Almonds Grown in California; Amendments to the Marketing Order, 37965-37969 [2024-09553]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 89, Number 89 (Tuesday, May 7, 2024)]
[Rules and Regulations]
[Pages 37965-37969]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-09553]



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Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 

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Federal Register / Vol. 89, No. 89 / Tuesday, May 7, 2024 / Rules and 
Regulations

[[Page 37965]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Doc. No. AMS-SC-21-0089]


Almonds Grown in California; Amendments to the Marketing Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rulemaking amends Marketing Order No. 981, which 
regulates the handling of almonds grown in California. This final rule 
modifies the definition of almonds and shelled almonds, establishes a 
definition for ``almond biomass,'' and changes dates when the Almond 
Board of California (Board) conducts elections to coincide with 
assessment collections and when the Board submits volume regulation 
recommendations to USDA. The amendments modify certain marketing order 
provisions to facilitate orderly administration of the program. 
Additionally, the amendments modernize, simplify, or align language 
with current industry practices and definitions.

DATES: This rule is effective June 6, 2024.

FOR FURTHER INFORMATION CONTACT: Thomas Nalepa, Marketing Specialist, 
or Matthew Pavone, Chief, Rulemaking Services Branch, Market 
Development Division, Specialty Crops Program, AMS, USDA, 1400 
Independence Avenue SW, Stop 0237, Washington, DC 20250-0237; 
Telephone: (202) 720-8085, 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, Market Development Division, 
Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW, STOP 
0237, Washington, DC 20250-0237; Telephone: (202) 720-8085, or Email: 
[email protected].

SUPPLEMENTARY INFORMATION: This action, pursuant to 5 U.S.C. 553, 
proposes to amend 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 of almonds operating within the area of production.
    The Agricultural Marketing Service (AMS) is issuing this final rule 
in conformance with Executive Orders 12866, 13563, and 14094. Executive 
Orders 12866 and 13563 direct agencies to assess all costs and benefits 
of available regulatory alternatives and, if regulation is necessary, 
to select regulatory approaches that maximize net benefits (including 
potential economic, environmental, public health and safety effects, 
distributive impacts, and equity). Executive Order 13563 emphasizes the 
importance of quantifying both costs and benefits, reducing costs, 
harmonizing rules, and promoting flexibility. Executive Order 14094 
reaffirms, supplements, and updates Executive Order 12866 and further 
directs agencies to solicit and consider input from a wide range of 
affected and interested parties through a variety of means. This action 
falls within a category of regulatory actions that the Office of 
Management and Budget (OMB) exempted from Executive Order 12866 review.
    This final rule has been reviewed under Executive Order 13175--
Consultation and Coordination with Indian Tribal Governments, which 
requires agencies to consider whether their rulemaking actions would 
have Tribal implications. AMS has determined this final rule is 
unlikely to have substantial direct effects on one or more Indian 
Tribes, on the relationship between the Federal Government and Indian 
Tribes, or on the distribution of power and responsibilities between 
the Federal Government and Indian Tribes.
    This final rule has also been reviewed under Executive Order 12988, 
Civil Justice Reform. This 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 8c(15)(A) of the 
Act (7 U.S.C. 608c(15)(A)), any handler subject to an order may file 
with the U.S. Department of Agriculture (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 the 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 depending upon 
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 in this final rule are not unduly complex, and the nature of 
the amendments is appropriate for utilizing the informal rulemaking 
process to amend the Order. This final rule encompasses changes that 
are primarily administrative or modernizing in nature. Following are 
the amendments voted on and the results for each:
     Amendment 1--``Modifying the definitions for ``Almonds'' 
and ``Shelled

[[Page 37966]]

