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.

Rules and Regulations Federal Register

32721 

Vol. 86, No. 118 

Wednesday, June 23, 2021 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Part 984 

[Doc. No. AMS–SC–20–0075; SC20–984–2 

FR] 

Walnuts Grown in California; 

Decreased Assessment Rate 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Final rule. 

SUMMARY: This final rule implements a 

recommendation from the California 

Walnut Board (Board) to decrease the 

assessment rate established for the 

2020–21 and subsequent marketing 

years. The assessment rate will remain 

in effect indefinitely unless modified, 

suspended, or terminated. 

DATES: Effective July 23, 2021. 

FOR FURTHER INFORMATION CONTACT: 

Bianca Bertrand, Management and 

Program Analyst, California Marketing 

Field Office, Marketing Order and 

Agreement Division, Specialty Crops 

Program, AMS, USDA; Telephone: (559) 

487–5901, Fax: (559) 487–5906, or 

Email: Biancam.Bertrand@usda.gov or 

Gary Olson, Acting Regional Director; 

Telephone: (503) 326–2055, or Email: 

GaryD.Olson@usda.gov. 

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, or Email: Richard.Lower@

usda.gov. 

SUPPLEMENTARY INFORMATION: This 

action, pursuant to 5 U.S.C. 553, 

implements an amendment to 

regulations issued to carry out a 

marketing order as defined in 7 CFR 

900.2(j). This 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 Board locally 

administers the Order and is comprised 

of growers and handlers operating 

within the area of production, and a 

public member. 

The Department of Agriculture 

(USDA) is issuing this rule in 

conformance with Executive Orders 

13563 and 13175. In accordance with 

Executive Order 13175, AMS has not 

identified any tribal implications as a 

result of this rule. This rule 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 12988, Civil Justice 

Reform. Under the Order now in effect, 

California walnut handlers are subject to 

assessments. Funds to administer the 

Order are derived from such 

assessments. It is intended that the 

assessment rate be applicable to all 

assessable walnuts for the 2020–21 

marketing year, and continue until 

amended, suspended, or terminated. 

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. Such 

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 rule decreases the assessment 

rate from $0.0400 per kernelweight 

pound assessable walnuts, the rate that 

was established for the 2017–18 and 

subsequent marketing years, to $0.0250 

per kernelweight pound of assessable 

walnuts handled for the 2020–21 and 

subsequent marketing years. 

The Order provides authority for the 

Board, with the approval of USDA, to 

formulate an annual budget of expenses 

and collect assessments from handlers 

to administer the program. The 

members are familiar with the Board’s 

needs and with the costs of goods and 

services in their local area and are thus 

able to formulate an appropriate budget 

and assessment rate. The assessment 

rate is formulated and discussed in a 

public meeting and all directly affected 

persons have an opportunity to 

participate and provide input. 

For the 2017–18 and subsequent 

marketing periods, the Board 

recommended, and USDA approved, an 

assessment rate of $0.0400 per 

kernelweight pound of assessable 

walnuts handled. That assessment rate 

continued until modified, suspended, or 

terminated by USDA upon 

recommendation and information 

submitted by the Board or other 

information available to USDA. 

On September 11, 2020, the Board 

unanimously recommended 2020–21 

expenditures of $17,990,000 and an 

assessment rate of $0.0250 per 

kernelweight pound of assessable 

walnuts. In comparison, last year’s 

budgeted expenditures were 

$25,760,000. The assessment rate of 

$0.0250 is $0.0150 lower than the rate 

currently in effect. The Board 

recommended decreasing the 

assessment rate to reduce the 

assessment burden on handlers. Funds 

from assessments and from the Board’s 

reserve will be sufficient to cover 

proposed expenses, while maintaining 

the Board’s reserve within the 

requirements of the Order at no more 

than two years’ budgeted expenses. 

