[Federal Register: July 25, 2003 (Volume 68, Number 143)]
[Proposed Rules]
[Page 43978-43981]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25jy03-19]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 930
[Docket No. FV03-930-3 PR]
Tart Cherries Grown in the States of Michigan, et al.; Increased
Assessment Rate
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This proposed rule would increase the assessment rate for tart
cherries that are utilized in the production of tart cherries products
from $0.0019 to $0.0021 per pound. The assessment rate was recommended
by the Cherry Industry Administrative Board (Board) under Marketing
Order No. 930 for the 2003-2004 and subsequent fiscal periods. The
Board is responsible for local administration of the marketing order
which regulates the handling of tart cherries grown in the production
area. Authorization to assess tart cherry handlers enables the Board to
incur expenses that are reasonable and necessary to administer the
program. The fiscal period begins July 1, 2003, and ends June 30, 2004.
The assessment rate would remain in effect indefinitely unless
modified, suspended, or terminated.
DATES: Comments must be received by August 25, 2003.
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:
moabdocket.clerk@usda.gov. 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: Patricia A. Petrella or Kenneth G.
Johnson, Marketing Order Administration Branch, Fruit and Vegetable
Programs, AMS, USDA, Suite 2A04, Unit 155, 4700 River Road, Riverdale,
MD 20737, telephone: (301) 734-5243, or Fax: (301)-734-5275; or George
Kelhart, Technical Advisor, Marketing Order Administration Branch,
Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW.,
STOP 0237, Washington, DC 20250-0237; telephone: (202) 720-2491, or
Fax: (202) 720-8938.
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, or Fax: (202) 720-8938, or e-mail: Jay.Guerber@usda.gov.
SUPPLEMENTARY INFORMATION: This rule is issued under Marketing
Agreement and Order No. 930 (7 CFR part 930), regulating the handling
of tart cherries grown in the States of Michigan, New York,
Pennsylvania, Oregon, Utah, Washington, and Wisconsin, hereinafter
referred to as the ``order.'' The marketing agreement and order are
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 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 would be applicable to all assessable tart cherries
beginning July 1, 2003, and continue until amended, suspended, or
terminated. This rule will not preempt
[[Page 43979]]
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 USDA a petition
stating that the order, and 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 would increase the assessment rate established for the
Board for the 2003-2004 and subsequent fiscal periods for cherries that
are utilized in the production of tart cherry products from $0.0019 to
$0.0021 per pound of cherries.
The tart cherry marketing order provides authority for the 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. 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.
For the 2002-2003 fiscal period, the Board recommended, and the
Department approved, an assessment rate that would continue in effect
from fiscal period to fiscal period unless modified, suspended, or
terminated by the USDA upon recommendation and information submitted by
the Board or other information available to USDA.
Section 930.42(a) of the order authorizes a reserve sufficient to
cover one year's operating expenses. The increased rate is expected to
generate enough income to meet the Board's operating expenses in 2003-
2004.
The Board met on January 23, 2003, and unanimously recommended
2003-2004 expenditures of $532,000. The industry completed a formal
rulemaking proceeding which amended the assessment rate section by
authorizing one assessment rate rather than two assessment rates for
different tart cherry products [67 FR 51697]. The provisions requiring
the establishment of different assessment rates for different products
were removed. In their place, the Board is required to consider the
volume of cherries used in making various products and the relative
market value of those products in deciding whether the assessment rate
should be a single, uniform rate applicable to all cherries or whether
varying rates should be recommended for cherries manufactured into
different products.
In addition, the amended order provides that the assessment rate
should not apply to cherries diverted in orchard by growers, and those
diverted by handlers through destruction at their plants. The Board
recommended the amendment to allow one assessment rate for all tart
cherry products handled. In making its recommendation, the Board stated
that while a two-tiered assessment rate scheme may be appropriate in
some years, it may not be in others.
The amended order specifically provides that under Sec.
930.41(f)(1) and (2) the established assessment rate may be uniform, or
may vary depending on the product the cherries are used to manufacture.
The Board consider the differences in the number of pounds of cherries
utilized for various cherry products and the relative market values of
such cherry products.
On June 25, 2003 (68 FR 37726), a final rule was published in the
Federal Register that established a single assessment rate for the
2002-2003 fiscal period for all tart cherries handled regardless of the
product the cherries are used to manufacture. The Board determined that
the markets for juice, juice concentrate, and puree were gaining in
importance and that cherries used in such products should be assessed
the same as those sold for use in assorted bakery items, as canned pie
fill, and as dried cherries. The assessment rate for tart cherry
products other than juice, juice concentrate, or puree was increased
from $0.00175 to $0.0019 per pound of cherries. The assessment rate for
cherries utilized for juice, juice concentrate, or puree was increased
from $0.000875 to $0.0019 per pound.
The Board considered the above items and decided that one
assessment rate should be recommended for all cherry products during
2003-2004. According to the Board, processors have developed a strong
market for juice and concentrate products over the past few years.
There is considerable belief that juice will be one of the growth
outlets for tart cherries. This results from the industry's promotional
efforts being undertaken for juice and concentrate products, the
segmentation of the market into retail and industrial components, and
the nutritional/nutraceutical profile of the product. As a result,
there has been an increase in consumer recognition, acceptance,
purchases, and the value of tart cherry juice and concentrate.
According to the Board, prices received for tart cherry juice
concentrate are now $25.00 per gallon or more. This is derived by using
the fairly common conversion ratio of 100 pounds to the gallon for mid-
west production, which has a raw product value of $0.25 per pound.
Using a 50 pound to the gallon conversion for the product, typical for
west coast production, this represents a per pound value of $0.50. The
difference in the west and mid-west conversion factors is that tart
cherries produced in the western United States generally have a higher
sugar content and larger fruit size, thus fewer raw product is needed.
The average grower price received ranges between $0.17 to $0.20 per
pound.
According to the Board, puree products are as valuable and
comparable to juice and juice concentrate products. The Board reported
that the spot price for single strength puree for 2001 was about 60
cents per pound. The raw product equivalent (RPE) volume of pureed
fruit was 539,504 pounds which is about 0.15 percent of all processed
fruit. The Board also reported for 2001 that the price for five plus
one product was 67 cents per pound. Five plus one is a product of
cherries and sugar which is manufactured by many processors (25 pounds
of cherries and five pounds of sugar to make a 30 pound commercial
container). It is the main product that handlers produce. Five plus one
cherries are primarily sold and remanufactured into assorted bakery
items, canned pie fill, and dried cherries. Since, juice, juice
concentrate, and puree are not considered to be low value products at
this time the Board considers one assessment to be appropriate. The
product is moved between production areas and may be converted into
puree or concentrate at a later date, depending on the market demand
for these products.
In comparing the costs of juice, juice concentrate, and puree, the
Board has determined that current prices are similar for these products
when compared to the 5 plus 1 product. The information received from
the Board
[[Page 43980]]
indicates that puree products are becoming a viable market and should
be assessed at a higher assessment rate.
As a result of last season's short crop, much of the tart cherry
products released from inventory were in the form of tart cherry juice
and/or juice concentrate. There is not much, if any, of this product
available on the market today. The Board contends that given these
factors, it is hard to suggest that juice/concentrate, or puree, are of
lesser value than the more traditional products such as pie-fill or
individually quick frozen tart cherries. Thus, the Board determined
that one assessment rate is appropriate for the 2003-04 fiscal period.
Budgeted expenditures for the 2003-04 fiscal period were
unanimously recommended at $532,000. The major expenditures recommended
by the Board for 2003-04 include $81,000 for meetings, $149,000 for
compliance, $191,000 for personnel, $106,000 for office expenses, and
$5,000 for industry educational efforts. Budgeted expenses for those
items in 2002-2003 were $85,000 for meetings, $170,000 for compliance,
$185,000 for personnel, $80,000 for office expenses, and $2,500 for
industry educational efforts, respectively.
Last fiscal period's budgeted expenditures were $522,500. However
last season, the tart cherry industry experienced a significant frost
mainly in Michigan which severely impacted the crop. Only 60 million
pounds of cherries were produced in comparison to a normal crop of
about 260 million pounds. The Board staff responded to this decrease in
funds by cutting its expenditures. The Board reduced its staff and
Committee travel for meetings and used reserve funds to continue
administrative operations in 2002-2003. The recommended assessment rate
of $0.0021 is higher than the current rate of $0.0019 per pound. 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 260 million
pounds. Therefore, total assessment income for 2003-2004 is estimated
at $546,000. This amount plus adequate funds in the reserve and
interest income would be adequate to cover budgeted expenses. Funds in
the reserve (approximately $66,000) 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 2003-2004 budget and those for subsequent fiscal
periods would be reviewed and, as appropriate, approved by the USDA.
