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Proposed Rule2023-21701

Almonds Grown in California; Amendments to the Marketing Order

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Published

October 4, 2023

Issuing agencies

Agriculture DepartmentAgricultural Marketing Service

Abstract

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

Full Text

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<title>Federal Register, Volume 88 Issue 191 (Wednesday, October 4, 2023)</title>
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[Federal Register Volume 88, Number 191 (Wednesday, October 4, 2023)]
[Proposed Rules]
[Pages 68500-68506]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-21701]

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Proposed Rules
Federal Register
________________________________________________________________________

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

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Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 /
Proposed Rules

[[Page 68500]]

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

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

Almonds Grown in California; Amendments to the Marketing Order

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

ACTION: Proposed rule and referendum order.

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

DATES: The referendum will be conducted from October 30 through
November 20, 2023. The representative period for the referendum is
August 1, 2022, through July 31, 2023.

ADDRESSES: Interested persons with questions and comments are invited
to submit written questions and comments to the Docket Clerk, Market
Development Division, Specialty Crops Program, AMS, USDA, 1400
Independence Avenue SW, STOP 0237, Washington, DC 20250-0237; or
Telephone: (202) 720-8085.

FOR FURTHER INFORMATION CONTACT: Thomas Nalepa, Marketing Specialist,
or Matthew Pavone, Chief, Rulemaking Services Branch, Market
Development Division, Specialty Crops Program, AMS, USDA, 1400
Independence Avenue SW, STOP 0237, Washington, DC 20250-0237;
Telephone: (202) 720-8085, Fax: (202) 720-8938, or Email:
<a href="/cdn-cgi/l/email-protection#feaa9691939f8dd0b09f929b8e9fbe8b8d9a9fd0999188">[email&#160;protected]</a> or <a href="/cdn-cgi/l/email-protection#2e634f5a5a464b59007e4f5841404b6e5b5d4a4f00494158">[email&#160;protected]</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#dc8eb5bfb4bdaeb8f290b3abb9ae9ca9afb8bdf2bbb3aa">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION: This action, pursuant to 5 U.S.C. 553,
proposes to amend regulations issued to carry out a marketing order as
defined in 7 CFR 900.2(j). This proposal is issued under Marketing
Order No. 981, as amended (7 CFR part 981), regulating the handling of
almonds grown in California. Part 981 (referred to as the ``Order'') is
effective under the Agricultural Marketing Agreement Act of 1937, as
amended (7 U.S.C. 601-674), hereinafter referred to as the ``Act.'' The
Board locally administers the Order and comprises growers and handlers
of almonds operating within the area of production.
The USDA is issuing this proposed rule in conformance with
Executive Orders 12866, 13563, and 14094. 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 proposed rule has been reviewed under Executive Order 13175--
Consultation and Coordination with Indian Tribal Governments, which
requires agencies to consider whether their rulemaking actions would
have Tribal implications. AMS has determined this proposed rule is
unlikely to have substantial direct effects on one or more Indian
Tribes, on the relationship between the Federal Government and Indian
Tribes, or on the distribution of power and responsibilities between
the Federal Government and Indian Tribes.
This proposal has been reviewed under Executive Order 12988, Civil
Justice Reform. This rule shall not be deemed to preclude, preempt, or
supersede any State program covering almonds grown in California.
The Act provides that administrative proceedings must be exhausted
before parties may file suit in court. Under section 8c(15)(A) of the
Act (7 U.S.C. 608c(15)(A)), any handler subject to an order may file
with USDA a petition stating that the order, any provision of the
order, or any obligation imposed in connection with the order is not in
accordance with law and request a modification of the order or to be
exempted therefrom. A handler is afforded the opportunity for a hearing
on the petition. After the hearing, USDA would rule on the petition.
The Act provides that the district court of the United States in any
district in which the handler is an inhabitant, or has his or her
principal place of business, has jurisdiction to review USDA's ruling
on the petition, provided an action is filed no later than 20 days
after the date of entry of the ruling.
Section 1504 of the Food, Conservation, and Energy Act of 2008
(2008 Farm Bill) (Pub. L. 110-246) amended section 8c(17) of the Act,
which in turn required the addition of supplemental rules of practice
to 7 CFR part 900 (73 FR 49307; August 21, 2008). The amendment of
section 8c(17) of the Act and the supplemental rules of practice
authorize the use of informal rulemaking (5 U.S.C. 553) to amend
Federal fruit, vegetable, and nut marketing agreements and orders. USDA
may use informal rulemaking to amend marketing orders depending upon
the nature and complexity of the proposed amendments, the potential
regulatory and economic impacts on affected entities, and any other
relevant matters.
AMS has considered these factors and has determined that the
amendments proposed herein are not unduly complex and the nature of the
proposed amendments is appropriate for utilizing the informal
rulemaking process to

