41390 Federal Register / Vol. 63, No. 149 /Tuesday, August 4, 1998 /Rules and Regulations

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 920

[Docket No. FV98–920–2 FR]

Kiwifruit Grown in California;

Temporary Suspension of an

Inspection Requirement

AGENCY: Agricultural Marketing Service,

USDA.

ACTION: Final rule.

SUMMARY: This rule temporarily

suspends an inspection requirement for

kiwifruit covered under the California

kiwifruit marketing order. The

marketing order regulates the handling

of kiwifruit grown in California, and is

administered locally by the Kiwifruit

Administrative Committee (Committee).

Prior to this suspension, certification of

any kiwifruit which was inspected and

certified as meeting grade, size, quality,

or maturity requirements in effect under

the marketing order was valid until

December 31 of the current fiscal year

or 21 days from the date of inspection,

whichever was later. This rule enables

handlers to ship kiwifruit without the

necessity for reinspection and

recertification and the costs associated

with such requirements. This temporary

suspension was unanimously

recommended by the Committee and is

expected to reduce handler costs and to

increase grower returns, while

continuing to provide consumers with

the same high quality fruit as was

available under previous requirements.

EFFECTIVE DATE: September 1, 1998

through July 31, 1999.

FOR FURTHER INFORMATION CONTACT: Rose

Aguayo, 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: (209) 487–

5901, Fax: (209) 487–5906; or George

Kelhart, Technical Advisor, Marketing

Order Administration Branch, Fruit and

Vegetable Programs, AMS, USDA, room

2525–S, P.O. Box 96456, Washington,

DC 20090–6456; telephone: (202) 720–

2491, Fax: (202) 205–6632. Small

businesses may request information on

compliance with this regulation by

contacting Jay Guerber, Marketing Order

Administration Branch, Fruit and

Vegetable Programs, AMS, USDA, room

2525–S, P.O. Box 96456, Washington,

DC 20090–6456; telephone: (202) 720–

2491, Fax: (202) 205–6632.

SUPPLEMENTARY INFORMATION: This final

rule is issued under Marketing Order

No. 920 (7 CFR part 920), as amended,

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

(Department) is issuing this rule in

conformance with Executive Order

12866.

This final 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 the Secretary 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 the Secretary 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 the Secretary’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 final rule temporarily suspends

an inspection requirement for kiwifruit

covered under the California kiwifruit

marketing order. This rule temporarily

suspends the current limitation of the

inspection certificate validation period

and enables handlers to ship kiwifruit

without the necessity for reinspection

and recertification. The rule will be in

effect during the 1998–99 fiscal year.

Section 920.55 of the order requires

that prior to handling any variety of

California kiwifruit, such kiwifruit shall

be inspected by the Federal or FederalState Inspection Service (inspection

service) and certified as meeting the

applicable grade, size, quality, or

maturity requirements in effect pursuant

to § 920.52 or § 920.53. Section 920.55

also provides authority for the

establishment, through the order’s

administrative rules and regulations, of

a period prior to shipment during which

inspections must be performed.

Section 920.155 of the order’s

administrative rules and regulations

prescribes that the certification of grade,

size, quality, and maturity of kiwifruit

pursuant to § 920.52 or § 920.53 during

each fiscal year is valid until December

31 of such year or 21 days from the date

of inspection, whichever is later. Any

inspected kiwifruit to be shipped after

the certification period lapses must be

reinspected and recertified before

shipping.

At its meeting on February 11, 1998,

the Committee unanimously

recommended suspending § 920.155 for

the 1998–99 fiscal year. The Committee

made this recommendation in an effort

to reduce the additional costs of

reinspection. In recent years, after

cultural and post-harvest expenses have

been paid, many kiwifruit growers have

lost money or merely recovered their

production costs with little or no profit.

Because storage and handling

operations have improved in the

industry, and as a result of a fruit

ripening program being utilized by the

industry, the Committee believes it may

no longer be necessary to have fruit

reinspected to provide consumers with

a high quality product. The

recommended suspension is for a oneyear period so the effects can be

evaluated. The Committee further

recommended that this suspension be in

effect no later than September 1, 1998,

to enable handlers to make operational

decisions in time for the 1998 harvest

and shipping season.

