[Federal Register Volume 69, Number 192 (Tuesday, October 5, 2004)]
[Proposed Rules]
[Pages 59551-59557]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-22303]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 69, No. 192 / Tuesday, October 5, 2004 / 
Proposed Rules

[[Page 59551]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 923

[Docket Nos. AO-F&V-923-3; FV03-923-01]


Sweet Cherries Grown in Designated Counties in Washington; 
Recommended Decision and Opportunity To File Written Exceptions to 
Proposed Amendments to Marketing Agreement and Order No. 923

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule and opportunity to file exceptions.

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SUMMARY: This recommended decision invites written exceptions on 
proposed amendments to the marketing agreement and order (order) for 
sweet cherries grown in Washington. Four amendments were proposed by 
the Washington Cherry Marketing Committee (Committee), which is 
responsible for local administration of the order: adding authority for 
promotion, including paid advertising, and production research 
projects; adding authority for supplemental rates of assessment for 
individual varieties of cherries; adding authority for the Committee to 
accept voluntary contributions for research and promotion; and, adding 
a public member to the Committee. Two additional amendments are 
proposed by the Agricultural Marketing Service: establishing tenure 
limitations for Committee members; and, requiring that continuance 
referenda be conducted every 6 years.

DATES: Written exceptions must be filed by November 4, 2004.

ADDRESSES: Written exceptions should be filed with the Hearing Clerk, 
U.S. Department of Agriculture, room 1081-S, Washington, DC 20250-9200, 
Facsimile number (202) 720-9776 or http://www.regulations.gov. All 
comments should reference the docket number and the date and page 
number of this issue of the Federal Register. Comments will be made 
available for public inspection in the Office of the Hearing Clerk 
during regular business hours, or can be viewed at: http://www.ams.usda.gov/fv/moab.html.

FOR FURTHER INFORMATION CONTACT: Melissa Schmaedick, Marketing Order 
Administration Branch, Fruit and Vegetable Programs, Agricultural 
Marketing Service, USDA, Post Office Box 1035, Moab, UT 84532, 
telephone: (435) 259-7988, fax: (435) 259-4945.
    Small businesses may request information on this proceeding by 
contacting Jay Guerber, Marketing Order Administration Branch, Fruit 
and Vegetable Programs, AMS, USDA, 1400 Independence Avenue SW., Stop 
0237, Washington, DC 20250-0237; telephone: (202) 720-2491, fax: (202) 
720-8938.

SUPPLEMENTARY INFORMATION: Prior documents in this proceeding include a 
Notice of Hearing issued on October 6, 2003, and published in the 
October 10, 2003, issue of the Federal Register (68 FR 58636).
    This 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.

Preliminary Statement

    Notice is hereby given of the filing with the Hearing Clerk of this 
recommended decision with respect to the proposed amendment of 
Marketing Agreement and Order No. 923 regulating the handling of sweet 
cherries grown in designated counties in Washington, and the 
opportunity to file written exceptions thereto. Copies of this decision 
can be obtained from Melissa Schmaedick, whose address is listed above.
    This recommended decision is issued pursuant to the provisions of 
the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 
601 et seq.), hereinafter referred to as the ``Act,'' and the 
applicable rules of practice and procedure governing the formulation of 
marketing agreements and orders (7 CFR part 900).
    The proposed amendments are based on the record of a public hearing 
held November 18, 2003, in Yakima, Washington. Notice of this hearing 
was published in the Federal Register on October 10, 2003. The notice 
of hearing contained proposals submitted by the Committee and by AMS.
    The Committee's proposed amendments include: (1) Adding the 
authority for promotion, including paid advertising, and production 
research projects; (2) adding the authority for supplemental rates of 
assessment for individual varieties of cherries; (3) adding the 
authority for the Committee to accept voluntary contributions for 
marketing research and promotion, including paid advertising, and 
production research projects; and (4) adding a public member and 
alternate public member to the Committee.
    The Fruit and Vegetable Programs of AMS proposed two additional 
amendments: to establish tenure limitations for Committee members and 
require that continuance referenda be conducted on a periodic basis to 
ascertain grower support for the order. In addition, AMS proposed to 
allow such changes as may be necessary to the order, if any of the 
proposed changes are adopted, so that all of the order's provisions 
conform to the effectuated amendments.
    Six industry witnesses testified at the hearing. These witnesses 
represented sweet cherry growers and handlers in the production area, 
and they all supported the Committee's recommended changes.
    Witnesses addressed the need for adding the authority for 
promotion, including paid advertising, and production research 
projects. This authority would enable the Committee to develop more 
efficient growing, harvesting, marketing and distribution techniques 
for sweet cherries produced in the production area. Promotional 
activities, including paid advertising, could lead to greater market 
exposure and consumer demand for sweet cherries, thereby supporting 
increased grower returns.
    Witnesses stated their approval of the Committee's recommendation 
to add the authority for supplemental rates of assessment for 
individual varieties of cherries. Funds generated from supplemental 
rates of assessment would be used for research or promotion projects 
specific to an individual variety of sweet cherry.
    Witnesses also supported the proposal to add authority for the 
Committee to accept voluntary contributions for marketing research and 
promotion,

