[Federal Register Volume 74, Number 217 (Thursday, November 12, 2009)]
[Proposed Rules]
[Pages 58216-58223]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-27135]


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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. 74, No. 217 / Thursday, November 12, 2009 / 
Proposed Rules  

[[Page 58216]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 920

[Doc. No. AO-FV-08-0174; AMS-FV-08-0085; FV08-920-3]


Kiwifruit Grown in California; Recommended Decision and 
Opportunity To File Written Exceptions to Proposed Amendments to 
Marketing Order No. 920

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule and opportunity to file exceptions.

-----------------------------------------------------------------------

SUMMARY: This is a recommended decision regarding proposed amendments 
to Marketing Order No. 920 (order), which regulates the handling of 
kiwifruit grown in California. Four amendments were proposed by the 
Kiwifruit Administrative Committee (committee), which is responsible 
for local administration of the order. These proposed amendments would 
redefine the districts into which the production area is divided and 
reallocate committee membership positions among the districts, revise 
the committee nomination and selection procedures, authorize the 
committee to conduct research and promotion programs, and revise 
committee meeting and voting procedures. The proposals are intended to 
improve the operation and administration of the order. This recommended 
decision invites written exceptions on the proposed amendments.

DATES: Written exceptions must be filed by December 14, 2009.

ADDRESSES: Written exceptions should be filed with the Hearing Clerk, 
U.S. Department of Agriculture, Room 1031-S, Washington, DC 20250-9200, 
Fax: (202) 720-9776 or via the Internet at http://www.regulations.gov. 
All comments should reference the docket number and the date and page 
number of this issue of the Federal Register. All comments submitted in 
response to this rule will be included in the record and will be made 
available for public inspection in the Office of the Hearing Clerk 
during regular business hours, or can be viewed at: http://www.regulations.gov. 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.
    To the extent practicable, all documents filed with the hearing 
clerk should also be submitted electronically to Laurel May at the 
email address noted for her in the FOR FURTHER INFORMATION CONTACT 
section.

FOR FURTHER INFORMATION CONTACT: Laurel May or Kathleen Finn, 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] or [email protected]. Small businesses 
may request information on this proceeding 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, E-mail: 
[email protected].

SUPPLEMENTARY INFORMATION: Prior documents in this proceeding: Notice 
of Hearing issued on January 24, 2008, and published in the November 
19, 2008, issue of the Federal Register (73 FR 69588).
    This action is governed by the provisions of sections 556 and 557 
of title 5 of the United States Code and is therefore excluded from the 
requirements of Executive Order 12866.

Preliminary Statement

    Notice is hereby given of the filing with the Hearing Clerk of this 
recommended decision with respect to the proposed amendments to 
Marketing Order 920 regulating the handling of kiwifruit grown in 
California, and the opportunity to file written exceptions thereto. 
Copies of this decision can be obtained from Laurel May, whose address 
is listed above.
    This recommended decision is issued pursuant to the provisions of 
the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 
601-674), hereinafter referred to as the ``Act,'' and the applicable 
rules of practice and procedure governing the formulation of marketing 
agreements and orders (7 CFR part 900).
    The proposed amendments are based on the record of a public hearing 
held December 9, 2008, in Modesto, California. Notice of this hearing 
was published in the Federal Register on November 19, 2008 (73 FR 
69588). The notice of hearing contained four proposals submitted by the 
committee.
    The proposed amendments were recommended by the committee following 
deliberations at public meetings on January 30, 2008; April 22, 2008; 
and July 9, 2008. The proposed amendments were submitted to the 
Agricultural Marketing Service (AMS) on August 15, 2008. After 
reviewing the recommendation and other information submitted by the 
committee, AMS determined to proceed with the formal rulemaking process 
and schedule the matter for hearing.
    The committee's proposed amendments to the order would: (1) 
Redefine the districts into which the production area is divided and 
reallocate committee membership positions among the districts; (2) 
revise committee nomination and selection procedures; (3) add authority 
for research and promotion programs; and (4) revise the committee's 
meeting and voting procedures.
    In addition to the proposed amendments, AMS proposed to make any 
such changes to the order as may be necessary to conform to any 
amendment to the order that may result from the hearing.
    Seven industry witnesses testified at the hearing. The witnesses 
represented kiwifruit producers and handlers in the production area, as 
well as the committee, and they all supported the recommended changes. 
The witnesses emphasized the need to modernize and update committee 
representation and procedures as well as equip the industry with 
additional tools to address the research and promotion needs of 
California kiwifruit.
    At the conclusion of the hearing, the Administrative Law Judge 
established a deadline of February 6, 2009, for

[[Page 58217]]

interested persons to file proposed findings and conclusions or written 
arguments and briefs based on the evidence received at the hearing. No 
briefs were filed.

