Almonds Grown in California; Amendments to the Marketing Order, 25559-25565 [2023-08851]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 88, Number 81 (Thursday, April 27, 2023)]
[Proposed Rules]
[Pages 25559-25565]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-08851]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

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


Almonds Grown in California; Amendments to the Marketing Order

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule invites comments on proposed amendments to 
Marketing Order No. 981, which regulates the handling of almonds grown 
in California. The proposed amendments would modify certain marketing 
order provisions to facilitate orderly administration of the program. 
Additionally, the proposed amendments would modernize, simplify, or 
align language with current industry practices and definitions, and 
would establish authority to borrow funds. The proposal would also 
establish authority for the Almond Board of California (Board) to 
accept advanced assessments.

DATES: Comments must be received by June 26, 2023.

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. Please be advised that the identity of the 
individuals or entities submitting the comments will be made public.

FOR FURTHER INFORMATION CONTACT: Thomas Nalepa, Marketing Specialist, 
or Matthew Pavone, Chief, Rulemaking Services Branch, Market 
Development Division, Specialty Crops Program, AMS, USDA, 1400 
Independence Avenue SW, Stop 0237, Washington, DC 20250-0237; 
Telephone: (202) 720-2491, Fax: (202) 720-8938, or Email: 
[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, 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 proposal 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 area of production.
    Section 8c(17) of the Act (7 U.S.C. 608c(17)) and the applicable 
rules of practice and procedure governing the formulation of marketing 
agreements and orders (7 CFR part 900) authorize amendment of the Order 
through this informal rulemaking action. The Agricultural Marketing 
Service (AMS) will consider comments received in response to this 
proposed rule, and based on all the information available, will 
determine if the Order amendment is warranted. If AMS determines 
amendment of the Order is warranted, a subsequent proposed rule and 
notice of referendum would be issued, and producers would be allowed to 
vote for or against the proposed amendments. If appropriate, AMS would 
then issue a final rule effectuating any amendments approved by 
producers in the referendum.
    AMS 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

[[Page 25560]]

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. 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 proposal has been reviewed under Executive Order 12988, Civil 
Justice Reform.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 8c(15)(A) of the 
Act (7 U.S.C. 608c(15)(A)), any handler subject to an order may file 
with USDA a petition stating that the order, any provision of the 
order, or any obligation imposed in connection with the order is not in 
accordance with law and request a modification of the order or to be 
exempted therefrom. A handler is afforded the opportunity for a hearing 
on the petition. After the hearing, USDA would rule on the petition. 
The Act provides that the district court of the United States in any 
district in which the handler is an inhabitant, or has his or her 
principal place of business, has jurisdiction to review USDA's ruling 
on the petition, provided an action is filed no later than 20 days 
after the date of entry of the ruling.
    Section 1504 of the Food, Conservation, and Energy Act of 2008 
(2008 Farm Bill) (Pub. L. 110-246) amended section 8c(17) of the Act, 
which in turn required the addition of supplemental rules of practice 
to 7 CFR part 900 (73 FR 49307; August 21, 2008). The amendment of 
section 608c(17) of the Act and the supplemental rules of practice 
authorize the use of informal rulemaking (5 U.S.C. 553) to amend 
Federal fruit, vegetable, and nut marketing agreements and orders. USDA 
may use informal rulemaking to amend marketing orders depending upon 
the nature and complexity of the proposed amendments, the potential 
regulatory and economic impacts on affected entities, and any other 
relevant matters.
    AMS has considered these factors and has determined that the 
amendments proposed herein are not unduly complex and the nature of the 
proposed amendments is appropriate for utilizing the informal 
rulemaking process to amend the Order. This proposed rule encompasses a 
number of changes that are primarily administrative or modernizing in 
nature. These changes would simplify, clarify, or align Order language 
with current industry practices and definitions. A discussion of the 
potential regulatory and economic impacts on affected entities is 
discussed later in the ``Initial Regulatory Flexibility Analysis'' 
section of this proposed rule. The amendments would apply equally to 
all producers and handlers, regardless of size. The proposed amendments 
also have no additional impact on the reporting, record-keeping, or 
compliance costs of small businesses.
    The Board unanimously recommended seven proposed Order amendments 
following deliberations at a public meeting held on August 11, 2020. 
The Board submitted its formal recommendation to amend the Order 
through the informal rulemaking process on August 9, 2021. The proposed 
rule would:
     Amend the Order to modify the definitions of ``Almonds'' 
and ``Shelled almonds'', and add a definition for ``Almond biomass'' 
(Proposal 1).
     Change the date utilized to determine the applicable 
handler volume for the purpose of tabulating handler votes in the 
nomination process for handler positions on the Board (Proposal 2).
     Replace obsolete references to ``Control Board'' with 
``Board'' in two sections (Proposal 3).
     Simplify language pertaining to incoming quality control 
(Proposal 4).
     Change the date that the Board is required to submit 
volume regulation estimates and recommendations to the Secretary 
(Proposal 5).
     Remove language that distinguishes certain funds in the 
accounting of the Board's operating reserve fund and sets the reserve 
fund limit at approximately six-months' expenses instead of six-months' 
budget (Proposal 6).
     Add authority to accept advanced assessments and to borrow 
funds from commercial lenders (Proposal 7).

