[Federal Register Volume 65, Number 226 (Wednesday, November 22, 2000)]
[Rules and Regulations]
[Pages 70279-70284]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-29706]



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  Federal Register / Vol. 65, No. 226 / Wednesday, November 22, 2000 / 
Rules and Regulations  

[[Page 70279]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 928

[Docket No. FV00-928-1 FR]


Papayas Grown in Hawaii; Removal of Suspension Regarding Grade, 
Inspection, and Related Reporting Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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

SUMMARY: This rule removes the suspension of grade, inspection, 
inspection waiver procedure, and related exempt shipment reporting 
requirements under the marketing order regulating papayas grown in 
Hawaii and makes those requirements applicable for one year. These 
requirements were suspended in July of 1994 because the industry was 
exploring alternative methods of quality control to reduce costs. The 
alternative methods have not been as successful as the industry had 
hoped. This action is expected to facilitate the shipment of 
satisfactory quality papayas and program compliance. This rule also 
amends Sec. 928.160 regarding reporting requirements to require 
handlers to add the inspection certificate number on PAC Form 1, Papaya 
Utilization, for one year.

DATES: Effective January 2, 2001. The incorporation by reference of 
certain publications in this rule is approved by the Director of the 
Office of the Federal Register as of January 2, 2001.

FOR FURTHER INFORMATION CONTACT: Terry Vawter, 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 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) 
720-5698, or E-mail: [email protected].

SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing 
Agreement No. 155 and Marketing Order No. 928, both as amended (7 CFR 
part 928), regulating the handling of papayas grown in Hawaii, 
hereinafter referred to as the ``order.'' The marketing agreement and 
order are 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 final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This rule is not intended to have retroactive 
effect. This action 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.
    Pursuant to a recommendation of the Papaya Administrative Committee 
(committee or PAC), this final rule removes the suspension of three 
sections of the order's rules and regulations regarding grade and 
inspection (Sec. 928.313), maturity shipment exemptions (Sec. 928.152), 
and inspection waiver procedures (Sec. 928.150) and makes these 
regulations applicable until January 2, 2002. This final rule also 
amends Sec. 928.160 regarding reporting requirements to require 
handlers to add the inspection certificate number on PAC Form 1, Papaya 
Utilization during the period of regulation. The removal of the 
suspension of the grade requirements in Sec. 928.313 will require 
handlers of papayas to adhere to the minimum quality requirements that 
were in effect prior to their suspension on July 1, 1994, except that a 
5 percent tolerance for immature papayas in Hawaii No. 1 will be 
removed, as recommended by the committee.
    An interim final rule implementing these suspensions was published 
in the Federal Register on July 27, 1994 (59 FR 38102). A final rule 
finalizing the interim final rule was published in the Federal Register 
on October 18, 1994, (59 FR 52409).
    Removal of the suspension of minimum quality requirements will 
require handlers to obtain inspection through the Federal or Federal-
State Inspection Service (inspection service) prior to shipment. 
Removal of the suspension of the maturity exemption and related 
reporting requirements in Sec. 928.152 will require handlers interested 
in becoming approved handlers of immature papayas to apply to the 
committee for approval, and to report handling of immature papayas. 
Immature papayas are used in a popular dish called green papaya salad 
and as a vegetable substitute in recipes. In addition, amendment of 
Sec. 928.160 will require handlers to include the number of the 
inspection certificate issued by the inspection service on each PAC 
Form 1, Utilization Report, filed with the committee. Finally, removal 
of the suspension of the inspection waiver procedures in Sec. 928.150 
will allow handlers to ship papayas without inspection under certain 
conditions when it is not practicable for the

