[Federal Register Volume 70, Number 185 (Monday, September 26, 2005)]
[Rules and Regulations]
[Pages 56107-56111]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-19085]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 916 and 917

[Docket No. FV05-916-3 FR]


Nectarines and Peaches Grown in California; Increased Assessment 
Rates

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule increases the assessment rates established for the 
Nectarine Administrative Committee

[[Page 56108]]

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. Assessments upon nectarine and peach handlers are used by 
the committees to fund reasonable and necessary expenses of the 
programs. The fiscal period runs from March 1 through the last day of 
February. The assessment rates will remain in effect indefinitely 
unless modified, suspended, or terminated.

DATES: Effective September 27, 2005.

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 issued herein will 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 increases 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 also increases 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 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 should 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

[[Page 56109]]

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 should 
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 should 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 
should 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 assessment rates established in this rule will 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 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' Web site 
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 committee's 2005-06 budget and those for subsequent 
fiscal periods would 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 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 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

[[Page 56110]]

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 increases 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 assessment rate of 
$0.20 is $0.005 higher than the 2004-05 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 assessment rate of $0.20 is $0.01 higher 
than the 2004-05 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, should 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 should 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 increases 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 April 28, 2004, meetings were public meetings and all 
entities, both large and small, were able to express views on this 
issue.
    This rule 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.
    A proposed rule concerning this action was published n the Federal 
Register on August 22, 2005 (70 FR 48900). Copies of the proposed rule 
were also mailed or sent via facsimile to all nectarine and peach 
handlers. Finally, the proposal was made available through the Internet 
by USDA and the Office of the Federal Register. A 10-day comment period 
ending September 1, 2005, was provided for interested persons to 
respond to the proposal. Two comments supporting the proposal were 
received. Both cited reduced crop yields and the need to fund pre-
harvest expenses next year as justification for the assessment rate 
increases. An additional response was received, but it was not relevant 
to the proposed assessment increase.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab.html. Any questions about the compliance 
guide should be sent to Jay Guerber at the previously mentioned address 
in the FOR FURTHER INFORMATION CONTACT section.
    After consideration of all relevant material presented, including 
the information and recommendation

[[Page 56111]]

submitted by the NAC and PCC and other available information, it is 
hereby found that this rule, as hereinafter set forth, 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: (1) The 
2005-06 fiscal period began on March 1, 2005, and the marketing orders 
require that the assessment rates for each fiscal period apply to all 
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. Also, a 10-day comment 
period was provided for in the proposed rule and the comments received 
have been considered in reaching a final decision on this matter.

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.

0
For the reasons set forth in the preamble, 7 CFR parts 916 and 917 are 
amended as follows:
0
1. The authority citation for 7 CFR parts 916 and 917 continue to read 
as follows:

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

PART 916--NECTARINES GROWN IN CALIFORNIA

0
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

0
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: September 20, 2005.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 05-19085 Filed 9-23-05; 8:45 am]
BILLING CODE 3410-02-P