[Federal Register Volume 64, Number 134 (Wednesday, July 14, 1999)]
[Rules and Regulations]
[Pages 37833-37838]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-17890]



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  Federal Register / Vol. 64, No. 134 / Wednesday, July 14, 1999 / 
Rules and Regulations  

[[Page 37833]]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 925 and 944

[Docket No. FV98-925-3 FIR]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Department of Agriculture (Department) is adopting, as a 
final rule, without change, the provisions of an interim final rule 
which revised the minimum grade requirements for grapes grown in 
southeastern California and for grapes imported into the United States 
for a portion of the 1998 shipping season. The interim final rule also 
revised container and pack requirements prescribed for California 
grapes for a limited time. In combination, the revisions allowed 
California grape handlers to market consumer packages of grapes more 
economically by increasing the range of allowable bunch sizes for a 
portion of the 1998 season. Master containers of consumer grape 
packages were allowed to be marketed if the grape clusters/bunches in 
the packages consisted of at least 2 berry clusters and the clusters/
bunches were not greater than 19 ounces in weight. The increased bunch 
size range also applied to imported grapes. This action was in the 
interest of handlers, producers, importers, and consumers.

EFFECTIVE DATE: August 13, 1999.

FOR FURTHER INFORMATION CONTACT: Rose M. Aguayo, Marketing Specialist, 
California Marketing Field Office, Marketing Order Administration 
Branch, F&V, AMS, USDA, 2202 Monterey Street, suite 102B, Fresno, 
California 93721; telephone: (209) 487-5901, Fax: (209) 487-5906; or 
George Kelhart, Technical Advisor, Marketing Order Administration 
Branch, F&V, AMS, USDA, room 2525-S, P.O. Box 96456, Washington, DC 
20090-6456; telephone: (202) 720-2491, Fax: (202) 720-5698. Small 
businesses may request information on compliance with this regulation 
by contacting Jay Guerber, Marketing Order Administration Branch, F&V, 
AMS, USDA, room 2525-S, P.O. Box 96456, Washington, DC 20090-6456; 
telephone: (202) 720-2491, Fax: (202) 720-5698, or E-mail: 
Jay.G[email protected]. You may view the marketing agreement and order 
small business compliance guide at the following web site: http://
www.ams.usda.gov/fv/moab.html.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order 
No. 925 (7 CFR Part 925), regulating the handling of grapes grown in a 
designated area of southeastern California, hereinafter referred to as 
the ``order.'' The order is effective under the Agricultural Marketing 
Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter 
referred to as the ``Act.''
    This rule is also issued under section 8e of the Act, which 
provides that whenever certain specified commodities, including table 
grapes, are regulated under a Federal marketing order, imports of these 
commodities into the United States are prohibited unless they meet the 
same or comparable grade, size, quality, or maturity requirements as 
those in effect for the domestically produced commodities.
    The Department of Agriculture (Department) is issuing this rule in 
conformance with Executive Order 12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to have retroactive effect. 
This rule will not preempt any State or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with the Secretary a 
petition stating that the order, any provision of the order, or any 
obligation imposed in connection with the order is not in accordance 
with law and request a modification of the order or to be exempted 
therefrom. A handler is afforded the opportunity for a hearing on the 
petition. After the hearing the Secretary would rule on the petition. 
The Act provides that the district court of the United States in any 
district in which the handler is an inhabitant, or has his or her 
principal place of business, has jurisdiction to review the Secretary's 
ruling on the petition, provided an action is filed not later than 20 
days after the date of the entry of the ruling.
    There are no administrative procedures which must be exhausted 
prior to any judicial challenge to the provisions of import regulations 
issued under section 8e of the Act.
    An interim final rule (63 FR 28475, May 26, 1998), increased the 
range of allowable sizes of grape bunches that California handlers 
could pack in certain containers during the period June 1, 1998, 
through August 15, 1998. Master containers, containing individual 
consumer packages of grapes weighing 1\1/2\ pounds or less, net weight, 
were allowed to be marketed if the grape clusters/bunches in the 
packages consisted of at least 2 berry clusters and the clusters/
bunches were not greater than 19 ounces in weight. The increased bunch 
size range also applied to imported grapes, but no container 
specifications applied. Grapes packed in this manner by handlers in 
California had to be marked ``DGAC Consumer No. 1 Institutional.'' The 
changes in domestic requirements were recommended by the California 
Desert Grape Administrative Committee (Committee), the agency 
responsible for local administration of the order. The results of the 
test marketing effort are being evaluated by the Committee. A decision 
on whether or not to allow such shipments in future seasons will be 
made at a later time.
    The interim final rule also updated or removed certain obsolete 
references appearing in Sec. 925.304 of the order's rules and 
regulations and in Sec. 944.503 of the import regulation. The final 
rule finalizes these actions.
    Under the terms of the order, fresh market shipments of grapes 
grown in southeastern California are required to be inspected and meet 
grade, size, maturity, pack, and container

