[Federal Register: November 8, 2006 (Volume 71, Number 216)]
[Rules and Regulations]
[Page 65373-65376]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08no06-2]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 981
[Docket No. FV06-981-2 FR]
Almonds Grown in California; Changes to Incoming Quality Control
Requirements
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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[[Page 65374]]
SUMMARY: This rule changes the incoming quality control requirements
under the administrative rules and regulations of the California almond
marketing order (order). The order regulates the handling of almonds
grown in California and is administered locally by the Almond Board of
California (Board). These changes will help minimize the risk of
aflatoxin in almonds by removing inedible kernels from human
consumption. Inedible almonds are poor quality kernels or pieces of
defective kernels that may be contaminated with aflatoxin. This action
is intended to improve the overall quality of almonds placed into
consumer channels.
EFFECTIVE DATE: This final rule becomes effective on November 9, 2006.
FOR FURTHER INFORMATION CONTACT: Maureen T. Pello, Assistant Regional
Manager, or Kurt Kimmel, Regional Manager, California Marketing Field
Office, Marketing Order Administration Branch, Fruit and Vegetable
Programs, AMS, USDA, telephone: (559) 487-5901, Fax: (559) 487-5906, or
E-mail: Maureen.Pello@usda.gov, or Kurt.Kimmel@usda.gov.
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 rule is issued under Marketing Order
No. 981, as amended (7 CFR part 981), regulating the handling of
almonds grown in California, hereinafter referred to as the ``order.''
The 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 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. Such
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 changes the incoming quality control requirements under
the administrative rules and regulations of the order. These changes
will help minimize the risk of aflatoxin in almonds by removing
inedible almonds from human consumption. Inedible almonds are poor
quality kernels or pieces of defective kernels that may be contaminated
with aflatoxin. These changes are intended to improve the overall
quality of almonds placed into consumer channels, and were recommended
by the Board at a meeting on May 18, 2006.
Section 981.42 of the order provides authority for a quality
control program. Paragraph (a) of that section requires handlers to
obtain incoming inspections on almonds received from growers to
determine the percent of inedible kernels in each lot of any variety.
Based on these inspections, handlers incur an inedible disposition
obligation. They must satisfy their obligation by disposing of inedible
almonds in outlets such as oil and animal feed.
Section 981.442(a)(4) of the order's administrative rules and
regulations specifies that the weight of inedible kernels in excess of
1 percent of kernel weight shall constitute that handler's disposition
obligation. Handlers must satisfy the disposition obligation by
delivering packer pickouts, kernels rejected in blanching, pieces of
kernels, meal accumulated in manufacturing, or other material, to
crushers, feed manufacturers, feeders, or dealers in nut wastes on
record with the Board as accepted users of such product. Accepted users
dispose of this material through non-human consumption outlets.
Paragraph (a)(5) of Sec. 981.442 specifies further that at least 25
percent of a handler's total annual disposition obligation be satisfied
with inedible kernels as defined under Sec. 981.408 (hereinafter
referred to as ``true inedibles''). Handlers with total annual inedible
obligations of less than 1,000 pounds are exempt from the 25 percent
requirement.
Board research has shown that aflatoxin in almonds is directly
related to insect damage in inedible kernels. In order to help minimize
the risk of aflatoxin in almonds, the Board recommended reducing the
tolerance for inedible kernels from 1 to 0.50 percent, and increasing
the percent of a handler's total annual inedible obligation that must
be true inedibles from 25 to 50 percent. Such revisions are intended to
improve the overall quality of almonds placed into consumer channels.
All of the Board's members supported the change regarding true
inedibles, but three of the Board's 10 members opposed the change to
reduce the incoming tolerance for inedible kernels (the Board's
chairperson abstained). Those opposed pointed to the existing 2 percent
voluntary outgoing tolerance and expressed concern about additional
costs that handlers may incur to separate out inedible kernels. The
majority of Board members supported both changes. Paragraphs (a)(4) and
(a)(5) of Sec. 981.442 are revised accordingly.
