[Federal Register Volume 84, Number 228 (Tuesday, November 26, 2019)]
[Rules and Regulations]
[Pages 64967-64969]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-25661]



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 Rules and Regulations
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains regulatory documents 
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  Federal Register / Vol. 84, No. 228 / Tuesday, November 26, 2019 / 
Rules and Regulations  

[[Page 64967]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Doc. No. AMS-SC-18-0099; SC19-981-1 FR]


Almonds Grown in California; Revisions to the Accepted User 
Program Requirements and New Information Collection

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule implements a recommendation from the Almond Board of 
California (Board) to revise the almond accepted user program 
requirements currently prescribed under the Marketing Order for Almonds 
Grown in California (Order). This rule prohibits the transfer of 
inedible material between accepted users, implements a new information 
collection form and makes a conforming change to an existing form.

DATES: Effective December 26, 2019.

FOR FURTHER INFORMATION CONTACT: Peter R. Sommers, Marketing 
Specialist, or Terry Vawter, 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 rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This 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 requires accepted users to dispose of inedible 
material within six months of receipt, submit public weighmaster weight 
certificates within 10 business days of receipt of inedible material, 
and submit an accepted user plan annually. In addition, this action 
prohibits the transfer of inedible material between accepted users, 
establishes a new information collection, and makes a conforming change 
to an existing form. The Board unanimously recommended these changes at 
its December 4, 2018, meeting.
    Section 981.42 provides authority for the Board to impose quality 
control requirements. Paragraph (a) of that section obligates each 
handler to have their almonds inspected to determine the percentage of 
inedible kernels out of the total kernel weight received. Inspection 
results are sent to the Board. Inedible kernels in excess of two 
percent of the total represent the handler's ``inedible disposition 
obligation'' (obligation). Handlers are required to dispose of their 
obligation by delivering it to the Board or an approved accepted user 
(crusher, feed manufacturer, feeder, or dealer in nut waste). This 
section also gives the Board the authority to establish rules and 
regulations necessary and incidental to the administration of the 
inedible program.
    Quality control requirements in section 981.442(a)(7) contain 
requirements to which accepted users must adhere to be eligible to 
receive disposition obligations. These include completing an 
application and business data sheet, maintaining prompt and accurate 
reporting of disposition notices, and providing a public weighmaster 
weight certificate for each lot received. The Board may deny or revoke 
accepted user status at any time if the accepted user fails to meet 
these terms and conditions.
    Proper delivery of the obligation is tracked and credited to the 
handler through the completion of the Board's ``Form 8--Inedible and 
Exempt Outlet Disposition.'' Part A of the form is submitted to the 
Board by the handler and Part B, supported by a public weighmaster 
weight certificate, is submitted to the Board by the accepted user. The 
Order currently does not specify deadlines by which accepted users are 
required to dispose of inedible kernels or when to submit the public 
weighmaster weight certificate to the Board. With no specified 
deadlines, accepted users are not required to

[[Page 64968]]

dispose of the inedible kernels in the same crop year they received the 
material. This has led to handlers not receiving timely credit for 
their disposition obligation.
    This final rule requires accepted users to dispose of inedible 
material within six months of receipt and to submit public weighmaster 
weight certificates within 10 business days of receipt of inedible 
material. These changes are expected to improve the timeliness and 
proper tracking of handler disposition obligations.
    This rule requires submission of an annual accepted user plan, 
which provides a detailed description of how the accepted user 
receives, stores, uses, and documents inedible material received. This 
is an additional verification tool during accepted user annual reviews. 
The rule also specifies that an application and business sheet must be 
completed and submitted annually, as well. Additionally, this rule 
implements conforming changes to an existing form.
    Current regulations do not prohibit the transfer of inedible 
material between accepted users; therefore, material may be transferred 
an unlimited number of times between accepted users, making handler 
disposition obligations increasingly difficult to properly track and 
verify. Specifying deadlines for submission of required documentation, 
requiring the annual submission of an accepted user plan, along with 
prohibiting the transfer of product between accepted users, will 
increase the effectiveness of the Board's compliance and verification 
activities.

