[Federal Register Volume 76, Number 83 (Friday, April 29, 2011)]
[Proposed Rules]
[Pages 24292-24337]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-10199]



[[Page 24291]]

Vol. 76

Friday,

No. 83

April 29, 2011

Part V





Department of Agriculture





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



Agricultural Marketing Service



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



7 CFR Part 970



Proposed National Marketing Agreement Regulating Leafy Green 
Vegetables; Recommended Decision and Opportunity To File Written 
Exceptions to Proposed Marketing Agreement No. 970; Proposed Rule

  Federal Register / Vol. 76 , No. 83 / Friday, April 29, 2011 / 
Proposed Rules  

[[Page 24292]]


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

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 970

[Doc. No. AO-FV-09-0138; AMS-FV-09-0029; FV09-970-1]


Proposed National Marketing Agreement Regulating Leafy Green 
Vegetables; Recommended Decision and Opportunity To File Written 
Exceptions to Proposed Marketing Agreement No. 970

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule and opportunity to file exceptions.

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

SUMMARY: This recommended decision proposes the issuance of a marketing 
agreement (agreement) under the Agricultural Marketing Agreement Act of 
1937 to cover the handling of fresh leafy green vegetables in the 
United States. Leafy green vegetables include lettuce, spinach, 
cabbage, and similar items. The proposed agreement would authorize the 
development and implementation of production and handling regulations 
(audit metrics) to reflect United States Food and Drug Administration 
(FDA) Good Agricultural Practices (GAPs) and Good Manufacturing 
Practices (GMPs), and United States Department of Agriculture (USDA) 
Good Handling Practices (GHPs). The program would be voluntary, and 
cover both United States and imported leafy green vegetables. Signatory 
handlers would agree to only handle leafy green vegetables that meet 
the requirements of the program. The program would be financed 
primarily by assessments collected from signatory first handlers. A 
Board, whose members would be appointed by the Secretary, would 
administer the proposed agreement with USDA oversight. This rule also 
announces USDA Agricultural Marketing Service's (AMS) intention to 
request approval by the Office of Management and Budget for new 
information collection requirements to implement this program.

DATES: Written exceptions must be filed by July 28, 2011. Pursuant to 
the Paperwork Reduction Act, comments on the information collection 
burden must be received by July 28, 2011.

ADDRESSES: Written exceptions should be filed with the Hearing Clerk, 
United States Department of Agriculture, 1400 Independence Ave., SW., 
Room 1031-S, Washington, DC 20250-9200, Fax: (202) 720-9776 or via the 
Internet at http://www.regulations.gov. All exceptions should reference 
the docket number and the date and page number of this issue of the 
Federal Register. Comments will be made available for public inspection 
in the Office of the Hearing Clerk during regular business hours, or 
can be viewed at: http://www.regulations.gov.
    To the extent practicable, all documents filed with the hearing 
clerk also should be submitted electronically to Melissa Schmaedick at 
the e-mail address noted for her in the FOR FURTHER INFORMATION CONTACT 
section.

FOR FURTHER INFORMATION CONTACT: Antoinette Carter, 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]; or Melissa Schmaedick, Marketing Order 
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 805 SW. 
Broadway, Suite 930, Portland, OR 97205; Telephone (503) 326-2724, Fax 
(503) 326-7440, or E-mail: [email protected].
    Small businesses may request information on this proceeding by 
contacting Antoinette Carter at the address provided for her above.

SUPPLEMENTARY INFORMATION: Prior documents in this proceeding: Notice 
of Public Hearing issued on August 31, 2009, and published in the 
September 3, 2009, issue of the Federal Register (74 FR 45565); and 
Notice of Additional Time for Public Hearing issued on September 18, 
2009, and published in the September 23, 2009, issue of the Federal 
Register (74 FR 48423).
    These actions are governed by the provisions of sections 556 and 
557 of title 5 of the United States Code and are therefore excluded 
from the requirements of Executive Order 12866.

Preliminary Statement

    Notice is hereby given of the filing with the Hearing Clerk of this 
recommended decision with respect to the proposed marketing agreement 
regulating the handling of leafy green vegetables in the United States, 
and the opportunity to file written exceptions thereto. Copies of this 
recommended decision can be obtained from Melissa Schmaedick, whose 
address is listed above.
    This recommended decision is issued pursuant to the provisions of 
the Agricultural Marketing Agreement Act of 1937, as amended (48 Stat. 
31, as amended; 7 U.S.C. 601-674), hereinafter referred to as the 
``Act'', and the applicable rules of practice and procedure governing 
the formulation of marketing agreements and orders (7 CFR part 900).
    The proposed agreement is based on the record of a public hearing 
held on: September 22 through 24, 2009, in Monterey, California; 
September 30 through October 1, 2009, in Jacksonville, Florida; October 
6, 2009, in Columbus, Ohio; October 8, 2009, in Denver, Colorado; 
October 14 and 15, 2009, in Yuma, Arizona; October 20, 2009, in 
Syracuse, New York; and October 22, 2009, in Charlotte, North Carolina.
    The hearing was held to receive evidence on the proposed agreement 
from producers, handlers, and other interested parties. The Notice of 
Public Hearing was published in the Federal Register on September 3, 
2009 (74 FR 45565).

Background

    In mid-September 2006, FDA issued the first public alerts of a 
multi-State Escherichia coli (E. coli) outbreak linked to fresh spinach 
grown in California's Salinas Valley. The resulting recall was the 
largest ever for fresh leafy green vegetables. Investigations by FDA 
and the California Department of Health Services, in cooperation with 
the Centers for Disease Control and Prevention, and USDA's Animal and 
Plant Health Inspection Service, concluded that the E. coli 
contamination might have been attributed to environmental factors in 
the production area.
    In response to this E. coli outbreak, members of the California 
leafy green vegetable industry initiated the establishment of a State 
marketing agreement for handlers of leafy green vegetables. The 
California Leafy Green Products Handler Marketing Agreement became 
effective February 10, 2007. At the time of the hearing, 99 percent of 
leafy green vegetables produced and handled in California were subject 
to the State program. In October 2007, a similar program was 
implemented in Arizona: The Arizona Leafy Green Products Shipper 
Marketing Agreement. Approximately 75 percent of the leafy green 
vegetables produced and handled in Arizona were being regulated under 
that State's program at the time of the hearing. While both the 
California and Arizona programs are voluntary, the requirements of 
these State marketing agreements are mandatory for all signatories 
within each respective State.
    On October 4, 2007, AMS published an Advance Notice of Proposed 
Rulemaking (ANPR) in the Federal Register (72 FR 56678) in response to 
industry interest in the establishment of a national marketing program 
to address

[[Page 24293]]

the handling of leafy green vegetables nationwide. The ANPR explored 
the concept of establishing a regulatory program to reduce microbial 
contamination and improve product quality of leafy green vegetables 
available in the United States' produce market. Proposals and comments 
were sought from the public, particularly from producers, handlers, 
buyers, and sellers of leafy green vegetables.
    The ANPR resulted in the submission and consideration of more than 
3,500 public comments on the need and level of support for a nationwide 
regulatory program for GAPs, GHPs, and GMPs. These comments may be 
viewed at http://www.regulations.gov and by typing the following docket 
number into the search function: AMS-FV-07-0090.
    On June 10, 2009, a petition for rulemaking and a request for 
public hearing on a proposed national agreement for leafy green 
vegetables were submitted to AMS. The proposal was submitted by a group 
of producers, handlers, and interested persons representing a cross-
section of the national fresh and fresh-cut produce industry, 
hereinafter referred to as the ``proponents'' or ``proponent group''. 
The proponent group is comprised of the membership of the following 
organizations: United Fresh Produce Association, Produce Marketing 
Association, Georgia Fresh Vegetable Association, Georgia Farm Bureau, 
Texas Vegetable Association, Arizona Farm Bureau, Leafy Greens Council, 
California Farm Bureau, California Leafy Greens Products Handler 
Marketing Agreement, Grower-Shipper Association of Central California, 
Western Growers, and the Imperial Valley Vegetable Growers Association. 
The proponents, whose membership includes both conventional and organic 
producers and handlers, as well as business entities of all sizes, 
claim to represent a majority of the volume of leafy green vegetables 
produced and handled for the United States market.
    In their request and at the hearing, the proponents proposed the 
establishment of a program that would oversee a systematic application 
of good agricultural production, handling, and manufacturing practices 
for leafy green vegetables. Proponents stated that the proposed 
agreement would minimize the potential for microbial contamination in 
production and handling systems and would improve consumer confidence 
in leafy green vegetables in the United States market.
    Proponents supported the establishment of a voluntary program that 
would require mandatory compliance for its signatories under the 
authority of the Act and that it be administered by USDA. Proponents 
explained that, if implemented, an administrative body comprised of 
leafy green vegetable producers, handlers, and other representatives of 
the leafy green vegetable industry should be established to administer 
the program under USDA oversight. In addition to the administrative 
body, proponents proposed two committees: One to assist the 
administrative body in the identification and development of audit 
metrics, and one to advise the administrative body on research and 
development projects administered under the program.
    Proponents defined the proposed production area as the 50 States of 
the United States of America and the District of Columbia. It was 
further proposed that the agreement be financed primarily by 
assessments collected from signatory first handlers on the volume of 
leafy green vegetables handled. In addition, contributions could be 
received for the purposes of funding research and development 
activities.
    As a voluntary program, proponents explained that only signatory 
handlers to the proposed agreement would be regulated. Signatory 
handlers would be required to only handle leafy green vegetables that 
were produced and handled in adherence to specific requirements (audit 
metrics) established under the proposed agreement. Proponents stated 
that audit metrics should be science-based, scalable, and regionally 
applicable in order to accommodate compliance of varying size and types 
of operations. Moreover, any audit metrics proposed under the program 
would require approval of the USDA prior to implementation.
    Proponents explained that audits should be conducted by the USDA 
Inspection Service, or persons or organizations authorized to audit on 
its behalf, to verify signatory handler compliance to the proposed 
agreement. If implemented, proponents stated that such audits should be 
conducted on both domestic and imported product handled by signatory 
handlers.
    One hundred and twenty individuals testified during the 9 days of 
hearings which resulted in 4,935 pages of testimony. One hundred and 
thirty-nine exhibits were submitted. Witnesses represented leafy green 
producers and handlers, and representatives from stakeholder interest 
groups including State and local government representatives, certified 
organic auditors, organic and sustainable agriculture advocacy groups, 
consumer advocacy groups, conservation and wildlife advocacy 
organizations, academia, and others. Some witnesses supported the 
proposed agreement, while others opposed it or suggested modifications 
or changes to it.
    In addition to other opponents of the proposed agreement, an 
opponent group comprised of member organizations of the National 
Organic Coalition (NOC) testified at the hearing. Members of the NOC 
include: Beyond Pesticides, Center for Food Safety, Equal Exchange, 
Food and Water Watch, Maine Organic Farmers and Gardeners Association, 
Midwest Organic Farmers and Gardeners Association, National Cooperative 
Grocers Association, Northeast Organic Dairy Producers Alliance, 
Northeast Organic Farming Association-Interstate Council, Organically 
Grown Company, Rural Advancement Foundation International-USA, and the 
Union of Concerned Scientists.
    Witnesses opposed to the program cited several areas of concern. 
These included: The cost of becoming compliant and maintaining 
compliance with the proposed agreement; the existing proliferation of 
audit requirements from private sector customers, the addition of a new 
and potentially conflicting set of audit requirements, and ``audit 
fatigue''; the need for science-based production and handling 
requirements, as well as the need for adequate peer-review of 
scientific studies used to establish them; potential conflicts between 
existing Federal, State, and local conservation, wildlife, and 
environmental regulations and any proposed metrics; the need for 
recognition of organic and other non-conventional production and 
handling practices in the development of audit metrics; the 
appropriateness and authority for USDA oversight of the proposed 
agreement; and, the need for a national program.
    At the conclusion of the hearing, the Administrative Law Judge 
fixed January 13, 2010, as the due date for interested persons to file 
proposed findings and conclusions or written arguments based on the 
evidence received at the hearing. Upon a motion for extension from the 
proponents as well as member organizations of the National Organic 
Coalition, the date was extended until January 27, 2010.
    Sixteen briefs were filed in total. Those submitting briefs 
included: Pollinator Partnership, Global Organic Specialty Source, 
Inc., Chiquita Brands International, Inc., Arizona Leafy Green Products 
Shipper Marketing Agreement, Office of the Attorney General for the 
State of Arizona, Episcopal Diocese of California, DNO, Inc., Duda Farm 
Fresh Foods, Inc., National Organic Coalition

[[Page 24294]]

(including Food and Water Watch, Carolina Farm Stewardship Association, 
and Florida Certified Organic Growers and Consumers, Inc.), Canadian 
Horticultural Council, Partners for Sustainable Pollination, 
Association of Food and Drug Officials, Massachusetts Farm Bureau 
Federation, Inc., Grower's Management, Inc., Western Growers, and 
California Roundtable on Agriculture and the Environment.

Overview

    After extensive analysis and review of the hearing record, USDA has 
incorporated in this recommended decision changes and revisions to the 
text of the proposed marketing agreement. Changes and modifications 
include numerical redesignations of sections, combining of regulatory 
text, the addition of new provisions, and clarifications. For ease of 
reference in reading this recommended decision, the following table 
provides a summary that identifies the differences between the sections 
proposed in the Notice of Hearing and the sections proposed in this 
recommended decision.

------------------------------------------------------------------------
                                                           Recommended
       Notice of hearing         Changes and revisions      decision
------------------------------------------------------------------------
970.1.........................  ......................             970.1
                                NEW...................             970.2
970.2.........................  REDESIGNATED AND                   970.3
                                 REVISED.
970.3.........................  REDESIGNATED AND                   970.4
                                 REVISED.
                                NEW...................             970.5
970.4.........................  REDESIGNATED AND                   970.6
                                 REVISED.
970.6.........................  REDESIGNATED AND                   970.8
                                 REVISED.
                                NEW...................             970.9
970.7.........................  REDESIGNATED AND                  970.10
                                 REVISED.
970.8.........................  REDESIGNATED AND                  970.11
                                 REVISED.
970.9.........................  REDESIGNATED AND                  970.12
                                 REVISED.
970.10........................  REDESIGNATED AND                  970.13
                                 REVISED.
970.11........................  REDESIGNATED AND                  970.14
                                 REVISED.
970.12........................  REDESIGNATED AND                  970.15
                                 REVISED.
970.13........................  REDESIGNATED AND                  970.16
                                 REVISED.
970.14........................  REDESIGNATED AND                  970.17
                                 REVISED.
970.15........................  REDESIGNATED AND                  970.18
                                 REVISED.
970.16........................  REDESIGNATED AND                  970.19
                                 REVISED.
970.17........................  REDESIGNATED AND                  970.20
                                 REVISED.
                                NEW...................            970.21
                                NEW...................            970.22
970.18........................  REDESIGNATED AND                  970.23
                                 REVISED.
                                NEW...................            970.24
970.19........................  REDESIGNATED..........            970.25
970.20........................  REDESIGNATED AND                  970.27
                                 REVISED.
970.21........................  REDESIGNATED AND                  970.19
                                 REVISED.
970.22........................  REDESIGNATED AND                  970.26
                                 REVISED.
970.23........................  REDESIGNATED..........            970.28
                                NEW...................            970.29
970.24........................  REDESIGNATED AND                  970.30
                                 REVISED.
970.25........................  REDESIGNATED..........            970.31
                                NEW...................            970.32
970.26........................  REDESIGNATED AND                  970.33
                                 REVISED.
                                NEW...................            970.34
970.27........................  REDESIGNATED AND                  970.35
                                 REVISED.
                                NEW...................            970.36
970.28........................  REDESIGNATED AND                  970.37
                                 REVISED.
970.35........................  REDESIGNATED AND                  970.39
                                 REVISED.
970.40........................  REVISED...............            970.40
                                NEW...................            970.41
970.41........................  REDESIGNATED AND                  970.42
                                 REVISED.
970.42........................  REDESIGNATED AND                  970.43
                                 REVISED.
970.43........................  REDESIGNATED AND                  970.44
                                 REVISED.
970.44........................  REDESIGNATED AND                  970.45
                                 REVISED.
970.45........................  REDESIGNATED AND                  970.46
                                 REVISED.
970.46........................  REDESIGNATED AND                  970.47
                                 REVISED.
970.47........................  REDESIGNATED AND                  970.48
                                 REVISED.
970.48........................  REDESIGNATED AND                  970.49
                                 REVISED.
970.49........................  REDESIGNATED AND                  970.50
                                 REVISED.
970.50........................  REDESIGNATED AND                  970.51
                                 REVISED.
970.55........................  REVISED...............            970.55
970.56........................  REVISED...............            970.56
970.57........................  REVISED...............            970.57
970.58........................  REVISED...............            970.58
970.65........................  REVISED...............            970.65
970.66........................  REVISED...............            970.66
970.67........................  REVISED...............            970.67
970.68........................  REVISED...............            970.68
970.69........................  REVISED...............            970.69
970.70........................  REVISED...............            970.70
970.71........................  REVISED...............            970.71

[[Page 24295]]

 
970.72........................  REVISED...............            970.72
970.75........................  REVISED...............            970.75
970.80........................  REVISED...............            970.80
970.81........................  REVISED...............            970.81
970.82........................  REVISED...............            970.82
970.83........................  REVISED...............            970.83
970.85........................  REVISED...............            970.85
970.86........................  REVISED...............            970.86
970.87........................  REVISED...............            970.87
970.88........................  ......................            970.88
970.89........................  REVISED...............            970.89
970.90........................  ......................            970.90
970.91........................  REVISED...............            970.91
970.92........................  ......................            970.92
970.93........................  REVISED...............            970.93
970.94........................  ......................            970.94
970.95........................  REVISED...............            970.95
970.96........................  REVISED...............            970.96
970.97........................  REVISED...............            970.97
970.98........................  REVISED...............            970.98
                                NEW...................            970.99
------------------------------------------------------------------------

    This recommended decision takes into consideration the record of 
the public hearing as well as the arguments contained in the post-
hearing briefs. The merits of these arguments are discussed in the 
findings and conclusions of this recommended decision.

Material Issues

    The material issues presented on the record of hearing are as 
follows:
    1. Whether the handling of leafy green vegetables in the production 
area is in the current of interstate commerce or foreign commerce, or 
directly burdens, obstructs, or affects such commerce;
    2. Whether market conditions justify a need for a Federal marketing 
agreement which would tend to effectuate the declared policy of the 
Act;
    3. What the definition of the production area and the commodity to 
be covered by the proposed agreement should be;
    4. What the identity of the persons and the activities to be 
regulated under the proposed agreement should be;
    5. What the specific terms and provisions of the proposed agreement 
should be, including:
    (a) The definition of terms used therein, which are necessary and 
incidental to attain the declared objectives and policy of the Act;
    (b) Whether an administrative body should be established to assist 
USDA in the administration and oversight of the proposed agreement, and 
what the membership composition, administrative procedures, powers, and 
duties of that body should be;
    (c) Whether the proposed agreement should include the authority to 
establish regulations and audit requirements that would apply to 
signatory handlers;
    (d) Whether the proposed agreement should include the authority to 
incur expenses and establish procedures to levy assessments on 
signatory first handlers to obtain revenue for paying such expenses;
    (e) Whether the proposed agreement should include the authority to 
establish signatory handler reporting and recordkeeping requirements;
    (f) Whether the proposed agreement should require signatory handler 
compliance with all provisions of the agreement and with any 
regulations issued under it;
    (g) Whether the proposed agreement should include the authority to 
establish rules, regulations, or safeguards for exemption from the 
requirements of the agreement;
    (h) Whether the proposed agreement should include the authority to 
establish or provide for the establishment of research and market 
development projects;
    (i) Whether the proposed agreement should include additional terms 
and conditions as set forth in Sec.  970.85 through Sec.  970.98 of the 
Notice of Hearing published in the Federal Register on September 3, 
2009 (74 FR 45565), which are common to all agreements; and
    6. What the handler sign-up process should be, and if provisions 
should be made for signatory handlers to discontinue participation in 
the program.

Findings and Conclusions

    The following findings and conclusions on the material issues are 
based on the evidence presented at the hearing and the record thereof.

Material Issue Number 1--Current of Interstate Commerce or Foreign 
Commerce

    The record indicates that the handling of leafy green vegetables 
grown in the United States, or leafy green vegetables grown outside the 
United States and imported by United States handlers, is in the current 
of interstate or foreign commerce or directly burdens, obstructs, or 
affects such commerce.
    Evidence is that the leafy green vegetable industry is a highly 
integrated, complex system of large, mid-size, and small producers 
delivering product to handlers, retailers, and foodservice operators 
nation-wide. Leafy green vegetables may be produced in one State, 
processed in another State, and then shipped for consumption to many 
States or nationally. Moreover, the product of one or more producers of 
varying sizes and origin may be handled by one or more handlers, also 
of varying size or origin.
    Evidence also is that leafy green vegetables are imported, mainly 
from Mexico and Canada, and that such leafy green vegetables are often 
co-mingled with United States produced leafy green vegetables and 
distributed throughout the United States market. Similarly, United 
States produced leafy green vegetables are regularly exported, 
primarily to Canada. Exported leafy green vegetables may contain 
product produced by a variety of producers, varying in size and origin, 
and may be handled by one or more handlers.
    For these reasons, evidence confirms that the handling of leafy 
green vegetables is at multiple levels of interstate or foreign 
commerce and has an effect on such commerce.

[[Page 24296]]

Industry Overview

Producers and Handlers
    According to USDA Census of Agriculture data (Census) and other 
USDA data presented at the hearing, there were 8,216 farms that 
harvested 433,023 acres of leafy green vegetables specifically for the 
fresh market in 2007.
    While data indicates that leafy green vegetable production is found 
in all 50 United States, evidence is that most production tends to be 
concentrated in the States of California, Arizona, Florida, New York, 
Texas, Georgia, and Colorado, and on farms that exceed the Small 
Business Administration (SBA) definition of a small agricultural 
producer. Under 13 CFR 121.201, the SBA defines ``small'' agricultural 
producers as farming operations having gross annual receipts of 
$750,000 or less. This is the threshold by which USDA analyzes the 
impact of the proposed marketing agreement on small producer entities. 
Farm data by States from the 2007 Census of Agriculture (Census), 
unavailable from other sources, has also been used in developing the 
recommended decision. However, the Census defines small producers as 
those with annual receipts of less than $250,000 and large producers as 
those with $250,000 or more. Thus, in some of the discussion and 
analysis in this recommended decision, the Census data cannot be 
reconciled with the SBA definition for small producers.
    California and Arizona are the largest producing States of leafy 
green vegetables, with California alone accounting for 75 percent of 
total United States production in 2007, and Arizona representing 15 
percent of total United States production in that same year. Evidence 
is that the remaining 10 percent of production is spread throughout the 
United States and tends to be sourced by handlers from small to mid-
size farms.
    For such farms, leafy green vegetable production commonly only 
represents a portion of these diversified farms' total production. 
According to the hearing record, a ``diversified farm'' is a farming 
operation that produces a variety of crops or animals, or both, on one 
farm, as distinguished from a producer who specializes solely in the 
production of leafy green vegetables.
    Marketing Research Association (MRA) data presented at the hearing 
indicates that there were approximately 1,285 handlers of leafy green 
vegetables in the United States in 2009. This data is published in the 
Blue Book Marketing Research Service Directory (Blue Book), which can 
be found at http://www.bluebook.org.
    According to the record, many small and mid-size producers also 
operate as handlers by way of their direct sales to consumers, 
foodservice operators, or retailers. Evidence is that the Blue Book 
likely does not account for many of these smaller producer-handler 
businesses because they are not directly engaged in the mainstream, 
conventional market. Therefore, record evidence indicates that the 
number of leafy green vegetable handlers in the United States that 
would qualify to participate as signatory handlers under the proposed 
agreement is more than 1,285. Record evidence is unclear, however, as 
to how many small producer-handler operations handling leafy green 
vegetables exist in the United States.
    According to the record, the majority of leafy green vegetables 
handled in the United States are subject to seasonal contracts between 
producers and handlers, and these relationships are usually long-term. 
Typically, such contracts are prepared using quantity, weight, acreage, 
or price.
    Any leafy green vegetable crop for sale in the market that is not 
covered under a contract is considered part of the cash, or ``spot'' 
market, where produce is sold for cash and delivered immediately. Small 
farms often sell directly to consumers at farmers' markets, roadside 
stands, and through community-supported agriculture (CSA) programs, as 
well as directly to smaller retailers and local foodservice operators. 
According to the record, these types of transactions are considered 
part of the spot market.
    Evidence shows that some leafy green vegetables for the United 
States market are sold through produce auctions, where members of the 
auction maintain their membership through a contractual relationship 
with the auction organization. In this scenario, produce supplied by 
auction members is sold through the auction method, where prices 
obtained for the produce can fluctuate based on daily market supply and 
demand, and quality of produce. According to the hearing record, sales 
of leafy green vegetables made through a produce auction also are 
considered part of the spot market.

Production

    USDA data presented at the hearing indicates that the value of 
leafy green vegetables grown for the United States fresh and fresh-cut 
market was $2.5 billion in 2008. The majority of United States leafy 
green vegetable production is accounted for by three lettuce crops 
(head, leaf, and romaine), spinach, and fresh cabbage. Of the 2008 
production value, lettuce crops accounted for 79 percent, cabbage 
accounted for 15 percent, and spinach accounted for 7 percent, for a 
total of 81 percent. Other minor fresh leafy green vegetable crops, 
such as collards, escarole, endives and specialty varieties of kale, 
are produced regionally and seasonally. Evidence is that these crops 
are produced widely across the United States and are generally 
available throughout the year. Since 1997, United States production of 
major fresh leafy green vegetables has grown by almost 25 percent.

Major Fresh Leafy Green Vegetable Crops

    At the time of the hearing, head lettuce production was estimated 
at 5.3 billion pounds. Even though head lettuce's average share of 
United States lettuce production has declined from an average of 77 
percent during 1996 to 1998, to 56 percent from 2006 to 2008, head 
lettuce continues to represent the majority of total leafy green 
vegetable production in the United States. Iceberg lettuce is harvested 
year-round in California. Of the other States with large production of 
head lettuce, Arizona harvests in the winter, New Jersey harvests in 
the spring and fall, and Colorado harvests in the summer.
    According to 2007 Census data, 1,158 farms harvested head lettuce 
from nearly 167,000 acres. Although the farms harvesting head lettuce 
were spread over 48 States, only three States reported harvesting more 
than 1,000 acres: California (118,676 acres), Arizona (39,187 acres), 
and Colorado (2,268 acres).
    USDA statistical evidence presented at the hearing indicates that 
demand for lettuce has shifted away from head lettuce to romaine and 
other varieties of leaf lettuce. Leaf and romaine lettuce production 
from major States increased 125 percent between 1990 and 1999, and an 
additional 42 percent between 2000 and 2009. Total production of leaf 
and romaine lettuce for 2009 was estimated at 3.9 billion pounds 
accounting for 42 percent of United States lettuce production. Leaf and 
romaine lettuce are harvested year-round in California. Arizona is the 
other main producer of these lettuces in the winter. According to 2007 
Census record data, 2,891 farms in all 50 States harvested leaf lettuce 
from approximately 59,000 acres. For romaine lettuce, the figures are 
87,000 acres harvested from 1,057 farms in 49 States.
    According to the hearing record, demand for fresh spinach resulted 
in

[[Page 24297]]

average production increases of over 6 percent per year since 1990, 
with production from major States estimated to have reached 513 million 
pounds in 2009. According to the 2007 Census, 1,121 farms in all 50 
States harvested spinach for the fresh market from almost 30,000 acres. 
In 2007, the top producers of spinach for the fresh market were 
California (harvesting 18,000 acres), Arizona (harvesting 3,600 acres), 
Texas (harvesting 2,200 acres), Colorado (harvesting 1,900 acres), and 
New Jersey (harvesting 1,500 acres). These States accounted for 94 
percent of the fresh spinach acreage. Seasonal production data 
indicates that California harvests spinach throughout the year. Arizona 
and Texas harvest in the winter, Colorado harvests in the summer, and 
New Jersey harvests in the spring and fall.
    Production increases for fresh cabbage have been significantly less 
than for lettuce and spinach over the past 20 years, but do indicate a 
steady increase in demand for fresh cabbage. Production averaged 2.3 
billion pounds in the 1990s, 11 percent higher than the average for the 
1980s. For the 10-year period between 2000 and 2009, fresh cabbage 
production in major States averaged 2.4 billion pounds, 4 percent 
higher than the 1990s average.
    In 2007, 88 percent of harvested cabbage acreage was for fresh use. 
In 2007, the top 5 State producers of cabbage for the fresh market were 
California (harvesting 14,000 acres), New York (harvesting 10,300 
acres), Florida (harvesting 9,800 acres), Texas (harvesting 6,800 
acres), and Georgia (harvesting 6,600 acres), and accounted for 67 
percent of United States total fresh cabbage production. Other States 
that produce large quantities of fresh cabbage include North Carolina, 
Wisconsin, and Arizona. According to the 2007 Census, 3,986 farms in 
all 50 States harvested cabbage for the fresh market from approximately 
71,000 acres. Of the States with large production of fresh cabbage, 
Florida, Georgia, and Texas harvest in the winter and spring, 
California harvests year round, and New York harvests in the summer.

Minor Fresh Leafy Green Vegetable Crops

    The 2007 Census included limited data for the following leafy green 
vegetables for the United States market: Chinese cabbage, escarole & 
endive (data combined), kale, and mustard greens.
    According to hearing record evidence, there were a total of 618 
farms growing Chinese cabbage on a total of 11,471 acres in 2007. The 
top producing States for Chinese cabbage include California (harvesting 
5,593 acres on 111 farms), Florida (harvesting 3,206 acres on 40 
farms), New Jersey (harvesting 981 acres on 27 farms), Texas 
(harvesting 517 acres on 7 farms), and Hawaii (harvesting 271 acres on 
53 farms).
    For escarole and endive, the 2007 Census numbers reported for 
national acreage and numbers of farms are 3,169 and 132, respectively. 
The top producing States for these crops are California (harvesting 
1,974 acres on 28 farms), New Jersey (harvesting 546 acres on 32 
farms), Florida (harvesting 402 acres on 7 farms), Ohio (harvesting 164 
acres on 4 farms), and New York (harvesting 75 acres on 13 farms).
    For kale, the 2007 Census numbers reported for national acreage and 
numbers of farms are 3,784 and 946, respectively. The top producing 
States for these crops are California (harvesting 1,077 acres on 96 
farms), North Carolina (harvesting 363 acres on 64 farms), Texas 
(harvesting 214 acres on 13 farms), Colorado (harvesting 84 acres on 12 
farms), and Ohio (harvesting 76 acres on 28 farms).
    For mustard greens, the 2007 Census numbers reported for national 
acreage and numbers of farms are 7,013 and 848, respectively. The top 
producing States for these crops are California (harvesting 1,902 acres 
on 87 farms), Georgia (harvesting 1,585 acres on 36 farms), South 
Carolina (harvesting 581 acres on 35 farms), Texas (harvesting 470 
acres on 61 farms), and Michigan (harvesting 308 acres on 29 farms).

Consumption

    According to the hearing record, annual per capita lettuce 
consumption in the United States was 21 pounds in the 1960s, 24 pounds 
in the 1970s, and 25 pounds in the first half of the 1980s. Since the 
late 1980s, lettuce consumption has averaged about 30 pounds per 
person, an increase of 40 percent compared to the 1960s. The type of 
lettuce consumed has changed over this period of time. Historically, 
head lettuce has accounted for the majority of national leafy green 
vegetable consumption. While still representing the majority of leafy 
green vegetable production volume, evidence is that consumer demand for 
head lettuce is slowly shifting toward other leafy green vegetable 
crops. Evidence is that demand is shifting to leaf lettuce, romaine, 
spinach, and specialty crops.
    Consumption of head lettuce decreased from 23.5 pounds per person 
in 2000 to 16.9 pounds per person in 2008. At the same time, 
consumption of leaf and romaine lettuce increased from 8.4 pounds per 
person in 2000 to 11.1 pounds per person in 2008. Consumption of 
spinach peaked in 2005 at 2.3 pounds per person, and has remained at 
most 15 percent below peak consumption since the E. coli outbreak in 
2006. Average per capita consumption of spinach was forecasted at 1.6 
pounds per person for 2009. Cabbage consumption has remained steady 
since 2004, oscillating from 8.1 pounds per person in that year to 7.8 
pounds per person in 2005-06 to 8.2 pounds per person in 2009.

