[Federal Register Volume 68, Number 99 (Thursday, May 22, 2003)]
[Proposed Rules]
[Pages 27943-27946]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-12804]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Docket No. FV03-930-2 PR]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would increase the assessment rate for tart 
cherries that are utilized in the production of tart cherry products 
other than juice, juice concentrate, or puree from $0.00175 to $0.0019 
per pound. It would also increase the assessment rate for cherries 
utilized for juice, juice concentrate, or puree from $0.000875 to 
$0.0019 per pound. The single assessment rate for all assessable tart 
cherries was 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 began July 1, 2002, and 
ends June 30, 2003. The assessment rate would remain in effect 
indefinitely unless modified, suspended, or terminated.

DATES: Comments must be received by June 2, 2003.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposed 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 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 (USDA) is issuing this proposed rule 
in

[[Page 27944]]

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 issued herein would be applicable to all assessable 
tart cherries beginning July 1, 2002, and continue until amended, 
suspended, or terminated. This proposed rule will not preempt any State 
or local laws, regulations, or policies, unless they present an 
irreconcilable conflict with this proposed 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 proposed 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 $0.0019 
per pound of cherries. The assessment rate for cherries utilized for 
juice, juice concentrate, or puree would also be increased from 
$0.000875 to $0.0019 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 rate or rates as appropriate. The 
assessment rates are formulated and discussed in a public meeting. 
Thus, all directly affected 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 that an 
assessment rate of $0.0019 be established for all tart cherry products 
if an amendment to do so passed in a May 2002 referendum of producers 
and processors. The amendment passed and was finalized by USDA on 
August 8, 2002 (67 FR 51698). The provisions requiring the 
establishment of different assessment rates for different products were 
removed. In their place, the Board is required to consider the volume 
of cherries used in making various products and the relative market 
value of those products in deciding whether the assessment rate should 
be a single, uniform rate applicable to all cherries or whether varying 
rates should be recommended for cherries manufactured into different 
products. Prior to the amendment passing in referendum, the Department 
issued a proposed rule on June 10, 2002 (67 FR 39637) proposing a dual 
assessment rate at higher amounts ($0.0021 and $0.00105, respectively, 
for high and low value cherry products) since the uniform assessment 
rate amendment was not yet effective. A rule withdrawing that proposal 
was published on April 2, 2003 (68 FR 15971). This proposal reflects 
the amended provisions and the Board's January 24, 2002 recommendation.
    The amended assessment provisions allow the Board to recommend a 
uniform single assessment rate for all assessable tart cherries 
handled, or variable rates depending on the quantities and values of 
the cherries used in the various products. A two-tiered assessment rate 
scheme may be appropriate in some years, it may not be in others.
    The amended order specifically provides that under Sec.  
930.41(f)(1) and (2) the established assessment rates may be uniform, 
or may vary depending on the product the cherries are used to 
manufacture. The Board may consider the differences in the number of 
pounds of cherries utilized for various cherry products and the 
relative market values of such cherry products. The Board considered 
the above items and decided that one assessment rate should be 
recommended for all assessable tart cherries for the 2002-2003 fiscal 
period.
    According to the Board, processors have developed a strong market 
for juice and concentrate products over the past few years. There is 
considerable belief that juice will be one of the growth outlets for 
tart cherries. This derives from the industry's promotional efforts 
being undertaken for juice and concentrate products, the segmentation 
of the market into retail and industrial components and the 
nutritional/nutraceutical profile of the product. As a result, there 
has been an increase in consumer recognition, acceptance, purchases, 
and the value of tart cherry juice and concentrate. According to the 
Board, prices received for tart cherry juice concentrate are now $25.00 
per gallon or more. This is derived by using the fairly common 
conversion ratio of 100 pounds to the gallon for mid-west production, 
which has a raw product value of $0.25 per pound. Using a 50 gallon 
conversion for the product, as has been used on the west coast, this 
represents a per pound value of $0.50. The difference in the west and 
mid-west conversion factors is that tart cherries produced in the 
western United States generally have a higher sugar content and larger 
fruit size, thus fewer raw product is needed. The average grower price 
received ranges between $0.17 to $0.20 per pound.
    According to the Board, puree products are as valuable and 
comparable to juice and juice concentrate products. The Board reported 
that the spot price for single strength puree for 2001-02 was about 
$0.60 cents per pound. The raw product equivalent (RPE) volume of 
pureed fruit was 539,504 pounds which is about 0.15 percent of all 
processed fruit. The Board also reported for 2001-02 that the price for 
five plus one product was $0.67 cents per pound. Five plus one is a 
product of cherries and sugar which is manufactured by many processors 
(25 pounds of cherries and five pounds of sugar to make a 30 pound 
commercial container). It is the main product that handlers produce. 
Five plus one cherries are primarily sold and remanufactured into 
assorted bakery items, canned pie fill, and dried cherries. Since 
juice, juice concentrate, and puree are not considered to be low value 
products at this time, the Board considers one assessment to be

