[Federal Register Volume 81, Number 159 (Wednesday, August 17, 2016)]
[Rules and Regulations]
[Pages 54719-54721]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-19625]



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  Federal Register / Vol. 81, No. 159 / Wednesday, August 17, 2016 / 
Rules and Regulations  

[[Page 54719]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Doc. No. AMS-SC-16-0047; SC16-981-3 IR]


Almonds Grown in California; Change in Quality Control 
Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim rule with request for comments.

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

SUMMARY: This rule implements a recommendation from the Almond Board of 
California (Board) to change the quality control requirements currently 
prescribed under the California almond marketing order (order). The 
order regulates the handling of almonds grown in California. The Board 
locally administers the order and is comprised of growers and handlers 
operating within California. This rule relaxes incoming quality 
requirements by increasing the inedible kernel tolerance from 0.50 
percent to 2 percent. This relaxation decreases California almond 
handlers' disposition obligation. This change also allows handlers more 
flexibility in their operations while continuing to maintain quality 
control and ensuring compliance with the order's requirements.

DATES: Effective August 18, 2016; comments received by October 17, 2016 
will be considered prior to issuance of 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 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. 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: Andrea Ricci, Marketing Specialist or 
Jeffrey 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: 
[email protected] or [email protected].
    Small businesses may request information on complying with this 
regulation by contacting Richard Lower, 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 rule is issued under Marketing Order 
No. 981, as amended (7 CFR part 981), regulating the handling of 
almonds grown in California, hereinafter referred to as the ``order.'' 
The order is effective under the Agricultural Marketing Agreement Act 
of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the 
``Act.''
    The Department of Agriculture (USDA) is issuing this rule in 
conformance with Executive Orders 12866, 13563, and 13175.
    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 implements a recommendation from the Almond Board of 
California (Board) to change the quality control requirements currently 
prescribed under the order. This rule relaxes incoming quality 
requirements by increasing the inedible kernel tolerance from 0.50 
percent to 2 percent. This relaxation would decrease California almond 
handler's disposition obligation. This will allow handlers more 
flexibility in their operations while continuing to maintain quality 
control. In addition, this change will ensure that the reporting and 
outgoing quality requirements of the order are met. The Board 
unanimously recommended this change at its April 12, 2016, meeting.
    Section 981.42 of the almond marketing order provides authority for 
quality control regulations. Paragraph (a) of that section requires 
that almonds must be inspected prior to processing to determine the 
percentage of inedible kernels in each lot. Inedible kernels are 
defined in Sec.  981.408. The Board, with the approval of the 
Secretary, may change the approved percentage of inedible kernels for 
any crop year. Inedible kernels in excess of the approved percentage of 
the kernel weight constitute the handlers' inedible disposition weight 
obligation. Handlers must satisfy their obligation by disposing of 
inedible kernels in Board-accepted, non-human outlets such as animal 
feed or oil.
    Section 981.442(a)(4)(i) of the order's rules and regulations 
currently specifies that the weight of inedible kernels in excess of 
0.50 percent of kernel weight shall constitute the handler's 
disposition obligation. Pursuant to Sec.  981.442(a)(5), handlers must 
meet their disposition obligation by delivering inedible kernels to 
crushers, feed manufacturers, feeders, or dealers in nut wastes on 
record with the Board as accepted users.

[[Page 54720]]

    In the past several years, the total inedible kernel percentages 
have been trending lower. This is partially due to good agricultural 
practices used by growers and better technologies in handler 
facilities. At the same time, the market value of almonds has increased 
significantly. As a result, some Board-accepted outlets have started to 
clean and repurpose the disposition obligation delivered by handlers. 
After the inedible disposition is delivered to Board-accepted outlets, 
these accepted outlets provide to the Board a record of disposition 
receipt, which indicates what was received by the accepted outlet from 
handlers and how the accepted outlet disposed of the inedible 
disposition. However, such record of disposition receipt does not 
indicate whether the almonds have been pasteurized or treated for human 
consumption. Thus the action of repurposing has led to concern that the 
order's outgoing quality requirements are not being met.
    By increasing the inedible kernel tolerance, handlers' disposition 
obligation will decrease or become zero, therefore reducing the 
quantity of product delivered to those specified outlets. This action 
will also provide handlers with more control over low quality product 
allowing one handler the flexibility to transfer the larger portion of 
low quality product to another handler for further cleaning. This 
action will require completion of an interhandler transfer form and 
help with traceability of low quality product. It also will help ensure 
that any product destined for human consumption was in compliance with 
the pertinent regulations under the order.