The Regulatory Flexibility Act and Effects on Small Businesses
The Agricultural Marketing Service (AMS) has considered the
economic impact of this action on small entities and has prepared this
initial regulatory flexibility analysis. The Regulatory Flexibility Act
(RFA) allows AMS to certify that regulations do not have a significant
economic impact on a substantial number of small entities. However, as
a matter of general policy, AMS' Fruit and Vegetable Programs
(Programs) no longer opts for such certification, but rather performs
regulatory flexibility analyses for any rulemaking that would generate
the interest of a significant number of small entities. Performing such
analyses shifts the Programs' efforts from determining whether
regulatory flexibility analyses are required to the consideration of
regulatory options and economic or regulatory impacts.
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 the rules issued 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 order and approximately 900 producers
of tart cherries in the regulated area. Small agricultural service
firms have been defined by the Small Business Administration (13 CFR
121.201) as those having annual receipts less than $5,000,000, and
small agricultural producers are those whose annual receipts are less
than $750,000. A majority of the tart cherry handlers and producers may
be classified as small entities.
The Board unanimously recommended 2003-2004 expenditures of
$532,000 and an assessment rate increase from $0.0019 to $0.0021 per
pound. This rule would increase the assessment rate established for the
Board and collected from handlers for the 2003-2004 and subsequent
fiscal periods for cherries that are utilized in the production of tart
cherry products. The quantity of assessable tart cherries expected to
be produced during the 2003-2004 crop year is estimated at 260 million
pounds. Assessment income, based on this crop, along with interest
income and reserves, would be adequate to cover budgeted expenses.
The major expenditures recommended by the Board for the 2003-2004
fiscal period include $81,000 for meetings, $149,000 for compliance,
$191,000 for personnel, $106,000 for office expenses, and $5,000 for
industry educational efforts. Budgeted expenses for those items in
2002-2003 were $85,000 for meetings, $170,000 for compliance, $185,000
for personnel, $80,000 for office expenses, and $2,500 for industry
educational efforts, respectively.
The Board discussed the alternative of continuing the existing
assessment rate, but concluded that would cause the amount in the
operating reserve to be reduced to an unacceptable level.
The principal demand for tart cherries is in the form of processed
products. Tart cherries are dried, frozen, canned, juiced, and pureed.
Data from the National Agricultural Statistics Service (NASS) states
that during the period 1995/96 through 2002/03, approximately 92
percent of the U.S. tart cherry crop, or 285.7 million pounds, was
processed annually. Of the 285.7 million pounds of tart cherries
processed, 58 percent was frozen, 30 percent was canned, and 12 percent
was utilized for juice.
Based on NASS data, acreage in the United States devoted to tart
cherry production has been trending downward. Since 1987/88 tart cherry
bearing acres have decreased from 50,050 acres, to 36,900 acres in the
2002/03 crop year. In 2002/03, 93 percent of domestic tart cherry
acreage was located in four States: Michigan,
[[Page 43981]]
New York, Utah, and Wisconsin. Michigan leads the nation in tart cherry
acreage with 74 percent of the total. Michigan produces about 75
percent of the U.S. tart cherry crop each year. Tart cherry acreage in
Michigan decreased from 28,500 acres in 2000-2001, to 27,400 acres in
2002-2003.
In deriving the recommended assessment rate, the Board estimated
assessable tart cherry production for the fiscal period at 260 million
pounds. Cherries used for handler destruction and grower diversion
outlets are exempt from assessment obligations. Funds in the reserve
(approximately $66,000) will be kept within the approximately six
months' operational expenses as recommended by the Board which would be
consistent with the order (Sec. 930.42(a)).
While this action will impose additional costs on handlers, the
costs are in the form of assessments which are applied uniformly. Some
of the costs may also be passed on to producers. However, these costs
are offset by the benefits derived from the operation of the marketing
order. 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, the January 23, 2003, meeting was a public meeting and
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 action will 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.
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: 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 30-day comment period is provided to allow interested persons to
respond to this proposed rule. Thirty days is deemed appropriate
because: (1) The 2003-2004 fiscal begins on July 1, 2003, and ends on
June 30, 2004, and the marketing order requires that the rate of
assessment for each fiscal period apply to all assessable tart cherries
handled during such fiscal period; (2) the Board needs the funds to
operate the program; and (3) handlers are aware of this action which
was unanimously recommended by the Board at a public meeting. 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 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 Handler assessment rate.
On and after July 1, 2003, the assessment rate imposed on handlers
shall be $0.0021 per pound of tart cherries grown in the production
area and utilized in the production of tart cherry products.
Dated: July 22, 2003.
A.J. Yates,
Administrator, Agricultural Marketing Services.
[FR Doc. 03-18985 Filed 7-24-03; 8:45 am]
BILLING CODE 3410-02-M