3412 Federal Register / Vol. 74, No. 12 / Wednesday, January 21, 2009 / Rules and Regulations 

Dated: January 9, 2009. 

Joseph Glauber, 

Chief Economist. 

For Part 2, Subpart M: 

Dated: January 12, 2009. 

Charles R. Christopherson, Jr., 

Chief Financial Officer. 

For Part 2, Subpart N: 

Dated: January 9, 2009. 

Bruce I. Knight, 

Under Secretary for Marketing and Regulatory 

Programs. 

For Part 2, Subpart P: 

Dated: January 13, 2009. 

Boyd K. Rutherford, 

Assistant Secretary for Administration. 

[FR Doc. E9–976 Filed 1–16–09; 8:45 am] 

BILLING CODE 3410–90–P 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Parts 925 and 944 

[Doc. No. AMS–FV–06–0184; FV03–925–1 

IFR] 

Grapes Grown in a Designated Area of 

Southeastern California and Imported 

Table Grapes; Change in Regulatory 

Periods 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Interim final rule with request 

for comments. 

SUMMARY: This rule revises the 

regulatory period when minimum grade, 

size, quality, and maturity requirements 

apply to southeastern California grapes 

under Marketing Order No. 925 (order), 

and to imported grapes under the table 

grape import regulation, from April 20 

through August 15 of each year to April 

10 through July 10 of each year. The 

order regulates the handling of grapes 

grown in a designated area of 

southeastern California and is 

administered locally by the California 

Desert Grape Administrative Committee 

(Committee). The change to the 

regulatory period beginning date is 

needed to ensure that imported table 

grapes marketed in competition with 

domestic grapes are subject to the grade, 

size, quality, and maturity requirements 

of the order. Section 8e of the 

Agricultural Marketing Agreement Act 

of 1937 (Act) provides authority for 

such change. The change to the 

regulatory period ending date is needed 

to realign the regulatory period with 

current shipping trends for grapes in the 

order’s production area. This rule also 

clarifies the maturity (soluble solids) 

requirements for southeastern California 

and imported Flame Seedless variety 

grapes. 

DATES: Effective Date: January 24, 2009; 

comments received by March 23, 2009, 

will be considered prior to issuance of 

a final rule. 

ADDRESSES: Interested persons are 

invited to submit written comments 

concerning this rule. Comments must be 

sent to the Docket Clerk, Marketing 

Order Administration Branch, Fruit and 

Vegetable Programs, AMS, USDA, 1400 

Independence Avenue, SW., STOP 

0237, Washington, DC 20250–0237; Fax: 

(202) 720–8938; or Internet: http:// 

www.regulations.gov. All comments 

should reference the docket number and 

the date and page number of this issue 

of the Federal Register and will be 

made available for public inspection in 

the Office of the Docket Clerk during 

regular business hours, or can be viewed 

at: http://www.regulations.gov. All 

comments submitted in response to this 

rule will be included in the record and 

will be made available to the public. 

Please be advised that the identity of the 

individuals or entities submitting the 

comments will be made public on the 

Internet at the address provided above. 

FOR FURTHER INFORMATION CONTACT: 

Barry Broadbent, Northwest Marketing 

Field Office, Marketing Order 

Administration Branch, Fruit and 

Vegetable Programs, AMS, USDA, 1220 

SW Third Avenue, Suite 385, Portland, 

Oregon 97204; Telephone: (503) 326– 

2724, Fax: (503) 326–7440, or E-mail: 

Barry.Broadbent@usda.gov; or Kurt 

Kimmel, California Marketing Field 

Office, Marketing Order Administration 

Branch, Fruit and Vegetable Programs, 

AMS, USDA, 2202 Monterey Street, 

Suite 102B, Fresno, California 93721; 

Telephone: (559) 487–5901, Fax: (559) 

487–5906, or E-mail: 

Kurt.Kimmel@usda.gov. 

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: 

Jay.Guerber@usda.gov. 

SUPPLEMENTARY INFORMATION: This rule 

is issued under Marketing Agreement 

and Marketing Order No. 925 (7 CFR 

part 925), regulating the handling of 

grapes grown in a designated area of 

southeastern California, hereinafter 

referred to as the ‘‘order.’’ The order is 

effective under the Agricultural 

Marketing Agreement Act of 1937, as 

amended (7 U.S.C. 601–674), hereinafter 

referred to as the ‘‘Act.’’ 

This rule is also issued under section 

8e of the Act, which provides that 

whenever certain specified 

commodities, including table grapes, are 

regulated under a Federal marketing 

order, imports of these commodities 

into the United States are prohibited 

unless they meet the same or 

comparable grade, size, quality, or 

maturity requirements as those in effect 

for the domestically produced 

commodities. The table grape import 

regulation is specified in § 944.503 (7 

CFR part 944.503). 

The Department of Agriculture 

(USDA) is issuing this rule in 

conformance with Executive Order 

12866. 

This rule has been reviewed under 

Executive Order 12988, Civil Justice 

Reform. This action 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. 

There are no administrative 

procedures that must be exhausted prior 

to any judicial challenge to the 

provisions of import regulations issued 

under section 8e of the Act. 

Introduction 

This rule revises the beginning and 

ending dates of the regulatory period 

when minimum grade, size, quality, and 

maturity requirements apply to 

southeastern California grapes under 

Marketing Order No. 925 (order), and to 

imported grapes under the table grape 

import regulation. The revised 

regulatory period also applies to pack 

and container requirements issued 

under the order. The previous 

regulatory period for both domestic and 


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Federal Register / Vol. 74, No. 12 / Wednesday, January 21, 2009 / Rules and Regulations 3413 

imported grapes was April 20 through 

August 15 of each year. The Committee, 

which locally administers the order, 

unanimously recommended changing 

the date when the order’s requirements 

expire to July 10 of each year, because 

few grapes are normally shipped after 

that date. Additionally, the Desert Grape 

Growers League of California (League) 

requested that USDA change the 

beginning date of the regulatory period 

for imported table grapes from April 20 

to April 1. The League requested this 

change to ensure that grapes imported 

prior to the beginning of the regulatory 

period, but marketed during the 

regulatory period in competition with 

domestically produced grapes, meet the 

California grape order’s grade, size, 

quality, and maturity requirements. 

After much consideration, USDA has 

determined that a beginning regulatory 

period date of April 10 will adequately 

address the League’s concerns and is 

consistent with the provisions of the 

Act. 

This rule also changes the ending date 

of the regulatory period for imported 

grapes to July 10, because few grapes are 

shipped after that date. The rule also 

clarifies the maturity (soluble solids) 

requirements for southeastern California 

and imported Flame Seedless variety 

grapes. 

Section 925.52(a)(2) of the grape 

marketing order provides authority to 

limit the handling of any grade, size, 

quality, maturity, or pack of grapes 

differently for different varieties, or any 

combination of the foregoing during any 

period or periods. Section 925.55 

provides for mandatory inspection for 

all grapes handled pursuant to § 925.52 

of the order. Section 925.304 of the 

order’s administrative rules and 

regulations prescribes the period during 

which grapes are handled pursuant to 

regulation. 

