[Federal Register Volume 83, Number 119 (Wednesday, June 20, 2018)]
[Rules and Regulations]
[Pages 28523-28526]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-13272]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

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


Almonds Grown in California; Revision to the Adjusted Kernel 
Weight Computation

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule implements a recommendation from the Almond 
Board of California (Board) to revise the adjusted kernel weight 
computation currently prescribed under the Marketing Order for almonds 
grown in California. In addition, this action allows adjustments to the 
calculated percentages for foreign material, excess moisture, or 
inedible kernels so that the sum of the percentages for the specified 
measurements equals 100 percent.

DATES: Effective July 20, 2018.

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 final rule, pursuant to 5 U.S.C. 553, 
amends regulations issued to carry out a marketing order as defined in 
7 CFR 900.2(j). This final 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 final 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 final 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 final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This final 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 final rule changes 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 final rule allows adjustments to the 
calculated percentages for foreign material, excess moisture, or 
inedible kernels so that the sum of the percentages for the specified 
measurements equals 100 percent. The Board unanimously recommended 
these

[[Page 28524]]

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.
    The new program also makes automatic minor adjustments to the 
percentage computations for foreign material, excess moisture, or 
inedible kernels so that the sum of the percentages always equals 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 provides 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 aligns the 
requirements under the Order with current industry practices, ensuring 
the continuance of longstanding reporting practices and transparency in 
the program.

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 rule 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 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 final rule revises 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

[[Page 28525]]

allows adjustments to the calculated percentages for foreign material, 
excess moisture, or inedible kernels so that the sum of the percentages 
for the specified measurements equals 100 percent. Requiring rounding 
of the decimal to the nearest thousandth provides for a more accurate 
computed percentage. In addition, allowing adjustments to the foreign 
material, excess moisture, or inedible kernel measurements aligns 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). 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 changes are 
intended to align provisions of the Order with current industry 
practices. This final 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 final rule imposes no 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.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap or conflict with this final 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.
    A proposed rule concerning this action was published in the Federal 
Register on April 20, 2018 (83 FR 17506). Copies of the rule were made 
available to all members of the Board and all California almond growers 
and handlers. Finally, the rule was made available through the internet 
by USDA and the Office of the Federal Register. A 30-day comment period 
ending May 21, 2018, was provided to allow interested persons to 
respond to the proposal. No comments were received. Accordingly, no 
changes will be made to the rule as proposed.
    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.
    After consideration of all relevant matters presented, including 
the information and recommendation submitted by the Board and other 
available information, it is hereby found that this rule, as 
hereinafter set forth, 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.

    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. 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) * * *

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                                                       Computation number 1            Computation number 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)
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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 4).          50.940  ..............          82.320  ..............
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 8).          11.760  ..............          11.760  ..............
10. Total inedible kernels (line 9 x line 1)....  ..............           1,176  ..............           1,176

[[Page 28526]]

 
11. Adjusted kernel weight (line 6 + line 10)...  ..............           6,270  ..............           9,408
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\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: June 15, 2018.
Bruce Summers,
Administrator, Agricultural Marketing Service.
[FR Doc. 2018-13272 Filed 6-19-18; 8:45 am]
 BILLING CODE 3410-02-P