[Federal Register Volume 82, Number 161 (Tuesday, August 22, 2017)]
[Rules and Regulations]
[Pages 39655-39658]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-17641]



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 Rules and Regulations
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  Federal Register / Vol. 82, No. 161 / Tuesday, August 22, 2017 / 
Rules and Regulations  

[[Page 39655]]



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: Final rule.

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

SUMMARY: This rule revises the U.S. Standards for Grades of Shelled 
Walnuts and the U.S. Standards for Grades of Walnuts in the Shell 
issued under the Agricultural Marketing Agreement Act of 1946. The 
Agricultural Marketing Service (AMS) of the Department of Agriculture 
(USDA) is amending the color requirements to include red-colored 
walnuts. In addition, AMS is removing the ``Unclassified'' section. 
These revisions will modernize the standards to more accurately 
represent today's marketing practices and to meet growing consumer 
demand by providing greater marketing flexibility.

DATES: Effective September 21, 2017.

FOR FURTHER INFORMATION CONTACT: David G. Horner, Agricultural 
Marketing Specialist, Specialty Crops Inspection Division, USDA/AMS 
Specialty Crops Program, 100 Riverside Parkway, Suite 101, 
Fredericksburg, VA 22406; telephone (540) 361-1120; fax (540) 361-1199; 
or email [email protected]. Copies of the revised U.S. Standards 
for Grades of Shelled Walnuts and Walnuts in the Shell are available at 
http://www.regulations.gov or http://www.ams.usda.gov/.

SUPPLEMENTARY INFORMATION: The changes in these two sets of standards 
will permit grade certification of red-colored walnut varieties. These 
revisions also affect the grade requirements under the marketing order, 
7 CFR part 984, issued under the Agricultural Marketing Agreement Act 
of 1937 (7 U.S.C. 601-674) and applicable imports.

Executive Orders 12866 and 13563

    This rule does not meet the definition of a significant regulatory 
action contained in section 3(f) of Executive Order 12866, and is not 
subject to review by the Office of Management and Budget (OMB). 
Additionally, because this rule does not meet the definition of a 
significant regulatory action it does not trigger the requirements 
contained in Executive Order 13771. See OMB's Memorandum titled 
``Interim Guidance Implementing Section 2 of the Executive Order of 
January 30, 2017 titled `Reducing Regulation and Controlling Regulatory 
Costs'[thinsp]'' (February 2, 2017). 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.

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 of 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 so small businesses will not 
be unduly or disproportionately burdened. Accordingly, AMS has prepared 
the following final 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 is 
revising these standards to include a new classification for red-
colored walnuts. In addition, AMS is eliminating the ``Unclassified'' 
section. These revisions modernize 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. 
Including red-colored varieties to the walnut grading standards will 
facilitate additional market opportunities for walnut producers and 
other participants in the supply chain. The revision will result in a 
minor change only to the color requirements of the current standards. 
AMS anticipates that there will be little or no additional cost to 
implement this revision. This 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 following analysis. The Small 
Business Administration (SBA) defines small agricultural producers as 
those with annual receipts of less than $750,000 (13 CFR 121.601).
    AMS used crop value per acre to determine the number of bearing 
acres 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 5-year average crop value

[[Page 39656]]

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 5 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 5 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 final 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 United States. 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.
    On November 25, 2016, AMS published a Proposed Rule in the Federal 
Register (81 FR 85164) soliciting comments on its proposal to amend the 
standards to (1) include red-colored walnuts and (2) remove the 
``Unclassified'' section. On March 23, 2017, AMS published a 
``Reopening of the comment period'' in the Federal Register (82 FR 
14832). The extended comment period closed April 24, 2017. To view the 
eight posted comments, please visit http://www.regulations.gov.
    Six commenters supported the changes. One supporter was a trade 
association representing nearly 4,000 family farms, nearly 60,000 jobs, 
and a $1.7 billion walnut industry. The other supporting commenters 
were from the general public. Two of the supporting individuals asked 
for clarification on the following:
     Was there a health hazard in the past, preventing red 
walnuts from being certified to a U.S. grade? No. When the USDA Walnut 
Color Chart was developed in 1967, walnuts came in light to dark amber 
colors. Since then, red varieties of walnuts (e.g., Livermore) have 
been bred and seen increased demand. The standards are being updated to 
reflect the changing market.
     Are red walnuts a type of English walnut? Yes. Red 
walnuts, such as the Livermore variety, are a Juglans Regia cultivar 
with a red seed coat.
     What would prevent the industry from marketing dyed 
walnuts as true red walnuts? Marketing Order 984, which regulates 
walnuts grown in California, prohibits walnuts from being modified in 
any form (over 99 percent of U.S. walnuts are grown in California). In 
addition, the U.S. grade standards have no provision for artificial 
coloring and, therefore, walnuts could not be certified to grade if 
color was added.
    Two commenters, representing the general public, opposed the 
changes. One believed red walnuts should be free from regulations and 
the other believed it would affect the market negatively. The purpose 
of U.S. grade standards is to facilitate the marketing of agriculture 
in the United States and around the world. These revisions come at the 
request of the U.S. walnut industry. In addition, AMS believes these 
revisions would increase supply of red walnuts. Marketing Order 984 
requires walnuts grown in California to be certified to a U.S. grade. 
Once red walnuts can be grade certified, they will become more 
available to domestic and global consumers.
    Based on the above information gathered, AMS is making 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 is making 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 U.S. Standards for Grades of Shelled Walnuts and the U.S. 
Standards for Grades of Walnuts in the Shell will be effective 30 days 
after publication of this rule in the Federal Register.