[[Page 37834]]

requirements. Current requirements include minimum grade and net weight 
requirements. Grapes must also be packed in authorized containers. Such 
containers must be marked with the minimum net weight of the grapes 
contained therein, the variety of the grapes, the name of the shipper, 
and the lot stamp number corresponding to the lot inspection conducted 
by an authorized inspector.
    Section 925.52(a)(2) of the grape order provides authority to limit 
the handling of any grade, size, quality, maturity, or pack of grapes 
for different varieties, or any combination of the foregoing during any 
period or periods.
    Section 925.304(a) of the order's administrative rules and 
regulations requires grapes to meet the minimum grade requirements of 
U.S. No. 1 Table, or U.S. No. 1 Institutional, or to meet all the 
requirements of U.S. No. 1 Institutional, except that a tolerance of 33 
percent is provided for off-size bunches. Grapes meeting U.S. No. 1 
Institutional requirements are required to be marked ``U.S. No. 1 
Institutional.'' Grapes meeting the modified U.S. No. 1 Institutional 
requirements may be marked ``DGAC No. 1 Institutional.'' The 
requirements for the U.S. No. 1 Table and U.S. No. 1 Institutional 
grades are set forth in the United States Standards for Grades of Table 
Grapes (European or Vinifera Type) (7 CFR 51.880 through 51.914) 
(Standards).
    Section 925.52(a)(4) of the order provides authority to regulate 
the size, capacity, weight, dimensions, markings, materials, and pack 
of containers which may be used in the handling of grapes.
    Section 925.304(b)(1) of the order's administrative rules and 
regulations requires grapes to be packed in new and clean boxes which 
meet the requirements of sections 1380.14, 1380.19, 1436.37, and 
1436.38 of Title 3: California Code of Regulations (CCR). That section 
also authorizes nine containers that can be used for domestic and 
export shipments and specifies dimensions for each such container. An 
additional container, defined in terms of a net weight of 5 kilograms, 
is authorized for export shipments only. All 10 of the authorized 
containers may be used for export shipments. Only the first nine can be 
used for domestic shipments. Section 925.304(b)(1) also authorizes the 
Committee to approve other containers for experimental or research 
purposes.
    Section 925.304(b)(2) of the order's administrative rules and 
regulations provides that grapes in any containers weigh at least 20 
pounds based on the average net weight of grapes in a representative 
sample of containers. An exception is provided for grapes packed in 
experimental containers, or packed in bags or wrapped in plastic or 
paper. Containers of grapes packed in bags or wrapped in plastic or 
paper prior to being placed in these containers must meet a minimum net 
weight requirement of 18 pounds. There are no weight requirements 
specified for experimental containers.
    The Committee met on March 24, 1998, and unanimously recommended 
modifying Sec. 925.304 of the order's administrative rules and 
regulations to:
    (1) Revise the minimum grade requirement for the period June 1, 
1998, through August 15, 1998, to allow a pilot test for the marketing 
of grapes meeting all the requirements of U.S. No. 1 Institutional, 
except for the weight of clusters/bunches. The revision was intended to 
allow clusters/bunches as small as a 2 berry cluster and as large as 19 
ounces in weight. Grapes meeting the revised quality requirements were 
to be marked ``DGAC Consumer No. 1 Institutional,'' but could not be 
marked ``Institutional Pack.''
    (2) Authorize an experimental master container, containing 
individual consumer packages of grapes weighing 1\1/2\ pounds or less, 
net weight, for use during the pilot test period of June 1, 1998, to 
August 15, 1998. It further recommended that grapes meeting the ``DGAC 
Consumer No. 1 Institutional'' requirements be packed in this container 
and that this master container could only be used for packing the 
``DGAC Consumer No. 1 Institutional'' grade.
    (3) Update or remove certain obsolete references appearing in the 
regulation.

