[Federal Register Volume 71, Number 128 (Wednesday, July 5, 2006)]
[Proposed Rules]
[Pages 38115-38118]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-10425]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 71, No. 128 / Wednesday, July 5, 2006 / 
Proposed Rules  

[[Page 38115]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 916 and 917

[Docket No. FV06-916/917-2 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 2006-07 and subsequent fiscal periods 
from $0.20 to $0.21 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 July 17, 2006.

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, Marketing Specialist, or 
Kurt 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 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, 2006, 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) and the Peach Commodity 
Committee (PCC) for the 2006-07 and subsequent fiscal periods from 
$0.20 to $0.21 per 25-pound container or container equivalent of 
nectarines and peaches handled.
    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 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 2005-06 fiscal period, and USDA 
approved, an assessment rate of $0.20 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 27, 2006, and discussed and unanimously 
recommended 2006-07 expenditures and an assessment rate of $0.21 per 
25-pound container or container equivalent of nectarines. At the same 
meeting, NAC unanimously recommended 2006-07 expenditures of 
$4,473,764. In comparison, the budgeted expenditures for 2005-06 were 
$4,919,048. The

[[Page 38116]]

proposed assessment rate of $0.21 is $0.01 higher than the rate 
currently in effect.
    The rate increase was recommended to ensure that, despite lower 
than normal crop production estimates for the 2006 crop season, which 
began on March 1, 2006, NAC could meet its 2006-07 anticipated expenses 
and carry over a financial reserve that would provide adequate funds 
for promotional and other activities at the beginning of the 2007 
season before assessment collections begin. Increasing the assessment 
rate from $0.20 to $0.21 per 25-pound container or container equivalent 
is expected to provide about $178,240 in additional assessment revenue, 
and would allow NAC to start the 2007 season with adequate funds.
    Expenditures recommended by the NAC for the 2006-07 fiscal period 
include $567,856 for administration, $1,070,832 for inspection, 
$201,702 for research, and $2,633,374 for domestic and international 
promotion. Budgeted expenses for these items in 2005-06 were $899,288 
for administration, $1,167,381 for inspection, $203,230 for research, 
and $2,649,149 for domestic and international promotion.
    The NAC 2006-07 fiscal period assessment rate was derived after 
considering anticipated fiscal year expenses; the estimated assessable 
nectarines of 17,824,000 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 2007 
season. Therefore, the NAC recommended an assessment rate of $0.21 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.  916.42).

PCC Assessment and Expenses

    The PCC recommended, for the 2005-06 fiscal period, and USDA 
approved, an assessment rate of $0.20 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 27, 2006, and discussed and recommended 2006-
07 expenditures and an assessment rate of $0.21 per 25-pound container 
or container equivalent of peaches. At the same meeting, PCC 
recommended 2006-07 expenditures of $4,988,914. In comparison, last 
year's budgeted expenditures were $5,095,709. The proposed assessment 
rate of $0.21 is $0.01 higher than the rate currently in effect.
    The rate increase was recommended to ensure that PCC could meet its 
2006-07 anticipated expenses and carry over a financial reserve that 
would provide adequate funds for promotional and other activities at 
the beginning of the 2007 season before assessment collections begin. 
Increasing the assessment rate from $0.20 to $0.21 per 25-pound 
container or container equivalent is expected to provide about $202,420 
in additional assessment revenue, and would allow PCC to start the 2007 
season with adequate funds.
    Expenditures recommended by the PCC for the 2006-07 fiscal period 
include $629,024 for administration, $1,299,211 for inspection, 
$210,718 for research, and $2,849,961 for domestic and international 
promotion. Budgeted expenses for these items in 2005-06 were $918,736 
for administration, $1,260,160 for inspection, $204,833 for research, 
and $2,711,980 for domestic and international promotion.
    The PCC 2006-07 fiscal period assessment rate was derived after 
considering anticipated PCC expenses; the estimated assessable peaches 
of 20,242,000 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. Therefore, 
the PCC recommended an assessment rate of $0.21 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' website at www.eatcaliforniafruit.com 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 committees' 2006-07 fiscal period budgets 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 150 California nectarine and peach handlers 
subject to regulation under the orders covering nectarines and peaches 
grown in California, and about 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 $6,500,000. 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 25 
handlers in the industry who could be defined as other than small 
entities. For the 2005 season, the committees' staff estimated that the 
average handler price received was $10.00 per container or container 
equivalent of nectarines or peaches. A handler would have to ship at 
least 650,000 containers to have annual receipts of $6,500,000. Given 
data on shipments maintained by the committees' staff and the average 
handler price received during the 2005 season, the committees' staff 
estimates that small handlers represent approximately 83 percent of all 
the handlers within the industry.
    The committees' staff has also estimated that fewer than 10 percent 
of

