[Federal Register Volume 61, Number 104 (Wednesday, May 29, 1996)]
[Proposed Rules]
[Pages 26956-26979]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-13383]
[[Page 26955]]
_______________________________________________________________________
Part II
Department of Agriculture
_______________________________________________________________________
Agricultural Marketing Service
_______________________________________________________________________
7 CFR Part 930
Tart Cherries Grown in the States of Michigan, New York, Pennsylvania,
Oregon, Utah, Washington, and Wisconsin; Secretary's Decision and
Referendum Order on the Proposed Marketing Agreement and Order;
Proposed Rule
Federal Register / Vol. 61, No. 104 / Wednesday, May 29, 1996 /
Proposed Rules
[[Page 26956]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 930
[Docket No. AO-370-A5; FV93-930-2]
Tart Cherries Grown in the States of Michigan, New York,
Pennsylvania, Oregon, Utah, Washington, and Wisconsin; Secretary's
Decision and Referendum Order on the Proposed Marketing Agreement and
Order
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed rule and referendum order.
-----------------------------------------------------------------------
SUMMARY: This decision proposes the issuance of a marketing agreement
and order for tart cherries grown in certain designated States and
provides growers and processors the opportunity to vote in a referendum
to determine if they favor the proposed order. For the purposes of this
document, the term ``Cherries'' refers to all tart/sour cherry
varieties grown in the proposed production area, which consists of the
States of Michigan, New York, Pennsylvania, Oregon, Utah, Washington,
and Wisconsin. The proposed order would authorize volume regulation,
grade, size, and maturity regulations, and mandatory inspection. It
would also authorize production, processing, and marketing research and
promotion projects, including paid advertising. The order would be
administered by an 18 member administrative board consisting of 17
growers and handlers and one public member, and would be financed by
assessments on handlers of tart cherries grown in the production area.
A primary objective of this program would be to improve producer
returns by strengthening consumer demand through volume control and
quality assurance mechanisms. Tart cherry producers and processors
would vote in a referendum to determine if they favor issuance of the
proposed marketing order.
DATES: The referendum shall be conducted from June 12, 1996, through
July 10, 1996. The representative period for the purpose of the
referendum herein ordered is July 1, 1995, through May 31, 1996.
FOR FURTHER INFORMATION CONTACT:
(1) R. Charles Martin or Kenneth G. Johnson, Marketing Order
Administration Branch, Fruit and Vegetable Division, AMS, USDA, P.O.
Box 96456, room 2523-S, Washington, D.C. 20090-6456; telephone: 202-
720-5053, FAX: 202-720-5698.
(2) Robert Curry, Northwest Marketing Field Office, Marketing Order
Administration Branch, Fruit and Vegetable Division, AMS, USDA, 1220
S.W. Third Avenue, room 369, Portland, Oregon 97204; telephone: 503-
326-2725, FAX: 503-326-7440.
SUPPLEMENTARY INFORMATION:
Prior Documents in This Proceeding
Notice of Hearing, issued on November 30, 1993, and published in
the Federal Register on November 30, December 23, 1993, and January 31,
1994 [58 FR 63108, 58 FR 68065, and 59 FR 4259, respectively]. The
notice reopening the hearing was issued on December 5, 1994, and
published in the Federal Register on December 8, 1994 [59 FR 63273];
Recommended Decision and Opportunity to File Written Exceptions to the
Proposed Marketing Agreement and Order, issued November 20, 1995, and
published in the Federal Register on November 29, 1995 (60 FR 61292).
The reopening of the comment period to file written exceptions to the
proposed marketing agreement and order was issued on December 27, 1995,
and published in the Federal Register on January 2, 1996 (61 FR 21).
This administrative action is governed by the provisions of
sections 556 and 557 of Title 5 of the United States Code, and is
therefore excluded from the requirements of Executive Order 12866.
The marketing agreement and order proposed herein have been
reviewed under Executive Order 12778, Civil Justice Reform. They are
not intended to have retroactive effect. If adopted, the proposed
agreement and order would not preempt any State or local laws,
regulations, or policies, unless they present an irreconcilable
conflict with the proposal.
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 requesting a modification of the order or to be exempted
therefrom. A handler is afforded the opportunity for a hearing on the
petition. After the hearing, the Secretary would rule on the petition.
The Act provides that the district court of the United States in any
district in which the handler is an inhabitant, or has his or her
principal place of business, has jurisdiction to review the Secretary's
ruling on the petition, provided an action is filed not later than 20
days after the date of the entry of the ruling.
Preliminary Statement
This proposed marketing agreement and order was formulated on the
record of a public hearing held December 15-17, 1993, in Grand Rapids,
Michigan; January 13, 1994, in Provo, Utah; February 15-17, 1994, in
Portland, Oregon; January 12-13, 1995, in Portland, Oregon; and January
18-19, 1995, in Grand Rapids, Michigan. These multiple hearing sessions
were held to consider a proposed marketing agreement and order
regulating the handling of tart cherries grown in the proposed
production area. The hearing was held pursuant to the provisions of the
Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-
674), hereinafter referred to as the Act, and the applicable rules of
practice and procedure governing the formulation of marketing
agreements and marketing orders (7 CFR part 900). Approximately 40
witnesses, including tart cherry growers, handlers, and economists,
testified in support of the order. Growers and handlers mainly from the
States of Oregon and Washington testified in opposition to the proposed
order and asked to have Oregon and Washington excluded from the
proposed production area.
At the conclusion of the February 1994 hearing in Oregon, the
deadline for filing post-hearing briefs was set at April 29, 1994. The
deadline for filing post-hearing briefs was subsequently extended to
May 31, 1994. However, based on a review of the hearing evidence and
post-hearing briefs, USDA determined that the hearing should be
reopened to clarify some provisions. USDA wanted to obtain additional
information and clarification concerning: (1) The States that should be
regulated under the order; (2) the economic impact of the proposed
order on small and large businesses; (3) whether the expected program
benefits would exceed costs, especially for growers, handlers and
consumers; and (4) how certain provisions would be implemented under
the proposed marketing order. The hearing was reopened and held January
12-13, 1995, in Portland, Oregon, and January 18-19, 1995 in Grand
Rapids, Michigan. At the conclusion of the Michigan hearing, the
deadline for filing post-hearing briefs was set at March 17, 1995. Ten
briefs were filed following the first briefing period and seven briefs
were filed following the second briefing period.
The proponents testified that severely fluctuating tart cherry
prices are
[[Page 26957]]
inherently harmful to growers and consumers. It was contended that the
proposed marketing order would improve grower returns by strengthening
consumer demand through volume control and quality assurance
mechanisms.
Upon the basis of evidence introduced at the hearing and the record
thereof, the Administrator of the Agricultural Marketing Service (AMS)
on November 29, 1995, filed with the Hearing Clerk, U. S. Department of
Agriculture, a recommended decision with the opportunity for written
exceptions by December 29, 1995. Subsequently, the USDA received three
requests to provide more time to analyze the recommended decision and
prepare and file written comments. Based on these requests the USDA
reopened the comment period until January 16, 1996.
There were 29 exceptions received on the proposed order. Seven
exceptions support the order as proposed, 4 support the order with
minor modifications, 2 support the order with substantial
modifications, 15 oppose the order, and 1 recommends only a minor
technical clarification. Exceptions were received from: Richard
DeRuiter, Michigan tart cherry processor; Senator Mark Hatfield,
Congressional Representatives Peter DeFazio, Jim Bunn, Ron Wyden,
Elizabeth Furse, and Wes Cooley, all from the State of Oregon; Mark L.
Schrepel, Oregon tart cherry grower and processor; William R. Sherman,
Burnette Foods, Inc., Michigan grower/processor; Randy Hageman, General
Manager, Milne Fruit Products; Rick Jacobson, NORPAC Foods; Christian
Schlect, President, Northwest Horticultural Council; Mark Riley,
Michigan tart cherry grower; Terry Dorsing, President, Washington Tart
Cherry Products, Inc.; Ray, Jim, Mildred and Mary Schultz, Michigan
tart cherry growers; Philip Walker, Oregon tart cherry grower; Thomas
A. Facer, Vice-President Agricultural Services, Comstock Michigan Fruit
Division; Lee W. Schrepel, Chair, Oregon Tart Cherry Association; Bruce
Andrews, Director, Oregon Department of Agriculture; the Department of
Justice, Anti-Trust Division; Claude A. Rowley, Manager, Payson Fruit
Growers; David Frank, Fruit Belt Canning, Co. Inc.; Norman R.
Veliquette, President, Great Lakes Packing Company; Dean Kleckner,
President, American Farm Bureau Federation; Forest P. Johnson, Michigan
tart cherry grower; Ken Guise, Executive Vice-President, Chief
Operating Officer, Knouse Foods Cooperative, Inc.; Kenneth T. Morrison,
President, Cherry Growers, Inc.; David White, President, Chain O'Lakes
Fruit Growers Association; Randy G. Harmson, General Manager, Michigan
Agricultural Cooperative Marketing Association, Inc.; Jack Laurie,
President, Michigan Farm Bureau; Teryl R. Roper, Associate Professor
and Extension Fruit Specialist, University of Wisconsin; Gene A.
Veliquette, Michigan tart cherry grower, President, Shoreline Fruit,
Inc.; Ian A. MacKay, CPA, American Institute of Certified Public
Accountants; and the Cherry Marketing Institute (CMI), the proponent
group.
The issues raised in the exceptions are discussed in the Findings
and Conclusions.
Small Business Consideration and Paperwork Reduction Act: In
accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et seq.),
AMS has considered the economic impact of this action on small
entities. The record indicates that there are approximately 1,600
growers of tart cherries and 75 handlers who process cherries in the
production area proposed to be regulated. Small agricultural service
firms have been defined by the Small Business Administration (SBA) (13
CFR 121.601) as those whose annual receipts are less than $5,000,000,
and small agricultural producers as those having annual receipts of
less than $500,000. The majority of the tart cherry handlers and
producers may be classified as small entities.
For practical purposes, there is no fresh market for tart cherries.
Processors dry, freeze, can, juice, or puree pitted tart cherries.
Market use averages are: 56 percent of the product becomes industrial
grade frozen cherries; 16 percent goes into consumer-size cans of pie
filling; 8 percent is used for commercial pie filling; 10 percent
becomes juice concentrate; 2 percent is dried; and, 8 percent goes into
water packs.
Since 1971, there has been a marked transformation in the
processing industry's structure. Currently, 75 percent of the crop is
processed by farmer-owned cooperatives or grower-owned processing
facilities; whereas in 1971, a substantial volume was processed by
independent handlers. Processors, through their sales agents, market in
all U.S. markets and export to Europe and Asia. There are no discrete
regional markets where cherries from a particular district could have a
particular advantage, beyond nominal differences in transportation
costs, which can often be overcome by price discounting.
The record evidence shows that economic adversity has caused more
than 21 percent of Michigan's growers to withdraw from tart cherry
farming. There were 1,183 Michigan commercial growers in 1986, compared
to 933 in 1992. In 1992, Michigan growers had an average production of
238,000 pounds with 19 percent of those growers averaging 800,000
pounds, accounting for 66 percent of the total Michigan production. In
States other than Michigan, there has also been a general decline in
the number of commercial growers since 1986. There are fewer growers in
other States besides Michigan, but the number of bearing acres has
increased from 45,000 acres in 1986, to more than 50,000 acres in 1990.
Record evidence also indicates that the demand for red tart
cherries is inelastic at high and low levels of production, and
relatively elastic in the middle range. At the extremes, during times
of very low and very high production, different factors become
operational. In very short crop years, such as 1991, there is limited
but sufficient exclusive demand for cherries that can cause processor
prices to double and grower prices to triple. In the event of large
crops, there seems to be no price low enough to expand sales beyond
about 275 million pounds of raw fruit in a single year.
Since 1982, annual sales have averaged 230 million pounds. Under
the proposed order, total returns to growers could be increased by
restricting supplies of red tart cherries available for sale by
handlers during large crop years. Also, production characteristics of
the tart cherry industry provide an opportunity to increase growers'
total earnings by converting the excess production of large crop years
into storable products that could constitute reserve pools. These pools
would be liquidated in a year when the available supplies are short.
One of the main concerns addressed in this proposed order is the
short term annual variation in supply which is attributable to climatic
factors that neither growers nor processors can control, and which
leads to chaotic marketing conditions. Such climatic factors can result
in highly unpredictable annual crop sizes, causing gluts and shortages
of tart cherries. When gluts occur, large carryin inventories can
decrease processor and grower prices, regardless of the anticipated
size of the oncoming year's crop. Many sales are consummated with large
buyers well before the current crop year's supply and demand situation
is clear (based on what can best be described as ``Anticipated
Supply'', i.e., the sum of the carryin inventory and USDA crop
forecast, available usually
[[Page 26958]]
late in June, weeks before the actual crop harvest.)
These large, unrestricted carryin inventories and crop estimates
can play a dominant role in setting the tone of the market in a given
year. The proposed order is intended to lessen the impact of these
inventories and estimates by establishing an ``optimum supply,''
thereby reducing price swings to growers and buyers, and ultimately
resulting in a stabilization and enhancement of the market.
The order would impose some reporting and record keeping
requirements on handlers. Handler testimony indicated that the expected
burden that would be imposed with respect to these requirements would
be negligible since most of the information that would be reported to
the Board is already compiled by handlers for other uses and is readily
available. Reporting and record keeping requirements issued under
comparable marketing order programs impose an average annual burden on
each regulated handler of about one hour. It is reasonable to expect
that a comparable burden would be imposed under this proposed marketing
order on the estimated 75 handlers of tart cherries. With respect to
growers, they testified at the hearing that information required to be
submitted to the Board for grower diversion is already collected and
available from growers.
The Act requires that, prior to the issuance of a marketing order
for tart cherries, a referendum be conducted among effected producers
and processors to determine if they favor issuance of the order. The
ballot material that would be used in conducting the referendum would
be submitted to and approved by OMB before it is used. It is estimated
that it would take an average of 20 minutes for each of the
approximately 1,600 tart cherry growers and 75 tart cherry processors
to complete the ballots. Additionally, it has been estimated that it
would take approximately ten minutes for each handler to read and sign
the marketing agreement.
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 record
keeping requirements contained in the proposed rule specific to the
ballot material to be used in conducting the referendum have been
approved by OMB on a temporary basis and have been assigned OMB number
0581-0177. An expiration date of September 1996 has been established
for this temporary OMB approval. A complete package of information and
collection requirements contained in this proposed rule will be
submitted, for approval, to OMB at a later date. Those requirements
would not become effective prior to OMB review. Interested persons
would be provided 60 days to comment on : (1) whether the proposed
collection of information is necessary for the functioning of the
proposed tart cherry marketing order program and USDA'S oversight of
that program; (2) the accuracy of the collection burden estimate and
the validity of methodology and assumptions used in estimating the
burden on respondents; (3) ways to enhance the quality, utility, and
clarity of the information requested; and (4) ways to minimize the
burden, including use of automated or electronic technologies. Any
record keeping and reporting requirements imposed would be evaluated
against the potential benefits to be derived and it is expected that
any added burden resulting from increased reporting and record keeping
would not be significant when compared to those anticipated benefits
derived from administration of the order.
The purpose of the RFA is to fit regulatory and informational
requirements to the size and scale of the business entities in a manner
that is consistent with the objectives of the rule and applicable
statutes. The proposed marketing order provisions have been carefully
reviewed and every effort has been made to eliminate any unnecessary
costs or requirements. As discussed in the RFA, Congress' intent, among
other objectives, was to direct agencies to identify the need for any
``special accommodation'' (e.g., exemption or relaxation) on regulated
small entities (i.e., handlers) because, in the past, some Federal
regulatory and reporting requirements imposed unnecessary and
disproportionately burdensome demands on small businesses. After
reviewing the record AMS determined that direct or indirect costs
imposed under the marketing order regulation would not be
proportionately greater on small handlers than on large handlers, or
conversely, that any projected order benefits would not be
proportionately smaller for small handlers than for large handlers.
The record evidence indicates that the proposed order may impose
some additional costs and requirements on handlers, but those costs are
insignificant and are directly proportional to the size of the
regulated handlers. The evidence also indicates that, given the severe
economic conditions and unstable markets facing the majority of the
industry, the benefits to small (as well as large) handlers are likely
to be greater than would accrue under the alternatives to the order
proposed herein, namely no marketing order, or an order without the
proposed combination of volume controls and other order authorities.
