[Federal Register Volume 59, Number 165 (Friday, August 26, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-21090]


[[Page Unknown]]

[Federal Register: August 26, 1994]


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DEPARTMENT OF AGRICULTURE
7 CFR Part 982

[FV93-982-2FIR]

 

Filberts/Hazelnuts Grown In Oregon and Washington; Establishment 
of Interim Final and Final Free and Restricted Percentages for the 
1993-94 Marketing Year

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (Department) is adopting as a 
final rule, without change, the provisions of an interim final rule 
establishing interim final and final free and restricted percentages 
for domestic inshell filberts/hazelnuts for the 1993-94 marketing year 
under the Federal marketing order for filberts/hazelnuts grown in 
Oregon and Washington. The percentages allocate the amounts of 
domestically produced filberts/hazelnuts which may be marketed in 
domestic, export and other outlets. The percentages are intended to 
stabilize the supply of domestic inshell filberts/hazelnuts in order to 
meet the limited domestic demand for such filberts/hazelnuts and 
provide reasonable returns to producers. This rule was recommended by 
the Filbert/Hazelnut Marketing Board (Board), which is the agency 
responsible for local administration of the order.

EFFECTIVE DATE: September 26, 1994.

FOR FURTHER INFORMATION CONTACT: Teresa Hutchinson, Marketing 
Specialist, Northwest Marketing Field Office, Fruit and Vegetable 
Division, AMS, USDA, 1220 SW Third Ave., Room 369, Portland, OR 97204; 
telephone (503) 326-2724 or Mark A. Slupek, Marketing Specialist, 
Marketing Order Administration Branch, Fruit and Vegetable Division, 
AMS, USDA, Room 2524-S, P.O. Box 96456, Washington, DC 20090-6456; 
telephone: (202) 205-2830.

SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing 
Agreement and Order No. 982 [7 CFR Part 982], both as amended, 
regulating the handling of filberts/hazelnuts grown in Oregon and 
Washington. This 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 Department is issuing this rule in conformance with Executive 
Order 12866.
    This rule has been reviewed under Executive Order 12778, Civil 
Justice Reform. It is intended that this action apply to all 
merchantable filberts/hazelnuts handled during the 1993-94 marketing 
year. This rule will not preempt any State or local laws, regulations, 
or policies, unless they present an irreconcilable conflict with this 
rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 8c(15)(A) of the 
Act, any handler subject to an order may file with the Secretary 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, the Secretary 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 in equity to review the 
Secretary's ruling on the petition, provided a bill in equity is filed 
not later than 20 days after the date of the entry of the ruling.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Administrator of the Agricultural Marketing Service 
(AMS) has considered the economic impact of this action on small 
entities.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business 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. Thus, both statutes have small 
entity orientation and compatibility.
    There are approximately 1,000 producers of filberts/hazelnuts in 
the production area and approximately 25 handlers subject to regulation 
under the marketing order. Small agricultural producers have been 
defined by the Small Business Administration [13 CFR 121.601] as those 
having annual receipts of less than $500,000, and small agricultural 
service firms are defined as those whose annual receipts are less than 
$3,500,000. The majority of handlers and producers of filberts/
hazelnuts may be classified as small entities.
    The Board's recommendation and this rule are based on requirements 
specified in the order. This rule finalizes an interim final rule which 
established the amount of inshell filberts/hazelnuts that can be 
marketed in domestic markets. The domestic outlets for this commodity 
are characterized by limited demand, and interim final and final free 
and restricted percentages benefit the industry by promoting stronger 
marketing conditions and stabilizing prices and supplies, thus 
improving grower returns.
    The interim final rule was issued on February 18, 1994, and 
published in the Federal Register [59 FR 9068, February 25, 1994], with 
an effective date of February 25, 1994. That rule added Sec. 982.242 to 
the rules and regulations in effect under the order. That rule provided 
a 30-day comment period which ended March 28, 1994.
    One comment was received, from the United States Small Business 
Administration's Chief Counsel for Advocacy (SBA). The SBA's comment 
alleged that the Department should have undertaken an analysis under 
the Regulatory Flexibility Act and should have sought public comment 
prior to placing the interim rule in effect. The comment by SBA fails 
to consider the distinct characteristics of the filbert program.
    Under this marketing order, there are permanent regulations that 
authorize a market allocation program for filberts and that specify 
exactly how the free and restricted percentages should be established 
and revised. Those provisions were adopted after a formal rulemaking 
hearing, a process that allows for a full presentation of all economic 
and operational evidence not only in written form, but also through 
oral testimony under oath and subject to cross-examination. The process 
additionally permits further briefing and exceptions based on this 
record of exhibits and testimony. Hence, there has been extensive 
economic analysis and public participation in the rulemaking adopting 
the market allocation program and specifying the market allocation 
calculation procedures.
    Each year the marketing order Board meets and considers a marketing 
policy for the coming year, including the activation of the market 
allocation program and the projected trade demand (as calculated under 
the specifications in the permanent regulations). The Board represents 
the entire filbert industry and brings to its deliberations the highest 
level of experience and expertise. The Board conducts open meetings and 
receives input of an economic nature from all interested persons. The 
Secretary's representatives are in attendance at such meetings and 
freely interact to gather any necessary economic or operational 
information. In addition, the Board is continually gathering economic 
data from a number of sources for its deliberations and for submission 
to the Secretary. At several points during the season, the Board holds 
further open meetings to update or revise the market allocation program 
for the year.
    In view of this unique and comprehensive system, the Department 
believes it is sufficiently knowledgeable to make a Regulatory 
Flexibility Act certification without any further studies or reports. 
In addition, there has been ample opportunity for public participation 
both in the formal rulemaking process that created the detailed market 
allocation program formula being applied herein, as well as thereafter 
to assure the Secretary that there has been no misapplication. Finally, 
it should be noted that the specific action commented-on is an interim 
rule which relieved restrictions by releasing the full free percentage 
immediately on February 25 rather than waiting until late May as may be 
provided under the order. This relaxation was effectuated only 10 days 
after the last date for marketing policy revisions and seeking further 
prior public participation would have significantly temporally diluted 
the value of this relief to the industry. Hence, the alternative 
championed by SBA would have maintained for a longer time more 
restrictive trade controls on small handlers.
    Therefore, for the reasons stated, the above comment in opposition 
to the interim final rule is denied.
    The Board is required to meet prior to September 20 of each 
marketing year to compute an inshell trade demand and preliminary free 
and restricted percentages, if the use of volume regulation is 
recommended during the season. The order prescribes formulas for 
computing the inshell trade demand, as well as preliminary, interim 
final, and final percentages. The inshell trade demand establishes the 
amount of inshell filberts/hazelnuts the market can utilize throughout 
the season, and the percentages release the volume of filberts/
hazelnuts necessary to meet the inshell trade demand. The preliminary 
percentages provide for the release of 80 percent of the inshell trade 
demand. The interim final percentages release 100 percent of the 
inshell trade demand. The inshell trade demand equals the average of 
the preceding three ``normal'' years' trade acquisitions of inshell 
filberts/hazelnuts, rounded to the nearest whole number. The Board may 
increase such estimate by no more than 25 percent, if market conditions 
warrant an increase. The final free and restricted percentages release 
an additional 15 percent of the average of the preceding three years' 
trade acquisitions of inshell filberts/hazelnuts for desirable 
carryout.
    The preliminary free and restricted percentages make available 
portions of the filbert/hazelnut crop which may be marketed in domestic 
inshell markets (free) and exported, shelled, or otherwise disposed of 
(restricted) early in the 1993-94 season. The preliminary free 
percentage is expressed as a percentage of the total supply subject to 
regulation and is based on preliminary crop estimates. The majority of 
domestic inshell filberts/hazelnuts are marketed in October, November, 
and December. By November, the marketing season is well under way.
    At its August 26, 1993, meeting, the Board announced preliminary 
free and restricted percentages of 7 percent and 93 percent, 
respectively, to release 80 percent of the inshell trade demand. The 
purpose of releasing only 80 percent of the inshell trade demand under 
the preliminary percentage is to guard against underestimates of crop 
size. The preliminary restricted percentage is 100 percent minus the 
free percentage.
    On or before November 15, the Board must meet again to recommend 
interim final percentages and final percentages. The Board uses current 
crop estimates to calculate the interim final and final percentages. 
The interim final percentages are calculated in the same way as the 
preliminary percentages and release 100 percent of the inshell trade 
demand previously computed by the Board for the marketing year. Final 
free and restricted percentages release an additional 15 percent of the 
average of the preceding three years' trade acquisitions to ensure an 
adequate carryover into the following season. The final free and 
restricted percentages must be effective at least 30 days prior to the 
end of the marketing year (July 1 through June 30), or earlier, if 
recommended by the Board and approved by the Secretary. In addition, 
revisions in the marketing policy can be made until February 15 of each 
marketing year.
    In accordance with order provisions, the Board met on November 10, 
1993, reviewed and approved an amended marketing policy and recommended 
the establishment of interim final and final free and restricted 
percentages. Interim final percentages were recommended at 12 percent 
free and 88 percent restricted, and final free and restricted 
percentages were recommended at 13 percent and 87 percent. The interim 
final percentages made an additional 807 tons of product available for 
the domestic inshell market. The interim final marketing percentages 
were based on the industry's final production estimates and released 
3,903 tons to the domestic inshell market from the 1993 crop. The final 
marketing percentages released an additional 605 tons from the 1993 
crop for domestic use. Thus, a total of 4,508 tons of product was 
available from the 1993 crop for domestic use when the final 
percentages were established. The Oregon Agricultural Statistics 
Service provided an early estimate of 39,000 tons total production for 
the Oregon and Washington area. However, a handler survey conducted by 
the Board provided a more current estimate of 37,700 tons total 
production for the area. Therefore, the Board voted to unanimously 
accept the more current estimate of 37,700 tons.
    Although the crop is large, the Board determined that the inshell 
domestic market conditions would allow more product without depressing 
the market and recommended immediate release of the additional 15 
percent (the final percentages). The Board believed that the immediate 
release of the final percentages would benefit the industry with 
increased returns to growers and more product available for consumers.
    The marketing policy of the marketing order states that the final 
percentages must be effective at least 30 days prior to the end of the 
marketing year, or earlier. The Board recommended immediate release of 
the final percentages, in accordance with the authority of the 
marketing policy. The marketing policy also requires that procedurally, 
the Board recommend interim final and final percentages. Therefore, the 
interim final percentages were established even though they would not 
be utilized this marketing season.
    The marketing percentages were based on the Board's production 
estimates and the following supply and demand information for the 1993-
94 marketing year: 

