26956 Federal Register / Vol. 61, No. 104 / Wednesday, May 29, 1996 / Proposed Rules

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Docket No. AO–370–A5; FV93–930–2]

Tart Cherries Grown in the States of

Michigan, New York, Pennsylvania,

Oregon, Utah, Washington, and

Wisconsin; Secretary’s Decision and

Referendum Order on the Proposed

Marketing Agreement and Order

AGENCY: Agricultural Marketing Service,

USDA.

ACTION: Proposed rule and referendum

order.

SUMMARY: This decision proposes the

issuance of a marketing agreement and

order for tart cherries grown in certain

designated States and provides growers

and processors the opportunity to vote

in a referendum to determine if they

favor the proposed order. For the

purposes of this document, the term

‘‘Cherries’’ refers to all tart/sour cherry

varieties grown in the proposed

production area, which consists of the

States of Michigan, New York,

Pennsylvania, Oregon, Utah,

Washington, and Wisconsin. The

proposed order would authorize volume

regulation, grade, size, and maturity

regulations, and mandatory inspection.

It would also authorize production,

processing, and marketing research and

promotion projects, including paid

advertising. The order would be

administered by an 18 member

administrative board consisting of 17

growers and handlers and one public

member, and would be financed by

assessments on handlers of tart cherries

grown in the production area. A primary

objective of this program would be to

improve producer returns by

strengthening consumer demand

through volume control and quality

assurance mechanisms. Tart cherry

producers and processors would vote in

a referendum to determine if they favor

issuance of the proposed marketing

order.

DATES: The referendum shall be

conducted from June 12, 1996, through

July 10, 1996. The representative period

for the purpose of the referendum

herein ordered is July 1, 1995, through

May 31, 1996.

FOR FURTHER INFORMATION CONTACT:

(1) R. Charles Martin or Kenneth G.

Johnson, Marketing Order

Administration Branch, Fruit and

Vegetable Division, AMS, USDA, P.O.

Box 96456, room 2523–S,

Washington, D.C. 20090–6456;

telephone: 202–720–5053, FAX: 202–

720–5698.

(2) Robert Curry, Northwest Marketing

Field Office, Marketing Order

Administration Branch, Fruit and

Vegetable Division, AMS, USDA,

1220 S.W. Third Avenue, room 369,

Portland, Oregon 97204; telephone:

503–326–2725, FAX: 503–326–7440.

SUPPLEMENTARY INFORMATION:

Prior Documents in This Proceeding

Notice of Hearing, issued on

November 30, 1993, and published in

the Federal Register on November 30,

December 23, 1993, and January 31,

1994 [58 FR 63108, 58 FR 68065, and 59

FR 4259, respectively]. The notice

reopening the hearing was issued on

December 5, 1994, and published in the

Federal Register on December 8, 1994

[59 FR 63273]; Recommended Decision

and Opportunity to File Written

Exceptions to the Proposed Marketing

Agreement and Order, issued November

20, 1995, and published in the Federal

Register on November 29, 1995 (60 FR

61292). The reopening of the comment

period to file written exceptions to the

proposed marketing agreement and

order was issued on December 27, 1995,

and published in the Federal Register

on January 2, 1996 (61 FR 21).

This administrative 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.

The marketing agreement and order

proposed herein have been reviewed

under Executive Order 12778, Civil

Justice Reform. They are not intended to

have retroactive effect. If adopted, the

proposed agreement and order would

not preempt any State or local laws,

regulations, or policies, unless they

present an irreconcilable conflict with

the 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 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 requesting 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 the date of the

entry of the ruling.

Preliminary Statement

This proposed marketing agreement

and order was formulated on the record

of a public hearing held December 15–

17, 1993, in Grand Rapids, Michigan;

January 13, 1994, in Provo, Utah;

February 15–17, 1994, in Portland,

Oregon; January 12–13, 1995, in

Portland, Oregon; and January 18–19,

1995, in Grand Rapids, Michigan. These

multiple hearing sessions were held to

consider a proposed marketing

agreement and order regulating the

handling of tart cherries grown in the

proposed production area. The hearing

was held pursuant to the provisions of

the Agricultural Marketing Agreement

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

674), hereinafter referred to as the Act,

and the applicable rules of practice and

procedure governing the formulation of

marketing agreements and marketing

orders (7 CFR part 900). Approximately

40 witnesses, including tart cherry

growers, handlers, and economists,

testified in support of the order.

Growers and handlers mainly from the

States of Oregon and Washington

testified in opposition to the proposed

order and asked to have Oregon and

Washington excluded from the

proposed production area.

At the conclusion of the February

1994 hearing in Oregon, the deadline for

filing post-hearing briefs was set at

April 29, 1994. The deadline for filing

post-hearing briefs was subsequently

extended to May 31, 1994. However,

based on a review of the hearing

evidence and post-hearing briefs, USDA

determined that the hearing should be

reopened to clarify some provisions.

USDA wanted to obtain additional

information and clarification

concerning: (1) The States that should

be regulated under the order; (2) the

economic impact of the proposed order

on small and large businesses; (3)

whether the expected program benefits

would exceed costs, especially for

growers, handlers and consumers; and

(4) how certain provisions would be

implemented under the proposed

marketing order. The hearing was

reopened and held January 12–13, 1995,

in Portland, Oregon, and January 18–19,

1995 in Grand Rapids, Michigan. At the

conclusion of the Michigan hearing, the

deadline for filing post-hearing briefs

was set at March 17, 1995. Ten briefs

were filed following the first briefing

period and seven briefs were filed

following the second briefing period.

The proponents testified that severely

fluctuating tart cherry prices are
Federal Register / Vol. 61, No. 104 / Wednesday, May 29, 1996 / Proposed Rules 26957

inherently harmful to growers and

consumers. It was contended that the

proposed marketing order would

improve grower returns by

strengthening consumer demand

through volume control and quality

assurance mechanisms.

Upon the basis of evidence

introduced at the hearing and the record

thereof, the Administrator of the

Agricultural Marketing Service (AMS)

on November 29, 1995, filed with the

Hearing Clerk, U. S. Department of

Agriculture, a recommended decision

with the opportunity for written

exceptions by December 29, 1995.

Subsequently, the USDA received three

requests to provide more time to analyze

the recommended decision and prepare

and file written comments. Based on

these requests the USDA reopened the

comment period until January 16, 1996.

There were 29 exceptions received on

the proposed order. Seven exceptions

support the order as proposed, 4

support the order with minor

modifications, 2 support the order with

substantial modifications, 15 oppose the

order, and 1 recommends only a minor

technical clarification. Exceptions were

received from: Richard DeRuiter,

Michigan tart cherry processor; Senator

Mark Hatfield, Congressional

Representatives Peter DeFazio, Jim

Bunn, Ron Wyden, Elizabeth Furse, and

Wes Cooley, all from the State of

Oregon; Mark L. Schrepel, Oregon tart

cherry grower and processor; William R.

Sherman, Burnette Foods, Inc.,

Michigan grower/processor; Randy

Hageman, General Manager, Milne Fruit

Products; Rick Jacobson, NORPAC

Foods; Christian Schlect, President,

Northwest Horticultural Council; Mark

Riley, Michigan tart cherry grower;

Terry Dorsing, President, Washington

Tart Cherry Products, Inc.; Ray, Jim,

Mildred and Mary Schultz, Michigan

tart cherry growers; Philip Walker,

Oregon tart cherry grower; Thomas A.

Facer, Vice-President Agricultural

Services, Comstock Michigan Fruit

Division; Lee W. Schrepel, Chair,

Oregon Tart Cherry Association; Bruce

Andrews, Director, Oregon Department

of Agriculture; the Department of

Justice, Anti-Trust Division; Claude A.

Rowley, Manager, Payson Fruit

Growers; David Frank, Fruit Belt

Canning, Co. Inc.; Norman R. Veliquette,

President, Great Lakes Packing

Company; Dean Kleckner, President,

American Farm Bureau Federation;

Forest P. Johnson, Michigan tart cherry

grower; Ken Guise, Executive VicePresident, Chief Operating Officer,

Knouse Foods Cooperative, Inc.;

Kenneth T. Morrison, President, Cherry

Growers, Inc.; David White, President,

Chain O’Lakes Fruit Growers

Association; Randy G. Harmson,

General Manager, Michigan Agricultural

Cooperative Marketing Association, Inc.;

Jack Laurie, President, Michigan Farm

Bureau; Teryl R. Roper, Associate

Professor and Extension Fruit Specialist,

University of Wisconsin; Gene A.

Veliquette, Michigan tart cherry grower,

President, Shoreline Fruit, Inc.; Ian A.

MacKay, CPA, American Institute of

Certified Public Accountants; and the

Cherry Marketing Institute (CMI), the

proponent group.

The issues raised in the exceptions

are discussed in the Findings and

Conclusions.

Small Business Consideration and

Paperwork Reduction Act: In

accordance with the Regulatory

Flexibility Act (5 U.S.C. 601 et seq.),

AMS has considered the economic

impact of this action on small entities.

The record indicates that there are

approximately 1,600 growers of tart

cherries and 75 handlers who process

cherries in the production area

proposed to be regulated. Small

agricultural service firms have been

defined by the Small Business

Administration (SBA) (13 CFR 121.601)

as those whose annual receipts are less

than $5,000,000, and small agricultural

producers as those having annual

receipts of less than $500,000. The

majority of the tart cherry handlers and

producers may be classified as small

entities.

For practical purposes, there is no

fresh market for tart cherries. Processors

dry, freeze, can, juice, or puree pitted

tart cherries. Market use averages are: 56

percent of the product becomes

industrial grade frozen cherries; 16

percent goes into consumer-size cans of

pie filling; 8 percent is used for

commercial pie filling; 10 percent

becomes juice concentrate; 2 percent is

dried; and, 8 percent goes into water

packs.

Since 1971, there has been a marked

transformation in the processing

industry’s structure. Currently, 75

percent of the crop is processed by

farmer-owned cooperatives or growerowned processing facilities; whereas in

1971, a substantial volume was

processed by independent handlers.

Processors, through their sales agents,

market in all U.S. markets and export to

Europe and Asia. There are no discrete

regional markets where cherries from a

particular district could have a

particular advantage, beyond nominal

differences in transportation costs,

which can often be overcome by price

discounting.

The record evidence shows that

economic adversity has caused more

than 21 percent of Michigan’s growers

to withdraw from tart cherry farming.

There were 1,183 Michigan commercial

growers in 1986, compared to 933 in

1992. In 1992, Michigan growers had an

average production of 238,000 pounds

with 19 percent of those growers

averaging 800,000 pounds, accounting

for 66 percent of the total Michigan

production. In States other than

Michigan, there has also been a general

decline in the number of commercial

growers since 1986. There are fewer

growers in other States besides

Michigan, but the number of bearing

acres has increased from 45,000 acres in

1986, to more than 50,000 acres in 1990.

Record evidence also indicates that

the demand for red tart cherries is

inelastic at high and low levels of

production, and relatively elastic in the

middle range. At the extremes, during

times of very low and very high

production, different factors become

operational. In very short crop years,

such as 1991, there is limited but

sufficient exclusive demand for cherries

that can cause processor prices to

double and grower prices to triple. In

the event of large crops, there seems to

be no price low enough to expand sales

beyond about 275 million pounds of

raw fruit in a single year.

