[Federal Register Volume 62, Number 209 (Wednesday, October 29, 1997)]
[Rules and Regulations]
[Pages 56049-56051]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-28630]
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Rules and Regulations
Federal Register
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Federal Register / Vol. 62, No. 209 / Wednesday, October 29, 1997 /
Rules and Regulations
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 981
[Docket No. FV97-981-2 FR]
Almonds Grown in California; Interhandler Transfers of Reserve
Obligations
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: This final rule revises regulations under the California
almond marketing order to authorize interhandler transfers of reserve
obligations. The almond marketing order regulates the handling of
almonds grown in California and is administered locally by the Almond
Board of California (Board). This rule will allow the Board to
implement authority contained in the marketing order to authorize
handlers to transfer reserve withholding obligations to other handlers.
It will provide handlers with an additional option to satisfy reserve
obligations. This rule will enhance the utility and flexibility of the
volume control regulations while benefiting producers, handlers, and
consumers.
EFFECTIVE DATE: This rule becomes effective November 28, 1997.
FOR FURTHER INFORMATION CONTACT: Kathleen M. Finn, Marketing
Specialist, Marketing Order Administration Branch, F&V, AMS, USDA, room
2530-S, P.O. Box 96456, Washington, DC 20090-6456; telephone: (202)
720-1509, Fax: (202) 720-5698; or Martin Engeler, California Marketing
Field Office, Marketing Order Administration Branch, F&V, 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, F&V, AMS, USDA, room
2525-S, P.O. Box 96456, Washington, DC 20090-6456, telephone: (202)
720-2491 or Fax: (202) 720-5698.
SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order
No. 981 (7 CFR part 981), as amended, 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 (Department) is issuing this rule in
conformance with Executive Order 12866.
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. This rule is not intended to have retroactive effect.
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 to review the Secretary's
ruling on the petition, provided an action is filed not later than 20
days after date of the entry of the ruling.
This rule implements regulations authorizing interhandler transfers
of reserve obligations. Sections 981.45 through 981.60 set forth the
authority to implement volume control regulations under the order by
establishing salable and reserve percentages of almonds. Annually, the
Board meets to review projected crop estimates and marketing conditions
for the coming season. Variations in production can cause wide
fluctuations in prices. These swings in supplies and price levels can
result in market instability and uncertainty for growers, handlers,
buyers, and consumers.
If it is determined a reserve is warranted, the Board recommends to
the Secretary the salable and reserve percentages to be placed on the
almond crop. If a reserve is established, handlers are required to
refrain from selling to normal market outlets a quantity of almonds
equal to the reserve percentage. This percentage becomes the handlers'
reserve withholding obligation. Handlers must either maintain product
in inventory for possible release at a later date or dispose of product
to secondary reserve outlets to satisfy their reserve obligation. The
last season a reserve was in effect was during the 1994-95 crop year.
Section 981.55 of the order was amended by final order dated June
26, 1996 (61 FR 32917) to include a provision that allows handlers to
transfer reserve withholding obligations to other handlers. Prior to
the amendment to the order, Sec. 981.55 authorized only the transfer of
almonds (not reserve almonds) or reserve credits to other handlers.
Reserve credits are issued to handlers when they dispose of almonds to
secondary outlets in satisfaction of their reserve obligation. Handlers
can transfer excess credits to other handlers. Receiving handlers can
use the credit to meet all or a portion of their reserve obligations.
This section of the order further states that the terms and conditions
implementing the provision must be recommended by the Board and
approved by the Secretary. Adding a third option by amendment to the
order was intended to provide more flexibility for handlers in
satisfying their reserve obligation.
At a Board meeting held on February 18, 1997, the Board unanimously
recommended implementing the third option under Sec. 981.55 concerning
reserve withholding obligation transfers by making appropriate changes
to the rules and regulations. This rule will enhance the utility and
flexibility of the volume control regulations. It will provide handlers
with an additional method of satisfying reserve obligations.
Currently, Sec. 981.455 contains three paragraphs setting forth
rules and regulations regarding interhandler transfers of almonds.
These paragraphs set forth procedures for (1) transferring
[[Page 56050]]
non-reserve almonds; (2) transferring reserve credits; and (3)
transferring inedible almond obligations. This rule will add a new
paragraph including procedures for transferring reserve withholding
obligations.
This rule will expand the options available to handlers in the
event a reserve is implemented. The ability to transfer reserve
obligations will particularly benefit those handlers who do not stay in
business all year and do not have facilities for storage of reserve
almonds. Such handlers are traditionally the smaller handlers in the
industry. Storage and other costs associated with maintaining reserve
inventory or disposing of product to secondary outlets will be reduced.
This rule will provide another option for handlers to choose from in
satisfying their reserve obligations that may better suit their
operation.
The objective of the reserve provisions is to keep a certain
quantity of almonds off the market in order to maintain market
stability. The additional flexibility in the reserve provisions is
expected to improve compliance among handlers, which in turn will
maintain the integrity of the volume control regulations.
In order to ensure that adequate procedures are in place to monitor
transfer of reserve obligations among handlers, ABC Form 11, which
currently covers interhandler transfers of reserve credits, will be
modified. New information will be added to the form to properly
document reserve obligation transfers. Almond handlers wanting to
transfer their reserve obligation to another handler will complete one
portion of revised Form 11 and forward the form to the receiving
handler. The receiving handler will complete their portion of the form
and submit it to the Board. Authorized Board personnel will review, and
if appropriate, approve the transfer. The Board will then submit copies
of the forms to involved parties.
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), the Agricultural Marketing Service (AMS) has considered the
economic impact of this action 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 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 million
of almonds and 42 percent ship over $5 million 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.
