[Federal Register Volume 68, Number 205 (Thursday, October 23, 2003)]
[Rules and Regulations]
[Pages 60620-60624]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-26712]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 993 and 999

[Docket No. FV03-993-3 FIR]


Dried Prunes Produced in California; Temporary Suspension of the 
Mandatory Outgoing Prune Inspection and Quality Requirements, and 
Modification of the Undersized Prune Disposition Requirements Under the 
Marketing Order, and Suspension of the Prune Import Regulation

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (USDA) is adopting, as a final 
rule, without change, an interim final rule which suspended for three 
years the outgoing prune inspection and quality requirements under the 
California Dried Prune Marketing Order (Order) and its administrative 
rules and regulations, and the prune import regulation. Continued 
suspension of the outgoing inspection and quality requirements, and 
import regulation provisions ensures relief from these requirements. 
The Order regulates the handling of dried prunes produced in California 
and is administered locally by the Prune Marketing Committee 
(Committee). During the three-year suspension, the industry will have 
the opportunity to develop and implement outgoing inspection and 
finished product grade standards more consistent with current industry 
needs. In the absence of additional rulemaking to modify or terminate 
the suspended provisions, they will come back into effect automatically 
at the end of the three-year period. The modifications to the 
undersized prune disposition requirements made by the interim final 
rule also are continued without change.

EFFECTIVE DATE: November 24, 2003.

FOR FURTHER INFORMATION CONTACT: Richard P. Van Diest, 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, or Fax: (202) 720-8938.

[[Page 60621]]

    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 and Order No. 993 (7 CFR part 993), both as amended, 
regulating the handling of dried prunes produced in 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.''
    USDA is issuing this rule in conformance with Executive Order 
12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to have retroactive effect. 
This rule will not preempt any State or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with USDA a petition 
stating that the order, any provision of the order, or any obligation 
imposed in connection with the order is not in accordance with law and 
request a modification of the order or to be exempted therefrom. A 
handler is afforded the opportunity for a hearing on the petition. 
After the hearing, USDA would rule on the petition. The Act provides 
that the district court of the United States in any district in which 
the handler is an inhabitant, or has his or her principal place of 
business, has jurisdiction to review USDA's ruling on the petition, 
provided an action is filed not later than 20 days after the date of 
the entry of the ruling.
    This rule continues in effect the suspension of the outgoing prune 
inspection and quality requirements in the order and its administrative 
rules and regulations, and the prune import regulation for a three-year 
period, and modification of the undersized prune disposition 
requirements. These changes became effective with the start of the new 
crop year on August 1, 2003. The order regulates the handling of dried 
prunes produced in California and is administered locally by the Prune 
Marketing Committee (Committee). The Committee unanimously recommended 
suspension of the outgoing inspection, and outgoing prune quality 
requirements at meetings held on April 3, and May 1, 2003, because it 
is the quickest way to ensure relief from these regulations. During the 
three-year suspension period, the industry will have the opportunity to 
develop and implement outgoing inspection and finished product grade 
standards that are more in line with current industry needs. As 
discussed below, suspension of the prune import regulation is required 
under section 8e of the Act.

Marketing Order Authority To Modify and Suspend

    Section 993.50(g) states in part: ``rules and regulations to insure 
proper disposition of the [undersized] prunes shall be established by 
the Committee with the approval of the Secretary.''
    Section 993.90(a) states in part: ``The Secretary shall terminate 
or suspend the operation of any or all of the provisions of this 
subpart, whenever he finds that such provisions do not tend to 
effectuate the declared policy of the act.''

Outgoing Grade and Size Regulations

    The order previously mandated outgoing inspections and outgoing 
prune quality, size, and labeling requirements of California produced 
prunes by California prune handlers to verify that such prunes meet 
quality requirements. These requirements were based on the U.S. 
Standards for Grades of Dried Prunes and marketing order grade 
standards. The objective of the inspection, grade, size, and labeling 
requirements was to ensure that only prunes of acceptable quality and 
size entered the domestic and foreign markets for human consumption, 
thereby ensuring consumer satisfaction, increasing sales, and improving 
returns to producers. While the industry continues to believe that 
quality is an important factor in maintaining sales, the Committee 
believes that the costs associated with existing minimum grade, size, 
and labeling standards may exceed the benefits accrued from such 
requirements at this time.

