Raisins Produced From Grapes Grown in California; Proposed Amendments to Marketing Order 989 and Referendum Order, 11678-11681 [2016-04623]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 81, Number 44 (Monday, March 7, 2016)]
[Proposed Rules]
[Pages 11678-11681]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-04623]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 81, No. 44 / Monday, March 7, 2016 / Proposed 
Rules

[[Page 11678]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 989

[Doc. No. AMS-FV-14-0069; FV-14-989-2 PR]


Raisins Produced From Grapes Grown in California; Proposed 
Amendments to Marketing Order 989 and Referendum Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule and referendum order.

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SUMMARY: This rule proposes two amendments to Marketing Order No. 989 
(order), which regulates the handling of raisins produced from grapes 
grown in California and provides producers with the opportunity to vote 
in a referendum to determine if they favor the changes. These 
amendments were proposed by the Raisin Administrative Committee 
(Committee), which is responsible for the local administration of the 
order and is comprised of producers and handlers of raisins operating 
within the production area. These proposed amendments are intended to 
improve administration of the order and reflect current industry 
practices.

DATES: The referendum will be conducted from March 9, 2016, through 
March 23, 2016. The representative period for the purpose of the 
referendum is August 1, 2014, through July 31, 2015.

ADDRESSES: Marketing Order and Agreement Division, Specialty Crops 
Program, AMS, USDA, 1400 Independence Avenue SW., Stop 0237, 
Washington, DC 20250-0237.

FOR FURTHER INFORMATION CONTACT: Geronimo Quinones, Marketing 
Specialist, or Michelle P. Sharrow, Rulemaking Branch Chief, Marketing 
Order and Agreement Division, Specialty Crops Program, AMS, USDA, 1400 
Independence Avenue SW., Stop 0237, Washington, DC 20250-0237; 
Telephone: (202) 720-2491, Fax: (202) 720-8938, or Email: 
Geronimo.Quinones@ams.usda.gov or Michelle.Sharrow@ams.usda.gov.
    Small businesses may request information on complying with this 
regulation by contacting Antoinette Carter, Marketing Order and 
Agreement Division, Specialty Crops Program, AMS, USDA, 1400 
Independence Avenue SW., STOP 0237, Washington, DC 20250-0237; 
Telephone: (202) 720-2491, Fax: (202) 720-8938, or Email: 
Antoinette.carter@ams.usda.gov.

SUPPLEMENTARY INFORMATION: This proposal is issued under Marketing 
Order No. 989, as amended (7 CFR part 989), regulating the handling of 
raisins produced from grapes grown in California, hereinafter referred 
to as the ``order.'' The order is 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 (USDA) is issuing this rule in 
conformance with Executive Orders 12866, 13563, and 13175.
    This proposal has been reviewed under Executive Order 12988, Civil 
Justice Reform. This proposal is not intended to have retroactive 
effect.
    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 USDA a petition 
stating that the order, any provision of the order, or any obligation 
imposed in connection with the order is not in accordance with law and 
request a modification of the order or to be exempted therefrom. Such 
handler is afforded the opportunity for a hearing on the petition. 
After the hearing, USDA 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 USDA's ruling on the petition, 
provided an action is filed not later than 20 days after the date of 
the entry of the ruling.
    Section 1504 of the Food, Conservation, and Energy Act of 2008 
(2008 Farm Bill)(Pub. L. 110-246) amended section 18c(17) of the Act, 
which in turn required the addition of supplemental rules of practice 
to 7 CFR part 900 (73 FR 49307; August 21, 2008). The additional 
supplemental rules of practice authorize the use of informal rulemaking 
(5 U.S.C. 553) to amend Federal fruit, vegetable, and nut marketing 
agreements and orders. USDA may use informal rulemaking to amend 
marketing orders based on the nature and complexity of the proposed 
amendments, the potential regulatory and economic impacts on affected 
entities, and any other relevant matters.
    AMS has considered these factors and has determined that the 
amendment proposals are not unduly complex and the nature of the 
proposed amendments is appropriate for utilizing the informal 
rulemaking process to amend the order.
    The proposed amendments were unanimously recommended by the 
Committee following deliberations at a public meeting held on October 
2, 2014.
    A proposed rule soliciting comments on the proposed amendments was 
issued on October 15, 2015, and published in the Federal Register on 
October 16, 2015 (80 FR 62506). Two comments were received. One comment 
was in support of the amendments. The second comment asked questions 
about one of the proposals. These comments will be addressed later in 
this document. AMS will conduct a producer referendum to determine 
support for the proposed amendments. If appropriate, a final rule will 
then be issued to effectuate the amendments favored by producers in the 
referendum.
    The Committee's proposed amendments would amend the order by: (1) 
Authorizing the Committee to borrow from a commercial lending 
institution during times of cash shortage to help ensure continuity of 
operations during the first half of the year before assessment income 
is received, and (2) Establishing a monetary reserve equal to one 
year's budgeted expenses.

