[Federal Register Volume 72, Number 10 (Wednesday, January 17, 2007)]
[Rules and Regulations]
[Pages 1919-1922]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-162]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 966

[Docket No. FVO6-966-1 FR]


Tomatoes Grown in Florida; Partial Exemption to the Minimum Grade 
Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule provides a partial exemption to the minimum grade 
requirements under the marketing order for tomatoes grown in Florida 
(order). The Florida Tomato Committee (Committee) locally administers 
the order. Under the order, Florida tomatoes must meet at least a U.S. 
No. 2 grade before they can be shipped and sold outside the regulated 
area. This rule exempts UglyRipeTM (UglyRipe) tomatoes from 
the shape requirements associated with the U.S. No. 2 grade. This 
change increases the volume of UglyRipe tomatoes that will meet the 
order requirements, and will help increase shipments and availability 
of these tomatoes for consumers.

EFFECTIVE DATE: This final rule becomes effective January 18, 2007.

FOR FURTHER INFORMATION CONTACT: William Pimental, Marketing 
Specialist, or Christian Nissen, Regional Manager, Southeast Marketing 
Field Office, Marketing Order Administration Branch, Fruit and 
Vegetable Programs, AMS, USDA; Telephone: (863) 324-3375, Fax: (863) 
325-8793, or e-mail: [email protected], or 
[email protected].
    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].

[[Page 1920]]


SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing 
Agreement No. 125 and Marketing Order No. 966, both as amended (7 CFR 
part 966), regulating the handling of tomatoes grown in certain 
designated counties in Florida, hereinafter referred to as the 
``order.'' The marketing agreement and order are effective under the 
Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-
674), hereinafter referred to as the ``Act.''
    The Department of Agriculture (USDA) is issuing this rule in 
conformance with Executive Order 12866.
    This final 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 final rule provides a partial exemption to the minimum grade 
requirements prescribed under the order. The order's rules and 
regulations specify that Florida tomatoes must meet at least a U.S. No. 
2 grade before they can be shipped and sold outside the regulated area. 
This rule exempts UglyRipe tomatoes from the shape requirements 
associated with the U.S. No. 2 grade. This change increases the volume 
of UglyRipe tomatoes that will meet the order requirements, and will 
help increase shipments and availability of these tomatoes for 
consumers. In addition, it is anticipated that this change will help 
promote continued innovation within the industry.
    Section 966.52 of the order provides the authority for the 
establishment of grade and size requirements for Florida tomatoes. Form 
and shape represent part of the elements of grade. Section 966.323 of 
the order's rules and regulations specifies, in part, the minimum grade 
requirements for Florida tomatoes. The current minimum grade 
requirement for Florida tomatoes is a U.S. No. 2. The specifics of this 
grade requirement are listed under the U.S. Standards for Grades of 
Fresh Tomatoes (7 CFR 51.1855-51.1877).
    The U.S. Standards for Grades of Fresh Tomatoes (Standards) specify 
the criteria tomatoes must meet to grade a U.S. No. 2, including that 
they must be reasonably well formed, and not more than slightly rough. 
These two elements relate specifically to the shape of the tomato. The 
definitions section of the Standards defines reasonably well formed as 
not decidedly kidney shaped, lopsided, elongated, angular, or otherwise 
