[Federal Register Volume 69, Number 29 (Thursday, February 12, 2004)]
[Rules and Regulations]
[Pages 6912-6917]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-3029]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 989

[Docket No. FV03-989-6 FIR]


Raisins Produced From Grapes Grown in California; Revision of 
Varietal Types

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 that revised the list of 
varietal types of raisins specified under the Federal marketing order 
for California raisins (order). The order regulates the handling of 
raisins produced from grapes grown in California and is locally 
administered by the Raisin Administrative Committee (RAC). The order 
provides authority for volume and quality regulations that are applied 
according to varietal type of raisin. This action continues to combine 
the Oleate and Related Seedless varietal type (Oleates) with the 
Natural (sun-dried) Seedless varietal type (Naturals), and make 
conforming changes to the order's volume and quality regulations. This 
action addresses changing cultural practices in the California raisin 
industry.

EFFECTIVE DATE: March 15, 2004.

FOR FURTHER INFORMATION CONTACT: Maureen T. Pello, Senior 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

[[Page 6913]]

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. 989 (7 CFR part 989), both as amended, 
regulating the handling of raisins produced from grapes grown 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. Such 
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 to revise the list of varietal types of raisins 
specified under the order. The order regulates the handling of raisins 
produced from grapes grown in California and is administered locally by 
the RAC. The order provides authority for volume and quality 
regulations that are applied according to varietal type of raisin. This 
action continues to combine the Oleate varietal type with the Natural 
varietal type, and make conforming changes to the order's volume and 
quality regulations. This action was unanimously recommended by the RAC 
at a meeting on May 15, 2003, and addresses changing cultural practices 
in the California raisin industry.

Varietal Types

    The order provides authority for quality and volume regulations 
that are applied according to varietal type of raisin. Section 989.10 
of the order defines the term varietal type to mean raisins generally 
recognized as possessing characteristics differing from other raisins 
in a degree sufficient to make necessary or desirable separate 
identification and classification. That section includes a list of 
eight varietal types, and provides authority for the RAC, with the 
approval of USDA, to change this list. A description of these varietal 
types, along with additional varietal types, may be found in Sec. 
989.110 of the order's administrative rules and regulations.
    Prior to implementation of the interim final rule (68 FR 42943), 
paragraph (a) in Sec. 989.110 defined the Natural varietal type to 
include all sun-dried seedless raisins that possess characteristics 
similar to Natural Thompson Seedless (NTS) raisins which, for the 
purpose of expediting drying, have not been dipped in or sprayed with 
water, with or without soda, oil or other chemicals prior to or during 
the drying process. Naturals are the predominant varietal type of 
California raisin, comprising about 90 percent of California's raisin 
production.
    Also prior to implementation of the interim final rule, paragraph 
(c) in Sec. 989.110 defined the Oleate varietal type to include all 
raisins produced by sun-drying or artificial dehydration of seedless 
grapes which, in order to expedite drying, are dipped in or sprayed 
with water with soda, oil, Ethyl Oleate, Methyl Oleate or any other 
chemicals either while such grapes are on the vine or after they have 
been removed from the vine.
    Cultural practices are evolving in the raisin industry in an effort 
to reduce production and harvest costs. Traditionally, most California 
raisins have been made by hand picking grapes from the vine and drying 
them in the sun on trays laid on the ground. This process is labor 
intensive and expensive. Thus, in an effort to reduce costs, some 
growers have switched to sun-drying their grapes on the vine, and then 
mechanically harvesting them (``dried on the vine'' or DOV). A drying 
agent such as Oleate may be applied to the grapes on the vine to hasten 
the drying process.
    Additionally, there is concern that Oleate could be applied to sun-
dried Natural raisins, and that the raisins could be represented as 
Oleates to circumvent the volume regulations that are typically in 
effect for Naturals. With the exception of the 1998-99 crop year, 
volume regulation has been in place for Naturals every year since 1983-
84. (The raisin crop year (season) runs from August 1 through July 31.) 
For the 1992-93 through the 1999-2000 seasons, average acquisitions of 
Oleates were 441.38 tons. For the 2000-01 and 2001-02 seasons, Oleate 
acquisitions were 3,669 and 6,495 tons, respectively. Volume regulation 
was in place for the beginning of the 2001-02 season for Oleates, but 
was lifted in November 2001 due to no acquisitions up to that time. 
Once volume regulation was lifted, Oleates were acquired. For the 2002-
03 season, the RAC recommended final volume regulation percentages for 
Oleates in January 2003. However, by the week ending February 1, 2003, 
Oleate acquisitions were at 2,121 tons, and far below the 5,268-ton 
trade demand. Because the supply of Oleates was well below demand, 
volume regulation was lifted in mid-February 2003. Since that time, 
2002-03 Oleate acquisitions increased to 18,385 tons through July 31, 
2003, the end of the 2002-03 crop year. Based on this data, and the 
fact that most raisins are typically acquired much earlier in the crop 
year, the RAC is concerned that Oleate could be sprayed on bins of 
Naturals and that the raisins could be represented as Oleates to 
circumvent volume regulation.
    These different types of Oleate-treated grapes/raisins are 
difficult to distinguish from non-Oleate treated raisins. At its May 
15, 2003, meeting, the RAC recommended eliminating the Oleate varietal 
type, and revising the Natural varietal type to include Oleates. 
Specifically, Naturals include all sun-dried raisins possessing similar 
identifiable characteristics as raisins produced from Natural Thompson 
Seedless grapes, or similar grape varieties, whether dried on trays or 
on the vine, with or without application of a drying agent that is a 
food-grade additive, such as, soda, oil, Ethyl Oleate, or Methyl Oleate 
prior to, during, or after the drying process. The RAC recommended 
using ``accepted food-grade drying agent'' in the definition rather 
than ``drying agent that is a food-grade additive''. USDA changed the 
RAC's recommendation so it conforms more closely to accepted U.S. Food 
and Drug Administration terminology. Soda was also added to the 
examples of drying agents because soda has been used by the industry 
for this purpose in past years. Accordingly, paragraph (c) in Sec. 
989.110 regarding Oleates was removed, and paragraph (a) regarding 
Naturals was revised to include Oleates.

