Exemptions From Import Regulations for Specified Fruit, Vegetable and Specialty Crop Commodities

Federal RegisterMar 26, 1996

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 944, 980 and 999

[Docket Nos. FV93-944-3FIR, FV93-980-1FIR and FV93-999-1FIR]

Exemptions From Import Regulations for Specified Fruit, Vegetable

and Specialty Crop Commodities

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule finalizes, with modifications, two interim final

rules which exempt imported fresh fruit, vegetable and specialty crop

commodities from grade, size, quality, and maturity requirements if

those commodities are to be used in certain specified outlets. The

exemptions correspond to exemptions in effect for the same commodities

regulated under Federal marketing orders. This rule also finalizes,

with modifications, safeguard procedures which were added to import

regulations to assure that imported fresh commodities are utilized only

in such specified exempt outlets. This rule also deletes import

requirements for Tokay grapes. This rule is implemented in accordance

with section 8e of the Agricultural Marketing Agreement Act of 1937 to

make the import regulations more consistent with applicable domestic

marketing order exemptions and with the North American Free Trade

Agreement (NAFTA). Exempt uses include, but are not limited to,

processing, livestock feed, and donation to charity.

EFFECTIVE DATE: May 28, 1996.

FOR FURTHER INFORMATION CONTACT: Barbara Schulke or Bill Addington,

telephone (202) 720-4607 and (202) 720-2412 respectively, Marketing

Order Administration Branch, Fruit and Vegetable Division, AMS, USDA,

P.O. Box 96456, room 2523-S, Washington, DC 20090-6456, Fax (202) 720-

5698.

SUPPLEMENTARY INFORMATION: This rule is issued under section 8e of the

Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-

674) (Act), which provides that whenever certain specified commodities,

including avocados, grapefruit, kiwifruit, limes, olives, oranges,

table grapes, potatoes, onions, tomatoes, dates

[[Page 13052]]

and walnuts, are regulated under a Federal marketing order, imports of

those commodities must meet the same or comparable grade, size,

quality, and maturity requirements as those in effect for the

domestically produced commodities.

The Act further provides that when two or more marketing orders for

the same commodity produced in different areas are in effect, the

imported commodity must meet the same grade, size, quality, and

maturity requirements as the commodity produced in the area with which

the imported commodity is in most direct competition.

Some marketing orders provide exemptions for commodities sold at

roadside stands, shipped directly to consumers, or exported. However,

such exemptions are not issued for commodities offered for importation

because such outlets are not applicable to import regulations.

The Department of Agriculture (Department) is issuing this rule in

conformance with Executive Order 12866.

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. Import regulations issued under

the Act are based on those established under Federal marketing orders.

The following are updated estimates of the number of importers who

may be affected by this final rule: avocados--147, grapefruit--96,

kiwifruit--110, limes--147, olives--15, oranges--96, table grapes--80,

potatoes--74, onions--148, tomatoes--142, dates--164, and walnuts--6.

Small agricultural service firms, which include importers and

processors of these commodities, have been defined by the Small

Business Administration (13 CFR 121.601) as those having annual

receipts of less than $5 million. The majority of these importers may

be classified as small entities.

This final rule has been reviewed under Executive Order 12778,

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

effect. This rule would not preempt any State or local laws,

regulations, or policies, unless they present an irreconcilable

conflict with this rule. There are no administrative procedures which

must be exhausted prior to any judicial challenge to the provisions of

this rule.

In accordance with section 8e, imported commodities destined for

processing must be given the same or comparable treatment as that

afforded domestic commodities destined for processing. The Federal

marketing orders covering avocados, grapefruit, kiwifruit, limes,

olives, oranges, table grapes, potatoes, onions and tomatoes provide

exemptions from established quality and size requirements if the

commodity is to be used in certain processing outlets. This final rule

provides similar exemptions for imported products destined for

processing.

Marketing Order No. 926 regulating Tokay Grapes Grown in San

Joaquin County, California, has been terminated by the Department at

the request of the order's Industry Committee. Thus, the import

requirements for Tokay grapes established under section 8e of the Act

are also terminated. This final rule removes all references to Tokay

grapes that appeared in the interim final rule (58 FR 69182).

This rule finalizes exemptions for imported commodities to be

utilized in other exempt outlets. These exemptions are consistent with

section 8e of the Act which requires imported commodities to meet the

same or comparable requirements established under the domestic

marketing orders for the commodities. This rule finalizes, with

modifications, amendments to the following 7 CFR sections:

944.28 Avocado import grade regulation,

944.31 Avocado import maturity regulation,

944.106 Grapefruit import regulation,

944.209 Lime import regulation,

944.312 Orange import regulation,

944.401 Olive regulation,

944.503 Table grape import regulation,

944.550 Kiwifruit import regulation,

980.1 Import regulations; Irish potatoes,

980.117 Import regulations; onions,

980.212 Import regulations; tomatoes,

999.1 Regulation governing the importation of dates, and

999.100 Regulation governing imports of walnuts.

Safeguard provisions, added by the interim final rules as

Secs. 944.350, 980.501, and 999.500, are modified in this final rule to

provide that imported commodities not meeting grade, size, quality, and

maturity requirements can be utilized in specified exempt outlets.

The two interim final rules were issued on December 23, 1993, and

published in the Federal Register (58 FR 69182 and 69186, December 30,

1993) with an effective date of January 1, 1994. The two rules amended

7 CFR parts 944, 980 and 999 and provided a two-month comment period

which ended February 28, 1994. A minor correction to part 944 was

issued on January 31, 1994 (59 FR 4245). At the request of industry

members, the Department reopened the comment period for one additional

month (59 FR 11529, March 11, 1994) for both interim final rules. The

reopened comment period closed April 11, 1994.

Thirty five comments were received. Thirty four comments opposed

various aspects of the two interim final rules and one comment favored

the interim final rules. The primary concern of most commenters was the

use of exemptions by processors. Thirty comments were from members of,

or on behalf of, the potato, onion and tomato industries in the United

States. The one favorable comment was received from the Canadian

Produce Marketing Association.

Several commenters questioned the Department's commitment to the

safeguard program. They claimed that there is no plan to monitor exempt

shipments and that the AMS lacks personnel to enforce compliance of the

program.

