[Federal Register Volume 66, Number 184 (Friday, September 21, 2001)]
[Rules and Regulations]
[Pages 48527-48529]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-23652]



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 Rules and Regulations
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  Federal Register / Vol. 66, No. 184 / Friday, September 21, 2001 / 
Rules and Regulations  

[[Page 48527]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 928

[Docket No. FV01-928-1 FIR]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (Department) is adopting, as a 
final rule, without change, an interim final rule suspending 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. This rule continues in effect the suspension 
of those provisions. These modifications result 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.

EFFECTIVE DATE: October 22, 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) 720-8938.
    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 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 continues in effect the suspension of 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 continues in effect the 
amendment of Sec. 928.160 of the order's rules and regulations. The 
amendment to Sec. 928.160 continues in effect the removal of 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 continuing in effect the 
suspension of the requirements that were reinstated on January 2, 2001, 
for an indefinite period.
    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 `` 928.45) as the 
committee, with the approval of the

[[Page 48528]]

Secretary, may prescribe. Section 928.60 of the papaya marketing order 
authorizes handler reporting requirements.
    This rule continues in effect the suspension of 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 continues in effect the removal of 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 continues in effect the suspension of 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 also relieves handlers 
from filing PAC Forms 7 and 7(c) with the committee.
    In addition, this rule continues in effect the amendment of 
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 ranged 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, however, has 
not yet been approved for exportation to 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 
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. 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 suspension of mandatory grade, inspection, 
and reporting requirements effective January 2, 2001, are continued in 
effect until such time as the conditions in the industry improve and 
the committee can demonstrate a long-term commitment to a quality 
control program.

Final Regulatory Flexibility Analysis

    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 60 handlers of papayas in the production 
area and approximately 400 producers 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 $750,000, 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

[[Page 48529]]

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 continues in effect the suspension of the grade, 
inspection, and related reporting requirements under the order's rules 
and regulations. As a result, the suspension of Secs. 928.150, 928.152, 
and 928.313 in their entirety is continued, and the amendment of 
Sec. 928.160 is continued 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 the 
suspension of the requirements is preferable and continues in effect, 
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.
    This rule continues in effect the relaxation of reporting 
requirements under the order, since 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 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.
    An interim final rule concerning this action was published in the 
Federal Register on May 30, 2001. Copies of the rule were mailed by the 
committee's staff to all committee members and papaya handlers. In 
addition, the rule was made available through the Internet by the 
Office of the Federal Register. That rule provided for a 60-day comment 
period which ended July 30, 2001. No comments were received.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at the 
following website: 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 found that finalizing the interim final 
rule, without change, as published in the Federal Register (66 FR 
29216, May 30, 2001) will tend to effectuate the declared policy of the 
Act.

List of Subjects in 7 CFR Part 928

    Marketing agreements, Papayas, Reporting and recordkeeping 
requirements.

PART 928--PAPAYAS GROWN IN HAWAII

    Accordingly, the interim final rule amending 7 CFR part 928, which 
was published at 66 FR 29216 on May 30, 2001, is adopted as a final 
rule without change.

    Dated: September 17, 2001.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 01-23652 Filed 9-20-01; 8:45 am]
BILLING CODE 3410-02-P