Kiwifruit Grown in California; Order Amending Marketing Order No. 920, 30441-30445 [2014-12327]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 79, Number 102 (Wednesday, May 28, 2014)]
[Rules and Regulations]
[Pages 30441-30445]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-12327]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 920

[Doc. No. AMS-FV-12-0008; FV12-920-1 FR]


Kiwifruit Grown in California; Order Amending Marketing Order No. 
920

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule amends Marketing Order No. 920 (order), which 
regulates the handling of kiwifruit grown in California. The amendments 
were proposed by the Kiwifruit Administrative Committee (Committee or 
KAC), which is responsible for the local administration of the order. 
The five amendments will provide authority to recommend and conduct 
production and postharvest research, to recommend and conduct market 
research and development projects, to receive and expend voluntary 
contributions, to specify that recommendations for production research 
and market development be approved by eight members of the Committee, 
and to update provisions regarding alternate members' service on the 
Committee. These amendments are intended to improve administration of 
and compliance with the order, as well as reflect current industry 
practices.

DATES: This rule is effective May 29, 2014.

FOR FURTHER INFORMATION CONTACT: Melissa Schmaedick, Marketing Order 
and Agreement Division, Fruit and Vegetable Program, AMS, USDA, Post 
Office Box 952, Moab, UT 84532; Telephone: (202) 557-4783, Fax: (435) 
259-1502, or Email: Melissa.Schmaedick@ams.usda.gov; or, Michelle 
Sharrow, Marketing Order and Agreement Division, Fruit and Vegetable 
Program, AMS, USDA, 1400 Independence Avenue SW., Stop 0237, 
Washington, DC 20250-0237; Telephone: (202) 720-9921, Fax: (202) 720-
8938 or Email: Michelle.Sharrow@ams.usda.gov.
    Small businesses may request information on complying with this 
regulation by contacting Jeffrey Smutny, Marketing Order and Agreement 
Division, Fruit and Vegetable Program, AMS, USDA, 1400 Independence 
Avenue SW., STOP 0237, Washington, DC 20250-0237; Telephone: (202) 720-
2491, Fax: (202) 720-8938, or Email: Jeffrey.Smutny@ams.usda.gov.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order 
No. 920, as amended (7 CFR part 920), regulating the handling of 
kiwifruit produced 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.'' Section 608c(17) of the Act and the 
applicable rules of practice and procedure governing the formulation of 
marketing agreements and orders (7 CFR part 900) authorize amendments 
of the order through this informal rulemaking action.
    The Department of Agriculture (USDA) is issuing this rule in 
conformance with Executive Orders 12866, 13563, and 13175.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to have retroactive effect. 
This rule shall not be deemed to preclude, preempt, or supersede any 
research and market development provisions of any State program 
covering California kiwifruit (7 U.S.C. 608c(6)(I)).

[[Page 30442]]

    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 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. A 
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 
entry of the ruling.
    Section 1504 of the Food, Conservation, and Energy Act of 2008 
(2008 Farm Bill) (Pub. L. 110-246) amended section 18c(17) of the Act, 
which in turn required the addition of supplemental rules of practice 
to 7 CFR Part 900 (73 FR 49307; August 21, 2008). The amendment of 
section 18c(17) of the Act and additional supplemental rules of 
practice authorize the use of informal rulemaking (5 U.S.C. 553) to 
amend Federal fruit, vegetable, and nut marketing agreements and 
orders. USDA may use informal rulemaking to amend marketing orders 
based on the nature and complexity of the proposed amendments, the 
potential regulatory and economic impacts on affected entities, and any 
other relevant matters.
    AMS considered the nature and complexity of the proposed 
amendments, the potential regulatory and economic impacts on affected 
entities, and other relevant matters, and determined that amending the 
order as proposed by the Committee could appropriately be accomplished 
through informal rulemaking.
    The proposed amendments were unanimously recommended by the 
Committee following deliberations at public meetings on July 12 and 
December 13, 2011. A proposed rule soliciting comments on the proposed 
amendments was issued on February 4, 2013, and published in the Federal 
Register on February 8, 2013 (78 FR 9331). Three comments were 
received. Two comments were supportive of the proposed amendments. The 
third comment was supportive of some of the proposed amendments and not 
supportive of others. A proposed rule and referendum order was issued 
on July 29, 2013, and published in the Federal Register on August 2, 
2013 (78 FR 46823). This document directed that USDA conduct a 
referendum among kiwifruit producers who produced kiwifruit during the 
period of August 1, 2012, through July 31, 2013, to determine whether 
they favored the proposed amendments to the order. To become effective, 
the amendments had to be approved by at least two-thirds of the 
producers voting or two-thirds of the volume of kiwifruit represented 
by voters in the referendum. All of the proposed amendments were 
favored by at least 80 percent of those voting in the referendum and by 
at least 83 percent of the volume represented in the referendum.
    The amendments included in this final rule will:
    (1) Provide authority to recommend and conduct production and 
postharvest research;
    (2) Provide authority to recommend and conduct market research and 
development projects;
    (3) Provide authority to receive and expend voluntary 
contributions;
    (4) Amend procedures to specify that recommendations for production 
research and market development be approved by eight members of the 
Committee; and
    (5) Clarify provisions regarding alternate members' service on the 
Committee.

