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.

Proposed Rules Federal Register

77323

Vol. 65, No. 238

Monday, December 11, 2000

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.

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

77324 Federal Register / Vol. 65, No. 238 / Monday, December 11, 2000 / Proposed Rules

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 § 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 nonmembers) 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 § 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

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

77326 Federal Register / Vol. 65, No. 238 / Monday, December 11, 2000 / Proposed Rules

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 § 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 § 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

§ 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 nonexistent.

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

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

77328 Federal Register / Vol. 65, No. 238 / Monday, December 11, 2000 / Proposed Rules

1This order shall not become effective unless and

until the requirements of § 900.14 of the rules of

practice and procedure governing proceedings to

formulate marketing agreements and marketing

orders have been met.

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

Thefindings 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. 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, § 930.16 is revised to

read as follows:

§ 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 § 930.50, paragraph (a) is revised

to read as follows:

§ 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

DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Part 1308

[DEA–209P]

RIN 1117–AA59

Schedule of Controlled Substances:

Placement of Dichloralphenazone Into

Schedule IV

AGENCY: Drug Enforcement

Administration (DEA), Department of

Justice.

ACTION: Notice of proposed rulemaking.

SUMMARY: This proposed rule is issued

by the Deputy Administrator of the Drug

Enforcement Administration (DEA) to

expressly list dichloralphenazone as a

Schedule IV controlled substance under

the Controlled Substances Act (CSA).

This proposed action is based on the

DEA’s interpretation that

dichloralphenazone is a compound

containing chloral hydrate, a Schedule

IV controlled substance under 21 CFR

part 1308; by definition,

dichloralphenazone is also a Schedule

IV substance. If finalized, this action

will impose the regulatory controls and

criminal sanctions of Schedule IV on

those persons who handle

dichloralphenazone or products

containing dichloralphenazone.

DATES: Comments must be received by

February 9, 2001.