When the order was promulgated,

authority was included to limit the

length of time inspection certificates

would be valid. This authority was

provided because the condition of

kiwifruit can change while it is held in

cold storage.

The industry has estimated that

approximately 30 percent of the

inspected kiwifruit is subject to

reinspection each year at a cost of

approximately $0.03 per tray equivalent

(a tray equivalent being 7 pounds of

kiwifruit), and that a minimal amount,

approximately 1 percent, of reinspected

fruit fails to meet order requirements.

As the inspection service has not yet

established the 1998–99 reinspection

rates, the total costs for the industry are

based on the past season’s rates. These

annual costs were estimated to be

approximately $50,000 for the 1998–99

season.

By suspending the reinspection

requirement, handlers will be able to

reduce handling costs by conducting

their own reinspection of fruit before

shipment, when necessary. The

Committee believes that consumers will

continue to receive the same high

quality fruit as was available when

reinspection was conducted by the
Federal Register / Vol. 63, No. 149 /Tuesday, August 4, 1998 /Rules and Regulations 41391

inspection service. Handlers have

continually upgraded their cold storage

and handling operations, resulting in

fewer fruit condition problems. In

recent seasons, improved storage

facilities have resulted in fewer storagerelated condition problems, such as

black sooty mold. In addition,

processing and packing equipment

utilized by handlers has improved in

recent years, resulting in less damage to

fruit in the handling process, thus

resulting in fewer condition problems.

Finally, the industry’s ripening program

has resulted in earlier seasonal

shipments and a decreased amount of

inspected fruit remaining in cold storage

beyond the maximum time for which an

inspection certificate is valid.

The Committee believes that

eliminating the reinspection

requirement will not have a negative

impact on any aspect of the industry;

however, it wishes to approach this

issue with caution. Thus, the Committee

recommended temporarily suspending

§ 920.155 for the 1998–99 fiscal year as

a ‘‘pilot test,’’ so it can evaluate the

results after the season. The Committee

expects this action to reduce handler

costs by $50,000, resulting in increased

grower returns, while continuing to

provide consumers with the same high

quality fruit as provided under previous

requirements.

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 60 handlers

of California kiwifruit subject to

regulation under the marketing order

and approximately 450 producers in the

production area. Small agricultural

producers are defined by the Small

Business Administration (13 CFR

121.601) as those whose annual receipts

are less than $500,000, and small

agricultural service firms are defined as

those whose annual receipts are less

than $5,000,000. One of the 60 handlers

subject to regulation has annual

kiwifruit receipts of at least $5,000,000.

This figure excludes receipts from any

other sources. The remaining 59

handlers have annual receipts less than

$5,000,000, excluding receipts from

other sources. In addition, 10 of the 450

producers subject to regulation have

annual sales of at least $500,000,

excluding receipts from any other

sources. The remaining 440 producers

have annual sales less than $500,000,

excluding receipts from any other

sources. Therefore, a majority of

handlers and producers are classified as

small entities.

This final rule temporarily suspends

an inspection requirement for kiwifruit

covered under the California kiwifruit

marketing order. This rule temporarily

suspends the current limitation of the

inspection certificate validation period

and enables handlers to ship kiwifruit

without the necessity for reinspection

and recertification. The rule will be in

effect during the 1998–99 fiscal year.

Section 920.55 of the order requires

that prior to handling any variety of

California kiwifruit, such kiwifruit shall

be inspected by the Inspection Service

and certified as meeting the applicable

grade, size, quality, or maturity

requirements in effect pursuant to

§ 920.52 or § 920.53. Section 920.55 also

provides authority for the

establishment, through the order’s

administrative rules and regulations, of

a period prior to shipment during which

inspections must be performed.

Section 920.155 of the order’s

administrative rules and regulations

prescribes that the certification of grade,

size, quality, and maturity of kiwifruit

pursuant to § 920.52 or § 920.53 during

each fiscal year is valid until December

31 of such year or 21 days from the date

of inspection, whichever is later. Any

inspected kiwifruit to be shipped after

the certification period lapses must be

reinspected and recertified before

shipping.

