[Federal Register Volume 63, Number 217 (Tuesday, November 10, 1998)]
[Rules and Regulations]
[Pages 62923-62925]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-30121]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 920

[Docket No. FV98-920-3 FIR]


Kiwifruit Grown in California; Decreased 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 decreased the assessment rate from $0.0225 per tray or tray 
equivalent to $0.05 per 22-pound volume fill container or equivalent of 
kiwifruit established for the Kiwifruit Administrative Committee 
(Committee) under Marketing Order No. 920 for the 1998-99 and 
subsequent fiscal periods. The assessment rate of $0.0225 per tray or 
tray equivalent approximates $0.0675 per 22-pound volume fill 
container. Thus, the assessment rate of $0.05 per 22-pound volume fill 
container is less than the 1997-98 assessment rate. 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 fiscal 
period began August 1 and ends July 31. The assessment rate will remain 
in effect indefinitely unless modified, suspended, or terminated.

EFFECTIVE DATE: December 10, 1998.

FOR FURTHER INFORMATION CONTACT: Toni Sasselli, Marketing Assistant or 
Rose M. 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, Technical Advisor, 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) 205-6632. Small businesses may request information 
on complying with this regulation, or obtain a guide on complying with 
fruit, vegetable, and specialty crop marketing agreements and orders by 
contacting Jay Guerber, Marketing Order Administration Branch, Fruit 
and Vegetable Programs, AMS, USDA, P.O. Box 96456, room 2525-S, 
Washington, DC 20090-6456; telephone: (202) 720-2491, Fax: (202) 205-
6632, or E-mail: Jay__N__G[email protected]. You may view the marketing 
agreement and order small business compliance guide at the following 
web site: http://www.ams.usda.gov/fv/moab.html.

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 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, 1998, 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 a decrease in the assessment rate and continues 
a change in the assessable unit established for the Committee for the 
1998-99 and subsequent fiscal periods from $0.0225 per tray or tray 
equivalent to $0.05 per 22-pound volume fill container or equivalent. 
The assessment rate of $0.0225 per tray or tray equivalent approximates 
$0.0675 per 22-pound volume fill container. Thus, the assessment rate 
of $0.05 per 22-pound volume fill container for the 1998-99 and 
subsequent fiscal periods is less than the 1997-98 assessment rate.
    The California 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. The members of the Committee are producers of California 
kiwifruit. 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

[[Page 62924]]

an opportunity to participate and provide input.
    For the 1997-98 and subsequent fiscal periods, the Committee 
recommended, and the Department approved, an assessment rate that would 
continue in effect from fiscal period to fiscal period 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 July 8, 1998, and unanimously recommended 
1998-99 expenditures of $135,250 and an assessment rate of $0.05 per 
22-pound volume fill container or equivalent of kiwifruit. In 
comparison, last year's budgeted expenditures were $161,286, and the 
assessment rate was $0.0225 per tray equivalent, which approximates 
$0.0675 per 22-pound volume fill container. The assessment rate of 
$0.05 per 22-pound volume fill container is $0.0175 or 26 percent lower 
than the 1997-98 equivalent rate. The Committee voted to reduce 1998-99 
budgeted expenditures and the assessment rate to lessen the financial 
burden on California kiwifruit handlers.
    The Committee recommended changing the assessable unit to a 22-
pound volume fill container or equivalent basis because this container 
is now the predominant container being used by handlers within the 
industry. Tray packs had been the container of choice in previous 
seasons, but handlers have been switching gradually to volume fill 
containers.
    The Committee owes $32,577 to the California Kiwifruit Commission 
(Commission) and plans to pay off the loan during the 1998-99 fiscal 
period. The Commission administers a State program utilized to promote 
kiwifruit grown in California. The Committee and Commission share staff 
and expenses pursuant to an agreement.
    During the 1997-98 fiscal period, the Committee borrowed $32,577 
from the Commission pursuant to Sec. 920.41 of the order to cover a 
funding deficit. Handler assessments received were lower than expected 
because the 1997-98 crop of 9 million trays or tray equivalents and 
shipments of 8.5 million trays or tray equivalents were smaller than 
the Committee anticipated. The Committee had estimated that assessments 
would total $225,000 for the 1997-98 fiscal period, and that shipments 
for the period would total 10 million trays or tray equivalents.
    The following table compares major budget expenditures (in 
thousands of dollars) recommended by the Committee for the 1998-99 and 
1997-98 fiscal periods:

------------------------------------------------------------------------
             Budget expense categories               1998-99    1997-98
------------------------------------------------------------------------
Administrative Staff and Field Salaries...........       44.2      102.2
Contingency Fund/Operating Reserve................       29.2          0
Travel, Food and Lodging..........................        5.0       13.8
Accident and Health Insurance.....................        3.8       12.2
------------------------------------------------------------------------