Revision in Minimum Grade Requirements

    Until 1993, the minimum grade requirement under the order was U.S. 
No. 1 Table. One requirement of that grade is that grape bunches weigh 
at least 4 ounces.
    In 1991, a new U.S. No. 1 Institutional grade was added to the 
Standards. This grade--used primarily for sales to restaurants and 
other food service firms--provides for grape lots which have very small 
bunches. At the request of the table grape industry, this grade was 
added to meet market demand for individual consumer sized servings of 
grapes. The Standards were further revised in 1996 to lower the minimum 
bunch size to a two berry cluster and to specify a separate 4 percent 
tolerance for off-size bunches.
    The minimum grade requirements under the order were changed in 1993 
to allow California grape handlers to pack the newly established U.S. 
No. 1 Institutional grade. Because handlers experienced difficulties in 
packing this grade, these requirements were further revised in 1994 to 
provide a tolerance of 33 percent for off-size bunches. This modified 
U.S. No. 1 Institutional grade is referred to as DGAC No. 1 
Institutional.
    California grape handlers can ship and importers can import grapes 
meeting at least U.S. No. 1 Table, U.S. No. 1 Institutional, or DGAC 
No. 1 Institutional during the period April 20 through August 15 each 
year. During the period June 1 through August 15, 1998, grapes also 
could be shipped and imported meeting the requirements of DGAC Consumer 
No. 1 Institutional. Grapes meeting this requirement were required to 
meet all of the requirements of the U.S. No. 1 Institutional grade, 
except for the cluster/bunch size requirements. California grapes 
meeting this requirement were packed in consumer packages.
    The requirements of U.S. No. 1 Institutional are essentially the 
same as those of the U.S. No. 1 Table grade, with three major 
exceptions. The first difference relates to bunch size. Under the U.S. 
No. 1 Table grade, there is a minimum bunch size requirement of 4 
ounces and no maximum bunch size. Under the U.S. No. 1 Institutional 
grade, grapes are to consist of at least a two berry cluster ranging to 
clusters and/or bunches of grapes not greater than five ounces in 
weight. A cluster is two or more berries sharing a common point of 
attachment.
    The second difference is that at least 95 percent of the containers 
in a lot of grapes grading U.S. No. 1 Institutional must be legibly 
marked ``Institutional Pack.'' There are no marking requirements under 
the U.S. No. 1 Table grade.
    The third difference relates to the tolerances for off-size 
bunches. For grapes grading U.S. No. 1 Table, an 8 percent tolerance is 
established for all grade requirements, including off-size bunches. The 
U.S. No. 1 Institutional grade has a separate tolerance of 4 percent 
for off-size clusters/bunches and an 8 percent tolerance for the 
remaining grade requirements.
    Requirements for the DGAC No. 1 Institutional are the same as for 
the U.S. No. 1 Institutional, except that the tolerance for off-size 
bunches is 33 percent. Because grapes meeting these requirements do not 
meet the U.S. No. 1 Institutional grade requirements, they cannot be 
marked ``Institutional Pack.'' They may, however, be marked ``DGAC No. 
1 Institutional.''
    Prior to the start of the 1998 shipping season, grape handlers 
expressed

[[Page 37835]]

interest in packing grapes in individual consumer packages known as 
``punits'' or ``clamshells.'' These containers, used most commonly to 
pack strawberries, are made of a clear, hard rigid plastic and 
typically hold a half pound or a pound of fruit. Some retailers prefer 
these containers because they are of the same net weight, and can be 
scanned at check-out. This is particularly convenient for retailers 
that do not have facilities for weighing produce, such as convenience 
stores and fast food outlets. Some consumers also prefer the 
convenience of prepackaged individual portions of fruit.
    To meet changing market requirements, California grape handlers 
wanted to market grapes packed in these consumer packages. Bunch size 
requirements made it difficult because grape bunches normally range in 
weight from 1/4 pound to 3 pounds. Thus, portions of bunches needed to 
be used to fill the new packages to the weights desired by buyers. 
Handlers determined that increasing the range of permissible bunch 
sizes to allow for clusters/bunches of two berries to 19 ounces would 
provide handlers the flexibility needed to pack grapes in the desired 
consumer containers.
    The interim final rule revised Sec. 925.304(a) of the order's rules 
and regulations and Sec. 944.503 of the import regulation. The revision 
to Sec. 925.304(a) allowed handlers to ship a new grade of grapes known 
as ``DGAC Consumer No. 1 Institutional'' for a portion of the 1998 
season. The name recognized that such grapes would be packed in 
consumer packages and that the grapes would not be packed to the 
minimum requirements of the U.S. No. 1 Table grade. Grapes meeting this 
requirement were required to meet the requirements of the U.S. No. 1 
Institutional grade, except for the cluster/bunch size requirements. 
Specifically, the modified requirements allowed shipments with 
clusters/bunches ranging from 2 berry clusters to clusters/bunches of 
grapes up to 19 ounces in weight during the period June 1, 1998, to 
August 15, 1998. The revision to Sec. 944.503 allowed grapes meeting 
the relaxed requirements to be imported during that period.

