Almonds Grown in California; Outgoing Quality Control Requirements and Request for Approval of New Information Collection, 70683-70692 [06-9543]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 71, Number 234 (Wednesday, December 6, 2006)]
[Proposed Rules]
[Pages 70683-70692]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-9543]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 71, No. 234 / Wednesday, December 6, 2006 / 
Proposed Rules

[[Page 70683]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Docket No. FV06-981-1 PR]


Almonds Grown in California; Outgoing Quality Control 
Requirements and Request for Approval of New Information Collection

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule invites comments on adding outgoing quality 
control requirements under the administrative rules and regulations of 
the California almond marketing order (order). The order regulates the 
handling of almonds grown in California and is administered locally by 
the Almond Board of California (Board). This proposed rule provides for 
a mandatory program under the order to reduce the potential for 
Salmonella bacteria in almonds. This action would help ensure that 
quality almonds are available for human consumption. This proposal also 
announces the Agricultural Marketing Service's (AMS) intention to 
request approval of a new information collection issued under the 
order.

DATES: Comments must be received by January 22, 2007. Pursuant to the 
Paperwork Reduction Act, comments on information collection burden that 
would result from this proposal must be received by February 5, 2007.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent to the Docket Clerk, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC 
20250-0237; Fax: (202) 720-8938, E-mail: moab.docketclerk@usda.gov. or 
Internet: https://www.regulations.gov. All comments should reference the 
docket number and the date and page number of this issue of the Federal 
Register and will be available for public inspection in the Office of 
the Docket Clerk during regular business hours, or can be viewed at: 
https://www.ams.usda.gov/fv/moab.html.

FOR FURTHER INFORMATION CONTACT: Maureen T. Pello, Assistant Regional 
Manager, or Kurt J. Kimmel, Regional Manager, California Marketing 
Field Office, Marketing Order Administration Branch, Fruit and 
Vegetable Programs, AMS, USDA, Telephone: (559) 487-5901, Fax: (559) 
487-5906, or E-mail: Maureen.Pello@usda.gov. or Kurt.Kimmel@usda.gov.
    Small businesses may request information on complying with this 
regulation by contacting Jay Guerber, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence 
Avenue, SW., STOP 0237, Washington, DC 20250-0237; Telephone: (202) 
720-2491, Fax: (202) 720-8938, or E-mail: Jay.Guerber@usda.gov.

SUPPLEMENTARY INFORMATION: This proposed 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 Order 12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to have retroactive effect. 
This rule will not preempt any State or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
rule.
    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 proposed rule invites comments on adding outgoing quality 
control requirements under the administrative rules and regulations of 
the order. This rule provides for a mandatory program to reduce the 
potential for Salmonella bacteria in almonds. This action would help 
ensure that quality almonds are available for human consumption. This 
action was unanimously recommended by the Board at a meeting on August 
22, 2006. This proposal also announces AMS's intention to request 
approval of a new information collection issued under the order.
    Section 981.42(b) of the order provides authority for the Board to 
establish, with approval of the Secretary, such minimum quality and 
inspection requirements applicable to almonds to be handled or to be 
processed into manufactured product, as will contribute to orderly 
marketing or be in the public interest. In such crop year, no handler 
shall handle or process almonds into manufactured items or products 
unless they meet the applicable requirements as evidenced by 
certification acceptable to the Board. The Board, with approval of the 
Secretary, may establish rules and regulations necessary and incidental 
to the administration of this provision.

Salmonella Outbreaks Linked to Almonds

    In 2001, a Salmonella outbreak was identified in Canada, which was 
linked to a specific retailer, traced back to raw almonds sold in bulk 
bins, and ultimately traced back to the handler and the grower. The 
Salmonella strain was extremely unusual and had not previously been 
associated with contamination in a non-animal product. Three orchards 
where the almonds were produced were identified, and samples gathered 
from the orchards contained Salmonella. With oversight by the 
California Department of Health Services (CDHS), procedures were 
implemented by the grower, huller/

[[Page 70684]]

sheller, and handler to specify how the almonds from those orchards 
were to be processed using a treatment to reduce the potential for 
Salmonella before the almonds were moved into commercial channels. The 
Board initiated an extensive research program to help understand the 
occurrence of Salmonella in almond orchards.
    The Board also initiated an education program for the industry 
regarding Good Agricultural Practices (GAP's), Good Manufacturing 
Practices (GMP's), and Sanitation Standard Operating Procedures 
(SSOP's). GAP's provide guidelines to growers on how to minimize 
potential biological hazards during the production and harvesting of 
almonds. GMP's define procedures to be used by handlers to allow 
almonds to be processed, packed, and sold under sanitary conditions. 
SSOP's help to ensure a clean and sanitary environment in the packing 
facility. Together, these practices and procedures provide a framework 
for a Hazard Analysis Critical Control Point (HACCP) program for the 
industry to proactively eliminate or minimize potential sources of 
Salmonella contamination.
    In the spring of 2004, a second Salmonella outbreak occurred in 
Oregon that was linked to raw almonds purchased at a particular 
retailer. The Salmonella strain was very similar to that identified in 
2001. One handler had been the supplier to the retailer, and the 
handler initiated a voluntary recall of 5 million pounds of almonds 
sold in the U.S. The Food and Drug Administration (FDA) subsequently 
announced that the almonds had been exported to eight countries. The 
handler then initiated a full recall of the 6 suspect almonds produced, 
packed, and shipped, increasing the recall to approximately 15 million 
pounds.
    In the summer of 2004, the Board unanimously approved a voluntary 
action plan that called for treating all almonds to reduce the 
potential for Salmonella. Handlers were encouraged to treat the almonds 
prior to shipment, or ship the almonds to a manufacturer who agreed to 
treat the almonds. The Board continued to fund research on various 
technologies that could be used to help reduce the potential for 
Salmonella in almonds.

