67306 Federal Register / Vol. 70, No. 213 / Friday, November 4, 2005 / Rules and Regulations 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Part 82 

[Docket No. FV05–82–01 FR] 

RIN 0581–AC45 

Regulations Governing the California 

Clingstone Peach (Tree Removal) 

Diversion Program 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Final rule. 

SUMMARY: This rule provides procedures 

for a California Clingstone Peach 

Diversion Program. The program will be 

voluntary and consist entirely of tree 

removal. The program will be 

implemented under clause (3) of Section 

32 of the Act of August 24, 1935, as 

amended. Based on 2003 and prior 

season acreage, production, supply, and 

marketing information for California 

clingstone peaches, this program is 

expected to bring the domestic canned 

peach supply more in line with the 

market and provide relief to growers 

faced with excess acreage and supplies, 

and with low prices. The program will 

ensure that removal is not part of the 

normal process of tree replacement. 

EFFECTIVE DATE: November 5, 2005. 

FOR FURTHER INFORMATION CONTACT: 

George Kelhart, Technical Advisor, 

Marketing Order Administration 

Branch, Fruit and Vegetable Programs, 

AMS, USDA, 1400 Independence 

Avenue, SW., Stop 0237, Washington, 

DC 20250–0237; Telephone: (202) 720– 

2491; Fax: (202) 720–8938; or e-mail: 

George.Kelhart@usda.gov.; or Kurt 

Kimmel, 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 e-mail: 

Kurt.Kimmel@usda.gov. 

Small businesses may request 

information on the proposed diversion 

program by contacting Jay Guerber, 

Marketing Order Administration 

Branch, Fruit and Vegetable Programs, 

AMS, USDA, 1400 Independence 

Avenue, SW., Stop 0237, Washington, 

DC 20250–0237; Telephone: (202) 720– 

2491; Fax: (202) 720–8938; or e-mail: 

Jay.Guerber@usda.gov. 

SUPPLEMENTARY INFORMATION: 

Executive Order 12866 

This rule has been determined to be 

not significant for the purposes of 

Executive Order 12866 and, therefore, 

has not been reviewed by the Office of 

Management and Budget (OMB). In 

accordance with Executive Order 12866, 

the Department of Agriculture (USDA) 

has prepared a detailed regulatory 

impact cost-benefit assessment, which 

can be obtained by contacting the 

person(s) listed in the FOR FURTHER

INFORMATION CONTACT section of this 

rule. USDA also prepared a civil rights 

impact analysis. This document also can 

be obtained by following the same 

procedure. 

Public Law 104–4 

Title II of the Unfunded Mandates 

Reform Act of 1995 (UMRA), Public 

Law 104–4, establishes requirements for 

Federal agencies to assess the effects of 

their regulatory actions on State and 

local governments and the private 

sector. Under section 202 of the UMRA, 

the Agricultural Marketing Service 

(AMS) generally must prepare a written 

statement, including a cost-benefit 

analysis, for proposed and final rules 

with ‘‘Federal mandates’’ that may 

result in expenditures by State and local 

governments, in the aggregate, or by the 

private sector, of $100 million or more 

in any one year. When such a statement 

is needed for a rule, section 205 of the 

UMRA generally requires federal 

agencies to identify and consider a 

reasonable number of regulatory 

alternatives and adopt the least costly, 

most cost-effective, or least burdensome 

alternative that achieves the objectives 

of the rule. 

This rule contains no Federal 

mandates (under the regulatory 

provisions of Title II of the UMRA) for 

State and local governments or the 

private sector of $100 million or more 

in any one year. Therefore, this rule is 

not subject to the requirements of 

sections 202 and 205 of the UMRA. 

Executive Order 12988 

This rule has been reviewed under 

Executive Order 12988, Civil Justice 

Reform. The rule is intended to have 

preemptive effect with respect to any 

State or local laws, regulations or 

policies which conflict with its 

provisions, or which will otherwise 

impede its full implementation. Prior to 

any judicial challenge to the provisions 

of this rule or the application of its 

provisions, all applicable administrative 

procedures must be exhausted. 

Executive Order 12372 

This program is not subject to the 

provisions of Executive Order 12372, 

which requires intergovernmental 

consultation with State and local 

officials. See the Notice related to 7 CFR 

part 3015, subpart V published at 48 FR 

29115 (June 24, 1983). 

Executive Order 12612 

It has been determined that this rule 

does not have sufficient Federalism 

implications to warrant the preparation 

of a Federalism Assessment. The 

provisions contained in this rule will 

not have a substantial direct effect on 

States or their political subdivisions or 

on the distribution of power and 

responsibilities among the various 

levels of government. 

Authority for a Diversion Program 

This program is intended to 

reestablish the purchasing power of 

California clingstone peach growers 

who suffered from excess acreage, 

supplies, and low prices in 2003. 

Programs to reestablish the purchasing 

power of U.S. farmers are authorized by 

clause (3) of Section 32 of the Act of 

August 24, 1935, as amended (7 U.S.C. 

612c), hereinafter referred to as ‘‘Section 

32.’’ Clause (3) authorizes USDA to 

‘‘* * * reestablish farmers’ purchasing 

power by making payments in 

connection with the normal production 

of any agricultural commodity for 

domestic consumption.’’ Section 32 also 

authorizes USDA to use Section 32 

funds ‘‘* * * at such times, and in such 

manner, and in such amounts, as USDA 

finds will effectuate substantial 

accomplishments of any one or more of 

the purposes of this section.’’ 

Furthermore, ‘‘Determinations by USDA 

as to what constitutes * * * normal 

production for domestic consumption 

shall be final.’’ 

Need for a Diversion Program 

Domestic production of clingstone 

peaches is concentrated in California. 

Although there are more than 200 peach 

varieties, there are two basic types: 

Clingstone and freestone. Clingstone 

peaches—so named because their flesh 

‘‘clings’’ to the stone, or pit—are almost 

exclusively canned due to their ability 

to retain flavor and textural consistency. 

Other relatively minor uses include 

frozen peaches, baby food, and fruit 

concentrate for juice. Freestone 

peaches—so named because their flesh 

is readily removed from the stone—are 

primarily produced for the fresh market, 

with secondary outlets including the 

frozen and dried fruit market. 

Although peaches are grown 

commercially in more than 30 states, the 

National Agricultural Statistics Service 

(NASS) reported that, in 2003, 

California produced about 74 percent of 

all peaches grown in the U.S. Other 

significant peach producing states, 

including South Carolina, Georgia, New 

Federal Register / Vol. 70, No. 213 / Friday, November 4, 2005 / Rules and Regulations 67307 

Jersey, Pennsylvania, and Washington, 

had a combined production of a little 

less than 17 percent of the U.S. total. As 

noted earlier, clingstone peach 

production is concentrated in 

California, which claims over 95 percent 

of the domestic production. 

NASS reports that U.S. production of 

all peaches in 2004 totaled a little over 

1.279 million tons, of which 949 

thousand tons were produced in 

California. In comparison, California 

clingstone peach production in 2004 

totaled 539 thousand tons. 

