[Federal Register: August 22, 2005 (Volume 70, Number 161)]
[Proposed Rules]
[Page 48900-48903]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22au05-27]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Parts 916 and 917
[Docket No. FV05-916-3 PR]
Nectarines and Peaches Grown in California; Increased Assessment
Rates
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This rule would increase the assessment rates established for
the Nectarine Administrative Committee and the Peach Commodity
Committee (committees) for the 2005-06 and subsequent fiscal periods
from $0.195 and $0.19, respectively, to $0.20 per 25-pound container or
container equivalent of nectarines and peaches handled. The committees
locally administer the marketing orders that 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 period runs from March 1 through the last day of February. The
assessment rates would remain in effect indefinitely unless modified,
suspended, or terminated.
DATES: Comments must be received by September 1, 2005.
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.
Comments should reference the docket number and the date and page
number of this issue of the Federal Register and will be available for
public inspection in the Office of the Docket Clerk during regular
business hours, or can be viewed at: http://www.ams.usda.gov/fv/moab.html
.
FOR FURTHER INFORMATION CONTACT: Laurel May, California Marketing Field
Office, Marketing Order Administration Branch, Fruit and Vegetable
Programs, AMS, USDA; Telephone: (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.''
The Department of Agriculture (USDA) is issuing this rule in
conformance with Executive Order 12866.
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. Under the marketing 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 proposed herein would be applicable to all
assessable nectarines and peaches beginning on March 1, 2005, 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 would increase the assessment rate established for the
Nectarine Administrative Committee (NAC) for the 2005-06 and subsequent
fiscal periods from $0.195 to $0.20 per 25-pound container or container
equivalent of nectarines. This rule would also increase the assessment
rate established for the Peach Commodity Committee (PCC) for the 2005-
06 and subsequent fiscal periods from $0.19 to $0.20 per 25-pound
container or container equivalent of peaches.
The nectarine and peach marketing orders provide authority for the
committees, with the approval of USDA, to formulate annual budgets of
expenses and collect assessments from handlers to administer the
programs. The members of the NAC and 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, therefore, 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 2004-05 fiscal period, and USDA
approved, an assessment rate of $0.195 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 April 28, 2005, and discussed and unanimously
recommended 2005-06 expenditures and an assessment rate of $0.20 per
25-pound container or container equivalent of nectarines. Subsequently,
the NAC revised its budget recommendation because it anticipated higher
administrative overhead expenses than it had forecast earlier. In a
mail vote completed on June 28, 2005, the NAC
[[Page 48901]]
unanimously recommended 2005-06 expenditures of $4,919,049. In
comparison, the budgeted expenditures for 2004-05 were $5,162,866. The
assessment rate of $0.20 is $0.005 higher than the rate currently in
effect.
The rate increase was recommended to ensure that the NAC could meet
its 2005-06 anticipated expenses and carry over a financial reserve
that would provide adequate funds for promotional and other activities
at the beginning of the 2006 season before assessment collections
begin. Increasing the assessment rate from $0.195 to $0.20 per 25-pound
container is expected to provide about $103,410 in additional
assessment revenue, and would allow the NAC to start the 2006 season
with about $342,347.
Expenditures recommended by the NAC for the 2005-06 fiscal period
include $899,288 for administration, $1,167,381 for inspection,
$203,230 for research, and $2,649,149 for domestic and international
promotion. Budgeted expenses for these items in 2004-05 were $538,770
for administration, $1,153,676 for inspection, $308,568 for research,
and $3,161,852 for domestic and international promotion.
The 2004-05 and 2005-06 budgeted expenses differ significantly
because some individual line items have been moved to different expense
categories for 2005-2006. However, NAC expenses are generally expected
to be lower during the 2005-06 fiscal year compared to the 2004-05
fiscal year.
The 2005-06 NAC assessment rate was derived after considering
anticipated fiscal year expenses; 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 2006 season.
The committee desires to maintain a financial reserve of approximately
$340,000 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 would result in an adequate financial reserve, yet one
well within the maximum of approximately one year's expenses permitted
by the order (Sec. 916.42).
PCC Assessment and Expenses
The PCC recommended, for the 2004-05 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 met on April 28, 2005, and discussed and unanimously
recommended 2005-06 expenditures and an assessment rate of $0.20 per
25-pound container or container equivalent of peaches. Subsequently,
the PCC revised its budget recommendation because it anticipated higher
administrative overhead expenses than it had forecast earlier. In a
mail vote completed on June 28, 2005, the PCC unanimously recommended
2005-06 expenditures of $5,095,709. In comparison, last year's budgeted
expenditures were $5,178,003. The assessment rate of $0.20 is $0.01
higher than the rate currently in effect.
