[Federal Register Volume 67, Number 50 (Thursday, March 14, 2002)]
[Rules and Regulations]
[Pages 11406-11411]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-6147]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 982

[Docket No. FV02-982-1 IFR]


Hazelnuts Grown in Oregon and Washington; Establishment of 
Interim Final and Final Free and Restricted Percentages for the 2001-
2002 Marketing Year

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule establishes interim final and final free and 
restricted percentages for domestic inshell hazelnuts for the 2001-2002 
marketing year under the Federal marketing order for hazelnuts grown in 
Oregon and Washington. The interim final free and restricted 
percentages are 4.9363 and 95.0637 percent, respectively, and the final 
free and restricted percentages are 6.1048 and 93.8952 percent, 
respectively. 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: This interim final rule is effective March 15, 2002. Comments 
received by May 13, 2002, 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, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, 1400 Independence Avenue SW., STOP 0237, Washington, DC 
20250-0237; Fax: (202) 720-8938, 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 be 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, 1400 Independence 
Avenue SW., STOP 0237, Washington, DC 20250-0237; 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, 1400 Independence SW., 
STOP 0237, Washington, DC 20250-0237; 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 2001-2002 marketing year 
(July 1, 2001, through June 30, 2002). 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 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. 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

[[Page 11407]]

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 48,000 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 adjusted the crop estimate down to 44,588 tons by taking 
into consideration the average crop disappearance over the preceding 
three years (7.12 percent) and the undeclared carry-in (6 tons.) 
Disappearance is the difference between orchard-run production (crop 
estimate) and the available supply of merchantable product available 
for sale by handlers. This difference or disappearance consists of 
unharvested hazelnuts, cull product that is harvested and delivered to 
handlers but later discarded, or product used on the farm, sold 
locally, or otherwise disposed of by producers. The Board computed the 
adjusted inshell trade demand of 2,201 tons by taking the difference 
between the average of the past three years' sales (3,473 tons) and the 
declared carry-in from last year's crop (1,272 tons.)
    The Board computed and announced preliminary free and restricted 
percentages of 3.9495 percent and 96.0505 percent, respectively, at its 
August 30, 2001, 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 (2,201 tons x 80 
percent/44,588 tons = 3.9495 percent.) The preliminary free percentage 
thus initially released 1,761 tons of hazelnuts from the 2001 supply 
for domestic inshell use, and the restricted percentage withheld 42,804 
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 carry-out). 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 USDA. 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, 2001, 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 4.9363 percent free and 
95.0637 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 6.1048 
percent free and 93.8952 percent restricted effective May 31, 2002. The 
final free percentage releases 2,722 tons of inshell hazelnuts from the 
2001 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 2001-2002 marketing year:

------------------------------------------------------------------------
                                                                 Tons
------------------------------------------------------------------------
Inshell supply:
    (1) Total production (crop estimate)...................       48,000
    (2) Less substandard, farm use (disappearance; 7.12            3,418
     percent of Item 1)....................................
    (3) Merchantable production (Board's adjusted crop            44,582
     estimate; Item 1 minus Item 2)........................
    (4) Plus undeclared carry-in as of July 1, 2001                    6
     (subject to regulation)...............................
    (5) Supply subject to regulation (Item 3 plus Item 4)..       44,588
Inshell trade demand:
    (6) Average trade acquisitions of inshell hazelnuts for        3,473
     three prior years.....................................
    (7) Less declared carry-in as of July 1, 2001 (not             1,272
     subject to regulation)................................
    (8) Adjusted Inshell Trade Demand (Item 6 minus Item 7)        2,201
    (9) Desirable carry-out on August 31, 2002 (15 percent           521
     of Item 6)............................................
    (10) Adjusted Inshell Trade Demand plus desirable carry-       2,722
     out (Item 8 plus Item 9)..............................
------------------------------------------------------------------------


------------------------------------------------------------------------
                  Percentages                       Free      Restricted
------------------------------------------------------------------------
(11) Interim final percentages (Item 8 divided       4.9363      95.0637
 by Item 5)  x  100...........................
(12) Interim final free in tons (Item 8)......        2,201
(13) Interim final restricted in tons (Item 5                     42,387
 minus Item 8)................................

