[Federal Register Volume 71, Number 170 (Friday, September 1, 2006)]
[Rules and Regulations]
[Pages 51982-51985]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-7377]



[[Page 51982]]

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 916 and 917

[Docket No. FV06-916/917-2 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 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. 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.

EFFECTIVE DATE: September 5, 2006.

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, or E-mail: 
[email protected] or [email protected].
    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 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 
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, 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 increases 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 California 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

    For the 2005-06 fiscal period, the NAC recommended, and USDA 
approved, an assessment rate of $0.20 per 25-pound container or 
container equivalent of nectarines 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 unanimously recommended 2006-07 
expenditures of $4,473,764 and an assessment rate of $0.21 per 25-pound 
container or container equivalent of nectarines. In comparison, the 
budgeted expenditures for 2005-06 were $4,919,048. The 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, the 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 should allow the 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 period 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 should result in an adequate financial 
reserve,

[[Page 51983]]

yet one well within the maximum of approximately one year's expenses 
permitted by the order (Sec.  916.42).

PCC Assessment and Expenses

    For the 2005-06 fiscal period, the PCC recommended, and USDA 
approved, an assessment rate of $0.20 per 25-pound container or 
container equivalent of peaches 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 recommended 2006-07 expenditures 
of $4,988,914 and an assessment rate of $0.21 per 25-pound container or 
container equivalent of peaches. 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 the 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 should allow the 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 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' Website 
at http://www.eatcaliforniafruit.com 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 committees' 2006-07 fiscal period 
budgets and those for subsequent fiscal periods 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 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 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 the producers in the industry could be defined as other than small 
entities. For the 2005 season, the committees' 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 increases the assessment rates established for the 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 and 
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 assessment rate of 
$0.21 is $0.01 higher than the 2005-06 rate. The PCC recommended 2006-
07 fiscal period expenditures of $4,988,914 for peaches and an 
assessment rate of $0.21 per 25-pound container or container equivalent

[[Page 51984]]

of peaches. The assessment rate of $0.21 is $0.01 higher than the 2005-
06 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, should be adequate to cover 
budgeted expenses and maintain the desired reserve.
    The major 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, $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, should be adequate to cover budgeted expenses and 
maintain the desired reserve.
    The major 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, $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 the NAC and PCC 
determined 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 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 27, 2006, meetings were public meetings and all 
entities of all sizes were able to express views on this issue.
    This rule imposes no additional reporting or recordkeeping 
requirements on either small or large California nectarine or peach 
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.
    The AMS is committed to complying with the E-Government Act, to 
promote the use of the Internet and other information technologies to 
provide increased opportunities for citizen access to Government 
information and services, and for other purposes.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this rule.
    A proposed rule concerning this action was published in the Federal 
Register on July 5, 2006 (71 FR 38115). Copies of the proposed rule 
were also mailed or sent via facsimile or E-mail 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 July 17, 2006, was provided for interested 
persons to respond to the proposal. One comment supporting the proposal 
was received. The commenter cited reduced crop yields and the need to 
fund pre-harvest expenses next year as justification for the assessment 
rate increases.
    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 committees 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 2006-
07 fiscal period began on March 1, 2006, 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 and unanimously recommended by the 
committees at

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public meetings 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 comment received has 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 continues 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, 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

0
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: August 28, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 06-7377 Filed 8-31-06; 8:45 am]
BILLING CODE 3410-02-P