Proposal 1--Modification or Inclusion of Definitions for Almonds, 
Almond Biomass, and Shelled Almonds

    Sections 981.4 and 981.6 define Almonds and Shelled Almonds, 
respectively, for the purposes of the Order. Specifically, as defined 
in the Order, ``almonds mean (unless otherwise specified) all varieties 
of almonds (except bitter almonds), either shelled or unshelled, grown 
in the State of California, and for the purposes of research includes 
almond shells and hulls.'' ``Shelled almonds mean raw or roasted 
almonds after the shells are removed and includes blanched, diced, 
sliced, slivered, cut, halved, or broken almonds, or any combination 
thereof. Additional almond products may be included by the Secretary 
from time to time upon consideration of a recommendation from the Board 
or other pertinent information.'' This proposal would amend Sec.  981.4 
to broaden the definition of Almonds to include almond biomass for 
research purposes. This proposal would add a new section, Sec.  981.4 
(a), to specifically define almond biomass. Section 981.6, which 
defines Shelled almonds, would also be amended to include any form that 
almonds without shells might take.
    As the almond industry has significantly evolved since promulgation 
of the Order, the versatility of almond usage has also expanded.
    In the mid-1970s, the Board sought to redefine almonds to include 
shells and hulls. A formal rulemaking hearing covering that and other 
proposals took place. The initial proposal sought to redefine almonds 
to include hulls and shells for the purpose of Sec.  981.41. See 40 FR 
50289.
    Section 981.41 authorizes projects involving production and 
marketing research designed to assist, improve, or promote the 
marketing, distribution, consumption, or efficient production of 
almonds. Testimony at the hearing explained that research to find new 
and more profitable uses for, or better methods of, handling shells and 
hulls should be permitted under the Order. Testimony further indicated 
that shells and hulls together weigh approximately three times the 
kernelweight of almonds. Accordingly, a sizable quantity of shells and 
hulls is produced annually and represents a significant economic 
factor. Testimony indicated that grower returns could be improved if 
more profitable outlets or better methods of handling can be found for 
shells and hulls. See 41 FR 15341.
    Testimony at the hearing further indicated that the Board should 
not undertake any marketing promotion including advertising activity 
for shells and hulls. Ultimately, the definition of almonds was revised 
to include hulls and shells for the purposes of research. See 41 FR 
26852.
    This proposal would amend Sec.  981.4 to broaden the definition of 
Almonds to

