[Federal Register Volume 74, Number 85 (Tuesday, May 5, 2009)]
[Proposed Rules]
[Pages 20630-20647]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-10150]


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 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. 74, No. 85 / Tuesday, May 5, 2009 / Proposed 
Rules  

[[Page 20630]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 983

[Doc. No. AO-FV-08-0147; AMS-FV-08-0051; FV08-983-1]


Pistachios Grown in California; Recommended Decision and 
Opportunity To File Written Exceptions to Proposed Amendment of 
Marketing Order No. 983

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule and opportunity to file exceptions.

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

SUMMARY: This is a recommended decision regarding proposed amendments 
to Marketing Agreement and Order No. 983 (order), which regulates the 
handling of pistachios grown in California. The amendments were 
proposed by the Administrative Committee for Pistachios (Committee), 
which is responsible for local administration of the order. The 
proposed amendments would: Expand the production area covered under the 
order to include Arizona and New Mexico in addition to California; 
authorize the Committee to reimburse handlers for a portion of their 
inspection and certification costs in certain situations; authorize the 
Committee to recommend research projects; modify existing order 
authorities concerning aflatoxin and quality regulations; modify the 
authority for interhandler transfers of order obligations; redesignate 
several sections of the order; remove previously suspended order 
provisions, and make other related changes. The amendments are intended 
to improve the operation and functioning of the marketing order 
program. This recommended decision invites written exceptions on the 
proposed amendments. This rule also announces AMS's intention to 
request approval by the Office of Management and Budget (OMB) of a new 
information collection.

DATES: Written exceptions must be filed by June 4, 2009. Pursuant to 
the Paperwork Reduction Act, comments on the information collection 
burden must be received by July 6, 2009.

ADDRESSES: Written exceptions should be filed with the Hearing Clerk, 
U.S. Department of Agriculture, Room 1031-S, Washington, DC 20250-9200, 
Fax: (202) 720-9776 or via the Internet at http://www.regulations.gov, 
or to Martin Engeler at the E-mail address provided in the For Further 
Information Contact section. All comments should reference the document 
number and the date and page number of this issue of the Federal 
Register. Comments will be made available for public inspection in the 
Office of the Hearing Clerk during regular business hours, or can be 
viewed at: http://www.regulations.gov. All comments submitted in 
response to this rule will be included in the record and will be made 
available to the public. Please be advised that the identity of the 
individuals or entities submitting the comments will be made public on 
the Internet at the address provided above.

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) 720-1509, 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, E-mail: [email protected].

SUPPLEMENTARY INFORMATION: Prior document in this proceeding: Notice of 
Hearing issued on July 15, 2008, and published in the July 18, 2008, 
issue of the Federal Register (73 FR 41298).
    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

    Notice is hereby given of the filing with the Hearing Clerk of this 
recommended decision with respect to the proposed amendments to 
Marketing Agreement and Order 983 regulating the handling of pistachios 
grown in California, and the opportunity to file written exceptions 
thereto. Copies of this decision can be obtained from Martin Engeler, 
whose address is listed above.
    This recommended decision is issued 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 orders (7 CFR Part 900).
    The proposed amendments are based on the record of a public hearing 
held July 29 and 30, 2008, in Fresno, California. Notice of this 
hearing was published in the Federal Register on July 18, 2008 (73 FR 
41298). The notice of hearing contained the proposals submitted by the 
Committee.
    The proposed amendments were recommended by the Committee and 
submitted to USDA on June 10, 2008. After reviewing the recommendation 
and other information submitted by the Committee, AMS determined to 
proceed with the formal rulemaking process and schedule the matter for 
hearing.
    The proposed amendments include addition of new sections to the 
order which would result in numerical redesignation of several sections 
of the order. The redesignated sections would allow the related 
provisions to be grouped together in the order. The proposed amendments 
recommended by the Committee are summarized below.
    1. Proposal 1 would amend the order to expand the production area 
to include the States of Arizona and New Mexico. The production area 
covered under the order is currently limited to the State of 
California. This proposal would revise existing Sec.  983.26, 
Production area, and redesignate it as Sec.  983.25. It would also 
result in corresponding changes being made to existing Sec.  983.11, 
Districts; Sec.  983.21, Part and subpart; and existing Sec.  983.32, 
Establishment and membership. Existing sections 983.21 and 983.32

[[Page 20631]]

would also be redesignated as Sec.  983.20 and Sec.  983.41, 
respectively.
    2. Proposal 2 would amend the order to authorize the Committee to 
reimburse handlers for travel and shipping costs related to aflatoxin 
inspection, under certain circumstances. This proposal would amend 
existing Sec.  983.44, Inspection, certification and identification, 
and redesignate it as Sec.  983.56.
    3. Proposal 3 would amend the order to add a new Sec.  983.46, 
Research, that would authorize the Committee to engage in research 
projects with the approval of USDA. This proposed amendment would also 
require corresponding changes to existing Sec.  983.34, Procedure, to 
establish voting requirements for Committee recommendations concerning 
research. It would also require corresponding changes to existing Sec.  
983.46, Modification or suspension of regulations, and Sec.  983.54, 
Contributions. The existing Sec.  983.34, Sec.  983.46, and Sec.  
983.54 would also be redesignated as Sec.  983.43, Sec.  983.59, and 
Sec.  983.72, respectively.
    4. Proposal 4 would amend the order to provide broad authority for 
aflatoxin regulations by revising existing Sec.  983.38, Aflatoxin 
levels, and redesignating it as Sec.  983.50. This proposal would also 
require corresponding changes to existing Sec.  983.40, and 
redesignating that section as Sec.  983.52. It would also require 
corresponding changes to Sec.  983.1, Accredited laboratory.
    5. Proposal 5 would amend the order to provide broad authority for 
quality regulations by revising existing Sec.  983.39, Minimum quality 
levels, and redesignating it as Sec.  983.51. It would also remove 
provisions from that section concerning specific quality regulations 
that are currently suspended. This amendment would also require 
corresponding changes by removing currently suspended language in Sec.  
983.6, Assessed weight; revising Sec.  983.7, Certified pistachios; 
removing existing Sec.  982.19, Minimum quality requirements and Sec.  
983.20, Minimum quality certificate; revising existing Sec.  983.31, 
Shelled pistachios; revising existing Sec.  983.41, Testing of minimal 
quantities, and removing currently suspended language in that section; 
revising existing Sec.  983.42, Commingling; and revising existing 
Sec.  983.45, Substandard pistachios. Sections 983.31, 983.41, 983.42, 
and 983.45 would be redesignated as sections 983.30, 983.53, 983.54, 
and 983.57, respectively.
    6. Proposal 6 would amend the order to add a new Sec.  983.58, 
Interhandler Transfers. This proposal would modify existing authority 
under the order by expanding the range of marketing order obligations 
that may be transferred between handlers when pistachios are 
transferred between handlers. This proposal would require a 
corresponding change to existing Sec.  983.53, Assessments, and would 
redesignate Sec.  983.53 as Sec.  983.71.
    7. As a result of the proposed amendments and corresponding changes 
to the order summarized above, numerous administrative changes to the 
order would also be required. Such changes include numerical 
redesignations to several sections of the order, changes to cross 
references of section numbers in regulatory text as a result of the 
numerical redesignations, and removal of obsolete provisions. In 
addition, a change would be made to amend existing Sec.  983.70 and 
redesignate it as Sec.  983.92.
    In addition to the proposed amendments to the order, AMS proposed 
to make any such additional changes as may be necessary to the order to 
conform to any amendment that may result from the hearing.
    Fourteen industry witnesses testified at the hearing. These 
witnesses represented pistachio producers and handlers in the 
production area, as well as Committee staff, and all were supportive of 
the proposed amendments.
    At the conclusion of the hearing, the Administrative Law Judge 
established a deadline of September 26, 2008, for interested persons to 
file proposed findings and conclusions or written arguments and briefs 
based on the evidence received at the hearing. Five briefs were filed 
during that period; all supported the proposed amendments.

Material Issues

    The material issues presented on the record of hearing are as 
follows:
    (1) Whether to amend the order to expand the production area to 
include the States of Arizona and New Mexico and to make related 
changes regarding Committee membership, representation, and voting 
requirements;
    (2) Whether to amend the order to authorize the Committee to 
reimburse handlers for travel and shipping costs related to aflatoxin 
inspection, under certain circumstances;
    (3) Whether to amend the order to add a new section that would 
authorize the Committee to engage in research projects with the 
approval of USDA;
    (4) Whether to amend the order to provide broad authority for 
aflatoxin regulations;
    (5) Whether to amend the order to provide broad authority for 
quality regulations and to remove existing provisions from the order 
concerning specific quality regulations that are currently suspended; 
and,
    (6) Whether to amend the order to add specific provisions for 
interhandler transfers of marketing order obligations. This proposal 
would modify existing authority under the order by expanding the range 
of marketing order obligations that may be transferred between handlers 
when pistachios are transferred between handlers.
    Numerous administrative changes to the order would also be required 
if the proposed amendments described in the material issues above are 
adopted. Such changes include numerical redesignations to several 
sections of the order, changes to cross references of section numbers 
in regulatory text as a result of the numerical redesignations, and 
removal of obsolete provisions.

Findings and Conclusions

    The following findings and conclusions on the material issues are 
based on evidence presented at the hearing and the record thereof.

Material Issue Number 1--Expanding the Production Area

    Section 983.26 of the order should be amended to expand the 
production area to include the States of Arizona and New Mexico. The 
production area is currently limited to the State of California. This 
section should also be redesignated as Sec.  983.25. Sections 983.11, 
Districts; 983.21, Part and subpart; and 983.32, Establishment and 
membership, should also be amended to reflect the proposed addition of 
Arizona and New Mexico to the order. Section 983.34 should likewise be 
amended to revise the voting requirements needed to approve Committee 
actions due to the above proposed changes. Existing sections 983.21 and 
983.32 should also be redesignated as sections 983.20 and 983.41, 
respectively.
    The order regulating the handling of pistachios grown in the State 
of California was established in 2004. The primary feature of the order 
is a quality provision that requires pistachios to be sampled and 
tested for aflatoxin prior to shipment to domestic markets. Such 
shipments of pistachios may not exceed a tolerance level for aflatoxin 
of 15 parts per billion. Aflatoxin is a carcinogen that is considered 
to be harmful to humans if ingested.
    According to the record, one of the primary reasons the order was 
established was to assure consumers of a high quality product through 
the aflatoxin program. Reducing the risk of potential aflatoxin 
incidence in

[[Page 20632]]

