[Federal Register Volume 67, Number 158 (Thursday, August 15, 2002)]
[Rules and Regulations]
[Pages 53281-53290]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-20684]



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 Rules and Regulations
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  Federal Register / Vol. 67, No. 158 / Thursday, August 15, 2002 / 
Rules and Regulations  

[[Page 53281]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 916 and 917

[Docket No. FV02-916-1 FIR]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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

SUMMARY: The Department of Agriculture is adopting, with changes, an 
interim final rule which revised the handling requirements for 
California nectarines and peaches by modifying the grade, size, 
maturity, container, container marking, and pack requirements for fresh 
shipments of these fruits, beginning with 2002 season shipments. This 
rule also continues in effect a modification of the requirements for 
placement of Federal-State Inspection Service lot stamps for the 2002 
season only, a new standard container, and weight-count standards for 
Peento type peaches. The marketing orders regulate the handling of 
nectarines and peaches grown in California and are administered locally 
by the Nectarine Administrative and Peach Commodity Committees 
(committees). This rule enables handlers to continue shipping fresh 
nectarines and peaches meeting consumer needs in the interests of 
producers, handlers, and consumers of these fruits.

EFFECTIVE DATE: September 16, 2002.

FOR FURTHER INFORMATION CONTACT: Terry Vawter, Marketing Specialist, 
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 George Kelhart, Technical Advisor, 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.
    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: [email protected].

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing 
Agreement Nos. 124 and 85, and Marketing Order Nos. 916 and 917 (7 CFR 
parts 916 and 917) regulating the handling of nectarines and peaches 
grown in California, respectively, hereinafter referred to as the 
``orders.'' The orders are effective under the Agricultural Marketing 
Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter 
referred to as the ``Act.''
    USDA is issuing this rule in conformance with Executive Order 
12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to have retroactive effect. 
This rule will not preempt any State or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with USDA a petition 
stating that the order, any provision of the order, or any obligation 
imposed in connection with the order is not in accordance with law and 
request a modification of the order or to be exempted therefrom. A 
handler is afforded the opportunity for a hearing on the petition. 
After the hearing, USDA would rule on the petition. The Act provides 
that the district court of the United States in any district in which 
the handler is an inhabitant, or has his or her principal place of 
business, has jurisdiction to review USDA's ruling on the petition, 
provided an action is filed not later than 20 days after the date of 
the entry of the ruling.
    Under the orders, lot stamping, grade, size, maturity, container, 
container marking, and pack requirements are established for fresh 
shipments of California nectarines and peaches. Such requirements are 
in effect on a continuing basis. The Nectarine Administrative Committee 
(NAC) and the Peach Commodity Committee (PCC), which are responsible 
for local administration of the orders, met on November 29, 2001, and 
unanimously recommended that these handling requirements be revised for 
the 2002 season, which began on April 15. The changes: (1) Continue the 
lot stamping requirements which were in effect for the 2000 and 2001 
seasons; (2) authorize shipments of ``CA Utility'' quality fruit to 
continue during the 2002 season; (3) establish weight-count standards 
for the Peento type peaches; (4) require shippers' names and addresses 
on all containers; (5) add the Euro five-down returnable plastic 
container as a standard container, establish a net weight for the 
container, and exempt the container from the ``well-filled'' 
requirement; and (6) revise varietal maturity, quality, and size 
requirements to reflect changes in growing and marketing practices. 
These changes continue in effect.
    The committees meet prior to and during each season to review the 
rules and regulations effective on a continuing basis for California 
nectarines and peaches under the orders. Committee meetings are open to 
the public and interested persons are encouraged to express their views 
at these meetings. USDA reviews committee recommendations and 
information, as well as information from other sources, and determines 
whether modification, suspension, or termination of the rules and 
regulations would tend to effectuate the declared policy of the Act.
    No official crop estimate was available at the time of the 
committees' meetings because the nectarine and peach trees were 
dormant. The committees adopted crop estimates at their May 1, 2002, 
meetings. They estimated that 2002 production would total about 
23,248,000 containers of nectarines and 23,121,000 containers of 
peaches. Containers are equivalent to 25 pounds of fruit. This is 
similar in size to the 2001 crop, which totaled

[[Page 53282]]

20,951,000 containers of nectarines, and 21,408,000 containers of 
peaches.

Lot Stamping Requirements

    Sections 916.55 and 917.45 of the orders require inspection and 
certification of nectarines and peaches, respectively, handled by 
handlers. Sections 916.115 and 917.150 of the nectarine and peach 
orders' rules and regulations, respectively, require that all exposed 
or outside containers of nectarines and peaches, and at least 75 
percent of the total containers on a pallet, be stamped with the 
Federal-State Inspection Service (inspection service) lot stamp number 
after inspection and before shipment to show that the fruit has been 
inspected. These requirements apply except for containers that are 
loaded directly onto railway cars, exempted, or mailed directly to 
consumers in consumer packages.
    Lot stamp numbers are assigned to each handler by the inspection 
service, and are used to identify the handler and the date on which the 
container was packed. The lot stamp number is also used by the 
inspection service to identify and locate the inspector's corresponding 
working papers or field notes. Working papers are the documents each 
inspector completes while performing an inspection on a lot of 
nectarines or peaches. Information contained in the working papers 
supports the grade levels certified to by the inspector at the time of 
the inspection.
    The lot stamp number has value for the industries, as well. The 
committees utilize the lot stamp number and date codes to trace fruit 
in the container back to the orchard where it was harvested. This 
information is essential in providing quick information for a crisis 
management program instituted by the industries. Without the lot stamp 
information on each container, the ``trace back'' effort, as it is 
called, would be jeopardized.
    Over the last few years, several new containers have been 
introduced for use by nectarine and peach handlers. These containers 
are returnable plastic containers (RPCs). Use of RPCs may represent 
substantial savings to retailers for storage and disposal, as well as 
for handlers who do not have to pay for traditional, single-use, 
containers. Fruit is packed in the containers by the handler, delivered 
to the retailer, emptied, and returned to a central clearinghouse for 
cleaning and redistribution to the handler. However, because these 
containers are designed for reuse, RPCs do not support markings that 
are permanently affixed to the container. All markings must be printed 
on cards that slip into tabs on the front or sides of the containers. 
The cards are easily inserted and removed, and further contribute to 
the efficient reuse of RPCs.
    The cards are a concern for the inspection service and the 
industries because of their unique portability. There is some concern 
that the cards on pallets of inspected containers could easily be moved 
to pallets of uninspected containers, thus permitting a handler to 
avoid inspection on a lot or lots of nectarines or peaches. This would 
also jeopardize the use of the lot stamp numbers for the industries' 
``trace back'' program.
    To address this concern for the 2000 and 2001 seasons, the 
committees recommended that pallets of inspected fruit in RPCs be 
identified with a USDA-approved pallet tag containing the lot stamp 
number, in addition to the lot stamp number printed on the card on the 
container. In this way, noted the committees, an audit trail would be 
created, confirming that the lot stamp number on each container on the 
pallet corresponds to the lot stamp number on the pallet tag.
    The committees and the inspection service presented their concerns 
to the manufacturers of these types of containers prior to the 2000 
season. At that time, one manufacturer indicated a willingness to 
address the problem by offering an area on the principal display panel 
where the container markings would adhere to the container. Another 
possible improvement discussed was for an adhesive for the current 
style of containers which would securely hold the cards with the lot 
stamp numbers, yet would be easy for the clearinghouse to remove when 
the containers are washed. However, the changes were not in effect for 
the 2000 and 2001 seasons, but were anticipated to be in effect for the 
2002 season.
    In a meeting of the Returnable Plastic Container Task Force on 
November 15, 2001, it was determined that given the different styles 
and configurations of RPCs available, having a standardized display 
panel or a satisfactory adhesive for placement of the cards may not be 
realistic.
    For those reasons, the task force recommended to the committees 
that the regulation in effect for the 2000 and 2001 seasons requiring 
lot stamp numbers on USDA-approved pallet tags, as well as on 
individual containers on a pallet, be again required for the 2002 
season. The committees, in turn, recommended unanimously that such 
requirement be extended for the 2002 season, as well.
    Thus, Secs. 916.115 and 917.150, as amended, continue in effect the 
requirement that the lot stamp number be printed on a USDA-approved 
pallet tag, in addition to the requirement that the lot stamp number be 
applied to cards on all exposed or outside containers, and not less 
than 75 percent of the total containers on a pallet, during the 2002 
season.

