[Federal Register Volume 65, Number 218 (Thursday, November 9, 2000)]
[Proposed Rules]
[Pages 67585-67598]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-28660]



[[Page 67583]]

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Part IV





Department of Agriculture





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Agricultural Marketing Service



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7 CFR Part 923



Sweet Cherries Grown in Designated Counties in Washington; Recommended 
Decision and Opportunity To File Written Exceptions to Proposed 
Amendment of Marketing Agreement No. 134 and Marketing Order No. 923; 
Proposed Rule

[[Page 67584]]


  Federal Register / Vol. 65, No. 218 / Thursday, November 9, 2000 / 
Proposed Rules  
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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 923

[Docket Nos. 99AMS-FV-923-A1; FV00-923-1]


Sweet Cherries Grown in Designated Counties in Washington; 
Recommended Decision and Opportunity To File Written Exceptions to 
Proposed Amendment of Marketing Agreement No. 134 and Marketing Order 
No. 923

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule and opportunity to file exceptions.

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SUMMARY: This recommended decision invites written exceptions on 
proposed amendments to the marketing agreement and order for sweet 
cherries grown in six counties in eastern Washington. Six proposals 
were submitted by the Washington Cherry Marketing Committee 
(Committee), which is responsible for local administration of the 
order. The Committee's proposals would: increase the production area to 
cover the area in the State of Washington east of the Cascade Mountain 
Range and allow for special purpose shipments of cherries to packing 
operations outside the production area; increase representation on the 
Committee by adding an additional handler member; provide for late 
payment and interest charges on delinquent assessments; authorize 
establishment of container marking requirements; and allow prospective 
Committee members and alternates to qualify for membership by filing a 
single form. The Fruit and Vegetable Programs (F&V) of the Agricultural 
Marketing Service (AMS) proposed the establishment of tenure 
requirements for Committee members and to require that continuance 
referenda be conducted every six years. AMS also proposed to allow such 
changes as may be necessary to the order to conform with any amendment 
that may result from the hearing. These proposals are intended to 
improve the operation and functioning of the Washington sweet cherry 
marketing order program.

DATES: Written exceptions must be filed by December 11, 2000.

ADDRESSES: Written exceptions should be filed with the Hearing Clerk, 
U.S. Department of Agriculture, room 1081-S, Washington, DC 20250-9200, 
Facsimile number (202) 720-9776. Four copies of all written exceptions 
should be submitted and they should reference the docket numbers and 
the date and page number of this issue of the Federal Register. 
Exceptions will be made available for public inspection in the Office 
of the Hearing Clerk during regular business hours, or can be viewed 
at: http://www.ams.usda.gov/fv/moab.html.

FOR FURTHER INFORMATION CONTACT: Kathleen M. Finn, Marketing 
Specialist, Marketing Order Administration Branch, Fruit and Vegetable 
Programs, AMS, USDA, room 2525-S, Washington, D.C. 20250-0237; 
telephone: (202) 720-2491, or 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: Prior document in this proceeding: Notice of 
Hearing issued on November 3, 1999, and published in the November 8, 
1999, issue of the Federal Register (64 FR 60733).
    This administrative action is governed by the provisions of 
sections 556 and 557 of Title 5 of the United States Code and, 
therefore, is excluded from the requirements of Executive Order 12866.

Question and Answer Overview

What circumstances led to this recommended decision?

    The Washington Cherry Marketing Committee (Committee), which is 
responsible for local administration of the marketing order, 
recommended amending the current order. A hearing was held on these 
proposed amendments in Yakima, Washington, on November 16, 1999.
    The Washington Cherry Marketing Order was created in 1957 and has 
never been amended. Since that time, cherry production has dramatically 
increased in areas outside the current 6-county production area.
    The marketing order's primary authority is the use of grade, size 
and container regulations for fresh shipments of cherries from the 
production area. The purpose of these regulations is to ensure the 
shipment of high quality cherries. The order has allowed the industry 
to develop the reputation for shipping a quality product, which has 
allowed producers to ship and sell sweet cherries in a more stable 
marketplace.
    The primary purpose of this proceeding is to expand the production 
area to include the other sweet cherry producing counties in Washington 
and maintain the high quality image of the Washington sweet cherry. 
This proceeding would also allow shipments of cherries outside the 
production area for packing, to accommodate growers in the proposed 
production area who have their cherries packed in Oregon.
    The Committee also recommended increasing representation on the 
Committee, allowing for late payment and interest charges on unpaid 
assessments, authorizing container marking requirements and other 
administrative changes.
    AMS proposed establishing a limit on the number of consecutive 
terms a person may serve as a member on the Committee and requiring 
that continuance referenda be conducted every six years to ascertain 
industry support for the order.

Who would be impacted by this action?

    Growers and handlers of sweet cherries in the current and proposed 
production area would be affected by these amendments. Handlers would 
be required to pay assessments based on the amount of cherries handled. 
The current assessment rate is 75 cents per ton of cherries handled. 
Handlers would also be required to abide by the regulations in effect 
under the order which includes obtaining Federal/State inspections on 
all cherries to ensure that marketing order requirements are met. 
Current regulations specify certain size, maturity and pack 
requirements and are based on the State of Washington grade standards.
    Field-run cherries from Washington growers sent to Oregon packers 
also would have to meet these requirements as well.

How can I comment on these proposals?

    Written exceptions should be filed with the Hearing Clerk, U.S. 
Department of Agriculture, room 1081-S, Washington, DC 20250-9200, 
Facsimile number (202) 720-9776. Four copies of all written exceptions 
should be submitted and they should reference the docket numbers and 
the date and page number of this issue of the Federal Register. 
Exceptions will be made available for public inspection in the Office 
of the Hearing Clerk during regular business hours, or can be viewed 
at: http://www.ams.usda.gov/fv/moab.html.
    All exceptions will be considered before issuing any final 
decision.

[[Page 67585]]

What are the next steps after the recommended decision?

    USDA will evaluate the exceptions and, if it is decided to continue 
with the proceeding, a Secretary's Decision and Referendum Order will 
be issued. A producer referendum will be conducted and will include all 
affected producers. The referendum will be conducted by mail ballot, 
and producers can vote on each material issue presented. There are 
seven material issues in this recommended decision.
    To become effective, the amendments require approval of two-thirds 
of the producers voting in the referendum or approval by two-thirds of 
the volume of production represented by the producers voting in the 
referendum. If the vote favors any or all of the amendments, the 
Department prepares a final order effectuating the amendments.

Preliminary Statement

    Notice is hereby given of the filing with the Hearing Clerk of this 
recommended decision with respect to the proposed amendment of 
Marketing Agreement No. 134 and Marketing Order No. 923, regulating the 
handling of sweet cherries grown in designated counties in Washington, 
(hereinafter referred to as the order), and the opportunity to file 
written exceptions thereto.
    This action is issued pursuant to the provisions of the 
Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601 
et seq.), hereinafter referred to as the ``Act,'' and the applicable 
rules of practice and procedure governing the formulation of marketing 
agreements and orders (7 CFR Part 900).
    The proposed amendment of Marketing Agreement No. 134 and Order No. 
923 is based on the record of a public hearing held in Yakima, 
Washington, on November 16, 1999. Notice of this hearing was published 
in the Federal Register on November 8, 1999. The notice of hearing 
contained proposals submitted by the Committee and the Department.
    The Committee's proposed amendments would: Increase the production 
area to cover the area in the State of Washington east of the Cascade 
Mountain Range, redefine the districts currently established under the 
order and allow for special purpose shipments of cherries to packing 
operations outside the production area; Increase representation on the 
Committee by adding an additional handler member; Provide for late 
payment and interest charges on delinquent assessments; Authorize 
establishment of container marking requirements; and Allow prospective 
Committee members and alternates to qualify for membership by filing a 
single form.
    Also, AMS proposed to establish a limit on the number of 
consecutive terms a person may serve as a member on the Committee and 
to require that continuance referenda be conducted on a periodic basis 
to ascertain industry support for the order.
    At the conclusion of the hearing, the Administrative Law Judge 
fixed January 20, 2000, as the final date for interested persons to 
file proposed findings and conclusions or written arguments and briefs 
based on the evidence received at the hearing. None were filed.

Material Issues

    The material issues of record addressed in this decision are as 
follows:
    (1) Whether to increase the production area to cover the area in 
the State of Washington east of the Cascade Mountain Range; to redefine 
the districts established under the order; and to authorize special 
purpose shipments, with appropriate safeguards, allowing movement of 
cherries to packing facilities outside the production area;
    (2) Whether to increase representation on the Committee by adding 
one additional handler member;
    (3) Whether to authorize the Committee, with USDA approval, to 
collect late payment and interest charges on delinquent assessments;
    (4) Whether to authorize the Committee, with USDA approval, to 
establish container marking requirements;
    (5) Whether to authorize Committee nominees to qualify as a member 
or alternate by filing a written acceptance of willingness to serve 
prior to the selection;
    (6) Whether to establish a limit on the number of consecutive terms 
a person may serve as a member on the Committee; and
    (7) Whether to require that continuance referenda be conducted on a 
periodic basis to ascertain industry support for the order.

