[Federal Register Volume 67, Number 163 (Thursday, August 22, 2002)]
[Rules and Regulations]
[Pages 54327-54333]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-21364]



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  Federal Register / Vol. 67, No. 163 / Thursday, August 22, 2002 / 
Rules and Regulations  

[[Page 54327]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 920

[Docket No. FV02-920-3 IFR]


Kiwifruit Grown in California; Relaxation of Pack and Container 
Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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

SUMMARY: This rule revises pack and container requirements currently 
prescribed for California kiwifruit 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 increases the number of 
pieces of fruit per 8-pound sample for three size designations and 
decreases the number of individual pieces of fruit per 8-pound sample 
for one size designation, revises lot stamping requirements for plastic 
containers, suspends the standard packaging requirement for volume 
filled containers of kiwifruit designated by weight for the 2002-03 
season, and removes obsolete language from the text of the regulation. 
These changes were unanimously recommended by the Committee and are 
expected to help handlers compete more effectively in the marketplace, 
better meet the needs of buyers, and to improve grower returns.

DATES: Effective August 23, 2002. Comments received by October 21, 2002 
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, 1400 Independence Avenue, SW., STOP 0237, Washington, DC 
20250-0237; 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: Rose Aguayo, 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, 1400 
Independence Avenue, SW., STOP 0237, Washington, DC 20250-0237; 
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, 1400 Independence 
Avenue, SW., STOP 0237, Washington, DC 20250-0237; telephone: (202) 
720-2491, Fax: (202) 720-8938, or e-mail: [email protected].

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order 
No. 920 as amended (7 CFR part 920), regulating the handling of 
kiwifruit grown in California, hereinafter referred to as the 
``order.'' The order is effective under the Agricultural Marketing 
Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter 
referred to as the ``Act.''
    The Department of Agriculture (USDA) 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 USDA 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 USDA 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 USDA'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 revises container and pack requirements currently 
prescribed for California kiwifruit under the order. This rule 
increases the number of pieces of fruit per 8-pound sample for three 
size designations and decreases the number of individual pieces of 
fruit per 8-pound sample that handlers can pack for one size 
designation, revises lot stamping requirements for plastic containers, 
suspends the standard packaging requirement for volume filled 
containers of kiwifruit designated by weight for the 2002-03 season, 
and removes obsolete language from the text of the regulation. These 
changes were unanimously recommended by the Committee and are expected 
to help handlers compete more effectively in the marketplace, better 
meet the needs of buyers, and to improve grower returns. The Committee 
unanimously recommended these changes at its April 9, 2002, meeting.

Numerical Count Size Designations

    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 pack requirements. 
Section 920.302(a)(4) of the order's administrative rules and 
regulations outlines pack requirements for fresh shipments of 
California kiwifruit.
    Section 920.302(a)(4)(iii) establishes a maximum number of fruit 
per 8-pound sample for each numerical count size designation for fruit 
packed in bags, volume filled, or bulk containers.
    The amount of kiwifruit supplied to the domestic market by 
California

[[Page 54328]]

handlers has declined 40 percent since the 1992-93 season, while 
imports from Europe have increased 1,409 percent. During the 2000-01 
season approximately 3.2 million tray equivalents were imported from 
Europe. Imports from Europe are in direct competition with California 
kiwifruit. Additionally, grower prices have steadily declined in spite 
of a continuous increase in the U.S. per capita consumption of 
kiwifruit. When the order was implemented in 1984, the average Free-on-
Board (FOB) value was $1.14 per pound. A recent review of FOB values 
showed that the average FOB value for the 1992-93 season through the 
1999-2000 season was $0.56 per pound, a decline of $0.58 per pound.
    As previously mentioned, the rules and regulations specify a 
maximum number of fruit per 8-pound sample for each numerical count 
size designation for kiwifruit packed in bags, volume filled, or bulk 
containers. California and imported fruit size designations by weight 
have differed since the implementation of the order. In 1998, the 
Committee addressed these differences by revising the numerical count 
per size designation specified in Sec. 920.302(a)(iv) of the order's 
administrative rules and regulations. An interim final rule published 
in the Federal Register on September 3, 1998 (63 FR 46861), increased 
the number of fruit that could be packed per 8-pound samples of size 
designations 30 through 42. A final rule concerning this matter was 
published in the Federal Register on July 29, 1999 (64 FR 41010).
    Buyers generally prefer to purchase containers with a greater 
number of pieces of fruit in the box. Therefore, at its September 19, 
2001, meeting, the Committee again addressed the differences in size 
designations between California kiwifruit and imported kiwifruit and 
unanimously recommended relaxing pack requirements under 
Sec. 920.302(a)(iii) to permit handlers to pack more individual pieces 
of fruit in an 8-pound sample for various sizes.
    The Committee unanimously recommended increasing the maximum number 
of fruit per 8-pound sample for sizes 42 through 25, eliminating size 
21, and adding new sizes 20 and 23. These changes as shown in the 
following chart were implemented through an interim final rule (66 FR 
1413, October 29, 2001) and a final rule (67 FR 11396, March 14, 2002). 
Changes are in bold.