Container and Pack Requirements

    Sections 916.52 and 917.41 of the orders authorize establishment of 
container, pack, and marking requirements for shipments of nectarines 
and peaches, respectively. Under this rule, the revisions of the well-
filled requirements, container marking requirements, and list of 
standard containers continue in effect in accordance with the 
recommendations of the NAC and PCC.

Well-Filled Requirements

    Under paragraphs (a)(1) of Secs. 916.350 and 917.442, all 
containers of nectarines and peaches, respectively, are required to 
conform to the requirements of standard pack, and volume-filled 
containers are further required to be ``well-filled.'' ``Well-filled'' 
means that nectarines and peaches in any volume-filled container must 
be filled to within one inch of the top of the container.
    With the addition of the RPCs, handlers are frequently unable to 
well fill those containers without either damaging the fruit inside or 
making the container too heavy. For this reason, applying the 
requirements of ``well-filled'' to this container is impractical.
    The Returnable Plastic Container Task Force discussed this issue at 
their meeting on November 15, 2001, and unanimously agreed that the 
requirement for the Euro five down box to meet the well-filled 
requirement was difficult for handlers utilizing that RPC, and such 
requirement should not be applied to that container.
    For those reasons, the revisions to paragraphs (a)(1) of 
Secs. 916.350 and 917.442 continue in effect the specification that the 
Euro five down box is not required to meet the well-filled requirement.

Container Marking Requirements

    Sections 916.350 and 917.442 establish certain requirements for 
marking containers of nectarines and peaches, respectively. This rule 
continues in effect provisions requiring all containers of nectarines 
and peaches to be marked with the name and address of the shipper. 
Previously, all containers had to be marked with this information,

[[Page 53283]]

except for consumer containers mailed directly to consumers.
    Requiring the handler to print his or her name and address on each 
container will ensure that all boxes are properly identified for 
handler responsibility. Such proper identification will also assist the 
industry's trace back program by providing additional information for 
beginning the trace.
    The Returnable Plastic Container Task Force discussed this issue at 
its meeting on November 15, 2001, and unanimously voted to recommend to 
the NAC and PCC that the requirement for the name and address of the 
shipper be extended to all types of containers. When the committees met 
on November 29, 2001, they unanimously voted to do so.

Addition of a New Standard Container

    In the rules and regulations for nectarines at Sec. 916.350, 
paragraphs (a)(6), (a)(7) and (a)(8), and for peaches at Sec. 917.442, 
paragraphs (a)(7), (a)(8), and (a)(9), standard containers, such as the 
Nos. 22D, 22E, 22G, and 32, are required to be marked with the net 
weight. Under paragraph (b) in Secs. 916.350 and 917.442, such standard 
containers are defined. Once the use of a container has become common 
in the industry, such containers are determined to be standard 
containers. Standard containers represent container types that are 
recognized by the industry and adopted by the retail trade. As such, it 
is a practice of the committees to recommend that such containers be 
added to the list of standard containers together with container 
marking requirements.
    At the November 29, 2001 meeting, the NAC and PCC, acting upon a 
recommendation from the Returnable Plastic Container Task Force, 
unanimously recommended that the Euro five down RPC be added to the 
list of standard containers and have a net weight of 31 pounds, which 
is to be printed on the end of the container.
    Nectarines: For the reasons stated above, the redesignation of 
paragraph (a)(4) of Sec. 916.350 as paragraph (a)(5), and the addition 
of a new paragraph (a)(4) of Sec. 916.350 continues in effect to 
require all containers of nectarines to be marked with the name and 
address of the shipper. The markings shall be placed on one outside end 
of the container in plain sight and in plain letters. The redesignation 
of paragraphs (a)(5) and (a)(6) as paragraphs (a)(6) and (a)(7), and 
the addition of a new paragraph (a)(8) continues in effect the 
establishment of a 31-pound net weight for the Euro five down RPC. The 
net weight shall be marked on one outside end in plain sight and plain 
letters. The redesignation of paragraphs (a)(7), (a)(8), and (a)(9) as 
paragraphs (a)(9), (a)(10) and (a)(11) also continues in effect. In a 
conforming change, the redesignation of paragraph (a)(4) to paragraph 
(a)(5) continues in effect the correction of the reference to paragraph 
(a)(4)(i) in former paragraph (a)(4)(ii), which currently reads 
``(a)(5)(i).''
    Peaches: For the reasons stated above, the redesignation of 
paragraph (a)(4) of Sec. 917.442 as paragraph (a)(5) continues in 
effect, and the addition of a new paragraph (a)(4) of Sec. 917.442 
continues in effect to require all containers of peaches to be marked 
with the name and address of the shipper. The markings shall appear on 
one outside end of the container in plain sight and plain letters. The 
redesignation of paragraphs (a)(5), (a)(6), and (a)(7) as paragraphs 
(a)(6), (a)(7), and (a)(8) also continues in effect. New paragraph 
(a)(9) continues in effect the establishment of a net weight of 31-
pounds for the Euro five down RPC. The net weight shall appear on one 
outside end of the container in plain sight and plain letters. The 
redesignation of paragraphs (a)(8), (a)(9), and (a)(10) as paragraphs 
(a)(10), (a)(11), and (a)(12) similarly continue in effect. In a 
conforming change, the redesignation of paragraph (a)(4) to paragraph 
(a)(5) continues in effect the correction of the reference to paragraph 
(a)(4)(i) in former paragraph (a)(4)(ii), which currently reads 
``(a)(5)(i).''
    In addition, the revision of paragraph (b) of Secs. 916.350 and 
917.442 continues in effect to add the Euro five down container to the 
list of standard containers. The California Department of Food and 
Agriculture is expected to assign this container a number, like the 22D 
or 32 nectarine and peach containers, once the container is added to 
the California Agricultural Code. At that time, the common name 
currently used, Euro five down, will be replaced by the assigned 
number.