Leafy Green Vegetable Imports and Exports

    According to data submitted into evidence, the United States is the 
second largest producer of leafy green vegetables in the world, 
accounting for roughly 22 percent of global production in 2009. China 
is the world's largest leafy green vegetable producer, with a world 
market share equal to 51 percent in 2008.
    Witnesses explained that United States leafy green vegetable 
producers compete on both a domestic and international level with 
foreign leafy green producers. Since 2002, Mexico has been the largest 
exporter of leafy green vegetables to the United States, followed by 
Canada, Peru, and Israel. In 2006, Mexico exported 118 million pounds 
of leafy green vegetables to the United States. During the same period, 
Canada, Peru, and Israel exported 52 million pounds, 1.2 million 
pounds, and 365,000 pounds, respectively. In 2006, the United States 
exported slightly less than 12 percent of its leafy green vegetable 
production.
    Even though China consumes the majority of its leafy green 
vegetable production, witnesses stated that China is the main 
competitor to United States leafy green vegetable exports to Asian 
markets. Although Japan and India both are top ten global producers of 
leafy green vegetables, neither country exports more than 0.1 percent 
of the leafy green vegetables that they produce.
    Mexico is the largest producer of leafy green vegetables in Latin 
America and was the ninth largest global producer in 2006. Its 
proximity to the United States market makes Mexico a competitor in both 
the United States and Mexican markets, in addition to other Latin 
American markets. Witnesses also explained that some of the leafy green 
vegetables from Mexico are produced by United States companies 
operating in both countries.
    Major producers and exporters in the European Union are Spain and 
Italy. Both Spain and Italy produced approximately 2 million pounds of 
leafy

[[Page 24298]]

green vegetables annually from 2000-2006. Total exports from Spain and 
Italy average 45 percent and 10 percent of their respective leafy green 
vegetable production.
    Record evidence from the hearing illustrates that the handling of 
United States grown leafy green vegetables is multi-State, regional, 
national, and international in scope. Within the United States, the 
handling of leafy green vegetables in one State exerts an influence on 
all other handling of leafy green vegetables within the production 
area. Additionally, the handling of imported fresh leafy green 
vegetables also impacts interstate commerce and foreign commerce. 
Record evidence is that imported leafy green vegetables are widely 
distributed throughout the United States market alongside domestic 
leafy green vegetables. Moreover, record evidence is that sometimes 
imported product is co-mingled with domestic product prior to its 
distribution in United States markets. Thus, the evidence shows that 
the handling of leafy green vegetables for the United States market, 
whether the leafy green vegetables are produced domestically or 
imported, is in the current of interstate and foreign commerce and 
directly affects such commerce.

Material Issue Number 2--The Need for a National Leafy Green Vegetable 
Marketing Agreement

    The record evidence demonstrates that there is a need for the 
proposed program to regulate the handling of leafy green vegetables, 
and that such a program would improve quality by minimizing the 
occurrence of microbial contamination of those vegetables. If 
implemented, the proposed program would provide for the establishment 
of audit metrics and verification audits of all product handled by 
signatory handlers within the United States. Any audit metrics 
developed under the proposed program would reflect FDA good 
agricultural practice guidelines (GAPs) and FDA fresh product 
manufacturing regulation (GMPs). Any regulation would also take into 
account leafy green vegetable industry stakeholder interests and 
concerns regarding varying production and handling environments across 
the nation. Furthermore, the proposed program would assist in 
stabilizing market conditions if a contamination event were to occur, 
and would increase consumer confidence in the quality of leafy green 
vegetables.
    While participation in the proposed program would be voluntary, any 
handler becoming a signatory to the agreement would be subject to 
mandatory compliance. The proposed program would also cover any 
imported leafy green vegetables handled by signatory handlers. 
According to record evidence, foreign producers and handlers doing 
business with signatory handlers would be required to meet equivalent 
audit metrics as in effect for the domestic industry.
    USDA Inspection Service would serve as the primary auditing 
authority to conduct verification audits under the proposed program. 
USDA Inspection Service would also have the authority to designate 
other entities approved or recognized by USDA to conduct audits on its 
behalf.
    According to the hearing record, there are no national, mandatory 
food quality or safety regulations for the growing and handling of 
fresh leafy green vegetables. There are, however, FDA guidelines that 
are commonly used by leafy green vegetable producers and handlers in 
their development of private or customer-driven food safety plans. 
These guidelines are: The ``Guide to Minimize Microbial Food Safety 
Hazards for Fresh Fruits and Vegetables'' (1998), and the ``Guide to 
Minimize Microbial Food Safety Hazards for Fresh-cut Fruits and 
Vegetables'' (2008). According to the hearing record, these guidelines 
jointly comprise what are referred to as ``Good Agricultural 
Practices'' or ``GAPs''. In 2009, FDA published a draft set of 
commodity specific guidelines for leafy green vegetables, the 
``Commodity Specific Food Safety Guidelines for Lettuce and Leafy 
Greens Supply Chain''. These guidelines have not been finalized yet 
and, therefore, are not being actively used in the industry.
    Mandatory FDA regulation does exist for manufacturers of fresh-cut 
leafy green vegetables. Manufacturers alter leafy green vegetables from 
their fresh form into a fresh-cut form. FDA regulations regarding the 
manufacturing of fresh-cut leafy green vegetables are found in 21 CFR 
Part 110. According to the record, these regulations are commonly 
referred to as Good Manufacturing Practices (GMPs).
    The AMS, in partnership with State departments of agriculture, 
offers a voluntary, audit-based program that verifies adherence to the 
two FDA guidelines identified above. Under AMS's Good Agricultural and 
Good Handling Practices Audit Verification Programs, the FDA GAPs 
guidelines are divided into two specific programs: GAPs verification 
audits, which examine farm practices, and Good Handling Practices 
(GHPs), which concentrate on packing facilities, storage facilities, 
and wholesale distribution centers. The AMS programs are not mandatory. 
However, according to the hearing record, many commercial purchasers of 
leafy green vegetables require their vendors to be audited under one of 
the above mentioned programs.
    There are two State programs that have been established 
specifically for the purpose of regulating the handling of fresh leafy 
green vegetables. These programs are found in California and Arizona.
    The California Leafy Green Products Handler Marketing Agreement 
became effective February 10, 2007. Record evidence indicates that, at 
the time of the hearing, 99 percent of leafy green vegetables produced 
and handled in California were subject to the State program. In October 
2007, a similar program was implemented in Arizona: The Arizona Leafy 
Green Products Shipper Marketing Agreement. Evidence is that 
approximately 75 percent of the leafy green vegetables produced and 
handled in Arizona were being regulated under that State's program at 
the time of the hearing. While both the California and Arizona programs 
are voluntary, the requirements of these State marketing agreements are 
mandatory for all signatories within each respective State.
    Proponents of the proposed agreement stated that a national program 
would allow for the coordination of audit verifications for all fresh 
leafy green vegetables at a national level and would allow for 
continuity of product quality as it moves between States.
    While proponents acknowledged that leafy green vegetable GAP and 
GHP programs have been designed and implemented in cooperation with the 
USDA Inspection Service in two States (Arizona and California), they 
argued that the development of a national program was necessary. 
Proponents stated that a national program would minimize the potential 
for contamination of fresh leafy green vegetables in all States where 
they were produced or handled, not just California and Arizona. 
According to the record, participation in the two State programs 
represents roughly 99 and 75 percent of production in California and 
Arizona, respectively, but participation of production outside of those 
two States is inconsistent and limited. Proponents explained that 
producers and handlers who currently undergo GAP or GHP audit 
verifications outside of the States of California and Arizona primarily 
do so either electively or at the request of their buyers.

[[Page 24299]]

    Proponents explained that a fresh leafy green vegetable may be 
grown in one State, shipped to another State for washing and 
preliminary handling, and then shipped to a third State for further 
processing and packaging prior to that product reaching consumers. For 
this reason, proponents stated that consistency in good agricultural 
and handling practices were needed in all States in which leafy green 
vegetables are grown or handled. Proponents stated that national 
coordination of such practices is needed to maintain the integrity of 
product quality, including minimizing the potential for microbial 
contamination.
    For example, the California Leafy Green Products Handler Marketing 
Agreement does not cover lettuce or leafy green vegetables grown 
outside of California. It does not have the authority to send 
inspectors to audit growers or handlers in another State. Therefore, if 
a handler who is based in California receives product from outside the 
State, that product may not be required to meet the GAPs or GHPs. 
According to the proponents, the development of a national GAP and GHP 
program for leafy green vegetables based on FDA guidelines would foster 
consistency in agricultural and handling practices across all States.
    Proponents explained that FDA-based GAPs and GHPs provide general 
guidance on critical steps within the growing, harvesting, 
transportation, cooling, packing, and storage of fresh produce where 
food safety might be compromised. FDA guidelines alert producers and 
handlers to critical areas within the production and handling of fresh 
leafy green vegetables that present potential for microbiological 
contamination. FDA guidelines do not, however, describe the actions 
that need to be taken by producers or handlers within their individual 
businesses to meet the guidance benchmark. Proponents explained that 
guidance of this kind is established in the form of ``audit metrics''.
    For example, FDA guidelines state that mechanical or machine 
harvest has become increasingly prevalent and that this activity leads 
to increased surface contact exposure of leafy green vegetables with 
components of the harvest machinery. FDA guidelines identify surface 
contact in mechanical harvesting as a critical step. One of the 
guidelines offered by FDA to reduce the potential for contamination at 
this critical step includes establishing appropriate measures that 
reduce, control, or eliminate the potential introduction of human 
pathogens at the cut surface during and after the mechanical harvest 
operation. Under the proposed program, audit metrics would be developed 
to identify actions that would meet this guideline, such as equipment 
cleaning schedules and requirements for harvest workers to use gloves 
or other protective clothing.
    According to proponents, if the proposed program were implemented, 
its administrative body would have authority to recommend ``audit 
metrics''. Witnesses explained that audit metrics are standards or 
steps within a production or handling system at which some action or 
measure should be taken to minimize the potential for microbial 
contamination. The standards or steps within a production or handling 
system at which action or measures are taken are also referred to as 
``control points'' of a ``process control''. It was further explained 
that any ``audit metrics'' established under the proposed program would 
represent a set of auditable standards or requirements within a process 
control that would allow an auditor to determine if a producer or 
handler is in compliance with the program.
    While proponent witnesses supported the need for a uniform 
verification audit program, they also supported the development of a 
program that recognizes differences among producers and handlers across 
regions in the production area. For example, differences in water 
sources, geography, climate, or size of operation could require slight 
variations in the types of actions needed to be taken for a producer or 
handler to be compliant under the proposed program.
    It also was argued that the proposed agreement should allow for the 
development of audit metrics that are reflective of current industry 
practices and are scientifically-based. According to the record, 
standardization of production and handling audit metrics would result 
in increased efficiencies and reduced costs related to multiple buyer-
specific requirements. Proponents explained that usage of current 
industry practices was important for two reasons. First, current 
practices for organic handling operations are likely different from 
conventional handling operations. However, the audit metric established 
for each respective type of handling operation should result in both 
operations meeting the FDA guidelines and complying with the proposed 
program.
    Secondly, proponents advocated that audit metrics be supported by 
current scientific research accepted within the professional and 
academic scientific community. Proponents stated that the proposed 
program would positively address the increasingly common practice among 
fresh produce buyers to develop their own food safety requirements for 
producers and handlers. According to the hearing record, these 
requirements often differ from buyer to buyer, resulting in a complex 
web of private standards that producers and handlers need to adhere to 
in order to sell their product.
    Implementation of these varied requirements is costly to the 
producer and handler, and is often redundant. Moreover, many witnesses 
testified that some buyer requirements are not scientifically justified 
and, in turn, have led to production and handling practices that 
challenge existing industry technology or are contra-indicated to 
findings of current scientific research.
    To this end, proponents expressed the importance of including input 
from stakeholder groups including, but not limited, to organic 
producers and handlers, small businesses, and natural resource interest 
groups. Additionally, proponents stated that members of the 
professional and academic community should be represented in the audit 
metric development process.
    Proponents argued that because the handling of imported fresh leafy 
green vegetables impacts domestic commerce, foreign product handled by 
signatories should also be regulated. As discussed in Material Issue 1, 
imported leafy green vegetables are widely distributed throughout the 
United States market alongside domestic leafy green vegetables. 
Moreover, record evidence shows that imported product can be co-mingled 
with domestic product prior to its distribution in United States 
markets.
    Witnesses explained that if microbial contamination were to occur 
during the growing or handling of foreign leafy green vegetables 
imported by United States handlers and consumed by United States 
consumers, the United States fresh leafy green vegetable industry would 
suffer economic losses regardless of the origin of the contaminated 
product. Witnesses stressed the importance of having a Federally-
regulated program through which the industry could stabilize any 
negative market impacts, and proactively address consumer confidence 
with regard to domestically handled leafy green vegetables, if such an 
event were to occur.
    According to the hearing record, the regulation of imported product 
handled by signatory handlers would ensure that both domestic and 
foreign product was held to the same, or equivalent, good agricultural 
and handling practices. This would allow for consistency of

[[Page 24300]]

product quality among participants of the proposed program.
    Proponents stated that it is critical for the industry to improve 
and ensure the safety and quality of leafy green vegetables. The 
relationship among quality, consumer demand, and producer returns was 
demonstrated at the hearing. Furthermore, the correlation between 
product quality and the absence of microbial contamination was clearly 
defined.
    Witnesses testifying at the hearing used the example of the 
September 2006, multi-state outbreak of E. coli linked to fresh spinach 
grown in California's Salinas Valley. According to the record, the 
resulting recall was the largest ever for the fresh leafy green 
vegetable industry. Investigations by FDA and the California Department 
of Health Services, in cooperation with the Centers for Disease Control 
and Prevention, and USDA Animal and Plant Health Inspection Service, 
concluded that E. coli contamination might have been attributed to 
environmental factors in the production area.
    Witnesses who were impacted by the recall stated that consumer 
demand for fresh spinach dropped by more than 60 percent immediately 
following FDA's public alerts. Witnesses also explained that after the 
contamination had been linked to California, consumer consumption of 
spinach remained at record lows regardless of the State within which it 
was produced. According to record evidence, consumer demand for spinach 
remains below pre-2006 levels.
    Proponents used the 2006 E. coli outbreak, and the subsequent 
damage to consumer confidence and demand for leafy green vegetables, to 
demonstrate that a contamination event in one State can impact industry 
participants nation-wide. Witnesses stressed the need to have a 
regulatory system in place as a means of minimizing the potential for 
future contamination events. Witnesses also expressed the usefulness of 
having a Federally regulated program to facilitate the rapid 
identification and containment of contamination events if they occur. 
Proponents explained that such a national program would safeguard 
consumers, as well as provide the leafy green vegetable industry with a 
mechanism to address potential loss of consumer confidence in product 
quality.
    According to record evidence, USDA has several programs--namely the 
Qualified Through Verification and the GAPs and GHPs Audit Verification 
Programs--that provide independent verification that growers and 
handlers are following FDA's guidance and commodity-specific best 
practices.
    Proponents further stated that USDA and FDA have an established 
working relationship on food quality programs. For example, AMS offers 
the GAPs and GHPs Fresh Produce Audit Verification Program, a 
voluntary, audit-based program for the fresh produce industry based on 
the FDA's ``Guidance to Minimize Microbial Food Safety Hazards for 
Fresh Fruits and Vegetables'', and also coordinates Inspection Service 
audits under both the California and Arizona leafy green vegetable 
marketing agreements.
    Witnesses in favor of USDA oversight also cited the history of 
interagency cooperation. As an example, witnesses at the hearing 
referred to the USDA and FDA co-sponsorship of the National Advisory 
Committee on Microbiological Criteria for Foods by the Food Safety and 
Inspection Services, along with other Federal agencies such as the 
Centers for Disease Control and Prevention.
    Witnesses opposed to the proposed program, as well as those who 
voiced the need for revisions to the proponents' proposal, expressed 
apprehension over the ability of program administrators to collaborate 
with stakeholder interest groups. Specifically, witnesses were 
concerned that the development and recommendation process of audit 
metrics would not take into consideration differences between 
conventional and organic production and handling practices, as well as 
scale of business operations. Other areas of particular concern noted 
during the hearing include topics such as conservation practices and 
natural resource management.
    These witnesses also explained that regulatory jurisdiction over 
some of these topics is shared by multiple Federal, State, and local 
government agencies, and stated the need to include representatives 
from these regulatory agencies in the audit metric development process. 
It was argued that their involvement would mitigate the potential for 
conflicting requirements being placed on producers or handlers that are 
subject to multiple sets of standards and compliance issues.
    Some witnesses opposed to the proposed program expressed concern 
that its implementation would lead to further proliferation of private 
sector standards. These critics argue that the current California and 
Arizona State programs have had little positive impact on the reduction 
of private standards in those States since their implementation.
    While many witnesses testified at the hearing that a relationship 
between product quality and food safety does exist, some stated that a 
regulatory program would be better placed under FDA oversight, or 
perhaps under a system of State regulatory programs.
    Critics of USDA oversight of such a program stated that USDA lacks 
the scientific expertise needed for the development and implementation 
of a science-based regulatory program for food safety. Critics also 
explained that their understanding of the mission of AMS is to 
facilitate the marketing of agricultural products and therefore should 
not be involved in the oversight of quality as it relates to food 
safety issues. These witnesses stated that monitoring of food safety is 
not relevant to food quality and should not be included under the 
purview of marketing and market stability.
    Others witnesses stated that individual State departments of 
agriculture would be better equipped at addressing the particular needs 
and unique characteristics of their producer and handler constituents. 
Witnesses in favor of State regulatory programs argued that the 
implementation of a national program would result in a ``one-size fits 
all'' Federal regulatory program. These witnesses believe that 
regulation would be developed to reflect the agricultural practices of 
regions producing the most volume of leafy green vegetables to the 
detriment of regions producing less volume.
    Lastly, concerns were raised during the hearing process and in the 
post-hearing briefs submitted over the development process of any audit 
metrics applied to foreign production or handling operations. Witnesses 
also raised questions over the proposed agreement's ability to 
recognize foreign GAPs, GHPs and GMPs programs, foreign auditing 
services, or independent third-party auditing services currently in 
operation both domestically and internationally.
    Based on hearing record evidence, USDA concludes that there is a 
need for a national program to regulate the handling of leafy green 
vegetables. The evidence supports that the proposed program would allow 
a uniform baseline of regulation to be proficiently administered 
throughout the complex and diverse leafy green vegetable industry. The 
proposed program should allow for participation and compliance among 
the diverse community of growing and handling operations across the 
United States.
    Through the proposed program, leafy green vegetable industry 
stakeholders could work cooperatively together to develop and recommend 
a uniform, auditable, science-based food quality

[[Page 24301]]

verification program. Furthermore, audit oversight conducted by the 
USDA Inspection Service or USDA approved or recognized entities in 
coordination with current FDA guidelines, would benefit the industry 
and would be in the best interest of consumers. Finally, the proposed 
agreement would tend to effectuate the declared policy of the Act.

Material Issue Number 3--Definition of Leafy Green Vegetables and 
Production Area

    The proposed agreement should provide for the definition of the 
commodity and the area that would be regulated. Terms related to the 
commodity to be covered by the proposed agreement, such as ``fresh'' 
and ``fresh-cut'' should also be defined.

Leafy Green Vegetables

    The proponents testified that leafy green vegetables are short-
lived herbaceous plants that are eaten raw. Most leafy green vegetables 
are produced in raised beds that are either directly seeded or 
transplanted with plugs (immature plants). Leafy green vegetables 
produced for fresh market production are harvested either as single 
leaves or as whole plants. Some types of leafy green vegetables, such 
as chard, kale, mizuna, and baby leaf lettuce may be harvested multiple 
times in a crop year. Record evidence pertaining to the leafy green 
vegetables included in the definition follows.
    Arugula, a member of the Brassicaceae family of plants, has three 
species that are used for human consumption: the annual species--Eruca 
sativa (domesticated) and Eruca sativa vesicaria (L.) Cav. (wild-type); 
perennial species--Diplotaxis tenuifolia (L.) DC; and a polyploidy 
perennial Diplotaxis muralis (L.) DC. Arugula is a low-growing annual 
that is commonly called rocket, roquette (French), rughetta, and rucola 
(Italian). If arugula is marketed as a single commodity, it is usually 
bunched and packed into cartons in the field. Arugula that is for the 
fresh-cut market is shipped from the field to the processing facility 
in bulk containers.
    According to record evidence, arugula produced in Arizona is 
primarily produced for value-added packaged salad mixes. In this 
example, the plants are not thinned after sprouting and are harvested 
as immature arugula. This differs from producers in New Jersey, who 
generally harvest, wash, and bundle their crop, and sell it as a single 
commodity at local produce auctions in wholesale units of 24 bunches 
per crate. Record evidence indicates that small producers who produce 
arugula generally sell their crop in bunches directly to customers at 
farmers' markets.
    Cabbage, one of the most consumed vegetables in the world, is a 
member of the Brassica oleracea species (Capitata Group) of the family 
Brassicaceae. Cabbage is produced year-round in all 50 States. A mature 
head of cabbage generally weighs 3-5 pounds, depending on the variety. 
Cabbage produced for the fresh market is harvested by hand and packed 
18-24 heads per carton.
    Chard (Beta vulgaris var. cicla) is a member of the Amaranthaceae 
family of plants that is commonly called Swiss chard in the United 
States. It is the same species as beetroot. Stems of the chard plant 
vary from white to red and yellow depending on the variety. If only 
mature leaves are harvested, chard will continue to be productive for 
up to a year. Leaves are typically bunched in the field during harvest. 
Immature or baby leaves may be added to packaged salad mixes.
    Cilantro (Coriandrum sativum) is an annual herb in the family 
Apiaceae that is also called Chinese or Mexican parsley in the United 
States. In Florida, cilantro is produced for the fresh-cut market 
between late September and May, whereas in California it is produced 
year-round. Hand-harvested cilantro is sold in bunches tied with a 
rubber band or twist tie. Conventional packing is 30 bunches in 10 
pound boxes.
    There are three major cress species known in North America: Garden 
cress, Upland cress, and watercress. All are members of the family 
Brassicaceae. Garden cress (Lepidium sativum), also called peppergrass, 
pepper cress, or pepperwort, is a fast-growing plant. Introduced to the 
United States from China, it is botanically related to mustard and 
watercress and is sometimes referred to as an herb. Garden cress is 
commonly used in salads as a ``baby green''. Upland cress (Barbarea 
verna) is native and grows wild in the southeast; it is often called 
creasy greens, highland creasy, or creasy salad. Watercress (Nasturtium 
officinale, N. microphyllum) is a fast-growing aquatic or semi-aquatic 
perennial plant. It is thought to be one of the oldest known leafy 
green vegetables consumed by humans.
    Dandelion is produced commercially in the United States from two 
species, Taraxacum officinale and Chichorium intybus, both belonging to 
the Asteraceae family. A perennial herbaceous plant, dandelions are 
native to North America and produced as weeds worldwide. Dandelion use 
as a fresh leafy green is growing in popularity.
    Endigia is a new variety of forced red chicory that is a cross 
between Belgian endive and two varieties of radicchio--Chioggia and 
Verona.
    Endive (Cichorium endivia) is a leafy green belonging to the large 
Asteraceae family. There are two main varieties of endive, curly 
endive, or frisee (var. crispum), and escarole (var. latifolia). The 
leaves from endive are harvested by hand and tied in bunches before 
being packed into cartons. Belgian endive (Cichorium intybus var. 
foliosum) is also known as witloof in the United States.
    Kale is a member of the Brassica oleracea species (Acephala Group) 
with common varieties of green kale, red kale, red Russian kale, and 
Lacinto or dinosaur kale. At harvest, two cuttings may generally be 
taken from one seeding. If harvested as an immature leaf, kale is often 
co-mingled with other immature or baby leaf variety leafy green 
vegetables in salad mixes. Mature kale is typically cooked prior to 
eating. However, witnesses testified that mature kale is often used on 
salad bars for decoration, so it comes into contact with other leafy 
green vegetables in that context.
    Lettuce (Lactuca sativa) is produced in all 50 States and is highly 
perishable. Lettuce crops include head, leaf, and romaine. Common 
varieties of head lettuce (Lactuca sativa var. capitata) are iceberg 
(also called crisphead) and butterhead (also called Boston, bibb, 
buttercrunch, or Tom Thumb). During harvesting in Arizona and 
California, outer leaves are stripped from the lettuce heads before 
boxing. Head lettuce sold fresh is boxed 24 heads to a carton--either 
naked or film-wrapped. Head lettuce that will be further processed is 
shipped in bulk to the processing facility where it is washed, cored, 
shredded, and/or cut and packaged as ready-to-eat products. Leaf 
lettuce (Lactuca sativa var. crispa) has steadily grown in popularity 
in the United States in the past 15 years. Common leaf lettuce 
varieties are red leaf, green leaf, and baby leaf or salad/spring mix. 
At harvest, leaf lettuce is generally naked packed 24 to a carton. 
Romaine lettuce (Lactuca sativa var. longifolia), also called Cos 
lettuce, is generally loosely packed.
    M[acirc]che (Valerianella locusta) is a small annual plant of the 
family Valeriancaceae. It is also called corn salad, Lewiston 
cornsalad, lamb's lettuce, lamb's tongue, field lettuce, field salad, 
rapunzel, and fetticus.
    Parsley (Petroselinum crispum) is a biennial green leaf herb that 
is a member of the family Apiaceae. Parsley

[[Page 24302]]

is available in two varieties--curly leaf and Italian or flat leaf. 
Parsley is harvested by cutting 1.5-2 inches above ground so that re-
growth may occur, allowing for three to four cuttings per planting.
    Radicchio, a type of chicory (Cichorium intybus var. foliosum), is 
a member of the family Asteraceae. Sometimes called Italian chicory, 
varieties of radicchio are named after the regions of Italy from which 
they originate. The most common variety of radicchio found in the 
United States is Radicchio di Chioggia. Other lesser known varieties 
available are Radicchio di Treviso, Tardivo, and Radicchio di 
Castelfranco. In Italy, radicchio is often grilled or roasted, but in 
the United States it is most often used as a colorful addition to leafy 
green salad mixes. The United States also imports radicchio from Italy 
and Chile.
    Spinach (Spinancia oleracea) is a hardy leafy green vegetable that 
is produced in all 50 States. There are several different varieties of 
spinach that are classified according to leaf shape and texture. 
Varieties include savoy, which has wrinkled leaves, semi-savoy, and 
varieties with smooth or flat leaves. Savoy types are sold mainly for 
fresh market uses, while types with smooth or flat leaves are used 
mainly for processing. The growing season varies by location, and 
leaves may be cut as often as four times during a crop year. Spinach is 
sold in bunches or as loose leaf in cellophane packaging to food 
service and retail outlets.
    Tat soi (Brassica rapa var. rosularis, Narinosa group) is an Asian 
leafy green vegetable and a member of the Brassicaceae family.
    Winter purslane (Claytonia perfoliata) is a member of the 
Portulacaceae family. Also known as Cuban Spinach and Miner's lettuce, 
winter purslane is an annual plant.
    Proponents and other witnesses testified that they believe this is 
a comprehensive list of the leafy green vegetables produced in the 
United States and available in the market. However, new varieties of 
lettuces and other leafy greens appear in the market on an annual 
basis. Those varieties would be covered by the proposed agreement. 
Similarly, witnesses testified that ``baby leaf'' or ``baby greens'' 
are a seed variety that is to be harvested and marketed as a vegetable, 
rather than being an immature version of a leafy green vegetable. These 
varieties would also be covered by the program. The definition of leafy 
green vegetables should be revised to clarify that all varieties of the 
listed items would be covered.
    Some witnesses supported adding mustards and herbs to the 
proponents' definition. However, record evidence does not support 
extending program coverage to those items. Proponents testified, for 
example, that mustards were not included in the definition of leafy 
green vegetables because they are normally cooked prior to consumption.
    The proponents supported including ``spring mix'' in the definition 
of leafy green vegetables. However, the record evidence is that spring 
mix is not a single commodity, but a mixture of a variety of leafy 
green vegetables. Proponents and other witnesses testified that there 
is no universal, standard ingredient blend for spring mix. A spring mix 
typically includes, but is not limited to, arugula, chard, cress, 
lettuce, and radicchio. It also includes baby leaf items such as cress, 
dandelion, endiga, mache, mizuna, tat soi, and winter purslane. While 
the list of leafy green vegetables includes most items commonly used in 
a spring mix, signatory handlers who produce a spring mix would need to 
ensure that all ingredients of their spring mix are produced and 
handled in accordance with the terms of the proposed agreement.
    The proposed agreement is intended to cover all mixes (such as 
spring mix and other salad blends) of leafy green vegetables. The 
definition of leafy green vegetables is revised to clarify this point 
by adding a new paragraph (b). In a related matter, sometimes salad 
mixes contain items that are not leafy green vegetables, such as 
carrots or dressings. These items would not be covered by the 
agreement. Such language is being added to the definition of leafy 
green vegetables as a new paragraph (c). (This provision appeared in 
Sec.  970.8 of the proponents' proposal, but that section of the 
proposed agreement is being deleted as unnecessary.)
    Some witnesses stated that the program should apply only to fresh-
cut leafy green vegetables. These witnesses cited that there is a 
different safety risk for leafy green vegetables produced for fresh-cut 
versus the fresh market. Other witnesses with generally the same 
viewpoint stated that the list of leafy green vegetables presented by 
the proponents was too broad and should provide an exception for leafy 
green vegetables that require cooking.
    Based on hearing record evidence, all leafy green vegetables 
included in the proposed definition that are handled by signatory 
handlers and that are intended for human consumption in the fresh form 
(whether fresh-cut or not) should be covered under the proposed 
agreement. Record evidence demonstrates that the movement of leafy 
green vegetables from producers to handlers is fluid and that 
oftentimes it is difficult to anticipate what the end use of a 
harvested field will be. Moreover, record evidence supports that the 
opportunity for microbial contamination exists throughout the industry 
at the production, harvesting, handling and processing stages. 
Therefore, coverage of all leafy green vegetables, whether in their 
fresh or fresh-cut form, is necessary and is in the best interest of 
consumers.
    Regarding witness requests to exempt leafy green vegetables that 
require cooking prior to human consumption, this exemption is 
unnecessary as the proposed program would only cover leafy green 
vegetables intended for consumption in their raw or uncooked form. This 
is because the process of cooking is identified as a ``kill step'' in 
food safety guidelines and is believed to eliminate contamination.
    Lastly, the record evidence supports the authority for the Board, 
with the approval of the Secretary, to add and remove leafy green 
vegetables from the definition as deemed necessary. This authority 
would enable the program to adapt and change to the needs of the leafy 
green vegetable industry. Any change would require that the Board 
approve such a recommendation at a public meeting and then submit the 
recommendation to the Secretary for review. If appropriate, USDA would 
initiate rulemaking.
    In summary, the definition of ``leafy green vegetables'' that 
appeared in the Notice of Hearing as Sec.  970.15, is revised as 
discussed above and redesignated as Sec.  970.18.

Fresh

    Proponents and other witnesses stated that ``fresh'' means any 
leafy green vegetable in the raw or natural form. Proponents described 
the many different ways that leafy green vegetables are harvested fresh 
in the field. One witness described how cilantro could be harvested 
using any of three different methods: (1) Cut the foliage 1-2 inches 
above the crown (the most common method); (2) cut the whole plant just 
below the soil; and (3) bulk harvest into bins using a mower and 
conveyor. Another witness provided the example that a head of lettuce 
that is field-cored and wrapped in the field is considered a raw 
agricultural commodity in a package. Both of these examples demonstrate 
that while harvesting involves cutting the foliage growth from the stem 
or crown of the plant, such cutting does not

[[Page 24303]]

constitute the creation of a fresh-cut leafy green vegetable.
    The term ``fresh'' was used often as witnesses discussed GAPs and 
GHPs, since both pertain only to the fresh commodity. Thus, based on 
record evidence, a new definition Sec.  970.9, ``fresh'' is added to 
the proposed agreement. This is necessary to identify and describe how 
fresh leafy green vegetables are different from fresh-cut leafy green 
vegetables.