------------------------------------------------------------------------
                                     Maximum number of fruit per 8-pound
          Size designation                          sample
------------------------------------------------------------------------
                     20                                   27
                     23                                   29
                     25                                   32
                  27/28                                   35
                     30                                   38
                     33                                   43
                     36                                   45
                     39                                   49
                     42                                   54
                     45                                   55
------------------------------------------------------------------------

    This chart is commonly referred to as the ``Size Designation 
Chart'' in the industry. Increasing the maximum number of fruit per 8-
pound sample allowed some smaller-sized fruit to be packed into a 
larger-size category. This change allowed one more piece of fruit to be 
packed per 8-pound sample in sizes 42 and 39, three more pieces of 
fruit to be packed in size 36, seven more pieces of fruit to be packed 
in size 33, and five more pieces of fruit to be packed in sizes 27/28 
and 25.
    Increasing the maximum number of fruit permitted per 8-pound 
samples during the 2001-02 season enabled handlers to better meet the 
needs of buyers, because kiwifruit sells by the piece, and buyers 
desire as much fruit in each container as the container can comfortably 
hold.
    The changes to the size designation chart have helped reduce the 
sizing differences between California and imported kiwifruit during the 
2001-02 season and allowed more fruit to be sold; however, handlers 
found that adjustments are still needed in some of the size 
designations to bring them closer to imported fruit size designations 
and to allow more accurate sorting into the size categories with 
handler sizing equipment. Sizing equipment had difficulty during the 
2001-02 season distinguishing between sizes.
    Therefore, at its April 9, 2002, meeting, the Committee unanimously 
recommended increasing the maximum number of fruit per 8-pound sample 
for sizes 23, 30, and 36, and reducing the maximum number of fruit per 
8-pound sample for size 42. The maximum number of fruit allowed in size 
23 will be increased from 29 pieces of fruit per 8-pound sample to 30 
pieces; in size 30, 39 pieces of fruit will be allowed instead of 38 
pieces; in size 36, 46 pieces of fruit will be allowed instead of 45; 
and in size 42, the number of fruit allowed will be decreased from 54 
pieces of fruit per 8-pound sample to 53 pieces. These recommended 
changes are shown in the following chart. Recommended changes are shown 
in bold.

------------------------------------------------------------------------
                                     Maximum number of fruit per 8-pound
          Size designation                          sample
------------------------------------------------------------------------
                     20                             27
                     23                             29    30
                     25                             32
                  27/28                             35
                     30                             38    39
                     33                             43
                     36                             45    46
                     39                             49
                     42                             54    53
                     45                             55
------------------------------------------------------------------------

    The Committee believes that increasing the number of fruit 
permitted per 8-pound samples of sizes 23, 30, and 36, and decreasing 
the number of fruit per 8-pound sample for size 42 will result in more 
clearly defined size categories, and allow sizing equipment to more 
uniformly separate fruit of different sizes. Additionally, these 
adjustments will make the four size designations more similar to those 
for imported fruit. This action will not affect import requirements.

