[Federal Register Volume 63, Number 118 (Friday, June 19, 1998)]
[Rules and Regulations]
[Pages 33523-33529]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-16377]



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  Federal Register / Vol. 63, No. 118 / Friday, June 19, 1998 / Rules 
and Regulations  

[[Page 33523]]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Docket No. FV97-930-2 FR]


Tart Cherries Grown in the States of Michigan, et al.; 
Establishment of Rules and Regulations for Grower Diversion and a 
Compensation Rate for the Cherry Industry Administrative Board Public 
Member and Alternate Public Member

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This rule establishes rules and regulations for a grower 
diversion program under the tart cherry marketing order for the 1998-
1999 and following crop years. It also establishes a compensation rate 
to be paid to the Cherry Industry Administrative Board (Board) public 
member and/or alternate public member when attending Board meetings.

EFFECTIVE DATE: This rule becomes effective June 20, 1998.

FOR FURTHER INFORMATION CONTACT: Patricia A. Petrella or Kenneth G. 
Johnson, Marketing Order Administration Branch, F&V, AMS, USDA, room 
2525-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 Programs, 
AMS, USDA, P.O. Box 96456, room 2525-S, Washington, DC 20090-6456; 
telephone (202) 720-2491; Fax: (202) 720-5698.

SUPPLEMENTARY INFORMATION: This final 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. This rule is not intended to have retroactive effect. 
This rule would 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 final rule establishes rules and regulations for grower 
diversion under the tart cherry marketing order and also establishes a 
compensation rate of $250 per meeting for the public member and 
alternate public member when attending Board meetings. The tart cherry 
marketing order became effective in September of 1996 and the Board met 
March 12-13, June 26-27, September 11-12, 1997, and January 29-30, 
1998, to establish and recommend to the Secretary rules and regulations 
to implement order authorities. At its meetings, the Board recommended 
grower diversion regulations and a compensation rate for the public 
member and alternate public member to the Department for appropriate 
action.
    An interim final rule was published in the Federal Register on 
August 25, 1997, to establish terms and conditions for the issuance of 
grower diversion certificates for the 1997-1998 crop season. A final 
rule was published on April 22, 1998, in the Federal Register. A 
proposed rule establishing the grower diversion program for the 1998-99 
and following crop years was published in the Federal Register on April 
23, 1998, (63 FR 20274). This final rule contains the terms and 
conditions for the grower diversion program to be used for 1998-1999 
and subsequent crop years.
    Section 930.33 of the order authorizes the Board to compensate the 
public member and/or alternate public member for performance of their 
duties. The Board at its discretion may request the attendance of the 
alternate public member at any or all meetings, notwithstanding the 
expected or actual presence of the public member. The $250 compensation 
rate will allow the Board to compensate the public member and alternate 
public member for attending Board meetings. Such compensation is a per 
meeting rate. For example, if a Board meeting is convened and lasts 
four days or four hours, the public member and/or alternate public 
member attending the meeting will receive $250. This action is intended 
to compensate them for loss of work and wages. This payment will be in 
addition to compensation for travel, lodging, meals, and other related 
costs incurred in attending public Board meetings.
    The order in section 930.50 provides the method of establishing an 
optimum supply level of cherries for the crop year. The optimum supply 
is defined as the average of the prior three years' sales of tart 
cherries, adjusted for carry-in and desired carry-out inventory. The 
optimum supply consists of a free percentage amount of cherries which a 
handler could sell to any market and a restricted percentage amount, 
when warranted, which would have to be withheld from the market. Based 
on the optimum supply level, the Board establishes preliminary free and 
restricted percentages. No later than September 15, after harvesting 
and processing of the crop, the Board computes and recommends to the 
Secretary final free and restricted percentages based on actual crop

