[Federal Register Volume 67, Number 49 (Wednesday, March 13, 2002)]
[Rules and Regulations]
[Pages 11215-11218]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-5940]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 982

[Docket No. FV01-982-1 FIR]


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: Final rule.

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SUMMARY: This final rule is adopting and reinstating, without change, 
an interim final rule that established 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. This action is necessary because the interim 
final rule inadvertently allowed the marketing percentages to expire on 
June 30, 2001. The Department of Agriculture is therefore adopting and 
reinstating the interim final rule. The marketing percentages 
established by the interim final rule will continue to apply until all 
restricted hazelnuts from the 2000-2001 marketing year have been 
properly disposed of in accordance with marketing order requirements. 
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.

DATES: Effective date: March 14, 2002. Applicability date: This final 
rule applies from July 1, 2000, until all restricted hazelnuts 
generated during the 2000-2001 marketing year are properly disposed of 
in accordance with marketing order requirements.

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, PO Box 
96456, Washington, DC 20090-6456; telephone: (202) 720-2491, Fax: (202) 
720-8938.
    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, PO Box 
96456, Washington, DC 20090-6456; telephone: (202) 720-2491, Fax: (202) 
720-8938, 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 (USDA) 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), or until all restricted 
hazelnuts from that year are properly disposed of in accordance with 
marketing order requirements. 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

[[Page 11216]]

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, 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 reinstates percentages that 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 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, subject       1,233
     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 of        652
     Item 6).................................................
    (10) Adjusted Inshell Trade Demand plus desirable carry-       3,815
     out (Item 8 plus Item 9)................................
------------------------------------------------------------------------


[[Page 11217]]


------------------------------------------------------------------------
                    Percentages                       Free    Restricted
------------------------------------------------------------------------
(11) Interim final percentages (Item 8 divided           14           86
 by Item 5)  x  100.............................
(12) Final percentages (Item 10 divided by Item          17           83
 5)  x  100.....................................
------------------------------------------------------------------------

    In addition to complying with the provisions of the order, the 
Board also considered USDA'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 made 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.

Final Regulatory Flexibility Analysis

    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 19 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 $750,000, and small agricultural service firms 
are defined as those whose annual receipts are less than $5,000,000. 
Using these criteria, all of the producers are small agricultural 
producers and a majority 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 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

[[Page 11218]]

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 final rule does not change those requirements. In addition, the 
USDA 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. Additionally, interested persons were invited to submit 
information on the regulatory and informational impacts of this action 
on small businesses.
    An interim final rule regarding this action was published in the 
Federal Register on March 6, 2001. A copy of the rule was provided to 
the Board's staff for distribution to Board members as well as the 
hazelnut industry. In addition, the rule was made available through the 
Internet by the Office of the Federal Register and USDA. That rule 
provided for a 60-day comment period that ended on May 7, 2001. No 
comments were received. USDA is adopting and reinstating the interim 
final rule because the marketing percentages inadvertently expired on 
June 30, 2001. The marketing percentages established by the interim 
final rule will continue to apply until all restricted hazelnuts from 
the 2000-2001 marketing year have been properly disposed in accordance 
with marketing order requirements. Some of these dispositions are made 
after June 30, 2001, the end of the 2000-2001 marketing year.
    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 
adopting and reinstating as a final rule without change the provisions 
of Sec. 982.248 in the interim final rule published in the Federal 
Register (66 FR 13396, March 6, 2001), 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 
established by the interim final rule continue to apply until all 
restricted hazelnuts from the 2000-2001 marketing year have been 
properly disposed of in accordance with the marketing order 
requirements; (2) the interim final rule was published in the Federal 
Register on March 6, 2001, with a May 7, 2001, comment period, and no 
comments were received; 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, Sec. 982.248 as published in the interim final rule at 
66 FR 13396 on March 6, 2001, is adopted and reinstated as a final rule 
without change. Section 982.248 reads as follows:


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: March 7, 2002.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 02-5940 Filed 3-12-02; 8:45 am]
BILLING CODE 3410-02-P