[Federal Register Volume 60, Number 95 (Wednesday, May 17, 1995)]
[Rules and Regulations]
[Pages 26341-26343]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-12145]
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[[Page 26342]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 981
[Docket No. FV94-981-4 FR]
Almonds Grown in California; Reduction of Expenses and Assessment
Rate
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: This rule revises the expenses and assessment rate previously
established under Marketing Order No. 981 for the 1994-95 crop year.
This rule reduces 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.
EFFECTIVE DATE: Effective July 1, 1994, through June 30, 1995.
FOR FURTHER INFORMATION CONTACT: Kathleen M. Finn, Marketing
Specialist, Marketing Order Administration Branch, Fruit and Vegetable
Division, AMS, USDA, P.O. Box 96456, room 2522-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 final 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 rule in
conformance with Executive Order 12866.
This 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 issued 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 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), 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 totalled $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 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 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 [[Page 26343]] 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.
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
will 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 will reduce the budget to
$5,235,262. The reduced budget will 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.
Under this assessment rate reduction, there is no assessment for
these handlers to claim credit-back against. However, an assessment
rate of .25 cents per pound is significantly lower than the previously
established rate of 2.25 cents. Under the previous 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 will 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.
A proposed rule concerning this rule was published in the March 24,
1995, Federal Register (60FR 15523), with a 30-day comment period. Two
comments were received.
The first comment received was from an independent handler who was
concerned that some handlers will make their final accountings to
growers prior to the finalization of the proposed rule. If handlers
make final payment to their growers based on the proposed assessment
and USDA modifies the proposal, the commenter states that some of these
handlers will file petitions against USDA for modifying the proposal
under section 608c(15)(A) of the Act. However, this final rule does not
modify the proposed rule and both handlers and growers had adequate
notice of this change. In addition, the marketing order does not
regulate contractual relationships between handlers and growers.
The second comment was received from the Office of Chief Counsel
for Advocacy of the United States Small Business Administration (SBA).
The SBA contended that although it concurs with the cancellation of the
advertising component of the order until legal disputes are resolved,
USDA's assertion that this cancellation of the advertising program
would not have a significant economic impact on a substantial number of
small entities was illogical. SBA contends that rational businesses are
not going to subject themselves to the increased paperwork generated by
the advertising program for insignificant economic gain and USDA
appears to be avoiding its responsibilities under the RFA.
Although SBA's comment seems to relate to the implementation of the
almond promotional program, rather than the elimination of that
program, consideration was given to the impact of this rule on large
and small handlers. As stated previously in this final rule and in the
proposed rule, concerns were raised about the handlers who have
incurred expenses that would be eligible for credit-back. It was
determined that handlers will pay significantly less even if they
conducted advertising for which they believed they would be entitled to
credit-back as well as derive benefits from the advertising they
conducted.
Another determination made in this rule and in the proposed rule
was that the action taken by the Board to minimize financial liability
in the event the pending litigation is decided unfavorably to the
Board, is sensible and reduces economic risk to handlers.
For the above reasons, USDA disagrees with the SBA's assertion that
this action fails to meet the requirements of the RFA. The program's
impact on small businesses has been properly addressed in this document
and in the proposed rule.
This rule reduces the assessment obligation imposed on handlers.
The assessments are uniform for all handlers. The assessment cost will
be offset by the benefits derived by the operation of the marketing
order. Therefore, the Administrator of the AMS has determined that this
action will not have a significant economic impact on a substantial
number of small entities.
After consideration of the Board's recommendations and other
relevant information presented, it is found that this final rule will
tend to effectuate the declared policy of the Act.
Pursuant to 5 U.S.C. 553, it is 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: (1) This
rule reduces the assessment rate currently in effect; (2) this rule
should be in effect as soon as possible because the 1994 crop year
began on July 1, 1994; and (3) the proposed rule provided a 30-day
comment period and the only comments received did not oppose the
reduction.
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.
Note: The following section will not appear in the Code of
Federal Regulations.
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: May 11, 1995.
Sharon Bomer Lauritsen,
Deputy Director, Fruit and Vegetable Division.
[FR Doc. 95-12145 Filed 5-16-95; 8:45 am]
BILLING CODE 3410-02-P
