[Federal Register Volume 66, Number 132 (Tuesday, July 10, 2001)]
[Rules and Regulations]
[Pages 35889-35891]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-17126]



 ========================================================================
 Rules and Regulations
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains regulatory documents 
 having general applicability and legal effect, most of which are keyed 
 to and codified in the Code of Federal Regulations, which is published 
 under 50 titles pursuant to 44 U.S.C. 1510.
 
 The Code of Federal Regulations is sold by the Superintendent of Documents. 
 Prices of new books are listed in the first FEDERAL REGISTER issue of each 
 week.
 
 ========================================================================
 

  Federal Register / Vol. 66, No. 132 / Tuesday, July 10, 2001 / Rules 
and Regulations  

[[Page 35889]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Docket No. FV01-930-3 IFR]


Tart Cherries Grown in the States of Michigan, et al.; 
Modifications to the Rules and Regulations Under the Tart Cherry 
Marketing Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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

SUMMARY: This interim final rule increases the Cherry Industry 
Administrative Board (Board) membership, and establishes procedures 
under the rules and regulations of the Federal tart cherry marketing 
order (order) for handlers who want to post surety bonds to temporarily 
defer maintaining an inventory reserve for tart cherries. The Board 
recommended these actions to improve order administration, provide 
handlers more marketing flexibility, and change Board representation as 
required. The order regulates the handling of tart cherries grown in 
the States of Michigan, New York, Pennsylvania, Oregon, Utah, 
Washington, and Wisconsin and is administered locally by the Board.

DATES: Effective July 11, 2001; comments received by September 10, 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) 720-8938 or E-mail: 
[email protected]. All comments should reference the docket 
number and the date and page number of this issue of the Federal 
Register and will be made available for public inspection in the Office 
of the Docket Clerk during regular business hours.

FOR FURTHER INFORMATION CONTACT: Patricia A. Petrella or Kenneth G. 
Johnson, Marketing Order Administration Branch, F&V, AMS, USDA, Suite 
2A04, 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) 720-8938. 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) 720-8938, or E-mail: [email protected].

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing 
Agreement and Order No. 930 (7 CFR part 930) regulating the handling of 
tart cherries grown in the States of Michigan, New York, Pennsylvania, 
Oregon, Utah, Washington, and Wisconsin, hereinafter referred to as the 
``order.'' This order is effective under the Agricultural Marketing 
Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter 
referred to as the ``Act.''
    The Department of Agriculture (Department or USDA) is issuing this 
rule in conformance with Executive Order 12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to have retroactive effect. 
This rule will not preempt any State or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with the Secretary a 
petition stating that the order, any provision of the order, or any 
obligation imposed in connection with the order is not in accordance 
with law and request a modification of the order or to be exempted 
therefrom. A handler is afforded the opportunity for a hearing on the 
petition. After the hearing the Secretary would rule on the petition. 
The Act provides that the district court of the United States in any 
district in which the handler is an 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.
    This rule increases the Board's membership, and establishes 
procedures under the order's rules and regulations for handlers to post 
surety bonds to temporarily defer maintaining an inventory reserve for 
tart cherries.
    The Board recommended that its membership be increased by one 
member for District 8, the State of Washington. Currently, 
Sec. 930.20(e) provides that if Districts 5, 6, 8, or 9 become subject 
to volume regulation under Sec. 930.52(a), the Board shall be 
reestablished by the Secretary to provide such District(s) with at 
least one grower and one handler seat on the Board. At the September 8, 
2000, meeting it was determined that the State of Washington's annual 
average production of cherries over the prior three years has exceeded 
the 15 million pound threshold required for districts to become 
regulated. As such, if volume regulation is implemented for the 2001-
2002 crop year, handlers handling tart cherries grown in Washington 
will be subject to volume regulation. Therefore, the Board should be 
increased from 18 to 19 members which would allow two members instead 
of one to represent District 8--Washington. The new member and 
alternate would be nominated and selected in the same manner as other 
Board members and alternates. With the change for District 8, 
Washington, District representation on the Board will be as follows:

------------------------------------------------------------------------
                                                    Grower      Handler
                    District                        members     members
------------------------------------------------------------------------
1...............................................          2           2
2...............................................          1           2
3...............................................          1           1
4...............................................          1           1
5...............................................          1       or  1
6...............................................          1       or  1
7...............................................          1           1
8...............................................          1           1

[[Page 35890]]

 
9...............................................          1       or  1
------------------------------------------------------------------------

