[Federal Register Volume 68, Number 104 (Friday, May 30, 2003)]
[Rules and Regulations]
[Pages 32330-32336]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-13518]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 989

[Docket No. FV03-989-1 FIR]


Raisins Produced From Grapes Grown in California; Modifications 
to the Raisin Diversion Program

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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[[Page 32331]]

SUMMARY: The Department of Agriculture (USDA) is adopting, as a final 
rule, with change, an interim final rule that modified the requirements 
of the raisin diversion program (RDP) authorized 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 
changes are intended to provide the RAC with additional flexibility 
when implementing a RDP, and provide opportunity for all producers to 
participate in a program. The changes include adding an additional date 
by which the RAC can increase the tonnage allotted to a RDP; adding 
authority for the RAC to limit the amount of tonnage allotted to vine 
removal; modifying the application of the production cap for spur 
pruners under a RDP; adding authority for the RAC to condition a vine 
removal program with a producer's agreement not to replant and to 
compensate the RAC for damages if replanting occurs; revising the 
requirements for prioritizing and allocating tonnage for spur pruners 
under a RDP; allowing partial production units to be included in a RDP 
and adding authority for the RAC to specify provisions to maintain the 
integrity of the program; and specifying in the regulations the 
approval of a program's provisions by USDA.

EFFECTIVE DATE: June 2, 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 Ronald L. Cioffi, Chief, 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 in effect modifications to the administrative 
rules and regulations regarding the RDP specified under the order. The 
changes are designed to provide the RAC with additional flexibility 
when implementing a RDP, and provide the opportunity for all producers 
to participate in a program. The changes include: Adding an additional 
date by which the RAC can increase the tonnage allotted to a RDP; 
adding authority for the RAC to limit the amount of tonnage allocated 
for vine removal; modifying application of the production cap for spur 
pruners under a RDP; adding authority for the RAC to condition a vine 
removal program with a producer's agreement not to replant and to 
compensate the RAC for damages if replanting occurs; revising the 
requirements for prioritizing and allocating tonnage for spur pruners 
under a RDP; and allowing partial production units to be included in a 
RDP and allowing the RAC to specify provisions to maintain the 
integrity of the program.
    These regulatory changes were recommended by the RAC at meetings on 
October 15, and December 12, 2002, by a near unanimous vote. A member 
voting no expressed concern with the definition of partial production 
unit as proposed by the RAC.
    Given the above changes, appropriate revisions were made to the 
text of Sec.  989.156 to include specific references to approval of 
USDA for a program's provisions.

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 reserve pool equity holders.

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. Paragraph (e) of that section provides 
authority for the RAC to establish, with the approval of USDA, such 
rules and regulations as may be necessary for the implementation and 
operation of a RDP. Accordingly, additional procedures and deadlines 
are specified in Sec.  989.156.
    Pursuant to these sections, the RAC must meet during the 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

[[Page 32332]]

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.

RAC Recommendation

    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 also has been reviewing options to help the industry 
address these issues through the marketing order. The RAC proposed some 
requirements for a 2003 RDP at a meeting on October 15, 2002. 
Additional revisions were proposed by the RAC's Executive Committee on 
October 24, and November 4 and 26, 2002. 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 regarding the RDP that could apply to any future RDP. The 
changes were designed to provide the RAC with additional flexibility 
when implementing a RDP, and provide opportunity for all producers to 
participate in a program. The changes are described in the following 
paragraphs.

Additional Date for Increasing the RDP Tonnage

    With the exception of the 2002-03 crop year, Sec.  989.56(a) of the 
order and Sec.  989.156(a)(1) of the regulations specify that the RAC 
must announce the quantity of tonnage allotted to a RDP on or before 
November 30 of each crop year. Section 989.156(a)(1) specifies further, 
with the exception of the 2002-03 crop year, that the RAC may announce 
an increase in the tonnage eligible for a RDP on or before January 15 
of each crop year. The November 30 deadline in the order was suspended, 
and the November 30 and January 15 dates in the regulations were 
extended for the 2002-03 crop year to dates specified by the RAC (67 FR 
71072, November 29, 2002) to allow time for review and modification of 
the RAC's proposed RDP changes.
    The RAC recommended that the regulations be modified to allow the 
RAC an additional opportunity to increase the tonnage eligible for a 
RDP on or before May 1 of each crop year subsequent to 2002-03. This 
will allow the RAC the opportunity to allocate additional tonnage to a 
RDP in years when raisin deliveries may be slow, or when additional 
reserve raisins may be available later during the crop year. Section 
989.156(a)(1) was modified accordingly.

