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

31719 

Vol. 75, No. 107 

Friday, June 4, 2010 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Part 930 

[Docket No. AO–370–A8; AMS–FV–06–0213; 

FV07–930–2] 

Tart Cherries Grown in the States of 

Michigan, New York, Pennsylvania, 

Oregon, Utah, Washington, and 

Wisconsin; Recommended Decision 

on Proposed Amendment of Marketing 

Agreement and Order No. 930 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Proposed rule and opportunity 

to file exceptions. 

SUMMARY: This recommended decision 

invites written exceptions to proposed 

amendments to Marketing Agreement 

and Order No. 930 (order), which 

regulates the handling of tart cherries 

grown in Michigan, New York, 

Pennsylvania, Oregon, Utah, 

Washington, and Wisconsin. Seven 

amendments were proposed by the 

Cherry Industry Administrative Board 

(Board), which is responsible for local 

administration of the order. These 

proposed amendments would: 

Authorize changing the primary reserve 

capacity associated with the volume 

control provisions of the order; 

authorize establishment of a minimum 

inventory level at which all remaining 

product held in reserves would be 

released to handlers for use as free 

tonnage; establish an age limitation on 

product placed into reserves; revise the 

nomination and election process for 

handler members on the Board; revise 

Board membership affiliation 

requirements; and update order 

language to more accurately reflect 

grower and handler participation in the 

nomination and election process in 

districts with only one Board 

representative. In addition, the 

Agricultural Marketing Service (AMS) 

proposed to make any such changes as 

may be necessary to the order to 

conform to any amendment that may 

result from the hearing. 

This decision does not recommend 

the Board proposal to revise the voting 

requirements necessary to approve a 

Board action. 

The proposals are designed to provide 

flexibility in administering the volume 

control provisions of the order and to 

update Board nomination, election, and 

membership requirements. The 

proposed amendments are intended to 

improve the operation and 

administration of the order. 

DATES: Written exceptions must be filed 

by July 6, 2010. 

ADDRESSES: Written exceptions should 

be filed with the Hearing Clerk, U.S. 

Department of Agriculture, room 1031– 

S, Washington, DC 20250–9200, Fax: 

(202) 720–9776 or via the internet at 

http://www.regulations.gov, or to Martin 

Engeler at the E-mail address provided 

in the FOR FURTHER INFORMATION

CONTACT section. All comments should 

reference the docket number and the 

date and page number of this issue of 

the Federal Register. Comments will be 

made available for public inspection in 

the Office of the Hearing 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: 

Martin Engeler, Marketing Order 

Administration Branch, Fruit and 

Vegetable Programs, AMS, USDA, 2202 

Monterey Street, Suite 102–B, Fresno, 

California 93721; telephone: (559) 487– 

5110, Fax: (559) 487–5906; or Marc 

McFetridge, Marketing Order 

Administration Branch, Fruit and 

Vegetable Programs, AMS, USDA, 1400 

Independence Avenue, SW., Stop 0237, 

Washington, DC 20250–0237; telephone: 

(202) 720–1509, Fax: (202) 720–8938, or 

E-mail: Martin.Engeler@usda.gov or 

Marc.McFetridge@usda.gov. 

Small businesses may request 

information on this proceeding by 

contacting Jay Guerber, Marketing Order 

Administration Branch, Fruit and 

Vegetable Programs, AMS, USDA, 1400 

Independence Avenue SW., Stop 0237, 

Washington, DC 20250–0237; 

Telephone: (202) 720–2491, Fax: (202) 

720–8938, E-mail: 

Jay.Guerber@usda.gov. 

SUPPLEMENTARY INFORMATION: Prior 

document in this proceeding: Notice of 

Hearing issued on February 5, 2007, and 

published in the February 7, 2007, issue 

of the Federal Register (72 FR 5646). 

This action is governed by the 

provisions of sections 556 and 557 of 

title 5 of the United States Code and is 

therefore excluded from the 

requirements of Executive Order 12866. 

Preliminary Statement 

Notice is hereby given of the filing 

with the Hearing Clerk of this 

recommended decision with respect to 

the proposed amendments to Marketing 

Order 930 regulating the handling of tart 

cherries grown in Michigan, New York, 

Pennsylvania, Oregon, Utah, 

Washington, and Wisconsin, and the 

opportunity to file written exceptions 

thereto. Copies of this decision can be 

obtained from Martin Engeler whose 

address is listed above. 

This recommended decision is issued 

pursuant to the provisions of the 

Agricultural Marketing Agreement Act 

of 1937, as amended (7 U.S.C. 601 et 

seq.), hereinafter referred to as the ‘‘Act’’, 

and the applicable rules of practice and 

procedure governing the formulation of 

marketing agreements and orders (7 CFR 

Part 900). 

The proposed amendments are based 

on the record of public hearings held 

February 21 and 22, 2007, in Grand 

Rapids, Michigan and March 1 and 2, 

2007, in Provo Utah. Notice of this 

hearing was published in the Federal 

Register on February 7, 2007 (72 FR 

5646). The notice of hearing contained 

proposals submitted by the Board. 

The proposed amendments were 

recommended by the Board and initially 

submitted to AMS on December 16, 

2005. Additional information was 

submitted in June 2006 at the request of 

AMS and a determination was 

subsequently made to schedule this 

matter for hearing. 

The proposed amendments to the 

order recommended by the Board are 

summarized below. 

1. Amend § 930.50 of the order to 

authorize changing the primary reserve 

capacity associated with the volume 

control provisions of the order. 

2. Amend § 930.54 of the order to 

authorize establishment of a minimum 


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inventory level at which all remaining 

product held in reserves would be 

released to handlers for use as free 

tonnage. 

3. Amend § 930.55 to establish an age 

limitation on product placed into 

reserves. 

4. Amend § 930.32 to revise the voting 

requirements necessary to approve a 

Board action. 

5. Amend § 930.23 to revise the 

nomination and election process for 

handler members on the Board; 

6. Amend § 930.20 to revise Board 

membership affiliation requirements. 

7. Amend § 930.23 to update order 

language to more accurately reflect 

grower and handler participation in the 

nomination and election process in 

Districts with only one Board 

representative. 

In addition to the proposed 

amendments to the order, AMS 

proposes the following: 

8. To make any such changes as may 

be necessary to the order to conform to 

any amendments that may result from 

the hearing. 

One amendment proposed by the 

Board is not being recommended for 

adoption and is discussed in this 

decision. 

Twenty-one industry witnesses 

testified at the hearing. These witnesses 

consisted of tart cherry producers and 

handlers in the production area, and 

Board staff. The majority of the 

witnesses testified in favor of the 

proposed amendments, while some 

were opposed to various proposals. 

At the conclusion of the hearing, the 

Administrative Law Judge established a 

deadline of May 30, 2007, for interested 

persons to file proposed findings and 

conclusions or written arguments and 

briefs based on the evidence received at 

the hearing. Two briefs were filed. One 

was in support of all the proposed 

amendments and one was opposed to 

most of the proposals. 

Material Issues 

The material issues presented on the 

record of hearing are as follows: 

(1) Whether to amend the order to 

authorize changing the primary reserve 

capacity through informal rulemaking; 

(2) Whether to amend the order to 

authorize establishment of a minimum 

inventory level at which all remaining 

product held in reserves would be 

released to handlers for use as free 

tonnage; 

(3) Whether to amend the order to 

establish an age limitation on product 

placed into reserves; 

(4) Whether to amend the order to 

revise the voting requirements necessary 

to approve a Board action; 

(5) Whether to amend the order to 

revise the nomination and election 

process for handler members on the 

Board; 

(6) Whether to amend the order to 

revise Board membership affiliation 

requirements; and 

(7) Whether to amend order language 

regarding the nomination and election 

process in districts with only one Board 

representative. 

Findings and Conclusions 

The following findings and 

conclusions on the material issues are 

based on evidence presented at the 

hearing and the record thereof. 

Material Issue Number 1—Authority To 

Change the Primary Reserve Capacity 

The order should be amended to 

authorize changing the primary reserve 

capacity through the informal 

rulemaking process rather than the 

formal rulemaking process. Such a 

change could occur no more than once 

per crop year, and a recommendation 

from the Board to USDA to make such 

a change must be made by September 30 

of the preceding crop year. Any change 

made to the reserve capacity would 

remain in effect until further modified. 

Prior to making a recommendation to 

change the reserve capacity, the Board 

should consider appropriate factors 

when making such a recommendation. 

Section 930.50 of the order specifies 

procedures concerning establishment of 

volume control in the form of free and 

restricted percentages applied to the 

cherries handlers acquire from growers 

in a given crop year. Applying the free 

percentage to the cherries acquired by 

handlers results in a quantity of free 

tonnage cherries, and applying the 

restricted percentage results in a 

quantity of restricted cherries applicable 

to regulated handlers. Free tonnage 

cherries may be disposed of by handlers 

in any market outlet. Restricted cherries 

may be released to handlers for market 

expansion opportunities or to augment 

supplies in free market outlets. They 

may also be disposed of in certain 

outlets not competitive with normal 

market outlets, according to procedures 

specified in the order. 

