[Federal Register: January 28, 2003 (Volume 68, Number 18)]
[Rules and Regulations]
[Page 4079-4085]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28ja03-1]
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Rules and Regulations
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[[Page 4079]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 989
[Docket No. FV03-989-1 IFR]
Raisins Produced From Grapes Grown in California; Modifications
to the Raisin Diversion Program
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Interim final rule with request for comments.
-----------------------------------------------------------------------
SUMMARY: This rule modifies the requirements of the raisin diversion
program (RDP) authorized under the Federal marketing order for
California raisins (order). The order regulates the handling of raisins
produced from grapes grown in California and is administered locally by
the Raisin Administrative Committee (RAC). The changes are intended to
provide the RAC with additional flexibility when implementing a RDP,
and provide opportunity for all producers to participate in a program.
The changes include adding an additional date by which the RAC can
increase the tonnage allotted to a RDP; adding authority for the RAC to
limit the amount of tonnage allotted to vine removal; modifying the
application of the production cap for spur pruners under a RDP; adding
authority for the RAC to condition a vine removal program with a
producer's agreement not to replant and to compensate the RAC for
damages if replanting occurs; revising the requirements for
prioritizing and allocating tonnage for spur pruners under a RDP;
allowing partial production units to be included in a RDP and adding
authority for the RAC to specify provisions to maintain the integrity
of the program; and specifying in the regulations the approval of a
program's provisions by the Department.
DATES: Effective: January 29, 2003. Comments received by March 31,
2003, will be considered prior to issuance of a final rule.
ADDRESSES: Interested persons are invited to submit written comments
concerning this rule. Comments must be sent to the Docket Clerk,
Marketing Order Administration Branch, Fruit and Vegetable Programs,
AMS, USDA, 1400 Independence Avenue SW, STOP 0237, Washington, DC
20250-0237; Fax: (202) 720-8938, or e-mail: moab.docketclerk@usda.gov.
All comments should reference the docket number and the date and page
number of this issue of the Federal Register and will be made available
for public inspection in the Office of the Docket Clerk during regular
business hours, or can be viewed at: http://www.ams.usda.gov/fv/moab.html
.
FOR FURTHER INFORMATION CONTACT: Maureen T. Pello, Senior Marketing
Specialist, California Marketing Field Office, Marketing Order
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 2202
Monterey Street, suite 102B, Fresno, California 93721; telephone: (559)
487-5901, Fax: (559) 487-5906; or Ronald L. Cioffi, Chief, Marketing
Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA,
1400 Independence Avenue SW, STOP 0237, Washington, DC 20250-0237;
telephone: (202) 720-2491, Fax: (202) 720-8938.
Small businesses may request information on complying with this
regulation by contacting Jay Guerber, Marketing Order Administration
Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence
Avenue SW, STOP 0237, Washington, DC 20250-0237; telephone: (202) 720-
2491, Fax: (202) 720-8938, or e-mail: Jay.Guerber@usda.gov.
SUPPLEMENTARY INFORMATION: This rule is issued under Marketing
Agreement and Order No. 989 (7 CFR part 989), both as amended,
regulating the handling of raisins produced from grapes grown in
California, hereinafter referred to as the ``order.'' The order is
effective under the Agricultural Marketing Agreement Act of 1937, as
amended (7 U.S.C. 601-674), hereinafter referred to as the ``Act.''
The Department of Agriculture (USDA) is issuing this rule in
conformance with Executive Order 12866.
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. This rule is not intended to have retroactive effect.
This rule will not preempt any State or local laws, regulations, or
policies, unless they present an irreconcilable conflict with this
rule.
The Act provides that administrative proceedings must be exhausted
before parties may file suit in court. Under section 608c(15)(A) of the
Act, any handler subject to an order may file with USDA a petition
stating that the order, any provision of the order, or any obligation
imposed in connection with the order is not in accordance with law and
request a modification of the order or to be exempted therefrom. Such
handler is afforded the opportunity for a hearing on the petition.
After the hearing USDA would rule on the petition. The Act provides
that the district court of the United States in any district in which
the handler is an inhabitant, or has his or her principal place of
business, has jurisdiction to review USDA's ruling on the petition,
provided an action is filed not later than 20 days after the date of
the entry of the ruling.