The AMS is responsible for administering Federal fruit, vegetable,

and specialty crop marketing order programs and the corresponding

import regulations. A number of different resources are being utilized

to implement and monitor the safeguard program, including the Fruit and

Vegetable Division's (Division) Marketing Order Administration Branch

(MOAB) (which monitors exempt entries), the inspection services of

Fresh Products Branch and Processed Products Branch and the AMS

Compliance Staff. The Department's Animal and Plant Health Inspection

Service (APHIS), and the U.S. Customs Service (Customs Service) also

must review and clear all agricultural shipments prior to entry into

the United States. This rule does not supersede the Federal Plant

Quarantine Act of 1912, the Federal Food, Drug, and Cosmetic Act, or

any other applicable laws or food and sanitary regulations of city,

county, state or Federal agencies.

Every attempt is made to keep importers, known processors, and

other exempt receivers aware of these rules and the safeguard

procedures. The interim final rules, exemption forms and updated import

summary sheets for the affected commodities have been sent to all known

importers and processors.

[[Page 13053]]

Additional exemption forms are sent immediately upon request.

A compliance plan has been developed utilizing follow-up telephone

calls and spot compliance checks of exempt outlets. Division personnel

currently make telephone calls to importers and customs brokers who

initiate the FV-6 ``Importer's Exempt Commodity Form'' (FV-6 or FV-6

forms) and calls to exempt receivers who must certify receipt and

disposition of the exempt shipments. The FV-6 was established under the

interim final rule as an integral part of the safeguard reporting

procedures. This final rule modifies the FV-6 (below).

Experience over the last year indicates that the notification

process outlined in the interim final rules (58 FR pages 69182 and

69186, December 30, 1993) should be modified to ensure that the

Department is aware of all shipments entered as exempt under 8e

provisions. Under a Memorandum of Understanding between the AMS and the

Customs Service, AMS will be provided import data on all entries of 8e

commodities. The MOAB has worked with the fresh and processed products

inspection offices and the Customs Service to coordinate efforts for an

effective 8e compliance program. In addition, MOAB maintains an

extensive and comprehensive list of importers, customs brokers and

receivers for mailing and field audits. Division representatives attend

regional and national importers and customs brokers meetings to educate

importers and Customs Service officials on the requirements of the Act.

MOAB enters and reconciles data from the FV-6 forms, Customs Service

data, and the inspection service offices, and the PIERS report (Port,

Import/Export Reporting Service) to identify lots which enter ports

under the exemption rule.

Some commenters asked what penalties would be applied to those who

violate the safeguard procedures. The compliance plan provides for on-

the-spot inspections and checks of processors and other exempt outlet

receivers to gather evidence of violations. Pursuant to section 8e of

the Act, the Department can bring legal action against those who

violate import regulations. Penalties may be assessed under section

608a(5). Upon conviction, penalties as prescribed in 608c(14)(A) also

may be imposed. Section (14)(A) provides for fines from $50 to $5,000

per violation, per day, for those convicted of violating regulations,

including import regulations. In addition, section 608c(14)(B) provides

for administrative adjudication to issue civil penalties of up to

$1,000 per day, per violation, against importers and exempt receivers

who violate the import regulations, including safeguard procedures.

Further, using Customs Service regulatory authorities (19 CFR part

113), the AMS can also request the Customs Service to demand redelivery

of a lot imported as exempt under section 8e if certification of exempt

use has not been received by the AMS. Failure to redeliver the lot is

punishable by a penalty of three times the value of the shipment. The

AMS is developing a computerized data base to identify exempt shipments

for which the reporting process has not been completed within specified

time frames. This rule does not supersede or replace Customs Service

entry procedures.

A few commenters, evidently referring to the $1,000 fine cited on

the exemption form, stated that $1,000 is not a sufficient deterrent to

prevent some from violating the safeguard procedures. However, the

$1,000 fine is for making false statements on the form. False

representation to any Federal agency on any matter within its

jurisdiction, knowing it to be false, is a criminal offense and a

violation of 18 U.S.C. 1001 which provides for a fine or imprisonment

or both.

The Department is fully committed to enforcing the import

regulations.

Most of the commenters questioned whether the safeguard procedures

would prevent substandard product from entering fresh marketing

channels. With modifications implemented in this final rule, the

Department believes that the enhanced safeguard procedures represent

practicable, aggressive, and effective procedures for monitoring exempt

shipments. In addition, the management staffs of many marketing orders

follow similar procedures in monitoring and enforcing special purpose

shipment provisions relating to their respective commodities.

A few commenters suggested that the marketing order committees

should be allowed to assist the Department with enforcement activities.

The Department is responsible for enforcing import regulations and

cannot delegate that compliance activity to committee managers.

However, the Department encourages managers to notify the AMS of

suspected violations of safeguard procedures or improper dispositions.

A few commenters contended that the reporting deadlines (15 days at

the port of entry and 15 days after receipt by the exempt receiver) are

too long for the Department to effectively monitor the disposition of

lots. They stated that during the 15-day reporting period an exempt lot

could easily be disposed of in fresh market channels and there would be

no proof of such illegal activity. The Department agrees that a more

timely notification of the release of exempt lots into the United

States will enhance the Department's ability to enforce the safeguard

procedures and ensure compliance with the import regulations. The time

period should be short enough to enable the Department, when conducting

on-site inspection of receivers' facilities, to determine ultimate

disposition of exempt lots. The Department believes that a two-day

reporting period will be sufficient for mailing reports of entry and

exempt disposition. Thus, this final rule establishes that original

copies of FV-6 forms must be submitted by importers, customs brokers,

and exempt receivers, and such copies must be postmarked no later than

two days after importation or receipt of the commodity shipment being

reported. FV-6 forms must be mailed to the Marketing Order

Administration Branch, USDA, AMS, P.O. Box 96456, room 2523-S,

Washington, D.C. 20090-6456 (telephone (202) 720-4607. FV-6 forms

submitted by fax must be followed by a mailed, original copy of the FV-

6. Fax transmissions may be sent to the MOAB at (202) 720-5698.

One commenter suggested that the Act should be changed to allow for

regulation of processors. Amendment of the Act would require

Congressional action. In any event, the Food and Drug Administration of

the Department of Health and Human Services is responsible for

regulating the wholesomeness of processed peanut products.

One commenter claimed that the Department has reversed its long-

standing position that section 8e requirements cannot be applied to

pack and container requirements. However, section 8e of the Act states

that imported commodities must meet the grade, size, quality and

maturity requirements established under respective marketing orders.

Because section 8e does not authorize pack and container requirements,

those requirements cannot be applied to imported commodities. The

Department has not changed its position on this issue.

Some commenters claimed that the exemptions for processing make it

easier for imported culls to be used in local processing markets than

domestic culls and that this would have a negative impact on

economically depressed production areas that utilize domestically

produced culls in processing. However, the objective of this rule is

that section 8e import

[[Page 13054]]

regulations and the exemption provisions of domestic marketing orders

be the same or comparable. An importer who properly files FV-6 forms

when using imported culls in processing outlets does not violate the

import regulation.

A few commenters stated that import barriers still exist in some

countries and that the import exemption rule gives unfair advantage to

foreign producers. However, the efficacy of this rule in the United

States is not dependent on the absence of trade barriers in other

countries. The exemption form may be used for exempt commodities

imported from any country. The interim final rules were issued to be

consistent with section 8e of the Act, and thus, may be applied to the

specified commodities imported from any country.

One commenter, referring to Section A of Annex 703.2 of the NAFTA,

stated that the Department ``went beyond the specific requirements of

the NAFTA by applying the rule to Canada.'' The Department did not

intend to imply that Section A of Annex 703.2 applies to Mexico, Canada

and other countries. Implementation of the NAFTA caused the Department

to review all 8e provisions applicable to fruits and vegetables. After

such review it became apparent that the regulations concerning the 8e

commodities covered in this regulation needed to be amended to be

consistent with marketing order regulations and requirements, as well

as the NAFTA. Therefore, pursuant to Section 8e of the Act and the

provisions of the NAFTA, the Department amended its regulations

relating to these commodities.

One commenter suggested that new food technologies now tend to blur

the distinction between fresh and ``fresh processed'' activities. To

assist the importer or customs broker, specific processes that qualify

for exemption are added to the regulatory text (e.g. canning, freezing,

dehydrating, etc.) as appropriate for individual commodities. The

listing of qualified processes for each commodity should assist

importers and customs brokers in determining whether the process

designated on the exemption form is considered to be an exempt process.

The entries may be updated by future rulemaking, as necessary.

Several commenters suggested that the Department establish a ``pre-

approved processor'' list for each commodity covered in parts 944, 980

and 999. According to the comments, a pre-approved processor list would

contain the names of processor companies that have certified to the

respective marketing order committee and to the Department that the

processor agrees to dispose of exempt shipments only in approved

processing operations. Commenters suggested that such lists be used to

approve or reject exempt shipments at the port of entry, depending on

whether the processor is on the approved list. Commenters suggested

that the approval be granted either by the Customs Service, the

respective marketing order committee manager, or the Department.

However, the Customs Service cannot be expected to maintain a list of

approved processors and to refer to it every time an exempt shipment is

presented for importation. Oversight of import regulations cannot be

delegated to marketing order managers. In response to comments,

however, MOAB has obtained approved-processor lists for some commodity

committees and is referring to the lists as part of MOAB's compliance

procedures when reviewing FV-6 forms.

Some commenters cited phytosanitary concerns in opposing the import

exemptions. The commenters believe that exempt shipments would enter

the United States and not be subject to APHIS regulations or

inspection. However, exempt shipments, including culls removed from

reconditioned fresh shipments, continue to be subject to APHIS

inspection and certification.

Several commenters complained that the rulemaking procedure used by

the Department to issue the two interim final rules was abbreviated and

did not provide for adequate industry input. The interim final rules

were issued under informal rulemaking procedures used by the Department

to implement regulations, and there was good cause not to postpone the

effective date of the rule. More than three months were provided for

comment on the two interim final rules. The lengthy comment period

allowed interested persons time to comment on the interim final rules

and also provided the Department with more opportunity to monitor and

evaluate the safeguard procedures in operation.

Finally, customs brokers complained that they have no control over

the ultimate disposition of exempt lots and, thus, should not be

expected to certify as to the ultimate disposition of the lot. However,

certification by either the importer or customs broker is needed to

provide some validity to the safeguard procedure. Importers and customs

brokers are responsible for seeking out and representing clients who

will act in accordance with law. If a customs broker cannot, in good

faith, certify as to the eventual exempt usage, then that person should

not act as the agent of the importer.

On the basis of comments received, review of ongoing safeguard

procedures, and review of the exemption form, the Department clarifies

and modifies some requirements and procedures specified on the FV-6

form. These clarifications and modifications are intended to eliminate

confusion when completing the exemption form, improve the functioning

of the safeguard process, and improve the compliance capability of the

Department.

This final rule establishes that the FV-6, Importer's Exempt

Commodity Form will be sequentially numbered. Sequentially numbered

forms will enable the Department to better monitor use of the form by

importers and brokers and enhance compliance efforts by the Department.

The new forms will be mailed to all known importers, customs brokers

and inspection service offices serving major ports of entry. Use of the

new forms must begin no later than 60 days after publication of this

final rule in the Federal Register. During unforeseen or emergency

situations, a special, sequentially numbered FV-6 form can be faxed to

an importer or customs broker for one-time use. Additional copies of

the new FV-6 form and single use copies are available on request by

calling (202) 720-6585 or sending a fax to (202) 720-5698.

Under initial instructions, the white copy (#1) was to be retained

by the Customs Service office at the port of entry upon entry. Under

this final rule, the importer or customs broker must present the FV-6

to the Customs Service at the port of entry with Section I completed.

The importer or customs broker then retains the white Copy 1 of the FV-

6 as a record of the exempt entry. Further distribution of the form

remains unchanged--the yellow Copy 2 is forwarded to the AMS and the

pink Copy 3 is forwarded to the exempt outlet receiver with the exempt

shipment.

The FV-6 is used when an entire lot (in bags or bulk) is imported

exempt from quality requirements and shipped directly to an exempt

outlet. An importer or customs broker usually arranges or facilitates

the business transaction between a foreign producer (seller) and the

domestic processor or other exempt entity. In these instances, the

importer or customs broker is responsible for initiating the FV-6 form

and the exempt user is the buyer.

An 8e commodity imported for fresh market use must be inspected and

certified as meeting fresh market quality requirements. Prior to

issuance of the two interim final rules in this

[[Page 13055]]

rulemaking procedure, if an imported 8e commodity shipment failed to

meet applicable quality requirements, the importer had three options:

(1) Export; (2) destroy the lot under inspection supervision; or (3)

recondition the lot and return or destroy the culls. This rule provides

another option for the importer. The FV-6 may be used to ship a failing

lot, or the culls from a reconditioned lot, to an exempt outlet.

