[Federal Register Volume 82, Number 170 (Tuesday, September 5, 2017)]
[Rules and Regulations]
[Pages 41827-41829]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-18756]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Doc. No. AMS-SC-16-0104; SC16-930-4 FR]


Tart Cherries Grown in the States of Michigan, New York, 
Pennsylvania, Oregon, Utah, Washington and Wisconsin; Modification of 
Allocation of Assessments

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule implements a recommendation from the Tart Cherry 
Industry Administrative Board (Board) to increase the portion of 
assessments allocated to research and promotion activities from $0.005 
to $0.0065 per pound of tart cherries and decrease the portion 
allocated to administrative expenses from $0.0025 to $0.001 per pound 
of tart cherries handled under the marketing order (order). This rule 
also corrects the allocation numbers from $0.006 per pound for research 
and promotion activities and $0.0015 per pound for administrative 
expenses as stated in the proposed rule based on a comment received. 
The overall assessment rate remains unchanged at $0.0075 per pound of 
tart cherries. The Board locally administers the order and is comprised 
of producers and handlers of tart cherries operating within the area of 
production, and one public member. Assessments upon tart cherry 
handlers are used by the Board to fund reasonable and necessary 
expenses of the program. The fiscal period begins October 1 and ends 
September 30. The assessment rate will remain in effect indefinitely 
unless modified, suspended, or terminated.

DATES: Effective September 6, 2017.

FOR FURTHER INFORMATION CONTACT: Jennie M. Varela, Marketing 
Specialist, or Christian D. Nissen, Regional Director, Southeast 
Marketing Field Office, Marketing Order and Agreement Division, 
Specialty Crops Program, AMS, USDA; Telephone: (863) 324-3375, Fax: 
(863) 291-8614, or Email: [email protected] or 
[email protected].
    Small businesses may request information on complying with this 
regulation by contacting Richard Lower, Marketing Order and Agreement 
Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue 
SW., STOP 0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, 
Fax: (202) 720-8938, or Email: [email protected].

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing 
Agreement and Order No. 930, both 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 final rule in 
conformance with Executive Orders 13563 and 13175. This rule does not 
meet the definition of a significant regulatory action contained in 
section 3(f) of Executive Order 12866 and is not subject to review by 
the Office of Management and Budget (OMB). Additionally, because this 
rule does not meet the definition of a significant regulatory action, 
it does not trigger the requirements contained in Executive Order 
13771. See OMB's Memorandum titled, ``Interim Guidance Implementing 
Section 2 of the Executive Order of January 30, 2017, titled `Reducing 
Regulation and Controlling Regulatory Costs'[thinsp]'' (February 2, 
2017).
    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 will be applicable to all assessable tart cherries 
beginning on October 1, 2016, and continue until amended, suspended, or 
terminated.
    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 rule increases the portion of the assessment rate allocated to 
research and promotion activities from $0.005 to $0.0065 per pound of 
tart cherries handled and decreases the portion allocated to 
administrative expenses from $0.0025 to $0.001 per pound of tart 
cherries handled under the order. This rule also corrects the 
allocation numbers from $0.006 per pound for research and promotion 
activities and $0.0015 per pound for administrative expenses as stated 
in the proposed rule based on a comment received. The overall 
assessment rate for the 2016-17 and subsequent fiscal periods remains 
unchanged at $0.0075 per pound of tart cherries.
    The tart cherry marketing order provides authority for the Tart 
Cherry Industry Administrative Board (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, and one public member. They 
are familiar with the Board's needs and with the costs of goods and 
services in their local areas 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 2010-11 and subsequent fiscal periods, the Board 
recommended, and USDA approved, an assessment rate of $0.0075 per pound 
of tart cherries 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 September 8, 2016, and unanimously recommended 
2016-17 expenditures of $2,523,550 and an assessment rate of $0.0075 
per pound of tart cherries. In comparison, last year's budgeted 
expenditures were $1,725,000. The total assessment rate remains 
unchanged by this action. However, this rule increases the portion of 
the assessment rate allocated to research and promotion activities from 
$0.005 to

[[Page 41828]]

$0.0065 per pound of tart cherries handled and decreases the portion 
allocated to administrative expenses from $0.0025 to $0.001 per pound 
of tart cherries handled under the order. This shift in allocation will 
allow for expanded research and promotion activities to help market 
this season's above-average crop, while helping to ensure that funds 
held in the Board's authorized reserve are consistent with the order's 
limits on the reserve.
    The major expenditures recommended by the Board for the 2016-17 
fiscal year include $2,045,550 for promotion, $255,000 for personnel, 
and $106,000 for office expenses. Budgeted expenses for these items in 
2015-16 were $1,150,000, $236,000, and $102,000, respectively.
    The assessment rate recommended by the Board was derived by 
considering expected shipments of tart cherries and examining the needs 
of the industry with regard to research and promotion and the 
authorized reserve. Tart cherry shipments for the 2016-17 year are 
estimated at 314.7 million pounds, which should provide $2,360,250 in 
assessment income. Income derived from handler assessments, interest 
income, and funds from the Board's authorized reserve should be 
adequate to cover budgeted expenses. Funds in the reserve 
(approximately $894,000) will be kept within the maximum permitted by 
the order of no more than approximately one year's operational expenses 
as stated in Sec.  930.42(a).
    The assessment rate will continue in effect indefinitely unless 
modified, suspended, or terminated by USDA upon recommendation and 
information submitted by the Board or other available information.
    Although this assessment rate will be in effect 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 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 budget for future fiscal periods will be reviewed and, as 
appropriate, approved by USDA.

Final Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) 
has considered the economic impact of this rule on small entities. 
Accordingly, AMS has prepared this final regulatory flexibility 
analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
businesses 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 issued thereunder, are unique in that 
they are brought about through group action of essentially small 
entities acting on their own behalf.
    There are approximately 600 producers of tart cherries in the 
regulated area and approximately 40 handlers of tart cherries who are 
subject to regulation under the order. Small agricultural producers are 
defined by the Small Business Administration (SBA) as those having 
annual receipts of less than $750,000, and small agricultural service 
firms have been defined as those whose annual receipts are less than 
$7,500,000 (13 CFR 121.201).
    According to the National Agricultural Statistics Service and Board 
data, the average annual grower price for tart cherries during the 
2015-16 season was approximately $0.347 per pound. With total 
utilization at 251.1 million pounds, the total 2015-16 crop value is 
estimated at $87 million. Dividing the crop value by the estimated 
number of producers (600) yields an estimated average receipt per 
producer of $145,000. This is well below the SBA threshold for small 
producers. In 2015, The Food Institute estimated a free on board 
(f.o.b.) price of $0.96 per pound for frozen tart cherries, which make 
up the majority of processed tart cherries. Multiplying the f.o.b price 
by total utilization of 251.1 million pounds results in an estimated 
handler-level tart cherry value of $241 million. Dividing this figure 
by the number of handlers (40) yields an estimated average annual 
handler receipts of $6 million, which is below the SBA threshold for 
small agricultural service firms. Assuming a normal distribution, the 
majority of producers and handlers of tart cherries may be classified 
as small entities.
    This rule increases the portion of the assessment rate allocated to 
research and promotion activities from $0.005 to $0.0065 per pound of 
tart cherries handled and decreases the portion allocated to 
administrative expenses from $0.0025 to $0.001 per pound of tart 
cherries handled under the order. This rule also corrects the 
allocation numbers from $0.006 per pound for research and promotion 
activities and $0.0015 per pound for administrative expenses as stated 
in the proposed rule based on a comment received. The overall 
assessment rate established for the Board for the 2016-17 and 
subsequent fiscal periods remains unchanged at $0.0075 per pound of 
tart cherries. The quantity of assessable tart cherries for the 2016-17 
season is estimated at 314.7 million pounds. Thus, the $0.0075 rate 
should provide $2,360,250 in assessment income. Income derived from 
handler assessments, interest income, and funds from the Board's 
authorized reserve should provide sufficient funds to meet this year's 
anticipated expenses.
    The major expenditures recommended by the Board for the 2016-17 
year include $2,045,550 for promotion, $255,000 for personnel, and 
$106,000 for office expenses. Budgeted expenses for these items in 
2015-16 were $1,150,000, $236,000, and $102,000, respectively.
    This rule shifts the allocation of the assessment rate to increase 
the portion allocated for research and promotion, while decreasing the 
portion allocated for administrative costs. This adjustment will allow 
for expanded research and promotion activities to help market this 
season's above-average crop, while helping to ensure that funds held in 
the Board's authorized reserve are consistent with the order's limits 
on the reserve.
    Prior to arriving at this budget and assessment rate, the Board 
considered production history, crop estimates, its financial 
statements, and the need to both reduce financial reserves and increase 
its marketing efforts to increase demand for tart cherries. The Board 
also considered not taking this action but determined that 2016-17 
expenditures of $2,523,550 were appropriate, and the recommended 
assessment rate and allocation, along with funds from interest income, 
block grants, and funds from reserves, would be adequate to cover 
budgeted expenses.
    A review of historical information and preliminary information 
pertaining to the upcoming crop year indicates that the average grower 
price for the 2016-17 season could be approximately $0.348 per pound of 
tart cherries. Therefore, the estimated assessment revenue for the 
2016-17 crop year as a percentage of total grower revenue could be 
approximately 2 percent.
    This action does not 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 costs 
may be

