[Federal Register Volume 72, Number 32 (Friday, February 16, 2007)]
[Rules and Regulations]
[Pages 7547-7549]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-2732]



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 Rules and Regulations
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  Federal Register / Vol. 72, No. 32 / Friday, February 16, 2007 / 
Rules and Regulations  

[[Page 7547]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 920

[Docket No. FV06-920-1 FIR]


Kiwifruit Grown in California; Relaxation of Container Marking 
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 that relaxed the container 
marking requirements for kiwifruit covered 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). Prior to implementation 
of the interim final rule, kiwifruit that had been inspected, met 
applicable grade and size requirements, and was subsequently placed 
into new containers, had to be positive lot identified, which required 
reinspection. This rule continues in effect the action that established 
procedures for handlers to ship such kiwifruit without positive lot 
identification (PLI). This rule is intended to reduce handler 
inspection costs and facilitate the marketing of kiwifruit.

DATES: Effective Date: March 19, 2007.

FOR FURTHER INFORMATION CONTACT: Shereen Marino, Marketing Specialist, 
or Kurt J. Kimmel, Regional Manager, California Marketing Field Office, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, telephone: (559) 487-5901, Fax: (559) 487-5906, or E-mail: 
[email protected], or [email protected].
    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 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 the action that relaxed the container 
marking requirements for kiwifruit covered under the order. Prior to 
implementation of the interim final rule, kiwifruit that had been 
inspected, met applicable grade and size requirements, and was 
subsequently placed into new containers, had to be positive lot 
identified, which required reinspection. This rule continues to 
establish procedures for handlers to ship such kiwifruit without PLI. 
This rule is intended to reduce handler inspection costs and facilitate 
the marketing of kiwifruit. The Committee unanimously recommended this 
change at its April 6, 2006, meeting.
    Section 920.52(a) of the order provides authority for grade, size, 
pack, container, and container marking requirements for shipments of 
fresh kiwifruit. Section 920.55 of the order requires inspection and 
certification of kiwifruit prior to shipment by the Federal or Federal-
State Inspection Service (FSIS). Section 920.302 of the order's 
regulations specifies applicable grade, size, pack, and container 
requirements and Sec.  920.303 specifies applicable container marking 
requirements.
    Paragraph (d) of Sec.  920.303 requires that containers of 
kiwifruit be positive lot identified prior to shipment. PLI helps to 
ensure that a specific load or lot of kiwifruit can be linked to an 
inspection certificate and provides verification that the fruit was 
inspected. No less than 75 percent of the containers of kiwifruit on a 
pallet must be marked with a lot stamp number corresponding to the lot 
inspection conducted by the FSIS. This lot stamp number is a PLI number 
that can be matched to an inspection certificate. Individual consumer 
packages within a master container, and containers being directly 
loaded into a vehicle for export under FSIS supervision are exempt from 
PLI. Individual consumer packages placed directly on a pallet, and 
plastic containers of kiwifruit must be positive lot identified.
    Prior to implementation of the interim final rule, kiwifruit that 
had been inspected and certified, and was subsequently placed into new 
containers, had to be positive lot identified. When such kiwifruit is 
placed into new containers, the PLI mark on the container is lost and 
thus the lot is not easily identified. The new containers must be 
reinspected and marked with a new PLI number. Reinspection costs for 
such kiwifruit account for roughly 20 percent of annual inspection 
costs for handlers.
    In an effort to reduce handler costs, the Committee recommended 
establishing procedures for handlers to

[[Page 7548]]

ship previously inspected kiwifruit placed in new containers without 
PLI. Handlers now have the option of having such kiwifruit reinspected 
and marked with a PLI number or requesting a verification number under 
a new verification process. Such kiwifruit must be of the same grade 
and size as originally inspected. The handler must contact the FSIS to 
obtain a verification number prior to shipment, and plainly mark one 
end of each container with the letter ``R'' and the verification 
number. The letter ``R'' and the verification number must not be less 
than one-half inch in height. The handler must submit a Kiwifruit 
Verification Form to the FSIS within 3 business days of such request, 
and provide the following information from the original inspection: (i) 
The positive lot identification numbers; (ii) the identity of the 
handler; (iii) the inspection certificate numbers; (iv) the grade and 
size of the kiwifruit; (v) the number and type of containers; and (v) 
the handler's brand; and the following information on the kiwifruit 
placed into new containers: (i) The number and type of containers; and 
(ii) the applicable brand. The verification number is linked to the PLI 
number, thus providing a method to trace the fruit back to the original 
inspection certificate. The FSIS maintains the Kiwifruit Verification 
Forms. The Committee will make use of completed forms to audit handlers 
as needed to ensure compliance, pursuant to authority provided in Sec.  
920.61.
    Accordingly, a new paragraph (f) was added to Sec.  920.303 that 
established the verification procedures described above. Additionally, 
a new sentence was added to the beginning of paragraph (d) in that 
section to clarify that except as provided in the new paragraph (f), 
containers of kiwifruit must be positive lot identified prior to 
shipment in accordance with specified requirements. Paragraph (d) was 
modified further for clarification purposes to change the term ``lot 
stamp number'' to ``positive lot identified,'' and to change the term 
``plastic container'' to ``reusable plastic container.''

