[Federal Register Volume 66, Number 2 (Wednesday, January 3, 2001)]
[Rules and Regulations]
[Pages 229-232]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-96]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Docket No. FV00-930-6 IFR]


Tart Cherries Grown in the States of Michigan, et al.; Suspension 
of Provisions under the Federal Marketing Order for Tart Cherries

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule suspends indefinitely a portion of an order 
provision concerning the release of reserve cherries. The suspension 
will allow cherries held in inventory reserves to be released for 
exempt uses such as exports. The Cherry Industry Administrative Board 
(Board) recommended this action to allow reserve cherries to be used in 
outlets

[[Page 230]]

other than normal commercial outlets. The Board is responsible for 
local administration of the marketing order which regulates the 
handling of tart cherries grown in the production area.

DATES: Effective January 4, 2001. Comments received by March 5, 2001, 
will be considered prior to issuance of a final rule.

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

FOR FURTHER INFORMATION CONTACT: Patricia A. Petrella or Kenneth G. 
Johnson, Marketing Order Administration Branch, Fruit and Vegetable 
Programs, AMS, USDA, Suite 2AO4, Unit 155, 4700 River Road, Riverdale, 
Maryland 20737, telephone: (301) 734-5243, Fax: (301) 734-5275 or 
George Kelhart, Technical Advisor, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 
96456, Washington, DC 20090-6456; telephone: (202) 720-2491, Fax: (202) 
720-5698.
    Small businesses may request information on compliance with this 
regulation, or obtain a guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders by contacting Jay 
Guerber, Marketing Order Administration Branch, Fruit and Vegetable 
Programs, AMS, USDA, P.O. Box 96456, room 2525-S, Washington, DC 20090-
6456; telephone (202) 720-2491; Fax: (202) 720-5698, or E-mail: 
[email protected].

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing 
Agreement and Order No. 930, both as amended (7 CFR part 930), 
regulating the handling of tart cherries grown in the States of 
Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and 
Wisconsin, hereinafter referred to as the ``order.'' The marketing 
agreement and order are effective under the Agricultural Marketing 
Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter 
referred to as the ``Act.''
    The Department of Agriculture (Department) is issuing this rule in 
conformance with Executive Order 12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to have retroactive effect. 
This rule will not preempt any State or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with the Secretary a 
petition stating that the order, any provision of the order, or any 
obligation imposed in connection with the order is not in accordance 
with law and request a modification of the order or to be exempted 
therefrom. Such handler is afforded the opportunity for a hearing on 
the petition. After the hearing the Secretary would rule on the 
petition. The Act provides that the district court of the United States 
in any district in which the handler is an inhabitant, or has his or 
her principal place of business, has jurisdiction to review the 
Secretary's ruling on the petition, provided an action is filed not 
later than 20 days after the date of the entry of the ruling.
    The order authorizes the use of volume regulation. In years when 
volume regulation is implemented to stabilize supplies, a certain 
percentage of the cherry crop is required to be set aside as restricted 
tonnage, and the balance may be marketed freely as free tonnage. The 
restricted tonnage is required to be maintained in handler-owned 
inventory reserve pools. Handlers in volume regulated States may 
fulfill their restricted tonnage requirements with diversion credits 
earned by diverting cherries or cherry products. Handlers are permitted 
to divert (at plant or with grower-diversion certificates from growers 
choosing not to deliver their crop) as much of their restricted 
percentage (reserve pool) requirements as they deem appropriate. 
Handlers also may divert cherries by using cherries or cherry products 
for exempt purposes, including the development of export markets. 
Presently, these markets do not include Canada and Mexico.
    Section 930.62 of the order (Exemptions) provides that cherries 
which are diverted in accordance with Sec. 930.59, which are used for 
new product and new market development, which are used for experimental 
purposes, or which are used for any other purposes designated by the 
Board, including cherries processed into products for markets for which 
less than 5 percent of the preceding 5-year average production of 
cherries was utilized, may be exempted from the assessment, quality 
control, volume regulation, and reserve provisions of the order.
    Handlers can receive exemptions and diversion credits to offset 
their restricted percentage obligation during years of volume 
regulation. One of the exempt uses is the export of cherries to markets 
other than Canada and Mexico. Cherries used for exempt uses, including 
export, are exempt from assessments, and handlers pay growers less for 
such cherries than cherries for normal commercial outlets. This lowers 
handlers' costs and allows them to price export cherries competitively.
    The Board held a teleconference meeting on June 1, 2000, and 
recommended that the word ``normal'' be suspended from Sec. 930.54(a) 
of the order. Currently, that section of the order provides that if the 
Board determines that the total available supplies for use in normal 
commercial outlets do not at least equal the amount needed to meet the 
demand in such outlets, the Board shall recommend to the Secretary that 
all or a portion of the reserve be released for such uses. Normal 
commercial outlets, as that term is used in the order, means the 
primary market which is mainly the domestic market for tart cherries. 
Therefore, under Sec. 930.54(a), reserve release could not be used to 
fulfill exempt needs.
    During the 1999-2000 crop year when no volume regulation was 
established, the Board found that the export market was not adequately 
supplied due to short supplies of tart cherries, but could not make 
reserve cherries from the previous season available to meet export 
needs because export markets were not considered normal commercial 
outlets. Because of this limitation, the industry was not able to 
maintain a presence in many export markets, or further develop others. 
Export sales are a function of many different factors, including the 
size of the crop in Europe, the size of the U.S. crop, and the strength 
of the U.S. dollar.
    Exports need to be sustained each year, whether or not volume 
control is implemented. It is important for buyers of tart cherries to 
know that product will be available from year to year from sources in 
the United States. The Board believes that failure to properly supply 
these markets will result in lost market share. In years with no volume 
regulation, growers and handlers have little economic incentive to move 
tart cherries or tart cherry products to the lower return markets, like 
export. In such years, growers seek to maximize profits by selling in 
the higher return ``free'' domestic market. Consequently,