Section 930.50(i) provides for the 

establishment of a primary reserve and 

a secondary reserve. The first 50-million 

pounds of reserve established by 

applying the reserve percentages to the 

aggregate quantity of cherries acquired 

by handlers is placed in a primary 

reserve. Any reserve cherries in excess 

of the 50-million-pound limitation, or 

cap, are placed into a secondary reserve. 

Product from the secondary reserve 

cannot be released until all cherries in 

any primary reserve have been released. 

Currently, formal rulemaking is required 

to change the 50-million-pound cap on 

the primary reserve. 

The Board proposed amending the 

order to authorize changing the 50- 

million-pound limitation on the primary 

reserve through the informal rulemaking 

process rather than through the formal 

rulemaking process, as is currently 

required. Under the proposal, a change 

to the reserve cap could not be made 

more than once per year, and a 

recommendation from the Board to 

make such a change must be made prior 

to September 30 of the preceding crop 

year. 

Witnesses testified that the proposed 

amendment is primarily procedural in 

nature, and would add flexibility to the 

order. They testified that the current 

process needed to change the reserve 

limitation (formal rulemaking) is 

lengthier than the informal rulemaking 

process. Witnesses indicated that if this 

amendment is adopted it would provide 

a more efficient and timely process for 

changing the reserve capacity. 

Witnesses testified that the cap could be 

either increased or decreased through 

this process. 

Witnesses testified that the topic of 

reserves is of great importance and 

interest to the industry, and it is 

desirable that a full discussion of the 

issues occur prior to changing the 

reserve limitation. They further 

indicated that the informal rulemaking 

process would provide ample 

opportunity for a thorough discussion 

and analysis of the pertinent issues 

prior to making a recommendation to 

the USDA for changing the reserve cap. 

Witnesses further stated that the order’s 

voting requirements for a ‘‘supermajority’’ to approve a Board action 

would ensure that a high level of 

industry agreement is reached before 

any recommended change could be 

made. Witnesses also pointed out that 

the Board itself cannot implement an 

informal rulemaking change. Such 

changes are recommended to the USDA, 

and are only implemented after informal 

rulemaking by USDA. Witnesses 

testified that changes to the primary 

reserve capacity through informal 

rulemaking should be made no more 

than one time per year to prevent any 

market disruption that could occur by 

changing it more frequently. The 

proposed requirement that any change 

must be recommended no later than 

September 30 of the prior year would 

allow all industry participants to be 

fully aware of the regulation well in 

advance of its implementation. 

Proponents of the proposal presented 

testimony indicating that changes in the 


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industry have occurred which may 

warrant a change in the primary reserve 

inventory cap in the future. Handlers 

are obligated to provide cherry products 

to meet their reserve obligation, and 

they currently produce a broader 

spectrum of products than when the 

order was formulated in 1996. In the 

past, the primary product produced and 

sold was frozen cherries; the product 

mix is now more diverse with increased 

amounts of products such as dried 

cherries, frozen concentrate, and single 

strength juice being marketed. Because 

there is now a wider variety of cherry 

products produced, held in inventory, 

and sold than in the past, it may be 

necessary at some point to increase the 

reserve capacity so the industry can 

adequately supply buyer’s needs with 

reserve product if and when the reserve 

is released. Witnesses testified that 

industry production and sales 

information is more accurate and more 

readily available now than in the past, 

which contributes to the need for the 

marketing order and its rules and 

regulations to be responsive to changes 

in a more timely manner. 

Additional testimony suggested that it 

may be desirable to increase the reserve 

cap in the future due to an anticipated 

increase in demand and sales. In 2002, 

the industry experienced an extremely 

short crop, and sales in subsequent 

years decreased as buyers sourced 

product from different suppliers or used 

substitute products. It is anticipated that 

the industry will ultimately regain lost 

sales and eventually increase demand, 

especially with the support of a new 

industry-wide promotion program 

recently implemented. An increase in 

demand and annual sales could warrant 

an increase in the reserve capacity at 

some point in the future. For example, 

if annual demand increases, and the 

industry has a short crop like in 2002, 

it would be in a better position to 

adequately supply markets if a larger 

reserve is in place. 

Witnesses opposed to the proposal 

indicated that the current 50-millionpound cap has worked well for the 

industry. When the order was 

promulgated, a 50-million-pound 

reserve was considered to be an 

appropriate level, and would help 

prevent a large inventory buildup. A 

previous tart cherry marketing order in 

effect from 1971 to 1987 was not as 

effective as it could have been because 

there was no cap on the reserve, which 

led to the buildup of excessively large 

inventories. This situation ultimately 

contributed to the demise of that 

program, according to testimony. 

One witness testified that it is good 

business practice to carry approximately 

25 percent of annual sales in inventory. 

A 50-million-pound reserve is thus 

appropriate for the industry because 

annual industry sales have been in the 

range of 200 million pounds in recent 

years. If the industry carries too large a 

reserve, grower returns could be 

negatively affected because the demand 

for tart cherries is relatively inelastic, 

according to the witness. 

Another witness testified that current 

features of the order allow adequate 

reserve product to be made available to 

augment market supplies. There is no 

need to increase the reserve cap for that 

purpose, according to the witness. 

The witness further testified that the 

50-million-pound reserve capacity was a 

core element of the order when it was 

promulgated, and its intended use was 

to manage supplies wisely. According to 

the witness, no evidence was presented 

at the hearing that warrants a specific 

change to the reserve capacity. 

However, the witness stated that if a 

change in the reserve capacity is 

appropriate in the future, any change 

should be subject to specific, 

measurable criteria for the Board to 

consider. As discussed below, such 

consideration should be part of the 

Board’s analysis and recommendation to 

USDA. 

This proposal would not increase the 

50-million-pound primary reserve 

capacity. The amendment, if adopted, 

would only change the process by 

which a future revision in the reserve 

capacity could be effectuated if 

conditions warrant. 

The record shows that industry and 

market conditions change over time, 

and there may be circumstances that 

would warrant a change in the reserve 

capacity. Allowing such a change to be 

made through informal rather than 

formal rulemaking would add flexibility 

to the order by providing the industry 

with an additional tool to respond to 

industry and market conditions in a 

more timely and efficient manner. 

Hearing testimony indicated that it is 

desirable to for the Board to conduct a 

full and thorough analysis when 

recommending changes to key elements 

in marketing order programs, such as 

volume control provisions. This 

includes the impacts of any proposed 

change on producers and handlers. 

Witnesses testified that it is also 

desirable to attain a high level of 

agreement among industry members 

before regulatory changes are 

implemented. 

There can be benefits in allowing 

changes to be made to program 

requirements through informal 

rulemaking rather than formal 

rulemaking. As with all 

recommendations for informal 

rulemaking, USDA expects the Board to 

fully consider and analyze pertinent 

factors when making recommendations 

to change the reserve capacity. 

In consideration of the record, USDA 

recommends that Section 930.50(i) be 

revised to authorize changing the 

reserve capacity from its current 50- 

million-pound limit through informal 

rulemaking. Such a change should only 

occur once per year, and any 

recommendation for a change should be 

made by the Board to USDA no later 

than September 30 of the preceding 

year. Any change would remain in effect 

until subsequently modified through 

informal rulemaking. The requirement 

to make any such changes no more than 

one time per year would help to ensure 

that the industry has sufficient time to 

plan and respond to the change, and the 

requirement that any change must be 

recommended no later that September 

30 of the prior year would allow 

sufficient time to implement the change. 

In addition, the super-majority voting 

requirement of the Board will help to 

ensure that any recommendation for a 

change to the reserve capacity has a 

high level of support. 

For the above reasons, the proposed 

amendment to § 930.50(i) is 

recommended for adoption. 

Material Issue Number 2—Authority to 

Establish a Minimum Inventory Level 

at Which Reserves Would Be Released 

The order should be amended to add 

the authority for the Board to establish 

a minimum inventory level at which 

cherries held in the primary and 

secondary reserves would be released 

and made available to handlers as free 

tonnage. This change would allow the 

Board to clear out the primary reserve 

and subsequently the secondary reserve 

when a specified inventory level of tart 

cherries is reached. The specified 

inventory level would be established by 

the Secretary through informal 

rulemaking upon recommendation of 

the Board. 

Section 930.54 of the order specifies 

different uses and conditions for release 

of cherries placed in inventory reserve. 

Reserve cherries may be released from 

the primary or secondary reserve if 

demand is greater than supply in 

commercial outlets, if the Board 

recommends a portion or the entire 

reserve inventory be released for sale in 

designated markets, or the cherries are 

to be used in certain exempt outlets. 

Section 930.55 of the order provides 

authority and establishes parameters for 

a primary reserve, including a 

maximum quantity of product that can 

be held in primary reserve inventories. 


