[Federal Register Volume 67, Number 93 (Tuesday, May 14, 2002)]
[Rules and Regulations]
[Pages 34383-34385]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-11949]



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 Rules and Regulations
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  Federal Register / Vol. 67, No. 93 / Tuesday, May 14, 2002 / Rules 
and Regulations  

[[Page 34383]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 989

[Docket No. FV02-989-2 FIR]


Raisins Produced From Grapes Grown in California; Reduction in 
Production Cap for 2002 Diversion Program

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (USDA) is adopting, as a final 
rule, without change, an interim final rule reducing the production cap 
for the 2002 diversion program (RDP) for Natural (sun-dried) Seedless 
(NS) raisins from 2.75 to 2.0 tons per acre. The cap is specified under 
the Federal marketing order for California raisins (order). The order 
regulates the handling of raisins produced from grapes grown in 
California and is administered locally by the Raisin Administrative 
Committee (RAC). Under a 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. The production cap 
limits the yield per acre that a producer can claim in a RDP. Reducing 
the cap for the 2002 RDP brings the figure in line with 2001 crop 
yields.

EFFECTIVE DATE: June 13, 2002.

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) 720-8938.
    Small businesses may request information on complying with this 
regulation by contacting Jay Guerber, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence 
Avenue SW, STOP 0237, Washington, DC 20250-0237; telephone: (202) 720-
2491, Fax: (202) 720-8938, 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.''
    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 is not intended to have retroactive effect. 
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 continues to reduce the production cap for the 2002 RDP 
for NS raisins from 2.75 to 2.0 tons per acre. The cap is specified in 
the order. Under a 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. The production cap 
limits the yield per acre that a producer can claim in a RDP. Reducing 
the cap for the 2002 RDP brings the figure in line with 2001 crop 
yields. This action was recommended by the RAC at a meeting on November 
13, 2001.

Volume Regulation Provisions

    The order provides authority for volume regulation designed to 
promote orderly marketing conditions, stabilize prices and supplies, 
and improve producer returns. When volume regulation is in effect, a 
certain percentage of the California raisin crop may be sold by 
handlers to any market (free tonnage) while the remaining percentage 
must be held by handlers in a reserve pool (reserve) for the account of 
the RAC. Reserve raisins are disposed of through various programs 
authorized under the order. For example, reserve raisins may be sold by 
the RAC to handlers for free use or to replace part of the free tonnage 
they exported; carried over as a hedge against a short crop the 
following year; or may be disposed of in other outlets not competitive 
with those for free tonnage raisins, such as government purchase, 
distilleries, or animal feed. Net proceeds from sales of reserve 
raisins are ultimately distributed to producers.

Raisin Diversion Program

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

[[Page 34384]]

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. Such producers curtail their production by vine 
removal or some other means established by the RAC and receive a 
certificate from the RAC which represents the quantity of raisins 
diverted. Producers sell these certificates to handlers who pay 
producers for the free tonnage applicable to the diversion certificate 
minus the established harvest cost for the diverted tonnage. Handlers 
redeem the certificates by presenting them to the RAC and paying an 
amount equal to the established harvest cost plus payment for 
receiving, storing, fumigating, handling, and inspecting the tonnage 
represented on the certificate. The RAC then gives the handler raisins 
from the 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).

Production Cap

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

RAC Recommendation

    The RAC met on November 13, 2001, and recommended reducing the 
production cap from 2.75 to 2.0 tons per acre. With 2001 raisin-type 
variety grape production down by 31 percent, according to the 
California Agricultural Statistics Service, the RAC recommended 
reducing the production cap by about 30 percent to reflect 2001 crop 
yields. Paragraph (t) in Sec. 989.156 of the order's rules and 
regulations was revised accordingly.
    On November 28, 2001, the RAC met and reviewed data relating to the 
quantity of reserve raisins and anticipated market needs. With a 2001-
02 NS crop estimated at 359,341 tons, and a computed trade demand 
(comparable to market needs) of 235,850 tons, the RAC projects a 
reserve pool of 123,491 tons of NS raisins. With such a large 
anticipated reserve, the RAC announced that 45,182 tons of NS raisins 
would be eligible for diversion under the 2002 RDP. The RAC increased 
this amount to 54,086 tons at a meeting on January 11, 2002. Of the 
54,086 tons, 49,086 tons were made available to approved producers who 
submitted applications to the RAC by December 20, 2001, with producers 
who plan to remove vines receiving priority over those who plan to 
curtail (abort) production through spur pruning or other means. Section 
989.156(d) requires the RAC to give priority to applicants who agree to 
remove vines. Another 5,000 tons will be made available to approved 
producers who submit applications to the RAC from December 21, 2001, 
through May 1, 2002, and plan to remove vines. Authority for this 
additional opportunity for vine removal is provided in Sec. 989.156(s).

