[Federal Register Volume 64, Number 36 (Wednesday, February 24, 1999)]
[Rules and Regulations]
[Pages 9053-9056]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-4540]
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Rules and Regulations
Federal Register
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Federal Register / Vol. 64, No. 36 / Wednesday, February 24, 1999 /
Rules and Regulations
[[Page 9053]]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 989
[Docket No. FV99-989-2 IFR]
Raisins Produced From Grapes Grown In California; Increase in
Assessment Rate
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Interim final rule with request for comments.
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SUMMARY: This rule increases the assessment rate established under the
Federal marketing order for California raisins (order) from $5.00 to
$8.50 per ton for raisins acquired by handlers for the 1998-99 and
subsequent crop years. The order regulates the handling of raisins
produced from grapes grown in California and is administered locally by
the Raisin Administrative Committee (Committee). Authorization to
assess raisin handlers enables the Committee to incur expenses that are
reasonable and necessary to administer the program. The crop year runs
from August 1 through July 31. The 1998-99 crop is smaller than
initially estimated. Further, for this crop year, volume regulation
will only be applied to one minor varietal type of raisin. As a result,
some expenses paid by assessments will increase. The $5.00 per ton
assessment rate will not generate enough revenue to cover expenses. The
$8.50 per ton assessment rate will remain in effect indefinitely unless
modified, suspended, or terminated.
DATES: February 25, 1999. Comments which are received by April 26,
1999, will be considered prior to issuance of any final rule.
ADDRESSES: Interested persons are invited to submit written comments
concerning this rule. Comments must be sent to the Docket Clerk, Fruit
and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 96456,
Washington, DC 20090-6456; Fax: (202) 720-5698; or E-mail:
moabdocket__clerk@usda.gov. All comments should reference the docket
number and the date and page number of this issue of the Federal
Register and will be made available for public inspection in the Office
of the Docket Clerk during regular business hours.
FOR FURTHER INFORMATION CONTACT: Maureen T. Pello, Marketing
Specialist, California Marketing Field Office, Fruit and Vegetable
Programs, AMS, USDA, 2202 Monterey Street, suite 102B, Fresno,
California 93721; telephone: (559) 487-5901, Fax: (559) 487-5906; or
George Kelhart, Technical Advisor, Marketing Order Administration
Branch, Fruit and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box
96456, Washington, DC 20090-6456; telephone: (202) 720-2491, or Fax:
(202) 720-5698. Small businesses may request information on complying
with this regulation, or obtain a guide on complying with fruit,
vegetable, and specialty crop marketing agreements and orders by
contacting Jay Guerber, Marketing Order Administration Branch, Fruit
and Vegetable Programs, AMS, USDA, P.O. Box 96456, room 2525-S,
Washington, DC 20090-6456; telephone (202) 720-2491, Fax: (202) 720-
5698, or E-mail: Jay__N__Guerber@usda.gov. You may view the marketing
agreement and order small business compliance guide at the following
web site: http://www.ams.usda.gov/fv/moab.html.
SUPPLEMENTARY INFORMATION: This rule is issued under Marketing
Agreement and Order No. 989 (7 CFR part 989), both as amended,
regulating the handling of raisins produced from grapes grown in
California, hereinafter referred to as the ``order.'' 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 Department of Agriculture (Department) is issuing this rule in
conformance with Executive Order 12866.
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. Under the marketing order now in effect, California
raisin handlers are subject to assessments. It is intended that the
assessment rate as issued herein will apply to all assessable raisins
beginning August 1, 1998, the beginning of the 1998-99 crop year, and
continue in effect until amended, suspended, or terminated. 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 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 in equity to review the
Secretary's ruling on the petition, provided an action is filed not
later than 20 days after the date of the entry of the ruling.
This rule increases the assessment rate established under the order
for the 1998-99 and subsequent crop years from $5.00 to $8.50 per ton
of raisins acquired by handlers. Authorization to assess raisin
handlers enables the Committee to incur expenses that are reasonable
and necessary to administer the program. The 1998-99 crop is smaller
than initially estimated. Further, for this crop year, volume
regulation will be applied to one minor varietal type of raisin. As a
result, some expenses paid by assessments will increase. The $5.00 per
ton rate of assessment will not generate enough revenue to cover
expenses. This action was unanimously recommended by the Committee at a
meeting on January 15, 1999.
