Tart Cherries Grown in the States of Michigan, et al.; Revision of Optimum Supply Requirements and Establishment of Inventory Release Procedures, 63676-63679 [2016-22258]
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63676
Federal Register / Vol. 81, No. 180 / Friday, September 16, 2016 / Rules and Regulations
Since this change is a technical
correction and editorial in nature, and
will not result in a change to the way
service is provided to our customers,
AMS has determined it will not have a
financial impact on small entities that
utilize our services.
AMS will also revise the prerequisite
requirement of shell eggs eligible for
USDA grading and certification. The
revision will prohibit the use of SEadulterated shell eggs or recalled shell
eggs from being presented to USDA for
grading and certification.
The FDA prohibits the use of SEadulterated shell eggs from being sold to
consumers. When shell eggs are
suspected of being adulterated with SE,
the packing facility is obligated to test
the shell eggs to assure only safe
product is distributed to consumers. If
shell eggs are found to be adulterated
with SE, the FDA will issue a request to
the packing facility to voluntarily recall
the product, or will exercise its
mandatory recall authority to return the
product to the origin facility. The
product must either be destroyed or
reconditioned under FDA supervision.
Since SE-adulterated shell eggs or
shell eggs that have been recalled are no
longer eligible for distribution to
consumers, but are either destroyed or
reconditioned under the direction of the
FDA, changing the AMS regulation will
not have an impact on small entities
since those shell eggs are deemed unfit
for human consumption.
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Executive Order 12988
This final rule has been reviewed
under Executive Order 12988, Civil
Justice Reform. When this final rule is
adopted: (1) All State and local laws and
regulations that are inconsistent with
the rule will be preempted; (2) no
retroactive effect will be given to this
rule; and (3) administrative proceedings
will not be required before parties may
file suit in court challenging this rule.
Paperwork Reduction Act
In accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501
et seq.), OMB has approved the
information collection and
recordkeeping requirements included in
this final rule, and there are no new
requirements. The assigned OMB
control number is 0581–0128, as
approved on July 8, 2014.
AMS is committed to compliance
with the Government Paperwork
Elimination Act, which requires
government agencies in general to
provide the public the option of
submitting information or transacting
business electronically to the maximum
extent possible.
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E-Government Act
AMS is committed to complying with
the E-Government Act of 2002 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.
List of Subjects in 7 CFR Part 56
Agriculture, Eggs and egg products,
Food grades and standards, Food
labeling, Food packaging, Reporting and
recordkeeping requirements, Voluntary
standards.
For the reasons set forth in the
preamble, 7 CFR part 56 is amended as
follows:
PART 56—VOLUNTARY GRADING OF
SHELL EGGS
1. The authority citation for 7 CFR
part 56 continues to read as follows:
■
Authority: 7 U.S.C. 1621 et seq.
2. Amend § 56.1 by revising the
definition of Condition to read as
follows:
■
§ 56.1 Meaning of words and terms
defined.
*
*
*
*
*
Condition means any characteristic
detected by sensory examination
(visual, touch, or odor), including the
state of preservation, cleanliness,
soundness, or fitness for human food
that affects the marketing of the product.
*
*
*
*
*
3. Amend § 56.40 by revising
paragraphs (c)(2) and (3) and adding
paragraphs (c)(4) and (5) to read as
follows:
■
§ 56.40 Grading requirements of shell
eggs identified with grademarks.
*
*
*
*
*
(c) * * *
(2) Not possess any undesirable odors
or flavors;
(3) Not have previously been shipped
for retail sale;
(4) Not originate from a layer house
environment determined positive for the
presence of Salmonella Enteritidis (SE),
unless the eggs from the layer house
have been sampled and have tested
negative for the presence of SE in the
eggs; and
(5) Not originate from eggs testing
positive for SE, or not have been subject
to a product recall.
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Dated: September 12, 2016.
Elanor Starmer,
Associate Administrator, Agricultural
Marketing Service.
[FR Doc. 2016–22246 Filed 9–15–16; 8:45 am]
BILLING CODE 3410–02–P
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 930
[Doc. No. AMS–FV–15–0047; FV15–930–2
FR]
Tart Cherries Grown in the States of
Michigan, et al.; Revision of Optimum
Supply Requirements and
Establishment of Inventory Release
Procedures
Agricultural Marketing Service,
USDA.
ACTION: Final rule.
AGENCY:
This rule implements
recommendations from the Cherry
Industry Administrative Board (Board)
to add inventory release procedures and
revise optimum supply provisions
under the marketing order for tart
cherries grown in the States of
Michigan, New York, Pennsylvania,
Oregon, Utah, Washington, and
Wisconsin (order). The Board locally
administers the order and is comprised
of growers and handlers operating
within the area of production. This final
rule establishes procedures for releasing
inventory from reserves and increases
the maximum carry-out volume
available when calculating optimum
supply from 20 million pounds to 100
million pounds. These changes provide
clear procedures should an inventory
release be necessary and provides more
flexibility when calculating optimum
supply.
SUMMARY:
DATES:
Effective September 19, 2016.
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:
Jennie.Varela@ams.usda.gov or
Christian.Nissen@ams.usda.gov.
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–
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Federal Register / Vol. 81, No. 180 / Friday, September 16, 2016 / Rules and Regulations
2491, Fax: (202) 720–8938, or Email:
Richard.Lower@ams.usda.gov.
SUPPLEMENTARY INFORMATION: This final
rule is issued under Marketing Order
No. 930, as amended (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 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 rule in
conformance with Executive Orders
12866, 13563, and 13175.
This final rule has been reviewed
under Executive Order 12988, Civil
Justice Reform. This 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. A 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 final rule adds inventory release
procedures and revises the optimum
supply and exemption provisions under
the order. This rule establishes
procedures for releasing inventory from
reserves and increases the maximum
carry-out volume available when
calculating optimum supply from 20
million pounds to 100 million pounds.
These changes provide clear procedures
should an inventory release be
necessary and provides more flexibility
when calculating optimum supply. The
Board voted to recommend these
changes to the Secretary at its meeting
on June 25, 2015.
Section 930.50 prescribes procedures
for calculating an optimum supply
based on sales history to determine free
and restricted percentages under
volume regulation. As part of the
process, the Board is required to
determine the volume of fruit they
anticipate would be necessary to have
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on hand at the end of the crop year. The
order refers to this volume as carry-out
inventory. This section currently
specifies, in part, that the Board can
consider a carry-out inventory of up to
20 million pounds, or another amount
with the approval of the Secretary. This
rule amends Section 930.151 to increase
the maximum carry-out volume
available when calculating optimum
supply from 20 million pounds to 100
million pounds.
Section 930.54 of the order governs
the use or disposition of inventory
reserve cherries. Under this authority,
the Board can recommend to the
Secretary that a portion or all of
inventory reserve cherries be released if
there is not sufficient fruit on the market
to meet commercial demand. Sections
930.55 and 930.57 outline the
provisions and requirements of the
primary and secondary reserves,
respectively. Further, no cherries in the
secondary reserve may be released until
all cherries in the primary reserve have
been released. This rule creates section
930.154 to establish procedures for
releasing inventory from reserves.
When volume regulation is in place,
the restricted portion of the crop is
either held in reserve by handlers or can
be sold for exempt uses as authorized in
the rules and regulations of the order.
Reserves can be held over multiple crop
years and are released when there is a
shortfall in supply. While the Board
maintains record of the volume in
reserve, handlers maintain ownership of
the reserve fruit.
All inventory reserves were released
to meet demand following a crop
disaster in 2012. The following year, the
industry was still recovering and the
Board did not recommend a volume
regulation. When the Board
recommended a volume regulation for
the 2014–15 season to the Secretary, and
cherries were again being added to the
reserve, the Board established a
committee to review the procedures for
releasing restricted inventory from
reserves. The committee recommended
to the Board that the procedures as
previously developed by the Board be
maintained, and that any release should
first come from inventory currently in
the primary reserve and then from any
cherries designated for reserve from the
current season if necessary.
Under these procedures, once the
additional volume needed for release is
established, the release should be
apportioned among handlers based on
each handler’s prior three-year average
of volume handled as a percentage of
the industry’s three-year average. For
example, if a handler handled five
percent of the previous three years’
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63677
production, and the Board
recommended a release of 20 million
pounds, that handler would be
authorized to release one million
pounds of established reserves (.05 X 20
million). If a handler receives a release
larger than what they have in the
primary reserve, the excess amount
would be reapportioned to those
handlers with remaining primary
reserve. If the handler in the scenario
above had only 750,000 pounds in the
primary reserve, the remaining 250,000
pounds would be reallocated to those
handlers who still have inventory in the
primary reserve.
The committee that reviewed the
procedures for releasing restricted
inventory from the reserves recognized
that inventory reserves can be
accumulated over a period of years.
Therefore, the committee agreed
releases should be based on the average
amount handled during the three
previous crop years, rather than using a
year-to-year basis. The existing release
procedures were crafted by the Board
through a series of actions in past years
and meetings. However, the procedures
were not codified in the rules and
regulations under the order. This rule
adds the inventory release procedures to
the regulations.
This recommendation was also
thought to be the most equitable way to
conduct releases. One Board member
believed the releases should come from
the current year’s reserves prior to
releasing from existing reserves, and did
not support the recommendation.
However, the Board recognized that
during the crop year, complete
information on reserves and shipment
data would not be available. Thus, the
Board recommended codifying
inventory release procedures as
recommended by the committee. The
Board supported the recommendation
by a vote of 17–1. This rule adds a new
Section 930.154 to the regulations to
establish procedures for releasing
inventory from reserves.
In addition to reviewing inventory
release procedures, the Board discussed
changes to some of its practices
regarding calculation of optimum
supply. Optimum supply is defined as
the average free sales of the prior three
years plus desirable carry-out inventory.
Desirable carry-out is the amount of
fruit needed by the industry to be
carried into the succeeding crop year to
meet marketing demand until the new
crop is available. Desirable carry-out is
set each year by the Board after
considering market circumstances and
needs. Section 930.50(a) currently
specifies that desirable carry-out can
range from 0 to a maximum of 20
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Federal Register / Vol. 81, No. 180 / Friday, September 16, 2016 / Rules and Regulations
million pounds, but also authorizes the
Board to establish an alternative carryout figure with the approval of the
Secretary.
Since the promulgation of the order,
the industry has seen new products and
new segments emerge, such as dried tart
cherries. As a result, at the end of a
season there are multiple product lines
that need to be supplied with tart
cherries before the next harvest, which
has impacted desirable carry-out.
Desirable carry-out is the amount of
fruit needed by the industry to be
carried into the succeeding crop year to
meet marketing demand until the new
crop is available.
In 2014, the Board used its authority
to recommend to the Secretary a carryout volume above the order-prescribed
20 million pound maximum for the
2014–2015 crop year. At that time, the
Board estimated it was necessary to
have 50 million pounds available at the
end of the crop year to fulfill the needs
of the industry. In discussing volume
regulation for the 2015–2016 crop year,
the Board agreed an increased carry-out
was again necessary and recommended
to the Secretary a 55 million pound
carry-out when calculating the optimum
supply.
In order to facilitate future carry-out
needs without engaging in annual
rulemaking, the Board recommended
permanently increasing the maximum
carry-out to 100 million pounds. Some
members considered the 100 million
pound upper limit to be too high, and
voted against the recommendation.
However, this action only increases the
available range for the carry-out value
from 0 to 20 million pounds to 0 to 100
million. This change will provide the
Board with additional flexibility when
considering the carry-out, but in itself
does not establish a carry-out amount.
The Board will still discuss and
recommend a desirable carry-out value
that represents current industry needs
each crop year. Consequently, the Board
supported the recommendation by a
vote of 12–5. This rule amends section
930.151 of the regulations to increase
the maximum carry-out volume possible
when calculating optimum supply from
20 million pounds to 100 million
pounds.
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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
action on small entities. Accordingly,
AMS has prepared this final regulatory
flexibility analysis.
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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 having annual receipts
of 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 2014–
15 crop year was $0.35 per pound, and
total utilization was around 300 million
pounds. Therefore, average receipts for
tart cherry producers were around
$175,800, well below the SBA threshold
for small producers. In 2014, The Food
Institute estimated an f.o.b. price of
$0.96 per pound for frozen tart cherries,
which make up the majority of
processed tart cherries. Using this data,
average annual handler receipts were
about $6.9 million, which is also 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 final rule creates § 930.154 of the
rules and regulations, establishing
procedures for release of inventory
reserves. This final rule also revises
§ 930.151 to allow the Board to consider
a carry-out of up to 100 million pounds
when calculating optimum supply.
These changes are intended to provide
clear direction in the event an inventory
release becomes necessary and allow the
Board to be more responsive to tart
cherry market demand. The authority
for these actions is provided in
§§ 930.50 and 930.54 of the order.
It is not anticipated that this action
will impose additional costs on
handlers or growers, regardless of size.
The implemented changes are
administrative in nature and intended to
align the provisions of the order with
current industry practices. The addition
of rules and regulations regarding
inventory releases is a codification of
administrative procedures the Board has
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had in place for many years. The
expanded carry-out upper limit will
allow the Board additional flexibility in
meeting market needs without
additional rulemaking.
The benefits of this rule are not
expected to be disproportionately
greater or less for small handlers or
producers than for larger entities.
The Board discussed alternatives to
these changes to the order, including
releasing reserves from the current crop
year or releasing cherries in the order in
which the fruit was put into reserve. A
committee was established to review the
reserve procedures, and it proposed
using a three-year average percentage for
each handler and releasing the previous
crop years’ reserves. The Board agreed
that the committee’s recommendation
would be the most equitable solution.
Regarding the carry-out limit, the Board
considered not recommending a
permanent change. However, the Board
anticipates needing more than 20
million pounds of carry-out for the
foreseeable future. A member suggested
changing the motion to 80 million
pounds, but that suggestion did not
receive support. Thus, the suggested
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 the Office of
Management and Budget (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 as a result of this action
are necessary. Should any changes
become necessary, they would be
submitted to OMB for approval.
Accordingly, this action will not
impose any 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.
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Federal Register / Vol. 81, No. 180 / Friday, September 16, 2016 / Rules and Regulations
The Board’s meeting was widely
publicized throughout the tart cherry
industry and all interested persons were
invited to attend and participate in
Board deliberations on all issues. Like
all Board meetings, the June 25, 2015,
meeting was a public meeting and all
entities, both large and small, were able
to express views on these issues.
A proposed rule concerning this
action was published in the Federal
Register on June 15, 2016 (81 FR 38975).
Copies of the rule were mailed or sent
via facsimile to all Board members and
tart cherry handlers. Finally, the rule
was made available through the internet
by USDA and the Office of the Federal
Register. A 30-day comment period
ending July 15, 2016, was provided to
allow interested persons to respond to
the proposal.
One comment was received during
the comment period in response to the
proposal. The commenter is an
individual who supports the proposed
action. The commenter described the
proposed changes as positive for the
industry. Accordingly, no changes will
be made to the rule as proposed, 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: https://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
matter 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.
It is further found that good cause
exists for not postponing the effective
date of this rule until 30 days after
publication in the Federal Register (5
U.S.C. 553) because handlers are already
putting cherries into reserve. This action
also needs to be in place before the
Board meets in September to discuss
establishing volume control, including
determining an appropriate carry-out
figure. 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.