Since 1982, annual sales have

averaged 230 million pounds. Under the

proposed order, total returns to growers

could be increased by restricting

supplies of red tart cherries available for

sale by handlers during large crop years.

Also, production characteristics of the

tart cherry industry provide an

opportunity to increase growers’ total

earnings by converting the excess

production of large crop years into

storable products that could constitute

reserve pools. These pools would be

liquidated in a year when the available

supplies are short.

One of the main concerns addressed

in this proposed order is the short term

annual variation in supply which is

attributable to climatic factors that

neither growers nor processors can

control, and which leads to chaotic

marketing conditions. Such climatic

factors can result in highly

unpredictable annual crop sizes,

causing gluts and shortages of tart

cherries. When gluts occur, large carryin

inventories can decrease processor and

grower prices, regardless of the

anticipated size of the oncoming year’s

crop. Many sales are consummated with

large buyers well before the current crop

year’s supply and demand situation is

clear (based on what can best be

described as ‘‘Anticipated Supply’’, i.e.,

the sum of the carryin inventory and

USDA crop forecast, available usually
26958 Federal Register / Vol. 61, No. 104 / Wednesday, May 29, 1996 / Proposed Rules

late in June, weeks before the actual

crop harvest.)

These large, unrestricted carryin

inventories and crop estimates can play

a dominant role in setting the tone of

the market in a given year. The

proposed order is intended to lessen the

impact of these inventories and

estimates by establishing an ‘‘optimum

supply,’’ thereby reducing price swings

to growers and buyers, and ultimately

resulting in a stabilization and

enhancement of the market.

The order would impose some

reporting and record keeping

requirements on handlers. Handler

testimony indicated that the expected

burden that would be imposed with

respect to these requirements would be

negligible since most of the information

that would be reported to the Board is

already compiled by handlers for other

uses and is readily available. Reporting

and record keeping requirements issued

under comparable marketing order

programs impose an average annual

burden on each regulated handler of

about one hour. It is reasonable to

expect that a comparable burden would

be imposed under this proposed

marketing order on the estimated 75

handlers of tart cherries. With respect to

growers, they testified at the hearing

that information required to be

submitted to the Board for grower

diversion is already collected and

available from growers.

The Act requires that, prior to the

issuance of a marketing order for tart

cherries, a referendum be conducted

among effected producers and

processors to determine if they favor

issuance of the order. The ballot

material that would be used in

conducting the referendum would be

submitted to and approved by OMB

before it is used. It is estimated that it

would take an average of 20 minutes for

each of the approximately 1,600 tart

cherry growers and 75 tart cherry

processors to complete the ballots.

Additionally, it has been estimated that

it would take approximately ten

minutes for each handler to read and

sign the marketing agreement.

In compliance with Office of

Management and Budget (OMB)

regulations (5 CFR Part 1320), which

implement the Paperwork Reduction

Act of 1995 (Pub. L. 104–13), the

information collection and record

keeping requirements contained in the

proposed rule specific to the ballot

material to be used in conducting the

referendum have been approved by

OMB on a temporary basis and have

been assigned OMB number 0581–0177.

An expiration date of September 1996

has been established for this temporary

OMB approval. A complete package of

information and collection requirements

contained in this proposed rule will be

submitted, for approval, to OMB at a

later date. Those requirements would

not become effective prior to OMB

review. Interested persons would be

provided 60 days to comment on : (1)

whether the proposed collection of

information is necessary for the

functioning of the proposed tart cherry

marketing order program and USDA’S

oversight of that program; (2) the

accuracy of the collection burden

estimate and the validity of

methodology and assumptions used in

estimating the burden on respondents;

(3) ways to enhance the quality, utility,

and clarity of the information requested;

and (4) ways to minimize the burden,

including use of automated or electronic

technologies. Any record keeping and

reporting requirements imposed would

be evaluated against the potential

benefits to be derived and it is expected

that any added burden resulting from

increased reporting and record keeping

would not be significant when

compared to those anticipated benefits

derived from administration of the

order.

The purpose of the RFA is to fit

regulatory and informational

requirements to the size and scale of the

business entities in a manner that is

consistent with the objectives of the rule

and applicable statutes. The proposed

marketing order provisions have been

carefully reviewed and every effort has

been made to eliminate any unnecessary

costs or requirements. As discussed in

the RFA, Congress’ intent, among other

objectives, was to direct agencies to

identify the need for any ‘‘special

accommodation’’ (e.g., exemption or

relaxation) on regulated small entities

(i.e., handlers) because, in the past,

some Federal regulatory and reporting

requirements imposed unnecessary and

disproportionately burdensome

demands on small businesses. After

reviewing the record AMS determined

that direct or indirect costs imposed

under the marketing order regulation

would not be proportionately greater on

small handlers than on large handlers,

or conversely, that any projected order

benefits would not be proportionately

smaller for small handlers than for large

handlers.

The record evidence indicates that the

proposed order may impose some

additional costs and requirements on

handlers, but those costs are

insignificant and are directly

proportional to the size of the regulated

handlers. The evidence also indicates

that, given the severe economic

conditions and unstable markets facing

the majority of the industry, the benefits

to small (as well as large) handlers are

likely to be greater than would accrue

under the alternatives to the order

proposed herein, namely no marketing

order, or an order without the proposed

combination of volume controls and

other order authorities.

The record evidence indicates that the

proposed order would be instrumental

in providing expanding markets and

sales, and raising and stabilizing prices

of tart cherries, primarily for the benefit

of producers. The evidence also

indicates that handlers would benefit as

well. While the level of such benefits to

handlers is difficult to quantify, it is

also clear the provisions of the proposed

order are designed to benefit small

entities. Small handlers and producers

are more likely to be minimally

capitalized than large entities, and are

less likely to survive without the

stability the proposed order would

provide.

Accordingly, based on the

information discussed above, AMS has

determined that the issuance of this

proposed rule and referendum order

would not have a significant economic

impact on a substantial number on

small entities.

The material issues presented on the

record are:

1. Whether the handling of tart

cherries grown in the proposed

production area is in the current of

interstate or foreign commerce, or

directly burdens, obstructs, or affects

such commerce;

2. Whether the economic and

marketing conditions are such that they

justify a need for a Federal marketing

agreement and order which will tend to

effectuate the declared policy of the Act;

3. What the definition of the

production area and the commodity to

be covered by the marketing order

should be;

4. What the identity of the persons

and the marketing transactions to be

regulated should be; and

5. What the specific terms and

provisions of the order should be

including:

(a) The definition of terms used

therein which are necessary and

incidental to attain the declared policy

and objectives of the order and the Act;

(b) The establishment, composition,

maintenance, procedures, powers and

duties of a committee that shall be the

local administrative agency for assisting

the Secretary in the administration of

the marketing order;

(c) The authority to incur expenses

and the procedure to levy assessments

on handlers to obtain revenue for paying

such expenses;
Federal Register / Vol. 61, No. 104 / Wednesday, May 29, 1996 / Proposed Rules 26959

(d) The authority to establish or

provide for the establishment of

production, processing and marketing

research and marketing development

projects, including paid advertising;

(e) The authority to establish

regulations that would require

minimum quality and inspection

requirements applicable to cherries to

be handled;

(f) The authority to establish

regulations that would provide for a

volume control program;

(g) The establishment of requirements

for handler reporting and record

keeping;

(h) The requirement of compliance

with all provisions of the order and with

any regulations issued under it; and

(i) Additional terms and conditions as

set forth in section 930.81 through

section 930.91 of the Notice of Hearing

published in the Federal Register of

November 30, 1993, which are common

to all marketing agreements and orders,

and other terms and conditions

published at section 930.92 through

section 930.94 that are common to

marketing agreements only.

Findings and Conclusions and Rulings

on Exceptions

The material issues, findings and

conclusions, rulings, and general

findings and determinations included in

the Recommended Decision set forth in

the November 29, 1995, issue of the

Federal Register [60 FR 61292] are

hereby approved and adopted subject to

the following additions and

modifications:

Based upon the exceptions filed by

Department of Justice, Anti-trust

Division (DOJ), and Mr. Lee Schrepel,

the findings and conclusions in material

issue number 2 of the Recommended

Decision concerning the question of

whether economic and marketing

conditions are such that they justify a

need for a Federal marketing agreement

and order which would tend to

effectuate the declared policy of the Act

are amended by adding the following

eight paragraphs after the last paragraph

(60 FR 61297) to read as follows:

In its exception to the Recommended

Decision, DOJ urged USDA to reject the

proponents’ request for a marketing

order for tart cherries. DOJ contended

that the proposed marketing order is not

by any means a ‘‘national solution’’ for

any existing problems in the tart cherry

industry, and its implementation would

harm the public. DOJ asserts there is no

reliable evidence to show that the

proposed marketing order would

produce supply or price stability and it

should not be issued. In addition, DOJ

cited two areas of disagreement with the

Recommended Decision. DOJ stated

that: (1) The tart cherry industry does

not require regulation based on the

evidence presented at the hearing; and

(2) the proposed marketing order would

not stabilize tart cherry prices or

supplies.

In regard to its first concern, DOJ

stated that growers and handlers who

prefer to protect against fluctuating

prices may do so by using any one of the

numerous market mechanisms that

already exist for that purpose. DOJ

stated that these mechanisms are far

superior to government regulation for

reducing risk because they help

producers deal with fluctuating supplies

without artificially inflating prices. As

previously stated, the market

mechanisms suggested by DOJ are

currently available to the industry. The

marketing order is another tool for the

industry to use in stabilizing supplies.

Marketing orders do not exist to the

exclusion of other market mechanisms.

However, as the record shows, those

mechanisms have not been effective in

dealing with the production variability

problems faced by the industry.

In regard to its second concern, DOJ

contended that the finding that the

proposed marketing order would

contribute to orderly marketing

conditions and, therefore, effectuate the

declared policy of the Act, is without

support in the record. The agency stated

that USDA relied heavily on the

testimony of Dr. Forker, who testified on

price stability. It is DOJ’s position that

Dr. Forker’s conclusions on price

stability are wrong and that he

improperly manipulated the data to

reach a desired result. In addition, in his

exception, Mr. Lee Schrepel also

objected to USDA relying on the

evidence presented by Dr. Forker.

As previously stated, USDA believes

that the proponents have demonstrated

a need for a tart cherry marketing order.

The record supports the argument that

the industry has suffered since the

termination of the prior order. A

proposed order was developed to

correct the situation with the goal of

increasing grower returns and bringing

supplies in line with demand. Authority

for volume control regulation which

would only be used when the market

warrants it, is included in the order.

Record evidence supports the need for

the marketing order. Evidence presented

at the hearing did not offer a basis for

discrediting Dr. Forker. Dr. Forker is a

recognized expert in his field and there

was no persuasive evidence presented at

the hearing which would refute his

testimony. In addition, USDA did not

rely solely on Dr. Forker. It considered

all the testimony and analyzed the

record in its entirety in arriving at its

findings and conclusions.