[[Page 6914]]

    Industry members considered the merits of revising the definition 
for Dipped Seedless raisins. Dipped Seedless includes all raisins 
produced by artificial dehydration of seedless grapes that possess 
characteristics similar to Thompson Seedless grapes which, in order to 
expedite drying, have been dipped in or sprayed with water only after 
such grapes have been removed from the vine. The current Oleate 
definition includes raisins produced by artificially dehydrating grapes 
with the application of a drying agent to the grapes. The question was 
raised regarding how raisins made from artificially dehydrated Oleate-
treated grapes would be classified if sun-dried Oleates are included 
with Naturals. Industry members concluded that no such raisins are 
currently produced. Accordingly, the definition of Dipped Seedless 
raisins was not revised to include artificially dehydrated Oleate-
treated grapes.

Volume Regulation and Reserve Pool Requirements

    The order provides authority for volume regulation designed to 
promote orderly marketing conditions, stabilize prices and supplies, 
and improve producer returns. When volume regulation is in effect, a 
certain percentage of the California raisin crop may be sold by 
handlers to any market (free tonnage) while the remaining percentage 
must be held by handlers in a reserve pool (reserve) for the account of 
the RAC. Reserve raisins are disposed of through various programs 
authorized under the order. For example, reserve raisins may be sold by 
the RAC to handlers for free use or to replace part of the free tonnage 
they exported; carried over as a hedge against a short crop the 
following year; or may be disposed of in other outlets not competitive 
with those for free tonnage raisins, such as government purchase, 
distilleries, or animal feed. Net proceeds from sales of reserve 
raisins are ultimately distributed to producers.
    Section 989.66 of the order specifies general requirements for 
reserve tonnage. Reserve tonnage acquired by handlers from producers 
and reserve tonnage transferred to a handler from the RAC must be held 
by the handler for the account of the RAC. Reserve tonnage must be 
stored separate and apart from other raisins and identified according 
to rules and procedures specified by the RAC and approved by the 
Secretary. Handlers may, under the direction and supervision of the 
RAC, substitute for any reserve tonnage raisins a like quantity of 
standard raisins of the same varietal type and of the same or more 
recent year's production.
    Section 989.166 of the order's administrative rules and regulations 
specifies additional requirements for reserve raisins. Paragraph (a)(1) 
of that section prescribes identification, delivery, and transfer 
requirements for Natural reserve raisins. Specifically, lots of Natural 
reserve raisins that have been dipped in or sprayed with water, with or 
without chemicals, prior to or during the drying process, for purposes 
other than to expedite drying, or that have been produced from seedless 
varieties of grapes other than Thompson Seedless, must be identified by 
the Inspection Service affixing to one container on each pallet or to 
each bin in each lot, a prenumbered RAC control card which must remain 
affixed until the raisins are processed or disposed of as natural 
condition raisins. Additionally, such reserve raisins cannot be 
delivered to the RAC nor transferred to another handler without 
approval of the RAC or the receiving handler.
    The above language in Sec. 989.166(a)(1) regarding chemicals 
applied to Naturals for purposes other than to expedite drying was 
added to the regulations in 1984 and refers to MP-11, a fungicide. The 
language regarding Naturals produced from grapes other than Thompson 
