[Federal Register Volume 72, Number 166 (Tuesday, August 28, 2007)]
[Rules and Regulations]
[Pages 49128-49134]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-4161]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 916 and 917

[Docket No. AMS-FV-07-0030; FV07-916/917-4 FIR]


Nectarines and Peaches Grown in California; Revision of Handling 
Requirements for Fresh Nectarines and Peaches

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (USDA) is adopting, as a final 
rule, without change, an interim final rule eliminating grade, size, 
maturity, pack, container and inspection requirements for all 
California nectarines and peaches except those packed in containers 
labeled ``California Well Matured'' or ``CA WELL MAT.'' This rule also 
continues in effect seasonal adjustments to the handling requirements 
applicable to well matured fruit and the removal of certain handler 
reporting requirements that are deemed no longer necessary. The 
marketing orders regulate the handling of nectarines and peaches grown 
in California and are administered locally by the Nectarine 
Administrative and Peach Commodity Committees (committees). This rule 
reduces handler costs while enabling handlers to continue to meet the 
demands of their buyers.

EFFECTIVE DATE: September 27, 2007.

FOR FURTHER INFORMATION CONTACT: Jennifer Garcia, Marketing Specialist, 
or Kurt J. Kimmel, Regional Manager, California Marketing Field Office, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA; Telephone: (559) 487-5901, Fax: (559) 487-5906; or E-mail: 
<a href="/cdn-cgi/l/email-protection#f9b39c9797909f9c8bd7be988b9a9098cab98c8a9d98d79e968f"><span class="__cf_email__" data-cfemail="d69cb3b8b8bfb0b3a4f891b7a4b5bfb7e596a3a5b2b7f8b1b9a0">[email protected]</span></a> or <a href="/cdn-cgi/l/email-protection#e0ab959294ceab898d8d858ca095938481ce878f96"><span class="__cf_email__" data-cfemail="f8b38d8a8cd6b39195959d94b88d8b9c99d69f978e">[email protected]</span></a>.
    Small businesses may request information on complying with this 
regulation by contacting Jay Guerber, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence 
Avenue, SW., STOP 0237, Washington, DC 20250-0237; Telephone: (202) 
720-2491, Fax: (202) 720-8938, or E-mail: <a href="/cdn-cgi/l/email-protection#aae0cbd384eddfcfd8c8cfd8eadfd9cecb84cdc5dc"><span class="__cf_email__" data-cfemail="5218332b7c1527372030372012272136337c353d24">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order 
Nos. 916 and 917, both as amended (7 CFR parts 916 and 917), regulating 
the handling of nectarines and peaches grown in California, 
respectively, hereinafter referred to as the ``orders.'' The orders are 
effective under the Agricultural Marketing Agreement Act of 1937, as 
amended (7 U.S.C. 601-674), hereinafter referred to as the ``Act.''
    USDA 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 USDA 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, USDA 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 USDA's ruling on the petition, 
provided an action is filed not later than 20 days after the date of 
the entry of the ruling.
    This final rule continues in effect the provisions of an interim 
final rule action that: (1) Eliminated grade, size, maturity, pack, 
container and inspection requirements for all California nectarines and 
peaches except those packed in containers labeled ``California Well 
Matured'' or ``CA WELL MAT;'' (2) made seasonal adjustments to the 
handling requirements applicable to California Well Matured fruit; and 
(3) removed certain handler reporting requirements that are deemed no 
longer necessary.
    These changes allow industry handlers to reduce costs and provide 
them greater flexibility in meeting buyer preferences. Also, 
adjustments are made in light of the newly implemented California State 
marketing program.
    Sections 916.52 and 917.41 of the orders provide authority for 
handling regulations for fresh California nectarines and peaches. The 
regulations may include grade, size, maturity, quality, pack, and 
container requirements. The orders also provide that whenever such 
requirements are in effect, the fruit subject to such regulation must 
be inspected by the Federal or Federal-State Inspection Service (FSIS) 
and certified as meeting the applicable requirements.
    The nectarine order has been in effect since 1939, and the peach 
program has been in effect since 1958. The orders have been used over 
the years to establish a quality control program that includes minimum 
grades, sizes, and maturity standards. That program has helped improve 
the quality of product moving from the farm to market, and has helped 
growers and handlers more effectively market their crops. Additionally, 
the orders have been used to ensure that only satisfactory quality 
nectarines and peaches reach the consumer. This has helped increase and 
maintain market demand over the years.
    Sections 916.53 and 917.42 authorize the modification, suspension, 
or termination of regulations issued under 916.52 and 917.41, 
respectively. Changes in regulations have been implemented to reflect 
changes in