Findings and Conclusions

    The findings and conclusions on the material issues, all of which 
are based on evidence presented at the hearing and the record thereof, 
are:

Material Issue Number 1

    The definition of production area under Sec. 923.4 should be 
amended to include the counties of Okanogan, Chelan, Kittitas, Yakima, 
Klickitat in the State of Washington and all of the counties in 
Washington lying east thereof and Sec. 923.14 should be amended to 
include the additional counties in the two districts established under 
the order. In addition, Sec. 923.54 should be amended to authorize 
special purpose shipments, with appropriate safeguards, allowing 
movement of cherries to packing operations outside the production area.
    Currently, the production area includes only the counties of 
Okanogan, Chelan, Douglas, Grant, Yakima and Benton in the State of 
Washington. District 1 includes the counties of Chelan, Okanogan, 
Douglas and Grant. District 2 includes the counties of Yakima and 
Benton. There are no provisions in the current order that authorize 
uninspected cherries to be shipped outside the production area for 
packing.
    The marketing order was promulgated in 1957. At that time, the 
primary objective of the order was to provide consumers with a uniform 
product so that buyers were assured of quality. The order has never 
been amended. Since that time, many changes have occurred in the sweet 
cherry industry. New areas of production have developed and marketing 
practices have changed. For example, Franklin County is not currently 
regulated under the marketing order, but reports indicate that sweet 
cherry trees have been planted in that county in recent years. This is 
true in other non-regulated counties as well. If 12 counties in the 
State of Washington are producing cherries in significant volume, and 
only 6 are regulated under the order, inconsistencies in quality could 
occur which could impact the current high quality image of Washington 
sweet cherries. The proposed amendment intends to update the order to 
reflect this change. The proposed amendment also would redefine the 
districts established under the order to include the new counties in 
the existing districts.
    In addition, many of the cherries grown in the counties proposed to 
be added to the production area are currently packed in Oregon. If the 
production area is expanded to include these counties, it is 
recommended that sweet cherry shipments be authorized outside the 
production area to these packing facilities for preparing for market. 
This would be done under the special purpose authority contained in 
Sec. 923.54 of the order. Grower/handlers could deliver cherries to 
those Oregon packing operations that agree to abide by the marketing 
order requirements for such cherries, including obtaining inspections 
and paying assessments. The Committee would establish

[[Page 67586]]

safeguards to ensure that marketing order requirements are being met.
Expansion of Production Area
    When the order was created in 1957, sweet cherries were primarily 
grown in only 6 counties in the State of Washington. The 6 counties 
that are currently regulated are Okanogan, Chelan, Douglas, Grant, 
Benton and Yakima. The 14 additional counties proposed for inclusion 
are Kittitas, Klickitat, Ferry, Stevens, Pend Oreille, Lincoln, 
Spokane, Adams, Whitman, Franklin, Walla Walla, Columbia, Garfield and 
Asotin.
    Cherry production has dramatically increased in areas within the 
State of Washington that are outside the current production area. As 
more land has come into irrigation and farmers look for alternative 
crops to grow, sweet cherry production is expected to continue to 
increase in areas outside the current production area.
    The total production of sweet cherries in Washington was reported 
by the National Agricultural Statistics Service (NASS), USDA to be 
96,000 tons in 1998 and 95,000 tons in 1997. Production by county is 
not available. However, NASS does report production information by 
Fruit Reporting Districts and this information is available annually 
for 1993 through 1997.
    The West Fruit Reporting District produces a minimal amount of 
sweet cherries (50 tons per year) and is not proposed to be included in 
the order's production area. In addition to the low level of 
production, testimony revealed that, due to weather conditions, it 
would be unlikely that cherries could be commercially produced in 
significant amounts west of the Cascade Mountain Range in Washington. 
Average production in this area is 50 tons per year. Testimony 
indicated that excessive rain causes serious quality problems with 
sweet cherries, such as cracking. Generally, weather conditions in 
eastern Washington are more favorable for growing sweet cherries, as 
well as other horticultural crops.
    The Mid-Columbia Fruit Reporting District includes the counties of 
Wahkiakum, Cowlitz, Clark, Skamania, and Klickitat. These counties 
produced an average of 1,550 tons during the 1993 though 1997 seasons. 
Only Klickitat County would be included in the proposed regulated area. 
The other four counties are in the western part of the State and have 
minimal sweet cherry production and no potential for significant 
production. These counties not included in the proposed production area 
have weather conditions similar to the counties in the West Fruit 
Reporting District.
    The Wenatchee Fruit Reporting District includes the counties of 
Okanogan, Chelan, and Douglas. This is one of the two biggest sweet 
cherry producing districts with an average production of 34,360 tons 
from 1993 through 1997. These three counties are currently regulated 
under the federal marketing order.
    The Yakima Valley Fruit Reporting District is the other large sweet 
cherry producing district with an average production of 35,830 tons 
from 1993 through 1997. Yakima County is currently regulated, while 
Kittitas County is proposed for inclusion in the regulated area.
    The Columbia Basin Fruit Reporting District includes the counties 
of Grant, Adams, and Franklin. Grant is currently regulated under the 
federal marketing order, while Adams and Franklin counties are proposed 
additions to the regulated area. The Columbia Basin Fruit Reporting 
District averaged 3,410 tons annually over the past 5 seasons.
    The Northeast Fruit Reporting District is made-up of Ferry, 
Stevens, Pend Oreille, Lincoln, and Spokane counties. The average 
annual production from this fruit-reporting district is 100 tons. All 
of these counties would be included in the proposed production area.
    The Southeast Fruit Reporting District is comprised of Whitman, 
Walla Walla, Columbia, Garfield, and Asotin counties. Average 
production from 1993 through 1997 for this fruit-reporting district was 
100 tons. Again, the proposed production area would include all of 
these counties.
    Of the 14 counties that are proposed to be added to the marketing 
order, 10 currently produce cherries (Franklin, Klickitat, Walla Walla, 
Spokane, Stevens, Asotin, Lincoln, Kittitas, Adams, and Whitman). 
Production of cherries is not shown for the counties of Ferry, Pend 
Oreille, Columbia, and Garfield.
    Testimony indicated that it is likely for these current non-
producing counties to produce cherries in the future. One grower 
testified that there are newly planted cherry orchards in Pend Oreille, 
one of the counties proposed to be in the expanded production area, 
that currently lists no commercial production. Testimony indicated that 
these four counties with no current statistics on cherry orchards, 
could produce cherries in significant volume in the future. The 
climatic conditions in those counties have potential for future growth. 
Additional testimony revealed that cattle and wheat farmers in these 
areas are looking for alternative crops to enhance their operations and 
cherries could be a reasonable choice.
    As discussed later in this decision, the Committee considered 
various alternatives and concluded that the proposal it submitted on 
the expansion of the production area is the most reasonable 
alternative. The proposed production area is the smallest regional 
area, which is practicable, while maintaining program effectiveness.
    Testimony revealed that Washington cherries have a very positive 
image to buyers and consumers. When purchases are made of Washington 
cherries, the buyer does not necessarily know if the cherries originate 
from counties under the marketing order or not. If one county ships an 
inferior cherry, the entire state's image could be impacted. Testimony 
indicated that most of the facilities that pack Washington cherries 
(both those inside and outside the production area) already pack to the 
marketing order requirements. However, without modifying the order, a 
greater possibility exists for more cherries being shipped of an 
inferior quality. Testimony further indicated that a grower's success 
is partly based on the quality of fruit delivered. As production levels 
continue to increase, the value of maintaining a high quality image 
will assist growers from encountering decreasing prices. The marketing 
order assists all growers in that handlers prepare their cherries to a 
certain quality level, which helps to maintain price levels.
    Testimony was received at the hearing on the costs associated with 
the proposed amendments. The current assessment of 75 cents per ton 
comprises less than 1 percent of total production costs. The 1999-2000 
budget for the Committee is $62,815, of which $3,388 is earmarked for 
compliance efforts. Testimony indicated that increased compliance and 
administrative costs necessary to monitor this proposal would not be 
significant. Testimony further indicated that the annual assessment 
could even be reduced due to additional cherries being assessed with 
the expansion of the production area. Testimony at the hearing 
indicated that the benefits of strengthening the market would outweigh 
any increase in costs. Adversely, if the production area is not 
redefined, testimony indicated that the Washington cherry image could 
be harmed, as more and more areas are growing cherries. In addition, 
indications are that a large number of non-bearing acres are coming 
into production inside and outside the current production area. Adding 
to the