List of Subjects in 7 CFR Part 51

    Food grades and standards, Fruits, Nuts, Reporting and 
recordkeeping requirements, Vegetables.

    For reasons set forth in the preamble, 7 CFR part 51 is 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. Section 51.2276 is removed and reserved.

0
3. In Sec.  51.2277, paragraph (a) is revised to read as follows:

[[Page 39657]]

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'' color. 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. Section 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 the end of the table and by revising footnote 1 to read as follows:


Sec.  51.2282   Tolerances for color.

* * * * *

                                                    Table II
----------------------------------------------------------------------------------------------------------------
                                                                       Tolerances for color
                                                 ---------------------------------------------------------------
              Color classification                  Darker than                     Darker than
                                                    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. Section 51.2946 is removed and reserved.

0
10. In Sec.  51.2948, paragraph (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.)
* * * * *

0
11. In Sec.  51.2949, paragraph (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 
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.)
* * * * *

0
12. In Sec.  51.2950, paragraph (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 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.)
* * * * *

[[Page 39658]]

Sec.  51.2951   [Removed and reserved]

0
13. Section 51.2951 is removed and reserved.

0
14. In Sec.  51.2954, the table is revised to read as follows:


Sec.  51.2954   Tolerances for grade defects.

* * * * *

                                          Tolerances for Grade Defects
----------------------------------------------------------------------------------------------------------------
                                                                          Kernel color
                                  External (shell)  Internal (kernel)    based on USDA     Kernel color based on
             Grade                    defects            defects          Walnut Color              red
                                                                             Chart
----------------------------------------------------------------------------------------------------------------
U.S. No. 1.....................  10%, by count,     10% total, by      No tolerance to    ......................
                                  for splits. 5%,    count, including   reduce the
                                  by count, for      not more than 6%   required 70% of
                                  other shell        which are          ``light amber''
                                  defects,           damaged by mold    kernels or the
                                  including not      or insects or      required 40% of
                                  more than 3%       seriously          ``light''
                                  seriously          damaged by other   kernels or any
                                  damaged.           means, of which    larger
                                                     not more than \5/  percentage of
                                                     6\ or 5% may be    ``light amber''
                                                     damaged by         or ``light''
                                                     insects, but no    kernels
                                                     part of any        specified.
                                                     tolerance shall
                                                     be allowed for
                                                     walnuts
                                                     containing live
                                                     insects.
U.S. No. 2.....................  10%, by count,     15% total, by      No tolerance to    ......................
                                  for splits. 10%,   count, including   reduce the
                                  by count, for      not more than 8%   required 60% or
                                  other shell        which are          any specified
                                  defects,           damaged by mold    larger
                                  including not      or insects or      percentage of
                                  more than 5%       seriously          ``light amber''
                                  serious damage     damaged by other   kernels, or any
                                  by adhering        means, of which    specified
                                  hulls.             not more than 5/   percentage of
                                                     8 or 5% may be     ``light''
                                                     damaged by         kernels.
                                                     insects, 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      tolerance for      reduce any
                                  U.S. No. 2.        U.S. No. 2.        percentage of
                                                                        ``light amber''
                                                                        or ``light''
                                                                        kernel specified.
----------------------------------------------------------------------------------------------------------------


    Dated: August 16, 2017.
Bruce Summers,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 2017-17641 Filed 8-21-17; 8:45 am]
 BILLING CODE 3410-02-P