Nectarines and Peaches Grown in California; Revision of Handling Requirements for Fresh Nectarines and Peaches, 55090-55096 [06-7868]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 71, Number 183 (Thursday, September 21, 2006)]
[Rules and Regulations]
[Pages 55090-55096]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-7868]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 916 and 917

[Docket No. FV06-916/917-1 FIR]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture is adopting, as a final rule, 
with a change, an interim final rule revising the handling requirements 
for California nectarines and peaches by modifying the grade, size, 
maturity, and pack requirements for fresh shipments of these fruits, 
beginning with 2006 season shipments. This rule also continues in 
effect the authorization for continued shipments of ``CA Utility'' 
quality nectarines and peaches, the establishment of weight-count 
standards for Peento type nectarines in volume-filled containers, and 
the elimination of the varietal container marking requirements. The 
marketing orders regulate the handling of nectarines and peaches grown 
in California and are administered locally by the Nectarine 
Administrative and Peach Commodity Committees (committees). This rule 
enables handlers to continue to ship fresh nectarines and peaches in a 
manner that meets consumer needs, increases returns to producers and 
handlers, and reflects current industry practices.

DATES: Effective Date: October 23, 2006.

FOR FURTHER INFORMATION CONTACT: Laurel May, Marketing Specialist, or 
Kurt Kimmel, Regional Manager, California Marketing Field Office, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, 2202 Monterey Street, Suite 102B, Fresno, California, 93721; 
Telephone (559) 487-5901, Fax: (559) 487-5906, or e-mail: 
Laurel.May@usda.gov or Kurt.Kimmel@usda.gov.
    Small businesses may request information on complying with this 
regulation by contacting Jay Guerber, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence 
Avenue, SW., STOP 0237, Washington, DC 20250-0237; Telephone: (202) 
720-2491, Fax: (202) 720-8938, or e-mail: Jay.Guerber@usda.gov.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order 
Nos. 916 and 917 (7 CFR parts 916 and 917) regulating the handling of 
nectarines and peaches grown in California, respectively, hereinafter 
referred to as the ``orders.'' The orders are effective under the 
Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-
674), hereinafter referred to as the ``Act.''
    USDA is issuing this rule in conformance with Executive Order 
12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to have retroactive effect. 
This rule will not preempt any State or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with USDA a petition 
stating that the order, any provision of the order, or any obligation 
imposed in connection with the order is not in accordance with law and 
request a modification of the order or to be exempted therefrom. A 
handler is afforded the opportunity for a hearing on the petition. 
After the hearing, USDA would rule on the petition. The Act provides 
that the district court of the United States in any district in which 
the handler is an inhabitant, or has his or her principal place of 
business, has jurisdiction to review USDA's ruling on the petition, 
provided an action is filed not later than 20 days after the date of 
the entry of the ruling.
    This rule continues in effect: (1) Revisions to the nectarine and 
peach grade, size, maturity, and pack requirements to better reflect 
current industry operating and marketing practices; (2) authorization 
for continued shipments of ``CA Utility'' quality nectarines and 
peaches during the 2006 and subsequent seasons to meet buyer needs; (3) 
establishment of weight-count standards for Peento type nectarines 
packed in volume-filled containers to assure pack uniformity; and (4) 
elimination of the varietal container marking requirements for 
nectarines and peaches to provide handlers more marketing flexibility.
    Sections 916.52 and 917.41 of the orders provide authority for 
regulating the handling of fresh California nectarines and peaches. The 
regulations include grade, size, maturity, quality, pack, and container 
marking requirements. Such regulations are in effect on a continuing 
basis. The Nectarine Administrative Committee (NAC) and the Peach 
Commodity Committee (PCC), which are responsible for local 
administration of the orders, meet prior to and during each season to 
review the regulations. Committee meetings are open to the public and 
interested persons are encouraged to express their views at these 
meetings. USDA reviews committee recommendations and information, as 
well as information from other sources, and determines whether 
modification, suspension, or termination of the rules and regulations 
would tend to effectuate the declared policy of the Act.
    The committees held such meetings on February 3, 2006, and 
unanimously recommended that the handling requirements be revised for 
the 2006 season, which was expected to begin at the end of March. No 
official crop estimates were available at the time of the committees' 
February meetings because the nectarine and peach trees were dormant. 
The committees subsequently met on April 27, 2006, and recommended 2006 
crop estimates of 17,824,000 containers of nectarines and 20,242,000 
containers of peaches. The 2006 nectarine crop is expected to be 
slightly smaller than the 2005 crop, which totaled approximately 
18,618,000 containers. The 2006 peach crop is

[[Page 55091]]

expected to be slightly larger than the 2005 crop of approximately 
20,177,000 containers.

