[Federal Register Volume 66, Number 59 (Tuesday, March 27, 2001)]
[Rules and Regulations]
[Pages 16597-16599]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-7530]


-----------------------------------------------------------------------

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 989

[Docket No. FV01-989-1 FIRA]


Raisins Produced from Grapes Grown in California; Reduction in 
Production Cap for 2001 Diversion Program

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Department of Agriculture (Department) is adopting, as a 
final rule, without change, the provisions of an interim final rule 
reducing the production cap for the 2001 diversion program (RDP) for 
Natural (sun-dried) Seedless (NS) raisins from 2.75 to 2.5 tons per 
acre. The cap is specified under the Federal marketing order for 
California raisins (order). The order regulates the handling of raisins 
produced from grapes grown in California and is administered locally by 
the Raisin Administrative Committee (RAC). Under an RDP, producers 
receive certificates from the RAC for curtailing their production to 
reduce burdensome supplies. The certificates represent diverted 
tonnage. Producers sell the certificates to handlers who, in turn, 
redeem the certificates for reserve raisins from the RAC. The 
production cap limits the yield per acre that a producer can claim in 
an RDP. Reducing the cap brings the figure in line with anticipated 
2001 crop yields.

EFFECTIVE DATE: April 26, 2001.

FOR FURTHER INFORMATION CONTACT: Maureen T. Pello, Senior Marketing 
Specialist, California Marketing Field Office, Marketing Order 
Administration Branch, 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 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: [email protected].

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 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 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. 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 continues to reduce the production cap for the 2001 RDP 
for NS raisins from 2.75 to 2.5 tons per acre. The cap is specified in 
the order. Under an RDP, producers receive certificates from the RAC 
for curtailing their production to reduce burdensome supplies. The 
certificates represent diverted tonnage. Producers sell the 
certificates to handlers who, in turn, redeem the certificates for 
reserve raisins from the RAC. The production cap limits the yield per 
acre that a producer can claim in an RDP. Reducing the cap for the 2001 
RDP brings the figure in line with anticipated 2001 crop yields. This 
action was recommended by the RAC at a meeting on November 29, 2000.

Volume Regulation Provisions

    The order 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 California raisin crop may be sold by 
handlers to any market (free tonnage) while the remaining percentage 
must be held by handlers in a reserve pool (reserve) for the account of 
the RAC. Reserve raisins are disposed of through various programs 
authorized under the order. For example, reserve raisins may be sold by 
the RAC to handlers for free use or to replace part of the free tonnage 
they exported; 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. Net proceeds from sales of reserve 
raisins are ultimately distributed to producers.

Raisin Diversion Program

    The RDP is another program concerning reserve raisins authorized 
under the order and may be used as a means for controlling 
overproduction. Authority for the program is provided in Sec. 989.56 of 
the order, and additional procedures are specified in Sec. 989.156 of 
the order's administrative rules and regulations.
    Pursuant to these sections, the RAC must meet by November 30 each 
crop year to review raisin data, including information on production, 
supplies, market demand, and inventories. If the RAC determines that 
the available supply of raisins, including those in the reserve pool, 
exceeds projected market needs, it can decide to implement a

[[Page 16598]]

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 RAC. Such 
producers curtail their production by vine removal or some other means 
established by the RAC and receive a certificate from the RAC 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 RAC 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 RAC then gives the handler raisins from the reserve 
pool in an amount equal to the tonnage represented on the diversion 
certificate.

Production Cap

    Section 989.56(a) of the order specifies a production cap of 2.75 
tons per acre for any production unit of a producer approved for 
participation in an RDP. When the diversion tonnage is announced, the 
RAC may recommend, subject to approval by the Secretary, reducing the 
2.75 tons per acre production cap. The production cap limits the yield 
that a producer can claim. Producers who historically produce yields 
above the production cap can choose to produce a crop rather than 
participate in the diversion program. No producer is required to 
participate in an RDP.
    Pursuant to Sec. 989.156, producers who wish to participate in a 
program must submit an application to the RAC by December 20. Producers 
must specify, among other things, the raisin production and the acreage 
covered by the application. RAC staff verifies producers' production 
claims using handler acquisition reports and other available 
information. However, a producer could misrepresent production by 
claiming that some raisins produced on one ranch were produced on 
another, and use an inflated yield on the RDP application. Thus, the 
production cap limits the amount of raisins for which a producer 
participating in an RDP may be credited, and protects the program from 
overstated yields.

