Tart Cherries Grown in the States of Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and Wisconsin; Modification of Assessment Rate, 20253-20255 [2021-07954]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 86, Number 73 (Monday, April 19, 2021)]
[Rules and Regulations]
[Pages 20253-20255]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-07954]



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Rules and Regulations
                                                Federal Register
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Federal Register / Vol. 86, No. 73 / Monday, April 19, 2021 / Rules 
and Regulations

[[Page 20253]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Doc. No. AMS-SC-20-0079; SC20-930-4 FR]


Tart Cherries Grown in the States of Michigan, New York, 
Pennsylvania, Oregon, Utah, Washington, and Wisconsin; Modification of 
Assessment Rate

AGENCY: Agricultural Marketing Service, Department of Agriculture 
(USDA).

ACTION: Final rule.

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SUMMARY: This rule implements a recommendation from the Cherry Industry 
Administrative Board (Board) to decrease the portion of assessments 
allocated to research and promotion activities and increase the portion 
allocated to administrative expenses. The overall assessment rate 
remains unchanged. The assessment rate will remain in effect 
indefinitely unless modified, suspended, or terminated.

DATES: Effective May 19, 2021.

FOR FURTHER INFORMATION CONTACT: Thomas 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 
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, 
amends regulations issued to carry out a marketing order as defined in 
7 CFR 900.2(j). This 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 rule in 
conformance with Executive Orders 13563 and 13175. This action falls 
within a category of regulatory actions that the Office of Management 
and Budget (OMB) exempted from Executive Order 12866 review.
    This 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 will be 
applicable to all assessable tart cherries for the 2020-21 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 not later than 20 days after the date of 
the entry of the ruling.
    This rule decreases the portion of the assessment rate allocated to 
research and promotion activities from $0.005 to $0.00275 per pound of 
tart cherries and increases the portion allocated to administrative 
expenses from $0.00075 to $0.003 per pound of tart cherries. The 
overall assessment rate established for the Board for the 2020-21 and 
subsequent fiscal periods remains unchanged at $0.00575 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 areas 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 2019-20 fiscal period, the Board recommended, and USDA 
approved, an assessment rate of $0.00575 per pound of tart cherries 
that would continue in effect from fiscal period to fiscal period 
unless modified, suspended, or terminated by USDA upon recommendation 
and information submitted by the Committee or other information 
available to USDA.
    During the September 10, 2020, meeting, the Board recommended 2020-
21 expenditures of $795,000 and an assessment rate of $0.00575 per 
pound of tart cherries. In comparison, last year's budgeted 
expenditures were $1,956,500. The total assessment rate remains 
unchanged by this action. However, this rule decreases the portion of 
the assessment rate allocated to research and promotion activities from 
$0.005 to $0.00275 per pound of tart cherries and increases the portion 
allocated to administrative expenses from $0.00075 to $0.003 per pound 
of tart cherries. This shift in allocation will allow the Board to fund 
its administrative obligations while continuing limited research and 
promotion activities to help market this season's below-average crop. 
The revised allocation should ensure the availability of adequate 
administrative funds despite a significant draw-down in reserves 
resulting from the 2019-20 crop year assessment rate reduction.

[[Page 20254]]

    The major expenditures recommended by the Board for the 2020-21 
year include $350,000 for research and promotion, $255,000 for salaries 
and wages, and $130,000 for other administrative expenses. Budgeted 
expenses for these items in 2019-2020 were $1,514,500, $250,000, and 
$130,000, respectively.
    The Board derived the recommended assessment rate by considering 
anticipated administrative expenses, an estimated crop of 141.46 
million pounds of tart cherries (down from last year's production of 
236.3 million pounds), the current status of reserves, and the needs of 
the industry with regards to research and promotion activities. Income 
derived from handler assessments is calculated at $813,395 (141.46 
million pounds x $0.00575/pound). The Board anticipates that due to 
approved exemptions and loss adjustments the actual income from 
assessments will be closer to $783,992. Assessment income, along with 
interest income and funds from the Board's authorized reserve, should 
be adequate to cover budgeted expenses of $795,000. Funds in the 
reserve are estimated to be $75,096 at the end of the 2020-21 fiscal 
year.
    The assessment rate established in this rule will 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 will be in effect for an indefinite 
period, the Board will 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 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 will be undertaken as necessary. The Board's 
2020-21 budget and those for subsequent fiscal periods will be reviewed 
and, as appropriate, approved by USDA.