[[Page 59552]]

including paid advertising, and production research projects. Witnesses 
stated that the industry would benefit from this authority as 
contributions could provide the industry with additional research and 
marketing opportunities.
    Lastly, the Committee recommended adding a public member and 
alternate public member to the Committee. Witnesses stated that a 
public member would benefit Committee deliberations by bringing a non-
industry, consumer perspective to the table.
    An AMS witness testified in support of tenure limitations as a way 
to broaden industry participation in the program. That witness also 
supported continuance referenda as a means of determining grower 
sentiment on the order's operations.
    At the conclusion of the hearing, the Administrative Law Judge 
stated that the final date for interested persons to file proposed 
findings and conclusions or written arguments and briefs based on the 
evidence received at the hearing would be 30 days after USDA's receipt 
of the hearing record transcript. No briefs were filed.

Material Issues

    The material issues presented on the record of hearing are as 
follows:
    (1) Whether to add authority for promotion, including paid 
advertising, and production research projects;
    (2) Whether to add authority for supplemental rates of assessment 
for individual varieties of cherries;
    (3) Whether to add authority for the Committee to accept voluntary 
contributions for marketing research and promotion, including paid 
advertising, and production research projects;
    (4) Whether to add a public member and alternate public member seat 
to the Committee;
    (5) Whether to impose term limitations on Committee members; and
    (6) Whether to add a requirement that continuance referenda be held 
every 6 years.

Findings and Conclusions

    The following findings and conclusions on the material issues are 
based on evidence presented at the hearing and the record thereof.

Material Issue Number 1--Authority for Production Research and 
Promotion, Including Paid Advertising