Board Recommendation for a Mandatory Treatment Program

    To further its efforts in providing a high quality product to 
consumers, in August 2006, the Board recommended that a mandatory 
treatment program be implemented under the order, pursuant to authority 
provided in Sec.  981.42(b). Specifically, handlers would have to 
subject their almonds to a process that achieves a minimum 4-log 
reduction in Salmonella bacteria prior to shipment. The program would 
provide for an exemption for handlers who ship untreated almonds under 
a direct verifiable (DV) program to manufacturers within the U.S., 
Canada, or Mexico who agree to treat the almonds accordingly. The 
program would also provide for an exemption for handlers who ship 
untreated almonds to locations outside of the U.S., Canada, or Mexico. 
All containers of untreated almonds shipped under the two exemptions 
would have to be prominently identified with the term 
``unpasteurized.'' The program would become effective for the 2007-08 
crop year which begins on August 1, 2007.

Specific Parameters of Proposed Mandatory Program

    Under the Board's proposal, handlers would have to subject their 
almonds to a treatment process or processes that achieve in total a 
minimum 4-log reduction of Salmonella bacteria, or ship their almonds 
under one of the two exemptions cited above. The proposal would only 
affect those who meet the definition of ``handler'' in Sec.  981.13 of 
the order (thus exempting growers selling through roadside stands). Log 
reduction describes how much bacterial contamination is reduced by a 
treatment process. A 4-log reduction decreases bacteria by a factor of 
10,000 (4 zeros). One treatment process that independently achieved a 
minimum 4-log reduction could be used, or a combination of different 
treatments could be used that collectively achieve a minimum 4-log 
reduction (``hurdle'' technologies).
    The Board initially supported a 5-log reduction, which is FDA's 
performance standard. However, the Board subsequently funded research 
with the University of California, Davis, in conjunction with Rutgers 
University, whereby a risk assessment model was developed using data 
from the two Salmonella outbreaks, as well as data from an industry 
pathogen survey.\1\ The risk assessment model demonstrated that a 
minimum 4-log reduction could provide an appropriate level of consumer 
protection. Thus, the Board concluded that a 4-log reduction was an 
appropriate standard for almonds.
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    \1\ Journal of Food Protection, Vol. 69, No. 7, 2006, Pages 
1594-1599.
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Treatment Processes

    Acceptable treatment processes for handlers would have to utilize 
technologies that have been determined to achieve a minimum 4-log 
reduction of Salmonella bacteria in almonds, pursuant to a letter of 
determination issued by the FDA, or acceptance by a scientific review 
panel as identified by the Board (known as the Technical Expert Review 
Panel, or TERP).
    The FDA reviews studies utilizing specific protocols and treatment 
parameters, and issues a letter of determination when it determines 
that a process has sufficiently demonstrated its effectiveness to 
achieve a 5-log reduction of Salmonella in almonds. To date, FDA has 
issued letters of determination for propylene oxide (PPO), oil 
roasting, blanching, and for a moist heat process.
    The TERP would evaluate various treatment technologies against 
specific criteria, based on recommendations provided by the National 
Advisory Committee on Microbiological Criteria in Food (NACMCF). The 
NACMCF was formed in 1988 under Departmental Regulation 1043-28, and 
provides impartial, scientific advice to Federal food safety agencies 
for use in the development of an integrated national food safety 
systems approach from farm to final consumption to assure the safety of 
domestic, imported, and exported foods. It is co-sponsored by USDA's 
Food Safety and Inspection Service, the FDA, the Center for Disease 
Control and Prevention, the National Marine Fisheries Service, and the 
Department of Defense Veterinary Service Activity.
    While the TERP would not ``recommend'' or ``approve'' technologies, 
its review would ensure that technologies utilized by the industry have 
been evaluated against specific science-based criteria demonstrating 
the technology's ability to deliver a lethal treatment for Salmonella 
in almonds. Documentation and data would be provided to the TERP (by a 
company pursuing TERP acceptance for its technology) for review to 
ensure that the proposed technologies are consistently achieving the 
minimum 4-log reduction.
    The TERP, initially formed by the Board in the fall of 2004 to 
review treatment technologies, consists of four scientists, with a 
representative from the FDA serving as an ex-officio member. The TERP 
has been evaluating various technologies and treatments for the almond 
industry, and to date, the TERP has accepted steam and moist heat 
treatments as acceptable for achieving the Board's Salmonella reduction 
goals. Membership on the TERP would be approved annually by the Board 
prior to the beginning of each crop year, or more frequently if needed 
during the crop

[[Page 70685]]

year, for example, to fill a vacancy on the panel.

On-Site Versus Off-Site Treatment

    Under the Board's proposal, unless handlers shipped their almonds 
to a Board-approved DV user (described later in this document), or 
shipped their almonds to locations outside of the U.S., Canada, or 
Mexico, handlers would have to subject their almonds to a treatment 
process or processes prior to shipment either at their handling 
facility (on-site), or at an off-site treatment facility located within 
the production area (California). An off-site facility may or may not 
be affiliated with another handler. Transportation of almonds by a 
handler to an off-site treatment facility would not be considered a 
shipment.

Validation by Process Authorities

    Handlers could only use, or transport their almonds to off-site 
treatment facilities that use treatment processes that have been 
``validated'' by a Board-approved process authority. Validation means 
that the treatment technology and equipment utilized have been 
demonstrated to achieve the minimum 4-log reduction. The use of process 
authorities is modeled after process authorities as cited in the 
``Guide to Inspections of Low Acid Canned Food Manufacturers'' (Guide) 
(https://www.fda.gov). Treatment technology and equipment that have been 
modified to the point where operating parameters such as time, 
temperature, or volume, change must be revalidated.
    For purposes of this document, a process authority is a person or 
an organization that has expert knowledge of appropriate processes for 
the treatment of almonds as described above, and meets other criteria 
as specified by the Board. Such criteria would include, but not be 
limited to, the following: (1) Knowledge about the equipment used for 
the treatment process; (2) experience in conducting appropriate studies 
to determine the ability of the equipment to deliver the appropriate 
treatment (such as heat penetration or heat distribution studies); and 
(3) the ability to determine that sufficient data has been gathered to 
identify the critical factors needed to ensure the quality of the final 
product. On an annual basis, process authorities would have to submit 
an application to the Board on ABC Form No. 51, ``Application for 
Process Authority for Almonds,'' and be approved by the Board's TERP. 
Should the applicant disagree with the TERP's decision, it could appeal 
the decision in writing to the Board, and ultimately to USDA.

