[Federal Register Volume 65, Number 238 (Monday, December 11, 2000)]
[Proposed Rules]
[Pages 77323-77328]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-31455]


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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. 65, No. 238 / Monday, December 11, 2000 / 
Proposed Rules

[[Page 77323]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Docket Nos. AO-370-A6; FV98-930-2]


Tart Cherries Grown in the States of Michigan, New York, 
Pennsylvania, Oregon, Utah, Washington, and Wisconsin; Secretary's 
Decision and Referendum Order on Proposed Amendment of Marketing 
Agreement and Order No. 930

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 (order) for tart cherries and provides growers and processors 
with the opportunity to vote in a referendum to determine if they favor 
the proposed amendments. The proposed amendments were submitted by the 
Cherry Industry Administrative Board (Board), which is responsible for 
local administration of the order. One amendment would clarify the 
current limitation on the number of Board members that may be from, or 
affiliated with, a single ``sales constituency'' by amending the 
definition of that term. Another would simplify the method used to 
establish volume regulations for tart cherries. The proposed changes 
are intended to improve the operation and functioning of the tart 
cherry marketing order program.

DATES: The referendum shall be conducted from January 15 through 
January 26, 2001. The representative period for the purpose of the 
referendum herein ordered is June 1, 1999, through May 31, 2000.

FOR FURTHER INFORMATION CONTACT: Anne M. Dec, Marketing Specialist, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, room 2525-S, Washington, DC 20250-0200; telephone: (202) 
720-2491, or Fax: (202) 720-5698.
    Small businesses may request information on compliance with this 
regulation by contacting Jay Guerber, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, P.O. Box 96456, room 
2525-S, Washington, DC 20090-6456; telephone (202) 720-2491; Fax (202) 
720-5698.

SUPPLEMENTARY INFORMATION: Prior documents in this proceeding: Notice 
of Hearing issued on November 12, 1998, and published in the November 
17, 1998, issue of the Federal Register (63 FR 63803). Recommended 
Decision and Opportunity to File Written Exceptions issued on December 
29, 1999, and published in the Federal Register on January 5, 2000 (65 
FR 672).
    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 on the record of a public 
hearing held in Grand Rapids, Michigan on December 1, 1998, and in Salt 
Lake City, Utah on December 3, 1998. The hearing was held to consider 
the proposed amendment of Marketing Agreement and Order No. 930, 
regulating the handling of tart cherries grown in the States of 
Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and 
Wisconsin, 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 proceedings to formulate marketing 
agreements and marketing orders (7 CFR part 900). The Notice of Hearing 
contained amendment proposals submitted by the Board and the U.S. 
Department of Agriculture.
    The Board proposed two amendments. One would amend the current 
order provision which defines the term ``sales constituency'' in order 
to clarify the intent of the Board membership limitation regarding 
sales constituency affiliation. The second would simplify the method 
used to establish volume regulations for tart cherries.
    Also, the Fruit and Vegetable Programs of the Agricultural 
Marketing Service (AMS), U.S. Department of Agriculture, proposed to 
adopt such changes as may be necessary to the order, if either or both 
of the above amendments are adopted, so that all of its provisions 
conform with the proposed amendment. No conforming changes have been 
deemed necessary.
     Upon the basis of evidence introduced at the hearing and the 
record thereof, the Administrator of the Agricultural Marketing Service 
(AMS) on December 29, 1999, filed with the Hearing Clerk, U.S. 
Department of Agriculture, a Recommended Decision and Opportunity to 
File Written Exceptions thereto by February 4, 2000.
    Five exceptions and briefs were filed during the period provided 
regarding the two proposed revisions to the order. Two of those 
supported the conclusions reached in the Recommended Decision 
concerning the proposed revision of the definition of ``sales 
constituency''--those filed by the Board and by James R. Jensen, 
President, CherrCo, Inc. Three were opposed to that amendment--those 
filed by Timothy O. Brian, Smeltzer Orchard Co.; Terry Dorsing, 
President, Washington Tart Cherry Products, Inc.; and Lee Schrepel, 
Chair, Oregon Tart Cherry Association. With regard to the second 
amendment, the proposed revision of the optimum supply formula, the 
Board supported and Mr. Dorsing did not object to this amendment.
    The specific issues raised in the exceptions are discussed in the 
Small Business Considerations and Findings and Conclusions sections of 
this document.

