61220 Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Rules and Regulations 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Part 983 

[Docket No. FV05–983–2 FR] 

Pistachios Grown in California; 

Establishment of Additional Inspection 

Requirements 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Final rule. 

SUMMARY: This rule establishes 

additional inspection requirements 

authorized 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). This rule 

modifies sampling procedures for darkstained pistachios which are intended to 

be dyed or color-coated. It also 

establishes reinspection requirements 

for lots of pistachios which are 

materially changed after meeting initial 

aflatoxin and quality requirements. This 

action is expected to assure the quality 

of pistachios, improve the marketability 

of pistachios, and provide handlers 

more marketing flexibility. The benefits 

of this action are expected to offset the 

increased inspection costs. 

DATES: Effective Date: October 22, 2005. 

FOR FURTHER INFORMATION CONTACT: 

Terry Vawter, Marketing Specialist, 

California Marketing Field Office, 

Marketing Order Administration 

Branch, Fruit and Vegetable Programs, 

AMS, USDA; Telephone: (559) 487–

5901, Fax: (559) 487–5906; or George 

Kelhart, Technical Advisor, 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. 

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: 

Jay.Guerber@usda.gov. 

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 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 rule modifies sampling 

procedures for dark-stained pistachios 

which are intended to be dyed or colorcoated. It also establishes reinspection 

requirements for lots of pistachios, 

which are materially changed after 

meeting initial aflatoxin, quality, and 

size requirements. This action is 

expected to improve the quality and 

marketability of pistachios, provide 

handlers more marketing flexibility, and 

improve the marketability of pistachios. 

The benefits of this action are expected 

to offset the increased inspection costs. 

For the purposes of this final rule, the 

terms ‘‘marketing year’’ and 

‘‘production year’’ are synonymous. 

Section 983.46 of the order authorizes 

the committee to recommend that the 

Secretary modify or suspend the order 

provisions contained in §§ 983.38 

through 983.45. These sections took 

effect August 1, 2005. 

Sampling Procedures 

Sections 983.38 and 983.39 of the 

order specify maximum aflatoxin, and 

minimum quality and size 

requirements, respectively, that must be 

met prior to the shipment of pistachios. 

Sections 983.38(d)(1) and 983.39(e)(1) 

of the order specify that a sample must 

be drawn from each lot, and that this lot 

sample must be divided into two 

samples—one portion for aflatoxin 

testing and one for minimum quality 

and size testing. 

Section 983.39(b)(3)(iv) of the order 

currently defines dark stain and 

specifies that pistachios that are dyed or 

color-coated to improve their marketing 

quality are not subject to the maximum 

permissible defects for dark stain. 

Pistachios grow on trees in grape-like 

clusters and are encased in an outer skin 

or hull. During the pistachio harvest 

process, the nuts, which contain a 

significant amount of moisture when 

harvested, must arrive at the handling 

facility as soon as possible and the hulls 

covering the shell must be removed. If 

the hulls are not removed from the nuts 

within 24 hours of their removal from 

the tree, staining of the outer shell 

occurs. 

After being hulled, the pistachios are 

then dried, and placed in storage 

containers. When the nuts are removed 

from storage, they are sorted, sized, 

graded, and mechanically separated into 

open and closed shell product (pinpicked), and placed into lots for 

aflatoxin and minimum quality and size 

testing. Some handlers have the 

pistachios tested for aflatoxin prior to 

these processes. A ‘‘lot’’ is any quantity 

of pistachios that is designated for 

testing. 

During the sorting process, the inshell 

pistachios are separated by the color of 

the shells and the amount of stain on 

the shells. On average, approximately 95 

percent of the harvested inshell 

pistachios are placed into lots 

designated as non-stained or lightstained pistachios. Such pistachios are 

typically marketed without any 

treatment to cover the stains. The 

remaining 5 percent are placed into lots 

consisting primarily of dark-stained 

inshell pistachios. 

Handlers typically dye or color-coat 

the dark-stained inshell pistachios to 

cover the stains, as the staining limits 

their marketability and detracts from 

their appearance. 

The color-coating process usually 

consists of applying a white coating or 

a flavoring to the shells of the 

pistachios. The dyeing process consists 

of applying a dye to the shells. These 

pistachios are marketed after either of 

these processes is performed by the 

handler. 

Under the regulatory requirements of 

the order, one test sample will be drawn 

per lot and divided into two portions—

one for aflatoxin testing and the other 

for minimum quality and size testing. 

Handlers or the inspection service will 

draw this sample while the pistachios 

Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Rules and Regulations 61221 

are in their natural state (prior to dyeing 

or color-coating) because false-positive 

aflatoxin test results may occur when 

dyed or color-coated pistachios are used 

in conducting aflatoxin tests. 

Lots of badly-stained, naturalcondition pistachios would likely 

exceed the maximum permissible 3 

percent by weight tolerance for dark 

stain. Thus, they would fail to meet 

existing voluntary minimum quality 

requirements under the U.S. Grade 

Standards for Pistachios in the Shell (7 

CFR 51.2540 through 51.2549) or the 

minimum quality requirements under 

the order that became effective on 

August 1, 2005. 

On dark stained lots, it is common 

practice for handlers to use or submit 

the portion of the initial natural sample 

designated for aflatoxin testing at a 

USDA or USDA-approved laboratory. If 

the sample meets the aflatoxin 

requirements, handlers then return the 

sample portion designated for the 

minimum quality and size testing to the 

lot, dye or color-coat the lot, and draw 

or have drawn a second representative 

dyed or color-coated sample for 

minimum quality and size inspection. 

