[Federal Register Volume 65, Number 147 (Monday, July 31, 2000)]
[Proposed Rules]
[Pages 46658-46661]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-19342]


 ========================================================================
 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. 65, No. 147 / Monday, July 31, 2000 / 
Proposed Rules  

[[Page 46658]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 920 and 944

[Docket No. FV00-920-2 PR]


Kiwifruit Grown in California and Imported Kiwifruit; Proposed 
Relaxation of the Minimum Maturity Requirement

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: This rule would relax the current minimum maturity 
requirements for fresh shipments of kiwifruit grown in California and 
for kiwifruit imported into the United States. The Kiwifruit 
Administrative Committee (Committee) which locally administers the 
marketing order for California kiwifruit unanimously recommended the 
change for California kiwifruit. The change in the import regulation is 
required under section 8e of the Agricultural Marketing Agreement Act 
of 1937. This action would allow handlers and importers to ship 
kiwifruit which meets the minimum maturity requirement of 6.2 percent 
soluble solids. This change is expected to reduce handler inspection 
costs, increase grower returns, and enable handlers and importers to 
compete more effectively in the marketplace.

DATES: Comments must be received by August 30, 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 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, 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 proposed rule 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.''
    This proposed rule is also issued under section 8e of the Act, 
which provides that whenever certain specified commodities, including 
kiwifruit, are regulated under a Federal marketing order, imports of 
these commodities into the United States are prohibited unless they 
meet the same or comparable grade, size, quality, or maturity 
requirements as those in effect for the domestically produced 
commodities.
    The Department of Agriculture (Department) is issuing this 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 
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.
    There are no administrative procedures which must be exhausted 
prior to any judicial challenge to the provisions of import regulations 
issued under section 8e of the Act.
    Under the terms of the 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 such shipments be at least Size 45, grade at least 
KAC No. 1 quality, and contain a minimum of 6.5 percent soluble solids.
    The order authorizes under Sec. 920.52(a)(1) the establishment of 
minimum maturity requirements. Section 920.302(a)(3) of the rules and 
regulations outlines the minimum maturity requirements for fresh 
shipments of California kiwifruit and specifies that kiwifruit shall 
have a minimum of 6.5 percent soluble solids at the time of inspection.
    Maturity is generally determined on the basis of total solids or 
soluble solids content. Kiwifruit can ripen on or off the vine and 
typically contains between 5 and 8 percent starch at harvest. This 
starch hydrolyzes into sugars during ripening. Kiwifruit continues to 
ripen while stored in refrigerated facilities and may reach 16.2 
percent soluble solids when completely ripe.
    In the 1980's, the minimum maturity requirements were established 
at 6.5 percent soluble solids for both the domestic and import 
regulations. This

[[Page 46659]]