Fresh-Cut

    Proponents proposed a definition of ``fresh cut'' to mean fresh 
leafy green vegetables that have been altered from their natural form 
by cutting, dicing, peeling, slicing, chopping, shredding, coring, or 
trimming, with or without washing prior to being packaged for use by 
the consumer, foodservice industry, or a retail establishment. 
Proponents provided examples of fresh-cut leafy green vegetables by 
citing lettuce that is shipped in bulk to the processing facility where 
it is washed, cored, shredded or cut, and packaged as ready-to-eat 
bagged salads. It was noted that this process would also apply to 
cabbage.
    Section 970.7 is revised for clarification and redesignated as 
Sec.  970.10.
    In addition, proponents proposed a definition in the Notice of 
Hearing as Sec.  970.8, ``fresh-cut, packaged leafy green product''. 
However, witnesses testified that this term means the same as the 
definition of ``fresh-cut''. This definition is being removed from the 
proposed agreement as unnecessary. Likewise, the definition of 
``Packaged'' that appeared in the Notice of Hearing as Sec.  970.18 is 
deleted as unnecessary.

Production Area

    The term ``production area'' should be included in order to 
identify the area in which the proposed program would be applicable. 
According to the hearing record, the production area should include the 
fifty of the United States and the District of Columbia.
    Proponents testified that the intent of the proposed program is to 
put into effect a national, standardized system to increase quality by 
minimizing microbial contamination of leafy green vegetables intended 
for raw or uncooked human consumption in the United States. 
Furthermore, the proposed program would assist in stabilizing market 
conditions if a contamination event were to occur, and would increase 
consumer confidence in the quality of leafy green vegetables.
    According to record evidence and as discussed in Material Issue 1, 
leafy green vegetables are produced and handled year-round in all 50 
States and the District of Columbia. Handlers in the United States may 
acquire leafy green vegetables that are produced in one State, 
manufactured in another State, and shipped nationally for consumption 
by consumers. Additionally, witnesses stated that some handlers have 
production or manufacturing operations, or both, in multiple locations 
throughout the United States. Thus, the national scope of the leafy 
green vegetable industry supports defining the production area as all 
50 States and the District of Columbia.
    Lastly, the production area and the zones into which it would be 
divided would determine the eligibility of persons to serve on the 
Board. The proposed program would require that all handlers, producers, 
and at-large members are located within the production area. The topic 
of the division of the production area into zones and Board membership 
are further discussed in Material Issue 5(b).
    Based on the hearing record, the term ``production area'' should be 
defined to mean all 50 States and the District of Columbia of the 
United States of America. The definition of ``production area'' that 
appeared in the Notice of Hearing as Sec.  970.23 is redesignated as 
Sec.  970.28.

Material Issue Number 4--Persons and Activities To Be Regulated

    Certain terms should be defined to identify the persons and the 
activities that would be regulated under the proposed agreement. The 
proposed agreement would regulate the act of handling leafy green 
vegetables in the production area by those handlers would voluntarily 
agree to adhere to the agreement requirements. As such, the following 
terms should be defined: ``handle'', ``handler'', ``importer'', 
``manufacture'', ``manufacturer'', ``signatory first handler'', and 
``signatory handler.''
    According to record testimony, within the leafy green vegetable 
industry, businesses in the farm to fork continuum include growers/
producers, handlers (commonly known as processors, shippers, packers), 
wholesalers/distributors, agents/brokers, exporters/importers, retail 
outlets such as grocery stores, and foodservice providers. Small farms 
as defined by SBA commonly sell their leafy green vegetables directly 
to consumers at farmer markets, through Community Supported Agriculture 
(CSA) programs, or to retailers. Record testimony indicates that large 
farm operations usually sell their leafy green vegetable crops to 
handlers or directly to retailers at wholesale produce auctions.
    Record testimony indicates that there basically are two types of 
handlers ``first handlers'' and ``secondary handlers'' or handlers 
other than first handlers. ``First handlers'' take possession of leafy 
green vegetables and may process and package leafy green vegetables 
before selling to other handlers or retailers. ``Secondary handlers'' 
such as manufacturers--the record indicates--commonly buy from first 
handlers. However, such handlers also could buy directly from 
producers.
    According to record testimony, handling generally begins when the 
harvested leafy green vegetable crop leaves the field and is in the 
possession of the handler. Record testimony also indicates that fresh 
leafy green vegetable crops may change hands as many as three times 
through handling activities before reaching its final destination.
    According to record evidence, the term ``handle'' should be defined 
to mean ``receive, acquire, sell, process, ship, distribute, or import 
leafy green vegetables. The record indicates that ``handle'' should not 
include retail sales, foodservice sales, or brokering of such leafy 
green vegetables. According to record evidence, the act of handling 
places leafy green vegetables or products into the current of commerce 
both within the production area, and between the production area and 
any point outside that area. As such, ``handle'' which appeared in the 
Notice of Hearing as Sec.  970.11 should be redesignated as Sec.  
970.14, and revised slightly for clarity.
    ``Handler'' should be defined to mean any person who handles leafy 
green vegetables. The record indicates that a handler could be an 
individual, joint venture, partnership, corporation, or other business 
entity. According to record testimony, a handler represents the segment 
of the industry that processes, ships, sells, consigns, or imports 
leafy green vegetables, or any combination thereof. As proposed by 
under this agreement, distributors, packers, processors, shippers, and 
wholesalers would be handlers. The record also indicates that producers 
who engage in the act of handling leafy green vegetables would be 
considered handlers. As handlers, such producers would directly place 
their product into the stream of commerce, through direct sales to 
consumers, retailers, or other handlers such as a manufacturer or 
foodservice operator.
    For the purposes of the proposed agreement, the term ``handler'' 
should specify that brokers, retailers, and foodservice operators would 
not be considered handlers unless such

[[Page 24304]]

persons are otherwise engaged in handling. The record indicates that 
generally brokers serve as intermediaries and, negotiate with producers 
or handlers on behalf of their customers without ever taking possession 
or ownership of the actual leafy green vegetables.
    The term ``handler'' appeared in the Notice of Hearing as Sec.  
970.12, and should be re-designated Sec.  970.15, and revised slightly 
for clarity.
    Record evidence indicates that the term ``signatory'' should be 
modified to ``signatory handler'' and the definition should be revised 
to mean a handler located in the production area who is party to the 
proposed agreement. The revisions clarify that only handlers could 
become signatories to the proposed agreement, and that such persons 
would have to be located within the production area.
    According to the record, a signatory handler would be responsible 
for meeting the requirements of the proposed agreement, complying with 
audit requirements, and submitting reports and other information 
required for the administration of the proposed agreement. In cases 
where a signatory handler contracts for services, the signatory handler 
would be responsible for verifying and retaining documentation that the 
contracting service provider or agent meets any requirements in effect 
under the proposed agreement.
    Signatory handlers would be eligible to nominate persons to the 
Board and to serve as handler members or their alternates on the Board. 
Signatory handlers also would be eligible to nominate persons to serve 
on Committees of the Board and be eligible to serve as members of the 
Technical Review Committee. Additionally, record evidence indicates 
that signatory handlers would need to be located in the production area 
because they are responsible for handling leafy green vegetables in the 
United States.
    The term ``signatory'', which appeared in the Notice of Hearing as 
Sec.  970.26, is revised to ``signatory handler'', and redesignated as 
Sec.  970.33.
    Record testimony indicates that, signatory handlers would be 
identified as ``first'' or ``secondary'' handlers under the proposed 
agreement. Record evidence supports adding a new Sec.  970.32. This 
section would establish the definition of ``signatory first handler'' 
to mean the person located in the production area who signs the 
proposed agreement and who is the first to handle leafy green 
vegetables. This definition is intended to identify signatory handlers 
who first receive leafy green vegetables for the purposes of assessment 
collection. As proposed under the agreement and supported by the 
record, signatory first handlers would be financially responsible for 
the payment of assessments under the proposed agreement. It is 
important to identify the responsible party, since leafy green 
vegetables may be handled by several different signatory handlers and 
the assessment should only be applied once.
    According to proponents of the proposed agreement, ``signatory 
first handlers'' would be identified as the handler who first takes 
possession of leafy green vegetables in their natural form from a 
producer with the intent to sell them to retailers or other handlers. 
As an example, a signatory first handler may contract with an 
independent harvesting company to harvest a producer's crop and deliver 
that crop to the signatory first handler's facility. In such a case, 
the signatory first handler would take ownership of the crop, yet would 
not be the first business entity to physically engage in the act of 
handling. According to record evidence, given that the harvesting 
company is contracted by the signatory first handler, and the handler 
assumes ownership, the said handler, and not the harvester, would be 
identified as the signatory first handler. Therefore, the signatory 
first handler would be responsible for ensuring that the contracting 
harvester is in compliance with any provisions in effect under the 
proposed agreement. Additionally, the signatory first handler would be 
responsible for the payment of assessments on such leafy green 
vegetables.
    As another example, if a producer were to harvest a leafy green 
vegetable crop and then engage in the act of handling the crop that 
producer would be considered a ``signatory first handler'' and 
responsible for ensuring crop is in program compliance with the 
proposed agreement, assuming the producer in its capacity as a handler 
had signed the agreement.
    Witnesses explained that while some leafy green vegetables are 
minimally handled after they are harvested, some product is sold or 
transferred to a secondary handler or a handler other than a first 
handler for further processing. These secondary handlers are commonly 
known as ``manufacturers'' or ``processors''. Record testimony 
indicates that secondary handlers or handlers other than first handlers 
generally buy from first handlers, and could receive product from other 
handlers, processors, or manufacturers. Additionally, such secondary 
handlers also may purchase leafy green vegetables directly from 
producers.
    According to the hearing record, the term ``process'', which is 
included in the definition of ``handle'', is synonymous with 
``manufacture'' and means ``to change fresh leafy green vegetables from 
their natural or raw form into packaged fresh-cut products.'' During 
the manufacturing process, leafy green vegetables are typically washed, 
and then shredded, cut, cored, trimmed, or blended with other types of 
fresh-cut leafy green vegetables, or any combination thereof. 
Ultimately, the processed product is packaged for distribution. 
Processed fresh leafy green vegetable products are then typically 
transported in refrigerated trucks or coolers to the secondary 
handler's customer. These customers may include consumers, retailers, 
foodservice companies, or wholesale produce operations supplying a 
range of products to retail and foodservice companies.
    Witnesses were careful to clarify that activities of a manufacturer 
do not include the packing of leafy green vegetables in the field. 
Additionally, record testimony indicates that, in some cases, coring 
and trimming activities can be part of a producer or handler harvesting 
activity. Therefore, the definition of manufacture should not include 
leafy green vegetables packed in the field. Additionally, the terms 
``manufacture'' and ``process'' appeared in the Notice of Hearing as 
Sec.  970.16 and Sec.  970.21, respectively, and should be combined and 
revised slightly for purposes of clarification and redesignated as 
Sec.  970.19.
    The term ``manufacturer'' as indicated above should be defined to 
mean any person who manufactures. As slightly revised, the definition 
should not include a retailer, a foodservice operator, or broker, 
except to the extent that such a person is otherwise engaged in 
handling. The term ``manufacturer'' appeared in the Notice of Hearing 
as Sec.  970.17, and should be redesignated as Sec.  970.20.
    Hearing record evidence supports the inclusion of the term 
``import'' under the definition of ``handle''. As such, the term 
``importer'' should be defined to mean ``a handler located in the 
production area who imports leafy green vegetables that are produced or 
handled outside of the production area.'' The term ``importer'' 
appeared in the Notice of Hearing as Sec.  970.13, and should be re-
designated as Sec.  970.16.

[[Page 24305]]

Material Issue Number 5(a)--Definition of Terms

    In addition to the definitions addressed in Material Issues 3 and 
4, certain terms should be defined for the purpose of specifically 
designating their applicability and limitations whenever they are used 
in the proposed agreement.
    ``Act'' should be defined in Sec.  970.1 of the proposed agreement 
as the Agricultural Marketing Agreement Act of 1937, as amended (48 
Stat. 31, as amended; 7 U.S.C. 601-674). This is the statute under 
which the proposed regulatory agreement would be operative.
    Record evidence supports adding a new definition Sec.  970.2, 
``Audit metric'', to the proposed agreement. According to the record, 
``audit metric'' should be defined to mean an auditable standard or 
requirement within a process control prescribed pursuant to Sec.  
970.67.
    ``Audit verification'' should be revised to ``audit'' and should 
mean an official review conducted by the Inspection Service to verify 
and document that good agricultural, handling, and manufacturing 
practices are adhered to throughout the growing, harvesting, packing, 
manufacturing, and transportation of leafy green vegetables. 
Additionally, according to the record, an audit would include a 
physical visit to the farm or facility subject to audit while it is in 
operation. This audit would represent a ``snapshot in time'' based on 
documentation reviewed, persons interviewed, and operations observed. 
The intention of the audit is to provide the auditor with a picture of 
the handler's activities with the ultimate goal of ensuring that such 
activities comply with program requirements.
    The definition for ``audit verification'' that appeared in the 
Notice of Hearing as Sec.  970.2, should be redesignated as Sec.  
970.3, ``audit''.
    The term ``broker'' should mean a person who coordinates the sale 
and transportation of leafy green vegetables for retail or foodservice 
operators, without taking ownership of such vegetables. This definition 
appeared in the Notice of Hearing as Sec.  970.3, and should be 
redesignated as Sec.  970.4 and reworded for clarity.
    As witnesses explained, and as recommended in this decision, the 
term ``critical limit'' should refer to a maximum or minimum value that 
is assigned to a process control when a biological, chemical, or a 
physical parameter must be controlled. This prevents or minimizes the 
occurrence of a food safety hazard. ``Critical limit'' appeared in the 
Notice of Hearing as Sec.  970.4, and should be redesignated as Sec.  
970.6 and revised slightly for clarity.
    The term ``crop year'' should be defined to mean the 12-month 
period beginning on April 1 of any year and ending on March 31 of the 
following year. The record indicates that leafy green vegetables are 
produced year round in the production area. The proposed April through 
March period mirrors the existing crop year in the predominant 
production areas for leafy green vegetables. This period represents a 
fixed timeline that would prescribe a period of conduct essential for 
the Board's administrative activities, such as preparing an annual 
budget of expenses and accounting for receipts and expenditures of 
funds. Thus, the term ``crop year'' would be synonymous with ``fiscal 
year.''
    The definition of ``crop year'' should be revised to include 
authority for the Board, subject to approval of the Secretary, to 
recommend any other annual period if a different annual period is found 
to be more appropriate. The definition of ``crop year'' that appeared 
in the Notice of Hearing as Sec.  970.5 should be revised as indicated 
above and redesignated as Sec.  970.7.
    The definition of ``foodservice distributor'' that appeared in the 
Notice of Hearing should be replaced by a definition of ``foodservice 
operator''. The term should be defined to mean a person that provides 
leafy green vegetables to the public as a restaurant, cafeteria, 
industrial caterer, hospital, or nursing homes. These businesses 
directly deliver leafy green vegetables to consumers, either by sale or 
by offering for direct consumption. Foodservice operators are excluded 
from the definition of ``handler'' in their role as a foodservice 
operator, much the same as retailers are excluded from the term 
handlers in their roles as retailers.
    Record evidence also supports clarifying that the list of 
businesses identified in the proponents' definition of foodservice 
operators is not all inclusive. This clarification is being added to 
the definition of foodservice operator, which appeared as Sec.  970.6 
and is being revised and redesignated as Sec.  970.8.
    ``Good agricultural and handling practices'' refer to general 
practices established by FDA to reduce microbial food safety hazards in 
leafy green vegetables. According to the hearing record, good 
agricultural and handling practices are described in two FDA guideline 
documents, the ``Guide to Minimize Microbial Food Safety Hazards for 
Fresh Fruits and Vegetables'' and the ``Guide to Minimize Microbial 
Food Safety Hazards for Fresh-cut Fruits and Vegetables''.
    FDA is the agency at the U.S. Department of Health and Human 
Services charged with primary regulatory responsibility for food 
safety. The FDA guidelines referenced above, broadly referred to as 
``GAPs'' and ``GHPs'', are intended to assist the produce industry in 
minimizing the risk of food-borne contamination throughout the 
industry's production and handling activities. According to the hearing 
record, GAPs and GHPs, would provide the scientific baseline or 
reference for all audit metrics relating to production and handling 
activities developed under the proposed agreement.
    As witnesses explained, and as included in the proposed agreement, 
the Board should have authority to recommend, for approval by the 
Secretary, the adoption of any other documents or regulations, 
established for the purposes of minimizing microbial food safety 
hazards in the production and handling of leafy green vegetables. These 
documents and regulations would be used as the basis for audits 
conducted by the Inspection Service under the program.
    Section 970.9 that appeared in the Notice of Hearing is being 
modified for clarification and redesignated as Sec.  970.11.
    According to the hearing record, ``good manufacturing practices'', 
or ``GMPs'', mean any FDA regulations which describe the methods, 
equipment, facilities, and controls required for producing fresh-cut 
food, including processed, packaged leafy green vegetables. Current FDA 
regulations appear in 21 CFR Part 110. According to the hearing record, 
GMPs would provide the scientific baseline or reference for all audit 
metrics relating to manufacturing activities developed under the 
proposed agreement.
    As recommended in this proposed agreement, the Board should have 
authority to recommend, for approval by the Secretary, the adoption of 
FDA guidance documents, regulations, or any other documents, for use in 
audits conducted by the Inspection Service under this part. This 
definition appeared in the Notice of Hearing as Sec.  970.10, ``good 
manufacturing practices'' and should be revised and redesignated as 
Sec.  970.13, ``good manufacturing practices or GMPs''.
    ``Inspection Service'' should be defined to mean Fruit and 
Vegetable Programs, Agricultural Marketing Service, USDA, its 
designees, or any other entity approved or recognized by USDA to 
conduct audits on leafy green vegetables. USDA recommends revising

[[Page 24306]]

this definition to more clearly define the Inspection Service's role in 
the audit process. This definition appeared in the Notice of Hearing as 
Sec.  970.14 and should be revised and redesignated as Sec.  970.17.
    The term ``National Leafy Green Vegetable Board'' or ``Board'' be 
added to the list of defined terms as Sec.  970.22 of the proposed 
agreement. ``Board'' should mean the administrative board established 
pursuant to Sec.  970.40 and Sec.  970.41.
    The term ``part'' should be added to the proposed agreement as 
Sec.  970.24 and should be defined to mean the marketing agreement 
regulating the handling of leafy green vegetables and all rules, and 
regulations issued thereunder.
    As presented in the Notice of Hearing, proponents proposed that 
``Person'' should be defined to mean an individual, partnership, 
corporation, association, or any other business unit or legal entity. 
This definition should be revised to make it consistent with the 
definition of the same term in the Act and redesignated as Sec.  
970.25.
    The definition of ``process control'' should be revised so that it 
more clearly reflects the usage of this term as it was presented by 
witnesses during the hearing. ``Process control'' should mean a step or 
point within a production, harvesting, handling, manufacturing, or 
transportation process at which the potential for microbiological 
contamination can be reduced. This definition appeared in the Notice of 
Hearing as Sec.  970.22, and should be revised and redesignated as 
Sec.  970.26.
    ``Producer'' is synonymous with ``grower'' and should be defined to 
mean any person engaged in a proprietary capacity in the production of 
leafy green vegetables for sale or delivery to a signatory handler.
    Section Sec.  970.20 of the Notice of Hearing should be modified 
for clarity and redesignated as Sec.  970.27.
    Witnesses proposed the addition of the term ``region'' to the list 
of definitions to clarify that ``region'' is distinctly different from 
the term ``zone''. As discussed later in Material Issue 5(b), zones are 
related to Board membership. According to record evidence, ``region'' 
should mean a production or growing area distinguished by common 
environmental or growing conditions including, but not limited to, 
geography, climate, production practices, water sources and 
distribution systems, and wildlife. This definition should be added to 
the list of definitions as Sec.  970.29 of the proposed agreement.
    ``Retailer'' should be defined to mean any person that sells leafy 
green vegetables directly to the consumer. Retailers' sales typically 
involve the sale of leafy green vegetables for further preparation or 
home consumption by the consumer. An example of a retailer would be a 
grocery store.
    This definition appeared in the Notice of Hearing as Sec.  970.24, 
and should be revised for clarity and redesignated as Sec.  970.30.
    ``Secretary'' means the Secretary of Agriculture of the United 
States or any officer or employee of the USDA who is acting on their 
behalf. This definition appeared in the Notice of Hearing as Sec.  
970.25 and should be redesignated as Sec.  970.31.
    ``United States Department of Agriculture or USDA'' should be 
defined to mean any officer, employee, service, program, or branch of 
the Department of Agriculture, or any other person acting as the 
Secretary's agent or representative in connection with any provisions 
of this part. This definition appeared in the Notice of Hearing as 
Sec.  970.27 and should be revised with minor modifications for clarity 
and redesignated as Sec.  970.35.
    A definition of the term ``United States Food and Drug 
Administration or FDA'' should be added to the list of defined terms as 
Sec.  970.36 of the proposed agreement and should mean the agency 
within the United States Department of Health and Human Services. This 
definition allows the FDA acronym to be used throughout the proposed 
agreement.
    The definition of ``Zone'' that appeared in the Notice of Hearing 
as Sec.  970.28 should be revised and redesignated as Sec.  970.37. 
``Zone'' should be defined to mean one of the subdivisions of the 
production area or such other subdivisions as may be established 
pursuant to Sec.  970.41. Defining the zones would be important for the 
purpose of Board and the Technical Review Committee representation, and 
is related to Sec. Sec.  970.40, 970.41, 970.42, 970.44, 970.46, 970.49 
and 970.66.
    Record evidence supports modifying the zones proposed by the 
proponents, as well as adding additional zones. Zones should be 
comprised of States that are geographically contiguous and reflect 
similarities in climate and crop production. Zones should also reflect 
the distribution of leafy green vegetable acreage, and distribution of 
leafy green vegetable farms. ``Zone'' is further discussed under 
Material Issue 5(b).
    USDA recommends replacing the proponents' proposed five zones with 
eight zones, as stated below:
    (1) Zone 1 shall include the States of California and Hawaii.
    (2) Zone 2 shall include the States of Alaska, Idaho, Montana, 
Oregon, Washington, and Wyoming;
    (3) Zone 3 shall include the States of Arizona, Colorado, Nevada, 
New Mexico, and Utah;
    (4) Zone 4 shall include the States of Illinois, Iowa, Minnesota, 
Nebraska, North Dakota, South Dakota, and Wisconsin;
    (5) Zone 5 shall include the States of Arkansas, Kansas, Louisiana, 
Missouri, Oklahoma, and Texas;
    (6) Zone 6 shall include the States of Delaware, District of 
Columbia, Indiana, Kentucky, Maryland, Michigan, Ohio, Virginia, and 
West Virginia;
    (7) Zone 7 shall include the States of Alabama, Florida, Georgia, 
Mississippi, North Carolina, South Carolina, and Tennessee; and,
    (8) Zone 8 shall include the States of Connecticut, Maine, 
Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode 
Island, and Vermont.

Material Issue 5(b)--Administrative Board

    The proposed agreement should provide for the establishment of an 
administrative body (Board) to administer the program and to provide 
for its effective and efficient operation. Membership on the Board 
should be reflective of leafy green vegetable industry stakeholders, 
namely signatory handlers, producers supplying such signatory handlers, 
importers, retailers, foodservice operators, and the public 
(consumers). Further, the proposed agreement should delineate the 
procedures, powers, and duties of the Board.
    USDA recommends that, based on record evidence, the provisions of 
the proposed agreement pertaining to zones, Board membership allocation 
among zones, eligibility requirements, and nomination procedures, be 
revised from those provisions that appeared in the Notice of Hearing. 
Specifically, USDA recommends increasing the number of zones and 
redefining them so that regional similarities are recognized as well as 
leafy green vegetable acreage and the number of farms harvesting leafy 
green vegetables. USDA also proposes that the Board's membership be 
expanded and revised to reflect the proposed changes in zones, and to 
increase opportunity for participation of industry representatives on 
the Board. Lastly, USDA proposes that eligibility requirements and 
nomination procedures be revised to address witness concerns regarding 
diverse

[[Page 24307]]

stakeholder (small businesses, organic businesses, diversified 
businesses) representation among the Board membership. This would 
provide for an open, transparent, and inclusive nomination, selection, 
and appointment process.
    This Material Issue addresses Sec. Sec.  970.37, 970.40, 970.41, 
970.42, 970.43, 970.44, 970.45, 970.48, 970.49, 970.50, and 970.51 of 
the proposed agreement. These sections address the subject areas of: 
establishment of zones, establishment and membership of the Board, 
rezoning and reallocation, eligibility, term of office, nominations, 
alternate members, compensation and expenses, administrative 
procedures, and powers and duties of the Board. These sections were 
originally proposed in the Notice of Hearing as Sec. Sec.  970.28, 
970.40, 970.41, 970.42, 970.43, 970.44, 970.47, 970.48, 970.49, and 
970.50, respectively.

Definition of Zones

    The proponents testified that the production area should be 
subdivided into five zones for the purpose of industry representation 
on the Board and administration of the proposed agreement. The five 
zones were proposed as follows:
    (1) Zone 1: California, Washington, Oregon, Hawaii, and Alaska.
    (2) Zone 2: Arizona, Montana, North Dakota, Wyoming, South Dakota, 
Idaho, Nevada, and Utah.
    (3) Zone 3: New Mexico, Colorado, Nebraska, Minnesota, Iowa, 
Kansas, Oklahoma, Texas, Missouri, Arkansas, and Louisiana.
    (4) Zone 4: Wisconsin, Michigan, Ohio, Illinois, Indiana, Kentucky, 
Tennessee, Mississippi, Alabama, and Georgia.
    (5) Zone 5: Maine, New Hampshire, Vermont, New York, Connecticut, 
Massachusetts, Pennsylvania, New Jersey, West Virginia, Virginia, 
Maryland, Delaware, Rhode Island, North Carolina, South Carolina, 
Florida, and the District of Columbia.
    For this zone structure, the proponents utilized 2007 United States 
Census production volume data for leafy green vegetables. Proponents 
explained that they attempted to anchor each zone with a key leafy 
green vegetable-producing State, as detailed in Material Issue 1. For 
this reason, the States of California and Arizona were purposefully 
separated so that their production volume would not be attributed to 
one zone, thereby not skewing the balance of Board member 
representation in favor of those two States and thus, a specific zone. 
Other anchor States that produce the majority of leafy green vegetables 
in the United States are Texas, Colorado, Georgia, Florida, and New 
York.
    Proponents explained that their intent was to create zones strictly 
for the purpose of industry representation on the Board. Proponents 
contended that the proposed zones and corresponding Board 
representation would provide for the development of audit metrics that 
recognized regional differences. Proponents further explained that they 
intended to develop a process that would be inclusive and transparent 
to allow for the participation of various stakeholder groups and the 
recognition of regional, geographic differences. The topic of audit 
metrics development is discussed in Material Issue 5(c).
    A considerable number of witnesses, both those who were opposed to 
the establishment of the proposed agreement, as well as those who 
supported the concept of a national agreement but suggested 
improvements to the proponents' proposal, raised concerns over the 
proponents' proposed zones. Witnesses testified that the proposed zones 
were geographically too large, and did not recognize regional 
differences in geography, types of crops grown, production practices, 
environmental factors, climate, and diverse stakeholder concerns that 
exist in the United States leafy green vegetable industry. Witnesses 
also testified that the proposed zones did not accurately reflect the 
distribution of leafy green vegetable acreage or the distribution of 
farms.
    Witnesses contended that the proponents' proposed zones were not 
established based on agricultural or climatic conditions to reflect 
common growing seasons or agronomic zone characteristics. Witnesses 
further claimed that it was unreasonable to expect representatives of 
zones inclusive of States that greatly differ in leafy green vegetable 
crop type, production methods, geography, and climate, to adequately 
understand the growing conditions across such a wide geography. 
Witnesses cited several examples to illustrate the proponents' proposed 
zones were geographically too large and included States in the same 
zone that do not share geographic and climate characteristics, but 
would be represented by the same membership and Board member 
allocation.
    As an example, witnesses testified that proponents' proposed Zone 4 
included 10 States that stretched from Wisconsin to Alabama. These 
witnesses pointed out that, as proposed, the States of Georgia and 
Ohio, and the States of Wisconsin and Alabama, would be in the same 
zone even though they have distinct differences in geography and 
climate. Witnesses also noted that proponents' proposed Zone 5, which 
included 16 States and the District of Columbia, combined southern 
States such as Florida with northern States such as Vermont, Maine, and 
New York which vary widely in geography, climate, and production 
practices. Witnesses further asserted that the States in proposed Zone 
5 have different soil types, water sources, growing seasons, and 
marketing channels.
    Witnesses testified that production practices, which vary across 
the United States, were reflective of climates. Witnesses suggested 
that the proposed zones should include similar climate areas such as 
the Upper Midwest as one zone. An example cited by witnesses identified 
Upper Midwest States as having climate requiring different production 
practices than those found in Georgia or California. Witnesses 
explained that Upper Midwest States tend to have periods of hard 
freezes, thereby limiting their production season to the months of May 
through October. In contrast, witnesses noted that the State of Georgia 
has a high humidity climate, Northeast States have cooler climates, and 
Southern California has more of a desert climate.
    Witnesses asserted that States having similar climate and geography 
should be grouped together in order to represent a contiguous area as 
further support of proper representation of like concerns among States. 
One witness offered the example of combining the States of Florida, 
Georgia, and Alabama as an appropriate representation of like 
geography, climate, and production practices. Another witness suggested 
subdividing the State of Maryland to place the northern half of 
Maryland with States west to Michigan in one zone, and southern part of 
Maryland with States west of the Mississippi River in another zone. 
Additionally, another witness suggested combining the Northeast States 
into one single zone because of similarities in climate.
    Some witnesses suggested that the division of zones and Board 
membership allocation among those zones should be based on the number 
of leafy green vegetables acres harvested for the fresh and fresh-cut 
market. Witnesses explained that some production areas benefit from 
production environments that allow for multiple harvests of high-
yielding crops, while other areas only harvest one crop per year.
    According to witnesses, an example of this difference would be a 
producer in California that may harvest a field of immature or baby 
leaf varieties of leafy

