[Federal Register Volume 88, Number 189 (Monday, October 2, 2023)]
[Rules and Regulations]
[Pages 67621-67627]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-21702]



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Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 

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Federal Register / Vol. 88, No. 189 / Monday, October 2, 2023 / Rules 
and Regulations

[[Page 67621]]



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: Final rule.

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

SUMMARY: This rule implements a recommendation from the Almond Board of 
California (Board) to change multiple provisions in the administrative 
requirements prescribed under the Federal marketing order regulating 
the handling of almonds grown in California (Order). This action amends 
administrative requirements regulating quality control, exempt 
dispositions, and interest and late charges provisions. In addition, 
the rule stays 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: Effective November 1, 2023.

FOR FURTHER INFORMATION CONTACT: Peter Sommers, Marketing Specialist, 
or Gary Olson, Chief, West Region Branch, Market Development Division, 
Specialty Crops Program, AMS, USDA; Telephone: (559) 487-5901, Fax: 
(559) 487-5906, or Email: <a href="/cdn-cgi/l/email-protection#8ddde8f9e8ffdfa3dee2e0e0e8fffecdf8fee9eca3eae2fb"><span class="__cf_email__" data-cfemail="306055445542621e635f5d5d55424370454354511e575f46">[email protected]</span></a> or 
<a href="/cdn-cgi/l/email-protection#9bdcfae9e2dfb5d4f7e8f4f5dbeee8fffab5fcf4ed"><span class="__cf_email__" data-cfemail="f8bf998a81bcd6b7948b9796b88d8b9c99d69f978e">[email protected]</span></a>.
    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) 720-8085, or Email: 
<a href="/cdn-cgi/l/email-protection#386a515b50594a5c1674574f5d4a784d4b5c59165f574e"><span class="__cf_email__" data-cfemail="adffc4cec5ccdfc983e1c2dac8dfedd8dec9cc83cac2db">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: This action, pursuant to 5 U.S.C. 553, 
amends regulations issued to carry out a marketing order as defined in 
7 CFR 900.2(j). This final 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 rule in 
conformance with Executive Orders 12866, 14094 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. Executive Order 14094 
reaffirms, supplements, and updates Executive Order 12866 and further 
directs agencies to solicit and consider input from a wide range of 
affected and interested parties through a variety of means. This action 
falls within a category of regulatory actions that the Office of 
Management and Budget (OMB) exempted from Executive Order 12866 review.
    This 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 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 final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This 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 no later than 20 days after the date of the 
entry of the ruling.
    This final rule amends administrative requirements in the Order 
regulating quality control, exempt dispositions, and interest and late 
charges provisions. In addition, the rule stays two sections of the 
administrative requirements that define almond butter and stipulate 
disposition in reserve outlets by handlers. This action modifies the 
Order's requirements to reflect updates in industry practices and is 
expected to help facilitate the orderly administration of the Order.
    The Board initially recommended the changes effectuated 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 in the Federal 
Register 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. Two 
comments favored the proposed rule, one comment was neutral, and one 
was opposed. The comment opposed to the action was submitted by a large 
cooperative marketing association and contained embedded comments from 
four individual growers. These 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

[[Page 67622]]

