[Federal Register Volume 71, Number 103 (Tuesday, May 30, 2006)]
[Rules and Regulations]
[Pages 30574-30576]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-8207]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 989

[Docket No. FV06-989-1 FIR]


Raisins Produced From Grapes Grown in California; Decreased 
Assessment Rate

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 decreased the 
assessment rate established for the Raisin Administrative Committee 
(Committee) for the 2005-06 and subsequent crop years from $11.00 to 
$7.50 per ton of free tonnage raisins acquired by handlers, and reserve 
tonnage raisins released or sold to handlers for use in free tonnage 
outlets. The Committee locally administers the Federal marketing order 
which regulates the handling of raisins produced from grapes grown in 
California (order). Assessments upon raisin handlers are used by the 
Committee to fund reasonable and necessary expenses of the program. The 
crop year runs from August 1 through July 31. The assessment rate will 
remain in effect indefinitely unless modified, suspended, or 
terminated.

DATES: Effective Date: June 29, 2006.

FOR FURTHER INFORMATION CONTACT: Rose Aguayo, Marketing Specialist, or 
Kurt J. Kimmel, Regional Manager, California Marketing Field Office, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA; Telephone: (559) 487-5901, Fax: (559) 487-5906.
    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 marketing 
agreement and order 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 order now in effect, California 
raisin handlers are subject to assessments. Funds to administer the 
order are derived from such assessments. It is intended that the 
assessment rate as issued herein will be applicable to all assessable 
raisins beginning August 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 continues in effect the action that decreased the 
assessment rate established for the Committee for the 2005-06 and 
subsequent crop years from $11.00 to $7.50 per ton of free tonnage 
raisins acquired by handlers, and reserve tonnage raisins released or 
sold to handlers for use in free tonnage outlets. Assessments upon 
handlers are used by the Committee to fund reasonable and necessary 
expenses of the program. When volume regulation is in effect, an 
administrative budget funded with handler assessments is developed, and 
a reserve pool budget funded with reserve pool proceeds is developed. 
Volume regulation was not implemented for the 2004-05 crop, but is 
applicable this year. As a result, Committee costs are apportioned 
between the two for 2005-06 and will be funded appropriately. The $7.50 
per ton assessment rate should generate enough revenue to cover the 
Committee's administrative expenses. This action was recommended by the 
Committee at a meeting on August 15, 2005.
    Sections 989.79 and 989.80, respectively, of the order provide 
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 raisins. They are familiar with the Committee's 
needs and with the costs of 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.
    Section 989.79 also provides authority for the Committee to 
formulate an annual budget of expenses likely to be incurred during the 
crop year in connection with reserve raisins held for the account of 
the Committee. A certain percentage of each year's raisin crop may be 
held in a reserve pool during years when volume regulation is 
implemented to help stabilize raisin supplies and prices. The remaining 
``free'' percentage may be sold by handlers to any market. Reserve 
raisins are disposed of through various programs authorized under the 
order. Reserve pool expenses are deducted

[[Page 30575]]