RAC Recommendation

    On November 29, 2000, the RAC met and reviewed data relating to the 
quantity of reserve raisins and anticipated market needs. With a 2000-
01 NS crop estimated to be the largest on record at 427,394 tons, and a 
computed trade demand of 233,344 tons (comparable to market needs), the 
RAC projected a reserve pool of 194,050 tons of NS raisins. With such a 
large anticipated reserve, the RAC announced that 25,000 tons of NS 
raisins would be eligible for diversion under the 2001 RDP. In January 
2001, the RAC revised its crop estimate to 440,000 tons, which, if 
realized, would yield a 206,656-ton reserve. The amount of tonnage 
towards the RDP was increased to 96,532 tons.
    At the November meeting, RAC members evaluated the 2.75 tons per 
acre production cap. With this year's record crop and high yields per 
acre, the RAC believes that the grapevines will likely produce a 
smaller crop next year. In addition, RAC historical data indicates that 
the production cap under NS raisin diversion programs has averaged 2.24 
tons per acre. Thus, the RAC recommended reducing the production cap 
from 2.75 to 2.5 tons per acre to more accurately reflect next year's 
anticipated yields. Accordingly, a new paragraph (t) was added to 
Sec. 989.156 of the order's rules and regulations.

Final Regulatory Flexibility Analysis

    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 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 firms are defined 
by the Small Business Administration (13 CFR 121.201) as those having 
annual receipts of less that $5,000,000, and small agricultural 
producers are defined as those having annual receipts of less than 
$500,000. 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. No more than 7 handlers, and a majority of producers, of 
California raisins may be classified as small entities, excluding 
receipts from other sources.
    This rule continues to add a new paragraph (t) to Sec. 989.156 of 
the order's rules and regulations regarding the RDP. Under an RDP, 
producers receive certificates from the RAC for curtailing their 
production to reduce burdensome supplies. The certificates represent 
diverted tonnage. Producers sell the certificates to handlers who, in 
turn, redeem the certificates for reserve raisins from the RAC. The 
order specifies a production cap limiting the yield per acre that a 
producer can claim in an RDP. This rule continues to reduce the cap 
from 2.75 to 2.5 tons per acre to accurately reflect next year's 
anticipated yields. Authority for this action is provided in 
Sec. 989.56(a) of the order.
    Regarding the impact of this action on affected entities, producers 
who participate in the 2001 RDP will have the opportunity to earn some 
income for not harvesting a 2001-02 crop. Producers will sell the 
certificates to handlers next fall for the free tonnage applicable to 
the diversion certificate minus the harvest cost for the diverted 
tonnage. Applicable harvest costs for the 2001 RDP were established by 
the RAC at $340 per ton.
    Reducing the production cap has no impact on raisin handlers. 
Handlers will pay producers for the free tonnage applicable to the 
diversion certificate minus the $340 per ton harvest cost. Handlers 
will redeem the certificates for 2000-01 crop NS reserve raisins and 
pay the RAC the $340 per ton harvest cost plus payment for receiving, 
storing, fumigating, handling (currently totaling $46 per ton), and 
inspecting (currently $9.00 per ton) the tonnage represented on the 
certificate. Reducing the production cap does not impact handler 
payments for reserve raisins under the 2001 RDP.
    Alternatives to the recommended action include leaving the 
production cap at 2.75 tons per acre or reducing it to another figure 
besides 2.5 tons per acre. However, the majority of RAC members believe 
that a cap of 2.5 tons per acre will more accurately reflect next 
year's yields.
    There was some discussion at the RAC's meeting that the 2.5 tons 
per acre production cap was too low and would discriminate against 
producers with high yields. In recent years, cultural practices have 
evolved to where some producers' yield per acre is reportedly as high 
as 4 tons. However, as previously stated, the program is voluntary and 
producers whose vines

[[Page 16599]]

can produce 4 tons per acre have the option to produce a raisin crop 
rather than apply for the RDP and be subject to the production cap.
    This rule imposes no additional reporting or recordkeeping 
requirements on either small or large raisin handlers. In accordance 
with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the 
information collection requirement referred to in this rule (i.e., the 
application) has been approved by the Office of Management and Budget 
(OMB) under OMB Control No. 0581-0178. As with all Federal marketing 
order programs, reports and forms are periodically reviewed to reduce 
information requirements and duplication by industry and public sectors 
agencies. Finally, the Department has not identified any relevant 
Federal rules that duplicate, overlap, or conflict with this rule.
    Further, the RAC's meeting on November 29, 2000, and the RAC's 
Administrative Issues Subcommittee meeting on that same day but prior 
to the RAC meeting 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 Register on January 4, 2001 (66 FR 705). Copies of the rule 
were mailed by the RAC's staff to all RAC 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 15-day comment period that 
ended January 19, 2001. No comments were received.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab.html. Any questions about the compliance 
guide should be sent to Jay Guerber at the previously mentioned address 
in the FOR FURTHER INFORMATION CONTACT section.
    After consideration of all relevant material presented, including 
the information and recommendation submitted by the RAC and other 
available information, it is hereby 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 66 FR 705 on January 4, 2001, is adopted as a final 
rule without change.

    Dated: March 21, 2001.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 01-7530 Filed 3-26-01; 8:45 am]
BILLING CODE 3410-02-U