Seedless was added in 1991. In these respective instances, some 
handlers had indicated that they would not pack MP-11 raisins nor 
raisins made from grapes other than Thompson Seedless. In both cases, 
the RAC determined that these categories of Naturals should be 
considered as Naturals for volume and quality control purposes, but 
that additional requirements should be in place regarding 
identification, delivery, and transfers of reserve raisins.
    As the RAC considered the merits of combining Oleates with 
Naturals, some handlers indicated that they would not pack Naturals 
treated with a drying agent such as Oleate. Thus, at its May 2003 
meeting, the RAC recommended revising Sec. 989.166(a)(1) to include 
reserve Naturals treated with drying agents. Such reserve raisins must 
be tagged and identified accordingly, and cannot be delivered to the 
RAC nor transferred to another handler without the approval of the RAC 
or the receiving handler. Handlers with only Oleate-treated reserve can 
substitute non-Oleate treated free tonnage Naturals if necessary. The 
RAC also recommended adding in this section authority for the RAC to 
specify additional categories of Naturals that have been produced using 
other cultural practices and that will be subject to these additional 
requirements. Any such additions will be made with USDA approval. This 
will give the RAC flexibility to address changing cultural practices 
regarding different categories of Naturals in the future. Section 
989.166(a) was revised accordingly.
    Another concern regarding this issue is the impact of volume 
regulation on handlers that may have built up a market for Oleate-
treated raisins. There is concern that volume regulation would 
contribute to handlers losing this market. However, pursuant to Sec. 
989.66(b)(3), handlers of Oleate-treated Naturals have the flexibility 
to substitute free tonnage Naturals that will be acceptable to the RAC. 
Thus, handlers can substitute non-Oleate treated free tonnage Naturals 
for their Oleate-treated reserve raisins, and use their Oleate-treated 
fruit to meet their market needs.

Quality Requirements

    This rule also continues to revise the quality requirements 
specified in the order's regulations to remove references to Oleates. 
Specifically, this rule continues to revise: the incoming quality 
requirements; the table of factors for converting between natural 
condition and processed weight; and the outgoing quality requirements. 
The details of these changes are discussed below.

Incoming Quality Requirements

    Section 989.58(a) of the order provides authority for quality 
control regulations whereby natural condition raisins that are 
delivered from producers to handlers must meet certain incoming quality 
requirements. Section 989.701 of the order's regulations specifies 
minimum grade and condition standards for natural condition raisins for 
each varietal type. Prior to implementation of the interim final rule, 
paragraph (b) of that section specified requirements for three varietal 
types of raisins--Dipped Seedless, Oleate, and Other Seedless-Sulfured. 
Specifically, such raisins must have been prepared from sound, 
wholesome, matured grapes properly dried and cured, and shall: (1) Be 
fairly free from damage by sugaring, mechanical injury, sunburn, or 
other similar injury; (2) have a normal characteristic flavor and odor 
of properly prepared raisins; (3) contain no more than 5 percent, by 
weight, of substandard raisins (raisins that show development less than 
that characteristic of raisins prepared from fairly well-matured 
grapes), and also contain at least 50 percent well-matured or 
reasonably well-matured raisins; (4) not exceed 14 percent moisture; 
and (5) be of such quality and condition as can

