[Federal Register Volume 73, Number 150 (Monday, August 4, 2008)]
[Rules and Regulations]
[Pages 45153-45156]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-17827]



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  Federal Register / Vol. 73, No. 150 / Monday, August 4, 2008 / Rules 
and Regulations  

[[Page 45153]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Docket No. AO-214-A7; AMS-FV-07-0050; FV07-981-1]


Almonds Grown in California; Order Amending Marketing Order No. 
981

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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

SUMMARY: This final rule amends the marketing order for almonds grown 
in California. The amendments were proposed by the Almond Board of 
California (Board), which is responsible for local administration of 
the order. The amendments will authorize the establishment of different 
outgoing quality requirements for different markets and authorize the 
establishment of bulk container marking and labeling requirements. The 
amendments are intended to provide additional flexibility in 
administering the quality control provisions of the order and provide 
the industry with additional tools for the marketing of almonds.

DATES: This rule is effective August 5, 2008.

FOR FURTHER INFORMATION CONTACT: Martin Engeler, Marketing Order 
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 2202 
Monterey Street, Suite 102-B, Fresno, California 93721; Telephone: 
(559) 487-5110, Fax: (559) 487-5906, or E-mail: 
[email protected]; or Laurel May, 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].
    Small businesses may request information on this proceeding 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: Prior documents in this proceeding: Notice 
of Hearing issued on June 29, 2007, and published in the July 6, 2007, 
issue of the Federal Register (72 FR 36900); a Recommended Decision 
issued on December 21, 2007, and published in the December 28, 2007, 
issue of the Federal Register (72 FR 73671); and a Secretary's Decision 
and Referendum Order issued on February 27, 2008, and published in the 
March 3, 2008, issue of the Federal Register (73 FR 11360).
    This action is governed by the provisions of sections 556 and 557 
of Title 5 of the United States Code and is therefore excluded from the 
requirements of Executive Order 12866.

Preliminary Statement

    This final rule was formulated on the record of a public hearing 
held on August 2, 2007, in Modesto, California. Notice of this hearing 
was issued on June 29, 2007, and published in the July 6, 2007, issue 
of the Federal Register (72 FR 36900). The hearing was held to consider 
the proposed amendment of Marketing Order No. 981, hereinafter referred 
to as the ``order''.
    The hearing was held pursuant to the provisions of the Agricultural 
Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), 
hereinafter referred to as the ``Act,'' and the applicable rules of 
practice and procedure governing the formulation of marketing 
agreements and marketing orders (7 CFR part 900).
    The Notice of Hearing contained two amendment proposals submitted 
by the Almond Board of California (Board), which is responsible for 
local administration of the order. Upon the basis of evidence 
introduced at the hearing and the record thereof, the Administrator of 
AMS on December 21, 2007, filed with the Hearing Clerk, U.S. Department 
of Agriculture, a Recommended Decision and Opportunity to File Written 
Exceptions thereto by January 17, 2008. No exceptions were filed.
    A Secretary's Decision and Referendum Order was issued on February 
27, 2008, directing that a referendum be conducted during the period 
March 24 through April 11, 2008, among almond growers to determine 
whether they favored the proposed amendments to the order. To become 
effective, the amendments had to be approved by at least two-thirds of 
those producers voting or by voters representing at least two-thirds of 
the volume of almonds represented by voters in the referendum. Each of 
the two proposed amendments were favored by at least 80 percent of the 
voters voting in the referendum.
    The amendments approved by voters and included in this order will:
    1. Authorize the establishment of different outgoing almond quality 
requirements for different markets; and
    2. Authorize the establishment of container marking and labeling 
requirements.
    The U.S. Department of Agriculture (USDA) also proposed to allow 
such changes as may be necessary to the order so that all of the 
order's provisions conform to the effectuated amendments. None were 
deemed necessary.
    An amended marketing agreement was subsequently provided to all 
almond handlers in the production area for their approval. The 
marketing agreement was not approved by handlers representing at least 
50 percent of the volume of almonds handled by all handlers during the 
representative period of August 1, 2006, through July 31, 2007.

Small Business Consideration

    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA) (5 U.S.C. 601-612), 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 so that small businesses will not be 
unduly or disproportionately burdened. Marketing orders and amendments 
thereto are unique in that they are normally brought about through 
group action of essentially small entities for their own benefit.
    Small agricultural service firms, which include handlers regulated 
under the order, have been defined by the Small Business Administration 
(SBA) (13 CFR 121.201) as those having annual

