[Federal Register Volume 71, Number 119 (Wednesday, June 21, 2006)]
[Proposed Rules]
[Pages 35562-35564]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-9727]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Docket No. FV06-930-2 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 rule would increase the assessment rate established for 
the Cherry Industry Administrative Board (Board) for the 2006-2007 
fiscal year and subsequent fiscal years from $0.0021 to $0.0066 per 
pound to fund the Board's administrative expenses and its new research 
and promotion program. Authorization to assess tart cherry handlers 
enables the Board to incur expenses that are reasonable and necessary 
to administer the program. The Board locally administers the marketing 
order which regulates the handling of tart cherries grown in the States 
of Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and 
Wisconsin. The fiscal year begins July 1, 2006 and ends June 30, 2007. 
The assessment rate will remain in effect indefinitely unless modified, 
suspended, or terminated.

DATES: Comments must be received by July 11, 2006.

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: Dawana J. Clark or Kenneth G. Johnson, 
DC Marketing Field Office, Fruit and Vegetable Programs, AMS, USDA, 
Unit 155, 4700 River Road, Riverdale, Maryland 20737; telephone: (301) 
734-5243, Fax: (301) 734-5275.
    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, as amended (7 CFR part 930), regulating 
the handling of tart cherries produced in the States of Michigan, New 
York, Pennsylvania, Oregon, Utah, Washington, and Wisconsin, 
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, tart cherries 
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, 2006, 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 the 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 the 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 the 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 2006-2007 and subsequent fiscal years for tart cherries 
from $0.0021 to $0.0066 per pound of tart cherries to fund the Board's 
administrative expenses and its new research and promotion program.
    The tart cherry marketing order provides authority for the Board, 
with 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.
    Authority to fix the rate of assessment to be paid by each handler 
and to collect such assessment appears in Sec.  930.41 of the order. In 
addition, Sec.  930.48 of the order provides that the Board, with the 
approval of the 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 cherries. The 
expense of such projects is paid from funds collected pursuant to Sec.  
930.41 (Assessments), or from such other funds as approved by the USDA.
    For the 2003-2004 fiscal year, the Board recommended, and USDA 
approved, an assessment rate of $0.0021 per pound of tart cherries 
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 Board or other 
information available to USDA.
    The Board met on March 16, 2006, and recommended 2006-2007 
expenditures of $1,523,000 and an assessment rate of $0.0066 per pound 
of tart cherries. Eighteen of the nineteen Board members voted in 
support of the assessment rate increase. One Board seat is vacant. In 
comparison, last year's budgeted expenses were $488,000. The assessment 
rate of $0.0066 is $0.0045 higher than the rate currently in effect. 
The Board recommended that the

[[Page 35563]]

assessment rate be increased to cover its administrative expenses and 
fund a new research and promotion program which will commence in Fall 
2006. The proposed $0.0066 assessment rate would cover the costs of the 
research and promotion program which would be assessed at $.005 per 
pound (or $10 per ton) of cherries for processing and $.0016 per pound 
for administrative expenses. The $0.0016 per pound for administrative 
expenses would be a reduction from the 2005-2006 assessment rate of 
$0.0021 per pound. The Board believes that its new research and 
promotion program is the best way for the industry to develop both 
stronger demand for tart cherries and tart cherry products and increase 
sales opportunities.
    According to a recent Board survey, both growers and handlers 
believe a research and promotion program would benefit the industry. 
This program would be directed primarily at consumers and retail 
nutrition advisors, and employ promotional strategies, such as print 
advertising. All tart cherry handlers regulated under the marketing 
order would pay the proposed assessment rate to fund the new research 
and promotion program. However, certain organic handlers may be exempt 
from paying assessments for market promotion activities pursuant to 7 
CFR 900.700.
    The major expenditures recommended by the Board for the 2006-2007 
year include $1,150,000 for promotion, $169,000 for personnel, $82,000 
for meetings, $77,000 for office expenses, $20,000 for compliance, and 
$5,000 for industry educational efforts. Budgeted expenses for major 
items in 2005-2006 were $159,000 for personnel, $150,000 for 
compliance, $81,000 for meetings, $93,000 for office expenses, and 
$5,000 for industry educational efforts. 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 230 million 
pounds. Therefore, total assessment income for 2006-2007 is estimated 
at $1,518,000 (230 million pounds x $0.0066). This amount plus adequate 
funds in the reserve and interest income would be adequate to cover 
budgeted expenses. Funds in the reserve (approximately $411,000) 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 2006-2007 budget and those for subsequent fiscal 
periods would be reviewed and, as appropriate, approved by the USDA.

Initial 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 initial 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 40 handlers of tart cherries who are 
subject to regulation under the tart cherry marketing order and 
approximately 900 producers of tart cherries 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 $6,500,000, and small agricultural 
producers are defined as those having annual receipts of less than 
$750,000. The majority of producers and handlers of tart cherries under 
the order are considered small entities under SBA's standards.
    The principal demand for tart cherries is in the form of processed 
products. Tart cherries are dried, frozen, canned, juiced, and pureed. 
During the period 2001/2002 through 2005/2006, approximately 93.8 
percent of the U.S. tart cherry crop, or 214.3 million pounds, was 
processed annually. Of the 214.3 million pounds of tart cherries 
processed, 62 percent was frozen, 26 percent was canned, and 12 percent 
was utilized for juice and other products.
    Based on National Agricultural Statistics Service data, acreage in 
the United States devoted to tart cherry production has been trending 
downward. Bearing acreage has declined from a high of 50,050 acres in 
1987/99 to 37,100 acres in 2005/2006. This represents a 26 percent 
decrease in total bearing acres. Michigan leads the nation in tart 
cherry acreage with 74 percent of the total and produces about 72 
percent of the U.S. tart cherry crop each year.
    This rule would increase the assessment rate established for the 
Board and collected from handlers for the 2006-2007 and subsequent 
fiscal periods from $.0021 to $.0066 per pound of tart cherries.
    The Board discussed continuing the existing assessment rate, but 
concluded that it needed the additional funds to devote to its research 
and promotion program which would be funded through assessments.
    This action would increase 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 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, 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 proposed rule 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.
    AMS is committed to compliance with the Government Paperwork 
Elimination Act (GPEA), which requires Government agencies in general 
to provide the public the option of submitting information or 
transacting

[[Page 35564]]

business electronically to the maximum extent possible.
    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 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.
    A 20-day comment period is provided to allow interested persons to 
respond to this proposed rule. Twenty days is deemed appropriate 
because: (1) The 2006-2007 fiscal period begins July 1, 2006, and the 
marketing order requires that the rate of assessment for each fiscal 
year apply to all assessable tart cherries handled during such 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 recommended by the Board at a public meeting.

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  Assessment rate.

    On and after July 1, 2006, the assessment rate imposed on handlers 
shall be $0.0066 per pound of tart cherries grown in the production 
area and utilized in the production of tart cherry products. Included 
in this rate is $.005 per pound of cherries to cover the costs of the 
new research and promotion program and $.0016 per pound of cherries to 
cover administrative expenses.

    Dated: June 15, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
 [FR Doc. E6-9727 Filed 6-20-06; 8:45 am]
BILLING CODE 3410-02-P