[Federal Register Volume 65, Number 104 (Tuesday, May 30, 2000)]
[Proposed Rules]
[Pages 34411-34420]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-13467]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 65, No. 104 / Tuesday, May 30, 2000 / 
Proposed Rules  

[[Page 34411]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 929

[Docket No. FV00-929-2 PR]


Cranberries Grown in the States of Massachusetts, Rhode Island, 
Connecticut, New Jersey, Wisconsin, Michigan, Minnesota, Oregon, 
Washington and Long Island in the State of New York; Establishment of 
Marketable Quantity and Allotment Percentage and Other Modifications 
Under the Cranberry Marketing Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: This rule would establish the quantity of cranberries that 
handlers may purchase from, or handle for, growers during the 2000-2001 
crop year, which begins on September 1, 2000, and ends on August 31, 
2001. The Cranberry Marketing Committee (Committee), the agency 
responsible for local administration of the cranberry marketing order, 
recommended a marketable quantity of 5.4 million barrels and an 
allotment percentage of 85 percent. This rule invites comments on the 
Committee's recommendation as well as two alternative levels of 
regulation being proposed by the Department. This action is designed to 
stabilize marketing conditions and improve grower returns. Fresh and 
organically-grown cranberries would be exempt from the volume 
limitations to facilitate marketing of these products. Also proposed 
are improvements in the way producer allotments are calculated, 
including proposals initiated by the Department to revise the way in 
which growers' sales histories are computed and to suspend certain 
dates in the order which are impractical.

DATES: Comments must be received by June 14, 2000.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent to the Docket Clerk, Fruit 
and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 96456, 
Washington, DC 20090-6456, Fax: (202) 720-5698 or E-mail: 
[email protected]. 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 or can be viewed at 
the following website: www.ams.usda.gov/fv/moab.html.

FOR FURTHER INFORMATION CONTACT: Patricia A. Petrella or Kenneth G. 
Johnson, DC Marketing Field Office, Fruit and Vegetable Programs, AMS, 
USDA, Suite 5D03, Unit 155, 4700 River Road, Riverdale, Maryland 20737, 
telephone: (301) 734-5243; Fax: (301) 734-5275; or Anne M. Dec, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, room 2525-S, P.O. Box 96456, Washington, DC 20090-6456; 
telephone: (202) 720-2491, Fax: (202) 720-5698.
    Small businesses may request information on complying 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, or E-mail: [email protected].

SUPPLEMENTARY INFORMATION: This proposal is issued under Marketing 
Order No. 929 [7 CFR Part 929], as amended, regulating the handling of 
cranberries grown in Massachusetts, Rhode Island, Connecticut, New 
Jersey, Wisconsin, Michigan, Minnesota, Oregon, Washington, and Long 
Island in the State of New York. The order is effective under the 
Agricultural Marketing Agreement Act of 1937, as amended [7 U.S.C. 601-
674], hereinafter referred to as the ``Act.''

Question and Answer Overview

What Are Marketing Orders?

    Marketing orders are rules which are authorized under the 
Agricultural Marketing Agreement Act of 1937 and which are based on 
evidence developed at a formal hearing. Marketing orders help fruit and 
vegetable growers work together to solve marketing problems that cannot 
be solved individually. Industries voluntarily enter into these 
programs and choose to have Federal oversight of certain aspects of 
their operations.
    The cranberry industry has operated under a marketing order since 
1962. The order's primary regulatory authority is volume control, 
utilizing either a producer allotment program, or establishing a 
withholding percentage where the amount of cranberries that handlers 
can handle is limited. The order also authorizes reporting and record 
keeping activities related to the gathering of statistical information 
and supporting volume control activities, as well as research and 
promotion activities. Volume control has not been used since 1971.
    The Committee, which is responsible for local administration of the 
order, recommended this action to stabilize marketing conditions and 
improve grower returns. The Department is also proposing some changes 
in the way the volume control program would be implemented to improve 
the process.

Who Would Be Affected by This Action?

    Growers and handlers/processors located in the 10-State production 
area would be affected by this action. The 10-State production area 
covers cranberries grown in Massachusetts, Rhode Island, Connecticut, 
New Jersey, Wisconsin, Michigan, Minnesota, Oregon, Washington, and 
Long Island in the State of New York.

Why Is Volume Control Being Recommended for This Year?

    The Committee recommended volume control this year in order to 
address the serious oversupply situation being experienced by the 
industry. For the 1999 crop year, industry reports show that continued 
low grower prices will accompany record high production and 
inventories. Many cranberry growers are experiencing difficulties 
dealing with these extreme market conditions. The Committee recommended 
implementing volume regulations at its March 30, 2000, meeting in 
Minneapolis, Minnesota.
    The Committee determined the best method of volume control would be 
the producer allotment program which provides for an annual marketable 
quantity and allotment percentage.
    The use of volume control is not the only avenue that could be used 
to address the oversupply situation being

[[Page 34412]]

experienced by the industry. The industry is also looking into methods 
of increasing demand by developing new markets, both domestic and 
foreign, by developing new products and by increasing promotional 
efforts.

What Is Marketable Quantity and Allotment Percentage?

    Marketable quantity is defined as the number of pounds of 
cranberries needed to meet total market demand and to provide for an 
adequate carryover into the next season. The Committee determined that 
the marketable quantity for the 2000-2001 crop year should be 
established at 5.4 million barrels. This is equal to the expected 
demand for fruit for processing.
    The allotment percentage equals the marketable quantity divided by 
the total of all growers' sales histories. Total growers' sales 
histories were set at 6.35 million barrels. Using the formula 
established under the order (5.4 million barrels divided by 6.35 
million barrels), the annual allotment percentage is 85 percent.
    The Department is proposing a change in the way sales histories are 
calculated, which would bring the industry total to 7.6 million 
barrels. Using the 5.4 million barrel marketable quantity recommended 
by the Committee would yield an allotment percentage of 71 percent. To 
keep the allotment percentage at the level recommended by the Committee 
(85 percent), the marketable quantity would have to be increased to 
6.46 million barrels. Comments are invited on the Committee's proposed 
recommendation for setting a volume regulation for the 2000 cranberry 
crop and on the two alternative methods proposed by the Department.
    Sales of fresh and organically-grown fruit would be exempt from the 
proposed volume regulation. In addition, the Committee and the 
Department recommended other modifications to implement volume 
regulation.

How Are Growers' Annual Allotments Calculated?

    A grower's annual allotment is the result of multiplying the 
individual grower's sales history by the allotment percentage.

How Are Sales Histories Calculated?

    The Cranberry Marketing Committee (Committee) is responsible for 
calculating each grower's sales history on an annual basis. For growers 
with existing cranberry acreage, sales history is established by 
computing an average of the best four years' sales out of the last six 
years' sales. For growers with four years or less of commercial sales 
history, the sales history is calculated by averaging all available 
years of such grower's sales. A grower with no sales history would be 
issued allotment based on the State average yield per acre or the total 
estimated commercial sales, whichever is greater. For the 2000-2001 
crop, the State average yield would be defined as the average State 
yield for the year 1997 or the average of the best four years out of 
the last six years, whichever is greater.
    The Department is proposing a change in this calculation. For all 
existing growers, sales histories would be based on the best year out 
of the last six. For a grower with less than six years of sales, the 
sales history would be the highest year of sales available. Growers 
with no sales history would be issued allotment as described in the 
previous paragraph.

How Can I Comment on This Action?

    Interested persons have 15 days from the date of publication of the 
proposed rule to file written comments. Such comments should be sent 
to: Docket Clerk, Fruit and Vegetable Programs, AMS, USDA, room 2525-S, 
P.O. Box 96456, Washington, DC 20090-6456, Fax: (202) 720-5698 or E-
mail: [email protected]. 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 or can be viewed at 
the following website: www.ams.usda.gov/fv/moab.html. In addition, 
small businesses may request information on complying 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, or E-mail: [email protected].

When Will This Action Be Effective?

    After the 15-day comment period ends, the Department will analyze 
the comments and issue its decision. Depending on the results of its 
analysis of the rulemaking proceeding, the Department could issue a 
final rule similar to, or the same as, this proposal. It could also 
issue a rule with appropriate modifications, based on the comments and 
on the rulemaking record, or it could terminate this rulemaking. In 
rare instances, the Department has issued a second proposal. Any final 
rule would be effective for the 2000-2001 crop year which begins on 
September 1, 2000. It would affect all current growers and handlers of 
cranberries in the production area.

Executive Orders 12866 and 12998

    The Department of Agriculture (Department) is issuing this proposed 
rule in conformance with Executive Order 12866.
    This proposal has been reviewed under Executive Order 12988, Civil 
Justice Reform. Under the marketing order provisions now in effect, a 
marketable quantity and allotment percentage may be established for 
cranberries during the crop year. This rule would establish a 
marketable quantity and allotment percentage for cranberries for the 
2000-2001 crop year beginning September 1, 2000, through August 31, 
2001. This proposal 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 date of the entry of the ruling.
    This proposal invites comments on establishing a marketable 
quantity and allotment percentage for the 2000-2001 crop year. This 
action would also exempt fresh and organically-grown cranberries from 
volume regulation, define State average yield per acre, increase the 
barrels per acre for determining a commercial crop, and revise the 
Committee review procedures for re-determination of sales histories. 
These actions were recommended by the Committee at its March 30, 2000, 
meeting. The volume regulation would be in effect September 1, 2000, 
through August 31, 2001.
    This action also invites comments on two proposals being suggested 
by the Department. The first would change the

[[Page 34413]]

way in which growers' sales histories are computed, which would result 
in a revised marketable quantity or allotment percentage. The second 
would suspend the order requirement that grower allotments be issued by 
June 1.

Marketable Quantity and Allotment Percentage

    Section 929.49 of the order currently provides that if the 
Secretary finds from the recommendation of the Committee or from other 
available information, that limiting the quantity of cranberries 
purchased from or handled on behalf of growers during a crop year would 
tend to effectuate the declared policy of the Act, the Secretary shall 
determine and establish a marketable quantity for that year. In 
addition, the Secretary would establish an allotment percentage which 
shall equal the marketable quantity divided by the total of all 
growers' sales histories. Handlers cannot handle cranberries unless 
they are covered by a grower's annual allotment.
    The cranberry industry has operated under a Federal marketing order 
since 1962. The last season volume regulation was recommended was in 
1971.
    The order covers a ten-State area. The highest producing States are 
Massachusetts and Wisconsin, which together account for about 80 
percent of total production. Over 95 percent of the crop is processed, 
with the remainder being sold as fresh fruit.
    For many years, the industry has enjoyed increasing demand for 
cranberry products, primarily due to the success of cranberry juice-
based drinks. This situation encouraged additional production. From 
1960 through 1999, production increased from 1.34 million barrels (one 
barrel equals 100 pounds of cranberries) to 6.39 million barrels. This 
represents a 377 percent increase. Production in 1999 was an all-time 
high, and was 17 percent above that of the previous year.
    The growth rate in production is attributable to a 76 percent 
increase in harvested area (from 21,140 to 37,200 acres) and an even 
higher increase (171 percent) in yields (from 63.4 to 171.7 barrels per 
acre).
    While production continues to rise, demand has leveled off. Total 
domestic sales peaked in 1994 at 4.7 million barrels, and declined to 
4.5 million barrels in 1998.
    Increased total supplies in excess of demand have resulted in large 
inventories. Carryover inventories have grown from 883,773 barrels in 
1988 to 3,107,366 barrels in 1999. From 1988 through 1997, carryover as 
a percent of production ranged from 21 to 36 percent. However, in 1998, 
carryover as a percent of production increased to 40 percent; in 1999 
it increased to 49 percent. Carryover inventory for the 1999 season 
exceeded 3 million barrels for the first time in the industry's 
history.
    When supply outpaces demand, resulting in high levels of carryover 
inventories, grower prices can be negatively impacted. Grower prices 
rose from $8.83 per barrel in 1960 to a peak level of $65.90 per barrel 
in 1996. These rising price levels provided an incentive for producers 
to expand planted acres and to increase yields. Over the past two 
seasons, prices have started to decline. In 1998, grower prices 
decreased to $38.80 per barrel. The returns for the 1999 crop year are 
expected to fall below $30.00 per barrel. The industry anticipates 
further price reductions if supplies are not brought more in line with 
demand.
    Increasing inventories and the high costs associated with storing 
these inventories have resulted in the industry considering the use of 
volume control regulations. The goal of such regulations is to obtain a 
higher and more stable price than would exist in their absence.
    In an industry such as the cranberry industry, where the product 
can be stored for long periods of time, volume control is a method that 
could be used to reduce unwanted inventories. Large inventories are 
costly to maintain and, with the outlook for continued high production 
levels, these inventories would be difficult to market.
    Section 929.46 of the order requires the Committee to develop a 
marketing policy each year prior to May 1. In its marketing policy, the 
Committee projects expected supply and market conditions for the 
upcoming season, including an estimate of the marketable quantity 
(defined as the number of pounds of cranberries needed to meet total 
market demand and to provide for an adequate carryover into the next 
season).
    At a March 30, 2000, meeting, the Committee estimated the 2000-2001 
domestic production of cranberries at 5.89 million barrels. Carryover 
as of September 1, 2000 is estimated at 4.6 million barrels. Foreign 
production (primarily Canada) is projected at 800,000 barrels. Allowing 
for shrinkage of approximately 3 percent, the total adjusted available 
supply of cranberries is expected to be 10,930,000 barrels.
    Based in large part on historical sales figures, the Committee 
estimated utilization of processing fruit at 5.4 million barrels and of 
fresh fruit at 280,000 barrels.
    A summary of the marketing policy follows:

                       Cranberry Marketing Policy
                        [2000 crop year estimate]
------------------------------------------------------------------------
                                                               Barrels
------------------------------------------------------------------------
Carryin as of 9/1/2000....................................     4,600,000
Domestic production.......................................     5,890,000
Foreign production........................................       800,000
                                                           -------------
Available supply (sum of the above).......................    11,290,000
Minus shrinkage...........................................       360,000
                                                           -------------
Adjusted Supply...........................................    10,930,000
Fresh Fruit...............................................       280,000
Processing fruit..........................................     5,400,000
Total Sales and Usage.....................................     5,680,000
Carryover as of 8/31/2001.................................     5,250,000
------------------------------------------------------------------------

    The Committee determined that the marketable quantity for the 2000-
2001 crop year should be established at 5.4 million barrels. This is 
equal to the expected demand for processing fruit. Fresh fruit sales 
were not included because (as discussed later in this document) fresh 
fruit would not be covered by the allotment percentage. Using a 
marketable quantity equal to processed fruit demand should result in a 
more stable level of inventories. Supplies in inventory could easily 
cover any unexpected increases in market demand.
    Section 929.49(b) of the order provides that the marketable 
quantity be apportioned among growers by applying the allotment 
percentage to each grower's sales history. The allotment percentage 
equals the marketable quantity divided by the total of all grower's 
sales histories. No handler can purchase or handle cranberries on 
behalf of any grower not within the grower's annual allotment.
    Total growers' sales histories were set at 6.35 million barrels. 
Using the formula established under the order in Sec. 929.49 (5.4 
million barrels divided by 6.35 million barrels), the annual allotment 
percentage is 85 percent.
    As described later in this document, the Department is proposing a 
change in the way growers' sales histories are computed. If this change 
is adopted, each grower's sales history would be recalculated. The 
Committee staff reports that this would result in a new industry total 
sales history of 7.6 million barrels. Using the 5.4 million barrel 
marketable quantity recommended by the Committee would result in an 
allotment percentage of 71 percent. To retain an allotment percentage 
of 85 percent, the marketable quantity would need to be increased to 
6.46 million barrels. The Department is

[[Page 34414]]

soliciting comments on the Committee's original recommendation of 
marketable quantity and allotment percentage as well as the two 
alternatives proposed by the Department. To summarize, the three 
options are as follows (the marketable quantity and total sales 
histories figures are all in million barrel units):

----------------------------------------------------------------------------------------------------------------
                                                                    Marketable      Total sales      Allotment
                                                                     quantity        histories      percentage
----------------------------------------------------------------------------------------------------------------
Committee Recommendation........................................            5.4             6.35              85
USDA Option 1...................................................            5.4             7.6               71
USDA Option 2...................................................            6.46            7.6               85
----------------------------------------------------------------------------------------------------------------

    A marketable quantity and allotmentment percentage for the 2000-
2001 crop year are proposed to be established by adding a new 
Sec. 929.250 to the order's rules and regulations. The Committee could 
at any time, by reason of changed conditions, recommend modification, 
suspension or termination of this section.

Determination of New Sales History

    Section 929.48 of the order provides for computing growers' sales 
histories to be used in calculating marketable quantities and allotment 
percentages under Sec. 929.49. Sales history is defined in section 
929.13 as the number of barrels of cranberries established for a grower 
by the Committee. The Committee has been updating growers' sales 
histories each season. The Committee accomplishes this by using 
information submitted by the grower on a production and eligibility 
report filed with the Committee. The order sets forth that a grower's 
sales history is established by computing an average of the best four 
years' sales out of the last six years' sales for those growers with 
existing acreage. For growers with four years or less of commercial 
sales history, the sales history is calculated by averaging all 
available years of such grower's sales. A new sales history for a 
grower with no sales history is calculated by using the State average 
yield per acre or the total estimated commercial sales, whichever is 
greater.
    The Committee considered for the 2000-2001 crop that the State 
average yield be defined as the average State yields for the year 1997 
or the average of the best four years out of the last six years, 
whichever is greater. This calculation is similar to that used to 
compute sales history (an average of the best four years out of the 
last six years), and would average out seasonal variations in yields. 
However, if estimated commercial sales are greater than what is 
computed above, the Committee would use the commercial sales estimated 
by the grower.
    In order to take into account the differences among the States, the 
Committee recommended calculating the average yield for each State 
using the best four of the last six years, and comparing it to the 
average yield for that State in 1997. The higher of the two figures for 
each State would be used to calculate new sales histories for new 
growers. This rule proposes adding a new Sec. 929.148 to set forth this 
calculation.
    Some existing growers may also have newly planted acreage that has 
not yet established a sales history. Sales histories for such acreage 
would be calculated in the same way as sales histories for new growers.
    Growers are required to file a form with the Committee by April 15 
each year if they wish to receive an annual allotment. Growers also 
must notify the Committee of any new acreage that will be coming into 
production for the 2000-2001 crop year. The Committee would notify each 
grower of his or her annual allotment and notify each handler of the 
annual allotment that can be handled for each grower whose total crop 
will be delivered to such handler. In cases where a grower delivers a 
crop to more than one handler, such grower may determine how to 
apportion the annual allotment among those handlers.
    A grower who does not produce cranberries equal to his or her 
annual allotment would transfer such unused allotment to such grower's 
handler(s). The handlers would then be required to equitably allocate 
the unused allotment to growers with excess cranberries (those not 
covered by allotment) who deliver to those handlers. Unused allotment 
remaining after all such transfers have taken place would be forfeited 
to the Committee.
    Handlers who receive more cranberries than are covered by their 
growers' annual allotments have excess cranberries. The Committee would 
equitably distribute unused allotment to those handlers that have 
excess cranberries.