[[Page 70280]]

inspection service to provide such inspection.
    This rule was recommended by the committee at its meeting on 
February 18, 1999, by a vote of seven in favor, two opposed, and one 
abstention. The two dissenters believed that the cost of mandatory 
inspection continues to outweigh its benefits to the industry, that 
there are other less expensive methods of achieving quality control, 
and that voluntary quality control should be continued. Those in favor 
believed that voluntary controls have not been effective, and mandatory 
controls were needed to ensure that buyers receive the quality they 
desire and help the industry compete more effectively in the 
marketplace.
    Section 928.52 of the papaya marketing order authorizes the 
establishment of grade, size, quality, maturity, and pack and container 
regulations for shipments of papayas. Section 928.53 allows for the 
modification, suspension, or termination of such regulations when 
warranted. Section 928.55 provides that whenever papayas are regulated 
pursuant to Secs. 928.52 or 928.53, such papayas must be inspected by 
the inspection service and certified as meeting the applicable 
requirements. The cost of inspection and certification is borne by 
handlers. Section 928.54 authorizes regulation exemptions when shipping 
papayas for commercial processing, relief agencies, or charitable 
institutions. In addition, the Secretary may relieve from any or all 
requirements under or established pursuant to Sec. 928.41, 928.52, 
928.53, and 928.55, the handling of papayas in such minimum quantities, 
in such types of shipments, or for such specified purposes (including 
shipments to facilitate the conduct of marketing research and 
development projects established pursuant to Sec. 928.45) as the 
committee, with the approval of the Secretary, may prescribe. Section 
928.60 of the papaya marketing order authorizes handler reporting 
requirements.
    In 1994, Secs. 928.150, 928.152, and 928.313 of the order's rules 
and regulations were suspended. Section 928.313 established minimum 
grade requirements for shipments of papayas prior to its suspension. 
This section required that papayas grade at least Hawaii No. 1, except 
that not more than 5 percent of the fruit may be immature. Also, the 
weight requirements specified in the Hawaiian grade standards did not 
apply. This final rule removes the suspension of these regulations with 
some changes. First, paragraph (a) of Sec. 928.313 will be amended to 
remove the 5 percent tolerance for immature fruit. Second, paragraph 
(b) of that section will be amended to correct the information 
regarding the name, address, and telephone number of the Department 
contact to obtain copies of the Hawaii papaya quality standards which 
are incorporated by reference. The standards for Hawaii-grown papaya 
are dated August 6, 1990, and replace standards dated May 29, 1981, 
previously incorporated.
    As a result of removing the suspension of the grade regulations 
issued pursuant to Sec. 928.52, mandatory inspection will also be 
required, except where specifically exempted.
    Prior to its suspension, Sec. 928.152 of the order's rules and 
regulations defined immature papayas and established the procedures for 
handling immature papayas exempt from regulation. This section also 
required handlers to apply to the PAC to become approved handlers of 
immature papayas and report the handling of immature papayas. This rule 
removes the suspension of these regulations in their entirety for 12 
months, thus, affording approved handlers the opportunity to handle 
immature papayas, exempt from minimum grade, size, quality, and 
maturity regulations. PAC Form 7 (Application to be an Approved Handler 