[[Page 24308]]

green vegetables several times within one growing season, while 
producers of cabbage in New York may only harvest one time per growing 
season. In this example, if production volume were used instead of 
acreage, the producer in California would be given more weight in the 
allocation of producer seats under the proponents' proposal. However, 
witnesses indicated that if the number of acres were used as a basis of 
member allocation, the example farm in California would be equally 
weighted to the farm in New York. As such, witnesses suggested that the 
usage of acres would therefore result in a more equitable 
representation of producers on the Board.
    Other witnesses, including those opposed to the proposed agreement, 
suggested using the number of farms per State to capture the 
distribution of producers nationwide as opposed to relying solely on 
production volume to determine producer representation. These witnesses 
explained that while some States have a concentration of large producer 
entities producing high-yielding crops, other States have a high number 
of smaller producer entities that produce leafy green vegetables as a 
portion of their overall farm production. Witnesses argued that under a 
zone and membership allocation structure that focuses on production 
volume, such as that proposed by the proponents, States having a high 
number of small, low-volume farms risk being under-represented compared 
to States with fewer high-volume farms. Witnesses contended that under-
representation of these small farm operations would result from the 
proponents' proposed zones. Witnesses with this concern stated that the 
proposed zones and corresponding member representation on the Board 
should be revised to better recognize diversified, small-scale 
operations.
    Witnesses argued that an increase in the number of zones together 
with a more accurate zone definition would likely result in greater 
opportunities for stakeholders, such as small diversified farms, farms 
using non-conventional production methods, and handler entities 
interacting with local, small-scale markets and producer associations, 
to gain representation. Witnesses stated that increased opportunity for 
stakeholders would result in the inclusion of those groups' concerns in 
Board decisions, including the audit metric development process.
    Witnesses argued that, contrary to the proponents' position, the 
definition of zones and the recommendation of audit metrics by Board 
members are intrinsically linked. Witnesses disagreed with the 
proponents' position that the division of zones would not have an 
impact on the process of developing audit metrics under the proposed 
agreement. They explained that if the proposed zones did not adequately 
represent regional differences in geography, climate, and production 
practices, the composition of Board membership would not adequately 
represent the complex spectrum of producer and signatory handler 
interests that exist in the United States leafy green vegetable 
industry. Furthermore, because the Board would ultimately be 
responsible for recommending audit metrics to USDA for approval, 
witnesses feared that minority and diverse stakeholder concerns would 
be overlooked in this process because they may not be represented on 
the Board.
    Lastly, witnesses, including proponent witnesses, stated that the 
Board should have the ability to modify the number and definition of 
zones, in order to reflect the diverse and changing leafy green 
vegetable industry.
    Proponent witnesses testified that their intent in defining the 
proposed zones was to allow for adequate participation by stakeholders 
to ensure consideration of diverse interests in Board decision-making, 
including the development of the audit metrics. However, there was 
record testimony that the proposed zones were geographically too large 
to ensure adequate representation of diverse stakeholder interests. The 
record further establishes that acreage of leafy green vegetables and 
the number of farms harvesting leafy green vegetables rather than 
production volume also should be considered in subdividing the 
production area into zones.
    Throughout the hearing, proponents stated they were open to 
revisions in the proposed agreement to address concerns brought to 
light by the hearing process. Proponents asserted that they were 
willing to collaborate with concerned witnesses and USDA to improve the 
proposed agreement's effectiveness. Several proponents stated that, 
while their proposal attempted to present an equitable, balanced 
division of geographic zones and diverse perspectives of the supply 
chain, USDA should have the discretion, based on hearing record 
evidence, to modify the proposal so that it better reflects the needs 
of the industry. In addition, both witnesses who were opposed to the 
proponents' proposal and those who advocated improvements to the 
proposal, stated that USDA should revise the proposed zones and Board 
membership eligibility requirements to ensure that leafy green 
stakeholder groups are adequately represented. These stakeholder groups 
would include, but are not limited to: Small producer and signatory 
handler entities, organic producers and signatory handlers, and 
diversified farming operations.
    USDA has analyzed witness testimony in conjunction with record data 
and has developed recommended changes to the proposed zones. Evidence 
reviewed by USDA includes both Census and NASS leafy green vegetable 
data, and information specific to the distribution of leafy green 
vegetable acreage and the number of farm reporting such acreage by 
State. In addition, USDA considered information supplied by witnesses 
with regard to geography, climate, and seasonal growth patterns of 
different leafy green vegetable crops to more appropriately group 
States into zones.
    USDA's analysis of the distribution of leafy green acreage 
throughout the production area as compared to the volume of production 
demonstrated that significant variances exist between areas producing 
high-yielding crops and those producing low-yielding crops. An acreage-
based analysis places leafy green vegetable acreage having smaller 
annual per acre production yields on more equal footing with leafy 
green vegetable acreage having higher annual per acre production 
yields. This should result in greater and more equitable opportunity 
for participation in States having lower yields per acre. As such, USDA 
recommends that acreage rather than production volume, as proposed by 
proponents, should be utilized in defining zones.
    Furthermore, USDA's analysis of the number of farms reporting 
harvest of leafy green vegetables (specifically for the fresh and 
fresh-cut market) allowed USDA to assess the distribution of industry 
stakeholders across the production area. Using the number of farms 
harvesting leafy green vegetables in defining zones would address 
concerns that States having a high number of small producer entities 
would be under-represented under the zone structure proposed by 
proponents. Lastly, defining zones on a combined analysis of leafy 
green vegetable acreage and the number of leafy green farms provides 
better representation on the Board of diverse stakeholder interests.
    USDA also took into consideration witness testimony that zones 
should reflect grouping of States that are contiguous and share 
geographic and climate similarities. According to hearing record 
evidence, incorporating guidelines that would require, to the extent 
practicable, grouping of States

[[Page 24309]]

into zones that are contiguous and share climate and similarities in 
agricultural practices would result in zones comprised of States that 
share similar production and handling concerns.
    Regarding the above, USDA recommends grouping, to the extent 
practicable, geographically contiguous States into zones to reflect 
similarities in climate and agricultural practices. For example, 
southeastern States such as Mississippi, Alabama, Florida, Georgia, and 
North and South Carolina were grouped together because of the 
similarity in warm, coastal climates, type of crops grown, and growing 
seasons. Tennessee was added to this group as record evidence indicated 
that the similarity between leafy green vegetable production in this 
State was more similar to the coastal States than its northern 
neighbors.
    Similarly, the northeastern States stretching from Pennsylvania and 
New Jersey up through Maine were grouped because of similarities in 
crop types and growing seasons. According to the hearing record, the 
northeastern States produce a majority of the nation's cabbage, which 
is typically a colder weather crop that is harvested according to a 
crop cycle that is distinctly different from warm weather crops. 
Another example is the grouping of Arizona, New Mexico, Nevada and 
Utah. These States all represent warmer, drier climates with spring and 
summer growing and harvest seasons. These States also typically rely 
heavily on irrigation watering systems as rainfall is limited. Similar 
to the case of Tennessee, Colorado was included in the southwestern 
State grouping even though that State tends to have an overall cooler 
and wetter climate. However, according to the record, Colorado leafy 
green vegetable crops, growing and harvest seasons were more similar to 
those in Arizona and New Mexico than those in the other neighboring 
States of Nebraska, Wyoming, or Kansas.
    States ranking among the top leafy green vegetable bearing acreage 
were identified so that each zone was anchored with a key leafy green 
vegetable producing State. This is consistent with the method applied 
by proponents.
    In summary, the record supports increasing the number of proposed 
zones from 5 to 8. The zones would delineate smaller geographic areas 
that both reflect similarities in climate, geography, and crop 
production, and increase opportunity for participation of industry 
representative on the Board.
    The zone structure would be as follows:
    (1) Zone 1 should include the States of California and Hawaii;
    (2) Zone 2 should include the States of Alaska, Idaho, Montana, 
Oregon, Washington, and Wyoming;
    (3) Zone 3 should include the States of Arizona, Colorado, Nevada, 
New Mexico, and Utah;
    (4) Zone 4 should include the States of Illinois, Iowa, Minnesota, 
Nebraska, North Dakota, South Dakota, and Wisconsin;
    (5) Zone 5 should include the States of Arkansas, Kansas, 
Louisiana, Missouri, Oklahoma, and Texas;
    (6) Zone 6 should include the States of Delaware, the District of 
Columbia, Indiana, Kentucky, Maryland, Michigan, Ohio, Virginia, and 
West Virginia;
    (7) Zone 7 should include the States of Alabama, Florida, Georgia, 
Mississippi, North Carolina, South Carolina, and Tennessee;
    (8) Zone 8 should include the States of Connecticut, Maine, 
Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode 
Island, and Vermont.
    These zones, which were previously defined in Sec.  970.28 of the 
Notice of Hearing, now appear in Sec.  970.37.
    The Board should have authority to recommend future modifications 
of the defined zones and to ensure proper geographic division of the 
production area over time. In making such a recommendation, the Board 
would be expected to consider factors similar to those used in deriving 
the zones proposed in this recommended decision.

Board Membership and Allocation of Member Seats Among Zones

    Proponent witnesses advocated a Board membership of 23 members 
allocated among five zones, with the representation of each zone based 
on that zone's relative volume of leafy green vegetable production. Of 
the 23-member Board proposed by the proponents, 13 seats would be 
assigned to signatory handlers and 6 seats would be assigned to 
producers delivering to signatory handlers. The signatory handler and 
producer member seats would be allocated among the proposed five zones 
as follows: Four handlers and two producers from Zone 1; three handlers 
and one producer from Zone 2; two handlers and one producer from Zone 
3; two handlers and one producer from Zone 4; and two handlers and one 
producer from Zone 5. In addition, the proponents' proposal would 
assign one seat to each of the following interest groups: Retailers, 
foodservice, importers (signatory handlers), and the public. As 
proposed by proponents, representation of signatory handlers, 
producers, and the other at-large members (retailer, foodservice, 
importer, and public) among the 23 seats would be as follows: 13 
handler seats (57 percent), 6 producer seats (26 percent), and 4 at-
large seats (17 percent).
    Proponents testified that even though the proposed agreement would 
regulate signatory handlers, the inclusion of producers delivering 
product to those handlers as Board members was important given that 
they would also be impacted by any regulations in effect under the 
proposed agreement. The proponents testified that the importer, 
retailer, foodservice, and public members are needed to represent the 
diverse perspectives of the farm-to-consumer leafy green vegetable 
supply chain. They further stated that each of these stakeholders can 
address unique factors associated with their sector. Proponents stated 
that the public member seat was intended to provide consumer 
representation on the Board.
    Proponents explained further that specific producer and signatory 
handler stakeholder groups should be assured representation on the 
Board and, therefore, proposed representation requirements for these 
groups. Specifically, the proposed requirements state the majority of 
producer members could not be engaged in the act of handling leafy 
green vegetables or manufacturing fresh-cut, packaged leafy green 
products. In addition, the Board would include at least two small 
producer business entities, and four signatory handler members would be 
manufacturers of fresh-cut leafy green vegetables.
    Proponents explained that the proposal to include producers not 
engaged in handling or manufacturing leafy green vegetables or products 
would allow for representation of ``pure'' producer interests on the 
Board. Regarding Board seats allocated to small producer entities, 
proponents explained that the United States leafy green vegetable 
production industry is comprised of many different sizes of producer 
operations following varying production methods, and that each type of 
producer is faced with unique challenges when producing for the United 
States leafy green vegetable industry. For this reason, proponents 
stated that small producer entities should be assured representation on 
the administrative Board. Lastly, proponents explained that 
manufacturers of fresh-cut leafy green vegetables face unique 
challenges that are different from those faced by other sectors of the 
leafy green vegetable industry. For this reason, proponents

[[Page 24310]]

stated that their representation on the Board was important to 
understanding issues that are particular to that part of the United 
States leafy green vegetable industry.
    Both witnesses who were opposed to the proponents' proposal and 
those who advocated improvements to the proposal stated that USDA 
should revise, as necessary, Board membership to ensure that diverse 
leafy green vegetable industry stakeholder groups are represented. 
Witnesses testified that the proponents' proposed Board membership, 
which resulted from their proposed zones, appeared to be based more on 
ensuring the strategic voting power for certain States. These witnesses 
asserted that the proposed zones and corresponding Board membership 
would provide inequitable representation of leafy green vegetable 
industry stakeholders, particularly small, diversified farm operations.
    The record supports the establishment of an administrative Board to 
administer the proposed agreement and provide for its effective and 
efficient operation. The record also indicates that the membership of 
the administrative Board should represent signatory handlers, producers 
supplying such handlers, importers, retailers, foodservice, and the 
public.
    Upon consideration of the record evidence, a 3-member increase in 
the total size of the Board would allow for greater industry 
representation yet would maintain a membership that is manageable and 
efficient. For these reasons, the Board membership should be increased 
from 23 to 26 members. Of that total, USDA recommends that 22 Board 
member seats be designated as producer and signatory handler seats, and 
the remaining 4 seats be designated as importer, retailer, foodservice, 
and public member seats. Each member should also have an alternate who 
would have the same qualifications as the member for whom he or she is 
an alternate.
    In allocating handler and grower seats, each zone's combined share 
of national leafy green acreage and the national number of leafy green 
vegetable producing farms were considered. In instances where a zone 
represents a greater portion of leafy green vegetable acreage or a 
larger number of leafy green vegetable farms, additional producer or 
signatory handler members would be allocated. Additionally, record 
evidence supports assigning a minimum of one producer member and one 
signatory handler representative to each zone.
    Based on the foregoing discussion, the following is the allocation 
of producer and signatory handler members:
    (1) Zone 1 should have four signatory handlers and three producers;
    (2) Zone 2 should have one signatory handler and one producer;
    (3) Zone 3 should have one signatory handler and one producer;
    (4) Zone 4 should have one signatory handler and one producer;
    (5) Zone 5 should have one signatory handler and one producer;
    (6) Zone 6 should have one signatory handler and one producer;
    (7) Zone 7 should have two signatory handlers and one producer; 
and,
    (8) Zone 8 should have one signatory handler and one producer.
    In addition to the producer and signatory handler seats, four seats 
should represent the following four groups: Importers, retailers, 
foodservice, and the public. Representation of these stakeholders is 
needed to represent the diverse perspectives of the leafy green 
vegetable supply chain. The representation of the proposed 26-member 
Board for signatory handlers, producers, and the other members 
(importer, foodservice, retailer, and public) would be 12 seats (46 
percent), 10 seats (39 percent), and 4 seats (15 percent), 
respectively.
    This revised allocation represents an increase in producer 
representation on the Board from the proponents' proposed 26 percent to 
39 percent, as well as a decrease in at-large representation from the 
proponents' proposed 17 percent to 15 percent. The revised signatory 
handler representation would result in 46 percent versus the 
proponents' 57 percent.
    The proponents' recommendations that the majority of grower members 
not be engaged in handling, that at least two of the grower members 
represent small businesses and that at least four of the handler 
members be manufacturers of fresh-cut products should remain in Sec.  
970.40. Additionally, to the extent practicable, Board membership 
should include diversified farm producers and organic producers and 
handlers.
    Section 970.40 of the proposed agreement is being revised as 
discussed above.
    Proponents proposed including authority to reapportion Board member 
seats among zones, change the number of Board members, and revise 
composition (the relative number of signatory handler, producer and 
other seats). This authority appeared in the hearing notice under Sec.  
970.40 and is being moved to a new Sec.  970.41.
    In making any recommendation to revise membership, the Board would 
have to consider the geographic distribution of acreage and the number 
of leafy green vegetable farms among the zones. This differs somewhat 
from what the proponent group proposed--that the Board would need to 
consider shifts in production. Other criteria to consider would be the 
importance of new acreage, the equitable relationship between 
membership and zones, economies to result in promoting efficient 
administration of the program, and other relevant factors. The 
agreement should require that each zone be represented by at least one 
producer one signatory handler seat.

Eligibility

    The proponents proposed eligibility requirements for the purpose of 
identifying persons who would be qualified to serve as members on the 
Board. Proponents proposed that in order for a signatory handler 
(including importers) or producer to be eligible to serve on the Board, 
each should be an owner, officer, or employee of a signatory handler or 
producer at the time of their selection and throughout their term of 
office in the zone for which selected.
    Proponents proposed that the retail, foodservice, and public 
members and their respective alternate members not be engaged in the 
production or handling of leafy green vegetables. Additionally, the 
retail and foodservice members and their respective alternate members 
should be, at the time of their selection and throughout their term of 
office, an owner, officer, or employee of the firm represented by the 
seat selected. This would enable these members to represent all 
stakeholders involved in the supply chain for that sector.
    Regarding the producer and signatory handler member seats, there 
was testimony presented at the hearing advocating that such members 
should be required to be a legal resident in the zone for which 
selected. However, record evidence supports that where a producer or 
handler conducts business is a more important criteria than the 
producer or handler's place of residence.
    Multiple witnesses expressed concern that the proposed eligibility 
provisions could allow large leafy green vegetable producers and 
handlers--who often operate in multiple States--to have member seats in 
several zones. These witnesses testified that the agreement should 
limit the number of seats any one company could fill to maximize 
industry representation on the Board.
    According to record evidence, limiting Board member representation 
to provide that no one company or its affiliates could be represented 
on the Board by more than one signatory

[[Page 24311]]

handler (including importer) or producer and their alternate member 
should provide more opportunities for diverse representation on the 
Board. As such, a provision is added to the proposed agreement to 
specify that company representation for such entities would be limited 
to one member seat and one alternate member seat.
    Finally, the remaining members of the Board may be from any zone 
because they represent the production area at large. The eligibility 
requirements proposed in Sec.  970.41 of the Notice of Hearing are 
revised as discussed above and redesignated as Sec.  970.42.

Alternate Members

    Proponents proposed that each Board member should be assigned an 
alternate member for the purpose of assuring continuity and stability 
of Board operations. Alternate members would act in the place and stead 
of the Board members they are alternates for when the Board members 
cannot fulfill their Board obligations. Alternate members would succeed 
their member in the event of that member's death, removal, resignation 
or disqualification. The alternate would then serve until a successor 
was selected and qualified.
    According to proponents, alternate members would be subject to the 
same eligibility requirements as Board members and would be nominated 
in the same manner as Board members. Proponents explained that 
providing alternate Board members would ensure full representation of 
the industry, as well as full representation of their particular zone 
and group (producers, signatory handlers, or other stakeholder 
members).
    The record supports the proponents' proposal regarding alternate 
members. This proposal appeared as Sec.  970.44 of the Notice of 
Hearing and is redesignated as Sec.  970.45. The last sentence of that 
section is removed as it is duplicative of language that appears in 
Sec.  970.49.

Nominations

    A nomination mechanism should be established through which members 
and alternate members of the Board would be nominated, selected, and 
appointed by the Secretary. Record evidence supports revising Sec.  
970.43 of the Notice of Hearing to improve transparency in the 
selection and appointment of Board members.
    In their proposal, proponents described a nomination process to 
identify Board member nominees and to provide for their selection and 
appointment by USDA. Proponents explained that names of nominees would 
be collected by USDA (initially) and by the Board (for subsequent 
nominations) at producer and signatory handler meetings, by mail, or 
through any form of electronically verifiable communication. Names 
received as nominees for producer and signatory handler member seats 
would then be placed on a ballot and would be voted on by their peers, 
respectively. A list of nominees receiving the highest number of votes 
would be forwarded to USDA for selection and appointment by the 
Secretary. Proponents explained that once the producer and signatory 
handler members had been appointed, those members would nominate the 
retailer, foodservice, importer, and public members and their alternate 
members. Final selection and appointment of the retailer, foodservice 
operator, importer, and public member would be made by the Secretary.
    Proponents further explained that, as part of the nomination 
process, nominees would be required to indicate in advance of selection 
their interest to serve as a member, alternate, or both, and that they 
are willing to accept the seat for which selected. According to the 
record, agreeing in advance to serve as a Board member or alternate 
member would avoid possible delays in the appointment of the Board.
    According to proponents, the proposed agreement would provide, in 
times when nominations are not made in a timely manner and as 
specified, the Secretary authority to appoint members and alternates 
who meet the proposed eligibility requirements. Furthermore, proponents 
explained that in the event that any vacancy were to arise on the Board 
due to an individual's disqualification, removal, resignation, or 
death, a successor member or alternate member would be nominated and 
selected in accordance with the proposed nomination and acceptance 
procedures, or at the discretion of the Secretary.
    A considerable number of witnesses, both those who were opposed to 
the establishment of the agreement, as well as those who supported the 
concept of a national program but suggested improvements to the 
proponents' proposal, raised concerns over the proposed nomination and 
selection process outlined by the proponents.
    The primary concern among these witnesses focused on what was 
perceived as a closed nomination process. These witnesses stated that a 
peer nomination and ballot system, in combination with the proponents' 
proposed zones and limited number of Board member seats, would result 
in the inability of diverse stakeholders to successfully compete and 
receive nomination and appointment to the Board. Substantial concern 
was raised over the potential for large producer and signatory handler 
entities to control the nomination process and the resulting list of 
nominees forwarded to the Secretary for approval.
    Additional concern was voiced over the process outlined by 
proponents for the nomination of the retailer, foodservice, importer, 
and public member seats. Witnesses argued that because the proponents' 
proposal allowed nominations for these positions to be made exclusively 
by appointed producer and signatory handler members to USDA, the 
proposed process lacked transparency or the opportunity for input from 
industry representatives not appointed to the Board.
    Many witnesses testified that in the absence of proposed zones that 
better reflected regional differences and an increase in Board 
membership to allow for greater industry participation, all Board 
member selections should be made by the Secretary.
    These witnesses advocated the establishment of a system under which 
a peer nomination voting process would be replaced by an industry-wide 
nomination process, with selection and appointment by the Secretary. 
Others suggested that nominations should be made by the general public, 
with selection and appointment by the Secretary. According to witnesses 
making these suggestions, their recommendations would lead to a 
transparent process for the identification and selection of Board 
members, and would improve the potential for diverse stakeholders to 
participate on the Board.
    Record evidence supports that a process for Board member 
nominations is necessary. Further, record evidence supports that 
nominations for producer and signatory handler (including importer) 
member seats and their alternate member seats of the Board, should be 
made by their respective peers. As such, nominations for signatory 
handler member seats and their alternates only would be made by 
signatory handlers. Likewise, only producers supplying signatory 
handlers would be allowed to nominate eligible producers for producer 
member seats and their alternate seats.
    Record evidence supports that the nomination process for the 
retailer, foodservice, and public member, and their alternates, should 
be revised to allow for nominations to be received at meetings, by 
mail, or by any form of electronically verifiable communication

[[Page 24312]]

from any person in the production area. This revision would allow for 
greater industry and public participation in the nomination of persons 
representing the retail, foodservice, and public communities and would 
allow for greater transparency in that process.
    As part of the nomination process, nominees would be required to 
indicate in advance of selection their interest to serve as a member, 
alternate, or both, and that they are willing to accept the seat for 
which selected. This would avoid possible delays in the appointment of 
the Board.
    The record evidence supports revising the proponents' nomination 
process by removing the industry vote on nominees received. Instead, 
all names received during the nomination period should be forwarded to 
the Secretary, together with necessary information concerning their 
eligibility.
    The Secretary would appoint from those nominees the members and 
alternate members of the Board on the basis of the representation 
provided for in Sec. Sec.  970.40 through 970.42 of this proposed 
agreement.
    Finally, the record supports nomination provisions with regard to 
acceptance, failure to nominate, and vacancies. Sections 970.43(c), (d) 
and (e) as published in the Notice of Hearing are redesignated as Sec.  
970.44(c), (e) and (f).

Term of Office

    The proponents proposed that the term of office for Board members 
and alternates should begin on April 1 and continue for two years. The 
record indicates that leafy green vegetables are produced year round 
and that a term of office beginning on April 1 corresponds to the 
beginning of the time period designated in the definition of crop year. 
This language was published in the Notice of Hearing as Sec.  970.42 
and is redesignated as Sec.  970.43.
    This decision recommends the two-year term of office as proposed by 
proponents for Board members and their alternates to increase industry 
participation in administering the proposed agreement. The two-year 
term of office would apply to all Board members, including those 
representing the public. The maximum number of terms that an individual 
would be allowed to serve as a member on the Board would be three 
consecutive two-year terms of office, or a maximum of six consecutive 
years. Thus, once a person has served as a Board member for six 
consecutive years, that person would not be eligible for re-nomination 
to the Board until after 12 consecutive months out of office. Such 6-
year term limits would not apply to alternate members to ensure 
continuity in Board operations.

Compensation and Expenses

    According to record evidence, Board members and alternate members, 
committee and subcommittee members, including those members serving on 
the Technical Review Committee and the Research and Development 
Committee, would necessarily incur some expenses while attending 
meetings, or performing other duties under the proposed agreement. 
Proponents propose that reasonable expenses, which could include 
expenses associated with travel, meals, and lodging, should be 
reimbursed. However, proponents explained these same members and 
alternate members would not receive any compensation for their time. No 
specific testimony was received in opposition to this proposal. A 
provision for compensation and expenses was proposed in the Notice of 
Hearing as Sec.  970.47 and is redesignated as Sec.  970.48.

Quorum and Voting Provisions

    The proponents proposed that provisions establishing quorum and 
voting procedures would be necessary for the effective functioning of 
the proposed Board. In their proposal, proponents stated that having a 
quorum requirement would ensure a majority of Board members be present 
prior to the Board voting on any action. According to proponents, a 
quorum would be met when a majority of all Board members were present 
at a meeting, including at least one member from each zone. If a quorum 
were met, proponents stated that voting requirements for any action 
taken by the Board would require the concurrence of a majority of all 
the members present at the meeting.
    The proponents identified three Board actions that would require 
more than a simple majority vote. Proponents proposed that a minimum 
concurrence of two-thirds of the Board members at a meeting be required 
for Board actions related to the acceptance of GAPs, GHPs, and GMPs, as 
well as changes in the assessment rate and termination of the 
agreement. Proponents explained that for these specific actions a \2/3\ 
vote requirement would be needed due to the importance of changes to 
audit metrics, assessments, or termination.
    One witness testifying in favor of the super-majority provision 
clarified that the original language proposed by the proponents and 
published in the Notice of Hearing erroneously referred to ``acceptance 
of Good Agricultural, Handling, and Manufacturing Practices'' instead 
of audit metrics. The witness explained that Good Agricultural, 
Handling, and Manufacturing Practices are guidelines that are 
independent of the proposed agreement and, therefore, would not be 
subject to recommended revisions proposed by the Board. The witness 
offered that approval of audit metrics would better capture the intent 
of the proponent group. Hearing record evidence supports replacing 
``acceptance of Good Agricultural, Handling, and Manufacturing 
Practices'' with ``approval of the audit metrics as provided in Sec.  
970.67'' in Sec.  970.49 of the proposed agreement.
    In the event that a Board member were absent from a meeting, 
witnesses explained that that member's alternate could serve in the 
absent member's place and stead for the purpose of constituting a 
quorum and voting. Proponents further explained that if both the member 
and their alternate were unable to attend a meeting, the absent member 
or Board could designate any other alternate from the same zone and 
group who is present at the meeting to serve in the absent member's 
place and stead.
    For example, Zone 7 is proposed to be allocated two signatory 
handler members. If one of the two Zone 7 signatory handler members 
were present at a meeting and both the other member and their alternate 
were both absent, the alternate for the first member could serve in the 
place and stead of the absent member because they would represent both 
the same zone and group as the absentee. In this scenario, the 
alternate member would be selected to serve in the place and stead of 
the absentee by either the absent Board member or the Board. In this 
same example, if an available alternate member was a signatory handler 
from a different zone or was an alternate producer for Zone 7, that 
alternate could not be designated to serve.
    Proponent witnesses testified that meetings of the Board should be 
open to the public, and notice of meetings should be given to the 
Secretary in the same manner as is given to members of the Board. The 
record indicates that at Board meetings, members could cast their vote 
by voice, hand, or in writing.
    Additionally, a member participating by telephone would need to 
confirm his or her vote in writing. According to the record, a 
videoconference would be considered an assembled meeting and all votes 
would be considered as cast in person without need for subsequent 
written confirmation.
    The record supports the need to establish quorum requirements and 
voting procedures so that meetings are conducted in an orderly manner 
and

[[Page 24313]]

that adequate representation in Board decisions. However, the proposed 
language should be modified to state that a majority of all appointed 
members of the Board shall constitute a quorum. This would address 
situations in which a zone may not have any appointed members.
    No specific testimony was received in opposition to this proposal. 
Accordingly, the provisions regarding quorum and voting procedures in 
Sec.  970.48 would be revised as previously discussed above and 
redesignated as Sec.  970.49.

Powers

    Proponent witnesses testified that certain powers should be 
assigned to the Board in order for it to carry out its functions under 
the proposed agreement. Proponents indicated that these powers would 
enable the Board to make recommendations to the USDA that reflect the 
conditions in the industry based on their knowledge and experience. To 
this end, the proponents included six powers in their proposal:
    (1) To administer the proposed agreement in accordance with its 
terms and provisions;
    (2) To make such rules and regulations, with the approval of the 
Secretary, as may be necessary to effectuate the terms and provisions 
of the proposed agreement;
    (3) To adopt, with the approval of the Secretary after notice and 
comment, audit metrics to administer the terms and provisions of the 
proposed agreement;
    (4) To cooperate with existing State boards, commissions and 
agreements through memorandum of understanding to affect the purposes 
of the proposed agreement;
    (5) To receive, investigate, and report to the Secretary complaints 
of violation of the provisions of the proposed agreement; and,
    (6) To recommend to the Secretary amendments to the proposed 
agreement.
    No specific testimony was received in opposition to this proposal.
    Certain powers should be granted to the Board to enable it to 
properly administer the proposed program. Upon review, power 3 above is 
included in power 2 and is therefore duplicative, while power 4 is more 
appropriately included under Board duties. The section ``Powers'' 
originally was included in the Notice of Hearing as Sec.  970.49 and is 
revised and redesignated as Sec.  970.50.

Duties

    Proponents stated that specific duties are necessary for the Board 
to fully execute its responsibilities under the proposed agreement. 
They pertain to specific activities authorized under the proposed 
agreement, such as investigating and compiling information regarding 
leafy green vegetables, and to the general administration of the 
proposed agreement including hiring employees, appointing officers, and 
keeping records of all Board transactions.
    The specific duties of the Board proposed by the proponents are as 
follows:
    (a) To act as intermediary between the Secretary and any signatory 
with respect to the operations of the agreement;
    (b) To select from among its members a chairperson and such other 
officers as may be necessary, and to define the duties of such 
officers;
    (c) To establish subcommittees and advisory boards to aid the 
Committee in the performance of its duties under the agreement;
    (d) To adopt such bylaws for the conduct of its business as it may 
deem advisable;
    (e) To keep minutes, books, and records which clearly reflect all 
the acts and transactions of the Committee and subcommittees, and these 
shall be subject to examination by the Secretary at any time;
    (f) To appoint such employees or agents as it may deem necessary, 
and to determine the compensation and define the duties of each;
    (g) To cause its financial statements to be audited by a certified 
public accountant at least once each crop year and at such other times 
as the Committee may deem necessary or as the Secretary may request. 
Such audit shall include an examination of the receipt of assessments 
and the disbursement of all funds. The Committee shall provide the 
Secretary with a copy of all audits and shall make copies of such 
audits, after the removal of any confidential information that may be 
contained in them, available for examination at the offices of the 
Committee;
    (h) To investigate the production, handling and marketing of leafy 
green vegetables and to assemble data in connection therewith; and,
    (i) To furnish such available information as may be deemed 
pertinent or as requested by the Secretary.
    Record evidence indicates that, in addition to the duties proposed 
by the proponents, the duty to develop an annual budget for review and 
approval by the Secretary should be included. Witnesses testifying in 
favor of this addition stated that development of a budget is necessary 
to ensure proper financial planning of Board expected expenditures and 
anticipated receipts. In addition, the development of an annual budget 
would be instrumental in determining, along with production estimates, 
the annual assessment rate. The witness stated that the budget should 
be reviewed and approved by USDA to ensure the fiscal responsibility in 
the proposed agreement's administration.
    At the hearing, some witnesses raised questions regarding the 
protection of confidential information, especially within the context 
of financial reports developed by the Board, and audit of Board annual 
financials, including receipt of assessments and the disbursement of 
all funds. Witnesses expressed concern over the need to maintain 
confidentiality of proprietary information when such reports are 
written or audits conducted.
    The duties proposed by the proponents and listed above are 
reasonable and necessary. No specific testimony was received in 
opposition to this proposal. This proposal was included in the Notice 
of Hearing as Sec.  970.50 and is revised as previously discussed and 
redesignated as Sec.  970.51.

Material Issue Number 5(c)--Audit Metrics and Verification Audits

    According to record evidence, the proposed agreement should provide 
that verification audits be conducted to verify that signatory handlers 
are complying with the provisions of the proposed program. This would 
include audits of signatory handler operations to ensure that GHP audit 
metrics are being adhered to, as well as producer operations delivering 
to those handlers to ensure that GAP audit metrics are being adhered 
to. Verification audits should also be conducted of manufacturer 
operations (for those manufacturers who are signatories to the proposed 
agreement) to ensure that GMP audit metrics are being adhered to. 
Proposed provisions for verification audits are provided for in Sec.  
970.66.
    Record evidence supports providing the Board with the authority to 
recommend audit metrics. Audit metrics established under the proposed 
program would represent a set of auditable standards or process control 
that would allow an auditor to determine if a producer or handler is in 
compliance with the program. Provisions for the development of audit 
metrics are provided for in Sec.  907.67.
    In addition, a Technical Review Committee (TRC) should be 
established to assist the Board in the development of audit metrics. 
Members of the TRC would represent signatory handlers and

[[Page 24314]]

producers throughout the production area, as well as stakeholder 
interest groups including but not limited to organic and non-
conventional agriculture, small business operations, members of the 
scientific community, and interested government agencies. Authority for 
the TRC would be provided for in Sec.  970.46 (formerly Sec.  970.45).
    Provisions requiring traceability should be established under the 
proposed program. The ability to trace produce during all stages of 
production, handling, and distribution would be a key factor in 
ensuring compliance. Witnesses stated that traceability would also 
provide for increased information about the source and movement of 
produce within the leafy green vegetable industry in the event that a 
contamination incident was to occur. Provisions relating to 
traceability are provided for under Sec.  970.68.
    According to the hearing record, an official mark should be 
developed for the purposes of identifying compliant participants in the 
proposed program. The proposed mark would be used on bills of lading, 
manifests or other like documentation that is standard in pre-retail 
market transactions. In addition, the Board should have the authority 
to recommend other uses of the official mark. Any other such uses would 
require the approval of the Secretary. Provisions for the development 
and usage of the official mark are provided for under Sec.  970.69.
    The record also supports the establishment of provisions allowing 
for any financially interested person to request an administrative 
review if it is believed that the results of an audit are in error. 
These proposed provisions are included in Sec.  970.70.
    Provision for the Secretary to modify, suspend, or terminate 
regulations in effect under the proposed program should also be 
included in the proposed agreement. This is provided for in Sec.  
970.71.