Outlets for Excess Cranberries

    The purpose of the producer allotment program proposed to be 
implemented by this rule is to limit the amount of the total crop that 
can be marketed for normal uses. As previously indicated, a large 
portion of the U.S. cranberry crop is processed. Most of it is marketed 
domestically.
    There is no need to limit the volume of cranberries that may be 
marketed in noncommercial or noncompetitive outlets. Thus, in 
accordance with Sec. 929.61, handlers would be able to dispose of 
excess cranberries in certain designated outlets. Noncommercial outlets 
include charitable institutions and research and development projects 
for market development purposes. Noncompetitive outlets are any 
nonhuman food use and foreign markets, except Canada. Canada is 
excluded because significant sales of cranberries to Canada could 
result in transshipment back to the United States of the cranberries 
exported there. This could disrupt the U.S. market, counter to the 
intent of the volume regulation.
    To ensure that excess cranberries diverted to the specified outlets 
do not enter normal market channels, certain safeguard provisions are 
established under Sec. 929.61. These provisions require handlers to 
provide documentation to the Committee to prove that the diverted 
cranberries were actually used in a noncommercial or noncompetitive 
outlet. In the case of nonhuman food use, a handler would be required 
to notify the Committee at least 48 hours prior to disposition so that 
the Committee staff would have sufficient time to be available to 
observe the disposition of the cranberries.
    Section 929.104 of the rules and regulations is proposed to be 
revised to list the outlets in which handlers can divert excess 
cranberries. That section currently lists outlets for ``restricted 
cranberries.'' ``Restricted cranberries'' is a term used in connection 
with withholding requirements--another type of volume regulation 
authorized under the order. While the specific outlets listed are not 
being proposed for revision, changes are proposed in the regulatory 
text to provide that these outlets are authorized for excess 
cranberries under a producer allotment program.

Fresh and Organic Fruit Exemption

    The Committee also recommended that fresh fruit and organically-
grown

[[Page 34415]]

cranberries be exempted from regulation this season. Fresh and 
organically-grown fruit would be exempt pursuant to Sec. 929.58 of the 
order which provides that the Committee may relieve from any or all 
requirements cranberries in such minimum quantities as the Committee, 
with the approval of the Secretary, may prescribe.
    Fresh fruit accounts for about 4.7 percent of the total production. 
The Committee estimated that about 280,000 barrels will be sold fresh 
this year, compared to 260,000 barrels sold last season.
    Under current marketing practices, there is a distinction between 
cranberries for fresh market and those for processing markets. 
Cranberries intended for fresh fruit outlets are grown and harvested 
differently. Fresh cranberries are dry picked while cranberries used 
for processing are water picked. When cranberries are water picked, the 
bog is flooded and the cranberries that rise to the top are harvested. 
Dry picking is a more labor intensive and expensive form of harvesting. 
Cranberry bogs are designated as ``fresh fruit'' bogs and are grown and 
harvested accordingly. Only the lower quality fruit from a fresh bog 
goes to processing outlets.
    In addition, fresh cranberry sales constitute less than 5 percent 
of the cranberry market. All fresh cranberries can be marketed and do 
not compete with processing cranberries. Fresh cranberries are seasonal 
(due to their limited shelf life) and are not a part of the growing 
industry inventories. The Committee concluded that fresh supplies do 
not contribute significantly to the current cranberry surplus. Thus, 
the Committee recommended that such cranberries be exempt from the 
allotment percentage this rule proposes.
    Organically-grown cranberries comprise an even smaller portion of 
the total crop than fresh cranberries. The Committee estimated that 
about 1,000 barrels of organic fruit will be sold this season, compared 
to 450 barrels last season. Organic cranberries are a growing niche 
market and regulating them could have an adverse effect on the 
production and marketing of this product. Like fresh cranberries, 
demand for organic cranberries is in line with the current limited 
production. Thus, organic cranberries do not contribute in any 
meaningful way to the current oversupply experienced with processing 
fruit. The Committee therefore recommended that organically-grown 
cranberries be exempt from volume regulation during the upcoming 
season.
    In order to be exempt, organic cranberries would have to be 
certified as such by a third party organic certifying organization that 
is acceptable to the Committee.
    Exemptions for fresh and organically-grown cranberries would be 
provided in a proposed new Sec. 929.158.

Definition of Commercial Crop

    The Committee also recommended that the amount of barrels that 
defines a commercial crop under the marketing order be increased. 
Calculations of sales histories are based on ``commercial'' cranberry 
acreage. Currently, section 929.107 defines a commercial crop as 
acreage that has a sufficient density of growing vines to produce at 
least 15 barrels per acre without replanting or renovation. The 
Committee has recommended that the 15 barrels per acre be increased to 
50 barrels per acre. Acreage producing less than 50 barrels per acre 
would not be considered to produce a commercial crop. This increase 
would bring the order more in line with current growing conditions.
    This action would assist growers who harvested cranberries for the 
first time in 1999. These growers would qualify for a new sales history 
determination. As previously discussed, sales history on new acreage 
would be the State average yield or the grower's estimated commercial 
sales, whichever is greater.
    A full commercial cranberry crop is usually not harvested until 3 
or 4 years after being planted. Production is usually limited during 
the first year, with increases in subsequent years until full capacity 
is reached. If a grower harvested a bog for the first time in 1999, and 
achieved a yield of 25 barrels per acre, such grower's sales history 
would be calculated by using the determination for a grower with four 
years or less of production. This would be the actual production for 
that year. Therefore, in this example, for the 2000-2001 crop year the 
grower's sales history would be 25 barrels multiplied by the number of 
acres such grower harvested. The 25 barrels would be used in the 
calculation since it is greater than the 15 barrels per acre used to 
define commercial cranberry acreage.
    Under the proposed revision, such grower's first year of sales 
harvested from that acreage would not count since it is less than 50 
barrels per acre. Therefore, the grower would be eligible to receive 
the determination for growers with no sales history on such acreage 
(which would be the State average yield or the grower's estimated 
commercial sales, whichever is greater). This would benefit growers who 
had very low yields per acre for their first year of production.

Appeal Procedures

    Finally, the Committee recommended that the current review 
procedures for appeals be revised. Currently, section 929.125 provides 
an appeal procedure for growers who are dissatisfied with their sales 
histories, as determined pursuant to Sec. 929.48(a) and (b) of the 
order. Under the current procedures, a grower may submit to the 
Committee a written argument within 30 days after receiving the 
Committee's determination of that grower's sales history, if such 
grower disagrees with the determination. The Committee shall review its 
determination within a reasonable time, reviewing all the material 
submitted by the grower, and notify the grower of its decision. If the 
grower is not satisfied with the Committee's decision, that grower may 
appeal to the Secretary, through the Committee, within 30 days after 
being notified about the Committee's decision. The Secretary shall 
review all pertinent information and render a decision. The Secretary's 
decision shall be final.
    The Committee recommended revising the current process. 
Specifically, it proposed that an appeals subcommittee be established 
and that the full Committee be provided with 15 days to further review 
appeals by growers. The Committee believes that this process would be 
more efficient in considering grower appeals. The subcommittee, 
appointed by the Chairman, would be composed of two independent and two 
cooperative representatives, as well as a public member. Although an 
additional level of review is being established, the Committee believes 
that it would be more efficient for a subcommittee composed of 5 
members to meet and discuss the appeals. The subcommittee would have 30 
days to render a decision on the request.
    If the grower is not satisfied with the appeal subcommittee's 
decision, the grower could further appeal to the full Committee. The 
grower would submit his or her written argument to the Committee along 
with any pertinent information for the Committee's review within 15 
days after being notified about the determination by the subcommittee. 
The Committee would have 15 days from the receipt of the grower's 
appeal to respond. The Committee would inform the grower of its 
decision, including the reasons for its decision.
    The grower may further appeal to the Secretary within 15 days after 
notification of the Committee's findings, if such grower is not 
satisfied with the Committee's decision. The Committee would forward a 
file with all pertinent

[[Page 34416]]

information related to the grower's appeal. The Secretary would inform 
the grower and Committee staff of the Secretary's decision. All 
decisions by the Secretary are final.

