[Federal Register Volume 63, Number 56 (Tuesday, March 24, 1998)]
[Rules and Regulations]
[Pages 14021-14024]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-7512]



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  Federal Register / Vol. 63, No. 56 / Tuesday, March 24, 1998 / Rules 
and Regulations  

[[Page 14021]]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Docket No. FV97-930-1 FIR]


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: Final rule.

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SUMMARY: The Department of Agriculture (Department) is adopting, as a 
final rule, with modifications, the provisions of an interim final rule 
that established 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. That rule 
also established an interest rate and late payment charge on delinquent 
assessments owed by handlers under the tart cherry marketing order. The 
Board is responsible for local administration of the marketing order. 
Authorization to assess tart cherry handlers will enable the Board to 
incur expenses that are reasonable and necessary to administer the 
program. The interest rate and late payment charges will contribute to 
the efficient operation of the program by ensuring adequate funds are 
available to cover budgeted expenses incurred under the marketing 
order. The 1997-98 fiscal period covers the period July 1, through June 
30. The assessment rate will remain in effect indefinitely unless 
modified, suspended, or terminated.

EFFECTIVE DATE: April 23, 1998.

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 
Programs, AMS, USDA, P.O. Box 96456, room 2525-S, Washington, DC 20090-
6456; telephone:(202) 720-2491, Fax: (202) 205-6632. Small businesses 
may request information on compliance with this regulation 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) 205-
6632.

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 rate 
as issued herein will be applicable to all assessable tart cherries 
beginning July 1, 1997, and continuing 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.
    The tart cherry marketing order in section 930.31 provides that one 
of the duties of the Board is to submit to the Secretary a budget for 
each fiscal period, prior to the beginning of such period, including a 
report explaining the items appearing therein and a recommendation as 
to the rates of assessments for such period. The recommendations 
concerning the proposed assessment rate are discussed in a public 
meeting. Thus, all directly affected persons have an opportunity to 
participate and provide input.
    At its meeting on January 8 and 9, 1997, the Board unanimously 
recommended expenditures of $650,000, and an assessment rate of $0.0025 
per pound of tart cherries handled during the 1997-1998 crop year and 
subsequent crop years. The recommended expenditure figure covers 
expenses for the 1997-98 fiscal period, as well as expenses incurred in 
connection with the start-up of the program beginning on January 1, 
1997, when the first public meeting of the newly formed Board took 
place. The tart cherry marketing order became effective on September 
25, 1996. The Department has approved the Board's 1997-98 budget of 
expenses.
    The Board assessed handlers after the effective date of the interim 
final rule concerning assessments, and all assessments were due to the 
Board office by November 30, 1997, for this season only. Future 
assessment payments will be due to the Board office by October 1 of 
each crop year. Major expenditures recommended by the Board for the 
1997-98 fiscal period, ending June 30, 1998, and expenditures for the 
prior six months, are $25,000 for interest, $175,000 for Board meeting 
expenses, $150,000 for salaries, $100,000 for administration, and 
$200,000 for compliance. For the six month period from January 1, 1997, 
through June 30, 1997, the expenses were $59,000.
    The order provides that when an assessment rate based on the number 
of

[[Page 14022]]

