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[Federal Register Volume 71, Number 170 (Friday, September 1, 2006)]
[Rules and Regulations]
[Pages 51985-51988]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-7376]

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 983

[Docket No. FV06-983-2 FR]

Pistachios Grown in California; Modification of Small Handler 
Exemption

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule modifies the current handling requirements 
prescribed under the California pistachio marketing order (order). The 
order regulates the handling of pistachios grown in California and is 
administered locally by the Administrative Committee for Pistachios 
(committee). The modification increases the exemption threshold for 
pistachio handlers who handle small amounts of pistachios, primarily 
for home or personal use. Currently, handlers of 1,000 pounds or less 
of hulled and dried pistachios (assessed weight) are exempt from most 
handling requirements. Under this modification, the exemption is 
extended to handlers of less than 5,000 pounds of assessed weight 
pistachios. This change is not expected to have a significant impact on 
the overall quality of California pistachios found in the marketplace.

EFFECTIVE DATE: This final rule becomes effective September 5, 2006.

FOR FURTHER INFORMATION CONTACT: Terry Vawter, Senior Marketing 
Specialist, or Kurt J. Kimmel, Regional Manager, California Marketing 
Field Office, Marketing Order Administration Branch, Fruit and 
Vegetable Programs, AMS, USDA; Telephone: (559) 487-5901, Fax: (559) 
487-5906; E-mail: [email protected] or [email protected].
    Small businesses may request information on complying with this 
regulation by contacting Jay Guerber, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence 
Avenue, SW., STOP 0237, Washington, DC 20250-0237; Telephone: (202) 
720-2491, Fax: (202) 720-8938, or E-mail: [email protected].

SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing 
Order No. 983 (7 CFR part 983), regulating the handling of pistachios 
grown in California, hereinafter referred to as the ``order.'' The 
order is effective under the Agricultural Marketing Agreement Act of 
1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the 
``Act.''
    The Department of Agriculture (USDA) is issuing this rule in 
conformance with Executive Order 12866.
    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This rule is not intended to have retroactive 
effect. This final rule will not preempt any State or local laws, 
regulations, or policies, unless they present an irreconcilable 
conflict with this rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with USDA a petition 
stating that the order, any provision of the order, or any obligation 
imposed in connection with the order is not in accordance with law and 
request a modification of the order or to be exempted therefrom. 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 States in any district in which 
the handler is an inhabitant, or has his or her principal place of 
business, has jurisdiction to review USDA's ruling on the petition, 
provided an action is filed not later than 20 days after the date of 
the entry of the ruling.
    This final rule modifies the current handling requirements 
prescribed under the California pistachio order. This modification 
increases the exemption threshold for pistachio handlers who handle 
small amounts of pistachios from the current level of 1,000 pounds or 
less of assessed weight pistachios to less than 5,000 pounds of 
assessed weight pistachios. Under this change, pistachio handlers who 
handle less than 5,000 pounds of assessed weight pistachios are exempt 
from most handling requirements established under the order, including 
those relating to aflatoxin testing, minimum quality inspection, and 
payment of assessments.
    Previous rules, one section of the order, and two sections of the 
rules and regulations refer to ``dried pounds'' or ``dried weight'' of 
pistachios. While these terms are not defined in the order, they are 
generally interchangeable with the defined term ``assessed weight.'' 
For the purposes of this final rule, the term ``assessed weight'' will 
be used.
    Section 983.70 of the pistachio order currently exempts any handler 
who handles 1,000 pounds or less of assessed weight pistachios in any 
production year from the requirements of Sec. Sec.  983.38 through 
983.45 and Sec.  983.53 of the order. A ``production year'' begins on

[[Page 51986]]