USDA Proposal--Recalculation of Sales Histories

    As previously discussed, the order sets forth that a grower's sales 
history is established by computing an average of the best four years' 
sales out of the last six years' sales for those growers with existing 
acreage. For growers with four years or less of commercial sales 
history, the sales history is calculated by averaging all available 
years of such grower's sales. A new sales history for a grower with no 
sales history is calculated by using the State average yield per acre 
or the total estimated commercial sales, whichever is greater.
    Since the Committee met on March 30, 2000, the Department has 
received additional information from cranberry growers and handlers 
pertaining to the way in which sales histories are computed. Of primary 
concern is the potential inequities that could result from the current 
process. Specifically, newer growers would be restricted to a greater 
extent than more established growers. That is because a cranberry bog 
does not reach full capacity until several years after being planted. 
Using an average of early years' sales (which are low) would likely 
result in a sales history substantially below current sales potential. 
A more established grower, on the other hand, would have a sales 
history more reflective of his or her production capacity.
    The Committee's recommendation concerning the definition of 
``commercial crop'' (previously discussed in this document) was in 
response to this concern. However, the Department believes a further 
modification is needed to lessen the differential impact a volume 
regulation would have on individual cranberry growers. For this reason, 
The Department is proposing that a sales history for each existing 
grower be calculated using the best single sales year in the past six 
years. For a grower with less than six years of sales, the sales 
history would be the highest year of sales available. This proposal is 
authorized under Sec. 929.48(a)(2) of the order which provides that the 
number and identity of the years used to compute sales histories may be 
altered by regulation. The Department is not proposing a change in the 
way sales histories are computed for brand new growers (those without 
any history of sales).
    The Department is inviting comments on this proposed change. As 
previously discussed, this change in the way sales histories are 
computed would result in a revised industry total sales history of 7.6 
million barrels. This would also result in a modification of the 
marketable quantity or the allotment percentage. It is expected that 
the Committee would meet to consider this proposal and provide the 
Department with its views and any recommended revisions prior to 
finalization of this proposed rule.
    This proposal would be implemented by adding a new Sec. 929.149 to 
the order's rules and regulations.

USDA Proposal--Suspension of Deadline for Notifying Growers of 
Their Annual Allotment

    Section 929.49 of the order provides that in any year in which an 
allotment percentage is established by the Secretary, the Committee 
must notify growers of their annual allotment by June 1. That section 
also requires the Committee to notify each handler of the annual 
allotments for that handler's growers by June 1.
    This rule proposes establishing an allotment percentage for the 
2000 cranberry crop. To allow adequate time for interested parties to 
comment on this proposal and for the Department to give due 
consideration to the comments received, a final decision on this rule 
may not be reached before June 1. Therefore, the Department is 
proposing that the June 1 deadline be suspended for the 2000-2001 crop 
year.

The Regulatory Flexibility Act and Effects on Small Businesses

    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 20 handlers of cranberries who are subject 
to regulation under the order and approximately 1,100 producers of 
cranberries in the regulated area. Small agricultural service firms, 
which includes handlers, have been defined by the Small Business 
Administration (13 CFR 121.201) 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 cranberry 
handlers and producers may be classified as small businesses.
    This rule would establish a marketable quantity and an allotment 
percentage for cranberries in a 10 State production area during the 
crop year from September 1, 2000, through August 31, 2001. Handlers 
would only be allowed to handle those cranberries that are covered by 
annual allotment. This action would also exempt fresh and organic 
cranberries from volume regulation, define the State average yield, 
increase the barrels per acre for determining a commercial crop, and 
revise the Committee review procedures. These actions are designed to 
improve the operation of the volume regulation program.
    Over the past several years, per capita consumption of cranberries 
has averaged 1.69 pounds. Per capita consumption peaked in 1994 at 1.80 
pounds and began trending downward. In 1998, per capita consumption was 
1.67 pounds. Associated with these per capita consumption figures is 
the fact that total domestic sales also peaked in 1994 at 4,692,507 
barrels and has declined to 4,506,632 barrels in 1998. However, 
cranberry production reached an all-time high of 6,389,000 barrels in 
1999. This is a 17 percent increase over 1998 production of 
approximately 5.4 million barrels. Available cranberry supplies 
continue to out pace demand, resulting in high levels of carryover 
inventories. Over the past two seasons, prices have started to decline. 
In 1998 grower prices decreased to $38.80 per barrel. In 1999, prices 
are expected to fall to $18-$30 per barrel.
    The cranberry industry has operated under a Federal marketing order 
since 1962. The last season of volume regulation was in 1971. The order 
covers a ten-State area. The highest producing States are Massachusetts 
and Wisconsin, which together account for about 80 percent of total 
production. Over 90 percent of the crop is processed, with the 
remainder being sold as fresh fruit.
    For many years the industry has enjoyed increasing demand for 
cranberry products, primarily due to the success of cranberry juice-
based drinks. This situation encouraged additional production. From 
1960 through 1999, production increased from 1.34 million barrels (one 
barrel equals 100 pounds of cranberries) to 6.39 million barrels. This

