[Federal Register Volume 66, Number 244 (Wednesday, December 19, 2001)]
[Rules and Regulations]
[Pages 65423-65426]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-31321]



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 Rules and Regulations
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  Federal Register / Vol. 66, No. 244 / Wednesday, December 19, 2001 / 
Rules and Regulations  

[[Page 65423]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 989

[Docket No. FV02-989-3 IFR]


Raisins Produced From Grapes Grown in California; Extension of 
Redemption Date for Unsold 2001 Diversion Certificates

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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

SUMMARY: This rule extends the deadline by which raisin handlers must 
redeem diversion certificates issued under the 2001 raisin diversion 
program (RDP). The deadline 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). This action gives 
producers additional time to sell their certificates to handlers and 
thus be compensated for diverting their 2001 production, which is the 
intent of the RDP.

DATES: Effective December 20, 2001. Comments received by January 3, 
2002, will be considered prior to issuance of a final rule.

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, 1400 Independence Avenue, SW STOP 0237, Washington, DC 
20250-0237; 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, or can be viewed at: http://www.ams.usda.gov/fv/moab.html.

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, 1400 Independence Avenue, SW STOP 0237, Washington, DC 
20250-0237; 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, 1400 Independence 
Avenue, SW STOP 0237, Washington, DC 20250-0237; 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 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 (USDA) is issuing this rule in 
conformance with Executive Order 12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule extends the deadline by which handlers may 
redeem diversion certificates issued under the 2001 RDP for Natural 
(sun-dried) Seedless (NS) raisins. The deadline is extended from 
December 17, 2001, to January 18, 2002, and applies only to 
certificates unsold by producers to handlers as of December 18, 2001. 
This rule will not preempt any State or local laws, 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 USDA 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 USDA 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 USDA'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 extends the deadline by which handlers may redeem 
diversion certificates issued under the 2001 NS RDP. The deadline is 
extended from December 17, 2001, to January 18, 2002, and applies only 
to certificates unsold by producers as of December 18, 2001. This 
action gives producers additional time to sell their certificates to 
handlers and thus be compensated for diverting their 2001 production, 
which is the intent of the RDP. This action was recommended by the RAC 
at a meeting on December 11, 2001, by a near unanimous vote of 36 in 
favor, 2 opposed (believed the RAC should adhere to the current 
deadline), and 1 abstained.

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

[[Page 65424]]

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. Paragraph (e) of that section provides authority for the RAC 
to establish, with the approval of USDA, such rules and regulations as 
may be necessary for the implementation and operation of an RDP. 
Accordingly, additional procedures and deadlines are specified in 
Sec. 989.156.
    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 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 prior to December 20. The 
RAC conducts a lottery if the tonnage applied for exceeds what has been 
allotted. RAC staff then notifies producers whether they have been 
accepted into the program.
    Approved producers curtail their production by vine removal or some 
other means established by the RAC. Such producers receive a 
certificate the following fall 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 by December 15 (Monday, December 17, 2001, for the 2001 RDP 
since December 15 fell on a Saturday) 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 prior 
year's reserve pool in an amount equal to the tonnage represented on 
the diversion certificate. The new crop year's volume regulation 
percentages are applied to the diversion tonnage acquired by the 
handler (as if the handler had bought raisins directly from a 
producer).

2001 NS Diversion Program

    The 2000-01 California NS raisin crop was the largest on record 
with final deliveries of raisins from producers to handlers totaling 
432,616 tons. This compares to the 10-year average of 344,303 tons. 
With this large crop, 203,330 tons of NS raisins were set aside in a 
reserve pool. Of that reserve tonnage, 89,076 tons were ultimately 
allocated to a diversion program. As of December 1, 2001, 70,529 tons 
of diversion certificates had been acquired by handlers. It was 
reported at the December 11, 2001, RAC meeting, by RAC staff that the 
status of about 2,000 tons of 2001 diversion certificates are unknown.

RAC Recommendation

    The RAC met on December 11, 2001, and addressed a concern expressed 
by some producers with the 2001 RDP. Some producers have had trouble 
selling their 2001 diversion certificates to handlers. There was 
concern that some certificates may remain unsold and unredeemed by the 
December 15 deadline (or Monday, December 17, 2001, for the 2001 RDP 
since December 15 fell on a Saturday). Several reasons were mentioned 
as to why this was occurring. The California raisin industry as a whole 
is experiencing a severe economic downturn. Two short crops in 1998 and 
1999 along with other factors caused producer prices to drop 
drastically for the 2000 crop, marking the first time in about 13 years 
that prices had fallen. The value of handler inventories has likewise 
fallen which has contributed to handler difficulties in securing 
financing to purchase diversion certificates from producers. In 
addition, some handlers do not need any more raisins to meet their 
market needs. In some instances, producers have tried to negotiate a 
premium price for their certificates with handlers.
    After deliberating various options (discussed in the following 
section of this rule regarding the Regulatory Flexibility Analysis), 
the RAC recommended extending the deadline for handlers to redeem 2001 
diversion certificates from December 17, 2001, to January 18, 2002. The 
extension applies only to 2001 certificates unsold by producers as of 
December 18, 2001. Producers still holding certificates must have the 
certificates verified and stamped appropriately by the RAC by December 
21, 2001, to indicate that such certificates will be valid until 
January 18, 2002. Handlers may then purchase these certificates from 
producers and redeem them for 2000-01 crop reserve raisins following 
prescribed procedures in Sec. 989.156(k). This action will give 
producers still holding certificates additional time to sell their 
certificates to handlers, and give handlers additional time to secure 
financing to purchase the certificates from producers and redeem them 
with the RAC. Thus, producers will likely be compensated for diverting 
their 2001 production, which is the intent of the RDP. Section 
989.156(k) is changed accordingly for the 2001 RDP only.

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 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 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 
$750,000. 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. No more than 7 handlers, and a 
majority of producers, of California raisins may be classified as small 
entities.
    This rule revises Sec. 989.156(k) 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 with the RAC for raisins from the prior year's reserve 
pool. This rule extends the date whereby handlers may redeem 2001 
diversion certificates with the RAC from December 17, 2001, to January 
18, 2002, and applies only to certificates unsold by producers to 
handlers as of December

[[Page 65425]]