Sections 989.79 and 989.80, respectively, of the Federal order for
California raisins provide authority for the Committee, with the
approval of the Department, to formulate an annual budget of expenses
and collect assessments from handlers to administer the program. The
members of the Committee are producers and handlers of California
raisins. They are familiar with the Committee's needs and with
[[Page 9054]]
the costs for goods and services in their local area and are thus in a
position to formulate an appropriate budget and assessment rate. The
assessment rate is formulated and discussed in a public meeting. Thus,
all directly affected persons have an opportunity to participate and
provide input.
An assessment rate of $5.00 per ton for raisins acquired by
handlers has been in effect under the Federal order since the 1996-97
crop year (61 FR 52684; October 8, 1996). Regarding the 1998-99 crop
year, the Committee met on August 13, 1998, and recommended
administrative expenditures of $1,655,000 for the year. Major
administrative expenditures included $545,500 for export program
administration and related activities; $478,000 for salaries; and
$100,000 for compliance activities. These expenditures were approved by
the Department on August 18, 1998. At that time, the Committee
estimated the crop at about 321,400 tons, and anticipated that 333,000
tons of raisins would be acquired by handlers during the 1998-99 crop
year (included about 59,800 tons of 1997 reserve raisins sold to
handlers for free use). The $5.00 per ton assessment rate was expected
to generate $1,665,000 in revenue which would have allowed the
Committee to meet its administrative expenses.
Section 989.79 of the order also provides authority for the
Committee to formulate an annual budget of expenses likely to be
incurred during the crop year in connection with reserve raisins held
for the account of the Committee. A certain percentage of each year's
raisin crop may be held in a reserve pool during years when volume
regulation is implemented to help stabilize raisin supplies and prices.
The remaining ``free'' percentage may be sold by handlers to any
market. Reserve raisins are disposed of through various programs
authorized under the order. Reserve pool expenses are deducted from
proceeds obtained from the sale of reserve raisins. Net proceeds are
returned to the pool's equity holders, primarily producers.
At its August 1998 meeting, the Committee recommended a 1998-99
reserve pool budget of $2,941,500. Major pool expenses included
$1,050,000 for insurance and repair of bins for storing reserve
raisins; $545,500 for export program administration and related
activities; $462,000 for salaries; and $235,000 for compliance
activities.
Adverse crop conditions during the spring of 1998 created by the
weather phenomenon known as El Nino, combined with scattered rain and a
labor shortage during harvest contributed to a smaller 1998-99 raisin
crop than initially anticipated. Also, reserve pools were initially
established in October 1998 for five of the nine varietal types of
raisins covered under the order--Natural (sun-dried) Seedless
(Naturals), Zante Currants (Zantes), Dipped Seedless, Oleate and
Related Seedless, and Other Seedless--when the Committee computed and
announced preliminary free and reserve marketing percentages pursuant
to Sec. 989.54. In November 1998, the Committee determined that volume
regulation was not warranted for Dipped Seedless, Oleate and Related
Seedless, and Other Seedless raisins.
The Committee met on January 15, 1999, to review crop conditions,
its financial situation, and various marketing order programs. The
Committee reduced its production estimate from 321,000 to 276,500 tons,
and reduced its estimate of assessable tonnage from 333,000 to 315,000
tons. The Committee also determined that volume regulation was not
warranted for Naturals and all other varietal types, but is warranted
for Zantes, for the 1998-99 crop year. This is the first time in 16
years that volume regulation for Naturals has not been implemented.
With a smaller 1998 crop, reduced estimate of assessable tonnage,
and volume regulation only warranted for Zantes, the Committee
recommended revising its administrative and reserve pool budgets. The
1998 reserve pool budget was reduced from $2,941,500 to $25,000 which
should cover operating expenses for Zante reserve raisins. In addition,
$975,000 initially budgeted for 1998 reserve pool operating expenses
were applied to the existing 1997 Natural and Zante reserve pool
budgets. Included in the $975,000 is $683,000 which will be utilized
for export program administration.
The Committee also reviewed and identified those expenses that were
considered reasonable and appropriate to continue the raisin marketing
order program, without a significant reserve pool. The expenses that
were associated with the initial reserve pool budget were modified and
adjusted as appropriate and included in the administrative budget. For
example, salaries, payroll, taxes, retirement contributions, insurance,
rent for office space, telephone, and other administrative items are
usually split between the Committee's administrative and reserve
budgets. Although the 1998 crop is reduced, the Committee needs to
maintain its staff to administer the order and ongoing export programs.
