[Federal Register Volume 65, Number 128 (Monday, July 3, 2000)]
[Rules and Regulations]
[Pages 40970-40973]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-16740]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 982

[Docket No. FV00-982-1 FIR]


Hazelnuts Grown in Oregon and Washington; Establishment of 
Interim and Final Free and Restricted Percentages for the 1999-2000 
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 
which established interim and final free and restricted percentages for 
domestic inshell hazelnuts for the 1999-2000 marketing year under the 
Federal marketing order for hazelnuts grown in Oregon and Washington. 
The percentages allocate the quantity of domestically produced 
hazelnuts which may be marketed in the domestic inshell market. The 
percentages are intended to stabilize the supply of domestic inshell 
hazelnuts to meet the limited domestic demand for such hazelnuts and 
provide reasonable returns to producers. This rule was recommended 
unanimously by the Hazelnut Marketing Board (Board), which is the 
agency responsible for local administration of the marketing order.

EFFECTIVE DATE: July 5, 2000.

FOR FURTHER INFORMATION CONTACT: Teresa L. Hutchinson, Northwest 
Marketing Field Office, Marketing Order Administration Branch, Fruit 
and Vegetable Programs, AMS, USDA, 1220 SW Third Avenue, room 385, 
Portland, OR 97204; telephone: (503) 326-2724, Fax: (503) 326-7440; or 
George J. Kelhart, Technical Advisor, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 
96456, Washington, DC 20090-6456; telephone: (202) 720-2491, Fax: (202) 
720-5698.
    Small businesses may request information on complying with this 
regulation by contacting Jay Guerber, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, P.O. Box 96456, room 
2525-S, Washington, DC 20090-6456; telephone: (202) 720-2491, Fax: 
(202) 720-5698, or E-mail: [email protected].

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing 
Agreement No. 115 and Marketing Order No. 982, both as amended (7 CFR 
Part 982), regulating the handling of hazelnuts grown in Oregon and 
Washington, hereinafter referred to as the ``order.'' 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 Department is issuing this rule in conformance with Executive 
Order 12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. It is intended that this action apply to all 
merchantable hazelnuts handled during the 1999-2000 marketing year 
(July 1, 1999, through June 30, 2000). 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 608c(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 to review the Secretary'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 continues in effect percentages which allocate the 
quantity of inshell hazelnuts that may be marketed in domestic markets. 
The Board is required to meet prior to September 20 of each marketing 
year to compute its marketing policy for that year, and compute and 
announce an inshell trade demand if it determines that volume 
regulations would tend to effectuate the declared policy of the Act. 
The Board also computes and announces preliminary free and restricted 
percentages for that year.
    The inshell trade demand is the amount of inshell hazelnuts that 
handlers may ship to the domestic market throughout the marketing 
season. The order specifies that the inshell trade demand be computed 
by averaging the preceding three ``normal'' years trade acquisitions of 
inshell hazelnuts, rounded to the nearest whole number. The Board may 
increase the

[[Page 40971]]

