[Federal Register Volume 65, Number 79 (Monday, April 24, 2000)]
[Proposed Rules]
[Pages 21668-21671]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-10064]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 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.
 
 ========================================================================
 

  Federal Register / Vol. 65, No. 79 / Monday, April 24, 2000 / 
Proposed Rules  

[[Page 21668]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 920

[Docket No. FV00-920-1 PR]


Kiwifruit Grown in California; Temporary Suspension of Inspection 
and Pack Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This rule invites comments on proposed temporary suspensions 
of inspection and pack requirements prescribed under the California 
kiwifruit marketing order (order). The order regulates the handling of 
kiwifruit grown in California and is administered locally by the 
Kiwifruit Administrative Committee (Committee). This rule would 
continue, for the 2000-2001 season, the suspension of the requirement 
that fruit must be reinspected if it has not been shipped by specified 
dates, and would also continue the suspension of the minimum net weight 
requirements for kiwifruit tray packs. Both suspensions are scheduled 
to expire at the end of the 1999-2000 season. These changes are 
expected to reduce handler packing costs, increase grower returns, and 
enable handlers to compete more effectively in the marketplace.

DATES: Comments must be received by May 24, 2000.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. Comments must be sent to the Docket Clerk, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, room 2525-S, P.O. Box 96456, Washington, DC 20090-6456; Fax: 
(202) 720-5698, or E-mail: [email protected]. 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 M. Aguayo, Marketing Specialist, 
California Marketing Field Office, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, 2202 Monterey Street, 
suite 102B, Fresno, California 93721; telephone: (559) 487-5901, Fax: 
(559) 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) 720-5698.
    Small businesses may request information on complying with this 
regulation by contacting Jay Guerber, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, P.O. Box 96456, room 
2525-S, Washington, DC 20090-6456; telephone: (202) 720-2491, Fax: 
(202) 720-5698, or E-mail [email protected].

SUPPLEMENTARY INFORMATION: This proposal is issued under Marketing 
Order No. 920, as amended (7 CFR part 920), 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 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 
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 rule invites comments on proposed temporary suspensions of 
inspection and pack requirements prescribed under the order. This rule 
would continue, for the 2000-2001 season, the suspension of the 
requirement that fruit must be reinspected if it has not been shipped 
by specified dates, and the suspension of the minimum net weight 
requirements for kiwifruit tray packs. Both suspensions are scheduled 
to expire at the end of the 1999-2000 season (July 31, 2000). These 
suspensions are expected to reduce handler-packing costs, increase 
grower returns, and enable handlers to compete more effectively in the 
marketplace. This rule was unanimously recommended by the Committee at 
its February 24, 2000, meeting and would be in effect through July 31, 
2001.

Continued Suspension of Reinspection Requirement

    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(b) provides authority for the establishment, through 
the order's rules and regulations, of a period prior to shipment during 
which inspections must be performed.
    Prior to its suspension for 1998-1999 season, Sec. 920.155 of the 
order's rules and regulations specified that the certification of 
grade, size, quality, and maturity of kiwifruit pursuant to Sec. 920.52 
or Sec. 920.53 during each fiscal year was valid until December 31 of 
such year or 21 days from the date of inspection, whichever is later. 
Any inspected kiwifruit shipped after the certification period lapsed 
was required to be reinspected and recertified before shipment.

[[Page 21669]]

    Section 920.155 was suspended for the 1998-1999 season by a final 
rule published August 4, 1998 (63 FR 41390). The Committee recommended 
this suspension to lessen the expenses upon the many kiwifruit growers 
who had either lost money or merely recovered their production costs in 
recent years. It concluded that the cost of reinspecting kiwifruit was 
too high to justify requiring it in view of the limited benefit 
reinspection provided. The Committee also believed it was no longer 
necessary to have fruit reinspected to provide consumers with a high 
quality product because storage and handling operations had improved in 
the industry.
    During the 1998-1999 season, handlers voluntarily checked stored 
fruit prior to shipment to ensure that the condition of the fruit had 
not deteriorated. Suspension of the reinspection requirement enabled 
handlers to ship quality kiwifruit during the 1998-1999 season without 
the necessity for reinspection and recertification and the costs 
associated with such requirements. However, because the harvest started 
later than normal and more fruit was in-line inspected and shipped 
directly to buyers less fruit was repacked and available for evaluation 
than anticipated.
    Therefore, at its February 25, 1999, meeting, the Committee 
unanimously recommended suspending Sec. 920.155 of the order for one 
more season. Section 920.155 was suspended for the 1999-2000 season by 
a final rule published on July 29, 1999 (64 FR 41010).
    During the 1999-2000 season a severe frost reduced the crop size 
from the estimated 9 million tray equivalents to 6 million tray 
equivalents. A tray equivalent is equal to approximately 7 pounds of 
fruit. This significant crop reduction and the excellent quality of the 
fruit resulted in limited quantities of fruit remaining in cold storage 
for repacking and evaluation. The Committee would like to fully 
evaluate the suspension of the reinspection requirement during a normal 
season. Therefore the Committee, at its February 24, 2000, meeting, 
unanimously recommended suspending Sec. 920.155 for another season, the 
2000-2001 season. This suspension would be in effect until July 31, 
2001.

