[Federal Register Volume 86, Number 154 (Friday, August 13, 2021)]
[Proposed Rules]
[Pages 44647-44650]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-17234]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Doc. No. AMS-SC21-0026; SC21-930-1 PR]


Tart Cherries Grown in the States of Michigan, New York, 
Pennsylvania, Oregon, Utah, Washington, and Wisconsin; Changes to 
Reporting Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would implement a recommendation from the 
Cherry Industry Administrative Board to revise reporting requirements 
prescribed under the Federal marketing order regulating the handling of 
tart cherries. This action would modify reporting requirements to 
include information necessary to determine the portion of total 
inventory that is greater than five years old.

DATES: Comments must be received by September 13, 2021.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. Comments must be submitted via the internet 
at: http://www.regulations.gov. All comments should reference the 
document number and the date and page number of this issue of the 
Federal Register. All comments submitted in response to this proposed 
rule will be included in the record and 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: Thomas F. Nalepa, 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

[[Page 44648]]

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, or 
Email: [email protected].

SUPPLEMENTARY INFORMATION: This action, pursuant to 5 U.S.C. 553, 
proposes an amendment to regulations issued to carry out a marketing 
order as defined in 7 CFR 900.2(j). This proposed rule is issued under 
Marketing Agreement and Order No. 930, (7 CFR part 930), regulating the 
handling of tart cherries produced in the States of Michigan, New York, 
Pennsylvania, Oregon, Utah, Washington, and Wisconsin. Part 930 
(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 Cherry Industry 
Administrative Board (Board or CIAB) locally administers the Order and 
is comprised of producers and handlers of tart cherries operating 
within the production area, and a public member.
    The Department of Agriculture (USDA) is issuing this proposed rule 
in conformance with Executive Orders 12866 and 13563. Executive Orders 
12866 and 13563 direct agencies to assess all costs and benefits of 
available regulatory alternatives and, if regulation is necessary, to 
select regulatory approaches that maximize net benefits (including 
potential economic, environmental, public health and safety effects, 
distributive impacts and equity). Executive Order 13563 emphasizes the 
importance of quantifying both costs and benefits, reducing costs, 
harmonizing rules, and promoting flexibility. This action falls within 
a category of regulatory actions that the Office of Management and 
Budget (OMB) exempted from Executive Order 12866 review.
    This proposed rule has been reviewed under Executive Order 13175--
Consultation and Coordination with Indian Tribal Governments, which 
requires agencies to consider whether their rulemaking actions would 
have tribal implications. Agricultural Marketing Service (AMS) has 
determined that this proposed rule is unlikely to have substantial 
direct effects on one or more Indian tribes, on the relationship 
between the Federal Government and Indian tribes, or on the 
distribution of power and responsibilities between the Federal 
Government and Indian tribes.
    This proposed rule has been reviewed under Executive Order 13175--
Consultation and Coordination with Indian Tribal Governments, which 
requires agencies to consider whether their rulemaking actions would 
have tribal implications. Agricultural Marketing Service (AMS) has 
determined that this proposed rule is unlikely to have substantial 
direct effects on one or more Indian tribes, on the relationship 
between the Federal Government and Indian tribes, or on the 
distribution of power and responsibilities between the Federal 
Government and Indian tribes.
    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This proposed rule is not intended to have 
retroactive effect.
    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 action would revise the reporting requirements to include the 
sales and inventory information necessary to segregate between 
inventory that is five years old from inventory is less than five years 
old. This modification would allow the industry to better estimate how 
much inventory on-hand is still marketable and help ensure relevant 
inventory information is available when considering volume 
restrictions. This proposal was unanimously recommended by the Board at 
its February 25, 2021 meeting.
    Section 930.70 of the Order provides, in part, authority to require 
handlers to submit reports of inventory. Section 930.70 further 
provides, with the approval of the Secretary, authority for the Board 
to collect other such information from handlers as needed to perform 
its duties. This proposed rule would utilize this authority to 
establish a new Sec.  930.170 under the rules and regulations of the 
Order. This new section would codify existing inventory reporting 
requirements and require handlers of tart cherries to annually report 
inventory that exceeds five years of age.
    During Board meetings held on June 25, 2020 and January 14, 2021, 
the Board received industry feedback about enhancing tart cherry 
inventory transparency and developing a clearer understanding of the 
age of product in inventory. In these discussions, several members 
expressed concern that some of the inventory currently being reported 
may be product beyond its saleable date, which could create a 
misleading view of the actual amount of tart cherries available for 
market.
    Currently, handlers submit inventory reports four times per year 
for reporting periods ending November 30, February 28, May 31, and June 
30, with reports for those periods due on December 10, March 10, June 
10, and July 10, respectively. This information is submitted on CIAB 
Form 3 (Sales/Inventory Report) as previously approved by OMB and 
assigned OMB No. 0581-0177. The report includes information on the 
type, form, and the amount of product, but does not include data 
regarding the age of products in inventory. The Board agreed that 
existing reporting requirements may limit their knowledge of the 
industry's on-hand tart cherry inventory and formed a subcommittee to 
review inventory reporting requirements.
    The Board reviewed the subcommittee findings at the January 14, 
2021, meeting, and expressed support for the subcommittee's 
recommendation to adjust reporting requirements to account for 
inventory greater than five years old. The Board noted a five-year 
inventory cutoff date was appropriate because this period would 
sufficiently accommodate lifespans of nearly all existing products 
likely to be inventoried. Board members agreed having this additional 
information regarding the age of inventory would be beneficial.
    The Order includes the authority for establishing volume 
regulation, and one element considered during those discussions is the 
amount of tart cherries available in inventory. The regulated season 
runs from July 1 through June 30. The current reporting aggregates the 
industry's inventory data and does not separately track older 
inventory, and this compilation could provide an incomplete view of the 
industry's marketable inventory. By segregating the accounting of 
inventory older than five years, the Board would have more precise 
information regarding inventory when discussing market issues.