For the reasons set forth in the
preamble, 7 CFR part 930 is amended as
follows:
DEPARTMENT OF AGRICULTURE
PART 930—TART CHERRIES GROWN
IN THE STATES OF MICHIGAN, NEW
YORK, PENNSYLVANIA, OREGON,
UTAH, WASHINGTON, AND
WISCONSIN
7 CFR Part 983
1. The authority citation for 7 CFR
part 930 continues to read as follows:
■
Authority: 7 U.S.C. 601–674.
2. In § 930.151:
a. Designate the current paragraph as
paragraph (a); and
■ b. Add a new paragraph (b) to read as
follows:
■
§ 930.151
Desirable carry-out inventory.
(a) * * *
(b) Beginning with the crop year
starting July 1, 2016, for the purposes of
determining an optimum supply
volume, the Board may recommend a
desirable carry-out inventory not to
exceed 100 million pounds.
3. Section 930.154 is added to read as
follows:
■
§ 930.154
cherries.
Release of inventory reserve
(a) As provided in § 930.54, the Board
may recommend a release of a portion
or all of the primary and/or secondary
reserve cherries. The total available
reserves will be determined at the
beginning of the crop year. The primary
reserve as defined in §§ 930.55 and
930.150 must be depleted before the
secondary reserve can be released. If a
release is recommended, the
recommended volume shall be
apportioned to handlers on the basis of
each handler’s proportion of the total
volume handled in the preceding three
crop years.
(b) If a handler has less volume in
reserve than is apportioned, the excess
volume shall be reapportioned to those
who still have volume in reserve until
the total release is complete.
Dated: September 12, 2016.
Elanor Starmer,
Administrator, Agricultural Marketing
Service.
[FR Doc. 2016–22258 Filed 9–15–16; 8:45 am]
BILLING CODE 3410–02–P
Marketing agreements, Reporting and
recordkeeping requirements, Tart
cherries.
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Agricultural Marketing Service
[Docket No. AMS–SC–16–0076 SC16–983–
2 IR]
Pistachios Grown in California,
Arizona, and New Mexico; Decreased
Assessment Rate
Agricultural Marketing Service,
USDA.
ACTION: Interim rule with request for
comments.
AGENCY:
■
List of Subjects in 7 CFR Part 930
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63679
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This rule implements a
recommendation from the
Administrative Committee for
Pistachios (Committee) for a decrease in
the assessment rate established for the
2016–17 and subsequent production
years from $0.0035 to $0.0010 per
pound of assessed weight pistachios
handled under the marketing order
(order). The Committee locally
administers the order and is comprised
of producers and handlers of pistachios
operating within the area of production.
Assessments upon pistachio handlers
are used by the Committee to fund
reasonable and necessary expenses of
the program. The production year
begins September 1 and ends August 31.
The assessment rate will remain in
effect indefinitely unless modified,
suspended, or terminated.
DATES: Effective September 19, 2016;
Comments received by November 15,
2016 will be considered prior to
issuance of a final rule.
ADDRESSES: Interested persons are
invited to submit written comments
concerning this 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: https://
www.regulations.gov. Comments should
reference the docket 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:
https://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
comments will be made public on the
Internet at the address provided above.
FOR FURTHER INFORMATION CONTACT:
Peter R. Sommers, Marketing Specialist,
SUMMARY:
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]]>Agencies
[Federal Register Volume 81, Number 180 (Friday, September 16, 2016)]
[Rules and Regulations]
[Pages 63676-63679]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22258]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 930
[Doc. No. AMS-FV-15-0047; FV15-930-2 FR]
Tart Cherries Grown in the States of Michigan, et al.; Revision
of Optimum Supply Requirements and Establishment of Inventory Release
Procedures
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This rule implements recommendations from the Cherry Industry
Administrative Board (Board) to add inventory release procedures and
revise optimum supply provisions under the marketing order for tart
cherries grown in the States of Michigan, New York, Pennsylvania,
Oregon, Utah, Washington, and Wisconsin (order). The Board locally
administers the order and is comprised of growers and handlers
operating within the area of production. This final rule establishes
procedures for releasing inventory from reserves and increases the
maximum carry-out volume available when calculating optimum supply from
20 million pounds to 100 million pounds. These changes provide clear
procedures should an inventory release be necessary and provides more
flexibility when calculating optimum supply.