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Section 930.57 provides authority and 

parameters for a secondary reserve. 

Quantities of product in excess of the 

maximum amount established in the 

primary reserve may be placed in the 

secondary reserve. 

Section 930.57(d) of the order states, 

in part, that ‘‘No cherries may be 

released from the secondary reserve 

until all cherries in any primary 

inventory reserve established under 

§ 930.55 have been released.’’ Based on 

the language in § 930.57(d) handlers 

cannot access the secondary reserve if 

any cherries remain in the primary 

reserve. In addition, the current 

provisions of the order do not allow the 

Board to require handlers to release all 

inventory held in their portion of the 

primary reserve. The proposed 

amendment would authorize the 

Secretary, upon recommendation of the 

Board to establish a minimum inventory 

level at which all remaining cherries 

held in the primary and secondary 

reserve would be released and made 

available to handlers as free tonnage. 

Witnesses testified that because 

handlers cannot access the secondary 

reserve until the primary reserve is 

completely depleted, minimal amounts 

left in the primary reserve can create 

problems for the industry. According to 

testimony, this may occur when 

handlers do not take full advantage of 

opportunities to utilize their portion of 

the primary reserve and carry minimum 

inventories in the primary reserve. 

Therefore, a minimal amount of 

inventory remaining in the primary 

reserve of one or a few handlers can 

prevent the rest of the industry from 

accessing the secondary reserve. In 

effect, this can prevent the majority of 

the industry from clearing out excess 

reserve inventories. 

The record indicates that there should 

be a way to access the secondary reserve 

when there is a minimal amount of 

product remaining in the primary 

reserve and handlers are not willing or 

are unable to completely deplete their 

reserve inventories. The proposed 

amendment would provide a way to 

clear out small amounts of primary 

reserve and provide access to secondary 

reserve inventories when necessary. 

According to the record, 

implementation of this amendment 

could also reduce costs associated with 

administering the reserve program. A 

significant portion of the Board staff’s 

time is directed at tracking reserve 

inventory by reviewing reports from 

handlers and also performing on-site 

reviews of records and verification of 

handler inventories. Once the reserve is 

released, it is no longer necessary for 

Board staff to track the reserve 

inventory. 

Similar to the Board staff, handlers 

also incur costs in maintaining reserves. 

These costs include the cost of storage 

and the costs associated with tracking 

inventory levels. If the storage time is 

reduced, the cost to handlers will also 

be reduced. 

Witnesses stated that when inventory 

levels reach a minimal amount, the 

costs of tracking inventory at the Board 

and handler level, plus storage costs, 

outweigh any potential benefit from 

carrying inventory in the primary 

reserve. 

According to witnesses, the intent of 

this proposal would be to authorize the 

Board, through informal rulemaking, to 

establish the inventory level at which 

the Board could release reserves when 

levels are minimal. 

The proposed amendment, if 

implemented, has the potential to 

positively impact the market by 

allowing for the sale of more tart 

cherries than the current order provides. 

One witness testified against the 

proposal. The witness stated that no 

quantification of the potential cost 

savings was offered by the proponents. 

The witness suggested as an alternative 

that the Board propose or recommend a 

volume level at which the cost of 

regulation exceeds the benefit. However, 

no such proposal was offered at the 

hearing. 

The proposed amendment would not 

establish a specific quantity at which 

primary reserves would be released. 

Witnesses testified that the intent of the 

proposed amendment is for the 

Secretary to establish the level through 

informal rulemaking after discussion 

and recommendation of the Board. 

Pertinent factors would be considered 

and analyzed during that process. No 

proposal to establish a specific level at 

which the reserve would be released 

was presented at the hearing. The Board 

is made up of a diverse industry group 

that ensures that all issues will be 

discussed, and with USDA oversight, 

the appropriate threshold would be 

established. Establishing the minimum 

inventory level through informal 

rulemaking would ensure broad support 

due to the two-thirds super majority 

vote needed for Board approval and 

recommendation to the Secretary. Once 

the minimum inventory level is 

established, the Board staff would 

administer the reserve release. 

According to the record, providing 

authority to establish a minimum 

inventory level at which reserves would 

be released through the informal 

rulemaking process would provide 

additional flexibility in administering 

the reserve program. If the Board 

ultimately recommends a minimum 

level at which reserves would be 

released, it would help the industry to 

access secondary reserves in certain 

situations. It could also help reduce 

costs associated with the tracking and 

storing of minimal amounts of reserve 

product by handlers and Board staff. 

Based on the record evidence, USDA 

recommends amending the order as 

proposed by the Board by adding 

§ 930.54(d) to authorize the Secretary, 

upon recommendation of the Board, to 

establish a minimum inventory level at 

which all remaining product held in 

reserves would be released to handlers 

for use as free tonnage. 

Material Issue Number 3— 

Establishment of a Minimum Age 

Limitation on Product Placed Into 

Reserves 

The order should be amended to 

establish a minimum age limitation on 

products placed into reserves. 

Currently, there is no age limitation on 

products carried in the reserves. Product 

carried in storage can deteriorate over 

time and is more difficult to sell than 

product stored for a shorter period. 

Section 930.55 of the order specifies 

parameters for cherries placed into 

reserves. Reserve cherries can be in the 

form of frozen, canned, dried, or 

concentrated juice. 

According to witness testimony, the 

marketing order and its inventory 

reserve provisions were crafted with the 

idea that market forces would generally 

define the products carried in the 

reserve. Handlers are given the option of 

carrying whatever form and whatever 

type of product they choose in the 

reserve. There are no quality standards 

applied to products placed into 

reserves, nor is there a limitation 

regarding the age of products that can be 

carried in the reserve. This has created 

a situation where handlers can carry 

product that is several years old in the 

reserve inventories. Witnesses testified 

that because product quality 

deteriorates over time, poor quality 

product is often carried in reserve 

inventory. 

According to the record, one of the 

main rationales for the establishment of 

the reserve program was the concept 

that the release of reserve inventories in 

low production years would support the 

long-term marketing efforts of the 

industry. This can only be achieved if 

the reserve products released are 

acceptable to the market. Establishing a 

minimum age limitation on reserve 

product would prevent product that has 

deteriorated over time from being held 

in reserve inventories. This would 


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ultimately aid the industry in its 

marketing efforts by having better 

quality products available when 

reserves are released to the market. 

One witness testified that the 

marketing order currently has authority 

to regulate the quality of cherries held 

in reserves. If the Board wants to 

regulate the quality of reserve product, 

it should do so through that authority. 

The witness further testified that the 

Board’s proposal to limit the age of 

cherries placed in reserve would not 

prevent handlers from placing lowgrade cherries in reserve, and that such 

cherries can be challenging to sell. 

Other witnesses acknowledged that 

the order contains authority to regulate 

the quality of cherries held in reserves, 

and this can be done through 

establishing minimum grade, quality, 

and condition requirements. However, 

witnesses also testified that the industry 

has chosen not to implement grade and 

quality standards with respect to 

products carried in the reserve. 

According to witness testimony, 

establishing and complying with 

minimum grade and quality standards 

would be expensive to the industry due 

to inspection costs, inventory 

management costs, and added costs 

associated with monitoring and tracking 

product grade. Witnesses testified that a 

more practical solution for the industry 

is to establish an age limitation on 

reserve products. Since tart cherry 

products deteriorate over time and 

generally have a shelf life of up to three 

years according to testimony, placing an 

age limitation of three years on reserve 

product should help to ensure reserve 

product is of marketable quality. 

Based on the record evidence, USDA 

recommends amending § 930.55(b) as 

proposed by the Board to require that 

products placed into reserve inventory 

must have been produced in the current 

or preceding two crop years. 

Material Issue Number 4—Revise 

Voting Requirements Necessary to 

Approve a Board Action 

The order should not be amended to 

revise the number of votes necessary to 

approve a Board action. 

Section 930.32 establishes the quorum 

requirements for Board meetings and 

the voting requirements necessary to 

approve Board actions. This section 

specifies that two-thirds of the members 

of the Board, including alternates acting 

for absent members, shall constitute a 

quorum. It further specifies that for any 

action of the Board to pass, two-thirds 

of the entire Board must vote in favor 

of such action. 

The Board proposed amending the 

voting requirement in § 930.32 to 

specify that for any action of the Board 

to pass, at least two-thirds of those 

present at the meeting must vote in 

support of such action. The quorum 

requirement would not change under 

the proposal. 

Witnesses in favor of this proposal 

believe the current voting requirement 

can give members who are not in 

attendance at meetings an undue 

influence on the outcome of votable 

issues. Witnesses believed that because 

the current requirement for passing a 

Board action is based on a favorable 

vote of at least two-thirds of the entire 

Board membership, any vacant Board 

position at a meeting results in the 

equivalent of a ‘‘no’’ vote on all votable 

issues. Witnesses further testified that 

the current requirement may encourage 

members to not attend a meeting if they 

do not want to discuss the merits of an 

issue, and that their non-attendance has 

an impact on the outcome of any vote 

taken at the meeting. The proposed 

amendment, according to proponents, 

would encourage members to attend 

meetings because they would no longer 

have an impact on the outcome of Board 

actions by virtue of their absence. If the 

proposal is implemented, members 

would have more incentive to attend 

meetings in order to discuss, vote, and 

have an impact on Board actions, 

according to witnesses. Witnesses also 

testified that improved meeting 

attendance would lead to increased 

interaction and discussion of industry 

issues among Board members. 

