[Federal Register Volume 70, Number 161 (Monday, August 22, 2005)]
[Proposed Rules]
[Pages 48900-48903]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-16572]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 916 and 917

[Docket No. FV05-916-3 PR]


Nectarines and Peaches Grown in California; Increased Assessment 
Rates

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule would increase the assessment rates established for 
the Nectarine Administrative Committee and the Peach Commodity 
Committee (committees) for the 2005-06 and subsequent fiscal periods 
from $0.195 and $0.19, respectively, to $0.20 per 25-pound container or 
container equivalent of nectarines and peaches handled. The committees 
locally administer the marketing orders that 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 period runs from March 1 through the last day of February. The 
assessment rates would remain in effect indefinitely unless modified, 
suspended, or terminated.

DATES: Comments must be received by September 1, 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, or E-mail: [email protected]. 
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: Laurel May, California Marketing Field 
Office, Marketing Order Administration Branch, Fruit and Vegetable 
Programs, AMS, USDA; 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 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.''
    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 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 proposed herein would be applicable to all 
assessable nectarines and peaches beginning on March 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 
Nectarine Administrative Committee (NAC) for the 2005-06 and subsequent 
fiscal periods from $0.195 to $0.20 per 25-pound container or container 
equivalent of nectarines. This rule would also increase the assessment 
rate established for the Peach Commodity Committee (PCC) for the 2005-
06 and subsequent fiscal periods from $0.19 to $0.20 per 25-pound 
container or container equivalent of peaches.
    The nectarine and peach marketing orders provide authority for the 
committees, with the approval of USDA, to formulate annual budgets of 
expenses and collect assessments from handlers to administer the 
programs. The members of the NAC and 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, therefore, 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 2004-05 fiscal period, and USDA 
approved, an assessment rate of $0.195 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 April 28, 2005, and discussed and unanimously 
recommended 2005-06 expenditures and an assessment rate of $0.20 per 
25-pound container or container equivalent of nectarines. Subsequently, 
the NAC revised its budget recommendation because it anticipated higher 
administrative overhead expenses than it had forecast earlier. In a 
mail vote completed on June 28, 2005, the NAC

[[Page 48901]]

unanimously recommended 2005-06 expenditures of $4,919,049. In 
comparison, the budgeted expenditures for 2004-05 were $5,162,866. The 
assessment rate of $0.20 is $0.005 higher than the rate currently in 
effect.
    The rate increase was recommended to ensure that the NAC could meet 
its 2005-06 anticipated expenses and carry over a financial reserve 
that would provide adequate funds for promotional and other activities 
at the beginning of the 2006 season before assessment collections 
begin. Increasing the assessment rate from $0.195 to $0.20 per 25-pound 
container is expected to provide about $103,410 in additional 
assessment revenue, and would allow the NAC to start the 2006 season 
with about $342,347.
    Expenditures recommended by the NAC for the 2005-06 fiscal period 
include $899,288 for administration, $1,167,381 for inspection, 
$203,230 for research, and $2,649,149 for domestic and international 
promotion. Budgeted expenses for these items in 2004-05 were $538,770 
for administration, $1,153,676 for inspection, $308,568 for research, 
and $3,161,852 for domestic and international promotion.
    The 2004-05 and 2005-06 budgeted expenses differ significantly 
because some individual line items have been moved to different expense 
categories for 2005-2006. However, NAC expenses are generally expected 
to be lower during the 2005-06 fiscal year compared to the 2004-05 
fiscal year.
    The 2005-06 NAC assessment rate was derived after considering 
anticipated fiscal year expenses; 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 2006 season. 
The committee desires to maintain a financial reserve of approximately 
$340,000 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 would result in an adequate financial reserve, yet one 
well within the maximum of approximately one year's expenses permitted 
by the order (Sec.  916.42).

