Pistachios Grown in California, Arizona, and New Mexico; Modification of the Aflatoxin Regulations

AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Interim rule with request for comments.

SUMMARY:

This rule modifies the aflatoxin sampling and testing regulations currently prescribed under the California, Arizona, and New Mexico pistachio marketing order (order). The order regulates the handling of pistachios grown in California, Arizona, and New Mexico and is administered locally by the Administrative Committee for Pistachios (Committee). This rule streamlines the aflatoxin sampling and testing procedures under the order's rules and regulations for pistachios to be shipped for domestic human consumption while maintaining sufficient aflatoxin controls. It is expected to reduce handler operating costs by providing a uniform and consistent aflatoxin sampling and testing procedure for pistachios shipped to all market destinations.

DATES:

Effective July 24, 2010; comments received by September 21, 2010 will be considered prior to confirmation as a final rule.

ADDRESSES:

Interested persons are invited to submit written comments concerning this rule. Comments must be sent to the Docket Clerk, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue SW., STOP 0237, Washington, DC 20250-0237; Fax: (202) 720-8938; or Internet: http://www.regulations.gov. All comments should reference the document number and the date and page number of this issue of the Federal Register and will be made available for public inspection in the Office of the Docket Clerk during regular business hours, or can be viewed at: http://www.regulations.gov. All comments submitted in response to this rule will be included in the record and will be made available to the public. Please be advised that the identity of the individuals or entities submitting the comments will be made public on the Internet at the address provided above.

FOR FURTHER INFORMATION CONTACT:

Maria Stobbe, Marketing Specialist, or Kurt J. 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: Maria.Stobbe@ams.usda.gov or Kurt.Kimmel@ams.usda.gov.

Small businesses may request information on complying with this regulation by contacting Antoinette Carter, 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: Antoinette.Carter@ams.usda.gov.

SUPPLEMENTARY INFORMATION:

This rule is issued under Marketing Agreement and Order No. 983, as amended (7 CFR part 983), regulating the handling of pistachios grown in California, Arizona, and New Mexico, 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.

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 the aflatoxin sampling and testing regulations currently prescribed under the order. It streamlines the aflatoxin sampling and testing procedures under the order's rules and regulations for pistachios to be shipped for domestic human consumption, while maintaining sufficient aflatoxin controls. It is expected to reduce handler operating costs by providing a uniform and consistent aflatoxin sampling and testing procedure for pistachios shipped to all market destinations. The Committee unanimously approved the recommended modifications at its meeting on April 6, 2010.

Section 983.50 of the pistachio marketing order provides authority for aflatoxin regulations that require pistachios to be sampled and tested for aflatoxin prior to being shipped for domestic human consumption.

Section 983.150 of the order's rules and regulations contains specific aflatoxin sampling and testing requirements and currently specifies that three test samples be drawn and prepared for all lots of inshell and shelled pistachios, regardless of lot size. The samples are then sent to USDA approved laboratories for analysis of aflatoxin content. Depending upon the analytical results of the first sample, up to two additional tests and averaging the results of all tests may be required to determine whether any lot may be certified as “negative” for aflatoxin. Handlers have the option to rework the lot prior to subsequent testing in order to meet the aflatoxin requirements.

When the order was promulgated in 2004, the aflatoxin sampling and testing regulations provided sufficient sampling and testing procedures for determining aflatoxin controls for pistachios shipped for domestic human consumption. These aflatoxin sampling and testing procedures allowed handlers to use similar operating procedures for both domestic and export shipments.

In March 2010, the European Commission (EC), the regulatory body of the European Union (EU), adopted a revised Codex Alimentarius Commission's (Codex) sampling plan as its regulation for the importation of tree nuts. Over the past few years, the percentage of U.S. pistachio crop being exported has increased significantly. Currently, more than 60 percent of the annual crop is exported, with slightly more than half of exports being shipped to the EU and requiring special testing and handling procedures. As a result, handlers face inconsistent operating procedures and increased operating costs as it has become necessary to use two different sampling and testing procedures: One for pistachios shipped for domestic human consumption and another for pistachios shipped to the EU.

In an effort to streamline operating procedures, while maintaining sufficient aflatoxin level controls, the Committee, at its April 6, 2010, meeting recommended decreasing the total weight of lot samples and increasing the weight of the test samples as specified in Table 1 for inshell pistachios and Table 2 for shelled pistachios under the order's administrative rules and regulations:

The Committee also recommended changing § 983.150 to specify that for pistachio lots of up to 4,400 pounds, one test sample will be created from a minimum number of incremental samples and analyzed. For lots exceeding 4,400 pounds, two test samples will be created from a minimum number of incremental samples and analyzed. If the aflatoxin level in the first sample is 10 parts per billion (ppb) or less, the lot may be certified “negative” for aflatoxin and may be shipped. If the aflatoxin level is 20 ppb or less, the handler may either rework the lot and draw new samples for analysis, or direct that the second sample be analyzed. If the averaged results of the two analyses are 15 ppb or less, the lot may be certified “negative” for aflatoxin and may be shipped. Any lots exceeding the specified aflatoxin levels fail, and must be reported to the Committee. Failing lots may be reworked or destroyed or disposed of as described in § 983.152.

