[Federal Register Volume 62, Number 164 (Monday, August 25, 1997)]
[Rules and Regulations]
[Pages 44881-44884]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-22578]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Docket No. FV97-930-5 IFR]


Tart Cherries Grown in the States of Michigan, New York, 
Pennsylvania, Oregon, Utah, Washington, and Wisconsin; Issuance of 
Grower Diversion Certificates

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule establishes terms and conditions for the issuance of 
grower diversion certificates by the Cherry Industry Administrative 
Board (Board) under the newly promulgated marketing order for tart 
cherries. In the event volume regulations are issued by the Secretary 
for the 1997 crop year, handlers could use such certificates in order 
to satisfy their restricted percentage amounts. Tart cherries handlers 
in Oregon, Pennsylvania, Washington and Wisconsin (Districts 5, 6, 8, 
and 9) would not be subject to volume regulation, if implemented, 
because these districts do not currently produce adequate tonnage to 
trigger such regulation under the order.

DATES: Effective August 26, 1997; comments received by September 24, 
1997, will be considered prior to issuance of a final rule.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent in triplicate to the Docket 
Clerk, Fruit and Vegetable Division, AMS, USDA, room 2525-S, P.O. Box 
96456, Washington, DC 20090-6456; Fax: (202) 720-5698. All comments 
should reference the docket number and the date and page number of this 
issue of the Federal Register and will be made available for public 
inspection in the Office of the Docket Clerk during regular business 
hours.

FOR FURTHER INFORMATION CONTACT: Patricia A. Petrella or Kenneth G. 
Johnson, Marketing Order Administration Branch, F&V, AMS, USDA, room 
2530-S, P.O. Box 96456, Washington, DC 20090-6456, telephone: (202) 
720-5053, Fax: (202) 720-5698. Small businesses may request information 
on compliance with this regulation by contacting: Jay Guerber, 
Marketing Order Administration Branch, Fruit and Vegetable Division, 
AMS, USDA, P.O. Box 96456, room 2525-S, Washington, DC 20090-6456; 
telephone (202) 720-2491; Fax: (202) 720-5698.

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.'' This 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 provisions now in effect, 
preliminary free and restricted percentages have been established for 
tart cherries acquired by handlers during the 1997 crop year, July 1, 
1997, through June 30, 1998. Final free and restricted percentages may 
be established at a later date. This rule authorizes the issuance of 
diversion certificates to growers for cherries diverted during the 1997 
crop year. 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. A 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.
    This rule provides for the issuance of diversion certificates to 
growers in volume regulated districts under the tart cherry marketing 
order for the 1997 crop year. The order became effective September 25, 
1996, and the initial Cherry Industry Administrative Board was 
appointed in December 1996. The Board held several meetings in January, 
February, March and June 1997, to consider its start-up costs and 
establish rules and regulations to implement the order authorities. At 
its meetings, the Board unanimously recommended that

[[Page 44882]]