[[Page 33524]]

amounts. After receiving the Board's recommendation, the Secretary 
designates the final free and restricted percentages through informal 
rulemaking if he finds that such action would tend to effectuate the 
purposes of the Act. The difference between any final free market 
percentage and 100 percent is the final restricted percentage. The 
Board established an optimum supply of 247 million pounds and 
preliminary free and restricted percentages for tart cherries acquired 
by handlers during the 1997-98 crop year during its June 26-27, 1997, 
meeting. Final free and restricted percentages which were recommended 
by the Board to the Secretary were established during its September 11-
12, 1997, meeting. A final rule setting the final free and restricted 
percentages for the 1997-98 crop year at 55 percent and 45 percent, 
respectively, was published in the Federal Register on April 27, 1998, 
(63 FR 20522).
    Handlers can satisfy their restricted percentage in various ways. 
The restricted percentage cherries can be maintained in handler-owned 
inventory reserve pools. Handlers can also satisfy restricted 
percentage obligations by redeeming grower diversion certificates, 
exporting cherries to designated countries, shipping to exempt outlets, 
contributing to charitable organizations or diverting cherries at the 
handler's facility.
    The maximum volume of cherries that can be held in the primary 
inventory reserve is 50 million pounds. Handlers can establish a 
secondary inventory reserve after the primary inventory reserve has 
reached its maximum volume. There is no maximum volume in the secondary 
inventory reserve. Each handler establishing a reserve (primary and 
secondary) is required to pay all of his or her own storage expenses. 
Reserve cherries can be released for sale upon Board approval into 
commercial outlets when the current crop is not expected to fill 
demand.
    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 will 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. In comments concerning the 1997-98 grower 
diversion program there were concerns that such program could act as an 
insurance policy for cherries that are not marketable contrary to the 
intent of the order. The overall intent of the order is that only 
cherries that have reached a harvestable, marketable condition be 
allowed to be diverted. Therefore, in order to further clarify this 
concept, this rule will provide that the Board will not allow diversion 
credit to a grower whose fruit was destroyed before it set and/or 
matured on the tree, or whose fruit is unmarketable. If marketable 
fruit were to be damaged or destroyed by acts of nature such as storms 
or hail, diversion credit could be granted.
    A new section 930.158 is added to the rules and regulations 
specifying the guidelines for grower diversion for the 1998-99 and 
subsequent crop years. First, any grower desiring to divert in the 
orchard would need to request an application form from the Board and 
would need to apply by June 24, 1998, for the 1998-99 crop year and by 
April 15 for subsequent crop years. The proposed June 15, 1998, date is 
changed in this final rule to June 24, 1998, to allow growers adequate 
time to apply for grower diversion for the 1998-99 crop year. The 
application will include the name, address, phone number and a signed 
statement certifying that the grower will abide by all the rules and 
regulations for diversion. In addition, the grower will need to include 
maps of such grower's orchard. Each map will include the grower's name, 
address and location of the orchard.
    The Board has recommended four types of in-orchard diversion. These 
are: (1) random row diversion, in which rows of cherry trees are 
randomly selected by the Board's computer programs to remain 
unharvested; (2) whole block diversion, in which an entire orchard 
block is left unharvested; (3) partial block diversion, in which a 
contiguous portion of a definable block is diverted; and (4) in-orchard 
tank diversion, in which cherries harvested into tanks are measured, 
calculated and then diverted in the orchard. The regulations for the 
1997-98 crop year only provide for random row and whole block 
diversion.
    For all types of diversion, except tank diversion, growers will 
need to map each orchard block they intend to divert. A block is 
defined as a group of trees that are of similar age, running in the 
same direction and having definable boundaries (e.g., roads, ditches). 
If a grower desires to divert using the random row method, all of the 
grower's orchards would need to be mapped, since random row diversion 
involves diverting a certain amount of trees from all the grower's 
orchards. If the grower elects whole or partial block diversion, all 
blocks to be diverted would need to be mapped. The maps would need to 
be supplied to the Board so that the Board can calculate the diversion 
amounts. New maps would not need to be prepared each season. However, 
maps would have to be updated to reflect any substantive changes in the 
grower's orchard such as new trees or trees destroyed by inclement 
weather.
    For the 1998-99 and subsequent crop years, the proposed rule 
provided that only trees more than six years old would qualify for 
diversion. Based on information from the National Agricultural 
Statistical Service (NASS), and from record testimony, it appears that 
tart cherry trees do not come into full commercial production before 
they are five to seven years old. Using trees which are not producing 
cherries or which are only beginning to come into full production when 
calculating diversion amounts would result in figures which are not 
representative of a grower's true production. A comment was received on 
this issue and will be discussed later in this document as well as the 
change in the regulations concerning this matter.
    By July 1 of each crop year in which volume regulation is 
recommended, a grower that has provided the Board with the required 
orchard maps would have to inform the Board of such grower's intention 
to divert in the orchard and the method of diversion. If a grower does 
not elect the method of diversion by July 1, then only random row or 
in-orchard tank diversion would be available and the Board would 
provide the information necessary for the grower to divert by the 
random row method.

