[Federal Register Volume 81, Number 227 (Friday, November 25, 2016)]
[Proposed Rules]
[Pages 85164-85167]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-28253]


 ========================================================================
 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.
 
 ========================================================================
 

  Federal Register / Vol. 81, No. 227 / Friday, November 25, 2016 / 
Proposed Rules  

[[Page 85164]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 51

[Document Number AMS-SC-16-0005, SC-16-331]


U.S. Standards for Grades of Shelled Walnuts and Walnuts in the 
Shell

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: The Agricultural Marketing Service (AMS) of the Department of 
Agriculture (USDA) proposes to revise the U.S. Standards for Grades of 
Shelled Walnuts and the U.S. Standards for Grades of Walnuts in the 
Shell. AMS proposes to include red colored walnuts. In addition, AMS 
proposes to remove the ``Unclassified'' section. The changes will 
modernize the standards, and meet growing consumer demand by providing 
greater marketing flexibility.

DATES: Comments must be submitted on or before January 24, 2017.

ADDRESSES: Interested persons are invited to submit comments to the 
Standardization Branch, Specialty Crops Inspection Division, Specialty 
Crops Program, Agricultural Marketing Service, U.S. Department of 
Agriculture, National Training and Development Center, 100 Riverside 
Parkway, Suite 101, Fredericksburg, Virginia 22406; fax: (540) 361-
1199, or on the Web at: www.regulations.gov. Comments should reference 
the dates and page number of this issue of the Federal Register and 
will be made available for public inspection in the above office during 
regular business hours. All comments submitted in response to this rule 
will be included in the public record and will be made available to the 
public and can be viewed as submitted, including any personal 
information that you provide, on the Internet via http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Contact David G. Horner at the address 
above, or at phone (540) 361-1120; fax (540) 361-1199; or, email 
[email protected]. Copies of the proposed U.S. Standards for 
Grades of Shelled Walnuts and Walnuts in the Shell are available on the 
Internet at http://www.regulations.gov. Copies of the current U.S. 
Standards for Grades of Shelled Walnuts and U.S. Standards for Walnuts 
in the Shell are available on the Specialty Crops Inspection Division 
Web site at https://www.ams.usda.gov/grades-standards/nuts.

SUPPLEMENTARY INFORMATION: 
    The proposed changes permit grade certification of the red variety. 
These revisions also affect the grade requirements under the marketing 
order, 7 CFR parts 984, issued under the Agricultural Marketing 
Agreement Act of 1937 (7 U.S.C. 601-674) and applicable imports.

Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
This rule has been determined to be not significant for purposes of 
Executive Order 12866 and, therefore, has not been reviewed by the 
Office of Management and Budget.

Executive Order 13175

    This action has been reviewed in accordance with the requirements 
of Executive Order 13175, Consultation and Coordination with Indian 
Tribal Governments. The review reveals that this regulation would not 
have substantial and direct effects on Tribal governments and would not 
have significant Tribal implications.

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. It is not intended to have retroactive effect. There 
are no administrative procedures that must be exhausted prior to any 
judicial challenge to the provisions of this rule.

Regulatory Flexibility Act and Paperwork Reduction Act

    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA) (5 U.S.C. 601-612), AMS has considered the 
economic impacts of the revisions to the U.S. Standards for Grades of 
Shelled Walnuts and the U.S. Standards for Grades of Walnuts in the 
Shell. The purpose of the RFA is to structure regulatory actions such 
that small businesses will not be unduly or disproportionately 
burdened. Accordingly, AMS has prepared this initial regulatory 
flexibility analysis.
    The current U.S. walnut standards have four color classifications: 
Extra Light, Light, Light Amber, and Amber. Product that does not meet 
these color standards cannot be certified to a U.S. grade. AMS proposes 
to revise these standards to include certification of red color. In 
addition, AMS proposes eliminating the ``Unclassified'' section. The 
proposed revision modernizes the current grading standards by allowing 
the industry to meet the growing consumer demand for red colored 
walnuts and by promoting better market information and greater 
marketing flexibility within the industry.
    The process of grading improves the functioning of a commodity 
market. Assigning different prices to different product characteristics 
and levels of quality increases opportunities for profitable trade. 
Adding red color to the walnut grading standards will facilitate 
additional market opportunities for walnut producers and other 
participants in the supply chain. The proposed revision will result in 
a minor change to the current standards with the only modification 
being to the color requirements. AMS anticipates that there will be 
little or no additional cost to implement this revision. The proposed 
change applies uniformly to all market participants and will not result 
in disproportionate additional costs being borne by small walnut 
producers or other small businesses.
    To determine the proportion of walnut producers that would be 
considered small, AMS conducted the analysis that follows. Small 
agricultural producers are defined by the Small Business Administration 
(SBA) as those having annual receipts of less than $750,000 (13 CFR 
121.601.
    AMS used crop value per acre to determine the number of bearing 
acres