Limit on Tonnage Allocated for Vine Removal

    Section 989.156(h)(1) specifies that the RAC may limit a RDP to 
vine removal only. This requirement remains unchanged by this rule. 
However, the RAC proposed having the ability to cap, or limit, the 
amount of tonnage allocated to a RDP for vine removal. For example, the 
RAC may allocate 100,000 tons to a RDP, of which 50,000 tons would be 
allotted for vine removal only. Under this scenario, the remaining 
50,000 tons would be available for spur pruners (or producers who opted 
to reduce their production by methods other than vine removal). As 
described later in this rule, the RAC recommended revising the 
regulations to allow for the allocation of tonnage to spur pruners pro 
rata to all who applied. Imposing a cap on vine removers would ensure 
that a certain amount of tonnage would be available for a spur prune 
program. This additional requirement is specified in Sec.  
989.156(a)(2).

Additional Agreement for Vine Removers Who Replant

    The RAC recommended that authority be added for the RAC to 
condition a vine removal program with a producer's agreement not to 
replant and to compensate the RAC for damages if replanting occurs. 
Producers who agree to remove vines, but replant within a specified 
number of years (maximum of 5 crop years), as determined by the RAC, 
with the approval of USDA, must agree to compensate the RAC for 
appropriate damages for the tonnage specified in the applicable 
diversion certificate. The payment of damages would be appropriate 
because replanting would cause serious damage to a RDP and the raisin 
industry. On January 29, 2003, the RAC recommended, and USDA 
subsequently approved, imposing a 5-year restriction on replanting as a 
feature of a 2003 RDP for NS raisins (35,000 tons of 2002 reserve 
raisins were allocated to a 2003 RDP). This should remove acreage from 
production for at least 8 crop years because it takes about 3 years for 
a new vineyard to have significant production. Adding this requirement 
to a RDP is expected to help the industry reduce its burdensome 
oversupply.
    Accordingly, the producer application for a 2003 RDP was modified 
to condition a vine removal program with a producer's agreement not to 
replant. Producers who elect to participate in a RDP and later replant 
will be required to compensate the RAC for damages at a rate of $700 
per ton, as recommended by the RAC and approved by USDA, for the 
tonnage specified on the diversion certificate.
    The interim final rule specified that funds collected by the RAC 
for such damages will be deposited in the reserve pool applicable to 
the particular diversion program and be distributed to the equity 
holders in that pool. An addition has been made to this final rule, 
based on a comment received. The comment is addressed in detail later 
in this rule. Specifically, if the applicable reserve pool has been 
closed and equity distributed, damages collected will be deposited in 
the reserve pool for the crop year in which such monies are received. 
If no reserve pool exists for that year, then damages collected will be 
deposited in an open reserve pool of the crop year closest to the 
applicable diversion pool. Finally, as stated in the interim final 
rule, if a determination is made by the RAC that a producer violated 
the agreement not to replant and is subject to damages, the producer 
may appeal the RAC's decision in accordance with paragraph (m) of Sec.  
989.156.

Application of Production Cap

    Under a RDP, the reserve tonnage allocated to a program becomes 
part of the following year's supply. For example, if 100,000 tons of 
2002-03 reserve raisins were allocated to a RDP, that tonnage would be 
issued to RDP producers in the fall of 2003 in the form of certificates 
from the RAC. The certificates represent actual raisins. The 100,000 
tons would then be included in the 2003-04 crop estimate. A higher crop 
estimate reduces the free tonnage

