[Federal Register Volume 61, Number 85 (Wednesday, May 1, 1996)]
[Rules and Regulations]
[Pages 19160-19164]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-10758]



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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service

7 CFR Parts 916 and 917

[Docket No. FV95-916-5FR]


Nectarines and Peaches Grown in California; Relaxation of Quality 
Requirements for Fresh Nectarines and Peaches

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule relaxes, for the 1996 season only, the quality 
requirements for California nectarines and peaches. This rule 
establishes a ``CA Utility'' quality requirement, based on minimum 
quality standards established under the California Agricultural Code, 
with a limitation on the amount of fruit meeting U.S. No. 1 or higher 
grade requirements that may be contained in the utility pack. This 
final rule also requires that containers of nectarines and peaches 
meeting the ``CA Utility'' quality requirement be clearly marked ``CA 
Utility.'' This final rule will allow more nectarines and peaches into 
fresh market channels, and is designed to benefit growers and 
consumers.

EFFECTIVE DATE: This final rule becomes effective May 2, 1996.

FOR FURTHER INFORMATION CONTACT: Kenneth Johnson, Marketing Specialist, 
Marketing Order Administration Branch, Fruit and Vegetable Division, 
AMS, USDA, P.O. Box 96456, Room 2523-S, Washington, DC 20090-6456; 
telephone: (202) 720-2861; or Terry Vawter, Marketing Specialist, 
California Marketing Field Office, Marketing Order Administration 
Branch, Fruit and Vegetable Division, AMS, USDA, 2202 Monterey Street, 
Suite 102B, Fresno, California, 93721; telephone: (209) 487-5901.

SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing 
Agreement and Marketing Order Nos. 916 and 917 [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.
    The Department of Agriculture (Department) is issuing this final 
rule in conformance with Executive Order 12866.
    This final rule has been reviewed under Executive Order 12778, 
Civil Justice Reform. This final rule is not intended to have 
retroactive effect. This final 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.
    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. 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 about 300 California nectarine and peach handlers subject 
to regulation under the orders covering nectarines and peaches grown in 
California, and about 1,800 producers of these fruits in California. 
Small agricultural producers have been defined by the Small Business 
Administration [13 CFR 121.601] as those having annual receipts of less 
than $500,000, and small agricultural service firms are defined as 
those whose annual

[[Page 19161]]

