[Federal Register Volume 70, Number 119 (Wednesday, June 22, 2005)]
[Proposed Rules]
[Pages 36060-36062]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-12254]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 920

[Docket No. FV05-920-1 PR]


Kiwifruit Grown in California; Relaxation of Pack Requirements 
for Kiwifruit Grown in California

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule invites comments on revisions to the pack 
requirements 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 would require that 
kiwifruit marked as size 39 or 42 not vary in diameter by more than \3/
8\ inch, regardless of pack type. In addition, the three tables 
currently under the pack regulation would be consolidated into one. By 
allowing handlers to utilize a single table for kiwifruit size 
designations and size variation tolerances regardless of pack or 
container, this rule is expected to simplify requirements for the 
industry, reduce handler packing costs, increase grower returns, and 
increase flexibility in handler packing operations.

DATES: Comments must be received by July 12, 2005.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. Comments must be sent to the Docket Clerk, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, 1400 Independence Avenue SW., STOP 0237, Washington, DC 
20250-0237; Fax: (202) 720-8938, E-mail: [email protected], or 
Internet: http://www.regulations.gov. 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: Shereen Marino, Marketing Specialist, 
California Marketing Field Office, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, 2202 Monterey Street, 
Suite 102B, Fresno, California 93721; Telephone: (559) 487-5901, Fax: 
(559) 487-5906; or George Kelhart, Technical Advisor, Marketing Order 
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 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 proposal is issued under Marketing 
Order No. 920 as amended (7 CFR part 920), regulating the handling of 
kiwifruit grown in California, hereinafter referred to as the 
``order.'' The order is effective under the Agricultural Marketing 
Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter 
referred to as the ``Act.''
    The Department of Agriculture (USDA) is issuing this rule in 
conformance with Executive Order 12866.
    This proposal has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to have retroactive effect. 
This proposal 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 proposed rule invites comments on revisions to the pack 
requirements for California kiwifruit under the order. This rule would 
require that Size 39 and Size 42 fruit not vary in size by more than 
\3/8\ inch, regardless of pack type. The Committee unanimously 
recommended these changes at its March 2, 2005, meeting.
    Currently, three tables are included under the pack regulation to 
designate sizes and list the size variances permitted for the different 
pack arrangements used in the industry. This rule would consolidate 
tables into one table that would list size designations with applicable 
size variation tolerances for kiwifruit regardless of the pack or 
container type. This rule is expected to simplify requirements for the 
industry, reduce handler packing costs, increase grower returns, and 
increase flexibility in handler packing operations.
    Section 920.52 of the order authorizes the establishment of pack 
requirements. Section 920.302(a)(4) of the order's regulations 
specifies pack requirements for fresh shipments of California 
kiwifruit. Pack requirements include the specific arrangement, size, 
weight, count, or grade of a quantity of kiwifruit in a particular type 
and size of container.
    Section 920.302 of the order's regulations specifies grade, size, 
pack, and container regulations for the fresh shipment of California 
kiwifruit. This section contains three tables regarding pack. One table 
in Sec.  920.302(a)(4)(iii) specifies size designations for kiwifruit 
packed in volume fill containers (such as bags or bulk containers). 
These size designations are based on the maximum number of pieces of 
fruit per 8-pound sample. Two tables in Sec.  920.302 specify size 
variation tolerances. One table in Sec.  920.302(a)(4)(ii)(B) is 
applicable to volume fill containers and lists size designations with 
the corresponding size variation tolerance listed by diameter. The 
other table in Sec.  920.302(a)(4)(ii)(A) is applicable to kiwifruit 
packed in trays and lists the variation tolerance in diameter by count 
(number of pieces of kiwifruit packed in a tray).
    Since 1989, there have been two different size variation tolerances 
for Size 39 and Size 42 kiwifruit, depending on style of pack. The

