[Federal Register Volume 60, Number 57 (Friday, March 24, 1995)]
[Proposed Rules]
[Pages 15522-15523]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-7336]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 60, No. 57 / Friday, March 24, 1995 /
Proposed Rules
[[Page 15522]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 981
[Docket No. FV94-981-4 PR]
Almonds Grown in California; Reduction of Expenses and Assessment
Rate
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed rule with request for comments.
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SUMMARY: This proposed rule invites comments on revising the expenses
and assessment rate previously established under Marketing Order No.
981 for the 1994-95 crop year. This proposal would reduce the budget of
expenses and rate which almond handlers may be assessed for funding
expenses by the Almond Board of California (Board) that are reasonable
and necessary to administer the program.
DATES: Comments received by April 24, 1995, will be considered prior to
issuance of a final rule.
ADDRESSES: Interested persons are invited to submit written comments
concerning this action. Comments must be sent in triplicate to the
Docket Clerk, Fruit and Vegetable Division, AMS, USDA, P.O. Box 96456,
Room 2523-S, 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: Kathleen M. Finn, Marketing
Specialist, Marketing Order Administration Branch, Fruit and Vegetable
Division, AMS, USDA, P.O. Box 96456, room 2536-S, Washington, DC 20090-
6456, telephone 202-720-1509, or FAX (202) 720-5698; or Martin Engeler,
Assistant Officer-In-Charge, California Marketing Field Office, Fruit
and Vegetable Division, AMS, USDA, 2202 Monterey Street, Suite 102B,
Fresno, California 93721, telephone 209-487-5901, or FAX (209) 487-
5906.
SUPPLEMENTARY INFORMATION: This proposed 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. 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 proposed
rule in conformance with Executive Order 12866.
This proposed rule has been reviewed under Executive Order 12778,
Civil Justice Reform. Under the provisions of the marketing order now
in effect, California almonds are subject to assessments. It is
intended that the assessment rate as proposed herein will be applicable
to all assessable almonds handled during the 1994-95 crop year, which
began July 1, 1994, and ends June 30, 1995. This proposed rule 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), 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
requesting 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 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.
Pursuant to the requirements set forth in the Regulatory
Flexibility Act (RFA), the Administrator of the Agricultural Marketing
Service (AMS) has considered the economic impact of this rule on small
entities.
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 California almonds under
this marketing order, and approximately 115 handlers. Small
agricultural producers have been defined by the Small Business
Administration [13 CFR 121.601] as those having annual receipts of less
than $500,000, and small agricultural service firms are defined as
those whose annual receipts are less than $5,000,000. The majority of
California almond producers and handlers may be classified as small
entities.
A budget of expenses and rate of assessment for the 1994-95 crop
year was recommended on May 18, 1994, by the Board, the agency
responsible for local administration of the program. An interim final
rule was issued in the Federal Register on July 14, 1994, [59 FR 35847]
and a final rule was issued in the September 8, 1994 Federal Register
[59 FR 46321]. Approved expenditures total $9,435,262 with an approved
assessment rate of 2.25 cents per pound. Of the 2.25 cents per pound,
handlers could receive credit-back against their assessment obligation
up to one cent per pound for their own promotional expenditures.
Specific explanations of various expenditure categories and comparisons
with a prior period are contained in the aforementioned final rule.
The Board met on September 14, 1994, and recommended, by a seven to
two vote, postponing its paid advertising campaign and directly related
activities until further notice. It also voted to postpone assessment
billings pending evaluation of legal issues and future program
activities. Generic public relations activities and other promotion-
related activities to which the Board was contractually committed at
that time are to be continued. This action was taken as a result of
uncertainty created by legal [[Page 15523]] decisions regarding the
Board's former advertising and promotion program.
Specifically, the Ninth Circuit Court of Appeals ruled in December
1993, that aspects of the Board's former advertising and promotion
program in the 1980's were unconstitutional. On remand, the district
court subsequently awarded plaintiff handlers refunds of assessments
and other money spent under the program. This decision was issued on
September 6, 1994, which led to the Board's actions to postpone
advertising activities at its September 14, 1994, meeting. The district
court's remand decision is currently being appealed. In addition,
several handlers filed legal challenges to the Board's current credit-
back advertising and promotion program, pursuant to Section
608(c)(15)(A) of the Act.