Current requirements under the 

marketing order require grapes shipped 

during the regulatory period to be at 

least U.S. No. 1 Table, as set forth in the 

United States Standards for Grades of 

Table Grapes (European or Vinifera 

type) (7 CFR 51.880 through 51.914) 

(Standards), or meet the requirements of 

the U.S. No. 1 Institutional grade, except 

for the tolerance percentage for bunch 

size. The tolerance is 33 percent instead 

of 4 percent as is required to meet the 

U.S. No. 1 Institutional grade. 

Grapes meeting the institutional 

quality requirements may be marked 

‘‘DGAC No. 1 Institutional’’ but shall 

not be marked ‘‘Institutional Pack.’’ 

Grapes of the Flame Seedless and 

Perlette varieties are required to meet 

the ‘‘other varieties’’ standard for berry 

size (ten-sixteenths of an inch). 

In addition, fresh shipments of grapes 

from the marketing order area are 

required to meet the minimum maturity 

requirements for table grapes as 

specified in the California Code of 

Regulations (3 CCR 1436.12). Grapes of 

the Flame Seedless variety shall be 

considered mature if the juice meets or 

exceeds 16.5 percent soluble solids, or 

contains not less than 15 percent 

soluble solids and the soluble solids are 

equal to or in excess of 20 parts to every 

part acid contained in the juice in 

accordance with applicable sampling 

and testing procedures specified in the 

California Code of Regulations. 

The foregoing requirements also apply 

to imported table grapes, under the 

authority of section 8e of the Act, during 

the regulatory period established in 

§ 944.503(a)(3). Prior to this action, the 

regulatory period for imported grapes 

began April 20 and extended through 

August 15 of each year, the same as the 

period delineated in the marketing order 

for domestic grapes. This rule revises 

the regulatory period established in the 

import regulations for imported grapes 

to April 10 through July 10 of each year. 

Again, this period mirrors the period set 

by the marketing order for domestic 

regulation. 

The ending date of the regulatory 

period is being changed from August 15 

to July 10 to more accurately reflect the 

production season of grapes produced 

within the marketing order production 

area. Recent production history shows 

the majority of the grapes produced in 

the production area are shipped prior to 

July 10. Regulating after that date is 

unjustified, both economically and 

logistically, for the small quantity of 

grapes that are produced. 

Additionally, the beginning date of 

the regulatory period is being changed 

from April 20 to April 10 of each year 

to respond to the marketing and 

technology changes that have occurred 

within the imported grape industry. 

Improvements in cold storage 

technology have enabled large 

quantities of imported grapes to be 

imported prior to the beginning of the 

marketing order regulatory period, when 

the order requirements come into effect, 

and subsequently be held in cold 

storage for long periods of time. This 

can potentially allow the stored product 

to be marketed after the start of the 

regulatory period in competition with 

regulated, domestically produced 

grapes. Establishing an earlier beginning 

regulatory period date for the marketing 

order will ensure that imported table 

grapes marketed in competition with 

domestically produced table grapes 

meet the minimum marketing order 

quality standards. 

Marketing order regulation is 

intended to protect the interests of both 

the producers and consumers of 

agricultural commodities covered under 

the Act. A USDA/ERS report discussed 

the purposes and benefits of quality and 

condition standards (USDA, Economic 

Research Service, Agricultural 

Economic Report Number 707, ‘‘Federal 

Marketing Orders and Federal Research 

and Promotion Programs, Background 

for 1995 Farm Legislation’’, by Steven 

A. Neff and Gerald E. Plato, May 1995). 

The basic rationale for such standards is 

that only satisfied customers are repeat 

customers. Thus, quality standards help 

ensure that consumers are presented a 

product that is of a consistent quality, 

helps create buyer confidence, and 

contributes to stable market conditions. 

When consumers purchase satisfactory 

quality grapes, they are likely to 

purchase grapes again, and inspection 

helps ensure a quality product. It is 

anticipated that this action will improve 

the orderly marketing of grapes and 

benefit producers and consumers of 

grapes. 

Changing the Date When Domestic and 

Imported Table Grape Regulations 

Expire 

Prior to this action, § 925.304 of the 

order specified a regulatory period of 

April 20 through August 15 when 

minimum grade, size, quality, and 

maturity requirements apply to grapes 

grown in southeastern California. A 

final rule published on March 20, 1987, 

(52 FR 8865) established the regulatory 

period to promote the orderly marketing 

of grapes. 

The Committee met on November 14, 

2002, and unanimously recommended 

modifying § 925.304 of the order to 

change the date when minimum grade, 

size, quality, and maturity requirements 

expire to July 10, rather than August 15. 

The Committee met again on December 

12, 2002, and clarified that the proposed 

regulatory period should also apply to 

pack and container requirements under 

the order. 

Since 1987, the amount of grapes 

handled in the production area after 

July 10 has generally decreased as older 

vineyards, which typically produce late 

season varieties, have been removed. 

For the years 2000–2008, almost 99 

percent of the approximately 7.3 million 

18-pound lugs of grapes grown annually 

in the production area were handled 

during the period April 20 to July 10. 

On average, just over one percent of 

these grapes were harvested and 

marketed during the period July 11 to 

August 15. The Committee believes that 

ending regulatory requirements on July 

10 will benefit handlers and producers 


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3414 Federal Register / Vol. 74, No. 12 / Wednesday, January 21, 2009 / Rules and Regulations 

by reducing the costs associated with 

mandatory inspection. 

Under section 8e of the Act, minimum 

grade, size, quality, and maturity 

requirements for table grapes imported 

into the United States are established 

under Table Grape Import Regulation 4 

(7 CFR 944.503) (import regulation). 

Section 944.503(a)(3) of the import 

regulation specifies the regulatory 

period when imported grapes are 

subject to minimum requirements. The 

change to the order’s regulatory period 

expiration date requires a corresponding 

change to expiration date of the 

regulatory period for imported table 

grapes. 

It is expected that the earlier end to 

the regulatory period for domestic and 

imported grapes will benefit handlers, 

producers, and importers, because the 

regulatory burden on these entities will 

be reduced. 

Changing the Beginning of the 

Regulatory Period for Domestic and 

Imported Table Grapes 

In January 2003, the League requested 

that USDA change the beginning date of 

the regulatory period for imported table 

grapes from April 20 to April 1, and 

provided information in support of that 

request. The League contended that, in 

prior years, grapes not subject to 

marketing order requirements were 

imported prior to the start of the 

regulatory period and were 

subsequently marketed during the 

regulatory period in competition with 

domestically produced grapes subject to 

the California grape order’s grade, size, 

maturity, and quality requirements. The 

League further contended that there 

would be no adverse effect on the 

availability and prices of grapes if the 

beginning of the regulatory period for 

imports were changed to April 1. 

After much consideration, including 

the League’s proposal and comments 

received by USDA concerning the 

proposed change, USDA is establishing 

with this rule an April 10 beginning 

date of the regulatory period for 

imported grapes. 

USDA is authorized by Section 

608e(b)(1) of the Act to extend 

marketing order requirements for a 

period, not to exceed 35 days, during 

which the order requirements would be 

effective for an imported commodity 

during any year, if USDA determines 

that the additional period of time is 

necessary to effectuate the purposes of 

the Act and to ensure that imports 

marketed during the regulatory period 

meet the grade, size, quality, or maturity 

requirements of the marketing order 

applicable to domestic production. 

