[Federal Register Volume 82, Number 103 (Wednesday, May 31, 2017)]
[Proposed Rules]
[Pages 24882-24897]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-09242]


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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. 82, No. 103 / Wednesday, May 31, 2017 / 
Proposed Rules  

[[Page 24882]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 989

[Doc. No. AO-FV-16-0016; AMS-SC-16-0011; SC16-989-1]


Raisins Produced From Grapes Grown in California; Recommended 
Decision and Opportunity To File Written Exceptions to Proposed 
Amendment of Marketing Order No. 989

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule and opportunity to file exceptions.

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SUMMARY: This recommended decision proposes amendments to Marketing 
Order No. 989 (order), which regulates the handling of raisins grown in 
California. Five amendments are proposed by the Raisin Administrative 
Committee (RAC or Committee), which is responsible for local 
administration of the order. These proposed amendments would: Authorize 
production research; establish new nomination procedures for 
independent producer member and alternate member seats; add authority 
to regulate quality; add authority to establish different regulations 
for different markets; and add a continuance referenda requirement.
    In addition, the Agricultural Marketing Service (AMS) proposed two 
amendments. These amendments would remove order language pertaining to 
volume regulation and reserve pool authority and would establish term 
limits for Committee members. In addition, AMS proposed to make any 
such changes as may be necessary to the order to conform to any 
amendment that may result from the hearing. These proposed amendments 
are intended to update the order to reflect changes in the industry and 
potential future changes, and to improve the operation and 
administration of the order.

DATES: Written exceptions must be filed by June 30, 2017.

ADDRESSES: Written exceptions should be filed with the Hearing Clerk, 
U.S. Department of Agriculture, Room 1031-S, Washington, DC 20250-9200; 
Fax: (202) 720-9776 or via the internet at http://www.regulations.gov. 
All comments should reference the docket number and the date and page 
number of this issue of the Federal Register. Comments will be made 
available for public inspection in the Office of the Hearing Clerk 
during regular business hours or can be viewed at: http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Melissa Schmaedick, Marketing Order 
and Agreement Division, Specialty Crops Program, AMS, USDA, Post Office 
Box 952, Moab, UT 84532; Telephone: (202) 557-4783, Fax: (435) 259-
1502, or Michelle Sharrow, Marketing Order and Agreement Division, 
Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW., Stop 
0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, Fax: (202) 
720-8938, or Email: [email protected] or 
[email protected].
    Small businesses may request information on this proceeding by 
contacting Richard Lower, Marketing Order and Agreement Division, 
Specialty Crops Program, 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: Prior documents in this proceeding: Notice 
of Hearing issued on April 14, 2016, and published in the April 22, 
2016 issue of the Federal Register (81 FR 23650).
    This action is governed by the provisions of sections 556 and 557 
of title 5 of the United States Code and is therefore excluded from the 
requirements of Executive Orders 12866, 13563, and 13175.

Preliminary Statement

    Notice is hereby given of the filing with the Hearing Clerk of this 
recommended decision with respect to the proposed amendments to 
Marketing Order 989 regulating the handling of raisins grown in 
California and the opportunity to file written exceptions thereto. 
Copies of this decision can be obtained from Melissa Schmaedick, whose 
address is listed above.
    This recommended decision is issued pursuant to the provisions of 
the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 
601-674), hereinafter referred to as the ``Act,'' and the applicable 
rules of practice and procedure governing the formulation of marketing 
agreements and orders (7 CFR part 900).
    The proposed amendments are based on the record of a public hearing 
held on May 3 and 4, 2016, in Clovis, California. Notice of this 
hearing was published in the Federal Register on April 22, 2016 (81 FR 
23650). The notice of hearing contained five proposals submitted by the 
Committee and three proposals by USDA.
    The Committee's proposed amendments were recommended by the 
Committee on January 27, 2016, and were submitted to USDA on February 
2, 2016. USDA made a determination to schedule this matter for hearing.
    The Committee's proposed amendments to the order would: (1) 
Authorize production research; (2) establish new nomination procedures 
for independent producer member and alternate member seats; (3) add 
authority to regulate quality; (4) add authority to establish different 
regulations for different markets; and (5) add a continuance referenda 
requirement.
    The Department of Agriculture (USDA) also proposed two amendments 
to: (1) Remove order language pertaining to volume regulation and 
reserve pool authority, and (2) establish term limits for Committee 
members. In addition, USDA proposed to make any such changes as may be 
necessary to the order to conform to any amendment that may be adopted, 
or to correct minor inconsistencies and typographical errors.
    Fourteen industry witnesses testified at the hearing. The witnesses 
represented raisin producers and handlers in the production area, as 
well as the Committee, and they all supported the proposed amendments, 
with the exception of one industry witness who did not support the 
proposal for continuance referenda. All industry witnesses, however, 
were opposed to USDA's proposal to require term limits for Committee 
membership.
    Witnesses offered testimony supporting the recommendation to 
authorize production research.

[[Page 24883]]

According to testimony, production research has historically been 
conducted by the California Raisin Marketing Board (CRMB). However, due 
to ongoing legal challenges to that program, the program's research 
activities have been suspended. Witnesses stated that adding research 
authority to the Federal marketing order would enable the industry to 
continue research while CRMB research is suspended. In the event that 
the CRMB were to cease to exist, the industry would be able to maintain 
research continuity under the Federal program.
    Witnesses testified in support of revising the RAC nomination 
process for independent producer members and independent producer 
alternate members so that each would be held separately. Witnesses 
stated that the current process, which combines nominations for members 
and alternates, and allots seats based on votes received to fill member 
seats first, results in multiple independent producer alternate member 
seat vacancies.
    Allowing for separate nominations for members and alternates would, 
according to witnesses, encourage participation by those who wish to 
serve in only one capacity and not the other. This process would allow 
individuals who only want to serve as alternates to no longer risk 
being seated as a member if they received high vote counts, as they 
would have previously. Witnesses believe that this proposal would 
increase participation of independent producers in the RAC as fewer 
vacancies would occur with separate nominations for members and 
alternates.
    Witnesses favored two proposals that would add authority to the 
order to regulate quality and to allow the establishment of different 
regulations for different markets. Witnesses explained that ``quality'' 
is mentioned in several sections of the order. However, the authority 
to regulate quality does not currently exist. The proposal to add this 
authority would support the order's current language. Witnesses also 
stated that quality authority could be used to establish future 
regulation to address quality issues not traditionally captured in 
grade and size regulation, such as the reduction of contaminants, 
including Ochratoxin. Witnesses indicated that this authority could 
also assist the industry in complying with the Food and Drug 
Administration's (FDA) food safety guidelines under the Food Safety 
Modernization Act of 2011 (FSMA).
    The proposal to add authority to establish different regulations 
for different markets was supported by witnesses who spoke to the need 
to tailor product to the differing demands of foreign consumers. 
Witnesses explained that this would help their products to be more 
competitive against foreign producers in those markets. Furthermore, 
witnesses indicated that this authority would allow future quality 
regulations to fit the demand profile of individual markets.
    The proposal to require continuance referenda was supported by 
witnesses who valued the opportunity to voice their support or 
displeasure with the order on a periodic basis. While all but one 
witness testified in support of this proposal, there were differing 
positions taken on the timing of such referenda. The one witness who 
testified against the proposal stated that he would have been in favor 
of a ``discontinuance'' referendum requirement. By ``discontinuance'', 
the witness explained that a two-thirds majority of voters voting would 
need to favor discontinuance in order for the program to no longer 
exist.
    Nonetheless, the majority of witnesses favored an initial 
continuance referendum no sooner than five years and no later than six 
years from implementation of the amendment and that subsequent 
referenda be conducted every six years.
    At the conclusion of the hearing, the Administrative Law Judge 
established a deadline of July 21, 2016, for the submission of 
corrections to the transcript, and September 9, 2016, as a deadline for 
interested persons to file proposed findings and conclusions or written 
arguments and briefs based on the evidence received at the hearing.
    One brief was filed. The brief identified a correction that had 
been overlooked and not included in the transcript corrections due July 
21, 2016. This correction has been taken into consideration in the 
development of this recommended decision.

Material Issues

    The material issues presented on the record of hearing are as 
follows:
    1. Whether to amend Sec.  989.53 to authorize production research.
    2. Whether to amend Sec. Sec.  989.29 and 989.129 to authorize 
separate nominations for independent producer member and independent 
producer alternate member seats.
    3. Whether to amend Sec. Sec.  989.58, 989.59 and 989.61 to add 
authority to regulate quality, and whether to revise the heading prior 
to Sec.  989.58 to include quality.
    4. Whether to amend Sec.  989.59 to add authority to establish 
different regulations for different markets.
    5. Whether to amend Sec.  989.91 to require continuance referenda.
    6. Whether to amend the order to remove volume regulation and 
reserve pool authority. This would include: Removing Sec. Sec.  989.55 
and 989.56, Sec. Sec.  989.65 through 989.67, Sec. Sec.  989.71, 
989.72, 989.82, 989.154, 989.156, 989.166, 989.167, 989.221, 989.257 
and 989.401; revising Sec. Sec.  989.11, 989.53, 989.54, 989.58, 
989.59, 989.60, 989.73, 989.79, 989.80, 989.84, 989.158, 989.173 and 
989.210; and redesignating Sec.  989.70 as Sec.  989.96. In addition, 
whether corresponding changes should be made to the following headings: 
``Volume Regulation'' prior to Sec. Sec.  989.65; ``Volume Regulation'' 
prior to Sec.  989.166; and ``Subpart--Schedule of Payments'' prior to 
Sec.  989.401.
    7. Whether to amend Sec.  989.28 to establish term limits.
    8. Whether any conforming changes need to be made as a result of 
the above proposed amendments. Conforming changes may also include non-
substantive, typographical errors.

Findings and Conclusions

    The following findings and conclusions on the material issues are 
based on evidence presented at the hearing and the record thereof.