Proposal #1--Borrowing From a Commercial Lending Institution

    Section 989.80 of the order, Assessments, authorizes the Committee 
to collect assessments from handlers to administer the program.
    This proposal would provide the Committee with authority to borrow 
from a commercial lending institution during times of cash shortages. 
Since inception of the marketing order, the Committee has occasionally 
used the order's volume regulation provisions to pool a portion of the 
annual raisin crop

[[Page 11679]]

to assure orderly marketing. These pooled raisins, designated by the 
Committee as reserve raisins, were sold and released to handlers 
throughout the crop year. In managing the pooled raisins for the best 
return to growers, the Committee pooled the cash received from the 
handlers until equity payments were distributed to the growers. The 
Committee borrowed funds (with interest) from this reserve raisin pool 
during times of assessment shortages to temporarily cover expenses, 
generally during the early part of the new crop year.
    Volume regulation has not been in effect under the marketing order 
since 2010, and the Committee has been returning equity payments to the 
growers who contributed raisins to the 2009 reserve raisin pool. 
Therefore, funds from the reserve raisin pool are no longer available 
for the Committee to use during times of cash shortages. The 
Committee's proposed amendment to the order would allow it to borrow 
from a commercial lending institution when no other funding is 
available. This would assist the Committee in bridging finances from 
the end of one fiscal year through the first quarter of the new fiscal 
year, before assessments on the new crop are received.
    Additionally, the Committee has received grants from the Foreign 
Agricultural Service's (FAS) Market Access Program (MAP) since 1995 to 
conduct market expansion and development activities in various 
international markets. Under MAP, participants must first use their own 
resources for activities and request reimbursement from FAS. Sometimes 
there is a time-lag between submission of reimbursement requests and 
receipt of payments, which causes budgeting issues. Having authority to 
borrow from a commercial lending institution would help to ensure 
continuity of operations when this occurs.
    Therefore, for the reasons stated above, it is proposed that Sec.  
989.80, Assessments, be amended by adding a sentence in paragraph (c) 
that would provide the Committee with authority to borrow from a 
commercial lending institution.

Proposal #2--Establish a Monetary Reserve Fund Equal to One Year's 
Budgeted Expenses

    Section 989.81 of the order, Accounting, authorizes the Committee 
to credit or refund unexpended assessment funds from the crop year back 
to the handlers from whom they were collected. Currently, the order 
doesn't allow the Committee to retain handler assessments from prior 
crop years.
    This proposal would allow the Committee to establish a monetary 
reserve equal to one year's operational expenses as averaged over the 
past six years. Reserve funds could be used for specific administrative 
and overhead expenses such as staff wages, salaries and related 
benefits, office rent, utilities, postage, insurance, legal expenses, 
and audit costs; to cover deficits incurred during any period when 
assessment income is less than expenses; to defray expenses incurred 
during any period when any or all provisions of the order are 
suspended; liquidation of the order; and other expenses recommended by 
the Committee and approved by the Secretary. Reserve funds could not be 
used for promotional expenses during any crop year prior to the time 
that assessment income is sufficient to cover such expenses.
    As previously stated in Proposal #1, the Committee borrowed cash 
from the reserve raisin pool and repaid it with interest when handler 
assessment cash shortages occurred in the past. This practice helped 
the Committee to bridge finances from one fiscal crop year to the next 
until assessment income for the new crop year was received. This option 
is no longer available.
    For the reasons stated above, it is proposed that Sec.  989.81, 
Accounting, be amended to allow the Committee to retain excess 
assessment funds for the purpose of establishing a monetary reserve 
equal to one year's budgeted expenses as averaged over the past six 
years. Such excess funds could only be used for specific administrative 
and operational expenses as outlined in the order.