[[Page 11408]]

 
(14) Final percentages (Item 10 divided by           6.1048      93.8952
 Item 5)  x  100..............................
(15) Final free in tons (Item 10).............        2,722
(16) Final restricted in tons (Item 5 minus                       41,866
 Item 10).....................................
------------------------------------------------------------------------

    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 allocating supplies for the export 
inshell, export kernel, and domestic kernel markets. This provides for 
plentiful supplies for consumers and for market expansion, while 
retaining the mechanism for dealing with oversupply situations. The 
established final percentages will make available an additional 521 
tons for desirable carry-out effective May 31, 2002. The total free 
supply for the 2001-2002 marketing year is 3,994 tons of hazelnuts, 
which is the sum of the final trade demand of 3,473 tons and the 521 
ton desirable carry-out. This amount is 115 percent of prior years' 
sales and exceeds the goal of the Guidelines.

Initial 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 action on small entities. Accordingly, 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.
    Small agricultural producers are 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 having annual receipts of less than $5,000,000. There are 
approximately 800 producers of hazelnuts in the production area and 
approximately 19 handlers subject to regulation under the order. 
Average annual hazelnut revenue per producer is approximately $35,700, 
computed by dividing National Agriculture Statistics Service (NASS) 
figures for the average value of production for 1999 and 2000 ($28.563 
million) by the number of producers. The level of sales of other crops 
by hazelnut producers is not known. In addition, based on Board 
records, about 95 percent of the handlers ship under $5,000,000 worth 
of hazelnuts on an annual basis. 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.
    Currently, U.S. hazelnut production is allocated among three market 
outlets: inshell domestic, inshell export, and shelled (kernel) 
markets. Handlers and growers receive the highest return on inshell 
domestic, less for inshell export, and the least for kernels (shelled). 
Based on Board records of average shipments for 1997-2000, the 
percentage going to each of those markets was 13 percent (domestic 
inshell), 46 percent (export inshell) and 41 percent (kernels).
    The inshell market can be characterized as having limited demand 
and being prone to oversupply and low grower prices in the absence of 
supply restrictions. 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 continental U.S. On average, 76 
percent of domestic inshell hazelnut shipments occur between October 1 
through November 30, primarily to supply holiday nut demand.
    Many years of marketing experience led to the development of the 
current volume control procedures. These procedures have helped the 
industry address its marketing problems by keeping inshell hazelnut 
supplies in balance with domestic needs. Volume controls fully supply 
the domestic inshell market while preventing an oversupply of that 
market. 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.
    This rule implements volume control procedures for the 2001-2002 
marketing year by establishing marketing percentages (free and 
restricted percentages) which determine the quantity of inshell 
hazelnuts that may be marketed in domestic markets. The free quantity 
may be marketed in domestic inshell markets and the restricted quantity 
must be exported, shelled, or otherwise disposed of by handlers. The 
computations for 2001-2002 are explained herein.
    The Board is required to meet prior to September 20 of each 
marketing year to establish its marketing policy for that year. At its 
marketing policy meeting, the Board computes and announces its estimate 
of inshell trade demand, which is the quantity of inshell hazelnuts 
that handlers typically ship to the domestic market throughout the 
marketing season. If it determines that volume regulations would tend 
to effectuate the declared policy of the Act, the Board also computes 
and announces the preliminary free and restricted percentages for that 
year. At subsequent meetings, the Board determines interim final 
percentages and final percentages, which may be the same as, or higher 
than, the preliminary percentages.
    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. If market 
conditions warrant, the Board may increase the three-year average by up 
to 25 percent.
    Establishing the preliminary free percentage releases 80 percent of 
the inshell trade demand to the domestic market. The purpose of 
releasing only 80 percent 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 and is based on the preliminary 
crop estimate. NASS has estimated hazelnut production at 48,000 tons 
for the Oregon and Washington area.
    At its November 2001 meeting, the Board computed the available 
supply of

[[Page 11409]]

