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[Federal Register: June 24, 2002 (Volume 67, Number 121)]
[Rules and Regulations]
[Page 42471-42475]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24jn02-1]
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
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to and codified in the Code of Federal Regulations, which is published
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[[Page 42471]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 989
[Docket No. FV02-989-5 IFR]
Raisins Produced From Grapes Grown in California; Additional
Opportunity for Participation in 2002 Raisin Diversion Program
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Interim final rule with request for comments.
-----------------------------------------------------------------------
SUMMARY: This rule allows producers an additional opportunity to
participate in the 2002 raisin diversion program (RDP). The RDP is
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). This action is intended to help reduce
the burdensome oversupply affecting the California raisin industry.
DATES: Effective June 25, 2002. Comments received by July 9, 2002, 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 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 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. A
handler is afforded the opportunity for a hearing on the petition.
After the hearing USDA would rule on the petition. The Act provides
that the district court of the United States in any district in which
the handler is an inhabitant, or has his or her principal place of
business, has jurisdiction to review USDA's ruling on the petition,
provided an action is filed not later than 20 days after the date of
the entry of the ruling.
A 2002 RDP for Natural (sun-dried) Seedless (NS) raisins was
established in November 2001. A total of 54,086 tons of 2001 crop
reserve raisins was allocated to the program. This rule allows
producers an additional opportunity to participate in the 2002 RDP. An
additional 25,000 tons of 2001 crop reserve raisins has been allocated
to the RDP. The additional program is applicable to producers who agree
to remove vines from production, and is intended to help the industry
reduce its burdensome oversupply. The action was recommended by the RAC
at a meeting on May 30, 2002, by a vote of 45 in favor, 1 opposed
(member opposed because the program did not provide for a moratorium on
replanting), and 1 abstained.
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 producers.
Raisin Diversion Program
The RDP is another program concerning reserve raisins authorized
under the order and may be used as a means for controlling
overproduction.
[[Page 42472]]
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 are specified in Sec. 989.156.
Pursuant to these sections, the RAC must meet by November 30 each
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. 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 by December 15 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).
Initial 2002 NS Diversion Program
On November 28, 2001, the RAC met and reviewed data relating to the
quantity of reserve raisins and anticipated market needs. With a 2001-
02 NS crop estimated at 359,341 tons, and a computed trade demand
(comparable to market needs) of 235,850 tons, the RAC projected a
reserve pool of 123,491 tons of NS raisins. With such a large
anticipated reserve, the RAC announced that 45,182 tons of NS raisins
would be eligible for diversion under the initial 2002 RDP. The RAC
increased this amount to 54,086 tons at a meeting on January 11, 2002.
Of the 54,086 tons, 49,086 tons were made available to approved
producers who submitted applications to the RAC by December 20, 2001,
with producers who planned to remove vines receiving priority over
those who planned to curtail (abort) production through spur pruning or
other means. Section 989.156(d) requires the RAC to give priority to
applicants who agree to remove vines. Another 5,000 tons were made
available to approved producers who submitted applications to the RAC
from December 21, 2001, through May 1, 2002, and planned to remove
vines. Authority for this additional opportunity for vine removal is
provided in Sec. 989.156(s).
Harvest costs for the initial RDP were announced by the RAC at $340
per ton, and a production cap of 2.0 tons per acre was established for
the program. The production cap limits the yield per acre that a
producer can claim. The 2.0-ton per acre production cap was established
in an interim final rule that was published in the Federal Register on
March 15, 2002 (67 FR 11555). A final rule was published on May 14,
2002 (67 FR 34383).