Material Issues

    The material issues presented on the record of hearing are as 
follows:
    (1) Whether to amend the order by redefining the production area's 
district boundaries and by reallocating committee membership positions 
among the districts;
    (2) Whether to amend the order by requiring that nomination 
meetings be held by June 1 in each year when nominations are to be made 
and by specifying that mid-term committee vacancies may be filled by 
the Secretary based upon recommendations from the committee;
    (3) Whether to amend the order by adding authority for the 
committee to establish and conduct research and promotion programs, by 
adding authority to accept voluntary contributions for use in such 
programs, and by requiring a supermajority approval for all committee 
actions pertaining to research and promotion; and
    (4) Whether to amend the order by authorizing substitute alternates 
to represent absent members and alternates at meetings, by authorizing 
the committee to conduct meetings through telephone or other means of 
communication, and by specifying the voting procedures for various 
meeting formats.

Findings and Conclusions

    The following findings and conclusions on the material issues are 
based on evidence presented at the hearing and the record thereof.

Material Issue Number 1--Districts and Representation

    Section 920.12, District, should be amended to redefine the 
districts into which the production area is divided. Section 920.20, 
Establishment and Membership, should also be amended to provide for 
flexible allocation of the eleven grower member and alternate seats 
among the districts and to remove the limitation of no more than two 
members and two alternates per district. Finally, Sec.  920.21, Term of 
Office, should be amended to specify that the two-year terms of office 
of all members and alternates would begin and end simultaneously and to 
provide for the nomination of a new committee following the amendment 
process.
    Currently, the production area, which comprises the state of 
California, is divided into eight districts. Eight of the eleven grower 
member committee seats are allocated to the eight districts, with one 
additional seat assigned to each of the three districts with the 
highest volume production. No more than two members and alternates may 
represent any district. Witnesses testified that this structure was 
appropriate at the time the order was promulgated because kiwifruit 
acreage and growers were widely distributed throughout California.
    Evidence provided at the hearing shows that most kiwifruit acreage 
and growers are now concentrated in two areas of the State. According 
to witnesses, under current order provisions, representation on the 
committee is no longer equitably distributed and does not reflect the 
concentration of growers and production in these two areas. Witnesses 
stated that the areas with greater production are under-represented on 
the committee. Witnesses further testified that it has become 
increasingly difficult in the past few years to fill committee 
positions to represent districts with fewer growers and lower 
production.
    Hearing testimony supported amending the order by redefining the 
district boundaries and adding greater flexibility for the committee to 
recommend district boundaries and committee membership allocations. 
Witnesses testified that these changes would provide more equitable 
representation for all growers and production within the production 
area.
    Specifically, witnesses supported amending the order by dividing 
the production area into three districts as follows: District 1 would 
include Butte, Sutter, and Yuba Counties; District 2 would include 
Tulare County; and District 3 would include all other California 
counties not included in Districts 1 and 2. The record shows that this 
district alignment would better serve the interests of the industry as 
it is currently distributed within the production area.
    Witnesses also supported amending the order's membership allocation 
provisions. Allocation of the eleven grower member positions on the 
committee would be based upon five-year production averages for each 
district, or upon some other basis approved by the Secretary, to 
provide equitable representation for each district. Witnesses explained 
that the committee's staff would review production averages prior to 
each nomination period and would recommend a membership allocation that 
would reflect the then current proportion of total kiwifruit production 
from each district. After its approval by the committee, the 
recommendation would be forwarded to USDA for review and approval prior 
to the beginning of the nomination period.
    Currently, terms of office are staggered so that part of the 
committee is nominated and selected each year. Members and alternates 
are limited to three consecutive two-year terms in one position. 
Additionally, as explained above, current order provisions require the 
committee to reallocate three member and alternate seats each year, 
based on production for each of the districts. Witnesses testified that 
conducting the nominations process, reallocating some of the seats, and 
seating new members every year has become burdensome to the industry 
and disruptive to the administration of the order. Witnesses supported 
the proposal to synchronize all the terms of office to begin and end 
biannually. All eleven grower member and alternate seats would be 
assigned to represent the districts for the entire two-year term of 
office. Witnesses testified that if the districts are realigned as 
proposed under Material Issue Number 1, there would be ample candidates 
available from each district to fill committee seats.
    Witnesses also supported adding a provision to the order that would 
provide that the terms of office for all current members would end on 
the last day of the fiscal period in which the amendment becomes 
effective and specify that nominations be conducted for new terms of 
office for all members as soon as practicable following implementation 
of the amendments. Under this proposal, terms of office for members or 
alternates who have served for less than two years at the time the 
current terms of office are terminated would not count toward tenure.
    No testimony opposing the proposed amendments was given at the 
hearing. For the reasons stated above, it is recommended that Sec.  
920.12, District, be amended to define three districts into which the 
kiwifruit production area is divided. Further, it is recommended that 
Sec.  920.20, Establishment and Membership, be amended to specify that 
the eleven grower member seats on the committee shall be allocated on 
the basis of five-year production history, or on some other basis 
recommended by the committee and approved by the Secretary, to provide 
for equitable representation on the committee. Finally, Sec.  920.21, 
Term of Office, should be amended to provide for concurrent terms of 
office for all members that would begin and end every other year.

