[Federal Register Volume 85, Number 238 (Thursday, December 10, 2020)]
[Rules and Regulations]
[Pages 79383-79385]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-26880]



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 Rules and Regulations
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  Federal Register / Vol. 85, No. 238 / Thursday, December 10, 2020 / 
Rules and Regulations  

[[Page 79383]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 984

[Docket No. AMS-SC-20-0053; SC20-984-1 FR]


Walnuts Grown in California; Changes to Reporting Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule revises the reporting requirements prescribed under 
the Federal marketing order regulating the handling of walnuts grown in 
California. This action requires California walnut handlers to report 
purchase commitments (walnuts sold but not yet shipped) with domestic 
and foreign buyers, monthly. This change provides more accurate 
information about supply and demand to the industry, which also 
enhances marketing efforts.

DATES: Effective January 11, 2021.

FOR FURTHER INFORMATION CONTACT: Terry Vawter, Regional Director, 
Marketing Order and Agreement Division, California Marketing Field 
Office, Specialty Crops Program, AMS, USDA; Telephone: (559) 487-5905, 
Fax: (559) 487-5906; or Email: [email protected].
    Small businesses may request information on complying with this 
regulation by contacting Richard Lower, Marketing Order and Agreement 
Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue 
SW, STOP 0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, 
Fax: (202) 720-8938, or Email: [email protected].

SUPPLEMENTARY INFORMATION: This final rule, 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. 
984, as amended (7 CFR part 984), regulating the handling of walnuts 
grown in California. Part 984 (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 California Walnut Board (hereinafter referred to as the 
``Board'') locally administers the Order and is comprised of growers 
and handlers of walnuts operating within California, and a public 
member.
    The Department of Agriculture (USDA) is issuing this final rule in 
conformance with Executive Orders 13563 and 13175. This action falls 
within a category of regulatory actions that the Office of Management 
and Budget (OMB) exempted from Executive Order 12866 review. 
Additionally, because this final rule does not meet the definition of a 
significant regulatory action, it does not trigger the requirements 
contained in Executive Order 13771. See OMB's Memorandum titled 
``Interim Guidance Implementing Section 2 of the Executive Order of 
January 30, 2017, titled `Reducing Regulation and Controlling 
Regulatory Costs' '' (February 2, 2017).
    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This final rule is not intended to have 
retroactive effect.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with USDA a petition 
stating that the order, any provision of the order, or any obligation 
imposed in connection with the order is not in accordance with law and 
request a modification of the order or to be exempted therefrom. A 
handler is afforded the opportunity for a hearing on the petition. 
After the hearing, USDA would rule on the petition. The Act provides 
that the district court of the United States in any district in which 
the handler is an inhabitant, or has his or her principal place of 
business, has jurisdiction to review USDA's ruling on the petition, 
provided an action is filed not later than 20 days after the date of 
the entry of the ruling.
    This final rule revises reporting requirements under the Order by 
authorizing the Board to collect reports from handlers about monthly 
purchase commitments with domestic and foreign buyers. The Board 
believes that the collection of this information enables the industry 
to have more accurate and timely data regarding the industry's monthly 
supply and demand, and enhances overall marketing efforts.
    The Marketing Order Revision Committee (MORC) met to discuss the 
proposal in a public meeting via teleconference on April 2, 2020. The 
MORC recommended the change in reporting requirements to enable the 
industry to have more complete information on purchase commitments. The 
Board unanimously recommended this action at a public meeting held on 
May 7, 2020, where stakeholders were encouraged to express their views 
and provide input.
    Section 984.71 authorizes the Board to require handlers to report 
inventory of inshell and shelled walnuts as specified by the Board.
    Section 984.72 authorizes the Board to require that handlers who 
handle merchantable walnuts, inshell or shelled, at any time during the 
marketing year shall submit reports showing the quantity handled and 
other pertinent information, as specified by the Board.
    Section 984.73 authorizes the Board, with the approval of the 
Secretary, to require handlers to report walnut receipts from growers, 
handlers, or others on a form and at designated times.
    Section 984.76 authorizes the Board, with the approval of the 
Secretary, to request handlers to furnish other reports and information 
as needed to enable the Board to perform its duties under the Order.
    Sections 984.471, 984.472, and 984.473 provide the requirements 
related to reports of inventory, merchantable walnuts shipped, and 
walnuts received from growers, respectively.
    Currently, reports of shipments and receipts are filed by handlers 
on CWB Form No. 6 no later than the 5th day of month following such 
shipments or receipts. This report also includes the quantity shipped 
to domestic and foreign buyers for shelled and inshell walnuts, 
including information about the quantity of walnuts exported by country 
of destination. Pursuant to this final rule, handlers would report 
purchase commitments of walnuts, not

