[Federal Register Volume 63, Number 108 (Friday, June 5, 1998)]
[Proposed Rules]
[Pages 30655-30658]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-15001]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 920
[Docket No. FV98-920-2 PR]
Kiwifruit Grown in California; Temporary Suspension of an
Inspection Requirement
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed rule.
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SUMMARY: This rule invites comments on the temporary suspension of an
inspection requirement for kiwifruit covered under the California
kiwifruit marketing order. The marketing order regulates the handling
of kiwifruit grown in California, and is administered locally by the
Kiwifruit Administrative Committee (Committee). Currently,
certification of any kiwifruit which is inspected and certified as
meeting grade, size, quality, or maturity requirements in effect under
the marketing order is valid until December 31 of the current fiscal
year or 21 days from the date of inspection, whichever is later. Any
kiwifruit not shipped before the end of this certification period must
be reinspected and recertified before shipping. This rule would
temporarily suspend this provision for the 1998-99 fiscal year and
would enable handlers to ship kiwifruit without the necessity for
reinspection and recertification and the costs associated with such
requirements. This temporary
[[Page 30656]]
suspension was unanimously recommended by the Committee and is expected
to reduce handler costs and to increase grower returns, while
continuing to provide consumers with the same high quality fruit as is
available under current requirements.
DATES: Comments must be received by July 6, 1998.
ADDRESSES: Interested persons are invited to submit written comments
concerning this proposal. Comments must be sent to the Docket Clerk,
Fruit and Vegetable Programs, AMS, USDA, Room 2525-S, P.O. Box 96456,
Washington, DC 20090-6456; Fax: (202) 205-6632. All comments should
reference the docket number and the date and page number of this issue
of the Federal Register and will be available for public inspection in
the Office of the Docket Clerk during regular business hours.
FOR FURTHER INFORMATION CONTACT: Rose Aguayo, Marketing Specialist,
California Marketing Field Office, Fruit and Vegetable Programs, AMS,
USDA, 2202 Monterey Street, suite 102B, Fresno, California 93721;
telephone: (209) 487-5901, Fax: (209) 487-5906; or George Kelhart,
Technical Advisor, Marketing Order Administration Branch, Fruit and
Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 96456, Washington,
DC 20090-6456; telephone: (202) 720-2491, Fax: (202) 205-6632. Small
businesses may request information on compliance with this regulation
by contacting Jay Guerber, Marketing Order Administration Branch, Fruit
and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 96456,
Washington, DC 20090-6456; telephone: (202) 720-2491, Fax: (202) 205-
6632.
SUPPLEMENTARY INFORMATION: This proposal 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 rule in
conformance with Executive Order 12866.
This proposal has been reviewed under Executive Order 12988, Civil
Justice Reform. This rule is not intended to have retroactive effect.
This proposal 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 to review the Secretary's
ruling on the petition, provided an action is filed not later than 20
days after the date of the entry of the ruling.
This proposal invites comments on the temporary suspension of an
inspection requirement for kiwifruit covered under the California
kiwifruit marketing order. This rule would temporarily suspend the
current limitation of the inspection certificate validation period and
would enable handlers to ship kiwifruit without the necessity for
reinspection and recertification. The rule would be in effect for the
1998-99 fiscal year.
Section 920.55 of the order requires that prior to handling any
variety of California kiwifruit, such kiwifruit shall be inspected by
the Federal or Federal-State Inspection Service (inspection service)
and certified as meeting the applicable grade, size, quality, or
maturity requirements in effect pursuant to Sec. 920.52 or Sec. 920.53.
Section 920.55 also provides authority for the establishment through
the order's administrative rules and regulations of a period prior to
shipment during which inspections must be performed.
Section 920.155 of the order's administrative rules and regulations
prescribes that the certification of grade, size, quality, and maturity
of kiwifruit pursuant to Sec. 920.52 or Sec. 920.53 during each fiscal
year is valid until December 31 of such year or 21 days from the date
of inspection, whichever is later. Any inspected kiwifruit to be
shipped after the certification period lapses is required to be
reinspected and recertified before shipping.
At its meeting on February 11, 1998, the Committee unanimously
recommended suspending Sec. 920.155 for the 1998-99 fiscal year. The
Committee made this recommendation in an effort to reduce the
additional costs of reinspection. In recent years, after cultural and
post-harvest expenses have been paid, many kiwifruit growers have lost
money or merely recovered their production costs with little or no
profit. Because storage and handling operations have improved in the
industry, and as a result of a fruit ripening program being utilized by
the industry, the Committee believes it may no longer be necessary to
have fruit reinspected to provide consumers with a high quality
product. The recommended suspension is for a one-year period so the
effects can be evaluated. The Committee further recommended that this
suspension be in effect no later than September 1, 1998, to enable
handlers to make operational decisions in time for the 1998 harvest and
shipping season.
When the order was promulgated, authority was included to limit the
length of time inspection certificates would be valid. This authority
was provided because the condition of kiwifruit can change while it is
held in cold storage. The current inspection requirements are intended
to help ensure that all fruit meets order requirements prior to
shipment.
