[Federal Register Volume 81, Number 137 (Monday, July 18, 2016)]
[Proposed Rules]
[Pages 46616-46619]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-16814]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
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 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. 81, No. 137 / Monday, July 18, 2016 / 
Proposed Rules  

[[Page 46616]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Doc. No. AMS-SC-16-0045; SC16-981-2 PR]


Almonds Grown in California; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This proposed rule would implement a recommendation from the 
Almond Board of California (Board) to increase the assessment rate 
established for the 2016-17 through the 2018-19 crop years from $0.03 
to $0.04 per pound of almonds handled under the marketing order 
(order). Of the $0.04 per pound assessment, 60 percent (or $0.024 per 
pound) would be available as credit-back for handlers who conduct their 
own promotional activities. The assessment rate would return to $0.03 
for the 2019-20 and subsequent crop years, and the amount available for 
handler credit-back would return to $0.018 per pound (60 percent). The 
Board locally administers the order and is comprised of growers and 
handlers of almonds grown in California. Assessments upon almond 
handlers are used by the Board to fund reasonable and necessary 
expenses of the program. The crop year begins August 1 and ends July 
31. The $0.04 assessment rate would remain in effect until July 31, 
2019. Beginning August 1, 2019, the assessment rate would return to 
$0.03 and would remain in effect indefinitely unless modified, 
suspended, or terminated.

DATES: Comments must be received by August 2, 2016.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposed rule. Comments must be sent to the Docket 
Clerk, Marketing Order and Agreement Division, Specialty Crops Program, 
AMS, USDA, 1400 Independence Avenue SW., STOP 0237, Washington, DC 
20250-0237; Fax: (202) 720-8938; or Internet: http://www.regulations.gov. Comments should reference the document number and 
the date and page number of this issue of the Federal Register and will 
be 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 
proposed 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: Andrea Ricci, Marketing Specialist or 
Jeffery Smutny, Regional Director, California Marketing Field Office, 
Marketing Order and Agreement Division, Specialty Crops Program, AMS, 
USDA; Telephone: (559) 487-5901, Fax: (559) 487-5906, or Email: with 
[email protected] or [email protected].
    Small businesses may request information on complying with this 
regulation by contacting Antoinette Carter, Marketing Order and 
Agreement Division, Specialty Crops Program, AMS, USDA, 1400 
Independence Avenue SW., STOP 0237, Washington, DC 20250-0237; 
Telephone: (202) 720-2491, Fax: (202) 720-8938, or Email: 
[email protected].

SUPPLEMENTARY INFORMATION: This proposed 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 proposed rule 
in conformance with Executive Orders 12866, 13563, and 13175.
    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. Under the marketing order now in effect, 
California almond handlers are subject to assessments. Funds to 
administer the order are derived from such assessments. It is intended 
that the assessment rate as proposed herein would be applicable to all 
assessable almonds beginning on August 1, 2016, through July 31, 2019. 
Beginning August 1, 2019, the assessment rate would return to the 
current $0.03 and would remain in effect indefinitely unless modified, 
suspended, or terminated.
    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 proposed rule would increase the assessment rate for the 2016-
17 through 2018-19 crop years from $0.03 to $0.04 per pound of almonds 
received. Of the $0.04 per pound assessment, 60 percent (or $0.024 per 
pound) would be available as credit-back for handlers who conduct their 
own promotional activities. The assessment rate would return to $0.03 
for the 2019-20 and subsequent crop years, and the amount available for 
handler credit-back would return to $0.018 per pound (60 percent).
    The California almond marketing order provides authority for the 
Board, with the approval of USDA, to formulate an annual budget of 
expenses and collect assessments from handlers to administer the 
program. The members of the Board are growers and handlers of 
California almonds. They are familiar with the Board's needs and with 
the costs for goods and services in their local area and thus are in a 
position to formulate an appropriate budget and assessment rate. The 
assessment rate is formulated and discussed in a public meeting. 
Therefore, all directly affected persons have an opportunity to 
participate and provide input.
    For the 2005-06 and subsequent crop years, the Board recommended, 
and

[[Page 46617]]