The U.S. is the largest producer of 

canned peaches in the world. However, 

foreign imports of canned clingstone 

peaches are providing an increasingly 

important volume of competition for the 

U.S. industry. Greece, the world’s 

second largest producer of canned 

peaches, has been the largest exporter to 

the U.S., followed by Spain, South 

Africa, China, and Thailand (remanufactured product). According to a 

February 2001 report by the Foreign 

Agricultural Service, the U.S. has 

become a net importer of canned 

peaches, with exports averaging around 

20 thousand tons and imports averaging 

approximately 21 thousand tons. 

The California Canning Peach 

Association (CCPA) requested the 

diversion program on behalf of the 

clingstone peach industry. Established 

in 1922, the CCPA is a nonprofit 

cooperative bargaining association, 

owned and directed by its member 

growers. The CCPA negotiates an annual 

grower price and otherwise operates on 

behalf of its nearly 600 members, who 

produce approximately 80 percent of 

the clingstone peaches grown in 

California. 

Specifically, the industry requested 

that USDA provide funding for a tree 

removal program during 2004. 

Implementation was not possible at that 

time, but the diversion program will 

begin November 5, 2005 and grower 

applications to participate will be due 

on November 30, 2005. After receiving 

the CCPA’s written notification 

approving grower tree pull applications, 

growers may participate in the program. 

The tree removals will have to be 

completed by June 1, 2006. CCPA 

believes that the program will provide 

relief to the peach growers who have 

been displaced from domestic and 

international markets. CCPA cited 

continuing market disruption and 

deteriorating economic conditions 

during 2003 for peach growers as 

reasons for the diversion program. The 

CCPA stated that the steadily increasing 

supply of low-priced foreign canned 

peaches, as well as high production 

costs and high levels of domestic 

production have resulted in record 

amounts of unsold fruit. 

The industry’s difficulty is due in part 

to the high cost of domestic production 

coupled with high levels of plantings 

between 1998 and 2002, and in part to 

the increased supply of low-priced 

canned peaches from other nations. 

Labor costs (more than 2⁄3 of growers’ 

direct production costs), as well as the 

costs of energy, chemicals, fertilizer, 

and equipment have climbed 

dramatically over the last few years. 

Producer prices have not kept pace with 

these increases. Moreover, as processing 

costs have increased, canners have been 

forced to raise their selling prices, thus 

providing a more attractive domestic 

market for low-priced imports and a 

more attractive market for clingstone 

peaches in countries traditionally 

supplied by the U.S. industry (Mexico, 

Canada, and Japan, for example). 

As previously noted, the U.S. has 

become a net importer of canned 

peaches due to several factors, including 

unfavorable exchange rates, subsidized 

Greek over-production, and low-cost 

Chinese production. The large increase 

in imports has resulted in a diminished 

need for domestic production with the 

consequence of record volumes of fruit 

not being sold. Imports are expected to 

continue to increase while the export of 

canned clingstone peaches, as well as 

clingstone peaches for canning, is 

anticipated to stay steady or decline. 

Exports to Mexico and other Central 

American countries—both canned 

peaches and peaches for canning—are 

being priced out by Greece, while 

exports to Asian markets are facing 

strong price competition from both 

Greece and China. Increasing levels of 

both domestic and foreign production 

coupled with diminished export 

demand (world demand for canned fruit 

is flat outside of the European Union) 

will lead to continued surplus situations 

for a number of years. 

Young, recently planted clingstone 

peach trees are more productive than 

older trees. This results in actual 

production volume increasing rapidly in 

proportion to the increase in acreage. 

Due to an industry-wide belief that the 

canned peach market would be taking a 

turn for the better, farmers planted an 

average of 3,526 acres of clingstone 

peach trees per year between 1998 and 

2002. Although much of this acreage has 

been offset with concurrent acreage 

reduction, the net result over the last ten 

years is an increase of about 4,000 acres. 

This extra peach acreage is not needed, 

however, because of the slow demand 

growth in the canned fruit sector and 

the increasing pressure from imports. 

The recent bankruptcy of Tri-Valley 

Growers (one of the major peach 

processors in California) has also greatly 

impacted the industry’s ability to 

process the extra peach production. 

Once planted, it takes clingstone 

peach trees 3 years to produce fruit in 

commercial quantities. Once a peach 

grower has committed funds to the 

planting and maintenance of an orchard, 

it is difficult to reverse those decisions 

and recoup cost. Because supply is slow 

to adjust to changing market conditions, 

without some remedial action the 

industry anticipates many years of 

production outpacing demand, resulting 

in a continuation, if not a worsening, of 

disruptive market conditions. 

Industry Self-Help Initiatives 

The California clingstone peach 

industry has taken a number of steps on 

its own to deal with oversupply issues. 

Since 1993, the industry has spent over 

$17 million to remove more than 10,000 

acres of trees. In fact, the industry 

sponsored a tree pull in the spring of 

2005 resulting in the removal of 2,000 

additional acres. Although the CCPA 

administered some industry initiated 

acreage removal programs that 

compensated growers, many growers 

carried the costs of tree removal 

themselves. As noted earlier, even with 

aggressive tree removal, net acreage is 

currently up by about 2,000 acres over 

what it was a decade ago. Ten years ago, 

the number of acres was 28,100. The 

CCPA has also initiated and helped 

fund research projects aimed at 

reducing labor costs in the orchards, 

funded export incentive programs, and, 

as of 2004, its growers have limited new 

plantings to the lowest level in more 

than 50 years (only 580 acres planted in 

2004, and an estimated 890 acres will be 

planted in 2005). To further improve its 

long-term market position, the 

California peach industry plans on 

developing new processing technology 

as well as new and innovative uses for 

clingstone peaches other than canning. 

Despite these recent self-help efforts 

at mitigating the supply and demand 

imbalance, production of clingstone 

peaches has continued to be 

significantly greater than normal market 

needs. In fact, during both 2001 and 

2002 50 million pounds of clingstone 

peaches were harvested but could not be 

sold, and in 2003 the unutilized 

quantity was 61 million pounds. The 

unsold portions represented 5.3, 4.5, 

and 5.9 percent, respectively, of the 

total crops in each of those years. In 

2004, all of the clingstone peach 

production harvested was utilized. 

The California clingstone peach 

industry is in need of the immediate 

relief USDA can provide. A diversion 

67308 Federal Register / Vol. 70, No. 213 / Friday, November 4, 2005 / Rules and Regulations 

program wholly consisting of a 

reduction in acreage through the 

removal of bearing trees will assist the 

industry in restoring a more balanced 

supply-demand situation for the 

clingstone peach industry in the shortand long-term. 

Tree Removal Diversion Program 

The industry is requesting $5 million 

in federal funds to fund a voluntary tree 

removal program, including 

administrative costs. In addition, a total 

of $2 million from CCPA assessments on 

its grower-members (to be collected and 

remitted by processors based on 2005 

season deliveries) will be used to 

augment the federal funds. 

The industry expects to remove 4,000 

bearing acres of clingstone peach trees, 

or a little over 13 percent of the 30,200 

acres currently in production. A healthy 

peach tree lives for about 20 years and 

reaches peak production when between 

8 and 12 years old. Many of the current 

bearing trees are reaching the age where 

the normal cycle of removing old trees 

followed by replanting will be 

considered. The diversion program will 

provide an incentive to growers to 

remove healthy, fruit bearing trees 

rather than those near the end of their 

productive life, while ensuring that 

those orchards are not replanted with 

clingstone peach trees. 

To be eligible for the tree removal 

program, growers must have made 

deliveries to processors during 2005. 

Orchards that have been abandoned will 

not be eligible for participation. Growers 

will be paid $100/ton based on their 

actual 2005 peach deliveries to 

processors from the same acreage that is 

being removed, provided that payments 

will not exceed $1,700 per acre nor be 

less than $500 per acre. Trees will have 

to be removed prior to June 1, 2006, and 

to be eligible must be bearing and have 

been planted after 1987 and before 2003. 

Thus, trees removed under this program 

will be at least three years old but less 

than 18 years old. 

Growers who participate in the 

diversion program and subsequently 

replant a clingstone peach tree in the 

same location, and within the 10-year 

period following removal of the trees, 

will be required to refund to USDA all 

payments received, plus interest, on 

replanted acreage. Because it takes new 

trees at least three years to be 

commercially productive, this provision 

will effectively remove the acreage 

participating in the diversion program 

from commercial production of 

clingstone peaches for at least 13 years. 

As previously stated, the tree removal 

program is expected to reduce California 

clingstone peach acreage by up to 4,000 

acres, which, based on the most recent 

10-year average annual yield of 17.5 

tons per acre, could reduce annual 

production by approximately 70,000 

tons. This one-time decrease in 

production will help align supply with 

demand, while also ensuring an 

adequate supply. In addition, this 

program will provide the clingstone 

peach industry with the economic 

opportunity to concentrate its efforts on 

rebuilding demand for the future. 

The diversion program will be 

administered by AMS and CCPA. Any 

California clingstone peach grower 

wishing to participate in the program 

will file an application with the CCPA 

on a form approved by OMB. The 

application period will begin after 

publication of the final rule announcing 

the terms and conditions of the 

program. Applications must be 

submitted by November 30, 2005. 

Each applicant will provide 

information needed by the CCPA to 

operate the program. This will include, 

for example, the location of the orchard 

from which trees will be removed, the 

acreage to be removed, and the tonnage 

harvested off the applicable acreage in 

2005. Applicants will also certify that 

all equity holders in the participating 

acreage consent to the filing of the 

application, and will agree not to 

replant clingstone peach trees on the 

same acreage for 10 years after the trees 

were removed. The CCPA will review 

each application for completeness, and 

will make every reasonable effort to 

contact growers to obtain any missing 

information. 

Each approved applicant will be 

notified by the CCPA on another form 

approved by OMB. The approved 

grower will be required to fill out a 

portion of this ‘‘notification’’ form, 

certifying to the CCPA that he/she had 

removed the clingstone peach trees, and 

the date of removal. The remainder of 

this form will be filled out by a CCPA 

staff member. The staff member will 

verify that the approved block of 

clingstone peach trees had been 

removed, list the equivalent 2005 

delivery tons removed, and indicate the 

total amount of money due to the 

grower. To verify that trees are eligible 

for the program, a CCPA representative 

may sample one or more trees in the 

block by taking a cross section of the 

base of the tree after it has been cut 

down and counting the tree rings to 

determine the age of the tree. In 

addition, the CCPA and USDA may 

verify the age of the trees in the block 

by relying on grower records, and may 

use any other means deemed necessary 

to confirm the eligibility of the trees. 

As noted earlier, the USDA will 

provide $5 million to fund the tree 

removal program, including 

administrative costs. Applications will 

be approved until the available USDA 

and CCPA funds have been committed. 

Each participating grower will have 

until June 1, 2006, to remove trees from 

their land. 

Growers will be paid $100 per ton 

based on their actual peach deliveries to 

processors of peaches that were 

harvested in 2005 from the acreage 

involved in the tree removal program. 

Based on the conditions of program 

participation, payments to growers will 

range from $500 to $1,700 per acre, 

which should cover most of the costs of 

removing the trees as well as preparing 

the land for other uses. Thus, even if a 

grower had a yield greater than 17 tons 

per acre on the acreage selected for 

removal, payment will not exceed the 

maximum of $1,700 per acre established 

by this rule. 

Conversely, if a selected block of land 

had a 2005 yield of 5 tons per acre or 

less, the grower will receive the 

minimum of $500 per acre. The $100 

per ton payment, as well as the upper 

and lower limits to the amount paid per 

acre, are considered necessary to help 

ensure that enough growers participate 

in the tree removal program. The costs 

of participating in the program will vary 

depending on the number of acres 

removed. Some cost savings may accrue 

when larger blocks of acreage are 

removed. 

Estimated costs for tree removal, 

including the removal of roots and 

associated debris, range from $325-$525 

per acre. In addition, costs associated 

with preparing the ground for other 

crops, including leveling, fumigation, 

and weed control could cost between 

$1,050 and $1,875. Based on these 

estimates, grower costs associated with 

tree removal could total as much as 

$2,400 per acre. The $500-$1,500 per 

acre payment under the program will 

offset a significant portion of each 

grower’s costs associated with tree 

removal. 

Further offsetting the costs of tree 

removal will be the economic 

opportunities afforded the grower 

associated with being positioned to 

plant alternative crops on the cleared 

acreage. Additionally, the current 

economic conditions within the 

industry, specifically weak demand, 

reduced per capita consumption, 

stagnant domestic shipments and 

exports, increasing low-priced imports, 

and declining grower prices and 

revenues will appear to limit the 

incentives for replanting acreage to 

clingstone peach trees. 

Federal Register / Vol. 70, No. 213 / Friday, November 4, 2005 / Rules and Regulations 67309 

Final Regulatory Flexibility Analysis 

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 actions in order that 

small businesses will not be unduly or 

disproportionately burdened. 

There are about 700 growers of 

clingstone peaches in California. Small 

agricultural producers have been 

defined by the Small Business 

Administration (13 CFR 121.201) as 

those having annual receipts of less than 

$750,000. Based on 2003 data from the 

California Agricultural Statistics 

Service, all of the growers will be 

considered small growers with annual 

incomes under $750,000. Thus, the 

majority of the growers are considered 

small entities under SBA’s definition. 

This rule will establish a tree removal 

diversion program for California 

clingstone peaches. Authority for this 

program is provided in clause (3) of 

Section 32 of the Act of August 24, 

1935, as amended. 

Participation in the diversion program 

is voluntary, so individual producers, 

both large and small, can weigh the 

benefits and costs for their own 

operations before deciding whether to 

participate in the program. 

Economic Assessment of the Diversion 

Program 

To assess the impact a tree removal 

program will have on prices growers 

receive for their product, impacts on 

grower prices and inventories with a 

tree removal program and without a tree 

removal program were estimated. This 

economic assessment compares the 

benefits and costs of a tree removal 

program to the alternative of not having 

a tree removal program. An econometric 

model was also developed for the 

purpose of estimating nominal season 

average grower prices under both 

scenarios. 

Although a tree removal program will 

directly reduce the number of bearing 

acres, the impact of the program will not 

be apparent until after the 2006 crop 

harvest. In 2004, bearing acres are 

estimated at 31,740 acres. The industry 

has indicated that no additional net 

plantings of clingstone peach trees are 

occurring at this time. However, trees 

planted in 2002 through 2004 will enter 

production in 2005 through 2007. 

The tree removal analysis assumes 

that 4,000 acres of clingstone peach 

orchards will be removed through this 

program. This results in the reduction in 

bearing acreage from 31,740 to 30,480. 