Verification Audits

    As explained in Material Issue 5(a), the term ``verification 
audit'' should be defined to mean an official audit conducted by the 
Inspection Service to verify and document that good agricultural, 
handling, and manufacturing practices are adhered to throughout the 
growing, harvesting, packing and transportation of leafy green 
vegetables. According to the record, a verification audit would include 
a physical visit to the farm or facility subject to audit while it is 
in operation, to the extent practicable, and would represent a snapshot 
in time based on documentation reviewed, persons interviewed and 
operations observed. Information gathered during the audit would 
reflect past and ongoing activities of the signatory handler or their 
supplying producer(s) to the Inspection Service.
    Section 970.66 of the proponents' proposed language describes 
verification audit provisions for GAPs, GHPs and GMPs audits. 
Proponents stated that signatory handlers would be required to ensure 
that any leafy green vegetables handled by their operation have been 
subject to GAPs verification audits. Proponents further stated that the 
GAPs audits should reflect FDA production and harvest guidelines, 
referred to in proposed Sec.  970.11, and should meet audit metrics 
provided for under proposed Sec.  970.67.
    Proponents also stated that all signatory handlers to the proposed 
program should be subject to GHPs or GMPs verification audits, 
whichever is applicable. Such audits would verify that signatory 
handlers operate under auditable conditions that meet general FDA 
guidelines referred to in Sec.  970.11 or FDA manufacturing regulations 
referred to in Sec.  970.13, and should meet audit metrics provided for 
under proposed Sec.  970.67.
    Proponents explained that audits were necessary to ensure the 
integrity of all leafy green vegetables handled under the program. 
Proponents stated that quality assurance of leafy green vegetables 
begins in the field where the produce is grown, but that the integrity 
of that quality should be maintained through all stages post-production 
through delivery to market. By ensuring that leafy green vegetables are 
consistently subject to GAPs, GHPs and GMPs, proponents asserted that 
the potential for microbial contamination of those vegetables would be 
minimized. These practices would support the delivery of quality 
products to the marketplace.
    According to the hearing record, proponents further stated that 
signatory handlers of the proposed program should not be allowed to 
import leafy green vegetables produced or handled in foreign countries 
that have not been subject to GAPs, GHPs or GMPs verification audits by 
the Inspection Service or agencies approved to audit on its behalf. 
Proponents stated that any foreign leafy green vegetables that are 
imported should be subject to comparable requirements that would be in 
effect in the United States if this proposed program were implemented.
    According to the hearing record, all audits should be conducted by 
the Inspection Service or any other such agency that is authorized to 
audit on its behalf. Proponents explained that audits should be 
conducted on a regular schedule that would ensure every handler is 
audited during their corresponding production season. In addition, 
unannounced audits of handlers and associated producers should be 
performed during the production season in each zone.
    Finally, Sec.  970.66 is revised for clarity.

Administrative Review

    Under proposed Sec.  970.70, any signatory handler denied the use 
of the official certification mark as a result of failing an audit 
should be allowed to petition for reconsideration of the results. 
Proponents proposed that such person could request an administrative 
review if it is believed that a material fact of the original 
verification audit was misinterpreted. Administrative reviews would be 
conducted in accordance with the USDA audit verification procedures for 
any audit program in effect.
    The record evidence also supports that a financially interested 
person should have recourse if an auditing error is made. Witnesses 
also stated that the person requesting the review should pay the cost 
of the review, and would be subsequently provided a copy of the review 
results.
    This section is revised for clarity.

Audit Metrics

    According to the hearing record and as defined in Material Issue 
5(a), ``audit metric'' refers to an auditable standard or requirement 
used to verify that a production, handling or manufacturing system 
intended to prevent, reduce or eliminate a microbiological hazard is 
being effectively and accurately followed. A collection of such 
standards is referred to as ``audit metrics'' and together establish 
the framework within which the process controls intended to ensure good 
agricultural, handling or manufacturing practices can be verified as 
being met.
    One example of this is an audit metric that provides that water 
used in a production field to be verified as meeting a quality 
standard. However, the way that an individual producer may meet that 
standard would differ depending on whether the water was sourced from 
municipal or private wells, delivered via canal irrigation, applied to 
the crop in a foliar or non-foliar application, or was rain water. The 
applicable process control also would differ.
    Each audit metric is a specific measure of GAPs, GHPs, or GMPs 
compliance. To the extent that production, handling and

[[Page 24315]]

manufacturing environments present different factors that need to be 
controlled during those processes, metrics may differ by zone or 
region. Moreover, according to the hearing record, the auditable 
actions taken by a producer, handler, or manufacturer to meet metric 
standards may also vary due to differences in business size, or 
cultural growing and handling practices. According to the record, audit 
metrics should incorporate current industry production, harvest and 
handling technologies, and should be based on scientific practices.
    Section 970.67 of the proponents' proposed language describes the 
development and implementation of audit metrics under the proposed 
program. This language states that audit metrics may be recommended by 
the Board to USDA for approval after consultation with the Technical 
Review Committee. The Technical Review Committee, and any subcommittees 
established thereunder, would provide the Board with production and 
handling perspectives of the various regions, particular challenges of 
individual regions, as well as scientific review and food safety 
expertise.
    The proponents' proposal contained a list of areas that may be 
addressed in establishing audit metrics for GAPs, GHPs, and GMPs. They 
are included in paragraphs (a) and (b), and those paragraphs are 
revised for clarity.
    Hearing record evidence indicates concern over the method by which 
critical limits for process controls and quality factors would be 
identified and established under the proposed program. Witnesses stated 
that any proposed critical limits should be science-based, should 
reflect the broad spectrum of industry practices across the country, 
and should reflect or coordinate with FDA and other existing Federal or 
State regulation.
    Portions of Sec.  970.67(c) of the Notice of Hearing should be 
divided for clarity and redesignated as Sec.  970.67(c), (d), and (e). 
Paragraph (c) should state that critical limits for process controls 
for each quality factor identified in GAPs, GHPs or GMPs audit metrics 
may be recommended by the Board, after consultation with the Technical 
Review Committee, for approval of the Secretary, or may be developed by 
USDA.
    Paragraph (d) should state that USDA may consult with appropriate 
government entities and consider recommendations made by the Board 
after Board consultation with the Technical Review Committee.
    Paragraph (e) should state that Board recommendations, including 
critical limits, shall incorporate current industry production, harvest 
and handling technologies, should be based on scientific practices.
    Paragraph Sec.  970.67(d) of the Notice of Hearing should be 
redesignated as a new Sec.  970.67(f). This paragraph states that audit 
metrics may be developed and recommended to accommodate differences in 
production, harvest, and handling environments of different regions.
    A new Sec.  970.67(h) should be added to state that audit metrics 
may be developed and recommended to accommodate differences in 
production, harvest and handling environments of imported leafy green 
vegetables and their products.
    Paragraph Sec.  970.67(e) of the Notice of Hearing should be 
redesignated as a new Sec.  970.67(g). This paragraph states that after 
consultation with the Technical Review Committee, the Board may, at any 
time, recommend changes to the audit metrics for approval by the 
Secretary.
    According to the hearing record, the Board should be required to 
review audit metrics periodically. Witnesses explained that systematic 
reviews needed to occur to ensure that audit metrics continually 
reflect the best industry practices, scientific information, and 
industry knowledge. This review should occur at least every 3 years. 
This language was originally included in the Notice of Hearing as Sec.  
970.67(f) and should be redesignated as Sec.  970.67(h).

Technical Review Committee

    According to the proponent proposal, the audit metrics development 
process would require consultative sessions with a subcommittee, the 
Technical Review Committee. TRC membership would include industry 
representation, food safety professionals, members of the scientific 
community, and representatives from selected government agencies. 
Proponents stated that the proposed TRC and its members would ensure 
that current industry practices as well as current scientific research 
and technology were integrated into any proposed metrics. This 
subcommittee was originally identified as the Technical Review Board in 
the Notice of Hearing, and is being renamed the Technical Review 
Committee.
    According to the proponents' proposal, the Technical Review 
Committee would have 14 members appointed by the Board. The 14 members 
would include: One representative from each of the five originally 
proposed zones; one food safety representative from a land grant 
university from within each zone; one representative of the USDA 
Natural Resources Conservation Service appointed by the Secretary; one 
representative of the U.S. Environmental Protection Agency designated 
by that agency's Administrator; and, two representatives of FDA 
appointed by that administration's Commissioner.
    Proponents stated that it was their intent to provide an 
administrative structure and Technical Review Committee that would 
allow fresh leafy green vegetable industry stakeholders to proactively 
engage in the process of recommending audit metrics for approval and 
implementation by USDA.
    Proponents explained that their proposal provided authority for 
additional subcommittees under both the Board and the Technical Review 
Committee to be established. Through these subcommittees, industry 
stakeholders could work cooperatively to develop and recommend uniform, 
auditable, science-based production and handling audit metrics that 
also incorporated any necessary specific measures to accommodate 
differences in size of operation, geographic location, or other 
environmental challenges for a given region. Also, recommendations 
would be addressed by the full Board, would require Secretary approval, 
and would be subject to a public rulemaking process.
    During the hearing, several witnesses raised concerns over the 
proposed structure of the Technical Review Committee. In particular, 
witnesses stated that producer interests, especially those of small 
producers, diversified farm operations, and organic farms, were not 
given adequate representation. Moreover, witnesses stated that the 
Technical Review Committee, as proposed by the proponents, did not 
provide adequate involvement of local, State, and other Federal 
government interests in the development of metrics. These witnesses 
explained that any metrics established under the proposed program could 
impact existing regulation or areas of shared jurisdiction by those 
entities.
    Areas of particular stakeholder concern noted during the hearing 
include: Water quality and usage, conservation practices, wildlife and 
habitat management, and natural resource management. Regulatory 
jurisdiction over some of these topics is shared by multiple Federal, 
State, and local government bodies. Witnesses concerned over the audit 
metric development process argued the need to include input and 
information from representatives of these regulatory

[[Page 24316]]

bodies to mitigate the potential for conflicting requirements being 
placed on producers or handlers.
    Lastly, witnesses who voiced concerns over the initial proposal's 
five geographic zones also voiced concerns over the Board's ability to 
appoint members of the Technical Review Committee. Opponents stated 
that without more appropriate stakeholder representation on the Board, 
the placement of members on the Technical Review Committee would not be 
reflective of the industry's diversity.
    On the last day of the hearing, proponents submitted a modified 
Technical Review Committee structure. Proponents presenting modified 
language explained that the revised language attempted to address 
opposing witness' concerns. The revised language outlined a new 
Technical Review Committee that would consist of 21 members to include: 
One handler and one producer representative from each of the initial 
zones elected by the Board members of that zone; one producer 
representative considered a small business entity under the SBA 
guidelines and one organic producer elected by all Board members; one 
produce safety expert from a land grant university within each of the 
initial zones elected by the producer and handler members from the 
corresponding zone; one representative of the USDA Natural Resources 
Conservation Service appointed by the Secretary; one representative of 
the United States Environmental Protection Agency designated by that 
agency's Administrator; and, two representatives of FDA appointed by 
that administration's Commissioner. Proponents explained that their 
proposed modifications would improve producer representation on the 
TRC. Moreover, the addition of seats designated for small businesses 
and organic operations would ensure that these stakeholder interests 
were represented in the audit metric development process.
    The alternative Technical Review Committee structure would improve 
the representation of stakeholder interests, but needs to be revised to 
reflect the modified zone definitions.
    Each of the eight zones, as recommended in Sec.  970.37, would have 
one signatory handler, one producer, and one food safety expert. One of 
the eight producer seats would have to be filled by a producer meeting 
the SBA definition of small agricultural producer, and one must be 
filled by a certified organic producer. In addition, the Secretary 
would appoint one representative from the USDA Natural Resources 
Conservation Service. The Technical Review Committee would therefore 
consist of 25 members. This proposed language is presented in Sec.  
970.46.
    Additionally, the Secretary would have authority to appoint such 
USDA representation on the Committee as deemed appropriate. Record 
evidence indicates that this may include representatives of the 
National Organic Program, Agricultural Research Service, and National 
Institute of Food and Agriculture.
    Further, USDA may consult with other Federal agencies, as 
appropriate, whose interests may be affected by audit metrics 
identified in Sec. Sec.  970.66 and 970.67, and may allow for 
representatives of those agencies to participate in the work of the 
Technical Review Committee. Agencies identified as potentially having a 
collaborative interest include, but are not limited to: United States 
Environmental Protection Agency, FDA Center for Food Safety and Applied 
Nutrition, and Department of Interior Fish and Wildlife Service.
    The proponent proposal did not include specific nomination 
procedures for TRC members. However, record evidence supports a process 
that would allow for broad industry participation in Committee 
nominations. Accordingly, TRC nomination procedures are being added 
that are similar to those for Board members.
    For the purposes of establishing the initial TRC, nominations would 
be conducted by the Secretary by means of meetings of producer and 
signatory handler representatives, by mail, or by any other form of 
electronically verifiable communication (such as fax, videoconference, 
conference call). The Secretary would then select and appoint the 
members from such nominations.
    Subsequent to the nomination of the initial members, all successor 
members would be nominated by producers and signatory handlers. In 
addition, the Board could recommend nominees to USDA. The Board would 
forward the entire list of nominees received to USDA for final 
selection and appointment by the Secretary.
    Authority should be added for the Board to recommend modifications 
to the membership of the TRC. Any such recommendations by the Board 
would require approval of the Secretary. This authority would provide 
flexibility to recommend adjustments or changes to the structure of the 
TRC over time.
    Finally, the TRC should have the authority to appoint subcommittees 
as necessary to facilitate the development of audit metrics specific to 
regions, or production, handling, or manufacturing environments that 
produce, handle, or manufacture leafy green vegetables. Subcommittees 
may consist of producers, handlers, and other interested parties as 
deemed appropriate by the TRC.
    USDA recommends that Sec.  970.45 of the Notice of Hearing be 
revised as previously discussed and redesignated as Sec.  970.46.

Traceability

    According to proponents of the proposed program, the ability to 
trace a product during production, processing, and distribution would 
be a key factor in increasing information and communication within the 
market, as well as ensuring compliance.
    In the case of a contamination event, timely communication about 
the scope of the contamination is essential to addressing consumer 
concerns and reducing the economic impact of the event on the industry 
and removing contaminated product from the market. For this reason, 
proponents recommended including authority to implement traceability 
requirements under the proposed program. These requirements would allow 
for a more efficient recall of contaminated product if a contamination 
event were to occur.
    Proponents explained that information required under a traceability 
system would allow for a more rapid and accurate identification of both 
the source location of the contamination, and the distribution of 
product coming from that source. Signatory handlers would need to have 
in place systems and procedures that will allow them to track their 
products.

Official Certification Mark

    According to the hearing record, an official mark or trademark 
should be developed for the purposes of identifying compliant 
participants in the proposed program. Evidence presented during the 
hearing also supports that any such mark should be developed through 
the use of funds collected under proposed Sec.  970.56 and according to 
the provisions of proposed Sec.  970.55. The mark would be the property 
of the United States Government as represented by the Board and would 
be used for the benefit of the Board, its signatories and their 
affiliated producers.
    Proponents explained that the proposed mark would be used on bills 
of lading, manifests and other like documentation that is standard in 
pre-retail market transactions. Proponents indicated that use of the 
mark would lead to buyer confidence in producer, handler, and 
manufacturer transactions

[[Page 24317]]

because it would indicate that the product being sold met program 
standards. Proponents also stated that use of the mark would facilitate 
traceability.
    Proponents stated that their intention was to not use the official 
certification mark on retail or consumer packaging. While some 
proponents suggested that the mark could be used in literature or 
informational campaigns designed to inform participants of the fresh 
produce industry about the scope and mission of the proposed program, 
proponent testimony did not anticipate the use of the mark at the 
consumer level for marketing purposes.
    Many witnesses who were opposed to the proposed program were also 
opposed to the development of the mark and stated that the proponents' 
proposed language did not clearly prohibit the use of such mark on 
consumer packaging. These witnesses stated that if the mark were used 
on consumer packaging, its use would lead to an unfair marketing 
advantage for participants of the program over those opting not to 
participate.
    The proposed agreement should provide authority for the Board to 
recommend, subject to approval of the Secretary, alternative uses of 
the official certification mark is important to ensuring flexibility of 
the proposed provisions and their application under the proposed 
program. However, based on record evidence, the use of the mark on 
consumer packages would be prohibited. The authority to recommend 
alternative uses would allow the Board to address unanticipated 
circumstances that may present themselves in the future.
    Lastly, hearing record evidence demonstrates that a signatory 
handler's compliance with the proposed program would be a condition 
precedent and subsequent to the signatory handler's use of the mark. As 
discussed under Material Issue 5(f), use of the mark would also be 
subject to verification, suspension and revocation provisions of the 
proposed program.
    In summary, the record supports authority for the development of a 
registered certification mark. The proposed regulatory text published 
in the Notice of Hearing under Sec.  970.69 is revised to reflect the 
change discussed above and for clarification.

Modification, Suspension and Termination

    The Secretary may modify, suspend, or terminate regulations in 
effect under the proposed program based on Board recommendations or 
otherwise. This would allow changes in any regulations established 
under the program. This provision appears in Sec.  970.71.

Material Issue Number 5(d) Expenses, Assessments, Accounting and 
Contributions

    The Board should be authorized to incur reasonable and necessary 
expenses and to collect assessments to fund such expenses. Further, the 
proposed agreement should provide for handling of excess assessments 
collected and should authorize the Board to accept voluntary 
contributions.

Expenses

    The record evidence supports that the Board should be authorized, 
under Sec.  970.55 of the proposed agreement, to incur such expense as 
the Secretary finds are reasonable and likely to be incurred during 
each crop year. Necessary expenses for the maintenance and functioning 
of the Board would generally include, but would not be limited to, 
administrative expenses such as employee salaries and benefits; 
establishment of an office and equipping that office; telephone and 
mail services; and business and travel-related expenses for the Board 
staff. As discussed previously, expenses incurred by Board members and 
alternate members, committee members, and subcommittee members in 
attending meetings or performing other official duties should also be 
reimbursable expenses. According to the hearing record, the proposed 
agreement should also authorize the Board to incur expenses related to 
research, development, and education activities pursuant to Sec.  
970.75. The types of activities that could be funded under this 
authority are discussed under Material Issue 5(h).
    According to the hearing record, the Board should also pay for GAP 
audit fees for verification audits conducted on producers delivering to 
signatory handlers as well as GHP audit fees for those signatory 
handlers. Having uniform assessments pay for such audit costs should 
alleviate concerns raised about the relative costs of audits for 
operations of varying size and in different locations. Having the Board 
pay audit fees could also result in more efficiencies for the program.
    The record evidence is that the Board would pay for direct audit 
costs. Any additional costs related to inspection service travel would 
be borne by the signatory first handler. Specifics as to which costs 
would be paid out of assessment funds could be included in any 
memorandum of understanding between the Board and the Inspection 
Service.
    The record evidence is that GHP and GMP audits conducted on second 
signatory handlers should not be paid for by the Board. This is because 
those handlers would not be required to pay assessments on the leafy 
green vegetables that they handle or manufacture.
    Minor clarifying changes have been made to Sec.  970.55.

Assessments

    The proponents testified that funds to cover the Board's 
administrative expenses should be obtained through the collection of 
assessments from signatory first handlers who handle leafy green 
vegetables in the production area. These assessments would reflect each 
signatory first handler's proportional share of the volume of leafy 
green vegetables subject to regulation under the proposed agreement. As 
such, assessments would be based on the total amount of leafy green 
vegetables handled by each signatory first handler.
    According to the hearing record, prior to the beginning of each 
crop year and as necessary thereafter, the Board should prepare and 
recommend to USDA an estimated budget of expenses including a rate of 
assessment calculated to adequately cover the cost of such projected 
expenditures. Proponents stated that any such assessment rate could 
include a supplemental assessment rate if it was determined beneficial 
to the administration of the program. A supplemental assessment rate 
could be used to address a specific problem. An example would be the 
need to fund a research project that only affects cabbage. In this 
example, the Board could assess a supplemental assessment rate on 
cabbage, which would be in addition to the regular administrative 
assessment rate. Funds derived from these supplemental assessment rates 
would then be specifically earmarked to pay for the cabbage research 
project in this example.
    Testimony indicates that the preparation of a budget prior to the 
beginning of each crop year would provide a basis for the Board's 
assessment rate formulation. Once approved at the Board level, the 
annual budget and assessment rate recommendations would be submitted to 
USDA for review and approval.
    As supported by the record, the proposed agreement contains a 
maximum assessment rate limit of $0.05 per 24-pound carton of leafy 
green vegetables or equivalent (including any supplemental assessment 
rate). According to the hearing record, lettuce

[[Page 24318]]

has traditionally been shipped in 24-pound cartons and is widely 
considered a standard of measurement for the leafy green vegetable 
industry. For leafy green vegetables not typically shipped in 24-pound 
cartons, the Board would recommend appropriate formulas to calculate 
equivalent units of measurement for assessment purposes.
    The intent of the maximum limit on the assessment rate is to assure 
signatory handlers that program expenses would be kept within specified 
limits. Proponents stated that the maximum limit is based on experience 
with the State marketing agreement programs in California and Arizona. 
They testified that the initial California assessment level was two 
cents per 24-count carton equivalent, and it was lowered to a penny and 
a half per carton equivalent after the second year. Given this 
experience, the proponents anticipate that the actual cost of the 
proposed agreement, if implemented, would be covered by an assessment 
rate below the proposed maximum limit.
    Should a signatory first handler fail to timely pay assessments, 
record evidence indicates that such handler should be required to pay 
the Board, in addition to the overdue assessments, an interest or late 
payment charge, or both, on any outstanding balance. The time period in 
which assessments should be paid to the Board, the rate of interest, 
and any late payment charge would be recommended by the Board and 
approved by the Secretary through the public rulemaking process.
    According to hearing record evidence, late payment charges and 
interest on unpaid balances are reasonable to encourage timely payment 
of assessments and to compensate the Board for expenses incurred in 
collecting unpaid assessments. Witnesses stated that timely collection 
of assessments would be important in order to efficiently and 
effectively administer the provisions of this proposed agreement.
    The proponents testified that the Board may accept, but not 
require, advance payments of assessments, which would be credited 
toward assessments levied against that signatory first handler for the 
crop year. In addition, the Board would be authorized to borrow money 
to cover operating expenses when assessment and reserve funds are not 
sufficient.
    Revisions have been made to Sec.  970.56 and paragraph (c) of that 
section has been deleted as unnecessary.

Excess Funds

    The proponents proposed procedures for accounting of excess funds 
in Sec.  970.57 of the proposed agreement. They indicated that such 
procedures would be necessary to assure signatory handlers and the 
industry that there would be proper disposition of excess funds, and 
that a detailed accounting would be made of such disposition. This 
section would allow the Board, with the approval of the Secretary, to 
establish an operating monetary reserve. This would permit the Board to 
carry over to subsequent crop years any excess funds in a reserve, if 
funds already in the reserve do not exceed approximately two years' 
expenses. If reserve funds exceed that amount, the assessment rate 
should be reduced to bring the reserve to a more reasonable level. 
These reserve funds could be used to defray expenses during any crop 
year before assessment income is sufficient to cover such expenses; to 
cover deficits incurred during any crop year when assessment income is 
less than expenses; to fulfill any obligations under Sec.  970.75; and, 
to cover necessary expenses of liquidation in the event of termination 
of the program.
    In lieu of depositing excess funds in a monetary reserve, the 
proponents proposed that Sec.  970.57 would also provide the Board with 
the necessary authority to credit each handler's account, or to refund 
each handler directly, with a proportionate share of any excess 
assessment funds at the end of each crop year.
    Clarifying changes have been made to Sec.  970.57.

Voluntary Contributions

    The proponents testified that in addition to assessment and other 
income, such as interest, the Board should be able to receive voluntary 
contributions for the conduct of research, development, and education 
activities authorized under Sec.  970.75 of the proposed agreement. 
Testimony supported having such contributions free from any 
encumbrances by the donor, and that the Board should retain complete 
control of the use of such funds. This authority appears in Sec.  
970.58.

Material Issue Number 5(e)--Reporting and Recordkeeping

    The proposed agreement should provide that signatory handlers 
periodically submit reports and other information to the Board and to 
maintain records regarding the handling of leafy green vegetables. 
Further, to ensure compliance with the Act, the proposed agreement 
should provide that all reports and other information submitted by 
signatory handlers remain in the custody of employees or authorized 
agents of the Board at all times. Finally, the proposed agreement 
should authorize agents or employees of USDA and the Board to access 
the premises of signatory handlers during reasonable business hours to 
verify compliance with the proposed agreement.

Reports and Recordkeeping

    The record indicates that the Board should have the authority, with 
the approval of the Secretary, to require under Sec.  970.80(a) that 
signatory handlers submit to the Board such reports and information as 
the Board may need to perform its functions and fulfill its 
responsibilities under the proposed agreement. The Board would require 
reports and information for such purposes as collecting assessments; 
analyzing leafy green vegetable markets and marketing trends with the 
objective of preparing and evaluating research and development 
projects; developing and recommending rules and regulations; and 
determining whether signatory handlers are complying with the 
requirements of the proposed agreement.
    Hearing testimony includes witness statements that reports 
potentially required under the proposed agreement could include 
production, inventory, and sales data; customer and supplier lists; and 
testing and audit reports. This should not be construed as a complete 
list of information the Board might require, nor all of the information 
necessary for the proper conduct of Board operations under the proposed 
agreement. Therefore, the Board should have the authority, with the 
approval of the Secretary, to require each signatory handler to furnish 
such information as it finds necessary to perform its duties under the 
proposed agreement.
    Under Sec.  970.80(b), proponents testified that signatory handlers 
should be required to maintain records of all receipts and acquisitions 
of leafy green vegetables as may be necessary to verify the reports 
that are submitted to the Board. This would also include all 
documentation relating to audit reports. All records would be 
maintained for at least two years after the end of the crop year of 
their applicability. The records maintained should be sufficient to 
document and substantiate each signatory handler's compliance with the 
proposed agreement. Witnesses testified that these records may be 
needed to assist in compliance investigations.

[[Page 24319]]

    Paragraphs (a) and (b) of Sec.  970.80 are revised for 
clarification, and paragraph (c) is deleted as it is not necessary.

Confidential Information

    As required by the Act and supported through testimony provided by 
witnesses at the hearing, Sec.  970.81 would require that all reports 
and information submitted by signatory handlers be received by, and at 
all times be in the custody of, employees or authorized agents of the 
Board. Information submitted by signatory handlers affecting the trade 
position, financial condition, or business operation of such handlers 
could not be disclosed by the employees of the Board, or by any agents 
authorized by the Board, to any person or entity other than the 
Secretary. Witnesses testified that reports and information that 
contain proprietary market and business information could affect the 
trade position, financial condition, or business operation of the 
affected signatory handler, and that confidentiality would be necessary 
to protect the businesses submitting the information. The Board would 
also confidentially hold any data or information obtained or extracted 
from reports or information submitted by signatory handlers. The 
proponents also stated that, although information from reports and 
information may be combined and made available in the form of general 
reports, the identities of the individuals furnishing the information 
should not be disclosed. Combined information in general reports could 
be helpful to the Board and to the leafy green vegetable industry.
    Minor revisions have been made to Sec.  970.81 for clarification.

Verification of Reports

    In Sec.  970.82, the proponents proposed procedures for verifying 
that reports filed by signatory handlers are in compliance with the 
requirements of the proposed agreement. For this purpose, the hearing 
record indicates that authorized agents or employees of the Board, and 
the Secretary, should have access to the premises of all signatory 
handlers during reasonable business hours. In addition to having access 
to a signatory handler's premises to verify that all reports have been 
submitted accurately, the proponents indicated that authorized agents 
or employees of the Board, and the Secretary, should also have access 
to check GAPs audit verification records for compliance with the 
proposed agreement.
    Record evidence indicates that authorized agents or employees of 
the Board, as well as the Secretary, should have reasonable access to 
any signatory handler's premises during regular business hours (those 
hours when the signatory is actually engaged in growing, harvesting, 
packing, or transporting leafy green vegetables). The record 
verification should be conducted through a visit to the signatory 
handler's facility, where documentation would be reviewed and personnel 
interviewed to ascertain compliance with this part.
    In regards to the general issue of reporting and recordkeeping, 
evidence indicates that handlers of leafy green vegetables and products 
already collect and maintain much of the information proposed for 
submission to the Board under the proposed agreement provisions. 
Furthermore, hearing testimony suggests that the proposed agreement 
would be beneficial to the industry by helping to standardize how 
information is collected, maintained, and disseminated. An additional 
benefit to the reporting and recordkeeping requirements of the proposed 
agreement would be enhanced traceability and identification of product 
due to the more consistent and generally available nature of the 
digitized information likely required by handlers.
    Although some small and organic producers and handlers currently 
not associated with any food quality verification program expressed 
concerns about the additional personnel and cost possibly required for 
adherence to the proposed reporting and recordkeeping requirements, 
others currently associated with a food quality verification program of 
some kind testified that good recordkeeping has helped adhere to the 
food quality verification program and been beneficial to overall farm 
operation. These witnesses also expressed the belief that the reporting 
requirements herein proposed would not constitute an undue burden on 
leafy green vegetable businesses.
    Section 970.82 is modified slightly for clarification.

Material Issue Number 5(f)--Compliance

    The proposed agreement should provide the Board and USDA with the 
authority to withdraw audit services, withdraw the use of the official 
certification mark, or seek remedies or penalties should signatory 
handlers be in non-compliance with the proposed agreement. In addition, 
the proposed agreement should provide that any immediate threat to 
public health be reported to appropriate health officials. This is 
necessary for the program to be effective and to help ensure that it is 
administered fairly to all participants.
    Under Sec.  970.83, proponents testified that compliance of the 
proposed agreement would be overseen by the Board and USDA. The Board 
would establish a policy in the form of a compliance program under 
which non-compliance actions would be identified either by the 
Inspection Service or by Board compliance staff. Non-compliance actions 
may be identified during scheduled or unscheduled audits, visits to a 
farm or facility, or from anonymous complaints. Proponents and other 
witnesses supported the proposal that any signatory handler not in 
compliance with the proposed agreement could be subject to withdrawal 
of audit services, could lose the privilege of the use of the official 
certification mark, or be subject to misbranding or trademark 
violations, depending on the level of non-compliance. It was further 
proposed by proponents under Sec.  970.83(c) that failure to comply 
with the provisions of this proposed agreement may also result in 
additional remedies or penalties.
    According to the hearing record, signatory handlers would be 
obligated to adhere to program requirements. Such requirements would 
include such things as acquiring only leafy green vegetables that have 
been grown in accordance with GAPs; receiving successful audits 
verifying that GHPs and GMPs (if applicable) are being adhered to; 
filing reports and maintaining records; and paying assessments. Failure 
to comply with these requirements could result in action against the 
signatory handlers.
    The record shows that the intent of the program would be to improve 
vegetable quality by reducing the risk of contamination. As such, the 
focus would be to establish and maintain best practices. If a signatory 
handler were found to be out of compliance with the audit metrics 
established under the program, the first step would be to require that 
handler to take appropriate corrective action to address and correct 
any non-conformities.
    According to record evidence, non-compliance by signatory handlers 
would be identified and classified at various levels from minor to 
flagrant violations of the proposed agreement. Other than in cases of 
immediate threat to public health, any signatory handler found in 
violation of the proposed agreement would be allowed to address and 
correct any actions that led to non-compliance of the proposed 
agreement. If a signatory handler were to fail to take appropriate 
verifiable corrective, the signatory handler could be subject to

[[Page 24320]]

withdrawal of audit services or lose the use of the official 
certification mark.
    According to the hearing record, the status of a signatory 
handler's compliance would be public information and may be posted on a 
Web site.
    The Notice of Hearing also contained a provision in Sec.  970.83(b) 
that any detection of an S threat to public health should be reported 
to FDA. Record evidence supports notification of any appropriate health 
officials, not just FDA.
    Section 970.83 of the proposed agreement is revised for 
clarification and to remove unnecessary language.

