Almonds Grown in California; Revision of Requirements Regarding Quality Control Program

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Docket No. FV98-981-1 PR]

Almonds Grown in California; Revision of Requirements Regarding

Quality Control Program

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule invites comments on a revision to the administrative

rules and regulations of the California almond marketing order (order)

pertaining to the quality control program. The order regulates the

handling of almonds grown in California, and is administered locally by

the Almond Board of California (Board). Under the terms of the order,

handlers are required to obtain inspection on almonds received from

growers to determine the percent of inedible almonds in each lot of any

variety. Handlers are then required to dispose of a quantity of almonds

in excess of 1 percent of the weight of almonds reported as inedible to

accepted users of such product. Accepted users are approved annually by

the Board. This rule would clarify conditions upon which accepted

users' status may be denied or revoked by the Board. This rule would

help to ensure that inedible almonds are removed from human consumption

channels, thereby maintaining the integrity of the quality control

provisions of the order.

DATES: Comments must be received by July 17, 1998.

ADDRESSES: Interested persons are invited to submit written comments

concerning this proposal. Comments must be sent to the Docket Clerk,

Fruit and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 96456,

Washington, DC 20090-6456; Fax: (202) 205-6632. All comments should

reference the docket number and the date and page number of this issue

of the Federal Register and will be made available for public

inspection in the Office of the Docket Clerk during regular business

hours.

FOR FURTHER INFORMATION CONTACT: Martin Engeler, Assistant Regional

Manager, California Marketing Field Office, Marketing Order

Administration Branch, F&V, AMS, USDA, 2202 Monterey Street, suite

102B, Fresno, California 93721; telephone: (209) 487-5901, Fax: (209)

487-5906; or George Kelhart, Technical Advisor, Marketing Order

Administration Branch, Fruit and Vegetable Programs, AMS, USDA, room

2525-S, P.O. Box 96456, Washington, DC 20090-6456; telephone: (202)

690-3919, Fax: (202) 205-6632. Small businesses may request information

on compliance with this regulation by contacting Jay Guerber, Marketing

Order Administration Branch, F&V, AMS, USDA, room 2525-S, P.O. Box

96456, Washington, DC 20090-6456; telephone: (202) 720-2491, Fax: (202)

205-6632.

SUPPLEMENTARY INFORMATION: This proposal is issued under Marketing

Order No. 981, as amended (7 CFR part 981), regulating the handling of

almonds grown in California, hereinafter referred to as the ``order.''

The marketing order is effective under the Agricultural Marketing

Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter

referred to as the ``Act.''

The Department of Agriculture (Department) is issuing this rule in

conformance with Executive Order 12866.

This rule has been reviewed under Executive Order 12988, Civil

Justice Reform. This rule is not intended to

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have retroactive effect. This rule will not preempt any State or local

laws, regulations, or policies, unless they present an irreconcilable

conflict with this rule.

The Act provides that administrative proceedings must be exhausted

before parties may file suit in court. Under section 608c(15)(A) of the

Act, any handler subject to an order may file with the Secretary 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 the Secretary would rule on the petition.

The Act provides that the district court of the United States in any

district in which the handler is an inhabitant, or has his or her

principal place of business, has jurisdiction to review the Secretary's

ruling on the petition, provided an action is filed not later than 20

days after date of the entry of the ruling.

This proposal invites comments on revisions to the administrative

rules and regulations pertaining to a quality control program under the

California almond order. The proposal was recommended unanimously by

the Board, and would clarify conditions under which the Board could

deny or revoke the status of accepted users of inedible almonds.

Section 981.42 of the order provides authority for a quality

control program. Section 981.42(a) requires handlers to obtain incoming

inspection on almonds received from growers to determine the percent of

inedible kernels in each lot of any variety. Handlers are required to

report such inedible determination for each lot received to the Board.

Section 981.42(a) also provides authority for the Board, with the

approval of the Secretary, to establish rules and regulations necessary

and incidental to the administration of the order's quality control

provisions.

