[Federal Register Volume 62, Number 216 (Friday, November 7, 1997)]
[Rules and Regulations]
[Pages 60156-60158]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-29479]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 920

[Docket No. FV97-920-3 FIR]


Kiwifruit Grown in California; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (Department) is adopting, as a 
final rule, without change, the provisions of an interim final rule 
which increased the assessment rate 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 1997-98 fiscal period 
covers the period August 1 through July 31. The assessment rate will 
continue in effect indefinitely unless modified, suspended, or 
terminated.

EFFECTIVE DATE: December 8, 1997.

FOR FURTHER INFORMATION CONTACT: Diane Purvis, Marketing Assistant, or 
Rose Aguayo, Marketing Specialist, California Marketing Field Office, 
Fruit and Vegetable Programs, 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 Programs, AMS, USDA, Room 2525-S, P.O. Box 96456, 
Washington, DC 20090-6456; telephone: (202) 720-2491, 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 Programs, 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 is issuing this rule in conformance with Executive 
Order 12866.
    This final rule was 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 continues in effect the assessment rate of $0.0225 per 
tray or tray equivalents of assessable kiwifruit for the Committee for 
the 1997-98 and subsequent fiscal periods.
    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 authorizes the Committee to borrow funds. The 
members of the Committee are 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 the 1996-97 and subsequent fiscal periods, the Committee 
recommended,

[[Page 60157]]

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 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 per 
tray or tray equivalent is $0.0050 higher than last year's established 
rate. The 1996-97 kiwifruit crop was short 3.3 million trays or tray 
equivalents of the quantity projected in the 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 
borrowed $11,052 as of May 31, 1997, and estimated that an additional 
$22,401 might be needed to cover expenses through the end of the fiscal 
period. Because the Committee's reserve has been 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. The order provides authority for a maximum reserve equal to 
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 major expenditure levels recommended by 
the Committee for the 1997-98 year 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 was approved by the Department on August 18, 1997; 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 final regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and the rules issued thereunder, are unique in 
that they are brought about through group action of essentially small 
entities acting on their own behalf. Thus, both statutes have small 
entity orientation and compatibility.
    There are approximately 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 California kiwifruit producers and handlers 
may be classified as small entities.
    This rule continues the assessment rate of $0.0225 per tray or tray 
equivalents of assessable kiwifruit for the 1997-98 and subsequent 
fiscal periods. 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 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 major expenditure levels recommended 
by the Committee for the 1997-98 year 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 the 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

[[Page 60158]]

assessment rate to cover the budgeted expenses, to reimburse the 
borrowed funds, and to establish an adequate reserve. Reserve funds 
will be kept within the maximum permitted by the order.
    A review of historical information and preliminary information 
pertaining to the 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 as a percentage of total grower revenue will 
be approximately 1.4 percent.
    This rule continues in effect the assessment obligation imposed on 
handlers. While the assessment rate this fiscal period is higher than 
that of last year, the additional costs upon handlers 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 the California kiwifruit industry and all 
interested persons were invited to attend the meeting and participate 
in Committee deliberations on all issues. Like all 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.
    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 final rule.
    An interim final rule concerning this action was published in the 
Federal Register on August 26, 1997 (62 FR 45146). Copies of the rule 
were mailed or sent via facsimile to all Committee members and 
kiwifruit handlers. Finally, the rule was made available through the 
Internet by the Office of the Federal Register. A 30-day comment period 
was provided. No comments were received.
    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.

List of Subjects in 7 CFR Part 920

    Kiwifruit, Marketing agreements.

PART 920--KIWIFRUIT GROWN IN CALIFORNIA

    Accordingly, the interim final rule amending 7 CFR part 920 which 
was published at 62 FR 45146 on August 26, 1997, is adopted as a final 
rule without change.

    Dated: November 3, 1997.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 97-29479 Filed 11-6-97; 8:45 am]
BILLING CODE 3410-02-P