[Federal Register Volume 83, Number 203 (Friday, October 19, 2018)]
[Rules and Regulations]
[Pages 52946-52950]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-22762]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 982

[Doc. No. AO-SC-16-0136; AMS-SC-16-0074; SC16-982-1]


Hazelnuts Grown in Oregon and Washington; Order Amending 
Marketing Order No. 982

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule amends Marketing Order No. 982 (Order), which 
regulates the handling of hazelnuts grown in Oregon and Washington. The 
amendments were proposed by the Hazelnut Marketing Board (Board) and 
add the authority to regulate quality for the purpose of pathogen 
reduction and to establish different regulations for different markets.
    This final rule also makes administrative revisions to subpart 
headings to bring the language into conformance with the Office of 
Federal Register requirements.

DATES: This rule is effective November 19, 2018.

ADDRESSES: Marketing Order and Agreement Division, Specialty Crops 
Program, AMS, USDA, 1400 Independence Avenue SW, Stop 0237, Washington, 
DC 20250-0237.

[[Page 52947]]


FOR FURTHER INFORMATION CONTACT: Melissa Schmaedick, Marketing Order 
and Agreement Division, Specialty Crops Program, AMS, USDA, Post Office 
Box 952, Moab, UT 84532; Telephone: (202) 557-4783, Fax: (435) 259-
1502, or Michelle Sharrow, 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] or 
[email protected].
    Small businesses may request information on this proceeding 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: Prior documents in this proceeding: Notice 
of Hearing issued on September 27, 2016, and published in the September 
30, 2016, issue of the Federal Register (81 FR 67217); a Recommended 
Decision issued on June 5, 2017, and published in the June 12, 2017, 
issue of the Federal Register (82 FR 26859); and a Secretary's Decision 
and Referendum Order issued September 14, 2017, and published in the 
September 28, 2017, issue of the Federal Register (82 FR 45208).
    This action is governed by the provisions of sections 556 and 557 
of title 5 of the United States Code and, therefore, is excluded from 
the requirements of 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' '' (February 2, 2017).
    Notice of this rulemaking action was provided to tribal governments 
through the Department of Agriculture's (USDA) Office of Tribal 
Relations.

Preliminary Statement

    This action finalizes an amendment to regulations issued to carry 
out a marketing order as defined in 7 CFR 900.2(j). This rule is issued 
under Marketing Order No. 982, as amended (7 CFR part 982), regulating 
the handling of hazelnuts grown in Oregon and Washington. Part 982 
(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 final rule was formulated 
on the record of a public hearing held on October 18, 2016, in 
Wilsonville, Oregon. The hearing was held pursuant to the provisions of 
the Act, and the applicable rules of practice and procedure governing 
the formulation of marketing agreements and orders (7 CFR part 900). 
Notice of this hearing was published in the Federal Register September 
30, 2016 (81 FR 67217). The notice of hearing contained two proposals 
submitted by the Board and one submitted by USDA.
    Upon the basis of evidence introduced at the hearing and the record 
thereof, the Administrator of the Agricultural Marketing Service (AMS) 
on June 5, 2017, filed with the Hearing Clerk, USDA, a Recommended 
Decision and Opportunity to File Written Exceptions thereto by July 12, 
2017. No exceptions were filed.
    A Secretary's Decision and Referendum Order was published in the 
Federal Register on September 28, 2017 (82 FR 45208), directing that a 
referendum be conducted during the period of October 16 through 
November 3, 2017, among eligible Oregon and Washington hazelnut growers 
to determine whether they favored the proposed amendments to the Order. 
To become effective, the amendments had to be approved by at least two-
thirds of those growers voting, or by voters representing at least two-
thirds of the volume of hazelnuts represented by voters voting in the 
referendum. The amendment adding authority to regulate quality was 
favored by 69.5 percent of the growers voting in the referendum, 
representing 71.6 percent of the total volume of hazelnuts produced by 
those voting. The amendment adding authority to establish different 
regulations for different markets was favored by 67.9 percent of the 
growers voting in the referendum, representing 69.5 percent of the 
total volume of hazelnuts produced by those voting.
    The amendments favored by voters and included in this final order 
authorize the regulation of quality for the purpose of pathogen 
reduction and the establishment of different outgoing quality 
regulations for different markets.
    USDA also made such changes as were necessary to the Order so that 
all of the Order's provisions conform to the effectuated amendments. 
USDA recommended one clarifying change to the language in the new 
paragraph 982.45(c), which adds authority to regulate quality. USDA 
determined that the language as presented in the Notice of Hearing was 
redundant and, therefore, confusing. USDA revised the language in the 
new paragraph Sec.  982.45(c) so that its intent is more clearly 
stated. This language is included in the regulatory text of this Order.
    The amended marketing agreement was subsequently mailed to all 
hazelnut handlers in the production area for their approval. The 
marketing agreement was not approved by handlers representing more than 
50 percent of the volume of hazelnuts handled by all handlers during 
the representative period of July 1, 2016, through June 30, 2017. 
Consequently, no companion handler agreement will be established.