September 1 and ends the following August 31.
    Section 983.38 of the order establishes a maximum aflatoxin level 
and the aflatoxin testing protocol, among other things.
    Section 983.39 of the order establishes minimum quality levels in 
terms of maximum defects and minimum sizes.
    Section 983.40 of the order establishes procedures for reworking 
pistachios that fail to meet the requirements prescribed in Sec. Sec.  
983.38 and 983.39.
    Section 983.41 of the pistachio order authorizes alternative 
aflatoxin testing methods for handlers handling less than 1 million 
pounds of assessed weight pistachios per production year, and 
authorizes the committee to grant such handlers exemptions from minimum 
quality testing requirements.
    Section 983.42 of the order permits commingling of inspected and 
certified lots with other inspected and certified lots.
    Section 983.43 of the order authorizes rules and regulations to 
establish conditions under which pistachios would be subject to 
reinspection.
    Under Sec.  983.44 of the order, all pistachios required to be 
inspected and certified may be subject to container marking or other 
identification requirements.
    Section 983.45 of the order requires the committee (with USDA's 
approval) to establish reporting and disposition procedures for 
substandard pistachios (those not meeting aflatoxin and minimum quality 
requirements).
    Finally, Sec.  983.53 of the order authorizes handler assessment to 
defray program administrative costs.
    The committee met on March 1, 2006, and unanimously recommended 
increasing the current handler exemption from including handlers who 
handle 1,000 pounds or less of assessed weight pistachios to handlers 
who handle less than 5,000 pounds of assessed weight pistachios. This 
action is authorized under Sec.  983.70 of the order, and will be 
implemented by adding a new section in the marketing order's rules and 
regulations (Sec.  983.170 Handler exemption). This rule also makes 
conforming changes to the order's rules and regulations to reflect the 
change in the exemption level.
    Specifically, the new Sec.  983.170 exempts handlers who handle 
less than 5,000 pounds of assessed weight pistachios in a production 
year from the requirements of Sec. Sec.  983.38 through 983.45 and 
Sec.  983.53 of the order.
    In addition, conforming changes are necessary in Sec.  983.143, 
paragraph (b)(2), as well as in Sec.  983.147, paragraphs (c) and (g), 
to clarify that the handling exemption applies to handlers of less than 
5,000 pounds of assessed weight pistachios rather than the currently-
applicable level of 1,000 pounds or less of assessed weight pistachios.
    The committee estimates that the amount of pistachios handled by 
handlers with less than 5,000 pounds of assessed weight pistachios is 
approximately 48,515 pounds of the total 283,419,713 pounds handled in 
the 2005-2006 production year, or less than 0.02 percent of all 
pistachios handled that production year. In the committee's opinion, 
quantities of pistachios that are less than 5,000 pounds are not 
commercially-significant and are unlikely to have an impact in the 
marketplace. These pistachios would likely be sold at local farmers' 
markets; kept for home use; distributed to friends, neighbors, business 
associates, or others; or used for other non-commercial purposes, 
rather than enter the conventional channels of trade.
    Exempt handlers will continue to file the required report, the ACP-
4, with the committee by November 15 of each production year (Sec.  
983.147 Reports). Also, under the authority contained in Sec.  983.50, 
Random verification audits, and Sec.  983.51, Verification of reports, 
the committee would maintain the right to spot-check these handlers to 
ensure marketing order compliance.
    The committee noted that when the order was promulgated, there was 
limited information about pistachio handlers and the volumes of 
pistachios each handled. Thus, the initial order provided for what was 
believed to be a reasonable exemption level of 1,000 pounds or less of 
assessed weight pistachios. After operating under the marketing order 
regulations for approximately one year, the committee believes that the 
handling exemption level is too low and recommended this relaxation.

Final Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this 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 in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and the rules issued thereunder, are unique in 
that they are brought about through group action of essentially small 
entities acting on their own behalf. Thus, both statutes have small 
entity orientation and compatibility.
    There are approximately 50 handlers of California pistachios who 
are subject to regulation under the order and about 741 producers of 
pistachios in the production area. This final rule results in about 28 
of the current handlers being exempt from most regulatory provisions of 
the order. The number of known handlers has increased since the 
committee began operation because they now have the authority under the 
order to gather information about handlers.
    The Small Business Administration (SBA) (13 CFR 121.201) defines 
small agricultural service firms as those having annual receipts of 
less than $6,500,000 and defines small agricultural producers as those 
having annual receipts of less than $750,000. Thirty-three of the 50 
handlers subject to regulation have annual pistachio receipts of less 
than $6,500,000. In addition, 722 of the 741 producers have annual 
receipts less than $750,000. Therefore, a majority of handlers (66 
percent) and producers (97 percent) may be classified as small entities 
under the SBA standards.
    This final rule increases the current handling exemption level for 
handlers from 1,000 pounds or less of assessed weight pistachios to 
less than 5,000 pounds of assessed weight pistachios. Exempt handlers 
could handle their pistachios free from the requirements of Sec. Sec.  
983.38 through 983.45 and Sec.  983.53 of the order.
    The committee met on March 1, 2006, to consider the handling 
exemption and unanimously recommended revising the level from 1,000 
pounds or less of assessed weight pistachios to less than 5,000 pounds 
of assessed weight pistachios handled per production year.
    The committee estimates that the total volume of pistachios handled 
by the 28 handlers with less than 5,000 pounds of assessed weight 
pistachios is approximately 48,515 pounds of the total 283,419,713 
pounds handled in the 2005-2006 production year. This represents less 
than 0.02 percent of all pistachios handled that production year. In 
the committee's opinion, 5,000 pounds of assessed weight pistachios is 
not commercially significant and represents pistachios that are 
unlikely to enter conventional channels of trade.
    The committee also noted that when the order was promulgated, there 
was very little information about pistachio handlers and their relative 
volumes. The initial order provided for what was believed to be a 
reasonable exemption level of 1,000 pounds or less of assessed weight 
pistachios. The committee now