[[Page 49129]]

industry operating practices and to solve marketing problems as they 
arise. The committees, which are responsible for local administration 
of the orders, meet whenever needed, but at least annually, to discuss 
the orders and the various regulations in effect and to determine if, 
or what, changes may be necessary to reflect industry needs. As a 
result, regulatory changes have been made numerous times over the years 
to address industry changes and to improve program operations.
    The industry has struggled to reduce costs in recent years. In its 
efforts to reduce costs, the industry considered adopting audit-based 
inspection programs in lieu of traditional inspection programs. 
Ultimately, the industry determined that these programs would not 
presently provide sufficient savings to the industry. More recently, 
the industry considered replacing the existing Federal marketing orders 
with programs under the State of California that would not require 
Federal or Federal-State inspection of nectarines and peaches. In 2006, 
at the request of the industry, the California Department of Food and 
Agriculture promulgated a State program authorizing voluntary 
inspections for the nectarine and peach industry.
    Beginning with the 2007 season, under the State program, all fruit 
must meet at least a modified U.S. No.1 grade and be ``mature'' as 
defined in the United States Standards for Grades of Nectarines (7 CFR 
51.3145 through 51.3160) and United States Standards for Grades of 
Peaches (7 CFR 51.1210 through 51.1223) (hereinafter referred to as the 
``Standards''). Inspection costs under the program are minimal because 
inspection is not mandatory. The industry has also shifted its data 
collection and promotional activities over to the State program.
    The industry subsequently discussed removing all handling 
regulations under the Federal orders. This would have also resulted in 
the elimination of all inspection requirements and expenses under the 
Federal orders. However, the industry believes that buyers value the 
committees' ``CA WELL MAT'' mark as an indicator of high quality and 
may be willing to pay a premium price for fruit marked as such. The 
``CA WELL MAT'' certification mark is owned by the California Tree 
Fruit Agreement, the management organization of the Peach Commodity 
Committee (PCC), which also manages the Nectarine Administrative 
Committee (NAC). Accordingly, the committees decided to maintain all 
Federal marketing order handling requirements, including inspection and 
certification requirements, for ``California well matured'' fruit. The 
committees, thus, recommended revising the handling regulations to 
cover only nectarines and peaches packed in containers marked ``CA WELL 
MAT'' or ``California Well Matured.''
    The term ``well matured'' is defined in the orders' rules and 
regulations, and has been used for many years by the industry to 
describe a level of maturity higher than the definition of ``mature'' 
in the Standards. The FSIS has been providing certification that these 
products meet the definition. Containers of nectarines and peaches 
bearing the certification mark must meet all of the requirements 
entailed in the definition of ``well matured.'' Thus, nectarines and 
peaches must continue to meet the grade and size requirements set forth 
in the orders' rules and regulations.
    The committees met on February 9, 2007, and unanimously recommended 
that the handling requirements be revised for the 2007 season, which 
began in April. The committees recommended a crop estimate of 
19,000,000 containers of nectarines and 20,000,000 containers of 
peaches at their May 1, 2007, meetings.

Container and Pack Requirements

    Sections 916.52 and 917.41 of the orders authorize the 
establishment of pack and container requirements for nectarines and 
peaches, respectively. Such requirements appear in Sec. Sec.  916.115, 
916.350, 917.150 and 917.442 of the orders' rules and regulations.
    Prior to implementation of the interim final rule, Sec. Sec.  
916.115 and 917.150 required that all containers of nectarines and 
peaches, respectively, be stamped with an FSIS lot stamp number showing 
that such fruit has been inspected. Since only nectarines and peaches 
marked ``CA WELL MAT'' or ``California Well Matured'' are subject to 
inspection requirements beginning in the 2007 season, Sec. Sec.  
916.115 and 917.150 were revised to specify that lot stamping is only 
required on containers so marked.
    This rule also continues in effect a revision to paragraph (a)(3) 
of Sec. Sec.  916.350 and 917.442 to remove references to ``U.S. 
Mature'' and ``US MAT'' container markings. These references are no 
longer needed since only fruit packed in containers marked ``CA WELL 
MAT'' or ``California Well Matured'' are subject to handling 
regulations under the orders this season.
    Sections 916.350 and 917.442 also establish weight-count standards 
for packed containers of nectarines and peaches, respectively. These 
regulations define a maximum number of nectarines or peaches in a 
sample when such fruit, which may be packed in tray-packed containers, 
is converted to volume-filled containers. The regulations also specify 
how the containers must be marked. In paragraph (a)(8) of Sec.  916.350 
and (a)(9) of Sec.  917.442, weight marking requirements are 
established for nectarines and peaches packed in volume-filled Euro 
style containers.
    According to the committees, some retailers have requested handlers 
to supply volume-filled Euro containers with a net weight that is equal 
to the weight of tray-packed Euro containers. By eliminating the net 
weight requirement for volume-filled Euro containers, handlers are 
allowed to increase or decrease the amount of fruit in the container to 
match the net weight of fruit in a tray-packed Euro container, thus 
giving them more flexibility when marketing their fruit.

