[Federal Register Volume 63, Number 19 (Thursday, January 29, 1998)]
[Rules and Regulations]
[Pages 4368-4372]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-2122]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 989
[Docket No. FV97-989-3 FIR]
Raisins Produced From Grapes Grown in California; Modifications
to the Raisin Diversion Program
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: The Department of Agriculture (Department) is adopting, as a
final rule, without change, the provisions of an interim final rule
modifying the raisin diversion program (RDP) currently authorized under
the Federal marketing order for California raisins. The marketing order
regulates the handling of raisins produced from grapes grown in
California and is administered locally by the Raisin Administrative
Committee (Committee). Under the RDP, producers are issued certificates
representing reserve raisins for voluntarily reducing their raisin
production in order to bring raisin supplies more closely in line with
market needs. Producers may then sell these certificates to handlers,
who, in turn, can redeem the certificates for reserve raisins. This
rule continues in effect various modifications to the diversion program
to improve compliance and bring the program in line with current
industry practices. Improving compliance with the RDP helps ensure
equity among all producers who participate in the program, and helps
maintain the integrity of the RDP.
EFFECTIVE DATE: March 2, 1998.
FOR FURTHER INFORMATION CONTACT: Maureen T. Pello, Marketing
Specialist, 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; or George Kelhart, Technical Advisor, Marketing Order
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, room
2525-S, PO 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, PO Box 96456, Washington, DC 20090-6456; telephone: (202)
720-2491, Fax: (202) 205-6632.
SUPPLEMENTARY INFORMATION: This rule is issued under Marketing
Agreement and Order No. 989, both as amended (7 CFR part 989),
regulating the handling of raisins produced from grapes grown in
California, hereinafter referred to as the ``order.'' 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 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
[[Page 4369]]
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 continues in effect modifications to the raisin diversion
program currently authorized under the Federal marketing order for
California raisins. Under the RDP, producers are issued certificates
representing reserve raisins for voluntarily reducing their raisin
production in order to bring raisin supplies more closely in line with
market needs. Producers may then sell these certificates to handlers,
who, in turn, can redeem the certificates for reserve raisins. This
rule makes various modifications to the RDP to improve compliance and
bring the RDP in line with current industry practices. Improving
compliance with the RDP helps ensure equity among all producers who
participate in the program, and helps maintain the integrity of the
RDP.
The Federal marketing order for California raisins provides
authority for volume regulation designed to promote orderly marketing
conditions, stabilize prices and supplies, and improve producer
returns. When volume regulation is in effect, a certain percentage of
the raisin crop may be sold by handlers to any market (free tonnage)
while the remaining percentage of the crop must be held by handlers in
a reserve pool (or reserve) for the account of the Committee. Reserve
pool raisins are disposed through certain programs authorized under the
order. For example, reserve raisins may be sold by the Committee to
handlers for sale to any market; exported to authorized countries;
carried over as a hedge against a short crop the following year; or may
be disposed of in other outlets not competitive with those for free
tonnage raisins, such as government purchase, distilleries, or animal
feed. The RDP is another program concerning reserve pool raisins
authorized under the order, and may be used as a means for controlling
overproduction. The RDP is described in the following paragraphs.
Pursuant to Sec. 989.56 of the order, the Committee meets by
November 30 of each crop year to review raisin data, including
information on production, supplies, market demand, and inventories. If
the Committee determines that the available supply of raisins,
including those in the reserve pool, exceeds projected market needs, it
can decide to implement a diversion program, and announce the amount of
tonnage eligible for diversion during the subsequent crop year.
Producers who wish to participate in the RDP must submit an application
to the Committee. Such producers then curtail their production by vine
removal or some other means established by the Committee and receive a
certificate from the Committee which represents the quantity of raisins
diverted. Producers sell these certificates to handlers who pay
producers for the free tonnage applicable to the diversion certificate
minus the established harvest cost for the diverted tonnage. Handlers
redeem the certificates by presenting them to the Committee and paying
an amount equal to the established harvest cost plus payment for
receiving, storing, fumigating, handling, and inspecting the tonnage
represented on the certificate. The Committee then gives the handler
raisins from the reserve pool in an amount equal to the tonnage
represented by the diversion certificate.