Final Regulatory Flexibility Analysis
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), the Agricultural Marketing Service (AMS) has considered the
economic impact of this rule on small entities. Accordingly, AMS has
prepared this final regulatory flexibility analysis.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions in order that small businesses will
not be unduly or disproportionately burdened. Marketing orders issued
pursuant to the Act, and the rules issued thereunder, are unique in
that they are brought about through group action of essentially small
entities acting on their own behalf. Thus, both statutes have small
entity orientation and compatibility.
There are approximately 6,000 producers of almonds in the
production area and approximately 115 handlers subject to regulation
under the marketing order. Small agricultural producers are defined by
the Small Business Administration (13 CFR 121.201) as those having
annual receipts of less than $750,000, and small agricultural service
firms are defined as those whose annual receipts are less than
$6,500,000.
Data for the most recently completed crop year indicate that about
52 percent of the handlers shipped under $6,500,000 worth of almonds.
Dividing average almond crop value for 2003-2005 reported by the
National
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Agricultural Statistics Service ($2.171 billion) by the number of
producers (6,000) yields an average annual producer revenue estimate of
about $362,000. Based on the foregoing, about half of the handlers and
a majority of almond producers may be classified as small entities.
This rule revises paragraphs (a)(4) and (a)(5) of Sec. 981.442 of
the order's administrative rules and regulations regarding inedible
almonds. These changes will help minimize the risk of aflatoxin in
almonds by removing inedible kernels from human consumption. Inedible
almonds are poor quality kernels or pieces of defective kernels that
may be contaminated with aflatoxin. Specifically, this action reduces
the tolerance for inedible kernels in each variety of almonds received
by a handler from 1 to 0.50 percent, and increases the percent of a
handler's annual inedible obligation that must be satisfied with
dispositions containing inedible almonds from 25 to 50 percent.
Authority for these changes is provided in Sec. 981.42(a) of the
order.
Regarding the impact of this action on affected entities, this
action is intended to improve the overall quality of almonds placed
into consumer channels and therefore should be beneficial to the
industry. In addition, this rule is not expected to change handler
inspection costs. Handlers must currently have an incoming inspection
done on each lot of almonds received to determine the percent of
inedible kernels. Additionally, inedible almond dispositions must be
inspected to determine the percent of inedible kernels in such
dispositions. Such inspections are performed by the inspection agency,
which means the Federal-State Inspection Service. The inspection agency
charges a fee of $40 per hour, plus $0.75 per ton, with a minimum total
fee of $55, to perform an inedible disposition inspection.
The Board considered various alternatives and options before making
its recommendation on inedible almonds. It was decided that a 0.50
percent tolerance was appropriate rather than 0 percent. As previously
stated, Board members opposed pointed to the existing 2 percent
voluntary outgoing tolerance and expressed concern about additional
costs that handlers may incur to separate out inedible kernels.
Ultimately, the majority of Board members supported both changes. The
Board's Food Quality and Safety (FQS) Committee met again via
teleconference on June 13, 2006, and concurred with the Board's
recommendation.
This action imposes no additional reporting and recordkeeping
burden on California almonds handlers. In accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C. Chapter 35), the information
collection requirements in this rule have been approved by the Office
of Management and Budget (OMB) under OMB Control No. 0581-0178,
Vegetable and Specialty Crops. As with all Federal marketing order
programs, reports and forms are periodically reviewed to reduce
information requirements and duplication by industry and public sector
agencies.
The AMS is committed to complying with the E-Government Act, to
promote the use of the Internet and other information technologies to
provide increased opportunities for citizen access to Government
information and services, and for other purposes.
USDA has not identified any relevant Federal rules that duplicate,
overlap, or conflict with this rule. There are U.S. Standards for
Grades of Shelled Almonds (7 CFR 51.2105 through 51.2131) and U.S.
