[Federal Register Volume 59, Number 200 (Tuesday, October 18, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-25669]
[[Page Unknown]]
[Federal Register: October 18, 1994]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 928
[Docket No. FV94-928-3-FR]
Papayas Grown in Hawaii; Suspension of Grade Requirements
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: The Department of Agriculture (Department) is adopting as a
final rule, without change, the provisions of an interim final rule
which suspended all grade requirements in effect under the marketing
order for Hawaiian papayas. This final rule also eliminates inspection
requirements for papayas and is expected to help the papaya industry
reduce expenses.
EFFECTIVE DATE: November 17, 1994.
FOR FURTHER INFORMATION CONTACT: Charles L. Rush, Marketing Specialist,
Marketing Order Administration Branch, Fruit and Vegetable Division,
AMS, USDA, P.O. Box 96456, Room 2523-S, Washington, DC 20090-6456;
telephone: 202-720-5331, or FAX: 202-720-5698; or Martin J. Engeler,
Assistant Officer In Charge, California Marketing Field Office, Fruit
and Vegetable Division, AMS, USDA, 2202 Monterey Street, Suite 102B,
Fresno, California 93721; telephone: 209-487-5901.
SUPPLEMENTARY INFORMATION: This rule is issued under Marketing
Agreement and Order No. 928 (7 CFR Part 928) regulating the handling of
papayas grown in Hawaii, hereinafter referred to as the order. This
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 12778,
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 8c(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 requesting 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 in equity to review the
Secretary's ruling on the petition, provided a bill in equity is filed
not later than 20 days after the date of the entry of the ruling.
Pursuant to the requirements set forth in the Regulatory
Flexibility Act (RFA), the Administrator of the Agricultural Marketing
Service (AMS) has considered the economic impact of this action on
small entities.
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 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 120 papaya handlers subject to regulation
under the marketing order covering fresh papayas grown in Hawaii, and
approximately 400 producers of papayas in Hawaii. Small agricultural
producers have been defined by the Small Business Administration (13
CFR 121.601) as those having annual receipts of less than $500,000, and
small agricultural service firms are defined as those whose annual
receipts are less than $5,000,000. A majority of these handlers and
producers may be classified as small entities.
This rule finalizes a suspension for an indefinite period the
minimum grade and the inspection requirements previously in effect
under the order. This suspension was recommended by the Papaya
Administrative Committee (committee) on April 22, 1994, by a vote of 8
in favor, 2 opposed, and 2 abstentions.
An interim final rule concerning this matter was issued on July 21,
1994, and published in the Federal Register on July 27, 1994, (59 FR
38102). That rule provided a 30-day comment period which ended August
26, 1994. No comments were received.
The committee meets prior to and during each season to review the
rules and regulations effective on a continuous basis for papayas
regulated under the order. The Department reviews committee
recommendations and information, as well as information from other
sources, and determines whether modification, suspension, or
termination of the rules and regulations would tend to effectuate the
declared policy of the Act.
Section 928.52 of the order authorizes the establishment of grade,
size, quality, maturity, pack and container regulations for fresh
shipments of papayas. Section 928.53 allows for the modification,
suspension or termination of such regulations when warranted. Section
928.55 provides that whenever papayas are regulated pursuant to
Sec. 928.52 or Sec. 928.53, such papayas must be inspected by the
Federal or Federal-State Inspection Service and certified as meeting
the applicable requirements of such regulation. The cost of inspection
and certification is borne by handlers.
Prior to the implementation of the interim final rule, section
928.313 of the rules and regulations in effect under the order
established minimum grade requirements for fresh shipments of Hawaiian
papayas. This rule finalizes the provisions of the interim final rule
which suspended Sec. 928.313, which required that such papayas grade at
least Hawaii No. 1, except that not more than 5 percent of the fruit
may be immature, and that the weight requirements specified in the
Hawaiian grade standards do not apply.
The minimum grade requirement had been in effect since 1984. The
objective of this requirement was to provide that only acceptable
quality fruit enter fresh market channels, thereby ensuring consumer
satisfaction, increasing sales, and improving returns to papaya
producers.
While the industry continues to believe that quality is an
important factor in maintaining sales, the committee recommended this
suspension because it believes the cost of inspection and certification
(mandated when the grade regulations are in effect) exceeds the
benefits derived. The cost of papaya inspections on a per pound basis
averages about $.006, which is nearly as much as the assessment rate
established under the order to cover the order's administrative and
promotion costs.
Committee members supporting the suspension stated that such action
would be in the best interests of producers, because eliminating the
cost of inspection will increase producer returns. Those members
contend that the marketplace will dictate fruit quality, and
competition among shippers will ensure shipments of good quality fruit.