This rule modifies the administrative rules and regulations
regarding the RDP specified under the order. The changes are designed
to provide the RAC with additional flexibility when implementing a RDP,
and provide the opportunity for all producers to participate in a
program. The changes are as follows: Add an additional date by which
the RAC can increase the tonnage allotted to a RDP; add authority for
the RAC to limit the amount of tonnage allocated for vine removal;
modify application of the production cap for spur pruners under a RDP;
adding authority for the RAC to condition a vine removal program with a
producer's agreement not to replant and to compensate the RAC for
damages if replanting occurs; revise the requirements for prioritizing
and allocating tonnage for spur pruners under a RDP; and allow partial
production units to be included in a RDP and allow the RAC to specify
provisions to maintain the integrity of the program.
[[Page 4080]]
These regulatory changes were recommended by the RAC at meetings on
October 15, and December 12, 2002, by a near unanimous vote. A member
voting no expressed concern with the definition of partial production
unit as proposed by the RAC.
Given the above changes, appropriate revisions are made to the text
of Sec. 989.156 to include specific references to approval of USDA for
a program's provisions.
Volume Regulation Provisions
The order provides authority for volume regulation designed to
promote orderly marketing conditions, stabilize prices and supplies,
and improve producer returns. When volume regulation is in effect, a
certain percentage of the California raisin crop may be sold by
handlers to any market (free tonnage) while the remaining percentage
must be held by handlers in a reserve pool (reserve) for the account of
the RAC. Reserve raisins are disposed of through various programs
authorized under the order. For example, reserve raisins may be sold by
the RAC to handlers for free use or to replace part of the free tonnage
they exported; carried over as a hedge against a short crop the
following year; or may be disposed of in other outlets not competitive
with those for free tonnage raisins, such as government purchase,
distilleries, or animal feed. Net proceeds from sales of reserve
raisins are ultimately distributed to reserve pool equity holders.
Raisin Diversion Program
The RDP is another program concerning reserve raisins authorized
under the order and may be used, as a means for bringing supplies into
closer balance with market needs. Authority for the program is provided
in Sec. 989.56 of the order. Paragraph (e) of that section provides
authority for the RAC to establish, with the approval of USDA, such
rules and regulations as may be necessary for the implementation and
operation of a RDP. Accordingly, additional procedures and deadlines
are specified in Sec. 989.156.
Pursuant to these sections, the RAC must meet during the crop year
to review raisin data, including information on production, supplies,
market demand, and inventories. If the RAC determines that the
available supply of raisins, including those in the reserve pool,
exceeds projected market needs, it can decide to implement a diversion
program, and announce the amount of tonnage eligible for diversion
during the subsequent crop year. Producers who wish to participate in
the RDP must submit an application to the RAC. Under the current
regulations, the RAC conducts a lottery if the tonnage applied for
exceeds what has been allotted. RAC staff then notifies producers
whether they have been accepted into the program.
Approved producers curtail their production by vine removal or some
other means established by the RAC. Such producers receive a
certificate the following fall from the RAC which represents the
quantity of raisins diverted. Producers sell these certificates to
handlers who pay producers for the free tonnage applicable to the
diversion certificate minus the established harvest cost for the
diverted tonnage. Handlers redeem the certificates by presenting them
to the RAC, and paying an amount equal to the established harvest cost
plus payment for receiving, storing, fumigating, handling, and
inspecting the tonnage represented on the certificate. The RAC then
gives the handler raisins from the prior year's reserve pool in an
amount equal to the tonnage represented on the diversion certificate.
The new crop year's volume regulation percentages are applied to the
diversion tonnage acquired by the handler, as if the handler had bought
raisins directly from a producer.
RAC Recommendation
The California raisin and grape industries continue to be plagued
by burdensome supplies and severe economic conditions. Industry members
have been reviewing various options to help address some of these
concerns. The RAC also has been reviewing options to help the industry
address these issues through the marketing order. The RAC proposed some
requirements for a 2003 RDP at a meeting on October 15, 2002.
Additional revisions were proposed by the RAC's Executive Committee on
October 24, and November 4 and 26, 2002. The RAC met on December 12,
2002, to review the Executive Committee's changes and proposed program.
The RAC ultimately recommended specific changes to the order's
regulations regarding the RDP that could apply to any future RDP. The
changes are designed to provide the RAC with additional flexibility
when implementing a RDP, and provide opportunity for all producers to
participate in a program. The changes are described in the following
paragraphs.