Container Requirements

    The Committee recommended and the interim final rule established 
that grapes meeting the requirements of the new ``DGAC Consumer No. 1 
Institutional'' be packed in individual consumer packages. The consumer 
packages were then required to be packed in a master container.
    Typically, the individual consumer packages held either \1/2\ or 1 
pound of fruit. To allow for normal shrinkage during handling, handlers 
generally packed a slightly greater weight than is desired at retail. 
Section 925.304(b) was revised to provide that DGAC Consumer No. 1 
Institutional grade grapes be packed in master containers containing 
individual consumer packages weighing 1\1/2\ pounds or less during the 
period June 1, 1998, to August 15, 1998.
    Additionally, the master containers were required to be marked 
``DGAC Consumer No. 1 Institutional'' to accurately reflect their 
contents. The individual consumer packages did not need to be so 
marked. Other container marking requirements appearing in the 
regulation applied to the master containers as well during the test 
period.
    The master containers used for these grapes typically held 10 
consumer packages weighing 1 pound each or 20 packages weighing \1/2\ 
pound each. Thus, these containers were exempt from the net weight 
requirements of 18 or 20 pounds specified in Sec. 925.304(b)(2) during 
the period June 1, 1998, to August 15, 1998.

Application to Imports

    Section 8e of the Act specifies that whenever certain commodities, 
like grapes, are regulated under a Federal order, imports of those 
commodities must meet the same or comparable grade, size, quality, and 
maturity requirements as those in effect for the domestically produced 
commodity. Pack and container requirements are not authorized by 
section 8e. Thus, the revised grade requirements implemented by the 
interim final rule applied to imported grapes; none of the container or 
container marking requirements applied, however. If desired, importers 
could have labeled containers of grapes meeting the modified U.S. No. 1 
Institutional requirements as ``DGAC Consumer No. 1 Institutional.'' 
Specifically, the interim final rule modified language in 
Sec. 944.503(a)(1) of Table Grape Import Regulation 4 for fresh grapes 
imported into the United States.

Clarification/Removal of Obsolete Language

    This rule continues in effect the removal of language in the 
introductory text of Sec. 925.304 that applied to the 1987 season and 
is no longer necessary.
    This rule also continues in effect several other corrections in 
both the order's administrative rules and regulations and the import 
regulation. Specifically, the tolerance percentage of ``8 percent'' was 
changed to ``4 percent'' in Secs. 925.304(a) of the order's 
administrative rules and regulations and in 944.503(a)(1) of the import 
regulation. This rule continues in effect a correction to those 
sections to accurately specify the current tolerance for off-size 
bunches in the U.S. No. 1 Institutional grade. This rule also continues 
in effect a correction to a Standards reference from section number 
``51.913'' to section number ``51.914'' in Secs. 925.304(a) of the 
order's rules and regulations and in 944.503(a)(1) of the import 
regulation. A change to a California Department of Food and Agriculture 
reference from ``California Administrative Code (Title 3)'' to ``Title 
3: California Code of Regulations'' in paragraph (a)(1)(ii) of 
Sec. 944.503 of the import regulation is continued in effect too.

Final Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Administrator of the Agricultural Marketing Service 
(AMS) has considered the economic impact of this rule on small 
entities. Accordingly, AMS has prepared this final regulatory 
flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and rules issued thereunder, are unique in that 
they are brought about through group action of essentially small 
entities acting on their own behalf. Thus, both statutes have small 
entity orientation and compatibility. Import regulations issued under 
the Act are based on those established under Federal marketing orders.
    There are approximately 27 handlers of California grapes who are 
subject to regulation under the order and approximately 80 grape 
producers in the production area. In addition, there are approximately 
127 importers of grapes. Small agricultural service firms have been 
defined by the Small Business Administration (13 CFR 121.601) as those 
having annual receipts of less than $5,000,000, and small agricultural 
producers have been defined as those having annual receipts of less 
than $500,000. Ten of the 27 handlers subject to regulation have annual 
grape sales of at least $5,000,000, excluding receipts from any other 
sources. In addition, 70 of the 80 producers subject to regulation have 
annual sales of at least $500,000, and the remaining 10 producers have 
annual sales less than $500,000, excluding receipts from any other 
sources. Therefore, a majority of handlers and a minority of producers