Standards for Grades of Almonds in the Shell (7 CFR 51.2075 through
51.2091) issued under the Agricultural Marketing Act of 1946 (7 U.S.C.
1621 through 1627). However, these standards are voluntary for the
almond industry.
Additionally, the meetings were widely publicized throughout the
California almond industry and all interested persons were invited to
attend the meetings and participate in deliberations on all issues.
Like all Board meetings, the task force meetings on March 23 and April
26, 2006, the FQS Committee meetings on April 11, May 8, and June 13,
2006, and the Board meeting on May 18, 2006, were public meetings and
all entities, both large and small, were able to express views on this
issue.
A proposed rule concerning this action was published in the Federal
Register on August 16, 2006 (71 FR 47152). Copies of the proposed rule
were also mailed or sent via facsimile to all almond handlers. Finally,
the proposal was made available through the Internet by USDA and the
Office of the Federal Register. A 7-day comment period ending August
23, 2006, was provided for interested persons to respond to the
proposal. Five comments were received from industry handlers opposed to
the proposed reduced tolerance for inedible kernels from 1 to 0.50
percent. All the points raised in these five comments were previously
discussed by the almond industry at the meetings cited earlier in this
rule.
Two of the commenters believe that reducing the incoming tolerance
for inedible kernels will not remove additional inedible almonds from
the market. They pointed to the existing voluntary outgoing tolerances
for seriously damaged kernels in the U.S. Standards for Grades of
Shelled Almonds (1 percent tolerance for U.S. Fancy and 2 percent
tolerance for U.S. Select Sheller run). One commenter also pointed to
the Board's voluntary aflatoxin sampling plan that recommends that
loads of almonds with over 2 percent serious damage be tested for
aflatoxin. The commenters contend that reducing the incoming tolerance
will not cause handlers to ship almonds at a lower outgoing tolerance
into the market.
We disagree with these comments. Reducing the incoming tolerance
for inedible kernels will remove more inedible almonds from channels of
commerce. Let us assume that the annual almond production is 1 billion
pounds, of which 3 percent or 30 million pounds (.03 x 1 billion
pounds) are inedible. The current inedible program provides for a 1
percent tolerance, or 10 million pounds (.01 x 1 billion pounds) of
almonds that can be inedible and sold into normal market channels.
Thus, 20 million pounds (.02 x 1 billion pounds) must be disposed of
into specified outlets for inedible almonds. Of the 20 million pounds,
only 25 percent, or 5 million pounds, must be true inedibles, and the
remaining 15 million pounds can be edible, inedible, or meal.
In comparison, the revised inedible program provides for a
tolerance of 0.50 percent, or 5 million pounds (.005 x 1 billion
pounds) of almonds that can be inedible and sold into normal market
channels. Thus, 25 million pounds (.025 x 1 billion pounds) must be
disposed of into specified outlets for inedible almonds. Of the 25
million pounds, 50 percent, or 12.5 million pounds, must be true
inedibles, and the remaining 12.5 million pounds can be edible,
inedible, or meal.
In summary, a total of 5 million pounds of true inedible almonds
are removed from the market annually under the current program, and
12.5 million pounds of almonds will be removed annually under the
revised program. Thus, the revised program will remove an additional
7.5 million pounds of inedible almonds from the market.
A commenter also stated that reducing the incoming tolerance from 1
to 0.50 percent may provide an unfair advantage for larger processors
that have blanching facilities. We disagree. The process of blanching
involves scalding the almonds with hot water to remove the skins, and
then running the almonds
[[Page 65376]]
through a series of rollers to remove any remaining skin and smooth the
almond surface. Handlers with blanching equipment may clean up inedible
almonds for market. However, increasing the percent of a handler's
total annual obligation that must be true inedible from 25 to 50
percent will reduce the amount of inedible almonds that are available
to be cleaned up with blanching equipment. Additionally, the revised
tolerances apply to all handlers throughout the industry, regardless of
size or processing capabilities.