18, 2001. Authority for this action is provided in Sec. 989.56(e) of 
the order.
    Regarding the impact of this action on affected entities, producers 
who curtailed 2001 production and have had trouble selling their 
diversion certificates to handlers will have additional time to sell 
their certificates to handlers. Handlers pay producers for the free 
tonnage applicable to the diversion certificate minus the established 
harvest cost for the diverted tonnage. For the 2001 RDP, the industry 
average free tonnage price applied to diversion certificates was $854 
per ton, and applicable harvest costs as established by the RAC were 
$340 per ton. Preliminary volume regulation percentages for the 2001-02 
crop were announced by the RAC at 56 percent free and 44 percent 
reserve. Thus, using these figures, if a producer was issued a 
certificate for 100 tons of raisins, he/she would be paid $138.24 per 
ton by the handler, or a total of $13,824 (($854 per ton  x  100 tons 
x  .56) minus (100 tons  x  $340 per ton harvest cost)). Extending the 
deadline allows producers additional time to sell their certificate and 
earn some income for not producing a 2001 crop.
    Regarding the impact of this action on handlers, handlers 
experiencing financial difficulty would have additional time to arrange 
for financing through likely extending lines of credit with financial 
institutions. Handlers pay producers for the free tonnage applicable to 
the diversion certificate minus the $340 per ton harvest cost. Handlers 
redeem the certificates for 2000-01 crop NS reserve raisins and pay the 
RAC the $340 per ton harvest cost, plus payment for bins ($20 per ton) 
and for receiving, storing, fumigating, handling (currently totaling 
$46 per ton) and inspecting (currently $9.00 per ton) the tonnage 
represented on the certificate (or a total of $415 per ton). In the 
above example, the handler would redeem the 100-ton certificate with 
the RAC, pay the RAC $41,500 ($415 per ton  x  100 tons), and receive 
44 tons (.44  x  100 tons) of raisins from the 2000-01 reserve pool.
    In addition, the $41,500 in the above example paid by the handler 
to the RAC would be allocated to the 2000-01 reserve pool and be used 
to pay remaining pool expenses or be distributed to 2000-01 reserve 
pool equity holders (producers). Thus, all such equity holders could 
potentially benefit from this action.
    Several alternatives to the recommended action were considered by 
the RAC and/or by the RAC's Administrative Issues' Subcommittee. It was 
proposed that the RAC purchase unsold diversion certificates from 
producers. However, the order currently provides no authority for this. 
In addition, there are concerns as to how this would impact future 
raisin diversion programs, in particular, whether the integrity of the 
RDP could be maintained.
    It was also proposed that a late fee be added to handlers' costs 
for redeeming diversion certificates after December 17, 2001. However, 
the order provides no authority for such a late charge. Another option 
considered was to take no action and adhere to the current deadline. 
Some industry members believe that there is no guarantee that producers 
can sell their harvested crop each season, and there should likewise be 
no ``guarantee'' that producers can sell their diversion certificates.
    There was also consideration of other extension dates besides 
January 18, 2002. However, after much deliberation, the majority of RAC 
members believe that extending the deadline to January 18, 2001, was 
the best solution to this situation. This date will allow the RAC 
sufficient time before it recommends final volume regulation 
percentages to ensure that all redeemed diversion certificates are 
properly reported as 2001 acquisitions by handlers and included in the 
2001-02 crop estimate.
    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 sector 
agencies. Finally, USDA has not identified any relevant Federal rules 
that duplicate, overlap, or conflict with this rule.
    Further, the RAC's meeting on December 11, 2001, and the RAC's 
Administrative Issues Subcommittee meeting on December 5, 2001, where 
this action was deliberated were all 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 information impact of this action on small 
businesses.
    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 15-day comment period is provided to allow interested persons to 
respond to this rule. Fifteen days is deemed appropriate because the 
deadline is extended until January 18, 2002, and comments should be 
received by USDA prior to that date.
    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.
    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) This rule needs to be in effect as soon as 
possible to extend the December 17, 2001, deadline; (2) this rule is a 
relaxation of the existing regulations because it extends a deadline; 
(3) producers are aware of this action which was recommended by the RAC 
at a public meeting; and (4) this interim final rule provides a 15-day 
comment period for written comments 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. In Sec. 989.156, paragraph (k) is revised to read as follows:


Sec. 989.156  Raisin diversion program.

* * * * *
    (k) Redemption of certificates. Any handler holding diversion 
certificates may redeem such certificates for reserve pool raisins from 
the Committee. To

[[Page 65426]]

redeem a certificate, a handler must present the diversion certificate 
to the Committee and pay the Committee an amount equal to the 
established harvest costs plus an amount equal to the payment for 
receiving, storing, fumigating, handling, and inspecting raisins as 
specified in Sec. 989.401 for the entire tonnage shown on the 
certificate. Handlers who acquire diversion certificates from producers 
shall report acquisitions of such certificates and submit them for 
redemption in a manner and for the reporting periods provided in 
Sec. 989.173(b) for the acquisition of raisins acquired from producers. 
The Committee shall issue a reserve release entitling the handler to an 
amount of reserve pool raisins equal to the entire tonnage shown on the 
certificate. Upon receipt of the diversion certificate, the Committee 
shall note on the certificate that it is cancelled. Diversion 
certificates will only be valid and honored if presented to the 
Committee for redemption on or before December 15 of the crop year for 
which they were issued: Provided, That for the 2001 diversion program 
for Natural (sun-dried) Seedless raisins, producers who have not sold 
certificates to handlers on or before December 17, 2001, may present 
them to the Committee on or before December 21, 2001. The Committee 
shall verify and stamp such certificates to indicate that the 
certificate is valid until January 18, 2002. Handlers may redeem such 
certificates with the RAC on or before January 18, 2002, in the same 
manner as described elsewhere in this paragraph (k).
* * * * *

    Dated: December 14, 2001.
A. J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 01-31321 Filed 12-17-01; 10:22 am]
BILLING CODE 3410-02-P