[Federal Register Volume 68, Number 144 (Monday, July 28, 2003)]
[Proposed Rules]
[Pages 44244-44252]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-19127]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 991

[Docket No. AO-F&V-991-A3 FV03-991-01]


Hops Produced in Washington, Oregon, Idaho and California; 
Hearing on Proposed Marketing Agreement and Order No. 991

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Notice of Public Hearing on Proposed Marketing Agreement and 
Order.

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SUMMARY: Notice is hereby given of a public hearing to consider a 
proposed marketing agreement and order under the Agricultural Marketing 
Agreement Act of 1937 to cover hops grown in Washington, Oregon, Idaho 
and California. The proposal was submitted by the Hop Marketing Order 
Proponent Committee (committee), a group of industry members who 
support a marketing order for hops. The proposed order would authorize 
volume control measures in the form of producer allotments to regulate 
the marketing of alpha acid in hops in the production area. Alpha acid 
is a bittering agent used in brewing that is the primary marketable 
component of hops. The proposed order would also allow for reserve 
pooling of excess production of alpha acid and would provide for 
production research, marketing research and development projects to 
promote the marketing, distribution and consumption or efficient 
production of hops. The program would be financed by assessments on hop 
handlers and would be administered by a committee of growers nominated 
by the industry and appointed by the Department of Agriculture (USDA).

DATES: The hearing will be held on August 14 and 15 in The Dalles, 
Oregon, on August 16 and 18 in Hood River, Oregon and continue, if 
necessary, on August 19, 20, 21 and 22 in Hood River, Oregon. The 
hearing will begin each day at 8:30 a.m. and end at 5 p.m.

ADDRESSES: The hearing locations are: August 14 and 15, 2003, Shilo 
Inn, 3223 Bret Clodfelter Way, The Dalles, Oregon 97058; August 16 and 
18 (and August 19 through 22, if necessary) Best Western Hood River 
Inn, 1108 East Marina Way, Hood River, Oregon 97031.

FOR FURTHER INFORMATION CONTACT: Barry Broadbent, 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 Order Administration Branch, Fruit 
and Vegetable Programs, AMS, USDA, 1400 Independence Avenue SW., Stop 
0237, Washington, DC 20250-0237; telephone: (202) 720-2491, fax: (202) 
720-8938. Small businesses may request information on this proceeding 
by contacting Jay Guerber, Marketing Order Administration Branch, Fruit 
and Vegetable Programs, AMS, USDA, 1400 Independence Avenue SW., Stop 
0237, Washington, DC 20250-0237; telephone: (202) 720-2491, fax: (202) 
720-8938.

SUPPLEMENTARY INFORMATION: This administrative action is instituted 
pursuant to the Agricultural Marketing Agreement Act of 1937, as 
amended (7 U.S.C. 601-674), hereinafter referred to as the ``Act.'' 
This 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.
    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) seeks to 
ensure that within the statutory authority of a program, the regulatory 
and informational requirements are tailored to the size and nature of 
small businesses. Interested persons are invited to present evidence at 
the hearing on the possible regulatory and informational impacts of the 
proposal on small businesses.
    The marketing agreement and order proposed herein have been 
reviewed under Executive Order 12988, Civil Justice Reform. They are 
not intended to have retroactive effect. If issued, the proposed 
agreement and order would 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. 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 hearing is called pursuant to the provisions of the Act and the 
applicable rules of practice and procedure governing the formulation of 
marketing agreements and orders (7 CFR part 900).
    This proposal is the result of more than two years of efforts 
undertaken by the committee. The committee was established as a result 
of renewed industry interest in a Federal marketing order. According to 
the committee, meetings for discussion of a hop marketing order 
involved all segments of the industry with varying views on 
establishment of an order and included growers, handlers, dealers and 
end users. In addition, meetings were held in each area of the 
production area to provide opportunities for all hop growers and other 
interested parties to provide input.
    According to the committee, the hop industry is suffering from a 
chronic oversupply situation that is depressing prices to below 
economically viable levels. Technological advances have increased the 
efficiency of both the production of alpha acid from hops and the 
utilization of the alpha acid in brewing. Consequently, less hop 
acreage is needed to adequately supply the market and excess alpha 
inventories have resulted. Industry reductions in acreage have not kept 
pace with the declining demand for alpha acid. The proponent group 
contends that the proposed marketing order program would bring 
stability to the U.S. hop industry by balancing supplies with market 
needs, which would enhance producer returns.
    There have been three previous marketing orders for hops. The most 
recent was for hop growers in the Northwest which was in effect from 
July 1966 to December 1985. The principal feature of that order was a 
producer allotment form of volume control. There was considerable 
controversy involved in the order during the 1980's, which included 
concerns over the grower base used in calculating the volume 
regulations. The base was limited to

[[Page 44245]]

