[Federal Register: May 30, 2006 (Volume 71, Number 103)]
[Rules and Regulations]
[Page 30574-30576]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30my06-4]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 989
[Docket No. FV06-989-1 FIR]
Raisins Produced From Grapes Grown in California; Decreased
Assessment Rate
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 decreased the
assessment rate established for the Raisin Administrative Committee
(Committee) for the 2005-06 and subsequent crop years from $11.00 to
$7.50 per ton of free tonnage raisins acquired by handlers, and reserve
tonnage raisins released or sold to handlers for use in free tonnage
outlets. The Committee locally administers the Federal marketing order
which regulates the handling of raisins produced from grapes grown in
California (order). Assessments upon raisin handlers are used by the
Committee to fund reasonable and necessary expenses of the program. The
crop year runs from August 1 through July 31. The assessment rate will
remain in effect indefinitely unless modified, suspended, or
terminated.
DATES: Effective Date: June 29, 2006.
FOR FURTHER INFORMATION CONTACT: Rose Aguayo, Marketing Specialist, or
Kurt J. Kimmel, Regional Manager, California Marketing Field Office,
Marketing Order Administration Branch, Fruit and Vegetable Programs,
AMS, USDA; Telephone: (559) 487-5901, Fax: (559) 487-5906.
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 marketing
agreement and order 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 order now in effect, California
raisin handlers are subject to assessments. Funds to administer the
order are derived from such assessments. It is intended that the
assessment rate as issued herein will be applicable to all assessable
raisins beginning August 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 continues in effect the action that decreased the
assessment rate established for the Committee for the 2005-06 and
subsequent crop years from $11.00 to $7.50 per ton of free tonnage
raisins acquired by handlers, and reserve tonnage raisins released or
sold to handlers for use in free tonnage outlets. Assessments upon
handlers are used by the Committee to fund reasonable and necessary
expenses of the program. When volume regulation is in effect, an
administrative budget funded with handler assessments is developed, and
a reserve pool budget funded with reserve pool proceeds is developed.
Volume regulation was not implemented for the 2004-05 crop, but is
applicable this year. As a result, Committee costs are apportioned
between the two for 2005-06 and will be funded appropriately. The $7.50
per ton assessment rate should generate enough revenue to cover the
Committee's administrative expenses. This action was recommended by the
Committee at a meeting on August 15, 2005.
Sections 989.79 and 989.80, respectively, of the order provide
authority for 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 of the Committee are producers and
handlers of California raisins. They are familiar with the Committee's
needs and with the costs of goods and services in their local area and
are thus 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.
Section 989.79 also provides authority for the Committee to
formulate an annual budget of expenses likely to be incurred during the
crop year in connection with reserve raisins held for the account of
the Committee. A certain percentage of each year's raisin crop may be
held in a reserve pool during years when volume regulation is
implemented to help stabilize raisin supplies and prices. The remaining
``free'' percentage may be sold by handlers to any market. Reserve
raisins are disposed of through various programs authorized under the
order. Reserve pool expenses are deducted
[[Page 30575]]
from proceeds obtained from the sale of reserve raisins. Net proceeds
are returned to the pool's equity holders, primarily producers.
When volume regulation is in effect, the Committee's operating
costs (rent, salaries, etc.) are split between an administrative budget
funded by handler assessments, and a reserve pool budget funded with
proceeds of sales of reserve raisins. In years when the crop is short
and no volume regulation is in effect, operating costs are funded by
the administrative budget.
Volume regulation was not implemented for the 2004-05 season
because the crop was short. Operating expenses were funded by the 2004-
05 administrative budget and not apportioned between the administrative
and reserve pool budgets. Thus, the Committee's assessment rate
increased from $8.00 to $11.00 per ton to cover the higher 2004-05
administrative expenses.
The Committee meets each August to review the ensuing year's crop
conditions and financial situation. When the Committee met on August
15, 2005, it recommended two budget scenarios for the 2005-06 crop year
to accommodate both situations, because it was not known at that time
if volume regulation would be implemented. At that time, it appeared
the crop might be short, but the initial crop estimate would not be
available until a later date.
