Tart Cherries Grown in the States of Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and Wisconsin; Assessment Rate and Establishment of Late Payment and Interest Charges on Delinquent Assessments

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Docket No. FV97-930-1PR]

Tart Cherries Grown in the States of Michigan, New York,

Pennsylvania, Oregon, Utah, Washington, and Wisconsin; Assessment Rate

and Establishment of Late Payment and Interest Charges on Delinquent

Assessments

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: This rule proposes the establishment of an assessment rate for

the 1997-98 and subsequent fiscal periods to cover expenses incurred by

the Cherry Industry Administrative Board (Board) under Marketing Order

No. 930. This rule also proposes the establishment of an interest rate

and late payment charge on delinquent assessments owed by handlers

under the tart cherry marketing order. Authorization to assess tart

cherry handlers would enable the Board to incur expenses that are

reasonable and necessary to administer the program. The interest rate

and late payment charges would contribute to the efficient operation of

the program by ensuring adequate funds are available to cover budgeted

expenses incurred under the marketing order.

DATES: Comments received by August 4, 1997, will be considered prior to

issuance of a final rule.

ADDRESSES: Interested persons are invited to submit written comments

concerning this proposed rule. Comments must be sent in triplicate to

the Docket Clerk, Fruit and Vegetable Division, AMS, USDA, P.O. Box

96456, room 2525-S, 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: Patricia A. Petrella, Marketing

Specialist, or Kenneth G. Johnson, Regional Manager, DC Marketing Field

Office, Marketing Order Administration Branch, Fruit and Vegetable

Division, AMS, USDA, P.O. Box 96456, room 2525-S, 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, P.O. Box 96456, room 2525-S,

Washington, DC 20090-6456; telephone (202) 720-2491; FAX # (202) 720-

5698.

SUPPLEMENTARY INFORMATION: This proposed rule is issued under Marketing

Agreement and Order No. 930 (7 CFR part 930), regulating the handling

of tart cherries grown in the States of Michigan, New York,

Pennsylvania, Oregon, Utah, Washington, and Wisconsin, 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 proposed

rule in conformance with Executive Order 12866.

This proposed rule has been reviewed under Executive Order 12988,

Civil Justice Reform. Under the marketing order now in effect, tart

cherry 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 tart cherries beginning July 1, 1997, and continuing until

amended, suspended, or terminated. This proposed rule would 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. 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 invites comments on establishing an assessment rate for

the Board for the 1997-98 (July 1, 1997, through June 30, 1998) and

subsequent crop years at $0.0025 per pound of tart cherries. This rule

also invites comments on establishing interest and late payment charges

on past due assessments.

The tart cherry marketing order provides authority to the Board,

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

expenses and collect assessments from handlers to administer the

program under the order. The members of the Board are producers and

handlers of tart cherries. 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.

The Board met on January 8 and 9, 1997, and unanimously recommended

expenditures of $650,000 for an 18-month period ending June 30, 1998,

and an assessment rate of $0.0025 per pound of tart cherries. This was

the first public meeting of the newly formed Board. The tart cherry

marketing order became effective on September 25, 1996. The Department

has approved the Board's 1997-98 budget of expenses. Until assessment

income is available, the Board has obtained funds through a lending

institution to fund Board operations.

As proposed, the Board would begin to assess handlers on July 1,

1997, and all assessments would be due to the Board office by October

1. Major expenditures recommended by the

[[Page 36021]]

Board for the 18-month period ending June 30, 1998, are $25,000 for

interest, Board meeting expenses $175,000, salaries $150,000,

administration $100,000, and compliance $200,000. The assessment rate

recommended by the Board was derived by dividing anticipated expenses

by expected shipments of tart cherries. Tart cherry shipments for the

1997-98 year are estimated at 260 million pounds which should provide

$650,000 in assessment income. Funds in any reserve would be kept

within the maximum permitted by the order.

The Board also recommended establishing an interest rate of 12

percent per annum and a late payment charge equal to 10 percent of the

unpaid balance of the assessment amount due. The interest rate would be

applied to any assessment not paid within 30 days of the October 1 due

date. The late payment fee on the unpaid assessment balance by a

handler would be assessed 90 days after the October 1 due date.