[[Page 34417]]

represents a 377 percent increase. Production in 1999 was an all-time 
high, and was 17 percent above that of the previous year.
    The growth rate in production is attributable to a 76 percent 
increase in harvested area (from 21,140 to 37,200 acres) and an even 
higher increase (171 percent) in yields (from 63.4 to 171.7 barrels per 
acre).
    While production continues to rise, demand has leveled off. Total 
domestic sales peaked in 1994 at 4.7 million barrels, and declined to 
4.5 million barrels in 1998.
    Increased total supplies in excess of demand have resulted in large 
inventories. Carryover inventories have grown from 883,773 barrels in 
1988 to 3,107,366 barrels in 1999. From 1988 through 1997, carryover as 
a percent of production ranged from 21 to 36 percent. However, in 1998, 
carryover as a percent of production increased to 40 percent; in 1999 
it increased to 49 percent. Carryover inventory for the 1999 season 
exceeded 3 million barrels for the first time in the industry's 
history.
    When supply outpaces demand, resulting in high levels of carryover 
inventories, grower prices could be negatively impacted. Grower prices 
rose from $8.83 per barrel in 1960 to a peak level of $65.90 per barrel 
in 1996. These rising price levels provided an incentive for producers 
to expand planted acres and to increase yields. Over the past two 
seasons, prices have started to decline. In 1998, grower prices 
decreased to $38.80 per barrel. The returns for the 1999 crop year are 
expected to fall below $30.00 per barrel. The industry anticipates 
further price reductions if supplies are not brought more in line with 
demand.
    Increasing inventories and the high costs associated with storing 
these inventories have resulted in the industry considering the use of 
volume control regulations. The goal of such regulations is to obtain a 
higher and more stable price than would exist in their absence.
    In an industry such as cranberries, where the product can be stored 
for long periods of time, volume control is a method that can be used 
to reduce unwanted inventories. Large inventories are costly to 
maintain and, with the outlook for continued high production levels, 
these inventories would be difficult to market.
    Based in large part on historical sales figures, the Committee 
estimated utilization of processing fruit at 5.4 million barrels and of 
fresh fruit at 280,000 barrels.
    The Committee determined that the marketable quantity for the 2000-
2001 crop year should be established at 5.4 million barrels. This is 
equal to the expected demand for processing fruit. Fresh fruit sales 
were not included because fresh fruit would not be covered by the 
allotment percentage. Organically-grown cranberries would also be 
exempted because projected sales are only about 1,000 barrels. Using a 
marketable quantity equal to processed fruit demand should result in a 
more stable level of inventories. Supplies in inventory could easily 
cover any unexpected increases in market demand.
    Section 929.49(b) provides that the marketable quantity be 
apportioned among growers by applying the allotment percentage to each 
grower's sales history. The allotment percentage equals the marketable 
quantity divided by the total of all grower's sales histories. No 
handler can purchase or handle cranberries on behalf of any grower not 
within the grower's annual allotment.
    Total growers' sales histories were set at 6.35 million barrels. 
Using the formula established under the order (5.4 million barrels 
divided by 6.35 million barrels), the annual allotment percentage is 85 
percent.
    Currently, a grower's sales history is established by computing an 
average of the best four years' sales out of the last six years' sales 
for those growers with existing acreage. For growers with four years of 
less of commercial sales history, the sales history is calculated by 
averaging all available years of such growers' sales.
    The Department is proposing that a sales history for each existing 
grower be recalculated, using the best single sales year in the past 
six years. For a grower with less than six years of sales, the sales 
history would be the highest year of sales available. This change is 
being proposed to take care of potential inequities that could result 
from the current process of computing sales histories. Specifically, 
newer growers are restricted to a greater extent than more established 
growers. That is because a cranberry bog does not reach full capacity 
until several years after being planted. Using an average of early 
years' sales (which are low) would likely results in a sales history 
substantially below current sales potential. A more established grower, 
on the other hand, would have a sales history more reflective of his or 
her production capacity.
    If adopted, each grower's sales history would be recalculated. The 
Committee staff reports that this would result in a new total industry 
sales history of 7.6 million barrels (compared to the current total of 
6.35 million barrels). Since the allotment percentage is determined by 
dividing the marketable quantity by the total sales history, a change 
in the total sales history could impact the level of volume regulation.
    If the 5.4 million barrel marketable quantity recommended by the 
Committee is used, the allotment percentage would change from the 85 
percent recommended by the Committee to 71 percent. Increasing the 
restricted percentage from 15 to 29 percent could result in a higher 
level of restriction than recommended by the Committee.
    To retain the Committee's recommended allotment percentage of 85 
percent with the new sales history total, the marketable quantity would 
have to be increased from the current 5.4 million barrels to 6.46 
million barrels. This would result in a lower restriction than 
recommended by the Committee.
    The Department is soliciting comments on all the proposals, 
including the Committee's original recommendation of marketable 
quantity and allotment percentage, as well as two alternatives proposed 
by the Department. Particular attention should be given to the expected 
impacts of these different levels of regulation on cranberry growers 
and processors, and whether there would be a differential impact on 
small versus large entities.
    The Committee could at any time, by reason of changed conditions, 
recommend modification, suspension or termination of the marketable 
quantity or allotment percentage proposed in this rule.
    The impact of this rule should be beneficial to both growers and 
handlers. The regulation is intended to decrease the build-up of 
excessive inventories and help stabilize grower prices and returns.
    Discussions at the meeting indicated that the establishment of a 
producer allotment program is the best alternative for the industry at 
this time. Six months ago, the Committee established a volume 
regulation subcommittee that researched the two methods of volume 
regulation available under the order. Those two methods are a producer 
allotment program and handler withholding program. The subcommittee's 
primary mission was to determine what method of volume control would be 
best for the industry if volume regulations were recommended. After 
holding several meetings, the subcommittee concluded that a producer 
allotment is the best

[[Page 34418]]