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increase in production are growers of other crops, such as grain and 
apples, looking for alternative crops to grow in order to supplement 
incomes. Sweet cherries are an option these growers consider.
    Applying grades and standards to the new production areas should 
provide benefits to producers. The grades and standards allow small 
producers the opportunity to develop a reputation for producing and 
delivering a consistent, high quality product. These grades and 
standards provide incentives and rewards for the production of high 
quality product. In addition, the establishment of uniform grades and 
standards across all the production areas provides a level field for 
competition among both small and large growers. Testimony indicated 
that as production increases, quality issues become more important. 
Production is expected to increase in excess of 100,000 tons for the 
first time in the industry's future.
    As an example of the impact inconsistent quality can have on a 
market, testimony was presented on the Rainier cherry market. Although 
Rainier cherries are included in the marketing order, they were 
specifically exempt from quality requirements until a few years ago. 
Some handlers packed high quality Rainier cherries and received a 
premium price. When other growers and handlers realized the acceptance 
of the Rainier, various ranges of quality were shipped in anticipation 
of receiving a premium price. However, buyers became reluctant to 
purchase Rainier cherries due to inconsistent quality. The Committee 
recommended minimum quality requirements for Rainier cherries which 
were established by regulation under the order. Assurance of consistent 
quality has resulted in the Rainier cherry market becoming more stable, 
and Rainiers are again considered a premium product.
    The Washington cherry market distinguishes itself from competitors. 
More product is available from Washington than the other cherry 
producing States. The Washington cherry market is more diverse and 
national in scope, and testimony indicated that buyers have confidence 
in Washington sweet cherries due to consistent quality. Testimony 
revealed that this distinction is a direct result of the establishment 
of minimum quality requirements under the marketing order.
    Testimony was received from a cooperative cherry handler that 
represents 108 growers, 27 of which are located in the proposed 
production area (the balance are in the current production area.) This 
handler testified that his company has two packing facilities, one 
inside the current production area and one in the proposed production 
area. It was this handler's position that its customers and growers 
must have confidence in their ability to pack a high quality consistent 
product.
    The witness testified that bringing all his growers under the 
marketing order would provide better returns for these growers and help 
bolster the image of the Washington sweet cherry. He stated that 
implementation of these proposals would level the playing field by 
eliminating confusion and creating more orderly marketing. This handler 
would anticipate no significant additional costs as his company already 
packs all cherries received to the marketing order's minimum quality 
requirements. It was this handler's position that the benefits would 
outweigh the costs to cherry growers.
    This handler stated that quality issues are foremost to the 
industry and equate to buyer confidence. Repeat business is critical to 
the cooperative and any bad perceptions could be detrimental to future 
business. If all major cherry producing counties were required to 
maintain the same quality requirements, consistency in quality would 
prevail. With increasing levels of production in Washington, other U.S. 
states and in foreign countries, quality becomes more and more 
important. Consumers view Washington cherries as a premium preferred 
product and this positive image could suffer if quality is not 
maintained.
    When regulations are in place, all cherries in the production area 
are required to be inspected and certified as meeting established 
requirements. Testimony indicated that increased costs associated with 
more cherries being inspected would be offset by consistent quality and 
a stable marketplace. Inspection costs are discussed in detail later in 
this document.
    Production has and continues to increase. The increased production 
is coming from the traditional growing areas in addition to the new 
production areas. The peak shipping week occurs during the last week of 
June. With new production and the plantings of late-season varieties of 
sweet cherries, the marketing window for shipping Washington sweet 
cherries is expanding into August.
    Minimum quality and size standards in the proposed production area 
would maintain the integrity of the product so that the commodity's 
overall quality image is not diminished by a low quality sample. The 
principal objective of a grading system is to make the market work more 
efficiently. Minimum quality and size requirements would improve 
information between buyers and sellers. Contracts could be made based 
on grade specifications, and buyers need not personally inspect each 
lot of product. Standardization of quality and size reduces uncertainty 
between buyers and sellers, and this helps reduce marketing costs. The 
goal of an effective grading system is to improve quality and size. 
Minimum quality and size standards would help ensure that substandard 
product does not find its way to the market and destroy consumer 
confidence and harm producer returns. Cherries that do not make the 
specified grade and size requirements can be shipped to processing 
outlets.
    Record evidence supports expanding the production area to include 
all counties in the State of Washington east of the Cascade Mountain 
Range.
Redefining Districts To Include Expanded Production Area
    For purposes of allocating Committee membership, the production 
area is divided into two geographic districts. If the production area 
is expanded, it will be necessary to incorporate the additional 
counties into the districts currently established under the order. The 
Committee discussed dividing the production area into three districts 
and distributing the counties and membership across these districts. 
The Committee was concerned that this would entail increasing Committee 
membership by more than one handler member as proposed and discussed in 
Material Issue No. 2. The record indicated that the Committee believed 
a 16 member Committee would be the most effective. Therefore, it was 
decided to distribute the new counties proportionately between the two 
existing districts. District 1 is currently composed of the counties of 
Chelan, Okanogan, Douglas and Grant. This proposal adds the counties of 
Lincoln, Spokane, Pend Oreille, Stevens and Ferry. District 2 is 
currently composed of the counties of Yakima and Benton. This proposal 
adds the counties of Kittitas, Klickitat, Adams, Franklin, Walla Walla, 
Whitman, Columbia, Garfield and Asotin.
    The proposed District 1 encompasses the northern part of the 
production area and District 2 encompasses the southern part. In 1997 
production in proposed District 1 was approximately 44,300 tons of 
sweet cherries and in proposed District 2, 45,500 tons. In addition, 
the tonnage packed in each proposed district is about the same.

[[Page 67588]]

    Record evidence supports redefining the districts to incorporate 
the additional counties into the currently established districts in the 
order.
Authority To Deliver Cherries to Packing Facilities Outside the 
Production Area
    The term ``handle'' under Sec. 923.13 means to sell, consign, 
deliver, or transport cherries or cause the sale, consignment, 
delivery, or transportation of cherries in the current of commerce from 
any point within the production area to any point outside. All cherries 
``handled'' must meet marketing order requirements, but the 
requirements can be waived for special purpose shipments which are 
defined in Sec. 923.54 of the order. The Committee has proposed adding 
as ``special purpose shipments'' the authority to ship cherries outside 
the production area for grading or packing.
    The Committee has been discussing amending the order for many 
years. In 1990, the subcommittee appointed to study the expansion of 
the production area, discussed expanding the production area with 
producers located outside the production area. Out of these 
discussions, it was determined that if the production area was 
expanded, the authority to grade and pack outside the production area 
was also needed in order to allow many growers in the proposed 
production area to continue having their cherries packed in Oregon. 
This would help avoid financial hardships for these growers by 
maintaining continuity in the packing of their cherries.
    A grower/handler from Oregon who does pack Washington cherries 
testified that some growers who are in the proposed production area 
have always had their cherries packed at plants outside the production 
area. His company has operated an orchard at Dallesport, Washington for 
over 17 years and has always packed the fruit in The Dalles, Oregon. 
This witness testified that much is invested in his facilities and it 
would be an economic hardship not to be able to pack and ship his fruit 
at his own plant. This is a good example of why the proposals for 
expansion of the production area and shipments outside the production 
area for packing should be considered as one material issue. This 
situation applies to many other growers in Dallesport and White Salmon, 
Washington. Expenses for growers could be dramatically increased if 
they are required to change their packing facilities to those that are 
farther from their orchards but in the production area. The four 
closest packing operations to Dallesport, Washington are in The Dalles, 
Oregon. The closest packing facility in Washington to that growing area 
is in Yakima, which is over 50 miles away.
    In addition to proximity to their orchards, there are other reasons 
growers select certain packing facilities. Many growers select packers 
based on the quality of pack, the packinghouse image and/or whether or 
not the packing facility is a cooperative. These options for growers 
would be limited if they were no longer able to have their cherries 
packed in Oregon.
    There are approximately 75 packing operations in the current 
production area and two additional packing houses in the proposed 
production area. There are four packing operations in Oregon that pack 
Washington cherries for grower/handlers. Testimony indicated that 
existing packing facilities in the State of Washington could have 
difficulty handling the volume of Washington cherries if the production 
continues to increase. The proposal to allow shipments of Washington 
cherries outside the production area for packing would specifically 
address this issue. This proposal would provide flexibility in moving 
product in and out of the marketing order production area while 
ensuring that quality objectives are not compromised.
    WSDA currently has an agreement with the Oregon Department of 
Agriculture covering the border area between both states, namely in the 
Bingen, Washington area, where the Oregon Department of Agriculture 
conducts inspections to Washington standards and marketing order 
specifications, using appropriate Washington certificates. Testimony 
indicated this agreement works well, as it assists the industry in 
supplying quality inspections in that area.
    Because of the agreement with the Oregon Department of Agriculture, 
there is assurance that any Washington product that is inspected by the 
Oregon Department of Agriculture is inspected to Washington standards 
or to Washington marketing order requirements. There is documentation 
that verifies product inspections and this process has proven to be 
successful in this area. Testimony indicated that the inspection office 
does not envision any oversight burden imposed by these proposals that 
it cannot meet.
    Safeguard provisions are incorporated into this proposal to ensure 
compliance with the proposal to authorize shipments outside the 
production area. This would be done under the special purpose shipment 
authority contained in Sec. 923.54 of the order. Grower/handlers could 
deliver cherries to those Oregon packing operations that agree to abide 
by the marketing order requirements for such cherries. The Committee 
would establish additional safeguards to ensure that marketing order 
requirements are being met. Although no specific procedures have been 
developed as yet, such information may include a requirement that 
packing facilities that grade and pack cherries outside the production 
area apply to the Committee and provide pertinent information necessary 
to safeguard marketing order provisions. If a packing facility does not 
abide by applicable requirements, the committee can rescind their 
agreement and Washington cherries could not be delivered to that 
facility.
    The WSDA assists in monitoring for compliance with the marketing 
order and would continue to do so. The WSDA provides the Committee with 
copies of all Federal/State inspection note sheets. If WSDA notifies 
the Committee of a potential marketing order violation, the Committee 
takes steps to ensure compliance. Compliance is currently not a problem 
with the Committee.
    The Committee proposal concerning this part of the amendment was 
designed to address this specific situation involving the packing 
facilities in Oregon. The proposed order language states that authority 
for ``shipments of cherries for grading and packing to specified 
locations outside the production area'' would be authorized. The 
specified locations would include the areas where these packing 
facilities are located in Oregon across the Washington border. This 
amendment is intended to provide flexibility in addressing the current 
situation of expanding the production area and to allow packing 
facilities currently being used to pack Washington cherries to continue 
to do so.
    Record evidence supports authorizing shipments, with appropriate 
safeguards, outside the production area for packing.
Combining Expansion of Production Area, Redefining Districts and 
Shipments Outside the Production Area as One Issue
    Record evidence supports that the proposals to expand the 
production area, to redefine the districts and to authorize shipments 
outside the production area for packing be considered as one votable 
issue in a referendum. Evidence presented at the hearing demonstrated 
that these proposals are inextricably intertwined and would cause 
confusion in the referendum if not voted upon as a single issue. The 
proposal to redefine the districts to allocate the new counties

[[Page 67589]]

between the existing districts obviously is only necessary if the 
production area is expanded. Therefore, this proposal should be 
combined with the proposal to expand the production area.
    Regarding combining the proposals on the production area expansion 
and the authority to authorize shipments of uninspected cherries 
outside the production area for packing, these proposals are reliant on 
each other and should be combined as one issue. Failure for both 
aspects to pass in referendum could result in hardships for grower/
handlers, especially those grower/handlers who currently ship their 
cherries to Oregon for packing. There are grower/handlers in the 
proposed production area whose orchards are closer to packing plants in 
Oregon than in Washington and who currently ship their cherries to 
these plants for packing.
    The record supports these proposed amendments. For the above 
reasons, the proposal to amend Sec. 923.4 Production area by including 
the counties of Okanogan, Chelan, Kittitas, Yakima, Klickitat in the 
State of Washington and all of the counties in Washington lying east; 
the proposal to amend Sec. 923.14 District by including the additional 
counties under Districts 1 and 2; and the proposal to amend Sec. 923.54 
Special purpose shipments to authorize special purpose shipments, with 
appropriate safeguards, allowing movement of cherries to packing 
operations outside the production area should be voted on in the 
referendum as one material issue.