decidedly deformed. The term slightly rough means that the tomato is 
not decidedly ridged or grooved. This rule amends Sec.  966.323 to 
exempt UglyRipe tomatoes from these shape requirements as specified 
under the grade for a U.S. No. 2.
    UglyRipe tomatoes are a trademarked tomato variety bred to look and 
taste like an heirloom-type tomato. One of the characteristics of this 
variety is its appearance. UglyRipe tomatoes are often shaped 
differently from other round tomatoes. Depending on the time of year 
and the weather, UglyRipe tomatoes are concave on the stem end with 
deep, ridged shoulders. They can also appear kidney shaped and 
lopsided. Because of this variance in shape and appearance, UglyRipe 
tomatoes can have difficulty meeting the shape requirements of the U.S. 
No. 2 grade.
    This rule provides UglyRipe tomatoes with a partial exemption from 
the grade requirements under the order. UglyRipe tomatoes are only 
exempt from the shape requirements of the grade and are still required 
to meet all other aspects of the U.S. No. 2 grade. UglyRipe tomatoes 
also continue to be required to meet all other requirements under the 
marketing order, such as size, pack and container, and inspection.
    Prior to the 1998-99 season, the Committee recommended that the 
minimum grade be increased from a U.S. No. 3 to a U.S. No. 2. Committee 
members agree that increasing the grade requirement has been very 
beneficial to the industry and in the marketing of Florida tomatoes. 
Further, some Committee members have stated that a large part of the 
volume of the standard commercial varieties of tomatoes which fail to 
make the grade are rejected because of their shape and appearance. 
Consequently, there was some industry concern that providing an 
exemption for UglyRipe tomatoes could result in the shipment of U.S. 
No. 3 grade tomatoes of other varieties, contrary to the objectives of 
the exemption and the order.
    To address this concern, the producers of UglyRipe tomatoes pursued 
entry into USDA's Identity Preservation (IP) program. This program was 
developed by the Agricultural Marketing Service to assist companies in 
marketing products having unique traits. The program provides 
independent, third-party verification of the segregation of a company's 
unique product at every stage, from seed, production and processing, to 
distribution. UglyRipe tomatoes were granted positive program status in 
early 2006.
    This partial exemption only extends to UglyRipe tomatoes covered 
under the IP program. As such, this should help ensure that only 
UglyRipe tomatoes are shipped under the exemption. In addition, this 
exemption is contingent upon UglyRipe tomatoes continuing to meet the 
requirements of the IP program.
    This rule exempts UglyRipe tomatoes from the shape requirements 
associated with the U.S. No. 2 grade. This change increases the volume 
of UglyRipe tomatoes that will meet order requirements, and will help 
increase shipments and availability of these tomatoes. In addition, it 
is hoped that this change will help promote continued innovation within 
the industry.
    Section 8e of the Act provides that when certain domestically 
produced commodities, including tomatoes, are regulated under a Federal 
marketing order, imports of that commodity must meet the same or 
comparable grade, size, quality, and maturity requirements. Since this 
rule provides a partial exemption to the minimum grade requirements 
under the domestic handling regulations, a corresponding change to the 
import regulations is also needed. A final rule providing the same 
partial exemption to the minimum grade requirements under the import 
regulations will be issued as a separate action.

