[Federal Register Volume 64, Number 170 (Thursday, September 2, 1999)]
[Proposed Rules]
[Pages 48115-48117]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-22908]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 928

[Docket No. FV99-928-1 PR]


Papayas Grown in Hawaii; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule would increase the assessment rate from $.0063 to 
$.008 per pound of assessable papayas established for the Papaya 
Administrative Committee (Committee) under Marketing Order No. 928 for 
the 1999-2000 and subsequent fiscal years. The Committee is responsible 
for local administration of the marketing order which regulates the 
handling of papayas grown in Hawaii. Authorization to assess papaya 
handlers enables the Committee to incur expenses that are reasonable 
and necessary to administer the program. The fiscal year began July 1 
and ends June 30. The assessment rate would remain in effect 
indefinitely unless modified, suspended, or terminated.

DATES: Comments must be received by October 4, 1999.

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]. Comments should reference the docket number 
and the date and page number of this issue of the Federal Register and 
will be available for public inspection in the Office of the Docket 
Clerk during regular business hours.

FOR FURTHER INFORMATION CONTACT: Terry Vawter, 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, 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 No. 155 and Order No. 928, both as amended (7 CFR part 928), 
regulating the handling of papayas grown in Hawaii, 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.

[[Page 48116]]

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. Under the marketing order now in effect, papaya 
handlers are subject to assessments. Funds to administer the order are 
derived from such assessments. It is intended that the assessment rate 
as proposed herein would be applicable to all assessable papayas 
beginning on July 1, 1999, and continue 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. Such 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 the date of the entry of the ruling.
    This rule would increase the assessment rate established for the 
Committee for the 1999-2000 and subsequent fiscal years from $0.0063 
per pound to $0.008 per pound of assessable papayas.
    The papaya marketing order provides 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 
papayas. 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.
    For the 1998-1999 and subsequent fiscal years, the Committee 
recommended, and the Department approved, an assessment rate that would 
continue in effect from fiscal year to fiscal year unless modified, 
suspended, or terminated by the Secretary upon recommendation and 
information submitted by the Committee or other information available 
to the Secretary.
    The Committee met on April 22, 1999, to discuss the crop estimate, 
the budget, and the assessment rate for the 1999-2000 fiscal year. On 
July 15, 1999, the Committee completed a mail ballot on the crop 
estimate and assessment rate, and on an eight to one vote, adopted a 
crop estimate of 40 million pounds of assessable papayas and an 
assessment rate of $0.008 per pound for the 1999-2000 and subsequent 
fiscal years. The person who voted no objected to the higher assessment 
rate. The Committee unanimously recommended a 1999-2000 fiscal year 
budget of $522,500.
    The assessment rate of $0.008 is $0.0017 higher than the rate 
currently in effect. The budgeted expenses are $39,000 less than the 
$561,500 budgeted for last year. The Committee determined that a higher 
assessment rate was necessary to meet the recommended expenses and 
maintain a reserve fund for the 1999-2000 fiscal year. For several 
fiscal years, money from the reserve fund has been used to meet a 
portion of budgeted expenses in an effort to keep the assessment rate 
as low as possible. The Committee believes a further reduction of the 
reserve fund would not be prudent.
    The Committee is authorized to maintain reserve funds in an amount 
not to exceed approximately one fiscal year's operational expenses. 
Last year, the reserve fund was $25,200. This year it is expected to be 
$25,000, which is approximately one percent lower than the previous 
year and considered adequate by the Committee. After consideration of 
the estimated crop size and anticipated expenses for the 1999-2000 
fiscal year, it was determined that increasing the assessment rate by 
approximately 27 percent would provide sufficient funds to meet 
anticipated expenses and maintain an adequate reserve fund.
    The major expenditures recommended by the Committee for the 1999-
2000 year include $230,000 for marketing and promotion, $90,500 for 
research and development, and $98,000 for salaries. Budgeted expenses 
for these items in 1998-99 were $183,000 for marketing and promotion, 
$171,500 for research and development, and $98,000 for salaries, 
respectively.
    The assessment rate recommended by the Committee was derived by 
dividing assessment income needed by expected shipments of papayas. 
Papaya shipments for the year are estimated at 40 million pounds which 
should provide $320,000 in assessment income. Income derived from 
handler assessments, when combined with income from the Hawaii 
Department of Agriculture, State of Hawaii (Research), USDA's Foreign 
Agricultural Service, County of Hawaii, and the Japanese Inspection 
program, along with interest income of $16,000, would be adequate to 
cover budgeted expenses. Funds in the reserve (estimated to be $25,000 
at the end of the 1999-2000 fiscal year) would be kept within the 
maximum permitted in Sec. 928.42(a)(2) of the order. The order 
authorizes approximately one fiscal year's expenses for the reserve.
    The proposed assessment rate would 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 would be in effect for an indefinite 
period, the Committee would continue to meet prior to or during each 
fiscal 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 are encouraged to express their views at these meetings. The 
Department would evaluate Committee recommendations and other available 
information to determine whether modification of the assessment rate is 
needed. Further rulemaking would be undertaken as necessary. The 
Committee's 1999-2000 budget and those for subsequent fiscal years 
would 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 rule on small entities. Accordingly, AMS has 
prepared this initial regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
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 the 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 400 producers of papayas in the production 
area and approximately 60 handlers subject to regulation under the 
marketing order. Small agricultural producers have been defined by the