Lot Stamping Requirements

    Section 920.52 of the order authorizes the establishment of 
container requirements. Section 920.55 of the order requires inspection 
and certification of kiwifruit, handled by handlers.
    Section 920.303(d) requires all exposed or outside containers of 
kiwifruit, but not less than 75 percent of the total containers on a 
pallet be plainly marked with the lot stamp number corresponding to the 
lot inspection conducted by an authorized inspector. It further 
requires that individual consumer packages of kiwifruit placed directly 
on a pallet have all outside or exposed packages on a pallet plainly 
marked with the lot stamp number corresponding to the lot inspection 
conducted by an authorized inspector or have one inspection label 
placed on each side of the pallet. However, kiwifruit packed into 
individual consumer packages within a master container that are being 
directly loaded into a vehicle for export shipment under the 
supervision of the Federal or Federal-State Inspection Service 
(inspection service) are exempted from the lot stamp number 
requirement.
    The lot stamp number is used by the inspection service to identify 
and locate the corresponding inspector's working papers or notes. 
Working papers are the documents each inspector completes while 
performing an inspection on a lot of kiwifruit.

[[Page 54329]]

    During the 2001 season, the kiwifruit industry began using plastic 
containers of various dimensions that can hold either bulk or tray 
packed kiwifruit. Some of these containers are reusable. Kiwifruit 
packed in reusable plastic containers (RPCs) is typically delivered to 
the retailer, where the containers are emptied and returned to the 
clearinghouse for cleaning and redistribution. As RPCs do not support 
markings that are permanently affixed to the container, all markings 
must be printed on cards, which slip into tabs on the front or sides of 
the containers. The cards are easily inserted and removed and 
contribute to the efficient use of the container. Because of their 
unique portability, the industry and inspection service are concerned 
that the cards on pallets of inspected containers could easily be moved 
to pallets of uninspected containers, enabling a handler to avoid 
inspection on a lot or lots of kiwifruit.
    The industry experimented last season with round adhesive labels on 
RPCs. The lot stamp number was stamped on the round adhesive label and 
placed on the RPCs; however, manufacturers found that it was difficult 
to remove the adhesive label in the wash cycle. Additionally, handlers 
found that increased labor was needed to affix the adhesive labels and 
lot stamp number to the plastic containers. Handler members calculated 
that affixing adhesive labels to RPCs and one-way plastic containers 
cost the kiwifruit industry approximately $0.10 per container in 
materials and labor.
    The inspection service and the Committee have presented their 
concerns to the manufacturers of these types of containers. One 
manufacturer has indicated a willingness to address the problem by 
offering an area on the principal display panel where the container 
markings will adhere to the plastic container. However, the 
manufacturer believes that this change may not be feasible in the near 
future.
    To address the additional time and cost of affixing adhesive labels 
to containers, the Committee unanimously recommended that handlers be 
allowed to use any method of positive lot identification (PLI) in 
accordance with Federal or Federal-State Inspection Service (inspection 
service) procedures. The Committee estimated that allowing handlers to 
use any method of PLI acceptable to inspection service will reduce 
handler costs by $8,700, and will make handler operations more 
efficient. This action will not affect import requirements.

Standard Packaging for Volume Filled Containers Designated by 
Weight

    Section 920.52 authorizes the establishment of pack requirements. 
Paragraphs (1) and (3) of Sec. 920.52 specify that the USDA may fix the 
weight of containers used in the handling of kiwifruit.
    Section 920.302(a)(4) of the order's administrative rules and 
regulations outlines pack requirements for fresh shipments of 
California kiwifruit.
    Section 920.302(a)(4)(v) requires that all volume filled containers 
of kiwifruit designated by weight shall hold 22-pounds (10-kilograms) 
net weight of kiwifruit unless such containers hold less than 10-pounds 
or more than 35-pounds net weight of kiwifruit.
    In a volume filled container, fairly uniform size kiwifruit are 
loosely packed without cell compartments, cardboard fillers or molded 
trays. Handlers may ship volume filled containers marked by either the 
appropriate count or net weight of kiwifruit. Handler shipments are 
based upon the preference of the receiver.
    In 1994, the Committee unanimously recommended and USDA established 
standard packaging for certain volume filled containers designated by 
weight. At that time 52 percent of the total crop was packed into 
volume filled containers. The percentage of the total crop packed into 
volume filled containers increased to 85 percent during the 2001-02 
season. In 2001-02, imports from the Northern hemisphere (Greece, 
Italy, and France) totaled approximately 17 percent of the U.S. market 
share. The majority of imported kiwifruit was shipped in 19.8-pound (9-
kilogram) volume filled containers, whereas the order limits California 
handlers to 22-pound (10-kilogram) net weight volume filled containers. 
Retailers do not differentiate between an imported 19.8-pound (9-
kilogram) and a 22-pound (10-kilogram) net weight volume filled 
container from California. Because buyers pay the same price for each 
container, the affect is not favorable for California handlers.
    Section 920.302(a)(4)(v) requires handlers to utilize a standard 
packaging of 22-pounds (10-kilograms) net weight for volume filled 
containers that are over 10-pounds or less than 35-pounds net weight of 
kiwifruit. This restriction limits California kiwifruit handlers in 
meeting buyer's demands for other types of packaging.
    Therefore, at its April 9, 2002, meeting, the Committee unanimously 
recommended suspending the standardized packaging requirement of 22-
pounds (10-kilograms) net weight for volume filled containers for the 
2002-03 season. The Committee expects that this suspension will enable 
California handlers to meet packaging demands of the retailer for 
volume filled containers, make California kiwifruit more competitive by 
allowing handlers to match other packaging styles, and reduce handlers' 
packaging costs. This change will not affect the import regulation.

