[Federal Register Volume 66, Number 94 (Tuesday, May 15, 2001)]
[Proposed Rules]
[Pages 26810-26813]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-12140]


 ========================================================================
 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. 66, No. 94 / Tuesday, May 15, 2001 / Proposed 
Rules  

[[Page 26810]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 920

[Docket No. FV01-920-1 PR]


Kiwifruit Grown in California; Removal of Certain Inspection and 
Pack Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: This rule invites comments on the removal of certain 
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 remove 
the requirement that fruit must be reinspected if it has not been 
shipped by specified dates, and would also remove the minimum net 
weight requirements for kiwifruit tray packs. 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 June 14, 2001.

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) 720-8938, 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) 720-8938. 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) 720-8938, 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 proposal invites comments on the removal of certain inspection 
and pack requirements prescribed under the order. The order regulates 
the handling of kiwifruit grown in California and is administered 
locally by the Kiwifruit Administrative Committee (Committee). This 
rule would remove the requirement that fruit must be reinspected if it 
has not been shipped by specified dates, and would also remove the 
minimum net weight requirements for kiwifruit tray packs. These changes 
are expected to reduce handler packing costs, increase grower returns, 
and enable handlers to compete more effectively in the marketplace.

Removal 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 provided. The Committee also believed it was no

[[Page 26811]]

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 wanted 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. Section 920.155 was suspended for the 2000-2001 season by a 
final rule published on June 14, 2000 (65 FR 37265).
    The 2000-2001 season was normal and enabled the industry to 
conclude that the suspensions have indeed helped handlers reduce 
packing costs and to compete more effectively in the marketplace. 
Therefore, at its February 28, 2001, meeting the Committee recommended 
removing this inspection requirement for the 2001-2002 and future 
seasons. As previously experienced, this change is expected to result 
in reduced handler packing costs, increased growers returns, and enable 
handlers to compete more effectively in the marketplace.

Removal 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 tray 
packed 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 of 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 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).
    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 recommended suspending 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. The suspension was implemented 
through July 31, 2001, by a final rule issued June 14, 2000 (65 FR 
37265). The 2000-2001 season was normal and enabled the industry to 
conclude that the suspensions have helped handlers reduce packing costs 
and to compete more effectively in the marketplace. Therefore, at its 
February 28, 2001, meeting, the Committee recommended removing this 
pack requirement for the 2001-2002 and future seasons. As previously 
experienced, this change is expected to result in reduced handler 
packing costs, increased growers returns, and enable handlers to 
compete more effectively in the marketplace, as previously experienced.

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

[[Page 26812]]

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 50 handlers of California kiwifruit subject 
to regulation under the marketing order and approximately 350 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 agricultural service firms 
are defined as those whose annual receipts are less than $5,000,000. 
All of the handlers have annual receipts of less than $5,000,000, 
excluding receipts from other sources. Three hundred forty-five 
producers have annual sales of 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 would remove Sec. 920.155 which requires that fruit be 
reinspected if it has not been shipped by specified dates, and would 
remove paragraph (a)(4)(iii) of Sec. 920.302 which specifies minimum 
net weight requirements for kiwifruit tray packs. These changes are 
expected to reduce handler-packing costs, increase grower returns, and 
enable handlers to compete more effectively in the marketplace. 
Authority for this action is provided in Secs. 920.52 and 920.55 of the 
order.

Removal of Reinspection Requirement

    Removing the requirement that kiwifruit must be reinspected if has 
not been shipped by a certain date would have a minimal impact on the 
quality of fruit shipped. 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 provided. Total average costs for reinspection was 
estimated to be $50,000 a year. 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. Quality control efforts in place within the industry 
combined with improved storage due to research and technological 
advances has ensured that quality fruit reaches the market.
    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.
    The Committee believed that the industry realized benefits from the 
suspension of the reinspection requirement, and recommended evaluating 
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 was implemented by a final rule published on 
June 14, 2000 (65 FR 37265). The 2000-2001 season was normal and 
enabled the industry to conclude that the suspensions have helped 
handlers reduce packing costs and to compete more effectively in the 
marketplace. The kiwifruit industry estimated that removal of the 
reinspection requirement has resulted in cost savings to the industry 
of approximately $50,000 a year.
    Therefore, the Committee, at its February 28, 2001, meeting, 
unanimously recommended removing Sec. 920.155 for the 2001-2002 and 
future seasons.

Removal of Minimum Net Weight Requirements for Trays

    Removing the minimum tray weight requirements for kiwifruit packed 
in cell compartments, cardboard fillers, or molded trays would have a 
minimal impact on the appearance of tray packs. 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.
    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 tray 
packed 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 of 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
------------------------------------------------------------------------

    Therefore, at its meeting on July 8, 1998, the Committee 
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).

[[Page 26813]]

    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 marketplace. 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 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).
    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 voted 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 was implemented 
by a final rule issued June 14, 2000 (65 FR 37265) and is in effect 
until July 31, 2001.
    The 2000-2001 season was normal and enabled the Committee to 
conclude that the suspensions have helped handlers reduce packing costs 
and to compete more effectively in the marketplace. The Committee and 
the Federal-State Inspection Service also have concluded that removing 
the minimum tray weight requirements would not result in a reduction in 
inspection costs as the inspection process is essentially the same. The 
Committee, at its February 28, 2001, meeting, unanimously recommended 
removing paragraph (a)(4)(iii) of Sec. 920.302 for the 2001-2002 and 
all future seasons. The Committee also noted that the minimum size 
requirement should be maintained on all kiwifruit regardless of pack 
style.
    These changes address the marketing and shipping needs of the 
kiwifruit industry and are in the interests 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 
continuing the temporary suspensions for another year. The industry 
believes that it has had adequate time to evaluate these changes. The 
suspensions helped handlers reduce packing costs and compete more 
effectively in the marketplace without an adverse affect on quality or 
appearance of the fruit. Therefore, the Committee recommended removal 
of Secs. 920.155 and 920.302(a)(4)(iii) for the 2001-2002 and future 
seasons.
    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 meeting was widely publicized 
throughout the kiwifruit industry and all interested persons were 
invited to attend the meetings and participate in Committee 
deliberations on all issues. Like all Committee meetings, the February 
28, 2001, 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: 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 need to be in place by August 1, 2001, as the current 
suspensions expire on July 31, 2001, and handlers need to make 
operational decisions in time for the 2001-2002 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  [Removed]

    2. In part 920, Sec. 920.155 is removed in its entirety.


Sec. 920.302  [Amended]

    3. In Sec. 920.302, paragraph (a)(4)(iii) is removed and paragraphs 
(a)(4)(iv), (v), and (vi) are redesignated as paragraphs (a)(4) (iii), 
(iv), and (v), respectively.

    Dated: May 9, 2001.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 01-12140 Filed 5-14-01; 8:45 am]
BILLING CODE 3410-02-P