Small Business Consideration

    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA), AMS has considered the economic impact of this 
action 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 so that small businesses will not be 
unduly or disproportionately burdened. Marketing orders and amendments 
thereto are unique in that they are normally brought about through 
group action of essentially small entities for their own benefit.

Hazelnut Industry Background and Overview

    According to the hearing transcript, there are currently over 800 
hazelnut growers in the production area. According to National 
Agricultural Statistics Service (NASS) data presented at the hearing, 
2015 grower receipts averaged $2,800 per ton. With a total 2015 
production of 31,000 tons, the farm gate value for hazelnuts in that 
year totaled $86.8 million ($2,800 per ton multiplied by 31,000 tons). 
Taking the total value of production for hazelnuts and dividing it by 
the total number of hazelnut growers provides a return per grower of 
$108,500. A small grower as defined by the Small Business 
Administration (SBA) (13 CFR 121.201) is one having annual receipts of 
less than $750,000 annually. Therefore, a majority of hazelnut growers 
are considered small entities under the SBA standards. Record evidence 
indicates that approximately 98 percent of hazelnut growers are small 
businesses.
    According to the industry, there are 17 hazelnut handlers, four of 
which handle 80 percent of the crop. While market prices for hazelnuts 
were not included among the data presented at

[[Page 52948]]

the hearing, an estimation of handler receipts can be calculated using 
the 2015 grower receipt value of $86.8 million. Multiplying $86.8 
million by 80 percent ($86.8 million multiplied by 80 percent equals 
$69.4 million) and dividing by four indicates that the largest hazelnut 
handlers received an estimated $17.3 million each. Dividing the 
remaining 20 percent of $86.8 million, or $17.4 million, by the 
remaining 13 handlers, indicates average receipts of $1.3 million each. 
A small agricultural service firm is defined by the SBA as one having 
annual receipts of less than $7,500,000. Based on the above 
calculations, a majority of hazelnut handlers are considered small 
entities under the SBA's standards.
    The production area regulated under the Order covers Oregon and 
Washington. According to the record, Eastern Filbert Blight has heavily 
impacted hazelnut production in Washington. One witness stated that 
there is currently no commercial production in that state. As a result, 
production data entered into the record pertains almost exclusively to 
Oregon.
    NASS data indicates bearing acres of hazelnuts reached a fifteen-
year high during the 2013-2014 crop year at 30,000 acres. Acreage 
remained steady, at 30,000 bearing acres for the 2015-2016 crop year. 
By dividing 30,000 acres by 800 growers, NASS data indicate there are 
approximately 37.5 acres per grower. Industry testimony estimates that 
due to new plantings, there are potentially 60,000 bearing acres of 
hazelnuts, or an estimated 75 bearing acres per hazelnut grower.
    During the hearing held October 18, 2016, interested parties were 
invited to present evidence on the probable regulatory impact of the 
amendments to the Order on small businesses. The evidence presented at 
the hearing shows that none of the amendments would have a significant 
economic impact on a substantial number of small agricultural growers 
or firms.