[[Page 32333]]

percentage. Since producers are paid by handlers for their free tonnage 
raisins, a lower free tonnage percentage reduces producer returns. The 
industry has had concerns with the impact of large diversion programs 
on the following year's free tonnage percentage.
    As a result, the RAC recommended that the concern about large RDP's 
adversely impacting the following year's free tonnage percentage be 
addressed through application of the production cap. A production cap 
is a limit on the yield per acre that is permitted under a RDP. Section 
989.56(a) specifies that the RAC must announce the production cap at 
the same time it announces a RDP for the crop year. The section 
specifies further that the production cap shall equal 2.75 tons per 
acre, unless it is lowered by the RAC, with approval of the Secretary.
    The RAC proposed that it have the flexibility to limit the 
production cap to a percentage of the yield per acre for production 
units on which producers agree to spur prune (or curtail production by 
methods other than vine removal) to lessen the adverse effects a large 
RDP would have on the following year's free tonnage percentage. For 
example, the RAC could specify that the production cap applicable to 
2003 spur pruners would equal the lesser of 2.75 tons per acre, or 80 
percent of the 2002 yield per acre on that production unit. The 
following table illustrates this further.

------------------------------------------------------------------------
                                          Application of production cap
       2002 yield per acre (tons)                     (tons)
------------------------------------------------------------------------
5.0....................................  2.75 (2.75 cap)
4.0....................................  2.75 (2.75 cap)
3.5....................................  2.75 (2.75 cap)
3.4375.................................  2.75 (both 80% and 2.75)
3.2....................................  2.56 (80% cap)
3.0....................................  2.4 (80% cap)
2.5....................................  2.0 (80% cap)
2.0....................................  1.6 (80% cap)
1.5....................................  1.2 (80% cap)
1.0....................................  0.8 (80% cap)
------------------------------------------------------------------------

    Participants who agree to remove vines would not be subject to the 
percentage limit on the production cap because of the effectiveness of 
vine removal in reducing production capacity. However, such 
participants would remain subject to the established production cap. 
This additional flexibility is specified in Sec.  989.156(a)(2).

Allocation of Tonnage for Spur Pruners (Includes Methods of Diversion 
Other Than Vine Removal)

    Prior to implementation of the interim final rule, Sec.  989.156(d) 
required that, if reserve tonnage existed after the allocation of 
diversion tonnage had been made to all eligible producer applicants who 
agreed to remove vines, a lottery would be held to allocate remaining 
tonnage. The RAC recommended that it have the flexibility to allocate 
such tonnage either pro rata to remaining applicants or by a lottery 
for complete production units to remaining applicants if a minimal 
amount of tonnage remains. Allocating tonnage pro rata will provide the 
opportunity for all producers to participate in a spur prune program. 
Accordingly, Sec. Sec.  989.156(a)(2) and 989.156(d) were modified to 
incorporate this option.

Inclusion of Partial Production Units

    As described above, the RAC contemplates future RDP's where the 
tonnage allotted to applicants who agree to spur prune vines (or divert 
production using a method other than vine removal) may be done on a pro 
rata basis. Such producers would spur prune only a portion of a 
production unit, or a ``partial'' unit.
    In 1997, the RAC recommended that partial production units no 
longer be accepted into the RDP, and Sec.  989.156 was modified 
accordingly (62 FR 60764; November 13, 1997). This action was taken 
because the RAC had concerns that some producers were removing weak 
vines in a production unit and getting credit under a RDP for an 
inflated amount of tonnage.
    To implement the RAC's proposal for allocating tonnage on a pro-
rata basis to applicants who agree to spur prune their vines, and help 
maintain integrity of the program, the RAC recommended that a partial 
production unit must have two permanent, contiguous (natural or man-
made) boundaries. This should eliminate the ability for producers to 
select certain rows of weak vines and artificially inflate the tonnage 
on their unit. This definition was added to paragraph (o) of Sec.  
989.156. Additionally, the words ``or portion thereof'' were added to 
paragraphs (h) and (i) of Sec.  989.156 to indicate that partial units 
may be included in a RDP.
    Finally, the RAC recommended that it be given the authority to 
specify provisions for a partial production unit to maintain the 
integrity of the program. For example, the RAC indicated that it might 
want to specify that only a certain corner of each vineyard may be 
accepted into a spur-prune RDP to further alleviate the problem of a 
producer choosing the weakest corner of his/her vineyard, and to help 
maintain the integrity of the RDP. Accordingly, paragraph (a) of Sec.  
989.156 was modified to reflect that the RAC may limit a program that 
is applicable to partial production units by specifying the portion of 
the production units that can be diverted, or like provisions to 
maintain the integrity of the program.