method available to the industry at this time.
    The withholding program has not been used since 1971. The 
provisions of the producer allotment program were amended in 1992, but 
never used. Under the withholding program, growers deliver all their 
cranberries to their respective handlers. The handler is responsible 
for setting aside restricted cranberries and ultimately disposing of 
the cranberries in authorized noncommercial and noncompetitive outlets. 
This could result in a large volume of cranberries being disposed of 
and perhaps destroyed. In addition, the withholding provisions require 
that all withheld cranberries be inspected by the Federal or Federal-
State Inspection Service, which could be costly.
    The producer allotment program would allow cultural practices to be 
changed at the grower level prior to harvest. This could result in less 
fruit being produced and would not require the disposal of as many 
cranberries as with the withholding provisions. In addition, 
inspections are not required under the producer allotment method, which 
is more cost effective and would be simpler to administer. For these 
reasons, the subcommittee recommended to the full Committee that if 
volume regulations were recommended, that the producer allotment 
program be the method for regulation.
    In its review of the producer allotment program, the subcommittee 
recommended that cranberries intended for fresh market be exempt from 
the volume regulation. This recommendation was unanimously approved by 
the full Committee. The Committee also recommended by unanimous vote 
that organic cranberries be exempt from volume regulations.
    Fresh and organically-grown fruit would be exempt pursuant to 
section 929.58 of the order which provides that the Committee may 
relieve from any or all requirements, cranberries in such minimum 
quantities as the Committee, with the approval of the Secretary, may 
prescribe.
    Fresh fruit accounts for about 4.7 percent of the total production. 
The Committee estimated that about 280,000 barrels will be sold fresh 
this year, compared to 260,000 barrels sold last season.
    Under current marketing practices, there is a distinction between 
cranberries for fresh market and those for processing markets. 
Cranberries intended for fresh fruit outlets are grown and harvested 
differently. Fresh cranberries are dry picked while cranberries used 
for processing are water picked. When cranberries are water picked, the 
bog is flooded and the cranberries that rise to the top are harvested. 
Dry picking is a more labor intensive and expensive form of harvesting. 
Cranberry bogs are designated as ``fresh fruit'' bogs and are grown and 
harvested accordingly. Only the lower quality fruit from a fresh bog 
goes to processing outlets.
    In addition, fresh cranberry sales constitute approximately 5 
percent of the cranberry market. All fresh cranberries can be marketed 
and do not compete with processing cranberries. Fresh cranberries are 
seasonal (due to their limited shelf life) and are not part of the 
growing industry inventories.
    The Committee concluded that fresh supplies do not contribute 
significantly to the current cranberry surplus. Thus, the Committee 
recommended that such cranberries be exempt from the allotment 
percentage this rule proposes.
    Organically-grown cranberries comprise an even smaller portion of 
the total crop than fresh cranberries do. The Committee estimated that 
about 1,000 barrels of organic fruit will be sold this season, compared 
to 450 barrels last season. Organic cranberries are a growing niche 
market and regulating them could have an adverse effect on marketing 
this product. Demand for organic cranberries is in line with the 
current limited production. Thus, all organic cranberries can be 
marketed, and they do not contribute in any meaningful way to the 
current oversupply experienced with processing fruit. The Committee 
therefore recommended that organically-grown cranberries be exempt from 
volume regulation during the upcoming season.
    In order to receive an exemption for fresh or organic cranberries a 
handler would be required to report such quantities on the current 
grower acquisition listing form.
    The Committee also recommended, by unanimous vote, that the sales 
history re-determination procedures be modified by appointing a 
subcommittee composed of two independent and two cooperative 
representatives and one public member to be the first level of review.
    Currently, section 929.125 provides an appeal procedure for growers 
that are dissatisfied with a determination made pursuant to section 
929.48(a) and (b) of the order which describes the computation for a 
grower's sales history. A grower may submit to the Committee a written 
argument within 30 days of receiving the Committee's determination for 
sales history, if such grower disagrees with the determination. The 
Committee shall review its determination within a reasonable time, 
reviewing all the material submitted by the grower. If the grower is 
not satisfied with the Committee's decision such grower may appeal 
through the Committee, within 30 days of the Committee's decision, to 
the Secretary. The Secretary shall review all pertinent information and 
render a prompt decision. The Secretary's decision shall be final.
    The Committee recommended that an appeals subcommittee be 
established and the full Committee have less time to further review 
appeals by growers. The Committee believed that this process would 
prove to be more efficient in considering grower appeals. Although an 
additional level of review is being established, the Committee believed 
that it would be more efficient for a subcommittee composed of 5 
members to meet and discuss the appeals. Scheduling a meeting of the 
entire Committee to discuss and make determinations of grower appeals 
could be cumbersome and time consuming.
    The Committee also recommended, by unanimous vote, to raise the 
amount of barrels that defines a commercial crop under the marketing 
order from 15 to 50 barrels. Calculations of sales histories are made 
on ``commercial'' cranberry acreage. This action would assist growers 
who harvested cranberries for the first time in 1999. These growers 
would qualify for a new sales history determination. As previously 
discussed, sales history on new acreage would be the State average 
yield or the grower's estimated commercial sales, whichever is greater.
    Under the proposed revision, such grower's first year of sales 
harvested from that acreage would not count since it is less than 50 
barrels per acre. Therefore, the grower would be eligible to receive 
the determination for growers with no sales history on such acreage 
(which would be the State average yield or the grower's estimated 
commercial sales, whichever is greater). This would benefit growers who 
had very low yields per acre for their first year of production.
    The Committee also considered that State average yield for the 
2000-2001 crop be defined as the average yields during the year 1997 or 
the average of the best four years out of the last six years, whichever 
is greater. This calculation is similar to that used to compute sales 
history (an average of the best four years out of the last six years), 
and would average out seasonal variations in yields. However, if 
estimated commercial sales are greater than what is computed above, the

[[Page 34419]]

Committee would use the commercial sales estimated by the grower.
    In order to take into account the differences among the States, the 
Committee recommended calculating the average yield for each State 
using the best four of the last six years, and compare it to the 
average yield for that State in 1997. The higher of the two figures for 
each State would be used to calculate new sales histories for new 
growers. This rule proposes adding a new Sec. 929.148 to set forth this 
calculation.
    The Department's proposal to change the way in which sales 
histories are computed (the best out of the past six years) should 
result in a more equitable distribution of annual allotment among 
individual cranberry growers. The proposal to suspend the June 1 
deadline for notifying growers and handlers would allow for adequate 
time to complete this rulemaking proceeding, without unduly impacting 
the cranberry industry.
    Some handlers at the meeting indicated that they do not have large 
inventories and therefore, may have to purchase fruit from their 
competitors to meet customer needs. They in turn favored a lesser 
restriction, rather than 15 percent as proposed. Some growers indicated 
that they have not contributed to the surplus problem, and they should 
not be regulated. Those at the meeting further expressed that Wisconsin 
has expanded its production and Massachusetts has not in the past five 
years. Massachusetts growers and handlers believe they should not have 
to be regulated. However, other growers and handlers at the meeting 
expressed that the surplus is a industry problem and must be dealt with 
by the entire industry.
    The Committee discussed the alternative of not regulating at all. 
Economic reports of the condition of the cranberry industry indicated 
that if supplies were not controlled, grower prices would continue to 
drop. The Committee does not know how small growers as well as large 
ones could sustain further price drops.
    Some growers expressed that the Committee should consider other 
methods of increasing demand rather than regulating the industry at 
this time. They suggested implementing a domestic promotion program in 
addition to the export promotion activities already underway. The 
Committee did recommend that a subcommittee be established to research 
such a possibility. They also suggested that effort in market 
development and new product development would increase demand for 
cranberries and better address the oversupply situation.
    The Committee recommendation for volume regulation passed by a 
seven to one vote. The person voting against the recommendation felt a 
volume regulation would adversely affect the growers and handlers in 
his district, New Jersey. All of the other recommendations were passed 
by unanimous votes. The proposed marketable quantity and allotment 
percentage is not expected to cause a shortage of cranberries.
    The other changes discussed in this document are designed to 
improve the operation of the volume regulation this season.
    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 (44 U.S.C. Chapter 35), the information collection and 
recordkeeping requirements imposed by this order have been previously 
approved by OMB and assigned OMB Number 0581-0103.
    There are some reporting and recordkeeping and other compliance 
requirements under the marketing order. The reporting and recordkeeping 
burdens are necessary for compliance purposes and for developing 
statistical data for maintenance of the program. The forms require 
information which is readily available from handler records and which 
can be provided without data processing equipment or trained 
statistical staff. This rule does not change those requirements.
    The Committee's meetings were widely publicized throughout the 
cranberry industry and all interested persons were invited to attend 
them and participate in Committee deliberations. Like all Committee 
meetings, the March 2000 meeting was a public meeting and all entities, 
both large and small, were able to express their views on these issues. 
The Board itself is composed of eight members, of which seven members 
are growers and one represents the public. Also, the Committee has a 
number of appointed subcommittees to review certain issues and make 
recommendations. The Committee manager also held several meetings with 
growers throughout the production area to discuss the methods of volume 
regulation and the procedures for regulation.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at the 
following website: http://www.ams.usda.gov/fv/moab.html. Any questions 
about the compliance guide should be sent to Jay Guerber at the 
previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    A 15-day comment period is provided to allow interested persons to 
respond to this proposal. Fifteen days is deemed appropriate so that 
any final rule which is issued may be applicable to 2000-2001 crop year 
cranberries. All written comments timely received will be considered 
before a final determination is made on this matter.