Grade and Quality Requirements

    Sections 916.52 and 917.41 of the orders authorize the 
establishment of grade and quality requirements for nectarines and 
peaches, respectively. Prior to the interim final rule, nectarines and 
peaches were subject to a modified U.S. No. 1 grade requirement. 
Handlers were also able to pack to ``CA Utility'' quality standards, 
subject to container labeling requirements. The committees recommended 
continued use of these grade and quality requirements.
    However, they recommended that these requirements only be applied 
to nectarines and peaches packed in containers marked ``CA WELL MAT'' 
or ``California Well Matured.'' This rule continues in effect revisions 
to paragraph (a) of Sec. Sec.  916.356 and 917.459 to specify such 
requirements only for containers of nectarines and peaches marked ``CA 
WELL MAT'' or ``California Well Matured'' during the 2007 and 
subsequent seasons.
    These changes allow industry handlers to reduce inspection costs by 
removing inspection and certification requirements on containers not 
marked ``CA WELL MAT'' and provide them greater flexibility in meeting 
buyer preferences.
    This rule also continues in effect revisions of paragraph (a)(1) of 
Sec.  916.356 to add an additional tolerance for Peento-type 
nectarines. Peento-type nectarines, also known as donut[reg] nectarines 
due to their flattened shape, are prone to growth cracks, which emanate 
from the blossom end of the fruit. The committees believe that this is 
a minor defect that does not affect the edibility of the fruit. Thus, 
this action makes more Peento-type nectarines available to consumers 
without

[[Page 49130]]

materially impacting the overall quality of the fruit.

Maturity Requirements

    Sections 916.52 and 917.41 of the orders also authorize the 
establishment of maturity requirements for nectarines and peaches, 
respectively. The minimum maturity level currently specified for 
nectarines and peaches is ``mature'' as defined in the Standards. The 
regulations also define a higher level of maturity (``well-matured'') 
that can be used at the option of handlers.
    For most varieties, ``well-matured'' determinations for nectarines 
and peaches are made using maturity guides (e.g., color chips) along 
with other maturity tests as may be applied by inspectors. These 
maturity guides are reviewed each year by the FSIS to determine whether 
they need to be changed, based upon the most recent information 
available on the individual characteristics of each nectarine and peach 
variety.
    These maturity guides appear in Table 1 in paragraphs (a)(1)(iv) of 
Sec. Sec.  916.356 and 917.459, for nectarines and peaches, 
respectively. Seasonal adjustments being made to the maturity guide are 
described below.
    Nectarines: Requirements for ``well-matured'' nectarines are 
specified in Sec.  916.356 of the order's rules and regulations. This 
rule revises Table 1 of paragraph (a)(1)(iv) of Sec.  916.356 to add 
maturity guides for four varieties of nectarines. Specifically, the 
FSIS recommended adding maturity guides for the Larry's Red, September 
Bright, and WF 1 varieties to be regulated at the J maturity guide, and 
for the Prima Diamond VII variety to be regulated at the L maturity 
guide.
    Peaches: Requirements for ``well-matured'' peaches are specified in 
Sec.  917.459 of the order's rules and regulations. This rule revises 
Table 1 of paragraph (a)(1)(iv) of Sec.  917.459 to add maturity guides 
for 11 peach varieties. Specifically, the FSIS recommended adding 
maturity guides for the Super Chief and Sweet Crest varieties to be 
regulated at the H maturity guide; the Junelicious variety to be 
regulated at the I maturity guide; the Burpeachfourteen (Spring 
Flame[reg] 20), Henry III, Sharise, Sierra Rich, Sweet Blaze and Sweet 
Kay varieties to be regulated at the J maturity guide; and the Bright 
Princess and Summer Fling varieties to be regulated at the L maturity 
guide.
    The committees recommended these maturity guide requirements based 
on the FSIS's continuing review of individual maturity characteristics 
and identification of the appropriate maturity guide corresponding to 
the ``well-matured'' level of maturity for nectarine and peach 
varieties in production.