The ``Date and Place of Inspection'' entry (Item 2 on the FV-6

form) is to be completed only when a lot imported for fresh market use

is inspected and all or a portion of the lot is subsequently sent to an

exempt outlet. Item 2 would include the fresh inspection certificate

number of the inspection performed on the lot. Some importers and

customs brokers have not completed item 2 with this information or

provided a copy of the inspection certificate when using the FV-6 form

to import a lot failing fresh market quality requirements. In addition

to filing an FV-6 form, the importer should also file a copy of the

inspection certificate applicable to the exempt lot.

One FV-6 may be used for multiple deliveries to the same exempt

outlet, if the deliveries are made at the same time. In such instances,

item 4, ``Vehicle Identification,'' on the FV-6 must contain the

license tag numbers or other identification for each vehicle delivering

the exempt shipments. Also, item 7, ``Total Quantity Imported,'' must

show the total weight of all loads delivered from the imported lot to

the exempt outlet. The receiver who signs Section II of the exemption

form for the exempt outlet certifies as to the receipt of all loads

listed on the FV-6, the total volume received, and that the disposition

is consistent with exempt usage.

If a shipment is entered as exempt and shipped to two or more

exempt outlets, an FV-6 must be completed for each exempt shipment and

outlet. Each receiver who signs section II of the exemption form for an

exempt outlet is certifying receipt of the shipment at that exempt

outlet. In such cases, the combined volume of exempt shipments to each

outlet must equal the total volume reported on the exemption form.

The quality of product shipped exempt is a business decision

between the exporter, importer and processor or other exempt receiver.

If an importer or processor receives exempt product below needed

quality specifications, the importer or processor could discontinue use

of the exemption form and require that further shipments be inspected

against applicable import grade, size, quality, or maturity

requirements.

An exempt receiver may reject a shipment, send it to an alternate

exempt outlet, destroy it, return it to the importer, or export it. It

is the responsibility of the importer to notify the MOAB of any such

action and final disposition of the shipment. In such cases, a second

exemption form must be completed in full and filed with the MOAB. The

second FV-6 should be initiated by the exempt receiver and certified by

a representative of the alternate exempt outlet or disposition outlet.

If the shipment is exported, a copy of the Customs Service export

document should be included with the second FV-6.

Under ``Total Quantity Imported'' (currently item 7), the importer

or customs broker must enter, in pounds, the quantity of product being

imported as exempt. Other terms of measurement common in some countries

or commodity industries, such as kilograms, basket, container, or bulk,

must be converted to pounds. This will provide the receiving exempt

outlet with a common, measurable term on which to determine that all of

the product has been delivered. The conversion to pounds will also

assist the Department in its compliance efforts. The weight entered

should be only the quantity imported as exempt. In instances where the

exempt commodity is the culled sublot of a larger fresh market lot, the

weight entered should be only the weight of the exempt sublot.

Under ``Intended Use'' (currently item 9) the importer or customs

broker should enter the type of processing use or other exempt use for

which the exempt product is intended. The type of processing should be

entered on the line after the word ``Type'' in item 9. This change is

made at the request of commenters and is a modification from the

interim final rules which did not require designation of the type of

processing or other exempt use. This modification of the form will help

the Department monitor exempt shipments.

The Customs Service Entry Number (currently item 10a) and the

Harmonized Tariff Code Number (currently item 10b) must be entered on

each exemption form. These data enable the Department to obtain a

baseline of exempt shipments released by the Customs Service and, thus,

are essential to the Department's monitoring and compliance

responsibilities.

After consideration of comments received and evaluation of

safeguard procedures, the Department finalizes the two interim final

rules and makes minor modifications and additions to individual

commodity import regulations for consistency and clarity. Discussions

regarding fruit crop import regulations under 7 CFR part 944 follow.

Avocados

The avocado import grade regulation (7 CFR 944.28) is based on

those in effect for avocados grown in Florida under Marketing Order No.

915 throughout the year. Under Marketing Order No. 915 any person may

handle avocados without regard to established grade, size, quality, or

maturity requirements provided that such avocados are handled for (1)

consumption by charitable institutions; (2) distribution by relief

agencies; (3) commercial processing into products; (4) seed; or (5)

individual shipments of up to 55 pounds. Prior to issuance of the

interim final rule, the only exemption allowed under the avocado import

regulation was for individual shipments of up to 55 pounds. This rule

finalizes the addition of charitable institutions, distribution by

relief agencies, seed, and commercial processing into products to the

list of exemptions allowed under the avocado import regulation.

Commercial processing includes canning, freezing, dehydrating, drying,

the addition of chemical substances, or fermentation.

The Department suspended Sec. 944.31 Avocado import maturity

regulation on May 15, 1991 (56 FR 23009). The suspension was in place

at the time of issuance of the import exemption interim final rule (58

FR 69182, December 23, 1993). Subsequently, the Department issued a

proposed rule on April 4, 1994 (59 FR 15661) to lift the suspension.

Because the avocado import maturity regulation was not in effect when

the exemption interim final rule was issued, exemptions under

Sec. 944.31 were not included in the exemption interim final rule.

However, a final rule removing the temporary suspension of avocado

import maturity regulation was issued on June 16, 1994 (59 FR 30866).

Because the exemptions for imported avocados under Sec. 944.31 maturity

regulations also apply to Sec. 944.28 grade regulations, this rule

finalizes the addition of charitable institutions, distribution by

relief agencies, seed, and commercial processing into products to the

list of exemptions allowed under the avocado import maturity

regulation.

Grapefruit

The grapefruit import regulation (7 CFR 944.106) is based on those

in effect for grapefruit grown in Florida under Marketing Order No. 905

throughout the year. Under Marketing Order No. 905, any person may

handle grapefruit without regard to established grade, size, quality,

or maturity requirements

[[Page 13056]]

provided that such grapefruit are handled for (1) consumption by

charitable institutions; (2) distribution by relief agencies; (3)

commercial processing into canned or frozen products or into a beverage

base; (4) animal feed; or (5) individual shipments of up to 15 standard

packed cartons (12 bushels). Prior to issuance of the interim final

rule, the only exemption allowed under the grapefruit import regulation

was that for individual shipments of up to 15 standard packed cartons

(12 bushels). This rule finalizes the addition of charitable

institutions, distribution by relief agencies, commercial processing

into canned or frozen products or into a beverage base, and animal feed

to the list of exemptions allowed under the grapefruit import

regulation.

