[Federal Register: November 14, 2003 (Volume 68, Number 220)]
[Rules and Regulations]
[Page 64499-64502]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14no03-3]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Parts 916 and 917
[Docket No. FV03-916-4 FIR]
Nectarines and Peaches Grown in California; Increased Assessment
Rates
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: The Department of Agriculture (USDA) is adopting, as a final
rule, without change, an interim final rule which increased the
assessment rate established for the Nectarine Administrative Committee
and the Peach Commodity Committee (committees) for the 2003-04 and
subsequent fiscal periods from $0.19 to $0.20 per 25-pound container or
container equivalent of nectarines and peaches handled. The committees
locally administer the marketing orders which regulate the handling of
nectarines and peaches grown in California. Authorization to assess
nectarine and peach handlers enables the committees to incur expenses
that are reasonable and necessary to administer the programs. The
fiscal periods run from March 1 through the last day of February. The
assessment rates will remain in effect indefinitely unless modified,
suspended, or terminated.
EFFECTIVE DATE: December 15, 2003.
FOR FURTHER INFORMATION CONTACT: Toni Sasselli, Marketing Assistant,
California Marketing Field Office, Fruit and Vegetable Programs, AMS,
USDA, 2202 Monterey Street, suite 102B, Fresno, California 93721, (559)
487-5901, Fax: (559) 487-5906; or George Kelhart, Technical Advisor,
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 Nos. 85 and 124 and Order Nos. 916 and 917, both as amended
(7 CFR parts 916 and 917), regulating the handling of nectarines and
peaches grown in California, respectively, hereinafter referred to as
the ``orders.'' The marketing agreements and orders are effective under
the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C.
601-674), hereinafter referred to as the ``Act.''
USDA is issuing this rule in conformance with Executive Order
12866.
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. Under the marketing orders now in effect, California
nectarine and peach handlers are subject to assessments. Funds to
administer the orders are derived from such assessments. It is intended
that the assessment rates as issued herein will be applicable to all
assessable nectarines and peaches beginning on March 1, 2003, and
continue until amended, suspended, or terminated. 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 continues to increase the assessment rates established
for the committees for the 2003-04 and subsequent fiscal periods from
$0.19 to $0.20 per 25-pound container or container equivalent of
nectarines and peaches.
[[Page 64500]]
The nectarine and peach marketing orders provide authority for the
committees, with the approval of USDA, to formulate an annual budget of
expenses and collect assessments from handlers to administer the
programs. The members of the Nectarine Administrative Committee (NAC)
and Peach Commodity Committee (PCC) are producers of California
nectarines and peaches, respectively. They are familiar with the
committees' needs and with the costs for goods and services in their
local area, and are, thus, in a position to formulate appropriate
budgets and assessment rates. The assessment rates are formulated and
discussed in public meetings. Thus, all directly affected persons have
an opportunity to participate and provide input.
NAC Assessment and Expenses
The NAC recommended, for the 2002-03 fiscal period, and USDA
approved, an assessment rate of $0.19 that would continue in effect
from fiscal period to fiscal period unless modified, suspended, or
terminated by USDA upon recommendation and information submitted by the
committee or other information available to USDA.
The NAC met on May 1, 2003, and recommended 2003-04 expenditures of
$4,173,438 and an assessment rate of $0.20 per 25-pound container or
container equivalent of nectarines on a 7 to 1 vote. In comparison,
last year's budgeted expenditures were $4,671,342. The assessment rate
of $0.20 is $0.01 higher than the rate previously in effect.
The dissenting voter stated that the growers he represented did not
support increasing the assessment rate. However, later in the meeting,
following a discussion about the development of a nectarine fruit
beverage, the dissenter indicated he no longer opposed the assessment
increase because the CTFA intended to fund beverage development. He
further stated that funds used to create more outlets for nectarines
will provide a service to the industry.
The rate increase was recommended to ensure that the NAC could meet
its 2003-04 anticipated expenses and carry over a financial reserve
that will provide adequate funds at the beginning of the 2004 season
before assessment collections begin. A financial reserve carryover of
about $400,000 is desirable because major expense outlays for seasonal
promotions and other activities occur before assessments are received.
Increasing the assessment rate from $0.19 to $0.20 per 25-pound
container is expected to provide about $220,400 in additional
assessment revenue, and will allow the NAC to start the 2004 season
with about $438,374.
The major expenditures recommended by the NAC for the 2003-04
fiscal period include $226,121 for salaries and benefits, $142,612 for
general expenses and industry activities, $1,210,220 for inspection,
$138,929 for research, and $2,263,061 for domestic and international
promotion. Budgeted expenses for these items in 2002-03 were $505,000
for salaries and benefits, $309,039 for general expenses and industry
activities, $1,050,000 for inspection, $138,018 for research, and
$2,574,160 for domestic and international promotion.
The 2002-03 and 2003-04 budgeted expenses differ somewhat because
the NAC reorganized some expense categories for 2003-2004. NAC's total
expenses are significantly lower this fiscal year compared to last
fiscal year.
The 2003-04 NAC assessment rate was derived after considering the
total NAC expenses of $4,173,438; the estimated assessable nectarines
of 22,004,000 25-pound containers or container equivalents; the
estimated income from other sources, such as interest; and the need for
an adequate financial reserve to carry the NAC into the 2004 season.
The committee decided that a financial reserve of $400,000 is necessary
to meet its obligations in the early part of each season, before
handler assessments are billed and received. To meet these goals, the
NAC recommended an assessment rate of $0.20 per 25-pound containers or
container equivalent. According to the committee, that assessment rate
will result in an adequate financial reserve, yet one well within the
maximum permitted by the order (one year's expenses; Sec. 916.42).
PCC Assessment and Expenses
The PCC recommended, for the 1996-97 fiscal period, and USDA
approved, an assessment rate of $0.19 that would continue in effect
from fiscal period to fiscal period unless modified, suspended, or
terminated by USDA upon recommendation and information submitted by the
committee or other information available to USDA.
The PCC also met on May 1, 2003, and recommended 2003-04
expenditures of $4,086,316 and an assessment rate of $0.20 per 25-pound
container or container equivalent of peaches on a vote of 12 to 1. In
comparison, last year's budgeted expenditures were $4,678,883. The
assessment rate of $0.20 is $0.01 higher than the rate previously in
effect.
The dissenting voter stated that the growers he represented did not
support increasing the assessment rate, and he, therefore, could not
support the increase.
The rate increase was recommended to ensure that the PCC could meet
its 2003-04 anticipated expenses and carry over a financial reserve for
the PCC which will provide adequate funds at the beginning of the 2004
season before assessment collections begin. A financial reserve
carryover of $500,000 is desirable because major expense outlays for
seasonal promotions and other activities occur before assessments are
received. Increasing the assessment rate from $0.19 to $0.20 per 25-
pound container is expected to provide about $213,360 in additional
assessment revenue, and will allow the PCC to start the 2004 season
with about $530,586.
The major expenditures recommended by the PCC for the 2003-04
fiscal period include $226,121 for salaries and benefits, $144,743 for
general expenses and industry activities, $1,206,414 for inspection,
$138,930 for research, and $2,211,346 for domestic and international
promotion. Budgeted expenses for these items in 2002-03 were $505,000
for salaries and benefits, $206,747 for general expenses, $1,100,000
for inspection, $142,186 for research, and $2,529,036 for domestic and
international promotion.
The 2002-03 and 2003-04 budgeted expenses differ somewhat because
the PCC reorganized some expense categories for 2003-2004. PCC's total
expenses are significantly lower this fiscal year compared to last
fiscal year.
The 2003-04 PCC assessment rate was derived after considering the
total PCC expenses of $4,086,316; the estimated assessable peaches of
21,336,000 25-pound containers or container equivalents; the estimated
income from other sources, such as interest; and the need for an
adequate reserve to carry the PCC into the 2004 season. The committee
decided that a financial reserve of $500,000 is necessary to meet its
obligations in the early part of each season, before handler
assessments are billed and received. To meet these goals, the PCC
recommended an assessment rate of $0.20 per 25-pound container or
container equivalent. According to the committee, that assessment rate
will result in an adequate financial reserve, yet one well within the
maximum permitted by the order (one year's expenses; Sec. 917.38).
Continuance of Assessment Rates
The assessment rates established in this rule will continue in
effect indefinitely unless modified, suspended, or terminated by USDA
upon recommendation and information
[[Page 64501]]
submitted by the committees or other available information.