Under section 930.41 of the order, each person who first handles

tart cherries is required to pay a pro-rata share of the cost of

administering the program. This cost is in the form of a uniform

assessment rate applied to each handler's acquisitions.

Section 930.41 also provides that if a handler does not pay an

assessment within the time prescribed by the Board, the assessment may

be subject to an interest or late payment charge, or both.

A new section 930.141 is proposed to be established in the rules

and regulations that specifies that assessments be subject to an

interest charge of 1 percent per month on any unpaid assessment balance

beginning 30 days from the due date prescribed by the Board. The Board

recommended that all assessments be paid by October 1 of each crop

year. Assessments equal to 100 percent of the crop year's assessment

obligation would be due on October 1.

Assessments are the main source of funds to pay Board expenses. The

failure of handlers to pay assessment obligations promptly results in

added expense and operational problems for the Board. Authority was

placed in the order to levy interest and late payment charges on

delinquent assessments. The interest rate and late payment charges

proposed herein are similar to those established under other marketing

orders. To attempt to collect delinquent assessments, the Board could

incur the added expense of sending out additional invoices and

contacting each delinquent handler by phone, in person, or by fax.

Nonpayment or late payment of assessments hampers the operation of the

Board.

Handlers would have ample time to pay their assessments and avoid

incurring the additional charges. Any amount paid by the handler would

be credited upon receipt in the Board office.

Interest and late payment charges would provide incentive for

handlers to remit assessments in a timely manner, with the intent of

creating a fair and equitable process among all industry handlers. It

would not impose any costs on handlers who pay their assessments on

time, and should contribute to the efficient administration of the

program.

The Board discussed alternatives when recommending the interest

rate and late payment charge. The Board discussed lower rates, but

decided that prompt payment of assessments by handlers is crucial to

the operation of this program. Therefore, the Board recommended an

interest rate and late payment charge deemed to be sufficient to serve

as an incentive to handlers to be prompt with their payment of

assessments.

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 1,220 producers of tart cherries in the

production area and approximately 40 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 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 tart cherry producers and handlers may be

classified as small entities.

This rule proposes establishing an assessment rate for the 1997-98

and subsequent fiscal periods to cover expenses of the Board at $0.0025

per pound of tart cherries. The Board unanimously recommended

expenditures for the 18-month period ending June 30, 1998, of $650,000.

Tart cherry shipments for the year are estimated at 260 million pounds

which should provide $650,000 in assessment income. Income derived from

handler assessments would be adequate to cover budgeted expenses. Funds

in any reserve would be kept within the maximum permitted under the

order.

The Board discussed alternatives when recommending the interest

rate and late payment charge. The Board discussed lower rates, but

decided that prompt payment of assessments by handlers is crucial to

the operation of this program. Therefore, the Board recommended an

interest rate and late payment charge deemed to be sufficient to serve

as an incentive to handlers to be prompt with their payment of

assessments.

Major expenditures recommended for the 18-month period ending June

30, 1998, include $25,000 for interest, $175,000 for Board meeting

expenses, $150,000 for salaries, $100,000 for administration and

$200,000 for program compliance. The $200,000 for compliance is deemed

necessary in the event volume control regulations are implemented

during the 1997-98 season. The Board discussed setting an assessment

rate that would allow for sufficient operation of a volume control

program for the upcoming season. The Board decided that the assessment

rate recommended would sufficiently cover all initial costs of

implementing this new order. With regard to alternatives, this is a new

marketing order that will begin its first full fiscal year of

operations on July 1 of this year. Accordingly, we believe that since

the recommended assessment rate would allow funds to be available to

cover the initial costs of implementing the new order, including

operation of a volume control program for the upcoming season, if

implemented, the assessment rate should be proposed as recommended by

the Board.

This action would not impose any additional reporting or

recordkeeping on either small or large tart cherry 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 new forms for

the operation of the order have been approved by the Office of

Management and Budget (OMB) and have been assigned OMB No. 0581-0177.

The interest and late payment charges were also discussed at a

public meeting. The Board believes the interest charge is a reasonable

rate. The late payment fee is high enough to discourage late

[[Page 36022]]

payments and encourage the timely payment of assessments by handlers.

