[Federal Register Volume 71, Number 158 (Wednesday, August 16, 2006)]
[Proposed Rules]
[Pages 47152-47154]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-6941]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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 

  Federal Register / Vol. 71, No. 158 / Wednesday, August 16, 2006 / 
Proposed Rules  

[[Page 47152]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Docket No. FV06-981-2 PR]


Almonds Grown in California; Changes to Incoming Quality Control 
Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule invites comments on changing the incoming quality 
control requirements under the administrative rules and regulations of 
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). These changes would help 
minimize the risk of aflatoxin in almonds by removing inedible kernels 
from human consumption. Inedible almonds are poor quality kernels or 
pieces of defective kernels that may be contaminated with aflatoxin. 
This action is intended to improve the overall quality of almonds 
placed into consumer channels.

DATES: Comments must be received by August 23, 2006.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent to the Docket Clerk, 
Marketing 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: Maureen T. Pello, Assistant Regional 
Manager, or Kurt Kimmel, Regional Manager, California Marketing Field 
Office, Marketing Order Administration Branch, Fruit and Vegetable 
Programs, AMS, USDA, telephone: (559) 487-5901, Fax: (559) 487-5906, or 
E-mail: [email protected], or [email protected].
    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 proposed 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 proposed rule invites comments on changing the incoming 
quality control requirements under the administrative rules and 
regulations of the order. These changes would help minimize the risk of 
aflatoxin in almonds by removing inedible almonds from human 
consumption. Inedible almonds are poor quality kernels or pieces of 
defective kernels that may be contaminated with aflatoxin. These 
changes are intended to improve the overall quality of almonds placed 
into consumer channels, and were recommended by the Board at a meeting 
on May 18, 2006.
    Section 981.42 of the order provides authority for a quality 
control program. Paragraph (a) of that section requires handlers to 
obtain incoming inspections on almonds received from growers to 
determine the percent of inedible kernels in each lot of any variety. 
Based on these inspections, handlers incur an inedible disposition 
obligation. They must satisfy their obligation by disposing of inedible 
almonds in outlets such as oil and animal feed.
    Section 981.442(a)(4) of the order's administrative rules and 
regulations specifies that the weight of inedible kernels in excess of 
1 percent of kernel weight shall constitute that handler's disposition 
obligation. Handlers must satisfy the disposition obligation by 
delivering packer pickouts, kernels rejected in blanching, pieces of 
kernels, 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 of such product. Accepted users 
dispose of this material through non-human consumption outlets. 
Paragraph (a)(5) of Sec.  981.442 specifies further that at least 25 
percent of a handler's total annual disposition obligation be satisfied 
with inedible kernels as defined under Sec.  981.408. Handlers with 
total annual inedible obligations of less than 1,000 pounds are exempt 
from the 25 percent requirement.
    Board research has shown that aflatoxin in almonds is directly 
related to insect damage in inedible kernels. In order to help minimize 
the risk of aflatoxin in almonds, the Board recommended reducing the 
tolerance for

[[Page 47153]]

inedible kernels from 1 to .50 percent, and increasing the percent of a 
handler's total annual inedible obligation that must be true inedibles 
from 25 to 50 percent. Such revisions are intended to improve the 
overall quality of almonds placed into consumer channels.
    All of the Board's members supported the change regarding true 
inedibles, but three of the Board's 10 members opposed the change to 
reduce the incoming tolerance for inedible kernels (the Board's 
chairperson abstained). Those opposed pointed to the existing 2 percent 
outgoing tolerance and expressed concern about additional costs that 
handlers may incur to separate out inedible kernels. The majority of 
Board members supported both changes. Paragraphs (a)(4) and (a)(5) of 
Sec.  981.442 are proposed to be revised accordingly.