Under the first budget scenario with volume regulation, the
Committee recommended an administrative budget of $2,062,500, a reserve
pool budget of $2,755,500, and a decreased assessment rate of $7.50 per
ton for the 2005-06 season. Under the second scenario, with no volume
regulation, the Committee recommended an administrative budget of
$3,025,000, and a continuing assessment rate of $11.00 per ton.
The Committee met on October 4, 2005, and announced preliminary
volume regulation percentages for 2005-06 crop raisins. Raisin
deliveries to-date are at a level to warrant the use of volume
regulation for the year. This, in turn, supports the Committee's August
recommendation to decrease the assessment rate from $11.00 to $7.50 per
ton. Handlers are expected to acquire 275,000 tons of raisins during
the 2005-06 crop year, which should provide adequate revenue to fund
the recommended administrative expenditures of $2,062,500. This
compares to budgeted administrative expenses of $3,025,000 for the
2004-05 crop year when volume regulation was not in effect.
Because the 2004-05 administrative budget funded some of the costs
typically allocated to a reserve budget, the Committee's 2004-05
expenses were higher than normal. A comparison of 2005-06 recommended
administrative expenditures to 2004-05 administrative budget
expenditures follows: 2005-06 salaries, $500,000 (2004-05
administrative budgeted expenditures for salaries was $1,000,000);
$686,000 for export program activities, ($536,000); $250,000 for
compliance activities, ($320,000); $65,000 for group health insurance,
($150,000); $58,000 for rent, ($110,000); $60,000 for Committee member
and staff travel, ($120,000); and $30,000 for computer software and
programming, ($110,000).
The recommended $7.50 per ton assessment rate was derived by
dividing the $2,062,500 in anticipated expenses by an estimated 275,000
tons of assessable raisins. The Committee recommended decreasing its
assessment rate because the projected administrative expenses for the
2005-06 crop year are $962,500 less than the 2004-05 administrative
expenses. Thus, sufficient income should be generated at the lower
assessment rate for the Committee to meet its anticipated expenses.
Pursuant to Sec. 989.81(a) of the order, any unexpended assessment
funds from the crop year must be credited or refunded to the handlers
from whom collected.
The assessment rate established in this rule will continue in
effect indefinitely unless modified, suspended, or terminated by the
Secretary upon recommendation and other information submitted by the
Committee or other available information.
Although this assessment rate is effective for an indefinite
period, the Committee will continue to meet prior to or during each
crop year 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 will evaluate Committee
recommendations and other available information to determine whether
modification of the assessment rate is needed. Further rulemaking will
be undertaken as necessary. The Committee's 2005-06 budget and those
for subsequent crop years 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 action 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 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 $6,500,000, and small agricultural
producers are defined as those having annual receipts of less than
$750,000. Eleven of the 20 handlers subject to regulation have annual
sales estimated to be at least $6,500,000, and the remaining 9 handlers
have sales less than $6,500,000. No more than 9 handlers, and a
majority of producers, of California raisins may be classified as small
entities.
This rule continues in effect the action that decreased the
assessment rate established for the Committee for the 2005-06 and
subsequent crop years from $11.00 to $7.50 per ton of free tonnage
raisins acquired by handlers, and reserve tonnage raisins released or
sold to handlers for use in free tonnage outlets. Assessments upon
handlers are used by the Committee to fund reasonable and necessary
expenses of the program.
When volume regulation is in effect, an administrative budget
funded with handler assessments is developed, and a reserve pool budget
funded with reserve pool proceeds is developed. Volume regulation was
not implemented for the 2004-05 crop, but is applicable this year. As a
result, Committee costs are apportioned between the two for 2005-06 and
will be funded appropriately. The Committee recommended administrative
expenses of $2,062,500. With anticipated assessable tonnage at 275,000
tons, sufficient income should be generated at the $7.50 per ton
assessment rate to meet the Committee's administrative expenses.