Witnesses asserted that the current 

voting requirements are unnecessarily 

restrictive. The current requirements 

could allow a small minority of Board 

members to effectively block an action 

that may be favored by the majority of 

the Board. For example, with an 18 or 

19-member Board, six members could 

block an action favored by 13 members. 

An example cited at the hearing 

referenced a specific Board meeting 

where 15 of 19 members were present. 

The required number of votes to pass a 

Board action was 13. It was testified that 

a small minority of three members were 

not supportive of an issue that the 

majority of Board members favored, 

which prevented the Board from taking 

an action it may have otherwise taken. 

Witnesses opposed to this proposed 

change testified that the proposed 

change to the voting requirements could 

create a situation where a minority 

number of Board members could 

approve an action. For example, if the 

Board consisted of 19 members and 

there were 13 members present at a 

meeting, an action could be passed by 

an affirmative vote of nine members. 

Nine members would represent only 47 

percent of the 19 Board members. 

Witnesses opposed to the proposal 

also testified that the proposed change 

could increase the possibility that 

members affiliated with a common sales 

constituency or region could dominate 

the Board and Board actions. This effect 

could be amplified if the proposed 

amendment to § 930.20 (see material 

issue #6) is adopted. That particular 

proposal could result in an increase in 

the number of Board members affiliated 

with a common sales constituency 

under certain circumstances. 

Witness testimony also contended 

that there is no evidence that the current 

voting requirements are ineffective. 

Lacking any evidence to the contrary, 

the arguments used in implementing the 

current voting requirements are as valid 

now as when they were originally 

implemented, according to one witness. 

The contention that a vacant Board 

position at a meeting automatically 

results in a ‘‘no’’ vote on all votable 

issues is not correct. If a Board seat is 

vacant at a meeting, the vacant seat 

would not be recorded in vote counts. 

In contrast however, under the order, 

voting requirements do not change 

based on the number of members 

present at the meeting. It takes a fixed 

number of votes to pass a Board action, 

regardless of the number of members in 

attendance at a meeting. Thus, if a 

member was absent from a meeting, that 

member’s absence would have the same 

impact on a vote as if the member was 

present and voted ‘‘no’’. 

According to statistics presented at 

the hearing regarding attendance at past 

Board meetings, there was nonattendance of members in 20 of the past 

40 Board meetings. Of the 20 meetings 

with members not in attendance, 17 of 

those meetings had one member absent, 

two meetings had two absent members, 

and one meeting had four absences. 

These statistics indicate that lack of 

attendance of Board members has not 

been an overriding problem at Board 

meetings. In fact, only 3.4% of the 

available Board seats have been 

unrepresented in the 40 meetings for 

which statistics were provided. Further, 

the statistics do not indicate there is an 

attendance problem from any particular 

region or district. Given the size of the 

Board (18 or 19 members, depending on 

production levels in the districts), and 

the geographic disbursement of 

members and travel involved to attend 

meetings, the meeting attendance record 

is very high. On a percentage basis, 

nearly 97 percent of available Board 

seats were filled in the 40 meetings for 

which statistics were provided. 


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Record testimony indicated that the 

Board tries to reach consensus on issues 

coming before it. Most actions taken by 

the Board are unanimous or very close 

to unanimous, indicating a high degree 

of support for Board actions. 

The current super-majority voting 

requirements were intentionally 

incorporated into the order when it was 

promulgated and subsequently 

amended. The requirements were 

designed to help ensure a high degree of 

support for issues at the Board level. 

According to the order’s promulgation 

record, the current voting requirements 

were incorporated into the order to 

ensure that the industry majority 

supports actions of the Board, and that 

minority interests are addressed. 

Further, the requirements were intended 

in part to ensure that a single sales 

constituency would not have a 

controlling interest on the Board. The 

record evidence does not refute that 

these same issues are valid today. 

Further, the evidence does not show 

that the current voting requirements are 

having an undue impact on Board 

actions or functions or that lack of 

attendance has caused an undue 

influence on the outcome of Board 

actions. 

The record evidence does not support 

changing the voting requirements under 

the order. For the reasons discussed 

herein, USDA recommends that 

proposed amendment to § 930.32(a) not 

be adopted. 

Material Issue Number 5—Revise 

Nomination and Election Process for 

Handler Members on the Board 

The order should be amended to 

require a handler to receive support 

from handler(s) that handled at least 

five percent of the average production of 

tart cherries handled in the applicable 

district in order to be eligible to 

participate as a candidate in an election 

for Board membership. The order 

should also be amended to require a 

handler to receive support from 

handler(s) that handled at least five 

percent of the average production of tart 

cherries handled in the applicable 

district in order to be elected by the 

industry and recommended to the 

Secretary for Board membership. 

Section 930.23 specifies procedures 

and criteria for growers and handlers to 

be nominated as candidates for Board 

membership. It also specifies 

procedures and criteria for candidates to 

be elected by the industry for 

recommendation to the Secretary for 

Board membership. 

To be nominated as a Board 

candidate, a handler must be nominated 

by one or more handlers, other than the 

nominee, from the applicable district. If 

there are fewer than two handlers in the 

district, a handler can nominate him or 

herself. To be elected by the industry for 

recommendation to the Secretary, the 

successful handler candidate is the 

candidate receiving the most votes. Each 

eligible handler is entitled to one vote, 

and there is no weight given to the 

individual votes based on the volume of 

cherries handled. 

The amendment proposed by the 

Board would provide additional criteria 

for being nominated as a handler 

candidate and being elected by the 

industry for recommendation for a 

handler position on the Board. The 

proposed additional criteria for a person 

to be nominated as a handler candidate 

would require the prospective candidate 

to attain support from another handler 

or handlers whose combined tonnage 

handled represents at least five percent 

of the average production handled in 

the applicable district. If a handler 

attained this five percent support, he or 

she could then be a candidate in the 

election. A successful candidate would 

then be required to similarly receive 

support (through the balloting process) 

from another handler or handlers whose 

combined tonnage represented no less 

than five percent of the average 

production handled in the applicable 

district. Of the candidates who received 

support from handlers representing at 

least five percent of the average 

production in the district, the candidate 

with the most votes would be 

recommended to the Secretary for Board 

membership. 

Witnesses testified that handler 

members on the Board should at least 

have support of a minimum amount of 

tonnage handled in the applicable 

district to help ensure they represent the 

interests of handlers in the district. 

Obtaining support from handlers 

representing at least five percent of the 

volume in the district was considered to 

be reasonable, and would not be an 

overly burdensome amount of support 

to obtain. Witnesses also testified that 

under the order’s current provisions, 

handlers representing a small amount of 

volume could attain and potentially 

control the handler seats on the Board. 

Witnesses indicated that it would not be 

equitable to the handlers representing 

the vast majority of production if this 

situation was to occur. 

Testimony was also provided at the 

hearing regarding application of this 

proposed amendment in conjunction 

with the proposed amendment to 

§ 930.20(g) addressed in material issue 

number six. It was discussed that if a 

potential handler candidate for Board 

membership could not achieve support 

from handlers handling five percent of 

the average production in a district, that 

should not prevent him or her from 

serving on the Board if it would prevent 

a sales constituency conflict from 

occurring as provided in § 930.20(g). (A 

sales constituency conflict is considered 

to exist if two persons from the same 

district are affiliated with the same sales 

constituency.) 

Record testimony supports requiring a 

minimum level of support for a handler 

to be elected to the Board. A provision 

to require members to have support 

from their peers representing at least 

five percent of the volume in the district 

would help to ensure that commercial 

handler interests in the applicable 

district are being represented. Such a 

provision would not preclude a small 

handler from serving on the Board. It 

would only require a handler to garner 

a minimum level of support from 

industry peers in order to serve on the 

Board. The provision would establish a 

minimum threshold of support in terms 

of volume handled to represent the 

constituents in the district. 

However, testimony also was 

provided at the hearing regarding 

application of the proposed amendment 

in conjunction with the proposed 

amendment to § 930.20(g) addressed in 

material issue number six. As discussed 

in material issue number six, USDA 

agrees with testimony indicating that if 

a potential handler candidate for Board 

membership could not achieve support 

from handlers handling five percent of 

the average production in a district, that 

should not prevent him or her from 

serving on the Board if it would prevent 

a sales constituency conflict from 

occurring as provided in § 930.20(g). (A 

sales constituency conflict is considered 

to exist if two persons from the same 

district are affiliated with the same sales 

constituency.) 

