[Federal Register Volume 66, Number 148 (Wednesday, August 1, 2001)]
[Proposed Rules]
[Pages 39690-39692]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-19100]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 66, No. 148 / Wednesday, August 1, 2001 / 
Proposed Rules  

[[Page 39690]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 916

[Docket No. FV01-916-2 PR]


Nectarines Grown in California; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule would increase the assessment rate established for 
the Nectarine Administrative Committee (committee) for the 2001-02 and 
subsequent fiscal periods from $0.1850 to $0.20 per 25-pound container 
or container equivalent of nectarines handled. The committee locally 
administers the marketing order which regulates the handling of 
nectarines grown in California. Authorization to assess nectarine 
handlers enables the committee to incur expenses that are reasonable 
and necessary to administer the program. The fiscal period runs from 
March 1 through the last day of February. The assessment rate would 
remain in effect indefinitely unless modified, suspended, or 
terminated.

DATES: Comments must be received by August 31, 2001.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent to the Docket Clerk, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, 2525-S, P.O. Box 96456, Washington, DC 20090-6456; Fax: 
(202) 720-8938, 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, or can be 
viewed at: http://www.ams.usda.gov/fv/moab.html.

FOR FURTHER INFORMATION CONTACT: Toni Sasselli, Marketing Assistant, 
California Marketing Field Office, Fruit and Vegetable Programs, AMS, 
USDA, 2202 Monterey Street, suite 102B, Fresno, California 93721, (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) 720-8938.
    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) 720-8938, or E-mail: [email protected].

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing 
Agreement No. 124 and Order No. 916, both as amended (7 CFR part 916), 
regulating the handling of nectarines 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. Under the marketing order now in effect, California 
nectarine handlers are subject to assessments. Funds to administer the 
orders are derived from such assessments. It is intended that the 
assessment rate as proposed herein would be applicable to all 
assessable nectarines beginning on March 1, 2001, 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 2001-02 and subsequent fiscal periods from $0.1850 to 
$0.20 per 25-pound container or container equivalent of nectarines.
    The nectarine 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 of California 
nectarines. 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 1996-97 fiscal period, the committee recommended, and the 
Department approved, an assessment rate that would continue in effect 
from fiscal period to fiscal period 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 May 3, 2001, and unanimously recommended 2001-
02 expenditures of $4,338,744 and an assessment rate of $0.20 per 25-
pound container or container equivalent of nectarines. In comparison, 
last year's budgeted expenditures were $4,399,087. The assessment rate 
of $0.20 is $0.015 higher than the rate currently in effect.
    The increase is needed as a result of a crop reduction due to 
spring hailstorms, and to keep the committee's reserve at an adequate 
level. The quantity of assessable nectarines before the hailstorms was 
estimated to be 24

[[Page 39691]]

million containers or container equivalents of nectarines. After the 
hailstorms, the estimate of assessable nectarines was reduced to 
19,351,000 containers or container equivalents of nectarines.
    The major expenditures recommended by the committee for the 2001-02 
year include $423,176 for salaries and benefits, $157,821 for general 
expenses, $1,000,000 for inspection, $169,393 for research, and 
$2,429,000 for domestic and international promotion.
    Budgeted expenses for these items in 2000-01 were $401,007 for 
salaries and benefits, $165,948 for general expenses, $1,100,00 for 
inspection, $139,025 for research, $2,424,000 for domestic and 
international promotion.
    To reach agreement on the applicable 2001-02 assessment rate, the 
committee considered the total expenses of $4,338,744; the assessable 
nectarines estimated at 19,351,000 25-pound containers or container 
equivalents; the estimated income from other sources such as interest 
income, and additional funds required from the committee's financial 
reserve at varying assessment rates.
    Cognizant of the fact that the committee was in agreement regarding 
the total expenses estimated, as well as the estimated assessable 
containers or container equivalents, several assessment rates were 
discussed and their effects on the budget calculated. At varying 
assessment rates, the committee would require using more or less funds 
from the financial reserve to meet budgeted expenses. For example, at 
the current assessment rate of $0.19 per container or container 
equivalent, assessments received would be $3,676,690 and would result 
in a financial reserve of $20,628 at the end of the fiscal period. At 
the proposed assessment of $0.20 per container or container equivalent, 
assessments received would be $3,870,200 and would result in a 
financial reserve of $214,138, more consistent with committee financial 
needs. The committee recognizes that a minimum financial reserve is 
necessary to meet its obligations in the early part of each fiscal 
year, before handler assessments are billed and received. According to 
the committee, that assessment rate would result in an adequate 
financial 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 period 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 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 
2001-02 budget and those for subsequent fiscal periods would be 
reviewed and, as appropriate, approved by the Department.

