[Federal Register Volume 66, Number 44 (Tuesday, March 6, 2001)]
[Proposed Rules]
[Pages 13447-13454]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-5418]


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

  Federal Register / Vol. 66, No. 44 / Tuesday, March 6, 2001 / 
Proposed Rules  

[[Page 13447]]



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; 
Secretary's Decision and Referendum Order on Proposed Amendment of 
Marketing Agreement No. 134 and Marketing Order No. 923

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule and referendum order.

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

SUMMARY: This decision proposes amendments to the marketing agreement 
and order (order) for sweet cherries and provides growers with the 
opportunity to vote in a referendum to determine if they favor the 
proposed amendments. The proposed amendments were submitted by the 
Washington Cherry Marketing Committee (Committee), which is responsible 
for local administration of the order. The proposed amendments 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 establishing of tenure requirements for Committee 
members and requiring that continuance referenda be conducted every 6 
years. These proposals are intended to improve the operation and 
functioning of the Washington sweet cherry marketing order program.

DATES: The referendum shall be conducted from April 10, 2001, through 
April 27, 2001. The representative period for the purpose of the 
referendum is April 1, 1999, through March 31, 2000.

FOR FURTHER INFORMATION CONTACT: Teresa Hutchinson, Marketing 
Specialist, Marketing Order Administration Branch, Fruit and Vegetable 
Programs, AMS, USDA, Northwest Marketing Field Office, 1220 SW. Third 
Avenue, room 369, Portland, Oregon 97204; telephone (503) 326-2724 or 
Fax (503) 326-7440; or Kathleen M. Finn, Marketing Specialist, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, room 2525-S, Washington, DC 20250-0200; telephone: (202) 
720-2491, or Fax: (202) 720-8363.
    Small businesses may request information on compliance with this 
regulation by contacting Jay Guerber, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, P.O. Box 96456, room 
2525-S, Washington, DC 20090-6456; telephone (202) 720-2491; Fax (202) 
720-8353.

SUPPLEMENTARY INFORMATION: Prior documents 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). Recommended Decision 
and Opportunity to File Written Exceptions issued on November 2, 2000, 
and published in the Federal Register on November 9, 2000 (65 FR 
67584).
    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 Secretary's Decision and Referendum 
Order?

    The Committee, which is responsible for local administration of the 
marketing order, recommended amending the current order. A hearing was 
held on the 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 6 years to ascertain 
industry support for the order.
    Upon the basis of evidence introduced at the hearing and the record 
thereof, the Administrator of the Agricultural Marketing Service (AMS) 
on November 2, 2000, filed with the Hearing Clerk, U.S. Department of 
Agriculture, a Recommended Decision and Opportunity to File Written 
Exceptions thereto by December 11, 2000. No exceptions were filed.

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

[[Page 13448]]

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 
would have to meet these requirements as well.

Who Is Eligible To Vote in The Referendum?

    To be eligible to vote in the referendum, growers must currently be 
producers and they must have produced sweet cherries in the production 
area during the period April 1, 1999, through March 31, 2000. The 
amendments to the order will become effective only if approved by at 
least two-thirds of those growers voting in the referendum, or by 
growers producing at least two-thirds of the volume of sweet cherries 
represented in the referendum.

When Will the Referendum Be Held?

    A producer referendum will be conducted from February 14, 2001, 
through February 28, 2001, among all affected producers. The referendum 
will be conducted by mail ballot, and producers can vote on each of the 
seven proposed amendments.

Preliminary Statement

    The proposed amendments were formulated on the record of a public 
hearing held in Yakima, Washington on November 16, 1999. The hearing 
was held to consider the proposed amendment of Marketing Agreement No. 
134 and Marketing Order No. 923, regulating the handling of sweet 
cherries grown in designated counties of Washington, hereinafter 
referred to as the ``order.'' The hearing was held 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 proceedings to 
formulate marketing agreements and marketing orders (7 CFR part 900). 
The Notice of Hearing contained amendment proposals submitted by the 
Committee and the U.S. Department of Agriculture.
    The Committee proposed 5 amendments: (1) 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, to facilitate the movement of cherries to packing 
facilities outside the production area; (2) increase representation on 
the Committee by adding one additional handler member; (3) authorize 
the Committee, with USDA approval, to collect late payment and interest 
charges on delinquent assessments; (4) authorize the Committee, with 
USDA approval, to establish container marking requirements; and (5) 
authorize Committee nominees to qualify as a member or alternate by 
filing a written acceptance of willingness to serve prior to the 
selection.
    Also, the Fruit and Vegetable Programs of the Agricultural 
Marketing Service (AMS), U.S. Department of Agriculture, proposed three 
amendments: (1) Establish a limit on the number of consecutive terms a 
person may serve as a member of the Committee; (2) require that 
continuance referenda be conducted every 6 years to ascertain grower 
support for the order; and (3) adopt such changes as may be necessary 
to the order, if any of the above amendments are adopted, so that all 
of its provisions conform with those amendments. No conforming changes 
have been deemed necessary.
    Upon the basis of evidence introduced at the hearing and the record 
thereof, the Administrator of the Agricultural Marketing Service (AMS) 
on November 2, 2000, filed with the Hearing Clerk, U.S. Department of 
Agriculture, a Recommended Decision and Opportunity to File Written 
Exceptions thereto by December 11, 2000. None were received.