[[Page 25561]]

include almond biomass for research purposes. This proposal would add a 
new section, Sec.  981.4(a), to specifically define almond biomass.
    In the past, biomass (hulls, shells, skins, prunings, etc.) offered 
limited additional value to the growers. Huller/shellers would 
primarily sell their hulls for feed, use the shells for bedding or 
power cogeneration, and burn woody biomass, such as whole trees or 
prunings. Now, with expanding production levels, the industry estimates 
that it generates over 5.6 billion pounds of hulls and shells alone 
each year. In addition, stricter environmental regulations have made it 
more difficult to dispose of organic material through burning. 
Consequently, the industry has devoted significant effort to identify 
new solutions to utilize waste material in the orchard or in other non-
edible product streams.
    With an increased focus on full utilization of what comes out of 
the almond orchard, innovative technologies and research have revealed 
more value-added applications for what were previously by-products with 
limited to no value. For example, almond skins, which are the result of 
blanching brownskin almonds, are being used for fiber addition, shells 
are incorporated into plastics using torrefaction, sugar can be 
extracted from hulls, and ``whole orchard recycling'' techniques 
incorporate chipped prunings and woody biomass into the soil. These new 
uses bring additional profitability to the grower.
    Therefore, the Board recommended that the current almond definition 
in Sec.  981.4 be broadened to accommodate all almond biomass, not just 
shells and hulls. It also recommended that the definition of almonds be 
further expanded to include Sec.  981.4(a) to specifically define 
almond biomass as almond hulls, shells, skins, and woody biomass (i.e., 
trees and prunings).
    During discussions regarding the definition of ``almonds,'' Board 
members noted that their research and development projects should 
address the entire almond category. Such efforts should encompass all 
aspects of almond production, going beyond almond kernels, inshell 
almonds, and the by-product shells and hulls. The interest in 
innovative applications for almond by-products and biomass utility has 
expanded over the years. Specifically, the Board has prioritized 
research of water conservation, zero orchard waste production 
practices, environmentally friendly pest management tools, and 
additional ways to reduce carbon dioxide emissions.
    The Board does not intend to engage in marketing promotion or 
advertising of almond biomass, nor does it intend to permit any credit-
back reimbursements to be applied to biomass (just as such 
reimbursements were never applied to shells and hulls). In its 
marketing promotion and advertising activity for consumable almonds, 
the Board would likely refer to its research efforts associated with 
almond biomass and its focus on sustainability and improving grower 
returns.
    During subsequent discussions, the Board emphasized that none of 
the changes in definitions would impact or materially expand the 
Board's authorities, nor would they expand the type of research or 
activities which are conducted by the Board. Rather, these changes 
would update the regulatory text to reflect current industry 
terminology and more accurately describe almond by-products that now 
represent additional value to the grower, which were previously viewed 
as waste.
    Finally, to accommodate for new innovations in the almond industry, 
the Board recommended modifying the definition of shelled almonds in 
Sec.  981.6 to include any form an almond without a shell might take, 
rather than specifying the exact almond form. This modification would 
simplify the language to provide flexibility in the event there are 
different forms or descriptors of almonds used in the future. The 
modifications to Sec.  981.6 would strike ``raw or roasted'' and remove 
the overly prescriptive language ``blanched, diced, sliced, slivered, 
cut, halved, or broken almonds, or any combination thereof.''

Proposal 2--Almond Board of California Voting Date Change

    Section 981.32(b)(2) of the Order establishes the criteria for how 
handlers may vote for Board nominees. This proposal would amend Sec.  
981.32(b)(2) by changing the handling period date for determining a 
handler's nomination weighting from December 31 to March 31 of the crop 
year in which the nominations are made (crop year being August 1 to the 
following July 31). Moving the date forward (further into the crop 
year) would allow for a more accurate determination of handler volume 
to be utilized when calculating each handler's weighting for Board 
nominations.
    The volume of almonds handled, as reported by the handlers, 
determines each handler's weighted vote for membership on the Board. 
The Board issues assessment invoices to handlers four times per year on 
a set schedule. The Board currently uses the volume handled per the 
December 31 assessment invoice to establish a handler's weighted vote. 
When the nominations and term of office dates were changed in the last 
amendment to the Order in October 2019 (84 FR 50713), it shifted the 
period for voting to later in the year. With the reestablishment of 
election dates, the Board can now utilize each handler's March 31 
assessment volume as the basis for computing handler volume for voting 
purposes. Moreover, as crop yields increase and deliveries of almonds 
from growers to handlers extend later into the crop year, using the 
March 31 assessment date to determine handling quantity would ensure 
that a larger proportion of the crop will be delivered and reported to 
the Board, and a more accurate estimate of handler volume may be 
utilized in the voting process.
    This proposed date change would not impact how handler volume is 
calculated, nor would it have any impact on the voting process. The 
proposed date change would also take into consideration timing of Board 
meetings and election dates.