The second representative sample is 

taken after the pistachios have been 

dyed or color-coated to assure that the 

coloring is uniform and adequately 

covers the stained pistachios. 

Because the inspection requirements 

do not provide for a second sample after 

dyeing or color-coating, the committee, 

on December 15, 2004, recommended 

modifying the order’s sampling 

procedures and establishing a new 

section entitled ‘‘§ 983.138—Samples 

for testing.’’ The vote was unanimous. 

For those lots that consist of primarily 

light-stained or non-stained inshell 

pistachios, one sample would continue 

to be drawn as specified in 

§§ 983.38(d)(1) and 983.39(e)(1) of the 

order. 

The committee estimated that the 

total 2005–06 inshell pistachio crop will 

be approximately 200 million pounds 

and that approximately 5 percent (6 

million pounds or 600 lots) of all inshell 

pistachios marketed domestically would 

be dyed or color-coated to cover darkstained shells. 

While this modification to sampling 

procedures under the order is expected 

to result in a slight increase in 

inspection costs for lots which are dyed 

or color-coated, the improvements in 

marketability of these pistachios are 

expected to offset the additional costs. 

When dark-stained pistachios are 

currently shelled out, the kernels 

generally have an approximate value of 

$1.00 per pound, which is substantially 

less than the $2.00 per pound value of 

dyes or color-coated pistachios. 

Producers, handlers, and consumers 

benefit from dyeing or color-coating 

inshell pistachios because dyeing and 

color-coating dark-stained pistachios 

results in nuts having a more desirable 

color appearance. This makes the nuts 

more appealing to retailers and 

consumers. Thus, retailers are willing to 

pay an average of $2.00 per pound for 

these previously unmarketable darkstained, inshell pistachios. This 

increased value is also expected to 

contribute to improved or maintained 

producer returns. 

Reinspection 

Sections 983.38 and 983.39 of the 

order specify maximum aflatoxin and 

minimum quality and size 

requirements, respectively. These 

sections took effect August 1, 2005. 

Section 983.39(e) of the pistachio 

order provides minimum quality testing 

and inspection procedures; and requires 

each lot of pistachios to be certified, 

uniquely identified, and traceable from 

testing through shipment by the 

handler. 

Section 983.41 of the pistachio order 

provides that handlers who handle less 

than 1 million pounds of assessed 

weight (dried weight) pistachios per 

marketing year (September 1–August 

31) with certain aflatoxin testing options 

and allows such handlers to apply to the 

committee for an exemption from 

minimum quality testing. Handlers 

granted an exemption will be required 

to pull the samples, make them 

available for review by the committee, 

and maintain these samples in their 

handling facilities for 90 days. Handlers 

who do not apply or who are not 

granted an exemption from minimum 

quality and size testing must test all lots 

for aflatoxin, quality, and size 

requirements under the order. 

Section 983.42 of the pistachio order 

provides that handlers may commingle 

aflatoxin and minimum quality certified 

lots with other certified lots. 

Section 983.43 of the pistachio order 

provides authority for the committee to 

recommend the establishment of rules 

and regulations to specify conditions 

under which pistachios would be 

subject to reinspection. 

Section 983.70 of the pistachio order 

exempts handlers who handle 1,000 

pounds or less of dried weight 

pistachios (dried to 5 percent moisture) 

during any production year within the 

production area from all aflatoxin and 

minimum quality and size 

requirements. 

As mentioned earlier, during the 

production year, handlers typically hull 

and dry pistachios, and place the nuts 

into storage containers. These nuts 

usually remain in storage until sold. 

When the nuts are removed from 

storage, handlers have the option of 

sampling and testing the nuts for 

aflatoxin prior to further processing (i.e., 

sorting, sizing, grading, and pin-picking 

(segregating the split- and closed-shell 

pistachios)), or placing the nuts into lots 

for aflatoxin and minimum quality and 

size testing after these processes have 

been performed. 

The first option is expected to be used 

primarily by those handlers who have 

been granted an exemption from 

minimum quality and size testing 

pursuant to § 983.41(b). Most handlers 

are expected to perform these processes, 

segregate the pistachios into lots, and 

then draw or have drawn the samples 

for the required aflatoxin, quality, and 

size tests. 

Typically, handlers who handle a 

million or more pounds of assessed 

weight pistachios per marketing year 

further process the nuts prior to testing 

for aflatoxin, quality, and size 

requirements. Such handlers, pursuant 

to § 983.38(d) are required to uniquely 

identify each lot so that it can be traced 

from the point of testing through 

shipment. 

After certification for aflatoxin, 

quality, and size or pulling and 

retaining required samples for smaller 

handlers, the majority of these lots are 

shipped directly into the channels of 

commerce. However, some certified lots 

are readied and retained in the handler’s 

facility in anticipation of future orders. 

When handlers receive new orders, 

they typically either resort or resize 

existing stored certified lots of inshell 

pistachios or create new lots from 

uncertified stored nuts. When existing 

certified lots are used, they generally 

have to be reworked to meet specific 

buyer needs. For instance, lightlystained nuts, dark-stained nuts, insectinfested nuts, smaller- or larger-sized 

nuts, closed shell, or open shell nuts 

may have to be removed via handsorting, color-sorting, pin-picking, and/ 

or resizing. Removal of these nuts 

results in new lots which no longer have 

representative inspection certificates. 

Such lots would then be considered to 

have been ‘‘materially changed.’’

