[Federal Register Volume 62, Number 131 (Wednesday, July 9, 1997)]
[Proposed Rules]
[Pages 36743-36746]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-17866]


      
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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 62, No. 131 / Wednesday, July 9, 1997 / 
Proposed Rules  

[[Page 36743]]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 920

[Docket No. FV97-920-2 PR]


Kiwifruit Grown in California; Proposed Relaxation in Pack 
Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposal invites comments on revisions to pack 
requirements for Size 42 and Size 45 kiwifruit under the Federal 
marketing order for kiwifruit grown in California. This rule would 
increase the size variation tolerance for Size 42 kiwifruit from 5 
percent, by count, to 10 percent, by count, and would increase the size 
variation tolerance for Size 45 kiwifruit from 10 percent, by count, to 
25 percent, by count. This relaxation was recommended by the Kiwifruit 
Administrative Committee (committee), the agency responsible for local 
administration of the marketing order. The committee expects this rule 
to reduce handler costs, increase grower returns, and allow the 
kiwifruit industry to meet the increased demand for lower priced 
kiwifruit.

DATES: Comments must be received by August 8, 1997.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. Comments must be submitted in triplicate to 
the Docket Clerk, Fruit and Vegetable Division, AMS, USDA, P.O. Box 
96456, room 2525-S, Washington, DC 20090-6456, FAX (202) 720-5698. All 
comments should reference the docket number and the date and page 
number of this issue of the Federal Register and will be made available 
for public inspection in the Office of the Docket Clerk during regular 
business hours.

FOR FURTHER INFORMATION CONTACT: Rose Aguayo, Marketing Specialist, or 
Kurt Kimmel, Regional Manager, California Marketing Field Office, 
Marketing Order Administration Branch, Fruit and Vegetable Division, 
AMS, USDA, 2202 Monterey St., suite 102B, Fresno, California 93721, 
telephone (209) 487-5901, FAX (209) 487-5906. Small businesses may 
request information on compliance with this regulation by contacting 
Jay Guerber, Marketing Order Administration Branch, Fruit and Vegetable 
Division, AMS, USDA, P.O. Box 96456, room 2525-S, Washington, DC 20090-
6456, telephone (202) 720-2491, FAX (202) 720-5698.

SUPPLEMENTARY INFORMATION: This proposed 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 proposed 
rule in conformance with Executive Order 12866.
    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This action is not intended to have retroactive 
effect. This proposed rule would 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 
principle place of business, has jurisdiction in equity to review the 
Secretary's ruling on the petition, provided a bill in equity is filed 
not later than 20 days after the date of the entry of the ruling.
    This proposal invites comments on revisions to pack requirements 
for Size 42 and Size 45 kiwifruit under the Federal marketing order for 
kiwifruit grown in California. This rule would increase the size 
variation tolerance for Size 42 kiwifruit from 5 percent, by count, to 
10 percent, by count, and would increase the size variation tolerance 
for Size 45 kiwifruit from 10 percent, by count, to 25 percent, by 
count.
    Section 920.52 authorizes the establishment of pack requirements. 
Section 920.302(a)(4) of the rules and regulations outlines the pack 
requirements for fresh shipments of California kiwifruit. Under 
Sec. 920.302(a)(4)(I) of the rules and regulations, kiwifruit packed in 
containers with cell compartments, cardboard fillers, or molded trays 
shall be of proper size and fairly uniform in size. Section 
920.302(a)(4)(ii) outlines pack requirements for kiwifruit packed in 
cell compartments, cardboard fillers or molded trays and includes a 
table that specifies numerical size designations and the size variation 
tolerances. It also outlines pack requirements for kiwifruit packed in 
bags, volume fill or bulk containers, and includes a separate table 
that specifies numerical size designations and size variation 
tolerances. This section provides that not more than 10 percent, by 
count of the containers in any lot may fail to meet pack requirements. 
It also provides that not more than 5 percent, by count, of kiwifruit 
in any container, (except that for Size 45 kiwifruit, the tolerance, by 
count, in any one container, may not be more than 10 percent) may fail 
to meet pack requirements. This size variation tolerance does not apply 
to other pack requirements such as how the fruit fills the cell 
compartments, cardboard fillers, or molded trays, or any weight 
requirements.
    Prior to the 1995-1996 season, handlers were experiencing 
difficulty meeting the size variation tolerance for Size 45 kiwifruit. 
Size 45 is the minimum size. The committee determined that the best 
solution was to increase the size variation tolerance, by count, in any 
one container, for Size 45 kiwifruit. Section 920.302 (a)(4) was 
revised by a final rule issued June 21, 1995 (60 FR 32257) to include a 
provision that increased the size variation tolerance, by count, in any 
one

