[Federal Register Volume 69, Number 128 (Tuesday, July 6, 2004)]
[Rules and Regulations]
[Pages 40534-40537]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-15278]


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

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Docket No. FV04-981-4 IFR]


Almonds Grown in California; Revision of Quality Control 
Provisions

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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

SUMMARY: This rule revises the quality control provisions under the 
California almond marketing order (order). The order regulates the 
handling of almonds grown in California and is administered locally by 
the Almond Board of California (Board). Under the order, handlers 
receiving almonds from growers must have them inspected to determine 
the percentage of inedible almonds in each lot. Based on these 
inspections, handlers incur an inedible disposition obligation. This 
obligation is calculated by the Board for each variety of almonds, and 
handlers must satisfy the obligation by disposing of inedible almonds 
or almond material in outlets such as oil and animal feed. This rule 
changes the varietal classifications of almonds for which inedible 
obligations are calculated. This will allow the Board to determine 
handlers' inedible disposition obligations by varietal classifications 
consistent with handler reporting requirements and current industry 
harvesting and marketing practices.

DATES: Effective August 1, 2004; comments received by September 7, 2004 
will be considered prior to issuance of a final rule.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent to the Docket Clerk, 
Marketing

[[Page 40535]]

Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 
1400 Independence Avenue SW., STOP 0237, Washington, DC 20250-0237; 
Fax: (202) 720-8938, E-mail: [email protected], or Internet: 
http://www.regulations.gov. All comments should reference the docket 
number and the date and page number of this issue of the Federal 
Register and will be available for public inspection in the Office of 
the Docket Clerk during regular business hours, or can be viewed at: 
http://www.ams.usda.gov/fv/moab.html.

FOR FURTHER INFORMATION CONTACT: Martin Engeler, Assistant 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 George Kelhart, Technical Advisor, 
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.
    Small businesses may request information on complying with this 
regulation by contacting Jay Guerber, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence 
Avenue SW., STOP 0237, Washington, DC 20250-0237; telephone: (202) 720-
2491, Fax: (202) 720-8938, or E-mail: [email protected].

SUPPLEMENTARY INFORMATION: This 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 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 (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. Such 
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 revises the quality control provisions under the order. 
Under the order, handlers receiving almonds from growers must have them 
inspected to determine the percentage of inedible almonds in each lot. 
Based on these inspections, handlers incur an inedible disposition 
obligation. This obligation is calculated by the Board for each variety 
of almonds, and handlers must satisfy the obligation by disposing of 
inedible almonds or almond material in outlets such as oil and animal 
feed. This rule changes the varietal classifications of almonds for 
which inedible obligations are calculated. This will allow the Board to 
determine handlers' inedible disposition obligations by varietal 
classifications consistent with handler reporting requirements and 
current industry harvesting and marketing practices. This action was 
unanimously recommended by the Board at a meeting on May 20, 2004.
    Section 981.42 of the almond marketing order provides authority for 
quality control regulations, including a requirement that almonds must 
be inspected prior to processing (incoming inspection) to determine, by 
variety, the percentage of inedible kernels in each lot received. The 
percentage of inedible kernels are reported to individual handlers and 
the Board, by variety, as determined by the incoming inspection. The 
Board then calculates each handler's inedible disposition obligation by 
variety, and handlers are required to dispose of a quantity of almonds 
equal to their inedible weight obligation.
    Section 981.442(a)(2) of the order's rules and regulations defines 
``variety'' for the purpose of calculating handlers' inedible 
disposition obligations. Currently, ``variety'' is defined as that 
variety of almonds which constitutes at least 90 percent of the almonds 
in a lot. Further, if no variety constitutes at least 90 percent of the 
almonds in a lot, the lot is classified as ``mixed''. One such mixture 
is the combination of the Butte and Padre varieties of almonds, which 
have very similar characteristics. It has become common practice within 
the industry to harvest the two varieties together and sell them under 
the marketing classification known as ``California''. In addition to 
harvesting and marketing these varieties together, handlers also 
present them for inspection and report them as ``Butte-Padre'', rather 
than ``mixed'', regardless of the percentages of each variety that 
comprise the lot. Mixtures of the Butte and Padre varieties are 
classified by the Board as ``mixed'' for purposes of calculating 
inedible disposition obligations if neither variety constitutes at 
least 90 percent of the lot.
    To be consistent with the harvesting, reporting, and marketing of 
the Butte and Padre varieties, mixtures of these varieties should be 
classified as ``Butte-Padre'' for the purpose of determining handlers'' 
inedible disposition obligations.
    Currently, Sec.  981.442(a)(2) also specifies that in cases where 
it is not known which variety constitutes at least 90 percent of a 
mixed lot, the lot should be classified as ``unknown''. In the past, 
very small ``door lot'' deliveries were accumulated by gathering 
almonds from isolated trees of unknown varieties. This practice is no 
longer common in the industry, and virtually all almond deliveries 
consist of known varieties of almonds. Thus, the use of ``unknown'' is 
no longer necessary or appropriate.
    Harvesting, marketing, and reporting mixtures of Butte and Padre 
varieties of almonds together as one varietal type and reporting lots 
of unknown varieties of almonds as ``mixed'' are now common practices 
in the industry. In order for the Board to calculate handlers' inedible 
disposition obligations by variety and to be consistent with current 
industry practices, it is necessary to implement changes to the 
administrative rules and regulations. Thus, the Board recommended that 
the rules and regulations be revised.
    Section 981.442(a)(2) of the quality control regulations regarding 
the classification of varietal types for the purpose of determining 
handlers' inedible disposition obligations is therefore revised to add 
``Butte-Padre'' as the varietal classification for mixed lots of the 
Butte and Padre varieties of almonds, regardless of the percentage of 
each variety in the lot. Other mixed variety lots that do not contain 
at least 90 percent of one variety will continue to be classified as 
``mixed''. Lots of almonds for which the variety or varieties are not 
specified will also be classified as ``mixed''. Accordingly, the

[[Page 40536]]

``unknown'' varietal classification is eliminated.