Pistachio handlers who handle more 

than 1,000 pounds and less than a 

million pounds of assessed weight 

pistachios per marketing year, and 

whose pistachios pass aflatoxin testing 

requirements would not have to comply 

with the traceability procedures set 

forth in § 983.38(d). Furthermore, 

pursuant to § 983.41(a) of the order, 

such handlers may test their entire 

61222 Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Rules and Regulations 

inventory (maximum lot size of 150,000 

pounds) or segregate receipts into 

various sized lots and have an inspector 

sample and test each specified lot for 

aflatoxin and may also, pursuant to 

§ 983.41(b) of the order, apply to the 

committee for an exemption from 

minimum quality testing. 

Because it is more economical for 

smaller handlers to test larger lots for 

aflatoxin and to be exempt from 

minimum quality testing, it is expected 

that the majority, if not all, such 

handlers, will apply for the exemption 

from minimum quality testing. 

Exempted handlers, who handle more 

than 1,000 pounds and less than a 

million pounds of assessed weight 

pistachios per marketing year, would 

draw or have one sample drawn per lot. 

This sample would be divided into two 

portions, one for aflatoxin and one for 

minimum quality testing. Typically, 

when such handlers receive notice that 

the lots have passed aflatoxin testing 

requirements, they return the sample 

portion designated for minimum quality 

testing to the lot. Such lots are then 

further processed (i.e., sized, sorted, airlegged, pin-picked, and graded). 

Handlers would then draw a new 

sample, which is required to be 

maintained for 90 days at the handler’s 

facilities and required to be made 

available for review or auditing by the 

committee. 

Those handlers who handle more 

than 1,000 pounds and less than a 

million pounds and who are not granted 

such an exemption by the committee are 

required to meet the traceability 

procedures as specified in § 983.38(d) of 

the order, and the aflatoxin, quality, and 

size requirements under the order for 

each lot of pistachios. 

Thus, the committee at its November 

3, 2004, meeting, unanimously 

recommended establishing a new 

section entitled ‘‘§ 983.143—

Reinspection’’ to define the term 

‘‘materially changed’’ and to specify 

handler reinspection requirements to 

assure the quality of pistachios entering 

market channels. 

The committee, at its April 12, 2005, 

meeting, reconsidered and further 

clarified its previous recommendation. 

The committee unanimously 

recommended that, effective August 1, 

2005, lots which are color-sorted, handsorted, pin-picked, and/or resized after 

being initially certified for aflatoxin, 

quality, and size requirements under the 

order be considered ‘‘materially 

changed’’ and that any portion of a lot 

(the portion resorted or resized to meet 

buyer specifications or the portion that 

was removed from the original lot) be 

inspected as new lots. 

The committee clarified that § 983.42, 

which provides that previously certified 

lots can be commingled with other 

certified lots, does not apply to portions 

of lots which are materially changed 

under the order, as such newly-formed 

lots may no longer contain the same 

quantity or quality of inshell pistachios 

as the original lots. 

Final Regulatory Flexibility Analysis 

Pursuant to requirements set forth in 

the Regulatory Flexibility Act (RFA), 

AMS has considered the economic 

impact of this action on small entities. 

Accordingly, AMS has prepared this 

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 would 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 24 handlers 

of California pistachios subject to 

regulation under the order and 

approximately 741 producers in the 

production area. Small agricultural 

producers are defined by the Small 

Business Administration (13 CFR 

121.201) as those having annual 

pistachio receipts less than $750,000, 

and small agricultural service firms are 

defined as those whose annual receipts 

are less than $6,000,000. Seventeen of 

the 24 handlers subject to regulation 

have annual pistachio receipts of less 

than $6,000,000. In addition, 722 

producers have annual receipts less 

than $750,000. Thus, the majority of 

handlers and producers of California 

pistachios may be classified as small 

entities. 

This rule modifies sampling 

procedures for dark-stained pistachios 

which are intended to be dyed or colorcoated. It also establishes reinspection 

requirements for lots of pistachios 

which are materially changed after 

meeting initial aflatoxin, quality, and 

size requirements. This action is 

expected to assure the quality of 

pistachios, provide handlers more 

marketing flexibility, improve the 

marketability of pistachios, and enhance 

the marketability for reworked 

pistachios. These benefits are expected 

to offset the increased inspection costs. 

Section 983.46 of the order authorizes 

the committee to recommend that the 

Secretary modify or suspend order 

provisions contained in §§ 983.38 

through 983.45. These provisions took 

effect August 1, 2005. 

Sampling Procedures 

Sections 983.38 and 983.39 of the 

order specify maximum aflatoxin, 

minimum quality and size 

requirements, respectively, that must be 

met prior to the shipment of pistachios. 

Sections 983.38(d)(1) and 983.39(e)(1) 

of the order specify that a sample must 

be drawn from each lot and that this lot 

sample must be divided into two 

subsamples—one portion for aflatoxin 

testing and one for minimum quality 

and size testing. 

Section 983.39(b)(3)(iv) of the order 

defines ‘‘dark stain,’’ and specifies that 

pistachios that are dyed or color-coated 

to improve their marketing quality are 

not subject to the maximum permissible 

defects for dark stain. 

Pistachios grow on trees in grape-like 

clusters and are encased in an outer 

skin, or hull. During the pistachio 

harvest process, the nuts, which contain 

a significant amount of moisture when 

harvested, must arrive at the handling 

facility as soon as possible and the hulls 

covering the shell must be removed. If 

the hulls are not removed from the nuts 

within 24 hours of their removal from 

the tree, staining of the outer shell 

occurs. After being hulled, the 

pistachios are then dried, and placed in 

storage containers. 