[[Page 85165]]

required to generate annual sales of $750,000 or more, and came to 136 
bearing acres. To reach this number, AMS divided the total crop value 
measured in dollars by the total utilized production measured in tons. 
Using annual National Agricultural Statistics Service (NASS) data for 
the years 2010 to 2014, the five-year average crop value was 
$1,507,478,000; utilized production was 504,800 tons; and grower price 
was $2,982 per ton. AMS multiplied the price by yield to find the crop 
value per acre of $5,670 on average over five years. Finally, AMS 
divided the SBA-defined annual sales threshold of $750,000 by value per 
acre, which resulted in 136 acres.
    The NASS Agricultural Census is conducted every five years and in 
2012 showed that 87 percent of walnut farming operations in the U.S. 
fell into its Census category of ``under 100 bearing acres'' of 
walnuts. AMS estimates that the proportion of walnut growers that 
qualify as small businesses under the SBA definition is likely to be 
close to 90 percent, given the probable exclusion in the ``under 100 
bearing acres'' Census category of walnut producers with bearing 
acreage between 100 and 136. These small growers will not be 
disproportionately affected by the proposed rule as all changes to the 
standards will be applied uniformly to all market participants.
    In August 2015, the Grades and Standards Committee of the 
California Walnut Board and Commission voted unanimously to revise the 
U.S. walnut standards to include non-amber cultivars such as red 
colored varieties. More than 99 percent of U.S. walnuts are produced in 
California. Addition of an expanded color certification grade will 
encourage greater revenue to flow into the industry due to greater 
marketing opportunities for red colored nuts. Revising the current 
grading standards to include red walnuts will come at a minimal cost to 
the industry. The benefits of modernized grading standards, which 
include better market information and greater marketing flexibility, 
exceed the minor costs to market participants of implementing this 
revision to the U.S. standards for walnuts.

Background

    The current U.S. walnut standards only permit the following four 
colors: Extra Light, Light, Light Amber, and Amber. However, consumer 
demand is growing for red walnuts in the U.S. In China, the Livermore 
variety (a red colored walnut) is very desirable. U.S. growers and 
companies expect sales to continue rising domestically and in China, 
especially once red walnuts are permitted grade certification.
    To address anticipated consumer needs, the Grades and Standards 
Committee of the California Walnut Board and Commission voted 
unanimously in August 2015 to revise the U.S. walnut standards to 
include non-amber cultivars, beginning with the Livermore variety. 
Later, the California Walnut Board and Commission sent an official 
letter to the AMS administrator formally requesting the addition of red 
colored varieties.
    Therefore, AMS proposes to make the following revisions in the U.S. 
Standards for Grades of Shelled Walnuts:
     Sec.  51.2276 Color chart: Removed and reserved. The 
information in this section regarding the U.S.D.A. Walnut Color Chart 
is obsolete.
     Sec.  51.2277 U.S. No. 1(a): Revised to include red 
walnuts.
     Sec.  51.2278 U.S. Commercial (a): Revised to include red 
walnuts.
     Sec.  51.2279 Unclassified: Removed and reserved. AMS is 
removing this section in all standards as they are revised, as it is no 
longer considered necessary.
     Sec.  51.2281 Color classifications: The section is 
reorganized into subparts (a) and (b) to include red walnuts.
     Sec.  51.2282 Table II: Revised to include red walnuts.
     Sec.  51.2283 Off color: Revised to include red walnuts.
    In addition, AMS proposes to make the following revisions in the 
U.S. Standards for Grades of Walnuts in the Shell:
     Sec.  51.2946 Color chart: Removed and reserved. This 
section is now redundant and no longer needed.
     Sec.  51.2948 U.S. No. 1 (a), Sec.  51.2949 U.S. No. 2 
(a), and Sec.  51.2950 U.S. No. 3 (a): Subpart (1) was added to subpart 
(a) in each section to accommodate red walnuts.
     Sec.  51.2951 Unclassified: Removed and reserved. AMS is 
removing this section in all standards as they are revised, as it is no 
longer considered necessary.
     Sec.  51.2954 Tolerances for grade defects: Revised to 
include red walnuts.
    The proposed rule provides a 60-day period during which interested 
parties may comment on the revisions to the standards.

