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contains regulatory documents having general

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Rules and Regulations Federal Register

27815

Vol. 63, No. 98

Thursday, May 21, 1998

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 982

[Docket No. FV98–982–1 FIR]

Hazelnuts Grown in Oregon and

Washington; Establishment of Interim

and Final Free and Restricted

Percentages for the 1997–98 Marketing

Year

AGENCY: Agricultural Marketing Service,

USDA.

ACTION: Final rule.

SUMMARY: The Department of

Agriculture (Department) is adopting, as

a final rule, without change, the

provisions of an interim final rule

which established interim and final free

and restricted percentages for domestic

inshell hazelnuts for the 1997–98

marketing year under the Federal

marketing order for hazelnuts grown in

Oregon and Washington. 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 order.

EFFECTIVE DATE: June 22, 1998.

FOR FURTHER INFORMATION CONTACT:

Teresa L. Hutchinson, Marketing

Specialist, Northwest Marketing Field

Office, Fruit and Vegetable Programs,

Agricultural Marketing Service, USDA,

1220 SW Third Avenue, Room 369,

Portland, OR 97204; telephone: (503)

326–2724, Fax: (503) 326–7440 or

George J. Kelhart, Marketing Order

Administration Branch, Fruit and

Vegetable Programs, AMS, USDA, Room

2525–S, P.O. Box 96456, Washington,

DC 20090–6456; telephone: (202) 720–

2491, Fax: (202) 205–6632. Small

businesses may request information on

compliance with this regulation by

contacting: Jay Guerber, Marketing

Order Administration Branch, Fruit and

Vegetable Programs, AMS, USDA, P.O.

Box 96456, Room 2525–S, Washington,

DC 20090–6456; telephone: (202) 720–

2491, Fax: (202) 205–6632.

SUPPLEMENTARY INFORMATION: This final

rule is issued under Marketing

Agreement No. 115 and Order No. 982

(7 CFR Part 982), both as amended,

regulating the handling of hazelnuts

grown in Oregon and Washington,

hereinafter referred to as the ‘‘order.’’

The marketing agreement and order are

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

(Department) 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 1997–98 marketing

year (July 1, 1997, through June 30,

1998). This rule will not preempt any

State or local laws, regulations, or

policies, unless they present an

irreconcilable conflict with this rule.

The Act provides that administrative

proceedings must be exhausted before

parties may file suit in court. Under

section 608c(15)(A) of the Act, any

handler subject to an order may file

with the Secretary a petition stating that

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, the Secretary 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 the Secretary’s ruling on the

petition, provided an action is filed not

later than 20 days after the date of the

entry of the ruling.

This rule continues in effect

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

released percentages are specified in

section 982.40 of the order.

The National Agricultural Statistics

Service (NASS) estimated hazelnut

production at 40,000 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 quantity marketed is broken

down into free and restricted percentage

portions to make available hazelnuts

which may be marketed in domestic

inshell markets (free) and hazelnuts

which must be exported, shelled or

otherwise disposed of (restricted). The

preliminary free percentage releases 80

percent of the adjusted inshell trade

demand. 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.

At its August 28, 1997, meeting, the

Board computed and announced

preliminary free and restricted

percentages of 8 percent and 92 percent,

respectively. The Board used the NASS

crop estimate of 40,000 tons. The

purpose of releasing only 80 percent of

the inshell trade demand under the

preliminary percentage was to guard

against an underestimate of crop size.
27816 Federal Register / Vol. 63, No. 98 /Thursday, May 21, 1998 /Rules and Regulations

The preliminary free percentage

released 3,003 tons of hazelnuts from

the 1997 supply for domestic inshell

use. The preliminary restricted

percentage portion of the 1997 supply

for export and kernel markets totaled

34,296 tons.

Under the order, the Board must meet

a second time, on or before November

15, to recommend interim final and

final percentages. The Board uses

current crop estimates to calculate the

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. The

final free and restricted percentages

must be effective by June 1, at least 30

days prior to the end of the marketing

year, June 30. The final free and

restricted percentages can be made

effective earlier, if recommended by the

Board and approved by the Secretary.

Revisions in the marketing policy can be

made until February 15 of each

marketing year, but the inshell trade

demand can only be revised upward,

consistent with section 982.40(e).

The Board met on November 13, 1997,

and reviewed and approved an

amended marketing policy. The Board

recommended that the three-year

average trade acquisition figure of 4,279

tons be increased by 214 tons for market

expansion. The Board also

recommended the establishment of

interim final and final free and

restricted percentages. Interim final

percentages were recommended at 10

percent free and 90 percent restricted.