Limes

The lime import regulation (7 CFR 944.209) is based on those in

effect for limes grown in Florida under Marketing Order No. 911

throughout the year. Under Marketing Order No. 911 any person may

handle limes without regard to established grade, size, quality, or

maturity requirements provided that such limes are handled for (1)

consumption by charitable institutions; (2) distribution by relief

agencies; (3) commercial processing into products; or (4) individual

shipments of up to 55 pounds. Prior to issuance of the interim final

rule, the only exemption allowed under the lime import regulation was

that for individual shipments of up to 250 pounds. This rule finalizes

the addition of charitable institutions, distribution by relief

agencies, and commercial processing into products to the list of

exemptions allowed under the lime import regulation. Commercial

processing includes canning, freezing, dehydrating, drying, the

addition of chemical substances, or fermentation. Limes imported for

conversion into juice without further processing or preservative

treatment are deemed fresh limes and may not be imported exempt from

inspection requirements.

Oranges

The orange import regulation (7 CFR 944.312) is based on those in

effect for oranges grown in Texas under Marketing Order No. 906

throughout the year. Under Marketing Order No. 906 any person may

handle oranges without regard to established grade, size, quality, or

maturity requirements provided that such oranges are handled for (1)

consumption by charitable institutions; (2) distribution by relief

agencies; (3) commercial processing into products; or (4) individual

shipments of up to 400 pounds. Prior to issuance of the interim final

rule, the only exemption allowed under the orange import regulation was

that for individual shipments of up to ten \7/10\ bushels (400 pounds).

In addition, Marketing Order No. 906 requires handlers to certify to

the order's committee that receiving processors have no facilities,

equipment, or outlet to repack or sell fruit in fresh form

(Sec. 906.123(b)(7)). This final rule adds a corresponding proviso to

the orange import regulation that oranges, imported as exempt under

this regulation, cannot be shipped to processors who have facilities,

equipment, or outlets to repack or sell fruit in fresh form. This rule

finalizes the addition of charitable institutions, distribution by

relief agencies, and commercial processing into products to the list of

exemptions allowed under the orange import regulation.

The minimum grade requirement for oranges under the orange import

regulation (7 CFR 944.312) was suspended effective October 24, 1991 (56

FR 55983) but was not addressed in the interim final rule because the

minimum grade requirement was not directly affected by the exemptions.

That minimum grade requirement was reinstated on May 12, 1994 (59 FR

25791), at the same U.S. No. 2 grade that was effective for imported

oranges prior to suspension in 1991. The reinstatement rule also

amended the definition of the term ``oranges'' and changed the minimum

quantity exemption from ``ten 7/10 bushels,'' which is the equivalent

of 420 pounds, to 400 pounds. This final rule reflects the changes

established in the reinstatement action.

Olives

The olive import regulation (7 CFR 944.401) is based on those in

effect for olives grown in California under Marketing Order No. 932

throughout the year. Under Marketing Order No. 932 any person may

handle olives without regard to established grade, size, quality, or

maturity requirements provided that such olives are handled for

processing into oil or donated to charitable institutions. Although

there is no minimum quantity exemption for olives regulated under

Marketing Order No. 932, an exemption is allowed under the olive import

regulation for individual shipments up to 100 pounds. This rule

finalizes the addition of processing into oil and donations to

charitable institutions to the list of exemptions allowed under the

olive import regulation.

This rule also replaces the original text in paragraph (c) of

Sec. 944.401 concerning procedures for importing olives and the

Department offices contacted prior to importation. The interim final

rule published December 30, 1993 (58 FR 69186) inadvertently omitted

the procedures and offices specified in the latter portion of paragraph

(c). This rule replaces, without change, the procedures to be followed

and updates the office addresses and numbers to be contacted prior to

importation.

Table Grapes

The table grape import regulation (7 CFR 944.506) is based on those

in effect for table grapes grown in southeastern California under

Marketing Order No. 925 from April 20 through August 15. Under

Marketing Order No. 925 any person may handle table grapes without

regard to established grade, size, quality, or maturity requirements

provided that such table grapes are handled for processing into

products. Currently, no imported shipments of table grapes are exempt

from the import regulations. This rule finalizes the addition of

processing into products as an exemption allowed under the table grape

import regulation.

Kiwifruit

The kiwifruit import regulation (7 CFR 944.550) is based on those

in effect for kiwifruit grown in California under Marketing Order No.

920 throughout the year. Under Marketing Order No. 920 any person may

handle kiwifruit without regard to established grade, size, quality, or

maturity requirements provided that such kiwifruit is handled for (1)

Consumption by charitable institutions; (2) distribution by relief

agencies; (3) commercial processing into products; or (4) individual

shipments of up to 200 pounds. Prior to issuance of the interim final

rule, the only exemption allowed under the kiwifruit import regulation

was that for individual shipments of up to 200 pounds. This rule

finalizes the addition of charitable institutions, distribution by

relief agencies, and commercial processing into products to the list of

exemptions allowed under the kiwifruit import regulation. For the

purposes of this section, commercial processing into products means

that the kiwifruit is physically altered in form or chemical

composition through freezing, canning, dehydrating, pulping, juicing,

or heating of the product. The act of slicing, dicing, or peeling shall

not be considered commercial processing into products.

This rule also makes minor modifications to the section titles of

some fruit crop import regulations. In the past, the Department issued

separate, annual import regulations that

[[Page 13057]]

were sequentially numbered. However, the import regulations are now

issued on a continuing basis and are amended only as necessary. The

section number for each import regulation remains the same and, thus,

the numerical designations at the end of the titles are no longer

needed. Also, to be consistent with Federal Register guidelines, the

titles are changed by removing the capitalization of some words. These

changes have no material effect on the import regulations.

The following vegetable crop import regulations are covered under 7

CFR part 980.

Potatoes

The import grade regulation for potatoes (7 CFR 980.1) is based on

marketing orders in effect for potatoes grown in five different potato

production areas in Idaho and Oregon (MO 945), Washington (MO 946),

Oregon-California (MO 947), Colorado (MO 948), and the Southeastern

United States (MO 953). Under one or more of these orders, any person

may handle potatoes exempt from established grade, size, quality, and

maturity requirements, provided that such potatoes are used for (1)

Processing, (2) livestock feed, (3) charity or relief, (4) certified

seed, (5) export, or (6) limited quantity shipments ranging from 500 to

1,000 pounds, depending on the individual order. Processing includes

canning, freezing, dehydration, chips, shoestrings, starch and flour.