[[Page 68501]]

amend the Order. This proposed rule encompasses a number of changes
that are primarily administrative or modernizing in nature. These
changes would simplify, clarify, or align Order language with current
industry practices and definitions. A discussion of the potential
regulatory and economic impacts on affected entities is discussed later
in the ``Initial Regulatory Flexibility Analysis'' section of this
proposed rule. The amendments would apply equally to all producers and
handlers, regardless of size. The proposed amendments also have no
additional impact on the reporting, record-keeping, or compliance costs
of small businesses.
The Board unanimously recommended seven proposed Order amendments
following deliberations at a public meeting held on August 11, 2020.
The Board submitted its formal recommendation to amend the Order
through the informal rulemaking process on August 9, 2021.
A proposed rule soliciting public comments on the proposed
amendments published in the Federal Register on April 27, 2023 (88 FR
25559). AMS received one comment in support of the proposed rule. Based
on all the information available to AMS at this time, including the
comment received in response to the proposed rule, no substantive
changes will be made to the proposed amendments.
AMS will conduct a producer referendum to determine support for the
proposed amendments. If appropriate, a final rule will then be issued
to effectuate the amendments, if they are favored by producers in the
referendum.
The proposal would:
<bullet> amend the Order to modify the definitions of ``Almonds''
and ``Shelled almonds'', and add a definition for ``Almond biomass''
(Proposal 1),
<bullet> change the date utilized to determine the applicable
handler volume for the purpose of tabulating handler votes in the
nomination process for handler positions on the Board (Proposal 2),
<bullet> replace obsolete references to ``Control Board'' with
``Board'' in two sections (Proposal 3),
<bullet> simplify language pertaining to incoming quality control
(Proposal 4),
<bullet> change the date that the Board is required to submit
volume regulation estimates and recommendations to the Secretary
(Proposal 5),
<bullet> remove language that distinguishes certain funds in the
accounting of the Board's operating reserve fund and sets the reserve
fund limit at approximately six-months' expenses instead of six-months'
budget (Proposal 6), and
<bullet> add authority to accept advanced assessments and to borrow
funds from commercial lenders (Proposal 7).