Random Row Diversion

    Based on orchard maps submitted to the Board by the grower, the 
Board, using a computer program, would randomly designate rows of trees 
in each orchard block for nonharvest and inform the grower of this 
designation. This designation would be based upon the preliminary 
restricted percentage amount computed and announced by the Board. For 
example, if the preliminary restricted percentage is 20 percent, the 
Board's computer would randomly select rows of trees across all blocks 
in the grower's orchard to allow the grower to divert 20 percent of 
such grower's crop. The grower, however, would not have to choose this 
diversion amount. No less than seven days prior to each grower's 
individual harvest date, such grower could request a different 
diversion percentage (either smaller or greater). The purpose of the 
seven day notice is to allow the Board adequate

[[Page 33525]]

time to prepare a different orchard map using different percentages.
    To divert cherries through random row diversion, the grower will 
not harvest the designated rows. After completing harvest of all trees 
not designated for diversion, the grower would be required to notify 
the Board and/or a Board compliance officer. Such grower will also need 
to provide the Board with total harvested production amounts so the 
Board could calculate the amount of grower diversion tonnage to be 
placed on the diversion certificate. Independent confirmation by the 
Board of the grower's production would also be provided by the handler 
on Board form number two.
    Growers will receive diversion certificates only after confirmation 
of diversion is provided to the Board. After harvest, the Board's 
compliance staff will visit the grower's orchards to ensure that the 
rows selected on the orchard map for random row diversion had not been 
harvested. Once the orchard has been visited by a compliance officer 
and the grower has carried out the terms and conditions for random row 
diversion, a diversion certificate will be issued to the grower. The 
diversion certificate will represent the weight of cherries diverted by 
the grower. The grower could then present the certificate to a handler 
to be redeemed.

Whole Block Diversion

    Whole block diversion involves diversion of the production from an 
entire block of cherry trees.
    In whole block diversion, the value of the diversion would be 
determined by application of a statistical sampling protocol. For 
example, if a block has 5 rows or less, 3 rows would be randomly chosen 
to be sampled. If a block has 6 to 15 rows, 4 rows would be randomly 
chosen to be sampled. If a block has 16 or more rows, 5 rows would be 
randomly chosen to be sampled.
    The Board originally recommended that a 5 percent sample size be 
used. However, after the first season of operation, the Board 
determined that the statistical method of sampling would be much more 
accurate in obtaining the weight of what is to be diverted. From each 
of the rows to be sampled, ten contiguous originally planted tree sites 
would be sampled within the rows. A tree site is a planted tree or an 
area where a tree was planted and may have been uprooted or died. Only 
trees over the age of six years old would be harvested for the sample. 
For example, if it is determined that five rows are to be sampled, then 
10 tree sites in each of the five rows would be sampled. A total of 50 
tree sites would be sampled ((10 original tree sites) x (5 rows)=50 
trees). If a total of 4600 pounds is harvested from the sample trees 
and this is divided by 50 tree sites, a yield of 92 pounds per tree 
site will be obtained. The yield for the block is found by multiplying 
92 pounds per site by 880 trees that were mapped in the block to yield 
80,960 pounds per block.
    The Board discussed another sampling option. This would have 
required that mapping be done by the grower each year the grower 
applied for diversion. However, the Board felt that was an undue burden 
on the grower. Using the sampling method recommended by the Board will 
only require the grower to map an orchard one time and update the map, 
as necessary, to reflect any substantive changes in the grower's 
orchard. The grower will not need to redo the map every year such 
grower may want to divert.
    Prior to sampling, the grower will notify the Board to allow 
observation of the sampling process by a compliance officer. After 
harvest, the compliance officer could again visit the grower's orchard 
to verify that diversion actually took place.
    A diversion certificate will be issued for an amount equal to the 
volume of cherries diverted by the grower. The grower could then 
present the certificate to a handler to be redeemed.

