[Federal Register Volume 67, Number 50 (Thursday, March 14, 2002)]
[Rules and Regulations]
[Pages 11384-11393]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-6098]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 81

[Docket No. FV01-81-01 FR]
RIN 0581-AC03


Regulations Governing the California Prune/Plum (Tree Removal) 
Diversion Program

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule establishes procedures for a California Prune/
Plum Diversion Program. The program is voluntary and consists wholly of 
tree removal. The program is being implemented under clause (3) of 
Section 32 of the Act of August 24, 1935, as amended. The program will 
help the California dried plum industry address its severe oversupply 
problems. The tree removal is expected to bring supplies into closer 
balance with market needs, and provide some relief to growers faced 
with excess supplies and acreage, and low prices.

EFFECTIVE DATE: January 2, 2002.

FOR FURTHER INFORMATION CONTACT: Ronald L. Cioffi, Marketing Order 
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 
Independence Avenue, SW Stop 0237, Washington, D.C. 20250-0237; 
Telephone: 202-720-2491; Fax: 202-720-8938; or E-mail: 
[email protected].
    Small businesses may request information on the diversion program 
by contacting Jay Guerber at the above address, telephone, fax, or E-
mail: [email protected].

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This final rule has been determined to be non-significant for the 
purposes of Executive Order 12866 by the Office of Management and 
Budget (OMB).
    This final rule is effective January 2, 2002, to reflect the 
beginning of the application period specified in the proposed rule. 
Prompt notification of growers concerning their participation in the 
program and prompt tree removal are needed for the industry to achieve 
the expected program goals.

Public Law 104-4

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub. 
L. 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State and local governments and 
the private sector. Under section 202 of the UMRA, the Agricultural 
Marketing Service (AMS) generally must prepare a written statement, 
including a cost-benefit analysis, for proposed and final rules with 
``Federal mandates'' that may result in expenditures by State and local 
governments, in the aggregate, or by the private sector, of $100 
million or more in any one year. When such a statement is needed for a 
rule, Section 205 of the UMRA generally requires the AMS to identify 
and consider a reasonable number of regulatory alternatives and adopt 
the least costly, most cost-

[[Page 11385]]

effective, or least burdensome alternative that achieves the objectives 
of the rule.
    This rule contains no Federal mandates (under the regulatory 
provisions of Title II of the UMRA) for State and local governments or 
the private sector of $100 million or more in any one year. Therefore, 
this rule is not subject to the requirements of Sections 202 and 205 of 
the UMRA.

Executive Order 12988

    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. The rule is intended to have preemptive effect 
with respect to any State or local laws, regulations or policies which 
conflict with its provisions, or which would otherwise impede its full 
implementation. Prior to any judicial challenge to the provisions of 
this rule or the application of its provisions, all applicable 
administrative procedures must be exhausted.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the reporting and recordkeeping provisions generated by 
this final rule were approved by the Office of Management and Budget 
(OMB). The Agricultural Marketing Service received emergency approval 
under OMB No. 0581-0201, California Prune/Plum Tree Removal Program--
Section 32 (as amended 7 U.S.C. 612c). The emergency approval expires 
May 31, 2002. A regular submission will be sent to OMB requesting 
approval for three years.
    Two forms are needed for the administration of the tree removal 
program. Growers wishing to participate in the program submitted an 
``Application for Prune Tree Removal Program'' (FV-298). The proposed 
rule estimated that about 200 growers would submit applications. The 
application period ended January 31, 2002, and a total of 481 program 
applications have been submitted. It is estimated that each form took 
about 30 minutes to complete. Thus, the total burden for filing grower 
applications has increased from 100 to 240.5 hours. A total of 10 hours 
has been added to cover the recordkeeping burden on growers. Thus, the 
total burden hours for the program will be 250.5 hours. After removing 
their trees, growers will then have to sign a statement (FV-299) 
stating they wish payment. No additional burden has been estimated for 
this second form which would require only a signature. Finally, 
participants will be required to retain records pertaining to the tree 
removal program for two years after the year of removal.

Executive Order 12372

    This program is not subject to the provisions of Executive Order 
12372, which requires intergovernmental consultation with State and 
local officials. See the Notice related to 7 CFR part 3015, subpart V 
published at 48 FR 29115 (June 24, 1983).

Executive Order 12612

    It has been determined that this rule does not have sufficient 
Federalism implications to warrant the preparation of a Federalism 
Assessment. The provisions contained in this rule will not have a 
substantial direct effect on States or their political subdivisions or 
on the distribution of power and responsibilities among the various 
levels of government.

Authority for Tree Removal Program

    The program is intended to reestablish prune/plum farmers' 
purchasing power. Programs to reestablish farmers' purchasing power are 
authorized by clause (3) of Section 32 of the Act of August 24, 1935, 
as amended (7 U.S.C. 612c) (``Section 32''). This clause of Section 32 
authorizes USDA to ``* * * reestablish farmers'' purchasing power by 
making payments in connection with the normal production of any 
agricultural commodity for domestic consumption.'' Section 32 also 
authorizes USDA to use Section 32 funds ``* * * at such times, and in 
such manner, and in such amounts, as USDA finds will effectuate 
substantial accomplishments of any one or more of the purposes of this 
section.'' Furthermore, ``Determinations by USDA as to what constitutes 
* * * normal production for domestic consumption shall be final.''

