Grapes Grown in a Designated Area of Southeastern California and Imported Table Grapes; Revision in Minimum Grade, Container, and Pack Requirements

Federal RegisterJul 14, 1999

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 925 and 944

[Docket No. FV98-925-3 FIR]

Grapes Grown in a Designated Area of Southeastern California and

Imported Table Grapes; Revision in Minimum Grade, Container, and Pack

Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (Department) is adopting, as a

final rule, without change, the provisions of an interim final rule

which revised the minimum grade requirements for grapes grown in

southeastern California and for grapes imported into the United States

for a portion of the 1998 shipping season. The interim final rule also

revised container and pack requirements prescribed for California

grapes for a limited time. In combination, the revisions allowed

California grape handlers to market consumer packages of grapes more

economically by increasing the range of allowable bunch sizes for a

portion of the 1998 season. Master containers of consumer grape

packages were allowed to be marketed if the grape clusters/bunches in

the packages consisted of at least 2 berry clusters and the clusters/

bunches were not greater than 19 ounces in weight. The increased bunch

size range also applied to imported grapes. This action was in the

interest of handlers, producers, importers, and consumers.

EFFECTIVE DATE: August 13, 1999.

FOR FURTHER INFORMATION CONTACT: Rose M. Aguayo, Marketing Specialist,

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

George Kelhart, Technical Advisor, Marketing Order Administration

Branch, F&V, AMS, USDA, room 2525-S, P.O. Box 96456, Washington, DC

20090-6456; telephone: (202) 720-2491, Fax: (202) 720-5698. Small

businesses may request information on compliance with this regulation

by contacting Jay Guerber, Marketing Order Administration Branch, F&V,

AMS, USDA, room 2525-S, P.O. Box 96456, Washington, DC 20090-6456;

telephone: (202) 720-2491, Fax: (202) 720-5698, or E-mail:

Jay.G[email protected]. You may view the marketing agreement and order

small business compliance guide at the following web site: http://

www.ams.usda.gov/fv/moab.html.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order

No. 925 (7 CFR Part 925), regulating the handling of grapes grown in a

designated area of southeastern California, hereinafter referred to as

the ``order.'' The order is effective under the Agricultural Marketing

Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter

referred to as the ``Act.''

This rule is also issued under section 8e of the Act, which

provides that whenever certain specified commodities, including table

grapes, are regulated under a Federal marketing order, imports of these

commodities into the United States are prohibited unless they meet the

same or comparable grade, size, quality, or maturity requirements as

those in effect for the domestically produced commodities.

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

conformance with Executive Order 12866.

This rule has been reviewed under Executive Order 12988, Civil

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

This rule will not preempt any State or local laws, regulations, or

policies, unless they present an irreconcilable conflict with this

rule.

The Act provides that administrative proceedings must be exhausted

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

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

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

obligation imposed in connection with the order is not in accordance

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

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

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

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

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

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

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

days after the date of the entry of the ruling.

There are no administrative procedures which must be exhausted

prior to any judicial challenge to the provisions of import regulations

issued under section 8e of the Act.

An interim final rule (63 FR 28475, May 26, 1998), increased the

range of allowable sizes of grape bunches that California handlers

could pack in certain containers during the period June 1, 1998,

through August 15, 1998. Master containers, containing individual

consumer packages of grapes weighing 1\1/2\ pounds or less, net weight,

were allowed to be marketed if the grape clusters/bunches in the

packages consisted of at least 2 berry clusters and the clusters/

bunches were not greater than 19 ounces in weight. The increased bunch

size range also applied to imported grapes, but no container

specifications applied. Grapes packed in this manner by handlers in

California had to be marked ``DGAC Consumer No. 1 Institutional.'' The

changes in domestic requirements were recommended by the California

Desert Grape Administrative Committee (Committee), the agency

responsible for local administration of the order. The results of the

test marketing effort are being evaluated by the Committee. A decision

on whether or not to allow such shipments in future seasons will be

made at a later time.

The interim final rule also updated or removed certain obsolete

references appearing in Sec. 925.304 of the order's rules and

regulations and in Sec. 944.503 of the import regulation. The final

rule finalizes these actions.

Under the terms of the order, fresh market shipments of grapes

grown in southeastern California are required to be inspected and meet

grade, size, maturity, pack, and container

[[Page 37834]]

requirements. Current requirements include minimum grade and net weight

requirements. Grapes must also be packed in authorized containers. Such

containers must be marked with the minimum net weight of the grapes

contained therein, the variety of the grapes, the name of the shipper,

and the lot stamp number corresponding to the lot inspection conducted

by an authorized inspector.