When the nuts are removed from 

storage, they are sorted, sized, graded, 

mechanically separated into open- and 

closed-shell product (pin-picked), and 

placed into lots for aflatoxin and 

minimum quality testing. A ‘‘lot’’ is any 

quantity of pistachios that is segregated 

for testing. 

During the sorting process, the inshell 

pistachios are separated by the color of 

the shells and the amount of staining on 

the shells. On average, approximately 95 

percent of the harvested inshell 

pistachios are placed into lots 

designated as non-stained or lightstained pistachios. Such pistachios are 

typically marketed without any 

treatment to cover or remove the stains. 

The remaining 5 percent are placed into 

lots consisting primarily of dark-stained 

inshell pistachios. Handlers typically 

dye or color-coat the dark-stained 

inshell pistachios to cover the stains 

because they are generally not 

marketable in their natural state. 

The color-coating process usually 

consists of applying a white coating or 

a flavoring to the shells of the 

pistachios. The dyeing process consists 

of applying a dye to the shells. 

Prior to placing pistachios into the 

domestic channels of commerce on 

August 1, 2005, or later, handlers will 

Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Rules and Regulations 61223 

be required to draw or have drawn a 

sample and test or have tested each 

sample for aflatoxin, quality, and size 

requirements, unless exempted under 

§§ 983.41 or 983.70 of the order. 

Under the regulatory requirements of 

the order, one test sample will be drawn 

per lot and divided into two portions—

one for aflatoxin testing and the other 

for minimum quality and size testing. 

Handlers will draw this sample while 

the pistachios are in their natural state 

(prior to dyeing or color-coating) 

because false positive test results may 

occur when dyed or color-coated 

pistachios are used in conducting 

aflatoxin tests. When handlers believe 

that lots of natural condition pistachios 

exceed the maximum permissible 3 

percent by weight tolerance for dark 

stain under the existing voluntary 

minimum quality requirements of the 

U.S. Grade Standards for Pistachios in 

the Shell (7 CFR 51.2540 through 

51.2549), or the minimum quality 

requirements under the order, they will 

have the natural condition portion of 

the sample designated for aflatoxin 

testing tested. If the sample meets the 

aflatoxin requirements, handlers then 

return the sample portion designated for 

the minimum quality and size testing to 

the lot, dye or color-coat the lot, and 

draw or have drawn a second 

representative dyes or color-coated 

sample to be tested for minimum quality 

and size. This second sample is taken 

after the pistachios have been dyed or 

color-coated to assure that the color is 

uniform and adequately covers the 

staining. 

Because the inspection requirements 

do not provide for sampling and 

inspections at this stage of the process, 

the committee, on December 15, 2004, 

recommended modifying the order’s 

sampling procedures and establishing a 

new section entitled ‘‘§ 983.138 Samples 

for testing.’’ The vote was unanimous. 

The first alternative considered was to 

leave the order provisions unchanged, 

but this alternative was not adopted, as 

handlers, producers, and consumers 

would benefit from permitting the 

orderly marketing of pistachios 

containing edible nutmeats that fail 

minimum quality for external cosmetic 

reasons. 

The committee also considered 

providing handlers with more flexibility 

in removing dark-stained inshell 

pistachios from lots, but decided that 

modifying the sampling procedures for 

lots intended for dyeing or color-coating 

would allow handlers to market these 

dark-stained pistachios without having 

to implement lengthy and costly 

removal processes. 

The committee estimated that the 

total 2005–06 inshell pistachio crop will 

be approximately 200 million pounds 

and that approximately 5 percent (6 

million pounds or 600 lots) of all inshell 

pistachios marketed domestically would 

be dyed or color-coated to cover darkstained shells. 

While this modification to sampling 

procedures under the order is expected 

to result in a slight increase in 

inspection costs for lots which are dyed 

or color-coated, the improvement in the 

marketability of these pistachios is 

expected to offset the additional costs. 

When the dark-stained pistachios are 

shelled out, the kernels are expected to 

have an approximate value of $1.00 per 

pound, which is substantially less than 

the $2.00 per pound value of dyed or 

color-coated inshell pistachios. 

Accordingly, producers, handlers, and 

consumers would benefit, as dyeing and 

color-coating dark-stained inshell 

pistachios results in nuts with a more 

pleasing appearance. Covering the dark 

stain would permit these edible 

pistachios to meet minimum quality 

requirements under the order and also 

make the pistachios more appealing to 

retailers and consumers. Retailers are 

expected to be willing to pay on average 

$2.00 per pound for these nuts that were 

previously unmarketable as inshell nuts. 

This increased value also is expected to 

contribute to improved or maintained 

producer returns and offset the slight 

increase in inspection costs. 

Reinspection 

Sections 983.38 and 983.39 of the 

order specify maximum aflatoxin 

requirements, and minimum quality and 

size requirements, respectively. 

Section 983.39(e) of the pistachio 

order provides minimum quality testing 

and inspection procedures and requires 

that each lot of pistachios to be certified, 

uniquely identified, and traceable from 

testing through shipment by the 

handler. 