industry production levels prior to establishment of the order and 
effectively restricted new growers from entering the industry. USDA 
terminated the order in 1985. According to the proponent committee, 
this proposal is different from the previous order as provisions have 
been included that allow for new base allotments in each year of 
expanding demand to both existing and new growers.
    The proposal submitted by the committee has not received approval 
by USDA.
    To assist in its review of the proposal, USDA issued a press 
release seeking comments from interested parties on the proposed order. 
Over 75 comments were received expressing a variety of views. There 
were no specific additional proposals or modifications to the 
committee's proposals submitted.
    USDA was concerned that the methodology for establishing initial 
base quantities set forth in the proposal was inconsistent with the 
statutory requirement that the salable quantity be allocated equitably 
among all growers. USDA issued a press release requesting alternatives 
to the proposal before proceeding to hearing. The proponents submitted 
a modification to their proposal addressing USDA concerns. An 
alternative to the establishment of initial base quantities, as well as 
other alternatives to the proposal, were submitted by Lenseigne Farms, 
Inc. The alternatives submitted are being included in this notice. 
Eight other comments were received during the period for receiving 
alternatives. However, these comments did not set forth alternatives.
    After reviewing the modified proposed program and all comments and 
alternatives received from the public, USDA has determined that the 
proposed marketing agreement and order potentially meets the objectives 
of the Act and has scheduled a public hearing.
    Testimony is invited at the hearing on the proposed marketing 
agreement and order (hereinafter referred to as the order) and all of 
its provisions, as well as any appropriate modifications or 
alternatives.
    The public hearing is held for the purpose of:
    (a) Receiving evidence about the economic and marketing conditions 
that relate to the proposed order and to appropriate modifications 
thereof;
    (b) Determining whether the handling of hops produced in the 
production area is in the current of interstate or foreign commerce or 
directly burdens, obstructs, or affects such commerce;
    (c) Determining whether there is a need for a marketing order for 
hops;
    (d) Determining the economic impact of the proposed order on the 
industry in the proposed production area and on the public affected by 
such program; and
    (e) Determining whether the proposed order or any appropriate 
modification thereof would tend to effectuate the declared policy of 
the Act.
    All persons wishing to submit written material as evidence at the 
hearing should be prepared to submit four copies of such material at 
the hearing and should have prepared testimony available for 
presentation at the hearing.
    From the time the notice of hearing is issued and until the 
issuance of a final decision in this proceeding, USDA employees 
involved in the decisional process are prohibited from discussing the 
merits of the hearing issues on an ex-parte basis with any person 
having an interest in the proceeding. The prohibition applies to 
employees in the following organizational units: Office of the 
Secretary of Agriculture; Office of the Administrator, AMS; Office of 
the General Counsel; and the Fruit and Vegetable Programs, AMS.
    Procedural matters are not subject to the above prohibition and may 
be discussed at any time.
    Provisions of the proposed marketing agreement and order follow. 
USDA modified the committee's proposed Sec.  991.78(b) to be consistent 
with the authority of the Act. The Act specifies that the Secretary 
shall terminate any marketing order when termination is favored by a 
majority of the producers, provided they have produced more than 50 
percent of the volume of the commodity. There is no authority under the 
Act to modify these criteria. Therefore, the proposed section has been 
changed to be consistent with the Act. USDA has also added three 
provisions to the committee's proposal that are common to and relate to 
marketing agreements now operating. These provisions are necessary to 
effectuate the provisions of the marketing agreement, if ratified. 
These sections are identified with an asterisk (*).

List of Subjects in Proposed 7 CFR Part 991

    Hops, Marketing agreements, Reporting and recordkeeping 
requirements.

Proposal Number 1

    The marketing agreement and order proposed by the Hop Marketing 
Order Proponent Committee would add a new part 991 to read as follows:

PART 991--HOPS PRODUCED IN WASHINGTON, OREGON, IDAHO AND CALIFORNIA

Subpart--Order Regulating Handling

Definitions

Sec.
991.01 Secretary
991.02 Act
991.03 Person
991.04 Hops and Hop Products
991.05 Production Area
991.06 Producer
991.07 Handler
991.08 Handle
991.09 Marketing year
991.10 Crop
991.11 Salable Quantity
991.12 Annual Allotment
991.13 New Producer

Administrative Committee

991.15 Establishment and membership
991.16 Eligibility
991.17 Term of Office
991.18 Nominations
991.19 Selection
991.20 Alternate Members
991.21 Vacancies
991.22 Powers
991.23 Duties
991.24 Committee Expenses and Compensation
991.25 Procedure
991.26 Research and Development Projects

Expenses and Assessments

991.30 Expenses
991.31 Assessments

Volume Limitations

991.50 Marketing Policy
991.51 Recommendations for Volume Regulation
991.52 Issuance of Volume Regulation
991.53 Allotment Base
991.54 Issuance of Annual Allotments
991.55 Identification
991.56 Excess Alpha Acid
991.57 Reserve Pool Requirements
991.58 Transfers

Reports and Records

991.60 Reports
991.61 Records
991.62 Verification of Reports and Records
991.63 Confidential Information

Miscellaneous Provisions

991.70 Compliance
991.71 Rights of the Secretary
991.72 Derogation
991.73 Agents
991.74 Personal Liability
991.75 Duration of Immunities
991.76 Separability
991.77 Effective Time
991.78 Termination
991.79 Continuance
991.80 Proceedings after Termination
991.81 Effect of Termination or Amendment

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

[[Page 44246]]

Subpart--Order Regulating Handling

Definitions


Sec.  991.01  Secretary.

    Secretary means the Secretary of Agriculture of the United States, 
or any other officer or employee of the U.S. Department of Agriculture 
who is, or who may be, authorized to perform the duties of the 
Secretary of Agriculture of the United States.


Sec.  991.02  Act.

    Act means Public Act No. 10, 73rd Congress, as amended by the 
Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601 
et seq.; 48 Stat. 31, as amended).


Sec.  991.03  Person.

    Person means an individual, partnership, corporation, association, 
or any other business unit.


Sec.  991.04  Hops and Hop Products.

    (a) Hops means and includes all kinds and varieties of Humulus 
lupulus or Humulus americanus grown and harvested in the United States, 
whether loose, packaged or baled and all pellets, powder, oils, 
extracts and/or lupulin derived therefrom.
    (b) Alpha Acid hops are those varieties that are primarily used for 
their bittering value. Aroma hops are those varieties primarily used 
for their aroma characteristics.


Sec.  991.05  Production Area.

    Production area means all States with commercial production of hops 
and shall be divided into the following districts:

(a) District 1--Washington
(b) District 2--Oregon
(c) District 3--Idaho and California


Sec.  991.06  Producer.

    Producer is synonymous with grower and means any person engaged in 
a proprietary capacity in the commercial production of hops. Any 
producer with multiple legal entities under his/her control (e.g. 
common Board of directors, common ownership, common banking, etc.* * 
*), shall be, for voting purposes only, included under the primary 
entity and shall be entitled to one vote.