Weight-Count Standards for Peaches

    Under the requirements of Sec. 917.41 of the order, containers of 
peaches are required to meet weight-count standards for a maximum 
number of peaches in a 16-pound sample when such peaches, which may be 
packed in tray-packed containers, are converted to volume-filled 
containers. Under Sec. 917.442 of the order's rules and regulations, 
weight-count standards are established for all varieties of peaches as 
TABLES 1 and 2 of paragraph (a)(5)(iv).
    According to the PCC, the Peento varieties of peaches have 
traditionally been packed in trays because they have been marketed as a 
premium variety, which justified the added packing costs.
    However, as the volume has increased, the value of the variety has 
diminished in the marketplace, and some handlers converted their tray-
packed containers of Peento varieties to volume-filled containers. 
Originally, weight-count standards were established for round peaches 
and nectarines. Peento type peaches are shaped like donuts, and those 
weight-count standards are inappropriate. In an effort to standardize 
the conversion from tray-packing to volume-filling for Peento type 
peaches, the committee staff conducted weigh-count surveys during the 
2001 season to determine the most optimum weight-counts for the 
varieties at varying fruit sizes.
    As a result, the staff prepared a new weight-count table applicable 
to only the Peento varieties. The Grade and Size Subcommittee reviewed 
the weight-counts at their November 15, 2001, meeting and recommended 
to the PCC that they be implemented for the 2002 season.
    The committee staff will continue to conduct further weight-count 
surveys to ensure that the Peento varieties, which are packed in 
volume-filled containers, meet the weight-count standards established 
for tray-packed fruit.
    For those reasons, the addition of a new Table 3 to paragraph 
(a)(5)(iv) of Sec. 917.442, following Tables 1 and 2 continues in 
effect. The revised titles of the Tables 1 and 2 continue in effect by 
adding the words ``(except Peento variety peaches)'' between the words 
``peaches'' and ``packed.''
    In addition, a correction was published in the Federal Register on 
May 29, 2002 (67 FR 37319), to exempt Peento type peaches from the 
weight-count standards for round varieties of peaches, given that such 
weight counts are not applicable to Peento type peaches. This language 
ensures that the newly-developed standards outlined in Table 3 of 
paragraph (a)(5)(iv) are the sole basis for the weight-count sampling 
of Peento type peaches. This rule also continues in effect that 
correction.

Grade and Quality Requirements

    Sections 916.52 and 917.41 of the orders authorize the 
establishment of grade and quality requirements for nectarines and 
peaches, respectively. Prior to the 1996 season, Sec. 916.356 required 
nectarines to meet a modified U.S. No. 1 grade. Specifically, 
nectarines were required to meet U.S. No. 1 grade requirements, except 
for a slightly tighter requirement for scarring and a more liberal 
allowance for misshapen fruit. Prior to the 1996

[[Page 53284]]

season, Sec. 917.459 required peaches to meet the requirements of a 
U.S. No. 1 grade, except for a more liberal allowance for open sutures 
that were not ``serious damage.''
    This rule continues in effect the revisions to Secs. 916.350, 
916.356, 917.442, and 917.459 to permit shipments of nectarines and 
peaches meeting ``CA Utility'' quality requirements during the 2002 
season. (``CA Utility'' fruit is lower in quality than that meeting the 
modified U.S. No. 1 grade requirements.) Shipments of nectarines and 
peaches meeting ``CA Utility'' quality requirements have been permitted 
each season since 1996.
    Studies conducted by the NAC and PCC in 1996 indicated that some 
consumers, retailers, and foreign importers found the lower-quality 
fruit acceptable in some markets. When shipments of ``CA Utility'' 
nectarines were first permitted in 1996, they represented 1.1 percent 
of all nectarine shipments, or approximately 210,000 containers. 
Shipments of ``CA Utility'' nectarines reached a high of 5 percent 
(1,131,000 containers) during the 2001 season, but usually represent 
approximately 4 percent of total nectarine shipments. Shipments of ``CA 
Utility'' peaches totaled 1.9 percent of all peach shipments, or 
approximately 366,000 containers, during the 1996 season. Shipments of 
``CA Utility'' peaches reached a high of 5 percent of all peach 
shipments (1,031,000 containers) during the 2001 season, but usually 
represent approximately 4 percent of total peach shipments.
    Handlers have also commented that the availability of ``CA 
Utility'' lends flexibility to their packing operations. They have 
noted that they now have the opportunity to remove marginal nectarines 
and peaches from their U.S. No. 1 containers and place this fruit in 
containers of ``CA Utility.'' This flexibility, the handlers note, 
results in better quality U.S. No. 1 packs without sacrificing fruit.
    The Grade and Size Subcommittee met on November 15 and did not make 
a recommendation to the NAC and PCC to continue shipments of ``CA 
Utility'' quality nectarines and peaches. Several subcommittee members 
raised a number of concerns about ``CA Utility'' quality fruit, 
including that the fruit is not reaching its intended low income 
consumer markets and that there are reduced returns to growers on ``CA 
Utility'' quality fruit. The authorized tolerance of 40 percent U.S. 
No. 1 fruit in each container of ``CA Utility'' quality was raised, and 
a suggestion was made that the tolerance should be eliminated so that 
no U.S. No. 1 fruit would be in a box.
    At the full committee meeting, committee staff discussed the 
benefits of having a ``CA Utility'' quality for nectarines and peaches. 
Such benefits included improved quality of packed fruit, improved 
compliance of marketing order requirements, and increased assessments. 
Further, elimination of the tolerances for U.S. No. 1 fruit in each 
container of ``CA Utility'' quality fruit was discussed. It was noted 
that this would likely result in higher inspection costs to handlers.
    Accordingly, based upon the recommendations, the revisions to 
paragraph (d) of Secs. 916.350 and 917.442, and paragraph (a)(1) of 
Secs. 916.356 and 917.459 continue in effect to permit shipments of 
nectarines and peaches meeting ``CA Utility'' quality requirements 
during the 2002 season, on the same basis as the 2000 and 2001 seasons.