receipts are less than $5,000,000. A majority of these handlers and 
producers may be classified as small entities.
    This final rule establishes, for the 1996 season only, a ``CA 
Utility'' quality requirement and a container marking requirement for 
shipments of ``CA Utility'' fruit.
    Minimum grade requirements for fresh nectarines and peaches grown 
in California are in effect under Sec. 916.356 and Sec. 917.459, 
respectively. This rule amends Secs. 916.356 and 917.459 by revising 
paragraph (a)(1) under each section to permit shipments of fruit 
meeting ``CA Utility'' quality requirements. ``CA Utility'' quality 
requirements are the same as the requirements set forth in the 
California Agricultural Code for nectarines and peaches with the 
exception that not more than 30 percent of the fruit in a container may 
meet or exceed the requirements of the U.S. No. 1 Grade Standard. ``CA 
Utility'' fruit must be inspected by the Federal or Federal-State 
Inspection Service and certified as meeting the ``CA Utility'' quality 
requirements. ``CA Utility'' fruit are subject to assessment, maturity, 
size and all other requirements of the orders.
    This rule also amends Secs. 916.350 and 917.442 by adding a 
paragraph to each section to specify that each package or container of 
nectarines and peaches shipped, meeting the requirements of the newly 
established ``CA Utility'' quality, must be conspicuously marked with 
the words ``CA Utility'' on a visible display panel.
    Shipments of California nectarines and peaches are subject to 
minimum grade, size, and maturity requirements under the provisions of 
Marketing Orders 916 (section 916.356) during the period April 1 
through October 31 each year and 917 (section 917.459) during the 
period April 1 through November 23 each year. Currently, nectarine 
shipments are required to meet the requirements of U.S. No. 1 Grade, 
except less scarring is permitted than under the U.S. No. 1 Grade, and 
the tolerance for fruit that is not well formed is greater than the 
U.S. No. 1 Grade. Different minimum size requirements are in effect for 
different groupings of nectarine varieties.
    Peach shipments are currently required to meet the requirements of 
U.S. No. 1 Grade, except there is an additional tolerance for fruit 
damage caused by open sutures. Also, different minimum size 
requirements are in effect for different groupings of peach varieties.
    Both the nectarine and peach regulations allow the shipment of 
fruit one size smaller than the specified minimum if the fruit meets 
higher maturity requirements. Both nectarine and peach shipments are 
also subject to container, pack, and container marking requirements.
    Prior to the 1995 shipping season, the Nectarine Administrative and 
Peach Commodity Committees (Committees), the agencies responsible for 
local administration of the orders, considered recommending a change in 
the nectarine and peach regulations to allow a utility grade for these 
fruits. (Utility grade is a lower quality fruit than U.S. No. 1.) 
During the 1995 season, changes were made to allow the shipment of a 
utility grade for California plums, which are regulated under a State 
program. The plum utility grade was based on California Agricultural 
Code requirements. The Committees voted not to recommend a utility 
grade for nectarines and peaches for the 1995 season. The Committees 
did, however, hire Dr. Dennis Nef, California State University, Fresno, 
to conduct a research project to study the potential impact of a 
utility grade for nectarines and peaches. The Committees also believed 
that industry experience with the plum utility grade would be helpful 
in making future recommendations for appropriate quality requirements 
for nectarines and peaches. The report prepared by Dr. Nef was 
presented to the Nectarine and Peach Grade and Size Subcommittees in 
October 1995. The report found that about 22 percent of the peaches 
sampled in packinghouse cull bins in 1995 would have met California 
Agricultural Code requirements. Of the nectarines sampled from 
packinghouse culls in that year, about 6 percent would have met 
California Agricultural Code requirements, and an additional 14 percent 
failed marketing order quality requirements but met U.S. No. 1 Grade 
requirements (as indicated previously, the nectarine requirements under 
the order permit less fruit scarring than allowed under the U.S. No. 1 
Grade). The report pointed out that these findings were based on a 
season which was marked by unusual crop and weather conditions. After 
reviewing the report, the nectarine and peach subcommittees voted not 
to recommend to the full Committees that a utility grade be implemented 
in 1996 for nectarines and peaches, citing the unusual weather 
conditions that resulted in below normal crop production. They believed 
that Dr. Nef's research project should be continued for another year to 
allow for the collection of data based on a more typical season.
    On November 29, 1995, the Department wrote to the Committees, 
recommending that a utility grade be adopted for nectarines and peaches 
for the 1996 season beginning April 1, 1996. The Committees met on 
December 6-7, 1995, to discuss possible implementation of a utility 
grade for nectarines and peaches for the 1996 season. Committee members 
and others in attendance at the meetings expressed views in opposition 
to and in support of implementing a utility grade.
    Commentors in opposition to a utility grade for nectarines and 
peaches stated that the 1995 season was not a normal season for plums, 
nectarines, or peaches and should not be used as a basis for 
recommending a utility grade. They also said that the tree fruit 
industry is facing competition in both domestic and in foreign markets. 
One commentor stated that utility grade fruit would damage the 
reputation of California-produced tree fruit and another stated that 
poor quality California plums had been shipped to Hong Kong during the 
1995 season, and that these plums had damaged the overall reputation of 
California plums. One commentor stated that allowing a utility grade 
would result in inspections of fruit which would only serve to verify 
that the fruit in the container is poor quality. Others stated that 
lower quality fruit is not wasted and may be used for cattle feed. 
Another stated that the results of the recent grower referendum 
indicated support for the continuation of the program and the 
continuation of current quality standards.
    One commentor in support of a utility grade for nectarines stated 
that the implementation of a utility grade for plums in 1995 resulted 
in a $10 million increase in plum grower revenue. Commentors noted that 
less than 10 percent of the plum pack was utility grade. One commentor 
stated that while less than one percent of his organization's plum pack 
was utility grade, this lower grade should be available for use by 
nectarine and peach handlers if a market exists. Others commented that 
the Department had recommended a utility grade for nectarines and 
peaches for one year only--1996.
    Committee members and others who commented at the December 1995 
Committee meetings indicated that a niche market may exist for utility 
grade fruit and that the opportunity should be made available to market 
lower quality fruit to meet demand. Reducing quality requirements would 
allow more fruit to be marketed. The lower quality fruit would be made 
available at lower prices, which would especially benefit lower income 
consumers.

