[Federal Register: March 3, 2008 (Volume 73, Number 42)]
[Proposed Rules]
[Page 11360-11363]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03mr08-14]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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[[Page 11360]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 981
[Docket No. AO-214-A7; AMS-FV-07-0050; FV07-981-1]
Almonds Grown in California; Secretary's Decision and Referendum
Order on Proposed Amendment of Marketing Order No. 981
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed rule and referendum order.
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SUMMARY: This decision proposes amendments to Marketing Order No. 981
(order), which regulates the handling of almonds grown in California,
and provides growers with the opportunity to vote in a referendum to
determine if they favor the changes. The amendments are based on those
proposed by the Almond Board of California (Board), which is
responsible for local administration of the order. The amendments would
authorize the establishment of different outgoing quality requirements
for different markets and would authorize the establishment of bulk
container marking and labeling requirements. The proposals are intended
to provide additional flexibility in administering the quality control
provisions of the order and provide the industry with additional tools
for the marketing of almonds.
DATES: The referendum will be conducted from March 24 through April 11,
2008. The representative period for the purpose of the referendum is
August 1, 2006, through July 31, 2007.
FOR FURTHER INFORMATION CONTACT: Martin Engeler, Marketing Order
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 2202
Monterey Street, Suite 102-B, Fresno, California 93721; Telephone:
(559) 487-5110, Fax: (559) 487-5906, or E-mail:
Martin.Engeler@usda.gov; or Laurel May, 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: Laurel.May@usda.gov.
Small businesses may request information on this proceeding 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: Prior documents in this proceeding: Notice
of Hearing issued on June 29, 2007, and published in the July 6, 2007,
issue of the Federal Register (72 FR 36900), and a Recommended Decision
issued on December 21, 2007, and published in the December 28, 2007,
issue of the Federal Register (72 FR 73671).
This action is governed by the provisions of sections 556 and 557
of Title 5 of the United States Code and is therefore excluded from the
requirements of Executive Order 12866.
Preliminary Statement
The proposed amendments are based on the record of a public hearing
held August 2, 2007, in Modesto, California, to consider such
amendments to the order. The hearing was held pursuant to the
provisions of the Agricultural Marketing Agreement Act of 1937, as
amended (7 U.S.C. 601-612), hereinafter referred to as the ``Act,'' and
the applicable rules of practice and procedure governing the
formulation of marketing agreements and marketing orders (7 CFR part
900). The Notice of Hearing was published in the Federal Register on
July 6, 2007 (72 FR 36900), and contained amendment proposals submitted
by the Board.
The amendments included in this decision would:
1. Authorize the establishment of different outgoing almond quality
requirements for different markets; and
2. Authorize the establishment of container marking and labeling
requirements.
In addition, the Agricultural Marketing Service (AMS) proposed to
make changes as may be necessary to the order, if any of the proposed
changes are adopted, so that all of the order's provisions conform to
the effectuated amendments.
Upon the basis of evidence introduced at the hearing and the record
thereof, the Administrator of AMS on December 21, 2007, filed with the
Hearing Clerk, U.S. Department of Agriculture (USDA), a Recommended
Decision and Opportunity to File Written Exceptions thereto by January
17, 2008. None were filed.
Small Business Consideration
Pursuant to the requirements set forth in the Regulatory
Flexibility Act (RFA) (5 U.S.C. 601-612), AMS has considered the
economic impact of this action on small entities. Accordingly, AMS has
prepared this initial regulatory flexibility analysis.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions so that small businesses will not be
unduly or disproportionately burdened. Marketing orders and amendments
thereto are unique in that they are normally brought about through
group action of essentially small entities for their own benefit.
Small agricultural service firms, which include handlers regulated
under the order, have been defined by the Small Business Administration
(SBA) (13 CFR 121.201) as those having annual receipts of less than
$6,500,000. Small agricultural producers have been defined as those
with annual receipts of less than $750,000.
There are approximately 104 handlers of almonds subject to
regulation under the order and approximately 6,000 producers of almonds
in the regulated area. Information provided at the hearing indicates
that approximately 50 percent of the handlers would be considered small
agricultural service firms. According to data reported by the National
Agricultural Statistics Service (NASS), the two-year average crop value
for 2005-06 and 2006-07 was $2.283 billion. Dividing that average by
6,000 producers yields average estimated producer revenues of $380,500,
which suggests that the majority of almond producers would also be
considered small entities according to the SBA's definition.