Under the initial RDP, the RAC received applications from producers
accounting for 40,788 tons of raisins that would be removed from
production by spur pruning vines, and 7,704 tons of raisins that would
be removed from production by removing vines. Using the production cap
of 2.0 tons per acre, about 3,850 acres should be removed from
production through vine removal (7,704 tons divided by 2.0 acres per
ton.) The following is a summary of the tonnage allocated and
participation in the initial 2002 RDP:
Initial 2002 RDP
----------------------------------------------------------------------------------------------------------------
Allotted tonnage Applications from producers
----------------------------------------------------------------------------------------------------------------
Dec. 20 deadline............................. 49,086 tons (vine removal and 40,788 tons (spur prune), 6,896
spur prune, with priority for tons (vine removal)
vine removal).
May 1 deadline............................... 5,000 tons (vine removal only).. 808 tons (vine removal)
------------------------------------------------------------------
Total........................................ 54,086 tons..................... 40,788 tons (spur prune), 7,704
tons (vine removal)
----------------------------------------------------------------------------------------------------------------
RAC Recommendation
The RAC met on May 30, 2002, and recommended adding an additional
opportunity for producers to participate in the 2002 NS RDP in view of
the oversupply situation affecting the California raisin industry.
Specifically, the RAC allocated an additional 25,000 tons of 2001 NS
reserve raisins to the program. The additional program applies to
producers who agree to remove vines, and includes a bonus for
participating producers. Producers will receive a diversion certificate
from the RAC equal to 1.5 times the creditable fruit weight of the
raisins produced on the production unit (up to a maximum of 3 tons per
acre). For example, if an applicant's verified production is 1.7 tons
per acre, the applicant will receive credit for 2.55 tons per acre (1.7
tons times 1.5). If an applicant's verified production is 2.5 tons per
acre, the applicant will receive credit for 3.0 tons per acre (2.0 tons
times 1.5). Authority for the RAC to issue diversion certificates in an
amount greater than the creditable fruit weight produced on the
production unit is provided in Sec. 989.56(c) of the order. The bonus
is intended to encourage participation in the program.
The additional opportunity to participate in the 2002 RDP is
available to producers who did not participate in the initial 2002
program (``new participants''), and to approved participants in the
initial 2002 RDP who curtailed their production by spur pruning their
vines (``early season spur pruners''). Producers who wish to
participate in the program must file an application with the RAC by
July 8, 2002. Priority will be given to new participants. If the
production applied for exceeds the 25,000 tons added to the program, a
lottery will be held to allocate the tonnage among the applicants,
pursuant to applicable procedures specified in Sec. 989.156(d).
Harvest costs for the additional opportunity program for ``early
season spur pruners'' will remain at $340 per ton, while harvest costs
for new
[[Page 42473]]
participants will be $100 per ton. Because harvest costs are deducted
from the payment producers receive from handlers for their diversion
certificates, a reduction in harvest costs results in a larger payment
to producers for the certificates. The reduction in harvest costs for
new participants and resulting increased payment is intended to take
into account the cultural costs incurred by such producers thus far in
producing a 2002 crop.
Under the additional opportunity program, vines must either be
removed, or chain sawed at the base by July 31, 2002. RAC staff will
verify that the vines have been removed or adequately chain sawed. RAC
staff will re-inspect vines that have been chain sawed to ensure that
the remainder of the vine is removed at a later date.
Accordingly, a new paragraph (u) is added to Sec. 989.156 that
specifies the provisions of the additional opportunity program with
applicable time frames. In addition, necessary conforming changes have
been made to paragraphs (a), (q), and (s) of Sec. 989.156.
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. 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 than $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.
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. A 2002 RDP for NS
raisins was established in November 2001, and 54,086 tons of 2001 crop
reserve raisins were allocated to the program. This rule allows
producers an additional opportunity to participate in the 2002 RDP in
view of the oversupply situation affecting the California raisin
industry. An additional 25,000 tons of 2001 crop reserve raisins has
been allocated to the RDP. The additional program is applicable to
producers who agree to remove vines from production, and is intended to
help the industry reduce its burdensome oversupply. Authority for this
action is provided in Sec. 989.56(e) of the order.