Another commenter expressed concern that the reduced incoming
tolerance is only being applied to the California almond industry, and
that other producing countries like Spain and Australia would not be
impacted by the change. The commenter added that the real concern to
the California industry is aflatoxin, and suggested that the industry
focus more on testing almonds prior to shipment rather than tightening
up the inedible almond program under the order.
The comment correctly points out that the revised tolerances are
applied under the California almond marketing order, and are only
applicable to domestic California production. However, concerning the
issue of aflatoxin, a number of initiatives have been recommended by
the Board. For example, the Board has endorsed a voluntary aflatoxin
sampling plan that recommends that loads of almonds with over 2 percent
serious damage be tested for aflatoxin. Additionally, Board research
has shown that aflatoxin in almonds is directly related to insect
damage in inedible kernels. In order to help minimize the risk of
aflatoxin, the Board recommended reducing the tolerance for inedible
kernels from 1 to 0.50 percent, and increasing the percent of a
handler's total annual inedible obligation that must be true inedibles
from 25 to 50 percent. This rule implements the Board's recommendation.
Two commenters expressed concern that this issue was not fully
deliberated by the Board and/or its committees. However, the Board
formed a task force to address the industry's concerns regarding
aflatoxin. The task force met on March 23 and April 26, 2006, and
recommended reducing the incoming tolerance from 1 to 0 percent, and
increasing the percent of a handler's total annual inedible obligation
that must be true inedibles from 25 to 50 percent. The FQS Committee
reviewed the task force's proposal on April 11 and again on May 8,
2006. After much discussion, the FQS Committee reached a compromise and
recommended that the incoming tolerance be reduced from 1 to 0.50
percent. The FQS Committee concurred with the proposal regarding true
inedibles. The Board considered the issue on May 18, 2006. Ultimately,
the majority of Board members concurred with the FQS Committee's
proposal. The FQS Committee met again via teleconference on June 13,
2006, revisited the issue, and reaffirmed its previous recommendation
that was ultimately approved by the Board and submitted to USDA. Thus,
the issue was fully deliberated at several meetings, and interested
persons had ample opportunity to express their views and participate in
the discussions.
Accordingly, no changes will be made to the rule as proposed, based
on the comments 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 material presented, including
the information and recommendation submitted by the Board 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.
Pursuant to 5 U.S.C. 553, it is also found and determined that good
cause exists for not postponing the effective date of this rule until
30 days after publication in the Federal Register because the 2006-07
crop year began on August 1, 2006, and handlers are disposing of
inedible almonds. These changes should be in effect for as much of the
crop year as possible. Handlers are aware of this action which was
recommended at a public meeting. Additionally, a 7-day comment period
was provided for in the proposed rule.
List of Subjects in 7 CFR Part 981
Almonds, Marketing agreements, Nuts, Reporting and recordkeeping
requirements.
0
For the reasons set forth in the preamble, 7 CFR part 981 is amended as
follows:
PART 981--ALMONDS GROWN IN CALIFORNIA
0
1. The authority citation for 7 CFR part 981 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
0
2. Section 981.442 is amended by revising the first sentence of
paragraph (a)(4)(i) and the eleventh sentence in paragraph (a)(5) to
read as follows:
Sec. 981.442 Quality control.
(a) * * *
(4) Disposition obligation. (i) The weight of inedible kernels in
excess of 0.50 percent of kernel weight reported to the Board of any
variety received by a handler shall constitute that handler's
disposition obligation. * * *
* * * * *
(5) Meeting the disposition obligation.
* * * At least 50 percent of a handler's total crop year inedible
disposition obligation shall be satisfied with dispositions consisting
of inedible kernels as defined in Sec. 981.408: Provided, That this 50
percent requirement shall not apply to handlers with total annual
obligations of less than 1,000 pounds. * * *
* * * * *
Dated: November 3, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 06-9133 Filed 11-3-06; 4:34 pm]
BILLING CODE 3410-02-P