Final Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) 
has considered the economic impact of this action on small entities. 
Accordingly, AMS has prepared this final regulatory flexibility 
analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
businesses subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and the rules issued thereunder, are unique in 
that they are brought about through group action of essentially small 
entities acting on their own behalf.
    There are approximately 6,800 almond growers in the production area 
and approximately 100 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 $30,000,000, and small agricultural producers are defined as those 
having annual receipts of less than $1,000,000 (13 CFR 121.201).
    The National Agricultural Statistics Service (NASS) reported in its 
most recent (2017) Agricultural Census that there were 7,611 almond 
farms in the production area (California), of which 6,683 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 indicate that out of the 6,683 California 
farms with bearing acres of almonds, 4,425 (66 percent) have fewer than 
100 bearing acres.
    For the almond industry's most recently reported crop year (2017), 
NASS reported an average yield of 2,270 pounds per acre and a season 
average grower price of $2.53 per pound. A 100-acre farm with an 
average yield of 2,270 pounds per acre would produce about 227,000 
pounds of almonds. At $2.53 per pound, that farm's production would be 
valued at $574,310. 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 2017-18 of less than 
$574,310, which is below the SBA threshold of $1,000,000. Thus, over 
two-thirds of California's almond growers may be classified as small 
businesses according to SBA's definition.
    There is no representative handler price available. Therefore, to 
estimate the proportion of almond handlers that may be considered small 
businesses, the unit value per shelled pound of almonds exported was 
used as a reasonable representation of a handler-level price. 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 shows that 
approximately 40 percent of California's almond handlers shipped 
almonds valued under $30,000,000 for that crop year. Therefore, 40 
percent of handlers may be considered small businesses according to the 
SBA definition.
    This rule requires, among other things, accepted users to dispose 
of inedible material within six months of receipt, submit public 
weighmaster weight certificates within 10 business days of receipt of 
inedible material, submit an annual accepted user plan, and prohibits 
the transfer of inedible material between accepted users. 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, 2018.
    It is not anticipated that this action would impose additional 
costs on handlers, growers, or accepted users, regardless of size. 
These changes are expected to increase the effectiveness of the Board's 
verification and compliance activities.
    The Board considered alternatives to this action, including not 
changing the current accepted user eligibility requirements. Prior to 
making its recommendation to the Secretary, a taskforce was created by 
the Board to review the accepted user program and make recommendations 
to the Board's Almond Quality, Food Safety and Services Committee 
(Committee). The Committee reviewed the program and the taskforce's 
recommendations and determined that the recommended changes were 
necessary to ensure the continued effectiveness of the program. 
Therefore, the Committee unanimously recommended this action to the 
Board.
    This rule imposes additional reporting and recordkeeping 
requirements on companies that voluntarily participate in the accepted 
user program. Accepted users are required to dispose of inedible 
material within six months of receipt, submit public weighmaster weight 
certificates within 10 business days of receipt of inedible material, 
submit an annual accepted user plan, and are prohibited from 
transferring inedible materials.
    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. USDA has not 
identified any relevant Federal rules that duplicate, overlap or 
conflict with this final rule. No public comments

[[Page 64969]]

were received regarding the initial regulatory flexibility analysis.
    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.
    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, 2018, 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 
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 July 12, 2019 (84 FR 33182). Copies of the proposed rule 
were provided to Board members and California almond handlers. 
Additionally, the proposed rule was made available through the internet 
by USDA and the Office of the Federal Register. A 30-day comment period 
ending August 12, 2019, was provided to allow interested persons to 
respond to the proposal. No comments were received. Accordingly, USDA 
will make no changes to the rule as proposed.
    AMS submitted a request to OMB for approval to modify three 
existing forms and create one new form in relation to the accepted user 
program. Once approved, the new information collection will be merged 
with the forms currently approved under OMB No. 0581-0178 Vegetable and 
Specialty Crops. This process for seeking approval of information 
collection requirements complies with the Paperwork Reduction Act of 
1995 (44 U.S.C. Chapter 35). Should additional changes become 
necessary, AMS will submit them to OMB for approval.
    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 matter 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 part 981 continues to read as follows:

    Authority: 7 U.S.C. 601-674.


0
2. In Sec.  981.442, revise paragraph (a)(7) to read as follows:


Sec.  981.442  Quality control.

    (a) * * *
    (7) Accepted Users. An accepted user's eligibility shall be subject 
to the following criteria:
    (i) Annual completion of an application with the Board for accepted 
user status;
    (ii) Annual submission of a business data sheet to the Board;
    (iii) Annual submission of an Accepted User Plan (Form ABC 30) to 
the Board by July 31 of each year;
    (iv) The accurate and prompt submission of Form ABC 8, Part B, to 
the Board for each lot of almonds received. Each lot of inedible 
almonds received must be documented by a public weighmaster weight 
certificate issued at the request of the accepted user at the time of 
receipt of the lot. Weighmaster weight certificates must be submitted 
to the Board within 10 business days of issuance;
    (v) Disposal of inedible almond material within 6 months of 
receipt; and
    (vi) Disposal of inedible almond material received with no transfer 
of the material between accepted users.
    (vii) The Board may deny or revoke accepted user status at any time 
if the applicant or accepted user fails to meet the terms and 
conditions of Sec.  981.442, or if the applicant or accepted user fails 
to meet the terms and conditions set forth in the accepted user 
application (Form ABC 34).
    (viii) The eligibility of accepted users shall be reviewed annually 
by the Board. Handlers will not receive credit towards their 
disposition obligations pursuant to paragraph (a)(4) of this section 
for inedible lots where the difference between the weight of the lot 
reported by the inspection agency on Form ABC 8 and the weight of the 
lot reported on the public weighmaster weight certificate exceeds 2.0 
percent.
* * * * *

    Dated: November 21, 2019.
Bruce Summers,
Administrator, Agricultural Marketing Service.
[FR Doc. 2019-25661 Filed 11-25-19; 8:45 am]
BILLING CODE 3410-02-P