[Federal Register Volume 84, Number 184 (Monday, September 23, 2019)]
[Proposed Rules]
[Pages 49682-49684]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-20451]



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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 923

[Doc. No. AMS-SC-19-0049; SC19-923-1 PR]


Marketing Order Regulating the Handling of Sweet Cherries Grown 
in Designated Counties in Washington; Decreased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would implement a recommendation from the 
Washington Cherry Marketing Committee (Committee) to decrease the 
assessment rate established for the 2019-2020 and subsequent fiscal 
periods. The assessment rate would remain in effect indefinitely unless 
modified, suspended, or terminated.

DATES: Comments must be received by October 23, 2019.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposed rule. Comments must be sent to the Docket 
Clerk, Marketing Order and Agreement Division, Specialty Crops Program, 
AMS, USDA, 1400 Independence Avenue SW, STOP 0237, Washington, DC 
20250-0237; Fax: (202) 720-8938; or Internet: http://www.regulations.gov. Comments should reference the document number and 
the date and page number of this issue of the Federal Register and will 
be available for public inspection in the Office of the Docket Clerk 
during regular business hours, or can be viewed at: http://www.regulations.gov. All comments submitted in response to this rule 
will be included in the record and will be made available to the 
public. Please be advised that the identity of the individuals or 
entities submitting the comments will be made public on the internet at 
the address provided above.

FOR FURTHER INFORMATION CONTACT: Dale Novotny, Marketing Specialist, or 
Gary Olson, Regional Director, Northwest Marketing Field Office, 
Marketing Order and Agreement Division, Specialty Crops Program, AMS, 
USDA; Telephone: (503) 326-2724, Fax: (503) 326-7440, 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 action, pursuant to 5 U.S.C. 553, 
proposes to amend regulations issued to carry out a marketing order as 
defined in 7 CFR 900.2(j). This proposed rule is issued under Marketing 
Order No. 923, as amended (7 CFR part 923), regulating the handling of 
sweet cherries grown in designated counties of Washington. Part 923 
(referred to as 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 Committee locally 
administers the Order and is comprised of sweet cherry growers and 
handlers operating within the area of production.
    The Department of Agriculture (USDA) is issuing this proposed rule 
in conformance with Executive Orders 13563 and 13175. This proposed 
rule falls within a category of regulatory actions that the Office of 
Management and Budget (OMB) exempted from Executive Order 12866 review. 
Additionally, because this proposed 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 proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. Under the Order now in effect, Washington sweet 
cherry handlers are subject to assessments. Funds to administer the 
Order are derived from such assessments. It is intended that the 
assessment rate would be applicable to all assessable Washington sweet 
cherries for the 2019-2020 fiscal period, 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.
    The Order authorizes the Committee, with the approval of USDA, to 
formulate an annual budget of expenses and collect assessments from 
handlers to administer the program. Committee members are familiar with 
the Committee's needs and with the costs of goods and services in their 
local area and can formulate an appropriate budget and assessment rate. 
The assessment rate is formulated and discussed in a public meeting 
where all directly affected persons have an opportunity to participate 
and provide input.
    This proposed rule would decrease the assessment rate from $0.25 to 
$0.20 per ton of Washington sweet cherries handled for the 2019-2020 
and subsequent fiscal periods. The proposed lower rate is necessary to 
fund the Committee's 2019-2020 fiscal period budgeted expenditures 
while maintaining the Committee's financial reserve fund at an amount 
not exceeding approximately one fiscal period's operational expenses. 
Based on input received from growers at an annual meeting, the 2019 
crop of Washington sweet cherries is expected to be similar in volume, 
and of exceptional quality, compared to the 2018 crop. The Committee 
believes that decreasing the continuing assessment rate would allow the 
Committee to fully fund its 2019-2020 budgeted expenses and maintain 
its financial reserve within the limits established in the Order.
    The Committee held a well-publicized meeting May 8, 2019, where all 
interested parties were encouraged to participate in the discussions. 
However, the Order's quorum requirement was not met, and the Committee 
was not able to conduct official business. The following day, the 
Committee conducted the vote by email and, with a vote of 15-1, 
recommended 2019-2020 fiscal period budgeted expenditures of $56,250 
and an assessment rate of $0.20 per ton of sweet cherries handled. In 
comparison, last year's budgeted expenditures were $55,750. The 
proposed assessment rate of $0.20 is $0.05 lower than the $0.25 per ton 
rate currently in effect. The Committee recommended the assessment rate 
decrease because of a normal size crop estimate and a financial reserve 
fund balance that was higher than the Committee believes is 
responsible. At the recommended