Section 989.156 of the order's administrative rules and regulations
prescribes additional procedures for the RDP. At a meeting on August
14, 1997, the Committee unanimously recommended that various changes be
made to these additional RDP procedures to improve compliance and bring
the RDP in line with current industry practices.
The first change to the RDP recommended by the Committee concerns
references throughout Sec. 989.156 to partial production units. Such
references are contained in paragraphs (d), (h)(2), (h)(3), (i),
(s)(1), and (s)(3) of Sec. 989.156. As defined in Sec. 989.156(o), a
production unit is a clearly defined geographic area with permanent
boundaries (either natural or man-made). For example, a production unit
could be 30 acres of raisins surrounded by a permanent road on two
sides and permanent fencing on the other two sides.
Partial production units have been allowed under the RDP in past
years. For instance, in the 30-acre production unit example, three rows
of vines from that unit could qualify as a partial production unit
under the RDP. Under Sec. 989.156(s)(3) of the order's administrative
rules and regulations, the determination of the tonnage allowed for
acreage removed for such a partial unit would be computed by
multiplying the previous year's tonnage produced and verified on the
entire unit by the ratio of the acreage removed divided by the acreage
contained in the total production unit. However, the Committee is
concerned that some producers may be removing weak vines in a
production unit and getting credit under the RDP for an inflated amount
of tonnage. In the 30-acre example, a producer could have an average
past production of 2.2 tons of raisins on the entire unit, remove three
rows of low-producing vines that averaged only 1.5 tons of raisins per
acre, and get credit in the RDP for 2.2 tons of raisins per acre.
Although Sec. 989.56(a) of the order specifies a cap of 2.75 tons of
raisins per acre for an approved production unit (which can be changed
through informal rulemaking), the Committee is still concerned that
actual production on a partial unit could be inflated.
Thus, the Committee recommended that partial production units no
longer be accepted as part of the RDP. This change will help ensure
that producers who participate in an RDP do not receive credit for an
inflated amount of tonnage and gain a financial advantage over other
producers. This change will help ensure equity among all producers who
participate in the program, and help maintain the integrity of the RDP.
In addition, the Committee believes that this change will improve
the accuracy of the amount of tonnage accepted into the RDP. When an
RDP is established, a quantity of raisins equivalent to the amount
diverted would be made available in the subsequent crop year from the
prior year's reserve. This RDP diverted tonnage from the reserve is
included in the Committee's marketing policy computations for that year
and subject to free and reserve percentages. Thus, it is important for
the Committee to have as accurate a figure as possible for RDP tonnage.
The Committee believes that not allowing partial production units into
the RDP will improve the accuracy of this figure. Appropriate changes
have been made to the applicable paragraphs to implement this
recommended change.
According to Committee staff, most of the RDP applications over the
years have been for full production units. The partial unit authority
has typically been used by a producer desiring to receive credit under
the RDP for a few weak rows of vines, which usually amounts to less
than an acre. Thus, this change is not expected to adversely impact RDP
participants.
The second change recommended by the Committee concerns paragraph
(g) of Sec. 989.156 regarding procedures to verify whether producers
under the RDP are curtailing their production. This section
[[Page 4370]]
currently specifies that committees of industry persons may be
established to serve as agents of the Committee in assuring producer
compliance with the RDP. These groups of industry persons may be
furnished approved RDP applications and are to advise the Committee on
the progress of the diversion within a particular district.
Such industry committees have been utilized during only one season
since the inception of the RDP in 1985. Committee staff has assumed the
functions of monitoring producer diversion and assuring program
compliance. Thus, the Committee recommended that reference to these RDP
industry committees be removed from Sec. 989.156(g) of the order's
administrative rules and regulations. This change brings RDP procedures
in line with current industry practices.
