Tart Cherries Grown in the States of Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and Wisconsin; Assessment Rate Increase, 39117-39119 [2023-12770]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 88, Number 115 (Thursday, June 15, 2023)]
[Rules and Regulations]
[Pages 39117-39119]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-12770]



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Rules and Regulations
                                                Federal Register
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Federal Register / Vol. 88, No. 115 / Thursday, June 15, 2023 / Rules 
and Regulations

[[Page 39117]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Doc. No. AMS-SC-22-0068]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule implements a recommendation from the Cherry Industry 
Administrative Board (Board) to increase the assessment rate 
established for the 2022-23 and subsequent fiscal periods. The 
assessment rate will remain in effect indefinitely unless modified, 
suspended, or terminated.

DATES: Effective July 17, 2023.

FOR FURTHER INFORMATION CONTACT: Delaney Fuhrmeister, Marketing 
Specialist, or Christian D. Nissen, Chief, Southeast Region Branch, 
Market Development 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, Market Development Division, 
Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW, STOP 
0237, Washington, DC 20250-0237; Telephone: (202) 720-8085, 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 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. 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 area of production, and 
a public member.
    The Agricultural Marketing Service (AMS) is issuing this rule in 
conformance with Executive Orders 12866 and 13563. Executive Orders 
12866 and 13563 direct agencies to assess all costs and benefits of 
available regulatory alternatives and, if regulation is necessary, to 
select regulatory approaches that maximize net benefits (including 
potential economic, environmental, public health and safety effects, 
distributive impacts, and equity). Executive Order 13563 emphasizes the 
importance of quantifying both costs and benefits, reducing costs, 
harmonizing rules, and promoting flexibility. This action falls within 
a category of regulatory actions that the Office of Management and 
Budget (OMB) exempted from Executive Order 12866 review.
    This rule has been reviewed under Executive Order 13175--
Consultation and Coordination with Indian Tribal Governments, which 
requires agencies to consider whether their rulemaking actions would 
have Tribal implications. AMS has determined that this rule is unlikely 
to have substantial direct effects on one or more Indian Tribes, on the 
relationship between the Federal Government and Indian Tribes, or on 
the distribution of power and responsibilities between the Federal 
Government and Indian Tribes.
    This 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. The assessment rate established herein will be 
applicable to all assessable tart cherries for the 2022-23 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 final rule increases the assessment rate for the 2022-23 and 
subsequent fiscal periods from $0.00575 to $0.0075 per pound of tart 
cherries. This rule also increases the portion of the assessment rate 
allocated to research and promotion from $0.00275 to $0.0055 per pound 
and decrease the portion allocated to administrative expenses from 
$0.003 to $0.002 per pound.
    The Order authorizes the Board, with the approval of AMS, to 
formulate an annual budget of expenses and collect assessments from 
handlers to administer the program. The members of the Board are 
familiar with the Board's needs and with the costs for goods and 
services in their local area and can formulate an appropriate budget 
and assessment rate. The assessment rate is formulated and discussed in 
a public meeting, and all directly affected persons have an opportunity 
to participate and provide input.
    For the 2020-21 and subsequent fiscal periods, the Board 
recommended, and AMS approved, an assessment rate that would continue 
in effect from fiscal period to fiscal period unless modified, 
suspended, or terminated by AMS upon recommendation and information 
submitted by the Board or other information available to AMS.
    The Board met on September 8, 2022, and unanimously recommended 
2022-23 expenditures of $1,667,000 and an assessment rate of $0.0075 
per pound, of which $0.0055 is for research and promotion expenses, and 
$0.002 is for administrative expenses. In comparison, last year's 
budgeted expenditures were $1,086,500. The assessment rate of

[[Page 39118]]

