WSR 97-11-085

PROPOSED RULES

DEPARTMENT OF AGRICULTURE

[Filed May 21, 1997, 11:34 a.m.]

Original Notice.

Preproposal statement of inquiry was filed as WSR 97-08-083.

Title of Rule: WAC 16-536-040, increase the grower assessments on dry peas and lentils.

Purpose: To consider a proposal from the dry pea and lentil growers to increase the assessment on all varieties of dry peas and lentils from one percent of net receipts at first point of sale to two percent.

Statutory Authority for Adoption: Washington State Agricultural Enabling Act of 1961-Commodity Boards, RCW 15.65.050.

Statute Being Implemented: Chapter 15.65 RCW.

Summary: The proposal, if adopted, will increase the assessment on dry peas and lentils grown in the state of Washington from one percent of net receipts at the first point of sale to two percent.

Reasons Supporting Proposal: The director of agriculture received a petition from the producers of dry peas and lentils to increase the assessment. The Dry Pea and Lentil Commission received approval from the 55th legislature (ESB 5514) to increase assessment above the fiscal growth factor as required by I-601. The assessment increase must also be approved by a vote of the growers.

Name of Agency Personnel Responsible for Drafting: Walter Swenson, 1111 Washington Street, 2nd Floor, Olympia, WA, (360) 902-1928; Implementation and Enforcement: Tim McGreevy, 5071 Highway 8 West, Moscow, ID, (208) 882-3023.

Name of Proponent: United States Dry Pea and Lentil Council, private.

Agency Comments or Recommendations, if any, as to Statutory Language, Implementation, Enforcement, and Fiscal Matters: Affected producers must approve the assessment increase by a referendum vote before the increase becomes effective.

Rule is not necessitated by federal law, federal or state court decision.

Explanation of Rule, its Purpose, and Anticipated Effects: The rule will increase the assessment of dry peas and lentils grown in the state of Washington from one percent of net receipts at the first point of sale to two percent. The rule is proposed because the dry pea and lentil industry faces reduced federal funding in the area of research and market development. Without an assessment increase, the industry may lose its entire research program and its competitive position in the domestic and export markets.

Proposal Changes the Following Existing Rules: The rule, if approved by a majority vote of the growers, would increase the assessment on dry peas and lentils from one percent of net receipts at the first point of sale to two percent.

A small business economic impact statement has been prepared under chapter 19.85 RCW.

Rule Summary: The proposed rule change will allow the growers of dry peas and lentils in the state of Washington to determine by referendum vote, whether to increase their assessment rate from one percent of the net receipts at the first point of sale to two percent.

Background: In every commodity commission marketing order, the director of agriculture prescribes the rate of assessment and method of collection. This rate of assessment and collection method may be adjusted or amended from time to time, but only upon compliance with the procedural requirements of the Washington Agricultural Enabling Act of 1961, chapter 15.65 RCW. The procedure requires an assent, or approval, by a majority of the growers. The marketing order for dry peas and lentils was issued in 1965. The rate of assessment has not been increased since 1987.

The director of agriculture received a petition from the dry pea and lentil industry to conduct a referendum of the growers to increase the rate of assessment. The dry pea and lentil industry faces reduced federal funding in the area of research and market development. Without an assessment rate increase, the industry may lose its entire research program and its competitive position in the domestic and international markets.

Cost of Compliance: If approved by the growers, the assessment rate on dry peas and lentils will increase from one percent of receipts at the first point of sale to two percent. The effect this rate increase will have on assessments paid by a grower is shown on an average per acre basis in the following table:

Green Yellow Austrian

Peas Peas Peas Lentils

Harvested Acres 90,455 8,554 600 92,000

Yield/Acre (lbs) 1,850 1,880 1,147 1,143

Grower Price

(cents/lb.) 0.0832 0.0793 0.0878 0.1565

Per Acre

Assessment @ 1% $1.54 $1.49 $1.01 $1.79

Per Acre

Assessment @ 2% $3.08 $2.98 $2.02 $3.58

Businesses in the dry pea and lentil industry are defined as producers and handlers. A producer is any person, firm, association or corporation engaged in the production of dry peas and lentils in commercial quantities. There are approximately 3000 affected producers in the state engaged in the production of dry peas and lentils. The cost of compliance for each producer is in direct proportion to harvested acres, yield, and grower price. The factors that affect cost are variable such as management, market conditions and growing conditions. Generally, the cost of compliance can be stated as twice the amount a grower would pay in assessments on the same amount of production prior to the increase in the assessment rate, assuming grower price remains constant. Businesses affected by the assessment rate increase will not incur any additional cost in equipment, supplies, labor or administrative cost.