[[Page 231]]

market opportunities are lost in the short term and quite possibly the 
long term. Development of export markets is important to the long term 
viability of the tart cherry industry.
    This rule suspends indefinitely a portion of Sec. 930.54 of the 
order to allow the release of reserve cherries for exempt uses such as 
exports. This will encourage handlers to purchase additional cherries 
from growers at lower prices in years of volume regulation for 
placement in the reserve during harvest for future export use, rather 
than having the grower divert them in the orchard. Thus, additional 
lower-priced cherries would be available in a year of no regulation to 
continuously supply the export market. This will enable the industry to 
maintain market share in these markets in volume and non-volume 
regulated seasons, which is important in developing and maintaining 
these markets.
    In non-volume regulated years, when expected supplies and primary 
market needs are closely aligned, lower-priced supplies are not 
available for export. This action will provide the industry with a 
means of maintaining exports by allowing lower-priced reserves from a 
previous season or seasons to be used for this purpose.

The Regulatory Flexibility Act and Effects on Small Businesses

    The Agricultural Marketing Service (AMS) has considered the 
economic impact of this action on small entities and has prepared this 
initial regulatory flexibility analysis. The Regulatory Flexibility Act 
(RFA) would allow AMS to certify that regulations do not have a 
significant economic impact on a substantial number of small entities. 
However, as a matter of general policy, AMS' Fruit and Vegetable 
Programs (Programs) no longer opt for such certification, but rather 
performs regulatory flexibility analyses for any rulemaking that would 
generate the interest of a significant number of small entities. 
Performing such analyses shifts the Programs' efforts from determining 
whether regulatory flexibility analyses are required to the 
consideration of regulatory options and economic or regulatory impacts.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and rules thereunder, are unique in that they are 
brought about through group action of essentially small entities acting 
on their own behalf. Thus, both statutes have small entity orientation 
and compatibility.
    There are approximately 900 producers of tart cherries in the 
production area and approximately 40 handlers subject to regulation 
under the marketing order. Small agricultural producers have been 
defined by the Small Business Administration (13 CFR 121.201) as those 
having annual receipts less than $500,000, and small agricultural 
service firms are defined as those whose annual receipts are less than 
$5,000,000. The majority of tart cherry producers and handlers may be 
classified as small entities.
    Data from the National Agricultural Statistics Service (NASS) 
states that for 1999, tart cherry utilization for juice, wine, or 
brined uses was 34.5 million pounds for all districts covered under the 
order. The total processed amount for 1999 was 252.3 million pounds. 
Juice, wine, and brined tart cherries represented about 14 percent of 
the total processed crop, and about 10 percent over the last three 
seasons (1997 through 1999).
    This rule will allow markets that have been developed and sustained 
by the use of the exemption and diversion provisions of the order in 
years of volume regulation to be sustained in years with no volume 
regulation. In the long run, market growth for tart cherry products 
will be increased, grower returns will be improved, and less fruit will 
be abandoned in the orchard by growers. Handlers will have an incentive 
to put cherries in the reserve to supply the export market in years of 
no regulation, and therefore, not as many growers will have to in-
orchard divert.
    All businesses, whether large or small, will benefit from this 
suspension action through increased sales during years of no regulation 
because they will be able to continue to supply the export markets. In 
years of volume regulation, handlers tend to put more cherries in 
reserve instead of diverting them because they expect to use those 
cherries during periods of short supply to assure a continuous supply 
of cherries. Currently, those cherries can only be released for normal 
commercial outlets; i.e., the domestic market. This action will allow 
the reserve cherries to be released for export, as well as the domestic 
market, when needed.
    During the 1999-2000 crop year, when no volume regulation was 
established, the Board found that the export market was not adequately 
supplied, but could not make lower-valued reserve cherries from the 
previous season available to meet export needs because export markets 
were not considered normal commercial outlets. Export sales are a 