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 
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. 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.
    For the almond industry's 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, which is 
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 rule revises Sec.  981.442(a)(4)(i) of the order's 
administrative rules and regulations regarding inedible kernel 
tolerance. Specifically, this action increases the inedible kernel 
tolerance from 0.50 percent to 2 percent, effectively decreasing 
handler's disposition obligation. Authority for this action is provided 
in Sec.  981.42(a) of the order.
    Regarding the impact of this action on affected entities, 
increasing the inedible kernel tolerance reduces disposition obligation 
on handlers and provides handlers with more flexibility and control 
over the poor quality product. This rule is not expected to change 
handler inspection costs, as handlers currently are required to have 
all lots inspected to determine the percentage of inedible kernels.
    The Board considered alternatives to this action. It formed a 
taskforce to examine the current inedible program and investigate 
alternatives. The taskforce reviewed the program and recent data, 
surveyed handlers, and reported their findings to the Almond Quality 
and Food Safety Committee (Committee). Recent data showed that the 
overall inedible kernel percentages have been trending lower, 
regardless of crop size. Surveyed handlers who did not agree with the 
change raised the concern that increasing the tolerance could result in 
more poor quality almonds entering the market. The Committee discussed 
the concerns raised and concluded that changing the tolerance would 
give handlers more flexibility in maintaining quality. After discussing 
the taskforce's findings, the Committee unanimously recommended this 
increase in inedible tolerance to the Board.
    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 Management and Budget (OMB) and 
assigned OMB No. 0581-0178 (Vegetable and Specialty Crops.) No changes 
are necessary in those requirements as a result of this action. Should 
any changes become necessary, they would be submitted to OMB for 
approval.
    This rule will not impose any additional reporting or recordkeeping 
requirements on either small or large 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.
    In addition, USDA has not identified any relevant Federal rules 
that duplicate, overlap or conflict with this rule.
    Further, the Board's meeting was widely publicized throughout the 
almond industry and all interested persons were invited to attend the 
meeting and participate in Board deliberations. Like all Board 
meetings, the April 12, 2016, meeting was a public meeting and all 
entities, both large and

[[Page 54721]]

small, were able to express their views on this issue.
    Also, the Board has a number of appointed committees to review 
certain issues and make recommendations to the Board. The Board's 
Almond Quality and Food Safety Committee met on April 5, 2016, and 
discussed this issue in detail. That meeting was also a public meeting, 
and both large and small entities were able to participate and express 
their views. 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/rules-regulations/moa/small-businesses. Any questions 
about the compliance guide should be sent to Richard Lower at the 
previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    This rule invites comments on a change to the quality control 
requirements currently prescribed under the order. Any comments timely 
received will be considered prior to finalization of this rule.
    After consideration of all relevant material presented, including 
the Board'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) This rule relaxes the current rules and regulations; (2) 
this rule should be in place in time for the beginning of the crop year 
on August 1; (3) the Board unanimously recommended these changes at a 
public meeting and interested parties had an opportunity to provide 
input; and (4) this rule provides a 60-day comment period and any 
comments timely received will be considered prior to finalization of 
this rule.

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 
amended as follows:

PART 981--ALMONDS GROWN IN CALIFORNIA

0
1. The authority citation for 7 CFR part 981 continues to read as 
follows:

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

0
2. Section 981.442(a)(4)(i) is revised to read as follows:


Sec.  981.442  Quality Control.

    (a) * * *
    (4) Disposition obligation. (i) Beginning August 1, 2016, the 
weight of inedible kernels in excess of 2 percent of kernel weight 
reported to the Board of any variety received by a handler shall 
constitute that handler's disposition obligation. For any almonds sold 
inshell, the weight may be reported to the Board and the disposition 
obligation for that variety reduced proportionately.
* * * * *

    Dated: August 12, 2016.
Elanor Starmer,
Administrator, Agricultural Marketing Service.
[FR Doc. 2016-19625 Filed 8-16-16; 8:45 am]
 BILLING CODE 3410-02-P