[Federal Register Volume 63, Number 149 (Tuesday, August 4, 1998)]
[Rules and Regulations]
[Pages 41390-41392]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-20791]
[[Page 41390]]
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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.
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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 Federal-State Inspection Service (inspection service)
and certified as meeting the applicable grade, size, quality, or
maturity requirements in effect pursuant to Sec. 920.52 or Sec. 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 Sec. 920.52 or Sec. 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 Sec. 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 one-year 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
[[Page 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 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 Sec. 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
Sec. 920.52 or Sec. 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 Sec. 920.52 or Sec. 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 Sec. 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 one-year 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 Sec. 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
[[Page 41392]]
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 Sec. 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.
Sec. 920.155 [Suspended]
2. In part 920, Sec. 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