Initial 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 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 300 California nectarine handlers subject 
to regulation under the order covering nectarines grown in California, 
and about 1,800 producers of nectarines grown in California. Small 
agricultural service firms, which includes handlers, are defined by the 
Small Business Administration (13 CFR 121.201) as those whose annual 
receipts are less than $5,000,000. Small agricultural producers are 
defined by the Small Business Administration as those having annual 
receipts of less than $500,000. A majority of these handlers and 
producers may be classified as small entities, excluding receipts from 
other sources.
    In the 2000 season, the average handler price received was $9.00 
per container or container equivalent of nectarines. A handler would 
have to ship at least 555,556 containers or container equivalents of 
nectarines to have annual receipts of $5,000,000. Given data on 
shipments maintained by the committee's staff and the average handler 
price received during the 2000 season, the committee's staff estimates 
that small handlers of nectarines represent approximately 94 percent of 
the handlers within the industry.
    In the 2000 season, the average producer price received was $5.50 
per container or container equivalent of nectarines. A producer would 
have to produce at least 90,910 containers or container equivalents of 
nectarines to have annual receipts of $500,000. Given data maintained 
by the committee's staff and the average producer price received during 
the 2000 season, the committee's staff estimates that small producers 
represent approximately 78 percent of the nectarine producers within 
the industry.
    This rule would increase the assessment rate established for the 
committee and collected from handlers for the 2001-02 and subsequent 
fiscal periods from $0.1850 to $0.20 per 25-pound container or 
container equivalent of nectarines. The committee unanimously 
recommended 2001-02 expenditures of $4,338,774 and an assessment rate 
of $0.20 per 25-pound container or container equivalent of nectarines. 
The proposed assessment rate of $0.20 is $0.015 higher than the current 
rate. The quantity of assessable nectarines for the 2001-02 fiscal year 
is estimated at 19,351,000 25-pound container or container equivalents. 
Thus, the $0.20 rate should provide $3,870,200 in assessment income. 
Income derived from handler assessments, along with other income and 
funds from the committee's authorized reserve would be adequate to 
cover budgeted expenses.
    The major expenditures recommended by the committee for the 2001-02 
year include $423,176 for salaries and benefits, $157,821 for general 
expenses, $1,000,000 for inspection, $169,393 for research, and 
$2,429,000 for domestic and international promotion.
    Budgeted expenses for these items in 2000-01 were $401,007 for 
salaries and benefits, $165,948 for general expenses, $1,100,00 for 
inspection, $139,025 for research, $2,424,000 for domestic and 
international promotion.
    The increase is needed as a result of a crop reduction due to 
spring hailstorms, and to keep the committee's reserve at an adequate 
level. The assessable nectarine estimate before the hailstorms was 24 
million containers or container equivalents of nectarines. After the 
hailstorms, the estimate was reduced to 19,351,000 containers or 
container equivalents of nectarines. The

[[Page 39692]]

committee reviewed and unanimously recommended 2001-02 expenditures of 
$4,338,774. Prior to arriving at this budget, the committee considered 
information and recommendations from various sources, including, but 
not limited to: the Management Services Committee, the Research 
Subcommittee, the International Programs Subcommittee, the Grade and 
Size Subcommittee, the Domestic Promotion Subcommittee, and the Grower 
Relations Subcommittee. Some of these subcommittees discussed 
alternatives to increasing the assessment rate, such as permitting the 
rate to remain the same or increasing the rate to $0.19 or $0.195 per 
25-pound container or container equivalent. The assessment rate of 
$0.20 per 25-pound container or container equivalent, is expected to 
result in an operating reserve of $214,138, more in line with committee 
financial needs. The $0.20 rate was subsequently recommended to the 
committee by the Management Services Committee.
    As noted earlier, the committee then considered the total estimated 
expenses, the total estimated assessable 25-pound containers or 
container equivalents, the estimated income from other sources such as 
interest income, and additional funds required from the committee's 
financial reserve at varying assessment rates, as the subcommittees had 
done, prior to recommending a final assessment rate. Depending on the 
assessment rate established, the committee would require more or less 
funds from the financial reserve, which the committee uses to meet its 
obligations prior to billing and receiving handler assessments the 
following year. Based on those deliberations, an assessment rate of 
$0.20 per 25-pound container or container equivalent was agreed upon 
and recommended to the Department. Such an assessment rate would result 
in an adequate financial reserve.
    A review of historical and preliminary information pertaining to 
the upcoming fiscal period indicates that the grower price for the 
2001-02 season could range between $5.50 and $6.00 per 25-pound 
container or container equivalent of nectarines. Therefore, the 
estimated assessment revenue for the 2001-02 fiscal period as a 
percentage of total grower revenue could range between 3.35 and 3.65 
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 from the operation of the 
marketing order. In addition, the committee's meeting was widely 
publicized throughout the California nectarine industry and all 
interested persons were invited to attend the meeting and participate 
in committee deliberations on all issues. Like all committee meetings, 
the May 3, 2001, 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 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 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.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposal. 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 2001-02 fiscal period 
began on March 1, 2001, and the marketing order requires that the rate 
of assessment for each fiscal period apply to all assessable nectarines 
handled during such fiscal period; (3) handlers are aware of this 
action which was unanimously recommended by the committee at public 
meetings and is similar to other assessment rate actions issued in past 
years; and (4) this proposed rule provides a 30-day comment period, and 
all comments timely received will be considered prior to finalization 
of this rule.

List of Subjects in 7 CFR Part 916

    Nectarines, Marketing agreements, Reporting and recordkeeping 
requirements.
    For the reasons set forth in the preamble, 7 CFR part 916 is 
proposed to be amended as follows:

PART 916--NECTARINES GROWN IN CALIFORNIA

    1. The authority citation for 7 CFR part 916 continues to read as 
follows:


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

    2. Section 916.234 is revised to read as follows:


Sec. 916.234  Assessment rate.

    On and after March 1, 2001, an assessment rate of $0.20 per 25-
pound container or container equivalent of nectarines is established 
for California nectarines.

    Dated: July 26, 2001.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 01-19100 Filed 7-31-01; 8:45 am]
BILLING CODE 3410-02-P