69996 Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service 

7 CFR Part 929

[Docket Nos. AO–341–A6; FV02–929–1A] 

Cranberries Grown in the States of 

Massachusetts, et al.; Secretary’s 

Decision and Referendum Order on 

Proposed Amendment of Marketing 

Agreement and Order No. 929

AGENCY: Agricultural Marketing Service, 

USDA.

ACTION: Proposed rule and referendum 

order. 

SUMMARY: This decision proposes 

amendments to the marketing agreement 

and order for cranberries grown in 

Massachusetts, Rhode Island, 

Connecticut, New Jersey, Wisconsin, 

Michigan, Minnesota, Oregon, 

Washington, and Long Island in the 

State of New York, and provides 

growers and processors with the 

opportunity to vote in a referendum to 

determine if they favor the changes. The 

amendments are based on those 

proposed by the Cranberry Marketing 

Committee (Committee), which is 

responsible for local administration of 

the order and other interested parties 

representing cranberry growers and 

handlers. The amendments would: 

Revise the volume control provisions; 

add authority for paid advertising; 

authorize the Committee to reestablish 

districts within the production area and 

reapportion grower membership among 

the various districts; clarify the 

definition of handle; and incorporate 

administrative changes. The proposed 

amendments are intended to improve 

the operation and functioning of the 

cranberry marketing order program.

DATES: The referendum will be 

conducted from December 13 to 

December 27, 2004. The representative 

period for the purpose of the 

referendum is September 1, 2003, 

through August 31, 2004.

FOR FURTHER INFORMATION CONTACT:

Kathleen M. Finn, Marketing Order 

Administration Branch, Fruit and 

Vegetable Programs, AMS, USDA, 1400 

Independence Avenue, SW STOP 0237, 

Washington, DC 20250–0237; telephone: 

(202) 720–2491, or Fax: (202) 720–8938. 

Small businesses may request 

information on compliance with this 

regulation by contacting Jay Guerber, 

Marketing Order Administration 

Branch, Fruit and Vegetable Programs, 

AMS, USDA, 1400 Independence 

Avenue, SW STOP 0237, Washington, 

DC 20250–0237; telephone (202) 720–

2491; Fax (202) 720–8938.

SUPPLEMENTARY INFORMATION: Prior 

documents in this proceeding: Notice of 

Hearing issued on April 23, 2002, and 

published in the May 1, 2002, issue of 

the Federal Register (67 FR 21854); 

Secretary’s Decision on partial 

amendments issued on December 4, 

2003, and published in the December 12 

issue of the Federal Register (68 FR 

69343); Final order amending order on 

partial amendments issued on April 5, 

2004, and published in the April 9 issue 

of the Federal Register (69 FR 18803); 

and Recommended Decision on 

remainder of amendments issued on 

April 21, 2004, and published in the 

April 28 issue of the Federal Register

(69 FR 23330).

This administrative action is governed 

by the provisions of sections 556 and 

557 of Title 5 of the United States Code 

and, therefore, is excluded from the 

requirements of Executive Order 12866. 

Preliminary Statement 

The proposed amendments were 

formulated based on the record of a 

public hearing held in Plymouth, 

Massachusetts on May 20 and 21, 2002; 

in Bangor, Maine on May 23, 2002; in 

Wisconsin Rapids, Wisconsin on June 3 

and 4, 2002; and in Portland, Oregon on 

June 6, 2002. The hearing was held to 

consider the proposed amendment of 

Marketing Agreement and Order No. 

929, regulating the handling of 

cranberries grown in the States of 

Massachusetts, Rhode Island, 

Connecticut, New Jersey, Wisconsin, 

Michigan, Minnesota, Oregon, 

Washington, and Long Island in the 

State of New York, hereinafter referred 

to collectively as the ‘‘order.’’ The 

hearing was held 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 marketing orders (7 CFR Part 900). 

The notice of hearing contained 

numerous proposals submitted by the 

Committee, other interested parties and 

one proposed by the Agricultural 

Marketing Service (AMS). A final order 

on 6 of the proposals determined 

necessary to be expedited was 

published in the Federal Register on 

April 9, 2004. A recommended decision 

on the remainder of the proposals was 

published in the Federal Register on 

April 28, 2004. This action sets forth the 

Secretary’s decision and referendum 

order on the remaining amendments. 

The proposed amendments included 

in this proceeding would: Authorize the 

Committee to reestablish districts 

within the production area and 

reapportion grower membership among 

the various districts; Simplify criteria 

considered and set forth more 

appropriate dates in establishing the 

Committee’s marketing policy; Revise 

the formula for calculating sales 

histories under the producer allotment 

program in § 929.48; Allow 

compensation of sales history for 

catastrophic events that impact a 

grower’s crop; Remove specified dates 

relating to when information is required 

to be filed by growers/handlers in order 

to issue annual allotments; Clarify how 

the Committee allocates unused 

allotment to handlers; Allow growers 

who decide not to grow a crop 

flexibility in deciding what to do with 

their allotment; Allow growers to 

transfer allotment during a year of 

volume regulation; Authorize the 

implementation of the producer 

allotment and withholding programs in 

the same year; Require specific dates for 

recommending volume regulation; Add 

specific authority to exempt fresh, 

organic or other forms of cranberries 

from order provisions; Allow for greater 

flexibility in establishing other outlets 

for excess cranberries; Update and 

streamline the withholding volume 

control provisions; Modify the buy-back 

provisions under the withholding 

volume control provisions; Add 

authority for paid advertising under the 

research and development provision of 

the order; Modify the definition of 

handle to clarify that transporting fresh 

cranberries to foreign countries is 

considered handling and include the 

temporary cold storage or freezing of 

withheld cranberries as an exemption 

from handling; Relocate some reporting 

provisions to a more suitable provision 

and streamline the language relating to 

verification of reports and records; and 

Delete an obsolete provision from the 

order relating to preliminary regulation. 

The Fruit and Vegetable Programs of 

AMS proposed to allow such changes as 

may be necessary to the order, if any of 

the proposed amendments are adopted, 

so that all of the order’s provisions 

conform to the effectuated amendments. 

Four proposed amendments were not 

recommended for adoption. 

Upon the basis of evidence 

introduced at the hearing and the record 

thereof, the Administrator of AMS on 

April 21, 2004, filed with the Hearing 

Clerk, U.S. Department of Agriculture, a 

Recommended Decision and 

Opportunity to File Written Exceptions 

thereto by May 28, 2004. On June 2, 

2004, the time period for filing written 

exceptions was extended until June 30, 

2004. 

Seven exceptions were filed during 

the period provided. The exceptions 

Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 69997

were filed by: The Cranberry Marketing 

Committee (CMC), Wareham, 

Massachusetts; Cape Cod Cranberry 

Growers’ Association (CCCGA), East 

Wareham, Massachusetts; Wisconsin 

State Cranberry Growers’ Association 

(WSCGA), Wisconsin Rapids, 

Wisconsin; Clement Pappas and Co., 

Inc. (Clement Pappas), Seabrook, New 

Jersey; John C. Decas (John Decas), 

Wareham, Massachusetts; and two 

exceptions were filed by Ocean Spray 

Cranberries, Inc. (OSC), Lakeville/

Middleboro, Massachusetts. The 

exceptions filed by Ocean Spray 

Cranberries were identical comments 

but signed by different representatives. 

This exception will be considered as 

one. The specifics of the exceptions are 

discussed in the Findings and 

Conclusions; Discussion of Exceptions 

section of this document. 

Proposals Being Recommended in This 

Decision 

The proposal to authorize the 

Committee to reestablish districts 

within the production area and 

reapportion grower membership among 

the various districts would amend 

§ 929.28. 

The proposal to simplify criteria and 

dates in establishing the Committee’s 

marketing policy would amend 

§ 929.46. 

The proposal to revise the formula for 

calculating sales histories under the 

producer allotment program and the 

proposal to allow compensation of sales 

history for catastrophic events that 

impact a grower’s crop would amend 

§ 929.48. 

The proposal to remove dates for 

information collection for issuing 

annual allotments, the proposal to 

clarify the allocation of unused 

allotment and the proposal to allow 

growers to not assign their allotment if 

they do not grow a crop would amend 

§ 929.49. 

The proposal to allow growers to 

transfer allotment would amend 

§ 929.50. 

The proposal to authorize the 

withholding and producer allotment 

programs in the same year would amend 

§ 929.52.

The proposal to require the 

Committee to recommend volume 

regulations by specific dates would 

amend § 929.51. 

The proposal to add authority for 

exempting fresh and organic cranberries 

would amend § 929.58. 

The proposal to allow more flexibility 

in establishing other outlets for excess 

cranberries would amend § 929.61. 

The proposal to streamline the 

withholding provisions would amend 

§ 929.54. 

The proposal to modify the buy-back 

provisions under the withholding 

program would amend § 929.56. 

The proposal to add authority for paid 

advertising under the research and 

development provision of the order 

would amend § 929.45. 

The proposal to modify the definition 

of handle would amend § 929.10. 

The proposal to streamline and 

relocate reporting provisions to a more 

appropriate provision of the order 

would amend §§ 929.62 and 929.64. 

The proposal to delete an obsolete 

provision would remove § 929.47. 

Proposals Not Recommended for 

Adoption in This Decision 

The proposal to add a new § 929.47 to 

include a handler marketing pool or 

buy-back under the producer allotment 

program is not being recommended for 

adoption. 

The proposal to allow the first 1,000 

barrels of each grower’s production to 

be exempt from regulations under the 

order is not being recommended for 

adoption. 

The proposal to amend § 929.4 to 

expand the production area to include 

the States of Maine, Delaware and the 

entire State of New York is not being 

recommended for adoption. 

The proposal to amend 929.5 to revise 

the definition of ‘‘cranberries’’ is not 

being recommended for adoption. 

Small Business Considerations 

Pursuant to the requirements set forth 

in the Regulatory Flexibility Act (RFA), 

AMS has considered the economic 

impact of this action on small entities. 

Accordingly, AMS has prepared this 

final regulatory flexibility analysis. 

The purpose of the RFA is to fit 

regulatory actions to the scale of 

business subject to such actions so that 

small businesses will not be unduly or 

disproportionately burdened. Marketing 

orders and amendments thereto are 

unique in that they are normally 

brought about through group action of 

essentially small entities for their own 

benefit. Thus, both the RFA and the Act 

are compatible with respect to small 

entities. 

Small agricultural producers 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, which include handlers 

regulated under the order, are defined as 

those with annual receipts of less than 

$5,000,000. 

Interested persons were invited to 

present evidence at the hearing on the 

probable regulatory and informational 

impact of the proposed amendments on 

small businesses. The record indicates 

that these amendments could result in 

additional regulatory requirements 

being imposed on some cranberry 

growers and handlers. Overall benefits 

are expected to exceed costs. 

The record indicates that there are 

about 20 handlers currently regulated 

under Marketing Order No. 929. In 

addition, the record indicates that there 

are about 1,250 producers of cranberries 

in the current production area. 

Based on recent years’ price and sales 

levels, AMS finds that nearly all of the 

cranberry producers and some of the 

handlers are considered small under the 

SBA definition. In 2001, a total of 

34,300 acres were harvested with an 

average U.S. yield per acre of 156.2 

barrels. Grower prices in 2001 averaged 

$22.90 per barrel. Using these figures, 

average total annual grower receipts for 

2001 are estimated at $153,375 per 

grower. However, there are some 

growers whose estimated sales would 

exceed the $750,000 threshold. Thus, 

the consequences of this decision would 

apply almost exclusively to small 

entities.

Five handlers handle over 97 percent 

of the cranberry crop. Using Committee 

data on volumes handled, AMS has 

determined that none of these handlers 

qualify as small businesses under SBA’s 

definition. The remainder of the crop is 

marketed by about a dozen growerhandlers who handle their own crops. 

Dividing the remaining 3 percent of the 

crop by these grower-handlers, all 

would be considered small businesses. 

This decision proposes that the order 

be amended: (1) To authorize the 

Committee to reestablish districts 

within the production area and 

reapportion grower membership among 

the various districts; (2) To simplify 

criteria considered and set forth more 

appropriate dates in establishing the 

Committee’s marketing policy; (3) To 

revise the formula for calculating sales 

histories under the producer allotment 

program in § 929.48, which includes 

providing additional sales history to 

compensate growers for expected 

production on younger acres. This 

proposed changed to § 929.48 would 

also allow for more flexibility in 

recommending changes to the formula 

and add authority for segregating fresh 

and processed sales; (4) To allow 

compensation of sales history for 

catastrophic events that impact a 

grower’s crop; (5) To remove specified 

dates relating to when information is 

required to be filed by growers/handlers 

in order to issue annual allotments; (6) 

To clarify how the Committee allocates 

69998 Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 

unused allotment to handlers; (7) To 

allow growers to decide whether to 

assign allotment if no crop is produced; 

(8) To allow growers to transfer 

allotment during a year of volume 

regulation; (9) To authorize the 

implementation of the producer 

allotment and withholding programs in 

the same year; (10) To set dates by 

which volume regulations must be 

recommended; (11) To add specific 

authority to exempt fresh, organic or 

other forms of cranberries from order 

provisions; (12) To allow for greater 

flexibility in establishing other outlets 

for excess cranberries; (13) To update 

and streamline the withholding volume 

control provisions; (14) To modify the 

withholding volume regulations by 

allowing growers to be compensated 

under the buy-back provisions if any 

funds are returned to the handler by the 

Committee; (15) To add authority for 

paid advertising under the research and 

development provision of the order; (16) 

To modify the definition of handle to 

clarify that transporting fresh 

cranberries to foreign countries is 

considered handling and include the 

temporary cold storage or freezing of 

withheld cranberries as an exemption 

from handling; (17) To relocate some 

reporting provisions to a more suitable 

provision and streamline the language 

relating to verification of reports and 

records; and (18) To delete an obsolete 

provision from the order relating to 

preliminary regulation. 

This decision does not recommend for 

adoption the following proposed 

amendments: (1) To incorporate a 

handler marketing pool or buy-back 

provisions under the producer allotment 

program; (2) To authorize an exemption 

from order provisions for the first 1,000 

barrels of cranberries produced by each 

grower; (3) To add Maine, Delaware and 

the entire State of New York to the 

production area; (4) To add the species 

Vaccinium oxycoccus to the definition 

of cranberry. 

Historical Trends and Near Term 

Outlook 

The cranberry industry has operated 

under a Federal marketing order since 

1962. For many years, the industry 

enjoyed increasing demand for 

cranberry products, primarily due to the 

success of cranberry juice-based drinks. 

This situation encouraged additional 

production. Between 1960 and 1999, 

production increased from 1.34 million 

barrels (one barrel equals 100 pounds of 

cranberries) to a record 6.3 million 

barrels. This represents a 370 percent 

increase from 1960 and a 17-percent 

gain from the 1998 crop year. 

Production in the 2000 crop year 

declined to 5.6 million barrels and to 

5.4 million barrels in 2001, due to the 

use of volume control by the industry 

and a decrease in yields in some 

production areas due to adverse weather 

conditions during the growing season.

Production increased for each of the 

five major producing States from 1960 

to 2001. In 1995, Wisconsin surpassed 

Massachusetts to become the largest 

producing State. Production in all States 

is highly variable. This variation in 

production is mainly due to the 

variation in yields, which is influenced 

by weather in each of the producing 

States. The variation in production is 

one of the primary reasons the industry 

likes to carry out a reasonable volume 

of inventory into the next crop year to 

insure against a short crop. 

Cranberries are produced in at least 

10 States, but the vast majority of farms 

and production are concentrated in 

Massachusetts, New Jersey, Oregon, 

Washington, and Wisconsin. Area 

harvested for the U.S. has increased 

from 21,140 acres in 1960 to 34,300 

acres in 2001. Most of this increase has 

come from Wisconsin, where area 

harvested has increased from 4,200 

acres in 1960 to 15,100 acres in 2001. 

Currently, Wisconsin has the highest 

amount of area harvested at 15,100 

acres, followed by Massachusetts with 

12,200, New Jersey with 3,100 acres, 

Oregon with 2,300 acres, and 

Washington with 1,600 acres. Total U.S. 

area harvested has declined from a peak 

of 37,500 in 1999 to 34,300 acres in 

2001. This decline is likely due to the 

surplus situation the industry has 

experienced over the last several crop 

years. Massachusetts has traditionally 

had the largest area harvested. However, 

in 1998, Wisconsin became the State 

with the largest area harvested. Since 

1998, Wisconsin area harvested has 

continued to increase, while 

Massachusetts area harvested has 

declined. Together, both States account 

for over 80 percent of cranberry 

production. 

Average farm size for cranberry 

production is very small. The average 

across all producing States is about 27 

acres. Wisconsin’s average is twice the 

U.S. average, at 56 acres, and New 

Jersey averages 66 acres. Average farm 

size is below the U.S. average for 

Massachusetts (20 acres), Oregon (13 

acres) and Washington (11 acres). 

Yields are highly variable from year to 

year and yields have been increasing 

over time. For the U.S., yields have 

more than doubled from the 1960’s to 

the 2000’s. Increasing yields suggest that 

cranberry growers have become more 

productive. Over the last five crop years 

(1997–2001), Wisconsin has had the 

highest yield at 185.9 barrels per acre, 

followed by New Jersey with an average 

yield of 154.0 barrels per acre, then 

Oregon with an average yield of 151.2 

barrels per acres, then Massachusetts 

with an average yield of 133.2 barrels 

per acre, and then Washington with an 

average yield of 104.1 barrels per acre. 

While production capacity continues 

to rise, demand has leveled off. Per 

capita consumption of fresh cranberries 

has remained stable ranging from 0.07 to 

0.10 pounds per person. The per capita 

consumption of processed cranberries 

increased to 1.70 pounds per person in 

1994. In 1994, total domestic production 

was 4,682,000 barrels, while total sales 

increased to 4,692,507 barrels. This 

increase in sales and per capita 

consumption, accompanied by 

increasing grower prices provided 

further incentives for growers to 

increase plantings and productivity. 

However, after 1994, sales of processed 

cranberries began to stagnate. Stagnant 

sales of processed cranberry products 

continued until 2000. In the 2000 crop 

year, per capita consumption of 

processed cranberries increased to 1.87 

pounds and sales of processed 

cranberries increased to over 5 million 

barrels for the first time. 

About 92 percent of the cranberry 

crop is processed, with the remainder 

sold as fresh fruit. In the 1950’s and 

early 1960’s, fresh production was 

considerably higher than it is today, and 

in many years, constituted as much as 

25 to 50 percent of total production. 

Fresh production began to decline in the 

1980’s, while processed utilization and 

output soared as cranberry juice 

products became popular. Today, fresh 

fruit claims only about 8 percent of total 

production. Three of the top five States 

produce cranberries for fresh sales. New 

Jersey and Oregon produce fruit for 

processed products only. There has 

been tremendous growth in processed 

cranberries, while the fresh market has 

remained relatively stable. 

When supply is greater than demand, 

inventories are carried over into the 

next crop year. Carryin inventories are 

reported by the Committee. In many 

agricultural industries, modest levels of 

inventories are believed to be desirable 

in situations of a late harvest or a 

disastrous production year. From 1987 

through 1997, annual carryin 

inventories were relatively stable, 

averaging 1.1 million barrels. Beginning 

with the 1998 crop, carryin inventories 

exceeded 2 million barrels. For the 2000 

crop year, carryin inventories exceeded 

4 million barrels. Large and increasing 

inventories provide an indication of 

how far supply is outpacing demand. 

Larger inventories, beginning in 1997, 

Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 69999

have resulted in prices paid to growers 

dropping dramatically.

From 1974 through 1996, prices 

trended up. Prices increased from 

$11.00 per barrel in 1974 to $65.90 per 

barrel in 1996. Since 1996, prices have 

decreased. Prices reached a recent low 

of $17.20 per barrel in 1999. In 2001, 

prices are reported at $22.90 per barrel. 

The period of increasing prices 

provided an incentive for producers to 

expand planted acres and to increase 

yields. The price decline over the past 

several crop years is due to the surplus 

situation which resulted from the 

increase in planted acreage and yields 

and the lack of significant sales 

increases to keep pace with increased 

production. 

Grower prices do not vary greatly 

among the five major producing States. 

This provides an indication that 

domestic market forces similarly impact 

all U.S. cranberry growers. Further 

evidence that prices for the five 

producing States follow very similar 

movements is provided by computing 

the correlation coefficient for the five 

producing States from 1960 to 2001. 

Correlation is a statistical measure, 

which shows how variables are related 

and a figure of 1.0 would mean perfect 

correlation. The price correlation among 

the five States is greater than 0.97. 

Real prices are derived by deflating 

the actual (nominal) prices by a price 

index (Prices Received by Farmers All 

Farm Products Index 1990–92=100). 

Real prices have the effects of inflation 

removed. Real prices show whether 

there has been any change in a 

commodity’s price behavior absent the 

effects of inflation. Real cranberry prices 

reached a peak in 1997. Currently, real 

prices have fallen to levels similar to the 

mid 1970’s. 

The value of production increased 

dramatically from 1960, reaching a peak 

of $350 million in 1997. In 2000, the 

value of production fell below $100 

million for the first time since 1980. 

Between 1997 and 2001, growers lost 69 

percent of the value of production due 

to the surplus situation. The value of 

production has declined in all of the 

major producing States. 

With most agricultural commodities, 

there is a pronounced inverse 

relationship between production and 

prices. When production is high, prices 

are generally low and when production 

is low, prices are generally high. From 

1960 through 1996, prices and 

production are positively correlated (the 

correlation coefficient is 0.93). However, 

beginning in 1997, as production 

continued to increase, prices started to 

decline and continued to decline as 

production increased in crop years 1998 

and 1999. Starting in 1996, supply 

began to outpace demand, ultimately 

resulting in declining prices. 

To help stabilize market supply and 

demand conditions, volume regulation 

was introduced in 2000 and again in 

2001, marking the first time in 30 years 

that such regulations were 

implemented. Crop sizes in 2000 and 

2001 have been reduced by the use of 

the producer allotment program, which 

limits the amount of product that a 

producer can deliver to a handler. 

Reduced crop sizes for these two crop 

years, combined with increased sales 

and USDA purchases, have resulted in 

a reduction of inventories. 

In an industry such as cranberries, 

where the product can be stored for long 

periods of time, volume control is a 

method that can be used to reduce 

supplies so that they are more in line 

with market needs. Large inventories are 

costly to maintain and, with the outlook 

for continued high production levels, 

these inventories are difficult to market. 

Producers may not receive full payment 

for cranberries delivered to storage for 

several years, and storage costs are 

deducted from their final payment. 

The demand for cranberries is 

inelastic. A producer allotment program 

results in a decrease in supply because 

producers can only deliver a certain 

portion of their past sales history. With 

an inelastic demand, a small shift 

(decrease) in the supply curve results in 

relatively large impacts on grower 

prices. An allotment program results in 

increasing grower prices and grower 

revenues. 

The level of unsold inventory, the 

current capacity to produce in excess of 

expected demand, and continuing low 

grower prices have resulted in the 

industry debating various alternatives 

under their marketing order. 

Reestablishment of Districts and 

Reapportionment of Grower 

Membership Among the Districts 

The proposed amendment to 

authorize the Committee to reestablish 

and/or reapportion districts would give 

the Committee greater flexibility in 

responding to changes in grower 

demographics and district significance 

in the future. This authority would 

allow the Committee to recommend 

changes through informal rulemaking 

rather than through an order 

amendment. The proposal includes 

specific criteria to be considered prior to 

making any recommendations. 

This proposed authority does not 

change the districts. It only authorizes 

the Committee to recommend changes 

more efficiently. No additional 

administrative costs are anticipated 

with this proposed amendment. This 

proposal should be favorable to both 

large and small entities. 

Development of Marketing Policy 

Section 929.46 of the order requires 

the Committee to develop a marketing 

policy each year as soon as practicable 

after August 1. In its marketing policy, 

the Committee projects expected supply 

and market conditions for the upcoming 

season. The marketing policy should be 

adopted before any recommendation for 

regulation, as it serves to inform USDA 

and the industry, in advance of the 

marketing of the crop, of the 

Committee’s plans for regulation and 

the bases therefore. Handlers and 

growers can then plan their operations 

in accordance with the marketing 

policy.

The Committee is currently required 

to consider nine criteria in developing 

its marketing policy. The criteria 

include such items as expected 

production, expected demand 

conditions, and inventory levels. This 

rule recommends removing criteria not 

considered to be relevant in making a 

decision on the need for volume 

regulation. 

The marketing order section of the 

order also states that the Committee 

must estimate the marketable quantity 

necessary to establish a producer 

allotment program by May 1, and must 

submit its marketing policy to USDA 

after August 1. These dates are 

inconsistent with the dates by which the 

Committee must recommend a volume 

regulation (if one or both are deemed 

necessary) for the upcoming crop. 

USDA is recommending that both dates 

be removed. 

These changes are non-substantive in 

nature. They remove unnecessary 

criteria and obsolete dates from the 

order. As such, they will have no 

economic impact on growers or 

handlers. 

Sales History Calculations Under the 

Producer Allotment Program 

The proposed amendment to modify 

the method for calculating sales 

histories would provide growers with 

additional sales histories to compensate 

them for expected increases in yields on 

newer acres during a year of volume 

regulation, which would result in sales 

histories more reflective of actual sales. 

This proposed amendment would also 

allow more flexibility in recommending 

changes to the sales history formula and 

add the authority to calculate fresh and 

processed cranberries separately. 

The proposed amendment to the sales 

history calculations would benefit 

growers, especially growers who 

70000 Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 

planted some or all of their acreage 

within the previous 5 years. The 

proposal would also help ensure that 

growers with mature acres who also 

have newer acreage and growers with 

only newer acres are treated equitably. 

During the 2000 volume regulation, 

many growers, particularly those with 

new acreage 4 years old or less, 

indicated that the method of calculating 

sales history placed them at a 

disadvantage because they realized 

more production on their acreage than 

their sales history indicated. With the 

volume of new acres within the 

industry, this would affect many 

growers. 

The Committee determined that 

something needed to be done to address 

the concerns associated in the 2000 crop 

year with growers with newer acreage. 

The Committee discussed a number of 

approaches for estimating sales history 

on new acres. One suggestion was to 

allow growers with newer acreage to 

add a percentage of the State average 

yield to their sales history each year up 

to the fourth year. The example 

presented was that acreage being 

harvested for the second time during a 

year of volume regulation would receive 

a sales history that was 25 percent of the 

State average yield, a third year harvest 

would receive 50 percent of State 

average yield, and a fourth year harvest 

would receive 75 percent of State 

average yield. Although this method 

would address some of the problems 

experienced in 2000, it was determined 

that the method established by this 

action would be simpler and more 

practical for growers to obtain the most 

realistic sales history. 

This action addresses grower 

concerns regarding determination of 

their sales histories. The method 

provides additional sales history for 

growers with newer acres to account for 

increased yields for each growing year 

up to the fifth year by factoring in 

appropriate adjustments to reflect 

rapidly increasing production during 

initial harvests. The adjustments are in 

the form of additional sales histories 

based on the year of planting. 

An appeals process would be 

established in crop years when volume 

regulation is used for growers to request 

a redetermination of their sales 

histories. For the 2000–2001 volume 

regulation, over 250 appeals were 

received by the appeals subcommittee 

(the first level of review for appeals). In 

2001–2002, a total of 49 appeals were 

filed. The decrease in appeals filed was 

a direct result of the formula for 

calculating sales histories that was 

implemented in 2001. This proposed 

amendment represents a generic version 

of the formula that was used in 2001. 

This proposal, if adopted, would not 

impose any immediate regulations on 

large or small growers and handlers. It 

would only modify the formula for 

calculating sales histories in the event 

volume regulations are implemented in 

the future. Adopting this proposal 

would benefit small businesses by 

allowing them more flexibility in 

receiving a more equitable sales history 

if volume regulations are recommended 

and implemented in future years. If this 

proposal is adopted, growers and 

handlers would know specifically how 

sales histories are calculated so they can 

be informed and business decisions can 

be made ahead of the future season.

The proposal also includes that sales 

histories, starting with the crop year 

following adoption of this amendment, 

would be calculated separately for fresh 

and processed cranberries. Fresh and 

organic fruit were exempt from the 2000 

and 2001 volume regulations because it 

was determined that they did not 

contribute to the surplus. In both years, 

fresh fruit sales were deducted from 

sales histories and each grower’s sales 

history represented processed sales 

only. To have sales histories more 

reflective of sales, the Committee 

proposed calculating separate sales 

histories for fresh and processed 

cranberries. Also, in future years, fresh 

cranberry sales could contribute to the 

surplus. This proposed change would 

make sales history calculations more 

equitable. 

These changes will have a positive 

effect on all growers and handlers 

because they will result in a more 

equitable allocation of the marketable 

quantity among growers. The proposal 

would be favorable to both large and 

small entities. 

Catastrophic Events That Impact 

Growers’ Sales Histories 

The proposed amendment would 

provide more flexibility in the provision 

under the sales history calculations that 

compensates growers with additional 

sales histories for losses on acreage due 

to forces beyond the grower’s control. 

The current provisions require that if 

a grower has no commercial sales from 

acreage for 3 consecutive crop years due 

to forces beyond the grower’s control, 

the Committee shall compute a level of 

commercial sales for the fourth year for 

that acreage using an estimated 

production. The record revealed that 

this provision was too stringent as 

evidenced by only one grower meeting 

these criteria in two years of volume 

regulation. 

The proposal would authorize the 

Committee to recommend rules and 

regulations to allow for adjustments of 

a grower’s sales history to compensate 

for catastrophic events that impact a 

grower’s crop. The Committee would 

recommend procedures and guidelines 

to be followed in each year a volume 

regulation is implemented. The 

proposed amendment would have a 

positive impact on both large and small 

growers as the Committee would be in 

a position to compensate more growers 

who experienced losses due to 

catastrophic events than the current 

order provides. 

Remove Specified Dates Relating to 

Issuing Annual Allotments 

The order currently provides that 

when a producer allotment regulation is 

implemented, USDA establishes an 

allotment percentage equal to the 

marketable quantity divided by the total 

of all growers’ sales histories. The 

allotment percentage is then applied to 

each grower’s sales history to determine 

that individual’s annual allotment. All 

growers must file an AL–1 form with the 

Committee on or before April 15 of each 

year in order to receive their annual 

allotments. The Committee is required 

to notify each handler on or before June 

1 of the annual allotment that can be 

handled for each grower whose crop 

will be delivered to such handler. 

Experience during the 2000 and 2001 

crop years has proven that maintaining 

a specified date by which growers are to 

file a form to qualify for their allotment 

and for the Committee to notify 

handlers of their growers’ annual 

allotments has been difficult. This 

proposed change would delete the 

specified dates and allow the Committee 

to determine, with the approval of 

USDA, more appropriate dates by which 

growers are to file forms and the 

Committee is to notify handlers of their 

growers’ annual allotments. The 

Committee would like to establish dates 

that the industry can realistically meet 

each season when a volume regulation 

is implemented. 

Because volume regulation was not 

recommended until the end of March 

during 2000 and 2001, growers had 

difficulty in submitting the required 

reports in a timely manner. 

Additionally, the rulemaking process to 

establish the allotment percentage was 

not completed by June 1. Therefore, the 

Committee was unable to notify 

handlers of their growers’ allotment by 

the specified deadline. With this 

proposed amendment, dates could be 

established in line with the timing of 

the recommendation and establishment 

of volume regulation. Allowing the 

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Committee to set dates that can 

realistically be met by the industry 

would better serve the purposes of the 

marketing order. Thus, this modification 

should benefit the entire industry, both 

large and small entities. 

The Committee also recommended 

clarifying the explanation of how an 

allotment percentage is calculated. 

Currently, section 929.49(b) states that 

such allotment percentage shall equal 

the marketable quantity divided by the 

total of all growers’ sales histories. It 

does not specify that ‘‘all growers’’ sales 

histories’ includes the sales histories 

calculated for new growers. This rule 

proposes a clarification to ensure that 

total sales histories (including those of 

new growers) are used in this 

calculation. To the extent this 

clarification makes the terms of the 

order easier to understand, it should 

benefit cranberry growers and handlers. 

This rule also proposes revising the 

information to be submitted by growers 

to qualify for an annual allotment. 

Currently, all growers must qualify for 

allotment by filing with the Committee 

a form including the following 

information: (1) The location of their 

cranberry producing acreage from which 

their annual allotment will be produced; 

(2) the amount of acreage which will be 

harvested; (3) changes in location, if 

any, of annual allotment; and (4) such 

other information, including a copy of 

any lease agreement, as is necessary for 

the Committee to administer the order. 

Such information is gathered by the 

Committee on a form specified as the 

AL–1 form. 

The proposed amendment would 

modify these criteria by not including 

information that is not pertinent. 

Currently, growers are assigned a grower 

number and the amount of acreage on 

which cranberries are being produced is 

maintained. The location of the 

cranberry producing acreage is not 

maintained. Therefore, there is no need 

to specify this information on the form. 

It is also unnecessary to include changes 

in location, if any, of growers’ annual 

allotment including the lease agreement. 

Annual allotment is linked to a grower’s 

cranberry producing acreage and, since 

the acreage cannot be moved from one 

location to another, information on 

changes in location is not relevant. 

Therefore, the information to be 

submitted by growers is being 

recommended for revision by removing 

the information that the Committee does 

not need to operate a producer 

allotment program. Other information 

that is currently requested (including 

identifying the handler(s) to whom the 

grower will assign his or her allotment) 

would remain unchanged.

The AL–1 form was modified (and 

approved by OMB) prior to the 2001 

volume regulation. At that time, the 

Committee did not include this 

information on the form. Therefore, 

there is no reporting burden change as 

a result of this amendment. This change 

removes the unnecessary information 

from the order language. 

Clarify How the Committee Allocates 

Unused Allotment to Handlers 

The proposed amendment would 

change the method by which the 

Committee allocates unused allotment 

to handlers having excess cranberries to 

proportional distribution of each 

handler’s total allotment. 

Currently under the producer 

allotment volume regulation features of 

the order, section 929.49(h) provides 

that handlers who receive cranberries 

more than the sum of their growers’

annual allotments have ‘‘excess 

cranberries’’ and shall notify the 

Committee. Handlers who have 

remaining unused allotment are 

‘‘deficient’’ and shall notify the 

Committee. The Committee shall 

equitably distribute unused allotment to 

all handlers having excess cranberries. 

The proponents testified that there 

has been a debate in the industry on the 

interpretation of what equitable 

distribution means and how it should be 

accomplished. To add specificity, the 

Committee proposed replacing the 

words ‘‘equitably distribute’’ with 

‘‘proportional to each handler’s total 

allotment’’. 

The proponents testified that the 

distribution of unused allotment would 

only be given to those handlers who 

have excess fruit and are in need of 

allotment to cover that fruit. Allotment 

is only distributed proportionately to 

handlers when there are more requests 

for unused allotment than available 

unused allotment. In this situation, 

handlers would then receive the 

allotment in proportion to the volume of 

cranberries they handle. 

This amendment would have a 

positive impact on large and small 

handlers since handlers may be able to 

acquire the additional allotment they 

need for their excess berries than they 

would have under the current 

provisions. 

Growers’ Assignment of Allotment if No 

Crop Is Produced 

The proposed amendment to 

authorize growers who choose not to 

produce a crop in years of volume 

regulation to not assign their allotment 

to their handler would provide growers 

with flexibility to decide what happens 

with their unused allotment. Currently, 

the order requires the allotment to go to 

the handlers. 

Prior to implementing this provision, 

the Committee would consider what 

would happen to the unused allotment 

and recommend, with USDA approval, 

implementing regulations. This 

amendment would benefit growers who 

choose not to grow a crop by providing 

them with input into the allocation of 

that allotment. This proposal should be 

favorable to both large and small 

growers. 

Transfers of Allotment During Years of 

Volume Regulation 

The proposed amendment would 

allow growers to transfer allotment 

during a year of volume regulation and 

allow the sales history to remain with 

the lessor when there is a total or partial 

lease of cranberry acreage to another 

grower. Currently, growers are not 

allowed to transfer allotment to other 

growers. The only option available to 

growers to accomplish a transfer of 

allotment is to complete a lease 

agreement between the two growers. 

This involves filing paperwork, 

including signed leases and only 

transferring the sales history, not the 

allotment. Many of the lease agreements 

were initiated during the two years of 

volume regulation and created a burden 

on Committee staff. It also made 

recalculations of growers sales histories 

difficult. 

This proposal would simplify the 

process for growers by authorizing 

growers to transfer all or part of his or 

her allotment to another grower. 

Safeguards are in place to ensure that 

the transferred allotment remains with 

the same handler unless consent is 

provided by both handlers. In addition, 

the Committee may establish dates by 

which transfers may take place. 

This proposal would be beneficial to 

both large and small growers as it 

provides flexibility in transferring 

allotment. 

Implementing Both Forms of Volume 

Regulation in the Same Year 

The proposal to require authorizing 

both forms of volume regulation in the 

same year was proposed in accordance 

with an amendment to the Act in 

November 2001. The amendment 

specified that USDA is authorized to 

implement a producer allotment 

program and a handler withholding 

program in the same crop year through 

informal rulemaking based on a 

recommendation and supporting 

economic analysis submitted by the 

Committee. If such recommendation is 

made by the Committee, it must be 

made no later than March 1 of each 

70002 Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 

year. The amendment would provide 

additional flexibility to the Committee 

when considering its marketing policy 

each year. 

This proposal should be favorable to 

both large and small entities. 

Dates for Recommending Volume 

Regulation

The proposal to require the 

Committee to recommend a producer 

allotment program by March 1 each year 

would allow growers to alter their 

cultural practices in an efficient manner 

in the event that a producer allotment 

is implemented. Growers have indicated 

that they need to know as soon as 

possible whether the Committee is going 

to recommend a regulation since a 

producer allotment program requires 

growers to only deliver a portion of their 

crop. The Committee’s decision 

influences whether growers can cut 

back on purchases of chemicals, 

fertilizer or possibly take acreage out of 

production. This can result in growers’

savings on their cost of production. The 

later the decision is made by the 

Committee to regulate, the chances are 

greater that growers will have already 

invested these costs on their acreage. 

The proposal to require the 

Committee to recommend a handler 

withholding program by August 31 each 

year would provide the Committee staff 

with ample time to prepare reports 

based on handler inventory reports and 

crop estimates from the National 

Agricultural Statistics Service (NASS). 

Because the withholding program does 

not impact grower deliveries, this date 

is more appropriate for making an 

informed decision on whether to 

recommend this type of program. 

Another proposal would authorize 

both forms of volume regulation to be 

implemented each year in accordance 

with an amendment to the Act 

authorizing such proposal. The 

amendment states that if both forms of 

volume regulation are recommended, it 

should be done by March 1. Therefore, 

this proposed amendment would 

require that if both forms of regulation 

are recommended in the same year that 

it be recommended by March 1. The 

same reasoning for recommending a 

producer allotment alone would apply 

to this proposed requirement. Growers 

need to know as soon as possible if 

production costs can be mitigated if a 

producer allotment is recommended. 

All growers, both large and small, 

should benefit from this change. 

Exemptions From Order Provisions 

The proposed amendment 

recommending that specific authority be 

added to exempt fresh, organic or other 

forms of cranberries from order 

provisions would clarify the current 

language and provide guidelines for the 

specific forms or types of cranberries 

that could be exempted. 

Fresh and organic cranberries were 

exempted from the 2000 and 2001 

volume regulations under the minimum 

quantity exemption authority of the 

order. This proposal would merely 

clarify that authority in the order to 

ensure that fresh and organic and other 

forms of cranberries could be exempted 

if warranted in the future. This proposal 

should be beneficial to large and small 

entities. 

Expand Outlets for Excess Cranberries 

The proposed amendment to the 

outlets for excess cranberries provisions 

would broaden the scope of 

noncommercial and noncompetitive 

outlets for excess cranberries. Adoption 

of this proposal would provide the 

Committee, with USDA’s approval, the 

ability to recognize and authorize the 

use of additional or new noncommercial 

and/or noncompetitive outlets for 

excess cranberries through informal 

rulemaking. 

Because competitive markets can 

change from season to season and new 

and different research ideas can be 

devised, the Committee would develop 

guidelines each year a volume 

regulation is recommended that would 

be used in determining appropriate 

outlets for excess cranberries. This 

would benefit growers and handlers by 

providing flexibility in determining 

outlets. This proposal would be 

particularly useful in determining 

which foreign markets can be used as 

outlets for excess cranberries. Foreign 

markets are one area where growth is 

occurring and demand is increasing. 

Exports of cranberries have increased 

from 184,000 barrels in 1988 to 824,000 

barrels in 2000. Both large and small 

entities should benefit from this 

proposal. 

General Withholding Provisions 

Section 929.54 of the order sets forth 

the general parameters pertaining to 

withholding regulations. Under this 

form of regulation, free and restricted 

percentages are established, based on 

market needs and anticipated supplies. 

The free percentage is applied to 

handlers’ acquisitions of cranberries in 

a given season. A handler may market 

free percentage cranberries in any 

chosen manner, while restricted berries 

must be withheld from handling. 

The withholding provisions of the 

order were used briefly over three 

decades ago. Although the cranberry 

industry has not used the authority for 

withholding regulations in quite some 

time, the record evidence supports 

maintaining this tool for possible future 

use. However, substantive changes in 

industry practices have rendered 

current withholding provisions in need 

of revision. Thus, this decision 

recommends updating and streamlining 

those provisions. 

The record shows that at the time the 

withholding provisions were designed, 

the cranberry industry was much 

smaller, producing and handling much 

lower volumes of fruit than it does now. 

In 1960, production was about 1.3 

million barrels; by 1999, a record 6.3 

million barrels were grown. A much 

higher percentage of the crop was 

marketed fresh—about 40 percent in the 

early 1960’s versus less than 10 percent 

in recent years.