Maturity Requirements

    Sections 916.52 and 917.41 of the orders authorize the 
establishment of maturity requirements for nectarines and peaches, 
respectively. The minimum maturity level currently specified for 
nectarines and peaches is ``mature'' as defined in the standards. For 
most varieties, ``well-matured'' determinations for nectarines and 
peaches are made using maturity guides (e.g., color chips, along with 
other maturity tests as applied by the inspection service). These 
maturity guides are reviewed each year by the Shipping Point Inspection 
Service (SPI) to determine whether they need to be changed, based upon 
the most-recent information available on the individual characteristics 
of each nectarine and peach variety.
    These maturity guides established under the handling regulations of 
the California tree fruit marketing orders have been codified in the 
Code of Federal Regulations as Table 1 in Sec. Sec.  916.356 and 
917.459, for nectarines and peaches, respectively.
    The requirements in the 2006 handling regulations are the same as 
those that appeared in the 2005 handling regulations with a few 
exceptions. Those exceptions are explained in this rule.
    Nectarines: Requirements for ``well-matured'' nectarines are 
specified in Sec.  916.356 of the order's rules and regulations. This 
rule continues in effect the revision of Table 1 of paragraph 
(a)(1)(iv) of Sec.  916.356 to add maturity guides for seven varieties 
of nectarines. Specifically, SPI recommended adding maturity guides for 
the Ruby Fire variety to be regulated at the G maturity guide; for the 
Burnectten (Spring Flare[reg] 19) variety to be regulated at 
the H maturity guide, for the Burnecttwelve (Sweet 
Flare[reg] 21) variety to be regulated at the I maturity 
guide, for the Burnectseven (Summer Flare[reg] 28) and Zee 
Fire varieties to be regulated at the J maturity guide, and for the 
Prima Diamond XIX and Summer Jewel varieties to be regulated at the L 
maturity guide.
    Peaches: Requirements for ``well-matured'' peaches are specified in 
Sec.  917.459 of the order's rules and regulations. This rule continues 
in effect the revision of Table 1 of paragraph (a)(1)(iv) of Sec.  
917.459 to add maturity guides for seven peach varieties. Specifically, 
SPI recommended adding maturity guides for the Flavor Joy variety to be 
regulated at the H maturity guide; the King Sweet, Lady Lou, and Sugar 
Time (214LC68) varieties to be regulated at the I maturity guide; the 
August Dream variety to be regulated at the J maturity guide; and the 
Burpeachfive (July Flame[reg]) and Burpeachsix (June 
Flame[reg]) varieties to be regulated at the L maturity 
guide.
    NAC and PCC recommended these maturity guide requirements based on 
SPI's continuing review of individual maturity characteristics and 
identification of the appropriate maturity guide corresponding to the 
``well-matured'' level of maturity for nectarine and peach varieties in 
production.