The order regulates the handling of almonds grown in the state of
California. The California almond bearing acreage increased nearly 40
[[Page 11361]]
percent between 1996 and 2006, from 418,000 to 585,000 acres.
Approximately 1.115 billion pounds (shelled basis) of almonds were
produced during the 2006-07 season. Bearing acreage for the 2007-08
season is estimated to be 615,000 acres. NASS has forecasted that the
2007-08 crop will reach 1.330 billion pounds (shelled basis). More than
two thirds of California's almond crop is exported to approximately 90
countries worldwide, and comprises nearly 80 percent of the world's
almond supply.
Under the order, incoming and outgoing quality regulations are
established, statistical information is collected, production research
projects are conducted, and marketing research and generic promotion
programs are sponsored. Program activities administered by the Board
are designed to support large and small almond producers and handlers.
The 10-member Board is comprised of both producer and handler
representatives from the production area. Board meetings where
regulatory recommendations and other decisions are made are open to the
public. All members are able to participate in Board deliberations, and
each Board member has an equal vote. Others in attendance at meetings
are also allowed to express their views.
The Board's Food Quality and Safety Committee discussed the need
for amendments to the order at meetings held on May 12, 2005; July 20,
2005; and November 1, 2006. The Board approved language for two
proposed amendments to the order at their meeting on November 28, 2006.
During a conference call on February 27, 2007, the Board confirmed that
the two amendments should be proposed to USDA. The views of all
participants were considered throughout this process.
In addition, the hearing to receive evidence on the proposed
changes was open to the public and all interested parties were invited
and encouraged to participate and provide their views.
The proposed amendments are intended to provide the Board and the
industry with additional flexibility in the marketing of California
almonds. Record evidence indicates that the proposed amendments are
intended to benefit all producers and handlers under the order,
regardless of size. There would be no cost implications for handlers or
growers from adding the proposed order authorities. Costs of
implementation would be incurred only if specific additional
requirements were established following future informal rulemaking. All
grower and handler witnesses supported the proposed amendments and
commented on the implications of implementing specific requirements in
the future. In that context, witnesses stated that they expected the
benefits to be substantial and the costs of any future requirements to
be minimal.
A description of the proposed amendments and their anticipated
economic impact on small and large entities is discussed below.
Proposal 1--Adding the Authority To Establish Different Outgoing
Quality Requirements for Different Markets
The record shows that the proposal to add authority to establish
different outgoing quality requirements for different markets would, in
itself, have no economic impact on producers or handlers of any size.
Regulations implemented under that authority could impose additional
costs on handlers required to comply with them. However, witnesses
testified that establishing mandatory regulations for different markets
could increase the industry's credibility and reduce the risk that
shipments of substandard product could jeopardize the entire industry's
reputation. Record evidence shows that any additional costs are likely
to be offset by the benefits of complying with those requirements.
Witnesses cited decreased delays and demurrage charges, as well as
fewer rejected loads and increased customer confidence, as expected
benefits. Recently, almonds have been rejected in the EU due to
aflatoxin levels exceeding its importing tolerances. Information
provided at the hearing shows that the rejection of a 44,000 pound
container of almonds in the EU costs about $10,000, or 22.7 cents per
pound. The cost includes demurrage for unanticipated delays at port,
warehousing product while awaiting official import testing results,
shipping rejected almonds back to the U.S., and shipping a replacement
container back to the EU.
To reduce the risk of rejections, the California almond industry
developed a voluntary aflatoxin testing protocol. Witnesses estimated
that the cost of the pre-export testing, including the value of the
sample, analytical fees, courier fees, and sampling labor is less than
2 cents per pound, which is less than 10 percent of the cost associated
with a rejection. Proponents testified that if a requirement that all
almonds destined for the EU be tested prior to shipment was established
under authority provided by the proposed order amendment, handlers
would incur the cost of testing, but those costs would be expected to
be more than offset by the reduced risk of rejections.
It's likely that most handlers are already complying with their
customers' specific market requirements on a voluntary basis as a part
of doing business, but witnesses explained that mandatory requirements
lend credibility to the entire industry. In addition, such requirements
could reduce the risk that one shipment of substandard product would
jeopardize the entire industry's reputation.
Currently, outgoing quality requirements established under the
order apply to all handler entities regardless of size. If the proposed
amendment and subsequent regulations established thereunder are
implemented, distribution of any increased costs between small and
large entities would depend on the requirements established for the
markets to which individual handlers shipped their almonds as well as
the volume of almonds shipped to those markets. But increases in cost
would be equitable to all entities because requirements for each market
would be imposed uniformly on all handlers shipping to that market.
