[Federal Register Volume 82, Number 12 (Thursday, January 19, 2017)]
[Rules and Regulations]
[Pages 6210-6212]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-00589]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

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


Almonds Grown in California; Change in Quality Control 
Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Affirmation of interim rule as final rule.

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SUMMARY: The Department of Agriculture (USDA) is adopting, as a final 
rule, without change, an interim rule implementing a recommendation 
from the Almond Board of California (Board) that relaxed the quality 
control requirements prescribed under the California almond marketing 
order (order). The Board locally administers the order and is comprised 
of growers and handlers operating within California. The interim rule 
relaxed 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 January 20, 2017.

FOR FURTHER INFORMATION CONTACT: Andrea Ricci, Marketing Specialist or 
Jeffrey Smutny, Regional Director, California Marketing Field Office,

[[Page 6211]]

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 obtain information on complying with this and 
other marketing order regulations by viewing a guide at the following 
Web site: http://www.ams.usda.gov/rules-regulations/moa/small-businesses; or 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.
    Section 981.442 of the order regulates almond quality, including 
the percentage of inedible (low quality) kernels required to be 
disposed of by handlers. Previously, the weight of inedible kernels in 
excess of 0.50 percent of kernel weight of almonds received by each 
handler constituted the handler's disposition obligation. Handlers must 
satisfy their obligation by disposing of the inedible kernels in Board-
accepted, non-human outlets such as animal feed or oil.
    In the past several years, 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 of the Board-accepted outlets have 
started to clean and repurpose almonds disposed under the obligation 
causing concern that product is being sold for human consumption 
without following the order's outgoing quality requirements. Increasing 
the inedible kernel tolerance to 2 percent provides handlers more 
control over low quality product, helping ensure any product destined 
for human consumption is compliant with the order's outgoing quality 
requirements. In an interim rule published in the Federal Register on 
August 17, 2016, and effective on August 18, 2016, (81 FR 54719, Doc. 
No. AMS-SC-16-0047, SC16-981-3 IR), Sec.  981.442(a)(4)(i) was amended 
by changing the disposition obligation from 0.5 percent to 2 percent. 
This rule continues in effect that action.

Final 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 final 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 (2015), 
NASS reported an average yield of 2,130 pounds per acre, and a season 
average grower price of $2.84 per pound. A 100-acre farm with an 
average yield of 2,130 pounds per acre would produce about 213,000 
pounds of almonds. At $2.84 per pound, that farm's production would be 
valued at $604,920. 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 2015 of less than $604,920, 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 continues in effect the revision of Sec.  
981.442(a)(4)(i), which relaxed incoming quality requirements by 
increasing the inedible kernel tolerance from 0.50 percent to 2 
percent. This relaxation decreases California almond handlers' 
disposition obligation, and also allows handlers more flexibility in 
their operations while continuing to maintain quality control and 
ensuring compliance with the order's requirements. 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 low 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.
    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. 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

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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 small, were able to 
express their views on this issue.
    Comments on the interim rule were required to be received on or 
before October 17, 2016. Two comments were received. One commenter 
stated that this change will allow almond handlers to have more 
flexibility with their operations. The other commenter stated the 
increase in tolerance should lead to a decrease in price. Marketing 
orders do not regulate price. Therefore, for the reasons given in the 
interim rule, we are adopting the interim rule as a final rule, without 
change.
    To view the interim rule, go to: https://www.regulations.gov/docket?D=AMS-SC-16-0047.
    This action also affirms information contained in the interim rule 
concerning Executive Orders 12866, 12988, 13175, and 13563; the 
Paperwork Reduction Act (44 U.S.C. Chapter 35); and the E-Gov Act (44 
U.S.C. 101).
    After consideration of all relevant material presented, it is found 
that finalizing the interim rule, without change, as published in the 
Federal Register (81 FR 54719) will tend to effectuate the declared 
policy of the Act.

List of Subjects in 7 CFR Part 981

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

PART 981--ALMONDS GROWN IN CALIFORNIA

0
Accordingly, the interim rule that amended 7 CFR part 981 and that was 
published 81 FR 54719 on August 17, 2016, is adopted as a final rule, 
without change.

    Dated: January 9, 2017.
Bruce Summers,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2017-00589 Filed 1-18-17; 8:45 am]
BILLING CODE 3410-02-P