[[Page 36744]]

container, from 5 percent to 10 percent for Size 45 kiwifruit.
    This increased size variation tolerance for Size 45 kiwifruit has 
been utilized for two seasons. Handlers are still experiencing 
difficulty discerning if size variation tolerances for smaller fruit 
are being met during the packing process.
    As the size of the kiwifruit increases, so does the size of the 
variation allowed. In the larger kiwifruit sizes, failure to meet the 
required size variation standards results in packs that are visibly 
irregular in size. In Size 42 and Size 45 packs, however, when the 
respective 5 and 10 percent tolerances are exceeded, the variation is 
difficult to detect visually. A size variation of \1/4\-inch (6.4 mm) 
difference is allowed between the widest and narrowest kiwifruit in any 
Size 42 container utilizing cell compartments, cardboard fillers or 
molded trays and a \3/8\-inch (9.5 mm) size variation difference is 
allowed between the widest and narrowest kiwifruit in a Size 42 bag, 
volume fill or bulk container. A \1/4\-inch (6.4 mm) size variation 
difference is allowed between the widest and narrowest kiwifruit in any 
Size 45 container.
    Packers must separate the round and flat shaped kiwifruit into two 
different containers in order to meet the size variation requirements. 
During the packing operation, a mechanical sizer routinely sorts the 
kiwifruit by shape and size. The kiwifruit which is missed by the 
mechanical sizer must be manually sorted by the handler. If size 
variation tolerances are not being met, packers must slow down the pack 
line and increase efforts to separate the round and flat kiwifruit to 
ensure that current size variation requirements are met. Since it is 
not economically feasible for each handler to be equipped with a 
caliper to measure size variation, they rely on their visual judgement. 
During inspection, calipers are utilized by the inspectors to determine 
if the size variation is met for Size 42 and Size 45 containers. The 
industry views this separation of Size 42 and 45 round and flat shaped 
kiwifruit into two different containers by shape as an added cost, that 
is particularly detrimental because this fruit returns little if any 
money back to the grower. The higher costs of sizing the fruit during 
the packing operation may have cost the industry sales as well.
    Further, this sizing of kiwifruit may not be apparent to consumers. 
Usually a pallet of Size 42 kiwifruit includes containers of round 
fruit and containers of flat fruit. When a pallet of Size 42 kiwifruit 
reaches the retailer, a container of round fruit may be displayed. As 
the kiwifruit is sold, a container of the Size 42 flat fruit may be 
commingled with the remaining round fruit. The consumer would then see 
this commingled fruit with slightly different shapes on display. The 
size variation standards that the packer strived so hard to stay within 
during the packing process are erased.
    The committee met on April 16, 1997, and recommended by a vote of 
eight in favor and one opposed to relax the pack requirements in effect 
under the order pertaining to size variation tolerances for Size 42 and 
Size 45 kiwifruit. The committee recommended increasing size variation 
tolerances for kiwifruit, in any one container, from 5 percent, by 
count, to 10 percent, by count, for Size 42 kiwifruit and from 10 
percent, by count, to 25 percent, by count, for Size 45 kiwifruit and 
further recommended that this rule be effective in September for the 
1997-1998 season. The season normally begins the end of September or 
the first week of October. The increased size variation tolerances 
would apply to any container of kiwifruit.
    This proposed rule would reduce costs for handlers by allowing them 
to operate in a more efficient and cost-effective manner and would 
enable the industry to meet the increased demand in the marketplace for 
lower priced, uniform containers of kiwifruit. Through these cost 
savings, growers would be expected to receive higher returns.
    There is support in the industry to increase these size variation 
tolerances. The one committee member who opposed the recommendation 
believes it would lower the quality of California kiwifruit.
    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, the 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 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 60 handlers of California kiwifruit subject 
to regulation under the order and approximately 450 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. 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.
    Section 920.52 authorizes the establishment of pack requirements. 
Section 920.302(a)(4)(ii) outlines pack requirements for kiwifruit 
packed in any container and contains tables that specify numerical size 
designations and size variation tolerances. This rule would increase 
the size variation tolerance for Size 42 kiwifruit from 5 percent, by 
count, to 10 percent, by count, and would increase the size variation 
tolerance for Size 45 kiwifruit from 10 percent, by count, to 25 
percent, by count. This relaxation was recommended by the committee, 
the agency responsible for local administration of the marketing order.
    In the larger kiwifruit sizes, failure to meet the required size 
variation standards results in packs that are visibly irregular in 
size. In Size 42 and Size 45, however, when the respective 5 and 10 
percent tolerances are exceeded, the variation is difficult to detect 
visually. However, packers must separate the round and flat shaped 
kiwifruit into two different containers in order to meet the size 
variation requirements within each container for Size 42 and Size 45 
kiwifruit. The industry views this separation of Size 42 and 45 round 
and flat shaped kiwifruit into two different containers by shape as an 
added cost, that is particularly detrimental because this fruit returns 
little if any money back to the grower. The higher costs of sizing the 
fruit during the packing operation may have cost the industry sales as 
well.
    Further, this sizing of kiwifruit may not be apparent to consumers. 
Usually a pallet of Size 42 kiwifruit includes containers of round 
fruit and containers of flat fruit. When a pallet of Size 42 kiwifruit 
reaches the retailer, a container of round fruit may be displayed. As 
the kiwifruit is sold, a container of the Size 42 flat fruit may be 
commingled with the remaining round fruit and the current size 
variation standards that the packer strived so hard