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assessment rate and budgeted expenditures, the Committee expects its 
financial reserve to be $55,093 at the end of the 2019-2020 fiscal 
period, which would be within the limits set in the Order.
    The major expenditures recommended by the Committee for the 2019-
2020 fiscal period include $25,000 for program management contract 
services provided by the Washington State Fruit Commission, $7,250 for 
administrative expenses, $7,000 for regulation proceedings, $5,000 for 
data management, $5,000 for research, $4,000 for an annual audit, and 
$3,000 for travel. In comparison, these major expense categories 
budgeted for the 2018-2019 fiscal period were $25,000, $6,950, $7,000, 
$5,000, $5,000, $3,800, and $3,000, respectively.
    The assessment rate recommended by the Committee was derived by 
considering anticipated expenses, expected sweet cherry sales, and the 
amount of funds available in the authorized reserve. Expected income 
derived from handler assessments of $40,000 (200,000 tons of sweet 
cherries at $0.20 per ton), plus $5 interest income and $16,245 from 
the reserve would be adequate to cover budgeted expenses of $56,250. 
Funds from the reserve (estimated to be $71,338 at the beginning of the 
2019-2020 fiscal period) would be used to supply part of the 
Committee's 2019-2020 expenses in an effort to keep the reserve within 
the maximum permitted by the Order in Sec.  923.142(a).
    The assessment rate proposed in this rule would continue in effect 
indefinitely unless modified, suspended, or terminated by USDA upon 
recommendation and information submitted by the Committee or other 
available information.
    Although this assessment rate would be in effect for an indefinite 
period, the Committee 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 Committee meetings are available from the Committee or USDA. 
Committee meetings are open to the public and interested persons may 
express their views at these meetings. USDA would evaluate Committee 
recommendations and other available information to determine whether 
modification of the assessment rate is needed. Further rulemaking would 
be undertaken as necessary. The Committee's budget for subsequent 
fiscal periods would be reviewed and, as appropriate, approved by USDA.