almonds,'' adding a definition for ``Almond biomass,'' changing the 
term ``Control Board'' to ``Board,'' and replacing listed approved 
outlets for inedible kernels with the term ``accepted users.'' This 
amendment was favored by 86.61 percent of voting almond producers, 
representing 94.99 percent of the production volume voted in the 
referendum.
     Amendment 2--``Changing the date from December 31 to March 
31 for determining handler weighted votes in the nomination process for 
handler positions on the Board.'' This amendment was favored by 85.63 
percent of voting almond producers, representing 94.28 percent of the 
production volume voted in the referendum.
     Amendment 3--``Changing from August 1 to September 1 the 
date the Board is required to submit volume regulation estimates/
recommendations to the Secretary of Agriculture.'' This amendment was 
favored by 86.61 percent of voting almond producers, representing 93.02 
percent of the production volume voted in the referendum.
     Amendment 4--``Removing language that requires separate 
accounting of certain excess funds and sets the reserve fund limit at 
approximately six months' ``expenses'' instead of six months' 
``budget.'' This amendment was favored by 84.59 percent of voting 
almond producers, representing 80.65 percent of the production volume 
voted in the referendum.
     Amendment 5--``Adding authority for the Board to accept 
advanced assessments from handlers or borrow funds from commercial 
lenders.'' This amendment was favored by 63.59 percent of voting almond 
producers, representing 56.15 percent of the production volume voted in 
the referendum.
    These changes simplify, clarify, or align Order language with 
current industry practices and definitions. A discussion of the 
potential regulatory and economic impacts on affected entities is 
discussed later in the ``Final Regulatory Flexibility Analysis'' 
section of this final rule. The amendments apply equally to all 
producers and handlers, regardless of size. The amendments also have no 
additional impact on the reporting, record-keeping, or compliance costs 
of small businesses.
    The Board unanimously recommended seven proposed Order amendments 
following deliberations at a public meeting held on August 11, 2020. 
The Board submitted its formal recommendation to amend the Order 
through the informal rulemaking process on August 9, 2021. This final 
rule will amend the Order by modifying the definition of almonds and 
shelled almonds, establishing a definition for ``almond biomass,'' and 
changing dates when the Almond Board of California (Board) conducts 
elections to coincide with assessment collections and when the Board 
submits volume regulation recommendations to USDA.
    A proposed rule soliciting public comments on the proposed 
amendments published in the Federal Register on April 27, 2023 (88 FR 
25559). AMS received one comment in support of the proposed rule. After 
reviewing the comment, AMS republished the proposed rule without 
substantive change along with the referendum order in the Federal 
Register on October 4, 2023 (88 FR 68500). For the purposes of the 
referendum ballots, AMS combined Proposals 1, 3, and 4 of the 
republished proposed rule and referendum order. These were combined 
into Amendment 1 because they each simplify and modernize language to 
align the Order with current industry practice. Therefore, the seven 
amendments in the originally proposed rule yielded five amendments on 
the referendum ballot. The proposed rule and referendum order directed 
that a referendum among California almond growers be conducted from 
October 30, 2023, through November 20, 2023, to determine whether they 
favor the proposals. To become effective, the amendments had to be 
approved by either two-thirds of the producers voting in the referendum 
or by those representing at least two-thirds of the volume of almonds 
grown by those voting in the referendum.
    During the referendum, producers showed overwhelming support for 
Amendments 1, 2, 3, and 4, referenced above, which were related to 
definitions and timeframes. Amendment 5, which would have added 
authority for the Board to accept advanced assessments from handlers or 
borrow funds from commercial lenders, failed to achieve two-thirds 
support from producers by vote or volume voting.

Final Regulatory Flexibility Analysis

    Pursuant to 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 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 are unique in that they are brought about through 
group action of essentially small entities acting on their own behalf.
    There are approximately 7,600 almond growers in the production area 
and approximately 100 handlers subject to regulation under the Order. 
In the previous proposed rule published in the Federal Register on 
April 27, 2023 (88 FR 25559), the small agricultural almond producers 
are defined by the Small Business Administration (SBA) as those having 
annual receipts of less than $3,250,000, and small agricultural service 
firms are defined as those having annual receipts of less than 
$30,000,000 (13 CFR 121.201). Since that publication, the SBA updated 
the definition of small businesses to those having annual receipts of 
less than $3,750,000 for producers (Tree Nut Farming, North American 
Industry Classification System code 111335), and $34,000,000 for 
handlers (Postharvest Crop Activities, North American Industry 
Classification System code 115114) (13 CFR 121.201). Thus, AMS changed 
the thresholds to reflect the new SBA thresholds in this final rule. 
The changes do not impact AMS's ultimate determination regarding the 
impact of the rule on small entities.
    The National Agricultural Statistics Service (NASS) reported in its 
2022 Census of Agriculture (Census) that there were 7,596 almond farms 
with bearing acres in the production area. Additionally, the Census 
indicates that out of the 7,596 California farms with bearing acres of 
almonds, 4,805 (63 percent) have fewer than 100 bearing acres.
    In its annual Noncitrus Fruits and Nuts publication, NASS reported 
a 2022 crop year average yield of 1,900 pounds per acre (shelled basis) 
and a season average grower price of $1.40 per pound. Therefore, a 100-
acre farm with an average yield of 1,900 pounds per acre would produce 
about 190,000 pounds of almonds (1,900 pounds times 100 acres equals 
190,000 pounds). At $1.40 per pound, that farm's production would be 
valued at $266,000 (190,000 pounds times $1.40 per pound equals 
$266,000). Since the Census indicated that 63 percent of California's 
almond farms are less than 100 acres, it could be concluded that the 
majority of California almond growers had annual receipts from the sale 
of almonds of less than $266,000 for the 2022 crop year, which is below 
the SBA threshold of $3,750,000 for small producers. Therefore, the 
majority of growers may be classified as small businesses.