pistachios would help to bolster consumer confidence in the quality of 
pistachios, thus leading to increased demand and improved grower 
returns. An economic study that included a cost-benefit analysis of the 
aflatoxin provisions of the pistachio marketing order was included in 
the hearing record as hearing exhibit 10. This study's findings, which 
are discussed in more detail in the Regulatory Flexibility Analysis 
section of this recommended decision, indicate the order's aflatoxin 
program results in a positive benefit to both the industry and 
consumers over various time horizons.
    Witnesses testified at the hearing that this proposal is intended 
to further the goal of improving the quality of pistachios available to 
consumers by reducing the risk of potential aflatoxin incidence in 
pistachios through expanding the scope of the regulatory requirements 
to include all the areas of the United States where pistachios are 
produced commercially. Record evidence indicates that area includes the 
States of California, Arizona, and New Mexico. The record shows that 
while California accounts for over 95 percent of commercial production 
(up to 98 percent in some years), the States of Arizona and New Mexico 
are also considered to have commercially significant production. 
Pistachios are also grown in small quantities in Texas, Utah, and 
Nevada. Witnesses testified that production from those states account 
for less than .02 percent (two one-hundredths of one percent) of the 
pistachios grown in the United States. Witnesses also testified that 
pistachios produced in those states are considered to be the result of 
hobby farming and are not commercially significant in volume. 
California, Arizona, and New Mexico account for over 99.99 percent of 
domestic pistachio production and essentially all of the production 
used for commercial purposes, according to the record.
    Witnesses from both California and the new states proposed to be 
added to the production area (Arizona and New Mexico) testified in 
support of this proposal. They testified that the implications from an 
aflatoxin contamination incident in pistachios, whether within the 
current production area or otherwise, would have an adverse impact on 
the entire U.S. pistachio industry, citing a previous example. Examples 
of other events also were cited in other agricultural commodities.
    Therefore, they believe it is important to the U.S. pistachio 
industry that the production area be expanded to cover all commercial 
pistachio producing areas in the U.S.
    Witnesses from California testified that the aflatoxin testing 
program under the order has been successful since it was implemented in 
2005. Through the aflatoxin sampling and testing program, pistachio 
lots exceeding the maximum tolerance for aflatoxin have been prevented 
from being shipped to markets.
    Witnesses testified that to further improve the quality of product 
to consumers and to reduce the likelihood of an aflatoxin incident in 
the pistachio industry, all product destined for commercial shipment 
should be subject to the same aflatoxin sampling, testing, and maximum 
tolerance requirements. Witnesses testified that ensuring consumers of 
a good quality product will increase consumer confidence in pistachios, 
leading to increased demand and improved grower returns.
    Witnesses from Arizona and New Mexico testified in support of those 
states being included under the order. They recognized the need to 
ensure that consumers receive a good quality product. They also 
recognized that an aflatoxin incident in any one commercial producing 
area could adversely affect other commercial producing areas.
    Witnesses from Arizona and New Mexico testified that pistachios 
from those areas should not have any specific problems or issues that 
would make it difficult to meet aflatoxin requirements, when compared 
to California-grown pistachios. They testified that Arizona and New 
Mexico produce a high quality product and have not had any known 
problems with aflatoxin. They do not anticipate any problem meeting the 
aflatoxin requirements currently in effect under the order. Witnesses 
from Arizona and New Mexico also expressed that they did not believe 
that pistachios grown in those states would have any trouble meeting 
other quality regulations that may be established in the future.
    Witnesses from Arizona and New Mexico also testified that they were 
aware there are certain costs associated with being included under the 
order. However, they testified that they believe the benefits 
associated with being included under the order would outweigh the 
costs.
    Witnesses also testified that including Arizona and New Mexico 
under the existing order would be more desirable than establishing a 
separate order or orders applicable to their state or states. They 
stated that it is important that uniform quality and testing 
requirements be applied consistently to all commercially produced 
pistachios in the U.S., and the three states should be considered one 
production area under the order.
    In addition to having consistent quality requirements, witnesses 
testified that it would be more cost effective to be included under the 
existing pistachio order than to establish a separate order or orders. 
Certain fixed costs are inherent in administering a marketing order 
program, such as staffing costs, office space, office equipment and 
supplies, etc. The existing marketing order has this infrastructure in 
place. If a separate order or orders were established, these costs 
would have to be funded separately, which would likely result in higher 
program administration costs than if Arizona and New Mexico were added 
to the existing order.
    Section 983.11, Districts, should be amended to add a new district 
for Committee representation purposes. Expanding the production area to 
include Arizona and New Mexico warrants a change to the order with 
respect to geographic representation on the Committee and membership on 
the Committee. Currently, the order provides for three districts within 
the State of California. Witnesses supported establishing a new 
district encompassing the States of Arizona and New Mexico for 
Committee representation purposes. This new district would be District 
4.
    Witnesses from California, Arizona, and New Mexico testified that 
one member representing Arizona and New Mexico would provide the new 
District 4 with adequate representation on the Committee. One position 
on the Committee is equal to \1/12\ of the Committee positions, or 8.3 
percent. Based on data presented at the hearing, the 5-year average 
production of Arizona and New Mexico production was about 3.5 percent 
of the 5-year average of U.S. production for the period 2002 through 
2006.
    Section 983.32, Establishment and membership, should be amended to 
reflect the addition of a new district and an additional member on the 
Committee. Witnesses testified in support of changes to this section to 
reflect the addition of the new District 4 encompassing the States of 
Arizona and New Mexico, an increase in Committee size from eleven to 
twelve total members, and an increase in the number of producer members 
on the Committee from eight to nine. This section should also be 
redesignated as Sec.  983.41.
    As a result of the inclusion of Arizona and New Mexico under the 
order, it is

[[Page 20633]]

recommended that Sec.  983.34, Procedure, be amended to revise the 
voting requirements necessary to approve certain actions of the 
Committee. Witnesses testified that a unanimous vote of the Committee 
should be required in order to approve actions on research, aflatoxin 
regulations, and quality regulations. This would ensure that broad 
industry support exists before actions of the Committee regarding these 
issues are taken. According to the record, the more stringent voting 
requirements are also intended to ensure support from representatives 
of Arizona and New Mexico. Changes to Sec.  983.34 pertaining to 
unanimous consent are discussed further under Material Issues 3, 4, and 
5 in this recommended decision. Section 983.34 should also be amended 
to require 8 votes on issues concerning inspection programs and the 
establishment of the Committee. Those issues currently require 7 votes; 
the increase to 8 votes reflects the increase in Committee membership 
from 11 to 12 members, thus the proportion of votes to pass actions on 
these issues would remain nearly the same. Section 983.34 should also 
be redesignated as Sec.  983.43.
    Finally, a corresponding change to Sec.  983.21, Part and subpart, 
is necessary to include Arizona and New Mexico as part of the area to 
which the order and regulations pertain. This section should also be 
redesignated as Sec.  983.20.
    Record evidence supports expanding the production area to include 
Arizona and New Mexico. This would help to ensure a uniform and 
consistent quality product from all commercial producing areas in the 
U.S., with the intent of increasing consumer confidence in pistachios, 
leading to increased demand and improved grower returns.
    Record evidence also supports providing for a representative on the 
Committee to represent the proposed addition of the States of Arizona 
and New Mexico, which requires a modification to the representation 
districts and an increase in the size of the Committee from eleven 
members to twelve members. Record evidence also indicates that 
inclusion of Arizona and New Mexico under the existing order would be 
more cost effective and more desirable than establishing separate 
orders. Including Arizona and New Mexico in the production area would 
establish the smallest regional production area that is practicable. 
According to the record, voting requirements should also be changed to 
help ensure broad industry support exists for certain Committee 
actions.
    There was no opposition testimony given against these proposed 
amendments. Witnesses from the producing areas of California, Arizona, 
and New Mexico all expressed support for the proposed amendments. For 
the reasons stated herein, it is recommended that Sec.  983.26, 
Production area, be amended to expand the production area under the 
order to include the States of Arizona and New Mexico. It is also 
recommended that corresponding changes be made to Sec. Sec.  983.11, 
Districts, 983.21, Part and subpart, 983.32, Establishment and 
membership, and 983.34, Procedure. The proposed addition of new 
sections to the order as discussed under material issues 3 and 6 of 
this recommended decision would require numerical redesignation of 
several sections of the order, including some of those discussed under 
this material issue. It is therefore also recommended that Sec. Sec.  
983.21, 983.26, 983.32, and 983.34 be redesignated as Sec. Sec.  
983.20, 983.25, 983.41, and 983.43, respectively.

Material Issue Number 2--Reimbursement of Handler Inspection Costs

    Section 983.44 of the order should be amended to provide authority 
for the Committee to reimburse handlers for certain costs associated 
with aflatoxin testing of pistachios, with approval of USDA. This 
section should also be redesignated as Sec.  983.56. Under this 
proposed amendment, the Committee could recommend to USDA informal 
rulemaking that would specify parameters for such reimbursement to 
handlers operating in areas where inspection costs for inspector travel 
and shipment of samples of pistachios for aflatoxin testing exceed the 
average of those same costs for comparable handling operations in 
Districts 1 and 2.
    The order requires pistachios to be sampled and tested at a USDA 
laboratory or a USDA-approved laboratory to determine the aflatoxin 
level prior to shipment. Section 983.44 of the order currently provides 
that all inspections shall be at the expense of the handler. According 
to hearing evidence, typical costs associated with aflatoxin inspection 
include: travel for inspectors, charges for retrieving samples, 
shipment of samples to laboratories, laboratory analysis, and the value 
of the product utilized during the testing process.
    Witness testimony indicates that in the State of California, 
handler's facilities are typically in close proximity to Federal-State 
Inspection Service (Inspection) offices. Inspectors therefore have 
relatively short distances to travel to perform the necessary services 
related to the aflatoxin program. In most cases, there is little or no 
cost for inspectors to travel to handler's facilities for aflatoxin 
inspections. In addition, handler's facilities are relatively close to 
laboratories that perform the analytical aflatoxin testing of the 
product. In some cases, handler facilities have on-site laboratories. 
Costs of shipping samples to laboratories for analyses are thus 
relatively minor and in some instances non-existent.
    In contrast, witnesses testified that the pistachio handling 
operations in Arizona and New Mexico are located sizeable distances 
from Inspection personnel. According to the record, in some instances 
the nearest available inspector is over 200 miles from the handler's 
facility. Costs for inspector travel would thus be significant in 
Arizona and New Mexico in such cases.
    Witnesses also testified that that there are no approved 
laboratories in Arizona or New Mexico for analyzing pistachio samples 
for aflatoxin. Further, the volume of pistachios produced and handled 
in Arizona and New Mexico would not warrant the establishment of 
analytical laboratories for testing pistachios for aflatoxin in those 
states. Samples of pistachios would therefore need to be shipped to 
California to an approved laboratory for aflatoxin analysis. As a 
result, costs of shipping samples would also be higher in Arizona and 
New Mexico than in California. According to the record, there would be 
no appreciable difference in other costs associated with the aflatoxin 
program in Arizona, New Mexico, and California.
    Data was presented at the hearing to illustrate the potential 
difference in costs associated with aflatoxin inspections in 
California, Arizona, and New Mexico. As discussed above, these 
differences are attributed to inspector travel costs and shipping 
costs. Individual costs can vary depending on individual circumstances, 
but inspection costs associated with the aflatoxin program would be 
significantly higher in Arizona and New Mexico than California. A 
detailed analysis of the costs and possible reimbursement is discussed 
in the Regulatory Flexibility Analysis section of this recommended 
decision, as well as the benefits.
    Record evidence supports adding authority to the order to allow the 
Committee to equitably reimburse handlers for certain costs associated 
with aflatoxin testing. The intent of this proposed amendment is to 
recognize potential differences in costs, and provide a method whereby 
the costs of inspection for the aflatoxin program can be more equitably 
distributed so that

[[Page 20634]]

Arizona and New Mexico industry members would not be unduly burdened as 
a result of their inclusion under the order. As previously discussed, 
this proposal would only provide authority for the Committee to 
recommend to USDA criteria for reimbursement, and informal rulemaking 
would be required prior to implementation.
    There was no opposition testimony to this proposed amendment. For 
the reasons stated above, it is recommended that Sec.  983.44, 
Inspection, certification, and identification, be amended to authorize 
the Committee, with approval of the Secretary, to reimburse handlers 
for inspection costs for inspector travel and shipment of samples for 
aflatoxin testing that exceed the average of those same inspection 
costs for comparable handling operations in Districts 1 and 2. Informal 
rulemaking to establish rules and regulations outlining the parameters 
of reimbursement would be required to implement this authority. Section 
983.44 would also be redesignated as Sec.  983.56.