The record evidence indicates that the proposed order would be
instrumental in providing expanding markets and sales, and raising and
stabilizing prices of tart cherries, primarily for the benefit of
producers. The evidence also indicates that handlers would benefit as
well. While the level of such benefits to handlers is difficult to
quantify, it is also clear the provisions of the proposed order are
designed to benefit small entities. Small handlers and producers are
more likely to be minimally capitalized than large entities, and are
less likely to survive without the stability the proposed order would
provide.
Accordingly, based on the information discussed above, AMS has
determined that the issuance of this proposed rule and referendum order
would not have a significant economic impact on a substantial number on
small entities.
The material issues presented on the record are:
1. Whether the handling of tart cherries grown in the proposed
production area is in the current of interstate or foreign commerce, or
directly burdens, obstructs, or affects such commerce;
2. Whether the economic and marketing conditions are such that they
justify a need for a Federal marketing agreement and order which will
tend to effectuate the declared policy of the Act;
3. What the definition of the production area and the commodity to
be covered by the marketing order should be;
4. What the identity of the persons and the marketing transactions
to be regulated should be; and
5. What the specific terms and provisions of the order should be
including:
(a) The definition of terms used therein which are necessary and
incidental to attain the declared policy and objectives of the order
and the Act;
(b) The establishment, composition, maintenance, procedures, powers
and duties of a committee that shall be the local administrative agency
for assisting the Secretary in the administration of the marketing
order;
(c) The authority to incur expenses and the procedure to levy
assessments on handlers to obtain revenue for paying such expenses;
[[Page 26959]]
(d) The authority to establish or provide for the establishment of
production, processing and marketing research and marketing development
projects, including paid advertising;
(e) The authority to establish regulations that would require
minimum quality and inspection requirements applicable to cherries to
be handled;
(f) The authority to establish regulations that would provide for a
volume control program;
(g) The establishment of requirements for handler reporting and
record keeping;
(h) The requirement of compliance with all provisions of the order
and with any regulations issued under it; and
(i) Additional terms and conditions as set forth in section 930.81
through section 930.91 of the Notice of Hearing published in the
Federal Register of November 30, 1993, which are common to all
marketing agreements and orders, and other terms and conditions
published at section 930.92 through section 930.94 that are common to
marketing agreements only.
Findings and Conclusions and Rulings on Exceptions
The material issues, findings and conclusions, rulings, and general
findings and determinations included in the Recommended Decision set
forth in the November 29, 1995, issue of the Federal Register [60 FR
61292] are hereby approved and adopted subject to the following
additions and modifications:
Based upon the exceptions filed by Department of Justice, Anti-
trust Division (DOJ), and Mr. Lee Schrepel, the findings and
conclusions in material issue number 2 of the Recommended Decision
concerning the question of whether economic and marketing conditions
are such that they justify a need for a Federal marketing agreement and
order which would tend to effectuate the declared policy of the Act are
amended by adding the following eight paragraphs after the last
paragraph (60 FR 61297) to read as follows:
In its exception to the Recommended Decision, DOJ urged USDA to
reject the proponents' request for a marketing order for tart cherries.
DOJ contended that the proposed marketing order is not by any means a
``national solution'' for any existing problems in the tart cherry
industry, and its implementation would harm the public. DOJ asserts
there is no reliable evidence to show that the proposed marketing order
would produce supply or price stability and it should not be issued. In
addition, DOJ cited two areas of disagreement with the Recommended
Decision. DOJ stated that: (1) The tart cherry industry does not
require regulation based on the evidence presented at the hearing; and
(2) the proposed marketing order would not stabilize tart cherry prices
or supplies.
In regard to its first concern, DOJ stated that growers and
handlers who prefer to protect against fluctuating prices may do so by
using any one of the numerous market mechanisms that already exist for
that purpose. DOJ stated that these mechanisms are far superior to
government regulation for reducing risk because they help producers
deal with fluctuating supplies without artificially inflating prices.
As previously stated, the market mechanisms suggested by DOJ are
currently available to the industry. The marketing order is another
tool for the industry to use in stabilizing supplies. Marketing orders
do not exist to the exclusion of other market mechanisms. However, as
the record shows, those mechanisms have not been effective in dealing
with the production variability problems faced by the industry.
In regard to its second concern, DOJ contended that the finding
that the proposed marketing order would contribute to orderly marketing
conditions and, therefore, effectuate the declared policy of the Act,
is without support in the record. The agency stated that USDA relied
heavily on the testimony of Dr. Forker, who testified on price
stability. It is DOJ's position that Dr. Forker's conclusions on price
stability are wrong and that he improperly manipulated the data to
reach a desired result. In addition, in his exception, Mr. Lee Schrepel
also objected to USDA relying on the evidence presented by Dr. Forker.
As previously stated, USDA believes that the proponents have
demonstrated a need for a tart cherry marketing order. The record
supports the argument that the industry has suffered since the
termination of the prior order. A proposed order was developed to
correct the situation with the goal of increasing grower returns and
bringing supplies in line with demand. Authority for volume control
regulation which would only be used when the market warrants it, is
included in the order. Record evidence supports the need for the
marketing order. Evidence presented at the hearing did not offer a
basis for discrediting Dr. Forker. Dr. Forker is a recognized expert in
his field and there was no persuasive evidence presented at the hearing
which would refute his testimony. In addition, USDA did not rely solely
on Dr. Forker. It considered all the testimony and analyzed the record
in its entirety in arriving at its findings and conclusions.
In Mr. Schrepel's exception, he stated that USDA has discounted any
and all arguments that reporting and record keeping requirements will
be significantly greater for Oregon producers and processors, and that
their subsequent costs and benefits of operating under the marketing
order are proportionately and significantly different than expected to
be experienced in larger producing districts. Mr. Schrepel also
contends that smaller producing States (i.e., Pennsylvania and Oregon)
have not been producing the reports that will be needed under the
marketing order, and therefore it will be an added burden on small
handlers to submit such reports to the Board under the marketing order.
Handlers from the smaller producing areas testified that reporting
to the Board would not be unduly burdensome. They normally keep such
records in conducting their business operations and therefore could
easily compile the information for use under the marketing order. In
addition, handlers in districts which are not volume regulated (e.g.,
the smaller producing states) would have fewer reporting and record
keeping requirements than those handlers in regulated districts since
they would not be maintaining reserve pools and reporting on storage
and disposition. Such requirements would stay reduced as long as that
district's production remains below the trigger amount for volume
regulation.
The record evidence also supports the premise that small growers
and handlers would have the most to benefit from implementation of the
marketing order because such growers and handlers have been going out
of business over most of the last 8 years due to low cherry prices.
Since the order would help increase grower returns, this should
increase the buffer between success and failure.
Based on the above discussion, the exceptions by DOJ and Mr.
Schrepel are denied.
Based upon the exceptions filed by Mr. Dorsing, Mr. Hageman, Mr.
Mark Schrepel, and Mr. Lee Schrepel, the findings and conclusions in
material issue number 3 of the Recommended Decision concerning the
definition of the production area and the commodity to be covered are
amended by adding the following six paragraphs after the last paragraph
(60 FR 61299) to read as follows:
The exception filed by Mr. Dorsing stated that the States of
Washington and Oregon should not be included in the proposed marketing
order. Mr. Dorsing
[[Page 26960]]
indicated that 1995 production figures for the State of Washington show
that over 90 percent of the tart cherry production went to juice
concentrate. He contended that the majority of producers in Washington
and Oregon produce their cherries for use in juice concentrate rather
than canned or frozen products. Mr. Dorsing also stated that the juice
characteristics of the Northwest tart cherry are unique in character
and juice companies are finding that the characteristics of Northwest
juice concentrate meet their required specifications. He also stated
that Northwest production is not adding to the ``glut'' in the packed
product industry, since the Northwest is primarily a juice concentrate
industry. Mr. Dorsing stated further that the Northwest tart cherry
industry pays for its own storage, develops its own markets and does
its own promotion and advertising. Thus, there is nothing to be gained
by the Northwest being included in the tart cherry marketing order. In
addition, Mr. Dorsing requested that each State be allowed to vote
separately for inclusion in the marketing order.
The exception filed by Mr. Hageman opposed the proposed marketing
order. He stated that the order would unnaturally inflate grower prices
to nearly double the current level. He also asked that Washington and
Oregon be excluded from coverage under the proposed marketing order.
The reason given was that Washington and Oregon account for 6.5 percent
of the 1990-1994 total U.S. production and that, during the same time
period, less than 20 percent of the Washington and Oregon production
entered the five plus one canned and frozen product line. This would
indicate that less than 1.5 percent of the nation's supply of five plus
one stock was produced in the Northwest. It was argued by Mr. Hageman
that the Northwest industry is dependent on the juice concentrate and
puree market which does not compete with the five plus one market. Mr.
Hageman also requested a State-by-State referendum.
The exception filed by Mr. Mark Schrepel stated that any proposed
order should not include the State of Oregon, and that the Act appears
not to include cherries for canning or freezing if they originated in
Oregon or Washington. Mr. Schrepel believes that no Oregon grower or
processor supports the order. He also requested a State-by-State
referendum.
The exception filed by Mr. Lee Schrepel indicated that one of the
reasons the proposed order should exclude Washington and Oregon is
because the Northwest has distinctive production and marketing
characteristics. Further, it is Mr. Schrepel's contention that
successful marketing orders depend on the support of affected producers
and handlers. According to him, the unanimous opposition of Oregon
producers and handlers and near unanimous opposition by Washington
producers and handlers demonstrate the lack of this essential element.
Mr. Schrepel also requested voting by a State-by-State referendum.
As previously stated, to exclude any portion of the proposed
production area would tend to defeat the purpose of the proposed order
and could depress prices of the regulated cherries. Contrary to Mr.
Schrepel's suggestion, Oregon and Washington cherries for freezing or
canning are not excluded from coverage under the Act. Record evidence
supports the position that the oversupply situation in the U.S. is a
national problem. In addition, the juice concentrate market in areas
such as Oregon and Washington can be impacted by production in other
areas. Therefore, the entire industry needs to work together to
alleviate the problem. Also, the record evidence supports the argument
that the Northwest has the greatest potential to expand tart cherry
producing acreage, thereby further benefiting from the proposed order
in the event of increased production. Therefore, the Northwest should
be included in the production area under the proposed order and the
requests to exclude Oregon and Washington from the proposed production
area are denied.
In regard to the requests to conduct a State-by-State referendum to
determine who should be covered under the proposed tart cherry order,
such requests are denied. The Act requires that all producers and
processors in the proposed production area should vote in a referendum
on the promulgation of an order. There is no authority for State by
State voting.
Based upon the exception filed by CMI, the findings and conclusions
in material issue number 5(a) of the Recommended Decision concerning
the commodity to be covered are amended by adding the following
paragraph after the sixth paragraph (60 FR 61300) to read as follows:
CMI stated that the definition of cherries should be modified to
correct the misspelling of a species name and to include the words ``or
hybrids of'' to the cherry definition. Adding these words would correct
and clarify the definition. Therefore, CMI's exception is adopted
herein.
Based upon the exceptions filed by CMI, Mr. Morrison, and Mr.
Facer, the findings and conclusions in material issue number 5(b) of
the Recommended Decision concerning the establishment, composition,
maintenance, procedures, powers and duties of the Board are amended by
adding the following eight paragraphs after the 73rd paragraph in
material issue number 5(b) (60 FR 61307) to read as follows:
In its exception, it was CMI's contention that the order should be
modified to require that, in order for the Board to adopt preliminary
or final free and restricted percentages for any crop year, at least 11
Board members from districts that would be subject to volume regulation
vote in the affirmative on any such action. CMI also wanted this
requirement to apply if there are modifications to the marketing policy
under section 930.50(f). In addition, CMI argued that since the
Recommended Decision contains a Board voting requirement of two-thirds
of the entire Board rather than a majority of the Board, as originally
proposed, this modification is necessary because it is important that a
clear majority of those who are going to be regulated agree with the
determination before volume regulation can go into effect. It was also
CMI's concern that the unregulated districts could somehow influence
the decision to impose volume regulation when such regulation is a
possibility under the optimum supply formula. Eleven votes out of 13 is
approximately 85 percent of the votes from the volume regulated
districts. CMI suggested that this voting requirement apply to
recommendations made under sections 930.50(b), 930.50(d) and 930.50(f).
In his exception, Mr. Morrison argued that Board members from
nonregulated districts should not be allowed to vote on matters
concerning regulation of the crop or the timing on the release of the
primary pool.
Throughout this formal rulemaking process, it has been expressed
that the oversupply situation in the U.S. is a national problem, and
that the entire industry should work together to alleviate the problem
by participating in the proposed marketing order. Although USDA
understands CMI's concerns, they are overstated, since the proposed
order provisions concerning the marketing policy and issuance of volume
regulations contain a number of procedural steps which, in many
respects, make them self-executing. Also, it is the Secretary, and not
the Board, who issues the volume regulations and sets the final free
and restricted percentages. Therefore, as
[[Page 26961]]
previously discussed in the Recommended Decision, all actions by the
Board, including volume regulation issues, should continue to require a
two-thirds affirmative vote of the entire Board to pass. Therefore,
CMI's and Mr. Morrison's exceptions are denied.
Mr. Facer requested that only regulated districts be allowed to
vote on the release of the primary reserve. This is not necessary nor
is it supported by the record. As previously stated the situation that
exists in the industry is a national problem, therefore, all members
that represent the tart cherry industry in the Board should vote in all
matters. The reserve would be released by the Board when certain
conditions exist. For example, proposed section 930.50(g) would
release, to all handlers, up to an additional 10 percent (above the
optimum supply level) of the average of the prior three years sales, if
such inventory is available in the primary inventory reserve.
Therefore, Mr. Facer's exception is denied.
Based upon the exception filed by CMI and Mr. Lee Schrepel, the
findings and conclusions in material issue number 5(b) of the
Recommended Decision concerning the establishment, composition,
maintenance, procedures, powers and duties of the Board are amended by
adding the following three paragraphs after the fourth paragraph (60 FR
61301) to read as follows:
Questions and recommendations regarding order language concerning
the Board membership limitation on sales constituencies in proposed
Sec. 930.20(f) were raised by both Mr. Lee Schrepel and CMI. It was Mr.
Schrepel's concern that a single sales constituency could potentially
gain control of the Board and he asked that not more than 30 percent of
the Board be allowed to be affiliated (even remotely) in any manner
with a single sales constituency. However, a 30 percent limitation is
not adequately supported by the record. CMI's concern was that if a
grower who sells cherries through a number of different processors is
nominated for membership to the Board in a district, all of those
processors but one would then be prevented from having grower
representation on the Board. According to CMI, this would be true even
if the grower sold a very small amount of cherries to a particular
handler on a one-time basis. As proposed by CMI, this concern can be
addressed by considering the sales constituency to which the grower
delivers the majority of his or her cherries to be the grower's sales
constituency for nomination and representation purposes.
Concerns regarding sales constituencies and Board representation
have been raised from the beginning of this rulemaking process. That is
one of the reasons that USDA decided to impose a two-thirds voting
requirement instead of a simple majority, and added a provision
requiring the consensus of at least two-thirds of the entire Board to
pass any action by the Board (see page 61306 of the Recommended
Decision). The record is clear that the major reason Sec. 930.20(f)
generated so much discussion was the perception among some of the
participants at the hearing sessions that the Board could become
controlled by a single constituency, and the interests of those growers
and handlers not associated with such constituency would not receive
proper attention or could be ignored altogether. Additions and changes
to Sec. 930.20(f) were suggested by Mr. Lee Schrepel and CMI, and
although these have merit, they are not dispositive of the main issue,
i.e., control of the Board by a single interest group.
When the question of adding further restrictions to Sec. 930.20(f)
arose early in the rulemaking proceeding, CMI indicated that it was
unlikely that any single sales constituency could gain control of the
Board, and that theoretical projections of such possibilities are not
realistic. Furthermore, it was pointed out by CMI that the Secretary
could effectively enforce the limitations contemplated by
Sec. 930.20(f) without modifying its language because the ultimate
decision of whom to appoint to the Board lies with the Secretary.
Therefore, in light of such requirements, and clear record evidence
that the purpose of Sec. 930.20(f) is to achieve a fair and balanced
Board representation, USDA will not add additional limitations to
Sec. 930.20(f), but, instead, will add language to more clearly express
the purpose of that section. In addition, the Secretary could issue
regulations to implement the section, if necessary.
Based upon the exception filed by Mr. Lee Schrepel, the findings
and conclusions in material issue number 5(b) of the Recommended
Decision concerning the establishment, composition, maintenance,
procedures, powers and duties of the Board are amended by adding the
following two paragraphs after the 30th paragraph (60 FR 61303) to read
as follows:
In Mr. Lee Schrepel's exception, he stated that the testimony by
the proponent made it clear that its intent is to maintain control of
the Board's public member. It was Mr. Schrepel's view that the proposed
marketing order still has no provisions to prevent the Board from
appointing Board members. Mr. Schrepel argued that the public member
should be appointed at the sole discretion of the Secretary, without
the advice or consent of the Board.