Small Business Considerations

    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA), the AMS has considered the economic impact of 
this action on small entities. Accordingly, the 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. Small agricultural producers 
have been defined by the Small Business Administration (SBA) (13 CFR 
121.201) as those having annual receipts of less

[[Page 77324]]

than $500,000. 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 during the 1998-99 crop year, 
approximately 41 handlers were regulated under Marketing Order No. 930. 
In addition, there were about 896 producers of tart cherries in the 
production area. 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.
    The 1998-99 tart cherry crop was about 340 million pounds. The 
record indicates that of the 41 tart cherry handlers, 12 had processed 
tonnage of more than 10 million pounds (or 29 percent of all handlers); 
4 had between 5 and 10 million pounds (10 percent); 15 had between 1 
and 5 million pounds (37 percent); and the remaining 10 had less than 1 
million pounds of processed tonnage (24 percent). Handlers accounting 
for 10 million pounds or more would be classified as large businesses. 
Thus, a majority of tart cherry handlers could be classified as small 
entities. The majority of tart cherry processors are located in 
Michigan. Many handle cherries grown in more than one district. 
Michigan accounted for 76.4 percent of the production, followed by Utah 
with 9.6 percent, Wisconsin with 4.3 percent, Washington with 4.0 
percent, New York with 3.9 percent, Pennsylvania with 1.2 percent, and 
Oregon with 0.6 percent. By State, about 72.5 percent of the growers 
are in Michigan, 9.9 percent in New York, 5.3 percent in Utah, 4.5 
percent in Wisconsin, 3.6 percent in Pennsylvania, 2.5 percent in 
Oregon, and 1.7 percent in Washington.
    Dividing total production by the number of growers, the average 
grower produces about 380,000 pounds of cherries annually. With grower 
returns of about 20 cents per pound, average revenues would be $76,000. 
Thus, it is reasonable to conclude that most tart cherry growers are 
small entities.
    At 20 cents per pound, a grower would have to produce 2.5 million 
pounds of cherries to reach the $500,000 receipt threshold to qualify 
as a large producing entity under the SBA's definition. No record 
evidence was provided to indicate how many tart cherry growers produce 
2.5 million pounds or more. One witness testified, however, that an 
estimated 150 growers (about 17 percent of the total number of growers) 
produce in excess of 1 million pounds, with the remainder producing 
less than that. With a majority of growers producing less than 1 
million pounds, it follows that a majority of growers produce less than 
2.5 million pounds. This supports the conclusion that the majority of 
tart cherry growers are small businesses. By State, however, average 
grower size varies considerably. The average grower in Washington 
accounts for roughly 910,000 pounds of cherries. Next in size is Utah 
with 680,000 pounds, followed by Michigan (400,000 pounds), Wisconsin 
(370,000 pounds), New York (150,000 pounds) Pennsylvania (130,000 
pounds), and Oregon (100,000 pounds).
    This decision proposes two amendments to the tart cherry marketing 
order. One would clarify the current limitation on the number of Board 
members that may represent a single ``sales constituency.'' The second 
would simplify the method used to establish volume regulations for tart 
cherries. Both amendments would be beneficial to business entities, 
both large and small.