This number is estimated by taking the 

bearing acreage of 31,740, subtracting 

the proposed tree removal acreage 

(4,000) and adding the acreage planted 

in 2002 (2,740 acres), which will start 

producing in 2005. Subsequent years’

bearing acreage is estimated using the 

same process; i.e., adding estimated 

acres planted three years earlier to 

existing bearing acreage. 

Under the proposed program, acreage 

in 2010 is estimated to total 28,256. It 

is assumed that the industry will only 

replant trees that were removed due to 

old age. However, it is not likely that all 

trees removed due to age will be 

replaced, and further, that trees 

removed due to age will not be involved 

in the tree removal program. 

Production for 2004 is reported by 

NASS at 539,000 tons. Carryin 

inventory for 2004 was reported by 

CCPA to be 3.44 million cases (24 No. 

21⁄2 size cans; No. 21⁄2 cans have a net 

weight of 27–29 ounces). 

Based on historical pack-out and per 

capita consumption, CCPA has 

estimated that demand for the 2005 

clingstone peach crop could 

approximate 460,000 tons. Subsequent 

demand for canned peaches is estimated 

to increase by about one percent a year 

for 2006 through 2010. This assumes 

that per capita consumption remains 

constant while demand increases with 

the level of population. 

The 2005 clingstone peach 

production, however, is estimated at 

530,000 tons based on the reduced 

acreage projection of 30,480 acres and 

an estimated yield of 18.53 tons per 

acre. For this analysis, the estimated 

carryin is 3 million cases (24 No. 21⁄2

basis) for 2005 and 2 million cases (24 

No. 21⁄2 basis) for 2006 through 2010, 

which is the desirable level favored by 

the industry. 

Acreage removed after 2006 is 

estimated based on an econometric 

model. Despite the removal of 4,000 

acres in the diversion program, the 

industry will conceivably continue to 

remove acreage on its own due to 

normally aging orchards. 

The analysis also estimates yields 

based on an autoregressive model of 

order two that allows for some 

fluctuations up and down. Yields under 

the proposed tree removal program are 

adjusted upwards by 0.2 tons per acre 

due to the removal of lower yielding 

trees which will result in higher average 

yields than will happen without a 

program. Estimated production, 

computed by multiplying acreage times 

yield, fluctuates accordingly. 

As carryin inventories are reduced, 

the total available supply will moderate 

for 2006 through 2010, relative to the 

situation without a tree removal 

program. This results in estimated 

season average grower prices ranging 

from $224 to $245 per ton during that 

same time span. This estimated price is 

slightly more than the total estimated 

cost of production. It should be noted 

that the margin of error for these 

estimates becomes very large for future 

years. 

Even though season-average grower 

prices per ton increase under the tree 

removal program, all product produced 

is not necessarily of marketable 

quantity. Costs are incurred on all of the 

production, but revenue is received only 

on product actually marketed. Thus, the 

economic effect of the tree removal 

program on a per acre basis is to 

dramatically reduce losses and bring 

producer returns closer to a break-even 

level. With the level of imports 

anticipated to continue to increase and 

with the level of exports anticipated to 

continue to decrease, there should be 

only a limited incentive to further 

expand production as a result of the tree 

removal program. It will remain for 

growers to control costs and to expand 

demand to ensure their longer-term 

economic stability and viability. 

Grower prices are a small component 

of the marketable canned peach product 

and are not closely associated with 

movements in retail prices. However, 

the increases in grower prices estimated 

for 2006 through 2010 may have an 

impact on retail prices. The extent of 

any retail price increases will depend 

on processor and retailer margins, as 

well as the pricing and availability of 

substitute canned fruit products. It 

should be noted that clingstone peach 

prices are estimated to increase with or 

without a tree removal program, but the 

magnitude of the grower price increase 

is greater with the program. This 

increase in retail price may have a slight 

negative impact on the quantity 

demanded. Such a decrease in the 

quantity demanded is not taken into 

account in this analysis. 

Without a tree removal program in 

place, the number of bearing acres is 

also estimated to decrease, although at 

a rate slower than with a tree removal 

program. This decrease in bearing 

acreage is estimated by taking the 

number of producing acres during the 

prior year, subtracting the number of 

acres removed from production and 

then adding the number of acres planted 

three seasons previously. For 2006 

through 2010, production is estimated 

to decrease due to the decline in the 

number of bearing acres. However, 

67310 Federal Register / Vol. 70, No. 213 / Friday, November 4, 2005 / Rules and Regulations 

marketable production will continue to 

be above the estimated 460,000 tons 

desired by the industry and carryin 

inventories are estimated as high as 3.5 

million cases (24 No. 21⁄2 basis). 

In addition, abandonment of some 

product is estimated to occur for 2005 

through 2010. Under this scenario, 2005 

grower prices are estimated at $220 per 

ton. With high inventories and low 

grower prices, market forces are 

assumed to induce growers to remove 

less productive acres and the number of 

bearing acres is estimated to decline 

from to 31,740 to 29,068. Even with the 

decline in bearing acres, production and 

inventories remain excessive from 2006 

through 2010. Under this scenario, 

grower prices are estimated to remain 

below or equal to the cost of production 

until 2010 when prices are estimated to 

be just above the cost of production. 

Under both scenarios, grower prices 

increase. However, adjustments to 

inventories and prices occur more 

rapidly under a tree removal program. 

This will accelerate benefits to growers 

until market forces could bring about a 

slow correction. 

In addition to the direct impact a tree 

removal program will have on grower 

price and revenue, there are indirect 

impacts. A tree removal program assists 

in decreasing the volume of fruit that is 

harvested but subsequently not utilized 

or simply not harvested. Without a tree 

removal program, large quantities of 

clingstone peaches could be produced 

and harvested but not utilized by 

packers. Growers will have to cover the 

total cost of production, harvest, and 

transportation but only receive 

payments on fruit actually canned. 

Further, in an attempt to sell the 

excessive inventories, packers might 

reduce f.o.b. prices, which in turn leads 

to market share battles and lower prices 

being passed back to producers. A more 

balanced supply and demand situation 

allows growers and packers to jointly 

continue developing markets in ways 

that benefit the entire industry. 

Benefits of the Program 

The economic assessment of the tree 

removal program indicates that it is 

expected to benefit growers (particularly 

small, under-capitalized growers), 

canners, and others associated with the 

clingstone peach industry. The per ton 

sales price is projected to increase over 

the next six years, thus reducing losses 

and moving grower returns closer to 

break-even levels. The benefit to 

growers from reduced losses is projected 

to total approximately $50 million over 

the six-year period. The benefits over 

the six-year period will average nearly 

$8 million annually. 

Costs of the Program 

The major direct cost of the program 

will be the payment to growers for 

removing their clingstone peach trees. A 

total of $5 million, less the costs 

associated with local administration of 

the program, will be made available by 

USDA for the tree removal program. 

Administrative costs for reviewing 

applications and verifying tree removals 

are expected to be about $125,000. 

Major expense categories for 

administration include costs for salaries 

and benefits, vehicle rental and 

maintenance, and insurance, overhead, 

and supplies. 

Total grower costs associated with the 

completion of diversion program 

applications, payment requests, and 

record maintenance for the period 

specified after tree removal are expected 

to be about $530. 

