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Federal Register / Vol. 86, No. 58 / Monday, March 29, 2021 / Rules and Regulations
adequately state that in all promotional activities, regardless of whether a handler is operating independently or in conjunction with a manufacturer, or whether promoting a product that is solely walnut content or walnuts are a partial ingredient, the words California Walnuts must be included in the labeling in order for that activity to qualify as a creditable expenditure. The revised language is included in the regulatory text of this decision.
Small Business Considerations Pursuant to the requirements set forth in the Regulatory Flexibility Act RFA, 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 so that small businesses will not be unduly or disproportionately burdened.
Marketing orders and amendments thereto are unique in that they are normally brought about through group action of essentially small entities for their own benefit.
Walnut Industry Background and Overview According to the hearing record, there are approximately 4,400 producers and 92 handlers in the production area.
Record evidence includes reference to a study showing that the walnut industry contributes 85,000 jobs to the economy, directly and indirectly.
A small handler as defined by the SBA 13 CFR 121.201 is one that grosses less than $30,000,000 annually.
A small grower is one that grosses less than $1,000,000 annually.
Record evidence showed that approximately 82 percent of Californias walnut handlers 75 out of 92 shipped merchantable walnuts valued under $30
million during the 20182019 marketing year and would therefore be considered small handlers according to the SBA
definition.
Data in the hearing record from the 2017 Agricultural Census, published by USDAS National Agricultural Statistics Service NASS, showed that 86 percent of California farms growing walnuts had walnut sales of less than $1 million.
In an alternative computation using NASS data from the hearing record, the 3-year average crop value 20162017 to 20182019 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
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$1 million in annual walnut sales. The 2017 Agricultural Census data show that 80 percent of walnut farms in 2017 were below 260 acres. Therefore, well over three-fourths of California walnut farms would be considered small businesses according to the SBA definition.
During the hearing held April 20 and 21, 2020, interested parties were invited to present evidence on the probable regulatory impact of the amendments to the Order on small businesses. The evidence presented at the hearing shows that none of the amendments would have a significant economic impact on a substantial number of small agricultural growers or firms.
Material Issues This action amends the Order to add authority to provide credit for market promotion expenses paid by handlers against their annual assessments due under the Order and establishes rules and regulations to effectuate the new authority. These authorities will help build towards increasing domestic demand and utilizing the industrys expanding supply of walnuts.
During the hearing held on April 20
and 21, 2020, interested persons were invited to present evidence on the probable regulatory and informational impact of the amendments to the Order on small businesses. The evidence presented at the hearing shows that the amendments would have no burdensome effects on small agricultural producers or firms.
The hearing record shows that most of the grower and handler witnesses stated that a key reason for seeking credit-back authority was the need to increase demand after years of unfavorable marketing conditions. Witnesses stated that a key factor in their support of seeking new ways to increase market demand was several years of deteriorating profitability.
Record evidence indicates that all industry members, growers and handlers, will benefit proportionally from an increase in demand brought about due to the credit-back program.
The credit-back program will be funded by allocating to the credit-back program a portion of the total Board promotional budget, funded at the current assessment rate. With no increase in the Boards assessment rate, there will be no increased costs to growers or handlers.
All handlers, large and small, will benefit proportionally by participating in the credit-back program. Handlers will participate only if they decide that they will benefit, and will incur no costs if they choose not to participate. No handler can benefit disproportionately from the program, since a handlers
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maximum credit-back payment from the Board is based on that handlers share of total industry acquisitions from the prior year, according to the hearing record.
The record shows that the proposal to add authority to establish the creditback program would, in itself, have no significant economic impact on producers or handlers of any size. Costs of complying with the new program will include handler maintenance and delivery of receipts and documentation for reimbursement of creditable expenditures, but these will be minimal and are considered standard business practices.
USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this final rule. These amendments are intended to improve the operation and administration of the Order and to assist in the marketing of California walnuts.
Paperwork Reduction Act Current information collection requirements that are part of the Federal marketing order for California walnuts 7 CFR part 984 are approved under OMB No. 05810178 Vegetables and Specialty Crops. No changes in these requirements are anticipated as a result of this proceeding. Should any such changes become necessary, they would be 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.
AMS is committed to complying with the Government Paperwork Elimination Act, which requires Government agencies in general to provide the public the option of submitting information or transacting business electronically to the maximum extent possible.
Civil Justice Reform The amendments to the Order proposed herein have been reviewed under Executive Order 12988, Civil Justice Reform. They are not intended to have retroactive effect. If adopted, the proposed amendments would not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this proposal.
The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c15A 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
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