Changes in harvesting and handling 

procedures have been made so the 

industry is better able to process higher 

volumes of cranberries. Forty years ago, 

virtually all cranberries were harvested 

dry, and water harvesting was in an 

experimental stage of development. 

Water harvesting is currently 

widespread in certain growing regions; 

cranberries harvested under this method 

must be handled immediately as they 

are subject to rapid deterioration. 

In the early 1960’s, handlers acquired 

some cranberries that had been 

‘‘screened’’ to remove extraneous 

material that was picked up with the 

berries as they were being harvested, 

and ‘‘unscreened’’ berries from which 

the extraneous material (including culls) 

had not been removed. The handler 

cleaned some of the unscreened berries 

immediately upon receipt, while others 

were placed in storage and screened just 

prior to processing. 

The order currently provides that 

when a withholding regulation is 

implemented, the restricted percentage 

will be applied to the volume of 

‘‘screened’’ berries acquired by 

handlers. Since the term ‘‘screening’’ is 

obsolete, all references to that term are 

being deleted. 

The order also currently provides that 

withheld cranberries must meet such 

quality standards as recommended by 

the Committee and established by 

USDA. The Federal or Federal-State 

Inspection Service must inspect such 

cranberries and certify that they meet 

the prescribed quality standards. The 

intent of these provisions is, again, to 

ensure that the withholding regulations 

reduce the volume of cranberries in the 

marketplace by not allowing culls to be 

used to meet withholding obligations. 

The inspection and certification process 

is also meant to assist the Committee in 

monitoring the proper disposition of 

Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 70003

restricted cranberries, thereby ensuring 

handler compliance with any 

established withholding requirements. 

The need for inspection and 

certification of withheld cranberries is 

not as great today as in the past. 

Additionally, inspection and 

certification could be costly, 

particularly since most withheld berries 

would subsequently be dumped, 

generating no revenue for growers or 

handlers. The inspection process could 

also inordinately slow down handling 

operations, and there could be 

differential impacts of such 

requirements because some handling 

facilities operate in ways that lend 

themselves to more efficient methods of 

pulling representative samples (for 

inspection purposes) than others. 

Removing the requirements for 

mandatory inspection and certification 

requirements would allow the industry 

to develop alternative safeguards to 

achieve its objectives at lower cost. 

While the inspection process may be 

deemed the best method by the 

Committee, this proposal provides 

flexibility by allowing the Committee to 

consider other, less costly alternatives. 

Eliminating the mandatory inspection 

under the withholding program and 

deleting obsolete terminology would 

make the program more flexible for the 

industry and allow the Committee to 

operate more efficiently. As such, this 

amendment should benefit cranberry 

growers and handlers by providing an 

additional tool they could use in times 

of oversupply. 

Buy-Back Provisions Under the 

Handler Withholding Program 

Section 929.56 of the order, entitled 

‘‘Special provisions relating to withheld 

(restricted) cranberries,’’ sets forth 

procedures under which handlers may 

have their restricted cranberries released 

to them. These provisions are 

commonly referred to in the industry as 

the buy-back provisions. 

Under the current buy-back 

provisions, a handler can request the 

Committee to release all or a portion of 

his or her restricted cranberries for use 

as free cranberries. The handler request 

has to be accompanied by a deposit 

equal to the fair market value of those 

cranberries. The Committee then 

attempts to purchase as nearly an equal 

amount of free cranberries from other 

handlers. Cranberries so purchased by 

the Committee are transferred to the 

restricted percentage and disposed of by 

the Committee in outlets that are 

noncompetitive to outlets for free 

cranberries. The provision that each 

handler deposit a fair market price with 

the Committee for each barrel of 

cranberries released and that the 

Committee use such funds to purchase 

an equal amount or as nearly an equal 

amount as possible of free cranberries is 

designed to ensure that the percentage 

of berries withheld from handling 

remains at the quantity established by 

the withholding regulation for the crop 

year. 

The Committee has the authority to 

establish a fair market price for the 

release of restricted cranberries under 

the buy-back program. The money 

deposited with the Committee by 

handlers requesting release of their 

restricted cranberries is the only money 

the Committee has available for 

acquiring free cranberries. Thus, the 

amount deposited must be equal to the 

then current market price or the 

Committee will have insufficient funds 

to purchase a like quantity of free 

cranberries. 

The Committee is required to release 

the restricted cranberries within 72 

hours of receipt of a proper request 

(including the deposit of a fair market 

value). This release was made automatic 

so that handlers would be able to plan 

their operations, and very little delay 

would be encountered.

If the Committee is unable to 

purchase free berries to replace 

restricted cranberries that are released 

under these provisions, the funds 

deposited with the Committee are 

required to be returned to all handlers 

in proportion to the volume withheld by 

each handler. 

This rule proposes authorizing direct 

buy-back between handlers. With this 

option, a handler would not have to go 

through the Committee to have his or 

her restricted berries released. Instead, 

that handler could arrange for the 

purchase of another handler’s free 

cranberries directly. All terms, 

including the price paid, would be 

between the two parties involved and 

would not be prescribed by the 

Committee. This change would add 

flexibility to the order and could offer 

a more efficient method of buying back 

cranberries. Also, no Committee 

administrative costs would be incurred. 

Handlers would have the option of 

using this method, or they could buy 

back their berries through the 

Committee, as is currently provided. 

There are four criteria the Committee 

needs to consider in establishing a fair 

market price under the buy-back 

program for purchasing restricted 

cranberries. These include prices at 

which growers are selling their 

cranberries to handlers; prices at which 

handlers are selling fresh berries to 

dealers; prices at which cranberries are 

being sold to processors; and prices at 

which the Committee has purchased 

free berries to replace released restricted 

berries. 

This action proposes adding two 

criteria to the list—the prices at which 

handlers are selling cranberry 

concentrate and growers’ costs of 

production. Both of these items are 

relevant to consider in determining a 

fair market value. Consideration of these 

criteria by the Committee would benefit 

handlers. 

Under the current buy-back 

provisions, handlers are required to 

deposit with the Committee the full 

market value of the berries they are 

asking to be released. This decision 

proposes a different payment schedule 

so that handlers would not have to make 

a large cash payment prior to the sale of 

their restricted cranberries. Twenty 

percent of the total amount would be 

due at the time of the request, with an 

additional 10 percent due each month 

thereafter. This change would facilitate 

handlers buying back their restricted 

berries by reducing the costs of such a 

venture. Thus, handlers should benefit. 

If the Committee is unable to 

purchase free berries under the buyback system, it is currently required to 

refund the money back to all handlers 

proportionate to the amount each 

handler withheld under regulation. 

USDA is proposing a modification that 

would provide that the money be 

returned to the handler who deposited 

it for distribution to the growers whose 

fruit was sold. This should benefit 

growers whose fruit was sold. 

Additionally, this change could provide 

an incentive for handlers to make 

available free cranberries for purchase to 

replace restricted cranberries that are 

released under the buy-back provisions. 

For these reasons, this change should 

benefit the cranberry industry. 

Paid Advertising 

The proposal to add authority for paid 

advertising under the research and 

development provisions of the order 

would provide the Committee the 

flexibility to use paid advertising to 

assist, improve, or promote the 

marketing, distribution, and 

consumption of cranberries in either its 

export or domestic programs. The 

authority for authorizing paid 

advertising under the cranberry 

marketing order was added to the Act in 

October, 1999. 

If a paid advertising program is 

recommended by the Committee, it 

could entail an increase in assessments 

to administer the program, which would 

have an impact on handlers. According 

to testimony, it is the Committee’s 

intent to use paid advertising as a means 

70004 Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 

to provide consumers with relevant 

information to the health-related 

benefits of cranberries. Paid advertising 

authority is viewed as an additional tool 

available to the Committee to meet its 

objectives of increasing the 

consumption of cranberries and 

cranberry products. It is anticipated that 

any additional costs incurred to all 

handlers, both large and small, would 

be outweighed by the benefits of 

increasing demand for cranberries. Any 

paid advertising program and increase 

of assessment must proceed through 

notice and comment rulemaking before 

it is implemented. 

Definition of Handle 

The proposal to modify the definition 

of handle under the order would clarify 

that the transporting of fresh cranberries 

to foreign markets other than Canada is 

also considered handling. This 

proposed change would merely clarify 

language. 

The proposal would also modify the 

definition by including the cold storage 

or freezing of withheld cranberries as an 

exemption from handling for the 

purpose of temporary cold storage 

during periods when withholding 

provisions are in effect prior to their 

disposal. The provision already applies 

this exemption to excess cranberries 

under the producer allotment program 

and it was determined that handlers 

could benefit from this provision under 

a withholding program as well. This 

would benefit large and small handlers 

by allowing temporary storage of 

withheld cranberries, which could be 

critical during a withholding volume 

regulation.

Reporting Requirements 

The proposal to modify the reporting 

requirements would relocate a 

paragraph on a grower reporting 

requirement to the section on Reports 

for ease of referencing and is only 

administrative in nature. 

The proposal would also add more 

specific information under the grower 

reporting provisions to incorporate 

additional information necessary from 

growers if the sales history and transfer 

of allotment proposals are adopted. This 

will assist the Committee in assembling 

the most accurate and effective 

information as possible. Orders with 

producer allotment programs are unique 

in that specific information is needed 

from growers in order to implement a 

program. Both large and small growers 

benefit from reporting the information 

by being provided accurate and timely 

sales histories that reflect their 

production and allow equitable 

allotments to be determined on their 

acreage during years of volume 

regulation. The failure of growers to file 

these reports could be detrimental to 

them in the event volume regulations 

are implemented. Any additional 

reporting requirements resulting from 

adoption of this proposed amendment 

would be submitted to the Office of 

Management and Budget prior to 

implementation. 

The proposal would also include that 

handlers report on the quantities of 

excess cranberries as well as withheld 

cranberries. This is a clarification and 

administrative in nature. The proposal 

would also simplify and clarify the 

provision on verification of reports. The 

proposal should be favorable to large 

and small growers. 

Obsolete Provision 

The proposal to delete an obsolete 

provision relating to preliminary 

regulation is administrative in nature 

and is being recommending for 

adoption. There would be no impact on 

growers or handlers. 

Proposed Amendments Not 

Recommended for Adoption in This 

Decision 

Four proposed amendments are not 

being recommended for adoption. 

Therefore, there would be no economic 

impact resulting from these proposals. 

The Recommended Decision 

erroneously indicated that five proposed 

amendments were not being 

recommended for adoption. The correct 

number of proposed amendments not 

being recommended for adoption is four 

(as discussed in Material Issues 

numbered 15, 16, 17 and 19).

The proposed amendments not 

recommended would have: (1) 

Incorporated a handler marketing pool 

and/or buy-back provisions to the 

producer allotment program (Material 

Issue 15); (2) Authorized an exemption 

from order provisions for the first 1,000 

barrels of cranberries produced by each 

grower (Material Issue 16); (3) Expanded 

the production area to include the States 

of Maine and Delaware and the entire 

State of New York (Material Issue 17); 

and (4) Modified the definition of 

cranberry by adding the species 

Vaccinium oxycoccus to the definition 

(Material Issue 19). 

Conclusion 

The proposed amendments would not 

have a disproportionate economic 

impact on a substantial number of small 

entities. Although the proposed 

amendments may impose some 

additional costs and requirements on 

handlers, it is anticipated that the 

amendments will enhance the 

administration and functioning of the 

cranberry marketing order program. 

Therefore, any additional costs would 

be offset by the benefits derived from 

improved, more effective functioning of 

the order benefiting handlers and 

producers alike. 

Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act of 1980 (44 U.S.C. 35), 

any reporting and recordkeeping 

provisions that would be generated by 

implementing the proposed 

amendments would be submitted to the 

Office of Management and Budget 

(OMB). 

Many of the changes have no 

reporting ramifications if they are 

established. As examples, adding the 

authority for redistricting and 

reapportionment of the Committee, 

changing the deadlines for filing volume 

regulations, or adding the authority for 

paid advertising would not create any 

additional reporting requirements. 

Some of the proposed amendments 

would not generate any reporting 

burdens by amendment of the order 

alone. If these authorities were added to 

the order, reporting burdens would 

occur at the time regulations were 

established to activate the order 

authority. Examples of these 

amendments are those that impact the 

two forms of volume regulations. If a 

producer allotment volume regulation 

were implemented, regulations would 

be needed to set forth any forms of 

cranberries exempt from the volume 

regulation or what outlets (and 

appropriate safeguards) would be 

established for excess cranberries. Also, 

at the time of recommendation, the 

process for making adjustments for 

catastrophic events would need to be 

recommended by the Committee. In 

these instances, the reporting burdens, if 

any, would not exist until the volume 

regulation was in place. In addition, if 

a handler withholding volume 

regulation is established, additional 

reporting burdens may be necessary to 

cover the handler-to-handler buy-back 

program. 

Reporting burdens that would be 

generated by these amendments are the 

grower reporting requirements. 

However, prior to the 2001 volume 

regulation, the Committee modified the 

AL–1 form to accommodate needed 

requirements for implementing the 

producer allotment volume regulation. 

Specifically, the way growers’ sales 

histories were calculated that is being 

recommended to be added to the order 

was used in the 2001 volume regulation. 

The AL–1 form was modified at that 

time (and approved by OMB) to include 

Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 70005

the additional information required, 

such as year of planting and year of first 

harvest. 

Likewise, growers are already 

reporting fresh and processed sales 

separately on form GSAR–1. This 

information was included on the form 

prior to the 2001 volume regulation to 

accommodate the regulations. 

The amendment to remove dates 

regarding issuance of annual allotments 

does not require a modification of the 

form as no dates are specified on the 

form. 

Therefore, there would be no 

modification to reporting and 

recordkeeping burdens generated from 

these proposed amendments at this 

time. Current information collection 

requirements for Part 929 are approved 

by OMB under OMB number 0581–

0189. 

As with all Federal marketing order 

programs, reports and forms are 

periodically reviewed to reduce 

information requirements and 

duplication by industry and public 

sector agencies. 

