[Federal Register Volume 62, Number 165 (Tuesday, August 26, 1997)]
[Rules and Regulations]
[Pages 45146-45148]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-22579]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 920

[Docket No. FV97-920-3 IFR]


Kiwifruit Grown in California; Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule increases the assessment rate established for the 
Kiwifruit Administrative Committee (Committee) under Marketing Order 
No. 920 for the 1997-98 and subsequent fiscal periods. The Committee is 
responsible for local administration of the marketing order which 
regulates the handling of kiwifruit grown in California. Authorization 
to assess kiwifruit handlers enables the Committee to incur expenses 
that are reasonable and necessary to administer the program. The 
assessment rate will remain in effect indefinitely unless modified, 
suspended, or terminated.

DATES: August 27, 1997. Comments received by September 25, 1997, will 
be considered prior to issuance of a final rule.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent in triplicate to the Docket 
Clerk, Fruit and Vegetable Division, AMS, USDA, room 2525-S, P.O. Box 
96456, Washington, DC 20090-6456; Fax: (202) 720-5698. Comments should 
reference the docket number and the date and page number of this issue 
of the Federal Register and will be available for public inspection in 
the Office of the Docket Clerk during regular business hours.

FOR FURTHER INFORMATION CONTACT: Rose Aguayo, Marketing Specialist, 
California Marketing Field Office, Fruit and Vegetable Division, AMS, 
USDA, 2202 Monterey Street, suite 102B, Fresno, California 93721; 
telephone: (209) 487-5901, Fax: (209) 487-5906, or George Kelhart, 
Marketing Order Administration Branch, Fruit and Vegetable Division, 
AMS, USDA, room 2525-S, P.O. Box 96456, Washington, DC 20090-6456; 
telephone: (202) 690-3919, Fax: (202) 720-5698. Small businesses may 
request information on compliance with this regulation by contacting 
Jay Guerber, Marketing Order Administration Branch, Fruit and Vegetable 
Division, AMS, USDA, room 2525-S, P.O. Box 96456, Washington, DC 20090-
6456; telephone: (202) 720-2491, Fax: (202) 720-5698.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order 
No. 920, as amended (7 CFR part 920), regulating the handling of 
kiwifruit grown in California, hereinafter referred to as the 
``order.'' The marketing 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 (Department) is issuing this rule in 
conformance with Executive Order 12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. Under the marketing order now in effect, California 
kiwifruit handlers are subject to assessments. Funds to administer the 
order are derived from such assessments. It is intended that the 
assessment rate as issued herein will be applicable to all assessable 
kiwifruit beginning August 1, 1997, and continuing until amended, 
suspended, or terminated. This rule will not preempt any State or local 
laws, regulations, or policies, unless they present an irreconcilable 
conflict with this rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with the Secretary a 
petition stating that the order, any provision of the order, or any 
obligation imposed in connection with the order is not in accordance 
with law and request a modification of the order or to be exempted 
therefrom. Such handler is afforded the opportunity for a hearing on 
the petition. After the hearing the Secretary would rule on the 
petition. The Act provides that the district court of the United States 
in any district in which the handler is an inhabitant, or has his or 
her principal place of business, has jurisdiction to review the 
Secretary's ruling on the petition, provided an action is filed not 
later than 20 days after the date of the entry of the ruling.
    This rule increases the assessment rate for the Committee for the 
1997-98 and subsequent fiscal periods from $0.0175 to $0.0225 per tray 
or tray equivalent.
    The kiwifruit marketing order provides authority for the Committee, 
with the approval of the Department, to formulate an annual budget of 
expenses and collect assessments from handlers to administer the 
program. Section 920.41 also authorizes the Committee to borrow funds. 
The members of the Committee consist of producers of California 
kiwifruit and one non-industry member. They are familiar with the 
Committee's needs and with the costs for goods and services in their 
local area and are thus in a position to formulate an appropriate 
budget and assessment rate. The assessment rate is formulated and 
discussed in a public meeting. Thus, all directly affected persons have 
an opportunity to participate and provide input.
    For 1996-1997 and subsequent fiscal periods, the Committee 
recommended, and the Department approved, an assessment rate that would 
continue in effect from season to season indefinitely unless modified, 
suspended, or terminated by the Secretary upon recommendation and 
information submitted by the Committee or other available information 
available to the Secretary.
    The Committee met on June 25, 1997, and unanimously recommended 
1997-98 expenditures of $161,286 and an assessment rate of $0.0225 per 
tray or tray equivalent of kiwifruit. In comparison, last year's 
budgeted expenditures were $178,598. The assessment rate of $0.0225 
cents per tray or tray equivalent is $0.0050 cents higher than the rate 
currently in effect. The 1996-97 kiwifruit crop was short 3.3 million 
trays or tray equivalents of the projected crop estimate. The Committee 
met in February, 1997, and approved the borrowing of funds to cover 
expenses for the remainder of the 1996-97 season. The Committee has 
borrowed $11,052 as of May 31, 1997, and estimates that an additional 
$22,401 may be needed to cover expenses through the end of the fiscal 
period. As the Committee's reserve is depleted, the Committee voted to 
increase its assessment rate to cover the budgeted expenses, to 
reimburse the borrowed funds, and to begin to establish an adequate 
reserve. The order provides for a maximum reserve equal to