[[Page 48117]]

Small Business Administration (13 CFR 121.601) as those having annual 
receipts less than $500,000, and small agricultural service firms are 
defined as those whose annual receipts are less than $5,000,000.
    Based on a reported average f.o.b. price of $1.30 per pound of 
papayas, a handler would have to ship in excess of 3.85 million pounds 
of papayas to have annual receipts of $5,000,000. Last year, two 
handlers each shipped in excess of 3.85 million pounds of papayas, and, 
therefore, could be considered large businesses. The remaining handlers 
could be considered small businesses under SBA's definition.
    Based on a reported average grower price of $0.45 per pound and 
industry shipments of 36 million pounds, total grower revenues would be 
$16.2 million. Average grower revenue would, thus, be $40,500. Based on 
the foregoing, the majority of handlers and producers of papayas may be 
classified as small entities.
    This rule would increase the assessment rate established for the 
Committee and collected from handlers for the 1999-2000 and subsequent 
fiscal years from $0.0063 per pound to $0.008 per pound of assessable 
papayas. The Committee recommended 1999-2000 expenditures of $522,500 
and the $0.008 per pound assessment rate. The proposed assessment rate 
of $0.008 is $0.0017 higher than the 1998-99 rate. The quantity of 
assessable papayas for the 1999-2000 fiscal year is estimated at 40 
million pounds. Thus, the $0.008 rate should provide $320,000 in 
assessment income. Income derived from handler assessments, the Hawaii 
Department of Agriculture, State of Hawaii (Research), USDA's Foreign 
Agricultural Service, County of Hawaii, and the Japanese Inspection 
program, along with interest income of $16,000, would be adequate to 
cover budgeted expenses. Funds in the reserve (estimated to be about 
$25,000 at the end of the 1999-2000 fiscal year) would be kept within 
the maximum permitted in Sec. 928.42(a)(2) of the order. The order 
authorizes approximately one fiscal year's expenses for the reserve.
    The Committee recommended 1999-2000 expenditures of $522,500. The 
major expenditures recommended by the Committee for the 1999-2000 year 
include $230,000 for marketing and promotion, $90,500 for research and 
development, and $98,000 for salaries. Budgeted expenses for these 
items in 1998-99 were $183,000 for marketing and promotion, $171,500 
for research and development, and $98,000 for salaries, respectively.
    Regarding alternatives, the Committee discussed decreasing 
expenditure levels for marketing and promotion, and further reductions 
in research and development expenditures to avoid increasing the 
assessment rate, but it determined that the programs should be funded 
at the recommended levels. The assessment rate of $0.008 per pound of 
assessable papayas was determined by dividing the assessment income 
needed by the quantity of assessable papayas, estimated at 40 million 
pounds for the 1999-2000 fiscal year. This estimate would generate 
$320,000 in assessment income. When combined with $208,800 in 
anticipated income from the previously mentioned sources, and $16,000 
in interest income, the Committee would have adequate funds to meet its 
1999-2000 expenses.
    A review of historical information and preliminary information 
pertaining to the 1999-2000 fiscal year indicates that the grower price 
for the season could range between $.30 and $0.45 per pound of papayas. 
Therefore, the estimated assessment revenue for the 1999-2000 fiscal 
year as a percentage of total grower revenue could range between 1.8 
and 2.7 percent.
    This action would increase the assessment obligation imposed on 
handlers. While assessments impose some additional costs on handlers, 
the costs are minimal and uniform on all handlers. Some of the 
additional costs may be passed on to producers. However, these costs 
would be offset by the benefits derived by the operation of the 
marketing order. In addition, the Committee's meeting was widely 
publicized throughout the papaya industry, and all interested persons 
were invited to attend the meeting and participate in Committee 
deliberations on all issues. Like all Committee meetings, the April 22, 
1999, meeting was a public meeting and all entities, both large and 
small, were able to express views on this issue. Finally, interested 
persons are invited to submit information on the regulatory and 
informational impacts of this action on small businesses.
    This proposed rule would impose no additional reporting or 
recordkeeping requirements on either small or large papaya 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.
    The Department has not identified any relevant Federal rules that 
duplicate, overlap, or conflict with this rule.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposed rule. Thirty days is deemed appropriate 
because: (1) The Committee needs to have sufficient funds to pay its 
expenses which are incurred on a continuous basis; (2) the 1999-2000 
fiscal year began on July 1, 1999, and the marketing order requires 
that the rate of assessment for each fiscal year apply to all 
assessable papayas handled during such fiscal year; and (3) handlers 
are aware of this action which was discussed by the Committee at a 
public meeting and is similar to other assessment rate actions issued 
in past years.

List of Subjects in 7 CFR Part 928

    Marketing agreements, Papayas, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 7 CFR part 928 is 
proposed to be amended as follows:

PART 928--PAPAYAS GROWN IN HAWAII

    1. The authority citation for 7 CFR part 928 continues to read as 
follows:

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

    2. Section 928.226 is revised to read as follows:


Sec. 928.226  Assessment rate.

    On and after July 1, 1999, an assessment rate of $0.008 per pound 
is established for papayas grown in Hawaii.

    Dated: August 26, 1999.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 99-22908 Filed 9-1-99; 8:45 am]
BILLING CODE 3410-02-P