Nectarines and Peaches Grown in California; Relaxation of Quality Requirements for Fresh Nectarines and Peaches

SUMMARY: This proposed rule would relax, for the 1996 season only, the

quality requirements for California nectarines and peaches. This

proposal would establish a California Tree Fruit Agreement (CTFA)

Utility quality requirement. California nectarines and peaches are

currently subject to a minimum requirement of a modified U.S. No. 1

grade. The CTFA Utility quality requirement would be the same as a U.S.

No. 2 except that misshapened fruit and fruit with serious damage due

to scarring would be permitted. This proposed rule would also require

that containers of nectarines and peaches meeting the CTFA Utility

quality requirement be clearly marked ``CTFA Utility.'' This proposed

rule is intended to allow more nectarines and peaches into fresh market

channels.

DATES: Comments must be received by April 3, 1996.

ADDRESSES: Interested persons are invited to submit written comments

concerning this rule. Comments must be sent in triplicate to the Docket

Clerk, Fruit and Vegetable Division, AMS, USDA, P.O. Box 96456, Room

2523-S, Washington, DC 20090-6456; or by facsimile at 202-720-5698. 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 at the office of the Docket Clerk during regular

business hours.

FOR FURTHER INFORMATION CONTACT: Kenneth Johnson, 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) 720-2861; or Terry Vawter, Marketing Specialist,

California Marketing Field Office, Marketing Order Administration

Branch, Fruit and Vegetable Division, AMS, USDA, 2202 Monterey Street,

Suite 102B, Fresno, California, 93721; telephone: (209) 487-5901.

SUPPLEMENTARY INFORMATION: This proposed rule is issued under Marketing

Agreement and Marketing Order Nos. 916 and 917 [7 CFR Parts 916 and

917] regulating the handling of nectarines and peaches grown in

California, hereinafter referred to as the orders. The orders 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 proposed

rule in conformance with Executive Order 12866.

This proposed rule has been reviewed under Executive Order 12778,

Civil Justice Reform. This proposed rule is not intended to have

retroactive effect. This proposed 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 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 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 about 300 California nectarine and peach handlers subject

to regulation under the orders covering nectarines and peaches grown in

California, and about 1,800 producers of these fruits in California.

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.

The Department is proposing to establish, for the 1996 season only,

a California Tree Fruit Agreement (CTFA) Utility quality requirement

and a container marking requirement for shipments of fruit meeting CTFA

Utility.

Minimum grade requirements for fresh nectarines and peaches grown

in California are in effect under Sec. 916.356 and Sec. 917.459,

respectively. This rule would amend Secs. 916.356 and 917.459 by

revising paragraph (a)(1) under each section, to permit shipments of

fruit meeting CTFA Utility. CTFA Utility quality requirements are the

same as the U.S. No. 2 grade requirements as set forth in the U.S.

Standards for Grades of Nectarines [7 CFR 51.3145 through 51.3160] and

the U.S. Standards for Grades of Peaches [7 CFR 51.1210 through

51.1223], except that misshapened fruit and fruit with serious damage

due to scarring would be permitted. All other applicable size and

maturity requirements would remain in effect. CTFA Utility fruit would

be inspected by the Federal-State Inspection Service as meeting the

CTFA Utility quality requirements. CTFA

[[Page 8226]]

Utility fruit would be subject to assessment and all other requirements

of the orders. This rule would also amend Secs. 916.350 and 917.442 by

adding a paragraph to each section to specify that each package or

container of nectarines and peaches shipped, meeting the requirements

of the newly established CTFA Utility quality requirements, must be

conspicuously marked with the words ``CTFA Utility''.

Shipments of California nectarines and peaches are subject to

minimum grade, size, and maturity requirements under the provisions of

Federal Marketing Orders 916 (section 916.356) during the period April

1 through October 31 each year and 917 (section 917.459) during the

period April 1 through November 23 each year. Currently, nectarine

shipments are required to meet the requirements of U.S. No. 1 except

less scarring is permitted than the U.S. No. 1 Grade but the tolerance

for fruit not well formed is greater than the U.S. No. 1 Grade.

Different minimum size requirements are in effect for different

groupings of nectarine varieties. Currently peach shipments are

required to meet the requirements of U.S. No. 1 Grade except there is

an additional tolerance for fruit damage caused by open sutures. Also,

different minimum size requirements are in effect for different

groupings of peach varieties. Both the nectarine and peach regulations

allow the shipment of fruit one size smaller than the specified minimum

if the fruit meets higher maturity requirements. Both nectarine and

peach shipments are subject to container, pack, and container marking

requirements.

Prior to the 1995 shipping season the Nectarine Administrative and

Peach Commodity Committees (Committees) considered recommending a

change in the nectarine and peach regulations to allow a utility grade

for these fruits (Utility grade is a lower quality fruit than U.S. No.

