[Federal Register Volume 63, Number 150 (Wednesday, August 5, 1998)]
[Rules and Regulations]
[Pages 41709-41711]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-20913]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Docket No. FV98-981-1 FR]


Almonds Grown in California; Revision of Requirements Regarding 
Quality Control Program

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule revises the administrative rules and regulations of 
the California almond marketing order (order) pertaining to the quality 
control program. The order regulates the handling of almonds grown in 
California, and is administered locally by the Almond Board of 
California (Board). Under the terms of the order, handlers are required 
to obtain inspection on almonds received from growers to determine the 
percent of inedible almonds in each lot of any variety. Handlers are 
then required to dispose of a quantity of almonds in excess of 1 
percent of the weight of almonds reported as inedible to accepted users 
of such product. Accepted users are approved annually by the Board. 
This rule clarifies conditions upon which accepted users' status may be 
denied or revoked by the Board. This rule will help to ensure that 
inedible almonds are removed from human consumption channels, thereby 
maintaining the integrity of the quality control provisions of the 
order.

EFFECTIVE DATE: This final rule becomes effective August 6, 1998.

FOR FURTHER INFORMATION CONTACT: Martin Engeler, Assistant Regional 
Manager, California Marketing Field Office, Marketing Order 
Administration Branch, F&V, AMS, USDA, 2202 Monterey Street, suite 
102B, Fresno, California 93721; telephone: (209) 487-5901, Fax: (209) 
487-5906; or George Kelhart, Technical Advisor, Marketing Order 
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, room 
2525-S, PO Box 96456, Washington, DC 20090-6456; telephone: (202) 720-
2491, Fax: (202) 205-6632. Small businesses may request information on 
compliance with this regulation by contacting Jay Guerber, Marketing 
Order Administration Branch, F&V, AMS, USDA, room 2525-S, PO Box 96456, 
Washington, DC 20090-6456; telephone: (202) 720-2491, Fax: (202) 205-
6632.

SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing 
Order No. 981, as amended (7 CFR part 981), regulating the handling of 
almonds grown in California, hereinafter referred to as the ``order.'' 
The marketing order is effective under the Agricultural Marketing 
Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter 
referred to as the ``Act.''
    The Department of Agriculture (Department) 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 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 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 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 to review the Secretary's 
ruling on the petition, provided an action is filed not later than 20 
days after date of the entry of the ruling.
    This final rule revises the administrative rules and regulations 
pertaining to a quality control program under the California almond 
order. This rule was unanimously recommended by the Board, and 
clarifies conditions under which the Board may deny or revoke the 
status of accepted users of inedible almonds.
    Section 981.42 of the order provides authority for a quality 
control program. Section 981.42(a) requires handlers to obtain incoming 
inspection on almonds received from growers to determine the percent of 
inedible kernels in each lot of any variety. Handlers are required to 
report such inedible determination for each lot received to the Board. 
Section 981.42(a) also provides authority for the Board, with the 
approval of the Secretary, to establish rules and regulations necessary 
and incidental to the administration of the order's quality control 
provisions.
    Section 981.442 of the order's administrative rules and regulations 
specifies that the weight of inedible kernels in each lot of any 
variety of almonds in excess of 1 percent of the kernel weight received 
by a handler shall constitute such handler's inedible disposition 
obligation. Handlers are required to deliver inedible kernels 
accumulated in the course of processing to Board-approved accepted 
users of such product in order to satisfy the disposition obligation. 
Accepted users then dispose of inedible kernels to non-human 
consumption outlets. Because inedible kernels are considered unfit for 
human consumption, requiring handlers to meet this obligation helps to 
ensure that each handler's outgoing shipments of almonds are relatively 
free of almonds with serious damage, and the number of kernels with 
minor damage should be minimal.
    Accepted users of inedible almonds file an application with the 
Board specifying certain terms and conditions with which they will 
voluntarily abide. The application also indicates they will dispose of 
the inedible almonds received from handlers in one or more of the 
following manners: crushing into oil; manufacturing into animal feed; 
or feeding directly to animals. The Board staff reviews and approves 
accepted user applications on an annual basis.
    Section 981.442(a)(7) of the rules and regulations lists 
eligibility criteria for accepted users. These criteria are applied by 
the Board when reviewing and approving accepted users. However, the 
regulations do not specifically address when the Board may deny or 
revoke accepted user status. Situations

