Federal Register / Vol. 62, No. 187 / Friday, September 26, 1997 / Rules and Regulations 50481

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 989

[Docket No. FV–97–989–2 FR]

Raisins Produced From Grapes Grown

in California; Suspension of Provisions

Concerning Certain Offers of Reserve

Raisins to Handlers for Free Use

AGENCY: Agricultural Marketing Service,

USDA.

ACTION: Final rule; suspension of rule.

SUMMARY: This final rule suspends

language in provisions of the raisin

marketing order concerning certain

offers of reserve raisins to handlers for

free use. The marketing order regulates

the handling of raisins produced from

grapes grown in California, and is

administered locally by the Raisin

Administrative Committee (Committee).

This rule indefinitely suspends certain

language to provide the Committee more

flexibility in meeting its marketing

needs. This rule was unanimously

recommended by the Committee.

EFFECTIVE DATE: This final rule becomes

effective September 29, 1997.

FOR FURTHER INFORMATION CONTACT:

Maureen Pello, California Marketing

Field Office, Marketing Order

Administration Branch, F&V, AMS,

USDA, 2202 Monterey Street, suite

102B, Fresno, California 93721;

telephone: (209) 487–5901, Fax # (209)

487–5906; or Mark A. Slupek, Marketing

Specialist, Marketing Order

Administration Branch, F&V, AMS,

USDA, room 2536–S, P.O. Box 96456,

Washington, DC 20090–6456; telephone:

(202) 205–2830, Fax # (202) 720–5698.

Small businesses may request

information on compliance with this

regulation by contacting: Jay Guerber,

Marketing Order Administration

Branch, Fruit and Vegetable Division,

AMS, USDA, P.O. Box 96456, room

2525–S, Washington, DC 20090–6456;

telephone (202) 720–2491; Fax # (202)

720–5698.

SUPPLEMENTARY INFORMATION: This final

rule is issued under Marketing

Agreement and Order No. 989 (7 CFR

part 989), both as amended, regulating

the handling of raisins produced 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 final 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 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. A

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 date of the entry

of the ruling.

This final rule indefinitely suspends

language in §§ 989.54(g) and 989.67(j) of

the order. The suspension concerns

certain offers of reserve raisins to

handlers for free use. The suspension

was unanimously recommended by the

Committee.

Section 989.54(g) of the order

describes two annual offers of reserve

raisins to handlers for free use for each

varietal type for which preliminary

volume control percentages have been

computed and announced. Each of these

offers consists of 10 percent of the prior

year’s shipments of free raisins and

reserve raisins sold for free use. These

offers are known to the industry as the

‘‘10 plus 10’’ offers. The order currently

mandates that the 10 plus 10 offers must

be made simultaneously on or before

November 15 of the crop year. The order

defines the crop year for raisins as the

12-month period beginning with August

1 of any year and ending with July 31

of the following year.

Section 989.54(a) establishes that the

trade demand for raisins shall be 90

percent of the prior crop year’s

shipments with adjustments for

inventory, meaning that the trade

demand excludes 10 percent of the prior

year’s shipments. Preliminary volume

control percentages, which are

computed and announced by October 5

of each crop year, make up to 85 percent

of the trade demand available to

handlers for disposal in any marketing

channel. The final free percentage,

which is recommended by the

Committee by February 15 of each crop

year, makes the remainder of the trade

demand available to handlers.

Standard raisins are raisins which

meet the minimum grade and condition

standards for natural condition raisins.

Handlers are required to place the

reserve percentage of their standard

raisin acquisitions in the reserve pool.

One of the 10 plus 10 offers makes

available, from the reserve pool, the 10

percent of the prior year’s shipments

which the final free percentage does not

make available. This offer, then, equates

the current year’s supply with the prior

year’s shipments. Because the free

percentage and this 10 plus 10 offer

only make available the tonnage

shipped during the prior year (with the

appropriate inventory adjustments), the

other 10 plus 10 offer, intended for

market expansion, makes an additional

10 percent available to handlers from

the reserve pool. Acceptance of the 10

plus 10 offers is voluntary; handlers are

not required to purchase any reserve

raisins.

The Committee believes that changes

in the raisin industry, particularly

changes to export programs

administered under the marketing order,

have made the 10 plus 10 offers a more

important source of raisins for many

handlers. The Committee’s export

programs in the early 1990’s allowed

handlers who exported California

raisins to purchase, at a reduced rate,

reserve raisins for free use. This

effectively blended down the cost of the

raisins which were exported, allowing

handlers to be price competitive in

export markets, which generally feature

lower prices than the domestic market.