USDA has not identified any relevant 

Federal rules that duplicate, overlap or 

conflict with this proposed rule. These 

amendments are designed to enhance 

the administration and functioning of 

the marketing order to the benefit of the 

industry. 

Committee meetings regarding these 

proposals as well as the hearing dates 

were widely publicized throughout the 

cranberry industry, and all interested 

persons were invited to attend the 

meetings and the hearing and 

participate in Committee deliberations 

on all issues. All Committee meetings 

and the hearing were public forums and 

all entities, both large and small, were 

able to express views on these issues. 

Finally, interested persons are invited to 

submit information on the regulatory 

and informational impacts of this action 

on small businesses. 

Civil Justice Reform

The amendments 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 the 

amendments. 

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 date of the entry 

of the ruling. 

Findings and Conclusions; Discussion 

of Exceptions 

The material issues, findings and 

conclusions, rulings, and general 

findings and determinations included in 

the Recommended Decision set forth in 

the April 28 issue of the Federal 

Register (69 FR 23330) are hereby 

approved and adopted subject to the 

following additions and modifications. 

Rulings on Exceptions 

Material Issue Number 1—

Reestablishment of Districts and 

Reapportionment of Committee 

Membership Among Districts 

Based on the exception filed, the 

findings and conclusions under material 

issue 1 of the Recommended Decision 

are revised by adding the following 

eight paragraphs after the fifteenth 

paragraph of that section: 

WSCGA filed a statement supporting 

the recommendation and reiterated their 

position that Wisconsin is 

underrepresented and New Jersey is 

overrepresented. Further, the WSCGA is 

of the view that the committee should 

directly reallocate membership based 

upon current production. 

CCCGA filed an exception opposing 

reestablishing districts without a 

committee recommendation for a 

hearing on the issue. It reiterated its 

concerns that Wisconsin representatives 

would immediately attempt to remove 

representation from New Jersey and 

dilute representation in Massachusetts. 

CCCGA believes that if that happens, 

Wisconsin representatives would have 

too much control over the Committee, 

which would have a negative impact on 

smaller States. In addition, CCCGA does 

not believe the cooperative seats on the 

Committee should decide the fate of the 

independent seats. 

The Committee is composed of 13 

grower members and 1 public member. 

District 3, which includes the State of 

Wisconsin, is assigned two independent 

seats. All actions of the Committee 

require at least 10 concurring votes if 

the public member does not vote and 11 

concurring votes if the public member 

votes. The Committee was specifically 

devised in this manner to ensure that 

Committee recommendations are 

supported by a majority of the industry, 

which includes both cooperative and 

non-cooperative members. If a motion is 

made to reapportion the districts, 10 

concurring votes are needed. 

The decision to increase the 

Committee to its current level was part 

of the same hearing. That portion of the 

proposed amendments was expedited 

and the Secretary’s Decision and 

Referendum Order was published in the 

Federal Register on December 12, 2003. 

In that decision, USDA concluded that 

providing an additional seat for District 

3 at the exclusion of membership from 

Districts 2 or 4 was not desirable. It was 

determined important to take into 

account the significance of the smaller 

growing regions, while recognizing that 

the potential scale of the impact 

increases with the volume of cranberries 

produced and regulated. 

Having 2 members from the districts 

that represent Wisconsin and 

Massachusetts reasonably recognized 

the fact that those districts have a 

greater economic interest at stake when 

more significant actions, such as volume 

regulation, are considered by the 

Committee. Allowing the smaller 

volume districts to have 1 member 

recognizes their significance to the 

industry. Using volume alone as a 

means of determining Committee 

membership does not take into 

consideration smaller growing regions. 

USDA further concluded that 

opportunities must be provided for 

input by all segments of the industry. 

As stated previously, notice and 

comment rulemaking would be 

necessary to implement any 

modifications in district representation. 

All growers and handlers would be 

provided the opportunity to comment 

and all comments would be considered 

before issuing a final rule. 

Also addressed previously is that this 

authority provides the Committee the 

flexibility to address industry changes 

in a timely manner. This flexibility is 

deemed beneficial to the Committee and 

the industry.

Accordingly, the exception on this 

material issue filed by CCCGA is 

denied. 

Material Issue Number 2—Development 

of Marketing Policy 

Based on two comments filed in 

support of this proposed amendment, 

the findings and conclusions under 

material issue 2 of the Recommended 

70006 Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 

Decision are revised by adding the 

following one paragraph after the 

eleventh paragraph of that section. 

CCCGA and Clement Pappas, in their 

exceptions filed to the Recommended 

Decision, supported USDA’s 

recommendation to delete the decision 

making dates from this section and 

modify the criteria to be considered in 

recommending the marketing policy. 

Material Issue Number 3—Revision of 

Sales History 

Based on the exceptions filed, the 

findings and conclusions under material 

issue 3 of the Recommended Decision 

are revised by adding the following 

twelve paragraphs after the twentyseventh paragraph of the subsection in 

material issue 3 entitled Sales History 

Formula:

Clement Pappas, in its exception to the 

Recommended Decision, supported USDA’s 

recommendation to amend the sales history 

formula. 

The Committee’s exception suggested this 

section be modified to better reflect the 

Committee’s intent. 

The Committee stated that the intent of 

modifying the sales history calculations was 

to provide additional sales histories to newer 

acres ‘‘in years of volume regulation.’’ The 

way the language is currently proposed, the 

Committee would calculate sales histories 

annually, which would include 

accommodating newer acres with additional 

sales histories each year. Providing 

additional sales history to newer acres is 

referred to throughout the industry as ‘‘rampup.’’ The Committee stated that ramp-up 

should only occur during periods when a 

producer allotment regulation is established. 

Paragraph (b) of § 929.48 states that ‘‘a new 

sales history shall be calculated for each 

grower after each crop year (emphasis added) 

using the formulas established in paragraph 

(a) of this section, or such other formula(s) 

as determined by the Committee, with the 

approval of the Secretary.’’

The Committee believes paragraph (b) 

should be modified to state ‘‘a new sales 

history shall be calculated for each grower 

during periods when a producer allotment 

regulation has been established prior to the 

beginning of the next crop year, using the 

formulas established in paragraph (a) of this 

section, or such other formula(s) as 

determined by the Committee, with the 

approval of the Secretary.’’

The intent of the ramp-up formula is to 

provide growers ‘‘in years of volume 

regulation’’ with additional sales histories to 

account for expected increases in yields on 

newer acres in order to provide growers of 

these acres with a sales history more 

reflective of their actual sales potential at the 

time of a volume regulation. To require the 

Committee to provide the adjustment each 

year regardless of whether a volume 

regulation is in effect would be unnecessary. 

The impact of a sales history assigned to 

new acreage would only affect growers when 

a volume regulation is implemented. For 

example, if the next volume regulation were 

implemented in 2008, growers who planted 

new acres in 2003 would have a sales history 

reflective of actual production in 2008 and 

would not need an adjustment on those 

acres. However, if new acres were planted in 

2007, the ramp-up provisions should be 

applied to the new acres to provide this 

grower an adjustment for those acres that are 

not at full production at the time of the 

volume regulation. 

It is concluded that the language in 

§ 929.48 should be modified to clarify that 

adjustments for new acres is only applied 

during years of volume regulation. It is 

intended that the Committee would still 

compute sales histories annually for growers 

so any modification to this provision should 

ensure that new sales histories are calculated 

for growers each year. The Committee’s 

suggested modification would not require 

any sales histories to be calculated until a 

volume regulation is implemented. Based on 

the record, the Committee needs to maintain 

an annual sales history for each grower based 

on their average production. To only 

compute sales histories in years of volume 

regulation would deprive the industry of 

critical information necessary to the mission 

of the Committee. The Committee uses this 

information annually in development of its 

marketing policy. Growers and handlers need 

to know this information to plan their 

growing and marketing strategies. It is 

important that the Committee continue to 

calculate sales histories annually. The 

language is being modified to express that 

adjustments for newer acres would only be 

authorized in years prior to any producer 

allotment volume regulation. 

Paragraphs (a)(3), (4) and (6) are being 

modified. Paragraph (a)(3) will state that for 

growers with 5 years of sales history from 

acreage planted or replanted 1 year prior to 

the first harvest on that acreage, the sales 

history is computed by averaging the highest 

4 of the 5 years and in a year prior to a year 

of a producer allotment volume regulation, 

shall be adjusted as provided in paragraph 

(a)(6) of this section.

Paragraph (a)(4) will state that for a grower 

with 4 years or less of sales history, the sales 

history will be computed by dividing the 

total sales from that acreage by 4 and in a 

year prior to a year of a producer allotment 

volume regulation, shall be adjusted as 

provided in paragraph (a)(6) of this section. 

Paragraph (a)(6) will specify that the 

adjustments will only be applied in a year 

prior to a producer allotment volume 

regulation. Paragraph (b) will not be 

modified. 

The Committee’s exception on this 

material issue is being accepted. These 

changes will more accurately reflect the 

intent of the industry and are supported by 

the record.

Material Issue Number 4—Catastrophic 

Events That Impact Growers—Sales 

Histories 

Based on the exceptions filed, the 

findings and conclusions under material 

issue 4 of the Recommended Decision 

are revised by adding the following five 

paragraphs after the sixteenth paragraph 

of that section: 

WSCGA and Clement Pappas, in their 

exceptions filed to the Recommended 

Decision, supported the flexibility 

provided by USDA’s recommendation to 

amend this provision. 

CCCGA also supported the flexibility 

that this provision provides but was 

concerned that using the word 

‘‘catastrophic’’ would be too stringent of 

a test to meet in order to qualify for an 

adjustment. As an example, CCCGA 

discussed a situation that impacted a 

Massachusetts grower in 2003. The 

grower experienced pesticide resistance 

with a severe insect pest called the 

cranberry weevil. This situation caused 

this grower to experience a crop loss in 

excess of 50 percent. CCCGA believed 

that this situation should be one where 

a grower would be authorized an 

adjustment in their sales history but was 

concerned that this type of event may 

not be classified as catastrophic. 

The record supported that the 

Committee deliberated on this provision 

at length and agreed that the word 

catastrophic was the terminology that 

was preferred. They believed that 

allowances should be made for serious 

events that impact growers’ crops, and 

should not be allowed for less serious 

events, such as a long rainy spell. In 

addition, the computation of sales 

histories allows a ‘‘bad’’ year not to be 

included in the computation if the 

acreage has 5 or more years of sales 

history. Only 4 of the highest years are 

used to calculate the sales history. 

The record supported allowing the 

Committee to recommend, through 

informal rulemaking, more specific 

determinations of what would 

constitute a catastrophic event. Using 

the informal rulemaking authority 

provides the Committee the flexibility to 

thoroughly discuss the issue at 

Committee meetings and make 

recommendations. 

Accordingly, no changes are being 

made to this provision. The exception 

on this issue is denied. 

Material Issue Number 7—Growers Who 

Do Not Produce a Crop During a Year 

of Regulation and Assignment of Their 

Allotment 

Based on the exceptions filed, the 

findings and conclusions under material 

issue 7 of the Recommended Decision 

are revised by adding the following 

eleven paragraphs after the eighth 

paragraph of that section: 

Two exceptions addressed this 

material issue. Clement Pappas 

requested that specificity be added to 

§ 929.49(f) to clarify that this provision 

would not supercede contractual 

arrangements. Although the hearing 

record disclosed that the amendment is 

Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 70007

not intended to obviate contractual 

arrangements, the commenter believes 

that the order language should specify 

such to ensure that there is no confusion 

on this issue. The amendment specifies 

that growers who do not grow a crop 

may choose not to assign their allotment 

to a handler. The commenter believes 

that if many growers of one handler opt 

to not assign their allotment, a handler’s 

marketing and sales program could be 

ruined. 

Clement Pappas suggested adding a 

paragraph (k) to § 929.49 stating ‘‘With 

the exception of issuance of annual 

allotments, nothing in this section shall 

be construed as superseding contractual 

agreements between growers and 

handlers.’’ As stated previously, 

contractual arrangements between 

growers and handlers fall outside the 

scope of the order. 

Because contractual relationships 

between growers and handlers are 

outside the scope of the order, the 

language requested to be included by 

this commenter is not being added to 

this provision. Therefore, this exception 

is denied. 

The Committee’s exception suggested 

adding the following sentence at the end 

of paragraph (f) of § 929.49: ‘‘If a grower 

does not specify how their annual 

allotment is to be apportioned among 

the handlers, the committee will 

apportion such annual allotment 

equally among those handlers they are 

delivering their crop to.’’ The 

Committee states that this addition was 

suggested at the hearing and there was 

no opposition to its inclusion. In 

testimony, the Committee representative 

stated that in the last two volume 

regulations, some growers who 

delivered to more than one handler did 

not specify the breakdown of the 

allotment. The Committee exception 

stated that this situation resulted in 

delays in apportionment and caused 

disagreements among handlers. This 

clarification has merit.

Paragraph (f) of § 929.49 is being 

modified to include the authority for the 

Committee to apportion the allotment 

among handlers if the grower fails to 

advise the Committee. This portion of 

the Committee’s exception is being 

accepted. 

The Committee also took exception to 

language in § 929.49 and believed that 

the language in paragraph (g) is in 

conflict with paragraph (i) of the same 

section and paragraph (b) of § 929.50. 

The Committee explained that 

paragraph (g) of 929.49 states that 

growers who do not produce cranberries 

equal to their computed annual 

allotment shall transfer their unused 

allotment to such grower’s handlers. In 

§ 929.50(b) stated that a grower may

transfer all or part of his/her allotment 

to another grower. The Committee states 

these provisions are in conflict with 

each other. The Committee suggested 

changing the shall in § 929.49(g) to may

to correct the issue and because of that, 

paragraph (i) covering growers who do 

not produce a crop is not needed. 