Witnesses explained that almonds are used in many different ways by
the various markets. In Europe, almonds are widely used as marzipan and
ingredients for baked goods, candy, and other dishes. In India and the
Middle East, almonds are presented as gifts at holidays and weddings,
and play a part in other cultural traditions. India imports large
quantities of inshell almonds that are then processed by hand. The wide
range of uses leads to a similarly wide array of customer requirements.
According to record testimony, handlers adapt their export methods
to satisfy customer requirements. One witness explained that it is
often difficult for smaller handlers to stay informed of rapidly
changing import regulations. The witness stated that small handlers in
particular would benefit from the proposed authority to establish
different requirements for different markets by avoiding costly
mistakes that could be associated with not understanding various market
and import requirements. If regulations were established under the
proposed authority, the Board would provide information about updated
requirements to the industry.
Finally, one witness explained that having the ability under the
order to establish different outgoing quality requirements for
different markets would not restrict handlers' choices regarding which
markets to supply. Rather, the provision would ensure that the
important standards that
[[Page 11362]]
differentiate markets would be consistently met by all handlers
shipping to those markets.
Proposal 2--Adding the Authority To Establish Container Labeling and
Marking Requirements
The proposal described in Material Issue No. 2 would add Sec.
981.43 to the order to provide general authority to establish container
marking and labeling requirements. If implemented, the proposed
amendment would allow the Board, through the informal rulemaking
process, to recommend and establish uniform container marking and
labeling regulations in response to evolving market requirements. Under
current order provisions, there is only very limited authority for
container marking and labeling requirements.
Witnesses testified that the lack of this authority has hindered
them from adapting quickly and appropriately to recent market
situations. In one case described at the hearing, the industry was
unable to implement container marking or labeling following recalls for
possible Salmonella contamination. Witnesses stated that customer
confidence in almond quality could have been reinforced if the
necessary authority to establish marking and labeling requirements had
been available. Such authority would have allowed the industry to
prescribe labeling to clearly indicate which almonds had been treated
to reduce risk of contamination.
The proposed amendment would allow the industry to respond to
evolving market needs as they develop by establishing uniform and
consistent marking and labeling requirements. According to proponents,
the ability to communicate important product information to customers
in a uniform and consistent manner will be essential as the industry
strives to maintain its position in the expanding global marketplace.
If the proposed amendment is implemented, costs of complying with
any regulations established thereunder would not be disproportionate to
small businesses. Witnesses testified that applying labels and marks to
almond containers is currently a common practice, and industry handlers
already have container marking processes and equipment in place.
Therefore, the costs associated with the addition of uniform marking or
labeling requirements would be minimal for both small and large
entities. The record shows that any costs would likely be offset by the
benefits derived from being more responsive to market demands.
Interested persons were invited to present evidence at the hearing
on the probable regulatory and informational impact of the proposed
amendments to the order on small entities. The record evidence
indicates that the proposed amendments are intended to benefit all
producers and handlers under the order, regardless of size. Further,
the record shows that the costs associated with implementing
regulations would be outweighed by the benefits expected to accrue to
the California almond industry.
USDA has not identified any relevant Federal rules that duplicate,
overlap or conflict with this proposed rule. These amendments are
designed to enhance the administration and functioning of the order to
the benefit the California almond industry.
Paperwork Reduction Act
Information collection requirements for Part 981 are currently
approved by the Office of Management and Budget (OMB), under OMB Number
0581-0178, Vegetable and Specialty Crops. Implementation of these
proposed amendments would not trigger any changes to those
requirements. Should any such changes become necessary in the future,
they would be submitted to OMB for approval.
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.
AMS is committed to complying with the Government Paperwork
Elimination Act (GPEA), which requires Government agencies in general
to provide the public the option of submitting information or
transacting business electronically to the maximum extent possible.
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.
Civil Justice Reform
The amendments to Marketing Order 981 proposed herein have been
reviewed under Executive Order 12988, Civil Justice Reform. They are
not intended to have retroactive effect. If adopted, the proposed
amendments would not preempt any State or local laws, regulations, or
policies, unless they present an irreconcilable conflict with this
proposal.
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 no later than 20 days after the date of the
entry of the ruling.
Findings and Conclusions
The findings and conclusions, rulings, and general findings and
determinations included in the Recommended Decision set forth in the
December 28, 2007 issue of the Federal Register are hereby approved and
adopted.
Marketing Order
Annexed hereto and made a part hereof is the document entitled
``Order Amending the Order Regulating the Handling of Almonds Grown in
California.'' This document has been decided upon as the detailed and
appropriate means of effectuating the foregoing findings and
conclusions.