PCC Assessment and Expenses

    The PCC recommended, for the 2004-05 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 met on April 28, 2005, and discussed and unanimously 
recommended 2005-06 expenditures and an assessment rate of $0.20 per 
25-pound container or container equivalent of peaches. Subsequently, 
the PCC revised its budget recommendation because it anticipated higher 
administrative overhead expenses than it had forecast earlier. In a 
mail vote completed on June 28, 2005, the PCC unanimously recommended 
2005-06 expenditures of $5,095,709. In comparison, last year's budgeted 
expenditures were $5,178,003. The assessment rate of $0.20 is $0.01 
higher than the rate currently in effect.
    The rate increase was recommended to ensure that the PCC could meet 
its 2005-06 anticipated expenses and carry over a financial reserve 
that would provide adequate funds for promotional and other activities 
at the beginning of the 2006 season before assessment collections 
begin. Increasing the assessment rate from $0.19 to $0.20 per 25-pound 
container is expected to provide about $211,800 in additional 
assessment revenue, and would allow the PCC to start the 2006 season 
with about $418,201.
    Expenditures recommended by the PCC for the 2005-06 fiscal period 
include $918,736 for administration, $1,260,160 for inspection, 
$204,833 for research, and $2,711,980 for domestic and international 
promotion. Budgeted expenses for these items in 2004-05 were $540,456 
for administration, $1,240,520 for inspection, $208,570 for research, 
and $3,188,457 for domestic and international promotion.
    The 2004-05 and 2005-06 budgeted expenses differ because some 
individual line items have been moved to different expense categories 
for 2005-2006. However, the PCC expenses are generally expected to be 
lower during the 2005-06 fiscal year compared to the 2004-05 fiscal 
year.
    The 2005-06 PCC assessment rate was derived after considering 
anticipated PCC expenses; the estimated assessable peaches of 
21,180,000 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 2006 season. The committee 
desires to maintain a financial reserve of approximately $420,000 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 
would result in an adequate financial reserve, yet one well within the 
maximum of approximately one year's expenses permitted by the order 
(Sec.  917.38).

Continuance of Assessment Rates

    The proposed assessment rates would continue in effect indefinitely 
unless modified, suspended, or terminated by USDA upon recommendation 
and information submitted by the committees or other available 
information.
    Although these assessment rates would be in effect for an 
indefinite period, the committees 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 rates. The 
dates and times of committee meetings are available from the 
committees' Web site or USDA. Committee meetings are open to the public 
and interested persons may express their views at these meetings. USDA 
would evaluate the committees' recommendations and other available 
information to determine whether modification of the assessment rate 
for each committee is needed. Further rulemaking would be undertaken as 
necessary. The committee's 2005-06 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 210 California nectarine and peach handlers 
subject to regulation under the orders covering nectarines and peaches 
grown in California, and about 1,500 producers of these fruits in 
California. Small agricultural service firms, which include handlers, 
are defined by the

[[Page 48902]]

Small Business Administration [13 CFR 121.201] as those whose annual 
receipts are less than $6,000,000. 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 fewer than 26 
handlers in the industry who could be defined as other than small 
entities. For the 2004 season, the committees' staff estimated that the 
average handler price received was $8.00 per container or container 
equivalent of nectarines or peaches. A handler would have to ship at 
least 750,000 containers to have annual receipts of $6,000,000. Given 
data on shipments maintained by the committees' staff and the average 
handler price received during the 2004 season, the committees' staff 
estimates that small handlers represent approximately 87 percent of all 
the handlers within the industry.
    The committees' staff has also estimated that fewer than 20 percent 
of the producers in the industry could be defined as other than small 
entities. For the 2004 season, the committees' estimated the average 
producer price received was $5.00 per container or container equivalent 
for nectarines and peaches. A producer would have to produce at least 
150,500 containers of nectarines and peaches to have annual receipts of 
$750,000. Given data maintained by the committees' staff and the 
average producer price received during the 2004 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 $5.00 per container or container 
equivalent, and a combined packout of nectarines and peaches of 
40,438,536 containers, the value of the 2004 packout is estimated to be 
$202,192,680. Dividing this total estimated grower revenue figure by 
the estimated number of producers (1,500) yields an estimate of average 
revenue per producer of about $134,795 from the sales of peaches and 
nectarines.
    This rule would increase the assessment rates established for the 
NAC for the 2005-06 and subsequent fiscal periods from $0.195 to $0.20 
per 25-pound container or container equivalent of nectarines and for 
the PCC for the 2005-06 and subsequent fiscal periods from $0.19 to 
$0.20 per 25-pound container or container equivalent of peaches.
    The NAC recommended 2005-06 fiscal period expenditures of 
$4,919,049 for nectarines and an assessment rate of $0.20 per 25-pound 
container or container equivalent of nectarines. The proposed 
assessment rate of $0.20 is $0.005 higher than the current rate. The 
PCC recommended 2005-06 fiscal period expenditures of $5,095,709 for 
peaches and an assessments rate of $0.20 per 25-pound container or 
container equivalent of peaches. The proposed assessment rate of $0.20 
is $0.01 higher than the current rate.