Processing does not include potatoes that are only peeled, or cooled,

sliced, diced, or treated to prevent oxidation. The Department has

determined that fresh use food service product, such as fresh use

potato salad, is not processing. Potatoes made into canned product,

such as canned potato salad, would be considered processing and thus,

can be imported as exempt. Prior to issuance of the interim final rule,

the potato import regulation provided exemptions only for certified

seed and minimum quantity shipments of 500 pounds. This rule finalizes

the addition of year-round exemptions, subject to certain safeguard

provisions, for potatoes used for: (1) canning, freezing, or other

processing, (2) livestock feed, and (3) charity or relief. The

safeguard provisions are specified in Sec. 980.501.

Onions

The import grade regulation for onions (7 CFR 980.117) is based on

marketing orders in effect for onions grown in two different onion

production areas in Idaho and Oregon (MO 958), and Texas (MO 959).

Under one or both of these orders, any person may handle onions exempt

from established grade, size, quality, and maturity requirements,

provided that such onions are used for (1) processing, (2) livestock

feed, (3) charity and relief, (4) plantings, or (5) limited quantity

shipments ranging from 110 to 2,000 pounds, depending on the individual

marketing order. Pearl onions not exceeding a maximum size may be

imported exempt from all but size requirements. Inspection is required

to determine that such onions do not exceed maximum size requirements.

Processing includes canning, freezing, dehydration, extraction (juice)

and pickling in brine. Processing does not include fresh chop, fresh

cut, convenience food or other pre-packaged salad operations. Prior to

issuance of the interim final rule, the onion import regulation

provided exemptions for processed onions (dehydrated, canned, frozen

and pickled in brine), green onions, onion sets (plantings), braided

red onions, and for minimum quantity shipments of 110 pounds. This rule

finalizes the addition of year-round exemptions, subject to certain

safeguard provisions, for onions used for livestock feed, charity or

relief, processing, and pearl onions. Marketing Order 958 exempts pearl

onions which are smaller sized onions produced using specific cultural

practices and are not larger than 1\3/4\ inches in diameter. Because of

the maximum size limitation, pearl onions imported exempt pursuant to

these regulations must be inspected against the 1\3/4\ inch diameter

maximum size requirement prior to being released by the Customs

Service. For clarity and consistency, this finalization also adds the

size limit of pearl onions to the definition in paragraph (h), and

other types of exempt onions to the definition for processing in

paragraph (i). The safeguard provisions are specified in Sec. 980.501.

Tomatoes

The import grade regulation for tomatoes (7 CFR 980.212) is based

on the marketing order in effect for tomatoes grown in Florida (MO

966). Under that order, any person may handle tomatoes exempt from

established grade, size, and maturity requirements, provided that such

tomatoes are used for (1) processing, (2) charity, (3) relief, (4)

export, (5) experimental purposes, (6) pear shaped (elongated), cherry,

green house or hydroponic tomatoes, or (7) limited quantity shipments

of 50 pounds per day. Prior to issuance of the interim final rule, the

tomato import regulation provided exemptions for experimental purposes,

shipments of 60 pounds, and pear shaped, cherry, hydroponic, and

greenhouse tomatoes. This rule finalizes the addition of exemptions,

subject to certain safeguard provisions, for tomatoes used for

processing (canning and pickling), charity and relief. The safeguard

provisions are specified in Sec. 980.501.

The following specialty crop import regulations are covered under 7

CFR part 999.

Dates

The import regulation for dates (7 CFR 999.1) is based on the

marketing order in effect for dates produced or packed in Riverside

County, California (MO 987). Under that order, any person may handle

dates exempt from established grade requirements, if such dates are

donated to ``needy persons, prisoners, or Native Americans on

reservations.'' Prior to issuance of the interim final rule, the date

import regulation provided exemptions for: (1) processing (preparing

and preserving dates into confection, coating to alter color, chopping,

slicing or other processing which alters the form), (2) denatured dates

unfit for human consumption, and (3) minimum quantity shipments which

in the aggregate do not exceed 70 pounds. This rule finalizes the

addition of exemptions, subject to certain safeguard provisions, for

dates donated to charity, prisoners, and Native Americans on

reservations. The safeguard provisions are specified in Sec. 999.500.

Walnuts

The import grade regulation for walnuts (7 CFR 999.100) is based on

the marketing order in effect for walnuts grown in California (MO 984).

Under that order, any person may handle walnuts exempt from established

grade and size requirements, if such walnuts are: (1) Green (immature),

(2) used by charitable institutions, relief agencies or government

agencies for school lunch programs, or diverted for animal feed, or oil

manufacture, or other noncompetitive outlets. Prior to issuance of the

interim final rule, the walnut import regulation provided exemptions

from grade and size requirements for minimum quantity shipments of 60

pounds shelled or 115 pounds inshell. This rule finalizes the addition

of exemptions, subject to certain safeguard provisions, for green

walnuts, and walnuts for charity, relief, school lunch programs, animal

feed or oil. The safeguard provisions are specified in Sec. 999.500.

Raisins

Exemptions for raisin imports specified under current import

[[Page 13058]]

regulations for raisins (7 CFR part 999.300) are consistent with

exemptions under the raisin marketing order and are not affected by

this final rule.

Filberts

Exemptions for filbert imports specified under current import

regulations for filberts (7 CFR part 999.400) are consistent with

exemptions under the filbert/hazelnut marketing order and are not

affected by this final rule.

Dried Prunes

Exemptions for dried prune imports specified under current import

regulations for prunes (7 CFR part 999.200) are consistent with

exemptions under the dried prune marketing order and are not affected

by this final rule.

The respective marketing order committees have developed methods to

monitor the marketing of the domestically produced exempt commodities

from handlers to points of final disposition. Safeguard procedures in

the form of reporting requirements and committee management oversight

ensure that domestically produced commodities are used in the intended

exempt outlets.

Safeguards in domestic marketing orders include two different

procedures. A ``certificate of privilege'' is issued by a committee

upon application by a handler. The handler notifies the appropriate

marketing order committee of the handler's intent to ship that

commodity to a processor, livestock feeder, charity, or other exempted

outlet. A ``special purpose shipment report'' is forwarded by a handler

to the receiver. The receiver sends the form to the responsible

committee, providing information about the shipment necessary to

determine compliance.

Because of the ease with which imported commodities can enter fresh

market channels of trade, this rule modifies and finalizes a process to

monitor exempt, imported commodities from the port of entry to the

point of final disposition.

