[Federal Register Volume 59, Number 55 (Tuesday, March 22, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-6653]


[[Page Unknown]]

[Federal Register: March 22, 1994]




DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Docket No. FV93-981-4FR]

 

Almonds Grown in California; Final Rule Revising Quality Control 
Provisions

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule revises the quality control provisions 
established under the Federal marketing order for California almonds. 
This rule better reflects current almond processing capabilities, 
marketing standards and practices. This rule is based on a 
recommendation of the Almond Board of California (Board), which is 
responsible for local administration of the order.

EFFECTIVE DATE: July 1, 1994.

FOR FURTHER INFORMATION CONTACT: Kathleen M. Finn, Marketing 
Specialist, Marketing Order Administration Branch, Fruit and Vegetable 
Division, AMS, USDA, room 2523-S., P.O. Box 96456, Washington, DC 
20090-6456; telephone: (202) 720-1509, or FAX (202) 720-5698, or Martin 
Engeler, Assistant Officer-in-Charge, California Marketing Field 
Office, Fruit and Vegetable Division, AMS, USDA, 2202 Monterey Street, 
Suite 102-B, Fresno, California 93721; (209) 487-5901, or FAX (209) 
487-5906.

SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing 
Agreement and Order No. 981 (7 CFR part 981), both as amended, 
regulating the handling of almonds grown in California. The marketing 
agreement and order are authorized by the Agricultural Marketing 
Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter 
referred to as the Act.
    The Department of Agriculture (Department) is issuing this rule in 
conformance with Executive Order 12866.
    This final rule has been reviewed under Executive Order 12778, 
Civil Justice Reform. This rule is not intended to have retroactive 
effect. This final 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 8c(15)(A) of the 
Act, any handler subject to an order may file with the Secretary 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 requesting a modification of the order or to be exempted 
therefrom. A handler is afforded the opportunity for a hearing on the 
petition. After a hearing the Secretary 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 in equity to review the 
Secretary's ruling on the petition, provided a bill in equity is filed 
not later than 20 days after date of entry of the ruling.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Administrator of the Agricultural Marketing Service 
(AMS) has considered the economic impact of this final rule on small 
entities.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and rules issued thereunder, are unique in that 
they are brought about through group action of essentially small 
entities acting on their own behalf. Thus, both statutes have small 
entity orientation and compatibility.
    There are approximately 115 handlers of almonds that are subject to 
regulation under the marketing order and approximately 7,000 producers 
in the regulated area. Small agricultural producers have been defined 
by the Small Business Administration (13 CFR 121.601) as those having 
annual receipts of less than $500,000, and small agricultural service 
firms are defined as those whose annual receipts are less than 
$3,500,000. The majority of the almond producers and handlers may be 
classified as small entities.
    This rule revises Sec. 981.442--Subpart--Administrative Rules and 
Regulations and is based on a recommendation (by a 5-4 vote) of the 
Almond Board of California (Board) on May 11, 1993, and other available 
information.
    The processing of almonds involves various steps taken by growers 
and handlers prior to shipment to market. Initially, growers take their 
almonds to a huller/sheller operation where the hulls and shells are 
mechanically removed. The almonds are then delivered to a handler, who 
has the almonds inspected by the Federal-State Inspection Service. 
Through sampling procedures, the inspector determines the percentage of 
inedible almond kernels, as defined in Sec. 981.408, in each lot.
    Under the quality control provisions of the marketing order, 
handlers incur a disposition obligation of inedible almonds, based on 
the results of this inspection. The weight of inedible kernels in 
excess of 0 percent of the kernel weight determined by the inspection 
service constitutes the inedible disposition obligation. In order to 
meet this disposition obligation, handlers must deliver packer 
pickouts, kernels rejected in blanching, pieces of kernel, meal 
accumulated in manufacturing, or other material to crushers, feed 
manufacturers, feeders or dealers in nut wastes on record with the 
Board as accepted users.
    The Board maintains a list of approved accepted users, which 
includes feedlots and oil mills. Handlers must notify the Board at 
least 72 hours prior to delivery to an accepted user.
    The quality control provisions previously required that the almond 
meat content of the inedible shipments must be at least 10 percent of 
the shipment to the accepted user or it cannot be used as a credit 
against the handler's disposition obligation.
    Although there are no minimum grade requirements under the 
marketing order, USDA standards for almonds do exist and are widely 
used in the industry. The highest USDA standard allows for a tolerance 
of 1\1/2\ percent inedible almonds per container, based on an outgoing 
inspection.
    The standards recognize that handlers may not be able to separate 
100% of the inedible nuts from the end product. However, the current 
quality control provisions under the marketing order require that 
handlers dispose of a quantity of almonds equal to 100% of the inedible 
obligation as determined by incoming inspections. When this was first 
implemented, it was thought that handlers could meet the disposition 
obligation by supplementing pickouts with material generated in 
handlers' processing operations (slicing, dicing, etc.). However, many 
handlers do not have a processing operation wherein excess almond 
material is generated. In order to meet their disposition obligation, 
they often purchase a mixture of almonds and foreign material such as 
hulls, shells, etc., mixed with a low percentage of almond meats from a 
hulling and/or shelling operation and mix it with their inedibles. 
These low percentage lots are usually disposed of to feedlots, whereas 
the higher meat percentage lots are usually disposed of to oil mills.
    The Board contends that the intent of the quality control 
provisions of the rules and regulations was not being met with these 
requirements. For the above-mentioned reasons, the Board recommended, 
by a 5 to 4 vote, that the base tolerance level be revised from 0 
percent to 1 percent and that the minimum meat content for inedible 
deliveries available for credit be revised from 10 percent to 50 
percent. The Board feels that these changes will better reflect current 
industry processing and marketing capabilities while maintaining the 
integrity of the quality control provisions of the marketing order.
    With a 1 percent tolerance, these changes are expected to enable 
handlers to pick out enough inedible material to satisfy their 
disposition obligations. Because the foreign material has already been 
removed in the hulling and shelling operation, the inedible portion of 
the shipments should most likely contain well over 50 percent meat 
content. Although it is likely these lots will be primarily sold to oil 
mills, those shipments with less than 50 percent meat content will also 
likely continue to go to accepted users, either directly from hullers 
and shellers or from handlers. However, handlers will not receive 
credit against their disposition obligation on shipments with less than 
50 percent meat content. Handlers will no longer have to supplement 
their shipments with huller and sheller purchases because sufficient 
inedibles will be picked out by the handlers. The marketing of inedible 
almonds should not be affected by the changes.
    The members who voted against the recommendation were concerned 
that a negative perception might be projected by increasing the 
tolerance to 1 percent; i.e., that the industry is relaxing its quality 
requirements. The members believed that buyers may question the 
industry's commitment to quality control. They also felt that it may 
appear that the tolerance is being increased in order for the handlers 
to have more product to sell. For the reasons previously stated, the 
Board members in favor of this rule believed that the changed tolerance 
and minimum meat content requirement will improve the quality control 
program administered under the marketing order.
    The proposed rule was published in the Federal Register (58 FR 
64175), on December 6, 1993. That rule provided a 30-day comment period 
which ended January 5, 1994. Two comments were received within the 
prescribed time period, and one comment was received late. The late 
comment cannot be considered. However, it was essentially the same as 
those received on a timely basis. The comments were all from 
independent almond handlers.
    The commenters supported the recommended changes but objected to 
the decision regarding the effective date of this rule, July 1, 1994. 
The first commenter stated that he relied on the original 
recommendation of the Board and planned his business operations for 
this crop year as if the recommendation was in effect. He believed that 
the recommendation was intended for the 1993 crop and the Board would 
reconsider the issue for the 1994 crop at an appropriate time.
    The second commenter stated, among other things, that he understood 
that the provisions on base tolerance for inedibles were designed to 
apply to conditions particular to a specific crop year. He further 
stated that handlers, in the past, have made operating decisions based 
on recommendations of the Board, such as reserve recommendations, even 
though the rule did not become final until later in the crop year. He 
believed that the intent of the Board was to have this recommendation 
effective in the 1993-94 crop year. He added that the failure to 
implement this recommendation in the current crop year could have 
serious financial implications for several handlers who have been 
operating on the assumption it would be effective for the 1993-94 crop 
year. Finally, he stated that most inedible shipments are more at the 
end of the crop year, thus implementing the rule in mid-year should not 
cause a problem for handlers.
    These commenters are correct that the Board recommended that this 
rule become effective in the 1993-94 crop year, which began on July 1, 
1993. However, many factors were considered in the Department's 
decision to make this change effective beginning with the 1994-95 crop 
year. The vote on these recommendations was a divided 5 to 4 decision. 
The Department deemed it necessary to solicit comments from interested 
parties prior to implementing the rule. In addition, the required 
explanation and justification for the proposed changes was not received 
by the Department until after the 1993-94 crop year had begun. Thus, 
the Department was unable to complete this rulemaking proceeding prior 
to the beginning of the 1993-94 crop year.
    The Department also believes that making this change effective in 
the middle of a crop year would be difficult to administer fairly. It 
would be inequitable to handlers who disposed of inedible almonds 
during the early part of the crop year based on the 0 percent base 
tolerance because this action relaxes that tolerance to 1 percent. With 
this change, an additional 1 percent of almonds becomes available for 
sale on the open market. Also, dispositions made prior to the issuance 
of this rule would have been disallowed if they were below the 50 
percent nut meat content.
    While it is true that the base tolerance for inedible dispositions 
is considered annually by the Board, the information received by the 
Department indicates that the recommended changes in the base tolerance 
and minimum nut meat content of the lots to be disposed of in 
satisfaction of inedible obligations should be treated as a package 
(not individually). The increase in the base tolerance relaxes handler 
requirements while the increase of the meat content tightens handler 
requirements, but together the two changes are intended to better 
reflect handler processing capabilities and improve the quality of 
almonds made available to consumers. Accordingly, handlers should be 
allowed ample time to modify their operations.
    With respect to the commenter's belief that the Board's 
recommendation was intended solely for the 1993-94 crop year, the 
recommendation was not limited to the 1993-94 crop year, but was 
presented as an overall improvement of the quality control provisions.
    For the reasons stated, the Department is making no changes based 
on these comments.
    Based on the above, the Administrator of the AMS has determined 
that this final rule will not have a significant economic impact on a 
substantial number of small entities.
    After consideration of the Board's recommendation, the comments 
received, and other relevant information, it is found that this final 
rule will tend to effectuate the declared policy of the Act.

List of Subjects in 7 CFR 981

    Almonds, Marketing agreements, Nuts, Reporting and recording 
requirements.

    For the reasons set forth in the preamble, 7 CFR Part 981 is 
amended as follows:

PART 981--ALMONDS GROWN IN CALIFORNIA

    1. The authority citation for 7 CFR Part 981 is revised to read as 
follows:

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

    2. Section 981.442(a)(4) is amended by changing the words ``0 
percent'' to read ``1 percent''.
    3. Section 981.442(a)(5) is amended by changing the words ``10 
percent'' to read ``50 percent''.


    Dated: March 16, 1994.
Martha B. Ransom,
Acting Deputy Director, Fruit and Vegetable Division.
[FR Doc. 94-6653 Filed 3-21-94; 8:45 am]
BILLING CODE 3410-02-P