[Federal Register: November 13, 2006 (Volume 71, Number 218)]
[Rules and Regulations]
[Page 66095-66098]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13no06-2]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 930
[Docket No. FV06-930-1 FIR]
Tart Cherries Grown in the States of Michigan, et al.; Change in
Certain Provisions/Procedures Under the Handling Regulations for Tart
Cherries
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: The Department of Agriculture (USDA) is adopting, as a final
rule, with a change, an interim final rule removing volume limitations
on new product development, new market development and market expansion
activities to facilitate such activities; allowing handlers to receive
diversion credit for the voluntary destruction of finished, marketable
products that have deteriorated in condition to provide handlers more
flexibility; adding a procedure to keep Cherry Industry Administrative
Board (Board) representation in line with current district production
levels; and revising grower application and mapping procedures under
the grower diversion program to make the process less burdensome. These
changes are intended to improve the operation of the marketing order
and to increase the demand for tart cherries and tart cherry products.
The changes were unanimously recommended by the Board, the body that
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.
EFFECTIVE DATE: December 13, 2006.
FOR FURTHER INFORMATION CONTACT: Patricia A. Petrella or Kenneth G.
Johnson, Marketing Order Administration Branch, Fruit and Vegetable
Programs, AMS, USDA, Unit 155, 4700 River Road, Riverdale, MD 20737;
Telephone: (301) 734-5243, or Fax: (301) 734-5275.
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 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 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. A
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 in equity 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 continues in effect changes to Sec. 930.162, Exemptions,
that removed volume limitations on new product development, new market
development, and market expansion activities utilized by handlers to
earn diversion credits to meet restricted percentage regulation
withholding requirements. 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. Volume
regulation percentages are in effect for the 2005-2006 crop year (71 FR
1915, January 12, 2006). This rule also continues in effect an action
that allowed handlers to receive diversion credit for the voluntary
destruction of finished marketable product; added a procedure to keep
Board representation in line with district production levels; and
revised grower application and mapping procedures.
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. According to Sec.
930.62, cherries that are diverted in accordance with Sec. 930.59 may
be used for new product development and new market development, used
for experimental purposes, or used for any other purpose designated by
the Board, including cherries processed into products for markets for
which less than 5 percent of the preceding 5-year average production of
cherries were utilized.
Section 930.162 specifies procedures for obtaining approval for
exempt uses which include new product development, new market
development, and market expansion. Currently, these provisions specify
volume limitations for these exempt uses. The limitations are specified
in Sec. 930.162(b)(1) which states that once total industry
utilization for a new product exceeds 2 percent of the 5-year average
production of tart cherries, the product shall no longer be considered
under development and not be eligible for a new product development
exemption. The maximum
[[Page 66096]]
duration of any new product credit activity is three years from the
first date of shipment.
Section 930.162(b)(2) regarding new market development and market
expansion specifies the annual industry-wide maximum diversion credit
volume at 10 million pounds RPE (Raw Product Equivalent) of cherry
products for all expansion activities which is allocated pro rata among
participating handlers.
When these limitations were added, the Board believed that these
markets should be developed slowly. However, it now believes that these
limitations are a disincentive to new product, market development, and
market expansion activities involving large quantities. If a handler's
new product activity involves moving 8 million pounds of exempt tart
cherries, and 2 percent of the 5-year average production is 5 million
pounds, the handler would only receive 5 million pounds of diversion
credit, not 8 million pounds. The Board now believes that this
unnecessarily restricts these handler activities and that handlers
should receive diversion credit for the full diversion amount to
stimulate handler interest and facilitate new product development
activities.
With respect to new market development and market expansion
activities, if the same handler had a pro rata allocation representing
20 percent of the industry-wide 10 million pound limitation for all
handlers participating in these activities, this handler would only
receive diversion credit for 1.6 million pounds, not 8 million pounds.
The Board believes that this provision should be removed to facilitate
handler interest in new market development and market expansion.
To facilitate these activities, the Board recommended that the
volume limitations be removed from paragraphs (b)(1) and (b)(2) of
Sec. 930.162 to foster further handler interest in new product, new
market development, and market expansion activities. This is expected
to result in an increase in demand for tart cherries and tart cherry
products. The time limitation for new product development will remain
in effect.