[[Page 58218]]

Section 920.21 should also provide that all current terms of office 
would end on the last day of the fiscal period in which the amendment 
becomes effective, and a new committee would be nominated as soon as 
practicable after that date. The section would be further amended to 
specify that terms of office for members or alternates who have served 
less than two years at the time the current terms of office are 
terminated would not count toward tenure. Additionally, references to 
three districts with additional seats in Sec. Sec.  920.20 and 920.21 
would be removed. Finally, a clarifying conforming change is made to 
the order language in Sec.  920.20 that cross references Sec.  
920.31(l).

Material Issue Number 2--Nominations and Vacancies

    Section 920.22, Nomination, of the order should be amended to 
specify that nomination meetings should be conducted in the grower 
districts by June 1 of each year in which nominations are made. 
Currently, the order requires that such nomination meetings be held by 
July 15 each year. Witnesses explained that the committee has found it 
necessary to conduct nomination meetings earlier than currently 
prescribed in the order to ensure that the selection process is 
completed prior to the August 1 beginning of the terms of office. 
According to witnesses, the order should be amended to codify what has 
become a regular practice for the committee. Additionally, as described 
under Material Issue Number 1, the committee proposed amending the 
order to provide for concurrent terms of office for all members that 
would begin and end every other year. Witnesses noted that if that 
proposed amendment is implemented, there would be no need to conduct 
nomination meetings every year.
    Section 920.26, Vacancies, should also be amended to authorize the 
Secretary to select a successor to fill mid-term committee vacancies 
that may occur after consideration of recommendations from the 
committee. Currently, the order specifies that vacancies must be filled 
by following the same procedures described for annual committee 
nominations and selections. Witnesses testified that conducting the 
entire nomination and selection process to fill mid-term vacancies is 
burdensome to the industry. Witnesses stated that the committee is 
aware of qualified growers from each district who would be available to 
serve out the unexpired terms of members who have vacated their seats. 
Testimony supported amending the order to provide that mid-term 
vacancies may be filled by selections made by the Secretary after 
consideration of recommendations that may be submitted by the committee 
unless such selection is deemed unnecessary by the Secretary.
    No testimony or evidence opposing this proposal was provided at the 
hearing. For the reasons stated above, it is recommended that Sec.  
920.22, Nomination, be amended to specify that grower district 
nomination meetings should be held by June 1 of each year in which 
nominations are to be made. Further, it is recommended that Sec.  
920.26, Vacancies, be amended to authorize the Secretary to select 
members to fill mid-term vacancies based upon recommendations from the 
committee.

Material Issue Number 3--Research and Promotion

    A new section 920.47, Production research, marketing research and 
development, providing authority to establish and conduct research and 
promotion programs, should be added to the order. An additional 
section, Sec.  920.45, Contributions, authorizing the committee to 
accept voluntary contributions for research and promotion projects, 
should also be added to the order. Finally, paragraph (a) of Sec.  
920.32, Procedure, should be amended to specify that actions of the 
committee with respect to research and promotion activities should 
require at least eight concurring votes.
    Currently, the committee is not authorized to conduct research or 
promotion programs, and it is not authorized to accept voluntary 
contributions for any purpose. Research and promotion programs for the 
California kiwifruit industry are currently conducted under a state 
marketing order, and the state program is authorized to accept 
contributions for its research programs.
    Witnesses at the hearing supported amending the order by adding 
research and promotion authority. Although they did not identify 
specific projects that the committee is considering at this time, those 
testifying about this proposed amendment explained that the committee 
should have authority to conduct research and promotion programs if the 
need arises. Further, witnesses stated that the committee does not 
intend to duplicate the efforts of the state program.
    Hearing witnesses testified in support of the proposed amendment to 
add authority to accept voluntary contributions for use in research and 
promotion projects. The record shows that industry members have made 
voluntary financial contributions in the past to support research 
projects such as the improvement of maturity testing methods and the 
lengthening of kiwifruit shelf life, both of which were considered 
critical to the industry. Witnesses testified that such financial 
support from the industry would be likely to continue if the committee 
is authorized to accept voluntary contributions.
    The record shows that contributions could supplement assessment 
funds earmarked for research and promotion projects. Witnesses stated 
that the declining California kiwifruit production would eventually 
erode the base upon which assessments are collected, and the committee 
would be limited as to the number and type of projects it could 
support. Additionally, Sec.  920.41 of the order specifies a cap on the 
assessment rate that the committee can levy on handlers. With such a 
cap on the assessment rate, witnesses could foresee a time when the 
committee might be unable to collect enough assessment revenue to fund 
extensive research or promotion projects. Voluntary contributions could 
augment the committee's available funds and allow the committee to 
conduct important projects.
    One witness suggested that voluntary contributions could also 
bolster the committee's share of projects requiring matching funds. For 
example, the California kiwifruit industry is interested in raising the 
demand for its product in the export market. Voluntary contributions 
could boost the committee's efforts to raise matching funds for 
participation in USDA's Market Access Program, which helps domestic 
producers develop and expand their international markets.
    The hearing record supports specifying that voluntary contributions 
would be free of any encumbrances by the donor and would be used at the 
committee's discretion. Expenditure of contributed funds would be 
subject to the committee's annual financial audits.
    Under the order, eight members constitute a quorum, and most 
committee actions require the concurrence of the majority of those in 
attendance. Supermajorities of eight concurring votes are currently 
required for actions with respect to expenses, assessments, and 
recommendations for shipping and inspection regulations. The committee 
proposed amending the order by requiring eight concurring votes for 
actions with respect to research and promotion if the order is amended 
to authorize such activities.