[[Page 19162]]

    Data on recent production of California nectarines and peaches in 
relation to season average producer prices appear to indicate that 
lesser quality fruit could be marketed successfully without interfering 
with sales of higher quality fruit. The limited additional quantity 
expected to be made available would be expected to have a minimal 
effect on consumer purchases and season average producer prices for 
California nectarines and peaches. Sales of lesser quality fruit to a 
niche market could increase producer revenue and promote consumer 
satisfaction.
    The implementation of utility quality requirements for the 1996 
season would authorize fruit meeting these requirements to be shipped 
to market and would provide information on consumer and retailer 
acceptance of such fruit. This information could then be used to 
supplement information collected by Dr. Nef and assist the Committees 
in developing appropriate quality requirements for the 1997 season.
    Based on the foregoing, the Department proposed that a utility 
grade for nectarines and peaches be implemented on a temporary basis 
for the 1996 season. The Department proposed, for purposes of this 
regulation, to define ``CTFA Utility'' to mean fruit which meets the 
requirements of the U.S. No. 2 Grade defined in the United States 
Standards for Grades of Nectarines (7 CFR 51.3145 through 51.3160) and 
the United States Standards for Grades of Peaches (7 CFR 51.1210 
through 51.1223), except that misshapened fruit and fruit with serious 
damage due to scarring would be permitted.
    In order to prevent confusion in the marketplace and to clearly 
differentiate shipments of ``CTFA Utility'' fruit from better quality 
fruit, the Department proposed requiring containers of ``CTFA Utility'' 
fruit to be conspicuously marked with the words ``CTFA Utility''. In 
addition, it was proposed that shipments of such fruit continue to be 
required to meet the same container, pack, and container marking 
requirements in effect for shipments of higher quality fruit.
    A proposed rule concerning this action was published in the March 
4, 1996, Federal Register (61 FR 8225), with a 30-day comment period 
ending on April 3, 1996. Nine comments were received. Jonathan Field, 
Manager of the California Tree Fruit Agreement, and John Tos, Chairman 
of the Peach Commodity Committee, submitted comments on behalf of the 
Committees, recommending modifications to the proposed rule as 
published. Six other commentors supported the establishment of a 
utility quality requirement, but did not fully agree with the 
Committees' comments: Harry Snyder, Consumers Union of U.S., Inc; Joe 
Caram, nectarine grower, Reedley, California; Steven Booz, Reedley, 
California; Richard Mittry, tree fruit grower, Sultana, California; Dan 
Gerawan, tree fruit grower-shipper, Reedley, California; and Craig 
Rasmussen, a grower and packer of California tree fruit, Reedley, 
California.
    One comment received from Leroy Giannini, a grower-handler of 
California tree fruit, Dinuba, California, opposes the establishment of 
utility quality requirements. Mr. Giannini states that California 
nectarines and peaches have grown in production over the last 30 years 
from 1 million cartons annually to almost 20 million cartons. He 
attributed this growth to the industry's quality assurance program. Mr. 
Giannini states further that during the 1995 season, ``Utility'' grade 
plums were marked up at retail, but neither grower nor consumer 
interests were well served. Mr. Giannini believes that the goal of 
providing lower cost plums to consumers through implementation of the 
``Utility'' grade failed to materialize.
    Comments supporting modification of the proposed rule addressed 
revisions in four areas: Whether the utility quality requirements 
should be based on the U.S. Standards for Grades; whether there should 
be a limit on the amount of U.S. No. 1 grade fruit in the utility pack; 
where utility quality fruit should be permitted to be marketed; and how 
utility quality fruit should be labeled.

The Basis for Utility Quality Requirements

    As previously indicated, the Department proposed defining utility 
quality in terms of a modified U.S. No. 2 grade. In Messrs. Field and 
Tos's comments, they state that the Committees support basing nectarine 
and peach utility quality requirements on the minimum quality standards 
established in the California Agricultural Code. The Committees believe 
the quality requirements for California nectarines and peaches should 
be consistent with the minimum requirements in place for the California 
plum utility grade, which are based on the California Agricultural 
Code.
    In addition to providing consistency within the California tree 
fruit industry, the Committees believe that basing the utility quality 
requirements on the California Agricultural Code will result in lower 
inspection costs. Mr. Field provided a letter from Mr. John Wiley, 
Branch Chief, Shipping Point Inspection, California Department of Food 
and Agriculture, which stated that requiring inspectors to review 
product for a quality requirement which is not a part of their normal 
procedures would increase the cost of inspection, thereby increasing 
program costs, particularly to small growers. Mr. Wiley stated further 
that, having a proposed quality requirement of U.S. No. 2 with 
different tolerances for peaches and nectarines, would increase the 
time required for training and supervision as well as increase the 
potential for confusion by inspectors and the difficulty of 
differentiating between the various grades.
    Mr. Gerawan supported using the California Agricultural Code as a 
basis for utility quality requirements. The remaining commentors did 
not state specifically whether they supported this proposed 
modification or not. The Department believes that the Committees' and 
Mr. Gerawan's arguments have merit. Also, defining the utility quality 
requirements in terms of the California Agricultural Code should not 
result in any less fruit being made available to fresh markets. For 
these reasons, the Committees' and Mr. Gerawan's proposed revision is 
adopted.