Compliance and Verification Program

Treatment Plans
    To ensure compliance with the mandatory program, handlers would be 
subject to verification by the Federal or Federal-State Inspection 
Service (inspection agency). Handlers could use either an on-site 
(traditional) or an audit-based verification program. Each handler 
would decide which verification program would be the most cost-
effective for his or her operation. All handlers would be required to 
submit a treatment plan to the Board for the upcoming crop year by May 
31. The crop year runs from August 1 through July 31 of the subsequent 
year. However, for the 2007-08 crop year, which would be the first year 
that the mandatory program was in effect, handlers would have to submit 
their treatment plans by May 1, 2007. The plan would be reviewed by the 
Board in conjunction with the inspection agency to ensure such plans 
were complete and auditable. The plan would be approved by the Board 
and must address specific parameters for the handler to ship almonds. 
Such parameters would include, but not be limited to, the following: 
(1) The location of treatment plant; (2) the name and address of off-
site treatment facility (custom processor), if appropriate; (3) a 
statement regarding whether treatment processes have been accepted by 
the TERP and/or ``determined'' by the FDA; (4) a statement regarding 
validation of treatment technology and equipment by a Board-approved 
process authority; (5) a statement whether untreated almonds would be 
exported; (6) a statement whether the handler would use the DV program; 
(7) a description or flow chart explaining how raw, untreated almonds 
enter and flow through the handler facility, and how the product would 
flow through the treatment process, including post treatment, packing, 
and/or storage; (8) a list of all treatments that would be used on the 
almonds (including, for example, number of blanching lines, etc.); (9) 
a description of how treated product would be differentiated and 
segregated from untreated product to ensure maintenance of treated 
product integrity; (10) a list of procedures regarding how interhandler 
transfers would be tracked; and (11) an explanation by handlers using a 
combination of processes to achieve a minimum 4-log reduction, that the 
processes occur in an appropriate sequence in sufficiently close 
proximity to ensure that the integrity of the treated product is 
maintained between processes.
    Almonds sent by a handler for treatment to an off-site facility 
affiliated with another handler would be subject to the approved 
treatment plan utilized at that off-site facility. Handlers would have 
to follow their own approved treatment plans for almonds sent to an 
off-site facility that is not affiliated with another handler.

On-Site Verification Program

    Under an on-site verification program, handlers would cause the 
inspection agency to verify that their almonds had been subjected to an 
acceptable treatment process that had been validated by a Board-
approved process authority. Such handlers would have to submit, or 
cause to be submitted, a verification report to the Board. The 
inspection agency would have to physically observe the treatment 
process to issue such a report. It would be the handler's 
responsibility to arrange for inspection agency verification. An on-
site program would be comparable to a traditional in-line or lot 
inspection program.

Audit-Based Verification Program

    Under an audit-based verification program, handlers would be 
subject to periodic audits conducted by the inspection agency. The 
inspection agency would verify that handlers were following their 
approved treatment plans. Audit frequency would be tied to handler 
performance. Handlers would be provided with written audit reports 
specifying deficiencies. Handlers who do not comply with an audit-based 
verification program would be required to revert to an on-site 
verification program. Audit reports would be provided to the Board to 
facilitate program compliance.
Interhandler Transfers
    Interhandler transfers of almonds may or may not be treated prior 
to transfer. Handlers receiving untreated almonds from another handler 
would be responsible for treating the product. Handlers receiving 
treated almonds from another handler would need to have procedures 
outlined in their treatment plan addressing how the integrity of the 
treated almonds would be maintained. In all instances involving 
interhandler transfers, it would be the responsibility of the receiving 
handler to ensure that the almonds are treated prior to shipment and to 
maintain documentation to that effect.
Handler Records
    Handlers would be required to maintain records and documentation

[[Page 70686]]

that would be subject to audit by the inspection agency and the Board 
for the purpose of verifying compliance with the regulation. Consistent 
with Sec.  981.70 of the order regarding handler records and 
verification, records would have to be maintained for 2 full years 
following the end of a crop year. Such records would identify lots from 
the point of treatment forward to the point of shipment by the handler. 
Lot identification would also provide the ability to differentiate 
treated from untreated product.
Exemptions