[[Page 58219]]

Witnesses supported the addition of this supermajority voting 
requirement to ensure widespread support for any research or promotion 
projects the committee may undertake.
    No testimony or evidence opposing this proposal was offered at the 
hearing. For the reasons stated above, it is recommended that a new 
Sec.  920.47, Production research, marketing research and development, 
be added to the order to authorize the committee to recommend and 
conduct research and promotion programs. It is also recommended that a 
new Sec.  920.45, Contributions, be added to the order to authorize the 
committee to accept financial contributions for use in their research 
and promotion programs and to specify that the committee will retain 
complete control of any such contributions. Finally, it is recommended 
that Sec.  920.32(a) be amended to specify that eight concurring votes 
are required for all committee actions with respect to research and 
promotion.

Material Issue Number 4--Meeting and Voting Procedures

    Section 920.27 should be revised to specify that grower members and 
their respective alternates may be represented by any other alternates 
from the same district at committee meetings if necessary to obtain a 
quorum. Section 920.32(b) should also be amended to authorize the 
committee to meet via telephone, video conference, or other means of 
communication.
    Currently, the order authorizes a member's own alternate to 
represent him or her at meetings during the member's absence. In the 
case of the three districts allocated two members, an alternate may act 
in the stead of the other member of that district and his or her 
alternate, if necessary.
    If membership allocation is amended as described under Material 
Issue Number 1, some districts could be represented by more than two 
members. This proposal would revise the language of Sec.  920.27 to 
authorize the committee to designate any available alternate to 
represent any absent grower member and his or her alternate from the 
same district, if necessary to obtain a quorum.
    Witnesses at the hearing noted that, due to increased demands on 
their time, growers have found it increasingly difficult to attend 
meetings that are held at great distances from their districts. Citing 
recent examples, witnesses described occasions when the committee was 
unable to conduct business in a timely manner because they were unable 
to meet quorum requirements.
    Witnesses supported amending the order to authorize the committee 
to appoint any available alternates to represent absent members and 
alternates from the same district in order to obtain a quorum. 
Witnesses agreed that substitute alternates from the same districts as 
the absent members are likely to have similar views regarding industry 
issues and could represent the views of their districts, as well as the 
entire industry, appropriately.
    Currently, the order authorizes the committee to vote by telephone 
or other means of communication, but if an assembled meeting is held, 
all votes must be cast in person. This proposal would enable the 
committee to hold meetings through other means of communication when 
appropriate.
    As noted above, hearing witnesses testified that time and distance 
constraints make attendance at assembled meetings difficult for 
committee members as well as other interested persons. Consequently, 
meeting attendance has dropped. According to witnesses, meeting 
attendance could improve if the meetings were more accessible to as 
many participants as possible. Witnesses expected that providing more 
meeting options would improve the likelihood that quorum requirements 
could be met, and that committee business could be conducted in a 
timely manner.
    According to evidence provided at the hearing, teleconference 
meetings are currently used by other kiwifruit industry organizations. 
Witnesses testified that teleconferencing has greatly enhanced the 
efficiency and effectiveness of those other groups.
    Witnesses explained that the committee holds approximately three 
meetings per year. Subcommittees meet more frequently, as needed. If 
the authority to conduct research and promotion activities, as 
described under Material Issue Number 3, is added to the order, 
witnesses anticipate that many more meetings could be needed to discuss 
and recommend potential projects. Witnesses stated that the work of the 
committee and subcommittees would be facilitated by adding the 
flexibility to meet by telephone or other means of communication.
    Witness testimony indicates that the committee would provide for 
assembly of interested persons at sites such as county farm bureau 
offices, where all could participate in videoconference meetings. As 
well, the committee would continue to publicize meeting information and 
provide relevant materials and call-in instructions on its Web site or 
by mail to those requesting it. Witnesses stated that all interested 
persons would have access to committee meetings and would be encouraged 
to participate.
    Section 920.32(b) should be further amended to specify that 
videoconferences would be considered assembled meetings, and that votes 
cast at such meetings would be considered as cast in person. However, 
votes cast by members participating in meetings through other methods 
of communication should be by roll call. Currently, the order provides 
that votes by telegraph or other means of communication shall be 
confirmed in writing.
    No opposing testimony regarding this proposal was offered at the 
hearing. For the reasons stated above, it is recommended that Sec.  
920.27 should be amended to authorize the committee to appoint 
substitute alternates to act in the stead of absent members from the 
same district, if necessary to obtain a quorum. Further, Sec.  
920.32(b) should be amended to allow the committee to meet by telephone 
and other means of communication, to specify that videoconference 
meetings shall be considered assembled meetings and that votes cast at 
such meetings shall be considered in-person, and to require votes cast 
at non-assembled meetings to be taken by roll call.