The interim final percentage made an

additional 965 tons of inshell hazelnuts

available for the domestic inshell

market, including product for market

expansion. The interim final marketing

percentages were based on the Board’s

final production estimate (42,000 tons)

and released 3,968 tons to the domestic

inshell market from the 1997 supply

subject to regulation. The interim final

restricted percentage resulted in a

restricted obligation of 35,173 tons.

The final free and restricted

percentages were recommended at 12

percent and 88 percent, respectively.

The Board also recommended that the

final percentages be effective on April

30, 1997. The established final

marketing percentages release for

domestic inshell use an additional 642

tons from the supply subject to

regulation. Thus, a total of 4,610 tons of

inshell hazelnuts will be released from

the 1997 supply for domestic inshell

use. The final restricted percentage

resulted in a restricted obligation of

34,531 tons.

The marketing percentages are based

on the Board’s production estimates and

the following supply and demand

information for the 1997–98 marketing

year:

Tons

Inshell Supply Tons

(1) Total production (Board’s estimate) ........................................................................................................................... 42,000

(2) Less substandard, farm use (disappearance) ............................................................................................................ 2,860

(3) Merchantable production (Board’s adjusted crop estimate) ....................................................................................... 39,140

(4) Plus undeclared carryin as of July 1, 1997, subject to regulation ............................................................................. 1

(5) Supply subject to regulation (Item 3 plus Item 4) ...................................................................................................... 39,141

Inshell Trade Demand

(6) Average trade acquisitions of inshell hazelnuts for three prior years ........................................................................ 4,279

(7) Increase to encourage increased sales (5 percent of Item 6) ................................................................................... 214

(8) Less declared carryin as of July 1, 1996, not subject to regulation .......................................................................... 525

(9) Adjusted Inshell Trade Demand ................................................................................................................................. 3,968

(10) 15 percent of the average trade acquisitions of inshell hazelnuts for three prior years (Item 6) .............................. 642

(11) Adjusted Inshell Trade Demand plus 15 percent for carryout (Item 9 plus Item 10) ................................................ 4,610

Percentages

Free Restricted

(12) Interim final percentages (Item 9 divided by Item 5) × 100 ....................................................................................... 10 90

(13) Final percentages (Item 11 divided by Item 5) × 100 ................................................................................................ 12 88

In addition to complying with the

provisions of the order, the Board also

considered the Department’s 1982

‘‘Guidelines for Fruit, Vegetable, and

Specialty Crop Marketing Orders’’

(Guidelines) when making its

computations in the marketing policy.

This volume control regulation provides

a method to collectively limit the

supply of inshell hazelnuts available for

sale in domestic markets. The

Guidelines provide that the domestic

inshell market has available a quantity

equal to 110 percent of prior years’

shipments before secondary market

allocations are approved. This provides

for plentiful supplies for consumers and

for market expansion, while retaining

the mechanism for dealing with

oversupply situations. At its November

13, 1997, meeting, the Board

recommended that an increase of 5

percent (214 tons) for market expansion

be included in the inshell trade demand

which was used to compute the interim

percentages. The established final

percentages are based on the final

inshell trade demand, and will make

available an additional 642 tons for

desirable carryout. The total free supply

for the 1997–98 marketing year is 5,135

tons of hazelnuts, which is the final

trade demand of 4,610 tons plus the

declared carryin of 525 tons. This

amount is 120 percent of prior years’

sales and exceeds the goal of the

Guidelines.

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

final regulatory flexibility analysis.

The purpose of the RFA is to fit

regulatory actions to the scale of

business subject to such actions in order

that small businesses will not be unduly

or disproportionately burdened.

Marketing orders issued pursuant to the

Act, and rules issued thereunder, are

unique in that they are brought about

through group action of essentially
Federal Register / Vol. 63, No. 98 /Thursday, May 21, 1998 /Rules and Regulations 27817

small entities acting on their own

behalf. Thus, both statutes have small

entity orientation and compatibility.

There are approximately 1,000

producers of hazelnuts in the

production area and approximately 23

handlers subject to regulation under the

marketing order. Small agricultural

producers have been defined by the

Small Business Administration (13 CFR

121.601) as those having annual receipts

of less than $500,000, and small

agricultural service firms are defined as

those whose annual receipts are less

than $5,000,000. Using these criteria,

virtually all of the producers are small

agricultural producers and an estimated

20 of the 23 handlers are small

agricultural service firms. Thus, the

great majority of hazelnut producers and

handlers may be classified as small

entities.

Board meetings are widely publicized

in advance of the meetings and are held

in a location central to the production

area. The meetings are open to all

industry members and other interested

persons who are encouraged to

participate in the deliberations and

voice their opinions on topics under

discussion. Thus, Board

recommendations can be considered to

represent the interests of small business

entities in the industry.

Many years of marketing experience

led to the development of the current

volume control procedures. These

procedures have helped the industry

solve its marketing problems by keeping

inshell supplies in balance with

domestic needs. The current volume

control procedures fully supply the

domestic inshell market, provide for

market expansion, and help prevent

oversupplies in that market.