of Immature Papayas) and PAC Form 7(c) (Maturity Exemption Report) will 
also be reinstated so the committee can approve applications of 
handlers who would like to handle immature papayas. Removal of the 
suspension will require such handlers to report their handling of 
immature papayas. Handlers pay assessments on such shipments.
    Section 928.150 established the procedures for granting inspection 
waivers under certain conditions prior to its suspension. This rule 
removes the suspension of Sec. 928.150 for one year, giving the 
inspection service the flexibility to issue inspection waivers to 
handlers when it is impracticable to provide inspection services during 
the period of regulation. For example, a handler might be in a remote 
location and the inspection service might not be able to provide an 
inspector to perform the inspection at the time and place requested.
    Section 928.160 was amended in 1994 as a result of the suspension 
of Secs. 928.150, 928.152, and 928.313. Because the quality 
requirements, and, thus, the requirement for mandatory inspection were 
suspended, Sec. 928.160 was amended to remove the requirement to 
include the inspection certificate number on the PAC Form 1, 
Utilization Report. Since the quality and inspection requirements will 
be reinstituted, a change will be necessary in Sec. 928.160 to require 
the inspection certificate number to be reported by the handler on the 
PAC Form 1. PAC Form 1 has been revised to include this additional 
information collection.
    Minimum grade and inspection requirements were initially 
established to assure that only acceptable quality fruit entered fresh 
market channels, thereby ensuring consumer satisfaction, increasing 
sales, and improving returns to papaya producers. The reporting 
requirements were established to authorize the committee to allow 
approved handlers to handle immature papayas, and to aid the committee 
in assessment billings and program compliance.
    In committee discussions on the suspension of grade, inspection, 
and reporting requirements in 1994, members who supported the 
suspension advised that the papaya industry was committed to 
instituting alternative quality assurance procedures in the absence of 
mandatory inspection. This was to be achieved by handlers providing 
financial incentives to producers to harvest and deliver only high 
quality fruit. Such a program was to be arranged with handlers by the 
newly formed producers' bargaining cooperative. It was anticipated that 
this program would provide incentives for growers to deliver high-
quality fruit to handlers. However, the producer's bargaining 
cooperative was not as successful as hoped in implementing this 
program. To date, the industry has not instituted any effective 
alternative means of quality control. As a result, the overall quality 
of papayas shipped from Hawaii has declined and the industry has lost 
market share.
    Most committee members also believed that the elimination of 
inspection requirements would increase producer returns because 
handlers would pass on to producers the savings they realized when 
inspection costs were eliminated. This has happened to a limited 
extent. Finally, the committee hoped that buyers of fresh papayas would 
encourage handlers to continue to ship high-quality fruit by paying 
premium prices for higher-quality fruit. As handlers became more aware 
of the price differentials between various quality levels, the 
committee believed that competition among handlers would ensure 
shipments of good quality fruit. This has not occurred as the committee 
had hoped.
    At the time the suspension was recommended, the industry was 
suffering from an infestation of Papaya Ringspot Virus (PRSV), a 
debilitating disease that attacks papaya trees,

