[Federal Register Volume 76, Number 27 (Wednesday, February 9, 2011)]
[Proposed Rules]
[Pages 7119-7121]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-2875]


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 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. 76, No. 27 / Wednesday, February 9, 2011 / 
Proposed Rules  

[[Page 7119]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 925

[Doc. No. AMS-FV-10-0104; FV11-925-1 PR]


Grapes Grown in Designated Area of Southeastern California; 
Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule would increase the assessment rate established for 
the California Desert Grape Administrative Committee (Committee) for 
the 2011 and subsequent fiscal periods from $0.01 to $0.0125 per 18-
pound lug of grapes handled. The Committee locally administers the 
marketing order, which regulates the handling of grapes grown in a 
designated area of southeastern California. Assessments upon grape 
handlers are used by the Committee to fund reasonable and necessary 
expenses of the program. The fiscal period begins January 1 and ends 
December 31. The assessment rate would remain in effect indefinitely 
unless modified, suspended or terminated.

DATES: Comments must be received by March 11, 2011.

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 Internet: http://www.regulations.gov. 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.regulations.gov. All comments submitted in response to this rule 
will be included in the record and will be made available to the 
public. Please be advised that the identity of the individuals or 
entities submitting the comments will be made public on the Internet at 
the address provided above.

FOR FURTHER INFORMATION CONTACT: Jerry L. Simmons, 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 Antoinette Carter, Marketing Order 
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 
Independence, 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 
No. 925, as amended (7 CFR part 925), regulating the handling of grapes 
grown in a designated area of southeastern California, hereinafter 
referred to as the ``order.'' The order is 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 order now in effect, grape handlers 
in a designated area of southeastern California are subject to 
assessments. Funds to administer the order are derived from such 
assessments. It is intended that the assessment rate as proposed herein 
would be applicable to all assessable grapes beginning on January 1, 
2011, and continue until amended, suspended, or terminated.
    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 
Committee for the 2011 and subsequent fiscal periods from $0.01 to 
$0.0125 per 18-pound lug of grapes.
    The grape order provides 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 grapes grown in a designated 
area of southeastern California. They are familiar with the Committee's 
needs and with the costs for 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.
    For the 2009 and subsequent fiscal periods, the Committee 
recommended, and the USDA approved, an assessment rate 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 Committee met on October 21, 2010, and unanimously recommended 
2011 expenditures of $89,616 and an assessment rate of $0.0125 per 18-
pound lug of grapes handled. In comparison, last year's budgeted 
expenditures were $73,666. The proposed assessment rate of $0.0125 is 
$0.0025 higher than the rate currently in effect. The Committee 
recommended a higher assessment rate to offset the 2011 budget 
increases in research, general office expenses, management and 
compliance expenses, as well as a decreased crop estimate. The 
Committee estimated a decreased

[[Page 7120]]