[[Page 27945]]

appropriate. It is important to understand that product is moved around 
between production areas and may be converted into puree or concentrate 
at a later date. The market drives the processing of these various 
products each season.
    In comparing the prices of juice, juice concentrate, and puree with 
the 5 plus 1 product, the Board determined that current prices for 
these products are similar. The information received from the Board 
indicates that puree products are becoming a viable market and should 
be assessed at a higher assessment rate.
    As a result of this season's 2002-2003 short crop, much of the tart 
cherry products released from inventory were in the form of tart cherry 
juice and/or juice concentrate. There is not much, if any, of this 
product available on the market today. The Board contends that given 
these factors, it is hard to suggest that juice/concentrate, or puree, 
are of lesser value than are the more traditional products such as pie-
fill or individually quick frozen tart cherries. Thus, the Board 
determined that one assessment rate is appropriate for the 2002-03 
fiscal period.
    Last year's budgeted expenditures were $442,500. The recommended 
assessment rate of $0.0019 is higher than the current rates of $0.00175 
for cherries used in the production of other than juice, juice 
concentrate, or puree products, and $0.000875 for cherries used for 
juice, juice concentrate or puree products.
    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. As discussed below, the Board's 
staff has taken steps to reduce actual expenditures for 2002-03 due to 
the assessment revenue shortfall. In comparison, last year's budgeted 
expenditures were $442,500. The recommended assessment rate of $0.0019 
is higher than the current rates of $0.00175 and $0.000875, 
respectively. The Board recommended an increased assessment rate to 
generate larger revenue to meet its expenses and keep its reserves at 
an acceptable level.
    In deriving the recommended assessment rates, the Board determined 
assessable tart cherry production for the fiscal period at 260 million 
pounds. However, the tart cherry industry experienced a severe frost, 
mainly in Michigan, which significantly reduced the crop. The tart 
cherry industry is expected to only produce 60 million pounds. The 
Board staff has responded to this decrease in funds by reducing staff 
and Committee travel for meetings and is expected to use reserve funds 
to continue administrative operations this season. Therefore, total 
assessment income for 2002-2003 is estimated at $114,000. 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 rate established in this proposed 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 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 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 will 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 $0.0019 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 $0.0019 per pound for cherries utilized for juice, juice 
concentrate, or puree.
    This proposed 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 to $0.0019 per pound. The Board 
unanimously recommended 2002-2003 expenditures of $522,500. The 
quantity of assessable tart cherries expected to be produced during the 
2002-2003 crop year was estimated at 260 million pounds. However, the 
tart cherry industry experienced a severe frost, mainly in Michigan, 
which has significantly reduced the crop. The tart cherry industry is 
expecting to only produce 60 million pounds during 2002-03. The Board 
staff has responded to this decrease in funds by reducing staff and 
Committee travel for meetings and is expected to use reserve funds to 
continue administrative operations this season. Assessment income, 
based on this crop, along with interest income and reserves, would be 
adequate to cover budgeted expenses.

[[Page 27946]]

    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 2002/03, approximately 92 
percent of the U.S. tart cherry crop, or 285.7 million pounds, was 
processed annually. Of the 285.7 million pounds of tart cherries 
processed, 58 percent was frozen, 30 percent was canned, and 12 percent 
was utilized for juice.
    Based on NASS data, acreage in the United States devoted to tart 
cherry production has been trending downward. Since 1987/88 tart cherry 
bearing acres have decreased from 50,050 acres, to 36,900 acres in the 
2002/03 crop year. In 2002/03, 93 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 74 
percent of the total production. Michigan produces about 75 percent of 
the U.S. tart cherry crop each year. Tart cherry acreage in Michigan 
decreased from 28,500 acres in 2000-2001, to 27,400 acres in 2002-2003.
    A review of historical information and preliminary information 
pertaining to the 2002-2003 fiscal period indicates that the grower 
price could range between $0.448 and $0.45 cents per pound of tart 
cherries. This is a high price due to the short crop this year. 
Therefore, the estimated assessment revenue for the 2002-2003 fiscal 
period as a percentage of total grower revenue could be less than one-
half of one percent.
    While this action will 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 were invited to submit information 
on the regulatory and informational impacts of this action on small 
businesses.
    This action will 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 10-day comment period is provided to allow interested persons to 
respond to this proposed rule. Ten days is deemed appropriate because: 
(1) The 2002-2003 fiscal period began on July 1, 2002, and ends on June 
30, 2003, and the marketing order requires that the rates of assessment 
for each fiscal period apply to all assessable tart cherries handled 
during such fiscal period; (2) the Board needs the funds to operate the 
program; and (3) handlers are aware of this action which was 
unanimously recommended by the Board at a public meeting. 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, 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 $0.0019 per pound of cherries handled for tart cherries grown 
in the production area.

    Dated: May 16, 2003.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 03-12804 Filed 5-21-03; 8:45 am]
BILLING CODE 3410-02-P