30642 Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Rules and Regulations

Dated: June 4, 2001.

Robert E. Taylor,

Clerk of the Board.

[FR Doc. 01–14388 Filed 6–6–01; 8:45 am]

BILLING CODE 7400–01–C

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 993

[Docket No. FV01–993–1 FR]

Dried Prunes Produced in California;

Undersized Regulation for the 2001–02

Crop Year

AGENCY: Agricultural Marketing Service,

USDA.

ACTION: Final rule.

SUMMARY: This rule changes the

undersized regulation for dried prunes

received by handlers from producers

and dehydrators under Marketing Order

No. 993 for the 2001–02 crop year. The

marketing order regulates the handling

of dried prunes produced in California

and is administered locally by the Prune

Marketing Committee (Committee). This

rule removes the smallest, least

desirable of the marketable size dried

prunes produced in California from

human consumption outlets and allows

handlers to dispose of the undersized

prunes in such outlets as livestock feed.

The Committee estimated that this rule

will reduce the excess of dried prunes

by approximately 3,400 tons while

leaving sufficient prunes to fulfill

foreign and domestic trade demand.

EFFECTIVE DATE: August 1, 2001 through

July 31, 2002.

FOR FURTHER INFORMATION CONTACT:

Richard P. Van Diest, 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, room

2525–S, P.O. Box 96456, Washington,

DC 20090–6456; 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, P.O. Box 96456, room

2525–S, Washington, DC 20090–6456;

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. 993, both as amended (7

CFR part 993), regulating the handling

of dried prunes 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 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 the date of the

entry of the ruling.

This final rule changes the undersized

regulation in § 993.49(c) of the prune

marketing order for the 2001–02 crop

year for supply management purposes.

The regulation removes prunes passing

through specified screen openings. For

French prunes, the screen opening will

be increased from 24⁄32 to 24⁄32 of an inch

in diameter; and for non-French prunes,

the opening will be increased from 28⁄32

to 30⁄32 of an inch in diameter. This rule

removes the smallest, least desirable of

the marketable size dried prunes

produced in California from human

consumption outlets. The rule will be in

effect from August 1, 2001, through July

31, 2002, and was unanimously

recommended by the Committee at a

November 29, 2000, meeting.

Section 993.19b of the prune

marketing order defines undersized

prunes as prunes which pass freely

through a round opening of a specified

diameter. Section 993.49(c) of the prune

marketing order establishes an

undersized regulation of 23⁄32 of an inch

for French prunes and 28⁄32 of an inch

for non-French prunes. These diameter

openings have been in effect for quality

control purposes. Section 993.49(c) also

provides that the Secretary upon a

recommendation of the Committee may

establish larger openings for undersized

dried prunes whenever it is determined

that supply conditions for a crop year

warrant such regulation. Section

993.50(g) states in part: ‘‘No handler

shall ship or otherwise dispose of, for

human consumption, the quantity of

prunes determined by the inspection

service pursuant to § 993.49(c) to be

undersized prunes. * * * Pursuant to

§ 993.52 minimum standards, pack

specifications, including the openings

prescribed in § 993.49(c), may be

modified by the Secretary on the basis

of a recommendation of the Committee

or other information.

Pursuant to the authority in § 993.52

of the order, § 993.400 modifies the

undersized prune openings prescribed

in § 993.49(c) to permit undersized

regulations using openings of 23⁄32 or 24⁄32 of an inch for French prunes and 28⁄32 or 30⁄32 of an inch for non-French

prunes.

During the 1974–75 and 1977–78 crop

years, the undersized prune regulation

was established by the Department at

23⁄32 of an inch in diameter for French

prunes and 28⁄32 of an inch in diameter

for non-French prunes. These diameter

openings were established in §§ 993.401

and 993.404, respectively (39 FR 32733,

September 11, 1974; and 42 FR 49802,

September 28, 1977). In addition, the

Committee recommended and the

Department established volume

regulation percentages during the 1974–

75 crop year with an undersized

regulation at the aforementioned 23⁄32

and 28⁄32 inch diameter screen sizes.