Proposal 3--Update Language Regarding the Board

    Section 981.41(b) provides authorization for the Board to recommend 
research, development, and marketing promotion projects. However, the 
existing language in Sec.  981.41(b) refers to the Board by its former 
name ``Control Board.'' This proposal would update this section to 
correctly refer to the Board by its current name.
    Similarly, Sec.  981.59(a), which provides authorization for the 
Board to determine the reserve obligation for handlers, refers to the 
Board by its old name ``Control Board.'' The proposed action would 
update this section to correctly refer to the Board by its current 
name.
    Each of the proposed changes to Sec. Sec.  981.41(b) and 981.59(a) 
are administrative in nature and would have no impact on the Board's 
activities.

Proposal 4--Revise Language Addressing Outlets for Inedible Kernels

    Section 981.42(a) requires handlers to determine, through quality 
control inspections performed by the inspection agency, the percentage 
of inedible kernels received and report the determination to the Board. 
Such inedible kernels shall be delivered to the Board or a Board-
approved alternate outlet. The current language specifies such outlets 
as ``crushers, feed manufacturers, or feeders'' and limits the delivery 
of inedible kernels to the

[[Page 25562]]

same. This proposal would change Sec.  981.42(a) to refer to all 
delivery outlets approved by the Board for inedible kernels as 
``accepted users'' and would authorize alternative outlets for such 
product, so long as they meet established criteria determined by the 
Board.
    This change would broaden language related to approved outlets for 
inedible kernels in the incoming quality control regulations. 
Specifically, it would adopt the more common industry term--accepted 
users--to refer to the types of outlets for inedible kernels currently 
delineated in the Order (crushers, feed manufacturers, and feeders). 
The term is recognized by industry to encompass other disposition 
outlets not specifically prescribed, but commonly used, such as a 
landfill. Using the term ``accepted users'' would also not limit other 
disposition outlets that may be utilized in the future.
    Further, the term ``accepted user'' is utilized later in the 
Administrative Requirements section of the Order, so the term is 
understood and utilized by the Board and the industry in the 
administration of the Order. Section 981.442(a)(5) stipulates the 
requirements for handlers to meet their disposition obligation. In that 
section, handlers must deliver inedible product to entities ``on record 
with the Board as accepted users.'' The Board utilizes Form ABC-34, 
Application to be Approved as an Accepted User of Inedible Almonds and 
Almond Waste, in the approval process for accepted users. This action 
would harmonize Sec.  981.41(a) with other sections of the Order and 
the existing administrative oversight mechanisms of the Board.

Proposal 5--Volume Regulation Submission Date Change

    Section 981.49 requires that the Board furnish to the Secretary 
estimates of the supply and demand for almonds, and the corresponding 
salable and reserve percentages to be established, by August 1 of each 
year that volume regulation is being considered. The estimates aid the 
Secretary in determining if volume regulation would tend to effectuate 
the policy of the Act and in fixing the appropriate salable and reserve 
percentages.
    This proposal would change the date that such information must be 
furnished to the Secretary from August 1 to September 1 of each crop 
year. Revising the reporting date would allow for more data to be 
considered when making recommendations for volume regulation.
    Currently, the Order specifies August 1 as the date when industry 
estimates and volume recommendation must be furnished to the Secretary. 
However, this date immediately follows the end of the crop year, and it 
provides little time for the Board to compile industry data and 
formulate recommendations for salable and reserve percentages. In 
addition, data pertinent to the subject are not available until after 
the August 1 date. As an example, the final position report of crop 
year shipments and commitments is not published until the first week of 
August.
    The current submission date also limits the time available for 
discussion by the Board when considering volume control 
recommendations. The Board normally meets in early August, after the 
publication of National Agricultural Statistics Service's (NASS) 
Objective Forecast in July and year-end crop information are available. 
By moving the date of notification to the Secretary to September 1, the 
Board would avoid having to schedule a special meeting in July to meet 
the Order's requirement. The September 1 date would also allow the 
Board's staff to complete a full analysis utilizing final crop numbers 
and the NASS data. As such, the proposed date change would increase the 
time available for Board discussions and allow for more thorough data 
analysis, providing greater accuracy in the calculations that might be 
made for the reserve recommendation. This change would have no impact 
on crop estimates or other Board activities.

