Marketing Order Regulations for Almonds Grown in California, 25565-25571 [2023-08852]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 88, Number 81 (Thursday, April 27, 2023)]
[Proposed Rules]
[Pages 25565-25571]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-08852]


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

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Doc. No. AMS-SC-22-0069]


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 (Order). This action would amend administrative requirements 
regulating 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 to facilitate 
the efficient administration of the Order.

DATES: Comments must be received by June 26, 2023. Comments on the 
forms and information collection must also 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 submitted in 
response to this proposed rule will be included in the record and will 
be made available for public inspection in the Office of the Docket 
Clerk during regular business

[[Page 25566]]

hours, or viewed at: https://www.regulations.gov. Please be advised 
that the identity of individuals or entities submitting comments will 
be made public.

FOR FURTHER INFORMATION CONTACT: Barry Broadbent, Senior 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 Agricultural Marketing Service (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 
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 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 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 initially recommended the changes proposed herein, along 
with proposed changes to the Order's roadside stand exemption and 
credit-back provisions, at meetings held on December 7, 2020, and June 
17, 2021. AMS subsequently published a proposed rule addressing the 
aggregate of those proposed changes on February 22, 2022 (87 FR 9455), 
with a 60-day comment period ending April 25, 2022. Four comments were 
received during the comment period. One of those comments opposed 
changes to the credit-back provision and further questioned the Board's 
administrative process in recommending the proposed changes to AMS.
    After consideration of the comments received during the proposed 
rule's initial comment period, AMS reopened the comment period for 15 
additional days from June 22, 2022, to July 7, 2022 (87 FR 37240). 
During the reopened comment period, 1,155 comments were received. 
Approximately 98 percent of the comments were opposed to the proposed 
changes to the roadside stand exemption.
    Given the opposition to proposed changes to the credit-back and 
roadside stand exemption provisions in the Order, AMS published a 
withdrawal of the proposed rule in the Federal Register on August 22, 
2022 (87 FR 51270).
    The Board met on September 30, 2022, and unanimously recommended 
the resubmission of proposed changes to the Order's regulations, minus 
the previously proposed changes to the credit-back and roadside stand 
exemption provisions. Excepting the previously discussed provisions 
that were removed, the modifications to the Order's regulations, as 
proposed herein, are identical to the changes proposed in the initial 
proposed rule published February 22, 2022 (87 FR 9455).
    Multiple sections in the Order provide the authority for this 
proposed action. The authorities are cited with the descriptions of 
each of the proposed changes in the following narrative.
    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

[[Page 25567]]

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 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), 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).
    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 2010-21 crop 
year. Therefore, the majority of handlers may be classified as large 
businesses.
    This proposed rule would revise multiple provisions in the Order's 
administrative requirements. This

[[Page 25568]]

proposal would amend regulations covering the Order's 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 that would be stayed defines almond butter 
and the other regulates almond disposition in reserve outlets by 
handlers. Both sections would be stayed indefinitely.
    More specifically, 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.
    Additionally, 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.
    This proposed rule would also 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.  981.42, 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 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.
    Initially, the Board unanimously recommended the changes contained 
herein, along with other recommended changes that were subsequently 
removed from consideration. The Board unanimously recommended the 
proposed changes contained herein at a meeting on September 30, 2022.
    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 and only making changes to some 
of the requirements. After consideration of all the alternatives, and 
in consultation with AMS, the Board determined that making the 
recommended changes 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 meeting was 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 meetings, the September 30, 2022, meeting was a public meeting, 
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 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 Board 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

[[Page 25569]]

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 AMS, 
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 AMS 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. AMS has not 
identified any relevant Federal rules that duplicate, overlap, or 
conflict with this proposed rule.
    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, June 17, 2021, 
and September 30, 2022, meetings were open to the public, and all 
entities, both large and small, were able to express their views on the 
proposed changes. 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 these changes 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.
    After consideration of all relevant material presented, including 
the information and recommendations submitted by the Board and other 
available information, AMS has determined that this proposed rule is 
consistent with and will effectuate the purposes of the Act.
    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.  981.442 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 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.
* * * * *

[[Page 25570]]

    (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 within 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 the TERP. Custom processors must submit a 
Custom Processor Application, ABC Form XX, to the Board annually by 
July 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) * * *

[[Page 25571]]

    (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
3. 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
4. Sections 981.466 and 981.467 are stayed indefinitely.
0
5. 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 a 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 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. 2023-08852 Filed 4-26-23; 8:45 am]
BILLING CODE P