Dried Prunes Produced in California; Increased Assessment Rate

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 993

[Docket No. FV98-993-2 FR]

Dried Prunes Produced in California; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule increases the assessment rate from $1.60 to $2.16

per ton of salable dried prunes established for the Prune Marketing

Committee (Committee) under Marketing Order No. 993 for the 1998-99 and

subsequent crop years. The Committee is responsible for local

administration of the marketing order which regulates the handling of

dried prunes grown in California. Authorization to assess dried prune

handlers enables the Committee to incur expenses that are reasonable

and necessary to administer the program. The crop year began August 1

and ends July 31. The assessment rate will remain in effect

indefinitely unless modified, suspended, or terminated.

EFFECTIVE DATE: October 3, 1998.

FOR FURTHER INFORMATION CONTACT: Diane Purvis, Marketing Assistant, or

Richard P. Van Diest, Marketing Specialist, California Marketing Field

Office, Fruit and Vegetable Programs, AMS, USDA, 2202 Monterey Street,

suite 102B, Fresno, California 93721; telephone (209) 487-5901; Fax

(209) 487-5906; or George Kelhart, Technical Advisor, Marketing Order

Administration Branch, Fruit and Vegetable Programs, AMS, USDA, room

2525-S, P.O. Box 96456, Washington, DC 20090-6456; telephone: (202)

720-2491, Fax: (202) 205-6632. Small businesses may request information

on compliance with this regulation by contacting Jay Guerber, Marketing

Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA,

room 2525-S, P.O. Box 96456, Washington, DC 20090-6456; telephone:

(202) 720-2491, Fax: (202) 205-6632.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing

Agreement and Order No. 993, both as amended (7 CFR part 993),

regulating the handling of dried prunes 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.''

The Department of Agriculture (Department) 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

dried prune 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

dried prunes beginning on August 1, 1998, 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 the Secretary 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 the Secretary 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 the

Secretary'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 increases the assessment rate established for the

Committee for the 1998-99 and subsequent crop years from $1.60 per ton

to $2.16 per ton of salable dried prunes.

The California dried prune marketing order provides authority for

the Committee, with the approval of the Department, 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 dried prunes. They are familiar with the

Committee's needs and with the costs for 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.

For the 1997-98 and subsequent crop years, the Committee

recommended, and the Department approved, an assessment rate that would

continue in effect from crop year to crop year unless modified,

suspended, or terminated by the Secretary upon recommendation and

information submitted by the Committee or other information available

to the Secretary.

The Committee met on June 25, 1998, and unanimously recommended

1998-99 expenditures of $348,840 and an assessment rate of $2.16 per

ton of salable dried prunes. In comparison, last year's budgeted

expenditures were $331,960 and the assessment rate was $1.60 per ton.

The assessment rate of $2.16 is $0.56 higher than the rate currently in

effect. The $0.56 per ton increase is needed to generate sufficient

income to meet higher 1998-99 expenses, including increases in salaries

and operating expenses, and to offset an expected reduction in the size

of the crop because of unusually cool and wet weather this season. The

California Agricultural Statistical Service estimates a 170,000 ton

crop during the 1998-99 crop year, of which 8,500 tons are not expected

to be salable because of size or quality, leaving a balance of 161,500

salable tons.

The following table compares major budget expenditures (in

thousands of dollars) recommended by the Committee for the 1998-99 and

1997-98 crop years:

[[Page 52960]]

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Budget expense categories 1998-99 1997-98

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Salaries, Wages & Benefits.................. 191.5 176.3

Research & Development...................... 30 30

Office Rent................................. 23 23

Travel...................................... 21 21

Acreage Survey.............................. 21 20

Reserve (Contingencies)..................... 9.14 8.06

Equipment Rental............................ 9 9

Data Processing............................. 8 8

Stationary & Printing....................... 5.5 5

Office Supplies............................. 5 5

Postage & Messenger......................... 5 5

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The assessment rate recommended by the Committee was derived by

dividing anticipated expenses by expected salable tons of California

dried prunes. Production of dried prunes for the year is estimated at

161,500 salable tons which should provide $348,840 in assessment

income. Income derived from handler assessments, along with interest

income, would be adequate to cover budgeted expenses. The Committee is

authorized to use excess assessment funds from the 1997-98 crop year

(currently estimated at $48,255) for up to five months beyond the end

of the crop year to meet 1998-99 crop year expenses. At the end of the

five months, the Committee refunds or credits excess funds to handlers

(Sec. 993.81(c)).

The assessment rate established in this rule will continue in

effect indefinitely unless modified, suspended, or terminated by the

Secretary upon recommendation and information submitted by the

Committee or other available information.

Although this assessment rate will be in effect 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 the

Department. Committee meetings are open to the public and interested

persons may express their views at these meetings. The Department 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

1998-99 budget and those for subsequent crop years will be reviewed

and, as appropriate, approved by the Department.

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 1,400 producers of dried prunes in the

production area and approximately 19 handlers subject to regulation

under the marketing order. Small agricultural producers have been

defined by the Small Business Administration (13 CFR 121.601) as those

having annual receipts less than $500,000, and small agricultural

service firms are defined as those whose annual receipts are less than

$5,000,000.