Material Issues

    This action amends the Order to authorize the regulation of quality 
for the purpose of pathogen reduction and the establishment of 
different outgoing quality regulations for different markets. These 
authorities will aid in pathogen reduction in hazelnuts and increase 
the industry's ability to meet the needs of different market 
destinations.
    During the hearing held on October 18, 2016, interested persons 
were invited to present evidence on the probable regulatory and 
informational impact of the amendments to the Order on small 
businesses. The evidence presented at the hearing shows that the 
amendments would have no burdensome effects on small agricultural 
producers or firms.
    In discussing the impacts of the amendments on growers and 
handlers, record evidence indicates that the authority to establish 
quality regulations that require hazelnuts to be treated prior to 
shipment to reduce pathogen load would not significantly impact the 
majority of handlers. Regulations implemented under that authority 
could impose additional costs on handlers required to comply with them. 
However, witnesses testified that establishing mandatory treatment 
regulations could increase the industry's credibility and reduce the 
risk that shipments of substandard product could jeopardize the entire 
industry's reputation. Record evidence shows that any additional costs 
are likely to be offset by the benefits of complying with those 
requirements.
    The record shows that the proposal to add authority to establish 
different outgoing quality requirements for different markets would, in 
itself, have no economic impact on growers or handlers of any size. 
While regulations implemented under that authority could potentially 
impose additional costs on handlers required to comply with them, the 
record indicates the benefits of such regulation would outweigh the 
potential future costs. The record indicates that allowing different 
regulations for different markets would likely lower the costs to 
handlers and prevent multiple treatments of hazelnuts while preserving 
hazelnut quality.
    This final rule also makes administrative revisions to subpart 
headings to bring the language into conformance with the Office of 
Federal Register requirements.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap or conflict with this rule. These amendments are intended to 
improve the operation and administration of the Order and to assist in 
the marketing of hazelnuts.

Paperwork Reduction Act

    Current information collection requirements for Part 982 are 
approved by OMB, under 0581-0178 ``Vegetable and Specialty Crops.'' No 
changes are anticipated in these requirements as a result of this 
proceeding. Should any such changes become necessary, they would be 
submitted to OMB for approval.
    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 Government Paperwork 
Elimination Act, which requires Government agencies in general to 
provide the public the option of submitting information or transacting 
business electronically to the maximum extent possible.
    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.

Civil Justice Reform

    The amendments to the Order stated herein have been reviewed under 
Executive Order 12988, Civil Justice Reform. They are not intended to 
have retroactive effect. The amendments do 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 no later than 20 days after the date of 
entry of the ruling.

Order Amending the Order Regulating the Handling of Hazelnuts Grown in 
Oregon and Washington 1
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    \1\ This order shall not become effective unless and until the 
requirements of Sec.  900.14 of the rules of practice and procedure 
governing proceedings to formulate marketing agreements and 
marketing orders have been met.
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Findings and Determinations

    The findings and determinations hereinafter set forth are 
supplementary to the findings and determinations that were previously 
made in connection with the issuance of the Marketing Order; and all 
said previous findings and determinations are hereby ratified and 
affirmed, except insofar as such findings and determinations may be in

[[Page 52949]]

conflict with the findings and determinations set forth herein.
(a) Findings and Determinations Upon the Basis of the Hearing Record
    Pursuant to the provisions of the Agricultural Marketing Agreement 
Act of 1937, as amended (7 U.S.C. 601-674), and the applicable rules of 
practice and procedure effective thereunder (7 CFR part 900), a public 
hearing was held upon further amendment of Marketing Order No. 982, 
regulating the handling of hazelnuts grown in Oregon and Washington.
    Upon the basis of the record, it is found that:
    (1) The Order, as amended, and as hereby further amended, and all 
of the terms and conditions thereof, would tend to effectuate the 
declared policy of the Act;
    (2) The Order, as amended, and as hereby further amended, regulates 
the handling of hazelnuts grown in the production area in the same 
manner as, and is applicable only to, persons in the respective classes 
of commercial and industrial activity specified in the Order upon which 
a hearing has been held;
    (3) The Order, as amended, and as hereby further amended, is 
limited in its application to the smallest regional production area 
that is practicable, consistent with carrying out the declared policy 
of the Act, and the issuance of several orders applicable to 
subdivisions of the production area would not effectively carry out the 
declared policy of the Act;
    (4) The Order, as amended, and as hereby further amended, 
prescribes, insofar as practicable, such different terms applicable to 
different parts of the production area as are necessary to give due 
recognition to the differences in the production and marketing of 
hazelnuts grown in Oregon and Washington; and
    (5) All handling of hazelnuts grown in the production area as 
defined in the Order is in the current of interstate or foreign 
commerce or directly burdens, obstructs, or affects such commerce.
    (b) Determinations. It is hereby determined that:
    (1) Handlers (excluding cooperative associations of growers who are 
not engaged in processing, distributing, or shipping hazelnuts covered 
by the order as hereby amended) who, during the period July 1, 2016, 
through June 30, 2017, handled 50 percent or more of the volume of such 
hazelnuts covered by said order, as hereby amended, have not signed an 
amended marketing agreement;
    (2) The issuance of this amendatory Order, further amending the 
aforesaid Order, was favored or approved by at least two-thirds of the 
growers who participated in a referendum on the question of approval 
and who, during the period of July 1, 2016, through June 30, 2017 
(which has been deemed to be a representative period), have been 
engaged within the production area in the production of such hazelnuts, 
such growers having also produced for market at least two-thirds of the 
volume of such commodity represented in the referendum; and
    (3) The issuance of this amendatory Order advances the interests of 
growers of hazelnuts in the production area pursuant to the declared 
policy of the Act.