DATES: Effective September 19, 2016.
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: Jennie.Varela@ams.usda.gov or
Christian.Nissen@ams.usda.gov.
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-
[[Page 63677]]
2491, Fax: (202) 720-8938, or Email: Richard.Lower@ams.usda.gov.
SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing
Order No. 930, as amended (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 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 rule in
conformance with Executive Orders 12866, 13563, and 13175.
This final rule has been reviewed under Executive Order 12988,
Civil Justice Reform. This 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. A
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 final rule adds inventory release procedures and revises the
optimum supply and exemption provisions under the order. This rule
establishes procedures for releasing inventory from reserves and
increases the maximum carry-out volume available when calculating
optimum supply from 20 million pounds to 100 million pounds. These
changes provide clear procedures should an inventory release be
necessary and provides more flexibility when calculating optimum
supply. The Board voted to recommend these changes to the Secretary at
its meeting on June 25, 2015.
Section 930.50 prescribes procedures for calculating an optimum
supply based on sales history to determine free and restricted
percentages under volume regulation. As part of the process, the Board
is required to determine the volume of fruit they anticipate would be
necessary to have on hand at the end of the crop year. The order refers
to this volume as carry-out inventory. This section currently
specifies, in part, that the Board can consider a carry-out inventory
of up to 20 million pounds, or another amount with the approval of the
Secretary. This rule amends Section 930.151 to increase the maximum
carry-out volume available when calculating optimum supply from 20
million pounds to 100 million pounds.
Section 930.54 of the order governs the use or disposition of
inventory reserve cherries. Under this authority, the Board can
recommend to the Secretary that a portion or all of inventory reserve
cherries be released if there is not sufficient fruit on the market to
meet commercial demand. Sections 930.55 and 930.57 outline the
provisions and requirements of the primary and secondary reserves,
respectively. Further, no cherries in the secondary reserve may be
released until all cherries in the primary reserve have been released.
This rule creates section 930.154 to establish procedures for releasing
inventory from reserves.
When volume regulation is in place, the restricted portion of the
crop is either held in reserve by handlers or can be sold for exempt
uses as authorized in the rules and regulations of the order. Reserves
can be held over multiple crop years and are released when there is a
shortfall in supply. While the Board maintains record of the volume in
reserve, handlers maintain ownership of the reserve fruit.
All inventory reserves were released to meet demand following a
crop disaster in 2012. The following year, the industry was still
recovering and the Board did not recommend a volume regulation. When
the Board recommended a volume regulation for the 2014-15 season to the
Secretary, and cherries were again being added to the reserve, the
Board established a committee to review the procedures for releasing
restricted inventory from reserves. The committee recommended to the
Board that the procedures as previously developed by the Board be
maintained, and that any release should first come from inventory
currently in the primary reserve and then from any cherries designated
for reserve from the current season if necessary.
Under these procedures, once the additional volume needed for
release is established, the release should be apportioned among
handlers based on each handler's prior three-year average of volume
handled as a percentage of the industry's three-year average. For
example, if a handler handled five percent of the previous three years'
production, and the Board recommended a release of 20 million pounds,
that handler would be authorized to release one million pounds of
established reserves (.05 X 20 million). If a handler receives a
release larger than what they have in the primary reserve, the excess
amount would be reapportioned to those handlers with remaining primary
reserve. If the handler in the scenario above had only 750,000 pounds
in the primary reserve, the remaining 250,000 pounds would be
reallocated to those handlers who still have inventory in the primary
reserve.