Removal of Obsolete Language

    Paragraphs (a) and (b) of Sec. 920.60 authorize reporting 
requirements for kiwifruit handlers under the marketing order.
    Section 920.160 requires each handler who ships kiwifruit to file a 
report of shipment and inventory data to the Committee no later than 
the fifth day of the month following such shipment. Handlers who ship 
less than 10,000 trays or the equivalent thereof, per fiscal year, and 
who have qualified with the Committee are only required to furnish such 
report of shipment and inventory data twice each year. Paragraphs 
(a)(1) through (a)(6) of Sec. 920.160 specify the types of information 
to be provided on the shipment report. Paragraph (a)(4) requires 
handlers to report inventory at the end of the reporting period by 
container; paragraph (a)(5) requires handlers to report the amount of 
kiwifruit lost in repack; and paragraph (a)(6) requires handlers to 
report the amount of fruit set aside for processing.
    The Committee has not been collecting this information from 
handlers since the early 1990's. Therefore, the Committee unanimously 
recommended removing these obsolete reporting requirements from 
Sec. 920.160 of the order's rules and regulations at the April 9, 2002, 
meeting.

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 
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 52 handlers of California kiwifruit subject 
to

[[Page 54330]]

regulation under the marketing order and approximately 326 growers in 
the production area. Small agricultural service firms are defined as 
those whose annual receipts are less than $5,000,000, and small 
agricultural growers are defined by the Small Business Administration 
(13 CFR 121.201) as those whose annual receipts are less than $750,000. 
None of the 52 handlers subject to regulation have annual kiwifruit 
sales of at least $5,000,000. Two of the 326 growers subject to 
regulation have annual sales of at least $750,000. Therefore, a 
majority of the kiwifruit handlers and growers may be classified as 
small entities.
    This rule invites comments on revisions to container and pack 
requirements prescribed under the California kiwifruit order. This rule 
increases the number of pieces of fruit per 8-pound sample for three 
size designations and decreases the number of pieces of fruit per 8-
pound sample for one size designation, revises lot stamping 
requirements for plastic containers, suspends the standard packaging 
requirement for volume filled containers of kiwifruit designated by 
weight for the 2002-03 season, and removes obsolete language contained 
in paragraphs (a)(4), (a)(5), and (a)(6) of Sec. 920.160 that has not 
been applicable for several years. The Committee unanimously 
recommended these changes at its April 9, 2002, meeting. This rule is 
expected to help handlers compete more effectively in the marketplace, 
better meet the needs of buyers, and to improve grower returns. 
Authority for these actions is provided in Secs. 920.52, 920.55, and 
920.60 of the order.