Definition of Sales Constituency

    Section 930.20 of the tart cherry marketing order provides for an 
18-member Cherry Industry Administrative Board to assist the Department 
in administering the program. That section also divides the production 
area into nine districts for purposes of representation on the Board 
and allocates membership among those districts. Five of the nine 
current districts, including all districts subject to volume 
regulation, are allocated more than one member. Those five districts 
are Northern Michigan (four members), Central Michigan (three members), 
Southern Michigan (two members), New York (two members), and Utah (two 
members). The four districts with one member each are Oregon, 
Pennsylvania, Washington, and Wisconsin. (The eighteenth Board member 
is selected to represent the general public, and need not be from any 
specific area.)
    Section 930.20 further provides that for those districts allocated 
more than one member, only one of those members can be affiliated with 
a single sales constituency. Section 930.16 currently defines a sales 
constituency to mean a common marketing organization or brokerage firm 
or individual representing a group of handlers or growers.
    The proposed amendment to Sec. 930.16 would provide that an 
organization that receives consignments of cherries but does not direct 
where those cherries are sold would not be considered a sales 
constituency. The growers and handlers affiliated with such an 
organization would not be limited in their representation on the Board.
    The record shows that one of the Board's primary responsibilities 
is to recommend regulations to implement the marketing order's 
authorities relating to supply management, or volume regulation. Volume 
regulations benefit all industry members, both large and small, by 
matching demand in primary markets with available supplies of tart 
cherries. These regulations also serve to expand sales in secondary 
markets. The result is improved grower and processor returns.
    The record shows that approximately 11 of the current 18 members of 
the Board are affiliated in some way with CherrCo, the organization 
which raised the question of the intended meaning of the term sales 
constituency. Applying the current order limitation on the number of 
members representing a single sales constituency to CherrCo would 
result in five of the current Board members being declared ineligible 
to serve on the Board. All of these members represent regulated 
districts--four in Michigan and one in New York.
    The record shows that CherrCo is a federated grower cooperative. It 
is comprised of 24 member cooperatives. CherrCo's members account for 
75-80 percent of Michigan's tart cherry production, and a significant 
portion of the production in New York, Utah, Washington, and Wisconsin. 
CherrCo currently has no members in Oregon or Pennsylvania. The record 
indicates that the primary function of CherrCo is to establish minimum 
prices for certain tart cherry products. The record indicates that 
CherrCo is not directly involved in the actual sales of its members' 
products. There is intense competition among its members (as well as 
between its members and non-members) to sell tart cherries. The 
competition for sales is on the basis of individual handlers' 
reputations, on the quality and mix of the products they offer, on any 
special services they provide to their customers, and on whether or not 
their processing plants are certified to conform with certain 
sanitation standards.
    The purpose of the sales constituency limitation is explained in 
Sec. 930.20(f) of the order where it is stated that in order to achieve 
a fair and balanced representation on the Board, and to prevent any one 
sales constituency from gaining control of the Board, not more than one 
Board member may be from, or

[[Page 77325]]

