Domestic Dates Produced or Packed in Riverside County, California; Temporary Relaxation of Size Requirements for Deglet Noor Dates

DEPARTMENT OF AGRICULTURE

7 CFR Part 987

[Docket No. FV-96-987-3 FR]

Domestic Dates Produced or Packed in Riverside County,

California; Temporary Relaxation of Size Requirements for Deglet Noor

Dates

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule revises the size requirements currently

prescribed for the Deglet Noor variety of dates under the California

date marketing order. The marketing order regulates the handling of

domestic dates produced or packed in Riverside County, California, and

is administered locally by the California Date Administrative Committee

(committee). This rule will increase the current tolerance for

individual, whole Deglet Noor dates weighing less than 6.5 grams (the

prescribed minimum) from 10 to 15 percent and will be in effect through

October 31, 1997. The relaxation is necessary because dates from the

1996-97 crop are smaller in size and weight than normal. The decrease

in size and weight is due to extremely high temperatures experienced

last spring in the production area. This relaxation was recommended by

the committee to make a larger quantity of the 1996-97 crop

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available for sale domestically and in Canada and is expected to

benefit producers, handlers, and consumers.

EFFECTIVE DATE: This final rule becomes effective February 21, 1997.

FOR FURTHER INFORMATION CONTACT: Maureen Pello, California Marketing

Field Office, Marketing Order Administration Branch, F&V, AMS, USDA,

2202 Monterey Street, Suite 102B, Fresno, California 93721; telephone:

(209) 487-5901, Fax # (209) 487-5906; or Valerie L. Emmer, Marketing

Specialist, Marketing Order Administration Branch, F&V, AMS, USDA, room

2536-S, P.O. Box 96456, Washington, DC 20090-6456: telephone: (202)

205-2829, Fax # (202) 720-5698. Small businesses may request

information on compliance with this regulation by contacting: Jay

Guerber, Marketing Order Administration Branch, Fruit and Vegetable

Division, AMS, USDA, P.O. Box 96456, Room 2525-S, Washington, DC 20090-

6456: telephone (202) 720-2491; Fax # (202) 720-5698.

SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing

Agreement and Order No. 987 (7 CFR part 987), both as amended,

regulating the handling of domestic dates produced or packed in

Riverside County, California, 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 final rule has been reviewed under Executive Order 12988,

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

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

regulations, or policies, unless they present an irreconcilable

conflict with this rule.

The Act provides that administrative proceedings must be exhausted

before parties may file suit in court. Under section 608c(15)(A) of the

Act, any handler subject to an order may file with the Secretary a

petition stating that the order, any provision of the order, or any

obligation imposed in connection with the order is not in accordance

with law and request a modification of the order or to be exempted

therefrom. A handler is afforded the opportunity for a hearing on the

petition. After the hearing the Secretary would rule on the petition.

The Act provides that the district court of the United States in any

district in which the handler is an inhabitant, or has his or her

principal place of business, has jurisdiction to review the Secretary's

ruling on the petition, provided an action is filed not later than 20

days after date of the entry of the ruling.

This final rule revises the size requirements currently prescribed

for the Deglet Noor variety of dates under the California date

marketing order. This rule will increase the current tolerance for

individual, whole Deglet Noor dates weighing less than 6.5 grams (the

prescribed minimum) from 10 to 15 percent. The rule will be in effect

through October 31, 1997, and was recommended by the committee.

Section 987.39 of the date marketing order provides authority for

the establishment of minimum quality requirements for varieties of

California dates to be handled in designated outlets. Section 987.40 of

the order also provides authority for the committee to recommend to the

Secretary additional grade or size requirements for any variety of

dates to be handled in any designated outlet when it deems advisable.

Pursuant to Sec. 987.12, there are four designated outlet categories

for California dates--``DAC'' dates, ``dates for further processing''

(FP dates), ``export'' dates, and ``product'' dates.

Section 987.112a of the order's administrative rules prescribes

grade, size, and container requirements for each of the four outlet

categories of dates. Paragraph (b)(2) of that section prescribes such

requirements for DAC dates. DAC dates are marketable whole or pitted

dates that are inspected and certified as meeting the grade, size,

container, and applicable identification requirements for handling in

the United States and Canada. Currently, DAC dates must meet the

requirements for U.S. Grade B, as specified in the U.S. Standards for

Grades of Dates (Standards) issued by the Department. In addition, with

respect to whole dates of the Deglet Noor variety, the individual dates

in a sample from a lot must weigh at least 6.5 grams, with a tolerance

of 10 percent per lot for dates weighing less than 6.5 grams.