As previously stated in this document, handler diversion is
authorized under Sec. 930.59. 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. At-plant
diversion of cherries takes place prior to placing cherries into the
processing line to ensure that the cherries diverted were not simply an
undesirable or unmarketable byproduct of processing. Handlers also can
receive diversion credit for finished, marketable tart cherry products
that were accidentally destroyed. Finished, marketable cherry products
might be accidentally destroyed in a fire, explosion, or because of a
freezer malfunction.
Handlers sometimes voluntarily destroy finished, marketable cherry
products if the cherry products sustain a loss of condition that
renders them unacceptable for use in normal market channels (free
tonnage outlets). To permit handlers to recover some of their costs
incurred in acquiring, processing, and storing such cherries, the Board
unanimously recommended that the at-plant diversion procedures be
broadened so handlers can receive diversion credit for the voluntary
destruction of such cherries. The handler would not have to purchase
additional cherries to meet his/her restricted percentage obligation,
but could simply use the diversion credit received for the voluntarily
destroyed product.
To receive diversion credit under this added option, the Board
recommended that the cherry products meet similar criteria as
accidentally destroyed marketable product. That is, such cherry
products must: (1) Be owned by the handler at the time of the voluntary
destruction; (2) be a marketable product at the time of processing; (3)
be included in the handler's end of year handler plan; and (4) have
been assigned a Raw Product Equivalent (RPE) by the handler to
determine the volume of cherries. In addition, the condition and the
voluntary destruction as well as the disposition of the finished tart
cherry product must be verified by a USDA inspector or a Board agent or
employee.
Handlers wishing to obtain diversion certificates for finished tart
cherry products that are voluntarily destroyed must apply for such
diversion certificates and sign an agreement that disposition of the
destroyed product will take place under the supervision of USDA's
Processed Products Branch inspectors or Board inspectors. This will
allow the Board to verify that the finished product was marketable, but
sustained a loss of condition, and that it was disposed of properly.
Once diversion is satisfactorily accomplished, handlers will
receive diversion certificates from the Board stating the weight of
cherries diverted. Such diversion certificates can be used to satisfy a
handler's restricted percentage obligation.
Section 930.158 provides that growers, in districts subject to
volume regulation, may voluntarily divert their tart cherry production.
Growers may then offer their diversion certificates to handlers for
their use in meeting their restricted percentage obligation. The four
types of grower diversion are: Random row, whole block, partial block,
and in-orchard tank diversion. This action changes the procedures for
grower mapping under the grower diversion program. Currently, under
Sec. 930.158 growers that wish to divert cherries using methods other
than in-orchard tank must file maps every year if they intend to
participate in the voluntary grower diversion program. Growers applying
for diversion must sign a Grower Diversion Application which states
that the grower agrees to comply with the regulations established for
the tart cherry diversion program. Each map must contain the grower's
name and number assigned by the Board, the grower's address, the block
name or number when appropriate, the location of the orchard or
orchards, and other information which may be necessary to accomplish
the desired diversion.
Growers then inform the Board what type of diversion will be used:
Random row, partial block, whole block or in-orchard tank diversion.
Growers who have filed a Grower Diversion Application but have not
submitted an orchard map with the Board can only participate in in-
orchard tank diversion activities.
The Board has recommended that the original map and application
have an ongoing, continuing effect. Annual resubmissions of the map and
application would no longer be required. Growers will only submit an
application and map if they are participating in the grower diversion
program for the first time. Growers would need only to submit a new
orchard map if he/she added a new block of trees or changed the orchard
layout differently from the map previously submitted to the Board. This
action will slightly decrease reporting burdens on growers
participating in the grower diversion program.
This action continues in effect a revision to the provisions to
Sec. 930.120 for reallocating Board representation. Currently, Sec.
930.20 allocates producer and handler representation on the Board based
upon the previous 3-year average production of each district in the
production area. When the production level in a district reaches
various specified thresholds, the number of representatives from that
district either increases or decreases: districts with production up to
and including 10 million pounds shall have one member; districts with
production greater than 10 million and up to and including 40
[[Page 66097]]
million pounds shall have 2 members; and districts with production
greater than 40 million pounds and up to and including 80 million
pounds shall have 3 members; and districts with production greater than
80 million pounds shall have 4 members.