To provide consistency and ease the reporting burden on importers

that deal in several commodities, this rule finalizes a single set of

safeguard procedures and a standardized form that can be used for

imported avocados, grapefruit, limes, oranges, olives, table grapes,

kiwifruit, potatoes, onions, tomatoes, dates and walnuts. The procedure

is added in Secs. 944.350, 980.501 and 999.500, and is referenced in

individual commodity import regulations.

Exemption forms may be obtained from the Marketing Order

Administration Branch, USDA, AMS, P.O. Box 96456, room 2523-S,

Washington, D.C. 20090-6456 (telephone (202)-720-4607, fax (202)-720-

5698).

The exempt form must be mailed within two days of importation and

two days of receipt at an exempt outlet. Original copies of the FV-6

must be submitted. Information required on the Importer's Exempt

Commodity Form includes: (1) the commodity and the variety (if known)

being imported, (2) the date and place of inspection if used to enter

failing product or culls as exempt, (include a copy of the inspection

certificate), (3) identifying marks or numbers on the containers, (4)

identifying numbers on the railroad car, truck or other transportation

vehicle transporting product to the receiver, (5) the name and address

of the importer, (6) the place and date of entry, (7) the quantity

imported (in pounds), (8) the name and address of the intended receiver

(processor, feeder, charity, or other exempt receiver), (9) intended

use of the exempt commodity, (10) the U.S. Customs Service entry number

and harmonized tariff code number, and (11) such other information as

may be necessary to ensure compliance with this regulation.

The reporting burden on both importers and receiving entities is

minimal and consistent with safeguard procedures imposed on the

handling of domestically-produced exempt commodities. In accordance

with the Paperwork Reduction Act of 1980 (44 U.S.C. Chapter 35), the

information and collection requirements that are contained in this rule

have been previously approved by the Office of Management and Budget

(OMB) and have been assigned OMB No. 0581-0167.

This rule finalizes increases in the reporting burden on

approximately 448 importers of avocados, grapefruit, limes, oranges,

olives, table grapes, and kiwifruit and 534 importers of potatoes,

onions, tomatoes, dates and walnuts who complete the exemption form.

The estimated time for importers to complete the form is 10 minutes.

The estimated time for receivers to sign the certification is 5

minutes.

In accordance with section 8e of the Act, the United States Trade

Representative has concurred with the issuance of this final rule.

Based on the above, the Administrator of the AMS has determined

that this final rule will not have a significant economic impact on a

substantial number of small entities.

This final rule reflects the Department's appraisal of the need to

relax the import requirements, with modification as hereinafter set

forth, to comply with the terms of NAFTA and to effectuate the declared

policy of the Act.

List of Subjects

7 CFR Part 944

Avocados, Food grades and standards, Grapefruit, Grapes, Imports,

Kiwifruit, Limes, Olives, Oranges

7 CFR Part 980

Food grades and standards, Imports, Marketing agreements, Onions,

Potatoes, Tomatoes

7 CFR Part 999

Dates, Filberts, Food grades and standards, Imports, Nuts, Prunes,

Raisins, Reporting and recordkeeping requirements, Walnuts.

Accordingly, the two interim final rules amending 7 CFR parts 944,

980 and 999 which were published at 58 FR 69182 and 69186 on December

30, 1993, are adopted as a final rule with the following changes:

PART 944--FRUITS; IMPORT REGULATIONS

1. The authority citation for 7 CFR part 944 continues to read as

follows:

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

2. In Sec. 944.31, paragraphs (f) and (g) are revised to read as

follows:

Sec. 944.31 Avocado import maturity regulation.

* * * * *

(f) Any lot or portion thereof which fails to meet the import

requirements, and is not being imported for purposes of consumption by

charitable institutions, distribution by relief agencies, seed, or

commercial processing into products; prior to or after reconditioning

may be exported or disposed of under the supervision of the Federal or

Federal-State Inspection Service with the costs of certifying the

disposal of such lot borne by the importer.

(g) The maturity requirements of this section shall not be

applicable to avocados imported for consumption by charitable

institutions, distribution by relief agencies, seed, or commercial

processing into products, but such avocados shall be subject to the

safeguard provisions contained in Sec. 944.350.

Sec. 944.209 [Amended]

3. In Sec. 944.209, the last sentence in paragraph (c), the word

``handled'' is removed and the word ``imported'' is added in its place.

[[Page 13059]]

4. In Sec. 944.312, paragraphs (c) and (h) are revised to read as

follows:

Sec. 944.312 Orange import regulation.

* * * * *

States Customs Service. The term processing means the manufacture of

any orange product which has been converted into sectioned fruit or

into fresh juice, or preserved by any commercial process, including

canning, freezing, dehydrating, drying, and the addition of chemical

substances, or by fermentation.

* * * * *

(h) The grade, size, quality, and maturity requirements of this

section shall not be applicable to oranges imported for consumption by

charitable institutions, distribution by relief agencies, or processing

into products, but shall be subject to the safeguard provisions

contained in Sec. 944.350, Provided that: oranges, imported as exempt

under this regulation, cannot be shipped to processors who have

facilities, equipment, or outlets to repack or sell fruit in fresh

form.

* * * * *

5. Section 944.350 is revised to read as follows:

Sec. 944.350 Safeguard procedures for avocados, grapefruit, kiwifruit,

limes, olives, oranges, and table grapes exempt from grade, size,

quality, and maturity requirements.

(a) Each person who imports:

(1) Avocados, grapefruit, kiwifruit, limes, olives, and oranges for

consumption by charitable institutions or distribution by relief

agencies;

(2) Avocados, grapefruit, kiwifruit, limes, oranges, and table

grapes for processing;

(3) Olives for processing into oil;

(4) Grapefruit for animal feed; or

(5) Avocados for seed shall obtain an ``Importer's Exempt Commodity

Form'' (FV-6 form) from the Marketing Order Administration Branch,

Fruit and Vegetable Division, AMS, USDA, and shall show the completed

``Importer's Exempt Commodity Form'' to the U.S. Customs Service

Regional Director or District Director, as applicable, at the port at

which the customs entry is filed. One copy shall be mailed to the

Marketing Order Administration Branch, Fruit and Vegetable Division,

AMS, USDA with a postmark no later than two days after the date of

importation and a third copy shall accompany the lot to the exempt

outlet specified on the form. Any lot offered for inspection and, all

or a portion thereof, subsequently imported as exempt under this

provision shall be reported on an ``Importer's Exempt Commodity Form''

and such form, accompanied by a copy of the applicable inspection

certificate, shall be mailed to the Marketing Order Administration

Branch.