Section 981.442 of the order's administrative rules and regulations

specifies that the weight of inedible kernels in each lot of any

variety of almonds in excess of 1 percent of the kernel weight received

by a handler shall constitute such handler's inedible disposition

obligation. Handlers are required to deliver inedible kernels

accumulated in the course of processing to Board-approved accepted

users of such product in order to satisfy the disposition obligation.

Accepted users then dispose of inedible kernels to non-human

consumption outlets. Because inedible kernels are considered unfit for

human consumption, requiring handlers to meet this obligation helps to

ensure that each handler's outgoing shipments of almonds are relatively

free of almonds with serious damage, and the number of kernels with

minor damage should be minimal.

Accepted users of inedible almonds file an application with the

Board specifying certain terms and conditions with which they will

voluntarily abide. The application also indicates they will dispose of

the inedible almonds received from handlers in one or more of the

following manners: crushing into oil, manufacturing into animal feed,

or feeding directly to animals. The Board staff reviews and approves

accepted user applications on an annual basis.

Section 981.442(a)(7) of the rules and regulations lists

eligibility criteria for accepted users. These criteria are applied by

the Board when reviewing and approving accepted users. However, the

regulations do not specifically address when the Board may deny or

revoke accepted user status. Situations have occurred in the past

wherein accepted users have failed to completely meet these conditions,

and the Board could not be assured the inedible almonds were being

disposed of in non-human consumption outlets.

The Board met on March 25, 1998, and unanimously recommended adding

language to Sec. 981.442(a)(7) of the administrative rules and

regulations stating that an accepted user's status may be denied or

revoked if the eligibility requirements are not met or if the terms and

conditions agreed to in the accepted user application are not met. The

Board recommended that this change be made prior to August 1, 1998, so

that it could be made effective at the beginning of the crop year, and

to coincide with the approval cycle for accepted user applications.

This change would provide a clear foundation of understanding

between the Board, handlers, and accepted users. The proposal would

assist in maintaining the integrity of the Board's quality control

program by providing clear authority to deny or revoke accepted user

status. This would help to ensure inedible almonds are properly

disposed of in non-human consumption outlets, which is in the interest

of producers, handlers, and consumers.

Pursuant to requirements set forth in the Regulatory Flexibility

Act (RFA), the Agricultural Marketing Service (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 in order that small businesses will

not be unduly or disproportionately burdened. Marketing orders issued

pursuant to the Act, and rules issued thereunder, are unique in that

they are brought about through group action of essentially small

entities acting on their own behalf. Thus, both statutes have small

entity orientation and compatibility.

There are approximately 97 handlers of California almonds who are

subject to regulation under the order and approximately 7,000 almond

producers in the regulated area. Small agricultural service firms have

been defined by the Small Business Administration (13 CFR 121.601) as

those having annual receipts of less than $5,000,000, and small

agricultural producers are defined as those having annual receipts of

less than $500,000.

Currently, about 58 percent of the handlers ship under $5,000,000

worth of almonds and 42 percent ship over $5,000,000 worth on an annual

basis. In addition, based on acreage, production, and grower prices

reported by the National Agricultural Statistics Service, and the total

number of almond growers, the average annual grower revenue is

approximately $156,000. In view of the foregoing, it can be concluded

that the majority of handlers and producers of California almonds may

be classified as small entities.

There are currently 23 accepted users of inedible almonds approved

by the Board. Accepted users may enter into a voluntary agreement with

the Board to function as an outlet to which handlers can ship inedible

almonds to satisfy an order obligation. While data concerning these

entities is limited, based on a review of the quantity of inedible

almonds delivered to each entity, it is believed that the majority may

be classified as small entities.

This proposal invites comments on revisions to the quality control

provisions of the administrative rules and regulations issued under the

California almond order. Under the terms of the order, handlers are

required to obtain inspection on almonds received from growers to

determine the percent of inedible almonds in each lot of any variety.

Handlers are then required to dispose of a quantity of almonds in

excess of one percent of the weight of almonds reported as inedible to

accepted users of such product. Accepted users are approved annually by

the Board.