Conforming Changes

    AMS also proposed to make such changes as may be necessary to the 
order to conform to any amendment that may result from the hearing. Any 
such changes have been previously identified.

Small Business Considerations

    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (5 U.S.C. 601-612) (RFA), AMS has considered the 
economic impact of this action 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 so that small businesses will not be 
unduly or disproportionately burdened. Marketing orders and amendments 
thereto are unique in that they are normally brought about through 
group action of essentially small entities for their own benefit.
    Small agricultural service firms, which include handlers regulated 
under the order, have been defined by the Small Business Administration 
(SBA) (13 CFR 121.201) as those having annual receipts of less than 
$7,000,000. Small agricultural growers have been defined

[[Page 58220]]

as those with annual receipts of less than $750,000.
    There are approximately 30 handlers of kiwifruit subject to 
regulation under the order and approximately 220 growers of kiwifruit 
in the regulated area. Information provided at the hearing indicates 
that the majority of the handlers would be considered small 
agricultural service firms. Hearing testimony also suggests that the 
majority of growers would be considered small entities according to the 
SBA's definition.
    The order regulates the handling of kiwifruit grown in the state of 
California. Total bearing kiwifruit acreage has declined from a peak of 
approximately 7,300 acres in 1992-93 to about 4,000 acres in 2007-08. 
Approximately 24,500 tons of kiwifruit were produced in California 
during the 2007-08 season--a decline of approximately 27,800 tons 
compared to the 1992-93 season. According to evidence provided at the 
hearing, approximately 30 percent of the 2007-08 California kiwifruit 
crop was shipped to export markets, including Canada, Mexico, Central 
American, and Asian destinations.
    Under the order, outgoing grade, size, pack, and container 
regulations are established for kiwifruit shipments, and shipping and 
inventory information is collected. Program activities administered by 
the committee are designed to support large and small kiwifruit growers 
and handlers. The 12-member committee is comprised of eleven grower 
representatives from the production area, as well as a public member. 
Committee meetings in which regulatory recommendations and other 
decisions are made are open to the public. All members are able to 
participate in committee deliberations, and each committee member has 
an equal vote. Others in attendance at meetings are also allowed to 
express their views.
    Following several discussions within the kiwifruit industry, the 
committee considered adding authority to conduct research and promotion 
programs to provide maximum flexibility to the order. An amendment 
subcommittee was appointed to develop recommendations for this and 
other possible order revisions. The subcommittee developed a list of 
proposed amendments to the order, which was then presented to the 
committee.
    The committee met to review and discuss the subcommittee's 
proposals at its meetings on January 30, 2008, April 22, 2008, and July 
9, 2008. At those meetings, the committee voted unanimously to support 
the four proposed amendments that were forwarded to AMS and 
subsequently considered at the hearing.
    The proposed amendments are intended to provide the committee and 
the industry with additional flexibility in administering the order and 
producing and marketing California kiwifruit. Record evidence indicates 
that the proposals are intended to benefit all growers and handlers 
under the order, regardless of size.
    All grower and handler witnesses supported the proposed amendments 
at the hearing. Several witnesses commented on the implications of 
implementing research and promotion programs under the order. In that 
context, witnesses stated that they expected the benefits to growers 
and handlers to outweigh any potential costs.
    A description of the proposed amendments and their anticipated 
economic impact on small and large entities is discussed below.