Continued Suspension of Minimum Net Weight Requirements for Trays

    Under the terms of the order, fresh market shipments of kiwifruit 
grown in California are required to be inspected and meet grade, size, 
maturity, pack, and container requirements. Section 920.52 authorizes 
the establishment of minimum size, pack, and container requirements.
    Section 920.302(a)(4) of the order's rules and regulations outlines 
pack requirements for fresh shipments of California kiwifruit.
    Section 920.302(a)(4)(iii) specifies minimum net weight 
requirements for fruit of various sizes packed in containers with cell 
compartments, cardboard fillers, or molded trays.
    Prior to the 1989-1990 season, there were no minimum tray weight 
requirements although 73.5 percent of the crop was packed in trays. 
During the 1989-1990 season, minimum tray weights were mandated, as 
there were many new packers involved in the kiwifruit packing process 
and stricter regulations were viewed as necessary to provide uniform 
container weights for each size. However, since that season the 
proportion of the crop packed in trays has steadily declined.
    During the 1997-1998 season, only 15.5 percent of the crop was 
packed into molded trays and less than 1 percent of this fruit was 
rejected for failure to meet minimum tray weights. As a consequence, 
the Committee believed that minimum tray weight requirements might no 
longer be necessary to maintain uniformity in the marketplace.
    Prior to the 1998-1999 season handlers were required to meet the 
minimum net weight requirements as shown in the following chart:

------------------------------------------------------------------------
                                                            Minimum net
               Count designation of fruit                    weight of
                                                          fruit (pounds)
------------------------------------------------------------------------
34 or larger............................................           7.5
35 to 37................................................           7.25
38 to 40................................................           6.875
41 to 43................................................           6.75
44 and smaller..........................................           6.5
------------------------------------------------------------------------

    The Committee met on July 8, 1998, and unanimously recommended 
suspension of the minimum net weight requirements for kiwifruit packed 
in cell compartments, cardboard fillers, or molded trays for the 1998-
1999 season. Section 920.302(a)(4)(iii) was suspended for the 1998-1999 
season by an interim final rule which was published September 3, 1998 
(63 FR 14861) and finalized July 29, 1999 (64 FR 41019).
    Even though the fruit was shorter, more full-bodied, and heavier 
during the 1998-1999 season, handlers were able to reduce packing costs 
and to compete more effectively in the market. The industry continued 
to pack well-filled trays without having to spend the extra time 
weighing them. There was no reduction in the uniform appearance of 
fruit packed into trays. The consensus of the industry was that the 
absence of tray weights had no impact during the 1998-1999 season due 
to the exceptionally heavy weight of the fruit.
    The Committee, at its February 25, 1999, meeting unanimously 
recommended suspending the minimum net weight requirements for the 
1999-2000 season to evaluate the suspended requirements during a season 
when the fruit shape and density were normal. This suspension was 
implemented by a final rule published on July 29, 1999 (64 FR 41010) 
and is in effect until July 31, 2000.
    As previously mentioned, the 1999-2000 crop was approximately three 
million tray-equivalents shorter than estimated due to a severe frost 
during the spring of 1999. This shortage of fruit resulted in limited 
quantities of fruit available for evaluation. Because of the 
uncharacteristic fruit in the 1998-1999 season and the short crop in 
the 1999-2000 season the Committee would like to suspend the minimum 
net weight requirement for another year of evaluation. Therefore, at 
its February 24, 2000, meeting, the Committee, once again, unanimously 
recommended continuing the suspension of Sec. 920.302(a)(4)(iii) for 
another season, the 2000-2001 season. This suspension would be in 
effect until July 31, 2001 and is expected to result in reduced handler 
packing costs, and increased grower returns, and enable handlers to 
compete more effectively in the marketplace.