Section 981.442(a)(7) of the order's administrative rules and

regulations provides criteria which accepted users must meet. This rule

would revise this section to specify that an accepted

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user's status may be denied or revoked if the criteria are not met.

This rule would help maintain the integrity of the Board's quality

control program.

This proposed change is not expected to impact handlers, other than

to clarify to them that accepted user's status may be denied or

revoked. Handlers are provided a listing of approved accepted users so

they know who they can deliver inedible material to and receive credit

against their obligation. In the event an application for accepted user

status is denied or an accepted user's status is revoked, handlers

would be notified by Board staff and provided an updated listing.

This rule would only impact applicants for accepted user status, or

accepted users in the sense that it would clarify that accepted user

status may be denied or revoked if the terms and conditions set forth

in the rules and regulations and the accepted user application are not

met. Accepted users are approved entities to which handlers may deliver

inedible almonds and receive credit against their inedible disposition

obligation. Accepted users voluntarily agree to meet certain terms and

conditions so the Board may be assured that inedible almonds do not

enter human consumption channels. If these dealers in inedible almonds

do not agree to the terms and conditions, they are not approved by the

Board. However, they may still operate in the business, although

handlers do not receive credit against their inedible disposition

obligation if they deliver product to such non-approved entities.

Situations have occurred in the past wherein accepted users have failed

to completely meet these conditions, and the Board could not be assured

the inedible almonds were being disposed of in non-human consumption

outlets.

One alternative to the proposal would be to maintain the regulatory

language as it currently exists, in which case there would be no

clarification. Another alternative would be to specify at length all

possible reasons for denying or revoking an accepted user's status. The

first alternative fails to address the issue, and the second would

require unnecessary lengthy additions to regulatory language, and may

be incomplete.

This proposed rule would not impose any additional reporting or

recordkeeping requirements on either small or large almond handlers. As

with all Federal marketing order programs, reports and forms are

periodically reviewed to reduce information requirements and

duplication by industry and public sector agencies.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.

Chapter 35), the information collection requirements that are contained

in this rule have been approved by the Office of Management and Budget

(OMB) and have been assigned OMB No. 0581-0071.

The Department has not identified any relevant Federal rules that

duplicate, overlap or conflict with this proposed rule.

In addition, the Board's meeting was widely publicized throughout

the almond industry and all interested persons were invited to attend

the meeting and participate in Board deliberations. Like all Board

meetings, the March 25, 1998, meeting was a public meeting and all

entities, both large and small, were able to express their views on

this issue. The Board itself is composed of ten members, of which five

are producers and five are handlers.

Also, the Board has a number of appointed committees to review

certain issues and make recommendations to the Board. The Board's

Quality Control Committee met on February 25, 1998, and discussed this

issue. That meeting was also a public meeting and both large and small

entities were able to participate and express their views. Finally,

interested persons are invited to submit information on the regulatory

and informational impacts of this action on small businesses.

A 30-day comment period is provided to allow interested persons to

respond to this proposal. Thirty days is deemed appropriate because

this rule would need to be in effect prior to the 1998-99 crop year,

which begins August 1, 1998. All written comments timely received will

be considered before a final determination is made on this matter.

List of Subjects in 7 CFR Part 981

Almonds, Marketing agreements, Nuts, Reporting and recordkeeping

requirements.

For the reasons set forth in the preamble, 7 CFR part 981 is

proposed to be amended as follows:

PART 981--ALMONDS GROWN IN CALIFORNIA

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

follows:

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

2. Section 981.442 is amended by adding a new paragraph (a)(7)(iv)

to read as follows:

Sec. 981.442 Quality Control.

(a) * * *

(7) * * *

(iv) The Board may deny or revoke accepted user status at any time

if the applicant or accepted user fails to meet the terms and

conditions of Sec. 981.442, or if the applicant or accepted user fails

to meet the terms and conditions set forth in the accepted user

application (ABC Form 34).

* * * * *

Dated: June 11, 1998.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 98-16011 Filed 6-16-98; 8:45 am]

BILLING CODE 3410-02-P