Maturity Requirements

    In Secs. 916.52 and 917.41, authority is provided to establish 
maturity requirements for nectarines and peaches, respectively. The 
minimum maturity level currently specified for nectarines and peaches 
is ``mature'' as defined in the standards. For most varieties, ``well-
matured'' determinations for nectarines and peaches are made using 
maturity guides (e.g., color chips). These maturity guides are reviewed 
each year by the Shipping Point Inspection Service (SPI) to determine 
whether they need to be changed, based upon the most-recent information 
available on the individual characteristics of each nectarine and peach 
variety.
    These maturity guides established under the handling regulations of 
the California tree fruit marketing orders have been codified in the 
Code of Federal Regulations as TABLE 1 in Secs. 916.356 and 917.459, 
for nectarines and peaches, respectively.
    The requirements in the 2002 handling regulations are the same as 
those that appeared in the 2001 handling regulations with a few 
exceptions. Those exceptions are explained in this rule.
    Nectarines: Requirements for ``well-matured'' nectarines are 
specified in Sec. 916.356 of the order's rules and regulations. This 
rule continues in effect the revision to TABLE 1 of paragraph 
(a)(1)(iv) of Sec. 916.356 to add maturity guides for ten varieties of 
nectarines. Specifically, SPI recommended adding maturity guides for 
the Fire Sweet, Honey Blaze, Ruby Sweet, September Free, and Spring 
Sweet varieties to be regulated at the J maturity guide; and the Flame 
Glo, Gran Sun, Prima Diamond XIII, Red Jewel, and Spring Ray to be 
regulated at the L maturity guide.
    The NAC recommended these maturity guide requirements based on 
SPI's continuing review of individual maturity characteristics and 
identification of the appropriate maturity guide corresponding to the 
``well-matured'' level of maturity for nectarine varieties in 
production.
    Peaches: Requirements for ``well-matured'' peaches are specified in 
Sec. 917.459 of the order's rules and regulations. This rule continues 
in effect the revision of TABLE 1 of paragraph (a)(1)(iv) of 
Sec. 917.459 to add maturity guides for eleven varieties of peaches. 
Specifically, SPI recommended adding maturity guides for the Spring 
Delight variety to be regulated at the G maturity guide; the Super Rich 
variety to be regulated at the H maturity guide; the 60EF32 variety to 
be regulated at the I maturity guide; the Brittney Lane, Joanna Sweet, 
Madonna Sun, Morning Lord, Sweet Dream, Sweet Gem, and Sweet Mick 
varieties to be regulated at the J maturity guide; and the Sprague Last 
Chance variety to be regulated at the L maturity guide.
    In addition, SPI requested that the Sugar Lady variety of peaches 
be removed from the maturity guide listing in TABLE 1 of paragraph 
(a)(1)(iv) of Sec. 917.459. This rule continues in effect that removal. 
According to SPI, white-fleshed peaches and nectarines would be more 
accurately assessed by other criteria, including cutting the fruit. The 
committees unanimously recommended such a change at their meetings.
    The Joanna Sweet peach variety was also recommended to have a one 
hundred percent surface color requirement for meeting the assigned 
color chip rather than the current ninety percent. This recommendation 
is based upon SPI's experience with the maturity characteristics of 
this variety.
    Thus, the revision of paragraph (a)(1)(iv) of Sec. 917.459 to 
reflect this requirement continues in effect.
    The PCC recommended these maturity guide requirements based on 
SPI's continuing review of individual maturity characteristics and 
identification of the appropriate maturity guide corresponding to the 
``well-matured'' level of maturity for peach varieties in production.
    Size Requirements: Both orders provide (in Secs. 916.52 and 917.41) 
authority to establish size requirements. Size regulations encourage 
producers to leave fruit on the tree longer, which improves both size 
and maturity of the

[[Page 53285]]

fruit. Acceptable fruit size provides greater consumer satisfaction and 
promotes repeat purchases; and, therefore, increases returns to 
producers and handlers. In addition, increased fruit size results in 
increased numbers of packed containers of nectarines and peaches per 
acre, also a benefit to producers and handlers.
    Varieties recommended for specific size regulations have been 
reviewed and such recommendations are based on the specific 
characteristics of each variety. The NAC and PCC conduct studies each 
season on the range of sizes attained by the regulated varieties and 
those varieties with the potential to become regulated, and determine 
whether revisions and additions to the size requirements are 
appropriate.
    Nectarines: Section 916.356 of the order's rules and regulations 
specifies minimum size requirements for fresh nectarines in paragraphs 
(a)(2) through (a)(9). This rule continues in effect the revision to 
Sec. 916.356 establishing variety-specific minimum size requirements 
for 13 varieties of nectarines, which were produced in commercially-
significant quantities of more than 10,000 containers for the first 
time during the 2001 season. This rule also continues in effect the 
removal of the variety-specific minimum size requirements for 3 
varieties of nectarines whose shipments fell below 5,000 containers 
during the 2001 season.
    For example, one of the varieties recommended for addition to the 
variety-specific minimum size requirements is the Arctic Ice variety of 
nectarines, recommended for regulation at a minimum size 80. Studies of 
the size ranges attained by the Arctic Ice variety revealed that 100 
percent of the containers met the minimum size of 80 during the 2001 
season. Sizes ranged from size 30 to size 80, with 3 percent of the 
packages in the 30 sizes, 47 percent of the packages in the 40 sizes, 
41 percent of the packages in the 50 sizes, 5.4 percent in the 60 
sizes, 3.5 percent in the 70 sizes, and .2 percent at size 80. Due to 
rounding, these numbers add up to slightly more than 100 percent.
    A review of other varieties with the same harvesting period 
indicated that the Arctic Ice variety was also comparable to those 
varieties in its size ranges for that time period. Discussions with 
handlers known to handle the variety confirm this information regarding 
minimum size and harvesting period, as well. Thus, the recommendation 
to place the Arctic Ice variety in the variety-specific minimum size 
regulation at a minimum size 80 is appropriate.
    Historical data such as this provides the NAC with the information 
necessary to recommend the appropriate sizes at which to regulate 
various nectarine varieties. In addition, producers and handlers of the 
varieties affected are personally invited to comment when such size 
recommendations are deliberated. Producer and handler comments are also 
considered at both NAC and subcommittee meetings when the staff 
receives such comments, either in writing or verbally.
    For reasons similar to those discussed in the preceding paragraph, 
the revision of the introductory text of paragraph (a)(4) of 
Sec. 916.356 to include the Prima Diamond VI and the Prince Jim 1 
nectarine varieties continues in effect; and the revision of the 
introductory text of paragraph (a)(6) of Sec. 916.356 to include the 
Arctic Ice, Bright Sweet, Grand Sweet, June Lion, Kay Pearl, Prima 
Diamond XXVIII, Regal Red, September Bright (26P-490), Summer Jewel, 
Sun Valley Sweet, and Sweet White nectarine varieties continues in 
effect.
    This rule also continues in effect the revision of the introductory 
text of paragraphs (a)(4) and (a)(6) of Sec. 916.356 to remove 3 
varieties from the variety-specific minimum size requirements specified 
in these paragraphs because less than 5,000 containers of each of these 
varieties were produced during the 2001 season. Specifically, the 
revision of the introductory text of paragraph (a)(4) of Sec. 916.356 
to remove the Arctic Glo nectarine variety continues in effect; and the 
revision of the introductory text of paragraph (a)(6) of Sec. 916.356 
to remove the Cole Red and Mid Glo nectarine varieties continues in 
effect.
    Nectarine varieties removed from the nectarine variety-specific 
minimum size requirements become subject to the non-listed variety size 
requirements specified in paragraphs (a)(7), (a)(8), and (a)(9) of 
Sec. 916.356.
    Peaches: Section 917.459 of the order's rules and regulations 
specifies minimum size requirements for fresh peaches in paragraphs 
(a)(2) through (a)(6), and paragraphs (b) and (c). This rule continues 
in effect the revision of Sec. 917.459 establishing variety-specific 
minimum size requirements for 19 peach varieties that were produced in 
commercially-significant quantities of more than 10,000 containers for 
the first time during the 2001 season. This rule also continues in 
effect the removal of the variety-specific minimum size requirements 
for 1 variety of peaches whose shipments fell below 5,000 containers 
during the 2001 season.
    For example, one of the varieties recommended for addition to the 
variety-specific minimum size requirements is the Bev's Red variety of 
peaches, which was recommended for regulation at a minimum size 80. 
Studies of the size ranges attained by the Bev's Red variety revealed 
that 100 percent of the containers met the minimum size of 80 during 
the 2001 season. The sizes ranged from the 30 sizes to the 80 sizes, 
with 3.4 percent of the containers meeting the 30 sizes, 15.9 meeting 
the 40 sizes, 53.8 percent meeting the 50 sizes, 20.4 percent meeting 
the 60 sizes, 5.5 percent meeting the 70 sizes, and 1.1 percent meeting 
the size 80.
    A review of other varieties with the same harvesting period 
indicated that the Bev's Red variety was also comparable to those 
varieties in its size ranges for that time period. Discussions with 
handlers known to handle the variety confirm this information regarding 
minimum size and harvesting period, as well. Thus, the recommendation 
to place the Bev's Red variety in the variety-specific minimum size 
regulation at a minimum size 80 is appropriate.
    Historical data such as this provides the PCC with the information 
necessary to recommend the appropriate sizes at which to regulate 
various peach varieties. In addition, producers and handlers of the 
varieties affected are personally invited to comment when such size 
recommendations are deliberated. Producer and handler comments are also 
considered at both PCC and subcommittee meetings when the staff 
receives such comments, either in writing or verbally.
    For reasons similar to those discussed in the preceding paragraph, 
the revision of the introductory text of paragraph (a) (2) of 
Sec. 917.459 to include the 91002 peach variety continues in effect; 
the revision of the introductory text of paragraph (a)(3) of 
Sec. 917.459 to include the Snow Kist peach variety continues in 
effect; the revision of the introductory text of paragraph (a)(5) of 
Sec. 917.459 to include the Bev's Red, May Sweet, and Sunlit Snow 
(172LE81) peach varieties continues in effect; and the revision of the 
introductory text of paragraph (a)(6) of Sec. 917.459 to include the 
Flaming Dragon, Jillie White, Joanna Sweet, July Flame, Prima Peach 
XXV, Prima Peach XXVII, Princess Gayle, Red Sun, September Flame, Snow 
Fall, Snow Gem, Spring Gem, Sweet Gem, and 24-SB peach varieties 
continues in effect.
    This rule also continues in effect the revision of the introductory 
text of

