[Federal Register Volume 65, Number 107 (Friday, June 2, 2000)]
[Rules and Regulations]
[Pages 35265-35267]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-13782]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Docket No. FV00-930-4 IFR]


Tart Cherries Grown in the States of Michigan, et al.; 
Authorization of Japan as an Eligible Export Outlet for Diversion and 
Exemption Purposes

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This interim final rule authorizes Japan as an eligible export 
market under the diversion and exemption provisions of the Federal tart 
cherry marketing order (order). Currently, shipments to Canada, Mexico, 
or Japan do not qualify for diversion credit and may not be approved as 
exempt uses. The Cherry Industry Administrative Board (Board) 
recommended allowing shipments to Japan to qualify as exempt use 
shipments and to be eligible for diversion credit. The order regulates 
the handling of tart cherries grown in the States of Michigan, New 
York, Pennsylvania, Oregon, Utah, Washington, and Wisconsin and is 
administered locally by the Board.

DATES: Effective June 5, 2000; comments received by August 1, 2000 will 
be considered prior to issuance of a final rule.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent 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.

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 George Kelhart, 
Technical Advisor, 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 rule is issued under Marketing 
Agreement and Order No. 930 (7 CFR part 930) regulating the handling of 
tart cherries grown in the States of Michigan, New York, Pennsylvania, 
Oregon, Utah, Washington, and Wisconsin, hereinafter referred to as the 
``order.'' This order is effective under the Agricultural Marketing 
Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter 
referred to as the ``Act.''
    The Department of Agriculture (Department or USDA) 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 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

[[Page 35266]]

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 rule authorizes shipments of tart cherries to Japan to qualify 
as exempt use shipments and to be eligible for diversion credit. 
Currently, exports to countries other than Canada, Mexico, or Japan may 
receive diversion credit, and may qualify as exempt shipments. Japan 
has not been eligible for diversion and exemption in the past because, 
according to the Board, tart cherry markets were well established in 
that country. The Board, at its March 2, 2000, meeting, recommended 
allowing Japan to become an eligible export outlet for diversion credit 
and exempt uses in order to stimulate export sales to that country. 
This is because exports to Japan have greatly decreased.
    The order authorizes the use of volume regulation. In years when 
volume regulation is implemented to stabilize supplies, a certain 
percentage of the cherry crop is required to be set aside as restricted 
tonnage, and the balance may be marketed freely as free tonnage. The 
restricted tonnage is required to be maintained in handler-owned 
inventory reserve pools. Handlers in volume regulated States may 
fulfill their restricted tonnage requirements with diversion credits 
earned by diverting cherries or cherry products. Handlers are permitted 
to divert (at plant or with grower-diversion certificates from growers 
choosing not to deliver their crop) as much of their restricted 
percentage (reserve pool) requirements as they deem appropriate. 
Handlers also may divert cherries by using cherries or cherry products 
for exempt purposes, including the development of export markets. 
Presently, these markets do not include Canada, Mexico, and Japan.
    Section 930.62 of the order (Exemptions) provides that cherries 
which are diverted in accordance with Sec. 930.59, which are used for 
new product and new market development, which are used for experimental 
purposes, or which are used for any other purposes designated by the 
Board, including cherries processed into products for markets for which 
less than 5 percent of the preceding 5-year average production of 
cherries was utilized, may be exempted from the assessment, quality 
control, volume regulation, and reserve provisions of the order.
    Currently, Sec. 930.162 of the rules and regulations under the 
order authorizes exemptions for the sale of cherries and cherry 
products, including the development of sales for new and different tart 
cherry products or the expansion of sales for existing tart cherry 
products, to countries other than Canada, Mexico, and Japan.
    When the Board initially recommended regulations for exempt uses 
and handler diversion in 1997, exports to Japan were at an average of 
3.0 million pounds. The industry considered Japan, as well as Canada 
and Mexico, to be premium markets for tart cherries, not outlets for 
which exemptions and diversion credit could be given. However, in 1998, 
sales to Japan fell to 1.6 million pounds. The Board therefore 
recommended that exports to Japan be eligible for diversion and 
exemption. This, in the Board's opinion, would provide incentive for 
handlers to make shipments to that country and stimulate market 
activity.