Sections 981.45 through 981.60 of the almond marketing order
provide authority to implement volume control regulations by
establishing salable and reserve percentages of almonds. If it is
determined a reserve is warranted, the Board recommends to the
Secretary the salable and reserve percentages to be placed on the
almond crop. If a reserve is established, handlers must refrain from
selling to normal market outlets a quantity of almonds equal to the
reserve percentage. Handlers must either maintain product in inventory
for possible release at a later date or dispose of product to lower
value reserve outlets to satisfy their reserve obligation. These lower
value outlets are primarily crushing for oil and animal feed.
Section 981.55 of the order provides authority for the interhandler
transfer of almonds and reserve credits. This section was recently
amended to include authority for interhandler transfer of reserve
obligations. This rule will implement the authority to transfer reserve
withholding obligations by revising Section 981.455 of the
administrative rules and regulations accordingly. This rule will
provide another option, in addition to those that appear in that
section, for handlers to satisfy their reserve obligations. The ability
to transfer reserve obligations will particularly benefit those
handlers who do not stay in business all year and do not have
facilities for storage of reserve almonds. Such handlers are
traditionally the smaller handlers in the industry. Storage and other
costs associated with maintaining reserve inventory or disposing of
product to secondary outlets will be reduced. This rule will provide
another option for handlers to choose from in satisfying their reserve
obligations that may better suit their operation.
In past years, handlers either had to maintain product in inventory
or dispose of it in approved reserve outlets to satisfy their
withholding obligation, as discussed earlier. Those handlers choosing
to maintain product in inventory must locate storage facilities and
incur storage costs they may not otherwise incur, until the reserve is
lifted.
Storage costs vary, depending upon factors such as the type of
facilities utilized and quantities involved. These costs are generally
in the range of one cent per pound per month, with additional charges
for moving product into and out of storage facilities. These costs
could be incurred for approximately six to eighteen months depending on
the ultimate disposition of the reserve.
Those handlers choosing to dispose of their reserve to approved
outlets may save on storage costs, but receive a lower return on the
sales than they may receive if sold in normal market channels if the
reserve is ultimately released. Price levels for almonds used for
crushing into oil are in the range of 28 to 35 cents per pound, while
animal feed brings about two to three cents per pound. Price levels for
sales to normal market outlets vary significantly from year to year
depending on available supplies and market conditions, and can range
from $1 to $3 per pound. The additional option that will be provided by
this rule will allow handlers to make arrangements to transfer their
reserve obligation to other handlers. Handlers will be able to choose
the most cost effective method of satisfying their reserve obligations
that best suits their operations. This rule will provide more
flexibility if volume control regulations under the almond marketing
order are issued.
A current form is being revised for handlers to supply the transfer
information to the Board for its approval. The current form (ABC Form
11) provides for handlers to transfer reserve credits. Information will
be added to this form to collect information on transfers of
withholding obligation. No additional burden will be added to the form
because handlers will choose one of the options on the form. The form's
current burden time of 5 minutes will not be changed. This action will
not impose any significant additional reporting or recordkeeping
requirements on either small or large almond
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handlers. The benefits of providing another tool to the industry to
assist them in making business decisions far outweigh the estimated 5
minutes it will take to complete the form. Further, any additional
reporting may be offset by reduced reporting for those handlers
choosing to utilize this option in lieu of other options available for
satisfying reserve obligations. 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.
As noted in the initial regulatory flexibility analysis, the
Department has not identified any relevant Federal rules that
duplicate, overlap or conflict with this rule. Information generated by
State, Federal, and private sector reports pertains to almonds in
general and does not contain specific producer and handler information.
Therefore, such information would not be detailed enough to be used for
the specific purposes required under the order.
The amendment to the marketing order was voted on in a referendum
and was overwhelmingly supported by almond growers. This rule will
establish procedures to implement the amendment that authorized
transfers of reserve obligations. There are no alternatives that would
result in the additional flexibility sought by the industry.
In addition, 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 on all issues. Like
all Board meetings, the February 18, 1997, meeting was a public meeting
and all entities, both large and small, were able to express views on
this issue. The Board itself is composed of ten industry members, of
which five are handlers and five are growers.
A proposed rule concerning this action was issued by the Department
on April 4, 1997, and published in the Federal Register on April 10,
1997 (62 FR 17569). It was also made available through the Internet by
the Office of the Federal Register. A 60 day comment period was
provided to allow interested persons to respond to the proposal. No
comments were received.
After consideration of all relevant matter 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.
The proposed rule regarding the interhandler transfer of almonds
also announced the AMS's intent to request a revision to the currently
approved information collection requirements issued under the marketing
order. The 60 day comment period was also provided to allow interested
persons the opportunity to respond to the notice. No comments were
received on the information collection requirements.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
Chapter 35), the information collection requirements that are contained
in this rule have been approved by the Office of Management and Budget
(OMB) and have been assigned OMB No. 0581-0071.
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. In Sec. 981.455, paragraph (c) is redesignated as paragraph (d)
and a new paragraph (c) is added to read as follows:
Sec. 981.455 Interhandler transfers.
* * * * *
(c) Transfers of reserve withholding obligation. A handler may
transfer reserve withholding obligation to other handlers pursuant to
Sec. 981.55 after having filed with the Board an ABC Form 11 executed
by both handlers. The Board shall approve the transfer upon receipt of
the properly completed form.
* * * * *
Dated: October 23, 1997.
Eric M. Forman,
Acting Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 97-28630 Filed 10-28-97; 8:45 am]
BILLING CODE 3410-02-P