[[Page 53286]]

paragraph (a)(6) of Sec. 917.459 removing the Carnival peach variety 
from the variety-specific minimum size requirements specified in the 
section because less than 5,000 containers of this variety were 
produced during the 2001 season.
    Peach varieties removed from the peach variety-specific minimum 
size requirements become subject to the non-listed variety size 
requirements specified in paragraphs (b) and (c) Sec. 917.459.
    This rule also continues in effect the correction of the spelling 
of the peach variety ``Brittney Lane,'' incorrectly spelled as 
``Brittany Lane'' in paragraph (a)(5) of Sec. 917.459.
    The NAC and PCC recommended these changes in the minimum size 
requirements based on a continuing review of the sizing and maturity 
relationships for these nectarine and peach varieties, and the consumer 
acceptance levels for various fruit sizes. This rule continues in 
effect the established minimum size requirements for fresh nectarines 
and peaches consistent with expected crop and market conditions.
    This rule reflects the committees' and USDA's appraisal of the need 
to revise the handling requirements for California nectarines and 
peaches, as specified. USDA believes that this rule will have a 
beneficial impact on producers, handlers, and consumers of fresh 
California nectarines and peaches.
    This rule continues in effect the establishment of handling 
requirements for fresh California nectarines and peaches consistent 
with expected crop and market conditions, and will help ensure that all 
shipments of these fruits made each season will meet acceptable 
handling requirements established under each of these orders. This rule 
will also help the California nectarine and peach industries provide 
fruit desired by consumers. This rule continues in effect the 
establishment and maintenance of orderly marketing conditions for these 
fruits in the interests of producers, handlers, and consumers.

Final Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this action on small entities. Accordingly, AMS has 
prepared this final regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and rules issued thereunder, are unique in that 
they are brought about through group action of essentially small 
entities acting on their own behalf. Thus, both statutes have small 
entity orientation and compatibility.
    There are approximately 300 California nectarine and peach handlers 
subject to regulation under the orders covering nectarines and peaches 
grown in California, and about 1,800 producers of these fruits in 
California. Small agricultural service firms, which include handlers, 
are defined by the Small Business Administration [13 CFR 121.201] as 
those whose annual receipts are less than $5,000,000. Small 
agricultural producers are defined by the Small Business Administration 
as those having annual receipts of less than $750,000. A majority of 
these handlers and producers may be classified as small entities.
    The committees' staff has estimated that there are less than 20 
handlers in the industry who could be defined as other than small 
entities. In the 2001 season, the average handler price received was 
$9.00 per container or container equivalent of nectarines or peaches. A 
handler would have to ship at least 556,000 containers to have annual 
receipts of $5,000,000. Given data on shipments maintained by the 
committees' staff and the average handler price received during the 
2001 season, the committees' staff estimates that small handlers 
represent approximately 94 percent of all the handlers within the 
industry.
    The committees' staff has also estimated that more than 80 percent 
of the producers in the industry could be defined as small entities. In 
the 2001 season, the average producer price received was $5.50 per 
container or container equivalent for nectarines, and $5.25 per 
container or container equivalent for peaches. A producer would have to 
produce at least 136,364 containers of nectarines and 142,858 
containers of peaches to have annual receipts of $750,000. Given data 
maintained by the committees' staff and the average producer price 
received during the 2001 season, the committees' staff estimates that 
small producers represent more than 80 percent of the producers within 
the industry.
    Under Secs. 916.52 and 917.41 of the orders, grade, size, maturity, 
container, container marking, and pack requirements are established for 
fresh shipments of California nectarines and peaches, respectively. 
Such requirements are in effect on a continuing basis. The NAC and PCC 
met on November 29, 2001, and unanimously recommended that these 
handling requirements be revised for the 2002 season. These 
recommendations had been presented to the committees by various 
subcommittees, each charged with review and discussion of the changes. 
The changes: (1) Continue the lot stamping requirements which were in 
effect for the 2000 and 2001 seasons; (2) authorize shipments of ``CA 
Utility'' quality fruit to continue during the 2002 season; (3) 
establish weight-count standards for Peento type peaches; (4) require 
shippers' names and addresses on all containers; (5) add the Euro five-
down returnable plastic container as a standard container, establish a 
net weight for that container, and exempt that container from the 
``well-filled'' requirement; and (6) revise varietal maturity, quality, 
and size requirements to reflect changes in growing and marketing 
practices. These changes continue in effect.
    This rule continues in effect the authority for the continuation of 
the lot stamping requirements for returnable plastic containers under 
the marketing orders' rules and regulations that were in effect for 
such containers during the 2001 season for nectarine and peach 
shipments. The modified requirements of Secs. 916.115 and 917.150 
mandated that the lot stamp numbers be printed on a USDA-approved 
pallet tag, in addition to the requirement that the lot stamp number be 
applied to cards on all exposed or outside containers, and not less 
than 75 percent of the total containers on a pallet. Continuation of 
such requirements for the 2002 season would help the inspection service 
safeguard the identity of inspected and certified containers of 
nectarines and peaches, and would help the industry by keeping in place 
the information necessary to facilitate their ``trace-back'' program.
    The Returnable Plastic Container Task Force and Grade and Size 
Subcommittee met on November 15, 2001, and considered possible 
alternatives to this action. Other alternatives were rejected because 
it was determined that given the different styles and configurations of 
RPCs available, having a standardized display panel or a satisfactory 
adhesive for placement of the cards may not be realistic, at least for 
the time being.
    For those reasons, the task force recommended to the committees, 
and the committees voted unanimously, to extend the requirement for the 
lot stamp number to be printed on the cards on each container and for 
each pallet to be marked with a USDA-approved pallet tag, also 
containing the lot stamp number. Such safeguards were put in place to 
ensure that all the containers on