The Secretary has discretion in appointing members and alternate
members to the Board, including the public member. The appointments can
be made from Board nominees or other qualified individuals. In the case
of the public member and such member's alternate, the Secretary is
relying on the Board to nominate and elect eligible individuals. As was
previously stated in the Recommended Decision, such individuals would
then be subject to appointment by the Secretary. This procedure is
similar to the selection of public members and alternates on other
marketing order committees. Therefore, Sec. 930.24 is modified to
clarify the selection and appointment procedure.
Based upon the exceptions filed by Mr. Facer, Mr. Guise, Mr. Lee
Schrepel and CMI, the findings and conclusions in material issue number
5(b) of the Recommended Decision concerning the establishment,
composition, maintenance, procedures, powers and duties of the Board
are amended by adding the following six paragraphs after the 27th
paragraph (60 FR 61303) to read as follows:
The exception filed by Mr. Facer stated that the responsibilities
and authority of the Board relating to its ability to assess the
industry for research, development, promotion and advertising are too
broadly described. Also, the Board composition includes too much
representation from the nonregulated districts.
USDA relies on the marketing order committees and boards to
recommend rules and regulations concerning their particular industries.
Marketing order committees and boards are comprised of industry grower
and handler members and are experienced in the industry's operations
and should be capable of evaluating the industry's needs. It is for the
Secretary to determine whether rules recommended by committees or
boards should be issued. Board composition was recommended by the
proponent group to provide fair and equitable representation to the
entire industry based on the relative levels of production of cherries
in the various producing districts. It was the proponents' position
that all States covered under the order should be represented on the
Board in order to keep them informed of the Board's activities. In
addition, all States covered under the marketing order have the
potential to become regulated States in the future. Mr. Facer's
exception is therefore denied.
[[Page 26962]]
The exceptions filed by Mr. Ken Guise, Mr. Lee Schrepel and CMI
requested that the proposed order be modified to correct the handler
nomination petition process for District 6. Currently, only one handler
exists in District 6, which covers the State of Pennsylvania (Knouse
Foods Cooperative, Inc.). The Recommended Decision provided that for a
handler to be nominated for election to the Board, the handler would
have to obtain the signature of at least one handler, other than the
nominee, from the nominee's district who is eligible to vote in the
referendum. Under this procedure, Mr. Guise and CMI point out that
since there is no other handler in District 6 except Knouse Foods, such
handler would be denied the opportunity to be nominated for election to
the Board and District 6 would never be represented by a handler
representative unless another handler were to start operating in that
District.
CMI stated that this result is wholly unintended by the proponent
and requests that the USDA modify section 930.23(b)(2) to require that
when nominating handler members to the Board, the petition form be
signed by a handler other than the nominee shall not apply in any
District where less than two handlers are eligible to vote.
Mr. Schrepel requested that the same procedures developed for
Pennsylvania also apply to Washington and Oregon, since they have very
few handlers. The modification proposed by the proponents would also
address Mr. Lee Schrepel's concerns since the modification would apply
to any District that has less than two handlers.
Mr. Guise's, Mr. Lee Schrepel's and CMI's exception on this issue
is therefore adopted in this Secretary's Decision and appropriate
changes are made in section 930.23(b)(2).
Based upon the exception filed by Mr. Lee Schrepel, the findings
and conclusions in material issue number 5(b) of the Recommended
Decision concerning the establishment, composition, maintenance,
procedures, powers and duties of the Board are amended by adding the
following paragraph after the 33rd paragraph (60 FR 61304) to read as
follows:
Mr. Lee Schrepel requested that the procedures for electing
alternate members to the Board be more clearly detailed in the order.
The proposed order provides under section 930.23 that each member and
alternate member would be nominated and elected separately. The Board
has the authority to recommend rules and regulations to effectuate such
authority and specify more detailed procedures in regard to the
nomination process. Therefore, Mr. Schrepel's exception is denied.
Based upon the exception filed by Mr. Lee Schrepel, the findings
and conclusions in material issue number 5(b) of the Recommended
Decision concerning the establishment, composition, maintenance,
procedures, powers and duties of the Board are amended by adding the
following paragraph after the 35th paragraph (60 FR 61304) to read as
follows:
In his exception, Mr. Schrepel stated that USDA has submitted
contradictatory language regarding the nomination process. He claimed
that USDA appears to be advancing it's own interests of fast tracking
the proposal, if promulgated, by conducting nomination meetings in the
districts and allowing growers and handlers to vote for members and
alternate members at these meetings. USDA is not fast tracking such a
proposal. If the Secretary determines that conducting nomination
meetings and voting at these meetings would be the best method of
completing the process in a timely manner, then such method should be
used. Should the proposed order receive the required level of grower
and processor support in the referendum, USDA intends to conduct
meetings to nominate and elect the initial Board members and alternate
members using petition forms and election ballots as provided by
Sec. 930.23. Therefore, Mr. Schrepel's exception is denied.
In Mr. Lee Schrepel's exception, he indicated that there was an
error in proposed section 930.22 regarding Board members' terms of
office. The current proposed order specifies that one-third of such
initial members and alternates shall serve only one fiscal year, one-
third of such members and alternates shall serve only two fiscal years
and one-third of such members and alternate members shall serve two
fiscal years. The latter reference to two fiscal years should be
changed to three fiscal years to be consistent with the record
evidence. Mr. Schrepel is correct and his exception is adopted herein
by revising the order language.
Based upon the exceptions filed by Mr. MacKay and Mr. Lee Schrepel,
the findings and conclusions in material issue number 5(b) of the
Recommended Decision concerning the establishment, composition,
maintenance, procedures, powers and duties of the Board are amended by
adding the following three paragraphs after the 51st paragraph (60 FR
61305) to read as follows:
In Mr. Lee Schrepel's exception, he stated that in section
930.31(h), the reference to disbursement of all funds, including the
payment of storage to handlers, should not be included in that
particular section. USDA does not intend for the Board to utilize
assessments to pay for the storage of any cherries or cherry products.
The proponent's proposal to collect assessments from handlers for
storage of primary inventory reserve cherries was removed by the USDA
in the Recommended Decision. Therefore, such language referencing
storage assessments should not be contained in the proposed order. This
has been an oversight and such language shall be removed. Therefore,
Mr. Schrepel's exception is adopted.
The exception filed by Mr. MacKay requested that the proposed
marketing order be modified under the area of duties of the Board to
include that the Board's financial statements be prepared in accordance
with generally accepted accounting principles and to be audited by a
certified public accountant. Currently, the proposed order provides
that the Board cause its books to be audited by a certified public
accountant. Mr. MacKay requested USDA to clarify in the final order
whether the term ``books'' refers to the Board's financial statements
and clarify the basis for the financial statement presentation
(generally accepted accounting principles).
The term ``books'' does refer to the Board's financial statements.
The modification to change the term ``books'' to ``financial
statements'' is incorporated in this document. However, the
modification to clarify the basis for the financial statement
presentation (generally accepted accounting principles) is denied. The
Fruit and Vegetable Division's Marketing Agreement and Order Operation
Manual specifies the types of financial statement presentations to be
used in committee audits. This manual is used by all marketing order
committees and is a policy document issued by USDA. It is not feasible
to place such language in the order, since in the future, USDA could
change the basis for financial statement presentation for all marketing
order committees to use. If such a change occurred, the marketing order
would have to be amended, which can be a costly process. Therefore,
such a modification is denied. Thus, Mr. MacKay's exception is
partially denied.
Based upon the exception filed by Mr. Lee Schrepel, the findings
and conclusions in material issue number 5(c) of the Recommended
Decision concerning the authority to incur expenses and the procedure
to levy assessments on handlers to obtain revenue for paying such
expenses are
[[Page 26963]]
amended by adding the following paragraph after the seventh paragraph
(60 FR 61308) to read as follows:
In his exception, Mr. Lee Schrepel contended that a built-in limit
on the authority to level assessments should be established. Mr.
Schrepel proposed that this authority be capped at no more than 5
percent of the average field price for the season. He suggested that
this limit could be adjustable through modification at continuance
referendum time or more frequently. Under the order, the tart cherry
industry assessment rate would be dependent on meeting administrative
and other expenses and would be necessarily influenced by the volume of
the crop. The assessment rate would be established through informal
rulemaking which would require a Board recommendation and an
opportunity for public comment. Mr. Schrepel did not specify why 5
percent of the average field price for the season would be a reasonable
limit, and record evidence does not contain support for such a cap.
However, if the marketing order is implemented, the Board could adopt
such a cap as a guideline when recommending the assessment rate.
Therefore, Mr. Schrepel's exception is denied.
Based upon the exception filed by Mr. Lee Schrepel, the findings
and conclusions in material issue number 5(c) of the Recommended
Decision concerning the authority to incur expenses and the procedure
to levy assessments on handlers to obtain revenue for paying such
expenses are amended by adding the following two paragraphs after the
eighth paragraph (60 FR 61308) to read as follows:
In Mr. Lee Schrepel's exception, he stated that it is not equitable
to exempt from assessment those cherries which are diverted in
accordance with proposed sections 930.58 and 930.59.
Pursuant to section 930.62, cherries would be exempt from
assessments if they are diverted according to section 930.59. Product
diverted by handlers would not be entering normal market channels,
therefore assessments should not be levied. Mr. Schrepel does not point
to any evidence in the record to support his exception concerning
assessment of diverted cherries. Conversely, record testimony amply
supported exempting diverted cherries, since they are not entering
normal market channels. Therefore, Mr. Schrepel's exception is denied.
Based upon the exceptions filed by Mr. Mark Schrepel and Mr.
Morrison, the findings and conclusions in material issue number 5(c) of
the Recommended Decision concerning the authority to incur expenses and
the procedure to levy assessments on handlers to obtain revenue for
paying such expenses are amended by adding the following three
paragraphs after the eighth paragraph (60 FR 61308) to read as follows:
In Mr. Mark Schrepel's exception, he stated that he is concerned
about provisions within the proposal that would add expense and
hardship to growers. Mr. Schrepel contended that handlers should not be
assessed under this marketing order program if handlers are not in a
regulated district. He further stated that handlers in unregulated
districts should not be assessed for any expenses accrued by the Board
since handlers who divert are not assessed on diverted product.
As supported by record evidence, all growers and handlers in the
States proposed to be covered under the marketing order, including
those not subject to volume regulation, would enjoy the benefits
provided by the marketing order (i.e., improved grower returns and
increased consumption of tart cherries). Therefore, all handlers should
be assessed for the administrative costs of the order. Also, handlers
who enter cherries into normal market channels who choose to divert
some of their cherries would still be assessed for the cherries that
enter normal market channels. Therefore, Mr. Schrepel's exception is
denied.
In Mr. Morrison's exception, he stated that further effort needs to
be made to make sure that growers understand that the cost of holding
and processing the reserve can be passed on to growers by their
handlers. It is true that some handlers may pass such costs on to their
growers, either directly or indirectly. Under the former order, which
was based on a grower pool, growers were directly assessed storage and
processing costs for reserve pool cherries. However, this proposed
order is based on a handler pool. Therefore, it does not contain
authority to assess growers for such costs. Because of this difference,
Mr. Morrison's recommendation to somehow emphasize that storing and
processing costs can be passed on to growers is denied.
Based upon the exception filed by Mr. Lee Schrepel, the findings
and conclusions in material issue number 5(d) of the Recommended
Decision concerning the authority to provide for the establishment of
production, processing and marketing research and market development
projects, including paid advertising, are amended by adding the
following paragraph after the sixth paragraph (60 FR 61309) to read as
follows:
Mr. Lee Schrepel questioned whether the handlers in States that
have State marketing order programs should be exempted from paying
assessments on research and marketing development to the Federal
marketing order. Mr. Schrepel stated that there should only be one
assessment, a Federal or state assessment, not both. There is no
current proposal to exempt handlers from paying these assessments if
they are in a State that has a State marketing order program. The
record evidence did indicate that it would be highly unlikely that the
Board would initiate recommendations for research, development, or
promotion related assessments while a high percentage of tart cherry
growers are financing such activities through other organizations. The
record evidence does not contain support for Mr. Schrepel's proposal,
therefore, his exception is denied.
Based upon the exceptions filed by Mr. Frank, Mr. Morrison, Mr.
Facer, and Mr. Lee Schrepel, the findings and conclusions in material
issue number 5(e) of the Recommended Decision concerning the authority
to establish regulations that would require minimum quality and
inspection requirements are amended by adding the following six
paragraphs after the seventh paragraph (60 FR 61310) to read as
follows:
In Mr. Frank's exception, he stated that sections 930.44 (a) and
(b) are ambiguous and do not spell out what form of inspection would be
required (raw product or finished product). He also stated that any
inspection of free tonnage cherries should be a decision by a handler
and growers that deliver cherries to such handler. This should not be a
decision by an administrative body such as the Board. Local weather
conditions could affect a small geographic area, thereby causing damage
in a localized area rather than the entire production area under the
proposed order. This also interferes with a handler's decision on what
quality such handler feels could be marketed. Mr. Frank suggested that
the above mentioned sections be deleted from the proposed marketing
order.
Mr. Morrison also filed an exception that stated that only the
quality of cherries placed in the reserve should be regulated. This
would be the same as the prior order. Also, Mr. Morrison stated that
the Board should not regulate the raw product grade.
In Mr. Facer's exception, he stated that although the order
requires inspection of primary reserve tart cherries, there is no
official quality standards for some products. Therefore,
[[Page 26964]]
such inspection will be impractical, irrelevant and of no economic
benefit.
In Mr. Lee Schrepel's exception, he stated that the Board should
not be empowered to require the inspection of all cherries entering the
stream of commerce.
As previously stated, the proponents testified that as technology
increases, the Board should have the authority to adopt quality
standards for cherries, especially those concerning pit count. If
quality standards are recommended by the Board and implemented by the
Secretary, no handler would be allowed to process cherries into
manufactured products or sell manufactured products in the current of
commerce unless the cherries used in such products meet the applicable
requirements. Before recommending quality regulation, the record
evidence shows that it was the intent of the proponents that the Board
would obtain an industry consensus before making a recommendation to
USDA on this issue. Any such regulation would be issued by the
Secretary through informal rulemaking which would allow an opportunity
for comment.
Without additional Board action, only inventory reserve cherries
would be inspected, prior to placing them in the reserve. It is
imperative to maintain the quality of the reserve so that only good
quality cherries are released to handlers to be sold in the
marketplace. Therefore, based on the above discussion on the record
evidence, Mr. Frank's, Mr. Morrison's, Mr. Facer's, and Mr. Lee
Schrepel's exceptions are denied.
Based upon the exception filed by Mr. Lee Schrepel, the findings
and conclusions in material issue number 5(e) of the Recommended
Decision concerning the authority to establish regulations that would
require minimum quality and inspection requirements are amended by
adding the following two paragraphs after the 4th paragraph (60 FR
61310) to read as follows:
In Mr. Schrepel's exception, he stated that the cost of inspecting
new cherries to be rotated into the reserve and removing older cherries
out of the reserve should be at the expense of the handler. Such action
as this, undertaken by or at the convenience of the affected handler
for the benefit of the handler or some other party, should not be the
expense of the industry.
As previously stated, rotating cherries in the reserve is not a
requirement. However, it would benefit the industry if it were done.
This would insure that good quality cherries are being released when
inventory reserve cherries are sold. The Board will have the authority
to limit the number of inspections of cherries to be rotated into
inventory for which the Board would be financially liable. In order to
establish such limits, the Board would make a recommendation to the
Secretary and informal rulemaking would be conducted. Based on the fact
that the record evidence supports including this authority it will
remain in the order. Therefore, Mr. Lee Schrepel's exception is denied.
Based upon the exception filed by Mr. Lee Schrepel, the findings
and conclusions in material issue number 5(e) of the Recommended
Decision concerning the authority to establish regulations that would
require minimum quality and inspection requirements are amended by
adding the following two paragraphs after the third paragraph (60 FR
61310) to read as follows:
The exception filed by Mr. Lee Schrepel stated that there should be
no reimbursement of inspection costs for quality inspections for any
reserve or free market cherries. Also, requirements for reinspection
are inappropriate unless such cherries are part of the primary reserve.
The record evidence indicates that quality control inspections
would be paid for by handlers. However, inspections of primary reserve
cherries should be paid for by the Board. As previously stated, this
would insure that only good quality cherries would be available for
release from the reserve into the marketplace. This benefits all in the
industry. In regard to reinspection, cherries would only be reinspected
if they were regraded, resorted, repackaged or any other way further
prepared for market. This would be done if a handler had to repackage a
product that was already packaged for a client. This provision is a
safety valve to prevent poor quality product entering the marketplace.
