[Federal Register Volume 66, Number 104 (Wednesday, May 30, 2001)]
[Rules and Regulations]
[Pages 29216-29219]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-13472]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 928

[Docket No. FV01-928-1 IFR]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule indefinitely suspends the grade, inspection, 
inspection waiver procedures, and related exempt shipment reporting 
requirements under the marketing order regulating papayas grown in 
Hawaii, due to current overproduction and unprecedented low prices for 
fresh papayas. These requirements went into effect on January 2, 2001. 
This action results from a unanimous recommendation of the Papaya 
Administrative Committee (committee or PAC) at an emergency meeting on 
December 28, 2000. This action is expected to permit the industry to 
utilize funds earmarked for inspection for enhanced marketing efforts, 
thus improving producer returns by increasing consumer demand.

DATES: Effective May 31, 2001; comments received by July 30, 2001 will 
be considered prior to issuance of a final rule.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. 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, or can be viewed at: http://www.ams.usda.gov/fv/moab.html.

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

[[Page 29217]]

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 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) 
720-8938, or E-mail: [email protected].

SUPPLEMENTARY INFORMATION: This 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 rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to have retroactive effect. 
This 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.
    This rule suspends three sections of the order's rules and 
regulations regarding minimum grade requirements (Sec. 928.313), 
maturity exemptions (Sec. 928.152), and inspection waiver procedures 
(Sec. 928.150). It also amends Sec. 928.160 of the order's rules and 
regulations. The amendment to Sec. 928.160 removes references to 
mandatory regulations and relieves handlers from the requirement to add 
the inspection certificate number on PAC Form 1, Papaya Utilization.
    This rule results from a unanimous recommendation of the committee 
at an emergency meeting on December 28, 2000. At that meeting, the 
committee recommended postponing, until July 1, 2001, the effective 
date of a final rule published by the Department on November 22, 2000, 
which reinstated grade, inspection, and related reporting requirements, 
effective January 2, 2001. The committee held a subsequent committee 
meeting on January 11, 2001, at which further public discussion was 
held. After considering the committee's recommendation and other 
relevant information, the Department is suspending, for an indefinite 
period, the requirements that were reinstated on January 2, 2001.
    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 Secs. 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.
    This rule suspends Sec. 928.313 of the order s rules and 
regulations regarding minimum grade requirements. That section states 
that no handler shall ship papayas to any destination unless such 
papayas meet the minimum grade of Hawaii No 1.
    This rule also removes the requirement that handlers obtain 
inspection through the Federal or Federal-State Inspection Service 
(inspection service) prior to shipment of fresh papayas. Suspension of 
the inspection waiver procedures in Sec. 928.150 of the order's rules 
and regulations results in the elimination of the authority of the 
inspection service to grant inspection waivers. Inspection waivers 
allow handlers to ship papayas without inspection under certain 
conditions when it is not practicable for the inspection service to 
provide such inspection. In the absence of mandatory inspection, 
handlers do not need inspection waivers issued by the inspection 
service.
    This rule also suspends the maturity exemption and related 
reporting requirements in Sec. 928.152 of the order's rules and 
regulations to remove the requirement that handlers interested in 
becoming handlers of immature papayas apply to the committee for 
approval, and report handling of immature papayas. Immature papayas are 
used in a popular dish called green papaya salad and as a vegetable 
substitute in recipes. Suspension of the maturity exemption and related 
reporting requirements relieves handlers from filing PAC Forms 7 and 
7(c) with the committee.
    In addition, this rule amends Sec. 928.160 to remove the references 
to mandatory regulations and the requirement that handlers include the 
number of the inspection certificate issued by the inspection service 
on each PAC Form 1 filed with the committee.
    Grade, inspection, and reporting requirements under the order were 
suspended in 1994. As previously mentioned, in a final rule published 
on November 22, 2000, and effective January 2, 2001, the Department 
reinstated those requirements under Secs. 928.150, 928.152, 928.313, 
and 928.160 of the order's rules and regulations.
    The committee met on December 28, 2000, and voted unanimously to 
postpone the effective date until July 1, 2001. During that meeting, 
and a subsequent meeting on January 11, 2001, the committee noted that 
producer prices currently range from 6 to 12 cents per pound, compared 
to 25 to 45 cents per pound reported by the committee for the same 
period the previous year. Such prices, coupled with overproduction, 
have had a negative effect on the entire industry, especially for the 
new Rainbow variety of papayas. The Rainbow variety has been developed 
to tolerate the effects of the Papaya Ringspot Virus, which has 
decimated papaya trees in Hawaii for several years. The Rainbow 
variety,