Section 925.52(a)(2) of the grape order provides authority to limit

the handling of any grade, size, quality, maturity, or pack of grapes

for different varieties, or any combination of the foregoing during any

period or periods.

Section 925.304(a) of the order's administrative rules and

regulations requires grapes to meet the minimum grade requirements of

U.S. No. 1 Table, or U.S. No. 1 Institutional, or to meet all the

requirements of U.S. No. 1 Institutional, except that a tolerance of 33

percent is provided for off-size bunches. Grapes meeting U.S. No. 1

Institutional requirements are required to be marked ``U.S. No. 1

Institutional.'' Grapes meeting the modified U.S. No. 1 Institutional

requirements may be marked ``DGAC No. 1 Institutional.'' The

requirements for the U.S. No. 1 Table and U.S. No. 1 Institutional

grades are set forth in the United States Standards for Grades of Table

Grapes (European or Vinifera Type) (7 CFR 51.880 through 51.914)

(Standards).

Section 925.52(a)(4) of the order provides authority to regulate

the size, capacity, weight, dimensions, markings, materials, and pack

of containers which may be used in the handling of grapes.

Section 925.304(b)(1) of the order's administrative rules and

regulations requires grapes to be packed in new and clean boxes which

meet the requirements of sections 1380.14, 1380.19, 1436.37, and

1436.38 of Title 3: California Code of Regulations (CCR). That section

also authorizes nine containers that can be used for domestic and

export shipments and specifies dimensions for each such container. An

additional container, defined in terms of a net weight of 5 kilograms,

is authorized for export shipments only. All 10 of the authorized

containers may be used for export shipments. Only the first nine can be

used for domestic shipments. Section 925.304(b)(1) also authorizes the

Committee to approve other containers for experimental or research

purposes.

Section 925.304(b)(2) of the order's administrative rules and

regulations provides that grapes in any containers weigh at least 20

pounds based on the average net weight of grapes in a representative

sample of containers. An exception is provided for grapes packed in

experimental containers, or packed in bags or wrapped in plastic or

paper. Containers of grapes packed in bags or wrapped in plastic or

paper prior to being placed in these containers must meet a minimum net

weight requirement of 18 pounds. There are no weight requirements

specified for experimental containers.

The Committee met on March 24, 1998, and unanimously recommended

modifying Sec. 925.304 of the order's administrative rules and

regulations to:

(1) Revise the minimum grade requirement for the period June 1,

1998, through August 15, 1998, to allow a pilot test for the marketing

of grapes meeting all the requirements of U.S. No. 1 Institutional,

except for the weight of clusters/bunches. The revision was intended to

allow clusters/bunches as small as a 2 berry cluster and as large as 19

ounces in weight. Grapes meeting the revised quality requirements were

to be marked ``DGAC Consumer No. 1 Institutional,'' but could not be

marked ``Institutional Pack.''

(2) Authorize an experimental master container, containing

individual consumer packages of grapes weighing 1\1/2\ pounds or less,

net weight, for use during the pilot test period of June 1, 1998, to

August 15, 1998. It further recommended that grapes meeting the ``DGAC

Consumer No. 1 Institutional'' requirements be packed in this container

and that this master container could only be used for packing the

``DGAC Consumer No. 1 Institutional'' grade.

(3) Update or remove certain obsolete references appearing in the

regulation.

Revision in Minimum Grade Requirements

Until 1993, the minimum grade requirement under the order was U.S.

No. 1 Table. One requirement of that grade is that grape bunches weigh

at least 4 ounces.

In 1991, a new U.S. No. 1 Institutional grade was added to the

Standards. This grade--used primarily for sales to restaurants and

other food service firms--provides for grape lots which have very small

bunches. At the request of the table grape industry, this grade was

added to meet market demand for individual consumer sized servings of

grapes. The Standards were further revised in 1996 to lower the minimum

bunch size to a two berry cluster and to specify a separate 4 percent

tolerance for off-size bunches.

The minimum grade requirements under the order were changed in 1993

to allow California grape handlers to pack the newly established U.S.

No. 1 Institutional grade. Because handlers experienced difficulties in

packing this grade, these requirements were further revised in 1994 to

provide a tolerance of 33 percent for off-size bunches. This modified

U.S. No. 1 Institutional grade is referred to as DGAC No. 1

Institutional.