Further, section 608e(b)(2) of the Act 

provides that in making such a 

determination, USDA shall consider, 

through notice and comment 

procedures: 

(A) To what extent, during the 

previous year, imports of a commodity 

that did not meet the requirements of a 

marketing order applicable to such 

commodity were marketed in the United 

States during the period that such 

marketing order requirements were in 

effect for available domestic 

commodities (or would have been 

marketed during such time if not for any 

additional period established by the 

Secretary); 

(B) If the importation into the United 

States of such commodity did, or was 

likely to, avoid the grade, size, quality, 

or maturity standards of a seasonal 

marketing order applicable to such 

commodity produced in the United 

States; and 

(C) The availability and price of 

commodities of the variety covered by 

the marketing order during any 

additional period the marketing order 

requirements are to be in effect. 

In its request, the League presented 

arguments and data that support the 

claim that unregulated imported grapes 

have been and likely will continue to be 

in the market in competition with 

grapes subject to regulation, that the 

presence of such grapes may result in an 

avoidance of the marketing order 

requirements, and that expanding the 

marketing order regulatory period to 

ensure that imported and domestic 

grapes marketed during the regulatory 

period meet minimum marketing order 

quality standards will have minimal 

impact on the price and availability of 

grapes. 

Current market mechanisms for 

imported grapes dictate that product is 

either immediately shipped directly to 

retail markets or diverted for holding in 

cold storage facilities. Improved cold 

storage technology allows importers to 

divert imported grapes from normal 

marketing channels for up to 60 days 

after their arrival at a U.S. port. The 

practice of importing grapes into the 

U.S. prior to the start date of the 

regulatory period, holding them in cold 

storage, and subsequently releasing 

them into the market after the regulatory 

period has begun may result in the 

avoidance of the marketing order 

regulation. Revising the start of the 

regulatory period to April 10 will 

reduce the likelihood that uninspected 

grapes that are imported prior to the 

start of regulation are marketed during 

the regulatory period. 

Exporting countries export many high 

quality grapes to the U.S. prior to April 

20. Those same countries have the 

capability of exporting grapes which 

will consistently meet the minimum 

requirements of the import regulation. 

There is no expectation that an earlier 

beginning date for regulation will cause 

a shortage of grapes in the market. An 

earlier beginning date will help to 

ensure that grapes being imported and 

marketed during the regulatory period 

meet minimum requirements prior to 

being allowed to be marketed in the U.S. 

It is expected that uniform high 

quality product consistently in the 

market will encourage repeat purchases 

of imported and domestic grapes, which 

should benefit producers, handlers, 

importers, and consumers of grapes. 

The U.S. Census Bureau indicates that 

on average for the years 2000–2008, 68 

million 18-pound lugs of grapes were 

imported into the United States. The 

two main countries exporting to the 

United States were Chile, with average 

exports of 51 million 18-pound lugs (76 

percent of the total), and Mexico, with 

14 million 18-pound lugs (21 percent of 

the total). The remaining three percent 

came from various other countries. 

Total grape imports for the February 

through April period in the years 2000– 

2008 averaged 44 million 18-pound 

lugs. Of this amount, 97 percent came 

from Chile and the remaining 

percentage came from various other 

countries. 

Information from USDA’s Market 

News Service (Market News) for 2000– 

2008 shows that the Port of Philadelphia 

(where historically the greatest 

percentage of Chilean table grapes enter 

the United States) received an average of 

20 million 18-pound lugs of imported 

Chilean grapes during the February 1 to 

April 19 period, with approximately 30 

percent (6 million) of these 20 million 

18-pound lugs arriving between April 1 

and April 19. Market News import 

statistics for the 2008 shipping season 

show that 18.82 million lugs of grapes 

were imported from Chile into 

Philadelphia from February 1 to April 

19, with 28 percent (5.26 million) 

arriving between April 1 and April 19. 

After the April 20 start of the regulatory 

period, shipments dropped off 

dramatically and ended completely by 

June 4. 

Fresh grapes imported prior to the 

beginning of the regulatory period are 

not subject to mandatory inspection but 

may be inspected on a voluntary basis. 

USDA’s Fresh Products Branch, Fruit 

and Vegetable Programs (Fresh 

Products), is responsible for the 

performance of those voluntary 

inspections and compiles the inspection 

results data. Approximately 10 percent 

of the table grapes imported in during 


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Federal Register / Vol. 74, No. 12 / Wednesday, January 21, 2009 / Rules and Regulations 3415 

the period April 1–19, 2008 were 

voluntarily inspected. 

The grapes that are voluntarily 

inspected and fail to meet the Standards 

are not prohibited from entering into the 

channels of commerce in the U.S. By 

contrast, imported grapes that fail 

import quality requirements during the 

regulatory period must be reworked to 

meet the minimum requirements before 

being marketed in the U.S. Otherwise, 

failing product must be exported, 

destroyed, or utilized in processed 

products. 

Under normal marketing conditions, 

imported grapes move directly through 

distribution channels into retail 

markets. However, when the supply of 

imported product exceeds demand, the 

imported grapes can be put into cold 

storage until the market is ready to 

absorb them. The length of time the 

grapes remain in storage likely has a 

negative effect the quality of the grapes. 

Studies of table grape importer storage 

behavior performed by SURRES, a 

division of the Applied Technology 

Corporation, and the College of Business 

and Management, University of 

Maryland, indicate that importers use 

their storage capability extensively 

during the March-April time frames and 

that storage periods in the 30 to 60 day 

range are not uncommon at this time of 

year. Thus, the utilization of cold 

storage facilities in this manner creates 

a mechanism whereby grapes imported 

prior to the April 20 start of the 

regulatory period (product which is not 

subject to the marketing order 

requirements) may be held over in cold 

storage and subsequently enter the 

market after April 20, in competition 

with grapes that have passed inspection 

and met or exceeded the marketing 

order and import requirements. 

Market News reports of commodity 

movement for the years 2000–2008 

show that grape imports decrease 

dramatically soon after the start of the 

regulatory period. The amount of grapes 

imported during the regulatory period 

cannot account for the substantial 

quantity of imported grapes consistently 

present in the market in May and, 

sometimes, into June. Since few grapes 

are imported early in the regulatory 

period, many of the imported grapes 

available during the regulatory period 

have entered the country prior to the 

beginning of the regulatory period and 

have been held in cold storage and 

marketed during the regulatory period. 

The Market News terminal market 

reports generally indicate that marginal 

quality and condition grapes command 

dramatically reduced prices in the 

market. In addition, those same reports 

indicate that grapes of better quality and 

condition tend to receive higher prices. 

The April 10 regulatory period 

beginning date is being implemented to 

ensure that imported and domestic 

grapes marketed during the regulatory 

period meet the minimum marketing 

order quality standards. This action is 

expected to reduce the quantity of 

unregulated imported grapes marketed 

during the regulatory period and to 

provide consumers with higher quality 

grapes on a more consistent basis. 

