Hazelnuts Grown in Oregon and Washington; Reduced Assessment Rate

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 982

[Docket No. FV97-982-1 IFR]

Hazelnuts Grown in Oregon and Washington; Reduced Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This interim final rule decreases the assessment rate

established for the Hazelnut Marketing Board (Board) under Marketing

Order No. 982 for the 1997-98 and subsequent marketing years. The Board

is responsible for local administration of the marketing order which

regulates the handling of hazelnuts grown in Oregon and Washington.

Authorization to assess hazelnut handlers enables the Board to incur

expenses that are reasonable and necessary to administer the program.

The 1997-98 marketing year covers the period July 1 through June 30.

The assessment rate will continue until amended, suspended, or

terminated.

DATES: Effective October 15, 1997. Comments received by December 15,

1997, will be considered prior to issuance of a final rule.

ADDRESSES: Interested persons are invited to submit written comments

concerning this rule. Comments must be sent in triplicate to the Docket

Clerk, Fruit and Vegetable Division, AMS, USDA, Room 2525-S, P.O. Box

96456, Washington, DC 20090-6456; Fax (202) 720-5698. Comments should

reference the docket 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.

FOR FURTHER INFORMATION CONTACT: Teresa L. Hutchinson, or Jadean L.

Williams, Northwest Marketing Field Office, Fruit and Vegetable

Division, AMS, 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

Division, AMS, USDA, Room 2525-S, P.O. Box 96456, Washington, DC 20090-

6456; telephone: (202) 720-2491, Fax: (202) 720-5698. Small businesses

may request information on compliance with this regulation by

contacting Jay Guerber, Marketing Order Administration Branch, Fruit

and Vegetable Division, AMS, USDA, Room 2525-S, P.O. Box 96456,

Washington, DC 20090-6456; telephone: (202) 720-2491, Fax: (202) 720-

5698.

SUPPLEMENTARY INFORMATION: This 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 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. Under the marketing order now in effect, hazelnut

handlers are subject to assessments. Funds to administer the order are

derived from such assessments. It is intended that the assessment rate

as issued herein will be applicable to all assessable hazelnuts

beginning July 1, 1997, and continuing until amended, suspended, or

terminated. This rule will not preempt any State or local laws,

regulations, or

[[Page 53226]]

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. Such 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 decreases the assessment rate established for the Board

for the 1997-98 and subsequent marketing years from $0.007 to $0.004

per pound.

The hazelnut marketing order provides authority for the Board, with

the approval of the Department, to formulate an annual budget of

expenses and collect assessments from handlers to administer the

program. The members of the Board are producers and handlers of

hazelnuts. They are familiar with the Board'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 1996-97 and subsequent marketing years, the Board

recommended, and the Department approved, an assessment rate that would

continue in effect from marketing year to marketing year indefinitely

unless modified, suspended, or terminated by the Secretary upon

recommendation and information submitted by the Board or other

information available to the Secretary.

The Board met on August 28, 1997, and unanimously recommended 1997-

98 expenditures of $553,218 and an assessment rate of $0.004 per pound

of hazelnuts. In comparison, last year's budgeted expenditures were

$558,974. The assessment rate of $0.004 is $0.003 less than the rate

currently in effect. At the current rate of $0.007 per pound and an

estimated 1997 hazelnut production of 70,000,000 pounds, the projected

reserve on June 30, 1998, would exceed the level the Board believed to

be adequate to administer the program. Section 982.62 of the order

allows the Board to establish and maintain an operating monetary

reserve in an amount not to exceed approximately one marketing year's

operational expenses. Last year's actual Board expenditures totaled

$284,894. The reduced assessment rate is expected to result in an

operating reserve of $257,497, which is about equal to what the Board

actually spent last year for program expenses.

The Board discussed lower assessment rates, but decided that an

assessment rate of less than $0.004 would not generate the income

necessary to administer the program with an adequate reserve. Major

expenses recommended by the Board for the 1997-98 marketing year

include $46,864 for personal service (salaries and benefits), $5,640

for rent, $5,000 for compliance, $17,000 for a crop survey, $269,000

for promotion, and $182,364 for an emergency fund. Budgeted expenses

for these items in 1996-97 were $50,020, $5,640, $5,000, $15,000,

$275,000, and $182,364, respectively. The Board will consider using

emergency funds for authorized activities when it is reasonably certain

that its estimate of assessable hazelnuts is reached. It will not be

able to make this determination until December 1997, the month in which

the hazelnut harvest and deliveries to handlers usually are completed.

Thus, any decision on whether or not to undertake any additional

activities will not be made until December 1997, at the earliest.

The assessment rate recommended by the Board was derived by

dividing anticipated expenses by expected shipments of hazelnuts. With

hazelnut shipments for the year estimated at 70,000,000 pounds, the

$0.004 per pound assessment rate should provide $280,000 in assessment

income. Income derived from handler assessments, along with interest

and funds from the Board's authorized reserve, will be adequate to

cover budgeted expenses. Funds in the reserve will be kept within the

maximum permitted by the order.