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.
    The California Agriculture Statistics Service (CASS) forecasted the 
2002 production of raisin variety grapes at 2,550,000 tons (green). 
This is a relatively high level of production. The record high 
production occurred in 2000, at 2,921,000 tons (green).
    Producers market raisin variety grapes in the fresh market (table), 
wine or juice market (crush), or dry them into raisins. Typically, 67 
percent of the crop is dried for raisins, 20 percent crushed for wine 
and juice, and the remaining 13 percent of the crop is utilized in 
fresh and canned sales. These outlets provide a hedge for producers 
attempting to minimize risk from bad weather (rain) or a depressed 
market (concentrate, wine, or raisins).
    For the week ending March 22, 2003, seasonal deliveries for all 
varietal types of raisins were at 421,725 tons (381,992 tons for 
Natural (sun-dried) Seedless (NS)). This will be the third consecutive 
year that raisin production has been

[[Page 32334]]

above 400,000 tons. Combined domestic and export demand (shipments) is 
estimated at approximately 300,000 tons. These levels of production, 
combined with stable demand have resulted in a large build-up of free 
and reserve carryin inventories.
    At the beginning of the 2002-2003 crop year (August 1, 2002), the 
RAC reported that 48,749 tons of NS raisins were currently being held 
in the reserve pool from the 2001 crop. In addition, 153,152 free tons 
were held by handlers in inventories. With total dried production 
initially estimated at 446,449 tons, and combined free and reserve 
inventories at 201,901 tons, the industry had over 600,000 tons of 
raisins.
    This type of surplus situation leads to serious marketing problems. 
Handlers compete against each other in an attempt to sell more raisins 
to reduce inventories and to market their crop. This situation puts 
downward pressure on producers' prices and incomes.
    In addition, it has been reported that the wineries offered $65 a 
ton for green NS raisins for crushing. In recent years, wineries have 
typically offered prices ranging from $164 to $200 per ton. The wine 
price for NS grapes was lowered to $125 per ton in 2000 and fell to 
$85.70 per ton in 2001. This has resulted in more raisin variety grapes 
being dried for raisins, which has added to the surplus situation in 
the raisin market.
    Typically, 500,000 tons of raisin variety grapes are delivered to 
the wineries for crushing. In 2001, this volume decreased to 261,000 
tons. The 2002 crop year deliveries for crushing are expected to remain 
low.
    Surplus situations are often the result of increased bearing acres, 
which are encouraged by high prices. However, bearing acres for raisin 
variety grapes have fallen from 280,000 acres in 2000 to 273,000 acres 
in 2002. In addition, 27,000 acres were idle due to the raisin 
diversion program. The increased raisin production is largely the 
result of producers deciding to dry more grapes for raisins due to the 
low crush prices and increased yields. The RAC hopes to utilize the RDP 
to help alleviate the industry's oversupply. The RAC's recommended 
changes were designed to add flexibilities to the RDP, and provide the 
opportunity for all producers to participate in a program. The overall 
impact of a RDP with the recommended flexibility is expected to impact 
small and large entities positively by reducing the industry's 
production capacity, and by bringing supplies in closer balance with 
market needs.
    This rule continues to revise Sec.  989.156 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. Specifically, this rule continues to revise the requirements of a 
RDP by: Adding an additional date by which the RAC can increase the 
tonnage allotted to a RDP; add authority for the RAC to limit the 
amount of tonnage allocated for vine removal; modifying application of 
the production cap for spur pruners under a RDP; adding authority for 
the RAC to condition a vine removal program with a producer's agreement 
not to replant and to compensate the RAC for damages if replanting 
