[Federal Register Volume 82, Number 159 (Friday, August 18, 2017)]
[Proposed Rules]
[Pages 39369-39371]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-17488]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 82, No. 159 / Friday, August 18, 2017 / 
Proposed Rules  

[[Page 39369]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 982

[Doc. No. AMS-SC-17-0036; SC17-982-1 PR]


Hazelnuts Grown in Oregon and Washington; Increased Assessment 
Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would implement a recommendation from the 
Hazelnut Marketing Board (Board) to increase the assessment rate 
established for the 2017-2018 and subsequent marketing years from 
$0.005 to $0.006 per pound of hazelnuts handled under the marketing 
order (order). The Board locally administers the order and is comprised 
of growers and handlers of hazelnuts operating within the area of 
production. The Board's membership also includes one public member. 
Assessments upon hazelnut handlers are used by the Board to fund 
reasonable and necessary expenses of the program. The marketing year 
begins July 1 and ends June 30. The assessment rate would remain in 
effect indefinitely unless modified, suspended, or terminated.

DATES: Comments must be received by September 18, 2017.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposed rule. Comments must be sent to the Docket 
Clerk, Marketing Order and Agreement Division, Specialty Crops Program, 
AMS, USDA, 1400 Independence Avenue SW., STOP 0237, Washington, DC 
20250-0237; Fax: (202) 720-8938; or Internet: http://www.regulations.gov. Comments should reference the document 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.regulations.gov. All comments submitted in response to this 
proposed rule will be included in the record and will be made available 
to the public. Please be advised that the identity of the individuals 
or entities submitting the comments will be made public on the Internet 
at the address provided above.

FOR FURTHER INFORMATION CONTACT: Dale Novotny, Marketing Specialist, or 
Gary D. Olson, Regional Director, Northwest Marketing Field Office, 
Marketing Order and Agreement Division, Specialty Crops Program, AMS, 
USDA; Telephone: (503) 326-2724, Fax: (503) 326-7440, or Email: 
[email protected] or [email protected].
    Small businesses may request information on complying with this 
regulation by contacting Richard Lower, Marketing Order and Agreement 
Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue 
SW., STOP 0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, 
Fax: (202)720-8938, or Email: [email protected].

SUPPLEMENTARY INFORMATION: This proposed rule is issued under Marketing 
Agreement No. 115 and 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 proposed rule 
in conformance with Executive Orders 12866, 13563, and 13175. 
Additionally, because this rule does not meet the definition of a 
significant regulatory action, it does not trigger the requirements 
contained in Executive Order 13771. See the Office of Management and 
Budget's (OMB) Memorandum titled, ``Interim Guidance Implementing 
Section 2 of the Executive Order of January 30, 2017, titled `Reducing 
Regulation and Controlling Regulatory Costs'[thinsp]'' (February 2, 
2017).
    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. Under the marketing order now in effect, Oregon 
and Washington hazelnut handlers are subject to assessments. Funds to 
administer the order are derived from such assessments. It is intended 
that the assessment rate as proposed herein would be applicable to all 
assessable hazelnuts beginning on July 1, 2017, and continue until 
amended, suspended, or terminated.
    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. Such 
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 proposed rule would increase the assessment rate for the 2017-
2018 and subsequent marketing years from $0.005 to $0.006 per pound of 
hazelnuts.
    The order provides authority for the Hazelnut Marketing Board 
(Board), with the approval of USDA, to formulate an annual budget of 
expenses and collect assessments from handlers to administer the 
program. The members and alternate members of the Board are growers and 
handlers of Oregon and Washington hazelnuts. The Board's membership 
also includes one public member and an alternate public member, neither 
of whom are involved in the production or handling of hazelnuts. The 
Board members are familiar with the program's needs and with the costs 
for goods and services in their local area and are thus in a position 
to formulate an appropriate budget and assessment rate. The assessment 
rate is formulated and discussed in a public meeting. Thus, all 
directly affected persons have an opportunity to participate and 
provide input.
    For the 2000-2001 and subsequent marketing years, the Board 
recommended, and USDA approved, an assessment rate that would continue 
in

[[Page 39370]]