The committee that reviewed the procedures for releasing restricted
inventory from the reserves recognized that inventory reserves can be
accumulated over a period of years. Therefore, the committee agreed
releases should be based on the average amount handled during the three
previous crop years, rather than using a year-to-year basis. The
existing release procedures were crafted by the Board through a series
of actions in past years and meetings. However, the procedures were not
codified in the rules and regulations under the order. This rule adds
the inventory release procedures to the regulations.
This recommendation was also thought to be the most equitable way
to conduct releases. One Board member believed the releases should come
from the current year's reserves prior to releasing from existing
reserves, and did not support the recommendation. However, the Board
recognized that during the crop year, complete information on reserves
and shipment data would not be available. Thus, the Board recommended
codifying inventory release procedures as recommended by the committee.
The Board supported the recommendation by a vote of 17-1. This rule
adds a new Section 930.154 to the regulations to establish procedures
for releasing inventory from reserves.
In addition to reviewing inventory release procedures, the Board
discussed changes to some of its practices regarding calculation of
optimum supply. Optimum supply is defined as the average free sales of
the prior three years plus desirable carry-out inventory. Desirable
carry-out is the amount of fruit needed by the industry to be carried
into the succeeding crop year to meet marketing demand until the new
crop is available. Desirable carry-out is set each year by the Board
after considering market circumstances and needs. Section 930.50(a)
currently specifies that desirable carry-out can range from 0 to a
maximum of 20
[[Page 63678]]
million pounds, but also authorizes the Board to establish an
alternative carry-out figure with the approval of the Secretary.
Since the promulgation of the order, the industry has seen new
products and new segments emerge, such as dried tart cherries. As a
result, at the end of a season there are multiple product lines that
need to be supplied with tart cherries before the next harvest, which
has impacted desirable carry-out. Desirable carry-out is the amount of
fruit needed by the industry to be carried into the succeeding crop
year to meet marketing demand until the new crop is available.
In 2014, the Board used its authority to recommend to the Secretary
a carry-out volume above the order-prescribed 20 million pound maximum
for the 2014-2015 crop year. At that time, the Board estimated it was
necessary to have 50 million pounds available at the end of the crop
year to fulfill the needs of the industry. In discussing volume
regulation for the 2015-2016 crop year, the Board agreed an increased
carry-out was again necessary and recommended to the Secretary a 55
million pound carry-out when calculating the optimum supply.
In order to facilitate future carry-out needs without engaging in
annual rulemaking, the Board recommended permanently increasing the
maximum carry-out to 100 million pounds. Some members considered the
100 million pound upper limit to be too high, and voted against the
recommendation. However, this action only increases the available range
for the carry-out value from 0 to 20 million pounds to 0 to 100
million. This change will provide the Board with additional flexibility
when considering the carry-out, but in itself does not establish a
carry-out amount. The Board will still discuss and recommend a
desirable carry-out value that represents current industry needs each
crop year. Consequently, the Board supported the recommendation by a
vote of 12-5. This rule amends section 930.151 of the regulations to
increase the maximum carry-out volume possible when calculating optimum
supply from 20 million pounds to 100 million pounds.
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 action 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 having annual receipts of 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
2014-15 crop year was $0.35 per pound, and total utilization was around
300 million pounds. Therefore, average receipts for tart cherry
producers were around $175,800, well below the SBA threshold for small
producers. In 2014, The Food Institute estimated an f.o.b. price of
$0.96 per pound for frozen tart cherries, which make up the majority of
processed tart cherries. Using this data, average annual handler
receipts were about $6.9 million, which is also 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 final rule creates Sec. 930.154 of the rules and regulations,
establishing procedures for release of inventory reserves. This final
rule also revises Sec. 930.151 to allow the Board to consider a carry-
out of up to 100 million pounds when calculating optimum supply. These
changes are intended to provide clear direction in the event an
inventory release becomes necessary and allow the Board to be more
responsive to tart cherry market demand. The authority for these
actions is provided in Sec. Sec. 930.50 and 930.54 of the order.