USDA approved, an assessment rate of $0.03 per pound that would 
continue in effect from crop year to crop year unless modified, 
suspended, or terminated by USDA upon recommendation and information 
submitted by the Board or other information available to USDA. Of the 
$0.03 per pound assessment, 60 percent ($0.018) per pound was made 
available as credit-back for handlers who conducted their own 
promotional activities.
    The Board met on April 12, 2016, and unanimously recommended 2016-
17 expenditures of $69,897,626 and an assessment rate of $0.04 per 
pound of almonds received. In comparison, last year's budgeted 
expenditures were $58,998,976. The proposed assessment rate of $0.04 is 
$0.01 higher than the rate currently in effect, and the credit-back 
portion of the assessment rate ($0.024 per pound) would be $0.006 more 
than the credit-back portion currently in effect.
    The Board estimates a production increase of thirty percent, or 600 
million pounds, by the 2019-20 crop year. This increase is nearly as 
much as their largest market currently consumes. Due to the size of the 
increase in forecasted production, the Board anticipates that increased 
market development projects and new marketing programs are required to 
successfully market the additional supply. Accordingly, the Board has 
recommended a new ``Nut of Choice'' marketing program.
    The Board also anticipates needing additional funding for the 
industry's new ``Crop of Choice'' research program, as well as 
additional research to address concerns such as: Changing water supply 
and quality systems; air quality and how it relates to harvesting, 
pesticide, and energy use; and bee health.
    The three-year higher assessment rate is needed to fund the 
increase in marketing and research activities. The Board anticipates 
that by the 2019-20 crop year, the increase in production assessed at 
the reinstated $0.03 per pound rate should generate sufficient revenue 
to cover the anticipated expenditures at that time. Therefore, 
beginning August 1, 2019, the assessment rate would return to $0.03 per 
pound.
    The following table compares major budget expenditures recommended 
by the Board for the 2015-16 and 2016-17 crop years:

------------------------------------------------------------------------
        Budget expense categories             2015-16         2016-17
------------------------------------------------------------------------
Operations Expenses.....................      $7,904,000      $8,404,000
Board Accelerated Innovation Management        1,500,000       1,000,000
 (AIM) Initiatives......................
Crop of Choice Initiatives..............               0       5,625,000
Reputation Management...................       1,826,350       2,000,000
Production Research.....................       1,843,331       1,843,331
Environmental Research..................       1,039,790       1,039,790
Scientific Affairs/Nutrition............       1,640,000       1,640,000
Global Market Development...............      38,583,756      38,583,756
Nut of Choice Initiatives...............               0       5,100,000
Technical & Regulatory Affairs..........       1,045,500       1,045,500
Industry Services.......................       2,436,220       2,436,220
Almond Quality & Food Safety............         790,800         790,800
Corporate Technology....................         389,229         389,229
------------------------------------------------------------------------

    The assessment rate recommended by the Board was derived by 
considering the anticipated 30 percent production increase in the next 
three years, anticipated expenditures plus additional program expenses, 
current production level, and maintaining adequate operating reserve 
funds. In its recommendation, the Board utilized an estimate of 
1,835,290,000 pounds of assessable almonds for the 2016-17 crop year. 
If realized, this would provide estimated assessment revenue of 
$62,262,213, which reflects credit-back reimbursements and organic 
exemptions. In addition, it is anticipated that $20,907,722 will be 
provided by other sources, including interest income, Market Access 
Program (MAP) funds, and operating reserve funds. When combined, 
revenue from these sources would be adequate to cover budgeted 
expenses.
    Section 981.81 of the order authorizes the Board to maintain 
operating reserve funds consisting of an administrative-research 
portion and a marketing promotion portion, and states that the amount 
allocated to each portion shall not exceed six months' budgeted 
expenses for that activity area. Funds in the reserve at the end of the 
2016-17 crop year are estimated to be approximately $16,581,222, well 
within the amount permitted by the order.
    The proposed assessment rate would continue in effect until July 
31, 2019. Beginning August 1, 2019, the assessment rate would return to 
$0.03 and would continue in effect indefinitely unless modified, 
suspended, or terminated by USDA upon recommendation and information 
submitted by the Board or other available information.
    Although this assessment rate would be in effect for a specified 
period, the Board would continue to meet prior to or during each crop 
year to recommend a budget of expenses and consider recommendations for 
modification of the assessment rate. The dates and times of Board 
meetings are available from the Board or USDA. Board meetings are open 
to the public and interested persons may express their views at these 
meetings. USDA would evaluate Board recommendations and other available 
information to determine whether modification of the assessment rate is 
needed. Further rulemaking would be undertaken as necessary. The 
Board's 2016-17 budget and those for subsequent crop years would be 
reviewed and, as appropriate, approved by USDA.

