programs and expenditure level, and
determined a rate of $0.025 per pound of assessable almonds is
necessary to generate adequate revenue to fund the recommended expenses
and programs.
A review of historical information and preliminary information
pertaining to the upcoming crop year indicates that the grower price
for the 1998-99 season could range between $1.50 and $2.00 per pound of
almonds. Therefore, the estimated assessment revenue for the 1998-99
crop year as a percentage of total grower revenue could range between
.97 and 1.3 percent.
[[Page 48997]]
This action increases 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
are 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 June 4, 1998,
meeting was a public meeting and all entities, both large and small,
were able to express views on this issue.
This rule imposes 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.
The Department has not identified any relevant Federal rules that
duplicate, overlap, or conflict with this rule.
A proposed rule concerning this action was published in the Federal
Register on July 24, 1998 (63 FR 39755). 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 30-day comment period ending August 24, 1998, was provided for
interested persons to respond to the proposal. One comment in support
of the proposed rule was received from a large cooperative handler.
This handler supports increasing the assessment rate and continuing the
credit-back program mentioned earlier.
The proposed regulatory language in Sec. 981.343 incorrectly stated
that the assessment rate of $0.025 per pound of assessable almonds
would apply on and after June 4, 1998. The date should have been August
1, 1998, and has been corrected.
After consideration of all relevant material presented, including
the information and recommendation submitted by the Board, the comment
received, 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.
Pursuant to 5 U.S.C. 553, it also found and determined that good
cause exists for not postponing the effective date of this rule until
30 days after publication in the Federal Register because the 1998-99
crop year began on August 1, 1998, and the marketing order requires the
assessment rate to apply to all almonds received during the 1998-99 and
subsequent crop years. Further, handlers are already receiving 1998-99
crop year almonds from growers, the Board needs to have sufficient
funds to cover its expenses that are incurred on a continuous basis,
and handlers are aware of this rule which was recommended unanimously
at a public meeting. Also, a 30-day comment period was provided for in
the proposed rule, and a comment was received in support of this action
from a large cooperative almond handler.
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.
2. Section 981.343 is revised to read as follows:
Sec. 981.343 Assessment rate.
On and after August 1, 1998, an assessment rate of $0.025 per pound
is established for California almonds. Of the $0.025 assessment rate,
$0.0125 per assessable pound is available for handler credit-back.
Dated: September 8, 1998.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-24535 Filed 9-11-98; 8:45 am]
BILLING CODE 3410-02-U