Although these assessment rates will be in effect for an indefinite
period, the committees 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 rates. The dates and
times of committee meetings are available from the committees' website
or USDA. Committee meetings are open to the public and interested
persons may express their views at these meetings. USDA will evaluate
the committees' recommendations and other available information to
determine whether modification of the assessment rate for each
committee is needed. Further rulemaking will be undertaken as
necessary. The committees' 2003-04 budgets were reviewed and approved
on August 27, 2003, and those for subsequent fiscal periods will be
reviewed and, as appropriate, approved by USDA.
Final 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 rule on small entities. Accordingly, AMS has
prepared this final regulatory flexibility analysis.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions in order that small businesses will
not be unduly or disproportionately burdened. Marketing orders issued
pursuant to the Act, and the rules issued thereunder, are unique in
that they are brought about through group action of essentially small
entities acting on their own behalf. Thus, both statutes have small
entity orientation and compatibility.
There are approximately 300 California nectarine and peach handlers
subject to regulation under the orders covering nectarines and peaches
grown in California, and about 1,800 producers of these fruits in
California. Small agricultural service firms, which include handlers,
are defined by the Small Business Administration [13 CFR 121.201] as
those whose annual receipts are less than $5,000,000. Small
agricultural producers are defined by the Small Business Administration
as those having annual receipts of less than $750,000. A majority of
these handlers and producers may be classified as small entities.
The committees' staff has estimated that there are less than 20
handlers in the industry who could be defined as other than small
entities. For the 2002 season, the committees' staff estimated that the
average handler price received was $9.00 per container or container
equivalent of nectarines or peaches. A handler would have to ship at
least 556,000 containers to have annual receipts of $5,000,000. Given
data on shipments maintained by the committees' staff and the average
handler price received during the 2002 season, the committees' staff
estimates that small handlers represent approximately 94 percent of all
the handlers within the industry.
The committees' staff has also estimated that less than 20 percent
of the producers in the industry could be defined as other than small
entities. For the 2002 season, the committees' estimated the average
producer price received was $4.00 per container or container equivalent
for nectarines and peaches. A producer would have to produce at least
187,500 containers of nectarines and peaches to have annual receipts of
$750,000.
With data maintained by the committees' staff and the average
producer price received during the 2002 season, the committees' staff
estimates that small producers represent more than 80 percent of the
producers within the industry. With an average producer price of $4.00
per container or container equivalent, and a combined packout of
nectarines and peaches of 43,340,000 containers, the value of the 2002
packout level is estimated to be $173,360,000. Dividing this total
estimated grower revenue figure by the estimated number of producers
(1,800) yields an estimate of average revenue per producer of about
$96,311 from the sales of peaches and nectarines.
This rule continues to increase the assessment rates established
for the committees and collected from handlers for the 2003-04 and
subsequent fiscal periods from $0.19 to $0.20 per 25-pound container or
container equivalent of nectarines and peaches. The committees
recommended 2003-04 expenditures of $4,173,438 for nectarines and
expenditures of $4,086,316 for peaches and an assessment rate of $0.20
per 25-pound container or container equivalent of nectarines and
peaches. The assessment rate of $0.20 is $0.01 higher than the rate
previously in effect.
Analysis of NAC Budget
The quantity of assessable nectarines for the 2003-04 fiscal year
continues to be estimated at 22,004,000 25-pound container or container
equivalents. Thus, the $0.20 rate should provide $4,400,800 in
assessment income. Income derived from handler assessments will be
adequate to cover budgeted expenses and permit an adequate reserve.
The major expenditures recommended by the NAC for the 2003-04 year
include $226,121 for salaries and benefits, $142,612 for general
expenses and industry activities, $1,210,220 for inspection, $138,929
for research, and $2,263,061 for domestic and international promotion.
Budgeted expenses for these items in 2002-03 were $505,000 for
salaries and benefits, $309,039 for general expenses and industry
activities, $1,050,000 for inspection, $138,018 for research, and
$2,574,160 for domestic and international promotion.
The NAC recommended an increase in the assessment rate to meet
anticipated 2003-04 expenses and preserve an acceptable financial
reserve. A reserve of $400,000 is needed to fund expenses for the
following year until assessments for that year are received. The NAC
reviewed and recommended 2003-04 expenditures of $4,173,438 and the
increased assessment rate.
Analysis of PCC Budget
The quantity of assessable peaches for the 2003-04 fiscal year
continues to be estimated at 21,336,000 25-pound container or container
equivalents. Thus, the $0.20 rate should provide $4,267,200 in
assessment income. Income derived from handler assessments will be
adequate to cover budgeted expenses and permit a small increase in
reserves.