Proposal 6--Modification of the Accounting of Funds Held in Reserve

    Section 981.81(b) stipulates authorized use and refund requirements 
for assessments collected but not utilized within the applicable crop 
year. Under the provisions in that paragraph, certain excess funds, if 
not expended, must be held as qualified reserve funds that may only be 
expended on marketing promotion expenses. Further, the paragraph refers 
to accounting for funds held in reserve as being segregated into 
separate ``portions'' of the reserve.
    Section 981.81(c) prescribes requirements for the Board's financial 
reserve. Currently, the Board maintains its operating reserve in two 
``portions,'' one consisting of funds to be used for administrative-
research functions and another consisting of funds to be used for 
marketing promotion activities. The amount in each portion is not to 
exceed approximately six-months' budget for the respective activity 
area.
    The Board has found it impractical to maintain separate accounting 
of excess and reserve funds for administrative-research purposes and 
marketing promotion purposes. The Board has authority to recommend an 
operating budget and assessment rate each year, and it can also draw 
from its operating reserve to fund operations at any time during the 
year. Maintaining separate accounting to designate reserve funds for 
certain distinct purposes, however, adds administrative burden with no 
recognizable benefit. While the accounting scheme may have served a 
purpose in the past, the Board believes that it is redundant and 
obsolete moving forward.
    This proposal would revise the Order's regulatory language in 
Sec. Sec.  981.81(b) and 981.81(c) regarding assessment accounting 
procedures and processes for funds held in reserve. Both sections refer 
to keeping separate the funds used for administrative-research 
activities and funds used for marketing promotion activities. To 
facilitate the efficient accounting of reserve funds moving forward, 
this proposal would remove language in Sec.  981.81(b) that refers to 
the proportional segregation of reserve funds according to their 
administrative-research or marketing promotion use. Similarly, this 
proposal would strike language in Sec.  981.81(c) which currently 
specifies that the reserve fund consists of an administrative-research 
portion and a marketing promotion portion. It would also modify the 
language that limits the amount held in reserve to not exceed 
``approximately six-months' budget'' for each activity to read ``six-
months' expenses'', without any reference to ``each activity.''
    The recommended changes would not impact the percentage of the 
assessment available for credit-back, nor would it materially impact 
reserves. In addition, although there would not be separate reserve 
accounts for different activities, the Board and USDA would continue to 
know how all monies are spent and to which activities they are 
allocated through the Board's marketing policy, budget, and other 
approval and oversight mechanisms and records. This is an 
administrative change, clarifying in the Order language that each 
portion would not technically be maintained in separate accounts.

Proposal 7--Acceptance of Advanced Assessments and Borrowing Authority

    Section 981.81 authorizes the collection of assessments from almond 
handlers to provide funds to meet authorized Board expenses and the 
operating reserve requirements. This proposal would create a new Sec.  
981.81(f) to authorize the Board to accept advance payments of 
assessments and to borrow funds from commercial lending

[[Page 25563]]

institutions to better ensure continuity in operations during periods 
when neither operating assessments nor reserve funds are sufficient to 
fund Board functions.
    As almond tonnage and assessment revenue have increased since the 
Order's promulgation, the industry has approved increasingly larger 
budgets which have year-round financial commitments. However, growers 
do not necessarily deliver the entire assessable crop at one time, nor 
do handlers have the facilities to process the entire crop at one time, 
and handlers instead purchase and market almonds throughout the 
production cycle. As a result, only about 17 percent of assessment 
revenue is paid to the Board when the first crop year assessment 
invoice is sent to handlers in October. Consequently, the Board 
invoices for assessments in the second and third quarters of the crop 
year. Yet, many research activities and marketing programs are 
initiated early in the crop year, necessitating payment when services 
are performed, often well before the first assessments are received 
from October invoices. Although the Board currently maintains a reserve 
fund to help pay for early expenses, this fund is insufficient to 
advance some of the necessary payments. Authorizing the Board to accept 
advance assessment payments and to borrow from commercial lending 
institutions would help it manage and sustain program activities during 
times of cash flow deficiencies.
    Board members further noted that the ability to borrow against a 
line of credit is a common tool authorized in other federal marketing 
orders, especially to accommodate expenses when the assessment revenue 
necessary to pay such expenses is not received until later in the year.
    While addressing general business concerns about the potential 
risks associated with debt financing, the Board agreed that its 
internal control policies would be revised to reflect the new borrowing 
authorities. Notably, the Board stressed that these policies would 
include financing procedures that would require any borrowing by the 
Board to be reimbursed upon receipt of sufficient assessment revenue. 
Moreover, Board members stressed that any borrowing of funds would be 
short-term in nature, limited, and would not extend beyond the end of 
the crop year.