New crop cherries would be inspected prior to being placed in the
primary reserve. The record evidence supports the above provisions,
therefore, Mr. Lee Schrepel's exception is denied.
Based upon the exceptions filed by CMI, the findings and
conclusions in material issue number 5(e) of the Recommended Decision
concerning the authority to establish regulations that would require
minimum quality and inspection requirements are amended by adding the
following paragraph after the seventh paragraph (60 FR 61310) to read
as follows:
CMI's exception stated that the proponent wishes to make it clear
that the Board would exercise its powers with regard to the
establishment of quality standards and inspection requirements in a
manner consistent with the establishment of quality standards under the
prior order. Producers and handlers were comfortable with the way that
the Board under the prior order instituted inspection requirements. The
proponents expect the new Board would operate in the same manner,
although they recognize that there are obvious significant differences
between the two orders. In addition, such quality regulations would be
implemented through the informal rulemaking process which would require
a Board vote and opportunity for the public to comment.
Based upon the exception filed by Mr. Harmson, the findings and
conclusions in material issue number 5(f) of the Recommended Decision
concerning the authority to establish volume regulation provisions
under the proposed order are amended by adding the following two
paragraphs after the 15th paragraph (60 FR 61311) to read as follows:
In an exception filed by Mr. Harmson, he stated that the provision
that would allow the Board to acknowledge a national bargaining agency
on behalf of growers should not be deleted from the proposed order.
Bargaining associations are a form of group action in agriculture that
contributes greatly to the economic well being of growers and adds an
important dimension to representation of their interests in the
marketplace.
As previously stated, the record evidence did not adequately
explain how such a provision would work or what the benefits would be
to growers. Also, the record evidence did not define the functions of a
national bargaining association as related to the proposed marketing
order. Therefore, Mr. Harmson's exception is denied.
Based upon the exception filed by Mr. Lee Schrepel, the findings
and conclusions in material issue number 5(f) of the Recommended
Decision concerning the authority to establish volume regulation
provisions under the proposed order are amended by adding the following
two paragraphs after the 23rd paragraph (60 FR 61312) to read as
follows:
The exception filed by Mr. Lee Schrepel stated that ownership of
the primary or secondary reserve should not be allowed to be
transferred, but remain with the handler who had the initial reserve
obligation.
Record evidence supported authorizing the transfer of a handler's
equity in the primary reserve to another person. As previously stated,
a handler may need to do this if, for example, such handler does not
have the storage
[[Page 26965]]
area to store the primary reserve. Therefore, Mr. Schrepel's exception
is denied.
Based upon the exception filed by CMI, the findings and conclusions
in material issue number 5(f) of the Recommended Decision concerning
the authority to establish volume regulation provisions under the
proposed order are amended by adding the following paragraph after the
seventh paragraph (60 FR 61311) to read as follows:
In CMI's exception, it stated that section 930.50(b) governing the
application of the optimum supply formula in calculating preliminary
free and restricted percentages was altered from the proponents'
proposal. The proponents' proposal provided that tonnage requirements
for the current crop year should be subtracted from the current year
USDA crop forecast. The Recommended Decision provided that these
numbers should be divided. This calculation would not work properly and
is an inadvertent error by USDA. Therefore, it will be corrected in the
amendatory language and CMI's exception is adopted.
Based upon the exception filed by CMI, the findings and conclusions
in material issue number 5(f) of the Recommended Decision concerning
the authority to establish volume regulation provisions under the
proposed order are amended by adding the following paragraph after the
67th paragraph (60 FR 61316) to read as follows:
The exception filed by CMI indicated that section 930.52(d) should
be corrected and clarified by removing the word ``maximum'' in the
phrase ``maximum average annual processed production'' since this
phrase is ambiguous and lacks clear meaning. One can either have a
maximum annual production or an average annual production over the last
five years, but not both. Therefore, section 930.52(d) should be
modified by removing the word ``maximum'' and simply permit a district
to drop out of volume regulation when its current crop is 50 percent
less than the average crop processed over the prior five years. CMI's
exception is adopted herein.
Based upon the exceptions filed by Mr. Rowley, Mr. Morrison, CMI,
Mr. Mark Schrepel, and Mr. Lee Schrepel, the findings and conclusions
in material issue number 5(f) of the Recommended Decision concerning
the authority to establish volume regulation provisions under the
proposed order are amended by adding the following eight paragraphs
after the 59th paragraph (60 FR 61315) to read as follows:
The exception filed by Mr. Rowley stated that he was very concerned
that the Recommended Decision did not authorize cherries used for
drying as a diversion outlet. Mr. Rowley stated that his company had
spent over $1,500,000 to develop dried cherries and dried cherry
products. He believes that it would be grossly unfair that unregulated
States could sell all their dried cherry products and he could not
since dried cherries is not a diversion outlet.
Mr. Mark Schrepel's exception expressed concern that export would
be prohibited as an exempt use or diversion outlet.
Mr. Morrison's exception requested that diversion credit be allowed
for juice, exports and dried cherries. Mr. Morrison stated that
companies have invested substantial sums to develop new markets and
expand current markets dealing with juice, export and dried cherries.
In CMI's exception, it requested that the USDA modify section 930.62 to
include dried cherries that are exported, and cherries that are
converted to juice.
Under section 930.59 of the proposed order, handler diversion can
take place by several methods, including uses exempt under section
930.62. Section 930.62 provides that diverted cherries used for
specific purposes may be exempt from certain provisions of the
marketing order. These include exemption from assessment and volume
control provisions.
Dried cherries or cherries designated for export can be exempted
under Sec. 930.62 from certain order provisions or can be allowed to
qualify as diversion outlets under Sec. 930.59. As specified under
section 930.62, the Board can also designate other exempt uses. If the
Board choose to designate export or dried cherries as an exempted use
under Sec. 930.62, export and dried cherries could also be specified as
an eligible diversion outlet. Thus, such uses requested by the
exceptions for diversion credit are not prohibited under the marketing
order, except for cherries converted to juice or juice concentrate.
As previously discussed, record evidence supports the proposition
that cherries converted to juice or juice concentrate cannot be used as
an eligible diversion outlet. The arguments raised in the exceptions
did not overcome the evidence in the record indicating that cherries
converted to juice or juice concentrate cannot be used as an eligible
diversion. This is mainly because of the possibility of oversupplies
damaging the juice market already established by cherry producers and
handlers in Oregon and Washington.
In addition, CMI's exception requested USDA to modify section
930.59(d) to clarify that the prohibition of juice or juice concentrate
as an eligible handler diversion only prohibits the conversion of
diverted cherries to juice or concentrate. CMI requested that the use
of juice or juice concentrate for sales in export markets be eligible
for diversion credit. As previously discussed, the prohibition of juice
or juice concentrate for diversion credit, discussed in the Recommended
Decision (60 FR 61316), would also apply to sales of juice or juice
concentrate in export markets. This prohibition on diversion credit,
however, does not preclude the export of free tonnage cherries that
have been converted to juice or juice concentrate. Therefore, CMI's
exception is denied.
Finally, Mr. Lee Schrepel's exception stated that there was an
error in section 930.58(b) which referenced section 930.63 as exempted
uses. Section 930.62 is the section in the marketing order that
specifies the exempt uses. Therefore, section 930.58(b) should be
corrected.
Based upon the exceptions filed by Mr. Frank and Mr. Facer, the
findings and conclusions in material issue number 5(f) of the
Recommended Decision concerning the authority to establish volume
regulation provisions under the proposed order are amended by adding
the following paragraph after the 68th paragraph (60 FR 61317) to read
as follows:
In Mr. Frank's exception, he stated that tart cherries is a
national crop and the oversupply is a national problem. Therefore,
Washington, Oregon, Wisconsin and Pennsylvania should not be exempt
from participating in the marketing order. These States comprise 17
percent of the total bearing acreage. Mr. Frank states that this is not
an insignificant amount and to exempt these States from participating
in the marketing order is not fair or right. In Mr. Facer's exception,
he stated that he opposed the 15 million pound requirement tart cherry
producing areas would have to meet to become regulated under the order.
All tart cherry producing areas should be included or there should not
be a marketing order. The above-mentioned States are not exempt from
the marketing order. If the proposed order becomes effective, they
would not be regulated under the order's proposed volume regulation
because they do not meet the 15 million pound criteria. Should they
meet the criteria in the future, they would become regulated. Handlers
in all States would pay assessments for the administration of the
order. The record evidence does not warrant volume
[[Page 26966]]
regulation in the States discussed by Mr. Frank or Mr. Facer, at this
time. Therefore, Messrs. Frank's and Facer's exceptions are denied.
Based upon the exception filed by Mr. Facer, the findings and
conclusions in material issue number 5(f) of the Recommended Decision
concerning the authority to establish volume regulation provisions
under the proposed order are amended by adding the following two
paragraphs after the 23rd paragraph (60 FR 61312) to read as follows:
Mr. Facer expressed a concern that the proposed order would not
protect individual producers' investments in processing/marketing
cooperatives. He stated that many producers have made substantial
investments in cooperatives to market their production while other
producers have no such investments. It is his contention that the order
will make all producers equal, allowing each to market the same portion
of his/her crop.
The proposed order does not regulate producers. The order regulates
only handlers of tart cherries. If a volume regulation is implemented,
handlers would have to decide how to market their product, whether to
withhold the required reserve or divert product, or both. Independent
handlers and cooperatives would be making similar decisions concerning
tart cherries to those they have made in the past when faced with
overproduction. Such decisions would include identifying which
producers' cherries to purchase, and which of those to utilize in
various products and markets. The proposed marketing order is intended
to bring supplies in line with current demand, thereby increasing
returns to growers. Therefore, Mr. Facer's exception is denied.
Based upon the exception filed by Mr. Lee Schrepel, the findings
and conclusions in material issue number 5(f) of the Recommended
Decision concerning the authority to establish volume regulation
provisions under the proposed order are amended by adding the following
two paragraphs after the 20th paragraph (60 FR 61312) to read as
follows:
Mr. Lee Schrepel's exception stated that the Board, even with the
concurrence of the Secretary, should never have authority to modify the
50 million pound primary reserve limit. If a modification occurs, it
should involve a proposal of modification to the Secretary followed by
a comment period and State-by-State voting.
The record evidence supports the 50 million pound level specified
in section 930.50(i). If the Board recommended a change to the 50
million pound level, it would have to be implemented through the formal
rulemaking process which would require a public hearing and eventually
a favorable vote by growers and processors to implement such change.
State-by-State voting is not authorized under the Act nor is it
supported by the record.
Based upon the exception filed by CMI, the findings and conclusions
in material issue number 5(f) of the Recommended Decision concerning
the authority to establish volume regulation provisions under the
proposed order are amended by adding the following paragraph after the
16th paragraph (60 FR 61311) to read as follows:
The exception filed by CMI stated that there was an inconsistency
in section 930.55(b) of the proposed order. The record evidence
supported the concept that handlers could place cherries in any form in
the inventory reserve. Handlers would have the option of choosing what
form of inventory they wish to store. However, proposed section
930.55(b) states that the form to be used would be prescribed by the
Board. This statement is inconsistent with the record evidence.
Therefore, CMI's exception is adopted and appropriate modifications are
made in section 930.55(b).
Based upon the exception filed by CMI, the findings and conclusions
in material issue number 5(f) of the Recommended Decision concerning
the authority to establish volume regulation provisions under the
proposed order are amended by adding the following paragraph after the
15th paragraph (60 FR 61311) to read as follows:
The exception filed by CMI stated that section 930.53 should also
apply to the modification, suspension, or termination of quality
regulations along with volume regulations. This change would clarify
the Board's responsibility to monitor crop and market conditions and
recommend changes to existing regulations as necessary. Therefore,
CMI's exception is adopted and appropriate modifications to section
930.53 have been made.
Based upon the exception filed by Mr. Lee Schrepel, the findings
and conclusions in material issue number 5(f) of the Recommended
Decision concerning the authority to establish volume regulation
provisions under the proposed order are amended by adding the following
paragraph after the 12th paragraph (60 FR 61311) to read as follows:
In Mr. Lee Schrepel's exception, he stated that the reference to
the harvest season beginning in August (used as part of an
illustration) was incorrect. Mr. Schrepel stated that the harvest
season actually begins in mid-June and runs through mid-August. Mr.
Schrepel's exception is correct.
Based upon the exception filed by Mr. Lee Schrepel, the findings
and conclusions in material issue number 5(f) of the Recommended
Decision concerning the authority to establish volume regulation
provisions under the proposed order are amended by adding the following
paragraph after the 52nd paragraph (60 FR 61314) to read as follows:
The exception filed by Mr. Lee Schrepel stated that grower
diversion credit should not be given for fruit that is storm damaged. A
diversion credit may be a marketable commodity, an item of value, and
no such value should be accrued for unmarketable cherries. USDA did not
include the proponents' proposal to authorize diversion credit for
unharvestable or unmarketable fruit. The record evidence supported the
proposition that growers should be allowed to receive diversion credit
for marketable, harvestable fruit, even if some portion of such fruit
was damaged by storm winds or floods. USDA has determined that the
grower diversion program contained in the Recommended Decision could
benefit the industry and believes that this finding is consistent with
Mr. Schrepel's exception.
Based upon the exceptions filed by CMI and Mr. Lee Schrepel, the
findings and conclusions in material issue number 5(f) of the
Recommended Decision concerning the authority to establish volume
regulation provisions under the proposed order are amended by adding
the following 10 paragraphs after the 68th paragraph (60 FR 61317) to
read as follows:
The exception filed by CMI stated that since USDA modified the
provisions under section 930.52, the section may not now provide
authority to subject additional districts to volume regulation once the
initial group of volume regulated districts is established at the time
of promulgation. CMI also proposes a new section 930.52 to replace
section 930.52 that was published in the Recommended Decision. CMI
objected to USDA removing a 150 percent trigger provision which would
make districts that had a surge in production subject to volume
control. USDA determined that such an additional criteria would be
complicated for the Board to administer and possibly inequitable to
growers and handlers.
CMI stated that, since the 150 percent trigger was removed from the
proposal, the potential now exists for having up to 25 million pounds
of unregulated
[[Page 26967]]
production. In a market of 250 million pounds, this amounts to 10
percent of unregulated production annually and an additional 10 percent
could have a substantial impact upon markets and prices. CMI states
that this emphasizes the need to have realistic production triggers.
Also, CMI disagrees with USDA's conclusion that the dual triggers (150
percent and 15 million pounds) would somehow cause confusion and
concern that a district could meet one criteria and not the other and
still be regulated. CMI contends that the rules pertaining to the 15
million pound criteria and the 150 percent trigger are clear on the
record, and therefore are not confusing.
CMI has proposed modifications to section 930.52 which would
provide that: (1) Upon promulgation, those districts potentially
subject to any imposed volume regulation would be those in which the
average annual production of cherries over the prior three years,
measured on a total production basis, has exceeded 15 million pounds of
cherries and that handlers in districts not meeting this 15 million
pound requirement at the time of order promulgation shall become
subject to any volume regulation implemented in accordance with this
part in the crop year that follows any three-year period in which the
15 million pound average production requirement is exceeded in that
district; (2) If total production data is unavailable for a district,
the Board would adjust the 15 million pound trigger upward or downward
by a factor accounting for the historical difference between the total
production and total utilization; and (3) When a district hits the 15
million pound trigger, it would be subject to regulation in the next
crop year and remain regulated until the crop year following that in
which its production drops below 15 million pounds over any three-year
period subsequent to the year in which it hit the original 15 million
pound threshold.
Regarding modification number one, USDA is adopting CMI's
exception. This would clarify the intent and meaning of section 930.52
which should provide that after the initial regulation of districts
that meet the 15 million pound test, additional districts may become
regulated in the future.
Regarding modification number two, USDA is not adopting this
exception. Such factors as proposed by CMI would be confusing and
difficult to administer. If the order is promulgated, information
needed to calculate each State's production would be collected under
the marketing order. The marketing order provides for information
collection from handlers that can be used for this purpose.
Finally, the third modification is also denied. This modification
would lock a State in to being regulated for three years once it
reaches the 15 million pound threshold. This was not the intent of
USDA's modification to the Recommended Decision to delete the 150
percent trigger mechanism. USDA intended that States would become
regulated in the year subsequent to when they reach 15 million pounds
(computed as a rolling average of a three year period). Also, States
would become unregulated in the year subsequent to when they fell below
the 15 million pounds. The production of each State or district would
be reviewed annually to determine if they would be regulated or not
regulated in the upcoming crop year. Therefore, CMI's exception is
denied on this issue.
