[Federal Register Volume 78, Number 97 (Monday, May 20, 2013)]
[Proposed Rules]
[Pages 29258-29261]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-11852]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 78, No. 97 / Monday, May 20, 2013 / Proposed 
Rules  

[[Page 29258]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1218

[Document Number AMS-FV-12-0062]


Blueberry Promotion, Research and Information Order; Assessment 
Rate Increase

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule invites comments on amending the Blueberry 
Promotion, Research and Information Order (Order) to increase the 
assessment rate from $12 to $18 per ton (an increase of $0.003 per 
pound). The Order is administered by the U.S. Highbush Blueberry 
Council (USHBC) with oversight by the U.S. Department of Agriculture 
(USDA). Under the program, assessments are collected from domestic 
producers and importers and used for research and promotion projects 
designed to maintain and expand the market for highbush blueberries in 
the United States and abroad. Additional funds would allow the USHBC to 
expand its health research activities and promotional efforts. The 
USHBC uses its health information in its promotion messaging to help 
build demand for blueberries. Increasing demand would help move the 
growing supply of blueberries, which would benefit producers and 
consumers.

DATES: Comments must be received by July 19, 2013.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. Comments may be submitted on the Internet at: 
http://www.regulations.gov or to the Promotion and Economics Division, 
Fruit and Vegetable Program, AMS, USDA, 1400 Independence Avenue SW., 
Room 1406-S, Stop 0244, Washington, DC 20250-0244; facsimile: (202) 
205-2800. 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, including name and address, if 
provided, in the above office during regular business hours or it can 
be viewed at http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Maureen T. Pello, Marketing 
Specialist, Research and Promotion Division, Fruit and Vegetable 
Program, AMS, USDA, P.O. Box 831, Beavercreek, Oregon, 97004; 
telephone: (503) 632-8848; facsimile (503) 632-8852; or electronic 
mail: [email protected].

SUPPLEMENTARY INFORMATION: This proposed rule is issued under the Order 
(7 CFR part 1218). The Order is authorized under the Commodity 
Promotion, Research, and Information Act of 1996 (1996 Act) (7 U.S.C. 
7411-7425).

Executive Order 12866

    The Office of Management and Budget (OMB) has waived the review 
process required by Executive Order 12866 for this action.

Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. It is not intended to have retroactive effect. 
Section 524 of the 1996 Act provides that it shall not affect or 
preempt any other Federal or State law authorizing promotion or 
research relating to an agricultural commodity.
    Under section 519 of the 1996 Act, a person subject to an order may 
file a written petition with USDA stating that an order, any provision 
of an order, or any obligation imposed in connection with an order, is 
not established in accordance with the law, and request a modification 
of an order or an exemption from an order. Any petition filed 
challenging an order, any provision of an order, or any obligation 
imposed in connection with an order, shall be filed within two years 
after the effective date of an order, provision, or obligation subject 
to challenge in the petition. The petitioner will have the opportunity 
for a hearing on the petition. Thereafter, USDA will issue a ruling on 
the petition. The 1996 Act provides that the district court of the 
United States for any district in which the petitioner resides or 
conducts business shall have the jurisdiction to review a final ruling 
on the petition, if the petitioner files a complaint for that purpose 
not later than 20 days after the date of the entry of USDA's final 
ruling.

Background

    This proposed rule invites comments on amending the Order to 
increase the assessment rate from $12 to $18 per ton (an increase of 
$0.003 per pound). The Order is administered by the USHBC with 
oversight by USDA. Under the program, assessments are collected from 
domestic producers and importers and used for research and promotion 
projects designed to maintain and expand the market for highbush 
blueberries in the United States and abroad. Additional funds would 
enable the USHBC to expand its health research activities and 
promotional efforts. The USHBC uses its health information in its 
promotion messaging to help build demand for blueberries. Increasing 
demand would help move the growing supply of blueberries, which would 
benefit producers and consumers. This action was unanimously 
recommended by the USHBC.
    The Order specifies that the funds to cover the USHBC's expenses 
shall be paid from assessments on producers and importers, donations 
from persons not subject to assessments and from other funds available 
to the USHBC. First handlers are responsible for collecting and 
submitting reports and producer assessments to the USHBC. Handlers must 
also maintain records necessary to verify their reports. Importers are 
responsible for paying assessments to the USHBC on highbush blueberries 
imported into the United States through the U.S. Customs and Border 
Protection (Customs). The Order also provides for two exemptions. 
Producers and importers who produce or import less than 2,000 pounds of 
blueberries annually, and producers and importers of 100 percent 
organic blueberries are exempt from the payment of assessments.
    Section 1218.52(c) of the Order specifies that assessments shall be 
levied at a rate of $12 per ton on all highbush blueberries. The 
assessment rate may be modified with the approval of the Secretary.
    The $12 per ton assessment rate has been in effect since the 
Order's inception in 2000. The USHBC's fiscal year runs from January 1 
through