Regarding the impact of this action on affected entities, the
additional opportunity program is intended to help the industry as a
whole reduce its burdensome oversupply. The California raisin industry
has experienced successive crop years of high production. The 10-year
average for deliveries of NS raisins to handlers is 344,303 tons. NS
raisin deliveries for the 2000 crop year were 432,616 tons, and
deliveries to-date for the 2001 crop year are about 375,000 tons. As
previously stated, the initial RDP should remove about 3,850 acres from
production. It is estimated that the additional opportunity program
could remove another 8,350 acres from production, for a combined total
of about 12,200 acres, which would help the industry reduce its
oversupply.
Regarding the impact of this action on producers, the program will
provide producers with an additional opportunity to earn some income
for removing their vineyards from production. Participating producers
will receive a bonus for removing their vines. They will receive a
diversion certificate from the RAC equal to 1.5 times the creditable
fruit weight of the raisins produced on the production unit (up to a
maximum of 3 tons per acre). Producers will sell their certificates to
handlers this fall and be paid for the free tonnage applicable to the
diversion certificate minus the harvest cost for the diverted tonnage.
Applicable harvest costs for the additional RDP were announced by the
RAC at $100 per ton for ``new participants'' (producers who did not
participate in the initial 2002 RDP), and $340 per ton for ``early
season spur pruners'' (approved participants in the initial 2002 RDP
who curtailed production by spur pruning their vines).
Regarding the impact on handlers, handlers will redeem certificates
for 2001 crop NS raisins and pay the RAC the applicable harvest cost
($100 per ton for new participants, and $340 per ton for early season
spur pruners) plus payment for bins ($20 per ton) and for receiving,
storing, fumigating, handling ($46 per ton), and inspecting ($9.00 per
ton). The program will return $175 per ton for new participant
certificates, and $415 per ton for remaining certificates to the 2001
NS reserve pool. Such income to the reserve pool could be used to pay
remaining pool expenses or be distributed to 2001 NS reserve pool
equity holders (producers). Thus, all such equity holders could
potentially benefit from this action.
Several alternatives to the recommended action were considered by
the RAC. There was discussion at the meeting regarding whether the
program should include a moratorium on replanting. Some members
expressed concern that growers may remove their vines and replant with
new systems that produce higher yields, thereby contributing to more
oversupply. However, there is no authority for a moratorium on
replanting.
There was some discussion at the meeting about the impact of adding
an additional 25,000 tons of 2001 crop NS reserve raisins to the 2002
supply. Through the order's mathematical formula for volume regulation,
additional 2002 supply will reduce the 2002 free tonnage percentage.
This could reduce returns for producers since producers are paid a
field price for the free tonnage percentage of their crop. There was
some consideration of allowing handlers to redeem a portion of their
certificates for 2001 reserve raisins and a portion for 2002 crop
reserve raisins. However, the current order only provides authority for
handlers to redeem certificates for reserve raisins from the prior crop
year.
There was also discussion at the meeting about giving smaller
producers some priority in the program. For example, the program could
allow 2 days for producers with production units of 80 acres to apply,
and then the program could be opened up to other applicants. However,
this was not recommended over a program providing the same opportunity
to all eligible producers.
This rule imposes no additional reporting or recordkeeping
requirements on either small or large raisin handlers. In accordance
with the Paperwork
[[Page 42474]]
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 previously 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, the RAC's meeting on May 30, 2002, where this action was
deliberated was a public meeting widely publicized throughout the
raisin industry. All interested persons were invited to attend the
meeting and participate in the industry's deliberations. Finally, all
interested persons are invited to submit information on the regulatory
and information 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 15-day comment period is provided to allow interested persons to
comment on this rule. Fifteen days is deemed appropriate taking into
account producers must submit applications to the RAC by July 8, 2002,
to participate in the program.
After consideration of all relevant material presented, including
the information and recommendation submitted by the RAC 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.