Final Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this action on small entities. Accordingly, AMS has 
prepared this final regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and rules issued thereunder, are unique in that 
they are brought about through group action of essentially small 
entities acting on their own behalf. Thus, both statutes have small 
entity orientation and compatibility.
    There are approximately 20 handlers of California raisins who are 
subject to regulation under the order and approximately 4,500 raisin 
producers in the regulated area. Small agricultural firms are defined 
by the Small Business Administration (13 CFR 121.201) as those having 
annual receipts of less that $5,000,000, and small agricultural 
producers are defined as those having annual receipts of less than 
$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 continues to revise Sec. 989.156(t) of the order's rules 
and regulations regarding the RDP. Under a 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. The order specifies a production cap limiting the yield per acre 
that a producer can claim in a RDP. This rule continues to reduce the 
cap from 2.75 to 2.0 tons per acre to accurately reflect 2001 crop 
yields. Authority for this action is provided in Sec. 989.56(a) of the 
order.
    Regarding the impact of this action on affected entities, producers 
who participate in the 2002 RDP will have the opportunity to earn some 
income for not harvesting a 2002-03 crop. Producers will sell the 
certificates to handlers next fall and be paid for the free tonnage 
applicable to the diversion certificate minus the harvest cost for the 
diverted tonnage. Applicable harvest costs for the 2002 RDP were 
established by the RAC at $340 per ton.
    Reducing the production cap will have little impact on raisin 
handlers. Handlers will pay producers for the free tonnage applicable 
to the diversion certificate minus the $340 per ton harvest cost. 
Handlers will redeem the certificates for 2001-02 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. Reducing the 
production cap will have little impact on handler payments for reserve 
raisins under the 2001 RDP.
    Alternatives to the recommended action include leaving the 
production

[[Page 34385]]

cap at 2.75 tons per acre or reducing it to another figure besides 2.0 
tons per acre. However, the majority of RAC members believe that a cap 
of 2.0 tons per acre more accurately reflects 2001 yields.
    There was some discussion at the RAC's meeting that the 2.0-ton per 
acre production cap was too low and would discriminate against 
producers with high yields. In recent years, cultural practices have 
evolved to where some producers' yield per acre is reportedly as high 
as 4 tons. However, as previously stated, the program is voluntary and 
producers whose vines can produce 4 tons per acre have the option to 
produce a raisin crop rather than apply for the RDP and be subject to 
the production cap.
    This rule imposes no additional reporting or recordkeeping 
requirements on either small or large raisin handlers. In accordance 
with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the 
information collection requirement referred to in this rule (i.e., the 
application) has been approved by the Office of Management and Budget 
(OMB) under OMB Control No. 0581-0178. As with all Federal marketing 
order programs, reports and forms are periodically reviewed to reduce 
information requirements and duplication by industry and public 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 November 13, 2001, the RAC's 
Administrative Issues Subcommittee meeting on that same day but prior 
to the RAC meeting where this action was deliberated, and the RAC's 
meeting on November 28, 2001, where a diversion program was announced, 
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. An interim final rule 
concerning this action was published in the Federal Register on March 
15, 2002 (67 FR 11555). Copies of the rule were mailed by RAC staff to 
all RAC members and alternates, the Raisin Bargaining Association, 
handlers and dehydrators. In addition, the rule was made available 
through the Internet by the Office of the Federal Register and USDA. 
That rule provided for a 15-day comment period which ended April 1, 
2002. No comments were received.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab.html. Any questions about the compliance 
guide should be sent to Jay Guerber at the previously mentioned address 
in the FOR FURTHER INFORMATION CONTACT section.
    After consideration of all relevant material presented, including 
the information and recommendation submitted by the RAC and other 
available information, it is hereby found that finalizing this interim 
final rule, as hereinafter set forth, will tend to effectuate the 
declared policy of the Act.

List of Subjects in 7 CFR Part 989

    Grapes, Marketing agreements, Raisins, Reporting and recordkeeping 
requirements.

PART 989--RAISINS PRODUCED FROM GRAPES GROWN IN CALIFORNIA

    Accordingly, the interim final rule amending 7 CFR part 989 which 
was published at 67 FR 11555 on March 15, 2002, is adopted as a final 
rule without change.

    Dated: May 8, 2002.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 02-11949 Filed 5-13-02; 8:45 am]
BILLING CODE 3410-02-P