[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
________________________________________________________________________
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