Record evidence supports adopting 

the Board’s proposal by amending 

§ 930.23(b)(2) and § 930.23(c)(3)(ii) of 

the order to require handler candidates 

seeking nomination to the Board to 

receive support from handler(s) that 

handled at least five percent of the 

average production of tart cherries 

handled in the district in which he or 

she is seeking the position. Record 

evidence also supports adding 

provisions to § 930.23(b)(2) and 

§ 930.23(c)(3)(ii) that would conform 

this section to the proposed 

amendments to § 930.20(g) regarding 

sales constituency affiliation. USDA 

recommends adoption of this 

amendment as proposed, with changes 

as noted. 


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Material Issue Number 6—Revise 

Board Membership Affiliation 

Requirements 

The order should be amended to 

revise Board membership affiliation 

requirements to allow more than one 

Board member per district from being 

affiliated with the same sales 

constituency if it cannot be avoided. 

Section 930.20(g) of the order 

currently provides that no more than 

one Board member may be from, or 

affiliated with, a single sales 

constituency in those districts with 

more than one seat on the Board. A sales 

constituency is defined in § 930.16 as 

‘‘* * * a common marketing 

organization or brokerage firm or 

individual representing a group of 

handlers or growers * * *’’ The purpose 

of this provision is to achieve a fair and 

balanced representation on the Board 

and to prevent any one sales 

constituency from gaining control of the 

Board. 

The proposed amendment would add 

a proviso to the prohibition limiting the 

number of Board members from a sales 

constituency in districts with more than 

one member. The proviso states that the 

sales constituency prohibition shall not 

apply in a district where such a conflict 

cannot be avoided. 

Witnesses supporting this proposed 

amendment testified that the current 

order provisions recently prevented 

District 7, the State of Utah, from 

attaining its full complement of 

positions on the Board. Section 

930.20(b) provides that districts with 

greater than 10 million pounds of 

production and less than 40 million 

pounds are entitled to two seats on the 

Board. Based on this provision, the State 

of Utah is entitled to two positions on 

the Board. However, a situation 

occurred in recent years where there 

were no eligible persons willing to serve 

on the Board from Utah who were 

affiliated with a different sales 

constituency than the existing Board 

member, as required by Section 

930.30(g). Witnesses testified that 

despite extensive outreach efforts, they 

were only able to locate one eligible 

candidate from a different sales 

constituency, but that person had no 

interest in serving on the Board. 

Because of this situation, there was one 

vacant Utah seat on the Board. Utah was 

unable to achieve its full complement of 

positions on the Board pursuant to 

§ 930.20(b) of the order. Witnesses 

believed that a fair and equitable 

process was not being well served in 

this situation, and that a conflict exists 

between sections 930.20(b), which 

allocates Utah two positions on the 

Board, and 930.20(g), which prevents 

two members from the same sales 

constituency in the same district from 

serving on the Board. 

The proposed amendment is intended 

to prevent this type of situation from 

occurring. Witnesses testified that a 

district’s right to representation on the 

Board is more important than the 

requirement that Board members from 

the same District not be affiliated with 

the same sales constituency. 

One witness expressed reservations 

about the proposed amendment. He 

indicated that a potential increase in the 

number of Board members affiliated 

with the same sales constituency may 

not promote diversity of views on the 

Board. The witness also stated that this 

proposal would not be desirable if the 

proposed change to the voting 

requirements is adopted. The witness 

suggested an alternative idea would be 

to divide the State of Utah into two 

districts for Board representation 

purposes. However, the witness did not 

present a specific alternative proposal or 

any information or analysis 

demonstrating how this would address 

the problem. 

The record indicates that the Board’s 

proposal would address the issue of 

ensuring that the various districts under 

the order would be able to maintain 

their share of representation on the 

Board. 

The provisions of the proposed 

amendment would allow two Board 

members from a district to be affiliated 

with the same sales constituency if it 

cannot be avoided. An example given at 

the hearing regarding when a sales 

constituency conflict could not be 

avoided was if there were no other 

persons willing and able to serve on the 

Board from a particular district from a 

different sales constituency. Witnesses 

were questioned about the possible 

implementation of this proposed 

amendment and the proposed 

amendment under material issue 

number five that would require a 

handler Board member candidate to 

achieve support from handlers 

representing at least five percent of the 

production in the District in order to 

run for a position and be elected to the 

Board. Some witnesses testified that if 

the only qualified candidate in a 

particular district that was not affiliated 

with the same sales constituency as the 

other Board member from that district 

could not achieve the five percent 

support, then that person should be able 

to serve on the Board to avoid having 

two members from the same district 

affiliated with the same sales 

constituency. Other witnesses testified 

that if such a situation occurred, the 

candidate should not be allowed to 

serve on the Board, and if another 

qualified candidate from the same sales 

constituency as the existing member 

was available and met the five percent 

criterion, that candidate should be able 

to serve. 

The record is clear that if there are no 

willing and eligible candidates available 

to serve on the Board from a different 

sales constituency than the existing 

member(s), then it should be 

permissible to allow two members from 

the same sales constituency to serve so 

that each district achieves its share of 

representation. In order to appropriately 

address the issue that generated this 

proposal while avoiding two members 

on the Board from the same sales 

constituency, USDA concludes that it is 

reasonable to not apply the five percent 

requirements discussed in material 

issue number five in these 

circumstances. Accordingly, as 

provided in material issue number five, 

language is added to conform and 

clarify the two sections of the order. 

Record evidence supports amending 

§ 930.20(g) to revise Board membership 

affiliation requirements to allow more 

than one Board member per district 

from being affiliated with the same sales 

constituency if such a conflict cannot be 

avoided. USDA recommends adoption 

of this amendment as proposed. 

Material Issue Number 7—Update 

Order Language 

Section 930.23 of the order should be 

revised to update order language to 

more accurately reflect grower and 

handler participation in the nomination 

and election process in districts with 

only one Board representative. Section 

930.20 establishes the calculations for 

the number of representatives on the 

Board to which each district is entitled. 

Based on the calculations established in 

§ 930.20, the number of Board 

representatives can vary from year to 

year due to shifts in production levels 

in various districts. 

Sections 930.23(b)(5) and (c)(4) 

specifically reference Districts 5, 6, 8 

and 9 in regard to the nomination and 

election process. Those were the 

districts entitled to one Board seat when 

the order was initially promulgated. 

However, districts that are entitled to 

one Board seat have changed over time 

due to shifts in production. Amending 

§ 930.23(b)(5) and (c)(4) by removing the 

specific references to Districts 5, 6, 8 

and 9 and replacing it with generic 

language to cover any district that is 

entitled to only one Board 

representative based on the 

representation calculation established in 

§ 930.20 would update order language to 


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accommodate changes in production 

patterns in the tart cherry industry. This 

amendment is intended to simply 

update language rather than alter the 

meaning of order provisions in any way. 

Witnesses supported this proposed 

amendment at the hearing and there was 

no opposition expressed. 

The record evidence supports 

amending § 930.23(b)(5) and (c)(4) as 

proposed. 

Conforming Changes 

The Agricultural Marketing Service 

also proposed to make such changes as 

may be necessary to the order to 

conform to any amendment that may 

result from the hearing. Except as 

previously discussed, the Department 

has identified no additional conforming 

changes. 

Small Business Considerations 

Pursuant to the requirements set forth 

in the Regulatory Flexibility Act (RFA), 

AMS has considered the economic 

impact of this action on small entities. 

Accordingly, AMS has prepared this 

initial regulatory flexibility analysis. 

The purpose of the RFA is to fit 

regulatory actions to the scale of 

business subject to such actions so that 

small businesses will not be unduly or 

disproportionately burdened. Marketing 

orders and amendments thereto are 

unique in that they are normally 

brought about through group action of 

essentially small entities for their own 

benefit. 

Small agricultural producers have 

been defined by the Small Business 

Administration (SBA) (13 CFR 121.201) 

as those having annual receipts of less 

than $750,000. Small agricultural 

service firms, which include handlers 

regulated under the order, are defined as 

those with annual receipts of less than 

$6,500,000. 

There are approximately 40 handlers 

of tart cherries subject to regulation 

under the order and approximately 900 

producers of tart cherries in the 

regulated area. A majority of the 

producers and handlers are considered 

small entities according to the SBA’s 

definition. 

The geographic region regulated 

under the order covers the states of 

Michigan, New York, Oregon, 

Pennsylvania, Utah, Washington, and 

Wisconsin. Acreage devoted to tart 

cherry production in the regulated area 

has declined in recent years. According 

to data presented at the hearing, bearing 

acreage in 1987–88 totaled 50,050 acres; 

by 2006–2007 it had declined to 37,200 

acres. Michigan accounts for 74 percent 

of total U.S. bearing acreage with 27,700 

bearing acres. Utah is second, with a 

reported 2,800 acres, or approximately 

eight percent of the total. The remaining 

states’ acreage ranges from 700 to 2,000 

acres. 