[[Page 45147]]

approximately one fiscal period's expenses.
    The Committee discussed alternatives to this rule, including 
alternative expenditure levels and alternative assessment rates. An 
assessment rate of $0.0200 was considered but not recommended because 
it would not generate the income necessary to administer the program 
with an adequate reserve. The Committee recommended that the major 
expenditures for the 1997-98 year should include $102,200 for 
administrative staff and field salaries, $13,825 for travel, food, and 
lodging; and $12,200 for accident and health insurance. Budgeted 
expenses for these items in 1996-97 were $108,500, $20,398, and 
$13,000, respectively.
    The assessment rate recommended by the Committee was derived by 
considering anticipated expenses, expected shipments of California 
kiwifruit, and additional pertinent factors. Kiwifruit shipments for 
the year are estimated at 10 million trays or tray equivalents of 
kiwifruit which should provide $225,000 in assessment income. Income 
derived from handler assessments, along with interest income will be 
adequate to cover budgeted expenses, reimbursement of borrowed funds, 
and to fund an adequate reserve. Future reserve funds will be kept 
within the maximum permitted by the order.
    The assessment rate established in this rule will continue in 
effect indefinitely unless modified, suspended, or terminated by the 
Secretary upon recommendation and information submitted by the 
Committee or other available information.
    Although this assessment rate is effective for an indefinite 
period, the Committee will continue to meet prior to or during each 
fiscal period to recommend a budget of expenses and consider 
recommendations for modification of the assessment rate. The dates and 
times of Committee meetings are available from the Committee or the 
Department. Committee meetings are open to the public and interested 
persons may express their views at these meetings. The Department will 
evaluate Committee recommendations and other available information to 
determine whether modification of the assessment rate is needed. 
Further rulemaking will be undertaken as necessary. The Committee's 
1997-98 budget and those for subsequent fiscal periods will be reviewed 
and, as appropriate, approved by the Department.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this rule on small entities. Accordingly, AMS has 
prepared this initial regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and the rules issued thereunder, are unique in 
that they are brought about through group action of essentially small 
entities acting on their own behalf. Thus, both statutes have small 
entity orientation and compatibility.
    There are approximately 450 producers of kiwifruit in the 
production area and approximately 60 handlers subject to regulation 
under the marketing order. Small agricultural producers have been 
defined by the Small Business Administration (13 CFR 121.601) as those 
having annual receipts less than $500,000, and small agricultural 
service firms are defined as those whose annual receipts are less than 
$5,000,000. One of the 60 handlers subject to regulation has annual 
kiwifruit sales of at least $5,000,000, and the remaining 59 handlers 
have sales less than $5,000,000, excluding receipts from any other 
sources. Ten of the 450 producers subject to regulation have annual 
sales of at least $500,000, and the remaining 440 producers have sales 
less than $500,000, excluding receipts from any other sources. 
Therefore, a majority of handlers and producers of California kiwifruit 
may be classified as small entities.
    This rule increases the assessment rate established for the 
Committee and collected from handlers for the 1997-98 and subsequent 
fiscal periods from $0.0175 to $0.0225 per tray or tray equivalent. The 
Committee unanimously recommended 1997-98 expenditures of $161,286 and 
an assessment rate of $0.0225 per tray or tray equivalent of kiwifruit. 
The assessment rate of $0.0225 is $0.0050 more than the rate currently 
in effect. The 1996-97 kiwifruit crop was short 3.3 million trays or 
tray equivalents of the estimated crop. The Committee met in February, 
1997, and approved borrowing funds to cover expenses for the remainder 
of the 1996-97 season. The Committee has borrowed $11,052 as of May 31, 
1997, and estimates that an additional $22,401 may be needed to cover 
expenses through the end of the fiscal period. As the Committee's 
reserve is depleted and funds have been borrowed to meet the remaining 
1996-97 expenses, the Committee voted to increase its assessment rate 
to cover the budgeted expenses, to reimburse the borrowed funds, and to 
establish an adequate reserve.
    The Committee discussed alternatives to this rule, including 
alternative expenditure levels and alternative assessment rates. An 
assessment rate of $0.0200 was considered but not recommended because 
it would not generate the income necessary to administer the program 
with an adequate reserve. The Committee also considered reducing the 
compliance staff by two personnel, but determined that one part-time 
position would be eliminated. The Committee recommended that the major 
expenditures for the 1997-98 fiscal period should include $102,200 for 
administrative staff and field salaries, $13,825 for travel, food, and 
lodging; and $12,200 for accident and health insurance. Budgeted 
expenses for these items in 1996-97 were $108,500, $20,398, and 
$13,000, respectively.
    Kiwifruit shipments for the year are estimated at 10 million trays 
or tray equivalents which should provide $225,000 in assessment income. 
Income derived from handler assessments, along with interest income, 
will be adequate to cover budgeted expenses and the shortage of funds 
resulting from the 1996-97 crop shortage. As the Committee's reserve is 
depleted, the Committee voted to increase its assessment rate to cover 
the budgeted expenses, to reimburse the borrowed funds, and to 
establish an adequate reserve. Funds in the reserve will be kept within 
the maximum permitted by the order.
    A review of historical information and preliminary information 
pertaining to the upcoming crop year indicates that the grower price 
for the 1997-98 season is estimated to be approximately $1.62 per tray 
or tray equivalent of kiwifruit. Therefore, the estimated assessment 
revenue for the 1997-98 crop year period as a percentage of total 
grower revenue would be approximately 1.4 percent.
    This action will increase the assessment obligation imposed on 
handlers. While this rule will impose some additional costs on 
handlers, the costs are minimal and in the form of uniform assessments 
on all handlers. Some of the additional costs may be passed on to 
producers. However, these costs will be offset by the benefits derived 
by the operation of the marketing order. In addition, the Committee's 
meeting was widely publicized throughout California and the kiwifruit 
industry and all interested persons were invited to attend the meeting 
and participate in Committee deliberations on all issues. Like all

