Papayas Grown in Hawaii; Increased Assessment Rate

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 928

[Docket No. FV99-928-1 PR]

Papayas Grown in Hawaii; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule would increase the assessment rate from $.0063 to

$.008 per pound of assessable papayas established for the Papaya

Administrative Committee (Committee) under Marketing Order No. 928 for

the 1999-2000 and subsequent fiscal years. The Committee is responsible

for local administration of the marketing order which regulates the

handling of papayas grown in Hawaii. Authorization to assess papaya

handlers enables the Committee to incur expenses that are reasonable

and necessary to administer the program. The fiscal year began July 1

and ends June 30. The assessment rate would remain in effect

indefinitely unless modified, suspended, or terminated.

DATES: Comments must be received by October 4, 1999.

ADDRESSES: Interested persons are invited to submit written comments

concerning this rule. Comments must be sent to the Docket Clerk, Fruit

and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 96456,

Washington, DC 20090-6456; Fax: (202) 720-5698; or E-mail:

[email protected]. 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.

FOR FURTHER INFORMATION CONTACT: Terry Vawter, Marketing Specialist,

California Marketing Field Office, 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, room 2525-S, P.O. Box 96456, Washington,

DC 20090-6456; telephone: (202) 720-2491, Fax: (202) 720-5698. Small

businesses may request information on complying with this regulation,

or obtain a guide on complying with fruit, vegetable, and specialty

crop marketing agreements and orders by contacting Jay Guerber,

Marketing Order Administration Branch, Fruit and Vegetable Programs,

AMS, USDA, P.O. Box 96456, room 2525-S, Washington, DC 20090-6456;

telephone: (202) 720-2491, Fax: (202) 720-5698, or E-mail:

Jay.G[email protected]. You may view the marketing agreement and order

small business compliance guide at the following web site: http://

www.ams.usda.gov/fv/moab.html.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing

Agreement No. 155 and Order No. 928, both as amended (7 CFR part 928),

regulating the handling of papayas grown in Hawaii, 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.

[[Page 48116]]

This rule has been reviewed under Executive Order 12988, Civil

Justice Reform. Under the marketing order now in effect, papaya

handlers are subject to assessments. Funds to administer the order are

derived from such assessments. It is intended that the assessment rate

as proposed herein would be applicable to all assessable papayas

beginning on July 1, 1999, 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 would increase the assessment rate established for the

Committee for the 1999-2000 and subsequent fiscal years from $0.0063

per pound to $0.008 per pound of assessable papayas.

The papaya 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

papayas. 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 1998-1999 and subsequent fiscal years, the Committee

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

continue in effect from fiscal year to fiscal 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 April 22, 1999, to discuss the crop estimate,

the budget, and the assessment rate for the 1999-2000 fiscal year. On

July 15, 1999, the Committee completed a mail ballot on the crop

estimate and assessment rate, and on an eight to one vote, adopted a

crop estimate of 40 million pounds of assessable papayas and an

assessment rate of $0.008 per pound for the 1999-2000 and subsequent

fiscal years. The person who voted no objected to the higher assessment

rate. The Committee unanimously recommended a 1999-2000 fiscal year

budget of $522,500.

The assessment rate of $0.008 is $0.0017 higher than the rate

currently in effect. The budgeted expenses are $39,000 less than the

$561,500 budgeted for last year. The Committee determined that a higher

assessment rate was necessary to meet the recommended expenses and

maintain a reserve fund for the 1999-2000 fiscal year. For several

fiscal years, money from the reserve fund has been used to meet a

portion of budgeted expenses in an effort to keep the assessment rate

as low as possible. The Committee believes a further reduction of the

reserve fund would not be prudent.

The Committee is authorized to maintain reserve funds in an amount

not to exceed approximately one fiscal year's operational expenses.

Last year, the reserve fund was $25,200. This year it is expected to be

$25,000, which is approximately one percent lower than the previous

year and considered adequate by the Committee. After consideration of

the estimated crop size and anticipated expenses for the 1999-2000

fiscal year, it was determined that increasing the assessment rate by

approximately 27 percent would provide sufficient funds to meet

anticipated expenses and maintain an adequate reserve fund.

The major expenditures recommended by the Committee for the 1999-

2000 year include $230,000 for marketing and promotion, $90,500 for

research and development, and $98,000 for salaries. Budgeted expenses

for these items in 1998-99 were $183,000 for marketing and promotion,

$171,500 for research and development, and $98,000 for salaries,

respectively.

The assessment rate recommended by the Committee was derived by

dividing assessment income needed by expected shipments of papayas.

Papaya shipments for the year are estimated at 40 million pounds which

should provide $320,000 in assessment income. Income derived from

handler assessments, when combined with income from the Hawaii

Department of Agriculture, State of Hawaii (Research), USDA's Foreign

Agricultural Service, County of Hawaii, and the Japanese Inspection

program, along with interest income of $16,000, would be adequate to

cover budgeted expenses. Funds in the reserve (estimated to be $25,000

at the end of the 1999-2000 fiscal year) would be kept within the

maximum permitted in Sec. 928.42(a)(2) of the order. The order

authorizes approximately one fiscal year's expenses for the reserve.

