[Federal Register Volume 83, Number 130 (Friday, July 6, 2018)]
[Proposed Rules]
[Pages 31473-31477]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-14512]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[AMS-SC-18-0018; SC18-981-3]


Handling of Almonds Grown in California

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule invites comments on proposed amendments to 
Marketing Order No. 981, which regulates the handling of almonds grown 
in California. The proposed amendments would change the dates 
associated with the process to nominate members to the Almond Board of 
California (Board) as well as the start of the term of office of 
members of the Board. The proposed amendments would also add authority 
to allow future revisions of the nomination methods and term of office 
start date through the development of regulations using informal 
rulemaking.

DATES: Comments must be received by September 4, 2018.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposed rule. 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 31474]]

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 
proposed rule 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: Debbie Wray, Senior Marketing 
Specialist, or Julie Santoboni, Rulemaking Branch Chief, 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] 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 amendments 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 
almond growers and handlers operating within California.
    Section 608c(17) of the Act and the applicable rules of practice 
and procedure governing the formulation of marketing agreements and 
orders (7 CFR part 900) authorizes amendment of the Order through this 
informal rulemaking action. The Agricultural Marketing Service (AMS) 
will consider comments received in response to this proposed rule and, 
based on all the information available, will determine if the Order 
amendments are warranted. If AMS determines amendment of the Order is 
warranted, a subsequent proposed rule and notice of referendum would be 
issued, and growers would be allowed to vote for or against the 
proposed Order amendments. AMS would then issue a final rule 
effectuating any amendments approved by growers in the referendum.
    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'[thinsp]'' (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. This proposed rule shall not be deemed to preclude, 
preempt, or supersede any State program covering almonds grown in 
California.
    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 no later than 20 days after the date of 
entry of the ruling.
    Section 1504 of the Food, Conservation, and Energy Act of 2008 
(2008 Farm Bill) (Pub. L. 110-246) amended section 8c(17) of the Act, 
which in turn required the addition of supplemental rules of practice 
to 7 CFR part 900 (73 FR 49307; August 21, 2008). The amendment of 
section 8c(17) of the Act and additional supplemental rules of practice 
authorize the use of informal rulemaking (5 U.S.C. 553) to amend 
Federal fruit, vegetable, and nut marketing agreements and orders. USDA 
may use informal rulemaking to amend marketing orders based on its 
consideration of the nature and complexity of the proposed amendments, 
the potential regulatory and economic impacts on affected entities, and 
any other relevant matters.
    AMS has considered these factors and has determined that the 
amendments proposed are not unduly complex, and the nature of the 
proposed amendments is appropriate for utilizing the informal 
rulemaking process to amend the Order. A discussion of the potential 
regulatory and economic impacts on affected entities is discussed later 
in the ``Initial Regulatory Flexibility Analysis'' section of this 
proposed rule.
    The proposed amendments were unanimously recommended by the Board 
following deliberations at a public meeting held on December 4, 2017. 
The proposed rule would amend the Order by: (1) Changing the nomination 
deadline for Board nominees from January 20 to April 1, the deadline 
for presenting nominees to USDA for selection from February 20 to June 
1, and the start of the term of office from March 1 to August 1; (2) 
adding the ability to propose future revisions to Board nomination 
methods by developing regulations through informal rulemaking; and (3) 
adding the ability to propose future revisions to the start date of the 
Board's term of office by developing regulations through informal 
rulemaking.
    In addition to these proposals, AMS proposes to make any additional 
changes to the Order as may be necessary to conform to any amendment 
that may result from this rulemaking action.

Proposal 1--Nomination and Term of Office Dates

    Section 981.32 provides that, each year, nominees for open Board 
member and alternate member positions shall be chosen by ballot 
delivered to the Board. In support of this nomination process, Sec.  
981.32 further provides that on or before January 20 of each year, the 
Board shall mail to all handlers and growers, other than the 
cooperative(s) of record, the required ballots with all necessary 
voting information; and that nominees chosen by the Board in this 
manner shall be submitted by the Board to the USDA Secretary of 
Agriculture (Secretary) on or before February 20 of each year. If a 
nomination for any Board member or alternate is not received by the 
Secretary on or before February 20, the Secretary may select, without 
nomination, such member or alternate from persons belonging to the 
group to be represented.
    Section 981.33 provides that the term of office of Board members 
and alternate members selected by the Secretary pursuant to Sec.  
981.32 shall begin on March 1.