The Board recommended that in the event that a district's 3-year
average production decreases to a level requiring a reduction in
membership on the Board, representation of the district shall be
determined by: (1) Agreement of the elected members and alternate
members of the specific district; or (2) if an agreement cannot be
reached, the members and alternates having the shortest amount of time
remaining in their terms of office would be removed from the Board.
However, the Board's recommendation required modification.
Because the Secretary of Agriculture (Secretary) has sole authority
to remove and select persons who can serve on the Board, it would not
be appropriate to give direct responsibility to current Board members
in a specific district to determine who is removed from the Board when
production levels decrease. Accordingly, when a district is faced with
losing Board representation, the regulations will require the members
of the specific district to make a recommendation to the Board as to
who should be removed from the Board, and the Board will then submit
its recommendation to the Secretary for approval.
In the event a district's 3-year average production increases such
that it warrants additional seats on the Board, the seats shall be
allocated following the criteria in Sec. 930.20(b)(5). Nomination and
selection of members to fill the additional seats would follow the
procedures specified in Sec. Sec. 930.23 and 930.24.
In addition, Sec. 930.158(a) was revised to delete obsolete dates
in that section and Sec. 930.158(b) was revised to clarify the
requirement to submit a map for random-row diversion use.
Final Regulatory Flexibility Analysis
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), the Agricultural Marketing Service (AMS) has considered the
economic impact of this action on small entities. Accordingly, AMS has
prepared this final regulatory flexibility analysis.
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 $6,000,000, and small agricultural
producers are defined as those having annual receipts of less than
$750,000. A majority of the producers and handlers of tart cherries
under the order are considered small entities under SBA's standards.
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 2000/2001 through 2004/2005, approximately 93.4
percent of the U.S. tart cherry crop, or 216.8 million pounds, was
processed annually. Of the 216.8 million pounds of tart cherries
processed, 59 percent was frozen, 28 percent was canned, and 13 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 36,950 acres in 2004/2005. This represents a 26 percent
decrease in total bearing acres. Michigan leads the nation in tart
cherry acreage with 73 percent of the total and produces about 70
percent of the U.S. tart cherry crop each year.
This action continues in effect a rule that removed volume
limitations on market expansion activities used by handlers to earn
diversion credits to meet their restricted volume obligations; allowed
handlers to earn diversion credits when they voluntarily destroy
finished marketable products that have been damaged or deteriorated in
condition in some manner; revised grower application/mapping procedures
under the grower division program to make the procedures less
burdensome; and added a procedure regarding the reallocation of Board
representation to reflect current district production levels. These
changes to the marketing order are authorized under Sec. Sec. 930.62,
930.59, 930.58, and 930.20, respectively.
It is expected that the benefits resulting from this rulemaking
will impact both small and large handlers positively by helping them
increase market demand and by improving the operation of the marketing
order. It also will benefit producers by making the in-orchard
diversion application/mapping procedures less burdensome and improve
the operation of the program.
Regarding alternatives, the Board discussed leaving the provisions
unchanged, but determined that the changes were a more viable course of
action. The program improvements expected to result because of these
changes will positively impact producers and handlers under the
marketing order, regardless of size.
USDA has not identified any relevant Federal rules that duplicate,
overlap, or conflict with this regulation.
USDA has determined that this action will have a small impact on
the reporting and recordkeeping requirements imposed under the tart
cherry marketing order. As with all Federal marketing order programs,
reports and forms are periodically reviewed to reduce information
requirements and duplication by industry and public sector agencies.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
Chapter 35), the information collection and recordkeeping requirements
that are contained in this rule have been previously approved by the
Office of Management and Budget (OMB) under OMB No. 0581-0177, Tart
Cherries Grown in the States of Michigan, New York, Pennsylvania,
Oregon, Utah, Washington, and Wisconsin, M.O. No. 930.
This rule, which changes procedures for growers submitting
applications and maps, will result in a slight decrease in reporting
and recordkeeping requirements on growers who participate in the
voluntary diversion program. In addition, a slight increase in
reporting and recordkeeping requirements for handlers who voluntarily
destroy tart cherry products would be within the current information
collection burden approved by OMB.
Reporting and recordkeeping requirements 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.