[[Page 37836]]

are classified as small entities. The average importer receives $2.8 
million in grape revenue, excluding receipts from other sources. 
Therefore, we believe that the majority of these importers are small 
entities.
    This action finalizes an interim final rule (63 FR 28475, May 26, 
1998), which increased the range of allowable sizes of grape bunches 
that California handlers could pack in certain containers during the 
period June 1, 1998, through August 15, 1998. Master containers, 
containing individual consumer packages of grapes weighing 1\1/2\ 
pounds or less, net weight, were allowed to be marketed if the grape 
clusters/bunches in the packages consisted of at least 2 berry clusters 
and the clusters/bunches were not greater than 19 ounces in weight. 
Grapes meeting the ``DGAC Consumer No. 1 Institutional'' requirements 
were required to be packed in the experimental container, and the 
container was to be used solely for packing the ``DGAC Consumer No. 1 
Institutional'' grade. The changes in domestic requirements were 
recommended by the Committee, the agency responsible for local 
administration of the order. These changes were implemented during the 
test period and the Committee is evaluating the test results. A 
decision on a future course of action will be made at a later time. The 
increased bunch size range also applied to imported grapes during that 
time period, but no container specifications applied.
    The interim final rule also updated or removed certain obsolete 
references appearing in Sec. 925.304 of the order's rules and 
regulations and in Sec. 944.503 (a)(1) of the import regulation.
    Under the terms of the order, fresh market shipments of grapes 
grown in southeastern California are required to be inspected and meet 
grade, size, maturity, pack, and container requirements. Current 
requirements include minimum grade and net weight requirements. Grapes 
must also be packed in authorized containers. Such containers must be 
marked with the minimum net weight of the grapes contained therein, the 
variety of the grapes, the name of the shipper, and the lot stamp 
number corresponding to the lot inspection conducted by an authorized 
inspector.
    Section 925.52(a)(2) of the grape order provides authority to limit 
the handling of any grade, size, quality, maturity, or pack of grapes 
for different varieties, or any combination of the foregoing during any 
period or periods.
    Section 925.304(a) of the order's administrative rules and 
regulations requires grapes to meet the minimum grade requirements of 
U.S. No. 1 Table, or U.S. No. 1 Institutional, or to meet all the 
requirements of U.S. No. 1 Institutional, except that a tolerance of 33 
percent is provided for off-size bunches. Grapes meeting U.S. No. 1 
Institutional requirements are required to be marked ``U.S. No. 1 
Institutional.'' Grapes meeting the modified U.S. No. 1 Institutional 
requirements may be marked ``DGAC No. 1 Institutional.'' The 
requirements for the U.S. No. 1 Table and U.S. No. 1 Institutional 
grades are set forth in the United States Standards for Grades of Table 
Grapes (European or Vinifera Type) (7 CFR 51.880 through 51.914) 
(Standards).
    Section 925.52(a)(4) of the order provides authority to regulate 
the size, capacity, weight, dimensions, markings, materials, and pack 
of containers which may be used in the handling of grapes.
    Section 925.304(b)(1) of the order's administrative rules and 
regulations requires grapes to be packed in new and clean boxes which 
meet the requirements of sections 1380.14, 1380.19, 1436.37, and 
1436.38 of Title 3: California Code of Regulations (CCR). That section 
also authorizes nine containers that can be used for domestic and 
export shipments, and specifies dimensions for each such container. An 