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 proposed rule 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 
businesses 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 6,800 almond growers in the production area 
and approximately 100 handlers subject to regulation under the 
marketing order.

[[Page 46618]]

Small agricultural producers are defined by the Small Business 
Administration (SBA) 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 $7,500,000 (13 CFR 121.201).
    The National Agricultural Statistics Service (NASS) reported in its 
2012 Agricultural Census that there were 6,841 almond farms in the 
production area (California), of which 6,204 had bearing acres. The 
following computation provides an estimate of the proportion of 
producers (farms) and agricultural service firms (handlers) that would 
be considered small under the SBA definitions.
    The NASS Census data indicates that out of the 6,204 California 
farms with bearing acres of almonds, 4,471 (72 percent) have fewer than 
100-bearing acres.
    In its most recently reported crop year (2014), NASS reported an 
average yield of 2,150 pounds per acre, and a season average grower 
price of $3.19 per pound. A 100-acre farm with an average yield of 
2,150 pounds per acre would produce about 215,000 pounds of almonds. At 
$3.19 per pound, that farm's production would be valued at $685,850.
    Since Census of Agriculture indicates that the majority of 
California's almond farms are smaller than 100 acres, it could be 
concluded that the majority of growers had annual receipts from the 
sale of almonds in 2014-15 of less than $685,850, well below the SBA 
threshold of $750,000. Thus, over 70 percent of California's almond 
growers would be considered small growers according to SBA's 
definition.
    According to information supplied by the Board, approximately 30 
percent of California's almond handlers shipped almonds valued under 
$7,500,000 during the 2014-15 crop year, and would therefore be 
considered small handlers according to the SBA definition.
    This proposal would increase the assessment rate collected from 
handlers for the 2016-17 through the 2018-19 crop years from $0.03 to 
$0.04 per pound of almonds received. Of the $0.04 per pound assessment, 
60 percent (or $0.024 per pound) would be available as credit-back for 
handlers who conduct their own promotional activities, consistent with 
Sec.  981.441 of the order's regulations and subject to Board approval. 
The Board unanimously recommended 2016-17 expenditures of $69,897,626 
and an assessment rate of $0.04 per pound of almonds received. The 
proposed assessment rate of $0.04 is $0.01 higher than the 2015-16 
rate, and the credit-back portion of $0.024 per pound would be $0.006 
higher than the current credit-back portion of $0.018. The quantity of 
assessable almonds for the 2016-17 crop year is estimated at 
1,835,290,000 pounds.
    This would provide estimated assessment revenue of $62,262,213, 
which reflects credit-back reimbursements and organic exemptions. In 
addition, it is anticipated that $20,907,722 will be provided by other 
sources, including interest income, MAP funds, and operating reserve 
funds. When combined, revenue from these sources would be adequate to 
cover budgeted expenses.
    The major expenditures recommended by the Board for the 2016-17 
crop year include $8,404,000 for Operations Expenses, $1,000,000 for 
Board AIM Initiatives, $5,625,000 for Crop of Choice Initiatives, 
$2,000,000 for Reputation Management, $1,843,331 for Production 
Research, $1,039,790 for Environmental Research, $1,640,000 for 
Scientific Affairs/Nutrition, $38,583,756 for Global Market 
Development, $5,100,000 for Nut of Choice Initiatives, $1,045,500 for 
Technical & Regulatory Affairs, $2,436,220 for Industry Services, 
$790,800 for Almond Quality & Food Safety, and $389,229 for Corporate 
Technology.
    Budgeted expenses for these items in 2015-16 were $7,904,000 for 
Operations Expenses, $1,500,000 for Board AIM Initiatives, $0 for Crop 
of Choice Initiatives, $1,826,350 for Reputation Management, $1,843,331 
for Production Research, $1,039,790 for Environmental Research, 
$1,640,000 for Scientific Affairs/Nutrition, $38,583,756 for Global 
Market Development, $0 for Nut of Choice Initiatives, $1,045,500 for 
Technical & Regulatory Affairs, $2,436,220 for Industry Services, 
$790,800 for Almond Quality & Food Safety, and $389,229 for Corporate 
Technology.
    The Board estimates a production increase of thirty percent, or 600 
million pounds, by the 2019-20 crop year. This increase is nearly as 
much as their largest market currently consumes. Increased market 
development investment, as well as new marketing programs will be 
required to successfully market the additional supply. Additional 
investment in research is also needed to address concerns such as: 
Changing water supply and quality systems; air quality and how it 
relates to harvesting, pesticide, and energy use; and bee health. 
Accordingly, the three-year higher assessment rate is needed to fund 
the Board's new Nut of Choice marketing program and Crop of Choice 
research activities. The Board anticipates that by the 2019-20 crop 
year, the increased production assessed at the reinstated $0.03 per 
pound rate should generate sufficient revenue to cover the anticipated 
expenditures at that time.
    Prior to arriving at this budget and assessment rate, the Board 
held a strategic planning session in February 2016. The Board also 
considered recommendations made from its various committees including 
the Global Market Development Committee, Production Research Committee, 
and Environmental Committee. Alternative expenditure levels were 
discussed, based upon the relative value of various activities to the 
almond industry. The Board ultimately determined that 2016-17 
expenditures of $69,897,626 were appropriate, and the recommended 
assessment rate plus, income from other sources and operation reverse 
funds, would generate sufficient revenue to meet its expenses.
    A review of historical information and preliminary information 
pertaining to the upcoming crop year indicates that the grower price 
for the 2016-17 season could range between $3.21 and $3.19 per pound of 
almonds. Therefore, the estimated assessment revenue for the 2016-17 
crop year (disregarding any amounts credited pursuant to Sec.  981.41 
and Sec.  981.441) as a percentage of total grower revenue could range 
between 1.24 and 1.25 percent, respectively.
    This action would increase the assessment obligation imposed on 
handlers. While assessments impose some additional costs on handlers, 
the costs are minimal and uniform on all handlers. Some of the 
additional costs may be passed on to growers. However, these costs 
would be offset by the benefits derived by the operation of the 
marketing order. In addition, the Board's meeting was widely publicized 
throughout the California almond industry and all interested persons 
were invited to attend the meeting and participate in Board 
deliberations on all issues. Like all Board meetings, the April 12, 
2016, meeting was a public meeting and all entities, both large and 
small, were able to express views on this issue. Finally, interested 
persons are invited to submit comments on this proposed rule, including 
the regulatory and informational impacts of this action on small 
businesses.
    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the order's information collection requirements have been 
previously approved by the Office of

