81_FR_92803 81 FR 92559 - Almonds Grown in California; Increased Assessment Rate

81 FR 92559 - Almonds Grown in California; Increased Assessment Rate

DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service

Federal Register Volume 81, Issue 244 (December 20, 2016)

Page Range92559-92564
FR Document2016-30264

This rule implements a recommendation from the Almond Board of California (Board) for an increase of the assessment rate established for the 2016-17 through the 2018-19 crop years from $0.03 to $0.04 per pound of almonds handled under the marketing order (order). Of the $0.04 per pound assessment, 60 percent (or $0.024 per pound) is available as credit-back for handlers who conduct their own promotional activities. The assessment rate will return to $0.03 for the 2019-20 and subsequent crop years, and the amount available for handler credit- back will return to $0.018 per pound (60 percent). The Board locally administers the order and is comprised of growers and handlers of almonds grown in California. Assessments upon almond handlers are used by the Board to fund reasonable and necessary expenses of the program. The crop year began on August 1 and ends on July 31. The $0.04 assessment rate will remain in effect until July 31, 2019. Beginning August 1, 2019, the assessment rate will return to $0.03 and will remain in effect indefinitely unless modified, suspended, or terminated. Two comments period were provided to interested individuals. Comments will be addressed later in this document.

Federal Register, Volume 81 Issue 244 (Tuesday, December 20, 2016)
[Federal Register Volume 81, Number 244 (Tuesday, December 20, 2016)]
[Rules and Regulations]
[Pages 92559-92564]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-30264]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Doc. No. AMS-SC-16-0045; SC16-981-2 FR]


Almonds Grown in California; Increased Assessment Rate

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) for an increase of the assessment rate established 
for the 2016-17 through the 2018-19 crop years from $0.03 to $0.04 per 
pound of almonds handled under the marketing order (order). Of the 
$0.04 per pound assessment, 60 percent (or $0.024 per pound) is 
available as credit-back for handlers who conduct their own promotional 
activities. The assessment rate will return to $0.03 for the 2019-20 
and subsequent crop years, and the amount available for handler credit-
back will return to $0.018 per pound (60 percent). The Board locally 
administers the order and is comprised of growers and handlers of 
almonds grown in California. Assessments upon almond handlers are used 
by the Board to fund reasonable and necessary expenses of the program. 
The crop year began on August 1 and ends on July 31. The $0.04 
assessment rate will remain in effect until July 31, 2019. Beginning 
August 1, 2019, the assessment rate will return to $0.03 and will 
remain in effect indefinitely unless modified, suspended, or 
terminated. Two comments period were provided to interested 
individuals. Comments will be addressed later in this document.

DATES: Effective December 21, 2016.

FOR FURTHER INFORMATION CONTACT: Marketing Specialist Andrea Ricci, or 
Regional Director Jeffrey Smutny, California Marketing Field Office, 
Marketing Order and Agreement Division, Specialty Crops Program,

[[Page 92560]]

AMS, USDA; Telephone: (559) 487-5901, Fax: (559) 487-5906, or Email: 
with [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 rule is issued under Marketing Order 
No. 981, as amended (7 CFR part 981), regulating the handling of 
almonds grown in California, hereinafter referred to as the ``order.'' 
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 Department of Agriculture (USDA) is issuing this rule in 
conformance with Executive Orders 12866, 13563, and 13175.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. Under the marketing order now in effect, California 
almond handlers are subject to assessments. Funds to administer the 
order are derived from such assessments. It is intended that the 
assessment rate as issued herein will be applicable to all assessable 
almonds beginning on August 1, 2016, through July 31, 2019. Beginning 
August 1, 2019, the assessment rate will return to $0.03 and will 
remain in effect indefinitely unless modified, suspended, or 
terminated.
    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. Such 
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 rule increases the assessment rate established for the Board 
for the 2016-17 through 2018-19 crop years from $0.03 to $0.04 per 
pound of almonds received. Of the $0.04 per pound assessment, 60 
percent (or $0.024 per pound) is available as credit-back for handlers 
who conduct their own promotional activities. The assessment rate will 
return to $0.03 for the 2019-20 and subsequent crop years, and the 
amount available for handler credit-back will return to $0.018 per 
pound (60 percent).
    The California almond marketing order provides authority for the 
Board, with the approval of USDA, to formulate an annual budget of 
expenses and collect assessments from handlers to administer the 
program. The members of the Board are growers and handlers of 
California almonds. They are familiar with the Board's needs and with 
the costs for goods and services in their local area and thus are in a 
position to formulate an appropriate budget and assessment rate. The 
assessment rate is formulated and discussed in a public meeting. 
Therefore, all directly affected persons have an opportunity to 
participate and provide input.
    For the 2005-06 and subsequent crop years, the Board recommended, 
and USDA approved, an assessment rate of $0.03 per pound that would 
continue in effect from crop year to crop year unless modified, 
suspended, or terminated by USDA upon recommendation and information 
submitted by the Board or other information available to USDA. Of the 
$0.03 per pound assessment, 60 percent ($0.018) per pound was made 
available as credit-back for handlers who conducted their own 
promotional activities.
    The Board met on April 12, 2016, and unanimously recommended 2016-
17 expenditures of $69,897,626 and an assessment rate of $0.04 per 
pound of almonds received. In comparison, last year's budgeted 
expenditures were $58,998,976. The assessment rate of $0.04 is $0.01 
higher than the rate currently in effect, and the credit-back portion 
of the assessment rate ($0.024 per pound) is $0.006 more than the 
credit-back portion currently in effect.
    The Board estimates a production increase of thirty percent, or 600 
million pounds, by the 2019-20 crop year. This increase is nearly as 
much as is consumed by the industry's largest market. Due to the size 
of the increase in forecasted production, the Board believes that 
increased market development projects and new marketing programs are 
required to successfully market the additional supply. Accordingly, the 
Board has recommended a new ``Nut of Choice'' marketing program.
    The Board also anticipates needing additional funding for the 
industry's new ``Crop of Choice'' research program, as well as 
additional research to address concerns such as changing water supply 
and quality systems; air quality and how it relates to harvesting, 
pesticide, and energy use; and bee health.
    The three-year higher assessment rate is needed to fund the 
increase in marketing and research activities. The Board anticipates 
that by the 2019-20 crop year, the increase in production assessed at 
the reinstated $0.03 per pound rate should generate sufficient revenue 
to cover the anticipated expenditures at that time. Therefore, 
beginning August 1, 2019, the assessment rate will return to $0.03 per 
pound.
    The following table compares major budget expenditures recommended 
by the Board for the 2015-16 and 2016-17 crop years:

------------------------------------------------------------------------
        Budget expense categories             2015-16         2016-17
------------------------------------------------------------------------
Operations Expenses.....................     $ 7,904,000     $ 8,404,000
Board Accelerated Innovation Management        1,500,000       1,000,000
 (AIM) Initiatives......................
Crop of Choice Initiatives..............               0       5,625,000
Reputation Management...................       1,826,350       2,000,000
Production Research.....................       1,843,331       1,843,331
Environmental Research..................       1,039,790       1,039,790
Scientific Affairs/Nutrition............       1,640,000       1,640,000
Global Market Development...............      38,583,756      38,583,756
Nut of Choice Initiatives...............               0       5,100,000
Technical & Regulatory Affairs..........       1,045,500       1,045,500
Industry Services.......................       2,436,220       2,436,220
Almond Quality & Food Safety............         790,800         790,800
Corporate Technology....................         389,229         389,229
------------------------------------------------------------------------


[[Page 92561]]

    The assessment rate recommended by the Board was derived by 
considering the anticipated 30-percent production increase in the next 
three years, anticipated expenditures plus additional program expenses, 
current production level, and maintaining adequate operating reserve 
funds. In its recommendation, the Board utilized an estimate of 
1,835,290,000 pounds of assessable almonds for the 2016-17 crop year. 
If realized, this should provide estimated assessment revenue of 
$62,262,213, which reflects credit-back reimbursements and organic 
exemptions. In addition, it is anticipated that $20,907,722 will be 
provided by other sources, including interest income, Market Access 
Program (MAP) funds, and operating reserve funds. When combined, 
revenue from these sources should be adequate to cover budgeted 
expenses.
    Section 981.81 of the order authorizes the Board to maintain 
operating reserve funds consisting of an administrative-research 
portion and a marketing promotion portion, and states that the amount 
allocated to each portion shall not exceed six months' budgeted 
expenses for that activity area. Funds in the reserve at the end of the 
2016-17 crop year are estimated to be approximately $16,581,222, well 
within the amount permitted by the order.
    A proposed rule concerning this action was published in the Federal 
Register on July 18, 2016 (81 FR 46616). A 15-day comment period ending 
August 2, 2016, was provided for interested persons to respond to the 
proposal. One commenter raised concern that notification of the 
proposal was not promptly circulated within industry and asked for an 
extension of the comment period. After reviewing the request, USDA 
published a notice reopening the comment period for an additional 30 
days in the Federal Register on September 12, 2016 (81 FR 62668). All 
comments will be addressed further in this document.
    The assessment rate established in this rule will continue in 
effect until July 31, 2019. Beginning August 1, 2019, the assessment 
rate will return to $0.03 and will continue in effect indefinitely 
unless modified, suspended, or terminated by USDA upon recommendation 
and information submitted by the Board or other available information.
    Although this assessment rate will be in effect for a specified 
period, the Board will continue to meet prior to or during each crop 
year to recommend a budget of expenses and consider recommendations for 
modification of the assessment rate. The dates and times of Board 
meetings are available from the Board or USDA. Board meetings are open 
to the public, and interested persons may express their views at these 
meetings. USDA would evaluate Board recommendations and other available 
information to determine whether modification of the assessment rate is 
needed. Further rulemaking would be undertaken as necessary. The 
Board's 2016-17 budget and those for subsequent crop years would be 
reviewed and, as appropriate, approved by USDA.