[[Page 45148]]

Committee meetings, the June 25, 1997, meeting was a public meeting and 
all entities, both large and small, were able to express views on this 
issue. Finally, interested persons are invited to submit information on 
the regulatory and informational impacts of this action on small 
businesses.
    This action will not impose any additional reporting or 
recordkeeping requirements on either small or large California 
kiwifruit handlers. As with all Federal marketing order programs, 
reports and forms are periodically reviewed to reduce information 
requirements and duplication by industry and public sector agencies.
    The Department has not identified any relevant Federal rules that 
duplicate, overlap, or conflict with this rule.
    After consideration of all relevant material presented, including 
the information and recommendation submitted by the Committee and other 
available information, it is hereby found that this rule, as 
hereinafter set forth, will tend to effectuate the declared policy of 
the Act.
    Pursuant to 5 U.S.C. 553, it is also found and determined upon good 
cause that it is impracticable, unnecessary, and contrary to the public 
interest to give preliminary notice prior to putting this rule into 
effect, and that good cause exists for not postponing the effective 
date of this rule until 30 days after publication in the Federal 
Register because: (1) The Committee needs to have sufficient funds to 
pay its expenses which are incurred on a continuous basis; (2) the 
1997-98 fiscal period begins on August 1, 1997, and the marketing order 
requires that the rate of assessment for each fiscal period apply to 
all assessable kiwifruit handled during such fiscal period; (3) 
handlers are aware of this action which was unanimously recommended by 
the Committee at a public meeting and is similar to other assessment 
rate actions issued in past years; and (4) this interim final rule 
provides a 30-day comment period, and all comments timely received will 
be considered prior to finalization of this rule.

List of Subjects in 7 CFR Part 920

    Kiwifruit, Marketing agreements.

    For the reasons set forth in the preamble, 7 CFR part 920 is 
amended as follows:

PART 920--KIWIFRUIT GROWN IN CALIFORNIA

    1. The authority citation for 7 CFR part 920 continues to read as 
follows:

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


Sec. 920.213  [Amended]

    2. Section 920.213 is amended by removing ``August 1, 1996,'' and 
adding in its place ``August 1, 1997,'' and by removing ``$0.0175 and 
adding in its place ``$0.0225.''

    Dated: August 18, 1997.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 97-22579 Filed 8-25-97; 8:45 am]
BILLING CODE 3410-02-P