[[Page 45154]]

receipts of less than $6,500,000. Small agricultural producers have 
been defined as those with annual receipts of less than $750,000.
    There are approximately 104 handlers of almonds subject to 
regulation under the order and approximately 6,000 producers of almonds 
in the regulated area. Information provided at the hearing indicates 
that approximately 50 percent of the handlers would be considered small 
agricultural service firms. According to data reported by the National 
Agricultural Statistics Service (NASS), the two-year average crop value 
for 2005-06 and 2006-07 was $2.283 billion. Dividing that average by 
6,000 producers yields average estimated producer revenues of $380,500, 
which suggests that the majority of almond producers would also be 
considered small entities according to the SBA's definition.
    The order regulates the handling of almonds grown in the state of 
California. The California almond bearing acreage increased nearly 40 
percent between 1996 and 2006, from 418,000 to 585,000 acres. 
Approximately 1.115 billion pounds (shelled basis) of almonds were 
produced during the 2006-07 season. Bearing acreage for the 2007-08 
season is estimated to be 615,000 acres. NASS has forecasted that the 
2007-08 crop will reach 1.330 billion pounds (shelled basis). More than 
two thirds of California's almond crop is exported to approximately 90 
countries worldwide, and comprises nearly 80 percent of the world's 
almond supply.
    Under the order, incoming and outgoing quality regulations are 
established, statistical information is collected, production research 
projects are conducted, and marketing research and generic promotion 
programs are sponsored. Program activities administered by the Board 
are designed to support large and small almond producers and handlers. 
The 10-member Board is comprised of both producer and handler 
representatives from the production area. Board meetings where 
regulatory recommendations and other decisions are made are open to the 
public. All members are able to participate in Board deliberations, and 
each Board member has an equal vote. Others in attendance at meetings 
are also allowed to express their views.
    The Board's Food Quality and Safety Committee discussed the need 
for amendments to the order at meetings held on May 12, 2005; July 20, 
2005; and November 1, 2006. The Board approved language for two 
proposed amendments to the order at their meeting on November 28, 2006. 
During a conference call on February 27, 2007, the Board confirmed that 
the two amendments should be proposed to USDA. The views of all 
participants were considered throughout this process.
    In addition, the hearing to receive evidence on the proposed 
changes was open to the public and all interested parties were invited 
and encouraged to participate and provide their views.
    The amendments are intended to provide the Board and the industry 
with additional flexibility in the marketing of California almonds. 
Record evidence indicates that the amendments are intended to benefit 
all producers and handlers under the order, regardless of size. There 
are no cost implications for handlers or growers from adding the new 
order authorities. Costs of implementation will be incurred only if 
specific additional requirements are established following future 
informal rulemaking. All grower and handler witnesses supported the 
amendments and commented on the implications of implementing specific 
requirements in the future. In that context, witnesses stated that they 
expected the benefits to be substantial and the costs of any future 
requirements to be minimal.
    A description of the amendments and their anticipated economic 
impact on small and large entities is discussed below.

Proposal 1--Adding the Authority To Establish Different Outgoing 
Quality Requirements for Different Markets

    The record shows that the amendment adding authority to establish 
different outgoing quality requirements for different markets will, in 
itself, have no economic impact on producers or handlers of any size. 
Regulations implemented under that authority could impose additional 
costs on handlers required to comply with them. However, witnesses 
testified that establishing mandatory regulations for different markets 
could increase the industry's credibility and reduce the risk that 
shipments of substandard product could jeopardize the entire industry's 
reputation. Record evidence shows that any additional costs are likely 
to be offset by the benefits of complying with those requirements.
    Witnesses cited decreased delays and demurrage charges, as well as 
fewer rejected loads and increased customer confidence, as expected 
benefits. Recently, almonds have been rejected in the EU due to 
aflatoxin levels exceeding its importing tolerances. Information 
provided at the hearing shows that the rejection of a 44,000 pound 
container of almonds in the EU costs about $10,000, or 22.7 cents per 
pound. The cost includes demurrage for unanticipated delays at port, 
warehousing product while awaiting official import testing results, 
shipping rejected almonds back to the U.S., and shipping a replacement 
container back to the EU.
    To reduce the risk of rejections, the California almond industry 
developed a voluntary aflatoxin testing protocol. Witnesses estimated 
that the cost of the pre-export testing, including the value of the 
sample, analytical fees, courier fees, and sampling labor is less than 
2 cents per pound, which is less than 10 percent of the cost associated 
with a rejection. Proponents testified that if a requirement that all 
almonds destined for the EU be tested prior to shipment was established 
under authority provided by the order amendment, handlers would incur 
the cost of testing, but those costs would be expected to be more than 
offset by the reduced risk of rejections.
    It's likely that most handlers are already complying with their 
customers' specific market requirements on a voluntary basis as a part 
of doing business, but witnesses explained that mandatory requirements 
lend credibility to the entire industry. In addition, such requirements 
could reduce the risk that one shipment of substandard product would 
jeopardize the entire industry's reputation.
    Currently, outgoing quality requirements established under the 
order apply to all handler entities regardless of size. If regulations 
are established pursuant to this amendment, distribution of any 
increased costs between small and large entities would depend on the 
requirements established for the markets to which individual handlers 
shipped their almonds as well as the volume of almonds shipped to those 
markets. But increases in cost would be equitable to all entities 
because requirements for each market would be imposed uniformly on all 
handlers shipping to that market.
    Witnesses explained that almonds are used in many different ways by 
the various markets. In Europe, almonds are widely used as marzipan and 
ingredients for baked goods, candy, and other dishes. In India and the 
Middle East, almonds are presented as gifts at holidays and weddings, 
and play a part in other cultural traditions. India imports large 
quantities of inshell almonds that are then processed by hand. The wide 
range of uses leads to a similarly wide array of customer requirements.
    According to record testimony, handlers adapt their export methods 
to

