[Federal Register Volume 63, Number 116 (Wednesday, June 17, 1998)]
[Proposed Rules]
[Pages 33010-33012]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-16011]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Docket No. FV98-981-1 PR]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule invites comments on a revision to the administrative 
rules and regulations of the California almond marketing order (order) 
pertaining to the quality control program. The order regulates the 
handling of almonds grown in California, and is administered locally by 
the Almond Board of California (Board). Under the terms of the order, 
handlers are required to obtain inspection on almonds received from 
growers to determine the percent of inedible almonds in each lot of any 
variety. Handlers are then required to dispose of a quantity of almonds 
in excess of 1 percent of the weight of almonds reported as inedible to 
accepted users of such product. Accepted users are approved annually by 
the Board. This rule would clarify conditions upon which accepted 
users' status may be denied or revoked by the Board. This rule would 
help to ensure that inedible almonds are removed from human consumption 
channels, thereby maintaining the integrity of the quality control 
provisions of the order.

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

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. Comments must be sent to the Docket Clerk, 
Fruit and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 96456, 
Washington, DC 20090-6456; Fax: (202) 205-6632. All comments should 
reference the docket number and the date and page number of this issue 
of the Federal Register and will be made available for public 
inspection in the Office of the Docket Clerk during regular business 
hours.

FOR FURTHER INFORMATION CONTACT: Martin Engeler, Assistant Regional 
Manager, California Marketing Field Office, Marketing Order 
Administration Branch, F&V, AMS, USDA, 2202 Monterey Street, suite 
102B, Fresno, California 93721; telephone: (209) 487-5901, Fax: (209) 
487-5906; or George Kelhart, Technical Advisor, Marketing Order 
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, room 
2525-S, P.O. Box 96456, Washington, DC 20090-6456; telephone: (202) 
690-3919, Fax: (202) 205-6632. Small businesses may request information 
on compliance with this regulation by contacting Jay Guerber, Marketing 
Order Administration Branch, F&V, AMS, USDA, room 2525-S, P.O. Box 
96456, Washington, DC 20090-6456; telephone: (202) 720-2491, Fax: (202) 
205-6632.

SUPPLEMENTARY INFORMATION: This proposal is issued under Marketing 
Order No. 981, as amended (7 CFR part 981), regulating the handling of 
almonds grown in California, hereinafter referred to as the ``order.'' 
The marketing order is effective under the Agricultural Marketing 
Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter 
referred to as the ``Act.''
    The Department of Agriculture (Department) is issuing this rule in 
conformance with Executive Order 12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to

[[Page 33011]]