Experience has shown that an 

improvement in product quality results 

in increased acceptance in the 

marketplace and translates into more 

frequent purchases. USDA expects 

domestic producers and handlers of 

southeastern California grapes, and 

exporters and importers of foreignproduced grapes to benefit from this 

action through stabilized marketing 

conditions and prices. The regulatory 

period change is anticipated to benefit 

the producers and marketers of both 

domestic and imported grapes, as well 

as grape consumers. 

Clarification of Maturity Requirements 

This action also revises 

§ 944.503(a)(1)(ii) to clarify that 

imported Flame Seedless variety grapes 

shall be considered mature if the juice 

meets or exceeds 16.5 percent soluble 

solids, or contains not less than 15 

percent soluble solids and the soluble 

solids are equal to or in excess of 20 

parts to every part acid contained in the 

juice in accordance with applicable 

sampling and testing procedures 

specified in the California Code of 

Regulations (3 CCR 1436.3, 1436.5, 

1463.6, 1436.7, 1436.12, and 1436.17). 

Previously, this subparagraph did not 

include the 16.5 percent option for 

meeting maturity requirements. In 

addition, obsolete language specifically 

regarding requirements in effect only in 

1998 is removed from paragraph (a)(1). 

These same requirements are already in 

effect for grapes shipped from 

southeastern California under Marketing 

Order No. 925. 

Initial Regulatory Flexibility Impact 

Analysis 

Pursuant to requirements set forth in 

the Regulatory Flexibility Act (RFA) (5 

U.S.C. 601–612), the Agricultural 

Marketing Service (AMS) has 

considered the economic impact of this 

rule on small entities. Accordingly, 

AMS has prepared this initial 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 the rules issued thereunder, are 

unique in that they are brought about 

through group action of essentially 

small entities acting on their own 

behalf. Thus, both statutes have small 

entity orientation and compatibility. 

Import regulations issued under the Act 

are comparable to those established 

under Federal marketing orders. 

There are approximately 14 handlers 

of southeastern California grapes who 

are subject to regulation under the order 

and about 50 grape producers in the 

production area. In addition, there are 

approximately 123 importers of grapes. 

Small agricultural service firms are 

defined by the Small Business 

Administration (13 CFR 121.201) as 

those having annual receipts of less than 

$7,000,000, and small agricultural 

producers are defined as those whose 

annual receipts are less than $750,000. 

Nine of the 14 handlers subject to 

regulation have annual grape sales of 

less than $7 million. Based on data from 

the National Agricultural Statistics 

Service (NASS) and the Committee, the 

average crop value for 2008 is about 

$53,040,000. Dividing this figure by the 

number of producers (50) yields an 

average annual producer revenue 

estimate of about $1,060,800, which is 

above the SBA threshold of $750,000. 

Based on the foregoing, it may be 

concluded that a majority of grape 

handlers and none of the producers may 

be classified as small entities. The 

average importer receives $2.8 million 

in revenue from the sale of grapes. 

Therefore, we believe that the majority 

of these importers may also be classified 

as small entities. 

Summary of Changes 

This rule revises the regulatory 

periods when minimum grade, size, 

quality, and maturity requirements 

apply to grapes grown in southeastern 

California under the order, and to 

imported grapes under the table grape 

import regulation. The revised 

regulatory period also applies to pack 

and container requirements issued 

under the order. Prior to this action, the 

regulatory period for both domestic and 

imported grapes was April 20 through 

August 15 of each year. 

The California Desert Grape 

Administrative Committee, which 

locally administers the order for grapes 

grown in a designated area of 

southeastern California, unanimously 

recommended changing the date when 

these requirements expire for grapes 

grown in California to July 10. Moving 

the ending date of the regulatory period 

forward is in the interest of table grape 


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3416 Federal Register / Vol. 74, No. 12 / Wednesday, January 21, 2009 / Rules and Regulations 

handlers and producers. The Desert 

Grape Growers League of California 

requested that the beginning date of the 

regulatory period for imported grapes be 

changed from April 20 to April 1 and 

provided information to support its 

request. The League proposed this 

regulatory period change to reduce the 

quantity of unregulated imported grapes 

that are marketed during the regulatory 

period in competition with regulated 

grapes. The League believes that 

regulating product quality to meet 

minimum standards will result in 

increased acceptance of grapes in the 

marketplace, and is expected to 

translate into more frequent purchases 

on the part of the consumer. 

After publishing a proposed rule and 

receiving comments, USDA has 

subsequently determined that changing 

the beginning date of the regulatory 

period to April 10, as opposed to the 

April 1 date requested by the League, 

adequately addresses the League’s 

concerns and is consistent with the 

provisions of the Act. 

In addition, this action revises 

regulatory language in the grape import 

regulations to clarify maturity 

requirements on imported Flame 

Seedless variety grapes. Prior to this 

rule, the regulation did not include the 

16.5 percent option for meeting maturity 

requirements that is already in effect for 

grapes shipped from southeastern 

California under Marketing Order No. 

925. 

Changing the Ending of the Regulatory 

Period for Domestic and Imported 

Grapes 

Section 925.52(a)(2) of the grape order 

provides authority to limit the handling 

of any grade, size, quality, maturity or 

pack of grapes differently for different 

varieties, or any combination of the 

foregoing during any period or periods. 

Section 925.304 of the order’s 

administrative rules and regulations 

stipulates the regulatory period, most 

recently April 20 through August 15, 

when minimum grade, size, quality, and 

maturity requirements apply to grapes 

grown in southeastern California under 

the order. A final rule published on 

March 20, 1987, (52 FR 8865) 

established that regulatory period to 

promote the orderly marketing of 

grapes. 

Grape handlers in the production area 

shipped and marketed an average of 7.3 

million 18-pound lugs of grapes 

annually from 2000–2008. 

Approximately 99 percent of those 

grapes were shipped and marketed 

during the period April 20 to July 10. At 

least 14 varieties are grown in the 

production area regulated under the 

order and marketed in major U.S. 

market areas. The four major varieties 

are Flame Seedless, Perlettes, 

Thompson Seedless, and Sugraone. 

Since 1987, the amount of grapes 

handled after July 10 has decreased, 

and, in the period 2000–2008, the 

amount of grapes handled after July 10 

constituted just slightly more than 1 

percent of the grapes produced in the 

production area. The Committee met on 

November 14, 2002, and unanimously 

recommended modifying § 925.304 of 

the order’s administrative rules and 

regulations to advance the date when 

minimum grade, size, quality, and 

maturity requirements expire to July 10, 

rather than August 15. The Committee 

met again on December 12, 2002, and 

clarified that the proposed regulatory 

period should also apply to pack and 

container requirements under the order. 

The amount of grapes handled in the 

production area after July 10 of each 

year has generally decreased as older 

vineyards, which typically produce late 

season varieties, have been removed. 

During the past 3 years, approximately 

99 percent of the grapes grown in the 

production area were handled during 

the period April 20 through July 10. 

Grapes handled after July 10 tend to 

bring much lower prices than early 

season grapes. For example, in the 2003 

season that followed the Committee 

recommendation, early season Flame 

Seedless grapes had an average FOB 

price of $13.85 to $23.85 while end-ofseason Flame Seedless grapes brought 

an average FOB price of $11.85 to 

$12.85 per 18-pound lug. In 2008, early 

season Flame Seedless prices averaged 

$22.95 to $28.95 while the late season 

prices averaged $11.95 per 18-pound 

lug. 