affiliated with, a single sales constituency in those districts having 
more than one seat on the Board. The genesis of this limitation can be 
traced to the order promulgation record where it was stated that the 
limitation was designed to prevent the recurrence of a problem that 
existed under the previous tart cherry order which was in effect from 
1971 through 1987. Under that order, there was no such limitation, and 
actions of the Board only required a simple majority vote, allowing 
representatives from a single sales organization to pass Board actions 
without support from other industry members. As was explained in the 
recommended decision published on January 5, 2000, concerning the 
amendments in this rulemaking, the tart cherry industry is comprised of 
many different organizations. Some were clearly meant to be covered by 
the sales constituency limitation, while others were not. It was 
clearly intended that an organization such as Cherry Central, Inc. (a 
cooperative) be covered. Its main purpose is to sell its members' 
cherries and other products. The recommended decision further explains 
that an organization such as the Cherry Marketing Institute was not 
intended to be subject to the sales constituency limitation. The 
formation of CherrCo, a federated grower cooperative which was not in 
existence when the present order was promulgated, has caused the 
Department and the industry to reopen this question and to consider an 
amendment to the definition of sales constituency. This is because an 
organization such as CherrCo lies somewhere between Cherry Central, 
Inc. and the Cherry Marketing Institute which has a primary function of 
conducting generic promotion activities to expand overall sales of 
cherries and funding and conducting research in processing techniques 
and product development.
    Some of the exceptions and briefs filed raised issues and concerns 
in connection with material Issue Number 1, definition of a sales 
constituency, and small business considerations. The Board was of the 
view that this proposed amendment would not have any negative impact on 
small businesses and that it would in fact help small entities by 
allowing them to send a representative of their choice to the Board. 
The Board noted that the regulatory requirements of the proposed 
amendment were properly tailored to the size and nature of small 
businesses.
    Two exceptions were filed that raised small business concerns. One 
exception from Terry Dorsing, President, Washington Tart Cherries 
Products, Inc., presented an overview of the functioning of the tart 
cherry marketing order since its inception. Mr. Dorsing stated that 
since the initial hearing to establish the order, it was his and his 
company's position that the Northwest and other small production areas 
would be dominated by the large production in Michigan and the impact 
of various provisions of the order would be detrimental to small 
entities. The exception also stated that a marketing order was not good 
for the small producer and for the tart cherry industry as a whole. 
While acknowledging the inclusion in the provisions of the order of a 
variety of safeguards to protect small producers and production areas, 
the exception concluded that the Board itself, in recommending further 
changes to the order (currently subject to a separate rulemaking 
action) was preparing to tear down the safeguards to the detriment of 
small entities.
    Another exception from Lee Schrepel, Chair, Oregon Tart Cherry 
Association, raised concern about the size of CherrCo affiliates, 
noting that perhaps most of the large handlers in the industry were 
CherrCo affiliates. The exception argued that the proposal had the 
appearance of giving a greater proportion of Board control to larger 
handlers, as defined under the Regulatory Flexibility Act. The 
exception questioned whether the Department failed to make a thorough 
examination of all relevant small business considerations, as required 
by that Act. The exception also noted that there are several examples 
of how boards administering Federal marketing orders for other 
commodities have protected the small, the remote and the independent, 
with each of the orders limiting the degree of domination by a 
particular constituency in the governed industry. Finally, the 
exception stated the proposed amendment should be rejected, that the 
Department should refer the matter back to the Board for further study 
to craft a more suitable amendment, or that the Department should 
develop a compromise amendment itself taking into account the 
alternative proposals presented in the rulemaking proceedings. 
Alternatively, the exception stated that there should be an allowance 
for permanent exclusion of all producers and handlers in the Oregon 
district, an issue that has not been proposed in the proceeding.
    Alternative proposals discussed at the hearing were considered and 
discussed in the Recommended Decision. It was determined that those 
proposals failed to properly address some of the fundamental issues 
faced by the tart cherry industry. One of these issues is that some 
districts are subject to volume control, while others are not. Another 
deals with the varying marketing and growing conditions. Probably the 
most important issue which alternative proposals failed to address was 
fair representation. Restrictions on an organization such as CherrCo 
could prevent growers in some of the highest volume producing areas 
from being adequately represented on the Board.
    Material Issue Number 1 concerns a proposed amendment that would 
clarify the current limitation on the number of Board members that may 
be from, or affiliated with, a single sales constituency. This proposal 
is intended to be inclusive rather than exclusive. The issue presented 
by this proposed amendment is whether an organization or entity, such 
as CherrCo, should be limited in terms of membership on the Board. The 
Department has fully reviewed this amendment consistent with the 
provisions of the Regulatory Flexibility Act as well as the statutory 
authority for this program. In doing so, it has concluded that this 
proposed amendment should be favorable to both large and small 
entities. The two exceptions received raising small business 
considerations are not in agreement with this conclusion.
    The exceptions raised a variety of issues and concerns regarding 
the proposed amendment as well as the marketing order itself. The 
nature and structure of a board under a marketing order program 
reflects the industry that is regulated. Accordingly, a marketing order 
may provide for one or more provisions concerning board memberships. 
Such provisions would be tailored to reflect the attributes of a 
particular industry, as appropriate. In the case of the tart cherry 
marketing order, a provision was crafted to prevent any single sales 
constituency from having control of Board decision making. The proposed 
amendment would clarify the application of that provision, taking into 
account the current state of the industry as well as the present 
membership on the Board. As such, the original intent of the provisions 
would not be changed by the clarification. Looking at this amendment in 
terms of its impact, we continue to conclude that the proposed 
amendment should be favorable to both large and small entities.
    With regard to the assertion that certain safeguards in the order 
could be eliminated to the detriment of smaller production areas, this 
cannot be done by Board action alone. Any such proposed changes would 
be subject to a formal rulemaking process, including public

[[Page 77326]]

hearings and a referendum, as well as an analysis and review by the 
Department.