[[Page 51987]]

believes that the exemption level is too low and should be increased.
    The committee recommendation on March 1, 2006, resulted from 
deliberations of its Technical Subcommittee (subcommittee), the 
subcommittee charged with compliance, quality, and inspection issues 
under the order. The March 1, 2006, meeting of the subcommittee was 
also a public meeting, where opinions and concerns of industry 
representatives were solicited, openly discussed, and deliberated at 
some length.
    The subcommittee and committee discussed alternatives to this 
modification, including not making any changes or modifying the 
handling exemption for handlers of less than 10,000 pounds of assessed 
weight pistachios. Both the subcommittee and the committee ultimately 
determined that exempting handlers of less than 5,000 pounds of 
assessed weight pistachios was prudent because only 14 additional 
handlers would be affected, and the total volume of exempted pistachios 
handled is relatively insignificant (less than 0.02 percent of total 
production). Thus, exempting an estimated total of 28 handlers with 
less than 5,000 pounds of assessed weight pistachios would not affect 
the overall quality of the pistachios handled as those pistachios are 
likely to be for home or personal use and will not compete in 
traditional markets.
    Both the subcommittee and the committee noted that spot-checks on 
small handlers would be continued to ensure compliance with order 
requirements.
    This action reduces the reporting requirements for pistachio 
handlers who fall below the 5,000 pound threshold. Such handlers are 
also exempt from most of the other regulatory requirements imposed 
under the authority.
    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 requirement that is contained 
in this rule has been submitted to the Office of Management and Budget 
(OMB) for approval.
    The 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.
    In addition, USDA has not identified any relevant Federal rules 
that duplicate, overlap or conflict with this final rule.
    Further, the committee's meetings are widely publicized throughout 
the pistachio industry and all interested persons are encouraged to 
attend the meetings and participate in the committee's deliberations. 
In this respect, the March 1, 2006, subcommittee and committee meetings 
regarding the handler exemption were public meetings and all entities, 
both large and small, were encouraged to express their views on this 
issue.
    The committee recommendation on March 1, 2006, resulted from 
deliberations of its Technical Subcommittee, which is charged with 
compliance, quality, and inspection issues under the marketing order. 
During the subcommittee meeting, the opinions and concerns of industry 
representatives were solicited, openly discussed, and deliberated at 
some length. The subcommittee made its unanimous recommendation to the 
committee, who agreed with the recommendation unanimously, as well.
    A proposed rule concerning this action was published in the Federal 
Register on June 19, 2006 (71 FR 35201). Copies of the rule were sent 
to all committee members and pistachio handlers. Also, the rule was 
made available through the Internet by USDA and the Office of the 
Federal Register. A 20-day comment period, ending July 10, 2006, was 
provided to allow interested persons to respond to the proposal. No 
comments were received in response to the proposed rule. Accordingly, 
no changes will be made to the rule as proposed.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab.html. Any questions about the compliance 
guide should be sent to Jay Guerber at the previously mentioned address 
in the FOR FURTHER INFORMATION CONTACT section.
    After consideration of all relevant matters presented, including 
information and recommendation submitted by the committee and other 
available information, it is hereby found that this rule, as 
hereinafter set forth, will tend to effectuate the declared policy of 
the Act.
    It is further found that good cause exists for not postponing the 
effective date of this rule until 30 days after publication in the 
Federal Register (5 U.S.C. 553) because this rule needs to be in effect 
in time for the beginning of the production year on September 1, 2006. 
Further, handlers are aware of this rule, which was recommended at a 
public meeting. Also, a 20-day comment period was provided for in the 
proposed rule.

List of Subjects in 7 CFR Part 983

    Marketing agreements, Pistachios, Reporting and recordkeeping 
requirements.

0
For the reasons set forth in the preamble, 7 CFR part 983 is amended as 
follows:

PART 983--PISTACHIOS GROWN IN CALIFORNIA

0
1. The authority citation for 7 CFR part 983 continues to read as 
follows:

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

0
2. In Sec.  983.143, revise paragraph (b)(2) to read as follows:

Sec.  983.143  Reinspection.

* * * * *
    (b) * * *
    (2) Handlers exempted from order requirements under Sec.  983.170 
are exempt from all reinspection requirements.

0
3. In Sec.  983.147, paragraphs (c) and (g) are revised to read as 
follows:

Sec.  983.147  Reports.

* * * * *
    (c) ACP-4, Federal Marketing Order Exempt Handler Notification. 
Each handler who handles less than 5,000 pounds of assessed weight 
pistachios in a production year shall complete and furnish this report 
to the committee no later than November 15 of each production year.
* * * * *
    (g) Exemptions. Handlers who handle less than 5,000 pounds of 
assessed weight pistachios during any production year are exempt from 
filing all forms, with the exception of the ACP-4.
* * * * *

0
4. In part 983, Subpart--Administrative Rules and Regulations is 
amended by adding new Sec.  983.170 to read as follows:

Sec.  983.170  Handler exemption.

    Pursuant to Sec.  983.70, any handler may handle pistachios within 
the production area free of the requirements in Sec. Sec.  983.38 
through 983.45 and Sec.  983.53 if such pistachios are handled in 
quantities of less than 5,000 pounds of assessed weight in any 
production year.

[[Page 51988]]

    Dated: August 28, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 06-7376 Filed 8-31-06; 8:45 am]
BILLING CODE 3410-02-P
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