[[Page 36061]]

majority of Size 39 and Size 42 kiwifruit is initially packed in volume 
fill containers and must meet a size variation tolerance of \3/8\-inch. 
It has become more common for some of the fruit to then be restyled 
(repacked) into trays. In fact, the current estimate is that 10 percent 
of the crop is restyled into trays. All kiwifruit restyled within the 
production area must be reinspected.
    Currently, restyling fruit from volume fill containers into trays 
may require resizing the fruit because the size variation tolerance 
differs for the two containers. Fruit packed in trays that is 39 and 42 
count must meet a size variation tolerance of \1/4\-inch. In order to 
meet the more restrictive \1/4\-inch tolerance, handlers must resize 
the fruit. Resizing is costly and slows down the restyling process. In 
addition, during the initial packing process, pack styles can change 
several times daily depending upon market demand. Resizing may also 
reduce returns to growers. Thus, the Committee recommended changing the 
size variation requirement for Size 39 and Size 42 kiwifruit from \1/4\ 
inch to \3/8\ inch when packed in cell compartments, cardboard fillers, 
or molded trays.
    The Committee also recommended revising the regulations to specify 
one standard size variation tolerance of \3/8\-inch for Size 39 and 
Size 42 kiwifruit, regardless of whether the fruit is packed in volume 
fill containers or trays. To facilitate this change the three tables 
under the pack regulation would be consolidated into one that would 
list both size designations and their applicable size variation 
tolerances for fruit packed in all container types. Additionally, 
clarifying language that was inadvertently omitted from under the first 
table (Count) in prior rulemaking would be restored. The language 
clarifies that the average weight of all sample units in a lot must 
weigh at least 8 pounds, but no sample unit may be more than 4 ounces 
less than 8 pounds. This rule is expected to simplify requirements for 
the industry, reduce handler packing costs, increase grower returns, 
and increase flexibility in handler packing operations. Accordingly, 
section 920.302 is proposed to be revised.

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 45 handlers of California kiwifruit subject 
to regulation under the marketing order and approximately 275 growers 
in the production area. Small agricultural service firms are defined by 
the Small Business Administration (13 CFR 121.201) as those whose 
annual receipts are less than $6,000,000, and small agricultural 
producers are defined as those whose annual receipts are less than 
$750,000. None of the 45 handlers subject to regulation have annual 
kiwifruit sales of at least $6,000,000. In addition, six growers 
subject to regulation have annual sales exceeding $750,000. Therefore, 
a majority of the kiwifruit handlers and growers may be classified as 
small entities.
    This proposed rule would relax the pack requirements currently 
specified in Sec.  920.302 for kiwifruit. The rule would create one 
standard size variation tolerance to be applied uniformly to all 
container types. Additionally, the three tables currently under the 
pack regulation would be consolidated into one. By allowing handlers to 
utilize a single table for kiwifruit size designations and size 
variation tolerances, regardless of pack or container this rule is 
expected to simplify requirements for the industry, reduce handler 
packing costs, increase grower returns, and increase flexibility in 
handler packing operations. Authority for this action is provided in 
Sec.  920.52 of the order, which authorizes the establishment of pack 
requirements.
    The impact of this change on handlers was discussed by the 
Committee. Approximately 10 percent of shipments are restyled from a 
volume fill container to a tray pack. Based on an industry survey, 
restyling costs an average of $.07 per tray equivalent. If there is no 
longer a need for handlers to resize the fruit when restyling from a 
volume fill container to a tray pack, it is estimated that restyling 
costs per tray equivalent would decrease to $.035 per tray equivalent. 
The average of Size 39 and 42 fruit sold over a 6-year period is 
approximately 22 percent of the crop. Current restyling costs are 
obtained by calculating 10 percent of the average of Size 39 and 42 
fruit (22 percent of the total packout) and multiplying that number by 
the estimated cost per tray equivalent.
    Based on a total crop of 6 million tray equivalents (te) the cost 
savings for repacking/restyling would be around $9,000. This amount is 
obtained by subtracting $9,240 from $18,480 from the table below, which 
is the difference between the restyling costs incurred when fruit must 
be resized and restyling costs when fruit does not need to be resized.

------------------------------------------------------------------------
 
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Total Crop Sold (te)....................................       6,000,000
Total Size 39 & 42 fruit (22% of total crop) (te).......       1,320,000
Estimated number of Size 39 & 42 fruit restyled annually         132,000
 from bulk to trays (10% of total 39/42's packed) (te)..
Approximate cost to restyle Sizes 39 and 42 fruit                 $9,240
 without rechecking/resizing for size variation
 difference (0.07 cents per te).........................
Approximate cost to restyle Size 39 and 42 fruit that            $18,480
 requires resize for size variation difference (0.14
 cents per te)..........................................
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    The change would reduce packing costs since handlers would no 
longer need to resize fruit to the more restrictive \1/4\-inch 
tolerance in the restyling (repacking) process. The packing process 
would also move more rapidly since frequent resizing adjustments would 
no longer be necessary. Fewer resizing adjustments may also mean 
increased returns to growers.
    The Committee considered the alternative of not revising the rule, 
but this was not considered viable because of the confusion currently 
experienced because of differences in the size variation tolerance in 
the different packs and the resulting increased packing costs. The 
Committee reasoned that the only viable alternative was to create a 
standard size variation tolerance regardless of pack.
    This proposed rule would create one size variation standard that 
would be applied uniformly to all container types as well as 
consolidate the three tables currently in the pack regulation of the 
order into one table. Accordingly, these actions would not impose any