Revision of the Optimum Supply Formula

    A principal feature of the tart cherry marketing order is supply 
management through the use of volume regulations. Authority for such 
regulations appears in Sec. 930.51 of the marketing order.
    Volume regulations are implemented through the establishment of 
free and restricted percentages. Such percentages are recommended by 
the Board in accordance with Sec. 930.50 of the order, and, if deemed 
appropriate, implemented by the Department through the public 
rulemaking process. These percentages are then applied to each 
regulated handler's acquisitions in a given season. ``Free market 
tonnage percentage'' cherries may be marketed in any outlet. 
``Restricted percentage'' cherries must be withheld from the primary 
market. They may be diverted in the orchard or at the processing plant; 
placed into a reserve pool; or sold in secondary markets. These 
secondary markets include exports (except to North America), and new 
products. Sales of restricted percentage cherries to these specified 
exempt markets receive diversion credits which handlers use to fulfill 
their restricted obligation.
    The record indicates that the primary objective of tart cherry 
volume regulations is to balance supplies with market demand, thereby 
stabilizing the market and improving grower and processor returns. A 
second objective is to encourage market growth by allowing restricted 
cherries to be sold in secondary markets (for example, most export 
markets). Witnesses attributed much of the improvement in recent cherry 
market conditions to the use of regulation in the 1997/98 and 1998/99 
seasons.
    The order currently sets forth, in Sec. 930.50, an ``Optimum Supply 
Formula'' (OSF) which the Board must follow in its consideration of 
annual free and restricted percentages. The optimum supply is currently 
defined as 100 percent of the average sales of the prior 3 years, to 
which is added a desirable carryout inventory.
    The record indicates that using 100 percent of prior years' sales 
results in an overstatement of the optimum supply. The record shows 
that including the sales of restricted cherries in the optimum supply 
understates the projected surplus and results in a higher free 
percentage than supply and market conditions warrant. This is because 
those total sales include not only sales to the primary market, but to 
secondary markets as well.
    In the years that tart cherry volume regulations have been used, 
this issue has been addressed through use of an adjustment in order to 
achieve an optimum supply of cherries in the marketplace. Once a 
surplus has been computed (deducting the optimum from the available 
supply), the sales to secondary markets are added back to the surplus 
as an economic adjustment. The Board's recommended amendment would 
revise the procedures currently used in calculating the optimum supply. 
Under its proposal, the optimum supply would be equal to the 3-year 
average sales in primary markets (total sales less sales to markets 
eligible for diversion credit) plus the target carryout. This would 
simplify the method of arriving at an optimum supply figure and would 
be easier for tart cherry growers and processors to understand. 
Therefore, any regulatory impact on growers or handlers would be 
minimal or non-existent.
    The record evidence supports the conclusion that this amendment 
would result in no extra costs to growers or processors in that any 
resulting level of volume regulation would be similar to what is 
currently in effect and its economic effect on the industry would be 
similarly analyzed in each instance. It would benefit industry members 
both large and small, however, because the process relating to the 
establishment of volume regulations would be less confusing and more 
readily understood by industry members. This process is used by growers 
and handlers in making seasonal decisions (including those relating to 
harvesting cherries). To the extent that this process is more readily 
understood, all in the industry should benefit.
    Further, in its brief, the Board noted that the Department 
considered the impact of Material Issue Number 2 on small businesses 
and concluded that there would be no negative impact. The Board stated 
that it considered several other approaches concerning the optimum 
supply formula and was of the view that the proposed amendment was the 
best alternative available.
    The collection of information under the marketing order would not 
be affected by these amendments to the marketing order. Current 
information collection requirements for Part 930 are approved by OMB 
under OMB number 0581-0177.
    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.
    The Department 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.
    Board meetings regarding these proposals as well as the hearing 
dates were widely publicized throughout the tart cherry industry, and 
all interested persons were invited to attend the meetings and the 
hearing and participate in Board deliberations on all issues. All Board 
meetings and the hearing were public forums and all entities, both 
large and small, were able to express views on these issues.

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 Comments

    The material issues, findings and conclusions, rulings, and general 
findings and determinations included in the Recommended Decision set 
forth in the January 5, 2000, issue of the Federal Register (65 FR 672) 
are hereby approved and adopted subject to the following additions and 
modifications:
    Based upon the briefs and exceptions filed, the findings and 
conclusions in material issue number 1 of the Recommended Decision 
concerning whether the definition of ``sales

[[Page 77327]]

constituency'' should be revised are amended by adding the following 
eight paragraphs to read as follows:
    In his exception, James R. Jensen, President of CherrCo, Inc., 
expressed agreement with the conclusions reached in the Recommended 
Decision, and requested that cherry growers and handlers be given the 
opportunity to express their views through the referendum process. This 
document calls for such a referendum to be conducted.
    The Cherry Industry Administrative Board also agreed with the AMS 
recommendation on this issue, but requested one clarification. The 
Recommended Decision concluded that CherrCo should not be considered a 
sales constituency for the purpose of Board membership limitations. The 
Board requested that this conclusion be expanded to include all 
purposes regulated by the order. The term ``sales constituency'' is 
only used in the order with respect to Board membership. It has no 
relevance to other order provisions. Thus, the Board's recommendation 
is unnecessary, and its exception is denied.
    The exceptions filed by Tim O. Brian, Lee Schrepel and Terry 
Dorsing asked that AMS revise its decision to conclude that CherrCo is 
a sales constituency and that its membership on the Board should be 
limited.
    Mr. Brian and Mr. Schrepel took exception to the statement that 
CherrCo does not actively arrange sales of tart cherries. They 
supported their position by providing a Membership and Marketing 
Agreement dated March 31, 1997, containing the statement that CherrCo 
``* * * may sell the Product itself or may license sales agents to sell 
the Product.'' Record evidence shows that CherrCo licenses sales agents 
to sell its members' cherries. These agents compete among themselves 
and with non-member sales agents to garner sales. CherrCo itself does 
not sell cherries. If, in the future, CherrCo takes on that function, 
such activities would be reviewed in light of the prohibition.
    Mr. Brian also argued that CherrCo has taken on additional 
functions since the time of the hearing. First, it has purchased the 
label ``CherreX'' from a cherry export trading company. Second, it has 
been in the process of forming a supply cooperative. Whether any of the 
present or future activities would make industry members affiliated 
with CherrCo subject to the Board membership restriction would be 
determined on the facts in each instance. In any case, the definition 
amendment is generic and is not applicable only to CherrCo.
    Mr. Schrepel and Mr. Dorsing claimed that CherrCo's membership 
should be limited because Board members affiliated with that 
organization have recently taken actions that are counter to the 
interests of industry members not affiliated with CherrCo. Both 
exceptions pointed to a group of marketing order amendment proposals 
submitted by the Board in October 1999. Included were proposals to 
eliminate the 15 million pound threshold used to determine whether a 
district is subject to volume regulation; allowing diversion credits 
for tart cherry juice and juice concentrate; setting assessments for 
all cherry products at the same level; and allowing the Board chairman 
to designate a person to vote at a Board meeting if neither a member 
nor his or her alternate is present. While it is true that a second set 
of amendment proposals has been recommended and an amendatory hearing 
was held in March and April 2000, those proposals are and will be 
considered in a separate formal rulemaking proceeding. Interested 
parties have and will be given the opportunity to express their 
viewpoints, and growers and handlers will be able to vote in 
referendum.
    Mr. Schrepel argued that USDA did not adequately consider 
alternative proposals relating to Board membership. He pointed to the 
fact that other marketing orders (for example, those covering 
cranberries and almonds) limit the number of positions that can be held 
by a particular constituency. The record shows that this issue has been 
under consideration by the Board for many months, and this amendment 
was recommended as the best course of action. The public hearing held 
on this matter provided interested persons with the opportunity to 
present alternative plans related to Board membership. As previously 
discussed, alternatives presented at the hearing failed to address some 
of the fundamental issues faced by the tart cherry industry, such as 
adequate representation of growers in high volume producing areas. As 
such, AMS rejected those alternatives.
    Mr. Schrepel also argues that USDA is not fulfilling its obligation 
under the U.S. Constitution and the Act when it permits an interest 
group to control the Board. He states that the percentage of Board 
members affiliated with CherrCo exceeds the proportion of the cherry 
crop CherrCo members handle. The marketing order does not guarantee 
CherrCo a specified number of seats on the Board. Membership is 
allocated among the established districts and among growers and 
handlers. Every tart cherry grower and handler has the opportunity to 
participate in the nomination process, and can vote on who should be 
his or her representative on the Board. All Board actions are subject 
to the approval of the Secretary, and any resultant rulemaking actions 
provide further opportunity for public participation.

