Kiwifruit Grown in California; Assessment Rate

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 920

[Docket No. FV97-920-3 IFR]

Kiwifruit Grown in California; Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule increases the assessment rate established for the

Kiwifruit Administrative Committee (Committee) under Marketing Order

No. 920 for the 1997-98 and subsequent fiscal periods. The Committee is

responsible for local administration of the marketing order which

regulates the handling of kiwifruit grown in California. Authorization

to assess kiwifruit handlers enables the Committee to incur expenses

that are reasonable and necessary to administer the program. The

assessment rate will remain in effect indefinitely unless modified,

suspended, or terminated.

DATES: August 27, 1997. Comments received by September 25, 1997, will

be considered prior to issuance of a final rule.

ADDRESSES: Interested persons are invited to submit written comments

concerning this rule. Comments must be sent in triplicate to the Docket

Clerk, Fruit and Vegetable Division, AMS, USDA, room 2525-S, P.O. Box

96456, Washington, DC 20090-6456; Fax: (202) 720-5698. Comments should

reference the docket number and the date and page number of this issue

of the Federal Register and will be available for public inspection in

the Office of the Docket Clerk during regular business hours.

FOR FURTHER INFORMATION CONTACT: Rose Aguayo, Marketing Specialist,

California Marketing Field Office, Fruit and Vegetable Division, AMS,

USDA, 2202 Monterey Street, 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, room 2525-S, P.O. Box 96456, Washington, DC 20090-6456;

telephone: (202) 690-3919, 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, room 2525-S, P.O. Box 96456, Washington, DC 20090-

6456; telephone: (202) 720-2491, Fax: (202) 720-5698.

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 marketing 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 rule in

conformance with Executive Order 12866.

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 will be applicable to all assessable

kiwifruit beginning August 1, 1997, and continuing until amended,

suspended, or terminated. This 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. Such 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 than 20 days after the date of the entry of the ruling.

This rule increases the assessment rate for the Committee for the

1997-98 and subsequent fiscal periods from $0.0175 to $0.0225 per tray

or tray equivalent.

The kiwifruit marketing order provides authority for the Committee,

with the approval of the Department, to formulate an annual budget of

expenses and collect assessments from handlers to administer the

program. Section 920.41 also authorizes the Committee to borrow funds.

The members of the Committee consist of producers of California

kiwifruit and one non-industry member. They are familiar with the

Committee's needs and with the costs for 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 1996-1997 and subsequent fiscal periods, the Committee

recommended, and the Department approved, an assessment rate that would

continue in effect from season to season indefinitely unless modified,

suspended, or terminated by the Secretary upon recommendation and

information submitted by the Committee or other available information

available to the Secretary.

The Committee met on June 25, 1997, and unanimously recommended

1997-98 expenditures of $161,286 and an assessment rate of $0.0225 per

tray or tray equivalent of kiwifruit. In comparison, last year's

budgeted expenditures were $178,598. The assessment rate of $0.0225

cents per tray or tray equivalent is $0.0050 cents higher than the rate

currently in effect. The 1996-97 kiwifruit crop was short 3.3 million

trays or tray equivalents of the projected crop estimate. The Committee

met in February, 1997, and approved the borrowing of funds to cover

expenses for the remainder of the 1996-97 season. The Committee has

borrowed $11,052 as of May 31, 1997, and estimates that an additional

$22,401 may be needed to cover expenses through the end of the fiscal

period. As the Committee's reserve is depleted, the Committee voted to

increase its assessment rate to cover the budgeted expenses, to

reimburse the borrowed funds, and to begin to establish an adequate

reserve. The order provides for a maximum reserve equal to

[[Page 45147]]

approximately one fiscal period's expenses.

The Committee discussed alternatives to this rule, including

alternative expenditure levels and alternative assessment rates. An

assessment rate of $0.0200 was considered but not recommended because

it would not generate the income necessary to administer the program

with an adequate reserve. The Committee recommended that the major

expenditures for the 1997-98 year should include $102,200 for

administrative staff and field salaries, $13,825 for travel, food, and

lodging; and $12,200 for accident and health insurance. Budgeted

expenses for these items in 1996-97 were $108,500, $20,398, and

$13,000, respectively.

The assessment rate recommended by the Committee was derived by

considering anticipated expenses, expected shipments of California

kiwifruit, and additional pertinent factors. Kiwifruit shipments for

the year are estimated at 10 million trays or tray equivalents of

kiwifruit which should provide $225,000 in assessment income. Income

derived from handler assessments, along with interest income will be

adequate to cover budgeted expenses, reimbursement of borrowed funds,

and to fund an adequate reserve. Future reserve funds will be kept

within the maximum permitted by the order.

The assessment rate established in this rule will continue in

effect indefinitely unless modified, suspended, or terminated by the

Secretary upon recommendation and information submitted by the

Committee or other available information.

Although this assessment rate is effective 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 the

Department. Committee meetings are open to the public and interested

persons may express their views at these meetings. The Department will

evaluate Committee recommendations and other available information to

determine whether modification of the assessment rate is needed.

Further rulemaking will be undertaken as necessary. The Committee's

1997-98 budget and those for subsequent fiscal periods will be reviewed

and, as appropriate, approved by the Department.

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, 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 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. Thus, both statutes have small

entity orientation and compatibility.

There are approximately 450 producers of kiwifruit in the

production area and approximately 60 handlers subject to regulation

under the marketing order. Small agricultural producers have been

defined by the Small Business Administration (13 CFR 121.601) as those

having annual receipts less than $500,000, and small agricultural

service firms are defined as those whose annual receipts are less than

$5,000,000. 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.

This rule increases the assessment rate established for the

Committee and collected from handlers for the 1997-98 and subsequent

fiscal periods from $0.0175 to $0.0225 per tray or tray equivalent. The

Committee unanimously recommended 1997-98 expenditures of $161,286 and

an assessment rate of $0.0225 per tray or tray equivalent of kiwifruit.

The assessment rate of $0.0225 is $0.0050 more than the rate currently

in effect. The 1996-97 kiwifruit crop was short 3.3 million trays or

tray equivalents of the estimated crop. The Committee met in February,

1997, and approved borrowing funds to cover expenses for the remainder

of the 1996-97 season. The Committee has borrowed $11,052 as of May 31,

1997, and estimates that an additional $22,401 may be needed to cover

expenses through the end of the fiscal period. As the Committee's

reserve is depleted and funds have been borrowed to meet the remaining

1996-97 expenses, the Committee voted to increase its assessment rate

to cover the budgeted expenses, to reimburse the borrowed funds, and to

establish an adequate reserve.

The Committee discussed alternatives to this rule, including

alternative expenditure levels and alternative assessment rates. An

assessment rate of $0.0200 was considered but not recommended because

it would not generate the income necessary to administer the program

with an adequate reserve. The Committee also considered reducing the

compliance staff by two personnel, but determined that one part-time

position would be eliminated. The Committee recommended that the major

expenditures for the 1997-98 fiscal period should include $102,200 for

administrative staff and field salaries, $13,825 for travel, food, and

lodging; and $12,200 for accident and health insurance. Budgeted

expenses for these items in 1996-97 were $108,500, $20,398, and

$13,000, respectively.

Kiwifruit shipments for the year are estimated at 10 million trays

or tray equivalents which should provide $225,000 in assessment income.

Income derived from handler assessments, along with interest income,

will be adequate to cover budgeted expenses and the shortage of funds

resulting from the 1996-97 crop shortage. As the Committee's reserve is

depleted, the Committee voted to increase its assessment rate to cover

the budgeted expenses, to reimburse the borrowed funds, and to

establish an adequate reserve. Funds in the reserve will be kept within

the maximum permitted by the order.

A review of historical information and preliminary information

pertaining to the upcoming crop year indicates that the grower price

for the 1997-98 season is estimated to be approximately $1.62 per tray

or tray equivalent of kiwifruit. Therefore, the estimated assessment

revenue for the 1997-98 crop year period as a percentage of total

grower revenue would be approximately 1.4 percent.

This action will increase the assessment obligation imposed on

handlers. While this rule will impose some additional costs on

handlers, the costs are minimal and in the form of uniform assessments

on all handlers. Some of the additional costs may be passed on to

producers. However, these costs will be offset by the benefits derived

by the operation of the marketing order. In addition, the Committee's

meeting was widely publicized throughout California and the kiwifruit

industry and all interested persons were invited to attend the meeting

and participate in Committee deliberations on all issues. Like all

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Committee meetings, the June 25, 1997, 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 information on

the regulatory and informational impacts of this action on small

businesses.

This action will 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.

The Department has not identified any relevant Federal rules that

duplicate, overlap, or conflict with this rule.

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 is also found and determined upon good

cause that it is impracticable, unnecessary, and contrary to the public

interest to give preliminary notice prior to putting this rule into

effect, and 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 Committee needs to have sufficient funds to

pay its expenses which are incurred on a continuous basis; (2) the

1997-98 fiscal period begins on August 1, 1997, and the marketing order

requires that the rate of assessment for each fiscal period apply to

all assessable kiwifruit handled during such fiscal period; (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; and (4) this interim final rule

provides a 30-day comment period, and all comments timely received will

be considered prior to finalization of this rule.

List of Subjects in 7 CFR Part 920

Kiwifruit, Marketing agreements.

For the reasons set forth in the preamble, 7 CFR part 920 is

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.

Sec. 920.213 [Amended]

2. Section 920.213 is amended by removing ``August 1, 1996,'' and

adding in its place ``August 1, 1997,'' and by removing ``$0.0175 and

adding in its place ``$0.0225.''

Dated: August 18, 1997.

Robert C. Keeney,

Director, Fruit and Vegetable Division.

[FR Doc. 97-22579 Filed 8-25-97; 8:45 am]

BILLING CODE 3410-02-P