[[Page 53287]]

each pallet had been inspected and certified in the event a card on an 
individual container or containers was removed, misplaced, or lost.
    The Returnable Plastic Container Task Force met on November 15 to 
discuss issues relating to RPCs. At that time, they discussed volume 
filling of RPCs and its ramifications, specifically of the Euro five 
down container. They noted that RPCs are favored by many retailers and 
demanded by others, and that this particular container has become a 
standard container within the industry. In an effort to meet the 
demands and preferences for their customers, the Euro five down 
container has been used in increasing numbers in recent years. However, 
they noted, to maintain efficient packing operations, some container 
requirements needed to be reviewed, especially the requirement that all 
volume-filled RPC containers must be well filled. While the well-filled 
requirement may work for traditional boxes, the requirement may 
increase the amount of damage to fruit in RPCs or make the containers 
unwieldy and heavy. The task force considered leaving the requirement 
in place. However, given the potential for increased utilization of 
RPCs, and this container in particular, and the need to provide a 
quality product to customers, the alternative was rejected.
    The Grade and Size Subcommittee met on November 15, 2001, to 
discuss container-marking requirements, among other things. At that 
time, it was noted by staff that not all containers are required to 
have the shipper's name and address printed on them. The subcommittee 
voted unanimously to recommend to the NAC and PCC that marking 
requirements be changed to require the shipper's name and address be 
placed on all containers.
    Sections 916.350 and 917.442 establish certain requirements for 
marking containers of nectarines and peaches, respectively. This rule 
continues in effect provisions requiring all containers of nectarines 
and peaches to be marked with the name and address of the shipper. 
Previously, consumer packages of these fruits mailed directly to 
consumers did not have to be marked with that information.
    Requiring the handler to print his or her name and address on each 
container will ensure that all boxes are properly identified for 
handler responsibility. Such proper identification will also assist the 
industry's trace back program by providing additional information for 
beginning the trace.
    In addition, the Returnable Plastic Container Task Force also 
deliberated the issue of making the Euro five down container a standard 
container and recommending a net weight for that container. It has been 
the practice of the committees to study the trends in containers used 
by the industry. Traditionally, corrugated containers have been the 
shippers' container of choice. However, in recent years, the growth of 
RPCs has increased dramatically. In keeping with that practice, the 
Task Force determined that the Euro five down container has become an 
industry standard and may continue to be used by greater numbers of 
shippers. As such, any other alternative would not be viable.
    Coupled with the recommendation to add the Euro five down container 
to the list of standard containers is the need to recommend an 
applicable net weight for the container. Assigning an appropriate net 
weight would foreclose other alternatives.
    In 1996, Secs. 916.350 and 917.442 were revised to permit shipments 
of ``CA Utility'' quality nectarines and peaches as an experiment 
during the 1996 season only. Such shipments have subsequently been 
permitted each season. Since 1996, shipments of ``CA Utility'' have 
ranged from 1 to 5 percent of total nectarine and peach shipments. This 
rule continues in effect the authority for continued shipments of ``CA 
Utility'' quality nectarines and peaches during the 2002 season.
    The Grade and Size Subcommittee met on November 15, 2001, and 
considered one alternative to this action. They considered not 
authorizing continued shipments of ``CA Utility'' quality nectarines 
and peaches. The subcommittee, ultimately, did not make a 
recommendation to the NAC and PCC on continued shipments of ``CA 
Utility'' quality nectarines and peaches.
    However, the NAC and PCC unanimously recommended implementation of 
the authority for continued shipments of ``CA Utility'' quality 
nectarines and peaches at their November 29, 2001, meeting. The 
committees voted to continue all requirements that were in effect at 
that time, and then individually discussed any proposed changes, such 
as grade and size changes. There was discussion regarding shipments of 
``CA Utility'' quality nectarines and peaches, based upon information 
from the Grade and Size Subcommittee, but the committees voted to 
continue such shipments along with all other requirements in effect at 
that time.
    Sections 916.350 and 917.442 establish container, pack, and marking 
requirements for shipments of nectarines and peaches, respectively. 
This rule continues in effect the changes to the pack and container 
marking requirements of the order's rules and regulations to exempt 
RPCs from the well-filled requirement and add the requirement that all 
types of containers be marked with the shipper's name and address.
    Section 917.442 also establishes minimum weight-count standards for 
containers of peaches. Under these requirements, containers of peaches 
are required to meet weight-count standards for a maximum number of 
peaches in a 16-pound sample when such peaches are packed in a tray-
packed container. That same maximum number of peaches is also 
applicable to volume-filled containers, based upon the tray-packed 
standard. In other words, the weight-count standard is developed so 
handlers may convert tray-packed peaches to volume-filled containers 
and be assured that the fruit in the volume-filled container will meet 
the maximum number of peaches in the 16-pound sample.
    When the Grade and Size Subcommittee met on November 15, 2001, they 
discussed the recent changes in the packing and marketing of Peento 
type peaches. When these varieties were first introduced and marketed, 
they were generally tray-packed because they were a novel and premium 
product. As production has increased, the value of the varieties has 
diminished in the marketplace, and some handlers have converted their 
tray-packed containers of Peento varieties to volume-filled containers.
    The staff conducted weight-count studies during the 2001 season so 
that weight-count standards could be developed, thus ensuring that all 
handlers are packing a standard maximum number of peaches in a 16-pound 
sample. Since weight-count standards provide a basis for volume filling 
of containers of other varieties of peaches, the subcommittee 
recommended that the NAC and PCC establish such standards for these 
unique varieties.
    Sections 916.356 and 917.459 establish minimum maturity levels. 
This rule continues in effect the annual adjustments to the maturity 
requirements for several varieties of nectarines and peaches. Maturity 
requirements are based on maturity measurements generally using 
maturity guides (e.g., color chips), as recommended by Shipping Point 
Inspection. Such maturity guides are reviewed annually by SPI to 
determine the appropriate guide for each nectarine and peach variety. 
These annual adjustments reflect changes in the maturity 
characteristics of nectarines