Proposal 1--Districts and Representation

    Proposal 1 would amend the order by redefining the districts into 
which the production area is divided and providing for the allocation 
of committee membership positions between the districts. Such 
allocation would be based upon five-year production averages, or upon 
another basis approved by the Secretary. This proposal would also 
provide for concurrent terms of office for all committee members, who 
would be selected biannually.
    At the time the order was promulgated, kiwifruit acreage was more 
widespread throughout California and there were many more growers 
involved in kiwifruit production. The order originally provided for 
eight grower districts within the production area, with one membership 
seat apportioned to each district, and an additional seat reallocated 
annually to each of the three districts with the highest production in 
the preceding year. The structure was designed to afford equitable 
representation for all districts on the committee.
    The concentration of planted acreage into two main regions and the 
decline in the number of growers over time has prompted the committee 
to evaluate the appropriateness of the current committee structure. The 
committee believes that consolidating the districts and providing for 
reallocation of grower seats as proposed would better reflect the 
current composition of the industry. The revisions would ensure that 
the interests of all large and small entities are represented 
appropriately during committee deliberations. Synchronizing all the 
terms of office to begin and end at the same time would simplify 
administration of the order and reduce disruptions to committee 
business. Adoption of the proposed amendment would have no economic 
impact on growers or handlers of any size.

Proposal 2--Nominations and Vacancies

    Proposal 2 would amend the order by specifying that grower 
nomination meetings be held by June 1 of each nomination year and that 
mid-term vacancies may be filled by selections made by the Secretary 
after consideration of recommendations that may be submitted by the 
committee, unless such selection is deemed unnecessary by the 
Secretary.
    Currently, the order requires that nomination meetings be held by 
July 15 of each year, but that deadline does not allow for timely 
processing of the nominations and selections of new members prior to 
the August 1 beginning of the terms of office. The committee has been 
conducting nomination meetings earlier than prescribed by the order and 
proposed this revision to codify what has become normal practice.
    Any vacancies that occur under the current order provisions must be 
filled by repeating the nomination and selection process outlined for 
new members. Allowing the Secretary to fill vacancies as proposed would 
streamline the process of filling vacancies and reduce disruption to 
committee business.
    Adoption of this proposal would have no economic impact upon 
growers or handlers of any size.

Proposal 3--Research and Promotion

    Proposal 3 would amend the order by adding authority for the 
committee to conduct research and promotion projects and to accept 
voluntary contributions to assist with funding those projects. This 
proposal would also amend the order by requiring the concurring vote of 
eight members for any action with respect to research and promotion. 
Currently, the committee is not authorized to conduct research or 
promotion programs, and it is not authorized to accept voluntary 
contributions for any purpose.
    Historically, kiwifruit research has been conducted by other 
industry organizations and funded through private as well as public 
revenues. Currently, the California Kiwifruit Commission, a state 
marketing program,

[[Page 58221]]

is authorized to conduct research and promotion projects for the 
industry. According to the hearing record, the committee has not 
identified any specific projects that it wants to conduct at this time, 
nor does it intend to duplicate the efforts of the state program. 
However, it would like to add authority to conduct such projects in the 
event that a need for new projects arises.
    Further, the committee proposed adding authority to accept 
voluntary funds to conduct research and promotion projects to augment 
the assessment revenues they might budget for such purposes. The order 
specifies a cap on the rate handlers may be assessed to support the 
committee's programs and activities. According to witnesses, the 
current assessment rate is well below the established cap, but 
supporting research and promotion projects in the future could require 
more money than what the shrinking industry is likely to collect 
through assessments. Voluntary contributions could also augment 
matching funds required from the committee for participation in USDA-
sponsored market development programs.
    Finally, the committee recommended adding a provision that all 
actions with respect to research and promotion would require eight 
concurring committee votes. Witnesses explained that this supermajority 
approval would ensure that research and promotion projects undertaken 
by the committee would benefit the industry as a whole. Adding 
authority to conduct research and promotion projects would not, of 
itself, have any economic impact on growers or handlers of any size. If 
research and promotion projects were implemented under this authority 
in the future, the assessment rate for handlers would likely increase 
to cover the cost of those expenditures. The value of any proposed 
projects, as well as recommendations for increased assessment rates, 
would be evaluated by the committee and approval would require the 
concurring vote of eight members. Any increases in cost would be borne 
proportionately by handlers according to the volume of kiwifruit they 
ship. Those costs could be offset by voluntary contributions. Witnesses 
testified that any increases in cost due to implementation of this 
proposal would be offset by benefits expected to accrue to growers and 
handlers as improved production and post-harvest handling methods and 
new market opportunities are developed. Any increased costs would be 
proportional to a handler's size and would not unduly or 
disproportionately impact small entities.