Section 983.41 of the pistachio order 

provides handlers who handle more 

than a 1,000 pounds and less than a 

million pounds of assessed weight 

(dried weight) pistachios per production 

year (September 1–August 31) with 

certain aflatoxin testing options and 

allows such handlers to apply to the 

committee for an exemption from 

minimum quality testing. Handlers 

granted an exemption must pull the 

samples and maintain these samples in 

their handling facilities for 90 days for 

review and audit by the committee 

when requested. Handlers who are not 

granted an exemption from minimum 

quality testing must test all lots for 

aflatoxin, quality, and size requirements 

under the order. 

Section 983.42 of the pistachio order 

provides that handlers may commingle 

aflatoxin and minimum quality certified 

lots with other certified lots. 

Section 983.43 of the pistachio order 

provides authority for the committee to 

recommend the establishment of rules 

and regulations to specify conditions 

under which pistachios would be 

subject to reinspection. 

Section 983.70 of the pistachio order 

exempts handlers who handle 1,000 

pounds or less of dried weight 

pistachios during any marketing year 

(dried to 5 percent moisture) within the 

production area from all aflatoxin and 

minimum quality requirements. 

As mentioned earlier, during the 

production year handlers typically hull 

and dry pistachios and place the nuts 

into storage containers. These nuts 

usually remain in storage until sold. 

When the nuts are removed from 

storage, handlers have the option of 

testing the nuts for aflatoxin prior to 

further processing (i.e., sorting, sizing, 

grading, pin-picking (segregating the 

split- and closed-shell nuts)), or placing 

the nuts into lots for aflatoxin and 

minimum quality and size testing after 

these processes have been completed. 

Typically, handlers who handle a 

million or more pounds of assessed 

weight pistachios per marketing year 

further process the nuts prior to testing 

for aflatoxin and quality requirements. 

Such handlers, pursuant to § 983.38(d) 

are required to uniquely identify each 

lot so that it can be traced from the point 

of testing through shipment. 

After certification for aflatoxin, 

quality and size or pulling and retaining 

required samples, the majority of these 

lots are shipped directly into the 

channels of commerce. However, some 

certified lots are readied and retained in 

the handler’s facility in anticipation of 

future orders. 

When handlers receive new orders, 

they typically either resort or resize 

existing certified lots of inshell 

pistachios or create new lots from 

uncertified stored nuts. When existing 

certified lots are used, they generally 

have to be reworked to meet specific 

buyer needs. For instance, light-stained 

nuts, dark-stained nuts, insect infested 

nuts, smaller- or larger-sized nuts, 

closed shell, or open shell nuts may 

have to be removed via hand-sorting, 

color-sorting, pin-picking and/or 

resizing. Removal of these nuts results 

in new lots which no longer have 

representative inspection certificates. 

Such lots would be considered to have 

been ‘‘materially changed’’. 

61224 Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Rules and Regulations 

Pistachio handlers who handle less 

than a million pounds of assessed 

weight pistachios per marketing year 

and whose pistachios pass aflatoxin 

testing requirements would not have to 

comply with the traceability procedures 

set forth in § 983.38(d). Furthermore, 

pursuant to § 983.41(a) of the order, 

such handlers may test their entire 

inventory (maximum lot size of 150,000 

pounds) or segregate receipts into 

various sized lots and have an inspector 

sample and have each specified lot 

tested for aflatoxin and may also, 

pursuant to § 983.41(b) of the order, 

apply to the Committee for exemption 

from minimum quality and size testing. 

Because it is more economical for 

smaller handlers to test larger lots for 

aflatoxin and to be exempt from 

minimum quality testing, it is expected 

that the majority, if not all such 

handlers, will apply for the exemption 

from minimum quality and size testing. 

Thus, those exempted handlers, who 

handle more than 1,000 pounds and less 

than a million pounds of assessed 

weight pistachios per marketing year, 

would draw or have one sample drawn 

per lot. This sample would be divided 

into two portions, one for aflatoxin and 

one for minimum quality testing. 

Typically, when such handlers receive 

notice that the lots have passed 

aflatoxin testing requirements, they 

return the sample portion designated for 

minimum quality testing to the lot. Such 

lots are then further processed (sized, 

sorted, air-legged, pin-picked, and 

graded). Handlers would then draw a 

new quality sample, which is required 

to be maintained for 90 days at the 

handler’s facilities and made available 

for review or auditing by the committee. 

Those handlers who handle more 

than 1,000 pounds and less than a 

million pounds and who are not granted 

such an exemption by the committee are 

required to meet the traceability 

procedures as specified in § 983.38(d) of 

the order and the aflatoxin, quality, and 

size requirements under the order for 

each lot of pistachios. 

Thus, the committee at its November 

3, 2004, meeting, unanimously 

recommended establishing a new 

section entitled ‘‘§ 983.143—

Reinspection’’ to define the term 

‘‘materially changed’’ and to specify 

handler reinspection requirements. 

The committee, at its April 12, 2005, 

meeting, reconsidered and further 

clarified its previous recommendation. 

The committee unanimously 

recommended that, effective August 1, 

2005, lots which are color-sorted, handsorted, pin-picked, and/or resized after 

being initially certified for aflatoxin, 

quality, and size requirements under the 

order be considered ‘‘materially 

changed’’ and that any portion of a lot 

(the portion resorted and resized to meet 

buyer specifications or the portion that 

was removed from the original lot) be 

inspected as new lots. The committee 

clarified that § 983.42 which provides 

that previously certified lots can be 

commingled with other certified lots, 

does not apply to portions of lots which 

are materially changed under the order, 

as such newly formed lots may no 

longer contain the same quantity or 

quality of inshell pistachios as the 

original lots. 

