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

 
CONTENT
Federal Register, Volume 84 Issue 228 (Tuesday, November 26, 2019)
[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]
========================================================================
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.
========================================================================
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.
-----------------------------------------------------------------------
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: http://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: http://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: http://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