The major expenditures 

recommended by the Board for the 

2020–21 marketing year include 

$1,930,000 for employee expenses, 

$283,000 for office expenses, $1,600,000 

for production research, $825,000 for 

grades and standards activities, and 

$13,112,000 for domestic market 

development. Budgeted expenses for 

these items in 2019–20 were $1,896,000, 

$293,000, $2,000,000, $825,000, and 

$20,700,000, respectively. 

The Board derived the recommended 

assessment rate by considering 

anticipated expenses; estimated 

certification (‘‘certification’’ means 


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32722 Federal Register / Vol. 86, No. 118 / Wednesday, June 23, 2021 / Rules and Regulations 

having the walnuts inspected) of 

650,000 tons (inshell), based on a threeyear average; and the amount of funds 

available in the authorized reserve. 

Pursuant to § 984.51(b) of the Order, 

the estimated production is converted to 

a merchantable kernelweight basis using 

a factor of 0.45 (650,000 tons × 2,000 

pounds per ton × 0.45), which yields 

585,000,000 kernelweight pounds. At 

$0.0250 per pound, the assessment rate 

will generate $14,625,000 in assessment 

income and, along with funds from the 

reserve, will meet estimated expenses of 

$17,990,000. 

Funds in the reserve (currently 

$20,133,075) will be kept within the 

maximum permitted in § 984.69 of the 

Order of approximately two marketing 

years’ budgeted expenses. The reserve at 

the end of the 2020–21 marketing year 

is anticipated to be $13,258,075. 

The assessment rate established in 

this rule will continue in effect 

indefinitely unless modified, 

suspended, or terminated by USDA 

upon recommendation and information 

submitted by the Board or other 

available information. 

Although the assessment rate will be 

effective for an indefinite period, the 

Board will continue to meet prior to or 

during each marketing year to 

recommend a budget of expenses and 

consider recommendations for 

modification of the assessment rate. The 

dates and times of Board meetings are 

available from the Board or USDA. 

Board meetings are open to the public 

and interested persons may express 

their views at these meetings. USDA 

will evaluate Board recommendations 

and other available information to 

determine whether modification of the 

assessment rate is needed. Further 

rulemaking would be undertaken as 

necessary. The Board’s 2020–21 budget 

and those for subsequent marketing 

years will be reviewed and, as 

appropriate, approved by USDA. 

Final Regulatory Flexibility Analysis 

Pursuant to requirements set forth in 

the Regulatory Flexibility Act (RFA) (5 

U.S.C. 601–612), the Agricultural 

Marketing Service (AMS) has 

considered the economic impact of this 

rule 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 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 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). 

The Board 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 Agricultural 

Census, 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. 

An alternative computation includes 

more recent NASS data, starting with a 

three-year average value of utilized 

production of $1.263 billion for the 

most recent seasons for which data is 

available (2017/18 through 2019/20). 

Dividing that figure by the number of 

walnut growers (4,400) yields an 

average annual crop value per grower of 

approximately $287,045. This figure is 

well below the SBA small agricultural 

producer threshold of $1,000,000 in 

annual sales. Assuming a normal 

distribution, this provides evidence that 

a large majority of walnut growers can 

be considered small agricultural 

producers according to the SBA 

definition. 

This rule decreases the assessment 

rate collected from handlers for the 

2020–21 and subsequent marketing 

years from $0.0400 to $0.0250 per 

kernelweight pound of assessable 

walnuts. The Board unanimously 

recommended 2020–21 expenditures of 

$17,990,000 and an assessment rate of 

$0.0250 per kernelweight pound of 

assessable walnuts. The assessment rate 

of $0.0250 is $0.0150 lower than the rate 

currently in effect. The quantity of 

assessable walnuts for the 2020–21 

marketing year is estimated at 650,000 

tons (inshell), which is equivalent to 

585,000,000 kernelweight pounds. 

Thus, the $0.0250 rate should provide 

$14,625,000 in assessment income. The 

Board anticipates that the income 

derived from handler assessments, along 

with funds from the Board’s authorized 

reserve, will be adequate to cover 

budgeted expenses for the 2020–2021 

marketing year. 

