[Federal Register Volume 69, Number 230 (Wednesday, December 1, 2004)]
[Proposed Rules]
[Pages 69996-70014]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-26445]



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Part II





Department of Agriculture





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Agricultural Marketing Service



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7 CFR Part 929



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; Proposed Rule

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

[[Page 69996]]


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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.

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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 
Sec.  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

[[Page 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 Sec.  929.28.
    The proposal to simplify criteria and dates in establishing the 
Committee's marketing policy would amend Sec.  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 Sec.  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 Sec.  929.49.
    The proposal to allow growers to transfer allotment would amend 
Sec.  929.50.
    The proposal to authorize the withholding and producer allotment 
programs in the same year would amend Sec.  929.52.
    The proposal to require the Committee to recommend volume 
regulations by specific dates would amend Sec.  929.51.
    The proposal to add authority for exempting fresh and organic 
cranberries would amend Sec.  929.58.
    The proposal to allow more flexibility in establishing other 
outlets for excess cranberries would amend Sec.  929.61.
    The proposal to streamline the withholding provisions would amend 
Sec.  929.54.
    The proposal to modify the buy-back provisions under the 
withholding program would amend Sec.  929.56.
    The proposal to add authority for paid advertising under the 
research and development provision of the order would amend Sec.  
929.45.
    The proposal to modify the definition of handle would amend Sec.  
929.10.
    The proposal to streamline and relocate reporting provisions to a 
more appropriate provision of the order would amend Sec. Sec.  929.62 
and 929.64.
    The proposal to delete an obsolete provision would remove Sec.  
929.47.

Proposals Not Recommended for Adoption in This Decision

    The proposal to add a new Sec.  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 Sec.  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 grower-handlers 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 Sec.  929.48, which includes providing additional sales 
history to compensate growers for expected production on younger acres. 
This proposed changed to Sec.  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

[[Page 69998]]

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,

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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

[[Page 70000]]

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

[[Page 70001]]

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

[[Page 70002]]

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

[[Page 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 buy-
back 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

[[Page 70004]]

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

[[Page 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

[[Page 70006]]

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 twenty-seventh 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 
``ramp-up.'' The Committee stated that ramp-up should only occur 
during periods when a producer allotment regulation is established.
    Paragraph (b) of Sec.  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 Sec.  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 Sec.  929.49(f) to clarify that 
this provision would not supercede contractual arrangements. Although 
the hearing record disclosed that the amendment is

[[Page 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 Sec.  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 Sec.  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 Sec.  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 Sec.  929.49 and 
believed that the language in paragraph (g) is in conflict with 
paragraph (i) of the same section and paragraph (b) of Sec.  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 Sec.  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 Sec.  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 Sec.  929.49 and paragraph (b) of Sec.  929.50, the Committee's 
suggested change would not address the concern. If the word may were 
substituted for shall in Sec.  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 Sec.  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 Sec.  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 Sec.  929.49.
    The Committee's exception is being accepted in part and denied in 
part. Specifically, Sec.  929.49(f) and (g) are being modified to 
address the points of the exception. The exception to remove paragraph 
(i) of Sec.  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

[[Page 70008]]

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 Sec.  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 Sec.  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 Sec.  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 twenty-eighth 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

[[Page 70009]]

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\
---------------------------------------------------------------------------

    \1\ This order shall not become effective unless and until the 
requirements of Sec.  900.14 of the rules of practice and procedure 
governing proceedings to formulate marketing agreements and 
marketing orders have been met.
---------------------------------------------------------------------------

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

[[Page 70010]]

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 Sec.  929.10 by revising paragraphs (a)(2) and (b)(4) to 
read as follows:


Sec.  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 Sec. Sec.  929.54 or 
929.59.
    3. Add a new Sec.  929.28 to read as follows:


Sec.  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 Sec.  929.45 to read as follows:


Sec.  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 
Sec.  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 Sec.  929.46 to read as follows:


Sec.  929.46  Marketing policy.

    Each season prior to making any recommendation pursuant to Sec.  
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.


Sec.  929.47  [Removed]

    6. Remove Sec.  929.47.
    7. Revise Sec.  929.48 to read as follows:


Sec.  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

[[Page 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 Sec.  929.49 to read as follows:


Sec.  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 Sec.  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 
Sec.  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 
Sec.  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 Sec.  929.50 to read as follows:


Sec.  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 Sec.  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

[[Page 70012]]

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 Sec.  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 Sec.  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 Sec.  929.52 to read as follows:


Sec.  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 Sec.  929.54, and/
or by establishing an allotment percentage in accordance with Sec.  
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 Sec.  929.54 to read as follows:


Sec.  929.54  Withholding.

    (a) Whenever the Secretary has fixed the free and restricted 
percentages for any fiscal period, as provided for in Sec.  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 Sec.  
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 Sec.  929.52 was modified pursuant to Sec.  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 Sec.  929.56 to read as follows:


Sec.  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 Sec.  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

[[Page 70013]]

the beginning of the marketing season of each fiscal period with 
respect to which the marketing policy proposes regulation pursuant to 
Sec.  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 Sec.  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 Sec.  929.58 to read as follows:


Sec.  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 Sec.  929.61 to read as follows:


Sec.  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;

[[Page 70014]]

    (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 Sec.  929.62 to read as follows:


Sec.  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 Sec. Sec.  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 Sec.  929.64 to read as follows:


Sec.  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