One effect of this program was that

handlers would continuously purchase

reserve raisins for free use throughout

the crop year. Handlers who knew they

would be exporting raisins did not need

to purchase enough raisins to meet their

needs for the entire year early in the

season.

The current export program, which is

in its second year of operation, offers

cash, rather than reserve raisins, to

exporting handlers. This has caused

handlers to make larger purchases of 10

plus 10 raisins to replace the raisins

formerly acquired through the export

program. When handlers make large 10

plus 10 purchases early in the season,

rather than small reserve purchases

throughout the season, however, they

are committing themselves to raisins

before they have a firm estimate of their

needs for the year. Handlers are forced

to guess at the demand for the

remainder of the crop year. If this guess

is too high, prices will fall and there
50482 Federal Register / Vol. 62, No. 187 / Friday, September 26, 1997 / Rules and Regulations

may be excess free tonnage inventory at

the end of the crop year, resulting in

market instability and a lower free

percentage for the following year. If the

guess is too low, market needs may not

be met and the Committee may be

forced to dispose of the excess reserve

raisins in low income outlets.

Most raisin deliveries, and most of the

associated costs, are concentrated

between September and November, so

handlers must establish large lines of

credit at this time during each crop year.

Because the Committee is required to

make the 10 plus 10 offers concurrently

on or before November 15 of the crop

year, handlers must arrange for

additional credit to make their 10 plus

10 purchases. The Committee believes

that the inflexibility of the November 15

deadline and the requirement of

simultaneous offers creates unnecessary

financial stress on handlers.

Section 987.67(j) of the order lists

other circumstances, including national

emergency, crop failure, changing

economic or marketing conditions, fire

or other disasters, or to supplement an

inadequate inventory to carryover to the

next crop year, under which the

Committee can sell reserve raisins for

free use. The Committee also can offer

reserve raisins for free use if raisin

shipments during the first 10 months of

the current crop year exceed 105

percent of shipments during the

comparable period of the prior crop

year. This type of offer is limited to the

amount exceeding 105 percent of the

prior year’s shipments. Thus, if the

market for raisins expands rapidly

during any crop year, this provision

allows the Committee to make more

raisins available to handlers to supply

the increased market needs. The 105

percent limit was established to

safeguard against depressing raisin

prices by expanding the free supply by

too large a quantity. Like the 10 plus 10

offers, handler acceptance of this type of

offer is voluntary.

During the past two seasons, the

Committee has reduced its desirable

carryout inventory level by about 20

percent, meaning that the free

percentage provides for fewer raisins to

remain at the end of a crop year for use

in the following crop year. Reduction of

the desirable carryout, coupled with the

elimination of the export program

which offered reserve raisins for free

use, has increased the likelihood that

the raisin industry might have an

inadequate supply of raisins late in a

crop year which featured an increase in

shipments. If handlers, when making

acquisition decisions early in the

season, underestimate their needs for

the crop year, they could be forced to

either lose current sales or ship raisins

which were intended to be carried over,

which could prevent the industry from

meeting its market needs early in the

next crop year.

As an example, if the raisin industry

were to experience 6 percent growth

over the first 10 months of a given crop

year, the Committee could offer reserve

raisins for free use up to 1 percent of the

previous year’s shipments. With the

tightening of the desirable carryout and

the absence of reserve raisins offered

under the export program, the industry

could face a short supply of free raisins

while an adequate supply of reserve

raisins sat unused.

At its meeting on April 10, 1997, the

Committee recommended suspending

language in both §§ 989.54(g) and

989.67(j). In the former, the suspension

eliminates both the simultaneous

requirement and the November 15

deadline for the 10 plus 10 offers. In the

latter, the 105 percent requirement is

removed from the required level of

shipments and the size of the reserve

offer for free use.

Elimination of the simultaneous

requirement and the November 15

deadline from the first sentence of

§ 989.54(g) will leave the following

sentence, ‘‘the Committee shall make

two offers of reserve tonnage to sell to

handlers to sell as free tonnage for each

varietal type for which preliminary

percentages have been computed and

announced.’’ This means that if

preliminary percentages have been

established, the Committee will still be

required to make two 10 plus 10 offers,

but these offers could take place

independently at any time during the

crop year.

