`[Federal Register Volume 74, Number 150 (Thursday, August 6, 2009)]
[Proposed Rules]
[Pages 39230-39240]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-18538]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 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.
 
 ========================================================================
 

  Federal Register / Vol. 74, No. 150 / Thursday, August 6, 2009 / 
Proposed Rules  

[[Page 39230]]



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; Secretary's Decision and 
Referendum Order on Proposed Amendment of Marketing Order No. 983

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule and referendum order.

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

SUMMARY: This decision proposes amendments to Marketing Agreement and 
Order No. 983 (order), which regulates the handling of pistachios grown 
in California, and provides growers with the opportunity to vote in a 
referendum to determine if they favor the changes. The amendments are 
based on proposals by the Administrative Committee for Pistachios 
(Committee), which is responsible for local administration of the 
order. These 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.

DATES: The referendum will be conducted from August 10 through August 
22, 2009. The representative period for the purpose of the referendum 
is September 1, 2008, through July 31, 2009.

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 documents 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), and a Recommended Decision 
issued on April 29 and published in the May 5, 2009, issue of the 
Federal Register (74 FR 20630).
    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

    The proposed amendments are based on the record of a public hearing 
held on July 29 and 30, 2008, in Fresno, California, to consider such 
amendments to the order. The hearing was held pursuant to the 
provisions of the Agricultural Marketing Agreement Act of 1937, as 
amended (7 U.S.C. 601-674), hereinafter referred to as the ``Act'', and 
the applicable rules of practice and procedure governing the 
formulation of marketing agreements and orders (7 CFR Part 900).
    The Notice of Hearing was published in the Federal Register on July 
18, 2008 (73 FR 41298), and contained amendment proposals submitted by 
the Committee.
    The amendments included in this decision would add 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 amendments 
included in this decision would:
    1. 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 would also be redesignated as Sec.  983.20 and Sec.  983.41, 
respectively.
    2. 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. 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. 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. Provide broad authority for quality regulations by revising 
existing Sec.  983.39, Minimum quality levels, and

[[Page 39231]]

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.  
983.19, 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. 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. The title 
of order would be revised to include the States of Arizona and New 
Mexico. 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 be adopted. To the extent necessary, 
conforming changes have been made to the amendments. These conforming 
changes have been identified in the above list of proposed amendments.
    Upon the basis of evidence introduced at the hearing and the record 
thereof, the Administrator of AMS on April 29, 2009, issued a 
Recommended Decision published in the Federal Register on May 5, 2009 
(74 FR 20630). An opportunity to file written exceptions was provided 
through June 4, 2009. None were received.

Small Business Considerations

    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (5 U.S.C. 601-612) (RFA), AMS has considered the 
economic impact of this action on small entities. Accordingly, AMS has 
prepared this final regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions so that small businesses will not be 
unduly or disproportionately burdened. Marketing orders and amendments 
thereto are unique in that they are normally brought about through 
group action of essentially small entities for their own benefit.
    Small agricultural service firms, which include handlers regulated 
under the order, have been defined by the Small Business Administration 
(SBA) (13 CFR 121.201) as those having annual 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;

[[Page 39232]]

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 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.
    Tables 1-3 that follow 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

[[Page 39233]]

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
                             ----------------------  Description of cost
                               Dollars    Dollars         elements
                               per lot   per pound
------------------------------------------------------------------------
Inspector Travel Time to      .........  .........  No inspector travel
 Plant.                                              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   .........  .........  Onsite labs in
 \1\.                                                plants; no shipping
                                                     cost.
Aflatoxin Testing Cost \2\..     $90.00    $0.0018  $90 lab fee to
                                                     determine aflatoxin
                                                     level of sample.
�����������������������������
    Total Cost..............    $204.00    $0.0041  ....................
�����������������������������
Pct. of price received by     .........       0.2%  Industry estimate of
 handler.                                            CA handler sale
                                                     price per pound =
                                                     $2.00.
Pct. of price received by     .........       0.3%  NASS estimate of
 grower.                                             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
                             ----------------------  Description of cost
                               Dollars    Dollars         elements
                               per lot   per pound
------------------------------------------------------------------------
Inspector Travel Time to         $32.70    $0.0007  [24 miles \1\ @
 Plant.                                              $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     $200.00    $0.0040  Shipping cost per 10
 \3\.                                                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     .........       0.3%  Industry estimate of
 handler.                                            AZ handler sale
                                                     price per pound =
                                                     $2.75.
Pct. of price received by     .........       0.7%  USDA/NASS estimate
 grower.                                             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
                             ----------------------  Description of cost
                               Dollars    Dollars         elements
                               per lot   per pound
------------------------------------------------------------------------
Inspector Travel Time to        $432.50    $0.0087  [600 miles \1\ @
 Plant.                                              $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].

