[Federal Register Volume 67, Number 111 (Monday, June 10, 2002)]
[Proposed Rules]
[Pages 39637-39639]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-14405]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Docket No. FV02-930-3 PR]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule would increase the assessment rate for cherries that 
are utilized in the production of tart cherry products other than 
juice, juice concentrate, or puree from $0.00175 to $0.0021 per pound. 
It also would increase the assessment rate for cherries utilized for 
juice, juice concentrate, or puree from $0.000875 to $0.00105 per 
pound. Both assessment rates were recommended by the Cherry Industry 
Administrative Board (Board) under Marketing Order No. 930 for the 
2002-2003 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 will begin July 1, 2002, and end June 30, 2003. The assessment 
rates would remain in effect indefinitely unless modified, suspended, 
or terminated.

DATES: Comments must be received by July 10, 2002.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this action. Comments must be sent to the Docket Clerk, 
Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW 
STOP 0237, Washington, DC 20250-0237; Fax: (202) 720-8938, or e-mail: 
[email protected]. All comments should reference the docket 
number and the date and page number of this issue of the Federal 
Register and will be made available for public inspection in the Office 
of the Docket Clerk during regular business hours or can be viewed at: 
http://www.ams/usda.gov/fv/moab.html.

FOR FURTHER INFORMATION CONTACT: Patricia A. Petrella or Kenneth G. 
Johnson, Marketing Order Administration Branch, Fruit and Vegetable 
Programs, AMS, USDA, Suite 2A04, Unit 155, 4700 River Road, Riverdale, 
MD 20737, telephone: (301) 734-5243, or 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, or 
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 
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 (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, 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 would be applicable to all assessable tart cherries 
beginning July 1, 2002, 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 would increase the assessment rate established for the 
Board for the 2002-2003 and subsequent fiscal periods for cherries that 
are utilized in the production of tart cherry products other than 
juice, juice concentrate, or puree from $0.00175 to $0.0021 per pound 
of cherries. The assessment rate for cherries utilized for juice, juice 
concentrate, or puree would be increased from $0.000875 to $0.00105 per 
pound.
    The tart cherry marketing order provides authority for the Board, 
with the approval of USDA, 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

[[Page 39638]]

persons have an opportunity to participate and provide input.
    For the 2001-2002 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 USDA upon recommendation and information submitted by 
the Board or other information available to USDA.
    Section 930.42(a) of the order authorizes a reserve sufficient to 
cover one year's operating expenses. The increased rates are expected 
to generate enough income to meet the Board's operating expenses in 
2002-2003.
    The Board met on January 24, 2002, and unanimously recommended 
2002-2003 expenditures of $522,500. The Board also recommended an 
assessment rate of $0.0021 per pound of tart cherries utilized in the 
production of tart cherry products other than juice, juice concentrate, 
and puree products and an assessment rate of $0.00105 per pound for 
juice, juice concentrate, and puree products. In comparison, last 
year's budgeted expenditures were $442,500. The recommended assessment 
rates of $0.0021 and $0.00105 are higher than the current rates of 
$0.00175 and $0.000875, respectively. The Board recommended increased 
assessment rates to generate larger revenue to meet its expenses and 
keep its reserves at an acceptable level.
    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.
    The major expenditures recommended by the Board for the 2002-2003 
fiscal period include $85,000 for meetings, $170,000 for compliance, 
$185,000 for personnel, $80,000 for office expenses, and $2,500 for 
industry educational efforts. Budgeted expenses for those items in 
2001-2002 were $80,000 for meetings, $100,000 for compliance, $185,000 
for personnel, $75,000 for office expenses, and $2,500 for industry 
educational efforts, respectively.
    In deriving the recommended assessment rates, the Board determined 
assessable tart cherry production for the fiscal period at 260 million 
pounds. It further estimated that about 220 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 15 
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 $462,000 
(220 million pounds x $0.0021 per pound). The potential income from 
tart cherries utilized for juice, juice concentrate, or puree would be 
$15,750 (15 million pounds x $0.00105 per pound). No assessment income 
would be received by the Board on approximately 25 million pounds of 
the projected production of 260 million pounds of tart cherries. 
Cherries used for export and other diversion outlets are exempt from 
assessment obligations. Therefore, total assessment income for 2002-
2003 is estimated at $477,750. This amount plus adequate funds in the 
reserve and interest income would be adequate to cover budgeted 
expenses. Funds in the reserve (approximately $233,000) would be kept 
within the approximately six months' operating expenses as recommended 
by the Board consistent with Sec. 930.42(a).
    The assessment rates established in this rule would continue in 
effect indefinitely unless modified, suspended, or terminated by USDA 
upon recommendation and other 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 USDA. Board meetings are 
open to the public and interested persons may express their views at 
these meetings. USDA would evaluate Board recommendations and other 
available information to determine whether modifications of the 
assessment rates are needed. Further rulemaking would be undertaken as 
necessary. The Board's 2002-2003 budget and those for subsequent fiscal 
periods would be reviewed and, as appropriate, approved by the USDA.