Overall Assessment of the Program 

Payments made through this program 

could help California clingstone peach 

growers by addressing the oversupply 

problem that is adversely affecting their 

industry. The implementation of a tree 

removal program could reduce available 

supply more quickly than if the industry 

relied on market forces alone. While 

market forces could also result in 

supplies being reduced, such an 

adjustment may occur more slowly, 

with resultant economic hardships for 

growers and processors. In addition, a 

tree removal program could be 

beneficial in reducing the risk of loan 

default for lenders that financed 

clingstone peach growers. This program 

could also help small, under-capitalized 

growers stay in business. 

Increasing the level of profitability 

also should provide opportunities for 

the industry to engage in additional 

demand-enhancing activities, especially 

directed at the domestic market. Even a 

moderate increase in domestic per 

capita consumption will have a 

significant, positive impact on grower 

returns. 

Costs for the program will include the 

$7 million ($5 million provided by 

USDA and $2 million by the industry) 

to be paid to growers and to the CCPA 

for administrative costs. Additionally, 

growers will incur costs totaling $500 to 

comply with the application and recordkeeping requirements of the program. 

Benefits to growers under the tree 

removal program could total 

approximately $50 million. This is 

calculated by multiplying total 

marketable production for each of the 

next six years times the difference 

between grower price and variable cost, 

and then adding those figures. This 

calculation was done for each of the two 

scenarios (with and without a tree 

removal program). The $50 million 

difference between those figures 

represents an estimate of program 

benefits resulting from reduced grower 

losses. 

Growers who participate in the tree 

pull program will likely remove older, 

less productive trees from production. 

Because younger trees are more 

productive, older trees typically have 

higher variable costs of production than 

younger trees, where the variable costs 

are spread over a higher yield. 

Accordingly, the $50 million benefit 

under the tree pull scenario is the result 

of both higher prices resulting from the 

tree pull combined with lower variable 

costs per ton of production. 

This cost calculation assumes that the 

acreage on which trees are removed 

remains idle, and that growers will 

therefore absorb all fixed costs on that 

acreage. To the extent that the land is 

put to other productive uses, growers 

will not be absorbing all fixed costs of 

producing clingstone peaches, and 

grower benefits will be higher. 

If growers are earning more income, it 

follows that processors will pay more to 

obtain the peaches from the growers. 

These higher costs could be passed on 

to consumers through higher retail 

prices or could be absorbed as reduced 

operating margins for processors, 

wholesalers, or retailers. An estimate of 

these costs is obtained by multiplying 

the estimated grower price over each of 

the next six years times annual 

shipments with the diversion program 

in place and without it in place. That 

figure, summed over the six years, is 

approximately $25 million. Processors, 

wholesalers, and retailers are 

anticipated to absorb the additional 

costs. Adjustments in retail prices, as 

well as retailer and processor margins, 

are anticipated to change with or 

without the program. 

Another cost of the tree removal 

program is the reduced economic 

activity due to the growers purchasing 

fewer inputs (labor, chemicals, etc.) 

because of the reduction in the number 

of clingstone peach acres managed and 

harvested. Farm laborers and 

agricultural supply firms such as 

chemical manufacturers and distributors 

will realize less revenue because of the 

reduced need for their services and 

goods. To the extent that acreage 

removed is replanted in other crops, 

those costs could be somewhat offset by 

purchases of labor and supplies to 

produce the alternative crops. This cost 

of the tree removal program is difficult 

to quantify and is not included in this 

analysis. 

Federal Register / Vol. 70, No. 213 / Friday, November 4, 2005 / Rules and Regulations 67311 

Conclusion 

Based on all of the information 

available, USDA has determined that 

there is a surplus of clingstone peaches, 

and that reestablishment of growers’

purchasing power will be encouraged by 

using Section 32 funds to reduce 

supplies under a tree removal program 

for California clingstone peaches. USDA 

has further determined that this 

program will be a long-term solution to 

the oversupply situation that exists in 

the California clingstone peach 

industry, and that it will provide relief 

to growers. 

Each grower participating in the 

program will agree not to replant 

clingstone peaches on the land from 

which the trees were removed for 10 

years from the date the trees are 

removed. The non-planting promise is a 

guarantee by the participant that no one 

(not just the participant) will plant the 

land to clingstone peaches. Only those 

persons who are current owners of the 

land, and have not contracted to sell the 

land or destroy the trees, will be eligible 

to participate. Also, growers will 

guarantee that they have not made prior 

arrangements to sell the land or remove 

the trees for commercial purposes, like 

shopping centers, housing 

developments, or similar such purposes. 

Including such non-agricultural land in 

the program will not serve the purposes 

of the tree removal program. 

Notice of this action was published in 

the Federal Register on August 3, 2005 

(70 FR 44525). Interested persons were 

invited to submit written comments 

until September 2, 2005. Six comments 

were received. Two of those comments 

were received from the California 

Canning Peach Association, the 

association that requested financial 

support from USDA for the tree removal 

program. The other comments were 

received from a vendor of fruits and 

vegetables, and producers and 

processors of clingstone peaches. 

In one of the association’s comments, 

it requested several changes to the 

proposal. It pointed out that its original 

request specified that the maximum age 

of eligible trees was 18, but that the 

proposed rule changed that age to 17. 

The final rule has been modified to 

reflect the association’s initial intent. A 

maximum clingstone peach tree age of 

18 is expected to facilitate participation 

in the program. In addition, the 

association requested that two 

additional association office locations 

be listed to facilitate the receipt and 

review of grower applications in the 

production area. These office locations, 

telephone, and fax numbers have been 

added to the regulatory text. It also 

requested that the implementation 

process start immediately after tree 

removal applications have been 

approved. This was USDA’s intent and 

this has been clarified in the final rule. 

In addition, USDA has added language 

regarding verifying the eligibility of 

trees to be removed. To verify that trees 

are eligible for the program, an 

association representative may sample 

one or more trees in the block by taking 

a cross section of the base of the tree 

after it has been cut down and counting 

the tree rings to determine the age of the 

tree. In addition, the association and 

USDA may verify the age of the trees in 

the block by relying on grower records, 

and may use any other means deemed 

necessary to confirm the eligibility of 

the trees. 

In another comment, the association 

provided additional information in 

support of the diversion program. It 

indicated that it is much more cost 

effective for USDA to deal with the 

clingstone peach industry’s supply/ 

demand imbalance by funding the $5 

million tree removal program than it 

would be to spend nearly $30 million 

per year buying surplus finished 

product (clingstone peaches) from 

processors. 

One commenter stated that the 

program will be an effective solution to 

the industry’s oversupply problem and 

will help growers survive in the long 

term. Another commenter stated that the 

industry’s acreage exceeds market 

demand and the removal program will 

help bring the clingstone peach supply 

in line with market needs and reduce 

current high inventory levels. 

Another commenter requested 

changes to the program to allow 

clingstone peach growers to remove 

trees by grafting their trees over to other 

fruits, such as nectarines or plums, 

rather than removing the trees entirely. 

The commenter states that considering 

grafting as removal under the program 

would be more enticing to him than 

removing an orchard. Grafting was not 

considered to be a method of removal 

when developing the program. The 

program contemplates removal of the 

trees and the roots of the trees, and the 

basis for calculating the payments per 

tree includes costs for removing the 

entire tree. Therefore, the definition of 

removal continues to exclude grafting as 

a method of removal. 

One commenter did not support 

implementing the proposed program at 

this time. The commenter believes that 

implementation now might result in an 

overcorrection of the supply imbalance. 