Additional Date for Increasing the RDP Tonnage
With the exception of the 2002-03 crop year, Sec. 989.56(a) of the
order and Sec. 989.156(a)(1) of the regulations specify that the RAC
must announce the quantity of tonnage allotted to a RDP on or before
November 30 of each crop year. Section 989.156(a)(1) specifies further,
with the exception of the 2002-03 crop year, that the RAC may announce
an increase in the tonnage eligible for a RDP on or before January 15
of each crop year. The November 30-deadline in the order was suspended,
and the November 30 and January 15 dates in the regulations were
extended for the 2002-03 crop year to dates specified by the RAC (67 FR
71072; November 29, 2002) to allow time for review and modification of
the RAC's proposed RDP changes.
The RAC recommended that the regulations be modified to allow the
RAC an additional opportunity to increase the tonnage eligible for a
RDP on or before May 1 of each crop year subsequent to 2002-03. This
will allow the RAC the opportunity to allocate additional tonnage to a
RDP in years when raisin deliveries may be slow, or when additional
reserve raisins may be available later during the crop year. Section
989.156(a)(1) is modified accordingly.
Limit on Tonnage Allocated for Vine Removal
Section 989.156(h)(1) specifies that the RAC may limit a RDP to
vine removal only. This requirement will remain unchanged by this rule.
However, the RAC proposed having the ability to cap, or limit, the
amount of tonnage allocated to a RDP for vine removal. For example, the
RAC may allocate 100,000 tons to a RDP, of which 50,000 tons would be
allotted for vine removal only. Under this scenario, the remaining
50,000 tons would be available for spur pruners (or producers who opted
to reduce their production by methods other than vine removal). As
described later in this rule, the RAC recommended revising the
regulations to allow for the allocation of tonnage to spur pruners pro
rata to all who applied. Imposing a cap on vine removers would ensure
that a certain amount of tonnage would be available for a spur prune
program. This additional requirement is specified in Sec.
989.156(a)(2).
Additional Agreement for Vine Removers Who Replant
This RAC recommended that authority be added for the RAC to
condition a vine removal program with
[[Page 4081]]
a producer's agreement not to replant and to compensate the RAC for
damages if replanting occurs. Producers who agree to remove vines, but
replant within a specified number of years (maximum of 5 crop years),
as determined by the RAC, with the approval of USDA, must agree to
compensate the RAC for appropriate damages for the tonnage specified in
the applicable diversion certificate. The payment of damages would be
appropriate because replanting would cause serious damage to a RDP and
the raisin industry. The RAC contemplates that a 5-year restriction on
replanting would be included as a feature of a 2003 RDP for NS raisins.
This would remove acreage from production for at least 8 crop years
because it takes about 3 years for a new vineyard to have significant
production. Adding this requirement to a RDP is expected to help the
industry reduce its burdensome oversupply.
Accordingly, the producer application for a 2003 RDP has been
modified to condition a vine removal program with a producer's
agreement not to replant. Producers who elect to participate in a RDP
and later replant will be required to compensate the RAC for damages at
a rate per ton to be determined by the RAC and approved by USDA for the
tonnage specified on the diversion certificate. Funds collected by the
RAC for such damages will be deposited in the reserve pool applicable
to the particular diversion program and be distributed to the equity
holders in that pool. If a determination is made by the Committee that
a producer violated the agreement not to replant and is subject to
damages, the producer may appeal the Committee's decision in accordance
with paragraph (m) of Sec. 989.156.
Application of Production Cap
Under a RDP, the reserve tonnage allocated to a program becomes
part of the following year's supply. For example, if 100,000 tons of
2002-03 reserve raisins were allocated to a RDP, that tonnage would be
issued to RDP producers in the fall of 2003 in the form of certificates
from the RAC. The certificates represent actual raisins. The 100,000
tons would then be included in the 2003-04 crop estimate. A higher crop
estimate reduces the free tonnage percentage. Since producers are paid
by handlers for their free tonnage raisins, a lower free tonnage
percentage reduces producer returns. The industry has had concerns with
the impact of large diversion programs on the following year's free
tonnage percentage.
As a result, the RAC recommended that the concern about large RDP's
adversely impacting the following year's free tonnage percentage be
addressed through application of the production cap. A production cap
is a limit on the yield per acre that is permitted under a RDP. Section
989.56(a) specifies that the RAC must announce the production cap at
the same time it announces a RDP for the crop year. The section
specifies further that the production cap shall equal 2.75 tons per
acre, unless it is lowered by the RAC, with approval of the Secretary.