Final Regulatory Flexibility Analysis

    Pursuant to the 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 action 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 rules issued thereunder, are unique in that 
they are brought about through group action of essentially small 
entities acting on their own behalf.
    Based on Committee data, there are approximately 175 producers and 
27 handlers of kiwifruit in the California production area. The Small 
Business Administration (SBA) defines small agricultural producers as 
those having annual receipts of less than $750,000, and small 
agricultural service firms are defined as those having annual receipts 
of less than $7,000,000. (13 CFR 121.201)
    The California Agricultural Statistical Service (CASS) reported 
total California kiwifruit production for the 2011-12 season at 37,700 
tons, with an average price of $775 per ton. Based on the average 
price, shipment, and grower information provided by the CASS and the 
Committee, the majority of kiwifruit handlers would be considered small 
businesses under the SBA definition. In addition, based on kiwifruit 
production and price information, as well as the total number of 
California kiwifruit growers, the average annual grower revenue is less 
than $750,000. Thus, the majority of California kiwifruit producers may 
also be classified as small entities.
    The amendments will provide authority to recommend and conduct 
production and postharvest research; provide authority to recommend and 
conduct marketing research and development projects; provide authority 
to receive and expend voluntary contributions; amend procedures to 
specify that recommendations for production research and market 
development be approved by eight members of the Committee; and update 
provisions regarding alternate members' service on the Committee.
    These amendments were unanimously recommended at public meetings of 
the Committee held on July 12 and December 13, 2011. None of these 
amendments will have an immediate impact on handlers or producers 
because they will not establish any requirements or regulations on 
handlers. However, the amendments will add authority to conduct 
production and postharvest research as well as market research and 
development projects. In the event the Committee decides to conduct 
these activities in the future, there would be a cost associated with 
funding any projects recommended.
    Research activities were previously funded by the industry through 
the California Kiwifruit Commission (CKC), which no longer exists. 
Therefore, there would be no net overall increase in costs to the 
industry if the Committee chose to take over projects previously funded 
through the CKC. Furthermore, the newly established authority for the 
Committee to accept voluntary contributions could provide additional 
sources of funds and reduce the amount of assessment monies otherwise 
needed to fund research activities.
    Although there would be a cost associated with any research 
activities undertaken by the industry, the benefits of such activities 
would be expected to outweigh the costs. Past benefits of production 
research to the California kiwifruit industry include improved 
techniques for establishing vineyards,

[[Page 30443]]