Prune Import Regulations

    Section 8e of the Agriculture Marketing Agreement Act of 1937 (Act) 
provides that when certain domestically produced commodities, including 
prunes, are regulated under a Federal marketing order, imports of that 
commodity must meet the same or comparable grade, size, quality, and 
maturity requirements. Section 999.200 contained the prune import 
regulations that were comparable to the domestically produced prune 
outgoing quality and size requirements. Since this rule continues to 
suspend the outgoing quality and size requirements for domestically 
produced prunes for three years, these requirements in the import 
regulation must continue to be suspended during this period as well.
    U.S. imports of dried prunes are insignificant compared to U.S. 
production. In 2002, while the U.S. produced 158,000 tons of dried 
prunes, only 616 tons were imported. In that year, the domestically 
produced tonnage was over 250 times as large as the imported tonnage. 
In 2001, 204 tons were imported, but the U.S. produced 150,000 tons. 
Production was 735 times as large as imports.
    In recent years, about 90 percent of U.S. imports of dried prunes 
have come from Argentina. Other countries that export to the United 
States include Chile, France, Mexico, Iran, and Turkey.

Undersized Prune Disposition Regulations

    The prune administrative rules and regulations previously required 
handlers to have a third party inspection of each lot of undersized 
prunes prior to shipment into nonhuman outlets or other disposition. 
Under Sec.  993.51 of the Order, inspections are performed by the Dried 
Fruit Association of California. These requirements also required 
handlers to submit to the Committee comprehensive documentation 
verifying that they have satisfied their undersized prune obligation.
    The prune administrative rules and regulations previously limited 
the quantities of larger size prunes that can be used to meet a 
handler's undersized disposition obligation. While the Committee plans 
to continue to restrict the shipment of undersized prunes into human 
consumption outlets, the Committee continues to believe that the costs 
associated with the inspection and documentation of the disposal of 
undersized prunes may exceed the benefits. To reduce the cost and time 
for handlers to file reports and verify the disposition of undersized 
prunes through inspection, the Committee unanimously recommended 
removing the inspection requirements, and simplifying the documentation 
required from handlers to satisfy their undersized obligation as well 
as removing the limits on the weights of larger prunes that can be used 
to meet undersized obligations.

Background and Action Taken

    California prune handlers are currently selling prunes in many 
forms to customers throughout the world. The

[[Page 60622]]

majority of these sales involve sizing or processing the prunes to more 
stringent specifications than required under the order. Retail and 
wholesale buyers often visit handlers' plants in California to verify 
specification and quality procedures, which tend to be more stringent 
than the minimum outgoing quality requirements mandated in the 
marketing order. Handlers continue to improve the quality and outgoing 
inspection procedures to target the specific customer and market 
demands. Almost all prunes sold for consumption in the United States as 
prunes are pitted and packaged in consumer bags and canisters targeting 
much higher standards than those mandated by the marketing order.
    Previously used procedures required detailed administrative 
notating and reporting of defect information, large numbers of line 
inspectors at handler plants, and tracking and segregating lots and 
bins of fruit to comply with the order. As a result, handlers expended 
significant amounts of time and money on the inspection process. Also, 
almost all fruit is inspected by international buyers upon receipt, and 
is accepted or rejected based on the fruits' condition at the time of 
that review, regardless of any prior inspection process or 
certification. Further, prunes produced in other countries must meet 
customer specifications and inspection criteria.
    Because of increased foreign competition that sells quality-
processed fruit, shifting consumer demand from natural condition to 
processed prunes, and increasingly competitive specifications, the 
minimum marketing order standards no longer reflect current industry 
needs. The Committee continues to believe that California prune 
handlers must reduce all unnecessary costs in order to remain 
competitive with imported fruit and to profitably sell fruit in 
international markets.
    The mandatory outgoing inspections focused on cosmetic defects or 
defects that tend to be removed through steaming, pitting, or juicing 
the fruit. While the industry once sold primarily unprocessed prunes, 
consumer demand has changed and some processing is invariably required, 
leaving the outgoing inspection criteria inapplicable and out-dated.
    With regard to import requirements, section 8e of the Act requires 
import regulations to be comparable to the domestic regulations, not 
more restrictive. Since this rule continues to suspend outgoing grade 
and size regulations for domestically produced prunes, and 
substantially relaxes the disposition and verification requirements on 
undersized prunes under the order, the import regulation must continue 
to be suspended as well.
    During the three-year suspension period, the industry will have the 
opportunity to develop and implement more appropriate finished product 
grade standards through amendments to the order and administrative 
rules and regulations. In the interim, the suspension of these 
provisions continues to ensure that these provisions are not 
implemented. In the absence of any additional action, the provisions 
will automatically come back into effect at the end of the suspension 
period.
    At its May 1, 2003, meeting, the Committee unanimously recommended 
suspension of all outgoing inspection, outgoing quality, size, and 
labeling requirements in the marketing order and the administrative 
rules and regulations for three years, beginning with the start of the 
new crop year on August 1, 2003. The suspension of these provisions 
continues to reduce some administrative costs.
    This rule continues to suspend in their entirety Sec. Sec.  
993.50(a) through (f) and 993.97 Exhibit A--Part II of the order, and 
Sec. Sec.  993.150(a) and (b), 993.150(d) through (g)(1), 993.515, 
993.516, 993.517, 993.518 of the administrative rules and regulations, 
as well as the import regulation specified in Sec.  999.200. Portions 
of Sec. Sec.  993.50(g) and 993.51 of the order, and portions of 
Sec. Sec.  993.601 of the administrative rules and regulations continue 
to be suspended. These sections of the order and administrative rules 
and regulations pertain to the various requirements of the outgoing 
inspection, outgoing quality, size, and labeling requirements, and 
import regulation provisions.
    Prune handlers opposed the previously stated undersized prune 
regulations because they were costly to use. Undersized prunes have 
marginal value as cattle feed or use in tobacco products (about $40-$45 
per ton), and the costs of completing the required Committee paperwork 
and having them inspected by the DFA of California may exceed the 
revenue received. The industry is now also less concerned about the 
minimal amount of poor quality undersized prunes. Supplies of 
undersized prunes are now lower because of the recent tree pull 
programs and growers field sizing programs to drop small prune plums in 
the orchard, rather than deliver them to handlers.
    The Committee chose to recommend removal of the limits on the 
quantities of larger-sized prunes that can be used to meet a handler's 
undersized weight disposition obligation, and the requirement for 
inspection of the undersized prunes and certification of handlers' 
receipt of usage, because these changes eliminate certain inspection 
costs and reduce Committee and handler administration costs.
    At the April 3, 2003, meeting, the Committee unanimously 
recommended modification of the undersized prune disposition provisions 
in the marketing order and the administrative rules and regulations, 
which began with the start of the new crop year on August 1, 2003. The 
modification of these provisions continues to reduce some committee and 
handler administrative costs.
    This rule continues to remove Sec.  993.150(g)(2)(i), Sec.  
993.150(g)(2)(iii), and Sec.  993.150(g)(2)(iv) in the administrative 
rules and regulations. Portions of Sec.  993.150(g)(3) continue to be 
amended.