Size Requirements

    Both orders provide authority (in Sec. Sec.  916.52 and 917.41) to 
establish size requirements. Size regulations encourage producers to 
leave fruit on the tree longer, which improves both size and maturity 
of the fruit. Acceptable fruit size provides greater consumer 
satisfaction and promotes repeat purchases, and, therefore, increases 
returns to producers and handlers. Increased fruit size results in 
increased numbers of packed containers of nectarines and peaches per 
acre, which also benefits producers and handlers.
    Recommendations for size regulations are based on the specific 
characteristics of each variety. The NAC and PCC conduct studies each 
season on the range of sizes attained by the regulated varieties and 
those varieties with the potential to become regulated, and determine 
whether revisions to the size requirements are appropriate.
    Nectarines: Section 916.356 of the order's rules and regulations 
specifies minimum size requirements for fresh nectarines in paragraphs 
(a)(2) through (a)(9). This rule continues in effect the revisions to 
Sec.  916.356 that establish variety-specific minimum size requirements 
for nine varieties of nectarines that were produced in commercially 
significant quantities of more than 10,000 containers for the first 
time during the 2005 season. This rule also continues in effect to 
remove the variety-specific minimum size requirements for seven 
varieties of nectarines whose shipments fell below 5,000 containers 
during the 2005 season.
    For example, one of the varieties recommended for addition to the 
variety-specific minimum size requirements is the Burnectten (Spring 
Flare[supreg] 19) variety of nectarines, recommended for regulation at 
a minimum size 96. Studies of the size ranges attained by the 
Burnectten (Spring Flare[supreg] 19) variety revealed that 100 percent 
of the containers met the minimum size of 96 during the 2004 and 2005 
seasons. Sizes ranged from size 40 to size 96, with 0.2 percent of the 
fruit in the 40 sizes, 4.9 percent of the packages in the 50 sizes, 
27.0 percent in the 60 sizes, 35.8 percent in the 70 sizes, 24.4 
percent in the 80 sizes, and 7.7 percent in size 96 for the 2005 
season.
    A review of other varieties with the same harvesting period 
indicated that the Burnectten (Spring Flare[reg] 19) variety 
was also comparable to those varieties in its size ranges for that time 
period. Discussions with handlers known to handle the variety confirm 
this information regarding minimum size and harvesting period, as well. 
Thus, the recommendation to place the Burnectten (Spring 
Flare[reg] 19) variety in the variety-specific minimum size 
regulation at a minimum size 96 is appropriate. This recommendation 
results from size studies conducted over a two-year period.
    Historical data such as this provides the NAC with the information 
necessary to recommend the appropriate sizes at which to regulate 
various nectarine varieties. In addition, producers and handlers of the 
varieties affected are personally invited to comment when such size 
recommendations are deliberated. Producer and handler comments are also 
considered at both NAC and subcommittee meetings when the staff 
receives such comments, either in writing or verbally.
    For reasons similar to those discussed in the preceding paragraph, 
the introductory text of paragraph(a)(3) of Sec.  916.356 continues in 
effect to be revised to include the Burnectten (Spring 
Flare[reg] 19) variety; the introductory text of paragraph 
(a)(4) of Sec.  916.356 continues in effect to be revised to include 
the Gee Sweet variety; and the introductory text of paragraph (a)(6) of 
Sec.  916.356 continues in effect to be revised to include the Arctic 
Belle, August Sweet, Autumn Blaze, Giant Pearl, Prima Diamond X, Prince 
Jim 3, and Summer Jewel nectarine varieties.
    This rule also continues in effect the revisions to the 
introductory text of paragraphs (a)(3), (a)(4), and (a)(6) of Sec.  
916.356 that remove seven varieties from the variety-specific minimum 
size requirements specified in these paragraphs because less than 5,000 
containers of each of these varieties were produced during the 2005 
season. Specifically, the introductory text of paragraph (a)(3) of 
Sec.  916.356 continues in effect to be revised to remove the Early 
Diamond nectarine variety; the

[[Page 55092]]

introductory text of paragraph (a)(4) of Sec.  916.356 continues in 
effect to be revised to remove the Arctic Rose, June Glo, May Diamond 
and Red Delight nectarine varieties; and the introductory text of 
paragraph (a)(6) of Sec.  916.356 continues in effect to be revised to 
remove the Bright Sweet and Emelia nectarine varieties.
    Nectarine varieties removed from the nectarine variety-specific 
minimum size requirements become subject to the non-listed variety size 
requirements specified in paragraphs (a)(7), (a)(8), and (a)(9) of 
Sec.  916.356.
    Peaches: Section 917.459 of the order's rules and regulations 
specifies minimum size requirements for fresh peaches in paragraphs 
(a)(2) through (a)(6), and paragraphs (b) and (c). This rule continues 
in effect revisions to Sec.  917.459 that establish variety-specific 
minimum size requirements for eleven peach varieties that were produced 
in commercially significant quantities of more than 10,000 containers 
for the first time during the 2005 season. This rule also continues in 
effect to remove the variety-specific minimum size requirements for 
seven varieties of peaches whose shipments fell below 5,000 containers 
during the 2005 season.
    For example, one of the varieties recommended for addition to the 
variety-specific minimum size requirements is the Island Prince variety 
of peaches, which was recommended for regulation at a minimum size 88. 
Studies of the size ranges attained by the Island Prince variety 
revealed that 100 percent of the containers met the minimum size of 88 
during the 2004 and 2005 seasons. The sizes ranged from size 30 to size 
88, with 3.8 percent of the containers meeting the size 30, 4.0 percent 
meeting the size 40, 42.1 percent meeting the size 50, 28.1 percent 
meeting the size 60, 11.8 percent meeting the size 70, 9.9 percent 
meeting the size 80, and 0.3 percent meeting the size 88 in the 2005 
season.
    A review of other varieties with the same harvesting period 
indicated that the Island Prince variety was also comparable to those 
varieties in its size ranges for that time period. Discussions with 
handlers known to pack the variety confirm this information regarding 
minimum size and the harvesting period, as well. Thus, the 
recommendation to place the Island Prince variety in the variety-
specific minimum size regulation at a minimum size 88 is appropriate.
    Historical data such as this provides the PCC with the information 
necessary to recommend the appropriate sizes at which to regulate 
various peach varieties. In addition, producers and handlers of the 
varieties affected are personally invited to comment when such size 
recommendations are deliberated. Producer and handler comments are also 
considered at both PCC and subcommittee meetings when the staff 
receives such comments, either in writing or verbally.
    For reasons similar to those discussed in the preceding paragraph, 
the introductory text of paragraph (a)(3) of Sec.  917.459 continues in 
effect to be revised to include the Island Prince and Snow Peak peach 
varieties; the introductory text of Sec.  (a)(5) of Sec.  917.459 
continues in effect to be revised to include the Bright Princess, 
Burpeachnineteen (Spring Flame[supreg] 22), Honey Sweet, Sierra Snow, 
and Sweet Crest peach varieties; and the introductory text of paragraph 
(a)(6) of Sec.  917.459 continues in effect to be revised to include 
the Glacier White, Jasper Treasure, Spring Candy, and Valley Sweet 
peach varieties.
    This rule also continues in effect the revision to the introductory 
text of paragraph (a)(6) of Sec.  917.459 to remove the Autumn Ruby, 
Cherry Red, Early O'Henry, Gypsy Red, Pretty Lady, Supechfour (Amber 
Crest), and 244LE379 peach varieties from the variety-specific minimum 
size requirements specified in the section because less than 5,000 
containers of each of these varieties was produced during the 2005 
season.
    Peach varieties removed from the peach variety-specific minimum 
size requirements become subject to the non-listed variety size 
requirements specified in paragraphs (b) and (c) of Sec.  917.459.
    NAC and PCC recommended these changes in the minimum size 
requirements based on a continuing review of the sizing and maturity 
relationships for these nectarine and peach varieties, and the consumer 
acceptance levels for various fruit sizes. This rule is designed to 
establish minimum size requirements for fresh nectarines and peaches 
consistent with expected crop and market conditions.