the regulations be forwarded to the Department for appropriate action.
    In discussions concerning volume regulations for the 1997 crop 
year, the Board considered guidelines and procedures for grower 
diversion. Growers in the States which would be subject to volume 
regulation were sent information about diversion and were notified that 
participation in a diversion program would be completely voluntary. A 
majority of the growers (approximately 700 out of 1,220) in the 
districts which would be subject to volume regulation if it were 
imposed have been diverting their cherries this season based on 
preliminary free and restricted percentage figures announced by the 
Board. The Board, in its meetings, continued its review of applicable 
sections of the order, such as those pertaining to optimum supply, and 
making recommendations to specify guidelines for grower diversion.
    The order in Sec. 930.50 provides the method of establishing an 
optimum supply level of cherries for the crop year. The optimum supply 
consists of a free percentage amount which a handler could sell to any 
market and a restricted percentage amount, when warranted, which would 
have to be withheld from the market. Preliminary percentages were 
established by the Board on July 2, pursuant to Sec. 930.50(b) of the 
order, using Department estimates of the upcoming crop. Preliminary 
free and restricted percentages of 66 and 34 percent, respectively, 
were announced to the industry in accordance with Sec. 930.50(h) of the 
order. No later than September 15, after harvest and processing of the 
crop have been completed, the Board is required to compute, and 
recommend to the Secretary, final percentages based on actual crop 
amounts. A handler can satisfy restricted percentage obligations 
established by regulation by holding restricted percentage cherries in 
an inventory reserve that the handler maintains, by redeeming grower 
diversion certificates, or by diverting cherries.
    Section 930.58 of the tart cherry marketing order provides 
authority for voluntary grower diversion. Growers can divert all or a 
portion of their cherries which otherwise, upon delivery to a handler, 
would become restricted percentage cherries. Growers would receive 
diversion certificates from the Board stating the weight of cherries 
diverted. The grower could then present this certificate to a handler 
in lieu of actual cherries. The handler could apply the weight of 
cherries represented by the certificate against the handler's 
restricted percentage amount.
    The Board recommended rules and regulations specifying the 
guidelines for the grower diversion program. First, the Board 
recommended that any grower desiring to divert in the orchard should 
first apply to the Board. The application should include the name, 
address, phone number and a statement signed by the grower agreeing to 
abide by all the rules and regulations for diversion. In addition, the 
grower would provide maps of such grower's orchard.
    The Board recommended two types of in-orchard diversion. These are 
random row diversion, in which orchard rows are randomly chosen by the 
Board, using a computer program, to be left unharvested, and whole 
block diversion, in which a whole definable orchard block is left 
unharvested. Trees six years old or younger would not qualify for 
diversion, since these trees are not yet in full production.
    The Board recommended that all grower diversion certificates should 
be redeemed with handlers by November 1. After November 1, grower 
diversion certificates would not be valid. It was intended that 
diversion certificates be used within the same crop year that they were 
issued, as if a crop had been produced. The November 1 date would allow 
handlers adequate time to meet their restricted percentage amounts 
after final percentages have been established.
    The Board also recommended guidelines concerning random row and 
whole block diversion and compliance procedures for growers to follow 
under the grower diversion program.
    This crop year a majority of growers are voluntarily diverting 
cherries based on preliminary free and restricted percentages which 
have been established by the Board and on recommendations and guidance 
concerning diversion which the Board has developed, and will be 
requesting diversion certificates from the Board. This rule provides 
for the issuance of such certificates subject to certain specified 
terms and conditions. In order to receive a certificate, a grower must 
show, to the satisfaction of the Board, that cherries were in fact 
diverted. This may be accomplished in a number of ways. The Board needs 
information about the grower's production. In addition, the grower must 
agree to allow the Board to confirm reported diversion figures by 
allowing a Board compliance officer to visit the grower's orchard to 
determine whether rows or trees selected for diversion have not been 
harvested.
    Once the Board has obtained the necessary information concerning 
diversion by a grower, it will issue a diversion certificate. The 
diversion certificate would be issued for an amount equal to the 
estimated volume of cherries diverted by the grower.
    For random row diversion, such estimated volume would be calculated 
by applying the percentage of the grower's production diverted to the 
actual average volume per acre of cherries produced and harvested. For 
example, Grower A farms 1,000 acres and elects to divert 20 percent of 
the harvestable acreage (200 acres). The grower harvests the remaining 
800 acres and obtains 6,400,000 pounds of cherries, which represents a 
yield per acre of 8,000 pounds. Such grower would receive a diversion 
certificate for 1,600,000 pounds of cherries (8,000 lbs multiplied by 
the 20 percent of the total acreage diverted; in this instance, 200 
acres).
    For whole block diversion, the weight of a harvested sample of 5 
percent of each block, provided by the grower, would be used to 
calculate the total volume of diverted cherries to be credited on the 
diversion certificate. For example, Grower B farms 1,000 acres and 
elects to whole block divert a 200 acre block. If the 5 percent of the 
harvested trees in the block diverted yield 80,000 pounds of cherries, 
the grower would receive a diversion certificate for 1,600,000 pounds 
(80,000 pounds divided by 5 percent (.05) yields 1,600,000 pounds). The 
rest of the block would remain unharvested.
    After receiving a certificate from the Board, the grower could 
present the certificate to a handler to be redeemed. Based upon the 
recommendations of the Board, guidelines and procedures for grower 
diversion for 1998 and subsequent seasons will be established later 
through another rulemaking action.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this action 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 
business 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 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 40 handlers of tart cherries who are 
subject to regulation under the order and approximately 1,220 producers 
or growers of tart cherries in the regulated

