[Federal Register: May 30, 2001 (Volume 66, Number 104)]
[Rules and Regulations]
[Page 29216-29219]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 928
[Docket No. FV01-928-1 IFR]
Papayas Grown in Hawaii; Suspension of Grade, Inspection, and
Related Reporting Requirements
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Interim final rule with request for comments.
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SUMMARY: This rule indefinitely suspends the grade, inspection,
inspection waiver procedures, and related exempt shipment reporting
requirements under the marketing order regulating papayas grown in
Hawaii, due to current overproduction and unprecedented low prices for
fresh papayas. These requirements went into effect on January 2, 2001.
This action results from a unanimous recommendation of the Papaya
Administrative Committee (committee or PAC) at an emergency meeting on
December 28, 2000. This action is expected to permit the industry to
utilize funds earmarked for inspection for enhanced marketing efforts,
thus improving producer returns by increasing consumer demand.
DATES: Effective May 31, 2001; comments received by July 30, 2001 will
be considered prior to issuance of a final rule.
ADDRESSES: Interested persons are invited to submit written comments
concerning this rule. Comments must be sent to the Docket Clerk,
Marketing Order Administration Branch, Fruit and Vegetable Programs,
AMS, USDA, room 2525-S, P.O. Box 96456, Washington, DC 20090-6456; Fax:
(202) 720-8938, or E-mail: moab.docketclerk@usda.gov. All comments
should reference the docket 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: http://www.ams.usda.gov/fv/moab.html.
FOR FURTHER INFORMATION CONTACT: Terry Vawter, 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: (559) 487-5901, Fax:
(559) 487-5906; or George Kelhart, Technical Advisor, Marketing Order
Administration Branch, Fruit and
[[Page 29217]]
Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 96456, Washington,
DC 20090-6456; telephone: (202) 720-2491, Fax: (202) 720-8938.
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)
720-8938, or E-mail: Jay.Guerber@usda.gov.
SUPPLEMENTARY INFORMATION: This rule is issued under Marketing
Agreement No. 155 and Marketing Order No. 928, both as amended (7 CFR
part 928), regulating the handling of papayas grown in Hawaii,
hereinafter referred to as the ``order.'' The marketing agreement and
order are 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 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 rule suspends three sections of the order's rules and
regulations regarding minimum grade requirements (Sec. 928.313),
maturity exemptions (Sec. 928.152), and inspection waiver procedures
(Sec. 928.150). It also amends Sec. 928.160 of the order's rules and
regulations. The amendment to Sec. 928.160 removes references to
mandatory regulations and relieves handlers from the requirement to add
the inspection certificate number on PAC Form 1, Papaya Utilization.
This rule results from a unanimous recommendation of the committee
at an emergency meeting on December 28, 2000. At that meeting, the
committee recommended postponing, until July 1, 2001, the effective
date of a final rule published by the Department on November 22, 2000,
which reinstated grade, inspection, and related reporting requirements,
effective January 2, 2001. The committee held a subsequent committee
meeting on January 11, 2001, at which further public discussion was
held. After considering the committee's recommendation and other
relevant information, the Department is suspending, for an indefinite
period, the requirements that were reinstated on January 2, 2001.
Section 928.52 of the papaya marketing order authorizes the
establishment of grade, size, quality, maturity, and pack and container
regulations for 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 Secs. 928.52 or 928.53, such papayas must be inspected by
the inspection service and certified as meeting the applicable
requirements. The cost of inspection and certification is borne by
handlers. Section 928.54 authorizes regulation exemptions when shipping
papayas for commercial processing, relief agencies, or charitable
institutions. In addition, the Secretary may relieve from any or all
requirements under or established pursuant to Secs. 928.41, 928.52,
928.53, and 928.55, the handling of papayas in such minimum quantities,
in such types of shipments, or for such specified purposes (including
shipments to facilitate the conduct of marketing research and
development projects established pursuant to Sec. 928.45) as the
committee, with the approval of the Secretary, may prescribe. Section
928.60 of the papaya marketing order authorizes handler reporting
requirements.
This rule suspends Sec. 928.313 of the order s rules and
regulations regarding minimum grade requirements. That section states
that no handler shall ship papayas to any destination unless such
papayas meet the minimum grade of Hawaii No 1.
This rule also removes the requirement that handlers obtain
inspection through the Federal or Federal-State Inspection Service
(inspection service) prior to shipment of fresh papayas. Suspension of
the inspection waiver procedures in Sec. 928.150 of the order's rules
and regulations results in the elimination of the authority of the
inspection service to grant inspection waivers. Inspection waivers
allow handlers to ship papayas without inspection under certain
conditions when it is not practicable for the inspection service to
provide such inspection. In the absence of mandatory inspection,
handlers do not need inspection waivers issued by the inspection
service.
