[Federal Register Volume 83, Number 77 (Friday, April 20, 2018)]
[Proposed Rules]
[Pages 17506-17509]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-08249]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Doc. No. AMS-SC-17-0084; SC18-981-1 PR]


Almonds Grown in California; Adjusted Kernel Weight Computation

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would implement a recommendation from the 
Almond Board of California (Board) to

[[Page 17507]]

revise the adjusted kernel weight computation currently prescribed 
under the Marketing Order for almonds grown in California. In addition, 
this action would allow adjustments to the calculated percentages for 
foreign material, excess moisture, or inedible kernels so that the sum 
of the percentages for the specified measurements would equal 100 
percent.

DATES: Comments must be received by May 21, 2018.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. 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 proposal 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 action, pursuant to 5 U.S.C. 553, 
proposes an amendment to regulations issued to carry out a marketing 
order as defined in 7 CFR 900.2(j). This proposed rule is issued under 
Marketing Order No. 981, as amended (7 CFR part 981), regulating the 
handling of almonds grown in California. Part 981 (referred to as 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 Board locally administers the Order and is comprised of 
growers and handlers operating within California.
    The Department of Agriculture (USDA) is issuing this proposed rule 
in conformance with Executive Orders 13563 and 13175. This action falls 
within a category of regulatory actions that the Office of Management 
and Budget (OMB) exempted from Executive Order 12866 review. 
Additionally, because this proposed 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' '' (February 2, 2017).
    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This proposed 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 proposed rule invites comments on revisions to the adjusted 
kernel weight computation currently prescribed for almonds under the 
Order. This proposal would change the way adjusted kernel weight is 
expressed by requiring calculation of percentages for specified 
measurements to round the decimal to the nearest thousandth rather than 
the current hundredth. In addition, this proposed rule would allow 
adjustments to the calculated percentages for foreign material, excess 
moisture, or inedible kernels so that the sum of the percentages for 
the specified measurements would equal 100 percent. The Board 
unanimously recommended these changes at its December 4, 2017, meeting.
    Section 981.42 provides authority for quality control regulations. 
Paragraph (a) of that section requires that each handler shall have the 
inspection agency determine the percentage of inedible kernels received 
by that handler and report such determination to the Board.
    Section 981.442(a)(1) prescribes that each handler shall have a 
representative sample drawn from each lot of any variety of incoming 
almonds that the handler receives. Section 981.442(a)(3) prescribes 
that each such sample shall be analyzed by or under surveillance of the 
Federal-State Inspection Service (or, when specifically designated, the 
Federal Inspection Service) to determine the kernel content and the 
portion of inedible kernels in the sample. The inspection agency 
prepares a report showing, among other things, the total adjusted 
kernel weight. This report is submitted by the inspection agency to the 
Board and the handler.
    Section 981.401(a) defines adjusted kernel weight. Section 
981.401(b) provides examples of the computation that is used to 
determine adjusted kernel weight. This computation includes a 
calculation of percentages for specified measurements of edible 
kernels, inedible kernels, foreign material, and excess moisture. The 
table of examples contained in Sec.  981.401(b) shows percentages 
rounded to the nearest tenth and the nearest hundredth decimal place. 
However, in practice, the calculated percentages are currently being 
rounded to the nearest hundredth decimal place.
    Currently, the inspection agency utilizes a computer-based database 
program that computes and totals the percentages for the specified 
measurements. As part of the program's computation process, it 
automatically makes adjustments, when needed, so that the total of the 
percentages equals 100 percent. This program has been used for several 
years, and the industry is accustomed to receiving reports from the 
inspection agency that show the 100-percent summed total.
    In early 2017, the USDA inspection service began testing a new web-
based program that will replace the computer-based program described 
above. During this testing, USDA discovered that, due to the rounding 
method used by the new program, the sum of the percentages occasionally 
did not equal 100 percent. It was further determined during testing 
that having the new program round the decimal to the nearest 
thousandth, rather than the nearest hundredth as currently provided in 
the Order, would produce more accurate results.

[[Page 17508]]

    The new program could also make automatic minor adjustments to the 
percentage computations for foreign material, excess moisture, or 
inedible kernels so that the sum of the percentages would always equal 
100 percent. This allowance for automatic adjustments of these 
specified measurements aligns with industry practice that has existed 
for many years.
    As a result of these test results, the Board determined that 
rounding the decimal to the nearest thousandth rather than the current 
hundredth would provide a more accurate computed percentage. In 
addition, allowing the program to make adjustments to the calculated 
percentages for foreign material, excess moisture, or inedible kernels 
would align the requirements under the Order with current industry 
practices, ensuring the continuance of longstanding reporting practices 
and transparency in the program.

