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

Federal RegisterOct 29, 1999

Ask Donna

What actually matters in this document.

Text

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Docket No. FV99-930-3 FR]

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

Assessment Rates

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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

SUMMARY: The Department of Agriculture (Department) is adopting, as a

final rule, without change, the provisions of an interim final rule

which decreased 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 per pound to $0.00225 per pound. The

interim final rule also decreased the assessment rate for cherries

utilized for juice, juice concentrate, or puree from $0.00125 per pound

to $0.001125 per pound. Both assessment rates are established for the

Cherry Industry Administrative Board (Committee) 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 began July 1 and ends June 30. The assessment rate

will remain in effect indefinitely unless modified, suspended, or

terminated.

EFFECTIVE DATE: November 29, 1999.

FOR FURTHER INFORMATION CONTACT: Patricia A. Petrella or Kenneth G.

Johnson, Marketing Order Administration Branch, Fruit and Vegetable

Programs, AMS, USDA, room 2530-S, P.O. 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, 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, 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, P.O. Box 96456, room 2525-S, Washington, DC 20090-

6456; telephone (202) 720-2491; Fax: (202) 720-5698, or E-mail:

Jay.G[email protected].

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing

Agreement and Order No. 930, both as amended (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 rate

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 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 continues in effect a decrease in 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 also was decreased from

$0.00125 per pound 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 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 1997-98 fiscal period, the Board recommended, and the

Department approved, an assessment rate 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 $497,780 and an assessment rate of $0.00225

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

cherry products other

[[Page 58324]]

than juice, juice concentrate, or puree, and an assessment rate of

$0.001125 per pound of 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 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

crop year 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 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). 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 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 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 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 rule on small entities and has prepared this

final regulatory flexibility analysis. The Regulatory Flexibility Act

(RFA) would allow 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 opt for such certification, but rather

perform 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 marketing order and 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 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 continues in effect decreases in 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 $497,780 and the reduced assessment rates.

The quantity of assessable tart cherries for 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.

[[Page 58325]]

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. 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.