Material Issue Number 5(g)--Exemptions

    USDA recommends that the Board should have the authority to exempt 
small quantities of leafy green vegetables from any or all program 
requirements.
    Section Sec.  970.72, ``Exemptions,'' of the Notice of Hearing 
stated in part: ``The [Board], with the approval of the Secretary, may 
establish such rules, regulations, and safeguards that exempt from any 
and all requirements pursuant to this part, such quantities of leafy 
green vegetables or products as do not interfere with the objective of 
this part.''
    While the proponents' proposal would have permitted the Board to 
exempt a given quantity of leafy green vegetables from the requirements 
of the agreement, during the hearing sessions, both proponents and the 
opponents of this agreement opposed that any quantity of leafy green 
vegetables should become exempt from the agreement. Witnesses' 
rationale for this opposition was that any quantity of exempt leafy 
green vegetables, be it from a small, organic, or large farm, may 
jeopardize the ultimate goal of this program which is to make the 
production and handling of leafy green vegetables safer.
    While the objectives of the program should not be compromised, the 
agreement should authorize an exemption if an unforeseen circumstance 
arises which would make such an exemption reasonable. Furthermore, the 
Board should have authority to recommend rules and regulations to 
ensure that such leafy green vegetables are handled and used only as 
authorized under the agreement.
    Clarifying changes are made to Sec.  970.72.

Material Issue Number 5(h)--Research, Development, and Education

    The proposed agreement should authorize the Board to conduct 
research, including market research, development projects, and to 
develop and implement educational and outreach programs intended to 
facilitate the adoption, implementation, and administration of the 
agreement. In addition, the proposed agreement should establish a 
Research and Development Committee to assist the Board in carrying out 
the aforementioned programs.

Research, Development, Education and Outreach

    Proponent witnesses testified that the proposed agreement should 
provide the Board authority to establish marketing research and 
development projects, and or promotional activities, including paid 
advertising, to assist or promote the efficient adoption, 
implementation, and marketplace acceptance of the agreement and leafy 
green vegetables. As proposed by proponents, such projects and 
activities would require approval by the Secretary, and would be funded 
by collected assessments and voluntary contributions as specified in 
proposed Sec. Sec.  970.56 and 970.58, respectively.
    Proponent witnesses testified that the authority for market 
research was necessary to better understand and communicate with key 
leafy green vegetable industry audiences--such as buyers. The authority 
for the conduct of market research and development projects generally 
was supported by witnesses. However, some witnesses suggested the types 
of research specified under the proposed agreement should be expanded 
beyond market research. Specifically, these witnesses stated the 
proposed agreement should authorize food safety research such as best 
practices in production, handling, and manufacturing of leafy green 
vegetables, contamination risk management including reducing the risk 
of cross-contamination in the food supply chain, and identification of 
measures to reduce microbial contamination. While proponents supported 
research associated with quality in areas such as production, handling, 
and manufacturing practices for leafy green vegetables, they did not 
support the use of collected funds for generic research on risks 
associated with leafy green vegetables.
    Several witnesses who expressed concern about the potential impact 
audit metrics could have on small business entities suggested the 
proposed agreement should provide authority to the Board to develop and 
implement educational and outreach programs. This recommendation was 
supported by the proponents of the proposed agreement.
    Witnesses supporting the authority for educational and outreach 
programs stated the programs should be designed to assist small 
businesses comply with the proposed agreement. They asserted these 
programs could be effective tools for providing training to entities, 
particularly small entities, about the proposed agreement, its audit 
metrics and other requirements. Such programs, the witnesses asserted, 
also could be used to increase awareness of the proposed agreement 
within the leafy green vegetable industry supply chain.
    Witnesses supporting inclusion of a training component explained 
that training should be made available to producers, handlers, and 
persons conducting verification audits under the proposed agreement. 
According to these witnesses, training for producers and handlers would 
assist in program compliance and ensure a clear understanding of the 
proposed agreement and its requirements. Witnesses advocating training 
for auditors stated that such would provide consistency and accuracy in 
audit verifications.
    Additionally, in implementing educational and outreach programs 
under the proposed agreement, witnesses advocated cooperation with 
existing state, local, and Federal agencies, universities, or other 
organizations already successfully operating such programs within their 
regions or communities.
    Based on the record evidence, the proposed agreement should 
authorize the Board to conduct research (including market research), 
development projects, and education and outreach programs. The proposed 
programs would help to expand knowledge about the leafy green vegetable 
industry, the proposed agreement, its audit metrics, and requirements. 
The programs also would assist in increasing awareness on the proposed 
agreement among leafy green vegetable stakeholders. Lastly, the 
programs should allow the proposed agreement to become more accessible 
to small entities, organic, diversified, and unconventional operations 
within the leafy green vegetable industry.
    Record evidence establishes that the proposed agreement should 
authorize the Board to provide for the conduct of market research and 
development projects as proposed by proponents. These projects would 
allow the Board to compile information related to the leafy green 
vegetable industry to better understand the industry, facilitate 
communications with industry stakeholders, and evaluate the proposed 
agreement. This authority also would

[[Page 24321]]

help ensure the proposed agreement is functioning properly and meeting 
its intended purpose.
    The record evidence further establishes that authority to conduct 
research under the proposed agreement should be expanded beyond market 
research. The record evidence supports authority for the conduct of 
research projects designed to assist or improve the development of 
audit metrics related to the production, handling, and manufacturing of 
leafy green vegetables. The broader research authority would allow for 
the conduct of research that is applicable to various production 
environments and practices, spanning from conventional, to organic, to 
others. The proposed authority also would allow research concerning 
contamination risk management as well as other relevant areas. Record 
evidence supports providing broad research authority to ensure relevant 
areas related to leafy green vegetables could be researched, if deemed 
necessary and appropriate.
    Record evidence supports the inclusion of authority for the 
development and implementation of educational and outreach programs 
under the proposed agreement. Record evidence indicates that these 
programs would be critical to facilitate awareness and education of the 
proposed agreement.
    As supported by record evidence, the proposed educational and 
outreach authority would allow the Board to develop tools that aid 
growers and handlers, particularly small entities, comply with program 
requirements. According to record evidence, these tools could include 
templates to aid producers and handlers with recordkeeping 
requirements, and how-to guides to assist with complying with audit 
metrics and implementing best practices. Additionally, record evidence 
indicates that the proposed authority for educational and outreach 
programs would allow for the development and implementation of training 
programs for persons responsible for conducting audit verifications to 
ensure consistency and accuracy. As supported by the record, the 
proposed authority would allow the Board to coordinate with local, 
State, and Federal agencies, and other organizations in designing and 
implementing educational and outreach programs.
    Record evidence supports that the educational and outreach programs 
should be funded by authorized receipts of the Board, including 
assessment income, voluntary contributions, and miscellaneous income 
such as interest. As provided in the proposed agreement, the expenses 
for the activities described above would be budgeted and paid from 
funds collected pursuant to Sec. Sec.  970.56 and 970.58, both 
assessments and contributions.
    Based on the record evidence, all research, development projects, 
and education and outreach programs to be conducted under the proposed 
agreement in a given fiscal period should be required to be submitted 
by the Board to the Secretary for approval prior to being undertaken. 
The amount of funds to be spent on research, development projects, and 
education and outreach programs would be included in the annual budget 
required to be submitted to the Secretary for review and approval. 
Additionally, the Board would be required to report to the Secretary at 
least annually on the progress of each project and at the conclusion of 
each project. These are common USDA program requirements to ensure the 
effective conduct of authorized projects and the proper use of 
collected funds.

Promotion and Advertising

    Regarding the proponents' proposed authority for the conduct of 
promotion and advertising activities, proponent witnesses testified 
that the intended target audience for outreach and promotion of the 
proposed agreement was buyers and others within the leafy green 
vegetable industry. Proponent witnesses stated that they fundamentally 
believed funds collected under the proposed agreement should not be 
used for consumer advertising or other marketing campaigns designed to 
promote food safety and or leafy green vegetables.
    Several witnesses--those in support of the proposed agreement and 
those opposed to it--expressed concern regarding the authority to 
engage in promotion and advertising activities. These witnesses opposed 
any marketing efforts targeted to consumers. The witnesses further 
contended that such marketing of the proposed agreement would imply 
that leafy green vegetables covered under the proposed agreement were 
safer than those that were not covered under the agreement, thus 
creating a competitive advantage for entities associated with the 
proposed agreement.
    The testimony of a witness supported the conduct of generic 
promotional activities under the proposed agreement. However, testimony 
of the proponents indicated the proposed agreement was not designed to 
use collected assessments to fund the generic promotion of leafy green 
vegetables to consumers.
    Based on record evidence, the proposed agreement should not provide 
for the conduct of promotion and advertising activities. The record 
clearly demonstrates a lack of support for the inclusion of such 
authority.
    As detailed above, Sec.  970.75 ``Research and Promotion'', as 
proposed by proponents, should be revised and included in the proposed 
agreement as ``Research, Development, and Education.''

Research and Development Committee

    The proponents proposed that a ``Market Review Board'' as specified 
in Sec.  970.46 of their proposal be established to advise the 
administrative body on retail, foodservice, and consumer issues to 
maximize consumer confidence through market acceptance and recognition 
of the proposed agreement. Proponent witnesses explained that the 
Market Review Board would assist with promotion and acceptance of the 
proposed agreement throughout the leafy green vegetable supply chain.
    As proposed by proponents, the Market Review Board would be 
appointed by the administrative body and would consist of a minimum of 
nine members as follows: Two representatives of retail grocers, two 
representatives of foodservice operations, three consumers, and two 
representatives from land grant universities with expertise in fresh 
vegetable marketing, economics, or consumer acceptance. Under the 
proponents' proposal, the administrative body also would have the 
authority to appoint additional representatives from consumer, retail, 
and foodservice organizations.
    Several witnesses expressed concerns over the potential role of the 
proposed Market Review Board relating to the promotion of the proposed 
agreement to maximize consumer acceptance through market acceptance of 
the proposed agreement. These witnesses believed that marketplace 
acceptance of the proposed agreement related to promotion of the 
program to consumers. These witnesses were opposed to the proposed 
marketing and promotion authorities, including paid advertising, that 
were outlined in Sec.  970.75 ``Research and Promotion'' of the 
proponents' proposal.
    Based on the record evidence, the proponents' proposed Market 
Review Board should be removed from the proposed agreement and, in its 
place, a Research and Development Committee should be established. The 
name of the committee reflects the role and responsibilities of the 
committee as described below.

[[Page 24322]]

    As supported by record evidence, the Research and Development 
Committee should be established for the purpose of assisting the Board 
in the oversight and management of research, development projects, and 
education and outreach activities under the proposed agreement, as 
authorized under proposed Sec.  970.75. The record evidence also 
indicates that the membership structure proposed by proponents for the 
Market Review Board should be adopted for the proposed Research and 
Development Committee and modified slightly for clarity. However, based 
on record evidence, the nomination and selection process for this 
committee should be expanded to ensure broader participation by 
interested parties as detailed below.
    Record evidence indicates that persons appointed to this committee 
should have expertise in certain areas to aid them in performing the 
committee's roles and responsibilities. As such, the proposed agreement 
should specify that persons should have expertise in one of, but not 
limited to, the following areas: The production, handling, and 
marketing of leafy green vegetables; small, diversified, or organic 
production practices; agricultural economics; or educational outreach 
in the specified or related areas.
    The expanded nomination and selection process would address 
concerns raised by witnesses regarding the selection of members to this 
Committee. Witnesses expressed concerns that the proponents' proposal 
limited the persons that could be identified and, thus, selected to be 
members of this Committee. The broader process offered in this 
recommended decision would allow for more participation from interested 
persons in the nomination process, and would provide that selections be 
made by the Secretary.
    Record evidence supports that nominations for the Research and 
Development Committee should be received from producers and signatory 
handlers at meetings, by mail, or by any form of electronically 
verifiable communication. In addition, the Board also would be allowed 
to recommend nominees to the Secretary. The Secretary would select and 
appoint the members from such nominations or from other qualified 
persons. Record evidence also supports providing authority for the 
appointment of additional members to this Committee by the Secretary. 
This provision is consistent with the proponents' proposal, which would 
have allowed for the appointment of additional representatives of 
retailers, consumers, and foodservice companies.
    As supported by record evidence, the membership of the Research and 
Development Committee could be modified based on recommendations by the 
Board and approval of the Secretary, or as otherwise deemed appropriate 
by USDA. Additionally, the Research and Development Committee should be 
allowed to appoint subcommittees as necessary to assist it in carrying 
out its roles. Subcommittees could be comprised of producers, signatory 
handlers, and other interested parties such as representatives of 
consumers, retailers, and foodservice organizations as deemed 
appropriate by the Research and Development Committee. The above 
described proposed language should be included in the proposed 
agreement as Sec.  970.47 ``Research and Development Committee'', and 
should take the place and stead of the proponents' proposed Market 
Review Board.

Material Issue Number 5(i)--Common Terms

    The provisions of proposed Sec. Sec.  970.85 through 970.96 are 
common to marketing agreements and orders now operating. All such 
provisions are necessary to effectuate the other provisions of the 
marketing agreement and to effectuate the declared policy of the Act. 
The record evidence supports inclusion of each provision. These 
provisions are identified by the section number and heading as follows: 
Sec.  970.85 Effective time; Sec.  970.86 Rights of Secretary; Sec.  
970.87 Personal liability; Sec.  970.88 Separability; Sec.  970.89 
Derogation; Sec.  970.90 Duration of immunities; Sec.  970.91 Agents; 
Sec.  970.92 Suspension or termination; Sec.  970.93 Proceedings upon 
termination; Sec.  970.94 Effect of termination or amendment; Sec.  
970.95 Amendments and Sec.  970.96 Counterparts. Minor changes to these 
sections are made for clarification.

Material Issue Number 6--Handler Sign-up and Withdrawal

    Based on a review of the hearing record, the proposed agreement 
should provide for two handler sign-up phases to facilitate initial 
implementation of the program, including the nomination and selection 
of the initial Board. Also, the agreement should provide for handler 
withdrawal from the agreement.

Handler Sign-Up

    A two-phase approach to the handler sign-up process would be used. 
An initial phase of at least 60 days would be established. This would 
allow for the nomination of producer and signatory handler members and 
alternate members of the Board, and the selection of an initial Board 
by the Secretary. The specific time frame would be established at the 
time the agreement becomes effective.
    Handlers who sign up during this initial sign-up period would be 
eligible to serve as initial members of the Board. Proponent witnesses 
explained that the initial sign-up period should be for a specified 
period of time so that handlers know in what time frame they may sign-
up for this agreement to be eligible to serve on the initial Board. 
After this initial sign-up period, a handler may become a signatory to 
this agreement at any time.
    Section 970.97 has been changed to add an initial sign-up phase and 
change the title of the section from ``Additional parties'' to 
``Handler Sign-up''.

Handler Withdrawal From the Agreement

    The agreement should also provide that signatory handlers may 
withdraw from the program. Record evidence supported a process wherein 
a signatory handler could file a written notice of withdrawal with the 
Board during any crop year. The withdrawal would become effective at 
the beginning of the subsequent crop year. The signatory handler would 
remain responsible for any obligations (including payment of 
assessments) incurred during the period that handler was a signatory 
handler.
    In addition, a signatory handler could receive immediately 
withdrawal from the program if they cease to be a handler of leafy 
green vegetables and give notice to the Board in writing. Again the 
signatory handler would be responsible for any obligations incurred 
during the period of participation in the program.
    Section 970.98 has been revised for clarity, including the addition 
of language to state that upon withdrawing from the agreement, the 
withdrawing party would no longer be permitted to use any official 
certification mark developed under the agreement.

Small Business Consideration

    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (5 U.S.C. 601-612) (RFA), AMS has considered the 
economic impact of this action on small entities. Accordingly, AMS has 
prepared this initial regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions so that small businesses will not be 
unduly or disproportionately burdened. Small agricultural service 
firms, which include handlers that would be eligible to be signatories 
under the proposed

[[Page 24323]]

agreement, have been defined by the Small Business Administration (SBA) 
(13 CFR 121.201) as those having annual receipts of less than 
$7,000,000. According to data published in the Blue Book, there are 
over 2,200 handlers, which include approximately 300 importers and over 
100 fresh cut processors, of leafy green vegetables in the U.S. As 
noted earlier, there may be additional small handler businesses, 
specifically producers who are engaged in handling, not included in 
this total.
    While the hearing record does not contain data to estimate average 
annual sales for handlers, the majority of handlers who testified at 
the hearing indicated they had annual sales of leafy green vegetables 
in excess of the SBA definition for a small agricultural service firm.
    The hearing record indicates that, according to the latest Census 
of Agriculture, 8,216 farms harvested leafy green vegetables from 
433,023 acres for the fresh market in 2007. Statistics for the leafy 
green industry presented at the hearing show that the total value for 
leafy green vegetable crops was approximately $2.5 billion in 2008.
    Small agricultural producers have been defined by the SBA as those 
with annual receipts of less than $750,000. Based on the information 
presented at the hearing, 89 percent of farms producing leafy green 
vegetables in the United States would be considered small businesses as 
defined by the SBA.
    In addition to handlers and producers, other persons including 
retailers, food service representatives, food safety experts, and other 
members of the public could nominate or serve on the boards or 
committees as appropriate. The reporting burden on such persons is 
discussed in the Paperwork Reduction Act section that follows.
    In 2007, 69 percent of leafy green vegetable farms had annual gross 
sales under $100,000, 12 percent had annual gross sales between 
$100,000 and $299,000, 8 percent had annual gross sales between 
$300,000 and $749,000, with the remaining 11 percent of farms producing 
leafy green vegetables in the United States having annual gross sales 
over $750,000.
    Since the spinach outbreak in 2006, large and small leafy green 
vegetable producers and handlers in all parts of the country have had 
to become more knowledgeable about produce contamination. This has led 
many of them to initiate or increase good agricultural, handling and 
manufacturing practices and programs. Other initiatives include the 
implementation of the California and Arizona State marketing agreement 
programs which are designed to minimize the potential of contamination 
from leafy green vegetables produced within the respective States.
    An economist with a science-based consulting firm (Intertox) 
testified as a proponent witness. This witness presented evidence that 
a majority of the volume of leafy green vegetables production is 
currently being produced under the California or Arizona State 
marketing agreements. In California, which accounts for 75 percent of 
U.S. leafy green vegetables production, 99 percent of this production 
is covered under the LGMA. Arizona represents 15 percent of U.S. 
production; 90 percent of that volume is covered by the Arizona 
agreement. For those producers and handlers, implementation of a 
national marketing agreement would not likely cause significant 
additional costs.
    If adopted, the proposed agreement would authorize the development 
and implementation of audit metrics that are consistent with FDA GAPs 
and GMPs, and current USDA GHPs. While the proposed program would be 
voluntary, handlers who choose to become signatories would be required 
to comply. Many of the farms that produce leafy green vegetables would 
be subject to certain requirements under the proposed marketing 
agreement if they opt to sell to signatory handlers.
    Evidence provided at the hearing indicates that large farms almost 
always sell to handlers under seasonal contracts and that these 
relationships are usually long-term. These large farms produce most of 
the volume of leafy green vegetables in the U.S., and are quite likely 
to supply handlers who would be signatories under the proposed 
agreement.
    A key economic issue to examine in considering the proposed 
agreement is the benefits and costs to signatory handlers, and to 
producers supplying such handlers.

Benefits of the Proposed Program

    The record evidence from handlers and producers who handle and 
produce a vast majority of the volume of leafy green vegetables in the 
U.S. is that although the proposed program would impose some additional 
costs on signatory handlers and the growers who sell to them, those 
costs would be outweighed by the benefits expected to accrue to the 
U.S. leafy green vegetable industry.
    A primary benefit of the proposed agreement is the reduced 
likelihood of food contamination outbreaks in leafy green vegetables 
and products handled in the United States. Two witnesses presented 
estimates of the impacts of food contamination outbreaks in terms of 
lost sales. A measure of the benefit of the proposed program is the 
avoidance of lost sales.
    An economist on the faculty at Arizona State University testifying 
as a proponent witness stated that, based on his research, the cost of 
a food contamination outbreak is high and borne by all producers in 
that industry. He estimated that a food contamination outbreak event 
could lead to a 10 percent long-term reduction in demand for leafy 
green vegetables. In addition, the witness stated that without 
intervention, such as a national agreement, the leafy green vegetable 
industry could face a major food contamination incident, on average, 
every 10 years, leading to significant financial losses.
    Record testimony indicates that producers and handlers can derive 
some benefit from their investments to minimize food contamination but 
the value of that investment is diminished if others do not similarly 
invest. The record further indicates that a collective action program 
with government oversight, such as a marketing agreement, can be used 
to intervene in a market system if the market is not producing enough 
of a public good; in this case investment to minimize food 
contamination outbreaks.
    In the absence of collective action, individual producers may not 
have sufficient incentive to invest in food quality verification 
programs since it is not a tangible food characteristic for their 
buyers or final consumers. The witness noted that producers who do not 
invest, or who under-invest, in such quality or best practices programs 
create a ``free rider'' problem, since they do not pay their fair share 
of the production cost for what consumers expect to buy--a fresh leafy 
green product that is not contaminated.
    Additional evidence about sales and price impacts to producers and 
handlers from the 2006 spinach outbreak was presented by a witness from 
California State University-Fresno. The witness stated that although 
the contaminated spinach was grown in California, producer sales 
throughout the nation were affected. Even after the source was isolated 
and consumers were assured that eating fresh spinach was again safe, 
sales lagged for a significant period of time and the commodity may 
have experienced long term loss of goodwill. Due to reduced shipments 
and lower prices from August through December 2006, the farm level loss 
in U.S. spinach sales was estimated at $12 million; the estimated loss 
at the retail level was $63 million.

[[Page 24324]]

    The record testimony indicates that the benefits to a producer of 
implementing a best practices or food safety plan can include higher 
prices received by producers, maintaining and growing sales, reducing 
liability costs and improving operational efficiency. The witness also 
noted that the benefits tend to accrue over time and are uncertain.
    The proposed program has the potential to increase the number of 
producers, including small producers, following standard GAPs. This 
could result in handlers buying leafy green vegetables from more small 
producers.
    The proposed agreement also has the potential to reduce the 
redundancy of multiple audit verifications to which many handlers are 
currently subjected due to specific buyer requirements. Reducing 
multiple audit verifications will reduce costs and improve efficiency 
for both signatory handlers and their supplying producers.
    Evidence was presented at the hearing that, due to food 
contamination outbreaks in recent years, producers of the vast majority 
of leafy green vegetable production currently have contracts that 
stipulate production standards that need to be met to deliver their 
leafy green vegetables to handlers. These standards are generally 
mandated to handlers by retail and food service buyers, but 
consequently have an impact on producers who must also conform to the 
standards in order to sell to handlers.
    A USDA Economic Research Service and University of Arizona research 
report was submitted at the hearing regarding the fresh-cut vegetable 
industry. Fifteen lettuce and bagged salad shippers were interviewed in 
1999-2000. This research indicated that most leafy greens shippers were 
diversified mixed-vegetable shippers and many engaged in some degree of 
processing. In 1999, 80 percent of these shippers had requests from 
retailers for, and were providing, third-party food safety 
certification.
    Evidence was presented at the hearings that the lack of one set of 
production and handling standards in the leafy green vegetable industry 
often results in producers having to comply with different sets of 
standards for different customers.
    Based on record testimony by those who favor the proposed 
agreement, support was expressed for a government program that would 
become an industry standard. If this proposal is implemented, 
supporters of the proposed agreement believe that the multiplicity of 
private standards would be replaced or minimized with a science-based, 
consistent, and scalable program that standardizes GAPs, GHPs, and GMPs 
throughout the industry. The leafy green vegetable industry also may 
benefit from the proposed agreement's ability to make timely 
adjustments to GAP and GHP audit metrics, as appropriate, through the 
mechanisms of the agreement.
    The record evidence shows that the proposed agreement would likely 
result in some cost increases for producers and handlers, especially in 
the short run (both start-up costs and ongoing annual costs), but in 
the long run there could be some cost decreases from streamlining of 
differing buyer standards and being subject to fewer audits.

Compliance Cost Estimates

    Based on record evidence, the proposed agreement would result in 
total one-time modification costs at the farm level for all leafy green 
acreage outside of California and Arizona estimated to range between 
$1.2 and $3.0 million, and an estimated average range of $14-$34 per 
acre for modification costs. The record evidence indicates that this 
modification costs estimate is in addition to an estimated $6.1-$14.7 
million already expended at the farm level for producers under State 
marketing agreement programs.
    Under the proposed agreement, total seasonal (annual) cost 
increases at the farm level for all leafy green acreage outside of 
California and Arizona are estimated to range from $2.7 to $4.4 
million, which is an estimated average range of $30-$50 per acre annual 
compliance costs. These annual cost estimates would be in addition to 
the estimated $13.0-$21.7 million being expended at the farm level for 
producers under State marketing agreement programs. We are relying 
primarily on cost estimates published in a University of California 
report submitted at the hearing. However, a wider range of cost 
estimates was submitted by a proponent witness and is included 
subsequently in Table 2.
    Based on record data, annual handler assessments that would be 
collected under the proposed agreement are estimated to range between 
$5.7 and $28.6 million. Annual per acre compliance costs, not including 
assessments, for handlers who also are producers are estimated to range 
between $48 and $105 per acre.

Producer Cost Impact Estimates

    Under the proposed agreement, signatory handlers would be required 
to ensure that producers that supply them with leafy green vegetables 
are producing in accordance with a set of ``best'' practices. The most 
immediate and significant changes for producers, especially small ones, 
would be the increased expenses of supplying signatory handlers. While 
some producers may currently be applying and implementing GAPs, many 
producers would have to make physical modifications in their 
operations, add to their current recordkeeping requirements, and 
increase their administrative oversight over certain aspects of their 
farming enterprise.
    Record evidence supports a program where the costs resulting from 
participation are proportional to the size of businesses involved and 
do not unduly or disproportionately impact small entities.
    Witnesses at the hearing provided evidence of the cost of 
compliance with food quality verification requirements that were used 
in this document to compute producer cost estimates of implementation 
of the proposed program. Cost per acre data was combined with estimates 
of the number of acres to provide overall national cost estimates.
    Data derived from the 2007 Census of Agriculture (2007 Census), 
which was presented at the hearing, showed that the total number of 
U.S. acres of leafy greens outside of California and Arizona was 
88,572, representing 20 percent of total U.S. acres. Combined acres for 
California and Arizona total 344,451.

------------------------------------------------------------------------
                                                             Percentage
                                                   Acres       of U.S.
                                                                acres
------------------------------------------------------------------------
United States..................................    433,023  ............
California.....................................    271,040            63
Arizona........................................     73,411            17
All other States...............................     88,572            20
------------------------------------------------------------------------
Source: NASS, USDA

    Two reports submitted as evidence at the hearing (the ``UC report'' 
and the ``Intertox report'') included estimates of compliance cost per 
acre.\1\ The cost impact estimates are summarized in three tables, two 
of which focus on producer costs, and a third one covers first handler 
assessment costs.
---------------------------------------------------------------------------

    \1\ Exhibit 43 ``Producers' Compliance Costs for the Leafy 
Greens Marketing Agreement and Other Food Safety Programs'', by S. 
Hardesty and Y. Kusunose, UC Davis; and Exhibit 34A ``Marketing Data 
and Cost Overview'' by Diane Wetherington, Intertox.
---------------------------------------------------------------------------

    Table 1 presents computations of producer costs using cost data 
from the UC report and acreage data from the 2007 Census. The $14 per 
acre figure appearing in the 2nd column of Table 4 was rounded off from 
a $13.60 cost estimate in the UC Report.\2\ The standard deviation was 
rounded off to

[[Page 24325]]

$20\2\ and added to the mean cost to give an upper range estimate of 
$34 per acre.
---------------------------------------------------------------------------

    \2\ ``Cost per acre of leafy greens'' on the bottom row of Table 
4 of the UC Report.
---------------------------------------------------------------------------

    Multiplying the cost figures of $14 and $34 per acre by 88,572 
acres yields a range of estimated farm modification costs of $1.2 to 
$3.0 million for all leafy green acreage outside of California and 
Arizona.
    To provide an estimate of the total cost for modifications for the 
industry as a whole, the fourth column adds the costs in column three 
to an estimated cost expended by producers in California and Arizona. 
However, additional California and Arizona farm modification costs for 
compliance would likely be minimal, since most acreage is already 
participating in the leafy green marketing agreements in those two 
States and/or have already completed modifications in response to 
contractual GAPs and audit verification cost obligations from buyers.

      Table 1--Range of Farm Modification Cost Estimates for Producer Compliance With the Proposed Program
                                      [one time expenditures, not seasonal]
----------------------------------------------------------------------------------------------------------------
                                                                                       Total
                                                                                   modification        Total
                                                                   Per acre cost  cost for farms   modification
                                                                  in California*  outside of CA,  cost for farms
                                                                                       AZ***      in the U.S.***
----------------------------------------------------------------------------------------------------------------
                                                                  ..............  - - - - - - $ million - - - -
                                                                                                 -
----------------------------------------------------------------------------------------------------------------
Mean cost of producers in survey................................             $14            $1.2            $6.1
Mean cost plus $20 per acre* *..................................              34             3.0            14.7
----------------------------------------------------------------------------------------------------------------
*Farm modification cost based on 2009 UC report of impact of California LGMA by S. Hardesty, presented at the
  hearing in Monterey.
**Approximately one standard deviation from the mean cost of producers surveyed in the 2009 UC report.
***To get Total Modification Cost, per acre cost is multiplied by acreage data from 2007 Census (88,572 acres of
  leafy greens outside of CA and AZ; total U.S. leafy green acres of 433,023 is the sum of 344,451 acres in
  California and Arizona plus 88,572 outside of those two States).

    The most common changes in leafy green farming operations made by 
respondents (to the survey that was the basis of the UC report) were 
installing or improving fencing and bathroom/hand-washing facilities. 
The total cost of the investments/modifications for LGMA compliance 
averaged $21,490, or $13.60 per acre, with a range from $0 to $150,500. 
The cost for modifications reported by small farms was $14.82 per acre. 
The figures for medium and large farms were $18.05 and $8.29 per acre, 
respectively. In the UC report, a small farm was defined as a farm with 
annual gross revenue from leafy green vegetables of under $1 million. 
Revenue of $1 million to $10 million was defined as medium, and a large 
farm had leafy green revenues over $10 million annually.
    The survey results indicated that one-third of respondents reduced 
production area under cultivation, averaging a 1.5 percent reduction, 
to meet buffer zone requirements. Evidence presented at the hearing 
indicates small producers tend to have numerous small plots of land. 
Buffer zone land loss, if required under the proposed agreement, could 
be a much larger percent for those producers with small, scattered 
plots.
    Another key impact to examine is the increased seasonal cost that 
would be incurred every year by producers for compliance with the 
proposed program. A range of compliance cost increases is presented in 
Table 2, based on cost data drawn from the UC and Intertox reports.\3\ 
Table 2 presents a range of per acre of cost increases for producer 
compliance--four cost levels at $20 increments: $10, $30, $50, and 
$70.\4\ Individual producer costs could vary substantially from these 
estimates of mean costs per acre.
---------------------------------------------------------------------------

    \3\ In table 5 in the UC report, the bottom rows show that the 
mean food safety costs per acre were $24.04 and $54.63. The 
difference between those figures ($30.59, rounded to $30) represents 
one estimate of increased California producer expenditure on food 
safety after the California LGMA went into effect in 2007, compared 
to seasonal food safety expenses already incurred prior to the LGMA. 
In table 6 of the UC report, mean per acre costs of $36.46 and 
$84.36 appear in the bottom rows. The difference between them is 
$47.90, which is rounded to $50. The $30 and $50 costs represent a 
range of estimates of the cost impact of the additional requirements 
to comply with the California LGMA. Since cost data from other 
regions of the U.S. were not submitted at the hearing, it is assumed 
that a similar range of additional expenditures would be likely in 
other states under the proposed program.
    \4\ Table 13 on page 13 of the Intertox report indicates costs 
of $35 and $45 for a producer growing 200 acres of leafy greens. 
Table 14 on page 14 presents per acre cost estimates of $20, $30 and 
$50 for a 10,000-acre producer. Tables 15 and 16 (on page 16 of the 
Intertox report) present costs for producer-handlers. For a 
producer-handler shipping 200,000 cartons annually, the per acre 
cost estimates were $67 and $95. For an operation shipping 9.5 
million cartons, the food safety costs were $48 and $105. The cost 
elements in the tables included personnel, water testing, third 
party audits, recordkeeping, training, equipment, and a category 
called ``ranch care, pest control, chlorine.'' Given this range of 
total costs from the Intertox report, it is assumed that a range of 
cost increases (averaged over all producers) could range from $10 to 
$70 per acre.