List of Subjects in 7 CFR Part 51

    Food grades and standards, Food labeling, Frozen foods, Fruit 
juices, Fruits, Reporting and recordkeeping requirements, Vegetables.

    For reasons set forth in the preamble, 7 CFR part 51 is proposed to 
be amended as follows:

PART 51--[AMENDED]

0
1. The authority citation for part 51 continues to read as follows:

    Authority: 7 U.S.C. 1621-1627.


Sec.  51.2276  [Removed and Reserved]

0
2. In Sec.  51.2276 is removed and reserved:
0
3. In Sec.  51.2277, paragraph (a) is revised to read as follows:


Sec.  51.2277  U.S. No. 1.

* * * * *
    (a) Color shall be specified in connection with this grade in terms 
of ``extra light,'' ``light,'' ``light amber,'' or ``amber'' from the 
USDA Walnut Color Chart or in terms of ``red'' color. The color 
classifications in the USDA Walnut Color Chart shall not apply to 
``red'' color. Furthermore, ``red'' color shall not be mixed with 
``extra light,'' ``light,'' ``light amber,'' or ``amber'' colors. (See 
Sec.  51.2281 and Sec.  51.2282.)
* * * * *
0
4. In Sec.  51.2278, paragraph (a) is revised to read as follows:


Sec.  51.2278  U.S. Commercial.

* * * * *
    (a) Color of walnuts based on the USDA Walnut Color Chart shall be 
not darker than the ``amber'' classification. There are no color 
requirements for ``red'' walnuts. Color may be specified in connection 
with the grade in terms of one of the color classifications in the USDA 
Walnut Color Chart or ``red'' color. ``Red'' color shall not be mixed 
with ``extra light,'' ``light,'' ``light amber,'' or ``amber'' colors. 
(See Sec.  51.2281 and Sec.  51.2282.)
* * * * *


Sec.  51.2279  [Removed and Reserved]

0
5. In Sec.  51.2279 is removed and reserved:
0
6. Revise Sec.  51.2281 to read as follows:


Sec.  51.2281  Color classifications.

    The following classifications are provided to describe the color of 
any lot:
    (a) ``Extra light,'' ``light,'' ``light amber,'' and ``amber:'' The 
portions of kernels in the lot shall be not darker than the darkest 
color permitted in the specified classification as shown on the USDA 
Walnut Color Chart.
    (b) ``Red:'' There are no color requirements.
0
7. In Sec.  51.2282, Table II is amended by adding an entry for ``Red'' 
to read as follows:

[[Page 85166]]

Sec.  51.2282  Tolerances for color.

* * * * *

                                                    Table II
----------------------------------------------------------------------------------------------------------------
                                                    Darker than                     Darker than
              Color classification                  extra light     Darker than     light amber     Darker than
                                                        \1\          light \1\          \1\          amber \1\
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
Red.............................................  ..............  ..............  ..............  ..............
----------------------------------------------------------------------------------------------------------------
\1\ See illustration of this term on USDA Walnut Color Chart.

* * * * *
0
8. Revise Sec.  51.2283 to read as follows:


Sec.  51.2283  Off color.

    The term ``off color'' is not a color classification, but shall be 
applied to any lot which fails to meet the requirements of the 
``amber'' classification when applying the color classifications in the 
USDA Walnut Color Chart. Off color shall not be used for ``red'' color.


Sec.  51.2946  [Removed and reserved].

0
9. In Sec.  51.2946 is removed and reserved.
0
10. In Sec.  51.2948, paragraphs (a) is revised to read as follows:


Sec.  51.2948  U.S. No. 1.

* * * * *
    (a) Kernel color shall be specified in connection with this grade 
in terms of ``extra light,'' ``light,'' ``light amber,'' or ``amber'' 
from the USDA Walnut Color Chart or in terms of ``red'' color. The 
color classifications in the USDA Walnut Color Chart shall not apply to 
``red'' color. Furthermore, ``red'' color shall not be mixed with 
``extra light,'' ``light,'' ``light amber,'' or ``amber'' colors. When 
kernel color is based on the color classifications from the USDA Walnut 
Color Chart, at least 70 percent, by count, of the walnuts have kernels 
which are not darker than ``light amber,'' and which are free from 
grade defects: Provided, That at least four-sevenths of the above 
amount, or 40 percent of the walnuts have kernels which are not darker 
than ``light.'' Higher percentages of nuts with kernels not darker than 
``light amber'' which are free from grade defects and/or higher 
percentages with kernels not darker than ``light'' which are free from 
grade defects, may be specified in accordance with the facts. (See 
Sec.  51.2954 of this part)
0
11. In Sec.  51.2949, paragraphs (a) is revised to read as follows:


Sec.  51.2949  U.S. No. 2.