three-year average by up to 25 percent, if market conditions warrant an 
increase. The Board's authority to recommend volume regulations and the 
computations used to determine the percentages are specified in 
Sec. 982.40 of the order.
    The National Agricultural Statistics Service (NASS) estimated 
hazelnut production at 38,000 tons for the Oregon and Washington area. 
The majority of domestic inshell hazelnuts are marketed in October, 
November, and December. By November, the marketing season is well under 
way.
    The quantity marketed is broken down into free and restricted 
percentages to make available hazelnuts which may be marketed in 
domestic inshell markets (free) and hazelnuts which must be exported, 
shelled or otherwise disposed of by handlers (restricted). The 
preliminary free percentage releases 80 percent of the adjusted inshell 
trade demand. The adjusted inshell trade demand used by the Board was 
the average of the past three years' sales (4,136 tons), plus an 
additional 10 percent for market development (414 tons), minus the 
declared carryin from last year's crop (110 tons).
    The purpose of releasing only 80 percent of the inshell trade 
demand under the preliminary percentage is to guard against an 
underestimate of crop size. The preliminary free percentage is 
expressed as a percentage of the total supply subject to regulation 
(supply) and is based on the preliminary crop estimate.
    Based on the NASS crop estimate of 38,000 tons, the Board computed 
and announced preliminary free and restricted percentages of 10 percent 
and 90 percent, respectively, at its August 31, 1999, meeting. This 
action initially released 3,552 tons of hazelnuts from the 1999 supply 
for domestic inshell use as the preliminary free percentage. The 
preliminary restricted percentage of the 1999 supply for export and 
kernel markets thus initially totaled 31,143 tons.
    A special meeting of the Board was held on October 26, 1999, to 
increase the percentage of free product released for market development 
from 10 percent (414 tons) to 20 percent (827 tons) which is 120 
percent of the three-year average trade acquisitions of inshell 
hazelnuts. The Board took this action because it determined that the 
demand for domestic inshell hazelnuts was greater than previously 
thought. Based upon the new adjusted trade demand of 4,854 tons, the 
Board computed revised preliminary free and restricted percentages of 
11 percent and 89 percent, respectively. This revised preliminary free 
percentage (11 percent) released 3,883 tons of hazelnuts from the 1999 
supply for domestic inshell use rather than the initially computed 
3,552 tons. The revised preliminary restricted percentage (89 percent) 
of the 1999 supply for export and kernel markets thus totaled 30,720 
tons, rather than 31,143 tons.
    Under the order, the Board must meet on or before November 15 to 
recommend interim final and final percentages. The Board uses current 
crop estimates to calculate interim final and final percentages. The 
interim final percentages are calculated in the same way as the 
preliminary percentages and release the remaining 20 percent (to total 
100 percent of the inshell trade demand) previously computed by the 
Board. Final free and restricted percentages may release up to an 
additional 15 percent of the average of the preceding three years' 
trade acquisitions to provide an adequate carryover into the following 
season (i.e., desirable carryout). The order requires that the final 
free and restricted percentages shall be effective 30 days prior to the 
end of the marketing year, or earlier, if recommended by the Board and 
approved by the Secretary. Revisions in the marketing policy can be 
made until February 15 of each marketing year, but the inshell trade 
demand can only be revised upward, consistent with Sec. 982.40(e).
    The Board met on November 15, 1999, and reviewed and approved an 
amended marketing policy and recommended the establishment of interim 
final and final free and restricted percentages. The interim final free 
and restricted percentages were recommended at 15 percent free and 85 
percent restricted. Final percentages, which included an additional 15 
percent of the average of the preceding three-years' trade acquisitions 
for desirable carryout, were recommended at 16 percent free and 84 
percent restricted effective March 1, 2000. The final percentages 
release 5,474 tons of inshell hazelnuts from the 1999 supply for 
domestic use.
    The final marketing percentages are based on the Board's final 
production estimate (36,548 tons) and the following supply and demand 
information for the 1999-2000 marketing year:

------------------------------------------------------------------------
                                                                 Tons
------------------------------------------------------------------------
Inshell Supply:
    (1) Total production (Board's estimate)................       36,548
    (2) Less substandard, farm use (disappearance).........        3,271
    (3) Merchantable production (Board's adjusted crop            33,277
     estimate; Item 1 minus Item 2)........................
    (4) Plus undeclared carryin as of July 1, 1999, subject            4
     to regulation.........................................
    (5) Supply subject to regulation (Item 3 plus Item 4)..       33,281
Inshell Trade Demand:
    (6) Average trade acquisitions of inshell hazelnuts for        4,136
     three prior years.....................................
    (7) Increase to encourage increased sales (20 percent            827
     of Item 6)............................................
    (8) Less declared carryin as of July 1, 1999, not                109
     subject to regulation.................................
    (9) Adjusted Inshell Trade Demand......................        4,854
    (10) Desirable carryout on August 31, 2000 (15 percent           620
     of Item 6)............................................
    (11) Adjusted Inshell Trade Demand plus desirable              5,474
     carryout (Item 9 plus Item 10)........................