Additionally, inspection costs for 

grapes handled after July 10 are higher, 

as inspection fees are proportionate to 

the volume of grapes inspected. Thus, 

this shortened regulatory period is 

expected to benefit handlers and 

producers. 

The Committee considered other 

regulatory period alternatives that 

would more adequately reflect the end 

of the harvest for the domestic 

production area but still ensure 

shipments of higher quality grapes. For 

example, one suggestion was to change 

the ending date of the regulatory period 

for grapes grown in the designated area 

of southeastern California to July 1 or 

July 5. This suggestion was not adopted 

because the Committee believes that 

July 10 is more reflective of the end of 

the season. Approximately one percent 

of grapes are shipped from the 

production area after July 10, but the 

industry felt that commercial quantities 

of grapes may still be shipped before 

that date and was not supportive of an 

earlier ending date. 

Section 8e of the Act specifies that 

whenever certain specified 

commodities, including table grapes, are 

regulated under a Federal marketing 

order, imports of that commodity into 

the United States are prohibited unless 

they meet the same or comparable 

grade, size, quality, and maturity 

requirements as those in effect for the 

domestically produced commodity. 

Minimum grade, size, quality, and 

maturity requirements for table grapes 

imported into the United States are 

established under Table Grape Import 

Regulation 4 (7 CFR 944.503) (import 

regulation). 

Section 944.503(a)(3) of the import 

regulation specifies the regulatory 

period during which imported grapes 

are subject to regulation. Prior to this 

rule, the regulatory period was April 20 

to August 15 of each year. Since this 

action will change the expiration date of 

the regulatory period for the California 

production area to July 10, a 

corresponding change to the regulatory 

period for imported table grapes is 

required under section 8e of the Act. 

Changing the Beginning of the 

Regulatory Period for Imported Grapes 

The U.S. Census Bureau indicates that 

on average, for the years 2000–2008, 68 

million 18-pound lugs of grapes were 

imported into the United States. The 

majority of these grapes are imported 

prior to April 20. Only grapes imported 

during the regulatory period are 

required to be inspected and to comply 

with the same minimum grade, size, 

quality, and maturity requirements as 

the domestic marketing order. 

The League requested that the 

beginning date of the regulatory period 

for imported grapes be advanced from 

April 20 to April 1, and submitted 

information to support its request to 

USDA for review and evaluation. After 

much consideration, USDA determined 

that changing the beginning date of the 

regulatory period to April 10 adequately 

addresses the League’s concerns and is 

consistent with the provisions of the 

Act. The beginning date of the 

marketing order regulatory period is 

also being changed to keep the import 

and domestic regulatory period dates 

the same. 

The authority for changing the 

beginning date of the regulatory period 

for imports is specified in § 608e(b) of 

the Act. These provisions allow the 

Secretary to extend import requirements 

for a period, not to exceed 35 days, 

during which the import requirements 

would be effective for the imported 


jlentini on PROD1PC65 with RULES
Federal Register / Vol. 74, No. 12 / Wednesday, January 21, 2009 / Rules and Regulations 3417 

commodity. To change the beginning 

date, USDA must consider the 

following: (1) For the prior year, 

whether imports of grapes that did not 

meet import requirements were 

marketed in the United States during 

the period that such import 

requirements were in effect; (2) whether 

imported grapes did or were likely to 

avoid such import requirements; and (3) 

whether there would be any adverse 

effect on the availability and prices of 

grapes if the regulatory period for 

imports was changed. 

The League contends that such an 

action is needed to ensure that grapes 

imported into the United States prior to 

the beginning of the regulatory period, 

but marketed when the regulation is in 

effect, meet marketing order grade, size, 

quality, and maturity requirements. 

Grape importers use cold storage 

extensively during the months of March 

and April. Storage periods in the 30–60 

day range are not uncommon at this 

time of year. Much of the imported 

product available in the market during 

the regulatory period is believed to have 

been shipped prior to the beginning of 

the regulatory period and held in such 

facilities before shipping to terminal 

markets. 

On average, 68.0 million 18-pound 

lugs of grapes were imported into the 

United States at all ports during each of 

the years 2000 to 2008. During each of 

those years, there was a significant 

decrease in imports after the April 20 

beginning of the regulatory period. 

Approximately 3 million 18-pound lugs 

of imported grapes arrive each week of 

the shipping season prior to the April 20 

beginning date of regulation. After April 

20, shipments drop dramatically and 

usually cease altogether by May 31. 

Market News reports show that 

shipments of imported Chilean grapes 

in 2008 mirror the pattern of previous 

years. An average of 3.25 million 18- 

pound lugs of grapes were imported 

each week of the season leading up to 

the April 20 start of regulation. For the 

week following the April 20 start date, 

shipments dropped to approximately 

750,000 lugs per week. In the weeks that 

followed, shipments were 430,000 lugs, 

372,000 lugs, and 78,000 lugs. 

Shipments continued to decrease to 

statistically insignificant quantities, 

ceasing completely after June 4, 2008. 

Fresh Products data indicates that 

from 2004–2007, less than one percent 

of imported Chilean grapes were subject 

to inspection during the regulatory 

period, confirming that only limited 

quantities of Chilean grapes are 

imported after the import regulation 

takes effect. The majority of imports 

from Mexico are imported during the 

May-July period of each year subject to 

the import regulation requirements. 

Market News terminal market reports 

for grapes for the years 2000–2008 

indicate that imported table grapes are 

in the domestic market during May and 

June and that they compete with 

regulated grapes that are required to be 

inspected and certified as meeting 

minimum quality requirements. Given 

the small quantity of grapes imported 

during the early part of the regulatory 

period, it is presumed that the imported 

grapes available in the market during 

that time were imported prior to the 

start of the regulatory period and held 

over in cold storage. 

USDA’s Economic Research Service 

(ERS) studies indicate that low quality 

commodities can adversely affect the 

market for shippers of acceptable 

quality products. Quality requirements 

are typically used to cultivate a positive 

image of a consistent and reliable 

supplier of high-quality product. This 

results in consumer goodwill that 

strengthens demand and boosts 

producer prices. (USDA, Economic 

Research Service, Agricultural 

Economic Report Number 629, ‘‘Federal 

Marketing Orders for Fruits, Vegetables, 

Nuts, and Specialty Crops’’ by Nicholas 

J. Powers, March 1990; USDA, 

Economic Research Service, ‘‘Criteria 

for Evaluating Federal Marketing 

Orders: Fruits, Vegetables, Nuts, and 

Specialty Commodities’’ by Leo C. 

Polopolus, Hoy F. Carman, Edward V. 

Jesse, and James D. Shaffer, December 

1986). 

The presence of lower quality product 

in the marketplace, from any source, 

weakens demand for all products of that 

type. Market research and experience 

shows that consumers often purchase 

other commodities in place of the 

commodity with which they have had a 

bad quality experience. Decreasing 

demand ultimately has a negative effect 

on grower, handler, exporter, and 

importer returns. 