Final Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) 
has considered the economic impact of this rule on small entities. 
Accordingly, AMS has prepared this final regulatory flexibility 
analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
businesses subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and 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 handlers subject to regulation under the 
marketing order. Small agricultural producers are defined by the Small 
Business Administration (SBA) as those having annual receipts of less 
than $750,000, and small agricultural service firms are defined as 
those whose annual receipts are less than $7,500,000 (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 
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.
    In its most recently reported crop year (2015), NASS reported an 
average yield of 2,130 pounds per acre and a season average grower 
price of $2.84 per pound. A 100-acre farm with an average yield of 
2,130 pounds per acre would produce about 213,000 pounds of almonds. At 
$2.84 per pound, that farm's production would be valued at $604,920.
    Because the Census of Agriculture indicates that the majority of 
California's almond farms are smaller than 100 acres, it could be 
concluded that the majority of growers had annual receipts from the 
sale of almonds in 2015 of less than $604,920, well below the SBA 
threshold of $750,000. Thus, over 70 percent of California's almond 
growers would be considered small growers according to SBA's 
definition.
    According to information supplied by the Board, approximately 30 
percent of California's almond handlers shipped almonds valued under 
$7,500,000 during the 2014-15 crop year and would therefore be 
considered small handlers according to the SBA definition.
    This rule increases the assessment rate collected from handlers for 
the 2016-17 through the 2018-19 crop years from $0.03 to $0.04 per 
pound of almonds received. Of the $0.04 per pound assessment, 60 
percent (or $0.024 per pound) is available as credit-back for handlers 
who conduct their own promotional activities, consistent with Sec.  
981.441 of the order's regulations and subject to Board approval. The 
Board unanimously recommended 2016-17 expenditures of $69,897,626 and 
an assessment rate of $0.04 per pound of almonds received. The 
assessment rate of $0.04 is $0.01 higher than the 2015-16 rate, and the 
credit-back portion of $0.024 per pound is $0.006 higher than the 
current credit-back portion of $0.018. The quantity of assessable 
almonds for the 2016-17 crop year is estimated at 1,835,290,000 pounds. 
This should provide estimated assessment revenue of $62,262,213, which 
reflects credit-back reimbursements and organic exemptions. In 
addition, it is anticipated that $20,907,722 will be provided by other 
sources, including interest income, MAP funds, and operating reserve 
funds. When combined, revenue from these sources should be adequate to 
cover budgeted expenses.
    The major expenditures recommended by the Board for the 2016-17 
crop year include $8,404,000 for Operations Expenses, $1,000,000 for 
Board AIM Initiatives, $5,625,000 for Crop of Choice Initiatives, 
$2,000,000 for Reputation Management, $1,843,331 for Production 
Research, $1,039,790 for Environmental Research, $1,640,000 for 
Scientific Affairs/Nutrition, $38,583,756 for Global Market 
Development, $5,100,000 for Nut of Choice Initiatives, $1,045,500 for 
Technical & Regulatory Affairs, $2,436,220 for Industry

[[Page 92562]]

Services, $790,800 for Almond Quality & Food Safety, and $389,229 for 
Corporate Technology.
    Budgeted expenses for these items in 2015-16 were $7,904,000 for 
Operations Expenses, $1,500,000 for Board AIM Initiatives, $0 for Crop 
of Choice Initiatives, $1,826,350 for Reputation Management, $1,843,331 
for Production Research, $1,039,790 for Environmental Research, 
$1,640,000 for Scientific Affairs/Nutrition, $38,583,756 for Global 
Market Development, $0 for Nut of Choice Initiatives, $1,045,500 for 
Technical & Regulatory Affairs, $2,436,220 for Industry Services, 
$790,800 for Almond Quality & Food Safety, and $389,229 for Corporate 
Technology.
    The Board estimates a production increase of 30 percent, or 600 
million pounds, by the 2019-20 crop year. This increase is nearly as 
large as the current consumption of the industry's largest market. 
Increased market development investment as well as new marketing 
programs will be required to successfully market the additional supply. 
Additional investment in research is also needed to address concerns 
such as changing water supply and quality systems; air quality and how 
it relates to harvesting, pesticide, and energy use; and bee health. 
Accordingly, the three-year higher assessment rate is needed to fund 
the Board's new Nut of Choice marketing program and Crop of Choice 
research activities. The Board anticipates that by the 2019-20 crop 
year, the increased production assessed at the reinstated $0.03 per 
pound rate should generate sufficient revenue to cover the anticipated 
expenditures at that time.
    Prior to arriving at this budget and assessment rate, the Board 
held a strategic planning session in February 2016. The Board also 
considered recommendations made from its various committees, including 
the Global Market Development Committee, Production Research Committee, 
and Environmental Committee. Alternative expenditure levels were 
discussed, based upon the relative value of various activities to the 
almond industry. Ultimately, the Board unanimously determined that 
2016-17 expenditures of $69,897,626 were appropriate and that the 
recommended assessment rate, plus income from other sources and 
operation reverse funds, would generate sufficient revenue to meet its 
expenses.
    A review of historical information and preliminary information 
pertaining to the upcoming crop year indicates that the grower price 
for the 2016-17 season could range between $4.00 and $2.84 per pound of 
almonds. Therefore, the estimated assessment revenue for the 2016-17 
crop year (disregarding any amounts credited pursuant to Sec.  981.41 
and Sec.  981.441) as a percentage of total grower revenue could range 
between 1.00 and 1.41 percent, respectively.
    This action increases the assessment obligation imposed on 
handlers. While assessments impose some additional costs on handlers, 
the costs are minimal and uniform on all handlers. Some of the 
additional costs may be passed on to growers. However, these costs 
would be offset by the benefits derived by the operation of the 
marketing order. In addition, the Board's meeting was widely publicized 
throughout the California almond industry, and all interested persons 
were invited to attend the meeting and participate in Board 
deliberations on all issues. Like all Board meetings, the April 12, 
2016, meeting was a public meeting, and all entities, both large and 
small, were able to express views on this issue.
    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 the Office of Management and Budget (OMB) and 
assigned OMB No. 0581-0178 (Vegetable and Specialty Crops.) No changes 
in those requirements as a result of this action are necessary. Should 
any changes become necessary, they would be submitted to OMB for 
approval.
    This rule imposes 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.
    As previously noted, a proposed rule concerning this action was 
published providing a 15-day comment period for interested persons to 
respond to the proposal. In addition, on September 12, 2016, the 
comment period was reopened for an additional 30 days. Copies of the 
proposed rule were provided to all almond handlers. Finally, the 
proposal was made available through the internet by USDA and the Office 
of the Federal Register. A total of forty-six comments were received. 
Twenty-eight supported and eighteen opposed the proposal. Of the 
eighteen in opposition, three were grower/handlers, eleven were 
growers, two individuals were from outside of the production area, and 
two individuals did not identify themselves.
    Of those who supported the proposal, twenty-three were growers.
    The majority of the commenters in support of the proposal stated 
that increasing the assessment rate now was necessary to fund market 
development programs and new marketing and promotion activities to 
create demand prior to the onset of the increased production. 
Commenters noted that the industry is aware of the increasing almond 
acreage and the need to invest prior to the larger crop materializing. 
The commenters also noted that the three-year ``sunset'' feature will 
ensure that once the additional 30 percent increase in production is 
realized, the assessment rate will return to the current $0.03 rate. 
One commenter noted the need to develop demand for the increased 
supplies to ensure the carry-over inventory is kept near zero each 
year, which will help stabilize prices at the grower level and negate 
the effect of the increased assessment. Another commenter noted that 
the recent volatility in almond prices illustrates how critically 
important it is to make investments now. Several commenters stated the 
Board has had proven success in the areas of marketing and promotion; 
nutrition, environmental, and production research; and grower outreach; 
and they are pleased overall with the work of the Board. Commenters 
also expressed the need for continued investment in research, 
specifically in areas that will provide resources for growers to 
continue to remain profitable in the face of continued challenges. One 
commenter stated that programs such as the almond order are a good 
example of a public/private partnership which has worked for the 
consumer, farmer, and food safety while expanding markets around the 
world.
    The majority of commenters in opposition of the proposal stated the 
increase of production over the next several years should generate 
adequate income to fund Board programs. In the development of the 
budget, the Board contemplated the production forecast of a 30 percent 
increase in the next three years. The Board anticipates the 2016-17 
crop year production at 1.835 billion pounds, 2017-18 crop year 
production at 2.184 billion pounds, 2018-19 crop year production at 
2.277 billion pounds, and 2019-20 crop year production at 2.354 billion 
pounds. The Board discussed the need to build demand before this 
increased production is realized. The Board strongly believes