[[Page 70281]]

eventually killing them. Production from the Island of Hawaii, the 
primary growing region, declined substantially, and the papayas 
produced from infected trees were of lower quality.
    Since 1994, the committee has reported deteriorating wholesale 
buyer and consumer confidence with Hawaiian papayas, resulting in lost 
market share. The condition of poor quality papayas often deteriorates 
further during shipment, frequently requiring buyers to discard some 
fruit and repack the rest. This has resulted in financial losses for 
some buyers, decreased buyer confidence, and reduced market 
opportunities for handlers of Hawaii papayas. As a result, competing 
supplies from the Philippines, Brazil, and Mexico have made inroads 
into existing Hawaii papaya markets.
    This is of great concern to the committee, especially because the 
domestic production from two PRSV-resistant papaya varieties is 
increasing significantly, and is expected to continue. The committee 
would like to regain the confidence of buyers by shipping high-quality 
Hawaii papayas. It believes that mandatory quality control is needed to 
ensure buyers the quality they prefer. Removing the suspension of the 
grade, inspection, and reporting requirements in place prior to July 1, 
1994, is anticipated to help the industry achieve its goals and compete 
more effectively in the marketplace.
    During its deliberations on the removal of the suspension of grade, 
inspection, and reporting requirements on February 18, 1999, the 
committee discussed the current state of the industry and what actions 
the committee could take to enhance the quality of shipments, improve 
grower and handler returns, increase wholesale buyer and consumer 
confidence, and regain lost market share. The committee decided that to 
successfully market the increasing production from the PRSV-resistant 
papaya varieties, the industry must reestablish a quality image for 
Hawaii papayas among buyers and consumers. It would be 
counterproductive, they noted, to utilize assessment dollars promoting 
a product which was not of acceptable quality.
    In addition, the committee noted that reinstituting mandatory 
inspection will augment information available to the committee on 
assessments owed by handlers. Once inspections begin, a copy of each 
inspection certificate will be provided to the committee staff by the 
inspection service. This third-party information will permit the 
committee staff to have accurate and timely data upon which to bill 
each handler for papayas handled. Currently, the committee staff 
utilizes information gathered from transshippers (air freight and 
shipping companies) to augment and confirm information provided by 
handler's reports for assessment collection compliance purposes under 
Sec. 928.31(n). This information is obtained at a significant cost of 
committee time and resources. While information from transshippers will 
continue to be used as a random check, data provided from the 
inspection certificates will be the primary source of third-party 
information for assessment billings by the committee staff.
    Inspection costs to handlers will result from this action. 
Inspection costs incurred will total $24.24 per hour for on site 
inspections and mileage travel costs of 37 cents a mile round-trip from 
the office to the processing plant or handler's premises. For a trip 
less than 10 minutes or 7 miles, no travel time cost is charged, just 
the mileage cost. For a trip taking 10 or more minutes, or covering 7 
or more miles, the travel time cost is based on the $24.24 hourly rate.
    The committee members who opposed the recommendation believe that 
the cost of inspection will be passed on to producers, lowering overall 
producer returns, and that the benefits of mandatory quality control 
will not outweigh the costs. In addition, they believe that voluntary 
quality control should be given more time to work. However, most 
committee members favored the recommendation, as they believe the 
alternatives attempted have not been successful, and that prompt action 
is imperative to assure the long-term viability of the Hawaii papaya 
industry.
    The committee's recommendation resulted from the efforts of a task 
force assigned by the committee chairman in 1998. The task force 
reviewed the current marketing and quality conditions affecting the 
Hawaii papaya industry for several months, and recommended to the 
committee removal of the suspension of quality control-related 
requirements.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), AMS has considered the economic impact of this action 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.
    There are approximately 400 producers of papayas in the production 
area and approximately 60 handlers subject to regulation under the 
marketing order. Small agricultural producers have been defined by the 
Small Business Administration (13 CFR 121.201) as those having annual 
receipts less than $500,000, and small agricultural service firms are 
defined as those whose annual receipts are less than $5,000,000.
    Based on a reported average f.o.b. price of $1.30 per pound of 
papayas, a handler would have to ship in excess of 3.85 million pounds 
of papayas to have annual receipts of $5,000,000. Last year, two 
handlers each shipped in excess of 3.85 million pounds of papayas, and, 
therefore, would be considered large businesses. The remaining handlers 
are considered to be small businesses under SBA's definition.
    Based on a reported average grower price of $0.45 per pound and 
industry shipments of 36 million pounds, total grower revenues would be 
$16.2 million. Average grower revenue would, thus, be $40,500. Based on 
the foregoing, the majority of handlers and producers of papayas would 
be classified as small entities.
    This rule removes the suspension of grade, inspection, and related 
reporting requirements under the order's rules and regulations. As a 
result of removing the suspension, Secs. 928.150, 928.152, and 928.313 
will be reinstated. This rule also amends these sections to make the 
requirements in these sections applicable for one year; and 
Sec. 928.160 will be amended to include the requirement that inspection 
certificate numbers be added to the utilization reports filed by 
handlers during the time mandatory inspection is required.
    Section 928.313 will also be amended to remove the 5 percent 
tolerance for immature papayas since the committee believes that the 
quality of papayas shipped into fresh market channels must be improved. 
In their recommendation to remove the 5 percent tolerance for immature 
papayas from the reinstated rules and regulations, the committee 
believed that they were tightening the quality requirements by 
utilizing the quality requirements in effect under the Hawaii 
Department of Agriculture Standards for Fruits and Vegetables (Hawaii 
Standards).
    Under the Hawaii Standards, tolerances are applied based upon the 
number of samples and number of fruit in the sample that contains 
defects.

[[Page 70282]]