In Mr. Lee Schrepel's exception, he stated that the Board should
not have the authority to modify the 15 million pound requirement for
volume regulation. If the Board decided to recommend modification of
the 15 million pound level, such modification would have to be
implemented through formal rulemaking procedures. This would require a
public hearing and a favorable vote by growers and processors to
implement such change.
Mr. Schrepel further stated that the proposal should be modified to
facilitate that this trigger (15 million pound requirement) for
imposition of volume regulations increase whenever it falls below 8
percent of the optimum supply. There is no support in the record for
such proposition. Also, Mr. Schrepel did not specify why 8 percent was
chosen and how this provision would work, therefore, his exception is
denied.
Mr. Schrepel also requested clarification of when districts would
become permanently regulated; would it be contingent upon the average
of the previous three seasons? As previously discussed, no district
would be regulated unless that district continued to have production
above the 15 million pound requirement. Each year, the production of
each district (based on a rolling 3-year average) would be evaluated to
determine if such district would be regulated in the upcoming crop
year.
Mr. Schrepel also requested that USDA specify the source of data
for application of the trigger. USDA believes that the proponents
intended that the Board use post-harvest production figures from each
district. The Board can also obtain this information from USDA data and
handler reports.
Based upon the exception filed by Mr. Lee Schrepel, the findings
and conclusions in material issue number 5(f) of the Recommended
Decision concerning the authority to establish volume regulation
provisions under the proposed order are amended by adding the following
paragraph after the 19th paragraph (60 FR 61312) to read as follows:
Mr. Lee Schrepel's exception stated under section 930.63(a) that
referenced ``60 days prior to the end of the crop year'' appears to be
open to interpretation by the reader. USDA disagrees with this
statement. Crop year is defined under the marketing to mean the 12-
month period beginning on July 1 of any year and ending on June 30 of
the following year. Therefore, 60 days prior to the end of the crop
year would mean April 30. Mr. Schrepel's exception is denied.
Based upon the exception filed by Mr. Lee Schrepel, the findings
and conclusions in material issue number 5(h) of the Recommended
Decision concerning the additional terms and conditions which are
common to all marketing orders are amended by adding the following five
paragraphs after the sixth paragraph (60 FR 61318) to read as follows:
Mr. Lee Schrepel's exception stated that a continuance referendum
every sixth year is not frequent enough. The industry should be able to
petition the Secretary to hold a continuance referendum more
frequently.
The record evidence supported the conduct of a continuance
referendum at least every six years among growers and processors in the
industry to determine if they favor continuance of the order. This is
also consist with Departmental guidelines that endorse a continuance
referendum every six years. The Secretary is not prevented from holding
a continuance referendum at an earlier date if such referendum is
deemed necessary. Therefore, Mr. Schrepel's exception is denied.
Mr. Schrepel also stated that the standards or criteria should be
as stringent for continuance of the order as it is for the initial
promulgation. As was indicated in the Recommended Decision, it was
contemplated that the criteria for continuance of the order would be
based on a two-thirds affirmative vote by number or volume represented
in the referendum. This standard would be similar to the promulgation
standard. In any event, the Secretary would still have discretionary
authority in deciding whether to continue the order. Therefore, Mr.
Schrepel's exception is denied.
[[Page 26968]]
Mr. Schrepel also stated that section 930.91 should include
provisions for the initiation of an amendment from a source within the
industry other than the Board. Mr. Schrepel stated that incidents may
occur and the Board may not choose to act on a matter that may be of
considerable importance to an industry segment. The language in section
930.91 is standard language which is found in other orders and does not
preclude anyone from recommending amendments.
The Secretary relies on the Board to make recommendations that are
important to the welfare of the industry. If one segment of the
industry is concerned about an issue, it should be brought to the Board
to be addressed. Any person can submit recommendations to the Secretary
for consideration. If the Secretary does conclude that formal
rulemaking is necessary based on a Board recommendation or other
recommendations, other persons will also have the opportunity to submit
proposals. In addition, the Secretary may propose amendments, even in
the absence of outside recommendations. Therefore, Mr. Schrepel's
exception is denied.
In addition, to the exceptions filed and discussed above, CMI filed
an exception that included some typographical errors in the amendatory
language of the proposed order. Those changes are adopted in the
amendatory language below. They are:
(1) Section 930.11--Add the words ``for his or her own account'' at
the end of the definition.
(2) Section 930.15--cross sectional references are incorrect that
refer to the primary and secondary reserve.
(3) Section 930.17--cross sectional reference is incorrect that
refers to the primary and secondary reserve.
(4) Section 930.25--the phrase ``reapportionment or'' should be
added to make this section consistent with other changes that were
made.
(5) Section 930.51--A comma and the word ``this'' were left out of
the proposal.
(6) Section 930.55(a)--cross sectional reference is incorrect that
refers to equity holders.
(7) Section 930.57(a)--cross sectional reference is incorrect that
refers to equity holders.
(8) Section 930.58(b)--cross sectional reference is incorrect that
refers to exemptions.
(9) Section 930.58(b)(i)--add an ``and'' at the end of the
paragraph.
(10) Section 930.60--Change ``sole property'' to sole
responsibility.''
Also, in his exception, Mr. Lee Schrepel pointed out some
typographical errors and omissions of words in the Recommended
Decision. They are: (1) the dates of the Grand Rapids, Michigan hearing
session were incorrectly listed (60 FR 61292) and should be changed
from January 9 and 10, 1995, to January 18 and 19, 1995, respectively;
(2) in the description of small agricultural producers as those
entities having annual receipts of less than $500,000 (60 FR 61293),
the words ``less than'' were inadvertently omitted and should be added;
and, (3) the listings of U.S. bearing acreage of tart cherries (60 FR
61293) in 1986 and 1990 were incorrectly stated and should be changed
from 4.5 million and 5 million, respectively, to 45,000 and 50,000,
respectively.
USDA has modified sections 70(c) to make that provision consistent
with authorities provided under this proposed order and other Federal
marketing orders. In addition, where necessary, USDA has made minor
conforming changes to ensure that all sections of this part accurately
reflect the modifications adopted in this decision.
Rulings on Exceptions
In arriving at the findings and conclusions and the regulatory
provisions of this decision, the exceptions to the Recommended Decision
were carefully considered in conjunction with the record evidence. To
the extent that the findings and conclusions and the regulatory
provisions of this decision are at variance with the exceptions, such
exceptions are denied.
Marketing Agreement and Order
Annexed hereto and made a part hereof is the document entitled
``Order Regulating the Handling of Tart Cherries Grown in the States of
Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and
Wisconsin.'' This document has been decided upon as the detailed and
appropriate means of effectuating the foregoing findings and
conclusions.
It is hereby ordered, That this entire decision be published in the
Federal Register.
Referendum Order
It is hereby directed that a referendum be conducted in accordance
with the procedure for the conduct of referenda (7 CFR 900.400) to
determine whether the issuance of the annexed order regulating the
handling of tart cherries grown in the States of Michigan, New York,
Pennsylvania, Oregon, Utah, Washington, and Wisconsin is approved or
favored by growers and processors, as defined under the terms of the
order, who, during the representative period were engaged in the
production or processing of tart cherries in the proposed production
area.
The representative period for the conduct of such referendum is
hereby determined to be July 1, 1995, through May 31, 1996.
The agents of the Secretary to conduct such referendum are hereby
designated to be Gary D. Olson and Robert J. Curry, Marketing Order
Administration Branch, Fruit and Vegetable Division, AMS, USDA, 1220
S.W. Third Avenue, room 369, Portland, Oregon 97204; telephone 503-326-
2724, FAX 503-326-7440.
List of Subjects in 7 CFR Part 930
Marketing agreements, Tart cherries, Reporting and recordkeeping
requirements.
Dated: May 22, 1996.
Shirley R. Watkins,
Deputy Assistant Secretary, Marketing and Regulatory Programs.
Order Regulating the Handling of Tart Cherries Grown in the States of
Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and
Wisconsin 1
---------------------------------------------------------------------------
\1\ This order shall not become effective unless and until the
requirements of section 900.14 of the rules of practice and
procedure governing proceedings to formulate marketing agreements
and marketing orders have been met.
---------------------------------------------------------------------------
Findings and determinations upon the basis of the record. Pursuant
to the provisions of the Agricultural Marketing Agreement Act of 1937,
as amended (7 U.S.C. 601 et seq.), and the applicable rules of practice
and procedure effective thereunder (7 CFR part 900), a public hearing
was held upon a proposed marketing agreement and order regulating the
handling of tart cherries grown in the States of Michigan, New York,
Pennsylvania, Oregon, Utah, Washington, and Wisconsin.
Upon the basis of the evidence introduced at such hearing and the
record thereof, it is found that:
(1) The marketing agreement and order, and all of the terms and
conditions thereof, will tend to effectuate the declared policy of the
Act;
(2) The marketing agreement and order regulate the handling of tart
cherries grown in the production area in the same manner as, and are
applicable only to persons in the respective classes of commercial and
industrial activity specified in the marketing agreement and order upon
which hearings have been held;
[[Page 26969]]
(3) The marketing agreement and order are limited in their
application to the smallest regional production area which is
practicable, consistent with carrying out the declared policy of the
Act, and the issuance of several orders applicable to subdivisions of
the production area would not effectively carry out the declared policy
of the Act;
(4) There are no differences in the production and marketing of
tart cherries produced in the production area which make necessary
different terms and provisions applicable to different parts of such
area; and
(5) All handling of tart cherries grown in the production area is
in the current of interstate or foreign commerce or directly burdens,
obstructs, or affects such commerce.
Order Relative to Handling
It is therefore ordered, That on and after the effective date
hereof, all handling of tart cherries grown in the States of Michigan,
New York, Pennsylvania, Oregon, Utah, Washington, and Wisconsin, shall
be in conformity to, and in compliance with, the terms and conditions
of the said order, as follows:
The provisions of the proposed marketing agreement and order
contained in the Recommended Decision issued by the Administrator on
November 20, 1995, and published in the Federal Register on November
29, 1995 [60 FR 61292], as revised herein, shall be and are the terms
and provisions of this agreement and order. Sections 930.92 through
930.94 apply only to the proposed marketing agreement and not the
proposed order.
Title 7, Chapter IX is proposed to be amended by adding part 930 to
read as follows:
PART 930--TART CHERRIES GROWN IN THE STATES OF MICHIGAN, NEW YORK,
PENNSYLVANIA, OREGON, UTAH, WASHINGTON, AND WISCONSIN
Subpart A--Order Regulating Handling
Definitions
Sec.
930.1 Act.
930.2 Board.
930.3 Cherries.
930.4 Crop year.
930.5 Department or USDA.
930.6 District.
930.7 Fiscal period.
930.8 Free market tonnage percentage cherries.
930.9 Grower.
930.10 Handle.
930.11 Handler.
930.12 Person.
930.13 Primary inventory reserve.
930.14 Production area.
930.15 Restricted percentage cherries.
930.16 Sales constituency.
930.17 Secondary inventory reserve.
930.18 Secretary.
Administrative Body
930.20 Establishment and membership.
930.21 Reestablishment
930.22 Term of office.
930.23 Nomination and election.
930.24 Appointment.
930.25 Failure to nominate.
930.26 Acceptance.
930.27 Vacancies.
930.28 Alternate members
930.29 Eligibility for membership on Cherry Industry Administrative
Board.
930.30 Powers.
930.31 Duties.
930.32 Procedure.
930.33 Expenses and compensation.
Expenses and Assessments
930.40 Expenses.
930.41 Assessments.
930.42 Accounting.
Quality Control
930.44 Quality Control.
Research, Market Development and Promotion
930.48 Research, Market Development and Promotion.
Regulations
930.50 Marketing policy.
930.51 Issuance of volume regulations.
930.52 Establishment of districts subject to volume regulations.
930.53 Modification, suspension, or termination of regulations.
930.54 Prohibition on the use or disposition of inventory reserve
cherries.
930.55 Primary inventory reserves.
930.56 Off-premise inventory reserve.
930.57 Secondary inventory reserve.
930.58 Grower diversion privilege.
930.59 Handler diversion privilege.
930.60 Equity holders.
930.61 Handler compensation.
930.62 Exemptions.
930.63 Deferment of restricted obligation.
Reports and Records
930.70 Reports.
930.71 Records.
930.72 Verification of reports and records.
930.73 Confidential information.
Miscellaneous Provisions
930.80 Compliance.
930.81 Right of the Secretary.
930.82 Effective time.
930.83 Termination.
930.84 Proceedings after termination.
930.85 Effect of termination or amendment.
930.86 Duration of immunities.
930.87 Agents.
930.88 Derogation.
930.89 Personal liability.
930.90 Separability.
930.91 Amendments.
930.92 Counterparts.
930.93 Additional parties.
930.94 Order with marketing agreement.
Subpart B--[Reserved]
Authority: 7 U.S.C. 601-674.
Subpart A--Order Regulating Handling
Definitions
Sec. 930.1 Act.
Act means Public Act No. 10, 73d Congress (May 12, 1933), as
amended, and as reenacted and amended by the Agriculture Marketing
Agreement Act of 1937, as amended (48 Stat. 31, as amended, 68 Stat.
906, 1047; 7 U.S.C. 601 et seq.).
Sec. 930.2 Board.
Board means the Cherry Industry Administrative Board established
pursuant to Sec. 930.20.
Sec. 930.3 Cherries.
Cherries means all tart/sour cherry varieties grown in the
production area classified botanically as Prunus cerasas, or hybrids of
Prunus cerasas by Prunus avium, or Prunus cerasas by Prunus fruticosa.
Sec. 930.4 Crop year.
Crop year means the 12-month period beginning on July 1 of any year
and ending on June 30 of the following year, or such other period as
the Board, with the approval of the Secretary, may establish.
Sec. 930.5 Department or USDA.
Department or USDA means the United States Department of
Agriculture.
Sec. 930.6 District.
District means one of the subdivisions of the production area
described in Sec. 930.20(c), or such other subdivisions as may be
established pursuant to Sec. 930.21, or any subdivision added pursuant
to Sec. 930.63.
Sec. 930.7 Fiscal period.
Fiscal period is synonymous with fiscal year and means the 12-month
period beginning on July 1 of any year and ending on June 30 of the
following year, or such other period as the Board, with the approval of
the Secretary, may establish: Provided, That the initial fiscal period
shall begin on the effective date of this part.
Sec. 930.8 Free market tonnage percentage cherries.
Free market tonnage percentage cherries means that proportion of
cherries handled in a crop year which are free to be marketed in normal
commercial outlets in that crop year under any volume regulation
established pursuant to Sec. 930.50 or Sec. 930.51 and, in the absence
of a
[[Page 26970]]
restricted percentage being established for a crop year pursuant to
Sec. 930.50 or Sec. 930.51, means all cherries received by handlers in
that crop year.
Sec. 930.9 Grower.
Grower is synonymous with producer and means any person who
produces cherries to be marketed in canned, frozen, or other processed
form and who has a proprietary interest therein: Provided, That the
term grower shall not include a person who produces cherries to be
marketed exclusively for the fresh market in an unpitted condition.
Sec. 930.10 Handle.
Handle means the process to brine, can, concentrate, freeze,
dehydrate, pit, press or puree cherries, or in any other way convert
cherries commercially into a processed product, or divert cherries
pursuant to Sec. 930.59 or obtain grower diversion certificates issued
pursuant to Sec. 930.58, or otherwise place cherries into the current
of commerce within the production area or from the area to points
outside thereof: Provided, That the term handle shall not include:
(a) The brining, canning, concentrating, freezing, dehydration,
pitting, pressing or the converting, in any other way, of cherries into
a processed product for home use and not for resale.
(b) The transportation within the production area of cherries from
the orchard where grown to a processing facility located within such
area for preparation for market.
(c) The delivery of such cherries to such processing facility for
such preparation.
(d) The sale or transportation of cherries by a grower to a handler
of record within the production area.
(e) The sale of cherries in the fresh market in an unpitted
condition.
Sec. 930.11 Handler.
Handler means any person who first handles cherries or causes
cherries to be handled for his or her own account.
Sec. 930.12 Person.
Person means an individual, partnership, corporation, association,
or any other business unit.
Sec. 930.13 Primary inventory reserve.
Primary inventory reserve means that portion of handled cherries
that are placed into handlers' inventories in accordance with any
restricted percentage established pursuant to Sec. 930.50 or
Sec. 930.51.
Sec. 930.14 Production area.
Production area means the States of Michigan, New York,
Pennsylvania, Oregon, Utah, Washington and Wisconsin.