[[Page 39234]]

 
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     $105.00    $0.0021  Shipping cost per 10
 \3\.                                                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     .........       0.7%  Industry estimate of
 handler.                                            NM handler sale
                                                     price per pound =
                                                     $2.00.
Pct. of price received by     .........       1.1%  USDA/NASS estimate
 grower.                                             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.

    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

[[Page 39235]]

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 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 of 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

[[Page 39236]]

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 information 
requirements generated by the proposed amendments would result in an 
increase in burden, which has been submitted to OMB for approval under 
OMB No. 0581-NEW. Upon approval, we will request that this collection 
be merged into OMB No. 0581-0215.
    The estimated burden is as follows:
    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.
    The Recommended Decision provided an opportunity to submit comments 
on the proposed information collection requirements. None were 
received.
    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 Government Paperwork 
Elimination Act (GPEA), which requires Government agencies in general 
to provide the public the option of submitting information or 
transacting business electronically to the maximum extent possible.
    AMS is committed to complying with the E-Government Act, to promote 
the use of the Internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.

Civil Justice Reform

    The amendments to Marketing Agreement and 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.

Findings and Conclusions

    The findings and conclusions, rulings, and general findings and 
determinations included in the Recommended Decision set forth in the 
May 5, 2009, (74 FR 20630) issue of the Federal Register are hereby 
approved and adopted.

Marketing Agreement and Order

    Annexed hereto and made a part hereof is the document entitled 
``Order Amending the Order Regulating the Handling of Pistachios Grown 
in California, Arizona, and New Mexico.'' This document has been 
decided upon as the detailed and appropriate means of effectuating the 
foregoing findings and conclusions.
    It is hereby ordered, that this entire decision be published in the 
Federal Register.

Referendum Order

    It is hereby directed that a referendum be conducted in accordance 
with the procedure for the conduct of referenda (7 CFR part 900.400-
407) to determine whether the annexed order amending the order 
regulating the handling of pistachios grown in California, Arizona, and 
New Mexico is approved or favored

[[Page 39237]]

by producers, as defined under the terms of the order, who during the 
representative period were engaged in the production of pistachios in 
the production area (California, Arizona, and New Mexico).
    The representative period for the conduct of such referendum is 
hereby determined to be September 1, 2008 through July 31, 2009.
    The agents of the Secretary to conduct such referendum are hereby 
designated to be Kurt Kimmel and Jennifer Robinson, California 
Marketing Field Office, Marketing Order Administration Branch, Fruit 
and Vegetable Programs, AMS, USDA; Telephone: (559) 487-5901, Fax (559) 
487-5906, or e-mail: [email protected] or 
[email protected], respectively.

List of Subjects in 7 CFR Part 983

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

    Dated: July 29, 2009.
Rayne Pegg,
Administrator, Agricultural Marketing Service.

Order Amending the Order Regulating the Handling of Pistachios Grown in 
California, Arizona, and New Mexico \1\

Findings and Determinations

    The findings and determinations hereinafter set forth are 
supplementary to the findings and determinations that 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\ This order shall not become effective unless and until the 
requirements of Sec.  900.14 of the rules of practice and procedure 
governing proceedings to formulate marketing agreements and 
marketing orders have been met.
---------------------------------------------------------------------------

(a) Findings and Determinations Upon the Basis of the Hearing Record
    Pursuant to the provisions of the Agricultural Marketing Agreement 
Act of 1937, as amended, (7 U.S.C. 601-612), and the applicable rules 
of practice and procedure effective thereunder (7 CFR part 900), a 
public hearing was held upon proposed further amendment of Marketing 
Agreement and Order No. 983, regulating the handling of pistachios 
grown in California. Upon the basis of the evidence introduced at such 
hearing and the record thereof, it is found that:
    (1) The marketing agreement and order, and as hereby proposed to be 
amended, and all of the terms and conditions thereof, would tend to 
effectuate the declared policy of the Act;
    (2) The marketing agreement and order, as hereby proposed to be 
amended, regulate the handling of pistachios grown in the production 
area in the same manner as, and are applicable only to, persons in the 
respective classes of commercial and industrial activity specified in 
the marketing agreement and order upon which a hearing has been held;
    (3) The marketing agreement and order, as hereby proposed to be 
amended, are limited in their 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 hereby proposed to be 
amended, prescribe, 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.

Order Relative to Handling

    It is therefore ordered, That on and after the effective date 
hereof, all handling of pistachios grown in California, Arizona, and 
New Mexico shall be in conformity to, and in compliance with the terms 
and conditions of the said order as hereby proposed to be amended as 
follows:
    The provisions of the proposed marketing agreement and order 
amending the order contained in the Recommended Decision issued on 
April 29, 2009, and published in the Federal Register on May 5, 2009, 
(74 FR 20630) will be and are the terms and provisions of this order 
amending the order and are set forth in full below.

