[Federal Register Volume 70, Number 7 (Tuesday, January 11, 2005)]
[Proposed Rules]
[Pages 1837-1839]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-470]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 925

[Docket No. FV05-925-1 PR]


Grapes Grown in a Designated Area of Southeastern California; 
Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule would increase the assessment rate established for 
the California Desert Grape Administrative Committee (committee) for 
the 2005 and subsequent fiscal periods from $0.015 to $0.0175 per 18-
pound lug of grapes handled. The committee locally administers the 
marketing order which regulates the handling of grapes grown in a 
designated area of southeastern California. Authorization to assess 
grape handlers enables the committee to incur expenses that are 
reasonable and necessary to administer the program. The fiscal period 
begins January 1 and ends December 31. The assessment rate would remain 
in effect indefinitely unless modified, suspended, or terminated.

DATES: Comments must be received by February 10, 2005.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent to the Docket Clerk, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC 
20250-0237; Fax: (202) 720-8938; e-mail: [email protected]; or 
Internet: http://www.regulations.gov. Comments should reference the 
docket number and the date and page number of this issue of the Federal 
Register and will be available for public inspection in the Office of 
the Docket Clerk during regular business hours, or can be viewed at: 
http://www.ams.usda.gov/fv/moab.html.

FOR FURTHER INFORMATION CONTACT: Toni Sasselli, Program Analyst or 
Terry Vawter, Marketing Specialist, Marketing Field Office, Fruit and 
Vegetable Programs, AMS, USDA, 2202 Monterey Street, Suite 102B, 
Fresno, California

[[Page 1838]]

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. 925, both as amended (7 CFR part 925), 
regulating the handling of grapes grown in a designated area of 
southeastern 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.''
    The Department of Agriculture (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 order now in effect, California 
grape handlers are subject to assessments. Funds to administer the 
order are derived from such assessments. It is intended that the 
assessment rate as proposed herein would be applicable to all 
assessable grapes beginning on January 1, 2005, 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 would increase the assessment rate established for the 
committee for the 2005 and subsequent fiscal periods from $0.015 to 
$0.0175 per 18-pound lug of grapes.
    The grape marketing order provides authority for the committee, 
with the approval of USDA, to formulate an annual budget of expenses 
and collect assessments from handlers to administer the program. The 
members of the committee are producers and handlers of California 
grapes. They are familiar with the committee's needs and with the costs 
for goods and services in their local area and are thus in a position 
to formulate an appropriate budget and assessment rate. The assessment 
rate is formulated and discussed in a public meeting. Thus, all 
directly affected persons have an opportunity to participate and 
provide input.
    For the 2002 and subsequent fiscal periods, the committee 
recommended, and USDA approved, an assessment rate 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 committee met on November 9, 2004, and unanimously recommended 
expenditures of $210,691 and an assessment rate of $0.0175 per 18-pound 
lug of grapes for the 2005 fiscal period. In comparison, last year's 
budgeted expenditures were $188,091. The assessment rate of $0.0175 is 
$0.0025 higher than the rate currently in effect. The increased 
assessment rate together with interest income and reserve funds is 
needed to ensure that sufficient funds are available to offset an 
increase in salaries and research programs in 2005, and ensure that an 
adequate carryover of reserve funds is available for the 2006 fiscal 
year.
    The expenditures recommended by the committee for the 2005 fiscal 
period include $125,000 for research, $5,000 for compliance activities, 
$45,500 for salaries and payroll expenses, and $32,191 for other 
expenses. Budgeted expenses for these items in 2004 were $100,000 for 
research, $10,000 for compliance activities, $43,500 for salaries, and 
$34,591 for other expenses.
    The assessment rate recommended by the committee was derived using 
the following formula: Total shipments (8.5 million 18-pound lugs) 
times the recommended assessment rate ($0.0175 per 18-pound lug), plus 
anticipated interest income ($300) and the 2005 beginning reserve 
($78,000), minus the anticipated expenses ($210,691), leave a 2005 
ending reserve ($16,359).
    Based on this calculation, the $0.0175 assessment rate, interest 
income, and reserve funds would provide sufficient income to meet the 
2005 anticipated expenses of $210,691 and would fund an adequate 
December 2005 ending reserve of $16,359. The December 2005 ending 
reserve would be within the maximum permitted by the order. The maximum 
permitted is approximately one fiscal period's expenses (Sec.  925.41 
of the order).
    The proposed assessment rate would continue in effect indefinitely 
unless modified, suspended, or terminated by USDA upon recommendation 
and information submitted by the committee or other available 
information.
    Although this assessment rate would be in effect for an indefinite 
period, the committee would continue to meet prior to or during each 
fiscal period to recommend a budget of expenses and consider 
recommendations for modification of the assessment rate. The dates and 
times of committee meetings are available from the committee or USDA. 
Committee meetings are open to the public and interested persons may 
express their views at these meetings. USDA would evaluate committee 
recommendations and other available information to determine whether 
modification of the assessment rate is needed. Further rulemaking would 
be undertaken as necessary. The committee's 2005 budget and those for 
subsequent fiscal periods would be reviewed and, as appropriate, 
approved by USDA.