[[Page 79384]]

yet shipped, made with domestic and foreign buyers. The change and 
information about each handler's shipments and receipts are expected to 
provide more timely information about supply and demand for walnuts, 
and enhance marketing and promotion efforts.
    Section 984.472 is amended to add new paragraph (c), which requires 
handlers to submit reports on the purchase commitments with buyers that 
are not yet shipped. The title of Section 984.472 is also amended to 
read ``Reports of merchantable walnuts shipped, received, and 
committed.''

Final Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this action on small entities. Accordingly, AMS has 
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 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 90 handlers subject to regulation under the 
Order and approximately 4,400 walnut growers in the production area. 
The Small Business Administration (SBA) defines small agricultural 
service firms as those having annual receipts of less than $30,000,000, 
and small agricultural producers as those having annual receipts of 
less than $1,000,000 (13 CFR 121.201).
    According to the Board, there are approximately 4,400 producers and 
90 handlers in the production area. The Board also reported that 
approximately 82 percent of California's walnut handlers shipped 
merchantable walnuts valued under $30 million during the 2018-2019 
marketing year, and would, therefore, be considered small handlers 
according to the SBA definition.
    Data from the 2017 Census of Agriculture, published by USDA's 
National Agricultural Statistics Service (NASS), show that 86 percent 
of California farms growing walnuts had walnut sales of less than $1 
million. In an alternative computation using NASS data, the 3-year 
average crop value (2016/17 to 2018/19) was $1.24 billion. Average 
bearing acres over that same 3-year period were 333,000. Dividing crop 
value by acres yields a revenue per acre estimate of $3,733. Using 
these numbers, it would take approximately 268 acres ($1,000,000/
$3,733) to yield $1 million in annual walnut sales. The 2017 Census of 
Agriculture Census data show that 80 percent of walnut farms in 2017 
were below 260 acres. By either measure, the NASS data demonstrate that 
well over three-fourths of California walnut farms would be considered 
small businesses according to the SBA definition.
    This final rule revises the title of section 984.472 and adds a new 
paragraph (c) to include the requirement for handlers to report monthly 
purchase commitments made with domestic and foreign buyers. This action 
provides more accurate and timely information regarding the industry's 
monthly supply and demand, and enhances overall marketing efforts.
    During the MORC meeting on April 2, 2020, alternatives were 
discussed, including not collecting information about purchase 
commitments. However, the industry believes that information about 
walnut supply and demand is critical in supporting overall marketing 
efforts. Timely and accurate information gives the handlers and the 
Board valuable data, permitting them to focus on their sales efforts. 
At the May 7, 2020, meeting, the Board discussed the MORC's 
recommendation and its reasoning. There was agreement about the value 
of having the commitment information, along with information on 
shipments and receipts.
    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) under 
OMB No. 0581-0178, Vegetable and Specialty Crops. This final rule 
requires changes to the Board's existing CWB Form No. 6 by changing the 
title and adding the provision to collect information on purchase 
commitments with domestic and foreign buyers. The revised form has been 
submitted to OMB for approval.
    As with all Federal marketing order programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies. USDA has not 
identified any relevant Federal rules that duplicate, overlap, or 
conflict with this final 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.
    The Board's meetings were widely publicized throughout the walnut 
industry and all interested persons were invited to attend the meetings 
and encouraged to participate in the deliberations on all issues. The 
MORC's meeting on April 2, 2020, and the Board's meeting on May 7, 
2020, were public meetings held via teleconference and all entities, 
both large and small, were encouraged to express their views on this 
issue.
    A proposed rule concerning this action was published in the Federal 
Register on August 25, 2020, (85 FR 52278). Copies of the proposal were 
provided by the Board to members and handlers. Finally, the proposed 
rule was made available through the internet by USDA and the Office of 
the Federal Register. A 30-day comment period ending September 24, 
2020, was provided to allow interested persons to respond to the 
proposal. Ten comments were received.
    Seven of the comments favored adding the requirement for handlers 
to report purchase commitments, two of the commenters did not favor the 
change, and one commenter neither favored nor opposed the change.
    Those favoring the change did so for similar reasons: The value in 
having accurate information about monthly inventories; the value in 
collecting the data and the importance of the data in relationship to 
the Board's marketing efforts; and the ability of the information to 
provide market trend data and an overall better picture of the market.
    The two commenters who opposed the change did so because they were 
concerned about the reporting burden imposed on walnut handlers. One 
commenter also noted such commitment data could be impacted by 
cancelled orders or order adjustments. The other commented that the 
value of the information might not be offset by the increased reporting 
burden on walnut handlers.
    The commenter who did not take a position for or against the 
changes to the Order discussed the potential for such reported 
information to be skewed by backorders, and urged AMS to consider an 
additional inventory category with a shipping time limit.
    As to the two commenters who did not favor the change, it should be 
noted that some walnut handlers are also members of the Board, and this 
change to the reporting requirements was discussed in two separate 
public meetings a month apart. The vote on the change by the MORC on 
April 2, 2019,