Handlers collect the assessments from the producer at the first point of sale and remit the funds to the board of the Dry Pea and Lentil Commission. Handlers are defined as any person who acts as principal or agent in processing, selling, marketing or distributing dry peas and lentils not produced by the handler. Handlers of dry peas and lentils currently collect assessments from the growers and remit to the board of the commission and will not incur any additional cost in equipment, supplies, labor or administrative cost as a result of the assessment rate increase.

Mitigation: The concept of commodity commissions is based on the theory that every producer benefits in proportion to the volume of the affected commodity they produce. Commodity commissions are organized by agricultural industries to provide the means for producers to assess themselves to finance programs to solve some of their immediate and long-term economic problems. The dry pea and lentil marketing order was issued to provide for advertising and promotion programs, research in production and processing, and to establish uniform grades and standards of quality. Growers affected by the assessment rate increase have the authority, following procedures in chapter 15.65 RCW, to amend the assessment rate if the programs funded by the assessments are determined by the majority of growers to be ineffective.

Prepared: May 1997.

A copy of the statement may be obtained by writing to Walter Swenson, Washington State Department of Agriculture, Agricultural Programs Administrator, P.O. Box 42560, Olympia, WA 98504-2560, phone (360) 902-1928, FAX (360) 902-2089.

Section 201, chapter 403, Laws of 1995, does not apply to this rule adoption. The Washington State Department of Agriculture is not a listed agency in section 201.

Hearing Location: Colfax Public Works Building, Auditorium (1st Floor), 310 North Main, Colfax, WA 99111, on June 24, 1997, at 7:00 p.m.

Assistance for Persons with Disabilities: Contact Cathy Jensen by June 17, 1997, TDD (360) 902-1996, or (360) 902-1976.

Submit Written Comments to: Walter Swenson, Washington State Department of Agriculture, P.O. Box 42560, Olympia, WA 98504-2560, FAX (360) 902-2089, by June 24, 1997.

Date of Intended Adoption: July 23, 1997.

May 21, 1997

William E. Brookreson

Assistant Director

Agency Operations

AMENDATORY SECTION (Amending Order 1895, filed 7/3/86, effective 8/4/86)

WAC 16-536-040 Assessments and collections. (1) Assessments.

(a) The assessment on all varieties of dry peas and dry lentils subject to this marketing order shall be ((one)) two percent of the net receipts at the first point of sale and shall be deducted by the first purchaser from the price paid to the grower. Such assessment shall be remitted to the commission board in accordance with procedures adopted by the commission board: Provided, That such assessment on commercial wrinkled pea seed shall not become effective unless approved by a referendum vote of the affected wrinkled pea seed producers.

(b) Such assessments shall not be payable on any such dry peas and/or lentils used by the producer thereof on his premises for feed, seed and personal consumption.

(2) Collections. Any moneys collected or received by the board pursuant to the provisions of the order during or with respect to any season or year may be refunded on a pro rata basis at the close of such season or year or at the close of such longer period as the board determines to be reasonably adapted to effectuate the declared policies of this act and the purposes of such marketing agreement or order, to all persons from whom such moneys were collected or received, or may be carried over into and used with respect to the next succeeding season, year or period whenever the board finds that the same will tend to effectuate such policies and purposes.

(3) Penalties. Any due and payable assessment herein levied in such specified amount as may be determined by the board pursuant to the provisions of the act and the order, shall constitute a personal debt of every person so assessed or who otherwise owes the same, and the same shall be due and payable to the board when payment is called for by it. In the event any person fails to pay the board the full amount of such assessment or such other sum on or before the date due, the board may, and is hereby authorized to add to such unpaid assessment or sum an amount not exceeding ten percent of the same to defray the cost of enforcing the collecting of the same. In the event of failure of such person or persons to pay any such due and payable assessment or other such sum, the board may bring a civil action against such person or persons in a state court of competent jurisdiction for the collection thereof, together with the above specified ten percent thereon, and such action shall be tried and judgment rendered as in any other cause of action for debt due and payable.