Grade and Quality Requirements

    Sections 916.52 and 917.41 of the orders also authorize the 
establishment of grade and quality requirements for nectarines and 
peaches, respectively. Prior to the 1996 season, Sec.  916.356 required 
nectarines to meet a modified U.S. No. 1 grade standard that included a 
slightly tighter requirement for scarring and a more liberal allowance 
for misshapen fruit. Prior to the 1996 season, Sec.  917.459 required 
peaches to meet the requirements of a U.S. No. 1 grade, except for a 
more liberal allowance for open sutures that were not considered 
``serious damage.''
    Since 1996, shipments of nectarines and peaches meeting ``CA 
Utility'' quality requirements have been permitted each season. ``CA 
Utility'' fruit is lower in quality than that meeting the modified U.S. 
No. 1 grade requirements. Nevertheless, the fruit is acceptable in many 
markets. Use of the ``CA Utility'' quality option has allowed handlers 
the opportunity to remove marginal fruit from the U.S. No. 1 containers 
and pack it in ``CA Utility'' containers instead, which results in 
better quality U.S. No. 1 packs without sacrificing fruit.
    The committees have recommended continuation of the authorization 
to ship ``CA Utility'' quality fruit each year since 1996, and did so 
again at their meetings on February 3, 2006, for the 2006 and 
subsequent seasons. This rule continues in effect to revise paragraph 
(d) of Sec.  916.350 and 917.442, and paragraph (a)(1) of Sec.  916.356 
and 917.459 to permit shipments of nectarines and peaches meeting ``CA 
Utility'' quality requirements during the 2006 and subsequent seasons.

Weight-Count Standards

    Under the provisions of Sec.  916.52 of the order, NAC is 
authorized to establish weight-count standards for packed containers of 
nectarines. These standards define a maximum number of nectarines in a 
16-pound sample when such fruit, which may be packed in tray-packed 
containers, is converted to volume-filled containers. In Sec.  916.350 
of the order's rules and regulations, weight-count standards are 
established for all varieties of nectarines (except the Peento type), 
in Tables 1 and 2 of paragraph (a)(5)(iv).
    According to NAC, Peento varieties of donut nectarines have 
traditionally been packed in trays because they have been marketed as a 
premium variety, whose value justified the added packing costs. 
Recently, as the volume has increased, the value of the variety has 
diminished in the marketplace, and some handlers now desire to pack 
Peento variety nectarines in volume-filled containers to meet market 
demands. However, prior to this time, weight-count standards for Peento 
type nectarines had not been established in the order's rules and 
regulations. Previously, weight-count standards for nectarines were for 
round nectarines. Peento type nectarines are shaped like donuts and fit 
into volume-filled containers differently, so the existing weight count 
standards were inappropriate.