PART 983--[AMENDED]

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

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

    2. The heading for part 983 is revised to read as follows:

PART 983--PISTACHIOS GROWN IN CALIFORNIA, ARIZONA, AND NEW MEXICO

    3. 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.
    4. Lift suspension of Sec.  983.6, published on December 7, 2007 
(72 FR 69141) and effective on December 10, 2007 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.
    5. Lift suspension of Sec.  983.7 published on December 7, 2007 (72 
FR 69141) and effective on December 10, 2007, 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.
    6. 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.


Sec.  983.11  [Amended]

    7. 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 and Reserved]

    8. Lift suspension of Sec.  983.19 published on December 7, 2007 
(72 FR 69141) and effective on December 10, 2007, and remove the 
section.


Sec.  983.20  [Removed and Reserved]

    9. Lift suspension of Sec.  983.20 published on December 7, 2007 
(72 FR 69141) and effective on December 10, 2007, and remove the 
section.

[[Page 39238]]

Sec.  983.21  [Redesignated as Sec.  983.20]

    10. 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]

    11. Redesignate Sec.  983.22 as Sec.  983.21.


Sec.  983.23  [Redesignated as Sec.  983.22]

    12. 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]

    13. Redesignate Sec.  983.24 as Sec.  983.23.


Sec.  983.25  [Redesignated as Sec.  983.24]

    14. Redesignate Sec.  983.25 as Sec.  983.24.


Sec.  983.26  [Redesignated as Sec.  983.25]

    15. 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]

    16. 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]

    17. Lift suspension of Sec.  983.31 published on December 7, 2007 
(72 FR 69141) and effective on December 10, 2007, 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]

    18. 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]

    19. 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 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]

    20. Redesignate Sec.  983.55 as Sec.  983.73.


Sec.  983.56  [Redesignated as Sec.  983.74]

    21. 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]

    22. 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]

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


Sec.  983.65  [Redesignated as Sec.  983.87]

    25. 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]

    26. 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]

    27. 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]

    28. Lift suspension of Sec.  983.41 published on December 7, 2007 
(72 FR 69141) and effective on December 10, 2007, 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]

    29. Lift suspension of Sec.  983.42 published on December 7, 2007 
(72 FR 69141) and effective on December 10, 2007, 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.

[[Page 39239]]

Sec.  983.43  [Redesignated as Sec.  983.55]

    30. Redesignate Sec.  983.43 as Sec.  983.55.


Sec.  983.44  [Redesignated as Sec.  983.56]

    31. 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]

    32. Lift the suspension of Sec.  983.45 published on December 7, 
2007 (72 FR 69141) and effective on December 10, 2007, 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]

    33. 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 the 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]

    34. Redesignate Sec. Sec.  983.47 through 983.51 as Sec. Sec.  
983.64 through 983.68, respectively.
    35. Move the undesignated center heading ``REPORTS, BOOKS, AND 
RECORDS'' to precede Sec.  983.64.


Sec.  983.52  [Redesignated as Sec.  983.70]

    36. Redesignate Sec.  983.52 as Sec.  983.70.
    37. Move the undesignated center heading ``EXPENSES AND 
ASSESSMENTS'' to precede Sec.  983.70.
    38. 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]

    39. 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]

    40. 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]

    41. 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:
    (1) 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:
    (i) Quality regulation;
    (ii) Aflatoxin regulation;
    (iii) Research under Sec.  983.46; and
    (2) 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:
    (i) Inspection programs;
    (ii) The establishment of the committee.
* * * * *


Sec.  983.35  [Redesignated as Sec.  983.44]

    42. Redesignate Sec.  983.35 as Sec.  983.44.


Sec.  983.36  [Redesignated as Sec.  983.45]

    43. Redesignate Sec.  983.36 as Sec.  983.45.


Sec.  983.37  [Redesignated as Sec.  983.47]

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


Sec.  983.38  [Redesignated as Sec.  983.50]

    46. Lift the suspension of Sec.  983.38 published on December 7, 
2007 (72 FR 69141) and effective on December 10, 2007, redesignate 
Sec.  983.38 as Sec.  983.50, and revise the section to read as 
follows:

[[Page 39240]]

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.
    47. Move the undesignated center heading ``REGULATIONS'' to precede 
Sec.  983.50.


Sec.  983.39  [Redesignated as Sec.  983.51]

    48. Lift suspension of Sec.  983.39 published on December 7, 2007 
(72 FR 69141) and effective on December 10, 2007, 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]

    49. Lift suspension of Sec.  983.40 published on December 7, 2007 
(72 FR 69141) and effective on December 10, 2007, 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.
    50. 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 paid 
from funds collected pursuant to Sec. Sec.  983.71 and 983.72.

[FR Doc. E9-18538 Filed 8-5-09; 8:45 am]
BILLING CODE 3410-02-P`