California grape handlers can ship and importers can import grapes

meeting at least U.S. No. 1 Table, U.S. No. 1 Institutional, or DGAC

No. 1 Institutional during the period April 20 through August 15 each

year. During the period June 1 through August 15, 1998, grapes also

could be shipped and imported meeting the requirements of DGAC Consumer

No. 1 Institutional. Grapes meeting this requirement were required to

meet all of the requirements of the U.S. No. 1 Institutional grade,

except for the cluster/bunch size requirements. California grapes

meeting this requirement were packed in consumer packages.

The requirements of U.S. No. 1 Institutional are essentially the

same as those of the U.S. No. 1 Table grade, with three major

exceptions. The first difference relates to bunch size. Under the U.S.

No. 1 Table grade, there is a minimum bunch size requirement of 4

ounces and no maximum bunch size. Under the U.S. No. 1 Institutional

grade, grapes are to consist of at least a two berry cluster ranging to

clusters and/or bunches of grapes not greater than five ounces in

weight. A cluster is two or more berries sharing a common point of

attachment.

The second difference is that at least 95 percent of the containers

in a lot of grapes grading U.S. No. 1 Institutional must be legibly

marked ``Institutional Pack.'' There are no marking requirements under

the U.S. No. 1 Table grade.

The third difference relates to the tolerances for off-size

bunches. For grapes grading U.S. No. 1 Table, an 8 percent tolerance is

established for all grade requirements, including off-size bunches. The

U.S. No. 1 Institutional grade has a separate tolerance of 4 percent

for off-size clusters/bunches and an 8 percent tolerance for the

remaining grade requirements.

Requirements for the DGAC No. 1 Institutional are the same as for

the U.S. No. 1 Institutional, except that the tolerance for off-size

bunches is 33 percent. Because grapes meeting these requirements do not

meet the U.S. No. 1 Institutional grade requirements, they cannot be

marked ``Institutional Pack.'' They may, however, be marked ``DGAC No.

1 Institutional.''

Prior to the start of the 1998 shipping season, grape handlers

expressed

[[Page 37835]]

interest in packing grapes in individual consumer packages known as

``punits'' or ``clamshells.'' These containers, used most commonly to

pack strawberries, are made of a clear, hard rigid plastic and

typically hold a half pound or a pound of fruit. Some retailers prefer

these containers because they are of the same net weight, and can be

scanned at check-out. This is particularly convenient for retailers

that do not have facilities for weighing produce, such as convenience

stores and fast food outlets. Some consumers also prefer the

convenience of prepackaged individual portions of fruit.

To meet changing market requirements, California grape handlers

wanted to market grapes packed in these consumer packages. Bunch size

requirements made it difficult because grape bunches normally range in

weight from 1/4 pound to 3 pounds. Thus, portions of bunches needed to

be used to fill the new packages to the weights desired by buyers.

Handlers determined that increasing the range of permissible bunch

sizes to allow for clusters/bunches of two berries to 19 ounces would

provide handlers the flexibility needed to pack grapes in the desired

consumer containers.

The interim final rule revised Sec. 925.304(a) of the order's rules

and regulations and Sec. 944.503 of the import regulation. The revision

to Sec. 925.304(a) allowed handlers to ship a new grade of grapes known

as ``DGAC Consumer No. 1 Institutional'' for a portion of the 1998

season. The name recognized that such grapes would be packed in

consumer packages and that the grapes would not be packed to the

minimum requirements of the U.S. No. 1 Table grade. Grapes meeting this

requirement were required to meet the requirements of the U.S. No. 1

Institutional grade, except for the cluster/bunch size requirements.

Specifically, the modified requirements allowed shipments with

clusters/bunches ranging from 2 berry clusters to clusters/bunches of

grapes up to 19 ounces in weight during the period June 1, 1998, to

August 15, 1998. The revision to Sec. 944.503 allowed grapes meeting

the relaxed requirements to be imported during that period.

Container Requirements

The Committee recommended and the interim final rule established

that grapes meeting the requirements of the new ``DGAC Consumer No. 1

Institutional'' be packed in individual consumer packages. The consumer

packages were then required to be packed in a master container.

Typically, the individual consumer packages held either \1/2\ or 1

pound of fruit. To allow for normal shrinkage during handling, handlers

generally packed a slightly greater weight than is desired at retail.

Section 925.304(b) was revised to provide that DGAC Consumer No. 1

Institutional grade grapes be packed in master containers containing

individual consumer packages weighing 1\1/2\ pounds or less during the

period June 1, 1998, to August 15, 1998.

