[Federal Register Volume 62, Number 166 (Wednesday, August 27, 1997)]
[Rules and Regulations]
[Pages 45293-45295]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-22710]



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 Rules and Regulations
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  Federal Register / Vol. 62, No. 166 / Wednesday, August 27, 1997 / 
Rules and Regulations  

[[Page 45293]]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 920

[Docket No. FV97-920-1 FR]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule revises the time periods specified for timely 
payment of assessments owed by handlers under the Federal marketing 
order for kiwifruit grown in California. This rule reduces 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 also 
allows 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 will 
contribute to the efficient operation of the program, and will reduce 
the administrative and accounting burden for handlers and the committee 
staff.

EFFECTIVE DATE: August 28, 1997.

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 2525-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 final 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 rule in 
conformance with Executive Order 12866.
    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This rule is not intended to have retroactive 
effect. 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. 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 final rule revises the 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 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

[[Page 45294]]

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 were 
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 final rule will reduce 
costs for handlers and the committee by making the procedure 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 will be consistent 
with the commission's time period and further recommended that this 
rule be effective in September for the 1997-1998 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 wants to ensure that consistent accounting and 
administrative procedures can 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 modified accordingly.
    This action revises 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 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 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 than 
$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 Shipping 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 will 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 require the handlers to review two invoices and 
make two payments. Thus, this final rule will 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 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 will be consistent with the commission's 
time period and further recommended that this rule be effective in 
September for the 1997-1998 season. The committee also recommended 
including authority to revise this time

[[Page 45295]]

period in the future, if deemed necessary. The committee wants to 
ensure that consistent accounting and administrative procedures can 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 will not be significant as payments for 
shipments are normally received 30-60 days before assessments are due.
    For the 1997-98 season, handlers will pay assessments of $.0225 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 nor the 10 percent late charge.
    Under this rule, handlers will have 30 days from the invoice date 
before their assessments will 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 will 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 will 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 $.0225 per tray or tray equivalent will 
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 $.0225 per tray generates a $600 assessment per handler. If 
an account is 30 days delinquent, the handler is charged a 1.5 percent 
interest charge in the amount of $9.00 and a 10 percent late charge in 
the amount of $60.00 over the assessment. This action does not change 
the interest rate nor 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 will 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 finalized 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, will ensure that consistent accounting and administrative 
procedures can be implemented simultaneously in the future. This rule 
will be applied uniformly to all handlers and was viewed by the 
committee as the best solution.
    This action will 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 final 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.
    A proposed rule concerning this action was issued by the Department 
on June 30, 1997, and published in the Federal Register on Monday, July 
7, 1997 (62 FR 36231). Copies of the rule were mailed to all Committee 
members and kiwifruit handlers. The rule was also made available 
through the Internet by the Office of the Federal Register. No comments 
were received.
    After consideration of all relevant matter presented, including the 
information and recommendations 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.
    It is further found that good cause exists for not postponing the 
effective date of this rule until 30 days after publication in the 
Federal Register (5 U.S.C. 553) because this change should apply to all 
kiwifruit shipped during the season. Such shipments can begin as early 
as September. Further, handlers are aware of this rule, which was 
recommended at a public meeting. Also, a 30-day comment period was 
provided for in the proposed rule and no comments were received.

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.

    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: August 21, 1997.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 97-22710 Filed 8-26-97; 8:45 am]
BILLING CODE 3410-02-P