Initial 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 rule 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 in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and the 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 6,000 producers of almonds in the 
production area and approximately 119 handlers subject to regulation 
under the marketing order. Small agricultural producers are defined by 
the Small Business Administration (13 CFR 121.201) as those having 
annual receipts less than $750,000, and small agricultural service 
firms are defined as those whose annual receipts are less than 
$5,000,000.
    Data for the most recently completed crop year indicate that about 
38 percent of the handlers shipped over $5,000,000 worth of almonds and 
about 62 percent of the handlers shipped under $5,000,000 worth of 
almonds. In addition, based on production and grower price data 
reported by the California Agricultural Statistics Service (CASS), and 
the total number of almond growers, the average annual grower revenue 
is estimated to be approximately $199,000. Based on the foregoing, the 
majority of handlers and producers of almonds may be classified as 
small entities.
    This rule revises the quality control provisions under the order. 
Under the order, handlers receiving almonds from growers must have them 
inspected to determine the percentage of inedible almonds in each lot. 
Based on these inspections, handlers incur an inedible disposition 
obligation. This obligation is calculated by the Board for each variety 
of almonds, and handlers must satisfy the obligation by disposing of 
inedible almonds or almond material in outlets such as oil and animal 
feed. This rule changes the varietal types of almonds for which 
inedible obligations are calculated. This will allow the Board to 
determine handlers' inedible disposition obligations by varietal types 
that are consistent with current industry harvesting and marketing 
practices, and handler reporting requirements.
    Specifically, this rule revises Sec.  981.442(a)(2) of the 
regulations by adding ``Butte-Padre'' as the varietal classification 
for mixed lots of Butte and Padre almonds, regardless of the percentage 
of each variety in the lot. This rule also designates ``mixed'' as the 
varietal classification for lots of unidentified varieties of almonds. 
Finally, the ``unknown'' classification is removed. These revisions 
will permit the Board to calculate handlers' inedible disposition 
obligations consistent with current industry harvesting and marketing 
practices, and handler reporting requirements. This action was reviewed 
and unanimously recommended by the Food Quality and Safety Committee 
(FQSC) at its April 27, 2004, meeting, and by the Board at its meeting 
held on May 20, 2004.
    These revisions are not expected to have a financial impact on 
handlers, including small businesses. The regulations are applied 
uniformly on all handlers, regardless of size. This action imposes no 
additional reporting or recordkeeping requirements on either small or 
large California 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.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this rule.
    The meetings of the FQSC and the Board were both widely publicized 
throughout the California almond industry and all interested persons 
were invited to attend the meetings and participate in deliberations on 
all issues. Like all committee and Board meetings, those held on April 
27, and May 20, 2004, were public meetings and all entities, both large 
and small, were able to express views on this issue. Finally, 
interested persons are invited to submit information on the regulatory 
and informational impacts of this action on small businesses.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab.html. Any questions about the compliance 
guide should be sent to Jay Guerber at the previously mentioned address 
in the FOR FURTHER INFORMATION CONTACT section.
    This rule invites comments on a change to the quality control 
requirements under the California almond marketing order. Any comments 
received will be considered prior to finalization of this rule.
    After consideration of all relevant material presented, including 
the information and recommendation submitted by the Board 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.
    Pursuant to 5 U.S.C. 553, it is also found and determined upon good 
cause that it is impracticable, unnecessary, and contrary to the public 
interest to give preliminary notice prior to putting this rule into 
effect, and that good cause exists for not postponing the effective 
date of this rule until 30 days after publication in the Federal 
Register because: (1) The 2004-05 crop year begins on August 1, 2004, 
and quality control regulations apply to all almonds received during 
the entire crop year; (2) handlers are aware of this action which was 
unanimously recommended by the Board at a public meeting; and (3) this 
interim final rule provides a 60-day comment period, and all comments 
timely received will be considered prior to finalization of this rule.

List of Subjects in 7 CFR Part 981

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

0
For the reasons set forth in the preamble, 7 CFR part 981 is amended as 
follows:

PART 981--ALMONDS GROWN IN CALIFORNIA

0
1. The authority citation for 7 CFR part 981 continues to read as 
follows:

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

0
2. Section 981.442 is amended by revising paragraph (a)(2) to read as 
follows:


Sec.  981.442  Quality control.

    (a) * * *
    (1) * * *
    (2) Variety. For the purpose of classifying receipts by variety to 
determine a handler's disposition obligation, ``variety'' shall mean 
that variety of almonds which constitutes at least 90 percent of the 
lot: Provided, That lots containing a combination of Butte and Padre 
varieties only, shall be classified as ``Butte-Padre'', regardless of 
the percentage of each variety in the lot. If no variety constitutes at 
least 90 percent of the almonds in a lot, the lot shall be classified 
as ``mixed'': Provided further, That if the variety or varieties of 
almonds in a lot are not identified, the lot shall be classified as 
``mixed'',

[[Page 40537]]

regardless of the percentage of each variety in a lot.
* * * * *

    Dated: June 30, 2004.
Kenneth C. Clayton,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 04-15278 Filed 7-2-04; 8:45 am]
BILLING CODE 3410-02-P