$0.0075 is $0.00175 higher than the rate currently in effect.
    The Board recommended increasing the assessment rate to allow for 
more spending on health benefits research, increased spending on 
promotion, and to add funds to Board reserves, which have been depleted 
due to reduced production in previous seasons. The production during 
the 2022-23 fiscal period was 242,352,172 pounds, an increase from the 
172,354,783 pounds produced the previous year. However, at the current 
assessment rate, assessment income would equal $1,393,525, which does 
not meet the Board's anticipated expenditures of $1,667,000. By 
increasing the assessment rate by $0.00175, assessment income would be 
$1,817,641. This amount should provide sufficient funds to meet 2022-23 
anticipated expenses.
    Major expenditures recommended by the Board for the 2022-23 year 
include $850,000 for promotion, $250,000 for health benefits research, 
and $200,000 for salaries. Budgeted expenses for these items in 2021-22 
were $600,000, $0, and $258,000, respectively.
    The assessment rate recommended by the Board was derived by 
reviewing anticipated expenses, production of tart cherries, and the 
level of funds in reserve. The 2022-23 crop produced 242,352,172 pounds 
of tart cherries, which should provide $1,817,641 in assessment income 
(242,352,172 pounds multiplied by $0.0075). However, the Board 
anticipates that due to approved exemptions and loss adjustments, the 
actual income from assessments will be closer to $1,784,641. Income 
derived from handler assessments at the rate established by this rule, 
along with reserve funds and interest income, should be adequate to 
cover budgeted expenses. Funds in the reserve (currently about 
$262,732) are expected to be kept within the maximum permitted by the 
Order (approximately one fiscal period's expenses as authorized in 
Sec.  930.42).
    The assessment rate will continue in effect indefinitely unless 
modified, suspended, or terminated by AMS 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. Dates and times of Board 
meetings are available from the Board or AMS. Board meetings are open 
to the public and interested persons may express their views at these 
meetings. AMS evaluates Board recommendations and other available 
information to determine whether modification of the assessment rate is 
needed, and further rulemaking would be undertaken as necessary. The 
Board's 2022-23 budget and those for subsequent fiscal periods will be 
reviewed and, as appropriate, approved by AMS.

Final Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), AMS has considered the economic impact of 
this 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 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 tart cherry growers in the production 
area and approximately 40 handlers subject to regulation under the 
Order. The Small Business Administration (SBA) standard for small 
agricultural producers applicable to tart cherries is annual receipts 
of less than $3,500,000 (Other Noncitrus Fruit Farming, NAICS 111339). 
Small agricultural service firms are defined as those having annual 
receipts of less than $34,000,000 (NAICS 115114, Postharvest Crop 
Activities) (13 CFR 121.201).\1\
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    \1\ The proposed rule used a SBA size standard for a small 
agricultural producer and service firm with annual receipts less 
than $3 million and $30 million respectively. This was an error, 
since in December 2022 the size standard was revised upward to $3.5 
million and $34 million. This final rule uses the updated $3.5 
million and $34 million standard for a small agricultural producer 
and service firm. The determination that the majority of producers 
and handlers of tart cherries may be classified as small entities 
has not changed from the proposed rule.
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    The National Agricultural Statistics Service (NASS) reported that 
the 2021-22 value of the tart cherry crop for processed utilization was 
approximately $83 million. Production utilized for processing was 171.0 
million pounds and the season average grower price for processed tart 
cherries was $0.485 per pound. Dividing the crop value by the estimated 
number of producers (400) yields an estimated average annual receipts 
per producer of $207,500 ($83 million divided by 400 producers). This 
is well below the SBA threshold for small producers.
    An estimate of the season average price per pound received by 
handlers for processed tart cherries was derived from USDA's purchases 
of dried tart cherries for feeding programs in the 2021-2022 season at 
an average price of $4.70 per pound. The dried cherry price was 
converted to a raw product equivalent price of $0.94 per pound at an 
industry recognized ratio of five to one. Multiplying this price by 
2021 total processed utilization of 171.0 million pounds results in an 
estimated handler-level tart cherry value of $160.7 million. Dividing 
this figure by the number of handlers ($160.7 million divided by 40 
handlers) yields estimated average annual receipts per handler of 
approximately $4 million, which is well below the SBA threshold of $34 
million 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 increases the assessment rate established for the 
Board and collected from handlers for the 2022-23 and subsequent fiscal 
periods from $0.00575 to $0.0075 per pound of tart cherries. This 
change also increases the portion of the assessment rate allocated to 
research and promotion from $0.00275 to $0.0055 per pound and decreases 
the portion allocated to administrative expenses from $0.003 to $0.002 
per pound. The Board unanimously recommended 2022-23 expenditures of 
$1,667,000 and the assessment rate of $0.0075 per pound. The assessment 
rate of $0.0075 is $0.00175 higher than the current rate. The 2022-23 
crop produced 242,352,172 pounds of tart cherries, which should provide 
$1,817,641 in assessment income (242,352,172 pounds multiplied by 
$0.0075). However, the Board anticipates that due to approved 
exemptions and loss adjustments the actual income from assessments will 
be closer to $1,784,641. Income derived from handler assessments and 
funds from the Board's authorized reserve, should be adequate to cover 
budgeted expenses.
    Major expenditures recommended by the Board for the 2022-23 year 
include $850,000 for promotion, $250,000 for health benefits research, 
and $200,000 for salaries. Budgeted expenses for promotion and salaries 
in 2021-22 was $600,000 and $258,000, respectively. There were no 
budgeted expenses for health benefits research in 2021-2022.
    The Board voted to increase the assessment rate to allow for more 
spending on health benefits research,

