[Federal Register Volume 68, Number 143 (Friday, July 25, 2003)]
[Proposed Rules]
[Pages 43978-43981]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-18985]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Docket No. FV03-930-3 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 cherries products 
from $0.0019 to $0.0021 per pound. The assessment rate was recommended 
by the Cherry Industry Administrative Board (Board) under Marketing 
Order No. 930 for the 2003-2004 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 begins July 1, 2003, and ends June 30, 2004. 
The assessment rate would remain in effect indefinitely unless 
modified, suspended, or terminated.

DATES: Comments must be received by August 25, 2003.

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, or 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 rate 
as issued herein would be applicable to all assessable tart cherries 
beginning July 1, 2003, and continue until amended, suspended, or 
terminated. This rule will not preempt

[[Page 43979]]

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, and 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 2003-2004 and subsequent fiscal periods for cherries that 
are utilized in the production of tart cherry products from $0.0019 to 
$0.0021 per pound of cherries.
    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. The assessment rate is 
formulated and discussed in a public meeting. Thus, all directly 
affected persons have an opportunity to participate and provide input.
    For the 2002-2003 fiscal period, the Board recommended, and the 
Department approved, an assessment rate 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 rate is expected to 
generate enough income to meet the Board's operating expenses in 2003-
2004.
    The Board met on January 23, 2003, and unanimously recommended 
2003-2004 expenditures of $532,000. The industry completed a formal 
rulemaking proceeding which amended the assessment rate section by 
authorizing one assessment rate rather than two assessment rates for 
different tart cherry products [67 FR 51697]. 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.
    In addition, the amended order provides that the assessment rate 
should not apply to cherries diverted in orchard by growers, and those 
diverted by handlers through destruction at their plants. The Board 
recommended the amendment to allow one assessment rate for all tart 
cherry products handled. In making its recommendation, the Board stated 
that while 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 rate may be uniform, or 
may vary depending on the product the cherries are used to manufacture. 
The Board consider the differences in the number of pounds of cherries 
utilized for various cherry products and the relative market values of 
such cherry products.
    On June 25, 2003 (68 FR 37726), a final rule was published in the 
Federal Register that established a single assessment rate for the 
2002-2003 fiscal period for all tart cherries handled regardless of the 
product the cherries are used to manufacture. The Board determined that 
the markets for juice, juice concentrate, and puree were gaining in 
importance and that cherries used in such products should be assessed 
the same as those sold for use in assorted bakery items, as canned pie 
fill, and as dried cherries. The assessment rate for tart cherry 
products other than juice, juice concentrate, or puree was increased 
from $0.00175 to $0.0019 per pound of cherries. The assessment rate for 
cherries utilized for juice, juice concentrate, or puree was increased 
from $0.000875 to $0.0019 per pound.
    The Board considered the above items and decided that one 
assessment rate should be recommended for all cherry products during 
2003-2004. 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 results 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 pound to the gallon conversion for the product, typical for 
west coast production, 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 was about 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 that the price for five plus 
one product was 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 appropriate. The 
product is moved between production areas and may be converted into 
puree or concentrate at a later date, depending on the market demand 
for these products.
    In comparing the costs of juice, juice concentrate, and puree, the 
Board has determined that current prices are similar for these products 
when compared to the 5 plus 1 product. The information received from 
the Board

[[Page 43980]]

indicates that puree products are becoming a viable market and should 
be assessed at a higher assessment rate.
    As a result of last season's 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 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 2003-04 fiscal period.
    Budgeted expenditures for the 2003-04 fiscal period were 
unanimously recommended at $532,000. The major expenditures recommended 
by the Board for 2003-04 include $81,000 for meetings, $149,000 for 
compliance, $191,000 for personnel, $106,000 for office expenses, and 
$5,000 for industry educational efforts. Budgeted expenses for those 
items in 2002-2003 were $85,000 for meetings, $170,000 for compliance, 
$185,000 for personnel, $80,000 for office expenses, and $2,500 for 
industry educational efforts, respectively.
    Last fiscal period's budgeted expenditures were $522,500. However 
last season, the tart cherry industry experienced a significant frost 
mainly in Michigan which severely impacted the crop. Only 60 million 
pounds of cherries were produced in comparison to a normal crop of 
about 260 million pounds. The Board staff responded to this decrease in 
funds by cutting its expenditures. The Board reduced its staff and 
Committee travel for meetings and used reserve funds to continue 
administrative operations in 2002-2003. The recommended assessment rate 
of $0.0021 is higher than the current rate of $0.0019 per pound. 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 rate, the Board determined 
assessable tart cherry production for the fiscal period at 260 million 
pounds. Therefore, total assessment income for 2003-2004 is estimated 
at $546,000. This amount plus adequate funds in the reserve and 
interest income would be adequate to cover budgeted expenses. Funds in 
the reserve (approximately $66,000) 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 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 rate would be effective for an indefinite 
period, the Board would continue to meet prior to or during each fiscal 
period to recommend a budget of expenses and consider recommendations 
for modification of the assessment rate. 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 modification of the 
assessment rate is needed. Further rulemaking would be undertaken as 
necessary. The Board's 2003-2004 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' 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 2003-2004 expenditures of 
$532,000 and an assessment rate increase from $0.0019 to $0.0021 per 
pound. This rule would increase the assessment rate established for the 
Board and collected from handlers for the 2003-2004 and subsequent 
fiscal periods for cherries that are utilized in the production of tart 
cherry products. The quantity of assessable tart cherries expected to 
be produced during the 2003-2004 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 2003-2004 
fiscal period include $81,000 for meetings, $149,000 for compliance, 
$191,000 for personnel, $106,000 for office expenses, and $5,000 for 
industry educational efforts. Budgeted expenses for those items in 
2002-2003 were $85,000 for meetings, $170,000 for compliance, $185,000 
for personnel, $80,000 for office expenses, and $2,500 for industry 
educational efforts, respectively.
    The Board discussed the alternative of continuing the existing 
assessment rate, 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,

[[Page 43981]]

New York, Utah, and Wisconsin. Michigan leads the nation in tart cherry 
acreage with 74 percent of the total. 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.
    In deriving the recommended assessment rate, the Board estimated 
assessable tart cherry production for the fiscal period at 260 million 
pounds. Cherries used for handler destruction and grower diversion 
outlets are exempt from assessment obligations. Funds in the reserve 
(approximately $66,000) 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 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 23, 2003, 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 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 30-day comment period is provided to allow interested persons to 
respond to this proposed rule. Thirty days is deemed appropriate 
because: (1) The 2003-2004 fiscal begins on July 1, 2003, and ends on 
June 30, 2004, 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 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, 2003, the assessment rate imposed on handlers 
shall be $0.0021 per pound of tart cherries grown in the production 
area and utilized in the production of tart cherry products.

    Dated: July 22, 2003.
A.J. Yates,
Administrator, Agricultural Marketing Services.
[FR Doc. 03-18985 Filed 7-24-03; 8:45 am]
BILLING CODE 3410-02-M