Limitation of U.S. No. 1 Grade Fruit in Utility Packs

    The Committees support limiting the amount of U.S. No. 1 grade 
fruit that can be included in a utility pack. Specifically, they 
support a limit of 15 percent in any container. Mr. Field, in his 
comment, states that a utility quality requirement must be clearly 
distinct from a U.S. No. 1 grade. Failure to provide a clear 
distinction could cause confusion in the marketplace and would not meet 
the goal of providing low-cost fruit to low-income consumers. Mr. Field 
contends that the Department failed to address this issue in its 
proposal which to allow for a U.S. No. 2 grade, with a 100 percent 
tolerance for misshapen and seriously scarred fruit; and that such 
action would, in effect, do away with regulatory grades in place for 
California nectarines and peaches. Mr. Field states that containers 
could be marked as utility without regard to the amount of U.S. No. 1 
therein. Fruit could be packed at 80-85 percent U.S. No. 1 and fail 
marketing order requirements, but rather than be repacked, it could be 
marked utility and marketed. This would cause confusion in the 
marketplace since the fruit would not be adequately distinguished from 
U.S. No. 1 grade fruit. By the same token, a container of nectarines or 
peaches could have 0 percent U.S. No. 1 or 100 percent U.S. No. 1 
product

[[Page 19163]]

inside, but could be marked utility for whatever reason the shipper 
determined appropriate. According to Mr. Field, this clearly 
demonstrates why the Committees believe it is necessary to establish a 
maximum tolerance of 15 percent for U.S. No. 1 grade fruit in 
containers marketed as utility grade fruit.
    In the comments received in support of the proposed rule, five 
commentors stated that the Department should not set a 15 percent 
tolerance on U.S. No. 1 grade fruit in containers marked utility. These 
commentors contend that it would be too difficult and costly for 
packers to meet a 15 percent tolerance because some containers would 
not meet the utility quality requirements because they would have too 
much ``good fruit'' in the box. These commentors could see no 
reasonable justification for limiting the amount of good quality fruit 
in a utility pack.
    Mr. Rasmussen offered a compromise. He believes that there should 
be a limit on the amount of U.S. No. 1 grade fruit in the utility pack 
to ensure a distinct difference between the packs, but states the 15 
percent limit supported by the Committees was overly restrictive. He 
supports a limit of 30 percent. This limit has proved workable for the 
California plum industry's use of a utility grade standard.
    The Department finds that Mr. Rasmussen's suggested revision is 
reasonable. Thus, this rule provides that the amount of fruit in a 
container of utility quality fruit that meets or exceeds the 
requirements of a U.S. No. 1 grade cannot exceed 30 percent.

Where Utility Quality Fruit May Be Shipped

    The Committees, through Mr. Field, also comment that on an 
experimental basis, utility quality fruit should be limited to the 
domestic markets. Mr. Field opines that under sections 916.54 and 
917.43 of the orders, special purpose shipments can be made for 
research purposes for special markets. Mr. Field believes that this 
authority allows restricting utility grade shipments, which would 
enable the nectarine and peach industries to continue studying the 
utility quality requirements, the availability of lower quality fruit 
to lower income consumers, and the benefits of making the lower quality 
product available. Mr. Field believes limiting shipments of utility 
quality fruit to the domestic market would allow for these studies to 
progress and would allay the fears of the industries that low quality 
fruit in export markets is to the long term detriment of the 
industries.
    Five commentors state that there is no rationale for restricting 
the sale of utility quality California nectarines and peaches to 
Mexico, where there is believed to be strong market demand for the 
product. One commentor--Mr. Rasmussen--did not state a position on this 
subject.
    The Committees did not provide sufficient evidence that the 
adoption of the CA Utility requirement for the 1996 season only would 
result in any damage to export markets. Thus, the Committees' proposal 
is denied.