Material Issue Number 1--Production Research

    Section 989.53, Research and development, should be amended to 
provide the Committee with the authority to conduct production 
research. This authority would only be used by the Committee in the 
event that the California Raisin Marketing Board (CRMB), which oversees 
the state marketing program which currently conducts industry research, 
ceases to exist or is no longer financially able to fund the work.
    The CRMB is currently the designated funding source for industry-
wide production research, referred to as ``crop production research'' 
under the state program. According to witnesses, research under the 
CRMB was suspended approximately three years ago pending the results of 
ongoing litigation. As a result, important research is not being 
conducted.
    Witnesses were also concerned that the CRMB referendum requirement, 
which requires the industry to indicate its support for continuance of 
the program every five years, may cause the CRMB to cease to exist. If 
that were to occur, there would be no funding program available to the 
industry unless

[[Page 24884]]

the proposed amendment to provide such authority under the order were 
successful.
    Witnesses in support of this amendment stated that a collective 
effort was necessary in order for the industry to address the ongoing 
challenges that producers and handlers cannot financially support on 
their own. Challenges needing production research generally include: 
Pests, water issues related to drought, new varietal development, and 
crop production.
    Witnesses familiar with immediate research needs of the industry 
indicated the necessity for: Improved raisin grapes for mechanical 
harvest, including types resistant to powdery mildew; nematode-
resistant rootstocks; early ripening varieties; and control of pests, 
including vine mealybug. These witnesses also explained that future 
research could potentially impact producers in a multitude of positive 
ways, ``such as reduced pesticide usage or possibly safer and more 
economical products.''
    A witness also stated that ``Also, in regards to labor, if a viable 
new variety were discovered with the potential to be harvested with 
fewer laborers needed, it would help all producers farm the crop more 
economically and also keep the price of raisins competitive in the 
marketplace.''
    Witnesses explained that if this proposal were implemented, the 
transition from CRMB to RAC of oversight of research under the order 
would not be difficult.
    According to the record, many of the CRMB Research Committee board 
members also serve on the current Raisin Administrative Committee, and 
they are familiar with the procedures for requests, budgets and 
implementation of research projects. The RAC would establish a budget 
for research and the USDA would have oversight. If the assessment rate 
needed to be increased to cover the costs, a new rate would be 
recommended by the RAC and submitted to USDA for approval, as well as 
public comment, prior to implementation.
    Representatives of the CRMB testifying at the hearing stated that 
on April 14, 2016, the CRMB voted and unanimously passed a resolution 
supporting this proposal. Through testimony and the content of the CRMB 
resolution, witnesses clearly stated that, in the absence of the CRMB's 
ability to support research or if the organization ceases to exist, 
research should be authorized to be conducted under the federal 
marketing order. If the CRMB is able to conduct research in the future, 
production research under the order would be not implemented. 
Therefore, only one or the other organization would be collecting funds 
and overseeing research at any given time.
    No testimony opposing the proposed amendment was given at the 
hearing. For the reasons stated above, it is recommended that Sec.  
989.53 be amended to authorize production research as proposed.

Material Issue Number 2--Independent Producer Nominations

    Section 989.29, Initial members and nomination of successor 
members, and Sec.  989.129, Voting at nominations meetings, should be 
amended to authorize separate nominations for independent producer 
member and independent producer alternate member seats.
    According to the record, there have been extensive vacancies in the 
seats allocated to independent producer alternate members on the RAC 
for the past five two-year terms. Out of the total 15 to 16 independent 
producer alternate member seats available, there have been 12, 13, 14, 
14 and 11 vacancies for the 2006-2008, 2008-2010, 2010-2012, 2012-2014 
and 2014-2016 two-year terms, respectively.
    While the independent producer member seats have been, for the most 
part, filled during the same five terms, the lack of independent 
producer alternate members results in less than full participation of 
the independent producer community. Alternate member seats allow for 
representation at a meeting when the member is not able to attend. 
Similarly, service as an alternate member provides exposure to the 
workings of the order and training for alternates to be able to serve 
as full members in future terms.
    According to witnesses, full representation would give independent 
producers full participation in the RAC's administrative decisions and 
program direction. In an effort to encourage increased participation, 
the RAC proposes that allowing separate nominations for members and 
alternate member seats would encourage participation by those who wish 
to serve in a specific seat only.
    Witnesses explained that raisin producers are largely divided into 
three groups: Members of Sun-Maid, members of the Raisin Bargaining 
Association (RBA), and independents.
    Sun-Maid is a marketing-processing cooperative. Their membership is 
made up of those producers that have a membership in the organization. 
Sun-Maid producers typically deliver all of their crop to the 
cooperative. On some occasions, the cooperative may also buy raisins 
from independent producers and the RBA. The RBA serves its members by 
negotiating raisin prices for its members.
    Independent producers choose not to be members of either Sun-Maid 
or the RBA. Independent producers typically sell their product to Sun-
Maid or independent packers. However, some independent producers are 
members of Fresno Co-op, a small marketing cooperative representing one 
to two percent of the industry.
    According to the record, Sun-Maid producer members represent 
roughly 28 percent of industry production, with the RBA membership 
representing approximately 26 percent of industry production. The 
balance, or roughly 46 percent of the industry, is represented by 
independent producers.
    Out of the RAC's 47-seat Committee, 35 seats are allocated to 
producer representatives, as stipulated in Sec.  989.26 of the order. 
For the 2014-2016 term, producer representation is allocated such that 
independent producers represent 16 votes (or roughly 46 percent of the 
RAC calculated by dividing 16 by 35), Sun-Maid represents 10 votes 
(roughly 28 percent of the RAC), and the RBA represents 9 votes 
(roughly 26 percent of the RAC).
    Currently, independent producer nominations are held in three 
districts. Districts One and Two, which represent all counties north 
and south of Fresno County, respectively, have one member and one 
alternate each for the 2014-2016 term. The largest district, Fresno 
County, for the 2014-2016 term, has 13 member and 13 alternate member 
seats.
    According to the record, nominees are identified at district 
nomination meetings, which are widely advertised by the RAC through 
direct-mailings, newspaper advertisements, and placement on the 
program's Web site. Names collected at the nomination meetings are 
placed on a ballot. An example given by one witness indicated that, for 
District Three, if 13 seats for independent producer members and 13 
seats for independent producer alternate members are available, the RAC 
would hope to receive at least 26 different nominees to fill all 
positions.
    Ballots are then mailed to all independent producers who vote 
within their own district according to where their farm is located. 
When tabulating the votes according to Sec.  989.29(2)(ii), the 
individual receiving the highest number of votes is designated as the 
first independent producer member nominee. The producer receiving the 
second highest number of votes is designated as the second independent 
producer member nominee. This tabulation process continues until all 13

[[Page 24885]]

of the independent producer member seats are nominated. The individual 
receiving the 14th highest number of votes is designated as an 
alternate member nominee, with this process being followed until all 
nominees for all independent producer member and alternate positions 
have been nominated. In other words, the top 13 who receive the most 
votes will be nominated to hold a member position, and the remaining 
would be nominated to hold alternate member positions.
    However, witnesses explained that, in most cases, there are too few 
nominees to fill both independent producer member and independent 
producer alternate member seats. If 20 names are on the one ballot, 
with only 13 member seats available, the independent producer would 
vote for no more than 13 names to fill the 13 member seats. Of the 
remaining candidates, seven would hold alternate member positions, and 
six alternate member seats would be left vacant. One witness offered 
another example of a past nomination meeting where 14 independent 
producer member seats, along with their corresponding alternate member 
seats, were available to be filled. A total of five people attended 
that meeting. Therefore, there were only five individuals willing to 
fill 28 independent producer seats.
    Witnesses speaking to the issue of low independent producer 
participation speculated that uncertainty over whether one would be 
nominated as a full member rather than an alternate member was 
preventing many from agreeing to be candidates. Similarly, there is a 
reluctance among independent producers to nominate other independent 
producers with limited time to attend regular RAC meetings. Witnesses 
indicated that the time commitment for a three- or four-hour meeting 
once a month as a full member was too big of a commitment for a 
producer who spends long days tending to his or her ranch. However, 
those individuals would be more inclined to serve as alternates because 
the commitment would be on an as-needed basis when required to serve in 
the place of an absent member.
    Witnesses explained that the proposal to allow for separate 
nomination processes for independent producer member and independent 
producer alternate members is designed to eliminate the risk of being 
nominated to a member seat to those individuals interested in serving 
only as an alternate. Witnesses indicated that this proposal would 
increase participation of independent producers on the RAC.
    According to the record, if the proposed amendment passes, instead 
of a single ballot for all nominations as is currently done, there 
would be two separate ballots: one for members and one for alternate 
members. As is currently the practice, a meeting would be held by the 
RAC for the purpose of receiving nominations; if the proposed amendment 
passes, those nominations would be submitted separately for members and 
alternates.
    Ballot mailing and tabulation of results would follow the current 
practice, described above, with the individual receiving the highest 
number of independent producer member votes becoming the first 
independent producer nominee, and so on, until all independent producer 
member seats are assigned a nominee. The same process would be used for 
identifying the individuals assigned as nominees to fill the 
independent producer member alternate seats.
    USDA would oversee the nomination process, review background and 
acceptance statements and ultimately select and appoint the members. 
The timing of the nominations would not change, and there would be no 
anticipated additional costs in the administration of the nomination 
process.
    Witnesses explained that this proposal, if implemented, would 
positively impact the California raisin industry, indicating that it 
would result in a fuller representation of those impacted by the 
program. Full representation would give the independent producers the 
fullest potential of their voice in the RAC decision-making process. 
Representation of small, independent producer businesses on the RAC 
could also increase, thereby supporting small business interests.
    Additionally, witnesses indicated that increased participation of 
independent producers serving as alternate producer members could be 
viewed as a training opportunity for future generations of RAC members. 
Serving as alternates would allow these individuals to become familiar 
with the administrative functioning of the order. One witness indicated 
the desire to nominate individuals who are new to the industry or 
generational members who are assuming responsibility for their family 
farm. The witness described these individuals as the future of the 
industry.
    No testimony opposing the proposed amendment was presented at the 
hearing. For the reasons stated above, it is recommended that Sec.  
989.29, Initial members and nomination of successor members, and Sec.  
989.129, Voting at nominations meetings, be amended to authorize 
separate nominations for independent producer member and independent 
producer alternate member seats as proposed.

Material Issue Number 3--Authority To Regulate Quality

    Sections 989.58, 989.59 and 989.61 (``Natural condition raisins,'' 
``Regulation of the handling of raisins subsequent to their acquisition 
by handlers'' and ``Above parity situations,'' respectively) should be 
amended to regulate quality by inserting the word ``quality'' after the 
words ``minimum grade'' in each section, respectively. Additionally, 
the heading prior to Sec.  989.58 should be revised to read ``Grade, 
Quality, and Condition Standards''. This would add authority to 
regulate quality under the order.
    Currently, Sec. Sec.  989.58 and 989.59 of the order state that the 
RAC has authority to regulate grade and condition standards. The 
attribute ``quality'' is not specifically mentioned. However, current 
program language indicates the intent to regulate quality by use of 
that word in several sections of the order. The inclusion of 
``quality'' as a regulated attribute would support and further 
strengthen the current usage of this term in the order and its 
application in current inspection and order activities.
    Witnesses explained that, if implemented, this proposal would 
clarify the intent of Sec. Sec.  989.53 (Research and development), 
989.54 (Marketing policy), 989.73 (Reports), 989.107 (Inspection 
certificate), 989.157 through 989.160 (Quality Control), and form FV 
146 (Certificate of Quality and Condition), which all refer to the 
regulation of ``quality'' under the order.
    Witnesses explained that the authority to regulate quality would 
allow them to regulate product attributes that fall outside the 
traditional scope of ``grade'' and ``condition standards.'' According 
to the record, current raisin grade and condition standards found in 
the order correspond to the ``U.S. Standards for Grades of Processed 
Raisins,'' USDA, December 1, 1978. The attributes regulated under grade 
and condition standards include, but are not limited to: 
Characteristics of damaged raisins (sunburn, scars, insect injury, 
etc.); presence of capstems, sugar crystals, grit, sand, silt, 
discoloration, moisture, or mold; and signs of immaturity. According to 
the record, ``quality'' would therefore mean attributes that impact the 
consumer, supply chain, end user, or the public's demand for the 
product.
    Witnesses also testified about the importance of quality checks on 
product, specifically residual testing for