[[Page 44649]]

    As part of their discussions, the Board also provided clarifying 
information on how to calculate inventory age for reporting purposes. 
To determine product age, the date used would either be the date of 
harvest and processing or date of remanufacturing. Board members 
emphasized the starting point for calculating inventory age would be 
reset if the inventory were remanufactured into a new product.
    For example, if a handler was completing their routine inventory 
report on May 31, 2021, any tart cherries harvested in 2014 or earlier 
would be considered over five years old. Although cherries harvested in 
2014 would be considered part of the 2014-15 harvest year, based on the 
date they were harvested and processed, they would be greater than five 
years old for reporting purposes by the end of May 2021. If cherries 
harvested in 2014 were remanufactured into another product, the date of 
remanufacturing would become the date used for calculating the age for 
inventory purposes. The Board stated this is the same dating procedure 
as used for calculating the age of cherries held in reserve under 
volume regulation. Using these dates, inventory older than five years 
would be reported each May on the modified report.
    Several members commented the age of inventory is already recorded 
by handlers as part of their normal business activities, and as a 
result, this requirement would not be overly burdensome. Members 
further expressed the separate reporting of inventory over five years 
old would, at most, require a few extra minutes of a handler's time and 
would only be required once annually.
    Consequently, the Board voted to add a section to the inventory 
report to include the total volume of inventory over five years old. 
The Board recommended including this information on the inventory 
report for the reporting period ending May 31 due on June 10. The Board 
agreed this was the appropriate time to have the information available 
as this report would be used to develop the industry inventory data 
when the Board meets in June to consider the need to establish a volume 
control recommendation for the coming season.
    This proposed rule would add sales and inventory report 
requirements to administrative provisions under the Order and would 
require handlers to report inventory older than five years. These 
reporting requirements would be added in a new Sec.  930.170 and would 
include information on the handler submitting the form; the reporting 
period; beginning inventory for each product; the amount packed for 
each product; sales; information on transfers of product between 
handlers, including the name of the selling handler, name of the 
receiving handler, and form type, number of units; information on 
product repacked or remanufactured during the reporting period, 
including form type and number of units of source products and form 
type and number of units of end products; and information on the amount 
of ending inventory for each product, including the amount of ending 
inventory for each product over five years old. Only the May 31 report 
would require handlers to record amounts of inventories over five years 
old.
    This information would support the industry's ability to make 
marketing decisions by providing more descriptive information than 
currently available when evaluating the need for volume regulation. 
Besides providing important information for industry reports regarding 
sales and inventory, this action would also help ensure compliance with 
this reporting requirement by including it in the rules and regulations 
under the Order.