Final Regulatory Flexibility Analysis

    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing 
Service (AMS) has considered the economic impact of this action on 
small entities. Accordingly, AMS has prepared this final regulatory 
flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
businesses subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and rules issued thereunder, are unique in that 
they are brought about through group action of essentially small 
entities acting on their own behalf.
    There are approximately 3,000 producers of California raisins and 
approximately 28 handlers subject to regulation under the marketing 
order. The Small Business Administration defines small agricultural 
producers as those having annual receipts of less than $750,000 and 
defines small agricultural service firms as those whose annual receipts 
are less than $7,000,000 (13 CFR 121.201).
    Based upon information provided by the Committee, it may be 
concluded that a majority of producers and approximately 18 handlers of 
California raisins may be classified as small entities.
    The amendments proposed by the Committee would authorize the 
Committee to borrow from commercial lending institutions and to 
establish a monetary reserve fund equal to one year's budgeted 
expenses. This would help to ensure proper management and funding of 
the program.
    The Committee reviewed and identified a yearly budget that would be 
necessary to continue program operations in the absence of a reserve 
pool. Based on this budget, the Committee believes a monetary reserve 
of approximately $2 million would be sufficient to continue operations. 
The anticipated $2 million to be accumulated in a monetary reserve 
would not be accrued in one crop year. It would be spread over several 
years, depending on expenses, assessment revenue, and excess handler 
assessments accrued in each crop year. For example: If excess annual 
handler assessments amount to $400,000, it would take five years to 
accrue $2 million. Currently, the average excess handler assessments 
paid yearly over the last six years has been $861,622. During the time 
in which the monetary reserve fund would be accumulated, the Committee 
would seek funding from a commercial lending institution as previously 
explained in Proposal #1.
    While this action would result in a temporary increase in handler 
costs, these costs would be uniform on all handlers and proportional to 
the size of their businesses. However, these costs are expected to be 
offset by the benefits derived from operation of the order. 
Additionally, these costs would help to ensure that the Committee has 
sufficient funds to meet its financial obligations. Such stability is 
expected to allow the Committee to conduct programs that would benefit 
all entities, regardless of size. California raisin producers should 
see an improved business environment and a more sustainable business 
model because of the improved business efficiency.
    Alternatives were considered to these proposals, including making 
no changes at this time. However, the Committee

[[Page 11680]]

believes it would be beneficial to have the means and funds necessary 
to effectively administer the program.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: https://www.ams.usda.gov/rules-regulations/moa/small-businesses. Any questions 
about the compliance guide should be sent to Antoinette Carter at the 
previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the order's information collection requirements have been 
previously approved by the Office of Management and Budget (OMB) and 
assigned OMB No. 0581-0178, ``Vegetable and Specialty Crops.'' No 
changes in those requirements as a result of this action are necessary. 
Should any changes become necessary, they would be submitted to OMB for 
approval.
    These proposed amendments would impose no additional reporting or 
recordkeeping requirements on either small or large California raisin 
handlers.
    As with all Federal marketing order programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies. In addition, USDA 
has not identified any relevant Federal rules that duplicate, overlap, 
or conflict with this rule.
    AMS is committed to complying with the E-Government Act, to promote 
the use of the internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.
    The Committee's meeting was widely publicized throughout the 
California raisin production area. All interested persons were invited 
to attend the meeting and encouraged to participate in Committee 
deliberations on all issues. Like all Committee meetings, the October 
2, 2014, meeting was public, and all entities, both large and small, 
were encouraged to express their views on these proposals.
    A proposed rule concerning this action was published in the Federal 
Register on October 16, 2015 (80 FR 62506). Copies of the rule were 
mailed or sent via facsimile to all Committee members. Finally, the 
rule was made available through the internet by USDA and the Office of 
the Federal Register. A 60-day comment period ending December 15, 2015, 
was provided to allow interested persons to respond to the proposal.
    Two comments were received. One comment was in support of the 
proposal. The second comment stated that the term ``commercial lending 
institution'' is vague and asked for the name of the institution and 
clarification regarding what constitutes a shortage. The comment also 
stated that the lending arrangement should be discussed openly. To 
clarify, as used in this proposal, a shortage would exist when the 
Committee's cash flow needs exceed the amount of cash available from 
handler assessments. Regarding open discussion, the Committee 
establishes a budget and assessment rate annually in meetings that are 
open to the public. During these meetings, the Committee would discuss 
any shortages and any available commercial lending opportunities. No 
changes have been made to the proposed amendments as a result of the 
comments received.