[[Page 31475]]

    This proposal would amend Sec.  981.32 by changing the nomination 
deadline for Board nominees from January 20 to April 1 and the deadline 
for presenting nominees for selection to the Secretary from February 20 
to June 1. It would also amend Sec.  981.33 by changing the start of 
the term of office from March 1 to August 1. A clarifying change would 
also be made to Sec.  981.33 to remove language related to a previous 
amendment to the Order that is no longer needed.
    Changing the two nomination process dates from January 20 and 
February 20 to April 1 and June 1, respectively, could provide several 
benefits. First, preparing ballots to mail in January is very 
challenging for the Board because it prepares for and hosts major 
industry activities in December, including a Board meeting and a large, 
multi-day almond conference that is held at an off-site location. The 
Board office is also closed the last week of December every year. 
Because of these year-end activities, it is difficult for the Board to 
prepare for a nomination mailing in January. Changing the nomination 
dates would allow the Board sufficient time to prepare nominations for 
mailing.
    In addition, the Board believes that more industry members might 
participate in the nomination process if it occurred later in the 
calendar year. This is because many industry members are busy with or 
returning from winter holiday season activities in December and January 
and, therefore, may be less likely to participate in nomination 
proceedings that are occurring at that time.
    In addition to the challenges the Board faces in meeting the 
January nomination deadline, there is currently only one month between 
the deadline for mailing ballots (January 20) and the date that the 
Board must process returned ballots and prepare a nomination package to 
submit to USDA (February 20). In addition to this short timeframe, 
there are only 9 or 10 days between the February 20 deadline by which 
the Board must submit nominations to USDA and the March 1 term of 
office start date. This short timeframe does not provide adequate time 
for the nominations to be processed and new member selections to be 
made prior to the new term of office. The proposed changes would 
provide 60 days between the April 1 and June 1 nomination process 
deadline dates, compared to the existing 30 days between the current 
dates of January 20 and February 20. The proposed changes would also 
provide 60 days between the June 1 deadline for the Board to submit the 
nominations to USDA and the new August 1 term of office start date, 
compared to the existing 10 days between the current dates of February 
20 and March 1. Extending the times between these dates would improve 
the overall preparation and processing of nominations.
    The proposal to change the term of office start date would improve 
Board cohesiveness because the Board would then operate on the same 
timeline as the crop year and the Board's committees. The Order's crop 
year is defined in Sec.  981.19 as August 1 through July 31. The Board 
is responsible for all program planning and budgeting for each crop 
year. However, with the current term of office beginning on March 1, 
Board members responsible for annual program planning and budget 
recommendations leave office prior to the end of the crop year; 
conversely, new Board members also begin serving in the middle of a 
crop year. Starting the term of office on August 1 would allow Board 
members to administer activities for an entire crop year as well as 
provide valuable insight related to the next crop year's activities. In 
addition, changing the start of the term of office to August 1 would 
align with the appointment of individuals to various committees that 
operate under the Board, which occurs at the beginning of each crop 
year.
    Changing the term of office start date from March 1 to August 1 
would require current members and alternates to serve a few additional 
months, beyond the original March 1 start date, until their respective 
successors were selected and qualified pursuant to Sec.  981.33(a).
    These changes to the nomination and term of office dates that 
appear in two sections of the Order (Sec. Sec.  981.32 and 981.33) are 
being proposed as a single amendment because of the relation of the 
nomination process to the start date of the term of office; that is, if 
the nomination process dates are changed to occur later in the calendar 
year (on April 1 and June 1, respectively, as described above), then 
the start date of the term of office would also need to change from 
March 1 to a date that would follow the new nomination process dates. 
As noted above, the Board recommended the term of office start date be 
changed to August 1.

