Tomatoes Grown in Florida; Decreased Assessment Rate

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 966

[Docket No. FV99-966-1 IFR]

Tomatoes Grown in Florida; Decreased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule decreases the assessment rate established for the

Florida Tomato Committee (Committee) for the 1999-2000 and subsequent

fiscal periods from $0.03 per 25-pound container to $0.025 per 25-pound

container of tomatoes handled. The Committee is responsible for local

administration of the marketing order which regulates the handling of

tomatoes grown in Florida. Authorization to assess tomato handlers

enables the Committee to incur expenses that are reasonable and

necessary to administer the program. The fiscal period began August 1

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

indefinitely unless modified, suspended, or terminated.

DATES: October 26, 1999. Comments received by December 27, 1999, 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, Fruit

and Vegetable Programs, AMS, USDA, room 2525-S, PO Box 96456,

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

mo[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: Doris Jamieson, Southeast Marketing

Field Office, Fruit and Vegetable Programs, AMS, USDA, P.O. Box 2276,

Winter Haven, FL 33883-2276; telephone: (941) 299-4770, Fax: (941) 299-

5169; or George Kelhart, Technical Advisor, Marketing Order

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

2525-S, PO Box 96456, Washington, DC 20090-6456; telephone: (202) 720-

2491, Fax: (202) 720-5698. Small businesses may request information on

complying with this regulation by contacting Jay Guerber, Marketing

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

PO Box 96456, room 2525-S, Washington, DC 20090-6456; telephone (202)

720-2491, Fax: (202) 720-5698, or E-mail: Jay.G[email protected].

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing

Agreement No. 125 and Order No. 966, both as amended (7 CFR part 966),

regulating the handling of tomatoes grown in Florida, 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, Florida tomato

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 Florida tomatoes

beginning August 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 deceases the assessment rate established for the Florida

Tomato Committee for the 1999-2000 and subsequent fiscal periods from

$0.03 per 25-pound container to $0.025 per 25-pound container of

tomatoes.

The Florida tomato 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 of Florida

tomatoes. 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 1996-97 and subsequent fiscal periods, the Committee

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

continue in effect from fiscal period to fiscal period 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 September 10, 1999, and unanimously

recommended 1999-2000 expenditures of $2,088,900 and an assessment rate

of $0.025 per 25-pound container of tomatoes. In comparison, last

year's budgeted expenditures were $1,926,000. The assessment rate of

$0.025 is $0.005 lower than the rate currently in effect. For the

previous fiscal period, the Committee had planned to use funds from its

authorized reserves to cover some of its approved expenses. The

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reserve fund was larger than the Committee believed it needed for

program operations. However, there was a larger than expected supply of

assessable tomatoes during 1998-99, and instead of the reduction, the

amount in the reserve fund increased. In another effort to reduce the

amount in the reserve fund, the Committee unanimously recommended

reducing the assessment rate and using reserve funds to pay some of its

operating expenses.

The major expenditures recommended by the Committee for the 1999-

2000 fiscal period include $436,000 for salaries, $241,000 for

research, $1,000,000 for education and promotion, and $150,000 for

Market Access Program export promotion. Budgeted expenses for these

items in 1998-99 were $364,000, $212,000, $900,000, and $200,000

respectively.

The assessment rate recommended by the Committee was derived by

dividing anticipated expenses by expected shipments of Florida

tomatoes. Tomato shipments for the year are estimated at 50,000,000 25-

pound containers which should provide $1,250,000 in assessment income.

Income derived from handler assessments, along with interest income and

funds from the Committee's authorized reserve, will be adequate to

cover budgeted expenses. Funds in the reserve (currently $1,879,557)

will be kept within the maximum permitted by the order (Sec. 966.44;

approximately one fiscal period's expenses).

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 is effective for an indefinite

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

fiscal period 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

1999-2000 budget and those for subsequent fiscal periods 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 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 75 producers of tomatoes in the production

area and approximately 65 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.

Based on the industry and committee data for the 1998-99 season,

the average annual f.o.b. price for fresh Florida tomatoes during the

1998-99 season was around $7.17 per 25-pound container, and total fresh

shipments for the 1998-99 season are estimated at 56.7 million 25-pound

containers of tomatoes. Committee data indicates that approximately 20

percent of the Florida handlers handle 80 percent of the total volume

shipped outside the regulated area. Based on this information, the

shipment information for the 1998-99 season, and the 1998-99 season

average price, the majority of handlers would be classified as small

entities as defined by the SBA. The majority of producers of Florida

tomatoes also may be classified as small entities.