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

Sections 981.4 and 981.6 define Almonds and Shelled Almonds,
respectively, for the purposes of the Order. Specifically, as defined
in the Order, ``almonds means (unless otherwise specified) all
varieties of almonds (except bitter almonds), either shelled or
unshelled, grown in the State of California, and for the purposes of
research includes almond shells and hulls.'' ``Shelled almonds mean raw
or roasted almonds after the shells are removed and includes blanched,
diced, sliced, slivered, cut, halved, or broken almonds, or any
combination thereof. Additional almond products may be included by the
Secretary from time to time upon consideration of a recommendation from
the Board or other pertinent information.'' This proposal would amend
Sec. 981.4 to broaden the definition of Almonds to include almond
biomass for research purposes. This proposal would add a new section,
Sec. 981.4(a), to specifically define almond biomass. Sec. 981.6,
which defines Shelled almonds, would also be amended to include any
form that almonds without shells might take.
As the almond industry has significantly evolved since promulgation
of the Order, the versatility of almond usage has also expanded.
In the mid-1970s, the Board sought to redefine almonds to include
shells and hulls. A formal rulemaking hearing covering that and other
proposals took place. The initial proposal sought to redefine almonds
to include hulls and shells for the purpose of Sec. 981.41. See 40 FR
50289.
Section 981.41 authorizes projects involving production and
marketing research designed to assist, improve, or promote the
marketing, distribution, consumption, or efficient production of
almonds. Testimony at the hearing explained that research to find new
and more profitable uses for, or better methods of, handling shells and
hulls should be permitted under the Order. Testimony further indicated
that shells and hulls together weigh approximately three times the
kernelweight of almonds. Accordingly, a sizable quantity of shells and
hulls is produced annually and represents a significant economic
factor. Testimony indicated that grower returns could be improved if
more profitable outlets or better methods of handling can be found for
shells and hulls. See 41 FR 15341.
Testimony at the hearing further indicated that the Board should
not undertake any marketing promotion including advertising activity
for shells and hulls. Ultimately, the definition of almonds was revised
to include hulls and shells for the purposes of research. See 41 FR
26852.
This proposal would amend Sec. 981.4 to broaden the definition of
Almonds to include almond biomass for research purposes. This proposal
would add a new section, Sec. 981.4(a), to specifically define almond
biomass.
In the past, biomass (hulls, shells, skins, prunings, etc.) offered
limited additional value to the growers. Huller/shellers would
primarily sell their hulls for feed, use the shells for bedding or
power cogeneration, and burn woody biomass, such as whole trees or
prunings. Now, with expanding production levels, the industry estimates
that it generates over 5.6 billion pounds of hulls and shells alone
each year. In addition, stricter environmental regulations have made it
more difficult to dispose of organic material through burning.
Consequently, the industry has devoted significant effort to identify
new solutions to utilize waste material in the orchard or in other non-
edible product streams.
With an increased focus on full utilization of what comes out of
the almond orchard, innovative technologies and research have revealed
more value-added applications for what were previously by-products with
limited to no value. For example, almond skins, which are the result of
blanching brownskin almonds, are being used for fiber addition, shells
are incorporated into plastics using torrefaction, sugar can be
extracted from hulls, and ``whole orchard recycling'' techniques
incorporate chipped prunings and woody biomass into the soil. These new
uses bring additional profitability to the grower.
Therefore, the Board recommended that the current almond definition
in Sec. 981.4 be broadened to accommodate all almond biomass, not just
shells and hulls. It also recommended that the definition of almonds be
further expanded to include Sec. 981.4(a) to specifically define
almond biomass as almond hulls, shells, skins, and woody biomass (i.e.
trees and prunings).
During discussions regarding the definition of ``almonds,'' Board
members noted that their research and development projects should
address the entire almond category. Such efforts should encompass all
aspects of almond production, going beyond almond

[[Page 68502]]

kernels, inshell almonds, and the by-product shells and hulls. The
interest in innovative applications for almond by-products and biomass
utility has expanded over the years. Specifically, the Board has
prioritized research of water conservation, zero orchard waste
production practices, environmentally friendly pest management tools,
and additional ways to reduce carbon dioxide emissions.
The Board does not intend to engage in marketing promotion or
advertising of almond biomass, nor does it intend to permit any credit-
back reimbursements to be applied to biomass (just as such
reimbursements were never applied to shells and hulls). In its
marketing promotion and advertising activity for consumable almonds,
the Board would likely refer to its research efforts associated with
almond biomass and its focus on sustainability and improving grower
returns.
During subsequent discussions, the Board emphasized that none of
the changes in definitions would impact or materially expand the
Board's authorities, nor would they expand the type of research or
activities which are conducted by the Board. Rather, these changes
would update the regulatory text to reflect current industry
terminology and more accurately describe almond by-products that now
represent additional value to the grower, which were previously viewed
as waste.
Finally, to accommodate for new innovations in the almond industry,
the Board recommended modifying the definition of shelled almonds in
Sec. 981.6 to include any form an almond without a shell might take,
rather than specifying the exact almond form. This modification would
simplify the language to provide flexibility in the event there are
different forms or descriptors of almonds used in the future. The
modifications to Sec. 981.6 would strike ``raw or roasted'' and remove
the overly prescriptive language ``blanched, diced, sliced, slivered,
cut, halved, or broken almonds, or any combination thereof.''