Proposal 2--Regulation Authority for Nomination Methods

    Section 981.32 provides the methods by which nominations for open 
Board member and alternate member positions shall be chosen, including 
the dates by which (1) ballots and voting information shall be mailed 
by the Board to all handlers and growers, other than cooperative(s) of 
record, and (2) nominations shall be submitted by the Board to the 
Secretary. Changes to these dates are included in Proposal 1 above (to 
change from January 20 to April 1 and from February 20 to June 1, 
respectively).
    This proposal would change Sec.  981.32 by adding authority to 
modify the nomination methods described in paragraph (a) through the 
future development of regulations using the informal rulemaking 
process. Currently, changes to the nomination methods require formal 
rulemaking. The Board would still be required to discuss future 
proposed changes at its meetings and to vote on whether to recommend 
changes to USDA. If amended, future changes would still require notice 
be given to the public with an opportunity for the public to comment on 
the proposed changes. However, it is anticipated that this proposed 
amendment would streamline future changes to the Order by allowing such 
changes to be proposed and finalized through the use of informal 
rulemaking.

Proposal 3--Regulation Authority for Term of Office Start Date

    Section 981.33 provides that the term of office of Board members 
and alternate members selected by the Secretary pursuant to Sec.  
981.32 shall begin on March 1. A change to this term of office start 
date is included in Proposal 1 above (to change from March 1 to August 
1).
    This proposal would change Sec.  981.33 by adding authority to 
modify the term of office start date through the future development of 
regulations using the informal rulemaking process. Currently, changes 
to the term of office start date require formal rulemaking. The Board 
would still be required to discuss a future proposed change at its 
meetings and to vote on whether to recommend a change to USDA. If 
amended, a future change to the term of office start date would still 
require notice be given to the public with an opportunity for the 
public to comment on the proposed change. However, it is anticipated 
that this proposed amendment would streamline future changes to the 
Order by allowing such changes to be proposed and finalized through the 
use of informal rulemaking.

Initial Regulatory Flexibility Analysis

    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA) (5 U.S.C. 601-612), AMS has considered the 
economic impact of this action on small entities. Accordingly, AMS has 
prepared this initial regulatory flexibility analysis.

[[Page 31476]]

    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 
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 
entities 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 entities according to the SBA definition.
    The proposed amendments would change the dates associated with the 
process to nominate Board members and alternates as well as the start 
of the term of office of Board members. The proposed amendments would 
also add authority to allow future revisions of the nomination methods 
and term of office dates through the development of regulations using 
informal rulemaking. These amendments would improve the nomination 
process, align the term of office with the crop year and appointment of 
Board committees, and streamline the process for making similar changes 
in the future.
    The Board's proposed amendments were unanimously recommended at a 
public meeting of the Board on December 4, 2017. The proposed 
amendments are administrative in nature; therefore, if any or all of 
the proposals are approved in referendum, there should be no economic 
impact on growers or handlers. Changing the nomination dates could 
encourage greater industry participation on the Board because the 
timing of the current nominations occurs immediately after the winter 
holiday season, when many industry members are just returning to their 
operations and may be less inclined to participate. The changes to the 
nomination process dates and the term of office start date are expected 
to streamline and improve operations of the Board. Adding authority to 
allow the development of regulations through informal rulemaking for 
making future changes to the nomination methods and term of office 
start date could reduce the time it takes to implement the changes, 
thereby allowing the Board to function more effectively.
    Alternatives to the proposals, including recommending no changes, 
were considered. However, the Board believes that changing the 
nomination process dates and term of office start date, as well as 
adding authority to make similar changes in the future by creating 
regulations through informal rulemaking, will be beneficial to the 
industry by enhancing Board operations and effectiveness.

Paperwork Reduction Act

    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 in those requirements are necessary as 
a result of this action. Should any changes become necessary, they 
would be submitted to OMB for approval.
    This proposed rule would impose no additional reporting or 
recordkeeping requirements on either small or large California 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 action.
    The Board's meeting was widely publicized throughout the almond 
industry. All interested persons were invited to attend the meeting and 
encouraged to participate in Board deliberations on all issues. Like 
all Board meetings, the December 4, 2017, meeting was public, and all 
entities, both large and small, were encouraged to express their views 
on these proposals.
    Finally, interested persons are invited to submit comments on the 
proposed amendments to the Order, including comments on the regulatory 
and information collection impacts of this action on small businesses.
    Following analysis of any comments received on the amendments 
proposed in this proposed rule, AMS will evaluate all available 
information and determine whether to proceed. If appropriate, a 
proposed rule and notice

[[Page 31477]]

of referendum would be issued, and growers would be provided the 
opportunity to vote for or against the proposed amendments. Information 
about the referendum, including dates and voter eligibility 
requirements, would be published in a future issue of the Federal 
Register. A final rule would then be issued to effectuate any 
amendments favored by growers participating in the referendum.
    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.