Order Relative to Handling

    It is therefore ordered, that on and after the effective date 
hereof, all handling of hazelnuts grown in Oregon and Washington shall 
be in conformity to, and in compliance with, the terms and conditions 
of the said Order as hereby amended as follows:
    The provisions of the amendments to the Order contained in the 
Secretary's Decision issued on September 14, 2017, and published in the 
September 28, 2017, issue of the Federal Register (82 FR 45208) will be 
and are the terms and provisions of this order amending the Order and 
are set forth in full herein.

List of Subjects in 7 CFR Part 982

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

    For the reasons set out 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 part 982 continues to read as follows:

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

[Subpart Redesignated as Subpart A]

0
2. Redesignate the ``Subpart--Order Regulating Handling'' as ``Subpart 
A--Order Regulating Handling''.

0
3. Revise Sec.  982.12 to read as follows:


Sec.  982.12  Merchantable hazelnuts.

    Merchantable hazelnuts means inshell hazelnuts that meet the grade, 
size, and quality regulations in effect pursuant to Sec.  982.45 and 
are likely to be available for handling as inshell hazelnuts.

0
4. Amend Sec.  982.40 by revising paragraph (d) to read as follows:


Sec.  982.40  Marketing policy and volume regulation.

* * * * *
    (d) Grade, size, and quality regulations. Prior to September 20, 
the Board may consider grade, size, and quality regulations in effect 
and may recommend modifications thereof to the Secretary.
* * * * *

0
5. Revise the undesignated center heading prior to Sec.  982.45 to read 
as follows:

Grade, Size, and Quality Regulation

0
6. In Sec.  982.45, revise the section heading and add paragraphs (c) 
and (d) to read as follows:


Sec.  982.45   Establishment of grade, size, and quality regulations.

* * * * *
    (c) Quality regulations. For any marketing year, the Board may 
establish, with the approval of the Secretary, such minimum quality and 
inspection requirements applicable to hazelnuts to facilitate the 
reduction of pathogens as will contribute to orderly marketing or will 
be in the public interest. In such marketing year, no handler shall 
handle hazelnuts unless they meet applicable minimum quality and 
inspection requirements as evidenced by certification acceptable to the 
Board.
    (d) Different regulations for different markets. The Board may, 
with the approval of the Secretary, recommend different outgoing 
quality requirements for different markets. The Board, with the 
approval of the Secretary, may establish rules and regulations 
necessary and incidental to the administration of this provision.

0
7. Amend Sec.  982.46 by adding paragraph (d) to read as follows:


Sec.  982.46  Inspection and certification.

* * * * *
    (d) Whenever quality regulations are in effect pursuant to Sec.  
982.45, each handler shall certify that all product to be handled or 
credited in satisfaction of a restricted obligation meets the quality 
regulations as prescribed.

[Subpart Redesignated as Subpart B and Amended]

0
8. Redesignate ``Subpart--Grade and Size Regulation'' as subpart B and 
revise the heading to read as follows:

Subpart B--Grade and Size Requirements

[Subpart Redesignated as Subpart C]

0
9. Redesignate ``Subpart--Free and Restricted Percentages'' as 
``Subpart C--Free and Restricted Percentages''.

[[Page 52950]]

[Subpart Redesignated as Subpart D]

0
10. Redesignate ``Subpart--Assessment Rates'' as ``Subpart D--
Assessment Rates''.

[Subpart Redesignated as Subpart E and Amended]

0
11. Redesignate ``Subpart--Administrative Rules and Regulations'' as 
subpart E and revise the heading to read as follows:

Subpart E--Administrative Requirements

    Dated: October 15, 2018.

Bruce Summers,
Administrator, Agricultural Marketing Service.
[FR Doc. 2018-22762 Filed 10-18-18; 8:45 am]
 BILLING CODE 3410-02-P