[Federal Register Volume 73, Number 240 (Friday, December 12, 2008)]
[Rules and Regulations]
[Pages 75537-75540]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-29573]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 920

[Docket No. AMS-FV-08-0095; FV09-920-1 IFR]


Kiwifruit Grown in California; Decreased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule decreases the assessment rate established for the 
Kiwifruit Administrative Committee

[[Page 75538]]

(Committee) for the 2008-09 and subsequent fiscal periods from $0.045 
to $0.035 per 9-kilo volume-fill container or equivalent of kiwifruit. 
The Committee locally administers the marketing order which regulates 
the handling of kiwifruit grown in California. Assessments upon 
kiwifruit handlers are used by the Committee to fund reasonable and 
necessary expenses of the program. The fiscal period begins on August 1 
and ends July 31. The assessment rate will remain in effect 
indefinitely unless modified, suspended, or terminated.

DATES: Effective December 15, 2008; comments received by February 10, 
2009 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 to the Docket Clerk, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC 
20250-0237; Fax: (202) 720-8938, or Internet: http://www.regulations.gov. 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, or can be viewed at: http://www.regulations.gov. All comments submitted in response to this rule 
will be included in the record and will be made available to the 
public. Please be advised that the identity of the individuals or 
entities submitting the comments will be made public on the Internet at 
the address provided above.

FOR FURTHER INFORMATION CONTACT: Debbie Wray, Marketing Specialist, or 
Kurt J. Kimmel, Regional Manager, California Marketing Field Office, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, telephone: (559) 487-5901, Fax: (559) 487-5906, or E-mail: 
[email protected], or [email protected].
    Small businesses may request information on complying with this 
regulation by contacting Jay Guerber, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence 
Avenue, SW., STOP 0237, Washington, DC 20250-0237; telephone: (202) 
720-2491, Fax: (202) 720-8938, or E-mail: [email protected].

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 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 (USDA) 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 on August 1, 2008, and continue 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 USDA 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, USDA 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 USDA'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 decreases the assessment rate established for the 
Committee for the 2008-09 and subsequent fiscal periods from $0.045 to 
$0.035 per 9-kilo volume-fill container or equivalent of kiwifruit.
    The California kiwifruit marketing order provides authority for the 
Committee, with the approval of USDA, 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 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 2005-06 and subsequent fiscal periods, the Committee 
recommended, and USDA approved, an assessment rate that would continue 
in effect from fiscal period to fiscal period unless modified, 
suspended, or terminated by USDA upon recommendation and information 
submitted by the Committee or other information available to USDA.
    The Committee met on October 14, 2008, and unanimously recommended 
2008-09 expenditures of $76,492 and an assessment rate of $0.035 per 9-
kilo volume-fill container or equivalent of kiwifruit. In comparison, 
last year's budgeted expenditures were $99,302. The assessment rate of 
$0.035 per 9-kilo volume-fill container or equivalent is $0.010 per 9-
kilo volume-fill container or equivalent less than the rate currently 
in effect. The decreased assessment rate is primarily due to a decrease 
in management expenditures for the 2008-09 fiscal year.
    The following table compares major budget expenditures recommended 
by the Committee for the 2007-08 and 2008-09 fiscal periods:

------------------------------------------------------------------------
           Budget expense categories              2007-08      2008-09
------------------------------------------------------------------------
Staff Salaries/Management.....................      $65,150      $56,700
Financial Management Services.................       12,000        1,000
Audit Expense.................................        5,000        3,500
Vehicle Maintenance/Insurance.................        3,180  ...........
Travel........................................        3,300        3,500
Office Expenses...............................        2,830        4,500
------------------------------------------------------------------------


[[Page 75539]]

    The assessment rate recommended by the Committee was derived by 
using the following formula: Anticipated 2008-09 expenses ($76,492), 
minus the difference between the 2008 beginning reserve ($62,647) and 
the desired 2009 ending reserve ($54,311), divided by the total 
estimated 2008-09 shipments (1,944,444 9-kilo volume-fill containers). 
This formula results in the assessment rate of $0.035 per 9-kilo 
volume-fill container or equivalent. As mentioned earlier, kiwifruit 
shipments for the year are estimated at 1,944,444 9-kilo volume-fill 
containers which should provide $68,056 in assessment income. An 
additional $100 in penalty and interest income is also anticipated, 
bringing the total projected 2008-09 revenue to $68,156. Income 
generated through this rate, plus interest income and reserve funds, 
will provide sufficient funds to meet the anticipated expenses of 
$76,492 and should result in a July 2009 ending reserve of $54,311 
which is within the maximum reserve of approximately one fiscal year's 
expenses permitted by the order (Sec.  920.42).
    The assessment rate established in this rule will continue in 
effect indefinitely unless modified, suspended, or terminated by USDA 
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 USDA. 
Committee meetings are open to the public and interested persons may 
express their views at these meetings. USDA 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 2008-09 budget and those 
for subsequent fiscal periods will be reviewed and, as appropriate, 
approved by USDA.