During the 1975–76 and 1976–77 crop

years, the undersized prune regulation

was established at 24⁄32 of an inch for

French prunes and 30⁄32 of an inch for

non-French prunes. These diameter

openings were established in §§ 993.402

and 993.403 respectively (40 FR 42530,

September 15 1975; and 41 FR 37306,

September 3, 1976). The prune industry

had an excess supply of prunes—

particularly small-sized prunes. Rather

than recommending volume regulation

percentages for the 1975–76, 1976–77,

and 1977–78 crop years, the Committee

recommended the establishment of an

undersized prune regulation applicable

Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Rules and Regulations 30643

to all prunes received by handlers from

producers and dehydrators during each

of those crop years.

The objective of the undersized prune

regulations during each of those crop

years was to preclude the use of small

prunes in manufactured prune products

such as juice and concentrate. Handlers

could not market undersized prunes for

human consumption, but could dispose

of them in nonhuman outlets such as

livestock feed.

With these experiences as a basis, the

marketing order was amended on

August 1, 1982, establishing the

continuing quality-related regulation for

undersized French and non-French

prunes under § 993.49(c). That

regulation has removed from the

marketable supply those prunes which

are not desirable for use in prune

products.

As in the 1970’s, the prune industry

is currently experiencing an excess

supply of prunes. During the 1998–99

crop year, an undersized prune

regulation was established at 24⁄32 of an

inch for French prunes, and 30⁄32 of an

inch for non-French prunes. These

diameter openings were established in

§ 993.405 (63 FR 20058, April 23, 1998).

With larger than desired carryin

inventories and a 1999–2000 prune crop

of about 172,000 natural condition tons,

the Committee unanimously

recommended continuing with an

undersized prune regulation at 24⁄32 of

an inch in diameter for French prunes

and 30⁄32 of an inch in diameter for nonFrench prunes. These diameter

openings were established in § 993.406

(64 FR 23759, May 4, 1999) and made

effective from August 1, 1999, through

July 31, 2000. With larger than desired

carryin inventories and a 2000–01 prune

crop of about 211,300 natural condition

tons, the Committee unanimously

recommended continuing with an

undersized prune regulation at 24⁄32 of

an inch in diameter for French prunes

and 30⁄32 of an inch in diameter for nonFrench prunes. These diameter

openings were established in § 993.407

(65 FR 29945, May 10, 2000) and made

effective from August 1, 2000, through

July 31, 2001.

For the 1998–99 crop year, the carryin

inventory level reached a record high of

126,485 natural conditions tons.

Excessive inventories tend to dampen

producer returns, and cause weak

marketing conditions. The carryin for

the 1999–2000 crop year was reduced to

59,944 natural condition tons. This

reduction was due to the low level of

salable production in 1998–99 (about

102,521 natural condition tons and 50

percent of a normal size crop) and the

undersized prune regulation. The

carryin for the 2000–01 crop increased

to 65,131 natural condition tons. This

increase was due to a larger crop size of

about 172,000 natural condition tons

and reduced shipments during the

1999–2000 crop year. According to the

Committee, the desired inventory level

to keep trade distribution channels full

while awaiting the new crop has ranged

between 35,353 and 42,071 natural

condition tons since the 1996–97 crop

year while the actual inventory has

ranged between 59,944 and 126,485

natural condition tons since that year.

The desired inventory level for early

season shipments fluctuates from yearto-year depending on market conditions.

At its meeting on November 29, 2000,

the Committee unanimously

recommended continuing an undersized

prune regulation at 24⁄32 of an inch in

diameter for French prunes and 30⁄32 of

an inch in diameter for non-French

prunes during the 2001–02 crop year for

supply management purposes. This

regulation will be in effect from August

1, 2001, through July 31, 2002.

The Committee estimated that there

will be an excess of about 41,476 natural

condition tons of dried prunes as of July

31, 2001. This rule will continue to

remove primarily small-sized prunes

from human consumption channels,

consistent with the undersized prune

regulation that was implemented for the

1998–99, 1999–2000, and 2000–01 crop

years. It is estimated that approximately

3,400 natural condition tons of small

prunes will be removed from human

consumption channels during the 2001–

02 crop year as a result of this rule. This

will leave sufficient prunes to fill

domestic and foreign trade demand

during the 2001–02 crop year, and

provide an adequate carryout on July 31,

2002, for early season shipments until

the new crop is available for shipment.