Immaturity is considered a serious defect under the Hawaii Standards 
for Papaya. According to the Hawaii inspection service, in the routine 
application of the number of defects in a papaya sample, the average 
tolerance applied would generally be less than 5 percent, which would 
result in the increased papaya quality envisioned by the committee.
    Section 928.313 will also be amended to correct the name and 
address of Department references for obtaining copies of the Hawaii 
papaya quality standards, which are incorporated by reference. 
References to Department contacts are outdated, as is the mailing 
address listed in that section. The quality standards for Hawaii-grown 
papayas have been revised as of August 6, 1990, and will replace the 
standards dated May 29, 1981, currently incorporated by reference.
    During its deliberations, the committee discussed the current state 
of the industry with the advent of the two PRSV-resistant papaya 
varieties. Production is increasing and overall production levels of 
Hawaii papayas are expected to reach pre-1994 levels by the 2001-2002 
fiscal year, and then continue growing. Such increasing production 
could reduce handler and producer returns if the quality of papayas 
shipped is not improved.
    Since the suspension of the grade and inspection requirements in 
1994, the quality of Hawaii papayas in the marketplace has been 
deteriorating. The condition of poor quality fruit has often 
deteriorated further during shipment, requiring buyers to discard some 
fruit and repack the remaining fruit. This has resulted in financial 
losses for some buyers and caused decreased buyer confidence in Hawaii 
papaya quality, resulting in reduced market share.
    With the new varieties, the industry is now in a position to 
provide ample supplies of good quality fruit, and restore wholesale 
buyer and consumer confidence in Hawaii papayas. Ample supplies of good 
quality fruit will allow the industry to regain its market share; and, 
thus, improve returns to handlers and producers.
    The committee discussed continuing the suspension as an alternative 
to this change. However, the committee believed that removing the 
suspension of the grade, inspection, and reporting requirements will 
benefit producers and handlers by enhancing the market quality of 
papayas grown in Hawaii.
    The committee estimated that the increased cost of inspection will 
be offset by the increased market value of the inspected papayas. 
Inspection costs incurred will total $24.24 per hour for on site 
inspections and mileage travel costs of 37 cents a mile round-trip from 
the office to the processing plant or handler's premises. For a trip of 
less than 10 minutes or 7 miles, no travel time cost is charged, just 
the mileage cost. For a trip taking 10 or more minutes, or covering 7 
or more miles, the travel time cost is based on the $24.24 hourly rate. 
The majority of committee members agreed that removing the suspension 
of the grade, inspection, and reporting requirements is in the long-
term best interests of the industry.
    Improved quality of Hawaii papayas is expected to result in 
increased consumer satisfaction and repeat purchases, thereby improving 
handler and producer returns. The increased handling costs due to 
mandatory inspection are expected to be offset by the aforementioned 
benefits. In addition, greater information collection authority may 
result in enhanced assessment collections, permitting the committee to 
utilize more funds to promote a larger and higher-quality crop, if they 
deem it appropriate.
    This action imposes additional reporting requirements on an 
estimated five papaya handlers by requiring handlers to file PAC Form 
7, the Application to be an Approved Handler of Immature Papayas, and 
PAC Form 7(c), Maturity Exemption Report. It also requires including 
the inspection certificate number on PAC Form 1. PAC Form 7 is 
estimated to take 15 minutes to complete, and PAC Form 7(c) is 
estimated to take less than 10 minutes to complete. There is no 
additional measurable reporting burden estimated for PAC Form 1. In 
all, requiring both forms will result in an estimated additional 
reporting burden to the previously mentioned five handlers of 9.25 
annual hours. The current burden is approximately 1,000 hours. The 
benefits of the additional reporting requirements are expected to 
outweigh the costs. Handlers will be able to utilize exemptions to the 
grade and inspection requirements, and the committee will have 
additional information to aid in assessment collections and program 
compliance. In accordance with the Paperwork Reduction Act of 1995 (44 
U.S.C. Chapter 35), the information collection requirements that are 
contained in Part 928 have been previously approved by the Office of 
Management and Budget (OMB) and have been assigned OMB No. 0581-0102.
    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. However, as 
previously stated, handlers of Hawaii papayas will be required to 
obtain inspection prior to shipment, except under certain conditions 
when it is not practicable for the inspection service to provide such 
inspection, apply for approval to handle immature papayas, and report 
handling of immature papayas. In addition, changes to PAC Form 1 will 
require handlers to include the number of the inspection certificate 
issued by the inspection service.
    In addition, the committee's meeting was widely publicized 
throughout the papaya industry and all interested persons were 
encouraged to attend the meeting and participate in committee 
deliberations on all issues. Like all committee meetings, the February 
18, 1999, meeting was a public meeting and all entities, both large and 
small, were encouraged to express views on this issue. The committee 
itself is comprised of 13 members, of whom nine are producers and three 
are handlers. The committee also includes a public member who does not 
represent an agricultural interest nor have a financial interest in 
papayas.
    A proposed rule concerning this action was published in the Federal 
Register on February 18, 2000 (65 FR 8313). Copies of the rule were 
mailed or sent via facsimile to all committee members and handlers. 
Finally, the rule was made available on the Internet by the Office of 
the Federal Register. A 60-day comment period, ending April 18, 2000, 
we provided to allow interested persons to respond to the proposal.
    One comment, signed by eight persons, was received in response to 
the proposal. The commenters collectively opposed the removal of the 
suspension of grade and inspection requirements, citing that the 
current economic condition of the papaya industry did not warrant 
reinstatement of these requirements. The commenters also noted that 
production of papayas, which they estimate at only 29 million pounds, 
is not yet adequate to warrant minimum grade and inspection 
requirements and that further market study should have been done prior 
to the committee recommendation. Also, according to the comment, papaya 
trees that are not PRSV-resistant still continue to be lost due to 
PRSV, and the Hawaii Department of Agriculture (HDOA) has not put forth 
a plan to clear abandoned papaya fields. Finally, the comment