Initial 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 proposed rule 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 
businesses subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act are unique in that they are brought about through 
group action of essentially small entities acting on their own behalf.
    There are approximately 1,450 growers and 37 handlers of sweet 
cherries in the regulated production area subject to regulation under 
the Order. Small agricultural service firms are defined by the Small 
Business Administration (SBA) as those having annual receipts of less 
than $7,500,000, and small agricultural producers are defined as those 
having annual receipts of less than $750,000 (13 CFR 121.201).
    According to data from USDA Market News, the 2018 season average 
f.o.b. price for Washington sweet cherries was approximately $35.14 per 
15-pound carton. The Committee reported that the industry shipped 3,964 
tons for the season, which equals approximately 27,394,133 cartons 
(204,456 tons at a net weight of 15 pounds per carton). Using the 
number of handlers, and assuming a normal distribution, most handlers 
would have average annual receipts of more than $7,500,000 ($35.14 
times 27,394,133 cartons equals $962,629,845 divided by 37 handlers 
equals $26,017,022 per handler).
    In addition, based on USDA National Agricultural Statistics Service 
data, the weighted average grower price for the 2018 season was $1,900 
per ton of sweet cherries. Based on grower price, shipment data, and 
the total number of Washington sweet cherry growers, and assuming a 
normal distribution, the average annual grower revenue is below 
$750,000 ($1,900 times 205,456 tons equals $390,366,400 divided by 
1,450 growers equals $269,218 per grower). Thus, most growers of 
Washington sweet cherries may be classified as small entities, but most 
of their handlers may be classified as large entities.
    This proposed rule would decrease the assessment rate collected 
from handlers for the 2019-2020 and subsequent fiscal periods from 
$0.25 to $0.20 per ton of Washington sweet cherries handled. The 
Committee recommended 2019-2020 fiscal period expenditures of $56,250 
and the $0.20 per ton assessment rate with an affirmative vote of 15-1. 
The one dissenting voter gave no reason for their opposition. The 
proposed assessment rate of $0.20 is $0.05 lower than the rate for the 
2018-2019 fiscal period. The Committee estimates that the industry will 
handle 200,000 tons of fresh, Washington sweet cherries during the 
2019-2020 fiscal period. Thus, the $0.20 per ton rate should provide 
$40,000 in assessment income. Income derived from handler assessments, 
along with $5 interest income and $16,245 from the reserve, would be 
adequate to cover all budgeted expenses.
    The major expenditures recommended by the Committee for the 2019-
2020 fiscal period include $25,000 for program management contract 
services provided by the Washington State Fruit Commission, $7,250 for 
administrative expenses, $7,000 for regulation proceedings, $5,000 for 
data management, $5,000 for research, $4,000 for an annual audit, and 
$3,000 for travel. In comparison, these major expense categories 
budgeted for the 2018-2019 fiscal period were $25,000, $6,950, $7,000, 
$5,000, $5,000, $3,800, and $3,000, respectively.
    The proposed lower assessment rate would cover most of the 
Committee's 2019-2020 fiscal period budgeted expenditures, with the 
balance to come from the financial reserve. Decreasing the continuing 
assessment rate and using some funds from the reserve would allow the 
Committee to fully fund budgeted expenses and bring its financial 
reserve to a level that is compliant with the Order.
    Prior to arriving at this budget and assessment rate, the Committee 
considered maintaining the current assessment rate of $0.25 per ton. 
However, after grower input and discussions at the May 8, 2019, 
meeting, the Committee projected the 2019 crop to be as good or better 
than the previous year. This amount of production at the current 
assessment level of $0.25 per ton would generate too much assessment 
income to fund the Committee's operations for the 2019-2020 fiscal 
period, but its financial reserve would not be in compliance with the 
Order. Based on estimated shipments, the recommended assessment rate of 
$0.20 per ton of sweet cherries should provide $40,000 in assessment 
income. The Committee determined assessment revenue would be adequate 
to cover most of its budgeted expenditures for the 2019-2020 fiscal 
period, with the balance coming from its financial reserve.

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Reserve funds would be kept within the amount authorized in the Order.
    A review of historical information and preliminary information 
pertaining to the upcoming fiscal period indicates that the average 
grower price range for the 2019-2020 season should be approximately 
$1,598-$3,081 per ton of Washington sweet cherries. Therefore, the 
estimated assessment revenue for the 2019-2020 fiscal period as a 
percentage of total grower revenue would be between 0.007 and 0.013 
percent.
    The Committee's meetings are widely publicized throughout the 
Washington sweet cherry industry. All interested persons are invited to 
attend the meetings and participate in Committee deliberations on all 
issues. Like all Committee meetings, the May 8, 2019, meeting was a 
public meeting and all entities, both large and small, were able to 
express views on this issue. Interested persons are invited to submit 
comments on this proposed rule, including the regulatory and 
information collection impacts of this action on small businesses.
    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 the OMB and assigned OMB No. 0581-0189, Fruit 
Crops. No changes in those requirements would be necessary because of 
this action. Should any changes become necessary, they would be 
submitted to OMB for approval.
    This proposed rule would not impose any additional reporting or 
recordkeeping requirements on either small or large Washington sweet 
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 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.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this proposed 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/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.

List of Subjects in 7 CFR Part 923

    Cherries, Marketing agreements, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 7 CFR part 923 is 
proposed to be amended as follows:

PART 923--MARKETING ORDER REGULATING THE HANDLING OF SWEET CHERRIES 
GROWN IN DESIGNATED COUNTIES IN WASHINGTON

0
1. The authority citation for 7 CFR part 923 continues to read as 
follows:

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


Sec.  923.236  [Amended]

0
2. Amend Sec.  923.236 is as follows:
    On and after April 1, 2019, an assessment rate of $0.20 per ton is 
established for the Washington Cherry Marketing Committee.

    Dated: September 17, 2019.
Bruce Summers,
Administrator, Agricultural Marketing Service.
[FR Doc. 2019-20451 Filed 9-20-19; 8:45 am]
 BILLING CODE 3410-02-P