[[Page 92563]]

not doing so in advance will negatively impact prices. The Board is 
concerned that without market expansion and new market development 
programs, the anticipated 600 million pounds' increase in production 
will lead to oversupply. This year, after Committee input and Board 
strategic planning, the Board decided an increase in the assessment 
rate was necessary. The increase in revenue will be used to fund new 
marketing programs and increase the budgets of existing market research 
and development projects. At the $0.03 assessment rate, the Board 
determined funding generated would not be adequate to cover anticipated 
expenses necessary to establish outlets for the increased production. 
In its recommendation to have the assessment rate revert back to $0.03 
after three years, the Board considered current program needs at the 
current production level against the anticipated production in the next 
three years, while recognizing that the increased production will 
generate adequate income once realized.
    In its discussion, the Board also considered the time and resources 
needed to develop new marketing and promotion programs. The Global 
Market Demand Committee developed a comprehensive marketing plan, which 
includes the Nut of Choice program. The plan encompasses expanding the 
Germany and Japan markets by increasing funding in order to increase 
impressions; accelerating momentum by increasing budgets and 
impressions for the U.S./Canada, France, United Kingdom, India, and 
South Korea markets; maintaining budget levels in the China market and 
Global Initiative; and allocating spending for one to two additional 
exploratory markets (i.e., Mexico, Indonesia, and Saudi Arabia 
regions). Prior to the Committee recommending the marketing plan, it 
reviewed key factors for each market, including market attractiveness, 
total market demand forecast, market outlook, opportunities and 
challenges, historical spending data, and low-end and high-end demand 
potential. The Board also determined that with the current environment 
of the agriculture industry, investing in new and innovative techniques 
would be key to the viability of the almond industry moving forward. 
Key areas of focus are water management, food safety, production, pest 
management, pollination, biomass, and soil health.
    Additionally, several commenters stated that for growers, with the 
decline in prices and the rising production costs, it is difficult to 
remain profitable. The Board has had considerable strategic discussions 
about the continued challenges facing growers, including rising 
production costs, water availability, and regulatory impacts, and ways 
to address the issues. As a result, a substantial portion of the 
revenue generated by the increased assessment rate is designated for 
research. More specifically, the newly established nine capabilities of 
the Crop of Choice Program will fund research at a level of $5.625 
million. Areas of focus include Irrigation and Nutrients; Orchard, 
Tree, Rootstock; Harvesting; Value-Added Orchard Utilization; Soil 
Health Management; Pest Management; Food Safety; Pollination; Energy; 
and the Sustainability Program update and outreach. This investment is 
intended to develop new and innovative techniques to help the almond 
industry continue to remain profitable. In addition, the increased 
investment in market development and new marketing programs is intended 
to create demand to absorb the anticipated increase in production. In 
turn, these activities should stabilize prices.
    Three commenters raised concern that only 23 percent of the 
additional funding generated is allocated to direct marketing. The 
commenters further stated that if at least 80 percent of the additional 
funding was not allocated to direct marketing and promotion activities, 
they were opposed to the increase. The Board utilizes a comprehensive 
strategy that includes a balanced approach for research and marketing 
and promotion activities to sustain and develop market outlets. The 
Board-funded research plays an integral part in supporting the almond 
industry, which continues to face new challenges as the landscape of 
agriculture changes. The Board triennially holds strategic planning 
retreats to develop tactics that directly address the needs of the 
almond industry as well as ever-changing market demands. The Board 
recommends a budget each year utilizing recommendations made by each 
Committee. Committees are comprised of industry members and meet 
regularly to deliberate and prioritize programs. Marketing and 
promotion has been set as a priority, and recommendations have been 
made to increase spending. Along with the marketing activities, the 
Board has a robust research program. Nutrition, production, 
environmental, and food safety research has been utilized by the 
marketing programs to better position almonds in the marketplace. 
Specifically, in the past several years with the drought in California, 
the almond industry came under media fire for its water use. Through 
the research programs funded by the Board, the marketing team was able 
to provide data regarding almonds and water use. This research was 
pivotal in transitioning the conversation from negative to neutral or 
positive. Additionally, almonds have a qualified heart-healthy claim, 
which can be directly linked to the research funded as part of the 
nutrition research program. The almond industry's ability to utilize 
the heart-health claim is a vital part of the marketing program. 
Further, the Board is celebrating the tenth year of its California 
Almond Sustainability Program. As consumer demand continues to shift 
towards products that are sustainable, the Sustainability Program has 
been a great resource to the marketing program to provide data 
regarding the sustainability of the almond industry. The research and 
marketing and promotion activities work interdependently, ensuring the 
viability of the industry.
    Two commenters stated an assessment rate increase should be 
approved by growers prior to implementation. Two of the commenters 
questioned the outreach to the growing community, stating growers 
should have a larger role in the discussion. One of the commenters 
requested a grower referendum prior to implementation of an assessment 
rate change. All Board and Committee meetings are open to the public, 
allowing directly affected persons and other interested parties an 
opportunity to participate and provide input. On April 14, 2016, the 
Board sent a memo to almond handlers and growers as part of its mailer, 
providing notice of the Board's unanimous recommendation to increase 
the assessment rate. The Board also included an article regarding the 
recommendation in the April California Almonds Outlook e-newsletter. In 
addition, two comment periods were provided, which gave interested 
parties the opportunity to comment on the recommended proposal. The 
Board included notice of the comment periods in its industry e-
newsletters, on its Web site (specifically, on the grower site), on its 
social media platforms, and announced this information at its Committee 
and Board meetings. Notices of the comment periods were also made 
available on the USDA Web site. In response to the request to hold a 
grower referendum, under the California almond marketing order, 
referenda are conducted every five years to ascertain whether 
continuation of the order is favored by growers. The last continuance 
referendum was held in 2014, and results indicated continued

[[Page 92564]]

grower support for the order. Furthermore, annual budget and assessment 
rate recommendations are among the many duties the Board, which is 
comprised of grower and handler members, is required to perform as 
authorized under the order.
    One commenter raised concern that the additional funding will be 
used to increase the size and salaries of the organization, which will 
lead to the continuation of increasing the assessment rate year after 
year. Also, the commenter expressed concerns about transparency and 
availability of financial information. The majority of the funds 
generated by the increased assessment are allotted to research programs 
and marketing and promotion activities. For the past several years, 
operating expenses have fluctuated between 12 percent and 15 percent of 
the total budget. In the recommended budget for the 2016-17 crop year, 
operating expenses are approximately 12 percent of the total budget. In 
addition, in its unanimous recommendation, the Board stipulated that 
the increased assessment rate continue only through the 2018-19 crop 
year. The assessment rate will revert to the current $0.03 rate 
beginning August 1, 2019. All Board and Committee meetings are open to 
the public. On a quarterly basis, the Board reviews and approves 
financial statements at its public meetings. Those documents are made 
available to the public, and interested persons are encouraged to 
participate in all meetings.
    One commenter expressed concern about the order's credit-back 
program and that it is not advantageous to non-branded handlers. While 
credit-back is associated with the assessment rate, the Board did not 
discuss the program as part of this proposal. This rule does not modify 
the percentage rate available for handler credit-back.
    One commenter raised concern that the Nut of Choice and Crop of 
Choice programs appear to be an effort to improve the image of almonds 
at the expense of other California commodities. USDA has a strict 
policy against any marketing order boards, committees, or councils 
disparaging other commodities. USDA reviews all marketing and 
communication materials prior to publication to ensure that policy is 
being followed.
    Accordingly, no changes will be made to the rule as proposed, based 
on the comments received.
    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 material 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.
    It is further found that good cause exists for not postponing the 
effective date of this rule until 30 days after publication in the 
Federal Register (5 U.S.C. 553) because the 2016-17 crop year began 
August 1, 2016, and the marketing order requires that the rate of 
assessment for each crop year apply to all assessable almonds handled 
during such crop year. Further, handlers are aware of this rule, which 
was recommended at a public meeting. Also, a 15-day comment period was 
provided for in the proposed rule, followed by an additional 30-day 
comment period.