additional container, defined in terms of a net weight of 5 kilograms, 
is authorized for export shipments only. All 10 authorized containers 
may be used for export shipments. Only the first nine can be used for 
domestic shipments. Section 925.304(b)(1) also authorizes the Committee 
to approve other containers for experimental or research purposes.
    Section 925.304(b)(2) of the order's administrative rules and 
regulations provides that grapes in any containers weigh at least 20 
pounds based on the average net weight of grapes in a representative 
sample of containers. An exception is provided for grapes packed in 
experimental containers, or packed in bags or wrapped in plastic or 
paper. Containers of grapes packed in bags or wrapped in plastic or 
paper prior to being placed in these containers must meet a minimum net 
weight requirement of 18 pounds. There are no weight requirements 
specified for experimental containers.
    The Committee met on March 24, 1998, and unanimously recommended 
modifying Sec. 925.304 of the order's administrative rules and 
regulations to:
    (1) Revise the minimum grade requirement for the period June 1, 
1998, through August 15, 1998, to allow a pilot test for the marketing 
of grapes meeting all the requirements of U. S. No. 1 Institutional, 
except for the weight of clusters/bunches. The revision was intended to 
allow clusters/bunches as small as a 2 berry cluster and as large as 19 
ounces in weight. Grapes meeting the revised quality requirements were 
required to be marked ``DGAC Consumer No. 1 Institutional,'' but could 
not be marked ``Institutional Pack.''
    (2) Authorize an experimental master container, containing 
individual consumer packages of grapes weighing 1\1/2\ pounds or less, 
net weight, for use during the pilot test period of June 1, 1998, to 
August 15, 1998. It further recommended that grapes meeting the ``DGAC 
Consumer No. 1 Institutional'' requirements be packed in this container 
and that this master container could only be used for packing the 
``DGAC Consumer No. 1 Institutional'' grade.
    During the period April 20 through August 15 each year, California 
grape handlers can ship grapes meeting at least U.S. No. 1 Table, U.S. 
No. 1 Institutional, or DGAC No. 1 Institutional. The revision 
implemented by the interim final rule allowed handlers to ship DGAC 
Consumer No. 1 Institutional during the period June 1, 1998, to August 
15, 1998.
    The requirements of the U.S. No. 1 Institutional are essentially 
the same as those of the U.S. No. 1 Table grade, with three major 
exceptions. The first difference relates to bunch size. Under the U.S. 
No. 1 Table grade, there is a minimum bunch size requirement of 4 
ounces and no maximum bunch size. Under the U.S. No. 1 Institutional 
grade, grapes are to consist of at least a two berry cluster ranging to 
clusters and/or bunches of grapes not greater than five ounces in 
weight. A cluster is two or more berries sharing a common point of 
attachment.
    The second difference is that at least 95 percent of the containers 
in a lot of grapes grading U.S. No. 1 Institutional must be legibly 
marked ``Institutional Pack.'' There are no marking requirements under 
the U.S. No. 1 Table grade.
    The third difference relates to the tolerances for off-size 
bunches. For grapes grading U.S. No. 1 Table, an 8 percent tolerance is 
established for all grade requirements, including off-size bunches. The 
U.S. No. 1 Institutional grade has a separate tolerance of 4 percent 
for off-size clusters/bunches and an 8 percent tolerance for the 
remaining grade requirements.
    Requirements for the DGAC No. 1 Institutional are the same as for 
the U.S. No. 1 Institutional, except that the tolerance for off-size 
bunches is 33 percent. Because grapes meeting these