Labeling Requirements for Utility Quality Fruit

    The Committees, through Mr. Field, comment that the name of the 
proposed quality requirement, ``CTFA Utility'' should be known instead 
as ``USDA Utility''. The Committees believe that since the Department 
initially proposed the utility quality requirements, such quality 
requirements should be called ``USDA Utility.'' It is the consensus of 
the Committees that the California quality image could be diluted by 
using ``California'' or ``CTFA'' to describe the lower quality product.
    Mr. Field also states that containers of utility quality California 
nectarines and peaches should meet all size, marking, and standard 
container requirements, with the additional requirement that the 
marking of ``USDA Utility'' should be a minimum height of \3/4\ inches 
and on the visible display panel of the box. (The proposed rule did not 
specify where such marking should appear.) As provided in the proposed 
rule, consumer bags or packages are also required to be to be marked. 
Requiring the marking to be on a visible display panel and on consumer 
packages will enable consumers and retailers to identify the fruit as 
utility quality when it is palletized or on display at the retail 
level.
    Mr. Rasmussen is the only other commentor who expresses an opinion 
on this issue. He states that the utility quality peaches and 
nectarines should be known as ``CA Utility.'' This is comparable to the 
designation used for California plums, and having the same nomenclature 
for peaches and nectarines would be advantageous from the standpoint of 
maintaining uniformity among the three commodities and creating less 
confusion in the marketplace.
    The Department finds that Mr. Rasmussen's position has merit and is 
therefore adopted. Further, the Committees' proposal to require the 
marking on a visible display panel also has merit and is incorporated 
in this final rule.
    The intent of this rule is to establish a minimum quality 
requirement for California nectarines and peaches to allow more fruit 
into fresh market channels, ensure customer satisfaction and improve 
returns to producers. Moreover, as previously stated, information 
gathered as a result of allowing shipments of ``CA Utility'' quality 
fruit, for the 1996 season, can be used to help determine appropriate 
quality requirements for California nectarines and peaches for the 1997 
season.
    This rule reflects the Department's appraisal of the need to revise 
the quality and container marking requirements for California 
nectarines and peaches. The Department believes that this rule will 
have a beneficial impact on producers, handlers, and consumers of 
California nectarines and peaches.
    Based on available information, the AMS has determined that this 
action will not have a significant economic impact on a substantial 
number of small entities.
    After consideration of all relevant matter presented, including the 
information and recommendations submitted by the Committees, the 
comments received, and other available information, it is hereby found 
that this rule, as hereinafter set forth, will tend to effectuate the 
declared policy of the Act.
    It is further found that good cause exists for not postponing the 
effective date of this rule until 30 days after publication in the 
Federal Register (5 U.S.C. 553) because this rule should apply to as 
many shipments of California nectarines and peaches as possible. The 
shipping seasons for both California nectarines and peaches began on 
April 1, 1996. Further, handlers are aware of this rule, which was 
recommended in a proposed rule in early March and discussed in public 
meetings of the Committees. Also, this rule provides an additional 
alternative for handlers of California nectarines and peaches, and no 
additional time is needed for those handlers to comply with the relaxed 
quality requirements. Finally, a 30-day comment period was provided for 
in the proposed rule, and all comments have been considered in 
developing this final rule.

List of Subjects

7 CFR Part 916

    Marketing agreements, Nectarines, Reporting and recordkeeping 
requirements.

[[Page 19164]]

7 CFR Part 917

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

    For the reasons set forth in the preamble, 7 CFR Parts 916 and 917 
are amended as follows:
    1. The authority citation for 7 CFR Parts 916 and 917 continues to 
read as follows:

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

PART 916--NECTARINES GROWN IN CALIFORNIA

    2. Section 916.350 is amended by adding a new paragraph (d) to read 
as follows:


Sec. 916.350  California Nectarine Container and Pack Regulation.

* * * * *
    (d) During the period April 1 through October 31, 1996, each 
container or package when packed with nectarines meeting CA Utility 
requirements, shall bear the words ``CA Utility'', along with all other 
required container markings, in letters of \3/4\ inch minimum height on 
the visible display panel. Consumer bags or packages must also be 
clearly marked on the bag or package as ``CA Utility'' along with other 
required markings.
    3. Section 916.356 is amended by revising paragraph (a)(1) to read 
as follows:


Sec. 916.356  California Nectarine Grade and Size Regulation.

