[Federal Register Volume 68, Number 192 (Friday, October 3, 2003)]
[Rules and Regulations]
[Pages 57321-57324]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-25110]



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 Rules and Regulations
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  Federal Register / Vol. 68, No. 192 / Friday, October 3, 2003 / Rules 
and Regulations  

[[Page 57321]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Docket No. FV03-930-3 FR]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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

SUMMARY: This final rule increases the assessment rate for tart 
cherries that are utilized in the production of tart cherry 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 began July 1 and ends June 30. The 
assessment rate will remain in effect indefinitely unless modified, 
suspended, or terminated.

EFFECTIVE DATE: This final rule becomes effective October 6, 2003.

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 final 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 final 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, 2003, 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 final rule increases 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

[[Page 57322]]

whether varying rates should be recommended for cherries manufactured 
into different products.
    In addition, the amended order provides that the assessment rate 
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 them to establish 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 
due to the fact that the absolute and relative market values of various 
tart cherry products fluctuate from year to year.
    The amended order specifically provides that under section 
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 must 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 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 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 seen 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 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 5 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. 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 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 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 
that is 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 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 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. In 
comparison, last year's budgeted expenditures were $522,500. 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 has 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 in January, the Board estimated assessable tart cherry 
production for the fiscal period at 260 million pounds. However, actual 
production was 222 million pounds. Therefore, total assessment income 
for 2003-2004 based on actual production of 222 million pounds is 
$466,200. This amount plus adequate funds in the reserve and interest 
income will be adequate to cover budgeted expenses. Funds in the 
reserve (approximately $66,000) will be kept within the approximately 
six months' operating expenses as recommended by the Board consistent 
with section 930.42(a).
    The assessment rate established in this rule will 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 is 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 rate. The dates and times of Board 
meetings are available from the Board or the USDA. Board meetings are

[[Page 57323]]

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 rate is needed. Further rulemaking will 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 
final 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 2003-2004 expenditures of 
$532,000 and an assessment rate increase from $0.0019 to $0.0021 per 
pound. This rule increases 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 produced 
during the 2003-2004 crop year is 222 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, 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. However, actual 2003-2004 production is approximately 222 
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 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 proposed rule concerning this action was published in the Federal 
Register on July 25, 2003 (68 FR 43978). Copies of the rule were mailed 
and sent via facsimile to all Board members and cherry handlers. 
Finally, the rule was made available through the Internet by the Office 
of the Federal Register and USDA. A 30-day comment period ending August 
25, 2003, was provided to allow interested persons to respond to the 
proposal.
    One comment was received from Mr. Perry Hedin, Executive Director 
of the Board. He commented that the Board is in support of the proposed 
rule but he wanted to make one clarification. The terms of the order 
allow the Board to maintain one year's operational expenses as a 
reserve. The Board policy, however, intends to maintain cash reserves 
equal to one half of one year's operational budget. The Board's 
increase in the assessment rate this year was intended to replenish the 
cash reserves depleted when the crop was extremely short in 2002. The 
commenter stated that the Board should be able to rebuild some of the 
intended cash reserves under the current assessment,

[[Page 57324]]

but it is as yet unknown if reserves will be fully replenished this 
season.
    Accordingly, no changes will be made to the rule based on the 
comment received.
    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.
    After consideration of all relevant matters 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.
    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 U.S.C. 553) because the 2003-2004 fiscal period 
began 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. 
Further, handlers are aware of this action which was unanimously 
recommended by the Board at a public meeting. Also, a 30-day comment 
period was provided in the proposed rule.

List of Subjects in 7 CFR Part 930

    Marketing agreements, Reporting and recordkeeping requirements, 
Tart cherries.


0
For the reasons set forth in the preamble, 7 CFR part 930 is amended as 
follows:

PART 930--TART CHERRIES GROWN IN THE STATES OF MICHIGAN, NEW YORK, 
PENNSYLVANIA, OREGON, UTAH, WASHINGTON, AND WISCONSIN

0
1. The authority citation for 7 CFR part 930 continues to read as 
follows:

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

0
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 cherries handled for tart cherries grown 
in the production area and utilized in the production of tart cherry 
products.

    Dated: September 29, 2003.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 03-25110 Filed 10-2-03; 8:45 am]
BILLING CODE 3410-02-P