[Federal Register Volume 86, Number 57 (Friday, March 26, 2021)]
[Proposed Rules]
[Pages 16085-16087]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-06222]


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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. 86, No. 57 / Friday, March 26, 2021 / 
Proposed Rules  

[[Page 16085]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 925

[Doc. No. AMS-SC-20-0093; SC21-925-1 PR]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would implement a recommendation from the 
California Desert Grape Administrative Committee (Committee) to 
increase the assessment rate established for the 2021 and subsequent 
fiscal periods. The proposed assessment rate would remain in effect 
indefinitely unless modified, suspended, or terminated.

DATES: Comments must be received by May 10, 2021.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposed rule. Comments must be sent to the Docket 
Clerk, Marketing Order and Agreement Division, Specialty Crops Program, 
AMS, USDA, 1400 Independence Avenue SW, STOP 0237, Washington, DC 
20250-0237; or internet: https://www.regulations.gov. Comments should 
reference the document number and the date and page number of this 
issue of the Federal Register and will be available for public 
inspection in the Office of the Docket Clerk during regular business 
hours, or can be viewed at: https://www.regulations.gov. All comments 
submitted in response to this rule will be included in the record and 
will be made available to the public. Please be advised that the 
identity of the individuals or entities submitting the comments will be 
made public on the internet at the address provided above.

FOR FURTHER INFORMATION CONTACT: Bianca Bertrand, Management, Program 
Analyst, California Marketing Field Office or Andrew Hatch, Deputy 
Director, Marketing Order and Agreement Division, Specialty Crops 
Program, AMS, USDA; Telephone: (559) 487-5901 or email: 
[email protected] or [email protected].
    Small businesses may request information on complying with this 
regulation 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: This action, pursuant to 5 U.S.C. 553, 
proposes to amend regulations issued to carry out a marketing order as 
defined in 7 CFR 900.2(j). This proposed rule is issued under Marketing 
Agreement and Order No. 925, as amended (7 CFR part 925), regulating 
the handling of grapes grown in a designated area of southeastern 
California. Part 925 (referred to as the ``Order'') is effective under 
the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 
601-674), hereinafter referred to as the ``Act.'' The Committee locally 
administers the Order and is comprised of producers and handlers of 
grapes operating within the production area, and a public member.
    The Department of Agriculture (USDA) is issuing this proposed rule 
in conformance with Executive Orders 13563 and 13175. This proposed 
rule falls within a category of regulatory actions that the Office of 
Management and Budget (OMB) exempted from Executive Order 12866 review.
    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. Under the Order now in effect, grape handlers in 
a designated area of southeastern California are subject to 
assessments. Funds to administer the Order are derived from such 
assessments. It is intended that the assessment rate would be 
applicable to all assessable grapes for the 2021 fiscal period and 
continue until amended, suspended, or terminated.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with USDA a petition 
stating that the order, any provision of the order, or any obligation 
imposed in connection with the order is not in accordance with law and 
request a modification of the order or to be exempted therefrom. Such 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 the 
entry of the ruling.
    This proposed rule would increase the assessment rate from $0.020 
per 18-pound lug of assessable grapes handled, the rate that was 
established for the 2018 and subsequent fiscal periods, to $0.040 per 
18-pound lug of assessable grapes handled for the 2021 and subsequent 
fiscal periods.
    The Order authorizes the Committee, with the approval of USDA, to 
formulate an annual budget of expenses and collect assessments from 
handlers to administer the program. The members are familiar with the 
Committee's needs and with the costs of goods and services in their 
local area and are in a position to formulate an appropriate budget and 
assessment rate. The assessment rate is formulated and discussed in a 
public meeting. Thus, all directly affected persons have an opportunity 
to participate and provide input.
    For the 2018 and subsequent fiscal periods, the Committee 
recommended, and USDA approved, an assessment rate of $0.020 per 18-
pound lug of assessable grapes handled. That assessment rate continues 
in effect from fiscal period to fiscal period unless modified, 
suspended, or terminated by USDA upon recommendation and information 
submitted by the Committee or other information available to USDA.
    The Committee met on November 4, 2020, and unanimously recommended 
expenditures of $85,500, and an assessment rate of $0.040 per 18-pound 
lug of assessable grapes handled for the 2021 and subsequent fiscal 
periods. In comparison, last year's budgeted expenditures were 
$121,100. The proposed assessment rate of $0.040 is $0.020 higher than 
the rate currently in effect. The Committee recommended increasing the 
assessment rate to provide adequate income to cover the

[[Page 16086]]