Partial Block Diversion

    The Board recommended that partial block diversion be available as 
an option to growers. Inclusion of this option would permit growers 
added flexibility. Also, it would help discourage the tendency of 
growers to break up large blocks into multiple small blocks. Partial 
block diversion would also speed up the orchard diversion activity by 
decreasing the sampling time for growers and the Board. Growers may 
wish to divert only partial blocks of marketable, harvestable cherries 
that have been subjected to storm damage or are of lower quality. For 
example, this will allow a grower that has a block that is 35 rows by 
40 trees per row to divert contiguous rows 1 through 22 and harvest 
rows 23 through 35. The partial block would be sampled as in whole 
block diversion. This provides the grower with more options when 
determining if such grower should in-orchard divert.
    The Board recommended limiting partial block diversions to one 
partial block per grower per year. This will alleviate the time that 
compliance officers would need to spend observing sampling and 
diversion at grower's premises. The Board may evaluate partial block 
diversions at the end of the season to decide if it is not timely or 
not cost effective to administer by the compliance officers. Based on 
this evaluation the Board may recommend increasing the number of 
partial block diversions or eliminate this type of diversion as an 
option to growers. The grower should inform the Board by July 1 if such 
grower elects to whole or partial block divert. If whole block or 
partial block diversion is not selected by July 1, growers who wish to 
divert could then choose the random row method or the in-orchard tank 
method of diversion.

In-Orchard Tank Diversion

    The Board recommended that in-orchard tank diversion be authorized 
to growers as another option for diversion. The Board discussed at 
length the fact that the grower diversion program must be grower 
friendly in order for growers to take full advantage of the program. 
Adding options to the grower diversion program provides more 
flexibility to the grower.
    A grower diverting by this method would need to notify the Board 
and compliance officers of such diversion. Growers may wish to use tank 
diversion when marketable cherries in part of the orchard have 
sustained damage or are of lower quality. Such cherries could be picked 
and placed in harvesting tanks until a compliance officer could come to 
the orchard to probe the tanks for volume measurement and observe the 
destruction of the cherries on the grower's premises.
    To use this diversion option a grower would need to inform a 
compliance officer that such grower has tanks ready for diversion. The 
Board recommended that the grower have no fewer than 10 tanks for 
diversion prior to informing the compliance officer. This will keep the 
cost of inspections to a minimum and decrease the compliance officer's 
time from traveling from location to location to observe a small amount 
of in-orchard tank diversion. The Board discussed the fact that 10 
tanks is not a large amount, since each tank holds about 1,000 pounds 
and 10 tanks would be about a truckload of cherries. This will not be 
an undue hardship on small growers that wish to take advantage of such 
diversion.
    After the grower informs the compliance officer of such diversion, 
the compliance officer will have up to five days to come to the 
grower's premises to probe the tanks and observe the diversion. This 
will allow the compliance officer the flexibility to schedule visits 
throughout the area and save compliance costs.

[[Page 33526]]