------------------------------------------------------------------------
                                                    Free      Restricted
------------------------------------------------------------------------
Percentages:
    (12) Interim final percentages (Item 9               15           85
     divided by Item 5).......................
    (13) Final percentages (Item 11 divided by           16           84
     Item 5)  x  100..........................
------------------------------------------------------------------------

    In addition to complying with the provisions of the order, the 
Board also considered the Department's 1982 ``Guidelines for Fruit, 
Vegetable, and Specialty Crop Marketing Orders'' (Guidelines) when 
making its

[[Page 40972]]

computations in the marketing policy. This volume control regulation 
provides a method to collectively limit the supply of inshell hazelnuts 
available for sale in domestic markets. The Guidelines provide that the 
domestic inshell market has available a quantity equal to 110 percent 
of prior years' shipments 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. At its October 26 and November 15, 1999, 
meetings the Board recommended that an increase of 20 percent (827 
tons) for market expansion be included in the inshell trade demand 
which was used to compute the interim percentages. The established 
final percentages are based on the final inshell trade demand, and made 
available an additional 620 tons for desirable carryout effective March 
1, 2000. The total free supply for the 1999-2000 marketing year is 
4,756 tons of hazelnuts, which is the final trade demand of 4,136 tons 
plus the 620 tons for desirable carryout. This amount is 135 percent of 
prior years' sales and exceeds the goal of the Guidelines.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this rule on small entities. Accordingly, the AMS 
has prepared this final regulatory flexibility analysis.
    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 the 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 800 producers of hazelnuts in the 
production area and approximately 22 handlers subject to regulation 
under the order. Small agricultural producers are defined by the Small 
Business Administration (13 CFR 121.201) as those having annual 
receipts of less than $500,000, and small agricultural service firms 
are defined as those having annual receipts of less than $5,000,000. 
Using these criteria, virtually all of the producers are small 
agricultural producers and an estimated 19 of the 22 handlers are small 
agricultural service firms. In view of the foregoing, it can be 
concluded that the majority of hazelnut producers and handlers may be 
classified as small entities, excluding receipts from other sources.
    Board meetings are widely publicized in advance of the meetings and 
are held in a location central to the production area. The meetings are 
open to all industry members and other interested persons who are 
encouraged to participate in the deliberations and voice their opinions 
on topics under discussion. Thus, Board recommendations can be 
considered to represent the interests of small business entities in the 
industry.
    Many years of marketing experience led to the development of the 
current volume control procedures. These procedures have helped the 
industry solve its marketing problems by keeping inshell supplies in 
balance with domestic needs. The current volume control procedures 
fully supply the domestic inshell market while preventing oversupplies 
in that market.
    Inshell hazelnuts sold to the domestic market provide higher 
returns to the industry than are obtained from shelling. The inshell 
market is inelastic and is characterized as having limited demand and 
being prone to oversupply.
    Industry statistics show that total hazelnut production has varied 
widely over the last 10 years, from a low of 13,000 tons in 1989 to a 
high of 47,000 tons in 1997. Average production has been around 27,000 
tons. While crop size has fluctuated, the volume regulations contribute 
toward orderly marketing and market stability, and help moderate the 
variation in returns for all producers and handlers, both large and 
small. For instance, production in the shortest crop year (1989) was 48 
percent of the 10-year average (1989-1998). Production in the biggest 
crop year (1997) was 173 percent of the 10-year average. The percentage 
releases provide all handlers with the opportunity to benefit from the 
most profitable domestic inshell market. That market is available to 
all handlers, regardless of handler size.
    NASS statistics show that the producer price per pound has 
increased over the last 5 years, from $.32 in 1993 to $.49 in 1998.
    The Board discussed not regulating. However, without any 
regulations in effect, the Board believes that the industry would 
oversupply the inshell domestic market.
    While the level of benefits of this rulemaking is difficult to 
quantify, the stabilizing effects of the volume regulations impact both 
small and large handlers positively by helping them maintain and expand 
markets even though hazelnut supplies fluctuate widely from season to 
season.
    Hazelnuts produced under the order comprise virtually all of the 
hazelnuts produced in the United States. This production represents, on 
average, less than 5 percent of total U.S. tree nut production, and 
less than 5 percent of the world's hazelnut production.
    This volume control regulation provides a method for the U.S. 
hazelnut industry to limit the supply of domestic inshell hazelnuts 
available for sale in the United States. Section 982.40 of the order 
establishes a procedure and computations for the Board to follow in 
recommending to the Secretary release of preliminary, interim final, 
and final quantities of hazelnuts to be released to the free and 
restricted markets each marketing year. The program results in 
plentiful supplies for consumers and for market expansion while 
retaining the mechanism for dealing with oversupply situations.
    Currently, U.S. hazelnut production can be successfully allocated 
between the inshell domestic and secondary markets. One of the best 
secondary markets for hazelnuts is the export market. Inshell hazelnuts 
produced under the marketing order compete well in export markets 
because of quality. Europe, and Germany in particular, is historically 
the primary world market for U.S. produced inshell hazelnuts. A third 
market is for shelled hazelnuts (kernels) sold domestically. 
Domestically produced kernels generally command a higher price in the 
domestic market than imported kernels. The industry is continuing its 
efforts to develop and expand secondary markets, especially the 
domestic kernel market. Small business entities, both producers and 
handlers, benefit from the expansion efforts resulting from this 
program.
    There are some reporting, recordkeeping, and other compliance 
requirements under the order. The reporting and recordkeeping burdens 
are necessary for compliance purposes and for developing statistical 
data for maintenance of the program. The information collection 
requirements have been previously approved by the Office of Management 
and Budget under OMB No. 0581-0178. The forms require information which 
is readily available from handler records and which can be provided 
without data processing equipment or trained statistical staff. As with 
all Federal marketing order programs, reports and forms are 
periodically reviewed to reduce or eliminate duplicate information 
collection burdens by industry and public sector agencies. This final 
rule does not change those requirements. In addition, as noted in the 
initial