(b) Each person who receives an exempt commodity for the purposes

specified in paragraph (a) of this section shall also receive a copy of

the same numbered Importer's Exempt Commodity Form filed by the

importer or customs broker and shall certify, by completing and signing

Section II of the form and mailing the form to the Marketing Order

Administration Branch within two days of receipt of the exempt lot,

that such lot has been received and will be utilized in the exempt

outlet.

Marketing Order Administration Branch of any lot of exempt commodity

rejected by a receiver, shipped to an alternative exempt receiver,

exported, or otherwise destroyed. In such cases, a second ``Importer's

Exempt Commodity Form'' must be filed by the importer providing

sufficient information to determine ultimate disposition of the exempt

lot and such disposition shall be so certified by the final receiver.

(d) All FV-6 forms and other correspondence regarding entry of 8e

commodities must be mailed to the Marketing Order Administration

Branch, USDA, AMS, P.O. Box 96456, room 2523-S, Washington, D.C. 20090-

6456, telephone (202)-720-4607. FV-6 forms submitted by fax must be

followed by a mailed, original copy of the FV-6 form. Fax transmissions

may be sent to the MOAB at (202) 720-5698.

6. In Sec. 944.401, paragraph (c) is revised to read as follows:

Sec. 944.401 Olive import regulation.

* * * * *

Agricultural Marketing Service, U.S. Department of Agriculture, is

hereby designated as the governmental inspection service for the

purpose of certifying the grade and size of processed olives from

imported bulk lots for use in canned ripe olives and the grade and size

of imported canned ripe olives. Inspection by said inspection service

with appropriate evidence thereof in the form of an official inspection

certificate, issued by the service and applicable to the particular lot

of olives, is required. With respect to imported bulk olives,

inspection and certification shall be completed prior to use as

packaged ripe olives. With respect to canned ripe olives, inspection

and certification shall be completed prior to importation. Any lot of

olives which fails to meet the import requirements and is not being

imported for purposes of contribution to a charitable organization or

processing into oil may be exported or disposed of under the

supervision of the Processed Products Branch, Fruit and Vegetable

Division, AMS, USDA, with the cost of certifying the disposal borne by

the importer. Such inspection and certification services will be

available, upon application, in accordance with the applicable

regulations governing the inspection and certification of Processed

Fruits and Vegetables, Processed Products Thereof, and Certain Other

Processed Food Products (part 52 of this title). Application for

inspection of canned ripe olives shall be made not less than 10 days

prior to the time when the olives will be imported. Since inspectors

are not located in the immediate vicinity of some of the small ports of

entry, importers of canned ripe olives shall make arrangements for

inspection through the following office at least 10 days prior to the

time when the olives will be imported: Processed Products Branch, USDA,

AMS, F&V Division, P.O. Box 96456, Room 0726-S, Washington, DC 20090-

6456, telephone (202) 720-5021, fax (202) 690-1527. Application for

inspection of processed bulk olives shall be made not less than 3 days

prior to use in the production of canned ripe olives. Such application

shall be made through one of the following offices: Regional Director,

Eastern Regional Office, 800 Roosevelt Road, Building A, suite 380 Glen

Ellyn, IL 60137, telephone (708) 790-6937/8/9, fax (708) 469-5162; or

Regional Director, Western Regional Office, 2202 Monterey Street, suite

102-C, Fresno, CA 93721, telephone (209) 487-5891, fax (209) 487-5900.

* * * * *

7. In Sec. 944.550, paragraph (d) is revised to read as follows:

Sec. 944.550 Kiwifruit import regulation.

* * * * *

(d) Any lot or portion thereof which fails to meet the import

requirements and is not being imported for purposes of consumption by

charitable institutions, distribution by relief agencies, or commercial

processing into products may be reconditioned or exported. Any failed

lot which is not reconditioned or exported shall be disposed of under

supervision of the Federal or Federal-State Inspection Service with the

costs of certifying the

[[Page 13060]]

disposal of said lot borne by the importer.

* * * * *

PART 980--VEGETABLES; IMPORT REGULATIONS

1. The authority citation for 7 CFR part 980 continues to read as

follows:

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

2. In Sec. 980.1, paragraph (i) is revised to read as follows:

Sec. 980.1 Import regulations; Irish potatoes.

* * * * *

(i) Exemptions. The grade, size, quality and maturity requirements

of this section shall not be applicable to potatoes imported for

canning, freezing, other processing, livestock feed, charity, or

relief, but such potatoes shall be subject to the safeguard provisions

contained in Sec. 980.501. Processing includes canning, freezing,

dehydration, chips, shoestrings, starch and flour. Processing does not

include potatoes that are only peeled, or cooled, sliced, diced, or

treated to prevent oxidation, or made into fresh potato salad.

3. In Sec. 980.117, paragraph (i) is revised to read as follows:

Sec. 980.117 Import regulations; onions.

* * * * *

(i) Exemptions. The grade, size, quality and maturity requirements

of this section shall not be applicable to onions imported for

processing, livestock feed, charity, or relief, and pearl onions not

larger than 1\3/4\ inches in diameter, onion sets (plantings), braided

red onions, and minimum quantity shipments of 110 pounds, but such

onions shall be subject to the safeguard provisions in Sec. 980.501.

Processing includes canning, freezing, dehydration, extraction (juice)

and pickling in brine. Processing does not include fresh chop, fresh

cut, convenience food or other pre-packaged salad operations. Pearl

onions must be inspected for size prior to entry into the United

States.

4. In Sec. 980.212, paragraph (i) is revised to read as follows:

Sec. 980.212 Import regulations; tomatoes.

* * * * *

(i) Exemptions. The grade, size, quality and maturity requirements

of this section shall not apply to tomatoes for charity, relief,

canning or pickling, but such tomatoes shall be subject to the

safeguard provisions contained in Sec. 980.501. Processing includes

canning and pickling.

5. Section 980.501 is revised to read as follows:

Sec. 980.501 Safeguard procedures for potatoes, onions, and tomatoes

exempt from grade, size, quality, and maturity requirements.

(a) Each person who imports:

(1) Potatoes, onions or tomatoes for consumption by charitable

institutions or distribution by relief agencies;

(2) Potatoes, onions, or tomatoes for processing;

(3) Potatoes or onions for livestock feed; or

(4) Pearl onions, shall obtain an ``Importer's Exempt Commodity

Form'' (FV-6) from the Marketing Order Administration Branch, Fruit and

Vegetable Division, AMS, USDA, and shall show the completed