Material Issue Number 3--Research

    A new section 983.46, Research, should be added to the order. This 
proposed amendment would provide authority for the Committee to engage 
in research projects with the approval of USDA. Corresponding changes 
should be made to existing Sec.  983.46, Modification or suspension of 
regulations, to reflect changes to other sections of the order. 
Corresponding changes should also be made to Sec.  983.54, 
Contributions, to add authority for the Committee to accept voluntary 
contributions for research purposes. Additionally, corresponding 
changes to Sec.  983.34, Procedure, should be made to establish voting 
requirements for Committee recommendations concerning research. 
Finally, existing Sec. Sec.  983.34, 983.46, and 983.54 should be 
redesignated as Sec. Sec.  983.43, 983.59, and 983.72, respectively.
    Currently, the order does not contain authority for the Committee 
to recommend or conduct research projects. Witnesses testified that at 
the time the order was promulgated, the California Pistachio Commission 
(CPC), a state marketing program, supported the industry's production 
and nutrition research. Therefore, the industry did not believe that 
providing research authority in the order was necessary. However, CPC 
was discontinued in 2007, and the responsibility for production 
research was temporarily assumed by individual entities and other 
industry organizations in order to provide for continuity of ongoing 
projects. In December 2007, the California Pistachio Research Program 
(CPRP), a state program, was enacted under the authority of the 
California Marketing Act of 1937, Chapter 1, Part 2, Division 21 of the 
California Food and Agriculture Code, as amended. CPRP is authorized to 
conduct production and post-harvest research, for which it may collect 
limited assessment revenues.
    The record indicates that CPRP is not authorized to conduct 
nutrition research. According to witnesses, nutrition research, which 
is designed to determine the effects of pistachio consumption on human 
health, is critical to the marketing of pistachios. To fill this 
critical need, witnesses supported amending the order to authorize the 
Committee to recommend, conduct, and fund research projects designed to 
determine the effects of pistachio consumption on human health.
    One witness described previous industry research on the effects of 
cholesterol on heart health as related to pistachio consumption. The 
witness suggested that that type of research might be pursued by the 
Committee.
    Witness testimony also supported the addition of authority to 
recommend, conduct, and fund research projects to improve the efficient 
production and postharvest handling of pistachios. The record shows 
that the ability to establish production research projects in response 
to immediate needs is important to the industry. Witnesses cited two 
examples of critical production research needs in the past. In the 
1970's and 1980's, Verticillium wilt, which ultimately leads to tree 
death, threatened the existence of the pistachio industry in 
California. Through collaborative research efforts, rootstocks 
resistant to Verticillium wilt were developed and are today widely used 
in the industry. In the 1990's, Botryosphaeria blight, which attacks 
the nut clusters and foliage, reached epidemic proportions in northern 
California. According to witness testimony, industry-funded research 
efforts led to the development of cultural practices and fungicides 
that now effectively control the disease. One witness emphasized the 
fact that it is difficult to anticipate what production problems could 
arise in the future, but that the Committee could best prepare itself 
for emergencies by maintaining a stable funding source to address those 
needs.
    Witnesses testified that the Committee does not intend to duplicate 
activities conducted by the CPRP if it is authorized to conduct 
research programs under the order. Witnesses explained that the 
Committee manager and staff, as well as many Committee members, are 
informed about CPRP's activities and that their participation in 
Committee deliberations would ensure that research activities would not 
be duplicative. In addition, witnesses testified that the CPRP program 
has a cap on the amount of assessments it may collect. This cap could 
limit the industry's ability to fund research projects at a level 
necessary to address certain issues, especially in emergency 
situations. Nonetheless, if a situation occurred where the CPRP could 
not fund critical production or post harvest research needed by the 
industry, the research could be funded under the Federal marketing 
order and still avoid duplication.
    Funding for the Committee's projects would come from the collection 
of assessments from pistachio handlers, which is authorized under the 
order. Currently, the Committee's assessments cover the costs of 
administration of the order and operation of its other program 
activities. Although the Committee's assessment rate could increase to 
cover the costs of any research projects they might establish, record 
evidence indicates that the benefits to be derived from such research 
are expected to exceed related assessment costs.
    In conjunction with the authority to establish research programs, 
the Committee proposed amending Sec.  983.54, Contributions, to provide 
authority to accept voluntary contributions toward research programs. 
Currently, the Committee is authorized to accept voluntary 
contributions toward the administrative costs of the order. Witnesses 
testified that voluntary contributions could augment or replace 
assessment funds used for research projects. According to witnesses, 
contributors could designate that contributions be used for the 
Committee's research programs, but they would not retain control of how 
the Committee uses the funds. It would be the responsibility of the 
Committee to allocate those funds appropriately.
    Addition of the authority to conduct research programs would merely 
authorize the Committee to recommend such programs and, following USDA 
approval, to plan and conduct those projects. Witnesses explained that 
if authority to conduct research programs is added to the order, the 
Committee might appoint a new subcommittee to consider research 
proposals and make recommendations for specific projects to the 
Committee.
    The Committee's amendment proposals included a revision to their 
voting procedures under Sec.  983.34 that

[[Page 20635]]

would specify that recommendations regarding research projects should 
require the approval of the entire Committee. Witnesses testified that 
requiring unanimous approval would ensure consensus from all sectors of 
the industry. Witnesses testifying in favor of expanding the production 
area to include Arizona and New Mexico (Material Issue No. 1) explained 
that requiring unanimous Committee approval for research 
recommendations would assure the industry in those states that their 
interests are considered in Committee decision-making with regard to 
potential research projects.
    The Committee also recommended amending the existing Sec.  983.46, 
Modification or suspension of regulations. These changes would update 
cross-references to other sections of the order that are being proposed 
to change, and removes a redundant reference to voting requirements 
that is already included under another section of the order.
    No testimony opposing this proposal was provided at the hearing. 
For the reasons stated above, it is recommended that a new Sec.  
983.46, Research, be added to the order to provide authority to 
establish and conduct production, post harvest, and nutrition research 
projects. Corresponding changes should be made to Sec.  983.34, 
Procedure, to establish voting requirements for Committee 
recommendations concerning research; Sec.  983.46, Modification or 
suspension of regulations, to update cross-references and remove 
redundant provisions; and to Sec.  983.54, Contributions, to authorize 
the Committee to accept voluntary contributions toward research 
programs. Finally, existing Sec. Sec.  983.34, 983.46, and 983.54 
should be redesignated as Sec. Sec.  983.43, 983.59, and 983.72, 
respectively.

Material Issue Number 4--Aflatoxin Regulation

    Section 983.38, Aflatoxin levels, should be renamed Aflatoxin 
regulations, and amended to provide broad authority for aflatoxin 
regulation under the order. This would require removing extensive 
specific regulatory provisions in the order and replacing them with a 
provision providing general authority for aflatoxin regulation and 
authority to issue specific regulatory requirements through the 
informal rulemaking process. The current regulatory provisions that are 
removed from the order could then be proposed as rules and regulations 
through the informal rulemaking process. This section should also be 
redesignated as Sec.  983.50. Corresponding changes to Sec.  983.40, 
Failed lots/rework procedure and Sec.  983.1, Accredited laboratory, 
should also be made, and Sec.  983.40 should be redesignated as Sec.  
983.52. In addition, Sec.  983.34, Procedure, should be amended to 
require unanimous consent by the Committee to approve actions 
concerning aflatoxin levels, and Sec.  983.34 should be redesignated as 
Sec.  983.43.
    Currently, the order provides authority for regulation of aflatoxin 
levels in pistachios, and specific regulatory requirements such as 
sampling, testing, and certification are also included in the order. 
The order provisions also allow for modification of the regulatory 
requirements by issuing rules and regulations through the informal 
rulemaking process.
    Witness testimony indicated that including specific regulatory 
details in the order language, with authority to change such 
requirements through the informal rulemaking process, is not the most 
desired way to structure a marketing order for another reason also. If 
specific regulatory requirements in the order are subsequently modified 
through informal rulemaking, regulatory language in the order would be 
different than regulatory language in the rules and regulations, which 
might cause confusion.
    Witness testimony stated that a more appropriate approach is to 
provide general authority for aflatoxin regulations in the order 
language, and provide authority to issue rules and regulations through 
the informal rulemaking process to implement specific regulations and 
procedures. Witnesses testified that it is important to maintain 
continuity in the existing aflatoxin regulations at this time. With 
this approach, the existing aflatoxin requirements could be proposed in 
the informal rulemaking process.
    Hearing testimony also supported amending Sec.  983.34 to require a 
unanimous vote of the Committee on any recommendations concerning 
aflatoxin regulations. The record indicates that it is important to 
have widespread industry support prior to implementing or changing 
aflatoxin regulations. With the unanimous consent provision, the States 
of Arizona and New Mexico would be entitled to a voting representative 
on the Committee and would need to vote in favor of any recommendation 
by the Committee with respect to regulations in order for such action 
to be approved.
    A witness testified that a corresponding amendment to Sec.  983.40, 
Failed lots/rework procedure should be made. General authority would be 
provided in this section of the order to authorize establishment of 
procedures to rework product that failed the aflatoxin requirements. 
Similar to the preceding amendment to Sec.  983.38, detailed procedures 
currently contained in Sec.  983.40 would be established as rules and 
regulations through informal rulemaking in order to avoid an 
interruption in the existing procedures. Section 983.40 should also be 
redesignated as Sec.  983.52.
    Witnesses also testified in support of amending the order to 
incorporate a corresponding change to Sec.  983.1, Accredited 
laboratory. This change would revise the definition of accredited 
laboratory by removing a restriction that limited accredited 
laboratories to only aflatoxin testing. Testimony noted that this 
change would give flexibility to this definition, given the previously 
discussed changes to quality regulation. This discussion appears in 
material issue number 5.
    Record evidence supports amending Sec.  983.38, Aflatoxin levels, 
renaming it Aflatoxin regulations, and redesignating it as Sec.  
983.50. Corresponding changes to Sec.  983.40, Failed lots/rework 
procedure and Sec.  983.1, Accredited laboratory, are also recommended, 
and Sec.  983.40 should be redesignated as 983.52. Record evidence also 
supports amending Section 983.34, Procedure, and redesignating it as 
983.43. No opposition testimony was given regarding these proposed 
amendments, and they are thus recommended for adoption.

Material Issue Number 5--Quality Regulation

    Section 983.39, Minimum quality levels, should be renamed Quality 
regulations, and should be amended to provide broad authority for 
quality regulation under the order. This would require removing 
extensive regulatory provisions in the order pertaining to minimum 
quality levels and replacing them with a provision providing general 
authority for quality regulation and authority to issue specific 
quality regulatory requirements through the informal rulemaking 
process. Section 983.39 should also be redesignated as Sec.  983.51. 
Corresponding changes should also be made to Sec.  983.6, Assessed 
weight; Sec.  983.7, Certified pistachios; Sec.  983.31, Substandard 
pistachios; Sec.  983.41, Testing of minimal quantities; Sec.  983.42, 
Commingling; and Sec.  983.45, Substandard pistachios. Sections 983.19 
and 983.20 should be removed as a result of this amendment. Section 
983.34, Procedure, should be amended to require a unanimous vote of the 
Committee to approve actions concerning quality regulations. Finally, 
Sections 983.31, 983.41, 983.42, and

[[Page 20636]]