According to the commenter, reducing 

the raw product supply too much could 

result in the increased importation of 

foreign produced peaches. This could 

displace domestic production and 

shrink the California peach grower base 

even more. Also, if fewer peaches are 

available for processors, this could 

increase manufacturing costs, and lead 

to decreased consumption and demand. 

The commenter states that a 

significant reduction is forecasted for 

the 2005 peach crop due to weather 

changes and this already accounts for a 

reduction in volume that exceeds the 

proposed program. The commenter 

estimates that the 2005 harvest will be 

approximately 476,000 tons. The USDA 

projects this figure to actually be 

530,000 tons and large enough to 

warrant implementation at this time 

without an overcorrection in supplies. 

The opposing commenter also blames 

the dried prune/plum tree removal 

program in 2002 for the current low 

production in the industry. The dried 

prune/plum industry has experienced 

two years of extremely low yields due 

to unusual weather conditions during 

the bloom in spring. Yields in 2004 are 

reported by NASS at 0.70 tons per acre, 

which is a record low yield. Thus, the 

industry would have experienced a 

supply shortage even if the 17,448 

bearing acres had not been removed in 

2002. 

From 1988 through 2003 total dried 

prune/plum shipments ranged from 

170,000 to 180,000 tons. Given the 

expectation of production in excess of 

200,000 tons, the industry faced a severe 

surplus situation. Supply is slow to 

adjust to changing market conditions 

given the substantial fixed investment 

in orchards. The tree removal program 

assisted the dried prune/plum industry 

in making the adjustment to lower 

production more rapidly than awaiting 

market adjustment. 

The California clingstone peach 

industry faces a similar situation as 

dried prune/plum growers did in 2002. 

Over the past several years, the 

clingstone peach industry has suffered 

from record amounts of unsold product 

due to low-priced, imported canned 

peaches and high domestic production. 

This situation is leading to low grower 

prices and revenues that are expected to 

continue to deteriorate. During the 2001 

and 2002 seasons, 50 million pounds of 

clingstone peaches were harvested but 

could not be sold, and 61 million 

pounds were unutilized in 2003. The 

percent of unutilized production for 

each of those years is 5.3 percent, 4.5 

percent, and 5.9 percent. 

Though there is indication of a 

decline in clingstone peach bearing 

acres for the 2005–06 crop year, there 

were a large number of trees planted 

from 1998 through 2002 that are only 

67312 Federal Register / Vol. 70, No. 213 / Friday, November 4, 2005 / Rules and Regulations 

starting to produce fruit and this 

situation is expected to adversely affect 

grower prices unless the tree removal 

program is implemented. Clingstone 

peach acres are expected to continue to 

decline but it’s anticipated this will 

occur at a slower pace than with a tree 

removal program. The proposed 

program provides an incentive for 

growers to remove healthy, fruit bearing 

trees rather than those at the end of their 

productive life and ensuring those 

orchards are not replanted with 

clingstone peach trees for 10 years. 

Although clingstone peach 

production may be down for the 2005–

06 crop year (NASS final production 

information will not be available until 

January 2006), the tree removal program 

attempts to solve a long run overproduction problem for a number of 

years. The program is expected to help 

align supply with demand and improve 

grower returns at a faster pace. The 

benefit to growers from reduced losses 

is projected to be approximately $50 

million over the six-year period from 

2005 to 2010, which is an average of 

nearly $8 million annually. 

In view of the foregoing, and after 

considering all of the comments 

presented, the USDA has decided not to 

postpone the tree removal program, but 

as indicated has made changes where 

appropriate. The changes made based 

on the comments received are expected 

to improve the program and to help the 

program better accomplish the 

objectives intended. The only changes 

made by the final rule clarify eligibility 

and removal requirements as discussed 

above. 

After consideration of all relevant 

matter presented, including the 

comments received, and other 

information, it is found that this final 

rule, as hereinafter set forth, will tend 

to effectuate the policy of 7 U.S.C. 612c. 

Pursuant to 5 U.S.C. 553, it is further 

found that good cause exists for not 

postponing the effective date of this 

rule. Such delay will be contrary to the 

public interest because clingstone peach 

producers need to know as soon as 

possible whether they will be accepted 

into the program. Eligible interested 

producers want to begin removing the 

clingstone peach trees as soon as 

possible. In addition, further delay 

could jeopardize the successful removal 

of excess clingstone peach production. 

Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. 

Chapter 35), the AMS has obtained 

approval from OMB of a new 

information collection, California 

Clingstone Peach (Tree Removal) 

Diversion Program, under OMB No. 

0581–0232. 

AMS is committed to compliance 

with the Government Paperwork 

Elimination Act (GPEA), which requires 

Government agencies in general to 

provide the public the option of 

submitting information or transacting 

business electronically to the maximum 

extent possible. 

As mentioned earlier, two forms will 

be needed for the administration of the 

tree removal program. Growers who 

wish to participate in the program will 

have to submit form FV–302, 

‘‘Application for Clingstone Peach Tree 

Removal Program,’’ along with 

documentation, to the CCPA, which will 

administer the program. Upon receipt of 

FV–302, the CCPA will send the grower 

form FV–303, ‘‘Notification of 

Clingstone Peach Tree Removal.’’ The 

grower will fill out a portion of this 

form certifying that his/her approved 

block of clingstone peach trees was 

removed, and the date of removal. The 

remainder of this form will be filled out 

by a CCPA staff member, notifying the 

grower of his/her eligibility to receive a 

diversion payment. The form will also 

be used to notify USDA that the CCPA 

verified the grower’s compliance with 

program regulations and recommend 

disbursement of Section 32 funds to the 

grower. Finally, participants will be 

required to retain records pertaining to 

the tree removal program for 10 years 

after the date the trees were removed. 

We estimate that 100 growers may 

submit applications, and that it will take 

each grower about 30 minutes to 

complete, for a total burden of 50 hours. 

We also estimate that it will take the 

growers about 2 minutes to complete 

their portion of the notification form, for 

a total burden of 3 hours. The estimated 

one-time cost for all growers in 

completing the participation application 

and payment request statement 

(notification form), and maintaining 

records, is $530. This total cost was 

calculated by multiplying the estimated 

53 burden hours by $10 per hour (a sum 

deemed reasonable, should the 

applicants be compensated for this 

time). 

Comments were invited on the 

information collection in the August 3, 

2005, notice of proposed rulemaking. 

The deadline for comments ended on 

October 3, 2005, and no comments were 

received. 

List of Subjects in 7 CFR Part 82 

Administrative practice and 

procedures, Agriculture, Peaches, 

Reporting and recordkeeping 

requirements, Surplus agricultural 

commodities. 

■ For the reasons set forth in the 

preamble, Title 7, Subtitle B, Chapter 1 

is amended as follows: 

PART 82—[AMENDED] 

■ 1. In Subtitle B, Chapter 1, Part 82 is 

added to read as follows: 

PART 82—CLINGSTONE PEACH 

DIVERSION PROGRAM 

Sec. 

82.1 Applicability. 

82.2 Administration. 

82.3 Definitions. 

82.4 Length of program. 

82.5 General requirements. 

82.6 Rate of payment; total payments. 

82.7 Eligibility for payment. 

82.8 Application and approval for 

participation. 

82.9 Inspection and certification of 

diversion. 