Lastly, the committee recommended 

that some handlers be exempt from 

reinspection requirements under the 

order. As previously mentioned, 

§ 983.70 of the pistachio order exempts 

handlers who handle 1,000 pounds or 

less of dried weight pistachios during 

any marketing year (dried to 5 percent 

moisture) from all aflatoxin and 

minimum quality requirements. Thus, 

the committee recommended that such 

handlers also be exempt from any 

reinspection requirements under the 

order. 

Additionally, § 983.41 of the pistachio 

order provides that handlers who 

handle less than 1 million pounds of 

assessed weight (dried weight) 

pistachios per production year 

(September 1–August 31) with certain 

aflatoxin testing options and allows 

such handlers to apply to the committee 

for an exemption from minimum quality 

and size testing. The order further 

provides that handlers, who are granted 

an exemption, shall pull and maintain 

for 90 days representative lot samples of 

any lots intended to be shipped into the 

domestic channels of commerce for 

review and audit by the committee as 

requested. 

The committee recommended 

exempting such handlers from 

reinspection requirements, as typically 

such handlers pull or have pulled 

representative lot samples immediately 

prior to shipment, do not materially 

change the lots, and ship such lots 

directly into the domestic channels of 

commerce and because the committee 

believed such smaller handlers could be 

negatively impacted by the additional 

cost of reinspection. 

However, because such handlers 

could materially change their lots prior 

to shipment into the domestic channels 

of commerce, USDA is requiring such 

handlers to pull or have pulled 

representative samples of the materially 

changed lots to assure both the aflatoxin 

and quality of the pistachios, and to 

keep the sampling and inspection 

procedures consistent with order 

authority. As noted in this document, 

the costs for reinspection are expected 

to be small compared to the benefit of 

assuring the quality of the pistachios 

entering commercial channels. 

Such representative lot samples 

would be divided into two parts, one 

part would be retested for aflatoxin and 

the other part would be maintained for 

90 days at the handler’s facilities. Such 

samples would be stored in the 

handler’s facility and should not add to 

the handler’s cost. Additionally, 

handlers would be required to make 

those samples maintained for 90 days 

available for auditing by the committee. 

While handlers who handle more 

than 1,000 pounds and less than a 

million pounds may apply to the 

committee for a minimum quality 

testing exemption, there may be 

occasions when the committee does not 

grant these handlers such an exemption. 

The committee unanimously 

recommended that such handlers and 

any handler who handles more than a 

million pounds of assessed weight 

pistachios during the marketing year 

and who materially changes any lot of 

pistachios shall test or have tested such 

lots for aflatoxin and minimum quality 

and size requirements under the order 

before shipping such pistachios into the 

domestic channels of commerce, when 

the order requirements took effect on 

August 1, 2005. 

The committee also discussed 

alternatives to this change, including 

not establishing these reinspection 

requirements, but believes that 

consumers should be provided with 

assurance of a certified high quality 

product that does not currently exist 

when a certified lot is ‘‘materially 

changed’’. Also, the committee 

discussed but decided not to include the 

following processes in the definition of 

‘‘materially changed’’: (1) Roasting, 

salting, flavoring, dyeing, color-coating, 

were discussed but not included in the 

definition as these processes do not alter 

a lot’s minimum quality or maximum 

aflatoxin levels; (2) cleaning was 

considered but not included because 

cleaning typically is accomplished prior 

to the initial inspection; and (3) airlegging which is performed to remove 

loose shells, was considered but not 

included because this process does not 

significantly change a lot. 

Lastly, the committee discussed 

whether tracing a lot would provide 

assurance that materially changed lots 

would continue to meet the order’s 

maximum aflatoxin and minimum 

quality requirements and believed that 

it would not provide such assurance. It 

is of the view that the best way to assure 

the quality of materially changed lots 

was through resampling and retesting. 

Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Rules and Regulations 61225 

The committee also discussed the 

slight increase in the cost of inspection 

and the benefits of this action for 

handlers, consumers, and producers. 

Typically, nuts removed from materially 

changed lots are blended into other lots 

of uninspected inshell pistachios, 

shelled out into kernels, dyed or colorcoated, or discarded. Very few inshell 

pistachios are discarded, as handlers 

typically further process the nuts to 

obtain as many marketable nuts as 

possible. 

Closed-shell pistachios that are not 

blended into other uninspected lots are 

typically shelled out into kernels. 

Kernels are marketed on average of 

$1.00 per pound on the domestic market 

and can be marketed in some export 

markets for $2.00 to $3.00 per pound. 

Ordinarily, the dark-stained pistachios 

that are not blended into other 

uninspected lots are dyed or colorcoated and are marketed for $2.00 per 

pound in the domestic market, slightly 

less than the price received for natural 

condition, inshell pistachios. Dyed or 

color-coated nuts occasionally can be 

marketed in export markets, as well. 

The committee mentioned that the cost 

of resorting and resizing lots varies from 

lot to lot, and that such costs are 

dependent upon whether the product is 

hand sorted or mechanically sorted, the 

size of the lot, the percentage of the lot 

removed, and other similar factors. The 

committee believes that the overall 

handler cost for resorting and/or 

resizing such lots is typically 

insignificant compared to the prices 

received for better quality lots. 

In reviewing inspection costs, the 

committee believes that a typical initial 

aflatoxin certification costs 

approximately $70 per lot and an initial 

minimum quality inspection costs $100 

per lot. Buyers and consumers are 

willing to pay more for more appealing 

pistachios. Therefore, the committee 

expects that handlers will market these 

materially changed lots at prices that 

will offset the combined costs of initial 

inspection, reprocessing, and 

reinspection. 