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 rule 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 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 
during the 2019-20 season was approximately $0.15 per pound. With total 
utilization at 236.3 million pounds, the total 2019-20 crop value is 
estimated at $35.45 million. Dividing the crop value by the estimated 
number of producers (400) yields an estimated average receipt per 
producer of $88,613. 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 by total utilization of 236.3 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 $4.8 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 final rule decreases the portion of the assessment rate 
allocated to research and promotion activities from $0.005 to $0.00275 
per pound of tart cherries and increases the portion allocated to 
administrative expenses from $0.00075 to $0.003 per pound of tart 
cherries. The overall assessment rate established for the Board for the 
2019-20 and subsequent fiscal periods remains unchanged at $0.00575 per 
pound of tart cherries. The volume of assessable tart cherries for the 
2020-21 season is estimated at 141.46 million pounds. Thus, the 
$0.00575 rate should provide $813,395 in assessment income (141.46 
million pounds x $0.00575/pound). The Board anticipates that due to 
approved exemptions and loss adjustments the total income from 
assessments will be $783,992. Income derived from handler assessments, 
along with interest income and funds from the Board's authorized 
reserve, should be adequate to cover budgeted expenses.
    The major expenditures recommended by the Board for the 2020-21 
year include $350,000 for research and promotion, $255,000 for salaries 
and wages, and $130,000 for other administrative expenses. Budgeted 
expenses for these items in 2019-20 were $1,514,500, $250,000, and 
$130,000, respectively.
    This rule shifts the allocation of the assessment rate to decrease 
the portion allotted for research and promotion, while increasing the 
amount allocated for administrative costs. This adjustment should 
provide enough funds for the Board's administrative obligations and 
decrease the funding for research and promotion activities to reflect 
the significant reduction in the 2020-21 crop.
    Prior to arriving at this budget and assessment rate, the Board 
considered production history, crop estimates, its financial 
statements, and the need to meet its administrative obligations and 
maintain some marketing efforts to increase demand for tart cherries. 
The Board discussed alternatives, including raising the assessment rate 
and borrowing funds; however, they were rejected due to the burden of 
increasing assessments on handlers and the cost of debt due to 
financing. The Board determined that 2020-21 expenditures of $795,000 
were appropriate, and the recommended assessment rate and allocation, 
along with funds from interest income, and funds from reserves, would 
be adequate to cover the budgeted expenses.
    A review of historical information and preliminary information 
pertaining to the upcoming fiscal year indicates that the average 
grower price for the 2020-21 season should be approximately $0.19 per 
pound of tart cherries. According to NASS statistics, this price is the 
average of the past three years. Therefore, the estimated assessment 
revenue for the 2020-21 crop year as a

[[Page 20255]]

percentage of total grower revenue will be approximately 3.0 percent.
    This action will not increase 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, these costs will 
be offset by the benefits derived by the operation of the marketing 
order.
    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 10, 2020, meeting was a public meeting, 
and all entities, both large and small, were able to express views on 
this issue.
    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 the States of Michigan, New York, Pennsylvania, 
Oregon, Utah, Washington, and Wisconsin. No changes in those 
requirements will be necessary as a result of this rule. Should any 
changes become necessary, they would be submitted to OMB for approval.
    This rule imposes 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. As noted in the initial regulatory 
flexibility analysis, USDA has not identified any relevant Federal 
rules that duplicate, overlap, or conflict with this 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.
    A proposed rule concerning this action was published in the Federal 
Register on December 16, 2020 (85 FR 81425). Copies of the proposed 
rule were also mailed or sent via email to all tart cherry handlers. 
The proposed rule was made available through the internet by USDA and 
the Office of the Federal Register. A 30-day comment period ending 
January 15, 2021, was provided for interested persons to respond to the 
proposal.
    One comment was received that opposed any increase to the 
assessment rate and expressed concern that small growers suffered an 
unfair financial burden with respect to assessments. While this action 
does increase the portion of the assessment rate dedicated to 
administrative expenses, it decreases the portion dedicated to research 
and promotion. This action does not change the overall assessment rate 
currently in effect and will not increase the assessment cost on small 
or large handlers. The assessment rate is also calculated on a per 
pound basis so the cost to small and large handlers is shared 
proportionally based on their production volume. 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 material presented, including 
the information and recommendation submitted by the Board and other 
available information, it is hereby found that this rule will tend to 
effectuate the declared policy of the Act.

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. Section 930.200 is revised to read as follows:


Sec.  930.200  Assessment rate.

    On and after October 1, 2020, 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 $0.00275 per pound of tart cherries to cover 
the cost of the research and promotion program and $0.003 per pound of 
tart cherries to cover administrative expenses.

Bruce Summers,
Administrator, Agricultural Marketing Service.
[FR Doc. 2021-07954 Filed 4-16-21; 8:45 am]
BILLING CODE P