Sec. 930.15 Restricted percentage cherries.
Restricted percentage cherries means that proportion of cherries
handled in a crop year which must be either placed into handlers'
inventories in accordance with Sec. 930.55 or Sec. 930.57 or otherwise
diverted in accordance with Sec. 930.60 and thereby withheld from
marketing in normal commercial outlets under any volume regulation
established pursuant to Sec. 930.50 or Sec. 930.51.
Sec. 930.16 Sales constituency.
Sales constituency means a common marketing organization or
brokerage firm or individual representing a group of handlers or
growers.
Sec. 930.17 Secondary inventory reserve.
Secondary inventory reserve means any portion of handled cherries
voluntarily placed into inventory by a handler under Sec. 930.57.
Sec. 930.18 Secretary.
Secretary means the Secretary of Agriculture of the United States,
or any officer or employee of the U.S. Department of Agriculture to
whom authority has heretofore been delegated, or to whom authority may
hereafter be delegated, to act in the Secretary's stead.
Administrative Body
Sec. 930.20 Establishment and membership.
(a) There is hereby established a Cherry Industry Administrative
Board (Board) consisting of 18 members. Seventeen of these members
shall be qualified growers and handlers selected pursuant to this part,
each of whom shall have an alternate having the same qualifications as
the member for whom the person is an alternate. The remaining member of
the Board shall be a public member who, along with his or her
alternate, shall be elected by the Board from the general public.
(b) District representation on the Board shall be as follows:
------------------------------------------------------------------------
Grower Handler
District members members
------------------------------------------------------------------------
1................................................. 2 2
2................................................. 1 2
3................................................. 1 1
4................................................. 1 1
5................................................. 1 or 1
6................................................. 1 or 1
7................................................. 1 1
8................................................. 1 or 1
9................................................. 1 or 1
------------------------------------------------------------------------
(c) Upon the adoption of this part, the production area shall be
divided into the following described subdivisions for purposes of this
section:
District 1--Northern Michigan: That portion of the State of
Michigan which is north of a line drawn along the northern boundary of
Mason County and extended east to Lake Huron.
District 2--Central Michigan: That portion of the State of Michigan
which is south of District 1 and north of a line drawn along the
southern boundary of Allegan County and extended east to Lake St.
Clair.
District 3--Southern Michigan: That portion of the State of
Michigan not included in Districts 1 and 2.
District 4--The State of New York.
District 5--The State of Oregon.
District 6--The State of Pennsylvania.
District 7--The State of Utah.
District 8--The State of Washington.
District 9--The State of Wisconsin.
(d) The ratio of grower to handler representation in District 2
shall alternate each time the term of a Board member from the
representative group having two seats expires. During the initial
period of the order, the ratio shall be as designated in paragraph (b)
of this section.
(e) Board members from Districts 5, 6, 8 and 9 may be either grower
or handler members and will be nominated and elected as outlined in
Sec. 930.23. If District 5, 6, 8, and/or 9 becomes subject to volume
regulation under Secs. 930.52(a), then the Board shall be reestablished
by the Secretary to provide such District(s) with at least one grower
and one handler seat on the Board and such seats shall be filled
according to the provisions of Sec. 930.23.
(f) In order to achieve a fair and balanced representation on the
Board, and to prevent any one sales constituency from gaining control
of the Board, not more than one Board member may be from, or affiliated
with, a single sales constituency in those districts having more than
one seat on the Board. There is, however, no prohibition on the number
of Board members from differing districts that may be elected from a
single sales constituency which may have operations in more than one
district. However, as provided in Sec. 930.23, a handler or grower may
only nominate Board members and vote in one district.
(g) Subject to the approval of the Secretary, the Board shall at
its first meeting and annually thereafter elect from among any of its
members a chairperson and a vice-chairperson and may elect other
appropriate officers.
Sec. 930.21 Reestablishment.
Districts, subdivisions of districts, and the distribution of
representation among growers and handlers within a respective district
or subdivision
[[Page 26971]]
thereof, or among the subdivision of districts, may be reestablished by
the Secretary, subject to the provisions of Sec. 930.23, based upon
recommendations by the Board. In recommending any such changes, the
Board shall consider:
(a) the relative importance of producing areas;
(b) relative production;
(c) the geographic locations of producing areas as they would
affect the efficiency of administration of this part;
(d) shifts in cherry production within the districts and the
production area;
(e) changes in the proportion and role of growers and handlers
within the districts; and
(f) other relevant factors.
Sec. 930.22 Term of office.
The term of office of each member and alternate member of the Board
shall be for three fiscal years: Provided that, of the nine initial
members and alternates from the combination of Districts 1, 2 and 3,
one-third of such initial members and alternates shall serve only one
fiscal year, one-third of such members and alternates shall serve only
two fiscal years, one-third of such members and alternates shall serve
three fiscal years; and one-half of the initial members and alternates
from Districts 4 and 7 shall serve only one fiscal year, and one-half
of such initial members and alternates shall serve two fiscal years
(determination of which of the initial members and their alternates
shall serve for 1 fiscal year, 2 fiscal years, or 3 fiscal years, in
both instances, shall be by lot). Members and alternate members shall
serve in such capacity for the portion of the term of office for which
they are selected and have qualified until their respective successors
are selected, have qualified and are appointed. The consecutive terms
of office of grower, handler and public members and alternate members
shall be limited to two 3-year terms, excluding any initial term
lasting less than 3 years. The term of office of a member and alternate
member for the same seat shall be the same. If this part becomes
effective on a date such that the initial fiscal period is less than 6
months in duration, then the tolling of time for purposes of this
subsection shall not begin until the beginning of the first 12-month
fiscal period.
Sec. 930.23 Nomination and election.
(a) Forms and ballots. Nomination and election of initial and
successor members and alternate members of the Board shall be conducted
through petition forms and election ballots distributed to all eligible
growers and handlers via the U.S. Postal Service or other means, as
determined by the Secretary. Similar petition forms and election
ballots shall be used for both members and alternate members and any
requirements for election of a member shall apply to the election of an
alternate.
(b) Nomination:
(1) In order for the name of a grower nominee to appear on an
election ballot, the nominee's name must be submitted with a petition
form, to be supplied by the Secretary or the Board, which, except in
District 8, contains at least five signatures of growers, other than
the nominee, from the nominee's district who are eligible to vote in
the referendum. Grower petition forms in District 8 must be signed by
only two growers, other than the nominee, from the nominee's district.
(2) In order for the name of a handler nominee to appear on an
election ballot, the nominee's name must be submitted with a petition
form, to be supplied by the Secretary or the Board, which contains the
signature of at least one handler, other than the nominee, from the
nominee's district who is eligible to vote in the referendum. The
requirement that the petition form be signed by a handler other than
the nominee shall not apply in any District where less than two
handlers are eligible to vote.
(3) Only growers, including duly authorized officers or employees
of growers, who are eligible to serve as grower members of the Board
shall participate in the nomination of grower members and alternate
grower members of the Board. No grower shall participate in the
submission of nominees in more than one district during any fiscal
period. If a grower produces cherries in more than one district, that
grower may select in which district he or she wishes to participate in
the nominations and election process and shall notify the Secretary or
the Board of such selection. A grower may not participate in the
nomination process in one district and the election process in a second
district in the same election cycle.
(4) Only handlers, including duly authorized officers or employees
of handlers, who are eligible to serve as handler members of the Board
shall participate in the nomination of handler members and alternate
handler members of the Board. No handler shall participate in the
selection of nominees in more than one district during any fiscal
period. If a handler handles cherries in more than one district, that
handler may select in which district he or she wishes to participate in
the nominations and election process and shall notify the Secretary or
the Board of such selection. A handler may not participate in the
nominations process in one district and the elections process in a
second district in the same election cycle. If a person is a grower and
a grower-handler only because some or all of his or her cherries were
custom packed, but he or she does not own or lease and operate a
processing facility, such person may vote only as a grower.
(5) In Districts 5, 6, 8 and 9, both growers and handlers may be
nominated for the district's Board seat. Grower and handler nominations
must follow the petition procedures outlined in paragraphs (b)(1) and
(b)(2) of this section.
(6) All eligible growers and handlers in all districts may submit
the names of the nominees for the public member and alternate public
member of the Board.
(7) After the appointment of the initial Board, the Secretary or
the Board shall announce at least 180 days in advance when a Board
member's term is expiring and shall solicit nominations for that
position in the manner described in this section. Nominations for such
position should be submitted to the Secretary or the Board not less
than 120 days prior to the expiration of such term.
(c) Election:
(1) After receiving nominations, the Secretary or the Board shall
distribute ballots via the U.S. Postal Service or other means, as
determined by the Secretary, to all eligible growers and handlers
containing the names of the nominees by district for the respective
seats on the Board, excluding the public voting member seat. The
ballots will clearly indicate that growers and handlers may only rank
or otherwise vote for nominees in their own district.
(2) Except as provided in paragraph (c)(4) of this section, only
growers, including duly authorized officers or employees of growers,
who are eligible to serve as grower members of the Board shall
participate in the election of grower members and alternate grower
members of the Board. No grower shall participate in the election of
Board members in more than one district during any fiscal period. If a
grower produces cherries in more than one district, the grower must
vote in the same district in which he or she chose to participate in
the nominations process under paragraph (b)(3) of this section.
However, if the grower did not participate in the nominations process,
he or she may select in which district he or she wishes to vote and
shall notify the Secretary or the Board of such selection.
(3) Except as provided in paragraph (c)(4) of this section, only
handlers, including duly authorized officers or
[[Page 26972]]
employees of handlers, who are eligible to serve as handler members of
the Board shall participate in the election of handler members and
alternate handler members of the Board. No handler shall participate in
the election of Board members in more than one district during any
fiscal period. If a handler does handle cherries in more than one
district, he or she must vote in the same district in which the handler
elected to participate in the nominations process under paragraph
(b)(4) of this section. However, if a handler did not participate in
the nominations process, that handler may select in which district he
or she chooses to vote and shall notify the Secretary or the Board of
such selection. If a person is a grower and a grower-handler only
because some or all of his or her cherries were custom packed, but he
or she does not own or lease and operate a processing facility, such
person may vote only as a grower.
(4) In Districts 5, 6, 8 and 9, growers and handlers may vote for
either the grower or handler nominee(s) for the single seat allocated
to those districts.
(d) The members of the Board appointed by the Secretary pursuant to
Sec. 930.24 shall, at the first meeting and whenever necessary
thereafter, by at least a two-thirds vote of the entire Board, select
individuals to serve as the public member and alternate public member
of the Board from the list of nominees received from growers and
handlers pursuant to paragraph (b) of this section or from other
persons nominated by the Board. The persons selected shall be subject
to appointment by the Secretary under Sec. 930.24.
(e) The Board, with the approval of the Secretary, may establish
rules and regulations necessary and incidental to the administration of
this section.
Sec. 930.24 Appointment.
The selection of nominees made pursuant to elections conducted
under Sec. 930.23(c) shall be submitted to the Secretary in a format
which indicates the nominees by district, with the nominee receiving
the highest number of votes at the top and the number of votes received
being clearly indicated. The Secretary shall appoint from those
nominees or from other qualified individuals, the grower and handler
members of the Board and an alternate for each such member on the basis
of the representation provided for in Sec. 930.20 or as provided for in
any reapportionment or reestablishment undertaken pursuant to
Sec. 930.21. The public member and alternate public member is nominated
by the Board pursuant to Sec. 930.23(d) and shall also be subject to
appointment by the Secretary. The Secretary shall appoint from nominees
by the Board or from other qualified individuals the public member and
the alternate public member.
Sec. 930.25 Failure to nominate.
If nominations are not made within the time and in the manner
prescribed in Sec. 930.23, the Secretary may, without regard to
nominations, select the members and alternate members of the Board on
the basis of the representation provided for in Sec. 930.20 or as
provided for in any reapportionment or reestablishment undertaken
pursuant to Sec. 930.21.
Sec. 930.26 Acceptance.
Each person to be appointed by the Secretary as a member or as an
alternate member of the Board shall, prior to such appointment, qualify
by advising the Secretary that he/she agrees to serve in the position
for which nominated for selection.
Sec. 930.27 Vacancies.
To fill any vacancy occasioned by the failure of any person
appointed as a member or as an alternate member of the Board to
qualify, or in the event of the death, removal, resignation, or
disqualification of any member or alternate member of the Board, a
successor for the unexpired term of such member or alternate member of
the Board shall be appointed by the Secretary from the most recent list
of nominations for the Board made by growers and handlers, from
nominations made by the Board, or from other qualified individuals. Any
nominations made by the Board to fill a vacancy must be received by the
Secretary within 90 days of the effective date of the vacancy. Board
members wishing to resign from the Board must do so in writing to the
Secretary.
Sec. 930.28 Alternate members.
An alternate member of the Board, during the absence of the member
for whom that member serves as an alternate, shall act in the place and
stead of such member and perform such other duties as assigned.
However, if a member is in attendance at a meeting of the Board, an
alternate member may not act in the place and stead of such member. In
the event of the death, removal, resignation, or disqualification of a
member, the alternate shall act for the member until a successor for
such member is appointed and has qualified.
Sec. 930.29 Eligibility for membership on Cherry Industry
Administrative Board.
(a) Each grower member and each grower alternate member of the
Board shall be a grower, or an officer or employee of a grower, in the
district for which nominated or appointed.
(b) Each handler member and each handler alternate member of the
Board shall be a handler, or an officer or employee of a handler, who
owns, or leases, and operates a cherry processing facility in the
district for which nominated or appointed.
(c) The public member and alternate public member of the Board
shall be prohibited from having any financial interest in the cherry
industry and shall possess such additional qualifications as may be
established by regulation.
Sec. 930.30 Powers.
The Board 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. 930.31 Duties.
The Board shall have, among others, the following duties:
(a) To select such officers, including a chairperson and vice-
chairperson, as may be necessary, and to define the duties of such
officers and the duties of the chairperson and the vice- chairperson;
(b) To employ or contract with such persons or agents as the Board
deems necessary and to determine the duties and compensation of such
persons or agents;
(c) To select such committees and subcommittees as may be
necessary;
(d) To adopt bylaws and to adopt such rules for the conduct of its
business as it may deem advisable;
(e) To submit to the Secretary a budget for each fiscal period,
prior to the beginning of such period, including a report explaining
the items appearing therein and a recommendation as to the rates of
assessments for such period;
(f) To keep minutes, books, and records which will reflect all of
the acts and transactions of the Board and which shall be subject to
examination by the Secretary;
(g) To prepare periodic statements of the financial operations of
the Board and to make copies of each statement available to growers and
handlers for examination at the office of the Board;
(h) To cause its financial statements to be audited by a certified
public accountant at least once each fiscal year
[[Page 26973]]
and at such times as the Secretary may request. Such audit shall
include an examination of the receipt of assessments and the
disbursement of all funds. The Board shall provide the Secretary with a
copy of all audits and shall make copies of such audits, after the
removal of any confidential individual grower or handler information
that may be contained in them, available to growers and handlers for
examination at the offices of the Board;
(i) To act as intermediary between the Secretary and any grower or
handler with respect to the operations of this part;
(j) To investigate and assemble data on the growing, handling, and
marketing conditions with respect to cherries;
(k) To apprise the Secretary of all Board meetings in a timely
manner;
(l) To submit to the Secretary such available information as the
Secretary may request;
(m) To investigate compliance with the provisions of this part;
(n) To develop and submit an annual marketing policy for approval
by the Secretary containing the optimum supply of cherries for the crop
year established pursuant to Sec. 930.50 and recommending such
action(s) necessary to achieve such optimum supply;
(o) To implement volume regulations established under Sec. 930.50
and issued by the Secretary under Sec. 930.51, including the release of
any inventory reserves;
(p) To provide thorough communication to growers and handlers
regarding the activities of the Board and to respond to industry
inquiries about Board activities;
(q) To oversee the collection of assessments levied under this
part;
(r) To enter into contracts or agreements with such persons and
organizations as the Board may approve for the development and conduct
of activities, including research and promotion activities, authorized
under this part or for the provision of services required by this part
and for the payment of the cost thereof with funds collected through
assessments pursuant to Sec. 930.41 and income from such assessments.