The major expenditures 

recommended by the Board for the 

2020–21 marketing year include 

$1,930,000 for employee expenses, 

$283,000 for office expenses, $1,600,000 

for production research, $825,000 for 

grades and standards activities, and 

$13,112,000 for domestic market 

development. Budgeted expenses for 

these items in 2019–20 were $1,896,000, 

$293,000, $2,000,000, $825,000, and 

$20,700,000, respectively. 

The Board unanimously 

recommended decreasing the 

assessment rate to reduce the 

assessment burden on handlers, and 

recommended utilizing funds from the 

authorized reserve to help cover the 

portion of the Board expenses. 

Prior to arriving at this budget and 

assessment rate, the Board considered 

information from various sources, such 

as the Board’s Executive Committee. 

The Board discussed alternative 

expenditure levels, based upon the 

relative value of various activities to the 

California walnut industry. The Board 

recommended the assessment rate of 

$0.0250 to provide $14,625,000 in 

assessment income based on the 

estimation. The Board determined that 

assessment revenue, along with funds 

from the authorized reserve will be 

adequate to cover budgeted expenses for 

the 2020–21 marketing year. 

Based upon information from the 

National Agricultural Statistics Service 

(NASS), the grower price reported for 

walnuts in 2019 was $1,970 per ton 

($0.99 per pound) of walnuts. In order 

to determine the estimated assessment 

revenue as a percentage of the total 

grower revenue, we calculate the 

assessment rate ($0.0250 per 

kernelweight pound) times the 

estimated production (585,000,000 

kernelweight pounds), which equals the 

assessment revenue of $14,625,000. The 

grower revenue is calculated by 

multiplying the grower price of $1,970 

per ton ($0.99 per kernelweight pound) 

times the estimated production 

(585,000,000 kernelweight pounds), 

which equals the grower revenue of 

$579,150,000. The final step, dividing 

the assessment revenue by the grower 

revenue, indicates that, for the 2020–21 

marketing year, the estimated 

assessment revenue as a percentage of 

total grower revenue would be about 2.5 

percent. 

This rule decreases the assessment 

obligation imposed on handlers. 

Assessments are applied uniformly on 

all handlers, and some of the costs may 

be passed on to growers. However, 

decreasing the assessment rate reduces 

the burden on handlers and may also 

reduce the burden on growers. 


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Federal Register / Vol. 86, No. 118 / Wednesday, June 23, 2021 / Rules and Regulations 32723 

1This interpretive rule uses the terms 

‘‘supervised nonbank’’ and ‘‘very large bank or 

credit union’’ for convenience. The more precise 

definitions of the persons that are subject to the 

Bureau’s supervisory authority under sections 1024 

and 1025 of the CFPA are set out in the statute. 12 

U.S.C. 5514(a), 5515(a). The Bureau also has certain 

additional supervisory authority regarding service 

providers to these persons, and the reasoning of this 

interpretive rule also extends to those service 

providers. 12 U.S.C. 5514(e), 5515(d). 

The Board’s meeting was widely 

publicized throughout the California 

walnut industry. All interested persons 

were invited to attend the meeting and 

participate in Board deliberations on all 

issues. Like all Board meetings, the 

September 11, 2020, meeting was a 

public meeting and all entities, both 

large and small, were able to express 

views on this issue. Finally, interested 

persons were invited to submit 

comments on this rule, including the 

regulatory and information collection 

impacts of this action on small 

businesses. 

In accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. 

chapter 35), the Order’s information 

collection requirements have been 

previously approved by the OMB and 

assigned OMB No. 0581–0178 Vegetable 

and Specialty Crops. No changes in 

those requirements will be necessary as 

a result of this rule. Should any changes 

become necessary, they would be 

submitted to OMB for approval. 

This rule will not impose any 

additional reporting or recordkeeping 

requirements on either small or large 

California walnut 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 final rule. 

