[Federal Register Volume 87, Number 117 (Friday, June 17, 2022)]
[Proposed Rules]
[Pages 36412-36415]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-13004]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 920 and 944

[Doc. No. AMS-SC-21-0098; SC21-920-1 PR]


California and Imported Kiwifruit; Handling Regulations

AGENCY: Agricultural Marketing Service, Department of Agriculture 
(USDA).

ACTION: Proposed rule.

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SUMMARY: This proposed rule would implement a recommendation from the 
Kiwifruit Administrative Committee (Committee) to modify the handling 
regulations prescribed under the Federal marketing order for kiwifruit 
grown in California. This action would revise the size and uniformity 
requirements for all varieties of Actinidia chinensis species 
kiwifruit, which is commonly known as golden kiwifruit, regulated under 
the marketing order. A corresponding change would be made to the 
kiwifruit import regulation as required under section 8e of the 
Agricultural Marketing Agreement Act of 1937.

DATES: Comments must be received by August 16, 2022.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposed rule. Comments must be sent to the Docket 
Clerk, Market Development Division, Specialty Crops Program, AMS, USDA, 
1400 Independence Avenue SW, STOP 0237, Washington, DC 20250-0237; Fax: 
(202) 720-8938; or internet: https://www.regulations.gov. Comments 
should reference the document 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: https://www.regulations.gov. All 
comments submitted in response to this proposed rule will be included 
in the record and will be made available to the public. Please be 
advised that the identity of the individuals or entities submitting the 
comments will be made public on the internet at the address provided 
above.

FOR FURTHER INFORMATION CONTACT: Barry Broadbent, Senior Marketing 
Specialist, or Gary Olson, Regional Director, Western Region Field 
Office, Market Development Division, Specialty Crops Program, AMS, 
USDA; Telephone: (503) 326-2724, or Email: [email protected] or 
[email protected].
    Small businesses may request information on complying with this 
regulation by contacting Richard Lower, Market Development Division, 
Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW, STOP 
0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, or Email: 
[email protected].

SUPPLEMENTARY INFORMATION: This action, pursuant to 5 U.S.C. 553, 
proposes to amend regulations issued to carry out a marketing order as 
defined in 7 CFR 900.2(j). This proposed rule is issued under Marketing 
Order No. 920, as amended (7 CFR part 920), regulating the handling of 
kiwifruit grown in California. Part 920, (referred to as 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 
Committee locally administers the Order and comprises kiwifruit growers 
operating within the production area, and a public member.
    This proposed rule is also issued under section 8e of the Act (7 
U.S.C. 608e-1), which provides that whenever certain specified 
commodities, including kiwifruit, are regulated under a Federal 
marketing order, imports of these commodities into the United States 
are prohibited unless they meet the same or comparable grade, size, 
quality, or maturity requirements as those in effect for domestically 
produced commodities.
    The Agricultural Marketing Service (AMS) is issuing this proposed 
rule in conformance with Executive Orders 12866 and 13563. Executive 
Orders 12866 and 13563 direct agencies to assess all costs and benefits 
of available regulatory alternatives and, if regulation is necessary, 
to select regulatory approaches that maximize net benefits

[[Page 36413]]

(including potential economic, environmental, public health and safety 
effects, distributive impacts and equity). Executive Order 13563 
emphasizes the importance of quantifying both costs and benefits, 
reducing costs, harmonizing rules, and promoting flexibility. This 
action falls within a category of regulatory actions that the Office of 
Management and Budget (OMB) exempted from Executive Order 12866 review.
    This proposed rule has been reviewed under Executive Order 13175--
Consultation and Coordination with Indian Tribal Governments, which 
requires agencies to consider whether their rulemaking actions would 
have tribal implications. AMS has determined this proposed rule is 
unlikely to have substantial direct effects on one or more Indian 
tribes, on the relationship between the Federal Government and Indian 
tribes, or on the distribution of power and responsibilities between 
the Federal Government and Indian tribes.
    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This proposed rule is not intended to have 
retroactive effect.
    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 no later than 20 days after the date of the 
entry of the ruling.
    There are no administrative procedures that must be exhausted prior 
to any judicial challenge to the provisions of import regulations 
issued under section 8e of the Act.
    Under the provisions of the Order, fresh market shipments of 
kiwifruit produced in California are required to be inspected and are 
subject to grade, size, quality, maturity, pack, and container 
requirements. This proposed rule would revise the minimum size and 
uniformity requirements for certain varieties of kiwifruit handled 
under the Order. As required by section 8e of the Act, the proposed 
revision to the minimum size requirement would also be applied to the 
import regulations for kiwifruit.
    Section 920.51 of the Order provides authority for the Committee to 
recommend regulations to the Secretary. Section 920.52 of the Order 
provides authority for the establishment of handling regulations. 
Further, Sec.  920.53 provides the authority to recommend the 
modification, suspension, or termination of such regulations when the 
Committee finds that industry conditions so dictate. Section 920.302 
establishes the minimum grade, size, quality, maturity, pack, and 
container requirements for kiwifruit handled subject to the Order. 
Under the authority of Sec.  920.53, the Committee has determined that 
the production and marketing conditions for some varieties of kiwifruit 
have changed and that the handling requirements should be modified 
accordingly.
    Currently, the handling regulations require that all varieties of 
kiwifruit be a minimum Size 45, defined as a maximum of 55 pieces of 
fruit in an 8-pound sample. In addition, kiwifruit packed in containers 
are required to be fairly uniform in size.
    At its meeting on September 29, 2021, the Committee unanimously 
recommended modifying the regulations to accommodate varieties of 
Actinidia chinensis species kiwifruit that are characteristically 
smaller in size and less uniform than the more common varieties grown 
in California that are Actinidia deliciosa species. No other species of 
kiwifruit are known to be grown in California.
    This proposed rule would relax the minimum size requirement for all 
varieties of Actinidia chinensis species kiwifruit to Size 49, defined 
in the requirements as a maximum of 64 pieces of fruit in an 8-pound 
sample. In addition, the proposed rule would exempt all varieties of 
Actinidia chinensis species kiwifruit from the current requirement that 
fruit packed in a container be fairly uniform in size.
    At the time that the Order's handling regulations were established 
in 1985, practically all the kiwifruit grown in California were 
varieties of the Actinidia deliciosa species. As such, the requirements 
were implemented to accommodate the characteristics of those varieties. 
Recently, production of varieties of Actinidia chinensis species 
kiwifruit has been increasing in California. This sector of the 
industry now accounts for approximately eight percent of the acreage 
and five percent of the production in the state. Given the natural 
characteristics of Actinidia chinensis species kiwifruit, the current 
minimum size and uniformity requirements preclude some high-quality 
kiwifruit from entering the fresh market. Relaxing the minimum 
requirements for those varieties would allow growers to market more of 
their fruit in the fresh market, increasing their total revenue. The 
proposed change is expected to benefit domestic kiwifruit growers, 
handlers, and consumers.
    Section 8e of the Act provides that when certain domestically 
produced commodities, including kiwifruit, are regulated under a 
Federal marketing order, imports of that commodity must meet the same 
or comparable grade, size, quality, and maturity requirements. Since 
this proposed action would modify the minimum size requirement for 
varieties of Actinidia chinensis species kiwifruit under the domestic 
handling regulations, a corresponding change would need to be made to 
the import regulations.
    Minimum grade, size, quality, and maturity requirements for 
kiwifruit imported into the United States are currently in effect under 
Sec.  944.550 (7 CFR 944.550). Paragraph (a) of that section specifies 
the minimum size requirement. This proposed rule would lower the 
minimum size requirement for varieties of Actinidia chinensis species 
kiwifruit to Size 49, defined as a maximum of 64 pieces of kiwifruit in 
an 8-pound sample. In accordance with the Act, under the kiwifruit 
import regulations, imported kiwifruit are not subject to container and 
pack requirements. Accordingly, the proposed change in the Order's 
uniformity requirement would not affect the kiwifruit import 
requirements.
    The relaxation in the size requirements for imports of Actinidia 
chinensis varieties would allow a greater quantity of kiwifruit to be 
imported. The proposed change is expected to benefit kiwifruit 
importers and consumers of imported kiwifruit.

Initial Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), 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 are unique in that they are brought about through 
group action of essentially small entities acting on their own behalf. 
Import regulations issued