[[Page 24886]]

herbicides, pesticides or fungicide residues, to ensure the safety of 
the consumer. As an example, witnesses discussed the need to regulate 
Ochratoxin, a naturally occurring fungus. A tolerance limit for this 
fungus is in place for products entering many markets. Witnesses stated 
that the ability to meet those markets' import requirements are vital 
to continued trade. By implementing quality regulation under the order, 
the industry would be certain that this requirement would be equally 
applied to all handlers of raisins within the U.S. Witnesses also 
explained that many producers are prohibited from using chemicals and 
their usage is regulated in the production of raisins, but this 
authority would allow for product validation or attesting that there 
are no residual chemicals on incoming or outgoing raisins from the 
packers.
    Furthermore, in the event that the industry desires to implement 
further regulation to conform to forthcoming FDA guidelines under the 
Food Safety Modernization Act, those regulations may not fall within 
the traditional framework of grade and condition standards. Thus, the 
authority to regulate quality would provide the RAC with the 
flexibility to meet future regulatory needs of its industry.
    Witnesses stated that the anticipated cost impact on the industry 
as a result of this proposal would be minimal at this time. If approved 
in referendum by producers, the addition of ``quality'' to the list of 
attributes that can be regulated under the order would not necessarily 
result in new, immediate regulation. Any new regulation would need to 
be developed and vetted as a proposal, approved and recommended by the 
RAC, published by USDA as a proposed rule, allow for public comment, 
and receive USDA approval prior to being implemented.
    If quality regulation were recommended by the RAC and approved by 
USDA, such regulation would address quality concerns within the 
industry. For example, if Ochratoxin were to be regulated, its 
regulation would benefit the industry by ensuring that raisins with 
high levels of this toxin were not placed into the market. In addition, 
foreign markets with low Ochratoxin threshold levels would be assured 
that California raisins are adequately regulated. This type of 
regulation would assure customers of the industry's oversight of 
product quality. As such, witnesses explained that any potential costs 
of future regulation would be outweighed by the benefits of product 
quality assurance in the market. Witnesses also explained that 
California raisins are currently inspected. The addition of another 
inspection parameter is unlikely to result in significant costs. 
Witnesses also anticipated that quality regulations could result in 
increased returns for both producers and handlers as, in some markets, 
a higher price would be paid for quality-certified product.
    No testimony opposing the proposed amendment was given at the 
hearing. For the reasons stated above, it is recommended that 
Sec. Sec.  989.58, 989.59 and 989.61, and the heading preceding Sec.  
989.58 should be amended to add quality regulation authority under the 
order.

Material Issue Number 4--Different Market Regulations

    Section 989.59, Regulation of the handling of raisins subsequent to 
their acquisition by handlers, should be further amended to provide 
authority to establish different regulations for different markets.
    Current order language establishes grade and condition standards 
for two classifications only: Grade A and Grade B. According to the 
record, the California raisin industry has customers in as many as 50 
different countries. While the consumer bases in these countries vary 
significantly, the order does not allow for different quality or grade 
standards to be applied to exports to those markets. This proposed 
authority would allow the RAC to develop regulation for product that is 
best suited for a particular market destination.
    Witnesses clarified that this proposal would only result in the 
addition of the authority to establish different regulations for 
different market destinations under the order. This proposal would not 
result in new, immediate regulation. If this proposal is implemented, 
the RAC could make recommendations for different regulations for 
different market destinations to USDA. Any new regulation would need to 
be developed and vetted as a proposal, approved and recommended by the 
RAC, published by USDA as a proposed rule, allow for public comment, 
and receive USDA approval prior to being implemented.
    Witnesses stated that if any market-specific regulations were to be 
implemented as a result of this authority, the anticipated impact on 
producers and handlers would not be negative. Different regulations for 
different market destinations would not prevent product from being sold 
into the market. Instead, it would match product attributes to the 
consumer profile and customer demands of each market. In doing so, 
witnesses anticipate that returns to producers and handlers could 
increase as consumers would be more likely to pay more for those 
products.
    One witness stated that in the current global market, customers 
regularly establish their own individual specifications and define 
their own key attributes of quality. Thus, the authority of the 
marketing order to be more selective and precise for individual markets 
would likely enhance demand for California raisins. Witnesses further 
added that market-specific regulations tailored to market-specific 
consumers would allow the industry to be more competitive against 
foreign producers in those markets.
    As previously stated, many export markets have unique product 
specifications in place to meet their consumer tastes and needs of 
their market. Witnesses explained that many California raisin handlers 
shipping to those markets are already meeting those product 
specifications. However, if this proposal were implemented, the RAC 
could recommend standards for all California raisin handlers shipping 
to specific export markets, thereby ensuring uniform quality of product 
and a level playing field for foreign customers who are comparing 
product services from multiple handlers.
    According to the hearing record, the addition of this authority is 
not intended to address any specific export market at this time. 
Witnesses stated that the market is currently functioning well, with 
quality product being shipped to consistently meet foreign customers' 
product specifications.
    According to data submitted at the hearing, the top five export 
markets for natural seedless raisins in crop year 2014-2015 were Japan, 
the United Kingdom, Canada, China and Germany. Exports for the 2014-
2015 crop year totaled 111,407 packed tons, which is slightly lower 
than the five-crop-year average of 130,880 packed tons. By comparison, 
U.S. consumption of natural seedless for the 2014-2015 crop year 
totaled 180,627 packed tons. Based on these numbers, roughly 40 percent 
of the California raisin crop is exported (111,407/
(180,627+111,407)[ap]40%). Therefore, as witnesses indicated, the 
ability to develop specific quality or grade requirements for these 
export markets would assist in meeting or improving product demand for 
roughly half of the industry's production.
    No testimony opposing the proposed amendment was given at the 
hearing. For the reasons stated above, it is recommended that Sec.  
989.59, Regulation of the handling of raisins subsequent to their 
acquisition by handlers, should be

[[Page 24887]]

further amended to provide authority to establish different regulations 
for different markets.

Material Issue Number 5--Continuance Referenda

    Section 989.91, Suspension or termination, should be amended to 
require continuance referenda. Currently there is no continuance 
referendum requirement in the order.
    If implemented, this amendment would provide the industry with an 
opportunity to determine if the order is favored by producers between 
five to six years after the implementation of the proposal for the 
initial referendum and every six years thereafter for subsequent 
referenda. If continuance were favored by at least two-thirds of 
producers voting in the continuance referendum, or if the volume of 
those voting represented a two-thirds majority of volume voted in 
support of continuance, the order would continue. If the vote failed to 
get two-thirds support by either number of voters or volume, USDA could 
terminate the program.
    Witnesses explained that when the details of this proposal were 
first developed by the RAC's Rulemaking Workgroup (workgroup), the 
recommendation was to conduct an initial continuance referendum no 
sooner than five years after, and no later than six years after, the 
proposal was implemented. Subsequent referenda were to be conducted 
every six years thereafter. This recommendation was voted on and 
accepted by the workgroup, and was then presented to the Administrative 
Issues Subcommittee and full RAC membership meeting on January 27, 
2016.
    According to the record, when this recommendation was presented at 
the January 27, 2016 meeting, a lengthy discussion, including several 
proposed modifications, ensued. At that meeting, a revision to the 
proposed continuance referendum requirement was made, resulting in the 
initial referendum being slated to occur no sooner than two crop years 
and no later than six crop years of the proposal's implementation. The 
modified proposal passed with sixteen ``yes'' votes and ten ``no'' 
votes. Consequently, the modified proposal became the amendatory text 
included in the Notice of Hearing for this proposed rulemaking.
    However, at the close of the January 27, 2016, meeting, and in 
subsequent RAC discussions, the modified continuance referendum 
requirement was revisited by individuals raising concerns that two 
years may not provide sufficient time for the industry to fully adjust 
to any amendments resulting from this rulemaking action prior to a 
continuance vote. The RAC met again on April 14, 2016, and voted 
unanimously to uphold the original recommendation of the workgroup. In 
other words, the RAC voted to change the timing of the initial 
referendum requirement from two to six crop years after implementation 
back to a requirement of holding the initial referendum between five 
and six crop years after implementation.
    As a result of the April 14, 2016, unanimous RAC vote, witnesses 
testifying on behalf of this amendment proposed a modification to the 
Notice of Hearing language, requesting that the phrase ``no less than 
two years and no later than six years'' be reverted to the workgroup's 
original proposal of ``no less than five years and no more than six 
years'' after implementation of the amendment. All witnesses testifying 
in favor of the proposed continuance referendum requirement supported 
this modification.
    As a conforming change, USDA recommends modifying the alternate 
language proposed by the RAC to change the word ``year'' to ``crop 
year'', as necessary, to be consistent with previously proposed 
amendatory language for this change. The RAC proposed modification and 
the USDA conforming change have been included in the amendatory text of 
this recommended decision. The requirement for subsequent referenda to 
be conducted every six crop years thereafter remains unchanged.
    In general, witnesses favored the continuance referendum 
requirement stating that the industry had not undergone an amendatory 
proceeding of its marketing program since 1989 and, therefore, has not 
had the opportunity to ascertain producer support since then. If 
implemented, witnesses stated that the continuance referendum 
requirement would provide the industry with regular feedback on the 
success and acceptance of its program's activities.
    Furthermore, witnesses stated that this proposal, if implemented, 
would bring the order in line with the ``Guidelines for Fruit, 
Vegetable, and Specialty Crop Marketing Orders,'' (guidelines) issued 
by the U.S Department of Agriculture on January 25, 1982. These 
guidelines state that, ``The Secretary believes these referenda are in 
the public interest. They provide the industry with the means to 
regularly re-assess the value of marketing orders and keep the 
Department informed of the wishes of the majority of the industry. 
Therefore, the Secretary is requiring that periodic referenda be 
conducted for each order. USDA will work with each committee in 
development of a time frame appropriate for each order.''
    One witness raised concerns over the two-thirds majority 
requirement, as described above, to determine continuance, suspension 
or termination. This witness indicated that the two-thirds support 
requirement may be too large, and that if one-third of the industry 
were to not favor continuance, the program would fail. This witness 
indicated that this presented too large of a risk to the program and 
that a ``discontinuance'' referendum requiring two-thirds in favor of 
discontinuance would be more favorable.
    Witnesses countering this position stated that the two-thirds in 
favor of continuance requirement is standard across many current 
marketing orders containing active continuance referendum requirements.
    Witnesses also stated that the raisin industry has a history of 
consensus-building, with RAC votes on recommended actions historically 
being voted unanimously after extensive internal discussion and 
deliberations over a proposed course of action. One witness offered 
that, through the process of debate and compromise, consensus is 
reached. This witness also indicated that historically, in spite of 
robust and lengthy debates, the industry has shown an appreciation and 
value for its marketing order program.
    Ultimately, witnesses concurred that the proposal for mandatory 
continuance referenda had been discussed and debated in the industry 
and, if implemented with the modified language presented at the 
hearing, would be a positive compromise encompassing many viewpoints. 
Witnesses stated that there would be minimal costs associated with 
implementing this proposal, if approved and implemented. Witnesses 
further explained that USDA has established procedures for conducting 
continuance referenda, as these are regularly held in other marketing 
orders, and that the addition of a continuance referendum every six 
years will assure that the marketing order is responsive to industry 
needs and changing circumstances. While it would not directly improve 
producer returns, witnesses stated that it would indirectly assure that 
the industry believes the marketing order is operating in their best 
interest, as the marketing order is funded by the assessments of the 
industry.
    Witnesses further stated that many producers are small businesses, 
and this proposal will provide another

[[Page 24888]]

democratic opportunity to participate in the marketing order.
    For the reasons stated above, it is recommended that Sec.  989.91 
be amended to require continuance referenda as proposed.