[[Page 29259]]

December 31. USHBC expenditures have ranged from $1,522,519 in 2004 to 
$3,931,296 in 2012. Expenditures for health and nutrition research have 
ranged from $113,880 in 2004 (7.5 percent of total expenses) to 
$668,059 in 2011/2012 (17.0 percent of total expenses).
    USHBC expenditures for health messaging and promotion activities 
have ranged from $920,020 in 2004 (60.4 percent of total expenses) to 
$2,820,817 in 2012 (71.8 percent of total expenses). Pursuant to 
section 1218.50(i) of the Order, administrative expenditures have been 
under 15 percent of total expenses annually.
    USHBC assessment income has ranged from $1,435,989 in 2004 
($1,080,230 in domestic assessments and $355,759 in import assessments) 
to $4,051,836 in 2012 ($2,434,646 in domestic assessments and 
$1,601,966 in import assessments). Additionally, pursuant to section 
1218.50(j) of the Order, the USHBC maintains a monetary reserve with 
funds that do not exceed one fiscal period's budget.

USHBC 2012 Recommendation

    The USHBC met on October 5, 2012, and unanimously recommended 
increasing its assessment rate from $12 to $18 per ton ($0.006 to 
$0.009 per pound). This equates to an increase of $6 per ton, or $0.003 
per pound. Additional funds would enable the USHBC to expand its health 
research activities and promotional efforts. Since the program's 
inception, the USHBC has funded several health and nutritional research 
projects, many of them laboratory studies. USHBC research has shown 
possibilities relating to various health issues, including 
cardiovascular health and cancer. However, most of these preliminary 
findings have been done under laboratory conditions. Additional funds 
would allow the USHBC to incorporate specific areas of research into 
expanded clinical (human) trials. Clinical trials are important for the 
industry to be able to make health claims according to the Federal 
Trade Commission and the Food and Drug Administration requirements for 
the advertising of food.
    The USHBC uses its health information in its promotion messaging to 
help build demand for blueberries. Increasing demand would help move 
the growing supply of blueberries. Worldwide highbush blueberry 
production has grown from 393 million pounds in 2005 to 753 million 
pounds in 2010. Production is expected to increase to 1 billion pounds 
in 2013 and to nearly 1.4 billion pounds by 2015.\1\ World highbush 
blueberry acreage grew from approximately 50,000 acres in 1995 to over 
190,000 acres in 2010.\2\ North American highbush blueberry acreage 
increased by over 55 percent from 71,075 acres in 2005 to 110,290 acres 
in 2010.\3\
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    \1\ Brazelton, C., World Blueberry Acreage & Production, 2011, 
Brazelton Ag Consulting, p. 49.
    \2\ Brazelton, World Blueberry Acreage & Production, p. 43.
    \3\ Brazelton, World Blueberry Acreage & Production, p. 42.
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    With highbush blueberry production expected to increase more than 
38 percent by 2015, the USHBC hopes to increase consumption among 
existing blueberry consumers and to attract new blueberry users. Per 
capita consumption of blueberries increased from 15.7 ounces in 2000 to 
31.4 ounces in 2009.\4\ According to the North American Blueberry 
Council, U.S. per capita consumption is now estimated at 36.2 ounces. 
In order to maintain a balance between supply and demand, a 38 percent 
increase in per capita consumption would equate to a level of 50 ounces 
per person by 2015.
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    \4\ Kaiser, Henry M., An Economic Analysis of Domestic Market 
Impacts of the U.S. Highbush Blueberry Council, 2010, Cornell 
University, p. 3.
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    At the proposed $18 per ton assessment rate and assessable tonnage 
ranging from 350,000 to 500,000 tons (700 million to 1 billion pounds), 
assessment income could range from $6.3 million to $ 9 million 
annually. As an example, if 15 percent of the budget was allocated to 
health and nutrition research and 60 percent were allocated to 
promotion, funds available for health and nutrition research could 
range from $945,000 to $1.35 million annually and funds available for 
health messaging and promotion could range from $3.78 million to $5.4 
million annually.
    In light of the need to allocate more funds towards health research 
activities and build demand for blueberries, the USHBC recommended 
increasing the assessment rate under the Order from $12 to $18 per ton 
(or by $0.003 per pound). Section 1218.52(c) of the Order is proposed 
to be amended accordingly. Changes are also proposed to section 
1218.52(d)(2) to update the listed Harmonized Tariff Schedule of the 
United States (HTSUS) numbers; this change is administrative in nature 
and has no impact on the assessment rate.

