[Federal Register Volume 88, Number 1 (Tuesday, January 3, 2023)]
[Proposed Rules]
[Pages 16-18]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-28369]


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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. 88, No. 1 / Tuesday, January 3, 2023 / 
Proposed Rules  

[[Page 16]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 920

[Doc. No. AMS-SC-22-0058]


Kiwifruit Grown in California; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would implement a recommendation from the 
Kiwifruit Administrative Committee (Committee) to increase the 
assessment rate established for the 2022-23 and subsequent fiscal 
periods. The assessment rate would remain in effect indefinitely unless 
modified, suspended, or terminated.

DATES: Comments must be received by February 2, 2023.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposed rule. Comments must be submitted to the Docket 
Clerk electronically by email: [email protected] or via 
the internet at: https://www.regulations.gov. Comments should reference 
the document number and the date and page number of this issue of the 
Federal Register. Comments submitted in response to this proposed rule 
will be included in the record and will be made available to the public 
and can be viewed at: https://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.

FOR FURTHER INFORMATION CONTACT: Kathie Notoro, Marketing Specialist, 
or Gary D. Olson, Regional Director, Western Region Branch, Market 
Development Division, Specialty Crops Program, AMS, USDA; Telephone: 
(559) 487-5903, or email: [email protected] or 
[email protected].
    Small businesses may request information on complying with this 
regulation by contacting Richard Lower, Market Development Division, 
Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW, STOP 
0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, or email: 
[email protected].

SUPPLEMENTARY INFORMATION: This action, pursuant to 5 U.S.C. 553, 
proposes to amend regulations issued to carry out a marketing order as 
defined in 7 CFR 900.2(j). This proposed rule is issued under Marketing 
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 growers 
operating within the area of production, and a public member.
    The Agricultural Marketing Service (AMS) is issuing this proposed 
rule in conformance with Executive Orders 12866 and 13563. Executive 
Orders 12866 and 13563 direct agencies to assess all costs and benefits 
of available regulatory alternatives and, if regulation is necessary, 
to select regulatory approaches that maximize net benefits (including 
potential economic, environmental, public health and safety effects, 
distributive impacts, and equity). Executive Order 13563 emphasizes the 
importance of quantifying both costs and benefits, reducing costs, 
harmonizing rules, and promoting flexibility. This action falls within 
a category of regulatory actions that the Office of Management and 
Budget (OMB) exempted from Executive Order 12866 review.
    This proposed rule has been reviewed under Executive Order 13175--
Consultation and Coordination with Indian Tribal Governments, which 
requires agencies to consider whether their rulemaking actions would 
have tribal implications. AMS has determined that this proposed rule is 
unlikely to have substantial direct effects on one or more Indian 
tribes, on the relationship between the Federal Government and Indian 
tribes, or on the distribution of power and responsibilities between 
the Federal Government and Indian tribes.
    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. Under the 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 proposed herein would be applicable to all 
assessable kiwifruit beginning on August 1, 2022, 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 the Department of 
Agriculture (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 no later than 20 
days after the date of the entry of the ruling.
    The Order authorizes the Committee, with the approval of AMS, to 
formulate an annual budget of expenses and collect assessments from 
handlers to administer the program. The members of the Committee are 
familiar with the Committee's needs and with the costs for goods and 
services in their local area and are able to formulate an appropriate 
budget and assessment rate. The assessment rate is formulated and 
discussed in a public meeting, and all directly affected persons have 
an opportunity to participate and provide input.
    This proposed rule would increase the assessment rate established 
for the 2022-23 and subsequent fiscal periods from $0.025 to $0.035 per 
9-kilo volume-fill container or equivalent of kiwifruit handled. The 
proposed higher rate is the result of the significantly smaller 
expected 2022 kiwifruit crop. The higher rate would allow the Committee 
to fund 2022-23 fiscal