Findings and Conclusions

    The findings and conclusions and general findings and 
determinations included in the proposed rule set forth in the October 
16, 2015, issue of the Federal Register are hereby approved and 
adopted.

Marketing Order

    Annexed hereto and made a part hereof is the document entitled 
``Order Amending the Order Regulating the Handling of Raisins Produced 
from Grapes Grown in California.'' This document has been decided upon 
as the detailed and appropriate means of effectuating the foregoing 
findings and conclusions. It is hereby ordered, that this entire rule 
be published in the Federal Register.

Referendum Order

    It is hereby directed that a referendum be conducted in accordance 
with the procedure for the conduct of referenda (7 CFR part 900.400-
407) to determine whether the annexed order amending the order 
regulating the handling of Raisins Produced from Grapes Grown in 
California is approved by growers, as defined under the terms of the 
order, who during a representative period were engaged in the 
production of raisins in the production area. The representative period 
for the conduct of such referendum is hereby determined to be August 1, 
2014, through July 31, 2015.
    The agents of the Secretary to conduct such referendum are 
designated to be Maria Stobbe and Andrea Ricci, California Marketing 
Field Office, Marketing Order and Agreement Division, Specialty Crops 
Program, AMS, USDA; Telephone: (559) 487-5901, or Email: 
Maria.Stobbe@ams.usda.gov or Andrea.Ricci@ams.usda.gov, respectively.

List of Subjects in 7 CFR Part 989

    Raisins, Marketing agreements, Reporting and recordkeeping 
requirements.

    Dated: February 26, 2016.
Elanor Starmer,
Acting Administrator, Agricultural Marketing Service.

Order Amending the Order Regulating the Handling of Raisins Produced 
From Grapes Grown in California \1\ Findings and Determinations
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    \1\ This order shall not become effective unless and until the 
requirements of Sec.  900.14 of the rules of practice and procedure 
governing proceedings to formulate marketing agreements and 
marketing orders have been met.
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    The findings hereinafter set forth are supplementary to the 
findings and determinations which were previously made in connection 
with the issuance of the marketing order; and all said previous 
findings and determinations are hereby ratified and affirmed, except 
insofar as such findings and determinations may be in conflict with the 
findings and determinations set forth herein.
    1. The marketing order, as amended, and as hereby proposed to be 
further amended, and all of the terms and conditions thereof, would 
tend to effectuate the declared policy of the Act;
    2. The marketing order, as amended, and as hereby proposed to be 
further amended, regulates the handling of raisins produced from grapes 
grown in California in the same manner as, and are applicable only to, 
persons in the respective classes of commercial and industrial activity 
specified in the marketing order;
    3. The marketing order, as amended, and as hereby proposed to be 
further amended, is limited in application to the smallest regional 
production area which is practicable, consistent with carrying out the 
declared policy of the Act, and the issuance of several orders 
applicable to subdivisions of the production area would not effectively 
carry out the declared policy of the Act;
    4. The marketing order, as amended, and as hereby proposed to be 
further amended, prescribe, insofar as practicable, such different 
terms applicable to different parts of the production area as are 
necessary to give due recognition to the differences in the production 
and marketing of raisins produced in the production area; and
    5. All handling of raisins produced in the production area as 
defined in the

[[Page 11681]]

marketing order is in the current of interstate or foreign commerce or 
directly burdens, obstructs, or affects such commerce.

