[Federal Register Volume 81, Number 22 (Wednesday, February 3, 2016)]
[Rules and Regulations]
[Pages 5573-5575]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-02067]



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 Rules and Regulations
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  Federal Register / Vol. 81, No. 22 / Wednesday, February 3, 2016 / 
Rules and Regulations  

[[Page 5573]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 920

[Doc. No. AMS-FV-15-0056; FV15-920-1 FR]


Kiwifruit Grown in California; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule implements a recommendation from the Kiwifruit 
Administrative Committee (Committee) for an increase of the assessment 
rate established for the 2015-16 and subsequent fiscal periods from 
$0.025 to $0.040 per 9-kilo volume-fill container or equivalent of 
kiwifruit handled under the marketing order (order). The Committee 
locally administers the order, and is comprised of growers of kiwifruit 
operating within the area of production. 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 February 4, 2016.

FOR FURTHER INFORMATION CONTACT: Kathie Notoro, Marketing Specialist, 
or Martin Engeler, Regional Director, California Marketing Field 
Office, Marketing Order and Agreement Division, Specialty Crops 
Program, AMS, USDA; Telephone: (559) 487-5901, Fax: (559) 487-5906, or 
Email: [email protected], or [email protected]. 
Small businesses may request information on complying with this 
regulation by contacting Jeffrey Smutny, Marketing Order and Agreement 
Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue 
SW., STOP 0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, 
Fax: (202) 720-8938, or Email: [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 Orders 12866, 13563, and 13175.
    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 would be applicable to all assessable 
kiwifruit beginning on August 1, 2015, and continue until amended, 
suspended, or terminated.
    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 increases the assessment rate for the 2015-16 and 
subsequent fiscal periods from $0.025 to $0.040 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 with the 
costs of 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 2013-14 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 July 17 and September 16, 2015, and 
unanimously recommended 2015-16 fiscal year expenditures of $132,725 
and an assessment rate of $0.040 per 9-kilo volume-fill container or 
equivalent of kiwifruit handled to fund Committee expenses. In 
comparison, last year's budgeted expenditures were $120,925. The 
assessment rate of $0.040 is $0.015 more than the rate currently in 
effect. The Committee's recommended 2015-16 expenditures are $11,800 
higher than last year's budgeted expenditures. The primary reason for 
the increase is to provide funding for research. When applied to the 
Committee's crop estimate for the 2015-16 fiscal year of 2,297,000 9-
kilo volume-fill containers or equivalent, the current assessment rate 
of $0.025 would not generate sufficient assessment income to 
anticipated expenses. The assessment rate of $0.040 per 9-kilo volume-
fill container or its equivalent should generate assessment income of 
$91,880. Anticipated assessment income combined with financial reserve 
and interest income, should provide sufficient funds for the Committee 
to meet its budgeted expenses while maintaining its financial reserve 
within the limit authorized under the order. (Sec.  920.42)
    The major expenditures recommended by the Committee for the 2015-16 
fiscal period include $80,000 for management expenses; $14,000 for

[[Page 5574]]

two financial audits, $14,330 for research; $7,500 for International 
Kiwifruit Organization (IKO) travel; $2,500 for a membership fee to Buy 
California; and $2,500 for a membership fee to the IKO. Major budgeted 
expenses for the 2014-15 fiscal period were $80,000 for management 
expenses; $7,500 for a financial audit, $5,000 for handler audits; 
$2,500 for a membership fee to Buy California; $2,500 for IKO 
membership; and $12,500 for IKO travel.
    The assessment rate recommended by the Committee was derived by 
considering the amount of revenue needed to meet anticipated expenses 
divided by expected shipments of California kiwifruit. As previously 
mentioned, kiwifruit shipments for the 2015-16 fiscal period are 
estimated at 2,297,000 9-kilo volume-fill containers, which should 
provide $91,880 in assessment income. Anticipated assessment income 
derived from handler assessments, along with interest income and 
$40,756 from the Committee's authorized financial reserve, should 
provide sufficient funds for the Committee to meet its budgeted 
expenses. It is anticipated that $29,119 would remain in the financial 
reserve at the end of July 2016, which would be within the maximum 
amount permitted by the order of approximately one fiscal year's 
expenses (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 will be in effect 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 would evaluate Committee 
recommendations and other available information to determine whether 
modification of the assessment rate is needed. Further rulemaking would 
be undertaken as necessary. The Committee's 2015-16 budget and those 
for subsequent fiscal periods would be reviewed and, as appropriate, 
approved by USDA.