Many operating expenses were adjusted from the Committee's initial
administrative and reserve budgets, such as for overall compliance
($335,000 to $200,000), overall auditing fees ($35,000 to $10,000),
overall printing ($20,000 to $17,000), and overall Committee meetings
($24,000 to $20,000). Ultimately, the Committee recommended increasing
its administrative expenses from $1,665,000 to $2,677,500, which
includes an additional $1,012,500 in operating expenses initially
associated with the 1998 reserve budget. Major expenses to be funded
through handler assessments now include $940,000 in salaries; $408,000
for export program administration; $200,000 for compliance activities;
$150,000 for Committee travel; and $140,000 for membership dues and
surveys.
The Committee recommended increasing its assessment rate from $5.00
to $8.50 per ton of raisins acquired by handlers. The $8.50 per ton
assessment rate when applied to anticipated acquisitions of 315,000
tons will yield $2,677,500 in assessment income which will be adequate
to cover anticipated administrative expenses. Authority for the
Committee to recommend an increase in the assessment rate during a crop
year to obtain sufficient funds to meet expenses is provided in
Sec. 989.80(c) of the order. Any unexpended assessment funds from the
crop year are required to be credited or refunded to the handlers from
whom collected, as provided in Sec. 989.81(a) of the order.
The assessment rate established in this rule will continue in
effect indefinitely unless modified, suspended, or terminated by the
Secretary upon recommendation and information submitted by the
Committee or other available information. Although this assessment rate
is effective for an indefinite period, the Committee will 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 the Department. Committee meetings are
open to the public and interested persons may express their views at
these meetings. The Department will evaluate Committee recommendations
and other available information to determine whether modification of
the assessment rate is needed. Further rulemaking will be undertaken as
necessary. The Committee's 1998-99 revised budget and those for
subsequent crop years will be reviewed and, as appropriate, approved by
the Department.
[[Page 9055]]
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 initial 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 7 handlers, and a majority of
producers, of California raisins may be classified as small entities.
Thirteen of the 20 handlers subject to regulation have annual sales
estimated to be at least $5,000,000, and the remaining 7 handlers have
sales less than $5,000,000, excluding receipts from any other sources.
This rule increases the assessment rate established under the
Federal order for the 1998-99 and subsequent crop years, as specified
in Sec. 989.347, from $5.00 to $8.50 per ton of raisins acquired by
handlers. The order regulates the handling of raisins produced from
grapes grown in California and is administered locally by the
Committee. Authorization to assess raisin handlers enables the
Committee to incur expenses that are reasonable and necessary to
administer the program. The 1998-99 crop is smaller than initially
estimated due to adverse weather conditions and a labor shortage during
harvest. Further, for this crop year, volume regulation will be applied
to one minor varietal type of raisin. As a result, some expenses paid
by assessments will increase. The $5.00 per ton rate of assessment will
not generate enough revenue to cover expenses.
With a smaller crop, reduced estimate of assessable tonnage, and
volume regulation only warranted for Zantes, the Committee recommended
revising its administrative and reserve pool budgets. The 1998 reserve
pool budget was reduced from $2,941,500 to $25,000 which should cover
operating expenses for Zante Currant reserve raisins. In addition,
$975,000 initially budgeted for 1998 reserve pool operating expenses
were applied to the existing 1997 Natural and Zante reserve pool
budgets. Included in the $975,000 is $683,000 which will be utilized
for export program administration.
The Committee also reviewed and identified those expenses that were
considered reasonable and appropriate to continue the raisin marketing
order program, without a significant reserve pool. Those expenses that
were associated with the initial reserve pool budget were modified and
adjusted as appropriate and included in the administrative budget. For
example, salaries, payroll taxes, retirement contributions, insurance,
rent for office, space, telephone, and other administrative items are
usually split between the Committee's administrative and reserve
budgets. Although the 1998 crop is reduced, the Committee needs to
maintain its staff to administer the order and ongoing export programs.
Many operating expenses were adjusted from the Committee's initial
administrative and reserve budgets. These included adjustments for
overall compliance ($335,000 to $200,000), overall auditing fees
($35,000 to $10,000), overall printing ($20,000 to $17,000), and
overall Committee meetings ($24,000 to $20,000). Ultimately, the
Committee recommended increasing its administrative expenses from
$1,665,000 to $2,677,500, which includes an additional $1,012,500 in
operating expenses initially associated with the 1998 reserve budget.