1). During the 1995 season, changes were made to allow use of the

utility grade for California plums which are regulated under a State

program. The plum utility grade was based on the California

Agricultural Code requirements. The Committees voted not to recommend a

utility grade for nectarines and peaches in the 1995 season. The

Committees did, however, hire Dr. Dennis Nef, California State

University, Fresno, to conduct a research project to study the impact

of a utility grade for nectarines and peaches. The Committees also

believed that the industry experiences from the plum utility grade

would be helpful in making future recommendations for a utility grade

for nectarines and peaches. The report prepared by Dr. Nef was

presented to the Nectarine and Peach Grade and Size Subcommittees in

October 1995. The report found that about 22 percent of the peaches

sampled in packinghouse cull bins in 1995 would have met California

agricultural code requirements. Of the nectarines sampled from

packinghouse culls in that year, about 6 percent would have met

California agricultural code requirements and an additional 14 percent

failed marketing order quality requirements but would have met U.S. No.

1 Grade (as indicated previously, the nectarine grade requirements

under the marketing order permit less fruit scarring than allowed under

U.S. No. 1). The report pointed out that these findings were based on a

crop season which was marked by unusual crop and weather conditions.

After reviewing the report, the nectarine and peach subcommittees voted

to not recommend to the full Committees that a utility grade be

implemented in 1996 for nectarines and peaches citing the unusual

weather conditions that resulted in below normal crops. They believed

that Dr. Nef's research project should be continued for another year to

allow for the collection of data based on a more normal year.

On November 29, 1995, the Department wrote to the Committees

recommending that a utility grade be adopted for nectarines and peaches

for the 1996 season beginning April 1, 1996. These Committees met on

December 6-7, 1995, to discuss possible implementation of a utility

grade for nectarines and peaches for the 1996 season. Committee members

and others in attendance at the meetings expressed views in opposition

to and in support of implementing a utility grade.

Commenters in opposition to a utility grade for nectarines and

peaches stated that the 1995 season was not a normal season for plums,

nectarines, or peaches and should not be used as a basis for

recommending a utility grade. They also said that the tree fruit

industry is facing competition in both domestic and in foreign markets.

One commenter stated that utility grade fruit would damage the

reputation of California-produced tree fruit and another stated that

poor quality California plums had been shipped to Hong Kong last year

and that these plums had damaged the reputation of California plums.

One commenter stated that allowing a utility grade would result in

inspections of fruit which only serve to verify that the fruit in the

container is poor quality. Others stated that lower quality fruit is

not wasted and may be used for cattle feed. Another stated that the

results of the recent grower referendum indicated support for the

continuation of the program and the continuation of the quality

standards.

One commenter in support of a utility grade for nectarines stated

that the implementation of a utility grade for plums in 1995 resulted

in a $10 million increase in plum grower revenue. Commenters noted that

less than 10 percent of the plum pack was utility grade. One commenter

stated that while less than one percent of his organization's plum pack

was utility grade, this lower grade should be available for use by

nectarine and peach handlers if a market exists. Others commented that

the Department had recommended a utility grade for nectarines and

peaches for one year only--1996.

Data on recent production of California nectarines and peaches in

relation to season average producer prices appears to indicate that

lesser quality fruit could be marketed successfully without interfering

with sales of higher quality fruit. The limited quantity expected to be

available would be expected to have a minimal effect on consumer

purchases and season average producer prices for California nectarines

and peaches. Sales of lesser quality fruit to a niche market could

increase producer revenue and promote consumer satisfaction.

The Department's proposal to implement the ``CTFA Utility'' quality

requirement for the 1996 season would authorize fruit meeting this

requirement to be shipped to market and provide actual information on

consumer and retailer acceptability of such fruit. This information

could then be used to supplement information collected by Dr. Nef and

assist the respective industries in developing their quality

requirements for the 1997 season.

Based on the foregoing, the Department proposes that a utility

grade for nectarines and peaches should be implemented on an

experimental basis for the 1996 season. The Department proposes, for

purposes of this regulation, to define ``CTFA Utility'' to mean fruit

which meets the requirements of U.S. No. 2 Grade defined in the United

States Standards for Grades of Nectarines (7 CFR 51.3145 through

51.3160) and the United States Standards for Grades of Peaches (7 CFR

51.1210 through 51.1223) except that misshapened fruit and fruit with

serious damage due to scarring would be permitted.

Committee members and others who commented at the December 6-7

Committee meetings indicated that a niche market may exist for utility

grade

[[Page 8227]]

fruit and that the opportunity should be made available to market lower

quality fruit to meet demand. This proposal could allow more fruit to

be marketed.

In order to prevent confusion in the marketplace and to clearly

differentiate shipments of ``CTFA Utility'' fruit from better quality

fruit, this proposal requires that containers of ``CTFA Utility'' fruit

be conspicuously marked with the words ``CTFA Utility''. In addition,

shipments of such fruit would be required to meet the same container,

pack, and container marking requirements in effect for shipments of

higher quality fruit.