983.45 would be redesignated as sections 983.30, 983.53, 983.54, 
983.57, respectively.
    Witnesses testified that specific requirements pertaining to 
quality levels are contained in the provisions of the order. These 
provisions were in effect from 2004 through 2007. In December of 2007, 
the requirements were suspended because they were no longer meeting the 
industry's needs. Witness testimony indicated that while there is no 
desire to reinstate the specific quality regulations previously in 
effect or any intent at this time to recommend any form of quality 
regulation, the industry would like to retain authority to implement 
some form of quality regulation in the future if circumstances warrant. 
Adding broad authority for quality regulation would provide flexibility 
in the order because it would enable the industry to establish 
additional requirements for quality regulations in addition to the 
current requirements in the order.
    Witnesses also testified that adding broad authority for quality 
regulation, with the ability to implement and change requirements 
through informal rulemaking, could be especially beneficial in the 
event the proposal to expand the production area to include Arizona and 
New Mexico is adopted. Growing conditions and other factors that impact 
the quality of pistachios may vary in different states. Record 
testimony indicates this proposal provides flexibility to take into 
account factors affecting the quality of pistachios from different 
areas, and other pertinent information in developing quality 
regulations that may be recommended in the future. Any regulations, if 
established, could be revised through the informal rulemaking process 
to adapt to changing industry conditions and to accommodate the various 
growing regions, if necessary.
    Witnesses also testified that Sec.  983.34 should be amended to 
require a unanimous vote of the Committee in order to recommend 
adopting or changing potential quality regulations established under 
this proposed new order authority. Witnesses testified that it was 
important to have widespread industry support prior to implementing any 
new quality regulations. According to testimony, the unanimous consent 
provision would help to ensure that any potential quality regulations 
would meet the needs of the States of Arizona and New Mexico, as well 
as California. Arizona and New Mexico would be entitled to a voting 
representative on the Committee and would need to vote in favor of any 
recommendation by the Committee with respect to quality regulations in 
order for such action to be approved.
    Witness testimony supported several corresponding changes to 
certain definitions in the order that are associated with the existing 
quality provisions in the order. The definition of Assessed weight, 
Sec.  983.6, should be amended by removing references to the existing 
quality regulations and replacing such references with a provision that 
would allow assessed weight to be based on such quality requirements 
that may be established in the future. The definition of Certified 
pistachios, Sec.  983.7, should also be amended by removing a reference 
to specific existing aflatoxin inspection and minimum quality 
certificates and replacing such reference with a reference to general 
inspection and certification requirements. The definition of 
Substandard pistachios, Sec.  983.31, should similarly be amended by 
removing a reference to existing aflatoxin and minimum quality 
regulations and replacing such reference with a reference to sections 
of the order under which regulations may be established. Section 983.31 
should also be redesignated as 983.30.
    Witness testimony also supported amending Sec.  983.41, Testing of 
minimal quantities, to remove a provision pertaining to an exemption 
from minimum quality requirements for handlers handling less than one 
million pounds of pistachios. That provision would be replaced by a 
more general provision that would allow the Committee, with approval of 
the Secretary, to establish regulations regarding minimal quantities in 
the event quality regulations are established in the future. The 
proposed language for this section published in the Notice of Hearing 
referenced specific aflatoxin levels. However, at the hearing, a 
witness clarified that the language should be revised to conform with 
other proposed amendments to the order, specifically by replacing 
references to specific levels of aflatoxin with references to levels of 
aflatoxin that may be established by the committee and approved by the 
Secretary. Therefore, AMS has revised the proposed language 
accordingly. Finally, this section should also be redesignated as Sec.  
983.53.
    Witnesses also testified in support of amending Sec.  983.42, 
Commingling, to clarify that if a lot of certified pistachios is 
commingled with a lot of uncertified pistachios, the resulting lot 
would lose its certification. This section should be redesignated as 
Sec.  983.54.
    The record also supports amending Sec.  983.45, Substandard 
pistachios, by removing a reference to specific existing aflatoxin 
requirements and quality requirements and replacing that reference with 
a more general reference to aflatoxin and quality requirements. This 
section should be redesignated as Sec.  983.57.
    Finally, the existing Sec.  983.19, Minimum quality requirements, 
should be removed from the order because it pertains to requirements 
that would no longer be in effect as a result of the recommended 
amendments to the order. Similarly, existing Sec.  983.20, Minimum 
quality certificate, should be removed from the order because it 
references a certificate that would no longer exist as a result of 
these amendments.
    Record evidence supports amending the order to add broad authority 
for quality regulations and removing provisions concerning specific 
minimum quality levels. This would provide authority for the Committee 
to develop and recommend quality regulations in the future, if deemed 
appropriate, and any such regulations could take into account the new 
producing areas being proposed for addition to the order. Informal 
rulemaking would be required to implement any future quality 
regulations, and modifications thereto could also be accomplished 
through informal rulemaking. Record evidence also supports the 
corresponding changes as discussed in this material issue.
    No testimony in opposition to this proposed amendment and 
corresponding changes was given. For the reasons stated above, it is 
recommended that Sec.  983.39, Minimum quality levels, be renamed 
Minimum quality regulation, amended, and redesignated as 983.51. It is 
also recommended that corresponding changes be made to Sec.  983.6, 
Assessed weight; and Sec.  983.7, Certified pistachios. Corresponding 
changes are also recommended to Sec.  983.31, Substandard pistachios; 
Sec.  983.41, Testing of minimal quantities; Sec.  983.42, Commingling; 
and Sec.  983.45, Substandard pistachios, and those sections be 
redesignated as Sec. Sec.  983.30, 983.53, 983.54, and 983.57, 
respectively. It is also recommended that Sec.  983.34, Procedure be 
amended. Finally, it is recommended that Sec.  983.19, Minimum quality 
requirements and Sec.  983.20, Minimum quality certificate, be removed.

Material Issue Number 6--Interhandler Transfers

    A new section, Sec.  983.58, Interhandler Transfers, should be 
added to the order. This recommended section would allow handlers to 
transfer marketing order obligations such as aflatoxin testing 
requirements, assessments, inspection

[[Page 20637]]

requirements, or any other marketing order requirements, to the 
receiving handler if pistachios are transferred from one handler to 
another. The recommended provisions would also allow the Committee, 
with approval of the Secretary, to establish methods and procedures, 
including reports, to maintain an accurate accounting of the pistachios 
and accompanying marketing order obligations. The existing Sec.  983.58 
should be redesignated as Sec.  983.80. Section 983.53, Assessments, 
should also be amended to provide an exception from assessment payment 
for those handlers who transfer the obligation to another handler 
pursuant to the proposed new Sec.  983.58. Section 983.53 should also 
be redesignated as Sec.  983.71.
    According to witness testimony, this provision would provide 
flexibility in administering the marketing order, especially with 
regard to the proposed new District 4, the States of Arizona and New 
Mexico. Under the order, hulling and drying of pistachios is considered 
a handling function. Persons performing handling functions are 
considered to be handlers, and marketing order obligations are applied 
to handlers.
    Witnesses testified that in the proposed District 4, some small 
producers may not have access to nearby processing facilities, and as a 
result must hull and dry their product prior to delivery to a facility 
that further processes and packages it and puts it into the stream of 
commerce. Under the order, such small producers would be considered 
handlers by definition, and would be subject to marketing order 
obligations such as reporting, aflatoxin testing, and payment of 
assessments. This proposed amendment would allow such grower/handlers 
to transfer the marketing order obligations to the subsequent handler 
that further processes the pistachios and places them into the current 
of commerce. This would help to ensure that marketing order obligations 
are met.
    According to testimony, this amendment would provide flexibility 
under the order to allow producers and handlers in District 4 to 
continue their current business practices.
    Witness testimony also supported a corresponding change to Sec.  
983.53, Assessments. This section of the order requires each handler to 
pay assessments under the order. The proposed change corresponds with 
the interhandler transfer authority by excepting from assessment 
payment those handlers who transfer the obligation to another handler 
pursuant to the proposed new Sec.  983.58. Section 983.53 should also 
be redesignated as Sec.  983.71.
    Record evidence supports these changes to the order. No testimony 
in opposition to the proposed changes was given at the hearing. For the 
reasons stated above, it is recommended that a new Sec.  983.58, 
Interhandler transfers, be added to the order; a corresponding change 
be made to Sec.  983.53, Assessments; and that Sec.  983.53 be 
redesignated as Sec.  983.71.

Material Issue Number 7--Administrative Changes

    The proposed amendments discussed in Material Issues 1 through 6 
necessitate several administrative changes to the order. Such changes 
include numerical redesignations to several sections of the order, 
changes to cross references of section numbers in regulatory text as a 
result of the numerical redesignations, and removal of obsolete 
provisions. These changes are summarized below.
    Section 983.8, Committee, should be amended by removing a reference 
to Sec.  983.32 and replacing it with a reference to Sec.  983.41. 
Section 983.23, Pistachios, should be redesignated as Sec.  983.22 and 
amended by adding ``and species'' after the word ``genus'', as this was 
inadvertently omitted when the order was promulgated. Section 983.33, 
Initial members and nomination of successor members, should be 
redesignated as Sec.  983.42 and amended by removing the word 
``grower'' and replacing it with the word ``producer'', as that term is 
defined in the order; and references to Sec. Sec.  983.32, 983.33, and 
983.34 should be removed and replaced with references to Sec. Sec.  
983.41, 983.42, and 983.43, respectively. Section 983.34 should be 
redesignated as Sec.  983.43 and in paragraphs (a)(1) and (2), the word 
``level'' should be removed and replaced with the word ``regulation'' 
to correspond to changes made to the titles of Sec. Sec.  983.51 and 
983.52. Section 983.56 should be redesignated as Sec.  983.74 and 
amended by removing the reference to Sec.  983.53 and replacing it with 
a reference to Sec.  983.71. Section 983.57 should be redesignated as 
Sec.  983.75 and amended by removing the reference to ``Sec. Sec.  
983.47 through 983.56'' and replacing it with ``Sec. Sec.  983.64 
through 983.74''. Section 983.58, Compliance, should be redesignated as 
Sec.  983.80 as a result of the proposed new Sec.  983.58, Interhandler 
transfers. Section 983.65 should be redesignated as Sec.  983.87 and 
amended to remove a reference to ``Sec.  983.66 or Sec.  983.67'' and 
replacing it with ``Sec.  983.88 or Sec.  983.89''.
    Section 983.70 should be redesignated as Sec.  983.92 and amended 
by removing references to Sec. Sec.  983.38, 983.45, and 983.53 and 
replacing them with references to Sec. Sec.  983.50, 983.58, and 
983.71, respectively. Redesignated Sec.  983.92 should further be 
amended to remove the words ``marketing'' and ``subpart'' and replacing 
them with ``production'' and ``section'', respectively. These changes 
would correct technical errors in the existing order provisions. This 
section also should be amended by replacing a reference to an exemption 
of 1,000 pounds with reference to an exemption of 5,000 pounds to 
update this order provision, given the current rules and regulations 
that were implemented under that section after the order was 
promulgated.
    AMS is rewording the language that appears in the redesignated 
Sec. Sec.  983.50, 983.52, 983.53(a), 983.59(c), and 983.92 to conform 
to other references to informal rulemaking that currently appear in the 
order. This language clarifies that the committee may establish, with 
the Secretary's approval, rules and regulations regarding 
implementation of authorities provided in those sections. AMS is also 
rewording the language in Sec.  983.56 to correctly state that handlers 
may be ``reimbursed'' rather than ``compensated'' by the committee 
regarding inspection costs.
    The following table identifies changes that should be made 
regarding redesignation of sections to the order that have not been 
previously discussed in this recommended decision.

------------------------------------------------------------------------
            Old section                          New section
------------------------------------------------------------------------
                  983.22                               983.21
                  983.24                               983.23
                  983.25                               983.24
                  983.27                               983.26
                  983.28                               983.27
                  983.29                               983.28
                  983.30                               983.29
                  983.35                               983.44
                  983.36                               983.45
                  983.37                               983.47
                  983.43                               983.55
                  983.47                               983.64
                  983.48                               983.65
                  983.49                               983.66
                  983.50                               983.67
                  983.51                               983.68
                  983.52                               983.70
                  983.55                               983.73
                  983.59                               983.81
                  983.60                               983.82
                  983.61                               983.83
                  983.62                               983.84
                  983.63                               983.85
                  983.64                               983.86
                  983.66                               983.88
                  983.67                               983.89
                  983.68                               983.90
                  983.69                               983.91
------------------------------------------------------------------------


[[Page 20638]]

    There was no opposition testimony to these proposed changes. Record 
evidence supports these changes and they are therefore recommended for 
adoption.

Conforming Changes

    AMS also proposed to make such changes as may be necessary to the 
order to conform to any amendment that may result from the hearing. 
Other than previously discussed, no additional conforming changes have 
been made.

Small Business Considerations

    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA), AMS has considered the economic impact of this 
action 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 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 receipts of less than 
$7,000,000. Small agricultural producers have been defined as those 
with annual receipts of less than $750,000.
    There are approximately 24 handlers and approximately 800 producers 
of pistachios in the State of California. It is estimated that 
approximately 50 percent of the processing handlers had annual receipts 
of less than $7,000,000, according to information presented at the 
hearing. In addition, based on the number of producers, the size of the 
2007 crop, and the average producer price per pound data reported by 
the National Agricultural Statistics Service (NASS), the average 
producer revenue for the 2007 crop was $702,000. It is estimated that 
85% of the producers in California produced less than $750,000 worth of 
pistachios and would thus be considered small businesses according to 
the SBA definition.
    Based on information presented at the hearing, it is estimated that 
there are approximately 40 to 50 growers of pistachios in Arizona and 
approximately 30 growers in New Mexico. It is also estimated that there 
are 2 handlers in Arizona and 3 handlers in New Mexico. Although no 
official data is available, based on hearing testimony it is estimated 
that the majority of producers in Arizona and New Mexico are small 
businesses according to SBA's definition. It is also estimated that all 
of the handlers in New Mexico are small businesses and one of the 
handlers in Arizona is a small business.
    California accounts for the vast majority of pistachio acreage and 
production in the U.S. According to data from the National Agricultural 
Statistics Service (NASS), California's total acreage in 2007 was 
reported at 176,400 acres. While no 2007 acreage data is available from 
NASS for Arizona and New Mexico, in 2006, Arizona acreage was reported 
at 2,500 acres while New Mexico acreage was reported at 1,350 acres in 
2002. Two witnesses from New Mexico testified that they estimate 
acreage in New Mexico to be about 450 acres in 2007. Pistachios are 
also grown in small quantities in Texas, Utah, and Nevada. However, 
witnesses testified that pistachios produced in those states are 
considered to be the result of hobby farming and are not commercially 
significant in volume. California, Arizona, and New Mexico account for 
over 99.99 percent of domestic pistachio production and essentially all 
of the production used for commercial purposes, according to the 
record.
    The order regulating the handling of pistachios grown in the State 
of California was established in 2004. The primary feature of the order 
is a quality provision that requires pistachios to be sampled and 
tested for aflatoxin prior to shipment to domestic markets. Such 
shipments of pistachios may not exceed a tolerance level for aflatoxin. 
Information collection and dissemination is also conducted under the 
order. The program is funded through assessments on handlers according 
to the quantity of pistachios handled. The order is administered by an 
industry committee of handlers and growers, and is designed to support 
both large and small pistachio handlers and growers. Committee meetings 
where regulatory recommendations and other decisions are made are open 
to the public. All members are able to participate in Committee 
deliberations, and each Committee member has an equal vote. Others in 
attendance at meetings are also allowed to express their views.
    The Committee met on March 6, 2008, and requested that USDA conduct 
a public hearing to consider proposed amendments to the order. USDA 
reviewed the request and determined to proceed to a hearing. A hearing 
was conducted on July 29 and 30, 2008, in Fresno, California. The 
Committee's meeting and the hearing were both open to the public and 
all that attended were able to participate and express their views.
    The proposed amendments recommended by the Committee would: expand 
the production area to include the States of Arizona and New Mexico; 
authorize the Committee to reimburse handlers for certain inspection 
costs; authorize research activities under the order; provide broad 
authority for aflatoxin regulation under the order, provide broad 
authority for quality regulation under the order; provide authority for 
interhandler transfer of marketing order obligations; and make 
corresponding administrative changes to the order as a result of the 
aforementioned proposed changes.
    The proposed amendments are intended to improve the operation and 
functioning of the marketing order program. Record evidence indicates 
that the proposals are intended to benefit all producers and handlers 
under the order, regardless of size. All grower and handler witnesses 
at the hearing supported the proposed amendments and while 
acknowledging the additional cost implications, they stated that they 
expected the benefits to outweigh the costs.
    A description of the proposed amendments and their anticipated 
economic impact on small and large entities is discussed below.

