[Federal Register Volume 61, Number 60 (Wednesday, March 27, 1996)]
[Rules and Regulations]
[Pages 13393-13395]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-7436]



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DEPARTMENT OF AGRICULTURE
7 CFR Part 920

[Docket No. FV95-920-4FR]


Kiwifruit Grown in California; Relaxation of Container Marking 
Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule relaxes the container marking requirements for 
kiwifruit packed under the Federal marketing order for kiwifruit grown 
in California. This relaxation reduces the number of kiwifruit 
containers required to be marked with the lot stamp number. This rule 
reduces handling costs and provides more flexibility in kiwifruit 
packing operations.

EFFECTIVE DATE: April 26, 1996.

FOR FURTHER INFORMATION CONTACT: Rose Aguayo, California Marketing 
Field Office, Marketing Order Administration Branch, Fruit and 
Vegetable Division, AMS, USDA, 2202 Monterey Street, suite 102B, 
Fresno, California 93721; telephone (209) 487-5901, Fax # (209) 487-
5906; or Charles Rush, Marketing Order Administration Branch, Fruit and 
Vegetable Division, AMS, USDA, P.O. Box 96456, room 2526-S, Washington, 
DC 20090-6456, telephone (202) 720-5127, Fax # (202) 720-5698.

SUPPLEMENTARY INFORMATION: This final 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 final 
rule in conformance with Executive Order 12866.
    This final rule has been reviewed under Executive Order 12778, 
Civil Justice Reform. This rule is not intended to have retroactive 
effect. This final 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 in equity to review the 
Secretary's ruling on the petition, provided a bill in equity

[[Page 13394]]
is filed not later than 20 days after date of the entry of the ruling.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Administrator of the Agricultural Marketing Service 
(AMS) has considered the economic impact of this rule on small 
entities.
    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 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 65 handlers of California kiwifruit subject 
to regulation under the order and approximately 500 kiwifruit 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 
than $500,000. A majority of handlers and producers of California 
kiwifruit may be classified as small entities.
    Under the terms of the marketing order, fresh market shipments of 
California kiwifruit are required to be inspected and are subject to 
grade, size, maturity, pack and container requirements. Current 
requirements include specifications that all containers of kiwifruit 
shall be plainly marked with the lot stamp number corresponding to the 
lot inspection conducted by an authorized inspector, except for 
individual consumer packages and containers that are being directly 
loaded into a vehicle for export shipment under the supervision of the 
Federal or Federal-State Inspection Service.
    The Kiwifruit Administrative Committee (committee), the agency 
responsible for local administration of the marketing order, met on 
November 30, 1995, and recommended, by unanimous vote, to relax the 
container marking requirements by reducing the number of containers 
plainly marked with the lot stamp number from all containers to all 
exposed or outside containers of kiwifruit, but not less than 75 
percent of the total containers on a pallet.
    The marketing order authorizes under Sec. 920.52(a)(3) the 
establishment of container marking requirements. Section 920.303(d) of 
the rules and regulations outlines the lot stamp number container 
marking requirements for fresh kiwifruit packed under the order.
    The committee recommended relaxing the lot stamp number marking 
requirement because of changes in the produce retail industry. The 
committee anticipates that the current order language, which requires 
all containers to be plainly marked with the lot stamp number, will 
create a problem in the near future due to industry changes in 
container packaging configurations and pallet sizes. This relaxation 
allows the industry flexibility for future pallet size and container 
configurations.
    Many products, outside the produce industry, are received by 
retailers on 48- by 40-inch pallets. The kiwifruit industry almost 
exclusively used the ``LA Lug'' container which fits on the 35- by 42-
inch or 53- by 42-inch pallets until recent years. The ``LA Lug'' 
configuration does not create a center tier when stacked on these 
pallets. When kiwifruit shippers use 35- by 42-inch or 53- by 42-inch 
pallets, receivers must unload the pallets and restack the fruit on 
metric pallets, causing more damage to the fruit and more labor costs 
to the receiver. Because of retail buying patterns and the retail 
demand for operational consistency in pallet usage, the produce 
industry has been moving away from using the 35- by 42-inch or 53 x 42 
inch pallets and has been moving towards using a standard grocery-
industry metric pallet measuring 48- by 40-inches. The committee 
anticipates that the retail usage of the metric pallet will continue to 
increase because: (1) Retailer and handler trucking and transportation 
costs for produce stacked on metric pallets are less than for produce 
stacked on 35- by 42-inch and 53- by 42-inch pallets, (2) retailer 
labor and disposal costs are less when metric pallets are utilized, and 
(3) receiving areas are steadily being remodeled to handle metric 
pallets. In the 1995/1996 season, approximately one percent of the 
industry's 9.3 million trays equivalents were packed in ``shoe'' box 
containers. The ``shoe'' box container (12 x 20 inches) is one of two 
new containers which is stacked in eight columns on a 48- by 40-inches 
metric pallet, and is configured in a manner which leaves one side of 
each container exposed. The other container that fits on the metric 
pallet is the ``mum'' box container. The ``mum'' box container 
(13.3 x 16 inches) is stacked nine columns on a pallet with the center 
column inaccessible to lot stamp numbering after the containers are 
placed on the pallet during block inspection. In block inspection, the 
inspection occurs after the pallets have been packed, strapped, and 
been placed in storage. In-line inspection is performed during the 
packing process, prior to palletization and storage.
    The industry's usage of block and in-line inspection methods is 
fairly evenly split with approximately 50 percent of the handlers using 
in-line inspection and 50 percent using block inspection. The majority 
of block inspections are conducted in the northern part of California 
while in-line inspections are conducted primarily in the southern part 
of California.
    The committee's recommendation to relax the container marking 
requirement will not significantly lower the number of containers being 
inspected or bearing the lot stamp number. Of the 81 containers stacked 
on a metric pallet during block inspection, nine containers (the center 
tier--approximately 11 percent of the pallet) will not be lot stamp 
numbered. The center tiers of all pallets will be randomly inspected by 
the Federal or Federal-State Inspection Service for all marketing order 
requirements. When the industry utilizes in-line inspection, both the 
``shoe'' and ``mum'' containers are accessible to lot stamp number 
marking and inspection, as they are being stacked on the pallet.
    There is unanimous support in the industry to reduce the lot stamp 
number container marking requirement.
    Several other alternatives were suggested during the public 
meeting. One alternative discussed by the committee was to require all 
containers to continue to be lot stamp numbered. Maintaining the 
requirement for lot stamp numbers to be placed on all containers 
increases handler labor costs, slows handler operations, increases 
handler restrapping costs, as well as increases inspection costs. It 
was the consensus of the committee that such a requirement will be cost 
prohibitive as each block-inspected pallet will have to be manually 
pulled apart to enable the lot stamp number to be placed on the nine-
column center tier containers.
    Another alternative suggested was to eliminate the block-inspection 
method and require all handlers to use the in-line inspection method. 
During in-line inspection, containers will be stamped with the lot 
stamp number prior to being stacked on the pallet. This will have a 
serious financial impact on the industry, especially among small 
growers and handlers, due to a large increase in inspection costs. This 
suggestion was unacceptable to the industry as it will be cost 
prohibitive and could force small growers and handlers out of business.