The Committee expects that these

changes will solve some of the planning

and credit problems which handlers

currently face. If one or both of the

offers were moved to later in the crop

year, handlers would be able to make

better informed acquisition decisions.

At the same time, a change in the offer

date would ease the autumn credit

burden for many handlers.

The language suspension in

§ 989.67(j) will leave the following as

one of the circumstances which allows

the Committee to offer reserve tonnage

to handlers for free use: ‘‘free tonnage

shipments during the then current crop

year exceeding shipments of a

comparable period of the prior crop

year: Provided, that, such sale of reserve

tonnage shall be limited to the quantity

exceeding shipments for the first ten

months of the prior crop year’’. Thus, if

free tonnage shipments were up during

the first ten months of a crop year, the

Committee could offer reserve raisins to

handlers for free use in any amount

exceeding the prior year’s shipments.

Following the earlier example, if the

raisin industry were to experience 6

percent growth over the first ten months

of a given crop year, the Committee

could offer reserve raisins for free use

up to 6 percent of the previous year’s

shipments. In fact, if the growth was

only 4 percent, the Committee could

offer up to 4 percent of the previous

year’s shipments. Under the current

provisions, the Committee could make

no offer at 4 percent growth because the

year’s growth did not meet the 5 percent

threshold. The Committee believes that

the current inflexibility could become

problematic in the future, particularly if

the industry was unable to take

advantage of a growth opportunity in

what has, in recent years, become a

relatively stagnant market.

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 raisin marketing

order and approximately 4,500

producers of raisins in the regulated

area. Small agricultural service firms,

which includes handlers, have been

defined by the Small Business

Administration (13 CFR 121.601) 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 $500,000.

No more than 8 handlers, and a majority

of producers, of California raisins may

be classified as small entities. Twelve of

the 20 handlers subject to regulation

have annual sales estimated to be at

least $5,000,000, and the remaining 8

handlers have sales less than

$5,000,000, excluding receipts from any

other sources.

This final rule suspends provisions

concerning certain offers of reserve

raisins to handlers for free use under

§§ 989.54(g) and 989.67(j) of the raisin

marketing order. The current provisions

in § 989.54(g) require that the
Federal Register / Vol. 62, No. 187 / Friday, September 26, 1997 / Rules and Regulations 50483

Committee make two simultaneous

offers of reserve raisins for free use, each

equal to 10 percent of the prior year’s

free shipments, on or before November

15 of each crop year for each variety for

which preliminary volume control

percentages have been computed and

announced. These ‘‘10 plus 10’’ offers

are intended to ensure that the

establishment of volume control

regulations will not prevent the industry

from having enough raisins to meet the

prior year’s shipments plus some raisins

for market expansion.

Changes in the Committee’s export

programs have caused many handlers to

greatly increase their 10 plus 10

purchases. During the 5 years prior to

the change to the export programs,

handler purchases of raisins from 10

plus 10 offers averaged 10,355 tons. In

the 2 seasons since the program was

modified, the purchases increased to an

average of 61,033 tons, a 489 percent

increase. The requirement that the offers

be made simultaneously on or before

November 15 of each crop year does not

allow the Committee the flexibility that

it now believes is necessary for handlers

to meet their market needs. Because

these offers must take place so early in

the season, handlers have to guess at the

level of raisins they will need for the

year.

Raisin handlers, because most raisin

deliveries to handlers are concentrated

between September and November,

must establish credit lines totaling

between $250–270 million each

autumn. Because of the increase in 10

plus 10 purchases, handlers have had to

establish an additional $75–80 million

in credit during their most financially

burdened period of the year. The

Committee believes that the inflexibility

of the November 15 deadline and the

requirement of simultaneous offers

creates unnecessary financial stress on

handlers, and that this suspension will

alleviate that stress and allow the

handlers to better plan to meet their

market needs.

Section 989.67(j) of the order

authorizes the Committee to offer

reserve raisins for free use if raisin

shipments during the first 10 months of

the current crop year exceed shipments

during the comparable period of the

prior crop year. Thus, if the market for

raisins expands rapidly during any crop

year, this provision allows the

Committee to make more raisins

available to handlers to supply the

increased market needs. Any such offer

is limited, however, to the amount of

raisins exceeding 105 percent of the

prior year’s shipments.