The RAC proposed that it have the flexibility to limit the
production cap to a percentage of the yield per acre for production
units on which producers agree to spur prune (or curtail production by
methods other than vine removal) to lessen the adverse effects a large
RDP would have on the following year's free tonnage percentage. For
example, the RAC could specify that the production cap applicable to
2003 spur pruners would equal the lesser of 2.75 tons per acre, or 80
percent of the 2002 yield per acre on that production unit. The
following table illustrates this further.
------------------------------------------------------------------------
Application of production cap
2002 yield per acre (tons (tons)
------------------------------------------------------------------------
5.0................................ 2.75 (2.75 cap)
4.0................................ 2.75 (2.75 cap)
3.5................................ 2.75 (2.75 cap)
3.4375............................. 2.75 (both 80% and 2.75)
3.2................................ 2.56 (80% cap)
3.0................................ 2.4 (80% cap)
2.5................................ 2.0 (80% cap)
2.0................................ 1.6 (80% cap)
1.5................................ 1.2 (80% cap)
1.0................................ 0.8 (80% cap)
------------------------------------------------------------------------
Participants who agree to remove vines would not be subject to the
percentage limit on the production cap because of the effectiveness of
vine removal in reducing production capacity. However, such
participants would remain subject to the established production cap.
This additional flexibility is specified in Sec. 989.156(a)(2).
Allocation of Tonnage for Spur Pruners (Includes Methods of Diversion
Other Than Vine Removal)
Section 989.156(d) currently requires that, if reserve tonnage
exists after the allocation of diversion tonnage has been made to all
eligible producer applicants who agree to remove vines, a lottery shall
be held to allocate remaining tonnage. The RAC recommended that it have
the flexibility to allocate such tonnage either pro rata to remaining
applicants or by a lottery for complete production units to remaining
applicants if a minimal amount of tonnage remains. Allocating tonnage
pro rata would provide the opportunity for all producers to participate
in a spur prune program. Accordingly, Sec. Sec. 989.156(a)(2) and
989.156(d) is modified to incorporate this option.
Inclusion of Partial Production Units
As described above, the RAC contemplates future RDP's where the
tonnage allotted to applicants who agree to spur prune vines (or divert
production using a method other than vine removal) may be done on a pro
rata basis. Such producers would remove only a portion of a production
unit, or a ``partial'' unit.
In 1997, the RAC recommended that partial production units no
longer be accepted into the RDP, and Sec. 989.156 was modified
accordingly (62 FR 60764; November 13, 1997). This action was taken
because the RAC had concerns that some producers were removing weak
vines in a production unit and getting credit under a RDP for an
inflated amount of tonnage.
To implement the RAC's proposal for allocating tonnage on a pro-
rata basis to applicants who agree to spur prune their vines, and help
maintain integrity of the program, the RAC recommended that a partial
production unit must have two permanent, contiguous (natural or man-
made) boundaries. This would eliminate the ability for producers to
select certain rows of weak vines and artificially inflate the tonnage
on their unit. This definition is added to paragraph (o) of Sec.
989.156. Additionally, the words ``or portion thereof'' are added to
paragraphs (h) and (i) of Sec. 989.156 to indicate that partial units
may be included in a RDP.
Finally, the RAC recommended that it be given the authority to
specify provisions for a partial production unit to maintain the
integrity of the program. For example, the RAC indicated that it might
want to specify that only a certain corner of each vineyard may be
accepted into a spur-prune RDP to further alleviate the problem of a
producer choosing the weakest corner of his/her vineyard, and to help
maintain the integrity of the RDP. Accordingly, paragraph (a) of Sec.
989.156 is modified to reflect that the RAC may limit a program that is
applicable to partial production units by specifying the portion of the
production units that can be diverted, or like provisions to maintain
the integrity of the program.
Initial Regulatory Flexibility Analysis
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), the Agricultural Marketing Service (AMS) has considered the
economic impact of this action on small entities.
[[Page 4082]]
Accordingly, AMS has prepared this initial regulatory flexibility
analysis.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions in order that small businesses will
not be unduly or disproportionately burdened. Marketing orders issued
pursuant to the Act, and rules issued thereunder, are unique in that
they are brought about through group action of essentially small
entities acting on their own behalf. Thus, both statutes have small
entity orientation and compatibility.
There are approximately 20 handlers of California raisins who are
subject to regulation under the order and approximately 4,500 raisin
producers in the regulated area. Small agricultural firms are defined
by the Small Business Administration (13 CFR 121.201) as those having
annual receipts of less that $5,000,000, and small agricultural
producers are defined as those having annual receipts of less than
$750,000. Thirteen of the 20 handlers subject to regulation have annual
sales estimated to be at least $5,000,000, and the remaining 7 handlers
have sales less than $5,000,000. No more than 7 handlers, and a
majority of producers, of California raisins may be classified as small
entities.