Sec.  991.07  Handler.

    Handler means any person who handles hops.


Sec.  991.08  Handle.

    Handle means to prepare hops for market, acquire hops from a 
producer, use hops commercially of one's own production, sell, 
transport or ship (except as a common or contract carrier of hops owned 
by another) or otherwise place hops into the current of commerce within 
the production area or from the area to points outside thereof, except 
that:
    (a) The preparation for market of hops by producers, not dealers or 
users of the product, or;
    (b) The sale, transportation or shipment of such hops by a producer 
to a handler of record within the production area, and;
    (c) The transfer of excess hops by the producer to another producer 
to enable that producer to fill a deficiency in an annual allotment, 
shall not be construed as handling.


Sec.  991.09  Marketing Year.

    Marketing year means the 12 months from August 1 to the following 
July 31, inclusive.


Sec.  991.10  Crop.

    Crop means hops produced by a producer during the marketing year.


Sec.  991.11  Salable Quantity.

    Salable Quantity means the total quantity of hops that handlers may 
purchase from, or handle on behalf of, producers during the marketing 
year.


Sec.  991.12  Annual Allotment.

    Annual Allotment means that portion of the Salable Quantity 
prorated to a producer.


Sec.  991.13  New Producer.

    The term New Producer means a person who has not grown hops prior 
to 2003. The term New Producer specifically excludes any person who has 
previously been granted Hop Commission grower number or an allotment 
base in any capacity, either as an individual, or as an owner, officer 
or operator of any business entity.

Administrative Committee


Sec.  991.15  Establishment and Membership.

    (a) A Hop Administrative Committee consisting of eight members, 
each of whom shall have an alternate, is hereby established to 
administer the terms and provisions of this part. Five of the members 
and their alternates shall be producers in District 1, Two members and 
their alternates shall be producers in District 2; and One member and 
his/her alternate shall be producers in District 3. An additional 
member and his/her alternate shall represent the public and shall be an 
ex-officio member of the Committee without a vote.
    (b) Representation on the Committee shall be by independent 
producers as follows:
    (1) Position 1 for District 1, Sub District 1 shall be all that 
portion of the State of Washington lying north of the south line of 
Township 12 N.
    (2) Position 2 for District 1, Sub District 2 shall be all that 
portion of the State of Washington lying south of the south line of 
Township 12 N. and west of the east line of Range 20 E.
    (3) Position 3 for District 1, Sub District 3 shall be all areas of 
the state of Washington not included in Sub District 1 or Sub District 
2.
    (4) Position 4 is an at large position and shall be all of District 
1.
    (5) Position 5 is an at large position and shall be all of District 
1.
    (6) Position 6 shall be all of District 2.
    (7) Position 7 shall be all of District 2.
    (8) Position 8 shall be all of District 3.
    (c) The committee may change sub-district boundaries in District 1 
to reflect significant changes in numbers of producers.
    (d) Each Committee shall select officers consisting of a Chairman, 
Vice Chairman, Secretary and Treasurer and these officers shall 
constitute the Executive Sub Committee.


Sec.  991.16  Eligibility.

    Each member and alternate of the Committee shall be, at the time of 
his/her selection and during his/her term of office, a producer or an 
officer or employee of a producer, in the district or sub district for 
which selected: Provided, That these requirements shall not apply to 
the public member and the alternate public member.


Sec.  991.17  Term of Office.

    The term of office of each member and alternate member of the 
Committee shall be for a period of 3 years: Provided, that the members 
initially selected for Positions 1, 2 and 5 shall serve for terms 
ending on December 31, 2006, and the members initially selected for 
Positions 3, 7 and 8 shall serve for terms ending on December 31, 2007, 
and the members initially selected for Positions 4 and 6 shall serve 
for terms ending on December 31, 2008. Committee members shall serve in 
such capacity and for the term of office for which they are selected 
and have qualified and until their respective successors are selected 
and have qualified. No member shall serve more then two consecutive 
terms as member and no alternate shall serve more then two consecutive 
terms as alternate.


Sec.  991.18  Nominations.

    (a) Nominations for producer members of the Committee and their

[[Page 44247]]

alternates shall be made at nomination meetings of producers in each 
District or Sub-District. Such meetings shall be held at such times (on 
or before November 1 of each year) and places as the Committee shall 
designate. One nominee shall be elected for each position to be filled. 
The names and addresses of each nominee shall be submitted to the 
Secretary not later than December 1 of each year.
    (b) Only producers, including duly authorized officers or employees 
of producers present and eligible to serve as producer members of the 
Committee, shall participate in the nomination. If a producer produces 
hops in more than one district, the producer shall select the district 
in which that producer will participate and notify the Committee of the 
choice.
    (c) Should the Committee find it impractical to hold nomination 
meetings, nominations may be submitted to the Secretary based on the 
results of balloting by mail. Ballots to be used may contain the names 
of candidates and a blank space for write-in candidates for each 
position, together with voting instructions. The eligible person 
receiving the highest number of votes for a member or alternate 
position shall be the nominee for that position.
    (d) The producer members of the Committee shall nominate the ex-
officio public member and alternate public member at the first meeting 
following the selection of members for a new term of office.
    (e) Initial members. As soon as practicable following the effective 
date of this part, the Secretary shall hold, or cause to be held, 
nomination meetings of producers in each district to nominate the 
initial members of the Committee.
    (f) The Committee shall issue rules and regulations necessary to 
carry out the provisions of this section or to change the procedures in 
this section in the event they are no longer practical.


Sec.  991.19  Selection.

    Committee members shall be selected by the Secretary from nominees 
submitted by the Committee or from among other eligible persons. Each 
person so selected shall qualify by filing a written acceptance with 
the Secretary prior to assuming the duties of the position.


Sec.  991.20  Alternate members.