In Mr. Schrepel’s exception, he stated

that USDA has discounted any and all

arguments that reporting and record

keeping requirements will be

significantly greater for Oregon

producers and processors, and that their

subsequent costs and benefits of

operating under the marketing order are

proportionately and significantly

different than expected to be

experienced in larger producing

districts. Mr. Schrepel also contends

that smaller producing States (i.e.,

Pennsylvania and Oregon) have not

been producing the reports that will be

needed under the marketing order, and

therefore it will be an added burden on

small handlers to submit such reports to

the Board under the marketing order.

Handlers from the smaller producing

areas testified that reporting to the

Board would not be unduly

burdensome. They normally keep such

records in conducting their business

operations and therefore could easily

compile the information for use under

the marketing order. In addition,

handlers in districts which are not

volume regulated (e.g., the smaller

producing states) would have fewer

reporting and record keeping

requirements than those handlers in

regulated districts since they would not

be maintaining reserve pools and

reporting on storage and disposition.

Such requirements would stay reduced

as long as that district’s production

remains below the trigger amount for

volume regulation.

The record evidence also supports the

premise that small growers and handlers

would have the most to benefit from

implementation of the marketing order

because such growers and handlers have

been going out of business over most of

the last 8 years due to low cherry prices.

Since the order would help increase

grower returns, this should increase the

buffer between success and failure.

Based on the above discussion, the

exceptions by DOJ and Mr. Schrepel are

denied.

Based upon the exceptions filed by

Mr. Dorsing, Mr. Hageman, Mr. Mark

Schrepel, and Mr. Lee Schrepel, the

findings and conclusions in material

issue number 3 of the Recommended

Decision concerning the definition of

the production area and the commodity

to be covered are amended by adding

the following six paragraphs after the

last paragraph (60 FR 61299) to read as

follows:

The exception filed by Mr. Dorsing

stated that the States of Washington and

Oregon should not be included in the

proposed marketing order. Mr. Dorsing
26960 Federal Register / Vol. 61, No. 104 / Wednesday, May 29, 1996 / Proposed Rules

indicated that 1995 production figures

for the State of Washington show that

over 90 percent of the tart cherry

production went to juice concentrate.

He contended that the majority of

producers in Washington and Oregon

produce their cherries for use in juice

concentrate rather than canned or frozen

products. Mr. Dorsing also stated that

the juice characteristics of the

Northwest tart cherry are unique in

character and juice companies are

finding that the characteristics of

Northwest juice concentrate meet their

required specifications. He also stated

that Northwest production is not adding

to the ‘‘glut’’ in the packed product

industry, since the Northwest is

primarily a juice concentrate industry.

Mr. Dorsing stated further that the

Northwest tart cherry industry pays for

its own storage, develops its own

markets and does its own promotion

and advertising. Thus, there is nothing

to be gained by the Northwest being

included in the tart cherry marketing

order. In addition, Mr. Dorsing

requested that each State be allowed to

vote separately for inclusion in the

marketing order.

The exception filed by Mr. Hageman

opposed the proposed marketing order.

He stated that the order would

unnaturally inflate grower prices to

nearly double the current level. He also

asked that Washington and Oregon be

excluded from coverage under the

proposed marketing order. The reason

given was that Washington and Oregon

account for 6.5 percent of the 1990–

1994 total U.S. production and that,

during the same time period, less than

20 percent of the Washington and

Oregon production entered the five plus

one canned and frozen product line.

This would indicate that less than 1.5

percent of the nation’s supply of five

plus one stock was produced in the

Northwest. It was argued by Mr.

Hageman that the Northwest industry is

dependent on the juice concentrate and

puree market which does not compete

with the five plus one market. Mr.

Hageman also requested a State-by-State

referendum.

The exception filed by Mr. Mark

Schrepel stated that any proposed order

should not include the State of Oregon,

and that the Act appears not to include

cherries for canning or freezing if they

originated in Oregon or Washington. Mr.

Schrepel believes that no Oregon grower

or processor supports the order. He also

requested a State-by-State referendum.

The exception filed by Mr. Lee

Schrepel indicated that one of the

reasons the proposed order should

exclude Washington and Oregon is

because the Northwest has distinctive

production and marketing

characteristics. Further, it is Mr.

Schrepel’s contention that successful

marketing orders depend on the support

of affected producers and handlers.

According to him, the unanimous

opposition of Oregon producers and

handlers and near unanimous

opposition by Washington producers

and handlers demonstrate the lack of

this essential element. Mr. Schrepel also

requested voting by a State-by-State

referendum.

As previously stated, to exclude any

portion of the proposed production area

would tend to defeat the purpose of the

proposed order and could depress

prices of the regulated cherries.

Contrary to Mr. Schrepel’s suggestion,

Oregon and Washington cherries for

freezing or canning are not excluded

from coverage under the Act. Record

evidence supports the position that the

oversupply situation in the U.S. is a

national problem. In addition, the juice

concentrate market in areas such as

Oregon and Washington can be

impacted by production in other areas.

Therefore, the entire industry needs to

work together to alleviate the problem.

Also, the record evidence supports the

argument that the Northwest has the

greatest potential to expand tart cherry

producing acreage, thereby further

benefiting from the proposed order in

the event of increased production.

Therefore, the Northwest should be

included in the production area under

the proposed order and the requests to

exclude Oregon and Washington from

the proposed production area are

denied.

In regard to the requests to conduct a

State-by-State referendum to determine

who should be covered under the

proposed tart cherry order, such

requests are denied. The Act requires

that all producers and processors in the

proposed production area should vote

in a referendum on the promulgation of

an order. There is no authority for State

by State voting.

Based upon the exception filed by

CMI, the findings and conclusions in

material issue number 5(a) of the

Recommended Decision concerning the

commodity to be covered are amended

by adding the following paragraph after

the sixth paragraph (60 FR 61300) to

read as follows:

CMI stated that the definition of

cherries should be modified to correct

the misspelling of a species name and

to include the words ‘‘or hybrids of’’ to

the cherry definition. Adding these

words would correct and clarify the

definition. Therefore, CMI’s exception is

adopted herein.

Based upon the exceptions filed by

CMI, Mr. Morrison, and Mr. Facer, the

findings and conclusions in material

issue number 5(b) of the Recommended

Decision concerning the establishment,

composition, maintenance, procedures,

powers and duties of the Board are

amended by adding the following eight

paragraphs after the 73rd paragraph in

material issue number 5(b) (60 FR

61307) to read as follows:

In its exception, it was CMI’s

contention that the order should be

modified to require that, in order for the

Board to adopt preliminary or final free

and restricted percentages for any crop

year, at least 11 Board members from

districts that would be subject to

volume regulation vote in the

affirmative on any such action. CMI also

wanted this requirement to apply if

there are modifications to the marketing

policy under section 930.50(f). In

addition, CMI argued that since the

Recommended Decision contains a

Board voting requirement of two-thirds

of the entire Board rather than a

majority of the Board, as originally

proposed, this modification is necessary

because it is important that a clear

majority of those who are going to be

regulated agree with the determination

before volume regulation can go into

effect. It was also CMI’s concern that the

unregulated districts could somehow

influence the decision to impose

volume regulation when such regulation

is a possibility under the optimum

supply formula. Eleven votes out of 13

is approximately 85 percent of the votes

from the volume regulated districts. CMI

suggested that this voting requirement

apply to recommendations made under

sections 930.50(b), 930.50(d) and

930.50(f).

In his exception, Mr. Morrison argued

that Board members from nonregulated

districts should not be allowed to vote

on matters concerning regulation of the

crop or the timing on the release of the

primary pool.

Throughout this formal rulemaking

process, it has been expressed that the

oversupply situation in the U.S. is a

national problem, and that the entire

industry should work together to

alleviate the problem by participating in

the proposed marketing order. Although

USDA understands CMI’s concerns,

they are overstated, since the proposed

order provisions concerning the

marketing policy and issuance of

volume regulations contain a number of

procedural steps which, in many

respects, make them self-executing.

Also, it is the Secretary, and not the

Board, who issues the volume

regulations and sets the final free and

restricted percentages. Therefore, as
Federal Register / Vol. 61, No. 104 / Wednesday, May 29, 1996 / Proposed Rules 26961

previously discussed in the

Recommended Decision, all actions by

the Board, including volume regulation

issues, should continue to require a twothirds affirmative vote of the entire

Board to pass. Therefore, CMI’s and Mr.

Morrison’s exceptions are denied.

Mr. Facer requested that only

regulated districts be allowed to vote on

the release of the primary reserve. This

is not necessary nor is it supported by

the record. As previously stated the

situation that exists in the industry is a

national problem, therefore, all

members that represent the tart cherry

industry in the Board should vote in all

matters. The reserve would be released

by the Board when certain conditions

exist. For example, proposed section

930.50(g) would release, to all handlers,

up to an additional 10 percent (above

the optimum supply level) of the

average of the prior three years sales, if

such inventory is available in the

primary inventory reserve. Therefore,

Mr. Facer’s exception is denied.

Based upon the exception filed by

CMI and Mr. Lee Schrepel, the findings

and conclusions in material issue

number 5(b) of the Recommended

Decision concerning the establishment,

composition, maintenance, procedures,

powers and duties of the Board are

amended by adding the following three

paragraphs after the fourth paragraph

(60 FR 61301) to read as follows:

Questions and recommendations

regarding order language concerning the

Board membership limitation on sales

constituencies in proposed § 930.20(f)

were raised by both Mr. Lee Schrepel

and CMI. It was Mr. Schrepel’s concern

that a single sales constituency could

potentially gain control of the Board and

he asked that not more than 30 percent

of the Board be allowed to be affiliated

(even remotely) in any manner with a

single sales constituency. However, a 30

percent limitation is not adequately

supported by the record. CMI’s concern

was that if a grower who sells cherries

through a number of different

processors is nominated for membership

to the Board in a district, all of those

processors but one would then be

prevented from having grower

representation on the Board. According

to CMI, this would be true even if the

grower sold a very small amount of

cherries to a particular handler on a

one-time basis. As proposed by CMI,

this concern can be addressed by

considering the sales constituency to

which the grower delivers the majority

of his or her cherries to be the grower’s

sales constituency for nomination and

representation purposes.

Concerns regarding sales

constituencies and Board representation

have been raised from the beginning of

this rulemaking process. That is one of

the reasons that USDA decided to

impose a two-thirds voting requirement

instead of a simple majority, and added

a provision requiring the consensus of at

least two-thirds of the entire Board to

pass any action by the Board (see page

61306 of the Recommended Decision).

The record is clear that the major reason

§ 930.20(f) generated so much

discussion was the perception among

some of the participants at the hearing

sessions that the Board could become

controlled by a single constituency, and

the interests of those growers and

handlers not associated with such

constituency would not receive proper

attention or could be ignored altogether.

Additions and changes to § 930.20(f)

were suggested by Mr. Lee Schrepel and

CMI, and although these have merit,

they are not dispositive of the main

issue, i.e., control of the Board by a

single interest group.

When the question of adding further

restrictions to § 930.20(f) arose early in

the rulemaking proceeding, CMI

indicated that it was unlikely that any

single sales constituency could gain

control of the Board, and that theoretical

projections of such possibilities are not

realistic. Furthermore, it was pointed

out by CMI that the Secretary could

effectively enforce the limitations

contemplated by § 930.20(f) without

modifying its language because the

ultimate decision of whom to appoint to

the Board lies with the Secretary.