This proposed rule reflects the Department's appraisal of the need

to revise the quality and container requirements for California

nectarines and peaches as specified. The Department believes that this

rule may have a beneficial impact on producers, handlers, and consumers

of California nectarines and peaches.

Based on available information, the Administrator of the AMS has

determined that this action would not have a significant economic

impact on a substantial number of small entities.

A 30-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 these matters.

List of Subjects

7 CFR Part 916

Marketing agreements, Nectarines, Reporting and recordkeeping

requirements.

7 CFR Part 917

Marketing agreements, Peaches, Pears, Reporting and recordkeeping

requirements.

For the reasons set forth in the preamble, 7 CFR Parts 916 and 917

are proposed to be amended as follows:

PART 916--NECTARINES GROWN IN CALIFORNIA

1. The authority citation for 7 CFR Part 916 continues to read as

follows:

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

2. Section 916.350 is amended by adding a new paragraph (d) to read

as follows:

Sec. 916.350 California Nectarine Container and Pack Regulation.

* * * * *

(d) During the period April 1 through October 31, 1996, each

container or package when packed with nectarines meeting CTFA Utility

requirements, shall bear the words ``CTFA Utility'' marked on all

containers and packages, along with all other required container

markings, in letters of \3/4\ inch minimum height on the principal

display panel. Consumer bags or packages must also be clearly marked on

the bag or package as ``CTFA Utility'' along with other required

markings.

3. Section 916.356 is amended by revising paragraph (a)(1) to read

as follows:

Sec. 916.356 California Nectarine Grade and Size Regulation.

(a) * * *

(1) Any lot or package or container of any variety of nectarines

unless such nectarines meet the requirements of U.S. No. 1 grade:

Provided, that nectarines 2 inches in diameter or smaller, shall not

have fairly light colored, fairly smooth scars which exceed an

aggregate area of a circle \3/8\ inch in diameter, and nectarines

larger than 2 inches in diameter shall not have fairly light colored,

fairly smooth scars which exceed an aggregate area of a circle \1/2\

inch in diameter: Provided further, That an additional tolerance of 25

percent shall be permitted for fruit that is not well formed but not

badly misshapen. Provided further, that, during the period April 1

through October 31, 1996, any handler may handle nectarines if such

nectarines meet CTFA Utility quality requirements. The term CTFA

Utility means nectarines that have been inspected by the Federal or

Federal-State Inspection Service and meet the requirements of the U.S.

No. 2 grade as defined in the United States Standards for Grades of

Nectarines [7 CFR 51.3145 through 51.3160], except that misshapened

fruit and fruit with serious damage due to scarring would be permitted.

The Federal or Federal-State Inspection Service shall make final

determinations on maturity through the use of color guides or such

other tests as determined appropriate by the inspection agency.

* * * * *

PART 917--FRESH PEARS AND PEACHES GROWN IN CALIFORNIA

1. The authority citation for 7 CFR Part 917 continues to read as

follows:

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

2. Section 917.442 is amended by adding and reserving a new

paragraph (c) and adding paragraph (d) to read as follows:

Sec. 917.442 California Peach Container and Pack Regulation.

* * * * *

(d) During the period April 1 through November 23, 1996, each

container or package when packed with peaches meeting CTFA Utility

requirements, shall bear the words ``CTFA Utility'' marked on all

containers and packages, along with all other required container

markings, in letters of \3/4\ inch minimum height on the principal

display panel. Additional consumer bags or packages must also be

clearly marked on the bag or package as ``CTFA Utility'' along with

other required markings.

3. Section 917.459 is amended by revising paragraph (a)(1) to read

as follows:

Sec. 917.459 California Peach Grade and Size Regulation.

(a) * * *

(1) Any lot or package or container of any variety of peaches

unless such peaches meet the requirements of U.S. No. 1 grade:

Provided, that an additional 25 percent tolerance shall be permitted

for fruit with open sutures which are damaged, but not seriously

damaged. Provided, that, during the period April 1 through November 23,

1996, any handler may handle peaches if such peaches meet CTFA Utility

quality requirements. The term CTFA Utility means peaches that have

been inspected by the Federal or Federal State Inspection Service and

meet the requirements of the U.S. No. 2 grade as defined in the United

States Standards for Grades of Peaches [7 CFR 51.1210 through 51.1223],

except that misshapened fruit and fruit with serious damage due to

scarring would be permitted. The Federal or Federal-State Inspection

Service shall make final determinations on maturity through the use of

color chips or other tests as determined appropriate by the inspection

agency.

* * * * *

Dated: February 26, 1996.

Sharon Bomer Lauritsen,

Deputy Director, Fruit and Vegetable Division.

[FR Doc. 96-4871 Filed 3-1-96; 8:45 am]

BILLING CODE 3410-02-P