As described above, handlers are now

making their acquisition decisions

earlier in the season than in previous

years. In addition, the Committee has

tightened its supply situation during the

last 2 seasons by reducing its desirable

inventory level and eliminating the

feature of its export program which

made reserve tonnage available to

handlers for free use. The Committee

believes that these factors leave the

industry with little room for error; if

handlers underestimate the tonnage that

is needed to meet the market needs,

there are too few avenues for acquiring

raisins for free use later in the season.

In a growth year, a poor estimate could

result in customers with unmet needs.

The earlier example discussed years

in which the industry experienced 4

and 6 percent growth, and that the

Committee now believes that the

inflexibility of § 989.67(j) could prevent

the industry from taking advantage of

growth opportunities in what has

become a relatively stagnant market.

According to the Committee’s 1996–97

marketing policy, during the last 10

crop years free shipments have ranged

between 290,646 (in 1986–87) and

338,881 tons (1990–91). The most recent

complete crop year’s shipments (1995–

96) were the lowest, 315,170 tons, since

1986–87. The Committee calculates that

the loss of just 1 percent of annual

shipments due to the inability to supply

the late season market would cost about

$3 million in grower revenue.

The Committee also considered the

following situation. If free shipments

during 10 months of a crop year were

275,000 tons, and shipments grew by 4

percent (11,000 tons) during the same

time period during the following crop

year, the current provision would allow

for no reserve offer due to growth.

Under this suspension, however, the

Committee could offer up to 11,000 tons

of reserve raisins for free use. Assuming

a profit to handlers of 1 cent per pound,

the Committee calculates that operating

under the current provision would cost

handlers $220,000 in profit and growers

$11 million in revenue. The benefits

generated by this rule are not expected

to be disproportionately greater or less

for small handlers or producers than for

large entities.

The Committee discussed alternatives

to this change, including not

suspending any language in either

section of the order. Suspending the

provisions discussed herein provides

the Committee with flexibility,

including the option of operating

exactly as it does now. If the Committee

were to find any change was not

beneficial, the suspension does not

prevent the Committee from returning to

its current procedures for the next year.

Leaving the sections as they currently

stand, however, offers the Committee no

marketing flexibility. The Committee

also recognized that reserve raisins can

be offered for free use to supplement an

inadequate carryover inventory, but

thought that this option could be too

late to prevent lost sales. Also, this

suspension will not prevent the

Committee from selecting such a course.

This final rule suspends language

concerning offers of reserve tonnage

raisins under the raisin marketing order.

The order currently authorizes such

offers and would continue to do so.

Accordingly, this action will not impose

any 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 sector agencies.

The Department has not identified

any relevant Federal rules that

duplicate, overlap or conflict with this

final rule.

Committee and subcommittee

meetings are widely publicized in

advance and are held in a location

central to the production area. The

meetings are open to all industry

members (including small business

entities) and other interested persons—

who are encouraged to participate in the

deliberations and voice their opinions

on topics under discussion. Thus,

Committee recommendations can be

considered to represent the interests of

small business entities in the industry.

Finally, interested persons were invited

to submit information on the regulatory

and informational impacts of this action

on small businesses.

A proposed rule concerning this

action was issued by the Department on

July 22, 1997, put on display at the

Office of the Federal Register on July 27,

1997, and published in the Federal

Register on July 28, 1997. Copies of the

rule were mailed by the Committee’s

staff to all Committee members, raisin

handlers, and dehydrators. Finally, the

rule was made available through the

Internet by the Office of the Federal

Register. That rule provided for a 30-day

comment period which ended August

27, 1997. No comments were received.

After consideration of all relevant

material presented, including the

Committee’s recommendation, and

other information, it is found that the

order language to be suspended, as

hereinafter set forth, no longer tends to

effectuate the declared policy of the Act.

It is further found that good cause

exists for not postponing the effective

date of this rule until 30 days after

publication in the Federal Register (5
50484 Federal Register / Vol. 62, No. 187 / Friday, September 26, 1997 / Rules and Regulations

U.S.C. 553) because the crop year is

underway and this rule suspends

language concerning offers of reserve

tonnage raisins to handlers for free use.

This action could provide the

Committee with more flexibility in

meeting its marketing needs and

therefore should be implemented as

soon as possible. Further, handlers are

currently making their marketing plans

for the upcoming season. 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.

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.

§ 989.54 [Amended]

2. In § 989.54, paragraph (g) the

words, ‘‘On or before November 15 of

the crop year,’’ and ‘‘simultaneous’’, are

suspended indefinitely from the first

sentence.