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's 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 approximately 900 producers 
of tart cherries in the regulated area. Small agricultural service 
firms have been defined by the Small Business Administration (13 CFR 
121.201) as those having annual receipts less than $5,000,000, and 
small agricultural producers are those whose annual receipts are less 
than $750,000. A majority of the tart cherry handlers and producers may 
be classified as small entities.
    The Board unanimously recommended 2002-2003 expenditures of 
$522,500 and assessment rate increases from $0.00175 to $0.0021 per 
pound for cherries that are utilized in the production of tart cherry 
products other than juice, juice concentrate, or puree, and from 
$0.000875 to $0.00105 per pound for cherries utilized for juice, juice 
concentrate, or puree.
    This rule would increase the assessment rate established for the 
Board and collected from handlers for the 2002-2003 and subsequent 
fiscal periods for cherries that are utilized in the production of tart 
cherry products other than juice, juice concentrate, or puree from 
$0.00175 to $0.0021 per pound, and the assessment rate for cherries 
utilized for juice, juice concentrate, or puree from $0.000875 to 
$0.00105 per pound. The Board unanimously recommended 2002-2003 
expenditures of $522,500. The quantity of assessable tart cherries 
expected to be

[[Page 39639]]

produced during the 2002-2003 crop year is estimated at 260 million 
pounds. Assessment income, based on this crop, along with interest 
income and reserves, would be adequate to cover budgeted expenses.
    The major expenditures recommended by the Board for the 2002-2003 
fiscal period include $85,000 for meetings, $170,000 for compliance, 
$185,000 for personnel, $80,000 for office expenses, and $2,500 for 
industry educational efforts. Budgeted expenses for those items in 
2001-2002 were $80,000 for meetings, $100,000 for compliance, $185,000 
for personnel, $75,000 for office expenses, and $2,500 for industry 
educational efforts, respectively.
    The Board discussed the alternative of continuing the existing 
assessment rates, but concluded that would cause the amount in the 
operating reserve to be reduced to an unacceptable level.
    The principal demand for tart cherries is in the form of processed 
products. Tart cherries are dried, frozen, canned, juiced, and pureed. 
Data from the National Agricultural Statistics Service (NASS) states 
that during the period 1995/96 through 1999/00, approximately 91 
percent of the U.S. tart cherry crop, or 280.5 million pounds, was 
processed annually. Of the 280.5 million pounds of tart cherries 
processed, 62 percent was frozen, 29 percent was canned, and 9 percent 
was utilized for juice.
    Based on NASS data, acreage in the United States devoted to tart 
cherry production has been trending downward. In the ten-year period, 
1987/88 through 1997/98, the tart cherry area decreased from 50,050 
acres, to less than 40,000 acres. In 1999/00, approximately 90 percent 
of domestic tart cherry acreage was located in four States: Michigan, 
New York, Utah and Wisconsin. Michigan leads the nation in tart cherry 
acreage with 70 percent of the total. Michigan produces about 75 
percent of the U.S. tart cherry crop each year. In 1999/00, tart cherry 
acreage in Michigan decreased to 28,100 acres from 28,400 acres the 
previous year.
    In deriving the recommended assessment rates, the Board estimated 
assessable tart cherry production for the fiscal period at 260 million 
pounds. It further estimated that about 220 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 15 
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 $462,000 
(220 million pounds X $0.0021 per pound). The potential income from the 
tart cherries utilized for juice, juice concentrate, or puree would be 
$15,750 (15 million pounds X $0.00105 per pound). No assessment income 
would be received by the Board on approximately 25 million pounds of 
the projected production of 260 million pounds of tart cherries. 
Cherries used for export and other diversion outlets are exempt from 
assessment obligations. Therefore, total assessment income for 2002-
2003 is estimated at $477,750. This amount plus adequate funds in the 
reserve and interest income should be adequate to cover budgeted 
expenses. Funds in the reserve (approximately $233,000) will be kept 
within the approximately six months' operational expenses as 
recommended by the Board which would be consistent with the order 
(Sec. 930.42(a)).
    While this action would impose additional costs on handlers, the 
costs are in the form of assessments which are applied uniformly. Some 
of the costs may also be passed on to producers. However, these costs 
are offset by the benefits derived from the operation of the marketing 
order. 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 24, 2002, 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 would impose 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.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this rule.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: 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.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposed rule. Thirty days is deemed appropriate 
because: (1) The 2002-2003 fiscal period begins on July 1, 2002, and 
ends on June 30, 2003, and the marketing order requires that the rate 
of assessment for each fiscal period apply to all assessable tart 
cherries handled during such fiscal period; (2) the Board needs to have 
sufficient funds to pay its expenses which are incurred on a continuous 
basis; and (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.

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 
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. Section 930.200 is revised to read as follows:


Sec. 930.200  Handler assessment rate.

    On and after July 1, 2002, the assessment rate imposed on handlers 
shall be $0.0021 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 juice, juice concentrate, and puree products shall be $0.00105 
per pound.

    Dated: June 4, 2002.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 02-14405 Filed 6-7-02; 8:45 am]
BILLING CODE 3410-02-P