Need for the Tree Removal Program

    Production of prune/plums for marketing as dried plums is 
concentrated in California. Production of dried plums during the 2000 
season increased for the second consecutive year, to nearly 219,000 
tons (natural condition).
    Changes in growing conditions have substantially altered the 
production outlook for 2001. Production was originally estimated to be 
220,000 tons. However, due to a lighter crop-set in major producing 
areas, as well as freezing temperatures and hail, production for the 
2001 crop year is now expected to range between 140,000 and 155,000 
tons. This smaller crop somewhat alleviates the oversupply situation, 
but does not represent a change in the longer-term oversupply 
situation.
    When the crop was estimated at 220,000 tons in the spring of 2001, 
the industry discussed the use of volume control authorized under the 
Federal marketing order. In addition, carryin inventories from the 2000 
crop year were reported at 100,829 tons. With this level of inventories 
and crop, the total available supply would have been 320,829 tons.
    With this estimated crop size, establishing a 48 percent reserve 
(52 percent free tonnage) was discussed. The industry does not have a 
history of establishing reserve percentages, and reserve percentages 
were last used in the 1970's. The fact that the marketing order 
committee even considered use of the reserve provisions indicates the 
gravity with which the industry views the oversupply problem. The use 
of marketing order reserve provisions is intended to help industries 
deal with surplus production and facilitate orderly marketing of their 
crops.
    The Prune Bargaining Association (PBA) represents about 40 percent 
of the independent growers and negotiates a selling price for its 
members. With the large anticipated crop for the 2001 season and the 
large carryin inventory, the PBA had difficulty establishing a price 
with handlers. Even with the smaller crop of 155,000 tons, the PBA 
could only negotiate a price of $763 per ton. This compares to $845 for 
the 2000 season, or a decrease of 9.7 percent. Although the price has 
been set, not all handlers have signed the agreement. Even this lower 
price may be too high in the eyes of the non-signing handlers, given 
current supply conditions.
    The smaller crop size for 2001 has provided the industry some 
relief in reducing total available supplies. However, there are still a 
large number of nonbearing acres (15,000) that will become productive 
over the next six years. In addition, there are many acres with older, 
less productive trees which could be replanted in the near future. A 
tree removal program will assist growers who are facing difficult 
replanting decisions by allowing them to receive funds for the removal 
of trees and, at the same time, prohibit those growers from replanting 
prune/plums in those orchards. Prune/plum growers also tend to be 
producers of almonds, walnuts, and cling peaches. Plantings of these 
crops could increase in future years as growers remove prune/plum 
acreage.
    Bearing acreage expanded to a record 86,000 acres during the 2000 
season and the average yield increased 19 percent. Yields are 
anticipated to increase further as more densely planted acres

[[Page 11386]]

become productive over the next several years.
    Nonbearing acreage, which is an indicator of future production 
levels, increased to an all-time high of 26,000 acres in 1998. This 
represented a 22-percent increase in the productive capacity of the 
industry. The non-bearing acres are more densely planted than in 
previous years which results in a higher yield per acre.
    The dried plum industry faces a long-run surplus situation. For the 
2000 crop year, bearing acres were 86,000 and non-bearing acres were 
15,000. Bearing acres could exceed 100,000 in the near future. With 
yields in excess of 2.0 tons per acre, production could be expected to 
be above 200,000 tons in many crop years.
    Total domestic shipments exceeded 100,000 tons for six seasons in 
the late 1980's and early 1990's, but have declined from a high of 
108,085 processed tons in 1996. Per capita consumption has been 
steadily declining since 1980. Export shipments have been stagnant. As 
a result of these domestic and export trends, total shipments have 
never exceeded 190,000 processed tons.
    Until recently, export shipments were a source of growth in the 
dried plum industry. In 2000, exports represented 47 percent of total 
shipments. However, the strong dollar and the downturn in the economies 
in Asia and Europe have significantly slowed export sales.
    Due to the significant supply-demand imbalance, the industry 
anticipates several years in which the expected annual carryin 
inventories will exceed the industry's desirable carryin level of 
approximately 40,000 tons. If dried plum markets continue to be over-
supplied with product, grower prices and grower relations with packers 
will deteriorate significantly. Even with the lower production estimate 
for the 2001 crop year, the carryout inventory is expected to exceed 
76,000 tons.
    High prices from 1992 through 1995, and a more balanced supply and 
demand situation, helped to stimulate investments in new acreage. This 
additional acreage came from a variety of sources, mainly rice and 
pasture land. Intensifying the anticipated surplus situation is the 
fact that new acres are more productive than existing acres, which 
causes output to grow more rapidly in proportion to acreage growth.
    It takes dried plum trees 6 years to become fully productive. Many 
of the costs of producing plum trees are ``sunk,'' making it difficult 
to reverse decisions once those acres are planted. Because supply is 
slow to adjust to changing market conditions, the industry anticipates 
many years of production outpacing demand, resulting in continued 
distressed grower conditions.
    From 1980 through 2000, the total cost per ton of producing dried 
plums exceeded the growers' season-average prices. Similarly, the total 
cost per acre exceeded revenue per acre.
    However, it is also important to consider variable cost. In recent 
years, the total revenue per ton and per acre has been greater than the 
total variable cost per ton and per acre. Prices and revenues greater 
than variable costs provide some indication of why a dried plum 
producer continues to harvest and process a crop despite losing money.

Tree Removal Diversion Program

    The industry is requesting a voluntary tree removal program 
estimated to cost $17 million. The industry would like to remove a 
minimum of 20,000 bearing acres of prune/plum trees. With many of the 
current bearing acres reaching the age where replanting would be 
considered, the industry is trying to provide an incentive to growers 
to remove older trees, while ensuring that those orchards are not 
replanted with prune/plum trees.
    To be eligible for the tree removal program, orchards must have a 
minimum yield of 1.5 tons of dried prune/plums per net-planted acre. 
With a minimum threshold yield of 1.5 tons of dried prune/plums per 
net-planted acre, sufficient land would be enrolled in the tree removal 
program to reduce annual production by approximately 30,000 tons. A 
net-planted acre is the actual acreage planted with prune/plum trees.
    The industry has estimated that it will take $8 to $9 per tree to 
induce growers to participate in such a program. It is believed that 
financial institutions that provide growers operating funds would not 
allow them to participate if the payment per tree is below this level.
    This type of one-time decrease in production would more closely 
align supply with demand, while assuring an adequate supply. This would 
allow the industry to concentrate their efforts on rebuilding demand 
for future years.
    The industry has already undertaken a smaller-scale tree removal 
program. However, to finance this grower-initiated tree pull program, 
grower assessments for promotion were reduced from $50 per ton to $30 
per ton. Less money is available for promotion, but growers felt that 
this re-direction of funds was necessary to help address the oversupply 
situation.
    The tree removal program would be administered through the 
Agricultural Marketing Service (AMS) and the Prune Marketing Committee 
(Committee). The Committee is an administrative agency appointed by AMS 
to locally administer the terms of Federal Marketing Order No. 993.
    Any prune/plum producer wishing to participate in the program filed 
an application with the Committee. The application period began January 
2, and ended January 31, 2002.
    Each applicant provided information needed by the Committee to 
operate the program. This included, for example, the number of trees 
the applicant wished to remove and their location. The applicant also 
will have to certify that he/she has not contracted to sell the land or 
otherwise already arranged to have the trees removed for commercial 
purposes (e.g., shopping centers, housing developments, resorts, etc.). 
Applicants should note that under the regulations, they bear 
responsibility for ensuring that prune/plum trees are not replanted, 
whether by themselves or by successors to the land, until after June 
30, 2004, and that if they fail to prevent such replanting, they must 
refund any USDA payment, with interest, made in connection with the 
tree removal program. The Committee will review each application for 
completeness, and make reasonable efforts to contact growers to obtain 
any missing information.
    In order to be eligible to participate in the program, the orchards 
or blocks of trees being removed from production would have to have a 
minimum yield of 1.5 dried tons per net-planted acre during either the 
1999 or 2000 crop years. A net-planted acre is the actual acreage 
planted with prune/plum trees. This means that abandoned orchards will 
not be eligible for participation. USDA considered establishing the 
minimum qualifying yield at 2.2 tons per acre, but determined that at 
that level, too many orchards would be ineligible for the program. A 
lower yield would not reduce production as much as the industry 
desires.
    USDA has allocated $17 million for this program, including 
administrative costs. Applications would be approved until the level of 
available funding was reached. Each participating grower will have to 
then remove trees from production by June 30, 2002. Growers will be 
paid $8.50 for each eligible tree removed. This level of payment is 
deemed necessary for a significant number of growers to participate in 
the tree-removal program. It would cover most of the costs of removing 
the trees (bulldozing, cutting, etc.), and preparing the land for other 
uses. The costs vary depending on the number of acres

