AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Proposed rule.

SUMMARY:

This proposed rule would implement 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). In addition, this action would prohibit the transfer of inedible material between accepted users. This proposal also announces the Agricultural Marketing Service's (AMS) intention to request approval from the Office of Management and Budget (OMB) of a new information collection and to make a conforming change to an existing form.

DATES:

Comments must be received by August 12, 2019. Comments on the forms and information collection must be received by September 10, 2019.

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:

Peter 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: Peter.Sommers@usda.gov or Terry.Vawter@usda.gov.

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: Richard.Lower@usda.gov.

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 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 almond accepted user program requirements currently prescribed under the Order. This proposal would require 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 would prohibit the transfer of inedible material between accepted users, establish a new information collection, and make conforming changes to an existing form. The Board unanimously recommended these changes at its December 4, 2018, meeting.

Section 981.42 provides authority to 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 criteria to which accepted users must adhere to be eligible to receive disposition obligations. These include completing an application and business data sheet, as well as maintaining prompt and accurate reporting of disposition notices and 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 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.

The proposed changes in this action would require 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 would improve the timeliness and proper tracking of handler disposition obligations.

This action also proposes a new information collection in the form of an annual submission of an accepted user plan. The user plan would provide a detailed description of how the accepted user would receive, store, use and document inedible material received. This would be an additional verification tool during accepted user annual reviews. The proposal also clarifies that an application and business sheet must be completed and submitted annually, as well. Conforming changes to existing forms would also be required.

Lastly, current regulations do not prohibit the transfer of inedible material between accepted users. Since transferring inedible material is not prohibited, material may be transferred an unlimited number of times between accepted users, which has made 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, would increase the effectiveness of the Board's compliance and verification activities.

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 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 (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 $750,000. 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 $7,500,000 for that crop year. Therefore, 40 percent of handlers may be considered small businesses according to the SBA definition.

This proposal would require, 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, and submit an annual accepted user plan. In addition, this action would prohibit the transfer of inedible material between accepted users. Authority for this action is provided in § 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. The proposed changes would 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 proposed rule would impose additional reporting and recordkeeping requirements on companies that participate in the accepted user program. Accepted users would be required to submit a user plan to the Board annually. This new form and a sample “Accepted User Plan” are being submitted to OMB for approval under OMB Control No. 0581-0178. Specific burdens for the accepted user plan are detailed later in this document in the section titled “Paperwork Reduction Act.” In addition, this proposed rule would require changes to the Board's existing Form ABC 8 and Form ABC 34. The changes are minor and the currently approved burden for the forms should not be affected by the proposed changes to the forms. The revised forms have been submitted to OMB for approval.

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 proposed rule.

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.

Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), this notice announces AMS's intent to request approval from OMB for a new information collection under OMB No. 0581-NEW. The new form will be merged with the forms currently approved under OMB No. 0581-0178 (Vegetable and Specialty Crops).

Title: Almonds Grown in California; Marketing Order No. 981.

OMB Number: 0581-NEW.

Type of Request: New Collection.

Abstract: The information requirements in this request are essential to carry out the intent of the Act to provide the respondents the type of service they request, and to administer the almond marketing order. USDA is responsible for overseeing the Order regulating the handling of almonds grown in California. The Order is effective under the Act.

On December 4, 2018, the Board unanimously recommended that accepted users subject to the Order provide the Board with a report indicating how inedible material will be received, stored, used and documented. This form, titled “Accepted User Plan” would be submitted directly to the Board by July 31 of each year. The report would provide the Board with information on how each accepted user would meet the requirements of the accepted user program.

The Order authorizes the Board to collect certain information as required. The information collected would only be used by authorized representatives of the USDA, including the AMS Specialty Crops Program regional and headquarters staff, and authorized employees of the Board. All proprietary information would be kept confidential in accordance with the Act and the Order.

The Board developed this form to assist accepted users in documenting the proper handling and disposition of inedible material. The purpose of the form would be to ensure compliance with the accepted user program requirements.

Upon OMB approval of the new form and the information collection package, AMS will request OMB approval to merge the new form and this information collection with the currently approved information collection OMB control number 0581-0178 (Vegetable and Specialty Crops).

The proposed request for new information collection under the Order is as follows:

Accepted User Plan (Form ABC 30)

Estimate of Burden: Public reporting burden for this collection is estimated to be an average of 2 hours per response.

Respondents: Accepted users subject to the marketing order regulating almonds grown in California.

Estimated Number of Respondents: 24.

Estimated Number of Responses per Respondent: 1.

Estimated Total Annual Burden on Respondents: 48 hours.

Comments are invited on: (1) Whether the proposed collection of information is necessary for the proper performance of the functions of the Agency, including whether the information will have practical utility; (2) the accuracy of the Agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on those who are to respond, including the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.

Comments should reference OMB No. 0581-NEW and the Marketing Order for Almonds Grown in California and should be sent to the USDA in care of the Docket Clerk at the previously mentioned address or at http://www.regulations.gov.

All responses to this notice will be summarized and included in the request for OMB approval. All comments received will become a matter of public record and will be available for public inspection during regular business hours at the address of the Docket Clerk or at http://www.regulations.gov.

If this proposed rule is finalized, this information collection will be merged with the forms currently approved under OMB No. 0581-0178 (Vegetable and Specialty Crops).

A 30-day comment period is provided to allow interested persons to respond to all parts of this proposal. All written comments timely received will be considered before a final determination is made on this matter.

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.

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

1. The authority citation for 7 CFR part 981 continues to read as follows:

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

2. Amend § 981.442 by revising paragraph (a)(7) to read as follows: