[Federal Register Volume 68, Number 220 (Friday, November 14, 2003)]
[Rules and Regulations]
[Pages 64499-64502]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-28521]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 916 and 917

[Docket No. FV03-916-4 FIR]


Nectarines and Peaches Grown in California; Increased Assessment 
Rates

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 which increased the 
assessment rate established for the Nectarine Administrative Committee 
and the Peach Commodity Committee (committees) for the 2003-04 and 
subsequent fiscal periods from $0.19 to $0.20 per 25-pound container or 
container equivalent of nectarines and peaches handled. The committees 
locally administer the marketing orders which regulate the handling of 
nectarines and peaches grown in California. Authorization to assess 
nectarine and peach handlers enables the committees to incur expenses 
that are reasonable and necessary to administer the programs. The 
fiscal periods run from March 1 through the last day of February. The 
assessment rates will remain in effect indefinitely unless modified, 
suspended, or terminated.

EFFECTIVE DATE: December 15, 2003.

FOR FURTHER INFORMATION CONTACT: Toni Sasselli, Marketing Assistant, 
California Marketing Field Office, Fruit and Vegetable Programs, AMS, 
USDA, 2202 Monterey Street, suite 102B, Fresno, California 93721, (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 Nos. 85 and 124 and Order Nos. 916 and 917, both as amended 
(7 CFR parts 916 and 917), regulating the handling of nectarines and 
peaches grown in California, respectively, hereinafter referred to as 
the ``orders.'' The marketing agreements and orders are 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. Under the marketing orders now in effect, California 
nectarine and peach handlers are subject to assessments. Funds to 
administer the orders are derived from such assessments. It is intended 
that the assessment rates as issued herein will be applicable to all 
assessable nectarines and peaches beginning on March 1, 2003, and 
continue until amended, suspended, or terminated. 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 increase the assessment rates established 
for the committees for the 2003-04 and subsequent fiscal periods from 
$0.19 to $0.20 per 25-pound container or container equivalent of 
nectarines and peaches.

[[Page 64500]]

    The nectarine and peach marketing orders provide authority for the 
committees, with the approval of USDA, to formulate an annual budget of 
expenses and collect assessments from handlers to administer the 
programs. The members of the Nectarine Administrative Committee (NAC) 
and Peach Commodity Committee (PCC) are producers of California 
nectarines and peaches, respectively. They are familiar with the 
committees' needs and with the costs for goods and services in their 
local area, and are, thus, in a position to formulate appropriate 
budgets and assessment rates. The assessment rates are formulated and 
discussed in public meetings. Thus, all directly affected persons have 
an opportunity to participate and provide input.

NAC Assessment and Expenses

    The NAC recommended, for the 2002-03 fiscal period, and USDA 
approved, an assessment rate of $0.19 that would continue in effect 
from fiscal period to fiscal period unless modified, suspended, or 
terminated by USDA upon recommendation and information submitted by the 
committee or other information available to USDA.
    The NAC met on May 1, 2003, and recommended 2003-04 expenditures of 
$4,173,438 and an assessment rate of $0.20 per 25-pound container or 
container equivalent of nectarines on a 7 to 1 vote. In comparison, 
last year's budgeted expenditures were $4,671,342. The assessment rate 
of $0.20 is $0.01 higher than the rate previously in effect.
    The dissenting voter stated that the growers he represented did not 
support increasing the assessment rate. However, later in the meeting, 
following a discussion about the development of a nectarine fruit 
beverage, the dissenter indicated he no longer opposed the assessment 
increase because the CTFA intended to fund beverage development. He 
further stated that funds used to create more outlets for nectarines 
will provide a service to the industry.
    The rate increase was recommended to ensure that the NAC could meet 
its 2003-04 anticipated expenses and carry over a financial reserve 
that will provide adequate funds at the beginning of the 2004 season 
before assessment collections begin. A financial reserve carryover of 
about $400,000 is desirable because major expense outlays for seasonal 
promotions and other activities occur before assessments are received. 
Increasing the assessment rate from $0.19 to $0.20 per 25-pound 
container is expected to provide about $220,400 in additional 
assessment revenue, and will allow the NAC to start the 2004 season 
with about $438,374.
    The major expenditures recommended by the NAC for the 2003-04 
fiscal period include $226,121 for salaries and benefits, $142,612 for 
general expenses and industry activities, $1,210,220 for inspection, 
$138,929 for research, and $2,263,061 for domestic and international 
promotion. Budgeted expenses for these items in 2002-03 were $505,000 
for salaries and benefits, $309,039 for general expenses and industry 
activities, $1,050,000 for inspection, $138,018 for research, and 
$2,574,160 for domestic and international promotion.
    The 2002-03 and 2003-04 budgeted expenses differ somewhat because 
the NAC reorganized some expense categories for 2003-2004. NAC's total 
expenses are significantly lower this fiscal year compared to last 
fiscal year.
    The 2003-04 NAC assessment rate was derived after considering the 
total NAC expenses of $4,173,438; the estimated assessable nectarines 
of 22,004,000 25-pound containers or container equivalents; the 
estimated income from other sources, such as interest; and the need for 
an adequate financial reserve to carry the NAC into the 2004 season. 
The committee decided that a financial reserve of $400,000 is necessary 
to meet its obligations in the early part of each season, before 
handler assessments are billed and received. To meet these goals, the 
NAC recommended an assessment rate of $0.20 per 25-pound containers or 
container equivalent. According to the committee, that assessment rate 
will result in an adequate financial reserve, yet one well within the 
maximum permitted by the order (one year's expenses; Sec.  916.42).