Material Issue Number 6--Volume Regulation Removal

    USDA is proposing that all volume regulation and reserve pool 
authorities, and their related provisions, be removed from the order. 
As such, the following sections should be removed from the order: 
Sec. Sec.  989.55, Regulation by the Secretary; 989.56, Raisin 
diversion program; 989.65, Free and reserve tonnage; 989.66, Reserve 
tonnage generally; 989.67, Disposal of reserve raisins; 989.71, 
Disposition of unsold reserve tonnage in above parity situations; 
989.72, Exemption of educational institutions; 989.82, Expenses of 
reserve raisin operations; 989.154, Marketing policy computations; 
989.156, Raisin diversion program; 989.166, Reserve tonnage generally; 
989.167, Disposal of reserve raisins; 989.221, Sale and export of 
reserve raisins by handlers; 989.257, Final free and reserve 
percentages; and, 989.401 Payments for services performed with respect 
to reserve tonnage raisins.
    In addition, the following headings should be removed: ``Volume 
Regulation'' prior to Sec.  989.65, ``Free and reserve tonnage.''; 
``Volume Regulation'' prior to Sec.  989.166, ``Reserve tonnage 
generally.'' and, ``Subpart--Schedule of Payments'' prior to Sec.  
989.401, ``Payments for services performed with respect to reserve 
tonnage raisins.''
    Also in accordance with this proposal, the following sections 
should be revised: Sec. Sec.  989.11 ``Producer,'' which mentions the 
diversion program; 989.53 ``Research and development,'' to remove 
research and development projects related to reserve tonnage raisins; 
989.54 ``Marketing policy,'' to remove marketing policy trade demand 
calculations linked to reserve raisins; 989.58 ``Natural condition 
raisins,'' to remove references to free and tonnage raisins; 989.59 
``Regulation of the handling of raisins subsequent to their acquisition 
by handler,'' to remove regulation of the handling of reserve raisins 
subsequent to their acquisition by handlers; 989.60 ``Exemption,'' to 
remove exemptions for reserve raisins; 989.73 ``Reports,'' to remove 
reports related to reserve raisins; 989.79 ``Expenses,'' to remove the 
authority for the RAC to incur expenses related to volume regulation or 
reserve raisins; 989.80 ``Assessments,'' to remove assessment language 
involving volume regulations and reserve pool raisins; 989.84 
``Disposition limitation,'' to remove disposition limitations for 
reserve raisins on handlers; 989.158 ``Natural condition raisins,'' to 
remove the inclusion of reserve raisins from the natural condition 
raisin definition and provisions for reconditioning of off-grade 
reserve raisins; 989.173 ``Reports,'' to remove reporting requirements 
related to reserve pool raisins and volume regulation; and, 989.210 
``Handling of varietal types of raisins acquired pursuant to a weight 
dockage system,'' to remove handling regulation of reserve varietal 
types of raisins acquired using a weight dockage system.
    Lastly, Sec.  989.70, ``Storage of raisins held on memorandum 
receipt and of packer-owned tonnage,'' should be re-designated as Sec.  
989.96 as a result of the removal and amendment of the above sections.
    According to the record, on June 22, 2015, the United States 
Supreme Court, in Horne v. USDA, ruled that the application of the 
marketing order's reserve pool authority to the Hornes was a taking 
under the Fifth Amendment to the U.S. Constitution. By a July 16, 2015, 
letter to the RAC, USDA stated, ``In light of the Horne decision, the 
U.S. Department of Agriculture has decided not to authorize the reserve 
program of the federal marketing order for California raisins for the 
foreseeable future, effective immediately.''
    Accordingly, USDA is proposing the removal of the reserve pool 
authority. In addition, USDA has determined that the reserve pool 
authority is inextricably connected to the order's volume regulation 
authority. Furthermore, language for both authorities can be extracted 
from the order language without disturbing the remaining program 
functions. Therefore, USDA is proposing that all volume regulation and 
reserve pool authorities, and all related provisions, be removed from 
the order.
    A USDA witness speaking on behalf of this proposal indicated that 
the July 16, 2015, letter to the RAC indicated USDA's intention to 
schedule a formal rulemaking hearing. According to the witness and 
record evidence, the letter encouraged the RAC ``to consider proposals 
to amend provisions in the marketing order related to the reserve 
program.'' During a July 28, 2015, meeting with the RAC, the RAC was 
again informed of USDA's intention to initiate rulemaking in the spring 
of 2016, for the purpose of amending the order as described above. 
Finally, on August 20, 2015, USDA met with the RAC to notify them that 
the aforementioned hearing would take place in May 2016.
    The RAC was provided with a draft of USDA's proposed modifications 
to the marketing order language that indicated which sections of 
language would be removed, revised, and re-designated. The RAC was 
given the opportunity to provide feedback on the proposed modified 
language. Consequently, some minor adjustments were made based on 
industry feedback, and the industry indicated its general acceptance of 
USDA's proposed modifications prior to entering into the pre-hearing ex 
parte period. These proposed changes are captured in the proposed 
amendatory text published in this proceeding's Notice of Hearing, as 
well as in the amendatory text of this recommended decision. Industry 
witnesses testifying at the hearing indicated general support for 
USDA's proposed amendatory changes.
    One witness speaking on behalf of the industry's largest producer-
handler cooperative, indicated that historical data supported the 
proposal that volume regulation was no longer needed in the order. The 
witness presented record evidence showing the varying acres of 
California raisins by variety grapes from 2006 to 2015. As one example, 
according to the data, in 2006, raisin variety bearing acres was 
234,000, and in 2015, it was 190,000, indicating a sharp decline in 
raisin-producing acreage.
    The witness explained that this data supported the theory that the 
California raisin industry is adjusting to a decreasing or flat demand 
for the product. The witness stated that, in the future, supply will 
likely remain in better balance with demand and, therefore, the reserve 
pool and volume regulation are no longer as relevant as they were in 
higher production times. To further the point, the witness stated that 
the order's reserve pool authority has not been utilized since 2010.
    No testimony opposing the proposed amendment was given at the 
hearing. For the reasons stated above, it is recommended that volume 
regulation and reserve pool authorities in the order be amended as 
proposed, including: Removing Sec. Sec.  989.55 and 989.56, Sec. Sec.  
989.65 through 989.67, Sec. Sec.  989.71, 989.72, 989.82, 989.154, 
989.156, 989.166, 989.167, 989.221, 989.257 and 989.401; revising 
Sec. Sec.  989.11, 989.53, 989.54, 989.58, 989.59, 989.60, 989.73, 
989.79, 989.80, 989.84, 989.158, 989.173 and 989.210; and re-
designating Sec.  989.70 as Sec.  989.96.
    In addition, the following headings should be removed: ``Volume 
Regulation'' prior to Sec.  989.65, ``Free and

[[Page 24889]]

reserve tonnage.''; ``Volume Regulation'' prior to Sec.  989.166, 
``Reserve tonnage generally.''; and ``Subpart--Schedule of Payments'' 
prior to Sec.  989.401, ``Payments for services performed with respect 
to reserve tonnage raisins.''

Material Issue Number 7--Term Limits

    Section 989.28, Term of office, should be revised to establish a 
limit on the number of consecutive terms a person may serve as a member 
of the RAC.
    Currently, the term of office of each member and alternate member 
of the RAC is two years. There are no provisions related to term limits 
in the marketing order. Members and alternates may serve on the RAC 
until their respective successors are selected and have been qualified.
    The USDA believes that all marketing order programs should include 
tenure limitations for committee membership. The USDA believes that 
this provision would increase industry participation on the RAC, 
provide for more diverse membership, provide the Committee with new 
perspectives and ideas, and increase the number of individuals in the 
industry with Committee experience.
    At the hearing and as stated in the Notice of Hearing, USDA 
proposed a period of eight years as an appropriate limit to the number 
of years a member may serve consecutively. Since the current term of 
office for members and alternates is two years, USDA is proposing that 
members serve no more than four consecutive two-year terms, or a total 
of eight years. Once a member has served on the RAC for four 
consecutive terms, or eight years, the member could not serve as a 
member for at least one year before being eligible to serve again.
    As originally stated in the Notice of Hearing, USDA's proposal for 
term limits would have applied to both members and alternate members. 
However, at the hearing, the USDA witness testifying on behalf of this 
proposal offered a modification to remove the term limit requirement 
from alternate member service. The witness clarified that the 
modification would allow continuity to be maintained through 
individuals rotating their service between member and alternate member 
status. The witness stated that the modified language would uphold the 
intent of the 1982 guidelines as well as meet the needs of the industry 
for continuity of service. The modified language proposed by USDA would 
read as follows: ``Committee members may serve up to four consecutive 
two-year terms of office. In no event shall any member serve more than 
eight consecutive years on the Committee. For purposes of determining 
when a representative has served four consecutive terms, the accrual of 
terms shall begin following any period of at least twelve consecutive 
months out of office. This limitation on tenure shall not include 
service on the Committee prior to implementation of this amendment. 
This limitation on tenure shall not apply to the service of alternate 
members.'' This language has been incorporated into the regulatory text 
of this recommended decision.
    This proposal falls within the 1982 guidelines and USDA's 
experience that indicates that a period of eight years is an 
appropriate period. Eight years is considered long enough for committee 
members to make meaningful contributions to the administration of a 
marketing order, but not so long as to exclude others from 
participation on the committee.
    According to evidence submitted at the hearing, term limits are in 
place in other federal marketing orders and have generally proven to 
have the intended impact on member participation and diversity. Of the 
28 marketing orders currently in effect, 15 have term limits, including 
3 out of 6 of the federal marketing orders that are based in 
California. The California programs requiring term limits include the 
Almond Board of California, the Administrative Committee for 
Pistachios, and the Kiwifruit Administrative Committee. Multi-state 
federal marketing order examples, such as the tart cherry industry 
administrative board, as well as the Cranberry Marketing Committee, 
also have term limits.
    The witness further explained that term limits, as applicable in 
other marketing order programs, have been applied in ways that have 
suited those particular industries. For example, industry members can 
serve a number of consecutive terms before taking a minimum of a one-
year break or a moving to an alternate member position. For those 
industries, term limits offer an opportunity to groom potential 
successors, while also retaining seasoned members with important 
institutional knowledge as alternate members who can continue to advise 
the board or committee.
    The witness offered two specific examples of successful industry 
application of term limit requirements for the purpose of recruiting 
new, up-and-coming industry individuals: The California almond and 
kiwifruit industries.
    In order to manage its succession planning for term limits, the 
Almond Board of California conducts an almond industry leadership 
program that provides mentorship and education on the almond industry 
for younger, newer entrants into the industry. The program allows 
participants to be trained in a diverse range of issues, such as 
environmental stewardship, food quality and safety, as well as 
government, trade and leadership development. At the end of the 
program, participants are offered an opportunity to sit on a 
subcommittee of the Board for a year, in order to encourage them to 
pursue leadership roles within the industry and give them exposure to 
the inner workings of the organization. According to the witness, this 
experience helps build newcomer interest and expertise, in order to 
eventually move on to a position on the Almond Board of California 
Board of Directors.
    The witness's second example, the Kiwifruit Administrative 
Committee, convened an ad hoc diversity subcommittee in 2014 and 
implemented a diversity plan that resulted in the addition of three new 
members and three new alternates. The Kiwifruit Administrative 
Committee, or the KAC, reached out to eight local and highly visible 
newspapers, including the Appeal Democrat, the Chico Enterprise, the 
Modesto Bee, the Sacramento Bee, the Fresno Bee, the Porterville Post, 
the Valley Voice, and the Packer, and placed press releases on its 
Facebook page as well as the industry Web site and also shared the 
press releases with seven county Farm Bureau offices to conduct 
outreach. The outreach was successful in garnering many new members, 
four of whom are also involved in producing new kiwifruit varieties, 
which have recently been introduced into the market.
    Industry witnesses presented testimony in opposition to this 
proposal. Although they agreed that increased industry participation in 
the program is desirable, witnesses stated that the application of term 
limits could be problematic. Testimony indicated that finding 
California raisin producers to serve on the RAC, especially independent 
producers, is challenging. Witnesses noted that there have been times 
in the past when filling RAC member positions has been difficult and 
that recruiting new members is not easily done. Moreover, witnesses 
stated that industry members who currently serve on the RAC bring 
knowledge and experience to the RAC that would be difficult to replace.
    Furthermore, both Sun-Maid and RBA have internal programs that 
serve to fulfill recruitment and training

[[Page 24890]]

opportunities for industry members new to the program's operations. 
Therefore, according to witnesses, the need for a formalized, industry-
wide program was not apparent.
    Nonetheless, USDA believes that any additional efforts necessary to 
find eligible producers and handlers who are willing to serve on the 
RAC are offset by the benefits derived by broader industry 
participation in order operations. Therefore, USDA recommends adding 
this requirement.
    For the reasons stated above, it is recommended that Sec.  989.28, 
Term of office, be amended to include term limits as proposed.