The ERS report also discusses the 

purposes of quality standards. The basic 

rationale for such standards is that only 

satisfied customers are repeat 

customers. When consumers have a 

good quality experience, they make 

repeat purchases. Thus, quality 

standards help ensure that consumers 

are presented product that is of a known 

level of quality. It is in the interest of 

the grape industry to maintain 

consumer confidence by consistently 

offering high-quality product. 

According to the League, table grapes 

shipped from some countries exporting 

to the United States must meet 

minimum inspection requirements on a 

year-round basis when their product is 

exported to both the European Union 

and Canada. Hence, a change in the 

effective date to April 10 should not 

dramatically adversely affect the 

availability of imported table grapes in 

the U.S. market, as the exporting 

countries have the ability to supply high 

quality table grapes. As an example, 

during the period April 1–19, 2004, FOB 

prices for imported grapes in U.S. 

markets ranged from $8 to $26 per 

package, depending on the date, 

condition, and size of the grapes. During 

the same period, Canadian FOB prices 

for imported grapes ranged from $12.03 

to $33.98 and European Union prices 

ranged from $8 to $22 depending on the 

date, condition, and size of the grapes. 

Better quality grapes tend to 

command higher prices. The increase in 

revenue could offset the added 

inspection costs of 3.8 cents per box for 

imported grapes checked at dockside. In 

2000–2008, less than 1 percent of 

Chilean grapes required mandatory 

inspection. However, if inspection in 

these years had been mandatory as of 

April 10, about 7 percent would have 

been required to be inspected. It is 

anticipated that grape prices will be 

slightly higher as the quality level of 

grapes offered to consumers is 

increased. 

Inspection fees will now be applicable 

to grapes imported during the April 10– 

19 period. These fees vary, depending 

on such factors as the location of the 

inspection, the size of the load to be 

inspected, and whether there are 

multiple commodities to be inspected. 

Current inspection fees for imported 

grapes are 3.8 cents per package when 

inspected at dockside. When the 

inspection is performed at a location 

other than dockside, the fees range from 

$69 to $151 per car lot (approximately 

45,000 pounds), depending on the 

number of packages in the load. (See 

http://www.ams.usda.gov/AMSv1.0/ 

ams.fetchTemplateData.do?

template=TemplateA&navID=

FreshProduct

InspectionService&rightNav1=

FreshProductInspectionService&

topNav=&leftNav=&page=FreshFV

Grading&resultType=&acct=freshgrdcert 

for inspection fee information). 

With prices for imported grapes 

ranging from $6 to mostly $44 per 

package, depending on the month, 

condition, and size of the grapes, 

inspection fees are anticipated to be less 

than 1 percent of the value of the grapes 

imported during this period of time. 

The benefits and costs associated with 

changing the dates when grade, size, 

quality, and maturity requirements 

apply to grapes grown in a designated 

area of southeastern California and to 


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3418 Federal Register / Vol. 74, No. 12 / Wednesday, January 21, 2009 / Rules and Regulations 

imported grapes under the grape import 

regulation is not expected to be 

disproportionately larger or smaller for 

small importers than for large importers, 

nor for small handlers or producers than 

for larger entities. 

A number of alternatives to an April 

10 regulatory period start date were 

considered prior to this action, 

including leaving the April 20 

beginning date of the regulatory period 

unchanged, and setting an earlier 

beginning date (April 1 per the League’s 

request). 

There is clear evidence that the April 

20 start date has allowed unregulated 

imported grapes to compete in the 

marketplace with regulated grapes, 

negatively impacting domestic 

producers and handlers. Maintaining 

the status quo in relation to the 

regulatory period start date was not 

deemed to be a viable option. 

An April 1 regulatory period start 

date, as originally proposed by the 

League, would certainly have addressed 

the problem, but may have also created 

some unintended consequences. The 

imported grape industry felt that an 

April 1 start date would have created 

undue economic hardship for the 

industry and may have ultimately 

resulted in curtailed shipments. 

The April 10 regulatory period start 

date addresses the concerns of the 

domestic grape industry, while not 

excessively burdening the imported 

grape industry. An April 10 beginning 

date is expected to improve the quality 

of imported and domestic grapes 

available to consumers, lessen the 

chances of unregulated imported grapes 

being in the market during the 

regulatory period in competition with 

regulated grapes, and, ultimately, be in 

the best interest of all grape handlers, 

producers, importers, and consumers. 

This action will not impose any 

additional reporting or recordkeeping 

requirements on either small or large 

grape handlers or importers. 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. 

AMS is committed to compliance 

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 

final rule. 

In addition, the Committee’s meetings 

were widely publicized throughout the 

grape industry and all interested 

persons were invited to attend the 

meetings and participate in Committee 

deliberations. Like all Committee 

meetings, the November 14, 2002, and 

the December 12, 2002, meetings were 

public meetings and all entities, both 

large and small, were able to express 

their views on changing the marketing 

order regulatory period. Also, the World 

Trade Organization, the Chilean 

Technical Barriers to Trade (TBT) 

inquiry point for notifications under the 

U.S-Chile Free Trade Agreement, the 

embassies of Argentina, Brazil, Canada, 

Chile, Italy, Mexico, Peru, and South 

Africa, and known grape importers were 

notified of the proposed action. Finally, 

interested persons are invited to submit 

comments on this interim final rule, 

including the regulatory and 

informational impacts of this action on 

small businesses. 

Previously Published Proposed Rule 

A proposed rule concerning this 

action was published in the Federal 

Register on May 25, 2005 (70 FR 30001). 

The rule proposed changing the 

regulatory period for southeastern 

California grapes and imported grapes 

from April 20 through August 15 to 

April 1 through July 10 and clarifying 

the maturity requirements for 

southeastern California and imported 

Flame Seedless variety grapes. 

The proposed rule was subsequently 

reopened five times for further 

comments on July 25, 2005 (70 FR 

42513), on September 27, 2005 (70 FR 

56378), on July 11, 2006 (71 FR 39019), 

on October 25, 2007 (72 FR 60588), and 

on December 13, 2007 (72 FR 70811). 

Copies of the rule were mailed or sent 

via facsimile to all Committee members 

and grape handlers. Finally, the rule 

was made available through the Internet 

by the Office of the Federal Register. A 

total of five 60-day comment periods 

and one 15-day comment period, the 

last of which ended December 28, 2007, 

were provided to allow interested 

persons to respond to the proposal. 

In total, USDA received 161 

comments in response to the proposed 

rule and subsequent reopenings. 

Comments were broken down as 

follows; 20 comments were in support 

of the proposal, 141 were in opposition, 

112 of the comments originated from 

foreign sources, and 49 originated from 

domestic sources. Fifteen comments 

were in reference to procedural aspects 

of the rulemaking process and were not 

related directly to the merits of the 

proposal. 

The comments were primarily 

directed towards the proposed change to 

the beginning date of the regulatory 

period from April 20 to April 1, as 

published in the proposed rule. There 

were no comments in opposition to the 

proposed change to the ending date of 

the regulatory period or to the proposed 

change in the maturity requirements in 

the import regulation. 

All comments, both in support of and 

in opposition to the proposed rule, were 

reviewed thoroughly and considered 

prior to the issuance of this action. 

