[Federal Register Volume 66, Number 83 (Monday, April 30, 2001)]
[Rules and Regulations]
[Pages 21271-21273]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-10661]



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 Rules and Regulations
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  Federal Register / Vol. 66, No. 83 / Monday, April 30, 2001 / 
Rules and Regulations  

[[Page 21271]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Docket No. FV00-930-6 FIR]


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: Final rule.

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SUMMARY: The Department of Agriculture (Department) is 
adopting, as a final rule, without change, the provisions of an interim 
final rule suspending indefinitely a portion of an order provision 
concerning the release of reserve cherries. The suspension continues to 
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 
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.

EFFECTIVE DATE: May 30, 2001.

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. That section of the order

[[Page 21272]]

provided that if the Board determined that the total available supplies 
for use in normal commercial outlets did not at least equal the amount 
needed to meet the demand in such outlets, the Board should 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 have been 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, 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 continues to suspend 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 
final regulatory flexibility analysis. The Regulatory Flexibility Act 
(RFA) allows 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 continues an interim final rule which allows 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. Previously, those cherries could only be released for 
normal commercial outlets; i.e., the domestic market. This action 
allows 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 continues to suspend indefinitely a portion of 
Sec. 930.54 of the order to allow the release of reserve

[[Page 21273]]

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.
    Finally, interested persons were invited to submit information on 
the regulatory and informational impacts of this action on small 
businesses.
    An interim final rule concerning this action was published in the 
Federal Register on January 3, 2001 (66 FR 229). Copies of the 
rule were mailed by the Board's staff to all Board members and 
handlers. In addition, this rule was made available through the 
Internet by the Office of the Federal Register. That rule provided for 
a 60-day comment period which ended March 5, 2001. No comments were 
received.
    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.
    After consideration of all relevant material presented, including 
the Board's recommendation, and other information, it is 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. 
Accordingly, this action finalizes the interim final rule, without 
change, as published in the Federal Register will tend to 
effectuate the declared policy of the Act.

List of Subjects in 7 CFR Part 930

    Marketing agreements, Reporting and recordkeeping requirements, 
Tart cherries.

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

    Accordingly, the interim final rule amending 7 CFR part 930 which 
was published at 66 FR 229 on January 3, 2001, is adopted as a final 
rule without change.

    Dated: April 24, 2001.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 01-10661 Filed 4-27-01; 8:45 am]
BILLING CODE 3410-02-P