Material Issue Number 8--Conforming Changes

    USDA recommends that any changes that may be necessary to the order 
language to conform to any of the above-proposed amendments, if 
implemented, should be made. In addition, conforming changes may also 
include non-substantive, typographical errors.
    As such, USDA recommends correcting the following minor 
inconsistencies and typographical errors found in the current order 
language that are not substantive in nature. These include: Changing 
all occurrences of the term ``offgrade'' to ``off-grade''; changing all 
occurrences of the term ``nonnormal'' to ``non-normal''; and, changing 
all occurrences of the term ``committee'' to ``Committee.'' These 
corrections would result in consistent spelling of these terms 
throughout the order.
    In addition, the words ``Processed Products Standardization and 
Inspection Branch'' in Sec. Sec.  989.58(d) and 989.59(d) should be 
changed to ``Specialty Crops Inspection Division.'' Similarly, 
``Processed Products Branch, Fruit and Vegetable Division'' in Sec.  
989.102 should be changed to ``Specialty Crops Inspection Division.'' 
These corrections would reflect the official name change of the AMS's 
inspection service office for fruit, vegetables and specialty crops.

Executive Orders 12866 and 13771, and Regulatory Flexibility Act

    This rule does not meet the definition of a significant regulatory 
action contained in section 3(f) of Executive Order 12866, and is not 
subject to review by the Office of Management and Budget (OMB). 
Additionally, because this rule does not meet the definition of a 
significant regulatory action it does not trigger the requirements 
contained in Executive Order 13771. See OMB's Memorandum titled 
``Interim Guidance Implementing Section 2 of the Executive Order of 
January 30, 2017 titled `Reducing Regulation and Controlling Regulatory 
Costs'[thinsp]'' (February 2, 2017).
    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA), 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 
businesses subject to such actions so that small businesses will not be 
unduly or disproportionately burdened. Marketing orders and amendments 
thereto are unique in that they are normally brought about through 
group action of essentially small entities for their own benefit.
    According to the hearing transcript, there are approximately 3,000 
raisin producers in California. According to National Agricultural 
Statistics Service data presented at the hearing, the total value of 
production of raisins in the 2014/15 crop year is $598,052,000. Taking 
the total value of production for raisins and dividing it by the total 
number of raisin producers provides an average return per producer of 
$199,950.67. A small producer as defined by the Small Business 
Administration (SBA) (13 CFR 121.201) is one that grosses less than 
$750,000 annually. Therefore, a majority of raisin producers are 
considered small entities under SBA's standards.
    According to the industry, there were 23 handlers for the 2015/16 
crop year. A small agricultural service firm as defined by the SBA is 
one that grosses less than $7,500,000 annually. Based on Committee 
data, 13 handlers would be considered small entities under SBA's 
standards. Slightly more than half of the industry's handlers are 
considered small entities under SBA's standards.
    The production area regulated under the order covers the state of 
California. Acreage devoted to raisin production in the regulated area 
has declined in recent years. According to data presented at the 
hearing, bearing acreage for raisins reached a high of 280,000 acres 
during the 2000/01 crop year. Since then, bearing acreage for raisins 
has decreased 32 percent to 190,000 in 2014/15. As a result, the total 
production of raisins reached a high during the 2000/01 crop year of 
484,500 tons (dried basis). Since the 2000/01 crop year, total 
production for raisins has decreased 32 percent to 328,600 tons in 
2014/15.
    During the hearing held May 3 and 4, 2016, interested persons were 
invited to present evidence at the hearing on the probable regulatory 
and informational impact of the proposed amendments to the order on 
small businesses. The evidence presented at the hearing shows that none 
of the proposed amendments would have any burdensome effects or a 
significant economic impact on a substantial number of small 
agricultural producers or firms.

Material Issue Number 1--Authorize Production Research

    The proposal described in Material Issue 1 would amend Sec.  989.53 
to authorize production research.
    Currently, the California Raisin Marketing Board (CRMB) is the 
funding source for production research for the California raisin 
industry. Three years ago, payments of assessments to the CRMB were 
suspended due to the results of litigation. Without funding the CRMB 
has been unable to conduct any new production research projects. If 
amended, this proposal would authorize the RAC to conduct production 
research without having to rely on the CRMB.
    Witnesses supported this proposal and stated that future research 
could potentially impact producers in many ways, such as reducing 
pesticide usage or the development of new varieties that are less labor 
intensive. Production research would provide the raisin industry the 
ability to meet the needs of the ever changing domestic and 
international markets. According to a witness's testimony, the benefits 
of the proposed amendment would outweigh any costs.
    For the reasons described above, it is determined that the proposed 
amendment would benefit industry participants and improve 
administration of the order. The costs of implementing this proposal 
would be minimal, if any.

Material Issue Number 2--Authorize Separate Nominations for Independent 
Producer Member and Independent Producer Alternate Member Seats

    The proposal described in Material Issue 2 would amend Sec. Sec.  
989.29 and 989.129 to authorize separate nominations for independent 
producer members and independent producer alternate member seats.
    Currently, the RAC has difficulty filling Committee seats 
designated for independent producer members and independent producer 
alternative members. Independent producer alternative member seats have 
gone unfilled for several consecutive years.
    According to witnesses' testimony, the purpose of the proposal is 
to increase the participation of independent producers willing to 
participate on the Committee. Full participation would give the 
independent producers their represented voice on RAC decisions.

[[Page 24891]]

    In conclusion, it is determined that the benefits of increased 
Committee participation by independent producers would outweigh any 
costs associated with the implementation of the proposed amendment.

Material Issue Number 3--Add Authority To Regulate Quality

    The proposal described in Material Issue 3 would amend Sec. Sec.  
989.58, 989.59 and 989.61 to add authority to regulate quality. A 
corresponding change would also revise the heading prior to Sec.  
989.58 to include quality.
    Currently, Sec. Sec.  989.58 and 989.59 of the order state that the 
Committee has the authority to recommend grade and condition standards 
regulation under the order. The attribute ``quality'' is not 
specifically mentioned. The proposed amendment would add language to 
include ``quality'' as an attribute that can be regulated under the 
order.
    According to a witness, the proposed amendment would give the 
Committee flexibility to ensure consumer safety by setting quality 
standards for residue levels for herbicides, pesticides or fungicides. 
The quality standards would be equally applied to all handlers of 
raisins within the U.S.; some handlers are already testing for certain 
types of fungicides so the increased costs would be minimal.
    It is determined that the additional costs incurred to regulate 
quality would be greatly outweighed by the increased flexibility for 
the industry to respond to changing quality regulations, increased 
consumer safety, and other benefits gained from implementing this 
proposal.

Material Issue Number 4--Add Authority To Establish Different 
Regulations for Different Markets

    The proposal described in Material Issue 4 would amend Sec.  989.59 
to add authority to establish different regulations for different 
markets.
    The order does not currently allow for different quality or grade 
standards to be applied to different foreign markets. The language in 
the order only has two classifications for grade and condition 
standards, Grade A or Grade B. The current grade and condition 
standards are consistent across all markets.
    The proposed amendment would give the Committee the authority to 
develop regulations for individual foreign markets that would be best 
suited for that specific destination. This proposal would give the 
industry flexibility to tailor product attributes to meet the foreign 
consumer profile and the customer demands for each individual market.
    For the reasons described above, it is determined that any 
additional costs incurred for this proposal would be outweighed by the 
increased flexibility for the industry to respond to a changing global 
marketplace.

Material Issue Number 5--Continuance Referenda

    The proposal described in Material Issue 5 would amend Sec.  989.91 
to require continuance referenda.
    The proposed amendment would require the USDA to conduct a 
continuance referenda between year five and year six for the first 
referendum and every six years thereafter to assure that the order is 
responsive to industry needs and changing circumstances. A witness 
testified that a continuance referenda is the best tool for assuring 
that the order remains responsive to the needs of the industry. While a 
continuance referenda will not directly improve producer returns, it 
will indirectly assure that the industry believes that the order is 
operating in the producer's best interest.
    For these reasons, it is determined that the benefits of conducting 
a continuance referenda would outweigh the potential costs of 
implementing this proposal.

Material Issue Number 6--Remove Volume Regulations and Reserve Pool 
Authority

    The proposal described in Material Issue 6 would amend the order to 
remove volume regulation and reserve pool authority. This would 
include: Removing Sec. Sec.  989.55 and 989.56, Sec. Sec.  989.65 
through 989.67, Sec. Sec.  989.71, 989.72, 989.82, 989.154, 989.156, 
989.166, 989.167, 989.221, 989.257, and 989.401; revising Sec. Sec.  
989.11, 989.53, 989.54, 989.58, 989.59, 989.60, 989.73, 989.79, 989.80, 
989.84, 989.158, 989.173, and 989.210; and redesignating Sec.  989.70 
as Sec.  989.96. Corresponding changes would also remove the following 
headings: ``Volume Regulation'' prior to Sec.  989.65; ``Volume 
Regulation'' prior to Sec.  989.166; and, ``Subpart-Schedule of 
Payments'' prior to Sec.  989.401.
    The proposed amendment would remove all authority for the RAC to 
establish volume restrictions and a reserve pool. On June 22, 2015, the 
United States Supreme Court, in Horne v. USDA, ruled that the 
application of the marketing order's reserve pool authority to the 
Hornes was a taking under the Fifth Amendment to the U.S. Constitution. 
By a July 16, 2015 letter to the Raisin Administrative Committee, USDA 
stated, ``In light of the Horne decision, the U.S. Department of 
Agriculture has decided not to authorize the reserve program of the 
federal marketing order for California raisins for the foreseeable 
future, effective immediately.''
    One witness explained that bearing acres have declined the past ten 
years that supports the theory that the California raisin industry is 
adjusting to a decreasing or flat demand for the product. The witness 
stated that, in the future, supply will likely remain in better balance 
with demand and, therefore, the reserve pool and volume regulation are 
no longer as relevant as they were in higher production times. To 
further the point, the witness stated that the order's reserve pool 
authority has not been utilized since 2010.
    The proposal would be a relaxation of regulations, for this reason, 
it is determined that no significant impact on small business entities 
is anticipated from this proposed change.

