[Federal Register Volume 67, Number 225 (Thursday, November 21, 2002)]
[Rules and Regulations]
[Pages 70140-70146]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-29530]


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

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 920

[Docket No. FV02-920-3 FIR]


Kiwifruit Grown in California; Relaxation of Pack and Container 
Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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

SUMMARY: The Department of Agriculture (USDA) is adopting, as a final 
rule, without change, an interim final rule which revised pack and 
container 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 continues to allow 
handlers to pack more individual pieces of fruit per 8-pound sample for 
three size designations and one less piece of fruit per 8-pound sample 
for one size designation. This rule also continues in effect revisions 
to lot stamping requirements for plastic containers, suspension of the 
standard packaging requirement for volume filled containers of 
kiwifruit designated by weight for the 2002-03 season, and removal of 
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.

EFFECTIVE DATE: December 23, 2002.

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 continues in effect container and pack requirements 
currently prescribed for California kiwifruit under the order. This 
rule continues to allow handlers to pack more individual pieces of 
fruit per 8-pound sample for three size designations and one less piece 
of fruit per 8-pound sample for one size designation. This rule 
continues in effect revisions to lot stamping

[[Page 70141]]

requirements for plastic containers, suspension of the standard 
packaging requirement for volume filled containers of kiwifruit 
designated by weight for the 2002-03 season, and removal of 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 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)(4)(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
                   Size designation                     of fruit per 8-
                                                          pound 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 found 
that adjustments were 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.
    At its April 9, 2002, meeting, the Committee unanimously 
recommended and the USDA approved 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 (67 FR 54327, 
August 22, 2002). The maximum number of fruit allowed in size 23 
increased from 29 pieces of fruit per 8-pound sample to 30 pieces; in 
size 30, 39 pieces of fruit were allowed instead of 38 pieces; in size 
36, 46 pieces of fruit were allowed instead of 45; and in size 42, the 
number of fruit allowed was decreased from 54 pieces of fruit per 8-
pound sample to 53 pieces. These changes are shown in bold in the 
following chart.

------------------------------------------------------------------------
                                                         Maximum number
                   Size designation                     of fruit per 8-
                                                          pound 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.
    Prior to issuance of the interim final rule (67 FR 54327, August 
22, 2002),

[[Page 70142]]

Sec.  920.303(d) required 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 
required 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) were exempted, and continue to be 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.
    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 a 
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 and the USDA 
approved allowing handlers to use any method of positive lot 
identification (PLI) in accordance with Federal or Federal-State 
Inspection Service (inspection service) procedures (67 FR 54327, August 
22, 2002). 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.

Standard Packaging for Volume Filled Containers Designated by Weight

    Section 920.52 authorizes the establishment of pack requirements. 
Paragraphs (a)(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.
    Prior to issuance of the interim final rule (67 FR 54327, August 
22, 2002), Sec.  920.302(a)(4)(v) required 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 limited 
California handlers to 22-pound (10-kilogram) net weight volume filled 
containers. Retailers did 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 paid the same price 
for each container in 2001, the effect was not favorable for California 
handlers.
    Additionally, prior to publication of the above-mentioned interim 
final rule, Sec.  920.302(a)(4)(v) required handlers to utilize a 
standard packaging of 22-pounds (10-kilograms) net weight for volume 
filled containers that were over 10-pounds or less than 35-pounds net 
weight of kiwifruit. This restriction limited California kiwifruit 
handlers in meeting buyer's demands for other types of packaging.
    At its April 9, 2002, meeting, the Committee unanimously 
recommended and the USDA approved suspending the standardized packaging 
requirement of 22-pounds (10-kilograms) net weight for volume filled 
containers for the 2002-03 season (67 FR 54327, August 22, 2002). The 
Committee expects that this suspension will enable California handlers 
to meet the packaging demands of retailers 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. Prior to 
publication of the interim final rule (67 FR 54327, August 22, 2002), 
paragraphs (a)(1) through (a)(6) of Sec.  920.160 specified the types 
of information to be provided on the shipment report.

[[Page 70143]]

Paragraph (a)(4) required handlers to report inventory at the end of 
the reporting period by container; paragraph (a)(5) required handlers 
to report the amount of kiwifruit lost in repack; and paragraph (a)(6) 
required handlers to report the amount of fruit set aside for 
processing.
    The Committee had 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.