Last year, 7 of the 19 handlers (37%) shipped over $5,000,000 of

dried prunes and could be considered large handlers by the Small

Business Administration. Twelve of the 19 handlers (63%) shipped under

$5,000,000 of dried prunes and could be considered small handlers. An

estimated 110 producers, or less than 8% of the 1,400 total producers,

would be considered large growers with annual income over $500,000. The

majority of handlers and producers of California dried prunes may be

classified as small entities.

This rule increases the assessment rate established for the

Committee and collected from handlers for the 1998-99 and subsequent

crop years from $1.60 per ton to $2.16 per ton of salable dried prunes.

The Committee unanimously recommended 1998-99 expenditures of $348,840

and an assessment rate of $2.16 per ton. The assessment rate of $2.16

is $0.56 higher than the 1997-98 rate. The quantity of assessable dried

prunes for the 1998-99 crop year is estimated at 161,500 salable tons.

Thus, the $2.16 rate should provide $348,840 in assessment income and

be adequate to meet this year's expenses. Interest income also will be

available to cover budgeted expenses if the 1998-99 expected income

falls short.

The following table compares major budget expenditures (in

thousands of dollars) recommended by the Committee for the 1998-99 and

1997-98 crop years:

------------------------------------------------------------------------

Budget expense categories 1998-99 1997-98

------------------------------------------------------------------------

Salaries, Wages & Benefits.................. 191.5 176.3

Research & Development...................... 30 30

Office Rent................................. 23 23

Travel...................................... 21 21

Acreage Survey.............................. 21 20

Reserve (Contingencies)..................... 9.14 8.06

Equipment Rental............................ 9 9

Data Processing............................. 8 8

Stationary & Printing....................... 5.5 5

Office Supplies............................. 5 5

Postage & Messenger......................... 5 5

------------------------------------------------------------------------

Because of unusually cool and wet weather this season, the 1998-99

dried prune crop is expected to be composed of a higher proportion of

small, lower quality fruit. The California Agricultural Statistical

Service estimates a 170,000 ton crop during the 1998-99 crop year, of

which 8,500 tons are not expected to be salable because of size or

quality, leaving a balance of 161,500 salable tons.

The Committee reviewed and unanimously recommended 1998-99

expenditures of $348,840 which included increases in administrative and

office salaries and operating expenses. Prior to arriving at the 1998-

99 budget, the Committee reviewed a budget that did not reflect any

salary increases. Despite the expected reduced size of the crop, it

recommended salary increases, thus increasing the budget. The

assessment rate of $2.16 per ton of salable dried prunes was then

determined by dividing the total recommended budget by the quantity of

salable dried prunes, estimated at 161,500 salable tons for the 1998-99

crop year. The Committee is authorized to use excess assessment funds

from the 1997-98 crop year (currently estimated at $48,255) for up to

five months beyond the end of the crop year to fund 1998-99 crop year

expenses. At the end of the five months, the Committee refunds or

credits excess funds to handlers (Sec. 993.81(c)).

[[Page 52961]]

Recent price information indicates that the grower price for the

1998-99 season should average $800 per salable ton of dried prunes.

Based on estimated shipments of 161,500 salable tons, the estimated

assessment revenue for the 1998-99 crop year is expected to be less

than 1 percent of the total expected grower revenue.

This action increases 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 by the operation of the marketing

order. In addition, the Committee's meeting was widely publicized

throughout the California dried prune industry, and all interested

persons were invited to attend the meeting and participate in Committee

deliberations on all issues. Like all Committee meetings, the June 25,

1998, meeting was a public meeting and all entities, both large and

small, were able to express views on this issue.

This rule imposes no additional reporting or recordkeeping

requirements on either small or large California dried prune 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.

The Department has not identified any relevant Federal rules that

duplicate, overlap, or conflict with this rule.

A proposed rule concerning this action was published in the Federal

Register on August 7, 1998 (63 FR 42284). Copies of the proposed rule

were also mailed or sent via facsimile to all dried prune handlers.

Finally, the proposal was made available through the Internet by the

Office of the Federal Register. A 30-day comment period ending

September 8, 1998, was provided for interested persons to respond to

the proposal. No comments were received.

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.

Pursuant to 5 U.S.C. 553, it also found and determined that good

cause exists for not postponing the effective date of this rule until

30 days after publication in the Federal Register because the 1998-99

crop year began on August 1, 1998, and the marketing order requires

that the rate of assessment for each crop year apply to all assessable

dried prunes handled during such year. Moreover, the Committee needs to

have sufficient funds to pay its expenses which are incurred on a

continuous basis. Further, handlers are aware of this rule which was

recommended at a public meeting. Also, a 30-day comment period was

provided for in the proposed rule, and no comments were received.

List of Subjects in 7 CFR Part 993

Marketing agreements, Plums, Prunes, Reporting and Recordkeeping

requirements.

For the reasons set forth in the preamble, 7 CFR part 993 is

amended as follows:

PART 993--DRIED PRUNES PRODUCED IN CALIFORNIA

1. The authority citation for 7 CFR part 993 continues to read as

follows:

Authority: 7 U.S.C. 601-674.

2. Section 993.347 is revised to read as follows:

Sec. 993.347 Assessment rate.

On and after August 1, 1998, an assessment rate of $2.16 per ton is

established for California dried prunes.

Dated: September 25, 1998.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 98-26479 Filed 10-1-98; 8:45 am]

BILLING CODE 3410-02-P