82.10 Claim for payment. 

82.11 Compliance with program provisions. 

82.12 Inspection of premises. 

82.13 Records and accounts. 

82.14 Offset, assignment, and prompt 

payment. 

82.15 Appeals. 

82.16 Refunds; joint and several liability. 

82.17 Death, incompetency or 

disappearance. 

Authority: 7 U.S.C. 612c. 

§ 82.1 Applicability. 

Pursuant to the authority conferred by 

Section 32 of the Act of August 24, 

1935, as amended (7 U.S.C. 612c) 

(Section 32), the Agricultural Marketing 

Service (AMS) will make payment to 

California growers who divert 

clingstone peaches by removing trees on 

which the fruit is produced in 

accordance with the terms and 

conditions set forth herein. 

§ 82.2 Administration. 

The program will be administered 

under the general direction and 

supervision of the Deputy 

Administrator, Fruit and Vegetable 

Programs, AMS, United States 

Department of Agriculture (USDA), and 

will be implemented by the California 

Canning Peach Association (CCPA). The 

CCPA, or its authorized representatives, 

does not have authority to modify or 

waive any of the provisions of this 

subpart. The Administrator or delegatee, 

in the Administrator’s or delegatee’s 

sole discretion can modify deadlines to 

serve the goals of the program. In all 

cases, payments under this part are 

subject to the availability of funds. 

§ 82.3 Definitions. 

(a) Administrator means the 

Administrator of AMS. 

(b) AMS means the Agricultural 

Marketing Service of the U.S. 

Department of Agriculture. 

Federal Register / Vol. 70, No. 213 / Friday, November 4, 2005 / Rules and Regulations 67313 

(c) Application means ‘‘Application 

for Clingstone Peach Tree Removal 

Program.’’

(d) Calendar year means the 12-month 

period beginning January 1 and ending 

the following December 31. 

(e) CCPA means the California 

Canning Peach Association, a growerowned marketing and bargaining 

cooperative representing the clingstone 

peach industry in California. 

(f) Diversion means the removal of 

clingstone peach trees after approval of 

applications by the CCPA. 

(g) Grower means an individual, 

partnership, association, or corporation 

in the State of California who grows 

clingstone peaches for canning. 

(h) Removal or removed means that 

the clingstone peach trees are no longer 

standing and capable of producing a 

crop, and the roots of the trees have 

been removed. The grower can 

accomplish removal by any means the 

grower desires. Grafting another type of 

tree to the rootstock remaining after 

removing the clingstone peach tree will 

not qualify as removal under this 

program. 

§ 82.4 Length of program. 

This program is effective November 5, 

2005, through November 9, 2015. 

Growers diverting clingstone peaches by 

removing clingstone peach trees must 

complete the diversion no later than 

June 1, 2006. 

§ 82.5 General requirements. 

(a) To be eligible for this program, the 

trees to be removed must be fruitbearing and have been planted after the 

1987 and before the 2003 calendar 

years. Abandoned orchards and dead 

trees will not qualify. The block of trees 

for removal must be easily definable by 

separations from other blocks of eligible 

trees and contain at least 1,000 eligible 

trees or an entire orchard. Clingstone 

peach tree removal shall not take place 

until the grower has been informed in 

writing that the grower’s application has 

been approved. 

(b) Any grower participating in this 

program must agree not to replant 

clingstone peach trees on the land 

cleared under this program through June 

1, 2016. Participants bear responsibility 

for ensuring that trees are not replanted, 

whether by themselves, by successors to 

the land, or by any other person, until 

after June 1, 2016. If trees are replanted 

before June 1, 2016, by any persons, 

participants must refund all USDA 

payments, with interest, made in 

connection with this tree removal 

program. 

§ 82.6 Rate of payment; total payments. 

(a) Applications will be processed on 

a first-come, first-served basis. Growers 

will be paid $100 per ton based on their 

actual 2005 deliveries of clingstone 

peaches to processors from those acres 

of clingstone peach trees removed under 

this program, except that, regardless of 

actual 2005 deliveries, growers will 

receive a minimum of $500 per acre and 

a maximum of $1,700 per acre. 

(b) Payment under paragraph (a) of 

this section will only be made after tree 

removal has been verified by the staff of 

the CCPA. 

(c) The $100 per ton payment is 

intended to cover the costs of tree 

removal. USDA will not make any other 

payment with respect to such removals. 

The grower will be responsible for 

arranging, requesting, and paying for the 

tree removal in the specified acreage. 

(d) Total payments under this 

program are limited to not more than 

$5,000,000 of Section 32 funds. No 

additional expenditures shall be made 

unless the Administrator or delegatee in 

their sole and exclusive discretion shall, 

in writing, declare otherwise. 

§ 82.7 Eligibility for payment. 

(a) If total applications for payment do 

not exceed $5,000,000, less 

administration costs, payments, as set 

forth in § 82.6, will be made under this 

program to any grower of clingstone 

peaches who complies with the 

requirements in § 82.8 and all other 

terms and conditions in this part. 

(b) If applications for participation in 

the program authorized by this part 

exceed $5,000,000, less administration 

costs, the CCPA will approve the 

applications (subject to the 

requirements in § 82.8) in the order in 

which the completed applications are 

received in the CCPA office to the extent 

that funds are available. Applications 

received after total outlays exceed the 

amount of money available will be 

denied. 

§ 82.8 Application and approval for 

participation. 

(a) Applications will be reviewed for 

program compliance and approved or 

disapproved by CCPA office personnel. 

(b) Applications for participation in 

the Clingstone Peach Diversion Program 

can be obtained from the CCPA office at 

2300 River Plaza Drive, Suite 110, 

Sacramento, CA 95833; Telephone: 

(916) 925–9131; Fax: (916) 925–9030; at 

335 Teegarden Avenue, Suite A, Yuba 

City, CA 95991; Telephone: (530) 673–

8526; Fax: (530) 673–2673; or at 1704 

Herndon Road, Ceres, CA 95307; 

Telephone: (209) 537–0715; Fax: (209) 

537–1043. 

(c) Any grower desiring to participate 

in the Clingstone Peach Diversion 

Program must file an application with 

the CCPA prior to November 30, 2005. 

The application shall be accompanied 

by a copy of any two of the following 

four documents: Plot Map from the 

County Hall of Records; Irrigation Tax 

Bill; County Property Tax Bill; or any 

other documents containing an 

Assessor’s Parcel Number. Such 

application shall include at least the 

following information: 

(1) The name, address, telephone 

number, and tax identification number 

or social security number of the grower; 

(2) The location and amount of 

acreage to be diverted; 

(3) The 2005 clingstone peach 

production from the acreage to be 

diverted; 

(4) If the land with respect to which 

the clingstone peach trees will be 

destroyed is subject to a mortgage, 

statutory lien, or other equity interest, 

the grower must obtain from the holder 

of such interest a written statement that 

such party agrees to the enrollment of 

such land in this program to the extent 

determined necessary by AMS. 

Obtaining such assent shall be the 

responsibility of the applicant who shall 

alone bear any responsibilities which 

may extend to such third parties; 

(5) A statement that the applicant 

agrees to comply with all of the 

regulations established for the 

clingstone peach diversion program; 

(6) The applicant shall sign the 

application certifying that the 

information contained in the 

application is true and correct; 

(7) The year that the clingstone peach 

acreage to be diverted was planted; 

(8) The names of the processors who 

received the clingstone peaches from 

the grower in 2005. 