Likewise, all comments received in 

response to this interim final rule will 

be considered prior to the issuance of a 

final rule. 

Comments in Full Support 

Twenty comments were submitted in 

full support of the proposal. The 

comments were submitted by domestic 

grape producers and handlers, 

associations related to the domestic 

grape industry, domestic agricultural 

service firms, and members of the U.S. 

Congress. 

Comments in Opposition 

Of the 141 comments in opposition to 

the proposal, 14 were concerned with 

procedural aspects of the rulemaking 

process, 106 were so similar in style and 

content as to be considered form letters, 

and the remaining 21 were unique 

submissions. The commenters 

represented foreign grape producers, 

foreign grape producer associations, and 

shippers, importers, exporters, and 

maritime affiliates that are directly 

involved in the importation of foreign 

produced grapes into the U.S. 

The opposition comments that had 

material bearing on this rulemaking 

action were summarized into the 

following four categories: (1) The 

proposed change in the beginning 

effective date contravenes the mandates 

set forth in the Act; (2) the proposed 

rule fails to supply a reasoned analysis 

to rescind the 1987 finding that a 

change of the beginning effective date 

for Marketing Order 925 and Import 

Regulation 4 to a date before April 20 

would constitute an unnecessary 

regulation of imports at a time when 

domestic shipments would appear to be 

remote; (3) the proposed beginning 

effective date of April 1 is contrary to 

the declared administrative policy of 

AMS/USDA; and (4) the proposed rule 

imposes marketing order standards on 

Chilean supplies when no domestic 

varieties are available, and therefore 

allegedly constitutes a non-tariff barrier 

contrary to the terms of WTO 

Agreements and the U.S.-Chile Free 

Trade Agreement and assesses 

inspection fees starting April 1 when no 

domestic supplies are being so charged, 


jlentini on PROD1PC65 with RULES
Federal Register / Vol. 74, No. 12 / Wednesday, January 21, 2009 / Rules and Regulations 3419 

and thereby allegedly violates Article III 

and Article VIII of GATT 1994. 

The specific comments in opposition 

to the proposed rule maintained that the 

action violated the criteria set forth in 

the Act for such action and lacked the 

required statistical evidence from ‘‘the 

previous year.’’ The commenters also 

charged that deficient or irrelevant 

evidence in support of the action, 

rebutted allegations of poor quality of 

grape imports being imported 

immediately prior to the regulatory 

period, and asserted that grape imports 

would be curtailed in response to the 

action. Virtually all of the commenters 

in opposition stated that the imported 

grape industry would suffer negative 

economic impacts as a result of such 

action. In addition, opposition 

commenters asserted that the action 

violated previous rulemaking findings, 

that the action contravenes 

departmental policy determinations 

dating back to 1982, and that the action 

constituted a breach of various trade 

agreements entered into by the U.S. 

Government. 

USDA is in disagreement with most of 

the opposition comments. However, 

USDA believes that an April 1 

beginning date for the regulatory period 

would be too early and could 

potentially place an unjustifiable 

hardship on the imported grape 

industry. USDA believes that moving 

the beginning date of the regulatory 

period forward from April 20 to April 

10 is necessary and justified. 

USDA further believes that this 

rulemaking action fully adheres to the 

requirements of the Act to take such 

action. USDA has sought to collect, 

present, analyze, and consider evidence 

that is both current and relevant, as is 

required by the Act. The proposed rule, 

the reopening of the comment period to 

present updated statistical data, and this 

interim final rule present appropriate 

statistical justification for this action 

and are in compliance with the 

governing statutes. In addition, USDA 

rejects the opposition commenters’ 

contention that any statutory or 

procedural errors were committed 

during the course of this rulemaking 

process. USDA believes that all statutes, 

policies, and procedures of the federal 

government have been strictly adhered 

to. 

Likewise, USDA believes that this 

action is not contrary to any previous 

actions, decisions, agreements, or 

treaties binding on the U.S. 

Government. 

In deciding how to proceed on this 

matter, USDA took into consideration 

the information submitted prior to issue 

of the proposed rule, as well as the 

comments received and determined that 

an April 10 regulatory period beginning 

date is more appropriate than the 

proposed April 1 date. Consequently, 

this interim final rule implements an 

April 10 regulatory period beginning 

date instead of the April 1 date 

contained in the proposed rule. 

A small business guide on complying 

with fruit, vegetable, and specialty crop 

marketing agreements and orders may 

be viewed at: http://www.ams.usda.gov/ 

AMSv1.0/ams.fetchTemplateData.do

?template=TemplateN&page=Marketing

OrdersSmallBusinessGuide. Any 

questions about the compliance guide 

should be sent to Jay Guerber at the 

previously mentioned address in the 

FOR FURTHER INFORMATION CONTACT

section. 

This rule invites comments on the 

revisions to the regulatory period when 

minimum grade, size, quality, and 

maturity requirements apply to 

southeastern California grapes under 

Marketing Order No. 925 (order), and to 

imported grapes under the table grape 

import regulation. Any comments 

received will be considered prior to 

finalization of this rule. 

In accordance with section 8e of the 

Act, USTR has concurred with the 

issuance of this interim final rule. 

After consideration of all relevant 

material presented, including the 

information and recommendation 

submitted by the Committee and other 

available information, it is hereby found 

that this interim final rule, as 

hereinafter set forth, will tend to 

effectuate the declared policy of the Act. 

Pursuant to 5 U.S.C. 553, it is also 

found and determined upon good cause 

that it is impracticable, unnecessary, 

and contrary to the public interest to 

give preliminary notice prior to putting 

this rule into effect and that good cause 

exists for not postponing the effective 

date of this action until 30 days after 

publication in the Federal Register 

because: (1) The 2008–2009 shipping 

season for imported grapes affected by 

this rule has already begun; (2) the 

immediate implementation of this rule 

is necessary for importers to make 

marketing decisions and to contract in 

advance for shipping; (3) handlers and 

importers are aware of this rule; (4) a 

proposed rule concerning the action 

taken in this rule was published in the 

Federal Register May 25, 2005 (70 FR 

30001); and (5) this rule provides a 60- 

day comment period and all comments 

timely received will be considered prior 

to finalization of this rule. 

List of Subjects 

7 CFR Part 925 

Grapes, Marketing agreements, 

Reporting and recordkeeping 

requirements. 

7 CFR Part 944 

Avocados, Food grades and standards, 

Grapefruit, Grapes, Imports, Kiwifruit, 

Limes, Olives, Oranges. 

■ For the reasons set forth in the 

preamble, 7 CFR parts 925 and 944 are 

amended as follows: 

PART 925—GRAPES GROWN IN A 

DESIGNATED AREA OF 

SOUTHEASTERN CALIFORNIA 

■ 1. The authority citation for 7 CFR 

parts 925 and 944 continues to read as 

follows: 

Authority: 7 U.S.C. 601–674. 

■ 2. The introductory text to § 925.304 

is revised to read as follows: 

§ 925.304 California Desert Grape 

Regulation 6. 

During the period April 10 through 

July 10 each year, no person shall pack 

or repack any variety of grapes except 

Emperor, Almeria, Calmeria, and Ribier 

varieties, on any Saturday, Sunday, 

Memorial Day, or the observed 

Independence Day holiday, unless 

approved in accordance with paragraph 

(e) of this section, nor handle any 

variety of grapes except Emperor, 

Calmeria, Almeria, and Ribier varieties, 

unless such grapes meet the 

requirements specified in this section. 

* * * * * 

PART 944—FRUITS; IMPORT 

REGULATIONS 

■ 3. In § 944.503, paragraphs (a)(1) 

introductory text, (a)(1)(ii), and (a)(3) are 

revised to read as follows: 

§ 944.503 Table Grape Import Regulation 

4. 

(a)(1) Pursuant to section 8e of the Act 

and Part 944—Fruits, Import 

Regulations, the importation into the 

United States of any variety of Vinifera 

species table grapes, except Emperor, 

Calmeria, Almeria, and Ribier varieties, 

is prohibited unless such grapes meet 

the minimum grade and size 

requirements specified in 7 CFR 51.884 

for U.S. No. 1 table, as set forth in the 

United States Standards for Grades of 

Table Grapes (European or Vinifera 

Type, 7 CFR 51.880 through 51.914), or 

shall meet all the requirements of U.S. 

No. 1 Institutional with the exception of 

the tolerance for bunch size. Such 

tolerance shall be 33 percent instead of 


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3420 Federal Register / Vol. 74, No. 12 / Wednesday, January 21, 2009 / Rules and Regulations 

4 percent as is required to meet U.S. No. 

1 Institutional grade. Grapes meeting 

these quality requirements shall not be 

marked ‘‘Institutional Pack,’’ but may be 

marked ‘‘DGAC No. 1 Institutional.’’ 

(i) * * * 

(ii) Grapes of the Flame Seedless 

variety shall meet the minimum berry 

size requirement of ten-sixteenths of an 

inch (1.5875 centimeters) and shall be 

considered mature if the juice meets or 

exceeds 16.5 percent soluble solids, or 

the juice contains not less than 15 

percent soluble solids and the soluble 

solids are equal to or in excess of 20 

parts to every part acid contained in the 

juice, in accordance with applicable 

sampling and testing procedures 

specified in sections 1436.3, 1436.5, 

1436.6, 1436.7, 1436.12, and 1436.17 of 

Article 25 of Title 3: California Code of 

Regulations (CCR). 

* * * * * 

(3) All regulated varieties of grapes 

offered for importation shall be subject 

to the grape import requirements 

contained in this section effective April 

10 through July 10. 

* * * * * 

Dated: January 14, 2009. 

James E. Link, 

Administrator, Agricultural Marketing 

Service. 

[FR Doc. E9–1139 Filed 1–16–09; 8:45 am] 

BILLING CODE 3410–02–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[TD 9435] 

RIN 1545–BH61 

Guidance Regarding the Treatment of 

Stock of a Controlled Corporation 

Under Section 355(a)(3)(B); Correction 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Correcting amendment. 

SUMMARY: This document contains 

corrections to final and temporary 

regulations (TD 9435) that were 

published in the Federal Register on 

Monday, December 15, 2008 (73 FR 

75946) providing guidance regarding the 

distribution of stock of a controlled 

corporation acquired in a transaction 

described in section 355(a)(3)(B) of the 

Internal Revenue Code. This action is 

necessary in light of amendments to 

section 355(b). These temporary 

regulations will affect corporations and 

their shareholders. The text of these 

temporary regulations also serves as the 

text of the proposed regulations set forth 

in the notice of proposed rulemaking on 

this subject in the Proposed Rules 

section in this issue of the Federal 

Register. 

DATES: Effective Date: This correction is 

effective January 21, 2009, and is 

applicable on December 15, 2008. 

FOR FURTHER INFORMATION CONTACT: 

Russell P. Subin, (202) 622–7790 (not a 

toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

The final and temporary regulations 

that are the subject of this document are 

under section 355 of the Internal 

Revenue Code. 

Need for Correction 

As published, final and temporary 

regulations (TD 9435) contains errors 

that may prove to be misleading and are 

in need of clarification. 

List of Subjects in 26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 

Correction of Publication 

■ Accordingly, 26 CFR part 1 is 

corrected by making the following 

correcting amendments: 

PART 1—INCOME TAXES 

■ Paragraph 1. The authority citation 

for part 1 is amended by revising the 

entries to read as follows: 

Authority: 26 U.S.C. 7805 * * * 

Section 1.355–2T(g) and (i) are also issued 

under 26 U.S.C. 355(b)(3)(D). * * * 

■ Par. 2. Section 1.355–1 is amended by 

revising the last two sentences of 

paragraph (a) to read as follows: 

§ 1.355–1 Distribution of stock and 

securities of a controlled corporation. 

(a) * * * This section and §§ 1.355– 

2 through 1.355–4, other than § 1.355– 

2(g) and (i) and § 1.355–2T, do not 

reflect the amendments to section 355 

made by the Revenue Act of 1987, the 

Technical and Miscellaneous Revenue 

Act of 1988, and the Tax Technical 

Corrections Act of 2007. For the 

applicability date of §§ 1.355–2T(g), 

1.355–5, 1.355–6, and 1.355–7, see 

§§ 1.355–2T(i), 1.355–5(e), 1.355–6(g), 

and 1.355–7(k), respectively. 

* * * * * 

■ Par. 3. Section 1.355–2T is amended 

by revising the last sentence of 

paragraph (i)(1) to read as follows: 

§ 1.355–2T Limitations (temporary). 

* * * * * 

(i) * * * 

(1) * * * However, except as 

provided in paragraph (i)(2) of this 

section, paragraphs (g)(1) through (g)(5) 

of this section do not apply to any 

distribution occurring after December 

15, 2008, that is pursuant to a 

transaction which is— 

* * * * * 

LaNita Van Dyke, 

Chief, Publications and Regulations Branch, 

Legal Processing Division, Associate Chief 

Counsel, (Procedure and Administration). 

[FR Doc. E9–1120 Filed 1–16–09; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[TD 9435] 

RIN 1545–BH61 

Guidance Regarding the Treatment of 

Stock of a Controlled Corporation 

Under Section 355(a)(3)(B); Correction 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Correction to final and 

temporary regulations. 

SUMMARY: This document contains 

corrections to final and temporary 

regulations (TD 9435) that were 

published in the Federal Register on 

Monday, December 15, 2008 (73 FR 

75946) providing guidance regarding the 

distribution of stock of a controlled 

corporation acquired in a transaction 

described in section 355(a)(3)(B) of the 

Internal Revenue Code. This action is 

necessary in light of amendments to 

section 355(b). These temporary 

regulations will affect corporations and 

their shareholders. 

DATES: Effective Date: This correction is 

effective January 21, 2009, and is 

applicable on December 15, 2008. 

FOR FURTHER INFORMATION CONTACT: 

Russell P. Subin, (202) 622–7790 (not a 

toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

The final and temporary regulations 

that are the subject of this document are 

under section 355 of the Internal 

Revenue Code. 

Need for Correction 

As published, final and temporary 

regulations (TD 9435) contains errors 

that may prove to be misleading and are 

in need of clarification. 


jlentini on PROD1PC65 with RULES