Inshell hazelnuts sold to the domestic

market provide higher returns to the

industry than are obtained from

shelling. The inshell market is inelastic

and is characterized as having limited

demand and being prone to oversupply.

Industry statistics show that total

hazelnut production has varied widely

over the last 10 years, from a low of

13,000 tons in 1989 to a high of 41,000

tons in 1993, with another record crop

of 42,000 tons in 1997. Average

production has been around 24,000

tons. While crop size has fluctuated, the

volume regulations contribute toward

orderly marketing and market stability,

and help moderate the variation in

returns for all growers and handlers,

both large and small. For instance,

production in the shortest crop year

(1989) was 53 percent of the 10-year

average (1987–1996). Production in the

biggest crop year (1996) was 170 percent

of the 10-year average. The percentage

releases provide all handlers with the

opportunity to benefit from the most

profitable domestic inshell market. That

market is available to all handlers,

regardless of handler size.

NASS statistics show that the grower

price per pound has increased steadily

over the last 4 years, from $.28 in 1992

to $.43 in 1996.

The Board discussed the only

alternative to this rule which was not to

regulate. Without any regulations in

effect, the Board believed that the

industry would oversupply the inshell

domestic market. With the 1997

hazelnut crop the largest in history, the

release of 42,000 tons on the domestic

inshell market would cause grower

returns to decrease drastically, and

completely disrupt the market.

While the level of benefits of this

rulemaking are difficult to quantify, the

stabilizing effects of the volume

regulations impact both small and large

handlers positively by helping them

maintain and expand markets even

though hazelnut supplies fluctuate

widely from season to season.

Hazelnuts produced under the order

comprise virtually all of the hazelnuts

produced in the U.S. This production

represents, on average, approximately 3

percent of total U.S. tree nut production

and approximately 3 percent of the

world’s hazelnut production.

This volume control regulation

provides a method for the U.S. hazelnut

industry to limit the supply of domestic

inshell hazelnuts available for sale in

the U.S. Section 982.40 of the order

establishes a procedure and

computations for the Board to follow in

recommending to the Secretary release

of preliminary, interim final, and final

quantities of hazelnuts to be released to

the free and restricted markets each

marketing year. The program results in

plentiful supplies for consumers and for

market expansion while retaining the

mechanism for dealing with oversupply

situations.

Currently, U.S. hazelnut production

can be successfully allocated between

the inshell domestic and secondary

markets. One of the best secondary

markets for hazelnuts is the export

market. Inshell hazelnuts produced

under the marketing order compete well

in export markets because of quality.

Europe, and Germany in particular, is

historically the primary world market

for U.S. produced inshell hazelnuts,

although China was the largest importer

in 1996–97. A third market is for shelled

hazelnuts sold domestically.

Domestically produced kernels

generally command a higher price in the

domestic market than imported kernels.

The industry is continuing its efforts to

develop and expand secondary markets,

especially the domestic kernel market.

Small business entities, both producers

and handlers, benefit from the

expansion efforts resulting from this

program.

There are some reporting,

recordkeeping, and other compliance

requirements under the order. The

reporting and recordkeeping burdens

have been accepted by the handlers as

necessary for compliance purposes and

for developing statistical data for

maintenance of the program. The forms

require information which is readily

available from handler records and

which can be provided without data

processing equipment or trained

statistical staff. As with other marketing

order programs, reports and forms are

periodically studied to reduce or

eliminate duplicate information

collection burdens by industry and

public sector agencies. This final rule

does not change those requirements.

The Department has not identified

any relevant Federal rules that

duplicate, overlap, or conflict with this

regulation.

The interim final rule was published

in the Federal Register on January 22,

1998 (63 FR 3251). The Board manager

mailed information concerning that

action to all known industry members,

and it was also made available through

the Internet by the Office of the Federal

Register. That rule provided a 60-day

comment period which ended March

23, 1998. No comments were received.

After consideration of all relevant

material presented, including the

Board’s recommendation and other

information, it is found that finalizing

the interim final rule, without change,

as published in the Federal Register (63

FR 3251, January 22, 1998), will tend to

effectuate the declared policy of the Act.

List of Subjects in 7 CFR Part 982

Filberts, Hazelnuts, Marketing

agreements, Nuts, Reporting and

recordkeeping requirements.

PART 982—HAZELNUTS GROWN IN

OREGON AND WASHINGTON

Accordingly, the interim final rule

amending 7 CFR part 982 which was

published at 63 FR 3251 on January 22,

1998, is adopted as a final rule without

change.

Dated: May 14, 1998.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable

Programs.

[FR Doc. 98–13524 Filed 5–20–98; 8:45 am]

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