While it is agreed that there is a 

conflict between paragraph (g) of 

§ 929.49 and paragraph (b) of § 929.50, 

the Committee’s suggested change 

would not address the concern. If the 

word may were substituted for shall in 

§ 929.49(g), growers would not be 

required to account for 100 percent of 

their unused allotment. Record evidence 

supports that for effective 

administration of the program, growers 

should account for all of their unused 

allotment. If growers have the option to 

deliver unused allotment to their 

handler or transfer unused allotment to 

other growers, they could choose not to 

transfer all their unused allotment. In 

that situation, it would be unclear what 

would happen to the remainder of their 

allotment. Therefore, the language is 

being modified to specify that growers 

shall transfer their unused allotment to 

their handler unless it is transferred to 

another grower in accordance with 

§ 929.50(b). In this way, any unused 

allotment not transferred to other 

growers must be transferred to their 

handlers. 

The Committee’s exception also states 

that there is no need for paragraph (i) 

where growers who choose not to grow 

a crop may choose not to assign their 

allotment. This situation is not in 

conflict with the provisions on transfers. 

This was included in the proposed 

order to allow growers who choose not 

to grow a crop some flexibility in 

assigning their allotment. 

However, this option should also be 

included under paragraph (g) as an 

option for transferring unused allotment 

to handlers. Therefore, paragraph (g) of 

§ 929.49 is being further modified to 

state that growers must transfer their 

unused allotment to their handler 

unless it is transferred to another grower 

or if it is not assigned in accordance 

with paragraph (i) of § 929.49. 

The Committee’s exception is being 

accepted in part and denied in part. 

Specifically, § 929.49(f) and (g) are being 

modified to address the points of the 

exception. The exception to remove 

paragraph (i) of § 929.49 is denied. 

Material Issue Number 10—Dates for 

Recommending Volume Regulations 

Based on the exception filed, the 

findings and conclusions under material 

issue 10 of the Recommended Decision 

are revised by adding the following two 

paragraphs after the ninth paragraph of 

that section: 

Clement Pappas filed an exception 

expressing concern with authorizing a 

later date than March 1 for 

recommending a producer allotment 

program. The order language states that 

an allotment percentage must be 

recommended by no later than March 1, 

unless unforeseen circumstances deem a 

later date. 

The commenter states that after March 

1, growers have already incurred 

significant costs to maintain their bogs 

and prepare for the upcoming growing 

season. Record testimony supported that 

the March 1 date be flexible enough to 

allow an exception in the event of 

unforeseen circumstances. Therefore, 

this exception is denied.

Material Issue Number 11—Exemptions 

From Regulations 

Based on the exceptions filed, the 

findings and conclusions under material 

issue 11 of the Recommended Decision 

are revised by adding the following four 

paragraphs after the ninth paragraph of 

that section: 

WSCGA supports this amendment. 

However, it suggests that the description 

of how cranberries for fresh use are 

harvested be corrected. The 

recommended decision stated that fresh 

cranberries are dry harvested. WSCGA 

stated that in some growing areas in the 

eastern U.S., cranberries for fresh use 

are dry harvested. However, in 

Wisconsin, cranberries for fresh use are 

wet harvested. This exception is being 

accepted to clarify the different ways 

cranberries for fresh use are harvested. 

Clement Pappas filed an exception 

stating that the language for exempting 

varieties and types of cranberries from 

regulations is too broad. The exception 

states that exemptions should be limited 

to niche markets and not varieties. The 

commenter further stated that allowing 

specific varieties to be exempted from 

order regulations creates a loophole for 

abuse. 

The language specifies that forms or 

types of cranberries can be exempted 

from the regulations. Testimony did 

indicate that types of cranberries could 

be extended to include varieties. The 

intent of this amendment is to clarify 

that cranberries such as organic and 

fresh cranberries can be exempted from 

order provisions if recommended by the 

Committee and approved by USDA. In 

addition, other unforeseen markets 

could develop and the Committee 

wanted the language broad enough to 

cover these unforeseen situations. It is 

possible that an experimental variety 

could be developed that the Committee 

70008 Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 

believed would benefit from being 

exempt. 

This exception is being denied. The 

language should remain flexible enough 

to allow for unforeseen markets that 

may develop that an exemption from 

order requirements would benefit. 

Material Issue Number 13—General 

Withholding Provisions 

Based on the exception filed, the 

findings and conclusions under material 

issue 13 of the Recommended Decision 

are revised by adding the following two 

paragraphs after the seventeenth 

paragraph of that section: 

Clement Pappas filed an exception 

expressing general disapproval for the 

withholding method of volume 

regulation. The commenter stated that 

except for its use in withholding very 

small quantities of cranberries, the 

withholding provisions are a poor 

method of volume regulation in 

comparison to the producer allotment 

method of volume regulation. 

The record supports maintaining this 

method of volume regulation as an 

additional tool for the industry in 

considering ways to minimize 

oversupply of cranberries. Any 

withholding regulation would have to 

be recommended by the Committee and 

approved by USDA. Accordingly, this 

exception is denied. 

Material Issue Number 14—Buy-Back 

Provisions Under the Handler 

Withholding Program 

Based on the exception filed, the 

findings and conclusions under material 

issue 14 of the Recommended Decision 

are revised by adding the following six 

paragraphs after the twenty-third 

paragraph of that section: 

The Committee filed an exception 

pertaining to the distribution of funds 

collected under the buy-back provisions 

of the withholding program. 

The order currently provides for 

situations in which the funds deposited 

with the committee by handlers to 

purchase unrestricted cranberries are in 

excess of the funds used by the 

committee for this purpose. In such 

situations, the excess funds are to be 

proportionately refunded to the 

handlers on the basis of the volume of 

cranberries withheld by each handler.

The recommended decision (and the 

notice of hearing) contained two 

provisions related to expended funds 

under the buy-back program. Paragraph 

(e) of § 929.56 proposed amending this 

provision to provide that any excess 

funds received by the committee accrue 

to the committee’s general fund. 

Paragraph (f) of that same section 

provides that any unexpended funds be 

refunded to the handler that deposited 

the funds. Proposed paragraph (f) also 

stated that the handler would then 

equitably distribute the refund among 

the growers delivering cranberries to 

that handler. 

In its exception, the committee 

recommended that § 929.56(e) be 

changed to provide that any excess 

funds received by the committee would 

accrue to the handler who deposited the 

funds for the release of withheld 

cranberries to be distributed 

proportionately to the handlers’ growers 

affected by the volume regulation (the 

committee’s suggested revision in 

italics). 

After further review of the record 

evidence, USDA finds that the 

committee’s exception has merit. The 

order should be consistent in its 

provisions relative to excess funds 

received under the buy-back program. 

Further, it is reasonable that such funds 

be refunded to those persons from 

whom they were collected. 

Thus, the committee’s exception is 

being accepted. However, the text of 

paragraph (e) has been slightly modified 

from the committee’s suggested text. 

Paragraph (e) of § 929.56 has been 

modified accordingly. 

Material Issue Number 15—Handler 

Marketing Pool and Buy-Back Under the 

Producer Allotment Program 

Based on the exceptions filed, the 

findings and conclusions under material 

issue 15 of the Recommended Decision 

are revised by adding the following four 

paragraphs after the thirty-seventh 

paragraph of that section: 

Ocean Spray, in its exception filed to 

the Recommended Decision, supported 

USDA’s recommendation to not include 

a handler marketing pool to the order. 

Clement Pappas believes the handler 

marketing pool should be added to the 

order. In its exception, the commenter 

stated that the proposed amendment 

had broad industry support and was 

innovative. The commenter stated that 

the recommended decision states that 

without resolution on price and 

cohesiveness from all segments of the 

industry, the handler marketing pool 

would not work. According to the 

commenter, these standards are 

inappropriate for evaluating the handler 

marketing pool because they are 

impossible to meet. If this standard were 

applied to all amendments, none would 

pass. Finally, the commenter stated that 

adequate justification was not provided 

and this amendment should be allowed 

to be voted on in a referendum. 

As stated previously in the 

Recommended Decision, this concept 

was innovative and showed the 

potential to address concerns of 

handlers. This issue was considered at 

the subcommittee level and agreement 

on the pricing issue could not be 

achieved. There were wide-ranging 

options put forth on how the pricing 

mechanism could work, each benefiting 

one segment of the industry over 

another. Because of the subcommittee’s 

inability to gain consensus on this issue, 

a recommendation was not made to the 

full committee. In addition, nothing 

additional was presented on the hearing 

record to demonstrate how the handler 

marketing pool could work effectively, 

particularly in view of the outstanding 

pricing issue options. 

Accordingly, this exception is denied. 

Material Issue Number 17—Expansion 

of Production Area 

Based on the exceptions filed, the 

findings and conclusions under material 

issue 17 of the Recommended Decision 

are revised by adding the following 

eleven paragraphs after the twentyeighth paragraph of that section: 

There were six exceptions filed 

regarding the decision not to expand the 

production area.

The comments included discussions 

that the entire industry benefits from the 

operation of the marketing order, 

especially the promotion activities. 

Thus, all growing areas should 

contribute to these efforts, as well as 

participate in any volume regulation. 

Two commenters stated that there are 

other States currently included in the 

marketing order that produce minimal 

amounts of cranberries. One commenter 

stated that most Massachusetts 

producers have minimal acreage and 

low yields and for this reason, 

Massachusetts growers should be 

exempt. 

Two commenters stated that all 

growers compete for the same markets. 

As an example, a commenter stated that 

Maine’s involvement in the ingredients 

market impacts all of the Northeast 

States that compete in that market. 

One commenter believed that USDA’s 

analysis of future yields of Maine 

cranberries is flawed, and there is the 

potential for Maine to produce large 

volumes of cranberries in the future. 

Three commenters did not believe 

that there is any differentiation in the 

quality of Maine cranberries compared 

to those grown in other States. 

Two commenters discussed the 

importance of receiving data from all 

producing States. The best way to 

ensure complete information is to 

collect it under marketing order 

reporting requirements. 

One commenter stated that USDA 

misinterpreted the Act’s requirement 

Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 70009

1This order shall not become effective unless and 

until the requirements of § 900.14 of the rules of 

practice and procedure governing proceedings to 

formulate marketing agreements and marketing 

orders have been met.

that a marketing order be limited in its 

application to the smallest regional 

production area practicable. 

One commenter stated that it is a rare 

occasion when consensus is reached in 

the cranberry industry and that there is 

consensus that the production area 

should be expanded. The commenter 

believes that USDA should not deny 

such a strongly supported position by 

the industry. Another commenter added 

that growers should be allowed to vote 

on this issue in referendum. 

The concerns raised in the exceptions 

have been thoroughly considered. Many 

segments of the industry throughout this 

proceeding, both within and outside the 

production area, have expressed 

opinions on the expansion of the 

production area. 

After consideration of the record, 

including the exceptions filed on this 

material issue, USDA concludes that the 

production area should not be expanded 

at this time as proposed by the 

Committee. The record includes many 

factors concerning the determination of 

the appropriate production area. These 

include production levels, the number 

of growers in each State, the markets 

and the future potential of the industry. 

It is determined that expanding the 

production area at this time is not 

necessary for the effective operation of 

the marketing order and thus would not 

be consistent with the Act. 

Accordingly, the six exceptions filed 

on this material issue are denied. 

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. 

Order Amending the Marketing 

Agreement and Order 

Annexed hereto and made a part 

hereof is the document entitled ‘‘Order 

Amending the Order Regulating the 

Handling of Cranberries Grown in the 

States of Massachusetts, Rhode Island, 

Connecticut, New Jersey, Wisconsin, 

Michigan, Minnesota, Oregon, 

Washington, and Long Island in the 

State of New York.’’ 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 part 900.400 et seq.) to 

determine whether the issuance of the 

annexed order amending the order 

regulating the handling of cranberries 

grown in the States of Massachusetts, 

Rhode Island, Connecticut, New Jersey, 

Wisconsin, Michigan, Minnesota, 

Oregon, Washington, and Long Island in 

the State of New York 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 cranberries in the 

production area. 

The representative period for the 

conduct of such referendum is hereby 

determined to be September 1, 2003, 

through August 31, 2004. 

The agent of the Secretary to conduct 

such referendum is hereby designated to 

be Kenneth G. Johnson, Regional 

Manager, DC Marketing Field Office, 

Marketing Order Administration 

Branch, Fruit and Vegetable Programs, 

AMS, USDA, 4700 River Road, Unit 

155, Suite 2A04, Riverdale, Maryland 

20737; telephone (301) 734–5243.

List of Subjects in 7 CFR Part 929 

Cranberries, Marketing agreements, 

Reporting and recordkeeping 

requirements.

Dated: November 24, 2004. 

A.J. Yates, 

Administrator, Agricultural Marketing 

Service.

Order Amending the Order Regulating 

the Handling of Cranberries Grown in 

the States of Massachusetts, Rhode 

Island, Connecticut, New Jersey, 

Wisconsin, Michigan, Minnesota, 

Oregon, Washington, and Long Island 

in the State of New York 1

Findings and Determinations 

The findings and determinations 

hereinafter set forth are supplementary 

and in addition to the findings and 

determinations previously made in 

connection with the issuance of the 

order; and all of 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. 

(a) Findings and Determinations Upon 

the Basis of the Hearing 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 the proposed 

amendments to the Marketing 

Agreement and Order No. 929 (7 CFR 

part 929), regulating the handling of 

cranberries grown in the States of 

Massachusetts, Rhode Island, 

Connecticut, New Jersey, Wisconsin, 

Michigan, Minnesota, Oregon, 

Washington, and Long Island in the 

State of New York. 

Upon the basis of the evidence 

introduced at such hearing and the 

record thereof, it is found that: 

(1) The marketing agreement and 

order, as amended, and as hereby 

proposed to be further amended, and all 

of the terms and conditions thereof, will 

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 cranberries 

grown in the production area in the 

same manner as, and is applicable only 

to persons in the respective classes of 

commercial and industrial activity 

specified in the marketing order upon 

which hearings have been held; 

(3) The marketing agreement and 

order, as amended, and as hereby 

proposed to be further amended, are 

limited in 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 cranberries grown in the 

production area; and 

(5) All handling of cranberries grown 

in the production area as defined in the 

marketing agreement and order, as 

amended, and as hereby proposed to be 

further amended, 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 cranberries grown in the 

70010 Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 

States of Massachusetts, Rhode Island, 

Connecticut, New Jersey, Wisconsin, 

Michigan, Minnesota, Oregon, 

Washington, and Long Island in the 

State of New York, shall be in 

conformity to, and in compliance with, 

the terms and conditions of the said 

order as hereby proposed to be amended 

as follows: 

The provisions of the proposed 

marketing agreement and the order 

amending the order will be and are the 

terms and provisions of this order 

amending the order and are set forth in 

full herein.