Proposal 4--Meeting and Voting Procedures

    Proposal 4 would amend the order by allowing the committee to 
designate substitute alternates to represent absent members from the 
same district at meetings if necessary to secure a quorum. Currently, 
under most circumstances, only a member's respective alternate may 
represent the member if the member is unable to attend a meeting. For 
districts with only one member, there is no provision for when both the 
member and his or her alternate are unavailable for a meeting. In the 
past, meetings have been cancelled at the last minute because 
attendance was insufficient to meet quorum requirements.
    If implemented, the proposed amendment would allow alternates not 
otherwise representing absent members to represent other members at 
committee meetings in order to secure a quorum. This would help ensure 
that quorum requirements could be met and that committee business could 
be addressed in a timely manner.
    This proposal would further authorize the committee to meet by 
telephone or other means of communication. Video conference meetings 
would be considered assembled meetings and votes taken at such meetings 
would be considered in-person. Votes by telephone or other types of 
non-assembled meetings would be by roll call.
    Witnesses testified that this amendment would provide the committee 
with greater flexibility in scheduling meetings and would be consistent 
with current practices in other kiwi industry settings. The use of 
telephone and other means of communication would allow greater access 
to committee meetings for members as well as other interested persons. 
Additionally, administration of the order would be improved as urgent 
committee business could be addressed in a timely manner.
    This amendment is expected to benefit growers and handlers of all 
sizes by improving committee efficiencies and encouraging greater 
participation in industry deliberations. The amendment is not expected 
to result in any significant increased costs to producers or handlers.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this proposed rule. These amendments are 
intended to improve the operation and administration of the order and 
to assist in the production and marketing of California kiwifruit.
    Committee meetings regarding these proposals, as well as the 
hearing date and location, were widely publicized throughout the 
kiwifruit industry, and all interested persons were invited to attend 
the meetings and the hearing and to participate in committee 
deliberations on all issues. All committee meetings and the hearing 
were public forums and all entities, both large and small, were able to 
express views on these issues. Finally, interested persons are invited 
to submit information on the regulatory and informational impacts of 
this action on small businesses.
    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.

Paperwork Reduction Act

    Current information collection requirements for Part 920 are 
approved by the Office of Management and Budget (OMB), under OMB Number 
0581-0189--``Generic OMB Fruit Crops.'' No changes in these 
requirements are anticipated as a result of this proceeding. Should any 
such changes become necessary, they would be submitted to OMB for 
approval.
    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.

Civil Justice Reform

    The amendments to Marketing Order No. 905 proposed herein have been 
reviewed under Executive Order 12988, Civil Justice Reform. They are 
not intended to have retroactive effect.
    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. A 
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

[[Page 58222]]

no later than 20 days after the date of the entry of the ruling.

Rulings on Briefs of Interested Persons

    Briefs and proposed findings and conclusions based on the record 
evidence were solicited in this proceeding. No briefs were filed.

General Findings

    The findings hereinafter set forth are supplementary to the 
findings and determinations which were previously made in connection 
with the issuance of the marketing agreement and order; and all said 
previous findings and determinations are hereby ratified and affirmed, 
except insofar as such findings and determinations may be in conflict 
with the findings and determinations set forth herein.
    (1) The marketing order, as amended, and as hereby proposed to be 
further amended, and all of the terms and conditions thereof, would 
tend to effectuate the declared policy of the Act;
    (2) The marketing order, as amended, and as hereby proposed to be 
further amended, regulates the handling of kiwifruit grown in the 
production area (California) in the same manner as, and is applicable 
only to, persons in the respective classes of commercial and industrial 
activity specified in the marketing order upon which a hearing has been 
held;
    (3) The marketing order, as amended, and as hereby proposed to be 
further amended, is limited in its application to the smallest regional 
production area which is practicable, consistent with carrying out the 
declared policy of the Act, and the issuance of several orders 
applicable to subdivisions of the production area would not effectively 
carry out the declared policy of the Act;
    (4) The marketing order, as amended, and as hereby proposed to be 
further amended, prescribes, insofar as practicable, such different 
terms applicable to different parts of the production area are as 
necessary to give due recognition to the differences in the production 
and marketing of kiwifruit grown in the production area; and
    (5) All handling of kiwifruit grown in the production area as 
defined in the marketing order, is in the current of interstate or 
foreign commerce or directly burdens, obstructs, or affects such 
commerce.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposal. Thirty days is deemed appropriate because the 
2009-2010 fiscal period has already begun, and it would be preferable 
to have these changes, if adopted, in place for this fiscal period. All 
written exceptions timely received will be considered, and a grower 
referendum will be conducted, before any of these proposals are 
implemented.

List of Subjects in 7 CFR Part 920

    Kiwifruit, Marketing agreements, Reporting and recordkeeping 
requirements.

    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. Revise Sec.  920.12 to read as follows:


Sec.  920.12  District.

    District means the applicable one of the following described 
subdivisions of the production area or such other subdivision as may be 
prescribed pursuant to Sec.  920.31:
    (a) District 1 shall include Butte, Sutter, and Yuba Counties.
    (b) District 2 shall include Tulare County.
    (c) District 3 shall include all counties within the production 
area not included in Districts 1 and 2.
    3. Revise Sec.  920.20 to read as follows:


Sec.  920.20  Establishment and membership.