[[Page 36745]]

to stay within during the packing process are erased.
    This proposed rule should reduce costs for handlers by allowing 
them to operate in a more efficient and cost-effective manner and to 
meet the increased demand in the marketplace for lower priced, uniform 
containers of kiwifruit.
    Approximately 74 percent of all kiwifruit shipped during the 1996-
1997 season was shipped in bags, volume fill or bulk containers. The 
proposed increase in tolerance in Size 42 from 5 percent, by count, to 
10 percent, by count, would increase the number of kiwifruit that may 
exceed the \3/8\'' size variation requirement in bags, volume fill, or 
bulk containers. Since the individual fruit weight of a Size 42 
kiwifruit is approximately 0.160 ounces, a 22-pound volume fill 
container of Size 42 kiwifruit would contain approximately 138 fruit. 
An increased tolerance of 10 percent per container would allow 
approximately 14 kiwifruit to exceed the \3/8\'' tolerance versus 7 
kiwifruit at the 5 percent tolerance rate. As a result, handlers would 
be able to operate more efficiently with this increased tolerance.
    The proposed increase in tolerance in Size 45 from 10 percent, by 
count, to 25 percent, by count, would increase the number of kiwifruit 
that may exceed the \1/4\'' size variation requirement. Since the 
individual fruit weight of a Size 45 kiwifruit is approximately 0.145 
ounces, a 22-pound volume fill container of Size 45 kiwifruit contains 
approximately 151 kiwifruit. An increased tolerance of 25 percent, by 
count, per container would allow 37 kiwifruit out of 151 kiwifruit to 
exceed the \1/4\'' tolerance versus 15 kiwifruit at the 10 percent 
tolerance rate. With this increased tolerance, handlers expect to be 
able to pack round and flat shaped kiwifruit into one container, 
thereby reducing costs.
    This action is not expected to reduce the quality of the kiwifruit 
pack. Consumers would not see any changes to the product at retail, 
because the produce staff at the stores already commingle round and 
flat kiwifruit in their display bins. Also, the allowed variation would 
be at a reasonable level and retailers would still receive a fairly 
uniform box of fruit.
    California kiwifruit packing operations range from very small 
operations, employing as few as 2 persons, to large operations 
employing as many as 150 people per shift. The 1997-1998 season crop 
estimate is projected to be 10 to 12 million tray equivalents. A tray 
equivalent is 7 pounds of fruit. Handlers pack from several hundred to 
over 25,000 tray equivalents during the season. Packing costs for 
volume fill containers range from approximately $0.25 to 0.75 per 
container. The 60 packing sheds can be divided into 3 size categories 
of small, medium, and large. Small sheds would consist of 25 employees 
or less, medium sheds 26-75 employees, and large sheds would consist of 
76 or more employees. The committee anticipates that labor devoted to 
packout, on average, would be decreased by 1 to 3 employees per packing 
shed. The committee estimates cost savings of approximately $0.01 per 
tray equivalent. Based on a projected crop estimate of 10 to 12 million 
tray equivalents, a savings of $100,000 to $120,000 could be realized 
for the 1997-1998 season.
    The committee discussed numerous alternatives to this change, 
including eliminating all pack requirements, increasing the size 
variation tolerance to establish a Size 42-45 container by blending the 
packing of Size 42 and Size 45 kiwifruit into one container, reducing 
