[Federal Register: October 20, 2004 (Volume 69, Number 202)]
[Rules and Regulations]
[Page 61589-61592]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20oc04-2]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 930
[Docket No. FV03-930-6 FIR]
Tart Cherries Grown in the States of Michigan, et al.; Additional
Option for Handler Diversion
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: The Department of Agriculture (Department) is adopting, as a
final rule, without change, an interim rule that added another method
of handler diversion to the regulations under the Federal tart cherry
marketing order (order). Handlers handling cherries harvested in a
regulated district may fulfill any restricted percentage requirement
when volume regulation is in effect by diverting cherries or cherry
products rather than placing them in an inventory reserve. Under this
additional method, handlers will be allowed to
[[Page 61590]]
obtain diversion credit for diverting tart cherries, after processing,
that may not be acceptable for the finished products manufactured by
the handler. This action was unanimously recommended by the Cherry
Industry Administrative Board (Board), the body which locally
administers the marketing order. The marketing order regulates the
handling of tart cherries grown in the States of Michigan, New York,
Pennsylvania, Oregon, Utah, Washington, and Wisconsin.
DATES: Effective November 19, 2004.
FOR FURTHER INFORMATION CONTACT: Patricia A. Petrella or Kenneth G.
Johnson, Marketing Order Administration Branch, Fruit and Vegetable
Programs, AMS, USDA, Suite 6C02, 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, or obtain a guide on complying with fruit, vegetable, and
specialty crop marketing agreements and orders by contacting Jay
Guerber, Marketing Order Administration Branch, Fruit and Vegetable
Programs, AMS, USDA, 1400 Independence Avenue, SW., STOP 0237,
Washington, DC 20250-0237; telephone: (202) 720-2491, fax: (202) 720-
5698, 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 produced in the States of Michigan, New York,
Pennsylvania, Oregon, Utah, Washington, and Wisconsin, hereinafter
referred to as the ``order.'' The order is effective under the
Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-
674), hereinafter referred to as the ``Act.''
The Department of Agriculture (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 the 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 exempt therefrom. Such
handler is afforded the opportunity for a hearing on the petition.
After the hearing, the Secretary would rule on the petition. The Act
provides that the district court of the United States in any district
in which the handler is an inhabitant, or has his or her principal
place of business, has jurisdiction in equity to review the 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.
Handler diversion is authorized under Sec. 930.59 of the tart
cherry marketing order and, when volume regulation is in effect,
handlers may fulfill restricted percentage requirements by diverting
cherries or cherry products into authorized outlets. 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 free percentage portion of the regulated crop is not expected to
fill demand.
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 as provided for in Sec. 930.59(c).
Section 930.159 of the rules and regulations under the order allows
handlers to divert cherries by destruction of the cherries at the
handler's facility. Currently, at-plant diversion of cherries takes
place at the handler's facility prior to placing cherries into the
processing line. However, experience has shown that this limitation
places a burden on handlers regulated under this order.
To remove this burden, the Board unanimously recommended that
handlers be allowed to divert and receive diversion credit for tart
cherries after processing that may not be acceptable for the finished
products they manufacture. With the capability to divert such cherries
after processing, but before the finished product is completed,
handlers would have an incentive to remove the lower quality processed
cherries from the lot, meet their restricted obligation requirements,
and improve the quality of their products. Improvement in the quality
of tart cherries and tart cherry products would benefit producers,
handlers, and consumers.
This action continues to provide handlers more flexibility in
meeting their restricted obligation requirements. The ability to
perform at-plant diversion after placing the cherries into the
processing line, but before a finished product is completed, will
benefit all handlers. This action is expected to especially benefit
handlers who only process one product. In many instances, these
handlers are small.