At its meeting on February 11, 1998,

the Committee unanimously

recommended suspending § 920.155 for

the 1998–99 fiscal year. The Committee

made this recommendation in an effort

to reduce the additional costs of

reinspection. In recent years, after

cultural and post-harvest expenses have

been paid, many kiwifruit growers have

lost money or merely recovered their

production costs with little or no profit.

Because storage and handling

operations have improved in the

industry, and as a result of a fruit

ripening program being utilized by the

industry, the Committee believes it may

no longer be necessary to have fruit

reinspected to provide consumers with

a high quality product. The

recommended suspension is for a oneyear period so the effects can be

evaluated. The Committee further

recommended that this suspension be in

effect no later than September 1, 1998,

to enable handlers to make operational

decisions in time for the 1998 harvest

and shipping season.

When the order was promulgated,

authority was included to limit the

length of time inspection certificates

would be valid. This authority was

provided because the condition of

kiwifruit can change while it is held in

cold storage.

The industry has estimated that

approximately 30 percent of the

inspected kiwifruit is subject to

reinspection each year at a cost of

approximately $0.03 per tray equivalent,

and that a minimal amount,

approximately 1 percent, of reinspected

fruit fails to meet order requirements.

Although the inspection service has

not yet established the 1998–99

inspection rates, based on the past

season’s rates, total reinspection costs

for the industry are expected to be

approximately $50,000 for the 1998–99

fiscal year.

Handlers will be able to reduce

handling costs by conducting their own

reinspection of fruit before shipment,

when necessary. The Committee

believes that consumers will continue to

receive the same high quality fruit as

was available when reinspection was

conducted by the inspection service.

Handlers have continually upgraded

their cold storage and handling

operations, resulting in fewer fruit

condition problems. In recent seasons,

improved storage facilities have resulted

in fewer storage-related condition

problems, such as black sooty mold. In

addition, processing and packing

equipment utilized by handlers has

improved in recent years, resulting in

less damage to fruit in the handling

process, thus resulting in fewer

condition problems. Finally, the

industry’s ripening program has

resulted in earlier seasonal shipments

and a decreased amount of inspected

fruit remaining in cold storage beyond

the maximum time for which an

inspection certificate is valid.

The Committee believes that

eliminating the reinspection

requirement will not have a negative

impact on any aspect of the industry;

however, it wishes to approach this

issue with caution. Thus, the Committee

recommended temporarily suspending

§ 920.155 for the 1998–99 fiscal year as

a ‘‘pilot test,’’ so it can evaluate the

results after the season. The Committee

expects this action to reduce handler

costs by $50,000, resulting in increased

grower returns, while continuing to

provide consumers with the same high
41392 Federal Register / Vol. 63, No. 149 /Tuesday, August 4, 1998 /Rules and Regulations

quality fruit as provided under previous

requirements.

The 1998–99 kiwifruit crop estimate

was revised in April 1998 from 10 to 12

million tray equivalents to 8.5 million

tray equivalents. Based on recent

experience, approximately 30 percent of

the inspected kiwifruit is subject to

reinspection. The 1998–99 reinspection

fees have not yet been established by the

inspection service, however,

preliminary estimates indicate that

these rates will be slightly higher than

the 1997–98 rates. The 1997–98 rates

were $0.032 per tray/volume fill/count

fill container, $0.047 per 3 layer/master

container, and $0.0047 per pound for

bins. The inspection service estimates

that reinspection costs will continue to

be approximately $42,000 and that with

the addition of mileage and overtime

fees, the inspection service estimates

that the total annual costs to the

industry will continue to be

approximately $50,000. Therefore, the

suspension of the reinspection

requirement is expected to result in an

annual savings of $50,000 for the 1998–

99 fiscal year.