A proposed rule concerning this 

action was published in the Federal 

Register on March 5, 2021 (86 FR 

12837). The Board notified all California 

walnut handlers of the proposed 

assessment rate decrease. The proposed 

rule was made available through the 

internet by USDA and the Office of the 

Federal Register. A 30-day comment 

period ending April 5, 2021, was 

provided for interested persons to 

respond to the proposal. No comments 

were received. Accordingly, no changes 

will be made to the proposed rule. 

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 

information available, 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, and 

Walnuts. 

For the reasons set forth in the 

preamble, 7 CFR part 984 is amended as 

follows: 

PART 984—WALNUTS GROWN IN 

CALIFORNIA 

■ 1. The authority citation for part 984 

continues to read as follows: 

Authority: 7 U.S.C. 601–674. 

■ 2. Section 984.347 is revised to read 

as follows: 

§ 984.347 Assessment rate. 

On and after September 1, 2020, an 

assessment rate of $0.0250 per 

kernelweight pound is established for 

California merchantable walnuts. 

Erin Morris, 

Associate Administrator, Agricultural 

Marketing Service. 

[FR Doc. 2021–13039 Filed 6–22–21; 8:45 am] 

BILLING CODE P 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

12 CFR Chapter X 

Examinations for Risks to Active-Duty 

Servicemembers and Their Covered 

Dependents 

AGENCY: Bureau of Consumer Financial 

Protection. 

ACTION: Interpretive rule. 

SUMMARY: The Bureau of Consumer 

Financial Protection (Bureau) has 

statutory authority to conduct 

examinations, at those institutions that 

it supervises, regarding the risks to 

active-duty servicemembers and their 

covered dependents that are presented 

by conduct that violates the Military 

Lending Act. This interpretive rule 

explains the basis for that authority. 

DATES: This interpretive rule is effective 

on June 23, 2021. 

FOR FURTHER INFORMATION CONTACT: 

Christopher Shelton, Senior Counsel, 

Legal Division, (202) 435–7700. If you 

require this document in an alternative 

electronic format, please contact CFPB_

Accessibility@cfpb.gov. 

SUPPLEMENTARY INFORMATION: 

I. Introduction 

The Consumer Financial Protection 

Act of 2010 (CFPA) authorizes the 

Bureau to conduct examinations of 

supervised nonbanks for the purposes of 

assessing and detecting ‘‘risks to 

consumers.’’ As explained below, the 

risks to active-duty servicemembers and 

their dependents from conduct that 

violates the Military Lending Act (MLA) 

fall squarely within that category. The 

CFPA also authorizes the Bureau to 

conduct examinations of very large 

banks and credit unions for purposes of 

detecting and assessing those ‘‘risks to 

consumers’’ that are ‘‘associated’’ with 

‘‘activities subject to’’ Federal consumer 

financial laws, such as the Truth in 

Lending Act (TILA) or the CFPA.1

Because conduct that violates the MLA 

is associated with activities that are 

subject to TILA and the CFPA, that 

standard is also satisfied here. The 

Bureau’s interpretation is also entirely 

consistent with the enforcement scheme 

of the MLA, which by incorporating 

TILA’s enforcement scheme authorizes 

the Bureau to use formal administrative 

adjudications, civil enforcement actions, 

and other authorities to enforce the 

MLA. That enforcement scheme is 

complemented by the Bureau’s use of 

the examination process to detect and 

assess risks to consumers arising from 

violations of the MLA. This reading also 

avoids an unworkable gap in Bureau 

examinations that can otherwise only be 

potentially filled by the formal 

enforcement process; based on the 

Bureau’s experience, that gap leads to 

wasteful inefficiencies for both the 

Bureau and supervised institutions. 

Additionally, the Bureau is no longer 

persuaded by counterarguments that it 

does not have the relevant authority, for 

reasons that will also be discussed 

below. 

This part I is followed by part II, 

which provides some general 

background about the CFPA, the MLA, 

TILA, and the history of Bureau 

examinations regarding the MLA. Part 

III sets out the Bureau’s analysis of its 

authority with respect to supervised 

nonbanks, including the statutory text; 

the statutory scheme; and 

counterarguments that the Bureau no 


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