    An alternate for a member shall act in the place of such member:
    (a) In the member's absence,
    (b) In the event of the member's death, removal, resignation, or 
disqualification, until a successor for the member's unexpired term has 
been selected and has qualified, or
    (c) When requested and designated by the member.


Sec.  991.21  Vacancies.

    To fill any vacancy occasioned by the failure of any person 
appointed as a member or as an alternate member of the Committee to 
qualify, or in the event of the death, removal, resignation, or 
disqualification of any member or alternate member of the Committee, a 
successor to fill the unexpired term shall be nominated and appointed 
in the manner specified in Sec. Sec.  991.18 and 991.19. If the names 
of the nominees to fill any such vacancy are not made available to the 
Secretary within 30 days after such vacancy occurs, the Secretary may 
fill such vacancy without regard to nominations, which appointment 
shall be made on the basis of representation provided for in Sec.  
991.15.


Sec.  991.22  Powers.

    The Committee shall have the following powers:
    (a) To administer this part in accordance with its terms and 
provisions;
    (b) To make rules and regulations to effectuate the terms and 
provisions of this part;
    (c) To receive, investigate, and report to the Secretary complaints 
of violations of this part; and
    (d) To recommend to the Secretary amendments to this part.


Sec.  991.23  Duties.

    The Committee shall have, among others, the following duties;
    (a) To select from among its membership such officers and adopt 
such rules or bylaws for the conduct of its meetings as it deems 
necessary;
    (b) To appoint such employees as it may deem necessary, and to 
determine the compensation and to define the duties of each employee;
    (c) To appoint such subcommittees and consultants as it may deem 
necessary;
    (d) To keep minutes, books, and records which will reflect all of 
the acts and transactions of the Committee and which shall be subject 
to examination by the Secretary;
    (e) To prepare periodic statements of the financial operations of 
the Committee and to make copies of each such statement available to 
producers and handlers for examination at the office of the Committee;
    (f) To cause the books of the Committee to be audited by a 
certified public accountant at such times as the Committee may deem 
necessary, or as the Secretary may request, to submit copies of each 
audit report to the Secretary, and to make available a copy which does 
not contain confidential data for inspection at the offices of the 
committee by producers and handlers;
    (g) To act as intermediary between the Secretary and any producer 
or handler;
    (h) To investigate and assemble data on the growing, handling, and 
marketing conditions with respect to hops and hop products;
    (i) To submit to the Secretary such available information as may be 
requested or that the Committee may deem desirable and pertinent;
    (j) To notify producers and handlers of all meetings of the 
Committee to consider recommendations for regulations and of all 
regulatory actions taken affecting producers and handlers;
    (k) To give the Secretary the same notice of meetings of the 
Committee and its subcommittees as is given to its members;
    (l) To investigate compliance and use means available to prevent 
violations of the provisions of this part;
    (m) To redefine, with the approval of the Secretary, the districts 
into which the production area is divided and to reapportion the 
representation of any district on the Committee: Provided, That such 
changes shall reflect, insofar as practical, shifts in hop production 
within the production area and numbers of producers; and
    (n) To establish such rules and regulations as are necessary or 
incidental to administration of this part, as are consistent with its 
provisions, and as would tend to accomplish the purposes of this part 
and the act.


Sec.  991.24  Committee Expenses and Compensation.

    Members and Alternates of the Committee shall serve without 
compensation but shall receive such allowances for necessary expenses 
incurred in connection with their duties as may be approved by the 
Committee.


Sec.  991.25  Procedure.

    (a) At an assembled meeting, all votes shall be cast in person and 
seven members of the Committee shall constitute a quorum. Decisions of 
the Committee shall require the concurring vote of at least six 
members. If both a Committee member and appropriate alternate are 
unable to attend a Committee meeting, the Committee may designate any 
other alternate from the same district who is present at the meeting to 
serve in the member's place.
    (b) The Committee may vote by mail, telephone, or other means of 
communication: Provided, That each

[[Page 44248]]

proposition is explained accurately, fully, and identically to each 
member. All votes shall be confirmed promptly in writing. Seven 
concurring votes and no dissenting votes shall be required for approval 
of a Committee action by such method.


Sec.  991.26  Research and Development Projects.

    The Committee may establish or provide for the establishment of 
production research, marketing research and development projects 
designed to assist, improve, or promote the marketing, distribution and 
consumption or efficient production of hops. The expense of such 
projects shall be paid from funds collected pursuant to Sec.  991.31.

Expenses and Assessments


Sec.  991.30  Expenses.

    The Committee is authorized to incur such expenses as the Secretary 
finds are reasonable and likely to be incurred by it for such purposes 
as the Secretary may, pursuant to this part, determine to be 
appropriate, and for the maintenance and functioning of the Committee 
during each marketing year. The Committee shall submit to the Secretary 
a budget for each marketing year, including an explanation of the items 
appearing therein, and a recommendation as to the rate of assessment 
for such year.


Sec.  991.31  Assessments.

