[Federal Register: June 22, 2004 (Volume 69, Number 119)]
[Rules and Regulations]
[Page 34549-34554]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22jn04-1]
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Rules and Regulations
Federal Register
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[[Page 34549]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 930
[Docket No. FV03-930-5-IFR]
Tart Cherries Grown in the States of Michigan, et al.; Revision
of Current Procedures for Handlers To Receive Exempt Use/Diversion
Credit for New Product and New Market Development Activities
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Interim final rule with request for comments.
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SUMMARY: This rule provides more specific criteria to help handlers
take better advantage of exempt use/diversion credit activities in
meeting volume regulation requirements, and to help the Cherry Industry
Administrative Board (Board) better assess the validity of handler
requests for such diversion credit. It also clarifies the current
definitions of ``new product development'' and ``new market
development'' activities eligible for diversion credit, includes
``market expansion'' activities in the definition of ``new market
development,'' and specifies what a handler has to do to become
``involved'' in an authorized activity to obtain diversion credit. This
rule also specifies an industry-wide limit for market expansion
activities totaling 10 million pounds per crop year. These changes were
recommended by the Board, which locally administers the Federal
marketing order for tart cherries grown in the States of Michigan, New
York, Pennsylvania, Oregon, Utah, Washington, and Wisconsin. Finally, a
conforming change to the rules and regulations is made to recognize
that cherry juice and juice concentrate products marketed domestically
now are eligible for diversion credit. Prior to a formal rulemaking
amendment completed in 2002, only exports of such products earned
diversion credits.
DATES: Effective date: June 23, 2004. Comments must be received by
August 23, 2004.
ADDRESSES: Interested persons are invited to submit written comments
concerning this action. Comments must be sent to the Docket Clerk,
Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW.,
STOP 0237, Washington, DC 20250-0237; fax: (202) 720-8938, or e-mail:
moabdocket.clerk@usda.gov or Internet: http://www.regulations.gov. 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 or can be viewed at: http://www.ams/usda.gov/fv/moab/html
.
FOR FURTHER INFORMATION CONTACT: Patricia A. Petrella or Kenneth G.
Johnson, Marketing Order Administration Branch, Fruit and Vegetable
Programs, AMS, USDA, Suite 2A04, Unit 155, 4700 River Road, Riverdale,
MD 20737, telephone: (301) 734-5243, or fax: (301) 734-5275; or George
Kelhart, Technical Advisor, Marketing Order Administration Branch,
Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW.,
STOP 0237, Washington, DC 20250-0237; telephone: (202) 720-2491, or
fax: (202) 720-8938.
Small businesses may request information on complying with this
regulation 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, or e-mail: Jay.Guerber@usda.gov.
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.'' 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 (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 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 USDA 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 USDA 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 USDA'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 revises the current procedures for handlers to receive
exempt use/diversion credit in meeting their volume regulation
obligations as follows: (1) It provides more specific criteria to help
handlers take better advantage of exempt use/diversion credit
activities and to help the Board better assess the validity of handler
requests for diversion credit; (2) It clarifies the current definitions
of ``new product development'' and ``new market development''
activities eligible diversion credit, and adds ``market expansion'' to
the definition of ``new market development''; (3) It also specifies an
industry-wide limit for market expansion activities totaling 10 million
pounds per crop year. This limitation reflects the Board's concern that
these activities should be developed gradually. The limitation would be
allocated on a pro rata basis among the handlers who requested
diversion credit for market expansion activities and were approved by
the Board; and (4) Handlers requesting
[[Page 34550]]
diversion credit under these provisions would have to provide evidence
to the Board that they have been actively involved in the development
of the new product, new market, or market expansion activity, or have
financially supported the development efforts. This is to assure that
the handlers initiating such efforts are the ones who earn the
resulting diversion credits.
Handler diversion is authorized under Sec. 930.59 of the order
and, when volume regulation is in effect, handlers may fulfill
restricted percentage requirements by diverting cherries or cherry
products rather than placing tart cherries in an inventory reserve.