minimum soluble solids level was established because research showed 
that the majority of fruit harvested at 6.5 percent soluble solids 
ripened to a 13.5-14 percent soluble solids level or higher, and stored 
well. Also, consumer taste tests showed that fruit containing at least 
13.5 percent soluble solids were more acceptable than fruit containing 
lower levels of soluble solids. These regulations benefited growers, 
handlers, consumers, and importers as improvements were seen in the 
quality of fruit shipped to the market place, domestic and export 
sales, and grower returns.
    Since that time a number of factors have changed: (1) Research 
conducted during the 1990's has shown that fruit harvested at 6.2 
percent soluble solids and handled properly has the potential to ripen 
to 12.6 percent soluble solids or higher, (2) recent consumer taste 
tests have shown that fruit containing at least 12.6 percent soluble 
solids has a high level of acceptability, and (3) the majority of the 
kiwifruit producing countries are now utilizing 6.2 percent soluble 
solids as their guideline for minimum maturity.
    The six countries exporting kiwifruit to the United States are New 
Zealand, Chile, Greece, France, Italy, and Canada. New Zealand has a 
mandatory maturity standard of 6.2 percent soluble solids. Chile, 
Greece, France, Italy, and Canada utilize a voluntary 6.2 percent 
soluble solids guideline for minimum maturity.
    The Committee, at its May 2, 2000, meeting, unanimously recommended 
relaxing the minimum maturity requirements to 6.2 percent soluble 
solids because of the above-mentioned factors and because this 
relaxation is expected to reduce handler inspection costs, increase 
grower returns, and enable handlers and importers to compete more 
effectively in the marketplace.
    Section 8e of the Act provides that when certain domestically 
produced commodities, including kiwifruit, are regulated under a 
Federal order, imports of that commodity must meet the same or 
comparable grade, size, quality, and maturity requirements. Since this 
rule would relax the minimum maturity requirement under the domestic 
handling regulations, a corresponding change to the import regulations 
must also be considered.
    Minimum grade, size, quality, and maturity requirements for 
kiwifruit imported into the United States are currently in effect under 
Sec. 944.550 (7 CFR 944.550). The minimum maturity requirement is 
covered in paragraph (a) of Sec. 944.550. Paragraph (a) of Sec. 944.550 
states that the importation into the United States of any kiwifruit is 
prohibited unless such kiwifruit meets all the requirements of a U.S. 
No. 1 grade as defined in the United States Standards for Grades of 
Kiwifruit (7 CFR 51.2335 through 51.2340) (Standards), except that the 
kiwifruit shall be ``not badly misshapen'', and an additional tolerance 
of 7 percent is provided for ``badly misshapen'' fruit. The Standards 
define ``Mature'' to mean that the fruit has reached the stage of 
development which will ensure the proper completion of the ripening 
process. The Standards further specify that the minimum average soluble 
solids, unless otherwise specified, shall be not less than 6.5 percent.
    The relaxation in the minimum maturity requirement for importers of 
kiwifruit would also have a beneficial impact. This rule would relax 
the minimum maturity requirement for imported kiwifruit from 6.5 
percent soluble solids to 6.2 percent soluble solids. The majority of 
the kiwifruit producing countries now are utilizing a 6.2 percent 
soluble solids level as their guideline for minimum maturity. Thus, 
importers would be able to utilize one minimum maturity standard for 
shipments of kiwifruit.
    The metric equivalent of the minimum sizes currently specified is 
also added to paragraph (a) of Sec. 944.550.

Initial Regulatory Flexibility Analysis

    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has 
considered the economic impact of this proposed rule 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 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. Import regulations issued under 
the Act are based on those established under Federal marketing orders.
    There are approximately 56 handlers of California kiwifruit who are 
subject to regulation under the order and about 400 kiwifruit producers 
in the regulated area. There are approximately 50 importers of 
kiwifruit. Small agricultural service firms, which include kiwifruit 
handlers and importers, have been defined by the Small Business 
Administration (13 CFR 121.201) as those having annual receipts are 
less than $5,000,000, and small agricultural producers are defined as 
those whose annual receipts are less than $500,000. Fifty-six handlers 
and fifty importers have annual receipts of 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, importers, 
and producers may be classified as small entities.
    This rule would relax the minimum maturity requirements specified 
in Sec. 920.302(a)(3) of the order's regulations and in Sec. 944.550 (7 
CFR 944.550) for imported kiwifruit. These sections, respectively, 
allow handlers and importers to ship kiwifruit which meets the minimum 
maturity requirement of 6.5 percent soluble solids. Relaxation of the 
minimum maturity requirements to 6.2 percent soluble solids is expected 
to reduce handler inspection costs, increase grower returns, and enable 
handlers and importers to compete more effectively in the marketplace. 
Authority for this action is provided in Sec. 920.52 (a)(1) of the 
order, section 8e of the Act.
    Regarding the impact of this action on affected entities, relaxing 
the minimum maturity requirement to 6.2 percent soluble solids is 
expected to benefit handlers and importers. Handlers and importers 
would be able to utilize one minimum maturity standard for the majority 
of shipments of kiwifruit. The majority of the kiwifruit producing 
countries now utilize 6.2 percent soluble solids as their guideline for 
minimum maturity. Importers have not experienced problems meeting the 
minimum maturity requirement of 6.5 percent soluble solids. Therefore, 
it is expected that importers would not have any difficulty meeting the 
relaxed minimum maturity requirement of 6.2 percent soluble solids.
    Imports account for 67 percent of domestic shipments and enter the 
United States between the months of March through August. Recent yearly 
data indicate that imports during the months of September through March 
are negligible. To date, New Zealand, Chile, and Italy have been the 
principal sources of imported fruit during the 1999-2000 (August 1-July 
31) season, and accounted for 98 percent of the total import shipments, 
with the remaining imports being supplied by France, Greece, and 
Canada. Chile has been the largest exporter of kiwifruit to the United 
States since 1993. Chile shipped approximately 8 million tray 
equivalents (about 7 pounds of fruit per