The Committee discussed a number of

alternatives to this rule, including

making inspection certificates valid to

January 31, or modifying the

reinspection process by requiring

inspection for condition only, but it was

determined that neither of these

alternatives would reduce reinspection

costs. The Committee also discussed the

possibility of reducing the sample size

from the current one-half of 1 percent;

however, the inspection service advised

the Committee that further reduction of

the sample size would jeopardize the

integrity of the inspection.

Another alternative discussed was the

elimination of in-line inspections

altogether, but this was determined to

be unacceptable to the industry. Use of

in-line inspection provides handlers

assurance that the fruit is making grade

at the time of packing. Any problems

that may exist can be identified

immediately and corrected, thus

avoiding the additional costs of

repacking at the time of shipment.

The Committee also considered

increasing the use of inspection waivers

as a means to lower costs. However, the

Committee could not reach a consensus

on an acceptable and equitable means to

increase the issuance of waivers

throughout the industry, and, thus, it

was determined to be an unacceptable

alternative.

As another possibility, the Committee

discussed alternative inspection

methods. It was decided that they

would not be a viable option at this

time.

Following discussion of these

alternatives, the Committee concluded

that temporarily suspending § 920.155 is

in the best interest of the industry, as

this suspension is expected to save as

much as $50,000 in reinspection fees

and to increase grower returns, while

continuing to provide consumers with

the same high quality fruit as provided

under previous reinspection

requirements.

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

sector agencies.

As noted in the initial regulatory

flexibility analysis, the Department has

not identified any relevant Federal rules

that duplicate, overlap, or conflict with

this final rule.

In addition, the Committee’s February

11, 1998, 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 February 11, 1998,

meeting was a public meeting and all

entities, both large and small, were able

to express views on this issue. The

Committee itself is composed of 12

members. Two of these members are

handlers and producers, nine are

producers only, and one is a public

member. The majority of the Committee

members are small entities. In addition,

a survey on the options of eliminating

or keeping the reinspection requirement

was mailed to all growers and handlers

of California kiwifruit. Of the 485

surveys mailed, 159 were returned to

the Committee by the deadline of

February 6, 1998, for a response rate of

33 percent. Growers accounted for 77

percent of the total surveys returned by

the deadline, and of those, 67 percent

were in favor of eliminating

reinspection. Finally, interested persons

were invited to submit information on

the regulatory and informational

impacts of this action on small

businesses.

A proposed rule concerning this

action was published in the Federal

Register on June 5, 1998 (63 FR 30655).

Copies of the rule were also mailed or

sent via facsimile to all Committee

members and kiwifruit handlers.

Finally, the rule was made available

through the Internet by the Office of the

Federal Register.

A 30-day comment period was

provided to allow interested persons to

respond to the proposal. No comments

were received.

After consideration of all relevant

matter presented, including the

information and recommendation

submitted by the Committee and other

available information, it is hereby found

that the provisions of the regulation, as

hereinafter set forth, should be

suspended to effectuate the declared

policy of the Act.

It is further found that good cause

exists for not postponing the effective

date of this rule until 30 days after

publication in the Federal Register (5

U.S.C. 553) because handlers need this

action in place by September 1 to

provide sufficient time to plan for the

upcoming marketing season. Harvest is

expected to begin the end of September

or early October and handlers want to

take advantage of the relaxation as soon

as possible. Further, handlers are aware

of this rule, which was recommended at

a public meeting. Also, a 30-day

comment period was provided for in the

proposed rule and no comments were

received.

List of Subjects in 7 CFR Part 920

Kiwifruit, Marketing agreements,

Reporting and recordkeeping

requirements.

For the reasons set forth in the

preamble, 7 CFR part 920 is amended as

follows:

PART 920—KIWIFRUIT GROWN IN

CALIFORNIA

1. The authority citation for 7 CFR

part 920 continues to read as follows:

Authority: 7 U.S.C. 601–674.

§ 920.155 [Suspended]

2. In part 920, § 920.155 is suspended

in its entirety effective September 1,

1998, through July 31, 1999.

Dated: July 29, 1998.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable

Programs.

[FR Doc. 98–20791 Filed 8–3–98; 8:45 am]

BILLING CODE 3410–02–P