[[Page 45155]]

satisfy customer requirements. One witness explained that it is often 
difficult for smaller handlers to stay informed of rapidly changing 
import regulations. The witness stated that small handlers in 
particular would benefit from the authority to establish different 
requirements for different markets by avoiding costly mistakes that 
could be associated with not understanding various market and import 
requirements. If regulations are established under this amendment, the 
Board will provide information about updated requirements to the 
industry.
    Finally, one witness explained that having the ability under the 
order to establish different outgoing quality requirements for 
different markets will not restrict handlers' choices regarding which 
markets to supply. Rather, the provision will ensure that the important 
standards that differentiate markets will be consistently met by all 
handlers shipping to those markets.

Proposal 2--Adding the Authority To Establish Container Labeling and 
Marking Requirements

    The second amendment adds Sec.  981.43 to the order to provide 
general authority to establish container marking and labeling 
requirements. This amendment will allow the Board, through the informal 
rulemaking process, to recommend and establish uniform container 
marking and labeling regulations in response to evolving market 
requirements. Under previous order provisions, there is only very 
limited authority for container marking and labeling requirements.
    Witnesses testified that the lack of this authority has hindered 
them from adapting quickly and appropriately to recent market 
situations. In one case described at the hearing, the industry was 
unable to implement container marking or labeling following recalls for 
possible Salmonella contamination. Witnesses stated that customer 
confidence in almond quality could have been reinforced if the 
necessary authority to establish marking and labeling requirements had 
been available. Such authority would have allowed the industry to 
prescribe labeling to clearly indicate which almonds had been treated 
to reduce risk of contamination.
    The amendment will allow the industry to respond to evolving market 
needs as they develop by establishing uniform and consistent marking 
and labeling requirements. According to proponents, the ability to 
communicate important product information to customers in a uniform and 
consistent manner will be essential as the industry strives to maintain 
its position in the expanding global marketplace.
    If regulations are implemented pursuant to this amendment, costs of 
complying with any regulations established thereunder will not be 
disproportionate to small businesses. Witnesses testified that applying 
labels and marks to almond containers is currently a common practice, 
and industry handlers already have container marking processes and 
equipment in place. Therefore, the costs associated with the addition 
of uniform marking or labeling requirements will be minimal for both 
small and large entities. The record shows that any costs will likely 
be offset by the benefits derived from being more responsive to market 
demands.
    Interested persons were invited to present evidence at the hearing 
on the probable regulatory and informational impact of the proposed 
amendments to the order on small entities. The record evidence 
indicates that the amendments are intended to benefit all producers and 
handlers under the order, regardless of size. Further, the record shows 
that the costs associated with implementing regulations would be 
outweighed by the benefits expected to accrue to the California almond 
industry.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap or conflict with this rule. These amendments are designed to 
enhance the administration and functioning of the order to the benefit 
the California almond industry.

Paperwork Reduction Act

    Information collection requirements for part 981 are currently 
approved by the Office of Management and Budget (OMB), under OMB Number 
0581-0178, Vegetable and Specialty Crops. Implementation of these 
amendments will not trigger any changes to those requirements. Should 
any such changes become necessary in the future, they will be submitted 
to OMB for approval.
    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 complying 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.
    AMS is committed to complying with the E-Government Act, to promote 
the use of the Internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.

Civil Justice Reform

    The amendments to Marketing Order 981 stated herein have been 
reviewed under Executive Order 12988, Civil Justice Reform. They are 
not intended to have retroactive effect. The amendments will not 
preempt any State or local laws, regulations, or policies, unless they 
present an irreconcilable conflict with an amendment.
    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. A 
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 Sates 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 no later than 20 days after the date of the 
entry of the ruling.

Order Amending the Order Regulating the Handling of Almonds Grown in 
California

Findings and Determinations

    The findings and determinations set forth hereinafter are 
supplementary and in addition to the findings and determinations 
previously made in connection with the issuance of the order; and all 
of said previous findings and determinations are hereby ratified and 
affirmed, except insofar as such findings and determinations may be in 
conflict with the findings and determinations set forth herein.