[[Page 44883]]

area. Small agricultural service firms, which include handlers, have 
been defined by the Small Business Administration (13 CFR 121.601) as 
those having annual receipts of less than $5,000,000, and small 
agricultural producers are defined as those having annual receipts of 
less than $500,000. The majority of handlers and producers of tart 
cherries may be classified as small entities.
    Section 930.58(b) authorizes the Board to issue diversion 
certificates to growers in volume regulated districts under the tart 
cherry marketing order if cherries are diverted according to terms and 
conditions specified in the order, or according to such other terms and 
conditions that the Board, with the approval of the Secretary, may 
establish. The tart cherry marketing order was recently promulgated and 
the Board met several times in 1997 to recommend rules and regulations 
to implement the order authorities. The Board is required under the 
order to review its marketing policy on or before July 1 and then make 
recommendations to the Secretary for volume regulation, if such 
regulation is deemed necessary.
    The impact of this rule would be beneficial to growers. Grower 
diversion is one of the methods under the order that a handler can 
utilize to meet any such handler's restricted percentage. For example, 
growers may voluntarily choose to divert because they have an abundance 
of low value, poor quality cherries or because they are unable to find 
a processor willing to process some or all of their cherries. Before 
choosing to divert, the grower would most likely evaluate the 
harvesting and other cultural costs that could be saved by diverting 
and locate a handler that would be willing to redeem such grower's 
diversion certificate.
    The Board discussed alternatives to its recommendation to issue 
grower diversion certificates for the 1997 crop year. The Board 
considered not issuing grower diversion certificates for the 1997 crop 
year but believed this action was needed.
    The Board also discussed limiting the blocks to be diverted to no 
less than 5 acre blocks, but felt that this could have an adverse 
impact on small growers that produce on less than 5 acre blocks. 
Therefore, the Board recommended not to restrict the size of orchard 
blocks which could be diverted.
    This rule will not impose any reporting or recordkeeping 
requirements on either small or large tart cherry growers or handlers 
in addition to those already considered or approved during the order 
promulgation proceeding. The only written information requested from a 
grower for 1997 is an orchard map and the grower's final production 
volume. Since growers maintain this information as part of their normal 
farming operations, it takes approximately 10 minutes to prepare a map 
and less than a minute to total the final production volume. As with 
all Federal marketing order programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public sectors. In addition, the Department 
has not identified any relevant Federal rules that duplicate, overlap 
or conflict with this rule.
    In compliance with Office of Management and Budget (OMB) 
regulations (5 CFR part 1320) which implement the Paperwork Reduction 
Act of 1995 (Pub. L. 104-13), the information collection and 
recordkeeping requirements have been previously approved by OMB and 
assigned OMB Number 0581-0177.
    The Board's meetings were widely publicized throughout the tart 
cherry industry and all interested persons were invited to attend the 
meetings and participate in Board deliberations. All Board meetings 
were open to the public and all entities, both large and small, were 
able to express their views on these issues. The Board itself is 
composed of 18 members, of which 17 members are growers and handlers 
and one represents the public. Also, the Board has a number of 
appointed committees to review certain issues and make recommendations 
to the Board. Finally, interested persons are invited to submit 
information on the regulatory and informational impacts of this action 
on small businesses.
    After consideration of all relevant material presented, including 
the Board's recommendation, and other information, it is found that 
this interim final rule, as hereinafter set forth, will tend to 
effectuate the declared policy of the Act.
    This interim final invites comments on grower diversion. Any 
comments received will be considered prior to finalization of this 
rule.
    Pursuant to 5 U.S.C. 553, it is also found and determined upon good 
cause that it is impracticable, unnecessary, and contrary to the public 
interest to give preliminary notice prior to putting this rule into 
effect and that good cause exists for not postponing the effective date 
of this rule until 30 days after publication in the Federal Register 
because: (1) The marketing order has been recently promulgated and the 
rule needs to be implemented as soon as possible since, based on 
announced preliminary percentages, volume regulation may be recommended 
for the 1997 crop year; (2) the 1997 crop year for cherries is from 
July 1, 1997, through June 30, 1998; (3) over 700 growers participating 
in a diversion program and have been voluntarily diverting cherries 
based on preliminary free and restricted percentages announced by the 
Board; and, (4) this rule provides a 30-day comment period and any 
comments received will be considered prior to finalization of this 
rule.

List of Subjects in 7 CFR Part 930

    Marketing agreements, Tart cherries, Reporting and recordkeeping 
requirements.

    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

    1. The authority citation for 7 CFR part 930 continues to read as 
follows:

    Authority: 7 U.S.C. 601-674.

    2. In part 930, a new Sec. 930.100 is added to read as follows:


Sec. 930.100  Grower diversion certificates.

    (a) In accordance with paragraph (b) of this section, the Board 
may, for the 1997 crop year, issue diversion certificates to growers, 
in districts subject to volume regulation (Northwest Michigan, Central 
Michigan, New York, and Utah) who have voluntarily elected to divert in 
the orchard all or a portion of their 1997 tart cherry production which 
otherwise, upon delivery to handlers, would become restricted 
percentage cherries. Growers may offer the diversion certificate to 
handlers in lieu of delivering cherries. Handlers may redeem diversion 
certificates with the Board through November 1 of the 1997 crop year. 
After November 1 of the 1997 crop year that crop year's grower 
diversion certificates are no longer valid.
    (b) Terms and conditions. To be eligible to receive diversion 
credit, growers voluntarily choosing to divert cherries must meet the 
following terms and conditions:
    (1) In order to receive a certificate, a grower must demonstrate, 
to the satisfaction of the Board, that rows or trees which were 
selected for diversion were not harvested. Trees six years old or 
younger do not qualify for diversion.
    (2) The grower must furnish the Board with a total harvested 
production amount so the Board can calculate the amount of grower 
diversion tonnage to

[[Page 44884]]

be placed on the diversion certificate. The Board will confirm the 
grower's production amount with information provided by handlers (to 
which the grower delivers cherries) on Board Form Number Two.
    (3) The grower must agree to allow a Board compliance officer to 
visit the grower's orchard to confirm that diversion has actually taken 
place.
    (c) Calculation of diversion amounts. The weight of cherries 
diverted and left unharvested shall be calculated by the Board after 
growers furnish the Board with the necessary information concerning 
their production. After verification of the volume of cherries 
diverted, the Board shall calculate the amounts of grower diversion 
tonnage to be placed on the diversion certificates and issue such 
certificates to growers. Such amounts shall be determined as follows:
    (1) For whole block diversion, the weight of a harvested sample of 
5 percent of each diverted block, provided by the grower, will be used 
to calculate the total volume of diverted cherries to be credited on 
the diversion certificate. For example, a grower farms 1,000 acres and 
elects to whole block divert a 200 acre block. If 5 percent of the 
harvested trees in the block diverted yield 80,000 pounds of cherries, 
the grower would receive a diversion certificate for 1,600,000 pounds 
(80,000 pounds divided by 5 percent (.05) yields 1,600,000 pounds). The 
rest of the block would remain unharvested.
    (2) For random row diversion, such estimated volume would be 
calculated by applying the percentage of the grower's production 
diverted to the actual average volume per acre of cherries produced and 
harvested. For example, a grower farms 1,000 acres and elects to divert 
20 percent of the harvestable acreage (200 acres). The grower harvests 
the remaining 800 acres and obtains 6,400,000 pounds of cherries, which 
represents a yield per acre of 8,000 pounds. Such grower would receive 
a diversion certificate for 1,600,000 pounds of cherries (8,000 lbs 
multiplied by the 20 percent of the total acreage diverted; in this 
instance, 200 acres).

    Dated: August 18, 1997.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 97-22578 Filed 8-20-97; 4:06 pm]
BILLING CODE 3410-02-P