It is hereby ordered, That this entire decision be published in the
Federal Register.
Referendum Order
It is hereby directed that a referendum be conducted in accordance
with the procedure for the conduct of referenda (7 CFR part 900.400-
407) to determine whether the annexed order amending the order
regulating the handling of almonds grown in California is approved or
favored by growers, as defined under the terms of the order, who during
the representative period were engaged in the production of almonds in
the production area.
The representative period for the conduct of such referendum is
hereby determined to be August 1, 2006, through July 31, 2007.
The agents of the Secretary to conduct such referendum are hereby
designated to be Kurt Kimmel and Terry Vawter, 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: Kurt.Kimmel@usda.gov or Terry Vawter@usda.gov,
respectively.
[[Page 11363]]
List of Subjects in 7 CFR Part 981
Almonds, Marketing agreements, Nuts, Reporting and recordkeeping
requirements.
Dated: February 27, 2008.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
Order Amending the Order Regulating the Handling of Almonds Grown in
California \1\
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\1\ This order shall not become effective unless and until the
requirements of Sec. 900.14 of the rules of practice and procedure
governing proceedings to formulate marketing agreements and
marketing orders have been met.
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Findings and determinations
The findings and determinations hereinafter set forth are
supplementary to the findings and determinations which were previously
made in connection with the issuance of the marketing order; and all
said previous findings and determinations are hereby ratified and
affirmed, except insofar as such findings and determinations may be in
conflict with the findings and determinations set forth herein.
(a) Findings and Determinations Upon the Basis of the Hearing
Record.
Pursuant to the provisions of the Agricultural Marketing Agreement
Act of 1937, as amended (7 U.S.C. 601-612), and the applicable rules of
practice and procedure effective thereunder (7 CFR part 900), a public
hearing was held upon the proposed amendments to the Marketing Order
No. 981 (7 CFR part 981), regulating the handling of almonds grown in
California. Upon the basis of the evidence introduced at such hearing
and the record thereof, it is found that:
(1) The marketing order, as amended, and as hereby proposed to be
further amended, and all of the terms and conditions thereof, would
tend to effectuate the declared policy of the Act;
(2) The marketing order, as amended, and as hereby proposed to be
further amended, regulates the handling of almonds grown in the
production area in the same manner as, and is applicable only to,
persons in the respective classes of commercial and industrial activity
specified in the marketing order upon which a hearing has been held;
(3) The marketing order, as amended, and as hereby proposed to be
further amended, is limited to its application to the smallest regional
production area which is practicable, consistent with carrying out the
declared policy of the Act, and the issuance of several orders
applicable to subdivisions of the production area would not effectively
carry out the declared policy of the Act;
(4) The marketing order, as amended, and as hereby proposed to be
further amended, prescribes, insofar as practicable, such different
terms applicable to different parts of the production area as are
necessary to give due recognition to the differences in the production
and marketing of almonds grown in the production area; and
(5) All handling of almonds grown in the production area as defined
in the marketing order is in the current of interstate or foreign
commerce or directly burdens, obstructs, or affects such commerce.
Order Relative to Handling
It is therefore ordered, That on and after the effective date
hereof, all handling of almonds grown in California shall be in
conformity to, and in compliance with, the terms and conditions of the
said order as hereby proposed to be amended as follows:
The provisions of the proposed marketing order amending the order
contained in the Recommended Decision issued by the Administrator on
December 21, 2007, and published in the Federal Register (72 FR 73671)
on December 28, 2007, will be and are the terms and provisions of this
order amending the order and are set forth in full herein.
PART 981--ALMONDS GROWN IN CALIFORNIA
1. The authority citation for 7 CFR part 981 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
2. Amend paragraph (b) of Sec. 981.42 by adding the following
sentence before the last sentence to read as follows:
Sec. 981.42 Quality control.
* * * * *
(b) * * * The Board may, with the approval of the Secretary,
establish different outgoing quality requirements for different
markets. * * *
3. Add a new Sec. 981.43 to read as follows:
Sec. 981.43 Marking or labeling of containers.
The Board may, with the approval of the Secretary, establish
regulations to require handlers to mark or label their containers that
are used in packaging or handling of bulk almonds. For purposes of this
section, container means a box, bin, bag, carton, or any other type of
receptacle used in the packaging or handling of bulk almonds.
[FR Doc. E8-4017 Filed 2-29-08; 8:45 am]
BILLING CODE 3410-02-P