§ 989.67 [Amended]

3. In § 989.67, paragraph (j) the words,

‘‘by more than 5 percent’’ and ‘‘105

percent of’’, are suspended indefinitely

from the first sentence.

Dated: September 22, 1997.

Lon Hatamiya,

Administrator, Agricultural Marketing

Service.

[FR Doc. 97–25621 Filed 9–25–97; 8:45 am]

BILLING CODE 3410–02–P

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1138

[DA–97–07]

Milk in the New Mexico-West Texas

Marketing Area; Suspension of Certain

Provisions of the Order

AGENCY: Agricultural Marketing Service,

USDA.

ACTION: Final rule; suspension.

SUMMARY: This document suspends

certain provisions of the pool plant and

producer milk definitions of the New

Mexico-West Texas Federal milk

marketing order for a two-year period.

Associated Milk Producers, Inc. (AMPI),

a cooperative association that represents

a majority of the producers who supply

milk to the market, requested

continuation of the current suspension

which would limit the pooling of

diverted milk. Continuation of the

suspension currently in effect is

necessary to ensure that dairy farmers

who have historically supplied the

market will continue to have their milk

priced under the New Mexico-West

Texas order without incurring costly

and inefficient movements of milk.

EFFECTIVE DATE: October 1, 1997,

through September 30, 1999.

FOR FURTHER INFORMATION CONTACT:

Clifford M. Carman, Marketing

Specialist, USDA/AMS/Dairy Division,

Order Formulation Branch, Room 2971,

South Building, PO Box 96456,

Washington, DC 20090–6456, (202)720–

9368, e-mail address

CliffordlMlCarman@usda.gov.

SUPPLEMENTARY INFORMATION: Prior

document in this proceeding:

Notice of Proposed Suspension:

Issued May 7, 1997; published May 13,

1997 (62 FR 26257).

The Department is issuing this final

rule in conformance with Executive

Order 12866.

This final rule has been reviewed

under Executive Order 12988, Civil

Justice Reform. This rule is not intended

to have a 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 Agricultural Marketing

Agreement Act of 1937, as amended (7

U.S.C. 601–674), 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

request modification or exemption from

such order by filing 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 the law. A

handler is afforded the opportunity for

a hearing on the petition. After a

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 its principal place of

business, has jurisdiction in equity to

review the Secretary’s ruling on the

petition, provided a bill in equity is

filed not later than 20 days after the date

of the entry of the ruling.

Small Business Consideration

In accordance with the Regulatory

Flexibility Act (5 U.S.C. 601 et seq.), the

Agricultural Marketing Service has

considered the economic impact of this

action on small entities and has certified

that this rule will not have a significant

economic impact on a substantial

number of small entities. For the

purpose of the Regulatory Flexibility

Act, a dairy farm is considered a ‘‘small

business’’ if it has an annual gross

revenue of less than $500,000, and a

dairy products manufacturer is a ‘‘small

business’’ if it has fewer than 500

employees. For the purposes of

determining which dairy farms are

‘‘small businesses,’’ the $500,000 per

year criterion was used to establish a

production guideline of 326,000 pounds

per month. Although this guideline does

not factor in additional monies that may

be received by dairy producers, it

should be an inclusive standard for

most ‘‘small’’ dairy farmers. For

purposes of determining a handler’s

size, if the plant is part of a larger

company operating multiple plants that

collectively exceed the 500-employee

limit, the plant will be considered a

large business even if the local plant has

fewer than 500 employees.

For the month of March 1997, the

milk of 174 producers was pooled on

the New Mexico-West Texas Federal

milk order. Of these producers, 26

producers were below the 326,000-

pound production guideline and are

considered small businesses. During

this same period, there were 19 handlers

operating pool plants under the New

Mexico-West Texas order. Twelve of

these handlers would be considered

small businesses.

The suspension continues the current

suspension of segments of the pool

plant and producer milk definitions

under the New Mexico-West Texas

order. The continued suspension will

allow more pooling of diverted milk.

This rule lessens the regulatory impact

of the order on certain milk handlers

and tends to ensure that dairy farmers

continue to have their milk priced

under the order and thereby receive the

benefits that accrue from such pricing.

Preliminary Statement

This order of suspension is issued

pursuant to the provisions of the

Agricultural Marketing Agreement Act

and of the order regulating the handling

of milk in the New Mexico-West Texas

marketing area.

Notice of proposed rulemaking was

published in the Federal Register on

May 13, 1997 (62 FR 26257) concerning

a proposed suspension of certain