[[Page 36414]]

under the Act are based on those established under Federal marketing 
orders.
    There are approximately 133 kiwifruit growers in the production 
area and 20 handlers subject to regulation under the Order. In 
addition, there are approximately 80 importers of kiwifruit. Small 
agricultural producers are defined by the Small Business Administration 
(SBA) as those having annual receipts less than $1,000,000. Small 
agricultural service firms, which include kiwifruit handlers and 
importers, are defined by the SBA as those having annual receipts of 
less than $30,000,000.
    The USDA National Agricultural Statistics Service (NASS) reported 
that total production of California kiwifruit for the 2020-2021 season 
was 39,760 tons. NASS further reported that the average producer price 
was $1,920 per ton over that period. Multiplying $1,920 per ton by the 
production quantity of 39,760 tons yields an annual crop revenue 
estimate of $76,339,200. The average annual fresh kiwifruit revenue for 
each of the 133 growers for the 2020-2021 season is therefore 
calculated to be $573,979 ($76,339,200 divided by 133), which is less 
than the SBA threshold of $1,000,000 for small producers. Therefore, on 
average and given a normal distribution, the majority of growers may be 
classified as small businesses.
    In addition, based on information reported by USDA's Market News 
Service (Market News), the average Free On Board (F.O.B.) shipping 
point price for California kiwifruit over the 2020-2021 season was 
$23.28 per 9 kilogram container (19.8 pounds equivalent). Multiplying 
$23.28 by the shipment quantity of 4,016,162 containers (39,760 tons 
times 2,000 pounds per ton divided by 19.8 pounds) yields an annual 
crop revenue estimate of $93,496,251. The average annual fresh 
kiwifruit revenue for each of the 20 handlers is therefore calculated 
to be $4,674,813 ($93,496,251 divided by 20), which is below the SBA 
threshold of $30,000,000 for agricultural service firms. Therefore, on 
average and assuming a normal distribution, the majority of the 
handlers may be classified as small businesses.
    Further, USDA's Foreign Agricultural Service reported 80,279 metric 
tons of kiwifruit were imported during the 2020-2021 season with a 
reported value of $184,488,000. Using that data, the average revenue 
for each of the approximately 80 kiwifruit importers would have been 
$2,306,100 ($184,488,000 divided by 80), which is below the $30,000,000 
SBA threshold for small agricultural service firms. As such, the 
majority of kiwifruit importers may be classified as small businesses.
    This proposed rule would relax the minimum size and uniformity 
requirements currently prescribed in the Order's handling regulations. 
The proposed rule would lower the minimum size requirement for all 
varieties of Actinidia chinensis species kiwifruit from Size 45 to 49, 
defined in the requirements as a maximum of 64 pieces of fruit in an 8-
pound sample. In addition, the proposed rule would exempt all varieties 
of Actinidia chinensis species kiwifruit from the current container 
requirement that fruit be fairly uniform in size.
    This proposed action would not impose any additional costs to the 
industry. It is expected to increase revenue to handlers and growers of 
Actinidia chinensis species varieties of kiwifruit, as smaller size 
fruit, and fruit that lacks uniformity, would be allowed to enter the 
market. The quality of fruit to consumers is not expected to be 
significantly affected, as relaxing the size and uniformity 
requirements would not impact the Order's minimum quality requirements. 
All kiwifruit marketed under the Order would continue to be packed to 
the minimum grade of KAC No.1.
    The Committee considered alternatives to the recommended changes, 
including taking no action and continuing to regulate according to the 
requirements as currently established. In addition, the Committee 
considered lowering the size requirements for all varieties of 
kiwifruit. However, the Committee determined that the current minimum 
size requirement is effective for Actinidia deliciosa varieties and 
that it should not be changed. The Committee also considered 
establishing other minimum sizes for Actinidia chinensis varieties 
higher and lower than the minimum size recommended, but believed that 
Size 49 would allow more fruit to be marketed and still maintain the 
high standards of California kiwifruit. Ultimately, the Committee 
determined that relaxation of the handling regulation, as recommended, 
was in the best interests of the growers, handlers, and consumers of 
California kiwifruit and rejected all other alternatives.
    Committee meetings were widely publicized throughout the California 
kiwifruit industry. All interested persons were invited to attend 
meetings and participate in Committee deliberations. Like all Committee 
meetings, the September 27, 2021, meeting was a public meeting, and all 
entities, both large and small, were able to express their views on 
this issue. Also, the embassies of countries that export kiwifruit to 
the United States, and known kiwifruit importers, will be notified of 
this proposed rule upon its publication. Finally, interested persons 
are invited to submit comments on this proposed rule, including the 
regulatory and informational impacts of this action on small 
businesses.
    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the Order's information collection requirements have been 
previously approved by the Office of Management and Budget (OMB) and 
assigned OMB No. 0581-0189, Fruit Crops. No changes in those 
requirements are necessary as a result of this action. Should any 
changes become necessary, they would be submitted to OMB for approval.
    This proposed rule would 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 sector agencies. USDA has not 
identified any relevant Federal rules that duplicate, overlap, or 
conflict with this proposed rule.
    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 access to Government information 
and services, and for other purposes.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: 
https://www.ams.usda.gov/rules-regulations/moa/small-businesses. Any 
questions about the compliance guide should be sent to Richard Lower at 
the previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    After consideration of all relevant material presented, including 
the information and recommendations submitted by the Committee and 
other available information, USDA has determined that this proposed 
rule is consistent with and will effectuate the purposes of the Act.
    In accordance with section 8e of the Act, the United States Trade 
Representative has concurred with the issuance of this proposed rule.
    A 60-day comment period is provided to allow interested persons to 
respond to this proposal. All written comments timely received will be 
considered before a final determination is made on this matter.