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

[[Page 1921]]

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 100 producers of tomatoes in the production 
area and approximately 70 handlers subject to regulation under the 
marketing order. Small agricultural producers are defined by the Small 
Business Administration (SBA) as those having annual receipts less than 
$750,000, and small agricultural service firms are defined as those 
whose annual receipts are less than $6,500,000 (13 CFR 121.201).
    Based on industry and Committee data, the average annual price for 
fresh Florida tomatoes during the 2004-05 season was approximately 
$12.50 per 25-pound container, and fresh shipments totaled 53,025,915 
25-pound cartons of tomatoes. Committee data indicates approximately 27 
percent of the handlers handle 95 percent of the total volume shipped 
outside the regulated area. Based on the average price, about 75 
percent of handlers could be considered small businesses under SBA's 
definition. In addition, based on production, grower prices as reported 
by the National Agricultural Statistics Service, and the total number 
of Florida tomato growers, the average annual grower revenue is below 
$750,000. Thus, the majority of handlers and producers of Florida 
tomatoes may be classified as small entities.
    This final rule provides a partial exemption to the minimum grade 
requirements for tomatoes grown in Florida. Under the order, Florida 
tomatoes must meet at least a U.S. No. 2 grade before they can be 
shipped and sold outside the regulated area. This final rule exempts 
UglyRipe tomatoes from the shape requirements specified under the 
Standards for a U.S. No. 2 grade. This change increases the volume of 
UglyRipe tomatoes that will meet the order requirements, and will help 
increase shipments and availability of these tomatoes for consumers. 
This final rule amends the provisions of Sec.  966.323. Authority for 
this action is provided in Sec.  966.52 of the order.
    This change represents a small increase in costs for producers and 
handlers of UglyRipe tomatoes, primarily from costs associated with 
developing and maintaining the IP program. However, the majority of 
facilities associated with UglyRipe tomatoes were involved with the IP 
program prior to this rule and have already received a successful 
audit. Therefore, the additional costs associated with this action are 
those costs related to maintaining and complying with the IP program. 
It is anticipated that these costs will be minimal and will be offset 
by the increased sales of UglyRipe tomatoes.
    Finally, UglyRipe tomatoes are still required to meet the majority 
of the requirements for a U.S. No. 2 grade, and are usually priced 
higher than U.S. No. 2 graded standard commercial variety tomatoes. 
Therefore, this action should not have a price depressing effect on 
standard varieties, and because of the difference in price, this 
exemption should not have a significant impact on the market share for 
standard commercial varieties of Florida tomatoes.
    One alternative to this action that was considered was to not 
provide an exemption from shape requirements for UglyRipe tomatoes. 
This option would not have allowed for an increase in the volume of 
UglyRipe tomatoes that would meet the order requirements, and would not 
help increase shipment and availability of these tomatoes. Therefore, 
this alternative was rejected.
    This final rule provides a partial exemption to the minimum grade 
requirements under the Florida tomato marketing order. Accordingly, 
this rule will not impose any additional reporting or recordkeeping 
requirements on either small or large tomato 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.
    The AMS is committed to complying with the E-Government Act, to 
promote the use of the Internet and other information technologies to 
provide increased opportunities for citizen access to Government 
information and services, and for other purposes.
    As noted in the initial regulatory flexibility analysis, USDA has 
not identified any relevant Federal rules that duplicate, overlap or 
conflict with this final rule.
    A proposed rule concerning this action was published in the Federal 
Register on June 29, 2006 (71 FR 37014). Copies of the rule were mailed 
or sent via facsimile to all Committee members and tomato handlers. 
Finally, the rule was made available through the Internet by USDA and 
the Office of the Federal Register. A 60-day comment period ending 
August 28, 2006, was provided to allow interested persons to respond to 
the proposal.
    Eighty-eight comments were received during the comment period in 
response to the proposal. Of the comments received, 79 were in support 
of the regulation and 9 were in opposition. One comment was received 
after the close of the comment period.
    The comments in support of the proposal expressed appreciation for 
the taste of UglyRipe tomatoes, and supported a greater market 
availability for UglyRipe tomatoes. Several commenters stated that 
UglyRipe tomatoes compared favorably with homegrown tomatoes. Other 
commenters compared the taste as being equal to local tomatoes, even in 
winter when local tomatoes were not available. Several of the comments 
stated that good taste was of greater importance than appearance. 
Commenters also expressed that they have had difficulty in finding 
UglyRipe tomatoes available for purchase and supported this rule and 
its efforts to increase availability.
    Nine comments were received in opposition to the proposed rule. Of 
these comments, five expressed concerns regarding this proposal's 
impact on orderly marketing. Four commenters stated that the current 
marketing order requirements provide stability to the industry. One 
commenter stated that the standards established under the order are key 
to the establishment of an orderly market for Florida growers and that 
this rule will weaken the industry's ability to maintain an orderly 
market. Another commenter stated that the proposed rule does not 
establish, maintain, or support orderly marketing conditions, but does 
the exact opposite.
    One of the main goals of marketing orders is to establish orderly 
marketing conditions for those commodities covered under marketing 
orders. As previously noted, this partial exemption only extends to 
UglyRipe tomatoes. Further, this rule only provides UglyRipe tomatoes 
with a partial exemption from the shape requirements of the U.S. No. 2 
grade. UglyRipe tomatoes are still subject to the requirements for 
maturity, ripeness, softness, development, decay, and damage as 
specified under the Standards for a U.S. No. 2 grade. Even with this 
partial exemption, the requirements for UglyRipe tomatoes are still 
significantly higher than those for U.S. No. 3 grade tomatoes.
    Because this partial exemption is narrowly defined, the vast 
majority of the tomatoes shipped from Florida will still meet the 
requirements for a U.S. No. 2 grade. Therefore, this change will not 
diminish the overall benefits of the established grade standard.

[[Page 1922]]

