[Federal Register Volume 83, Number 246 (Wednesday, December 26, 2018)]
[Rules and Regulations]
[Pages 66077-66079]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27888]



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 Rules and Regulations
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  Federal Register / Vol. 83, No. 246 / Wednesday, December 26, 2018 / 
Rules and Regulations  

[[Page 66077]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 920

[Doc. No. AMS-SC-18-0060; SC18-920-1 FR]


Kiwifruit Grown California; Decreased 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) to decrease the assessment rate 
established for the 2018-2019 and subsequent fiscal periods. The 
assessment rate will remain in effect indefinitely unless modified, 
suspended, or terminated.

DATES: Effective January 25, 2019.

FOR FURTHER INFORMATION CONTACT: Maria Stobbe, Marketing Specialist, or 
Terry Vawter, Senior Marketing Specialist, 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 Richard Lower, 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 action, pursuant to 5 U.S.C. 553, 
amends regulations issued to carry out a marketing order as defined in 
7 CFR 900.2(j). This rule is issued under Marketing Agreement and Order 
No. 920, as amended (7 CFR part 920), regulating the handling of 
kiwifruit grown in California. Part 920 (referred to as 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 
Committee locally administers the Order and is comprised of producers 
of kiwifruit operating within the area of production, and one member of 
the public.
    The Department of Agriculture (USDA) is issuing this rule in 
conformance with Executive Orders 13563 and 13175. This action falls 
within a category of regulatory actions that the Office of Management 
and Budget (OMB) exempted from Executive Order 12866 review. 
Additionally, because this rule does not meet the definition of a 
significant regulatory action, it does not trigger the requirements 
contained in Executive Order 13771. See OMB's Memorandum titled 
``Interim Guidance Implementing Section 2 of the Executive Order of 
January 30, 2017, titled `Reducing Regulation and Controlling 
Regulatory Costs'[thinsp]'' (February 2, 2017).
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. Under the Order now in effect, kiwifruit handlers in 
California are subject to assessments. Funds to administer the Order 
are derived from such assessments. It is intended that the assessment 
rate will be applicable to all assessable kiwifruit for the 2018-2019 
fiscal period 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 (7 U.S.C. 608c(15)(A)), 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.
    The 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, and one member of the 
public. 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.
    This rule decreases the assessment rate for the 2018-2019 and 
subsequent fiscal periods from $0.040 to $0.025 per 9-kilo volume-fill 
container or equivalent of kiwifruit handled.
    The Committee met on July 19, 2018, and unanimously recommended 
2018-2019 expenditures of $119,000 and an assessment rate of $0.025 per 
9-kilo volume-fill of kiwifruit. In comparison, last year's budgeted 
expenditures were $114,383. The assessment rate of $.025 is $0.015 
lower than the rate currently in effect. The Committee currently has a 
cash reserve of approximately $52,056. The decreased assessment rate 
plus the cash reserve are sufficient to fund the 2018-2019 budgeted 
expenses.
    The major expenditures recommended by the Committee for 2018-2019 
include $80,000 for management services, $29,000 in office 
expenditures, and $10,000 for research. Budgeted expenses for these 
items in 2017-2018 were $80,000 for management services, $24,383 in 
office expenditures, and $10,000 for research.
    The assessment rate recommended by the Committee was derived by 
considering anticipated expenses, expected shipments of kiwifruit in 
the production area, and the level of funds in the authorized reserve. 
Kiwifruit shipments for the 2018-2019 season are estimated at 4,207,071 
9-kilo volume-fill containers, which should provide $105,177 in 
assessment income (4,207,071 9-kilo volume-fill containers times $0.025 
per container equals $105,177). Income derived from handler 
assessments, along with interest income and funds from the Committee's

[[Page 66078]]