Therefore, in light of such requirements,

and clear record evidence that the

purpose of § 930.20(f) is to achieve a fair

and balanced Board representation,

USDA will not add additional

limitations to § 930.20(f), but, instead,

will add language to more clearly

express the purpose of that section. In

addition, the Secretary could issue

regulations to implement the section, if

necessary.

Based upon the exception filed by Mr.

Lee Schrepel, the findings and

conclusions in material issue number

5(b) of the Recommended Decision

concerning the establishment,

composition, maintenance, procedures,

powers and duties of the Board are

amended by adding the following two

paragraphs after the 30th paragraph (60

FR 61303) to read as follows:

In Mr. Lee Schrepel’s exception, he

stated that the testimony by the

proponent made it clear that its intent

is to maintain control of the Board’s

public member. It was Mr. Schrepel’s

view that the proposed marketing order

still has no provisions to prevent the

Board from appointing Board members.

Mr. Schrepel argued that the public

member should be appointed at the sole

discretion of the Secretary, without the

advice or consent of the Board.

The Secretary has discretion in

appointing members and alternate

members to the Board, including the

public member. The appointments can

be made from Board nominees or other

qualified individuals. In the case of the

public member and such member’s

alternate, the Secretary is relying on the

Board to nominate and elect eligible

individuals. As was previously stated in

the Recommended Decision, such

individuals would then be subject to

appointment by the Secretary. This

procedure is similar to the selection of

public members and alternates on other

marketing order committees. Therefore,

§ 930.24 is modified to clarify the

selection and appointment procedure.

Based upon the exceptions filed by

Mr. Facer, Mr. Guise, Mr. Lee Schrepel

and CMI, the findings and conclusions

in material issue number 5(b) of the

Recommended Decision concerning the

establishment, composition,

maintenance, procedures, powers and

duties of the Board are amended by

adding the following six paragraphs

after the 27th paragraph (60 FR 61303)

to read as follows:

The exception filed by Mr. Facer

stated that the responsibilities and

authority of the Board relating to its

ability to assess the industry for

research, development, promotion and

advertising are too broadly described.

Also, the Board composition includes

too much representation from the

nonregulated districts.

USDA relies on the marketing order

committees and boards to recommend

rules and regulations concerning their

particular industries. Marketing order

committees and boards are comprised of

industry grower and handler members

and are experienced in the industry’s

operations and should be capable of

evaluating the industry’s needs. It is for

the Secretary to determine whether

rules recommended by committees or

boards should be issued. Board

composition was recommended by the

proponent group to provide fair and

equitable representation to the entire

industry based on the relative levels of

production of cherries in the various

producing districts. It was the

proponents’ position that all States

covered under the order should be

represented on the Board in order to

keep them informed of the Board’s

activities. In addition, all States covered

under the marketing order have the

potential to become regulated States in

the future. Mr. Facer’s exception is

therefore denied.
26962 Federal Register / Vol. 61, No. 104 / Wednesday, May 29, 1996 / Proposed Rules

The exceptions filed by Mr. Ken

Guise, Mr. Lee Schrepel and CMI

requested that the proposed order be

modified to correct the handler

nomination petition process for District

6. Currently, only one handler exists in

District 6, which covers the State of

Pennsylvania (Knouse Foods

Cooperative, Inc.). The Recommended

Decision provided that for a handler to

be nominated for election to the Board,

the handler would have to obtain the

signature of at least one handler, other

than the nominee, from the nominee’s

district who is eligible to vote in the

referendum. Under this procedure, Mr.

Guise and CMI point out that since there

is no other handler in District 6 except

Knouse Foods, such handler would be

denied the opportunity to be nominated

for election to the Board and District 6

would never be represented by a

handler representative unless another

handler were to start operating in that

District.

CMI stated that this result is wholly

unintended by the proponent and

requests that the USDA modify section

930.23(b)(2) to require that when

nominating handler members to the

Board, the petition form be signed by a

handler other than the nominee shall

not apply in any District where less than

two handlers are eligible to vote.

Mr. Schrepel requested that the same

procedures developed for Pennsylvania

also apply to Washington and Oregon,

since they have very few handlers. The

modification proposed by the

proponents would also address Mr. Lee

Schrepel’s concerns since the

modification would apply to any

District that has less than two handlers.

Mr. Guise’s, Mr. Lee Schrepel’s and

CMI’s exception on this issue is

therefore adopted in this Secretary’s

Decision and appropriate changes are

made in section 930.23(b)(2).

Based upon the exception filed by Mr.

Lee Schrepel, the findings and

conclusions in material issue number

5(b) of the Recommended Decision

concerning the establishment,

composition, maintenance, procedures,

powers and duties of the Board are

amended by adding the following

paragraph after the 33rd paragraph (60

FR 61304) to read as follows:

Mr. Lee Schrepel requested that the

procedures for electing alternate

members to the Board be more clearly

detailed in the order. The proposed

order provides under section 930.23 that

each member and alternate member

would be nominated and elected

separately. The Board has the authority

to recommend rules and regulations to

effectuate such authority and specify

more detailed procedures in regard to

the nomination process. Therefore, Mr.

Schrepel’s exception is denied.

Based upon the exception filed by Mr.

Lee Schrepel, the findings and

conclusions in material issue number

5(b) of the Recommended Decision

concerning the establishment,

composition, maintenance, procedures,

powers and duties of the Board are

amended by adding the following

paragraph after the 35th paragraph (60

FR 61304) to read as follows:

In his exception, Mr. Schrepel stated

that USDA has submitted

contradictatory language regarding the

nomination process. He claimed that

USDA appears to be advancing it’s own

interests of fast tracking the proposal, if

promulgated, by conducting nomination

meetings in the districts and allowing

growers and handlers to vote for

members and alternate members at these

meetings. USDA is not fast tracking

such a proposal. If the Secretary

determines that conducting nomination

meetings and voting at these meetings

would be the best method of completing

the process in a timely manner, then

such method should be used. Should

the proposed order receive the required

level of grower and processor support in

the referendum, USDA intends to

conduct meetings to nominate and elect

the initial Board members and alternate

members using petition forms and

election ballots as provided by § 930.23.

Therefore, Mr. Schrepel’s exception is

denied.

In Mr. Lee Schrepel’s exception, he

indicated that there was an error in

proposed section 930.22 regarding

Board members’ terms of office. The

current proposed order specifies that

one-third of such initial members and

alternates shall serve only one fiscal

year, one-third of such members and

alternates shall serve only two fiscal

years and one-third of such members

and alternate members shall serve two

fiscal years. The latter reference to two

fiscal years should be changed to three

fiscal years to be consistent with the

record evidence. Mr. Schrepel is correct

and his exception is adopted herein by

revising the order language.

Based upon the exceptions filed by

Mr. MacKay and Mr. Lee Schrepel, the

findings and conclusions in material

issue number 5(b) of the Recommended

Decision concerning the establishment,

composition, maintenance, procedures,

powers and duties of the Board are

amended by adding the following three

paragraphs after the 51st paragraph (60

FR 61305) to read as follows:

In Mr. Lee Schrepel’s exception, he

stated that in section 930.31(h), the

reference to disbursement of all funds,

including the payment of storage to

handlers, should not be included in that

particular section. USDA does not

intend for the Board to utilize

assessments to pay for the storage of any

cherries or cherry products. The

proponent’s proposal to collect

assessments from handlers for storage of

primary inventory reserve cherries was

removed by the USDA in the

Recommended Decision. Therefore,

such language referencing storage

assessments should not be contained in

the proposed order. This has been an

oversight and such language shall be

removed. Therefore, Mr. Schrepel’s

exception is adopted.

The exception filed by Mr. MacKay

requested that the proposed marketing

order be modified under the area of

duties of the Board to include that the

Board’s financial statements be prepared

in accordance with generally accepted

accounting principles and to be audited

by a certified public accountant.

Currently, the proposed order provides

that the Board cause its books to be

audited by a certified public accountant.

Mr. MacKay requested USDA to clarify

in the final order whether the term

‘‘books’’ refers to the Board’s financial

statements and clarify the basis for the

financial statement presentation

(generally accepted accounting

principles).

The term ‘‘books’’ does refer to the

Board’s financial statements. The

modification to change the term

‘‘books’’ to ‘‘financial statements’’ is

incorporated in this document.

However, the modification to clarify the

basis for the financial statement

presentation (generally accepted

accounting principles) is denied. The

Fruit and Vegetable Division’s

Marketing Agreement and Order

Operation Manual specifies the types of

financial statement presentations to be

used in committee audits. This manual

is used by all marketing order

committees and is a policy document

issued by USDA. It is not feasible to

place such language in the order, since

in the future, USDA could change the

basis for financial statement

presentation for all marketing order

committees to use. If such a change

occurred, the marketing order would

have to be amended, which can be a

costly process. Therefore, such a

modification is denied. Thus, Mr.

MacKay’s exception is partially denied.

Based upon the exception filed by Mr.

Lee Schrepel, the findings and

conclusions in material issue number

5(c) of the Recommended Decision

concerning the authority to incur

expenses and the procedure to levy

assessments on handlers to obtain

revenue for paying such expenses are
Federal Register / Vol. 61, No. 104 / Wednesday, May 29, 1996 / Proposed Rules 26963

amended by adding the following

paragraph after the seventh paragraph

(60 FR 61308) to read as follows:

In his exception, Mr. Lee Schrepel

contended that a built-in limit on the

authority to level assessments should be

established. Mr. Schrepel proposed that

this authority be capped at no more than

5 percent of the average field price for

the season. He suggested that this limit

could be adjustable through

modification at continuance referendum

time or more frequently. Under the

order, the tart cherry industry

assessment rate would be dependent on

meeting administrative and other

expenses and would be necessarily

influenced by the volume of the crop.

The assessment rate would be

established through informal

rulemaking which would require a

Board recommendation and an

opportunity for public comment. Mr.

Schrepel did not specify why 5 percent

of the average field price for the season

would be a reasonable limit, and record

evidence does not contain support for

such a cap. However, if the marketing

order is implemented, the Board could

adopt such a cap as a guideline when

recommending the assessment rate.

Therefore, Mr. Schrepel’s exception is

denied.

Based upon the exception filed by Mr.

Lee Schrepel, the findings and

conclusions in material issue number

5(c) of the Recommended Decision

concerning the authority to incur

expenses and the procedure to levy

assessments on handlers to obtain

revenue for paying such expenses are

amended by adding the following two

paragraphs after the eighth paragraph

(60 FR 61308) to read as follows:

In Mr. Lee Schrepel’s exception, he

stated that it is not equitable to exempt

from assessment those cherries which

are diverted in accordance with

proposed sections 930.58 and 930.59.

Pursuant to section 930.62, cherries

would be exempt from assessments if

they are diverted according to section

930.59. Product diverted by handlers

would not be entering normal market

channels, therefore assessments should

not be levied. Mr. Schrepel does not

point to any evidence in the record to

support his exception concerning

assessment of diverted cherries.

Conversely, record testimony amply

supported exempting diverted cherries,

since they are not entering normal

market channels. Therefore, Mr.

Schrepel’s exception is denied.