Material Issue Number 7--Establish Term Limits

    The proposal described in Material Issue 7 would amend Sec.  989.28 
to establish term limits.
    The proposed amendment would establish term limits of up to four 
consecutive two-year terms for members only, not alternate members. If 
implemented, in no event would any member serve more than eight 
consecutive years on the Committee. The proposal for term limits would 
conform the order to other existing programs. USDA strives to maintain 
continuity in the service of its members.
    According to a witness's testimony, term limits in other marketing 
orders have generally proven to have the intended impact of increased 
participation and diversity. For these reasons, it is determined that 
the benefits of the proposal would outweigh the potential costs of 
implementation.
    The costs attributed to these proposed changes are minimal; 
therefore, there will not be a significant impact on a substantial 
number of small entities.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap or conflict with this proposed rule. These amendments are 
intended to improve the operation and administration of the order and 
to assist in the marketing of California raisins.
    RAC meetings regarding these proposals, as well as the hearing date 
and location, were widely publicized throughout the California raisin 
industry, and all interested persons were invited to attend the 
meetings and the hearing to participate in RAC deliberations on all 
issues. All RAC meetings and the hearing were public

[[Page 24892]]

forums, and all entities, both large and small, were able to express 
views on these issues. Finally, interested persons are invited to 
submit information on the regulatory and informational impacts of this 
action on small businesses.
    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.

Paperwork Reduction Act

    Current information collection requirements for Part 989 are 
approved by OMB, under OMB Number 0581-0189--``Generic OMB Fruit 
Crops.'' No changes are anticipated in these requirements as a result 
of this proceeding. Should any such changes become necessary, they 
would be submitted to OMB for approval.
    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.

Civil Justice Reform

    The amendments to the order proposed herein have been reviewed 
under Executive Order 12988, Civil Justice Reform. They are not 
intended to have retroactive effect. If adopted, the proposed 
amendments would not preempt any State or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
proposal.
    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. A 
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 no later than 20 days after the date of 
entry of the ruling.

Rulings on Briefs of Interested Persons

    Briefs, proposed findings and conclusions, and the evidence in the 
record were considered in making the findings and conclusions set forth 
in this recommended decision. To the extent that the suggested findings 
and conclusions filed by interested persons are inconsistent with the 
findings and conclusions of this recommended decision, the requests to 
make such findings or to reach such conclusions are denied.

General Findings

    The findings hereinafter set forth are supplementary to the 
findings and determinations which were previously made in connection 
with the issuance of the marketing agreement and order; and all said 
previous findings and determinations are hereby ratified and affirmed, 
except insofar as such findings and determinations may be in conflict 
with the findings and determinations set forth herein.
    (1) The marketing order, as amended, and as hereby proposed to be 
further amended, and all of the terms and conditions thereof, would 
tend to effectuate the declared policy of the Act;
    (2) The marketing order, as amended, and as hereby proposed to be 
further amended, regulates the handling of raisins grown in the 
production area (California) in the same manner as, and is applicable 
only to, persons in the respective classes of commercial and industrial 
activity specified in the marketing order upon which a hearing has been 
held;
    (3) The marketing order, as amended, and as hereby proposed to be 
further amended, is limited in its application to the smallest regional 
production area which is practicable, consistent with carrying out the 
declared policy of the Act, and the issuance of several orders 
applicable to subdivisions of the production area would not effectively 
carry out the declared policy of the Act;
    (4) The marketing order, as amended, and as hereby proposed to be 
further amended, prescribes, insofar as practicable, such different 
terms applicable to different parts of the production area as are 
necessary to give due recognition to the differences in the production 
and marketing of raisins grown in the production area; and
    (5) All handling of raisins grown in the production area as defined 
in the marketing order is in the current of interstate or foreign 
commerce or directly burdens, obstructs, or affects such commerce.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposal. Thirty days is deemed appropriate because 
these proposed changes have already been widely publicized, and the 
Committee and industry would like to avail themselves of the 
opportunity to implement the changes as soon as possible. All written 
exceptions received within the comment period will be considered, and a 
producer referendum will be conducted before any of these proposals are 
implemented.

List of Subjects in 7 CFR Part 989

    Raisins, Marketing agreements, Reporting and recordkeeping 
requirements.

Recommended Further Amendment of the Marketing Order

    For the reasons set out in the preamble, 7 CFR part 989 is proposed 
to be amended as follows:

PART 989--RAISINS PRODUCED BY GRAPES GROWN IN CALIFORNIA

0
1. The authority citation for 7 CFR part 989 continues to read as 
follows:

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

0
2. Section 989.11 is revised to read as follows:


Sec.  989.11  Producer.

    Producer means any person engaged in a proprietary capacity in the 
production of grapes which are sun-dried or dehydrated by artificial 
means until they become raisins.
0
3. In Sec.  989.28:
0
a. Redesignate the introductory text as paragraph (a);
0
b. Revise newly redesignated paragraph (a); and
0
c. Add paragraph (b).
    The revisions and addition read as follows:


Sec.  989.28  Term of office.

    (a) The term of office of all representatives serving on the 
Committee shall be for two years and shall end on April 30 of even 
numbered calendar years; Provided, That each such member and alternate 
member shall continue to serve until their successor is selected and 
has qualified.
    (b) Representatives may serve up to four consecutive, two-year 
terms of office. In no event shall any representative serve more than 
eight consecutive years on the Committee. For purposes of determining 
when a representative has served four consecutive terms, the accrual of 
terms shall begin following any period of at least twelve consecutive 
months out of office. This limitation on tenure shall not include 
service on the Committee prior to implementation of this amendment. 
This limitation on tenure shall not apply to the service of alternate 
members.
0
4. In Sec.  989.29:

[[Page 24893]]

0
a. Revise paragraph (b)(2)(ii);
0
b. Redesignate paragraph (b)(2)(iii) as paragraph (b)(2)(iv);
0
c. Add a new paragraph (b)(2)(iii); and
0
d. Revise newly redesignated paragraph (b)(2)(iv).
    The revisions and addition read as follows:


Sec.  989.29   Initial members and nomination of successor members.

* * * * *
    (b) * * *
    (2) * * *
    (i) * * *
    (ii) Each such producer whose name is offered in nomination for 
producer member positions to represent on the committee independent 
producers or producers who are affiliated with cooperative marketing 
association(s) handling less than 10 percent of the total raisin 
acquisitions during the preceding crop year shall be given the 
opportunity to provide the committee a short statement outlining 
qualifications and desire to serve if selected. Similarly, each such 
producer whose name is offered in nomination for producer alternate 
member positions to represent on the committee independent producers or 
producers who are affiliated with cooperative marketing association(s) 
handling less than 10 percent of the total raisin acquisitions during 
the preceding crop year shall be given the opportunity to provide the 
committee a short statement outlining qualifications and desire to 
serve if selected. These brief statements, together with a ballot and 
voting instructions, shall be mailed to all independent producers and 
producers who are affiliated with cooperative marketing associations 
handling less than 10 percent of the total raisin acquisitions during 
the preceding crop year of record with the committee in each district. 
The producer member candidate receiving the highest number of votes 
shall be designated as the first member nominee, the second highest 
shall be designated as the second member nominee until nominees for all 
producer member positions have been filled. Similarly, the producer 
alternate member candidate receiving the highest number of votes shall 
be designated as the first alternate member nominee, the second highest 
shall be designated as the second alternate member nominee until 
nominees for all member positions have been filled.
    (iii) In the event that there are more producer member nominees 
than positions to be filled and not enough producer alternate member 
nominees to fill all positions, producer member nominees not nominated 
for a member seat may be nominated to fill vacant alternate member 
seats. Member seat nominees shall indicate, prior to the nomination 
vote, whether they are willing to accept nomination for an alternate 
seat in the event they are not nominated for a member seat and there 
are vacant alternate member seats. Member seat nominees that do not 
indicate willingness to be considered for vacant alternate member seats 
shall not be considered.
    (iv) Each independent producer or producer affiliated with 
cooperative marketing association(s) handling less than 10 percent of 
the total raisin acquisitions during the preceding crop year shall cast 
only one vote with respect to each position for which nominations are 
to be made. Write-in candidates shall be accepted. The person receiving 
the most votes with respect to each position to be filled, in 
accordance with paragraph (b)(2)(ii) and (iii) of this section, shall 
be the person to be certified to the Secretary as the nominee. The 
committee may, subject to the approval of the Secretary, establish 
rules and regulations to effectuate this section
* * * * *
0
5. In Sec.  989.53(a), revise the introductory text and remove the text 
that follows paragraph (a)(5) to read as follows:


Sec.  989.53  Research and development.

    (a) General. The Committee, with the approval of the Secretary, may 
establish or provide for the establishment of projects involving 
production research, market research and development, marketing 
promotion including paid advertising, designed to assist, improve, or 
promote the production, marketing, distribution, and consumption of 
raisins in domestic and foreign markets. These projects may include, 
but need not be limited to those designed to:
* * * * *
0
6. In Sec.  989.54:
0
a. Remove paragraphs (a) through (d) and (g);
0
b. Remove paragraph (e)(4);
0
c. Redesignate paragraphs (e)(5) through (e)(10) as (e)(4) through 
(e)(9), respectively;
0
d. Redesignate paragraphs (e), (f), and (h) as paragraphs (a), (b), and 
(c), respectively; and
0
e. Revise newly redesignated paragraphs (a) introductory text, (a)(1), 
(a)(4), (a)(5) and (c).
    The revisions read as follows:


Sec.  989.54  Marketing policy.

    (a) Each crop year, the Committee shall prepare and submit to the 
Secretary a report setting forth its recommended marketing policy, 
including quality regulations for the pending crop. In developing the 
marketing policy, the Committee may give consideration to the 
production, harvesting, processing, and storage conditions of that 
crop, as well as the following factors:
    (1) The estimated tonnage held by producers and handlers at the 
beginning of the crop year;
* * * * *
    (4) An estimated desirable carryout at the end of the crop year;
    (5) The estimated market demand for raisins, considering the 
estimated world raisin supply and demand situation;
* * * * *
    (c) Publicity. The Committee shall promptly give reasonable 
publicity to producers, dehydrators, handlers, and the cooperative 
bargaining association(s) of each meeting to consider a marketing 
policy or any modification thereof, and each such meeting shall be open 
to them. Similar publicity shall be given to producers, dehydrators, 
handlers, and the cooperative bargaining association(s) of each 
marketing policy report or modification thereof, filed with the 
Secretary and of the Secretary's action thereon. Copies of all 
marketing policy reports shall be maintained in the office of the 
Committee, where they shall be made available for examination by any 
producer, dehydrator, handler, or cooperative bargaining association 
representative. The Committee shall notify handlers, dehydrators and 
the cooperative bargaining association(s), and give reasonable 
publicity to producers of its computation.
0
7. Sections 989.55 and 989.56 are removed.
0
8. The heading prior to Sec.  989.58 ``Grade and Condition Standards'' 
is revised to read as follows: ``GRADE, QUALITY, AND CONDITION 
STANDARDS''.
0
9. In Sec.  989.58, revise paragraphs (a), (b), (d)(1), (e)(1), and 
(e)(4) to read as follows:


Sec.  989.58  Natural condition raisins.