pounds of 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 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.
    This rule continues an assessment rate for the 1997-98 and 
subsequent fiscal periods at $0.0025 per pound of tart cherries used in 
the production of tart cherry products other than juice, juice 
concentrate and puree, and $0.00125 per pound for cherries used for 
juice, juice concentrate and puree. The Department inadvertently stated 
in the preamble of the interim final rule and in the regulatory text 
itself that the assessment rate for cherries used for juice, juice 
concentrate and puree shall be $0.0125. Such rate should be one half of 
$0.0025 which is $0.00125. Such error has been corrected in this rule.
    Data from the National Agricultural Statistics Service (NASS) 
states that for 1996, tart cherry utilization for juice, wine or brined 
uses was 8.0 million pounds for all districts covered under the 
marketing order. The total processed amount of tart cherries for the 
1996 crop year was 256.1 million pounds. Juice, wine, or brined 
represents about 3 percent of the total processed crop. Data for this 
season (1997-98) is not available at this time. However, based on the 
data from the previous season, it seems that juice, juice concentrate 
and puree represent a very small percentage of the crop. Therefore, a 
reduced assessment rate for cherries used in such products should have 
an insignificant effect on the monies collected for assessments this 
season.
    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 crop year were estimated at 260 
million pounds and were projected to provide $650,000 in assessment 
income which, along with interest income, should have been adequate to 
cover budgeted expenses. At this time, actual production figures are 
available. Crop production for the 1997-98 season is now projected at 
278,989,653 pounds. Assessment income, based on this crop, will be 
adequate to cover this year's expenses. Funds in any reserve will be 
kept within the current approximately one year's operational expenses 
permitted by the order (Sec. 930.42(a)).
    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 made subject to an interest or late payment charge, or both.
    This final rule continues an interest rate of 1 percent per month 
and a late payment charge equal to 10 percent of the unpaid balance of 
the assessment amount due. The interest rate will be applied to any 
assessment not paid by the October 1 due date. For the 1997-98 crop 
year only, the assessment due date was November 30. Any interest charge 
for late assessment payments accrued 30 days after the November 30 due 
date and any late fee accrued 90 days after that date. The late payment 
fees on an unpaid assessment balance by a handler will be assessed 90 
days after the October 1 due date for future seasons.
    Section 930.41(a) of the marketing order provides for the payment 
by handlers of a pro-rata share of the cost of administering the 
program under the order. The payment is in the form of a uniform 
assessment rate applied to each handler's cherry acquisitions. In 
addition, section 930.41(f) provides that assessments will be 
calculated on the basis of pounds handled provided that the formula 
adopted by the Board and approved by the Secretary for determining the 
rate of assessment will compensate for differences in the number of 
pounds of cherries utilized for various cherry products and the 
relative market values of such cherry products.
    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 in 
this final rule are similar to those established under other marketing 
orders. In collecting delinquent assessments, the Board would 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.
    Any amount paid by the handler will be credited upon receipt in the 
Board office. Interest and late payment charges will 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. 
They will not impose any costs on handlers who pay their assessments on 
time, and will contribute to the efficient administration of the 
program.
    In its deliberations, the Board discussed lower rates when 
recommending the interest rate and late payment charge but decided that 
prompt payment of assessments by handlers was crucial to the operation 
of the 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.
    A proposed rule concerning this action was published in the Federal 
Register on July 3, 1997 (62 FR 36020). An interim final rule was 
issued by the Department on October 17, 1997, and published in the 
Federal Register on Thursday, October 23, 1997 (62 FR 55146). The rule 
addressed the comments concerning the proposed rule and was made 
available through the Internet by the Office of the Federal Register. A 
60-day comment period, which ended on December 22, 1997, was provided 
to allow interested persons to respond to a modification of the 
proposed rule. The modification provided a different rate of assessment 
for cherries used for juice, juice concentrate, or puree.
    One comment was received during the comment period in response to 
the interim final rule. That comment is discussed later in this rule.

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 
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 impacts.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that the small businesses 
will not be unduly or disproportionately burdened. Marketing orders 
issued pursuant to the

[[Page 14023]]

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 continues 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 used in the production of tart cherry products 
other than juice, juice concentrate and puree, and $0.00125 per pound 
for cherries used in the production of juice, juice concentrate and 
puree.
    The Board unanimously recommended expenditures of $650,000 for 
expenses incurred during the 1997-98 fiscal period as well as for those 
incurred during the start-up period beginning January 1, 1997. From 
January 1, 1997, through June 30, 1997, the expenses for this six month 
period was $59,000. The expenses for the 1997-98 fiscal period are 
projected at $591,000. Tart cherry shipments for the year were 
estimated at 260 million pounds, which would have provided $650,000 in 
assessment income (260,000,000 pounds at $0.0025 per pound) and would 
have been adequate to cover this year's expenses. At this time, actual 
production figures are available. Crop production for the 1997-98 
season is 278,989,653 pounds, which, even with the reduced assessment 
rate for cherries used in juice, juice concentrate, and puree, will 
provide adequate assessment income to cover this year's expenses. Funds 
in any reserve will be kept within the current approximately one year's 
operational expenses permitted by the order (Sec. 930.42(a)).
    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 the 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 in 
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 was 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. With regards to alternatives, this 
rate may be adjusted by the Secretary, if necessary. Accordingly, the 
Department believes that since the assessments are necessary to make 
funds available to cover the initial costs of implementing the new 
order, including operation of a volume control program for this season, 
the assessment rate will be as recommended by the Board, and modified 
by the Department.
    This action will 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 forms for the 
operation of the order have been previously 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 reasonable. 
The late payment charge is high enough to discourage late payments and 
encourage the timely payment of assessments by handlers.
    This final rule continues to provide an 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 will not 
impose any costs on handlers who pay their assessments on time, and 
will 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 
will otherwise be paid to the Board to finance Board programs. In 
effect, this would provide handlers with an interest free loan.
    Continuation of the interest and late payment charges will provide 
an incentive for handlers to pay assessments on time, which will 
improve compliance with the order. It should help minimize actions 
taken against handlers who fail to pay assessments on time through 
administrative remedies or the Federal courts. This final rule will 
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 final rule will impose some 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 
will be offset by the benefits derived by the operation of the 
marketing order.
    This final rule will not impose any 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 final 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 Board 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 were invited to submit information on the 
regulatory and informational impacts of this final rule on small 
businesses, and none were received on this issue.
    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 the 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. The assessment rate, interest rate and late payment charge 
established in this final 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 rate, interest rate and late payment charge 
will be effective for an indefinite period, the Board will continue to 
meet prior to or