This rule would provide incentive for handlers to remit assessments

in a timely manner, with the intent of creating a fair and equitable

process among all industry handlers. It would not impose any costs on

handlers who pay their assessments on time, and should contribute to

the efficient administration of the program.

Handlers who do not pay their assessments on time would be able to

reap the benefits of Board programs at the expense of others. In

addition, they would be able to utilize funds for their own use that

should otherwise be paid to the Board to finance Board programs. In

effect, this would provide handlers with an interest free loan.

Implementing interest and late payment charges would provide an

incentive for handlers to pay assessments on time, which would improve

compliance with the order. It would minimize actions taken against

handlers who fail to pay assessments on time through administrative

remedies or the Federal courts. These remedies, currently the only

recourse against handlers who fail to pay assessments, can be costly

and time consuming. This rule would remove any economic advantage

gained by those handlers who do not pay on time, thus helping to ensure

a program that is equitable to all. This is also consistent with

standard business practices.

While this proposed rule would impose some additional costs on

handlers, the costs are in the form of uniform assessments on all

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

However, these costs would be offset by the benefits derived by the

operation of the marketing order.

The Department has not identified any relevant Federal rules that

duplicate, overlap, or conflict with this proposed rule. In addition,

the Board's meeting was widely publicized throughout the tart cherry

industry and all interested persons were invited to attend the meeting

and participate in Board deliberations on all issues. Like all

Committee meetings, the January 8 and 9, 1997, meeting was a public

meeting and all entities, both large and small, were able to express

views on these issues. Finally, interested persons are invited to

submit information on the regulatory and informational impacts of this

proposed action on small businesses.

The assessment rate, interest rate and late payment charge proposed

to be established in this rule would 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 the assessment rate, interest rate and late payment charge

would be effective for an indefinite period, the Board would continue

to meet prior to or during each fiscal period to recommend a budget of

expenses and consider recommendations for modification of the

assessment and interest rates and late payment charge. 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 would evaluate

Board recommendations and other available information to determine

whether modification of the assessment or interest rates or late

payment charge is needed. Further rulemaking would be undertaken as

necessary. The Board's 1997-98 budget has already been approved by the

Department to allow the Board to expend funds that they have borrowed.

Budgets for subsequent fiscal periods would be reviewed and, as

appropriate, approved by the Department.

A 30-day comment period is provided to allow interested persons to

respond to this proposal. All written comments timely received will be

considered before a final determination is made on this matter.

List of Subjects in 7 CFR Part 930

Marketing agreements, Tart cherries, Reporting and recordkeeping

requirements.

For the reasons set forth in the preamble, 7 CFR part 930 is

proposed to be amended as follows:

PART 930--TART CHERRIES GROWN IN THE STATES OF MICHIGAN, NEW YORK,

PENNSYLVANIA, OREGON, UTAH, WASHINGTON, AND WISCONSIN

1. The authority citation for 7 CFR part 930 continues to read as

follows:

Authority: 7 U.S.C. 601-674.

2. A new subpart--Administrative Rules and Regulations and a new

section 930.141 are added to read as follows:

Subpart--Administrative Rules and Regulations

Sec. 930.141 Delinquent assessments.

Pursuant to Sec. 930.41, the Board shall impose an interest charge

on any handler whose assessment payment has not been paid within 30

days from the due date of October 1 of each crop year. The interest

rate shall be a rate of one percent per month and shall be applied to

the unpaid assessment balance for the number of days all or any part of

the unpaid balance is delinquent beyond the 30 day payment period. In

addition to the interest charge, the Board shall impose a late payment

charge on any handler whose payment has not been paid within 90 days

from the due date of October 1. The late payment charge shall be 10

percent of the unpaid balance.

3. A new subpart--Assessment Rates and a new Sec. 930.200 are added

to read as follows:

Subpart--Assessment Rate

Sec. 930.200 Assessment rate.

On and after July 1, 1997, an assessment rate of $0.0025 per pound

is established for tart cherries grown in the production area.

Dated: June 27, 1997.

Robert C. Keeney,

Director, Fruit and Vegetable Division.

[FR Doc. 97-17507 Filed 7-2-97; 8:45 am]

BILLING CODE 3410-02-P