Marketing Order Regulations for Almonds Grown in California, 9455-9462 [2022-03460]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 87, Number 35 (Tuesday, February 22, 2022)]
[Proposed Rules]
[Pages 9455-9462]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-03460]


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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. 87, No. 35 / Tuesday, February 22, 2022 / 
Proposed Rules

[[Page 9455]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Doc. No. AMS-SC-21-0076; SC21-981-1 PR]


Marketing Order Regulations for Almonds Grown in California

AGENCY: Agricultural Marketing Service, Department of Agriculture 
(USDA).

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This proposed rule would implement a recommendation from the 
Almond Board of California (Board) to make changes to multiple 
provisions in the administrative requirements prescribed under the 
Federal marketing order regulating the handling of almonds grown in 
California. This action would revise several provisions in the Order's 
requirements to facilitate the efficient administration of the Order.

DATES: Comments must be received by April 25, 2022. Comments on the 
forms and information collection must also be received by April 25, 
2022.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposed rule. Comments must be sent to the Docket 
Clerk, Market Development Division, Specialty Crops Program, AMS, USDA, 
1400 Independence Avenue SW, STOP 0237, Washington, DC 20250-0237; Fax: 
(202) 720-8938; or via internet at: https://www.regulations.gov. 
Comments should reference the document number and the date and page 
number of this issue of the Federal Register. All comments will be made 
available for public inspection in the Office of the Docket Clerk 
during regular business hours, or can be viewed at: https://www.regulations.gov. All comments submitted in response to this 
proposed rule will be included in the record and will be made available 
to the public on the internet at the address provided above. Please be 
advised that the identity of individuals or entities submitting 
comments will be made public.

FOR FURTHER INFORMATION CONTACT: Peter Sommers, Marketing Specialist, 
or Gary Olson, Regional Director, West Region Field Office, Market 
Development Division, Specialty Crops Program, AMS, USDA; Telephone: 
(559) 487-5901, Fax: (559) 487-5906, or Email: [email protected] 
or [email protected].
    Small businesses may request information on complying with this 
regulation by contacting Richard Lower, Market Development 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 action, pursuant to 5 U.S.C. 553, 
proposes to amend regulations issued to carry out a marketing order as 
defined in 7 CFR 900.2(j). This proposed rule is issued under Marketing 
Order No. 981, as amended (7 CFR part 981), regulating the handling of 
almonds grown in California. Part 981 (referred to as the ``Order'') is 
effective under the Agricultural Marketing Agreement Act of 1937, as 
amended (7 U.S.C. 601-674), hereinafter referred to as the ``Act.'' The 
Board locally administers the Order and comprises growers and handlers 
of almonds operating within the production area.
    The Department of Agriculture (USDA) is issuing this proposed rule 
in conformance with Executive Orders 12866 and 13563. Executive Orders 
12866 and 13563 direct agencies to assess all costs and benefits of 
available regulatory alternatives and, if regulation is necessary, to 
select regulatory approaches that maximize net benefits (including 
potential economic, environmental, public health and safety effects, 
distributive impacts, and equity). Executive Order 13563 emphasizes the 
importance of quantifying both costs and benefits, reducing costs, 
harmonizing rules, and promoting flexibility. This action falls within 
a category of regulatory actions that the Office of Management and 
Budget (OMB) exempted from Executive Order 12866 review.
    This proposed rule has been reviewed under Executive Order 13175--
Consultation and Coordination with Indian Tribal Governments, which 
requires agencies to consider whether their rulemaking actions would 
have tribal implications. The Agricultural Marketing Service (AMS) has 
determined this proposed rule is unlikely to have substantial direct 
effects on one or more Indian tribes, on the relationship between the 
Federal Government and Indian tribes, or on the distribution of power 
and responsibilities between the Federal Government and Indian tribes.
    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This proposed rule is not intended to have 
retroactive effect.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with USDA a petition 
stating that the order, any provision of the order, or any obligation 
imposed in connection with the order is not in accordance with law and 
request a modification of the order or to be exempted therefrom. A 
handler is afforded the opportunity for a hearing on the petition. 
After the hearing, USDA would rule on the petition. The Act provides 
that the district court of the United States in any district in which 
the handler is an inhabitant, or has his or her principal place of 
business, has jurisdiction to review USDA's ruling on the petition, 
provided an action is filed not later than 20 days after the date of 
the entry of the ruling.
    This proposed rule would amend administrative requirements in the 
Order regulating the roadside stand exemption, credit for market 
promotion activities, quality control, exempt dispositions, and 
interest and late charges provisions. In addition, the proposed rule 
would stay two sections of the administrative requirements that define 
almond butter and stipulate disposition in reserve outlets by handlers. 
These proposed changes modify the requirements to reflect updates in 
industry practices and are expected to help facilitate the orderly 
administration of the Order. The Board unanimously recommended these 
changes at meetings held on December 7, 2020, and June 17, 2021.
    Multiple sections in the Order provide the authority for this 
proposed action. The authorities are cited with