    The Board also recommended that procedures be established for 
handlers to post surety bonds to temporarily defer maintaining 
inventory reserves. Section 930.63 provides in part that handlers may, 
in order to comply with the requirements of Secs. 930.50 and 930.51 and 
regulations issued thereunder, secure bonds on restricted percentage 
cherries to temporarily defer the date that inventory reserve cherries 
must be held to any date requested by a handler as long as it is not 
later than 60 days prior to the end of the crop year. Pursuant to the 
Board's recommendation, handlers would be required to post surety bonds 
at two times the market value of the quantity of cherries for which the 
holding obligation is being deferred. For example, if the inventory 
reserve product to be marketed is tart cherry juice concentrate and the 
market value for the concentrate is $20,000, the handler has to post a 
surety bond of $40,000 in order to temporarily defer his/her inventory 
reserve obligation.
    The deferment would be conditioned on the execution and delivery by 
the handler to the Board of a written undertaking within 30 days after 
the Secretary announces the final restricted percentage under 
Sec. 930.51. The written undertaking (required to be secured by a bond 
or bonds with a surety or sureties acceptable to the Board) must 
guarantee that on or prior to the acceptable deferred date that handler 
will have fully satisfied the restricted percentage amount required by 
Sec. 930.51. If a handler fails to satisfy that obligation with 
cherries in reserve by the date requested by the handler, the bond will 
be forfeited to the Board. The Board will then buy cherries to fulfill 
the handler's obligation. Handlers not posting surety bonds to 
temporarily defer maintaining an inventory reserve shall keep inventory 
reserves in compliance with applicable order regulations.

The Regulatory Flexibility Act and Effects on Small Businesses

    The Agricultural Marketing Service (AMS) has considered the 
economic impact of this action on small entities and has prepared this 
initial regulatory flexibility analysis. The Regulatory Flexibility Act 
(RFA) would allow AMS to certify that regulations do not have a 
significant economic impact on a substantial number of small entities. 
However, as a matter of general policy, AMS' Fruit and Vegetable 
Programs (Programs) no longer opt for such certification, but rather 
perform regulatory flexibility analyses for any rulemaking that would 
generate the interest of a significant number of small entities. 
Performing such analyses shifts the Programs' efforts from determining 
whether regulatory flexibility analyses are required to the 
consideration of regulatory options and economic or regulatory impacts.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and rules thereunder, are unique in that they are 
brought about through group action of essentially small entities acting 
on their own behalf. Thus, both statutes have small entity orientation 
and compatibility.
    There are approximately 40 handlers of tart cherries who are 
subject to regulation under the order and approximately 900 producers 
of tart cherries in the regulated area. Small agricultural service 
firms, which include handlers, have been defined by the Small Business 
Administration (13 CFR 121.201) as those having annual receipts of less 
than $5,000,000, and small agricultural producers are defined as those 
having annual receipts of less than $500,000. The majority of handlers 
and producers are small entities.
    Board and subcommittee meetings are widely publicized in advance 
and are held in a location central to the production area. The meetings 
are open to all industry members (including small business entities) 
and other interested persons who are encouraged to participate in the 
deliberations and voice their opinions on topics under discussion. 
Thus, Board recommendations can be considered to represent the 
interests of small business entities in the industry.
    The principal demand for tart cherries is in the form of processed 
products. Tart cherries are dried, frozen, canned, juiced, and pureed. 
During the period 1995/96 through 1999/00, approximately 91 percent of 
the U.S. tart cherry crop, or 280.5 million pounds, was processed 
annually. Of the 280.5 million pounds of tart cherries processed, 62 
percent was frozen, 29 percent was canned, and 9 percent was utilized 
for juice.
    Based on National Agricultural Statistics Service data, acreage in 
the United States devoted to tart cherry production has been trending 
downward. In the ten-year period, 1987/88 through 1997/98, tart cherry 
area decreased from 50,050 acres, to less than 40,000 acres. In 1999/
00, approximately 90 percent of domestic tart cherry acreage is located 
in four States: Michigan, New York, Utah and Wisconsin.
    Michigan leads the nation in tart cherry acreage with 70 percent of 
the total. Michigan produces about 75 percent of the U.S. tart cherry 
crop each year. In 1999/00, tart cherry acreage in Michigan decreased 
to 28,100 from 28,400.
    The impact of this rule would be beneficial to growers and 
handlers. The recommendation to add another member and alternate is 
consistent with the order requirements and will provide greater 
participation on the Board by the industry. Adding procedures for 
handlers to temporarily defer their inventory reserve holding 
obligations through written undertakings secured by surety bonds is 
also consistent with order provisions and will provide handlers with 
flexibility in their day-to-day processing, packing, and marketing 
operations.
    One alternative to these actions would be to continue the status 
quo. However, the order requires a change in Board membership, 
following established nomination procedures, upon a district meeting 
the volume regulation threshold and becoming regulated. The order also 
provides handlers the authority to post surety bonds. Recommending 
procedures for handlers to implement this authority is another tool the 
Board hopes to use to facilitate the orderly marketing of tart 
cherries.
    As with all Federal marketing order programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public sectors. In addition, the Department 
has not identified any relevant Federal rules which duplicate, overlap, 
or conflict with this rule.
    In compliance with Office of Management and Budget (OMB) 
regulations (5 CFR part 1320) which implement the Paperwork Reduction 
Act of 1995 (44 U.S.C. Chapter 35), the information collection and 
recordkeeping requirements imposed by this action have been previously 
approved by OMB and assigned OMB Number 0581-0177. Handlers taking 
advantage of the bonding option would execute an application which 
would take about an hour to complete. The total burden hours approved, 
4,649 hours, will be adequate to cover this added burden.
    The Board's meetings were widely publicized throughout the tart 
cherry industry and all interested persons were

