2018-23091. Raisins Produced From Grapes Grown in California; Increased Assessment Rate

AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Proposed rule.

SUMMARY:

This proposed rule would implement a recommendation from the Raisin Administrative Committee (Committee) to increase the assessment rate established for the 2018-19 and subsequent crop years. The assessment rate would remain in effect indefinitely unless modified, suspended, or terminated.

DATES:

Comments must be received by November 23, 2018.

ADDRESSES:

Interested persons are invited to submit written comments concerning this proposed rule. Comments must be sent to the Docket Clerk, Marketing Order and Agreement Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW, STOP 0237, Washington, DC 20250-0237; Fax: [phone]; or internet: http://www.regulations.gov. Comments should reference the document 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, or can be viewed at: http://www.regulations.gov. All comments submitted in response to this rule will be included in the record and will be made available to the public. Please be advised that the identity of the individuals or entities submitting the comments will be made public on the internet at the address provided above.

FOR FURTHER INFORMATION CONTACT:

Kathie Notoro, Marketing Specialist, or Terry Vawter, Acting Regional Director, California Marketing Field Office, Marketing Order and Agreement Division, Specialty Crops Program, AMS, USDA; Telephone: [phone], Fax: [phone]; or Email: [e-mail] or [e-mail].

Small businesses may request information on complying with this regulation by contacting Richard Lower, Marketing Order and Agreement Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW, STOP 0237, Washington, DC 20250-0237; Telephone: [phone], Fax: [phone], or Email: [e-mail].

SUPPLEMENTARY INFORMATION:

This action, pursuant to 5 U.S.C. 553, proposes an amendment to regulations issued to carry out a marketing order as defined in 7 CFR 900.2(j). This proposed rule is issued under Marketing Order No. 989, as amended (7 CFR part 989), regulating the handling of raisins produced from grapes grown in California. Part 989 (referred to as 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 Committee locally administers the Order and is comprised of producers and handlers of raisins operating within the area of production, and a public member.

The Department of Agriculture (USDA) is issuing this proposed rule in conformance with Executive Orders 13563 and 13175. This proposed rule falls within a category of regulatory actions that the Office of Management and Budget (OMB) exempted from Executive Order 12866 review. Additionally, because this proposed rule does not meet the definition of a significant regulatory action, it does not trigger the requirements contained in Executive Order 13771. See OMB's Memorandum titled “Interim Guidance Implementing Section 2 of the Executive Order of January 30, 2017, titled `Reducing Regulation and Controlling Regulatory Costs'” (February 2, 2017).

This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the Order now in effect, California raisin handlers are subject to assessments. Funds to administer the Order are derived from such assessments. It is intended that the assessment rate would be applicable to all assessable raisins for the 2018-19 crop year, and continue until amended, suspended, or terminated.

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 USDA 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. Such handler is afforded the opportunity for a hearing on the petition. After the hearing, USDA 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 USDA's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling.

The Order provides authority for the Committee, with the approval of USDA, to formulate an annual budget of expenses and collect assessments from handlers to administer the program. The members are familiar with the Committee's needs and with the costs of goods and services in their local area, and are, in a position to formulate an appropriate budget and assessment rate. The assessment rate is formulated and discussed in a public meeting. Therefore, all directly affected persons have an opportunity to participate and provide input.

This proposed rule would increase the assessment rate from $17.00 to $22.00 per ton for the 2018-19 and subsequent crop years. The current rate was published in the Federal Register during the 2015-16 crop year to reduce the Committee's monetary reserve to a level that it determined to be appropriate under the Order. The proposed higher rate is a result of a smaller crop forecast due to early spring rain damage to the vines. The 2018-19 crop is anticipated to be 275,000 tons, down from the 300,000 tons recorded the previous crop year.

The Committee met on June 27, 2018 to consider the Committee's projected 2018-19 budget and the Order's continuing assessment rate. The Committee unanimously recommended an assessment rate of $22.00 per ton of raisins for the 2018-19 crop year. The proposed assessment rate of $22.00 is $5.00 higher than the rate currently in effect. Without the proposed increase, anticipated assessment revenue would not be sufficient to fund the Committee's ongoing administrative functions. The assessment rate increase is necessary to maintain the Committee's activities at current levels and avoid a reduction in the program's effectiveness.

For the 2018-19 crop year, the Committee recommended a budget of expenses totaling $5,189,600. The proposed assessment rate of $22.00 per ton is expected to generate assessment income of approximately $6,050,000, which would be sufficient to fund the recommended 2018-19 expenses.

The major expenditures recommended by the Committee for the 2018-19 crop year include: Salaries and employee-related costs of $1,187,200; administration costs of $440,400; compliance activities of $60,000; research and study costs of $40,000; and promotion related costs of $3,637,000. Subtracted from these expenses is $175,000, which represents reimbursable costs for the shared management of the State marketing raisin program. In comparison, last year's approved budgeted expenditures included: Salaries and employee-related costs of $1,306,150; administration costs of $505,600; compliance activities of $48,000; research and study costs of $35,000; and promotion related costs of $3,577,178.

The increased assessment rate is necessary to cover the decrease in estimated crop size tonnage from 300,000 tons in 2017-18 to 275,000 tons in 2018-19. At the recommended assessment rate of $22.00 per ton, the anticipated assessment income would be $6,050,000. The remaining $860,400 would be added to the authorized reserve.

The proposed assessment rate would continue in effect indefinitely unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Committee or other available information.