    Section 923.45 of the order should be amended to add authority for 
production research and promotion, including paid advertising. That 
order provision currently authorizes only marketing research and 
development activities.
    This authority would enable the Committee to develop more efficient 
growing, harvesting, marketing and distribution techniques for sweet 
cherries produced in the production area. Promotional activities, 
including paid advertising, could lead to greater market exposure and 
consumer demand for Washington sweet cherries, thereby supporting 
increased returns for growers.
    This authority would enable the Committee to fund production 
research and promotion efforts. Such activities could be conducted by 
the Committee itself or be contracted out to other parties. The 
industry believes that it is important to include promotion and 
production research under the Federal marketing order as these 
activities are vital to the long-term health of the industry.
    The record evidence shows that sweet cherry acreage in Washington 
has increased from 21,000 acres in 1997 to an estimated 30,000 acres in 
2004. In that same time period, overall tonnage of Washington sweet 
cherries increased from 62,000 tons to 120,000 tons. Witnesses 
testified that acreage and production will continue to increase, making 
promotion and research all that more important. As production 
increases, there is an increasing need to identify means of increasing 
quality and more accurately determining the volume of cherries that 
will be available to consumers in a given year.
    For many years, production research and promotion has been carried 
out by the Washington State Fruit Commission (Commission) and other 
entities within the industry. Demonstrated success of these research 
and promotion programs has led to industry support for adding this 
authority to the order.
    Testimony indicated that current industry production research and 
promotion activities range from the development of more accurate 
weather detection systems and timely distribution strategies, to in-
store promotion activities and paid advertising.
    According to the record, production research in forecasting crop 
yield and harvest timing through Global Positioning Systems (GPS), 
satellite imagery, and real-time reporting technology has been 
particularly successful. Sweet cherries are a highly perishable crop. 
Accurate prediction of crop size and harvest timing is vital to the 
effective marketing and distribution of high quality cherries to the 
retail sectors. Because of the new advances in production technology, 
the industry was able to effectively anticipate the timing and record-
breaking volume of the 2003 sweet cherry crop. In 2003, 8.5 million 
boxes were harvested, marketed and sold over a four week period (June 
15 to July 15). Before that year, the industry's record volume for 
those four weeks was 5.5 million boxes.
    Another example of research conducted by the industry involves 
taste testing of newly developed sweet cherry varieties. According to 
the record, new varieties developed in Prosser, Washington, were taken 
to the United Kingdom for consumer taste tests in 2000. This project 
was a cooperative effort by the Commission, Washington State University 
and the Washington State Research Commission. This project helped the 
industry determine consumer receptivity of new varieties introduced 
into the market.
    A representative of the Commission testifying at the hearing stated 
that, since 1997, both volume and prices of Washington sweet cherries 
have shown annual increases. Increased market demand can be tied to the 
Commission's success in working with the retail sector. From 1997 to 
2003, the number of retailers running 4-week promotion ads increased 
from 30 to 79. At the same time, the number of retail chains decreased 
from 250 to 160. The witness stated that these numbers indicate that 
the relative proportion of retail exposure for sweet cherries since 
1997 has increased considerably.
    Consumers have responded to marketing efforts by doubling their 
purchase volume during targeted retail promotion periods. According to 
the witness, since 1997, sweet cherries have become a focus item for 
retail, as they have grown to make up at least 3.5 percent of the total 
produce category sales. Sweet cherry sales also continue to drive just 
over 10 percent sales lifts in the U.S. domestic retail market in the 
months of June and July.
    The witness estimates that the dollar impact on the local economy, 
or the residual benefit of the Commission's marketing efforts and 
increased sweet cherry demand within the State of Washington, has 
increased 29.74 percent over the past 5 years. With nearly 70 percent 
of total sweet cherry production sold domestically, the industry's 
marketing efforts have enabled the Washington sweet cherry industry to 
remain profitable in light of increasing production, rather than fall 
into a non-sustaining oversupply situation with low producer returns.
    One witness who produces other crops in addition to sweet cherries 
indicated that the recent loss of the Washington State Apple Commission

[[Page 59553]]

has had a negative impact on his returns for apples. More specifically, 
the witness indicated that the lack of promotional activities for 
Washington apples resulted in that industry's inability to respond 
effectively to last year's increased production. With increased volume 
in the market and few tools to assist in marketing and distributing 
that product, grower returns fell below subsistence levels. The witness 
stated that the Washington sweet cherry industry's ability to continue 
to meet the industry's challenges of increasing production through 
research and promotion has resulted in that industry's continued 
success. While to date that work has been done under the auspices of 
the Commission, the industry wants to further its ability to conduct 
these activities by adding research and promotion authority to the 
order.
    When asked whether a voluntary promotion program would work for the 
Washington sweet cherry industry, witnesses responded that the 
authority to conduct research and promotion activities under the order 
would ensure that those activities continue in a consistent manner, and 
that they would not be subject to economic cycles within the industry. 
One witness explained that a cooperative approach to funding these 
activities would operate as an ``umbrella'' mechanism for the entire 
industry by providing research and promotion solutions to all industry 
participants. Witnesses also indicated that this authority would be 
equally beneficial to small and large grower and handler entities. 
Grower input into the development of any research or promotion programs 
would also ensure that these activities, and the use of assessment 
funds to support them, would remain responsive to industry needs.
    Adding this authority to the order would provide the Committee with 
the flexibility to use research and promotional activities, including 
paid advertising, to assist and improve production techniques, and 
promote the marketing, distribution and consumption of Washington sweet 
cherries. The use of assessments and available funding sources for 
research and promotion, including paid advertising, would be an 
important component to increasing demand and consumption of Washington 
sweet cherries.
    The record supports adding authority for production research and 
promotion to Sec.  923.45 of the order. There was no opposition 
testimony on this issue.

