[Federal Register Volume 68, Number 54 (Thursday, March 20, 2003)]
[Rules and Regulations]
[Pages 13615-13617]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-6667]



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 Rules and Regulations
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  Federal Register / Vol. 68, No. 54 / Thursday, March 20, 2003 / Rules 
and Regulations  

[[Page 13615]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 989

[Docket No. FV03-989-2 FIR]


Raisins Produced From Grapes Grown in California; Temporary 
Suspension of a Provision, and Extension of Certain Deadlines Under the 
Raisin 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 regarding the raisin 
diversion program (RDP) as 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). The interim final 
rule temporarily suspended a November 30 deadline for announcing a 2003 
RDP, and extended certain deadlines within the 2002-03 crop year 
concerning the RDP specified in the order's regulations. Changes 
beginning with a 2003 RDP were recommended by the RAC. This action was 
needed to provide flexibility in implementing the existing as well as 
any new provisions of a 2003 RDP. This action also allowed for 
necessary review and evaluation of proposed provisions for such a 
program. The December 15 deadline for redemption of diversion 
certificates for the 2002 RDP was also extended, given the lack of 
sales of those certificates.

EFFECTIVE DATE: April 21, 2003.

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, regulations, or 
policies, unless they present an irreconcilable conflict with this 
rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with 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 temporarily suspend an order provision 
concerning the November 30 deadline by which the RAC must announce a 
RDP, and extends related deadlines specified under the order's 
regulations concerning the 2003 diversion program. Changes beginning 
with a 2003 RDP were recommended by the RAC. This action was needed to 
provide flexibility in implementing the existing as well as any new 
provisions of a 2003 RDP. This action also allowed for necessary review 
and evaluation of proposed provisions for such a program. This rule 
also continues in effect the action that extended the December 15 
redemption deadline for diversion certificates for the 2002 Natural 
(sun-dried) Seedless (NS) RDP, given the lack of sales of those 
certificates. At a meeting on November 26, 2002, the RAC extended that 
deadline until February 3, 2003.

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. Paragraph (e) of that section provides authority for the

[[Page 13616]]

RAC to establish, with the approval of USDA, such rules and regulations 
as may be necessary for the implementation and operation of a RDP. 
Accordingly, additional procedures and deadlines are specified in Sec.  
989.156.
    Prior to implementation of the interim final rule (67 FR 71072; 
November 29, 2002), these sections required the RAC to 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. 
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, 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).

Extension of Deadlines for 2003 Diversion Program

    The California raisin and grape industries continue to be plagued 
by burdensome supplies and severe economic conditions. Industry members 
have been reviewing various options to help address some of these 
concerns. The RAC has also been reviewing options to help the industry 
address these issues through the marketing order.
    At its October 15, 2002, meeting, the RAC recommended modifications 
to the RDP that were intended to significantly reduce the industry's 
oversupply and improve producer returns. Some revisions were proposed 
by the RAC's Executive Committee at follow-up meetings on October 24 
and November 4, 2002. The RAC hoped to have its recommended changes in 
effect for the 2003 diversion program, if recommended by the RAC and 
approved by USDA. Thus, temporarily suspending the November 30 deadline 
in the order for the RAC to announce a 2003 RDP, and extending other 
deadlines in the regulations were needed to provide flexibility in 
implementing the existing as well as any new provisions of a 2003 RDP. 
This action also allowed for necessary review and evaluation of 
provisions for such a program.
    The RAC met on December 12, 2002, to review the Executive 
Committee's changes and proposed program. The RAC ultimately 
recommended specific changes to the order's regulations that could 
apply to any future RDP. These changes were published in an interim 
final rule on January 28, 2003 (68 FR 4079).
    Specifically, the words ``On or before November 30 of '' in Sec.  
989.56(a) were suspended until July 31, 2003, which is the end of the 
2002-03 crop year. The November 30 date was also specified in Sec.  
989.156(a) of the order's regulations. The interim final rule added a 
proviso to Sec.  989.156(a) that allowed the RAC to extend this date 
for the 2003 diversion program to a later date during the 2002-03 crop 
year. Similar provisos were added that allowed the RAC to extend the 
following dates in Sec.  989.156 for the 2003 diversion program: the 
December 20 date specified in paragraph (b) whereby producers must 
submit applications to the RAC to participate in a RDP; the January 12 
date specified in paragraph (c) whereby producers must submit corrected 
applications to the RAC; and the January 15 date specified in paragraph 
(a) whereby the RAC can allocate additional tonnage to a RDP. Section 
989.56(a) and Sec.  989.156 were modified accordingly.
    Ultimately, the RAC recommended a 2003 RDP on January 29, 2003, and 
USDA approved the program on February 7, 2003. Producer applications 
were due to the RAC office on March 3, 2003, and corrected applications 
were due March 17, 2003. Additional tonnage may be allotted to the RDP 
through May 1, 2003.

