[Federal Register Volume 72, Number 60 (Thursday, March 29, 2007)]
[Proposed Rules]
[Pages 14710-14712]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-5789]



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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 916 and 917

[Docket No. AMS-FV-07-0012; FV07-916/917-3 PR]


Late Payment and Interest Charges on Past Due Assessments Under 
the Nectarine and Peach Marketing Orders

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule invites comments concerning the collection of 
assessments owed under the nectarine and peach marketing orders. The 
marketing orders regulate the handling of nectarines and peaches grown 
in California and are administered locally by the Nectarine 
Administrative Committee and the Peach Commodity Committee 
(committees). This rule would implement authorities contained in the 
marketing order to allow the committees to apply late payment and 
interest charges on past due assessments owed the committees by 
handlers.

DATES: Comments must be received by April 13, 2007.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. 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 Internet: http://www.regulations.gov. All comments should reference the docket number 
and the date and page number of this issue of the Federal Register and 
will be made available for public inspection in the Office of the 
Docket Clerk during regular business hours, or can be viewed at: http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Jennifer Garcia, 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, 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 proposal 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 proposal has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to have retroactive effect. 
This proposal 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 proposal invites comments on establishing regulations that 
would allow the committees to apply late payment and interest charges 
on past due assessments owed the committees by handlers. This proposal 
was unanimously recommended by the committees at meetings on November 
30, 2006.
    Sections 916.41 and 917.37 of the orders provide authority for the 
committees to assess handlers of California nectarines and peaches, 
respectively, to fund authorized activities such as research and 
promotion programs. Paragraph (b) of these sections was amended on July 
21, 2006 (71 FR 41345), to authorize the committees, with the approval 
of the Secretary, to apply late payment charges, interest charges, or 
both on past due assessments.
    At meetings on November 30, 2006, the committees recommended 
establishing rules and regulations to implement these authorities 
regarding late payment and interest charges. Although the majority of 
handlers remit their assessments in a timely manner, there are some 
handlers who do not. Implementing late payment and interest charges 
would provide an incentive for handlers to pay assessments in a timely 
manner and would remove any financial advantage for those who do not 
pay on time.
    Specifically, the committees recommended that a late payment charge 
be applied to any assessment that has not been received in the 
committees' office, or the envelope containing the payment legibly 
postmarked by the U.S. Postal Service, within 60 days of the invoice 
date shown on the handler's assessment statement. The committees 
recommended a late payment charge of 10 percent of the unpaid balance. 
In addition, interest would be applied to the unpaid balance and late 
payment charge for the number of days the payment is delinquent beyond 
60 days.
    The committees recommended that interest be applied at the current 
commercial prime rate charged by the committees' bank plus 2 percent 
beginning on the day the assessment becomes delinquent. However, USDA 
determined that a set interest rate of 1.5 percent per month is typical 
of comparable marketing order programs, and the proposal has been 
revised. Accordingly, new Sec. Sec.  916.141 and 917.137 specifying 
implementation of the 10 percent late charge and 1.5 percent per month 
interest rate would be added to the rules and regulations of the 
nectarine and peach orders, respectively.

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 action 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 rules issued thereunder, are unique in that 
they are brought about through group action of essentially

[[Page 14711]]