Paragraph (c)(2) of Sec. 987.112a provides similar requirements for

FP dates. FP dates are marketable whole dates acquired by one handler

from another handler that are certified as meeting the same grade and

size requirements as for DAC dates, with the exception of moisture

requirements and applicable identification requirements. Currently, FP

dates must also meet the requirements for U.S. Grade B as specified in

the Standards, except for moisture.

Section 987.112a also specifies requirements for the remaining two

outlet categories of dates--export and product. Except for some minor

differences stated in the section, export and product dates must meet

the requirements for U.S. Grade C as specified in the Standards.

At its meeting on October 31, 1996, the committee recommended

increasing the current tolerance for individual, whole Deglet Noor

dates weighing less than 6.5 grams from 10 to 15 percent to be handled

in the DAC and FP outlet categories. The committee also recommended

that this relaxation be in effect through October 31, 1997. This will

allow the rule to be in effect for the remainder of the 1996-97 season,

which ends on September 30, plus an additional month. By the end of

October 1997, as prescribed under the order, the committee is required

to meet and review its marketing policy for the next season. Five

committee members voted for this change, three voted against, and one

abstained.

In its deliberations, the committee commented that the average

fruit size for the 1996-97 crop is expected to be much smaller this

season than in recent years, primarily due to the hot, dry spring.

Increasing the tolerance from 10 to 15 percent for dates weighing less

than 6.5 grams should allow a greater quantity of Deglet Noor dates

which are of good quality but weigh less than 6.5 grams to meet the

requirements for DAC and FP dates. Currently, the industry average of

the number of dates packed per pound is 60. The additional five percent

tolerance for undersize dates will allow handlers to include

approximately two additional smaller dates per pound. Thus, more of the

crop would be utilized as whole dates domestically and in Canada. The

committee estimates total 1996-97 marketable date shipments at 33.5

million pounds. Of that amount, Deglet Noor shipments are estimated at

approximately 32.4 million pounds, with about 15 million pounds likely

to meet the current requirements for DAC and FP dates. According to the

committee, increasing the tolerance from 10 to 15 percent should allow

about three to five percent more Deglet Noor dates to meet the DAC and

FP requirements, or between 450,000 and 750,000 pounds. Making more

Deglet Noor dates of satisfactory quality available for sale

domestically and in Canada should provide for maximum utilization of

the 1996-97 crop, thereby benefiting producers, handlers, and

consumers.

The three committee members who opposed the recommendation believe

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that the overall quality of dates packed will be decreased if smaller

fruit is allowed to meet the requirements for DAC and FP dates.

However, other committee members commented that the smaller size dates

will still have to meet all of the other characteristics DAC and FP

dates must already meet. Thus, consumers should continue to receive

good quality whole dates with only a slight increase in the number of

smaller size dates. In addition, the majority of committee members

believe that this change will only affect about three to five percent

of the Deglet Noor shipments that are expected to meet DAC and FP

requirements.

Pursuant to requirements set forth in the Regulatory Flexibility

Act (RFA), the Agricultural Marketing Service (AMS) has considered the

economic impact of this action on small entities. Accordingly, AMS has

prepared this final regulatory flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of

business subject to such actions in order that small businesses will

not be unduly or disproportionately burdened. Marketing orders issued

pursuant to the Act, and 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 15 handlers of California dates who are

subject to regulation under the marketing order and approximately 135

date producers in the regulated area. Small agricultural service firms

have been defined by the Small Business Administration (13 CFR 121.601)

as those having annual receipts of less than $5,000,000, and small

agricultural producers are defined as those having annual receipts of

less than $500,000.

Last year, as a percentage, about 75 percent of the handlers

shipped under 4 million pounds of dates and 25 percent shipped over 4

million. Using an average f.o.b. price of $1.12 per pound, about 75

percent of date handlers could be considered small businesses under

SBA's definition and about 25 percent of the handlers could be

considered large businesses. The majority of handlers and producers of

California dates may be classified as small entities.