2011 crop of 6,000,000 18-pound lugs of grapes handled, which is about 
604,951 18-pound lugs fewer than the 6,604,951 18-pound lugs handled 
during the 2010 fiscal period. Based on increases in expenses and a 
decreased crop estimate, the Committee unanimously recommended that the 
assessment rate of $0.01 currently in effect be increased by $0.0025. 
Income derived from handler assessments, along with funds from the 
Committee's authorized reserve, should be adequate to cover budgeted 
expenses.
    The major expenditures recommended by the Committee for the 2011 
fiscal period include $10,000 for research, $15,616 for general office 
expenses, and $64,000 for management and compliance expenses. The 
$10,000 research project is for a new vine study proposed by the 
University of California Riverside. In comparison, major expenditures 
for the 2010 fiscal period included no funds for research, $13,666 for 
general office expenses, and $60,000 management and compliance 
expenses.
    The assessment rate recommended by the Committee was derived by the 
following formula: Anticipated 2011 expenses ($89,616) plus the desired 
2011 ending reserve ($88,384), minus the 2011 beginning reserve 
($103,000), divided by the estimated 2011 shipments (6,000,000 18-pound 
lugs) equals $0.0125 per lug.
    Income generated through the $0.0125 assessment ($75,000) plus 
carry-in reserve funds ($103,000) should be sufficient to meet 
anticipated expenses ($89,616). Reserve funds by the end of 2011 are 
projected at $88,384 or about one fiscal period's expenses. Section 
925.41 of the order permits the Committee to maintain about one fiscal 
period's expenses in reserve.
    The proposed assessment rate would continue in effect indefinitely 
unless modified, suspended, or terminated by USDA upon recommendation 
and information submitted by the Committee or other available 
information.
    Although this assessment rate would be in effect for an indefinite 
period, the Committee 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 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 would evaluate the 
Committee recommendations and other available information to determine 
whether modification of the assessment rate is needed. Further 
rulemaking would be undertaken as necessary. The Committee's 2011 
budget 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) (5 U.S.C. 601-612), 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.
    There are approximately 14 handlers of southeastern California 
grapes who are subject to regulation under the order and about 50 grape 
producers in the production area. Small agricultural service firms are 
defined by the Small Business Administration (13 CFR 121.201) as those 
having annual receipts of less than $7,000,000, and small agricultural 
producers are defined as those whose annual receipts are less than 
$750,000. Nine of the 14 handlers subject to regulation have annual 
grape sales of less than $7 million. Based on data from the National 
Agricultural Statistics Service and the Committee, the crop value for 
the 2010 season was about $38,139,629. Dividing this figure by the 
number of producers (50) yields an average annual producer revenue 
estimate of about $762,793. However, according to the Committee, at 
least ten of 50 producers would be considered small businesses under 
the Small Business Administration threshold of $750,000. Based on the 
foregoing, it may be concluded that a majority of grape handlers and at 
least ten of the producers could be classified as small entities.
    This rule would increase the assessment rate established for the 
Committee and collected from handlers for the 2011 and subsequent 
fiscal periods from $0.01 to $0.0125 per 18-pound lug of grapes. The 
Committee unanimously recommended 2011 expenditures of $89,616 and an 
assessment rate of $0.0125 per 18-pound lug of grapes handled. The 
proposed assessment rate of $0.0125 is $0.0025 higher than the 2010 
rate currently in effect. The Committee recommended the higher 
assessment rate of $0.0125 to offset the 2011 budget increases in 
research, general office expenses, management and compliance expenses, 
and a decreased crop estimate. The number of assessable grapes is 
estimated at 6 million 18-pound lugs of grapes. Thus, income generated 
through the $0.0125 assessment ($75,000) plus reserve funds ($103,000) 
should be sufficient to meet anticipated expenses ($89,616). Reserve 
funds by the end of 2011 are projected at $88,384 or about one fiscal 
period's expenses.
    The major expenditures recommended by the Committee for the 2011 
fiscal period include $10,000 for research, $15,616 for general office 
expenses, and $64,000 for management and compliance expenses. The 
$10,000 research project is a for a new vine study proposed by the 
University of California Riverside. In comparison, major expenditures 
for the 2010 fiscal period included no funds for research, $13,666 for 
general office expenses, and $60,000 management and compliance 
expenses.
    The assessment rate recommended by the Committee was derived based 
on the Committee's estimates of the available beginning reserve 
($103,000), projected decreased crop size (6 million 18-pound lugs), 
anticipated assessment income ($75,000), anticipated expenses 
($89,616), and the ending 2011 reserve ($88,384).
    The Committee reviewed and unanimously recommended 2011 
expenditures of $89,616, which included increases in research, general 
office expenses, and management and compliance expenses. Prior to 
arriving at this budget, the Committee considered alternative 
expenditures and assessment rates, to include not increasing the $0.01 
assessment rate currently in effect. Based on a decreased 2011 estimate 
crop of 6 million 18-pound lugs, the Committee ultimately determined 
that increasing the assessment rate to $0.0125 combined with funds 
generated from the reserve would adequately cover increased expenses 
and provide an adequate 2011 ending reserve.
    A review of historical crop and price information, as well as 
preliminary information pertaining to the upcoming fiscal period 
indicates that the producer price for the 2011 season could average 
about $5.77 per 18-pound lug of grapes handled for California grapes. 
To calculate the percentage of grower revenue represented by the 
assessment rate for 2010, the assessment rate of $0.01 per 18-pound lug 
is divided by the estimated average grower price

[[Page 7121]]

($5.77 per 18-pound lug). NASS data for 2011 is not yet available. 
However, applying these same calculations above using the 2010 grower 
price would result in an estimated assessment revenue as a percentage 
of total grower revenue of 0.216 percent for the 2011 season ($0.0125 
divided by $5.77 per 18-pound lug). Thus, the assessment revenue should 
be well below the 1 percent of estimated grower revenue in 2011.
    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 by the operation of the order. 
In addition, the Committee's meeting was widely publicized throughout 
the grape production area and all interested persons were invited to 
attend and participate in Committee deliberations on all issues. Like 
all Committee meetings, the October 21, 2010, meeting was a public 
meeting and all entities, both large and small, were able to express 
views on this issue. Finally, interested persons are invited to submit 
comments on this proposed rule, including 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 California grape 
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.
    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 small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/MarketingOrdersSmallBusinessGuide. Any questions 
about the compliance guide should be sent to Antoinette Carter at the 
previously-mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposed rule. Thirty days is deemed appropriate 
because: (1) The 2011 fiscal period begins on January 1, 2011, and the 
order requires that the rate of assessment for each fiscal period apply 
to all assessable grapes handled during such fiscal period; (2) the 
Committee needs to have sufficient funds to pay its expenses, which are 
incurred on a continuous basis; and (3) handlers are aware of this 
action, which was unanimously recommended by the Committee at a public 
meeting and is similar to other assessment rate actions issued in past 
years.

List of Subjects in 7 CFR Part 925

    Grapes, Marketing agreements, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 7 CFR part 925 is 
proposed to be amended as follows:

PART 925--GRAPES GROWN IN A DESIGNATED AREA OF SOUTHEASTERN 
CALIFORNIA

    1. The authority citation for 7 CFR part 925 continues to read as 
follows:

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

    2. Section 925.215 is revised to read as follows:


Sec.  925.215  Assessment rate.

    On or after January 1, 2011, an assessment rate of $0.0125 per 18-
pound lug is established for grapes grown in a designated area of 
southeastern California.

    Dated: February 3, 2011.
David R. Ship,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2011-2875 Filed 2-8-11; 8:45 am]
BILLING CODE 3410-02-P