[Federal Register Volume 82, Number 249 (Friday, December 29, 2017)]
[Rules and Regulations]
[Pages 61673-61675]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-28171]



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 Rules and Regulations
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  Federal Register / Vol. 82, No. 249 / Friday, December 29, 2017 / 
Rules and Regulations  

[[Page 61673]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 982

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


Hazelnuts Grown in Oregon and Washington; Increased Assessment 
Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule implements 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 
assessment rate will remain in effect indefinitely unless modified, 
suspended, or terminated.

DATES: Effective January 29, 2018.

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 action, pursuant to 5 U.S.C. 553, 
amends regulations issued to carry out a marketing order as defined in 
7 CFR 900.2(j). This final 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. Part 982 
(hereinafter referred to as 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 Board locally 
administers the Order and is comprised of growers and handlers of 
hazelnuts operating within the area of production and also includes one 
public member.
    The Department of Agriculture (USDA) is issuing this final rule in 
conformance with Executive Orders 13563 and 13175. This action falls 
within a category of regulatory actions that the Office of Management 
and Budget (OMB) exempted from Executive Order 12866 review. 
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 OMB's 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 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 issued herein will be applicable to all 
assessable hazelnuts beginning 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 final rule increases the assessment rate established for the 
Hazelnut Marketing Board for the 2017-2018 and subsequent marketing 
years from $0.005 to $0.006 per pound of hazelnuts handled.
    The hazelnut Marketing Order provides authority for the 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 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

[[Page 61674]]

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, should be 
adequate to cover budgeted expenses. Section 982.62(a) 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 assessment rate established in this rule will 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 will be in effect for an indefinite 
period, the Board will 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 will evaluate Board recommendations 
and other available information to determine whether modification of 
the assessment rate is needed. Further rulemaking will 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.

Final 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 final rule on small 
entities. Accordingly, AMS has prepared this final 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 agricultural 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 rule increases 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 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 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 three 
to seven years after planting, depending on the variety of hazelnut 
tree). The increased 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

[[Page 61675]]

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, 
should 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 increases 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.
    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 are necessary 
as a result of this action. Should any changes become necessary, they 
would be submitted to OMB for approval.
    This final rule imposes 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. As noted in the 
initial regulatory flexibility analysis, USDA has not identified any 
relevant Federal rules that duplicate, overlap, or conflict with this 
final rule.
    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.
    A proposed rule concerning this action was published in the Federal 
Register on August 18, 2017 (82 FR 39369). Copies of the rule were 
mailed or sent via facsimile to all Board members and hazelnut 
handlers. Finally, the rule was made available through the internet by 
USDA and the Office of the Federal Register. A 30-day comment period 
ending September 18, 2017, was provided to allow interested persons to 
respond to the proposal.
    Two comments were received during the comment period in response to 
the proposal. Both comments were generally in support of the assessment 
rate increase and believed that the action would have a minimal impact 
on consumers. However, one commenter was concerned that the notice and 
comment process for changes in assessment rates was burdensome, and the 
other commenter expressed the opinion that the assessment rate should 
have a time limit and should not be in effect indefinitely.
    Notice and comment rulemaking is required by statute for all 
changes made to marketing order regulations, including, but not limited 
to, establishment of assessment rates. In addition, all marketing order 
regulations are in effect indefinitely unless a specific effective 
period is defined in the regulation when it is established. The Board 
chose not to establish a specific time period for the regulation and is 
aware that the regulation will be effective indefinitely until changed. 
Accordingly, no changes will be made to the rule as proposed, based on 
the comments received.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/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.
    After consideration of all relevant matter presented, including the 
information and recommendation submitted by the Board and other 
available information, it is hereby found that this rule, as 
hereinafter set forth, will tend to effectuate the declared policy of 
the Act.

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 
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: December 26, 2017.
Bruce Summers,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 2017-28171 Filed 12-28-17; 8:45 am]
 BILLING CODE 3410-02-P