[[Page 38117]]

the producers in the industry could be defined as other than small 
entities. For the 2005 season, the committees' staff estimated the 
average producer price received was $5.25 per container or container 
equivalent for nectarines and peaches. A producer would have to produce 
at least 142,858 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 2005 season, the 
committees' staff estimates that small producers represent more than 90 
percent of the producers within the industry.
    With an average producer price of $5.25 per container or container 
equivalent, and a combined packout of nectarines and peaches of 
38,691,622 containers, the value of the 2005 packout is estimated to be 
$203,131,016. Dividing this total estimated grower revenue figure by 
the estimated number of producers (800) yields an estimate of average 
revenue per producer of about $253,914 from the sales of peaches and 
nectarines.
    This rule would increase the assessment rates established for NAC 
and PCC for the 2006-07 and subsequent fiscal periods from $0.20 to 
$0.21 per 25-pound container or container equivalent of nectarines or 
peaches.
    The NAC recommended 2006-07 fiscal period expenditures of 
$4,473,764 for nectarines and an assessment rate of $0.21 per 25-pound 
container or container equivalent of nectarines. The proposed 
assessment rate of $0.21 is $0.01 higher than the current rate. The PCC 
recommended 2006-07 fiscal period expenditures of $4,988,914 for 
peaches and an assessments rate of $0.21 per 25-pound container or 
container equivalent of peaches. The proposed assessment rate of $0.21 
is $0.01 higher than the current rate.

Analysis of NAC Budget

    The quantity of assessable nectarines for the 2006-07 fiscal period 
is estimated at 17,824,000 25-pound containers or container 
equivalents. Thus, the $0.21 rate should provide $3,743,040 in 
assessment income. Income derived from handler assessments, along with 
interest income and research grants, would be adequate to cover 
budgeted expenses and maintain their desired reserve.
    The major expenditures recommended by the NAC for the 2006-07 year 
include $567,856 for administration, $1,070,832 for inspection, 
$201,702 for research, and $2,633,374 for domestic and international 
promotion. Budgeted expenses for these items in 2005-06 were $899,288, 
$1,167,381, $203,230, and $2,649,149, respectively.
    The NAC recommended an increase in the assessment rate to meet 
anticipated 2006-07 expenses and maintain an acceptable financial 
reserve, which is needed to fund expenses for the following year until 
assessments for that year are received. The NAC reviewed and 
recommended 2006-07 expenditures of $4,473,764 and the increased 
assessment rate.

Analysis of PCC Budget

    The quantity of assessable peaches for the 2006-07 fiscal year is 
estimated at 20,242,000 25-pound containers or container equivalents. 
Thus, the $0.21 rate should provide $4,250,820 in assessment income. 
Income derived from handler assessments, along with interest income and 
research grants, would be adequate to cover budgeted expenses and 
maintain their desired reserve.
    The major expenditures recommended by PCC for the 2006-07 year 
include $629,024 for administration, $1,299,211 for inspection, 
$210,718 for research, and $2,849,961 for domestic and international 
promotion. Budgeted expenses for these items in 2005-06 were $918,736, 
$1,260,160, $204,833, and $2,711,980, respectively.
    The PCC recommended an increase in the assessment rate to meet 
anticipated 2006-07 expenses and maintain an acceptable financial 
reserve, which is needed to fund expenses for the following year until 
assessments for that year are received. The PCC reviewed and 
recommended 2006-07 expenditures of $4,988,914 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 Domestic Promotion 
Subcommittee, and the Nectarine and Peach Estimating Committees. 
Because 2006 crop estimates are lower than those for previous years, 
assessment revenues would decrease if the current rates were maintained 
through the 2006 season. The committees considered decreasing their 
promotional program expenditures in order to avoid raising the 
assessment rates. However, they believe that their current promotional 
programs are crucial to the success of the industry. Therefore, they 
recommended increasing the assessment rates in order to continue 
funding those activities at the current level. Both NAC and PCC decided 
that an assessment rate of $0.21 per 25-pound container or container 
equivalent would allow them to meet their 2006-07 fiscal period 
expenses and carry over necessary operating reserves to finance 
operations before 2007-08 assessments are collected. The committees 
then 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 2006-07 season could range between $4.00 
and $6.00 per 25-pound container or container equivalent. Therefore, 
the estimated assessment revenue for the 2006-07 fiscal period as a 
percentage of total grower revenue could range between 3.5 and 5.25 
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 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 27, 2006 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.

[[Page 38118]]

    A 10-day comment period is provided to allow interested persons to 
respond to this proposal. Ten days is deemed appropriate because: (1) 
The 2006-07 fiscal period began on March 1, 2006, 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 recommended at their meetings on April 27, 2006, 
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, 2006, an assessment rate of $0.21 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, 2006, an assessment rate of $0.21 per 25-
pound container or container equivalent of peaches is established for 
California peaches.

    Dated: June 28, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
 [FR Doc. E6-10425 Filed 7-3-06;8:45 am]
BILLING CODE 3410-02-P