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[Federal Register Volume 75, Number 44 (Monday, March 8, 2010)]
[Proposed Rules]
[Pages 10442-10444]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-4341]

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Proposed Rules
                                                Federal Register
________________________________________________________________________

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

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Federal Register / Vol. 75, No. 44 / Monday, March 8, 2010 / Proposed 
Rules

[[Page 10442]]

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 923

[Doc. No. AMS-FV-09-0033; FV09-923-1 PR]

Sweet Cherries Grown in Designated Counties in Washington; Change 
in the Handling Regulation

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule invites comments on proposed changes to the handling 
regulation currently prescribed for cherries under the Washington 
cherry marketing order. The marketing order regulates the handling of 
sweet cherries grown in designated counties in Washington and is 
administered locally by the Washington Cherry Marketing Committee 
(Committee). This rule would add quality and pack requirements for 
Rainier cherries and other lightly colored sweet cherry varieties that 
are designated as ``premium'' when handled. This change is expected to 
reduce market confusion regarding the marketing of such cherries; 
improve producer returns by providing pack differentiation; and benefit 
producers, handlers, and consumers.

DATES: Comments must be received by May 7, 2010.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent to the Docket Clerk, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC 
20250-0237; Fax: (202) 720-8938; or Internet: http://www.regulations.gov. All comments should reference the document number 
and the date and page number of this issue of the Federal Register and 
will be made available for public inspection in the Office of the 
Docket Clerk during regular business hours, or can be viewed at: http://www.regulations.gov. All comments submitted in response to this rule 
will be included in the record and will be made available to the 
public. Please be advised that the identity of the individuals or 
entities submitting the comments will be made public on the Internet at 
the address provided above.

FOR FURTHER INFORMATION CONTACT: Robert J. Curry or Gary D. Olson, 
Northwest Marketing Field Office, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, 1220 SW Third Avenue, 
suite 385, Portland, Oregon 97204; Telephone: (503) 326-2724, Fax: 
(503) 326-7440, or E-mail: Robert.Curry@ams.usda.gov or 
GaryD.Olson@ams.usda.gov.
    Small businesses may request information on complying with this 
regulation by contacting Antoinette Carter, 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, or E-mail: 
Antoinette.Carter@ams.usda.gov.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing 
Agreement and Order No. 923, both as amended (7 CFR part 923), 
regulating the handling of cherries grown in designated counties in 
Washington, hereinafter referred to as the ``order.'' The order is 
effective under the Agricultural Marketing Agreement Act of 1937, as 
amended (7 U.S.C. 601-674), hereinafter referred to as the ``Act.''
    The Department of Agriculture (USDA) is issuing this rule in 
conformance with Executive Order 12866.
    This proposal has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to have retroactive effect.
    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 USDA 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, USDA would rule on the petition. The Act provides 
that the district court of the United States in any district in which 
the handler is an inhabitant, or has his or her principal place of 
business, has jurisdiction to review USDA's ruling on the petition, 
provided an action is filed not later than 20 days after the date of 
the entry of the ruling.
    This proposal invites comments on proposed changes to the handling 
regulation currently prescribed for cherries under the order. 
Specifically, this rule would add minimum requirements for Rainier 
cherries and other lightly-colored sweet cherry varieties that are 
designated as ``premium'' when marketed. Under this proposal, such 
Rainier cherries or other varieties of lightly colored sweet cherries 
must be packed so that at least 90 percent, by count, of the cherries 
in any lot shall measure not less than 64/64-inch (10\1/2\-row) in 
diameter and not more than 5 percent, by count, may be less than 61/64-
inch (11-row) in diameter. In addition, 90 percent, by count, of the 
cherries in any lot must exhibit a pink-to-red surface blush. For any 
given sample, not more than 20 percent of the cherries shall be absent 
a pink-to-red surface blush.
    This change would help reduce market confusion and improve producer 
returns by providing pack differentiation and is expected to benefit 
producers, handlers, and consumers.
    Section 923.52 of the order authorizes the establishment of grade, 
size, quality, maturity, pack and container regulations for any variety 
or varieties of cherries grown in the production area. Section 923.53 
further authorizes the modification, suspension, or termination of 
regulations issued under Sec.  923.52. Section 923.55 provides that 
whenever cherries are regulated pursuant to Sec.  923.52 or Sec.  
923.53, such cherries must be inspected by the Federal-State Inspection 
Service, and certified as meeting the applicable requirements of such 
regulations.
    Section 923.322 of the order's rules and regulations currently 
provide grade, size, maturity, and pack regulations for Washington 
grown sweet cherries. Rainier cherries and other lightly-colored sweet 
cherry varieties have variety-specific minimum size and maturity 
requirements as well as the same pack requirements as all Washington 
sweet cherries, but do not

[[Page 10443]]

share the minimum grade requirements with dark colored cherries.
    As just stated, Rainier cherries and other lightly- colored sweet 
cherry varieties have certain current mandatory grading requirements, 
including a minimum maturity requirement of 17 percent soluble solids 
and a minimum size requirement of 61/64-inch diameter (11-row) as 
provided in section 923.322(c). However, lightly-colored varieties are 
not currently required to meet a minimum grade or pack standard. As a 
consequence, the cherry industry markets several different qualities or 
packs of lightly colored sweet cherries without the benefit of any 
clear differentiation between competing products. This lack of 
differentiation in the marketing of lightly-colored sweet cherries has 
led to market confusion and downward pricing pressure in recent years.
    The worldwide retail trade is currently demanding a consistently 
large lightly-colored sweet cherry that arrives with a pink to red 
blush on its external surface. Likewise, the retail trade is willing to 
pay a premium price for large lightly-colored sweet cherries that 
consistently exhibit this surface blush. Conversely, the market for 
lightly-colored sweet cherries without a blush--cherries pure yellow in 
color--is decreasing and this sub-group of cherries is generally sold 
at a lower market price. Within the order's existing handling 
regulation, there is no clear articulation of a ``premium'' designation 
within the lightly-colored cherry category and buyers have used the 
price of the packs containing all-yellow cherries to put downward 
pricing pressure on cherries that have been produced with the preferred 
pink-to-red blush.
    With this proposed change, industry handlers would be able to 
differentiate packs of lightly colored cherries and the price point 
that comes with producing a superior sweet cherry. It is also expected 
that the change would add further incentive to produce superior quality 
sweet cherries and strengthen the producer's position in the 
marketplace.
    This rule would require any regulated handler handling cherries 
with the ``premium'' designation to adhere to the new requirements as 
provided in new section 923.322(e). All cherries not so designated 
would continue to be allowed to be marketed without regard to the new 
requirements. Notwithstanding, all sweet cherries must continue to meet 
the other minimum requirements of the order and regulations.
    Conforming changes would be made to Sec.  923.322 to reflect the 
addition of the new requirements. The existing paragraph (e) would be 
redesignated as paragraph (d), and the introductory sentence of 
paragraph (g) would be revised to reference the new paragraph (e).

Initial Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) 
has considered the economic impact of this action on small entities. 
Accordingly, AMS has prepared this initial regulatory flexibility 
analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and the rules issued thereunder, are unique in 
that they are brought about through group action of essentially small 
entities acting on their own behalf.
    There are approximately 44 handlers of Washington sweet cherries 
subject to regulation under the marketing order and approximately 1,500 
cherry producers in the regulated area. Small agricultural service 
firms are defined by the Small Business Administration (SBA) (13 CFR 
121.201) as those having annual receipts of less than $7,000,000, and 
small agricultural producers are defined as those having annual 
receipts of less than $750,000.
    Based on the 2005-2007 three-year average fresh cherry utilization 
of 121,666 tons and average fresh cherry producer price of $2,400 per 
ton as reported by the National Agricultural Statistics Service, USDA, 
and 1,500 Washington cherry producers, the recent three-year average 
annual producer revenue was approximately $194,666. In addition, the 
Committee reports that none of the 44 handlers have annual receipts of 
over $7,000,000. Based on this information, the majority of Washington 
sweet cherry producers and handlers may be classified as small 
entities.
    Utilizing authority contained in sections 923.52, 923.53, and 
923.55, the Committee recommended that a definition for premium packed 
lightly-colored sweet cherries be added to section 923.322(h) in the 
order's handling regulation to identify the minimum size and color 
requirements that a premium packed cherry must meet. In addition, to 
help stabilize the downwards pricing pressure that varying unmarked 
grades have on the market, the Committee recommended adding a new 
paragraph 923.322(e)(3) to this subpart establishing a requirement that 
all cherries packed in containers marked ``premium'' must adhere to the 
definition.
    USDA subsequently determined that, rather than adding a new 
definition, it would be more appropriate to add minimum requirements 
for cherries that are designated as ``premium'' to section 923.322 of 
the handling regulation.
    The Committee reports that cherry size and quality are important to 
buyers. Consistency and dependability are equally important. In recent 
seasons, there has not been marketing consistency in the quality and 
size of lightly-colored cherries. This has resulted in a downwards 
pricing pressure on all cherries, regardless of the quality, color, and 
size of the fruit packed.
    Cherry size is related to maturity and other quality factors. That 
is, larger sized cherries tend to be sweeter and of higher overall 
quality, and thus generally provide higher prices for the producer. 
Although AMS Market News Service data is not reported for Rainier 
cherries smaller than 10\1/2\-row (1-inch diameter), this correlation 
is supported by prices received for Bing cherries of various sizes. For 
example, the Market News Service reported f.o.b. prices for 12-row 
sized Bing cherries (54/64 inch diameter) of $24.00 per carton in late 
June 2007. Concurrently, 10\1/2\-row size Bing cherries were selling 
for $35.00 to $36.00 per carton (10\1/2\-row Rainier cherries were 
being quoted by Market News at $35.00 to $40.00 per carton in late June 
2007). This price relationship generally holds steady throughout each 
season. Furthermore, market research by the Washington cherry industry 
shows that larger sizes correlate with higher maturity levels, and that 
larger sizes are preferred by cherry consumers.
    Although research showing a correlation between the flavor of 
lightly-colored sweet cherry varieties and the degree of reddish blush 
is lacking, actual market experience has shown the industry that a 
definite price correlation exists according to remarks made at the 
recent Committee meeting. This is largely due to consumer preference 
for lightly colored cherries that exhibit a reddish blush.
    The Committee believes that this change would not have a negative 
impact economically on either small or large handlers or producers. 
Comments received at the May 14, 2009, meeting indicate that the 
majority of the Washington sweet cherry industry is already packing to 
such standards or better. Comments also indicate that it is

[[Page 10444]]

relatively easy to produce lightly-colored sweet cherries with a pink 
to reddish surface blush, since the added color is related to the 
amount of direct sunlight available to the fruit. Pruning and other 
common cultural practices can greatly affect the amount of blush on the 
cherries. Finally, since this change is only required should a handler 
choose to pack and mark lightly-colored cherries to the ``premium'' 
standard, any additional costs can be eliminated by the handler.
    The Committee discussed alternatives to the recommended action. The 
most significant alternative would have been a recommendation that 
mandated a minimum percentage of reddish color on lightly colored sweet 
cherries, as well as a mandatory increase in the minimum size 
(currently 11-row size or 61/64 minimum diameter). There were other 
various options briefly discussed under this alternative related to 
sizing and the actual degree of blush. Comments from many of those 
attending the May 14th meeting indicated that a mandatory change in 
size and pack requirements would not be well received by the industry 
at this time, and that the less restrictive recommendation subsequently 
made should adequately solve the current marketing problem.
    This rule would not impose any additional reporting or 
recordkeeping requirements on either small or large sweet cherry 
handlers. As with all Federal marketing order programs, reports and 
forms are periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies. In addition, USDA 
has not identified any relevant Federal rules that duplicate, overlap 
or conflict with this rule.
    AMS is committed to complying with the E-Government Act, to promote 
the use of the Internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.
    Further, the Committee meeting was widely publicized throughout the 
Washington cherry industry and all interested persons were invited to 
attend the meeting and participate in the deliberations. Like all 
Committee meetings, the May 14, 2009, meeting was a public meeting and 
all entities, both large and small, were able to express their views on 
this issue. Finally, interested persons are invited to submit comments 
on this interim final rule, including the regulatory and informational 
impacts of this action on small businesses.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/AMSv1.0/ams.fetchTemplateData.do?template=TemplateN&page=MarketingOrdersSmallBusinessGuide. Any questions about the compliance guide should be sent to 
Antoinette Carter at the previously mentioned address in the FOR 
FURTHER INFORMATION CONTACT section.
    A 60-day comment period is provided to allow interested persons to 
respond to this proposal. All written comments received will be 
considered before a final determination is made on this matter.

List of Subjects in 7 CFR Part 923

    Cherries, Marketing agreements, Reporting and recordkeeping 
requirements.

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

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

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

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

Sec.  923.322  [Amended]

    2. In Sec.  923.322, redesignate paragraph (e) as paragraph (d), 
add a new paragraph (e), and revise the introductory sentence of 
paragraph (g) to read as follows:

Sec.  923.322  Washington cherry handling regulation.

* * * * *
    (e) Light sweet cherries marked as premium. No handler shall 
handle, except as otherwise provided in this section, any package or 
container of Rainier cherries or other varieties of lightly colored 
sweet cherries marked as premium except in accordance with the 
following:
    (1) Quality. 90 percent, by count, of such cherries in any lot must 
exhibit a pink-to-red surface blush and, for any given sample, not more 
than 20 percent of the cherries shall be absent a pink-to-red surface 
blush.
    (2) Pack. At least 90 percent, by count, of the cherries in any lot 
shall measure not less than 64/64-inch (10\1/2\-row) in diameter and 
not more than 5 percent, by count, may be less than 61/64-inch (11-row) 
in diameter.
* * * * *
    (g) Exceptions. Any individual shipment of cherries which meets 
each of the following requirements may be handled without regard to the 
provisions of paragraphs (a), (b), (c), (d), and (e) of this section, 
and of Sec. Sec.  923.41 and 923.55.
* * * * *

    Dated: February 25, 2010.
Rayne Pegg,
Administrator, Agricultural Marketing Service.
[FR Doc. 2010-4341 Filed 3-5-10; 8:45 am]
BILLING CODE P
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