The California Agriculture Statistics Service (CASS) has forecast
the 2002 production of raisin variety grapes at 2,550,000 tons (green).
This is a relatively high level of production. The record high
production occurred in 2000, at 2,921,000 tons (green).
Producers market raisin variety grapes in the fresh market (table),
wine or juice market (crush), or dry them into raisins. Typically, 67
percent of the crop is dried for raisins, 20 percent crushed for wine
and juice, and the remaining 13 percent of the crop is utilized in
fresh and canned sales. These outlets provide a hedge for producers
attempting to minimize risk from bad weather (rain) or a depressed
market (concentrate, wine, or raisins).
The industry's estimate for all variety raisin production, as of
October 4, 2002, is 446,449 dried tons (407,996 tons for NS). This will
be the third consecutive year that raisin production has been above
400,000 tons. Combined domestic and export demand (shipments) is
estimated at approximately 300,000 tons. These levels of production,
combined with stable demand have resulted in a large build-up of free
and reserve carryin inventories.
The RAC reports that 48,749 tons of NS raisins are currently being
held in the reserve pool from the 2001 crop. In addition, 153,152 free
tons are held by handlers in inventories. With current total dried
production estimated at 446,449 tons, and combined free and reserve
inventories at 201,901 tons, the industry has over 600,000 tons of
raisins.
This type of surplus situation leads to serious marketing problems.
Handlers compete against each other in an attempt to sell more raisins
to reduce inventories and to market their crop. This situation puts
downward pressure on producers' prices and incomes.
In addition, it has been reported that the wineries offered $65 a
ton for green NS raisins for crushing. In recent years, wineries have
typically offered prices ranging from $164 to $200 per ton. The wine
price for NS grapes was lowered to $125 per ton in 2000 and fell to
$85.70 per ton in 2001. This has resulted in more raisin variety grapes
being dried for raisins, which has added to the surplus situation in
the raisin market.
Typically, 500,000 tons of raisin variety grapes are delivered to
the wineries for crushing. In 2001, this volume decreased to 261,000
tons. The 2002 crop year deliveries for crushing are expected to remain
low.
Surplus situations are often the result of increased bearing acres,
which are encouraged by high prices. However, bearing acres for raisin
variety grapes have fallen from 280,000 acres in 2000 to 273,000 acres
in 2002. In addition, 27,000 acres were idle due to the raisin
diversion program. The increased raisin production is largely the
result of producers deciding to dry more grapes for raisins due to the
low crush prices and increased yields. The RAC hopes to utilize the RDP
to help alleviate the industry's oversupply. The RAC's recommended
changes are designed to add flexibilities to the RDP, and provide the
opportunity for all producers to participate in a program. The overall
impact of a RDP with the recommended flexibility is expected to impact
small and large entities positively by reducing the industry's
production capacity, and by bringing supplies in closer balance with
market needs.
This rule revises Sec. 989.156 of the order's rules and
regulations regarding the RDP. Under a RDP, producers receive
certificates from the RAC for curtailing their production to reduce
burdensome supplies. The certificates represent diverted tonnage.
Producers sell the certificates to handlers who, in turn, redeem the
certificates with the RAC for raisins from the prior year's reserve
pool. Specifically, this rule revises the requirements of a RDP to: Add
an additional date by which the RAC can increase the tonnage allotted
to a RDP; add authority for the RAC to limit the amount of tonnage
allocated for vine removal; modify application of the production cap
for spur pruners under a RDP; adding authority for the RAC to condition
a vine removal program with a producer's agreement not to replant and
to compensate the RAC for damages if replanting occurs; revise the
requirements for prioritizing and allocating tonnage for spur pruners
under a RDP; allow partial production units to be included in a RDP and
add authority for the RAC to specify provisions to maintain the
integrity of the program; and specifying in the regulations the
approval of a RDP's provisions by USDA. Authority for these changes is
provided in Sec. 989.56(e) of the order.