Initial Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), AMS has considered the economic impact of 
this action on small entities. Accordingly, AMS has prepared this 
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 almond producers are defined by the Small Business 
Administration (SBA) as those having annual receipts of less than 
$3,250,000, and small agricultural service firms are defined as those 
having annual receipts of less than $30,000,000 (13 CFR 121.201). 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 2021 crop year average 
yield of 2,210 pounds per acre and a season average grower price of 
$1.76 per pound. Therefore, a 100-acre farm with an average yield of 
2,210 pounds per acre would produce about 221,000 pounds of almonds 
(2,210 pounds times 100 acres equals 221,000 pounds). At $1.76 per 
pound, that farm's production would be valued at $388,960 (221,000 
pounds times $1.76 per pound equals $388,960). 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 
$388,960 for the 2020-21 crop year, which is below the SBA threshold of 
$3,250,000 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 2020 to July 2021 (combining shelled and inshell) 
was $4.647 billion. The quantity of almond exports over that time-
period was 2.162 billion pounds. Dividing the export value by the 
quantity yields a unit value of $2.15 per pound ($4.647 billion divided 
by 2.162 billion pounds equals $2.15).
    NASS estimated that the California almond industry produced 2.915 
billion pounds of almonds in 2021. Applying the $2.15 derived 
representative handler price per pound to total industry production 
results in an estimated total revenue at the handler level of $6.267 
billion (2.915 billion pounds x $2.15 per pound). With an estimated 100 
handlers in the California almond industry, average revenue per handler 
would be approximately $62.67 million ($6.267 billion divided by 100). 
Assuming a normal distribution of revenues, most almond handlers 
shipped almonds valued at more than $30,000,000 during the 2020-21 crop 
year. Therefore, the majority of handlers may be classified as large 
businesses.
    This proposed rule would revise multiple provisions in the Order's 
subpart regulating handling of California almonds. The proposed rule 
would:
     Amend the Order to modify the definitions of ``Almonds'' 
and ``Shelled almonds'', and add a definition for ``Almond biomass'' 
(Proposal 1).
     Change the date utilized to determine the applicable 
handler volume for the purpose of tabulating handler votes in the 
nomination process for handler positions on the Board (Proposal 2).
     Replace obsolete references to ``Control Board'' with 
``Board'' in two sections (Proposal 3).
     Simplify language pertaining to incoming quality control 
(Proposal 4).
     Change the date that the Board is required to submit 
volume regulation estimates and recommendations to the Secretary 
(Proposal 5).
     Remove language that distinguishes certain funds in the 
accounting of the Board's operating reserve fund and set the reserve 
fund limit at approximately six-months' expenses instead of six-months' 
budget (Proposal 6).
     Add authority to accept advanced assessments and to borrow 
funds from commercial lenders (Proposal 7).
    Proposals 1, 3, and 4 are modernizing in nature and align Order 
provisions with current industry definitions and practices in 
Sec. Sec.  981.4, 981.6, 981.41(b), and 981.59(a). Proposal 1 would 
also add Sec.  981.4(a) to define Almond Biomass and simplify language 
in Sec.  981.42(a) to identify disposition