Size Requirements

    Both orders provide authority (in Sec. Sec.  916.52 and 917.41) to 
establish size requirements. Size regulations encourage producers to 
leave fruit on the tree longer, which improves both size and maturity 
of the fruit. Acceptable fruit size provides greater consumer 
satisfaction and promotes repeat purchases, thereby increasing returns 
to producers and handlers. In addition, increased fruit size results in 
increased numbers of packed containers of nectarines and peaches per 
acre, which is also a benefit to producers and handlers.
    Several years ago the committees recommended revisions to allow 
handlers of late season nectarine and peach varieties to pack smaller 
sized fruit as long as the fruit was ``well matured.'' This rule 
continues in effect revisions to the size regulations in paragraphs 
(a)(6)(i), (a)(6)(ii), (a)(9)(i), and (a)(9)(ii) of Sec.  916.356 and 
paragraphs (a)(6)(i) and (a)(6)(ii) to remove size options since only 
containers marked ``CA WELL MAT'' or ``California Well Matured'' are 
subject to the size regulations under the orders.
    Varieties recommended for specific size regulations have been 
reviewed and such recommendations are based on the specific 
characteristics of each variety. The committees conduct studies each 
season on the range of sizes attained by the regulated varieties and 
those varieties with the potential to become regulated, and determine 
whether revisions to the size requirements are appropriate.
    Nectarines: Section 916.356 of the order's rules and regulations 
specifies minimum size requirements for fresh nectarines in paragraphs 
(a)(2) through (a)(9). This rule continues in effect revisions to 
paragraphs (a)(3), (a)(4), and (a)(6) of Sec.  916.356 to establish 
variety-specific minimum size requirements for 14 varieties of 
nectarines that were produced in commercially significant quantities of 
more than 10,000 containers for the first time during the 2006 season.
    For example, one of the varieties recommended for addition to the 
variety-specific minimum size requirements is the Burnectfive (Spring 
Flare[reg] 21) variety of nectarines, recommended for regulation at a 
minimum size 96. Studies of the size ranges attained by the Burnectfive 
(Spring Flare[reg] 21) variety revealed that 100 percent of the 
containers met the minimum size of 96 during the 2005 and 2006 seasons. 
Sizes ranged from size 50 to size 96, with 5.8 percent of the fruit in 
the 50 sizes, 15.7 percent of the packages in the 60 sizes, 28.6 
percent in the 70 sizes, 34.1 percent in the 80 sizes, and 16.8 percent 
in the 90 sizes.
    A review of other varieties with the same harvesting period 
indicated that the Burnectfive (Spring Flare[reg] 21) variety was also 
comparable to those varieties in its size ranges for that time period. 
Discussions with handlers known to handle the variety confirmed this 
information regarding minimum size and harvesting period. Thus, the 
recommendation to place the Burnectfive (Spring Flare[reg] 21) variety 
in the variety-specific minimum size regulation at a minimum size 96 
was appropriate. This recommendation results from size studies 
conducted by the committees over a two-year period.
    Historical data such as this provides the committee with the 
information necessary to recommend the appropriate sizes at which to 
regulate various nectarine varieties. In addition, producers and 
handlers of the varieties affected are personally invited to comment 
when such size recommendations are deliberated. Producer and handler 
comments are also considered at both NAC and subcommittee meetings when 
the staff receives such comments, either in writing or verbally.
    For reasons similar to those discussed in the preceding paragraph, 
paragraph (a)(3) of Sec.  916.356 is revised to include the Burnectfive 
(Spring Flare[reg] 21) variety; paragraph (a)(4) of Sec.  916.356 was 
revised to include the Burnecttwelve (Sweet Flare[reg] 21), Early 
Pearl, and Rose Bright varieties; and paragraph (a)(6) of Sec.  916.356 
was revised to include the August Bright, Burnectseventeen (Summer 
Flare[reg] 32), Candy Pearl, Grand Candy, Honey Diva, Larry's Red, 
Prima Diamond VII, Spring Pearl<SUP>TM</SUP>, Sugarine, and Zephyr 
nectarine varieties.
    Peaches: Section 917.459 of the order's rules and regulations 
specifies minimum size requirements for fresh peaches in paragraphs 
(a)(2) through (a)(6), and paragraphs (b) and (c). This rule continues 
to revise paragraphs (a)(2), (a)(3), (a)(4), (a)(5), and (a)(6) of 
Sec.  917.459 to establish variety-specific minimum size requirements 
for 11 peach varieties that were produced in commercially significant 
quantities of more than 10,000 containers for the first time during the 
2006 season. This rule also continues to remove the variety-specific 
minimum size 16 requirements for seven varieties of peaches whose