[[Page 17]]

period budgeted expenditures without depleting its financial reserve.
    For the 2018-19 and subsequent fiscal periods, the Committee 
recommended, and AMS approved, an assessment rate that would continue 
in effect from fiscal period to fiscal period unless modified, 
suspended, or terminated by AMS upon recommendation and information 
submitted by the Committee or other information available to AMS.
    The Committee met on July 26, 2022, and unanimously recommended 
2022-23 fiscal period expenditures of $132,200 and an assessment rate 
of $0.035 per 9-kilo volume-fill container or equivalent of kiwifruit 
handled to fund Committee expenses. In comparison, last year's budgeted 
expenditures were $101,200. The proposed assessment rate of $0.035 is 
$0.010 more than the rate currently in effect. The Committee 
recommended increasing the assessment rate due to a much lower expected 
volume of kiwifruit produced as a result of strong north winds and late 
spring frosts during the growing season. The abnormal weather impacted 
the crop in varying degrees throughout the state, from an estimated 100 
percent crop loss of some blocks in the north to lesser effect in the 
south. In addition, the Committee's budget increased $31,000 over the 
previous year to cover increased management costs and the cost of the 
Committee hosting the International Kiwifruit Organization this year in 
Sacramento.
    The Committee's crop estimate for the 2022-23 fiscal period of 
3,181,818 9-kilo volume-fill containers or equivalent, multiplied by 
the current assessment rate of $0.025 per container, would not generate 
sufficient assessment income to fund anticipated expenses. The proposed 
assessment rate of $0.035 per 9-kilo volume-fill container or 
equivalent would generate assessment income of approximately $111,364. 
Assessment income at the proposed rate, combined with $20,816 in 
financial reserve funds 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).
    Major expenditures recommended by the Committee for the 2022-23 
fiscal period include: $90,000 for management expenses; $25,000 for the 
International Kiwifruit Organization (IKO) membership and hosting, 
planning, and staffing of the IKO conference to be held in Sacramento; 
and $9,700 for administrative expenses. Major budgeted expenses for the 
2021-22 fiscal period were $80,000 for management expenses, $8,700 for 
administrative expenses, and $7,500 for financial audits.
    The assessment rate recommended by the Committee was derived by 
reviewing anticipated expenses, expected shipments of California 
kiwifruit, and the level of funds in reserve. Kiwifruit shipments for 
the year are estimated at 3,181,818 9-kilo volume-fill containers, 
which should provide $111,364 in assessment income at the $0.035 rate. 
Anticipated income derived from handler assessments, along with $20 in 
interest income and $20,816 from the Committee's authorized financial 
reserve, should provide sufficient funding to cover budgeted expenses. 
The Committee anticipates that $53,749 would remain in the financial 
reserve at the end of 2022-23 fiscal period on July 31, 2023, which 
would be within the maximum amount permitted by the Order of 
approximately one fiscal period's expenses (Sec.  920.42).
    The proposed assessment rate would continue in effect indefinitely 
unless modified, suspended, or terminated by AMS upon recommendation 
and information submitted by the Committee or other available 
information.
    Although this assessment rate would be in effect for an indefinite 
period, the Committee would 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. Dates and 
times of Committee meetings are available from the Committee or AMS. 
Committee meetings are open to the public and interested persons may 
express their views at these meetings. AMS evaluates 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 2022-23 budget, and those 
for subsequent fiscal periods, are reviewed and, as appropriate, 
approved by AMS.

Initial Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), AMS has considered the economic impact of 
this proposed 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 
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 124 kiwifruit growers in the production area and 20 
handlers subject to regulation under the Order. Small agricultural 
growers are defined by the Small Business Administration (SBA) as those 
having annual receipts less than $3,000,000, and small agricultural 
service firms are defined as those whose annual receipts are less than 
$30,000,000 (13 CFR 121.201).
    According to the National Agricultural Statistics Service (NASS), 
total California kiwifruit production reported for the 2022 season was 
39,940 tons, with an average price of $2,440 per ton, or $1.22 per 
pound ($2,440 per ton divided by 2,000 pounds per ton). Based on the 
kiwifruit production and price information from NASS, as well as the 
total number of California kiwifruit growers, average annual grower 
revenue is approximately $785,916 (39,940 tons multiplied by $2,440 per 
ton divided by 124 growers), which is less than the $3,000,000 SBA 
threshold. Thus, the majority of California kiwifruit growers may be 
classified as small businesses.
    In addition, according to AMS Market News data, the reported 
average terminal market price for California kiwifruit for 2021 was 
$24.23 per 9-kilo container. After converting the NASS 2021 California 
kiwifruit production estimate of 39,940 tons to 9-kilo containers 
(39,940 tons times 2,000 pounds divided by 19.8 pounds per 9-kilo 
container yields 4,034,343 containers) and multiplying that quantity by 
$24.23, the total value of the 2021 California kiwifruit shipments is 
estimated to be $97,752,141. Dividing this figure by the 20 regulated 
handlers yields estimated average annual handler receipts of 
$4,887,607, well below the $30 million SBA threshold for small 
agricultural service firms. Therefore, using the above data, the 
majority of handlers of California kiwifruit may be classified as small 
businesses.
    This proposal would increase the assessment rate collected from 
handlers for the 2022-23 and subsequent fiscal periods from $0.025 to 
$0.035 per 9-kilo volume-fill container or equivalent of kiwifruit. The 
Committee unanimously recommended 2022-23 expenditures of $132,200 and 
an assessment rate of $0.035 per 9-kilo volume-fill container. The 
proposed assessment rate of $0.035 is $0.010 higher than the 2021-22 
fiscal period rate. The quantity of assessable kiwifruit for the 2022-
23 fiscal period is estimated at 3,181,818 9-kilo volume-fill 
containers. Thus, the $0.035 rate should

