Raisins Produced From Grapes Grown In California; Relaxations to Substandard and Maturity Dockage Systems

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 989

[FV99-989-1 FIR]

Raisins Produced From Grapes Grown In California; Relaxations to

Substandard and Maturity Dockage Systems

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, an interim final rule relaxing the

substandard and maturity dockage systems for raisins covered under the

Federal marketing order for California raisins (order). The order

regulates the handling of raisins produced from grapes grown in

California and is administered locally by the Raisin Administrative

Committee (Committee). Relaxing the limits for the 1998 crop reduces

the number of lots of raisins returned by handlers to producers or

reconditioned by handlers at the producers' expense. This minimizes

producers' reconditioning costs and facilitates 1998 crop deliveries.

EFFECTIVE DATE: February 16, 1999.

FOR FURTHER INFORMATION CONTACT: Maureen T. Pello, Marketing

Specialist, California Marketing Field Office, Fruit and Vegetable

Programs, AMS, USDA, 2202 Monterey Street, suite 102B, Fresno,

California 93721; telephone: (559) 487-5901, Fax: (559) 487-5906; or

George Kelhart, Technical Advisor, Marketing Order Administration

Branch, Fruit and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box

96456, Washington, DC 20090-6456; telephone: (202) 720-2491, or Fax:

(202) 205-6632. Small businesses may request information on complying

with this regulation, or obtain a guide on complying with fruit,

vegetable, and specialty crop marketing agreements and orders by

contacting Jay Guerber, Marketing Order Administration Branch, Fruit

and Vegetable Programs, AMS, USDA, P.O. Box 96456, room 2525-S,

Washington, DC 20090-6456; telephone (202) 720-2491, Fax: (202) 205-

6632, or E-mail: Jay__N__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

Agreement and Order No. 989 (7 CFR part 989), both as amended,

regulating the handling of raisins produced from grapes grown in

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.''

The 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 in equity 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.

Under the order, handlers may acquire raisins from producers under

a weight dockage system and adjust the creditable fruit weight acquired

according to the percentage of substandard raisins in a lot, or

percentage of raisins that fall below certain levels of maturity.

Certain marketing order obligations and producer payments are based on

the creditable weight of raisins acquired by handlers. Because of

unusual crop conditions this year created by the weather phenomenon

known as El Nino, the industry predicted that a relatively high

percentage of the 1998-99 crop will fall outside the limits of the

substandard and maturity dockage systems.

This rule continues to relax the substandard and maturity dockage

systems for raisins covered under the order. Under the order, handlers

may acquire raisins from producers under a weight dockage system and

adjust the creditable fruit weight acquired

[[Page 2426]]

according to the percentage of substandard raisins in a lot, or

percentage of raisins that fall below certain levels of maturity. Some

marketing order obligations (assessments and volume control) and

producer payments are based on the creditable weight of raisins

acquired by handlers. Because of unusual crop conditions this year

created by the weather phenomenon known as El Nino, the industry

predicted that a relatively high percentage of the 1998-99 crop will

fall outside the limits of the substandard and maturity dockage

systems. Relaxing the limits for the 1998 crop reduces the number of

lots of raisins returned by handlers to producers or reconditioned by

handlers at the producers' expense. This minimizes producers'

reconditioning costs and facilitates 1998 crop deliveries. This rule

was unanimously recommended by the Committee at a meeting on October 8,

1998.

Section 989.58(a) of the order provides authority for quality

control regulations whereby natural condition raisins that are

delivered by producers to handlers must meet certain incoming quality

requirements. This section also contains authority for handlers to

acquire natural condition raisins which fall outside the tolerance

established for maturity, which includes substandard raisins, under a

weight dockage system. Handler acquisitions of raisins and payments to

producers are adjusted according to the percentage of substandard

raisins in a lot, or percentage of raisins that fall below certain

levels of maturity.

Tolerances for Substandard Raisins

Section 989.701 of the order's regulations specifies incoming

quality requirements for natural condition raisins. Lots of raisins may

contain a maximum percentage, depending on varietal type, of

substandard raisins (raisins that show development less than that

characteristic of raisins prepared from fairly well-matured grapes).

Specifically, lots of Natural (sun-dried) Seedless, Golden Seedless,

Dipped Seedless, Oleate and Related Seedless, Monukka, and Other

Seedless raisin may contain no more than 5 percent, by weight, of

substandard raisins. Lots of Muscat, Sultana, and Zante Currant raisins

may contain no more than 12 percent, by weight, of substandard raisins.