Numerical Count Size Designations

    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 920.302(a)(4) of the order's administrative rules and 
regulations outlines pack requirements for fresh shipments of 
California kiwifruit.
    Section 920.302(a)(4)(iii) establishes a maximum number of fruit 
per 8-pound sample for each numerical count size designation for fruit 
packed in bags, volume filled, or bulk containers.
    The amount of kiwifruit supplied to the domestic market by 
California handlers has declined 40 percent since the 1992-93 season, 
while imports from Europe have increased 1,409 percent. During the 
2000-01 season approximately 3.2 million tray equivalents were imported 
from Europe. Imports from Europe are in direct competition with 
California kiwifruit. Additionally, grower prices have steadily 
declined in spite of a continuous increase in the U.S. per capita 
consumption of kiwifruit. When the order was implemented in 1984, the 
average Free-on-Board (FOB) value was $1.14 per pound. A recent review 
of FOB values showed that the average FOB value for the 1992-93 season 
through the 1999-2000 season was $0.56 per pound, a decline of $0.58 
per pound.
    As previously mentioned, the rules and regulations specify a 
maximum number of fruit per 8-pound sample for each numerical count 
size designation for kiwifruit packed in bags, volume filled, or bulk 
containers. California and imported fruit size designations by weight 
have differed since the implementation of the order. In 1998 the 
Committee addressed these differences by revising the numerical count 
per size designation specified in Sec. 920.302(a)(iv) of the order's 
administrative rules and regulations. An interim final rule published 
in the Federal Register on September 3, 1998 (63 FR 46861), increased 
the number of fruit that could be packed per 8-pound samples of size 
designations 30 through 42. A final rule concerning this matter was 
published in the Federal Register on July 29, 1999 (64 FR 41010).
    Buyers generally prefer to purchase containers with a greater 
number of pieces of fruit in the box. Therefore, at its September 19, 
2001, meeting, the Committee again addressed the differences in size 
designations between California kiwifruit and imported kiwifruit and 
unanimously recommended relaxing pack requirements under 
Sec. 920.302(a)(iii) to permit handlers to pack more individual pieces 
of fruit in an 8-pound sample for various size designations, and, thus, 
better meet buyer preferences.
    The Committee unanimously recommended increasing the maximum number 
of fruit per 8-pound sample for sizes 42 through 25, eliminating size 
21, and adding new sizes 20 and 23. These changes, as shown in the 
following chart, were implemented through an interim final rule (66 FR 
1413, October 29, 2001), and finalized by a final rule (67 FR 11396, 
March 14, 2002). Changes are shown in bold.

------------------------------------------------------------------------
                                     Maximum number of fruit per 8-pound
          Size designation                          sample
------------------------------------------------------------------------
                     20                                   27
                     23                                   29
                     25                                   32
                  27/28                                   35
                     30                                   38
                     33                                   43
                     36                                   45
                     39                                   49
                     42                                   54
                     45                                   55
------------------------------------------------------------------------

    This chart is commonly referred to as the ``Size Designation 
Chart'' in the industry. Increasing the maximum number of fruit per 8-
pound sample allowed some smaller-sized fruit to be packed into a 
larger-size category. This change allowed one more piece of fruit to be 
packed per 8-pound sample in sizes 42 and 39, three more pieces of 
fruit to be packed in size 36, seven more pieces of fruit to be packed 
in size 33, and five more pieces of fruit to be packed in sizes 27/28 
and 25.
    Increasing the maximum number of fruit permitted per 8-pound 
samples during the 2001-02 season enabled handlers to better meet the 
needs of buyers, because kiwifruit sells by the piece, and buyers 
desire as much fruit in each container as the container can comfortably 
hold.
    The changes to the size designation chart helped reduce the sizing 
differences between California and imported kiwifruit during the 2001-
02 season and allowed more fruit to be sold. However, handlers find 
that adjustments are still needed in some of the size designations to 
bring them closer to imported fruit size designations and to allow more 
accurate sorting into the size categories with handler sizing 
equipment. Sizing equipment had difficulty during the 2001-02 season 
distinguishing between sizes.
    Therefore, at its April 9, 2002, meeting, the Committee unanimously 
recommended increasing the maximum number of fruit per 8-pound sample 
for sizes 23, 30, and 36, and reducing the maximum number of fruit per 
8-pound sample for size 42. Size 23 will be increased from 29 pieces of 
fruit per 8-pound sample to 30 pieces, size 30 will be increased from 
38 pieces of fruit per 8-pound sample to 39 pieces of fruit, size 36 
will be increased from 45 pieces of fruit per 8-pound sample to 46 
pieces, and size 42 will be decreased from 54 pieces of fruit per 8-
pound sample to 53 pieces. These recommended changes are shown in the 
following chart in bold.