This rule continues to allow a handler who processes only five plus
one cherries (25 pounds of tart cherries with 5 pounds of sugar added)
to fulfill his/her restricted percentage obligation (in a volume
regulated year) by diverting at-plant, lower quality wholesome fruit
from his/her five plus one processing line. Previously, the diversion
took place prior to processing and handlers that processed one product
were forced to divert their good quality tart cherries with the lower
quality wholesome cherries, or divert cherries by some other approved
method. Handlers processing more than one product also are able to take
advantage of the additional method of at-plant diversion.
Diversion may also be accomplished by handlers donating cherries to
charitable organizations, utilizing cherries in exempt outlets, or
redeeming grower diversion certificates obtained from growers who have
diverted cherries by non-harvest, and who have been issued diversion
certificates by the Board in accordance with rules and regulations
governing the issuance of grower diversion certificates (Sec.
930.158).
The Board reported that during the 2001-2002 crop year, the
inventory reserve contained 44.3 percent frozen products, 11.3 percent
waterpack, 15.2 percent piefill, 28 percent juice and juice
concentrate, and 1.2 percent other products. These percentages show
that frozen products, juice and juice concentrate make up most of the
reserve quantities.
Pursuant to Sec. 930.159(b), handlers electing to divert cherries
or cherry products must first notify the Board and submit a plan for
approval. Such notification and plan must include an agreement that
diversion will take place under the supervision of the USDA Processed
Products Inspection Service or Board employees, and that the costs
[[Page 61591]]
of such supervision are to be paid by the handler. USDA inspectors
supervise the diversion of cherries or finished products at the current
hourly rate under USDA's inspection fee schedule (7 CFR 54.42). Board
employees supervise diversion at the same payment rate.
Once diversion is satisfactorily accomplished, handlers receive
diversion certificates stating the weight of cherries diverted. Such
diversion certificates can be used to satisfy handlers' restricted
percentage obligations. Cherries and finished cherry products that have
been diverted are not subject to assessments.
The Regulatory Flexibility Act and Effects on Small Businesses
The Agricultural Marketing Service (AMS) has considered the
economic impact of this action on small entities and has prepared this
final regulatory flexibility analysis. The Regulatory Flexibility Act
(RFA) would allow AMS to certify that regulations do not have a
significant economic impact on a substantial number of small entities.
However, as a matter of general policy, AMS' Fruit and Vegetable
Programs (Programs) no longer opt for such certification, but rather
perform regulatory flexibility analyses for any rulemaking that would
generate the interest of a significant number of small entities.
Performing such analyses shifts the Programs' efforts from determining
whether regulatory flexibility analyses are required to the
consideration of regulatory options and economic or regulatory impacts.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions in order that small businesses will
not be unduly or disproportionately burdened. Marketing orders issued
pursuant to the Act, and rules 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 tart cherry marketing order and
approximately 900 producers of tart cherries in the regulated area.
Small agricultural service firms, which includes handlers, have been
defined by the Small Business Administration (13 CFR 121.201) as those
having annual receipts of less than $5,000,000, and small agricultural
producers are defined as those having annual receipts of less than
$750,000. A majority of the producers and handlers are considered small
entities under SBA's standards.
Board and subcommittee meetings are widely publicized in advance
and are held in a location central to the production area. The meetings
are open to all industry members (including small business entities)
and other interested persons who are encouraged to participate in the
deliberations and voice their opinions on topics under discussion.
Thus, Board recommendations can be considered to represent the
interests of small business entities in the industry.
The Board reported that during the 2001-2002 crop year, the
inventory reserve contained 44.3 percent frozen products, 11.3 percent
waterpack, 15.2 percent piefill, 28 percent juice and juice
concentrate, and 1.2 percent other products. These percentages show
that frozen products, juice and juice concentrate make up most of the
reserve quantities.
The Board unanimously recommended this additional method for
diversion credit to allow handlers to divert product after processing
that may not be acceptable for the finished products manufactured by
the handler. As discussed earlier, this action continues to provide
handlers more flexibility in meeting their restricted obligation
requirements and is expected to be particularly helpful to handlers who
produce only one product. In many instances, the one-product handlers
in the tart cherry industry are small.