merchantable product for sale by handlers by subtracting the average 
crop disappearance over the preceding three years (7.12 percent) from 
the 48,000-ton hazelnut crop estimate. Disappearance consists of (1) 
unharvested hazelnuts, (2) culled product (nuts that are harvested and 
delivered to handlers but later discarded), or (3) product used on the 
farm, sold locally, or otherwise disposed of by producers. Subtracting 
an additional 6 tons (the undeclared carryin) yielded the adjusted crop 
estimate of 44,588 tons.
    The Board computed the adjusted inshell trade demand of 2,201 tons 
by taking the difference between the average of the past three years' 
sales (3,473 tons) and the declared carry-in from last year's crop 
(1,272 tons.)
    The Board computed and announced preliminary free and restricted 
percentages of 3.9495 percent and 96.0505 percent, respectively, at its 
August 30, 2001, meeting. The Board computed the preliminary free 
percentage by multiplying the adjusted inshell trade demand by 80 
percent and dividing the result by the adjusted crop estimate: (2,201 
tons  x  80 percent)/44,588 tons = 3.9495 percent. Establishing the 
3.9495 percent preliminary free percentage allowed the initial release 
of 1,761 tons of hazelnuts from the 2001 supply for domestic inshell 
use. Establishing the 96.0505 percent restricted percentage had the 
effect of allocating 42,804 tons to the export and kernel markets.
    Under the order, the Board must meet again on or before November 15 
each year to recommend interim final and final percentages, using 
current crop estimates. The interim final percentages are calculated in 
the same way as the preliminary percentages. Computing and announcing 
the interim final percentage allows the release of the remaining 20 
percent (to total 100 percent) of the inshell trade demand previously 
computed by the Board. In establishing final free percentage and 
restricted percentages, the Board 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 carry-out).
    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 USDA. 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, 2001, and reviewed and approved an 
amended marketing policy and recommended the establishment of interim 
final and final free and restricted percentages. The recommended 
interim final free and restricted percentages were 4.9363 percent free 
and 95.0637 percent restricted. Recommended final percentages, which 
included an additional 15 percent of the average of the preceding 
three-years' trade acquisitions for desirable carry-out, were 6.1048 
percent free and 93.8952 percent restricted, effective May 31, 2002. 
Establishing the final free percentage releases for domestic use the 
full amount of the adjusted inshell trade demand of inshell hazelnuts 
from the 2001 supply (2,722 tons).
    The final marketing percentages are based on the Board's final 
production estimate and the following supply and demand information for 
the 2001-2002 marketing year:

------------------------------------------------------------------------
                                                                 Tons
------------------------------------------------------------------------
Inshell supply:
    (1) Total production (crop estimate)...................       48,000
    (2) Less substandard, farm use (disappearance; 7.12            3,418
     percent of Item 1)....................................
    (3) Merchantable production (Board's adjusted crop            44,582
     estimate; Item 1 minus Item 2)........................
    (4) Plus undeclared carry-in as of July 1, 2001                    6
     (subject to regulation)...............................
    (5) Supply subject to regulation (Item 3 plus Item 4)..       44,588
Inshell trade demand:
    (6) Average trade acquisitions of inshell hazelnuts for        3,473
     three prior years.....................................
    (7) Less declared carry-in as of July 1, 2001 (not             1,272
     subject to regulation)................................
    (9) Adjusted Inshell Trade Demand (Item 6 minus Item 7)        2,201
    (9) Desirable carry-out on August 31, 2002 (15 percent           521
     of Item 6)............................................
    (10) Adjusted Inshell Trade Demand plus desirable carry-       2,722
     out (Item 8 plus Item 9)..............................
------------------------------------------------------------------------


------------------------------------------------------------------------
                  Percentages                       Free      Restricted
------------------------------------------------------------------------
(11) Interim final percentages (Item 8 divided       4.9363      95.0637
 by Item 5) x 100.............................
(12) Interim final free in tons (Item 8)......        2,201
(13) Interim final restricted in tons (Item 5                     42,387
 minus Item 8)................................
(14) Final percentages (Item 10 divided by           6.1048      93.8952
 Item 5) x 100................................
(15) Final free in tons (Item 10).............        2,722
(16) Final restricted in tons (Item 5 minus                       41,866
 Item 10).....................................
------------------------------------------------------------------------

    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 at least 110 
percent of prior years' shipments before allocating supplies for the 
export inshell, export kernel, and domestic kernel markets. This 
provides for plentiful supplies for consumers and for market expansion, 
while retaining the mechanism for dealing with oversupply situations. 
The established final percentages will make available an additional 521 
tons for desirable carry-out effective May 31, 2002. The total free 
supply for the 2001-2002 marketing year is 3,994 tons of hazelnuts, 
which is the sum of the final trade demand of 3,473 tons (average trade 
acquisitions for three prior years) and the 521 ton desirable carry-
out. This amount is 115 percent of prior years' sales and exceeds the 
110 percent goal of the Guidelines.
    The high level of production and carryin were key market factors 
leading to the 6.1048 percent final free percentage. Hazelnut 
production in 2001 is estimated to be an all-time record, 1,000 tons 
higher than the previous record set in 1997. Even if carryin had been 
zero, the amount that handlers typically ship into the domestic inshell 
market (i.e., average trade acquisitions of 3,473 tons) equals about 8 
percent of the supply (44,588 tons subject to regulation). However, the