    (a) Requirements for payment. Each person who first handles hops 
shall pay to the Committee, upon demand, that handler's prorata share 
of the expenses authorized by the Secretary for each marketing year. 
Each handler's prorata share for each variety of hops sold shall be the 
rate of assessment fixed by the Secretary times the number of pounds of 
that variety of hops sold, times the alpha acid factor for that variety 
of hops which the handler handles as the first handler thereof. The 
payment of assessments for the maintenance and functioning of the 
Committee and for such purposes as the Secretary may, pursuant to this 
part, determine to be appropriate, may be required under this part 
throughout the period it is in effect, irrespective of whether 
particular provisions thereof are suspended or become inoperative.
    (b) Rate of assessment. The Secretary shall fix the rate of 
assessment to be paid by each handler. In order to provide funds for 
the administration of this part before sufficient operating income is 
available from assessments, the Committee may accept advance 
assessments and may also borrow money for such purpose. Advance 
assessments received from a handler shall be credited toward 
assessments levied against the handler during the marketing year.
    (c) Assessments not paid within a time prescribed by the Committee 
may be made subject to interest or late payment charges, or both. The 
period of time, rate of interest, and late payment charge will be as 
recommended by the Committee: Provided, That when interest or late 
payment charges are in effect, they shall be applied to all assessments 
not paid within the prescribed period of time.
    (d) Excess funds. At the end of a marketing year, funds in excess 
of the year's expenses may be placed in an operating reserve not to 
exceed approximately one marketing year's operational expenses or such 
lower limits as the Committee, with the approval of the Secretary, may 
establish. Funds in such reserve shall be available for use by the 
Committee for expenses authorized pursuant to Sec.  991.30. Funds in 
excess of those placed in the operating reserve shall be refunded to 
handlers: Provided, That any sum paid by a first handler in excess of 
that handler's prorata share of the expenses during any marketing year 
may be applied by the Committee at the end of such marketing year to 
any outstanding obligations due the Committee from such person. Each 
handler's share of such excess funds shall be the amount of assessments 
paid in excess of that handler's prorata share.
    (e) Disposition of funds upon termination of order. Upon 
termination of this part, any funds not required to defray the 
necessary expenses of liquidation shall be disposed of in such manner 
as the Secretary may determine to be appropriate: Provided, That to the 
extent practicable, such funds will be returned prorata to the first 
handler from whom such funds were collected.
    (f) The Committee may establish rules and regulations necessary and 
incidental to the administration of this section.

Volume Limitations


Sec.  991.50  Marketing Policy.

    (a) The Committee shall meet on or before November 15 of each year 
to adopt a marketing policy for the ensuing marketing year or years. As 
soon as is practical following the meeting or meetings, the Committee 
shall submit to the Secretary recommendations for volume regulations 
deemed necessary to meet market requirements and establish orderly 
marketing conditions. Additional reports shall be submitted to the 
Secretary if the Committee, subsequently adopts a new or revised policy 
because of changes in the demand and supply situation with respect to 
Alpha Acid.
    (b) In determining such marketing policy, Committee consideration 
shall include but not be limited to:
    (1) The estimated quantity of salable Alpha Acid held by producers 
and handlers;
    (2) The estimated demand for Alpha Acid;
    (3) Prospective production of Alpha Acid;
    (4) Total of allotment bases for the current marketing year and the 
estimated total of allotment bases for the ensuing marketing year;
    (5) The quantity of reserve Alpha Acid in storage;
    (6) Producer prices of Alpha Acid;
    (c) Notice of the marketing policy recommendations for a marketing 
year and any later changes shall be announced publicly by the 
Committee, and be submitted promptly to the Secretary and all producers 
and handlers. The Committee shall publicly announce its marketing 
policy or revision thereof and notice and contents thereof shall be 
submitted to producers and handlers by bulletins or through appropriate 
media.
    (d) As soon as practical following the effective date of this part 
and the organization of the Committee, the Committee may adopt a 
marketing policy.


Sec.  991.51  Recommendations for Volume Regulation.

    (a) If the Committee's marketing policy considerations indicate a 
need for limiting the quantity of Alpha Acid, the Committee shall 
recommend to the Secretary a salable quantity and allotment percentage 
for the ensuing marketing year. Such recommendations shall be made 
prior to November 15, or such other date as the Committee may 
establish.
    (b) At any time during the marketing year for which the Secretary, 
pursuant to Sec.  991.52(a), has established a salable quantity and an 
allotment percentage, the Committee may recommend to the Secretary that 
such quantity be increased with an appropriate increase in the 
allotment percentage. Each such recommendation, together with the 
Committee's reason for such recommendation, shall be submitted promptly 
to the Secretary.
    (c) As soon as practical following the effective date of this part 
and the organization of the Committee, the Committee may recommend a 
salable quantity.

[[Page 44249]]

Sec.  991.52  Issuance of Volume Regulation.

    (a) Whenever the Secretary finds, on the basis of the Committee's 
recommendation or other information, that limiting the total quantity 
of Alpha Acid of any crop that handlers may purchase from producers 
during a marketing year, would tend to effectuate the declared policy 
of the act, the Secretary shall establish the salable quantity for that 
crop. The salable quantity shall be prorated among producers by 
applying an allotment percentage to each producer's allotment base. The 
allotment percentage shall be established by dividing the salable 
quantity by the total of all producers' allotment bases.
    (b) When an allotment percentage is established for any marketing 
year, no handler shall purchase from producers any Alpha Acid during 
such year unless:
    (1) It is, at the time of handling, within the unused portion of a 
producer's annual allotment, and
    (2) Such handler notifies the Committee of the handling in such 
manner as the Committee may prescribe.
    (c) An Alpha Acid Factor shall be established for the ensuing 
marketing year for each variety of hops and shall be equal to the most 
recent three year average of the Alpha Acid for each variety. If there 
is not a 3 year average for a variety the Committee shall determine the 
Alpha Acid Factor for that variety until a three year average is 
available. The Alpha Acid Factor for each variety shall be determined 
in accordance with rules and regulations established by the Committee. 
The Alpha Acid Factor shall be established no later than November 15 of 
each year. A producer may forward sell any variety of hops in an amount 
equal to that variety's production times the Alpha Acid Factor for that 
variety for the year for which the Alpha Acid Factor has been 
established, or the producer may sell any combination of varieties, 
provided that, in any case, the total quantity sold is within the 
producer's salable quantity for that year.


Sec.  991.53  Allotment Base.