Evaluation of the Potential Economic Impacts of the Proposed Amendments

    The key economic issues to examine in considering the proposed 
amendments to the marketing order are the benefits and costs to growers 
and handlers of the proposed expansion of the production area and the 
consequences of that expansion. The most significant change in terms of 
its potentially significant and immediate impact is the fact that if 
the production area is expanded to include Arizona and New Mexico, the 
pistachio handlers in those two states would become regulated under the 
order and would have to meet the same aflatoxin certification 
requirements that apply to California handlers.

Aflatoxin Requirements

    California handlers currently must have all pistachio lots destined 
for the domestic market tested and certified that they do not exceed a 
maximum aflatoxin tolerance. To comply with the standard, California 
handlers arrange for a sample to be taken from each lot that is to be 
shipped domestically and to have that sample tested for aflatoxin. Lots 
that meet the standard receive

[[Page 20639]]

written certifications that allow shipment to the domestic market. Lots 
that exceed the aflatoxin tolerance cannot be shipped domestically. 
Handlers may rework the lots to remove contaminated nuts and then can 
begin the certification process again. There are costs associated with 
each of these steps, which are currently borne by California handlers 
and would be borne by handlers in the other two states, if the order is 
amended.
    Before considering cost-related details, it is important to examine 
the benefits associated with mandatory aflatoxin certification. Various 
grower and handler witnesses testified that they expected significant 
benefits to accrue from the mandatory requirements enforced through the 
marketing order, and increased consumer confidence in the quality of 
U.S. pistachios. Arizona and New Mexico handler witnesses indicated 
that they would willingly comply with all of the steps involved in 
meeting the aflatoxin standards. Grower witnesses from Arizona and New 
Mexico indicated awareness that at least part of the increased handler 
costs from aflatoxin certification would be passed onto them, but that 
they expected the net effect to be strongly positive. Grower witnesses 
from Arizona and New Mexico also stated they did not expect to have to 
undertake any significant changes in their pistachio production 
operations as a result of coming under the authority of the marketing 
order. Witnesses said that they believed that they would have overall 
improved returns and higher sales than would be the case without the 
marketing order regulation. They expected the benefits of the proposed 
amendments to far outweigh the costs.
    A 2005 benefit cost analysis of federal marketing order mandatory 
aflatoxin requirements for California was submitted as evidence at the 
hearing. The analysis, prepared by agricultural economists at the 
University of California-Davis, was entitled ``Economic Consequences of 
Mandated Grading and Food Safety Assurance: Ex Ante Analysis of the 
Federal Marketing Order for California Pistachios'' (Richard S. Gray 
and others, University of California, Giannini Foundation Monograph 46, 
March 2005). In present-value terms, over a 20-year horizon, the 
benefits to producers in the study's baseline scenario were estimated 
to be $75.3 million. The study reported a ``most likely scenario'' 
benefit cost ratio of nearly 6:1, with a range from about 4:1 to 9:1 
under alternative scenarios representing low and high aflatoxin event 
impacts, respectively, on the pistachio market.
    One witness noted that, depending on compliance cost and aflatoxin 
event assumptions under alternative scenarios in the study, the 
expected benefit cost ratio from implementation of mandatory aflatoxin 
standards under the California marketing order ranged between 5:1 and 
17:1. Several grower and handler witnesses suggested that these 
significant benefit cost ratios for the California marketing order 
would also likely apply if the order were expanded to include Arizona 
and New Mexico.
    The following section examines the cost impacts of the mandatory 
aflatoxin requirements in an expanded marketing order.

Differences in Aflatoxin Inspection and Certification Costs

    Aflatoxin inspection and certification costs can be divided into 
the costs of: (1) Inspector travel time to pistachio handler's 
premises; (2) time required for the inspector to draw samples from lots 
designated for domestic shipment; (3) cost of shipping samples to the 
testing laboratory; (4) aflatoxin analysis (testing cost); and (5) 
value of the destroyed pistachios used in the sampling and analysis.
    The three tables below present estimated costs for representative 
handlers in California, Arizona, and New Mexico. Each table is designed 
to summarize handler costs for the lots being tested, including each of 
the five cost elements listed above. For clarity of the cost 
comparisons, the lot size to be sampled is assumed to be 50,000 pounds 
in the representative scenarios for all three states. The 50,000-pound 
lot size is most appropriate for California's handler plants, which are 
generally larger than the handler plants in Arizona and New Mexico. The 
impact in terms of higher unit cost for smaller lot sizes is discussed 
below.
    Table 1 is a representation of the current aflatoxin certification 
cost situation in California, which is the production area of the 
current federal marketing order for pistachios. It serves as a 
benchmark with which to compare the costs in the other two states, 
Arizona and New Mexico, which would be included under the proposed 
expanded production area. Witnesses from the pistachio industry in each 
of the three states submitted as evidence the data used in the three 
tables, and stated that the data was representative of the situation 
that exists or would be faced by handlers in those states.
    Witnesses pointed out that inspector travel costs and sample 
shipment costs were the most variable costs across the states. 
Inspector travel costs consist of the mileage reimbursement that 
inspectors need to be paid by the handlers, plus the time spent 
traveling to the handler's location. In California, inspectors are 
regularly in the plants, and there is no additional travel time 
associated with aflatoxin sampling. Witnesses testified that New Mexico 
inspector travel costs could be as high as $485 per lot due to the 
large distances involved, but that the figure of $432.50 was the most 
representative. Data presented at the hearing indicated that Arizona 
inspector travel cost could be as high as $100 per lot, but that a 
lower figure of $32.70 was more likely due to the closer proximity of 
Arizona Plant Services inspectors, who may be certified to take the 
sample.

   Table 1--California Pistachios: Cost Scenario for Sampling and Aflatoxin Testing for Representative Handler
----------------------------------------------------------------------------------------------------------------
                                               50,000-pound lots
                                          --------------------------
                                           Dollars per  Dollars per          Description of cost elements
                                               lot         pound
----------------------------------------------------------------------------------------------------------------
Inspector Travel Time to Plant...........  ...........  ...........  No inspector travel time; inspector
                                                                      regularly in plant.
Inspector Sampling Time..................       $70.00      $0.0014  [Cost of sampler time: 2 hours) @ $35/hour
                                                                      = $70]; [2 hours to draw 100 samples for
                                                                      one lot \2\].
Value of Pistachio Sample................       $44.00      $0.0009  [10 kg (22-lb) weight of sample from 100
                                                                      sub-samples]; [22 lbs. @ $2.00 per pound =
                                                                      $44].
Shipping Cost to Laboratory \1\..........  ...........  ...........  Onsite labs in plants; no shipping cost.
Aflatoxin Testing Cost \2\...............       $90.00      $0.0018  $90 lab fee to determine aflatoxin level of
                                                                      sample.
                                          ----------------------------------------------------------------------

[[Page 20640]]

 
    Total Cost...........................      $204.00      $0.0041  ...........................................
                                          ----------------------------------------------------------------------
Pct. of price received by handler........  ...........         0.2%  Industry estimate of CA handler sale price
                                                                      per pound = $2.00.
Pct. of price received by grower.........  ...........         0.3%  NASS estimate of 2007 CA grower price per
                                                                      pound = $1.35.
----------------------------------------------------------------------------------------------------------------
\1\ DFA laboratory in Fresno, CA.
\2\ Aflatoxin analysis done in onsite laboratory; imputed cost of $90 is based on cost in outside laboratory.
Source: Testimony at pistachio federal marketing order hearing, July 29-30, 2008, in Fresno, CA.


    Table 2--Arizona Pistachios: Cost Scenario for Sampling and Aflatoxin Testing for Representative Handler
----------------------------------------------------------------------------------------------------------------
                                               50,000-pound lots
                                          --------------------------
                                           Dollars per  Dollars per          Description of cost elements
                                               lot         pound
----------------------------------------------------------------------------------------------------------------
Inspector Travel Time to Plant...........       $32.70      $0.0007  [24 miles\1\ @ $0.40 per mile = $9.60];
                                                                      [Cost of sampler time: 40 min. (0.66
                                                                      hours) @ $35/hour = $23.10].
Inspector Sampling Time..................       $70.00      $0.0014  [Cost of sampler time: 2 hours) @ $35/hour
                                                                      = $70]; 2 hours to draw 100 samples for
                                                                      one lot \2\].
Value of Pistachio Sample................       $60.50      $0.0012  [(10 kg (22-lb) weight of sample from 100
                                                                      sub-samples]; [22 lbs. @ $2.75 per pound =
                                                                      $60.50].
Shipping Cost to Laboratory \3\..........      $200.00      $0.0040  Shipping cost per 10 kg sample.
Aflatoxin Testing Cost...................       $90.00      $0.0018  $90 lab fee to determine aflatoxin level of
                                                                      sample.
                                          ----------------------------------------------------------------------
    Total Cost...........................      $453.20      $0.0091  ...........................................
                                          ----------------------------------------------------------------------
Pct. of price received by handler........  ...........         0.3%  Industry estimate of AZ handler sale price
                                                                      per pound = $2.75.
Pct. of price received by grower.........  ...........         0.7%  USDA/NASS estimate of 2007 CA grower price
                                                                      per pound = $1.35 (AZ price not
                                                                      available).
----------------------------------------------------------------------------------------------------------------
\1\ 12 miles each way from pistachio handler plant in Bowie, AZ, to the San Simon, AZ, location of Arizona Plant
  Services inspectors (certified samplers).
\2\ Three lots sampled per visit over a 6-hour period.
\3\ DFA laboratory in Fresno, CA; handler witness expected to use overnight shipping, estimated at $200 per 10
  kg sample.
Source: Computed by USDA, based on evidence presented at pistachio federal marketing order hearing, July 29-30,
  2008, in Fresno, CA.