------------------------------------------------------------------------
                                     Maximum number of fruit per 8-pound
          Size designation                          sample
------------------------------------------------------------------------
                     20                             27
                     23                             29    30
                     25                             32
                  27/28                             35
                     30                             38    39
                     33                             43
                     36                             45    46
                     39                             49
                     42                             54    53
                     45                             55
------------------------------------------------------------------------


[[Page 54331]]

    The Committee believes that increasing the number of fruit 
permitted per 8-pound samples of sizes 23, 30, and 36, and decreasing 
the number of fruit in 8-pound samples for size 42 will result in more 
clearly defined size categories and allow sizing equipment to more 
uniformly separate fruit of different sizes. Additionally, these 
adjustments will make the four size designations more similar to those 
for imported fruit. This action will not affect import requirements.
    The Committee discussed alternatives to these changes. It 
considered suspending the size designation chart to lower inspection 
costs and allow handlers to pack similar to imports. However, it did 
not adopt this option because it concluded inspection costs will not be 
significantly lowered and because a recent grower survey showed that 
uniform sizing is one of the most important issues to the California 
kiwifruit growers.
    Another suggestion presented was to leave the size designation 
chart unchanged. The Committee did not adopt this suggestion because it 
believes that handlers will benefit from the revised numerical counts 
for sizes 23, 30, 36, and 42.
    After considering these alternatives, the Committee recommended 
relaxing the pack requirements for three sizes and tightening the pack 
requirements for one size. Small and large growers and handlers are 
expected to benefit from these changes. A reasonable crop estimate for 
the 2002-03 season is 7.5 million tray equivalents. The average FOB 
value for the 2001-02 season is estimated to be $3.50 per tray 
equivalent. The Committee estimated that the changes to the numerical 
count for size designations 23, 30, 36 and 42 will increase the average 
FOB value for the 2002-03 season to $3.75 per tray equivalent. It is 
anticipated that the FOB value for the 2002-03 season will increase by 
$1,875,000 ($3.75--$3.50 x 7,500,000 tray equivalents). This change 
will not affect the minimum size and will not allow fruit currently 
considered ``undersized'' to be shipped. These changes will not affect 
import requirements. These changes are expected to help handlers 
compete more effectively in the marketplace, better meet the needs of 
buyers, and to improve grower returns.

Lot Stamping Requirements

    Section 920.303 (d) requires all exposed or outside containers of 
kiwifruit, but not less than 75 percent of the total containers on a 
pallet, to be plainly marked with the lot stamp number corresponding to 
the lot inspection conducted by an authorized inspector. It further 
requires that individual consumer packages of kiwifruit placed directly 
on a pallet have all outside or exposed packages on a pallet plainly 
marked with the lot stamp number corresponding to the lot inspection 
conducted by an authorized inspector or have one inspection label 
placed on each side of the pallet. However, kiwifruit packed into 
individual consumer packages within a master container that are being 
directly loaded into a vehicle for export shipment under the 
supervision of the inspection service is exempted from the lot stamp 
number requirement. The lot stamp number is used by the inspection 
service to identify and locate the corresponding inspector's working 
papers or notes. Working papers are the documents each inspector 
completes while performing an inspection on a lot of kiwifruit and the 
information in the working papers is used by the inspector to determine 
the grade of the inspected lot.
    During the 2001 season, the kiwifruit industry began using plastic 
containers of various dimensions that can hold either bulk or tray 
packed kiwifruit. Some of these containers are reusable. Kiwifruit 
packed in reusable plastic containers (RPCs) is typically delivered to 
the retailer where the containers are emptied and returned to the 
clearinghouse for cleaning and redistribution. As RPCs do not support 
markings that are permanently affixed to the container, all markings 
must be printed on cards, which slip into tabs on the front or sides of 
the containers. The cards are easily inserted and removed and further 
contribute to the efficient use of the container. Because of their 
unique portability, the industry and inspection service are concerned 
that the cards on pallets of inspected containers could easily be moved 
to pallets of uninspected containers, enabling a handler to avoid 
inspection on a lot or lots of kiwifruit.
    The industry experimented last season with round adhesive labels on 
RPCs. The lot stamp number was stamped on the round adhesive label and 
placed on the RPCs; however, manufacturers found that it was difficult 
to remove the adhesive label in the wash cycle. Additionally, handlers 
found that increased labor was needed to affix the adhesive labels and 
lot stamp number to the plastic containers. Handler members calculated 
that affixing adhesive labels to RPCs and one-way plastic containers 
cost the kiwifruit industry approximately $0.10 per container in 
materials and labor. The inspection service and the Committee have 
presented their concerns to the manufacturers of these types of 
containers. One manufacturer has indicated a willingness to address the 
problem by offering an area on the principal display panel where the 
container markings will adhere to the plastic container. However, this 
change may not be feasible in the near future.
    To address the additional time and cost of affixing adhesive labels 
to containers, the Committee unanimously recommended that handlers be 
allowed to use any method of PLI in accordance with Federal or Federal-
State Inspection Service (inspection service) procedures. The Committee 
estimated that allowing handlers to use any method of PLI acceptable to 
the inspection service will reduce handler costs by $8,700, and will 
make handler operations more efficient. This action will not affect 
import requirements.
    The Committee discussed alternatives to this change including not 
changing the lot stamp requirements for plastic containers. After 
considering this alternative, the Committee recommended relaxing the 
container marking requirements provided that plastic containers meet 
any approved method of PLI. The Committee believes that handlers and 
growers will benefit from such a relaxation. This change is expected to 
help handlers compete more effectively in the marketplace and to 
improve grower returns. This action will not affect import 
requirements.