Analysis of NAC Budget

    The quantity of assessable nectarines for the 2005-06 fiscal period 
is estimated at 20,682,000 25-pound container or container equivalents. 
Thus, the $0.20 rate should provide $4,136,400 in assessment income. 
Income derived from handler assessments, along with interest income, 
research grants, and funds from the committee's reserve, would be 
adequate to cover budgeted expenses and maintain their desired reserve.
    The major expenditures recommended by the NAC for the 2005-06 year 
include 899,288 for administration, $1,167,381 for inspection, $203,230 
for research, and $2,649,149 for domestic and international promotion. 
Budgeted expenses for these items in 2004-05 were $538,770, $1,050,000, 
$138,018, and $2,574,160, respectively.
    The NAC recommended an increase in the assessment rate to meet 
anticipated 2005-06 expenses and preserve an acceptable financial 
reserve. A reserve of approximately $340,000 is needed to fund expenses 
for the following year until assessments for that year are received. 
The NAC reviewed and recommended 2005-06 expenditures of $4,919,049 and 
the increased assessment rate.

Analysis of PCC Budget

    The quantity of assessable peaches for the 2005-06 fiscal year is 
estimated at 21,180,000 25-pound container or container equivalents. 
Thus, the $0.20 rate should provide $4,236,000 in assessment income. 
Income derived from handler assessments, along with interest income, 
research grants, and funds from the committee's reserves would be 
adequate to cover budgeted expenses and maintain their desired reserve.
    The major expenditures recommended by the PCC for the 2005-06 year 
include $918,736 for administration, $1,260,160 for inspection, 
$204,833 for research, and $2,711,980 for domestic and international 
promotion. Budgeted expenses for these items in 2004-05 were $540,456, 
$1,240,520, $208,570, and $3,188,457, respectively.
    The PCC recommended an increase in the assessment rate to meet 
anticipated 2005-06 expenses and preserve an acceptable financial 
reserve. A reserve of approximately $420,000 is needed to fund expenses 
for the following year until assessments for that year are received. 
The PCC reviewed and recommended 2005-06 expenditures of $5,095,709 and 
the increased assessment rate.

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 and research grants, prior to recommending a final 
assessment rate. The NAC decided that an assessment rate of $0.20 per 
25-pound container or container equivalent would allow it to meet its 
2005-06 expenses and carry over an operating reserve of approximately 
$342,000, 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 would allow it to meet its 2003-04 expenses and 
carry over an operating reserve of approximately $420,000, which is in 
line with the committee's financial needs. The committees then 
unanimously recommended these rates to USDA
    A review of historical and preliminary information pertaining to 
the upcoming fiscal period indicates that the grower price for 
nectarines and peaches for the 2005-06 season could range between $4.00 
and $6.00 per 25-pound container or container equivalent. Therefore, 
the estimated assessment revenue for the 2005-06 fiscal period as a 
percentage of total grower revenue could range between 3.33 and 5.0 
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 from the operation

[[Page 48903]]

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 April 28, 2004, meetings were 
public meetings and all entities of all sizes 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 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 10-day comment period is provided to allow interested persons to 
respond to this proposal. Ten days is deemed appropriate because: (1) 
The 2005-06 fiscal period began on March 1, 2005, and the marketing 
order requires that the rate of assessment for each fiscal period apply 
to all assessable nectarines and peaches handled during such fiscal 
period; (2) the committees need to have sufficient funds to pay their 
expenses, which are incurred on a continuous basis; and (3) handlers 
are aware of this action, which was discussed by the committees at 
public meetings and unanimously recommended by a mail vote, and is 
similar to other assessment rate actions issued in past years.

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.

    For the reasons set forth in the preamble, 7 CFR parts 916 and 917 
are proposed to be amended as follows:
    1. The authority citation for 7 CFR parts 916 and 917 continues to 
read as follows:

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

PART 916--NECTARINES GROWN IN CALIFORNIA

    2. Section 916.234 is revised to read as follows:


Sec.  916.234  Assessment rate.

    On and after March 1, 2005, an assessment rate of $0.20 per 25-
pound container or container equivalent of nectarines is established 
for California nectarines.

PART 917--PEACHES GROWN IN CALIFORNIA

    3. Section 917.258 is revised to read as follows:


Sec.  917.258  Assessment rate.

    On and after March 1, 2005, an assessment rate of $0.20 per 25-
pound container or container equivalent of peaches is established for 
California peaches.

    Dated: August 17, 2005.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 05-16572 Filed 8-19-05; 8:45 am]
BILLING CODE 3410-02-P