Direct Verifiable Program

    Handlers could ship untreated almonds directly to Board-approved 
manufacturers within the U.S., Canada, or Mexico for further processing 
under the Direct Verifiable or DV program. The Board would issue a DV 
user code to an approved manufacturer. Handlers would have to reference 
this code on all documentation accompanying the lot. This would help 
the Board track DV shipments and facilitate compliance with the 
program. Handlers would also have to identify each container of such 
almonds with the term ``unpasteurized.'' Container means a box, bin, 
bag, carton, or any other type of receptacle used in the packaging or 
handling of bulk almonds. The lettering must be on one outside 
principal display panel, at least \1/2\ inch in height, clear and 
legible. If a third party is involved in the transaction, the handler 
must provide sufficient documentation to the Board to track the 
shipment from the handler's facility to the approved DV user.
    Manufacturers wanting to participate in the DV program would have 
to submit an application annually to the Board on ABC Form No. 52, 
``Application for Direct Verifiable (DV) Program for Further Processing 
of Untreated Almonds,'' and be approved by the Board's TERP. Should the 
applicant disagree with the TERP's decision, it could appeal the 
decision in writing to the Board, and ultimately to USDA.
    Similar to handlers, manufacturers would have to subject the 
almonds to a treatment process or processes using technologies that 
achieve in total a minimum 4-log reduction of Salmonella bacteria as 
determined by the FDA or accepted by the TERP. Additionally, 
manufacturers could use treatment processes that have been 
``established'' by a Board-approved process authority. ``Established'' 
means that that the process authority would evaluate treatment 
processes and protocols to ensure the technology's ability to deliver a 
lethal treatment for Salmonella in almonds and achieve a minimum 4-log 
reduction. The Board recommended this option to address manufacturers' 
concern regarding the process to seek TERP acceptance of their 
treatments, which could involve providing data on their proprietary 
processes to the TERP (i.e., specific time and temperature data for 
special equipment).
    Manufacturers must also do the following: (1) Identify the 
manufacturing locations where treatment would occur; (2) have their 
treatment technology and equipment validated by a Board-approved 
process authority. Treatment technology and equipment that have been 
modified to the point where operating parameters such as time, 
temperature, or volume, change must be revalidated; (3) maintain all 
records regarding validation and verification of treatment methods, 
processing, and product traceability for 2 years, and make such records 
available for review by the Board; and (4) ship untreated almonds (due, 
for example, to a manufacturer overbuying) to a handler, to another 
approved DV user, to locations outside the U.S., Canada, or Mexico 
(containers must remain identified with the term unpasteurized), or 
dispose of such almonds in non-edible channels.
    Further, DV users would be audited by a Board-approved auditor 
within 1-2 months after the start of treatments, and at least once 
every 12 months thereafter. Such audits would determine if: (1) The DV 
user utilized appropriate treatment processes; (2) the DV user has a 
letter issued by a Board-approved process authority that validated that 
the treatment achieves a 4-log reduction of Salmonella; (3) personnel 
and procedures used at the facility ensure that treatment parameters 
were followed; and (4) records are retained for two years that document 
the treatment of almonds, or that any untreated almonds were properly 
disposed of as outlined above. A summary audit report of the DV user 
would be sent to the Board within 10 days of the audit. On an annual 
basis, DV user auditors would have to submit an application to the 
Board on ABC Form No. 53, ``Application for Direct Verifiable (DV) 
Program Auditors,'' and be approved by the Board's TERP. Should the 
applicant disagree with the TERP's decision, it could appeal the 
decision in writing to the Board, and ultimately to USDA.
    The Board recommended including Mexico and Canada as part of the DV 
program for compliance purposes. The Board was concerned that handlers 
could circumvent the regulation by shipping untreated almonds to Mexico 
or Canada, then, bring them back into the U.S. and sell them in normal 
market channels.

Shipments Outside of the U.S., Canada, or Mexico

    Handlers could also ship untreated almonds directly to locations 
outside the U.S., Canada, or Mexico, provided that each container of 
such almonds is prominently identified with the term unpasteurized. The 
lettering must be on one outside principal display panel, at least \1/
2\ inch in height, clear and legible. Again, if a third party is 
involved in the transaction, the handler must provide sufficient 
documentation to the Board to track the shipment from the handler's 
facility to the importer in the foreign country.
    Accordingly, a new paragraph (b) regarding outgoing quality control 
and a mandatory program to reduce the potential for Salmonella bacteria 
contamination in almonds is proposed to be added to Sec.  981.442 of 
the order's administrative rules and regulations.

Initial Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this rule on small entities. Accordingly, AMS has 
prepared this initial regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business 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. Thus, both statutes have small 
entity orientation and compatibility.
    There are approximately 6,000 producers of almonds in the 
production area and approximately 115 handlers subject to regulation 
under the marketing order. Additionally, the Board estimates there 
would be about 25 process authorities, 53 almond manufacturers, and 50 
DV program auditors impacted by this rule. Small agricultural producers 
are defined by the Small Business Administration (13 CFR 121.201) 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 $6,500,000.
    Data for the most recently completed crop year indicate that about 
52 percent of the handlers shipped under $6,500,000 worth of almonds. 
Dividing

[[Page 70687]]

average almond crop value for 2003-2005 reported by the National 
Agricultural Statistics Service (NASS) ($2.043 billion) by the number 
of producers (6,000) yields an average annual producer revenue estimate 
of about $340,000. Based on the foregoing, about half of the handlers 
and a majority of almond producers may be classified as small entities. 
While data regarding the size of the process authorities is not 
available, it may be assumed that some process authorities, almond 
manufacturers, and DV program auditors may be classified as small 
entities.
    The almond industry's 6,000 growers produce approximately 1 billion 
pounds annually (kernel weight basis). Industry members expect 
production to increase by 50 percent in the next 3-5 years, due to a 
significant amount of newly planted acreage that will come into 
production.
    Although the Board currently projects that there are about 115 
handlers, handler number estimates can vary over time. Recent surveys 
have yielded estimates ranging from 112 (see Table 1) to 117 (see Table 
2). Handlers ultimately market their almonds to customers in the U.S. 
and abroad. As shown in Table 1, the Board estimates that about 27 of 
112 handlers handle more than 10 million pounds each, and cumulatively 
handle 82 percent of the crop.

                                Table 1.--Number of Handlers Categorized by Size
----------------------------------------------------------------------------------------------------------------
                                                                            Between 1    Between 5
                                                              Less than 1     and 5        and 10     More than
                                                                million      million      million     10 million
                                                                  lbs.         lbs.         lbs.         lbs.
----------------------------------------------------------------------------------------------------------------
No. of handlers.............................................           41           28           16           27
Percent of crop handled.....................................            1            6           11           82
----------------------------------------------------------------------------------------------------------------

    According to data provided by the Board, about 30 percent of 
California almonds are sold domestically (about 300 million pounds). An 
estimated 20 percent of the domestic shipments are in the form of 
manufactured product--blanched, sliced, diced, or otherwise further 
processed using thermal treatments. About 70 percent of California 
almond production is exported to more than 80 countries worldwide. 
Mexico and Canada account for approximately 5 percent of export 
shipments. The quantities shipped by companies handling almonds vary 
considerably. However, a limited number of handlers are responsible for 
the majority of domestic and export shipments as shown in Table 2 
below. Table 2 shows that 16 handlers are responsible for 90 percent of 
domestic shipments. Many of the same handlers are among the 38 that are 
responsible for 90 percent of exports. About 79 of an estimated 117 
handlers are responsible for the remaining 10 percent of export 
shipments.