effect from marketing year to marketing year unless modified, 
suspended, or terminated by USDA upon recommendation and information 
submitted by the Board or other information available to USDA.
    The Board met on May 17, 2017, and unanimously recommended 2017-
2018 marketing year expenditures of $878,627 and an assessment rate of 
$0.006 per pound of hazelnuts handled. In comparison, last year's 
budgeted expenditures were $765,598. The assessment rate of $0.006 per 
pound is $0.001 per pound higher than the rate currently in effect.
    The major expenditures recommended by the Board for the 2017-2018 
marketing year include $210,590 for administrative expenses, $111,000 
for a crop survey, $342,037 for promotional activities, $35,000 for 
consulting, and $180,000 for undesignated emergency/miscellaneous 
expenses. Budgeted expenses for these items in the 2016-2017 marketing 
year were $138,088, $96,000, $234,510, $35,000, and $262,000, 
respectively. The increase in administrative expenses reflects the 
addition of an administrative staff member. The budget increase for 
marketing and promotion expenditures reflects the Board's desire to 
improve domestic hazelnut's share of the edible nut market and to 
increase consumer awareness of Oregon and Washington hazelnut products.
    The assessment rate recommended by the Board was derived at an 
annual meeting of the Board where budgetary matters for the forthcoming 
marketing year were discussed. After an open discussion with growers, 
handlers, and industry personnel, the Board established a crop estimate 
for the 2017-2018 marketing year. The Board considered the crop 
estimate, the recommended 2017-2018 marketing year expenses, and the 
Board's financial reserve when it recommended the assessment rate 
increase.
    Shipments for the year are estimated to be 80,000,000 pounds, which 
should provide $480,000 in assessment income at the $0.006 per pound 
assessment rate. Income derived from handler assessments, along with 
funds from the Board's authorized reserve and other income, would be 
adequate to cover budgeted expenses. Section 982.62(a) of the order 
specifies that the financial reserve is not to exceed approximately one 
marketing year's operational expenses. The Board expects its financial 
reserve to be $316,881 at the beginning of the 2017-2018 marketing year 
and $117,348 at the end of the year, which would be within the reserve 
limit authorized under the order.
    The proposed assessment rate would continue in effect indefinitely 
unless modified, suspended, or terminated by USDA upon recommendation 
and information submitted by the Board or other available information.
    Although this assessment rate would be in effect for an indefinite 
period, the Board would continue to meet prior to or during each 
marketing year to recommend a budget of expenses and consider 
recommendations for modification of the assessment rate. The dates and 
times of Board meetings are available from the Board or USDA. Board 
meetings are open to the public and interested persons may express 
their views at these meetings. USDA would evaluate Board 
recommendations and other available information to determine whether 
modification of the assessment rate is needed. Further rulemaking would 
be undertaken as necessary. The Board's 2017-2018 marketing year 
budget, and those for subsequent marketing years, would be reviewed 
and, as appropriate, approved by USDA.

Initial Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) 
has considered the economic impact of this proposed rule 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 
businesses 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.
    According to the Board, there are approximately 800 growers of 
hazelnuts in the production area and approximately 17 handlers subject 
to regulation under the marketing order. Small agricultural producers 
(growers) are defined by the Small Business Administration (SBA) as 
those having annual receipts less than $750,000, and small agricultural 
service firms (handlers) are defined as those whose annual receipts are 
less than $7,500,000 (13 CFR 121.201).
    According to the latest National Agricultural Statistic Service 
(NASS) data, 2015 grower prices averaged $1.40 per pound. With a total 
production of 62,000,000 pounds in the same year, the farm gate value 
for hazelnuts in 2015 totaled $86.8 million ($1.40 per pound multiplied 
by 62,000,000 pounds). Taking the total 2015 value of production for 
hazelnuts and dividing it by the approximate number of hazelnut growers 
provides an average return per grower of $108,500. It is estimated by 
the Board that approximately 98 percent of hazelnut growers under the 
marketing order have annual receipts less than $750,000. Therefore, a 
majority of hazelnut growers are considered small entities under the 
SBA standards.
    According to the Board, four of the approximately 17 hazelnut 
handlers process and ship 80 percent of the total crop. An estimation 
of handler receipts can be calculated using the same 2015 farm gate 
value of $86.8 million from NASS, described above. Multiplying $86.8 
million by 80 percent ($86.8 million x 80 percent = $69.4 million) and 
dividing by four indicates that the largest hazelnut handlers received 
an estimated $17.4 million each. Dividing the remaining 20 percent 
($17.4 million) by the remaining 13 handlers yields average annual 
receipts of $1.3 million per handler. Therefore, under SBA's definition 
of a small business, about 24 percent of handlers could be considered 
large businesses and about 76 percent could be considered small 
businesses. Thus, the majority of hazelnut handlers in Oregon and 
Washington may be classified as small entities.
    This proposal would increase the assessment rate established for 
the Board and collected from handlers for the 2017-2018 and subsequent 
marketing years from $0.005 to $0.006 per pound of hazelnuts handled. 
The Board unanimously recommended 2017-2018 expenditures of $878,627 
and an assessment rate of $0.006 per pound. The proposed assessment 
rate of $0.006 per pound is $0.001 per pound higher than the 2016-2017 
rate. The quantity of assessable hazelnuts for the 2017-2018 marketing 
year is estimated at 80,000,000 pounds. Thus, the $0.006 per pound rate 
should provide $480,000 in assessment income. This amount, along with 
the Board's reserve funds and other income, should be adequate to cover 
budgeted expenses.
    The major expenditures recommended by the Board for the 2017-2018 
marketing year include $210,590 for administrative expenses, $111,000 
for a crop survey, $342,037 for promotional activities, $35,000 for 
consulting, and $180,000 for undesignated emergency/miscellaneous 
expenses. Budgeted expenses for these items in the 2016-2017 marketing 
year were $138,088, $96,000, $234,510, $35,000, and $262,000, 
respectively.
    The Board believes there is a need to expand its promotion and 
outreach