Volume regulation is intended to help the tart cherry industry
stabilize supplies and prices in years of excess production. The volume
regulation provisions of the order provide for a combination of
processor owned inventory reserves and grower or handler diversion of
excess tart cherries. Reserve cherries may be released for sale into
commercial outlets when the current crop is not expected to fill
demand. Under certain circumstances, such cherries may also be used for
charity, experimental purposes, nonhuman use, and other approved
purposes.
Section 930.59(b) of the order provides for the designation of
allowable forms of handler diversion. These include: uses exempt under
Sec. 930.62; contribution to a Board approved food bank or other
approved charitable organization; acquisition of grower diversion
certificates that have been issued in accordance with Sec. 930.58; or
other uses, including diversion by destruction of the cherries at the
handler's facilities. Section 930.62 provides that the Board, with the
approval of the Secretary, may exempt from the provisions of Sec. Sec.
930.41 (Assessments), 930.44 (Quality control), 930.51 (Issuance of
volume regulations), 930.53 (Modification, suspension, or termination
of regulations), and 930.55 through 930.57 (Reserve regulations)
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 purpose
designated by the Board, including cherries processed into products for
markets for which less then 5 percent of the preceding 5-year average
production of cherries were utilized.
When applying to the Board to receive exemptions for cherries or
cherry products used for exempt purposes, the handler must detail the
nature of the product or market, how it differs from the current,
existing products and/or markets, and the estimated short and long term
sales volume for the exemption. In addition, in order to obtain
diversion credit for cherries used for exempt purposes, the application
must also contain an agreement that the proposed exempt use diversion
is to be carried out under the supervision of the Board, and that the
cost of any such supervision that is needed is paid by the applicant.
The fees for such USDA or Board supervision as previously stated, will
be the current hourly rate of $41.00, which is subject to change, under
USDA's inspection fee schedule (7 CFR 54.42).
The information which is provided allows the Board to assess the
request for exemption and render a determination concerning its
approval or disapproval. Any information received by the Board which is
of a confidential and/or proprietary nature is protected from
disclosure pursuant to Sec. 930.73 of the order.
Each handler that is granted an exemption must submit to the Board
an annual progress report, due May 1 of each year. The progress report
shall include the results of the exemption activity (comparison of
intended activity with actual activity) for the year in its entirety,
the volume of exempted fruit, an analysis of the success of the
exemption program, and such other information the Board may request.
For the purposes of regulation concerning exempt uses and diversion
credit, assisting handlers in obtaining exempt use/diversion credit
under Sec. 930.162, and assisting the Board in properly administering
these provisions, the terms ``new product development'', ``new market
development'', ``development of export markets'', and ``experimental
purposes'' are defined.
Currently, ``new product development'' is defined as the production
or processing of new tart cherry products or foods or other products in
which tart cherries or tart cherry products are incorporated which are
not presently being produced on a commercial basis. New product
development can also include the production or processing of a tart
cherry product using a technique not presently being utilized
commercially in the tart cherry industry. For example, a handler may
ask for an exemption for a product such as ground meat in combination
with raw tart cherries to form a leaner meat product. When a new
product is commercially viable, which is defined as the time when total
industry utilization for the product exceeds 2 percent of the 5-year
average production of tart cherries, the product is no longer eligible
for a new product development exemption and diversion credit.
``New market development'' means the development of markets for
cherry products which are not commercially established markets and
which are not competitive with commercial outlets presently utilized by
the tart cherry industry (including the development of new export
markets). For example, a handler may seek to establish sales of cherry
preserves to India or China, currently undeveloped markets. New markets
become commercially established when the total industry utilization in
the market exceeds 2 percent of the 5-year average production of tart
cherries. When the new markets become commercially viable they are no
longer eligible as an exempt use outlet or diversion credit.