[[Page 55093]]

    In an effort to standardize the conversion from tray-packing to 
volume-filling for Peento type nectarines, the committee staff 
conducted weight-count surveys during the 2005 season to determine 
optimum weight-counts for the varieties at various fruit sizes. As a 
result, the staff prepared a new weight-count table applicable to only 
the Peento varieties. The Tree Fruit Quality Subcommittee reviewed the 
weight-counts at their November 10, 2005, meeting. At its February 3, 
2006, meeting, NAC approved the recommendation that the new weight-
counts be implemented for the 2006 and subsequent seasons.
    This rule continues in effect the revisions made to paragraph 
(a)(5)(iv) of Sec.  916.350 by adding a new Table 3, establishing the 
weight-counts for Peento type nectarines, following Tables 1 and 2. In 
a conforming change, the titles of Tables 1 and 2 continue to be 
revised by adding the words ``except Peento type nectarines'' between 
the words ``nectarines'' and ``packed.'' Conforming changes will 
continue in effect to be made by adding the words ``except for Peento 
type nectarines'' at the end of paragraphs (a)(2)(ii), (a)(3)(ii), 
(a)(4)(ii), (a)(5)(ii), (a)(6)(ii), (a)(7)(ii), (a)(8)(ii), and 
(a)(9)(ii) of Sec.  916.356.
    The committee staff will continue to conduct weight-count surveys 
to ensure that the Peento varieties that are packed in volume-filled 
containers meet the weight-count standards established for tray-packed 
nectarines, and to ensure that the weight-counts continue to be 
appropriate.

Varietal Container Markings

    Sections 916.350 and 917.442 of the orders' rules and regulations 
require that all containers and packages of nectarines and peaches 
(except for consumer packages in master containers or those mailed 
directly to consumers) shall be marked with the name of the variety of 
the fruit if it is known, or with ``Unknown Variety'' if the variety is 
not known.
    Many industry members believe that variety recognition may limit 
the industry's ability to provide the best quality fruit at any given 
time during the harvest season. Factors such as weather can contribute 
to wide variability in harvest dates for individual varieties from year 
to year, making it difficult to meet customer demands on a timely 
basis. Eliminating the varietal container marking requirement would 
ease the transition that occurs when older trees are replaced with 
newly introduced varieties. New varieties could be substituted for 
obsolete varieties without risking the loss of market opportunities. 
Therefore, industry members suggested that elimination of the varietal 
container marking requirement would enable them to supply whichever 
varieties are appropriately mature throughout the season without regard 
for variety identity.
    The Tree Fruit Quality Subcommittee discussed this issue at many of 
their meetings in 2004 and 2005. They believe that eliminating the 
requirement that variety names be marked on containers will allow 
handlers greater flexibility to supply the best possible nectarines and 
peaches to customers throughout the marketing season without regard to 
variety. Consumer satisfaction should be raised, which will in turn 
increase returns to growers and handlers.
    Upon recommendation by the Tree Fruit Quality Subcommittee, NAC and 
PCC voted unanimously at their meetings on February 3, 2006, to 
recommend elimination of the requirement that fruit variety be marked 
on containers of nectarines and peaches. Accordingly, paragraphs (a)(2) 
of Sec. Sec.  916.350 and 917.442 continue in effect to be amended by 
deleting the words, ``and, except for consumer packages in master 
containers and consumer packages mailed directly to consumers, the name 
of the variety, if known, or, when the variety name is not known, the 
words `unknown variety.' A marketing name, trade mark, or brand name 
may be associated with a variety name, but cannot be substituted for 
the variety name.''
    Additionally, paragraph (a)(11) of Sec.  916.350 and paragraph 
(a)(12) of Sec.  917.442 continue in effect to be amended by deleting 
the words ``the name of the variety, if known, or if the variety is not 
known, the words Unknown Variety.''
    This rule reflects the need to revise the handling requirements for 
California nectarines and peaches, as specified. USDA believes that 
continuing this rule in effect will have a beneficial impact on 
producers, handlers, and consumers of fresh California nectarines and 
peaches.
    This rule continues in effect the establishment of handling 
requirements for fresh California nectarines and peaches consistent 
with expected crop and market conditions, and will help ensure that all 
shipments of these fruits made each season meet acceptable handling 
requirements established under each of these orders. This rule also 
helps the California nectarine and peach industries to provide fruit 
desired by consumers. This rule continues in effect the establishment 
and maintenance of orderly marketing conditions for these fruits in the 
interests of producers, handlers, and consumers.