(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. Notably, aside from 
the objections to the credit-back provision and the roadside stand 
exemption, commenters did not oppose any other portions of the proposed 
rule.
    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 the 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 effectuated herein, are identical to the changes 
proposed in the initial proposed rule published February 22, 2022 (87 
FR 9455). A proposed rule concerning this action was published in the 
Federal Register on April 27, 2023 (88 FR 25565), and it received one 
comment. The commentor expressed opinions on the sustainability of 
almond production that did not address the merits of the proposed rule. 
The commenter did not support or oppose the proposal.
    Multiple sections in the Order provide the authority for this 
action. The authorities are cited with the descriptions of each of the 
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 final rule modifies 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 rule also 
relaxes the requirements for handlers in meeting their disposition 
obligation under the regulations. The incoming quality requirements 
have been 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 will 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 rule amends the regulations to facilitate 
handlers utilizing off-site cleaning and treatment facilities in 
fulfillment of their quality control requirements. The action will 
allow the transfer of product for off-site cleaning without the 
transfer being considered a shipment, designates off-site treatment 
facilities as ``custom processors,'' and establishes application and 
approval procedures for Board authorization of such custom processors. 
This final rule also clarifies 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 rule refines 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 rule enhances the 
procedures currently in place for the Board to account for exempt 
dispositions. Moving forward, outlets for exempted product will need to 
be pre-approved by the Board in accordance with the requirements 
contained in Sec.  981.442(a)(7). Finally, because ``animal feed'' 
encompasses ``poultry feed,'' Sec.  981.450 is simplified by removing 
any reference to the word ``poultry.''
    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. Therefore, this rule stays 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 are outdated, the provisions in 
Sec.  981.467 are not currently relevant to the administration of the 
Order. As such, this rule stays the entire section indefinitely.
    Lastly, Sec.  981.481 stipulates the requirements for submission of 
handler assessment payments, which include 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 
rule adds ``or by some other verifiable delivery tracking system'' to 
the section to allow handlers alternative delivery methods.
    The Board believes that the changes effectuated 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 are conforming changes, but this final rule also makes 
changes to the quality control regulations that the Board views as 
essential to the continued efficient administration of the Order. The 
changes contained herein are expected to facilitate the orderly 
marketing of California almonds and benefit growers and handlers in the 
industry.

Final 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 final rule on small entities. Accordingly, AMS prepared this final 
regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
businesses subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and the rules issued thereunder, are unique in 
that they are brought about through group action of essentially small 
entities acting on their own behalf.
    There are approximately 7,600 almond growers in the production area 
and approximately 100 handlers subject to regulation under the Order. 
At the time this analysis was prepared, small agricultural almond 
producers were defined by the Small Business Administration (SBA) as 
those having annual receipts equal to or less than $3,750,000 (North 
American Industry

[[Page 67623]]

Classification System code 111335, Tree Nut Farming), and small 
agricultural service firms were defined as those having annual receipts 
equal to or less than $34,000,000 (North American Industry 
Classification System code 115114, Postharvest Crop Activities) (13 CFR 
121.201). The SBA thresholds for producers and handlers changed after 
the publication of the proposed rule. Thus, AMS changed the thresholds 
to reflect the currently applicable SBA thresholds in this final rule. 
The changes do not impact AMS's ultimate determination regarding the 
impact of the rule on small entities.
    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 its annual Noncitrus Fruits and Nuts Publication, NASS reported 
a 2021 crop year average yield of 2,210 pounds per acre and a season 
average grower price of $1.86 per pound. Therefore, a 100-acre farm 
with an average yield of 2,220 pounds per acre would produce about 
222,000 pounds of almonds (2,220 pounds times 100 acres equals 221,000 
pounds). At $1.86 per pound, that farm's production would be valued at 
$412,920 (222,000 pounds times $1.86 per pound equals $412,920). Since 
the Census indicates that 66 percent of California's almond farms are 
less than 100 acres, it may be concluded that the majority of 
California almond growers had annual receipts from the sale of almonds 
of less than $412,920 for the 2020-21 crop year, which is below the SBA 
threshold of $3,750,000 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 may 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 $34,000,000 during the 2010-21 crop 
year. Therefore, the majority of handlers may be classified as large 
businesses.
    This final rule revises multiple provisions in the Order's 
administrative requirements. This action amends regulations covering 
the Order's quality control, exempt dispositions, and interest and late 
charges provisions. In addition, it stays regulations contained in 
Sec. Sec.  981.466 and 981.467. One of the sections that is stayed 
defines almond butter and the other regulates almond disposition in 
reserve outlets by handlers. Both sections are stayed indefinitely.
    More specifically, in Sec.  981.442(a), the rule clarifies 
ambiguous language, removes irrelevant dates, and more clearly defines 
the term ``accepted user'' as it is referenced in the regulations. It 
also relaxes the requirements for handlers in meeting their disposition 
obligation under the Order.
    Additionally, in Sec.  981.442(b), the rule change will allow the 
transfer of product for off-site cleaning without the transfer being 
considered a shipment, designate off-site treatment facilities as 
``custom processors,'' and establish application and approval 
procedures for Board authorization of custom processors. This action 
also clarifies the roles of the TERP and the Board in administering the 
program in several subparagraphs in the section. Further, this rule 
refines 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 rule also amends Sec.  981.450 to require outlets for exempted 
product be Board-approved, in accordance with Sec.  981.442(a)(7).
    Further, 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 is 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 is also stayed indefinitely.
    Lastly, this action revises 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 changes detailed 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 
effectuated herein are necessary to reflect changes in the industry and 
to update the regulations to reflect current practices. Many of the 
modifications are conforming changes, but this action also makes 
substantive changes to quality control requirements that the Board 
views as essential to the efficient administration of the Order. The 
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 
changes contained herein at a meeting on September 30, 2022.
    AMS anticipates this final rule will impose minimal, if any, 
additional costs on handlers or growers, regardless of size. The 
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 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 is 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