List of Subjects in 7 CFR Part 981

    Almonds, Marketing agreements, Nuts, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 7 CFR part 981 is 
amended as follows:

PART 981--ALMONDS GROWN IN CALIFORNIA

0
1. The authority citation for 7 CFR part 981 continues to read as 
follows:

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


0
2. Section 981.343 is revised to read as follows:


Sec.  981.343  Assessment rate.

    For the period August 1, 2016, through July 31, 2019, the 
assessment rate shall be $0.04 per pound for California almonds. Of the 
$0.04 assessment rate, 60 percent per assessable pound is available for 
handler credit-back. On and after August 1, 2019, an assessment rate of 
$0.03 per pound is established for California almonds. Of the $0.03 
assessment rate, 60 percent per assessable pound is available for 
handler credit-back.

    Dated: November 12, 2016.
Elanor Starmer,
Administrator, Agricultural Marketing Service.
[FR Doc. 2016-30264 Filed 12-19-16; 8:45 am]
 BILLING CODE P



                                                                 Federal Register / Vol. 81, No. 244 / Tuesday, December 20, 2016 / Rules and Regulations                                            92559

                                                for interested persons to respond to the                on any proposed assessment rules. All                 § 923.236   Assessment rate.
                                                proposal.                                               comments are considered prior to                        On and after April 1, 2016, an
                                                   One comment was received during                      finalization of a proposed rule. Once                 assessment rate of $0.25 per ton is
                                                the comment period in response to the                   established, assessment rates remain in               established for the Washington Cherry
                                                proposal. The commenter was                             effect until modified by USDA upon the                Marketing Committee.
                                                concerned about the impact that the                     recommendation of the Committee.                        Dated: December 12, 2016.
                                                increased assessment rate would have                       Accordingly, no changes will be made
                                                on growers. The commenter also                                                                                Bruce Summers,
                                                                                                        to the rule as proposed, based on the                 Associate Administrator, Agricultural
                                                questioned why the assessment is only                   comment received.
                                                applied to certain counties in                                                                                Marketing Service.
                                                Washington, and not others. In addition,                   A small business guide on complying                [FR Doc. 2016–30302 Filed 12–19–16; 8:45 am]
                                                the commenter stated that the opinions                  with fruit, vegetable, and specialty crop             BILLING CODE 3410–02–P
                                                of sweet cherry growers and handlers                    marketing agreements and orders may
                                                should be taken into consideration                      be viewed at: http://www.ams.usda.gov/
                                                when establishing assessment rates, and                 rules-regulations/moa/small-businesses.               DEPARTMENT OF AGRICULTURE
                                                that there should be flexibility during                 Any questions about the compliance
                                                                                                        guide should be sent to Richard Lower                 Agricultural Marketing Service
                                                the transitional period when a new
                                                assessment rate is implemented. Lastly,                 at the previously mentioned address in
                                                                                                        the FOR FURTHER INFORMATION CONTACT                   7 CFR Part 981
                                                the commenter offered
                                                recommendations with regards to the                     section.                                              [Doc. No. AMS–SC–16–0045; SC16–981–2
                                                assessment rate establishment process                      After consideration of all relevant                FR]
                                                and took exception to the indefinite                    material presented, including the
                                                period that assessment rates are in                     information and recommendation                        Almonds Grown in California;
                                                effect.                                                 submitted by the Committee and other                  Increased Assessment Rate
                                                   Under the order, it is handlers that are             available information, it is hereby found             AGENCY:  Agricultural Marketing Service,
                                                assessed, not growers. As such, growers                 that this rule, as hereinafter set forth,             USDA.
                                                will not be directly impacted by this                   will tend to effectuate the declared                  ACTION: Final rule.
                                                action. However, as mentioned                           policy of the Act.
                                                previously in this rule, some of the                       Pursuant to 5 U.S.C. 553, it also found            SUMMARY:   This rule implements a
                                                additional costs to handlers as a result                and determined that good cause exists                 recommendation from the Almond
                                                of this action may be passed on to                      for not postponing the effective date of              Board of California (Board) for an
                                                growers. Nevertheless, USDA believes                    this rule until 30 days after publication             increase of the assessment rate
                                                that such additional costs will be offset                                                                     established for the 2016–17 through the
                                                                                                        in the Federal Register because: (1) The
                                                by the benefits derived by the operation                                                                      2018–19 crop years from $0.03 to $0.04
                                                                                                        2016–2017 fiscal period began on April
                                                of the order.                                                                                                 per pound of almonds handled under
                                                   Furthermore, the commenter’s request                 1, 2016, and the order requires that the
                                                                                                        assessment rate for each fiscal period                the marketing order (order). Of the $0.04
                                                for clarity with regards to why only                                                                          per pound assessment, 60 percent (or
                                                certain counties are covered by this                    apply to all assessable Washington
                                                                                                        cherries handled during such fiscal                   $0.024 per pound) is available as credit-
                                                regulatory change is addressed in the                                                                         back for handlers who conduct their
                                                order’s provisions. Section 923.4 defines               period; (2) the Committee needs to have
                                                                                                        sufficient funds to pay its expenses,                 own promotional activities. The
                                                the order’s production area as the
                                                                                                        which are incurred on a continuous                    assessment rate will return to $0.03 for
                                                counties of Okanogan, Chelan, Kittitas,
                                                                                                        basis; (3) handlers have already shipped              the 2019–20 and subsequent crop years,
                                                Yakima, Klickitat in the State of
                                                                                                        Washington cherries from the 2016                     and the amount available for handler
                                                Washington and all of the counties in
                                                                                                        crop; and (4) handlers are aware of this              credit-back will return to $0.018 per
                                                Washington lying east thereof. Only
                                                                                                        action, which was unanimously                         pound (60 percent). The Board locally
                                                handlers who handle cherries grown
                                                                                                        recommended by the Committee at a                     administers the order and is comprised
                                                within the specific production area are
                                                                                                        public meeting and is similar to other                of growers and handlers of almonds
                                                subject to assessment.
                                                   Lastly, the commenter’s thoughts                     assessment rate actions issued in past                grown in California. Assessments upon
                                                regarding the assessment rate                           years.                                                almond handlers are used by the Board
                                                establishment process and effective                                                                           to fund reasonable and necessary
                                                                                                        List of Subjects in 7 CFR Part 923                    expenses of the program. The crop year
                                                period have been previously addressed
                                                in this rule. The Committee meets prior                   Cherries, Marketing agreements,                     began on August 1 and ends on July 31.
                                                to, or during, each fiscal period to                    Reporting and recordkeeping                           The $0.04 assessment rate will remain
                                                recommend a budget of expenses and                      requirements.                                         in effect until July 31, 2019. Beginning
                                                consider recommendations for                                                                                  August 1, 2019, the assessment rate will
                                                                                                          For the reasons set forth in the                    return to $0.03 and will remain in effect
                                                modification of the assessment rate. The                preamble, 7 CFR part 923 is amended as
                                                dates and times of Committee meetings                                                                         indefinitely unless modified,
                                                                                                        follows:                                              suspended, or terminated. Two
                                                are available from the Committee or
                                                USDA. Committee meetings are open to                                                                          comments period were provided to
                                                                                                        PART 923—CHERRIES GROWN IN
                                                the public and interested persons may                                                                         interested individuals. Comments will
                                                                                                        DESIGNATED COUNTIES IN
                                                express their views at these meetings.                                                                        be addressed later in this document.
                                                                                                        WASHINGTON
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                                                   Meetings are widely publicized                                                                             DATES: Effective December 21, 2016.
                                                throughout the Washington cherry                        ■ 1. The authority citation for 7 CFR                 FOR FURTHER INFORMATION CONTACT:
                                                industry and all interested persons are                 part 923 continues to read as follows:                Marketing Specialist Andrea Ricci, or
                                                invited to attend the meetings and                                                                            Regional Director Jeffrey Smutny,
                                                                                                            Authority: 7 U.S.C. 601–674.
                                                participate in Committee deliberations                                                                        California Marketing Field Office,
                                                on all issues. In addition, interested                  ■ 2. Section 923.236 is revised to read               Marketing Order and Agreement
                                                persons are invited to submit comments                  as follows:                                           Division, Specialty Crops Program,


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                                                92560                Federal Register / Vol. 81, No. 244 / Tuesday, December 20, 2016 / Rules and Regulations