Regarding the impact of this action on affected entities, these
changes are designed to provide the RAC with additional flexibility
when implementing a RDP. Adding the May 1 date whereby the RAC may
increase the tonnage allotted to a RDP would give more producers an
opportunity to participate in the program. The changes regarding the
way tonnages are allocated under a program (cap on vine removal that
would allow a specified amount of tonnage available for spur pruners,
and allocating spur prune tonnage pro rata to all applicants) are
intended to provide the opportunity for all producers to participate at
some level in a RDP. Thus, all producers could potentially have the
opportunity to earn some income for curtailing their production.
With regard to cost, based on past RDP's, the RAC estimates that
compliance and verification costs associated with a RDP average about
$150 per production unit. Using an estimate of 1.25 production units
per RDP producer application, if all 4,500 producers participated in a
RDP, there could potentially be about 5,625 production units in a
program. Thus, using the $150 per unit figure, compliance and
verification costs for the program could average about $843,750. The
overall impact of the changes is difficult to quantify. However, if a
RDP implemented using the increased flexibility helps bring supplies
into balance with market needs over time, the benefits for both small
and large entities would be positive. When supplies and market needs
are in balance, experience has shown that producers and handlers both
benefit, regardless of size.
Regarding alternatives to the RAC's recommendation, the industry
has been considering various options and programs to help alleviate the
severe economic conditions adversely
[[Page 4083]]
impacting both raisin producers and handlers. Industry groups outside
of the RAC are seeking financial assistance under section 32 of the Act
of August 24, 1935 (7 U.S.C. 612c). The RAC also has a subcommittee
that is reviewing long-term solutions to help the industry that would
require formal rulemaking changes to the marketing order. RAC members
have been seeking short-term solutions available through the existing
order, or slight modifications thereto. Thus, the RAC recommended
changes are designed to add flexibilities to the RDP and provide the
potential for all producers to participate in a program. The RAC hopes
to utilize the RDP to help alleviate the industry's oversupply
situation.
The RAC and Executive Committee did consider options to some of the
features recommended by the RAC. One option concerned an alternative to
application of the production cap. That is, specifying that producers
who agreed to spur prune their vines would have to spur prune an
additional percentage of their acreage that would not be reflected on
their diversion certificates. However, the order does not provide
authority for the application of a ``multiplier'' in this fashion to
vineyards that were spur pruned. The RAC ultimately proposed that it
have the flexibility to limit the production cap to a percentage of the
yield per acre for production units on which producers agree to spur
prune (or curtail production by methods other than vine removal).
At its meetings, the Executive Committee also considered other
dates besides May 1 whereby the RAC could increase the tonnage allotted
to a RDP. An April date was contemplated, but not proposed because
industry members would rather be past the threat of an April frost
before making a decision whether to add tonnage to a RDP. Thus, the May
1 date was deemed appropriate and ultimately proposed by the RAC.
There was some discussion by industry members about partial
production units. Some members questioned whether authority for partial
units should be added back into the order's regulations, and some
questioned whether a partial unit should be required to have two
permanent, contiguous boundaries. There was also concern that a
producer could spur prune a corner of his/her vineyard, redesign his/
her trellacing system to provide for significantly increased yields,
and contribute to future oversupplies. After much discussion, the
majority of RAC members concurred with allowing partial production
units in a RDP, and limiting such a unit to one that has two permanent,
contiguous boundaries.
This rule does not add measurably to the current burden on
reporting or recordkeeping requirements for either small or large
raisin handlers. In accordance with the Paperwork Reduction Act of 1995
(44 U.S.C. Chapter 35), the information collection requirement referred
to in this rule (i.e., the RDP application) has been approved by the
Office of Management and Budget (OMB) under OMB Control No. 0581-0178.
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. Finally, USDA has
not identified any relevant Federal rules that duplicate, overlap, or
conflict with this rule.
Further, this action was reviewed by the RAC's Administrative
Issues Subcommittee October 7 and 15, and December 10 and 12, 2002, by
the RAC's Executive Committee on October 24, and November 4 and 26,
2002, and by the RAC on October 7 and 15, and December 12, 2002. All of
these meetings where this action was deliberated were public meetings
widely publicized throughout the raisin industry. All interested
persons were invited to attend the meetings and participate in the
industry's deliberations. Finally, all interested persons are invited
to submit information on the regulatory and informational impact of
this action on small businesses.
A small business guide on complying with fruit, vegetable, and
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab.html.
Any questions about the compliance
guide should be sent to Jay Guerber at the previously mentioned address
in the FOR FURTHER INFORMATION CONTACT section.
A 60-day comment period is provided to allow interested persons to
respond to this rule. Any comments received will be considered prior to
finalization of this rule.