[[Page 49131]]

shipments fell below 5,000 containers during the 2006 season.
    For example, one of the varieties recommended for addition to the 
variety-specific minimum size requirements was the May Snow variety of 
peaches, which was recommended for regulation at a minimum size 88. 
Studies conducted by the committees on the size ranges attained by the 
May Snow variety revealed that 97.8 percent of the containers met the 
minimum size of 88 during the 2005 and 2006 seasons. The sizes ranged 
from size 40 to size 88, with 11.6 percent of the containers meeting 
the size 40, 19.2 percent meeting the size 50, 45.7 percent meeting the 
size 60, 15.1 percent meeting the size 70, 3.4 percent meeting the size 
80, 2.3 percent meeting the size 84, and 0.5 percent meeting the size 
88 in the 2006 season.
    A review of other varieties with the same harvesting period 
indicated that the May Snow variety was also comparable to those 
varieties in its size ranges for that time period. Discussions between 
the committees and handlers known to pack the variety confirmed this 
information regarding minimum size and the harvesting period. Thus, the 
recommendation to place the May Snow variety in the variety-specific 
minimum size regulation at a minimum size 88 is appropriate.
    Historical data such as this provides the committee with the 
information necessary to recommend the appropriate sizes at which to 
regulate various peach varieties. In addition, producers and handlers 
of the varieties affected are personally invited to comment when such 
size recommendations are deliberated. Producer and handler comments are 
also considered at committee meetings when the staff receives such 
comments, either in writing or verbally.
    For reasons similar to those discussed in the preceding paragraph, 
paragraph (a)(2) of Sec.  917.459 was revised to include the Snow Angel 
peach variety; paragraph (a)(3) of Sec.  917.459 was revised to include 
the May Snow peach variety; paragraph (a)(4) of Sec.  917.459 was 
revised to include the May Saturn (Early Saturn) peach variety; 
paragraph (a)(5) of Sec.  917.459 was revised to include the Candy Red, 
Raspberry, and Sugar Jewel peach varieties; and paragraph (a)(6) of 
Sec.  917.459 was revised to include the Burpeachfifteen (Summer 
Flame[reg] 34), Burpeachsixteen, Burpeachtwenty (Summer Flame[reg]), 
Galaxy, and Snow Magic peach varieties.
    Section (a)(4) is reserved for any varieties which will be 
regulated at a size 84. The May Saturn (Early Saturn) variety, as noted 
above, is regulated at size 84 under (a)(4).
    This rule revises paragraph (a)(5) of Sec.  917.459 to remove the 
May Sun and Snow Prince peach varieties and paragraph (a)(6) of Sec.  
917.459 to remove the 24-SB, Crimson Queen, Jupiter, Red Giant, and 
Spring Gem peach varieties from the variety-specific minimum size 
requirements because less than 5,000 containers of each of these 
varieties was produced during the 2006 season.
    Peach varieties removed from the peach variety-specific minimum 
size requirements are subject to the non-listed variety size 
requirements specified in paragraphs (b) and (c) of Sec.  917.459.
    The committees recommended these changes in the minimum size 
requirements based on a continuing review of the sizing and maturity 
relationships for these nectarine and peach varieties, and the consumer 
acceptance levels for various fruit sizes. This rule is designed to 
establish minimum size requirements for fresh nectarines and peaches 
consistent with expected crop and market conditions.

Reporting Requirements

    Sections 916.60 and 917.50 of the orders authorize the 
establishment of reporting requirements for nectarines and peaches, 
respectively. Prior to the interim rule, under 19 sections 916.160, 
917.178, and 917.179, handlers are required to file certain reports 
pertaining to daily packouts, annual shipments, and shipment 
destinations. The collection and dissemination of statistical 
information has been a valuable component of the programs, as it 
provides growers and handlers with information which enhances their 
decision-making ability.
    However, as a State marketing program has recently been implemented 
for the California peach and nectarine industries, which includes the 
collection and dissemination of statistical information, there is no 
longer a need to require these handler reports under the orders. 
Therefore, at their February 9, 2007, meetings, the committees 
recommended removing current handler reporting requirements, beginning 
with the 2007 season. The committees have implemented a memorandum of 
understanding to share information with the new State marketing order, 
so information collected by the State program can be utilized by the 
committees.
    This rule continues in effect revisions removing reporting 
requirements in Sec.  916.160 for nectarines and Sec. Sec.  917.178 and 
917.179 for peaches. This action reduces handler costs under the 
orders.
    This rule reflects the need to revise the handling and reporting 
requirements for California nectarines and peaches. This rule is 
intended primarily to reduce costs and should therefore have a 
beneficial impact on producers, handlers, and consumers of fresh 
California nectarines and peaches. This rule is also intended to 
maintain the perceived value of the ``California well matured'' 
certification mark by maintaining current grade, size, quality, pack, 
container and inspection requirements on fruit packed and labeled as 
``California Well Matured'' or ``CA WELL MAT.''