                                                AMS, USDA; Telephone: (559) 487–                                          handler is afforded the opportunity for                                   available as credit-back for handlers
                                                5901, Fax: (559) 487–5906, or Email:                                      a hearing on the petition. After the                                      who conducted their own promotional
                                                with Andrea.Ricci@ams.usda.gov or                                         hearing, USDA would rule on the                                           activities.
                                                Jeffrey.Smutny@ams.usda.gov.                                              petition. The Act provides that the                                          The Board met on April 12, 2016, and
                                                   Small businesses may request                                           district court of the United States in any                                unanimously recommended 2016–17
                                                information on complying with this                                        district in which the handler is an                                       expenditures of $69,897,626 and an
                                                regulation by contacting Richard Lower,                                   inhabitant, or has his or her principal                                   assessment rate of $0.04 per pound of
                                                Marketing Order and Agreement                                             place of business, has jurisdiction to                                    almonds received. In comparison, last
                                                Division, Specialty Crops Program,                                        review USDA’s ruling on the petition,                                     year’s budgeted expenditures were
                                                AMS, USDA, 1400 Independence                                              provided an action is filed not later than                                $58,998,976. The assessment rate of
                                                Avenue SW., STOP 0237, Washington,                                        20 days after the date of the entry of the                                $0.04 is $0.01 higher than the rate
                                                DC 20250–0237; Telephone: (202) 720–                                      ruling.                                                                   currently in effect, and the credit-back
                                                2491, Fax: (202) 720–8938, or Email:                                         This rule increases the assessment                                     portion of the assessment rate ($0.024
                                                Richard.Lower@ams.usda.gov.                                               rate established for the Board for the                                    per pound) is $0.006 more than the
                                                SUPPLEMENTARY INFORMATION: This rule                                      2016–17 through 2018–19 crop years                                        credit-back portion currently in effect.
                                                is issued under Marketing Order No.                                       from $0.03 to $0.04 per pound of                                             The Board estimates a production
                                                981, as amended (7 CFR part 981),                                         almonds received. Of the $0.04 per                                        increase of thirty percent, or 600 million
                                                regulating the handling of almonds                                        pound assessment, 60 percent (or $0.024                                   pounds, by the 2019–20 crop year. This
                                                grown in California, hereinafter referred                                 per pound) is available as credit-back                                    increase is nearly as much as is
                                                to as the ‘‘order.’’ The order is effective                               for handlers who conduct their own                                        consumed by the industry’s largest
                                                under the Agricultural Marketing                                          promotional activities. The assessment                                    market. Due to the size of the increase
                                                Agreement Act of 1937, as amended (7                                      rate will return to $0.03 for the 2019–                                   in forecasted production, the Board
                                                U.S.C. 601–674), hereinafter referred to                                  20 and subsequent crop years, and the                                     believes that increased market
                                                as the ‘‘Act.’’                                                           amount available for handler credit-back                                  development projects and new
                                                   The Department of Agriculture                                          will return to $0.018 per pound (60                                       marketing programs are required to
                                                (USDA) is issuing this rule in                                            percent).                                                                 successfully market the additional
                                                conformance with Executive Orders                                            The California almond marketing
                                                                                                                                                                                                    supply. Accordingly, the Board has
                                                12866, 13563, and 13175.                                                  order provides authority for the Board,
                                                                                                                                                                                                    recommended a new ‘‘Nut of Choice’’
                                                   This rule has been reviewed under                                      with the approval of USDA, to formulate
                                                                                                                                                                                                    marketing program.
                                                Executive Order 12988, Civil Justice                                      an annual budget of expenses and
                                                Reform. Under the marketing order now                                     collect assessments from handlers to                                         The Board also anticipates needing
                                                in effect, California almond handlers are                                 administer the program. The members                                       additional funding for the industry’s
                                                subject to assessments. Funds to                                          of the Board are growers and handlers                                     new ‘‘Crop of Choice’’ research program,
                                                administer the order are derived from                                     of California almonds. They are familiar                                  as well as additional research to address
                                                such assessments. It is intended that the                                 with the Board’s needs and with the                                       concerns such as changing water supply
                                                assessment rate as issued herein will be                                  costs for goods and services in their                                     and quality systems; air quality and how
                                                applicable to all assessable almonds                                      local area and thus are in a position to                                  it relates to harvesting, pesticide, and
                                                beginning on August 1, 2016, through                                      formulate an appropriate budget and                                       energy use; and bee health.
                                                July 31, 2019. Beginning August 1, 2019,                                  assessment rate. The assessment rate is                                      The three-year higher assessment rate
                                                the assessment rate will return to $0.03                                  formulated and discussed in a public                                      is needed to fund the increase in
                                                and will remain in effect indefinitely                                    meeting. Therefore, all directly affected                                 marketing and research activities. The
                                                unless modified, suspended, or                                            persons have an opportunity to                                            Board anticipates that by the 2019–20
                                                terminated.                                                               participate and provide input.                                            crop year, the increase in production
                                                   The Act provides that administrative                                      For the 2005–06 and subsequent crop                                    assessed at the reinstated $0.03 per
                                                proceedings must be exhausted before                                      years, the Board recommended, and                                         pound rate should generate sufficient
                                                parties may file suit in court. Under                                     USDA approved, an assessment rate of                                      revenue to cover the anticipated
                                                section 608c(15)(A) of the Act, any                                       $0.03 per pound that would continue in                                    expenditures at that time. Therefore,
                                                handler subject to an order may file                                      effect from crop year to crop year unless                                 beginning August 1, 2019, the
                                                with USDA a petition stating that the                                     modified, suspended, or terminated by                                     assessment rate will return to $0.03 per
                                                order, any provision of the order, or any                                 USDA upon recommendation and                                              pound.
                                                obligation imposed in connection with                                     information submitted by the Board or                                        The following table compares major
                                                the order is not in accordance with law                                   other information available to USDA. Of                                   budget expenditures recommended by
                                                and request a modification of the order                                   the $0.03 per pound assessment, 60                                        the Board for the 2015–16 and 2016–17
                                                or to be exempted therefrom. Such                                         percent ($0.018) per pound was made                                       crop years:

                                                                                                              Budget expense categories                                                                                   2015–16       2016–17

                                                Operations Expenses ..............................................................................................................................................        $ 7,904,000   $ 8,404,000
                                                Board Accelerated Innovation Management (AIM) Initiatives .................................................................................                                 1,500,000     1,000,000
                                                Crop of Choice Initiatives ........................................................................................................................................                 0     5,625,000
                                                Reputation Management .........................................................................................................................................             1,826,350     2,000,000
                                                Production Research ...............................................................................................................................................         1,843,331     1,843,331
                                                Environmental Research .........................................................................................................................................            1,039,790     1,039,790
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                                                Scientific Affairs/Nutrition .........................................................................................................................................      1,640,000     1,640,000
                                                Global Market Development ....................................................................................................................................             38,583,756    38,583,756
                                                Nut of Choice Initiatives ...........................................................................................................................................               0     5,100,000
                                                Technical & Regulatory Affairs ................................................................................................................................             1,045,500     1,045,500
                                                Industry Services .....................................................................................................................................................     2,436,220     2,436,220
                                                Almond Quality & Food Safety ................................................................................................................................                 790,800       790,800
                                                Corporate Technology .............................................................................................................................................            389,229       389,229



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                                                                 Federal Register / Vol. 81, No. 244 / Tuesday, December 20, 2016 / Rules and Regulations                                      92561