[[Page 53288]]

and peaches as experienced over the previous season's inspections. 
Adjustments in the guides ensure that fruit has met an acceptable level 
of maturity, ensuring consumer satisfaction while benefiting nectarine 
and peach producers and handlers.
    In Sec. 916.356 of the nectarine order's rules and regulations, and 
in Sec. 917.459 of the peach order's rules and regulations, minimum 
sizes for various varieties of nectarines and peaches, respectively, 
are established. This rule continues in effect the adjustments to the 
minimum sizes authorized for various varieties of nectarines and 
peaches for the 2002 season. Minimum size regulations are put in place 
to encourage producers to leave fruit on the trees for a longer period 
of time. This increased growing time not only improves maturity, but 
also increases fruit size. Increased fruit size increases the number of 
packed containers per acre; and coupled with heightened maturity 
levels, also provides greater consumer satisfaction, fostering repeat 
purchases. Such improved consumer satisfaction and repeat purchases 
benefit both producers and handlers alike. Annual adjustments to 
minimum sizes of nectarines and peaches, such as these, are recommended 
by the NAC and PCC based upon historical data, producer and handler 
information regarding sizes attained by different varieties, and trends 
in consumer purchases.
    An alternative to such action would include not establishing 
minimum size regulations for these new varieties. Such an action, 
however, would be a significant departure from the committees' 
practices and represent a significant change in the regulations as they 
currently exist, would ultimately increase the amount of less 
acceptable fruit being marketed to consumers, and, thus, would be 
contrary to the long-term interests of producers, handlers, and 
consumers. For these reasons, this alternative was not recommended.
    The committees made recommendations regarding all the revisions in 
handling and lot stamping requirements after considering all available 
information, including comments of persons at several subcommittee 
meetings and comments received by committee staff. Such subcommittees 
include the Grade and Size Subcommittee, the Inspection and Compliance 
Subcommittee, the Returnable Plastic Container Task Force, and the 
Management Services Committee.
    At the meetings, the impact of and alternatives to these 
recommendations were deliberated. These subcommittees and the task 
force, like the committees themselves, frequently consist of individual 
producers (and handlers, where authorized) with many years' experience 
in the industry who are familiar with industry practices. Like all 
committee meetings, subcommittee meetings are open to the public and 
comments are widely solicited. In the case of the Returnable Plastic 
Container Task Force, RPC manufacturers also were invited, as well as 
those handlers currently using such boxes. Information from these 
sources assists the committees, subcommittees, and the task force in 
thoroughly examining and deliberating the issues that affect the entire 
industry in a public setting.
    This rule does not impose any additional reporting and 
recordkeeping requirements on either small or large handlers. As with 
all Federal marketing order programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies.
    In addition, as noted in the final regulatory flexibility analysis, 
USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this rule. However, as previously stated, 
nectarines and peaches under the orders have to meet certain 
requirements set forth in the standards issued under the Agricultural 
Marketing Act of 1946 (7 CFR 1621 et seq.). Standards issued under the 
Agricultural Marketing Act of 1946 are otherwise voluntary.
    Further, the committees' meetings are widely publicized through the 
nectarine and peach industries and all interested parties are 
encouraged to attend and participate in committee deliberations on all 
issues. These meetings are held annually during the last week of 
November or first week of December. Like all committee meetings, the 
November 29, 2001, meetings were public meetings, and all entities, 
large and small, were encouraged to express views on these issues.
    Also, various subcommittee meetings were held on November 15, 2001, 
and these regulations were reviewed and discussed publicly at that 
time.
    An interim final rule concerning this action was published in the 
Federal Register on April 5, 2002 (67 FR 16286), and a correction was 
published in the Federal Register on May 29, 2002 (67 FR 37319). Copies 
of a summary of the rules were provided to all handlers upon 
publication of the interim final rule. In addition, the rules were made 
available through the Internet by the Office of the Federal Register 
and USDA and interested persons were invited to submit information on 
the regulatory and informational impacts of these actions on small 
businesses. The interim final rule provided a 60-day comment period, 
which ended on June 4, 2002. Twelve comments were received; eleven 
opposed the continuation of ``CA Utility'' quality nectarines and 
peaches, and one requested clarification of the regulations regarding 
``Peento type peaches.''
    One commenter contended that continuation of the authority to ship 
``CA Utility'' quality nectarines and peaches in its current form would 
be costly to growers. The commenter believes that allowing up to 40 
percent U.S. No. 1 fruit in a box of ``CA Utility'' quality nectarines 
and peaches reduces returns to growers because the higher quality U.S. 
No. 1 fruit is sold for lower ``CA Utility'' prices. He favored 
allowing only 8 percent U.S. No. 1 fruit in ``CA Utility'' packages. 
However, the committees have discussed changing the percentage of U.S. 
No. 1 nectarines and peaches required in ``CA Utility'' quality 
containers, and have consistently recommended allowing 40 percent U.S. 
No. 1 fruit in each container, because a smaller tolerance, such as 8 
percent, is more difficult for the handler to pack, given all the other 
available tolerances already affecting individual lots and packages.
    Several commenters noted, too, that a survey of growers conducted 
by the committees indicated that 42 percent of the growers favored 
continuing the authority for ``CA Utility'' shipments, while 58 percent 
did not favor continuation. However, as several growers and handlers 
explained at the Grade and Size Subcommittee meeting, each handler 
chooses whether to pack and ship ``CA Utility'' quality nectarines and 
peaches. Also, growers can choose to request that ``CA Utility'' 
quality nectarines and peaches from their own orchards not be packed. 
Handlers, too, base their decisions on whether or not to pack and ship 
``CA Utility'' quality fruit on market conditions and prices.
    Even some growers who opposed continued authority to ship ``CA 
Utility'' quality fruit suggested in the survey that it should be 
available on an emergency or temporary basis, such as in a hail year or 
a year of short production. In fact, in late May 2002, hail damaged 
crops in the production area.
    Several commenters suggested that ``CA Utility'' quality nectarines 
and peaches are merely cull fruit. However, as stated earlier, ``CA 
Utility'' quality nectarines and peaches are a modified U.S. No. 1 
grade, not culls.