Initial Regulatory Flexibility Analysis

    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 400 producers 
in the production area. Small agricultural producers are defined by the 
Small Business Administration (13 CFR 121.201) as those whose annual 
receipts are less than $500,000, and small

[[Page 21670]]

agricultural service firms are defined as those whose annual receipts 
are less than $5,000,000. Fifty-nine handlers have annual receipts less 
than $5,000,000, excluding receipts from other sources. Three hundred 
ninety producers have annual sales less than $500,000, excluding 
receipts from any other sources. Therefore, a majority of the kiwifruit 
handlers and producers may be classified as small entities.
    This rule invites comments on proposed temporary suspensions of 
inspection and pack requirements prescribed under the order. This rule 
would continue, for the 2000-2001 season, the suspension of the 
requirement that fruit must be reinspected if it has not been shipped 
by specified dates, and the minimum net weight requirements for 
kiwifruit tray packs. Both suspensions are scheduled to expire at the 
end of the 1999-2000 season (July 31, 2000). Continuation of the 
suspensions is expected to reduce handler-packing costs, increase 
grower returns, and enable handlers to compete more effectively in the 
marketplace. This rule was unanimously recommended by the Committee at 
its February 24, 2000, meeting and would be in effect through July 31, 
2001.

Continued Suspension of Reinspection Requirement

    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(b) provides authority for the establishment, through 
the order's rules and regulations, of a period prior to shipment during 
which inspections must be performed.
    Prior to its suspension for 1998-1999 season, Sec. 920.155 of the 
order's rules and regulations specified that the certification of 
grade, size, quality, and maturity of kiwifruit pursuant to Sec. 920.52 
or Sec. 920.53 during each fiscal year was valid until December 31 of 
such year or 21 days from the date of inspection, whichever is later. 
Any inspected kiwifruit shipped after the certification period lapsed 
was required to be reinspected and recertified before shipment.
    Section 920.155 was suspended for the 1998-1999 season by a final 
rule published August 4, 1998 (63 FR 41390). The Committee recommended 
this suspension to lessen the expenses upon the many kiwifruit growers 
who had either lost money or merely recovered their production costs in 
recent years. It concluded that the cost of reinspecting kiwifruit was 
too high to justify requiring it in view of the limited benefit 
reinspection provides. The Committee also believed it was no longer 
necessary to have fruit reinspected to provide consumers with a high 
quality product because storage and handling operations had improved in 
the industry.
    During the 1998-1999 season, handlers voluntarily checked stored 
fruit prior to shipment to ensure that the condition of the fruit had 
not deteriorated. Suspension of the reinspection requirement enabled 
handlers to ship quality kiwifruit during the 1998-1999 season without 
the necessity for reinspection and recertification and the costs 
associated with such requirements. However, because the harvest started 
later than normal and more fruit was in-line inspected and shipped 
directly to buyers, less fruit was repacked and available for 
evaluation than anticipated.
    Therefore, at its February 25, 1999, meeting, the Committee 
unanimously recommended suspending Sec. 920.155 of the order for one 
more season. Section 920.155 was suspended for the 1999-2000 season by 
a final rule published on July 29, 1999 (64 FR 41010).
    During the 1999-2000 season a severe frost reduced the crop size 
from the estimated 9 million tray equivalents to 6 million tray 
equivalents. A tray equivalent is equal to approximately 7 pounds of 
fruit. This significant crop reduction and the excellent quality of the 
fruit resulted in less fruit remaining in cold storage for repacking 
and evaluation.
    While the Committee believes the industry realized benefits from 
the suspension of the reinspection requirement, it would like to 
evaluate the results of the suspended reinspection requirements during 
a normal season. Thus the Committee, at its February 24, 2000, meeting, 
unanimously recommended suspending Sec. 920.155 for the 2000-2001 
season. This suspension would be in effect until July 31, 2001.

Continued Suspension of Minimum Net Weight Requirements for Trays

    Under the terms of the order, fresh market shipments of kiwifruit 
grown in California are required to be inspected and meet grade, size, 
maturity, pack, and container requirements. Section 920.52 authorizes 
the establishment of minimum size, pack, and container requirements.
    Section 920.302(a)(4) of the order's rules and regulations outlines 
pack requirements for fresh shipments of California kiwifruit.
    Section 920.302(a)(4)(iii) specifies minimum net weight 
requirements for fruit of various sizes packed in containers with cell 
compartments, cardboard fillers, or molded trays.
    Prior to the 1989-1990 season, there were no minimum tray weight 
requirements although 73.5 percent of the crop was packed in trays. 
During the 1989-1990 season, minimum tray weights were mandated, as 
there were many new packers involved in the kiwifruit packing process 
and stricter regulations were viewed as necessary to provide uniform 
container weights for each size. However, since that season the 
proportion of the crop packed in trays has steadily declined.
    During the 1997-1998 season, only 15.5 percent of the crop was 
packed into molded trays and less than 1 percent of this fruit was 
rejected for failure to meet minimum tray weights. As a consequence, 
the Committee believed that minimum tray weight requirements might no 
longer be necessary to maintain uniformity in the marketplace.
    Prior to the 1998-1999 season handlers were required to meet the 
minimum net weight requirements as shown in the following chart:

------------------------------------------------------------------------
                                                            Minimum net
                                                             weight of
                 Count designation fruit                       fruit
                                                             (pounds)
------------------------------------------------------------------------
34 or larger............................................           7.5
35 to 37................................................           7.25
38 to 40................................................           6.875
41 to 43................................................           6.75
44 and smaller..........................................           6.5
------------------------------------------------------------------------

    The Committee met on July 8, 1998, and unanimously recommended 
suspension of the minimum net weight requirements for kiwifruit packed 
in cell compartments, cardboard fillers, or molded trays for the 1998-
1999 season. Section 920.302(a)(4)(iii) was suspended for the 1998-1999 
season by an interim final rule published September 3, 1998 (63 FR 
14861).
    Even though the fruit was shorter, more full-bodied, and heavier 
during the 1998-1999 season, handlers were able to reduce packing costs 
and to compete more effectively in the market. The industry continued 
to pack well-filled trays without having to spend the extra time 
weighing them. There was no reduction in the uniform appearance of 
fruit packed into trays. The consensus of the industry that season was 
that the absence of tray weights had no negative impact during the 
1998-1999 season

[[Page 21671]]

due to the exceptionally heavy weight of the fruit.
    The Committee, at its February 25, 1999, meeting, unanimously 
recommended suspending the minimum net weight requirements for the 
1999-2000 season in order to evaluate the suspended requirements during 
a season when the fruit shape and density were normal. This suspension 
was implemented by a final rule published on July 29, 1999 (64 FR 
41010) and is in effect until July 31, 2000.
    As previously mentioned, the 1999-2000 crop was approximately three 
million tray-equivalents shorter than estimated due to a severe frost 
during the spring of 1999. This shortage of fruit resulted in limited 
quantities of fruit available for evaluation. Because of the 
uncharacteristic fruit in the 1998-1999 season and the short crop in 
the 1999-2000 season the Committee would like to suspend the minimum 
net weight requirement for another year of evaluation. Therefore, at 
its February 24, 2000, meeting, the Committee, once again, unanimously 
recommended continuing the suspension of Sec. 920.302(a)(4)(iii) for 
another season, the 2000-2001 season. This suspension would be in 
effect until July 31, 2001, and is expected to reduce handler-packing 
costs, increase grower returns, and enable handlers to compete more 
effectively in the marketplace.
    These changes address the marketing and shipping needs of the 
kiwifruit industry and are in the interest of handlers, growers, 
buyers, and consumers. The impact of these changes is expected to be 
beneficial to all handlers and growers regardless of size.
    The Committee discussed alternatives to this change, including 
indefinitely suspending these requirements. While the industry 
continues to believe that the suspensions helped handlers reduce 
packing costs and compete more effectively in the marketplace, it is 
not yet ready to recommend permanent suspension for the 2000-2001 and 
future seasons. Both the 1998-1999 and 1999-2000 seasons were abnormal 
in some respects and the Committee would like to study the results of 
the suspensions during a normal season. Thus, the Committee unanimously 
agreed to suspend these requirements for the 2000-2001 season.
    This proposed rule would relax inspection and pack requirements 
under the kiwifruit marketing order. Accordingly, 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.
    In addition, the Committee's meetings were widely publicized 
throughout the kiwifruit industry and all interested persons were 
invited to attend the meetings and participate in Committee 
deliberations. Like all Committee meetings, the February 24, 2000, 
meeting was a public meeting and all entities, both large and small, 
were able to express their views on this issue. The majority of the 
industry are small entities. Finally, interested persons are invited to 
submit information on the regulatory and informational impacts of this 
action on small businesses.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at the 
following web site: http://www.ams.usda.gov/fv/moab.html. Any questions 
about the compliance guide should be sent to Jay Guerber at the 
previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposal. Thirty days is deemed appropriate because 
this rule would meet to be in place by August 1, 2000 as the current 
suspension expires on July 31, 2000, and handlers need to make 
operational decisions in time for the 2000-2001 season. 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, 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 in part]

    2. In part 920, Sec. 920.155 is suspended in its entirety effective 
August 1, 2000, through July 31, 2001.


Sec. 920.302  [Suspended in part]

    3. In Sec. 920.302, paragraph (a)(4)(iii) is suspended effective 
August 1, 2000, through July 31, 2001.

    Dated: April 18, 2000.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 00-10064 Filed 4-21-00; 8:45 am]
BILLING CODE 3410-02-P