                                                  The assessment rate recommended by                    of Board meetings are available from the              almonds. At $2.84 per pound, that
                                                the Board was derived by considering                    Board or USDA. Board meetings are                     farm’s production would be valued at
                                                the anticipated 30-percent production                   open to the public, and interested                    $604,920.
                                                increase in the next three years,                       persons may express their views at these                 Because the Census of Agriculture
                                                anticipated expenditures plus                           meetings. USDA would evaluate Board                   indicates that the majority of
                                                additional program expenses, current                    recommendations and other available                   California’s almond farms are smaller
                                                production level, and maintaining                       information to determine whether                      than 100 acres, it could be concluded
                                                adequate operating reserve funds. In its                modification of the assessment rate is                that the majority of growers had annual
                                                recommendation, the Board utilized an                   needed. Further rulemaking would be                   receipts from the sale of almonds in
                                                estimate of 1,835,290,000 pounds of                     undertaken as necessary. The Board’s                  2015 of less than $604,920, well below
                                                assessable almonds for the 2016–17 crop                 2016–17 budget and those for                          the SBA threshold of $750,000. Thus,
                                                year. If realized, this should provide                  subsequent crop years would be                        over 70 percent of California’s almond
                                                estimated assessment revenue of                         reviewed and, as appropriate, approved                growers would be considered small
                                                $62,262,213, which reflects credit-back                 by USDA.                                              growers according to SBA’s definition.
                                                reimbursements and organic                                                                                       According to information supplied by
                                                                                                        Final Regulatory Flexibility Analysis                 the Board, approximately 30 percent of
                                                exemptions. In addition, it is
                                                anticipated that $20,907,722 will be                       Pursuant to requirements set forth in              California’s almond handlers shipped
                                                provided by other sources, including                    the Regulatory Flexibility Act (RFA) (5               almonds valued under $7,500,000
                                                interest income, Market Access Program                  U.S.C. 601–612), the Agricultural                     during the 2014–15 crop year and
                                                (MAP) funds, and operating reserve                      Marketing Service (AMS) has                           would therefore be considered small
                                                funds. When combined, revenue from                      considered the economic impact of this                handlers according to the SBA
                                                these sources should be adequate to                     rule on small entities. Accordingly,                  definition.
                                                cover budgeted expenses.                                AMS has prepared this final regulatory                   This rule increases the assessment
                                                  Section 981.81 of the order authorizes                flexibility analysis.                                 rate collected from handlers for the
                                                the Board to maintain operating reserve                    The purpose of the RFA is to fit                   2016–17 through the 2018–19 crop years
                                                funds consisting of an administrative-                  regulatory actions to the scale of                    from $0.03 to $0.04 per pound of
                                                research portion and a marketing                        businesses subject to such actions in                 almonds received. Of the $0.04 per
                                                promotion portion, and states that the                  order that small businesses will not be               pound assessment, 60 percent (or $0.024
                                                amount allocated to each portion shall                  unduly or disproportionately burdened.                per pound) is available as credit-back
                                                not exceed six months’ budgeted                         Marketing orders issued pursuant to the               for handlers who conduct their own
                                                expenses for that activity area. Funds in               Act, and the rules issued thereunder, are             promotional activities, consistent with
                                                the reserve at the end of the 2016–17                   unique in that they are brought about                 § 981.441 of the order’s regulations and
                                                crop year are estimated to be                           through group action of essentially                   subject to Board approval. The Board
                                                approximately $16,581,222, well within                  small entities acting on their own                    unanimously recommended 2016–17
                                                the amount permitted by the order.                      behalf.                                               expenditures of $69,897,626 and an
                                                  A proposed rule concerning this                          There are approximately 6,800                      assessment rate of $0.04 per pound of
                                                action was published in the Federal                     almond growers in the production area                 almonds received. The assessment rate
                                                Register on July 18, 2016 (81 FR 46616).                and approximately 100 handlers subject                of $0.04 is $0.01 higher than the 2015–
                                                A 15-day comment period ending                          to regulation under the marketing order.              16 rate, and the credit-back portion of
                                                August 2, 2016, was provided for                        Small agricultural producers are defined              $0.024 per pound is $0.006 higher than
                                                interested persons to respond to the                    by the Small Business Administration                  the current credit-back portion of
                                                proposal. One commenter raised                          (SBA) as those having annual receipts of              $0.018. The quantity of assessable
                                                concern that notification of the proposal               less than $750,000, and small                         almonds for the 2016–17 crop year is
                                                was not promptly circulated within                      agricultural service firms are defined as             estimated at 1,835,290,000 pounds. This
                                                industry and asked for an extension of                  those whose annual receipts are less                  should provide estimated assessment
                                                the comment period. After reviewing                     than $7,500,000 (13 CFR 121.201).                     revenue of $62,262,213, which reflects
                                                the request, USDA published a notice                       The National Agricultural Statistics               credit-back reimbursements and organic
                                                reopening the comment period for an                     Service (NASS) reported in its 2012                   exemptions. In addition, it is
                                                additional 30 days in the Federal                       Agricultural Census that there were                   anticipated that $20,907,722 will be
                                                Register on September 12, 2016 (81 FR                   6,841 almond farms in the production                  provided by other sources, including
                                                62668). All comments will be addressed                  area (California), of which 6,204 had                 interest income, MAP funds, and
                                                further in this document.                               bearing acres. The following                          operating reserve funds. When
                                                  The assessment rate established in                    computation provides an estimate of the               combined, revenue from these sources
                                                this rule will continue in effect until                 proportion of producers (farms) and                   should be adequate to cover budgeted
                                                July 31, 2019. Beginning August 1, 2019,                agricultural service firms (handlers) that            expenses.
                                                the assessment rate will return to $0.03                would be considered small under the                      The major expenditures
                                                and will continue in effect indefinitely                SBA definitions.                                      recommended by the Board for the
                                                unless modified, suspended, or                             The NASS Census data indicates that                2016–17 crop year include $8,404,000
                                                terminated by USDA upon                                 out of the 6,204 California farms with                for Operations Expenses, $1,000,000 for
                                                recommendation and information                          bearing acres of almonds, 4,471 (72                   Board AIM Initiatives, $5,625,000 for
                                                submitted by the Board or other                         percent) have fewer than 100-bearing                  Crop of Choice Initiatives, $2,000,000
                                                available information.                                  acres.                                                for Reputation Management, $1,843,331
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                                                  Although this assessment rate will be                    In its most recently reported crop year            for Production Research, $1,039,790 for
                                                in effect for a specified period, the                   (2015), NASS reported an average yield                Environmental Research, $1,640,000 for
                                                Board will continue to meet prior to or                 of 2,130 pounds per acre and a season                 Scientific Affairs/Nutrition, $38,583,756
                                                during each crop year to recommend a                    average grower price of $2.84 per                     for Global Market Development,
                                                budget of expenses and consider                         pound. A 100-acre farm with an average                $5,100,000 for Nut of Choice Initiatives,
                                                recommendations for modification of                     yield of 2,130 pounds per acre would                  $1,045,500 for Technical & Regulatory
                                                the assessment rate. The dates and times                produce about 213,000 pounds of                       Affairs, $2,436,220 for Industry


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                                                92562            Federal Register / Vol. 81, No. 244 / Tuesday, December 20, 2016 / Rules and Regulations

                                                Services, $790,800 for Almond Quality                   estimated assessment revenue for the                  grower/handlers, eleven were growers,
                                                & Food Safety, and $389,229 for                         2016–17 crop year (disregarding any                   two individuals were from outside of
                                                Corporate Technology.                                   amounts credited pursuant to § 981.41                 the production area, and two
                                                   Budgeted expenses for these items in                 and § 981.441) as a percentage of total               individuals did not identify themselves.
                                                2015–16 were $7,904,000 for Operations                  grower revenue could range between                       Of those who supported the proposal,
                                                Expenses, $1,500,000 for Board AIM                      1.00 and 1.41 percent, respectively.                  twenty-three were growers.
                                                Initiatives, $0 for Crop of Choice                         This action increases the assessment                  The majority of the commenters in
                                                Initiatives, $1,826,350 for Reputation                  obligation imposed on handlers. While                 support of the proposal stated that
                                                Management, $1,843,331 for Production                   assessments impose some additional                    increasing the assessment rate now was
                                                Research, $1,039,790 for Environmental                  costs on handlers, the costs are minimal              necessary to fund market development
                                                Research, $1,640,000 for Scientific                     and uniform on all handlers. Some of                  programs and new marketing and
                                                Affairs/Nutrition, $38,583,756 for                      the additional costs may be passed on                 promotion activities to create demand
                                                Global Market Development, $0 for Nut                   to growers. However, these costs would                prior to the onset of the increased
                                                of Choice Initiatives, $1,045,500 for                   be offset by the benefits derived by the              production. Commenters noted that the
                                                Technical & Regulatory Affairs,                         operation of the marketing order. In                  industry is aware of the increasing
                                                $2,436,220 for Industry Services,                       addition, the Board’s meeting was                     almond acreage and the need to invest
                                                $790,800 for Almond Quality & Food                      widely publicized throughout the                      prior to the larger crop materializing.
                                                Safety, and $389,229 for Corporate                      California almond industry, and all                   The commenters also noted that the
                                                Technology.                                             interested persons were invited to                    three-year ‘‘sunset’’ feature will ensure
                                                   The Board estimates a production                     attend the meeting and participate in                 that once the additional 30 percent
                                                increase of 30 percent, or 600 million                  Board deliberations on all issues. Like               increase in production is realized, the
                                                pounds, by the 2019–20 crop year. This                  all Board meetings, the April 12, 2016,               assessment rate will return to the
                                                increase is nearly as large as the current              meeting was a public meeting, and all                 current $0.03 rate. One commenter
                                                consumption of the industry’s largest                   entities, both large and small, were able             noted the need to develop demand for
                                                market. Increased market development                    to express views on this issue.                       the increased supplies to ensure the
                                                investment as well as new marketing                        In accordance with the Paperwork                   carry-over inventory is kept near zero
                                                programs will be required to                            Reduction Act of 1995 (44 U.S.C.                      each year, which will help stabilize
                                                successfully market the additional                      Chapter 35), the order’s information                  prices at the grower level and negate the
                                                supply. Additional investment in                        collection requirements have been                     effect of the increased assessment.
                                                research is also needed to address                      previously approved by the Office of                  Another commenter noted that the
                                                concerns such as changing water supply                  Management and Budget (OMB) and                       recent volatility in almond prices
                                                and quality systems; air quality and how                assigned OMB No. 0581–0178                            illustrates how critically important it is
                                                it relates to harvesting, pesticide, and                (Vegetable and Specialty Crops.) No                   to make investments now. Several
                                                energy use; and bee health. Accordingly,                changes in those requirements as a                    commenters stated the Board has had
                                                the three-year higher assessment rate is                result of this action are necessary.                  proven success in the areas of marketing
                                                needed to fund the Board’s new Nut of                   Should any changes become necessary,                  and promotion; nutrition,
                                                Choice marketing program and Crop of                    they would be submitted to OMB for                    environmental, and production
                                                Choice research activities. The Board                   approval.                                             research; and grower outreach; and they
                                                anticipates that by the 2019–20 crop                       This rule imposes no additional                    are pleased overall with the work of the
                                                year, the increased production assessed                 reporting or recordkeeping requirements               Board. Commenters also expressed the
                                                at the reinstated $0.03 per pound rate                  on either small or large California                   need for continued investment in
                                                should generate sufficient revenue to                   almond handlers. As with all Federal                  research, specifically in areas that will
                                                cover the anticipated expenditures at                   marketing order programs, reports and                 provide resources for growers to
                                                that time.                                              forms are periodically reviewed to                    continue to remain profitable in the face
                                                   Prior to arriving at this budget and                 reduce information requirements and                   of continued challenges. One
                                                assessment rate, the Board held a                       duplication by industry and public                    commenter stated that programs such as
                                                strategic planning session in February                  sector agencies.                                      the almond order are a good example of
                                                2016. The Board also considered                            AMS is committed to complying with                 a public/private partnership which has
                                                recommendations made from its various                   the E-Government Act, to promote the                  worked for the consumer, farmer, and
                                                committees, including the Global                        use of the internet and other                         food safety while expanding markets
                                                Market Development Committee,                           information technologies to provide                   around the world.
                                                Production Research Committee, and                      increased opportunities for citizen                      The majority of commenters in
                                                Environmental Committee. Alternative                    access to Government information and                  opposition of the proposal stated the
                                                expenditure levels were discussed,                      services, and for other purposes.                     increase of production over the next
                                                based upon the relative value of various                   As previously noted, a proposed rule               several years should generate adequate
                                                activities to the almond industry.                      concerning this action was published                  income to fund Board programs. In the
                                                Ultimately, the Board unanimously                       providing a 15-day comment period for                 development of the budget, the Board
                                                determined that 2016–17 expenditures                    interested persons to respond to the                  contemplated the production forecast of
                                                of $69,897,626 were appropriate and                     proposal. In addition, on September 12,               a 30 percent increase in the next three
                                                that the recommended assessment rate,                   2016, the comment period was reopened                 years. The Board anticipates the 2016–
                                                plus income from other sources and                      for an additional 30 days. Copies of the              17 crop year production at 1.835 billion
                                                operation reverse funds, would generate                 proposed rule were provided to all                    pounds, 2017–18 crop year production
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                                                sufficient revenue to meet its expenses.                almond handlers. Finally, the proposal                at 2.184 billion pounds, 2018–19 crop
                                                   A review of historical information and               was made available through the internet               year production at 2.277 billion pounds,
                                                preliminary information pertaining to                   by USDA and the Office of the Federal                 and 2019–20 crop year production at
                                                the upcoming crop year indicates that                   Register. A total of forty-six comments               2.354 billion pounds. The Board
                                                the grower price for the 2016–17 season                 were received. Twenty-eight supported                 discussed the need to build demand
                                                could range between $4.00 and $2.84                     and eighteen opposed the proposal. Of                 before this increased production is
                                                per pound of almonds. Therefore, the                    the eighteen in opposition, three were                realized. The Board strongly believes


