[Federal Register Volume 66, Number 44 (Tuesday, March 6, 2001)]
[Rules and Regulations]
[Pages 13396-13399]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-5319]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 982

[Docket No. FV01-982-1 IFR]


Hazelnuts Grown in Oregon and Washington; Establishment of 
Interim and Final Free and Restricted Percentages for the 2000-2001 
Marketing Year

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule establishes interim and final free and restricted 
percentages for domestic inshell hazelnuts for the 2000-2001 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

[[Page 13397]]

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.

DATES: Effective Date: This interim final rule is effective March 7, 
2001 through June 30, 2001.
    Applicability Date: This interim final rule applies during the 
period July 1, 2000, through June 30, 2001. Comments received by May 7, 
2001 will be considered prior to issuance of a final rule.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent to the Docket Clerk, Fruit 
and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 96456, 
Washington, DC 20090-6456; Fax: (202) 720-5698, or E-mail: 
[email protected]. All comments should reference the docket 
number and the date and page number of this issue of the Federal 
Register and will be available for public inspection in the Office of 
the Docket Clerk during regular business hours, or can viewed at: 
http://www.ams.usda.gov/fv/moab.html.

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, suite 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, room 2525-S, P.O. Box 
96456, 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 of Agriculture (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 2000-2001 marketing year 
(July 1, 2000, through June 30, 2001). 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 establishes marketing 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 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 quantity to be 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). Prior to 
September 20 of each marketing year, the Board must compute and 
announce preliminary free and restricted percentages. The preliminary 
free percentage releases 80 percent of the inshell trade demand to the 
domestic market. 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.
    The National Agricultural Statistics Service (NASS) has estimated 
hazelnut production at 25,000 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 Board initially adjusted the crop estimate down to 24,153 tons 
by taking into consideration the average crop disappearance over the 
preceding three years (8.32 percent) and the undeclared carry-in (1,234 
tons.) The Board computed the adjusted inshell trade demand of 3,163 
tons by taking the difference between the average of the past three 
years' sales (4,347 tons) and the declared carry-in from last year's 
crop (1,184 tons.)
    The Board computed and announced preliminary free and restricted 
percentages of 10 percent and 90 percent, respectively, at its August 
31, 2000, meeting. The Board computed the preliminary free percentage 
by multiplying the adjusted trade demand by 80 percent and dividing the 
result by the adjusted crop estimate (3,163 tons  x  80 percent/24,153 
tons = 10 percent.) The preliminary free percentage thus initially 
released 2,530 tons of hazelnuts from the 2000 supply for domestic 
inshell use, and the restricted percentage withheld 21,738 tons for the 
export and kernel market.
    Under the order, the Board must meet again 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

[[Page 13398]]

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 14, 2000, 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 14 percent free and 86 
percent restricted. Final percentages, which included an additional 15 
percent of the average of the preceding three-years' trade acquisitions 
for desirable carry-out, were recommended at 17 percent free and 83 
percent restricted effective May 1, 2001. The final free percentage 
releases 3,815 tons of inshell hazelnuts from the 2000 supply for 
domestic use.
    The final marketing percentages are based on the Board's final 
production estimate and the following supply and demand information for 
the 2000-2001 marketing year:

------------------------------------------------------------------------
                                                                 Tons
------------------------------------------------------------------------
Inshell Supply:
    (1) Total production (Board's estimate)................       23,000
    (2) Less substandard, farm use (disappearance).........        1,914
    (3) Merchantable production (Board's adjusted crop            21,086
     estimate; Item 1 minus Item 2)........................
    (4) Plus undeclared carry-in as of July 1, 2000,               1,233
     subject to regulation.................................
    (5) Supply subject to regulation (Item 3 plus Item 4)..       22,319
Inshell Trade Demand:
    (6) Average trade acquisitions of inshell hazelnuts for        4,347
     three prior years.....................................
    (7) Less declared carry-in as of July 1, 2000, not             1,184
     subject to regulation.................................
    (8) Adjusted Inshell Trade Demand (Item 6 minus Item 7)        3,163
    (9) Desirable carry-out on August 31, 2001 (15 percent           652
     of Item 6)............................................
    (10) Adjusted Inshell Trade Demand plus desirable carry-       3,815
     out (Item 8 plus Item 9)..............................
------------------------------------------------------------------------


 
                  Percentages                       Free      Restricted
------------------------------------------------------------------------
    (11) Interim final percentages (Item 8               14           86
     divided by Item 5)  x  100...............
    (12) Final percentages (Item 10 divided by           17           83
     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 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. The established final 
percentages are based on the final inshell trade demand, and will make 
available an additional 652 tons for desirable carry-out effective May 
1, 2001. The total free supply for the 2000-2001 marketing year is 
4,999 tons of hazelnuts, which is the sum of the final trade demand of 
4,347 tons and the 652 ton desirable carry-out. This amount is 115 
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 initial 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 have been 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 whose annual receipts are 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.
    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 15,500 tons in 1998 to a 
high of 47,000

[[Page 13399]]

tons in 1997. Average production has been around 29,800 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 (1998) was 55 percent of 
the 10-year average (1990-1999). Production in the biggest crop year 
(1997) was 158 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.
    As an alternative, the Board discussed not regulating the 2000-2001 
hazelnut crop. 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 
other marketing order programs, reports and forms are periodically 
reviewed to reduce or eliminate duplicate information collection 
burdens by industry and public sector agencies. This interim final rule 
does not change those requirements. In addition, the Department has not 
identified any relevant Federal rules that duplicate, overlap or 
conflict with this regulation.
    Further, the Board's meeting was widely publicized throughout the 
hazelnut industry and all interested persons were invited to attend the 
meeting and participate in Board deliberations. Like all Board 
meetings, the November 14, 2000, meeting was a public meeting and all 
entities, both large and small, were able to express their views on 
this issue. Finally, interested persons are invited to submit 
information on the regulatory and informational impacts of this action 
on small businesses.
    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.
    This rule invites comments on the establishment of interim and 
final free and restricted percentages for the 2000-2001 marketing year 
under the hazelnut order. Any comments received will be considered 
prior to finalization of this rule.
    After consideration of all relevant material presented, including 
the Board's recommendation, and other information, it is found that 
this interim final rule, as hereinafter set forth, will tend to 
effectuate the declared policy of the Act.
    Pursuant to 5 U.S.C. 553, it is also found and determined, upon 
good cause, that it is impracticable, unnecessary, and contrary to the 
public interest to give preliminary notice prior to putting this rule 
into effect, and 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 2000-2001 marketing year began July 
1, 2000, and the percentages established herein apply to all 
merchantable hazelnuts handled from the beginning of the crop year; (2) 
handlers are aware of this rule, which was recommended at an open Board 
meeting, and need no additional time to comply with this rule; and (3) 
interested persons are provided a 60-day comment period in which to 
respond, and all comments timely received will be considered prior to 
finalization of this action.

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--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. Section 982.248 is added to read as follows:

    Note: This section will not be published in the annual Code of 
Federal Regulations.

Sec. 982.248  Free and restricted percentages--2000-2001 marketing 
year.

    (a) The interim final free and restricted percentages for 
merchantable hazelnuts for the 2000-2001 marketing year shall be 14 and 
86 percent, respectively.
    (b) On May 1, 2001, the final free and restricted percentages for 
merchantable hazelnuts for the 2000-2001 marketing year shall be 17 and 
83 percent, respectively.

    Dated: February 28, 2001.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 01-5319 Filed 3-5-01; 8:45 am]
BILLING CODE 3410-02-P