Material Issue Number 2--Supplemental Rates of Assessment

    Section 923.41, Assessments, of the order should be amended to 
allow additional rates of assessment for individual varieties of 
cherries. Currently, the order provides for a single rate of assessment 
for all cherries, regardless of variety, to be established. The base 
assessment rate is recommended by the Committee for approval by the 
Department. If authority to establish supplemental rates of assessment 
by variety was added to the order, those rates would also be 
recommended by the Committee for approval by USDA. Assessments are used 
to fund the administrative functions of the Committee, as well as any 
research and promotion activities. According to the record, 
supplemental rates of assessment would be used for expenses specific to 
an individual variety of sweet cherry.
    Witnesses stated that there are a number of reasons for which 
specific varieties may warrant supplemental assessment rates, including 
differences in production and marketing needs. Supplemental assessments 
could be used to fund research that is particular to the needs of a 
specific variety, or could be used to fund promotional projects to 
market lesser known or off-season varieties. Supplemental rates could 
also be applied when a particular variety of cherries produces a larger 
than anticipated crop in a given year. In those cases, extra funds 
generated through a supplemental rate could be used to support 
additional marketing efforts needed to stimulate demand and move that 
crop within the market.
    Witnesses stated that any supplemental assessments collected by 
variety of cherry should only be used to fund projects associated with 
that variety. While all growers within the production area benefit from 
general sweet cherry production research and marketing efforts, growers 
of specific varieties should fund any projects aimed at benefiting that 
particular variety. For example, if a new variety of sweet cherry is 
developed, special marketing may be needed to introduce that variety to 
consumers in the market. While there is a risk associated with the 
production of that new variety, both the costs and the benefits of 
producing a unique and potentially higher price product should be 
attributed to the growers of that product.
    It is not anticipated that this authority would unduly burden small 
growers or handlers. While a supplemental assessment would represent an 
additional cost, witnesses stated that the benefits derived from that 
assessment would outweigh its cost. Adding this authority in 
conjunction with the proposal to add authority to conduct production 
research and promotion activities, including paid advertising, would 
allow the Committee to streamline and more specifically focus its 
research and promotion activities to the needs of the industry.
    Record evidence supports amending the marketing order to authorize 
supplemental rates of assessment for specific varieties of sweet 
cherries. This proposal would allow the Committee to collect assessment 
funds to be used for research and promotion activities that are 
specific to a single variety of sweet cherry in addition to projects 
that are beneficial to the Washington sweet cherry industry as a whole. 
There was no opposition expressed with respect to this proposal.

Material Issue Number 3--Voluntary Contributions

    A new Sec.  923.43, Contributions, should be added to the order to 
allow the Washington Cherry Marketing Committee to accept voluntary 
contributions for the purpose of funding marketing research and 
promotion (including paid advertising), and production research 
projects. Such contributions should be free from any encumbrances by 
the donor so that the Committee would retain complete control of their 
use.
    Currently, the marketing order program does not contain authority 
for the Committee to accept contributions. All marketing order 
activities are funded through handler assessments. Witnesses stated 
that the industry would benefit from this authority as contributions 
from groups and businesses could provide the industry with additional 
research and marketing opportunities.
    The record shows that contributions could come from equipment and 
machinery dealers, fertilizer, chemical or seed dealers, container 
manufacturers and dealers, and companies that currently have their own 
marketing activities. One witness stated that this authority would have 
healthy, long-range effects on the industry. Ultimately, this would 
benefit all growers, handlers and consumers of Washington sweet 
cherries.
    Witnesses testified that voluntary contributions should only be 
accepted with the understanding that the Committee would retain full 
discretion over how those funds would be used. Witnesses stated that 
project selection and spending decisions would rest with the Committee. 
While a donor could

[[Page 59554]]

indicate a specific project that he or she supports, the Committee 
would decide how those funds should be spent.
    Record evidence supports revising the marketing order to 
incorporate the authority to accept voluntary contributions. There was 
no opposition given to this proposal.