Production of tart cherries can 

fluctuate widely from year to year. The 

magnitude of these fluctuations is one of 

the most pronounced for any 

agricultural commodity in the United 

States, and is due in large part to 

weather related conditions during the 

bloom and growing seasons. This 

fluctuation in supplies presents a 

marketing challenge for the tart cherry 

industry because demand for the 

product is relatively static. In addition, 

the demand for tart cherries is inelastic, 

which means a change in the supply has 

a proportionately larger change in the 

price level. 

Authorities under the order include 

volume regulation, promotion and 

research, and grade and quality 

standards. Volume regulation is used 

under the order to augment supplies 

during short supply years with product 

placed in reserves during large supply 

years. This practice is intended to 

reduce the annual fluctuations in 

supplies and corresponding fluctuations 

in prices. 

The Board is comprised of 

representatives from all producing areas 

based on the volume of cherries 

produced in those areas. The Board 

consists of a mix of handler and grower 

members, and a member that represents 

the public. Board meetings where 

regulatory recommendations and other 

decisions are made are open to the 

public. All members are able to 

participate in Board deliberations, and 

each Board member has an equal vote. 

Others in attendance at meetings are 

also allowed to express their views. 

The Board appointed a subcommittee 

to consider amendments to the 

marketing order. The subcommittee met 

several times for this purpose, and 

ultimately recommended several 

amendments to the order. The Board 

subsequently requested that USDA 

conduct a hearing to consider the 

proposed amendments. The views of all 

participants were considered 

throughout this process. 

In addition, the hearing to receive 

evidence on the proposed amendments 

was open to the public and all 

interested parties were invited and 

encouraged to participate and express 

their views. 

The proposed amendments are 

intended to provide additional 

flexibility in administering the volume 

control provisions of the order, and to 

update Board nomination, election, and 

membership requirements. The 

amendments are intended to improve 

the operation and administration of the 

order. Record evidence indicates the 

proposals are intended to benefit all 

producers and handlers under the order, 

regardless of size. 

Proposal 1—Adding the Authority to 

Change the Primary Reserve Capacity 

The proposal described in Material 

Issue No. 1 of this recommended 

decision would amend § 930.50 of the 

order to authorize changing the primary 

reserve capacity associated with the 

volume provisions of the order through 

informal rulemaking. Changing the 

reserve capacity currently requires 

amendment of the order through the 

formal rulemaking process. 

The order establishes a fixed quantity 

of 50-million pounds of tart cherries and 

tart cherry products that can be held in 

the primary reserve. Any reserve 

product in excess of the 50-millionpound limitation must be placed in the 

secondary reserve. 

Free tonnage product can be sold to 

any market outlet, but most shipments 

are sold domestically, which is 

considered the primary market. Reserve 

product can be used only in specific 

outlets which are considered secondary 

markets. These secondary markets 

include development of export markets, 

new product development, new 

markets, and government purchases. 

When the order was promulgated, a 

50-million-pound limitation was placed 

on the capacity of the primary reserve. 

Proponents of the current order 

proposed a limitation on the quantity of 

product that could be placed into the 

primary reserve. That limitation was 

incorporated into the order, and can 

only be changed through the formal 

rulemaking process. 

Economic data presented when the 

order was promulgated indicated that a 

reserve program could benefit the 

industry by managing fluctuating 

supplies. Witnesses at the February and 

March 2007 hearing indicated the order 

has been successful in this regard. 

However, the record indicated that the 

order could be more flexible in allowing 

modifications to the 50-million-pound 

limitation should conditions warrant 

such a change in the future. 

If the reserve capacity was changed, 

costs associated with storing product in 

reserves could also change. In addition, 

to the extent such a change could affect 

supplies in the marketplace; returns to 

both growers and handlers could also be 

affected. 

Any Board recommendation to change 

the reserve capacity would be required 

to be implemented through the informal 

rulemaking process. As part of the 

informal rulemaking process, USDA 


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expects that any Board recommendation 

would include an analysis of the 

pertinent factors and issues, including 

the impact of a proposed regulation on 

producers and handlers. Any change to 

the reserve capacity would be 

implemented only with analysis of the 

expected economic impact on the 

affected entities. 

Proposal 2—Adding the Authority To 

Establish a Minimum Inventory Level 

at Which Reserves Would Be Released 

The proposal described in Material 

Issue No. 2 would amend § 930.54 of the 

order to provide the Board with the 

authority to establish a minimum 

inventory level at which reserves would 

be released and made available to 

handlers as free tonnage. If 

implemented, the proposed amendment 

would allow the Board to clear out the 

primary reserve and subsequently the 

secondary reserve when a specified 

minimum inventory level of tart 

cherries is reached. The specified 

minimum level would be established 

through the informal rulemaking 

process. 

Under current order provisions, 

handlers cannot access the secondary 

reserve until the primary reserve is 

empty. Based on current language of the 

order, one handler who has not 

completely disposed of or otherwise 

fulfilled its reserve obligation can 

prevent access to the secondary reserve. 

The proposed amendment would 

allow the Board to clear out the primary 

reserve when inventory levels are at a 

minimum level in order to provide the 

industry access to secondary reserve 

inventories. 

If the amendment were implemented, 

costs to both handlers and the Board 

could be reduced. Handlers incur costs 

in maintaining reserves. According to 

the record, these costs include the cost 

of storage, which can be in the range of 

$.01 per pound per month. Handlers 

also incur costs associated with tracking 

their own inventory levels. Witnesses 

stated that when inventory levels reach 

a minimal amount the costs of tracking 

inventory outweighs the benefit from 

carrying inventory in the primary 

reserve. 

A significant portion of the Board 

staff’s time is directed at tracking 

reserve inventory maintained at 

handlers’ facilities. Hearing witnesses 

testified that while it is difficult to 

quantify the exact value of the Board 

staff’s time to conduct these activities, 

the time could be better spent on other 

industry issues, and it is unnecessary to 

track minimal levels of inventory. 

The proposed amendment, if 

implemented, could have a positive 

impact on the market. As inventories are 

released from the reserves, products 

could be sold, generating revenue for 

the industry. This proposed 

amendment, if implemented, is 

expected to reduce costs to handlers and 

the Board, thus having a positive 

economic impact. 

Proposal 3—Establishing an Age 

Limitation on Products Placed Into 

Reserves 

The proposal described in Material 

Issue No. 3 would amend § 930.55 to 

require that products placed in reserves 

must have been produced in the current 

or immediately preceding two crop 

years. If implemented, this proposed 

amendment would allow the Board to 

place an age limit on products carried 

in the reserve. The purpose of the 

amendment would be to help ensure 

that products of saleable quality are 

maintained in reserve inventories. 

Witness supported the proposed 

amendment by stating that it would add 

credibility to product quality for all 

products carried in the reserve. 

Currently, handlers can carry products 

they have no intention of selling just to 

meet their reserve obligation. This 

amendment would require handlers to 

rotate product in their reserve 

inventory, thus preventing them from 

maintaining the same product in the 

reserve year after year. Product held in 

inventory tends to deteriorate over time. 

When reserve product is ultimately 

released for sale to meet market 

demand, this proposed amendment 

would help ensure the reserve product 

available is in saleable condition and 

can satisfy the market’s needs. Assuring 

product is available to satisfy the market 

helps to foster long term market 

stability. 

In terms of costs, handlers may 

experience some minimal costs 

associated with periodically rotating 

product through their reserve inventory. 

It would be difficult to estimate such 

costs because they would vary 

depending upon each handler’s 

operation. To the extent costs would be 

increased, they would be proportionate 

to each handler’s share of the entire 

industry’s reserve inventory. Each 

handler’s reserve inventory obligation is 

based on the handler’s share of the total 

crop handled. Thus, small handlers 

would not be disproportionately 

burdened. 

It is anticipated that the benefits of 

providing a good quality product in 

reserves to ultimately supply markets 

when needed would outweigh any costs 

associated with implementation of this 

amendment. 

Proposal 4—Revision of Voting 

Requirements To Approve Board 

Actions 

The proposal submitted by the Board 

in Material Issue No. 4 would revise 

voting requirements under § 930.32 of 

the order. Current requirements provide 

that any action of the Board requires a 

two-thirds vote of the entire Board. The 

proposal would allow passage of a 

Board action with a two-thirds vote of 

those present at a meeting. USDA 

denied this proposal and will not 

change the voting requirements for 

reasons specified earlier in this 

recommended decision. 

Proposal 5—Revision of Nomination 

and Election Process for Handler 

Members on the Board 

The proposal submitted by the Board 

in Material Issue No. 5 relates to 

nomination and election of Board 

members under § 930.23 of the order. It 

would require a handler to receive 

support from handlers that handled at 

least five percent of the average 

production of tart cherries in the 

applicable district in order to be a 

candidate and to be elected by the 

industry and recommended to the 

Secretary for Board membership. 

Under the current order, there is no 

accounting for handler volume in the 

nomination and balloting process. Each 

handler is entitled to one equal vote. 