PART 929—CRANBERRIES GROWN IN 

THE STATES OF MASSACHUSETTS, 

RHODE ISLAND, CONNECTICUT, NEW 

JERSEY, WISCONSIN, MICHIGAN, 

MINNESOTA, OREGON, 

WASHINGTON, AND LONG ISLAND IN 

THE STATE OF NEW YORK 

1. The authority citation for 7 CFR 

part 929 continues to read as follows:

Authority: 7 U.S.C. 601–674.

2. Amend § 929.10 by revising 

paragraphs (a)(2) and (b)(4) to read as 

follows:

§ 929.10 Handle. 

(a) * * * 

(2) To sell, consign, deliver, or 

transport (except as a common or 

contract carrier of cranberries owned by 

another person) fresh cranberries or in 

any other way to place fresh cranberries 

in the current of commerce within the 

production area or between the 

production area and any point outside 

thereof. 

(b) * * * 

(4) The cold storage or freezing of 

excess or restricted cranberries for the 

purpose of temporary storage during 

periods when an annual allotment 

percentage and/or a handler 

withholding program is in effect prior to 

their disposal, pursuant to §§ 929.54 or 

929.59. 

3. Add a new § 929.28 to read as 

follows:

§ 929.28 Redistricting and 

reapportionment. 

(a) The committee, with the approval 

of the Secretary, may reestablish 

districts within the production area and 

reapportion membership among the 

districts. In recommending such 

changes, the committee shall give 

consideration to: 

(1) The relative volume of cranberries 

produced within each district. 

(2) The relative number of cranberry 

producers within each district. 

(3) Cranberry acreage within each 

district. 

(4) Other relevant factors. 

(b) The committee may establish, with 

the approval of the Secretary, rules and 

regulations for the implementation and 

operation of this section. 

4. Revise § 929.45 to read as follows:

§ 929.45 Research and development. 

(a) The committee, with the approval 

of the Secretary, may establish or 

provide for the establishment of 

production research, marketing 

research, and market development 

projects, including paid advertising, 

designed to assist, improve, or promote 

the marketing, distribution, 

consumption, or efficient production of 

cranberries. The expense of such 

projects shall be paid from funds 

collected pursuant to § 929.41, or from 

such other funds as approved by the 

Secretary. 

(b) The committee may, with the 

approval of the Secretary, establish rules 

and regulations as necessary for the 

implementation and operation of this 

section. 

5. Revise § 929.46 to read as follows:

§ 929.46 Marketing policy. 

Each season prior to making any 

recommendation pursuant to § 929.51, 

the committee shall submit to the 

Secretary a report setting forth its 

marketing policy for the crop year. Such 

marketing policy shall contain the 

following information for the current 

crop year: 

(a) The estimated total production of 

cranberries; 

(b) The expected general quality of 

such cranberry production; 

(c) The estimated carryover, as of 

September 1, of frozen cranberries and 

other cranberry products; 

(d) The expected demand conditions 

for cranberries in different market 

outlets; 

(e) The recommended desirable total 

marketable quantity of cranberries 

including a recommended adequate 

carryover into the following crop year of 

frozen cranberries and other cranberry 

products;

(f) Other factors having a bearing on 

the marketing of cranberries.

§ 929.47 [Removed] 

6. Remove § 929.47. 

7. Revise § 929.48 to read as follows:

§ 929.48 Sales history. 

(a) A sales history for each grower 

shall be computed by the committee in 

the following manner: 

(1) For growers with acreage with 6 or 

more years of sales history, the sales 

history shall be computed using an 

average of the highest four of the most 

recent six years of sales. 

(2) For growers with 5 years of sales 

history from acreage planted or 

replanted 2 years prior to the first 

harvest on that acreage, the sales history 

is computed by averaging the highest 4 

of the 5 years. 

(3) For growers with 5 years of sales 

history from acreage planted or 

replanted 1 year prior to the first harvest 

on that acreage, the sales history is 

computed by averaging the highest 4 of 

the 5 years and in a year prior to a year 

of a producer allotment volume 

regulation shall be adjusted as provided 

in paragraph (6) of this section. 

(4) For a grower with 4 years or less 

of sales history, the sales history shall 

be computed by dividing the total sales 

from that acreage by 4 and in a year 

prior to a year of a producer allotment 

volume regulation shall be adjusted as 

provided in paragraph (a)(6) of this 

section. 

(5) For growers with acreage having 

no sales history, or for the first harvest 

of replanted acres, the sales history will 

be the average first year yields 

(depending on whether first harvested 1 

or 2 years after planting or replanting) 

as established by the committee and 

multiplied by the number of acres. 

(6) In a year prior to a year of a 

producer allotment volume regulation, 

in addition to the sales history 

computed in accordance with 

paragraphs (a)(3) and (4) of this section, 

additional sales history shall be 

assigned to growers using the formula 

x=(a¥b)c. The letter ‘‘x’’ constitutes the 

additional number of barrels to be 

added to the grower’s sales history. The 

value ‘‘a’’ is the expected yield for the 

forthcoming year harvested acreage as 

established by the committee. The value 

‘‘b’’ is the total sales from that acreage 

as established by the committee divided 

by four. The value ‘‘c’’ is the number of 

acres planted or replanted in the 

specified year. For acreage with five 

years of sales history: a = the expected 

yield for the forthcoming sixth year 

harvested acreage (as established by the 

committee); b = an average of the most 

recent 4 years of expected yields (as 

established by the committee); and c = 

the number of acres with 5 years of sales 

history. 

(b) A new sales history shall be 

calculated for each grower after each 

crop year, using the formulas 

established in paragraph (a) of this 

section, or such other formula(s) as 

determined by the committee, with the 

approval of the Secretary. 

(c) The committee, with the approval 

of the Secretary, may adopt regulations 

to change the number and identity of 

years to be used in computing sales 

histories, including the number of years 

Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 70011

to be used in computing the average. 

The committee may establish, with the 

approval of the Secretary, rules and 

regulations necessary for the 

implementation and operation of this 

section. 

(d) Sales histories, starting with the 

crop year following adoption of this 

part, shall be calculated separately for 

fresh and processed cranberries. The 

amount of fresh fruit sales history may 

be calculated based on either the 

delivered weight of the barrels paid for 

by the handler (excluding trash and 

unusable fruit) or on the weight of the 

fruit paid for by the handler after 

cleaning and sorting for the retail 

market. Handlers using the former 

calculation shall allocate delivered fresh 

fruit subsequently used for processing to 

growers’ processing sales. Fresh fruit 

sales history, in whole or in part, may 

be added to process fruit sales history 

with the approval of the committee in 

the event that the grower’s fruit does not 

qualify as fresh fruit at delivery. 

(e) The committee may recommend 

rules and regulations, with the approval 

of the Secretary, to adjust a grower’s 

sales history to compensate for 

catastrophic events that impact the 

grower’s crop. 

8. Revise § 929.49 to read as follows:

§ 929.49 Marketable quantity, allotment 

percentage, and annual allotment. 

(a) Marketable quantity and allotment 

percentage. If the Secretary finds, from 

the recommendation of the committee 

or from other available information, that 

limiting the quantity of cranberries 

purchased from or handled on behalf of 

growers during a crop year would tend 

to effectuate the declared policy of the 

Act, the Secretary shall determine and 

establish a marketable quantity for that 

crop year. 

(b) The marketable quantity shall be 

apportioned among growers by applying 

the allotment percentage to each 

grower’s sales history, established 

pursuant to § 929.48. Such allotment 

percentage shall be established by the 

Secretary and shall equal the marketable 

quantity divided by the total of all 

growers’ sales histories including the 

estimated total sales history for new 

growers. Except as provided in 

paragraph (g) of this section, no handler 

shall purchase or handle on behalf of 

any grower cranberries not within such 

grower’s annual allotment.

(c) In any crop year in which the 

production of cranberries is estimated 

by the committee to be equal to or less 

than its recommended marketable 

quantity, the committee may 

recommend that the Secretary increase 

or suspend the allotment percentage 

applicable to that year. In the event it is 

found that market demand is greater 

than the marketable quantity previously 

set, the committee may recommend that 

the Secretary increase such quantity. 

(d) Issuance of annual allotments. The 

committee shall require all growers to 

qualify for such allotment by filing with 

the committee a form wherein growers 

include the following information: 

(1) The amount of acreage which will 

be harvested; 

(2) A copy of any lease agreement 

covering cranberry acreage; 

(3) The name of the handler(s) to 

whom their annual allotment will be 

delivered; 

(4) Such other information as may be 

necessary for the implementation and 

operation of this section. 

(e) On or before such date as 

determined by the committee, with the 

approval of the Secretary, the committee 

shall issue to each grower an annual 

allotment determined by applying the 

allotment percentage established 

pursuant to paragraph (b) of this section 

to the grower’s sales history. 

(f) On or before such date as 

determined by the committee, with the 

approval of the Secretary, in which an 

allotment percentage is established by 

the Secretary, the committee shall notify 

each handler of the annual allotment 

that can be handled for each grower 

whose total crop will be delivered to 

that handler. In cases where a grower 

delivers a crop to more than one 

handler, the grower must specify how 

the annual allotment will be 

apportioned among the handlers. If a 

grower does not specify how their 

annual allotment is to be apportioned 

among the handlers, the Committee will 

apportion such annual allotment 

equally among those handlers they are 

delivering their crop to. 

(g) Growers who do not produce 

cranberries equal to their computed 

annual allotment shall transfer their 

unused allotment to such growers’

handlers unless it is transferred to 

another grower in accordance with 

§ 929.50(b) or if it is not assigned in 

accordance with paragraph (i) of this 

section. The handler shall equitably 

allocate the unused annual allotment to 

growers with excess cranberries who 

deliver to such handler. Unused annual 

allotment remaining after all such 

transfers have occurred shall be 

reported and transferred to the 

committee by such date as established 

by the committee with the approval of 

the Secretary. 

(h) Handlers who receive cranberries 

more than the sum of their growers’

annual allotments have ‘‘excess 

cranberries,’’ pursuant to § 929.59, and 

shall so notify the committee. Handlers 

who have remaining unused allotment 

pursuant to paragraph (g) of this section 

are ‘‘deficient’’ and shall so notify the 

committee. The committee shall allocate 

unused allotment to all handlers having 

excess cranberries, proportional to each 

handler’s total allotment. 

(i) Growers who decide not to grow a 

crop, during any crop year in which a 

volume regulation is in effect, may 

choose not to assign their allotment to 

a handler. 

(j) The committee may establish, with 

the approval of the Secretary, rules and 

regulations necessary for the 

implementation and operation of this 

section. 

9. Revise § 929.50 to read as follows:

§ 929.50 Transfers of sales histories and 

annual allotments. 

(a) Leases and sales of cranberry 

acreage. 

(1) Total or partial lease of cranberry 

acreage. When total or partial lease of 

cranberry acreage occurs, sales history 

attributable to the acreage being leased 

shall remain with the lessor.

(2) Total sale of cranberry acreage.

When there is a sale of a grower’s total 

cranberry producing acreage, the 

committee shall transfer all owned 

acreage and all associated sales history 

to such acreage to the buyer. The seller 

and buyer shall file a sales transfer form 

providing the committee with such 

information as may be requested so that 

the buyer will have immediate access to 

the sales history computation process. 

(3) Partial sale of cranberry acreage.

When less than the total cranberry 

producing acreage is sold, sales history 

associated with that portion of the 

acreage being sold shall be transferred 

with the acreage. The seller shall 

provide the committee with a sales 

transfer form containing, but not limited 

to the distribution of acreage and the 

percentage of sales history, as defined in 

§ 929.48(a)(1), attributable to the acreage 

being sold. 

(4) No sale of cranberry acreage shall 

be recognized unless the committee is 

notified in writing. 

(b) Allotment transfers. During a year 

of volume regulation, a grower may 

transfer all or part of his/her allotment 

to another grower. If a lease is in effect 

the lessee shall receive allotment from 

lessor attributable to the acreage leased. 

Provided, That the transferred allotment 

shall remain assigned to the same 

handler and that the transfer shall take 

place prior to a date to be recommended 

by the Committee and approved by the 

Secretary. Transfers of allotment 

between growers having different 

70012 Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 

handlers may occur with the consent of 

both handlers. 

(c) The committee may establish, with 

the approval of the Secretary, rules and 

regulations, as needed, for the 

implementation and operation of this 

section. 

10. Revise § 929.51 to read as follows:

929.51 Recommendations for regulation. 

(a) Except as otherwise provided in 

paragraph (b) of this section, if the 

committee deems it advisable to 

regulate the handling of cranberries in 

the manner provided in § 929.52, it shall 

so recommend to the Secretary by the 

following appropriate dates: 

(1) An allotment percentage 

regulation must be recommended by no 

later than March 1; 

(2) A handler withholding program 

must be recommended by not later than 

August 31. Such recommendation shall 

include the free and restricted 

percentages for the crop year; 

(3) If both programs are recommended 

in the same year, the Committee shall 

submit with its recommendation an 

economic analysis to the USDA prior to 

March 1 of the year in which the 

programs are recommended.

(b) An exception to the requirement in 

paragraph (a)(1) of this section may be 

made in a crop year in which, due to 

unforeseen circumstances, a producer 

allotment regulation is deemed 

necessary subsequent to the March 1 

deadline. 

(c) In arriving at its recommendations 

for regulation pursuant to paragraph (a) 

of this section, the committee shall give 

consideration to current information 

with respect to the factors affecting the 

supply of and demand for cranberries 

during the period when it is proposed 

that such regulation should be imposed. 

With each such recommendation for 

regulation, the committee shall submit 

to the Secretary the data and 

information on which such 

recommendation is based and any other 

information the Secretary may request. 

11. Revise § 929.52 to read as follows:

§ 929.52 Issuance of regulations. 