[[Page 6915]]

be expected to withstand storage as provided in the order and that when 
processed in accordance with good commercial practice will meet the 
minimum standards for processed raisins established by the RAC. This 
rule continues to revise this paragraph to remove reference to the 
Oleate varietal type.
    Paragraph (a) of Sec. 989.701 specifies incoming quality 
requirements for Naturals, Monukka and Other Seedless raisins. This 
rule continues to combine Oleates with the Natural varietal type. Thus, 
the incoming quality requirements specified in Sec. 989.701(a) now 
apply to Oleates. With the exception of the moisture requirement, the 
specifications in paragraphs (a) and (b) of Sec. 989.701 are identical. 
Paragraph (a) specifies that Naturals, Monukkas, and Other Seedless 
raisins cannot exceed 16 percent moisture. The RAC's recommendation 
includes Oleates meeting a less restrictive moisture tolerance of 16 
percent as opposed to the 14 percent required for Oleates prior to 
implementation of the interim final rule.

Weight Dockage System

    Section 989.58(a) also contains authority for handlers to acquire 
natural condition raisins that fall outside the tolerance established 
for maturity, which includes substandard raisins, under a weight 
dockage system. Handler acquisitions of raisins and payments to 
producers are adjusted according to the percentage of substandard 
raisins in a lot, or the percentage of raisins that fall below certain 
levels of maturity. Section 989.210(a) of the order's regulations lists 
the varietal types of raisins that may be acquired pursuant to a weight 
dockage system. Sections 989.212 and 989.213 contain tables with 
dockage factors applicable to lots of raisins that fall outside the 
tolerances for substandard raisins and maturity, respectively, 
specified in Sec. 989.701. The substandard and maturity dockage factors 
are identical for Oleates and Naturals. This rule continues to remove 
all references to Oleates that were contained in Sec.Sec. 989.210(a), 
989.212, and 989.213. This rule also continues to remove paragraph (e) 
in Sec. 989.213 that was applicable only to the 1998-99 crop year and 
is thus obsolete.

Raisin Weight Conversion Table

    Section 989.601 of the order's regulations specifies a list of 
conversion factors for raisin weights. The factors are used to convert 
the net weight of reconditioned raisins acquired by handlers as packed 
raisins to a natural condition weight. The net weight of the raisins 
after the completion of processing is divided by the applicable factor 
to obtain the natural condition weight. If the adjusted weight exceeds 
the original weight, the original weight is used. This rule continues 
to remove the reference to Oleates and its 0.92 conversion factor. 
Additionally, the table specifies a conversion factor for Naturals of 
0.92. Thus, combining Oleates with the Natural varietal type results in 
no change to the conversion factor. Section 989.601 was revised 
accordingly.

Outgoing Quality Requirements

    Section 989.59 of the order provides authority for quality control 
regulations for raisins subsequent to their acquisition by handlers 
(outgoing requirements). Section 989.702 of the order's regulations 
specifies minimum grade standards for packed raisins. Prior to 
implementation of the interim final rule, paragraph (a) of that section 
specified identical requirements for four varietal types of raisins--
Natural, Dipped Seedless, Oleate, and Other-Seedless Sulfured. Since 
the outgoing requirements for Naturals and Oleates are identical, this 
rule continues to remove the reference to Oleates from paragraph (a).
    Accordingly, Naturals must meet the requirements of U.S. Grade C as 
defined in the United States Standards for Grades of Processed Raisins 
(Sec.Sec. 52.1841 through 52.1858) issued under the Agricultural 
Marketing Act of 1946 (AMA) (7 U.S.C. 1622 through 1624). At least 70 
percent, by weight, of the raisins in a lot must be well-matured or 
reasonably well-matured. With respect to select-sized and mixed-sized 
lots, the raisins must at least meet the U.S. Grade B tolerances for 
pieces of stem, and underdeveloped and substandard raisins, and small 
(midget) sized raisins must meet the U.S. Grade C tolerances for those 
factors.

Reporting Requirements

    All raisin handlers are currently required to submit various 
reports to the RAC where the data collected is segregated by varietal 
type of raisin. These reports include: (1) Weekly Report of Standard 
Raisin Acquisitions (RAC-1); (2) Weekly Report of Standard Raisins 
Received for Memorandum Receipt or Warehousing (RAC-3); (3) Monthly 
Report of Free Tonnage Raisin Disposition (RAC-20); (4) Weekly Off-
Grade Summary (RAC-30); (5) Inventory of Free Tonnage Standard Quality 
Raisins On Hand (RAC-50); and (6) Inventory of Off-Grade Raisins On 
Hand (RAC-51). These forms have been revised to remove the columns for 
Oleates. The total annual reporting burden on handlers for these six 
forms remains unchanged at 660 hours.
    In accordance with the Paperwork Reduction Act of 1995 (PRA) (44 
U.S.C. Chapter 35), these information collection requirements have been 
previously approved by the Office of Management and Budget (OMB) under 
OMB Control Number 0581-0178.