[[Page 36415]]

List of Subjects

7 CFR Part 920

    Kiwifruit, Marketing agreements, Reporting and recordkeeping 
requirements.

7 CFR Part 944

    Avocados, Food grades and standards, Grapefruit, Grapes, Imports, 
Kiwifruit, Limes, Olives, Oranges, Plums, Prunes.

    For the reasons set forth in the preamble, the Agricultural 
Marketing Service proposes to amend 7 CFR parts 920 and 944 as follows:

PART 920--KIWIFRUIT GROWN IN CALIFORNIA

0
1. The authority citation for 7 CFR part 920 continues to read as 
follows:

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

0
2. Amend Sec.  920.302 by:
0
a. Revising paragraphs (a)(2), (a)(4) heading, and (a)(4)(i); and
0
b. In paragraph (a)(4)(ii)(A):
0
i. Designating the table as table 1 to paragraph (a)(4)(ii)(A);
0
ii. Revising the three column headings;
0
iii. Removing the entry for ``45 or smaller'' and adding an entry for 
``45'' in its place; and
0
iv. Adding an entry for ``49'' in numerical order and footnotes 1 and 2 
at the end of the table.
    The revisions and additions read as follows:


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

    (a) * * *
    (2) Size requirements. Such kiwifruit, except for varieties of the 
Actinidia chinensis species, shall be at least a minimum Size 45, 
defined as a maximum of 55 pieces of fruit in an 8-pound sample. 
Varieties of the Actinidia chinensis species shall be at least a 
minimum Size 49, defined as a maximum of 64 pieces of fruit in an 8-
pound sample.
* * * * *
    (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, except for varieties of the Actinidia chinensis species, shall 
be fairly uniform in size.
    (ii)(A) * * *

                  Table 1 to Paragraph (a)(4)(ii)(A)--Size Designation and Size Variation Chart
----------------------------------------------------------------------------------------------------------------
                                              Maximum number  of
              Size designation                fruit per  8-pound     Size variation tolerance  (diameter) \1\
                                                    sample
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
45..........................................                 55   \1/4\-inch (6.4 mm).
49 \2\......................................                 64   Not applicable.
----------------------------------------------------------------------------------------------------------------
\1\ Not applicable to Actinidia chinensis species varieties.
\2\ Applicable only to Actinidia chinensis species varieties.

* * * * *

PART 944--FRUITS; IMPORT REGULATIONS

0
3. The authority citation for 7 CFR part 944 continues to read as 
follows:

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

0
4. Amend Sec.  944.550 by revising paragraph (a) to read as follows:


Sec.  944.550   Kiwifruit import regulation.

    (a) Pursuant to section 8e of the Agricultural Marketing Agreement 
Act of 1937, as amended, the importation into the United States of any 
kiwifruit is prohibited unless such kiwifruit meets all the 
requirements of a U.S. No. 1 grade as defined in the United States 
Standards for Grades of Kiwifruit (7 CFR 51.2335 through 51.2340), 
except that the kiwifruit shall be ``not badly misshapen,'' and an 
additional tolerance of 16 percent is provided for kiwifruit that is 
``badly misshapen,'' and except that such kiwifruit shall have a 
minimum of 6.2 percent soluble solids. Such fruit, except for varieties 
of the Actinidia chinensis species, shall be at least Size 45, which 
means there shall be a maximum of 55 pieces of fruit in an 8-pound 
sample. Varieties of the Actinidia chinensis species shall be at least 
Size 49, which means there shall be a maximum of 64 pieces of fruit in 
an 8-pound sample. The average weight of all samples in a specific lot 
must weigh at least 8 pounds (3.632 kilograms), provided that no 
individual sample may be less than 7 pounds 12 ounces (3.472 
kilograms).
* * * * *

Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2022-13004 Filed 6-16-22; 8:45 am]
BILLING CODE 3410-02-P