[Federal Register Volume 62, Number 128 (Thursday, July 3, 1997)]
[Proposed Rules]
[Pages 36020-36022]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-17507]


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 Proposed Rules
                                                 Federal Register
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 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. 62, No. 128 / Thursday, July 3, 1997 / 
Proposed Rules  

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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.

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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