Tart Cherries Grown in the States of Michigan, et al.; Decreased Assessment Rates

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Docket No. FV99-930-3 IFR]

Tart Cherries Grown in the States of Michigan, et al.; Decreased

Assessment Rates

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule decreases the assessment rate for cherries that are

utilized in the production of tart cherry products other than juice,

juice concentrate, or puree from $0.0025 to $0.00225 per pound. It also

decreases the assessment rate for cherries utilized for juice, juice

concentrate, or puree from $0.00125 to $0.001125 per pound. Both

assessment rates are established for the Cherry Industry Administrative

Board (Board) under Marketing Order No. 930 for the 1999-2000 and

subsequent fiscal periods. The Board is responsible for local

administration of the marketing order which regulates the handling of

tart cherries grown in the production area. Authorization to assess

tart cherry handlers enables the Board to incur expenses that are

reasonable and necessary to administer the program. The fiscal period

begins July 1 and ends June 30. The assessment rates will remain in

effect indefinitely unless modified, suspended, or terminated.

DATES: Effective July 28, 1999. Comments received by September 27,

1999, 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 to the Docket Clerk, Fruit

and Vegetable Programs, AMS, USDA, room 2525-S, PO Box 96456,

Washington, DC 20090-6456; Fax: (202) 720-5698; or E-mail:

[email protected]. 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 or Kenneth G.

Johnson, Marketing Order Administration Branch, Fruit and Vegetable

Programs, AMS, USDA, room 2530-S, PO Box 96456, Washington, DC 20090-

6456, telephone: (202) 720-2491; or George Kelhart, Technical Advisor,

Marketing Order Administration Branch, Fruit and Vegetable Programs,

AMS, USDA, room 2525-S, PO Box 96456, Washington, DC 20090-6456;

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

request information on complying with this regulation, or obtain a

guide on complying with fruit, vegetable, and specialty crop marketing

agreements and orders by contacting Jay Guerber, Marketing Order

Administration Branch, Fruit and Vegetable Programs, AMS, USDA, PO Box

96456, room 2525-S, Washington, DC 20090-6456; telephone (202) 720-

2491; Fax: (202) 720-5698, or E-mail: Jay.G[email protected]. You may

also view the marketing agreement and order small business compliance

guide at the following web site: http://www.ams.usda.gov/fv/moab.html.

SUPPLEMENTARY INFORMATION: This 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 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, tart cherry

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

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

as issued herein will be applicable to all assessable tart cherries

beginning July 1, 1999, and continue until amended, suspended, or

terminated. 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. 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

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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 1999-2000 and subsequent fiscal periods for cherries that are

utilized in the production of tart cherry products other than juice,

juice concentrate, or puree from $0.0025 to $0.00225 per pound of

cherries. The assessment rate for cherries utilized for juice, juice

concentrate, or puree is decreased from $0.00125 to $0.001125 per

pound.

The tart cherry 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 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 rates. The assessment

rates are formulated and discussed in a public meeting. Thus, all

directly affected persons have an opportunity to participate and

provide input.

For the 1997-98 fiscal period, the Board recommended, and the

Department approved, assessment rates that would continue in effect

from fiscal period to fiscal period 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 March 18-19, 1999, and unanimously recommended

1999-2000 expenditures of $487,780 and an assessment rate of $0.00225

per pound for cherries that are utilized in the production of tart

cherry products other than juice, juice concentrate, or puree, and an

assessment rate of $0.001125 per pound for cherries utilized for juice,

juice concentrate, or puree. In comparison, last year's budgeted

expenditures were $540,000. Decreased assessment rates have been

recommended by the Board because the cherry industry has experienced

record high crops for the past two seasons, and anticipates another

large crop in 1999-2000. In addition, the Board wants to reduce handler

costs and keep its monetary reserve within the authorized maximum of

approximately one year's operational expenses specified in

Sec. 930.42(a). The decreased rates are expected to generate enough

income to meet the Board's reduced operating expenses in 1999-2000.

The major expenditures recommended by the Board for the 1999-2000

fiscal period include $222,780 for personnel, $100,000 for Board

meetings, and $100,000 for compliance. Budgeted expenses for these

items in 1998-99 were $150,000 for personnel, $80,000 for Board

meetings, and $175,000 for compliance.

The order provides that when an assessment rate based on the number

of pounds of tart cherries handled is established, it should provide

for differences in relative market values for various cherry products.

The discussion of this provision in the order's promulgation record

indicates that proponents testified that cherries utilized in high

value products such as frozen, canned, or dried cherries should be

assessed one rate while cherries used to make low value products such

as juice concentrate or puree should be assessed at one-half that rate.

Data from the National Agricultural Statistics Service (NASS)

states that for 1998, tart cherry utilization for juice, wine, or

brined uses was 28.3 million pounds for all districts covered under the

order. The total processed amount of tart cherries for 1998 was 303.8

million pounds. Juice, wine, and brined tart cherries represented less

than 10 percent of the total processed crop, and about 8 percent over

the last three seasons (1996 through 1998).

In deriving the recommended assessment rates, the Board estimated

assessable tart cherry production for the crop year at 260 million

pounds. It further estimated that about 204.5 million pounds of the

assessable poundage would be utilized in the production of high-valued

products, like frozen, canned, or dried cherries, and that about 55.5

million pounds would be utilized in the production of low-valued

products, like juice, juice concentrate, or puree. Potential assessment

income from the high valued products would be approximately $460,125

(204.5 million pounds x $0.00225 per pound). The potential income

from tart cherries utilized for juice, juice concentrate, or puree

would be $62,500 (55.5 million pounds x $0.001125 per pound).