occurs; revising the requirements for prioritizing and allocating 
tonnage for spur pruners under a RDP; allowing partial production units 
to be included in a RDP and adding authority for the RAC to specify 
provisions to maintain the integrity of the program; and specifying in 
the regulations the approval of a RDP's provisions by USDA. Authority 
for these changes is provided in Sec.  989.56(e) of the order.
    Regarding the impact of this action on affected entities, these 
changes are designed to provide the RAC with additional flexibility 
when implementing a RDP. Adding the May 1 date whereby the RAC may 
increase the tonnage allotted to a RDP will give more producers an 
opportunity to participate in the program. The changes regarding the 
way tonnages are allocated under a program (cap on vine removal that 
will allow a specified amount of tonnage available for spur pruners, 
and allocating spur prune tonnage pro rata to all applicants) are 
intended to provide the opportunity for all producers to participate at 
some level in a RDP. Thus, all producers could potentially have the 
opportunity to earn some income for curtailing their production.
    With regard to cost, based on past RDP's, the RAC estimates that 
compliance and verification costs associated with a RDP average about 
$150 per production unit. Using an estimate of 1.25 production units 
per RDP producer application, if all 4,500 producers participated in a 
RDP, there could potentially be about 5,625 production units in a 
program. Thus, using the $150 per unit figure, compliance and 
verification costs for the program could average about $843,750. The 
overall impact of the changes is difficult to quantify. However, if a 
RDP implemented using the increased flexibility helps bring supplies 
into balance with market needs over time, the benefits for both small 
and large entities would be positive. When supplies and market needs 
are in balance, experience has shown that producers and handlers both 
benefit, regardless of size.
    Regarding alternatives to the RAC's recommendation, the industry 
has been considering various options and programs to help alleviate the 
severe economic conditions adversely impacting both raisin producers 
and handlers. Industry groups outside of the RAC are seeking financial 
assistance under section 32 of the Act of August 24, 1935 (7 U.S.C. 
612c). The RAC also has a subcommittee that is reviewing long-term 
solutions to help the industry that would require formal rulemaking 
changes to the marketing order. RAC members have been seeking short-
term solutions available through the existing order, or slight 
modifications thereto. Thus, the changes incorporated through the 
interim final rule were designed to add flexibilities to the RDP and 
provide the potential for all producers to participate in a program. 
The RAC hopes to utilize the RDP to help alleviate the industry's 
oversupply situation.
    The RAC and Executive Committee did consider options to some of the 
features recommended by the RAC. One option concerned an alternative to 
application of the production cap. That is, specifying that producers 
who agreed to spur prune their vines would have to spur prune an 
additional percentage of their acreage that would not be reflected on 
their diversion certificates. However, the order does not provide 
authority for the application of a ``multiplier'' in this fashion to 
vineyards that were spur pruned. The RAC ultimately proposed that it 
have the flexibility to limit the production cap to a percentage of the 
yield per acre for production units on which producers agree to spur 
prune (or curtail production by methods other than vine removal).
    At its meetings, the Executive Committee also considered other 
dates besides May 1 whereby the RAC could increase the tonnage allotted 
to a RDP. An April date was contemplated, but not proposed because 
industry members would rather be past the threat of an April frost 
before making a decision whether to add tonnage to a RDP. Thus, the May 
1 date was deemed appropriate and ultimately proposed by the RAC.
    There was some discussion by industry members about partial