It is not anticipated that this action will impose additional costs
on handlers or growers, regardless of size. The implemented changes are
administrative in nature and intended to align the provisions of the
order with current industry practices. The addition of rules and
regulations regarding inventory releases is a codification of
administrative procedures the Board has had in place for many years.
The expanded carry-out upper limit will allow the Board additional
flexibility in meeting market needs without additional rulemaking.
The benefits of this rule are not expected to be disproportionately
greater or less for small handlers or producers than for larger
entities.
The Board discussed alternatives to these changes to the order,
including releasing reserves from the current crop year or releasing
cherries in the order in which the fruit was put into reserve. A
committee was established to review the reserve procedures, and it
proposed using a three-year average percentage for each handler and
releasing the previous crop years' reserves. The Board agreed that the
committee's recommendation would be the most equitable solution.
Regarding the carry-out limit, the Board considered not recommending a
permanent change. However, the Board anticipates needing more than 20
million pounds of carry-out for the foreseeable future. A member
suggested changing the motion to 80 million pounds, but that suggestion
did not receive support. Thus, the suggested 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 the Office of Management and Budget (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 as a result of this action
are necessary. Should any changes become necessary, they would be
submitted to OMB for approval.
Accordingly, this action will not impose any 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.
[[Page 63679]]
The Board's meeting was widely publicized throughout the tart
cherry industry and all interested persons were invited to attend and
participate in Board deliberations on all issues. Like all Board
meetings, the June 25, 2015, meeting was a public meeting and all
entities, both large and small, were able to express views on these
issues.
A proposed rule concerning this action was published in the Federal
Register on June 15, 2016 (81 FR 38975). Copies of the rule were mailed
or sent via facsimile to all Board members and tart cherry handlers.
Finally, the rule was made available through the internet by USDA and
the Office of the Federal Register. A 30-day comment period ending July
15, 2016, was provided to allow interested persons to respond to the
proposal.
One comment was received during the comment period in response to
the proposal. The commenter is an individual who supports the proposed
action. The commenter described the proposed changes as positive for
the industry. Accordingly, no changes will be made to the rule as
proposed, 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: https://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 matter 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.
It is further found that good cause exists for not postponing the
effective date of this rule until 30 days after publication in the
Federal Register (5 U.S.C. 553) because handlers are already putting
cherries into reserve. This action also needs to be in place before the
Board meets in September to discuss establishing volume control,
including determining an appropriate carry-out figure. 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.
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. In Sec. 930.151:
0
a. Designate the current paragraph as paragraph (a); and
0
b. Add a new paragraph (b) to read as follows:
Sec. 930.151 Desirable carry-out inventory.
(a) * * *
(b) Beginning with the crop year starting July 1, 2016, for the
purposes of determining an optimum supply volume, the Board may
recommend a desirable carry-out inventory not to exceed 100 million
pounds.
0
3. Section 930.154 is added to read as follows:
Sec. 930.154 Release of inventory reserve cherries.
(a) As provided in Sec. 930.54, the Board may recommend a release
of a portion or all of the primary and/or secondary reserve cherries.
The total available reserves will be determined at the beginning of the
crop year. The primary reserve as defined in Sec. Sec. 930.55 and
930.150 must be depleted before the secondary reserve can be released.
If a release is recommended, the recommended volume shall be
apportioned to handlers on the basis of each handler's proportion of
the total volume handled in the preceding three crop years.
(b) If a handler has less volume in reserve than is apportioned,
the excess volume shall be reapportioned to those who still have volume
in reserve until the total release is complete.
Dated: September 12, 2016.
Elanor Starmer,
Administrator, Agricultural Marketing Service.
[FR Doc. 2016-22258 Filed 9-15-16; 8:45 am]
BILLING CODE 3410-02-P