[[Page 37967]]

    To estimate the proportion of almond handlers that would be 
considered small or large businesses, it was assumed that the unit 
value per 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 exported. 
Data from the Global Agricultural Trade System (GATS) database of 
USDA's Foreign Agricultural Service showed that the value of almond 
exports from August 2022 to July 2023 (shelled equivalent, combining 
shelled and inshell) was $4.117 billion. The quantity of almond exports 
over that time-period was 1.784 billion pounds. Dividing the export 
value by the quantity yields a unit value of $2.31 per shelled pound 
($4.117 billion divided by 1.784 billion pounds equals $2.31).
    NASS estimated that the California almond industry produced 2.511 
billion pounds of almonds in 2022. Applying the $2.31 derived 
representative handler price per pound to total industry production 
results in an estimated total revenue at the handler level of $5.80 
billion (2.511 billion pounds times $2.31 per pound). With an estimated 
100 handlers in the California almond industry, average revenue per 
handler would be approximately $58.0 million ($5.80 billion divided by 
100). Assuming a normal distribution of revenues, most almond handlers 
shipped almonds valued at more than $34,000,000 during the 2022 crop 
year. Therefore, the majority of handlers may be classified as large 
businesses.
    AMS has determined that the amendments, as effectuated by this 
final rule, will not have a significant impact on a substantial number 
of small businesses. Rather, large and small entities alike would be 
expected to benefit from the Board's improved ability to address 
important issues of interest to all on a timely basis. No small 
businesses are unduly or disproportionately burdened.
    The amendments to the Order are modernizing in nature and align 
Order provisions with current industry definitions and practices. They 
define commonly used industry terminology and simplify language to more 
broadly identify disposition outlets of almonds.
    Additionally, the amendments are necessary to adjust or align dates 
to allow for the inclusion of more available data when determining 
weighting of handler votes for Board nominations and providing volume 
regulation recommendations to the Secretary. These changes do not 
impact how volume is calculated for handler vote weighting, materially 
affect crop estimates, or adversely impact Board activities.
    Finally, these amendments remove language that distinguishes 
between funds for administrative-research and funds for marketing 
promotion activities in the accounting of excess funds. It also sets 
the reserve fund limit at approximately six-months' expenses instead of 
the current six-months' budget. This is an administrative adjustment 
that provides technical clarification on the accounting of assessments 
and reserves. It does not impact the percentage of assessments 
available for refund, nor does it materially impact reserves.
    The Board considered the benefits and costs of maintaining the 
status quo as an alternative to this action. However, AMS believes the 
amendments are beneficial in either clarifying or updating the language 
of the Order for industry or improving the Board's continuity of 
operations at no additional costs to industry.

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 
because of this action. Should any changes become necessary, they would 
be submitted to OMB for approval.
    This final rule does not impose 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 action.
    The Board's meetings are widely publicized throughout the 
California almond production area. All interested persons are invited 
to attend the meeting and encouraged to participate in Board 
deliberations on all issues. Like all Board meetings, the meetings held 
on December 9, 2019, August 11, 2020, and December 7, 2020, were 
public, and all entities, both large and small, were encouraged to 
express their views on the proposals.
    A proposed rule concerning this action published in the Federal 
Register on April 27, 2023 (88 FR 25559). A copy of the rule was sent 
via email to the Board staff for distribution to all Board members and 
California almond growers and handlers. The proposed rule was also made 
available by USDA through the internet and the Office of the Federal 
Register. A 60-day comment period ending June 26, 2023, was provided to 
allow interested persons to respond to the proposals. AMS received one 
comment during the comment period. The comment supported the proposed 
amendments. Based on all the information available to AMS at this time, 
including the comments received in response to the proposed rule, no 
substantive changes will be made to the amendments as proposed.
    A second proposed rule and referendum order was then published on 
October 4, 2023 (88 FR 68500). That document directed that a referendum 
among California almond growers be conducted from October 30, 2023, 
through November 20, 2023, to determine whether they favor the 
proposals. To become effective, the amendments had to be approved by 
either two-thirds of the producers voting in the referendum or by those 
representing at least two-thirds of the volume of almonds grown by 
those voting in the referendum. The referendum results show producers 
supported four amendments related to definitions and time frames by an 
average of 85.9 percent of producers voting, who represented 90.7 
percent of the volume of almonds produced by those voting. Results also 
show that producers did not support by two-thirds voting or volume 
voting, the amendment to add authority for the Board to accept advanced 
assessments from handlers or borrow funds from commercial lenders.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: 
https://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.

