Kiwifruit Grown California; Decreased Assessment Rate
| Published date | 26 December 2018 |
| Record Number | 2018-27888 |
| Section | Rules and Regulations |
| Court | Agricultural Marketing Service |
Federal Register, Volume 83 Issue 246 (Wednesday, December 26, 2018)
[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
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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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: Maria.Stobbe@ams.usda.gov or Terry.Vawter@ams.usda.gov.
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: Richard.Lower@ams.usda.gov.
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