------------------------------------------------------------------------
                        Inshell supply                            Tons  
------------------------------------------------------------------------
(1) Total production (Filbert/Hazelnut Marketing                        
 Boardhandlersurveyestimate)..................................    37,700
(2) Less substandard, farm use (disappearance)................     2,700
(3) Merchantable production (the Board's adjusted crop                  
 estimate)....................................................    35,000
(4) Plus undeclared carryin as of July 1, 1993, subject to              
 regulation...................................................       338
(5) Supply subject to regulation (Item 3 plus Item 4).........    35,338
                                                                        
                     Inshell Trade Demand                               
                                                                        
(6) Average trade acquisitions of inshell filberts for three            
 prior years..................................................     4,033
(7) Increase to encourage increased sales (20 percent)........       807
(8) Less declared carryin as of July 1, 1993, not subject to            
 regulation...................................................       937
(9) Adjusted Inshell Trade Demand.............................     3,903
(10) 15 percent of the average trade acquisitions of inshell            
 filberts for three prior years (Item 6)......................       605
(11) Adjusted Inshell Trade Demand plus 15 percent (Item 9              
 plus Item 10)................................................    4,508 
------------------------------------------------------------------------


------------------------------------------------------------------------
                                                              Restricted
                   Percentages                        Free              
------------------------------------------------------------------------
(12) Interim final percentages (Item 9 divided by                       
 Item 5) x 100....................................        11         89 
(13) Final percentages (Item 11 divided by Item 5)                      
 x 100............................................        13         87 
------------------------------------------------------------------------

    In addition to complying with the provisions of the marketing 
order, the Board also considers the Department's 1982 ``Guidelines for 
Fruit, Vegetable, and Specialty Crop Marketing Orders'' (Guidelines) 
when making its computations in the marketing policy. This volume 
control regulation provides a method to collectively limit the supply 
of inshell filberts/hazelnuts available for sale in domestic markets. 
The Guidelines provide that this primary market have available a 
quantity equal to 110 percent of recent years' sales in those outlets 
before secondary market allocations are approved. This provides for 
plentiful supplies for consumers and for market expansion while 
retaining the mechanism for dealing with oversupply situations. An 
additional increase of 20 percent (807 tons) was included in the 
calculations used in determining the inshell trade demand. The 
established final percentages make available 4,508 tons from the 1993 
crop plus 937 tons of declared carryin which is 135 percent of prior 
years' sales, thus exceeding the goal of the Guidelines.
    Based on these considerations, the Administrator of the AMS has 
determined that this action will not have a significant economic impact 
on a substantial number of small entities.
    After consideration of all relevant material presented, the 
information and recommendations submitted by the Board, and other 
information, it is found that finalizing the interim final rule, 
without change, as published in the Federal Register [59 FR 9068, 
February 25, 1994] will tend to effectuate the declared policy of the 
Act.

List of Subjects in 7 CFR Part 982

    Filberts, Hazelnuts, Marketing agreements, Nuts, Reporting and 
recordkeeping requirements.

    For the reasons set forth in the preamble, 7 CFR Part 982 is 
amended as follows:

PART 982--FILBERTS/HAZELNUTS GROWN IN OREGON AND WASHINGTON

    1. The authority citation for 7 CFR Part 982 continues to read as 
follows:

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

    2. Accordingly, the interim final rule amending 7 CFR part 982, 
which was published at 59 FR 9068 on February 25, 1994, is adopted as a 
final rule without change.

    Dated: August 22, 1994.
Eric M. Forman,
Deputy Director, Fruit and Vegetable Division.
[FR Doc. 94-21090 Filed 8-25-94; 8:45 am]
BILLING CODE 3410-02-P