     Table 2--Range of Seasonal Cost Increase Estimates for Producer
                  Compliance With the Proposed Program
------------------------------------------------------------------------
                                           Seasonal cost   Seasonal cost
                                           increases for   increases for
    Increased cost per acre                farms outside   farms in the
                                            of CA, AZ*         U.S.*
------------------------------------------------------------------------
                                                     $ million
------------------------------------------------------------------------
$10...........................    * * *             $0.9            $4.3
30............................      * *              2.7            13.0
50............................      * *              4.4            21.7

[[Page 24326]]

 
70............................    * * *              6.2            30.3
------------------------------------------------------------------------
* Acreage data from 2007 Census, 88,572 acres of leafy greens outside of
  CA and AZ plus 271,040 acres of leafy greens in CA and AZ equals U.S.
  leafy green acres of 433,023.
** In the UC report, a producer survey yielded a mean estimated increase
  of about $30. A separate estimate of ``Seasonal Food Safety Losses and
  Activities'' showed increased per acre expenditure of about $48, which
  is rounded to $50 in the table above.
*** The Intertox report included producer food safety costs from ranging
  from $20 to $50 per acre, and for producer/handlers, from $48 to $105
  per acre, for all food safety expenses, not just those incurred for
  compliance. Given this range of total costs, it is assumed that a
  range of net increased costs (averaged over all producers) could range
  from $10 to $70 per acre. Individual producer costs could vary
  substantially from these estimates of mean costs per acre.

    Multiplying the cost figures of $30 to $50 per acre by 88,572 acres 
yields a range of seasonal cost increase estimates for program 
compliance of $2.7 to $4.4 million for all leafy green acreage outside 
of California and Arizona. Adding Intertox submitted estimates 
increases the range to $900,000 to $6.2 million. Just as with 
modification costs discussed above, it is assumed that California and 
Arizona farm seasonal cost increases for program compliance would be 
minimal, since most acreage is already participating in the leafy green 
marketing agreements in those two States and/or have already undertaken 
seasonal GAPs or audit verification expenditures in response to 
contractual obligations from buyers. However, to provide an estimate of 
the total seasonal costs for the industry as a whole, the fourth column 
adds the costs in column three to an estimated cost expended by 
producers in California and Arizona, most of who are covered by State 
marketing agreements.
    Results of the UC report included per acre seasonal (annual) food 
safety cost estimates of $0 to $200 in 2007. This estimate includes 
requirements of private standards audits in addition to LGMA 
compliance. The average increase in seasonal compliance cost for 
producers of all sizes was $30.59 per acre. Total seasonal compliance 
costs reported by small farms were $38.57 per acre. The figures for 
medium and large farms were $85.89 and $33.22 per acre, respectively. 
Taking all costs into consideration, average compliance costs totaled 
1.0-1.3 percent of producers' leafy green vegetable revenues.
    A researcher on the faculty at California State University at 
Fresno testified as a proponent witness. The witness reported results 
of a survey taken on the costs of complying with the LGMA. Three 
significant cost increases as a result of the LGMA were $400-500 per 
audit per farm for compliance audits, one additional employee for food 
quality and best practices procedures, and increased water testing 
averaging a total of $3,657 per month.
    Record evidence indicates that a large proportion of commercial 
leafy green vegetable production is already complying with the 
California and or Arizona marketing agreements, therefore, the proposed 
agreement would not cause these producers to incur significant cost 
increases since they have already invested in food quality verification 
and related compliance.
    Record evidence indicates that, based on a 2008 survey of LGMA 
participants, the types of costs associated with the agreement included 
additional personnel costs, additional water and soil amendment tests, 
traceability processes and increased recordkeeping. According to the 
record evidence, small producers reported costs associated with the 
LGMA of $35 to $45 per acre; for large producers, costs were $20 to $50 
per acre. Small producers in the survey had made little investment 
prior to the LGMA. In the absence of specific buyer or program 
requirements, such as the National Organic Program, costs were small 
and/or not broken out from other operating expenses in the survey.
    The costs cited in the Intertox testimony represent 1-2 percent of 
total operating costs and include all food quality and best practices 
procedure costs, not just those associated with the LGMA. Numerous 
proponent witnesses testified that these costs were representative of 
their costs as a producer or handler.
    Evidence provided at the hearing indicates that most, if not all, 
large producers have initiated some food quality and best practices 
procedures even if they were not regulated under either of the two 
State marketing agreements currently in effect.
    Some small producers testified that they had initiated good 
agricultural practices in recent years, including some which increased 
cash costs, such as new or added testing of the growing environment. 
Many stated that they were spending more of their time on food safety 
issues, including attending training. Most small producers testifying 
were concerned with potential recordkeeping requirements that they 
believed would be burdensome under the proposed agreement. Evidence 
presented at the hearing suggested that most producers are spending 
time and/or money trying to reduce the potential for food 
contamination, but the efforts are not consistent and vary from 
producer to producer. It is anticipated that the proposed agreement 
would have minimal impact on small producers that market directly 
through local farmers' markets or similar community outlets, because 
these handling entities would likely not be signatories to the proposed 
agreement.

Producer/Handler Cost Impact Estimates

    According to record evidence, a large producer who also is a large 
handler would have food quality and best practices procedure costs 
ranging from $48 to $105 per acre. The evidence indicates the largest 
cost increase for large producers was hiring or assigning food safety 
personnel to manage food quality and best practices procedure 
compliance. Further evidence indicates that a small handler who is also 
a small producer would have audit verification or compliance related 
costs ranging from $67 to $95 per acre. This is based on a 
representative farm growing and shipping 200,000 cartons of leafy green 
vegetables per year (approximately 950 acres).

Assessment Cost Impacts on Handlers

    Under the proposed agreement, signatory first handlers would be 
assessed based on their volume of leafy green vegetables handled for 
the fresh market. These assessments would cover

[[Page 24327]]

the administrative costs of the proposed program as well as audit 
verification fees for signatory first handlers and their producers. 
Additionally, signatory handlers other than first handlers would pay 
costs associated with the conduct of audit verifications. The record 
evidence indicates that USDA's current rate is $92 per hour per 
auditor.
    Table 3 shows alternative assessment rates and a computation 
illustrating the total cost to all U.S. leafy green vegetable signatory 
handlers of the California and Arizona marketing agreements, and 
signatory first handlers under the proposed agreement. An assessment 
rate of one cent per carton is equivalent to $13.04 per acre. This 
computation is based on a carton weight of 24 pounds and an average 
yield. The three-year average U.S. yield (2007-2009) for the 5 major 
leafy greens is 313 hundredweight (cwt.) per acre.
    Multiplying $13.04 per acre times California and Arizona acreage of 
344,451 yields an estimate of $4.5 million in total assessments for 
those two States. The $4.5 million assessment figure represents an 
approximation of the average of annual payments by handlers since the 
State LGMAs were implemented in 2007; those States would therefore 
likely not see a significant change in assessment payments if the rate 
was approximately one cent per carton. At one cent per carton, the 
total assessment cost to handlers in all other States is estimated at 
$1.2 million, based on 88,172 acres, if all producers in those States 
sold their entire leafy green production to signatory handlers.
    In 2009, 167.7 million pounds of fresh lettuce, spinach and cabbage 
were imported in the U.S. Record evidence indicates that some of the 
leafy green vegetables imported into the United States are produced 
and/or shipped by large U.S. companies. Assessments on the quantity of 
imports are estimated to add $70,000 to potential total assessments at 
the assessment rate of one cent per carton.

               Table 3--Estimate of Potential Handler Assessments Under Alternative Payment Rates
----------------------------------------------------------------------------------------------------------------
             Assessment rates                                       Total assessments **
----------------------------------------------------------------------------------------------------------------
                                Per acre                             Assessments on
         Per carton            equivalent   California   All other      domestic     Imports ***       Total
                                   *       and Arizona     states      production                   assessments
----------------------------------------------------------------------------------------------------------------
              $                $ per acre                - - - - - - - - $ million - - - - - - - -
----------------------------------------------------------------------------------------------------------------
0.01........................        13.04         4.49         1.16            5.65         0.07            5.72
0.03........................        39.13        13.48         3.47           16.94         0.21           17.15
0.05........................        65.21        22.46         5.78           28.24         0.35           28.59
----------------------------------------------------------------------------------------------------------------
* Computation of per acre equivalent: $0.05 per carton/24 lbs. per carton = $0.002083 per pound, or $0.2083 per
  cwt; Average yield for 5 major leafy greens (2007-2009) = 313 cwt. per acre; $0.2083 per cwt. x 313 cwt. per
  acre = $65.21 per acre.
** Computed by multiplying Per Acre Equivalent Assessment Rate by Acres (California and Arizona = 344,451; all
  other States = 88,172).
*** Imports are assumed to be 167.7 million pounds.

    If the rate were five cents per carton, the per-acre equivalent 
rate would be $65.21. California and Arizona handlers would pay $22.5 
million, an increase of $18 million from the estimated $4.5 million 
that they have been paying in recent years to their respective State 
LGMAs. Handlers in all other States would pay $5.8 million. If all U.S. 
producers sold their entire leafy green production to signatory first 
handlers under the proposed agreement, if imports were equal to 2009 
levels and if the assessment rate were five cents per carton, the 
estimate of total assessment payments would be $28.6 million. The three 
cent per carton rate shown in the table represents an intermediate 
level of assessment.

Concerns of Small Handlers and Producers

    Hearing evidence indicates that participants representing small 
businesses and organic operations were concerned about the potential 
costs associated with any proposed best practices resulting from the 
implementation of this proposed agreement. A number of those who 
testified at the hearing expressed concern that, if implemented, the 
proposed agreement might have a disproportionate impact on small 
producers relative to larger producers. The cost to producers of 
implementing GAPs requirements is likely to be highly variable, based 
on individual farm situations, and may or may not be disproportionately 
different for small producers in relation to their larger counterparts.
    In AMS's analysis of the proposed agreement, consideration was 
given to its potential impact on small producers. In particular, this 
proposed rule broadens Board representation and membership of the 
proposed Technical Review Committee, provides for coordination with 
programs and other independent entities, and would include the addition 
of education and outreach authority to support the transition of small 
businesses into compliance with the proposed agreement.
    In response to comments received during the hearing, AMS is 
recommending changes to the proposal to make the Board and Committee 
more fully representative of the varied business sizes and diverse 
production cultures which comprise the domestic leafy green vegetables 
industry. The changes to representation on the Board and Technical 
Review Committee would ensure that the interests of small entities 
would be considered in the establishment of the audit metrics under the 
agreement.
    The proposed modifications are intended to ensure representation in 
the process so that the audit metrics developed would be scale-
appropriate and would not disproportionately burden small entities. As 
recommended in this proposed rule, the Secretary would have final 
approval of audit metrics.
    The establishment of audit metrics would include considering the 
recommendations in a public forum. A super majority vote by the Board 
is required for recommendations to be forwarded to the Secretary for 
approval through the informal rulemaking process. That process would 
include public notice, the opportunity for public comment, and final 
approval by USDA.
    Since audits paid for by the Board with assessment funds are based 
on volume handled, small handlers should not be at a disadvantage in 
participating in the proposed program in relation to large handlers. In 
addition, since producers within the production area (U.S. grown) would 
not be required to pay either assessments or auditing costs, small 
producers should not be at a

[[Page 24328]]

disadvantage in relation to larger producers for these costs.
    The hearing record indicates support for moving forward with the 
proposed agreement as revised to ensure that concerns of small, organic 
and diversified operations are addressed.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), AMS announces its intention to request an approval of a 
new information collection for the proposed National Marketing 
Agreement Regulating Leafy Green Vegetables.
    Title: National Marketing Agreement Regulating Leafy Green 
Vegetables.
    OMB Number: 0581-NEW.
    Expiration Date of Approval: Three years from approval date.
    Type of Request: New information collection.
    Abstract: The information collection requirements in this request 
are essential to carry out the intent of the Act, to provide the 
respondents the type of service they request, and to administer the 
proposed National Marketing Agreement Regulating Leafy Green 
Vegetables.
    The proposed agreement for leafy green vegetables would authorize 
the development and implementation of production and handling 
regulations (audit metrics). Such audit metrics would reflect GAPs, 
GHPs, and GMPs. AMS is the agency that would provide oversight of the 
proposed agreement, and any administrative rules and regulations issued 
under the proposed program.
    Upon implementation of the proposed agreement or during amendatory 
proceedings, handlers would be offered the opportunity to sign an 
agreement to indicate their willingness to comply with the provisions 
of the new or amended agreement. The proposed agreement would be 
voluntary in that only handlers who sign the proposed agreement would 
become signatory handlers who are subject to its requirements. AMS also 
would provide a certificate of resolution for each signatory handler 
organization to sign, documenting the handler's approval of the 
proposed agreement.
    If the proposed agreement is established, nomination forms for 
signatory handlers and producers and background information forms would 
be used to nominate and appoint Board members and alternates. Producer, 
signatory handler, and importer members would be nominated to serve as 
representatives on the Board by their peers who also are subject to the 
National Marketing Agreement Regulating Leafy Green Vegetables. The 
general public would nominate three additional members and their 
alternates to represent one from each of the following: Retailers, 
foodservice operators, and the public. Each producer, signatory 
handler, importer, retailer, foodservice operator, and person of the 
general public would be allowed to nominate oneself to the Board as a 
member or alternate. Each person nominated would be required to 
complete a background information form. All nominations would be 
submitted to the Secretary for selection and appointment as Board 
members and alternate members.
    Following the selection of the Board, committee nomination forms 
and background information forms would be used to nominate and appoint 
members to the Technical Review Committee and the Research and 
Development Committee. Each producer and signatory handler would have 
the opportunity to submit a nomination form with the names of persons 
to be considered for nomination to these committees. Persons who are 
nominated would be required to complete a background information form. 
All nominations would be submitted to the Secretary for selection and 
appointment as committee members.
    The forms covered under this information collection request would 
be for the submission of minimum information necessary to ascertain 
handler support for the proposed agreement, to appoint Board members 
and their alternates, and appoint members to specific committees of the 
Board. Additional reporting and recordkeeping requirements may 
subsequently be recommended by the Board for its use in administering 
the proposed agreement. The burden imposed by any additional 
requirements would be submitted for approval by the OMB.
    The information collected would be used only by authorized 
representatives of USDA, including AMS, Fruit and Vegetable Programs' 
regional and headquarters staff, and authorized employees of the Board, 
if established. Section 608(d)(2) of the Act provides for confidential 
treatment of information.

Total Annual Estimated Burden

    The total burden for the information collection request under the 
proposed agreement is as follows:
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average .25 hours per response.
    Estimated Number of Respondents: 2,370 (2,200 handlers, 140 
producers, 30 public).
    Estimated Number of Annual Responses: 4,790.
    Estimated Number of Responses per Respondent: 2.02.
    Estimated Total Annual Burden on Respondents: 522 hours.

Estimated Annual Burden for Each Form

    For each new form, the proposed request for approval of new 
information collections under the proposed agreement are as follows:
    FV-307 National Marketing Agreement Regulating Leafy Green 
Vegetables. Handlers would use this form to indicate their willingness 
to comply with the provisions of the proposed agreement. The proposed 
National Marketing Agreement Regulating Leafy Green Vegetables form 
would be completed if the proposed agreement is implemented and in any 
future amendment of the agreement.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 5 minutes per response.
    Respondents: Handlers of leafy green vegetables.
    Estimated Number of Respondents: 2,200.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 183.26 hours.
    FV-308A Certificate of Resolution. This form would document 
corporate handlers' support for the proposed agreement. The certificate 
of resolution would be completed if the proposed agreement is 
implemented and in any future amendment of the agreement.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 5 minutes per response.
    Respondents: Incorporated handlers of leafy green vegetables.
    Estimated Number of Respondents: 2,100.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 174.93 hours.
    FV-309 Nomination Form by Producers/Signatory Handlers. Producers 
and signatory handlers of leafy green vegetables would use this form to 
nominate themselves or other producers and signatory handlers to serve 
on the Board. This form also would include the nomination of the 
importer member and their alternate. For the purpose of this 
calculation, it is estimated that 70 producers and 70

[[Page 24329]]

signatory handlers would offer nominations.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 10 minutes per response.
    Respondents: Producers and signatory handlers of leafy green 
vegetables.
    Estimated Number of Respondents: 140.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 23.38 hours.
    FV-310 Nomination Form by General Public. Any person located in the 
production area would use this form to nominate themselves or other 
persons from the public to serve as a retailer, foodservice 
representative, and public member or alternate member on the Board. For 
the purpose of this calculation, it is estimated that 30 persons would 
offer nominations.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 10 minutes per response.
    Respondents: General Public.
    Estimated Number of Respondents: 30.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 5.10 hours.
    FV-311 Background Information. This proposed rule recommends the 
Board be comprised of 26 members and 26 alternates. This form would be 
used by nominated candidates to provide their qualifications to serve 
on the Board. For the purpose of this calculation, it is estimated that 
170 persons would agree to be candidates to serve on the Board.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 30 minutes per response.
    Respondents: Signatory handlers, importers, producers, retailers, 
foodservice representatives, and general public nominees.
    Estimated Number of Respondents: 170.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 85.0 hours.
    FV-312 Committee Nomination Form. Producers and signatory handlers 
of leafy green vegetables would use this form to nominate persons to 
serve on the Technical Review Committee or the Research and Development 
Committee. For the purpose of this calculation, it is estimated that 40 
producers and 35 signatory handlers would offer nominations.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 10 minutes per response.
    Respondents: Producers and signatory handlers of leafy green 
vegetables, and the Board.
    Estimated Number of Respondents: 75.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 12.75 hours.
    FV-313 Committee Background Information. This recommended decision 
proposes that the Technical Review Committee consist of a minimum of 10 
members and the Research and Development Committee consist of a minimum 
of 9 members. This form would be used by candidates that have been 
nominated to provide their qualifications to serve on the Technical 
Review Committee or the Research and Development Committee. For the 
purpose of this calculation, it is estimated that 20 producers, 15 
signatory handlers, and 40 other persons would agree to be candidates 
to serve on these committees.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 30 minutes per response.
    Respondents: Producers and signatory handlers of leafy green 
vegetables, retailers, foodservice representatives, food safety 
experts, and other persons.
    Estimated Number of Respondents: 75.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 37.50 hours.
    If this proposed agreement is established by USDA, the Board could 
recommend to the Department other forms (such as monthly assessment 
report, contact information form, withdrawal form, etc.) which would be 
needed to administer the proposed agreement. All such forms would be 
subject to USDA and OMB review and approval.
    Comments: Comments are invited on: (1) Whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the agency, including whether the information would 
have practical utility; (2) the accuracy of the agency's estimate of 
the burden of the proposed collection of information, including the 
validity of the methodology and assumptions used; (3) ways to enhance 
the quality, utility, and clarity of the information to be collected; 
and (4) ways to minimize the burden of the collection of information on 
those who are to respond, including the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology.
    Comments should reference OMB No. 0581-NEW and the Proposed 
National Marketing Agreement Regulating Leafy Green Vegetables, and be 
sent to USDA in care of the Docket Clerk at the previously-mentioned 
address. All comments received will be available for public inspection 
during regular business hours at the same address.
    All responses to this notice will be summarized and included in the 
request for OMB approval of the above-described forms. All comments 
will become a matter of public record.
    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.

Civil Justice Reform

    The marketing agreement proposed herein has been reviewed under 
Executive Order 12988, Civil Justice Reform. It is not intended to have 
retroactive effect. There are no administrative procedures that must be 
exhausted prior to any judicial challenge to the provisions of 
marketing agreements issued under the Act.

Rulings on Briefs of Interested Persons, Proposed Findings and 
Conclusions

    Briefs, proposed findings and conclusions, and the evidence in the 
record were considered in making the findings and conclusions set forth 
in this recommended decision. To the extent that the suggested findings 
and conclusions filed by interested persons are inconsistent with the 
findings and conclusions of this recommended decision, the requests to 
make such findings or to reach such conclusions are denied.

General Findings

    1. The proposed agreement and all of the terms and conditions 
thereof, would tend to effectuate the declared policy of the Act;
    2. The proposed agreement regulates the handling of leafy green 
vegetables grown in the production area in the same manner as, and is 
applicable only to, persons in the respective classes of commercial and 
industrial activity specified in the proposed agreement upon which a 
hearing has been held;
    3. The proposed agreement prescribes, insofar as practicable, such 
different terms applicable to different parts of the production area as 
are necessary to give due recognition to the differences in the

[[Page 24330]]

production and marketing of leafy green vegetables in the production 
area; and
    4. All handling of leafy green vegetables grown in the production, 
or handled as imported product from outside the production area, as 
defined in the proposed agreement, is in the current of interstate or 
foreign commerce or directly burdens, obstructs, or affects such 
commerce.
    A 90-day comment period is provided to allow interested persons to 
respond to this proposal. All written exceptions timely received will 
be considered. After consideration of any comments received, the 
Secretary will issue a Secretary's Decision which, if warranted, would 
include a handler sign-up period.

List of Subjects in 7 CFR Part 970

    Marketing agreements, Reporting and recordkeeping requirements, 
Vegetables.

    Title 7, Chapter IX is proposed to be amended by adding Part 970 to 
read as follows:

PART 970--NATIONAL MARKETING AGREEMENT REGULATING LEAFY GREEN 
VEGETABLES

Subpart--Agreement Regulating Signatory Handlers

Definitions

Sec.
970.1 Act.
970.2 Audit metric.
970.3 Audit.
970.4 Broker.
970.6 Critical limit.
970.7 Crop year.
970.8 Foodservice operator.
970.9 Fresh.
970.10 Fresh-cut.
970.11 Good agricultural and handling practices.
970.13 Good manufacturing practices or GMPs.
970.14 Handle.
970.15 Handler.
970.16 Importer.
970.17 Inspection Service.
970.18 Leafy green vegetables.
970.19 Manufacture.
970.20 Manufacturer.
970.22 National Leafy Green Vegetable Board or Board.
970.23 Packaged.
970.24 Part.
970.25 Person.
970.26 Process control.
970.27 Producer.
970.28 Production area.
970.29 Region.
970.30 Retailer.
970.31 Secretary.
970.32 Signatory first handler.
970.33 Signatory handler.
970.35 United States Department of Agriculture or USDA.
970.36 United States Food and Drug Administration or FDA.
970.37 Zone.

Purpose

970.39 Purpose.

National Leafy Green Vegetable Board

970.40 Establishment and membership.
970.41 Reallocation of membership.
970.42 Eligibility.
970.43 Term of office.
970.44 Nominations.
970.45 Alternate members.
970.46 Technical Review Committee.
970.47 Research and Development Committee.
970.48 Compensation and expenses.
970.49 Procedure.
970.50 Powers.
970.51 Duties.

Expenses and Assessments

970.55 Expenses.
970.56 Assessments.
970.57 Accounting.
970.58 Contributions.

Duties and Responsibilities of Signatory Handlers

970.65 Signatory handlers.
970.66 Verification audits.
970.67 Audit metrics.
970.68 Traceability.
970.69 Official certification mark.
970.70 Administrative review of audits.
970.71 Modification, suspension, or termination of regulations.
970.72 Exemptions.

Research and Development

970.75 Research, development, and education.

Reports and Records

970.80 Reports and recordkeeping.
970.81 Confidential information.
970.82 Verification of reports.
970.83 Compliance.

Miscellaneous

970.85 Effective time.
970.86 Rights of the Secretary.
970.87 Personal liability.
970.88 Separability.
970.89 Derogation.
970.90 Duration of immunities.
970.91 Agents.
970.92 Suspension or termination.
970.93 Proceedings upon termination.
970.94 Effect of termination or amendment.
970.95 Amendments.
970.96 Counterparts.
970.97 Handler sign-up.
970.98 Withdrawal.
970.99 OMB control number.

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

Subpart--Agreement Regulating Signatory Handlers

Definitions


Sec.  970.1  Act.

    Act means Public Act No. 10, 73rd Congress (May 12, 1933), as 
amended and as reenacted and amended by the Agricultural Marketing 
Agreement Act of 1937, as amended (48 Stat. 31, as amended; 7 U.S.C. 
601-674).


Sec.  970.2  Audit metric.

    Audit metric means an auditable standard or requirement within a 
process control prescribed pursuant to Sec.  970.67.


Sec.  970.3  Audit.

    Audit means an official review conducted by the Inspection Service 
to verify and document that good agricultural, handling, and 
manufacturing practices are adhered to throughout the growing, 
harvesting, packing, manufacturing, and transportation of leafy green 
vegetables. The audit includes a physical visit to the farm or facility 
subject to audit while it is in operation, where practicable, and 
represents a ``snapshot in time'' based on documentation reviewed, 
persons interviewed, and operations observed, and is intended to 
reflect past and ongoing activities.


Sec.  970.4  Broker.

    Broker means a person who coordinates the sale and transportation 
of leafy green vegetables for retail or foodservice operators, without 
taking ownership of such leafy green vegetables.


Sec.  970.6  Critical limit.

    Critical limit means a maximum or minimum value that is assigned to 
a process control when a biological, chemical, or a physical parameter 
must be controlled to prevent or minimize the occurrence of a food 
safety hazard.


Sec.  970.7  Crop year.

    Crop year is synonymous with fiscal year and means the 12-month 
period beginning on April 1 of any year and ending on March 31 of the 
following year, or any other period recommended by the Board and 
approved by the Secretary.


Sec.  970.8  Foodservice operator.

    Foodservice operator means a business (including but not limited to 
an industrial caterer or hospital) that receives or purchases leafy 
green vegetables from handlers and delivers such vegetables to 
consumers, either by sale or by offering for direct consumption.


Sec.  970.9  Fresh.

    Fresh means any leafy green vegetable in the raw or natural form.


Sec.  970.10  Fresh-cut.

    Fresh-cut is synonymous with products and means leafy green 
vegetables that have been altered from

[[Page 24331]]

their fresh form by cutting, dicing, peeling, slicing, chopping, 
shredding, coring, or trimming, with or without washing prior to being 
packaged for use by the consumer, foodservice industry, or a retail 
establishment.


Sec.  970.11  Good agricultural and handling practices.

    Good agricultural practices or GAPs and Good handling practices or 
GHPs refer to general practices to reduce microbial food safety hazards 
in leafy green vegetables, as described in sections of the current FDA 
``Guide to Minimize Microbial Food Safety Hazards for Fresh Fruits and 
Vegetables'' and the current FDA ``Guide to Minimize Microbial Food 
Safety Hazards for Fresh-cut Fruits and Vegetables'' that are 
applicable to the production and harvesting activities of leafy green 
vegetables, or any other revised or modified versions thereof, or any 
other documents or regulations, as recommended by the Board and 
approved by the Secretary for use in audits conducted by the Inspection 
Service under this part.


Sec.  970.13  Good manufacturing practices or GMPs.

    Good manufacturing practices or GMPs means any FDA regulations that 
appear in 21 CFR Part 110 or as otherwise amended, which describe the 
methods, equipment, facilities, and controls required for producing 
fresh-cut processed food, including packaged leafy green vegetables, or 
FDA guidance documents, regulations, or any other documents recommended 
by the Board and approved by the Secretary for use in audits conducted 
by the Inspection Service under this part.


Sec.  970.14  Handle.

    Handle means to receive, acquire, sell, process, ship, distribute, 
or import leafy green vegetables: Provided, that handle does not 
include brokering, retail sales, or foodservice sales of leafy green 
vegetables.


Sec.  970.15  Handler.

    Handler means any person who handles leafy green vegetables: 
Provided, that, this definition does not include a retailer, 
foodservice operator, or a broker, except to the extent such person is 
otherwise engaged in handling.


Sec.  970.16  Importer.

    Importer means a handler located in the production area who imports 
leafy green vegetables that are produced or handled outside of the 
production area.''


Sec.  970.17  Inspection Service.

    Inspection Service means the Fruit and Vegetable Programs, 
Agricultural Marketing Service, USDA, its designees, or any other 
entity approved or recognized by USDA to conduct audits on leafy green 
vegetables.


Sec.  970.18  Leafy green vegetables.

    (a) Leafy green vegetables means the mature and immature leafy 
portions of any of the following vegetables and any varieties thereof 
that are for human consumption in their fresh or fresh-cut form: 
arugula, cabbage (red, green, and savoy), chard, cilantro, cress, 
dandelion, endigia, endive (escarole), kale, lettuce (head, leaf, and 
romaine), m[acirc]che, mizuna, parsley, radicchio, spinach, tat soi, 
winter purslane, or any other leafy green vegetable recommended by the 
Board and approved by the Secretary. The Board may recommend, subject 
to the approval of the Secretary, the removal of any leafy green 
vegetable from this definition.
    (b) Combinations of the above listed leafy green vegetables are 
covered by the requirements established under this part. This includes 
spring mix.
    (c) All non-leafy green vegetables or non-produce ingredients 
commingled with fresh-cut leafy green vegetables in packaged products 
(e.g., salad kits which may contains carrots, meat, cheese, and/or 
dressings) are not covered by this part.


Sec.  970.19  Manufacture.

    Manufacture is synonymous with process and means to change fresh 
leafy green vegetables to fresh-cut leafy green vegetables: Provided, 
that manufacture does not include leafy green vegetables packed in the 
field or apply to retailing, foodservice operators, or brokering, 
except to the extent that a retailer, foodservice operator, or broker 
is other wised engaged in manufacturing for non-retail purposes.


Sec.  970.20  Manufacturer.

    Manufacturer means any person who manufactures: Provided, that, 
this definition does not include a retailer, a foodservice operator, or 
broker, except to the extent that such a person is otherwise engaged in 
handling.


Sec.  970.22  National Leafy Green Vegetable Board or Board.

    National Leafy Green Vegetable Board or Board means the 
administrative board established pursuant to Sec.  970.40, or as 
affected pursuant to Sec.  970.41.


Sec.  970.23  Packaged.

    Packaged is synonymous with containerized and means leafy green 
vegetables that are uniformly wrapped or sealed, such as cellophane, 
clamshells, cartons or totes.


Sec.  970.24  Part.

    Part means the marketing agreement regulating the handling of leafy 
green vegetables by signatory handlers and all rules, regulations and 
supplementary subparts issued thereunder.


Sec.  970.25  Person.

    Person means an individual, partnership, corporation, association, 
or any other business unit.


Sec.  970.26  Process control.

    Process control means a step or point within a production, 
harvesting, handling, manufacturing, or transportation process at which 
the potential for microbiological contamination can be reduced.


Sec.  970.27  Producer.

    Producer is synonymous with grower and means any person engaged in 
a proprietary capacity in the production of leafy green vegetables for 
sale or delivery to a signatory handler.


Sec.  970.28  Production area.

    Production area means all fifty States and the District of Columbia 
of the United States of America.


Sec.  970.29  Region.

    Region means a production or growing area distinguished by common 
environmental or growing conditions including, but not limited to, 
geography, climate, production practices, water sources and 
distribution systems, or wildlife. Regions are not synonymous with 
zones.


Sec.  970.30  Retailer.

    Retailer means any person that sells leafy green vegetables 
directly to the consumer.


Sec.  970.31  Secretary.

    Secretary means the Secretary of Agriculture of the United States 
or any officer or employee of the United States Department of 
Agriculture who is, or who may hereafter be, authorized to act in his 
or her stead.


Sec.  970.32  Signatory first handler.

    Signatory first handler means the person located in the production 
area that first handles leafy green vegetables and who is party to this 
part.


Sec.  970.33  Signatory handler.

    Signatory handler means a handler located in the production area 
who is party to this part.

[[Page 24332]]

Sec.  970.35  United States Department of Agriculture or USDA.

    United States Department of Agriculture or USDA means any officer, 
employee, service, program or branch of the Department of Agriculture, 
or any other person acting as the Secretary's agent or representative 
in connection with any provisions of this part.


Sec.  970.36  United States Food and Drug Administration or FDA.

