[Federal Register Volume 65, Number 250 (Thursday, December 28, 2000)]
[Rules and Regulations]
[Pages 82251-82254]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-33142]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 930
[Docket No. FV00-930-4 FIR]
Tart Cherries Grown in the States of Michigan, et al.;
Authorization of Japan as an Eligible Export Outlet for Diversion and
Exemption Purposes
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: The Department of Agriculture (Department) is adopting, as a
final rule, without change, the provisions of an interim final rule
which authorizes Japan as an eligible export market under the diversion
and exemption provisions of the Federal tart cherry marketing order
(order). Previously, shipments to Canada, Mexico, or Japan did not
qualify for diversion credit and could not be approved as exempt uses.
The Cherry Industry Administrative Board (Board) recommended allowing
shipments to Japan to qualify as exempt use shipments and to be
eligible for diversion credit. The order regulates the
[[Page 82252]]
handling of tart cherries grown in the States of Michigan, New York,
Pennsylvania, Oregon, Utah, Washington, and Wisconsin and is
administered locally by the Board.
EFFECTIVE DATE: January 29, 2001.
FOR FURTHER INFORMATION CONTACT: Patricia A. Petrella or Kenneth G.
Johnson, Marketing Order Administration Branch, F&V, AMS, USDA, Suite
2A04, Unit 155, 4700 River Road, Riverdale, Maryland 20737, (301) 734-
5243; Fax: (301) 734-5275, or George Kelhart, Technical Advisor,
Marketing Order Administration Branch, Fruit and Vegetable Programs,
AMS, USDA, room 2525-S, P.O. Box 96456, Washington, DC 20090-6456;
telephone; (202) 720-2491, Fax: (202) 720-5698.
Small businesses may request information on complying with this
regulation by contacting Jay Guerber, Marketing Order Administration
Branch, Fruit and Vegetable Programs, AMS, USDA, P.O. Box 96456, room
2525-S, Washington, DC 20090-6456; telephone (202) 720-2491; Fax: (202)
720-5698, or E-mail: [email protected].
SUPPLEMENTARY INFORMATION: This rule is issued under Marketing
Agreement and Order No. 930 (7 CFR part 930) regulating the handling of
tart cherries grown in the States of Michigan, New York, Pennsylvania,
Oregon, Utah, Washington, and Wisconsin, hereinafter referred to as the
``order.'' This order is effective under the Agricultural Marketing
Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter
referred to as the ``Act.''
The Department of Agriculture (Department or USDA) is issuing this
rule in conformance with Executive Order 12866.
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. This rule is not intended to have retroactive effect.
This rule will not preempt any State or local laws, regulations, or
policies, unless they present an irreconcilable conflict with this
rule.
The Act provides that administrative proceedings must be exhausted
before parties may file suit in court. Under section 608c(15)(A) of the
Act, any handler subject to an order may file with the Secretary a
petition stating that the order, any provision of the order, or any
obligation imposed in connection with the order is not in accordance
with law and request a modification of the order or to be exempted
therefrom. A handler is afforded the opportunity for a hearing on the
petition. 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.
This rule continues to authorize shipments of tart cherries to
Japan to qualify as exempt use shipments and to be eligible for
diversion credit. Currently, exports to countries other than Canada or
Mexico may receive diversion credit, and may qualify as exempt
shipments. Prior to the issuance of the interim final rule published
June 2, 2000 (65 FR 35265), Japan was not eligible for diversion and
exemption in the past because, according to the Board, tart cherry
markets were well established in that country. The Board, at its March
2, 2000, meeting, recommended allowing Japan to become an eligible
export outlet for diversion credit and exempt uses in order to
stimulate sales to that country. This was because exports to Japan have
greatly decreased industry-wide.
The order authorizes the use of volume regulation. In years when
volume regulation is implemented to stabilize supplies, a certain
percentage of the cherry crop is required to be set aside as restricted
tonnage, and the balance may be marketed freely as free tonnage. The
restricted tonnage is required to be maintained in handler-owned
inventory reserve pools. Handlers in volume regulated States may
fulfill their restricted tonnage requirements with diversion credits
earned by diverting cherries or cherry products. Handlers are permitted
to divert (at plant or with grower-diversion certificates from growers
choosing not to deliver their crop) as much of their restricted
percentage (reserve pool) requirements as they deem appropriate.
Handlers also may divert cherries by using cherries or cherry products
for exempt purposes, including the development of export markets.
Presently, these markets do not include Canada and Mexico.
Section 920.62 of the order (Exemptions) provides that cherries
which are diverted in accordance with Sec. 930.59, which are used for
new product and new market development, which are used for experimental
purposes, or which are used for any other purposes 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 was utilized, may be exempt from the assessment, quality
control, volume regulation, and reserve provisions of the order.
Currently, Sec. 930.162 of the rules and regulations under the
order authorizes the sale of cherries and cherry products, including
the development of sales for new and different tart cherry products or
the expansion of sales for existing tart cherry products, to countries
other than Canada and Mexico.
