[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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  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: 
[email protected]. 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__G[email protected]. 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