After consideration of all relevant material presented, including
the RAC's recommendation, and other information, it is found that this
interim final rule, as hereinafter set forth, will tend to effectuate
the declared policy of the Act.
Pursuant to 5 U.S.C. 553, it is also found and determined upon good
cause that it is impracticable, unnecessary, and contrary to the public
interest to give preliminary notice prior to putting this rule into
effect, and that good cause exists for not postponing the effective
date of this rule until 30 days after publication in the Federal
Register because: (1) This rule provides the RAC with additional
flexibility when implementing a RDP; (2) this rule needs to be in place
as soon as possible so that these requirements can be in place for a
2003 RDP, and the RAC and all potential participants can plan
accordingly. (3) this action was recommended by a near unanimous vote
of the RAC and producer participation in a RDP is voluntary; and (4) a
60-day comment period is provided and all comments received will be
considered in finalizing this rule.
List of Subjects in 7 CFR Part 989
Grapes, Marketing agreements, Raisins, Reporting and recordkeeping
requirements.
For the reasons set forth in the preamble, 7 CFR part 989 is
amended as follows:
PART 989--RAISINS PRODUCED FROM GRAPES GROWN IN CALIFORNIA
1. The authority citation for 7 CFR part 989 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
2. In Sec. 989.156, paragraphs (a), (d), (h)(2) and (3), (i), and
(o) are revised to read as follows:
Sec. 989.156 Raisin diversion program.
(a)(1) Quantity to be diverted.
On or before November 30 of each crop year, the Committee, with the
approval of the Secretary, shall announce the quantity of raisins
eligible for a raisin diversion program: Provided, That, for the 2003
diversion program, this date may be extended by the Committee to a
later date within the 2002-03 crop year. On or before January 15 of
each crop year, the Committee, with the approval the Secretary, may
announce an increase in the tonnage eligible for a raisin diversion
program: Provided, That, for the 2002 Natural (sun-dried) Seedless
raisin diversion program, the Committee may announce an increase in the
quantity of tonnage eligible for the program later than January 15: And
provided further, That, for the 2003 and subsequent raisin diversion
programs, the Committee, with the approval of the Secretary, may
announce an increase in the tonnage eligible for a raisin diversion
program on or before May 1 of each crop year. The quantity eligible for
diversion may be announced for any of the following varietal types of
raisins: Natural (sun-dried) Seedless, Muscat (including other raisins
with seeds), Sultana, Zante
[[Page 4084]]
Currant, Monukka, and Other Seedless raisins. At the same time, the
Committee, with the approval of the Secretary, shall determine and
announce to producers, handlers, and the cooperative bargaining
association(s) the allowable harvest cost to be applicable to such
diversion tonnage. The factors to be reviewed by the Committee in
determining allowable harvest costs shall include but not be limited
to: Costs for picking, turning, rolling, boxing, paper trays, vineyard
terracing, hauling to the handler, and crop insurance.
(2) Additional provisions.
For any crop year's diversion program, the Committee, with the
approval of the Secretary, may:
(i) Limit the entire program to production units on which producers
agree to remove vines;
(ii) Limit a portion of the program to production units on which
producers agree to remove vines;
(iii) Limit the production cap to a percentage (less than or equal
to 100 percent) of the yield per acre of the specific production unit
for production units on which producers agree to divert production by
methods other than vine removal;
(iv) Limit participation in a vine removal program to producer's
who agree not to replant vines for a period not to exceed 5 years and
who agree to compensate the Committee for appropriate damages if vines
are replanted. Damages collected by the Committee pursuant to this
subparagraph shall be deposited in the reserve pool fund of the reserve
pool applicable to the particular diversion program and be distributed
to the equity holders in that pool. If a determination is made by the
Committee that a producer violated the agreement not to replant and is
subject to damages, the producer may appeal the Committee's decision in
accordance with paragraph (m) of this section;
(v) Specify how tonnage available to producers who agree to divert
production by means other than through vine removal will be allotted,
either pro-rata to remaining applicants, or by lottery to remaining
applicants for complete production units if a minimal amount of tonnage
remains; and/or
(vi) Limit a program that is applicable to partial production units
by specifying the portion of the production units that can be diverted,
or like provisions to maintain the integrity of the program.
Additional provisions provided pursuant to this paragraph shall be
announced at the time the tonnage available for that season's diversion
program is announced.
* * * * *
(d) Priority of applications and allocation of tonnage.