Final Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this action on small entities. Accordingly, AMS has 
prepared this final regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and rules issued thereunder, are unique in that 
they are brought about through group action of essentially small 
entities acting on their own behalf. Thus, both statutes have small 
entity orientation and compatibility.

Industry Information

    There are approximately 180 California nectarine and peach handlers 
subject to regulation under the orders covering nectarines and peaches 
grown in California, and about 800 producers of these fruits in 
California. Small agricultural service firms, which include handlers, 
are defined by the Small Business Administration (13 CFR 121.201) as 
those whose annual receipts are less than $6,500,000. Small 
agricultural producers are defined by the Small Business Administration 
as those having annual receipts of less than $750,000. A majority of 
these handlers and producers may be classified as small entities.
    The committees' staff has estimated that there are fewer than 26 
handlers in the industry who could be defined as other than small 
entities. For the 2005 season, the committees' staff estimates that the 
average handler price received was $10.00 per container or container 
equivalent of nectarines or peaches. A handler would have to ship at 
least 650,000 containers to have annual receipts of $6,500,000. Given 
data on shipments maintained by the committees' staff and the average 
handler price received during the 2005 season, the committees' staff 
estimates that small handlers represent approximately 86 percent of all 
the handlers within the industry.
    The committees' staff has also estimated that fewer than 10 percent 
of the producers in the industry could be defined as other than small 
entities. For the 2005 season, the committees' staff estimates that the 
average producer

[[Page 55094]]

price received was $5.25 per container or container equivalent for 
nectarines and peaches. A producer would have to produce at least 
142,858 containers of nectarines and peaches to have annual receipts of 
$750,000. Given data maintained by the committees' staff and the 
average producer price received during the 2005 season, the committees' 
staff estimates that small producers represent more than 90 percent of 
the producers within the industry.
    With an average producer price of $5.25 per container or container 
equivalent, and a combined packout of nectarines and peaches of 
approximately 38,776,500 containers, the value of the 2005 packout is 
estimated to be $203,576,600. Dividing this total estimated grower 
revenue figure by the estimated number of producers (800) yields an 
estimated average revenue per producer of about $254,471 from the sales 
of peaches and nectarines.

Regulatory Revisions

    Under authority provided in Sec. Sec.  916.52 and 917.41 of the 
orders, grade, size, maturity, pack, and container marking requirements 
are established for fresh shipments of California nectarines and 
peaches, respectively. Such requirements are in effect on a continuing 
basis. NAC and PCC met on February 3, 2006, and unanimously recommended 
that these handling requirements be revised for the 2006 season. These 
recommendations had been presented to the committees by various 
subcommittees, each charged with review and discussion of the changes. 
The changes: (1) Revise varietal size, maturity, and pack requirements 
to reflect changes in production and marketing practices; (2) authorize 
continued shipments of ``CA Utility'' quality nectarines and peaches 
during the 2006 and subsequent seasons; (3) establish weight-count 
standards for Peento type nectarines packed in volume-filled 
containers; and (4) eliminate the varietal container marking 
requirements for nectarines and peaches.

Minimum Maturity and Size Levels--Discussions and Alternatives

    Sections 916.356 and 917.459 establish minimum fruit maturity 
levels. This rule continues in effect the annual adjustments to the 
maturity requirements for several varieties of nectarines and peaches. 
Maturity requirements are based on measurements suggested by maturity 
guides (e.g., color chips), as reviewed and recommended by SPI annually 
to determine the appropriate guide for each nectarine and peach 
variety. These annual adjustments reflect refinements in measurements 
of the maturity characteristics of nectarines and peaches as observed 
during previous seasons' inspections. Adjustments in the guides 
utilized ensure acceptable fruit maturity and increased consumer 
satisfaction while benefiting nectarine and peach producers and 
handlers.
    Sections 916.356 and 917.459 of the orders' rules and regulations 
also establish minimum sizes for various varieties of nectarines and 
peaches. This rule continues in effect the adjustments to the minimum 
sizes authorized for certain varieties of each commodity for the 2006 
season. Minimum size regulations are put in place to encourage 
producers to leave fruit on the trees for a longer period of time, 
increasing both maturity and fruit size. Increased fruit size increases 
the number of packed containers per acre, and coupled with heightened 
maturity levels, also provides greater consumer satisfaction, which in 
turn fosters repeat purchases that benefit producers and handlers 
alike.
    Annual adjustments to minimum sizes of nectarines and peaches, such 
as these, are recommended by NAC and PCC based upon historical data, 
producer and handler information regarding sizes attained by different 
varieties, and trends in consumer purchases.
    An alternative to such action would include not establishing 
minimum size regulations for these new varieties. Such an action, 
however, would be a significant departure from the committees' 
practices and represent a significant change in the regulations as they 
currently exist; would ultimately increase the amount of less 
acceptable fruit being marketed to consumers; and would be contrary to 
the long-term interests of producers, handlers, and consumers. For 
these reasons, this alternative was not recommended.

