[Federal Register Volume 62, Number 129 (Monday, July 7, 1997)]
[Proposed Rules]
[Pages 36231-36233]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-17605]


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 Proposed Rules
                                                 Federal Register
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 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. 62, No. 129 / Monday, July 7, 1997 / Proposed 
Rules  

[[Page 36231]]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 920

[Docket No. FV97-920-1 PR]


Kiwifruit Grown in California; Proposed Revision of 
Administrative Rules Pertaining to Delinquent Assessments

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposal invites comments on revisions to time periods 
specified for timely payment of assessments owed by handlers under the 
Federal marketing order for kiwifruit grown in California. This rule 
would reduce the time periods specified for timely payments of 
assessments from 60 days of invoice for in-line inspection and from 45 
days of invoice for block inspection, to 30 days of invoice for both 
types of inspection. It would also allow the Kiwifruit Administrative 
Committee (committee) to further revise this time period to a later 
time period, in the future, if deemed necessary and approved by the 
committee. This rule would contribute to the efficient operation of the 
program, and would reduce the administrative and accounting burden for 
handlers and the committee staff.

DATES: Comments must be received by August 6, 1997.

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

FOR FURTHER INFORMATION CONTACT: Rose Aguayo, California Marketing 
Field Office, Marketing Order Administration Branch, Fruit and 
Vegetable Division, AMS, USDA, 2202 Monterey St., 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, P.O. Box 96456, room 2526-S, 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 Division, AMS, USDA, P.O. Box 96456, room 2525-S, 
Washington, DC 20090-6456, telephone (202) 720-2491, FAX (202) 720-
5698.

SUPPLEMENTARY INFORMATION: This proposed rule is issued under Marketing 
Order No. 920 (7 CFR part 920), as amended, regulating the handling of 
kiwifruit 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 (Department) is issuing this proposed 
rule in conformance with Executive Order 12866.
    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This rule is not intended to have retroactive 
effect. This proposed rule will not preempt any State or local laws, 
regulations, or policies, unless they present an irreconcilable 
conflict with this rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with the Secretary a 
petition stating that the order, any provision of the order, or any 
obligation imposed in connection with the order is not in accordance 
with law and request a modification of the order or to be exempted 
therefrom. A handler is afforded the opportunity for a hearing on the 
petition. After the hearing the Secretary would rule on the petition. 
The Act provides that the district court of the United States in any 
district in which the handler is an inhabitant, or has his or her 
principal place of business, has jurisdiction to review the Secretary's 
ruling on the petition, provided an action is filed not later that 20 
days after date of the entry of the ruling.
    This proposal invites comments on revisions to time periods 
specified for timely payment of assessments owed by handlers under the 
Federal marketing order for kiwifruit grown in California. Under 
Sec. 920.41(a) of the order, each person who first handles kiwifruit is 
required to pay a pro-rata share of the costs of administering the 
program. This cost is in the form of a uniform assessment rate applied 
to each handler's shipments. Section 920.41(a) also provides that if a 
handler does not pay an assessment within the time prescribed by the 
committee, the assessment may be subject to an interest or late payment 
charge, or both. Section 920.112 of the order's administrative rules 
specifies that a simple interest rate of 1.5 percent per month will be 
charged to assessments which are not received within 60 days of invoice 
for in-line inspected kiwifruit or within 45 days of invoice for block 
inspected kiwifruit. It further specifies that a 10 percent late charge 
will be assessed handlers when payment becomes 30 days late.
    The committee, the agency responsible for local administration of 
the marketing order, met on April 16, 1997, and unanimously recommended 
revising the administrative rules in effect under the order pertaining 
to the time period specified for timely payment of assessments owed by 
handlers. The committee recommended reducing the time period for timely 
payment of assessments owed by handlers from 60 days of invoice for in-
line inspection and from 45 days of invoice for block inspection, to 30 
days of invoice for both types of inspection. The committee also 
requested that Sec. 920.112 of the rules and regulations be revised to 
allow the committee to further revise this time period in the future, 
if deemed necessary.
    Kiwifruit grown in California is harvested in late September or 
early October. The fruit is packed shortly after harvest and much of it 
is placed into storage until shipment. The primary shipping season 
extends through the following May, although some fruit is marketed 
during the summer months.
    Whenever grade, size, quality, or maturity requirements are in 
effect for California kiwifruit, handlers are