[[Page 37968]]

Order Amending the Order Regulating the Handling of Almonds Grown in 
California

Findings and Determinations 1
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    \1\ This order shall not become effective unless and until the 
requirements of Sec.  900.14 of the rules of practice and procedure 
governing proceedings to formulate marketing agreements and 
marketing orders have been met.
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(a) Findings and Determinations Upon the Basis of the Rulemaking Record

    The findings and determinations 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 amended, and as hereby amended, and all 
the terms and conditions thereof, will tend to effectuate the declared 
policy of the Act;
    2. Marketing Order 981, as amended, and as hereby further 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 Order;
    3. Marketing Order 981 as amended, and as hereby further 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 amended, and as hereby 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 grown or handled 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.

(b) Determinations

    It is hereby determined that:
    1. The issuance of this amendatory Order, amending the aforesaid 
Order, is favored or approved by producers representing at least two-
thirds of the volume of almonds produced by those voting in a 
referendum on the question of approval and who, during the period of 
August 1, 2022, through July 31, 2023, were engaged within the 
production area in the production of such almonds.
    2. The issuance of this amendatory Order advances the interests of 
producers of citrus in the production area pursuant to the declared 
policy of the Act.

Order Relative to Handling

    It is therefore ordered, that on and after the effective date 
hereof, all handling of almonds grown in California shall be in 
conformity to, and in compliance with, the terms and conditions of the 
said Order as hereby proposed to be amended as follows:
    The provisions amending the Order contained in the proposed rule 
and referendum issued by the Administrator and published in the Federal 
Register (88 FR 68500) on October 4, 2023, will be and are the terms 
and provisions of this order amending the Order and are set forth in 
full herein.

List of Subjects in 7 CFR Part 981

    Marketing agreements, Nuts, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, the Agricultural 
Marketing Service amends 7 CFR part 981 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. Revise Sec.  981.4 to read as follows:


Sec.  981.4  Almonds and almond biomass.

    (a) Almonds means (unless otherwise specified) all varieties of 
almonds (except bitter almonds), either shelled or unshelled, grown in 
the State of California, and, for the purposes of research includes 
almond biomass.
    (b) Almond biomass means the hulls, shells, and skins of harvested 
almonds and woody biomass derived from almond trees (e.g., tree limbs, 
bark, prunings).

0
4. Revise the first sentence of Sec.  981.6 to read as follows:


Sec.  981.6  Shelled almonds.

    Shelled almonds mean almonds after the shells are removed and 
includes any form those almonds might take. * * *

0
5. Revise Sec.  981.32(b)(2) to read as follows:


Sec.  981.32  Nominations.

* * * * *
    (b) * * *
    (2) Each handler may vote for a nominee for each position 
representing the group to which the handler belongs. Each handler vote 
shall be weighted by the quantity of almonds (kernel weight basis 
computed to the nearest whole ton) handled for the handler's own 
account through March 31 of the crop year in which nominations are 
made. The nominee for each position shall be the person receiving the 
highest weighted vote for the position.
* * * * *


Sec.  981.41  [Amended]

0
6. Amend Sec.  981.41(b) by removing the word ``Control''.


Sec.  981.42  [Amended]

0
7. Amend the second sentence of Sec.  981.42(a) by removing the words 
``accepted crushers, feed manufacturers, or feeders'' and adding, in 
their place, ``approved accepted users.''


Sec.  981.49  [Amended]

0
8. Amend Sec.  981.49 introductory text by removing the word ``August'' 
and adding in its place the word ``September''.


Sec.  981.59  [Amended]

0
9. Amend Sec.  981.59(a) by removing the word ``Control''.

0
10. Amend Sec.  981.81 by:
0
a. Revising the third and fourth sentences in paragraph (b); and
0
b. Revising the first sentence in paragraph (c).
    The revisions read as follows:


Sec.  981.81  Assessment.

* * * * *
    (b) * * * Any amounts, not credited pursuant to Sec.  981.41 for a 
crop year may be used by the Board for its marketing promotion expenses 
of the succeeding crop year, and any unexpended portion of those 
amounts at the end of that crop year shall be retained in the operating 
reserve fund. Any funds of the operating reserve fund in excess of the 
level authorized pursuant to paragraph (c) of this section shall be 
refunded to handlers or used to reduce the assessment rate of the 
subsequent crop year, as the Board may determine. * * *
    (c) Reserves. The Board may maintain an operating reserve fund 
which shall not exceed approximately six-months' expenses or such lower 
amount as the Board may establish with the approval of the Secretary: 
Provided, That this limitation shall not restrict the temporary 
retention of excess funds for

[[Page 37969]]

the purpose of stabilizing or reducing the assessment rate of a crop 
year. * * *
* * * * *

Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2024-09553 Filed 5-6-24; 8:45 am]
BILLING CODE P