[Federal Register Volume 67, Number 31 (Thursday, February 14, 2002)]
[Rules and Regulations]
[Pages 6843-6846]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-3635]



[[Page 6843]]

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

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 929

[Docket No. FV01-929-3 FR]


Cranberries Grown in the States of Massachusetts, et al.; 
Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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

SUMMARY: This rule increases the assessment rate established under the 
cranberry marketing order for the 2001-2002 and subsequent fiscal years 
from $.08 to $.18 per barrel of cranberries handled. Currently, funds 
derived from assessments are used to cover expenses incurred by the 
Cranberry Marketing Committee (Committee) in the performance of its 
duties and functions under the order and to fund an export market 
development program. The Committee is responsible for local 
administration of the marketing order which regulates the handling of 
cranberries grown in the production area. The proposed $.10 increase 
will be used to fund a domestic market development program. The fiscal 
year began September 1 and ends August 30. The assessment rate will 
remain in effect indefinitely unless modified, suspended, or 
terminated.

EFFECTIVE DATE: February 15, 2002.

FOR FURTHER INFORMATION CONTACT: Patricia A. Petrella or Kenneth G. 
Johnson, DC Marketing Field Office, Fruit and Vegetable Programs, AMS, 
USDA, Suite 2A04, Unit 155, 4700 River Road, Riverdale, Maryland 20737; 
telephone: (301) 734-5243, Fax: (301) 734-5275; or George Kelhart, 
Technical Advisor, Marketing Order Administration Branch, Fruit and 
Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW STOP 0237, 
Washington, DC 20250-0237; telephone: (202) 720-2491, Fax: (202) 720-
8938.
    Small businesses may request information on complying with this 
regulation by contacting Jay Guerber, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence 
Avenue, SW STOP 0237, Washington, DC 20250-0237; telephone: (202) 720-
2491, Fax: (202) 720-8938, or e-mail: [email protected].

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order 
No. 929, as amended (7 CFR part 929), regulating the handling of 
cranberries grown in Massachusetts, Rhode Island, Connecticut, New 
Jersey, Wisconsin, Michigan, Minnesota, Oregon, Washington, and Long 
Island in the State of New York, hereinafter referred to as the 
``order.'' The order is 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 (USDA) 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, cranberry 
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 cranberries 
beginning September 1, 2001, 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 USDA 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 USDA 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 USDA'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 increases the assessment rate established for the 
Committee for the 2001-2002 and subsequent fiscal years for cranberries 
from $0.08 to $0.18 per barrel of cranberries.
    The cranberry marketing order provides that one of the duties of 
the Committee is to formulate an annual budget of expenses and to 
recommend a rate of assessment necessary to administer the provisions 
of the order. The members of the Committee are producers of 
cranberries. They are familiar with the Committee'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.
    Authority to fix the rate of assessment to be paid by each handler 
and to collect such assessment appears in Sec. 928.41 of the order. In 
addition, Sec. 929.45 of the order provides that the Committee, with 
the approval of USDA, may establish or provide for the establishment of 
production research, marketing research, and market development 
projects designed to assist, improve, or promote the marketing, 
distribution, consumption, or efficient production of cranberries. The 
expense of such projects is paid from funds collected pursuant to 
Sec. 929.41 (Assessments), or from such other funds as approved by 
USDA.
    For the 2000-2001 fiscal year, the Committee recommended, and the 
Department approved, an assessment rate of $.08 per barrel of 
cranberries handled that would continue in effect from fiscal period to 
fiscal period unless modified, suspended, or terminated by USDA upon 
recommendation and information submitted by the Committee or other 
information available to USDA.
    The Committee voted by mail and recommended 2001-2002 expenditures 
of $1,206,772 and an assessment rate of $.18 per barrel of cranberries. 
Six of the eight committee members voted in support of the $.10 per 
barrel increase. Two members did not return their mail ballots to the 
Committee. The assessment rate increase was considered by the Committee 
at an earlier public meeting. The budget for 2001-2002 was recommended 
to the full Committee by the Executive Committee. The major 
expenditures recommended by the Committee for the 2001-2002 fiscal 
period include $846,953 for market development (including $490,000 for 
domestic market development, $273,953 for export market development, 
and $83,000 for export market consulting services), $123,952 for 
administration costs, $129,500 for personnel, $75,000 for Committee 
meetings, and $31,367 for payroll taxes and benefits. Included in the 
budget calculations is about $6,000 interest and $213,953 Market Access 
Program (MAP) funds from USDA's Foreign Agricultural Service (FAS) for 
export market development. Budgeted expenses in the Committee's amended 
2000-2001 budget were $223,647 for administration costs, $270,407 for 
export market development, $71,000 for export market consulting 
services, $119,464 for personnel, and $67,500 for Committee meetings. 
There was no