The Board again met on November 30, 1994, and recommended, by a
seven to three vote, reducing the assessment rate by eliminating the
portion applicable to credit-back to handlers for their own promotional
activities (one cent), and by eliminating the portion of the remaining
assessment applicable to generic promotion activities. The resulting
assessment rate the Board recommended handlers pay was .47 cents per
pound. Concurrently, the Board again postponed assessment billings
pending further evaluation of the Board's financial status. These
actions were taken because of the apparent lack of support by some
handlers at the present time for generic promotion and credit-back
programs, demonstrated by legal challenges filed by such handlers
representing a significant portion of the industry volume. One Board
member commented that since the handlers who have filed legal
challenges are not likely to pay the advertising assessment, it is not
equitable for the remainder of the industry to shoulder the expense of
an advertising program.
The Board met again on February 1, 1995, and recommended, by a six
to four vote, to further reduce the assessment rate. The Board
recommended an assessment rate of .25 cents per pound. This action was
taken after the Board further evaluated its financial position and
current and future program activities.
If implemented and collected, an assessment rate of .25 cents per
pound will generate income of $1,675,000 based on an estimated
assessable crop of 670 million pounds. When combined with cash and cash
equivalents held by the Board, this would provide the Board with
sufficient income to meet its administrative expenses and those
promotional expenses to which it is contractually obligated for the
remainder of the current fiscal year.
To reduce the budget of expenses previously approved ($9,435,262),
the Board deleted the funds budgeted for reserve replenishment
($300,000) and at its November 30, 1994, meeting, postponed a major
portion ($3.9 million) of the $4.7 million funds budgeted for
promotional activities. These revisions would reduce the budget to
$5,235,262. The reduced budget would provide the Board with sufficient
capital to carry into the next fiscal year to finance operations prior
to collection of future assessments.
Concerns were raised that the reduction of the assessment rate mid-
way through the crop year may generate complaints from those handlers
who relied on the final rule of September 8, 1994, which established an
assessment rate of 2.25 cents per pound, of which handlers could
receive credit-back up to one cent per pound for their own promotional
expenditures. Some handlers have incurred expenses that would be
eligible for credit-back under the provisions of that rule.
If the assessment rate is reduced with no portion being creditable,
there will be no assessment for these handlers to claim credit-back
against. However, an assessment rate of .25 cents per pound is
significantly lower than the current rate of 2.25 cents. Under the
current established assessment of 2.25 cents, if handlers claimed
credit-back for the entire one cent, they would still be required to
pay 1.25 cents per pound to the Board. Handlers would pay significantly
less even if they conducted advertising for which they believed credit-
back would be obtained. In addition, benefits are derived from
advertising undertaken by these handlers.
This action would reduce the assessment obligation imposed on
handlers. The assessments would be uniform for all handlers. The
assessment cost would be offset by the benefits derived by the
operation of the marketing order. Therefore, the Administrator of the
AMS has determined that this action would not have a significant
economic impact on a substantial number of small entities.
Interested persons are invited to submit their views and comments
on this proposal. Comments received within 30 days of publication of
this proposed rule in the Federal Register will be considered prior to
any final action being taken.
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
proposed to 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.
2. Section 981.341 is revised to read as follows:
Sec. 981.341 Expenses and assessment rate.
Expenses of $5,235,262 by the Almond Board of California are
authorized for the crop year ending June 30, 1995. An assessment rate
for the crop year payable by each handler in accordance with
Sec. 981.81 is fixed at .25 cents per kernel pound of almonds. Of the
.25 cents assessment rate, none is available for handler credit-back
pursuant to Sec. 981.441.
Dated: March 21, 1995.
Sharon Bomer Lauritsen,
Deputy Director, Fruit and Vegetable Division.
[FR Doc. 95-7336 Filed 3-23-95; 8:45 am]
BILLING CODE 3410-02-W