have retroactive effect. This rule will not preempt any State or local 
laws, regulations, or policies, unless they present an irreconcilable 
conflict with this rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with the Secretary a 
petition stating that the order, any provision of the order, or any 
obligation imposed in connection with the order is not in accordance 
with law and request a modification of the order or to be exempted 
therefrom. A handler is afforded the opportunity for a hearing on the 
petition. After the hearing the Secretary would rule on the petition. 
The Act provides that the district court of the United States in any 
district in which the handler is an inhabitant, or has his or her 
principal place of business, has jurisdiction to review the Secretary's 
ruling on the petition, provided an action is filed not later than 20 
days after date of the entry of the ruling.
    This proposal invites comments on revisions to the administrative 
rules and regulations pertaining to a quality control program under the 
California almond order. The proposal was recommended unanimously by 
the Board, and would clarify conditions under which the Board could 
deny or revoke the status of accepted users of inedible almonds.
    Section 981.42 of the order provides authority for a quality 
control program. Section 981.42(a) requires handlers to obtain incoming 
inspection on almonds received from growers to determine the percent of 
inedible kernels in each lot of any variety. Handlers are required to 
report such inedible determination for each lot received to the Board. 
Section 981.42(a) also provides authority for the Board, with the 
approval of the Secretary, to establish rules and regulations necessary 
and incidental to the administration of the order's quality control 
provisions.
    Section 981.442 of the order's administrative rules and regulations 
specifies that the weight of inedible kernels in each lot of any 
variety of almonds in excess of 1 percent of the kernel weight received 
by a handler shall constitute such handler's inedible disposition 
obligation. Handlers are required to deliver inedible kernels 
accumulated in the course of processing to Board-approved accepted 
users of such product in order to satisfy the disposition obligation. 
Accepted users then dispose of inedible kernels to non-human 
consumption outlets. Because inedible kernels are considered unfit for 
human consumption, requiring handlers to meet this obligation helps to 
ensure that each handler's outgoing shipments of almonds are relatively 
free of almonds with serious damage, and the number of kernels with 
minor damage should be minimal.
    Accepted users of inedible almonds file an application with the 
Board specifying certain terms and conditions with which they will 
voluntarily abide. The application also indicates they will dispose of 
the inedible almonds received from handlers in one or more of the 
following manners: crushing into oil, manufacturing into animal feed, 
or feeding directly to animals. The Board staff reviews and approves 
accepted user applications on an annual basis.
    Section 981.442(a)(7) of the rules and regulations lists 
eligibility criteria for accepted users. These criteria are applied by 
the Board when reviewing and approving accepted users. However, the 
regulations do not specifically address when the Board may deny or 
revoke accepted user status. Situations have occurred in the past 
wherein accepted users have failed to completely meet these conditions, 
and the Board could not be assured the inedible almonds were being 
disposed of in non-human consumption outlets.
    The Board met on March 25, 1998, and unanimously recommended adding 
language to Sec. 981.442(a)(7) of the administrative rules and 
regulations stating that an accepted user's status may be denied or 
revoked if the eligibility requirements are not met or if the terms and 
conditions agreed to in the accepted user application are not met. The 
Board recommended that this change be made prior to August 1, 1998, so 
that it could be made effective at the beginning of the crop year, and 
to coincide with the approval cycle for accepted user applications.
    This change would provide a clear foundation of understanding 
between the Board, handlers, and accepted users. The proposal would 
assist in maintaining the integrity of the Board's quality control 
program by providing clear authority to deny or revoke accepted user 
status. This would help to ensure inedible almonds are properly 
disposed of in non-human consumption outlets, which is in the interest 
of producers, handlers, and consumers.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this action on small entities. Accordingly, AMS has 
prepared this initial regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and rules issued thereunder, are unique in that 
they are brought about through group action of essentially small 
entities acting on their own behalf. Thus, both statutes have small 
entity orientation and compatibility.
    There are approximately 97 handlers of California almonds who are 
subject to regulation under the order and approximately 7,000 almond 
producers in the regulated area. Small agricultural service firms have 
been defined by the Small Business Administration (13 CFR 121.601) as 
those having annual receipts of less than $5,000,000, and small 
agricultural producers are defined as those having annual receipts of 
less than $500,000.
    Currently, about 58 percent of the handlers ship under $5,000,000 
worth of almonds and 42 percent ship over $5,000,000 worth on an annual 
basis. In addition, based on acreage, production, and grower prices 
reported by the National Agricultural Statistics Service, and the total 
number of almond growers, the average annual grower revenue is 
approximately $156,000. In view of the foregoing, it can be concluded 
that the majority of handlers and producers of California almonds may 
be classified as small entities.
    There are currently 23 accepted users of inedible almonds approved 
by the Board. Accepted users may enter into a voluntary agreement with 
the Board to function as an outlet to which handlers can ship inedible 
almonds to satisfy an order obligation. While data concerning these 
entities is limited, based on a review of the quantity of inedible 
almonds delivered to each entity, it is believed that the majority may 
be classified as small entities.
    This proposal invites comments on revisions to the quality control 
provisions of the administrative rules and regulations issued under the 
California almond order. Under the terms of the order, handlers are 
required to obtain inspection on almonds received from growers to 
determine the percent of inedible almonds in each lot of any variety. 
Handlers are then required to dispose of a quantity of almonds in 
excess of one percent of the weight of almonds reported as inedible to 
accepted users of such product. Accepted users are approved annually by 
the Board.
    Section 981.442(a)(7) of the order's administrative rules and 
regulations provides criteria which accepted users must meet. This rule 
would revise this section to specify that an accepted