[[Page 29218]]

however, has not yet been approved for exportation to possible 
significant markets, especially Japan or Canada, and is only marketed 
in the United States.
    Given the current marketing limitations and overproduction of 
papayas, the committee recommended that funds earmarked for inspection 
costs be redirected to marketing and promotion in an effort to increase 
demand and improve returns to producers. Currently, with low prices to 
producers, there is little money available for inspection. What funds 
are available, the committee believes, would best be utilized in 
increasing demand by enhanced marketing and promotion activities at 
this time. The committee proposed to review the condition of the 
industry in late spring or early summer to determine if overproduction 
has eased or demand improved. Historically, the summer months result in 
lower production, due to the reduced availability of rainwater. This 
has been true for most varieties of papayas, and may also be true for 
the Rainbow variety. This information would place the committee in a 
better position to evaluate what further recommendations to make in the 
interests of the industry.
    While the committee recommended a postponement of the effective 
date for implementing mandatory grade, inspection, and related 
reporting requirements until July 1, 2001, the Department believes that 
a suspension of the requirements is preferable at this time. First, the 
emergency recommendation was made five days prior to the effective date 
of the regulations, January 2, 2001. Since that time inspections of 
papayas have not occurred. Second, the committee does not yet have a 
timetable for entry of the new Rainbow variety of papayas into the 
export markets to which the traditional variety, Kapoho, currently has 
entry. The committee believes increased demand would help absorb the 
current overproduction of the prolific Rainbow variety, and have a 
positive affect on producer returns. Third, the committee also believes 
that enhanced marketing and promotion may also improve demand for all 
fresh papayas. The committee believes that funds earmarked for 
inspection costs would be better utilized on promotional efforts. Thus, 
there would be no funds available later in the fiscal year for 
implementing mandatory inspection. There is no evidence that the 
conditions that currently exist in the industry would be greatly 
improved in the next several months.
    For these reasons, the mandatory grade, inspection, and reporting 
requirements effective January 2, 2001, are suspended until such time 
as the conditions in the industry improve and the committee can 
demonstrate a long-term commitment to a quality control program.
    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 initial regulatory 
flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and rules issued thereunder, are unique in that 
they are brought about through group action of essentially small 
entities acting on their own behalf. Thus, both statutes have small 
entity orientation and compatibility.
    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 are 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 current average f.o.b. price of $.65 per pound 
of papayas, a handler would have to ship in excess of 7.69 million 
pounds of papayas to have annual receipts of $5,000,000. Last year, 
only one handler shipped more than 7.69 million pounds of papayas, and, 
therefore, could be considered a large business. The remaining handlers 
could be considered small businesses, excluding receipts from other 
sources.
    Based on a reported current average grower price of $0.09 per pound 
and annual industry shipments of 40 million pounds, total grower 
revenues would be $3.6 million. Average annual grower revenue would, 
thus, be $9,000. Based on the foregoing, the majority of handlers and 
producers of papayas may be classified as small entities, excluding 
receipts from other sources.
    This rule suspends the grade, inspection, and related reporting 
requirements under the order's rules and regulations. As a 
result,Secs. 928.150, 928.152, and 928.313 are suspended in their 
entirety, and Sec. 928.160 is amended to remove the reference to 
mandatory regulations and the requirement that the inspection 
certificate number be added to the utilization reports filed by 
handlers.
    At the meeting, the committee discussed the impact of these changes 
on handlers and producers in terms of cost. Since mandatory inspection 
and certification costs are borne by handlers, the cost savings to each 
handler are estimated to be a total $24.24 per hour for on-site 
inspections. In addition, the inspection service charges mileage costs 
of $.37 per mile round trip from the inspection service office to the 
handler's premises or processing plant. According to the inspection 
service, 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. Some 
handlers could pass the inspection costs onto producers, thus, further 
decreasing overall producer returns. These costs do not apply in the 
absence of minimum quality requirements and associated mandatory 
inspection.
    During its deliberations, the committee discussed possible 
alternatives to this action. They deliberated the impacts of the final 
rule taking effect on January 2, 2001. However, because economic 
conditions in the papaya industry are currently at a historically low 
level, the committee rejected that alternative.
    The committee also debated the value of suspending, rather than 
postponing, the regulations in their entirety. That alternative, 
however, was also rejected, as the committee felt suspension of the 
regulations was too drastic an action to take at the time. Instead, the 
committee proposed postponing the effective date of the requirements 
until July 1, 2001, and further reviewing the conditions within the 
industry at that time. The requirements were originally suspended 
beginning on July 1, 1994.
    However, as noted earlier, the Department has determined that a 
suspension of the requirements is preferable, given the current 
industry conditions and likelihood that there will be no substantial 
improvement in the next several months. If industry conditions improve, 
implementation of the quality control program could again be 
recommended by the committee. Accordingly, this action will have a 
favorable effect on both large and small entities.
    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the information collection requirements contained in this 
rule have been previously approved by the Office of Management and 
Budget (OMB) and have been assigned OMB No. 0581-0102.
    This rule relaxes reporting requirements under the order, since