[[Page 32335]]

production units. Some members questioned whether authority for partial 
units should be added back into the order's regulations, and some 
questioned whether a partial unit should be required to have two 
permanent, contiguous boundaries. There was also concern that a 
producer could spur prune a corner of his/her vineyard, redesign his/
her trellising system to provide for significantly increased yields, 
and contribute to future oversupplies. After much discussion, the 
majority of RAC members concurred with allowing partial production 
units in a RDP, and limiting such a unit to one that has two permanent, 
contiguous boundaries.
    This rule does not add measurably to the current burden on 
reporting or recordkeeping requirements for 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 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, this action was reviewed by the RAC's Administrative 
Issues Subcommittee October 7 and 15, and December 10 and 12, 2002, by 
the RAC's Executive Committee on October 24, and November 4 and 26, 
2002, and by the RAC on October 7 and 15, and December 12, 2002. All of 
these meetings where this action was deliberated were 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 January 28, 2003 (68 FR 4079). Copies of the rule 
were mailed by the 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 60-day comment 
period that ended March 31, 2003. One comment was received. The 
commenter supported the changes, but suggested some minor 
modifications.
    The commenter suggested adding language to Sec.  989.156(a)(1) to 
clarify the authority of the RAC to make program modifications should 
the RAC announce an increase in eligible tonnage in a RDP on or before 
May 1. The commenter added that additional clarification may not be 
necessary because of existing language in Sec.  989.156(r). That 
section contemplates that modifications can be made to the terms and 
conditions of a RDP after a producer's application has been approved, 
and requires producers to be notified of the changes and given the 
opportunity to agree with them or withdraw from the program. USDA 
concurs that authority for program modifications already exists in 
Sec.  989.156(r) and no further clarification is necessary.
    The second suggested language change by the commenter was to add 
``raisin-variety'' prior to the word ``vines'' in Sec.  
989.156(a)(2)(iv) that refers to producers who replant vines. USDA 
believes that this clarification is not needed because all references 
to vines in Sec.  989.56 are within the context of a raisin diversion 
program and are intended to refer to raisin-variety vines.
    The third suggested change by the commenter was to add language as 
to how to handle damages that may be collected should a producer 
replant raisin-variety vines on the approved production unit within the 
announced period of up to 5 years. A 5-year period was announced for 
the 2003 RDP. The 2003 RDP requirements require approved applicants to 
remove their vines by June 1, 2003. Producers may not replant raisin 
variety vines on approved production units until June 1, 2008. The 
interim final rule stated, in Sec.  989.156(a)(2)(iv), that any damages 
collected for a vine replanting violation must be deposited to the 
reserve pool fund of the reserve pool applicable to the particular RDP. 
In the case of the 2003 RDP, the 2002 reserve pool could not be closed 
until June 1, 2008, to ensure that no vine removal violations had 
occurred. Moreover, any collection process for a late occurring 
violation could cause a pool to remain open even longer.
    Normally, reserve pools are closed and equity is distributed within 
2 years of the crop year in which the reserve was established. The 
commenter suggested that damages collected be deposited in the 
``reserve pool for the crop year in which the monies are received, or 
if there is no reserve pool for the current year, then to the next 
prior year for which there was a reserve pool.''
    USDA concurs that a reserve pool need not remain open just because 
a potential vine replanting violation might occur. However, based on 
discussions with RAC staff, USDA has concluded that, if the applicable 
pool has been closed, damages collected should be deposited in the next 
open reserve pool for the crop year closest to the RDP pool. This 
distribution is more orderly. For example, under the 2003 RDP, 
producers who removed vines cannot replant until 2008. Raisins from the 
2002 reserve pool have been allocated to the 2003 RDP. If damages are 
collected in 2008, and the 2002 pool is closed, but the 2006 and 2007 
reserve pools are open, such damages would be deposited in the 2006 
pool. Accordingly, language is added to Sec.  989.156(a)(2)(iv) to 
state that if the applicable RDP reserve pool has been closed and 
equity distributed, then any damages collected for that RDP shall be 
deposited in the next open reserve pool of the crop year closest to the 
applicable diversion pool.
    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 RAC's recommendation, comment received, and other information, it 
is found that finalizing the interim final rule, as published in the 
Federal Register (68 FR 4079; January 28, 2003), with changes, will 
tend to effectuate the declared policy of the Act.
    Pursuant to 5 U.S.C. 553, it is also found and determined that good 
cause exists for not postponing the effective date of this rule until 
30 days after publication in the Federal Register because the 2003 RDP 
is well underway and this action should be made effective as soon as 
possible.

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 4079 on January 28, 2003, is adopted as a final 
rule, with the following changes:
0
1. The authority citation for 7 CFR part 989 continues to read as 
follows:

    Authority: 7 U.S.C. 601-674.


[[Page 32336]]



0
2. In Sec.  989.156, paragraph (a)(2)(iv) is revised to read as 
follows:


Sec.  989.156  Raisin diversion program.

    (a) * * *
    (2) * * *
    (iv) Limit participation in a vine removal program to producers who 
agree not to replant raisin-variety vines for a period not to exceed 5 
years and who agree to compensate the Committee for appropriate damages 
if raisin-variety vines are replanted. Damages collected by the 
Committee pursuant to this subparagraph shall be deposited in the 
reserve pool fund of the reserve pool applicable to the particular 
diversion program and be distributed to the equity holders in that 
pool: Provided, That, if such reserve pool has been closed and equity 
distributed, damages collected shall be deposited in the next open 
reserve pool of the crop year closest to the applicable diversion pool. 
If a determination is made by the Committee that a producer violated 
the agreement not to replant and is subject to damages, the producer 
may appeal the Committee's decision in accordance with paragraph (m) of 
this section;
* * * * *

    Dated: May 23, 2003.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 03-13518 Filed 5-29-03; 8:45 am]
BILLING CODE 3410-02-P