This rule also suspends the maturity exemption and related
reporting requirements in Sec. 928.152 of the order's rules and
regulations to remove the requirement that handlers interested in
becoming handlers of immature papayas apply to the committee for
approval, and report handling of immature papayas. Immature papayas are
used in a popular dish called green papaya salad and as a vegetable
substitute in recipes. Suspension of the maturity exemption and related
reporting requirements relieves handlers from filing PAC Forms 7 and
7(c) with the committee.
In addition, this rule amends Sec. 928.160 to remove the references
to mandatory regulations and the requirement that handlers include the
number of the inspection certificate issued by the inspection service
on each PAC Form 1 filed with the committee.
Grade, inspection, and reporting requirements under the order were
suspended in 1994. As previously mentioned, in a final rule published
on November 22, 2000, and effective January 2, 2001, the Department
reinstated those requirements under Secs. 928.150, 928.152, 928.313,
and 928.160 of the order's rules and regulations.
The committee met on December 28, 2000, and voted unanimously to
postpone the effective date until July 1, 2001. During that meeting,
and a subsequent meeting on January 11, 2001, the committee noted that
producer prices currently range from 6 to 12 cents per pound, compared
to 25 to 45 cents per pound reported by the committee for the same
period the previous year. Such prices, coupled with overproduction,
have had a negative effect on the entire industry, especially for the
new Rainbow variety of papayas. The Rainbow variety has been developed
to tolerate the effects of the Papaya Ringspot Virus, which has
decimated papaya trees in Hawaii for several years. The Rainbow
variety,
[[Page 29218]]
however, has not yet been approved for exportation to possible
significant markets, especially Japan or Canada, and is only marketed
in the United States.
Given the current marketing limitations and overproduction of
papayas, the committee recommended that funds earmarked for inspection
costs be redirected to marketing and promotion in an effort to increase
demand and improve returns to producers. Currently, with low prices to
producers, there is little money available for inspection. What funds
are available, the committee believes, would best be utilized in
increasing demand by enhanced marketing and promotion activities at
this time. The committee proposed to review the condition of the
industry in late spring or early summer to determine if overproduction
has eased or demand improved. Historically, the summer months result in
lower production, due to the reduced availability of rainwater. This
has been true for most varieties of papayas, and may also be true for
the Rainbow variety. This information would place the committee in a
better position to evaluate what further recommendations to make in the
interests of the industry.
While the committee recommended a postponement of the effective
date for implementing mandatory grade, inspection, and related
reporting requirements until July 1, 2001, the Department believes that
a suspension of the requirements is preferable at this time. First, the
emergency recommendation was made five days prior to the effective date
of the regulations, January 2, 2001. Since that time inspections of
papayas have not occurred. Second, the committee does not yet have a
timetable for entry of the new Rainbow variety of papayas into the
export markets to which the traditional variety, Kapoho, currently has
entry. The committee believes increased demand would help absorb the
current overproduction of the prolific Rainbow variety, and have a
positive affect on producer returns. Third, the committee also believes
that enhanced marketing and promotion may also improve demand for all
fresh papayas. The committee believes that funds earmarked for
inspection costs would be better utilized on promotional efforts. Thus,
there would be no funds available later in the fiscal year for
implementing mandatory inspection. There is no evidence that the
conditions that currently exist in the industry would be greatly
improved in the next several months.
For these reasons, the mandatory grade, inspection, and reporting
requirements effective January 2, 2001, are suspended until such time
as the conditions in the industry improve and the committee can
demonstrate a long-term commitment to a quality control program.
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), 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, 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 400 producers of papayas in the production
area and approximately 60 handlers subject to regulation under the
marketing order. Small agricultural producers are defined by the Small
Business Administration (13 CFR 121.201) as those having annual
receipts less than $500,000, and small agricultural service firms are
defined as those whose annual receipts are less than $5,000,000.
Based on a reported current average f.o.b. price of $.65 per pound
of papayas, a handler would have to ship in excess of 7.69 million
pounds of papayas to have annual receipts of $5,000,000. Last year,
only one handler shipped more than 7.69 million pounds of papayas, and,
therefore, could be considered a large business. The remaining handlers
could be considered small businesses, excluding receipts from other
sources.
Based on a reported current average grower price of $0.09 per pound
and annual industry shipments of 40 million pounds, total grower
revenues would be $3.6 million. Average annual grower revenue would,
thus, be $9,000. Based on the foregoing, the majority of handlers and
producers of papayas may be classified as small entities, excluding
receipts from other sources.
