Filberts/Hazelnuts Grown in Oregon and Washington; Establishment of Interim and Final Free and Restricted Percentages for the 1995-96 Marketing Year

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 filberts/hazelnuts for the 1995-96 marketing year

under the Federal marketing order for filberts/hazelnuts grown in

Oregon and Washington. The percentages allocate the quantity of

domestically produced filberts/hazelnuts which may be marketed in the

domestic inshell market. The percentages are intended to stabilize the

supply of domestic inshell filberts/hazelnuts to meet the limited

domestic demand for such filberts/hazelnuts and provide reasonable

returns to producers. This rule was recommended unanimously by the

Filbert/Hazelnut Marketing Board (Board), which is the agency

responsible for local administration of the order.

EFFECTIVE DATE: April 19, 1996.

FOR FURTHER INFORMATION CONTACT: Teresa L. Hutchinson, Marketing

Specialist, Northwest Marketing Field Office, Fruit and Vegetable

Division, Agricultural Marketing Service, USDA, 1220 SW. Third Ave.,

Room 369, Portland, OR 97204; telephone: (503) 326-2725 or Mark A.

Slupek, Marketing Specialist, Marketing Order Administration Branch,

Fruit and Vegetable Division, AMS, USDA, Room 2536-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, hereinafter referred to as the ``order.'' 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 1995-96 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 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 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 rule 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

$5,000,000. The majority of producers and handlers of filberts/

hazelnuts may be classified as small entities.

The Board's recommendation and this final rule are based on

requirements specified in the order. The interim final rule was issued

on January 22, 1996, and published in the Federal Register (61 FR 2665,

January 29, 1996), with an effective date of January 29, 1996. That

rule established the amount of inshell filberts/hazelnuts that may be

marketed in domestic markets. The domestic outlets for this commodity

are characterized by limited demand, and the finalization of interim

and final free and restricted percentages will continue to benefit the

industry by promoting stronger marketing conditions and stabilizing

prices and supplies, thus improving grower returns. That rule provided

a 30-day comment period which ended February 28, 1996. No comments were

received.

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 handlers may ship to the

domestic market 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

[[Page 11290]]

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 figure by no more

than 25 percent, if market conditions warrant such 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. Desirable carryout

is used for early season shipments until the new crop is available for

market.

The preliminary free and restricted percentages make available

portions of the filbert/hazelnut supply subject to regulation which may

be marketed in domestic inshell markets (free) and exported, shelled,

or otherwise disposed of (restricted) early in the 1995-96 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 28, 1995, meeting, the Board computed and announced

preliminary free and restricted percentages of 10 percent and 90

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 was to guard against

underestimates of crop size. The preliminary free percentage released

3,478 tons of filberts/hazelnuts from the 1995 supply for domestic

inshell use. 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 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 provide 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. However, the inshell trade demand can only be revised

upward.

In accordance with order provisions, the Board met on November 15,

1995, 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 14 percent and 86 percent,

respectively. The Board also recommended that the final percentages be

effective on June 1, 1996, which is 30 days prior to the end of the

season. The interim final percentages made an additional 870 tons of

inshell filberts/hazelnuts available for the domestic inshell market.

The interim final marketing percentages are based on the industry's

final production estimates and released 4,348 tons to the domestic

inshell market from the 1995 supply subject to regulation. The final

marketing percentages release an additional 637 tons from the 1995 crop

for domestic use. Thus, a total of 4,985 tons of inshell filberts/

hazelnuts will be available from the 1995 supply subject to regulation

for domestic use when the final percentages are established. The

National Agricultural Statistics Service (NASS) estimated filbert/

hazelnut production at 38,000 tons for the Oregon and Washington area.

The Board unanimously voted to accept the NASS estimate.

The marketing percentages are based on the Board's production

estimates and the following supply and demand information for the 1995-

96 marketing year:

------------------------------------------------------------------------

Tons

------------------------------------------------------------------------

Inshell Supply:

(1) Total production (NASS estimate)................... 38,000

(2) Less substandard, farm use (disappearance)......... 2,466

(3) Merchantable production (the Board's adjusted crop

estimate)............................................. 35,534

(4) Plus undeclared carryin as of July 1, 1995, subject

to regulation......................................... 11

(5) Supply subject to regulation (Item 3 plus Item 4).. 35,545

Inshell Trade Demand:

(6) Average trade acquisitions of inshell filberts/

hazelnuts for three prior years....................... 4,247

(7) Increase to encourage increased sales (15 percent

of Item 6)............................................ 637

(8) Less declared carryin as of July 1, 1995, not

subject to regulation................................. 536

(9) Adjusted Inshell Trade Demand...................... 4,348

(10) 15 percent of the average trade acquisitions of

inshell filberts/hazelnuts for three prior years (Item

6).................................................... 637

(11) Adjusted Inshell Trade Demand plus 15 percent for

carryout (Item 9 plus Item 10)........................ 4,985

------------------------------------------------------------------------

Free Restricted

Percentages:

(12) Interim final percentages (Item 9

divided by Item 5) x 100............... 12 88

(13) Final percentages (Item 11 divided by

Item 5) x 100.......................... 14 86

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 the domestic inshell market have available

a quantity equal to 110 percent of prior years' shipments in those

outlets before secondary market allocations are approved. This provides

for plentiful supplies for consumers and for market

[[Page 11291]]

expansion while retaining the mechanism for dealing with oversupply

situations. At its August 28, 1995, meeting, the Board recommended that

an increase of 15 percent (637 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 637 tons

for desirable carryout. The total free supply will be the final trade

demand of 4,985 tons plus the declared carryin of 536 tons or 5,521

tons. This is 130 percent of prior years' sales and exceeds the goal of

the Guidelines.

Based on the above, 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 Committee, and other

information, it is found that finalizing the interim final rule,

without change, as published in the Federal Register (61 FR 2665,

January 29, 1996), 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

Accordingly, the interim final rule amending 7 CFR part 982, which

was published at 61 FR 2665 on January 29, 1996, is adopted as a final

rule without change.

Dated: March 13, 1996.

Eric M. Forman,

Deputy Director, Fruit and Vegetable Division.

[FR Doc. 96-6694 Filed 3-19-96; 8:45 am]

BILLING CODE 3410-02-P