The major expenditures recommended by the PCC for the 2003-04 year
include $226,121 for salaries and benefits, $144,743 for general
expenses and industry activities, $1,206,414 for inspection, $138,930
for research, and $2,211,346 for domestic and international promotion.
Budgeted expenses for these items in 2002-03 were $505,000 for
salaries and benefits, $206,747 for general expenses, $1,100,000 for
inspection, $142,186 for research, and $2,529,036 for domestic and
international promotion.
The PCC recommended an increase in the assessment rate to meet
anticipated 2003-04 expenses and preserve an acceptable financial
reserve. A reserve of $500,000 to $550,000 is needed to fund expenses
for the following year until assessments for that year are received.
The PCC reviewed and recommended 2003-04 expenditures of $4,086,316 and
the increased assessment rate.
[[Page 64502]]
Considerations in Determining Expenses and Assessment Rates
Prior to arriving at these budgets, the committees considered
information and recommendations from various sources, including, but
not limited to: The Executive Committee, the Research Subcommittee, the
International Programs Subcommittee, the Grade and Size Subcommittee,
and the Domestic Promotion Subcommittee.
Each of the committees then reviewed the proposed expenses; the
total estimated assessable 25-pound containers or container
equivalents; and the estimated income from other sources, such as
interest income, prior to recommending a final assessment rate. The NAC
decided that an assessment rate of $0.20 per 25-pound container or
container equivalent will allow it to meet its 2003-04 expenses and
carry over an operating reserve of about $438,374, which is in line
with the committee's financial needs. The PCC decided that an
assessment rate of $0.20 per 25-pound container or container equivalent
will allow it to meet its 2003-04 expenses and carry over an operating
reserve of $530,586, which is in line with the committee's financial
needs. The committees then recommended this rate to USDA with one
dissenting vote from each committee.
A review of historical and preliminary information pertaining to
the upcoming fiscal period indicates that the grower price for the
2003-04 seasons could range between $4.00 and $6.00 per 25-pound
container or container equivalent. Therefore, the estimated assessment
revenue for the 2003-04 fiscal period as a percentage of total grower
revenue could range between 3.33 and 5.0 percent.
This action continues to increase the assessment obligation imposed
on handlers. While assessments impose some additional costs on
handlers, the costs are minimal and uniform on all handlers. Some of
the additional costs may be passed on to producers. However, these
costs are offset by the benefits derived from the operation of the
marketing orders. In addition, the committees' meetings were widely
publicized throughout the California nectarine and peach industries and
all interested persons were invited to attend the meetings and
participate in the committees' deliberations on all issues. Like all
committee meetings, the May 1, 2003, meetings were public meetings and
all entities of all sizes were able to express views on this issue.
Finally, interested persons were invited to submit information on the
regulatory and informational impacts of this action on small
businesses.
This action imposes no additional reporting or recordkeeping
requirements on either small or large 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.
USDA has not identified any relevant Federal rules that duplicate,
overlap, or conflict with this rule.
An interim final rule concerning this action was published in the
Federal Register on August 15, 2003 (68 FR 48767). Copies of that rule
were also mailed to committee members and made available as a link on
the committees' Web site. Finally, the interim final rule was made
available through the Internet by the Office of the Federal Register
and USDA. A 60-day comment period was provided for interested persons
to respond to the interim final rule. The comment period ended on
October 14, 2003, and no comments were received.
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.
After consideration of all relevant material presented, including
the Committees' recommendations, and other information, it is hereby
found that this rule, as hereinafter set forth, will tend to effectuate
the declared policy of the Act.
List of Subjects
7 CFR Part 916
Marketing agreements, Nectarines, Reporting and recordkeeping
requirements.
7 CFR Part 917
Marketing agreements, Peaches, Pears, Reporting and recordkeeping
requirements.
PART 916--NECTARINES GROWN IN CALIFORNIA
Sec. 916.234 Assessment rate.
0
Accordingly, the interim final rule amending 7 CFR part 916 which was
published at 68 FR 48767 on August 15, 2003, is adopted as a final rule
without change.
PART 917--PEACHES GROWN IN CALIFORNIA
0
Accordingly, the interim final rule amending 7 CFR part 917 which was
published at 68 FR 48767 on August 15, 2003, is adopted as a final rule
without change.
Dated: November 7, 2003.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 03-28521 Filed 11-13-03; 8:45 am]
BILLING CODE 3410-02-P