Dockage System for Substandard Raisins

Section 989.212 provides that handlers may acquire, under an

agreement with a producer, raisins that fall outside the tolerance for

substandard raisins specified in Sec. 989.701. Prior to implementation

of an interim final rule on October 24, 1998 (63 FR 56781), handlers

could acquire any lot of Natural (sun-dried) Seedless, Golden Seedless,

Dipped Seedless, Oleate and Related Seedless, Monukka, and Other

Seedless raisins containing from 5.1 through 17.0 percent, by weight,

substandard raisins under a weight dockage system. Handlers could also

acquire, subject to prior agreement, any lot of Muscat (including other

raisins with seeds), Sultana, and Zante Currant raisins containing from

12.1 through 20.0 percent, by weight, of substandard raisins under a

weight dockage system. The creditable weight of each lot of raisins

acquired by handlers under the substandard dockage system is obtained

by multiplying the applicable net weight of the lot of raisins by the

applicable dockage factor in the tables in Sec. 989.212. The dockage

factor reduces the weight of the raisin lot by an amount approximating

the weight of the raisins needed to be removed in order for the

remainder of the lot to meet minimum grade requirements after

processing and packing. The weight determined in this manner represents

the creditable weight of the raisins which is used as a basis for

applicable marketing order obligations and handler payments to

producers. Those raisins failing to meet established substandard

tolerance levels are returned to the producer or reconditioned by the

handler (at the producer's expense) to bring the lot up to acceptable

quality standards.

Adverse crop conditions this year created by the weather phenomenon

known as El Nino affected the quality of the grapes used to make

raisins by not allowing the grapes to properly mature. Temperatures in

the production area stayed below average until about mid-June. In

addition, due to the lateness of the 1998 crop (at least 3 to 4 weeks),

producers had difficulty finding sufficient labor to harvest the crop.

Raisin deliveries from producers to handlers were about 3-4 weeks later

than in most crop years. The Committee predicted that a relatively high

percentage of the 1998-99 crop would not meet the upper limit (17.0 or

20.0 percent, depending on varietal type) for the amount of substandard

raisins permitted in incoming lots of raisins.

Thus, the Committee recommended that the allowable amount of

substandard fruit in producer deliveries that can be acquired under the

dockage system be increased, for the 1998-99 crop year only, from 17.0

to 25.0 percent for Natural (sun-dried) Seedless, Golden Seedless,

Dipped Seedless, Oleate and Related Seedless, Monukka, and Other

Seedless raisins. Likewise, the Committee recommended increasing the

substandard dockage limit, for the 1998-99 crop year only, from 20.0 to

35.0 percent for Muscat (including other raisins with seeds), Sultana,

and Zante Currant raisins. Lots containing more than 25.0 or 35.0

percent, depending on varietal type, of substandard raisins are

considered off-grade and require reconditioning before they can be

acquired by handlers. Appropriate changes incorporating these

recommendations were made to Sec. 989.212 and apply for the 1998-99

crop year only.

Increasing the upper limit allowed for substandard raisins reduces

the number of lots of raisins returned by handlers to producers or

reconditioned by handlers at the producers' expense. Handlers may

acquire more lots of raisins upon first inspection without experiencing

further delay while waiting for failing lots to be reconditioned. The

ability to acquire more raisins upon first inspection helped handlers

better meet early season market needs.

Tolerance for Maturity

Section 989.701 of the order's regulations specifies that lots of

certain varietal types of natural condition raisins must contain a

minimum percentage of raisins that are well-matured or reasonably well-

matured. Specifically, lots of Natural (sun-dried) Seedless, Golden

Seedless, Dipped Seedless, Oleate and Related Seedless, Monukka, and

Other Seedless raisins must contain at least 50 percent, by weight, of

raisins that are well-matured or reasonably well-matured, or what is

commonly referred to by the industry as the ``B or better'' maturity

standard.