In addition, the industry is pursuing alternative means of
improving and ensuring quality, such as providing financial incentives
to producers to deliver good quality fruit to handlers. Current
industry practice is for producers to deliver their fruit to handlers
for grading, packing and marketing. Producers are paid by handlers
based, in part, on the quality of fruit they deliver. Producer prices
are reduced to reflect the amount of fruit that is discarded during
handling because it is of unacceptable quality. All producers
delivering fruit to a particular handler are typically paid the same
amount for their fruit, based on the average quality delivered by all
producers. This practice causes producers delivering high quality fruit
to be penalized by producers delivering poorer quality fruit. A newly
formed producers' bargaining cooperative is attempting to change this
practice by having low quality fruit attributed to individual
producers. That is, an individual producer would be paid based upon the
quality of fruit that individual delivered to the handler. Thus,
producers would have a financial incentive to harvest and deliver high
quality product. This should help improve and maintain the quality of
papayas entering the fresh market.
Committee members opposed to the suspension stated that it would
allow poor quality fruit on the market and have a negative impact on
the market. Additionally, those members believe that such a suspension
will be perceived negatively by the State of Hawaii Department of
Agriculture. They are also concerned about the length of time necessary
to reinstate the grade requirements, if it is determined that such
action is needed in the future to ensure that only fruit of acceptable
quality is shipped to fresh markets.
The majority of committee members acknowledge the possibility that
fruit quality could decline as a result of this action, but do not
believe that this is likely. They believe that the reduction in
handling costs due to elimination of mandatory inspection will outweigh
any declines in returns attributable to reduced quality. Further, the
committee will monitor the impact this action has on the market, and
will recommend reinstatement of quality standards if warranted.
This rule finalizes the suspension of grade and inspection
requirements for fresh papayas. Such suspension enables handlers to
ship papayas to the fresh market at a reduced cost, since handlers are
no longer required to have their fruit inspected and pay the resulting
inspection costs. Suspending grade requirements for fresh papayas is
expected to increase producer returns by reducing costs and maintaining
the quality of fruit offered for sale. The industry is committed to
instituting alternative means of quality assurance by providing
incentives to producers to harvest and deliver only acceptable quality
fruit. This activity should ensure that consumers continue to receive
good quality fresh papayas. This rule is in the best interest of
producers, handlers and consumers, and is expected to increase returns
to papaya producers.
The Department's view is that this rule will have a beneficial
impact on producers and handlers, since it will reduce costs, and, in
light of changes in the structure of contracts between papaya handlers
and the growers who supply them it is not expected to adversely impact
the quality of fruit entering fresh markets.
Consistent with the suspension of Sec. 928.313, this rule also
finalizes the suspension of Secs. 928.150 and 928.152 of the rules and
regulations under the order. Section 928.150 provided a means for
handlers to receive waivers from the mandatory inspection requirement
under certain circumstances, and Sec. 928.152 authorized exemptions
from the grade requirement relating to fruit maturity. Since this
action suspends mandatory inspection and grade requirements, these
rules authorizing exemptions from such requirements are no longer
needed.
A conforming change is also made in Sec. 928.160, which required
handlers to file monthly utilization reports with the committee. Among
the information required to be submitted was the inspection certificate
numbers applicable to each fresh shipment of papayas. Since inspection
is no longer mandatory, the requirement that handlers submit inspection
certificate numbers is no longer needed. Thus, Sec. 928.160 is revised
to suspend such requirement.
Based on the above, the Administrator of the AMS has determined
that this rule will not have a significant economic impact on a
substantial number of small entities.
The information collection requirements contained in the referenced
sections have been previously approved by the Office of Management and
Budget (OMB) under the provisions of 44 U.S.C. Chapter 35 and have been
assigned OMB number 0581-0102.
This rule should reduce the reporting burden on approximately 5
papaya handlers who have been completing PAC Form 7, Application to be
an Approved Handler of Immature Papayas, and PAC Form 7(c), Immature
Papaya Order Form. Form 7 is estimated to take 15 minutes to complete,
and Form 7(c) about 10 minutes per form. No reduction in reporting
burden is expected as a result of the revision in Sec. 928.160
pertaining to monthly utilization reports. While handlers are no longer
required to provide inspection certificate numbers, the remaining
information on the reports will continue to be collected. It is
estimated that each report requires 1 hour to complete.
After consideration of all relevant matter presented, the
information and recommendations submitted by the committee, and other
information, it is found that the suspension of these sections, as set
forth below, will tend to effectuate the declared policy of the Act.
List of Subjects in 7 CFR Part 928
Papayas, Marketing agreements, Reporting and recordkeeping
requirements.
For the reasons set forth in the preamble, 7 CFR Part 928 is
amended as follows:
PART 928--PAPAYAS GROWN IN HAWAII
Accordingly, the interim final rule amending 7 CFR part 928 which
was published at 59 FR 38102 on July 27, 1994, is adopted as a final
rule without change.
Dated: October 11, 1994.
Eric M. Forman,
Deputy Director, Fruit and Vegetable Division.
[FR Doc. 94-25669 Filed 10-17-94; 8:45 am]
BILLING CODE 3410-02-P