Final 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 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 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 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 continues to allow handlers to pack more individual 
pieces of fruit per 8-pound sample for three size designations and one 
less piece of fruit per 8-pound sample for one size designation. This 
rule continues in effect revisions to lot stamping requirements for 
plastic containers, suspension of the standard packaging requirement 
for volume filled containers of kiwifruit designated by weight for the 
2002-03 season, and removal of obsolete language contained in 
paragraphs (a)(4), (a)(5), and (a)(6) of Sec.  920.160 that has not 
been applicable for several years. 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 Sec. Sec.  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)(4)(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
                   Size designation                     of fruit per 8-
                                                          pound 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 found 
that adjustments were 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

[[Page 70144]]

equipment had difficulty during the 2001-02 season distinguishing 
between sizes.
    At its April 9, 2002, meeting, the Committee unanimously 
recommended and the USDA approved 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 (67 FR 54327, 
August 22, 2002). Size 23 was increased from 29 pieces of fruit per 8-
pound sample to 30 pieces, size 30 was increased from 38 pieces of 
fruit per 8-pound sample to 39 pieces of fruit, size 36 was increased 
from 45 pieces of fruit per 8-pound sample to 46 pieces, and size 42 
was decreased from 54 pieces of fruit per 8-pound sample to 53 pieces. 
These changes are shown in the following chart in bold.

------------------------------------------------------------------------
                                                         Maximum number
                   Size designation                     of fruit per 8-
                                                          pound 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 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 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 and 
the USDA approved relaxing the pack requirements for three sizes and 
tightening the pack requirements for one size (67 FR 54327, August 22, 
2002). 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

    Prior to issuance of the interim final rule (67 FR 54327, August 
22, 2002), Sec.  920.303(d) required 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 
required 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 were exempted, and continue to be 
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 a 
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

[[Page 70145]]

alternative, the Committee recommended and the USDA approved relaxing 
the container marking requirements provided that plastic containers 
meet any approved method of PLI (67 FR 54327, August 22, 2002). 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, and 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.
    Prior to issuance of the interim final rule (67 FR 54327, August 
22, 2002), Sec.  920.302(a)(4)(v) required all volume filled containers 
of kiwifruit designated by weight to 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 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.
    Prior to publication of the interim final rule (67 FR 54237, August 
22, 2002), Sec.  920.302(a)(4)(v) required handlers to utilize a 
standard 22-pound (10-kilogram) net weight standard for packaging 
volume filled containers that were over 10-pounds or less than 35-
pounds net weight. This restriction limited California kiwifruit 
handlers in meeting buyer's demands for other types of packaging.
    Therefore, at its April 9, 2002, meeting, the Committee unanimously 
recommended and the USDA approved suspending the standard 22-pounds 
(10-kilograms) net weight packaging requirement for volume filled 
containers designated by weight for the 2002-03 season (67 FR 54327, 
August 22, 2002). The Committee expects that this suspension will 
enable California handlers to meet packaging demands of retailers 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-pounds (10-kilograms) 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. Prior to 
publication of the interim final rule (67 FR 54327, August 22, 2002), 
paragraphs (a)(1) through (a)(6) of Sec.  920.160 specified the types 
of information to be provided on the shipment report. Paragraph (a)(4) 
required handlers to report inventory at the end of the reporting 
period by container; paragraph (a)(5) required handlers to report the 
amount of kiwifruit lost in repack; and paragraph (a)(6) required 
handlers to report the amount of fruit set aside for processing.
    The Committee had 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 continue to 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.
    In addition, as noted in the initial regulatory flexibility 
analysis, USDA has not identified any relevant Federal rules that 
duplicate, overlap, or conflict with this rule.
    Further, 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. 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.
    An interim final rule concerning this action was published in the 
Federal Register on August 22, 2002. Copies of the rule were mailed by 
the Committee Staff to all Committee members and kiwifruit handlers. In 
addition, the rule was made available through the Internet by the 
Office of the Federal Register and USDA. The rule provided for a 60-day 
comment period which ended October 21, 2002. No comments were received.
    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.
    After consideration of all relevant material presented, including 
the Committee's recommendation, and other information, it is found that 
finalizing the interim final rule, without

[[Page 70146]]

change, as published in the Federal Register (67 FR 54327, August 22, 
2002) will tend to effectuate the declared policy of the Act.

List of Subjects in 7 CFR Part 920

    Kiwifruit, Marketing agreements, Reporting and recordkeeping 
requirements.

PART 920--KIWIFRUIT GROWN IN CALIFORNIA

    Accordingly, the interim final rule amending 7 CFR part 920 which 
was published at 67 FR 54327, August 22, 2002, is adopted as a final 
rule without change.

    Dated: November 13, 2002.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 02-29530 Filed 11-20-02; 8:45 am]
BILLING CODE 3410-02-P