[[Page 53289]]

    Commenters also contended that since the inception of ``CA 
Utility'' quality regulations, the financial condition of growers has 
worsened. Additionally, some growers at industry meetings have 
indicated that they have profited by selling their ``CA Utility'' 
quality fruit.
    In addition, another commenter stated that regulations for ``CA 
Utility'' quality fruit have created a large market for uninspected 
cull fruit through sales to cash buyers and fruit peddlers. However, 
staff advised the committees at the NAC and PCC meetings in November 
that the existence of ``CA Utility'' has actually decreased compliance 
problems at terminal markets by reducing the need for vendors to sell 
cull fruit. The availability of the higher-quality ``CA Utility'' fruit 
at more favorable prices appears to provide an incentive for vendors in 
those markets to comply with marketing order requirements. Also, since 
such sales may displace cull fruit sales, the availability of ``CA 
Utility'' quality fruit may actually increase total fruit sales because 
buyers are not dissatisfied as they might be after purchasing low-
quality cull fruit.
    In addition, the staff advised that no assessments are collected on 
cull fruit, while ``CA Utility'' quality fruit is assessed at the same 
rate as U.S. No. 1 nectarines and peaches. Also, shipments of ``CA 
Utility'' are subject to the ``trace-back'' program discussed earlier, 
while cull fruit no longer maintains an identity.
    Another commenter suggested that shipments of ``CA Utility'' 
quality nectarines and peaches represent four percent of all tree fruit 
shipments or nearly three million containers. However, only about 2.1 
million containers of nectarines and peaches were shipped during 2001 
as ``CA Utility'' and those shipments represented approximately five 
percent of total nectarine and peach shipments.
    An additional commenter suggested that ``CA Utility'' requirements 
were created to benefit the handler at the expense of the grower since 
the handler gets his costs for pre-cooling, packaging, palletizing, 
etc., before the grower gets a return for each container sold. In 1996, 
``CA Utility'' quality requirements were implemented to provide an 
outlet for nectarines and peaches that would be acceptable in lower-
income markets. As noted earlier, ``CA Utility'' quality nectarines and 
peaches are acceptable in some domestic and foreign markets. In fact, a 
May 17, 2002, newsletter published by the committees recounting 
marketing activities in international markets quotes a supportive South 
American marketing representative. The representative noted that due to 
initial high prices of California nectarines and peaches, the first 
arrivals in Colombia and Venezuela are ``CA Utility'' quality fruit.
    Another commenter echoed previous concerns about the percentage of 
U.S. No. 1 grade fruit required in containers of ``CA Utility'' quality 
nectarines and peaches. The commenter suggested that if a market exists 
for lower-quality fruit, U.S. No. 1 fruit should not be packed with the 
lower-quality fruit. However, it is not practical to completely 
separate U.S. No. 1 fruit from ``CA Utility'' quality fruit.
    Yet another commenter suggested that the committees are composed of 
handlers or their employees who do not care about the plight of the 
growers. However, Sec. 916.20 requires nectarine committee members to 
be growers or employees of growers. In the case of peaches, growers are 
similarly situated in terms of committee membership.
    Accordingly, no changes to the ``CA Utility'' quality requirements 
will be made based upon the comments received.
    A final commenter noted that references to ``Peento (Donut) 
peaches'' should be corrected to read ``Peento type peaches'' since the 
term ``Donut'' has been patented by a broker. He also suggested 
exempting all Peento type peaches from the weight-count standards 
applicable to round varieties of peaches. In the correction published 
in the Federal Register on May 29, 2002 (67 FR 37319), the exemption 
from weight counts was applied to size 72 peaches regulated under 
Sec. 917.459(a)(6)(iii) only. However, Peento type peaches regulated 
under sizes 96, 88, 84, and 80 should be similarly exempt from the 
weight counts applicable to round varieties of peaches. This is 
consistent with the committees' intent to provide a separate weight-
count table applicable only to Peento type peaches, which continues in 
effect as a result of the interim final rule.
    The commenter also noted that references to the ``Earli Rich'' 
peach variety should be corrected to read ``Earlirich,'' consistent 
with the patented name recently acquired by the nursery that handles 
the rootstock for the variety.
    Accordingly, changes will be made to the interim final rule, based 
on this comment received.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at the 
following Web site: http://www.ams.usda.gov/fv/moab.html. Any questions 
about the compliance guide should be sent to Jay Guerber at the 
previously-mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    After consideration of all relevant matters presented, the comments 
received, including the committees' recommendation and other 
information, it is found that finalizing the interim final rule, with 
changes, as published in the Federal Register (67 FR 16286, April 5, 
2002), and the correction, as published in the Federal Register (67 FR 
37319, May 29, 2002) will tend to effectuate the declared policy of the 
Act.

List of Subjects

7 CFR Part 916

    Marketing agreements, Nectarines, Reporting and recordkeeping 
requirements.

7 CFR Part 917

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


    Accordingly, the interim final rule amending 7 CFR parts 916 and 
917, which was published at 67 FR 16286 on April 5, 2002, is adopted as 
a final rule with the following changes:

PART 917--PEACHES GROWN IN CALIFORNIA

    1. The authority citation for 7 CFR parts 916 and 917 continues to 
read as follows:

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


Sec. 917.442  [Amended]

    2. In Sec. 917.442, paragraph (a)(5)(iv), the table headings for 
Tables 1 and 2 are amended by removing the words ``(Donut) Varieties'' 
and adding the words ``Type Peaches'' in their place;

    3. In Sec. 917.442, paragraph (a)(5)(iv), the heading for Table 3 
is amended by removing the words ``(Donut) Varieties of'' and adding 
the word ``Type'' in their place;


Sec. 917.459  [Amended]

    4. In Sec. 917.459, Table 1 of paragraph (a)(1)(iv) is amended by 
revising the words ``Earli Rich'' to read ``Earlirich''

    5. In Sec. 917.459, paragraph (a)(2)(ii) is amended by adding the 
words ``except for Peento type peaches'' after the words ``96 peaches''

    6. In Sec. 917.459, paragraph (a)(3)(ii) is amended by adding the 
words ``except for Peento type peaches'' after the words ``92 peaches''

    7. In Sec. 917.459, paragraph (a)(4)(iii) is amended by adding the 
words ``except for Peento type peaches'' after the words ``83 peaches''

[[Page 53290]]


    8. In Sec. 917.459, paragraph (a)(5)(iii) is amended by adding the 
words ``except for Peento type peaches'' after the words ``76 peaches''

    9. In Sec. 917.459, paragraph (a)(6) is amended by revising the 
words ``Earli Rich'' to read ``Earlirich;'' and

    10. In Sec. 917.459, paragraph (a)(6)(iii) is amended by removing 
the words ``(Donut) Varieties of'' and adding the word ``Type'' in 
their place.

    Dated: August 8, 2002.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 02-20684 Filed 8-14-02; 8:45 am]
BILLING CODE 3410-02-P