Thus, this action is expected to 

benefit handlers, buyers, and 

consumers. Handlers and buyers would 

be able to offer higher quality lots, and 

consumers would receive more 

appealing, higher-quality pistachios. 

These higher quality lots should also 

contribute to improved grower returns. 

The committee does not foresee any 

industry problems that may result from 

implementation of this final rule. 

This action will not impose any 

additional reporting or recordkeeping 

requirements on either small or large 

pistachio handlers. As with all Federal 

marketing order programs, reports and 

forms are periodically reviewed to 

reduce information requirements and 

duplication by industry and publc 

sector agencies. 

As noted in the initial regulatory 

flexibility analysis, USDA has not 

identified any relevant Federal rules 

that duplicate, overlap, or conflict with 

this final rule. Further, the public 

comments received concerning the 

proposed rule did not address the initial 

regulatory flexibility analysis. 

In addition, the committee’s meetings 

were widely publicized throughout the 

pistachio industry and all interested 

persons were encouraged to attend the 

meetings and participate in the 

committee’s deliberations on all issues. 

Like all committee meetings, the 

November 3, 2004; December 15, 2004; 

and April 12, 2005; meetings, were 

public meetings and all entities, both 

large and small, were encouraged to 

express their views on these issues. 

A proposed rule concerning this 

action was published in the Federal 

Register on August 25, 2005 (70 FR 

49885). Copies of the rule were 

provided to all the committee members 

and pistachio handlers. Finally, the rule 

was made available through the Internet 

by USDA and the Office of the Federal 

Register. A seven-day comment period 

ending September 1, 2005, was 

provided to allow interested persons to 

respond to the proposal. 

One comment was received during 

the comment period in response to the 

proposal. The commenter, representing 

the Administrative Committee for 

Pistachios, was concerned that the 

committee’s recommendation on 

reinspection had been misinterpreted in 

the proposed rule. The commenter 

expressed concerns that the rule 

requires reinspection of lots of 

pistachios for handlers who handle 

more than a 1,000 pounds and less than 

a million pounds of pistachios after 

‘‘further processing’’ pistachios, and 

that the costs of this would burden 

smaller handlers. The commenter went 

on to recommend a change to 

§ 983.143(b)(1) which would include an 

exemption from reinspection 

requirements if a handler was exempt 

from minimum quality testing under 

§ 981.41(b). 

We disagree. In promulgating § 983.41 

of the order concerning the testing of 

minimal quantities, the procedures for 

aflatoxin testing were separated from 

those concerning minimum quality. The 

consideration given in § 983.41(b) 

applies solely to testing for minimum 

quality and size requirements, rather 

than for aflatoxin. As required under 

§ 983.41, handlers handling less than a 

million pounds of pistachios are 

afforded the option of utilizing two 

methods of aflatoxin testing. Thus, the 

impact of this change should be 

minimal especially given the potentially 

small number of handlers and 

pistachios that could be affected. The 

committee estimates that 14 handlers 

could be affected and they handle less 

than 1 percent of the inshell pistachios 

produced in California. The quantities 

handled of all 14 (except one) fall well 

short of one million pounds. 

This rule requires reinspection only if 

the lot is ‘‘materially changed’’ (pinpicked, hand-sorted, color-sorted, and/ 

or resized) after sampling and 

inspection. If other further processing 

(sizing, sorting, roasting, salting, etc.) 

occurs, reinspection is not required. 

Accordingly, no changes will be made 

to the rule, as proposed, based on the 

comment received. 

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 the 

information and recommendations 

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 the 

publication in the Federal Register (5 

U.S.C. 553) because the 2005 harvest 

has begun and this rule should be in 

place as soon as possible so that it can 

be applied to the pistachios handled in 

this production year. Further, handlers 

are aware of this rule, which was 

discussed in a public meeting. Also, a 

seven-day comment period was 

provided for in the proposed rule, and 

the comment received has been 

considered. 

List of Subjects in 7 CFR Part 983 

Pistachios, Marketing agreements and 

orders, Reporting and recordkeeping 

requirements. 

■ For the reasons set forth in the 

preamble, 7 CFR part 983 is amended as 

follows: 

PART 983—PISTACHIOS GROWN IN 

CALIFORNIA 

■ 1. The authority citation for 7 CFR 

part 983 continues to read as follows: 

61226 Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Rules and Regulations 

Authority: 7 U.S.C. 601–674. 

■ 2. In part 983, Subpart—Rules and 

Regulations is amended by adding new 

§ 983.138 to read as follows: 

§ 983.138 Samples for testing. 

Prior to testing, a sample shall be 

drawn from each lot and divided into 

two subsamples to be used to test 

pistachios for aflatoxin and for 

minimum quality. The lot subsamples 

shall be of sufficient weight to comply 

with Tables 1 and 2 of § 983.38 and 

Table 4 of § 983.39: Provided, That lots 

of pistachios which are intended for 

dyeing or color-coating shall be sampled 

for minimum quality after the dyeing or 

color-coating process. 

■ 3. In part 983, Subpart—Rules and 

Regulations is amended by adding 

§ 983.143 to read as follows: 

§ 983.143 Reinspection. 

(a) Any lot of inshell pistachios that 

is pin-picked, hand-sorted, color-sorted, 

and/or resized is considered to be 

‘‘materially changed.’’ Pistachios which 

are roasted, salted, flavored, air-legged, 

dyed, color-coated, cleaned, and 

otherwise subjected to similar processes 

are not considered to be materially 

changed. 