PCC Assessment and Expenses

    The PCC recommended, for the 1996-97 fiscal period, and USDA 
approved, an assessment rate of $0.19 that would continue in effect 
from fiscal period to fiscal period unless modified, suspended, or 
terminated by USDA upon recommendation and information submitted by the 
committee or other information available to USDA.
    The PCC also met on May 1, 2003, and recommended 2003-04 
expenditures of $4,086,316 and an assessment rate of $0.20 per 25-pound 
container or container equivalent of peaches on a vote of 12 to 1. In 
comparison, last year's budgeted expenditures were $4,678,883. The 
assessment rate of $0.20 is $0.01 higher than the rate previously in 
effect.
    The dissenting voter stated that the growers he represented did not 
support increasing the assessment rate, and he, therefore, could not 
support the increase.
    The rate increase was recommended to ensure that the PCC could meet 
its 2003-04 anticipated expenses and carry over a financial reserve for 
the PCC which will provide adequate funds at the beginning of the 2004 
season before assessment collections begin. A financial reserve 
carryover of $500,000 is desirable because major expense outlays for 
seasonal promotions and other activities occur before assessments are 
received. Increasing the assessment rate from $0.19 to $0.20 per 25-
pound container is expected to provide about $213,360 in additional 
assessment revenue, and will allow the PCC to start the 2004 season 
with about $530,586.
    The major expenditures recommended by the PCC for the 2003-04 
fiscal period include $226,121 for salaries and benefits, $144,743 for 
general expenses and industry activities, $1,206,414 for inspection, 
$138,930 for research, and $2,211,346 for domestic and international 
promotion. Budgeted expenses for these items in 2002-03 were $505,000 
for salaries and benefits, $206,747 for general expenses, $1,100,000 
for inspection, $142,186 for research, and $2,529,036 for domestic and 
international promotion.
    The 2002-03 and 2003-04 budgeted expenses differ somewhat because 
the PCC reorganized some expense categories for 2003-2004. PCC's total 
expenses are significantly lower this fiscal year compared to last 
fiscal year.
    The 2003-04 PCC assessment rate was derived after considering the 
total PCC expenses of $4,086,316; the estimated assessable peaches of 
21,336,000 25-pound containers or container equivalents; the estimated 
income from other sources, such as interest; and the need for an 
adequate reserve to carry the PCC into the 2004 season. The committee 
decided that a financial reserve of $500,000 is necessary to meet its 
obligations in the early part of each season, before handler 
assessments are billed and received. To meet these goals, the PCC 
recommended an assessment rate of $0.20 per 25-pound container or 
container equivalent. According to the committee, that assessment rate 
will result in an adequate financial reserve, yet one well within the 
maximum permitted by the order (one year's expenses; Sec.  917.38).

Continuance of Assessment Rates

    The assessment rates established in this rule will continue in 
effect indefinitely unless modified, suspended, or terminated by USDA 
upon recommendation and information

[[Page 64501]]

submitted by the committees or other available information.
    Although these assessment rates will be in effect for an indefinite 
period, the committees will continue to meet prior to or during each 
fiscal period to recommend a budget of expenses and consider 
recommendations for modification of the assessment rates. The dates and 
times of committee meetings are available from the committees' website 
or USDA. Committee meetings are open to the public and interested 
persons may express their views at these meetings. USDA will evaluate 
the committees' recommendations and other available information to 
determine whether modification of the assessment rate for each 
committee is needed. Further rulemaking will be undertaken as 
necessary. The committees' 2003-04 budgets were reviewed and approved 
on August 27, 2003, and those for subsequent fiscal periods will be 
reviewed and, as appropriate, approved by USDA.