The rate increase was recommended to ensure that the PCC could meet
its 2005-06 anticipated expenses and carry over a financial reserve
that would provide adequate funds for promotional and other activities
at the beginning of the 2006 season before assessment collections
begin. Increasing the assessment rate from $0.19 to $0.20 per 25-pound
container is expected to provide about $211,800 in additional
assessment revenue, and would allow the PCC to start the 2006 season
with about $418,201.
Expenditures recommended by the PCC for the 2005-06 fiscal period
include $918,736 for administration, $1,260,160 for inspection,
$204,833 for research, and $2,711,980 for domestic and international
promotion. Budgeted expenses for these items in 2004-05 were $540,456
for administration, $1,240,520 for inspection, $208,570 for research,
and $3,188,457 for domestic and international promotion.
The 2004-05 and 2005-06 budgeted expenses differ because some
individual line items have been moved to different expense categories
for 2005-2006. However, the PCC expenses are generally expected to be
lower during the 2005-06 fiscal year compared to the 2004-05 fiscal
year.
The 2005-06 PCC assessment rate was derived after considering
anticipated PCC expenses; the estimated assessable peaches of
21,180,000 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 2006 season. The committee
desires to maintain a financial reserve of approximately $420,000 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
would result in an adequate financial reserve, yet one well within the
maximum of approximately one year's expenses permitted by the order
(Sec. 917.38).
Continuance of Assessment Rates
The proposed assessment rates would continue in effect indefinitely
unless modified, suspended, or terminated by USDA upon recommendation
and information submitted by the committees or other available
information.
Although these assessment rates would be in effect for an
indefinite period, the committees would continue to meet prior to or
during each fiscal period to recommend a budget of expenses and
consider recommendations for modification of the assessment rates. The
dates and times of committee meetings are available from the
committees' Web site or USDA. Committee meetings are open to the public
and interested persons may express their views at these meetings. USDA
would evaluate the committees' recommendations and other available
information to determine whether modification of the assessment rate
for each committee is needed. Further rulemaking would be undertaken as
necessary. The committee's 2005-06 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), the Agricultural Marketing Service (AMS) has considered the
economic impact of this rule on small entities. Accordingly, AMS has
prepared this initial regulatory flexibility analysis.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions in order that small businesses will
not be unduly or disproportionately burdened. Marketing orders issued
pursuant to the Act, and the rules issued thereunder, are unique in
that they are brought about through group action of essentially small
entities acting on their own behalf. Thus, both statutes have small
entity orientation and compatibility.
There are approximately 210 California nectarine and peach handlers
subject to regulation under the orders covering nectarines and peaches
grown in California, and about 1,500 producers of these fruits in
California. Small agricultural service firms, which include handlers,
are defined by the
[[Page 48902]]
Small Business Administration [13 CFR 121.201] as those whose annual
receipts are less than $6,000,000. 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 fewer than 26
handlers in the industry who could be defined as other than small
entities. For the 2004 season, the committees' staff estimated that the
average handler price received was $8.00 per container or container
equivalent of nectarines or peaches. A handler would have to ship at
least 750,000 containers to have annual receipts of $6,000,000. Given
data on shipments maintained by the committees' staff and the average
handler price received during the 2004 season, the committees' staff
estimates that small handlers represent approximately 87 percent of all
the handlers within the industry.
The committees' staff has also estimated that fewer than 20 percent
of the producers in the industry could be defined as other than small
entities. For the 2004 season, the committees' estimated the average
producer price received was $5.00 per container or container equivalent
for nectarines and peaches. A producer would have to produce at least
150,500 containers of nectarines and peaches to have annual receipts of
$750,000. Given data maintained by the committees' staff and the
average producer price received during the 2004 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 $5.00 per container or container
equivalent, and a combined packout of nectarines and peaches of
40,438,536 containers, the value of the 2004 packout is estimated to be
$202,192,680. Dividing this total estimated grower revenue figure by
the estimated number of producers (1,500) yields an estimate of average
revenue per producer of about $134,795 from the sales of peaches and
nectarines.
This rule would increase the assessment rates established for the
NAC for the 2005-06 and subsequent fiscal periods from $0.195 to $0.20
per 25-pound container or container equivalent of nectarines and for
the PCC for the 2005-06 and subsequent fiscal periods from $0.19 to
$0.20 per 25-pound container or container equivalent of peaches.
The NAC recommended 2005-06 fiscal period expenditures of
$4,919,049 for nectarines and an assessment rate of $0.20 per 25-pound
container or container equivalent of nectarines. The proposed
assessment rate of $0.20 is $0.005 higher than the current rate. The
PCC recommended 2005-06 fiscal period expenditures of $5,095,709 for
peaches and an assessments rate of $0.20 per 25-pound container or
container equivalent of peaches. The proposed assessment rate of $0.20
is $0.01 higher than the current rate.