``Development of export markets'' is defined as the sale of
cherries or cherry products, including the development of sales for new
or different tart cherry products or the expansion of sales for
existing tart cherry products, to countries other than Canada and
Mexico. An example of development of sales for new or different tart
cherry products could be a handler seeking to establish sales of dried
cherries in Germany, which is primarily a hot pack market (canned tart
cherries). No quantity limitations are specified for development of
export markets. The Board did not want to put any constraints on
handlers seeking to establish export markets. Moreover, the optimum
supply formula which is used by the Board to calculate the desirable
volume of tart cherries that should be available for sale does not
apply to product that can be diverted or used in exempt outlets. Thus,
the Board felt that handlers in meeting their restricted percentage
obligations during volume regulation seasons, should be free to move
exempted/diverted cherries to export markets without constraints.
``Experimental purposes'' is defined as the use of cherries or
cherry products in preliminary and/or developmental activities intended
to result in new products, new applications and/or new markets for tart
cherry products, such as a handler working with cereal companies to
develop a cereal using dried cherries. Any exemption for experimental
work must be limited in scope, duration, and volume based on
information supplied by the applicant at the time a request for
exemption is made. In no case, shall an individual exemption for
experimental purposes last longer than 5 years or exceed 100,000 pounds
raw product equivalent of tart cherries.
[[Page 34551]]
To improve the administration of the exempt use/diversion credit
procedures, the Board believes that the current definitions of what
constitutes new product development and new market development should
be clarified, and that a new definition for market expansion should be
included in the definition of ``new market development'' in Sec.
930.162(b). It also recommended that an industry-wide limit for market
expansion activities be established totaling 10 million pounds per crop
year to be allocated pro rata among the approved handler applicants.
Under the recommended procedures, handlers applying for exempt use/
diversion credit would have to provide the Board evidence that they
have been actively involved in the development of the new product, new
market, or market expansion activities, or have financially supported
the development efforts. A definition of the term ``involvement'' has
been added to the provisions specifying these conditions in Sec.
930.162(c)(5).
The Board believes that these changes will provide handlers better
guidance in making marketing decisions and in earning exempt use/
diversion credits, and help the Board in assessing handler applications
and in determining when handlers have satisfactorily accomplished
diversion and rightfully earned credits against their restricted
percentage obligations during a crop year with volume regulation
percentages. No changes were recommended in the definitions of the
terms ``development of export markets'' or ``experimental purposes''.
These issues were discussed at the Board's January 2003 meeting,
they were then reconsidered at an April 2003 meeting, and a final
recommendation was reached at the Board's June 26, 2003, meeting.
There have been differences of opinion between industry members and
the Board concerning the existing provisions. The Board developed the
recommended changes to provide handlers with clearer and more detailed
guidelines to help them better understand the procedures when applying
for such credits, and to provide the Board members on the New Product/
New Market (NPNM) subcommittee with more specific guidance on granting
and denying applications for such diversion credits.
The Board believes that it is important to expand the demand for
tart cherries to better keep supplies in line with market needs. To
accomplish this, the Board thinks that the development of new markets
and products and that the expansion of current markets for tart
cherries and tart cherry products should be encouraged to the fullest
extent possible. The changes to the exempt use/diversion credit
procedures made by this rule are expected to help the tart cherry
industry further the Board's objectives and help producers and handlers
accordingly.
This rule specifies a revised definition for ``new product
development,'' ``new market development,'' adds the concept of ``market
expansion'' to the definition of ``new market development,'' and adds a
new condition of participation in obtaining exempt use/diversion credit
for new product development, new market development, and market
expansion referred to as ``involvement''.
As previously stated, ``new product development'' is currently
defined as the production or processing of new tart cherry products or
foods or other products in which tart cherries or tart cherry products
are incorporated which are not presently being produced on a commercial
basis. New product development can also include the production or
processing of a tart cherry product using a technique not presently
being utilized commercially in the tart cherry industry. Once total
industry utilization for the product exceeds 2 percent of the 5-year
average production of tart cherries, the product will no longer be
eligible for a new product development exemption.