Material Issue Number 2

    Section 923.20 should be amended to increase representation on the 
Committee by adding one additional handler member representing District 
1. In addition, Sec. 923.20 should be amended to provide equal grower 
representation in each district.
    The current 15-member Committee consists of four grower members 
representing District 1, six grower members representing District 2, 
two handler members representing District 1 and three handler members 
representing District 2. All members have alternates. District 1 
includes the counties of Chelan, Okanogan, Douglas, and Grant. District 
2 includes the counties of Yakima and Benton. If the proposal to expand 
the production area is implemented, District 1 would include the 
counties of Chelan, Okanogan, Douglas, Grant, Lincoln, Spokane, Pend 
Oreille, Stevens and Ferry. District 2 would include the counties of 
Kittitas, Yakima, Klickitat, Benton, Adams, Franklin, Walla Walla, 
Whitman, Columbia, Garfield and Asotin.
    The Committee believes that producer representation in District 1 
should remain at 4 members and District 2 should remain at 6 members. A 
witness testified that the amount of tonnage produced is significantly 
greater in District 2. However, significant quantities of cherries 
produced in District 2 are packed and graded in District 1. It was 
estimated that total product packed is nearly equal in both districts. 
By adding one handler member to District 1, both districts would be 
equally represented by 3 handler members.
    Record evidence supports increasing the membership on the Committee 
by one handler member. The Washington sweet cherry industry is growing. 
Bearing acres and production are increasing and markets, including 
exports, are expanding. Although the Committee's recommendation to 
increase the number of Committee members by one initially related to 
the expansion of the production area, the record testimony revealed 
that the Committee would prefer to have an additional handler member 
even if the production area is not expanded. Therefore, this material 
issue is not tied to the expansion of the production area and should be 
addressed and voted in the referendum on its own merits.
    Increasing representation on the Committee would allow additional 
input in Committee decisions. Having equal handler representation for 
each district is reasonable considering that the volume handled is 
similar in each district, whether or not the production area is 
expanded.
    The Committee discussed alternatives to address appropriate 
representation and districting should the production area be expanded. 
The Committee agreed that 16 members was an appropriate number for the 
Committee to be most effective while adequately representing the 
expanded production area. The alternatives are discussed in more detail 
later in this document.
    Further, an economic report submitted as evidence at the hearing 
does not support the proponents' statement that the amount of tonnage 
produced is significantly greater in District 2. The report shows that 
under the current districts, District 1 has approximately 814 farms 
growing sweet cherries on approximately 10,000 acres of land. In 
District 2, approximately 621 farms produce sweet cherries on 
approximately 9,141 acres of land.
    In the proposed districts, District 1 would have approximately 870 
farms growing cherries on 10,074 acres. District 2 would have 
approximately 753 farms that grow cherries on approximately 11,560 
acres of land. Production figures show that in 1997, production in 
proposed District 1 was approximately 44,300 tons of sweet cherries and 
in proposed District 2, production was approximately 45,500 tons.
    These statistics indicate that volume of production between 
Districts 1 and 2 is not significantly different in the current and 
proposed districts. Record evidence revealed that District 2 has 
slightly less growing acreage currently than District 1 and would have 
slightly more if the proposal to expand the production area were 
adopted. Based on record testimony, the Committee is striving for 
handler representation based on the volume of cherries handled in each 
district. The record indicated that the Committee intends that grower 
representation be based on the volume of production for each district. 
Since statistics show that production in the proposed districts would 
be relatively the same, grower membership between districts should be 
equal. Therefore, the record supports modifying the current 
representation of 4 growers for District 1 and 6 for District 2 to 5 
grower members and their respective alternatives per district.
    The marketing order provides the authority to redefine the 
production area districts and to reapportion the representation of any 
district on the Committee. The Committee may recommend changes in 
district representation if cherry production within the districts and 
the production area shifts. These changes can be accomplished through 
informal rulemaking.
    Currently, 12 members are required to make a quorum under the 15-
member Committee. Also, 9 concurring votes are currently required to 
pass any Committee action. A witness testified that quorum and 
concurring voting requirements were not discussed at meetings when the 
issue to increase membership was discussed. However, the current quorum 
and voting numbers would still be considered a ``super'' majority 
should the membership on the Committee increase by one handler member. 
The witness indicated that the current requirements would be adequate 
and no changes are being recommended to the quorum and voting 
requirements.
    Seemingly, record evidence suggests increasing representation on 
the Committee by one handler member and providing for equal grower 
representation in each district.

Material Issue Number 3

    Section 923.41 should be amended to add authority to require 
handlers to pay

[[Page 67590]]

late payment charges and/or interest on late assessment payments in 
order to encourage timely remittance of assessments by handlers.
    Currently, Sec. 923.41 requires handlers to pay to the Committee on 
demand assessments on cherries received by the handler. There is no 
provision for a late payment or interest charge.
    Record testimony revealed that most handlers pay assessments 
promptly and timely. However, the Committee's operating budget is 
relatively small and late payments could be detrimental to the 
operations of the Committee. Three marketing orders are administered by 
one manager and share expenses in order to mitigate costs. The other 
marketing orders are the Washington Apricot marketing order (Marketing 
Order No. 922) and the Washington-Oregon Fresh Prune marketing order 
(Marketing Order No. 924). Assessments collected under the sweet cherry 
order represent 80 percent of the combined budgets. For example, the 
1999-2000 total annual budget for sweet cherries is $62,815, while the 
two other program budgets combined total $18,600. Testimony indicated 
that even a few hundred dollars in late assessments could be 
detrimental to the administration of the cherry program.
    Testimony further indicated that failure to incorporate a charge 
for late payment of assessments would not be equitable for handlers who 
pay on time. These handlers would be financing Committee operations 
while late paying handlers would benefit from the Committee programs.
    Late payment and interest charges for delinquent assessments would 
provide an incentive for handlers to pay on time. This would result in 
fewer funds needed by the Committee for collection activities. Also, 
the fees derived from late payment and interest charges would partially 
compensate the Committee for its collection efforts.
    The Committee envisions implementing the specifics of the late 
payment and/or interest charges through informal rulemaking with the 
Secretary's approval. This would allow the Committee to remain flexible 
with the establishment of the interest and late payment charge. The 
Committee anticipates that the billing statements would include a date 
at which time a late payment charge of a specified amount would be 
assessed. The statement would advise the handler that in addition to 
the late payment charge, an interest payment of a certain percent on 
the unpaid balance would be assessed each month thereafter. Testimony 
indicated that an example of such charges would be similar to what 
commercial businesses charge, such as a $25 late fee, and a one and a 
half percent per month charge on the unpaid balance.
    The Department agrees that authorizing late payment and interest 
charges would encourage prompt payment and thereby, help ensure that 
the Committee operates effectively. The annual sweet cherry budget is 
small enough that even a few handlers paying late could disrupt 
Committee operations.
    Accordingly, record evidence supports this aspect of the proposal. 
However, in the proposed amendatory language, a provision was included 
stating ``the Committee may also recommend other methods of assessment 
collection with the approval of the Secretary.'' Testimony revealed 
that other methods of assessment collection would be filing liens 
against handlers for failure to pay assessments or suing a handler in 
small claims court for unpaid assessments.
    There is no authority under the Act allowing the Committee to file 
liens or sue in small claims court for unpaid assessments. Therefore, 
this provision should not be included in the proposed amendment.

Material Issue Number 4

    Section 923.52 should be amended to authorize the Committee to 
establish container marking requirements.
    Currently, the order provides the authority to fix the size, 
capacity, weight, dimensions, or pack of containers that may be used to 
ship fresh sweet cherries. The order does not include authority to 
establish marking requirements.
    Testimony indicated that, in the cherry industry, the customer 
dictates specifications of products such as quality, packaging and 
variety. The quality, size, container and pack requirements currently 
authorized under the order address many of these preferences. These 
provisions are used by the Committee and modified with industry changes 
and customer preferences. They help to maintain a positive image for 
Washington sweet cherries and stimulate repeat business. The proposal 
to add the authority to implement marking requirements would add an 
additional marketing tool for the Committee to continue meeting 
customer needs.
    Washington sweet cherry bearing acres are continually increasing, 
which has resulted in increased production. Since 1959, the production 
of sweet cherries has increased by over 500 percent. Production levels 
are trending toward 100,000 tons in the near future. New national 
markets have developed and exports now play an important role in the 
marketing of sweet cherries. Exports represented 40 percent of fresh 
sweet cherry shipments in 1998. In 1998, exports increased 35 percent 
over the 1997 levels, achieving a new high of 28,560 tons.
    Testimony revealed that two containers are primarily used in 
packing sweet cherries currently. However, in response to customer 
preferences, the industry is moving to multiple packaging and multiple 
varieties of cherries. As packaging and varieties become more diverse 
and production continues to increase, container markings are becoming 
increasingly important.
    In addition, product identification and origination becomes 
increasingly important as more and more sweet cherries are shipped 
greater distances nationally and to foreign markets. Testimony 
indicated that many handlers currently mark their containers to meet 
customer needs. However, uniform marking requirements would eliminate 
confusion and ensure to customers that they are receiving the products 
ordered. Testimony indicated that marking requirements that may be 
recommended by the Committee are weights, growing areas and State of 
origin.
    For these reasons, the Committee believes that it is becoming more 
important to denote product origination and varieties on packaging. 
Testimony indicated that containers may need to be marked more 
precisely in the future than just stating ``sweet cherries.'' Uniform 
marking requirements would provide additional consistency in product 
identification. This proposal is intended to provide that authority.
    The proponents have recommended establishing the authority for 
marking requirements under the marketing order. However, implementation 
of any specific regulations would require a recommendation by the 
Committee for informal rulemaking. The Committee wants to keep the 
order language flexible enough so that the Committee could adapt and 
modify marking requirements with changing needs and preferences of 
customers.
    Testimony indicated that no significant costs would be incurred if 
this authority were implemented because handlers already have the 
equipment to mark containers. Container markings are currently 
accomplished by handlers on an individual basis. The benefits of this 
proposed amendment would be in the form of uniform marking requirements 
for Washington sweet cherries.