This proposal would continue to allow 

each handler to have one vote, but 

would also require handler candidates 

to be supported by handlers 

representing at least five percent of the 

average production in the applicable 

district to be eligible to run for a Board 

position and to be elected by the 

industry for recommendation to the 

Secretary. This would help to ensure 

that handler members on the Board 

represent the interests of handlers in 

their district that account for at least a 

minimal percentage of the volume in the 

district. 

This proposed amendment is not 

anticipated to have a significant 

economic impact on small businesses. It 

only affects the nomination and election 

criteria for membership on the Board by 

adding volume as an element of support 

to help ensure that Board membership 

reflects the interests of its constituency. 

All handlers, regardless of size, will 

continue to be able to participate in the 

nomination and election process. The 

process would continue to allow for 

both small and large handlers to be 

represented on the Board. 


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31728 Federal Register / Vol. 75, No. 107 / Friday, June 4, 2010 / Proposed Rules 

Proposal 6—Revision of Board 

Membership Affiliation Requirements 

The Board’s proposal discussed in 

Material Issue No. 6 would amend 

§ 930.20 to allow more than one Board 

member to be affiliated with the same 

sales constituency from the same 

district, if such a conflict cannot be 

avoided. 

Currently, § 930.20 does not allow 

more than one Board member to be 

affiliated with the same sales 

constituency from the same district 

under any circumstances. The purpose 

of this provision is to prevent any one 

sales constituency from having a 

controlling influence on Board issues 

and actions. However, a situation 

occurred in District 7, Utah, where this 

particular provision of the order did not 

allow the district from having two 

representatives on the Board, as it was 

entitled to under section 930.20 (b) of 

the order. In that situation, the only 

candidates willing to serve on the Board 

from Utah were affiliated with the same 

sales constituency. Thus Utah was only 

able, under the marketing order rules, to 

seat one of the two Board 

representatives it was entitled to. 

The proposed amendment is designed 

to prevent this problem from occurring 

in the future by allowing more than one 

Board member affiliated with the same 

sales constituency to represent a 

district, if such a sales constituency 

conflict cannot be avoided. The hearing 

record is clear that the sales 

constituency provision should not 

prevent a district from having its 

allocated number of seats on the board 

if there are eligible candidates willing to 

serve on the Board. 

This amendment is not expected to 

have an economic impact on growers or 

handlers. It relates to representation on 

the Board, and is intended to help 

ensure each area covered under the 

order has the opportunity to achieve its 

allocated representation on the Board. 

Proposal 7—Update Order Language to 

Accurately Reflect Grower and Handler 

Participation in the Nomination and 

Election Process in Districts With Only 

One Board Representative 

The proposal described in Material 

Issue No. 7 would amend § 930.23 to 

revise and update order language to 

more accurately reflect grower and 

handler participation in the nomination 

and election process in districts with 

only one Board representative. 

Sections 930.23(b)(5) and (c)(4) 

specifically reference Districts 5, 6, 8 

and 9 in regard to the nomination and 

election process. Those were the 

districts entitled to one Board seat when 

the order was initially promulgated. 

However, districts that are entitled to 

one Board seat have changed over time 

due to shifts in production. Amending 

§ 930.23(b)(5) and (c)(4) by removing the 

specific references to Districts 5, 6, 8 

and 9 and replacing it with generic 

language to cover any district that is 

entitled to only one Board 

representative based on the 

representative calculation established in 

§ 930.20 would update order language to 

better reflect the constantly changing 

tart cherry industry. 

This amendment updates order 

language to remove incorrect references 

to district representation in the event 

production shifts occur. It has no 

economic impact on handlers, growers, 

or any other entities. 

Interested persons were invited to 

present evidence at the hearing on the 

probable regulatory and informational 

impacts of the proposed amendments to 

the order on small entities. The record 

evidence is that some of the proposed 

amendments may result in some 

minimal cost increases while others will 

result in cost decreases. To the extent 

there are any cost increases, the benefits 

of the proposed changes are expected to 

outweigh the costs. In addition, changes 

in costs as a result of these amendments 

would be proportional to the size of 

businesses involved and would not 

unduly or disproportionately impact 

small entities. The informational impact 

of proposed amendments is addressed 

in the Paperwork Reduction Act 

discussion that follows. 

USDA has not identified any relevant 

Federal rules that duplicate, overlap or 

conflict with this proposed rule. These 

amendments are intended to improve 

the operation and administration of the 

order to the benefit of the industry. 

Board meetings regarding these 

proposals as well as the hearing date 

and location were widely publicized 

throughout the tart cherry industry, and 

all interested persons were invited to 

attend the meetings and the hearing, 

and to 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. 

Finally, interested persons are invited to 

submit information on the regulatory 

and informational impacts of this action 

on small businesses. 

A 30-day comment period is provided 

to allow interested persons to respond 

to this proposal. Thirty days is deemed 

appropriate because these proposed 

changes have been widely publicized 

and the Board and industry would like 

to avail themselves of the opportunity to 

implement the changes as soon as 

possible. All written exceptions timely 

received will be considered and a 

grower referendum will be conducted 

before any of these proposals are 

implemented. 

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. 

Paperwork Reduction Act 

Information collection requirements 

for Part 930 are currently approved by 

the Office of Management and Budget 

(OMB), under OMB Number 0581–0177, 

Tart Cherries Grown in the States of 

Michigan, New York, Pennsylvania, 

Oregon, Utah, Washington, and 

Wisconsin. Implementation of these 

proposed amendments would not trigger 

any changes to those requirements. It is 

possible that a change to the reporting 

requirements may occur in the future if 

the Board believes it would be necessary 

to assist in program compliance efforts. 

Should any such changes become 

necessary in the future, they would be 

submitted to OMB for approval. 

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. 

Civil Justice Reform 

The amendments to Marketing Order 

930 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 this proposal. 

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 


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Federal Register / Vol. 75, No. 107 / Friday, June 4, 2010 / Proposed Rules 31729 

no later than 20 days after the date of 

the entry of the ruling. 

Rulings on Briefs of Interested Persons 

Briefs, proposed findings and 

conclusions, and the evidence in the 

record were considered in making the 

findings and conclusions set forth in 

this recommended decision. To the 

extent that the suggested findings and 

conclusions filed by interested persons 

are inconsistent with the findings and 

conclusions of this recommended 

decision, the requests to make such 

findings or to reach such conclusions 

are denied. 

General Findings 

The findings hereinafter set forth are 

supplementary to the findings and 

determinations which were previously 

made in connection with the issuance of 

the marketing agreement and order; and 

all 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. 

(1) The marketing agreement and 

order, as amended, and as hereby 

proposed to be further amended, and all 

of the terms and conditions thereof, 

would tend to effectuate the declared 

policy of the Act; 

(2) The marketing agreement and 

order, as amended, and as hereby 

proposed to be further amended, 

regulate the handling of tart cherries 

grown in the production area (the States 

of Michigan, New York, Oregon, 

Pennsylvania, Utah, Washington, and 

Wisconsin) in the same manner as, and 

are applicable only to, persons in the 

respective classes of commercial and 

industrial activity specified in the 

marketing agreement and order upon 

which a hearing has been held; 

(3) The marketing agreement and 

order, as amended, and as hereby 

proposed to be further amended, are 

limited in their application to the 

smallest regional production area which 

is practicable, consistent with carrying 

out the declared policy of the Act, and 

the issuance of several orders applicable 

to subdivisions of the production area 

would not effectively carry out the 

declared policy of the Act; 

(4) The marketing agreement and 

order, as amended, and as hereby 

proposed to be further amended, 

prescribe, insofar as practicable, such 

different terms applicable to different 

parts of the production area as are 

necessary to give due recognition to the 

differences in the production and 

marketing of tart cherries grown in the 

production area; and 

(5) All handling of tart cherries grown 

in the production area as defined in the 

marketing agreement and order, is in the 

current of interstate or foreign 

commerce or directly burdens, 

obstructs, or affects such commerce. 

A 30-day comment period is provided 

to allow interested persons to respond 

to this proposal. Thirty days is deemed 

appropriate because these proposed 

changes have been widely publicized 

and implementation of the changes, if 

adopted, would be desirable to benefit 

the industry as soon as possible. All 

written exceptions timely received will 

be considered and a grower referendum 

will be conducted before any of these 

proposals are implemented. 

List of Subjects in 7 CFR Part 930 

Marketing agreements, Reporting and 

recordkeeping requirements, Tart 

cherries. 

For the reasons set forth in the 

preamble, 7 CFR Part 930 is proposed to 

be amended as follows: 

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. Revise paragraph (g) of § 930.20 to 

read as follows: 

§ 930.20 Establishment and membership. 

* * * * * 

(g) 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 affiliated with, a single 

sales constituency in those districts 

having more than one seat on the Board; 

Provided, That this prohibition shall not 

apply in a district where such a conflict 

cannot be avoided. There is no 

prohibition on the number of Board 

members from differing districts that 

may be elected from a single sales 

constituency which may have 

operations in more than one district. 