small entities acting on their own behalf. Thus, both statutes have 
small entity orientation and compatibility.
    There are approximately 175 California nectarine and peach handlers 
subject to regulation under the orders covering nectarines and peaches 
grown in California, and about 676 producers of these fruits in 
California. Small agricultural service firms, which include handlers, 
are defined by the Small Business Administration (SBA) (13 CFR 121.201) 
as those whose annual receipts are less than $6,500,000. Small 
agricultural producers are defined by the SBA 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 2006 season, the committees' staff estimated that the 
average handler price received was $9.00 per container or container 
equivalent of nectarines or peaches. A handler would have to ship at 
least 722,223 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 2006 season, the committees' staff 
estimates that small handlers represent approximately 85 percent of all 
the handlers within the industry.
    The committees' staff has also estimated that fewer than 68 
producers in the industry could be defined as other than small 
entities. For the 2006 season, the committees' staff estimated the 
average producer price received was $4.50 per container or container 
equivalent for nectarines and peaches. A producer would have to produce 
at least 166,667 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 2006 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 $4.50 per container or container 
equivalent, and a combined packout of nectarines and peaches of 
36,388,996 containers, the value of the 2006 packout is estimated to be 
$163,750,482. Dividing this total estimated grower revenue figure by 
the estimated number of producers (676) yields an estimate of average 
revenue per producer of about $242,234 from the sales of peaches and 
nectarines.
    This proposed rule would add new Sec. Sec.  916.141 and 917.137 to 
the orders' rules and regulations, whereby late payment and interest 
charges on delinquent assessment payments would be implemented under 
the orders. Specifically, handlers not remitting their assessment 
payments within 60 days of the invoice date would be subject to a 10 
percent late payment penalty and interest charges accruing at a rate of 
1.5 percent per month. The late payment and interest charges would 
serve as an incentive for handlers to remit assessment payments when 
due to avoid paying an increased amount to the committees. This action 
is expected to facilitate program operations. Authority for this action 
is provided in paragraph (b) of Sec. Sec.  916.41 and 917.37 of the 
orders.
    This action would apply late payment and interest charges to 
assessments not paid within 60 days of the invoice date. Only handlers 
who are late in paying their assessments owed the committees would be 
impacted. For example, a delinquent invoice with late payment and 
interest charges applied would be calculated in the following manner: 
If a handler failed to pay an invoice for $5,000 within 60 days of the 
July 1, 2007, invoice date, a 10 percent late payment charge ($500) 
would be applied to the unpaid balance. In addition, interest charges 
at a rate of 1.5 percent per month would be added to the assessments 
owed and the accrued late payment charge. The 1.5 percent per month 
rate computes to an annual rate of 18 percent. This must be divided by 
365 days to obtain the daily rate. This same July 1, 2007, invoice 
would be 62 days delinquent as of September 1, 2007, bringing the 
interest charges to $168.16 ($5,500 x .18 / 365 x 62). Thus, the total 
assessment due, including late payment and interest charges, would be 
$5,668.16 as of September 1, 2007.
    The committees discussed alternatives to this change, including not 
implementing late payment and interest charges at all. While only a 
small number of handlers fail to make assessments payments when due, 
the committees believe that a lack of action only compounds the 
problem. The committees considered applying late payment and interest 
charges at a lower rate but believe that a higher rate would be more 
likely to encourage compliance with the orders' assessment 
requirements. The joint executive committee discussed the issue and 
recommended the 10 percent late payment and prime plus 2 percent 
interest charges that the committee members unanimously approved and 
recommended to USDA.
    However, as previously mentioned, USDA has determined that a set 
interest rate of 1.5 percent per month is typical of comparable 
marketing order programs, and the proposal has been revised.
    This proposed rule would not impose any additional reporting or 
recordkeeping requirements on either small or large nectarine and 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.
    In addition, USDA has not identified any relevant Federal rules 
that duplicate, overlap or conflict with this rule.
    Further, the subcommittee and 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 November 30, 2006, meetings were public 
meetings and all entities of all sizes were invited 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.
    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 15-day comment period is provided to allow interested persons to 
respond to this proposal. Fifteen days is deemed appropriate because 
this rule would need to be in place as soon as possible, since the 
season begins on April 1. All written comments timely received will be 
considered before a final determination is made 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.

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    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. Add Sec.  916.141 to read as follows:


Sec.  916.141  Delinquent assessments.

    (a) The Nectarine Administrative Committee shall impose a late 
payment charge on any assessment that has not been received in the 
Nectarine Administrative Committee's office, or legibly postmarked by 
the U.S. Postal Service, within 60 days of the invoice date shown on 
the handler's assessment statement. The late payment charge shall be 10 
percent of the unpaid balance.
    (b) In addition to that specified in paragraph (a) of this section, 
the Nectarine Administrative Committee shall impose an interest charge 
on any assessment payment that has not been received in the committee's 
office, or legibly postmarked by the U.S. Postal Service, within 60-
days of the invoice date. The interest charge shall be 1.5 percent per 
month and shall be applied to the unpaid balance and late payment 
charge for the number of days all or any part of the assessment 
specified in the handler's assessment statement is delinquent beyond 
the 60-day payment period.

PART 917--PEACHES GROWN IN CALIFORNIA

    3. Add Sec.  917.137 to read as follows:


Sec.  917.137  Delinquent assessments.

    (a) The Peach Commodity Committee shall impose a late payment 
charge on any assessment that has not been received in the Peach 
Commodity Committee's office, or legibly postmarked by the U.S. Postal 
Service, within 60 days of the invoice date shown on the handler's 
assessment statement. The late payment charge shall be 10 percent of 
the unpaid balance.
    (b) In addition to that specified in paragraph (a) of this section, 
the Peach Commodity Committee shall impose an interest charge on any 
assessment payment that has not been received in the Peach Commodity 
Committee's office, or legibly postmarked by the U.S. Postal Service, 
within 60 days of the invoice date. The interest charge shall be 1.5 
percent per month and shall be applied to the unpaid balance and late 
payment charge for the number of days all or any part of the assessment 
specified in the handler's assessment statement is delinquent beyond 
the 60-day payment period.

    Dated: March 23, 2007.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
 [FR Doc. E7-5789 Filed 3-28-07; 8:45 am]
BILLING CODE 3410-02-P