[[Page 36062]]

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 fact, this proposed 
action would relax the current requirements under the U.S. Standards 
for Grade of Kiwifruit (7 CFR 51.2335 through 51.2340) issued under the 
Agricultural Marketing Act of 1946 (7 U.S.C. 1621 through 1627) with 
regard to ``fairly uniform in size''.
    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 March 2, 
2005, meeting, was a public meeting and all entities, both large and 
small, were encouraged to express their views on these issues. Finally, 
interested persons are invited to submit information on the regulatory 
and informational impacts of this action on small businesses.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab.html. Any questions about the compliance 
guide should be sent to Jay Guerber at the previously mentioned address 
in the FOR FURTHER INFORMATION CONTACT section.
    A 20-day comment period is provided to allow interested persons to 
respond to this proposal. Twenty days is deemed appropriate because 
this rule should be in place by September 10, 2005, which would be 
prior to the start of the 2005/2006 crop year. All written comments 
timely received would be considered before a final determination is 
made on this matter.

List of Subjects in 7 CFR Part 920

    Kiwifruit, Marketing agreements, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 7 CFR part 920 is 
proposed to be amended as follows:

PART 920--KIWIFRUIT GROWN IN CALIFORNIA

    1. The authority citation for 7 CFR part 920 continues to read as 
follows:

    Authority: 7 U.S.C. 601-674.

    2. In Sec.  920.302, paragraph (a)(4) is revised to read as 
follows:


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

    (a) * * *
    (4) Pack requirements. (i) Kiwifruit packed in containers with cell 
compartments, cardboard fillers, or molded trays shall be of proper 
size for the cells, fillers, or molds in which they are packed. Such 
fruit shall be fairly uniform in size.
    (ii) (A) When kiwifruit is packed in any container, it would be 
subject to the size designation, maximum number of fruit per 8-pound 
sample, and the size variation tolerance specified as follows:

                                    Size Designation and Size Variation Chart
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                                                   Column 2--
                                                 maximum number
           Column 1--size designation            of fruit per 8-     Column 3--fruit size variation tolerance
                                                  pound sample                      (diameter)
 
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18 or larger...................................              25  \1/2\-inch (12.7 mm).
20.............................................              27  \1/2\-inch (12.7 mm).
23.............................................              30  \1/2\-inch (12.7 mm).
25.............................................              32  \1/2\-inch (12.7 mm).
27/28..........................................              35  \1/2\-inch (12.7 mm).
30.............................................              39  \1/2\-inch (12.7 mm).
33.............................................              43  \3/8\-inch (9.5 mm).
36.............................................              46  \3/8\-inch (9.5 mm).
39.............................................              49  \3/8\-inch (9.5 mm).
42.............................................              53  \3/8\-inch (9.5 mm).
45 or smaller..................................              55  \1/4\-inch (6.4 mm).
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    (B) The average weight of all sample units in a lot must weigh at 
least 8 pounds, but no sample unit may be more than 4 ounces less than 
8 pounds.
    (C) Not more than 10 percent, by count of the containers in any lot 
and not more than 5 percent, by count, of kiwifruit in any container, 
(except that for Sizes 42 and 45 kiwifruit, the tolerance, by count, in 
any one container, may not be more than 25 percent) may fail to meet 
the size variation requirements of this paragraph.
    (iii) All volume fill containers of kiwifruit designated by weight 
shall hold 19.8-pounds (9-kilograms) net weight of kiwifruit unless 
such containers hold less than 15 pounds or more than 35 pounds net 
weight of kiwifruit.
* * * * *

    Dated: June 16, 2005.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 05-12254 Filed 6-21-05; 8:45 am]
BILLING CODE 3410-02-P