Committee's budgeted expenses for the 2021 fiscal period, as well as 
add funds to the contingency reserve. Funds in the reserve are expected 
to be approximately $50,100 at the end of the 2021 fiscal period, which 
is within the Order's requirement to carryover no more than 
approximately one fiscal period's budgeted expenses.
    The major expenditures recommended by the Committee for the 2021 
fiscal period include $50,000 for management and compliance expenses; 
$19,500 for direct office expenses; $16,000 for shared office, 
facilities, and maintenance expenses.
    Budgeted expenses for these items for the 2020 fiscal period were 
$56,000 for management and compliance expenses; $20,700 for direct 
office expenses; $15,900 for shared office, facilities, and maintenance 
expenses; and $28,500 for production research.
    The Committee determined that the contingency reserve fund had 
grown too large, so they used $37,100 from it to help fund the 2020 
budget rather than raise their assessment rate.
    The Committee derived the recommended assessment rate by 
considering anticipated expenses; an estimated crop of 2.5 million 18-
pound lugs of assessable grapes; and the amount of funds available in 
the authorized contingency reserve. Income derived from handler 
assessments, calculated at $100,000 (2.5 million 18-pound lugs of 
assessable grapes multiplied by $0.040 assessment rate), would be 
adequate to cover budgeted expenses of $85,500, as well as add a small 
amount of funds ($14,500) back into the contingency reserve. Funds in 
the reserve are estimated to be $50,100 at the end of the 2021 fiscal 
period.
    The assessment rate proposed in this rule would continue in effect 
indefinitely unless modified, suspended, or terminated by USDA upon 
recommendation and information submitted by the Committee or other 
available information.
    Although this assessment rate would be in effect for an indefinite 
period, the Committee will continue to meet prior to or during each 
fiscal period to recommend a budget of expenses and consider 
recommendations for modification of the assessment rate. The dates and 
times of Committee meetings are available from the Committee or USDA. 
Committee meetings are open to the public and interested persons may 
express their views at these meetings. USDA would evaluate Committee 
recommendations and other available information to determine whether 
modification of the assessment rate is needed. Further rulemaking would 
be undertaken as necessary. The Committee's 2021 fiscal period budget, 
and those for subsequent fiscal periods, would be reviewed and, as 
appropriate, approved by USDA.

Initial Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) 
has considered the economic impact of this proposed rule on small 
entities. Accordingly, AMS has prepared this initial regulatory 
flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
businesses subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and the rules issued thereunder, are unique in 
that they are brought about through group action of essentially small 
entities acting on their own behalf.
    There are approximately 10 handlers subject to the regulation under 
the Order, and approximately 21 producers of grapes in the production 
area. Small agricultural producers are defined by the Small Business 
Administration (SBA) as those having annual receipts of less than 
$1,000,000, and small agricultural service firms have been defined as 
those whose annual receipts are less than $30,000,000 (13 CFR 121.201).
    According to the Committee data, USDA Market News Shipping Point 
Data, and National Agricultural Statistics Service (NASS), the national 
average producer price data released in 2020 for the 2019 production 
year was approximately $10.62 per 18-pound lug. Assuming that the 2020 
producer price remains the same as that for 2019, and using Committee 
data for the 2020 total grape production of 2,448,021 18-pound lugs, 
the total 2020 value of the grape crop was $25,997,983 (2,448,021 18-
pound lugs times $10.62 per 18-pound lug equals $25,997,983). Dividing 
the total grape crop value by the estimated number of producers (21) 
yields an estimated average receipt per producer of $1,237,999, which 
is above the SBA threshold for small producers.
    According to USDA Market News data, the reported terminal price for 
2020 for grapes ranged between $18.95 to $24.95 per 18-pound lug. The 
average of this range is $21.95 ($18.95 plus $24.95 divided by 2). 
Multiplying the 2020 grape total production of 2,448,021 18-pound lugs 
by the estimated average price per 18-pound lug of $21.95 equals 
$53,734,061.
    Dividing this figure by 10 regulated handlers yields estimated 
average annual handler receipts of $5,373,406, which is below the SBA 
threshold for small agricultural service firms. Therefore, using the 
above data, the majority of producers may be considered large entities, 
and handlers of grapes in the production area may be classified as 
small entities.
    Based upon information from NASS, the grower price reported for 
grapes in 2019 was $1,180 per ton ($10.62 per 18-pound lug) of grapes. 
In order to determine the estimated assessment revenue as a percentage 
of the total grower revenue, we calculate the assessment rate ($0.040 
per 18-pound lug) times the estimated production (2,500,000 18-pound 
lugs), which equals the assessment revenue of $100,000.
    The grower revenue is calculated by multiplying the grower price of 
$10.62 per 18-pound lug times the estimated production (2,500,000 18-
pound lugs), which equals the grower revenue of $26,550,000.
    In the final step, dividing the assessment revenue by the grower 
revenue indicates that, for the 2021 fiscal period, the estimated 
assessment revenue as a percentage of total grower revenue would be 
about 0.38 percent.
    This proposal would increase the assessment rate collected from 
handlers for the 2021 and subsequent fiscal periods from $0.020 to 
$0.040 per 18-pound lug of assessable grapes handled. The Committee 
unanimously recommended 2021 expenditures of $85,500 and an assessment 
rate of $0.040 per 18-pound lug of assessable grapes handled. The 
proposed assessment rate of $0.040 per 18-pound lug of assessable 
grapes handled is $0.020 higher than the current rate. The volume of 
assessable grapes for the 2021 fiscal period is estimated to be 
2,500,000 18-pound lugs. Thus, the $0.040 per 18-pound lug of 
assessable grapes handled should provide $100,000 in assessment income 
(2,500,000 multiplied by $0.040). Income derived from handler 
assessments would be adequate to cover budgeted expenses for the 2021 
fiscal period.
    The major expenditures recommended by the Committee for the 2021 
fiscal period include $50,000 for management and compliance expenses; 
$19,500 for direct office expenses; $16,000 for shared office, 
facilities, and maintenance expenses. Budgeted expenses for the 2020 
fiscal period were $56,000 for management and compliance; $20,700 for 
direct office; $15,900 for shared office, facilities, and