(d) After the CCPA receives the 

applications, it shall review them to 

determine whether all the required 

information has been provided and that 

the information is correct. 

(e) If the deliveries off the acreage to 

be removed in such applications, 

multiplied by $100 per ton (for actual 

2005 deliveries on these acres, but 

within the constraints of a minimum 

payment of $500 per acre and a 

maximum payment of $1,700 per acre), 

exceed the amount of funds available for 

the diversion program, each grower’s 

application will be considered in the 

order in which they are received at the 

CCPA offices. 

(f) After the application reviews and 

confirmation of eligible trees are 

completed, the CCPA shall notify the 

applicant, in writing, as to whether or 

not the application has been approved 

67314 Federal Register / Vol. 70, No. 213 / Friday, November 4, 2005 / Rules and Regulations 

and the tonnage approved for payment 

after removal. If an application is not 

approved, the notification shall specify 

the reason(s) for disapproval. 

§ 82.9 Inspection and certification of 

diversion. 

When the removal of the clingstone 

peach trees is complete, the grower will 

notify the CCPA on a form provided by 

the CCPA. The CCPA will certify that 

the trees approved for removal from the 

acreage have been removed, and notify 

AMS. 

§ 82.10 Claim for payment. 

To obtain payment for the trees 

removed, the grower must submit to the 

CCPA by July 31, 2006, a completed 

form provided by the CCPA. Such form 

shall include the CCPA’s certification 

that the qualifying trees from the 

acreage have been removed. AMS will 

then issue a check to the grower in the 

amount of $100 per eligible ton removed 

consistent with the minimum and 

maximum payments per acre earlier 

specified in this part. 

§ 82.11 Compliance with program 

provisions. 

If USDA or the CCPA determines that 

any provision of this part have not been 

complied with by the grower, the 

grower will not be entitled to diversion 

payments in connection with tree 

removal. If a grower does not comply 

with all the terms of this part, including 

the requirement specified in § 82.5(b), 

the grower must refund any payment 

made in connection with this program, 

and will also be liable for any other 

damages incurred as a result of such 

failure. The USDA may deny any grower 

the right to participate in this program 

or the right to receive payments in 

connection with any diversion 

previously made under this program, or 

both, if the USDA determines that: 

(a) The grower has failed to properly 

remove the clingstone peach trees from 

the applicable acreage, regardless of 

whether such failure was caused 

directly by the grower or by any other 

person or persons; 

(b) The grower has not acted in good 

faith, or has engaged in a scheme, fraud, 

or device, in connection with any 

activity under this program; or 

(c) The grower has failed to discharge 

fully any obligation assumed by him or 

her under this program. 

§ 82.12 Inspection of premises. 

The grower must permit authorized 

representatives of USDA or the CCPA, at 

any reasonable time, to have access to 

their premises to inspect and examine 

the acreage where the trees were 

removed as well as any records 

pertaining to that acreage to determine 

compliance with the provisions of this 

part. 

§ 82.13 Records and accounts. 

(a) The growers participating in this 

program must keep accurate records and 

accounts showing the details relative to 

the clingstone peach tree removal, 

including the contract entered into with 

any firm removing the trees, as well as 

the invoices. 

(b) The growers must permit 

authorized representatives of USDA, the 

CCPA, and the Government 

Accountability Office at any reasonable 

time to inspect, examine, and make 

copies of such records and accounts to 

determine compliance with provisions 

of this part. Such records and accounts 

must be retained for ten years after the 

date of payment to the grower under the 

program, or for ten years after the date 

of any audit of records by USDA, 

whichever is later. Any destruction of 

records by the grower at any time will 

be at the risk of the grower when there 

is reason to know, believe, or suspect 

that matters may be or could be in 

dispute or remain in dispute. 

§ 82.14 Offset, assignment, and prompt 

payment. 

(a) Any payment or portion thereof 

due any person under this part shall be 

allowed without regard to questions of 

title under State law, and without regard 

to any claim or lien against the crop 

proceeds thereof in favor of the grower 

or any other creditors except agencies of 

the U.S. Government. 

(b) Payments which are earned by a 

grower under this program may be 

assigned in the same manner as allowed 

under the provisions of 7 CFR part 1404. 

§ 82.15 Appeals. 

Any grower who is dissatisfied with 

a determination made pursuant to this 

part may make a request for 

reconsideration or appeal of such 

determination. The Deputy 

Administrator of Fruit and Vegetable 

Programs shall establish the procedure 

for such appeals. 

§ 82.16 Refunds; joint and several liability. 

(a) In the event there is a failure to 

comply with any term, requirement, or 

condition for payment arising under the 

application of this part, and if any 

refund of a payment to AMS shall 

otherwise become due in connection 

with the application of this part, all 

payments made under this part to any 

grower shall be refunded to AMS 

together with interest. 

(b) All growers signing an application 

for payment as having an interest in 

such payment shall be jointly and 

severally liable for any refund, 

including related charges, that is 

determined to be due for any reason 

under the terms and conditions of the 

application of this part. 

(c) Interest shall be applicable to 

refunds required of any grower under 

this part if AMS determines that 

payments or other assistance were 

provided to a grower who was not 

eligible for such assistance. Such 

interest shall be charged at the rate of 

interest that the United States Treasury 

charges the Commodity Credit 

Corporation (CCC) for funds, as of the 

date AMS made benefits available to 

such grower. Such interest shall accrue 

from the date of repayment or the date 

interest increases as determined in 

accordance with applicable regulations. 

AMS may waive the accrual of interest 

if AMS determines that the cause of the 

erroneous determination was not due to 

any action of the grower. 

(d) Interest determined in accordance 

with paragraph (c) of this section may 

be waived on refunds required of the 

grower when there was no intentional 

noncompliance on the part of the 

grower, as determined by AMS. Such 

decision to waive or not waive the 

interest shall be at the discretion of the 

Administrator or delegatee. 

(e) Late payment interest shall be 

assessed on all refunds in accordance 

with the provisions of, and subject to 

the rates prescribed for, those claims 

which are addressed in 14 CFR part 

1403. 

(f) Growers must refund to AMS any 

excess payments, as determined by 

AMS, with respect to such application. 

Such determinations shall be made by 

the Administrator or delegatee. 

(g) In the event that a benefit under 

this part was provided as the result of 

erroneous information provided by the 

grower, or was erroneously or 

improperly paid for any other reason, 

the benefit must be repaid with any 

applicable interest, subject to 

paragraphs (c) and (d) of § 82.6. 

§ 82.17 Death, incompetency, or 

disappearance. 

In the case of death, incompetency, 

disappearance, or dissolution of a 

clingstone peach grower that is eligible 

to receive benefits in accordance with 

this part, any person or persons who 

will, under 7 CFR part 707 of this title, 

be eligible for payments and benefits 

covered by this part, may receive such 

benefits otherwise due the actual 

producer, as determined appropriate by 

AMS. 

Federal Register / Vol. 70, No. 213 / Friday, November 4, 2005 / Rules and Regulations 67315 

Dated: October 31, 2005. 

Lloyd C. Day, 

Administrator, Agricultural Marketing 

Service. 

[FR Doc. 05–21978 Filed 11–3–05; 8:45 am] 

BILLING CODE 3410–02–P