[[Page 41829]]

passed on to producers. However, these costs are offset by the benefits 
derived by the operation of the marketing order.
    The Board's meetings were widely publicized throughout the tart 
cherry industry, and all interested persons were invited to attend the 
meetings and participate in Board deliberations on all issues. Like all 
Board meetings, the June 23, 2016, and September 8, 2016, meetings were 
public meetings, and all entities, both large and small, were able to 
express views on this issue.
    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the order's information collection requirements have been 
previously approved by OMB and assigned OMB No. 0581-0177, Tart 
Cherries Grown in the States of Michigan, New York, Pennsylvania, 
Oregon, Utah, Washington, and Wisconsin. No changes in those 
requirements are necessary as a result of this action. Should any 
changes become necessary, they would be submitted to OMB for approval.
    This rule imposes 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. As noted in the initial regulatory 
flexibility analysis, USDA has not identified any relevant Federal 
rules that duplicate, overlap, or conflict with this final 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.
    A proposed rule concerning this action was published in the Federal 
Register on May 25, 2017(82 FR 24080). Copies of the proposed rule were 
also mailed or sent via facsimile to all tart cherry handlers. Finally, 
the proposal was made available through the internet by USDA and the 
Office of the Federal Register. A 30-day comment period ending June 26, 
2017, was provided for interested persons to respond to the proposal.
    One comment was received from Board staff indicating that the Board 
minutes stated the recommendation was for assessment allocation of 
$0.0065 per pound of tart cherries for promotion and $0.001 per pound 
of tart cherries for administration rather than the $0.006 and $0.0015, 
respectively, as published in the proposed rule. Accordingly, the 
allocation numbers were revised 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/rules-regulations/moa/small-businesses. Any questions 
about the compliance guide should be sent to Richard Lower at the 
previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    After consideration of all relevant material 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.
    Pursuant to 5 U.S.C. 553, it is also found and determined that good 
cause exists for not postponing the effective date of this rule until 
30 days after publication in the Federal Register because the fiscal 
year ends on September 30, 2017, and the change in allotment of 
assessments collected is necessary to ensure sufficient funds are 
available to cover the increase in research and promotion expenses that 
were incurred to help market the 2016-17 above-average crop. Further, 
handlers are aware of this rule, which was recommended at a public 
meeting. Also, a 30-day comment period was provided for in the proposed 
rule and no negative comments were received.

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 
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  Assessment rate.

    On and after October 1, 2016, the assessment rate imposed on 
handlers shall be $0.0075 per pound of tart cherries grown in the 
production area and utilized in the production of tart cherry products. 
Included in this rate is $0.0065 per pound of tart cherries to cover 
the cost of the research and promotion program and $0.001 per pound of 
tart cherries to cover administrative expenses.

    Dated: August 30, 2017.
Bruce Summers,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 2017-18756 Filed 9-1-17; 8:45 am]
BILLING CODE 3410-02-P