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.

Industry Profile

    There are approximately 1,205 producers of dried prunes in the 
production area and approximately 21 handlers subject to regulation 
under the marketing order. Small agricultural producers are defined by 
the Small Business Administration (13 CFR 121.201) as those having 
annual receipts of less than $750,000 and small agricultural service 
firms are defined as those having annual receipts of less than 
$5,000,000.
    Eight of the 21 handlers (38 percent) shipped over $5,000,000 worth 
of dried prunes and could be considered large handlers by the Small 
Business Administration. Thirteen of the 21 handlers (62 percent) 
shipped less than $5,000,000 worth of dried prunes and could be 
considered small handlers. An estimated 32 producers, or less than 3 
percent of the 1,205 total producers, would be considered large growers 
with annual incomes over $750,000. The

[[Page 60623]]

majority of handlers and producers of California dried prunes may be 
classified as small entities.
    In addition, there are an estimated 30 importers and one third-
party entity that performed inspections under the order. USDA does not 
have precise information on these entities, but believes that the 
majority of the importers and the inspection agency are small entities.

Summary of Rule Change

    This rule continues to suspend the outgoing prune inspection and 
outgoing prune quality requirements under the order and the 
administrative rules and regulations, and the prune import provisions 
for a three-year period, and continues to modify the undersized prune 
disposition requirements. These changes continue to be effective since 
the start of the new crop year on August 1, 2003, for three years. In 
the absence of additional rulemaking, the suspended requirements will 
come back into effect at the end of the three-year period.
    The industry chose suspension of the outgoing inspection, outgoing 
prune quality and size and labeling requirements, because suspension is 
the quickest way to ensure relief from these regulations. During the 
three-year suspension period, the industry continues will have the 
opportunity to develop and implement more effective finished product 
grade standards through amendments to the order and administrative 
rules and regulations. It also has an opportunity to decide whether 
these requirements should be terminated.
    Authority to suspend these provisions of the marketing order and 
administrative rules and regulations is provided in Sec.  993.90(a) of 
the order. Authority to modify the disposition requirements and 
procedures for undersized prunes in the administrative rules and 
regulations is provided in Sec. Sec.  993.50(g) and 993.52 of the 
order. Authority for the import regulation is in section 8e of the Act.