[[Page 37837]]

requirements do not meet the U.S. No. 1 Institutional grade 
requirements, they cannot be marked ``Institutional Pack.'' They may, 
however, be marked ``DGAC No. 1 Institutional.''
    Prior to the start of the 1998 shipping season, handlers expressed 
interest in packing grapes in individual consumer packages known as 
``punits'' or ``clamshells.'' These containers, used most commonly to 
pack strawberries, are made of a clear, hard rigid plastic and 
typically hold a half pound or a pound of fruit. Some retailers prefer 
these containers because they are of the same net weight, and can be 
scanned at check-out. This is particularly convenient for retailers 
that do not have facilities for weighing produce, such as convenience 
stores and fast food outlets. Some consumers also prefer the 
convenience of prepackaged individual portions of fruit.
    To meet changing market requirements, California grape handlers 
wanted to be able to pack these consumer packages. Bunch size 
requirements made it difficult. Grape bunches normally range in weight 
from \1/4\ pound to 3 pounds. Thus, portions of bunches were needed to 
fill the new packages to the weights desired by buyers. Handlers 
determined that increasing the range of permissible bunch sizes to 
allow for clusters/bunches of two berries to 19 ounces would provide 
handlers the flexibility needed to pack grapes in the desired consumer 
containers.
    The interim final rule revised Sec. 925.304(a) of the order's rules 
and regulations and Sec. 944.503 of the table grape import regulation 
allowed handlers and importers to ship a new grade of grapes known as 
``DGAC Consumer No. 1 Institutional.'' The name recognized that such 
grapes would be packed in consumer packages and that the grapes were 
not packed to the minimum requirements of the U.S. No. 1 Table grade. 
These grapes had to meet the requirements of the U.S. No. 1 
Institutional grade, except for the cluster/bunch size requirements. 
Specifically, the modified requirements allowed shipments with 
clusters/bunches ranging from 2 berry clusters to clusters/bunches of 
grapes up to 19 ounces in weight during the period June 1, 1998, to 
August 15, 1998.
    The Committee recommended and the interim final rule established 
that grapes meeting the requirements of the new ``DGAC Consumer No. 1 
Institutional'' be packed in a certain way. The grapes were required to 
be packed in individual consumer packages. The consumer packages were 
then required to be packed in a master container.
    Typically, the individual consumer packages held either \1/2\ or 1 
pound of fruit. To allow for normal shrinkage during handling, handlers 
generally packed a slightly greater weight than is desired at retail. 
Section 925.304(b) was revised to provide that DGAC Consumer No. 1 
Institutional grade grapes be packed in master containers containing 
individual consumer packages weighing 1\1/2\ pounds or less.
    Additionally, the master containers were required to be marked 
``DGAC Consumer No. 1 Institutional'' to accurately reflect their 
contents. The individual consumer packages did not need to be so 
marked. Other container marking requirements appearing in the 
regulation applied to the master containers as well.
    The master containers used for these grapes typically held 10 
consumer packages weighing 1 pound each or 20 packages weighing 1/2 
pound each. Thus, the containers were exempted from the net weight 
requirements of 18 or 20 pounds specified in Sec. 925.304(b)(2) during 
the period June 1, 1998, to August 15, 1998.
    Section 8e of the Act specifies that whenever certain commodities, 
like grapes, are regulated under a Federal order, imports of those 
commodities must meet the same or comparable grade, size, quality, and 
maturity requirements as those in effect for the domestically produced 
commodity. Pack and container requirements are not authorized by 
section 8e. Thus, the revised grade requirements implemented by the 
interim final rule applied to imported grapes during the test period; 
none of the container or container marking requirements applied, 
however. If desired, importers could have labeled containers of grapes 
meeting the modified U.S. No. 1 Institutional requirements as ``DGAC 
Consumer No. 1 Institutional.'' Specifically, the interim final rule 
modified language in Sec. 944.503(a)(1) of the Table Grape Import 
Regulation 4 for fresh grapes imported into the United States during 
the period June 1, 1998, to August 15, 1998.
    The interim final rule provided handlers and importers more 
marketing flexibility, was estimated to result in increased shipments 
of consumer-sized grape packs, and was expected to have a positive 
impact on California grape handlers and importers of grapes. The 
changes addressed the marketing and shipping needs of the grape 
industry, and were in the interest of handlers, producers, importers, 
and consumers.
    During the last several seasons, Mexico has been the largest 
exporter of grapes to the United States during the June 1 through 
August 15 period. Chile and Italy have exported small quantities of 
grapes to the U.S. during this same period. Chile is the dominant 
exporting country from December through May each year.
    During the pilot test period of June 1, 1998, through August 15, 
1998, imports were estimated to total 5.5 million lugs from Mexico, 33 
thousand lugs from Chile, and approximately 4 thousand lugs from Italy. 
These estimates were based upon lug weights of 18 pounds.
    According to Department inspection officials, minimal quantities of 
grapes meeting the institutional grades have been imported since the 
``Institutional Pack'' was implemented. Based on historical data, it 
was estimated that approximately .5 percent to 1 percent of the 
imported lugs would meet the requirements of either the ``U.S. No. 1 
Institutional'' or the ``DGAC No. 1 Institutional'' grades. It was 
further estimated that less than 1 percent of the imported lugs would 
meet the requirements of the ``DGAC Consumer No. 1 Institutional'' 
grade. The majority of imported grapes meet the higher grade 
requirements of U.S. No. 1 Table, U.S. Fancy Table, or U.S. Extra Fancy 
Table. It is believed that no ``DGAC Consumer No. 1 Institutional'' 
grade grapes were imported during the test period.
    The Committee estimated the 1998 domestic crop would be 
approximately 8 million lugs. Domestic handlers in southeastern 
California, regulated under the order, were expected to ship 
approximately 6.2 million lugs during the test period. It was estimated 
that approximately .5 percent (31,000 lugs) to 1 percent (62,000 lugs) 
of the crop would be packed as U.S. No. 1 Institutional or DGAC No. 1 
Institutional and that less than 1 percent (62,000 lugs) of the crop 
would be packed as ``DGAC Consumer No. 1 Institutional'' during the 
test period. The estimates for the DGAC Consumer No. 1 Institutional 
were based upon a lug weight of 10 pounds. The Committee estimated that 
handlers would receive approximately $0.60 to $1.00 per pound for a 
total estimated value of $372,000 to $620,000 for this new individual 
consumer pack. It was estimated that handlers would receive 
approximately $0.10 per pound more for the new consumer packages than 
for bagged grapes and that consumers would benefit by being able to 
purchase grapes in preferred containers.
    Actual domestic shipments totaled 11.4 million lugs. Domestic 
handlers in southeastern California, regulated under the order, shipped 
10.6 million lugs during the test period. The quantity of