    There is hereby established a Kiwifruit Administrative Committee 
consisting of 12 members, each of whom shall have an alternate who 
shall have the same qualifications as the member for whom he or she is 
an alternate. The 12-member committee shall be made up of the 
following: One public member (and alternate), and eleven members (and 
alternates). With the exception of the public member and alternate, all 
members and their respective alternates shall be growers or employees 
of growers. In accordance with Sec.  920.31(l), district representation 
on the committee shall be based upon the previous five-year average 
production in the district and shall be established so as to provide an 
equitable relationship between membership and districts. The committee 
may, with the approval of the Secretary, provide such other allocation 
of membership as may be necessary to assure equitable representation.
    4. Revise Sec.  920.21 to read as follows:


Sec.  920.21  Term of office.

    The term of office of each member and alternate member of the 
committee shall be for two years from the date of their selection and 
until their successors are selected. The terms of office shall begin on 
August 1 and end on the last day of July, or such other dates as the 
committee may recommend and the Secretary approve. Provided, That the 
terms of office of all members and alternates currently serving will 
end on the last day of the fiscal period in which this amended 
provision becomes effective, with nominations for new terms of office 
to be conducted as soon as practicable after the effective date of the 
amendment. Members may serve up to three consecutive 2-year terms not 
to exceed 6 consecutive years as members. Alternate members may serve 
up to three consecutive 2-year terms not to exceed 6 consecutive years 
as alternate members. Provided, That any term of office less than two 
years as a result of the amendment will not count toward tenure.
    5. In Sec.  920.22, revise the first sentence of paragraph (a) to 
read as follows:


Sec.  920.22  Nomination.

    (a) Except as provided in paragraph (b) of this section, the 
committee shall hold, or cause to be held, not later than June 1 of 
each year in which nominations are made, or such other date as may be 
specified by the Secretary, a meeting or meetings of growers in each 
district for the purpose of designating nominees to serve as grower 
members and alternates on the committee. * * *
* * * * *
    6. Revise Sec.  920.26 to read as follows:


Sec.  920.26  Vacancies.

    To fill any vacancy occasioned by the failure of any person 
selected as a member or as an alternate member of the committee to 
qualify, or in the event of the death, removal, resignation, or 
disqualification of any member or alternate member of the committee, a 
successor for the unexpired term of such member or alternate member of 
the committee shall be selected by the Secretary after consideration of 
recommendations which may be submitted by the committee, unless such 
selection is deemed unnecessary by the Secretary. The selection shall 
be made on the basis of representation provided for in Sec.  920.20.
    7. Revise Sec.  920.27 to read as follows:


Sec.  920.27  Alternate members.

    An alternate member of the committee, during the absence of the 
member for whom that individual is an alternate, shall act in the place 
and stead of such member and perform such other duties as assigned. In 
the event both a member and his or her alternate are unable to attend a 
committee meeting, the committee may designate

[[Page 58223]]

any other alternate member from the same district to serve in such 
member's place and stead if necessary to secure a quorum. In the event 
of the death, removal, resignation, or disqualification of a member, 
the alternate of such member shall act for him or her until a successor 
for such member is selected and has qualified.
    8. Revise Sec.  920.32 to read as follows:


Sec.  920.32  Procedure.

    (a) Eight members of the committee, or alternates acting for 
members, shall constitute a quorum, and any action of the committee 
shall require the concurring vote of the majority of those present: 
Provided, That actions of the committee with respect to expenses and 
assessments, research and promotion activities, or recommendations for 
regulations pursuant to Sec. Sec.  920.50 through 920.55 of this part 
shall require at least eight concurring votes.
    (b) Committee meetings may be assembled or held by telephone, video 
conference, or other means of communication. The committee may vote by 
telephone, facsimile, or other means of communication. Votes by members 
or alternates present at assembled meetings shall be cast in person. 
Votes by members or alternates participating by telephone or other 
means of communication shall be by roll call; Provided, That a video 
conference shall be considered an assembled meeting, and votes by those 
participating through video conference shall be considered as cast in 
person.
    9. Add a new Sec.  920.45 to read as follows:


Sec.  920.45  Contributions.

    The committee may accept voluntary contributions, but these shall 
only be used to pay expenses incurred pursuant to Sec.  920.47. 
Furthermore, such contributions shall be free from any encumbrances by 
the donor, and the committee shall retain complete control of their 
use.
    10. Add a new Sec.  920.47 to read as follows:


Sec.  920.47  Production research, marketing research and development.

    The committee, with the approval of the Secretary, may establish or 
provide for the establishment of production and post-harvest research, 
and marketing research and development projects designed to assist, 
improve, or promote the marketing, distribution, and consumption or 
efficient production of kiwifruit. The expense of such projects shall 
be paid from funds collected pursuant to Sec. Sec.  920.41 and 920.45.

    Dated: November 5, 2009.
Rayne Pegg,
Administrator, Agricultural Marketing Service.
[FR Doc. E9-27135 Filed 11-10-09; 8:45 am]
BILLING CODE 3410-02-P