[Federal Register Volume 77, Number 127 (Monday, July 2, 2012)]
[Proposed Rules]
[Pages 39184-39186]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-16064]


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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. 77, No. 127 / Monday, July 2, 2012 / Proposed 
Rules  

[[Page 39184]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 925

[Doc. No. AMS-FV-11-0090; FV12-925-1 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 2012 and subsequent fiscal periods from $0.0125 to $0.0150 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 August 1, 2012.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent to the Docket Clerk, 
Marketing Orders Agreements Division, 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: Kathie M. Notoro, Marketing 
Specialist, or Kurt J. Kimmel, Regional Manager, California Marketing 
Field Office, Marketing Orders and Agreements Division, Fruit and 
Vegetable Programs, AMS, USDA; Telephone: (559) 487-5901, Fax: (559) 
487-5906, or Email: [email protected] or 
[email protected].
    Small businesses may request information on complying with this 
regulation by contacting Laurel May, Marketing Orders and Agreements 
Division, 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 Email: [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, 
2012, 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 2012 and subsequent fiscal periods from $0.0125 to 
$0.0150 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 2011 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 November 3, 2011, and unanimously recommended 
2012 expenditures of $95,500 and an assessment rate of $0.0150 per 18-
pound lug of grapes handled. In comparison, last year's budgeted 
expenditures were $89,616. The assessment rate of $0.0150 per 18-pound 
lug of grapes handled recommended by the Committee is $0.0025 higher 
than the $0.0125 rate currently in effect. The higher assessment rate 
is necessary to cover the Committee's budgeted expenses which include 
an increase in research and general office expenses. While the

[[Page 39185]]

Committee's crop estimate of 5.8 million 18-pound lugs is higher than 
the 5.4 million 18-pound lugs handled last year, the higher assessment 
rate would generate $87,000 of revenue. This revenue plus the operating 
reserve would be sufficient to cover the increase in anticipated 
expenses.
    The major expenditures recommended by the Committee for the 2012 
fiscal period include $15,500 for research, $17,500 for general office 
expenses, and $62,500 for management and compliance expenses. The 
$15,500 research project is a for a new vine study proposed by the 
University of California Riverside. In comparison, major expenditures 
for the 2011 fiscal period included $10,000 for research, $15,616 for 
general office expenses, and $64,000 management and compliance 
expenses.
    The assessment rate recommended by the Committee was derived by the 
following formula: Anticipated 2012 expenses ($95,500) plus the desired 
2012 ending reserve ($70,000), minus the 2012 beginning reserve 
($78,500), divided by the estimated 2012 shipments (5.8 million 18-
pound lugs) equals $0.0150 per lug.
    Income generated through the $0.0150 assessment ($87,000) plus 
carry-in reserve funds ($78,500) should be sufficient to meet 
anticipated expenses ($95,500). Reserve funds by the end of 2012 are 
projected at $70,000 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 2012 
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 13 handlers of southeastern California 
grapes who are subject to regulation under the order and about 41 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 13 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 2011 season was about $46,574,000. Dividing this figure by the 
number of producers (41) yields an average annual producer revenue 
estimate of about $1,135,951. However, according to the Committee, at 
least ten of 41 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 2012 and subsequent 
fiscal periods from $0.0125 to $0.0150 per 18-pound lug of grapes. The 
Committee unanimously recommended 2012 expenditures of $95,500 and an 
assessment rate of $0.0150 per 18-pound lug of grapes handled. The 
proposed assessment rate of $0.0150 is $0.0025 higher than the 2011 
rate currently in effect. The higher assessment rate is necessary to 
cover the Committee's budgeted expenses, including increases in 
research and general office expenses. While the Committee's crop 
estimate of 5.8 million 18-pound lugs is higher than the 5.4 million 
18-pound lugs handled last year, the higher assessment rate would 
generate $87,000 of revenue. This revenue plus the operating reserve 
would be sufficient to cover the increase in anticipated expenses. 
Reserve funds by the end of 2012 are projected at $70,000 or about one 
fiscal period's expenses.
    The major expenditures recommended by the Committee for the 2012 
fiscal period include $15,500 for research, $17,500 for general office 
expenses, and $62,500 for management and compliance expenses. The 
$15,500 research project is for a new vine study proposed by the 
University of California Riverside. In comparison, major expenditures 
for the 2011 fiscal period included $10,000 for research, $15,616 for 
general office expenses, and $64,000 management and compliance 
expenses.
    The assessment rate recommended by the Committee was derived by the 
following formula: Anticipated 2012 expenses ($95,500) plus the desired 
2012 ending reserve ($70,000), minus the 2012 beginning reserve 
($78,500), divided by the estimated 2012 shipments (5.8 million 18-
pound lugs) equals $0.0150 per lug.
    The Committee reviewed and unanimously recommended 2012 
expenditures of $95,500 which included increases in research and 
general office expenses. Prior to arriving at this budget, the 
Committee considered alternative expenditures and assessment rates, to 
include not increasing the $0.0125 assessment rate currently in effect. 
Based on a crop estimate of 5.8 million 18-pound lugs, the Committee 
ultimately determined that increasing the assessment rate to $0.0150 
combined with funds generated from the reserve would adequately cover 
increased expenses and provide an adequate 2012 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 2012 season could average 
about $8.03 per 18-pound lug of grapes handled for California grapes. 
To calculate the percentage of producer revenue represented by the 
assessment rate for 2011, the assessment rate of $0.0125 per 18-pound 
lug is divided by the estimated average producer price of $8.03 per 18-
pound lug. NASS data for 2012 is not yet available. However, applying 
these same calculations above using the 2011 producer price would 
result in an estimated assessment revenue as a percentage of total 
producer revenue of 0.187 percent for

[[Page 39186]]

the 2012 season ($0.0150 divided by $8.03 per 18-pound lug). Thus, the 
assessment revenue should be well below the 1 percent of estimated 
producer revenue in 2012.
    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 November 3, 2011, 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.
    In accordance with the Paperwork Reduction Act of 1995, (44 U.S.C. 
Chapter 35), the order's information collection requirements have been 
previously approved by the Office of Management and Budget (OMB) and 
assigned OMB No. 0581-0189. No changes in those requirements as a 
result of this action are necessary. Should any changes become 
necessary, they would be submitted to OMB for approval.
    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: 
www.ams.usda.gov/MarketingOrdersSmallBusinessGuide. Any questions about 
the compliance guide should be sent to Laurel May 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 2012 fiscal period begins on January 1, 2012, 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, 2012, an assessment rate of $0.0150 per 18-
pound lug is established for grapes grown in a designated area of 
southeastern California.

    Dated: June 26, 2012.
David R. Shipman,
Administrator, Agricultural Marketing Service.
[FR Doc. 2012-16064 Filed 6-29-12; 8:45 am]
BILLING CODE 3410-02-P