Consequently, this change should not have an adverse impact on the 
orderly market for Florida tomatoes.
    Five commenters stated that this change would allow UglyRipe 
tomatoes to circumvent the requirements of the order. Two comments 
declared that this rule would allow all UglyRipe tomatoes produced to 
be sold outside of the regulated area. Another comment stated that this 
rule would allow UglyRipe tomatoes to escape the standards applicable 
to all other tomatoes.
    This partial exemption will not allow UglyRipe tomatoes to 
circumvent the requirements of the order, or allow all UglyRipe 
tomatoes produced in Florida to be shipped outside the regulated area. 
As stated above, UglyRipe tomatoes will still have to meet the majority 
of the requirements for U.S. No. 2 grade tomatoes, and will have to be 
inspected to ensure these requirements are met. UglyRipe tomatoes also 
continue to be required to meet all other requirements under the 
marketing order, such as size, pack and container, and assessment 
provisions. In addition, UglyRipe tomatoes must meet the requirements 
of the IP program.
    Five commenters expressed concern that providing this exemption for 
the UglyRipe tomato will create a loophole, which will result in the 
shipment of U.S. No. 3 grade tomatoes of other varieties by other 
producers. One of the commenters stated that with this change, every 
farmer in Florida will be selling his off shaped fruit. Another 
commenter wrote that this action presents too many opportunities for 
domestic growers and importers to sell tomatoes of inferior quality. 
Another commenter stated that they had no doubt that efforts will be 
made to market U.S. No. 3 grade tomatoes that resemble UglyRipe 
tomatoes.
    We disagree with these comments. There are safeguards in place to 
address these issues. In addition to the existing inspection 
requirements, and compliance efforts, this partial exemption only 
extends to UglyRipe tomatoes covered under the IP program. This program 
was developed by AMS and provides independent, third-party verification 
of the segregation of a company's product at every stage, from seed, 
production and processing, to distribution. This will help ensure that 
only UglyRipe tomatoes are shipped using this partial exemption, as 
only handlers covered under the IP program will be allowed to pack 
under the exemption. Further, USDA plans to closely monitor compliance 
with this exemption.
    Three commenters stated that this rule will have a negative 
economic impact on the tomato industry. One commenter stated that this 
rule will cause a market share loss and loss of sales. Another comment 
states that this will increase supply, which will negatively affect 
price.
    We disagree because this partial exemption is so narrowly defined, 
and only applies to UglyRipe tomatoes, it should not result in a 
significant increase in the overall supply of tomatoes. Also, this 
action should not have a significant impact on price. Prior to the 
1998-99 season, the Committee recommended that the minimum grade be 
increased from a U.S. No. 3 to a U.S. No. 2. The reason for this action 
was that U.S. No. 3 grade tomatoes were having a price depressing 
effect on the market. This is because U.S. No. 3 grade tomatoes of 
standard commercial varieties sell at prices below those for U.S. No. 2 
grade tomatoes. However, in the case of UglyRipe tomatoes, they are 
still required to meet the majority of the requirements for a U.S. No. 
2 grade, and are usually priced higher than U.S. No. 2 graded standard 
commercial variety tomatoes. Therefore this action should not have a 
price depressing effect on standard varieties, and because of the 
difference in price this exemption should not have a significant impact 
on the market share for standard commercial varieties of Florida 
tomatoes.
    Two commenters also stated that this regulation would have a 
negative impact on small growers. The commenters stated that when USDA 
did its initial regulatory flexibility analysis USDA only considered 
the impact on producers and handlers of UglyRipe tomatoes. The 
commenters stated that this rule would have a negative impact on small 
producers and handlers of standard commercial varieties.
    In its initial regulatory flexibility analysis, USDA found that 
this change represents a small increase in costs for producers and 
handlers of UglyRipe tomatoes, primarily from costs associated with 
developing and maintaining the IP program. As discussed above, this 
rule should not significantly impact demand or price for standard 
commercial varieties. Consequently, we do not agree that this action 
will negatively impact growers and handlers of standard commercial 
varieties.
    Accordingly, no changes will be made to the rule as proposed, based 
on comments 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 matter presented, including the 
information and recommendation submitted by the Committee and other 
available information, it is hereby found that this rule, as 
hereinafter set forth, will tend to effectuate the declared policy of 
the Act.
    It is further found that good cause exists for not postponing the 
effective date of this rule until 30 days after publication in the 
Federal Register (5 U.S.C. 553) because the regulatory period will 
begin October 10, 2006. Also, a 60-day comment period was provided for 
in the proposed rule.

List of Subjects in 7 CFR Part 966

    Marketing agreements, Reporting and recordkeeping requirements, 
Tomatoes.

0
For the reasons set forth in the preamble, 7 CFR part 966 is amended as 
follows:

PART 966--TOMATOES GROWN IN FLORIDA

0
1. The authority citation for 7 CFR part 966 continues to read as 
follows:

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


0
2. Amend Sec.  966.323, by adding a new paragraph (d)(5) to read as 
follows:


Sec.  966.323  Handling regulation.

* * * * *
    (d) * * *
    (5) For UglyRipeTM tomatoes. UglyRipeTM 
tomatoes must meet all the requirements of this section: Provided, That 
UglyRipeTM tomatoes shall be graded and at least meet the 
requirements specified for U.S. No. 2 under the U.S. Standards for 
Grades of Fresh Tomatoes, except they are exempt from the requirements 
that they be reasonably well formed and not more than slightly rough, 
and Provided, Further that the UglyRipeTM tomatoes meet the 
requirements of the Identity Preservation program, Fresh Products 
Branch, Fruit and Vegetable Programs, AMS, USDA.
* * * * *

    Dated: January 12, 2007.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 07-162 Filed 1-12-07; 11:58 am]
BILLING CODE 3410-02-P