Grade and Quality Requirements--Discussions and Alternatives

    In 1996, Sec. Sec.  916.350 and 917.442 were revised to permit 
shipments of ``CA Utility'' quality nectarines and peaches as an 
experiment during the 1996 season only. Such shipments have 
subsequently been permitted each season. Although ``CA Utility'' fruit 
is lower in quality than that meeting the modified U.S. No. 1 grade 
requirements, it has been accepted in many markets. Between 1996 and 
2004, shipments of ``CA Utility'' quality fruit ranged from 1 to 6 
percent of total nectarine and peach shipments. In 2005, shipments of 
``CA Utility'' quality fruit were 8.6 percent and 7.1 percent of total 
nectarine and peach shipments, respectively.
    This rule continues in effect the authorization for continued 
shipments of ``CA Utility'' quality nectarines and peaches during the 
2006 and subsequent seasons. Not authorizing such shipments would 
curtail shipments of fruit for which there is an appropriate market. 
Because ``CA Utility'' is widely accepted, it is no longer necessary to 
reconsider this authorization on an annual basis.

Weight-Count Standards--Discussions and Alternatives

    Section 916.350 also establishes weight-count standards for 
nectarines packed in volume-filled containers. These standards define a 
maximum number of nectarines in a 16-pound sample when such fruit, 
which may be packed in tray-packed containers, is converted to volume-
filled containers.
    Peento type nectarines were formerly packed exclusively in trays 
because of their high market value. With increased production and 
lowered market value, retailers have begun requesting that packers 
place the donut-shaped fruit in volume-filled containers. Peento type 
nectarines fit into the boxes differently than spherical nectarines, so 
it is necessary to assign appropriate weight counts for Peento type 
nectarines in volume-filled containers.
    The committee staff was directed to collect data during the 2005 
season from which recommendations for change could be made. Extensive 
sampling of Peento type nectarines of various sizes provided the 
information needed for the committee to make recommendations regarding 
the new weight-count standards. The Tree Fruit Quality subcommittee 
reviewed these standards at their meeting on November 10, 2005. The 
standards were then presented to NAC, who unanimously recommended 
adding the new weight count standards for Peento type nectarines to the 
regulations at their meeting on February 3, 2006.
    Without the appropriate weight-counts, Peento type nectarines 
cannot be packed in volume-filled containers. NAC believes that the 
recommended weight-count standards will satisfy the stated needs of 
retailers, will open additional market opportunities for the industry 
and will provide for uniformity of sizes between nectarines packed in 
tray- and volume-filled containers.

Varietal Container Marking Requirements--Discussions and Alternatives

    Sections 916.350 and 917.442 of the orders' rules and regulations 
require

[[Page 55095]]