* * * * *
    (a) Kernel color shall be specified in connection with this grade 
either in terms of ``extra light,'' ``light,'' ``light amber,'' or 
``amber'' from the USDA Walnut Color Chart or in terms of ``red'' 
color. The color classifications in the USDA Walnut Color Chart shall 
not apply to ``red'' color. Furthermore, ``red'' color shall not be 
mixed with ``extra light,'' ``light,'' ``light amber,'' or ``amber'' 
colors. When kernel color is based on the color classifications from 
the USDA Walnut Color Chart, at least 60 percent, by count, of the 
walnuts have kernels which are not darker than ``light amber,'' and 
which are free from grade defects. Higher percentages of nuts with 
kernels not darker than ``light amber'' which are free from grade 
defects, and/or percentages with kernels not darker than ``light'' 
which are free from grade defects, may be specified in accordance with 
the facts. (See Sec.  51.2954 of this part)
0
12. In Sec.  2950, paragraphs (a) is revised to read as follows:


Sec.  51.2950  U.S. No. 3.

* * * * *
    (a) Kernel color may be specified in connection with this grade 
either in terms of ``light amber'' or ``light'' from the USDA Walnut 
Color Chart or in terms of ``red'' color. The color classifications in 
the USDA Walnut Color Chart shall not apply to ``red'' color. 
Furthermore, ``red'' color shall not be mixed with ``extra light,'' 
``light,'' ``light amber,'' or ``amber'' colors. When kernel color is 
based on the color classifications from the USDA Walnut Color Chart, 
there is no requirement in this grade for the percentage of walnuts 
having kernels which are ``light amber'' or ``light.'' However, the 
percentage, by count, of nuts with kernels not darker than ``light 
amber'' which are free from grade defects and/or the percentage with 
kernels not darker than ``light'' which are free from grade defects, 
may be specified in accordance with the facts. (See Sec.  51.2954 of 
this part)


Sec.  51.2951  [Removed and reserved].

0
13. In Sec.  51.2951 is removed and reserved.
0
14. In Sec.  51.2954 revise the table to read as follows:


Sec.  51.2954  Tolerances for Grade Defects.

* * * * *

                                          Tolerances for Grade Defects
----------------------------------------------------------------------------------------------------------------
                                                                             Kernel color based
            Grade                 External (shell)      Internal (kernel)   on USDA Walnut Color   Kernel color
                                      defects                defects                Chart          based on red
----------------------------------------------------------------------------------------------------------------
U.S. No. 1...................  10%, by count, for     10% total, by count,  No tolerance to       ..............
                                splits. 5%, by         including not more    reduce the required
                                count, for other       than 6% which are     70% of ``light
                                shell defects,         damaged by mold or    amber'' kernels or
                                including not more     insects or            the required 40% of
                                than 3% seriously      seriously damaged     ``light'' kernels
                                damaged.               by other means, of    or any larger
                                                       which not more than   percentage of
                                                       \5/6\ or 5% may be    ``light amber'' or
                                                       damaged by insects,   ``light'' kernels
                                                       but no part of any    specified.
                                                       tolerance shall be
                                                       allowed for walnuts
                                                       containing live
                                                       insects.

[[Page 85167]]

 
U.S. No. 2...................  10%, by count, for     15% total, by count,  No tolerance to       ..............
                                splits. 10%, by        including not more    reduce the required
                                count, for other       than 8% which are     60% or any
                                shell defects,         damaged by mold or    specified larger
                                including not more     insects or            percentage of
                                than 5%t serious       seriously damaged     ``light amber''
                                damage by adhering     by other means, of    kernels, or any
                                hulls.                 which not more than   specified
                                                       \5/8\ or 5% may be    percentage of
                                                       damaged by insects,   ``light'' kernels.
                                                       but no part of any
                                                       tolerance shall be
                                                       allowed for walnuts
                                                       containing live
                                                       insects.
U.S. No. 3...................  Same as above          Same as above         No tolerance to       ..............
                                tolerance for U.S.     tolerance for U.S.    reduce any
                                No. 2.                 No. 2.                percentage of
                                                                             ``light amber'' or
                                                                             ``light'' kernel
                                                                             specified.
----------------------------------------------------------------------------------------------------------------


    Dated: November 18, 2016.
Elanor Starmer,
Administrator, Agricultural Marketing Service.
[FR Doc. 2016-28253 Filed 11-23-16; 8:45 am]
BILLING CODE 3410-02-P