According to the Committee, the desired

inventory level to keep trade

distribution channels full while

awaiting the 2001–02 crop is about

41,000 natural condition tons.

In its deliberations, the Committee

reviewed statistics reflecting: (1) A

worldwide prune demand which has

been relatively stable at about 260,000

tons; (2) a worldwide oversupply that is

expected to continue growing for several

more years (estimated at 299,420 natural

condition tons by the year 2005; (3) a

continuing oversupply situation in

California caused by increased

production from increased plantings

and higher yields per acre (between the

1990–91 and 2000–01 crop years, the

yields ranged from 1.2 to 2.6 versus a

10-year average of 2.1 tons per acre);

and (4) California’s continued excess

inventory situation. The production of

these small sizes ranged from 1,335 to

8,778 natural condition tons during the

1990–91 through the 1999–2000 crop

years. The Committee concluded that it

has to continue utilizing supply

management techniques to accelerate

the return to a balanced supply/demand

situation in the interest of the California

dried prune industry. The changes to

the undersized regulation for the 2001–

02 crop year are the result of these

deliberations, and the Committee’s

desire to gradually bring supplies in line

with market needs.

The industry’s oversupply situation is

expected to continue over the next few

years due to new prune plantings in

recent years with higher yields per acre.

These plantings have a higher tree

density per acre than the older prune

plantings. During the 1990–91 crop

year, the non-bearing acreage totaled

5,900 acres; but by 1998–99, the nonbearing acreage had quadrupled to more

than 26,000 acres. The non-bearing

acreage has subsequently been reduced

to 22,000 acres during the 1999–2000

crop year. The 1996–97 through 1999–

2000 yields have ranged from 1.2 to 2.6

tons per acre. Over the last 10-years, the

average was 2.1 tons per acre.

The 2000–01 dried prune crop is

expected to be 211,300 natural

condition tons. Another large crop as

high as 220,000 natural condition tons

is expected for the 2001–02 crop year,

partly because of an anticipated increase

in bearing acreage.

The 1997–98 crop year producer

prices for the 24⁄32 size French prunes

have been about $40–$50 per ton, about

$260–$270 per ton below post harvest

costs. During the 2000–01 crop year,

feedlots are paying about $35 to $40 per

ton for the 24⁄32 size French prunes,

which is about $270–275 per ton below

post harvest costs. The lower producer

prices are expected to continue as an

incentive for production of larger size

prunes. The larger sizes will help the

industry better meet the increasing

market demand for larger-sized pitted

prunes.

The 1998–99, 1999–2000 and 2000–01

undersized prune rules of 24⁄32 of an

inch for French prunes and 30⁄32 of an

inch for non-French prunes have

expedited the reduction of small prune

inventories, but more needs to be done

to bring supplies into balance with

market demand. The excess inventory

on July 31, 2000, was 65,131 natural

condition tons, and about 3,400 natural

condition tons of dried prunes are

expected to be removed from the 2000–

01 marketable supply by the current

undersized regulation. The Committee

believes that the same undersized

regulation also should be implemented

30644 Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Rules and Regulations

during the 2001–02 crop year to

continue reducing the inventories of

small prunes, to help reduce the

expected large 2001–02 prune crop, and

more quickly bring supplies in line with

demand. Attainment of this goal will

benefit all of the producers and handlers

of California prunes.

The recommended decision of June 1,

1981 (46 FR 29271) regarding

undersized prunes states that the

undersized prune regulation at the 23⁄32

and 28⁄32 inch diameter size openings

will be continuous for the purposes of

quality control even in above parity

situations. It further states that any

change (i.e. increase) in the size of those

openings will not be for the purpose of

establishing a new quality-related

minimum. Larger openings would only

be applicable when supply conditions

warranted the regulation of a larger

quantity of prunes as undersized

prunes. Thus, any regulation prescribing

openings larger than those in § 993.49(c)

should not be implemented when the

grower average price is expected to be

above parity. The season average price

received by prune growers ranged from

39 percent to 62 percent of parity during

the 1994 through 1999 seasons. As

discussed later, the average grower price

for prunes during the 2001–02 crop year

is not expected to be above parity, and

implementation of this more restrictive

undersized regulation will be

appropriate in reference to parity.