Initial Regulatory Flexibility Act Analysis

    In accordance with the Regulatory Flexibility Act (RFA) (5 U.S.C. 
601-612), AMS is required to examine the impact of the proposed rule on 
small entities. Accordingly, AMS has considered the economic impact of 
this action on small entities.
    The purpose of the RFA is to fit regulatory actions to the scale of 
businesses subject to such actions so that small businesses will not be 
disproportionately burdened. The Small Business Administration defines, 
in 13 CFR Part 121, small agricultural producers as those having annual 
receipts of no more than $750,000 and small agricultural service firms 
(first handlers and importers) as those having annual receipts of no 
more than $7.0 million.
    There are approximately 2,000 domestic producers, 78 first handlers 
and 194 importers of highbush blueberries covered under the program. 
Dividing the highbush blueberry crop value for 2012 reported by the 
National Agricultural Statistics Service (NASS) of $781,808,000 \5\ by 
the number of producers (2,050) yields an average annual producer 
revenue estimate of $381,370. It is estimated that in 2012, about 68 
percent of the first handlers shipped under $7 million worth of 
highbush blueberries. Based on 2012 Customs data, it is estimated that 
90 percent of the importers shipped under $7 million worth of highbush 
blueberries. Based on the foregoing, the majority of producers, first 
handlers and importers may be classified as small entities.
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    \5\ Noncitrus Fruits and Nuts 2012 Summary, January 2013, USDA, 
National Agricultural Statistics Service, p. 10.
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    Regarding value of the commodity, as mentioned above, based on 2012 
NASS data, the value of the domestic highbush blueberry crop is about 
$782 million. According to Customs data, the value of 2012 imports was 
about $515 million.
    This proposed rule invites comments on amending section 1218.52(c) 
of the Order to increase the assessment rate from $12 to $18 per ton 
(an increase of $0.003 per pound). The Order is administered by the 
USHBC with oversight by USDA. Under the program, assessments are 
collected from domestic producers and importers and used for research 
and promotion projects designed to maintain and expand the market for 
highbush blueberries in the United States and abroad. Additional funds 
would enable the USHBC to expand its health research activities and 
promotional efforts. The USHBC uses its health information in its 
promotion messaging to help build demand. Increasing demand would help 
move the growing supply of blueberries, which would benefit producers 
and consumers. This proposed rule would

[[Page 29260]]