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.

Industry Information

    There are approximately 175 California nectarine and peach handlers 
subject to regulation under the orders covering nectarines and peaches 
grown in California, and about 676 producers of these fruits in 
California. Small agricultural service firms, which include handlers, 
are defined by the Small Business Administration (SBA) (13 CFR 121.201) 
as those whose annual receipts are less than $6,500,000. Small 
agricultural producers are defined by the SBA as those having annual 
receipts of less than $750,000. A majority of these handlers and 
producers may be classified as small entities.
    The committees' staff has estimated that there are fewer than 26 
handlers in the industry who would not be considered small entities. 
For the 2006 season, the committees' staff estimated that the average 
handler price received was $9.00 per container or container equivalent 
of nectarines or peaches. A handler would have to ship at least 722,223 
containers to have annual receipts of $6,500,000. Given data on 
shipments maintained by the committees' staff and the average handler 
price received during the 2006 season, the committees' staff estimates

[[Page 49132]]

that small handlers represent approximately 85 percent of all the 
handlers within the industry.
    The committees' staff has also estimated that fewer than 68 
producers in the industry would not be considered small entities. For 
the 2006 season, the committees estimated the average producer price 
received was $4.50 per container or container equivalent for nectarines 
and peaches. A producer would have to produce at least 166,667 
containers of nectarines and peaches to have annual receipts of 
$750,000. Given data maintained by the committees' staff and the 
average producer price received during the 2006 season, the committees' 
staff estimates that small producers represent more than 90 percent of 
the producers within the industry.
    With an average producer price of $4.50 per container or container 
equivalent, and a combined packout of nectarines and peaches of 
36,388,996 containers, the value of the 2006 packout is estimated to be 
$163,750,482. Dividing this total estimated grower revenue figure by 
the estimated number of producers (676) yields an estimate of average 
revenue per producer of about $242,234 from the sales of peaches and 
nectarines.

Regulatory Revisions

    Under authority provided in Sec. Sec.  916.52 and 917.41 of the 
orders, grade, size, maturity, pack, and container marking requirements 
are established for fresh shipments of California nectarines and 
peaches, respectively. Such requirements are in effect on a continuing 
basis. The committees met on February 9, 2007, and unanimously 
recommended that these handling requirements be revised for the 2007 
season. This final rule continues in effect the provisions of an 
interim final rule action that: (1) Eliminated grade, size, maturity, 
pack, container and inspection requirements for all California 
nectarines and peaches except those packed in containers labeled 
``California Well Matured'' or ``CA WELL MAT''; (2) makes seasonal 
adjustments to the handling requirements applicable to California Well 
Matured fruit; and (3) removes certain handler reporting requirements 
that are deemed no longer necessary.

Container and Pack Requirements--Discussions and Alternatives

    Sections 916.350 and 917.442 establish container and pack 
requirements. The committees discussed removing all handling 
regulations under the Federal orders, including inspection 
requirements. However, the industry believes that buyers value the 
committees' ``CA WELL MAT'' mark as an indicator of high quality and 
may be willing to pay a premium price for fruit marked as such. 
Accordingly, they decided to maintain current grade, quality, maturity, 
size container, pack and inspection requirements for ``well matured'' 
fruit. The committees, thus, recommended revising the handling 
regulations to cover only nectarines and peaches packed in containers 
marked ``CA WELL MAT'' or ``California Well Matured.''

Lot Stamping Requirements--Discussions and Alternatives

    Sections 916.115 and 917.150 establish lot stamping requirements. 
This rule continues in effect lot stamping requirements to require such 
markings only on containers labeled ``CA WELL MAT'' or ``California 
Well Matured.'' An alternative would be to leave the existing lot 
stamping requirements unchanged, but the requirements would not be 
consistent with the other recommended changes and would result in 
unnecessary expenses for industry handlers. Based on this, the 
committees recommended revising lot stamping requirements to require 
such markings only on containers labeled ``CA WELL MAT'' or 
``California Well Matured.''