the minimum size from Size 45 to Size 49, eliminating Size 45 and 
making Size 42 the minimum size, making Size 45 requirements more 
restrictive, reducing the maximum to 53 kiwifruit in the 8 pound 
sample, lowering the minimum maturity to 6.2 percent, and increasing 
the degree, or size of the variation allowed, from \1/4\-inch to \3/8\-
inch for Size 45 kiwifruit. After lengthy discussion, all of these 
alternatives were deemed unacceptable. The general consensus was that 
eliminating all pack requirements could adversely affect quality. The 
committee wishes to continue utilizing separate Size 42 and Size 45 
containers at this time because handlers are able to market each size. 
Reducing the minimum size from Size 45 to Size 49 would not benefit the 
industry because growers and handlers could not make a profit growing, 
packing and selling Size 49.
    It was the general consensus that eliminating Size 45 and making 
Size 42 the minimum size, or making Size 45 requirements more 
restrictive, by reducing the maximum to 53 kiwifruit in the 8 pound 
sample, would impose more stringent requirements on California growers 
and handlers and eliminate salable fruit from markets. Committee 
members deemed lowering the minimum maturity to 6.2 percent 
unacceptable as kiwifruit picked below the current minimum maturity of 
6.5 percent may shrivel in cold storage. The last alternative 
considered was to increase the degree, or size of the variation 
allowed, from \1/4\-inch to \3/8\-inch for Size 45 kiwifruit. It was 
the consensus of the committee that such an increase would allow 
undesired blending of undersize kiwifruit. The end result would be a 
container with visibly different fruit sizes, including undersize 
fruit. This alternative was deemed not acceptable as the industry 
desires to pack a uniform container of kiwifruit.
    This proposed rule would relax pack requirements under the 
kiwifruit marketing order and these requirements would be applied 
uniformly to all handlers. This action would not impose any additional 
reporting or recordkeeping requirements on either small or large 
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 proposed rule.
    The committee's meeting was widely publicized throughout the 
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 April 16, 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.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposal. All written comments timely received will be 
considered before a final determination is made on this matter.

List of Subjects in 7 CFR Part 920

    Kiwifruit, Marketing agreements.

    For the reasons set forth in the preamble, 7 CFR part 920 is 
proposed to be 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 Sec. 920.302 paragraph (a)(4)(ii) is amended by revising the 
last sentence to read as follows:


Sec. 920.302  Grade, size, pack, and container regulations.

    (a) * * *
    (4) * * * (ii)* * * Not more than 10 percent, by count of the 
containers in any lot and not more than 5 percent, by count, of 
kiwifruit in any container, (except that for Size 42 kiwifruit, the

[[Page 36746]]

tolerance, by count, in any one container, may not be more than 10 
percent and except that for Size 45 kiwifruit, the tolerance, by count, 
in any one container, may not be more than 25 percent) may fail to meet 
the requirements of this paragraph.

    Dated: July 2, 1997.
Eric M. Forman,
Director, Fruit and Vegetable Division.
[FR Doc. 97-17866 Filed 7-8-97; 8:45 am]
BILLING CODE 3410-02-P