                                       Table 2.--Handler Shipment Summary
----------------------------------------------------------------------------------------------------------------
                                                                     Export to Canada and   All export (includes
                                                  Domestic (U.S.)     Mexico 37,600,000      Canada and Mexico)
                                                300,000,000 pounds          pounds           700,000,000 pounds
----------------------------------------------------------------------------------------------------------------
No. of handlers responsible for 50 percent of                    3                      4                      9
 shipments....................................
No. of handlers responsible for 80 percent of                   12                     16                     26
 shipments....................................
No. of handlers responsible for 90 percent of                   16                     26                     38
 shipments....................................
----------------------------------------------------------------------------------------------------------------

    This rule would add a new paragraph (b) for outgoing quality 
control under Sec.  981.442 of the order's administrative rules and 
regulations, whereby a mandatory program to reduce the potential for 
Salmonella bacteria in almonds would be implemented under the order. 
Specifically, handlers would have to subject their almonds to a 
treatment process that achieves a minimum 4-log reduction in Salmonella 
bacteria prior to shipment. The program would exempt handlers who ship 
untreated almonds under a direct verifiable (DV) program to 
manufacturers within the U.S., Canada, or Mexico who agree to treat the 
almonds accordingly. The program would also exempt handlers who ship 
untreated almonds to locations outside of the U.S., Canada, or Mexico. 
All containers of untreated almonds shipped under the exemptions would 
have to be prominently identified with the term ``unpasteurized.'' The 
program would take effect for the 2007-08 crop year which 25 begins on 
August 1, 2007. Authority for the program is provided in Sec.  
981.42(b) of the order.
    According to the Board, the costs to individual handlers to comply 
with the program would vary considerably depending on their markets and 
treatment method(s) chosen. Handlers could: (1) Install new equipment 
in their processing lines to treat the almonds prior to shipment into 
commercial channels; (2) outsource to another handler or an off-site 
facility within California for treatment; (3) transfer their untreated 
product to another handler who would treat the almonds prior to 
shipment; (4) ship their untreated almonds to Board-approved DV users 
or to locations outside of the U.S., Canada, or Mexico; or (5) use a 
combination of these approaches.
    In a handler survey conducted by the Board in March 2005 (to which 
116 handlers handling almonds at that time responded), 86 handlers (74 
percent) have their own facilities and/or equipment to process almonds; 
the remainder have almonds processed on their behalf. Of those handlers 
with their own facilities and/or equipment, 66 (77 percent of 86) 
indicated they planned to install equipment to treat almonds while the 
remaining 20 indicated they would outsource to a third party, or custom 
processor. Again, the overall economic impact of the program would vary 
based on the approach selected. Smaller handlers may choose to defer 
purchasing equipment and send their almonds to an off-site facility for 
treatment until more cost effective technologies are available.
    Costs would also vary by treatment method. Some handlers may choose 
to install PPO chambers at their facilities. Handler sources estimate 
that typical installation costs for a PPO chamber range from $500,000 
to $1,250,000. As with other technologies, overall cost would depend 
upon how much infrastructure is in place in the processing facility as 
well as the desired

[[Page 70688]]

capacity of the chambers. Actual treatment cost for handlers treating 
their own product is approximately $0.03 per pound, varying with volume 
and efficiencies. PPO treatment is currently available in the industry 
on a contract basis at $0.04-$0.05 per pound (including transportation 
to the facility).
    Regarding steam technologies, handler sources estimate the 
following equipment costs for in-line steam systems designed to treat 
almonds at varying capacities from 1,000 pounds to over 30,000 pounds 
of almonds per hour:

Table 3.--Estimated Equipment Costs for Steam Units for Differing Levels
                          of Treatment Capacity
------------------------------------------------------------------------
          Capacity  (pounds per hour)                Equipment costs
------------------------------------------------------------------------
1,000..........................................        $100,000-$200,000
5,000..........................................          300,000-325,000
7,500-15,000...................................          370,000-470,000
20,000-30,000..................................          525,000-800,000
Over 30,000....................................        600,000-1,000,000
------------------------------------------------------------------------

    While treatment equipment costs would be the most significant 
outlay, there would also be capital expenditures associated with 
additional conveyance equipment, boilers, cooling systems, bins, and 
possible expansion or construction of new buildings. Handler sources 
estimate these costs to be an additional 50 percent of the treatment 
equipment costs cited in Table 3, depending on capacity needs, and 
assuming maximum throughput.
    A typical system of 10 million pound annual capacity would be 
equivalent to 22,000 pounds per hour, which falls in the 20,000 to 
30,000 pound per hour range in Table 3. The treatment equipment costs 
for that capacity range from $525,000 to $800,000. With an additional 
50 percent for cost of other related equipment and facility expansion, 
the costs range from $787,500 to $1,200,000. Handler sources suggest 
that a figure near the upper end of that range, $1,125,000, is a good 
point estimate of the cost for a 10,000,000 pound per year treatment 
line.
    An important step in assessing the financial impact of the proposed 
mandatory treatment on handlers is to estimate the annualized equipment 
cost and operating cost of treating the almonds to prevent Salmonella 
contamination. This can be illustrated by additional computations, with 
10,000,000 pounds per year serving as a representative level of 
treatment capacity, as shown in Table 4, third line of column A. Table 
4 also shows a range of costs across different levels of handler 
treatment capacity.