pruning, thinning, irrigating, pollination, fertilizer application, 
disease and pest management, and harvesting. Benefits of postharvest 
research include improved methods of fruit storage, packaging, and 
transportation. These research results have been disseminated to 
growers and handlers in the past and have been instrumental in 
maintaining a viable kiwifruit industry in California.
    Prior to undertaking any research activities, the Committee would 
evaluate potential projects and weigh their costs against the potential 
benefits to the industry. Any projects recommended by the Committee 
would be reviewed and approved by USDA before implementation. The 
Committee and USDA would provide oversight to help ensure that the 
goals and objectives were being met. The results would be disseminated 
to industry members and would also be made available to the public.
    Adding authority to the order for marketing research and 
development projects will not result in immediate costs to the 
industry. It will provide authority to recommend marketing research and 
development activities. In the event the Committee decides to undertake 
these activities in the future, there would be a cost associated with 
funding any marketing research and development projects.
    Like the production and postharvest research activities discussed 
above, marketing research and development projects could also be funded 
with voluntary contributions. This could help mitigate any possible 
assessment rate increases to offset the costs of these activities. To 
the extent that the assessment rate may need to be increased, any 
increase would be limited to remain within the maximum level authorized 
under Sec.  920.41 of the order.
    Any increased costs associated with marketing research and 
development activities are expected to be outweighed by the benefits. 
Marketing research could be conducted on consumer tastes and 
preferences. This type of information is valuable in developing 
marketing strategies. Collection of market data can also be used to 
evaluate prior programs and to develop future programs. Market 
development programs could be used to conduct activities designed to 
increase consumer awareness and demand for California kiwifruit. These 
demand-building activities would be expected to increase sales, which 
would ultimately increase producer returns.
    Prior to undertaking any marketing research and/or market 
development activities, the Committee would evaluate potential projects 
and their costs against the potential benefits to the industry. Any 
projects recommended by the Committee would be reviewed and approved by 
USDA before implementation. The Committee and USDA would provide 
oversight to help ensure that the goals and objectives were being met. 
In addition, as required by the Federal Agricultural Improvement and 
Reform Act of 1996, any marketing research and development programs 
engaged in under a Federal marketing order require periodic evaluation 
by an independent third party to ensure that they are effective. Thus, 
any such programs conducted under the kiwifruit order would be 
evaluated to ensure that the benefits exceed the costs.
    Adding authority for the Committee to receive voluntary 
contributions will provide an additional monetary source to help fund 
research and development programs. These types of programs are intended 
to benefit the entire industry. This change will not increase or 
decrease any reporting, recordkeeping, or compliance costs. Acceptance 
of voluntary financial contributions by the Committee would not result 
in increased costs. Rather, it might reduce the amount of assessment 
revenue needed to fund programs.
    Amendments four and five relate to voting procedures and alternate 
member service on the Committee. Both are procedural in nature and will 
have no economic impact on producers or handlers. They will not 
establish any regulatory requirements on handlers and will also not 
result in any assessment or funding implications. There will be no 
change in financial costs, reporting, or recordkeeping requirements.
    Alternatives to these proposals, including making no changes at 
this time, were considered. However, the Committee believes it would be 
beneficial to have the ability to conduct production research and 
market development activities, collect voluntary contributions, and 
clarify procedural language for Committee meetings.
    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, Generic OMB Fruit Crops. No changes in 
those requirements as a result of this proceeding are anticipated. 
Should any changes become necessary, they would be submitted to OMB for 
approval.
    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.
    In addition, USDA has not identified any relevant Federal rules 
that duplicate, overlap, or conflict with this 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.
    The Committee's meetings, at which these proposals were discussed, 
were widely publicized throughout the California kiwifruit industry. 
All interested persons were invited to attend the meetings and 
encouraged to participate in Committee deliberations on all issues. The 
Committee meetings were public, and all entities, both large and small, 
were encouraged to express their views on these proposals.
    A proposed rule concerning this action was published in the Federal 
Register on February 8, 2013 (78 FR 9331). Copies of the rule were 
mailed or sent via facsimile to all Committee members and kiwifruit 
handlers. Finally, the rule was made available through the internet by 
USDA and the Office of the Federal Register. A 60-day comment period 
ending April 9, 2013, was provided to allow interested persons to 
respond to the proposal.
    Three comments were received. Two comments were supportive of the 
proposed amendments.
    The third commenter supported the amendments to Sec. Sec.  920.32 
and 920.45 concerning Committee quorum (voting) and accepting voluntary 
contributions, respectively. However, the commenter was opposed to the 
amendment to Sec.  920.27 regarding alternate member procedures that 
will allow substitute alternates, from within the same district, to 
represent absent members at Committee meetings in districts with two or 
more members because he was concerned that it gave the Committee the 
opportunity to choose an alternate who shared their views. The change 
will improve the likelihood that quorum requirements are met. This 
should ensure a timely and orderly flow of business so that important 
matters would not have to be postponed. The substitute alternate would 
only be called upon if the member and their designated alternate were 
both absent. Because the substitute would be from the same district as 
the absent member and alternate, it is more likely that the