A third change to the RDP recommended by the Committee concerns
paragraph (h) of Sec. 989.156 regarding compliance. Paragraph (h)(1) of
Sec. 989.156 currently specifies that an approved applicant must remove
or spur-prune vines to preclude grapes from being produced and
harvested on the production unit involved in the program: Provided,
That vine removal may be the only acceptable means of diversion in some
seasons as determined by the Committee. If the Committee
representatives or agents determine that there is an average of more
than four bunches per vine remaining on a properly spur-pruned
production unit, the producer must be notified in writing and given 2
weeks to remove such bunches.
The Committee recommended that this section be modified to remove
the impression that spur-pruning is the only acceptable method of
diverting the crop, other than removing the vines altogether. Other
methods such as spraying with certain substances should also be
allowed. Producers should be allowed to remove and destroy the bunches
of grapes by whatever method they choose in order to receive a
diversion certificate. The Committee also recommended that the word
``acceptable'' in the first sentence in Sec. 989.156(h)(1) be removed
because it is not necessary. In addition, the Committee recommended
that the section be modified to strengthen the requirement regarding
producer notification of noncompliance with the RDP. Specifically,
Committee staff must notify producers ``immediately by certified
mail,'' in writing, and give producers 2 weeks to remove extra bunches.
The Committee believes that this added language will strengthen
producer compliance with the RDP.
The Committee also recommended that paragraph (h)(3) of
Sec. 989.156 concerning failure to divert be revised to specify that
any producer who has more than one production unit and fails to divert
on an approved production unit may be denied the opportunity to
participate in the next RDP on all of that producer's production units.
The current provisions specify that the producer should be denied
participation, and not the specific production unit. However, the
provisions have been interpreted so that producers only have been
denied the opportunity to participate in the next RDP on the unit that
was not properly diverted, not all of that producer's units. The
clarification will eliminate the confusion and is expected to provide
producers more incentive to remain in compliance with the RDP because
the clarified provisions specify that the failure to comply could mean
denial to participate on any of that producer's production units in the
next RDP. Thus, this provision is expected to strengthen producer
compliance with the RDP which will help ensure that the integrity of
the program is maintained.
The fourth change to the RDP recommended by the Committee concerns
paragraph (o) of Sec. 989.156. This section defines a production unit.
As previously mentioned, a production unit is a clearly defined
geographic area with permanent boundaries (either natural or man-made).
Under the RDP, producers must be able to document to the Committee the
previous year's production data for that specific area by means of
sales receipts or other delivery or transfer documents which indicate
the creditable fruit weight delivered to handlers from that specific
area. Additional criteria are specified for new production units and
existing units that may have been transferred to another producer.
The Committee believes that additional information may be necessary
in some cases to verify the appropriate production figure to apply to a
production unit. There have been concerns that some producers have
inflated their production units under past RDP's by reporting
statistics showing higher than actual raisin production. For example,
since diversion certificate tonnage is based on the tons of raisins
delivered per acre during the prior year, producers could inflate their
tonnage by acquiring raisins from another source and adding them to
deliveries from their production units, thereby receiving credit for a
greater amount of raisins than actually produced on the acreage. By
inflating yield figures, producers could receive diversion certificates
equal to more raisins from the reserve pool than they actually would
have produced from those production units.
Thus, the Committee recommended that authority be added to
paragraph (o) of Sec. 989.156 authorizing Committee staff to request
additional documentation to substantiate the tonnage of raisins
produced on any known production unit. This documentation may include
information such as tray count, employee payroll records, prior years'
production for all production units, and insurance records. This
information is maintained by producers in the normal course of
business. Such information for approved production units, in addition
to producers' other known production units, will give Committee staff
another tool to ensure producer compliance with the RDP so that the
integrity of the program is maintained.
This rule also continues to make minor changes to remove obsolete
language in paragraph (s)(1) in Sec. 989.156. That paragraph makes two
references to provisions particular to the 1985 calendar year which
marked the inception of the RDP. Certain parameters regarding dates
particular to 1985 were incorporated into the order's administrative
rules and regulations that are no longer necessary. Thus, those two
references have been removed.