Final Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), 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 
businesses 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 178 kiwifruit growers in the production 
area and approximately 28 handlers subject to regulation under the 
marketing order. Small agricultural producers are defined by the Small 
Business Administration as those having annual receipts of less than 
$750,000, and small agricultural service firms are defined as those 
whose annual receipts are less than $7,000,000 (13 CFR 121.201).
    The National Agricultural Statistical Service (NASS) reported total 
California kiwifruit production for the 2014 season at 27,400 tons, 
with an average price of $1,190 per ton. Based on the average price and 
shipment information provided by NASS and the Committee, it could be 
concluded that the majority of kiwifruit handlers would be considered 
small businesses under the SBA definition. Based on kiwifruit 
production and price information, as well as the total number of 
California kiwifruit growers, average annual grower revenue is less 
than $750,000. Thus, the majority of California kiwifruit growers may 
also be classified as small entities.
    This rule increases the assessment rate collected from handlers for 
the 2015-16 and subsequent fiscal periods from $0.025 to $0.040 per 9-
kilo volume-fill container or equivalent of kiwifruit. The Committee 
unanimously recommended 2015-16 expenditures of $132,725 and an 
assessment rate of $0.040 per 9-kilo volume-fill container. The 
assessment rate of $0.040 is $0.015 higher than the 2014-15 rate. The 
quantity of assessable kiwifruit for the 2015-16 fiscal period is 
estimated at 2,297,000 9-kilo volume-fill containers. Thus, the $0.040 
rate should provide $91,880 in assessment income. Anticipated 
assessment income derived from handler assessments, along with 
financial reserve funds and interest income, should provide sufficient 
revenue for the Committee to meet its budgeted expenses, while 
maintaining its financial reserve within the maximum amount permitted 
by the order of approximately one fiscal year's expenses (Sec.  
920.42).
    The major expenditures recommended by the Committee for the 2015-16 
fiscal period include: $80,000 for management expenses; $14,000 for two 
financial audits; $14,330 for research; $7,500 for IKO travel; $2,500 
for a membership fee to Buy California; and $2,500 for IKO membership. 
Major budgeted expenses for the 2014-15 fiscal period were: $80,000 for 
management expenses; $7,500 for a financial audit; $5,000 for handler 
audits; $2,500 for a membership fee to Buy California; $2,500 for IKO 
membership; and $12,500 for IKO travel.
    Prior to arriving at this budget and assessment rate, the Committee 
considered alternative expenditure levels, to include maintaining the 
current assessment rate, but ultimately determined that the current 
assessment rate would generate insufficient revenue to meet its 
expenses.
    According to data from NASS, the seasonal average producer price 
was $11.09 per 9-kilo volume-fill container in 2013 and $11.78 per 9-
kilo volume-fill container in 2014. A review of historical information 
and preliminary information pertaining to the upcoming fiscal period 
indicates that the grower price for 2015-16 could range between $11.09 
and $11.78 per 9-kilo volume-fill container of assessable kiwifruit. 
Therefore, estimated assessment revenue for the 2015-16 fiscal year as 
a percentage of total producer revenue could be between 0.34 percent 
and 0.36 percent.
    This action increases the assessment obligation imposed on 
handlers. While assessments impose some additional costs on handlers, 
the costs are minimal and uniform on all handlers. However, these costs 
would be offset by the benefits derived by the operation of the 
marketing order. In addition, the Committee's meetings were widely 
publicized throughout the California kiwifruit industry and all 
interested persons were invited to attend the meetings and participate 
in Committee deliberations on all issues. The July 17 and September 16, 
2015, meetings were public meetings. All entities, both large and 
small, were able to express views on this issue.
    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the order's information collection requirements have been 
previously approved by the Office of Management and Budget (OMB) and 
assigned OMB No. 0581-0189. No changes in those requirements are

[[Page 5575]]

necessary as a result of this action. Should any changes become 
necessary, they would be submitted to OMB for approval.
    This rule 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. As noted in the 
initial regulatory flexibility analysis, USDA has not identified any 
relevant Federal rules that duplicate, overlap, or conflict with this 
final rule.
    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.
    A proposed rule concerning this action was published in the Federal 
Register on November 5, 2015 (80 FR 68473). Copies of the proposed rule 
were also mailed or sent via facsimile to all California kiwifruit 
handlers. Finally, the proposal was made available through the internet 
by USDA and the Office of the Federal Register. A 15-day comment period 
ending November 20, 2015, was provided for interested persons to 
respond to the proposal. One comment in support of the rule was 
received, with the commenter requesting more information on the type of 
research the committee was conducting. The research the Committee 
recommended involves two field trials during the first year of a 
research proposal to study the beneficial effects of Nimitz nematicide 
on the Root-knot nematode. This type of production research is 
authorized under Sec.  920.47 of the marketing order and will benefit 
growers. Accordingly, no changes will be made to the rule as proposed, 
based on the comment received.
    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/rules-regulations/moa/small-businesses. Any questions 
about the compliance guide should be sent to Jeffrey Smutny at the 
previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    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.
    Pursuant to 5 U.S.C. 553, it also found and determined that good 
cause exists for not postponing the effective date of this rule until 
30 days after publication in the Federal Register because: (1) The 
2015-16 fiscal year began on August 1, 2015. Handlers began shipping 
kiwifruit in September and the marketing order requires that the rate 
of assessment apply to all assessable kiwifruit handled during the 
fiscal period; (2) the Committee needs to have sufficient funds to pay 
its expenses, which are incurred on a continuous basis; and (3) 
handlers are aware of this action which was unanimously recommended by 
the Committee at a public meeting and is similar to other assessment 
rate actions issued in past years. Also, a 15-day comment period was 
provided for in the proposed rule, and one supportive comment was 
received.

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 
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, 2015, an assessment rate of $0.040 per 9-
kilo volume-fill container or equivalent of kiwifruit is established 
for kiwifruit grown in California.

    Dated: January 29, 2016.
Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2016-02067 Filed 2-2-16; 8:45 am]
BILLING CODE 3410-02-P