[[Page 6844]]

domestic market development program for the 2000-2001 fiscal year.
    The Committee recommended the $.10 per barrel increase to fund a 
domestic market development program to increase demand for cranberries 
and cranberry products and thus expand cranberry shipments. Currently, 
supplies are outpacing demand. The Committee believes that a domestic 
market development program is needed to increase consumer awareness of 
the health benefits of cranberries and cranberry products. Currently, 
the Committee funds an export market development program with MAP money 
from FAS.
    Over the past several years, per capita consumption of cranberries 
has averaged 1.68 pounds. Per capita consumption peaked in 1994 at 1.80 
pounds and began trending downward. In 1998, per capita consumption was 
1.67 pounds. Associated with these per capita consumption figures is 
the fact that total domestic sales also peaked in 1994 at 4,692,507 
barrels and declined to 4,506,632 barrels in 1998. However, cranberry 
production reached an all-time high of 6,389,000 barrels in 1999. This 
is a 17 percent increase over 1998 production of approximately 5.4 
million barrels. Available cranberry supplies continue to outpace 
demand, resulting in high levels of carryin inventories and low grower 
prices. Grower returns have fallen 73 percent from 1997 to 2000, 
dropping from $65.90 to $15-$20 per barrel.
    The assessment rate recommended by the Committee was derived by 
estimating the cost of a viable domestic market development program 
($490,000) and then increasing the assessment rate to cover such costs. 
Cranberry shipments are projected at 4.9 million barrels which will 
provide $882,000 in assessment income. Income derived from handler 
assessments, along with interest income, FAS market access program 
funds for export market development, and funds from the Committee's 
authorized reserve will be adequate to cover budgeted expenses expected 
to total $1,206,772 in 2001-2002. Funds in the reserve (currently 
$115,000) will be kept within the approximately one year's operational 
expenses permitted by the order (Sec. 929.42(a)).
    The assessment rate will continue in effect indefinitely unless 
modified, suspended, or terminated by the Secretary upon recommendation 
and information submitted by the Committee or other available 
information.
    Although the assessment rate will be effective for an indefinite 
period, the Committee 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 Committee meetings are available from the Committee or the 
Department. Committee meetings are open to the public and interested 
persons may express their views at these meetings. The Department 
evaluates Committee recommendations and other available information to 
determine whether modification of the assessment rate is needed. 
Further rulemaking would be undertaken as necessary. The Committee's 
2001-2002 budget and those for subsequent fiscal periods will be 
reviewed and, as appropriate, approved by USDA.

Final Regulatory Flexibility Analysis

    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 final 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 rules 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 20 handlers of cranberries who are subject 
to regulation under the order and approximately 1,100 producers of 
cranberries in the regulated area. Small agricultural service firms, 
which includes handlers, are defined by the Small Business 
Administration (13 CFR 121.201) as those having annual receipts of less 
than $5,000,000, and small agricultural producers are defined as those 
having annual receipts of less than $750,000. The majority of cranberry 
handlers and producers may be classified as small businesses.
    This rule increases the assessment rate established for the 
Committee and collected from handlers for the 2001-2002 and subsequent 
fiscal periods from $.08 to $.18 per barrel of cranberries. One barrel 
equals 100 pounds of cranberries.
    The Committee discussed the alternative of continuing the existing 
assessment rate, but concluded that it needed to implement a domestic 
market development program funded through assessments. The assessment 
rate recommended by the Committee was derived by determining the cost 
of a viable domestic market development program ($490,000), and then 
increasing the assessment rate to cover the additional costs. Cranberry 
shipments are projected at 4.9 million barrels which would provide 
$882,000 assessment income. Income derived from handler assessments, 
along with interest income, FAS market access program funds, and funds 
from the Committee's authorized reserve will be adequate to cover 
budgeted expenses. Funds in the reserve (currently $115,000) would be 
kept within the approximately one year's operational expenses permitted 
by the order (Sec. 929.42(a)).
    The major expenditures recommended by the Committee for the 2001-
2002 fiscal period include $846,953 for market development (including 
$490,000 for domestic market development, $273,953 for export market 
development, and $83,000 for export market development consulting 
services), $123,952 for administration costs, $129,500 for personnel, 
$75,000 for Committee meetings, and $31,367 for payroll taxes and 
benefits. Included in the budget calculations is approximately $6,000 
interest and $213,953 MAP funds from FAS for export market development. 
Budgeted expenses in the Committee's amended 2000-2001 budget were 
$223,647 for administration costs, $270,407 for export market 
development, $119,464 for personnel, and $67,500 for Committee 
meetings. There was no domestic market development program for the 
2000-2001 fiscal period.
    This action increases the assessment obligation imposed on 
handlers. While assessments impose some additional costs on handlers, 
the costs are minimal and uniform 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. In addition, the Committee's meeting was widely 
publicized throughout the cranberry industry and all interested persons 
were invited to attend the meeting and participate in Committee 
deliberations on all issues. Like all Committee meetings, all entities, 
both large and small, were able to express views on this issue.
    This rule will impose no additional reporting or recordkeeping 
requirements on either small or large cranberry handlers.
    As with all Federal marketing order programs, reports and forms are 
periodically reviewed to reduce information requirements and

[[Page 6845]]