[[Page 9456]]

the descriptions of each of the proposed changes in the following 
narrative.
    Section 981.13 of the Order defines the term ``handler.'' The 
definition includes an exemption for roadside stand sales. Section 
981.413 of the Order's administrative requirements further expounds 
roadside stand sales by setting certain conditions that must be met for 
sales to be exempted from regulation under the Order. This proposed 
rule would add language to the requirements to clarify that sales of 
almonds through E-commerce (electronic commerce) are not exempt from 
regulation under the roadside stand exemption.
    Section 981.41(c) of the Order provides the authority to establish 
provisions for crediting a handler's direct expenditures for marketing 
promotion against that handler's assessment obligation. Section 981.441 
of the Order's administrative requirements delineates the provisions 
that handlers must meet to have a portion of their marketing promotion 
expenditures, including paid advertising, credited against their pro 
rata assessment obligation. This provision is otherwise known as 
Credit-Back. This proposed rule would allow the Board, with the 
approval of the Secretary, to annually establish a limit on the Credit-
Back amount allowed for a handler's expenditures on E-commerce. 
Further, this rule would modify the receipt submission and 
reimbursement requirements for the Credit-Back program and update the 
provisions for appealing the Board's Credit-Back decisions.
    Section 981.42 of the Order provides the authority to establish 
quality control regulations for both incoming and outgoing product. 
Section 981.442 of the Order's administrative requirements establishes 
quality control regulations under that authority. Section 981.442(a) 
establishes the quality requirements for incoming product received by 
handlers. Section 981.442(b) establishes the quality requirements for 
outgoing product prior to being shipped by handlers.
    This proposal would modify provisions in Sec.  981.442(a) to 
clarify ambiguous language, remove irrelevant dates, and more clearly 
define ``accepted user'' as it is referenced in the regulations. The 
proposed rule would also relax the requirements for handlers in meeting 
their disposition obligation under the regulations. The incoming 
quality requirements would be amended to allow inedible kernels, 
foreign material, and other defects sorted from off-site cleaning 
facilities to be credited to a handler's disposition obligation. In 
addition, almond meal would be allowed to meet the non-inedible portion 
of the disposition obligation, with the meal content to be determined 
in a manner acceptable to the Board.
    In Sec.  981.442(b), the proposed rule would amend the regulations 
to facilitate handlers utilizing off-site cleaning and treatment 
facilities in fulfillment of their quality control requirements. The 
proposal would allow the transfer of product for off-site cleaning 
without being considered a shipment, would designate off-site treatment 
facilities as ``custom processors,'' and would establish application 
and approval procedures for Board authorization of such custom 
processors. This action would also clarify the roles of the Technical 
Expert Review Panel (TERP) and the Board in administering the program 
as detailed in several provisions in Sec.  981.442(b). Lastly, the 
proposed rule would refine the duties of a Direct Verifiable (DV) 
program auditor to disallow individuals who conduct process validations 
from being named as the DV auditor for that same equipment used in the 
treatment process.
    Section 981.50 of the Order establishes handler reserve obligation 
requirements. Under those Order provisions, certain products are 
exempted from the reserve obligation, subject to the accountability of 
the Board. Section 981.450 establishes the provisions for exempt 
dispositions under the reserve obligation. This proposed rule would 
enhance the procedures currently in place for the Board to account for 
exempt dispositions. Under the proposed rule, outlets for exempted 
product would need to be pre-approved by the Board in accordance with 
the requirements contained in Sec.  981.442(a)(7).
    Section 981.66(b) of the Order establishes the conditions governing 
the disposition of reserve product. Within that paragraph, diversion of 
reserve almonds to be manufactured into almond butter is listed as an 
allowable outlet for such product. Section 981.466 further defines 
``almond butter'' as used in Sec.  981.66. The expanded definition of 
almond butter is no longer relevant in the administration of the 
program. The proposed rule would stay Sec.  981.466 indefinitely.
    Section 981.467 establishes the requirements regarding the 
disposition in reserve outlets by handlers. The section details the 
establishment of agents of the Board, delineates reserve credit in 
satisfaction of a reserve obligation, sets minimum prices, and 
establishes certain dates pertaining to the reserve disposition 
obligations. As the Order is not currently regulating volume, and a 
significant portion of the requirements is outdated, the provisions in 
Sec.  981.467 are not currently relevant to the administration of the 
Order. As such, this proposed rule would stay the entire section 
indefinitely.
    Lastly, Sec.  981.481 stipulates the requirements for submission of 
handler assessment payments, which includes documentary requirements 
for proof of timely submission of assessment payments. Other than 
actual receipt of payment in the Board's office within 30 days of the 
invoice date on the handler's statement, the current provisions only 
identify the U.S. Postal Service postmark as proof of timely 
submission. This proposed rule would add ``or by some other verifiable 
delivery tracking system'' to allow handlers alternative delivery 
methods.
    The Board believes that the changes recommended herein are 
necessary to update the Order's administrative requirements to adapt to 
changes in the industry and to reflect current industry practices. Many 
of the revisions may be considered conforming changes, but the proposed 
rule also makes changes to the Credit-Back provisions and quality 
control regulations that the Board views as essential to the continued 
efficient administration of the Order. The proposed changes contained 
herein are expected to facilitate the orderly marketing of California 
almonds and benefit growers and handlers in the industry.