This action adds to the current definition of ``new product
development'' the following clarification: (1) New product development
can also include an end product of the processing of raw tart cherries
created by handlers at pack time either for resale or for re-
manufacturing which has not previously been manufactured by handlers in
the industry (for example, dried tart cherries (dehydrated) were
marketed as a new product after first undergoing processing as a five
plus one product (25 pounds of cherries topped with 5 pounds of
sugar)); or (2) a processed, value-added, item that includes tart
cherry products as an ingredient which has never been marketed to
consumers either by a handler within the industry or by a food
manufacturer. For example, during the 2002-03 crop year, a new cookie
with a tart cherry filling was sold in retail markets for the first
time.
As previously mentioned, language within Sec. 930.162(b)(1)
provides a volume limit of 2 percent of the five year average of
production of tart cherries. Once this total industry utilization for a
new product exceeds this amount, the product is no longer considered
under development and is not eligible for a new product development
exemption and diversion credit. This limitation remains the same.
However, an additional limitation recommended by the Board for new
product and new market development is added to limit the duration of
any diversion credit to three years from the first date of shipment of
the new product. The Board believes that limiting the eligibility of
the exemption for 3 years from the first date of shipment of the new
product provides a handler time to adequately develop the market for
the product. After 3 years, regardless whether markets have been
developed for the new product or not, the product will no longer
qualify for an exemption and diversion credit.
Adding such references and volume limitations to the current
definition of ``new product development'' will clarify what new product
activities can qualify for exempt use/diversion credit and how long
such credit can be obtained by the handler once the Board approves the
handler's application and sales and shipments of the product are made.
Under the order, ``new market development'' is defined as the
development of markets for tart cherry products which are not
commercially established markets and which are not competitive with
commercial outlets presently utilized by the tart cherry industry
(including the development of new export markets). For instance, a
handler who developed a new market for tart cherries that is also an
export market would get credit for either the new market development or
development of the export market but could not get credit for both. A
new market becomes commercially established, when total industry
utilization in the market exceeds 2 percent of the five year average
production of tart cherries, and is not eligible for exempt use/
diversion credit.
This action also clarifies the current definition of ``new market
development'' by adding to that definition a proviso that ``new market
development'' should be a geographic area into which tart cherries or
products derived from them have not previously been sold. Included
within the revised ``new market development'' definition are ``market
expansion activities'', which are defined as activities that
incrementally expand the sale of either tart cherries or the products
in which tart cherries are an ingredient. Such activities include, but
are not limited to: (1) Expansions of the geographic areas in which
products are marketed; (2) product line extensions; (3) significant
improvements to or revisions of existing products; (4) packaging
innovations; (5) segmentation of markets along
[[Page 34552]]
geographic, demographic, or other definable characteristics; and (6)
product repositionings.
Examples of these activities follow: (1) Expansions of the
geographic areas in which products are marketed would include shipping
tart cherries to the Ukraine and then on to Uzbekistan; (2) product
line extensions would include taking tart cherry pie and making it an
apple-cherry-berry pie fill; (3) significant improvements to or
revisions of existing products would include using non-sugar sweeteners
or reduced sugar content to processed tart cherry products; (4)
packaging innovations would include using square containers instead of
round 2.5 pound poly bags; (5) an example of segmentation of markets
along geographic, demographic, or other definable characteristics would
include tart cherry juice concentrate marketed specifically to
consumers who suffer with arthritis or gout; and (6) product
repositionings would mean that retailers would move pie-fill out of the
dessert category to be used as a topping. These examples are intended
to provide guidance of potential marketing opportunities and not to
limit the marketing creativity of the handlers in the tart cherry
industry.
To earn new market development or new product development exempt
use/diversion credits for cherries or cherry products a handler must
demonstrate involvement in the activity for which credits are sought.
To demonstrate involvement, for the purpose of earning market
development or new product development diversion credits, the
requesting handler must either (1) be or have been involved in
development of the product or the market for which the credits are
sought or (2) have had financial involvement in these processes. This
involvement must be demonstrated and established to the satisfaction of
the NPNM subcommittee by the handler requesting the diversion credits.