Initial Regulatory Flexibility Analysis

    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.
    There are approximately 31 handlers of California kiwifruit subject 
to regulation under the marketing order and approximately 220 growers 
in the production area. Small agricultural service firms are defined by 
the Small Business Administration (SBA) (13 CFR 121.201) as those 
having annual receipts of less than $7,000,000, and small agricultural 
producers are defined as those having annual receipts of less than 
$750,000. None of the 31 handlers subject to regulation have annual 
kiwifruit sales of $7,000,000. Dividing average crop value for 2007-08 
reported by the National Agricultural Statistics Service (NASS) of 
$22,517,000 by the number of producers (220) yields an average annual 
producer revenue estimate of about $102,350, which is well below the 
SBA threshold of $750,000. Based on the foregoing, it may be concluded 
that all kiwifruit handlers and the majority of producers may be 
classified as small entities.
    This rule decreases the assessment rate established for the 
Committee and collected from handlers for the 2008-09 and subsequent 
fiscal periods from $0.045 to $0.035 per 9-kilo volume-fill container 
or equivalent of kiwifruit. The Committee unanimously recommended 2008-
09 expenditures of $76,492 and an assessment rate of $0.035 per 9-kilo 
volume-fill container or equivalent of kiwifruit. The assessment rate 
of $0.035 is $0.010 lower than the 2007-08 rate. The quantity of 
assessable kiwifruit for the 2008-09 fiscal period is estimated at 
1,944,444 9-kilo volume-fill containers or equivalent of kiwifruit. 
Thus, the rate should provide $68,056 in assessment income. Income 
derived from handler assessments, along with penalty and interest 
income and funds from the Committee's authorized reserve, will be 
adequate to cover budgeted expenses.
    The following table compares major budget expenditures recommended 
by the Committee for the 2007-08 and 2008-09 fiscal years:

------------------------------------------------------------------------
           Budget expense categories              2007-08      2008-09
------------------------------------------------------------------------
Staff Salaries/Management.....................      $65,150      $56,700
Financial Management Services.................       12,000        1,000
Audit Expense.................................        5,000        3,500
Vehicle Maintenance/Insurance.................        3,180  ...........
Travel........................................        3,300        3,500
Office Expenses...............................        2,830        4,500
------------------------------------------------------------------------

    The Committee reviewed and unanimously recommended 2008-09 
expenditures of $76,492 which included a reduction in management 
expenses. Prior to arriving at this budget, the Committee considered 
alternative expenditure levels, but ultimately decided that the 
recommended levels were reasonable to properly administer the order. 
The assessment rate recommended by the Committee was derived by using 
the following formula: Anticipated 2008-09 expenses ($76,492), minus 
the difference between the 2008 beginning reserve ($62,647) and the 
desired 2009 ending reserve ($54,311), divided by the total estimated 
2008-09 shipments (1,944,444 9-kilo volume-fill containers). This 
formula results in the assessment rate of $0.035 per 9-kilo volume-fill 
container or equivalent. As mentioned earlier, kiwifruit shipments for 
the year are estimated at 1,944,444 9-kilo volume-fill containers which 
should provide $68,056 in assessment income. An additional $100 in 
penalty and interest income is also anticipated, bringing the total 
projected 2008-09 revenue to $68,156. Income generated through this 
rate, plus interest income and reserve funds, will provide sufficient 
funds to meet the anticipated expenses of $76,492 and should result in 
a July 2009 ending reserve of $54,311 which is within the maximum 
reserve of approximately one fiscal year's expenses permitted by the 
order (Sec.  920.42).
    According to NASS, the season average grower price for years 2006 
and 2007 were $911 and $950 per ton,

[[Page 75540]]

respectively. These prices provide a range within which the 2008-09 
season average grower price could fall. Dividing these average grower 
prices by 2,000 pounds per ton provides a price per pound range of 
$0.46 to $0.48. Multiplying these per-pound prices by 19.8 pounds (the 
weight of a 9-kilo volume-fill container) yields a 2008-09 price range 
estimate of $9.11 to $9.50 per 9-kilo volume-fill container of 
assessable kiwifruit.
    To calculate the percentage of grower revenue represented by the 
assessment rate, the assessment rate of $0.035 per 9-kilo volume-fill 
container is divided by the low and high estimates of the price range. 
The estimated assessment revenue for the 2008-09 fiscal year as a 
percentage of total grower revenue would thus likely range between 
0.368 and 0.384 percent.
    This action decreases 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 October 14, 2008, 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 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.
    AMS is committed to complying with the E-Government Act, to promote 
the use of the Internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this rule.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/AMSv1.0/ams.fetchTemplateData.do?template=TemplateN&page=MarketingOrdersSmallBusinessGuide. Any questions about the compliance guide should be sent to 
Jay Guerber at the previously mentioned address in the FOR FURTHER 
INFORMATION CONTACT section.
    After consideration of all relevant material presented, including 
the Committee's recommendation and other available information, it is 
found that this interim final 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) This rule should be in place as soon as possible because 
the 2008-09 fiscal year began on August 1, 2008, handlers began 
shipping kiwifruit in mid-September, and the order requires that the 
rate of assessment for each fiscal period apply to all assessable 
kiwifruit handled during the period; (2) the Committee unanimously 
recommended this change at a public meeting and all interested parties 
had an opportunity to provide input; (3) this rule relaxes requirements 
currently in effect and kiwifruit producers and handlers are aware of 
this rule and need no additional time to comply with the relaxed 
requirements; and (4) this rule provides a 60-day comment period and 
any comments received will be considered prior to finalization of this 
rule.

List of Subjects in 7 CFR Part 920

    Kiwifruit, Marketing agreements, Reporting and recordkeeping 
requirements.

0
For the reasons set forth in the preamble, 7 CFR part 920 is amended as 
follows:

PART 920--KIWIFRUIT GROWN IN CALIFORNIA

0
1. The authority citation for 7 CFR part 920 continues to read as 
follows:

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

0
2. Section 920.213 is revised to read as follows:


Sec.  920.213  Assessment rate.

    On and after August 1, 2008, an assessment rate of $0.035 per 9-
kilo volume-fill container or equivalent of kiwifruit is established 
for kiwifruit grown in California.

    Dated: December 8, 2008.
James E. Link,
Administrator, Agricultural Marketing Service.
[FR Doc. E8-29573 Filed 12-10-08; 4:15 pm]
BILLING CODE 3410-02-P