The proposed assessment rate would 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 would be in effect for an indefinite

period, the Committee would continue to meet prior to or during each

fiscal 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 are encouraged to express their views at these meetings. The

Department would evaluate Committee recommendations and other available

information to determine whether modification of the assessment rate is

needed. Further rulemaking would be undertaken as necessary. The

Committee's 1999-2000 budget and those for subsequent fiscal years

would 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 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 400 producers of papayas in the production

area and approximately 60 handlers subject to regulation under the

marketing order. Small agricultural producers have been defined by the

[[Page 48117]]

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.

Based on a reported average f.o.b. price of $1.30 per pound of

papayas, a handler would have to ship in excess of 3.85 million pounds

of papayas to have annual receipts of $5,000,000. Last year, two

handlers each shipped in excess of 3.85 million pounds of papayas, and,

therefore, could be considered large businesses. The remaining handlers

could be considered small businesses under SBA's definition.

Based on a reported average grower price of $0.45 per pound and

industry shipments of 36 million pounds, total grower revenues would be

$16.2 million. Average grower revenue would, thus, be $40,500. Based on

the foregoing, the majority of handlers and producers of papayas may be

classified as small entities.

This rule would increase the assessment rate established for the

Committee and collected from handlers for the 1999-2000 and subsequent

fiscal years from $0.0063 per pound to $0.008 per pound of assessable

papayas. The Committee recommended 1999-2000 expenditures of $522,500

and the $0.008 per pound assessment rate. The proposed assessment rate

of $0.008 is $0.0017 higher than the 1998-99 rate. The quantity of

assessable papayas for the 1999-2000 fiscal year is estimated at 40

million pounds. Thus, the $0.008 rate should provide $320,000 in

assessment income. Income derived from handler assessments, the Hawaii

Department of Agriculture, State of Hawaii (Research), USDA's Foreign

Agricultural Service, County of Hawaii, and the Japanese Inspection

program, along with interest income of $16,000, would be adequate to

cover budgeted expenses. Funds in the reserve (estimated to be about

$25,000 at the end of the 1999-2000 fiscal year) would be kept within

the maximum permitted in Sec. 928.42(a)(2) of the order. The order

authorizes approximately one fiscal year's expenses for the reserve.

The Committee recommended 1999-2000 expenditures of $522,500. The

major expenditures recommended by the Committee for the 1999-2000 year

include $230,000 for marketing and promotion, $90,500 for research and

development, and $98,000 for salaries. Budgeted expenses for these

items in 1998-99 were $183,000 for marketing and promotion, $171,500

for research and development, and $98,000 for salaries, respectively.

Regarding alternatives, the Committee discussed decreasing

expenditure levels for marketing and promotion, and further reductions

in research and development expenditures to avoid increasing the

assessment rate, but it determined that the programs should be funded

at the recommended levels. The assessment rate of $0.008 per pound of

assessable papayas was determined by dividing the assessment income

needed by the quantity of assessable papayas, estimated at 40 million

pounds for the 1999-2000 fiscal year. This estimate would generate

$320,000 in assessment income. When combined with $208,800 in

anticipated income from the previously mentioned sources, and $16,000

in interest income, the Committee would have adequate funds to meet its

1999-2000 expenses.

A review of historical information and preliminary information

pertaining to the 1999-2000 fiscal year indicates that the grower price

for the season could range between $.30 and $0.45 per pound of papayas.

Therefore, the estimated assessment revenue for the 1999-2000 fiscal

year as a percentage of total grower revenue could range between 1.8

and 2.7 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 by the operation of the

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

publicized throughout the papaya industry, and all interested persons

were invited to attend the meeting and participate in Committee

deliberations on all issues. Like all Committee meetings, the April 22,

1999, meeting was a public meeting and all entities, both large and

small, 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 papaya 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 30-day comment period is provided to allow interested persons to

respond to this proposed rule. Thirty days is deemed appropriate

because: (1) The Committee needs to have sufficient funds to pay its

expenses which are incurred on a continuous basis; (2) the 1999-2000

fiscal year began on July 1, 1999, and the marketing order requires

that the rate of assessment for each fiscal year apply to all

assessable papayas handled during such fiscal year; and (3) handlers

are aware of this action which was discussed by the Committee at a

public meeting and is similar to other assessment rate actions issued

in past years.

List of Subjects in 7 CFR Part 928

Marketing agreements, Papayas, Reporting and recordkeeping

requirements.

For the reasons set forth in the preamble, 7 CFR part 928 is

proposed to be amended as follows:

PART 928--PAPAYAS GROWN IN HAWAII

1. The authority citation for 7 CFR part 928 continues to read as

follows:

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

2. Section 928.226 is revised to read as follows:

Sec. 928.226 Assessment rate.

On and after July 1, 1999, an assessment rate of $0.008 per pound

is established for papayas grown in Hawaii.

Dated: August 26, 1999.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 99-22908 Filed 9-1-99; 8:45 am]

BILLING CODE 3410-02-P