(b) Each handler who handles 

pistachios shall cause any lot or portion 

of a lot initially certified for aflatoxin, 

quality, and size requirements, and 

subsequently materially changed, to be 

reinspected for aflatoxin, quality, and 

size, and certified as new lots: Provided, 

That: 

(1) Pursuant to § 983.41(b) handlers 

exempted from minimum quality testing 

shall pull or have pulled representative 

lot samples for aflatoxin testing of any 

materially changed lots intended to be 

shipped into the domestic channels of 

commerce. Such representative lot 

samples shall be divided into two parts, 

one part shall be retested for aflatoxin 

and the other part shall be maintained 

for 90 days at the handler’s facilities. 

Handlers shall make the samples 

maintained for 90 days available for 

auditing by the Administrative 

Committee for Pistachios; and 

(2) Handlers exempted from order 

requirements under § 983.70 are 

exempted from all reinspection 

requirements. 

Dated: October 18, 2005. 

Lloyd C. Day, 

Administrator, Agricultural Marketing 

Service. 

[FR Doc. 05–21167 Filed 10–20–05; 8:45 am] 

BILLING CODE 3410–02–P 

DEPARTMENT OF AGRICULTURE 

Animal and Plant Health Inspection 

Service 

9 CFR Part 77 

[Docket No. 04–068–3] 

Tuberculosis in Cattle and Bison; State 

and Zone Designations; New Mexico 

AGENCY: Animal and Plant Health 

Inspection Service, USDA. 

ACTION: Affirmation of interim rule as 

final rule. 

SUMMARY: We are adopting as a final 

rule, without change, an interim rule 

that amended the bovine tuberculosis 

regulations regarding State and zone 

classifications by removing New Mexico 

from the list of modified accredited 

advanced States, adding portions of two 

counties in New Mexico to the list of 

modified accredited advanced zones, 

and adding the remainder of the State to 

the list of accredited-free zones. We took 

this action based on our determination 

that New Mexico met the requirements 

of the regulations for zone recognition 

and that one of the zones met the 

criteria for designation as accreditedfree. 

EFFECTIVE DATE: The interim rule 

became effective on July 22, 2005. 

FOR FURTHER INFORMATION CONTACT: Dr. 

M.J. Gilsdorf, Director, Ruminant Health 

Programs, National Center for Animal 

Health Programs, VS, APHIS, 4700 River 

Road Unit 43, Riverdale, MD 20737–

1231; (301) 734–6954. 

SUPPLEMENTARY INFORMATION: 

Background 

In an interim rule effective and 

published in the Federal Register on 

July 22, 2005 (70 FR 42259–42261, 

Docket No. 04–068–1), we amended the 

tuberculosis regulations in 9 CFR part 

77 by removing New Mexico from the 

list of modified accredited advanced 

States in § 77.9(a), adding portions of 

two counties in New Mexico to the list 

of modified accredited advanced zones 

in § 77.9(b), and adding the remainder 

of the State to the list of accredited-free 

zones in § 77.7(b). 

On August 12, 2005, we published a 

document in the Federal Register (70 

FR 47078, Docket No. 04–068–2), 

correcting an error in the abovementioned rule. When we set out the 

revised § 77.9(a) in the July 2005 interim 

rule, we inadvertently included 

California on the list of modified 

accredited advanced States. California 

was added to the list of accredited free 

States in § 77.7(a) in an interim rule 

published in the Federal Register on 

April 15, 2005 (70 FR 19877–19878, 

Docket No. 05–010–1). Our August 2005 

document corrected that error by 

removing California from the list of 

modified accredited advanced States in 

§ 77.9(a). 

Comments on the interim rule were 

required to be received on or before 

September 20, 2005. We received one 

comment by that date. The comment 

was from a State agricultural agency. 

The commenter supported the interim 

rule. Therefore, for the reasons given in 

the interim rule, we are adopting the 

interim rule as a final rule. 

This action also affirms the 

information contained in the interim 

rule concerning Executive Order 12866 

and the Regulatory Flexibility Act, 

Executive Orders 12372 and 12988, and 

the Paperwork Reduction Act. 

Further, for this action, the Office of 

Management and Budget has waived its 

review under Executive Order 12866. 

List of Subjects in 9 CFR Part 77 

Animal diseases, Bison, Cattle, 

Reporting and recordkeeping 

requirements, Transportation, 

Tuberculosis. 

PART 77—TUBERCULOSIS 

■ Accordingly, we are adopting as a 

final rule, without change, the interim 

rule that amended 9 CFR part 77 and 

that was published at 70 FR 42259–

42261 on July 22, 2005, as corrected by 

the correcting amendment published at 

70 FR 47078 on August 12, 2005. 

Done in Washington, DC, this 17th day of 

October 2005. 

W. Ron DeHaven, 

Administrator, Animal and Plant Health 

Inspection Service. 

[FR Doc. 05–21082 Filed 10–20–05; 8:45 am] 

BILLING CODE 3410–34–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2005–21086; Directorate 

Identifier 2004–NM–217–AD; Amendment 

39–14344; AD 2005–21–06] 

RIN 2120–AA64 

Airworthiness Directives; Boeing 

Model 737–600, –700, –700C, –800, and 

–900 Series Airplanes 

AGENCY: Federal Aviation 

Administration (FAA), Department of 

Transportation (DOT). 

ACTION: Final rule.