Compliance

    In-orchard diversion by growers is a voluntary action. However, 
once chosen, growers are expected to meet all of the terms and 
conditions for diversion to receive a diversion certificate and to be 
diligent in actually diverting the percentage of the crop for which 
they have applied. Handlers depend upon growers to accurately divert 
the percentages requested as they make their marketing and storage 
decisions throughout the season. Thus, in the case where growers fail 
to properly divert all of the cherries specified in their application, 
such growers should not receive diversion credit for the undiverted 
cherries.
    When a grower chooses random row diversion, such grower would not 
harvest trees in rows that have been randomly chosen by the Board's 
computer programs, to be left unharvested. Unintended errors could 
occur during harvest that could void a growers diversion efforts. The 
Board has recommended that growers who choose random row diversion 
should be permitted to rectify any unintended errors that may occur 
during harvest. Therefore, growers who fail to properly divert 
designated rows, but who otherwise meet the terms and conditions of 
diversion, will have to divert cherries in addition to those randomly 
chosen, but will still receive the diversion percentage originally 
applied for.
    For example, a grower's map could require such grower to random row 
divert rows 5 and 6 and such grower may harvest row 5 in error. Such 
grower will then be required to divert another two rows to make up for 
the mistake in diverting. This will discourage mistakes being made in 
the orchard since such growers know they may have to divert more 
cherries to correct a mistake. This recommended adjustment will allow a 
grower to correct an error in the orchard and still receive a diversion 
certificate.
    However, if growers are harvesting at the end of the orchard and 
thus, do not have an opportunity to rectify a mistake by diverting 
additional rows or trees, the Board could reduce the grower's diversion 
certificate by using the two for one method. For example, a grower 
specifies a diversion amount of 20 percent on the original application 
for diversion (and does not increase or decrease such percentage by the 
June 24, 1998, cutoff date for the 1998-99 crop year and by April 15 
for subsequent crop years). Subsequently, the grower fails to divert a 
complete block or all of the specified rows, resulting in diversion of 
only 16 percent of the crop. Thus, the grower has failed to divert an 
additional 4 percent of the crop. The Board would then multiply that 
percent by two and subtract that amount from the original diversion 
application amount. This would reduce the diversion amount by twice the 
amount of the mistake that was made and therefore, a 2 for 1 reduction 
would be made as explained above. In this example, 2 times 4 percent 
equals 8 percent; which, when subtracted from the original percentage 
of 20 percent, yields a diversion credit of 12 percent of the grower's 
total production. Thus, the grower would receive a diversion 
certificate equal to 12 percent of the originally requested amount.
    Growers, when aware of such errors, will need to immediately inform 
the Board when such errors are made during the diversion process to 
ensure that they continue to meet the terms and conditions of 
diversion. Growers who divert more than their preliminary percentage 
will not receive additional diversion credit. The Department agrees 
with this recommendation. The ``two for one'' method is a necessary 
part of compliance for the diversion provisions because it is important 
that the industry accurately projects the annual tonnage of cherries 
available for market.
    The Board recommended that all grower diversion certificates should 
be redeemed with handlers by November 1. After November 1, grower 
diversion certificates will 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 will allow 
handlers adequate time to meet their restricted percentage amounts 
after final percentages have been established.

Compensation

    The Board also recommended adding a new section 930.133 to provide 
a compensation rate of $250 to be paid to the public member and to the 
alternate public member for each meeting they attend. Section 930.33 
provides that the public member and alternate public member shall 
receive such compensation as the Board may establish and the Secretary 
may approve. The public and alternate public member cannot have a 
financial interest in the tart cherry industry. To attend meetings, it 
may be necessary for them to be absent from their places of employment. 
Therefore, the Board recommended a compensation rate be established. 
This payment will be in addition to compensation for travel, lodging, 
meals, and other related costs incurred in attending Board meetings. 
For example, if a Board meeting is convened and lasts for a day or two 
or only four hours, the public member and/or alternate public member 
attending the meeting would receive $250.

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 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 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.
    This final rule establishes rules and regulations for grower 
diversion under the tart cherry marketing order. The order was 
promulgated on September 25, 1996. The Board was established on 
December 20, 1996, met several times in 1997 and recommended numerous 
rulemaking actions. The Board recommended establishing an assessment 
rate and late payment charges, procedures for grower and

[[Page 33527]]

handler diversion and exemptions for certain order provisions. The 
Board also recommended regulations for the issuance of grower diversion 
certificates and final free and restricted percentages for the 1997-98 
crop year. These actions were recommended at Board meetings held March 
12-13, June 26-27, September 11-12, 1997, and January 29-30, 1998.
    The impact of this rule will be beneficial to growers. The receipt 
of grower diversion certificates is one of the methods under the order 
that handlers can utilize to meet any such handler's restricted 
percentage. Growers may voluntarily choose to divert because they have 
an abundance of low value, poor quality marketable 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. An interim final rule was published on 
August 25, 1997, (62 FR 44881) establishing terms and conditions for 
the issuance of grower diversion certificates by the Board for the 
1997-98 crop year. A final rule was published on April 22, 1998, (63 FR 
20019) in the Federal Register.
    Initially, about 700 growers expressed an interest in participating 
in the voluntary grower diversion program. However, because of the 
exceptional quality of 1997-98 tart cherry crop, fewer growers opted to 
participate in the grower diversion program. As such, approximately 120 
growers (65 growers diverting by random row and 55 diverting by whole 
block diversion) received diversion certificates for a total of 
6,139,600 pounds of diverted cherries for an average of 51,163 pounds 
of cherries diverted per grower. Although it is difficult to quantify 
the overall effect the grower diversion program has had on the tart 
cherry industry at this time, information from the Board indicates that 
the program's economic impact on both the handlers and growers appears 
to have been positive. There seems to be overall satisfaction among 
both growers and handlers with this year's returns. The economic impact 
of the grower diversion provisions of this regulation are also expected 
to be positive. They should result in benefits to both growers and 
handlers which are similar to those which resulted from the 1997-98 
program. In addition, this rule offers growers greater flexibility when 
diverting their cherries.
    With regard to methods of diversion, this rule establishes four 
different ones: random row, whole block, partial block and in-orchard 
tank. During diversion for the 1997-1998 season only the first two were 
used. The Board discussed limiting the blocks to be diverted to 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 there be no limit on the size of orchard blocks to be 
diverted. The Board also discussed a sampling option that would have 
required mapping to be done by the grower each year the grower applied 
for diversion, but rejected it because it would be an undue burden on 
the grower. Using the sampling methods in this rule will only require 
the grower to map an orchard one time and not redo the map every year 
such grower may want to divert.
    This rule also establishes a compensation rate of $250 per meeting 
for the public member and alternate public member when attending Board 
meetings. The public member and alternate public member would receive 
$250 whether the Board meeting convened and lasted for one or two days 
or only four hours. The compensation to be paid to the public member 
and alternate public member would compensate such persons for loss of 
work or wages since such persons do not have a financial interest in 
the tart cherry industry. There was consideration for a lower 
compensation rate but the Board decided to proceed with the above 
mentioned amount. The Board did not support a lower compensation rate 
because it did not adequately compensate the public member and 
alternate public member for their time to attend Board meetings.
    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 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 which 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 imposed by this order 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 
meeting and participate in Board deliberations. Like all Board 
meetings, the March, June, September 1997, meetings and January 1998 
meeting were public meetings and all entities, both large and small, 
were allowed 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. The Board's Diversion Subcommittee met on March 12, 1997, 
and discussed grower diversion in detail. That meeting was also a 
public meeting and both large and small entities were able to 
participate and express their views. Finally, interested persons are 
invited to submit information on the regulatory and informational 
impacts of this action on small businesses.
    A proposed rule concerning this action was published in the Federal 
Register on Thursday, April 23, 1998, (63 FR 20274). Copies of the rule 
were also mailed or sent via facsimile to all Board members and cherry 
handlers. Finally, the rule was made available through the Internet by 
the Office of the Federal Register.
    A 30-day comment period was provided which ended on May 26, 1998. 
One comment was received in response to the proposal. The commenter is 
the Executive Director of the Board. The commenter disagreed with the 
age of the trees for which diversion is authorized. The Board 
recommended to the Secretary that the age of trees for which diversion 
of fruit is permitted should be 5 years or older. The proposal stated 
that only trees seven years or older qualify for diversion. The 
commenter stated that this is not consistent with the needs of the 
industry.
    The commenter further stated its recommendation for change was not 
an arbitrary action by the Board. Rather, it is was done to bring the 
Board's diversion activities and authority in line with cultural 
practices of the industry. The proposal states that tart cherry trees 
come into full commercial production