    (a) The Representative Base Period shall be the marketing years 
1997, 1998, 1999, 2000, 2001 and 2002; Provided that, a producer must 
have produced hops in the 2001 and/or 2002 crop year to be eligible to 
apply for initial allotment base.
    (b) Initial Issuance: Each eligible producer desiring an allotment 
base for hops shall register with the Committee and furnish to it, on 
forms provided by the Committee, the following:
    (1) The Actual Production (in number of pounds) of each variety of 
hops produced during the highest production year of the Representative 
Base Period and the name of the handler(s) each variety of hops was 
sold to during that year.
    (2) The Alpha Acid Percentage for each variety of hops with an 
Alpha Acid percentage of 10% or more produced during the year selected 
pursuant to Sec.  991.53(b)(1).
    (3) The County and State where the production of each variety of 
hops occurred during the year selected pursuant to Sec.  991.53(b)(1).
    (4) As verification for the information submitted to the Committee, 
the producer shall also submit a copy of the appropriate state 
certification documents, or, if such documentation is unavailable, a 
copy of the handler ultra violet spectral analysis documentation 
relative to the submissions pursuant to this section.
    (5) The Executive Sub Committee shall act as a Hardship Committee 
for establishment of initial allotment base. Any producer has the right 
to petition the Hardship Committee for special consideration for their 
initial allotment base, provided that, such petition is in writing, and 
that it is based solely on hardships brought about by acts of God. The 
Hardship Committee may elect to defer their decision to the 
Administrative Committee.
    (6) The Committee shall not be required to accept applications for 
initial allotment base after one year from the effective date of this 
part.
    (7) A producer who has changed or changes identity from an 
individual producer to a partnership or corporate producer, or from a 
partnership to a corporate or individual producer, or from a corporate 
to a partnership or individual producer, may for the purpose of 
establishing the initial and subsequent allotment base, register with 
the Committee as one and the same person.
    (c) The Initial Allotment Base shall be established by the 
Committee for each registered producer based on the information 
submitted by the producer pursuant to 991.53(b), as follows:
    (1) For each variety over 10% Alpha Acid Percentage, that ``Variety 
Alpha Acid Base'' contribution to the total Alpha Acid Allotment Base 
shall be determined by multiplying the Actual Production by the Actual 
Alpha Acid Percentage of that variety for the chosen year.
    (2) For each variety equal to or less than 10% Alpha Acid 
Percentage, that ``Variety Alpha Acid Base'' contribution to the total 
Alpha Acid Allotment Base shall be determined by multiplying the Actual 
Production of that variety for the chosen year by a flat rate of 10%. 
The sum of all of the ``Variety Alpha Acid Bases'' as calculated above 
shall be the producer's ``Initial Allotment Base.''
    (d) Adjustment to allotment base. Periodically, but at least once 
every five years, the Committee shall review and may adjust each 
producer's allotment base to recognize changes and trends in production 
and demand. Any such adjustment shall be made in accordance with a 
formula prescribed by the Committee with the approval of the Secretary.
    (e) Additional allotment base. (1) The Committee annually shall 
make additional allotment bases available in the amount of no more than 
1 percent of the total allotment base. Fifty percent of these 
additional allotment bases shall be made available for new producers 
and 50 percent made available for existing producers; Provided that, in 
any year in which the current salable percentage is equal to or less 
than the previous year's salable percentage, the Committee shall not be 
required to make additional base available for the ensuing marketing 
year.
    (2) Any person may apply for an additional allotment base by filing 
an application with the Committee on or before December 1 of the 
marketing year preceding the marketing year for which the additional 
allotment bases will be made available.
    (3) The Committee shall, with the approval of the Secretary, 
establish rules and regulations to be used for determining the 
distribution of additional allotment bases.
    In establishing such rules, the Committee shall take into account, 
among other things, the minimum economic enterprise requirements for 
hop production, the applicant's ability to produce hops, the area where 
the hops will be produced and other economic and marketing factors.
    (f) Bona Fide Effort Requirement: The right of each producer 
receiving an allotment base, or any legal successor in interest, to 
retain all or part of an allotment base, shall be dependent on 
continuance to make a bona fide effort to produce the annual allotment 
referable thereto and failing to do so, such allotment base shall be 
reduced by an amount equivalent to such unproduced portions: Provided, 
that a producer's reserve pool shall be included in the bona fide 
effort requirement. The Committee shall develop the bona fide effort 
requirement.
    (g) Notwithstanding the foregoing, any person or entity who has 
entered the

[[Page 44250]]

hop industry as a New Producer for the 2003 crop year, shall be 
entitled to an allotment base as a matter of right. Such allotment base 
shall be calculated in the same manner as with any other producer; 
Provided: However that the New Producer's representative base period 
and initial allotment base shall be limited exclusively to the 2003 
crop year, and any such allotment shall be determined by the New 
Producer's actual production in 2003.


Sec.  991.54  Issuance of Annual Allotments.

    (a) Whenever the Secretary establishes a salable quantity and 
allotment percentage that may be marketed during a marketing year, the 
Committee shall issue an annual allotment to each producer holding an 
allotment base. Each producer's annual allotment shall be determined by 
multiplying the producer's allotment base by the allotment percentage.
    (b) On or before February 1, the Committee shall furnish each 
registered holder of an allotment base a form for the producer to apply 
for an annual allotment for the ensuing marketing year. The Committee, 
shall establish rules and regulations prescribing the information to be 
submitted on this form. The Committee shall notify each producer of the 
producer's annual allotment within 10 days after the Secretary 
establishes the salable quantity and allotment percentage.
    (c) Through 2003, a handler may acquire Alpha Acid of a producer's 
own production to fulfill a written contract entered into by these two 
persons prior to January 31, 2002. The terms of this contract shall 
require the producer to deliver to that handler a specified quantity of 
Alpha Acid from that producer's production at a specific price from a 
specified acreage and produced prior to 2003. The quantity of Alpha 
Acid acquired by the handler pursuant to that contract during the 2003-
04 or 2004-05 marketing year may exceed the producer's annual allotment 
for the applicable marketing year, but shall be charged against the 
producer's annual allotment for that year.