[[Page 11387]]

removed. Some cost savings may accrue with larger acreage removals.
    Estimated costs for removing, piling, chipping, or other disposal 
methods range from $142-$225 per acre or from $1.29-$2.05 per tree. 
Costs for removing the roots and other debris are expected to range 
from $163-$289 per acre or from $1.48-$2.63 per tree. Leveling of the 
ground is expected to cost $161-$401 per acre or $1.46-$3.65 per tree. 
Fumigation of the tree holes is expected to cost $550 per acre or $5.00 
per tree. This would amount to $9.23-$13.33 for each tree removed. The 
$8.50 payment under the program is expected to offset most of the 
grower's costs, but should be sufficient to encourage growers to 
participate in the program.
    Each grower participating in the program will have to agree not to 
replant prune/plum trees on land cleared under this program through 
June 30, 2004. Because it takes new acres at least six years to be 
productive, acreage participating in the tree-removal program would not 
return to commercial prune/plum production for at least eight years and 
possibly nine years because plantings occur in January and February. 
Alternative crops could be planted. Additionally, the current economic 
conditions in the industry, specifically weak demand, reduced per 
capita consumption, stagnant domestic shipments and exports, and 
declining grower prices and revenues, would appear to limit the 
incentives for replanting acreage to prune/plum trees.

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 rule 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 actions in order that small businesses will not be 
unduly or disproportionately burdened.
    There are approximately 1,250 producers of dried plums in 
California. Small agricultural producers have been defined by the Small 
Business Administration (13 CFR 121.201) as those having annual 
receipts of less than $750,000. An estimated 32 producers, or less than 
13 percent of the 1,250 total producers, would be considered large 
producers with annual incomes over $750,000.
    This final rule establishes a tree removal diversion program for 
California dried prune/plums. Authority for the program is provided in 
clause (3) of Section 32 of the act of August 24, 1935, as amended.
    Participation in the diversion program is strictly voluntary, so 
individual producers, both small and large, can weigh the benefits and 
costs for their own operations before deciding whether to participate 
in the program.

Economic Assessment of the Tree Removal Diversion Program

    To assess the impact a tree removal program would have on prices 
growers receive for their product, impacts on grower prices and 
inventories with a tree removal program and without a tree removal 
program were estimated. An econometric model was developed for the 
purpose of estimating nominal season average grower prices under both 
scenarios.
    A tree removal program will directly reduce the number of bearing 
acres, but there will not be an impact until the 2002 crop year since 
harvesting of the 2001 crop is completed.
    In 2000, there were still 15,000 non-bearing acres. The industry 
has indicated that no additional plantings of prune/plum trees for 
acreage expansion are occurring at this time. Therefore, after the 
15,000 non-bearing acres come into production, the productive capacity 
of the industry is assumed to stay constant.
    The tree removal analysis assumes that 20,000 acres are removed 
through the tree removal program, while 3,000 of the non-bearing acres 
become productive in 2002. This results in bearing acres being reduced 
from 86,000 in 2001 to 69,000 in 2002. Bearing acres increase by 3,000 
acres in each of the subsequent years until 2007, rising to 72,000 in 
2003, 75,000 in 2004, 78,000 in 2005, and 81,000 in 2006 and 2007.
    At the time the analysis was performed, production for the 2001 
crop year was estimated by the Department's National Agricultural 
Statistics Service (NASS) at 155,000 natural condition tons. Marketable 
production is generally 93 percent of total production, yielding an 
estimated 144,500 marketable tons for 2001. Carryin inventory for the 
2001 crop year was computed by the marketing order committee at 100,829 
tons as of June 30, 2001. These figures are used to derive an estimated 
total available supply of 244,979 tons for 2001. This level of supply 
accounts for the fact that a number of voluntary measures have been 
taken by the industry to reduce the level of production for the 2001 
crop year, including crop abandonment and cutbacks on cultural 
practices.
    Shipments are estimated to grow by 1 percent annually, which 
results in estimated total shipments of 165,932 tons for 2001. The one 
percent growth in shipments reflects decreased government surplus 
purchases and possible retail price effects.
    For 2002, total shipments are estimated at 167,591 tons and the 
carryin inventory is estimated at 79,047 tons. With the tree removal 
diversion program reducing bearing acres to 69,000 for the 2002 crop 
year, total available supply is estimated at 257,440 tons. It should be 
noted that through 2001, carryin inventory does not exactly match the 
prior year's difference between total available supply and total 
shipments. This is due to shrinkage and other minor adjustments 
computed by the Federal marketing order committee. However, for this 
analysis, the estimated carryin from 2002 to 2007 is estimated to be 
the exact difference between estimated total supply and estimated 
shipments from the prior year.
    The analysis also assumes that yields will fluctuate up and down, 
in keeping with the known ``alternate bearing'' tendency of prune/plum 
trees. Estimated production, computed by multiplying acreage times 
yield, fluctuates accordingly.
    As carryin inventories are reduced, the total available supply 
moderates for crop years 2003 through 2007, relative to the situation 
without a tree removal program. This results in season average grower 
prices ranging from $845 to $1,084 during that same time span. It 
should be noted that the margin of error for these estimates becomes 
very large for future crop years.
    Even though season-average grower prices per ton rise under the 
tree removal program, all product produced is not necessarily of 
marketable quantity. Costs are incurred on all the production, but 
revenue is received only on product actually marketed. Thus, the 
economic effect of the tree removal program on a per acre basis is to 
dramatically reduce losses and bring producer returns closer to a 
break-even level. With losses still being incurred by producers, there 
should be only a limited incentive to further expand production as a 
result of the tree removal program. It will remain for growers to 
control costs and to expand demand to ensure their longer-term economic 
stability.
    Grower prices are a small component of the finished dried plum 
product and are not closely associated with movements in retail prices. 
However, the increases in grower prices estimated for crop years 2003 
through 2007 may have an impact on retail prices. The extent of any 
retail price increases would depend on processor and retailer