Initial 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 initial 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 50 producers of grapes in the production 
area and approximately 20 handlers subject to regulation under the 
marketing order.

[[Page 1839]]

Small agricultural producers are defined by the Small Business 
Administration (13 CFR 121.201) as those having annual receipts less 
than $750,000 and small agricultural service firms are defined as those 
whose annual receipts are less than $5,000,000.
    Last year, eight of the 20 handlers subject to regulation had 
annual grape sales of at least $5,000,000. In addition, 10 of the 50 
producers had annual sales of at least $750,000. Therefore, a majority 
of handlers and producers may be classified as small entities.
    This rule would increase the assessment rate established for the 
committee and collected from handlers for the 2005 and subsequent 
fiscal periods from $0.015 to $0.0175 per 18-pound lug of grapes. The 
committee unanimously recommended expenditures of $210,691 and an 
assessment rate of $0.0175 per 18-pound lug of grapes for the 2005 
fiscal period. The proposed assessment rate of $0.0175 is $0.0025 
higher than the 2005 rate. The number of assessable grapes is estimated 
at 8.5 million 18-pound lugs. Thus, the $0.0175 rate should provide 
$148,750 in assessment income. Income derived from handler assessments, 
along with interest income and funds from the committee's authorized 
carry-in reserves should be adequate to cover budgeted expenses in 
2005.
    The expenditures recommended by the committee for the 2005 fiscal 
period include $125,000 for research, $5,000 for compliance activities, 
$45,500 for salaries and payroll expenses, and $32,191 for other 
expenses. Budgeted expenses for these items in 2004 were $100,000 for 
research, $10,000 for compliance activities, $43,500 for salaries, and 
$34,591 for other expenses.
    The committee reviewed and unanimously recommended 2005 
expenditures of $210,691 which included increases in salaries and 
research programs. Prior to arriving at this budget, the committee 
considered alternative expenditure and assessment rate levels, but 
ultimately decided that the recommended levels were reasonable to 
properly administer the order.
    The assessment rate recommended by the committee was derived by the 
following formula: Total shipments (8.5 million 18-pound lugs) times 
the recommended assessment rate ($0.0175 per 18-pound lug), plus the 
anticipated interest income ($300) and the 2005 beginning reserve 
($78,000), minus the anticipated expenses ($210,691), results in a 2005 
ending reserve ($16,359).
    This rate would provide sufficient funds in combination with 
interest and reserve funds to meet the anticipated expenses of $210,691 
and result in a December 2005 ending reserve of $16,359, which is 
acceptable to the committee. The December 2005 ending reserve would be 
within the maximum permitted by the order. As required under Sec.  
925.41 of the order, the ending reserve must be kept within 
approximately one fiscal period's expenses.
    A review of historical information and preliminary information 
pertaining to the upcoming fiscal period indicates that the on-vine 
grower price for the 2005 season could range between $5.00 and $9.00 
per 18-pound lug of grapes. Therefore, the estimated assessment revenue 
for the 2005 fiscal period as a percentage of total grower revenue 
could range between 0.2 and 0.4 percent.
    This action would 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 
would be offset by the benefits derived by the operation of the 
marketing order.
    In addition, the committee's meeting was widely publicized 
throughout the grape production area and all interested persons were 
invited to attend the meeting and participate in committee 
deliberations on all issues. Like all committee meetings, the November 
9, 2004, meeting was a public meeting and all entities, both large and 
small, were able to express views on this issue. Finally, interested 
persons are invited to submit information on the regulatory and 
informational impacts of this action on small businesses.
    This proposed rule would impose no additional reporting or 
recordkeeping requirements on either small or large production area 
grape 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.
    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.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposed rule. Thirty days is deemed appropriate 
because: (1) The 2005 fiscal period begins on January 1, 2005, and the 
marketing order requires that the rate of assessment for each fiscal 
period apply to all assessable grapes handled during such fiscal 
period; (2) the committee needs to have sufficient funds to pay its 
expenses which are incurred on a continuous basis; and (3) handlers are 
aware of this action which was unanimously recommended by the committee 
at a public meeting and is similar to other assessment rate actions 
issued in past years.

List of Subjects in 7 CFR Part 925

    Grapes, Marketing agreements, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 7 CFR part 925 is 
proposed to be amended as follows:

PART 925--GRAPES GROWN IN A DESIGNATED AREA OF SOUTHEASTERN 
CALIFORNIA

    1. The authority citation for 7 CFR part 925 continues to read as 
follows:

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

    2. Section 925.215 is revised to read as follows:


Sec.  925.215  Assessment rate.

    On and after January 1, 2005, an assessment rate of $0.0175 per 18-
pound lug is established for grapes grown in a designated area of 
southeastern California.

    Dated: January 5, 2005.
Kenneth C. Clayton,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 05-470 Filed 1-10-05; 8:45 am]
BILLING CODE 3410-02-P