    (a) Regulation. No handler shall acquire or receive natural 
condition raisins which fail to meet such minimum grade, quality, and 
condition standards as the committee may establish, with the approval 
of the Secretary, in applicable rules and regulations: Provided, That a 
handler may receive raisins for inspection, may receive off-grade 
raisins for reconditioning and may receive or acquire off-grade raisins 
for use in eligible non-normal outlets: And provided further, That a 
handler may

[[Page 24894]]

acquire natural condition raisins which exceed the tolerance 
established for maturity under a weight dockage system established 
pursuant to rules and regulations recommended by the committee and 
approved by the Secretary. Nothing contained in this paragraph shall 
apply to the acquisition or receipt of natural condition raisins of a 
particular varietal type for which minimum grade, quality, and 
condition standards are not applicable or then in effect pursuant to 
this part.
    (b) Changes in minimum grade, quality, and condition standards for 
natural condition raisins. The committee may recommend to the Secretary 
changes in the minimum grade, quality, and condition standards for 
natural condition raisins of any varietal type and may recommend to the 
Secretary that minimum grade, quality, and condition standards for any 
varietal type be added to or deleted. The committee shall submit with 
its recommendation all data and information upon which it acted in 
making its recommendation, and such other information as the Secretary 
may request. The Secretary shall approve any such change if he finds, 
upon the basis of data submitted to him by the committee or from other 
pertinent information available to him, that to do so would tend to 
effectuate the declared policy of the act.
* * * * *
    (d) * * *
    (1) Each handler shall cause an inspection and certification to be 
made of all natural condition raisins acquired or received by him, 
except with respect to:
    (i) An interplant or interhandler transfer of offgrade raisins as 
described in paragraph (e)(2) of this section, unless such inspection 
and certification are required by rules and procedures made effective 
pursuant to this amended subpart;
    (ii) An interplant or interhandler transfer of standard raisins as 
described in Sec.  989.59(e);
    (iii) Raisins received from a dehydrator which have been previously 
inspected pursuant to paragraph (d)(2) of this section;
    (iv) Any raisins for which minimum grade, quality, and condition 
standards are not then in effect;
    (v) Raisins received from a cooperative bargaining association 
which have been inspected and are in compliance with requirements 
established pursuant to paragraph (d)(3) of this section; and
    (vi) Any raisins, if permitted in accordance with such rules and 
procedures as the committee may establish with the approval of the 
Secretary, acquired or received for disposition in eligible non-normal 
outlets. Except as otherwise provided in this section, prior to 
blending raisins, acquiring raisins, storing raisins, reconditioning 
raisins, or acquiring raisins which have been reconditioned, each 
handler shall obtain an inspection certification showing whether or not 
the raisins meet the applicable grade, quality, and condition 
standards: Provided, That the initial inspection for infestation shall 
not be required if the raisins are fumigated in accordance with such 
rules and procedures as the committee shall establish with the approval 
of the Secretary. The handler shall submit or cause to be submitted to 
the committee a copy of such certification, together with such other 
documents or records as the committee may require. Such certification 
shall be issued by inspectors of the Processed Products Standardization 
and Inspection Branch of the U.S. Department of Agriculture, unless the 
committee determines, and the Secretary concurs in such determination, 
that inspection by another agency would improve the administration of 
this amended subpart. The committee may require that raisins held on 
memorandum receipt be re-inspected and certified as a condition for 
their acquisition by a handler.
* * * * *
    (e) * * *
    (1) Any natural condition raisins tendered to a handler which fail 
to meet the applicable minimum grade, quality, and condition standards 
may:
    (i) Be received or acquired by the handler for disposition, without 
further inspection, in eligible non-normal outlets;
    (ii) Be returned unstemmed to the person tendering the raisins; or
    (iii) Be received by the handler for reconditioning. Off-grade 
raisins received by a handler under any one of the three described 
categories may be changed to any other of the categories under such 
rules and procedures as the committee, with the approval of the 
Secretary, shall establish. No handler shall ship or otherwise dispose 
of off-grade raisins which he does not return to the tenderer, transfer 
to another handler as provided in paragraph (e)(2) of this section, or 
recondition so that they at least meet the minimum standards prescribed 
in or pursuant to this amended subpart, except into eligible non-normal 
outlets.
* * * * *
    (4) If the handler is to acquire the raisins after they are 
reconditioned, his obligation with respect to such raisins shall be 
based on the weight of the raisins (if stemmed, adjusted to natural 
condition weight) after they have been reconditioned.
* * * * *
0
10. In Sec.  989.59, revise paragraphs (a), (b), (d), (e), and (g) to 
read as follows:


Sec.  989.59   Regulation of the handling of raisins subsequent to 
their acquisition by handlers.

    (a) Regulation. Unless otherwise provided in this part, no handler 
shall:
    (1) Ship or otherwise make final disposition of natural condition 
raisins unless they at least meet the effective and applicable minimum 
grade, quality, and condition standards for natural condition raisins; 
or
    (2) Ship or otherwise make final disposition of packed raisins 
unless they at least meet such minimum grade quality, and condition 
standards established by the committee, with the approval of the 
Secretary, in applicable rules and regulations or as later changed or 
prescribed pursuant to the provisions of paragraph (b) of this section: 
Provided, That nothing contained in this paragraph shall prohibit the 
shipment or final disposition of any raisins of a particular varietal 
type for which minimum standards are not applicable or then in effect 
pursuant to this part. And provided further, That a handler may grind 
raisins, which do not meet the minimum grade, quality, and condition 
standards for packed raisins because of mechanical damage or sugaring, 
into a raisin paste. The Committee may establish, with approval of the 
Secretary, different grade, quality, and condition regulations for 
different markets.
    (b) The committee may recommend changes in the minimum grade, 
quality, or condition standards for packed raisins of any varietal type 
and may recommend to the Secretary that minimum grade, quality, or 
condition standards for any varietal type be added or deleted. The 
committee shall submit with its recommendation all data and information 
upon which it acted in making its recommendation, and such other 
information as the Secretary may request. The Secretary shall approve 
any such change if he finds, upon the basis of data submitted to him by 
the committee or from other pertinent information available to him, 
that to do so would tend to effectuate the declared policy of the act.
* * * * *
    (d) Inspection and certification. Unless otherwise provided in this

[[Page 24895]]

section, each handler shall, at his own expense, before shipping or 
otherwise making final disposition of raisins, cause and inspection to 
be made of such raisins to determine whether they meet the then 
applicable minimum grade, quality, and condition standards for natural 
condition raisins or the then applicable minimum standards for packed 
raisins. Such handler shall obtain a certificate that such raisins meet 
the aforementioned applicable minimum standards and shall submit or 
cause to be submitted to the committee a copy of such certificate 
together with such other documents or records as the committee may 
require. The certificate shall be issued by the Processed Products 
Standardization and Inspection Branch of the United States Department 
of Agriculture, unless the committee determines, and the Secretary 
concurs in such determination, that inspection by another agency will 
improve the administration of this amended subpart. Any certificate 
issued pursuant to this paragraph shall be valid only for such period 
of time as the committee may specify, with the approval of the 
Secretary, in appropriate rules and regulations.
    (e) Inter-plant and inter-handler transfers. Any handler may 
transfer from his plant to his own or another handler's plant within 
the State of California any raisins without having had such raisins 
inspected as provided in paragraph (d) of this section. The 
transferring handler shall transmit promptly to the committee a report 
of such transfer, except that transfers between plants owned or 
operated by the same handler need not be reported. Before shipping or 
otherwise making final disposition of such raisins, the receiving 
handler shall comply with the requirements of this section.
* * * * *
    (g) Exemption of experimental and specialty packs. The committee 
may establish, with the approval of the Secretary, rules and procedures 
providing for the exemption of raisins in experimental and specialty 
packs from one or more of the requirements of the minimum grade, 
quality, or condition standards of this section, together with the 
inspection and certification requirements if applicable.
0
11. Section 989.60(a) is revised to read as follows:


Sec.  989.60   Exemption.

    (a) Notwithstanding any other provisions of this amended subpart, 
the committee may establish, with the approval of the Secretary, such 
rules and procedures as may be necessary to permit the acquisition and 
disposition of any off-grade raisins, free from any or all regulations, 
for uses in non-normal outlets.
* * * * *
0
12. Section 989.61 is revised to read as follows:


Sec.  989.61   Above parity situations.

    The provisions of this part relating to minimum grade, quality, and 
condition standards and inspection requirements, within the meaning of 
section 2(3) of the act, and any other provisions pertaining to the 
administration and enforcement of the order, shall continue in effect 
irrespective of whether the estimated season average price to producers 
for raisins is in excess of the parity level specified in section 2(1) 
of the act.
0
13. The heading ``VOLUME REGULATION'' prior to Sec.  989.65 is removed.
0
14. Sections 989.65, 989.66, and 989.67 are removed.
0
15. Redesignate Sec.  989.70 as Sec.  989.96.
0
16. Sections 989.71, and 989.72 are removed.
0
17. Section 989.73 (b) is revised to read as follows:


Sec.  989.73  Reports.

* * * * *
    (b) Acquisition reports. Each handler shall submit to the committee 
in accordance with such rules and procedures as are prescribed by the 
committee, with the approval of the Secretary, certified reports, for 
such periods as the committee may require, with respect to his 
acquisitions of each varietal type of raisins during the particular 
period covered by such report, which report shall include, but not be 
limited to:
    (1) The total quantity of standard raisins acquired;
    (2) The total quantity of off-grade raisins acquired pursuant to 
Sec.  989.58(e)(1)(i); and
    (3) Cumulative totals of such acquisitions from the beginning of 
the then current crop year to and including the end of the period for 
which the report is made. Upon written application made to the 
committee, a handler may be relieved of submitting such reports after 
completing his packing operations for the season. Upon request of the 
committee, each handler shall furnish to the committee, in such manner 
and at such times as it may require, the name and address of each 
person from whom he acquired raisins and the quantity of each varietal 
type of raisins acquired from each such person.
* * * * *
0
18. Section 989.79 is revised to read as follows:


Sec.  989.79  Expenses.

    The committee is authorized to incur such expenses as the Secretary 
finds are reasonable and likely to be incurred by it during each crop 
year, for the maintenance and functioning of the committee and for such 
purposes as he may, pursuant to this subpart, determine to be 
appropriate. The funds to cover such expenses shall be obtained levying 
assessments as provided in Sec.  989.80. The committee shall file with 
the Secretary for each crop year a proposed budget of these expenses 
and a proposal as to the assessment rate to be fixed pursuant to Sec.  
989.80, together with a report thereon. Such filing shall be not later 
than October 5 of the crop year, but this date may be extended by the 
committee not more than 5 days if warranted by a late crop.
0
19. In Sec.  989.80, revise paragraphs (a) through (c) to read as 
follows:


Sec.  989.80  Assessments.