[[Page 67591]]

    Although the Committee has not developed a specific type of marking 
that would be recommended, adding the authority to establish marking 
requirements in the future is reasonable. The authority for uniform 
container marking requirements would further expand and complement the 
current container and pack requirements already being used. The 
Committee would discuss any recommended markings at meetings and vote 
on support for a marking requirement. Therefore, record evidence 
supports adding authority for container marking requirements to 
Sec. 923.52.

Material Issue Number 5

    Section 923.25 should be amended to authorize Committee nominees to 
qualify as a member or alternate by filing a written acceptance of 
willingness to serve prior to the selection.
    The Committee consists of 15 members, each of whom has an 
alternate. Ten members are growers and five are handlers. The term of 
office for Committee members and alternates is two years, beginning on 
April 1 and ending on March 31. Members and alternates serve in such 
capacities for the term of office for which they were selected and 
qualified until their respective successors are selected and have 
qualified.
    Currently, Committee nominations are made at the designated 
meetings where elections are to be held. These meetings are required to 
be held no later than March 1 of each year. Elected nominees for member 
and alternate positions are required to furnish a background statement, 
which is forwarded to the Secretary along with a list of nominees. 
After being notified of the selection by the Secretary, the members and 
alternates sign a written acceptance indicating their willingness to 
serve on the Committee.
    The proposal would delete the requirement that the selected member/
alternate file a written acceptance after notification of selection and 
combine the acceptance letter with the background statement submitted 
prior to the selection. The nominee would, in effect, be indicating 
willingness to serve on the Committee prior to being selected.
    Committee Form FV-23 is the Background Statement form. This form 
allows the Committee and Secretary to determine a nominee's eligibility 
to serve on the Committee by requiring information on the nominees' 
experience in the sweet cherry industry. The time required to complete 
this form is estimated to be five minutes. When nominated, the nominee 
completes this form. If the nominees do not return these forms 
promptly, delays can occur in submitting the nominee's names to the 
Secretary for selection, which could have a negative impact on the 
seating of the Committee.
    The Acceptance Letter, currently signed after selection, merely 
requires a signature from the person accepting the appointment. 
Testimony indicated that there is no advantage to waiting for this form 
to be signed by the selectee.
    The Committee believes that combining these forms as one and 
requiring submission at the time of nomination would be more efficient 
than the current method. Testimony indicated that the nominee, in 
effect, indicates willingness to serve on the Committee by accepting 
the nomination and completing the background statement upon nomination. 
By combining these forms into one and requiring the information at the 
time of nomination, the Committee and Secretary know in advance that 
the nominees are willing to serve on the Committee if selected.
    Testimony indicated that there is no benefit in waiting for the 
nominee to sign the Acceptance Letter after being selected. No negative 
impacts are anticipated from implementing this proposal. However, the 
benefits are that the nominees are only required to sign and deliver 
one form. In addition, the Committee could obtain all pertinent 
information well ahead of the time for seating of the new Committee, 
thereby operating more efficiently.
    The Department will submit the modified form to the Office of 
Management and Budget (OMB) for approval. Current information 
collection requirements for Part 923 are approved by OMB under OMB 
number 0581-0133.
    Accordingly, record evidence supports revising Sec. 923.25 of the 
order.

Material Issue Number 6

    Section 923.21 should be revised to establish a limit on the number 
of consecutive terms a person may serve on the Committee. Currently, 
the term of office of each member and alternate member of the Committee 
is two years. There are no provisions related to tenure in the 
marketing order. Members and alternates may serve on the Committee 
until their respective successors are selected and have qualified.
    The Department believes that all marketing order programs should 
consider tenure requirements for committee membership as a part of any 
amended order process. The Department believes that this provision 
would increase industry participation on the Committee, provide for 
more diverse membership, provide the Committee with new perspectives 
and ideas, and increase the number of individuals in the industry with 
Committee experience.
    Experience with other marketing order programs suggests that a 
period of six years would be appropriate. Since the current term of 
office for members and alternates is two years, the Department is 
proposing that no member serve more than three consecutive two-year 
terms or a total of six years. This proposal for a limitation on tenure 
would not apply to alternates. Once a member has served on the 
Committee for three consecutive terms, or six years, the member would 
sit out for one year before being eligible to serve as a member again. 
The member could serve as an alternate during that time.
    Witnesses presented testimony in opposition to this proposal. 
Although the Committee agrees with the principal that outreach efforts 
are important, the application of tenure could be problematic. 
Testimony indicated that the sweet cherry producing area is rather 
small in comparison to other fruit and vegetable growing areas, and 
finding growers willing to serve on the Committee is difficult. In 
addition, testimony further indicated that it is counterproductive to 
require valuable members to step down when the current system is 
working well.
    Regarding diversity, testimony indicated that there are few diverse 
individuals in the cherry industry and limiting tenure on the Committee 
would make it challenging to maintain a diverse Committee membership 
and to meet the Department's diversity goals. The Committee has 
difficulty getting growers involved in Committee operations. Many 
growers participate in the nomination meetings, but few volunteer to 
participate as members or alternates. The Committee finds that the 
industry members that do agree to serve bring knowledge and experience 
to the Committee that would be difficult to replace.
    Testimony indicated that the Committee would continue outreach 
efforts to encourage diverse representation on the Committee. If the 
proposal is implemented, the Committee supports that tenure should not 
apply to alternates.
    The Department believes, and experience with other marketing order 
committees has demonstrated, that tenure requirements for committee 
membership increases participation,

[[Page 67592]]

provides for more diverse committees, provides for different 
perspectives, and increases the number of industry members with 
Committee experience.
    Therefore, record evidence supports establishing tenure 
requirements for the Committee.

Material Issue Number 7

    Section 923.64 should be amended to require that continuance 
referenda be conducted every six years to ascertain industry support 
for the order.
    Currently, there is no provision in the marketing order that 
provides for periodic continuance referenda.
    The Department believes that producers should have an opportunity 
to periodically vote on whether a marketing order should continue. 
Continuance referenda provide an industry with a means to measure 
producer support for the marketing order program. Experience has shown 
that programs need significant industry support to operate effectively. 
Under this proposal, the Department would consider termination of the 
marketing order if less than two-thirds of those voting and less than 
two-thirds of the volume represented in the referendum favored 
continuance. This is the same as that for issuance of an order. As with 
tenure, experience in recent years indicates that six years is an 
appropriate period to allow producers an opportunity to vote for 
continuance of the program. Therefore, the proposal sets forth that a 
referendum would be conducted six years after the effective date of 
this amendment and every sixth year thereafter.
    Witnesses presented testimony in opposition to this proposal. 
Testimony indicated that the industry currently has the ability to 
request a continuance referendum at any time. The Committee believes 
that requiring unnecessary referenda is costly and of little value to 
the industry or the Department. The program has worked successfully 
since 1957 and growers have not been against any major aspects of the 
order since that time.
    Testimony also indicated that requiring a continuance referendum 
every six years would further impede participation on the Committee. 
Based on record evidence, many industry members believed that the 
process for conducting continuance referenda is similar to the 
marketing order amendment process, in that a hearing would be required.
    Contrary to formal amendment proceedings, continuance referenda do 
not require a hearing. Most referenda are conducted by mail. All 
growers in the production area would be sent a ballot and would be 
asked, not required, to answer whether they support continuance of the 
marketing order. The growers then send the ballot back to the 
Department. That is the extent of grower responsibility in the 
continuance referenda process. The Department prepares the ballot, 
mails the ballots and tallies and publishes the results. The Committee 
office does assist the Department in this process by providing a list 
of growers eligible to vote in the referendum.
    The Department believes that producers should have an opportunity 
to periodically vote on whether the marketing order should continue.
    Accordingly, the record evidence supports adding a requirement that 
such referenda be conducted.
    The Agricultural Marketing Service also proposed to make such 
changes as may be necessary to the order to conform with any amendment 
that may result from the hearing. The Department has identified no 
necessary conforming changes.

Small Business Considerations

    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA), the 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 so that small businesses will not be 
unduly or disproportionately burdened. Small agricultural producers 
have been defined by the Small Business Administration (SBA) (13 CFR 
121.201) as those having annual receipts of less than $500,000. Small 
agricultural service firms, which include handlers regulated under the 
order, are defined as those with annual receipts of less than 
$5,000,000.
    Interested persons were invited to present evidence at the hearing 
on the probable regulatory and informational impact of the proposed 
amendments on small businesses. The record indicates that growers and 
handlers would not be burdened by any additional regulatory 
requirements, including those pertaining to reporting and recordkeeping 
as a result of these proposed amendments.
    Marketing orders and amendments thereto are unique in that they are 
normally brought about through group action of essentially small 
entities for their own benefit. Thus, both the RFA and the Act are 
compatible with respect to small entities.
    The record indicates that there are approximately 75 handlers 
currently regulated under Marketing Order No. 923. There are two 
additional packing houses in the proposed production area that would be 
considered handlers if the production area is expanded. There are four 
packing operations in Oregon that pack Washington cherries for grower/
handlers. In addition, there are approximately 1,400 cherry growers in 
the current production area. There would be approximately 200 
additional growers if the production area is expanded as proposed.
    In 1998, Washington produced 96,000 tons of sweet cherries. The 
average price for fresh cherries in 1998 was $1,600 per ton. This 
computes to approximate revenues for the 1998 crop of $153,600,000. The 
record indicated that approximately 15 handlers handle the majority of 
the crop and could be classified as large businesses. Thus, a majority 
of sweet cherry handlers could be classified as small entities. The 
same is estimated with regard to the packing houses in Oregon.
    Dividing total production from 1998 by the number of growers in the 
proposed production area, the average grower produces about 60 tons of 
cherries annually. With an average price of $1,600 per ton for 1998 
sweet cherries, average revenues would be $96,000. Thus, it is 
reasonable to conclude that most sweet cherry growers are small 
entities.