Standard Packaging for Volume Filled Containers Designated by 
Weight

    Section 920.302(a)(4) of the order's administrative rules and 
regulations outlines pack requirements for fresh shipments of 
California kiwifruit.
    Section 920.302 (a)(4)(v) requires that all volume filled 
containers of kiwifruit designated by weight shall hold 22-pounds (10-
kilograms) net weight of kiwifruit unless such containers hold less 
than 10-pounds or more than 35-pounds net weight of kiwifruit.
    In a volume filled container, fairly uniform size kiwifruit are 
loosely packed without cell compartments, cardboard fillers or molded 
trays. Handlers may ship volume filled containers marked by either the 
appropriate count or net weight of kiwifruit. Handler shipments are 
based upon the preference of the receiver.
    In 1994, the Committee unanimously recommended, and USDA 
established standard packaging for certain volume filled containers 
packed by weight. At that time, 52 percent of the total crop was packed 
into volume filled containers. The percentage of the total crop packed 
into volume filled

[[Page 54332]]

containers increased to 85 percent during the 2001-02 season. In 2001-
02, imports from the Northern Hemisphere (Greece, Italy, and France) 
totaled approximately 17 percent of the U.S. market share. The majority 
of imported kiwifruit was shipped in 19.8-pound (9-kilogram) volume 
filled containers, whereas the order limits California handlers to 22-
pound (10-kilogram) net weight volume filled containers. Retailers do 
not differentiate between an imported 19.8-pound (9-kilogram) and 22-
pound (10-kilogram) net weight volume filled container from California. 
Because buyers pay the same price for each container, the effect is not 
favorable for California handlers.
    Section 920.302(a)(4)(v) requires handlers to utilize a standard 
22-pound (10-kilogram) net weight standard packaging for volume filled 
containers that are over 10-pounds or less than 35-pounds net weight. 
This restriction limits California kiwifruit handlers in meeting 
buyer's demands for other types of packaging.
    Therefore, at its April 9, 2002, meeting, the Committee unanimously 
recommended suspending the standard 22-pound (10-kilogram) net weight 
packaging requirement for volume filled containers designated by weight 
for the 2002-03 season. The Committee expects that this suspension will 
enable California handlers to meet packaging demands of the retailer 
for volume filled containers; make California kiwifruit more 
competitive with imports by allowing handlers to pack similar to 
imports; and reduce handlers' packaging costs. This change will not 
impact import requirements.
    The Committee discussed alternatives at the April 9, 2002, meeting. 
One Committee member suggested leaving the standard packaging 
requirement unchanged. However, the Committee believes that relaxing 
the standard packaging requirement of 22-pound (10-kilogram) net weight 
for volume filled containers designated by weight will allow handlers 
the flexibility to meet buyer container preferences and to increase 
sales.
    The Committee considered other alternatives to revising packing and 
container requirements; but determined that these suggestions will not 
adequately address the industry problems.