[[Page 13395]]

    Another alternative examined was to establish regulations 
prohibiting the use of any containers that create an inaccessible 
center when stacked on pallets. This alternative was not acceptable as 
it will not allow the industry to make necessary container changes to 
meet changing retailer needs and will be an excessive restriction.
    This final rule, which relaxes the lot stamp number requirement, 
impacts all handlers in the same manner and was viewed by the committee 
as the least restrictive and best solution. Relaxing the lot stamp 
number requirement solves the problems caused by changes in pallet 
sizes and container configurations as well as spares the industry 
future financial hardship. It allows the industry flexibility for 
future pallet size and container configurations.
    A proposed rule concerning this relaxation was issued on January 
24, 1996, and published in the Federal Register on February 1, 1996, 
(61 FR 3604). That rule provided a 30-day comment period which ended 
March 4, 1996. No comments were received.
    Based on the above, the Administrator of the AMS has determined 
that this action will not have a significant economic impact on a 
substantial number of small entities.
    After consideration of all relevant matter presented, the 
information and recommendations submitted by the committee, and other 
available information, it is found that this action will tend to 
effectuate the declared policy of the Act.

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.

    2. In Section 920.303 paragraph (d) is revised to read as follows:


Sec. 920.303  Container marking regulations.

* * * * *
    (d) All exposed or outside containers of kiwifruit, but not less 
than 75 percent of the total containers on a pallet, shall be plainly 
marked with the lot stamp number corresponding to the lot inspection 
conducted by an authorized inspector; except for individual consumer 
packages and containers that are being directly loaded into a vehicle 
for export shipment under the supervision of the Federal or Federal-
State Inspection Service.

    Dated: March 20, 1996.
Eric M. Forman,
Deputy Director, Fruit and Vegetable Division.
[FR Doc. 96-7436 Filed 3-26-96; 8:45 am]
BILLING CODE 3410-02-P