    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 2,705,000 22-pound volume fill containers or 
equivalents of kiwifruit, which should provide $135,250 in assessment 
income. Income derived from handler assessments will be adequate to 
cover budgeted expenses, to reimburse the borrowed funds, and to fund 
an adequate reserve. It is anticipated that the assessment rate of 
$0.05 per 22-pound volume fill container or equivalent of kiwifruit 
handled will provide a reserve of $29,200 at the end of the fiscal 
year. Currently, there are no funds in the reserve. Reserve funds will 
be kept within 1 fiscal period's expenses, the maximum permitted under 
Sec. 920.42 of the order.
    The assessment rate 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 
1998-99 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 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. The 
majority of California kiwifruit producers and handlers may be 
classified as small entities.
    This rule continues a decrease in the assessment rate and continues 
a change in the assessable unit established for the Committee for the 
1998-99 and subsequent fiscal periods from $0.0225 per tray or tray 
equivalent to $0.05 per 22-pound volume fill container or equivalent. 
The assessment rate of $0.0225 per tray or tray equivalent approximates 
$0.0675 per 22-pound volume fill container. Thus, the assessment rate 
of $0.05 per 22-pound volume fill container for the 1998-99 and 
subsequent fiscal periods is $0.0175 less than the 1997-98 assessment 
rate. The Committee unanimously recommended 1998-99 expenditures of 
$135,250. The quantity of assessable kiwifruit for the 1998-99 fiscal 
period is estimated at 2,705,000, 22-pound volume fill containers. 
Thus, the $0.05 rate should provide $135,250 in assessment income and 
be adequate to meet this year's expenses.
    The Committee recommended changing the assessable unit to a 22-
pound volume fill container or equivalent basis because this container 
is now the predominant container being used by handlers within the 
industry.

[[Page 62925]]

Tray packs had been the container of choice in previous seasons, but 
handlers have been switching gradually to volume fill containers.
    The following table compares major budget expenditures (in 
thousands of dollars) recommended by the Committee for the 1998-99 and 
1997-98 fiscal years:

------------------------------------------------------------------------
             Budget expense categories               1998-99    1997-98
------------------------------------------------------------------------
Administrative Staff and Field Salaries...........       44.2      102.2
Contingency Fund/Operating Reserve................       29.2          0
Travel, Food and Lodging..........................        5.0       13.8
Accident and Health Insurance.....................        3.8       12.2
------------------------------------------------------------------------

    The Committee owes $32,577 to the California Kiwifruit Commission 
(Commission) and plans to pay off the loan during the 1998-99 fiscal 
period. The Commission administers a State program utilized to promote 
California kiwifruit. The Committee and Commission share staff and 
expenses through an agency agreement.
    The Committee borrowed the money from the Commission pursuant to 
Sec. 920.41 of the order to cover a fund shortage during the 1997-98 
fiscal period. Handler assessments received were lower than expected 
because the 1997-98 crop of 9 million trays or tray equivalents and 
shipments of 8.5 million trays or equivalents were smaller than the 
Committee anticipated. The Committee had estimated that assessments 
would be $225,000 for the 1997-98 fiscal period and that kiwifruit 
shipments would be 10 million trays or equivalents.
    To lessen the financial burden on handlers, the Committee voted to 
reduce 1998-99 expenditures and the assessment rate. The reduced rate 
allows the Committee to meet its expenses, to reimburse the borrowed 
funds, and to establish an adequate reserve (estimated to be $29,200 at 
the end of the 1998-99 fiscal period). Currently, there are no funds in 
the reserve. Section 920.42 of the order provides for a maximum reserve 
equal to approximately 1 fiscal period's expenses.
    Prior to arriving at this budget, the Committee considered 
information from various sources, such as the Committee's Finance and 
Assessment Subcommittee. Alternative expense levels and assessment 
rates were considered at several industry strategic planning meetings. 
The assessment rate of $0.05 per 22-pound volume fill container or 
equivalent of assessable kiwifruit was determined by dividing the total 
recommended budget for 1998-99 by the quantity of assessable kiwifruit, 
estimated at 2,705,000 22-pound volume fill containers or equivalents.
    A review of historical information and preliminary information 
pertaining to the upcoming fiscal period indicated that the grower 
price for the 1998-99 season would be approximately $7.59 per 22-pound 
volume fill container or equivalent of kiwifruit. Therefore, the 
estimated assessment revenue for the 1998-99 fiscal period as a 
percentage of total grower revenue is estimated at 0.7 percent.
    This action continues a decrease in the assessment obligation 
imposed on handlers. Assessments are applied uniformly on all handlers, 
and some of the costs may be passed on to producers. However, 
decreasing the assessment rate reduces the burden on handlers, and may 
reduce the burden on producers. 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 July 8, 1998, meeting was a public meeting and 
all entities, both large and small, were able to express views on this 
issue. Finally, interested persons were invited to submit information 
on the regulatory and informational impacts of this action on small 
businesses.
    This action imposes no 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.
    An interim final rule concerning this action was published in the 
Federal Register on August 20, 1998 (63 FR 44541). Copies of that rule 
were also mailed or sent via facsimile to all kiwifruit handlers. 
Finally, the interim final rule was made available through the Internet 
by the Office of the Federal Register. A 60-day comment period was 
provided for interested persons to respond to the interim final rule. 
The comment period ended on October 19, 1998, and 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.

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

PART 920--KIWIFRUIT GROWN IN CALIFORNIA

    Accordingly, the interim final rule amending 7 CFR part 920 which 
was published at 63 FR 44541 on August 20, 1998, is adopted as a final 
rule without change.

    Dated: November 4, 1998.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-30121 Filed 11-9-98; 8:45 am]
BILLING CODE 3410-02-P