Weight Marking Requirements--Discussions and Alternatives

    Sections 916.350 and 917.442 also establish weight marking 
requirements for nectarines and peaches packed in Euro type volume-
filled containers. These require each five down Euro container of 
loose-filled nectarines or peaches to be marked with the words ``29 
pounds net weight.''
    In the past, handlers' sales to their retail customers have been 
based on set net weights for most pack styles. With the changing 
marketing environment, some retailers want volume-filled pack styles 
that have the same net weight as tray pack styles, especially for the 
Euro type containers.
    Handlers either respond to the requests of the retailers or risk 
losing business from those retailers. The committees agreed that weight 
markings are no longer necessary; and, in turn, at their February 9, 
2007, meetings recommended eliminating the Euro type container weight 
marking requirement.
    Without the weight marking requirements, nectarines and peaches 
packed in Euro style volume-filled containers can be packed to the 
buyers' preferences. The committees believe that the elimination of 
marking requirements will satisfy the stated needs of retailers and 
will open additional market opportunities for the industry.

Grade and Quality Requirements--Discussions and Alternatives

    Sections 916.356 and 917.459 establish minimum grade and quality 
requirements. The NAC and PCC previously discussed removing all 
handling regulations under the orders in favor of regulations under the 
newly-promulgated State marketing order. However, the industry still 
wanted to retain quality standards for fruit marketed as ``CA WELL 
MAT,'' a term which has value to buyers and the industry. One 
alternative the committees discussed was to allow handlers to use the 
mark under a licensing agreement with CTFA. Taking into account 
enforcement concerns, this approach was not considered feasible.
    At their February 9, 2007, meetings, the committees recommended 
revising the grade and quality requirements to apply only to nectarines 
and peaches packed in containers marked ``CA WELL MAT'' or ``California 
Well Matured'' beginning with the 2007 season. This action ensures that 
fruit packed in containers marked ``CA WELL MAT'' or ``California Well 
Matured'' is inspected and meets applicable grade and quality 
requirements. For this reason, the committees unanimously recommended 
the revisions in this final rule and believe that they will help 
accomplish the goals of the industry.

Minimum Maturity and Size Requirements--Discussions and Alternatives

    Sections 916.356 and 917.459 establish minimum fruit maturity 
levels. This rule continues in effect adjustments to the maturity 
requirements for several varieties of nectarines and peaches. Maturity 
requirements are based on measurements suggested by maturity guides 
(e.g., color chips), as reviewed and recommended by the FSIS annually 
to determine the appropriate guide for each nectarine and peach 
variety. These annual adjustments reflect refinements in measurements 
of the maturity characteristics of nectarines and peaches as observed 
during previous seasons' inspections. Adjustments in the guides 
utilized ensure acceptable fruit maturity and increased consumer 
satisfaction while benefiting nectarine and peach producers and 
handlers.
    Sections 916.356 and 917.459 of the orders' rules and regulations 
also specify minimum sizes for various varieties of nectarines and 
peaches. This rule continues in effect adjustments to

[[Page 49133]]

the minimum sizes authorized for certain varieties of each commodity 
for the 2007 season. Minimum size regulations are put in place to 
encourage producers to leave fruit on the trees for a longer period of 
time, increasing both maturity and fruit size. Increased fruit size 
increases the number of packed containers per acre, and coupled with 
heightened maturity levels, also provides greater consumer 
satisfaction, which in turn fosters repeat purchases that benefit 
producers and handlers alike.
    Annual adjustments to minimum sizes of nectarines and peaches, such 
as these, are recommended by NAC and PCC based upon historical data, 
producer and handler information regarding sizes attained by different 
varieties, and trends in consumer purchases.
    An alternative to such action would include not establishing 
minimum size regulations for these new varieties. Such an action, 
however, would be a significant departure from the committees' past 
practices and represent a significant change in the regulations as they 
currently exist. For these reasons, this alternative was not 
recommended.
    Sections 916.356 and 917.459 of the orders' rules and regulations 
also specify size requirements for handlers of late season nectarine 
and peach varieties wishing to pack smaller sized fruit as long as the 
fruit was ``well matured.'' Since only containers marked ``CA WELL 
MAT'' or ``California Well Matured'' are subject to minimum size 
requirements, this rule also continues in effect revisions to the size 
regulations which remove these obsolete size options.