When the Board initially recommended regulations for exempt uses
and handler diversion in 1997-98, exports to Japan were averaging about
3.0 million pounds per season. The industry considered Japan, as well
as Canada and Mexico, to be a premium markets for tart cherries, not
outlets for which exemptions and diversion credit should be given. With
regard to Canada and Mexico, the industry also was concerned about
transshipments of lower-priced cherries because of their close
proximity to the primary domestic market. In 1998-99, sales to Japan
fell to 1.6 million pounds, and in 1999-00 sales further dropped to
943,000 pounds. The Board, therefore, recommended that exports to Japan
be eligible for diversion and exemption. This, in the Board's opinion,
would provide an incentive for handlers throughout the industry to make
shipments to that country and stimulate activity.
The Regulatory Flexibility Act and Effects on Small Businesses
The Agricultural Marketing Service (AMS) has considered the
economic impact of this action on small entities and has prepared this
final regulatory flexibility analysis. The Regulatory Flexibility Act
(RFA) will allow AMS to certify that regulations do not have a
significant economic impact on a substantial number of small entities.
However, as a matter of general policy, AMS' Fruit and Vegetable
Programs (Programs) no longer opt for such certification, but rather
perform regulatory flexibility analyses for any rulemaking that would
generate the interest of a significant number of small entities.
Performing such analyses shifts the Programs' efforts from determining
whether regulatory flexibility analyses are required to the
consideration of regulatory options and economic or regulatory impacts.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions in order that small businesses will
not be unduly or disproportionately burdened. Marketing orders issued
pursuant to the Act, and rules thereunder, are unique in that they are
brought about through
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group action of essentially small entities acting on their own behalf.
Thus, both statutes have small entity orientation and compatibility.
There are approximately 40 handlers of tart cherries who are
subject to regulation under the order and approximately 900 producers
of tart cherries in the regulated area. Small agricultural service
firms, which include handlers, have been defined by the Small Business
Administration (13 CFR 121.201) as those having annual receipts of less
than $5,000,000, and small agricultural producers are defined as those
having annual receipts of less than $500,000.
The principal demand for tart cherries is in the form of processed
products. Tart cherries are dried, frozen, canned, juiced, and pureed.
During the period 1995/96 through 1999/00, approximately 90 percent of
the U.S. tart cherry crop, or 280.3 million pounds, was processed
annually. Of the 280.3 million pounds of tart cherries processed, 63
percent were frozen, 29 percent canned and 8 percent utilized for
juice. Exports to Japan in 1999-00 were 943,000 pounds.
This rule continues to authorize tart cherry shipments to Japan to
qualify as exempt use shipments and to be eligible for diversion
credit. The objective of this action is to stimulate and expand sales
of tart cherries
This rule is expected to benefit growers and handlers by assisting
growers market a greater proportion of their crop to handlers having
access to export markets. Handlers, instead of diverting at-plant or
in-orchard or placing product in reserves, could ship product to Japan
and receive diversion certificates that could be used to offset any
restricted percentage obligations. Handlers also would benefit from
this action as they would be able to process greater amounts of tart
cherries, as a result of receiving more product from growers for
shipment to Japan, through their facilities, thus spreading their
operation costs and increasing returns to growers.
One alternative to this action considered by the Board was to
disallow exemptions and diversion credit for shipments to Japan.
However, this was not expected to be favorable to cherry growers and
handlers throughout the production area because it might cause a
further decline in the Japanese market, as occurred in 1999-00.
The Board's meetings were widely publicized throughout the tart
cherry industry and all interested persons were invited to attend them
and participate in Board deliberations. Like all Board meetings, the
March 2000 meeting was a public meeting and all entities, both large
and small, were able to express their views on these issues. The Board
itself is composed of 18 members, of which 17 members are growers and
handlers and one represents the public. Also, the Board has a number of
appointed committees to review certain issues and make recommendations.
This rule will not impose any additional recordkeeping requirements
on either small or large tart cherry handlers. As with all Federal
marketing order programs, reports and forms are periodically reviewed
to reduce information requirements and duplication by industry and
public sectors. In addition, the Department has not identified any
relevant Federal rules which duplicate, overlap or conflict with this
rule.
In compliance with Office of Management and Budget (OMB)
regulations (5 CFR part 1320) which implement the Paperwork Reduction
Act of 1995 (44 U.S.C. Chapter 35), the information collection and
recordkeeping requirements imposed by this order have been previously
approved by OMB and assigned OMB Number 0581-0177.
An interim final rule concerning this action was published in the
Federal Register on June 2, 2000 (65 FR 35265). Copies of the rule were
mailed by the Board's staff to all Board members and cherry handlers.
In addition, the rule was made available through the Internet by the
Office of the Federal Register. That rule provided a 60-day comment
period which ended August 1, 2000. Two comments were received. One
comment was received from the Oregon Farm Bureau and the other was
received from a tart cherry grower and handler in Oregon.