Section 8e of the Act requires that

when certain domestically produced

commodities, including prunes, are

regulated under a Federal marketing

order, imports of that commodity must

meet the same or comparable grade,

size, quality, or maturity requirements

for the domestically produced

commodity. This action does not impact

the dried prune import regulation

because the action to be implemented is

volume control, not quality control. The

smaller diameter openings of 23⁄32 of an

inch for French prunes and 28⁄32 of an

inch for non-French prunes were

implemented to improve product

quality. The recommended increases to

24⁄32 of an inch in diameter for French

prunes and 30⁄32 of an inch in diameter

for non-French prunes are for purposes

of volume control. Therefore, the

increased diameters will not be applied

to imported prunes.

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 1,250

producers of dried prunes in the

production area and approximately 22

handlers subject to regulation under the

marketing order. Small agricultural

producers have been defined by the

Small Business Administration (13 CFR

121.201) as those having annual receipts

of less than $500,000, and small

agricultural service firms are defined as

those whose annual receipts are less

than $5,000,000.

An updated industry profile shows

that 9 out of 22 handlers (41%) shipped

over $5,000,000 worth of dried prunes

and could be considered large handlers

by the Small Business Administration.

Thirteen of the 22 handlers (59%)

shipped under $5,000,000 worth of

prunes and could be considered small

handlers. An estimated 109 producers,

or less than 9% of the 1,250 total

producers, could be considered large

growers with annual incomes over

$500,000. The majority of handlers and

producers of California dried prunes

may be classified as small entities.

This final rule will establish an

undersized prune regulation of 24⁄32 of

an inch in diameter for French prunes

and 30⁄32 of an inch in diameter for nonFrench prunes for the 2001–02 crop year

for inventory management purposes.

This change in regulation will result in

more of the smaller sized prunes being

classified as undersized prunes and is

expected to benefit producers, handlers,

and consumers. The larger screen

openings currently in place for 2000–01

are expected to remove only 3,449 tons

of dried prunes from the excess

marketable supply. The Committee

estimated that there will be an excess of

about 41,400 natural condition tons of

dried prunes on July 31, 2001.

Implementation of the larger openings

in 2001–02 is expected to reduce that

surplus by about 3,400 tons.

Because the benefits and costs of the

action will be directly proportional to

the quantity of 24⁄32 screen French

prunes and 30⁄32 screen non-French

prunes produced or handled, small

businesses should not be

disproportionately affected by the

action. While variation in sugar content,

prune density, and dry-away ratio vary

from county to county, they also vary

from orchard to orchard and season to

season. In the major producing areas of

the Sacramento and San Joaquin Valleys

(which account for over 99 percent of

the State’s production), the prunes

produced are homogeneous enough that

this action will not be viewed as

inequitable by large and small

producers in any area of the State.

The quantity of small prunes in a lot

is not dependent on whether a producer

or handler is small or large; but is

primarily dependent on cultural

practices, soil composition, and water

costs. The cost to minimize the quantity

of small prunes is similar for small and

large entities. The anticipated benefits

of this rule are not expected to be

disproportionately greater or lesser for

small handlers or producers than for

large entities. The only additional costs

on producers and handlers expected

from the increased openings will be the

disposal of additional tonnage (now

estimated to be about 3,400 tons) to

nonhuman consumption outlets. These

costs are expected to be minimal and

will be offset by the benefits derived by

the elimination of some of the excess

supply of small-sized prunes.