Further, the Committee recommended removing unnecessary language from § 983.150(a). In addition, the Committee also recommended changing the term Chromatograph in § 983.150(d)(3) to correctly read as Chromatography.

Initial Regulatory Flexibility Analysis

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (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 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.

There are approximately 29 handlers and 875 producers of pistachios in California, Arizona and New Mexico. Small business 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 $7,000,000. Small agricultural producers have been defined as those with annual receipts of less than $750,000.

Currently, about 72 percent of the California handlers ship less than $7,000,000 worth of pistachios on an annual basis and would therefore be considered small business firms under the SBA definition. Based on acreage, production, and grower prices reported by the Committee, the average annual revenue for small handlers is approximately $1,721,911. The industry has estimated that one of the Arizona handlers and all three New Mexico handlers would also be considered small businesses.

Data provided by the Committee regarding the size of the 2009 California crop indicates that approximately 630 California growers had 350,000 pounds or less of assessable dry weight of pistachios. Using the most recent grower price of $2.04 per pound for pistachios, it is estimated that 81 percent of California producers had receipts of approximately $714,000, which is less than $750,000, and thus would be considered small business according to the SBA definition. Although there is no official data available to date, as these states were recently added to the order and have not completed one full crop year for reporting purposes, the industry estimates that the majority of producers in Arizona and New Mexico would also be considered small businesses.

This rule modifies the aflatoxin sampling and testing regulations currently prescribed under the California, Arizona and New Mexico pistachio order. It streamlines the aflatoxin sampling and testing procedures under the order's rules and regulations for pistachios to be shipped for domestic human consumption while maintaining sufficient aflatoxin controls. It is expected to reduce handler operating costs by providing a uniform and consistent aflatoxin sampling and testing procedure for pistachios shipped to all market destinations.

The impact of this regulatory modification was discussed by the Committee at its April 6, 2010, meeting. It is anticipated that all producers and handlers will benefit from this action regardless of size and regardless of the market they ship into, as it streamlines handler operations and increases marketing flexibility. Reducing the number of required samples, the number of aflatoxin analyses, and the total weight of the lot samples, while increasing the weight of the test samples for each lot is expected to result in an estimated annual savings to the industry of approximately $18,000, including reductions of $900 for sampling, $1,400 for testing, $12,750 for labor, and $3,750 in shipping costs for those small handlers that do not do testing on site.

The Committee discussed alternatives to this action at their April 6, 2010, meeting, including continuing to operate under the current aflatoxin regulations. However, the Committee unanimously agreed that operating with the current multiple sampling and testing procedures based upon shipping destination would continue to be confusing to the industry and would continue to generate higher handler operating costs. The recommended modification is expected to eliminate any confusion with regard to operating procedures, streamline handling operations, and lower handler operating costs.

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 public sector agencies.

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.

In addition, USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this rule.

Further, the Committee's meeting was widely publicized throughout the pistachio industry and all interested persons were invited to attend the meeting and participate in Committee deliberations. Like all Committee meetings, the April 6, 2010, meeting was a public meeting and all entities, both large and small, were able to express their views on this issue. Finally, interested persons are invited to submit comments on this interim rule, including the regulatory and informational impacts of this action on small businesses.

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/AMSv1.0/ams.fetchTemplateData.do?template=TemplateN&page=MarketingOrdersSmallBusinessGuide. Any questions about the compliance guide should be sent to Antoinette Carter at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section.

This rule invites comments on modifications to the aflatoxin regulations currently prescribed under the pistachio marketing order. Any comments received will be considered prior to finalization of this rule.

After consideration of all relevant material presented, including the Committee's recommendation, and other information, it is found that this interim 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 upon good cause that it is impracticable, unnecessary, and contrary to the public interest to give preliminary notice prior to putting this rule into effect and that good cause exists for not postponing the effective date of this rule until 30 days after publication in the Federal Register because: (1) These changes are necessary to provide consistency in handler operating procedures and to reduce handler operating costs; (2) handlers are aware of these changes, which were unanimously recommended by the Committee at a public meeting where interested parties had an opportunity to provide input; and (3) this rule provides a 60-day comment period, and any comments received will be considered prior to finalization of this rule.

List of Subjects in 7 CFR Part 983

• Marketing agreements and orders
• Pistachios
• Reporting and recordkeeping requirements

For the reasons set forth in the preamble, 7 CFR part 983 is amended as follows:

PART 983—PISTACHIOS GROWN IN CALIFORNIA, ARIZONA, AND NEW MEXICO

1. The authority citation for 7 CFR part 983 continues to read as follows:

Authority: 7 U.S.C. 601-674.

2. Amend § 983.150 by revising paragraphs (a), (d)(2), (d)(3), (d)(4), and (d)(6) to read as follows: