[Federal Register Volume 63, Number 56 (Tuesday, March 24, 1998)]
[Rules and Regulations]
[Pages 14021-14024]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-7512]
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Rules and Regulations
Federal Register
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This section of the FEDERAL REGISTER contains regulatory documents
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Federal Register / Vol. 63, No. 56 / Tuesday, March 24, 1998 / Rules
and Regulations
[[Page 14021]]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 930
[Docket No. FV97-930-1 FIR]
Tart Cherries Grown in the States of Michigan, New York,
Pennsylvania, Oregon, Utah, Washington, and Wisconsin; Assessment Rate
and Establishment of Late Payment and Interest Charges on Delinquent
Assessments
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: The Department of Agriculture (Department) is adopting, as a
final rule, with modifications, the provisions of an interim final rule
that established an assessment rate for the 1997-98 and subsequent
fiscal periods to cover expenses incurred by the Cherry Industry
Administrative Board (Board) under Marketing Order No. 930. That rule
also established an interest rate and late payment charge on delinquent
assessments owed by handlers under the tart cherry marketing order. The
Board is responsible for local administration of the marketing order.
Authorization to assess tart cherry handlers will enable the Board to
incur expenses that are reasonable and necessary to administer the
program. The interest rate and late payment charges will contribute to
the efficient operation of the program by ensuring adequate funds are
available to cover budgeted expenses incurred under the marketing
order. The 1997-98 fiscal period covers the period July 1, through June
30. The assessment rate will remain in effect indefinitely unless
modified, suspended, or terminated.
EFFECTIVE DATE: April 23, 1998.
FOR FURTHER INFORMATION CONTACT: Patricia A. Petrella, Marketing
Specialist, or Kenneth G. Johnson, Regional Manager, DC Marketing Field
Office, Marketing Order Administration Branch, Fruit and Vegetable
Programs, AMS, USDA, P.O. Box 96456, room 2525-S, Washington, DC 20090-
6456; telephone:(202) 720-2491, Fax: (202) 205-6632. Small businesses
may request information on compliance with this regulation by
contacting Jay Guerber, Marketing Order Administration Branch, Fruit
and Vegetable Programs, AMS, USDA, P.O. Box 96456, room 2525-S,
Washington, DC 20090-6456; telephone: (202) 720-2491, Fax: (202) 205-
6632.
SUPPLEMENTARY INFORMATION: This rule is issued under Marketing
Agreement and Order No. 930 (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 marketing agreement and order are
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 (Department) is issuing this rule in
conformance with Executive Order 12866.
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. Under the marketing 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
as issued herein will be applicable to all assessable tart cherries
beginning July 1, 1997, and continuing until amended, suspended, or
terminated. This rule will not preempt any State or local laws,
regulations, or policies, unless they present an irreconcilable
conflict with this rule.
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 the Secretary 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 the Secretary 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 the
Secretary's ruling on the petition, provided an action is filed not
later than 20 days after the date of the entry of the ruling.
The tart cherry marketing order in section 930.31 provides that one
of the duties of the Board is to submit to the Secretary a budget for
each fiscal period, prior to the beginning of such period, including a
report explaining the items appearing therein and a recommendation as
to the rates of assessments for such period. The recommendations
concerning the proposed assessment rate are discussed in a public
meeting. Thus, all directly affected persons have an opportunity to
participate and provide input.
At its meeting on January 8 and 9, 1997, the Board unanimously
recommended expenditures of $650,000, and an assessment rate of $0.0025
per pound of tart cherries handled during the 1997-1998 crop year and
subsequent crop years. The recommended expenditure figure covers
expenses for the 1997-98 fiscal period, as well as expenses incurred in
connection with the start-up of the program beginning on January 1,
1997, when the first public meeting of the newly formed Board took
place. The tart cherry marketing order became effective on September
25, 1996. The Department has approved the Board's 1997-98 budget of
expenses.
The Board assessed handlers after the effective date of the interim
final rule concerning assessments, and all assessments were due to the
Board office by November 30, 1997, for this season only. Future
assessment payments will be due to the Board office by October 1 of
each crop year. Major expenditures recommended by the Board for the
1997-98 fiscal period, ending June 30, 1998, and expenditures for the
prior six months, are $25,000 for interest, $175,000 for Board meeting
expenses, $150,000 for salaries, $100,000 for administration, and
$200,000 for compliance. For the six month period from January 1, 1997,
through June 30, 1997, the expenses were $59,000.
The order provides that when an assessment rate based on the number
of
[[Page 14022]]
pounds of cherries handled is established it should provide for
differences in relative market values for various cherry products. The
discussion of this provision in the order promulgation record indicates
that proponents testified that cherries utilized in high value products
such as frozen, canned, or dried cherries should be assessed one rate
while cherries used to make low value products such as juice
concentrate or puree should be assessed at one half that rate.
This rule continues an assessment rate for the 1997-98 and
subsequent fiscal periods at $0.0025 per pound of tart cherries used in
the production of tart cherry products other than juice, juice
concentrate and puree, and $0.00125 per pound for cherries used for
juice, juice concentrate and puree. The Department inadvertently stated
in the preamble of the interim final rule and in the regulatory text
itself that the assessment rate for cherries used for juice, juice
concentrate and puree shall be $0.0125. Such rate should be one half of
$0.0025 which is $0.00125. Such error has been corrected in this rule.
Data from the National Agricultural Statistics Service (NASS)
states that for 1996, tart cherry utilization for juice, wine or brined
uses was 8.0 million pounds for all districts covered under the
marketing order. The total processed amount of tart cherries for the
1996 crop year was 256.1 million pounds. Juice, wine, or brined
represents about 3 percent of the total processed crop. Data for this
season (1997-98) is not available at this time. However, based on the
data from the previous season, it seems that juice, juice concentrate
and puree represent a very small percentage of the crop. Therefore, a
reduced assessment rate for cherries used in such products should have
an insignificant effect on the monies collected for assessments this
season.
The assessment rate recommended by the Board was derived by
dividing anticipated expenses by expected shipments of tart cherries.
Tart cherry shipments for the 1997-98 crop year were estimated at 260
million pounds and were projected to provide $650,000 in assessment
income which, along with interest income, should have been adequate to
cover budgeted expenses. At this time, actual production figures are
available. Crop production for the 1997-98 season is now projected at
278,989,653 pounds. Assessment income, based on this crop, will be
adequate to cover this year's expenses. Funds in any reserve will be
kept within the current approximately one year's operational expenses
permitted by the order (Sec. 930.42(a)).
Section 930.41 also provides that if a handler does not pay an
assessment within the time prescribed by the Board, the assessment may
be made subject to an interest or late payment charge, or both.
This final rule continues an interest rate of 1 percent per month
and a late payment charge equal to 10 percent of the unpaid balance of
the assessment amount due. The interest rate will be applied to any
assessment not paid by the October 1 due date. For the 1997-98 crop
year only, the assessment due date was November 30. Any interest charge
for late assessment payments accrued 30 days after the November 30 due
date and any late fee accrued 90 days after that date. The late payment
fees on an unpaid assessment balance by a handler will be assessed 90
days after the October 1 due date for future seasons.
Section 930.41(a) of the marketing order provides for the payment
by handlers of a pro-rata share of the cost of administering the
program under the order. The payment is in the form of a uniform
assessment rate applied to each handler's cherry acquisitions. In
addition, section 930.41(f) provides that assessments will be
calculated on the basis of pounds handled provided that the formula
adopted by the Board and approved by the Secretary for determining the
rate of assessment will compensate for differences in the number of
pounds of cherries utilized for various cherry products and the
relative market values of such cherry products.
Assessments are the main source of funds to pay Board expenses. The
failure of handlers to pay assessment obligations promptly results in
added expense and operational problems for the Board. Authority was
placed in the order to levy interest and late payment charges on
delinquent assessments. The interest rate and late payment charges in
this final rule are similar to those established under other marketing
orders. In collecting delinquent assessments, the Board would incur the
added expense of sending out additional invoices and contacting each
delinquent handler by phone, in person, or by fax. Nonpayment or late
payment of assessments hampers the operation of the Board.
Any amount paid by the handler will be credited upon receipt in the
Board office. Interest and late payment charges will provide incentive
for handlers to remit assessments in a timely manner, with the intent
of creating a fair and equitable process among all industry handlers.
They will not impose any costs on handlers who pay their assessments on
time, and will contribute to the efficient administration of the
program.
In its deliberations, the Board discussed lower rates when
recommending the interest rate and late payment charge but decided that
prompt payment of assessments by handlers was crucial to the operation
of the program. Therefore, the Board recommended an interest rate and
late payment charge deemed to be sufficient to serve as an incentive to
handlers to be prompt with their payment of assessments.
A proposed rule concerning this action was published in the Federal
Register on July 3, 1997 (62 FR 36020). An interim final rule was
issued by the Department on October 17, 1997, and published in the
Federal Register on Thursday, October 23, 1997 (62 FR 55146). The rule
addressed the comments concerning the proposed rule and was made
available through the Internet by the Office of the Federal Register. A
60-day comment period, which ended on December 22, 1997, was provided
to allow interested persons to respond to a modification of the
proposed rule. The modification provided a different rate of assessment
for cherries used for juice, juice concentrate, or puree.
One comment was received during the comment period in response to
the interim final rule. That comment is discussed later in this rule.
The Regulatory Flexibility Act and Effects on Small Businesses
The Agricultural Marketing Service (AMS) has considered the
economic impact of this action on small entities and has prepared this
final regulatory flexibility analysis. The Regulatory Flexibility Act
(RFA) would allow AMS to certify that regulations do not have a
significant economic impact on a substantial number of small entities.
However, as a matter of general policy, AMS' Fruit and Vegetable
Programs (Programs) no longer opt for such certification, but rather
perform regulatory flexibility analyses for any rulemaking that would
generate the interest of a significant number of small entities.
Performing such analyses shifts the Programs' efforts from determining
whether regulatory flexibility analyses are required to the
consideration of regulatory options and economic impacts.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions in order that the small businesses
will not be unduly or disproportionately burdened. Marketing orders
issued pursuant to the
[[Page 14023]]
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. Thus, both statutes have small entity orientation
and compatibility.
There are approximately 1,220 producers of tart cherries in the
production area and approximately 40 handlers subject to regulation
under the marketing order. Small agricultural producers have been
defined by the Small Business Administration (13 CFR 121.601) as those
having annual receipts less than $500,000, and small agricultural
service firms are defined as those whose annual receipts are less than
$5,000,000. The majority of tart cherry producers and handlers may be
classified as small entities.
This rule continues an assessment rate for the 1997-98 and
subsequent fiscal periods to cover expenses of the Board at $0.0025 per
pound of tart cherries used in the production of tart cherry products
other than juice, juice concentrate and puree, and $0.00125 per pound
for cherries used in the production of juice, juice concentrate and
puree.
The Board unanimously recommended expenditures of $650,000 for
expenses incurred during the 1997-98 fiscal period as well as for those
incurred during the start-up period beginning January 1, 1997. From
January 1, 1997, through June 30, 1997, the expenses for this six month
period was $59,000. The expenses for the 1997-98 fiscal period are
projected at $591,000. Tart cherry shipments for the year were
estimated at 260 million pounds, which would have provided $650,000 in
assessment income (260,000,000 pounds at $0.0025 per pound) and would
have been adequate to cover this year's expenses. At this time, actual
production figures are available. Crop production for the 1997-98
season is 278,989,653 pounds, which, even with the reduced assessment
rate for cherries used in juice, juice concentrate, and puree, will
provide adequate assessment income to cover this year's expenses. Funds
in any reserve will be kept within the current approximately one year's
operational expenses permitted by the order (Sec. 930.42(a)).
The Board discussed alternatives when recommending the interest
rate and late payment charge. The Board discussed lower rates, but
decided that prompt payment of assessments by handlers is crucial to
the operation of the program. Therefore, the Board recommended an
interest rate and late payment charge deemed to be sufficient to serve
as an incentive to handlers to be prompt with their payment of
assessments.
Major expenditures recommended for the 18-month period ending in
June 30, 1998, include $25,000 for interest, $175,000 for Board meeting
expenses, $150,000 for salaries, $100,000 for administration, and
$200,000 for program compliance. The $200,000 for compliance was deemed
necessary in the event volume control regulations are implemented
during the 1997-98 season. The Board discussed setting an assessment
rate that would allow for sufficient operation of a volume control
program for the upcoming season. With regards to alternatives, this
rate may be adjusted by the Secretary, if necessary. Accordingly, the
Department believes that since the assessments are necessary to make
funds available to cover the initial costs of implementing the new
order, including operation of a volume control program for this season,
the assessment rate will be as recommended by the Board, and modified
by the Department.
This action will not impose any additional reporting or
recordkeeping 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. The forms for the
operation of the order have been previously approved by the Office of
Management and Budget (OMB) and have been assigned OMB No. 0581-0177.
The interest and late payment charges were also discussed at a
public meeting. The Board believes the interest charge is reasonable.
The late payment charge is high enough to discourage late payments and
encourage the timely payment of assessments by handlers.
This final rule continues to provide an incentive for handlers to
remit assessments in a timely manner, with the intent of creating a
fair and equitable process among all industry handlers. It will not
impose any costs on handlers who pay their assessments on time, and
will contribute to the efficient administration of the program.
Handlers who do not pay their assessments on time would be able to
reap the benefits of Board programs at the expense of others. In
addition, they would be able to utilize funds for their own use that
will otherwise be paid to the Board to finance Board programs. In
effect, this would provide handlers with an interest free loan.
Continuation of the interest and late payment charges will provide
an incentive for handlers to pay assessments on time, which will
improve compliance with the order. It should help minimize actions
taken against handlers who fail to pay assessments on time through
administrative remedies or the Federal courts. This final rule will
remove any economic advantage gained by those handlers who do not pay
on time, thus helping to ensure a program that is equitable to all.
This is also consistent with standard business practices.
While this final rule will impose some costs on handlers, the costs
are in the form of uniform assessments on all handlers. Some of the
additional costs may be passed on to producers. However, these costs
will be offset by the benefits derived by the operation of the
marketing order.
This final rule 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. The Department has
not identified any relevant Federal rules that duplicate, overlap, or
conflict with this final rule. In addition, 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
January 8 and 9, 1997, meeting was a public meeting and all entities,
both large and small, were able to express views on these issues.
Finally, interested persons were invited to submit information on the
regulatory and informational impacts of this final rule on small
businesses, and none were received on this issue.
The Board discussed alternatives when recommending the interest
rate and late payment charge. The Board discussed lower rates, but
decided that prompt payment of assessments by handlers is crucial to
the operation of the program. Therefore, the Board recommended an
interest rate and late payment charge deemed to be sufficient to serve
as an incentive to handlers to be prompt with their payment of
assessments. The assessment rate, interest rate and late payment charge
established in this final rule will continue in effect indefinitely
unless modified, suspended, or terminated by the Secretary upon
recommendation and information submitted by the Board or other
available information.
Although the assessment rate, interest rate and late payment charge
will be effective for an indefinite period, the Board will continue to
meet prior to or
[[Page 14024]]
during each fiscal period to recommend a budget of expenses and
consider recommendations for modification of the assessment and
interest rates and late payment charge. The dates and times of Board
meetings are available from the Board or the Department. Board meetings
are open to the public and interested persons may express their views
at these meetings. The Department will evaluate Board recommendations
and other available information to determine whether modification of
the assessment or interest rates or late payment charge is needed.
Further rulemaking would be undertaken as necessary. The Board's 1997-
98 budget has already been approved by the Department to allow the
Board to expend funds that they have borrowed. Budgets for subsequent
fiscal periods will be reviewed and, as appropriate, approved by the
Department.
One comment concerning the interim final rule was received. The
commenter urged the Department to not assess cherries used in juice,
juice concentrate, or puree at a different rate. The commenter stated
that the Board considered the differences in the number of pounds of
cherries utilized for various cherry products and the relative market
value of such cherry products in its recommendation. The Board
unanimously recommended that because raw product values for the past
years have been relatively equal for most product uses the assessments
should be based on a single assessment rate for all raw products
delivered. The commenter also stated that the Board considered the
appropriate factors when it needed to consider the recommended
assessment rate, and recommended that a dual assessment rate should not
be imposed.
The commenter further stated that the proponent's original proposal
for a tart cherry marketing order contained provisions for storage
assessments. According to the commenter, the discussion in the record
of the administrative proceeding to formulate the order concerning dual
assessments relates to high and low value fruit as a consequence of
these different costs of storage. The Department, during the
promulgation process, concluded that a collection of a storage
assessment would not be equitable to the industry as a whole and
therefore such assessment was not included in the order since
nonregulated districts would not incur storage expenses. Therefore, the
commenter stated that the discussion on high and low value fruit is no
longer relevant and it is improper and inconsistent for the Department
to rely on such testimony to require a dual assessment rate.
The Department issued the rule to reflect the intent of Sec. 930.41
of the order which states that assessments will be calculated on the
basis of pounds of cherries handled. The order further states that the
formula adopted by the Board and approved by the Secretary for
determining the rate of assessment will compensate for differences in
the number of pounds of cherries utilized for various cherry products
and the relative market values of such cherry products. The proponents
of the order testified during promulgation of the order that there
should be different assessment rates by providing exhibits of how such
assessment rates would work based on the relative market value of
products. Therefore, this part of the comment is denied.
The commenter also stated that no grace period was recommended
under the interest and late payment charge provision. The Department
included a 30-day grace period which would allow assessments due on
October 1 to be paid as late as October 31 without incurring interest
and late payment charges. The commenter stated that handlers' financial
officers would clearly take advantage of this 30-day grace period and
not pay assessments until October 31. However, the Board's period of
heaviest expense is the summer months when harvest is underway and
compliance activities are at their peak. If reserves are not available,
the Board would have to borrow money to operate. It is therefore
important that assessments be paid on the October 1 date as recommended
by the Board.
Based on this comment, the Department is modifying the date when
the interest rate begins to accrue by excluding the 30-day grace
period. Therefore, starting with the 1998-99 crop year, assessments
will be due on October 1 and interest will begin to accrue after
October 1 on any unpaid assessment balance.
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, as
hereinafter set forth, 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.
Accordingly, the interim final rule amending 7 CFR part 930 which
was published at 62 FR 55146 on October 23, 1997, is adopted as a final
rule with the following changes:
PART 930--TART CHERRIES GROWN IN THE STATES OF MICHIGAN, NEW YORK,
PENNSYLVANIA, OREGON, UTAH, WASHINGTON, AND WISCONSIN
1. The authority citation for 7 CFR Part 930 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
2. Section 930.141 is amended by revising paragraph (a) and by
removing and reserving paragaph (b) to read as follows:
Sec. 930.141 Delinquent assessments.
(a) Pursuant to Sec. 930.41, the Board shall impose an interest
charge on any handler whose assessment payment has not been received by
October 1 of each crop year. The interest rate shall be a rate of one
percent per month and shall be applied to the unpaid assessment balance
not paid by the October 1 due date. In addition to the interest charge,
the Board shall impose a late payment charge on any handler whose
assessment payment has not been received within 90 days from the due
date of October 1. The late payment charge shall be 10 percent of the
unpaid balance.
3. Section 930.200 is revised to read as follows:
Sec. 930.200 Handler assessment rate.
On and after the effective date of this rule, the assessment rate
imposed on handlers shall be $0.0025 per pound of cherries handled for
tart cherries grown in the production area and utilized in the
production of tart cherry products other than juice, juice concentrate,
or puree. The assessment rate for tart cherries utilized in the
production of juice, juice concentrate, and puree products shall be
$0.00125 per pound. The assessment due date shall be October 1 of each
crop year.
Dated: March 18, 1998.
Robert C. Kenney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-7512 Filed 3-23-98; 8:45 am]
BILLING CODE 3410-02-P
