Kiwifruit Grown in California; Increased Assessment Rate, 21059-21061 [2023-07126]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 88, Number 68 (Monday, April 10, 2023)]
[Rules and Regulations]
[Pages 21059-21061]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-07126]



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Rules and Regulations
                                                Federal Register
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having general applicability and legal effect, most of which are keyed 
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Federal Register / Vol. 88 , No. 68 / Monday, April 10, 2023 / Rules 
and Regulations

[[Page 21059]]



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: Final rule.

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SUMMARY: This rule implements 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 will remain in effect indefinitely unless modified, 
suspended, or terminated.

DATES: Effective May 10, 2023.

FOR FURTHER INFORMATION CONTACT: Kathie Notoro, Marketing Specialist, 
or Gary D. Olson, Chief, 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) 720-8085, or Email: 
[email protected].

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 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 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 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 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 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. The assessment rate established herein 
will be applicable to all assessable kiwifruit beginning 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 rule increases 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 higher rate is 
the result of the significantly smaller expected 2022 kiwifruit crop. 
The higher rate will allow the Committee to fund 2022-23 fiscal 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 continued 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 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

[[Page 21060]]

than 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 expense of the Committee hosting the International 
Kiwifruit Organization (IKO) event 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 previous assessment rate of $0.025 per container, would not 
generate sufficient assessment income to fund anticipated expenses. The 
assessment rate of $0.035 per 9-kilo volume-fill container or 
equivalent is expected to generate assessment income of approximately 
$111,364. Assessment income, combined with $20,836 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 
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 will 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 assessment rate will 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 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. Dates and 
times of Committee meetings are available from the Committee and 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.

Final 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 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 124 kiwifruit growers in the production area and 20 
handlers subject to regulation under the Order. Small kiwifruit growers 
are defined by the Small Business Administration (SBA) as those having 
annual receipts of less than $3.5 million, and small agricultural 
service firms are defined as those whose annual receipts that are less 
than $34 million (13 CFR 121.201). The SBA threshold for small growers 
and handlers was changed in between the publication of the proposed 
rule and this final rule. Thus, AMS has changed the RFA to reflect the 
new amount in this final rule. However, the change did not impact the 
number of growers and handlers considered to be small.
    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 $3,500,000 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 $34 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 rule increases 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 
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 provide $111,364 in assessment income 
(3,181,818 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

[[Page 21061]]

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 data from NASS, 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)). With an assessment rate of $0.035 per 9-kilo container, 
assessments as a percentage of revenue will be approximately 0.145 
percent ($0.035 divided by $24.16).
    This action increases 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. Additionally, interested persons were 
invited to submit comments on the 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 will be necessary as a result of this rule. Should any 
changes become necessary, they will 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.
    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 rule.
    A proposed rule concerning this action was published in the Federal 
Register on January 3, 2023 (88 FR 16). Copies of the proposed rule 
were also mailed or sent via email to all California kiwifruit 
handlers. A copy of the proposed rule was made available through the 
internet by USDA and the Office of the Federal Register. A 30-day 
comment period ending February 2, 2023, was provided for interested 
persons to respond to the proposal. No comments were received. 
Accordingly, no changes have been made to the rule as proposed.
    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 rule tends 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, the Agricultural 
Marketing Service amends 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. Sec.  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.

Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2023-07126 Filed 4-7-23; 8:45 am]
BILLING CODE 3410-02-P