Dockage System for Maturity

Section 989.213 provides that handlers may acquire, under an

agreement with a producer, raisins falling outside the tolerance for

maturity specified in Sec. 989.701. Prior to implementation of the

previously referenced interim final rule on October 24, 1998, handlers

could acquire any lot of Natural (sun-dried) Seedless, Golden Seedless,

Dipped Seedless, Oleate and Related Seedless, Monukka, and Other

Seedless raisins which contained from 35.0 to 49.9 percent, by weight,

of well-matured or reasonably well-matured raisins under a weight

dockage system. The dockage system is applied similarly to the

substandard dockage system previously described. The creditable weight

of each lot of raisins acquired by handlers under the maturity dockage

[[Page 2427]]

system is obtained by multiplying the applicable net weight of the lot

of raisins by the applicable dockage factor in the tables in

Sec. 989.213. The dockage factor reduces the weight of the raisins

needed to be removed in order for the remainder of the lot to meet

minimum maturity requirements after processing and packing. The weight

determined in this manner represents the creditable weight of the

raisins which is used as a basis for applicable marketing order

obligations and handler payments to producers. Those raisins failing to

meet the established maturity tolerance level are returned to the

producer or reconditioned by the handler (at the producer's expense) to

bring the lot up to acceptable quality standards. If a lot of raisins

is subject to both a maturity and substandard dockage factor, only the

highest of the two dockage factors is applied.

In addition, prior to implementation of the interim final rule, the

maturity dockage system was divided into three categories depending on

the percentage of well-matured or reasonably well-matured raisins in a

lot. The creditable fruit weight of raisins delivered by producers to

handlers in the first category, which included lots containing between

45.0 to 49.9 percent well-matured or reasonably well-matured raisins,

was reduced .05 percent for each 0.1 percent the lot was below 50.0

percent down to 45.0 percent. The creditable fruit weight of raisins

delivered by producers to handlers in the second category, which

included lots containing between 40.0 to 44.9 percent well-matured or

reasonably well-matured raisins, was reduced 0.1 percent for each 0.1

percent the lot was below 44.9 percent down to 40.0 percent. The

creditable fruit weight of raisins delivered by producers to handlers

in the third category, which included lots containing between 35.0 to

39.9 percent well-matured or reasonably well-matured raisins, was

reduced 0.15 percent for each 0.1 percent the lot was below 39.9

percent down to 35.0 percent. Applicable marketing order obligations

and producer payments were reduced accordingly.

Because of the unusual crop conditions this year created by El

Nino, the Committee predicted that a relatively high percentage of the

1998-99 crop will fall below the 35.0 percent tolerance level for

maturity. Thus, the Committee recommended that the minimum allowable

level for maturity in lots of raisins delivered by producers that can

be acquired under the dockage system be reduced, for the 1998-99 crop

year only, from 35.0 to 30.0 percent.

The Committee also recommended that the creditable fruit weight of

raisin deliveries in this fourth category created for the 1998-99 crop

year, or lots containing between 30.0 to 34.9 percent well-matured or

reasonably well-matured raisins, be reduced 0.2 percent for each 0.1

percent the lot is below 34.9 percent down to 30.0 percent. Applicable

marketing order obligations and producer payments are reduced

accordingly. Lots containing 29.9 percent or less raisins which are

well-matured or reasonably well-matured raisins are considered off-

grade and require reconditioning before they can be acquired by

handlers. A new paragraph (e) has been added to Sec. 989.213 for this

fourth category and applies only to the 1998-99 crop year.

Similar to relaxing the substandard dockage system, reducing the

minimum allowable level for maturity for the 1998-99 crop year reduces

the number of lots of raisins returned by handlers to producers or

reconditioned by handlers at the producers' expense. Handlers may

acquire more lots of raisins upon first inspection without experiencing

further delay while waiting for failing lots to be reconditioned and

reinspected. The ability to acquire more raisins upon first inspection

helped handlers better meet early season market needs.

Final Regulatory Flexibility Analysis

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 20 handlers of California raisins who are

subject to regulation under the order and approximately 4,500 raisin

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. No more than 7 handlers, and a majority of

producers, of California raisins may be classified as small entities.

Thirteen of the 20 handlers subject to regulation have annual sales

estimated to be at least $5,000,000, and the remaining 7 handlers have

sales less than $5,000,000, excluding receipts from any other sources.