[[Page 70283]]

indicated that reinstating minimum grade and inspection requirements 
would be detrimental to small growers, handlers, and marketers.
    It is anticipated that the reinstatement of the grade and 
inspection requirements will have a positive effect on the industry. 
These requirements would ensure that higher-quality papayas are offered 
for sale, thus enhancing the overall image of Hawaii papayas. Such an 
increase in quality is also likely to stimulate consumer confidence and 
lead to repeat purchases, and, thus, improve grower prices. Improved 
grower prices should, in turn, improve the general economic condition 
of the industry. Accordingly, such action would not be detrimental to 
growers, handlers, and marketers, small or large.
    Regarding the comment about additional market studies, this 
recommendation was the result of nearly one year's work by a task force 
assigned by the committee chairman in 1998. The task force reviewed the 
current marketing and quality conditions affecting the industry for 
several months prior to making a recommendation to the committee. As a 
result of the work and recommendation of the task force, the committee 
made its recommendation to the Department after a thorough discussion 
on February 18, 1999. Discussions of the recommendation continued at a 
subsequent committee meeting held on September 23, 1999. At that 
meeting, a thorough analysis of the current condition of the industry 
and the potential effects of reinstating minimum grade and inspection 
requirements was held. It should be noted that the committee did not 
change its original recommendation at that time.
    In response to the comment that the production of papayas is only 
29 million pounds, the PAC estimated the 1999-2000 production of 
papayas to be 40 million pounds. This estimate was discussed and 
approved by the PAC at its April 22, 1999, meeting. The fiscal year 
ended June 30, 2000, and the PAC's final production figure for 1999-
2000 is 35.8 million pounds. An estimate of production for the 2000-
2001 fiscal year is not yet available.
    In any event, the size of a crop alone is not an adequate reason to 
forego reinstating minimum grade and inspection requirements. Minimum 
grade and inspection requirements serve other purposes for an industry. 
The benefits have been previously outlined herein.
    Further, the commenters note that grade and inspection requirements 
should not be reinstated until the HDOA puts forth a plan to clear 
abandoned papaya fields. While a plan to clear abandoned papaya fields 
would likely address the continued infection of non-resistant papayas 
trees, nothing in this action jeopardizes any plan which HDOA may put 
forth in the future. Regardless of the variety of papayas being 
produced and marketed, quality control measures are important to the 
industry in terms of increased consumer confidence and acceptance, 
repeat purchases, and the overall improved image of Hawaii papayas.
    The cost of inspection may be an additional cost to handlers. 
However, the cost is borne by all handlers, and the benefits of 
inspection in terms of increased sales, improved marketability, and 
other factors, are expected to outweigh the costs.
    The comment period was reopened with a notice published in the 
Federal Register on June 5, 2000 (65 FR 35590). Copies of the notice 
were mailed or sent via facsimile to all committee members and 
handlers. Finally, the notice was made available on the Internet by the 
Office of the Federal Register. A 15-day comment period, ending June 
20, 2000, was provided to allow interested persons to respond to the 
notice for additional written comments. One comment was received as the 
result of the comment period reopening.
    The comment was filed on behalf of the committee, which discussed 
the proposal at its meeting on May 25, 2000. According to the comment, 
at the meeting the committee clarified its intent regarding the removal 
of the 5 percent tolerance for immature papayas. Based upon additional 
information that was gathered, evaluated, and considered by the 
committee at the meeting, the committee unanimously reaffirmed its 1999 
recommendation that the maximum percentage tolerances for immature 
papayas be based upon the Hawaii No. 1 standard, as established by the 
State of Hawaii. As noted previously, this would generally limit 
tolerances to less than 5 percent for immature papayas, in part because 
this is scored as a serious defect. Thus, this applied tolerance would 
result in the increased papaya quality envisioned by the committee.
    According to the proponents of this action, the voluntary quality 
control measures anticipated following the 1994 suspension action have 
not been effective and the quality of papayas has been dropping. This 
has had an adverse impact on industry shipments and returns. They 
believe that reinstatement of quality control is in the long term 
interest of the industry because it will help the industry reestablish 
a quality image for Hawaii papayas among buyers and consumers, help 
increase shipments, augment information available to the committee on 
assessments owed by handlers, and facilitate program compliance. These 
are compelling reasons for reinstating quality control under the 
marketing order.
    However, taking into account the views of some in the industry that 
the benefits of mandatory inspection will not outweigh the costs, and 
that alternative methods of quality control should continue to be 
explored and developed in helping the industry solve its marketing 
problems, and the length of time the requirements have been suspended 
(1994), we believe that it is preferable to reestablish the mandatory 
inspection and related requirements and make them applicable for a 12-
month period, rather than on a continuing basis. This regulatory 
approach will require the committee to evaluate the results of 
mandatory quality control near the end of the regulatory period. The 
committee will have to decide then whether mandatory inspection should 
be continued beyond the 12-month regulatory period, and report the 
basis for its determination and recommendation. This will require the 
committee to closely assess the benefits of mandatory inspection in the 
short term which should be of assistance in helping producers and 
handlers make long term plans.
    Changes to the regulatory text as proposed have been made below to 
implement mandatory quality control only for one year from the 
effective date of this final rule.
    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.
    After consideration of all relevant matter presented, including the 
information and recommendation submitted by the committee, the comment 
received, 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.