(1) Those producer applications indicating that the vines on the
producing units will be removed shall receive first priority over other
applications when reserve tonnage under the program is to be allocated.
(2) Pursuant to paragraphs (a)(2)(i) and (a)(2)(ii) of this
section, if the entire program, or a portion of the program, is limited
to production units on which producers agree to remove vines, and the
production volume in such vine removal applications exceeds the amount
of diversion tonnage available for vine removal, a lottery will be held
to allocate such vine removal tonnage among the respective applicants.
(3) Remaining tonnage available under a diversion program, after
that allocated to producer applications indicating that the vines of
the producing units will be removed, shall be allocated by the
Committee either:
(i) pro-rata to remaining applicants; or
(ii) to remaining applicants by a lottery for complete production
units, if a minimal amount of tonnage remains.
In conducting any lottery under this section, the Committee may
group producer applications on a handler-by-handler basis, and separate
lotteries will be held for each group. The diversion tonnage of raisins
available for each such group in each lottery may not exceed the
percentage of total handler acquisitions acquired by the group's
handler during the previous crop year. If diversion tonnage exists
after such group lotteries, such remaining diversion tonnage may be
allocated by one lottery of all remaining producer applications.
* * * * *
(h) * * *
(2) Period of diversion. An approved applicant must remove the
grapes, or vines, indicated on the application within the production
unit, or portion thereof, designated within the application not later
than June 1 of the crop year in which a diversion program is
implemented. Producers who remove the vines on a production unit after
August 15 may qualify for a diversion program for that crop year if a
diversion program is announced and if diversion on that unit and vine
removal after August 15 can be documented and verified.
(3) Failure to divert. Any raisin producer who does not take the
necessary measures to remove the grapes on an approved production unit,
or portion thereof, by June 1, or any raisin producer who has indicated
the removal of vines or the intent to remove the vines and who does not
remove such vines on an approved production unit by June 1, shall not
be issued a diversion certificate, may be subject to liquidated damages
and interest charges as provided in paragraph (q) of this section, may
be subject to an injunctive action under the Act, and may be denied the
opportunity to participate in the next diversion program, when
implemented: Provided: That any producer who has more than one
production unit and fails to divert on an approved production unit or
portion thereof may be denied the opportunity to participate on all of
that producer's production units, in the next diversion program. For
spur-pruned vines, this date may be extended 2 weeks from the date of
the inspection of a producer's vineyard if more than 4 bunches on spur-
pruned vines are present at the time of inspection.
(i) Issuance of certificates. When preliminary percentages are
announced, the Committee shall issue diversion certificates to those
approved applicants who have removed grapes in accordance with this
section. Such certificates shall represent an amount of reserve tonnage
raisins equal to the amount of raisins diverted from the production
unit(s), or portion(s) thereof, specified in the producer application,
or additional quantity granted by the Committee when vines are diverted
through vine removal or any other means established by the Committee,
with the approval of the Secretary. If, prior to issuance of a
certificate, the Committee is notified by an approved applicant that
such applicant's interest in the production unit(s), or portion(s)
thereof, involved in the program has been transferred to another
person, the Committee may substitute the transferee for the applicant
provided the transferee agrees to comply with the provisions of this
section.
* * * * *
(o) Production units.
(1) For the purpose of the raisin diversion program, a production
unit is a clearly defined geographic area with permanent boundaries
(either natural or man-made). A producer must be able to document to
the Committee the previous year's production data for that specific
area by means of sales receipts or other deliveries or transfer
documents which indicate the creditable fruit weight delivered to
handlers from that specific area. If the information submitted by
producers on the application concerning a unit's
[[Page 4085]]
production is significantly greater than past production on the unit,
production on neighboring units, or the industry norm, or the
production is unable to be verified based on submitted documentation,
the Committee may request additional documentation such as tray count,
payroll records, prior years' production, and insurance records to
substantiate the tonnage of raisins produced on all production units
that such applicant controls or owns. Producers would not be precluded
from submitting other information substantiating production if those
producers desired. A new production unit will not be eligible for the
raisin diversion program until at least 1 year's production has been
grown and is documented. An existing production unit, transferred to a
new or expanding producer, is eligible for the raisin diversion program
as soon as the previous year's production can be properly documented.
(2) For purposes of the raisin diversion program, a partial
production unit must have two permanent, contiguous boundaries (either
natural or man-made).
* * * * *
Dated: January 23, 2003.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 03-1965 Filed 1-23-03; 5:09 pm]
BILLING CODE 3410-02-P