Impact of Regulation

    Regarding the impact of this rule on affected entities, this action 
continues the reduced reporting and recordkeeping burden on California 
prune handlers and continues the reduction in the Committee's and 
handlers' administrative costs. Also, this action continues to reduce 
the number of inspections performed by the inspection agency under the 
order. The Committee estimates that 21 California prune handlers are 
subject to these provisions and to filing the handler reports. Also 
under the prune import regulations, it is estimated that as many as 10 
importers would file forms applicable to the import regulations. The 
handler annual burden to file these reports is 70.04 hours, and the 
respondent annual burden to file reports under the import regulations 
is 6.05 hours. Thus, there is a potential to reducing the annual 
handler and importer reporting burden by 76.09 hours during the 
suspension period. The benefits of this final rule apply to all prune 
handlers and importers, regardless of their size of operation.
    The forms affected by this rule are as follows: (1) Form PMC 2.2, 
Application for Permission to Dispose of Substandard Prunes; (2) Form 
PMC 2.6, Statement of Proposed Disposition of Substandard Prunes; (3) 
Form PMC 4.72A, Foreign Export `` Notice of Substandard Prunes for 
Manufacturing Purposes; (4) Form PMC 4.72B, Foreign Export `` Notice of 
Usage of Substandard Prunes for Manufacturing Purposes; (5) Form PMC 
2.21, Application for Permission to Dispose of Undersized Prunes for 
Non-Human Usage; (6) Form PMC 4.71A, User's Receipt of Dried Undersized 
Prunes for Non-Human Usage; (7) Form PMC 4.71B, User's Certificate of 
Non-Human Usage of Dried Undersized Prunes; (8) Form PMC 2.63, 
Statement of Proposed Disposition of Undersized Prunes; (9) Form FV-
170, Prune Form No. 1; and (10) Form FV-171, Prune Form No. 2.
    It should be noted that if the Committee determines that these 
suspensions are having an unfavorable impact on the industry, it could 
meet and recommend rescinding the suspensions. Also, as previously 
mentioned, the provisions automatically come back into effect at the 
end of the suspension period.
    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the information collection requirements being suspended by 
this rule were previously approved by the Office of Management and 
Budget, under OMB No. 0581-0178. 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, USDA has not identified any relevant Federal rules that 
duplicate, overlap or conflict with this rule.

Alternatives Considered

    At meetings held on April 3, and May 1, 2003, the Committee and 
industry members discussed different alternatives to these actions. The 
Committee discussed the possibility of suspending the total Federal 
prune marketing order, but its benefit in other areas is recognized by 
the industry. Another alternative discussed was to suspend all 
mandatory inspections (both incoming and outgoing inspections), but 
many on the Committee and in the industry deemed this action too 
extreme. Another alternative discussed was to exempt handlers from the 
inspection requirements if they could demonstrate that the automation 
of their plant assured consistent delivery of higher quality prunes, 
but this would not be practicable. Another alternative considered was a 
two-year suspension of the undersized prune regulation. This was 
opposed because it would increase the domestic salable tonnage and 
would add to the industry's oversupply.
    The Committee's April 3, and May 1, 2003, meetings where the 
outgoing inspection, outgoing prune quality, size, and labeling 
requirement issues were deliberated were public meetings and widely 
publicized throughout the prune industry. At the April 3, 2003, 
meeting, the Committee recommended removing the limits on the quantity 
of larger-sized prunes that could be used to meet handler undersized 
obligations and eliminating the DFA of California undersized prune 
inspection and certification of receipt and usage. This was to reduce 
costs, including inspection fees and other Committee costs associated 
with mandatory inspection, and the reporting burden resulting from the 
inspection requirements.
    All interested persons were invited to attend the meetings and 
participate in the industry's deliberations. Finally, interested 
persons were invited to submit information on the regulatory and 
informational impacts of these changes on small businesses.
    An interim final rule concerning this action was published in the 
Federal Register on July 24, 2003. Copies of the rule were mailed by 
the Committee's staff to all Committee members, alternates and prune 
handlers. In addition, the rule was made available through the Internet 
by the Office of the Federal Register and USDA. That rule provided for 
a 60-day comment period which ended on September 22, 2003. No comments 
were received.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab.html. Any questions about the compliance 
guide should be sent to Jay Guerber at the previously mentioned

[[Page 60624]]

address in the FOR FURTHER INFORMATION CONTACT section.
    The Office of the U.S. Trade Representative has reviewed this rule 
and concurs with its issuance.
    After consideration of all relevant material presented, including 
the Committee's recommendation, and other information, it is found that 
finalizing the interim final rule, without change, as published in the 
Federal Register (68 FR 43614, July 24, 2003) will tend to effectuate 
the declared policy of the Act.

List of Subjects

7 CFR Part 993

    Marketing agreements, Plums, Prunes, Reporting and recordkeeping 
requirements.

7 CFR Part 999

    Dates, Filberts, Food grades and standards, Imports, Nuts, Prunes, 
Raisins, Reporting and recordkeeping requirements, Walnuts.

PART 993--DRIED PRUNES PRODUCED IN CALIFORNIA

PART 999--SPECIALTY CROPS: IMPORT REGULATIONS

    Accordingly, the interim final rule amending 7 CFR parts 993 and 
999 which was published at 68 FR 43614 on July 24, 2003, is adopted as 
a final rule without change.

    Dated: October 17, 2003.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 03-26712 Filed 10-22-03; 8:45 am]
BILLING CODE 3410-02-P