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 20 handlers of California raisins who are
subject to regulation under the order and approximately 4,500 raisin
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. No more than 8 handlers, and a majority of
producers, of California raisins may be classified as small entities.
Twelve of the 20 handlers
[[Page 4371]]
subject to regulation have annual sales estimated to be at least
$5,000,000, and the remaining 8 handlers have sales less than
$5,000,000, excluding receipts from any other sources.
This rule continues to modify the RDP currently authorized under
Sec. 989.56 of the Federal marketing order for California raisins.
Under the RDP, the Committee issues diversion certificates to producers
who have removed grapes in accordance with Sec. 989.156 to reduce
raisin production and bring raisin supplies more closely in line with
market needs. Such certificates represent an amount of reserve tonnage
raisins equal to the amount of raisins diverted. Diversion certificates
may be submitted by producers to handlers. Handlers may then redeem
such certificates for reserve pool raisins from the Committee. This
rule continues to make various modifications to Sec. 989.156 of the
order's administrative rules and regulations concerning the RDP. The
changes include: Removing authority for the diversion of partial
production units in an RDP; removing authority for committees of
industry persons to assist the Committee in compliance efforts;
clarifying that spur-pruning is not the only acceptable method of
aborting a crop; and making other changes to strengthen compliance with
the RDP.
Regarding the impact of this rule on affected entities, the changes
are designed to either improve compliance with the RDP, or are
administrative in nature to bring the RDP in line with current industry
practices. None of the changes concerning compliance are expected to
increase the cost of administering the RDP. Also, because most of the
producer applications over the years have been for full production
units, rather than for partial production units, discontinuance of
partial production units as part of the RDP is not expected to increase
appreciably costs to producers. Moreover, the addition of other methods
of diversion, like chemical application, should have a positive affect.
The changes are intended to ensure equity among all those participating
in the RDP and to maintain the integrity of the program. Thus, the
changes are expected to be equally beneficial to all affected entities
who are adhering to the requirements of the program, regardless of
size.
Other alternatives to the RDP procedures were considered by the
raisin industry prior to the Committee's recommendation. The Committee
has an appointed Amendment Subcommittee and Working Group which held
several public meetings throughout the year to consider changes to the
RDP and other order provisions. One alternative considered was to leave
the RDP procedures unchanged. However, the Committee concluded that the
changes established by this rule were necessary to improve the RDP and
better accomplish program objectives. The Working Group also considered
adding to the rules and regulations a scale that would correlate
production ranges with an appropriate production cap for each range, to
help ensure that participating producers did not receive credit for an
inflated amount of tonnage and gain a financial advantage over other
participants. Another related option concerned modifying the rules and
regulations to specify that the production cap should be based on a 5-
year rolling average of production per acre with a maximum of 2.75 tons
per acre. However, Committee staff indicated that data concerning total
industry production on a per acre basis was not available, and the
Working Group decided not to recommend these changes.
The Working Group also considered adding guidelines to the RDP
procedures for hardship cases where producers have been denied
participation in an RDP. For example, there have been cases in past
seasons where producers have submitted an application to participate in
an RDP, curtailed production, and then been denied a certificate from
Committee staff because such producers did not satisfy the terms of the
RDP (i.e., could not document their previous year's production). Under
the current rules and regulations, such producers have the option of
appealing such a decision to the Committee and ultimately the
Department. After some deliberation, the Working Group decided not to
change this appeal process by trying to specify various ``what if''
scenarios in the rules and regulations. The group believed it was best
to address each such situation on a case-by-case basis. Ultimately, the
full Committee concluded that the changes to the RDP previously
discussed were appropriate at this time.