duplication by industry and public sector agencies.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this rule.
    A proposed rule concerning this action was published in the Federal 
Register on September 21, 2001 (66 FR 48626). Copies of the rule were 
mailed by the Committee's staff to all Committee members and handlers. 
In addition, the rule was made available through the Internet by the 
Office of the Federal Register and USDA. A 15-day comment period ending 
October 9, 2001, was provided to allow interested persons to respond to 
the proposal.
    Eighteen comments were received during the comment period in 
response to the proposal. Nine were received in favor of the proposal 
and nine were in opposition. Most of the comments were received from 
cranberry growers. Comments also were received from the Committee, two 
handlers, and an institute that supports research on the health 
benefits of cranberries.
    Those in support favored the assessment rate increase because the 
funds will be the major source of funding for domestic market 
development activities, needed to increase shipments. The cranberry 
industry is faced with low prices primarily due to large surpluses. 
Industry-wide market development activities are needed to expand 
domestic markets and the consumption of cranberries and cranberry 
products. The initiation of these activities is expected to bring 
demand closer into balance with supply over the long term, and, in 
turn, help bring returns to growers back to acceptable levels.
    The main comments in opposition to the proposal were: The funds 
would be wasted because the Committee's marketing efforts have not been 
successful in the past and the Committee does not have the public 
relations/marketing development expertise of well known public 
relations firms; growers do not have a means of holding the Committee 
accountable for its results; other State organizations can work with 
the Cranberry Institute (an organization that funds research on the 
potential health benefits of cranberries and cranberry products) to 
accomplish the same goal; growers have not been informed of the 
domestic marketing plan, and, thus, do not know how the increased 
assessments will be spent; and farm gate prices are extremely low at 
this time to fund such an endeavor.
    Any market development program initiated by the Committee to expand 
domestic markets would be approved and overseen by USDA. In the 
development stages, USDA would provide general guidance on the conduct 
of market development. USDA also would review the program goals and the 
program activities, methods, and techniques to be employed in meeting 
the goals. The Committee and USDA would monitor any program implemented 
to determine that the program goals have or have not been met, and if 
not, the reason for the failure, that the assessment funds used for the 
program have been properly spent, and to determine whether the program 
should be continued unchanged, changed, or discontinued. Also, upon 
conclusion of any program, but at least annually, the Committee would 
report on the program status and accomplishments to the industry and 
the USDA.
    With respect to the comment that the Wisconsin Cranberry Board 
already collects funds for generic promotion and health related 
research and that the growers do not need to fund similar Committee 
activities, it should be noted that the Committee's anticipated 
domestic market development effort is intended to be industry-wide and 
not regional in scope. A broader based effort is needed to foster the 
domestic market growth needed to absorb production. The Committee 
commented that it surveyed growers in the industry and they 
overwhelmingly favored (449 out of 496 respondents) an industry-wide 
market development program. The Committee also stated that the market 
development program will be designed to complement ongoing promotion 
programs within the industry and to take advantage of the Cranberry 
Institute's health related research.
    With respect to the type of promotion that would be funded, the 
Committee's comments describe its initial plans for a promotion 
program. The Committee comprised of members from the different growing 
areas would decide what type of program would be implemented. 
Preliminary discussions on a domestic market development effort have 
begun, but have not been finalized by the Committee. The Committee 
commented that the initial focus of any market development effort 
undertaken would be to inform buyers of the health benefits of 
cranberries and cranberry products. Once the final plan is developed 
and recommended by the Committee, the plan would have to be approved by 
USDA before it could be implemented.
    Commenters in favor of the increased assessment rate stated that 
the goal of a domestic market development program implemented under the 
order would be to build markets and that this should help bring demand 
closer to the productive capacity of the industry. The ultimate goal, 
of course, is to help the industry return to profitability over time.
    Finally, those in opposition commented that prices are at an all 
time low and the Committee should not be raising assessments while 
farmers are going broke. One commenter in favor of the proposed 
assessment rate increase stated that the additional $.10 per barrel 
assessment is insignificant to the lost income growers are enduring as 
a result of the surplus situation currently being faced by the industry 
because of overproduction and reduced demand. The Committee expects 
such a program to stimulate growth in demand for cranberries and 
cranberry products and increase grower returns to a more acceptable 
level. Another commenter in favor of the increase noted that growers 
need to recognize that building demand for cranberries is the only 
long-term sustainable solution to the oversupply problem.
    One commenter did not approve of the increase because Ocean Spray 
members would pay a disproportionate share of the cost. Ocean Spray 
management submitted a comment in favor of the increase.
    Two commenters stated that growers have not been allowed to vote 
for some time on the continuation of the marketing order. They said 
that growers should be allowed to vote on whether they want to continue 
the order before raising the assessment rate. The issue of holding a 
continuance referendum was not part of the notice concerning this 
rulemaking action, but such referenda are periodically conducted by 
USDA.
    Accordingly, no changes will be made to the rule as proposed, based 
on the comments received.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at the 
following Web site: http://www.ams.usda.gov/fv/moab.html. Any questions 
about the compliance guide should be sent to Jay Guerber at the 
previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    After consideration of all relevant matter presented, including the 
information and recommendation submitted by the Committee 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.
    It is further found that good cause exists for not postponing the 
effective date of this rule until 30 days after publication in the 
Federal Register (5

[[Page 6846]]

U.S.C. 553) because the 2001-2002 fiscal period began on September 1, 
2001, and the marketing order requires that the rate of assessment for 
each fiscal period apply to all assessable cranberries handled during 
such fiscal period, and the Committee needs to have sufficient funds to 
pay its expenses which are incurred on a continuous basis. Further, 
handlers are aware of this action which was recommended by the 
Committee at a public meeting and is similar to other assessment rate 
actions issued in past years. Also, a 15-day comment period was 
provided for in the proposed rule, and all comments received have been 
addressed.

List of Subjects in 7 CFR Part 929

    Cranberries, Marketing agreements, Reporting and recordkeeping 
requirements.

PART 929--CRANBERRIES GROWN IN THE STATES OF MASSACHUSETTS, RHODE 
ISLAND, CONNECTICUT, NEW JERSEY, WISCONSIN, MICHIGAN, MINNESOTA, 
OREGON, WASHINGTON, AND LONG ISLAND IN THE STATE OF NEW YORK

    For the reasons set forth in the preamble, 7 CFR part 929 is 
amended as follows:
    1. The authority citation for 7 CFR part 929 continues to read as 
follows:

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


    2. Section 929.239 is revised to read as follows:


Sec. 929.239  Assessment rate.

    On and after September 1, 2001, an assessment rate of $0.18 per 
barrel is established for cranberries.

    Dated: February 8, 2002.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 02-3635 Filed 2-13-02; 8:45 am]
BILLING CODE 3410-02-P