Based upon the exceptions filed by

Mr. Mark Schrepel and Mr. Morrison,

the findings and conclusions in material

issue number 5(c) of the Recommended

Decision concerning the authority to

incur expenses and the procedure to

levy assessments on handlers to obtain

revenue for paying such expenses are

amended by adding the following three

paragraphs after the eighth paragraph

(60 FR 61308) to read as follows:

In Mr. Mark Schrepel’s exception, he

stated that he is concerned about

provisions within the proposal that

would add expense and hardship to

growers. Mr. Schrepel contended that

handlers should not be assessed under

this marketing order program if handlers

are not in a regulated district. He further

stated that handlers in unregulated

districts should not be assessed for any

expenses accrued by the Board since

handlers who divert are not assessed on

diverted product.

As supported by record evidence, all

growers and handlers in the States

proposed to be covered under the

marketing order, including those not

subject to volume regulation, would

enjoy the benefits provided by the

marketing order (i.e., improved grower

returns and increased consumption of

tart cherries). Therefore, all handlers

should be assessed for the

administrative costs of the order. Also,

handlers who enter cherries into normal

market channels who choose to divert

some of their cherries would still be

assessed for the cherries that enter

normal market channels. Therefore, Mr.

Schrepel’s exception is denied.

In Mr. Morrison’s exception, he stated

that further effort needs to be made to

make sure that growers understand that

the cost of holding and processing the

reserve can be passed on to growers by

their handlers. It is true that some

handlers may pass such costs on to their

growers, either directly or indirectly.

Under the former order, which was

based on a grower pool, growers were

directly assessed storage and processing

costs for reserve pool cherries. However,

this proposed order is based on a

handler pool. Therefore, it does not

contain authority to assess growers for

such costs. Because of this difference,

Mr. Morrison’s recommendation to

somehow emphasize that storing and

processing costs can be passed on to

growers is denied.

Based upon the exception filed by Mr.

Lee Schrepel, the findings and

conclusions in material issue number

5(d) of the Recommended Decision

concerning the authority to provide for

the establishment of production,

processing and marketing research and

market development projects, including

paid advertising, are amended by

adding the following paragraph after the

sixth paragraph (60 FR 61309) to read as

follows:

Mr. Lee Schrepel questioned whether

the handlers in States that have State

marketing order programs should be

exempted from paying assessments on

research and marketing development to

the Federal marketing order. Mr.

Schrepel stated that there should only

be one assessment, a Federal or state

assessment, not both. There is no

current proposal to exempt handlers

from paying these assessments if they

are in a State that has a State marketing

order program. The record evidence did

indicate that it would be highly unlikely

that the Board would initiate

recommendations for research,

development, or promotion related

assessments while a high percentage of

tart cherry growers are financing such

activities through other organizations.

The record evidence does not contain

support for Mr. Schrepel’s proposal,

therefore, his exception is denied.

Based upon the exceptions filed by

Mr. Frank, Mr. Morrison, Mr. Facer, and

Mr. Lee Schrepel, the findings and

conclusions in material issue number

5(e) of the Recommended Decision

concerning the authority to establish

regulations that would require

minimum quality and inspection

requirements are amended by adding

the following six paragraphs after the

seventh paragraph (60 FR 61310) to read

as follows:

In Mr. Frank’s exception, he stated

that sections 930.44 (a) and (b) are

ambiguous and do not spell out what

form of inspection would be required

(raw product or finished product). He

also stated that any inspection of free

tonnage cherries should be a decision by

a handler and growers that deliver

cherries to such handler. This should

not be a decision by an administrative

body such as the Board. Local weather

conditions could affect a small

geographic area, thereby causing

damage in a localized area rather than

the entire production area under the

proposed order. This also interferes

with a handler’s decision on what

quality such handler feels could be

marketed. Mr. Frank suggested that the

above mentioned sections be deleted

from the proposed marketing order.

Mr. Morrison also filed an exception

that stated that only the quality of

cherries placed in the reserve should be

regulated. This would be the same as

the prior order. Also, Mr. Morrison

stated that the Board should not regulate

the raw product grade.

In Mr. Facer’s exception, he stated

that although the order requires

inspection of primary reserve tart

cherries, there is no official quality

standards for some products. Therefore,
26964 Federal Register / Vol. 61, No. 104 / Wednesday, May 29, 1996 / Proposed Rules

such inspection will be impractical,

irrelevant and of no economic benefit.

In Mr. Lee Schrepel’s exception, he

stated that the Board should not be

empowered to require the inspection of

all cherries entering the stream of

commerce.

As previously stated, the proponents

testified that as technology increases,

the Board should have the authority to

adopt quality standards for cherries,

especially those concerning pit count. If

quality standards are recommended by

the Board and implemented by the

Secretary, no handler would be allowed

to process cherries into manufactured

products or sell manufactured products

in the current of commerce unless the

cherries used in such products meet the

applicable requirements. Before

recommending quality regulation, the

record evidence shows that it was the

intent of the proponents that the Board

would obtain an industry consensus

before making a recommendation to

USDA on this issue. Any such

regulation would be issued by the

Secretary through informal rulemaking

which would allow an opportunity for

comment.

Without additional Board action, only

inventory reserve cherries would be

inspected, prior to placing them in the

reserve. It is imperative to maintain the

quality of the reserve so that only good

quality cherries are released to handlers

to be sold in the marketplace. Therefore,

based on the above discussion on the

record evidence, Mr. Frank’s, Mr.

Morrison’s, Mr. Facer’s, and Mr. Lee

Schrepel’s exceptions are denied.

Based upon the exception filed by Mr.

Lee Schrepel, the findings and

conclusions in material issue number

5(e) of the Recommended Decision

concerning the authority to establish

regulations that would require

minimum quality and inspection

requirements are amended by adding

the following two paragraphs after the

4th paragraph (60 FR 61310) to read as

follows:

In Mr. Schrepel’s exception, he stated

that the cost of inspecting new cherries

to be rotated into the reserve and

removing older cherries out of the

reserve should be at the expense of the

handler. Such action as this, undertaken

by or at the convenience of the affected

handler for the benefit of the handler or

some other party, should not be the

expense of the industry.

As previously stated, rotating cherries

in the reserve is not a requirement.

However, it would benefit the industry

if it were done. This would insure that

good quality cherries are being released

when inventory reserve cherries are

sold. The Board will have the authority

to limit the number of inspections of

cherries to be rotated into inventory for

which the Board would be financially

liable. In order to establish such limits,

the Board would make a

recommendation to the Secretary and

informal rulemaking would be

conducted. Based on the fact that the

record evidence supports including this

authority it will remain in the order.

Therefore, Mr. Lee Schrepel’s exception

is denied.

Based upon the exception filed by Mr.

Lee Schrepel, the findings and

conclusions in material issue number

5(e) of the Recommended Decision

concerning the authority to establish

regulations that would require

minimum quality and inspection

requirements are amended by adding

the following two paragraphs after the

third paragraph (60 FR 61310) to read as

follows:

The exception filed by Mr. Lee

Schrepel stated that there should be no

reimbursement of inspection costs for

quality inspections for any reserve or

free market cherries. Also, requirements

for reinspection are inappropriate

unless such cherries are part of the

primary reserve.

The record evidence indicates that

quality control inspections would be

paid for by handlers. However,

inspections of primary reserve cherries

should be paid for by the Board. As

previously stated, this would insure that

only good quality cherries would be

available for release from the reserve

into the marketplace. This benefits all in

the industry. In regard to reinspection,

cherries would only be reinspected if

they were regraded, resorted,

repackaged or any other way further

prepared for market. This would be

done if a handler had to repackage a

product that was already packaged for a

client. This provision is a safety valve

to prevent poor quality product entering

the marketplace. New crop cherries

would be inspected prior to being

placed in the primary reserve. The

record evidence supports the above

provisions, therefore, Mr. Lee Schrepel’s

exception is denied.

Based upon the exceptions filed by

CMI, the findings and conclusions in

material issue number 5(e) of the

Recommended Decision concerning the

authority to establish regulations that

would require minimum quality and

inspection requirements are amended

by adding the following paragraph after

the seventh paragraph (60 FR 61310) to

read as follows:

CMI’s exception stated that the

proponent wishes to make it clear that

the Board would exercise its powers

with regard to the establishment of

quality standards and inspection

requirements in a manner consistent

with the establishment of quality

standards under the prior order.

Producers and handlers were

comfortable with the way that the Board

under the prior order instituted

inspection requirements. The

proponents expect the new Board would

operate in the same manner, although

they recognize that there are obvious

significant differences between the two

orders. In addition, such quality

regulations would be implemented

through the informal rulemaking

process which would require a Board

vote and opportunity for the public to

comment.

Based upon the exception filed by Mr.

Harmson, the findings and conclusions

in material issue number 5(f) of the

Recommended Decision concerning the

authority to establish volume regulation

provisions under the proposed order are

amended by adding the following two

paragraphs after the 15th paragraph (60

FR 61311) to read as follows:

In an exception filed by Mr. Harmson,

he stated that the provision that would

allow the Board to acknowledge a

national bargaining agency on behalf of

growers should not be deleted from the

proposed order. Bargaining associations

are a form of group action in agriculture

that contributes greatly to the economic

well being of growers and adds an

important dimension to representation

of their interests in the marketplace.

As previously stated, the record

evidence did not adequately explain

how such a provision would work or

what the benefits would be to growers.

Also, the record evidence did not define

the functions of a national bargaining

association as related to the proposed

marketing order. Therefore, Mr.

Harmson’s exception is denied.

Based upon the exception filed by Mr.

Lee Schrepel, the findings and

conclusions in material issue number

5(f) of the Recommended Decision

concerning the authority to establish

volume regulation provisions under the

proposed order are amended by adding

the following two paragraphs after the

23rd paragraph (60 FR 61312) to read as

follows:

The exception filed by Mr. Lee

Schrepel stated that ownership of the

primary or secondary reserve should not

be allowed to be transferred, but remain

with the handler who had the initial

reserve obligation.

Record evidence supported

authorizing the transfer of a handler’s

equity in the primary reserve to another

person. As previously stated, a handler

may need to do this if, for example,

such handler does not have the storage
Federal Register / Vol. 61, No. 104 / Wednesday, May 29, 1996 / Proposed Rules 26965

area to store the primary reserve.

Therefore, Mr. Schrepel’s exception is

denied.

Based upon the exception filed by

CMI, the findings and conclusions in

material issue number 5(f) of the

Recommended Decision concerning the

authority to establish volume regulation

provisions under the proposed order are

amended by adding the following

paragraph after the seventh paragraph

(60 FR 61311) to read as follows:

In CMI’s exception, it stated that

section 930.50(b) governing the

application of the optimum supply

formula in calculating preliminary free

and restricted percentages was altered

from the proponents’ proposal. The

proponents’ proposal provided that

tonnage requirements for the current

crop year should be subtracted from the

current year USDA crop forecast. The

Recommended Decision provided that

these numbers should be divided. This

calculation would not work properly

and is an inadvertent error by USDA.

Therefore, it will be corrected in the

amendatory language and CMI’s

exception is adopted.

Based upon the exception filed by

CMI, the findings and conclusions in

material issue number 5(f) of the

Recommended Decision concerning the

authority to establish volume regulation

provisions under the proposed order are

amended by adding the following

paragraph after the 67th paragraph (60

FR 61316) to read as follows:

The exception filed by CMI indicated

that section 930.52(d) should be

corrected and clarified by removing the

word ‘‘maximum’’ in the phrase

‘‘maximum average annual processed

production’’ since this phrase is

ambiguous and lacks clear meaning.