Material Issue Number 4--Public Member

    The marketing order should be revised to add a public member and 
alternate public member to the Washington Cherry Marketing Committee. 
This amendment would necessitate revising language in Sec.  923.20, 
Establishment and membership, and 923.22, Nomination.
    If this change were implemented, Committee membership would 
increase from 16 to 17 members. The public member could not have any 
financial interest in the Washington sweet cherry industry. The public 
member would have the same rights and responsibilities as other 
Committee members, including reimbursement for expenses as approved by 
the Committee.
    Witnesses stated that the addition of a public member to the 
Committee would be beneficial in that it would bring a non-industry 
perspective to Committee deliberations and decision-making. The public 
member and alternate should be persons who can present constructive 
criticism when needed, and who can work together with other Committee 
members to build a bridge for better understanding between consumers 
and agriculture.
    The evidence of record is that a non-industry perspective could be 
especially useful in deliberations over production research and 
promotion activities. Research and promotion activities are aimed not 
only at improving production and harvest techniques, but also product 
quality. High quality is important to the industry's ability to boost 
consumer demand and maintain adequate grower returns. Moreover, 
promotion activities are intended to attract or increase consumer 
interest in the product. Often promotion activities include an 
educational element about the benefits of the product, or ideas for 
using the product in cooking or food presentation. A public member 
could help the Committee to decide which types of production research 
or promotion activities would be most beneficial in the eyes of the 
consumer.
    Persons serving as public representatives should not be, at the 
time of selection, nomination or during the term of office, engaged in 
the commercial production, buying, grading, processing of any 
agricultural product, nor should they be an officer, director, member, 
or employee of any firm engaged in the production or processing of any 
agricultural product. Should the public member or alternate public 
member become involved in such activities at any time during their term 
of office, they would become ineligible to continue to serve and a 
replacement would be nominated for the Department's appointment.
    Testimony indicates that the initial public member and alternate 
public member should be nominated at the first Committee meeting 
following the selection of industry members for a new term of office, 
which starts on April 1. Normally, the Committee holds its marketing 
policy and organization meeting during May of each year, so such 
meeting could be used to nominate the public member and the alternate.
    Witnesses recognized that some delay would occur in the nomination 
and seating of the initial public member and alternate public member, 
as recommendation of those candidates would occur after the grower and 
handler members the Committee were appointed. Witnesses stated that it 
would be better to have the public member positions vacant for a short 
period of time until the new Committee members are seated by the 
Department, rather than create a second later term of office just 
applicable to the public member and alternate member. This situation 
would only occur once since all subsequent public members and their 
alternates would serve until their respective successors are appointed, 
as is currently practiced for all Committee grower and handler members.
    Record evidence supports the addition of a public member and 
alternate public member to the Washington Cherry Marketing Committee. 
No opposition to this proposal was presented at the hearing.

Material Issue Number 5--Tenure Limitations

    Section 923.21, Term of office, should be revised to establish a 
limit on the number of consecutive terms a person may serve on the 
Committee. Currently, the term of office of each member and alternate 
member of the Committee is three years. There are no provisions related 
to tenure in the marketing order. Members and alternates may serve on 
the Committee until their respective successors are selected and have 
qualified.
    The record shows that USDA proposed tenure requirements for 
Committee members as a means to increase industry participation on the 
Committee, provide for more diverse membership, provide the Committee 
with new perspectives and ideas, and increase the number of individuals 
in the industry with Committee experience.
    Experience with other marketing order programs suggests that a 
period of six years would be appropriate. Since the current term of 
office for Washington Cherry Marketing Committee members and alternates 
is two years, the Department is proposing that no member serve more 
than three consecutive two-year terms or a total of six years. This 
proposal for a limitation on tenure would not apply to alternates. Once 
a member has served on the Committee for three consecutive terms, or 
six years, the member would sit out for one year before being eligible 
to serve as a member again. The member could serve as an alternate 
during that time.
    One witness testified in opposition to tenure limitations. He 
indicated that finding growers and handlers willing to serve on the 
Committee could become more difficult, and the knowledge of experienced 
Committee members would be difficult to replace.
    The Department believes that any additional efforts necessary to 
find eligible growers and handlers who are willing to serve on the 
Committee offset by the benefits derived by broader industry 
participation in order operations.
    Therefore, it is recommended that the order be amended to establish 
tenure requirements for Committee members.

Material Issue Number 6--Continuance Referenda

    Section 923.64, Termination, should be amended to require that 
continuance referenda be conducted every six years to ascertain 
industry support for the order.
    Currently, there is no provision in the marketing order that 
requires periodic continuance referenda. The record evidence is that 
growers should have an opportunity to periodically vote on whether the 
marketing order should continue. Continuance referenda provide an 
industry with a means to measure grower support for the marketing order 
program. Experience has shown that programs need significant industry 
support to operate effectively. Under this proposal, the Department 
would consider termination of the marketing order if continuance is not 
favored by at least two-thirds of those voting, or at least two-thirds 
of the volume represented in the referendum. This is the same as that 
for issuance of an order. Experience in recent years indicates that six 
years is an appropriate