authorized reserve, should be adequate to cover budgeted expenses. 
Funds in the reserve (currently $52,056) will be kept within the 
maximum permitted by the Order (approximately one fiscal period's 
expenses).
    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 and 
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 will 
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 
budget 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 140 producers of kiwifruit in the 
production area and approximately 20 handlers subject to regulation 
under the Order. Small agricultural producers are defined by the Small 
Business Administration (SBA) as those having annual receipts less than 
$750,000, and small agricultural service firms are defined as those 
whose annual receipts are less than $7,500,000 (13 CFR 121.201).
    According to Committee, USDA Market News, and National Agricultural 
Statics Service (NASS) data, the average price of kiwifruit for the 
2016-2017 season was approximately $0.92 per pound, and the total crop 
was approximately 9.0 million tray equivalents, or 63 million pounds. 
Based on the average price and handler-specific annual kiwifruit sales 
data provided by the Committee, 19 of the 20 handlers have average 
annual receipts less than $7,500,000. Thus, the majority of kiwifruit 
handlers may be classified as small business entities.
    In addition, based on information from the NASS, the average grower 
price for kiwifruit during the 2016-2017 season was approximately 
$0.525 cents per pound. The Committee analyzed grower-specific 
production data and determined that growers with production over 
204,081 9-kilo volume-fill containers would be classified as large 
entities (204,081 9-kilo volume-fill containers times 7 pounds per 
container times $0.525 per pound equals $749,998). Using the NASS 
average grower price and the Committee's specific grower production 
information, at least 130 of 140 producers have annual receipts of less 
than $750,000. Thus, the majority of the kiwifruit producers may be 
classified as small entities.
    This rule decreases the assessment rate collected from handlers for 
the 2018-2019 and subsequent fiscal periods from $0.040 to $0.025 per 
9-kilo volume-fill container of kiwifruit. The Committee unanimously 
recommended 2018-2019 expenditures of $119,000 and an assessment rate 
of $0.025 per 9-kilo volume-fill container. The assessment rate of 
$0.025 is $0.015 lower than the 2017-2018 rate. The quantity of 
assessable commodity for the 2018-2019 fiscal year is estimated at 
4,207,071 9-kilo volume-fill container. Thus, the $0.025 rate should 
provide $105,177 in assessment income (4,207,071 x $0.025). Income 
derived from handler assessments, along with interest income and funds 
from the Committee's authorized reserve (currently $52,056), should be 
adequate to cover budgeted expenses.
    The major expenditures recommended by the Committee for the 2018-
2019 fiscal year include $80,000 for management services, $29,000 in 
office expenditures, and $10,000 for research. Budgeted expenses for 
these items in 2017-2018 were $80,000 for management services, $24,383 
in office expenditures, and $10,000 for research. The Committee 
estimates that the funds in the reserve (currently $52,056) would be 
reduced by $13,303 to ensure the reserve remains within the maximum 
permitted by the Order (approximately one fiscal period's expenses).
    Prior to arriving at this budget and assessment rate, the Committee 
considered various options, such as maintaining the current assessment 
rate and expenditure levels. Alternative expenditure levels were 
discussed by the Committee, based upon the relative value of various 
activities to the kiwifruit industry. The Committee ultimately 
determined that 2018-2019 expenditures of $119,000 were appropriate, 
and the recommended $0.025 assessment rate, and the use of $13,303 from 
the financial reserve, would be sufficient to meet its expenses.
    A review of historical crop and price information, as well as 
preliminary information pertaining to the upcoming fiscal period, 
indicates that the shipping point price for the 2017-2018 season 
averaged about $17.32 per 9-kilo volume-fill container of California 
kiwifruit handled. If the 2018-2019 price is similar to the 2017-2018 
price, estimated assessment revenue as a percentage of total estimated 
handler revenue would be 0.14 percent for the 2018-2019 season ($0.025 
divided by $17.32 per 9-kilo volume-fill container).
    This rule 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. This rule will not have a significant economic impact on a 
substantial number of small entities.
    The Committee's meeting was widely publicized throughout the 
production area. All interested persons were invited to attend the 
meeting and participate in Committee deliberations on all issues. Like 
all Committee meetings, the July 19, 2018, meeting was a public 
meeting, and 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 OMB and assigned OMB No. 0581-0189, Fruit Crops. 
No changes in those requirements are necessary as a result of this 
rule. 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

[[Page 66079]]

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 October 1, 2018 (83 FR 49312). Copies of the proposed rule 
were provided to all kiwifruit handlers. The proposal was also made 
available through the internet by USDA and the Office of Federal 
Register. A 30-day comment period ending October 31, 2018, was provided 
for interested persons to respond to the proposal.
    One comment was received regarding the proposed rate change. The 
commenter questioned the Committee's authority to recommend a reduction 
in the rate and the potential impact of the rate change on the quality 
of kiwifruit.
    As stated in the Act (7 U.S.C. 610(b)(2)(ii)), assessments 
collected by the Committee are used to cover the costs of administering 
the program. When the collection of assessments surpasses budget needs 
and reserve funds are at their maximum, the Committee and USDA are 
obligated by the Order (Sec.  920.41 Assessments and Sec.  920.42 
Accounting) to adjust the amount of assessment funds collected. This 
adjustment can be made either by refunding assessments or by reducing 
the assessment rate. Reducing the assessment rate is less costly and 
more efficient for both the Committee and handlers. Therefore, to 
prevent the collection of surplus revenue if the assessment rate were 
not changed, the authority to reduce the assessment rate is both 
implied in, and necessary under the Order.
    Regarding the commenters question about the quality of kiwifruit, 
the amount of assessments collected are tied to volume of kiwifruit 
handled, not the quality of the kiwifruit. Therefore, the assessment 
rate and kiwifruit quality are not directly correlated.
    The remainder of the comment was related to general information 
about the kiwifruit marketing order and was outside the scope of this 
action. 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 Richard Lower 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 will tend to 
effectuate the declared policy of the Act.

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 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.  925.213   Assessment rate.

    On and after August 1, 2018, an assessment rate of $0.025 per 9-
kilo volume-fill container or equivalent of kiwifruit is established 
for kiwifruit grown in California.

    Dated: December 19, 2018.
Bruce Summers,
Administrator, Agricultural Marketing Service.
[FR Doc. 2018-27888 Filed 12-21-18; 8:45 am]
 BILLING CODE 3410-02-P