[[Page 33528]]

in a range from their fifth to seventh growing season. The point at 
which a particular tree reaches production capacity depends upon 
geographic location. The commenter stated that recognition of this 
variance must be made for in the diversion process. The commenter 
believes that only allowing trees seven years old or older to qualify 
for diversion contributes to inequitable treatment of producers in 
different areas with different circumstances and with different 
cultural practices. The commenter further stated that the Board 
unanimously determined that it was more appropriate to recognize the 
full age range in the diversion of younger trees and orchards. By 
recognizing the full range, the opportunity for diversion activity is 
expanded for growers.
    After consideration of this comment, the Department is changing the 
provision in the regulations concerning the age of trees eligible for 
diversion (Sec. 930.158(b)) to provide that trees that are four years 
or younger do not qualify for diversion. This would recognize the full 
five to seven year range of age maturation for the trees and allow 
producers with younger fully producing trees to qualify for diversion. 
This is also in keeping with other provisions of the regulations 
providing that only cherries that have reached a harvestable, 
marketable production will be eligible for diversion.
    After consideration of all relevant matter 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.
    It is hereby found that good cause exists for not postponing the 
effective date of this rule until 30 days after publication in the 
Federal Register (5 U.S.C. 553) because growers are expected to begin 
harvesting and diverting their crop by mid-June and need to know the 
rules and regulations in order to participate in the grower diversion 
program. Further, growers are aware of this rule which was recommended 
at a public meeting.

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. A new Sec. 930.133 is added to read as follows:


Sec. 930.133  Compensation rate.

    A compensation rate of $250 per meeting shall be paid to the public 
member and to the alternate public member when attending Board 
meetings. Such compensation is a per meeting rate. For example, if a 
Board meeting is convened and lasts one or two days or only four hours, 
the public member and/or alternate public member attending the meeting 
would receive $250 each.
    3. A new Sec. 930.158 is added to read as follows:


Sec. 930.158  Grower diversion and grower diversion certificates.

    (a) Grower diversion certificates. The Board may issue diversion 
certificates to growers in districts subject to volume regulation who 
have voluntarily elected to divert in the orchard all or a portion of 
their 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 each crop year. After November 1 of the crop year 
that crop year's grower diversion certificates are no longer valid. 
Cherries that have reached a harvestable, marketable condition will be 
eligible for diversion. Diversion will not be granted to growers whose 
fruit was destroyed before it set and/or matured on the tree, or whose 
fruit is unmarketable. If marketable fruit were to be damaged or 
destroyed by acts of nature such as storms or hail diversion credit 
could be granted.
    (b) Application and mapping for diversion. Any grower desiring to 
divert cherries using methods other than random row or in-orchard tank 
shall submit a map of the orchard or orchards to be diverted, along 
with a completed Grower Diversion Application, to the Board by June 24, 
1998, for the 1998-99 crop year (July 1, 1998 through June 30, 1999) 
and April 15 for subsequent crop years. The application includes a 
statement which must be signed by the grower which states that the 
grower agrees to comply with the regulations established for a tart 
cherry diversion program. Each map shall contain the grower's name and 
number assigned by the Board, the grower's address, block name or 
number when appropriate, location of orchard or orchards and other 
information which may be necessary to accomplish the desired diversion. 
On or before July 1, the grower should inform the Board of such 
grower's intention to divert in-orchard and what type of diversion will 
be used. The four types of diversion are random row diversion, whole 
block diversion, partial block diversion and in-orchard tank diversion. 
A grower who informs the Board about the type of diversion he or she 
wishes to use by July 1 can elect to use any diversion method or a 
combination of diversion methods. Only random row or in-orchard tank 
diversion methods may be used if the Board is not so informed by July 
1. Trees that are four years or younger do not qualify for diversion.
    (1) Random row diversion. Using the orchard map furnished by the 
grower, the Board will randomly select rows of trees within the orchard 
to be diverted. The amount of cherries to be diverted will be based on 
the preliminary restricted percentage amount established pursuant to 
Sec. 930.50. A grower may elect a different percentage amount; however, 
the grower needs to inform the Board as soon as possible after the 
preliminary percentages are announced of this other amount, but in no 
event shall this be less than seven days in advance of harvest. The 
designated rows indicated by the map must not be harvested. After 
completing harvest of the remaining rows in the orchard, the grower 
must notify the Board and/or the Board's compliance officer. A 
compliance officer will then be allowed to observe the grower's orchard 
to assure that the selected rows have not been harvested. The grower 
must inform the Board of the total production of the orchard to 
calculate the tonnage that was diverted.
    (2) Whole block diversion. Based on maps supplied by the grower, a 
sampling procedure will be used to determine the amount of cherries in 
the orchard to be diverted. A block is defined as rows that run the 
same direction, are similar in age, and have definable boundaries. The 
Board would require a number of trees to be sampled depending on the 
size of the block. For example, if a block has 5 rows or less, 3 rows 
would be randomly chosen to be sampled, if a block has 6 to 15 rows, 4 
rows would be randomly chosen to be sampled, and if a block has 16 or 
more rows, 5 rows would be randomly chosen to be sampled. From each of 
the rows