Although this assessment rate would be in effect for an indefinite period, the Committee would continue to meet prior to or during each crop year to recommend a budget of expenses and consider recommendations for modification of the assessment rate. The dates and times of Committee meetings are available from the Committee or USDA. Committee meetings are open to the public and interested persons may express their views at these meetings. USDA would evaluate Committee recommendations and other available information to determine whether modification of the assessment rate is needed. Further rulemaking would be undertaken as necessary. The Committee's budget for subsequent crop years would be reviewed and, as appropriate, approved by USDA.

Initial Regulatory Flexibility Analysis

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) has considered the economic impact of this proposed rule on small entities. Accordingly, AMS has prepared this initial regulatory flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of businesses 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.

There are approximately 2,600 producers of California raisins and approximately 16 handlers subject to regulation under the marketing order. Small agricultural producers are defined by the Small Business Administration (SBA) as those having annual receipts less than $750,000, and small agricultural service firms are defined as those whose annual receipts are less than $7,500,000. (13 CFR 121.201.)

According to the National Agricultural Statistics Service (NASS), data for the most-recently completed crop year (2017) shows that about 8.03 tons of raisins were produced per acre. The 2017 producer price published by NASS was $1,670 per ton. Thus, the value of raisin production per acre averaged about $13,410.10 (8.03 tons times $1,670 per ton). At that average price, a producer would have to farm nearly 56 acres to receive an annual income from raisins of $750,000 ($750,000 divided by $13,410.10 per acre equals 55.93 acres). According to Committee staff, the majority of California raisin producers farm less than 56 acres. In addition, according to data from the Committee staff, six of the sixteen California raisin handlers have receipts of less than $7,500,000 and may also be considered small entities. Thus, the majority of producers of California raisins may be classified as small entities, while the majority of handlers may be classified as large entities.

This proposed rule would increase the assessment rate collected from handlers for the 2018-19 and subsequent crop years from $17.00 to $22.00 per ton of assessable raisins acquired by handlers.

The Committee reviewed and identified the expenses that would be reasonable and necessary to continue program operations during the 2018-19 crop year. The resulting recommended budget totals $5,189,600 for the 2018-19 crop year, which is an overall decrease from the 2017-18 crop year budget, which totaled $5,296,928.

The quantity of assessable raisins for 2018-19 crop year is estimated to be 275,000 tons. At the recommended assessment rate of $22.00 per ton, the anticipated assessment income would be $6,050,000. Sufficient income should be generated at the higher assessment rate for the Committee to meet its anticipated expenses.

The major expenditures recommended by the Committee for the 2018-19 crop year include: Salaries and employee-related costs of $1,187,200; administration costs of $440,400; compliance activities of $60,000; research and study costs of $40,000; and promotion related costs of $3,637,000.

In comparison, last year's approved budgeted expenditures included: Salaries and employee-related costs of $1,306,150; administration costs of $505,600; compliance activities of $48,000; research and study costs of $35,000; and promotion related costs of $3,577,178. The total budget approved for the 2017-18 crop year was $5,296,928.

Prior to arriving at this budget and assessment rate, the Committee considered information from the Audit Subcommittee which met on June 13, 2018, and discussed alternative spending levels. The recommendation was discussed by the Committee on June 27, 2018, and the Committee ultimately decided that the recommended budget and assessment rate were reasonable and necessary to properly administer the Order.

A review of historical and preliminary information pertaining to the upcoming crop year indicates that the producer price for the 2017-18 crop year was approximately $1,670.00 per ton of raisins. Utilizing that price, the estimated crop size of 275,000 tons, and the proposed assessment rate of $22.00 per ton, the estimated assessment revenue for the 2018-19 crop year as a percentage of total producer revenue is approximately 0.013 percent (assessment revenue of $6,050,000 divided by total producer revenue $459,250,000).

This proposed action would increase the assessment obligation imposed on handlers. While assessments impose some additional costs on handlers, the costs are minimal and uniform on all handlers, and some of the additional costs may be passed on to producers. However, these costs would be offset by the benefits derived from the operation of the Order.

The meetings of the Audit Subcommittee and the Committee were widely publicized throughout the California raisin industry. All interested persons were invited to attend the meetings and encouraged to participate in Committee deliberations on all issues. Like all subcommittee and Committee meetings, the June 13, 2018, and June 27, 2018, meetings, respectively, were public meetings, and all entities, both large and small, were able to express views on this issue. Interested persons are invited to submit comments on this proposed rule, including the regulatory and information collection impacts of this action on small businesses.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the Order's information collection requirements have been previously approved by the OMB and assigned OMB No. 0581-0178 Vegetable and Specialty Crops. No changes in those requirements would be necessary as a result of this action. Should any changes become necessary, they would be submitted to OMB for approval.

This proposed rule would not impose any additional reporting or recordkeeping requirements on either small or large California raisin handlers. 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.

AMS is committed to complying with the E-Government Act, to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this proposed rule.

A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/​rules-regulations/​moa/​small-businesses. Any questions about the compliance guide should be sent to Richard Lower at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section.

List of Subjects in 7 CFR Part 989

• Grapes
• Marketing agreements
• Raisins
• Reporting and recordkeeping requirements

For the reasons set forth in the preamble, 7 CFR part 989 is proposed to be amended as follows:

PART 989—RAISINS PRODUCED FROM GRAPES GROWN IN CALIFORNIA

1. The authority citation for 7 CFR part 989 continues to read as follows:

Authority: 7 U.S.C. 601-674.

2. Section 989.347 is revised to read as follows:

§ 989.347

Assessment rate.

On and after August 1, 2018, an assessment rate of $22.00 per ton is established for assessable raisins produced from grapes grown in California.

Dated: October 17, 2018.

Bruce Summers,

Administrator, Agricultural Marketing Service.