also update the HTSUS numbers listed in section 1218.52(d)(2). 
Authority for this action is provided in section 1218.52(c) of the 
Order and section 517 of the 1996 Act.
    Regarding the economic impact of the proposed rule on affected 
entities, this action would increase the assessment obligation on 
domestic producers and importers. While assessments impose additional 
costs on producers and importers, the costs are minimal and uniform on 
all. The costs would also be offset by the benefits derived from the 
operation of the program. It is estimated that 1,857 producers and 173 
importers pay assessments under the program.
    There have been two economic studies conducted since the Order's 
inception that evaluated the effectiveness of the USHBC's promotion 
program. The studies were conducted by Dr. Harry M. Kaiser at Cornell 
University in 2005 and 2010 and titled ``An Economic Analysis of 
Domestic Market Implications of the U.S. Highbush Blueberry Council.'' 
These studies may be obtained from Maureen Pello at the previously 
mentioned address in the FOR FURTHER INFORMATION CONTACT section. The 
2005 study evaluated the program from 2001-2004 and the 2010 study 
evaluated the program from 2001-2009. The purpose of the research was 
twofold: (1) To determine the domestic market implications of the 
USHBC's promotion program and (2) to complete a benefit-cost ratio 
(rate of return) for the promotion activities conducted by the USHBC. 
The impact of the USHBC's export marketing activities was not evaluated 
because most of the USHBC's marketing budget has been invested in the 
United States (about 90 percent).
    To assess the impact of the USHBC's domestic promotion activities 
on blueberry disappearance (a measure of demand), an econometric demand 
model was developed for blueberry disappearance in the United States. 
The model allowed the impact of the USHBC's generic promotion 
activities to be distinguished from the impact of other factors that 
influence demand. These include the price of blueberries, the price of 
blueberry substitutes, population, and consumer taste and 
preferences.\6\ The research shows that the USHBC's promotion 
activities increased total blueberry commercial disappearance by 441 
million pounds in total, or 49 million pounds per year from 2001 
through 2009. This represents an annual increase in blueberry 
commercial disappearance of 12.3 percent. Thus, the promotional 
spending by the USHBC has a positive effect on domestic highbush 
blueberry demand.
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    \6\ The econometric model used statistical methods with time 
series data to measure how strongly the various blueberry demand 
factors are correlated with commercial disappearance in the United 
States.
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    The results also indicate that generic blueberry promotion by the 
USHBC has had a positive impact on the blueberry producers' price. 
Specifically, from 2001 to 2009, the average increase in price ranged 
from 14 cents per pound in the case of the least elastic supply 
response to 5 cents per pound in the case of the most elastic supply 
response.\7\ The average impact over all supply responses was 8.4 cents 
per pound. In other words, had there been no generic blueberry 
promotion by the USHBC, the average producers' price would have been 
8.4 cents per pound, or 7.2 percent lower than it was from 2001 through 
2009.
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    \7\ Price elasticity of supply is a measure used in economics to 
show the responsiveness, or elasticity, of the quantity supplied/
produced of a good or service to a change in price. When the 
coefficient is less than one, the supply can be described as 
inelastic. When the coefficient is greater than one, the supply can 
be described as elastic.
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    The studies also show that USHBC promotion efforts have had a 
positive impact on producer surplus (i.e., producer profits) from 2001 
through 2009. The average increase in producer surplus due to generic 
blueberry promotion by the USHBC ranged from $5.4 million per year, in 
the case of the least elastic supply response, to $1.9 million per 
year, in the case of the most elastic supply response. The average 
increase in producer surplus over all supply responses was $3.2 million 
per year. Thus, the studies concluded that the domestic promotion 
efforts of the USHBC have had a positive impact on producer profits 
since 2001.
    An average benefit-cost ratio (BCR) for the USHBC's generic 
promotion activities was also computed. The BCR measures the net 
benefits of the program, which is equal to the gain in producer surplus 
divided by the cost of the marketing program. The BCR exceeded 1.0 for 
every supply response considered in Dr. Kaiser's study.\8\ For the 
least elastic supply response, the average BCR was 15.41. This implies 
that, on average from 2001-2009, the benefits of the USHBC promotion 
program has been over 15 times greater than the costs. At the opposite 
end of the spectrum in the supply response, the average BCR was 
computed to be 5.36, implying that the benefits of the USHBC were over 
five times greater than the costs. Given the wide range of supply 
responses considered in the analysis, and the fact that the BCR was 
above 1.0 in all cases, there is significant evidence that the USHBC's 
promotion programs have been profitable for the domestic blueberry 
industry. The average BCR over all supply responses was 9.12 (i.e., the 
benefits of the promotion activities of the USHBC exceeded the costs by 
nine-fold).
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    \8\ Kaiser, An Economic Analysis, 2010, p. 24.
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    To calculate the percentage of producer revenue represented by the 
assessment rate, the proposed $18 per ton ($0.009 per pound) assessment 
rate is divided by the average producer price. According to the NASS, 
the average producer price ranged from $1.85 per pound in 2011 ($2.14 
per pound for fresh and $1.28 per pound for processed) to $1.69 per 
pound in 2012 ($2.19 per pound for fresh and $0.923 per pound for 
processed).\9\ Thus, the assessment rate as a percentage of producer 
price could range from 0.486 to 0.532 percent (or from 0.420 to 0.411 
percent for fresh and from 0.703 to 0.975 percent for processed).
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    \9\ Noncitrus Fruits and Nuts, p. 35.
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    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the information collection and recordkeeping requirements 
that are imposed by the Order have been approved previously under OMB 
control number 0581-0093. This proposed rule would not result in a 
change to the information collection and recordkeeping requirements 
previously approved and would impose no additional reporting and 
recordkeeping burden on blueberry producers, first handlers and 
importers.
    As with all Federal promotion programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies. Finally, USDA has 
not identified any relevant Federal rules that duplicate, overlap, or 
conflict with this proposed rule.
    AMS is committed to complying with the E-Government Act, to promote 
the use of the Internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.
    Regarding alternatives, the USHBC has been considering an increase 
in the assessment rate for the past few years. The USHBC has reviewed 
rates ranging from maintaining the status quo at $12 per ton to 
doubling the rate to $24 per ton. In 2009, the USHBC recommended 
increasing the rate to $24 per ton. Two members opposed the increase 
because a rate of $18 per ton had been discussed