[[Page 67624]]

attend the meeting 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 were invited to submit 
comments on the proposed rule, including the regulatory and information 
collection impacts of the proposed action on small businesses.

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 the Office of Management and Budget (OMB) and 
assigned OMB Nos. 0581-0178 (Vegetable and Specialty Crops) and 0581-
0242 (Almond Salmonella). This 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 publication of this final 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 rule changes the body that approves DV 
Program applications from the TERP to the Board. The instructions that 
accompany ABC Form 52 need to be revised accordingly.
    Lastly, this final rule creates 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 AMS 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. ABC Form 55, 
``Custom Processor Application,'' must be submitted directly to the 
Board once each year no later than July 31. The application provides 
the Board with the name of the applicant, the location of each 
treatment facility covered by the application, applicant contact 
information, and certification that the applicant's technology and 
equipment provide a treatment process that has been validated by a 
Board-approved process authority.
    The Order authorizes the Board to collect certain information 
necessary for the administration of the Order. The information 
collected will 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 will be kept confidential in accordance with the Act and 
the Order.
    The 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.
    A 60-day comment period regarding the information collection 
related to this rule was imbedded in the proposed rule that was 
published on April 27, 2023 (88 FR 25565). The comment period closed 
June 26, 2023. One comment was received. The commentor expressed 
opinions on the sustainability of almond production but did not address 
the merits of the proposed information collection. Therefore, AMS made 
no changes to the information collection requirements as proposed.
    Upon approval by OMB, this information collection will be merged 
with the information collection 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 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 
were invited to submit comments on the proposed rule, including the 
regulatory and information collection impacts of this action on small 
businesses.
    A proposed rule concerning this action was published in the Federal 
Register on April 27, 2023 (88 FR 25565). Copies of the proposed rule 
were also mailed or sent via email to all California almond handlers. 
The proposal was made available through the internet by USDA and the 
Office of the Federal Register. A 60-day comment period ending June 26, 
2023, was provided for interested persons to respond to the proposal. 
One comment was received. The commentor expressed opinions on the 
sustainability of almond production that did not address the merits of 
the proposed rule. The commenter did not support or oppose the 
proposal. Therefore, AMS made no changes to the information collection 
requirements as proposed.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: 
https://

[[Page 67625]]

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, feedback 
from commenters, and other available information, AMS has determined 
that this final rule tends to effectuate the declared policy of the 
Act.

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 amends 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.
* * * * *
    (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 the 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 are 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.

[[Page 67626]]

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 determination 
issued by FDA or accepted by the TERP. Custom processors must submit a 
Custom Processor Application, ABC Form 55, 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) * * *
    (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

[[Page 67627]]

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, unless an envelope containing the payment has 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 
within 60 days of the invoice date, unless an envelope containing the 
payment has been legibly postmarked by the U.S. Postal Service or some 
other verifiable delivery tracking system as having been remitted 
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. 2023-21702 Filed 9-29-23; 8:45 am]
BILLING CODE 3410-02-P


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