The two commenters opposed making Japan an eligible export market
under the diversion and exemption provisions of the order. Prior to the
issuance of the interim final rule, shipments to Canada, Mexico, or
Japan did not qualify for diversion credit and could not be approved as
exempt uses. Japan was considered a premium market similar to the
domestic market. The markets in Canada and Mexico also were considered
similar to the domestic market. This was because these markets were in
close proximity to the United States and the industry was concerned
about transshipments of lower-priced cherries if shipments to these
markets were eligible for diversion credit in meeting volume control
obligations.
Under the volume control mechanism, the industry has established a
price system with diversion credit shipments commanding lower prices
than those shipped domestically. Handlers purchase the free percentage
portion of the grower deliveries which can be marketed, and pay low
prices for the excess cherries which are disposed of under the
diversion and exemption provisions of the order. The cherries that are
not disposed of in this manner are held in reserve. Some States in the
production area, like Oregon, are not subject to volume regulation and
handlers purchase all of the marketable production delivered by their
growers. Generally, higher quality and condition cherries return more
money to the grower.
Total U.S. exports to Japan have fallen from 3.2 million pounds in
1996-97 to 1.6 million pounds in 1998-99. During the 1999-00 crop year,
total exports to Japan fell further to 943,000 pounds. This represents
a 70 percent decrease in exports from 1996-97. Under the interim final
rule, shipments to Japan qualify as exempt use shipments and are
eligible for diversion credit. This is expected to stimulate shipments
to Japan industry-wide.
Both commenters claim that Japan is a well-established and premium
market which should not be eligible for diversion credit. The buyers in
Japan are willing to pay a premium for cherries of the quality and
condition they desire. One of the commenters, stated that its customers
consistently pay top-dollar, and are rewarded with the very best his
firm can offer. This commenter indicated that his firm has not
experienced a comparable sense of ``premium'' in its exports to Canada.
Nonetheless, the industry concerns on the transshipment of lower-priced
cherries to the United States weigh heavily in considering Canada a
primary market under the order. Oregon comprised about 1.4 percent of
the domestic production during the last three shipping seasons (1997-
1999).
Both commenters agree that exports to Japan have fluctuated over
the years, but contend that the fluctuations are a function of the size
of the Oregon crop and not a softening of the market. The goal of the
Board in recommending this action was to stimulate shipments to Japan
by providing growers and handlers from other parts of the production
area with a means of competing in Japan. The intent of the action is
not to negatively impact the Oregon growers and handlers shipping to
Japanese markets, but to expand markets in Japan in the interest of the
entire U.S. tart cherry industry. Although the action is expected to
enable firms from the other parts of the production area to gain a
foothold in the
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price conscious markets in Japan, it is not expected to prevent the
firms in Oregon from supplying the needs of their quality conscious
customers, willing to pay premium prices.
Shipments to markets under the diversion and exemption provisions
of the order can be sold at lower prices than those shipped
domestically because growers are paid less for the tart cherries
subject to the diversion and exemption provisions. Because cherries
produced in Oregon are not subject to volume regulation under the
order, tart cherries are not subject to the diversion credit and
exemption provisions of the order, and growers are paid for all of the
cherries delivered.
The primary purpose of the order is to strengthen marketing
conditions in the primary domestic market through volume regulation. In
implementing volume controls and the related procedures, the
Department's goal is to apply the requirements uniformly in as
equitable a manner as possible, and to assure that any regulatory
action is in the interest of the entire industry covered under the
order, not just one segment or part of the industry. Authorizing Japan
as an eligible export market under the diversion and exemption
provisions of the order is expected to help the industry further
develop the Japanese market. This is in the long term interest of all
growers and handlers of tart cherries covered under the order.
In view of this, these comments are denied.
A small business guide on complying with fruit, vegetable and
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab.html. Any questions about the compliance
guide should be sent to Jay Guerber at the previously mentioned address
in the FOR FURTHER INFORMATION CONTACT section.
After consideration of all relevant material presented, including
the information and recommendation submitted by the Board and other
available information, it is found that finalizing this interim final
rule, without modifications, as published in the Federal Register (65
FR 35265), will tend to effectuate the declared policy of the Act.
List of Subjects in 7 CFR Part 930
Marketing agreements, Reporting and recordkeeping requirements,
Tart cherries.
For the reasons set forth in the preamble, 7 CFR part 930 is
amended as follows:
PART 930--TART CHERRIES GROWN IN THE STATES OF MICHIGAN, NEW YORK,
PENNSYLVANIA, OREGON, UTAH, WASHINGTON, AND WISCONSIN
Accordingly, the interim final rule amending 7 CFR part 930 which
was published at 65 FR 35265 on June 2, 2000, is adopted as a final
rule without change.
Dated: December 21, 2000.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 00-33142 Filed 12-27-00; 8:45 am]
BILLING CODE 3410-02-P