[[Page 33529]]

to be sampled ten contiguous originally planted tree sites will be 
sampled within the rows. Only trees more than five years old will be 
harvested for the sample. For example, if it is determined that five 
rows are to be sampled and 10 trees in the five rows are to be sampled, 
then a total of 50 trees are to be sampled ((10 original tree sites) 
x  (5 rows)= 50 trees). A total of 4600 pounds will be harvested from 
the sample trees which is divided by 50 trees to obtain a yield of 92 
pounds per tree. To find the yield for the block, 92 pounds is 
multiplied by 880 trees that were mapped in the block to yield 80,960 
pounds per block. The harvested tonnage will be converted to a volume 
that represents the entire block of cherries. The grower should inform 
the Board when the samples are being taken so a compliance officer can 
observe the sampling. The compliance officer would be allowed to 
confirm that the block has been diverted.
    (3) Partial block diversion. Partial block diversion will also be 
accomplished using maps supplied by the grower. Sampling will be done 
as in whole block diversion except that only partial blocks would be 
selected and sampled. Growers may divert one partial block per year. 
Such block must be mapped and would be sampled as described under whole 
block diversion. Rows used in partial block diversion must be 
contiguous.
    (4) In-orchard tank diversion. Growers wishing to in-orchard tank 
divert must pick the cherries to be diverted and place them in 
harvesting tanks. A compliance officer would then probe the tanks for 
volume measurement and observe the destruction of the cherries on the 
grower's premises. Growers wishing to take advantage of this option 
must have at least 10 tanks ready for diversion. The compliance officer 
has up to five days to come to the grower's premises to observe the 
diversion after being contacted.
    (c) Compliance. Growers who voluntarily participate in the grower 
diversion program must sign and file with the Board a Grower Diversion 
Application. By signing the application, a grower agrees to the terms 
and conditions of the grower diversion program as contained in these 
regulations. 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 four 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 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. If the terms and conditions for whole block, partial block or 
in-orchard tank diversion are not completed, the Board shall not issue 
the grower a diversion certificate. If a grower who chooses random row 
diversion harvests rows that were designated not to be harvested, the 
grower should inform the Board immediately of the error. The grower 
will then be required to divert twice the amount (rows or trees) 
incorrectly harvested to correct the mistake. The grower will still 
receive a diversion certificate equal to the original requested amount. 
However, in instances where a grower is at the end of harvesting the 
orchard and fails to divert a complete block or specified rows, the 
Board shall multiply by two the difference between the original 
diversion amount and the actual diverted amount. The Board shall 
subtract that amount from the diversion application amount. Thus, the 
grower would receive a grower diversion certificate equal to a portion 
of the originally requested amount. If the grower does not inform the 
Board of such errors, the grower will not receive a diversion 
certificate.

    Dated: June 15, 1998.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-16377 Filed 6-18-98; 8:45 am]
BILLING CODE 3410-02-P