[[Page 46660]]

tray) into the US market during the 1999-2000 season, representing over 
56 percent of total market share. New Zealand shipped approximately 3 
million tray equivalents; Italy shipped approximately 1 million tray 
equivalents; and Greece, France, and Canada had combined shipments of 
approximately 200,500 tray equivalents. The amount of imported 
kiwifruit is expected to increase during the 2000-2001 season. Italy is 
expected to have a bumper crop and the US tariff restrictions on 
imports from New Zealand were lifted in August 1999.
    The Committee believes that lowering the minimum maturity 
requirements to 6.2 percent soluble solids would benefit large and 
small entities equally. Handlers and importers would be able to 
maximize shipments of early-season kiwifruit. The shipment of early-
season kiwifruit is expected to result in increased grower returns, as 
such fruit normally commands a higher price than fruit harvested later 
in the season.
    The amount of fruit harvested for the early market is dependent 
upon market conditions, the storability of fruit, and the overall size 
and quality of the crop. Since such information is not yet available, 
the Committee was not able to estimate the amount of fruit that would 
be shipped during the early season, nor estimate the amount of 
increased grower returns.
    Additionally, recent consumer taste tests have shown that fruit 
containing at least 12.6 percent soluble solids has a high level of 
acceptability. Research conducted during the 1990's also has shown that 
fruit with 6.2 percent soluble solids and that is handled properly has 
the potential to ripen to 12.6 percent soluble solids. Relaxing the 
minimum maturity requirement should make more kiwifruit available to 
consumers early in the season.
    In the past, some early season fruit failed to meet minimum 
maturity requirements at the time of inspection. Handlers had the 
option of re-conditioning the fruit or placing it into cold storage to 
ripen. After the soluble solids content was high enough to meet the 
minimum maturity requirements, the fruit was reinspected and the 
handler was billed for the original inspection and the reinspection. 
Relaxing the minimum maturity requirement to a 6.2 percent soluble 
solids level is expected to provide incentives for proper harvesting 
and handling of early fruit and to result in lower inspection costs. 
Thus, both large and small handlers should be able to benefit in the 
marketplace.
    The Committee expressed concern that lowering the minimum maturity 
requirements to 6.2 percent soluble solids might result in a larger 
quantity of undersized fruit. However, the Committee expects growers to 
voluntarily test for minimum maturity and size before harvesting a 
field to limit harvesting unacceptable fruit.
    Other alternatives have been suggested regarding the minimum 
maturity requirements, but would not adequately address the problem. 
The first alternative was to leave the regulation unchanged. However, 
this alternative would not address the changes in marketing conditions 
and in consumer acceptance of fruit with a lower level of soluble 
solids.
    Another alternative considered was to regulate the current minimum 
maturity at the time of harvest. The Committee also considered 
utilizing the New Zealand ``Kiwi Start'' program which also tests for 
minimum maturity in the field at the time of harvest. These 
alternatives were not considered viable. The regulation of growers is 
not authorized under the Act.
    Consideration was given to removing the 6.5 percent soluble solids 
minimum maturity requirement from the order and adding it to the 
California State Code of Regulations. This option was not acceptable to 
the Committee because of concerns regarding layers of regulation 
implementation, time, expenses, imports, and enforcement.
    Another alternative discussed was to eliminate the minimum maturity 
requirement from the order. It was determined that there is still a 
need to have a maturity testing system in place to prevent the immature 
fruit from entering the market. Thus, this alternative was not adopted.
    Utilizing a different testing method was also considered. 
Utilization of a dry weight test (total solids test) versus the 
currently used refractometer to measure maturity was discussed. This 
suggestion was not adopted because the test would be hard to implement, 
burdensome, and costly to the industry.
    Finally, another alternative presented in the meeting was to 
increase the minimum maturity requirement. This alternative was not 
acceptable because it fails to recognize the recent findings that 
consumers find fruit with lower soluble solids acceptable.
    This rule would not impose any additional reporting or 
recordkeeping requirements on either small or large kiwifruit handlers 
and importers. 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. In addition, 
the Department has not identified any relevant Federal rules that 
duplicate, overlap or conflict with this proposed rule.
    Further, the Committees' meeting was widely publicized throughout 
the kiwifruit industry and all interested persons were invited to 
attend the meeting and participate in Committee deliberations. Like all 
Committee meetings, the May 2, 2000, meeting was a public meeting and 
all entities, both large and small, were able to express their 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 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.
    In accordance with section 8e of the Act, the United States Trade 
Representative has concurred with the issuance of this proposed rule.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposal. Thirty days is deemed appropriate because 
this rule is a relaxation and would need to be in place as soon as 
possible to allow handlers time to make operational decisions for the 
2000-2001 season. The 2000-2001 season begins September 10, 2000. All 
written comments timely received will be considered before a final 
determination is made on this matter.