One can either have a maximum annual

production or an average annual

production over the last five years, but

not both. Therefore, section 930.52(d)

should be modified by removing the

word ‘‘maximum’’ and simply permit a

district to drop out of volume regulation

when its current crop is 50 percent less

than the average crop processed over the

prior five years. CMI’s exception is

adopted herein.

Based upon the exceptions filed by

Mr. Rowley, Mr. Morrison, CMI, Mr.

Mark Schrepel, and Mr. Lee Schrepel,

the findings and conclusions in material

issue number 5(f) of the Recommended

Decision concerning the authority to

establish volume regulation provisions

under the proposed order are amended

by adding the following eight

paragraphs after the 59th paragraph (60

FR 61315) to read as follows:

The exception filed by Mr. Rowley

stated that he was very concerned that

the Recommended Decision did not

authorize cherries used for drying as a

diversion outlet. Mr. Rowley stated that

his company had spent over $1,500,000

to develop dried cherries and dried

cherry products. He believes that it

would be grossly unfair that unregulated

States could sell all their dried cherry

products and he could not since dried

cherries is not a diversion outlet.

Mr. Mark Schrepel’s exception

expressed concern that export would be

prohibited as an exempt use or

diversion outlet.

Mr. Morrison’s exception requested

that diversion credit be allowed for

juice, exports and dried cherries. Mr.

Morrison stated that companies have

invested substantial sums to develop

new markets and expand current

markets dealing with juice, export and

dried cherries. In CMI’s exception, it

requested that the USDA modify section

930.62 to include dried cherries that are

exported, and cherries that are

converted to juice.

Under section 930.59 of the proposed

order, handler diversion can take place

by several methods, including uses

exempt under section 930.62. Section

930.62 provides that diverted cherries

used for specific purposes may be

exempt from certain provisions of the

marketing order. These include

exemption from assessment and volume

control provisions.

Dried cherries or cherries designated

for export can be exempted under

§ 930.62 from certain order provisions

or can be allowed to qualify as diversion

outlets under § 930.59. As specified

under section 930.62, the Board can also

designate other exempt uses. If the

Board choose to designate export or

dried cherries as an exempted use under

§ 930.62, export and dried cherries

could also be specified as an eligible

diversion outlet. Thus, such uses

requested by the exceptions for

diversion credit are not prohibited

under the marketing order, except for

cherries converted to juice or juice

concentrate.

As previously discussed, record

evidence supports the proposition that

cherries converted to juice or juice

concentrate cannot be used as an

eligible diversion outlet. The arguments

raised in the exceptions did not

overcome the evidence in the record

indicating that cherries converted to

juice or juice concentrate cannot be

used as an eligible diversion. This is

mainly because of the possibility of

oversupplies damaging the juice market

already established by cherry producers

and handlers in Oregon and

Washington.

In addition, CMI’s exception

requested USDA to modify section

930.59(d) to clarify that the prohibition

of juice or juice concentrate as an

eligible handler diversion only prohibits

the conversion of diverted cherries to

juice or concentrate. CMI requested that

the use of juice or juice concentrate for

sales in export markets be eligible for

diversion credit. As previously

discussed, the prohibition of juice or

juice concentrate for diversion credit,

discussed in the Recommended

Decision (60 FR 61316), would also

apply to sales of juice or juice

concentrate in export markets. This

prohibition on diversion credit,

however, does not preclude the export

of free tonnage cherries that have been

converted to juice or juice concentrate.

Therefore, CMI’s exception is denied.

Finally, Mr. Lee Schrepel’s exception

stated that there was an error in section

930.58(b) which referenced section

930.63 as exempted uses. Section 930.62

is the section in the marketing order that

specifies the exempt uses. Therefore,

section 930.58(b) should be corrected.

Based upon the exceptions filed by

Mr. Frank and Mr. Facer, the findings

and conclusions in material issue

number 5(f) of the Recommended

Decision concerning the authority to

establish volume regulation provisions

under the proposed order are amended

by adding the following paragraph after

the 68th paragraph (60 FR 61317) to

read as follows:

In Mr. Frank’s exception, he stated

that tart cherries is a national crop and

the oversupply is a national problem.

Therefore, Washington, Oregon,

Wisconsin and Pennsylvania should not

be exempt from participating in the

marketing order. These States comprise

17 percent of the total bearing acreage.

Mr. Frank states that this is not an

insignificant amount and to exempt

these States from participating in the

marketing order is not fair or right. In

Mr. Facer’s exception, he stated that he

opposed the 15 million pound

requirement tart cherry producing areas

would have to meet to become regulated

under the order. All tart cherry

producing areas should be included or

there should not be a marketing order.

The above-mentioned States are not

exempt from the marketing order. If the

proposed order becomes effective, they

would not be regulated under the

order’s proposed volume regulation

because they do not meet the 15 million

pound criteria. Should they meet the

criteria in the future, they would

become regulated. Handlers in all States

would pay assessments for the

administration of the order. The record

evidence does not warrant volume
26966 Federal Register / Vol. 61, No. 104 / Wednesday, May 29, 1996 / Proposed Rules

regulation in the States discussed by Mr.

Frank or Mr. Facer, at this time.

Therefore, Messrs. Frank’s and Facer’s

exceptions are denied.

Based upon the exception filed by Mr.

Facer, the findings and conclusions in

material issue number 5(f) of the

Recommended Decision concerning the

authority to establish volume regulation

provisions under the proposed order are

amended by adding the following two

paragraphs after the 23rd paragraph (60

FR 61312) to read as follows:

Mr. Facer expressed a concern that

the proposed order would not protect

individual producers’ investments in

processing/marketing cooperatives. He

stated that many producers have made

substantial investments in cooperatives

to market their production while other

producers have no such investments. It

is his contention that the order will

make all producers equal, allowing each

to market the same portion of his/her

crop.

The proposed order does not regulate

producers. The order regulates only

handlers of tart cherries. If a volume

regulation is implemented, handlers

would have to decide how to market

their product, whether to withhold the

required reserve or divert product, or

both. Independent handlers and

cooperatives would be making similar

decisions concerning tart cherries to

those they have made in the past when

faced with overproduction. Such

decisions would include identifying

which producers’ cherries to purchase,

and which of those to utilize in various

products and markets. The proposed

marketing order is intended to bring

supplies in line with current demand,

thereby increasing returns to growers.

Therefore, Mr. Facer’s exception is

denied.

Based upon the exception filed by Mr.

Lee Schrepel, the findings and

conclusions in material issue number

5(f) of the Recommended Decision

concerning the authority to establish

volume regulation provisions under the

proposed order are amended by adding

the following two paragraphs after the

20th paragraph (60 FR 61312) to read as

follows:

Mr. Lee Schrepel’s exception stated

that the Board, even with the

concurrence of the Secretary, should

never have authority to modify the 50

million pound primary reserve limit. If

a modification occurs, it should involve

a proposal of modification to the

Secretary followed by a comment period

and State-by-State voting.

The record evidence supports the 50

million pound level specified in section

930.50(i). If the Board recommended a

change to the 50 million pound level, it

would have to be implemented through

the formal rulemaking process which

would require a public hearing and

eventually a favorable vote by growers

and processors to implement such

change. State-by-State voting is not

authorized under the Act nor is it

supported by the record.

Based upon the exception filed by

CMI, the findings and conclusions in

material issue number 5(f) of the

Recommended Decision concerning the

authority to establish volume regulation

provisions under the proposed order are

amended by adding the following

paragraph after the 16th paragraph (60

FR 61311) to read as follows:

The exception filed by CMI stated that

there was an inconsistency in section

930.55(b) of the proposed order. The

record evidence supported the concept

that handlers could place cherries in

any form in the inventory reserve.

Handlers would have the option of

choosing what form of inventory they

wish to store. However, proposed

section 930.55(b) states that the form to

be used would be prescribed by the

Board. This statement is inconsistent

with the record evidence. Therefore,

CMI’s exception is adopted and

appropriate modifications are made in

section 930.55(b).

Based upon the exception filed by

CMI, the findings and conclusions in

material issue number 5(f) of the

Recommended Decision concerning the

authority to establish volume regulation

provisions under the proposed order are

amended by adding the following

paragraph after the 15th paragraph (60

FR 61311) to read as follows:

The exception filed by CMI stated that

section 930.53 should also apply to the

modification, suspension, or

termination of quality regulations along

with volume regulations. This change

would clarify the Board’s responsibility

to monitor crop and market conditions

and recommend changes to existing

regulations as necessary. Therefore,

CMI’s exception is adopted and

appropriate modifications to section

930.53 have been made.

Based upon the exception filed by Mr.

Lee Schrepel, the findings and

conclusions in material issue number

5(f) of the Recommended Decision

concerning the authority to establish

volume regulation provisions under the

proposed order are amended by adding

the following paragraph after the 12th

paragraph (60 FR 61311) to read as

follows:

In Mr. Lee Schrepel’s exception, he

stated that the reference to the harvest

season beginning in August (used as

part of an illustration) was incorrect.

Mr. Schrepel stated that the harvest

season actually begins in mid-June and

runs through mid-August. Mr.

Schrepel’s exception is correct.

Based upon the exception filed by Mr.

Lee Schrepel, the findings and

conclusions in material issue number

5(f) of the Recommended Decision

concerning the authority to establish

volume regulation provisions under the

proposed order are amended by adding

the following paragraph after the 52nd

paragraph (60 FR 61314) to read as

follows:

The exception filed by Mr. Lee

Schrepel stated that grower diversion

credit should not be given for fruit that

is storm damaged. A diversion credit

may be a marketable commodity, an

item of value, and no such value should

be accrued for unmarketable cherries.

USDA did not include the proponents’

proposal to authorize diversion credit

for unharvestable or unmarketable fruit.

The record evidence supported the

proposition that growers should be

allowed to receive diversion credit for

marketable, harvestable fruit, even if

some portion of such fruit was damaged

by storm winds or floods. USDA has

determined that the grower diversion

program contained in the

Recommended Decision could benefit

the industry and believes that this

finding is consistent with Mr. Schrepel’s

exception.

Based upon the exceptions filed by

CMI and Mr. Lee Schrepel, the findings

and conclusions in material issue

number 5(f) of the Recommended

Decision concerning the authority to

establish volume regulation provisions

under the proposed order are amended

by adding the following 10 paragraphs

after the 68th paragraph (60 FR 61317)

to read as follows:

The exception filed by CMI stated that

since USDA modified the provisions

under section 930.52, the section may

not now provide authority to subject

additional districts to volume regulation

once the initial group of volume

regulated districts is established at the

time of promulgation. CMI also

proposes a new section 930.52 to

replace section 930.52 that was

published in the Recommended

Decision. CMI objected to USDA

removing a 150 percent trigger provision

which would make districts that had a

surge in production subject to volume

control. USDA determined that such an

additional criteria would be

complicated for the Board to administer

and possibly inequitable to growers and

handlers.