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 20 handlers of California raisins who are 
subject to regulation under the order and approximately 4,500 raisin 
producers in the regulated area. Small agricultural service firms are 
defined by the Small Business Administration (13 CFR 121.201) as those 
having annual receipts of less than $5,000,000, and small agricultural 
producers are defined as those having annual receipts of less than 
$750,000. Thirteen of the 20 handlers subject to regulation have annual 
sales estimated to be at least $5,000,000, and the remaining 7 handlers 
have sales less than $5,000,000. No more than 7 handlers, and a 
majority of producers, of California raisins may be classified as small 
entities.
    The order provides authority for volume and quality regulations 
that are applied according to varietal type of raisin. This rule 
continues to combine the Oleate varietal type with the Natural varietal 
type, and to make conforming changes to the order's volume and quality 
regulations. Pursuant to Sec. 989.10 of the order, Sec. 989.110 of the 
regulations was revised to remove the Oleate varietal type, and to 
include sun-dried raisins that may or may not be treated with Oleate or 
similar food-grade drying agent in the definition of the Natural 
varietal type. Pursuant to Sec. 989.66, Sec. 989.166(a)(1) was revised 
to add identification, delivery, and transfer requirements for Naturals 
treated with Oleate, or similar drying agents. Finally,

[[Page 6916]]