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period to allow growers an opportunity to vote for continuance of the 
program. Therefore, the proposal sets forth that a referendum would be 
conducted six years after the effective date of this amendment and 
every sixth year thereafter.
    One industry witness testified in opposition to this proposal. He 
indicated that the industry currently has the ability to request a 
continuance referendum at any time, and requiring unnecessary referenda 
would be costly and of little value to the industry or the Department. 
The program has worked successfully since its inception, and growers 
have been supportive of the order since that time.
    The Department believes that growers should have an opportunity to 
periodically vote on whether the marketing order should continue. 
Accordingly, it is recommended that the order be amended to require a 
continuance referendum every six years.
    The Agricultural Marketing Service also proposed to make such 
changes as may be necessary to the order to conform to any amendment 
that may result from the hearing. The Department has identified no 
necessary conforming changes.

Small Business Consideration

    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has 
considered the economic impact of this action on small entities. 
Accordingly, the AMS has prepared this initial regulatory flexibility 
analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions so that small businesses will not be 
unduly or disproportionately burdened. Small agricultural growers have 
been defined by the Small Business Administration (SBA) (13 CFR 
121.201) as those having annual receipts of less than $750,000. Small 
agricultural service firms are defined as those with annual receipts of 
less than $5,000,000.
    The record shows that there are approximately 1,500 growers of 
sweet cherries in the production area and approximately 62 handlers 
subject to regulation under the order. The average production of sweet 
cherries in Washington State for the last three years is 64,676 tons 
with an average grower price of $1,943 per ton. Using this number, the 
average annual grower revenue is calculated to be approximately 
$83,777, thus indicating that the average Washington sweet cherry 
grower would qualify as a small entity according to the SBA definition.
    Using Committee data regarding each individual handler's total 
shipments during the 2002 marketing year, and an estimated average FOB 
price of $24 per 20-pound container, 79 percent of the Washington sweet 
cherry handlers shipped under $5 million worth of sweet cherries, and 
21 percent shipped over $5 million worth of sweet cherries. Therefore, 
the majority of Washington sweet cherry handlers may be classified as 
small entities.
    The Committee is currently comprised of 10 growers and 6 handlers. 
Both small and large growers and handlers are members and member 
alternates on the Committee. Committee meetings are widely publicized 
in advance of the meetings and are held in a location central to the 
production area. The meetings are open to all industry members and all 
other interested persons, who are encouraged to participate in the 
deliberations and voice their opinions on topics under discussion.
    At a May 22, 2003, full Committee meeting, all industry 
representatives present could present their views concerning the 
recommended amendments. Both large and small businesses were 
represented. The Committee believes that small and large entities would 
benefit equally from the proposed amendments.
    Testimony indicates that the proposal to include paid advertising 
and production research under the order would assist both small and 
large growers and handlers in marketing Washington sweet cherry crops. 
While addition of this authority could result in increased assessments 
under the order, witnesses stated that the benefits arising from these 
activities, as evidenced by similar activities under the Commission, 
would outweigh the costs.
    Similarly, the proposal to add authority for supplemental varietal 
assessments could require additional payments per individual variety of 
sweet cherry. However, witnesses stated that they believed the benefits 
of those research and promotion activities would outweigh the costs.
    Witnesses used the example of recent Commission activities as 
evidence that research and promotion activities would lead to increased 
grower returns and market stability by providing tools to the industry 
to address expanding production and evolving consumer trends in the 
industry. Witnesses were unanimous in their belief that the benefits of 
the Commission's activities more than outweigh the costs of these 
programs. They stated that the same results would be expected from any 
such activities conducted under the order.
    The proposal to add authority for the Committee to accept voluntary 
contributions would not result in any increased costs or burdens to the 
industry. In fact, witnesses stated that this authority would benefit 
the industry greatly as it could provide for additional funding sources 
of research and promotional activities. Safeguards against donor 
control over the use of voluntary contributions would ensure that these 
funds would be used in the best interest of the industry. The Committee 
would decide how to use those funds, and the decision-making process 
would be open to industry input and feedback.
    The proposal to add a public member and alternate public member to 
the Committee is not expected to result in any substantial cost 
increases. While the new members would be entitled to reimbursement for 
their expenses, the additional cost would be minimal. Additionally, the 
benefit of adding a non-industry, consumer perspective to Committee 
deliberations and decision-making could prove very beneficial. 
Witnesses stated that this additional perspective would improve the 
Committee's understanding of the consumer in the marketplace and could 
enhance Committee activities aimed at increasing consumer demand for 
Washington sweet cherries.
    The proposed amendment to add tenure requirements for Committee 
members would allow more persons the opportunity to serve as members of 
the Committee. It would provide for more diverse membership, provide 
the Committee with new perspectives and ideas, and increase the number 
of individuals in the industry with Committee experience.
    The proposal to require continuance referenda on a periodic basis 
to ascertain grower support for the order would allow growers to vote 
on whether to continue the operation of the program. The referenda 
would be conducted by USDA.
    Interested persons were invited to present evidence at the hearing 
on the probable regulatory and informational impacts of the proposed 
amendments to the order on small entities. The record evidence is that 
while some minimal costs may occur, those costs would be outweighed by 
the benefits expected to accrue to the sweet cherry industry in 
designated counties of Washington.
    The Department has not identified any relevant Federal rules that 
duplicate, overlap or conflict with this proposed rule. All of the 
amendments are designed to enhance the