[[Page 41710]]

have occurred in the past wherein accepted users have failed to 
completely meet these conditions, and the Board could not be assured 
the inedible almonds were being disposed of in non-human consumption 
outlets.
    The Board met on March 25, 1998, and unanimously recommended adding 
language to Sec. 981.442(a)(7) of the administrative rules and 
regulations stating that an accepted user's status may be denied or 
revoked if the eligibility requirements are not met or if the terms and 
conditions agreed to in the accepted user application are not met. The 
Board recommended that this change be made effective by the beginning 
of the crop year (August 1, 1998), or as soon as possible thereafter, 
so that this action coincides with the approval cycle for accepted user 
applications.
    This change provides a clear foundation of understanding between 
the Board, handlers, and accepted users. This action will assist in 
maintaining the integrity of the Board's quality control program by 
providing clear authority to deny or revoke accepted user status. This 
will help to ensure inedible almonds are properly disposed of in non-
human consumption outlets, which is in the interest of producers, 
handlers, and consumers.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this action on small entities. Accordingly, AMS has 
prepared this final regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and rules issued thereunder, are unique in that 
they are brought about through group action of essentially small 
entities acting on their own behalf. Thus, both statutes have small 
entity orientation and compatibility.
    There are approximately 97 handlers of California almonds who are 
subject to regulation under the order and approximately 7,000 almond 
producers in the regulated area. Small agricultural service firms have 
been defined by the Small Business Administration (13 CFR 121.601) as 
those having annual receipts of less than $5,000,000, and small 
agricultural producers are defined as those having annual receipts of 
less than $500,000.
    Currently, about 58 percent of the handlers ship under $5,000,000 
worth of almonds and 42 percent ship over $5,000,000 worth on an annual 
basis. In addition, based on acreage, production, and grower prices 
reported by the National Agricultural Statistics Service, and the total 
number of almond growers, the average annual grower revenue is 
approximately $156,000. In view of the foregoing, it can be concluded 
that the majority of handlers and producers of California almonds may 
be classified as small entities.
    There are currently 23 accepted users of inedible almonds approved 
by the Board. Accepted users may enter into a voluntary agreement with 
the Board to function as an outlet to which handlers can ship inedible 
almonds to satisfy an order obligation. While data concerning these 
entities is limited, based on a review of the quantity of inedible 
almonds delivered to each entity, it is believed that the majority may 
be classified as small entities.
    This rule revises the quality control provisions of the 
administrative rules and regulations issued under the California almond 
order. Under the terms of the order, handlers are required to obtain 
inspection on almonds received from growers to determine the percent of 
inedible almonds in each lot of any variety. Handlers are then required 
to dispose of a quantity of almonds in excess of 1 percent of the 
weight of almonds reported as inedible to accepted users of such 
product. Accepted users are approved annually by the Board.
    Section 981.442(a)(7) of the order's administrative rules and 
regulations provides criteria which accepted users must meet. This rule 
revises this section to specify that an accepted user's status may be 
denied or revoked if the criteria are not met. This rule will help 
maintain the integrity of the Board's quality control program.
    This change is not expected to impact handlers, other than to 
clarify to them that an accepted user's status may be denied or 
revoked. Handlers are provided a listing of approved accepted users so 
they know who they can deliver inedible material to and receive credit 
against their obligation. In the event an application for accepted user 
status is denied or an accepted user's status is revoked, handlers will 
be notified by Board staff and provided an updated listing.
    This rule only impacts applicants for accepted user status, or 
accepted users in the sense that it clarifies that accepted user status 
may be denied or revoked if the terms and conditions set forth in the 
rules and regulations and the accepted user application are not met. 
Accepted users are approved entities to which handlers may deliver 
inedible almonds and receive credit against their inedible disposition 
obligation. Accepted users voluntarily agree to meet certain terms and 
conditions so the Board may be assured that inedible almonds do not 
enter human consumption channels. If these dealers in inedible almonds 
do not agree to the terms and conditions, they are not approved by the 
Board. However, they may still operate in the business, although 
handlers do not receive credit against their inedible disposition 
obligation if they deliver product to such non-approved entities. 
Situations have occurred in the past wherein accepted users have failed 
to completely meet these conditions, and the Board could not be assured 
the inedible almonds were being disposed of in non-human consumption 
outlets.
    One alternative to this rule would be to maintain the regulatory 
language as it currently exists, in which case there would be no 
clarification. Another alternative would be to specify at length all 
possible reasons for denying or revoking an accepted user's status. The 
first alternative fails to address the issue, and the second would 
require unnecessary lengthy additions to regulatory language, and may 
be incomplete.
    This rule imposes no additional reporting or recordkeeping 
requirements on either small or large almond 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. In accordance with the Paperwork Reduction 
Act of 1995 (44 U.S.C. Chapter 35), the information collection 
requirements that are contained in this rule have been approved by the 
Office of Management and Budget (OMB) and have been assigned OMB No. 
0581-0071. Finally, the Department has not identified any relevant 
Federal rules that duplicate, overlap or conflict with this rule.
    In addition, the Board's meeting was widely publicized throughout 
the almond industry and all interested persons were invited to attend 
the meeting and participate in Board deliberations. Like all Board 
meetings, the March 25, 1998, meeting was a public meeting and all 
entities, both large and small, were able to express their views on 
this issue. The Board itself is composed of 10 members, of which 5 are 
producers and 5 are handlers.
    Also, the Board has a number of appointed committees to review 
certain issues and make recommendations to the Board. The Board's 
Quality Control Committee met on February 25, 1998,