Contracts or agreements for any plan or project shall provide that:
(1) The contractors shall develop and submit to the Board a plan or
project together with a budget(s) which shall show the estimated cost
to be incurred for such plan or project;
(2) Any contract or agreement for a plan or project and any plan or
project adopted by the Board shall only become effective upon approval
by the Secretary; and
(3) Every such contracting party shall keep accurate records of all
of its transactions and make periodic reports to the Board of
activities conducted and an accounting for funds received and expended,
and such other reports as the Secretary or the Board may require. The
Secretary or employees of the Board may audit periodically the records
of the contracting party;
(s) Pending disbursement consistent with its budget, to invest,
with the approval of the Secretary, and in accordance with applicable
Departmental policies, funds collected through assessments authorized
under Sec. 930.41 and income from such assessments;
(t) To establish standards or grade requirements for cherries for
frozen and canned cherry products, subject to the approval of the
Secretary;
(u) To borrow such funds, subject to the approval of the Secretary
and not to exceed the expected expenses of one fiscal year, as are
necessary for administering its responsibilities and obligations under
this part; and
(v) To establish, with the approval of the Secretary, such rules
and procedures relative to administration of this subpart as may be
consistent with the provisions contained in this subpart and as may be
necessary to accomplish the purposes of the Act and the efficient
administration of this subpart.
Sec. 930.32 Procedure.
(a) Twelve members of the Board, including alternates acting for
absent members, shall constitute a quorum. For any action of the Board
to pass, at least two-thirds of the entire Board must vote in support
of such action.
(b) The Board may provide through its own rules and regulations,
subject to approval by the Secretary, for simultaneous meetings of
groups of its members assembled at different locations and for votes to
be conducted by telephone or other means of communication. Votes so
cast shall be promptly confirmed in writing.
(c) All meetings of the Board are open to the public, although the
Board may hold portions of meetings in executive session for the
consideration of certain business. The Board will establish, with the
approval of the Secretary, a means of advanced notification of growers
and handlers of Board meetings.
Sec. 930.33 Expenses and compensation.
Except for the public member and alternate public member who shall
receive such compensation as the Board may establish and the Secretary
may approve, the members of the Board, and alternates when acting as
members, shall serve without compensation but shall be reimbursed for
necessary and reasonable expenses, as approved by the Board, incurred
by them in the performance of their duties under this part. The Board
at its discretion may request the attendance of one or more alternates
at any or all meetings, notwithstanding the expected or actual presence
of the respective member(s), and may pay the expenses of such
alternates.
Expenses and Assessments
Sec. 930.40 Expenses.
The Board is authorized to incur such expenses as the Secretary
finds are reasonable and likely to be incurred for its maintenance and
functioning and to enable it to exercise its powers and perform its
duties in accordance with the provisions of this part. The funds to
cover such expenses shall be acquired by the levying of assessments as
provided in Sec. 930.41.
Sec. 930.41 Assessments.
(a) An assessment may be levied upon handlers annually under this
part to cover the administrative costs of the Board, costs of
inspection, and any research, development and promotion activities
initiated by the Board under Sec. 930.48.
(b) Each part of an assessment intended to cover the costs of each
activity in paragraph (a) of this section, must be identified and
approved by the Board and the Secretary, and any notification or other
statement regarding assessments provided to handlers must contain such
information.
(c) As a pro rata share of the administrative, inspection,
research, development, and promotion expenses which the Secretary finds
reasonable and likely to be incurred by the Board during a fiscal
period, each handler shall pay to the Board assessments on all cherries
handled, as the handler thereof, during such period: Provided, a
handler shall be exempt from any assessment on the tonnage of handled
cherries that are diverted according to Sec. 930.59 which includes
cherries represented by grower diversion certificates issued pursuant
to Sec. 930.58(b)(2) and acquired by handlers and those cherries
devoted to exempt uses under Sec. 930.62.
(d) The Secretary, after consideration of the recommendation of the
Board, shall fix the rate of assessment to be paid by each handler
during the fiscal period in an amount designed to secure sufficient
funds to cover the expenses which may be approved and incurred
[[Page 26974]]
during such period or subsequent period as provided in paragraph (c) of
this section. At any time during or after the fiscal period, the
Secretary may increase the rate of assessment in order to secure
sufficient funds to cover any later finding by the Secretary relative
to the expenses which may be incurred. Such increase shall be applied
to all cherries handled during the applicable fiscal period. In order
to provide funds for the administration of the provisions of this part
during the first part of a fiscal period before sufficient operating
income is available from assessments, the Board may accept the payment
of assessments in advance, and may borrow money for such purposes.
(e) Assessments not paid within a time prescribed by the Board 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 Board and approved by the Secretary: 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.
(f) Assessments will be calculated on the basis of pounds of
cherries handled: Provided, That the formula adopted by the Board and
approved by the Secretary for determining the rate of assessment will
compensate for differences in the number of pounds of cherries utilized
for various cherry products and the relative market values of such
cherry products.
(g) The Board, with the approval of the Secretary, may establish
rules and regulations necessary and incidental to the administration of
this section.
Sec. 930.42 Accounting.
(a) If, at the end of a fiscal period, the assessments collected
are in excess of expenses incurred, the Board, with the approval of the
Secretary, may carry over all or any portion of such excess into
subsequent fiscal periods as a reserve. Such reserve funds may be used
to cover any expenses authorized by this part, and to cover necessary
expenses of liquidation in the event of termination of this part. If
any such excess is not retained in a reserve, it shall be refunded
proportionately to the handlers from whom the excess was collected.
Without an additional reserve level approved by the Secretary, the
amount held in reserve may not exceed approximately one year's
operational expenses. Upon termination of this part, any funds not
required to defray the necessary expenses of liquidation shall be
disposed of in such a manner as the Secretary may determine to be
appropriate: Provided, That to the extent practicable, such funds shall
be returned pro rata to the persons from whom such funds were
collected.
(b) All funds received by the Board pursuant to the provisions of
this part shall be used solely for the purpose specified in this part
and shall be accounted for in the manner provided in this part. The
Secretary may at any time require the Board and its members to account
for all receipts and disbursements.
Quality Control
Sec. 930.44 Quality Control.
(a) Quality standards. The Board may establish, with the approval
of the Secretary, such minimum quality and inspection requirements
applicable to cherries as will contribute to orderly marketing or be in
the public interest. If such requirements are adopted, no handler shall
process cherries into manufactured products or sell manufactured
products in the current of commerce unless such cherries and/or such
cherries used in the manufacture of products meet the applicable
requirements as evidenced by certification acceptable to the Board. The
Board, with the approval of the Secretary, may establish rules and
regulations necessary and incidental to the administration of this
section.
(b) Inspection and certification. Whenever the handling of any
cherries requires inspection pursuant to this part, each handler who
handles cherries shall cause such cherries to be inspected by the
appropriate division of USDA, and certified by it as meeting the
applicable requirements of such regulation: Provided, That inspection
and certification shall be required for cherries which previously have
been so inspected and certified only if such cherries have been
regraded, resorted, repackaged, or in any other way further prepared
for market. Promptly after inspection and certification, each such
handler shall submit, or cause to be submitted, to the Board a copy of
the certificate of inspection issued with respect to such cherries.
Research, Market Development and Promotion
Sec. 930.48 Research, Market Development and Promotion.
The Board, with the approval of the Secretary, may establish or
provide for the establishment of production and processing research,
market research and development, and/or promotional activities,
including paid advertising, designed to assist, improve or promote the
efficient production and processing, marketing, distribution, and
consumption of cherries subject to this part. The expense of such
projects shall be paid from funds collected pursuant to this part and
the income from such funds.
Regulations
Sec. 930.50 Marketing policy.
(a) Optimum Supply. On or about July 1 of each crop year, the Board
shall hold a meeting to review sales data, inventory data, current crop
forecasts and market conditions in order to establish an optimum supply
level for the crop year. The optimum supply volume shall be calculated
as 100 percent of the average sales of the prior three years to which
shall be added a desirable carryout inventory not to exceed 20 million
pounds or such other amount as the Board, with the approval of the
Secretary may establish. This optimum supply volume shall be announced
by the Board in accordance with paragraph (h) of this section.
(b) Preliminary percentages. On or about July 1 of each crop year,
the Board shall establish a preliminary free market tonnage percentage
which shall be calculated as follows: from the optimum supply computed
in paragraph (a) of this section, the Board shall deduct the carryin
inventory to determine the tonnage requirements (adjusted to a raw
fruit equivalent) for the current crop year which will be subtracted by
the current year USDA crop forecast. If the resulting number is
positive, this would represent the estimated over-production which
would need to be the restricted percentage tonnage. This restricted
percentage tonnage would then be divided by the sum of the USDA crop
forecast for the regulated districts to obtain the percentages for the
regulated districts. The Board shall establish a preliminary restricted
percentage equal to the quotient, rounded to the nearest whole number,
with the compliment being the preliminary free tonnage percentage. If
subtracting the current crop year requirement, computed in the first
sentence from the current USDA crop forecast, results in a negative
number, the Board shall establish a preliminary free tonnage of 100
percent with a preliminary restricted percentage of zero. The Board
shall announce these preliminary percentages in accordance with
paragraph (h) of this section.
(c) Interim percentages. Between July 1 and September 15 of each
crop year, the Board may modify the preliminary free market tonnage and
restricted percentages to adjust to the actual pack occurring in the
industry. The Board shall announce any interim percentages
[[Page 26975]]
in accordance with paragraph (h) of this section.
(d) Final percentages. No later than September 15 of each crop
year, the Board shall review actual production during the current crop
year and make such adjustments as are necessary between free and
restricted tonnage to achieve the optimum supply and recommend such
final free market tonnage and restricted percentages to the Secretary
and announce them in accordance with paragraph (h) of this section. The
difference between any final free market tonnage percentage designated
by the Secretary and 100 percent shall be the final restricted
percentage. With its recommendation, the Board shall report on its
consideration of the factors in paragraph (e) of this section.
(e) Factors. When computing preliminary and interim percentages, or
determining final percentages for recommendation to the Secretary, the
Board shall give consideration to the following factors:
(1) The estimated total production of cherries;
(2) The estimated size of the crop to be handled;
(3) The expected general quality of such cherry production;
(4) The expected carryover as of July 1 of canned and frozen
cherries and other cherry products;
(5) The expected demand conditions for cherries in different market
segments;
(6) Supplies of competing commodities;
(7) An analysis of economic factors having a bearing on the
marketing of cherries;
(8) The estimated tonnage held by handlers in primary or secondary
inventory reserves; and
(9) Any estimated release of primary or secondary inventory reserve
cherries during the crop year.
(f) Modification. In the event the Board subsequently deems it
advisable to modify its marketing policy, because of national
emergency, crop failure, or other major change in economic conditions,
it shall hold a meeting for that purpose, and file a report thereof
with the Secretary within 5 days (exclusive of Saturdays, Sundays, and
holidays) after the holding of such meeting, which report shall show
the Board's recommended modification and the basis therefor.
(g) Reserve tonnage to sell as free tonnage. In addition, the Board
shall make available tonnage equivalent to an additional 10 percent, if
available, of the average sales of the prior 3 years for market
expansion. Handlers can determine if they need the additional tonnage
and inform the Board so that reserve cherries may be released to them.
Handlers not desiring the additional tonnage would not have it released
to them.
(h) Publicity. The Board shall promptly give reasonable publicity
to growers and handlers of each meeting to consider a marketing policy
or any modification thereof, and each such meeting shall be open to
them and to the public. Similar publicity shall be given to growers and
handlers of each marketing policy report or modification thereof, filed
with the Secretary and of the Secretary's action thereon. Copies of all
marketing policy reports shall be maintained in the office of the
Board, where they shall be made available for examination. The Board
shall notify handlers, and give reasonable publicity to growers, of its
computation of the optimum supply, preliminary percentages, and interim
percentages and shall notify handlers of the Secretary's action on
final percentages by registered or certified mail.
(i) Restricted Percentages. Restricted percentage requirements
established under paragraph (b), (c) or (d) of this section may be
fulfilled by handlers by either establishing an inventory reserve in
accordance with Sec. 930.55 or Sec. 930.57 or by diversion of product
in accordance with Sec. 930.59. In years where required, the Board
shall establish a maximum percentage of the restricted quantity which
may be established as a primary inventory reserve such that the total
primary inventory reserve does not exceed 50 million pounds. Handlers
will be permitted to divert (at plant or with grower-diversion
certificates) as much of the restricted percentage requirement as they
deem appropriate, but may not establish a primary inventory reserve in
excess of the percentage established by the Board for restricted
cherries. In the event handlers wish to establish inventory reserve in
excess of this amount, they may do so, in which case it will be
classified as a secondary inventory reserve and will be regulated
accordingly.
(j) Inventory Reserve Release. In years when inventory reserve
cherries are available and when the expected availability of cherries
from the current crop plus expected carryin inventory does not fulfill
the optimum supply, the Board shall release not later than November 1st
of the current crop year such volume from the inventory reserve as will
satisfy the optimum supply.
(k) The Board, with the approval of the Secretary, may establish
rules and regulations necessary and incidental to the administration of
this section.
Sec. 930.51 Issuance of volume regulations.
(a) Whenever the Secretary finds, from the recommendation and
supporting information supplied by the Board, that to designate final
free market tonnage and restricted percentages for any cherries
acquired by handlers during the crop year will tend to effectuate the
declared policy of the Act, the Secretary shall designate such
percentages. Such regulation designating such percentage shall fix the
free market tonnage and restricted percentages, totaling 100 percent,
which shall be applied in accordance with this section, Sec. 930.55,
Sec. 930.57 and Sec. 930.59 to cherries grown in regulated districts,
as determined under Sec. 930.52, and handled during such fiscal period.
(b) The Board shall be informed immediately of any such regulation
issued by the Secretary, and the Board shall promptly give notice
thereof to handlers.
(c) That portion of a handler's cherries that are restricted
percentage cherries is the product of the restricted percentage imposed
under paragraph (a) of this section multiplied by the tonnage of
cherries, originating in a regulated district, handled, including those
diverted according to Sec. 930.59, by that handler in that fiscal year.
Therefore, while diverted cherries, including those represented by
grower diversion certificates, may be exempt from assessment under
Sec. 930.41, they must be counted when computing restricted percentage
requirements.
(d) The Board, with the approval of the Secretary, shall develop
rules and regulations which shall provide guidelines for handlers in
complying with any restricted tonnage requirements, including, but not
limited to, a grace period of at least 30 days to segregate and
appropriately document any tonnage they wish to place in the inventory
reserve and to assemble any applicable diversion certificates.
Sec. 930.52 Establishment of districts subject to volume regulations.
(a) Upon adoption of this part, the districts in which handlers
shall be subject to any volume regulations implemented in accordance
with this part shall be those districts in which the average annual
production of cherries over the prior three years has exceeded 15
million pounds. Handlers in districts not meeting the 15 million pound
requirement at the time of order promulgation shall become subject to
volume regulation implemented in accordance with this part in the crop
year that follows any three-year period in which the 15 million pound
average
[[Page 26976]]
production requirement is exceeded in that district.
(b) Handlers in districts which are not subject to volume
regulation would only be so regulated to the extent that they handled
cherries which were grown in a district subject to regulation as
specified in paragraph (a) of this section. In such a case, the handler
must place in inventory reserve pursuant to Sec. 930.55 or Sec. 930.57
or divert pursuant to Sec. 930.59 the required restricted percentage of
the crop originating in the regulated district.
(c) Handlers in districts not meeting the production requirement
described in paragraph (a) of this section in a given year would not be
subject to volume regulation in the next crop year.
(d) Any district producing a crop which is less than 50 percent of
the average annual processed production in that district in the
previous five years would be exempt from any volume regulation if, in
that year, a restricted percentage is established.
(e) The Board, with the approval of the Secretary, may establish
rules and regulations necessary and incidental to the administration of
this section.
Sec. 930.53 Modification, suspension, or termination of regulations.
(a) In the event the Board at any time finds that, by reason of
changed conditions, any regulations issued pursuant to Secs. 930.44 or
930.51 should be modified, suspended, or terminated, it shall so
recommend to the Secretary.
(b) Whenever the Secretary finds, from the recommendations and
information submitted by the Board or from other available information,
that a regulation issued pursuant to Secs. 930.44 or 930.51 should be
modified, suspended or terminated with respect to any or all shipments
of cherries in order to effectuate the declared policy of the Act, the
Secretary shall modify, suspend, or terminate such regulation.
Sec. 930.54 Prohibition on the use or disposition of inventory reserve
cherries.
(a) Release of primary and secondary inventory reserve cherries.
Except as provided in Sec. 930.50 and paragraph (b) of this section,
cherries that are placed in inventory reserve pursuant to the
requirements of Sec. 930.50, Sec. 930.51, Sec. 930.55, or Sec. 930.57
shall not be used or disposed of by any handler or any other person:
Provided, That if the Board determines that the total available
supplies for use in normal commercial outlets do not at least equal the
amount, as estimated by the Board, needed to meet the demand in such
outlets, the Board shall recommend to the Secretary and provide such
justification that, during such period as may be recommended by the
Board and approved by the Secretary, a portion or all of the primary
and/or secondary inventory reserve cherries shall be released for such
use.