Rulings on Exceptions

    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.

Marketing Agreement and Order

    Annexed hereto and made a part hereof is the document entitled 
``Order Amending the Order Regulating the Handling of Tart Cherries 
Grown in the States of Michigan, New York, Pennsylvania, Oregon, Utah, 
Washington, and Wisconsin.'' 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 tart cherries grown in the States 
of Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and 
Wisconsin 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 tart cherries in the 
production area.
    The representative period for the conduct of such referendum is 
hereby determined to be June 1, 1999, through May 31, 2000.
    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.

[[Page 77328]]

List of Subjects in 7 CFR Part 930

    Marketing agreements, Tart cherries, Reporting and recordkeeping 
requirements.

    Dated: December 5, 2000.
Kenneth C. Clayton,
Associate Administrator, Agricultural Marketing Service.

Order Amending the Order Regulating the Handling of Tart Cherries 
Grown in the States of Michigan, New York, Pennsylvania, Oregon, 
Utah, Washington, and Wisconsin \1\

Findings and Determinations

    The findings and determinations hereinafter set forth are 
supplementary and in addition to the findings and determinations 
previously made in connection with the issuance of the order; and all 
of said previous findings and determinations are hereby ratified and 
affirmed, except insofar as such findings and determinations may be in 
conflict with the findings and determinations set forth herein.
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    \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.
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    (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. 930 (7 CFR part 930), regulating the handling 
of tart cherries Grown in the States of Michigan, New York, 
Pennsylvania, Oregon, Utah, Washington, and Wisconsin.
    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 hereby proposed to be 
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 hereby proposed to be 
amended, regulate the handling of tart cherries 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 hereby proposed to be 
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; and
    (4) The marketing agreement and order, as hereby proposed to be 
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 tart cherries grown in the production area; and
    (5) All handling of tart cherries grown in the production area 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 tart cherries grown in the States of Michigan, 
New York, Pennsylvania, Oregon, Utah, Washington and Wisconsin, 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 contained in the Recommended Decision issued by the 
Administrator on December 29, 1999, and published in the Federal 
Register on January 5, 2000, shall be and are the terms and provisions 
of this order amending the order and are set forth in full herein.

PART 930--TART CHERRIES GROWN IN THE STATES OF MICHIGAN, NEW YORK, 
PENNSYLVANIA, OREGON, UTAH, WASHINGTON, AND WISCONSIN

    1. The authority citation for 7 CFR part 930 continues to read as 
follows:

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

    2. In part 930, Sec. 930.16 is revised to read as follows:


Sec. 930.16  Sales constituency.

    Sales constituency means a common marketing organization or 
brokerage firm or individual representing a group of handlers and 
growers. An organization which receives consignments of cherries and 
does not direct where the consigned cherries are sold is not a sales 
constituency.
    3. In Sec. 930.50, paragraph (a) is revised to read as follows:


Sec. 930.50  Marketing policy.

    (a) Optimum supply. On or about July 1 of each crop year, the Board 
shall hold a meeting to review sales data, inventory data, current crop 
forecasts and market conditions in order to establish an optimum supply 
level for the crop year. The optimum supply volume shall be calculated 
as 100 percent of the average sales of the prior three years, reduced 
by the average sales that represent dispositions of restricted 
percentage cherries qualifying for diversion credit for the same three 
years, unless the Board determines that it is necessary to recommend 
otherwise with respect to sales of restricted percentage cherries, to 
which shall be added a desirable carryout inventory not to exceed 20 
million pounds or such other amount as the Board, with the approval of 
the Secretary, may establish. This optimum supply volume shall be 
announced by the Board in accordance with paragraph (h) of this 
section.
* * * * *
[FR Doc. 00-31455 Filed 12-8-00; 8:45 am]
BILLING CODE 3410-02-P