Tart Cherries Grown in the States of Michigan, et al.; Decreased Assessment Rate, 65021-65023 [2019-25651]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 84, Number 228 (Tuesday, November 26, 2019)]
[Proposed Rules]
[Pages 65021-65023]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-25651]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 84, No. 228 / Tuesday, November 26, 2019 / 
Proposed Rules

[[Page 65021]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Doc. No. AMS-SC-19-0091; SC19-930-3 PR]


Tart Cherries Grown in the States of Michigan, et al.; Decreased 
Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would implement a recommendation from the 
Cherry Industry Administrative Board (Board) to decrease the assessment 
rate established for the 2019-20 and subsequent fiscal years. The 
proposed assessment rate would remain in effect indefinitely unless 
modified, suspended, or terminated.

DATES: Comments must be received by December 26, 2019.

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

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

SUPPLEMENTARY INFORMATION: This 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, both as amended (7 CFR part 
930), regulating the handling of tart cherries produced in the states 
of Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and 
Wisconsin. 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 Board 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 13563 and 13175. This proposed 
rule falls within a category of regulatory actions that the Office of 
Management and Budget (OMB) exempted from Executive Order 12866 review. 
Additionally, because this proposed rule does not meet the definition 
of a significant regulatory action, it does not trigger the 
requirements contained in Executive Order 13771. See OMB's Memorandum 
titled ``Interim Guidance Implementing Section 2 of the Executive Order 
of January 30, 2017, titled `Reducing Regulation and Controlling 
Regulatory Costs' '' (February 2, 2017).
    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. Under the 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 
would be applicable to all assessable tart cherries for the 2019-20 
crop year and continue until amended, suspended, or terminated.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with USDA a petition 
stating that the order, any provision of the order, or any obligation 
imposed in connection with the order is not in accordance with law and 
request a modification of the order or to be exempted therefrom. Such 
handler is afforded the opportunity for a hearing on the petition. 
After the hearing, USDA would rule on the petition. The Act provides 
that the district court of the United States in any district in which 
the handler is an inhabitant, or has his or her principal place of 
business, has jurisdiction to review USDA's ruling on the petition, 
provided an action is filed no later than 20 days after the date of the 
entry of the ruling.
    This proposed rule would decrease the assessment rate from $0.0075, 
the rate that was established for the 2016-17 and subsequent fiscal 
years, to $0.00575 per pound of tart cherries handled for the 2019-20 
and subsequent fiscal years. Under the marketing order, the Board also 
recommends an allocation of assessments for operations and for 
promotion activities. This action would decrease the portion of 
assessments allocated to research and promotion activities from $0.0065 
to $0.005 per pound of tart cherries and decrease the portion allocated 
to administrative expenses from $0.001 to $0.00075 per pound of tart 
cherries.
    The 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 are familiar with 
the Board's needs and with the costs of 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.

[[Page 65022]]

    For the 2016-17 and subsequent fiscal years, the Board recommended, 
and USDA approved, an assessment rate that would continue in effect 
from fiscal year to fiscal year unless modified, suspended, or 
terminated by USDA upon recommendation and information submitted by the 
Board or other information available to USDA.
    The Board met on September 12, 2019, and unanimously recommended 
2019-20 expenditures of $1,956,500, and an assessment rate of $0.00575 
per pound of tart cherries, divided into $0.005 for promotional 
expenses and $0.00075 for administrative expenses. In comparison, last 
year's budgeted expenditures were $2,374,450. The assessment rate of 
$0.00575 is $0.00175 lower than the rate currently in effect. The Board 
recommended decreasing the assessment rate to reduce the assessment 
burden on handlers and utilize funds from the authorized reserve to 
help cover its expenses.
    The major expenditures recommended by the Board for the 2019-20 
year include $1,514,500 for research and promotion, $250,000 for 
salaries and wages, and $130,000 for administrative expenses. Budgeted 
expenses for these items in 2018-19 were $1,867,450, $275,000, and 
$130,000, respectively.
    The Board derived the recommended assessment rate by considering 
anticipated expenses, an estimated crop of 230.74 million pounds of 
tart cherries, and the amount of funds available in the authorized 
reserve. Income derived from handler assessments, calculated at 
$1,326,755 (230.74 million pounds x $0.00575/pound), along with 
interest income and funds from the Board's authorized reserve, would be 
adequate to cover budgeted expenses of $1,956,500. Funds in the reserve 
are estimated to be $81,553 at the end of the 2019-20 fiscal year.
    The assessment rate proposed in this rule would continue in effect 
indefinitely unless modified, suspended, or terminated by USDA upon 
recommendation and information submitted by the Board or other 
available information.
    Although this assessment rate would be in effect for an indefinite 
period, the Board will continue to meet prior to or during each fiscal 
year to recommend a budget of expenses and consider recommendations for 
modification of the assessment rate. The dates and times of Board 
meetings are available from the Board or USDA. Board meetings are open 
to the public and interested persons may express their views at these 
meetings. USDA would 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 2019-20 budget and those for subsequent fiscal years will be 
reviewed and, as appropriate, approved by USDA.

Initial Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) 
has considered the economic impact of this proposed rule on small 
entities. Accordingly, AMS has prepared this initial regulatory 
flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
businesses subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, 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.
    There are approximately 400 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 $1,000,000, and small agricultural service 
firms have been defined as those whose annual receipts are less than 
$30,000,000 (13 CFR 121.201).
    According to the National Agricultural Statistics Service (NASS) 
and Board data, the average annual grower price for tart cherries 
utilized for processing during the 2018-19 season was approximately 
$0.196 per pound. With total utilization at 288.8 million pounds for 
the 2018-19 season, the total 2018-19 value of the crop utilized for 
processing is estimated at $56.6 million. Dividing the crop value by 
the estimated number of producers (400) yields an estimated average 
receipt per producer of $141,500. This is well below the SBA threshold 
for small producers.
    A free on board (FOB) price of $0.80 per pound for frozen tart 
cherries was reported by the Food Institute during the 2018-19 season. 
Based on utilization, this price represents a good estimate of the 
price for processed cherries. Multiplying this FOB price by total 
utilization of 288.8 million pounds results in an estimated handler-
level tart cherry value of $231 million. Dividing this figure by the 
number of handlers (40) yields estimated average annual handler 
receipts of $5.8 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 proposal would decrease the assessment rate collected from 
handlers for the 2019-20 and subsequent fiscal years from $0.0075 to 
$0.00575 per pound of tart cherries, with $0.005 per pound allocated to 
promotion and research and $0.00075 per pound allocated to 
administrative expenses. The Board unanimously recommended 2019-20 
expenditures of $1,956,500, and an assessment rate of $0.00575 per 
pound of tart cherries. The proposed assessment rate of $0.00575 per 
pound is $0.00175 lower than the 2018-19 rate. The volume of assessable 
tart cherries for the 2019-20 fiscal year is estimated at 230.74 
million. Thus, the $0.00575 rate should provide $1,326,755 in 
assessment income (230.74 million pounds x $0.00575/pound). Income 
derived from handler assessments, along with interest income and funds 
from the Board's authorized reserve, would be adequate to cover 
budgeted expenses.
    The major expenditures recommended by the Board for the 2019-20 
year include $1,514,500 for research and promotion, $250,000 for 
salaries and wages, and $130,000 for administrative expenses. Budgeted 
expenses for these items in 2018-19 were $1,867,450, $275,000, and 
$130,000, respectively.
    The Board recommended decreasing the assessment rate and utilizing 
funds from its authorized reserve in order to relieve the assessment 
burden on handlers. This action would also use the Board's reserve 
balance and maintain it below the levels authorized under the Order.
    Prior to arriving at this budget and assessment rate, the Board 
considered information from the Board's Executive Committee 
(Committee). Alternative expenditure levels were discussed by the 
Committee, which reviewed the relative value of various activities to 
the tart cherry industry. The Committee determined all program 
activities were adequately funded and essential to the functionality of 
the Order; thus, no alternate expenditure levels were deemed 
appropriate. Additionally, the Board discussed alternatives of 
maintaining the current assessment rate of $0.0075 per pound or 
reducing marketing expenditures to achieve a lower rate. However, the 
Board determined it would be appropriate to reduce the assessment 
burden to handlers using some of the reserves built up following 
recurring seasons

[[Page 65023]]

with large crops. The Board also determined the recommended promotion 
expenditures, which are lower than in previous seasons, were 
appropriate and further reduction might hinder sales growth.
    Based on these discussions and estimated deliveries, the 
recommended assessment rate of $0.00575 per pound of tart cherries 
would provide $1,326,755 in assessment income. Further, the Board 
recommended allocating $0.005 for promotional expenses and $0.00075 for 
administrative expenses. The Board determined that assessment revenue, 
along with funds from the reserve and interest income, would be 
adequate to cover budgeted expenses for the 2019-20 fiscal year.
    A review of historical information and preliminary information 
pertaining to the upcoming fiscal year indicates that the average 
grower price for the 2019-20 crop year should be approximately $0.20 
per pound of tart cherries. Therefore, the estimated assessment revenue 
for the 2019-20 crop year as a percentage of total grower revenue would 
be about 2.9 percent.
    This proposed rule would decrease the assessment obligation imposed 
on handlers. Assessments are applied uniformly on all handlers, and 
some of the costs may be passed on to producers. However, decreasing 
the assessment rate reduces the burden on handlers and may also reduce 
the burden on producers.
    The Board's meeting was widely publicized throughout the tart 
cherry industry. All interested persons were invited to attend the 
meeting and participate in Board deliberations on all issues. Like all 
Board meetings, the September 12, 2019, 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 comments 
on this proposed rule, including the regulatory and information 
collection impacts of this action on small businesses.
    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the Order's information collection requirements have been 
previously approved by the OMB and assigned OMB No. 0581-0177, Tart 
Cherries Grown in Michigan, New York, Pennsylvania, Oregon, Utah, 
Washington, and Wisconsin. No changes in those requirements would be 
necessary as a result of this proposed rule. Should any changes become 
necessary, they would be submitted to OMB for approval.
    This proposed rule would not impose any additional reporting or 
recordkeeping requirements on either small or large 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.
    AMS is committed to complying with the E-Government Act, to promote 
the use of the internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this proposed rule.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: 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.
    A 30-day comment period is provided to allow interested persons to 
respond to this 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 
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. Section 930.200 is revised to read as follows:


Sec.  930.200  Assessment rate.

    On and after October 1, 2019, the assessment rate imposed on 
handlers shall be $0.00575 per pound of tart cherries grown in the 
production area and utilized in the production of tart cherry products. 
Included in this rate is $0.005 per pound of tart cherries to cover the 
cost of the research and promotion program and $0.00075 per pound of 
tart cherries to cover administrative expenses.

    Dated: November 21, 2019.
Bruce Summers,
Administrator, Agricultural Marketing Service.
[FR Doc. 2019-25651 Filed 11-25-19; 8:45 am]
BILLING CODE 3410-02-P