[[Page 11388]]

margins and the pricing and availability of substitute products, such 
as raisins or other dried fruits. It should be noted that dried plum 
prices are estimated to increase with or without a tree removal 
program, but the magnitude of the grower price increase is greater with 
the program.
    Without a tree removal program, bearing acres are estimated to 
increase to 89,000 by the 2002 crop year. Production would be in excess 
of 200,000 tons, resulting in carryout inventories in excess of 100,000 
tons in 2002. In addition, under this scenario, 2002 grower prices are 
estimated at $789 per ton. With high inventories and low grower prices, 
market forces are assumed to induce growers to remove less productive 
acres and the number of bearing acres is estimated to decline from 
89,000 in 2002 to 84,000 in 2007. Even with the decline in bearing 
acres, production and inventories remain excessive from 2002 through 
2007. However, in 2007, carryout inventories fall to an estimated 6,592 
tons.
    Under both scenarios, grower prices increase and inventories become 
more manageable. The difference is that, under a tree removal program, 
adjustments to inventories and prices occur more rapidly. This would 
accelerate benefits to growers, who would otherwise be struggling to 
break even in a depressed market, until market forces brought about a 
slow correction.
    In addition to the direct impact on growers' prices and revenues 
that a tree removal program would have, there are also indirect 
impacts. A tree removal program will assist in decreasing burdensome 
(undesirable) carryout inventories. Without a tree removal program, 
large quantities of dried plums held in packers' inventories prevent 
grower pools from being closed, which delays grower payments. Large 
amounts of undesirable inventory lead to strained grower-packer 
relations. In an attempt to sell the excessive inventories, packers 
reduce f.o.b. prices, which in turn leads to market share battles and 
lower prices being passed back to producers. A more balanced supply and 
demand situation allows growers and packers to jointly continue 
developing markets in ways that benefit the entire industry.

Industry Self-Help Initiatives

    The California dried plum industry has undertaken an initiative to 
reduce acreage and production. The industry implemented a pre-harvest 
tree removal program during the 2001 crop year. The industry collected 
about $3 million to support this effort by reducing assessments under 
their California State marketing order from $50 to $30 a ton. The $20 
per ton reduced assessment was used to support the industry tree 
removal program.
    The program was successful in removing about 2,500 acres. The 
effects of this industry self-help diversion are included in the 
analysis of the Federal program.
    The industry also has taken measures to stimulate demand, 
including: (1) The development of new products and new uses for dried 
plums; (2) marketing efforts to attract younger customers; and (3) 
domestic and export market promotion programs under the California 
State marketing order and the Foreign Agricultural Service's Marketing 
Assistance Program (MAP). One of the most recent initiatives involved 
securing approval from the Food and Drug Administration to change the 
name ``dried prunes'' to ``dried plums.'' This has allowed the industry 
to redirect its generic marketing efforts to attract a new generation 
of consumers.

Benefits of the Program

    The economic assessment of the tree removal program indicates that 
it is expected to benefit producers, particularly small, under-
capitalized producers, as well as the entire dried plum industry, 
including packers. The per ton sales price is projected to increase 
from 2002-2007, reducing losses and moving producer returns closer to 
break-even levels. The benefit to producers from reduced losses is 
projected to total approximately $93 million over the six-year period 
2002-2007. The benefits over the six-year period would average nearly 
$15.5 million annually. The proposed rule incorrectly indicated that 
the benefit to producers from reduced losses would be about $128 
million and that the benefits over the six-year period would average 
nearly $24 million annually.

Costs of the Program

    The major cost of the program would be the payment to producers for 
removing their prune/plum trees. A total of $17 million, less Committee 
administrative costs, is available for the tree removal program. 
Committee administrative costs for reviewing applications and verifying 
tree removals are expected to be about $125,000. Major expense 
categories for administration include costs for salaries and benefits; 
vehicle rental and maintenance; insurance and overhead; and supplies.
    Total producer costs associated with filing applications to 
participate in the program and maintaining records for the period 
specified after tree removal are expected to be about $2,500. These 
costs were estimated to be $1,000 in the proposed rule. The increased 
producer cost estimate is due to the increased number of applications 
and the addition of 10 hours to cover grower recordkeeping. The number 
of applications received was estimated to be 200 in the proposed rule 
and the actual number received was 481.

Overall Assessment

    Payments made through this program could help prune/plum producers 
by addressing the oversupply problem that is adversely affecting the 
dried plum industry. A tree removal program is expected to allow supply 
to be adjusted downward more quickly. Market forces will also result in 
supplies being reduced, but this adjustment may occur more slowly, 
likely resulting in a number of farm failures. The tree-removal program 
may be beneficial in reducing the risk of loan default for lenders that 
financed prune/plum growers. This program will likely help small, 
under-capitalized producers to stay in business. These producers are 
often efficient, but do not have adequate resources to continue to 
operate given the current depressed conditions within their industry.
    Reducing the level of unprofitability also should provide 
opportunities for the industry to engage in additional demand-enhancing 
activities, especially directed at the domestic market. Even a moderate 
increase in domestic per capita consumption will have a significant, 
positive impact on grower returns.
    Costs for the program would include the $17 million to be paid 
growers and to the Committee for administration costs under the Federal 
tree removal diversion program. Additionally, growers would incur costs 
totaling about $2,500 to comply with the filing and record-keeping 
requirements of the program.
    Benefits to growers under the tree removal program could total 
approximately $93 million. The first step in this calculation is to 
multiply marketable production for each of the six years (2002-2007) 
times the difference between grower price and variable cost, and to sum 
those figures. This is done for each of the two scenarios (with and 
without a tree pull program). The $93 million difference between those 
figures represents a conservative (low-end) estimate of program 
benefits resulting from reduced grower losses. This cost calculation 
assumes that the acreage on which trees are removed remains idle, and 
that