List of Subjects

7 CFR Part 920

    Kiwifruit, Marketing agreements, Reporting and recordkeeping 
requirements.

7 CFR Part 944

    Avocados, Food grades and standards, Grapefruit, Grapes, Imports, 
Kiwifruit, Limes, Olives, Oranges.

    For the reasons set forth above, 7 CFR parts 920 and 944 are 
proposed to be amended as follows:

PART 920--KIWIFRUIT GROWN IN CALIFORNIA

    1. The authority citation for 7 CFR parts 920 and 944 continues to 
read as follows:

    Authority: 7 U.S.C. 601-674.


[[Page 46661]]


    2. In Sec. 920.302, paragraph (a)(3) is revised to read as follows:


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

    (a) * * *
    (1) * * *
    (2) * * *
    (3) Maturity Requirements. Such kiwifruit shall have a minimum of 
6.2 percent soluble solids at the time of inspection.
* * * * *

PART 944--FRUITS; IMPORT REGULATIONS

    3. In Sec. 944.550, paragraph (a) is revised to read as follows:


Sec. 944.550  Kiwifruit import regulation.

    (a) Pursuant to section 8e of the Agricultural Marketing Agreement 
Act of 1937, as amended, the importation into the United States of any 
kiwifruit is prohibited unless such kiwifruit meets all the 
requirements of the U.S. No. 1 grade as defined in the United States 
Standards for Grades of Kiwifruit (7 CFR 51.2335 through 51.2340), 
except that the kiwifruit shall be ``not badly misshapen,'' and an 
additional tolerance of 7 percent is provided for kiwifruit that is 
``badly misshapen,'' and except that such kiwifruit shall have a 
minimum of 6.2 percent soluble solids. Such fruit shall be at least 
Size 45, which means there shall be a maximum of 55 pieces of fruit and 
the average weight of all samples in a specific lot must weigh at least 
8 pounds (3.632 kilograms), provided that no individual sample may be 
less than 7 pounds 12 ounces (3.472 kilograms).
* * * * *

    Dated: July 27, 2000.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 00-19342 Filed 7-27-00; 1:45 pm]
BILLING CODE 3410-02-P