At the November 29, 2000, meeting,

the Committee discussed the financial

impact of this change on handlers and

producers. Handlers and producers

receive higher returns for the larger size

prunes. Prunes eliminated through the

implementation of this rule have very

little value. As mentioned earlier, the

current situation for producers of these

small sizes is quite bleak with producers

losing about $270–$275 on every ton

delivered to handlers. During the 2000–

01 crop year, the feedlot prices for 24⁄32

screen French prunes range between

$35 and $40 per ton. This price is a little

lower than the $40–50 price during the

1998–99 crop year. The cost of drying a

ton of such prunes is $260 per ton at a

4 to 1 dry-away ratio, transportation is

at least $20 per ton, and the producer

assessment paid to the California Prune

Board (a body which administers the

State marketing order for promotion) is

$30 per ton. The total cost is about $310

per ton which equates to a loss of about

$270–$275 per ton for every ton of 24⁄32

screen French prunes produced and

delivered to handlers.

Utilizing data provided by the

Committee, the Department has

evaluated the impact of the undersized

regulation change upon producers and

handlers in the industry. The analysis

shows that a reduction in the

marketable production and handler

inventories should probably result in

higher season-average prices, which

would benefit all producers. The

removal of the smallest, least desirable

of the marketable dried prunes

Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Rules and Regulations 30645

produced in California from human

consumption outlets will eliminate an

estimated 3,400 tons of small-sized

dried prunes during the 2001–02 crop

year from the marketplace. This will

help lessen the negative marketing and

pricing effects resulting from the excess

inventory situation facing the industry.

California prune handlers reported that

they held 65,131 tons of natural

condition prunes on July 31, 2000, the

end of the 1999–2000 crop year. The

65,131 ton year-end inventory is larger

than what is desired for early season

shipments by the prune industry. The

desired inventory level is based on an

average 12-week supply to keep trade

distribution channels full while

awaiting new crop. Currently, it is about

41,000 natural condition tons. This

leaves a 2000–01 inventory surplus of

about 24,000 tons. The undersized

regulation will help reduce the surplus,

but the anticipated large 2001–02 prune

crop is expected to worsen the supply

imbalance.

One of the primary reasons for this

rulemaking action is that the dried

prune industry continues to be plagued

by high carryin inventories. California

prune handlers estimate that 82,286

tons of prunes (natural condition) will

be inventoried at the end of the 2000–

01 crop year. This will result in a

surplus of 41,476 tons over the

industry’s desired carryout of 40,810

tons.

Increasing the screen openings is an

attempt to moderately reduce and

control the marketable production and

carryin inventory. If the marketable

supply and the carryin inventory are

both reduced, then prices may be

expected to increase. If no action is

taken, rising production levels, high

inventories, and low grower prices will

continue.

To assess the impacts that regulation

has on the prices growers receive for

their product, an econometric model has

been estimated. The two variables of

interest in this model are marketable

production and carryin inventory. Both

of the estimated parameters for these

variables are negative and statistically

significant. This provides evidence that

reducing the marketable supply and the

carryin inventory will benefit all

growers and handlers regardless of size.

Increasing the undersized openings

will result in a reduced level of

marketable production. The Committee

estimates that marketable production

will be reduced by 3,400 tons, or 2.2

percent. If marketable production for the

2001–02 crop year is reduced by 2.2

percent, the model suggests an increase

in prices of approximately 0.9 percent

compared to taking no action. Although

increasing the undersized openings will

only have a modest effect on marketable

production, price increases will result.

This action will not only help reduce

the oversupply situation, but improve

the quality of the manufactured prune

products by removing the smaller, less

desirable prunes from the supply chain.

Without increasing the undersized

openings, the industry could be

expected to continue to build unwanted

inventories. These inventories have a

depressing effect on the grower prices.

The econometric model shows that, for

every 1 percent increase in carryin

inventories, a decrease in grower prices

of 0.12 percent occurs.

This action will not result in a

shortage of prunes for either retail or

food service outlets. Inventories are

expected to remain above desired levels

and marketable production is

anticipated to be in excess of demand.

Additionally, this action is not expected

to have a significant impact on retail or

food service outlet prices.

In summary, increasing the openings

in the sizing screens may reduce the

volume of marketable production and

decrease the carryin inventory. If the

rule change accomplishes these two

intended effects, the model shows that

season average prices will be slightly

higher than if the screen openings

remain unchanged. A higher seasonaverage price should benefit all

producers regardless of size.

As the marketable dried prune

production and surplus prune

inventories are reduced through this

rule, and producers continue to

implement improved cultural and

thinning practices to produce largersized prunes, continued improvement

in producer returns is expected.

For the 1991–92 through the 1999–

2000 crop years, the season average

price received by the producers ranged

from a high of $1,140 per ton to a low

of $778 per ton during the 1998–99 crop

year. The season average price received

by producers during that 9-year period

ranged from 39 percent to 68 percent of

parity. Based on available data and

estimates of prices, production, and

other economic factors, the season

average producer price for 2000–01

season is expected to be about the same

as the 1999–2000 season average

producer price of $892 per ton, or about

42 percent of parity.

The Committee discussed alternatives

to this change, including making no

changes to the undersized prune

regulation and allowing market

dynamics to foster prune inventory

adjustments through lower prices on the

smaller prunes. While reduced grower

prices for small prunes are expected to

contribute toward a slow reduction in

dried prune inventories, the Committee

believed that the undersized rule change

is needed to expedite that reduction.

With the excess tonnage of dried

prunes, the Committee also considered

establishing a reserve pool and

diversion program to reduce the

oversupply situation. A third alternative

discussed was to advance to a 25⁄32

screen undersized regulation for French

prunes. However, handlers expressed

concern that this will reduce the

amount of manufacturing prunes

available for the manufacture of prune

juice and concentrate. This will increase

the prices of these products and could

encourage increased imports of foreign

prune concentrate, which could be

converted into prune juice and sold

cheaper than California packed juice.

This possibility may be explored in

more detail at a future meeting when a

thorough analysis is made as to what

effect this change will have on the

prune industry. The first two initiatives

were not supported because they will

not specifically eliminate the smallest,

least valuable prunes, which are in

oversupply. Instead, the reserve pool

and diversion program would eliminate

larger size prunes from human

consumption outlets. Reserve pools for

prunes have historically been

implemented on dried prunes regardless

of the size of the prunes. While the

marketing order also allows handlers to

remove the larger prunes from the pool

by replacing them with small prunes

and the value difference in cash, this

exchange would be cumbersome and

expensive to administer compared to

this rule.

Section 8e of the Act requires that

when certain domestically produced

commodities, including prunes, are

regulated under a Federal marketing

order, imports of that commodity must

meet the same or comparable grade,

size, quality, or maturity requirements

for the domestically produced

commodity. This action does not impact

the dried prune import regulation

because the action to be implemented is

for inventory management, not quality

control purposes. The smaller diameter

openings of 23⁄32 of an inch for French

prunes and 28⁄32 of an inch for nonFrench prunes were implemented for

the purpose of improving product

quality. The increases to 24⁄32 of an inch

in diameter for French prunes and 30⁄32

of an inch in diameter for non-French

prunes are for purposes of inventory

management. Therefore, the increased

diameters will not be applied to

imported prunes.

This action will not impose any

additional reporting or recordkeeping

30646 Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Rules and Regulations

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.

In addition, the Committee’s meeting

was widely publicized throughout the

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 November 29,

2000, meeting was a public meeting and

all entities, both large and small, were

able to express views on this issue. The

Committee itself is composed of twentytwo members. Seven are handlers,

fourteen are producers, and one is a

public member. Moreover, the

Committee and its Supply Management

Subcommittee have been monitoring the

supply situation, and this rule reflects

their deliberations completely.

A proposed rule concerning this

action was published in the Federal

Register on Tuesday, March 6, 2001, (66

FR 13454). Copies of this rule were

mailed or sent via facsimile to all

Committee members, alternates and

dried prune handlers. Finally, the rule

was made available through the Internet

by the U.S. Government Printing Office.

The rule provided a comment period

which ended April 16, 2001. No

comments were received. Accordingly,

no changes will be made to the rule as

proposed.

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.

After consideration of all relevant

matter 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.

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. A new section 993.408 is added to

read as follows:

§ 993.408 Undersized prune regulation for

the 2001–02 crop year.

Pursuant to §§ 993.49(c) and 993.52,

an undersized prune regulation for the

2001–02 crop year is hereby established.

Undersized prunes are prunes which

pass through openings as follows: for

French prunes, 24⁄32 of an inch in

diameter; for non-French prunes, 30⁄32 of

an inch in diameter.

Dated: June 1, 2001.

Kenneth C. Clayton,

Acting Administrator, Agricultural Marketing

Service.

[FR Doc. 01–14291 Filed 6–4–01; 10:42 am]

BILLING CODE 3410–02–U

SMALL BUSINESS ADMINISTRATION

13 CFR Parts 107 and 121

Size Eligibility Requirements for SBA

Financial Assistance and Size

Standards for Agriculture

AGENCY: Small Business Administration.

ACTION: Direct final rule.

SUMMARY: This final rule implements

legislative changes to size eligibility

requirements for assistance from Small

Business Investment Companies (SBICs)

and Certified Development Companies

(CDCs), and for the Agriculture

industry.

The Small Business Investment

Improvement Act of 1999, codified in

sections 103(5) and 103(12) of the Small

Business Investment Act of 1958, as

amended, established a method for

determining the eligibility of a business

that is not required to pay Federal

income tax at the corporate level, but

that is required to pass income through

to its shareholders or partners. The new

method treats ‘‘pass-through’’

enterprises the same as firms that pay

Federal taxes for the purpose of size

standard determinations.

The Small Business Reauthorization

Act of 2000, codified in section 3(a)(1)

of the Small Business Act, increases the

size standards used for Agriculture from

$500,000 to $750,000 in average annual

receipts.

DATES: The rule will become effective

August 6, 2001, unless adverse

comment is received prior to July 9,

2001. If an adverse comment is received,

SBA will publish a timely withdrawal of

the rule in the Federal Register. The

Agency may proceed to publish a

proposed rule following notice and

comment procedures.

ADDRESSES: Send written comments to

Gary M. Jackson, Assistant

Administrator for Size Standards, U.S.

Small Business Administration, 409

Third St., SW., Mail Code 6530,

Washington, DC 20416; or via e-mail to

sizestandards@sba.gov.

FOR FURTHER INFORMATION CONTACT:

Diane Heal, Office of Size Standards,

(202) 205–6618.

SUPPLEMENTARY INFORMATION:

SBIC/CDC

A business seeking financial

assistance from an SBIC or a CDC must

qualify as a ‘‘small-business concern’’ as

defined in section 103(5) of the Small

Business Investment Act of 1958, as

amended (the Act), and as implemented

by 13 CFR 121.301(b) for CDCs and 13

CFR 121.301(c) for SBICs. For SBIC

financial assistance, a business also may

need to qualify as a ‘‘smaller enterprise’’

as defined in section 103(12) of the Act,

and as implemented by 13 CFR

107.710(a). Each of these definitions

requires a firm to meet either the size

standard for its primary industry or

certain net worth and net income tests.

The net income tests measure the firm’s

average net income after Federal income

taxes for the preceding 2 years.

On April 5, 1999, Public Law 106–9,

the ‘‘Small Business Investment

Improvement Act of 1999’’ which

expands opportunities for small

businesses to receive investment capital

from banks and traditional investment

sources, became effective. This

legislation established a new method for

applying the net income test to a

business that is not required to pay

Federal income tax at the enterprise

level, but that is required to pass income

through to its shareholders, partners, or

other owners. This new method permits

such businesses to use a specified

formula to impute a tax to the business

and to compute ‘‘after-tax’’ net income.

The intent is to permit ‘‘pass-through’’

enterprises to be treated the same as

concerns that pay Federal income taxes

for purposes of SBA size standard

determinations.

As authorized by Public Law 106–9,

this final rule revises 121.301(b),

121.301(c) and 107.710(a) to permit a

business concern that does not pay

Federal income taxes at the enterprise

level to deduct an imputed Federal

income tax expense from its net income.

The business concern computes this

deduction by multiplying its net income