[[Page 11389]]

growers must therefore absorb all fixed costs on that acreage. To the 
extent that the land is put to other productive uses, growers would not 
be absorbing all fixed costs of producing prune/plums, and grower 
benefits would be higher.
    If growers are earning more, it follows that processors and/or 
retailers beyond the farmgate would pay higher raw product costs to 
obtain the prune/plums from the growers. These higher costs could be 
passed on to consumers through higher retail prices or could be 
absorbed as reduced operating margins for other affected sectors of the 
economy--processors, wholesalers, or retailers. An estimate of these 
costs is obtained by multiplying the estimated grower price changes 
over each of the six years (2002-2007) times annual shipments (an 
average of the prune/plum shipments with the tree pull program and 
without the tree pull program). That figure, summed over the six years, 
is approximately $68 million. However, this $68 million cost is likely 
overstated due to the fact that grower prices are currently less than 
the cost of production. Adjustments in retail prices, and retailer and 
processor margins, are anticipated to change with or without a tree 
removal program.
    Another cost of the tree removal program is the reduced economic 
activity due to the growers purchasing fewer inputs (labor, chemicals, 
etc.) from the reduction in prune/plum acres managed and harvested. 
Input producers (laborers and agricultural chemical firms) would see 
less revenue because of lowered purchases of these inputs. To the 
extent that acreage removed is replanted in other crops, those costs 
could be somewhat offset by purchases of inputs to produce the 
alternative crops. This cost of the tree removal program is difficult 
to quantify and is not included in this analysis.
    Savings over the same period of up to $60 million could be realized 
through reduced surplus removal purchases of dried plum products for 
Federal feeding programs. These government savings would be used to 
purchase other commodities for use in school and other food assistance 
programs.
    Historically, the dried plum industry has not relied heavily on the 
Federal surplus removal program. Since the 1991 season, the industry 
has requested and received surplus removal purchases in only 4 of the 
past 11 seasons. Should supplies be reduced as expected through the 
tree removal program, it would be unlikely that the dried plum industry 
would seek government assistance in the form of surplus removal 
purchases for several years to come.

Conclusion

    Based on this information, USDA has determined that there is a 
surplus of dried plums, and that reestablishment of producers' 
purchasing power would be encouraged by using Section 32 funds to 
reduce supplies under a Diversion Program for Dried Plums/Prunes 
consisting wholly of a tree-removal program. USDA has further 
determined that this program is expected to be a long-term solution to 
the oversupply situation that exists in the California dried plum 
industry, and that it will provide relief to growers.
    Notice of this action was published in the Federal Register on 
December 17, 2001. Interested persons were invited to submit comments 
until January 16, 2002. Eleven comments were received. Most of them 
supported the tree removal program and expressed appreciation to USDA 
for proposing to put the program in place. Other commenters requested 
changes or clarifications to the eligibility, removal, and replanting 
requirements, and several suggested alternatives to tree removal. One 
commenter did not support the proposed program.
    One commenter suggested that USDA should buy the surplus production 
and distribute the dried plums to needy persons in the United States 
and outside the United States. Another suggested that USDA should 
arrange to have the trees removed and shipped to other countries so 
they could be replanted and possibly provide food for needy people. 
USDA generally purchases commodities requested by users in quantities 
which can be distributed quickly. Available storage space is limited 
and storage is quite expensive. The tree removal program, on the other 
hand, is designed to help the California dried plum industry by 
bringing supplies more closely in line with market needs, and by 
providing more lasting benefits. Consumers should benefit through a 
stabilized market and reduced fluctuation in supplies and prices. The 
idea of shipping trees as a gift to needy countries with compatible 
climates and growing conditions has merit. However, the cost of 
removal, packaging of the trees with their roots intact, and the 
shipment to various countries would be prohibitive and the survival 
rate of the trees would probably be quite low.
    Six comments were received from individuals requesting changes or 
clarifications to the eligibility, replanting, and tree removal 
requirements of the program.
    Comments from two representatives of the California raisin industry 
requested USDA to incorporate a provision into the tree removal program 
specifying that each grower participating in the tree removal program 
must agree not to replant raisin grape vines on land cleared under the 
tree removal program through June 30, 2004, to prevent harming the 
raisin industry. A prune/plum grower from the Santa Clara Valley 
suggested that the yield requirements be reduced from 1.5 to 1.2 tons 
per acre to recognize that yields in the Santa Clara Valley are 
traditionally lower than the yields in the Central Valley of 
California, where most of the prune/plums are grown.
    Adding prohibitions on what could or could not be planted on land 
cleared under this program goes beyond the intended scope of the 
program and does not appear justified at this time. The limits placed 
on producers with respect to the trees involved in this program reflect 
that at a minimum prune/plum producers should not be allowed to accept 
the payment and, in the near future, recommit the same ground to prune/
plum trees.
    The program will assure that removal is not part of the normal 
process of tree replacement. The program directly affects land 
identified by the producer as prime prune/plum production land. Market 
conditions, moreover, would govern what producers will or will not 
plant. Producers are not likely to plant a crop which can be expected 
to be in surplus. In the end, USDA's desire was to have this program be 
as simple as possible.
    With respect to changes in the yield per acre limit, the suggestion 
was not adopted because USDA desires program dollars to be used for 
removing higher yielding trees. The program is designed to benefit the 
industry by stabilizing supplies and prices of dried plums.
    Two comments were received from the Executive Director of the Prune 
Marketing Committee. The commenter requested that an exception be made 
to the eligibility requirements specifying that the trees removed must 
have yielded at least 1.5 tons per net-planted acre during the 1999 or 
2000 crop years. The commenter reported that some producers might not 
have the required production information because the producers did not 
harvest, or only harvested a portion of, their crops during the 1999 or 
2000 crop years. The commenter indicated that these producers' crops 
generated little or no revenue because their handlers either pro-rated 
the quantity of dried plums they purchased or made no purchases of 
dried plums during 1999 or 2000.
    The commenter further indicated that these producers should not be 
further