Final Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this rule on small entities. Accordingly, AMS has 
prepared this final regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and the 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 300 California nectarine and peach handlers 
subject to regulation under the orders covering nectarines and peaches 
grown in California, and about 1,800 producers of these fruits in 
California. Small agricultural service firms, which include handlers, 
are defined by the Small Business Administration [13 CFR 121.201] as 
those whose annual receipts are less than $5,000,000. Small 
agricultural producers are defined by the Small Business Administration 
as those having annual receipts of less than $750,000. A majority of 
these handlers and producers may be classified as small entities.
    The committees' staff has estimated that there are less than 20 
handlers in the industry who could be defined as other than small 
entities. For the 2002 season, the committees' staff estimated that the 
average handler price received was $9.00 per container or container 
equivalent of nectarines or peaches. A handler would have to ship at 
least 556,000 containers to have annual receipts of $5,000,000. Given 
data on shipments maintained by the committees' staff and the average 
handler price received during the 2002 season, the committees' staff 
estimates that small handlers represent approximately 94 percent of all 
the handlers within the industry.
    The committees' staff has also estimated that less than 20 percent 
of the producers in the industry could be defined as other than small 
entities. For the 2002 season, the committees' estimated the average 
producer price received was $4.00 per container or container equivalent 
for nectarines and peaches. A producer would have to produce at least 
187,500 containers of nectarines and peaches to have annual receipts of 
$750,000.
    With data maintained by the committees' staff and the average 
producer price received during the 2002 season, the committees' staff 
estimates that small producers represent more than 80 percent of the 
producers within the industry. With an average producer price of $4.00 
per container or container equivalent, and a combined packout of 
nectarines and peaches of 43,340,000 containers, the value of the 2002 
packout level is estimated to be $173,360,000. Dividing this total 
estimated grower revenue figure by the estimated number of producers 
(1,800) yields an estimate of average revenue per producer of about 
$96,311 from the sales of peaches and nectarines.
    This rule continues to increase the assessment rates established 
for the committees and collected from handlers for the 2003-04 and 
subsequent fiscal periods from $0.19 to $0.20 per 25-pound container or 
container equivalent of nectarines and peaches. The committees 
recommended 2003-04 expenditures of $4,173,438 for nectarines and 
expenditures of $4,086,316 for peaches and an assessment rate of $0.20 
per 25-pound container or container equivalent of nectarines and 
peaches. The assessment rate of $0.20 is $0.01 higher than the rate 
previously in effect.

Analysis of NAC Budget

    The quantity of assessable nectarines for the 2003-04 fiscal year 
continues to be estimated at 22,004,000 25-pound container or container 
equivalents. Thus, the $0.20 rate should provide $4,400,800 in 
assessment income. Income derived from handler assessments will be 
adequate to cover budgeted expenses and permit an adequate reserve.
    The major expenditures recommended by the NAC for the 2003-04 year 
include $226,121 for salaries and benefits, $142,612 for general 
expenses and industry activities, $1,210,220 for inspection, $138,929 
for research, and $2,263,061 for domestic and international promotion.
    Budgeted expenses for these items in 2002-03 were $505,000 for 
salaries and benefits, $309,039 for general expenses and industry 
activities, $1,050,000 for inspection, $138,018 for research, and 
$2,574,160 for domestic and international promotion.
    The NAC recommended an increase in the assessment rate to meet 
anticipated 2003-04 expenses and preserve an acceptable financial 
reserve. A reserve of $400,000 is needed to fund expenses for the 
following year until assessments for that year are received. The NAC 
reviewed and recommended 2003-04 expenditures of $4,173,438 and the 
increased assessment rate.