function of many different factors, including the size of the crop in 
Europe, the size of the U.S. crop and the strength of the U.S. dollar.
    The industry recognizes, however, that exports need to be sustained 
each year, whether or not volume control is implemented. It is 
important for buyers of tart cherries to know that product will be 
available from year to year from sources in the United States. The 
Board believes that failure to properly supply these markets from year 
to year will result in lost market share, which is not conducive to 
further strengthening the industry.
    This rule suspends indefinitely a portion of Sec. 930.54 of the 
order to allow the release of reserve cherries for exempt uses such as 
exports. This will provide the industry with flexibility to meet market 
needs in domestic and export outlets from year to year which is in the 
interest of growers and handlers, whether small or large. Market 
development and expansion is important to the long-term strength of the 
industry.
    One alternative to this action would be to continue the status quo. 
However, this would not be favorable to cherry growers and handlers and 
could delay the long-term development of export markets.
    This action imposes no additional reporting or recordkeeping 
requirements on either small or large tart cherry handlers. As with all 
Federal marketing order programs, reports and forms are periodically 
reviewed to reduce information requirements and duplication by industry 
and public sector agencies. In addition, the Department has not 
identified any relevant Federal rules that duplicate, overlap, or 
conflict with this rule.
    In compliance with Office of Management and Budget (OMB) 
regulations (5 CFR Part 1320) which implement the Paperwork Reduction 
Act of 1995 (44 U.S.C. Chapter 35), the information collection and 
recordkeeping requirements imposed by this order have been previously 
approved by OMB and assigned OMB Number 0581-0177.
    The Board's telephone meeting was publicized and all Board members 
and alternate Board members, representing both large and small 
entities, were invited to attend the meeting and participate in Board 
deliberations. The Board itself is composed of 18 members, of which 17 
members are growers and handlers and one represents the public. Also, 
the Board has a number of appointed committees to review certain issues 
and make recommendations.

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    Finally, interested persons are invited to submit information on 
the regulatory and informational impacts of this action on small 
businesses.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at the 
following website: http://www.ams.usda.gov/fv/moab.html. Any questions 
about the compliance guide should be sent to Jay Guerber at the 
previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    This rule invites comments on suspending the word ``normal'' in 
Sec. 930.54(a) to allow the release of inventory reserve cherries into 
exempt use outlets such as exports. All comments received will be 
considered in finalizing this interim final rule.
    After consideration of all relevant material presented, including 
the information and recommendation submitted by the Board and other 
available information, it is hereby found that the word ``normal'' in 
Sec. 930.54(a) no longer tends to effectuate the declared policy of the 
Act and should be indefinitely suspended.
    Pursuant to 5 U.S.C. 553, it is also found and determined upon good 
cause that it is impracticable, unnecessary, and contrary to the public 
interest to give preliminary notice prior to putting this rule into 
effect, and that good cause exists for not postponing the effective 
date of this rule until 30 days after publication in the Federal 
Register because: (1) The 2000-2001 fiscal period began July 1, 2000, 
and this rule needs to be effective as soon as possible in order to 
allow the industry to take advantage of the expanded inventory release; 
and (2) this interim final rule provides a 60-day comment period, and 
all comments timely received will be considered prior to finalization 
of this rule.

List of Subjects in 7 CFR Part 930

    Marketing agreements, Reporting and recordkeeping requirements, 
Tart cherries.

    For the reasons set forth in the preamble, 7 CFR part 930 is 
amended as follows:

PART 930--TART CHERRIES GROWN IN THE STATES OF MICHIGAN, NEW YORK, 
PENNSYLVANIA, OREGON, UTAH, WASHINGTON, AND WISCONSIN

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

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


930.54  [Suspended in part]

    2. In Sec. 930.54(a), the word ``normal'' is suspended 
indefinitely.

    Dated: December 27, 2000.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 01-96 Filed 1-2-01; 8:45 am]
BILLING CODE 3410-02-P