[[Page 59556]]

administration and functioning of the program to the benefit of 
Washington cherry growers and handlers.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposal. Thirty days is deemed appropriate so that 
this rulemaking may be completed prior to the 2005-2006 season. All 
written exceptions timely received will be considered and a grower 
referendum will be conducted before these proposals are implemented.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), AMS announces its intention to request OMB approval of any 
increase in information collection burden for the Washington Cherry 
marketing order.
    The Washington Cherry Marketing Committee (Committee) recommended 
adding a public member and alternate public member to the Committee. In 
conformance with the recommendation, a confidential qualification and 
acceptance statement would be used to nominate and appoint the public 
and alternate public committee members. This form is based on the 
currently approved Confidential Background Statement for the Washington 
Cherry Marketing Committee. If this proposal is implemented the form 
would only be used after approval by OMB.

Civil Justice Reform

    The amendments to Marketing Order 923 proposed herein have been 
reviewed under Executive Order 12988, Civil Justice Reform. They are 
not intended to have retroactive effect. If adopted, the proposed 
amendments would not preempt any State or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
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 Department 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 USDA would rule on the petition. The 
Act provides that the district court of the United States in any 
district in which the handler is an inhabitant, or has his or her 
principal place of business, has jurisdiction to review the 
Department's ruling on the petition, provided an action is filed not 
later than 20 days after the date of the entry of the ruling.

General Findings

    The findings hereinafter set forth are supplementary to the 
findings and determinations which were previously made in connection 
with the issuance of the marketing agreement and order; and all said 
previous findings and determinations are hereby ratified and affirmed, 
except insofar as such findings and determinations may be in conflict 
with the findings and determinations set forth herein.
    (1) The marketing agreement and order, as amended, and as hereby 
proposed to be further amended, and all of the terms and conditions 
thereof, would tend to effectuate the declared policy of the Act;
    (2) The marketing agreement and order, as amended, and as hereby 
proposed to be further amended, regulate the handling of sweet 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 a 
hearing has been held;
    (3) The marketing agreement and order, as amended, and as hereby 
proposed to be further amended, 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) The marketing agreement and order, as amended, and as hereby 
proposed to be further amended, prescribe, insofar as practicable, such 
different terms applicable to different parts of the production area as 
are necessary to give due recognition to the differences in the 
production and marketing of sweet cherries grown in the production 
area; and
    (5) All handling of sweet cherries grown in the production area as 
defined in the marketing agreement and order, is in the current of 
interstate or foreign commerce or directly burdens, obstructs, or 
affects such commerce.

List of Subjects in 7 CFR Part 923

    Cherries, Marketing agreements, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 7 CFR part 923, is 
proposed to be amended as follows:

PART 923--SWEET CHERRIES GROWN IN DESIGNATED COUNTIES IN WASHINGTON

    1. The authority citation for 7 CFR part 923 continues to read as 
follows:

    Authority: 7 U.S.C. 601-674.

    2. Section 923.20 is revised to read as follows:


Sec.  923.20  Establishment and membership.