[[Page 36232]]

required to have their fruit inspected and certified as meeting those 
requirements. Handlers have a choice of two different inspection 
methods, referred to as ``in-line'' and ``block'' inspection. With in-
line inspection, kiwifruit is inspected during the packing process, 
prior to storage. With block inspection, the kiwifruit is inspected 
after it has been packed. Block inspections are typically performed 
just prior to shipment.
    Pursuant to Sec. 920.160, each shipper who ships kiwifruit shall 
furnish a report of shipment and inventory data to the committee not 
later than the fifth day of the month following such shipment. This 
Monthly Shipment Report is also required under the State kiwifruit 
program administered by the California Kiwifruit Commission 
(commission). The Federal and State programs are both administered by 
the same staff.
    The committee staff calculates assessments from the Monthly 
Shipment Report for all inspected kiwifruit and bills handlers for 
committee and commission assessments. The billing period runs from the 
first to the last day of the month for all handlers. Invoices are 
typically prepared and mailed at the end of the month of receipt of the 
Monthly Shipment Report, with payment due 60 days from date of invoice 
for in-line inspected kiwifruit and 45 days from date of invoice for 
block inspected kiwifruit.
    Approximately a month before the start of the 1996-1997 season, the 
commission reduced its time period to specify that assessments would be 
considered late if not received within 30 days of invoice. The 
committee did not recommend a change in its requirements at that time 
because there was not adequate time to implement such a change for the 
1996-1997 crop year. Operating under two different time periods for 
timely payment of assessments requires the committee staff to process 
and mail two invoices each month and requires the handlers to review 
two invoices and make two payments. Thus, this proposed rule should 
reduce costs for handlers and the committee by making the procedures 
under both programs the same.
    The committee met on April 16, 1997, and recommended reducing the 
time periods for timely payment of assessments owed by handlers to 30 
days of invoice so that the committee's time period would be consistent 
with the commission's time period and further recommended that this 
rule be effective in September for the l997-1998 season.
    The committee also recommended including authority to revise this 
time period in the future, if deemed necessary and approved by the 
committee. The committee would like to ensure that consistent 
accounting and administrative procedures could be implemented 
simultaneously in the future. The Department believes the committee 
should be granted authority to increase the time period; however, a 
reduction in the time period should be subject to the informal 
rulemaking process. The committee's recommendation is proposed to be 
modified accordingly.
    This action proposes revising Sec. 920.112 to provide that 
assessments on all kiwifruit be considered delinquent if not received 
within 30 days of invoice, or such other later time as specified by the 
committee.
    There is unanimous committee support to reduce the time periods 
specified for timely payment of assessments owed by handlers to within 
30 days of invoice for both types of inspections.
    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, the 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 would 
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. Thus, both statutes have small 
entity orientation and compatibility.
    There are approximately 60 handlers of California kiwifruit subject 
to regulation under the marketing order and 450 producers in the 
production area. Small agricultural service firms are defined by the 
Small Business Administration (13 CFR 121.601) as those whose annual 
receipts are less than $5,000,000, and small agricultural producers 
have been defined as those having annual receipts of less that 
$500,000. 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.
    Under Sec. 920.41(a) of the marketing order for kiwifruit grown in 
California, each person who first handles kiwifruit is required to pay 
a pro-rata share of the costs of administering the program. This cost 
is in the form of a uniform assessment rate applied to each handler's 
shipments. Section 920.41(a) also provides that if a handler does not 
pay an assessment within the time prescribed by the committee, the 
assessment may be subject to an interest or late payment charge, or 
both. Section 920.112 of the order's administrative rules specifies 
that a simple interest rate of 1.5 percent per month will be charged to 
assessments which are not received within 60 days of invoice for in-
line inspected kiwifruit or within 45 days of invoice for block 
inspected kiwifruit. It further specifies that a 10 percent late charge 
will be assessed handlers when payment becomes 30 days late.
    Pursuant to Sec. 920.160, each shipper who ships kiwifruit shall 
furnish a report of shipment and inventory data to the committee not 
later than the fifth day of the month following such shipment. This 
Monthly Shipment Report is also required under the State kiwifruit 
program administered by the California Kiwifruit Commission. The 
Federal and State programs are both administered by the same staff.
    The committee staff calculates assessments from the Monthly 
Shipment Report for all inspected kiwifruit and bills handlers for 
committee and commission assessments. The billing period runs from the 
first to the last day of the month for all handlers. Invoices are 
typically prepared and mailed at the end of the month of receipt of the 
Monthly Shipment Report, with payment due 60 days from date of invoice 
for in-line inspected kiwifruit and 45 days from date of invoice for 
block inspected kiwifruit.
    Approximately a month before the start of the 1996-1997 season, the 
commission reduced its time period to specify that assessments would be 
considered late if not received within 30 days of invoice. The 
committee did not recommend a change in its requirements at that time 
because there was not adequate time to implement such a change for the 
1996-1997 crop year. Two different time periods for timely payment of 
assessments requires the committee staff to process and mail two 
invoices each month and requires the handlers to review two invoices 
and make two payments. Thus, this proposed rule should reduce costs for