(a) The Secretary shall regulate, in the 

manner specified in this section, the 

handling of cranberries whenever the 

Secretary finds, from the 

recommendations and information 

submitted by the committee, or from 

other available information, that such 

regulation will tend to effectuate the 

declared policy of the Act. Such 

regulation shall limit the total quantity 

of cranberries which may be handled 

during any fiscal period by fixing the 

free and restricted percentages, applied 

to cranberries acquired by handlers in 

accordance with § 929.54, and/or by 

establishing an allotment percentage in 

accordance with § 929.49. 

(b) The committee shall be informed 

immediately of any such regulation 

issued by the Secretary, and the 

committee shall promptly give notice 

thereof to handlers. 

12. Revise § 929.54 to read as follows:

§ 929.54 Withholding. 

(a) Whenever the Secretary has fixed 

the free and restricted percentages for 

any fiscal period, as provided for in 

§ 929.52(a), each handler shall withhold 

from handling a portion of the 

cranberries acquired during such 

period. The withheld portion shall be 

equal to the restricted percentage 

multiplied by the volume of marketable 

cranberries acquired. Such withholding 

requirements shall not apply to any lot 

of cranberries for which such 

withholding requirement previously has 

been met by another handler in 

accordance with § 929.55. 

(b) The committee, with the approval 

of the Secretary, shall prescribe the 

manner in which, and date or dates 

during the fiscal period by which, 

handlers shall have complied with the 

withholding requirements specified in 

paragraph (a) of this section. 

(c) Withheld cranberries may meet 

such standards of grade, size, quality, or 

condition as the committee, with the 

approval of the Secretary, may 

prescribe. The Federal or Federal-State 

Inspection Service may inspect all such 

cranberries. A certificate of such 

inspection shall be issued which shall 

include the name and address of the 

handler, the number and type of 

containers in the lot, the location where 

the lot is stored, identification marks 

(including lot stamp, if used), and the 

quantity of cranberries in such lot that 

meet the prescribed standards. Promptly 

after inspection and certification, each 

such handler shall submit to the 

committee a copy of the certificate of 

inspection issued with respect to such 

cranberries. 

(d) Any handler who withholds from 

handling a quantity of cranberries in 

excess of that required pursuant to 

paragraph (a) of this section shall have 

such excess quantity credited toward 

the next fiscal year’s withholding 

obligation, if any—provided that such 

credit shall be applicable only if the 

restricted percentage established 

pursuant to § 929.52 was modified 

pursuant to § 929.53; to the extent such 

excess was disposed of prior to such 

modification; and after such handler 

furnishes the committee with such 

information as it prescribes regarding 

such withholding and disposition.

(e) The Committee, with the approval 

of the Secretary, may establish rules and 

regulations necessary and incidental to 

the administration of this section. 

13. Revise § 929.56 to read as follows:

§ 929.56 Special provisions relating to 

withheld (restricted) cranberries. 

(a) A handler shall make a written 

request to the committee for the release 

of all or part of the cranberries that the 

handler is withholding from handling 

pursuant to § 929.54(a). Each request 

shall state the quantity of cranberries for 

which release is requested and shall 

provide such additional information as 

the committee may require. Handlers 

may replace the quantity of withheld 

cranberries requested for release as 

provided under either paragraph (b) or 

(c) of this section. 

(b) The handler may contract with 

another handler for an amount of free 

cranberries to be converted to restricted 

cranberries that is equal to the volume 

of cranberries that the handler wishes to 

have converted from his own restricted 

cranberries to free cranberries. 

(1) The handlers involved in such an 

agreement shall provide the committee 

with such information as may be 

requested prior to the release of any 

restricted cranberries. 

(2) The committee shall establish 

guidelines to ensure that all necessary 

documentation is provided to the 

committee, including but not limited to, 

the amount of cranberries being 

converted and the identities of the 

handlers assuming the responsibility for 

withholding and disposing of the free 

cranberries being converted to restricted 

cranberries. 

(3) Cranberries converted to replace 

released cranberries may be required to 

be inspected and meet such standards as 

may be prescribed for withheld 

cranberries prior to disposal. 

(4) Transactions and agreements 

negotiated between handlers shall 

include all costs associated with such 

transactions including the purchase of 

the free cranberries to be converted to 

restricted cranberries and all costs 

associated with inspection (if 

applicable) and disposal of such 

restricted cranberries. No costs shall be 

incurred by the committee other than 

for the normal activities associated with 

the implementation and operation of a 

volume regulation program. 

(5) Free cranberries belonging to one 

handler and converted to restricted 

cranberries on the behalf of another 

handler shall be reported to the 

committee in such manner as prescribed 

by the committee. 

(c) Except as otherwise directed by 

the Secretary, as near as practicable to 

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the beginning of the marketing season of 

each fiscal period with respect to which 

the marketing policy proposes 

regulation pursuant to § 929.52(a), the 

committee shall determine the amount 

per barrel each handler shall deposit 

with the committee for it to release to 

him, in accordance with this section, all 

or part of the cranberries he is 

withholding; and the committee shall 

give notice of such amount of deposit to 

handlers. Such notice shall state the 

period during which such amount of 

deposit shall be in effect. Whenever the 

committee determines that, by reason of 

changed conditions or other factors, a 

different amount should therefore be 

deposited for the release of withheld 

cranberries, it shall give notice to 

handlers of the new amount and the 

effective period thereof. Each 

determination as to the amount of 

deposit shall be on the basis of the 

committee’s evaluation of the following 

factors: 

(1) The prices at which growers are 

selling cranberries to handlers, 

(2) The prices at which handlers are 

selling fresh market cranberries to 

dealers, 

(3) The prices at which cranberries are 

being sold for processing in products,

(4) The prices at which handlers are 

selling cranberry concentrate, 

(5) The prices the committee has paid 

to purchase cranberries to replace 

released cranberries in accordance with 

this section, and 

(6) The costs incurred by growers in 

producing cranberries. 

(7) Each request for release of 

withheld cranberries shall include, in 

addition to all other information as may 

be prescribed by the committee, the 

quantity of cranberries the release is 

requesting and shall be accompanied by 

a deposit (a cashier’s or certified check 

made payable to the Cranberry 

Marketing Committee) in an amount 

equal to the twenty percent of the 

amount determined by multiplying the 

number of barrels stated in the request 

by the then effective amount per barrel 

as determined in paragraph (c). 

(8) Subsequent deposits equal to, but 

not less than, the ten percent of the 

remaining outstanding balance shall be 

payable to the committee on a monthly 

basis commencing on January 1, and 

concluding by no later than August 31 

of the fiscal period. 

(9) If the committee determines such 

a release request is properly filled out, 

is accompanied by the required deposit, 

and contains a certification that the 

handler is withholding such cranberries, 

it shall release to such handler the 

quantity of cranberries specified in his 

request. 

(d) Funds deposited for the release of 

withheld cranberries, pursuant to 

paragraph (c) of this section, shall be 

used by the committee to purchase from 

handlers unrestricted (free percentage) 

cranberries in an aggregate amount as 

nearly equal to, but not in excess of, the 

total quantity of the released cranberries 

as it is possible to purchase to replace 

the released cranberries. 

(e) All handlers shall be given an 

equal opportunity to participate in such 

purchase of unrestricted (free 

percentage) cranberries. If a larger 

quantity is offered than can be 

purchased, the purchases shall be made 

at the lowest price possible. If two or 

more handlers offer unrestricted (free 

percentage) cranberries at the same 

price, purchases from such handlers 

shall be in proportion to the quantity of 

their respective offerings insofar as such 

division is practicable. The committee 

shall dispose of cranberries purchased 

as restricted cranberries in accordance 

with § 929.57. Any funds received by 

the committee for cranberries so 

disposed of, which are in excess of the 

costs incurred by the committee in 

making such disposition, would accrue 

to the handler who deposited those 

funds to be distributed to that handler’s 

growers. 

(f) In the event any portion of the 

funds deposited with the committee 

pursuant to paragraph (c) of this section 

cannot, for reasons beyond the 

committee’s control, be expended to 

purchase unrestricted (free percentage) 

cranberries to replace those withheld 

cranberries requested to be released, 

such unexpended funds shall, after 

deducting expenses incurred by the 

committee, be refunded to the handler 

who deposited the funds. The handler 

shall equitably distribute such refund 

among the growers delivering to such 

handler. 

(g) Inspection for restricted (withheld) 

cranberries released to a handler is not 

required. 

(h) The committee may establish, with 

the approval of the Secretary, rules and 

regulations for the implementation of 

this section. Such rules and regulations 

may include, but are not limited to, 

revisions in the payment schedule 

specified in paragraphs (c)(7) and (c)(8) 

of this section. 

14. Revise § 929.58 to read as follows:

§ 929.58 Exemptions. 

(a) Upon the basis of the 

recommendation and information 

submitted by the committee, or from 

other available information, the 

Secretary may relieve from any or all 

requirements pursuant to this part the 

handling of cranberries in such 

minimum quantities as the committee, 

with the approval of the Secretary, may 

prescribe. 

(b) Upon the basis of the 

recommendation and information 

submitted by the committee, or from 

other available information, the 

Secretary may relieve from any or all 

requirements pursuant to this part the 

handling of such forms or types of 

cranberries as the committee, with the 

approval of the Secretary, may 

prescribe. Forms of cranberries could 

include cranberries intended for fresh 

sales or organically grown cranberries. 

(c) The committee, with the approval 

of the Secretary, shall prescribe such 

rules, regulations, and safeguards as it 

may deem necessary to ensure that 

cranberries handled under the 

provisions of this section are handled 

only as authorized. 

15. Revise § 929.61 to read as follows:

§ 929.61 Outlets for excess cranberries. 

(a) Noncommercial outlets. Excess 

cranberries may be disposed of in 

noncommercial outlets that the 

committee finds, with the approval of 

the Secretary, meet the requirements 

outlined in paragraph (c) of this section. 

Noncommercial outlets include, but are 

not limited to: 

(1) Charitable institutions; and 

(2) Research and development 

projects.

(b) Noncompetitive outlets. Excess 

cranberries may be sold in outlets that 

the committee finds, with the approval 

of the Secretary, are noncompetitive 

with established markets for regulated 

cranberries and meet the requirements 

outlined in paragraph (c) of this section. 

Noncompetitive outlets include but are 

not limited to: 

(1) Any nonhuman food use; and 

(2) Other outlets established by the 

committee with the approval of the 

Secretary. 

(c) Requirements. The handler 

disposing of or selling excess 

cranberries into noncompetitive or 

noncommercial outlets shall meet the 

following requirements, as applicable: 

(1) Charitable institutions. A 

statement from the charitable institution 

shall be submitted to the committee 

showing the quantity of cranberries 

received and certifying that the 

institution will consume the 

cranberries; 

(2) Research and development 

projects. A report shall be given to the 

committee describing the project, 

quantity of cranberries contributed, and 

date of disposition; 

(3) Nonhuman food use. Notification 

shall be given to the committee at least 

48 hours prior to such disposition; 

70014 Federal Register / Vol. 69, No. 230 / Wednesday, December 1, 2004 / Proposed Rules 

(4) Other outlets established by the 

committee with the approval of the 

Secretary. A report shall be given to the 

committee describing the project, 

quantity of cranberries contributed, and 

date of disposition. 

(d) The storage and disposition of all 

excess cranberries withheld from 

handling shall be subject to the 

supervision and accounting control of 

the committee. 

(e) The committee, with the approval 

of the Secretary, may establish rules and 

regulations for the implementation and 

operation of this section. 

16. Revise § 929.62 to read as follows:

§ 929.62 Reports. 

(a) Grower report. Each grower shall 

file a report with the committee by 

January 15 of each crop year, or such 

other date as determined by the 

committee, with the approval of the 

Secretary, indicating the following: 

(1) Total acreage harvested and 

whether owned or leased. 

(2) Total commercial cranberry sales 

in barrels from such acreage. 

(3) Amount of acreage either in 

production, but not harvested or taken 

out of production and the reason(s) 

why. 

(4) Amount of new or replanted 

acreage coming into production. 

(5) Name of the handler(s) to whom 

commercial cranberry sales were made. 

(6) Such other information as may be 

needed for implementation and 

operation of this section. 

(b) Inventory. Each handler engaged 

in the handling of cranberries or 

cranberry products shall, upon request 

of the committee, file promptly with the 

committee a certified report, showing 

such information as the committee shall 

specify with respect to any cranberries 

and cranberry products which were 

held by them on such date as the 

committee may designate. 

(c) Receipts. Each handler shall, upon 

request of the committee, file promptly 

with the committee a certified report as 

to each quantity of cranberries acquired 

during such period as may be specified, 

and the place of production. 

(d) Handling reports. Each handler 

shall, upon request of the committee, 

file promptly with the committee a 

certified report as to the quantity of 

cranberries handled during any 

designated period or periods. 

(e) Withheld and excess cranberries. 

Each handler shall, upon request of the 

committee, file promptly with the 

committee a certified report showing, 

for such period as the committee may 

specify, the total quantity of cranberries 

withheld from handling or held in 

excess, in accordance with §§ 929.49 

and 929.54, the portion of such 

withheld or excess cranberries on hand, 

and the quantity and manner of 

disposition of any such withheld or 

excess cranberries disposed of. 

(f) Other reports. Upon the request of 

the committee, with the approval of the 

Secretary, each handler shall furnish to 

the committee such other information 

with respect to the cranberries and 

cranberry products acquired and 

disposed of by such person as may be 

necessary to enable the committee to 

exercise its powers and perform its 

duties under this part. 

(g) The committee may establish, with 

the approval of the Secretary, rules and 

regulations for the implementation and 

operation of this section. 

17. Revise § 929.64 to read as follows:

§ 929.64 Verification of reports and 

records. 

The committee, through its duly 

authorized agents, during reasonable 

business hours, shall have access to any 

handler’s premises where applicable 

records are maintained for the purpose 

of assuring compliance and checking 

and verifying records and reports filed 

by such handler.

[FR Doc. 04–26445 Filed 11–30–04; 8:45 am] 

BILLING CODE 3410–02–P