                   Table 4.--Estimate of Average Annual Equipment and Operating Costs at Varying Levels of Handler Treatment Capacity
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                      D E  Unit cost of equipment       F          G H  Equipment plus
                                                                       C  Annual use               at             -------------     operating cost at
                                                         B  Total         cost of    -----------------------------             -------------------------
             A  Handler annual capacity               equipment cost   equipment, 5       50% of          Full       Average       50% of        Full
                                                             *         year life **    capacity  (c/    capacity    operating     capacity     capacity
                                                                                         50% of A)       (C/A)         cost        (D+F)        (E+F)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                      (Pounds)                                                                                  Cents per pound
-----------------------------------------------------                                -------------------------------------------------------------------
2,000,000...........................................        $300,000         $69,292          $0.069       $0.035      $0.0035      $0.0725      $0.0385
5,000,000...........................................         487,500         112,600           0.045        0.023       0.0035       0.0485       0.0265
10,000,000..........................................       1,125,000         259,845           0.052        0.026       0.0035       0.0555       0.0295
15,000,000..........................................       1,500,000         346,460           0.046        0.023       0.0035       0.0495       0.0265
20,000,000..........................................       1,650,000         381,106           0.038        0.019       0.0035       0.0415       0.0225
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Equipment cost estimates at varying capacity levels, including treatment chambers, plus an additional 50 percent for conveyors, other equipment and
  extension of facilities.
** Annualized equipment cost is computed by dividing the equipment purchase cost by 4.3295, which is the Present Value of a $1 annuity for 5 Years
  (estimated life of the equipment) at a 5 percent interest rate (estimated cost of capital).
Source for equipment and operating costs: Almond handlers.

    To obtain the annual unit cost for installing a 10 million pound 
capacity treatment line (an expenditure of $1,125,000 in column B), the 
first step is to obtain the annualized equipment cost. The parameters 
recommended by the handlers were a 5 year equipment life and a 5 
percent cost of capital. The annual equipment use factor (4.3295) is 
the present value of a $1 annuity for 5 years at 5 percent. Dividing 
the total equipment expenditure of $1,125,000 by 4.3295 yields an 
annualized equipment cost estimate of $259,845 (column C). Dividing 
this figure by the annual 10,000,000 pound capacity yields a cost per 
pound estimate of 2.6 cents (column E). If the treatment line ran at 
half capacity, the equipment costs per pound would double to 5.2 cents 
(column D).
    This method of computing annualized equipment cost does not account 
for the tax implications of annual equipment depreciation or for the 
salvage value at the end of the equipment's useful life. In addition, 
the useful life of many pieces of equipment may well be over 5 years.
    Ongoing operational costs (electricity, etc.) are estimated by 
handlers to range from $0.0027 to $0.0043 per pound, depending on the 
system. The midpoint of this range ($0.0035) appears in column F.
    The key results from Table 4 are the cost estimates per pound of 
almonds treated, including both annualized equipment costs and 
operating costs. The highest cost is 7.25 cents per pound for the 
smallest handler (2 million pounds treated annually) operating at 50 
percent capacity (column G). The lowest cost estimate is 2.25 cents per 
pound for a handler treating 20 million pounds per year operating at 
full capacity (column H). These costs can be put in context by 
comparing them to almond grower prices as reported each year by the 
NASS. For 2003 to 2005, grower prices averaged $2.07 per pound, 
computed by dividing the value of production for those three years by 
the three-year quantity of production. The treatment cost estimates per 
pound in Table 4

[[Page 70689]]

range from 3 percent to 1 percent of the 2003-2005 average grower 
price, and represent an even smaller proportion of the prices paid to 
handlers when selling to almond users further down the marketing chain.
    A key aspect of handler costs is the proportion of total capacity 
at which a new production line would operate. Operating at higher 
capacity spreads the equipment cost across a wider base. For a small 
handler, investing in equipment with this level of capacity may only be 
viable economically if the costs are spread over their entire 
production run, rather than only applying costs to a small portion of 
their production run. If they do not intend to run their entire 
production through the treatment process, it may be more viable to 
outsource the treatment. Costs of contract processing (i.e., batch 
operations for steam processes or PPO treatment) are estimated to range 
from $0.04 to $0.05 per pound. This estimate includes additional costs 
associated with transporting almonds to a custom facility ($0.01 to 
$0.015 per pound). For medium-sized and larger handlers, it may be more 
cost effective to construct a treatment processing line, particularly 
if they intend to immediately put a significant portion of their 
production through the process.
    Handler sources estimate that the cost of setting up a new oil 
roast line is $300,000 to $600,000, with operating costs of $0.06 to 
$0.10 per pound. A blanching line may cost upward of $1,500,000 to 
$2,500,000 with an operating cost of approximately $0.12 to $0.22 per 
pound. It is unlikely that handlers would select these technologies 
unless they are already providing custom processed, value-added 
products to their customers.
    Regarding compliance and oversight costs, it is anticipated that 
handlers who do not currently have thorough recordkeeping procedures in 
place would likely have to invest approximately 40-80 person-hours to 
develop their treatment plan. However, once this document has been 
created, it would be updated on an annual basis, which would likely 
involve less time. Validation of treatment systems is estimated to cost 
from $1,000 to $3,000 per line, depending upon the complexity of the 
equipment utilized. Treatment technology and equipment that have been 
modified to the point where operating parameters such as time, 
temperature, or volume, change must be revalidated.
    Handler verification costs could vary, depending on whether the 
handler was under an on-site program or an audit-based program. The fee 
for an on-site program would be a minimum charge of $44.00 per hour 
(with 1 hour required to treat 44,000 pounds), or $0.204 per 
hundredweight, whichever is greater. The former is equivalent to $1.00 
per thousand pounds treated. For an audit-based program, the fee would 
be $78.00 per hour. Travel time for both programs would be charged at 
$44.00 per hour and $0.34 per mile.
    Examples of estimated handler verification costs are provided in 
Tables 5 and 6 below:

                          Table 5.--Annual Handler Verification Costs: On-Site Program
----------------------------------------------------------------------------------------------------------------
                                                                   Volume of almonds treated per year
                                                      ----------------------------------------------------------
                  Audit cost by type                    100,000    2 mill.    40 mill.   100 mill.    250 mill.
                                                          lbs        lbs        lbs         lbs          lbs
----------------------------------------------------------------------------------------------------------------
Hourly rate*.........................................       $100     $2,000    $40,000     $100,000     $250,000
Per Cwt = $.204......................................        204      4,080     81,600      204,000      510,000
----------------------------------------------------------------------------------------------------------------
* Hourly rate of $44/hour, with 1 hour required per 44,000 1bs of volume treated (equivalent to $1.00 per
  thousand pounds treated).