[[Page 33012]]

user's status may be denied or revoked if the criteria are not met. 
This rule would help maintain the integrity of the Board's quality 
control program.
    This proposed change is not expected to impact handlers, other than 
to clarify to them that accepted user's status may be denied or 
revoked. Handlers are provided a listing of approved accepted users so 
they know who they can deliver inedible material to and receive credit 
against their obligation. In the event an application for accepted user 
status is denied or an accepted user's status is revoked, handlers 
would be notified by Board staff and provided an updated listing.
    This rule would only impact applicants for accepted user status, or 
accepted users in the sense that it would clarify that accepted user 
status may be denied or revoked if the terms and conditions set forth 
in the rules and regulations and the accepted user application are not 
met. Accepted users are approved entities to which handlers may deliver 
inedible almonds and receive credit against their inedible disposition 
obligation. Accepted users voluntarily agree to meet certain terms and 
conditions so the Board may be assured that inedible almonds do not 
enter human consumption channels. If these dealers in inedible almonds 
do not agree to the terms and conditions, they are not approved by the 
Board. However, they may still operate in the business, although 
handlers do not receive credit against their inedible disposition 
obligation if they deliver product to such non-approved entities. 
Situations have occurred in the past wherein accepted users have failed 
to completely meet these conditions, and the Board could not be assured 
the inedible almonds were being disposed of in non-human consumption 
outlets.
    One alternative to the proposal would be to maintain the regulatory 
language as it currently exists, in which case there would be no 
clarification. Another alternative would be to specify at length all 
possible reasons for denying or revoking an accepted user's status. The 
first alternative fails to address the issue, and the second would 
require unnecessary lengthy additions to regulatory language, and may 
be incomplete.
    This proposed rule would not impose any additional reporting or 
recordkeeping requirements on either small or large almond handlers. As 
with all Federal marketing order programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies.
    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the information collection requirements that are contained 
in this rule have been approved by the Office of Management and Budget 
(OMB) and have been assigned OMB No. 0581-0071.
    The Department has not identified any relevant Federal rules that 
duplicate, overlap or conflict with this proposed rule.
    In addition, the Board's meeting was widely publicized throughout 
the almond industry and all interested persons were invited to attend 
the meeting and participate in Board deliberations. Like all Board 
meetings, the March 25, 1998, meeting was a public meeting and all 
entities, both large and small, were able to express their views on 
this issue. The Board itself is composed of ten members, of which five 
are producers and five are handlers.
    Also, the Board has a number of appointed committees to review 
certain issues and make recommendations to the Board. The Board's 
Quality Control Committee met on February 25, 1998, and discussed this 
issue. That meeting was also a public meeting and both large and small 
entities were able to participate and express their views. Finally, 
interested persons are invited to submit information on the regulatory 
and informational impacts of this action on small businesses.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposal. Thirty days is deemed appropriate because 
this rule would need to be in effect prior to the 1998-99 crop year, 
which begins August 1, 1998. All written comments timely received will 
be considered before a final determination is made on this matter.

List of Subjects in 7 CFR Part 981

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

    For the reasons set forth in the preamble, 7 CFR part 981 is 
proposed to be amended as follows:

PART 981--ALMONDS GROWN IN CALIFORNIA

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

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

    2. Section 981.442 is amended by adding a new paragraph (a)(7)(iv) 
to read as follows:


Sec. 981.442  Quality Control.

    (a) * * *
    (7) * * *
    (iv) The Board may deny or revoke accepted user status at any time 
if the applicant or accepted user fails to meet the terms and 
conditions of Sec. 981.442, or if the applicant or accepted user fails 
to meet the terms and conditions set forth in the accepted user 
application (ABC Form 34).
* * * * *
    Dated: June 11, 1998.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-16011 Filed 6-16-98; 8:45 am]
BILLING CODE 3410-02-P