This final rule revises the size requirements currently prescribed

for the Deglet Noor variety of dates under Sec. 987.112a of the

California date marketing order. Deglet Noor dates from the 1996-97

crop are smaller in size and weight than normal, due to extremely high

temperatures experienced last spring in the production area. The

committee recommended increasing the current tolerance for individual,

whole Deglet Noor dates weighing less than 6.5 grams (the prescribed

minimum) from 10 to 15 percent, to make a larger quantity of the 1996-

97 crop available for sale domestically and in Canada, thereby

benefitting producers, handlers, and consumers. This rule will be in

effect through October 31, 1997.

At the meeting, the committee discussed the impact of this change

on handlers and producers in terms of cost. Handlers and producers

receive higher returns for dates that meet DAC and FP requirements. As

previously mentioned, dates sold as DAC or FP must meet the

requirements for U.S. Grade B dates (with the exception of moisture for

FP dates) as specified in the Standards and dates sold in other outlet

categories such as product and export must meet requirements specified

for U.S. Grade C dates. According to industry members, handlers receive

about $.50 per pound more for U.S. Grade B dates than U.S. Grade C, and

growers receive about $.30 more per pound more for U.S. Grade B dates.

In addition, as previously mentioned, 1996-97 marketable Deglet

Noor shipments are estimated to be approximately 32.4 million pounds,

of which about 15 million pounds should meet DAC and FP requirements.

If, as the committee anticipates, increasing the tolerance for smaller

size fruit will impact about three to five percent of the crop, this

change should allow between about 450,000 and 750,000 pounds more

Deglet Noor dates to be sold as DAC and FP dates. With a net increase

to handlers and producers of about $.50 per pound and $.30 per pound,

respectively, for U.S. Grade B dates, this change could mean an

increase in total net returns of $225,000-$375,000 for all handlers and

$135,000-$225,000 for all producers. The benefits for this rule are not

expected to be disproportionately greater or less for small handlers or

producers than for larger entities.

The committee discussed alternatives to this change, including not

increasing the tolerance at all, as well as increasing the tolerance by

10 percent rather than five percent. While only a small amount of the

crop is expected to be affected by increasing the tolerance, the

committee believes that an increase should benefit producers and

handlers with smaller fruit this season. The committee considered

increasing the tolerance from 10 to 20 percent but believed that this

could put too much smaller size fruit on the market. In addition,

committee members commented that the tolerance was increased by five

percent during the 1992-93 season and in prior seasons because of

similar problems of an abundance of small size fruit due to hot

temperatures, and that the five percent increase was satisfactory.

Thus, the majority of committee members agreed that the tolerance for

the size of Deglet Noor dates should be increased from 10 to 15 percent

through October 31, 1997.

This final rule will relax size requirements under the date

marketing order. Accordingly, this action will not impose any

additional reporting or recordkeeping requirements on either small or

large date handlers. As with all Federal marketing order programs,

reports and forms are periodically reviewed to reduce information

requirements and duplication by industry and public sector agencies.

As noted in the initial regulatory flexibility analysis, the

Department has not identified any relevant Federal rules that

duplicate, overlap or conflict with this final rule. However, as

previously stated, DAC and FP dates must meet the requirements for U.S.

Grade B, as specified in the U.S. Standards for Grades of Dates (7 CFR

52.1001 through 52.1011) issued under the Agricultural Marketing Act of

1946 (7 U.S.C. 1621 through 1627). Standards issued under the

Agricultural Marketing Agreement Act of 1946 are voluntary. Further,

the public comments received concerning the proposal did not address

the initial regulatory flexibility analysis.

In addition, the committee's meeting was widely publicized

throughout the date industry and all interested persons were invited to

attend the meeting and participate in committee deliberations on all

issues. Like all committee meetings, the October 31, 1996, meeting was

a public meeting and all entities, both large and small, were able to

express views on this issue. The committee itself is composed of nine

members, of which six are handlers/producers and three are producers

only, the majority of whom are small entities.

A proposed rule concerning this action was issued by the Department

on December 2, 1996, put on public display at the Office of the Federal

Register on December 5, 1996, and published in the Federal Register on

Friday, December 6, 1996 (61 FR 64638). Copies of the rule were made

available to industry members on December 5, 1996, at a meeting of the

California Date Commission (Commission), a State organization that

conducts promotional activities for the date industry. Many of the

committee members also sit on the Commission. Copies of the rule were

also mailed or sent via facsimile to all committee members and date

handlers.

[[Page 7663]]

Finally, the rule was made available through the Internet by the Office

of the Federal Register.