This action also makes a conforming change to Sec. 930.162(a) to
be consistent with a formal rulemaking order amendment completed in
2002. Language within Sec. 930.162(a) states, in summary, that tart
cherry juice and juice concentrate products are not eligible for exempt
use/diversion credit in domestic markets but such products for export
can receive exempt use/diversion credit. This language is no longer
correct because juice and juice concentrate shipped into domestic
markets can now receive exempt use/diversion credit as provided by the
2002 order amendment.
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) 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 opts 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 the rules issued 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 have been defined by the Small Business Administration (13 CFR
121.201) as those having annual receipts less than $5,000,000, and
small agricultural producers are those whose annual receipts are less
than $750,000. A majority of the tart cherry handlers and producers may
be classified as small entities.
Pursuant to a unanimous recommendation of the Board, this rule
specifies a revised definition for ``new product development,'' ``new
market development,'' adds the concept of ``market expansion'' to the
definition of ``new market development,'' adds a new condition of
handler participation in obtaining exempt use/diversion credit for new
product development, new market development, and market expansion
referred to as ``involvement'', and specifies an industry-wide limit on
market expansion activities for exempt use/diversion credit.
The rule provides more specific criteria to help handlers take
better advantage of exempt use/diversion credit activities and to help
the Board better assess the validity of handler requests for diversion
credit. It clarifies the current definitions of ``new product
development'' and ``new market development'' activities eligible
diversion credit, and adds ``market expansion'' to the definition of
``new market development''. It also specifies an industry-wide limit
for market expansion activities totaling 10 million pounds per crop
year. This limitation reflects the Board's concern that these
activities should be developed gradually. The limitation would be
allocated on a pro rata basis among the handlers who requested
diversion credit for market expansion activities and were approved by
the Board. Handlers requesting exempt use/diversion credit under these
provisions would have to provide evidence to the Board that they have
been actively involved in the development of the new product, new
market, or market expansion activity, or have financially supported the
development efforts. This is to assure that the handlers initiating
such efforts are the ones earning the diversion credits.
With regard to alternatives, the Board discussed leaving the exempt
use/diversion credit procedures unchanged. However, the Board
determined that this course of action would not be satisfactory and
recommended adding specific guidelines for consideration when reviewing
handler applications for exempt use/diversion credit activities.
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 1998/99 through 2002/03, approximately 91 percent of
the U.S. tart cherry crop, or 240.6 million pounds, was processed
annually. Of the 240.6 million pounds of tart cherries processed, 55
percent was frozen, 30 percent was canned, and 15 percent was utilized
for juice and other products.
Based on National Agricultural Statistics Service data, acreage in
the United States devoted to tart cherry production has been trending
downward. Bearing acreage has declined from a high of 50,050 acres in
1987/88 to 36,900 acres in 2002/03. This represents a 26 percent
decrease in total bearing acres. Michigan leads the nation in tart
cherry acreage with 70 percent of the total and produces about 75
percent of the U.S. tart cherry crop each year.
The 2003/04 crop is moderate in size at 222.1 million pounds. The
largest crop occurred in 1995 with production in the regulated
districts reaching a
[[Page 34553]]
record 395.6 million pounds. The price per pound received by tart
cherry growers ranged from a low of 7.3 cents in 1987 to a high of 46.4
cents in 1991.
This action will not impose additional costs on handlers,
regardless of size, because the changes are intended to clarify and
improve the Board's current procedures on approving exempt use/
diversion credit requests. The recommended changes are intended to
assure that all exempt use/diversion credit requests are handled in a
more consistent and equitable manner.
The Board's meetings were widely publicized throughout the tart
cherry industry and all interested persons were invited to attend the
meeting and participate in Board deliberations on all issues. Like all
Board meetings, the January 23, April 24, and June 26, 2003, meetings
were public meetings and all entities, both large and small, were able
to express views on this issue. Finally, interested persons are invited
to submit information on the regulatory and informational impacts of
this action on small businesses.