Pursuant to Sec. 989.81(a) of the order, any unexpended assessment
funds from the crop year must be credited or refunded to the handlers
from whom collected.
[[Page 30576]]
Because the 2004-05 administrative budget funded some of the costs
typically allocated to a reserve budget, the Committee's 2004-05
expenses were higher than normal. A comparison of 2005-06 recommended
administrative budget expenditures to 2004-05 administrative budget
expenditures follows: 2005-06 salaries, $500,000 (2004-05
administrative budgeted expenditures for salaries was $1,000,000);
$686,000 for export program activities, ($536,000); $250,000 for
compliance activities, ($320,000); $65,000 for group health insurance,
($150,000); $58,000 for rent, ($110,000); $60,000 for Committee member
and staff travel, ($120,000); and $30,000 for computer software and
programming, ($110,000).
The industry considered an alternative assessment rate and budget
prior to arriving at the $7.50 per ton and $2,062,500 administrative
budget recommendation. The Committee's Audit Subcommittee met on July
13, 2005, to review preliminary budget information. The subcommittee
was aware that 2005-06 crop may be short and no volume regulation may
be implemented. The subcommittee, thus, developed two budgets and
assessment rates to accommodate a scenario with volume regulation and
another scenario with no volume regulation. If volume regulation was
not applicable, costs typically allocated to a reserve pool budget
would be funded by the administrative budget, thus necessitating a
continuation of the $11.00 per ton assessment rate. If volume
regulation was applicable, costs would be allocated to an
administrative budget and a reserve pool budget and the assessment rate
would be reduced to $7.50 per ton. The Committee approved these budget
and assessment recommendations on August 15, 2005. Ultimately, the
Committee determined that volume regulation was applicable for the
2005-06 crop, and that the lower assessment rate of $7.50 per ton was
appropriate.
A review of statistical data on the California raisin industry
indicates that assessment revenue has consistently been less than one
percent of grower revenue in recent years. A grower price of $1,210 per
ton for the 2005-06 raisin crop has been announced by the Raisin
Bargaining Association. If this price is realized, assessment revenue
would continue to be less than one percent of grower revenue in the
2005-06 crop year, even with the reduced assessment rate.
Regarding the impact of this action on affected entities, this
action continues in effect the action that decreased the assessment
rate imposed on handlers. Assessments are applied uniformly on all
handlers, and some of the costs may be passed on to producers. However,
decreasing the assessment rate reduces the burden on handlers, and may
reduce the burden on producers.
Additionally, the Audit Subcommittee's meeting on July 13, 2005,
and the Committee's meeting on August 15, 2005, where this action was
deliberated were public meetings widely publicized throughout the
California raisin industry. All interested persons were invited to
attend the meetings and participate in the Committee deliberations on
all issues.
This action imposes no additional reporting or recordkeeping
requirements on either small or large raisin handlers. As with all
Federal marketing order programs, reports and forms are periodically
reviewed to reduce information requirements and duplication by industry
and public sectors 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 February 22, 2006 (71 FR 8923). Copies of that rule
were also mailed or sent via facsimile to all raisin handlers. Finally,
the interim final rule was made available through the Internet by USDA
and the Office of the Federal Register. A 60-day comment period was
provided for interested persons to respond to the interim final rule.
The comment period ended on April 24, 2006, 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 information and recommendation submitted by the Committee and other
available 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 in 7 CFR Part 989
Grapes, Marketing agreements, Raisins, Reporting and recordkeeping
requirements.
PART 989--RAISINS PRODUCED FROM GRAPES GROWN IN CALIFORNIA
0
Accordingly, the interim final rule amending 7 CFR part 989 which was
published at 71 FR 8923 on February 22, 2006, is adopted as a final
rule without change.
Dated: May 23, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. E6-8207 Filed 5-26-06; 8:45 am]
BILLING CODE 3410-02-P