Additionally, the master containers were required to be marked

``DGAC Consumer No. 1 Institutional'' to accurately reflect their

contents. The individual consumer packages did not need to be so

marked. Other container marking requirements appearing in the

regulation applied to the master containers as well during the test

period.

The master containers used for these grapes typically held 10

consumer packages weighing 1 pound each or 20 packages weighing \1/2\

pound each. Thus, these containers were exempt from the net weight

requirements of 18 or 20 pounds specified in Sec. 925.304(b)(2) during

the period June 1, 1998, to August 15, 1998.

Application to Imports

Section 8e of the Act specifies that whenever certain commodities,

like grapes, are regulated under a Federal 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

commodity. Pack and container requirements are not authorized by

section 8e. Thus, the revised grade requirements implemented by the

interim final rule applied to imported grapes; none of the container or

container marking requirements applied, however. If desired, importers

could have labeled containers of grapes meeting the modified U.S. No. 1

Institutional requirements as ``DGAC Consumer No. 1 Institutional.''

Specifically, the interim final rule modified language in

Sec. 944.503(a)(1) of Table Grape Import Regulation 4 for fresh grapes

imported into the United States.

Clarification/Removal of Obsolete Language

This rule continues in effect the removal of language in the

introductory text of Sec. 925.304 that applied to the 1987 season and

is no longer necessary.

This rule also continues in effect several other corrections in

both the order's administrative rules and regulations and the import

regulation. Specifically, the tolerance percentage of ``8 percent'' was

changed to ``4 percent'' in Secs. 925.304(a) of the order's

administrative rules and regulations and in 944.503(a)(1) of the import

regulation. This rule continues in effect a correction to those

sections to accurately specify the current tolerance for off-size

bunches in the U.S. No. 1 Institutional grade. This rule also continues

in effect a correction to a Standards reference from section number

``51.913'' to section number ``51.914'' in Secs. 925.304(a) of the

order's rules and regulations and in 944.503(a)(1) of the import

regulation. A change to a California Department of Food and Agriculture

reference from ``California Administrative Code (Title 3)'' to ``Title

3: California Code of Regulations'' in paragraph (a)(1)(ii) of

Sec. 944.503 of the import regulation is continued in effect too.

Final Regulatory Flexibility Analysis

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 rule 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. Import regulations issued under

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

There are approximately 27 handlers of California grapes who are

subject to regulation under the order and approximately 80 grape

producers in the production area. In addition, there are approximately

127 importers of grapes. 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 have been defined as those having annual receipts of less

than $500,000. Ten of the 27 handlers subject to regulation have annual

grape sales of at least $5,000,000, excluding receipts from any other

sources. In addition, 70 of the 80 producers subject to regulation have

annual sales of at least $500,000, and the remaining 10 producers have

annual sales less than $500,000, excluding receipts from any other

sources. Therefore, a majority of handlers and a minority of producers

[[Page 37836]]

are classified as small entities. The average importer receives $2.8

million in grape revenue, excluding receipts from other sources.

Therefore, we believe that the majority of these importers are small

entities.

This action finalizes an interim final rule (63 FR 28475, May 26,

1998), which increased the range of allowable sizes of grape bunches

that California handlers could pack in certain containers during the

period June 1, 1998, through August 15, 1998. Master containers,

containing individual consumer packages of grapes weighing 1\1/2\

pounds or less, net weight, were allowed to be marketed if the grape

clusters/bunches in the packages consisted of at least 2 berry clusters

and the clusters/bunches were not greater than 19 ounces in weight.

Grapes meeting the ``DGAC Consumer No. 1 Institutional'' requirements

were required to be packed in the experimental container, and the

container was to be used solely for packing the ``DGAC Consumer No. 1

Institutional'' grade. The changes in domestic requirements were

recommended by the Committee, the agency responsible for local

administration of the order. These changes were implemented during the

test period and the Committee is evaluating the test results. A

decision on a future course of action will be made at a later time. The

increased bunch size range also applied to imported grapes during that

time period, but no container specifications applied.

The interim final rule also updated or removed certain obsolete

references appearing in Sec. 925.304 of the order's rules and

regulations and in Sec. 944.503 (a)(1) of the import regulation.

Under the terms of the order, fresh market shipments of grapes

grown in southeastern California are required to be inspected and meet

grade, size, maturity, pack, and container requirements. Current

requirements include minimum grade and net weight requirements. Grapes

must also be packed in authorized containers. Such containers must be

marked with the minimum net weight of the grapes contained therein, the

variety of the grapes, the name of the shipper, and the lot stamp

number corresponding to the lot inspection conducted by an authorized

inspector.