Hazelnuts Grown in Oregon and Washington; Increased Assessment Rate, 39369-39371 [2017-17488]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[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: https://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: https://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: 

DaleJ.Novotny@ams.usda.gov or GaryD.Olson@ams.usda.gov.

    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: Richard.Lower@ams.usda.gov.



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: https://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