This rule continues to relax the substandard and maturity dockage

systems specified in Secs. 989.212 and 989.213, respectively, of the

order's regulations. These sections allow handlers to acquire raisins

from producers under a weight dockage system and adjust their payments

and marketing order obligations according to the percentage of

substandard raisins in a lot, or percentage of raisins falling below

certain levels of maturity. Because of unusual crop conditions this

year created by El Nino, the industry predicted that a relatively high

percentage of the 1998 crop will fall outside the limits of the dockage

systems. Relaxing the limits reduces the number of lots of raisins

returned by handlers to producers or reconditioned by handlers at the

producers' expense.

Relaxing the dockage limits for the 1998-99 crop year allows

handlers to acquire more lots of raisins that fall outside specified

tolerances for substandard raisins and maturity. Thus, fewer lots are

returned to producers for reconditioning. Transportation costs for

hauling raisins to and from the handler's premises (estimated at $5.00

per ton one way) for reconditioning and re-inspection are eliminated.

Producers also save on reconditioning costs. Producer costs for

reconditioning substandard raisins (a ``dry'' vacuuming process) are

estimated at $20.00 per ton. Producer costs for reconditioning raisins

falling below certain maturity levels (usually a ``wash and dry''

process) are estimated at $140.00 per ton. Producers also save on re-

inspection costs at $8.50 per ton because more of their raisins meet

the relaxed incoming substandard and maturity requirements upon first

inspection. In summary, producers whose lots of raisins fall into the

extended dockage limits for substandard raisins do not have to incur

$38.50 per ton in costs for hauling, ``dry'' reconditioning, and re-

inspection. Producers whose lots fall into the revised dockage limits

for maturity do not have to incur $158.00 per ton in costs for hauling,

``wet'' reconditioning, and re-inspection.

Relaxing the dockage limits may cause handlers to incur some

additional costs because, while the incoming quality requirements are

relaxed, outgoing quality requirements remain unchanged. Thus, the

burden of removing substandard raisins or raisins falling below certain

levels of maturity

[[Page 2428]]

is shifted from producers to handlers. Although handlers have this

additional burden, handlers can more efficiently and economically

manage the situation because they already have the processing equipment

designed to remove the undesirable fruit.

The Committee considered some alternatives to the recommended

action. The Committee has an appointed subcommittee which periodically

holds public meetings to discuss changes to the order and other issues.

The subcommittee met on October 6, 1998. There was some deliberation at

the subcommittee meeting about revising the order's tolerances for mold

for the 1998-99 crop year. However, the majority of subcommittee

members did not support any change to the mold tolerances at this time.

Another alternative discussed at the subcommittee and Committee

meetings was to reduce the maturity dockage limit from 35.0 to 30.0

percent, as recommended, but revise the dockage factor by 0.15 percent

rather than the higher increment of 0.20 percent as recommended by the

Committee. However, some handlers believe that the higher incremental

dockage is necessary to accommodate a handler's ability to meet the

minimum outgoing quality requirements for maturity. Thus, the Committee

unanimously recommended that the higher increment of 0.20 percent was

appropriate.

This rule imposes no additional reporting or recordkeeping

requirements on either small or large raisin 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. In addition, as noted in the initial

regulatory flexibility analysis, the Department has not identified any

relevant Federal rules that duplicate, overlap or conflict with this

rule.

In addition, the Committee's subcommittee meeting on October 6,

1998, and the Committee meeting on October 8, 1998, where this action

was deliberated were public meetings widely publicized throughout the

raisin industry. All interested persons were invited to attend the

meetings and participate in the industry's deliberations.

An interim final rule concerning this action was published in the

Federal Register on October 23, 1998, and, as previously noted,

effective on October 24, 1998. Copies of the rule were mailed to all

Committee members and alternates, the Raisin Bargaining Association,

handlers, and dehydrators. In addition, the rule was made available

through the Internet by the Office of the Federal Register. That rule

provided for a 60-day comment period which ended December 22, 1998. No

comments were received.

After consideration of all relevant material presented, including

the Committee's recommendation, and other information, it is found that

finalizing the interim final rule, without change, as published in the

Federal Register (63 FR 56781), will tend to effectuate the declared

policy of the Act.

List of Subjects in 7 CFR Part 989

Grapes, Marketing agreements, Raisins, Reporting and recordkeeping

requirements.

Accordingly, the interim final rule amending 7 CFR part 989 which

was published at 63 FR 56781 on October 23, 1998, is adopted as a final

rule without change.

Dated: January 8, 1999.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 99-842 Filed 1-13-99; 8:45 am]

BILLING CODE 3410-02-U