pursuant to Sec.Sec. 989.58 and 989.59, the order's quality regulations 
were revised to remove references to Oleates as follows: Incoming 
quality requirements specified in Sec.Sec. 989.210, 989.212, 989.213, 
and 989.701; a table of factors for converting between natural 
condition and processed weight specified in Sec. 989.601; and outgoing 
quality requirements specified in Sec. 989.702.
    Regarding the impact of this action on affected entities, this rule 
continues to help ensure that sun-dried Natural Thompson raisins or 
raisins produced from similar grape varieties will be subject to the 
same volume regulation percentages. Concerns about circumventing volume 
regulation by representing Naturals as Oleates will be addressed. If 
volume regulation were in effect, handlers who have a market for 
Oleate-treated raisins will have the opportunity to substitute free 
tonnage non-Oleate treated Naturals for their reserve Oleates to meet 
their market needs.
    The RAC considered several alternatives to this action. In the 
spring of 2002, the RAC recommended, and USDA approved, conducting a 
research study to determine if it is possible to distinguish whether 
Oleate or a similar agent was applied to a grape as opposed to a 
raisin. This would assist in determining if Oleate or a similar drying 
agent was being applied to raisins to circumvent volume regulation. 
Preliminary information indicates that distinguishing if Oleate or 
similar drying agent were applied to grapes or raisins may not be 
possible. There were also some discussions on establishing color 
specifications to differentiate between non-Oleate Naturals, Oleate-
treated Naturals, and DOV. However, the general consensus is that 
raisins darken with time so that color specifications would be very 
difficult to apply. Further, there were discussions about requiring 
producers to file a declaration with the RAC prior to the beginning of 
the crop year regarding the use of Oleate or similar agent. However, 
such a producer declaration could not be required.
    Regarding the impact of this action on reporting requirements under 
the order, all raisin handlers are required to submit various reports 
to the RAC where the data collected is segregated by varietal type of 
raisin. As previously listed, these reports include: (1) Weekly Report 
of Standard Raisin Acquisitions (RAC-1); (2) Weekly Report of Standard 
Raisins Received for Memorandum Receipt or Warehousing (RAC-3); (3) 
Monthly Report of Free Tonnage Raisin Disposition (RAC-20); (4) Weekly 
Off-Grade Summary (RAC-30); (5) Inventory of Free Tonnage Standard 
Quality Raisins On Hand (RAC-50); and (6) Inventory of Off-Grade 
Raisins On Hand (RAC-51). These forms have been revised to remove the 
columns for Oleates. The current total annual burden on handlers for 
these six forms remains unchanged at 660 hours.
    As previously stated, in accordance with the PRA, the information 
collection requirements referenced above have been approved by the OMB 
under OMB Control 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.
    Additionally, except for applicable section 8e import regulations, 
USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this rule. However, as previously stated, 
Natural raisins must at least meet U.S. Grade C as defined in the 
United States Standards for Grades of Processed Raisins (Sec.Sec. 
52.1841 through 52.1858) issued under the AMA.
    Further, this action was reviewed at several industry meetings as 
follows--the RAC's Industry Solutions Subcommittee on April 21, 2003, 
the Administrative Issues Subcommittee on April 23, 2003, work group 
meetings on April 29 and May 12, 2003, and an Administrative Issues 
Subcommittee and a RAC meeting on May 15, 2003. All of these meetings 
where this action was deliberated were public meetings widely 
publicized throughout the raisin industry. All interested persons were 
invited to attend the meetings and participate in the industry's 
deliberations.
    An interim final rule concerning this action was published in the 
Federal Register on July 21, 2003 (68 FR 42943). The RAC staff mailed 
copies of the rule to all RAC members and alternates, the Raisin 
Bargaining Association, handlers, and dehydrators. 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 that ended on September 19, 2003. One comment was received in 
opposition to this action.
    The commenter contends that the order cannot be amended to abolish 
the Oleate varital type through informal rulemaking. The commenter 
states that, because Sec. 989.10 was amended through a formal 
rulemaking proceeding to create Oleates as a distinct varietal type, 
Oleates can only be abolished by an equivalent formal rulemaking 
procedure.
    USDA disagrees with the commenter's contention. The definition of 
varietal type has been part of the order since its promulgation in 
1949. In 1960, the term was amended through a formal rulemaking 
proceeding to name additional varietal types of raisins known at that 
time, and to add authority for the list of varietal types to be changed 
through informal rulemaking. USDA's recommended decision from the 
proceeding states that the time may come when a certain type of raisin 
will no longer be produced in commercial quantities and could be 
excluded from the list (25 FR 8656; September 8, 1960). Thus, removing 
a varietal type through informal rulemaking was clearly envisioned when 
Sec. 989.10 was revised in 1960. Additionally, as the commenter also 
states, Oleates were added to Sec. 989.110 through informal rulemaking 
in 1981 (46 FR 39120; July 31, 1981), with a conforming change made to 
Sec. 989.10 through formal rulemaking in 1983 (48 FR 32977; July 20, 
1983).
    The commenter also contends that USDA provided no proper basis for 
implementing this action through an interim final rule. The commenter 
alleges that USDA has known about the RAC proposal for months and could 
have published a proposal for comment long ago.
    USDA disagrees with the commenter's contention. While there have 
been discussions at past RAC meetings regarding the concern that 
Oleate-treated sun-dried Natural raisins could be represented as 
Oleates to circumvent Natural volume regulation, the RAC did not 
recommend to USDA any related action until May 15, 2003. USDA relies on 
marketing order committees/boards to analyze relevant information and 
submit recommendations to USDA for informal rulemaking to change 
marketing order regulations. It would have been premature for USDA to 
proceed with informal rulemaking absent a RAC recommendation and 
analysis. Additionally, the RAC's recommendation was unanimous, and the 
action needed to be in place by the beginning of the 2003-04 crop year, 
which began August 1, 2003. Thus, pursuant to 5 U.S.C. 553, USDA found 
upon good cause that it was impracticable, unnecessary and contrary to 
the public interest to give preliminary notice prior to putting this 
action into effect.
    The commenter contends that Oleates should remain a separate 
varietal type for several reasons. First, the commenter contends that 
the Oleate varietal type was first created in 1981 through informal 
rulemaking, and that the rationale for creating the Oleate varietal

