[Federal Register Volume 59, Number 165 (Friday, August 26, 1994)] [Unknown Section] [Page 0] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 94-21090] [[Page Unknown]] [Federal Register: August 26, 1994] ----------------------------------------------------------------------- DEPARTMENT OF AGRICULTURE 7 CFR Part 982 [FV93-982-2FIR] Filberts/Hazelnuts Grown In Oregon and Washington; Establishment of Interim Final and Final Free and Restricted Percentages for the 1993-94 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 establishing interim final and final free and restricted percentages for domestic inshell filberts/hazelnuts for the 1993-94 marketing year under the Federal marketing order for filberts/hazelnuts grown in Oregon and Washington. The percentages allocate the amounts of domestically produced filberts/hazelnuts which may be marketed in domestic, export and other outlets. The percentages are intended to stabilize the supply of domestic inshell filberts/hazelnuts in order to meet the limited domestic demand for such filberts/hazelnuts and provide reasonable returns to producers. This rule was recommended by the Filbert/Hazelnut Marketing Board (Board), which is the agency responsible for local administration of the order. EFFECTIVE DATE: September 26, 1994. FOR FURTHER INFORMATION CONTACT: Teresa Hutchinson, Marketing Specialist, Northwest Marketing Field Office, Fruit and Vegetable Division, AMS, USDA, 1220 SW Third Ave., Room 369, Portland, OR 97204; telephone (503) 326-2724 or Mark A. Slupek, Marketing Specialist, Marketing Order Administration Branch, Fruit and Vegetable Division, AMS, USDA, Room 2524-S, P.O. Box 96456, Washington, DC 20090-6456; telephone: (202) 205-2830. SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing Agreement and Order No. 982 [7 CFR Part 982], both as amended, regulating the handling of filberts/hazelnuts grown in Oregon and Washington. This 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 is issuing this rule in conformance with Executive Order 12866. This rule has been reviewed under Executive Order 12778, Civil Justice Reform. It is intended that this action apply to all merchantable filberts/hazelnuts handled during the 1993-94 marketing year. 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 8c(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 in equity to review the Secretary's ruling on the petition, provided a bill in equity is filed not later than 20 days after the date of the entry of the ruling. Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA), the Administrator of the Agricultural Marketing Service (AMS) has considered the economic impact of this action on small entities. 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 small entities acting on their own behalf. Thus, both statutes have small entity orientation and compatibility. There are approximately 1,000 producers of filberts/hazelnuts in the production area and approximately 25 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 $3,500,000. The majority of handlers and producers of filberts/ hazelnuts may be classified as small entities. The Board's recommendation and this rule are based on requirements specified in the order. This rule finalizes an interim final rule which established the amount of inshell filberts/hazelnuts that can be marketed in domestic markets. The domestic outlets for this commodity are characterized by limited demand, and interim final and final free and restricted percentages benefit the industry by promoting stronger marketing conditions and stabilizing prices and supplies, thus improving grower returns. The interim final rule was issued on February 18, 1994, and published in the Federal Register [59 FR 9068, February 25, 1994], with an effective date of February 25, 1994. That rule added Sec. 982.242 to the rules and regulations in effect under the order. That rule provided a 30-day comment period which ended March 28, 1994. One comment was received, from the United States Small Business Administration's Chief Counsel for Advocacy (SBA). The SBA's comment alleged that the Department should have undertaken an analysis under the Regulatory Flexibility Act and should have sought public comment prior to placing the interim rule in effect. The comment by SBA fails to consider the distinct characteristics of the filbert program. Under this marketing order, there are permanent regulations that authorize a market allocation program for filberts and that specify exactly how the free and restricted percentages should be established and revised. Those provisions were adopted after a formal rulemaking hearing, a process that allows for a full presentation of all economic and operational evidence not only in written form, but also through oral testimony under oath and subject to cross-examination. The process additionally permits further briefing and exceptions based on this record of exhibits and testimony. Hence, there has been extensive economic analysis and public participation in the rulemaking adopting the market allocation program and specifying the market allocation calculation procedures. Each year the marketing order Board meets and considers a marketing policy for the coming year, including the activation of the market allocation program and the projected trade demand (as calculated under the specifications in the permanent regulations). The Board represents the entire filbert industry and brings to its deliberations the highest level of experience and expertise. The Board conducts open meetings and receives input of an economic nature from all interested persons. The Secretary's representatives are in attendance at such meetings and freely interact to gather any necessary economic or operational information. In addition, the Board is continually gathering economic data from a number of sources for its deliberations and for submission to the Secretary. At several points during the season, the Board holds further open meetings to update or revise the market allocation program for the year. In view of this unique and comprehensive system, the Department believes it is sufficiently knowledgeable to make a Regulatory Flexibility Act certification without any further studies or reports. In addition, there has been ample opportunity for public participation both in the formal rulemaking process that created the detailed market allocation program formula being applied herein, as well as thereafter to assure the Secretary that there has been no misapplication. Finally, it should be noted that the specific action commented-on is an interim rule which relieved restrictions by releasing the full free percentage immediately on February 25 rather than waiting until late May as may be provided under the order. This relaxation was effectuated only 10 days after the last date for marketing policy revisions and seeking further prior public participation would have significantly temporally diluted the value of this relief to the industry. Hence, the alternative championed by SBA would have maintained for a longer time more restrictive trade controls on small handlers. Therefore, for the reasons stated, the above comment in opposition to the interim final rule is denied. The Board is required to meet prior to September 20 of each marketing year to compute an inshell trade demand and preliminary free and restricted percentages, if the use of volume regulation is recommended during the season. The order prescribes formulas for computing the inshell trade demand, as well as preliminary, interim final, and final percentages. The inshell trade demand establishes the amount of inshell filberts/hazelnuts the market can utilize throughout the season, and the percentages release the volume of filberts/ hazelnuts necessary to meet the inshell trade demand. The preliminary percentages provide for the release of 80 percent of the inshell trade demand. The interim final percentages release 100 percent of the inshell trade demand. The inshell trade demand equals the average of the preceding three ``normal'' years' trade acquisitions of inshell filberts/hazelnuts, rounded to the nearest whole number. The Board may increase such estimate by no more than 25 percent, if market conditions warrant an increase. The final free and restricted percentages release an additional 15 percent of the average of the preceding three years' trade acquisitions of inshell filberts/hazelnuts for desirable carryout. The preliminary free and restricted percentages make available portions of the filbert/hazelnut crop which may be marketed in domestic inshell markets (free) and exported, shelled, or otherwise disposed of (restricted) early in the 1993-94 season. The preliminary free percentage is expressed as a percentage of the total supply subject to regulation and is based on preliminary crop estimates. The majority of domestic inshell filberts/hazelnuts are marketed in October, November, and December. By November, the marketing season is well under way. At its August 26, 1993, meeting, the Board announced preliminary free and restricted percentages of 7 percent and 93 percent, respectively, to release 80 percent of the inshell trade demand. The purpose of releasing only 80 percent of the inshell trade demand under the preliminary percentage is to guard against underestimates of crop size. The preliminary restricted percentage is 100 percent minus the free percentage. On or before November 15, the Board must meet again to recommend interim final percentages 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 100 percent of the inshell trade demand previously computed by the Board for the marketing year. Final free and restricted percentages release an additional 15 percent of the average of the preceding three years' trade acquisitions to ensure an adequate carryover into the following season. The final free and restricted percentages must be effective at least 30 days prior to the end of the marketing year (July 1 through June 30), or earlier, if recommended by the Board and approved by the Secretary. In addition, revisions in the marketing policy can be made until February 15 of each marketing year. In accordance with order provisions, the Board met on November 10, 1993, reviewed and approved an amended marketing policy and recommended the establishment of interim final and final free and restricted percentages. Interim final percentages were recommended at 12 percent free and 88 percent restricted, and final free and restricted percentages were recommended at 13 percent and 87 percent. The interim final percentages made an additional 807 tons of product available for the domestic inshell market. The interim final marketing percentages were based on the industry's final production estimates and