[[Page 39119]]

increased spending on promotion, and to add funds to Board reserves, 
which have been depleted due to reduced production in previous seasons. 
At the current assessment rate of $0.00575 and with the 2022-23 crop 
production at 242,352,172 pounds, assessment income would equal 
$1,393,525 ($0.00575 multiplied by 242,352,172), an amount insufficient 
to cover the Committee's anticipated expenditures of $1,667,000. By 
increasing the assessment rate by $0.00175, assessment income would be 
approximately $1,817,641 ($0.0075 multiplied by 242,352,172). This 
amount, along with interest income, and funds from the reserve, should 
provide sufficient funds to meet 2022-23 anticipated expenses.
    Prior to arriving at this budget and assessment rate, the Board 
considered the level of production, projected expenditures, and the 
amount in the authorized reserve. The Board discussed alternatives, 
including maintaining the current assessment rate of $0.00575. However, 
leaving the assessment unchanged would not generate sufficient revenue 
to meet Board expenses for the 2022-23 fiscal period. Consequently, the 
Board determined that the assessment rate should be increased to 
$0.0075 per pound to generate sufficient revenue to meet expenses. 
Therefore, the Committee rejected the idea of maintaining the current 
assessment rate.
    A review of historical information and preliminary information 
pertaining to the upcoming season indicates the producer price for the 
2022-23 season should be approximately $0.23 per pound of tart 
cherries. The assessment rate of $0.0075 per pound represents 3.26 
percent of the $0.23 revenue for the 2021-22 fiscal period as a 
percentage of total producer revenue ($0.0075 divided by $0.23 
multiplied by 100).
    This rule increases the assessment obligation imposed on handlers. 
While assessments impose additional costs on handlers, the costs are 
minimal and uniform on all handlers, and some of the costs may be 
passed on to growers. However, these costs are expected to be offset by 
the benefits derived by the operation of the 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 September 8, 2022, meeting was a public meeting and 
all entities, both large and small, were able to express views on this 
issue. In addition, interested persons were invited to submit comments 
on the proposed rule, including the regulatory and informational 
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 because of this rule. If any changes become necessary, they 
would be submitted to OMB for approval.
    This rule does 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 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.
    A proposed rule concerning this action was published in the Federal 
Register on February 24, 2023 (88 FR 11822). Copies of the proposed 
rule were also mailed or sent via email to all tart cherry handlers. A 
copy of the proposed rule was made available through the internet by 
AMS via https://www.regulations.gov. A 30-day comment period ending 
March 27, 2023, was provided for interested persons to respond to the 
proposal.
    No comments were received. Accordingly, no changes have been made 
to the rule as proposed.
    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 recommendations submitted by the Board and other 
available information, AMS has determined that this rule tends to 
effectuate the declared policy of the Act.

List of Subjects in 7 CFR Part 930

    Cherries, Marketing agreements, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, the Agricultural 
Marketing Service amends 7 CFR part 930 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, 2022, the assessment rate imposed on 
handlers shall be $0.0075 per pound of tart cherries grown in the 
production area and utilized in the production of tart cherry products. 
Included in this rate is $0.0055 per pound of tart cherries to cover 
the cost of the research and promotion program and $0.002 per pound of 
tart cherries to cover administrative expenses.

Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2023-12770 Filed 6-14-23; 8:45 am]
BILLING CODE P