[[Page 29219]]

PAC Form 1 will no longer require the addition of the inspection 
certificate number on it. In addition, PAC Forms 7 and 7(c) will not be 
required from handlers wishing to be approved handlers of immature 
papayas. In the absence of mandatory inspection, no handlers will be 
required to apply for approval to handle immature papayas using PAC 
Form 7 nor report shipments of immature papayas to the committee using 
PAC Form 7(c). This rule will decrease the burden by 9.25 hours.
    The Department has not identified any relevant Federal rules that 
duplicate, overlap, or conflict with this proposed rule.
    In addition, the committee's meetings were widely publicized 
throughout the papaya industry and all interested persons were 
encouraged to attend the meetings and participate in committee 
deliberations on all issues. Like all committee meetings, the December 
28, 2000, and the subsequent January 11, 2001, meetings were public 
meetings and all entities, both large and small, were encouraged to 
express views on this issue. The committee itself is comprised of 13 
members, consisting of nine producer members and three handlers 
members. The committee also includes a public member who does not 
represent an agricultural interest nor have a financial interest in 
papayas. Finally, interested persons are invited to submit information 
on the regulatory and informational impacts of this action on small 
businesses.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at the 
following web site: http://www.ams.usda.gov/fv/moab.html. Any questions 
about the compliance guide should be sent to Jay Guerber at the 
previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    After consideration of all relevant matters presented, including 
the information and recommendation submitted by the committee and other 
available information, it is hereby found that the suspensions and 
revision made by this rule, as hereinafter set forth, will tend to 
effectuate the declared policy of the Act.
    Pursuant to 5 U.S.C. 553, it is also found and determined that it 
is impracticable, unnecessary, and contrary to the public interest to 
give preliminary notice prior to putting this rule into effect, and 
that good cause exists for not postponing the effective date of this 
rule until 30 days after publication in the Federal Register because: 
(1) This rule needs to be in effect as soon as possible to continue to 
provide relief to the Hawaii papaya industry; (2) this action reflects 
the emergency recommendation of the committee and the Department's 
assessment of the industry; and (3) this rule provides a 60-day comment 
period and any comments received will be considered prior to 
finalization of this rule.

List of Subjects in 7 CFR Part 928

    Marketing agreements, Papayas, Reporting and recordkeeping 
requirements.

    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.


Secs. 928.150, 928.152, 928.313  [Suspended]

    2. Sections 928.150, 928.152, and 928.313 are indefinitely 
suspended in their entirety.

    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 including 
the date and destination of each shipment;
* * * * *

    Dated: May 21, 2001.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 01-13472 Filed 5-29-01; 8:45 am]
BILLING CODE 3410-02-P