This rule suspends the grade, inspection, and related reporting
requirements under the order's rules and regulations. As a
result,Secs. 928.150, 928.152, and 928.313 are suspended in their
entirety, and Sec. 928.160 is amended to remove the reference to
mandatory regulations and the requirement that the inspection
certificate number be added to the utilization reports filed by
handlers.
At the meeting, the committee discussed the impact of these changes
on handlers and producers in terms of cost. Since mandatory inspection
and certification costs are borne by handlers, the cost savings to each
handler are estimated to be a total $24.24 per hour for on-site
inspections. In addition, the inspection service charges mileage costs
of $.37 per mile round trip from the inspection service office to the
handler's premises or processing plant. According to the inspection
service, for a trip taking 10 or more minutes, or covering 7 or more
miles, the travel time cost is based on the $24.24 hourly rate. Some
handlers could pass the inspection costs onto producers, thus, further
decreasing overall producer returns. These costs do not apply in the
absence of minimum quality requirements and associated mandatory
inspection.
During its deliberations, the committee discussed possible
alternatives to this action. They deliberated the impacts of the final
rule taking effect on January 2, 2001. However, because economic
conditions in the papaya industry are currently at a historically low
level, the committee rejected that alternative.
The committee also debated the value of suspending, rather than
postponing, the regulations in their entirety. That alternative,
however, was also rejected, as the committee felt suspension of the
regulations was too drastic an action to take at the time. Instead, the
committee proposed postponing the effective date of the requirements
until July 1, 2001, and further reviewing the conditions within the
industry at that time. The requirements were originally suspended
beginning on July 1, 1994.
However, as noted earlier, the Department has determined that a
suspension of the requirements is preferable, given the current
industry conditions and likelihood that there will be no substantial
improvement in the next several months. If industry conditions improve,
implementation of the quality control program could again be
recommended by the committee. Accordingly, this action will have a
favorable effect on both large and small entities.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
Chapter 35), the information collection requirements contained in this
rule have been previously approved by the Office of Management and
Budget (OMB) and have been assigned OMB No. 0581-0102.
This rule relaxes reporting requirements under the order, since
[[Page 29219]]
PAC Form 1 will no longer require the addition of the inspection
certificate number on it. In addition, PAC Forms 7 and 7(c) will not be
required from handlers wishing to be approved handlers of immature
papayas. In the absence of mandatory inspection, no handlers will be
required to apply for approval to handle immature papayas using PAC
Form 7 nor report shipments of immature papayas to the committee using
PAC Form 7(c). This rule will decrease the burden by 9.25 hours.
The Department has not identified any relevant Federal rules that
duplicate, overlap, or conflict with this proposed rule.
In addition, the committee's meetings were widely publicized
throughout the papaya industry and all interested persons were
encouraged to attend the meetings and participate in committee
deliberations on all issues. Like all committee meetings, the December
28, 2000, and the subsequent January 11, 2001, meetings were public
meetings and all entities, both large and small, were encouraged to
express views on this issue. The committee itself is comprised of 13
members, consisting of nine producer members and three handlers
members. The committee also includes a public member who does not
represent an agricultural interest nor have a financial interest in
papayas. Finally, interested persons are invited to submit information
on the regulatory and informational impacts of this action on small
businesses.
A small business guide on complying with fruit, vegetable, and
specialty crop marketing agreements and orders may be viewed at the
following web site: 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.
After consideration of all relevant matters presented, including
the information and recommendation submitted by the committee and other
available information, it is hereby found that the suspensions and
revision made by this rule, as hereinafter set forth, will tend to
effectuate the declared policy of the Act.
Pursuant to 5 U.S.C. 553, it is also found and determined that it
is impracticable, unnecessary, and contrary to the public interest to
give preliminary notice prior to putting this rule into effect, and
that good cause exists for not postponing the effective date of this
rule until 30 days after publication in the Federal Register because:
(1) This rule needs to be in effect as soon as possible to continue to
provide relief to the Hawaii papaya industry; (2) this action reflects
the emergency recommendation of the committee and the Department's
assessment of the industry; and (3) this rule provides a 60-day comment
period and any comments received will be considered prior to
finalization of this rule.
List of Subjects in 7 CFR Part 928
Marketing agreements, Papayas, 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
1. The authority citation for 7 CFR part 928 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
Secs. 928.150, 928.152, 928.313 [Suspended]
2. Sections 928.150, 928.152, and 928.313 are indefinitely
suspended in their entirety.
3. In Sec. 928.160, paragraph (a)(1) is revised to read as follows:
Sec. 928.160 Utilization reports.
(a) * * *
(1) Quantity of papayas handled subject to assessments including
the date and destination of each shipment;
* * * * *
Dated: May 21, 2001.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 01-13472 Filed 5-29-01; 8:45 am]
BILLING CODE 3410-02-P
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