Industry Background

    Sweet cherries rank second to apples as the most important fruit 
grown in Washington, with a value of production of $128.7 million. 
Washington growers produced 96,000 tons of sweet cherries in 1998, 
which is 46 percent of the nation's total.
    The varieties of sweet cherries subject to regulation under the 
order are: Bing, Chelan, Lambert, Lapin, Rainier, and Sweetheart. 
Shipping of these cherries generally begins around June 15 and usually 
ends around August 15. The most active harvest period is from June 10 
through July 20.
    The order authorizes the use of grade, size and container 
regulations for the fresh shipment of sweet cherries from the 
production area. The regulations, specify certain size, maturity and 
pack requirements. The current regulations are based on Washington 
grade standards and apply to specific varieties. The purpose of these 
regulations is to ensure the shipment of high quality cherries. The 
order has allowed the industry to develop the reputation for shipping a 
quality product, which has allowed producers to ship and sell fruit in 
a more stable marketplace.

[[Page 67593]]

    Washington is the leading producer of sweet cherries for fresh 
market sale. Washington's main competitors in domestic fresh markets 
are California and Oregon. From 1994 through 1998, Washington produced 
an average of 55,600 tons per year. This represents 59 percent of the 
total sweet cherries marketed fresh. California produced an average of 
20,460 tons per year and Oregon produced 12,900 tons per year from 1994 
through 1998.
    Sweet cherries are also grown in Idaho, Montana and Utah, as well 
as Michigan, New York and Pennsylvania. Bearing acreage figures are not 
published for the States of Idaho and Montana. Utah's production area 
totals 600 acres, and has been declining. Bearing acreage figures are 
published for Michigan, New York and Pennsylvania, but the majority of 
sweet cherries grown in those states are not sold in fresh markets. The 
fruit in these States are produced and marketed during the summer 
months each year. While these States compete with Washington, Oregon 
and California in the marketing of fresh sweet cherries, their 
production is relatively small.
    From 1964 through 1998, total U.S. production of sweet cherries 
increased 332 percent and fresh utilization increased 393 percent. This 
suggests that fresh shipments have been growing in importance, while 
the processing sector has remained relatively stable. Over the past 
five seasons, 66 percent of Washington's production moved into fresh 
markets.
    Over the last 30 years, prices between the three primary growing 
States have been very competitive. Prices in California, Washington and 
Oregon have averaged $1,166, $1,028 and $798 per ton, respectively. 
California prices are slightly higher than prices in Washington or 
Oregon. One of the reasons that California prices average higher than 
Washington's is that California shipments begin in the early part of 
May, when competition in the fresh fruit market is limited. Washington 
shipments do not start until the middle of June. Early-season shippers 
generally receive a premium for their product on the fresh market.
    Fresh prices for Washington sweet cherries receive a premium over 
processing sweet cherries. From 1969 to 1998, fresh prices have 
increased more than 350 percent. Fresh cherry prices were $350 per ton 
in 1969 and were as high as $2,150 per ton in 1996. Prices were $1,600 
per ton in 1998.
    While California growers receive higher prices than Washington 
growers on average, Washington's value of production is much greater 
than California's or Oregon's. This is due to higher yields and larger 
production levels in Washington. This likely indicates that Washington 
growers have a comparative cost advantage over California or Oregon 
growers. In 1998, Washington reported its highest value of fresh 
production, $113.6 million. This compares to a 1998 value of fresh 
production of $17.9 million for California and $22.6 million for 
Oregon. The value of fresh production has increased more than 150 
percent since 1991.
    Exports play an important role in the marketing of Washington sweet 
cherries. With increasing bearing acres and production levels trending 
toward 100,000 tons in the near future, increasing levels of exports 
can be anticipated. However, competition in the export markets is 
expected to be high. California continues to export a large volume of 
their increasing production. In addition, China is estimated to have 
25,000 acres of cherries planted. Spain, Greece, Turkey, Iran, Lebanon, 
Syria and some Eastern European countries have also increased 
production levels. These countries do not import sweet cherries into 
the U.S.
    Exports of fresh Washington sweet cherries have been increasing, in 
particular during the 1997 and 1998 seasons. Exports reached a high of 
21,148 tons in 1997. In 1998, exports increased 35 percent over the 
1997 levels, achieving a new high of 28,560 tons.
    Export markets demand a high quality product. With a limited shelf 
life, these fresh deliveries of sweet cherries require a high quality 
product. The shipment of low quality product could ruin years of market 
development in an export market. Grades and standards assure the 
shipment of high quality fruit into export markets, and small growers 
as well as large growers will benefit.

Production Area and Shipments Outside Production Area

    When the marketing order was created in 1957, sweet cherries were 
primarily grown in only 6 counties in the State of Washington. The 6 
counties that are currently regulated are Okanogan, Chelan, Douglas, 
Grant, Benton, and Yakima. The 14 additional counties proposed for 
inclusion are Kittitas, Klickitat, Ferry, Stevens, Pend Oreille, 
Lincoln, Spokane, Adams, Whitman, Franklin, Walla Walla, Columbia, 
Garfield, and Asotin.
    Cherry production has dramatically increased in areas within the 
State of Washington that are outside the current production area. As 
more land has come into irrigation and farmers look for alternative 
crops to grow, sweet cherry production is expected to increase in areas 
outside the current production area.
    The proposed amendment to increase the production area to cover the 
area in the State of Washington east of the Cascade Mountain Range, to 
redefine the districts in order to include the additional counties and 
to authorize special purpose shipments, with appropriate safeguards, 
allowing movement of cherries to packing operations outside the 
production area would improve the effectiveness of the marketing order 
by ensuring that the major cherry producing counties in Washington are 
covered under the marketing order. In addition, including counties with 
potential to produce significant amounts of sweet cherries would ensure 
that all major production would be covered under the marketing order in 
the future. The proposed amendment would also benefit growers, 
especially growers not currently regulated under the order, by allowing 
many of these growers to continue shipping their cherries to Oregon for 
packing.
    The Committee has been discussing amending the order in this regard 
for many years. In 1990, a subcommittee composed of small and large 
growers and handlers was appointed to study the expansion of the 
production area. The Committee discussed expanding the production area 
with producers located outside the production area. Out of these 
discussions, it was determined that if the production area was 
expanded, the authority to grade and pack cherries outside the 
production area was also needed in order to allow growers in the 
proposed production area to avoid financial hardships by maintaining 
continuity in the packing of their cherries.
    In March 1998, the Committee recommended numerous amendments to the 
marketing order, including covering the entire State of Washington in 
the production area. In August 1999, the Committee recommended 
modifying the recommendation on the production area proposal from 
regulating the entire State to only including the eastern part of the 
State.
    Alternatives to the current proposal on the expansion of the 
production area were considered by the Committee. These alternatives 
were: (1) Including the entire State of Washington; (2) including the 
States of Washington and Oregon; and (3) including the States of 
Washington, Oregon, Idaho and Utah. Committee representatives 
communicated with growers and handlers in these regions. Public

[[Page 67594]]