Proposal 2--Almond Board of California Voting Date Change

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

Proposal 3--Update Language Regarding the Board

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

Proposal 4--Revise Language Addressing Outlets for Inedible Kernels

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

Proposal 5--Volume Regulation Submission Date Change

Section 981.49 requires that the Board furnish to the Secretary
estimates of the supply and demand for almonds, and the corresponding
salable and reserve percentages to be established, by August 1 of each
year that volume regulation is being considered. The estimates aid the

[[Page 68503]]

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

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

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

Proposal 7--Acceptance of Advanced Assessments and Borrowing Authority

Section 981.81 authorizes the collection of assessments from almond
handlers to provide funds to meet authorized Board expenses and the
operating reserve requirements. This proposal would create a new Sec.
981.81(f) to authorize the Board to accept advance payments of
assessments and to borrow funds from commercial lending institutions to
better ensure continuity in operations during periods when neither
operating assessments nor reserve funds are sufficient to fund Board
functions.
As almond tonnage and assessment revenue have increased since the
Order's promulgation, the industry has approved increasingly larger
budgets which have year-round financial commitments. However, growers
do not necessarily deliver the entire assessable crop at one time, nor
do handlers have the facilities to process the entire crop at one time,
and handlers instead purchase and market almonds throughout the
production cycle. As a result, only about 17 percent of assessment
revenue is paid to the Board when the first crop year assessment
invoice is sent to handlers in October. Consequently, the Board
invoices for assessments in the second and third quarters of the crop
year. Yet, many research activities and marketing programs are
initiated early in the crop year, necessitating payment when services
are performed, often well before the first assessments are received
from October invoices. Although the Board currently maintains a reserve
fund to help pay for early expenses, this fund is insufficient to
advance some of the necessary payments. Authorizing the Board to accept
advance assessment payments and to borrow from commercial lending
institutions would help it manage and sustain program activities during
times of cash flow deficiencies.
Board members further noted that the ability to borrow against a
line of credit is a common tool authorized in other Federal marketing
orders, especially to accommodate expenses when the assessment revenue
necessary to pay such expenses is not received until later in the year.
While addressing general business concerns about the potential risks
associated with debt financing, the Board agreed that its internal
control policies would be revised to reflect the new borrowing
authorities. Notably, the Board stressed that these policies would

[[Page 68504]]

include financing procedures that would require any borrowing by the
Board to be reimbursed upon receipt of sufficient assessment revenue.
Moreover, Board members stressed that any borrowing of funds would be
short-term in nature, limited, and would not extend beyond the end of
the crop year.

Initial Regulatory Flexibility Analysis

Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA) (5 U.S.C. 601-612), AMS has considered the economic impact of
this action on small entities. Accordingly, AMS has prepared this
initial regulatory flexibility analysis.
The purpose of the RFA is to fit regulatory actions to the scale of
businesses subject to such actions in order that small businesses will
not be unduly or disproportionately burdened. Marketing orders issued
pursuant to the Act, are unique in that they are brought about through
group action of essentially small entities acting on their own behalf.
There are approximately 7,600 almond growers in the production area
and approximately 100 handlers subject to regulation under the Order.
In the previous proposed rule, published in the Federal Register on
April 27, 2023 (88 FR 25559), the 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). Since that publication, the SBA updated
the definition of small businesses to those having annual receipts of
less than $3,750,000 for producers and $34,000,000 for handlers (13 CFR
121.201). Thus, AMS changed the thresholds to reflect the new SBA
thresholds in this proposed rule and referendum order. The changes do
not impact AMS's ultimate determination regarding the impact of the
rule on small entities. 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
$3,750,000 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 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 $34,000,000 during the 2020-21 crop
year. Therefore, the majority of handlers may be classified as large
businesses.
This proposed rule would revise multiple provisions in the Order's
subpart regulating handling of California almonds. Specifically, the
proposed rule would:
<bullet> amend the Order to modify the definitions of ``Almonds''
and ``Shelled almonds'', and add a definition for ``Almond biomass''
(Proposal 1),
<bullet> change the date utilized to determine the applicable
handler volume for the purpose of tabulating handler votes in the
nomination process for handler positions on the Board (Proposal 2),
<bullet> replace obsolete references to ``Control Board'' with
``Board'' in two sections (Proposal 3),
<bullet> simplify language pertaining to incoming quality control
(Proposal 4),
<bullet> change the date that the Board is required to submit
volume regulation estimates and recommendations to the Secretary
(Proposal 5),
<bullet> remove language that distinguishes certain funds in the
accounting of the Board's operating reserve fund and set the reserve
fund limit at approximately six-months' expenses instead of six-months'
budget (Proposal 6), and
<bullet> add authority to accept advanced assessments and to borrow
funds from commercial lenders (Proposal 7).
Proposals 1, 3, and 4 are modernizing in nature and align Order
provisions with current industry definitions and practices in
Sec. Sec. 981.4, 981.6, 981.41(b), and 981.59(a). It would also add
Sec. 981.4(a) to define Almond Biomass and simplify language in Sec.
981.42(a) to identify disposition outlets more broadly as Accepted
Users. There are no substantial changes or additional requirements to
industry practices effectuated as a result of these proposed
amendments.
Proposals 2 and 5 adjust or align dates to allow for the inclusion
of more available data when determining weighting of handler votes for
Board nominations (Sec. 981.32(b)(2)) and providing volume regulation
recommendations to the Secretary (Sec. 981.49). These changes would
not impact how volume is calculated for handler vote weighting,
materially affect crop estimates, or adversely impact Board activities.
Proposal 6 removes language that distinguishes between funds for
administrative-research and funds for marketing promotion activities in
the accounting of excess funds (Sec. 981.81(b) and (c)). In addition,
it would set the reserve fund limit at approximately six-months'
expenses instead of the current six-months' budget. This is an
administrative adjustment that provides technical clarification on the
accounting of assessments and reserves. It does not impact the
percentage of assessments available for refund, nor does it materially
impact reserves.
Proposal 7 would add a new section, Sec. 981.81(f), to allow the
Board to accept advance payment of assessments and borrow funds against
the current season's assessment receipts using a line of credit from a
commercial financial institution to provide additional flexibility in
managing its cashflows and expenses.