[[Page 79385]]

and by the full Board on May 7, 2019, were unanimous. There were no 
opposing votes, and no handlers commented on the rule during the 
comment period. The handlers serving on the MORC and the Board did not 
feel that the additional information required by the change represented 
a significant burden to the reporting requirements. AMS believes that 
benefits of this change to the marketing of walnuts outweigh the 
concerns of the minimal increase in the reporting burden. Also, AMS 
finds the claim of commitment data being impacted by cancelled orders 
or order adjustments to be highly speculative, with no firm evidence 
presented to substantiate the assertion. Thus, there are no changes 
made to the final rule.
    In addition, the comment about changes to the data created by 
potential backorders may not materialize, since handlers are free to 
make interhandler transfers of walnuts to meet their purchase 
commitments; and the nature of agricultural commodities, in general, is 
not conducive to the development of backorders. In agriculture, a crop 
is produced and harvested, and more is not coming until about a year 
later.
    Accordingly, no changes will be made to the rule as proposed.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: 
https://www.ams.usda.gov/rules-regulations/moa/small-businesses. Any 
questions about the compliance guide should be sent to Richard Lower at 
the previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    After consideration of all relevant material presented, including 
the information and recommendation submitted by the Board and other 
available information, it is hereby found that this rule will tend to 
effectuate the declared policy of the Act.

List of Subjects in 7 CFR Part 984

    Marketing agreements, Reporting and recordkeeping requirements, 
Walnuts.

    For the reasons set forth in the preamble, 7 CFR part 984 is 
amended as follows:

PART 984--WALNUTS GROWN IN CALIFORNIA

0
1. The authority citation for 7 CFR part 984 continues to read as 
follows:

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


0
2. Amend Sec.  984.472 by revising the section heading and adding 
paragraph (c) to read as follows:


Sec.  984.472  Reports of merchantable walnuts, received, shipped, and 
committed.

* * * * *
    (c) Reports of merchantable walnuts on which handlers have made 
purchase commitments with buyers during the month, but which have not 
yet been shipped, shall be submitted to the Board on CWB Form No. 6, 
not later than the 5th day of the month following the month in which 
the walnuts were committed. Such reports shall show the quantity of 
walnuts committed in either inshell or shelled pounds. If the handler 
made no commitments during any month, he/she shall mark ``None'' in the 
``Purchase Commitments'' section of CWB Form No. 6.

Bruce Summers,
Administrator, Agricultural Marketing Service.
[FR Doc. 2020-26880 Filed 12-9-20; 8:45 am]
BILLING CODE P