[[Page 11390]]

disadvantaged by declaring them ineligible to participate because they 
were not able to sell any of their fruit or only some of their fruit 
during the 1999 or 2000 crop years. The commenter requested that these 
producers be allowed to qualify if they sold production during the 2001 
or 1998 crop years.
    This comment was not adopted because expanding the eligibility base 
period could result in some growers gaining an advantage over other 
growers. While some producers could fare better than other producers 
under a broader base period, the point of the program is to achieve an 
overall reduction in the level of the commodity available for market. 
The simplest and most assured manner for achieving this goal is to 
limit producer eligibility to production from the 1999 or 2000 crop 
years as was proposed. Moreover, limiting eligibility to these two crop 
years will provide some measure of assurance of uniform treatment among 
producers and should help the public's understanding of the program.
    This commenter also questioned a statement in the supplementary 
information section of the proposed rule that appeared on page 64920, 
first column, last paragraph of the December 17, 2001, issue of the 
Federal Register. The statement specified that the applicant would have 
to certify that he/she has not contracted to sell the land or otherwise 
already arranged to have the trees removed. The commenter indicated 
that the language implies that a grower cannot sell a prune orchard to 
another grower who agrees not to replant trees until after June 30, 
2004, and could also exclude a grower who is in the process of buying a 
prune orchard.
    It was not the intent of USDA to prevent participants from selling 
their orchards should they so choose after enrollment in the program. 
However, the owner who accepts the payment, or is the party of record 
for program purposes, will still be liable for ensuring that the two-
year planting prohibition is followed even though the participant no 
longer owns the land. The non-planting promise is a guarantee by the 
participant that no one (not just the participant) will plant the 
property with prune/plum trees during the two-year non-planting period. 
Further, it was and remained the intent of USDA that only those persons 
who are the current owners of the property, and have not already 
contracted to sell the property or destroy the trees could participate. 
This is to avoid conflict where title to the property is already in 
transition--and where the new buyer may be expecting the trees to stay.
    The certification that producer applicants are required to sign, 
guarantees that they have not made prior arrangements to sell the land 
or remove the trees for commercial purposes. That is, they guarantee 
that the land is not going to be commercially developed for shopping 
centers, housing developments, vacation resorts, or similar such 
purposes. It was determined that including such non-agricultural land 
in the program would not serve the purposes of the program.
    The Chairman of the Prune Marketing Committee suggested that the 
application period be extended for an additional 15 to 30 days to give 
producers more time to apply. The commenter indicated that this would 
be extremely helpful to the industry in obtaining as many participants 
as possible. This commenter subsequently withdrew the request. An 
extension of the application period was considered but was found not to 
be necessary in light of producer program interest and the fact that no 
material changes were found appropriate or needed based on the comments 
received. Had a need for material change in the program been found 
warranted and appropriate based on the comments received, an extension 
or other action would have be taken to allow for the adjustment. 
Deadlines were set out clearly in the proposed rule and the program was 
widely publicized in the industry.
    Another commenter raised questions regarding the definition of the 
term ``removal'' in Sec. 81.3. In the proposed rule, the term was 
defined to mean that the prune/plum trees are no longer standing and 
capable of producing a crop. The provision states that the producer can 
accomplish removal by any means the producer desires. The commenter 
contends that grafting other fruit stock to a prune/plum tree should be 
considered removal under the proposed definition. The commenter states 
that the prune/plum trees would no longer be standing, nor will they be 
able to produce a crop of prune/plums. In fact, no part of the prune/
plum tree would be left.
    This procedure would advance the likelihood of the production of 
other crops, and it is preferred that the program be neutral in that 
respect. Also, this would add unneeded complication to the program. 
Given that producer interest in the program is very high without this 
allowance, there does not appear to be any need to increase the 
attractiveness of the program. Moreover, the intent of the program is 
to remove prune/plum trees and the roots of those trees. Grafting is 
not consistent with the intent of the program. Therefore, the 
definition of removal has been clarified to exclude grafting as a 
method of removal and to specify that ``removal'' means that the prune/
plum trees are no longer standing and capable of producing a crop, and 
that the roots of trees have been removed.
    A final commenter indicated that he was opposed to the program. He 
stated that the industry got itself into the oversupply situation and 
should not look to the government to get itself out of it. This program 
is a valid exercise of the authority granted USDA under section 32. 
USDA is monitoring this program very closely to ensure that program 
objectives are attained. The majority of the industry supports this 
program having considered a number of less effective alternatives to 
balance supplies and demand.
    All of the comments received have been thoroughly reviewed. Some 
adjustments have been made in the rule for clarity and to assure 
accomplishment of the goals of the program as set out in the proposed 
rule and as set out in this final rule.
    After consideration of all relevant matter presented, including the 
comments received, and other information, it is found that this final 
rule, as hereinafter set forth, will tend to effectuate the policy of 7 
U.S.C. 612c.
    Pursuant to 5 U.S.C. 553, it is also found that no good cause 
existed for delaying the effective date of this rule. Such delay would 
be contrary to the public interest because prune/plum producers needed 
to know immediately whether they would be accepted into the program by 
February 14, 2002. Eligible producers wanted to begin removing the 
prune/plum trees. In addition, further delay could have jeopardized the 
ability of the program to accomplish its goal of reducing the supply of 
dried plums. As a technical matter, the rule has been made retroactive 
to January 2, 2002, for the reasons given. In fact, however, no 
obligations were undertaken until February 14, 2002. If for any reason 
January 2, 2002, is considered inappropriate as an effective date, then 
the effective date will be considered February 14, 2002, which was well 
after the close of the comment period. Program issues were open until 
that date.

List of Subjects in 7 CFR Part 81

    Administrative practice and procedures, Agriculture, Prunes, 
Reporting and record keeping requirements, Surplus agricultural 
commodities.

[[Page 11391]]


    For the reasons set forth in the preamble, Title 7, Subtitle B, 
Chapter I is amended as follows:
    1. In Subtitle B, Chapter I, part 81 is added to read as follows:

PART 81--PRUNE/DRIED PLUM DIVERSION PROGRAM

Sec.
81.1  Applicability.
81.2  Administration.
81.3  Definitions.
81.4  Length of program.
81.5  General requirements.
81.6  Rate of payment; total payments.
81.7  Eligibility for payment.
81.8  Application and approval for participation.
81.9  Inspection and certification of diversion.
81.10  Claim for payment.
81.11  Compliance with program provisions.
81.12  Inspection of premises.
81.13  Records and accounts.
81.14  Offset, assignment, and prompt payment.
81.15  Appeals.
81.16  Refunds; joint and several liability.
81.17  Death, incompetency or disappearance.

    Authority: 7 U.S.C. 612c.


Sec. 81.1  Applicability.