[[Page 30444]]

substitute would represent the views of other growers in that district.
    In 2010, the order was amended and the number of districts 
decreased to three. Each district is now represented on the Committee 
by two, four, or five members and alternate members, for a total of 
twenty-two grower positions. However, Sec.  920.27 only addresses 
alternate members' service on the Committee in districts with one and 
two grower positions. This amendment addresses alternate members' 
service on the Committee in districts with more than two members, as 
well as substitute alternates if both a member and his or her 
respective alternate are unable to attend a Committee meeting. In such 
situations, the Committee will be authorized to designate any other 
alternate present, in the same district, to serve in place of the 
absent member. Accordingly, no change to the amendment based on the 
comment received is being adopted.
    The commenter was also opposed to the amendment to Sec.  920.48 
regarding marketing research and development because he believes each 
marketer should conduct their own market promotion. The Act authorizes 
the establishment of marketing research and development projects, 
including paid advertising, for certain commodities; however, paid 
advertising is not authorized for kiwifruit. (7 U.S.C. 608c(6)(I)) The 
Committee developed this amendment taking into account that the CKC is 
no longer conducting such activities. One purpose of such generic 
programs is to benefit all members of the kiwifruit industry, including 
those that could not fund their own programs. As such, adding authority 
in the order for market research and development projects will benefit 
the entire kiwifruit industry. Therefore, no change to the proposed 
amendment is being adopted as a result of this comment.
    The commenter only supported the amendment to add authority to 
Sec.  920.47 to conduct production and postharvest research if the 
quorum requirement of eight votes passes in Sec.  920.32. The commenter 
wanted to either eliminate or link the two proposed amendments. Such a 
change would not have allowed the voters to consider each proposal on 
its own merits. Currently, the order requires an eight vote plurality 
for any changes for expenses, assessments, or recommended regulations 
in Sec.  920.32. The Committee unanimously supported requiring eight 
votes for approval of marketing research and development as well as 
production and postharvest research activities. Requiring at least 
eight votes would ensure that a broad base of support existed for any 
major actions that would affect the budget. Further, the Committee 
believes, and USDA concurs, that this requirement will help ensure that 
industry support exists before undertaking these activities. The 
commenter was supportive of adding the quorum voting requirement for 
production and postharvest research, and the commenter was in favor of 
production and postharvest research. Accordingly, no changes were made 
to the proposed amendments as a result of this comment.
    A proposed rule and referendum order was issued on July 29, 2013, 
and published in the Federal Register on August 2, 2013 (78 FR 46823). 
This document directed that USDA conduct a referendum among kiwifruit 
producers who produced kiwifruit during the period of August 1, 2012, 
through July 31, 2013, to determine whether they favored the proposed 
amendments to the order. To become effective, the amendments had to be 
approved by at least two-thirds of the producers voting or two-thirds 
of the volume of kiwifruit represented by voters in the referendum. All 
of the proposed amendments were favored by at least 80 percent of those 
voting in the referendum and by at least 83 percent of the volume 
represented in the referendum.
    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/MarketingOrdersSmallBusinessGuide. Any questions 
about the compliance guide should be sent to Jeffrey Smutny at the 
previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.

Order Amending the Order Regulating the Handling of Kiwifruit Grown in 
California