CMI stated that, since the 150 percent

trigger was removed from the proposal,

the potential now exists for having up

to 25 million pounds of unregulated
Federal Register / Vol. 61, No. 104 / Wednesday, May 29, 1996 / Proposed Rules 26967

production. In a market of 250 million

pounds, this amounts to 10 percent of

unregulated production annually and an

additional 10 percent could have a

substantial impact upon markets and

prices. CMI states that this emphasizes

the need to have realistic production

triggers. Also, CMI disagrees with

USDA’s conclusion that the dual

triggers (150 percent and 15 million

pounds) would somehow cause

confusion and concern that a district

could meet one criteria and not the

other and still be regulated. CMI

contends that the rules pertaining to the

15 million pound criteria and the 150

percent trigger are clear on the record,

and therefore are not confusing.

CMI has proposed modifications to

section 930.52 which would provide

that: (1) Upon promulgation, those

districts potentially subject to any

imposed volume regulation would be

those in which the average annual

production of cherries over the prior

three years, measured on a total

production basis, has exceeded 15

million pounds of cherries and that

handlers in districts not meeting this 15

million pound requirement at the time

of order promulgation shall become

subject to any volume regulation

implemented in accordance with this

part in the crop year that follows any

three-year period in which the 15

million pound average production

requirement is exceeded in that district;

(2) If total production data is

unavailable for a district, the Board

would adjust the 15 million pound

trigger upward or downward by a factor

accounting for the historical difference

between the total production and total

utilization; and (3) When a district hits

the 15 million pound trigger, it would

be subject to regulation in the next crop

year and remain regulated until the crop

year following that in which its

production drops below 15 million

pounds over any three-year period

subsequent to the year in which it hit

the original 15 million pound threshold.

Regarding modification number one,

USDA is adopting CMI’s exception. This

would clarify the intent and meaning of

section 930.52 which should provide

that after the initial regulation of

districts that meet the 15 million pound

test, additional districts may become

regulated in the future.

Regarding modification number two,

USDA is not adopting this exception.

Such factors as proposed by CMI would

be confusing and difficult to administer.

If the order is promulgated, information

needed to calculate each State’s

production would be collected under

the marketing order. The marketing

order provides for information

collection from handlers that can be

used for this purpose.

Finally, the third modification is also

denied. This modification would lock a

State in to being regulated for three

years once it reaches the 15 million

pound threshold. This was not the

intent of USDA’s modification to the

Recommended Decision to delete the

150 percent trigger mechanism. USDA

intended that States would become

regulated in the year subsequent to

when they reach 15 million pounds

(computed as a rolling average of a three

year period). Also, States would become

unregulated in the year subsequent to

when they fell below the 15 million

pounds. The production of each State or

district would be reviewed annually to

determine if they would be regulated or

not regulated in the upcoming crop

year. Therefore, CMI’s exception is

denied on this issue.

In Mr. Lee Schrepel’s exception, he

stated that the Board should not have

the authority to modify the 15 million

pound requirement for volume

regulation. If the Board decided to

recommend modification of the 15

million pound level, such modification

would have to be implemented through

formal rulemaking procedures. This

would require a public hearing and a

favorable vote by growers and

processors to implement such change.

Mr. Schrepel further stated that the

proposal should be modified to facilitate

that this trigger (15 million pound

requirement) for imposition of volume

regulations increase whenever it falls

below 8 percent of the optimum supply.

There is no support in the record for

such proposition. Also, Mr. Schrepel

did not specify why 8 percent was

chosen and how this provision would

work, therefore, his exception is denied.

Mr. Schrepel also requested

clarification of when districts would

become permanently regulated; would it

be contingent upon the average of the

previous three seasons? As previously

discussed, no district would be

regulated unless that district continued

to have production above the 15 million

pound requirement. Each year, the

production of each district (based on a

rolling 3-year average) would be

evaluated to determine if such district

would be regulated in the upcoming

crop year.

Mr. Schrepel also requested that

USDA specify the source of data for

application of the trigger. USDA

believes that the proponents intended

that the Board use post-harvest

production figures from each district.

The Board can also obtain this

information from USDA data and

handler reports.

Based upon the exception filed by Mr.

Lee Schrepel, the findings and

conclusions in material issue number

5(f) of the Recommended Decision

concerning the authority to establish

volume regulation provisions under the

proposed order are amended by adding

the following paragraph after the 19th

paragraph (60 FR 61312) to read as

follows:

Mr. Lee Schrepel’s exception stated

under section 930.63(a) that referenced

‘‘60 days prior to the end of the crop

year’’ appears to be open to

interpretation by the reader. USDA

disagrees with this statement. Crop year

is defined under the marketing to mean

the 12-month period beginning on July

1 of any year and ending on June 30 of

the following year. Therefore, 60 days

prior to the end of the crop year would

mean April 30. Mr. Schrepel’s exception

is denied.

Based upon the exception filed by Mr.

Lee Schrepel, the findings and

conclusions in material issue number

5(h) of the Recommended Decision

concerning the additional terms and

conditions which are common to all

marketing orders are amended by

adding the following five paragraphs

after the sixth paragraph (60 FR 61318)

to read as follows:

Mr. Lee Schrepel’s exception stated

that a continuance referendum every

sixth year is not frequent enough. The

industry should be able to petition the

Secretary to hold a continuance

referendum more frequently.

The record evidence supported the

conduct of a continuance referendum at

least every six years among growers and

processors in the industry to determine

if they favor continuance of the order.

This is also consist with Departmental

guidelines that endorse a continuance

referendum every six years. The

Secretary is not prevented from holding

a continuance referendum at an earlier

date if such referendum is deemed

necessary. Therefore, Mr. Schrepel’s

exception is denied.

Mr. Schrepel also stated that the

standards or criteria should be as

stringent for continuance of the order as

it is for the initial promulgation. As was

indicated in the Recommended

Decision, it was contemplated that the

criteria for continuance of the order

would be based on a two-thirds

affirmative vote by number or volume

represented in the referendum. This

standard would be similar to the

promulgation standard. In any event,

the Secretary would still have

discretionary authority in deciding

whether to continue the order.

Therefore, Mr. Schrepel’s exception is

denied.
26968 Federal Register / Vol. 61, No. 104 / Wednesday, May 29, 1996 / Proposed Rules

1This order shall not become effective unless and

until the requirements of section 900.14 of the rules

of practice and procedure governing proceedings to

formulate marketing agreements and marketing

orders have been met.

Mr. Schrepel also stated that section

930.91 should include provisions for the

initiation of an amendment from a

source within the industry other than

the Board. Mr. Schrepel stated that

incidents may occur and the Board may

not choose to act on a matter that may

be of considerable importance to an

industry segment. The language in

section 930.91 is standard language

which is found in other orders and does

not preclude anyone from

recommending amendments.

The Secretary relies on the Board to

make recommendations that are

important to the welfare of the industry.

If one segment of the industry is

concerned about an issue, it should be

brought to the Board to be addressed.

Any person can submit

recommendations to the Secretary for

consideration. If the Secretary does

conclude that formal rulemaking is

necessary based on a Board

recommendation or other

recommendations, other persons will

also have the opportunity to submit

proposals. In addition, the Secretary

may propose amendments, even in the

absence of outside recommendations.

Therefore, Mr. Schrepel’s exception is

denied.

In addition, to the exceptions filed

and discussed above, CMI filed an

exception that included some

typographical errors in the amendatory

language of the proposed order. Those

changes are adopted in the amendatory

language below. They are:

(1) Section 930.11—Add the words

‘‘for his or her own account’’ at the end

of the definition.

(2) Section 930.15—cross sectional

references are incorrect that refer to the

primary and secondary reserve.

(3) Section 930.17—cross sectional

reference is incorrect that refers to the

primary and secondary reserve.

(4) Section 930.25—the phrase

‘‘reapportionment or’’ should be added

to make this section consistent with

other changes that were made.

(5) Section 930.51—A comma and the

word ‘‘this’’ were left out of the

proposal.

(6) Section 930.55(a)—cross sectional

reference is incorrect that refers to

equity holders.

(7) Section 930.57(a)—cross sectional

reference is incorrect that refers to

equity holders.

(8) Section 930.58(b)—cross sectional

reference is incorrect that refers to

exemptions.

(9) Section 930.58(b)(i)—add an

‘‘and’’ at the end of the paragraph.

(10) Section 930.60—Change ‘‘sole

property’’ to sole responsibility.’’

Also, in his exception, Mr. Lee

Schrepel pointed out some

typographical errors and omissions of

words in the Recommended Decision.

They are: (1) the dates of the Grand

Rapids, Michigan hearing session were

incorrectly listed (60 FR 61292) and

should be changed from January 9 and

10, 1995, to January 18 and 19, 1995,

respectively; (2) in the description of

small agricultural producers as those

entities having annual receipts of less

than $500,000 (60 FR 61293), the words

‘‘less than’’ were inadvertently omitted

and should be added; and, (3) the

listings of U.S. bearing acreage of tart

cherries (60 FR 61293) in 1986 and 1990

were incorrectly stated and should be

changed from 4.5 million and 5 million,

respectively, to 45,000 and 50,000,

respectively.

USDA has modified sections 70(c) to

make that provision consistent with

authorities provided under this

proposed order and other Federal

marketing orders. In addition, where

necessary, USDA has made minor

conforming changes to ensure that all

sections of this part accurately reflect

the modifications adopted in this

decision.

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

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 900.400) to determine whether

the issuance of the annexed 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

proposed production area.

The representative period for the

conduct of such referendum is hereby

determined to be July 1, 1995, through

May 31, 1996.

The agents of the Secretary to conduct

such referendum are hereby designated

to be Gary D. Olson and Robert J. Curry,

Marketing Order Administration

Branch, Fruit and Vegetable Division,

AMS, USDA, 1220 S.W. Third Avenue,

room 369, Portland, Oregon 97204;

telephone 503–326–2724, FAX 503–

326–7440.

List of Subjects in 7 CFR Part 930

Marketing agreements, Tart cherries,

Reporting and recordkeeping

requirements.

Dated: May 22, 1996.

Shirley R. Watkins,

Deputy Assistant Secretary, Marketing and

Regulatory Programs.

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 upon the

basis of the 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 a proposed

marketing agreement and order

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, and all of the terms and

conditions thereof, will tend to

effectuate the declared policy of the Act;

(2) The marketing agreement and

order regulate the handling of tart

cherries grown in the production area 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 hearings have

been held;
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(3) The marketing agreement and

order 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) There are no differences in the

production and marketing of tart

cherries produced in the production

area which make necessary different

terms and provisions applicable to

different parts of such 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 follows:

The provisions of the proposed

marketing agreement and order

contained in the Recommended

Decision issued by the Administrator on

November 20, 1995, and published in

the Federal Register on November 29,

1995 [60 FR 61292], as revised herein,

shall be and are the terms and

provisions of this agreement and order.

Sections 930.92 through 930.94 apply

only to the proposed marketing

agreement and not the proposed order.

Title 7, Chapter IX is proposed to be

amended by adding part 930 to read as

follows:

PART 930—TART CHERRIES GROWN

IN THE STATES OF MICHIGAN, NEW

YORK, PENNSYLVANIA, OREGON,

UTAH, WASHINGTON, AND

WISCONSIN

Subpart A—Order Regulating Handling

Definitions

Sec.