[[Page 6917]]

type in 1981 is the same as today for maintaining the varietal type (46 
FR 39120; July 31, 1981). The commenter also states that changing 
cultural practices does not justify eliminating the Oleate varietal 
type today.
    As the commenter states, prior to 1981, Oleates were included with 
the varietal type Dipped and Related Seedless, along with water-dipped 
and soda-dipped raisins. In 1981, Oleates were considered relatively 
new to the U.S. industry and were developed to reduce the time required 
to sun-dry raisins and reduce problems associated with untimely rains. 
At that time, there was concern that, if Oleate production was 
substantial, the reserve percentage for Dipped and Related Seedless 
raisins would be inflated and the water-dipped segment's portion of the 
free tonnage for that year would be reduced. Thus, in 1981, the RAC 
recommended, and USDA approved, classifying water-dipped, soda-dipped, 
and Oleate-dipped raisins on the basis of whether or not they were sun-
dried or artificially dried. The rationale for the 1981 change was to 
provide equity between the sun-dried and artificially dehydrated 
segments of the raisin industry for purposes of volume regulation.
    USDA disagrees with the commenter's contention that the rationale 
for keeping Oleates as a separate varietal type remains the same today 
in 2003 as it was in 1981. The raisin industry is dynamic and the 
marketing order's regulations must often be changed to meet the needs 
of the industry. Section 989.10 was amended in 1960 to permit changes 
to the list of varietal types through informal rulemaking so that the 
RAC could be in a better position to meet changing conditions in the 
future. USDA has determined that the rationale to combine Oleates with 
Naturals referenced earlier in this rule--addressing changing cultural 
practices and reducing a possible means to circumvent volume 
regulation--justify this action and is consistent with the intent of 
Sec. 989.10.
    The commenter also contends that UDSA's inspection service is 
capable of proper classification and distinction of Oleate raisins 
versus Naturals. In this discussion, the commenter references the 1981 
informal rule that made Oleates a separate varietal type, and states 
that the rule correctly recognized that the inspection service was 
fully capable of making the proper classification.
    As defined in 1981, Oleates were raisins produced from ``grapes'' 
that had been treated with Oleate or similar drying agent. The problem 
is that cultural practices have changed since 1981, and Oleate is now 
applied to grapes or raisins at different times in the drying process.
    The commenter also contends that this action cannot be based at all 
on the research study referenced in the interim final rule because the 
study's results and methodology were not published or otherwise made 
available to interested parties. USDA disagrees with the commenter's 
contention. Dr. Susan Rodriguez and Dr. Roy Thornton at California 
State University, Fresno, California, conducted the study. Dr. 
Rodriguez attended a RAC work group meeting on April 29, 2003, and 
presented their preliminary findings. A final report was prepared for 
the RAC dated June 27, 2003.
    The commenter contends that the recent growth in demand for Oleates 
provides no evidence to extinguish the varietal type. Further, the 
commenter states that late season deliveries of Oleates provide no 
evidence of abuse, but rather is a sign of the industry's response to 
meet demand.
    USDA shares the RAC's concerns with the acquisition data. USDA 
believes that these concerns warrant combining Oleates with the Natural 
varietal type.
    The commenter contends that the change to Sec. 989.166 regarding 
the identification of Oleate-treated reserve raisins has no merit. USDA 
disagrees with the commenter's contention. The change is intended to 
ensure that Oleate-treated reserve raisins are properly marked, and 
that they cannot be delivered to the RAC or transferred to another 
handler without the approval of the RAC or the receiving handler. The 
commenter also contends that the economic viability of Oleates depends 
on their remaining free from volume regulation. However, as stated in 
the interim final rule, if volume regulation were in effect, handlers 
who have a market for Oleate-treated raisins will have the opportunity 
to substitute free tonnage non-Oleate treated Naturals for their 
reserve Oleates to meet their market needs.
    Accordingly, no changes will be made to the interim final rule as 
published in the Federal Register on July 21, 2003 (68 FR 42943) based 
on the comment 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 address 
in the FOR FURTHER INFORMATION CONTACT section.
    After consideration of all relevant material presented, including 
the information and recommendation submitted by the RAC, the comment 
received, and other available information, it is found that this rule, 
as hereinafter set forth, will tend to effectuate the declared policy 
of the Act.

List of Subjects in 7 CFR Part 989

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

PART 989--RAISINS PRODUCED FROM GRAPES GROWN IN CALIFORNIA

0
Accordingly, the interim final rule amending 7 CFR part 989 which was 
published at 68 FR 42943 on July 21, 2003, is adopted as a final rule 
without change.

    Dated: February 5, 2004.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 04-3029 Filed 2-11-04; 8:45 am]
BILLING CODE 3410-02-P