[Federal Register Volume 65, Number 177 (Tuesday, September 12, 2000)]
[Rules and Regulations]
[Pages 54945-54948]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-23496]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 920 and 944

[Docket No. FV00-920-2 FR]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule relaxes 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 allows 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.

EFFECTIVE DATE: September 13, 2000.

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 final 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 final 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 rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This action is not intended to have retroactive effect. 
This final rule will not preempt any State or local laws, regulations, 
or policies, unless they present an irreconcilable conflict with this 
rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with the Secretary a 
petition stating that the order, any provision of the order, or any 
obligation imposed in connection with the order is not in accordance 
with law and request a modification of the order or to be exempted 
therefrom. A handler is afforded the opportunity for a hearing on the 
petition. After the hearing the Secretary would rule on the petition. 
The Act provides that the district court of the United States in any 
district in which the handler is an inhabitant, or has his or her 
principal place of business, has jurisdiction 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

[[Page 54946]]

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 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 relaxes the minimum maturity requirement under the domestic 
handling regulations, a corresponding change to the import regulation 
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 will also have a beneficial impact. This rule relaxes 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 
will 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.

Final 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 final rule on small entities. 
Accordingly, AMS has prepared this final 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 relaxes the minimum maturity requirements specified in 
Sec. 920.302(a)(3) (7 CFR part 920) 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, and section 8e of the Act.
    Regarding the impact of this action on affected entities, relaxing 
the minimum

[[Page 54947]]

maturity requirement to 6.2 percent soluble solids is expected to 
benefit handlers and importers. Handlers and importers will 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 will 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 and August. Recent yearly 
data indicate that imports during the months of September through March 
are negligible. New Zealand, Chile, and Italy were 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 tray) into the U.S. 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 U.S. 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 will benefit large and small 
entities equally. Handlers and importers will 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 will 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 will not adequately address the problem. The 
first alternative was to leave the regulation unchanged. However, this 
alternative will 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 will 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 final rule relaxes the minimum maturity requirements under the 
kiwifruit marketing order and the import regulation. Accordingly, this 
action will 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.
    As noted in the initial regulatory flexibility analysis, the 
Department has not identified any relevant Federal rules that 
duplicate, overlap or conflict with this final rule.
    Further, 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. 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 were invited to submit 
information on the regulatory and informational impacts of this action 
on small businesses. No such comments were received.
    A proposed rule concerning this action was published in the Federal 
Register on July 31, 2000 (65 FR 46658). Interested persons were 
invited to submit written comments until August 30, 2000. Copies of the 
rule were mailed or sent via facsimile to all known interested parties. 
Finally, the rule was made available through the Internet by the Office 
of the Federal Register.

[[Page 54948]]

    One comment was received during the comment period in response to 
the proposal. The commenter, representing the European Community, 
supports the relaxation of the minimum maturity standard to 6.2 percent 
soluble solids, as it will simplify commerce. The European Community 
also urged the United States to incorporate relevant international 
standards of the Economic Commission for Europe of the UN (UN/ECE) and 
of the Organization for Economic Co-operation and Development (OECD) 
into our regulations, including the U.S. Standards for Grades of 
Kiwifruit (7 CFR 51.2335 to 51.2340). These requests are outside the 
scope of this rulemaking action. However, these suggestions will be 
reviewed for further appropriate action in connection with this 
program.
    Accordingly, no changes will be made to the rule as proposed, based 
on the comments received.
    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 final rule.
    After consideration of all relevant matter presented, including the 
information and recommendation submitted by the Board and other 
available information, it is hereby found that this rule, as 
hereinafter set forth, will tend to effectuate the declared policy of 
the Act.
    It is further found that good cause exists for not postponing the 
effective date of this rule until 30 days after publication in the 
Federal Register (5 U.S.C. 553) because: (1) This rule should be in 
effect promptly because the 2000-2001 harvest in California is expected 
to begin soon; (2) these changes were unanimously recommended by the 
Committee and interested persons had an opportunity to provide input; 
(3) handlers are aware of this change which was recommended at a public 
meeting; and (4) a 30-day comment period was provided for in the 
proposed rule, and the comment received supported the reduced maturity 
requirement.

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 in the preamble, 7 CFR parts 920 and 944 
are 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.

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


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

    (a) * * *
* * * * *
    (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: September 8, 2000.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 00-23496 Filed 9-8-00; 12:52 pm]
BILLING CODE 3410-02-P