    (a) Findings and Determinations Upon the Basis of the Hearing 
Record.
    Pursuant to the provisions of the Agricultural Marketing 
Agreement Act of 1937, as amended (7 U.S.C. 601-674) and the 
applicable rules of practice and procedure effective thereunder (7 
CFR part 900), a public hearing was held upon the proposed 
amendments to Marketing Order No. 981 (7 CFR part 981), regulating 
the handling of almonds grown in California.
    Upon the basis of the evidence introduced at such hearing and 
the record thereof, it is found that:
    (1) The marketing order, as amended, and as hereby further 
amended, and all of the terms and conditions thereof, will tend to 
effectuate the declared policy of the Act;

[[Page 45156]]

    (2) The marketing order, as amended, and as hereby further 
amended, regulates the handling of almonds grown in the production 
area in the same manner as, and is applicable only to persons in the 
respective classes of commercial and industrial activity specified 
in the marketing order upon which hearings have been held;
    (3) The marketing order, as amended, and as hereby further 
amended, is limited in application to the smallest regional 
production area which is practicable, consistent with carrying out 
the declared policy of the Act, and the issuance of several orders 
applicable to subdivision of the production area would not 
effectively carry out the declared policy of the Act;
    (4) The marketing order, as amended, and as hereby further 
amended, prescribes, insofar as practicable, such different terms 
applicable to different parts of the production area as are 
necessary to give due recognition to the differences in the 
production and marketing of almonds grown in the production area; 
and
    (5) All handling of almonds grown in the production area is in 
the current of interstate or foreign commerce or directly burdens, 
obstructs, or affects such commerce.
    (b) Additional Findings.
    It is necessary and in the public interest to make these 
amendments effective not later than one day after publication in the 
Federal Register. A later effective date would unnecessarily delay 
implementation of the new amendments. These amendments should be in 
place as soon as possible as the new crop year begins August 1. 
Making the effective date one day after publication in the Federal 
Register will allow the industry to consider regulations 
implementing the new order authorities at the beginning of the new 
crop year, which would be beneficial to the industry.
    (c) Determinations. It is hereby determined that:
    (1) Handlers (excluding cooperative associations of producers 
who are not engaged in processing, distributing, or shipping almonds 
covered by the order as hereby amended) who, during the period 
August 1, 2006, through July 31, 2007, handled 50 percent or more of 
the volume of such almonds covered by said order, as hereby amended, 
have not signed an amended marketing agreement; and,
    (2) The issuance of this amendatory order, further amending the 
aforesaid order, is favored or approved by at least two-thirds of 
the producers who participated in a referendum on the question of 
approval and who, during the period of August 1, 2006, through July 
31, 2007 (which has been deemed to be a representative period), have 
been engaged within the production area in the production of such 
almonds, such producers having also produced for market at least 
two-thirds of the volume of such commodity represented in the 
referendum; and
    (3) In the absence of a signed marketing agreement, the issuance 
of this amendatory order is the only practical means pursuant to the 
declared policy of the Act of advancing the interests of producers 
of almonds in the production area.

Order Relative to Handling of Almonds Grown in California

    It is therefore ordered, that on and after the effective dates 
hereof, all handling of almonds grown in California shall be in 
conformity to, and in compliance with, the terms and conditions of the 
said order as hereby amended as follows:
    The provisions of the proposed order further amending the order 
contained in the Secretary's Decision issued by the Administrator on 
February 27, 2008, and published in the Federal Register on March 3, 
2008 (73 FR 11360), shall be and are the terms and provisions of this 
order amending the order and set forth in full herein.

List of Subjects in 7 CFR Part 981

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

PART 981--ALMONDS GROWN IN CALIFORNIA

0
For the reasons set forth in the preamble, Title 7 of Chapter XI of the 
Code of Federal Regulations is amended by amending part 981 to read as 
follows:
0
1. The authority citation for 7 CFR part 981 continues to read as 
follows:

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


0
2. Amend paragraph (b) of Sec.  981.42 by adding the following sentence 
before the last sentence to read as follows:


Sec.  981.42  Quality control.

* * * * *
    (b) * * * The Board may, with the approval of the Secretary, 
establish different outgoing quality requirements for different 
markets. * * *

0
3. Add a new Sec.  981.43 to read as follows:


Sec.  981.43  Marking or labeling of containers.

    The Board may, with the approval of the Secretary, establish 
regulations to require handlers to mark or label their containers that 
are used in packaging or handling of bulk almonds. For purposes of this 
section, container means a box, bin, bag, carton, or any other type of 
receptacle used in the packaging or handling of bulk almonds.

    Dated: July 30, 2008.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. E8-17827 Filed 8-1-08; 8:45 am]
BILLING CODE 3410-02-P