                        Table 6.--Annual Handler Verification Costs: Audit-Based Program
----------------------------------------------------------------------------------------------------------------
                                                      Audit cost by hours required to complete audit*
                                         -----------------------------------------------------------------------
                                             1        2        3        4        5        6        7        8
----------------------------------------------------------------------------------------------------------------
Audit hourly cost = $78.................      $78     $156     $234     $312     $390     $468     $546     $624
Auditor Transportation Cost**...........       32       32       32       32       32       32       32       32
Cost per individual audit...............      110      188      266      344      422      500      578      656
----------------------------------------------------------------------------------------------------------------
* Estimated hours per audit varies by volume treated annually: (up to 2 milllon pounds: 1-3 hours); (more than 2
  but less than 40 million pounds: 2-5 hours); (40 million pounds or more: 3-8 hours).
** Estimated auditor transportation cost to each facility is approximately $32: $22 for travel time (\1/2\ hour
  @ $44/hour) plus mileage reimbursement of $10 (30 miles @ $0.34 per mile).

    The benefits associated with the proposed mandatory program are the 
avoided costs of a Salmonella outbreak. These costs may vary depending 
on several factors, including the quantity of product recalled, impact 
on consumer sales, lost customer confidence, insurance costs, and 
possible litigation. Using 2003-2005 average almond crop value as the 
basis, a loss of 5 percent would be equal to approximately $102 
million.
    The Board considered various alternatives and options to a 
mandatory treatment program. One option would be to take no action. 
However, the Board concluded that this was not in the best interest of 
the industry nor consumers. The Board believes that the industry should 
provide consumers with a quality product. Taking no action when there 
are viable alternatives could be significant in terms of the financial 
well being of the industry should another outbreak occur that was 
linked to almonds.
    The Board also considered continuing its voluntary action plan 
alone, without proposing a mandatory program. However, surveys 
conducted by the Board indicate that not all handlers are implementing 
the action plan. Thus, the Board concluded that a mandatory program is 
in the best interest of the industry and consumers.
    The Board also considered the effectiveness of testing for 
Salmonella prior to shipment. During the 2001 and 2004 outbreaks, 
significant amounts of testing occurred at the orchard level, in 
hulling and shelling facilities, and at retail. However, it was 
determined by the CDHS, University of California, Davis, and other 
pathogen experts that testing cannot be relied upon as the only

[[Page 70690]]

measure to ensure that almonds are Salmonella free. Thus, the Board 
concluded that testing alone was not a viable alternative.
    The Board also explored the merits of requiring alternative log 
reductions. As previously mentioned, the Board initially supported a 5-
log reduction, which was FDA's performance standard. However, a risk 
assessment model demonstrated that a minimum 4-log reduction could 
provide an appropriate level of consumer protection compared to a 5-log 
reduction. Thus, the Board concluded that a minimum 4-log reduction was 
an appropriate standard for almonds.
    The Board also explored the merits of whether the DV program should 
be temporary, whereby all almonds would be treated at the handler level 
prior to shipment. The Board submitted an initial proposal to USDA in 
February 2006 that would have ultimately required handlers to treat all 
almonds prior to shipment, with the DV program being temporary. 
However, concerns were raised by various parties, including 
manufacturers, handlers, and foreign countries, regarding the temporary 
nature of the DV program, and the requirement that all exported almonds 
be treated prior to shipment. The Board ultimately revised its proposal 
to remove the proviso regarding discontinuance of the DV program, to 
allow untreated almonds to be shipped to locations outside the U.S., 
Canada, or Mexico, and to require that all containers of untreated 
almonds be prominently identified with the term ``unpasteurized.''
    This action would impose additional reporting and recordkeeping 
burden on California almonds handlers, process authorities, almond 
manufacturers, and DV program auditors. Process authorities, 
manufacturers, and DV auditors would be required to submit respective 
applications to the Board annually. Almond handlers would be required 
to submit treatment plans to the Board annually. These new forms and a 
sample ``Handler Treatment Plan'' are being submitted to the Office of 
Management and Budget (OMB) for approval under OMB Control No. 0581-
NEW. Specific burdens for the three applications and handler treatment 
plan are detailed later in this document in the section titled 
Paperwork Reduction Act. 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. 
Finally, USDA has not identified any relevant Federal rules that 
duplicate, overlap, or conflict with this rule.
    Additionally, the meetings were widely publicized throughout the 
California almond industry and all interested persons were invited to 
attend the meetings and participate in deliberations on all issues. 
Between the summer of 2004 and the Board's August 2006, meeting, this 
issue was addressed at an estimated 12 Board meetings, 18 Food Quality 
and Safety Committee meetings, and well over 20 task force meetings. 
All of these meetings were public meetings and all entities, both large 
and small, were able to express views on this issue. Additionally, the 
Board issued about 35 updates to handlers regarding its voluntary 
action plan and progress towards its recommended mandatory program. 
Finally, interested persons are invited to submit information on the 
regulatory and informational impacts of this action on small 
businesses.
    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/fv/moab.html. Any questions about the compliance 
guide should be sent to Jay Guerber at the previously mentioned address 
in the FOR FURTHER INFORMATION CONTACT section.
    A 45-day comment period is provided for interested persons to 
comment on this proposal.The comment period is deemed appropriate 
because the Board recommended that the mandatory program be in effect 
for the 2007-08 crop year, which begins August 1, 2007. For that year, 
handlers would have to submit their treatment plans to the Board by May 
1, 2006. All written comments received will be considered before a 
final determination is made on this matter.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the AMS announces its intention to request approval of a 
new information collection under the marketing order for California 
almonds.
    Title: Almonds Grown in California, Marketing Order No. 981.
    OMB No.: 0581-NEW.
    Expiration Date of Approval: 3 years from OMB date of approval.
    Type of Request: New collection.
    Abstract: The information collection requirements in this request 
are essential to carry out the intent of the Act, to provide the 
respondents the type of service they request, and to administer the 
California almond marketing order program, which has been operating 
since 1950.
    On August 22, 2006, the Board unanimously recommended adding a new 
section to the order's administrative rules and regulations to 
implement a mandatory program to help reduce the potential for 
Salmonella in almonds. This document concerns the additional reporting 
and recordkeeping requirements regarding this mandatory program, in 
addition to the accompanying regulation previously discussed. Almond 
handlers would be required to submit annual treatment plans to the 
Board and inspection agency regarding how they plan to treat their 
almonds to reduce the potential for Salmonella. Entities interested in 
being almond process authorities that would validate technologies would 
have to submit an application to the Board on ABC Form No. 51, 
``Application for Process Authority for Almonds.'' Manufacturers in the 
U.S., Canada, and Mexico interested in being approved to accept 
untreated almonds, provided they agree to treat the almonds themselves 
under the Board's DV program, would have to submit an application to 
the Board on ABC Form No. 52, ``Application for Direct Verifiable (DV) 
Program for FurtherProcessing of Untreated Almonds.'' Entities 
interested in being approved DV user auditors would have to submit an 
application to the Board on ABC Form No. 53, ``Application for Direct 
Verifiable (DV) Program Auditors.'' This information would be needed by 
the Board to properly administer the mandatory Salmonella treatment 
program for the California almond industry.
    The information collected is used only by authorized 
representatives of USDA, including AMS, Fruit and Vegetable Programs 
regional and headquarters' staff, and authorized employees and agents 
of the Board. Authorized Board employees, agents, and the industry are 
the primary users of the information and AMS is the secondary user.