[[Page 68505]]

This proposed rule would apply equally to producers and handlers,
regardless of size. The proposed amendments have no additional impact
on the reporting, record-keeping, or compliance costs of small
businesses.
The Board considered the benefits and costs of maintaining the
status quo as an alternative to this proposed rule; however, the Board
determined that each proposed amendatory change was beneficial in
either clarifying or updating the language of the Order for industry or
improving the Board's continuity of operations at no additional costs
to industry.

Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
Chapter 35), the Order's information collection requirements have been
previously approved by OMB and assigned OMB No. 0581-0178, Vegetable
and Specialty Crops. No changes in those requirements are necessary
because of this action. Should any changes become necessary, they would
be submitted to OMB for approval.
This proposed rule would impose no additional reporting or
recordkeeping requirements on either small or large almond handlers. As
with all Federal marketing order programs, reports and forms are
periodically reviewed to reduce information requirements and
duplication by industry and public-sector agencies.
AMS is committed to complying with the E-Government Act, to promote
the use of the internet and other information technologies to provide
increased opportunities for citizen access to Government information
and services, and for other purposes.
USDA has not identified any relevant Federal rules that duplicate,
overlap, or conflict with this action.
The Board's meetings are widely publicized throughout the
California almond production area. All interested persons are invited
to attend the meeting and encouraged to participate in Board
deliberations on all issues. Like all Board meetings, the meetings held
on December 9, 2019, August 11, 2020, and December 7, 2020, were
public, and all entities, both large and small, were encouraged to
express their views on the proposals.
A proposed rule concerning this action published in the Federal
Register on April 27, 2023 (88 FR 25559). A copy of the rule was sent
via email to the Board staff for distribution to all Board members and
California almond growers and handlers. The proposed rule was also made
available by USDA through the internet and the Office of the Federal
Register. A 60-day comment period ending June 26, 2023, was provided to
allow interested persons to respond to the proposals. AMS received one
comment during the comment period. The comment supported the proposed
amendments. Based on all the information available to AMS at this time,
including the comments received in response to the proposed rule, no
substantive changes will be made to the amendments as proposed.
A small business guide on complying with fruit, vegetable, and
specialty crop marketing agreements and orders may be viewed at:
<a href="https://www.ams.usda.gov/rules-regulations/moa/small-businesses">https://www.ams.usda.gov/rules-regulations/moa/small-businesses</a>. Any
questions about the compliance guide should be sent to Richard Lower at
the previously mentioned address in the FOR FURTHER INFORMATION CONTACT
section.