Extension of Redemption Deadline for 2002 Diversion Program

    Prior to implementation of the interim final rule, Sec.  989.156(k) 
of the order's regulations specified that handlers must redeem 
diversion certificates by December 15 of the crop year for which they 
were issued. The value of the free tonnage represented on NS raisin 
diversion certificates has historically been based on a free tonnage 
field price negotiated by the Raisin Bargaining Association (RBA) and 
industry handlers. As of December 15, 2002, a 2002 RBA field price had 
not yet been established, and most certificates had not been sold by 
producers. Therefore, Sec.  989.156(k) was modified to specify that, 
for the 2002 NS RDP, the December 15 redemption deadline may be 
extended by the RAC to a later date within the 2002-03 crop year. As 
previously stated, at a meeting on November 26, 2002, the RAC extended 
that deadline until February 3, 2003.

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 in effect an interim final rule that 
temporarily suspended a provision specified in Sec.  989.56(a) of the 
order regarding the November 30 deadline by which the RAC must announce 
a 2003 RDP, and extended related deadlines in Sec.  989.156 applicable 
to the 2003 diversion program. This rule also continues in effect the 
interim final rule's extension of the December 15 redemption deadline 
for 2002 RDP certificates. Under a RDP, producers receive certificates 
from the RAC for curtailing

[[Page 13617]]

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. Authority for these changes to the 
regulations is provided in Sec.  989.56(e) of the order.
    Regarding the impact of this action on affected entities, the 
suspension of the November 30 meeting date and related extensions 
applicable to the 2003 diversion program were needed to provide 
flexibility in implementing the existing as well as any new provisions 
of a 2003 RDP. This action also allowed necessary review and evaluation 
of proposed provisions for such a program. Changes beginning with a 
2003 RDP were recommended by the RAC. Ultimately, the RAC recommended a 
2003 RDP on January 29, 2003, and USDA approved the program on February 
7, 2003. Producer applications were due to the RAC office on March 3, 
2003, and corrected applications were due March 17, 2003. Additional 
tonnage may be allotted to the RDP through May 1, 2003.
    Extending the December 15 deadline for the redemption of 2002 NS 
RDP certificates was necessary, given the lack of sales of such 
certificates. The deadline was extended until February 3, 2003. 
Producers had more time to sell their certificates to handlers, and 
handlers had more time to redeem the certificates with the RAC. Equity 
holders in the 2001 NS reserve pool benefited from the extension. A 
2002 field price for NS raisins was established in early January 2003, 
and more transactions regarding the RDP certificates were completed. 
Producers earned income when they sold the certificates to handlers. 
Handlers redeemed the certificates for reserve raisins. Finally, equity 
holders in the 2002 NS reserve pool earned some return for the raisins 
allotted to the RDP.
    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 
RDP application) has been approved previously 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. USDA initiated this action to facilitate 
administration of the order and help the raisin industry through this 
difficult time.
    An interim final rule concerning this action was published in the 
Federal Register on November 29, 2002 (67 FR 71072). Copies of the rule 
were mailed by RAC staff to all RAC members and alternates, the RBA, 
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 60-day comment period that ended on January 
28, 2003. 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, and other 
available information, it is hereby found that the order provision 
temporarily suspended does not tend to effectuate the declared policy 
of the Act. It is further found that the continued extension of the 
deadlines specified in this rule tends 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 CFR part 989 which was 
published at 67 FR 71072 on November 29, 2002, is adopted as a final 
rule without change.

    Dated: March 14, 2003.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 03-6667 Filed 3-19-03; 8:45 am]
BILLING CODE 3410-02-P