meetings on the subject were publicized in these growing areas and 
interested parties were encouraged to attend. Committee members also 
attended grower meetings in these areas to discuss expansion of the 
production area.
    Regarding including the entire State of Washington, the Committee 
determined that due to weather conditions, it would be unlikely that 
cherries could be commercially produced in significant amounts west of 
the Cascade Mountain Range in Washington. Average production in this 
area is 50 tons per year. Testimony indicated that excessive rain 
causes serious quality problems with sweet cherries, such as cracking. 
Generally, weather conditions in eastern Washington are more favorable 
for growing sweet cherries, as well as other horticultural crops.
    Representatives from Idaho and Utah believed that their production 
and marketing could be easily distinguished and segregated from 
Washington and Oregon production. In addition, it was believed the 
Idaho and Utah sweet cherry industry was not large enough to make an 
impact on Washington cherries. Statistical data presented at the 
hearing on the volume of cherries produced in Idaho and Utah supports 
this belief.
    Oregon's sweet cherry industry primarily borders the State of 
Washington, but representatives from Oregon believed their industry 
should be kept separate from the Washington industry. The record 
evidence revealed that Oregon already has two organizations that 
represent the interests of sweet cherry growers, the Oregon Sweet 
Cherry Commission and the Wasco County Fruit and Produce League. These 
organizations collect assessments based on cherry production. According 
to record testimony, the Oregon growers did not see the need to form 
another organization to protect their interests. In addition, testimony 
indicated that Oregon growers did not want to become a minor part of 
the Washington order.
    An organization called the Northwest Cherry Growers also represents 
the States of Washington, Oregon, Idaho and Utah. This group is 
responsible for collecting assessments based on cherry tonnage and 
directing promotion programs for sweet cherries grown in these four 
states.
    Based on record evidence, the Committee considered these various 
alternatives and concluded that the proposal it submitted on the 
expansion of the production area is the most reasonable alternative. 
The proposed production area is the smallest regional area, which is 
practicable, while maintaining program effectiveness.
    The record revealed that the average cherry farm size in Washington 
ranges from 3 or 4 acres to several hundred acres. The average farm is 
approximately 40 acres. According to testimony, there are approximately 
180 growers in the proposed production area that are larger that the 
average farm. Some farms in the proposed production area, particularly 
in Franklin County, are 50 to 200 acres. Although much of this acreage 
is currently non-producing, testimony indicated that the potential 
exists for significant production. Unlike the western part of the State 
where significant production is not anticipated, if those areas with 
significant production potential are not regulated, it could have a 
detrimental impact on the favorable Washington sweet cherry quality 
image.
    Testimony was received at the hearing on the costs associated with 
the proposed amendments. This testimony indicated that costs associated 
with this proposal would be minor. The total annual cost of production 
for a mature orchard is $7,413.06 per acre. The current assessment of 
75 cents per ton comprises less than 1 percent of total production 
costs. Any increase in assessments resulting from this proposed 
amendment would not have a significant negative financial impact on 
growers or handlers. Testimony indicated that the annual assessment 
could even be reduced due to additional cherries being assessed with 
the expansion of the production area.
    Applying grades and standards to the new production areas should 
provide benefits to small producers. The grades and standards allow 
small producers the opportunity to develop a reputation for producing 
and delivering a consistent, high quality product. These grades and 
standards provide incentives and rewards for the production of high 
quality product. In addition, the establishment of uniform grades and 
standards across all the production areas provides a level field for 
competition among both small and large growers. Testimony indicated 
that as production increases, quality issues become more important and 
production is expected to increase in excess of 100,000 tons for the 
first time in the industry's history.
    The 1999-2000 budget for the Committee is $62,815, of which $3,388 
is earmarked for compliance efforts. Testimony indicated that increased 
compliance and administrative costs necessary to monitor this proposal 
would not be significant. It was testified that the benefits of 
strengthening the market would outweigh any increase in costs. 
Adversely, if the production area is not redefined, testimony indicated 
that the Washington cherry image could be harmed, as more and more 
areas are growing cherries. In addition, indications are that a large 
number of non-bearing acres are coming into production inside and 
outside the current production area. Adding to the increase in 
production are growers of other crops, such as grain and apples, 
looking for alternative crops to grow in order to supplement incomes. 
Sweet cherries are an option these growers consider.
    The Washington cherry market distinguishes itself from competitors. 
More product is available from Washington than the other cherry 
producing States. The Washington cherry market is more diverse and 
national in scope, and testimony indicated that buyers have confidence 
in Washington sweet cherries due to consistent quality. Testimony 
revealed that this distinction is a direct result of the establishment 
of minimum quality requirements under the marketing order. If the 
proposal to allow cherry shipments outside the production area for 
packing is implemented there are safeguards in place to ensure that 
minimum quality requirements are met. If these facilities fail to abide 
by the applicable requirements, the committee can rescind their 
privileges and Washington cherries could not be delivered to that 
facility.
    When regulations are in place, all cherries in the production area 
are required to be inspected and certified as meeting established 
requirements. The Washington State Department of Agriculture's Fruit 
and Vegetable Inspection Program (WSDA), headquartered in Olympia, 
Washington collaborates with USDA-AMS, Fresh Products Branch to provide 
inspection to marketing order commodities in Washington. WSDA's 
district offices are located in Yakima, Wenatchee and Moses Lake. These 
main district offices have area offices in strategic locations to the 
various growing areas in the State. WSDA employs approximately 150-160 
full-time inspection staff throughout the State. In addition, during 
peak harvest periods, temporary inspectors are hired.
    The WSDA operates on a user-fee basis; no appropriated funds are 
received. Inspection fees pay for the program to operate. Except for 
random inspections conducted on fruit stands to comply with a cherry 
fruit fly quarantine program, WSDA provides inspections only upon 
request. The applicant indicates to WSDA what type

[[Page 67595]]

of inspection is needed, such as compliance with a marketing order.
    The fees for cherry inspections are 21 cents per hundred weight or 
$23/hour, whichever is greater, plus additional charges for travel time 
and mileage. The larger growers have individual inspectors stationed at 
their warehouses during the season. The time and mileage charges are 
more frequently assessed to the smaller grower/packer because of the 
small volumes inspected and remote locations. However, WSDA attempts to 
mitigate costs, especially to small growers and handlers. WSDA helps 
smaller growers mitigate these costs by meeting growers halfway between 
their orchard and the inspection office or WSDA authorizes the grower 
to bring the product to the inspection office.
    Individual shipments not exceeding 100 pounds in the aggregate are 
exempt from the regulations, as well as cherries for home use and 
cherries not intended for re-sale. In addition, shipments for 
consumption by charitable institutions, for distribution by relief 
agencies or for commercial processing into products are exempt from 
regulation.
    Testimony indicated that increased costs associated with more 
cherries being inspected in accordance with marketing order 
requirements would be offset by consistent quality and a stable market 
place. In addition, most handlers already pack their cherries and have 
them inspected in accordance with marketing order requirements, 
regardless of whether the cherries are grown inside or outside the 
current production area.
    Minimum quality and size standards in the proposed production area 
would maintain the integrity of the product so that the commodity's 
overall quality image is not diminished by a low quality sample. The 
principle objective of a grading system is to make the market work more 
efficiently. Minimum quality and size requirements would improve 
information between buyers and sellers. Contracts could be made based 
on grade specifications, and buyers need not personally inspect each 
lot of product. Standardization of quality and size reduces uncertainty 
between buyers and sellers, and this helps reduce marketing costs. The 
goal of an effective grading system is to improve quality and size. 
Minimum quality and size standards would help ensure that substandard 
produce does not find its way to the market and destroy consumer 
confidence and harm producer returns. Cherries that do not meet the 
grade and size requirements can be sold in the processed market.
    In addition to proximity to their orchards, there are other reasons 
growers select certain packinghouses. Many growers select handlers 
based on the quality of pack, the packinghouse image and/or whether or 
not the handler is a cooperative. These options for growers would be 
limited if they were no longer able to have their cherries packed in 
Oregon.
    Testimony indicated that existing packing facilities in the State 
of Washington could have difficulty handling the volume of Washington 
cherries if the production continues to increase. The proposal to allow 
shipments of Washington cherries outside the production area for 
packing would specifically address this issue. This proposal would 
provide flexibility in moving product in and out of the marketing order 
production area.
    WSDA currently has an agreement with the Oregon Department of 
Agriculture covering the border area between both states, namely in the 
Bingen, Washington area, where Oregon Department of Agriculture 
conducts the inspections to Washington standards and marketing order 
specifications. Testimony indicated this agreement works well, as it 
assists the WSDA in supplying quality inspections in that area. 
Testimony indicated that the inspection office does not envision any 
oversight burden imposed by these proposals that it cannot meet. 
Safeguard provisions are incorporated into this proposal to ensure 
compliance with the proposal to authorize shipments outside the 
production area.
    If the production area is expanded, it would be necessary to 
incorporate the additional counties regulated into the districts 
currently established under the order. The Committee discussed dividing 
the production area into three districts and distributing the counties 
and membership across these districts. The Committee was concerned that 
this would entail increasing Committee membership by more than one 
handler member as proposed and discussed in Material Issue No. 2. The 
record indicated that the Committee believed a 16 member Committee 
would be the most effective. Therefore, it was decided to distribute 
the counties proportionately among the two districts.
    The proposed District 1 encompasses the northern part of the 
production area and District 2 encompasses the southern part. In 1997 
production in proposed District 1 was approximately 44,300 tons of 
sweet cherries and in proposed District 2, 45,500 tons. In addition, 
tons packed in each proposed district is close to equal. This 
distribution of counties among the two districts would provide for 
equal representation of handlers and growers from each district.

Committee Representation

    The proposed amendment to increase representation on the Committee 
by adding one additional handler member would improve representation on 
the Committee and allow the Committee to function more efficiently.
    Record evidence supports increasing the membership on the Committee 
by one handler member. The Washington sweet cherry industry is growing. 
Bearing acres and production are increasing and markets, including 
exports, are expanding. Although the Committee's recommendation to 
increase the number of Committee members by one initially related to 
the expansion of the production area, the record testimony revealed 
that the Committee would prefer to have an additional handler member 
even if the production area is not expanded.
    Increasing representation on the Committee would allow additional 
input in Committee decisions. Having equal handler representation for 
each district is reasonable considering that the volume handled is 
similar in each district, regardless if the production area is 
expanded. Costs of adding an additional member to the Committee would 
be minimal.
    In its deliberations, the Committee discussed alternatives to 
address appropriate representation and districting should the 
production area be expanded. One alternative was to divide the area 
into three districts and distribute membership proportionately across 
these districts. This alternative would have likely entailed increasing 
membership by more than one. The Committee was concerned that 
increasing the number of members by more than one would hinder the 
decision-making capability of the Committee. The Committee agreed that 
16 members was an appropriate number for the Committee to be most 
effective while adequately representing the expanded production area.

Late Payment and Interest Charges on Delinquent Assessments

    The proposed amendment to authorize the Committee, with AMS 
approval, to collect late payment and interest charges on delinquent 
assessments would encourage handlers to pay their assessments on time. 
Assessments not paid promptly add an undue burden on the Committee 
because the Committee has ongoing projects and programs funded by 
assessments that are functioning throughout the year. The addition of 
such a charge is consistent with standard business practices. No costs

[[Page 67596]]

would be associated for handlers who pay timely assessments.
    Late payment and interest charges for delinquent assessments would 
provide an incentive for handlers to pay on time. This would result in 
fewer funds needed by the Committee for collection activities. Also, 
the fees derived from late payment and interest charges would partially 
compensate the Committee for its collection efforts.

Container Marking Requirements

    The proposed amendment to authorize the Committee, with AMS 
approval, to establish container marking requirements would further 
expand and enhance the current container and pack requirements already 
being used. Uniform marking requirements would assist in avoiding 
confusion in the marketplace.
    Testimony indicated that no significant costs would be incurred if 
this authority were implemented because handlers already have the 
equipment to mark containers. Container markings are currently 
accomplished by handlers, on an individual basis. The benefits of this 
proposed amendment would be in the form of uniform marking requirements 
for Washington sweet cherries.