List of Subjects in 7 CFR Part 929

    Cranberries, Marketing agreements, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 7 CFR Part 929 is 
proposed to be amended as follows:

PART 929--CRANBERRIES GROWN IN THE STATES OF MASSACHUSETTS, RHODE 
ISLAND, CONNECTICUT, NEW JERSEY, WISCONSIN, MICHIGAN, MINNESOTA, 
OREGON, WASHINGTON, AND LONG ISLAND IN THE STATE OF NEW YORK

    1. The authority citation for 7 CFR Part 929 continues to read as 
follows:

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

Sec. 929.49  [Amended]

    2. In paragraph (d) of Sec. 929.49, the phrase ``On or before June 
1'' is suspended.
    3. In paragraph (e) of Sec. 929.49, the phrase ``On or before June 
1 of any year in which an allotment percentage is established by the 
Secretary'' is suspended.
    4. Section 929.104 is revised to read as follows:


Sec. 929.104  Outlets for excess cranberries.

    (a) In accordance with Sec. 929.61, excess cranberries may be 
disposed of only in the following noncommercial or noncompetitive 
outlets, but only if the requirements in paragraph (b) of this section 
are complied with:
    (1) Foreign countries, except Canada.
    (2) Charitable institutions.
    (3) Any nonhuman food use.
    (4) Research and development projects dealing with dehydration, 
radiation, freeze drying, or freezing of cranberries, for the 
development of foreign markets.

[[Page 34420]]

    (b) Handlers may divert excess cranberries in the outlets listed in 
paragraph (a) of this section only if they meet the diversion 
requirements specified in Sec. 929.61(c).


Sec. 929.107  [Amended]

    5. In Sec. 929.107, paragraphs (a) and (c) are amended by removing 
the number ``15'' and adding in its place the number ``50''.
    6. Section 929.125 is revised to read as follows:


Sec. 929.125  Committee review procedures.

    Growers may request, and the Committee may grant, a review of 
determinations made by the Committee pursuant to section 929.48, in 
accordance with the following procedures:
    (a) If a grower is dissatisfied with a determination made by the 
Committee which affects such grower, the grower may submit to the 
Committee within 30 days after receipt of the Committee's determination 
of sales history, a request for a review by an appeals subcommittee 
composed of two independent and two cooperative representatives, as 
well as a public member. Such appeals subcommittee shall be appointed 
by the Chairman of the Committee. Such grower may forward with the 
request any pertinent material for consideration of such grower's 
appeal.
    (b) The subcommittee shall review the information submitted by the 
grower and render a decision within 30 days of receipt of such appeal. 
The subcommittee shall notify the grower of its decision, accompanied 
by the reasons for its conclusions and findings.
    (c) If the grower is not satisfied with the subcommittee's 
decision, the grower may further appeal to the full Committee. The 
grower must submit its written argument to the Committee along with any 
pertinent information for the Committee's review within 15 days after 
notification of the subcommittee's decision. The Committee shall 
respond within 15 days of the receipt of the grower's appeal. The 
Committee shall inform the grower of its decision, accompanied by the 
reasons for its decision.
    (d) The grower may further appeal to the Secretary, within 15 days 
after notification of the Committee's findings, if such grower is not 
satisfied with the Committee's decision. The Committee shall forward a 
file with all pertinent information related to the grower's appeal. The 
Secretary shall inform the grower and all interested parties of the 
Secretary's decision. All decisions by the Secretary are final.
    7. A new Sec. 929.148 is added to read as follows:


Sec. 929.148  State average yield.

    The State average yield pursuant to section 929.48(a)(5)(ii) is 
defined as the yield per State for the year 1997 or the best four years 
out of the last six years whichever is greater. However, if the 
estimated commercial sales are greater than the volume computed by this 
method, the Committee will use the grower's estimated commercial sales.
    8. A new Sec. 929.149 is added to read as follows:


Sec. 929.149  Determination of sales history.

    A sales history for each grower shall be computed by using the 
sales in the highest one of the most recent six seasons of sales. For a 
grower with less than six seasons of sales, the sales history shall be 
computed using the highest sales season. Sales history for a grower 
with no previous sales will be computed according to Sec. 929.48 of the 
order.
    9. A new Sec. 929.158 is added to read as follows:


Sec. 929.158  Exemptions.

    Sales of organic and fresh cranberries shall be exempt from volume 
regulation provisions. Handlers shall qualify for such exemption by 
filing the amount of fresh or organic cranberry sales on the grower 
acquisition listing form. In order to receive an exemption for organic 
cranberry sales, such cranberries must be certified as such by a third 
party organic certifying organization acceptable to the Committee.
    10. A new Sec. 929.250 is added to read as follows:

Option 1


Sec. 929.250  Marketable quantity and allotment percentage for the 
2000-2001 crop year.

    The marketable quantity for the 2000-2001 crop year is set at 5.4 
million barrels and the allotment percentage is designated at 85 
percent.

Option 2


Sec. 929.250  Marketable quantity and allotment percentage for the 
2000-2001 crop year.

    The marketable quantity for the 2000-2001 crop year is set at 5.4 
million barrels and the allotment percentage is designated at 71 
percent.

Option 3


Sec. 929.250  Marketable quantity and allotment percentage for the 
2000-2001 crop year.

    The marketable quantity for the 2000-2001 crop year is set at 6.46 
million barrels and the allotment percentage is designated at 85 
percent.

    Dated: May 24, 2000.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 00-13467 Filed 5-25-00; 8:45 am]
BILLING CODE 3410-02-P