Initial Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) 
has considered the economic impact of this action on small entities. 
Accordingly, AMS has prepared this initial regulatory flexibility 
analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
businesses subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, are unique in that they are brought about through 
group action of essentially small entities acting on their own behalf.
    There are approximately 7,600 almond growers in the production area 
and approximately 100 handlers subject to regulation under the Order. 
Small agricultural producers are defined by the Small Business 
Administration (SBA) as those having annual receipts of less than 
$1,000,000, and small agricultural service firms are defined as

[[Page 9457]]

those having annual receipts of less than $30,000,000 (13 CFR 121.201).
    The National Agricultural Statistics Service (NASS) reported in its 
2017 Census of Agriculture (Census) that there were 7,611 almond farms 
in the production area, of which 6,683 had bearing acres. Additionally, 
the Census indicates that out of the 6,683 California farms with 
bearing acres of almonds, 4,425 (66 percent) have fewer than 100 
bearing acres.
    In another publication, NASS reported a 2019 crop year average 
yield of 2,160 pounds per acre and a season average grower price of 
$2.43 per pound. Therefore, a 100-acre farm with an average yield of 
2,160 pounds per acre would produce about 216,000 pounds of almonds 
(2,160 pounds times 100 acres equals 216,000 pounds). At $2.43 per 
pound, that farm's production would be valued at $524,880 (216,000 
pounds times $2.43 per pound equals $524,880). Since the Census 
indicated that 66 percent of California's almond farms are less than 
100 acres, it could be concluded that the majority of California almond 
growers had annual receipts from the sale of almonds of less than 
$524,880 for the 2019-20 crop year, which is below the SBA threshold of 
$1,000,000 for small producers. Therefore, the majority of growers may 
be classified as small businesses.
    To estimate the proportion of almond handlers that would be 
considered small businesses, it was assumed that the unit value per 
pound of almonds exported in a particular year could serve as a 
representative almond price at the handler level. A unit value for a 
commodity is the value of exports divided by the quantity exported. 
Data from the Global Agricultural Trade System (GATS) database of 
USDA's Foreign Agricultural Service showed that the value of almond 
exports from August 2019 to July 2020 (combining shelled and inshell) 
was $4.691 billion. The quantity of almond exports over that time-
period was 1.78 billion pounds. Dividing the export value by the 
quantity yields a unit value of $2.64 per pound ($4.691 billion divided 
by 1.78 billion pounds equals $2.64).
    NASS estimated that the California almond industry produced 2.55 
billion pounds of almonds in 2019. Applying the $2.64 derived 
representative handler price per pound to total industry production 
results in an estimated total revenue at the handler level of $6.73 
billion (2.55 billion pounds x $2.64 per pound). With an estimated 100 
handlers in the California almond industry, average revenue per handler 
would be approximately $67.3 million ($6.73 billion divided by 100). 
Assuming a normal distribution of revenues, most almond handlers 
shipped almonds valued at more than $30,000,000 during the 2019-20 crop 
year. Therefore, the majority of handlers may be classified as large 
businesses.
    This proposed rule would revise multiple provisions in the Order's 
administrative requirements. This proposal would amend regulations 
covering the Order's roadside stand exemption, credit for market 
promotion activities, quality control, exempt dispositions, and 
interest and late charges provisions. In addition, it would stay 
regulations contained in Sec. Sec.  981.466 and 981.467. One of the 
sections defines almond butter and the other regulates almond 
disposition in reserve outlets by handlers. Both sections would be 
stayed indefinitely.
    More specifically, the proposed rule would add language in Sec.  
981.413 to clarify that sales of almonds through E-commerce are not 
exempt from regulation under the roadside stand exemption.
    In addition, the action would modify Sec.  981.441 to allow the 
Board, with the approval of the Secretary, to annually establish a 
limit on the Credit-Back amount allowed for a handler's expenditures on 
E-commerce. Further, this rule would modify the receipt submission and 
reimbursement requirements for the Credit-Back program, as well as 
update the provisions for appealing the Board's Credit-Back decisions.
    In Sec.  981.442(a), the proposed rule would clarify ambiguous 
language, remove irrelevant dates, and more clearly define the term 
``accepted user'' as it is referenced in the regulations. It would also 
relax the requirements for handlers in meeting their disposition 
obligation under the Order.
    In Sec.  981.442(b), the proposed rule would allow the transfer of 
product for off-site cleaning without being considered a shipment, 
designate off-site treatment facilities as ``custom processors,'' and 
establish the application and approval procedures for Board 
authorization of custom processors. This proposal would also clarify 
the roles of the TERP and the Board in administering the program in 
several subparagraphs in the section. Further, the proposed rule would 
refine the definition of a DV program auditor to disallow individuals 
who conduct process validations from being named as the DV auditor for 
that same equipment used in the treatment process.
    Additionally, this proposed rule would amend Sec.  981.450 to 
require outlets for exempted product be Board-approved, in accordance 
with Sec.  981.442(a)(7).
    Further, under the proposed action, Sec.  981.466, which defines 
``almond butter'' as it is used in Sec.  981.66(b), is no longer 
relevant in the administration of the program and would be stayed 
indefinitely. In addition, as the Order is not currently regulating 
volume, Sec.  981.467 is not necessary for the administration of the 
Order and would also be stayed indefinitely.
    Lastly, this action would revise Sec.  981.481 by adding ``or by 
some other verifiable delivery tracking system'' to the requirements to 
allow handlers alternative trackable delivery methods for demonstration 
of timely submission of assessment payments.
    The authorities for the proposed changes above are contained in 
Sec. Sec.  981.13, 981.41, 981.42, 981.50, 981.66, 981.67, and 981.81 
of the Order.
    The Board believes that the administrative requirement revisions 
recommended herein are necessary to reflect changes in the industry and 
to update the regulations to reflect current practices. Many of the 
modifications may be considered conforming changes, but this proposal 
also makes substantive changes to the Credit-Back provisions and 
quality control requirements that the Board views as essential to the 
efficient administration of the Order. The proposed changes contained 
herein are expected to facilitate the orderly marketing of California 
almonds and benefit growers and handlers in the industry. The Board 
unanimously recommended these changes at meetings held on December 7, 
2020, and June 17, 2021.
    AMS anticipates that this proposed rule would impose minimal, if 
any, additional costs on handlers or growers, regardless of size. The 
proposed changes to the administrative requirements are intended to 
clarify certain provisions, remove ambiguous and obsolete language, and 
adapt the requirements to facilitate the orderly marketing of almonds. 
The benefits derived from this proposed rule are not expected to be 
disproportionately more or less for small handlers or growers than for 
larger entities.
    The Board considered alternatives to this action, including making 
no changes to the current requirements, only making changes to some of 
the requirements, and recommending the changes be considered as two 
separate rulemaking actions. Prior to the recommendation of the Board, 
the Board's Almond Quality, Food Safety and Services Committee reviewed 
the program, surveyed handlers, and unanimously recommended this action