Sec.  991.55  Identification.

    (a) Each producer shall, under supervision of the Committee, 
identify each variety of Alpha Acid by October 15 of each year.
    (b) Identification shall include the name of the producer, the 
variety of hops, the net weight, the lot number and such other 
information as may be required by the Committee.
    (c) No handler shall handle as salable Alpha Acid that has not been 
identified as provided in this section, and no person shall alter or 
remove any identification.


Sec.  991.56  Excess Hops and Hop Products.

    Alpha Acid that is in excess of an individual producer's annual 
allotment at the conclusion of his/her harvest shall be identified as 
excess Alpha Acid and shall be disposed of as follows:
    (a) Before November 30, or such date as the Committee may 
establish, a producer, following notification of the Committee, may 
transfer excess alpha acid to another producer to enable that producer 
to fill a deficiency in that producer's annual allotment, or
    (b) On December 1, or such other date as the Committee, with the 
approval of the Secretary, may establish, excess Alpha Acid shall be 
identified as Reserve Pool Alpha Acid.
    (c) No handler shall handle Reserve Pool Alpha Acid.
    (d) The Committee may establish such rules and regulations as it 
deems necessary for the administration of the Reserve Pool.


Sec.  991.57  Reserve pool requirements.

    (a) General. The Committee shall pool Reserve Pool Alpha Acid in a 
manner to accurately account for its receipt, storage, and disposition. 
The Committee shall designate a Committee employee as Reserve Pool 
Manager. Administration of the provisions in this section shall be in 
accordance with such rules and regulation as the Committee may 
prescribe.
    (b) Disposition. (1) When, in any marketing year, a producer has 
produced less than the annual allotment of Alpha Acid, the producer 
may, upon notification of the Committee, fill the deficiency with Alpha 
Acid from the producer's Reserve Pool.
    (2) Under supervision of the Committee, a producer may exchange 
salable alpha acid for the same quantity of reserve alpha acid from own 
production so long as the alpha acid is properly identified.


Sec.  991.58  Transfers.

    (a) Nothing contained in this part shall prevent a producer from 
transferring the location where that producer's annual allotment is 
produced to another location except that the producer shall report the 
transfer to the Committee within 30 days after the transfer.
    (b) A producer may transfer all or part of an allotment base to 
another producer under rules and regulations established by the 
Committee: Provided, That the allotment base obtained by transfer from 
another producer or issued pursuant to Sec.  991.53(e) shall not be 
transferred for at least 2 years following transfer or issuance, and 
that the person receiving the allotment base submit to the Committee, 
evidence of an ability to produce hops from such allotment base in the 
first marketing year following the transfer or issuance of the 
allotment base.

Reports and Records


Sec.  991.60  Reports.

    (a) Inventory. Each handler shall file, with the Committee or its 
designee, a certified report showing such information as the Committee 
may specify with respect to any hops which were held by such handler on 
March 1 and September 1 or such other dates as the Committee may 
designate.
    (b) Receipts. Each handler shall, upon request of the Committee, 
file with the Committee a certified report showing the quantity of hops 
handled.
    (c) Other Reports. Upon the request of the Committee, each handler 
shall furnish to the Committee such other information as may be 
necessary to enable it to exercise its powers and perform its duties 
under this part.


Sec.  991.61  Records.

    Each handler shall maintain such records pertaining to all hops 
handled as will substantiate the required reports. All such records 
shall be maintained for not less than 2 years after the termination of 
the marketing year to which such records relate.


Sec.  991.62  Verification of reports & records.

    For the purpose of assuring compliance with record keeping 
requirements and verifying reports filed by handlers, the Secretary and 
the Committee through its duly authorized employees, shall have access 
to any premises where applicable records are maintained, where hops and 
or hop products are received or held, and at any time during reasonable 
business hours shall be permitted to inspect such handler premises, and 
any and all records of such handlers with respect to matters within the 
purview of this part.


Sec.  991.63  Confidential information.

    All reports and records furnished or submitted by handlers to, or 
obtained by the employees of, the Committee which contain data or 
information constituting a trade secret or disclosing the trade 
position, financial condition, or business operations of the particular 
handler from whom received, shall be treated as confidential and the 
reports and all information obtained from records shall at all times be 
kept in the custody and under the control of one or more employees of 
the Committee who

[[Page 44251]]

shall disclose such information to no person other than the Secretary.

Miscellaneous Provisions


Sec.  991.70  Compliance.

    No person shall handle hops and or hop products except in 
conformity with the provisions of this part.


Sec.  991.71  Rights of the Secretary.

    Members of the Committee and any agents, employees, or 
representatives thereof, shall be subject to removal or suspension by 
the Secretary at any time. Each and every decision, determination, and 
other act of the Committee shall be subject to the continuing right of 
disapproval by the Secretary at any time. Upon such disapproval, the 
disapproved action of the Committee shall be deemed null and void, 
except as to acts done in reliance thereon or in accordance therewith 
prior to such disapproval by the Secretary.


Sec.  991.72  Derogation.

    Nothing contained in this part is, or shall be construed to be, in 
derogation or in modification of the rights of the Secretary or of the 
United States (a) to exercise any powers granted by the act or 
otherwise, or (b) in accordance with such powers, to act in the 
premises whenever such action is deemed advisable.


Sec.  991.73  Agents.

    The Secretary may, by designation in writing, name any officer or 
employee of the United States, or name any agency or division in the 
U.S. Department of Agriculture, to act as his/her agent or 
representative in connection with any of the provisions of this part.


Sec.  991.74  Personal Liability.

    No member or alternate member of the Committee and no employee or 
agent of the Committee shall be held personally responsible, either 
individually or jointly with others, in any way whatsoever, to any 
person for errors in judgment, mistakes, or other acts, either of 
commission or omission, as such member, alternate, employee, or agent, 
except for acts of dishonesty, willful misconduct, or gross negligence.