from proceeds obtained from the sale of reserve raisins. Net proceeds 
are returned to the pool's equity holders, primarily producers.
    When volume regulation is in effect, the Committee's operating 
costs (rent, salaries, etc.) are split between an administrative budget 
funded by handler assessments, and a reserve pool budget funded with 
proceeds of sales of reserve raisins. In years when the crop is short 
and no volume regulation is in effect, operating costs are funded by 
the administrative budget.
    Volume regulation was not implemented for the 2004-05 season 
because the crop was short. Operating expenses were funded by the 2004-
05 administrative budget and not apportioned between the administrative 
and reserve pool budgets. Thus, the Committee's assessment rate 
increased from $8.00 to $11.00 per ton to cover the higher 2004-05 
administrative expenses.
    The Committee meets each August to review the ensuing year's crop 
conditions and financial situation. When the Committee met on August 
15, 2005, it recommended two budget scenarios for the 2005-06 crop year 
to accommodate both situations, because it was not known at that time 
if volume regulation would be implemented. At that time, it appeared 
the crop might be short, but the initial crop estimate would not be 
available until a later date.
    Under the first budget scenario with volume regulation, the 
Committee recommended an administrative budget of $2,062,500, a reserve 
pool budget of $2,755,500, and a decreased assessment rate of $7.50 per 
ton for the 2005-06 season. Under the second scenario, with no volume 
regulation, the Committee recommended an administrative budget of 
$3,025,000, and a continuing assessment rate of $11.00 per ton.
    The Committee met on October 4, 2005, and announced preliminary 
volume regulation percentages for 2005-06 crop raisins. Raisin 
deliveries to-date are at a level to warrant the use of volume 
regulation for the year. This, in turn, supports the Committee's August 
recommendation to decrease the assessment rate from $11.00 to $7.50 per 
ton. Handlers are expected to acquire 275,000 tons of raisins during 
the 2005-06 crop year, which should provide adequate revenue to fund 
the recommended administrative expenditures of $2,062,500. This 
compares to budgeted administrative expenses of $3,025,000 for the 
2004-05 crop year when volume regulation was not in effect.
    Because the 2004-05 administrative budget funded some of the costs 
typically allocated to a reserve budget, the Committee's 2004-05 
expenses were higher than normal. A comparison of 2005-06 recommended 
administrative expenditures to 2004-05 administrative budget 
expenditures follows: 2005-06 salaries, $500,000 (2004-05 
administrative budgeted expenditures for salaries was $1,000,000); 
$686,000 for export program activities, ($536,000); $250,000 for 
compliance activities, ($320,000); $65,000 for group health insurance, 
($150,000); $58,000 for rent, ($110,000); $60,000 for Committee member 
and staff travel, ($120,000); and $30,000 for computer software and 
programming, ($110,000).
    The recommended $7.50 per ton assessment rate was derived by 
dividing the $2,062,500 in anticipated expenses by an estimated 275,000 
tons of assessable raisins. The Committee recommended decreasing its 
assessment rate because the projected administrative expenses for the 
2005-06 crop year are $962,500 less than the 2004-05 administrative 
expenses. Thus, sufficient income should be generated at the lower 
assessment rate for the Committee to meet its anticipated expenses. 
Pursuant to Sec.  989.81(a) of the order, any unexpended assessment 
funds from the crop year must be credited or refunded to the handlers 
from whom collected.
    The assessment rate established in this rule will continue in 
effect indefinitely unless modified, suspended, or terminated by the 
Secretary upon recommendation and other information submitted by the 
Committee or other available information.
    Although this assessment rate is effective for an indefinite 
period, the Committee will continue to meet prior to or during each 
crop year 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 will evaluate Committee 
recommendations and other available information to determine whether 
modification of the assessment rate is needed. Further rulemaking will 
be undertaken as necessary. The Committee's 2005-06 budget and those 
for subsequent crop years 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 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 $6,500,000, and small agricultural 
producers are defined as those having annual receipts of less than 
$750,000. Eleven of the 20 handlers subject to regulation have annual 
sales estimated to be at least $6,500,000, and the remaining 9 handlers 
have sales less than $6,500,000. No more than 9 handlers, and a 
majority of producers, of California raisins may be classified as small 
entities.
    This rule continues in effect the action that decreased the 
assessment rate established for the Committee for the 2005-06 and 
subsequent crop years from $11.00 to $7.50 per ton of free tonnage 
raisins acquired by handlers, and reserve tonnage raisins released or 
sold to handlers for use in free tonnage outlets. Assessments upon 
handlers are used by the Committee to fund reasonable and necessary 
expenses of the program.
    When volume regulation is in effect, an administrative budget 
funded with handler assessments is developed, and a reserve pool budget 
funded with reserve pool proceeds is developed. Volume regulation was 
not implemented for the 2004-05 crop, but is applicable this year. As a 
result, Committee costs are apportioned between the two for 2005-06 and 
will be funded appropriately. The Committee recommended administrative 
expenses of $2,062,500. With anticipated assessable tonnage at 275,000 
tons, sufficient income should be generated at the $7.50 per ton 
assessment rate to meet the Committee's administrative expenses. 
Pursuant to Sec.  989.81(a) of the order, any unexpended assessment 
funds from the crop year must be credited or refunded to the handlers 
from whom collected.