Therefore, total assessment income for 1999-2000 is estimated at

$522,625, which will be adequate to cover budgeted expenses. Funds in

the reserve (currently $225,000) will be kept within the approximately

one year's operational expenses permitted by the order

(Sec. 930.42(a)).

The assessment rates 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 the assessment rates are effective for an indefinite

period, the Board will continue to meet prior to or during each fiscal

period to recommend a budget of expenses and consider recommendations

for modification of the assessment rates. 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 modifications of

the assessment rates are needed. Further rulemaking will be undertaken

as necessary. The Board's 1999-2000 budget and those for subsequent

fiscal periods will be reviewed and, as appropriate, approved by the

Department.

The Regulatory Flexibility Act and Effects on Small Businesses

The Agricultural Marketing Service (AMS) has considered the

economic impact of this action on small entities and has prepared this

initial regulatory flexibility analysis. The Regulatory Flexibility Act

(RFA) allows AMS to certify that regulations do not have a significant

economic impact on a substantial number of small entities. However, as

a matter of general policy, AMS' Fruit and Vegetable Programs

(Programs) no longer opts for such certification, but rather performs

regulatory flexibility analyses for any rulemaking that would generate

the interest of a significant number of small entities. Performing such

analyses shifts the Programs' efforts from determining whether

regulatory flexibility analyses are required to the consideration of

regulatory options and economic or regulatory impacts.

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 40 handlers of tart cherries who are

subject to regulation under the order and

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approximately 900 producers of tart cherries in the regulated area. The

number of reported tart cherry producers in the regulated area has been

reduced from 1,220 to 900 based on more recent information received by

the Board. Small agricultural service firms have been defined by the

Small Business Administration (13 CFR 121.601) as those having annual

receipts less than $5,000,000, and small agricultural producers are

those whose annual receipts are less than $500,000. The majority of

tart cherry handlers and producers may be classified as small entities.

This rule decreases the assessment rate established for the Board

and collected from handlers for the 1999-2000 and subsequent fiscal

periods for cherries that are utilized in the production of tart cherry

products other than juice, juice concentrate, or puree from $0.0025 to

$0.00225 per pound, and the assessment rate for cherries utilized for

juice, juice concentrate, or puree from $0.00125 to $0.001125 per

pound. The Board unanimously recommended 1999-2000 expenditures of

$487,780 and the reduced assessment rates. The quantity of assessable

tart cherries expected to be produced during the 1999-2000 crop year is

estimated at 260 million pounds. Assessment income, based on this crop,

will be adequate to cover budgeted expenses.

The major expenditures recommended by the Board for the 1999-2000

fiscal period include $222,780 for personnel, $100,000 for Board

meetings, and $100,000 for compliance. Budgeted expenses for these

items in 1998-99 were $150,000 for personnel, $80,000 for Board

meetings, and $175,000 for compliance.

The Executive Committee of the Board, after discussing a proposed

budget and assessment rates in executive session, recommended the

continuation of the current rates. It concluded that it was prudent for

the Board to have approximately one year's budget amount in the

operating reserve.

However, after considerable discussion, the Board concluded it

should reduce handlers' assessment costs and that the reserve should

not exceed one-half year's budget amount. Also, the cherry industry has

experienced record large crops for the past two seasons, and

anticipates a large crop for the upcoming season. Further, the amount

budgeted for Board compliance costs has been reduced. The Board

discussed the alternative of continuing the existing assessment rates,

but concluded that would cause the amount in the operating reserve to

exceed what is actually needed.

After the discussion, the Board voted unanimously to decrease the

assessment rates. In deriving the recommended assessment rates, the

Board estimated assessable tart cherry production for the crop year at

260 million pounds. It further estimated that about 204.5 million

pounds of the assessable poundage would be utilized in the production

of high-valued products, like frozen, canned, or dried cherries, and

that about 55.5 million pounds would be utilized in the production of

low-valued products, like juice, juice concentrate, or puree. Potential

assessment income from the high valued products would be approximately

$460,125 (204.5 million pounds x $0.00225 per pound). The potential

income from the tart cherries utilized for juice, juice concentrate, or

puree would be $62,500 (55.5 million pounds x $0.001125 per pound).

Therefore, total assessment income for 1999-2000 is estimated at

$522,625, which will be adequate to cover budgeted expenses. Funds in

the reserve (currently $225,000) will be kept within the approximately

one year's operational expenses permitted by the order

(Sec. 930.42(a)).

This action decreases the assessment obligation imposed on

handlers. Assessments are applied uniformly on all handlers, and some

of the costs may be passed on to producers. However, the assessment

rate decreases reduce the burden on handlers, and may reduce the burden

on producers. 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 Board meetings, the March 18-19, 1999, 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 imposes no additional reporting or recordkeeping

requirements 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 Department has not identified any relevant Federal rules that

duplicate, overlap, or conflict with this rule.

After consideration of all relevant material 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) The 1999-2000 fiscal period began on July 1,

1999, and the marketing order requires that the rates of assessment for

each fiscal period apply to all assessable tart cherries handled during

such fiscal period; (2) this action decreases the assessment rates for

assessable tart cherries beginning on July 1, 1999; (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 930

Marketing agreements, Reporting and recordkeeping requirements,

Tart cherries.

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

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. Section 930.200 is revised to read as follows:

Sec. 930.200 Handler assessment rates.

On and after July 1, 1999, the assessment rate imposed on handlers

shall be $0.00225 per pound for tart cherries grown in the production

area and utilized in the production of tart cherry products other than

juice, juice concentrate, or puree. The assessment rate for tart

cherries grown in the production area and utilized in the production of

juice, juice concentrate, or puree products shall be $0.001125 per

pound. The assessment due date shall be October 1 of each crop year.

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Dated: July 21, 1999.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 99-19062 Filed 7-26-99; 8:45 am]

BILLING CODE 3410-02-U