General Findings

    The findings hereinafter set forth are supplementary to the 
findings and determinations which were previously made in connection 
with the issuance of Marketing Order 981; and all said previous 
findings and determinations are hereby ratified and affirmed, except 
insofar as such findings and determinations may be in conflict with the 
findings and determinations set forth herein.
    1. Marketing Order 981 as hereby proposed to be amended and all of 
the terms and conditions thereof, would tend to effectuate the declared 
policy of the Act;
    2. Marketing Order 981 as hereby proposed to be amended regulates 
the handling of almonds grown in California and is applicable only to 
persons in the respective classes of commercial and industrial activity 
specified in the Marketing Order;
    3. Marketing Order 981 as hereby proposed to be amended is limited 
in application to the smallest regional production area which is 
practicable, consistent with carrying out the declared policy of the 
Act, and the issuance of several marketing orders applicable to 
subdivisions of the production area would not effectively carry out the 
declared policy of the Act;
    4. Marketing Order 981 as hereby proposed to be amended prescribes, 
insofar as practicable, such different terms applicable to different 
parts of the production area as are necessary to give due recognition 
to the differences in the production and marketing of almonds produced 
or packed in the production area; and
    5. All handling of almonds produced or packed in the production 
area as defined in Marketing Order 981 is in the current of interstate 
or foreign commerce or directly burdens, obstructs, or affects such 
commerce.
    A 60-day comment period is provided to allow interested persons to 
respond to these proposals. Any comments received on the amendments 
proposed in this proposed rule will be analyzed, and if AMS determines 
to proceed based on all the information presented, a grower referendum 
would be conducted to determine grower support for the proposed 
amendments. If appropriate, a final rule would then be issued to 
effectuate the amendments favored by growers participating in the 
referendum.

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. Amend Sec.  981.32 by revising paragraph (a)(1) and adding paragraph 
(a)(3) to read as follows:


Sec.  981.32  Nominations.

    (a) Method. (1) Each year the terms of office of three of the 
members elected pursuant to Sec.  981.31(a) and (b) shall expire, 
except every third year when the term of office for two of those 
members shall expire. Nominees for each respective member and alternate 
member shall be chosen by ballot delivered to the Board. Nominees 
chosen by the Board in this manner shall be submitted by the Board to 
the Secretary on or before June 1 of each year together with such 
information as the Secretary may require. If a nomination for any Board 
member or alternate is not received by the Secretary on or before June 
1, the Secretary may select such member or alternate from persons 
belonging to the group to be represented without nomination. The Board 
shall mail to all handlers and growers, other than the cooperative(s) 
of record, the required ballots with all necessary voting information 
including the names of incumbents willing to accept renomination, and, 
to such growers, the name of any person proposed for nomination in a 
petition signed by at least 15 such growers and filed with the Board on 
or before April 1. Distribution of ballots shall be announced by press 
release, furnishing pertinent information on balloting, issued by the 
Board through newspapers and other publications having general 
circulation in the almond producing areas.
* * * * *
    (3) The Board may recommend, subject to the approval of the 
Secretary, a change to the nomination method, should the Board 
determine that a revision is necessary.
* * * * *
0
3. Amend Sec.  981.33 by revising the first sentence of paragraphs (a) 
and (b), revising the last sentence of paragraph (c), and adding 
paragraph (d) to read as follows:


Sec.  981.33  Selection and term of office.

    (a) Members and their respective alternates for positions open on 
the Board shall be selected by the Secretary from persons nominated 
pursuant to Sec.  981.32, or, at the discretion of the Secretary, from 
other qualified persons, for a term of office beginning August 1. * * *
    (b) The term of office of members of the Board shall be for a 
period of three years beginning on August 1 of the years selected 
except where otherwise provided. * * *
    (c) * * * This limitation on tenure shall not apply to alternate 
members.
    (d) The Board may recommend, subject to approval of the Secretary, 
revisions to the start date for the term of office of members of the 
Board.

    Dated: July 2, 2018.
Bruce Summers,
Administrator, Agricultural Marketing Service.
[FR Doc. 2018-14512 Filed 7-5-18; 8:45 am]
 BILLING CODE 3410-02-P