[[Page 25564]]

outlets more broadly as Accepted Users. There are no substantial 
changes or additional requirements to industry practices effectuated as 
a result of these proposed amendments.
    Proposals 2 and 5 would adjust or align dates to allow for the 
inclusion of more available data when determining weighting of handler 
votes for Board nominations (Sec.  981.32(b)(2)) and providing volume 
regulation recommendations to the Secretary (Sec.  981.49). These 
changes would not impact how volume is calculated for handler vote 
weighting, materially affect crop estimates, or adversely impact Board 
activities.
    Proposal 6 would remove language that distinguishes between funds 
for administrative-research and funds for marketing promotion 
activities in the accounting of excess funds (Sec.  981.81(b) and (c)). 
In addition, it would set the reserve fund limit at approximately six-
months' expenses instead of the current six-months' budget. This is an 
administrative adjustment that provides technical clarification on the 
accounting of assessments and reserves. It does not impact the 
percentage of assessments available for refund, nor does it materially 
impact reserves.
    Proposal 7 would add a new section, Sec.  981.81(f), to allow the 
Board to accept advance payment of assessments and borrow funds against 
the current season's assessment receipts using a line of credit from a 
commercial financial institution to provide additional flexibility in 
managing its cashflows and expenses.
    This proposed rule encompasses a number of changes that are 
primarily administrative or modernizing in nature. These changes would 
simplify, clarify, or align Order language with current industry 
practices and definitions, and include a common authority to borrow 
funds. The amendments would apply equally to all producers and 
handlers, regardless of size. The proposed amendments also have no 
additional impact on the reporting, record-keeping, or compliance costs 
of small businesses. Proposal 7 would authorize the Board to receive 
advance assessment payments and borrow funds. These authorities are 
necessary to ensure that adequate funds are available throughout the 
year to pay the Board's management and administrative expenses. Any 
borrowing or interest costs associated with the borrowing provision in 
the proposed rule would be calculated and accounted for within the 
Board's annual budget.
    Alternatives to this proposed rule were considered, including 
making no changes at this time. However, the Board believes it would be 
beneficial to update Order language to better reflect the current state 
of the almond industry and the industry's vernacular, and to have the 
means and funds necessary to effectively administer the program.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the Order's information collection requirements have been 
previously approved by OMB and assigned OMB No. 0581-0178, Vegetable 
and Specialty Crops. No changes in those requirements are necessary 
because of this proposed action. Should any changes become necessary, 
they would be submitted to OMB for approval.
    This proposed rule would impose no additional reporting or 
recordkeeping requirements on either small or large almond handlers. As 
with all Federal marketing order programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public-sector agencies.
    AMS is committed to complying with the E-Government Act, to promote 
the use of the internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.
    AMS has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this proposed action.
    The Board's meetings are widely publicized throughout the 
California almond production area. All interested persons are invited 
to attend the meeting and encouraged to participate in Board 
deliberations on all issues. Like all Board meetings, the meetings held 
on December 9, 2019; August 11, 2020; and December 7, 2020, were 
public, and all entities, both large and small, were encouraged to 
express their views on the proposals.
    Interested persons are invited to submit comments on the proposed 
amendments to the Order, including comments on the regulatory and 
information collection impacts of this proposed action on small 
businesses.
    Following analysis of any comments received on the amendments in 
this proposed rule, AMS will evaluate all available information and 
determine whether to proceed. If appropriate, a proposed rule and 
notice of referendum would be issued, and producers would be provided 
the opportunity to vote for or against the proposed amendments. 
Information about the referendum, including dates and voter eligibility 
requirements, would be published in a future issue of the Federal 
Register. If appropriate, a final rule would then be issued to 
effectuate any amendments favored by producers participating in the 
referendum.
    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.