Analysis of NAC Budget
The quantity of assessable nectarines for the 2005-06 fiscal period
is estimated at 20,682,000 25-pound container or container equivalents.
Thus, the $0.20 rate should provide $4,136,400 in assessment income.
Income derived from handler assessments, along with interest income,
research grants, and funds from the committee's reserve, would be
adequate to cover budgeted expenses and maintain their desired reserve.
The major expenditures recommended by the NAC for the 2005-06 year
include 899,288 for administration, $1,167,381 for inspection, $203,230
for research, and $2,649,149 for domestic and international promotion.
Budgeted expenses for these items in 2004-05 were $538,770, $1,050,000,
$138,018, and $2,574,160, respectively.
The NAC recommended an increase in the assessment rate to meet
anticipated 2005-06 expenses and preserve an acceptable financial
reserve. A reserve of approximately $340,000 is needed to fund expenses
for the following year until assessments for that year are received.
The NAC reviewed and recommended 2005-06 expenditures of $4,919,049 and
the increased assessment rate.
Analysis of PCC Budget
The quantity of assessable peaches for the 2005-06 fiscal year is
estimated at 21,180,000 25-pound container or container equivalents.
Thus, the $0.20 rate should provide $4,236,000 in assessment income.
Income derived from handler assessments, along with interest income,
research grants, and funds from the committee's reserves would be
adequate to cover budgeted expenses and maintain their desired reserve.
The major expenditures recommended by the PCC for the 2005-06 year
include $918,736 for administration, $1,260,160 for inspection,
$204,833 for research, and $2,711,980 for domestic and international
promotion. Budgeted expenses for these items in 2004-05 were $540,456,
$1,240,520, $208,570, and $3,188,457, respectively.
The PCC recommended an increase in the assessment rate to meet
anticipated 2005-06 expenses and preserve an acceptable financial
reserve. A reserve of approximately $420,000 is needed to fund expenses
for the following year until assessments for that year are received.
The PCC reviewed and recommended 2005-06 expenditures of $5,095,709 and
the increased assessment rate.
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 and research grants, prior to recommending a final
assessment rate. The NAC decided that an assessment rate of $0.20 per
25-pound container or container equivalent would allow it to meet its
2005-06 expenses and carry over an operating reserve of approximately
$342,000, 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 would allow it to meet its 2003-04 expenses and
carry over an operating reserve of approximately $420,000, which is in
line with the committee's financial needs. The committees then
unanimously recommended these rates to USDA
A review of historical and preliminary information pertaining to
the upcoming fiscal period indicates that the grower price for
nectarines and peaches for the 2005-06 season could range between $4.00
and $6.00 per 25-pound container or container equivalent. Therefore,
the estimated assessment revenue for the 2005-06 fiscal period as a
percentage of total grower revenue could range between 3.33 and 5.0
percent.
This action would increase the assessment obligation imposed on
handlers. While assessments impose some additional costs on handlers,
the costs are minimal and uniform on all handlers. Some of the
additional costs may be passed on to producers. However, these costs
would be offset by the benefits derived from the operation
[[Page 48903]]
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 April 28, 2004, meetings were
public meetings and all entities of all sizes were able to express
views on this issue. Finally, interested persons are invited to submit
information on the regulatory and informational impacts of this action
on small businesses.
This proposed rule would impose 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.
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 10-day comment period is provided to allow interested persons to
respond to this proposal. Ten days is deemed appropriate because: (1)
The 2005-06 fiscal period began on March 1, 2005, and the marketing
order requires that the rate of assessment for each fiscal period apply
to all assessable nectarines and peaches handled during such fiscal
period; (2) the committees need to have sufficient funds to pay their
expenses, which are incurred on a continuous basis; and (3) handlers
are aware of this action, which was discussed by the committees at
public meetings and unanimously recommended by a mail vote, and is
similar to other assessment rate actions issued in past years.
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.
For the reasons set forth in the preamble, 7 CFR parts 916 and 917
are proposed to be amended as follows:
1. The authority citation for 7 CFR parts 916 and 917 continues to
read as follows:
Authority: 7 U.S.C. 601-674.
PART 916--NECTARINES GROWN IN CALIFORNIA
2. Section 916.234 is revised to read as follows:
Sec. 916.234 Assessment rate.
On and after March 1, 2005, an assessment rate of $0.20 per 25-
pound container or container equivalent of nectarines is established
for California nectarines.
PART 917--PEACHES GROWN IN CALIFORNIA
3. Section 917.258 is revised to read as follows:
Sec. 917.258 Assessment rate.
On and after March 1, 2005, an assessment rate of $0.20 per 25-
pound container or container equivalent of peaches is established for
California peaches.
Dated: August 17, 2005.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 05-16572 Filed 8-19-05; 8:45 am]
BILLING CODE 3410-02-P