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, the AMS has prepared this 
final 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

[[Page 13449]]

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.
    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

[[Page 13450]]

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 
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

[[Page 13451]]

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 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 
decisionmaking 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.

[[Page 13452]]

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 
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 1995 (44 U.S.C. 
Chapter 35), the reporting and recordkeeping provisions that would be 
generated by the proposed amendments have been 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 and handlers signing of marketing agreements. The 
other hour covers time spent by Committee members and alternates 
completing membership forms. Adding the additional growers and handlers 
from the expanded production area would increase the overall burden for 
referenda documentation by approximately 22 hours. 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 0581-0189. 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 were 
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.

[[Page 13453]]

Any questions about the compliance guide should be sent to Jay Guerber 
at the previously mentioned address in the FOR FURTHER INFORMATION 
CONTACT section.

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 would 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.

Findings and Conclusions

    The material issues, findings and conclusions, rulings, and general 
findings and determinations included in the Recommended Decision set 
forth in the November 9, 2000, issue of the Federal Register (65 FR 
67584) are hereby approved and adopted.

Marketing Agreement and Order

    Annexed hereto and made a part hereof is the document entitled 
``Order Amending the Order Regulating the Handling of Sweet Cherries 
Grown in designated counties of Washington.'' This document has been 
decided upon as the detailed and appropriate means of effectuating the 
foregoing findings and conclusions.
    It is hereby ordered, That this entire decision be published in the 
Federal Register.

Referendum Order

    It is hereby directed that a referendum be conducted in accordance 
with the procedure for the conduct of referenda (7 CFR part 900.400 et 
seq.) to determine whether the issuance of the annexed order amending 
the order regulating the handling of sweet cherries grown in designated 
counties in Washington is approved or favored by growers, as defined 
under the terms of the order, who during the representative period were 
engaged in the production of sweet cherries in the production area.
    The representative period for the conduct of such referendum is 
hereby determined to be April 1, 1999, through March 31, 2000.
    The agents of the Secretary to conduct such referendum are hereby 
designated to be Gary Olson and Teresa Hutchinson, Northwest Marketing 
Field Office, Marketing Order Administration Branch, Fruit and 
Vegetable Programs, AMS, USDA, 1220 SW. Third Avenue, room 369, 
Portland, Oregon 97204; telephone (503) 326-2724.

List of Subjects in 7 CFR Part 923

    Cherries, Marketing agreements, Reporting and recordkeeping 
requirements.

    Dated: March 1, 2001.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.

Order Amending the Order Regulating the Handling of Sweet Cherries 
Grown in designated counties in Washington \1\
---------------------------------------------------------------------------

    \1\ This order shall not become effective unless and until the 
requirements of Sec. 900.14 of the rules of practice and procedure 
governing proceedings to formulate marketing agreements and 
marketing orders have been met.
---------------------------------------------------------------------------

Findings and Determinations

    The findings and determinations hereinafter set forth are 
supplementary and in addition to the findings and determinations 
previously made in connection with the issuance of the order; and all 
of 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.
(a) Findings and Determinations Upon the Basis of the Hearing Record
    Pursuant to the provisions of the Agricultural Marketing Agreement 
Act of 1937, as amended (7 U.S.C. 601 et seq.), and the applicable 
rules of practice and procedure effective thereunder (7 CFR part 900), 
a public hearing was held upon the proposed amendments to the Marketing 
Agreement and Order No. 923 (7 CFR part 923), regulating the handling 
of sweet cherries grown in designated counties in Washington.
    Upon the basis of the evidence introduced at such hearing and the 
record thereof, it is found that:
    (1) The marketing agreement and order, as hereby proposed to be 
amended, and all of the terms and conditions thereof, will 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 is applicable only to 
persons in the respective classes of commercial and industrial activity 
specified in the marketing order upon which hearings have been held;
    (3) The marketing agreement and order, as hereby proposed to be 
amended, are limited in 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) The marketing agreement and order, as hereby proposed to be 
amended, prescribe, insofar as practicable, such different terms 
applicable to different parts of the production area as are necessary 
to give due recognition to the differences in the production and 
marketing of sweet cherries grown in the production area; and
    (5) All handling of sweet cherries grown in the production area is 
in the current of interstate or foreign commerce or directly burdens, 
obstructs, or affects such commerce.

Order Relative to Handling

    It is therefore ordered, That on and after the effective date 
hereof, all handling of sweet cherries grown in designated counties in 
Washington, shall be in conformity to, and in compliance with, the 
terms and conditions of the said order as hereby proposed to be amended 
as follows:
    The provisions of the proposed marketing agreement and the order 
amending the order contained in the Recommended Decision issued by the 
Administrator on November 2, 1999, and published in the Federal 
Register on November 9, 1999, shall be and are the terms and provisions 
of this order amending the order and are set forth in full herein.

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

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


[[Page 13454]]


    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. Revise 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
    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 paragraph; and 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 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. * * *
* * * * *
[FR Doc. 01-5418 Filed 3-5-01; 8:45 am]
BILLING CODE 3410-02-P