Sec. 930.55 Primary inventory reserves.
(a) Whenever the Secretary has fixed the free market tonnage and
restricted percentages for any fiscal period, as provided for in
Sec. 930.51(a), each handler in a regulated district shall place in his
or her primary inventory reserve for such period, at such time, and in
such manner, as the Board may prescribe, or otherwise divert, according
to Sec. 930.59, a portion of the cherries acquired during such period.
(b) The form of the cherries, frozen, canned in any form, dried, or
concentrated juice, placed in the primary inventory reserve is at the
option of the handler. Except as may be limited by Sec. 930.50 (i) or
as may be permitted pursuant to Sec. 930.59 and Sec. 930.62, such
inventory reserve portion shall be equal to the sum of the products
obtained by multiplying the weight or volume of the cherries in each
lot of cherries acquired during the fiscal period by the then effective
restricted percentage fixed by the Secretary: Provided, That in
converting cherries in each lot to the form chosen by the handler, the
inventory reserve obligations shall be adjusted in accordance with
uniform rules adopted by the Board in terms of raw fruit equivalent.
(c) Inventory reserve cherries shall meet such standards of grade,
quality, or condition as the Board, with the approval of the Secretary,
may establish. All such cherries shall be inspected by USDA. A
certificate of such inspection shall be issued which shall show, among
other things, the name and address of the handler, the number and type
of containers in the lot, the grade of the product, the location where
the lot is stored, identification marks (can codes or lot stamp), and a
certification that the cherries meet the prescribed standards. Promptly
after inspection and certification, each such handler shall submit, or
cause to be submitted, to the Board, at the place designated by the
Board, a copy of the certificate of inspection issued with respect to
such cherries.
(d) Handlers shall be compensated for inspection costs incurred on
cherries placed in the primary inventory reserve. All reporting of
cherries placed in, rotated in and out, or released from an inventory
reserve shall be in accordance with rules and procedures established by
the Board, with the approval of the Secretary. The Board could, with
the approval of the Secretary, also limit the number of inspections of
reserve cherries being rotated into inventory reserves for which the
Board would be financially liable.
(e) Except as provided in Sec. 930.54, handlers may not sell
inventory reserve cherries prior to their official release by the
Board. Handlers may rotate cherries in their inventory reserves with
prior notification to the Board. All cherries rotated into the
inventory reserve must meet the applicable inspection requirements.
Sec. 930.56 Off-premise inventory reserve.
Any handler may, upon notification to the Board, arrange to hold
inventory reserve, of his or her own production or which was purchased,
on the premises of another handler or in an approved commercial storage
facility in the same manner as though the inventory reserve were on the
handler's own premises.
Sec. 930.57 Secondary inventory reserve.
(a) In the event the inventory reserve established under
Sec. 930.55 of this part is at its maximum volume, and the Board has
announced, in accordance with Sec. 930.50, that volume regulation will
be necessary to maintain an orderly supply of quality cherries for the
market, handlers in a regulated district may elect to place in a
secondary inventory reserve all or a portion of the cherries the volume
regulation would otherwise require them to divert in accordance with
Sec. 930.59.
(b) Should any handler in a regulated district exercise his or her
right to establish a secondary inventory reserve under paragraph (a) of
this section, all costs of maintaining that reserve, as well as
inspection costs, will be the responsibility of the individual handler.
(c) The secondary inventory reserve shall be established in
accordance with Secs. 930.55(b) and (c) and such other rules and
regulations which the Board, with the approval of the Secretary, may
establish.
(d) The Board shall retain control over the release of any cherries
from the secondary inventory reserve. No cherries may be released from
the secondary reserve until all cherries in any primary inventory
reserve established under Sec. 930.55 have been released. Any release
of the secondary inventory reserve shall be in accordance with the
annual marketing policy and with Sec. 930.54.
Sec. 930.58 Grower diversion privilege.
(a) In general. Any grower may voluntarily elect to divert, in
accordance with the provisions of this section, all
[[Page 26977]]
or a portion of the cherries which otherwise, upon delivery to a
handler, would become restricted percentage cherries. Upon such
diversion and compliance with the provisions of this section, the Board
shall issue to the diverting grower a grower diversion certificate
which such grower may deliver to a handler, as though there were actual
harvested cherries.
(b) Eligible diversion. Grower diversion certificates shall be
issued to growers only if the cherries are diverted in accordance with
the following terms and conditions or such other terms and conditions
that the Board, with the approval of the Secretary, may establish.
Diversion may take such of the following forms which the Board, with
the approval of the Secretary, may designate: uses exempt under
Sec. 930.62; nonhuman food uses; or other uses, including diversion by
leaving such cherries unharvested.
(c) Application/mapping. The Board, with the approval of Secretary,
shall develop rules and regulations providing for the diversion of
cherries by growers. Such regulations may include, among other things:
(1) The form and content of applications and agreements relating to the
diversion, including provisions for supervision and compensation; and
(2) provisions for mapping areas in which cherries will be left
unharvested.
(d) Diversion certificate. If the Board approves the application it
shall so notify the applicant and conduct such supervision of the
applicant's diversion of cherries as may be necessary to assure that
the cherries have been diverted. After the diversion has been
accomplished, the Board shall issue to the diverting grower a diversion
certificate stating the weight of cherries diverted. Where diversion is
carried out by leaving the cherries unharvested, the Board shall
estimate the weight of cherries diverted on the basis of such uniform
rule prescribed in rules and regulations as the Board, with the
approval of the Secretary, may recommend to implement this section.
Sec. 930.59 Handler diversion privilege.
(a) In general. Handlers handling cherries harvested in a regulated
district may fulfill any restricted percentage requirement in full or
in part by voluntarily diverting cherries or cherry products in a
program approved by the Board, rather than placing cherries in an
inventory reserve. Upon such diversion and compliance with the
provisions of this section, the Board shall issue to the diverting
handler a handler diversion certificate which shall satisfy any
restricted percentage or diversion requirement to the extent of the
Board or Department inspected weight of the cherries diverted.
(b) Eligible diversion. Handler diversion certificates shall be
issued to handlers only if the cherries are diverted in accordance with
the following terms and conditions or such other terms and conditions
that the Board, with the approval of the Secretary, may establish. Such
diversion may take place in any of the following forms which the Board,
with the approval of the Secretary, may designate: 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: Provided, That diversion may not be accomplished
by converting cherries into juice or juice concentrate.
(c) Notification. The handler electing to divert cherries through
means specified in this section or other approved means (not including
uses exempt under Sec. 930.62), shall first notify the Board of such
election. Such notification shall describe in detail the manner in
which the handler proposes to divert cherries including, if the
diversion is to be by means of destruction of the cherries, a detailed
description of the means of destruction and ultimate disposition of the
cherries. It shall also contain an agreement that the proposed
diversion is to be carried out under the supervision of the Board and
that the cost of such supervision is to be paid by the handler. Uniform
fees for such supervision shall be established by the Board, pursuant
to rules and regulations approved by the Secretary.
(d) Application. The handler electing to divert cherries by
utilizing an exemption under Sec. 930.62 shall first apply to the Board
for approval of such diversion; no diversion should take place prior to
such approval. Such application shall describe in detail the uses to
which the diverted cherries will be put. It shall also contain an
agreement that the proposed diversion is to be carried out under the
supervision of the Board and that the cost of such supervision is to be
paid by the applicant. The Board shall notify the applicant of the
Board's approval or disapproval of the submitted application.
(e) Diversion certificate. The Board shall conduct such supervision
of the handler's diversion of cherries under paragraph (c) or under
paragraph (d) of this section as may be necessary to assure that the
cherries are diverted. After the diversion has been accomplished, the
Board shall issue to the diverting handler a handler diversion
certificate indicating the weight of cherries which may be used to
offset any restricted percentage requirement.
Sec. 930.60 Equity holders.
(a) Inventory reserve ownership. The inventory reserve shall be the
sole responsibility of the handlers who place products into the
inventory reserve. A handler's equity in the primary inventory reserve
may be transferred to another person upon notification to the Board.
(b) Agreements with growers. Individual handlers are encouraged to
have written agreements with growers who deliver their cherries to the
handler as to how any restricted percentage cherries delivered to the
handler will be handled and what share, if any, the grower will have in
the eventual sale of any inventory reserve cherries.
(c) Rulemaking authority. The Board, with the approval of the
Secretary, may adopt rules and regulations necessary and incidental to
the administration of this section.
Sec. 930.61 Handler compensation.
Each handler handling cherries from a regulated district that is
subject to volume regulations shall be compensated by the Board for
inspection relating to the primary inventory reserve as the Board may
deem to be appropriate. The Board, with the approval of the Secretary,
may establish such rules and regulations as are necessary and
incidental to the administration of this section.
Sec. 930.62 Exemptions.
The Board, with the approval of the Secretary, may exempt from the
provisions of Sec. 930.41, Sec. 940.44, Sec. 930.51, Sec. 930.53, and
Sec. 930.55 through Sec. 930.57 cherries: diverted in accordance with
Sec. 930.59; used for new product and new market development; used for
experimental purposes or for any other use 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. The Board, with the approval of the Secretary, shall
prescribe such rules, regulations, and safeguards as it may deem
necessary to ensure that cherries handled under the provisions of this
section are handled only as authorized.
[[Page 26978]]
Sec. 930.63 Deferment of restricted obligation.
(a) Bonding. The Board, with the approval of the Secretary, may
require handlers to secure bonds on deferred inventory reserve tonnage.
Handlers may, in order to comply with the requirements of Secs. 930.50
and 930.51 and regulations issued thereunder, secure bonds on
restricted percentage cherries to temporarily defer the date that
inventory reserve cherries must be held to any date requested by the
handler. This date shall be not later than 60 days prior to the end of
that crop year. Such deferment shall be conditioned upon the voluntary
execution and delivery by the handler to the Board of a written
undertaking within thirty (30) days after the Secretary announces the
final restricted percentage under Sec. 930.51. Such written undertaking
shall be secured by a bond or bonds with a surety or sureties
acceptable to the Board that on or prior to the acceptable deferred
date the handler will have fully satisfied the restricted percentage
amount required by Sec. 930.51.
(b) Rulemaking authority. The Board, with the approval of the
Secretary, may adopt rules and regulations necessary and incidental to
the administration of this section.
Reports and Records
Sec. 930.70 Reports.
(a) Weekly production, monthly sales, and inventory data. Each
handler shall, upon request of the Board, file promptly with the Board,
reports showing weekly production data; monthly sales and inventory
data; and such other information, including the volume of any cherries
placed in or released from a primary or secondary inventory reserve or
diverted, as the Board shall specify with respect to any cherries
handled by the handler. Such information may be provided to the Board
members in summary or aggregated form only without any reference to the
individual sources of the information.
(b) Other reports. Upon the request of the Board, with the approval
of the Secretary, each handler shall furnish to the Board such other
information with respect to the cherries acquired, handled, stored and
disposed of by such handler as may be necessary to enable the Board to
exercise its powers and perform its duties under this part.
(c) Protection of proprietary information. Under no circumstances
shall any information or reports be made available to the Board
members, or to any person designated by the Board or by the Secretary,
which will reveal the proprietary information of an individual handler.
Sec. 930.71 Records.
Each handler shall maintain such records of all cherries acquired,
handled, stored or sold, or otherwise disposed of as will substantiate
the required reports and as may be prescribed by the Board. All such
records shall be maintained for not less than two years after the
termination of the fiscal year in which the transactions occurred or
for such lesser period as the Board may direct with the approval of the
Secretary.
Sec. 930.72 Verification of reports and records.
For the purpose of assuring compliance and checking and verifying
the reports filed by handlers, the Secretary and the Board, through its
duly authorized agents, shall have access to any premises where
applicable records are maintained, where cherries are received, stored,
or handled, and, at any time during reasonable business hours, shall be
permitted to inspect such handlers premises and any and all records of
such handlers with respect to matters within the purview of this part.
Sec. 930.73 Confidential information.
All reports and records furnished or submitted by handlers to the
Board and its authorized agents which include data or information
constituting a trade secret or disclosing trade position, financial
condition, or business operations of the particular handler from whom
received, shall be received by and at all times kept in the custody and
under the control of one or more employees of the Board or its agent,
who shall disclose such information to no person other than the
Secretary.
Miscellaneous Provisions
Sec. 930.80 Compliance.
Except as provided in this part, no person may handle cherries, the
handling of which has been prohibited by the Secretary under this part,
and no person shall handle cherries except in conformity with the
provisions of this part and the regulations issued hereunder. No person
may handle any cherries for which a diversion certificate has been
issued other than as provided in Sec. 930.58(b) and Sec. 930.59(b).
Sec. 930.81 Right of the Secretary.
Members of the Board (including successors and alternates), and any
agents, employees, or representatives thereof, shall be subject to
removal or suspension by the Secretary at any time. Each regulation,
decision, determination, or other act of the Board shall be subject to
the Secretary's disapproval at any time. Upon such disapproval, the
disapproved action of the Board 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. 930.82 Effective time.
The provisions of this part, and of any amendment thereto, shall
become effective at such time as the Secretary may declare, and shall
continue in force until terminated, or suspended.
Sec. 930.83 Termination.
(a) The Secretary may, at any time, terminate any or all of the
provisions of this part by giving at least 1 day's notice by means of a
press notice or in any other manner in which the Secretary may
determine.
(b) The Secretary shall terminate or suspend the operation of any
or all of the provisions of this part whenever the Secretary finds that
such provisions do not tend to effectuate the declared policy of the
Act.
(c) The Secretary shall terminate the provisions of this part
whenever the Secretary finds by referendum or otherwise that such
termination is favored by a majority of the growers and processors:
Provided, That such majority has, during the current fiscal year,
produced or canned and frozen more than 50 percent of the volume of the
cherries which were produced or processed within the production area.
Such termination shall become effective on the last day of June
subsequent to the announcement thereof by the Secretary.
(d) The Secretary shall conduct a referendum within the month of
March of every sixth year after the effective date of this part to
ascertain whether continuation of this part is favored by the growers
and processors. The Secretary may terminate the provisions of this part
at the end of any fiscal period in which the Secretary has found that
continuance is not favored by a majority of growers and processors who,
during a representative period determined by the Secretary, have been
engaged in the production or processing of tart cherries in the
production area. Such termination shall be announced on or before the
end of the fiscal period.
(e) The provisions of this part shall, in any event, terminate
whenever the provisions of the Act authorizing them cease to be in
effect.
Sec. 930.84 Proceedings after termination.
(a) Upon the termination of the provisions of this part, the then
[[Page 26979]]
functioning members of the Board shall, for the purpose of liquidating
the affairs of the Board, 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.
(b) The said trustees shall:
(1) continue in such capacity until discharged by the Secretary;
(2) from time to time account for all receipts and disbursements
and deliver all property on hand, together with all books and records
of the Board and of the trustees, to such person as the Secretary may
direct; and
(3) 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
Board or in the trustees pursuant to this part.
(c) Any person to whom funds, property, and claims have been
transferred or delivered, pursuant to this section, shall be subject to
the same obligations imposed upon the Board and upon the trustees.
Sec. 930.85 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 risen or which may thereafter arise in connection with any
provision of this part or any regulation issued thereunder;
(b) Release or extinguish any violation of this part or any
regulation issued thereunder;
(c) Affect or impair any rights or remedies of the Secretary or any
other person with respect to any such violation.
Sec. 930.86 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. 930.87 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 the Secretary's agent or
representative in connection with any provisions of this part.
Sec. 930.88 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 to exercise any powers granted by the Act or otherwise,
or, in accordance with such powers, to act in the premises whenever
such action is deemed advisable.
Sec. 930.89 Personal liability.
No member or alternate member of the Board and no employee or agent
of the Board 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 member, employee, or agent, except for acts
of dishonesty, willful misconduct, or gross negligence.
Sec. 930.90 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 or the
applicability thereof to any other person, circumstance, or thing shall
not be affected thereby.
Sec. 930.91 Amendments.
Amendments to this subpart may be proposed, from time to time, by
the Board or by the Secretary.
Sec. 930.92 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. 930.93 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. 930.94 Order with marketing agreement.
Each signatory hereby requests the Secretary to issue, pursuant to
the Act, an order providing for regulating the handling of tart
cherries in the same manner as is provided for in this agreement.
Subpart B--[Reserved]
Dated: May 22, 1996.
Shirley R. Watkins,
Deputy Assistant Secretary, Marketing and Regulatory Programs.
[FR Doc. 96-13383 Filed 5-24-96; 8:45 am]
BILLING CODE 3410-02-P