However, as provided in § 930.23, a 

handler or grower may only nominate 

Board members and vote in one district. 

* * * * * 

3. Revise paragraphs (b)(2) and (b)(5), 

redesignate paragraph (c)(3) as 

paragraph (c)(3)(i), add a new paragraph 

(c)(3)(ii), and revise paragraph (c)(4) of 

§ 930.23 to read as follows: 

§ 930.23 Nomination and election. 

* * * * * 

(b) * * * 

(2) In order for the name of a handler 

nominee to appear on an election ballot, 

the nominee’s name must be submitted 

with a petition form, to be supplied by 

the Secretary or the Board, which 

contains the signature of one or more 

handler(s), other than the nominee, from 

the nominee’s district who is or are 

eligible to vote in the election and that 

handle(s) a combined total of no less 

than five percent (5%) of the average 

production, as that term is used 

§ 930.20, handled in the district. 

Provided, that this requirement shall not 

apply if its application would result in 

a sales constituency conflict as provided 

in § 930.20(g). The requirement that the 

petition form be signed by a handler 

other than the nominee shall not apply 

in any district where fewer than two 

handlers are eligible to vote. 

* * * * * 

(5) In districts entitled to only one 

Board member, both growers and 

handlers may be nominated for the 

district’s Board seat. Grower and 

handler nominations must follow the 

petition procedures outlined in 

paragraphs (b)(1) and (b)(2) of this 

section. 

* * * * * 

(c) * * * 

(3) * * * 

(ii) To be seated as a handler 

representative in any district, the 

successful candidate must receive the 

support of handler(s) that handled a 

combined total of no less than five 

percent (5%), of the average production, 

as that term is used in § 930.20, handled 

in the district; Provided, that this 

paragraph shall not apply if its 

application would result in a sales 

constituency conflict as provided in 

§ 930.20(g). 

(4) In districts entitled to only one 

Board member, growers and handlers 

may vote for either the grower or 

handler nominee(s) for the single seat 

allocated to those districts. 

* * * * * 

4. Revise paragraph (i) of § 930.50 to 

read as follows: 

§ 930.50 Marketing policy. 

* * * * * 

(i) Restricted Percentages. Restricted 

percentage requirements established 

under paragraphs (b), (c), or (d) of this 

section may be fulfilled by handlers by 

either establishing an inventory reserve 

in accordance with § 930.55 or § 930.57 

or by diversion of product in accordance 

with § 930.59. In years where required, 

the Board shall establish a maximum 

percentage of the restricted quantity 

which may be established as a primary 


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31730 Federal Register / Vol. 75, No. 107 / Friday, June 4, 2010 / Proposed Rules 

inventory reserve such that the total 

primary inventory reserve does not 

exceed 50-million pounds; Provided, 

That such 50-million-pound quantity 

may be changed upon recommendation 

of the Board and approval of the 

Secretary. Any such change shall be 

recommended by the Board on or before 

September 30 of any crop year to 

become effective for the following crop 

year, and the quantity may be changed 

no more than one time per crop year. 

Handlers will be permitted to divert (at 

plant or with grower diversion 

certificates) as much of the restricted 

percentage requirement as they deem 

appropriate, but may not establish a 

primary inventory reserve in excess of 

the percentage established by the Board 

for restricted cherries. In the event 

handlers wish to establish inventory 

reserve in excess of this amount, they 

may do so, in which case it will be 

classified as a secondary inventory 

reserve and will be regulated 

accordingly. 

* * * * * 

5. Add a new paragraph (d) to 

§ 930.54 to read as follows: 

§ 930.54 Prohibition on the use or 

disposition of inventory reserve cherries. 

* * * * * 

(d) Should the volume of cherries 

held in the primary inventory reserves 

and, subsequently, the secondary 

inventory reserves reach a minimum 

amount, which level will be established 

by the Secretary upon recommendation 

from the Board, the products held in the 

respective reserves shall be released 

from the reserves and made available to 

the handlers as free tonnage. 

6. Revise paragraph (b) of § 930.55 to 

read as follows: 

§ 930.55 Primary inventory reserves. 

* * * * * 

(b) The form of the cherries, frozen, 

canned in any form, dried, or 

concentrated juice, placed in the 

primary inventory reserve is at the 

option of the handler. The product(s) 

placed by the handler in the primary 

inventory reserve must have been 

produced in either the current or the 

preceding two crop years. Except as may 

be limited by § 930.50(i) or as may be 

permitted pursuant to §§ 930.59 and 

930.62, such inventory reserve portion 

shall be equal to the sum of the products 

obtained by multiplying the weight or 

volume of the cherries in each lot of 

cherries acquired during the fiscal 

period by the then effective restricted 

percentage fixed by the Secretary; 

Provided, That in converting cherries in 

each lot to the form chosen by the 

handler, the inventory reserve 

obligations shall be adjusted in 

accordance with uniform rules adopted 

by the Board in terms of raw fruit 

equivalent. 

* * * * * 

Dated: May 27, 2010. 

Rayne Pegg 

Administrator, Agriculture Marketing Service. 

[FR Doc. 2010–13348 Filed 6–3–10; 8:45 am] 

BILLING CODE 3410–02–P 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Part 1215 

[Document Number AMS–FV–10–0010] 

Popcorn Promotion, Research, and 

Consumer Information Order; 

Reapportionment 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Proposed rule. 

SUMMARY: This rule proposes to reduce 

the Popcorn Board (Board) membership 

from nine to five members to reflect the 

consolidation of the popcorn industry 

and therefore, fewer popcorn processors 

in the industry. In accordance with the 

Popcorn Promotion, Research and 

Consumer Information Order (Order) 

which is authorized by the Popcorn 

Promotion, Research and Consumer 

Information Act (Act), the number of 

members on the Board may be changed 

by regulation; provided, that the Board 

consist of not fewer than four members 

and not more than nine members. In 

addition, the Order states that for 

purposes of nominating and appointing 

processors to the Board, the Secretary 

may take into account the geographical 

distribution of popcorn processors. 

DATES: Comments must be received by 

July 6, 2010. 

ADDRESSES: Interested persons are 

invited to submit written comments on 

the Internet at: http:// 

www.regulations.gov or to the Research 

and Promotion Branch, Fruit and 

Vegetable Programs, Agricultural 

Marketing Service (AMS), U.S. 

Department of Agriculture, 

(Department) Room 0632–S, Stop 0244, 

1400 Independence Avenue, SW., 

Washington, DC 20250–0244; facsimile: 

(202) 205–2800. 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 

above office during regular business 

hours or it can be viewed at http:// 

www.regulations.gov. All comments 

received will be posted without change, 

including any personal information 

provided. 

FOR FURTHER INFORMATION CONTACT: 

Deborah Simmons, Marketing 

Specialist, Research and Promotion 

Branch, Fruit and Vegetable Programs, 

AMS, U.S. Department of Agriculture, 

Stop 0244, 1400 Independence Avenue, 

SW., Room 0632–S, Washington, DC 

20250–0244; telephone: (888) 720–9917; 

facsimile: (202) 205–2800; or electronic 

mail: deborah.simmons@ams.usda.gov. 

SUPPLEMENTARY INFORMATION: This rule 

is issued under the Popcorn Promotion, 

Research, and Consumer Information 

Order [7 CFR part 1215]. The Order is 

authorized under the Popcorn 

Promotion, Research and Consumer 

Information Act [7 U.S.C. 7481–7491]. 

Executive Order 12866 

The Office of Management and Budget 

(OMB) has waived the review process 

required by Executive Order 12866 for 

this action. 

Executive Order 12988 

This rule has been reviewed under 

Executive Order 12988, Civil Justice 

Reform. The rule is not intended to have 

retroactive effect and will not affect or 

preempt any other State or Federal law 

authorizing promotion or research 

relating to an agricultural commodity. 

The Act provides that any person 

subject to an order may file a written 

petition with the Department if they 

believe that the order, any provision of 

the order, or any obligation imposed in 

connection with the order, is not 

established in accordance with law. In 

any petition, the person may request a 

modification of the order or an 

exemption from the order. The 

petitioner is afforded the opportunity 

for a hearing on the petition. After a 

hearing, the Department would rule on 

the petition. The Act provides that the 

district court of the United States in any 

district in which the petitioner resides 

or conducts business shall have the 

jurisdiction to review the Department’s 

ruling on the petition, provided a 

complaint is filed not later than 20 days 

after the date of the entry of the ruling. 

Initial Regulatory Flexibility Act and 

Paperwork Reduction Act 

In accordance with the Regulatory 

Flexibility Act (RFA) [5 U.S.C. 601– 

612], AMS has considered the economic 

impact of this action on the processors 

that would be affected by this rule. The 

purpose of the RFA is to fit regulatory 

action to scale on businesses subject to 

such action so that small businesses will 

not be disproportionately burdened. 


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