Order Relative to Handling

    It is therefore ordered, that on and after the effective date 
hereof, all handling of raisins produced from grapes grown in 
California shall be in conformity to, and in compliance with, the terms 
and conditions of the said order as hereby proposed to be amended as 
follows:
    The provisions of the proposed marketing order amending the order 
contained in the proposed rule issued by the Administrator on October 
15, 2015, and published in the Federal Register (80 FR 62506) on 
October 16, 2015, will be and are the terms and provisions of this 
order amending the order and are set forth in full herein.

PART 989--RAISINS PRODUCED FROM GRAPES GROWN IN CALIFORNIA

0
1. The authority citation for 7 CFR part 989 continues to read as 
follows:

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

0
2. Revise paragraph (c) of Sec.  989.80 to read as follows:


Sec.  989.80  Assessments.

* * * * *
    (c) During any crop year or any portion of a crop year for which 
volume percentages are not effective for a varietal type, all standard 
raisins of that varietal type acquired by handlers during such period 
shall be free tonnage for purposes of levying assessments pursuant to 
this section. The Secretary shall fix the rate of assessment to be paid 
by all handlers on the basis of a specified rate per ton. At any time 
during or after a crop year, the Secretary may increase the rate of 
assessment to obtain sufficient funds to cover any later finding by the 
Secretary relative to the expenses of the committee. Each handler shall 
pay such additional assessment to the committee upon demand. In order 
to provide funds to carry out the functions of the committee, the 
committee may accept advance payments from any handler to be credited 
toward such assessments as may be levied pursuant to this section 
against such handler during the crop year. In the event cash flow needs 
of the committee are above cash available generated by handler 
assessments, the committee may borrow from a commercial lending 
institution. The payment of assessments for the maintenance and 
functioning of the committee, and for such purposes as the Secretary 
may pursuant to this subpart determine to be appropriate, may be 
required under this part throughout the period it is in effect, 
irrespective of whether particular provisions thereof are suspended or 
become inoperative.
* * * * *
0
3. Revise paragraph (a) of Sec.  989.81 to read as follows:


Sec.  989.81  Accounting.

    (a) If, at the end of the crop year, the assessments collected are 
in excess of expenses incurred, such excess shall be accounted for in 
accordance with one of the following:
    (1) If such excess is not retained in a reserve, as provided in 
paragraph (a)(2) of this section, it shall be refunded proportionately 
to the persons from whom collected in accordance with Sec.  989.80; 
Provided, That any sum paid by a person in excess of his or her pro 
rata share of expenses during any crop year may be applied by the 
committee at the end of such crop year as credit for such person, 
toward the committee's administrative operations for the following crop 
year; Provided further, That the committee may credit the excess to any 
outstanding obligations due the committee from such person.
    (2) The committee may carry over such excess funds into subsequent 
crop years as a reserve; Provided, That funds already in the reserve do 
not exceed one crop year's budgeted expenses as averaged over the past 
six years. In the event that funds exceed one crop year's expenses, 
funds in excess of one crop year's budgeted expenses shall be 
distributed in accordance with paragraph (1) above. Such funds may be 
used:
    (i) To defray essential administrative expenses (i.e., staff wages/
salaries and related benefits, office rent, utilities, postage, 
insurance, legal expenses, audit costs, consulting, Web site operation 
and maintenance, office supplies, repairs and maintenance, equipment 
leases, domestic staff travel and committee mileage reimbursement, 
international committee travel, international staff travel, bank 
charges, computer software and programming, costs of compliance 
activities, and other similar essential administrative expenses) 
exclusive of promotional expenses during any crop year, prior to the 
time assessment income is sufficient to cover such expenses;
    (ii) To cover deficits incurred during any period when assessment 
income is less than expenses;
    (iii) To defray expenses incurred during any period when any or all 
provisions of this part are suspended;
    (iv) To meet any other such expenses recommended by the committee 
and approved by the Secretary; and
    (v) To cover the necessary expenses of liquidation in the event of 
termination of this part. Upon such termination, any funds not required 
to defray the necessary expenses of liquidation shall be disposed of in 
such manner as the Secretary may determine to be appropriate; Provided, 
That to the extent practicable, such funds shall be returned pro rata 
to the persons from whom such funds were collected.
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[FR Doc. 2016-04623 Filed 3-4-16; 8:45 am]
 BILLING CODE 3410-02-P