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 
initial 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 or regulatory 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 900 producers 
of tart cherries in the regulated area. Small agricultural service 
firms, which include handlers, have been defined by the Small Business 
Administration (13 CFR 121.201) 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 tart 
cherry producers and handlers may be classified as small entities.
    The principal demand for tart cherries is in the form of processed 
products. Tart cherries are dried, frozen, canned, juiced, and pureed. 
During the period 1995/96 through 1999/00, approximately 90 percent of 
the U.S. tart cherry crop, or 280.3 million pounds, was processed 
annually. Of the 280.3 million pounds of tart cherries processed, 63 
percent was frozen, 29 percent was canned and 8 percent was utilized 
for juice. Exports to Japan in 1998 were 1.6 million pounds.
    This rule authorizes tart cherry shipments to Japan to qualify as 
exempt use shipments and to be eligible for diversion credit. The 
objective of this action is to stimulate and expand sales of tart 
cherries to that country. Authority for this action is found in 
Secs. 930.59 and 930.62.
    The impact of this rule would be beneficial to growers and 
handlers. It would assist growers to market a greater proportion of 
their crop to handlers who have access to export markets. Handlers, 
instead of diverting product at-plant or in-orchard or placing product 
in reserves, could ship product to Japan and receive diversion 
certificates that could be used to offset any restricted percentage 
obligations. Handlers also would benefit from this action as they would 
be able to process greater amounts of tart cherries, as a result of 
receiving more product from growers for shipment to Japan, through 
their facilities, thus spreading their operation costs and increasing 
returns to growers.
    One alternative to this action would be to continue to disallow 
exemptions and diversion credit for shipments to Japan. However, this 
would not be favorable to cherry growers and handlers and could cause a 
further decline in the Japanese market.
    This rule would not impose any additional recordkeeping 
requirements on either small or large tart cherry handlers. As with all 
Federal marketing order programs, reports and forms are periodically 
reviewed to reduce information requirements and duplication by industry 
and public 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

[[Page 35267]]

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 them 
and participate in Board deliberations. Like all Board 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 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.
    Finally, interested persons are invited to submit information on 
the regulatory and informational impacts of this action on small 
businesses.
    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.
    This rule invites comments on authorizing Japan as an eligible 
export outlet for purposes of the diversion and exemption provisions 
under the order.
    After consideration of all relevant material presented, including 
the Board's recommendation, and other information, it is found that 
this interim final rule, as hereinafter set forth, will tend to 
effectuate the declared policy of the Act.
    Pursuant to 5 U.S.C. 553, it is also found and determined upon good 
cause that it is impracticable, unnecessary, and contrary to the public 
interest to give preliminary notice prior to putting this rule into 
effect and that good cause exists for not postponing the effective date 
of this rule until 30 days after publication in the Federal Register 
because: (1) This rule relaxes requirements by providing an additional 
opportunity for handlers to receive an exemption or diversion credit; 
(2) the Board needs this rule to be in place by July 1, 2000, so 
handlers can take advantage of this option; (3) the Board recommended 
this change at a public meeting and interested parties had an 
opportunity to provide input; and (4) this rule provides a 60-day 
comment period and any comments received will be considered prior to 
finalization of this rule.

List of Subjects in 7 CFR Part 930

    Marketing agreements, Reporting and recordkeeping requirements, 
Tart cherries.

    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.


Sec. 930.159  [Amended]

    2. In Sec. 930.159, paragraph (a) is amended by removing the word 
``Japan'' and adding the word ``and'' in between the words ``Canada'' 
and ``Mexico''.


Sec. 930.162  [Amended]

    3. In Sec. 930.162, paragraph (a) and paragraph (b)(3) are amended 
by removing the word ``Japan'' and adding the word ``and'' in between 
the words ``Canada'' and ``Mexico''.

    Dated: May 26, 2000.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 00-13782 Filed 6-1-00; 8:45 am]
BILLING CODE 3410-02-P