Removal of Obsolete Language

    Paragraphs (a) and (b) of Sec. 920.60 authorize reporting 
requirements for kiwifruit handlers under the marketing order.
    Section 920.160 requires each handler who ships kiwifruit to file a 
report of shipment and inventory data to the Committee no later than 
the fifth day of the month following such shipment. Handlers who ship 
less than 10,000 trays or the equivalent thereof, per fiscal year, and 
who have qualified with the Committee are only required to furnish such 
report of shipment and inventory data twice each year. Paragraphs 
(a)(1) through (a)(6) of Sec. 920.160 specify the types of information 
to be provided on the shipment report. Paragraph (a)(4) requires 
handlers to report inventory at the end of the reporting period by 
container; paragraph (a)(5) requires handlers to report the amount of 
kiwifruit lost in repack; and paragraph (a)(6) requires handlers to 
report the amount of fruit set aside for processing.
    The Committee has not been collecting this information from 
handlers since the early 1990's. Therefore, the Committee unanimously 
recommended removing these obsolete reporting requirements from 
Sec. 920.160 of the order's rules and regulations at the April 9, 2002, 
meeting. It is estimated that the handler burden will not be impacted, 
as the current shipment report form approved by the Office of 
Management and Budget (OMB) under OMB No. 0581-0189 does not contain 
these data elements.
    This rule will relax pack and container requirements under the 
kiwifruit order. Accordingly, this action will 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 sectors.
    USDA 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 meeting and participate in Committee 
deliberations on all issues. Like all Committee meetings, the April 9, 
2002, meeting was a public meeting and all entities, both large and 
small, were able to express their views on this issue. 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.
    This rule invites comments on revisions to pack and container 
requirements currently prescribed under the California marketing order. 
Any comments received will be considered prior to finalization of this 
rule.
    After consideration of all relevant material presented, including 
the Committee's recommendation, and other information, it is found that 
this interim final rule, as hereinafter set forth, will tend to 
effectuate the declared policy of the Act.
    Pursuant to 5 U.S.C., it is also found and determined upon good 
cause 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 relaxes pack and container requirements; (2) the 
2002-2003 harvest is expected to begin during September and this 
relaxation should be in place as soon as possible to enable handlers to 
make operational decisions and to cover as much of the harvest as 
possible; (3) the Committee unanimously recommended these changes to 
provide handlers more marketing flexibility at a public meeting and 
interested parties had an opportunity to provide input; and (4) 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 920

    Kiwifruit, Marketing agreements, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 7 CFR part 920 is 
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. 920.160  [Amended]

    2. In Sec. 920.160, paragraphs (a)(4), (a)(5), and (a)(6) are 
removed.

    3. In Sec. 920.302, paragraph (a)(4)(v) is suspended beginning with 
August 23, 2002 through July 31, 2003, and the table in paragraph 
(a)(4)(iii) is revised to read as follows:


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

    (a) * * *

[[Page 54333]]

    (4) * * *
    (iii) * * *

------------------------------------------------------------------------
                                       Column 2 maximum number of fruit
     Column 1 size designation                per 8 pound sample
------------------------------------------------------------------------
                     20                                   27
                     23                                   30
                     25                                   32
                  27/28                                   35
                     30                                   39
                     33                                   43
                     36                                   46
                     39                                   49
                     42                                   53
                     45                                   55
------------------------------------------------------------------------

* * * * *

    4. In Sec. 920.303, paragraph (d) is revised to read as follows:


Sec. 920.303  Container marking regulations.

* * * * *
    (d) All exposed or outside containers of kiwifruit, but not less 
than 75 percent of the total containers on a pallet, shall be plainly 
marked with the lot stamp number corresponding to the lot inspection 
conducted by an authorized inspector, except for individual consumer 
packages within a master container and containers that are being 
directly loaded into a vehicle for export shipment under the 
supervision of the Federal or Federal-State Inspection Service. 
Individual consumer packages of kiwifruit placed directly on a pallet 
shall have all outside or exposed packages on a pallet plainly marked 
with the lot stamp number corresponding to the lot inspection conducted 
by an authorized inspector or have one inspection label placed on each 
side of the pallet. Plastic containers of kiwifruit, placed on a 
pallet, shall be positive lot identified (PLI) in accordance with 
Federal or Federal-State Inspection Service procedures and shall have 
required information on the cards of the individual containers, as 
provided in this section of the regulations.
* * * * *

    Dated: August 16, 2002.
A. J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 02-21364 Filed 8-19-02; 10:25 am]
BILLING CODE 3410-02-P