[[Page 40973]]

regulatory flexibility analysis, the Department has not identified any 
relevant Federal rules that duplicate, overlap or conflict with this 
regulation.
    Further, the Board's meetings were widely publicized throughout the 
hazelnut industry and all interested persons were invited to attend the 
meetings and encouraged to participate in Board deliberations. Like all 
Board meetings, those held on August 31, October 26, and November 15, 
1999, were open to the public and all entities, both large and small, 
were able to express their views on this issue. The Board itself is 
composed of 10 members, of which 4 are handlers, 5 are producers, and 
one is a public member. Finally, interested persons were invited to 
submit information on the regulatory and informational impacts of this 
action on small businesses.
    An interim final rule concerning this action was published in the 
Federal Register on January 19, 2000. Copies of the rule were mailed by 
the Board's staff to all Board members and hazelnut handlers. In 
addition, the rule was made available through the Internet by the 
Office of the Federal Register. That rule provided for a 60-day comment 
period which ended March 20, 2000. No comments were received.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab.html. Any questions about the compliance 
guide should be sent to Jay Guerber at the previously mentioned address 
in the FOR FURTHER INFORMATION CONTACT section.
    After consideration of all relevant material presented, including 
the Board's recommendation, and other information, it is found that 
finalizing the interim final rule, without change, as published in the 
Federal Register (65 FR 2841, January 19, 2000), will tend to 
effectuate the declared policy of the Act.
    Pursuant to 5 U.S.C. 553, it is also found that good cause exists 
for not postponing the effective date of this action until 30 days 
after publication in the Federal Register because: (1) The percentages 
continued herein apply to all merchantable hazelnuts handled during the 
1999-2000 marketing year; (2) the 1999-2000 marketing year ends June 
30, 2000; and (3) handlers are aware of this action and are prepared to 
comply with the marketing percentages.

List of Subjects in 7 CFR Part 982

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

PART 982--HAZELNUTS GROWN IN OREGON AND WASHINGTON

    Accordingly, the interim final rule amending 7 CFR part 982 which 
was published at 65 FR 2841 on January 19, 2000, is adopted as a final 
rule without change.

    Dated: June 27, 2000.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 00-16740 Filed 6-30-00; 8:45 am]
BILLING CODE 3410-02-P