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 needs to be in effect as soon as
possible because producers must submit applications to participate in
the program to the RAC by July 8, 2002; (2) this rule allows producers
an additional opportunity to participate in the 2002 RDP and earn some
income for removing their vines; (3) producers are aware of this action
which was recommended by the RAC at a public meeting; and (4) this
interim final rule provides a 15-day comment period for written
comments and all comments timely received will be considered prior to
finalization of 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)(1), (q)(2), and (s) are revised,
and paragraph (u) is added 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 shall
announce the quantity of raisins eligible for a raisin diversion
program. On or before January 15 of each crop year, the Committee 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. * *
*
* * * * *
(q) * * *
(2) Each approved applicant shall, with respect to liquidated
damages not paid by July 1, pay to the Committee interest on such
unpaid liquidated damages at the rate of the prime rate of the bank in
which the Committee has its reserve pool funds deposited, on the day
the liquidated damages become delinquent, plus 2 percent, and further
such rate of interest shall be added to the unpaid amount, monthly,
until the liquidated damages plus applicable interest are paid:
Provided, That for the program specified in paragraph (u) of this
section, the applicable date concerning liquidated damages not paid,
shall be September 1 instead of July 1 as referenced in this paragraph.
* * * * *
(s) Additional opportunity for vine removal. The Committee may
announce a date later than that provided in Sec. 989.156(b), by which
producers, who agree to remove the vines on a production unit may file
an application to participate in a raisin diversion program.
(1) For the 2002 Natural (sun-dried) Seedless raisin diversion
program, additional opportunity for vine removal shall be provided in
accordance with paragraph (u) of this section.
(2) For raisin diversion programs applicable to the 2003 and
subsequent crop years, the following provisions apply.
(i) The announced date shall be not later than May 1. The diversion
certificates will be issued only for the production units from which
vines are removed. The total tonnage available to such applicants shall
not exceed the tonnage determined by deducting the tonnage approved for
applications received on or before December 20 from the total tonnage
announced as eligible by the Committee for diversion. Applications
shall be considered and approved on a first-come, first-served, basis
and shall not be given preference over the tonnage approved for
applications received on or before December 20. The vines shall be
removed from the production units for which such applications are
approved not later than June 1.
(ii) Producers who agree to remove the vines pursuant to this
paragraph shall notify the Committee in advance of the date when such
vines will be removed in order to allow a representative of the
Committee to observe and verify such vine removal.
* * * * *
(u) Additional opportunity for producers to participate in the 2002
raisin diversion program. An additional opportunity for vine removal of
2002 crop Natural (sun-dried) Seedless raisins provided for 25,000
additional tons of raisins in accordance with the following provisions.
(1) The additional opportunity applies to production units on which
producers agree to remove vines. The additional opportunity program
applies to ``new participants'' (producers who are not approved
participants in the initial 2002 diversion program), and to ``early
season spur pruners'' (approved participants in the initial 2002
diversion program who curtailed production by spur pruning their
vines). Grafting vines of one varietal type to another varietal type
does not constitute removal under the program.
(2) Priority will be given to ``new participants.'' If the
production volume in such applications exceeds 25,000 tons, a lottery
will be held to allocate such diversion tonnage among applicants,
pursuant to applicable procedures specified in Sec. 989.156(d).
[[Page 42475]]
(3) Eligible producers who wish to participate in this program must
file an application with the Committee by July 8, 2002, with
appropriate documentation as specified in Sec. 989.156(b). The
Committee shall notify the applicant, in writing, as to whether or not
the application has been approved. Vines must be removed or chain sawed
at the base of the vine by July 31, 2002. Committee staff will verify
that the vines have been removed or adequately chain sawed. Committee
staff will re-inspect vines that have been chain sawed to ensure that
the remainder of the vine is removed. Procedures specified
Secs. 989.156(e), (f), (g), and (i) through (r) are applicable to the
additional opportunity program for vine removal of 2002 crop Natural
(sun-dried) Seedless raisins.
Dated: June 20, 2002.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 02-15961 Filed 6-20-02; 2:04 pm]
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