Almonds Grown in California; Secretary's Decision and Referendum Order on Proposed Amendment of Marketing Order No. 981, 11360-11363 [E8-4017]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 73, Number 42 (Monday, March 3, 2008)]
[Proposed Rules]
[Pages 11360-11363]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-4017]


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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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Federal Register / Vol. 73, No. 42 / Monday, March 3, 2008 / Proposed 
Rules

[[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