[Federal Register Volume 69, Number 187 (Tuesday, September 28, 2004)]
[Rules and Regulations]
[Pages 57820-57822]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-21628]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Docket No. FV04-981-4 FIR]


Almonds Grown in California; Revision of Quality Control 
Provisions

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture is adopting, as a final rule, 
without change, an interim final rule that revised 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 continues in effect changes in 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 October 28, 2004.

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 continues in effect revisions to 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 continues to change 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. Prior to implementation of the interim final 
rule (69 FR 40534; July 6, 2004), ``variety'' was defined as that 
variety of almonds which constituted at least 90 percent of the almonds 
in a lot. Further, if no variety constituted at least 90 percent of the 
almonds in a lot, the lot was 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

[[Page 57821]]

of the percentages of each variety that comprise the lot. Previously, 
mixtures of the Butte and Padre varieties were classified by the Board 
as ``mixed'' for purposes of calculating inedible disposition 
obligations if neither variety constituted 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 are now 
classified as ``Butte-Padre'' for the purpose of determining handlers' 
inedible disposition obligations.
    Prior to implementation of the interim final rule, Sec.  
981.442(a)(2) also specified that in cases where it was not known which 
variety constituted 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 was 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 was 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 
``unknown'' varietal classification was eliminated.

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 rule 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 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, 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 continues to revise 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 continues to change the 
varietal types of almonds for which inedible obligations are 
calculated.
    Specifically, this rule continues to revise 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 continues to 
designate ``mixed'' as the varietal classification for lots of 
unidentified varieties of almonds. Finally, the ``unknown'' 
classification continues to be 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. In addition, as noted in the initial regulatory flexibility 
analysis, 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.
    An interim final rule concerning this action was published in the 
Federal Register on July 6, 2004. Copies of the rule were mailed by the 
Board's staff to all Board members and almond handlers. In addition the 
rule was made available through the Internet by USDA and the Office of 
the Federal Register. That rule provided for a 60-day comment period 
which ended September 7, 2004. One comment was received during that 
period, but that comment concerned forest fires and was not relevant to 
this rulemaking action.
    Accordingly, no changes were made to the rule, based on the comment 
received.
    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.
    After consideration of all relevant material presented, including 
the

[[Page 57822]]

information and recommendation submitted by the Board and other 
available information, it is hereby found that finalizing the interim 
final rule, without change, as published in the Federal Register, will 
tend to effectuate the declared policy of the Act.

List of Subjects in 7 CFR Part 981

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

PART 981--ALMONDS GROWN IN CALIFORNIA

0
Accordingly, the interim final rule amending 7 CFR part 981, which was 
published at 69 FR 40534 on July 6, 2004, is adopted as a final rule 
without change.

    Dated: September 22, 2004.
Kenneth C. Clayton,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 04-21628 Filed 9-27-04; 8:45 am]
BILLING CODE 3410-02-P