List of Subjects in 7 CFR Part 928

    Incorporation by reference, Marketing agreements, Papayas, 
Reporting and recordkeeping requirements.

[[Page 70284]]


    For the reasons set forth in the preamble, 7 CFR part 928 is 
amended as follows:

PART 928--PAPAYAS GROWN IN HAWAII

    1. The authority citation for 7 CFR part 928 continues to read as 
follows:

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


    2. The suspensions of Secs. 928.150 and 928.152 are removed and 
introductory text is added to each section to read as follows:


Sec. 928.150  Exemption from inspection.

    The requirements in this section apply through Janaury 2, 2002.
* * * * *


Sec. 928.152  Maturity exemption.

    The requirements in this section apply through January 2, 2002.
* * * * *

    3. In Sec. 928.160, paragraph (a)(1) is revised to read as follows:


Sec. 928.160  Utilization reports.

    (a) * * *
    (1) Quantity of papayas handled subject to assessments and 
regulations including the date, destination, and inspection certificate 
number of each shipment when inspection requirements specified in 
Sec. 928.313 apply Janaury 2, 2001, through January 2, 2002; * * *

    4. The suspension of Sec. 928.313 is removed and the section is 
revised to read as follows:


Sec. 928.313  Hawaiian Papaya Regulation 13.

    (a) During the period January 2, 2001, through January 2, 2002, no 
handler shall ship any container of papayas to any destination (except 
immature papayas handled pursuant to Sec. 928.152) unless such papayas 
grade at least Hawaii No. 1: Provided, That the weight requirements 
specified in this grade shall not apply to such shipments.
    (b) Hawaii No. 1 cited in this regulation is specified in the 
Hawaii Department of Agriculture, Standards for Fruits and Vegetables 
(Title 4, Subtitle 4, Chapter 41, Subchapter 7, Sec. 4-41-52, Standards 
for Hawaii-Grown Papaya) (8/6/90). Copies of the grade specifications 
are available from the Chief, Marketing Order Administration Branch, 
F&V, AMS, USDA, Washington, DC 20250; and they are also available for 
inspection at the Office of the Federal Register, 800 North Capitol 
Street, NW., suite 700, Washington, DC. This incorporation by reference 
was approved by the Director of the Federal Register in accordance with 
5 U.S.C. 552(a), and 1 CFR part 51. The materials are incorporated as 
they exist on the date of approval and a notice of any changes in the 
material will be published in the Federal Register.

    Dated: November 14, 2000.
Eric M. Forman,
Acting Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 00-29706 Filed 11-21-00; 8:45 am]
BILLING CODE 3410-02-P