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 115 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 of less than $750,000, and small agricultural service 
firms are defined as those whose annual receipts are less than 
$6,500,000.
    Data for the most recently completed crop year indicate that about 
52 percent of the handlers shipped under $6,500,000 worth of almonds. 
Dividing average almond crop value for 2003-2005 reported by the 
National Agricultural Statistics Service ($2.171 billion) by the number 
of producers (6,000) yields an average annual producer revenue estimate 
of about $362,000. Based on the foregoing, about half of the handlers 
and a majority of almond producers may be classified as small entities.
    This rule would revise paragraphs (a)(4) and (a)(5) of Sec.  
981.442 of the order's administrative rules and regulations regarding 
inedible almonds. These changes would help minimize the risk of 
aflatoxin in almonds by removing inedible kernels from human 
consumption. Inedible almonds are poor quality kernels or pieces of 
defective kernels that may be contaminated with aflatoxin. 
Specifically, this action would reduce the tolerance for inedible 
kernels in each variety of almonds received by a handler from 1 to .50 
percent, and increase the percent of a handler's annual inedible 
obligation that must be satisfied with dispositions containing inedible 
almonds from 25 to 50 percent. Authority for these changes is provided 
in Sec.  981.42(a) of the order.
    Regarding the impact of the proposed action on affected entities, 
this action is intended to improve the overall quality of almonds 
placed into consumer channels and therefore would be beneficial to the 
industry. In addition, this rule is not expected to change handler 
inspection costs. Handlers must currently have an incoming inspection 
done on each lot of almonds received to determine the percent of 
inedible kernels. Additionally, inedible almond dispositions must be 
inspected to determine the percent of inedible kernels in such 
dispositions. Such inspections are performed by the inspection agency, 
which means the Federal-State Inspection Service. The inspection agency 
charges a fee of $40 per hour, plus $0.75 per ton, with a minimum total 
fee of $55, to perform an inedible disposition inspection.
    The Board considered various alternatives and options before making 
its recommendation on inedible almonds. It was decided that a 0.5 
percent tolerance was appropriate rather than 0 percent. As previously 
stated, opposition Board members pointed to the existing 2 percent 
outgoing tolerance and expressed concern about additional costs that 
handlers may incur to separate out inedible kernels. Ultimately, the 
majority of Board members supported both changes. The Board's Food 
Quality and Safety (FQS) Committee met again via teleconference on June 
13, 2006, and concurred with the Board's recommendation.
    This action would impose no additional reporting and recordkeeping 
burden on California almonds handlers. In accordance with the Paperwork 
Reduction Act of 1995 (44 U.S.C. Chapter 35), the information 
collection requirements in this rule have been approved by the Office 
of Management and Budget (OMB) under OMB Control No. 0581-0178. 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 compliance with the Government Paperwork 
Elimination Act, which requires Government agencies in general to 
provide the public the option of submitting information or transacting 
business electronically to the maximum extent possible.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this rule. There are U.S. Standards for 
Grades of Shelled Almonds (7 CFR 51.2105 through 51.2131) and U.S. 
Standards for Grades of Almonds in the Shell (7 CFR 51.2075 through 
51.2091) issued under the Agricultural Marketing Act of 1946 (7 U.S.C. 
1621 through 1627). However, these standards are voluntary for the 
almond industry.
    Additionally, the meetings were 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 Board meetings, the task force meetings on March 23 and April 
26, 2006, the FQS Committee meetings on April 11, May 8, and June 13, 
2006, and the Board meeting on May 18, 2006, 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.
    A 7-day comment period is provided to allow interested persons to 
respond to this proposal. Seven days is deemed appropriate because the 
2006-07 crop year begins on August 1, 2006, and therefore, this rule, 
if adopted, should be in effect as soon as possible.

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 
proposed to be amended as follows:

[[Page 47154]]

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 revising the first sentence of 
paragraph (a)(4)(i) and the eleventh sentence in paragraph (a)(5) to 
read as follows:


Sec.  981.442  Quality control.

    (a) * * *
    (4) Disposition obligation. (i) The weight of inedible kernels in 
excess of .50 percent of kernel weight reported to the Board of any 
variety received by a handler shall constitute that handler's 
disposition obligation. * * *
* * * * *
    (5) Meeting the disposition obligation.
    * * * At least 50 percent of a handler's total crop year inedible 
disposition obligation shall be satisfied with dispositions consisting 
of inedible kernels as defined in Sec.  981.408: Provided, That this 50 
percent requirement shall not apply to handlers with total annual 
obligations of less than 1,000 pounds. * * *
* * * * *

    Dated: August 9, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 06-6941 Filed 8-11-06; 2:16 pm]
BILLING CODE 3410-02-P