[[Page 39371]]

activities to increase consumers' awareness of, and desire for, Oregon 
and Washington hazelnuts in the edible tree nut market. The Oregon and 
Washington hazelnut industry has experienced a large amount of growth 
in new orchard plantings in recent years. The supply of hazelnuts grown 
in the production area is expected to increase greatly as newly planted 
trees come into nut bearing age (approximately 3 to 7 years after 
planting, depending on the variety of hazelnut tree). The proposed 
increase to the assessment rate is necessary to fund expanded 
promotional activities intended to assist marketing of the anticipated 
increased supply of hazelnuts in the forthcoming years.
    Prior to arriving at this budget and assessment rate, the Board 
considered information from various sources, such as the Board's Budget 
and Personnel Committee, representatives from private research firms, 
and input from industry personnel. Alternative expenditure levels were 
discussed by these groups, based upon the relative value of various 
activities to the hazelnut industry. Many growers at the May 17, 2017, 
meeting were in favor of even greater spending by the Board on 
promotional activities for hazelnuts, while handlers were more 
conservative.
    The Board ultimately determined that 2017-2018 marketing year 
expenditures of $878,627 were appropriate, and the recommended 
assessment rate, when combined with reserve funds and other income, 
would generate sufficient revenue to meet its budgeted expenses. 
Further, the Board will maintain a $180,000 emergency fund throughout 
the 2017-2018 marketing year in order to cover any unforeseen or 
emergency operational expenses. If the 2017-2018 emergency funds are 
not expended, the resulting operating reserve would not exceed the 
limit authorized under the order.
    A review of historical information and preliminary information 
pertaining to the upcoming marketing year indicates that the grower 
price for the 2017-2018 marketing year could range between $0.81 and 
$1.80 per pound (NASS, 2017). Therefore, the estimated assessment 
revenue for the 2017-2018 marketing year as a percentage of total 
grower revenue could range between 0.74 and 0.33 percent, respectively.
    This action would increase the assessment obligation imposed on 
handlers. While assessments impose some additional costs on handlers, 
the costs are minimal and uniform on all handlers. Some of the 
additional costs may be passed on to growers. However, these costs 
would be offset by the benefits derived by the operation of the 
marketing order. In addition, the Board's meeting was widely publicized 
throughout the Oregon and Washington hazelnut industry, and all 
interested persons were invited to attend the meeting and participate 
in Board deliberations on all issues. Like all Board meetings, the May 
17, 2017, meeting was a public meeting, and all entities, both large 
and small, were able to express views on this issue. Finally, 
interested persons are invited to submit comments on this proposed 
rule, including the regulatory and informational impacts of this action 
on small businesses.
    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the order's information collection requirements have been 
previously approved by OMB and assigned OMB No. 0581-0178, Vegetable 
and Specialty Crops. No changes in those requirements as a result of 
this action are necessary. Should any changes become necessary, they 
would be submitted to OMB for approval.
    This proposed rule would impose no additional reporting or 
recordkeeping requirements on either small or large Oregon and 
Washington hazelnut handlers. 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.
    AMS is committed to complying with the E-Government Act, to promote 
the use of the Internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this proposed action.
    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/rules-regulations/moa/small-businesses. Any questions 
about the compliance guide should be sent to Richard Lower at the 
previously-mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposed rule. Thirty days is deemed appropriate 
because: (1) The 2017-2018 marketing year begins on July 1, 2017, and 
the marketing order requires that the rate of assessment for each 
marketing year apply to all assessable hazelnuts handled during such 
marketing year; (2) the Board needs to have sufficient funds to pay its 
expenses, which are incurred on a continuous basis; and (3) handlers 
are aware of this action, which was unanimously recommended by the 
Board at a public meeting and is similar to other assessment rate 
actions issued in the past.

List of Subjects in 7 CFR Part 982

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

    For the reasons set forth in the preamble, 7 CFR part 982 is 
proposed to be amended as follows:

PART 982--HAZELNUTS GROWN IN OREGON AND WASHINGTON

0
1. The authority citation for 7 CFR part 982 continues to read as 
follows:

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

0
2. Section 982.340 is revised to read as follows:


Sec.  982.340  Assessment rate.

    On and after July 1, 2017, an assessment rate of $0.006 per pound 
is established for Oregon and Washington hazelnuts.

    Dated: August 15, 2017.
Bruce Summers,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 2017-17488 Filed 8-17-17; 8:45 am]
 BILLING CODE 3410-02-P