Reporting Requirements--Discussions and Alternatives

    Sections 916.160 and 917.178 establish reporting requirements for 
nectarine and peach handlers, respectively. Similar reporting 
requirements have been established under the newly-implemented 
California State marketing program. Accordingly, collection of this 
information under the Federal orders is no longer necessary. The 
committees have implemented a memorandum of understanding to share 
information with the new State marketing order, so information 
collected by the State program can be utilized by the committees. An 
alternative would be to maintain the reporting requirements, but this 
would result in an unnecessary reporting burden. For this reason, the 
removal of reporting requirements was unanimously recommended by both 
committees.
    The committees make recommendations regarding the revisions in 
handling and reporting requirements after considering all available 
information, including comments received by committee staff. At the 
meetings, the impact of and alternatives to these recommendations are 
deliberated. The committees consist of individual producers and 
handlers with many years of experience in the industry who are familiar 
with industry practices and trends. All committee meetings are open to 
the public and comments are widely solicited. In addition, minutes of 
all meetings are distributed to committee members and others who have 
requested them, and are also available on the committees' Web site, 
thereby increasing the availability of this critical information within 
the industry.
    Regarding the impact of this action on the affected entities, each 
of the revisions is expected to generate financial benefits for 
producers and handlers through reduced costs and increased fruit sales. 
Both large and small entities are expected to benefit from the changes, 
and the costs of compliance are not expected to be significantly 
different between large and small entities.
    This rule continues in effect revisions reducing reporting and 
recordkeeping requirements on both small and large nectarine and peach 
handlers regulated under the orders. 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 accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the information collection requirements that were removed 
by the interim final rule were approved by the Office of Management and 
Budget (OMB), under OMB No. 0581-0189, Generic OMB Fruit Crops. Removal 
of the reporting requirements under Parts 916 and 917 is expected to 
reduce the reporting burden on small or large peach and nectarine 
handlers by 370 hours, and should further reduce industry expenses.
    AMS is committed to complying with the E-Government Act, to promote 
the use of the Internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.
    In addition, USDA has not identified any relevant Federal rules 
that duplicate, overlap, or conflict with this rule.
    Further, the committees' meetings are widely publicized throughout 
the nectarine and peach industry and all interested parties are 
encouraged to attend and participate in committee deliberations on all 
issues. These meetings are held annually in the fall, winter, and 
spring. During the February 9, 2007, meetings, all entities, large and 
small, were encouraged to express views on these issues.
    An interim final rule concerning this action was published in the 
Federal Register on April 16, 2007 (72 FR 18847) . Copies of the rule 
were posted on the committees' Web site. In addition, the rule was made 
available through the Internet by USDA and the Office of the Federal 
Register. That rule provided a 60-day comment period which ended June 
15, 2007. Two comments were received during the comment period in 
response to the rule.
    The first commenter, representing the committees, agrees with a 
majority of the changes that were outlined in the interim final rule. 
The commenter stated that there was one discrepancy in regards to the 
reporting requirements. The commenter contends that the committees' 
intent was to have reporting requirements suspended, not removed, in 
case the committees recommend reinstating the Federal orders' reporting 
requirements in the future. The commenter contends that if the 
reporting requirements are removed, the current OMB approval on the 
committees' reporting forms will be eliminated.
    The suspension of reporting requirements without a reactivation 
date is essentially equivalent to the removal of reporting 
requirements. The reinstatement process would not be shortened by 
retaining the regulations. USDA will work to ensure a timely 
reinstatement of the reporting requirements should the committees 
recommend using them in the future. Accordingly, no changes have been 
made to the rule based on this comment.
    The second commenter contends that lowering industry quality 
standards will adversely affect the public in a number of ways.
    However, previously mentioned, beginning with the 2007 season, 
under the new State program, all fruit must meet at least a modified 
U.S. No. 1 grade and be ``mature'' as defined in the Standards for 
nectarines and peaches. Under the Federal program, all marketing order 
handling requirements, including inspection and certification 
requirements, for ``California well matured'' fruit are maintained. The 
quality standards are not being lowered; rather they are being revised 
to give

[[Page 49134]]

handlers more cost-saving options. Accordingly, no changes have been 
made to the rule based on this comment.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at the 
following Web site: http://www.ams.usda.gov/fv/moab.html.  Any 
questions about the compliance guide should be sent to Jay Guerber at 
the previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    After consideration of all relevant matters presented, the 
information and recommendations submitted by the committees, and other 
information, it is found that finalizing the interim final rule, 
without change, as published in the Federal Register (72 FR 18847, 
April 16, 2007) will tend to effectuate the declared policy of the Act. 
With regard to revision to the rules and regulations under the order 
and concerning those provisions that were removed or terminated, it is 
found that those provisions no longer tend to effectuate the declared 
policy of the Act.

List of Subjects

7 CFR Part 916

    Marketing agreements, Nectarines, Reporting and recordkeeping 
requirements.

7 CFR Part 917

    Marketing agreements, Peaches, Pears, Reporting and recordkeeping 
requirements.

PARTS 916 and 917--[AMENDED]

0
Accordingly, the interim final rule amending 7 CFR parts 916 and 917 
which was published at 72 FR 18847 on April 16, 2007, is adopted as a 
final rule without change.

    Dated: August 21, 2007.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 07-4161 Filed 8-27-07; 8:45 am]
BILLING CODE 3410-02-M


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