Combining Forms Required by Committee Nominees

    The proposed amendment to authorize Committee nominees to qualify 
as a member or alternate by filing a written acceptance of willingness 
to serve prior to the selection would allow the selection process to 
take place in a more timely fashion.
    The proposal would delete the requirement that the selected member/
alternate file a written acceptance after notification of selection and 
combine the acceptance letter with the background statement submitted 
prior to selection. The nominee would, in effect, be indicating 
willingness to serve on the Committee prior to being selected.
    Testimony indicated that there is no benefit in waiting for the 
nominee to sign the acceptance letter after being selected. No negative 
impacts are anticipated from implementing this proposal. However, the 
benefits are that the nominees are only required to sign and deliver 
one form. In addition, the Committee could obtain all pertinent 
information well ahead of the time for seating of the new Committee, 
thereby operating more efficiently.

Committee Tenure Requirements

    The proposed amendment to add tenure requirements for Committee 
members would allow more persons the opportunity to serve as members on 
the Committee. It would provide for more diverse membership, provide 
the Committee with new perspectives and ideas, and increase the number 
of individuals in the industry with Committee experience. It is 
anticipated that this proposed amendment would not increase costs to 
small businesses.

Continuance Referenda

    The proposed amendment to require that continuance referenda be 
conducted on a periodic basis to ascertain industry support for the 
order would allow growers the opportunity to vote on whether to 
continue the operation of the marketing order. Although this proposed 
amendment may generate minimal Committee costs to assist in conducting 
the referenda, there are no additional costs anticipated for small 
businesses.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1980 (44 U.S.C. 
35), the reporting and recordkeeping provisions that would be generated 
by the proposed amendments would be submitted to the Office of 
Management and Budget (OMB). Specifically, if the production area is 
expanded, the overall burden of completion of all Committee generated 
forms and reports could increase due to additional handlers being 
regulated, as well as additional growers in the regulated area. Current 
total burden hours are approximately 69 hours and only relate to 
referenda and nominations. Sixty eight of these hours relate to 
producer referenda. The other hour covers time spent by Committee 
members and alternates completing membership forms. Adding an 
additional 200 growers would increase the overall burden for referenda 
documentation by approximately one hour. Adding an additional handler 
member would increase the overall burden to complete nomination forms 
from 1.25 hours to 1.33 hours. The documentation required to implement 
the safeguard provisions for the four packing facilities in Oregon are 
yet to be established, but it is not anticipated that the overall 
burden would be dramatically increased. It is anticipated an 
application form would be developed for these packing operations. These 
provisions and any additional provisions modifying reporting and 
recordkeeping burdens that generate from these proposed amendments 
would not be effective until receiving OMB approval. Current 
information collection requirements for Part 923 are approved by OMB 
under OMB number 0581-0133. As with all Federal marketing order 
programs, reports and forms are periodically reviewed to reduce 
information requirements and duplication by industry and public sector 
agencies.
    The Department has not identified any relevant Federal rules that 
duplicate, overlap or conflict with this proposed rule. All of these 
amendments are designed to enhance the administration and functioning 
of the marketing order to the benefit of the industry.
    While the implementation of these requirements may impose some 
additional costs on handlers, the costs are minimal and uniform on all 
handlers. Some of these costs may be passed on to growers. However, 
these costs would be offset by the benefits derived by the operation of 
the marketing order. In addition, the meetings regarding these 
proposals as well as the hearing date were widely publicized throughout 
the Washington sweet cherry production area and proposed production 
area and all interested persons were invited to attend the meetings and 
the hearing and participate in Committee deliberations on all issues. 
All Committee meetings and the hearing were public forums and all 
entities, both large and small, were able to express views on these 
issues. The Committee itself is composed of 15 members, of whom five 
are handlers and ten are producers. 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 web site: 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 30-day comment period is provided to allow interested persons to 
respond to this proposal. Thirty days is deemed appropriate so that 
this rulemaking may be completed prior to the 2001 season which begins 
April 1, 2001. All written exceptions timely received will be 
considered and a grower referendum will be conducted before these 
proposals are implemented.

[[Page 67597]]

Civil Justice Reform

    The amendments proposed herein have been reviewed under Executive 
Order 12988, Civil Justice Reform. They are not intended to have 
retroactive effect. If adopted, the proposed amendments will not 
preempt any State or local laws, regulations, or policies, unless they 
present an irreconcilable conflict with the amendments.
    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.

General Findings

    The findings hereinafter set forth are supplementary to the 
findings and determinations which were previously made in connection 
with the issuance of the marketing agreement and order; and all said 
previous findings and determinations are hereby ratified and affirmed, 
except insofar as such findings and determinations may be in conflict 
with the findings and determinations set forth herein.
    (1) The marketing agreement and order, as hereby proposed to be 
amended, and all of the terms and conditions thereof, would tend to 
effectuate the declared policy of the Act;
    (2) The marketing agreement and order, as hereby proposed to be 
amended, regulate the handling of sweet cherries grown in the 
production area in the same manner as, and are applicable only to, 
persons in the respective classes of commercial and industrial activity 
specified in the marketing agreement and order upon which a hearing has 
been held;
    (3) The marketing agreement and order, as hereby proposed to be 
amended, are limited in their application to the smallest regional 
production area which is practicable, consistent with carrying out the 
declared policy of the Act, and the issuance of several orders 
applicable to subdivisions of the production area would not effectively 
carry out the declared policy of the Act; and
    (4) All handling of sweet cherries grown in the production area as 
defined in the marketing agreement and order, as hereby proposed to be 
amended, is in the current of interstate or foreign commerce or 
directly burdens, obstructs, or affects such commerce.

List of Subjects in 7 CFR Part 923

    Marketing agreements, Cherries, Reporting and recordkeeping 
requirements.

Recommended Amendment of the Marketing Agreement and Order

    For the reasons set out in the preamble, 7 CFR part 923 is proposed 
to be amended as follows:

PART 923--SWEET CHERRIES GROWN IN DESIGNATED COUNTIES IN WASHINGTON

    1. The authority citation for 7 CFR part 923 continues to read as 
follows:

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

    2. Revise Sec. 923.4 to read as follows:


Sec. 923.4  Production area.

    Production area means the counties of Okanogan, Chelan, Kittitas, 
Yakima, Klickitat in the State of Washington and all of the counties in 
Washington lying east thereof.
    3. Amend Sec. 923.14 by revising paragraphs (a) and (b) to read as 
follows:


Sec. 923.14  District.

* * * * *
    (a) District 1 shall include the Counties of Chelan, Okanogan, 
Douglas, Grant, Lincoln, Spokane, Pend Oreille, Stevens, and Ferry.
    (b) District 2 shall include the counties of Kittitas, Yakima, 
Klickitat, Benton, Adams, Franklin, Walla Walla, Whitman, Columbia, 
Garfield and Asotin.


Sec. 923.20  [Amended]

    4. Amend Sec. 923.20 as follows:
    a. In the first sentence remove the word ``fifteen'' and add the 
word ``sixteen'' in its place;
    b. In the third and fourth sentences remove the word ``five'' and 
add the word ``six'' in its place;
    c. In the fifth sentence, remove the words ``four'' and ``six'' and 
add the word ``five'' in their place; and
    d. In the sixth sentence, remove the word ``two'' and add the word 
``three'' in its place.
    5. Revise Sec. 923.21 to read as follows:


Sec. 923.21  Term of office.

    The term of office of each member and alternate member of the 
committee shall be for two years beginning April 1 and ending March 31. 
Members and alternate members shall serve in such capacities for the 
portion of the term of office for which they are selected and have 
qualified and until their respective successors are selected and have 
qualified. Committee members shall not serve more than three 
consecutive terms. Members who have served for three consecutive terms 
must leave the committee for at least one year before becoming eligible 
to serve again.
    6. Revise Sec. 923.25 to read as follows:


Sec. 923.25  Acceptance.

    Any person prior to selection as a member or an alternate member of 
the committee shall qualify by filing with the Secretary a written 
acceptance of willingness to serve on the committee.
    7. Amend Sec. 923.41 by adding a new paragraph (c) to read as 
follows:


Sec. 923.41  Assessments.

* * * * *
    (c) If a handler does not pay any assessment within the time 
prescribed by the committee, the assessment may be subject to an 
interest or late payment charge, or both, as may be established by the 
Secretary as recommended by the committee.


Sec. 923.52  [Amended]

    8. In Sec. 923.52, paragraph (a)(3) is amended by adding the word 
``markings,'' after the word ``dimensions,''.
    9. Amend Sec. 923.54 as follows
    a. Remove the words ``(including shipments to facilitate the 
conduct of marketing research and development projects established 
pursuant to Sec. 923.45),'' in paragraph (b) and add a new sentence at 
the end of the section; and
    b. Add a new sentence at the end of paragraph (c) to read as 
follows:


Sec. 923.54  Special purpose shipments.

* * * * *
    (b) * * * Specified purposes under this section may include 
shipments of cherries for grading or packing to specified locations 
outside the production area and shipments to facilitate the conduct of 
marketing research and development projects established pursuant to 
Sec. 923.45.
    (c) * * * The committee may rescind or deny to any packing facility 
the special purpose shipment certificate if proof satisfactory to the 
committee is obtained that cherries shipped for the purpose stated in 
this section were

[[Page 67598]]

handled contrary to the provisions of this section.
    10. Amend Sec. 923.64 by adding a new sentence at the beginning of 
paragraph (c) to read as follows:


Sec. 923.64  Termination.

* * * * *
    (c) The Secretary shall conduct a referendum six years after the 
effective date of this paragraph and every sixth year thereafter to 
ascertain whether continuance of this part is favored by growers. * * *
* * * * *

    Dated: November 2, 2000.
Kenneth C. Clayton,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 00-28660 Filed 11-8-00; 8:45 am]
BILLING CODE 3410-02-P