[Federal Register Volume 64, Number 91 (Wednesday, May 12, 1999)]
[Rules and Regulations]
[Pages 25419-25422]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-11977]
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Rules and Regulations
Federal Register
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Federal Register / Vol. 64, No. 91 / Wednesday, May 12, 1999 / Rules
and Regulations
[[Page 25419]]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 989
[Docket No. FV99-989-2 FIR]
Raisins Produced From Grapes Grown in California; Increase in
Assessment Rate
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: The Department of Agriculture (Department) is adopting, as a
final rule, without change, the provisions of an interim final rule
which increased 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 has only been
applied to one minor varietal type of raisin. As a result, some
expenses paid by assessments have increased. The $5.00 per ton
assessment rate would not have generated enough revenue to cover
expenses. The $8.50 per ton assessment rate will remain in effect
indefinitely unless modified, suspended, or terminated.
EFFECTIVE DATE: June 11, 1999.
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.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 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 continues to increase 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 has been applied to only one minor varietal type of raisin.
As a result, some expenses paid by assessments have increased. The
$5.00 per ton rate of assessment would not have generated 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 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 had 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
[[Page 25420]]
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 was warranted
for Zantes, for the 1998-99 crop year. This is the first time in 16
years that volume regulation for Naturals was not 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 is being 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
included 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.
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), the Agricultural Marketing Service (AMS) has considered the
economic impact of this action on small entities. Accordingly, AMS has
prepared this final regulatory flexibility analysis.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions in order that small businesses will
not be unduly or disproportionately burdened. Marketing orders issued
pursuant to the Act, and rules issued thereunder, are unique in that
they are brought about
[[Page 25421]]
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 continues to increase 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 has been
applied to only one minor varietal type of raisin. As a result, some
expenses paid by assessments have increased. The $5.00 per ton rate of
assessment would not have generated 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 is being 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 included 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 1 percent. The
increased assessment rate allows 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 would 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 was only 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 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.
An interim final rule concerning this action was published in the
Federal
[[Page 25422]]
Register on February 24, 1999 (64 FR 9053). Copies of the rule were
mailed to all Committee members and alternates, the Raisin Bargaining
Association, handlers, and dehydrators. In addition, the rule was made
available through the Internet by the Office of the Federal Register.
That rule provided for a 60-day comment period which ended April 26,
1999. No comments were received.
After consideration of all relevant material presented, including
the Committee's recommendation, and other information, it is found that
this rule, as hereinafter set forth, will tend to effectuate the
declared policy of the Act.
List of Subjects in 7 CFR Part 989
Grapes, Marketing agreements, Raisins, Reporting and recordkeeping
requirements.
PART 989--RAISINS PRODUCED FROM GRAPES GROWN IN CALIFORNIA
Accordingly, the interim final rule amending 7 CFR part 989 which
was published at 64 FR 9053 on February 24, 1999, is adopted as a final
rule without change.
Dated: May 5, 1999.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 99-11977 Filed 5-11-99; 8:45 am]
BILLING CODE 3410-02-P