    (a) * * *
    (1) Any lot or package or container of any variety of nectarines 
unless such nectarines meet the requirements of U.S. No. 1 grade: 
Provided, that nectarines 2 inches in diameter or smaller, shall not 
have fairly light colored, fairly smooth scars which exceed an 
aggregate area of a circle \3/8\ inch in diameter, and nectarines 
larger than 2 inches in diameter shall not have fairly light colored, 
fairly smooth scars which exceed an aggregate area of a circle \1/2\ 
inch in diameter: Provided further, That an additional tolerance of 25 
percent shall be permitted for fruit that is not well formed but not 
badly misshapen. Provided further, That during the period April 1 
through October 31, 1996, any handler may handle nectarines if such 
nectarines meet ``CA Utility'' quality requirements. The term ``CA 
Utility'' means that not more than 30 percent of the nectarines in any 
container meet or exceed the requirements of the U.S. No. 1 grade and 
that such nectarines are mature and are:
    (i) Free from insect injury which has penetrated or damaged the 
flesh; split pits which cause an unhealed crack or one or more well 
healed cracks which, either singly or in the aggregate, are more than 
\3/8\ inch in length; mold, brown rot, and decay which has affected the 
edible portion; and
    (ii) Free from serious damage due to skin breaks, cuts, growth 
cracks, bruises, or other causes.
    (iii) Tolerances. Not more than 10 percent, by count, of the 
nectarines in any one container may be below the requirements which are 
prescribed by this subparagraph, including not more than 5 percent, by 
count, for any one defect, except split pits. An additional tolerance 
of 10 percent, by count, of the nectarines in any one container or bulk 
lot may contain nectarines affected with split pits. This means a total 
tolerance of 20 percent is allowed for all defects, including split 
pits, but not to exceed 15 percent for split pits alone.
* * * * *

PART 917--FRESH PEARS AND PEACHES GROWN IN CALIFORNIA

    3. Section 917.442 is amended by adding a new paragraph (d) to read 
as follows:


Sec. 917.442  California Peach Container and Pack Regulation.

* * * * *
    (d) During the period April 1 through November 23, 1996, each 
container or package when packed with peaches meeting CA Utility 
requirements, shall bear the words ``CA Utility'', along with all other 
required container markings, in letters of \3/4\ inch minimum height on 
the visible display panel. Consumer bags or packages must also be 
clearly marked on the bag or package as ``CA Utility'' along with other 
required markings.
    4. Section 917.459 is amended by revising paragraph (a)(1) to read 
as follows:


Sec. 917.459  California Peach Grade and Size Regulation.

    (a) * * *
    (1) Any lot or package or container of any variety of peaches 
unless such peaches meet the requirements of U.S. No. 1 grade: 
Provided, that an additional 25 percent tolerance shall be permitted 
for fruit with open sutures which are damaged, but not seriously 
damaged. Provided, That during the period April 1 through November 23, 
1996, any handler may handle peaches if such peaches meet ``CA 
Utility'' quality requirements. The term ``CA Utility'' means that not 
more than 30 percent of the peaches in any container meet or exceed the 
requirements of the U.S. No. 1 grade and that such peaches are mature 
and are:
    (i) Free from insect injury which has penetrated or damaged the 
flesh; split pits which cause an unhealed crack or one or more healed 
cracks which, either singly or in the aggregate, are more than \1/2\ 
inch in length; and mold, brown rot, and decay; and
    (ii) Free from serious damage due to cuts, skin breaks, growth 
cracks, bruises, scab, rust, blight, disease, hail or other causes. 
Damage to any peach is serious when it causes a waste of 10 percent or 
more, by volume, of the individual peach.
    (iii) Tolerances. Not more than 10 percent, by count, of the 
peaches in any container may be below the requirements prescribed by 
this subparagraph. Not more than one-half of this tolerance shall be 
allowed for any one cause. Individual containers in any lot may contain 
not more than 1 \1/2\ times the tolerances specified if the percentage 
of defects of the entire lot averages within the tolerances.
* * * * *
    Dated: April 25, 1996.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 96-10758 Filed 4-30-96; 8:45 am]
BILLING CODE 3410-02-P