that all containers of nectarines and peaches be marked with the 
fruit's varietal name, if known.
    Many industry members believe that variety recognition may limit 
the industry's ability to provide the best quality fruit at any given 
time during the harvest season. Factors such as weather can contribute 
to wide variability in harvest dates for individual varieties from year 
to year, making it difficult to meet customer demands on a timely 
basis. The committees believe that eliminating the varietal container 
marking requirement will ease the transition that occurs when older 
trees are replaced with newly introduced varieties. New varieties may 
be substituted for obsolete varieties without risking the loss of 
market opportunities. Therefore, industry members have suggested that 
elimination of the varietal container marking requirement will enable 
them to supply whichever varieties are appropriately mature throughout 
the season without regard for variety identity. They believe that 
consumer satisfaction will be raised, which will in turn increase 
returns to growers and handlers.
    The Tree Fruit Quality Subcommittee discussed the issue at many of 
their recent meetings. Some members suggested that the requirement be 
left in place so that marketers and consumers would know what varieties 
of fruit they purchased and be encouraged to make repeat purchases. But 
the majority of subcommittee members voted to recommend elimination of 
the varietal container marking requirement, citing brand and commodity 
recognition in the market and easier transition to newer varieties as 
justification for the change. The Tree Fruit Subcommittee made the 
recommendation to both NAC and PCC, who agreed that varietal markings 
are no longer necessary or prudent, and in turn recommended at their 
February 3, 2006, meetings that the varietal container marking 
requirement be eliminated.
    The committees make recommendations regarding the revisions in 
handling requirements after considering all available information, 
including recommendations by various subcommittees, comments of persons 
at subcommittee meetings, and comments received by committee staff. 
Such subcommittees include the Tree Fruit Quality Subcommittee, the 
Size Nomenclature Review Group, the Marketing Order Amendment Task 
Force, and the Executive Committee.
    At the meetings, the impact of and alternatives to these 
recommendations are deliberated. These subcommittees, like the 
committees themselves, frequently consist of individual producers and 
handlers with many years of experience in the industry who are familiar 
with industry practices and trends. Like all committee meetings, 
subcommittee meetings are open to the public and comments are widely 
solicited. In the case of the Tree Fruit Quality Subcommittee, many 
growers and handlers who are affected by the issues discussed by the 
subcommittee attend and actively participate in the public 
deliberations, or call and/or write in their concerns and comments to 
the staff for presentation at the meetings. In addition, minutes of all 
subcommittee meetings are distributed to committee members and others 
who have requested them, and are also available on the committees' Web 
site, thereby increasing the availability of this critical information 
within the industry.
    An interim final rule concerning this action was published in the 
Federal Register on April 10, 2006. Copies of the rule were posted on 
the committees' Web site and were also made available through the 
Internet by USDA and the Office of the Federal Register. That rule 
provided a 60-day comment period, which ended on June 9, 2006. One 
comment was submitted on the rule. The commenter pointed out that 
obsolete language that had previously been removed from Sec.  
916.356(a)(1) (69 FR 44457, July 26, 2004) was inadvertently included 
in the interim final rule. Therefore, this rule revises paragraph 
(a)(1) of Sec.  916.356 by removing the obsolete language regarding the 
color requirement exemption for U.S. No. 1 grade nectarines.
    Each of the recommended handling requirement changes for the 2006 
season is expected to generate financial benefits for producers and 
handlers through increased fruit sales, compared to the situation that 
would exist if the changes were not adopted. Both large and small 
entities are expected to benefit from the changes, and the costs of 
compliance are not expected to be substantially different between large 
and small entities.
    This rule will not impose any additional reporting or recordkeeping 
requirements on either small or large nectarine or peach handlers. As 
with all Federal marketing order programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies.
    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.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this rule. However, as previously stated, 
nectarines and peaches under the orders have to meet certain 
requirements set forth in the standards issued under the Agricultural 
Marketing Act of 1946 (7 CFR 1621 et seq.). Standards issued under the 
Agricultural Marketing Act of 1946 are otherwise voluntary.
    In addition, the committees' meetings are widely publicized 
throughout the nectarine and peach industry and all interested parties 
are encouraged to attend and participate in committee deliberations on 
all issues. These meetings are held annually in the fall, winter, and 
spring. During the February 3, 2006, teleconference meeting all 
entities, large and small, were encouraged to express views on these 
issues. These regulations were also reviewed and thoroughly discussed 
at public subcommittee meetings held on November 30, 2004, and April 
19, September 2, October 5, and November 10, 2005.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at the 
following Web site: https://www.ams.usda.gov/fv/moab.html. Any questions 
about the compliance guide should be sent to Jay Guerber at the 
previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    After consideration of all relevant matters presented, the 
information and recommendations submitted by the committees, the 
comment received, and other information, it is found that finalizing 
the interim final rule, with a change, as published in the Federal 
Register (71 FR 17970, April 10, 2006), will tend to effectuate the 
declared policy of the Act.

List of Subjects

7 CFR Part 916

    Marketing agreements, Nectarines, Reporting and recordkeeping 
requirements.

7 CFR Part 917

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


0
Accordingly, the interim final rule amending 7 CFR parts 916 and 917, 
which was published in the Federal Register at 71 FR 17970 on April 10, 
2006, is adopted as a final rule with the following change:

[[Page 55096]]

PART 916--NECTARINES GROWN IN CALIFORNIA

0
1. The authority citation for 7 CFR parts 916 continues to read as 
follows:

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

Sec.  916.356  [Amended]

0
2. Section 916.356 paragraph (a)(1) introductory text is amended by 
removing words ``Provided further, That all varieties of nectarines 
which fail to meet the U.S. No. 1 grade only on account of lack of 
blush or red color due to varietal characteristics shall be considered 
as meeting the requirements of this subpart:''.

    Dated: September 15, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 06-7868 Filed 9-20-06; 8:45 am]
BILLING CODE 3410-02-P