Regarding any additional reporting or recordkeeping requirements,
this rule continues to allow Committee staff to request additional
information from producers participating in an RDP to verify
production. However, such information will only be requested on a case-
by-case basis for use as a compliance tool when the information
submitted on a producer's application concerning a unit's production is
significantly greater than past production on the unit, production on
neighboring units, or the industry norm, or when Committee staff is
unable to verify production based on submitted documentation. For
instance, if a producer had multiple production units of similar size,
and the production on the unit to be diverted was significantly
different than the others, the Committee wants its staff to be
authorized to request additional information such as that mentioned to
verify the accuracy of the producer application. Additional information
may also be needed in cases where the production on a unit to be
diverted is significantly different from that of neighboring production
units. As a third example, if information obtained from weigh tags and
other delivery documents provided to the Committee did not correspond
to the production figure indicated on the producer's application,
Committee staff may request additional information.
This rule requires no new forms and the number of producers for
which additional information may be requested is expected to be small.
According to the Committee staff, only about 5-10 percent of producer
applications raise questions for which additional information may be
needed. During the industry's diversion program in 1996 which provided
for only vine removal (as opposed to allowing spur pruning), 66
producers participated. In 1995's program, which provided for spur
pruning and vine removal, 778 producers participated.
Using the 778 participation figure and the 10 percent figure for
questionable applications, a total of 78 producer applicants might need
to provide additional information. The Committee staff estimated that
it will take each of these participants about 10 minutes to compile,
package, and submit this information. Thus, the time taken by the 78
participants as a group will total about 13 hours, and this time is
currently approved under OMB No. 0581-0178 by the Office of Management
and Budget (OMB) in accordance with the Paperwork Reduction Act of 1995
(44 U.S.C. Chapter 35).
The industry is currently implementing a diversion program for
Zante Currant raisins for the 1997-98 season. The Department is
monitoring producer reporting under the current diversion program.
This rule does not impose a reporting burden above that currently
approved for small and large raisin producers. As with all Federal
marketing order programs, reports and forms are periodically reviewed
to reduce information requirements and duplication by industry and
public sectors. In addition, the Department has not identified any
relevant Federal rules
[[Page 4372]]
that duplicate, overlap, or conflict with this rule.
Further, the Committee's meeting was widely publicized throughout
the raisin industry and all interested persons were invited to attend
the meeting and participate in Committee deliberations. Like all
Committee meetings, the August 14, 1997, meeting was a public meeting
and all entities, both large and small, were able to express their
views on this issue.
Also, the Committee has a number of appointed subcommittees to
review certain issues and make recommendations to the Committee. As
previously mentioned, the Committee's Amendment Working Group met
throughout the year at public meetings to discuss various changes to
the raisin order, including the recommended changes to the RDP. The
Working Group made its recommendations concerning revisions to the RDP
to the Amendment Subcommittee on August 7, 1997. The Amendment
Subcommittee in turn made its recommendations to the full Committee on
August 14, 1997. All of these meetings were public meetings and both
large and small entities were able to participate and express their
views.
As stated earlier and in accordance with the Paperwork Reduction
Act of 1995 (44 U.S.C. Chapter 35), the information collection
requirements contained in this rule have been previously approved by
the Office of Management and Budget (OMB) and have been assigned OMB
No. 0581-0178.
An interim final rule concerning this action was published in the
Federal Register on November 13, 1997. Copies of the rule were mailed
by the Committee's staff to all raisin handlers. In addition, the rule
was made available through the Internet by the Office of the Federal
Register. That rule provided for a 60-day comment period which ended on
January 12, 1998. Interested persons were also invited to submit
information on the information and regulatory impact of the rule. No
comments were received.
After consideration of all relevant material presented, including
the Committee's recommendation, and other information, it is found that
finalizing this interim final rule, as published in the Federal
Register (62 FR 60764; November 13, 1997), will tend to effectuate the
declared policy of the Act.
List of Subjects in 7 CFR Part 989
Grapes, Marketing agreements, Raisins, Reporting and recordkeeping
requirements.
PART 989--RAISINS PRODUCED FROM GRAPES GROWN IN CALIFORNIA
Accordingly, the interim final rule amending 7 CFR part 989 which
was published at 62 FR 60764 on November 13, 1997, is adopted as a
final rule without change.
Dated: January 23, 1998.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-2122 Filed 1-28-98; 8:45 am]
BILLING CODE 3410-02-P