    Pursuant to the authority conferred by Section 32 of the Act of 
August 24, 1935, as amended (7 U.S.C. 612c) (Section 32), the Secretary 
of Agriculture will make payment to California producers who divert 
prune/plums by removing trees on which the fruit is produced in 
accordance with the terms and conditions set forth herein.


Sec. 81.2  Administration.

    The program will be administered under the direction and 
supervision of the Deputy Administrator, Fruit and Vegetable Programs, 
Agricultural Marketing Service (AMS), United States Department of 
Agriculture (USDA), and will be implemented by the Prune Marketing 
Committee (Committee). The Committee, or its authorized 
representatives, does not have authority to modify or waive any of the 
provisions of this subpart. Such power shall rest solely with the 
Administrator of AMS, or delegatee. The Administator or delegatee, in 
the Administrator's or delegatee's sole discretion can modify deadlines 
or other conditions, as needed or appropriate to serve the goals of the 
program. In all cases, payments under this part are subject to the 
availability of funds.


Sec. 81.3  Definitions.

    (a) Administrator means the Administrator of AMS.
    (b) AMS means the Agricultural Marketing Service of the U.S. 
Department of Agriculture.
    (c) Application means ``Application for Prune Tree Removal 
Program.''
    (d) Committee means the Prune Marketing Committee established by 
the Secretary of Agriculture to locally administer Federal Marketing 
Order No. 993 (7 CFR Part 993), regulating the handling of dried prunes 
produced in California.
    (e) Diversion means the removal of prune-plum trees after approval 
of applications by the Committee through June 30, 2002.
    (f) Producer means an individual, partnership, association, or 
corporation in the State of California who grows prune/plums that are 
dehydrated into dried plums for market.
    (g) Removal means that the prune-plum trees are no longer standing 
and capable of producing a crop, and the roots of the trees have been 
removed. The producer can accomplish removal by any means the producer 
desires. Grafting another type of tree to the rootstock remaining after 
removing the prune/plum tree would not qualify as removal under this 
program.


Sec. 81.4  Length of program.

    Producers diverting prune/plums by removing prune-plum trees must 
complete the diversion no later than June 30, 2002.


Sec. 81.5  General requirements.

    (a) To be eligible for this program, the trees to be removed must 
have yielded at least 1.5 tons of dried prune/plums per net-planted 
acre during the 1999 or 2000 crop year. A net-planted acre is the 
actual acreage planted with prune-plum trees. Abandoned orchards and 
dead trees will not qualify. In new orchards diverted, qualifying trees 
must be at least 5 years of age (6th leaf), contain at least two 
scaffolds, and be capable of producing at least 1.5 tons per net-
planted acre. The block of trees for removal must be easily definable 
by separations from other blocks and contain at least 1,000 eligible 
trees or comprise an entire orchard.
    (b) Any grower participating in this program must agree not to 
replant prune-plum trees on the land cleared under this program through 
June 30, 2004. Participants bear responsibility for ensuring that trees 
are not replanted, whether by themselves, or by successors to the land, 
or by others, until after June 30, 2004. If trees are replanted before 
June 30, 2004, by any persons, participants must refund any USDA 
payment, with interest, made in connection with this tree removal 
program.


Sec. 81.6  Rate of payment; total payments.

    (a) The rate of payment for each eligible prune-plum tree removed 
will be $8.50 per tree.
    (b) Payment under paragraph (a) of this section will be made after 
tree removal has been verified by the staff of the Committee.
    (c) The $8.50 per tree payment shall be the total payment. USDA 
will make no other payment with respect to such removals. The producer 
will be responsible for arranging, requesting, and paying for the tree 
removal in the specified orchard blocks or orchard(s), as the case may 
be.
    (d) Total payments under this program are limited to no more than 
$17,000,000. No additional expenditures shall be made, unless the 
Administrator or delegatee in their sole and exclusive discretion 
shall, in writing, declare otherwise.


Sec. 81.7  Eligibility for payment.

    (a) If total applications for payment do not exceed $17,000,000, 
less administration costs, payments will be made under this program to 
any eligible producer of prune/plums who complies with the requirements 
in Sec. 81.8 and all other terms and conditions in this part.
    (b) If applications for participation in the program authorized by 
this part exceed $17,000,000, less administration costs, the Committee 
will approve the applications (subject to the requirements in 
Sec. 81.8) in the order in which the completed applications are 
received in the Committee office up to the funding limit of 
$17,000,000, less administration costs, for the program. Any additional 
applications will be denied.
    (c) The Administrator or his delegatee may set other conditions for 
payment, in addition to those provided for in this part, to the extent 
necessary to accomplish the goals of the program.


Sec. 81.8  Application and approval for participation.

    (a) Applications will be reviewed for program compliance and 
approved or disapproved by Committee office personnel.
    (b) Applications for participation in the Prune-Plum Diversion 
Program can be obtained from the Committee office at 3841 North Freeway 
Boulevard, Suite 120, Sacramento, California 95834; telephone (916) 
565-6235.
    (c) Any producer desiring to participate in the prune-plum 
diversion program must have filed an application with the Committee by 
January 31,

[[Page 11392]]

2002. The application shall be accompanied by a copy of any two of the 
following four documents: Plat Map from the County Hall of Records; 
Irrigation Tax Bill; County Property Tax Bill; or any other documents 
containing an Assessor's Parcel Number. Such application shall include 
at least the following information:
    (1) The name, address, telephone number and tax identification 
number/social security number of the producer;
    (2) The location and size of the production unit to be diverted;
    (3) The prune/plum production from the orchard or portion of the 
orchard to be diverted during the 1999-2000 and 2000-2001 seasons;
    (4) A statement that all persons with an equity interest in the 
prune/plums in the production unit to be diverted consent to the filing 
of the application. That is, the statement must show that the applicant 
has clear title to the property in question, and/or as needed, the 
statement must show an agreement to participate in the tree removal 
program from all lien or mortgage holders, and/or land owners, lessors, 
or similar parties with an interest in the property to the extent 
demanded by AMS or to the extent that such persons could object to the 
tree removal. However, obtaining such assent shall be the 
responsibility of the applicant who shall alone bear any 
responsibilities which may extend to third parties;
    (5) A statement that the applicant agrees to comply with all of the 
regulations established for the prune/plum diversion program;
    (6) A certification that the information contained in the 
application is true and correct;
    (7) The year that the unit of prune/plums was planted;
    (8) An identification of the handler(s) who received the prune/
plums from the producer in the last two years.
    (d) After the Committee receives the producer applications, it 
shall review them to determine whether all the required information has 
been provided and that the information appears reliable.
    (e) As previously indicated, if the number of trees to be removed 
in such applications, multiplied by $8.50 per tree, exceeds the amount 
of funds available for the diversion program, each grower's application 
will be considered in the order in which they are received at the 
Committee office. AMS may reject any application for any reason, and 
its decisions are final.
    (f) After the application reviews and confirmation of eligible 
trees are completed, the Committee shall notify the applicant, in 
writing, as to whether or not the application has been approved and the 
number of trees approved for payment after removal. If an application 
is not approved, the notification shall specify the reason(s) for 
disapproval. AMS shall be the final arbiter of which applications may 
be approved or rejected, and the final arbiter of any appeal.