This rule decreases the assessment rate established for the

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

fiscal periods from $0.03 per 25-pound container to $0.025 per 25-pound

container of tomatoes. The Committee unanimously recommended 1999-2000

expenditures of $2,088,900 and an assessment rate of $0.025 per 25-

pound container. The assessment rate of $0.025 is $0.005 lower than the

1998-99 rate. The quantity of assessable tomatoes for the 1999-2000

season is estimated at 50,000,000. Thus, the $0.025 rate should provide

$1,250,000 in assessment income. Income derived from handler

assessments, along with interest income and funds from the Committee's

authorized reserve, will be adequate to cover budgeted expenses.

The major expenditures recommended by the Committee for the 1999-

2000 year include $436,000 for salaries, $241,000 for research,

$1,000,000 for education and promotion, and $150,000 for Market Access

Program export promotion. Budgeted expenses for these items in 1998-99

were $364,000, $212,000, $900,000 and $200,000, respectively.

For the 1998-99 fiscal period, the Committee decided to use reserve

funds to cover some of its authorized expenses. The reserve fund was

larger than the Committee believed it needed for program operations.

However, there was a larger than expected supply of assessable tomatoes

in 1998-99, and instead of the anticipated reduction, the amount in the

reserve fund increased. In another effort to reduce the amount in the

reserve fund, the Committee unanimously recommended reducing the

assessment rate. The funds collected from assessments, along with money

from the reserve fund will be adequate to cover the Committee's

expenditures for the 1999-2000 fiscal year. Pursuant to Sec. 966.44,

the Committee is authorized to maintain an operating reserve not to

exceed approximately one fiscal period's expenses.

The Committee reviewed and unanimously recommended 1999-2000

expenditures of $2,088,900 which included increases in salaries,

research, and education and promotion programs. Prior to arriving at

this budget, the Committee considered information from various sources,

such as the Committee's Executive Subcommittee, Finance Subcommittee,

Research Subcommittee, and Education and Promotion Subcommittee.

Alternative expenditure levels were discussed by these groups, based

upon the relative value of various research projects to the tomato

industry. The assessment rate of $0.025 per 25-pound container of

assessable tomatoes was then determined by dividing the total

recommended budget by the quantity of assessable commodity, estimated

at 50,000,000 25-pound containers for the 1999-2000 fiscal period. This

is approximately $624,900 below the anticipated expenses, which the

Committee determined to be acceptable as a means of reducing its

operating reserves.

A review of historical information and preliminary information

pertaining to the upcoming fiscal period indicates that the grower

price for the 1999-2000 season could range between $6.09 and

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$9.70 per 25-pound container of tomatoes. Therefore, the estimated

assessment revenue for the 1999-2000 fiscal period as a percentage of

total grower revenue could range between .26 and .41 percent.

This action decreases the assessment obligation 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. In addition, the Committee's meeting was widely

publicized throughout the Florida tomato industry and all interested

persons were invited to attend the meeting and participate in Committee

deliberations on all issues. Like all Committee meetings, the September

10, 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 action imposes no additional reporting or recordkeeping

requirements on either small or large Florida tomato 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 small business guide on complying with fruit, vegetable, and

speciality crop marketing agreements and orders may be viewed at the

following web site: 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.

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) The 1999-2000 fiscal period began on August 1,

1999, and the marketing order requires that the rate of assessment for

each fiscal period apply to all assessable tomatoes handled during such

fiscal period; (2) this action decreases the assessment rate for

assessable tomatoes beginning with the 1999-2000 fiscal period; (3)

handlers are aware of this action which was unanimously recommended by

the Committee at a public meeting and is similar to other assessment

rate actions issued in past years; and (4) this interim final rule

provides a 60-day comment period, and all comments timely received will

be considered prior to finalization of this rule.

List of Subjects in 7 CFR Part 966

Marketing agreements, Reporting and recordkeeping requirements,

Tomatoes.

For the reasons set forth in the preamble, 7 CFR part 966 is

amended as follows:

PART 966--TOMATOES GROWN IN FLORIDA

1. The authority citation for 7 CFR part 966 continues to read as

follows:

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

2. Section 966.234 is revised to read as follows:

Sec. 966.234 Assessment rate.

On and after August 1, 1999, an assessment rate of $0.025 per 25-

pound container is established for Florida tomatoes.

Dated: October 18, 1999.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 99-27742 Filed 10-22-99; 8:45 am]

BILLING CODE 3410-02-P