[[Page 14024]]

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 will 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 will be reviewed and, as appropriate, approved by the 
Department.
    One comment concerning the interim final rule was received. The 
commenter urged the Department to not assess cherries used in juice, 
juice concentrate, or puree at a different rate. The commenter stated 
that the Board considered the differences in the number of pounds of 
cherries utilized for various cherry products and the relative market 
value of such cherry products in its recommendation. The Board 
unanimously recommended that because raw product values for the past 
years have been relatively equal for most product uses the assessments 
should be based on a single assessment rate for all raw products 
delivered. The commenter also stated that the Board considered the 
appropriate factors when it needed to consider the recommended 
assessment rate, and recommended that a dual assessment rate should not 
be imposed.
    The commenter further stated that the proponent's original proposal 
for a tart cherry marketing order contained provisions for storage 
assessments. According to the commenter, the discussion in the record 
of the administrative proceeding to formulate the order concerning dual 
assessments relates to high and low value fruit as a consequence of 
these different costs of storage. The Department, during the 
promulgation process, concluded that a collection of a storage 
assessment would not be equitable to the industry as a whole and 
therefore such assessment was not included in the order since 
nonregulated districts would not incur storage expenses. Therefore, the 
commenter stated that the discussion on high and low value fruit is no 
longer relevant and it is improper and inconsistent for the Department 
to rely on such testimony to require a dual assessment rate.
    The Department issued the rule to reflect the intent of Sec. 930.41 
of the order which states that assessments will be calculated on the 
basis of pounds of cherries handled. The order further states that the 
formula adopted by the Board and approved by the Secretary for 
determining the rate of assessment will compensate for differences in 
the number of pounds of cherries utilized for various cherry products 
and the relative market values of such cherry products. The proponents 
of the order testified during promulgation of the order that there 
should be different assessment rates by providing exhibits of how such 
assessment rates would work based on the relative market value of 
products. Therefore, this part of the comment is denied.
    The commenter also stated that no grace period was recommended 
under the interest and late payment charge provision. The Department 
included a 30-day grace period which would allow assessments due on 
October 1 to be paid as late as October 31 without incurring interest 
and late payment charges. The commenter stated that handlers' financial 
officers would clearly take advantage of this 30-day grace period and 
not pay assessments until October 31. However, the Board's period of 
heaviest expense is the summer months when harvest is underway and 
compliance activities are at their peak. If reserves are not available, 
the Board would have to borrow money to operate. It is therefore 
important that assessments be paid on the October 1 date as recommended 
by the Board.
    Based on this comment, the Department is modifying the date when 
the interest rate begins to accrue by excluding the 30-day grace 
period. Therefore, starting with the 1998-99 crop year, assessments 
will be due on October 1 and interest will begin to accrue after 
October 1 on any unpaid assessment balance.
    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.

List of Subjects in 7 CFR Part 930

    Marketing agreements, Reporting and recordkeeping requirements, 
Tart cherries.

    Accordingly, the interim final rule amending 7 CFR part 930 which 
was published at 62 FR 55146 on October 23, 1997, is adopted as a final 
rule with the following changes:

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 930.141 is amended by revising paragraph (a) and by 
removing and reserving paragaph (b) to read as follows:


Sec. 930.141  Delinquent assessments.

    (a) Pursuant to Sec. 930.41, the Board shall impose an interest 
charge on any handler whose assessment payment has not been received by 
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 
not paid by the October 1 due date. In addition to the interest charge, 
the Board shall impose a late payment charge on any handler whose 
assessment payment has not been received within 90 days from the due 
date of October 1. The late payment charge shall be 10 percent of the 
unpaid balance.
    3. Section 930.200 is revised to read as follows:


Sec. 930.200  Handler assessment rate.

    On and after the effective date of this rule, the assessment rate 
imposed on handlers shall be $0.0025 per pound of cherries handled 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 utilized in the 
production of juice, juice concentrate, and puree products shall be 
$0.00125 per pound. The assessment due date shall be October 1 of each 
crop year.

    Dated: March 18, 1998.
Robert C. Kenney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-7512 Filed 3-23-98; 8:45 am]
BILLING CODE 3410-02-P