# Kiwifruit Grown in California; Proposed Revision of Administrative Rules Pertaining to Delinquent Assessments

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/fr%3A97-17605

## Record

- **Collection:** Federal Register
- **Document type:** Proposed Rule
- **Published:** July 7, 1997
- **Citation:** 62 FR 36231

## Text

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 920

[Docket No. FV97-920-1 PR]

Kiwifruit Grown in California; Proposed Revision of
Administrative Rules Pertaining to Delinquent Assessments

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: This proposal invites comments on revisions to time periods
specified for timely payment of assessments owed by handlers under the
Federal marketing order for kiwifruit grown in California. This rule
would reduce the time periods specified for timely payments of
assessments from 60 days of invoice for in-line inspection and from 45
days of invoice for block inspection, to 30 days of invoice for both
types of inspection. It would also allow the Kiwifruit Administrative
Committee (committee) to further revise this time period to a later
time period, in the future, if deemed necessary and approved by the
committee. This rule would contribute to the efficient operation of the
program, and would reduce the administrative and accounting burden for
handlers and the committee staff.

DATES: Comments must be received by August 6, 1997.

ADDRESSES: Interested persons are invited to submit written comments
concerning this proposal. Comments must be sent in triplicate to the
Docket Clerk, Fruit and Vegetable Division, AMS, USDA, P.O. Box 96456,
room 2525-S, Washington, DC 20090-6456, FAX (202) 720-5698. All
comments should reference this docket number and the date and page
number of this issue of the Federal Register and will be made available
for public inspection in the Office of the Docket Clerk during regular
business hours.

FOR FURTHER INFORMATION CONTACT: Rose Aguayo, California Marketing
Field Office, Marketing Order Administration Branch, Fruit and
Vegetable Division, AMS, USDA, 2202 Monterey St., suite 102B, Fresno,
California 93721, telephone (209) 487-5901, FAX (209) 487-5906; or
George Kelhart, Marketing Order Administration Branch, Fruit and
Vegetable Division, AMS, USDA, P.O. Box 96456, room 2526-S, Washington,
DC 20090-6456, telephone (202) 720-2491, FAX (202) 720-5698. Small
businesses may request information on compliance with this regulation
by contacting Jay Guerber, Marketing Order Administration Branch, Fruit
and Vegetable Division, AMS, USDA, P.O. Box 96456, room 2525-S,
Washington, DC 20090-6456, telephone (202) 720-2491, FAX (202) 720-
5698.

SUPPLEMENTARY INFORMATION: This proposed rule is issued under Marketing
Order No. 920 (7 CFR part 920), as amended, 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 (Department) is issuing this proposed
rule in conformance with Executive Order 12866.
This proposed rule has been reviewed under Executive Order 12988,
Civil Justice Reform. This rule is not intended to have retroactive
effect. This proposed rule will not preempt any State or local laws,
regulations, or policies, unless they present an irreconcilable
conflict with this rule.
The Act provides that administrative proceedings must be exhausted
before parties may file suit in court. Under section 608c(15)(A) of the
Act, any handler subject to an order may file with the Secretary 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 the Secretary 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 the Secretary's
ruling on the petition, provided an action is filed not later that 20
days after date of the entry of the ruling.
This proposal invites comments on revisions to time periods
specified for timely payment of assessments owed by handlers under the
Federal marketing order for kiwifruit grown in California. Under
Sec. 920.41(a) of the order, each person who first handles kiwifruit is
required to pay a pro-rata share of the costs of administering the
program. This cost is in the form of a uniform assessment rate applied
to each handler's shipments. Section 920.41(a) also provides that if a
handler does not pay an assessment within the time prescribed by the
committee, the assessment may be subject to an interest or late payment
charge, or both. Section 920.112 of the order's administrative rules
specifies that a simple interest rate of 1.5 percent per month will be
charged to assessments which are not received within 60 days of invoice
for in-line inspected kiwifruit or within 45 days of invoice for block
inspected kiwifruit. It further specifies that a 10 percent late charge
will be assessed handlers when payment becomes 30 days late.
The committee, the agency responsible for local administration of
the marketing order, met on April 16, 1997, and unanimously recommended
revising the administrative rules in effect under the order pertaining
to the time period specified for timely payment of assessments owed by
handlers. The committee recommended reducing the time period for timely
payment of assessments owed by handlers from 60 days of invoice for in-
line inspection and from 45 days of invoice for block inspection, to 30
days of invoice for both types of inspection. The committee also
requested that Sec. 920.112 of the rules and regulations be revised to
allow the committee to further revise this time period in the future,
if deemed necessary.
Kiwifruit grown in California is harvested in late September or
early October. The fruit is packed shortly after harvest and much of it
is placed into storage until shipment. The primary shipping season
extends through the following May, although some fruit is marketed
during the summer months.
Whenever grade, size, quality, or maturity requirements are in
effect for California kiwifruit, handlers are

[[Page 36232]]

required to have their fruit inspected and certified as meeting those
requirements. Handlers have a choice of two different inspection
methods, referred to as ``in-line'' and ``block'' inspection. With in-
line inspection, kiwifruit is inspected during the packing process,
prior to storage. With block inspection, the kiwifruit is inspected
after it has been packed. Block inspections are typically performed
just prior to shipment.
Pursuant to Sec. 920.160, each shipper who ships kiwifruit shall
furnish a report of shipment and inventory data to the committee not
later than the fifth day of the month following such shipment. This
Monthly Shipment Report is also required under the State kiwifruit
program administered by the California Kiwifruit Commission
(commission). The Federal and State programs are both administered by
the same staff.
The committee staff calculates assessments from the Monthly
Shipment Report for all inspected kiwifruit and bills handlers for
committee and commission assessments. The billing period runs from the
first to the last day of the month for all handlers. Invoices are
typically prepared and mailed at the end of the month of receipt of the
Monthly Shipment Report, with payment due 60 days from date of invoice
for in-line inspected kiwifruit and 45 days from date of invoice for
block inspected kiwifruit.
Approximately a month before the start of the 1996-1997 season, the
commission reduced its time period to specify that assessments would be
considered late if not received within 30 days of invoice. The
committee did not recommend a change in its requirements at that time
because there was not adequate time to implement such a change for the
1996-1997 crop year. Operating under two different time periods for
timely payment of assessments requires the committee staff to process
and mail two invoices each month and requires the handlers to review
two invoices and make two payments. Thus, this proposed rule should
reduce costs for handlers and the committee by making the procedures
under both programs the same.
The committee met on April 16, 1997, and recommended reducing the
time periods for timely payment of assessments owed by handlers to 30
days of invoice so that the committee's time period would be consistent
with the commission's time period and further recommended that this
rule be effective in September for the l997-1998 season.
The committee also recommended including authority to revise this
time period in the future, if deemed necessary and approved by the
committee. The committee would like to ensure that consistent
accounting and administrative procedures could be implemented
simultaneously in the future. The Department believes the committee
should be granted authority to increase the time period; however, a
reduction in the time period should be subject to the informal
rulemaking process. The committee's recommendation is proposed to be
modified accordingly.
This action proposes revising Sec. 920.112 to provide that
assessments on all kiwifruit be considered delinquent if not received
within 30 days of invoice, or such other later time as specified by the
committee.
There is unanimous committee support to reduce the time periods
specified for timely payment of assessments owed by handlers to within
30 days of invoice for both types of inspections.
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), the Agricultural Marketing Service (AMS) has considered the
economic impact of this rule on small entities. Accordingly, the AMS
has prepared this initial regulatory flexibility analysis.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions in order that small businesses would
not be unduly or disproportionately burdened. Marketing orders issued
pursuant to the Act, and rules issued thereunder, are unique in that
they are brought about through group action of essentially small
entities acting on their own behalf. Thus, both statutes have small
entity orientation and compatibility.
There are approximately 60 handlers of California kiwifruit subject
to regulation under the marketing order and 450 producers in the
production area. Small agricultural service firms are defined by the
Small Business Administration (13 CFR 121.601) as those whose annual
receipts are less than $5,000,000, and small agricultural producers
have been defined as those having annual receipts of less that
$500,000. One of the 60 handlers subject to regulation has annual
kiwifruit sales of at least $5,000,000, and the remaining 59 handlers
have sales less than $5,000,000, excluding receipts from any other
sources. Ten of the 450 producers subject to regulation have annual
sales of at least $500,000, and the remaining 440 producers have sales
less than $500,000, excluding receipts from any other sources.
Therefore, a majority of handlers and producers of California kiwifruit
may be classified as small entities.
Under Sec. 920.41(a) of the marketing order for kiwifruit grown in
California, each person who first handles kiwifruit is required to pay
a pro-rata share of the costs of administering the program. This cost
is in the form of a uniform assessment rate applied to each handler's
shipments. Section 920.41(a) also provides that if a handler does not
pay an assessment within the time prescribed by the committee, the
assessment may be subject to an interest or late payment charge, or
both. Section 920.112 of the order's administrative rules specifies
that a simple interest rate of 1.5 percent per month will be charged to
assessments which are not received within 60 days of invoice for in-
line inspected kiwifruit or within 45 days of invoice for block
inspected kiwifruit. It further specifies that a 10 percent late charge
will be assessed handlers when payment becomes 30 days late.
Pursuant to Sec. 920.160, each shipper who ships kiwifruit shall
furnish a report of shipment and inventory data to the committee not
later than the fifth day of the month following such shipment. This
Monthly Shipment Report is also required under the State kiwifruit
program administered by the California Kiwifruit Commission. The
Federal and State programs are both administered by the same staff.
The committee staff calculates assessments from the Monthly
Shipment Report for all inspected kiwifruit and bills handlers for
committee and commission assessments. The billing period runs from the
first to the last day of the month for all handlers. Invoices are
typically prepared and mailed at the end of the month of receipt of the
Monthly Shipment Report, with payment due 60 days from date of invoice
for in-line inspected kiwifruit and 45 days from date of invoice for
block inspected kiwifruit.
Approximately a month before the start of the 1996-1997 season, the
commission reduced its time period to specify that assessments would be
considered late if not received within 30 days of invoice. The
committee did not recommend a change in its requirements at that time
because there was not adequate time to implement such a change for the
1996-1997 crop year. Two different time periods for timely payment of
assessments requires the committee staff to process and mail two
invoices each month and requires the handlers to review two invoices
and make two payments. Thus, this proposed rule should reduce costs for