General Findings

    The findings hereinafter set forth are supplementary to the 
findings and determinations which were previously made in connection 
with the issuance of Marketing Order 981; and all said previous 
findings and determinations are hereby ratified and affirmed, except 
insofar as such findings and determinations may be in conflict with the 
findings and determinations set forth herein.
    1. Marketing Order 981 as hereby proposed to be amended and all the 
terms and conditions thereof, would tend to effectuate the declared 
policy of the Act;
    2. Marketing Order 981 as hereby proposed to be amended regulates 
the handling of almonds grown in California and is applicable only to 
persons in the respective classes of commercial and industrial activity 
specified in the Order;
    3. Marketing Order 981 as hereby proposed to be amended is limited 
in application to the smallest regional production area which is 
practicable, consistent with carrying out the declared policy of the 
Act, and the issuance of several marketing orders applicable to 
subdivisions of the production area would not effectively carry out the 
declared policy of the Act;
    4. Marketing Order 981 as hereby proposed to be amended prescribes, 
insofar as practicable, such different terms applicable to different 
parts of the production area as are necessary to give due recognition 
to the differences in the production and marketing of almonds produced 
or packed in the production area; and
    5. All handling of almonds grown or handled in the production area, 
as defined in Marketing Order 981 is in the current of interstate or 
foreign commerce or directly burdens, obstructs, or affects such 
commerce.
    A 60-day comment period is provided to allow interested persons to 
respond to these proposals. Any comments received on the amendments 
proposed

[[Page 25565]]

in this rule will be analyzed, and if AMS determines to proceed based 
on all the information presented, a producer referendum would be 
conducted to determine producer support for the proposed amendments. If 
appropriate, a final rule would then be issued to effectuate the 
amendments favored by producers participating in the referendum.

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. Revise Sec.  981.4 to read as follows:


Sec.  981.4  Almonds.

    Almonds means (unless otherwise specified) all varieties of almonds 
(except bitter almonds), either shelled or unshelled, grown in the 
State of California, and, for the purposes of research includes almond 
biomass.
0
3. Add Sec.  981.4a to read as follows:


Sec.  981.4a  Almond Biomass.

    Almond Biomass means the hulls, shells, and skins of harvested 
almonds and woody biomass derived from almond trees (e.g., tree limbs, 
bark, prunings).
0
4. In Sec.  981.6 revise the first sentence to read as follows:


Sec.  981.6  Shelled almonds.

    Shelled almonds mean almonds after the shells are removed and 
includes any form those almonds might take. * * *
0
5. Revise Sec.  981.32 paragraph (b)(2) to read as follows:


Sec.  981.32  Nominations.

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


Sec.  981.41  [Amended]

0
6. In Sec.  981.41 paragraph (b) remove the word ``Control''.


Sec.  981.42  [Amended]

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


Sec.  981.49  [Amended]

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


Sec.  981.59  [Amended]

0
9. In Sec.  981.59 paragraph (a), remove the word ``Control''.
0
10. Amend Sec.  981.81 by:
0
a. Revising the third and fourth sentences in paragraph (b);
0
b. Revising paragraph (c); and
0
c. Adding paragraph (f).
    The revisions and addition read as follows:


Sec.  981.81  Assessment.

* * * * *
    (b) * * * Any amounts, not credited pursuant to Sec.  981.41 for a 
crop year may be used by the Board for its marketing promotion expenses 
of the succeeding crop year, and any unexpended portion of those 
amounts at the end of that crop year shall be retained in the operating 
reserve fund. Any funds of the operating reserve fund in excess of the 
level authorized pursuant to paragraph (c) of this section shall be 
refunded to handlers or used to reduce the assessment rate of the 
subsequent crop year, as the Board may determine. * * *
    (c) Reserves. The Board may maintain an operating reserve fund 
which shall not exceed approximately six-months' expenses or such lower 
amount as the Board may establish with the approval of the Secretary: 
Provided, That this limitation shall not restrict the temporary 
retention of excess funds for the purpose of stabilizing or reducing 
the assessment rate of a crop year. To the extent that funds from 
current crop year assessments are inadequate, funds in the operating 
reserve may be used for the authorized activities of the crop year. 
Funds so used, and not exceeding the six-month limitation, shall be 
replaced to the extent practicable from assessments subsequently 
collected for the crop year.
* * * * *
    (f) Advanced Assessments and Commercial Loans. To provide funds for 
the administration of the programs during the part of a crop year when 
neither sufficient operating reserve funds nor sufficient revenue from 
assessment on the current season's receipts are available, the Board 
may accept payment of handler assessments in advance of the date when 
due or may borrow funds from a commercial lending institution for such 
purposes.

Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2023-08851 Filed 4-26-23; 8:45 am]
BILLING CODE P