[[Page 9458]]

to the Board. After consideration of all the alternatives, and in 
consultation with USDA, the Board determined that making all the 
recommended changes, collectively in one rule, would be the best option 
to facilitate the Order's administration, contribute to the orderly 
marketing of almonds, and provide the greatest benefit to growers and 
handlers while maintaining the integrity of the Order.
    Further, the Board's meetings were widely publicized throughout the 
California almond industry, and all interested persons were invited to 
attend the meetings and participate in Board deliberations. Like all 
Board and subcommittee meetings, the December 7, 2020, and June 17, 
2021, meetings were public meetings, and all entities, both large and 
small, were able to express their views on this issue. Finally, 
interested persons are invited to submit comments on this proposed 
rule, including the regulatory and information collection impacts of 
this proposed action on small businesses.
    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 Nos. 0581-0178 (Vegetable and Specialty Crops) and 0581-
0242 (Almond Salmonella). This proposed rule announces AMS's intent to 
request approval from OMB for amendments made to existing information 
collections under OMB Nos. 0581-0178 and 0581-0242, and for a new 
information collection under OMB No. 0581-NEW.
    Upon finalization of the proposed rule, AMS will submit a 
Justification for Change to OMB for the Statement of Intent form 
contained in the ABC Credit-Back Guide (OMB No. 0581-0178). The form is 
necessary to administer the Credit-Back provisions as established in 
Sec.  981.441 of the Order's requirements. This proposed rule would 
change the number of days that the applicant is afforded to submit all 
necessary paperwork for proper evaluation of their Credit-Back claim 
from 76 days to 60 days. The Credit-Back Statement of Intent form 
included in the Credit-Back Guide would be changed accordingly.
    In addition, also upon finalization of the proposed rule, AMS will 
submit a Justification for Change to OMB for the ABC Form 52--Direct 
Verifiable (DV) Program for Further Processing of Untreated Almonds 
Application Form (OMB No. 0581-0242). The form is necessary to 
administer the DV Program established by Sec.  981.442(b)(6)(i) in the 
Order's quality control requirements. The proposed rule would change 
the body that approves DV Program applications from the TERP to the 
Board. The instructions that accompany ABC Form 52 would need to be 
revised accordingly.
    Lastly, this proposed rule would create a new form for California 
almond handlers, titled ABC Form 55--Custom Processor Application.
    Title: Custom Processor Application (7 CFR part 981).
    OMB Number: 0581-NEW.
    Type of Request: New Collection.
    Abstract: The information requirements in this request are 
essential to carry out the intent of the Act and to administer the 
Order. The Order is effective under the Act, and USDA is responsible 
for the oversight of the Order's administration.
    The Order's quality control requirements for outgoing product 
require handlers to subject their almonds to a treatment process or 
processes prior to shipment to reduce potential Salmonella bacteria 
contamination. The Order's quality control requirements allow handlers 
to utilize off-site treatment facilities to fulfill that requirement. 
The Committee unanimously recommended that the Order's quality control 
requirements be amended to define off-site treatment facilities located 
within the production area as ``custom processors'' and to require such 
custom processors to annually apply to the Board for approval.
    An individual desiring approval as a custom processor must 
demonstrate that their facility meets the Order's treatment process 
requirements and must submit an application to the Board. This form, 
numbered ABC Form 55 and titled ``Custom Processor Application,'' would 
be submitted directly to the Board once each year no later than July 
31. The application would provide the Board with the name of the 
applicant, the location of each treatment facility covered by the 
application, applicant contact information, and certification that the 
applicant's technology and equipment provide a treatment process that 
has been validated by a Board-approved process authority.
    The Order authorizes the Board to collect certain information 
necessary for the administration of the Order. The information 
collected would only be used by authorized representatives of the USDA, 
including the AMS Specialty Crops Program regional and headquarters 
staff, and authorized employees of the Board. All proprietary 
information would be kept confidential in accordance with the Act and 
the Order.
    The proposed request for new information collection under the Order 
is as follows:

Custom Processor Application

    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to be an average of 0.5 hours per response.
    Respondents: Nut processors located within the Order's area of 
production.
    Estimated Number of Respondents: 25.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Responses: 25.
    Estimated Total Annual Burden on Respondents: 12.5 hours.
    Comments are invited on: (1) Whether the proposed collection of 
information is necessary for the proper performance of the functions of 
the Agency, including whether the information will have practical 
utility; (2) the accuracy of the Agency's estimate of the burden of the 
proposed collection of information, including the validity of the 
methodology and assumptions used; (3) ways to enhance the quality, 
utility, and clarity of the information to be collected; and (4) ways 
to minimize the burden of the collection of information on those who 
are to respond, including the use of appropriate automated, electronic, 
mechanical, or other technological collection techniques or other forms 
of information technology.
    Comments should reference OMB No. 0581-NEW and the marketing order 
for almonds grown in California. Comments should be sent to the USDA in 
care of the Docket Clerk at the previously mentioned address or at 
https://www.regulations.gov.
    All responses to this notice will be summarized and included in the 
request for OMB approval. All comments received will become a matter of 
public record and will be available for public inspection during 
regular business hours at the address of the Docket Clerk or at https://www.regulations.gov.
    If this proposed rule is finalized, this information collection 
will be merged with the forms currently approved under OMB No. 0581-
0242 (Almond Salmonella).
    As with all Federal marketing order programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies. USDA has not 
identified any relevant Federal rules that duplicate, overlap, or 
conflict with this proposed rule.

[[Page 9459]]

    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.
    Further, the Board's meetings are widely publicized throughout the 
California almond industry, and all interested persons are invited to 
attend the meetings and participate in Board deliberations on all 
issues. Like all Board meetings, the December 7, 2020, and June 17, 
2021, meetings were open to the public, and all entities, both large 
and small, were able to express their views on this issue. Also, the 
Board has several appointed committees to review certain issues and 
make recommendations to the Board. The Board's Almond Quality, Food 
Safety, and Services Committee met several times in 2019 and discussed 
this issue in detail. Those meetings were also public meetings, and 
both large and small entities were able to participate and express 
their views. Finally, interested persons are invited to submit comments 
on this proposed rule, including the regulatory and information 
collection 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: 
https://www.ams.usda.gov/rules-regulations/moa/small-businesses. Any 
questions about the compliance guide should be sent to Richard Lower at 
the previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    A 60-day comment period is provided to allow interested persons to 
respond to this proposal. All written comments timely received will be 
considered before a final determination is made on this matter.

List of Subjects in 7 CFR Part 981

    Marketing agreements, Nuts, Reporting and recordkeeping 
requirements.
    For the reasons set forth in the preamble, the Agricultural 
Marketing Service proposes to amend 7 CFR part 981 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. Amend Sec.  981.413 by adding a sentence at the end of the paragraph 
to read as follows:


Sec.  981.413  Roadside stand exemption.

    * * * Sales of almonds through E-commerce are not eligible for this 
exemption.
0
3. Amend Sec.  981.441 by revising paragraphs (e)(4)(ii)(K), (e)(5), 
(e)(6)(ii) through (iv), and (f) to read as follows:


Sec.  981.441  Credit for market promotion activities, including paid 
advertising.