Findings and Determinations

(a) Findings and Determinations Upon the Basis of the Rulemaking Record
    The findings hereinafter set forth are supplementary to the 
findings and determinations which were previously made in connection 
with the issuance of the marketing order; and all said previous 
findings and determinations are hereby ratified and affirmed, except 
insofar as such findings and determinations may be in conflict with the 
findings and determinations set forth herein.
    1. The marketing order, as amended, and all of the terms and 
conditions thereof, will tend to effectuate the declared policy of the 
Act;
    2. The marketing order, as amended, and as hereby proposed to be 
further amended, regulates the handling of kiwifruit grown in 
California in the same manner as, and is applicable only to, persons in 
the respective classes of commercial and industrial activity specified 
in the marketing order;
    3. The marketing order, as amended, is limited in application to 
the smallest regional production area which is practicable, consistent 
with carrying out the declared policy of the Act, and the issuance of 
several orders applicable to subdivisions of the production area would 
not effectively carry out the declared policy of the Act;
    4. The marketing order, as amended, prescribes, insofar as 
practicable, such different terms applicable to different parts of the 
production area as are necessary to give due recognition to the 
differences in the production and marketing of kiwifruit produced or 
packed in the production area; and
    5. All handling of kiwifruit produced in the production area as 
defined in the marketing order is in the current of interstate or 
foreign commerce or directly burdens, obstructs, or affects such 
commerce.
(b) Additional Findings
    It is necessary and in the public interest to make these amendments 
effective not later than one day after publication in the Federal 
Register. A later effective date would unnecessarily delay 
implementation of the amendments. These amendments should be in place 
as soon as possible so that any regulations recommended as a result of 
these amendments can be in place prior to the next production year, 
which begins on August 1. In view of the foregoing, it is hereby found 
and determined that good cause exists for making these amendments 
effective one day after publication in the Federal Register and that it 
would be contrary to the public interest to delay the effective date 
for 30 days after publication in the Federal Register. (Sec. 553(d), 
Administrative Procedure Act; 5 U.S.C. 551-559.)
(c) Determinations
    It is hereby determined that:
    1. Handlers (excluding cooperative associations of producers who 
are not engaged in processing, distributing, or shipping kiwifruit 
covered under the order) who during the period August 1, 2012, through 
July 31, 2013, handled not less than 50 percent of the volume of such 
kiwifruit covered by said order, as hereby amended, have not signed an 
amended marketing agreement; and
    2. The issuance of this amendatory order, amending the aforesaid 
order, is favored or approved by at least two-

[[Page 30445]]

thirds of the producers who participated in a referendum on the 
question of approval and who, during the period of August 1, 2012, 
through July 31, 2013, have been engaged within the production area in 
the production of such kiwifruit, such producers having also produced 
for market at least two-thirds of the volume of such commodity 
represented in the referendum.

Order Relative To Handling

    It is therefore ordered, That on and after the effective date 
hereof, all handling of kiwifruit grown in California shall be in 
conformity to, and in compliance with, the terms and conditions of the 
said order as hereby amended as follows:
    The provisions of the proposed marketing order amending the order 
contained in the proposed rule issued by the Administrator on July 29, 
2013, and published in the Federal Register on August 2, 2013 (78 FR 
46823), shall be and are the terms and provisions of this order 
amending the order and are set forth in full herein.

List of Subjects in 7 CFR Part 920

    Marketing agreements, Kiwifruit, 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 7 CFR part 920 continues to read as 
follows:

    Authority:  7 U.S.C. 601-674.


0
2. Revise Sec.  920.27 to read as follows:


Sec.  920.27  Alternate members.

    An alternate member of the committee, during the absence of the 
member for whom that individual is an alternate, shall act in the place 
and stead of such member and perform such other duties as assigned. In 
the event both a member and his or her alternate are unable to attend a 
committee meeting, the committee may designate any other alternate 
member from the same district to serve in such member's place and 
stead. In the event of the death, removal, resignation, or 
disqualification of a member, the alternate of such member shall act 
for him or her until a successor for such member is selected and has 
qualified.

0
3. Revise Sec.  920.32(a) to read as follows:


Sec.  920.32  Procedure.

    (a) Eight members of the committee, or alternates acting for 
members, shall constitute a quorum and any action of the committee 
shall require the concurring vote of the majority of those present: 
Provided, That actions of the committee with respect to expenses and 
assessments, production and postharvest research, market research and 
development, or recommendations for regulations pursuant to Sec. Sec.  
920.50 through 920.55, of this part shall require at least eight 
concurring votes.
* * * * *

0
4. Add Sec.  920.45 to read as follows:


Sec.  920.45  Contributions.

    The committee may accept voluntary contributions, but these shall 
only be used to pay expenses incurred pursuant to Sec.  920.47 and 
Sec.  920.48. Furthermore, such contributions shall be free from any 
encumbrances by the donor, and the committee shall retain complete 
control of their use.

0
5. Add Sec.  920.47 to read as follows:


Sec.  920.47  Production and postharvest research.

    The committee, with the approval of the Secretary, may establish or 
provide for the establishment of projects involving research designed 
to assist or improve the efficient production and postharvest handling 
of kiwifruit.

0
6. Add Sec.  920.48 to read as follows:


Sec.  920.48  Market research and development.

    The committee, with the approval of the Secretary, may establish or 
provide for the establishment of marketing research and development 
projects designed to assist, improve, or promote the marketing, 
distribution, and consumption of kiwifruit.

    Dated: May 22, 2014.
Rex A. Barnes,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2014-12327 Filed 5-27-14; 8:45 am]
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