[[Page 46619]]

Management and Budget (OMB) and assigned OMB No. 0581-0178 (Vegetable 
and Specialty Crops.) No changes in those requirements are necessary as 
a result of this action. Should any changes become necessary, they 
would be submitted to OMB for approval.
    This proposed rule would impose no additional reporting or 
recordkeeping requirements on either small or large California almond 
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.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this action.
    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/rules-regulations/moa/small-businesses. Any questions 
about the compliance guide should be sent to Antoinette Carter at the 
previously-mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    A 15-day comment period is provided to allow interested persons to 
respond to this proposed rule. Fifteen days is deemed appropriate 
because: (1) The 2016-17 crop year begins on August 1, 2016, and the 
marketing order requires that the rate of assessment for each crop year 
apply to all assessable almonds handled during such crop year; (2) the 
Board needs to have sufficient funds to pay its expenses which are 
incurred on a continuous basis; and (3) handlers are aware of this 
action which was unanimously recommended by the Board at a public 
meeting.

List of Subjects in 7 CFR Part 981

    Almonds, Marketing agreements, Nuts, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 7 CFR part 981 is 
proposed to be 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 981.343 is revised to read as follows:


Sec.  981.343  Assessment rate.

    For the period August 1, 2016, through July 31, 2019, the 
assessment rate shall be $0.04 per pound for California almonds. Of the 
$0.04 assessment rate, 60 percent per assessable pound is available for 
handler credit-back. On and after August 1, 2019, an assessment rate of 
$0.03 per pound is established for California almonds. Of the $0.03 
assessment rate, 60 percent per assessable pound is available for 
handler credit-back.

    Dated: July 12, 2016.
Elanor Starmer,
Administrator, Agricultural Marketing Service.
[FR Doc. 2016-16814 Filed 7-15-16; 8:45 am]
BILLING CODE 3410-02-P