[[Page 41711]]

and discussed this issue. That meeting was also a public meeting and 
both large and small entities were able to participate and express 
their views.
    A proposed rule concerning this action was published in the Federal 
Register on June 17, 1998 (63 FR 33010). Copies of the rule were mailed 
to all Board members and almond handlers. Finally, the rule was made 
available through the Internet by the Office of the Federal Register. A 
30-day comment period ending July 17, 1998, was provided to allow 
interested persons to respond to the proposal.
    One comment was received in response to the proposed rule. The 
commenter, a marketing cooperative representing California almond 
growers, supported the proposal. The commenter believes that denying or 
revoking accepted user status is the principal method that the Board 
has to ensure that only users that dispose of inedible almonds in 
proper channels are approved by the Board.
    After consideration of all relevant matter presented, including the 
information and recommendation submitted by the Board, the comment 
received, and other available information, it is hereby found that this 
rule, as hereinafter set forth, will tend to effectuate the declared 
policy of the Act.
    It is further found that good cause exists for not postponing the 
effective date of this rule until 30 days after publication in the 
Federal Register (5 U.S.C. 553) because the beginning of the 1998-99 
crop year is August 1, 1998, and the rule needs to be in effect as soon 
as possible so this action coincides with the approval cycle for 
accepted user applications. Further, handlers are aware of this rule, 
which was recommended at a public meeting. Also, a 30-day comment 
period was provided for in the proposed rule, and one comment was 
received which supported the change.

List of Subjects in 7 CFR Part 981

    Almonds, Marketing agreements, Nuts, Reporting and recordkeeping 
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 continues to read as 
follows:

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

    2. Section 981.442 is amended by adding a new paragraph (a)(7)(iv) 
to read as follows:


Sec. 981.442  Quality Control.

    (a) * * *
    (7) * * *
    (iv) The Board may deny or revoke accepted user status at any time 
if the applicant or accepted user fails to meet the terms and 
conditions of Sec. 981.442, or if the applicant or accepted user fails 
to meet the terms and conditions set forth in the accepted user 
application (ABC Form 34).
* * * * *
    Dated: July 30, 1998.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-20913 Filed 8-4-98; 8:45 am]
BILLING CODE 3410-02-P