   Table 3--New Mexico Pistachios: Cost Scenario for Sampling and Aflatoxin Testing for Representative Handler
----------------------------------------------------------------------------------------------------------------
                                               50,000-pound lots
                                          --------------------------
                                           Dollars per  Dollars per          Description of cost elements
                                               lot         pound
----------------------------------------------------------------------------------------------------------------
Inspector Travel Time to Plant...........      $432.50      $0.0087  600 miles \1\ @ $0.40 per mile = $240];
                                                                      [Cost of sampler time: 5.5 hours \2\ @ $35/
                                                                      hour = $192.50].
Inspector Sampling Time..................       $70.00      $0.0014  [Cost of sampler time: 2 hours) @ $35/hour
                                                                      = $70]; [2 hours to draw 100 samples for
                                                                      one lot].
Value of Pistachio Sample................       $44.00      $0.0009  [10 kg (22-lb) weight of sample from 100
                                                                      sub-samples]; [22 lbs. @ $2.00 per pound =
                                                                      $44].
Shipping Cost to Laboratory \3\..........      $105.00      $0.0021  Shipping cost per 10 kg sample. \4\
Aflatoxin Testing Cost...................       $90.00      $0.0018  $90 lab fee to determine aflatoxin level of
                                                                      sample.
                                          ----------------------------------------------------------------------
    Total Cost...........................      $741.50      $0.0148  ...........................................
                                          ----------------------------------------------------------------------
Pct. of price received by handler........  ...........         0.7%  Industry estimate of NM handler sale price
                                                                      per pound = $2.00.
Pct. of price received by grower.........  ...........         1.1%  USDA/NASS estimate of 2007 CA grower price
                                                                      per pound = $1.35 (NM price not
                                                                      available).
----------------------------------------------------------------------------------------------------------------
\1\ Average of round trip travel distances to Alamagordo, NM, pistachio handler plant from two NM inspector
  (certified sampler) locations--Portales (416 miles round trip) and Farmington (782 miles).
\2\ Average of driving time estimates to two inspector locations: (4 + 7)/2 = 5.5 hours.
\3\ DFA laboratory in Fresno, CA.
\4\ Average of estimated range of shipping costs = ($90 + $120)/2 = $105.
Source: Computed by USDA, based on evidence presented at pistachio federal marketing order hearing, July 29-30,
  2008, in Fresno, CA.


[[Page 20641]]

    Two cost elements that are uniform across the three states are 
sampling time and testing cost. The estimated time that it takes an 
inspector to draw a 10 kg (22 pound) sample for aflatoxin testing of a 
50,000 pound lot, based on 100 sub-samples, is 2 hours. At a standard 
hourly rate of $35 per hour, two hours of sampling time will cost the 
handler $70. The testing cost for a laboratory to determine the 
aflatoxin level from a sample is $90.
    Witnesses indicated that the cost for the 22 pounds of pistachios 
used in the sample (handler sales revenue foregone) was $2.00 per pound 
($44 total) in California and New Mexico and $2.75 in Arizona (about 
$61 total).
    Given all of the assumptions that went into developing the cost 
summary in Table 1, the estimated cost per lot for a California handler 
for aflatoxin certification is $204, which is less than one half cent 
per pound (about four tenths of a cent). This represents 0.2 percent of 
the $2.00 pistachio value per pound at the handler level (estimate 
provided by industry witnesses) and 0.3 percent of the 2007 grower 
price per pound for California pistachios, estimated by NASS at $1.35 
per pound. A California pistachio industry witness pointed out that the 
unit price would be even lower with larger lot sizes and that the 
average lot size for ``failed lots'' in a recent year under the 
marketing order (those that exceeded the maximum aflatoxin tolerance) 
was nearly 67,000 pounds.
    Table 2 shows that a representative Arizona handler would pay twice 
as much as a California handler--$453 per lot, or nearly one cent per 
pound (about nine tenths of a cent). The data in Table 3 indicated that 
a New Mexico handler would pay even more for aflatoxin certification--
$742 per 50,000 pound lot, or about 1.5 cents per pound. Thus the 
certification costs for the smaller plants in Arizona and New Mexico 
would be between two and four times higher, if lot sizes were the same.
    Typical lot sizes may be smaller in Arizona and New Mexico; 
witnesses indicated that lot sizes could vary between 10,000 and 50,000 
pounds. An Arizona handler witness presented evidence indicating that 
40,000 pounds would be a more likely typical lot size, and that the 
sample size and related cost factors would be the same. With a smaller 
lot size, the Arizona handler cost per pound rises from nine tenths of 
a cent (50,000 pound lot) to 1.1 cents (40,000 pound lot). This cost 
per pound is nearly 3 times higher than the cost for a California 
handler with a 50,000 pound lot, but the percentage of the estimated 
handler sales price remains under one half of one percent (0.4%).
    A New Mexico handler witness characterized their own operation as 
being quite a bit smaller than the main Arizona handler and most 
California handlers. If the typical lot size for a small New Mexico 
handler was 10,000 pounds, then the sample size would be smaller (13.2 
pounds) and the inspector sampling time declines from two hours to one 
hour. The total cost would decline modestly, from $742 for a 50,000 
pound lot to $689 for a 10,000 pound lot. However, since the costs are 
spread over fewer pounds, the unit cost for certification would rise to 
nearly seven cents per pound, about 3 percent of the handler sales 
price. If the small handler had a typical lot size of 30,000 pounds 
(the midpoint between 10,000 and 50,000 pounds) the certification cost 
would be about 2.5 cents per pound, just over one percent of the 
handler sale price.
    However, the New Mexico handler witness indicated that they would 
try to organize their pistachio handling operation to keep the lot 
sizes for sampling and testing large enough to keep costs down. The 
50,000 pound lot example shown in Table 3 therefore provides a 
reasonable representation of small handler certification costs. The 
higher costs are due largely to the less developed aflatoxin testing 
infrastructure than is available in California, and related issues such 
as greater distances for inspector travel.
    Additional costs are incurred if a lot exceeds the maximum 
aflatoxin tolerance. Witnesses estimated that in all three states the 
cost for reworking a lot to remove the contaminated nuts would be 25 
cents per pound. After reworking the lot a handler would incur another 
round of the sampling and testing costs highlighted in the tables.
    Grower witnesses stated that the aflatoxin certification costs as 
presented by handler and other industry witnesses, and illustrated by 
the three tables, appeared to be reasonable representations of the cost 
of compliance with the aflatoxin requirements under the marketing 
order.

Proposed Reimbursement To Account for Handler Cost Differences

    The significant cost differences highlighted above is the reason 
that pistachio industry witnesses from all three states supported a 
proposed amendment to authorize the Committee to reimburse handlers in 
more remote locations within the production area for the excess costs 
due to lack of access to inspection and certification services. 
Reimbursing handlers for the excess costs would eliminate any 
differential impact and would equalize the aflatoxin certification 
costs across the proposed expanded production area.
    Although the precise details of reimbursement would be established 
through the informal rulemaking process upon recommendation of the 
Committee if such authority were granted, the following example 
illustrates one way to estimate the amount of reimbursement that may 
occur. With a 50,000 pound lot size, Table 3 shows the cost per lot for 
a New Mexico handler is about $742. The New Mexico handler would be 
expected to pay only the portion of the costs that are the same across 
the three states ($70 for inspector sampling, plus $90 testing cost, 
plus $44 in revenue foregone from destroyed pistachios, for a total 
cost per lot of $204). The handler represented by Table 3 would receive 
a reimbursement per lot of $538 ($742 minus $204).
    Using different cost assumptions, a pistachio industry witness 
provided an example with a somewhat higher estimate of the likely cost 
($605 per lot) that the Committee would reimburse New Mexico handlers. 
The witness estimated that with ten sampling trips per year, and one 
lot sampled per trip, the New Mexico reimbursements would total $6,050. 
With an anticipated total of 100 lots tested in Arizona in the example 
presented by the witness, and with a reimbursement rate of $235 per 
lot, the total Arizona cost would be $23,500. The sum for the two 
states would be about $30,000.
    Based on similar assumptions used in developing the tables, the 
total current cost of marketing order aflatoxin certification for 
California handlers (excluding the Committee assessment) was estimated 
by an industry witness to be $530,000. Based on this example, a $30,000 
reimbursement would be issued by the Committee to the Arizona and New 
Mexico handlers. The reimbursement would represent about a 6 percent 
increase above the $530,000 currently paid by the California handlers. 
The witness also stated that when the reimbursement system is 
implemented, all handlers of like-size operations would have comparable 
inspection costs.
    All California handler and grower witnesses expressed their support 
for such a reimbursement provision. In addition, all of the Arizona and 
New Mexico handler and grower witnesses also testified in favor of such 
a reimbursement.
    Handler and grower witnesses indicated that the expected benefits 
from the operation of the expanded

[[Page 20642]]

marketing order would substantially exceed costs.

Other Proposed Amendments

    The addition of production, post harvest, and nutrition research 
authority to the order would have no immediate cost impact on the 
industry. If the proposal is adopted, it would allow the Committee to 
recommend research activities to USDA. If approved, the projects would 
be funded through handler assessments. It is likely that program 
assessments would increase in order to fund any projects recommended, 
which would increase costs to handlers. However, the order limits the 
total assessment that can be implemented under the order so that the 
entire assessment cannot exceed one half of one percent of the average 
price received by producers in the preceding crop year. To the extent 
that funds for research would only represent a portion of the 
assessment funds, the cost of any research that may be conducted would 
necessarily be less than one half of one percent of the average price 
received by producers. In addition, since assessments are collected 
from handlers based on the volume of pistachios handled, any cost 
associated with research projects would be proportionate to the size of 
the handlers.
    Witnesses testified that the Committee would not undertake any 
research activities unless they expected the benefits to outweigh the 
costs. One witness testified that a presentation at a Symposium for 
Agricultural Research held on June 18 and 19, 2008, in Sacramento, 
California indicated that a benefit/cost ratio for agricultural 
research in California has been estimated at 30.7 to 1.
    Handler and grower witnesses made positive comments in support of 
other proposed order amendments, including the granting of broad 
authority for aflatoxin standards and for other quality regulations. 
Witnesses stated that there would be no immediate impact from the 
granting of these authorities, because there are no industry plans for 
changes in regulations. However, handler and grower witnesses stated 
that having such authority would be quite helpful to the future of the 
pistachio industry, and that if the authorities were exercised in the 
future, they expected that it would be done in a way that assured that 
benefits would outweigh costs. Since unanimity of the Committee would 
generally be required to make such changes, they expressed confidence 
that only regulations would be established that had very broad industry 
consensus. They expected additional improvements in product quality and 
improved returns to growers and handlers from the use of any such 
future regulations.
    One other proposed amendment, relating to interhandler transfers, 
merits discussion in the context of economic impact on handlers and 
growers, particularly small ones. When the marketing order was 
promulgated in 2004, authority was given for interhandler transfers of 
noncertified pistachios. Evidence presented at the hearing indicates 
that the proposed amendment formalizes that authority and expands it to 
include other marketing order requirements, including the payment of 
assessments on hulled and dried pistachios, when that processing is 
done by the producer. Under the marketing order, the entity which hulls 
and dries pistachios is responsible for assessments and inspections. 
This provision was included because in California producers normally 
deliver pistachios to a handler (processor) for hulling and drying as 
well as the subsequent handling functions.
    However, conditions in Arizona and New Mexico are different due to 
the limited processing capacity of some handlers, the lack of 
processing access of producers, and the small size of some producing 
operations. It is necessary in these conditions for some producers to 
process (hull and dry) their pistachios prior to delivery to a handler. 
The hulling and drying is part of the harvest process, and it is not 
the intent of these producers to perform any other handling functions. 
The proposal would therefore allow the transfer the responsibility for 
assessments, inspections and other marketing order requirements to the 
handler who places the pistachios into the stream of commerce.
    According to evidence presented at the hearing, this amendment 
would allow a small number of producers who hull and dry their own 
production, but perform no additional handling functions (estimated at 
less than ten), to limit their responsibility to filing a form at the 
time of pistachio delivery. This proposal would more clearly delineate 
the responsibilities of handlers and the small number of affected 
producers. Both would continue their current practices in virtually all 
cases, and the proposal would neither increase nor decrease returns. If 
the proposal is not accepted, small grower/handlers would assume an 
additional paperwork burden associated with the role of a handler, 
according to testimony. This proposal has the effect of assisting small 
business operations by removing them from paperwork and other burdens.

Handler Assessment Costs

    Under the marketing order, handlers pay assessments to the 
Committee for costs associated with administering the program. 
Following is an evaluation of the impact these costs would have on 
handlers in Arizona and New Mexico if they are included under the 
order.
    The assessment rate authorized under the order is limited to one-
half of one percent (.005) of the average grower price received in the 
preceding crop year. The current assessment rate under the order is 
$.0007 per pound, or .07 cents per pound. This compares to an estimated 
average grower price for the 2007 crop year of $1.35 per pound. The 
assessment rate for the 2007 crop year was .05 percent (5/100ths of one 
percent) of the grower price.
    Although there are no NASS data available regarding New Mexico 
pistachio production, information presented by witnesses at the hearing 
indicates average annual production in New Mexico could be in the range 
of 300,000 to 350,000 pounds. At an assessment rate of $.0007, this 
would equate to a total annual assessment ranging from $210 to $245 for 
all New Mexico handlers combined. Production from Arizona was 7 million 
pounds in 2007, according to NASS data. At the $.0007 per pound 
assessment rate, this would equate to a total annual assessment of 
$4,900 for all Arizona handlers combined. Assessments under the order 
present a cost to handlers, but as can be seen from the foregoing 
example, the cost is minimal. In addition, the costs are applied to 
handlers in proportion to the quantity of pistachios handled, so there 
is no differential impact anticipated for small and large handlers.

Paperwork Reduction Act

    Information collection requirements for Part 983 are currently 
approved by the Office of Management and Budget (OMB) under OMB No. 
0581-0215, ``Pistachios Grown in California.'' The reporting changes 
generated by the proposed amendments would result in an increase in 
burden and will be submitted to OMB under OMB No. 0581-NEW. Upon 
approval, we will request that this collection be merged into OMB No. 
0581-0215.
    Title: Pistachios Grown in California, Marketing Order No. 983.
    OMB Number: 0581-NEW.
    Expiration Date of Approval: 3 years from date of approval.
    Type of Request: Approval of the collection of a new information 
collection.
    Abstract: Marketing order programs provide an opportunity for 
producers of

[[Page 20643]]

fresh fruits, vegetables and specialty crops, in a specified production 
area, to work together to solve marketing problems that cannot be 
solved individually. Order regulations help ensure adequate supplies of 
high quality product and adequate returns to producers. Under the 
Agricultural Marketing Agreement Act of 1937 [7 U.S.C. 601-674], 
(AMAA), as amended, industries enter into marketing order programs. The 
Secretary of Agriculture is authorized to oversee the orders' 
operations and issue regulations recommended by a committee of 
representatives from each commodity industry.
    The information collection requirements in this request are 
essential to carry out the intent of the AMAA, to provide the 
respondents the type of service they request, and to administer the 
pistachio marketing order program.
    If the proposed amendments to the pistachio marketing order are 
implemented to expand the production area to include the States of 
Arizona and New Mexico, the reporting requirements in effect under the 
order would be applied to handlers and producers in those states, thus 
increasing burden.
    Once implemented, producers and handlers of pistachios located in 
the States of Arizona and New Mexico would be required to complete 
forms relating to committee nominations, background questionnaires, 
referendum and nomination ballots, and handler reports. This would 
result in a burden of 29 hours. Additionally, handlers would have to 
maintain related records and documentation for three full years 
following the end of the crop year.
    The information collected is used only by authorized 
representatives of the Department of Agriculture (USDA), including AMS, 
Fruit and Vegetable Programs regional and headquarters staff, and 
authorized employees of the Committee. AMS is the primary user of the 
information and authorized committee employees are the secondary user.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average .225 hours per response.
    Respondents: Producers and handlers of pistachios grown in Arizona 
and New Mexico.
    Estimated Number of Respondents: 85.
    Estimated Number of Responses per Respondent: 1.51.
    Estimated Total Annual Burden on Respondents: 29 hours.
    Comments are invited on: (1) Whether the proposed collection of 
information is necessary for the functioning of the pistachio marketing 
order program and USDA's oversight of that program; (2) the accuracy of 
the collection burden estimate and the validity of methodology and 
assumptions used in estimating the burden on respondents; (3) ways to 
enhance the quality, utility, and clarity of the information requested; 
and (4) ways to minimize the burden, including use of automated or 
electronic technologies.
    Comments should reference OMB No. 0581-NEW and the Marketing Order 
for Pistachios Grown in California, and should be sent to the USDA in 
care of the Docket Clerk at the previous mentioned address or at http://www.regulations.gov.
    All responses to this notice will be summarized and included in the 
request for OMB approval. All comments will also become a matter of 
public record and will be available for public inspection during 
regular business hours at the same address or at http://www.regulations.gov.
    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 proposed rule. All of these amendments are designed 
to enhance the administration and functioning of the marketing order to 
the benefit of the industry.
    While the implementation of these requirements may impose some 
additional costs on handlers, the costs are minimal and uniform on all 
handlers. Some of these costs may be passed on to growers. However, 
these costs would be offset by the benefits derived by the operation of 
the marketing order. In addition, the meetings regarding these 
proposals as well as the hearing date were widely publicized throughout 
the existing and proposed addition to the pistachio production area and 
all interested persons were invited to attend the meetings and the 
hearing and participate in Committee deliberations on all issues. All 
Committee meetings and the hearing were public forums and all entities, 
both large and small, were able to express views on these issues. The 
Committee itself is composed of members representing handlers and 
producers. Finally, interested persons are invited to submit 
information on the regulatory and informational impacts of this action 
on small businesses.
    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 983 proposed herein have been 
reviewed under Executive Order 12988, Civil Justice Reform. They are 
not intended to have retroactive effect. If adopted, the proposed 
amendments would not preempt any State or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
proposal.
    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.

Rulings on Briefs of Interested Persons

    Briefs, proposed findings and conclusions, and the evidence in the 
record were considered in making the findings and conclusions set forth 
in this recommended decision. To the extent that the suggested findings 
and conclusions filed by interested persons are inconsistent with the 
findings and conclusions of this recommended decision, the requests to 
make such findings or to reach such conclusions are denied.

General Findings

    The findings hereinafter set forth are supplementary to the 
findings and determinations which were previously made in connection 
with the issuance of the marketing order; and all 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.
    1. The marketing agreement and order, as amended, and as hereby 
proposed to be further amended, and all

[[Page 20644]]

of the terms and conditions thereof, would tend to effectuate the 
declared policy of the Act;
    2. The marketing agreement and order, as amended, and as hereby 
proposed to be further amended, regulates the handling of pistachios 
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 a hearing has been 
held;
    3. The marketing agreement and order, as amended, and as hereby 
proposed to be further amended, is limited in its 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 subdivisions of the production area would 
not effectively carry out the declared policy of the Act;
    4. The marketing agreement and order, as amended, and as hereby 
proposed to be 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 pistachios grown in the production area; 
and
    5. All handling of pistachios grown in the production area as 
defined in the marketing agreement and order, is in the current of 
interstate or foreign commerce or directly burdens, obstructs, or 
affects such commerce.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposal. Thirty days is deemed appropriate because 
these proposed changes have been widely publicized and implementation 
of the changes, if adopted, would be desirable to benefit the industry 
as soon as possible. All written exceptions timely received will be 
considered and a grower referendum will be conducted before any of 
these proposals are implemented.

List of Subjects in 7 CFR Part 983

    Pistachios, Marketing agreements and orders, Reporting and 
recordkeeping requirements.

    For the reasons set forth in the preamble, 7 CFR part 983 is 
proposed to be amended as follows:

PART 983--PISTACHIOS GROWN IN CALIFORNIA

    1. The authority citation for 7 CFR part 983 continues to read as 
follows:

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

    2. Revise Sec.  983.1 to read as follows:


Sec.  983.1  Accredited laboratory.

    An accredited laboratory is a laboratory that has been approved or 
accredited by the U.S. Department of Agriculture.
    3. Lift the December 10, 2007, suspension of Sec.  983.6, and 
revise the section to read as follows:


Sec.  983.6  Assessed weight.

    Assessed weight means pounds of inshell pistachios, with the weight 
computed at 5 percent moisture, received for processing by a handler 
within each production year: Provided, That for loose kernels, the 
actual weight shall be multiplied by two to obtain an inshell weight; 
Provided further, That the assessed weight may be based upon quality 
requirements for inshell pistachios that may be recommended by the 
Committee and approved by the Secretary.
    4. Lift the December 10, 2007, suspension of Sec.  983.7, and 
revise the section to read as follows:


Sec.  983.7  Certified pistachios.

    Certified pistachios are those that meet the inspection and 
certification requirements under this part.
    5. Revise Sec.  983.8 to read as follows:


Sec.  983.8  Committee.

    Committee means the Administrative Committee for Pistachios 
established pursuant to Sec.  983.41.
    6. Amend Sec.  983.11 by adding a paragraph (a)(4) to read as 
follows:


Sec.  983.11  Districts.

    (a) * * *
    (4) District 4 consists of the States of Arizona and New Mexico.
* * * * *


Sec.  983.19  [Removed]

    7. Lift the December 10, 2007, suspension of Sec.  983.19, and 
remove the section.


Sec.  983.20  [Removed]

    8a. Lift the December 10, 2007, suspension of Sec.  983.20, and 
remove the section.


Sec.  983.21  [Redesignated as Sec.  983.20]

    8b. Redesignate Sec.  983.21 as Sec.  983.20, and revise it to read 
as follows:


Sec.  983.20  Part and subpart.

    Part means the order regulating the handling of pistachios grown in 
the States of California, Arizona and New Mexico, and all the rules, 
regulations and supplementary orders issued thereunder. The aforesaid 
order regulating the handling of pistachios grown in California, 
Arizona and New Mexico shall be a subpart of such part.


Sec.  983.22  [Redesignated as Sec.  983.21]

    9. Redesignate Sec.  983.22 as Sec.  983.21.


Sec.  983.23  [Redesignated as Sec.  983.22]

    10. Redesignate Sec.  983.23 as Sec.  983.22, and revise it to read 
as follows:


Sec.  983.22  Pistachios.

    Pistachios means the nuts of the pistachio tree of the genus and 
species Pistacia vera grown in the production area, whether inshell or 
shelled.


Sec.  983.24  [Redesignated as Sec.  983.23]

    11. Redesignate Sec.  983.24 as Sec.  983.23.


Sec.  983.25  [Redesignated as Sec.  983.24]

    12. Redesignate Sec.  983.25 as Sec.  983.24.


Sec.  983.26  [Redesignated as Sec.  983.25]

    13. Redesignate Sec.  983.26 as Sec.  983.25, and revise it to read 
as follows:


Sec.  983.25  Production area.

    Production Area means the States of California, Arizona, and New 
Mexico.


Sec. Sec.  983.27 through 983.30  [Redesignated as Sec. Sec.  983.26 
through 983.29]

    14. Redesignate Sec. Sec.  983.27 through 983.30 as Sec. Sec.  
983.26 through 983.29, respectively.


Sec.  983.31  [Redesignated as Sec.  983.30]

    15. Lift the December 10, 2007, suspension of Sec.  983.31, 
redesignate Sec.  983.31 as Sec.  983.30, and revise the section to 
read as follows:


Sec.  983.30  Substandard pistachios.

    Substandard pistachios means pistachios, inshell or shelled, which 
do not meet regulations established pursuant to Sec. Sec.  983.50 and 
983.51.


Sec.  983.53  [Redesignated as Sec.  983.71]

    16. Redesignate Sec.  983.53 as Sec.  983.71, and revise paragraph 
(a) to read as follows:


Sec.  983.71  Assessments.

    (a) Each handler who receives pistachios for processing in each 
production year, except as provided in Sec.  983.58, shall pay the 
committee on demand, an assessment based on the pro rata share of the 
expenses authorized by the Secretary for that year attributable to the 
assessed weight of pistachios received by that handler in that year.
* * * * *


Sec.  983.54  [Redesignated as Sec.  983.72]

    17. Redesignate Sec.  983.54 as Sec.  983.72, and revise the 
section to read as follows:


Sec.  983.72  Contributions.

    The committee may accept voluntary contributions but these shall 
only be used to pay for committee expenses unless specified in support 
of research

[[Page 20645]]

under Sec.  983.46. Furthermore, research contributions shall be free 
of additional encumbrances by the donor and the committee shall retain 
complete control of their use.


Sec.  983.55  [Redesignated as Sec.  983.73]

    18. Redesignate Sec.  983.55 as Sec.  983.73.


Sec.  983.56  [Redesignated as Sec.  983.74]

    19. Redesignate Sec.  983.56 as Sec.  983.74, and amend it by 
removing the reference to ``Sec.  983.53'' and adding in its place 
``Sec.  983.71'' in paragraph (a)(1).


Sec.  983.57  [Redesignated as Sec.  983.75]

    20. Redesignate Sec.  983.57 as Sec.  983.75, and revise it to read 
as follows:


Sec.  983.75  Implementation and amendments.

    The Secretary, upon the recommendation of a majority of the 
committee, may issue rules and regulations implementing or modifying 
Sec. Sec.  983.64 through 983.74 inclusive.


Sec. Sec.  983.58 through 983.64  [Redesignated as Sec. Sec.  983.80 
through 983.86]

    21. Redesignate Sec. Sec.  983.58 through 983.64 as Sec. Sec.  
983.80 through 983.86, respectively.
    22. Move the undesignated center heading ``MISCELLANEOUS 
PROVISIONS'' to precede Sec.  983.80.


Sec.  983.65  [Redesignated as Sec.  983.87]

    23. Redesignate Sec.  983.65 as Sec.  983.87, and revise it to read 
as follows:


Sec.  983.87  Effective time.

    The provisions of this part, as well as any amendments, shall 
become effective at such time as the Secretary may declare, and shall 
continue in force until terminated or suspended in one of the ways 
specified in Sec.  983.88 or Sec.  983.89.


Sec. Sec.  983.66 through 983.69  [Redesignated as Sec. Sec.  983.88 
through 983.91]

    24. Redesignate Sec. Sec.  983.66 through 983.69 as Sec. Sec.  
983.88 through 983.91, respectively.


Sec.  983.70  [Redesignated as Sec.  983.92]

    25. Redesignate Sec.  983.70 as Sec.  983.92, and revise it to read 
as follows:


Sec.  983.92  Exemption.

    Any handler may handle pistachios within the production area free 
of the requirements in Sec. Sec.  983.50 through 983.58 and Sec.  
983.71 if such pistachios are handled in quantities not exceeding 5,000 
dried pounds during any production year. The Secretary, upon 
recommendation of the committee, may issue rules and regulations 
changing the 5,000 pound quantity applicable to this exemption.


Sec.  983.41  [Redesignated as Sec.  983.53]

    26. Lift the December 10, 2007, suspension of Sec.  983.41, 
redesignate Sec.  983.41 as Sec.  983.53, and revise the section to 
read as follows:


Sec.  983.53  Testing of minimal quantities.

    (a) Aflatoxin. Handlers who handle less than 1 million pounds of 
assessed weight per year have the option of utilizing both of the 
following methods for testing for aflatoxin:
    (1) The handler may have an inspector sample and test his or her 
entire inventory of hulled and dried pistachios for the aflatoxin 
certification before further processing.
    (2) The handler may segregate receipts into various lots at the 
handler's discretion and have an inspector sample and test each 
specific lot. Any lots that are found to have less aflatoxin than the 
level established by the Committee and approved by the Secretary can be 
certified by an inspector to be negative as to aflatoxin. Any lots that 
are found to have aflatoxin exceeding the level established by the 
Committee and approved by the Secretary may be tested after reworking 
in the same manner as specified in Sec.  983.50.
    (b) Quality. The committee may, with the approval of the Secretary, 
establish regulations regarding the testing of minimal quantities of 
pistachios for quality.


Sec.  983.42  [Redesignated as Sec.  983.54]

    27. Lift the December 10, 2007, suspension of Sec.  983.42, 
redesignate Sec.  983.42 as Sec.  983.54, and revise the section to 
read as follows:


Sec.  983.54  Commingling.

    Certified lots may be commingled with other certified lots, but the 
commingling of certified and uncertified lots shall cause the loss of 
certification for the commingled lots.


Sec.  983.43  [Redesignated as Sec.  983.55]

    28. Redesignate Sec.  983.43 as Sec.  983.55.


Sec.  983.44  [Redesignated as Sec.  983.56]

    29. Redesignate Sec.  983.44 as Sec.  983.56, and revise it to read 
as follows:


Sec.  983.56  Inspection, certification and identification.

    Upon recommendation of the committee and approval of the Secretary, 
all pistachios that are required to be inspected and certified in 
accordance with this part shall be identified by appropriate seals, 
stamps, tags, or other identification to be affixed to the containers 
by the handler. All inspections shall be at the expense of the handler, 
Provided, That for handlers making shipments from facilities located in 
an area where inspection costs for inspector travel and shipment of 
samples for aflatoxin testing would otherwise exceed the average of 
those same inspection costs for comparable handling operations located 
in Districts 1 and 2, such handlers may be reimbursed by the committee 
for the difference between their respective inspection costs and such 
average, or as otherwise recommended by the committee and approved by 
the Secretary.


Sec.  983.45  [Redesignated as Sec.  983.57]

    30. Lift the December 10, 2007, suspension of Sec.  983.45, 
redesignate Sec.  983.45 as Sec.  983.57, and revise the section to 
read as follows:


Sec.  983.57  Substandard pistachios.

    The committee shall, with the approval of the Secretary, establish 
such reporting and disposition procedures as it deems necessary to 
ensure that pistachios which do not meet the aflatoxin and quality 
requirements established pursuant to Sec. Sec.  983.50 and 983.51 shall 
not be shipped for domestic human consumption.


Sec.  983.46  [Redesignated as Sec.  983.59]

    31. Redesignate Sec.  983.46 as Sec.  983.59, and revise it to read 
as follows:


Sec.  983.59  Modification or suspension of regulations.

    (a) In the event that the committee, at any time, finds that by 
reason of changed conditions, any regulations issued pursuant to 
Sec. Sec.  983.50 through 983.58 should be modified or suspended, it 
shall, pursuant to Sec.  983.43, so recommend to the Secretary.
    (b) Whenever the Secretary finds from the recommendations and 
information submitted by the committee or from other available 
information, that a regulation should be modified, suspended, or 
terminated with respect to any or all shipments of pistachios in order 
to effectuate the declared policy of the Act, the Secretary shall 
modify or suspend such provisions. If the Secretary finds that a 
regulation obstructs or does not tend to effectuate the declared policy 
of the Act, the Secretary shall suspend or terminate such regulation.
    (c) The Secretary, upon recommendation of committee, may issue 
rules and regulations implementing Sec. Sec.  983.50 through 983.58.


Sec. Sec.  983.47 through 983.51  [Redesignated as Sec. Sec.  983.64 
through 983.68]

    32. Redesignate Sec. Sec.  983.47 through 983.51 as Sec. Sec.  
983.64 through 983.68, respectively.

[[Page 20646]]

    33. Move the undesignated center heading ``REPORTS, BOOKS, AND 
RECORDS'' to precede Sec.  983.64.


Sec.  983.52  [Redesignated as Sec.  983.70]

    34. Redesignate Sec.  983.52 as Sec.  983.70.
    35. Move the undesignated center heading ``EXPENSES AND 
ASSESSMENTS'' to precede Sec.  983.70.
    36. Add a new Sec.  983.58 to read as follows:


Sec.  983.58  Interhandler Transfers.

    Within the production area, any handler may transfer pistachios to 
another handler for additional handling, and any assessments, 
inspection requirements, aflatoxin testing requirements, and any other 
marketing order requirements with respect to pistachios so transferred 
may be assumed by the receiving handler. The committee, with the 
approval of the Secretary, may establish methods and procedures, 
including necessary reports, to maintain accurate records for such 
transfers.


Sec.  983.32  [Redesignated as Sec.  983.41]

    37. Redesignate Sec.  983.32 as Sec.  983.41, amend the section by 
removing the words ``eleven (11)'' from the introductory paragraph and 
adding in their place the words ``twelve (12),'' and by revising 
paragraph (b) to read as follows:


Sec.  983.41  Establishment and membership.

    (a) * * *
    (b) Producers. Nine members shall represent producers. Producers 
within the respective districts shall nominate four producers from 
District 1, three producers from District 2, one producer from District 
3, and one producer from District 4. The Secretary, upon recommendation 
of the committee, may reapportion producer representation among the 
districts to ensure proper representation.
* * * * *


Sec.  983.33  [Redesignated as Sec.  983.42]

    38. Redesignate Sec.  983.33 as Sec.  983.42, and amend the section 
by removing the word ``grower'' and adding in its place the word 
``producer'' in paragraph (a), removing the reference to ``Sec.  
983.32'' and adding in its place ``Sec.  983.41'' in paragraph (j), and 
by removing the reference to ``Sec. Sec.  983.32, 983.33, and 983.34'' 
and adding in its place ``Sec. Sec.  983.41, 983.42, and 983.43'' in 
paragraph (n).


Sec.  983.34  [Redesignated as Sec.  983.43]

    39. Redesignate Sec.  983.34 as Sec.  983.43, and revise paragraph 
(a) of that section to read as follows:


Sec.  983.43  Procedure.

    (a) Quorum. A quorum of the committee shall be any seven voting 
committee members. The vote of a majority of members present at a 
meeting at which there is a quorum shall constitute the act of the 
committee: Provided, That actions of the committee with respect to the 
following issues shall require twelve (12) concurring votes of the 
voting members regarding any recommendation to the Secretary for 
adoption or change in:
    (1) Quality regulation;
    (2) Aflatoxin regulation;
    (3) Research under Sec.  983.46; and
    Provided further, That actions of the committee with respect to the 
following issues shall require eight (8) concurring votes of the voting 
members regarding recommendation to the Secretary for adoption or 
change in:
    (4) Inspection programs;
    (5) The establishment of the committee.
* * * * *


Sec.  983.35  [Redesignated as Sec.  983.44]

    40. Redesignate Sec.  983.35 as Sec.  983.44.


Sec.  983.36  [Redesignated as Sec.  983.45]

    41. Redesignate Sec.  983.36 as Sec.  983.45.


Sec.  983.37  [Redesignated as Sec.  983.47]

    42. Redesignate Sec.  983.37 as Sec.  983.47.
    43. Move the undesignated center heading ``MARKETING POLICY'' to 
precede Sec.  983.47.


Sec.  983.38  [Redesignated as Sec.  983.50]

    44. Lift the December 10, 2007, suspension of Sec.  983.38, 
redesignate Sec.  983.38 as Sec.  983.50, and revise the section to 
read as follows:


Sec.  983.50  Aflatoxin regulations.

    The committee shall establish, with the approval of the Secretary, 
such aflatoxin sampling, analysis, and inspection requirements 
applicable to pistachios to be shipped for domestic human consumption 
as will contribute to orderly marketing or be in the public interest. 
No handler shall ship, for human consumption, pistachios that exceed an 
aflatoxin level established by the committee with approval of the 
Secretary. All domestic shipments must be covered by an aflatoxin 
inspection certificate.
    45. Move the undesignated center heading ``REGULATIONS'' to precede 
Sec.  983.50.


Sec.  983.39  [Redesignated as Sec.  983.51]

    46. Lift the December 10, 2007, suspension of Sec.  983.39, 
redesignate Sec.  983.39 as Sec.  983.51, and revise the section to 
read as follows:


Sec.  983.51  Quality regulations.

    For any production year, the committee may establish, with the 
approval of the Secretary, such quality and inspection requirements 
applicable to pistachios to be shipped for domestic human consumption 
as will contribute to orderly marketing or be in the public interest. 
In such production year, no handler shall ship pistachios for domestic 
human consumption unless they meet the applicable requirements as 
evidenced by certification acceptable to the committee.


Sec.  983.40  [Redesignated as Sec.  983.52]

    47. Lift the December 10, 2007, suspension of Sec.  983.40, 
redesignate Sec.  983.40 as Sec.  983.52, and revise the section to 
read as follows:


Sec.  983.52  Failed lots/rework procedure.

    (a) Substandard pistachios. Each lot of substandard pistachios may 
be reworked to meet aflatoxin or quality requirements. The committee 
may establish, with the Secretary's approval, appropriate rework 
procedures.
    (b) Failed lot reporting. If a lot fails to meet the aflatoxin and/
or the quality requirements of this part, a failed lot notification 
report shall be completed and sent to the committee within 10 working 
days of the test failure. This form must be completed and submitted to 
the committee each time a lot fails either aflatoxin or quality 
testing. The accredited laboratories shall send the failed lot 
notification reports for aflatoxin tests to the committee, and the 
handler, under the supervision of an inspector, shall send the failed 
lot notification reports for the lots that do not meet the quality 
requirements to the committee.
    48. Add a new Sec.  983.46, preceded by an undesignated center 
heading, to read as follows:

Research


Sec.  983.46  Research.

    The committee, with the approval of the Secretary, may establish or 
provide for the establishment of projects involving research designed 
to assist or improve the efficient production and postharvest handling 
of quality pistachios. The committee, with the approval of the 
Secretary, may also establish or provide for the establishment of 
projects designed to determine the effects of pistachio consumption on 
human health and nutrition. Pursuant to Sec.  983.43(a), such research 
projects may only be established with 12 concurring votes of the voting 
members of the committee. The expenses of such projects shall be

[[Page 20647]]

paid from funds collected pursuant to Sec. Sec.  983.71 and 983.72.

    Dated: April 29, 2009.
Robert C. Keeney,
Acting Associate Administrator, Agricultural Marketing Service.
[FR Doc. E9-10150 Filed 5-4-09; 8:45 am]
BILLING CODE 3410-02-P