    United States Food and Drug Administration or FDA means the 
government agency within the United States Department of Health and 
Human Services.


Sec.  970.37  Zone.

    Zone means the applicable one of the following described 
subdivisions of the production area or such other subdivisions as 
recommended by the Board and approved by the Secretary:
    (a) Zone 1 shall include the States of California and Hawaii.
    (b) Zone 2 shall include the States of Alaska, Idaho, Montana, 
Oregon, Washington, and Wyoming;
    (c) Zone 3 shall include the States of Arizona, Colorado, Nevada, 
New Mexico, and Utah;
    (d) Zone 4 shall include the States of Illinois, Iowa, Minnesota, 
Nebraska, North Dakota, South Dakota, and Wisconsin;
    (e) Zone 5 shall include the States of Arkansas, Kansas, Louisiana, 
Missouri, Oklahoma, and Texas;
    (f) Zone 6 shall include the States of Delaware, District of 
Columbia, Indiana, Kentucky, Maryland, Michigan, Ohio, Virginia, and 
West Virginia;
    (g) Zone 7 shall include the States of Alabama, Florida, Georgia, 
Mississippi, North Carolina, South Carolina, and Tennessee; and,
    (h) Zone 8 shall include the States of Connecticut, Maine, 
Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode 
Island, and Vermont.

Purpose


Sec.  970.39  Purpose.

    The purpose of this agreement is to: Implement a uniform, 
auditable, science-based food quality verification program conducted by 
the USDA; enhance the quality of leafy green vegetables available in 
the marketplace through the application of good agricultural 
production, handling, and manufacturing practices; foster greater 
cooperation with local, State, and Federal agencies and other 
organizations; and, improve consumer confidence in leafy green 
vegetables.

National Leafy Green Vegetable Board


Sec.  970.40  Establishment and membership.

    (a) A National Leafy Green Vegetable Board is hereby established to 
administer the terms and provisions of this part. Such Board shall 
consist of twenty-six members, each of whom shall have an alternate who 
shall have the same qualifications as the member for whom he or she is 
an alternate. Board membership shall be allocated as follows:
    (1) Four signatory handlers and three producers from Zone 1;
    (2) One signatory handler and one producer from Zone 2;
    (3) One signatory handler and one producer from Zone 3;
    (4) One signatory handler and one producer from Zone 4;
    (5) One signatory handler and one producer from Zone 5;
    (6) One signatory handler and one producer from Zone 6;
    (7) Two signatory handlers and one producer from Zone 7;
    (8) One signatory handler and one producer from Zone 8;
    (9) One importer representative from the production area;
    (10) One retailer representative from the production area;
    (11) One foodservice representative from the production area; and,
    (12) One public member representative from the production area.
    (b) A majority of the producer members of the Board shall not be 
engaged in the handling of leafy green vegetables or the manufacturing 
of fresh-cut products, and two producers must be small producers. 
Further, at least four handler members must be engaged in the 
manufacturing of fresh-cut leafy green products.
    (c) To the extent practicable, Board membership shall include 
representation of the following stakeholder groups:
    (1) Producers that meet the Small Business Administration's (SBA) 
definition small agricultural producers.
    (2) Diversified farm producers who produce a variety of crops or 
animals, or both, on one farm, as distinguished from specialization of 
a single commodity. For the purposes of this subpart, variety of crops 
means any crop in addition to those included in the definition of leafy 
green vegetables.
    (3) Producers and signatory handlers representing certified organic 
businesses meeting the SBA definition of small business entity.
    (4) Producers and signatory handlers representing certified organic 
businesses that exceed the SBA definition of small business entity.


Sec.  970.41  Reallocation of membership.

    The Board may recommend, subject to the approval of the Secretary, 
reallocation of Board members among zones, changes in the number of 
Board members, and changes in the composition of the Board by revising 
the number of members representing various industry sectors, Provided, 
that each zone must be represented by at least one producer and one 
signatory handler. In making such recommendations, the Board shall 
consider the following factors:
    (a) Shifts in acreage and number of producers within zones;
    (b) The importance of new acreage in its relation to existing 
zones;
    (c) The equitable relationship between membership and zones;
    (d) Economies to result in promoting efficient administration due 
to reallocation or changing the composition of membership; and,
    (e) Other relevant factors.


Sec.  970.42  Eligibility.

    (a) Each signatory handler member (including importer) and his or 
her alternate member at the time of his or her selection and throughout 
his or her term of office shall be a signatory handler (including 
importer), or an officer or employee of a signatory handler in the zone 
for which selected.
    (b) Each producer member and his or her alternate member at the 
time of his or her selection and through his or her term of office 
shall be a producer, or an officer or employee of a producer in the 
zone for which selected.
    (c) No signatory handler (including importer) or producer shall be 
represented on the Board by more than one member and one alternate 
member.
    (d) The retailer, foodservice, and public members and their 
alternate members may not be engaged in the production or handling of 
leafy green vegetables. The retailer and foodservice members and their 
alternates shall be, at the time of their selection and throughout 
their term of office, an owner, officer or employee for the seat 
selected.


Sec.  970.43  Term of office.

    Members and alternate members of the Board shall serve for terms of 
two (2) years beginning on April 1 and ending on March 31. Each member 
and alternate member shall continue to serve until a successor is 
selected and has qualified. Members shall not serve more than three (3) 
consecutive two-year terms of office or for a total of six (6) 
consecutive years.

[[Page 24333]]

Sec.  970.44  Nominations.

    Nomination of Board members and alternate members shall follow the 
procedure set forth in this section, or such other procedure as may be 
recommended by the Board and approved by the Secretary.
    (a) Producer and signatory handler (including importer) 
nominations. Nominations for the producer and signatory handler 
(including importer) members and alternate members shall be received at 
meetings, by mail, or by any form of electronically verifiable 
communication. Only persons eligible to serve on the Board as producers 
and signatory handlers shall be eligible to nominate producer and 
signatory handler (including importer) members and alternate members.
    (b) Retailer, foodservice and public member nominations. 
Nominations for the retailer, foodservice, and public members and their 
alternate members shall be received at meetings, by mail, or by any 
form of electronically verifiable communication. Any person from the 
production area shall be eligible to nominate the retailer, 
foodservice, and public members and their alternate members.
    (c) Acceptance. Each nominee shall qualify by advising the 
Secretary that, if selected, such person agrees to serve in the seat 
and position appointed.
    (d) Selection. A report shall be provided to the Secretary 
detailing all nominations prior to the beginning of each two- year term 
of office, together with all necessary data and other information as 
requested by the Secretary. The Secretary shall appoint from those 
nominees or from other qualified persons, the members and alternate 
members of the Board on the basis of the representation provided for in 
Sec. Sec.  970.40 through 970.42.
    (e) Failure to nominate. If nominations are not made within the 
time and manner specified in this part, the Secretary may, without 
regard to nominations, select the members and alternate members of the 
Board on the basis of the representation provided for in Sec. Sec.  
970.40 through 970.42.
    (f) Vacancies. To fill a vacancy on the Board occasioned by the 
failure of any person selected as member or alternate member to 
qualify, or in the event of the death, removal, resignation, or 
disqualification of any member or alternate member, a successor for the 
unexpired term of such member or alternate member shall be nominated 
and selected in the manner specified in paragraphs (a) and (b) of this 
section. If the names of nominees to fill any such vacancy are not made 
available to the Secretary within a reasonable time after such vacancy 
occurs, the Secretary may appoint from other qualified persons without 
regard to nominations on the basis of representation provided for in 
Sec. Sec.  970.40 through 970.42.


Sec.  970.45  Alternate members.

    An alternate for a member shall act in the place and stead of such 
member during the member's absence or, in the event of the member's 
death, removal, resignation, or disqualification, until a successor for 
such member's unexpired term has been selected and has qualified.


Sec.  970.46  Technical Review Committee.

    A Technical Review Committee is hereby established for the purpose 
of assisting the Board in developing audit metrics in Sec.  970.67.
    (a) The Technical Review Committee shall consist of one producer, 
one signatory handler, and one food safety expert from each zone. Of 
the producer members, at least one must be a small producer as defined 
by the Small Business Administration and one must be a certified 
organic producer. In addition, the Technical Review Committee shall 
include one representative from the USDA Natural Resources Conservation 
Service to be appointed by the Secretary.
    (b) The Secretary may appoint additional representatives from USDA 
agencies including, but not limited to: National Organic Program, 
Agricultural Research Service, and National Institute of Food and 
Agriculture.
    (c) USDA may consult with and invite representation from agencies 
outside of USDA including, but not limited to: the United States 
Environmental Protection Agency, FDA, and the United States Department 
of Interior Fish and Wildlife Service.
    (d) Nomination and selection. Nominations for positions prescribed 
in paragraph (a) of this section shall be received from producers and 
signatory handlers at meetings, by mail, or by any form of 
electronically verifiable communication. In addition, the Board may 
recommend nominees to USDA. The Secretary may select and appoint the 
members from such nominations or from other qualified persons.
    (e) The membership of the Technical Review Committee may be 
modified based on recommendations by the Board and approval of the 
Secretary, or as otherwise deemed appropriate by USDA.
    (f) The Technical Review Committee may appoint subcommittees as 
necessary to facilitate the development of audit metrics. Subcommittees 
may consist of producers, signatory handlers, and other interested 
persons as deemed appropriate by the Technical Review Committee.


Sec.  970.47  Research and Development Committee.

    The Research and Development Committee is hereby established for 
the purpose of providing advice to the Board on research, development, 
and educational and outreach programs as authorized under Sec.  970.75.
    (a) The Research and Development Committee shall consist of 9 
members as follows: Two representatives of retailers; two 
representatives from foodservice companies; three public 
representatives, and two representatives from land grant universities 
with expertise in one, but not limited to, the following areas: The 
production, handling, and marketing of leafy green vegetables; small, 
diversified, or organic production and handling practices; agricultural 
economics; or educational outreach in the specified or related areas.
    (b) Nomination and selection. Nominations shall be received from 
producers and signatory handlers at meetings, by mail, or by any form 
of electronically verifiable communication. The Board may recommend 
nominees to USDA. The Secretary shall select and appoint the members 
from such nominations or from other qualified persons.
    (c) The membership of the Research and Development Committee may be 
modified based on recommendations by the Board and approval of the 
Secretary, or as otherwise deemed appropriate by USDA.
    (d) The Research and Development Committee may appoint 
subcommittees as necessary. Subcommittees may consist of producers, 
signatory handlers, and other interested persons as deemed appropriate 
by the Research and Development Committee.


Sec.  970.48  Compensation and expenses.

    All Board members, alternate Board members, committee members, and 
subcommittee members, shall serve without compensation, but shall be 
reimbursed for necessary and reasonable expenses incurred in the 
performance of their duties under this part.


Sec.  970.49  Procedure.

    (a) A majority of all the appointed members of the Board shall 
constitute a quorum: Provided, That each zone with an appointed member 
shall be represented by at least one member or his or her alternate at 
any meeting of the full Board. Board action shall require the 
concurrence of a majority of present members except that 
recommendations

[[Page 24334]]

for the Secretary's approval of audit metrics, assessment rates, and 
termination of the agreement must be approved by a \2/3\ vote of 
present members.
    (b) In the event that a producer or signatory handler member of the 
Board and their alternate are unable to attend the meeting, the absent 
member or the Board may designate any other alternate from the same 
zone and group (signatory handler, producer) who is present at the 
meeting to serve in the member's place.
    (c) The Board shall give to the Secretary the same notice of each 
meeting that is given to the members of the Board.
    (d) The Board may vote by telephone or other means of 
communication, and any votes so cast shall be confirmed promptly in 
writing: Provided, That, if an assembled meeting is held, all members 
present shall cast votes in person. A videoconference shall be 
considered an assembled meeting and all votes shall be considered as 
cast in person.


Sec.  970.50  Powers.

    The Board shall have the following powers:
    (a) To administer this part in accordance with its terms and 
provisions;
    (b) To make such rules and regulations, with the approval of the 
Secretary, as may be necessary to effectuate the terms and provisions 
of this part;
    (c) To receive, investigate, and report to the Secretary complaints 
of violations of the provisions of this part; and
    (d) To recommend to the Secretary amendments to the part.


Sec.  970.51  Duties.

    The Board shall have, among others, the following duties:
    (a) To select from among its members a chairperson and such other 
officers as may be necessary, and to define the duties of such 
officers;
    (b) To adopt such bylaws for the conduct of its business as it may 
deem advisable;
    (c) To keep minutes, books, and records which clearly reflect all 
the acts and transactions of the Board, committees, and subcommittees, 
and these shall be subject to examination by the Secretary at any time;
    (d) To appoint such employees or agents as it may deem necessary, 
and to determine the compensation and define the duties of each;
    (e) To submit a budget to the Secretary for each crop year;
    (f) To cause its books to be audited by a certified public 
accountant at least once each crop year and at such other times as the 
Board may deem necessary or as the Secretary may request. Such audit 
shall include an examination of the receipt of income and the 
disbursement of all funds. The Board staff shall provide the Secretary 
with a copy of all audits and shall make copies of such audits 
available for examination at the office of the Board; Provided, That 
all confidential information is treated pursuant to Sec.  970.81;
    (g) To investigate the production, handling, and manufacturing of 
leafy green vegetables and to assemble data in connection therewith;
    (h) To establish subcommittees to aid the Board in the performance 
of its duties under this part;
    (i) To collaborate with existing State boards, commissions, and 
governing bodies of State agreements through memoranda of understanding 
to affect the purposes of this part;
    (j) To recommend, after consultation with the Technical Review 
Committee, for approval of the Secretary audit metrics as provided for 
in Sec.  970.67;
    (k) To act as intermediary between the Secretary and any signatory 
handler with respect to the operations of this part; and
    (l) To furnish such available information as may be deemed 
pertinent or as requested by the Secretary.

Expenses and Assessments


Sec.  970.55  Expenses.

    The Board is authorized to incur such expenses as the Secretary 
finds are reasonable for the maintenance and functioning of the Board 
during each crop year, including the payment of audit fees, activities 
provided for under Sec.  970.75, and for such other purposes as the 
Secretary may, pursuant to the provisions of this part, determine to be 
appropriate. Such expenses shall be paid from assessments received 
pursuant to Sec.  970.56 and other funds available to the Board.


Sec.  970.56  Assessments.

    (a) Each signatory first handler shall be responsible for paying 
the Board such handler's pro-rata share of the Board's expenses 
authorized by the Secretary for each crop year. The payment of 
assessments for the maintenance and functioning of the Board, as 
described in Sec.  970.55, may be required under this part throughout 
the period it is in effect irrespective of whether particular 
provisions thereof are suspended or become inoperative.
    (b) Based upon recommendation of the Board, or other available 
data, the Secretary shall fix a base rate of assessment for all leafy 
green vegetables that signatory first handlers shall pay during each 
crop year. The Board may recommend and the Secretary may approve 
supplemental assessments, but no combination of assessment and 
supplemental assessments may exceed the cap established in paragraph 
(c) of this section.
    (c) Based on the recommendation of the Board, or other available 
data, the Secretary may change or modify the base rate assessment. The 
assessment shall be set at the lowest rate practical to carry out the 
objectives of this part. The assessment rate shall not exceed $0.05 per 
24-pound carton or equivalent of leafy green vegetables.
    (d) Assessments not paid by a signatory first handler within a 
prescribed period of time may be subject to an interest or late payment 
charge, or both. The period of time, rate of interest, and late payment 
charge may be recommended by the Board and approved by the Secretary.
    (e) In order to provide funds for the administration of this part, 
the Board may accept, but not require, advance payments of assessments, 
which shall be credited toward assessments levied against such 
signatory first handler during the crop year. The Board may also borrow 
money, subject to approval by the Secretary, for such purposes when 
assessment and reserve funds are not sufficient to cover Board 
expenses.


Sec.  970.57  Accounting.

    If, at the end of a crop year, the assessments collected are in 
excess of expenses incurred, the Board, with the approval of the 
Secretary, may carry over such excess into subsequent crop years as an 
operating monetary reserve, except that total funds already in such 
reserve shall not exceed approximately two (2) crop years' budgeted 
expenses. Funds in such reserve shall be available for use by the Board 
for expenses authorized pursuant to Sec.  970.55 and Sec.  970.75, and 
to cover necessary expenses of liquidation in the event of termination 
of this part. If any such excess is not retained in a reserve, each 
signatory handler entitled to a proportionate refund shall be credited 
with such refund against the operations of the following crop year, or 
be paid such refund.


Sec.  970.58  Contributions.

    The Board may accept voluntary contributions but these shall only 
be used to pay expenses incurred pursuant to Sec.  970.75. Such 
contributions shall be free from any encumbrances by the donor and the 
Board shall retain complete control of their use.

[[Page 24335]]

Duties and Responsibilities of Signatory Handlers


Sec.  970.65  Signatory handlers.

    No signatory handler to this part shall handle leafy green 
vegetables for human consumption unless such are verified as meeting 
the verification audit provisions of this part. Such verification shall 
take the form of an official audit conducted by the Inspection Service 
pursuant to Sec.  970.66.


Sec.  970.66  Verification audits.

    (a) GAPs audits. (1) Signatory handlers shall ensure that any leafy 
green vegetables handled by a handler's facilities have been subject to 
GAPs audits conducted by the Inspection Service. Such audits shall 
verify that the leafy green vegetables were produced under auditable 
conditions that meet production and harvest guidelines referred to in 
Sec.  970.11 and any applicable audit metrics under Sec.  970.67.
    (2) No signatory handler subject to the provisions of this part 
shall receive leafy green vegetables produced outside the production 
area that have not been subject to GAPs audits conducted by the 
Inspection Service. Such audits shall verify that such product was 
produced under auditable conditions that meet production and harvest 
requirements referred to in Sec.  970.11 and in applicable audit 
metrics under Sec.  970.67.
    (b) GHPs or GMPs audits. (1) All signatory handlers shall be 
subject to audits. Such audits shall verify that such handlers operate 
under auditable conditions that meet guidelines provided for in the 
GHPs or GMPs referred to in Sec.  970.11 and Sec.  970.13 and in 
applicable audit metrics under Sec.  970.67.
    (2) No signatory handlers subject to the provisions of this part 
shall receive leafy green vegetables from handlers outside the 
production area that have not been subject to GHPs or GMPs audits 
conducted by the Inspection Service. Such audits shall verify that the 
leafy green vegetables were produced under auditable conditions that 
meet production and harvest guidelines referred to in Sec.  970.11 and 
applicable audit metrics provided for in Sec.  970.67.
    (c) Audits shall be conducted on a regular schedule that ensures 
every signatory handler is audited at least once a crop year. In 
addition, random unannounced audits of signatory handlers and 
associated producers shall be performed during the production season in 
each zone.


Sec.  970.67  Audit metrics.

    After consultation with the Technical Review Committee, the Board 
may recommend audit metrics to the Secretary for approval.
    (a) GAPs audit metrics. Audit metrics for GAPs may include 
verification of process controls related but not limited to: Water 
quality, soil amendments, machine harvest, hand harvest (including 
direct contact with soil during harvest), transfer of human pathogens 
by field workers, field sanitation, equipment-facilitated cross 
contamination, flooding, water usage to prevent dehydration, and 
production location concerns, including climatic conditions and 
environment, encroachment of animals of significant risk, and urban 
settings.
    (b) GHPs and GMPs audit metrics. Audit metrics for GHPs and GMPS 
may include verification of process controls related but not limited 
to:
    (1) Post-harvest handling processes: Cooling, water, reuse of field 
containers, bulk-bin modified atmosphere process, condition and 
sanitation of transportation vehicles, and employee hygiene.
    (2) Handling and manufacturing processes: Wash water, wash system 
capacity, bulk-bin modified atmosphere process, condition and 
sanitation of transportation vehicles, employee hygiene, labeling of 
Raw Agricultural Commodity versus ready-to-eat products, and finished 
product packaging.
    (3) Distribution handling processes: Condition and sanitation of 
transportation vehicles, condition and sanitation of distribution and 
cooler facilities, and temperature measurement of product.
    (c) Critical limits for process controls for each step or point 
identified in GAPs, GHPs, or GMPs audit metrics may be recommended by 
the Board, after consultation with the Technical Review Committee, for 
approval of the Secretary, or may be developed by USDA.
    (d) Technical Review Committee recommendations, including critical 
limits, shall incorporate current leafy green vegetable industry 
production, harvest and handling technologies, and be based on 
scientific practices.
    (e) Audit metrics may be developed and recommended to accommodate 
differences in production, harvest, and handling environments of 
different regions and of different leafy green vegetables.
    (f) After consultation with the Technical Review Committee, the 
Board may, at any time, recommend changes to audit metrics for approval 
by the Secretary.
    (g) The Board shall review audit metrics a minimum of once every 
three years to ensure that they continually reflect the best leafy 
green vegetable industry practices, scientific information, and 
industry knowledge.


Sec.  970.68  Traceability.

    (a) The traceability of leafy green vegetables by signatory 
handlers shall be established at production, handling, manufacturing, 
and distribution.
    (b) Signatory handlers shall have the ability to track their leafy 
green vegetables from their supplier(s) to their customer(s) and shall 
have in place systems and procedures that allow for this information to 
be made available during an audit by the Inspection Service.
    (c) Documents necessary for verification shall be maintained for 
two years.


Sec.  970.69  Official certification mark.

    (a) Any registered certified mark developed under this part are the 
property of the United States Government as represented by the Board 
and shall inure to the benefit of the Board. This mark shall be used in 
accordance with this section and consistent with the mark's 
registration.
    (b) The Board may license signatory handlers to affix the official 
certification mark to bills of lading or manifests, or any other such 
uses recommended by the Board and approved by the Secretary to carry 
out the purpose of this part, Provided, that such mark may not be used 
on consumer packages. The use of the official certification mark shall 
be subject to the verification, suspension, or revocation requirements 
of this part.
    (c) A signatory handler's compliance with the regulations under 
this part is a condition precedent and subsequent to the signatory 
handler's entitlement to use the official certification mark.


Sec.  970.70  Administrative review of audits.

    (a) Any financially interested person may request an administrative 
review of an audit if it is believed that the original audit is in 
error.
    (b) Any signatory handler denied the use of the official 
certification mark may request an administrative review of an audit if 
it is believed that a material fact of the original audit was 
misinterpreted.
    (c) Administrative reviews will be conducted in accordance with the 
USDA audit verification procedures for any audit program in effect 
under this part. The person requesting the review shall pay for the 
cost of the review. The review results shall be issued to the person 
making the request.

[[Page 24336]]

Sec.  970.71  Modification, suspension, or termination of regulations.

    (a) In the event that the Board, at any time, finds that any 
regulations issued under this part should be modified or suspended, it 
shall, pursuant to Sec.  970.49, so recommend to the Secretary.
    (b) Whenever the Secretary finds from the recommendations and 
information submitted by the Board or from other available information, 
that any regulations issued under this part should be modified, 
suspended, or terminated in order to effectuate the declared policy of 
the Act, the Secretary shall modify, suspend or terminate such 
provisions. If the Secretary finds that a regulation obstructs or does 
not tend to effectuate the declared policy of the Act, the Secretary 
shall suspend or terminate such regulation.


Sec.  970.72  Exemptions.

    With the approval of the Secretary, the Board may recommend rules, 
regulations, and safeguards that exempt leafy green vegetables from any 
or all requirements pursuant to this part. The Board may require 
reports or certifications, or impose other conditions as are necessary 
to ensure that such exempted leafy green vegetables are handled only as 
authorized.

Research and Development


Sec.  970.75  Research, development, and education.

    The Board, with the approval of the Secretary, may establish or 
provide for the establishment of research, including market research, 
related to production, handling, and manufacturing leafy green 
vegetables, developments projects, and educational and outreach 
programs, designed to assist, improve, or promote the efficient 
adoption, implementation, and administration of this part. The expenses 
of such projects shall be budgeted and paid from funds collected 
pursuant to Sec. Sec.  970.56 and 970.58.

Reports and Records


Sec.  970.80  Reports and recordkeeping.

    (a) Each signatory handler shall report all receipts and 
acquisitions of all leafy green vegetables and such other reports or 
information as recommended by the Board and approved by the Secretary 
that may be necessary to enable the Board to carry out the provisions 
of this part.
    (b) Each signatory handler shall maintain records of all receipts 
and acquisitions of leafy green vegetables and all documentation 
relating to audit reports. Such records shall be maintained for at 
least two years after the end of the crop year of their applicability. 
Such recordkeeping shall be sufficient to document and substantiate the 
signatory handler compliance with this part.


Sec.  970.81  Confidential information.

    All reports and information submitted by signatory handlers 
pursuant to the provisions of this part shall be received by, and at 
all times be in the custody of, employees or authorized agents of the 
Board. No such employees or authorized agents shall disclose to any 
person, other than the Secretary upon request therefore, data, or 
information obtained or extracted from such reports and information 
which might affect the trade position, financial condition, or business 
operation of the particular signatory handler from whom received: 
Provided, That such data and information may be combined and made 
available in the form of general reports in which the identities of the 
individual persons furnishing the information is not disclosed.


Sec.  970.82  Verification of reports.

    (a) For the purpose of checking and verifying reports filed by 
signatory handlers, the Board, through its authorized agents or 
employees, and the Secretary shall have access to any signatory 
handler's premises during regular business hours, and shall be 
permitted at any such time to:
    (1) Examine such premises and any leafy green vegetables held by 
such signatory handler, and any and all records of the signatory 
handler with respect to such signatory handler's acquisition, sales, 
uses and shipments thereof; and
    (2) Examine any and all records of such signatory handler with 
respect to activities carried out pursuant to Sec.  970.66.
    (b) Each signatory handler shall furnish all labor and equipment 
necessary.


Sec.  970.83  Compliance.

    (a) A signatory handler may be subject to withdrawal of audit 
services or may lose the privilege of the use of the official 
certification mark if the signatory handler:
    (1) Produces or acquires leafy green vegetables without an 
Inspection Service audit pursuant to Sec. Sec.  970.66 and 970.67;
    (2) Fails to obtain audit on the production, handling, or 
manufacturing of leafy green vegetables handled pursuant to Sec.  
970.66 and ships such leafy green vegetables for human consumption;
    (3) Fails to successfully pass any audit conducted under this part, 
or fails to take appropriate verifiable corrective action to address 
non-conformities;
    (4) Ships or places into the current of commerce leafy green 
vegetables for human consumption that fail to meet requirements under 
this part pursuant to Sec. Sec.  970.66 and 970.67;
    (5) Comingles leafy green vegetables that fail to meet the 
requirements of this part with leafy green vegetables and ships the 
comingled lot for human consumption;
    (6) Fails to maintain and provide access to records pursuant to 
Sec.  970.80; or
    (7) Otherwise violates any of the provisions of this part.
    (b) Any lot, or portion thereof, of leafy green vegetables that is 
deemed to be an immediate threat to public health by Inspection Service 
staff during the course of an audit shall be reported by USDA to 
appropriate health officials.
    (c) Failure to comply with the provisions of this part may result 
in additional remedies or penalties.

Miscellaneous


Sec.  970.85  Effective time.

    The provisions of this part, as well as any amendments, shall 
continue in force and effect until modified, suspended, or terminated.


Sec.  970.86  Rights of the Secretary.

    Members and alternates of the Board, committees, subcommittees, and 
any agents, employees, or representatives thereof, shall be subject to 
removal or suspension by the Secretary at any time. Each and every 
decision, determination, or other act of the Board shall be subject to 
the continuing right of the Secretary to disapprove of the same at any 
time. Upon such disapproval, the disapproved action of the Board shall 
be deemed null and void.


Sec.  970.87  Personal liability.

    No member or alternate member of the Board or the committees, and 
no employee or agent of the Board or the committees, shall be held 
personally responsible, either individually or jointly with others, in 
any way whatsoever, to any person for errors in judgment, mistakes, or 
other acts, either of commission or omission, as such member, 
alternate, employee, or agent, except for acts of dishonesty, willful 
misconduct, or gross negligence.


Sec.  970.88  Separability.

    If any provision of this part is declared invalid or the 
applicability thereof to any person, circumstance, or thing is held 
invalid, the validity of the

[[Page 24337]]

remainder of this part or the applicability thereof to any other 
person, circumstance, or thing shall not be affected thereby.


Sec.  970.89  Derogation.

    Nothing contained in this part is, or shall be construed to be, in 
derogation or in modification of the rights of the Secretary or of the 
United States to exercise any powers granted by the Act or otherwise, 
or, in accordance with such powers, to act in the premises whenever 
such action is deemed advisable.


Sec.  970.90  Duration of immunities.

    The benefits, privileges, and immunities conferred upon any person 
by virtue of this part shall cease upon its termination, except with 
respect to acts done under and during the existence of this part.


Sec.  970.91  Agents.

    The Secretary may, by designation in writing, name any officer or 
employee of the United States, or name any agency or program in the 
USDA, to act as the Secretary's agent or representative in connection 
with any of the provisions of this part.


Sec.  970.92  Suspension or termination.

    (a) The Secretary may at any time terminate the provisions of this 
part.
    (b) The Secretary shall terminate or suspend the operations of any 
or all of the provisions of this part whenever it is found that such 
provisions do not tend to effectuate the declared policy of the Act.
    (c) The provisions of this part shall, in any event, terminate 
whenever the provisions of the Act authorizing them cease.


Sec.  970.93  Proceedings upon termination.

    Upon the termination of this part, the then functioning members of 
the Board shall continue as joint trustees, for the purpose of 
liquidating the affairs of the Board. Action by such trustees shall 
require the concurrence of a majority of said trustees. Such trustees 
shall continue in such capacity until discharged by the Secretary, and 
shall account for all receipts and disbursements and deliver all 
property on hand, together with all books and records of the Board and 
the joint trustees, to such persons as the Secretary may direct; and 
shall upon the request of the Secretary, execute such assignments or 
other instruments necessary or appropriate to vest in such person full 
title and right to all the funds, properties, and claims vested in the 
Board or the joint trustees, pursuant to this part. Any person to whom 
funds, property, or claims have been transferred or delivered by the 
Board or the joint trustees, pursuant to this section, shall be subject 
to the same obligations imposed upon the members of said Board and upon 
said joint trustees.


Sec.  970.94  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this part or any regulation issued pursuant thereto, or 
the issuance of any amendment to either thereof, shall not:
    (a) Affect or waive any right, duty, obligation, or liability which 
shall have arisen or which may thereafter arise, in connection with any 
provisions of this part or any regulation issued thereunder;
    (b) Release or extinguish any violation of this part or any 
regulation issued; or
    (c) Affect or impair any rights or remedies of the Secretary, or of 
any other persons, with respect to such violation.


Sec.  970.95  Amendments.

    Amendments to this part may be proposed from time to time by the 
Board, or by any interested person affected by its provisions, 
including the Secretary.


Sec.  970.96  Counterparts.

    This part may be executed in multiple counterparts and, when one 
counterpart is signed by the Secretary, all such counterparts shall 
constitute, when taken together, one and the same instrument as if all 
signatures were contained in one original.


Sec.  970.97  Handler sign-up.

    (a) After the effective date of this part, there shall be an 
initial sign-up period of a length to be determined by the Secretary 
for handlers to become signatories. Handlers who sign up during the 
initial sign-up period and their corresponding producers are eligible 
to serve as initial members of the Board pursuant to Sec.  970.42.
    (b) After the initial sign-up period ends, a handler may become a 
signatory at any time by executing a counterpart to this part and 
delivering it to the Secretary. This agreement shall take effect as to 
such new contracting party at the time such counterpart is delivered to 
the Secretary. The obligations, benefits, privileges, and immunities 
conferred by this agreement shall then be effective as to such new 
contracting party.


Sec.  970.98  Withdrawal.

    Release from this agreement may be obtained under the following 
conditions:
    (a) A signatory may file with the Board a written request for 
withdrawal at any time, but such withdrawal will become effective at 
the beginning of the next crop year.
    (b) Immediate withdrawal may be effectuated when a signatory 
handler ceases to be a handler of leafy green vegetables and gives 
written notice thereof to the Board.
    (c) A signatory handler's withdrawal does not relieve the signatory 
handler of any obligation incurred while a signatory to this agreement.
    (d) A signatory handler that withdraws shall not use the official 
certification mark once no longer a signatory handler.

    Dated: April 22, 2011.
Rayne Pegg,
Administrator, Agricultural Marketing Service.
[FR Doc. 2011-10199 Filed 4-26-11; 4:15 pm]
BILLING CODE 3410-02-P