[Federal Register: October 21, 2005 (Volume 70, Number 203)]
[Rules and Regulations]
[Page 61220-61226]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21oc05-4]
[[Page 61220]]
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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.
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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 dark-stained
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 color-coated. 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
Sec. Sec. 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 (pin-picked), 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 light-stained
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
[[Page 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, natural-condition 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 ``Sec. 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 Sec. Sec. 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 dark-
stained 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 dark-stained, 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 Sec. 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 Sec. 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, lightly-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
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 Sec. 983.38(d).
Furthermore, pursuant to Sec. 983.41(a) of the order, such handlers
may test their entire
[[Page 61222]]
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 Sec. 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, air-legged, 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 Sec. 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 ``Sec. 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, hand-sorted, 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 Sec. 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 color-coated. 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
Sec. Sec. 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 light-stained
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
[[Page 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 Sec. Sec. 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 ``Sec. 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 dark-
stained 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 Sec. 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''.
[[Page 61224]]
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 Sec. 983.38(d). Furthermore,
pursuant to Sec. 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 Sec.
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 Sec. 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 ``Sec. 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, hand-sorted, 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 Sec. 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,
Sec. 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, Sec. 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) air-legging 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.
[[Page 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 color-coated, 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 color-coated 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 Sec. 983.143(b)(1)
which would include an exemption from reinspection requirements if a
handler was exempt from minimum quality testing under Sec. 981.41(b).
We disagree. In promulgating Sec. 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 Sec. 983.41(b) applies solely to testing for minimum quality
and size requirements, rather than for aflatoxin. As required under
Sec. 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'' (pin-picked, 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.
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:
[[Page 61226]]
Authority: 7 U.S.C. 601-674.
0
2. In part 983, Subpart--Rules and Regulations is amended by adding new
Sec. 983.138 to read as follows:
Sec. 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 Sec. 983.38 and Table 4 of Sec. 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.
0
3. In part 983, Subpart--Rules and Regulations is amended by adding
Sec. 983.143 to read as follows:
Sec. 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 Sec. 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 Sec. 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