[Federal Register Volume 68, Number 91 (Monday, May 12, 2003)]
[Rules and Regulations]
[Pages 25279-25281]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-11704]



 ========================================================================
 Rules and Regulations
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains regulatory documents 
 having general applicability and legal effect, most of which are keyed 
 to and codified in the Code of Federal Regulations, which is published 
 under 50 titles pursuant to 44 U.S.C. 1510.
 
 The Code of Federal Regulations is sold by the Superintendent of Documents. 
 Prices of new books are listed in the first FEDERAL REGISTER issue of each 
 week.
 
 ========================================================================
 

  Federal Register / Vol. 68, No. 91 / Monday, May 12, 2003 / Rules and 
Regulations  

[[Page 25279]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 989

[Docket No. FV03-989-3 FIR]


Raisins Produced From Grapes Grown in California; Reduction in 
Production Cap for 2003 Diversion Program

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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

SUMMARY: The Department of Agriculture (USDA) is adopting, as a final 
rule, without change, an interim final rule reducing the production cap 
for the 2003 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).

EFFECTIVE DATE: June 11, 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, 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 final rule reduces the production cap for the 2003 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 2003 RDP is expected to bring the figure in line with 
anticipated 2003 crop yields. This action was recommended by the RAC at 
a meeting on January 29, 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 bringing supplies into 
closer balance with market needs. 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 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 from the 
RAC that represents the quantity of raisins diverted. Producers

[[Page 25280]]

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 ton 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. 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 January 29, 2003, and recommended allocating 35,000 
tons of 2002 NS reserve raisins to a 2003 RDP. The program will be 
limited to vine removal for complete production units, with a 5-year 
moratorium on replanting raisin-variety grapes. Damages of $700 per ton 
of creditable fruit weight represented on the RDP certificate will be 
imposed on producers who replant prior to July 31, 2008. Harvest costs 
were established at $340 per ton. The RAC also recommended reducing the 
production cap from 2.75 to 2.0 tons per acre. With this year's large 
crop of about 373,000 tons, the RAC believes that the grape vines will 
produce a smaller crop next year. Thus, the RAC recommended reducing 
the cap from 2.75 to 2.0 tons per acre to reflect anticipated 2003 crop 
yields.
    The RAC's RDP recommendation passed with 24 members in favor and 21 
opposed. Those opposed expressed concern with the RDP as a whole, not 
the production cap. They believe that many producers have already 
pulled out their vines, and that attrition should occur naturally in 
the industry. Concern also was expressed that the tonnage allocated to 
the diversion program would be added to next year's crop estimate, 
thereby reducing next year's free tonnage percentage and producer 
returns. Those in favor of the program contend that, with a 2002 NS 
crop estimated at about 373,000 tons (deliveries through the week 
ending March 29, 2003, are at 387,780 tons), and a computed trade 
demand (comparable to market needs) of 196,185 tons, there would be 
176,815 tons of reserve raisins. A diversion program is one avenue 
authorized under the order to utilize these reserve raisins.
    On February 7, 2003, USDA approved the requirements of the RDP 
recommended by the RAC, with the exception of the production cap, which 
required informal rulemaking. This rule continues in effect an interim 
final rule implementing the RAC's recommendation to reduce the 2003 RDP 
production cap from 2.75 to 2.0 tons per acre. Paragraph (t) in Sec.  
989.156 of the order's rules and regulations was revised accordingly.

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. Authority for this action is 
provided in Sec.  989.56(a) of 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 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 reflect next year's estimated yield. Regarding the impact of 
this action on affected entities, producers who participate in the 2003 
RDP will nonetheless have the opportunity to earn income for not 
harvesting a 2003-04 crop. Producers who sell the certificates to 
handlers next fall will be paid for the free tonnage applicable to the 
diversion certificate minus the harvest cost for the diverted tonnage. 
Applicable harvest costs for the 2003 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 2002-03 crop NS reserve 
raisins and pay the RAC the $340 per ton harvest cost plus payment 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 2003 RDP.
    Alternatives to the recommended action included leaving the 
production 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

[[Page 25281]]

per acre will more accurately reflect anticipated 2003 crop yields.
    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 January 29, 2003, and the RAC's 
Administrative Issues Subcommittee meeting on January 24, 2003, when 
this action was deliberated were both 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 19, 2003 (68 FR 13219). 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 that 
ended on April 3, 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, including 
the information and recommendation submitted by the RAC and other 
available information, it is found that finalizing the interim final 
rule, without change, as published in the Federal Register (68 FR 
13219, March 19, 2003) 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

0
Accordingly, the interim final rule amending 7 CFR part 989 which was 
published at 68 FR 13219 on March 19, 2003, is adopted as a final rule 
without change.

    Dated: May 6, 2003.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 03-11704 Filed 5-9-03; 8:45 am]
BILLING CODE 3410-02-P