This action will impose 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.
USDA has not identified any relevant Federal rules that duplicate,
overlap, or conflict with this rule.
This rule invites comments on the revision of the current
procedures for tart cherry handlers to receive exempt use/diversion
credit for new product development, new market development, and market
expansion activities under the Federal marketing order for tart
cherries.
A small business guide on complying with fruit, vegetable, and
specialty crop marketing agreements and orders may be viewed at: 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
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 60 days after publication in the Federal Register
because: (1) This rule revises current rules and regulations to provide
clearer procedures for handlers and the Board to follow in making
exempt use/diversion credit decisions; (2) volume regulations are in
place for the 2003-04 season and this rule should be effective as soon
as possible; (3) the Board recommended this change 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.
0
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
0
1. The authority citation for 7 CFR part 930 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
0
2. Section 930.162 is amended by:
0
A. Revising paragraph (a);
0
B. Revising paragraphs (b)(1) and (b)(2); and
0
C. Adding a new paragraph (c)(5) to read as follows:
Sec. 930.162 Exemptions.
(a) General. Tart cherries which are used for the purpose of new
product development, for new market development and market expansion,
for the development of export markets, for experimental purposes, for
export to countries other than Canada, and Mexico, or which are donated
to charitable organizations may be granted an exemption by the Board
and will be exempt from Sec. Sec. 930.41, 930.44, 930.51, 930.53, and
Sec. Sec. 930.55 through 930.57, subject to the following terms and
conditions. Any information received of a confidential and/or
proprietary nature included in this application will be protected from
disclosure pursuant to Sec. 930.73 of the order.
(b) * * *
(1) New product development. This term includes the development of
new tart cherry products or of foods or other products in which tart
cherries or tart cherry products are incorporated which are not
presently being produced on a commercial basis. New product development
can also include the production or processing of a tart cherry product
using a technique not presently being utilized commercially in the tart
cherry industry; an end product of the processing of raw tart cherries
done by the industry at pack time either for resale or for re-
manufacturing which has not been manufactured previously by the
industry; or a processed, value-added item that includes tart cherry
products as an ingredient which has never been marketed to consumers
either by a handler within the industry or by a food manufacturer. Once
total industry utilization for a new product exceeds 2 percent of the
five year average production of tart cherries, the product shall no
longer be considered under development and not eligible for a new
product development exemption. In addition, the maximum duration of any
credit activity is three years from the first date of shipment.
(2) New market development and market expansion. This term includes
the development of markets for tart cherry products which are not
commercially established markets and which are not competitive with
commercial outlets presently utilized by the tart cherry industry
(including the development of new export markets): Provided, That these
markets are a geographic area into which tart cherries or products
derived from them have not previously been sold. The term ``market
expansion'', includes activities that incrementally expand the sale of
either tart cherries or the products in which tart cherries are an
ingredient, such as, but not be limited to: Expansions of the
geographic areas into which tart cherries or tart cherry products are
marketed; product line extensions; significant improvements to or
revisions of existing products; packaging innovations; segmentation of
markets along geographic, demographic, or other definable
characteristics; and product repositionings. There is an annual,
industry-wide maximum diversion credit volume of ten million RPE pounds
(Raw Product Equivalent pounds) of cherry products for all expansion
activities which will be allocated pro rata among participating
handlers.
* * * * *
(c) * * *
(5) To be eligible for new product, new market development and
market expansion diversion exemptions, a handler must demonstrate
involvement in the activity for which the exemptions are sought. The
requesting handler must
[[Page 34554]]
either be or have been involved in development of the product, the
market, or market expansion activities for which the exemptions are
sought or have had financial involvement in the activities. This
involvement must be demonstrated and established to the satisfaction of
the Board by the handler requesting the exemptions.
Dated: June 16, 2004.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 04-14062 Filed 6-21-04; 8:45 am]
BILLING CODE 3410-02-P