The industry has estimated that approximately 30 percent of the
inspected kiwifruit is subject to reinspection each year at a cost of
approximately $0.03 per tray equivalent (a tray equivalent being 7
pounds of kiwifruit), and that a minimal amount, approximately 1
percent, of reinspected fruit fails to meet order requirements.
Although the inspection service has not yet established the 1998-99
inspection rates, based on the past season's rates, total reinspection
costs for the industry are expected to be approximately $50,000 for the
1998-99 fiscal year.
Handlers would like to reduce handling costs and believe that they
can do so by conducting their own reinspection of fruit before
shipment, when necessary. The Committee believes that consumers would
be provided with the same high quality fruit as available under current
reinspection requirements. Handlers have continually upgraded their
cold storage and handling operations, resulting in fewer fruit
condition problems. In recent seasons, improved storage facilities have
resulted in fewer storage-related condition problems, such as black
sooty mold. In addition, processing and packing equipment utilized by
handlers has improved in recent years, resulting in less damage to
fruit in the handling process, thus resulting in fewer condition
problems. Finally, the industry's ripening program has resulted in
earlier seasonal shipments and a decreased amount of inspected fruit
remaining in cold storage
[[Page 30657]]
beyond the maximum time for which an inspection certificate is valid.
The Committee believes that eliminating the reinspection
requirement would not have a negative impact on any aspect of the
industry; however, it wishes to approach this issue with caution. Thus,
the Committee recommended temporarily suspending Sec. 920.155 for the
1998-99 fiscal year as a ``pilot test,'' so it can evaluate the results
after the season. The Committee expects this action to reduce handler
costs by $50,000, resulting in increased grower returns, while
continuing to provide consumers with the same high quality fruit as is
available under current reinspection requirements.
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), the Agricultural Marketing Service (AMS) has considered the
economic impact of this action on small entities. Accordingly, 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 the 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 marketing order and approximately 450 producers
in the production area. Small agricultural producers are defined by the
Small Business Administration (13 CFR 121.601) as those whose annual
receipts are less than $500,000, and small agricultural service firms
are defined as those whose annual receipts are less than $5,000,000.
One of the 60 handlers subject to regulation has annual kiwifruit sales
of at least $5,000,000, excluding receipts from any other sources. The
remaining 59 handlers have annual receipts less than $5,000,000,
excluding receipts from other sources. In addition, 10 of the 450
producers subject to regulation have annual sales of at least $500,000,
excluding receipts from any other sources. The remaining 440 producers
have annual sales less than $500,000, excluding receipts from any other
sources. Therefore, a majority of handlers and producers are classified
as small entities.
This proposal invites comments on the temporary suspension of an
inspection requirement for kiwifruit covered under the California
kiwifruit marketing order. This rule would temporarily suspend the
current limitation of the inspection certificate validation period and
would enable handlers to ship kiwifruit without the necessity for
reinspection and recertification. The rule would be in effect for the
1998-99 fiscal year.
Section 920.55 of the order requires that prior to handling any
variety of California kiwifruit, such kiwifruit shall be inspected by
the inspection service and certified as meeting the applicable grade,
size, quality, or maturity requirements in effect pursuant to
Sec. 920.52 or Sec. 920.53. Section 920.55 also provides authority for
the establishment through the order's administrative rules and
regulations of a period prior to shipment during which inspections must
be performed.
Section 920.155 of the order's administrative rules and regulations
prescribes that the certification of grade, size, quality, and maturity
of kiwifruit pursuant to Sec. 920.52 or Sec. 920.53 during each fiscal
year is valid until December 31 of such year or 21 days from the date
of inspection, whichever is later. Any inspected kiwifruit to be
shipped after the certification period lapses is required to be
reinspected and recertified before shipping.
At its meeting on February 11, 1998, the Committee unanimously
recommended suspending Sec. 920.155 for the 1998-99 fiscal year. The
Committee made this recommendation in an effort to reduce the
additional costs of reinspection. In recent years, after cultural and
post-harvest expenses have been paid, many kiwifruit growers have lost
money or merely recovered their production costs with little or no
profit. Also, because storage and handling operations have improved in
the industry, and as a result of a fruit ripening program being
utilized by the industry, the Committee believes it may no longer be
necessary to have fruit reinspected to provide consumers with a high
quality product. The recommended suspension is for a one-year period so
the effects can be evaluated. The Committee further recommended that
this suspension be in effect no later than September 1, 1998, to enable
handlers to make operational decisions in time for the 1998 harvest and
shipping season.
When the order was promulgated, authority was included to limit the
length of time inspection certificates would be valid. This authority
was provided because the condition of kiwifruit can change while it is
held in cold storage. The current inspection requirements are intended
to help ensure that all fruit meets order requirements prior to
shipment.
The industry has estimated that approximately 30 percent of the
inspected kiwifruit is subject to reinspection each year at a cost of
approximately $0.03 per tray equivalent (a tray equivalent being 7
pounds of kiwifruit), and that a minimal amount, approximately 1
percent, of reinspected fruit fails to meet order requirements.