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                                                                 Federal Register / Vol. 81, No. 244 / Tuesday, December 20, 2016 / Rules and Regulations                                         92563

                                                not doing so in advance will negatively                 strategic discussions about the                       for its water use. Through the research
                                                impact prices. The Board is concerned                   continued challenges facing growers,                  programs funded by the Board, the
                                                that without market expansion and new                   including rising production costs, water              marketing team was able to provide data
                                                market development programs, the                        availability, and regulatory impacts, and             regarding almonds and water use. This
                                                anticipated 600 million pounds’                         ways to address the issues. As a result,              research was pivotal in transitioning the
                                                increase in production will lead to                     a substantial portion of the revenue                  conversation from negative to neutral or
                                                oversupply. This year, after Committee                  generated by the increased assessment                 positive. Additionally, almonds have a
                                                input and Board strategic planning, the                 rate is designated for research. More                 qualified heart-healthy claim, which can
                                                Board decided an increase in the                        specifically, the newly established nine              be directly linked to the research funded
                                                assessment rate was necessary. The                      capabilities of the Crop of Choice                    as part of the nutrition research
                                                increase in revenue will be used to fund                Program will fund research at a level of              program. The almond industry’s ability
                                                new marketing programs and increase                     $5.625 million. Areas of focus include                to utilize the heart-health claim is a vital
                                                the budgets of existing market research                 Irrigation and Nutrients; Orchard, Tree,              part of the marketing program. Further,
                                                and development projects. At the $0.03                  Rootstock; Harvesting; Value-Added                    the Board is celebrating the tenth year
                                                assessment rate, the Board determined                   Orchard Utilization; Soil Health                      of its California Almond Sustainability
                                                funding generated would not be                          Management; Pest Management; Food                     Program. As consumer demand
                                                adequate to cover anticipated expenses                  Safety; Pollination; Energy; and the                  continues to shift towards products that
                                                necessary to establish outlets for the                  Sustainability Program update and                     are sustainable, the Sustainability
                                                increased production. In its                            outreach. This investment is intended to              Program has been a great resource to the
                                                recommendation to have the assessment                   develop new and innovative techniques                 marketing program to provide data
                                                rate revert back to $0.03 after three                   to help the almond industry continue to               regarding the sustainability of the
                                                years, the Board considered current                     remain profitable. In addition, the                   almond industry. The research and
                                                program needs at the current production                 increased investment in market                        marketing and promotion activities
                                                level against the anticipated production                development and new marketing                         work interdependently, ensuring the
                                                in the next three years, while                          programs is intended to create demand                 viability of the industry.
                                                recognizing that the increased                          to absorb the anticipated increase in                    Two commenters stated an
                                                production will generate adequate                       production. In turn, these activities                 assessment rate increase should be
                                                income once realized.                                   should stabilize prices.                              approved by growers prior to
                                                  In its discussion, the Board also
                                                                                                           Three commenters raised concern that               implementation. Two of the
                                                considered the time and resources
                                                needed to develop new marketing and                     only 23 percent of the additional                     commenters questioned the outreach to
                                                promotion programs. The Global Market                   funding generated is allocated to direct              the growing community, stating growers
                                                Demand Committee developed a                            marketing. The commenters further                     should have a larger role in the
                                                comprehensive marketing plan, which                     stated that if at least 80 percent of the             discussion. One of the commenters
                                                includes the Nut of Choice program.                     additional funding was not allocated to               requested a grower referendum prior to
                                                The plan encompasses expanding the                      direct marketing and promotion                        implementation of an assessment rate
                                                Germany and Japan markets by                            activities, they were opposed to the                  change. All Board and Committee
                                                increasing funding in order to increase                 increase. The Board utilizes a                        meetings are open to the public,
                                                impressions; accelerating momentum by                   comprehensive strategy that includes a                allowing directly affected persons and
                                                increasing budgets and impressions for                  balanced approach for research and                    other interested parties an opportunity
                                                the U.S./Canada, France, United                         marketing and promotion activities to                 to participate and provide input. On
                                                Kingdom, India, and South Korea                         sustain and develop market outlets. The               April 14, 2016, the Board sent a memo
                                                markets; maintaining budget levels in                   Board-funded research plays an integral               to almond handlers and growers as part
                                                the China market and Global Initiative;                 part in supporting the almond industry,               of its mailer, providing notice of the
                                                and allocating spending for one to two                  which continues to face new challenges                Board’s unanimous recommendation to
                                                additional exploratory markets (i.e.,                   as the landscape of agriculture changes.              increase the assessment rate. The Board
                                                Mexico, Indonesia, and Saudi Arabia                     The Board triennially holds strategic                 also included an article regarding the
                                                regions). Prior to the Committee                        planning retreats to develop tactics that             recommendation in the April California
                                                recommending the marketing plan, it                     directly address the needs of the almond              Almonds Outlook e-newsletter. In
                                                reviewed key factors for each market,                   industry as well as ever-changing                     addition, two comment periods were
                                                including market attractiveness, total                  market demands. The Board                             provided, which gave interested parties
                                                market demand forecast, market                          recommends a budget each year                         the opportunity to comment on the
                                                outlook, opportunities and challenges,                  utilizing recommendations made by                     recommended proposal. The Board
                                                historical spending data, and low-end                   each Committee. Committees are                        included notice of the comment periods
                                                and high-end demand potential. The                      comprised of industry members and                     in its industry e-newsletters, on its Web
                                                Board also determined that with the                     meet regularly to deliberate and                      site (specifically, on the grower site), on
                                                current environment of the agriculture                  prioritize programs. Marketing and                    its social media platforms, and
                                                industry, investing in new and                          promotion has been set as a priority,                 announced this information at its
                                                innovative techniques would be key to                   and recommendations have been made                    Committee and Board meetings. Notices
                                                the viability of the almond industry                    to increase spending. Along with the                  of the comment periods were also made
                                                moving forward. Key areas of focus are                  marketing activities, the Board has a                 available on the USDA Web site. In
                                                water management, food safety,                          robust research program. Nutrition,                   response to the request to hold a grower
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                                                production, pest management,                            production, environmental, and food                   referendum, under the California
                                                pollination, biomass, and soil health.                  safety research has been utilized by the              almond marketing order, referenda are
                                                  Additionally, several commenters                      marketing programs to better position                 conducted every five years to ascertain
                                                stated that for growers, with the decline               almonds in the marketplace.                           whether continuation of the order is
                                                in prices and the rising production                     Specifically, in the past several years               favored by growers. The last
                                                costs, it is difficult to remain profitable.            with the drought in California, the                   continuance referendum was held in
                                                The Board has had considerable                          almond industry came under media fire                 2014, and results indicated continued