[[Page 37838]]

grapes shipped during the test period meeting the requirements of DGAC 
Consumer No. 1 Institutional was small. Thus, the level of benefits of 
the interim final rule are difficult to quantify.
    The Committee had requested that the interim final rule be 
effective by June 1, 1998. When the recommendation was made, the 
industry expected the California grape shipping season to begin shortly 
and to continue until August 15, 1998. Therefore, an effective date of 
June 1 would have allowed handlers and importers approximately 10 weeks 
to test the market. The season ended early with the last shipments of 
grapes on July 22, 1998. This allowed a test period of approximately 7 
weeks versus the anticipated 10 weeks.
    At the meeting, the Committee discussed the potential impact of 
this rule and determined that this action would not require any changes 
in grape handling practices. The Committee expected the new grade and 
pack to generate additional sales that would benefit the grape industry 
as a whole.
    The benefits of this rule were not expected to be 
disproportionately greater or smaller for small handlers or producers 
than for larger entities.
    The Committee discussed alternatives to this revision, including 
not having a pilot test, but determined that handlers, producers, 
importers and consumers would benefit from the pilot test.
    The Committee also discussed adding a percentage tolerance for off-
size bunches of 33 percent similar to the additional percentage 
tolerance allowed for the DGAC No. 1 Institutional grade, but 
determined that the 4 percent tolerance, as contained in the Standards, 
was adequate to facilitate the packaging of the ``punits'' or 
``clamshells''.
    This action did 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. In addition, as 
noted in the initial regulatory flexibility analysis, the Department 
has not identified any relevant Federal rules that duplicate, overlap, 
or conflict with this rule.
    Further, the Committee's meeting was widely publicized throughout 
the grape industry and all interested persons were invited to attend 
the meeting and participate in Committee deliberations on all issues. 
Like all Committee meetings, the March 24, 1998, meeting was a public 
meeting and all entities, both large and small, were able to express 
their views on this issue. The Committee itself is composed of 12 
members: 8 are handlers and producers, 1 is a producer only, and 2 are 
handlers only. The twelfth Committee member is the public member.
    The interim final rule concerning this action was published in the 
Federal Register (63 FR 28475, May 26, 1998) with an effective date of 
June 1, 1998. Copies of the rule were mailed by the Committee staff to 
all Committee members and grape handlers. A summary of the interim 
final rule was sent to all importers of record and to foreign embassies 
known to be interested in table grapes. A copy of the summary was also 
faxed to the National Institute of Standards and Technology so the 
Institute could notify the World Trade Organization Secretariat of the 
action. In addition, the rule was made available through the Internet 
by the Office of the Federal Register. That rule provided a 30-day 
comment period which ended June 25, 1998. No comments were received.
    A request to extend the final date for comments was received from 
the European Commission, Brussels, Belgium, on behalf of the European 
Community. The requester asked the Department to provide a total of 60 
days for comments in line with the recommendation of the Committee on 
Technical Barriers to Trade established under General Agreement on 
Tariffs and Trade. However, a decision was made not to extend the 
comment period for 30 additional days. Notice of the short term 
relaxation was given to government officials in grape exporting 
countries consistent with trade obligations, the relaxed import 
requirements provided importers with more marketing flexibility during 
the test market period that ended August 15, 1998, and finally, no 
useful purpose would have been gained by extending the comment period 
for 30 additional days.
    In accordance with section 8e of the Act, the United States Trade 
Representative concurred with the issuance of this rule.
    After consideration of all relevant material presented, including 
the Committee's recommendation, and other available information, it is 
found that finalizing the interim final rule, without change, as 
published in the Federal Register (63 FR 28475, May 26, 1998), will 
tend to effectuate the declared policy of the Act.

List of Subjects

7 CFR Part 925

    Grapes, Marketing agreements and orders, Reporting and 
recordkeeping requirements.

7 CFR Part 944

    Avocados, Food grades and standards, Grapefruit, Grapes, Imports, 
Kiwifruit, Limes, Olives, Oranges.

PART 925--GRAPES GROWN IN A DESIGNATED AREA of SOUTHEASTERN 
CALIFORNIA

PART 944--FRUITS; IMPORT REQUIREMENTS

    Accordingly, the interim final rule amending 7 CFR parts 925 and 
944 which was published at 63 FR 28475 on May 26, 1998, is adopted as a 
final rule without change.

    Dated: July 7, 1999.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 99-17890 Filed 7-13-99; 8:45 am]
BILLING CODE 3410-02-P