[[Page 35891]]

invited to attend them and participate in Board deliberations. Like all 
Board meetings, the September 2000 meeting was a public meeting and all 
entities, both large and small, were able to express their views on 
these issues. The Board itself is composed of 18 members, of which 17 
members are growers and handlers and one represents the public. Also, 
the Board has a number of appointed committees to review certain issues 
and make recommendations.
    Finally, interested persons are invited to submit information on 
the regulatory and informational impacts of these actions 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 increasing the Board membership and 
adding rules and regulations to implement the use of surety bonds to 
temporarily defer maintaining an inventory reserve for tart cherries. 
All comments received will be considered in finalizing this interim 
final rule.
    After consideration of all relevant material presented, including 
the Board's recommendation, and other information, it is found that 
this interim final rule, as hereinafter set forth, will tend to 
effectuate the declared policy of the Act.
    Pursuant to 5 U.S.C. 553, it is also found and determined upon good 
cause that it is impracticable, unnecessary, and contrary to the public 
interest to give preliminary notice prior to putting this rule into 
effect and that good cause exists for not postponing the effective date 
of this rule until 30 days after publication in the Federal Register 
because: (1) The increase in Board membership is required by the order 
and needs to be implemented on a timely basis; (2) the Board needs this 
rule to be in place this season so handlers can take advantage of the 
bonding option; (3) the Board recommended these changes at a public 
meeting and interested parties had an opportunity to provide input; and 
(4) this rule provides a 60-day comment period and any comments 
received will be considered prior to finalization of this rule.

List of Subjects in 7 CFR Part 930

    Marketing agreements, Reporting and recordkeeping requirements, 
Tart cherries.


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

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

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

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


    2. A new Sec. 930.120 is added to read as follows:


Sec. 930.120  Board membership.

    Pursuant to Sec. 930.20(e), membership of the Cherry Industry 
Administrative Board is increased from 18 to 19 members and alternates. 
There will be one grower and one handler member from District 8.

    3. A new Sec. 930.163 is added to read as follows:


Sec. 930.163  Deferment of restricted obligation.

    A handler may obtain a surety bond on restricted percentage 
cherries to be posted to temporarily defer the date that inventory 
reserves must be held. The surety bond must be posted at two times the 
market value of the quantity of cherries for which the holding 
obligation is being deferred. The Board can temporarily defer the date 
inventory reserve cherries must be held to any date requested by the 
handler. However, this date shall not be later than 60 days prior to 
the end of the crop year. The deferment shall be conditioned on the 
execution and delivery by the handler to the Board of a written 
undertaking within 30 days after the Secretary announces the final 
restricted percentage under Sec. 930.51. The written undertaking 
(required to be secured by a bond or bonds with a surety or sureties 
acceptable to the Board) must guarantee that on or prior to the 
deferment date requested by the handler the handler will have fully 
satisfied the restricted percentage obligation. On or prior to the 
deferment date requested by the handler, the handler will have to fully 
satisfy the restricted percentage obligation. In the event, a handler 
has posted the surety bond, reached the deferment date deadline and 
does not have cherries in the inventory reserve to cover his/her 
inventory reserve obligation, the bond will be forfeited to the Board. 
The Board will then buy cherries to fulfill that handler's obligation.

    Dated: July 3, 2001.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 01-17126 Filed 7-9-01; 8:45 am]
BILLING CODE 3410-02-P