Initial Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), 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 450 producers of tart cherries in the 
regulated area and approximately 40 handlers who are subject to the 
Order. Small agricultural growers are defined by the Small Business 
Administration as those having annual receipts less than $1,000,000, 
and small agricultural service firms are defined as those whose annual 
receipts are less than $30,000,000 (13 CFR 121.201).
    According to information from the National Agricultural Statistics 
Service (NASS) and Board data, the average annual grower price for tart 
cherries during the 2019-2020 season was approximately $0.15 per pound. 
With total utilization at 236.34 million pounds, the total 2019-20 crop 
value is estimated at $35.45 million (236.34 million pounds times 
$0.15). Dividing the crop value by the estimated number of producers 
(450) yields an estimated average receipt per producer of $78,778. This 
is well below the SBA threshold for small producers.
    A free-on-board (FOB) price of $0.82 per pound for processed tart 
cherries was derived from USDA's 2020 purchases of dried tart cherries 
at an average price of $4.11 per pound. The dried cherry price was 
converted to a raw product equivalent price at an industry recognized 
ratio of five to one. Based on utilization, this price represents a 
good estimate of the price for processed cherries. Multiplying this FOB 
price ($0.82) by total utilization of 236.34 million pounds results in 
an estimated handler-level tart cherry value of $193.8 million. 
Dividing this figure by the number of handlers (40) yields estimated 
average annual handler receipts of $4.84 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 proposed rule would add the sales and inventory report 
requirements to the administrative provisions under the Order and would 
require handlers to report inventory older than five years. This 
proposed rule would establish a new Sec.  930.170 under the rules and 
regulations of the Order. The authority for this proposed action is 
provided in Sec.  930.70 of the Order.
    AMS anticipates that this proposed rule would impose minimal, if 
any, additional costs on handlers or growers, regardless of their size. 
This action would impose a small increase in the reporting burden for 
each tart cherry handler. However, because handlers currently maintain 
data about the age of their inventory in the regular course of 
business, they should be able to readily access this information. 
Consequently, any additional costs associated with this change would be 
minimal (not significant) and apply equally to all handlers.
    This proposed action should also benefit the entire industry by 
providing more precise information on tart cherry product in inventory. 
This information would provide accurate information regarding available 
inventory and help with marketing and planning for the industry. 
Further, having these requirements codified under the rules and 
regulations would also benefit compliance enforcement of this reporting 
requirement. The benefits of this rule are expected to be equally 
available to all tart cherry growers and handlers, regardless of their 
size.

[[Page 44650]]

    The Board discussed other alternatives to this proposed action, 
including reporting inventory older than three years for the purposes 
of classifying the age of inventory, reporting the age of inventory 
quarterly, and leaving the current reporting requirements unchanged. 
When discussing alternatives, the Board concluded a three-year 
timeframe would not sufficiently cover the normal lifespan of all 
products held in inventory. The Board also commented that quarterly 
reporting of older inventory was unnecessary because this information 
would be most useful at the end of the season, prior to making annual 
volume restriction recommendations. Therefore, the alternatives were 
rejected.
    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. This proposed rule would 
require changes to the Board's existing CIAB Form 3. However, changes 
are minor and the currently approved burden for the form would be 
minimally increased by the proposed changes. The revised form has been 
submitted to OMB for approval.
    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 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.
    Further, Board meetings are widely publicized throughout the tart 
cherry industry. Meetings are public and virtual or in a hybrid style 
with participants having a choice whether to attend in person or 
virtually. All interested persons are invited to attend meetings and 
participate in Board deliberations on all issues. Board meetings on 
June 25, 2020, January 14, 2021, and February 25, 2021, were each 
conducted via videoconference. All entities, both large and small, were 
able to express views on this issue. Finally, interested persons are 
invited to submit comments on this proposed rule, including regulatory 
and information collection impacts of this proposed action on small 
businesses.
    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.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposal. All written comments timely received will be 
considered before a final determination is made on this matter.

List of Subjects in 7 CFR Part 930

    Marketing agreements, Reporting and recordkeeping requirements, 
Tart cherries.

    For 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

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

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

0
2. Add Sec.  930.170 to read as follows:


Sec.  930.170  Sales and Inventory Report.

    (a) Handlers shall submit to the Board a sales and inventory report 
for the reporting period ending November 30, February 28, May 31, and 
June 30 of each crop year. Handlers shall file such reports by the 
tenth day of the month following the reporting period, December 10, 
March 10, June 10, and July 10, respectively. Should the filing due 
date fall on a Saturday, Sunday, or federal holiday, reports are due by 
the first business day following the due date. Such reports shall be 
reported to the Board on CIAB Form 3 and include:
    (1) The name, address, telephone number, and identifying number of 
the handler;
    (2) The reporting period covered by the report;
    (3) The form, type, and unit size for each product;
    (4) The total beginning of year inventory for each product;
    (5) The packed amount for each product;
    (6) Total inter-handler transfers, and total volume repackaged or 
remanufactured for each product, year-to-date;
    (7) Total sales outside the industry for each product, year-to-
date;
    (8) The amount of ending inventory for each product, year-to-date;
    (9) List of inter-handler transfers, both in and out, during the 
reporting period including:
    (i) Name of the selling handler;
    (ii) Name of the receiving handler; and
    (iii) Form, type, number of units.
    (10) List of repacks and remanufactures during the reporting period 
including:
    (i) Form, type, and number of units of source products; and
    (ii) Form, type, and number of units of end products.
    (b) The amount of inventory for each product over 5 years old shall 
be reported annually on the sales and inventory report for the 
reporting period ending May 31. Product age is based on the crop year 
in which the current product was processed or remanufactured.

Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2021-17234 Filed 8-12-21; 8:45 am]
BILLING CODE P