Sec. 81.9  Inspection and certification of diversion.

    When the removal of the prune-plum trees is complete, the 
producer(s) will notify the Committee on a form provided by the 
Committee. The Committee will certify that the trees approved for 
removal from the block or orchard, as the case may be, have been 
removed, and notify AMS.


Sec. 81.10  Claim for payment.

    (a) To obtain payment for the trees removed, the producer must 
submit to the Committee by June 30, 2002, a completed form provided by 
the Committee. Such form shall include the Committee's certification 
that the qualifying trees from the blocks or orchards have been 
removed. If all other conditions for payment are met, AMS will then 
issue a check to the producer in the amount of $8.50 per eligible tree 
removed.


Sec. 81.11  Compliance with program provisions.

    If USDA on its own, or on the advice of the Committee, determines 
that any provision of this part have not been complied with by the 
producer, the producer will not be entitled to diversion payments in 
connection with tree removal. If a producer does not comply with the 
terms of this part, including the requirement specified in 
Sec. 81.5(b), the producer must refund, with interest, any USDA payment 
made in connection with such tree removal, and will also be liable to 
USDA for any other damages incurred as a result of such failure. The 
Committee or USDA may deny any producer the right to participate in 
this program or the right to receive or retain payments in connection 
with any diversion previously made under this program, or both, if the 
Committee or USDA determines that:
    (a) The producer has failed to properly remove the prune/plum trees 
from the applicable block or the whole orchard regardless of whether 
such failure was caused directly by the producer or by any other person 
or persons;
    (b) The producer has not acted in good faith in connection with any 
activity under this program; or
    (c) The producer has failed to discharge fully any obligation 
assumed by, or charged to, him or her under this program.


Sec. 81.12  Inspection of premises.

    The producer must permit authorized representatives of USDA or the 
Committee, at any reasonable time, to have access to their premises to 
inspect and examine the orchard block where trees were removed and 
records pertaining to the orchard to determine compliance with the 
provisions of this part.


Sec. 81.13  Records and accounts.

    (a) The producers participating in this program must keep accurate 
records and accounts showing the details relative to the prune/plum 
tree removal, including the contract entered into with the firm or 
person removing the trees, as well as the invoices.
    (b) The producers must permit authorized representatives of USDA, 
the Committee, and the General Accounting Office, or their delegatees, 
at any reasonable time to inspect, examine, and make copies of such 
records and accounts to determine compliance with provisions of this 
part. Such records and accounts must be retained for two years after 
the date of payment to the producer under the program, or for two years 
after the date of any audit of records by USDA, whichever is later. Any 
destruction of records by the producer at any time will be at the risk 
of the producer when there is reason to know, believe, or suspect that 
matters may be or could be in dispute or remain in dispute.


Sec. 81.14  Offset, assignment, and prompt payment.

    (a) Any payment or portion thereof due any person under this part 
shall be allowed without regard to questions of title under State law, 
and without regard to any claim or lien against the crop proceeds 
thereof in favor of the producer or any other creditors except agencies 
of the U.S. Government.
    (b) Payments which are earned by a producer under this program may 
be assigned in the same manner as allowed under the provisions of 7 CFR 
part 1404.
    (c) Prompt payment interest from AMS will not be applicable.


Sec. 81.15  Appeals.

    Any producer who is dissatisfied with a determination made pursuant 
to this part may make a request for reconsideration or appeal of such 
determination. The Deputy Administrator of Fruit and Vegetable Programs 
shall establish the procedure for such appeals.

[[Page 11393]]

Sec. 81.16  Refunds; joint and several liability.

    (a) In the event there is a failure to comply with any term, 
requirement, or condition for payment arising under the application of 
this part, and if any refund of a payment to AMS shall otherwise become 
due in connection with the application of this part, all payments made 
under this part to any producer shall be refunded to AMS together with 
interest.
    (b) All producers signing an application for payment as having an 
interest in such payment shall be jointly and severally liable for any 
refund, including related charges, that is determined to be due for any 
reason under the terms and conditions of the application of this part.
    (c) Interest shall be applicable to refunds required of any 
producer under this part if AMS determines that payments or other 
assistance were provided to a producer who was not eligible for such 
assistance. Such interest shall be charged at the rate of interest that 
the United States Treasury charges the Commodity Credit Corporation 
(CCC) for funds, as of the date AMS made benefits available. Such 
interest shall accrue from the date of repayment or the date interest 
increases as determined in accordance with applicable regulations. AMS 
may waive the accrual of interest if AMS was at fault for the 
overpayment.
    (d) Interest allowable in favor of AMS in accordance with paragraph 
(c) of this section may be waived when there was no intentional 
noncompliance on the part of the producer, as determined by AMS. Such 
decision to waive or not waive the interest shall be at the discretion 
of the Administrator or delegatee.
    (e) Late payment interest shall be assessed on all refunds in 
accordance with the provisions of, and subject to the rates prescribed 
for those claims which are addressed in 7 CFR part 792.
    (f) Producers must refund to AMS any excess payments, as determined 
by AMS, with respect to such application.
    (g) In the event that a benefit under this part was provided as the 
result of erroneous information provided by the producer, or was 
erroneously or improperly paid for any other reason, the benefit must 
be repaid with any applicable interest.


Sec. 81.17  Death, incompetency, or disappearance.

    In the case of death, incompetency, disappearance, or dissolution 
of a prune/plum producer that is eligible to receive benefits in 
accordance with this part, such person or persons who would, under 7 
CFR part 707 be eligible for payments and benefits covered by that 
part, may receive the tree-removal benefits otherwise due the actual 
producer.

    Dated: March 8, 2002.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 02-6098 Filed 3-11-02; 3:09 pm]
BILLING CODE 3410-02-P