[[Page 18]]

provide $111,364 in assessment income (3,181,818 9-kilo volume-fill 
containers multiplied by $0.035). Income derived from handler 
assessments, along with the Committee's financial reserve funds and 
interest income, would be adequate to cover budgeted expenses, while 
maintaining its financial reserve within the maximum amount permitted 
by the Order of approximately one fiscal period's expenses (Sec.  
920.42).
    Major expenditures recommended by the Committee for the 2022-23 
fiscal period include: $90,000 for management expenses; $25,000 for the 
International Kiwifruit Organization (IKO) membership and hosting, 
planning, and staffing of the IKO conference to be held in Sacramento; 
and $9,700 for administrative expenses. Budgeted expenses for the 2021-
22 fiscal period were $80,000 for management expenses, $8,700 for 
administrative expenses, and $7,500 for financial audits.
    Prior to arriving at the recommended assessment rate, the Committee 
considered alternative levels of assessment, including maintaining the 
current assessment rate, but ultimately determined that such 
alternative rates would not generate sufficient revenue to meet 
budgeted expenses. The recommended assessment rate of $0.035 per 9-kilo 
container or equivalent of assessable kiwifruit was derived by 
considering anticipated expenses, the projected volume of assessable 
kiwifruit, the Committee's financial reserve, and additional pertinent 
factors.
    According to NASS data, the 2021 season average grower price was 
$2,440 per ton, or $24.16 per 9-kilo container ($2,440 divided by 2,000 
pounds times 19.8 pounds (9 kilograms equals approximately 19.8 
pounds)). At the proposed assessment rate of $0.035 per 9-kilo 
container, assessments as a percentage of revenue would be 
approximately 0.145 percent ($0.035 divided by $24.16).
    This action would increase the assessment obligation imposed on 
handlers. While assessments impose additional costs on handlers, the 
costs are minimal and uniform on all handlers. Some of the additional 
costs may be passed on to growers. However, these costs are expected to 
be offset by the benefits derived by the operation of the Order.
    The Committee's meeting was widely publicized throughout the 
California kiwifruit industry and all interested persons were invited 
to attend the meeting and participate in Committee deliberations on all 
issues. Like all Committee meetings, the July 26, 2022, 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 comments on this proposed rule, including the regulatory and 
informational impacts of this action on small businesses.
    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 Fruit Crops. No changes in those 
requirements would be necessary as a result of this proposed rule. 
Should any changes become necessary, they would be submitted to OMB for 
approval.
    This proposed rule would not impose any 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.
    AMS has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this proposed rule.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: 
https://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 recommendations submitted by the Committee and 
other available information, AMS has determined that this proposed rule 
is consistent with and will effectuate the purposes of the Act.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposed rule. All written comments timely received 
will be considered before a final determination is made on this matter.

List of Subjects in 7 CFR Part 920

    Kiwifruit, Marketing agreements, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, the Agricultural 
Marketing Service proposes to amend 7 CFR part 920 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, 2022, an assessment rate of $0.035 per 9-
kilo volume-fill container or equivalent of kiwifruit is established 
for kiwifruit grown in California.

Melissa R. Bailey,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2022-28369 Filed 12-30-22; 8:45 am]
BILLING CODE P