Sec.  991.75  Duration of Immunities.

    The benefits, privileges, and immunities conferred upon any person 
by virtue of this part shall cease upon its termination, except with 
respect to acts done under and during the existence of this part.


Sec.  991.76  Separability.

    If any provision of this part is declared invalid or the 
applicability thereof to any person, circumstance or thing is held 
invalid, the validity of the remainder of this part of the 
applicability thereof to any other person, circumstance, or thing shall 
not be affected thereby.


Sec.  991.77  Effective Time.

    The provisions of this part, and of any amendment thereto, shall 
become effective at such time as the Secretary may declare above his/
her signature and shall continue in force until terminated in one of 
the ways specified in 991.78.


Sec.  991.78  Termination.

    (a) Failure to effectuate. The Secretary shall terminate or suspend 
the operation of any or all of the provisions of this part whenever he/
she finds that such provisions obstruct or do not tend to effectuate 
the declared policy of the act.
    (b) Referendum. The Secretary shall terminate the provisions of 
this part at the end of any marketing year whenever he/she finds that 
such termination is favored by a majority of the producers who during 
the preceding marketing year produced for market more than 50 percent 
of the volume of Alpha Acid so produced: Provided, That termination 
shall be effective only if announced before May 31 of the then current 
marketing year.
    (c) Termination of act. The provisions of this part shall, in any 
event, terminate whenever the provisions of the act authorizing them 
cease to be in effect.


Sec.  991.79  Continuance.

    (a) Within 4 years of the effective date of this part, the 
Secretary shall conduct a continuance referendum to ascertain whether 
continuance of this part is favored by producers. Subsequent referenda 
to ascertain continuance shall be conducted every 8 years thereafter. 
The Secretary may terminate the provisions of this part at the end of 
any fiscal year in which the Secretary has found that continuance of 
this part is not favored by producers who during a representative 
period determined by the Secretary, have been engaged in the production 
of hops for market in the production area.
    (b) Termination of act. The provisions of this part shall, in any 
event, terminate whenever the provisions of the act authorizing them 
cease to be in effect.


Sec.  991.80  Proceedings After Termination.

    Upon termination of the provisions of this part, the Committee 
shall, for the purpose of liquidating the affairs of the Committee, 
continue as trustees of all the funds and property then in its 
possession, or under its control, including claims for any funds unpaid 
or property not delivered at the time of such termination. The said 
trustees shall:
    (a) Continue in such capacity until discharged by the Secretary;
    (b) From time to time account for all receipts and disbursements 
and deliver all property on hand, together with all books and records 
of the Committee and of the trustees, to such persons as the Secretary 
may direct; and
    (c) Upon the request of the Secretary, execute such assignments or 
other instruments necessary or appropriate to vest in such person full 
title and right to all of the funds, property, and claims vested in the 
Committee or the trustees pursuant thereto. Any person to whom funds, 
property, or claims have been transferred or delivered, pursuant to 
this section, shall be subject to the same obligation imposed upon the 
Committee and upon the trustees.


Sec.  991.81  Effect of Termination or Amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this part or of any regulation issued pursuant to this 
part, or the issuance of any amendment to either thereof, shall not:
    (a) Affect or waive any right, duty, obligation, or liability which 
shall have arisen or which may thereafter arise in connection with any 
provisions of this part or any regulation issued hereunder, or
    (b) Release or extinguish any violation of this part or any 
regulation issued hereunder, or
    (c) Affect or impair any rights or remedies of the Secretary or any 
other person with respect to any such violation.


Sec.  991.92  Counterparts.

    This agreement may be executed in multiple counterparts and when 
one counterpart is signed by the Secretary, all such counterparts shall 
constitute, when taken together, one and the same instrument as if all 
signatures were contained in one original.


Sec.  991.93  Additional parties.

    After the effective date thereof, any handler may become a party to 
this agreement if a counterpart is executed by such handler and 
delivered to the Secretary. This agreement shall take effect as to such 
new contracting part at the time such counterpart is delivered to the 
Secretary, and the benefits, privileges, and immunities conferred by 
this agreement shall then be effective as to such new contracting 
party.


Sec.  991.94  Order with marketing agreement.

    Each signatory hereby requests the Secretary to issue, pursuant to 
the Act,

[[Page 44252]]

an order providing for regulating the handling of hops in the same 
manner as is provided for in this agreement.
    The following proposals were submitted by Lenseigne Farms, Inc.

Proposal Number 2

    Establishment of initial allotment base would be based upon actual 
production for the most current season for which data is available. No 
specific regulatory text was submitted.

Proposal Number 3

    Ensure that initial base quantities are only allocated to existing 
producers. No specific regulatory text was submitted.

Proposal Number 4

    The representative period for purposes of voter eligibility would 
be the most current season for which data is available. No specific 
regulatory text was submitted.

Proposal Number 5

    Establish a market allocation pool, using salable and reserve 
percentages, instead of a producer allotment program. No specific 
regulatory text was submitted.

Proposal Number 6

    Provide a 3-year or more exemption from volume regulation for 
forward contracting agreements on hops. No specific regulatory text was 
submitted.

Proposal Number 7

    Provide an exemption for ``aroma varieties'' from marketing order 
regulations. No specific regulatory text was submitted.

Proposal Number 8

    If a producer allotment marketing order is established, allow a 
minimum of 10 percent of existing base quantities be made available to 
new and existing growers annually. No specific regulatory text was 
submitted.

Proposal Number 9

    If a producer allotment marketing order is established, base 
quantities would be based on actual alpha acid content. No specific 
regulatory text was submitted.

Proposal Number 10

    If a producer allotment marketing order is established, prohibit 
the sale, lease or transfer of base. No specific regulatory text was 
submitted.

    Dated: July 23, 2003.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 03-19127 Filed 7-25-03; 8:45 am]
BILLING CODE 3410-02-P