    There is hereby established a Washington Cherry Marketing Committee 
consisting of seventeen members, each of whom shall have an alternate 
who shall have the same qualifications as the member for whom he or she 
is an alternate. Ten members and their respective alternates shall be 
growers or officers or employees of corporate growers. Six of the 
members and their respective alternates shall be handlers, or officers 
or employees of handlers. One member and his or her respective 
alternate shall be a public member who is neither a grower nor a 
handler. The ten members of the committee who are growers or employees 
or officers of corporate growers are referred to in this part as 
``grower members'' of the committee; and six members of the committee 
who shall be handlers, or officers or employees of handlers are 
referred to in this part as ``handler members'' of the committee. Five 
of the grower members and their respective alternates shall be growers 
of cherries in District 1, and five of the grower members and their 
respective alternates shall be growers of cherries in District 2. Three 
of the handler members and their respective alternates shall be 
handlers of cherries in District 1, and three of the handler members 
and their representative alternates shall be handlers of cherries in 
District 2.
    3. Revise Sec.  923.21 to read as follows:


Sec.  923.21  Term of office.

    The term of office of each member and alternate member of the 
committee shall be for two years beginning April 1 and ending March 31. 
Members and alternate members shall serve in such capacities for the 
portion of the term of office for which they are selected and have 
qualified and until their respective successors are selected and have 
qualified. Committee members shall not serve more than three 
consecutive terms. Members who have served for three consecutive terms 
must leave the committee for at least one year before becoming eligible 
to serve again.
    4. Amend Sec.  923.22 by adding a new paragraph (b)(4) to read as 
follows:

[[Page 59557]]

Sec.  923.22  Nomination.

* * * * *
    (b) * * *
    (4) The grower and handler members of the committee shall nominate 
the public member and alternate public member at the first meeting 
following the selection of members for a new term of office.
    5. In Sec.  923.41, paragraph (c) is redesignated as paragraph (d) 
and a new paragraph (c) is added to read as follows:


Sec.  923.41  Assessments.

* * * * *
    (c) Based upon a recommendation of the committee or other available 
information, the Secretary shall fix the rate of assessment that 
handlers shall pay on all cherries handled during each fiscal period, 
and may also fix supplemental rates of assessment on individual 
varieties or subvarieties to secure sufficient funds to provide for 
projects authorized under Sec.  923.45. At any time during the fiscal 
period when it is determined on the basis of a committee recommendation 
or other information that a different rate is necessary for all 
cherries or for any varieties or subvarieties, the Secretary may modify 
a rate of assessment and such new rate shall apply to any or all 
varieties or subvarieties that are shipped during the fiscal period.
* * * * *
    6. A new Sec.  923.43 is added to read as follows:


Sec.  923.43  Contributions.

    The committee may accept voluntary contributions but these shall 
only be used to pay expenses incurred pursuant to Sec.  923.45. 
Furthermore, such contributions shall be free from any encumbrances by 
the donor and the committee shall retain complete control of their use.
    7. Section Sec.  923.45 is revised to read as follows:


Sec.  923.45  Production and marketing research, promotion and market 
development.

    The committee, with the approval of the Secretary, may establish or 
provide for the establishment of projects involving production 
research, marketing research and development, and marketing promotion, 
including paid advertising, designed to assist, improve, or promote the 
marketing, distribution, consumption or efficient production of 
cherries. The expense of such projects shall be paid from funds 
collected pursuant to Sec. Sec.  923.41 and 923.43.
    8. Section 923.64 is amended by:
    A. Revising paragraph (c).
    B. Redesignating paragraph (d) as paragraph (e).
    C. Adding a new paragraph (d).
    The revisions read as follows:


Sec.  923.64  Termination.

* * * * *
    (c) The Secretary shall terminate the provisions of this part 
whenever it is found that such termination is favored by a majority of 
growers who, during a representative period, have been engaged in the 
production of cherries: Provided, that such majority has, during such 
representative period, produced for market more than 50 percent of the 
volume of such cherries produced for market.
    (d) The Secretary shall conduct a referendum six years after the 
effective date of this section and every sixth year thereafter, to 
ascertain whether continuance of this subpart is favored by growers. 
The Secretary may terminate the provisions of this subpart at the end 
of any fiscal period in which the Secretary has found that continuance 
of this subpart is not favored by growers who, during a representative 
period determined by the Secretary, have been engaged in the production 
of cherries in the production area.
* * * * *

    Dated: September 29, 2004.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 04-22303 Filed 10-4-04; 8:45 am]
BILLING CODE 3410-02-P