[[Page 36233]]

handlers and the committee by making the procedures under both programs
the same.
The committee met on April 16, 1997, and recommended revising
Sec. 920.112 to provide that the time periods for timely payment of
assessments owed by handlers be reduced to 30 days of invoice so that
the committee's time period would be consistent with the commission's
time period and further recommended that this rule be effective in
September for the l997-1998 season. The committee also recommended
including authority to revise this time period in the future, if deemed
necessary. It would like to ensure that consistent accounting and
administrative procedures could be implemented simultaneously in the
future.
There is unanimous committee support to reduce the time periods
specified for timely payment of assessments owed by handlers to 30 days
of invoice for both types of inspections.
Currently, the time lapse between the date the fruit is shipped and
the date assessments are due is between 60-90 days. Handlers normally
receive payment for shipments within 30 days of shipment. Therefore,
the impact of this action would not be significant as payments for
shipments are normally received 30-60 days before assessments are due.
Handlers currently pay assessments of $.0175 per tray or tray
equivalent and have 60 days from date of invoice for in-line inspected
kiwifruit and have 45 days from date of invoice for block inspected
kiwifruit to pay their assessments before their assessments are
considered delinquent. If handlers pay their assessments in a timely
manner, they are not charged the simple interest rate of 1.5 percent
per month or the 10 percent late charge.
Under this proposal, handlers would have 30 days from the invoice
date before their assessments would be considered delinquent. This 30-
day reduction in the time period for handlers receiving in-line
inspection and 15-day reduction in the time period for handlers
receiving block inspection would have no impact on handlers who pay
their assessments in a timely manner. Even for those who do not pay in
a timely manner, the impact would not be significant. For example, if a
handler is delinquent in paying assessments, a simple interest rate of
1.5 percent interest per month and an assessment of $.0175 per tray or
tray equivalent would apply. During the peak month of March, 1996, less
than 1.6 million trays or tray equivalents were shipped. This equates
to an approximate average of 26,667 trays for each of the 60 handlers,
which when assessed at $.1075 per tray generates a $467 assessment per
handler. If an account is 30 days delinquent, the handler is charged a
1.5 percent interest charge in the amount of $7.00 and a 10 percent
late charge in the amount of $46.70 over the assessment. This action
does not change the interest rate or the late charge percentage, but
reduces the time period specified for timely payment to 30 days. If
amounts are paid in a timely manner, no additional charges are
incurred.
The majority of assessments owed by handlers are paid within the
specified time periods.
This change would reduce the administrative and accounting burden
for handlers and for the committee staff by making the committee's and
the commission's time periods consistent. While no specific
alternatives were suggested during the public meeting, the committee's
recommendation and the rule proposed herein do provide for built-in
alternatives and flexibility. Allowing the committee to further revise
this time period to a later time period in the future, if deemed
necessary, would ensure that consistent accounting and administrative
procedures could be implemented simultaneously in the future. This rule
would be applied uniformly to all handlers and was viewed by the
committee as the best solution.
This action would not impose any additional reporting or
recordkeeping requirements on either small or large 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.
The Department has not identified any relevant Federal rules that
duplicate, overlap or conflict with this proposed rule.
In addition, the committee's meeting was widely publicized
throughout the 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 April 16,
1997, meeting was a public meeting and all entities, both large and
small, were able to express views on this issue. The committee itself
is composed of 12 members. Two of these members are handlers and
producers, 9 are producers only, and one is a public member. The
majority are small entities, with one producer member having annual
receipts over $500,000. Thus, committee recommendations can be
considered to represent the interests of small business entities in the
industry. Finally, interested persons are invited to submit information
on the regulatory and informational impacts of this action on small
businesses.
A 30-day comment period is provided to allow interested persons to
respond to this proposal. 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.

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. Section 920.112 is revised to read as follows:

Sec. 920.112 Late payments.

Pursuant to Sec. 920.41(a), interest will be charged at a 1.5
percent monthly simple interest rate. Assessments for kiwifruit shall
be deemed late if not received within 30 days of invoice, or such other
later time period as specified by the committee. A 10 percent late
charge will be assessed when payment becomes 30 days late. Interest and
late payment charges shall be applied only to the overdue assessment.

Dated: June 30, 1997.
Eric M. Forman,
Acting Director, Fruit and Vegetable Division.
[FR Doc. 97-17605 Filed 7-3-97; 8:45 am]
BILLING CODE 3410-02-P

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A97-17605. Public record. Not legal advice.