AMS is committed to compliance with the E-Government Act, to
promote
[[Page 66098]]
the use of the Internet and other information technologies to provide
increased opportunities for citizen access to Government information
and services, and for other purposes.
An interim final rule concerning this action was published in the
Federal Register on April 5, 2006 (71 FR 16982). Copies of the rule
were mailed by the Board's staff to all Board members and tart cherry
handlers. In addition, the rule was made available through the Internet
by USDA and the Office of the Federal Register. That rule provided for
a 60-day comment period which ended June 5, 2006. Two comments were
received. One comment was received from a tart cherry grower and the
other comment was from the Executive Director of the Board.
The comment from the grower supported USDA's modification to the
Board's recommendation concerning the authority of the Secretary to
remove or select members of the Board. The Board had recommended that
current Board members in a specific district determine who is removed
from the Board when production levels decrease. USDA modified the
recommendation so it stated that when a district falls below the
threshold level, members from the district should make a recommendation
to the Board. The Board would then submit its recommendation to the
Secretary for approval. The commenter agreed with this modification.
The comment from the Executive Director of the Board concerned two
issues contained in the interim final rule: (1) Grower mapping
requirements; and (2) reallocating Board representation. With respect
to the first issue, the commenter urges USDA to remove the requirement
now included in Sec. 930.158(b) that if a grower decides not to
participate in the grower diversion program for a year, the grower must
inform the Board of his/her non-participation. USDA agrees that this
requirement is not necessary for the operation of the grower diversion
program. As such, this requirement is being deleted from Sec.
930.158(b).
The second issue the Executive Director addressed concerned the
reallocation of Board membership. The commenter asserted that the
recommendation of the Board, concerning reallocation, should be adopted
without the USDA modification that the Secretary will make the final
decision based on a Board recommendation. The Board's recommendation,
however, did not take into account the Secretary's sole authority to
remove and select persons to serve on the Board. As previously
discussed, it would not be appropriate to give direct responsibility to
current Board members in a specific district to determine who is
removed from the Board when production levels decrease. Therefore, the
commenter's second suggestion is not adopted in this rule.
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
finalizing the interim final rule, with a change, as published in the
Federal Register (71 FR 16982, April 5, 2006) 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.
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
Accordingly, the interim final rule amending 7 CFR part 930 which was
published at 71 FR 16982 on April 5, 2006, is adopted as a final rule
with the following change.
PART 930--TART CHERRIES GROWN IN THE STATES OF MICHIGAN, NEW YORK,
PENNSYLVANIA, OREGON, UTAH, WASHINGTON, AND WISCONSIN
0
1. The authority citation for part 930 continues to read as follows:
Authority: 7 U.S.C. 601-674.
0
2. In Sec. 930.158, the introductory text of paragraph (b) is revised
to read as follows:
Sec. 930.158 Grower diversion and grower diversion certificates.
* * * * *
(b) Application and mapping for diversion. Any grower desiring to
divert cherries using methods other than in-orchard tank shall submit a
map of the orchard or orchards to be diverted, along with a completed
Grower Diversion Application, to the Board by April 15 of each crop
year. The application includes a statement which must be signed by the
grower which states that the grower agrees to comply with the
regulations established for a tart cherry diversion program. Each map
shall contain the grower's name and number assigned by the Board, the
grower's address, block name or number when appropriate, location of
orchard or orchards and other information which may be necessary to
accomplish the desired diversion. On or before July 1, the grower
should inform the Board of such grower's intention to divert in-orchard
and what type of diversion will be used. The four types of diversion
are random row diversion, whole block diversion, partial block
diversion and in-orchard tank diversion. A grower who informs the Board
about the type of diversion he or she wishes to use by July 1 can elect
to use any diversion method or combination of diversion methods. Only
random row or in-orchard tank diversion methods may be used if the
Board is not so informed by July 1. Trees that are four years or
younger do not qualify for diversion. Annual resubmissions of either
the map or application will no longer be required. Growers will only
submit a new application and map if they are participating in the
grower diversion program for the first time. Growers will need only to
submit a new orchard map if he/she adds a new block of trees to the
orchard or changes the orchard layout differently from the map
previously submitted to the Board.
* * * * *
Dated: November 7, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. E6-19078 Filed 11-9-06; 8:45 am]
BILLING CODE 3410-02-P