A 15-day comment period was provided to allow interested persons to

respond to the proposal. Fifteen days was deemed appropriate because a

rule finalizing the action would need to be in place as soon as

possible since handlers are already shipping dates from the 1996-97

crop.

Two comments were received during the comment period in response to

the proposal. The commenters, both representing the same producer

operation, opposed the proposed relaxation. The points made by the

commenters were thoroughly discussed prior to the committee vote.

The commenters disagreed with the statement in the proposed rule

that the relaxation would benefit both producers and handlers. They

claimed that the increased returns to the handlers would not be passed

down to the producers. While this may differ between and among

individual handlers and producers, it is the Department's understanding

that growers are paid for their dates by handlers either on a weight

basis (so much money per pound of dates delivered) or on a packout

basis (so much money per pound of U.S. Grade B or U.S. Grade C dates).

Committee members indicated at the meeting that, when growers are paid

based on packout, such growers receive about $.30 more per pound for

U.S. Grade B dates than U.S. Grade C dates. As previously mentioned,

the committee anticipates that increasing the tolerance for smaller

size fruit will allow more dates to meet U.S. Grade B and be sold as

DAC and FP dates and thus, will benefit handlers and producers in the

industry.

The commenters also contend that the proposed relaxation will lower

industry quality standards at a time when the industry should be

striving for higher standards. However, as discussed by the committee

and specified in the proposed rule, the 5 percent increase in the

number of smaller size dates should result in an average of only 2

additional smaller sized dates in each package of approximately 60

dates. The majority of the committee members felt such a relaxation

would not significantly affect the overall quality of each date

package.

One commenter claimed that the estimate of 450,000 to 750,000

pounds of additional dates made available by the proposed rule is not

accurate because the industry's carryin inventory was 14 million

pounds. While the total inventory is, indeed, estimated at 14.7 million

pounds, the inventory of DAC dates--those dates affected by the

relaxation--is only 5.7 million pounds, which is less than normal. The

committee's estimate of an additional 450,000 to 750,000 pounds of DAC

dates is accurate.

The commenter also suggested that smaller dates would not

necessarily come only from the 1996 crop. The commenter stated that the

rule's expiration date of October 31, 1997, overlaps the 1997 crop

harvest. The commenter contends that smaller dates from the 1997 crop

could be packed with the 1996 crop. However, harvest usually begins in

mid to late October and only a small amount of dates are harvested and

processed before the end of the month. Also, it is common industry

practice to store dates for up to 10 months prior to processing,

packaging and shipment. Therefore, the October 1997 time period would

allow stored 1996 crop dates to be used.

The commenter also claimed that the relaxation is a short term

solution and questioned whether other commodities lower quality

standards because of adverse weather conditions. Such action has been

recommended by other marketing order committees and approved by the

Secretary for some commodities. Such recommendations have helped

marketing order industries to fully utilize available production when

harvests are diminished by adverse weather or other disasters.

Accordingly, no changes will be made to the rule as proposed, based

on the comments received.

After consideration of all relevant matter presented, including the

information and recommendation submitted by the committee and other

available information, it is hereby found that this rule, as

hereinafter set forth, will tend to effectuate the declared policy of

the Act.

It is further found that good cause exists for not postponing the

effective date of this rule until 30 days after publication in the

Federal Register (5 U.S.C. 553) because handlers are already shipping

dates from the 1996-97 crop and handlers want to take advantage of the

relaxation as soon as possible. Further, handlers are aware of this

rule, which was recommended at a public meeting. Also, a 15-day comment

period was provided for in the proposed rule.

List of Subjects in 7 CFR Part 987

Dates, Marketing agreements, Reporting and recordkeeping

requirements.

For the reasons set forth in the preamble, 7 CFR part 987 is

amended as follows:

1. The authority citation for 7 CFR part 987 continues to read as

follows:

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

PART 987--DOMESTIC DATES PRODUCED OR PACKED IN RIVERSIDE COUNTY,

CALIFORNIA

Sec. 987.112a [Amended]

2. In Sec. 987.112a, paragraphs (b)(2) and (c)(2), the words

``December 29, 1992, and ending October 31, 1993,'' are removed and the

words ``February 21, 1997, and ending October 31, 1997,'' are added in

their place.

Dated: February 14, 1997.

Robert C. Keeney,

Director, Fruit and Vegetable Division.

[FR Doc. 97-4335 Filed 2-18-97; 2:02 pm]

BILLING CODE 3410-02-P