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 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 almond handlers subject to regulation under the 
Order. Small agricultural service firms are defined by the Small 
Business Administration (SBA) as those having annual receipts of less 
than $7,500,000, and small agricultural producers are defined as those 
having annual receipts of less than $750,000 (13 CFR 121.201).
    The National Agricultural Statistics Service (NASS) reported in its 
most recent (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 agricultural 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 (2016), 
NASS reported an average yield of 2,280 pounds per acre and a season 
average grower price of $2.44 per pound. A 100-acre farm with an 
average yield of 2,280 pounds per acre would produce about 228,000 
pounds of almonds. At $2.44 per pound, that farm's production would be 
valued at $556,320. The Census of Agriculture indicates that the 
majority of California's almond farms are smaller than 100 acres; 
therefore, it could be concluded that the majority of growers had 
annual receipts from the sale of almonds in 2016-17 of less than 
$556,320, which is below the SBA threshold of $750,000. Thus, over 70 
percent of California's almond growers would be classified as small 
growers according to SBA's definition.
    To estimate the proportion of almond handlers that would be 
considered small businesses, it was assumed that the unit value per 
shelled pound of almonds exported in a particular year could serve as a 
representative almond price at the handler level. A unit value for a 
commodity is the value of exports divided by the quantity. Data from 
the Global Agricultural Trade System database of USDA's Foreign 
Agricultural Service showed that the value of almond exports from 
August 2016 to July 2017 (combining shelled and inshell almonds) was 
$4.072 billion. The quantity of almond exports over that time period 
was 1.406 billion pounds, combining shelled exports and the shelled 
equivalent of inshell exports. Dividing the export value by the 
quantity yields a unit value of $2.90 per pound. Subtracting this 
figure from the NASS 2016 estimate of season average grower price per 
pound ($2.44) yields $0.46 per pound as a representative grower-handler 
margin. Applying the $2.90 representative handler price per pound to 
2016-17 handler shipment quantities provided by the Board showed that 
approximately 40 percent of California's almond handlers shipped 
almonds valued under $7,500,000 during the 2016-17 crop year and would 
therefore be considered small handlers according to the SBA definition.
    This proposed rule would revise the adjusted kernel weight 
computation in Sec.  981.401 by requiring calculation of the 
percentages for specified measurements to round the decimal to the 
nearest thousandth rather than the current hundredth. In addition, this 
action would allow adjustments to the calculated percentages for 
foreign material, excess moisture, or inedible kernels so that the sum 
of the percentages for the specified measurements would equal 100 
percent. Requiring rounding of the decimal to the nearest thousandth 
would provide for a more accurate computed percentage. In addition, 
allowing adjustments to the foreign material, excess moisture, or 
inedible kernel measurements would align the Order with current 
industry practices, ensuring the continuance of longstanding reporting 
practices and transparency in the program. Authority for this action is 
provided in Sec.  981.42(a) of the Order. The Board recommended this 
action at a meeting on December 4, 2017.
    It is not anticipated that this action would impose additional 
costs on handlers or growers, regardless of size. The proposed changes 
are intended to align provisions of the Order with current industry 
practices. This proposed rule is not expected to change handler 
inspection costs, as handlers are currently required to have all lots 
inspected to determine kernel content.
    The Board considered alternatives to this action, including not 
changing the current computation procedures. Prior to this 
recommendation, the Board's Almond Quality, Food Safety and Services 
Committee (Committee) reviewed the program, surveyed handlers, and 
determined that not changing the computation procedures to align with 
current industry practices would cause disruption in the industry. 
Therefore, the Committee unanimously recommended this action to the 
Board at a meeting on November 16, 2017.
    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 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 proposed rule would 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

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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 proposed 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 December 4, 2017, meeting was a public meeting, and all 
entities, both large and 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 Committee met 
on November 16, 2017, 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 
proposed rule, including the regulatory and information collection 
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.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposal. All written comments timely received will be 
considered before a final determination is made on this matter.

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. In Sec.  981.401, revise the table in paragraph (b) and add 
paragraph (c) to read as follows:


Sec.  981.401  Adjusted kernel weight.

* * * * *
    (b) * * *

----------------------------------------------------------------------------------------------------------------
                                                         Computation No. 1               Computation No. 2
                                                 ---------------------------------------------------------------
                                                   Deliveries with less than 95    Deliveries with 95 percent or
                                                          percent kernels                  more kernels
                                                 ---------------------------------------------------------------
                                                    Percent of        Weight        Percent of        Weight
                                                      sample         (pounds)         sample         (pounds)
----------------------------------------------------------------------------------------------------------------
1. Actual gross weight of delivery..............  ..............          10,000  ..............          10,000
2. Percent of edible kernel weight..............          53.000  ..............          84.000  ..............
3. Less weight loss in processing \1\...........           1.000  ..............           0.000  ..............
4. Less excess moisture of edible kernels                  1.060  ..............           1.680  ..............
 (excess moisture x line 2).....................
5. Net percent shell out (line 2 - lines 3 and            50.940  ..............          82.320  ..............
 4).............................................
6. Net edible kernels (line 5 x line 1).........  ..............           5,094  ..............           8,232
7. Percent of inedible kernels (from sample)....          12.000  ..............          12.000  ..............
8. Less excess moisture of inedible kernels                0.240  ..............           0.240  ..............
 (excess moisture from sample x line 7).........
9. Net percent inedible kernels (line 7 - line            11.760  ..............          11.760  ..............
 8).............................................
10. Total inedible kernels (line 9 x line 1)....  ..............           1,176  ..............           1,176
11. Adjusted kernel weight (line 6 + line 10)...  ..............           6,270  ..............           9,408
----------------------------------------------------------------------------------------------------------------
\1\ Only applies to deliveries with less than 95 percent kernels.

    (c) Computation Adjustments. If applicable, adjustments shall be 
made by rounding such that the sample computation percentages total 
equals 100 percent. Rounding adjustments shall be made as follows: 
First adjust the foreign material percentage; if there is no foreign 
material in the sample, then adjust the excess moisture percentage; or 
if there is no foreign material or excess moisture in the sample, 
adjust the inedible kernels percentage.

    Dated: April 16, 2018.
Bruce Summers,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 2018-08249 Filed 4-19-18; 8:45 am]
 BILLING CODE 3410-02-P