    (a) Each handler shall pay to the committee, upon demand, his pro 
rata share of the expenses which the Secretary finds will be incurred, 
as aforesaid, by the committee during each crop year less any amounts 
credited pursuant to Sec.  989.53. Such handler's pro rata share of 
such expenses shall be equal to the ratio between the total raisin 
tonnage acquired by such handler during the applicable crop year and 
the total raisin tonnage acquired by all handlers during the same crop 
year.
    (b) Each handler who reconditions off-grade raisins but does not 
acquire the standard raisins recovered therefrom shall, with respect to 
his assessable portion of all such standard raisins, pay to the 
committee, upon demand, his pro rata share of the expenses which the 
Secretary finds will be incurred by the committee each crop year. Such 
handler's pro rata share of such expenses shall be equal to the ratio 
between the handler's assessable portion (which shall be a quantity 
equal to such handler's standard raisins which are acquired by some 
other handler or handlers) during the applicable crop year and the 
total raisin tonnage acquired by all handlers.
    (c) The Secretary shall fix the rate of assessment to be paid by 
all handlers on the basis of a specified rate per ton. At any time 
during or after a crop year, the Secretary may increase the rate of 
assessment to obtain sufficient funds to cover any later finding by the 
Secretary relative to the expenses of the committee. Each handler shall 
pay such additional assessment to the committee upon demand. In order 
to provide funds to carry out the functions of the committee, the 
committee may accept

[[Page 24896]]

advance payments from any handler to be credited toward such 
assessments as may be levied pursuant to this section against such 
handler during the crop year. The payment of assessments for the 
maintenance and functioning of the committee, and for such purposes as 
the Secretary may pursuant to this subpart determine to be appropriate, 
may be required under this part throughout the period it is in effect, 
irrespective of whether particular provisions thereof are suspended or 
become inoperative.
* * * * *
0
20. Section 989.82 is removed.
0
21. Section 989.84 is revised to read as follows:


Sec.  989.84   Disposition limitation.

    No handler shall dispose of standard raisins, off-grade raisins, or 
other failing raisins, except in accordance with the provisions of this 
subpart or pursuant to regulations issued by the committee.
0
22. In Sec.  989.91:
0
a. Redesignate paragraphs (c) and (d) as paragraphs (d) and (e), 
respectively, and;
0
b. Add a new paragraph (c).
    The revisions and addition read as follows:


Sec.  989.91  Suspension or termination.

* * * * *
    (c) No less than five crop years and no later than six crop years 
after the effective date of this amendment, the Secretary shall conduct 
a referendum to ascertain whether continuance of this part is favored 
by producers. Subsequent referenda to ascertain continuance shall be 
conducted every six crop years thereafter. The Secretary may terminate 
the provisions of this part at the end of any crop year in which the 
Secretary has found that continuance of this part is not favored by a 
two-thirds majority of voting producers, or a two-thirds majority of 
volume represented thereby, who, during a representative period 
determined by the Secretary, have been engaged in the production for 
market of grapes used in the production of raisins in the State of 
California. Such termination shall be announced on or before the end of 
the crop year.
* * * * *
0
23. Section 989.129 is revised to read as follows:


Sec.  989.129  Voting at nomination meetings.

    Any person (defined in Sec.  989.3 as an individual, partnership, 
corporation, association, or any other business unit) who is engaged, 
in a proprietary capacity, in the production of grapes which are sun-
dried or dehydrated by artificial means to produce raisins and who 
qualifies under the provisions of Sec.  989.29(b)(2) shall be eligible 
to cast one ballot for a nominee for each producer member position and 
one ballot for a nominee for each producer alternate member position on 
the committee which is to be filled for his district. Such person must 
be the one who or which: (a) Owns and farms land resulting in his or 
its ownership of such grapes produced thereon; (b) rents and farms 
land, resulting in his or its ownership of all or a portion of such 
grapes produced thereon; or (c) owns land which he or it does not farm 
and, as rental for such land, obtains the ownership of a portion of 
such grapes or the raisins. In this connection, a partnership shall be 
deemed to include two or more persons (including a husband and wife) 
with respect to land the title to which, or leasehold interest in 
which, is vested in them as tenants in common, joint tenants, or under 
community property laws, as community property. In a landlord-tenant 
relationship, wherein each of the parties is a producer, each such 
producer shall be entitled to one vote for a nominee for each producer 
member position and one vote for each producer alternate member 
position. Hence, where two persons operate land as landlord and tenant 
on a share-crop basis, each person is entitled to one vote for each 
such position to be filled. Where land is leased on a cash rental 
basis, only the person who is the tenant or cash renter (producer) is 
entitled to vote. A partnership or corporation, when eligible, is 
entitled to cast only one vote for a nominee for each producer position 
to be filled in its district.
0
24. Sections 989.154 and 989.156 are removed.
0
25. Section 989.158(c)(4)(i) is revised to read as follows:


Sec.  989.158  Natural condition raisins.

* * * * *
    (c) * * *
    (4) * * *
    (i) The handler shall notify the inspection service at least one 
business day in advance of the time such handler plans to begin 
reconditioning each lot of raisins, unless a shorter period is 
acceptable to the inspection service. Such notification shall be 
provided verbally or by other means of communication, including email. 
Natural condition raisins which have been reconditioned shall continue 
to be considered natural condition raisins for purposes of reinspection 
(inspection pursuant to Sec.  989.58(d)) after such reconditioning has 
been completed, if no water or moisture has been added; otherwise, such 
raisins shall be considered as packed raisins. The weight of the 
raisins reconditioned successfully shall be determined by reweighing, 
except where a lot, before reconditioning, failed due to excess 
moisture only. The weight of such raisins resulting from reconditioning 
a lot failing account excess moisture may be determined by deducting 
1.2 percent of the weight for each percent of moisture in excess of the 
allowable tolerance. When necessary due to the presence of sand, as 
determined by the inspection service, the requirement for deducting 
sand tare and the manner of its determination, as prescribed in 
paragraph (a)(1) of this section, shall apply in computing the net 
weight of any such successfully reconditioned natural condition 
raisins. The weight of the reconditioned raisins acquired as packed 
raisins shall be adjusted to natural condition weight by the use of 
factors applicable to the various degrees of processing accomplished. 
The applicable factor shall be that selected by the inspector of the 
reconditioned raisins from among factors established by the Committee 
with the approval of the Secretary.
* * * * *
0
26. The heading ``Volume Regulation'' prior to Sec.  989.166 is 
removed.
0
27. Sections 989.166 and 989.167 are removed.
0
28. In Sec.  989.173:
0
a. Revise paragraphs (a) and (b)(2)(i),
0
b. Remove paragraphs (b)(2)(ii), (f), and (g)(1)(ii);
0
c. Redesignate paragraphs (b)(2)(iii), (g) and (g)(1)(iii) as 
paragraphs (b)(2)(ii), (f) and (f)(1)(ii), respectively; and
0
d. Revise newly redesignated paragraph (b)(2)(ii), paragraph (c)(1), 
(d)(1), (d)(1)(v), and newly redesignated paragraph (f).
    The revisions read as follows:


Sec.  989.173  Reports.

    (a) Inventory reports. Each handler shall submit to the Committee 
as of the close of business on July 31 of each crop year, and not later 
than the following August 6, an inventory report which shall show, with 
respect to each varietal type of raisins held by such handler, the 
quantity of off-grade raisins segregated as to those for reconditioning 
and those for disposition as such. Provided, That, for the Other 
Seedless varietal type, handlers shall report the information required 
in this paragraph separately for the different types of Other Seedless 
raisins. Upon request by the Committee, each handler shall file at 
other times, and as of other dates, any of the said information which 
may reasonably be

[[Page 24897]]

necessary and which the Committee shall specify in its request.
    (b) * * *
    (2) * * *
    (i) The total net weight of the standard raisins acquired during 
the reporting period; and
    (ii) The cumulative totals of such acquisitions from the beginning 
of the then current crop year.
* * * * *
    (c) * * *
    (1) Each month each handler who is not a processor shall furnish to 
the Committee, on an appropriate form provided by the Committee and so 
that it is received by the Committee not later than the seventh day of 
the month, a report showing the aggregate quantity of each varietal 
type of packed raisins and standard natural condition raisins which 
were shipped or otherwise disposed of by such handler during the 
preceding month (exclusive of transfers within the State of California 
between plants of any such handler and from such handler to other 
handlers): Provided, That, for the Other Seedless varietal type, 
handlers shall report such information for the different types of Other 
Seedless raisins. Such required information shall be segregated as to:
* * * * *
    (d) * * *
    (1) Any handler who transfers raisins to another handler within the 
State of California shall submit to the Committee not later than five 
calendar days following such transfer a report showing:
* * * * *
    (v) If packed, the transferring handler shall certify that such 
handler is transferring only acquired raisins that meet all applicable 
marketing order requirements, including reporting, incoming inspection, 
and assessments.
* * * * *
    (f) * * *
    (1) * * *
    (i) The quantity of raisins, segregated as to locations where they 
are stored and whether they are natural condition or packed;
    (ii) * * *
    (2) * * *
    (i) The total net weight of the standard raisins acquired during 
the reporting period; and
* * * * *
    (3) Disposition report of organically-produced raisins. No later 
than the seventh day of each month, handlers who are not processors 
shall submit to the Committee, on an appropriate form provided by the 
Committee, a report showing the aggregate quantity of packed raisins 
and standard natural condition raisins which were shipped or otherwise 
disposed of by such handler during the preceding month (exclusive of 
transfer within the State of California between the plants of any such 
handler and from such handler to other handlers). Such information 
shall include:
* * * * *
0
29. In Sec.  989.210:
0
a. Remove paragraphs (b), (c) and (e);
0
b. Redesignate paragraph (d) as (b), paragraph (f) as (c), and 
paragraph (g) as (d); and
0
c. Revise newly redesignated paragraph (b).
    The revisions read as follows:


Sec.  989.210  Handling of varietal types of raisins acquired pursuant 
to a weight dockage system.

* * * * *
    (b) Assessments. Assessments on any lot of raisins of the varietal 
types specified in paragraph (a) of this section acquired by a handler 
pursuant to a weight dockage system shall be applicable to the 
creditable weight of such lot.
* * * * *
0
30. Sections 989.221 and 989.257 are removed.
0
31. The subpart heading ``Subpart-Schedule of Payments'' prior to Sec.  
989.401 is removed.
0
32. Section 989.401 is removed.
0
33. In part 989 all references of ``offgrade'' are revised to read 
``off-grade''.
0
34. In part 989 all references to ``nonnormal'' are revised to read 
``non-normal''.
0
35. In part 989 all references to ``committee'' are revised to read 
``Committee''.
0
36. In the list below, for each section indicated in the left column, 
remove the title indicated in the middle column from wherever it 
appears in the section, and add the title indicated in the right 
column:

------------------------------------------------------------------------
             Section                    Remove                Add
------------------------------------------------------------------------
989.58(d).......................  Processed Products  Specialty Crops
                                   Standardization     Inspection
                                   and Inspection      Division.
                                   Branch.
989.59(d).......................  Processed Products  Specialty Crops
                                   Standardization     Inspection
                                   and Inspection      Division.
                                   Branch.
989.102.........................  Processed Products  Specialty Crops
                                   Branch, Fruit and   Inspection
                                   Vegetable           Division.
                                   Division.
------------------------------------------------------------------------


    Dated: May 3, 2017.
Bruce Summers,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 2017-09242 Filed 5-30-17; 8:45 am]
BILLING CODE 3410-02-P