Handler Treatment Plan

    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to be no more than 27.3 hours per response (80 
hours per response for the first year of regulation, and 1 hour per 
response each year thereafter) .
    Respondents: Almond handlers.
    Estimated Number of Respondents: 115.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 3,143 hours per year 
(9,200 hours for the first year of

[[Page 70691]]

regulation, and 115 hours for each year thereafter).

Application for Process Authority for Almonds--ABC Form No. 51

    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 2 hours per response.
    Respondents: Persons or organizations that would like to qualify to 
be Board-approved process authorities that validate treatments and 
technologies.
    Estimated Number of Respondents: 25.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 50 hours.

Application for Direct Verifiable (DV) Program for FurtherProcessing of 
Untreated Almonds--ABC Form No. 52

    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 1 hour per response.
    Respondents: Manufacturers who would like to qualify to participate 
in the Board's direct verifiable program.
    Estimated Number of Respondents: 53.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 53 hours.

Application for Direct Verifiable (DV) Program Auditors--ABC Form No. 
53

    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 1 hour per response.
    Respondents: Entities that would like to qualify as auditors under 
the DV program.
    Estimated Number of Respondents: 50.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 50 hours.
    Comments: Comments are invited on: (1) Whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the agency, including whether the information will 
have practical utility; (2) the accuracy of the agency's estimate of 
the burden of the proposed collection of information, including the 
validity of the methodology and assumptions used; (3) ways to enhance 
the quality, utility, and clarity of the information to be collected; 
and (4) ways to minimize the burden of the collection of information on 
those who are to respond, including the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology.
    Comments should reference OMB No. 0581-NEW and the California 
almond marketing order, and be sent to the USDA in care of the Docket 
Clerk at the address above. All comments received will be available for 
public inspection during regular business hours at the same address. 
All responses to this notice will be summarized and included in the 
request for OMB approval. All comments will also become a matter of 
public record.
    The 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.
    It is estimated that handlers and manufacturers may spend between 
20-100 hours annually maintaining records pertaining to this rule. 
Using a figure of $10 per hour (a sum deemed reasonable, should 
handlers and manufacturers be compensated for this time), it is 
estimated that the recordkeeping burden would cost handlers and 
manufacturers between $200-$1,000 per year. Additionally, handler and 
manufacturers would have to maintain related records and documentation 
for two full years following the end of the crop year.
    A 60-day comment period is provided to allow interested persons to 
comment on this proposed information collection.

List of Subjects in 7 CFR Part 981

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

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

PART 981--ALMONDS GROWN IN CALIFORNIA

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

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

    2. Section 981.442 is amended by adding paragraph (b) to read as 
follows:


Sec.  981. 442  Quality control.

* * * * *
    (b) Outgoing. Pursuant to Sec.  981.42(b), beginning with the 2007-
08 crop year, which begins on August 1, 2007, and except as provided in 
Sec.  981.13 and in paragraph (6) of this section, handlers shall 
subject their almonds to a treatment process or processes prior to 
shipment to reduce potential Salmonella bacteria contamination in 
accordance with the provisions of this section.
    (1) Treatment process. Acceptable treatment processes shall utilize 
technologies that have been determined to achieve in total a minimum 4-
log reduction of Salmonella bacteria in almonds, pursuant to a letter 
of determination issued by the Food and Drug Administration(FDA), or 
acceptance by a scientific review panel as identified by the Board 
(Technical Expert Review Panel or ``TERP''). Such panel shall be 
approved at least annually by the Board prior to the beginning of each 
crop year, or as needed during the crop year.
    (2) On-site versus off-site treatment. Handlers shall subject 
almonds to a treatment process or processes prior to shipment either at 
their handling facility (on-site), or at an off-site treatment facility 
located within the production area. Transportation of almonds by a 
handler to an off-site treatment facility shall not be deemed a 
shipment.
    (3) Validation by process authorities. Handlers shall only use, or 
transport their almonds to off-site treatment facilities that use 
treatment processes that have been validated by a Board-approved 
process authority. Valida