Handlers that process juice concentrate and other products can more
easily meet their restricted obligation requirements by juicing and
processing lower quality wholesome product and placing it in the
inventory reserve. Handlers that only have the ability to process
products requiring higher quality fruit like five plus one cherries
have to put this fruit into the inventory reserves, or take advantage
of other diversion options available under the order.
To sell more of their higher quality products, some handlers
purchase cherries or diversion credit certificates from other handlers
to meet their restricted obligation requirements. The added flexibility
provided by this action will help all handlers, and is expected to
especially benefit the one-product handlers who will be able to sell
more of their higher quality cherries in finished product form.
Producers also are expected to benefit from the implementation of
this action. Currently, producers can use in-orchard tank diversion, in
which cherries harvested into tanks are measured, calculated then
diverted in the orchard. This method of diversion, however, removes
both good and lesser quality fruit. Under the Board's recommendation,
producers could deliver all of their fruit to handlers and the good
quality fruit would be sorted and the poor quality fruit diverted or
dumped. Producers would be paid for the good quality fruit. According
to the Board, growers are paid on a quality point basis relative to the
quality of the fruit delivered. This action would continue to provide
producers with more consistent income proportionate to the quality of
the fruit delivered to handlers and with discretion to reduce orchard
diversion. As such, producers can be more selective in complying with
the grower diversion process.
The principal demand for tart cherries is in the form of processed
products. Tart cherries are dried, frozen, canned, juiced, and pureed.
Data from the National Agricultural Statistics Service (NASS) states
that during the period 1995/96 through 2002/03, approximately 92
percent of the U.S. tart cherry crop, or 285.7 million pounds, was
processed annually. Of the 285.7 million pounds of tart cherries
processed, 58 percent was frozen, 30 percent was canned, and 12 percent
was utilized for juice.
With regard to alternatives, the Board felt that the recommendation
was the only solution to providing handlers additional flexibility in
meeting their restricted obligation requirements.
USDA has not identified any relevant Federal rules that duplicate,
overlap, or conflict with this regulation.
In compliance with Office of Management and Budget (OMB)
regulations (5 CFR part 1320) which implement the Paperwork Reduction
Act of 1995 (Pub. L. 104-13), the information collection and
recordkeeping requirements have been previously approved by OMB and
assigned OMB Number 0581-0177.
There are some reporting, recordkeeping, and other compliance
requirements under the marketing order. The reporting and recordkeeping
burdens are necessary for compliance purposes and for developing
statistical data for maintenance of the program. The forms require
information which is readily available from handler records and which
can be provided without data processing equipment or trained
statistical staff. As with other, similar marketing order programs,
reports and forms are periodically studied to reduce or eliminate
duplicate information collection burdens by industry and public sector
agencies. This rule does not change those requirements.
[[Page 61592]]
An interim final rule concerning this action was published in the
Federal Register on July 9, 2004. Copies of the rule were mailed by the
Board's staff to all Board members and tart cherry handlers. In
addition, the Office of the Federal Register and USDA made the rule
available through the Internet. That rule provided for a 60-day comment
period which ended September 7, 2004. No comments were received.
After consideration of all relevant material presented, including
the Board's recommendation, and other information, it is found that
finalizing the interim final rule, without change, as published in the
Federal Register (69 FR 41383, July 9, 2004) will tend to effectuate
the declared policy of the Act.
List of Subjects in 7 CFR Part 930
Marketing agreements, Reporting and recordkeeping requirements,
Tart cherries.
PART 930--TART CHERRIES GROWN IN THE STATES OF MICHIGAN, NEW YORK,
PENNSYLVANIA, OREGON, UTAH, WASHINGTON, AND WISCONSIN
0
Accordingly, the interim final rule amending 7 CFR part 930 which was
published at 69 FR 41383 on July 9, 2004, is adopted as a final rule
without change.
Dated: October 14, 2004.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 04-23417 Filed 10-19-04; 8:45 am]
BILLING CODE 3410-02-P