[[Page 16087]]

maintenance; and $28,500 for production research.
    The Committee recommended increasing the assessment rate to provide 
adequate income to cover the Committee's budgeted expenses for the 2021 
fiscal period, while adding funds to its financial reserve. This action 
would maintain the Committee's reserve balance at a level that the 
Committee believes is appropriate and meets the requirements of the 
Order.
    Prior to arriving at this budget and assessment rate 
recommendation, the Committee discussed various alternatives, including 
maintaining the current assessment rate of $0.020 per 18-pound lug of 
assessable grapes handled, and increasing the assessment rate by a 
different amount. However, the Committee determined that the 
recommended assessment rate would fully fund budgeted expenses and add 
funds to the contingency reserve.
    This proposed rule would increase the assessment obligation imposed 
on handlers. Assessments are applied uniformly on all handlers, and 
some of the costs may be passed on to producers. However, these costs 
would be offset by the benefits derived by the operation of the Order.
    The Committee's meeting was widely publicized throughout the 
industry. All interested persons were invited to attend the meeting and 
encouraged to participate in Committee deliberations on all issues. 
Like all Committee meetings, the November 4, 2020, meeting was a public 
meeting, and all entities, both large and small, were able to express 
views on this issue. Interested persons are invited to submit comments 
on this proposed rule, including the regulatory and information 
collection impacts of this action on small businesses.
    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the Order's information collection requirements have been 
previously approved by OMB and assigned OMB No. 0581-0189, Fruit Crops. 
No changes in those requirements would be necessary as a result of this 
proposed rule. Should any changes become necessary, they would be 
submitted to OMB for approval.
    This proposed rule would not impose any additional reporting or 
recordkeeping requirements on either small or large southeastern 
California grape handlers. As with all Federal marketing order 
programs, reports and forms are periodically reviewed to reduce 
information requirements and duplication by industry and public sector 
agencies.
    AMS is committed to complying with the E-Government Act, to promote 
the use of the internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this proposed rule.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: 
https://www.ams.usda.gov/rules-regulations/moa/small-businesses. Any 
questions about the compliance guide should be sent to Richard Lower at 
the previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    A 45-day comment period is provided to allow interested persons to 
respond to this proposed rule. All written comments timely received 
will be considered before a final determination is made on this matter.

List of Subjects in 7 CFR Part 925

    Grapes, Marketing agreements, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, AMS proposes to amend 7 
CFR part 925 as follows:

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

0
1. The authority citation for 7 CFR part 925 continues to read as 
follows:

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

0
2. Section 925.215 is revised to read as follows:


Sec.  925.215  Assessment rate.

    On and after January 1, 2021, an assessment rate of $0.040 per 18-
pound lug is established for grapes grown in a designated area of 
southeastern California.

Bruce Summers, Administrator,
Agricultural Marketing Service.
[FR Doc. 2021-06222 Filed 3-25-21; 8:45 am]
BILLING CODE 3410-02-P