[[Page 36233]]

handlers and the committee by making the procedures under both programs 
the same.
    The committee met on April 16, 1997, and recommended revising 
Sec. 920.112 to provide that the time periods for timely payment of 
assessments owed by handlers be reduced to 30 days of invoice so that 
the committee's time period would be consistent with the commission's 
time period and further recommended that this rule be effective in 
September for the l997-1998 season. The committee also recommended 
including authority to revise this time period in the future, if deemed 
necessary. It would like to ensure that consistent accounting and 
administrative procedures could be implemented simultaneously in the 
future.
    There is unanimous committee support to reduce the time periods 
specified for timely payment of assessments owed by handlers to 30 days 
of invoice for both types of inspections.
    Currently, the time lapse between the date the fruit is shipped and 
the date assessments are due is between 60-90 days. Handlers normally 
receive payment for shipments within 30 days of shipment. Therefore, 
the impact of this action would not be significant as payments for 
shipments are normally received 30-60 days before assessments are due.
    Handlers currently pay assessments of $.0175 per tray or tray 
equivalent and have 60 days from date of invoice for in-line inspected 
kiwifruit and have 45 days from date of invoice for block inspected 
kiwifruit to pay their assessments before their assessments are 
considered delinquent. If handlers pay their assessments in a timely 
manner, they are not charged the simple interest rate of 1.5 percent 
per month or the 10 percent late charge.
    Under this proposal, handlers would have 30 days from the invoice 
date before their assessments would be considered delinquent. This 30-
day reduction in the time period for handlers receiving in-line 
inspection and 15-day reduction in the time period for handlers 
receiving block inspection would have no impact on handlers who pay 
their assessments in a timely manner. Even for those who do not pay in 
a timely manner, the impact would not be significant. For example, if a 
handler is delinquent in paying assessments, a simple interest rate of 
1.5 percent interest per month and an assessment of $.0175 per tray or 
tray equivalent would apply. During the peak month of March, 1996, less 
than 1.6 million trays or tray equivalents were shipped. This equates 
to an approximate average of 26,667 trays for each of the 60 handlers, 
which when assessed at $.1075 per tray generates a $467 assessment per 
handler. If an account is 30 days delinquent, the handler is charged a 
1.5 percent interest charge in the amount of $7.00 and a 10 percent 
late charge in the amount of $46.70 over the assessment. This action 
does not change the interest rate or the late charge percentage, but 
reduces the time period specified for timely payment to 30 days. If 
amounts are paid in a timely manner, no additional charges are 
incurred.
    The majority of assessments owed by handlers are paid within the 
specified time periods.
    This change would reduce the administrative and accounting burden 
for handlers and for the committee staff by making the committee's and 
the commission's time periods consistent. While no specific 
alternatives were suggested during the public meeting, the committee's 
recommendation and the rule proposed herein do provide for built-in 
alternatives and flexibility. Allowing the committee to further revise 
this time period to a later time period in the future, if deemed 
necessary, would ensure that consistent accounting and administrative 
procedures could be implemented simultaneously in the future. This rule 
would be applied uniformly to all handlers and was viewed by the 
committee as the best solution.
    This action would not impose any additional reporting or 
recordkeeping requirements on either small or large 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 proposed rule.
    In addition, the committee's meeting was widely publicized 
throughout the 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 April 16, 
1997, meeting was a public meeting and all entities, both large and 
small, were able to express views on this issue. The committee itself 
is composed of 12 members. Two of these members are handlers and 
producers, 9 are producers only, and one is a public member. The 
majority are small entities, with one producer member having annual 
receipts over $500,000. Thus, committee recommendations can be 
considered to represent the interests of small business entities in the 
industry. Finally, interested persons are invited to submit information 
on the regulatory and informational impacts of this action on small 
businesses.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposal. All written comments timely received will be 
considered before a final determination is made on this matter.

List of Subjects in 7 CFR Part 920

    Kiwifruit, Marketing agreements.

    For the reasons set forth in the preamble, 7 CFR part 920 is 
proposed to be 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.

    2. Section 920.112 is revised to read as follows:


Sec. 920.112  Late payments.

    Pursuant to Sec. 920.41(a), interest will be charged at a 1.5 
percent monthly simple interest rate. Assessments for kiwifruit shall 
be deemed late if not received within 30 days of invoice, or such other 
later time period as specified by the committee. A 10 percent late 
charge will be assessed when payment becomes 30 days late. Interest and 
late payment charges shall be applied only to the overdue assessment.

    Dated: June 30, 1997.
Eric M. Forman,
Acting Director, Fruit and Vegetable Division.
[FR Doc. 97-17605 Filed 7-3-97; 8:45 am]
BILLING CODE 3410-02-P