Analysis of PCC Budget

    The quantity of assessable peaches for the 2003-04 fiscal year 
continues to be estimated at 21,336,000 25-pound container or container 
equivalents. Thus, the $0.20 rate should provide $4,267,200 in 
assessment income. Income derived from handler assessments will be 
adequate to cover budgeted expenses and permit a small increase in 
reserves.
    The major expenditures recommended by the PCC for the 2003-04 year 
include $226,121 for salaries and benefits, $144,743 for general 
expenses and industry activities, $1,206,414 for inspection, $138,930 
for research, and $2,211,346 for domestic and international promotion.
    Budgeted expenses for these items in 2002-03 were $505,000 for 
salaries and benefits, $206,747 for general expenses, $1,100,000 for 
inspection, $142,186 for research, and $2,529,036 for domestic and 
international promotion.
    The PCC recommended an increase in the assessment rate to meet 
anticipated 2003-04 expenses and preserve an acceptable financial 
reserve. A reserve of $500,000 to $550,000 is needed to fund expenses 
for the following year until assessments for that year are received. 
The PCC reviewed and recommended 2003-04 expenditures of $4,086,316 and 
the increased assessment rate.

[[Page 64502]]

Considerations in Determining Expenses and Assessment Rates

    Prior to arriving at these budgets, the committees considered 
information and recommendations from various sources, including, but 
not limited to: The Executive Committee, the Research Subcommittee, the 
International Programs Subcommittee, the Grade and Size Subcommittee, 
and the Domestic Promotion Subcommittee.
    Each of the committees then reviewed the proposed expenses; the 
total estimated assessable 25-pound containers or container 
equivalents; and the estimated income from other sources, such as 
interest income, prior to recommending a final assessment rate. The NAC 
decided that an assessment rate of $0.20 per 25-pound container or 
container equivalent will allow it to meet its 2003-04 expenses and 
carry over an operating reserve of about $438,374, which is in line 
with the committee's financial needs. The PCC decided that an 
assessment rate of $0.20 per 25-pound container or container equivalent 
will allow it to meet its 2003-04 expenses and carry over an operating 
reserve of $530,586, which is in line with the committee's financial 
needs. The committees then recommended this rate to USDA with one 
dissenting vote from each committee.
    A review of historical and preliminary information pertaining to 
the upcoming fiscal period indicates that the grower price for the 
2003-04 seasons could range between $4.00 and $6.00 per 25-pound 
container or container equivalent. Therefore, the estimated assessment 
revenue for the 2003-04 fiscal period as a percentage of total grower 
revenue could range between 3.33 and 5.0 percent.
    This action continues to increase the assessment obligation imposed 
on handlers. While assessments impose some additional costs on 
handlers, the costs are minimal and uniform on all handlers. Some of 
the additional costs may be passed on to producers. However, these 
costs are offset by the benefits derived from the operation of the 
marketing orders. In addition, the committees' meetings were widely 
publicized throughout the California nectarine and peach industries and 
all interested persons were invited to attend the meetings and 
participate in the committees' deliberations on all issues. Like all 
committee meetings, the May 1, 2003, meetings were public meetings and 
all entities of all sizes were able to express views on this issue. 
Finally, interested persons were invited to submit information on the 
regulatory and informational impacts of this action on small 
businesses.
    This action imposes no additional reporting or recordkeeping 
requirements on either small or large handlers. 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.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this rule.
    An interim final rule concerning this action was published in the 
Federal Register on August 15, 2003 (68 FR 48767). Copies of that rule 
were also mailed to committee members and made available as a link on 
the committees' Web site. Finally, the interim final rule was made 
available through the Internet by the Office of the Federal Register 
and USDA. A 60-day comment period was provided for interested persons 
to respond to the interim final rule. The comment period ended on 
October 14, 2003, and 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 Committees' recommendations, and other information, it is hereby 
found that this rule, as hereinafter set forth, will tend to effectuate 
the declared policy of the Act.

List of Subjects

7 CFR Part 916

    Marketing agreements, Nectarines, Reporting and recordkeeping 
requirements.

7 CFR Part 917

    Marketing agreements, Peaches, Pears, Reporting and recordkeeping 
requirements.

PART 916--NECTARINES GROWN IN CALIFORNIA


Sec.  916.234  Assessment rate.

0
Accordingly, the interim final rule amending 7 CFR part 916 which was 
published at 68 FR 48767 on August 15, 2003, is adopted as a final rule 
without change.

PART 917--PEACHES GROWN IN CALIFORNIA

0
Accordingly, the interim final rule amending 7 CFR part 917 which was 
published at 68 FR 48767 on August 15, 2003, is adopted as a final rule 
without change.

    Dated: November 7, 2003.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 03-28521 Filed 11-13-03; 8:45 am]
BILLING CODE 3410-02-P