The assessment rate established in this rule will continue in

effect indefinitely unless modified, suspended, or terminated by the

Secretary upon recommendation and information submitted by the Board or

other available information.

Although this assessment rate is effective for an indefinite

period, the Board will 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 the Department.

Board meetings are open to the public and interested persons may

express their views at these meetings. The Department will evaluate

Board recommendations and other available information to determine

whether modification of the assessment rate is needed. Further

rulemaking will be undertaken as necessary. The Board's 1997-98 budget

and those for subsequent marketing years will be reviewed and, as

appropriate, approved by the Department.

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 initial 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 the 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 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 hazelnut producers and handlers may be

classified as small entities.

This rule decreases the assessment rate established for the Board

and collected from handlers for the 1997-98 and subsequent marketing

years. The Board unanimously recommended 1997-98 expenditures of

$553,218 and an assessment rate of $0.004 per pound of hazelnuts. The

assessment rate of $0.004 is $0.003 less than the rate currently in

effect. At the current assessment rate of $0.007 per pound, the Board's

reserve was projected to exceed the level the Board believed to be

adequate to administer the program. Therefore, the Board voted to lower

its assessment rate and use more of the reserve to cover its expenses.

Section 982.62 of the order allows the Board to establish and maintain

an operating

[[Page 53227]]

monetary reserve in an amount not to exceed approximately one marketing

year's operational expenses. Last year's actual Board expenditures

totaled $284,894. The reduced assessment rate is expected to result in

an operating reserve of $257,497, which is about equal to what the

Board actually spent last year for program expenses.

The Board discussed alternatives to this rule, including

alternative expenditure levels. Lower assessment rates were considered,

but not recommended because they would not generate the income

necessary to administer the program with an adequate reserve. Major

expenses recommended by the Board for the 1997-98 marketing years

include $46,864 for personal services (salaries and benefits), $5,640

for rent, and $5,000 for compliance, $17,000 for a crop survey,

$269,000 for promotion, and $182,364 for an emergency fund. Budgeted

expenses for these items in 1996-97 were $50,020, $5,640, $5,000,

$15,000, $275,000, and $182,364, respectively. As mentioned earlier,

the Board will not make any decision on using emergency funds until

December 1997, at the earliest.

Hazelnut shipments for the year are estimated at 70,000,000 pounds,

which should provide $280,000 in assessment income. Income derived from

handler assessments, along with interest and funds from the Board's

authorized reserve, will be adequate to cover budgeted expenses. Funds

in the reserve will be kept within the maximum permitted by the order.

Recent price information indicates that the grower price for the

1997-98 marketing season will range between $0.32 and $0.43 per pound

of hazelnuts. Therefore, the estimated assessment revenue for the 1997-

98 marketing years as a percentage of total grower revenue will range

between .93 and 1.25 percent.

This action will reduce the assessment obligation imposed on

handlers. While this rule will impose some additional costs on

handlers, the costs are minimal and in the form of uniform assessments

on all handlers. Some of the additional costs may be passed on to

producers. However, these costs will be offset by the benefits derived

by the operation of the marketing order. In addition, the Board's

meeting was widely publicized throughout the 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

August 28, 1997, 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 information on the regulatory

and informational impacts of this action on small businesses.

This action will not impose any additional reporting or

recordkeeping requirements on either small or large 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.

The Department has not identified any relevant Federal rules that

duplicate, overlap, or conflict with this rule.

After consideration of all relevant matter presented, including the

information and recommendation submitted by the Board and other

available information, it is hereby found that this rule, as

hereinafter set forth, will tend to effectuate the declared policy of

the Act.

Pursuant to 5 U.S.C. 553, it is also found and determined upon good

cause that it is impracticable, unnecessary, and contrary to the public

interest to give preliminary notice prior to putting this rule into

effect, and that good cause exists for not postponing the effective

date of this rule until 30 days after publication in the Federal

Register because: (1) This action reduces the current assessment rate

for hazelnuts; (2) the 1997-98 marketing year began on July 1, 1997,

and the marketing order requires that the rate of assessment apply to

all assessable hazelnuts handled during such marketing year; (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 past years; and (4) this interim final rule provides

a 60-day comment period, and all comments timely received will be

considered prior to finalization of this rule.

List of Subjects in 7 CFR Part 982

Marketing agreements, Hazelnuts, Reporting and recordkeeping

requirements.

For the reasons set forth in the preamble, 7 CFR part 982 is

amended as follows:

PART 982--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.

Sec. 982.340 [Amended]

2. Section 982.340 is amended by removing the words ``July 1,

1996,'' and adding in their place the words ``July 1, 1997,'' and by

removing ``$0.007'' and adding in its place ``$0.004.''

Dated: October 7, 1997.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 97-27101 Filed 10-10-97; 8:45 am]

BILLING CODE 3410-02-P