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                                                92564            Federal Register / Vol. 81, No. 244 / Tuesday, December 20, 2016 / Rules and Regulations

                                                grower support for the order.                           Any questions about the compliance                    DEPARTMENT OF AGRICULTURE
                                                Furthermore, annual budget and                          guide should be sent to Richard Lower
                                                assessment rate recommendations are                     at the previously-mentioned address in                Agricultural Marketing Service
                                                among the many duties the Board,                        the FOR FURTHER INFORMATION CONTACT
                                                which is comprised of grower and                        section.                                              7 CFR Part 987
                                                handler members, is required to perform                    After consideration of all relevant                [Doc. No. AMS–SC–16–0084; SC16–987–1
                                                as authorized under the order.                          material presented, including the                     FIR]
                                                   One commenter raised concern that                    information and recommendation
                                                the additional funding will be used to                  submitted by the Board and other                      Domestic Dates Produced or Packed in
                                                increase the size and salaries of the                   available information, it is hereby found             Riverside County, California;
                                                organization, which will lead to the                    that this rule, as hereinafter set forth,             Decreased Assessment Rate
                                                continuation of increasing the                          will tend to effectuate the declared
                                                assessment rate year after year. Also, the                                                                    AGENCY:   Agricultural Marketing Service,
                                                                                                        policy of the Act.                                    USDA.
                                                commenter expressed concerns about
                                                transparency and availability of                           It is further found that good cause                ACTION: Affirmation of interim rule as
                                                financial information. The majority of                  exists for not postponing the effective               final rule.
                                                the funds generated by the increased                    date of this rule until 30 days after
                                                assessment are allotted to research                     publication in the Federal Register (5                SUMMARY:    The Department of
                                                programs and marketing and promotion                    U.S.C. 553) because the 2016–17 crop                  Agriculture (USDA) is adopting, as a
                                                activities. For the past several years,                 year began August 1, 2016, and the                    final rule, without change, an interim
                                                operating expenses have fluctuated                      marketing order requires that the rate of             rule that implemented a
                                                between 12 percent and 15 percent of                    assessment for each crop year apply to                recommendation from the California
                                                the total budget. In the recommended                    all assessable almonds handled during                 Date Administrative Committee
                                                budget for the 2016–17 crop year,                       such crop year. Further, handlers are                 (committee) to decrease the assessment
                                                operating expenses are approximately                    aware of this rule, which was                         rate established for the committee for
                                                12 percent of the total budget. In                      recommended at a public meeting. Also,                the 2016–17 and subsequent crop years
                                                addition, in its unanimous                              a 15-day comment period was provided                  from $0.10 to $0.05 per hundredweight
                                                recommendation, the Board stipulated                    for in the proposed rule, followed by an              of dates handled under the marketing
                                                that the increased assessment rate                      additional 30-day comment period.                     order (order). The committee locally
                                                continue only through the 2018–19 crop                  List of Subjects in 7 CFR Part 981                    administers the order and is comprised
                                                year. The assessment rate will revert to                                                                      of producers and handlers of dates
                                                the current $0.03 rate beginning August                   Almonds, Marketing agreements,                      operating within the area of production.
                                                1, 2019. All Board and Committee                        Nuts, Reporting and recordkeeping                     The interim rule was necessary to allow
                                                meetings are open to the public. On a                   requirements.                                         the committee to reduce its financial
                                                quarterly basis, the Board reviews and                    For the reasons set forth in the                    reserve while still providing adequate
                                                approves financial statements at its                    preamble, 7 CFR part 981 is amended as                funding to meet program expenses.
                                                public meetings. Those documents are                    follows:                                              DATES: Effective December 21, 2016.
                                                made available to the public, and                                                                             FOR FURTHER INFORMATION CONTACT:
                                                interested persons are encouraged to                    PART 981—ALMONDS GROWN IN                             Terry Vawter, Senior Marketing
                                                participate in all meetings.                            CALIFORNIA                                            Specialist Jeffrey Smutny, Regional
                                                   One commenter expressed concern                                                                            Director, California Marketing Field
                                                about the order’s credit-back program                   ■ 1. The authority citation for 7 CFR                 Office, Marketing Order and Agreement
                                                and that it is not advantageous to non-                 part 981 continues to read as follows:                Division, Specialty Crops Program,
                                                branded handlers. While credit-back is                                                                        AMS, USDA; Telephone: (559) 487–
                                                                                                            Authority: 7 U.S.C. 601–674.
                                                associated with the assessment rate, the                                                                      5901, Fax: (559) 487–5906, or Email:
                                                Board did not discuss the program as                    ■ 2. Section 981.343 is revised to read               Terry.Vawter@ams.usda.gov or
                                                part of this proposal. This rule does not               as follows:                                           Jeffrey.Smutny@ams.usda.gov.
                                                modify the percentage rate available for                                                                         Small businesses may obtain
                                                handler credit-back.                                    § 981.343    Assessment rate.
                                                                                                                                                              information on complying with this
                                                   One commenter raised concern that                      For the period August 1, 2016,                      regulation by viewing a guide at the
                                                the Nut of Choice and Crop of Choice                    through July 31, 2019, the assessment                 following Web site: http://
                                                programs appear to be an effort to                      rate shall be $0.04 per pound for                     www.ams.usda.gov/rules-regulations/
                                                improve the image of almonds at the                     California almonds. Of the $0.04                      moa/small-businesses; or by contacting
                                                expense of other California                             assessment rate, 60 percent per                       Richard Lower, Marketing Order and
                                                commodities. USDA has a strict policy                   assessable pound is available for                     Agreement Division, Specialty Crops
                                                against any marketing order boards,                     handler credit-back. On and after                     Program, AMS, USDA, 1400
                                                committees, or councils disparaging                     August 1, 2019, an assessment rate of                 Independence Avenue SW., STOP 0237,
                                                other commodities. USDA reviews all                     $0.03 per pound is established for                    Washington, DC 20250–0237;
                                                marketing and communication materials                   California almonds. Of the $0.03                      Telephone: (202) 720–2491, Fax: (202)
                                                prior to publication to ensure that                     assessment rate, 60 percent per                       720–8938, or Email: Richard.Lower@
                                                policy is being followed.                               assessable pound is available for                     ams.usda.gov.
                                                   Accordingly, no changes will be made                 handler credit-back.
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                                                to the rule as proposed, based on the                                                                         SUPPLEMENTARY INFORMATION:       This rule
                                                comments received.                                        Dated: November 12, 2016.                           is issued under Marketing Agreement
                                                   A small business guide on complying                  Elanor Starmer,                                       and Order No. 987, both as amended (7
                                                with fruit, vegetable, and specialty crop               Administrator, Agricultural Marketing                 CFR part 987), regulating the handling
                                                marketing agreements and orders may                     Service.                                              of domestic dates produced or packed in
                                                be viewed at: http://www.ams.usda.gov/                  [FR Doc. 2016–30264 Filed 12–19–16; 8:45 am]          Riverside County, California, hereinafter
                                                rules-regulations/moa/small-businesses.                 BILLING CODE P                                        referred to as the ‘‘order.’’ The order is


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Document Created: 2018-02-14 09:09:44
Document Modified: 2018-02-14 09:09:44
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionRules and Regulations
ActionFinal rule.
DatesEffective December 21, 2016.
ContactMarketing Specialist Andrea Ricci, or Regional Director Jeffrey Smutny, California Marketing Field Office, Marketing Order and Agreement Division, Specialty Crops Program, AMS, USDA; Telephone: (559) 487-5901, Fax: (559) 487-5906, or Email: with [email protected] or [email protected]
FR Citation81 FR 92559 
CFR AssociatedAlmonds; Marketing Agreements; Nuts and Reporting and Recordkeeping Requirements

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