[[Page 11410]]

free tonnage carryin level of 1,272 tons was also high (37 percent of 
the quantity of inshell hazelnuts that handlers typically ship), 
meaning that even less of the new production was needed to fully supply 
the 2001-2002 domestic inshell market. Although the domestic inshell 
market is a relatively small proportion of total sales (13 percent of 
total shipments), it remains a profitable market segment. The volume 
control provisions of the marketing order are designed to avoid 
oversupplying this particular market segment, because that would likely 
lead to substantially lower grower prices. The other market segments, 
inshell exports and kernels, are expected to continue to provide good 
outlets for US hazelnut production.
    Since low production years typically follow high production years 
(a consistent pattern for hazelnuts), lower production is expected in 
2002, and burdensome carryin levels will likely be significantly 
reduced.
    Recent production and price data reflect the stabilizing effect of 
the volume control regulations. Industry statistics show that total 
hazelnut production has varied widely over the ten year period between 
1991 and 2000, from a low of 16,500 tons (inshell) in 1998 to a high of 
47,000 tons in 1997. Production in the shortest crop year and the 
biggest crop year were 55 percent and 157 percent, respectively, of the 
10-year average tonnage of 29,880. The coefficient of variation (a 
standard statistical measure of variability; ``CV'') for hazelnut 
production over the ten-year period is 0.35. In contrast, the 
coefficient of variation for hazelnut grower prices is 0.16, less than 
half the CV for production. The considerably lower variability of 
prices versus production provides an illustration of the order's price-
stabilizing impacts.
    Comparing grower revenue to cost is useful in highlighting the 
impact on growers of recent product and price levels. A recent hazelnut 
cost of production study from Oregon State University estimated cost of 
production per acre to be approximately $1,340 for a typical 100-acre 
hazelnut enterprise. Average hazelnut grower revenue per bearing acre 
(based on NASS acreage and value of production data) equaled or 
exceeded that typical cost level twice between 1995 and 2000. Average 
grower revenue was below typical costs in the other years. Without the 
stabilizing impact of the order, growers may have lost more money. The 
volume regulations contribute to orderly marketing and market 
stability, and help moderate the variation in returns for all producers 
and handlers, both large and small.
    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. This regulation provides equitable allotment of the most 
profitable market, the domestic inshell hazelnut market. That market is 
available to all handlers, regardless of size.
    As an alternative to this regulation, the Board discussed not 
regulating the 2001-2002 hazelnut crop. However, without any 
regulations in effect, the Board believes that the industry would 
oversupply the inshell domestic market. Section 982.40 of the order 
establishes a procedure and computations for the Board to follow in 
recommending to USDA 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.
    Hazelnuts produced under the order comprise virtually all of the 
hazelnuts produced in the U.S. This production represents, on average, 
less than 5 percent of total U.S. production for other tree nuts, and 
less than 5 percent of the world's hazelnut production.
    Last season, 82 percent of the kernels were marketed in the 
domestic market and 18 percent were exported. 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 other markets with emphasis on the domestic kernel market. Small 
business entities, both producers and handlers, benefit from the 
expansion efforts resulting from this program.
    Inshell hazelnuts produced under the order compete well in export 
markets because of quality. Europe has historically been the primary 
export market for U.S. produced inshell hazelnuts, with a ten-year 
average of 5,452 tons out of total average exports of 10,236 tons. 
Recent years have seen a significant shift in export destinations. Last 
season, inshell shipments to Europe totaled 3,986 tons, representing 28 
percent of exports, with the largest share going to Germany. Inshell 
shipments to Southwest Pacific countries, and Hong Kong in particular, 
have increased dramatically in the past few years, rising to 58 percent 
of total exports of 14,400 tons in 2000. The industry continues to 
pursue export opportunities.
    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 information requirements and 
duplication by industry and public sector agencies. This rule does not 
change those requirements. In addition, USDA has not identified any 
relevant Federal rules that duplicate, overlap, or conflict with this 
rule.
    Further, the Board's meetings were widely publicized throughout the 
hazelnut industry and all interested persons were invited to attend the 
meetings and participate in Board deliberations. Like all Board 
meetings, those held on August 31, and November 15, 2001, were public 
meetings 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 final 
and final free and restricted percentages for the 2001-2002 marketing 
year under the hazelnut marketing 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

[[Page 11411]]

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 2001-2002 marketing year began July 1, 2001, 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 982.249 is added to read as follows:

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

Sec. 982.24  Free and restricted percentages--2001-2002 marketing year.

    (a) The interim final free and restricted percentages for 
merchantable hazelnuts for the 2001-2002 marketing year shall be 4.9363 
and 95.0637 percent, respectively.
    (b) On May 31, 2002, the final free and restricted percentages for 
merchantable hazelnuts for the 2001-2002 marketing year shall be 6.1048 
and 93.8952 percent, respectively.

    Dated: March 11, 2002.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 02-6147 Filed 3-13-02; 8:45 am]
BILLING CODE 3410-02-P