[[Page 30576]]

    Because the 2004-05 administrative budget funded some of the costs 
typically allocated to a reserve budget, the Committee's 2004-05 
expenses were higher than normal. A comparison of 2005-06 recommended 
administrative budget expenditures to 2004-05 administrative budget 
expenditures follows: 2005-06 salaries, $500,000 (2004-05 
administrative budgeted expenditures for salaries was $1,000,000); 
$686,000 for export program activities, ($536,000); $250,000 for 
compliance activities, ($320,000); $65,000 for group health insurance, 
($150,000); $58,000 for rent, ($110,000); $60,000 for Committee member 
and staff travel, ($120,000); and $30,000 for computer software and 
programming, ($110,000).
    The industry considered an alternative assessment rate and budget 
prior to arriving at the $7.50 per ton and $2,062,500 administrative 
budget recommendation. The Committee's Audit Subcommittee met on July 
13, 2005, to review preliminary budget information. The subcommittee 
was aware that 2005-06 crop may be short and no volume regulation may 
be implemented. The subcommittee, thus, developed two budgets and 
assessment rates to accommodate a scenario with volume regulation and 
another scenario with no volume regulation. If volume regulation was 
not applicable, costs typically allocated to a reserve pool budget 
would be funded by the administrative budget, thus necessitating a 
continuation of the $11.00 per ton assessment rate. If volume 
regulation was applicable, costs would be allocated to an 
administrative budget and a reserve pool budget and the assessment rate 
would be reduced to $7.50 per ton. The Committee approved these budget 
and assessment recommendations on August 15, 2005. Ultimately, the 
Committee determined that volume regulation was applicable for the 
2005-06 crop, and that the lower assessment rate of $7.50 per ton was 
appropriate.
    A review of statistical data on the California raisin industry 
indicates that assessment revenue has consistently been less than one 
percent of grower revenue in recent years. A grower price of $1,210 per 
ton for the 2005-06 raisin crop has been announced by the Raisin 
Bargaining Association. If this price is realized, assessment revenue 
would continue to be less than one percent of grower revenue in the 
2005-06 crop year, even with the reduced assessment rate.
    Regarding the impact of this action on affected entities, this 
action continues in effect the action that decreased the assessment 
rate imposed on handlers. Assessments are applied uniformly on all 
handlers, and some of the costs may be passed on to producers. However, 
decreasing the assessment rate reduces the burden on handlers, and may 
reduce the burden on producers.
    Additionally, the Audit Subcommittee's meeting on July 13, 2005, 
and the Committee's meeting on August 15, 2005, where this action was 
deliberated were public meetings widely publicized throughout the 
California raisin industry. All interested persons were invited to 
attend the meetings and participate in the Committee deliberations on 
all issues.
    This action imposes no additional reporting or recordkeeping 
requirements on either small or large raisin handlers. As with all 
Federal marketing order programs, reports and forms are periodically 
reviewed to reduce information requirements and duplication by industry 
and public sectors 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 February 22, 2006 (71 FR 8923). Copies of that rule 
were also mailed or sent via facsimile to all raisin handlers. Finally, 
the interim final rule was made available through the Internet by USDA 
and the Office of the Federal Register. A 60-day comment period was 
provided for interested persons to respond to the interim final rule. 
The comment period ended on April 24, 2006, 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 information and recommendation submitted by the Committee 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.

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 71 FR 8923 on February 22, 2006, is adopted as a final 
rule without change.

    Dated: May 23, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
 [FR Doc. E6-8207 Filed 5-26-06; 8:45 am]
BILLING CODE 3410-02-P