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 37 handlers of kiwifruit subject to 
regulation under the marketing order and approximately 220 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 $6,500,000, and small agricultural 
producers are defined as those whose annual receipts are less than 
$750,000. None of the 37 handlers subject to regulation have annual 
kiwifruit sales of $6,500,000. In addition, six growers subject to 
regulation have annual sales exceeding $750,000. Therefore, all of the 
kiwifruit handlers and a majority of the growers may be classified as 
small entities.
    This rule continues in effect the action that relaxed the container 
marking requirements specified in Sec.  920.303. Prior to 
implementation of the interim final rule, kiwifruit that had been 
inspected, met applicable grade and size requirements, and was 
subsequently placed into new containers had to be positive lot 
identified, which required reinspection. This rule continues to 
establish procedures for handlers to ship such kiwifruit without PLI. 
The verification procedures are specified in Sec.  920.303(f). Handlers 
must obtain a verification number from the FSIS, mark their new 
containers with such number and the letter ``R,'' and submit a 
Kiwifruit Verification Form to the FSIS. The verification number can be 
linked to the original PLI number, thereby providing a method to trace 
the fruit back to the original inspection certificate. This action is 
intended to reduce handler inspection costs and facilitate the 
marketing of kiwifruit. This rule also continues in effect minor 
modifications to paragraph (d) of Sec.  920.303 for clarification 
purposes. Authority for this action is provided in Sec. Sec.  
902.52(a)(3) and 920.55 of the order.
    The impact of this change on handlers was discussed by the 
Committee. Reinspection costs due to PLI requirements account for 
roughly 20 percent of annual inspection costs for the industry. 
Additionally, an average of 20 percent of the crop is placed into new 
containers annually. The following table shows inspection costs for in-
line inspection, lot inspection, and kiwifruit placed into new 
containers for 2001 to 2005.

----------------------------------------------------------------------------------------------------------------
                                                                                        New
                      Year                            In-Line           Lot         containers      Total cost
----------------------------------------------------------------------------------------------------------------
2001-02.........................................        $107,702         $15,254         $38,411        $161,367
2002-03.........................................          96,376          24,866          35,521         156,763
2003-04.........................................         111,228          12,064          29,197         152,489
2004-05.........................................         129,197          24,319          31,415         184,931
----------------------------------------------------------------------------------------------------------------

    This change reduces inspection costs because handlers have the 
option of using the new verification process instead of having 
kiwifruit reinspected to conform to PLI requirements. Additionally, 
reinspection can delay shipments because kiwifruit cannot be shipped 
until reinspection has been completed by the FSIS.
    The Committee considered the alternative of maintaining the status 
quo, but this was not viable. As an option to reinspection, identity of 
the lot can be achieved through the verification number, which provides 
a trace back to the original inspection certificate. Additionally, such 
kiwifruit has already met the minimum requirements of the marketing 
order. It is anticipated that the rule provides a cost savings to 
handlers.
    As with all Federal marketing order programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies. Finally, USDA has 
not identified any relevant Federal rules that duplicate, overlap, or 
conflict with this rule.
    The AMS is committed to complying with the E-Government Act, to 
promote the use of the Internet and other information technologies to 
provide increased opportunities for citizen

[[Page 7549]]

access to Government information and services, and for other purposes.
    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 6, 
2006, meeting was a public meeting and all entities, both large and 
small, were encouraged to express their views on these issues.
    An interim final rule concerning this action was published in the 
Federal Register on October 3, 2006. Copies of the rule were mailed by 
the Committee's staff to all Committee members and kiwifruit handlers. 
In addition, the rule was made available through the Internet by USDA 
and the Office of the Federal Register. That rule provided for a 60-day 
comment period which ended December 4, 2006. 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.

Paperwork Reduction Act

    The interim final rule published on October 3, 2006, provided a 60-
day period for comments on the reporting requirements in that rule. No 
comments were received. In accordance with the Paperwork Reduction Act 
of 1995 [44 U.S.C. 3501 et seq.], the information collection was 
approved by the Office of Management and Budget (OMB), under OMB No. 
0581-0238, ``Kiwifruit Grown in California.''
    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 change, as published in the 
Federal Register (71 FR 58246, October 3, 2006) 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

0
Accordingly, the interim final rule amending 7 CFR part 920, which was 
published at 71 FR 58246 on October 3, 2006, is adopted as a final rule 
without change.

    Dated: February 12, 2007.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. E7-2732 Filed 2-15-07; 8:45 am]
BILLING CODE 3410-02-P