[[Page 29261]]

at previous meetings and communicated to producers. USDA published a 
proposed rule for public comment in July 2009 (74 FR 36955; July 27, 
2009) and ultimately withdrew the proposed rule in February 2010 based 
on the comments received (75 FR 7985; February 23, 2010).
    Since that time, the USHBC and its committees have continued to 
discuss the need to increase the assessment rate. USHBC representatives 
have met with various producer associations and discussed this issue 
with their members as well as with importers. Ultimately the USHBC 
unanimously recommended increasing the rate to $18 per ton at its 
October 2012 meeting.
    While USDA has performed this initial RFA analysis regarding the 
impact of the proposed rule on small entities, in order to have as much 
data as possible for a more comprehensive analysis, we invite comments 
concerning potential effects. USDA is also requesting comments 
regarding the number and size of entities covered under the proposed 
Order.
    While this proposed rule set forth below has not received the 
approval of USDA, it has been determined that it is consistent with and 
would effectuate the purposes of the 1996 Act.
    A 60-day comment period is provided to allow interested persons to 
respond to this proposal. All written comments received in response to 
this proposed rule by the date specified will be considered prior to 
finalizing this action.

List of Subjects in 7 CFR Part 1218

    Administrative practice and procedure, Advertising, Consumer 
information, Marketing agreements, Blueberry promotion, Reporting and 
recordkeeping requirements.
    For the reasons set forth in the preamble, Part 1218, Chapter XI of 
Title 7 is proposed to be amended as follows:

PART 1218--BLUEBERRY PROMOTION, RESEARCH, AND INFORMATION ORDER

0
1. The authority citation for 7 CFR part 1218 continues to read as 
follows:

    Authority: 7 U.S.C. 7411-7425; 7 U.S.C. 7401.
0
2. In Sec.  1218.52, paragraphs (c) and (d)(2) are revised to read as 
follows:


Sec.  1218.52  Assessments.

* * * * *
    (c) Such assessments shall be levied at a rate of $18 per ton on 
all blueberries. The assessment rate will be reviewed, and may be 
modified with the approval of the Secretary.
    (d) * * *
    (2) The import assessment shall be uniformly applied to imported 
fresh and frozen blueberries that are identified by the numbers 
0810.40.0029 and 0811.90.2028, respectively, in the
    Harmonized Tariff Schedule of the United State or any other numbers 
used to identify fresh and frozen blueberries. * * *
* * * * *

    Dated: May 10, 2013.
David R. Shipman,
Administrator.
[FR Doc. 2013-11852 Filed 5-17-13; 8:45 am]
BILLING CODE 3410-02-P