Findings and Conclusions

AMS has determined that the findings and conclusions, and general
findings and determinations included in the proposed rule set forth in
the April 26, 2023, issue of the Federal Register (88 FR 25559) are
appropriate and necessary and are hereby approved and adopted.

Marketing Order

Annexed hereto and made a part hereof is the document entitled
``Order Amending the Order Regulating the Handling Almonds Grown in
California.'' This document has been decided upon as the detailed and
appropriate means of effectuating the foregoing findings and
conclusions. It is hereby ordered that this entire proposed rule be
published in the Federal Register.

Referendum Order

It is hereby directed that a referendum be conducted in accordance
with the procedure for the conduct of referenda (7 CFR part 900.400-
407) to determine whether the annexed order amending the Order
regulating the handling of almonds grown in California is approved by
growers, as defined under the terms of the Order, who during the
representative period were engaged in the production of almonds in the
production area. The representative period for the conduct of such
referendum is hereby determined to be August 1, 2022, through July 31,
2023.
The agents designated by the Secretary to conduct the referendum
are Bianca Bertrand, Barry Broadbent, Gary Olson, and Peter Sommers,
West Region Branch, Market Development Division, Specialty Crops
Program, AMS, USDA; Telephone: (863) 324-3375, Fax: (863) 291-8614, or
Email: <a href="/cdn-cgi/l/email-protection#89cbe0e8e7eae8c4a7cbecfbfdfbe8e7edc9fcfaede8a7eee6ff">[email&#160;protected]</a>, <a href="/cdn-cgi/l/email-protection#682a091a1a11462a1a07090c0a0d061c281d1b0c09460f071e">[email&#160;protected]</a>,
<a href="/cdn-cgi/l/email-protection#adeaccdfd4e983e2c1dec2c3edd8dec9cc83cac2db">[email&#160;protected]</a>, and <a href="/cdn-cgi/l/email-protection#174772637265453944787a7a726564576264737639707861">[email&#160;protected]</a>, respectively.

Order Amending the Order Regulating the Handling of Almonds Grown in
California 1
---------------------------------------------------------------------------

\1\ This order shall not become effective unless and until the
requirements of Sec. 900.14 of the rules of practice and procedure
governing proceedings to formulate marketing agreements and
marketing orders have been met.
---------------------------------------------------------------------------

Findings and Determinations

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

Order Relative to Handling

It is therefore ordered, that on and after the effective date
hereof, all

[[Page 68506]]

handling of almonds grown in California shall be in conformity to, and
in compliance with, the terms and conditions of the said Order as
hereby proposed to be amended as follows:
The provisions of the proposed marketing order amending the Order
contained in the proposed rule issued by the Administrator and
published in the Federal Register (88 FR 25559) on April 27, 2023, will
be and are the terms and provisions of this order amending the Order
and are set forth in full herein.

List of Subjects in 7 CFR Part 981

Marketing agreements, Nuts, Reporting and recordkeeping
requirements.

For the reasons set forth in the preamble, the Agricultural
Marketing Service proposes to amend 7 CFR part 981 as follows:

PART 981--ALMONDS GROWN IN CALIFORNIA

0
1. The authority citation for 7 CFR part 981 continues to read as
follows:

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

0
2. Revise Sec. 981.4 to read as follows:

Sec. 981.4 Almonds.

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

Sec. 981.4a Almond Biomass.

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

Sec. 981.6 Shelled almonds.

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

Sec. 981.32 Nominations.

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

Sec. 981.41 [Amended]

0
6. Amend Sec. 981.41(b) by removing the word ``Control''.

Sec. 981.42 [Amended]

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

Sec. 981.49 [Amended]

0
8. Amend Sec. 981.49 by replacing the word ``August'' with
``September''.
0
9. Amend Sec. 981.59 (a) by removing the word ``Control''.
0
10. Amend Sec. 981.81 by:
0
a. Revising the third and fourth sentences in paragraph (b);
0
b. Revising the first sentence in paragraph (c); and
0
c. Adding paragraph (f).
The revisions and addition read as follows:

Sec. 981.81 Assessment.

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

Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2023-21701 Filed 10-3-23; 8:45 am]
BILLING CODE P

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