The $8.50 per ton assessment rate, when applied to anticipated
acquisitions of 315,000 tons, will yield $2,677,500 in revenue and
allow the Committee to meet expenses, which include $940,000 for
salaries; $408,000 for export program administration; $200,000 for
compliance activities; $150,000 for Committee travel; and $140,000 for
membership dues and surveys. Authority for the Committee to incur
expenses, generate revenue by assessing raisin handlers, and increase
the assessment rate during a crop year is provided in Secs. 989.79 and
989.80 of the order, respectively.
Regarding the impact of this rule on handlers and producers, while
assessments impose some additional costs on handlers, the costs are
minimal and uniform on all handlers. Some of the additional costs may
be passed on to producers. However, these costs are offset by the
benefits derived by the operation of the marketing order. With the
1998-99 producer price for Naturals, the major raisin varietal type
covered under the order, averaging $1,290 per ton of raisins acquired,
estimated assessment revenue for the 1998-99 crop year as a percentage
of total producer revenue is expected to be less than 2 percent. The
increased assessment rate will allow the Committee to meet its expenses
and continue program operations. Any unexpended assessment funds from
the crop year are required to be credited or refunded to the handlers
from whom collected, as provided in Sec. 989.81(a) of the order.
The Committee considered some alternatives to the recommended
action. The Committee's Audit Subcommittee formed a working group which
held a meeting on December 16, 1998, to discuss revisions to the
budget. The Audit Subcommittee held a follow-up meeting on January 6,
1999. Alternatives discussed at these meetings were based on the
assumption that no volume regulation would be in effect for any
varietal type of California raisins for the remainder of the crop year.
Accordingly, one option considered was to have the 1998 administrative
budget absorb all of the operating costs that are typically split
between the administrative and reserve pool budgets, and increase the
assessment rate to $11.50 per ton of raisins acquired to cover these
costs. However, the majority of subcommittee members determined that
the increase in expenses should be funded more appropriately with 1998-
99 handler assessments and proceeds from the anticipated 1998 reserve
pool for Zantes, and the existing 1997 reserve pools for Naturals and
Zantes, respectively.
The working group and subcommittee members also considered various
scenarios regarding the itemized expenses, estimate of assessable
tonnage, and necessary assessment income. Ultimately, the Committee
determined that volume regulation will only be warranted for Zantes,
that administrative expenses should be increased to $2,677,500, that
the estimate of assessable tonnage should be reduced from 333,000 to
315,000 tons, and that the assessment rate should be increased to $8.50
per ton of raisins acquired by handlers.
This rule imposes no additional reporting or recordkeeping
requirements on either small or large 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. Finally, the Department
[[Page 9056]]
has not identified any relevant Federal rules that duplicate, overlap
or conflict with this rule.
In addition, the Committee's working group meeting on December 16,
1998, subcommittee meeting on January 6, 1999, and the Committee
meeting on January 15, 1999, where this action was deliberated were
public meetings widely publicized throughout the raisin industry. All
interested persons were invited to attend the meetings and participate
in the industry's deliberations. Finally, all interested persons are
invited to submit information on the regulatory and informational
impacts of this action on small businesses.
After consideration of all relevant material presented, including
the Committee's recommendation, and other information, it is found that
this interim final rule, as hereinafter set forth, will tend to
effectuate the declared policy of the Act.
Pursuant to 5 U.S.C. 553, it is also found and determined upon good
cause that it is impracticable, unnecessary, and contrary to the public
interest to give preliminary notice prior to putting this rule into
effect and that good cause exists for not postponing the effective date
of this rule until 30 days after publication in the Federal Register
because: (1) The Committee needs to begin assessing handlers at the
$8.50 rate as soon as possible to generate sufficient revenue to meet
its expenses; (2) the 1998-99 crop year began on August 1, 1998, and
the order requires that the rate of assessment for each crop year apply
to all raisins acquired during such crop year; (3) handlers are aware
of this action which was unanimously recommended by the Committee at a
public meeting and is similar to other assessment rate actions issued
in past years; and (4) this rule provides for a 60-day comment period,
and all comments timely received will be considered prior to
finalization of this rule.
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
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:
Sec. 989.347 Assessment rate.
On and after August 1, 1998, an assessment rate of $8.50 per ton is
established for assessable raisins produced from grapes grown in
California.
Dated: February 17, 1999.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 99-4540 Filed 2-23-99; 8:45 am]
BILLING CODE 3410-02-P