released 3,903 tons to the domestic inshell market from the 1993 crop. The final marketing percentages released an additional 605 tons from the 1993 crop for domestic use. Thus, a total of 4,508 tons of product was available from the 1993 crop for domestic use when the final percentages were established. The Oregon Agricultural Statistics Service provided an early estimate of 39,000 tons total production for the Oregon and Washington area. However, a handler survey conducted by the Board provided a more current estimate of 37,700 tons total production for the area. Therefore, the Board voted to unanimously accept the more current estimate of 37,700 tons. Although the crop is large, the Board determined that the inshell domestic market conditions would allow more product without depressing the market and recommended immediate release of the additional 15 percent (the final percentages). The Board believed that the immediate release of the final percentages would benefit the industry with increased returns to growers and more product available for consumers. The marketing policy of the marketing order states that the final percentages must be effective at least 30 days prior to the end of the marketing year, or earlier. The Board recommended immediate release of the final percentages, in accordance with the authority of the marketing policy. The marketing policy also requires that procedurally, the Board recommend interim final and final percentages. Therefore, the interim final percentages were established even though they would not be utilized this marketing season. The marketing percentages were based on the Board's production estimates and the following supply and demand information for the 1993- 94 marketing year: ------------------------------------------------------------------------ Inshell supply Tons ------------------------------------------------------------------------ (1) Total production (Filbert/Hazelnut Marketing Boardhandlersurveyestimate).................................. 37,700 (2) Less substandard, farm use (disappearance)................ 2,700 (3) Merchantable production (the Board's adjusted crop estimate).................................................... 35,000 (4) Plus undeclared carryin as of July 1, 1993, subject to regulation................................................... 338 (5) Supply subject to regulation (Item 3 plus Item 4)......... 35,338 Inshell Trade Demand (6) Average trade acquisitions of inshell filberts for three prior years.................................................. 4,033 (7) Increase to encourage increased sales (20 percent)........ 807 (8) Less declared carryin as of July 1, 1993, not subject to regulation................................................... 937 (9) Adjusted Inshell Trade Demand............................. 3,903 (10) 15 percent of the average trade acquisitions of inshell filberts for three prior years (Item 6)...................... 605 (11) Adjusted Inshell Trade Demand plus 15 percent (Item 9 plus Item 10)................................................ 4,508 ------------------------------------------------------------------------ ------------------------------------------------------------------------ Restricted Percentages Free ------------------------------------------------------------------------ (12) Interim final percentages (Item 9 divided by Item 5) x 100.................................... 11 89 (13) Final percentages (Item 11 divided by Item 5) x 100............................................ 13 87 ------------------------------------------------------------------------ In addition to complying with the provisions of the marketing order, the Board also considers 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 filberts/hazelnuts available for sale in domestic markets. The Guidelines provide that this primary market have available a quantity equal to 110 percent of recent years' sales in those outlets 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. An additional increase of 20 percent (807 tons) was included in the calculations used in determining the inshell trade demand. The established final percentages make available 4,508 tons from the 1993 crop plus 937 tons of declared carryin which is 135 percent of prior years' sales, thus exceeding the goal of the Guidelines. Based on these considerations, the Administrator of the AMS has determined that this action will not have a significant economic impact on a substantial number of small entities. After consideration of all relevant material presented, the information and recommendations submitted by the Board, and other information, it is found that finalizing the interim final rule, without change, as published in the Federal Register [59 FR 9068, February 25, 1994] 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. For the reasons set forth in the preamble, 7 CFR Part 982 is amended as follows: PART 982--FILBERTS/HAZELNUTS GROWN IN OREGON AND WASHINGTON 1. The authority citation for 7 CFR Part 982 continues to read as follows: Authority: 7 U.S.C. 601-674. 2. Accordingly, the interim final rule amending 7 CFR part 982, which was published at 59 FR 9068 on February 25, 1994, is adopted as a final rule without change. Dated: August 22, 1994. Eric M. Forman, Deputy Director, Fruit and Vegetable Division. [FR Doc. 94-21090 Filed 8-25-94; 8:45 am] BILLING CODE 3410-02-P