[Federal Register Volume 62, Number 219 (Thursday, November 13, 1997)]
[Rules and Regulations]
[Pages 60764-60769]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-29971]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 989

[Docket No. FV97-989-3 IFR]


Raisins Produced From Grapes Grown In California; Modifications 
to the Raisin Diversion Program

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule modifies 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 raisin diversion 
program, 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 diversion program to improve compliance and bring the program in 
line with current industry practices. Improving compliance with the RDP 
will help ensure equity among all producers who participate in the 
program, and help maintain the integrity of the RDP.

DATES: Effective November 14, 1997; comments received by January 12, 
1998 will be considered prior to issuance of a final rule.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent in triplicate to the Docket 
Clerk, Fruit and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 
96456, Washington, DC 20090-6456; Fax: (202) 205-6632. 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, 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, P.O. 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, P.O. 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 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. 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 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 modifies 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

[[Page 60765]]

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 will help ensure equity among all producers who 
participate in the program, and help 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 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.

[[Page 60766]]

This change will bring 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 makes 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, this rule removes those 
two references.
    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 8 handlers, and a majority of 
producers, of California raisins may be classified as small entities. 
Twelve of the 20 handlers 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 modifies 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 only to handlers. Any handler holding diversion 
certificates

[[Page 60767]]

may redeem such certificates for reserve pool raisins from the 
Committee. This rule makes 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. These changes will help improve compliance with the RDP and 
bring the program in line with current industry practices.
    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 have 
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 allows 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 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 will not require 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 last 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. The 
Department plans to monitor producer reporting under this rule during 
the first season an RDP is implemented.
    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).
    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 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

[[Page 60768]]

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. Interested persons 
are invited to submit information on the regulatory and informational 
impacts of this action on small businesses.
    As stated earlier and in accordance with the Paperwork Reduction 
Act of 1995 (44 U.S.C. Chapter 35), the information collection 
requirements that are contained in this rule have been previously 
approved by the Office of Management and Budget (OMB) and have been 
assigned OMB No. 0581-0178.
    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.
    This rule also invites comments on modifications to the diversion 
program authorized under the California raisin order. Any comments 
received will be considered prior to finalization of this rule.
    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 unanimously recommended these changes at a 
public meeting and interested parties had an opportunity to provide 
input; (2) the order specifies that the Committee must meet by November 
30 of each crop year to review pertinent data and decide whether a 
diversion program should be implemented; the Committee plans to meet on 
November 13 to review this issue and this rule should be in place prior 
to implementation of any diversion program; and (3) this rule provides 
a 60-day comment period and any comments 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. In Sec. 989.156, paragraph (s)(3) is removed, and the first 
sentence of paragraph (d), and paragraphs (g),(h), (i), (o), and (s)(1) 
are revised to read as follows:


Sec. 989.156  Raisin diversion program.

* * * * *
    (d) Priority of applications and allocations of tonnage. Those 
producer applications indicating that the vines of the producing units 
will be removed shall receive first priority over other applicants when 
reserve tonnage under the program is to be allocated. * * *
* * * * *
    (g) Verification. Any applicant whose application has been 
approved, authorizes Committee representatives and agents to have 
access to the production unit in the diversion program during 
reasonable business hours during the crop year to confirm compliance 
with the program. Notice will be provided to the applicant of such 
visits.
    (h) Compliance. (1) Methods of diversion. An approved applicant 
shall be required to remove the vines, spur-prune the vines, remove the 
bunches or take other means to preclude grapes from being produced and 
harvested on the production unit: Provided, That vine removal may be 
the only means of diversion in some seasons as determined and announced 
by the Committee. Bunches which occur on vines in an approved 
production unit shall be removed and destroyed by the applicant before 
maturity. If the Committee representatives or agents determine that 
there is an average of more than four bunches per vine remaining on an 
approved production unit, the producer shall be notified immediately by 
certified mail, in writing, and given 2 weeks to remove such bunches. 
Grafting vines of one varietal type to another varietal type does not 
constitute removal of vines under the program.
    (2) Period of diversion. An approved applicant must remove the 
grapes, or vines, indicated on the application within the production 
unit designated in the application not later than June 1 of the crop 
year in which a raisin diversion program is implemented. Producers who 
remove the vines on a production unit after August 15 may qualify for a 
diversion program for that crop year if a diversion program is 
announced and if diversion on that unit and vine removal after August 
15 can be documented and verified.
    (3) Failure to divert. Any raisin producer who does not take the 
necessary measures to remove the grapes on an approved production unit 
by June 1, or any raisin producer who has indicated the removal of 
vines or the intent to remove the vines and who does not remove such 
vines on an approved production unit by June 1, shall not be issued a 
diversion certificate, may be subject to liquidated damages and 
interest charges as provided in paragraph (q) of this section, may be 
subject to an injunctive action under the Act, and may be denied the 
opportunity to participate in the next diversion program, when 
implemented: Provided, 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 on all of that producer's 
production units, in the next diversion program. For spur-pruned vines, 
this date may be extended 2 weeks from the date of the inspection of a 
producer's vineyard if more than four bunches on spur-pruned vines are 
present at the time of inspection.
    (i) Issuance of certificates. When preliminary percentages are 
announced, the Committee shall issue diversion certificates to those 
approved applicants who have removed grapes in accordance with this 
section. Such certificates shall represent an amount of reserve tonnage 
raisins equal to the amount of raisins diverted from the production 
unit(s) specified in the producer application, or additional quantity 
granted by the Committee when vines are diverted through vine removal 
or any other means established by the Committee, as the case may be. 
If, prior to issuance of a certificate, the Committee is notified by an 
approved applicant that such applicant's interest in the production 
unit(s) involved in the program has been transferred to another person, 
the Committee may substitute the transferee for the applicant provided 
the transferee agrees to comply with the provisions of this section.
* * * * *
    (o) Production unit. For the purposes of the raisin diversion 
program, a

[[Page 60769]]

production unit is a clearly defined geographic area with permanent 
boundaries (either natural or man-made). A producer 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. If the information submitted by 
producers on the application concerning a unit's production is 
significantly greater than past production on the unit, production on 
neighboring units, or the industry norm, or the production is unable to 
be verified based on submitted documentation, the Committee may request 
additional documentation such as tray count, payroll records, prior 
years' production, and insurance records to substantiate the tonnage of 
raisins produced on all production units that such applicant controls 
or owns. Producers' would not be precluded from submitting other 
information substantiating production if those producers' desired. A 
new production unit will not be eligible for the raisin diversion 
program until at least 1 year's production has been grown and is 
documented. An existing production unit, transferred to a new or 
expanding producer, is eligible for the raisin diversion program as 
soon as the previous year's production can be properly documented.
* * * * *
    (s) Additional opportunity for vine removal. (1) The Committee may 
announce a date later than that provided in Sec. 989.156(b), by which 
producers, who agree to remove the vines on a production unit may file 
an application to participate in a raisin diversion program. The 
announced date shall be not later than May 1. The diversion 
certificates will be issued only for the production units from which 
vines are removed. The total tonnage available to such applicants shall 
not exceed the tonnage determined by deducting the tonnage approved for 
applications received on or before December 20 from the total tonnage 
announced as eligible by the Committee for diversion. Applications 
shall be considered and approved on a first-come, first-served, basis 
and shall not be given preference over the tonnage approved for 
applications received on or before December 20. The vines shall be 
removed from the production units for which such applications are 
approved not later than June 1.
* * * * *
    Dated: November 7, 1997.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 97-29971 Filed 11-12-97; 8:45 am]
BILLING CODE 3410-02-P