Although the inspection service has not yet established the 1998-99
inspection rates, based on the past season's rates, total reinspection
costs for the industry are expected to be approximately $50,000 for the
1998-99 fiscal year.
Handlers would like to reduce handling costs and believe that they
can do so by conducting their own reinspection of fruit before
shipment, when necessary. The Committee believes that consumers would
be provided with the same high quality fruit as available under current
reinspection requirements. Handlers have continually upgraded their
cold storage and handling operations, resulting in fewer fruit
condition problems. In recent seasons, improved storage facilities have
resulted in fewer storage-related condition problems, such as black
sooty mold. In addition, processing and packing equipment utilized by
handlers has improved in recent years, resulting in less damage to
fruit in the handling process, thus resulting in fewer fruit condition
problems. Finally, the industry's ripening program has resulted in
earlier seasonal shipments and a decreased amount of inspected fruit
remaining in cold storage beyond the maximum time for which an
inspection certificate is valid.
The Committee believes that eliminating the reinspection
requirement would not have a negative impact on any aspect of the
industry; however, it wishes to approach this issue with caution. Thus,
the Committee recommended temporarily suspending Sec. 920.155 for the
1998-99 fiscal year as a ``pilot test,'' so it can evaluate the results
after the season. The Committee expects this action to reduce handler
costs by $50,000, resulting in increased grower returns, while
continuing to provide consumers with the same high quality fruit as is
available under current reinspection requirements.
The 1998-99 kiwifruit crop is estimated to be 10 to 12 million tray
equivalents (a tray equivalent being equal to 7 pounds). Based on
recent experience, approximately 30 percent of the inspected kiwifruit
is subject to reinspection. At the current estimates
[[Page 30658]]
for the 1998-99 crop, that would amount to 3.0 to 3.6 million tray
equivalents requiring reinspection. The 1998-99 reinspection fees have
not yet been established by the inspection service, however, utilizing
the 1997-98 rates ($0.032 per tray/volume fill/count fill container,
$0.047 per 3 layer/master container, and $0.0047 per pound for bins),
it is estimated that the 1998-99 costs for reinspection would be around
$42,000. Adding mileage and overtime fees charged by the inspection
service would result in total annual costs for reinspection for the
1998-99 fiscal year of approximately $50,000.
The Committee discussed a number of alternatives to this rule,
including making inspection certificates valid to January 31, or
modifying the reinspection process by requiring inspection for
condition only, but it was determined that neither of these
alternatives would reduce reinspection costs. The Committee also
discussed the possibility of reducing the sample size from the current
one-half of 1 percent; however, the inspection service advised the
Committee that further reduction of the sample size would jeopardize
the integrity of the inspection.
Another alternative discussed was the elimination of in-line
inspections altogether, but this was determined to be unacceptable to
the industry. Use of in-line inspection allows handlers to be assured
that the fruit is making grade at the time of packing. Any problems
that may exist can be identified immediately and corrected, thus
avoiding the additional costs of repacking at the time of shipment.
The Committee also considered increasing the use of inspection
waivers as a means to lower costs. However, the Committee could not
reach a consensus on an acceptable and equitable means to increase the
issuance of waivers throughout the industry, and, thus, it was
determined to be an unacceptable alternative to this proposal.
As another possibility, the Committee discussed alternative
inspection methods. It was decided that they would not be a viable
option at this time.
Following discussion of these alternatives, the Committee concluded
that temporarily suspending Sec. 920.155 would be in the best interest
of the industry at this time, as it is expected to save as much as
$50,000 in reinspection fees and to increase grower returns, while
continuing to provide consumers with the same high quality fruit as
provided under current reinspection requirements.
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 rule.
The Committee's February 11, 1998, 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 February
11, 1998, meeting was a public meeting and all entities, both large and
small, were able to express views on this issue. The Committee itself
is composed of 12 members. Two of these members are handlers and
producers, 9 are producers only, and one is a public member. The
majority of the Committee members are small entities. In addition, a
survey on the options of eliminating or keeping the reinspection
requirement was mailed to all growers and handlers of California
kiwifruit. Of the 485 surveys mailed, 159 were returned to the
Committee by the deadline of February 6, 1998, for a response rate of
33 percent. Growers accounted for 77 percent of the total surveys
returned by the deadline, and of those, 67 percent were in favor of
eliminating reinspection. 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, including any regulatory and informational
impacts of this action on small businesses. Thirty days is deemed
appropriate because: (1) The industry would like the changes proposed
in this rule to be in place by September 1 to provide sufficient time
to plan for the upcoming marketing season; and (2) this action was
unanimously recommended by the Committee at a public meeting and is not
expected to be controversial. All written comments received within the
comment period will be considered before a final determination is made
on this matter.
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
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.
Sec. 920.155 [Suspended]
2. In Part 920, Sec. 920.155 is suspended in its entirety effective
August 1, 1998, through July 31, 1999.
Dated: May 29, 1998.
Sharon Bomer Lauritsen,
Acting Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-15001 Filed 6-4-98; 8:45 am]
BILLING CODE 3410-02-P