* * * * *
    (e) * * *
    (4) * * *
    (ii) * * *
    (K) Development and use of website on the internet for advertising 
and public relations purposes, including E-commerce (mail ordering 
through the internet): Provided, That Credit-Back for such activities 
shall be limited to a specific amount per crop year, to be established 
in conjunction with the approval of the Board's annual budget by the 
Secretary. No credit shall be given for costs for E-commerce 
administration, Extranet (restricted websites within the internet), 
Intranet (inter-office communication network), or portions of a website 
that target the farming or grower trade.
* * * * *
    (5) If the handler is promoting pursuant to a contract with the 
Foreign Agricultural Service (FAS) of the U.S. Department of 
Agriculture (USDA) and/or the California Department of Food and 
Agriculture (CDFA), such activities must also meet the requirements of 
paragraphs (e)(1), (2), (3), (4), and (6) of this section. Unless the 
Board is administering the foreign marketing program, such activities 
shall not be eligible for Credit-Back unless the handler certifies that 
it was not and will not be reimbursed by either FAS or the CDFA for the 
amount claimed for Credit-Back, and has on record with the Board all 
claims for reimbursement made to FAS and/or the CDFA. Foreign market 
expenses paid by third parties as part of a handler's contract with FAS 
or CDFA will not be eligible for Credit-Back.
    (6) * * *
    (ii) Handlers may receive credit against their assessment 
obligation up to the year-to-date advertising amount of the assessment, 
less the year-to-date reimbursed claims: Provided, That handlers submit 
the required documentation for a qualified activity at least 2 weeks 
prior to the mailing of each of the Board's first and second assessment 
notices, and at least 3 weeks prior to the mailing of each of the 
Board's third and fourth assessment notices in a crop year. In all 
other instances, handlers must remit the advertising assessment to the 
Board when billed, and a refund will be issued to the extent of proven, 
qualified activities.
    (iii) In addition to the credit against an assessment obligation as 
provided in paragraph (e)(6)(ii) of this section, the Board will issue 
Credit-Back reimbursements, by check or other means, on June 30 for any 
claim submission received by May 31 of the same crop year.
    (iv) The final opportunity to submit a claim for any given crop 
year requires submission of notice to the Board by August 15 of the 
following crop year. Notice must be given using the Statement of Intent 
form that is included in the Credit-Back Guide. Final claim submissions 
for activities outlined in the Statement of Intent must be submitted 
with all required elements no more than 60 days after the close of the 
crop year.
    (f) If a determination is made by the Board staff that a particular 
promotional activity is not eligible for Credit-Back because it does 
not meet the criteria specified in this section, or for any other 
reason, the affected handler may request a Board-designated committee 
to review the Board staff's decision. If the affected handler disagrees 
with the decision, the handler may request that the Board review the 
designated committee's decision. If the handler disagrees with the 
decision of the Board, the handler, through the Board, may request that 
the Secretary review the Board's decision. Handlers have the right to 
request anonymity in the review of their appeal. The Secretary 
maintains the right to review any decisions made by the aforementioned 
bodies at his/her discretion.
0
4. Amend Sec.  981.442 by:
0
a. Revising paragraphs (a)(1), (a)(4)(i), and (a)(5);
0
b. Revising the introductory text of paragraph (b);
0
c. Revising paragraphs (b)(2), (b)(3)(i) and (v), and (b)(4)(i) and 
(v);
0
d. Revising the introductory text of paragraph (b)(6)(i); and
0
e. Revising paragraphs (b)(6)(i)(A), (C), and (D).
    The revisions read as follows:


Sec.  981.442  Quality control.

    (a) * * *
    (1) Sampling. Each handler shall cause a representative sample of 
almonds to be drawn from each lot of any variety received from any 
incoming source. The sample shall be drawn before inedible kernels are 
removed from the lot after hulling/shelling, or before the lot is 
processed or stored by the handler. For receipts at premises with 
mechanical sampling equipment

[[Page 9460]]

and under contracts providing for payment by the handler to the grower 
for sound meat content, samples shall be drawn by the handler in a 
manner acceptable to the Board and the inspection agency. The 
inspection agency shall make periodic checks of the mechanical sampling 
procedures. For all other receipts, including but not limited to field 
examination and purchase receipts, accumulations purchased for cash at 
the handler's door or from an accumulator, or almonds of the handler's 
own production, sampling shall be conducted or monitored by the 
inspection agency in a manner acceptable to the Board. All samples 
shall be bagged and identified in a manner acceptable to the Board and 
the inspection agency.
* * * * *
    (4) * * *
    (i) The weight of inedible kernels in excess of 2 percent of kernel 
weight reported to the Board of any variety received by a handler shall 
constitute that handler's disposition obligation. For any almonds sold 
inshell, the weight may be reported to the Board and that disposition 
obligation for that variety reduced proportionately.
* * * * *
    (5) Meeting the disposition obligation. Each handler shall meet its 
disposition obligation by delivering packer pickouts, kernels rejected 
in blanching, pieces of kernels, meal accumulated in manufacturing, or 
other material, to Board-approved accepted users, which can include, 
but is not limited to, crushers, feed manufacturers, feeders, or 
dealers in nut wastes, located withing the production area. Inedible 
kernels, foreign material, and other defects sorted from edible kernels 
by off-site cleaning facilities may be used towards that handler's 
disposition obligation or destroyed. Handlers shall notify the Board at 
least 72 hours prior to delivery of product to an off-site cleaning 
facility or accepted user location: Provided, That the Board or its 
employees may lessen this notification time whenever it determines that 
the 72 hour requirement is impracticable. The Board may supervise 
deliveries at its option. In the case of a handler having an annual 
total obligation of less than 1,000 pounds, delivery may be to the 
Board in lieu of an accepted user, in which case the Board would 
certify the disposition lot and report the results to the USDA. For 
dispositions by handlers with mechanical sampling equipment, samples 
may be drawn by the handler in a manner acceptable to the Board and the 
inspection agency. For all other dispositions, samples shall be drawn 
by or under supervision of the inspection agency. Upon approval by the 
Board and the inspection agency, sampling may be accomplished at the 
accepted user's destination. The edible and inedible almond meat 
content of each delivery shall be determined by the inspection agency 
and reported by the inspection agency to the Board and the handler. The 
handler's disposition obligation will be credited upon satisfactory 
completion of ABC Form 8. ABC Form 8, Part A, is filled out by the 
handler, and Part B by the accepted user. At least 50 percent of a 
handler's total crop year inedible disposition obligation shall be 
satisfied with dispositions consisting of inedible kernels as defined 
in Sec.  981.408: Provided, That this 50 percent requirement shall not 
apply to handlers with total annual obligations of less than 1,000 
pounds. Each handler's disposition obligation shall be satisfied when 
the almond meat content of the material delivered to accepted users 
equals the disposition obligation, but no later than September 30 
succeeding the crop year in which the obligation was incurred. Almond 
meal can be used for meeting the non-inedible portion of the 
obligation. Meal content shall be determined in a manner acceptable to 
the Board.
* * * * *
    (b) Outgoing. Pursuant to Sec.  981.42(b), and except as provided 
in Sec.  981.13 and in paragraph (b)(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. Temporary transfer by a 
handler to an off-site cleaning facility is not considered a shipment 
under this section. Handlers may utilize off-site cleaning facilities 
within the production area, on record with the Board, to provide 
sorting services to separate inedible kernels, foreign material, and 
other defects from edible kernels. Product sent by a handler to an off-
site cleaning facility is considered a temporary transfer, with 
ownership maintained by the handler, and accountability required for 
all product fractions and handler obligations pursuant to Sec.  981.42.
* * * * *
    (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 a custom processor (defined as a 
Board-approved off-site treatment facility located within the 
production area subject to the provisions of paragraph (b)(4)(v) of 
this section). Transportation of almonds by a handler to a custom 
processor shall not be deemed a shipment. A handler with an on-site 
treatment process or processes may use such facility to act as a custom 
processor for other handlers.
    (3) * * *
    (i) Validation means that the treatment technology and equipment 
have been demonstrated to achieve in total a minimum 4-log reduction of 
Salmonella bacteria in almonds. Validation data prepared by a Board-
approved process authority must be submitted to the Board, and accepted 
by the TERP, for each piece of equipment used to treat almonds prior to 
its use under the program.
* * * * *
    (v) The TERP, in coordination with the Board, may revoke any 
approval for cause. The Board shall notify the process authority in 
writing of the reasons for revoking the approval. Should the process 
authority disagree with the decision, they may appeal the decision in 
writing to the Board, and ultimately to USDA. A process authority whose 
approval has been revoked must submit a new application to the TERP and 
await approval.
    (4) * * *
    (i) By May 31, each handler shall submit to the Board a Handler 
Treatment Plan (Treatment Plan) for the upcoming crop year. A Treatment 
Plan shall describe how a handler plans to treat his or her almonds and 
must address specific parameters as outlined by the Board for the 
handler to ship almonds. Such plan shall be reviewed by the Board, in 
conjunction with the inspection agency, to ensure it is complete and 
can be verified, and be approved by the Board. Almonds sent by a 
handler for treatment at a custom processing facility affiliated with 
another handler shall be subject to the approved Treatment Plan 
utilized at that facility. Handlers shall follow their own approved 
Treatment Plans for almonds sent to custom processors that are not 
affiliated with another handler.
* * * * *
    (v) Custom processors shall provide access to the inspection agency 
and Board staff for verification of treatment and review of treatment 
records. Custom processors 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 recommendation 
issued by FDA or accepted by TERP. Custom processors must submit a 
Custom Processor Application, ABC Form XX, to the Board annually by 
July

[[Page 9461]]

31. A custom processor who submits a timely application, and utilizes a 
treatment process or processes that has been validated by a Board-
approved process authority and approved by the Board in conjunction 
with the TERP, shall be approved by the Board for handler use. The 
Board may revoke any such approval for cause. The Board shall notify 
the custom processor of the reasons for revoking the approval. Should 
the custom processor disagree with the Board's decision, it may appeal 
the decision in writing to USDA. Handlers may treat their almonds only 
at custom processor treatment facilities that have been approved by the 
Board.
* * * * *
    (6) * * *
    (i) Handlers may ship untreated almonds for further processing 
directly to manufacturers located within the U.S., Canada, or Mexico. 
This program shall be termed the Direct Verifiable (DV) program. 
Handlers may only ship untreated almonds to manufacturers who have 
submitted ABC Form No. 52, ``Application for Direct Verifiable (DV) 
Program for Further Processing of Untreated Almonds,'' and have been 
approved by the Board. Such almonds must be shipped directly to 
approved manufacturing locations, as specified on Form No. 52. Such 
manufacturers (DV Users) must submit an initial Form No. 52 to the 
Board for review and approval in conjunction with the TERP. Should the 
applicant disagree with the Board's decision concerning approval, it 
may appeal the decision in writing to the Board, and ultimately to 
USDA. For subsequent crop years, approved DV Users with no changes to 
their initial application must send the Board a letter, signed and 
dated, indicating that there are no changes to the application the 
Board has on file. Approved DV Users desiring to make changes to their 
approved application must resubmit Form No. 52 to the Board for 
approval. The TERP, in coordination with the Board, may revoke any 
approval for cause. The Board shall notify the DV User in writing of 
the reasons for revoking the approval. Should the DV User disagree with 
the decision, it may appeal the decision in writing to the Board, and 
ultimately to USDA. A DV User whose approval has been revoked must 
submit a new application to the Board and await approval. The Board 
shall issue a DV User code to an approved DV User. Handlers must 
reference such code in all documentation accompanying the lot and 
identify each container of such almonds with the term 
``unpasteurized.'' Such lettering shall 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. While a third party may be 
involved in such transactions, shipments to a third party and then to a 
manufacturing location are not permitted under the DV program. Approved 
DV Users shall:
    (A) Subject such 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 established by a 
process authority accepted by the TERP, in accordance with and subject 
to the provisions and procedures of paragraph (b)(3) of this section. 
Establish means that the treatment process and protocol have been 
evaluated to ensure the technology's ability to deliver a lethal 
treatment for Salmonella bacteria in almonds to achieve a minimum 4-log 
reduction;
* * * * *
    (C) Have their treatment technology and equipment validated by a 
Board-approved process authority, and accepted by the TERP. 
Documentation must be provided with their DV application to verify that 
their treatment technology and equipment have been validated by a 
Board-approved process authority. Such documentation shall be 
sufficient to demonstrate that the treatment processes and equipment 
achieve a 4-log reduction in Salmonella bacteria. Treatment technology 
and equipment that have been modified to a point where operating 
parameters such as time, temperature, or volume change, shall be 
revalidated;
    (D) Have their technology and procedures verified by a Board-
approved DV auditor to ensure they are being applied appropriately. A 
DV auditor may not be an employee of the manufacturer that they are 
auditing. A DV auditor may not be the same individual who conducted the 
process validation accepted by the TERP for the equipment being 
audited. DV auditors must submit a report to the Board after conducting 
each audit. DV auditors must submit an initial application to the Board 
on ABC Form No. 53, ``Application for Direct Verifiable (DV) Program 
Auditors,'' and be approved by the Board in coordination with the TERP. 
Should the applicant disagree with the decision concerning approval, 
they may appeal the decision in writing to the Board, and ultimately to 
USDA. For subsequent crop years, approved DV auditors with no changes 
to their initial application must send the Board a letter, signed and 
dated, indicating that there are no changes to the application the 
Board has on file. Approved DV auditors whose status has changed must 
submit a new application. The Board, in coordination with the TERP, may 
revoke any approval for cause. The Board shall notify the DV auditor in 
writing of the reasons for revoking the approval. Should the DV auditor 
disagree with the decision to revoke, it may appeal the decision in 
writing to the Board, and ultimately to USDA. A DV auditor whose 
approval has been revoked must submit a new application to the Board 
and await approval;
* * * * *
0
5. Revise Sec.  981.450 to read as follows:


Sec.  981.450  Exempt dispositions.

    As provided in Sec.  981.50, any handler disposing of almonds for 
crushing into oil, or for animal feed, may have the kernel weight of 
these almonds excluded from their program obligations, so long as:
    (a) The handler qualifies as, or delivers such almonds to, a Board-
approved accepted user;
    (b) Each delivery is made directly to the accepted user by June 30 
of each crop year; and
    (c) Each delivery is certified to the Board by the handler on ABC 
Form 8.


Sec. Sec.  981.466 and 981.467  [Stayed]

0
6. Sections 981.466 and 981.467 are stayed indefinitely.
0
7. Revise Sec.  981.481 to read as follows:


Sec.  981.481  Interest and late payment charges.

    (a) Pursuant to Sec.  981.81(e), the Board shall impose an interest 
charge on any handler whose assessment payment has not been received in 
the Board's office within 30 days of the invoice date shown on the 
handler's statement, or the envelope containing the payment has not 
been legibly postmarked by the U.S. Postal Service or some other 
verifiable delivery tracking system, as having been remitted within 30 
days of the invoice date. The interest charge shall be a rate of one- 
and one-half percent per month and shall be applied to the unpaid 
assessment balance for the number of days all or any part of the unpaid 
balance is delinquent beyond the 30-day payment period.
    (b) In addition to the interest charge specified in paragraph (a) 
of this section, the Board shall impose a late payment charge on any 
handler whose payment has not been received in the Board's office, or 
the envelope containing the payment legibly

[[Page 9462]]

postmarked by the U.S. Postal Service or some other verifiable delivery 
tracking system, within 60 days of the invoice date. The late payment 
charge shall be 10 percent of the unpaid balance.

Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2022-03460 Filed 2-18-22; 8:45 am]
BILLING CODE P