930.1 Act.

930.2 Board.

930.3 Cherries.

930.4 Crop year.

930.5 Department or USDA.

930.6 District.

930.7 Fiscal period.

930.8 Free market tonnage percentage

cherries.

930.9 Grower.

930.10 Handle.

930.11 Handler.

930.12 Person.

930.13 Primary inventory reserve.

930.14 Production area.

930.15 Restricted percentage cherries.

930.16 Sales constituency.

930.17 Secondary inventory reserve.

930.18 Secretary.

Administrative Body

930.20 Establishment and membership.

930.21 Reestablishment

930.22 Term of office.

930.23 Nomination and election.

930.24 Appointment.

930.25 Failure to nominate.

930.26 Acceptance.

930.27 Vacancies.

930.28 Alternate members

930.29 Eligibility for membership on Cherry

Industry Administrative Board.

930.30 Powers.

930.31 Duties.

930.32 Procedure.

930.33 Expenses and compensation.

Expenses and Assessments

930.40 Expenses.

930.41 Assessments.

930.42 Accounting.

Quality Control

930.44 Quality Control.

Research, Market Development and

Promotion

930.48 Research, Market Development and

Promotion.

Regulations

930.50 Marketing policy.

930.51 Issuance of volume regulations.

930.52 Establishment of districts subject to

volume regulations.

930.53 Modification, suspension, or

termination of regulations.

930.54 Prohibition on the use or disposition

of inventory reserve cherries.

930.55 Primary inventory reserves.

930.56 Off-premise inventory reserve.

930.57 Secondary inventory reserve.

930.58 Grower diversion privilege.

930.59 Handler diversion privilege.

930.60 Equity holders.

930.61 Handler compensation.

930.62 Exemptions.

930.63 Deferment of restricted obligation.

Reports and Records

930.70 Reports.

930.71 Records.

930.72 Verification of reports and records.

930.73 Confidential information.

Miscellaneous Provisions

930.80 Compliance.

930.81 Right of the Secretary.

930.82 Effective time.

930.83 Termination.

930.84 Proceedings after termination.

930.85 Effect of termination or amendment.

930.86 Duration of immunities.

930.87 Agents.

930.88 Derogation.

930.89 Personal liability.

930.90 Separability.

930.91 Amendments.

930.92 Counterparts.

930.93 Additional parties.

930.94 Order with marketing agreement.

Subpart B—[Reserved]

Authority: 7 U.S.C. 601–674.

Subpart A—Order Regulating Handling

Definitions

§ 930.1 Act.

Act means Public Act No. 10, 73d

Congress (May 12, 1933), as amended,

and as reenacted and amended by the

Agriculture Marketing Agreement Act of

1937, as amended (48 Stat. 31, as

amended, 68 Stat. 906, 1047; 7 U.S.C.

601 et seq.).

§ 930.2 Board.

Board means the Cherry Industry

Administrative Board established

pursuant to § 930.20.

§ 930.3 Cherries.

Cherries means all tart/sour cherry

varieties grown in the production area

classified botanically as Prunus cerasas,

or hybrids of Prunus cerasas by Prunus

avium, or Prunus cerasas by Prunus

fruticosa.

§ 930.4 Crop year.

Crop year means the 12-month period

beginning on July 1 of any year and

ending on June 30 of the following year,

or such other period as the Board, with

the approval of the Secretary, may

establish.

§ 930.5 Department or USDA.

Department or USDA means the

United States Department of

Agriculture.

§ 930.6 District.

District means one of the subdivisions

of the production area described in

§ 930.20(c), or such other subdivisions

as may be established pursuant to

§ 930.21, or any subdivision added

pursuant to § 930.63.

§ 930.7 Fiscal period.

Fiscal period is synonymous with

fiscal year and means the 12-month

period beginning on July 1 of any year

and ending on June 30 of the following

year, or such other period as the Board,

with the approval of the Secretary, may

establish: Provided, That the initial

fiscal period shall begin on the effective

date of this part.

§ 930.8 Free market tonnage percentage

cherries.

Free market tonnage percentage

cherries means that proportion of

cherries handled in a crop year which

are free to be marketed in normal

commercial outlets in that crop year

under any volume regulation

established pursuant to § 930.50 or

§ 930.51 and, in the absence of a
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restricted percentage being established

for a crop year pursuant to § 930.50 or

§ 930.51, means all cherries received by

handlers in that crop year.

§ 930.9 Grower.

Grower is synonymous with producer

and means any person who produces

cherries to be marketed in canned,

frozen, or other processed form and who

has a proprietary interest therein:

Provided, That the term grower shall not

include a person who produces cherries

to be marketed exclusively for the fresh

market in an unpitted condition.

§ 930.10 Handle.

Handle means the process to brine,

can, concentrate, freeze, dehydrate, pit,

press or puree cherries, or in any other

way convert cherries commercially into

a processed product, or divert cherries

pursuant to § 930.59 or obtain grower

diversion certificates issued pursuant to

§ 930.58, or otherwise place cherries

into the current of commerce within the

production area or from the area to

points outside thereof: Provided, That

the term handle shall not include:

(a) The brining, canning,

concentrating, freezing, dehydration,

pitting, pressing or the converting, in

any other way, of cherries into a

processed product for home use and not

for resale.

(b) The transportation within the

production area of cherries from the

orchard where grown to a processing

facility located within such area for

preparation for market.

(c) The delivery of such cherries to

such processing facility for such

preparation.

(d) The sale or transportation of

cherries by a grower to a handler of

record within the production area.

(e) The sale of cherries in the fresh

market in an unpitted condition.

§ 930.11 Handler.

Handler means any person who first

handles cherries or causes cherries to be

handled for his or her own account.

§ 930.12 Person.

Person means an individual,

partnership, corporation, association, or

any other business unit.

§ 930.13 Primary inventory reserve.

Primary inventory reserve means that

portion of handled cherries that are

placed into handlers’ inventories in

accordance with any restricted

percentage established pursuant to

§ 930.50 or § 930.51.

§ 930.14 Production area.

Production area means the States of

Michigan, New York, Pennsylvania,

Oregon, Utah, Washington and

Wisconsin.

§ 930.15 Restricted percentage cherries.

Restricted percentage cherries means

that proportion of cherries handled in a

crop year which must be either placed

into handlers’ inventories in accordance

with § 930.55 or § 930.57 or otherwise

diverted in accordance with § 930.60

and thereby withheld from marketing in

normal commercial outlets under any

volume regulation established pursuant

to § 930.50 or § 930.51.

§ 930.16 Sales constituency.

Sales constituency means a common

marketing organization or brokerage

firm or individual representing a group

of handlers or growers.

§ 930.17 Secondary inventory reserve.

Secondary inventory reserve means

any portion of handled cherries

voluntarily placed into inventory by a

handler under § 930.57.

§ 930.18 Secretary.

Secretary means the Secretary of

Agriculture of the United States, or any

officer or employee of the U.S.

Department of Agriculture to whom

authority has heretofore been delegated,

or to whom authority may hereafter be

delegated, to act in the Secretary’s stead.

Administrative Body

§ 930.20 Establishment and membership.

(a) There is hereby established a

Cherry Industry Administrative Board

(Board) consisting of 18 members.

Seventeen of these members shall be

qualified growers and handlers selected

pursuant to this part, each of whom

shall have an alternate having the same

qualifications as the member for whom

the person is an alternate. The

remaining member of the Board shall be

a public member who, along with his or

her alternate, shall be elected by the

Board from the general public.

(b) District representation on the

Board shall be as follows:

District Grower

members

Handler

members

1 ................................ 2 2

2 ................................ 1 2

3 ................................ 1 1

4 ................................ 1 1

5 ................................ 1 or 1

6 ................................ 1 or 1

7 ................................ 1 1

8 ................................ 1 or 1

9 ................................ 1 or 1

(c) Upon the adoption of this part, the

production area shall be divided into

the following described subdivisions for

purposes of this section:

District 1—Northern Michigan: That

portion of the State of Michigan which

is north of a line drawn along the

northern boundary of Mason County

and extended east to Lake Huron.

District 2—Central Michigan: That

portion of the State of Michigan which

is south of District 1 and north of a line

drawn along the southern boundary of

Allegan County and extended east to

Lake St. Clair.

District 3—Southern Michigan: That

portion of the State of Michigan not

included in Districts 1 and 2.

District 4—The State of New York.

District 5—The State of Oregon.

District 6—The State of Pennsylvania.

District 7—The State of Utah.

District 8—The State of Washington.

District 9—The State of Wisconsin.

(d) The ratio of grower to handler

representation in District 2 shall

alternate each time the term of a Board

member from the representative group

having two seats expires. During the

initial period of the order, the ratio shall

be as designated in paragraph (b) of this

section.

(e) Board members from Districts 5, 6,

8 and 9 may be either grower or handler

members and will be nominated and

elected as outlined in § 930.23. If

District 5, 6, 8, and/or 9 becomes subject

to volume regulation under §§ 930.52(a),

then the Board shall be reestablished by

the Secretary to provide such District(s)

with at least one grower and one

handler seat on the Board and such

seats shall be filled according to the

provisions of § 930.23.

(f) 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.

There is, however, 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.

(g) Subject to the approval of the

Secretary, the Board shall at its first

meeting and annually thereafter elect

from among any of its members a

chairperson and a vice-chairperson and

may elect other appropriate officers.

§ 930.21 Reestablishment.

Districts, subdivisions of districts, and

the distribution of representation among

growers and handlers within a

respective district or subdivision
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thereof, or among the subdivision of

districts, may be reestablished by the

Secretary, subject to the provisions of

§ 930.23, based upon recommendations

by the Board. In recommending any

such changes, the Board shall consider:

(a) the relative importance of

producing areas;

(b) relative production;

(c) the geographic locations of

producing areas as they would affect the

efficiency of administration of this part;

(d) shifts in cherry production within

the districts and the production area;

(e) changes in the proportion and role

of growers and handlers within the

districts; and

(f) other relevant factors.

§ 930.22 Term of office.

The term of office of each member

and alternate member of the Board shall

be for three fiscal years: Provided that,

of the nine initial members and

alternates from the combination of

Districts 1, 2 and 3, one-third of such

initial members and alternates shall

serve only one fiscal year, one-third of

such members and alternates shall serve

only two fiscal years, one-third of such

members and alternates shall serve three

fiscal years; and one-half of the initial

members and alternates from Districts 4

and 7 shall serve only one fiscal year,

and one-half of such initial members

and alternates shall serve two fiscal

years (determination of which of the

initial members and their alternates

shall serve for 1 fiscal year, 2 fiscal

years, or 3 fiscal years, in both

instances, shall be by lot). Members and

alternate members shall serve in such

capacity for the portion of the term of

office for which they are selected and

have qualified until their respective

successors are selected, have qualified

and are appointed. The consecutive

terms of office of grower, handler and

public members and alternate members

shall be limited to two 3-year terms,

excluding any initial term lasting less

than 3 years. The term of office of a

member and alternate member for the

same seat shall be the same. If this part

becomes effective on a date such that

the initial fiscal period is less than 6

months in duration, then the tolling of

time for purposes of this subsection

shall not begin until the beginning of

the first 12-month fiscal period.

§ 930.23 Nomination and election.

(a) Forms and ballots. Nomination

and election of initial and successor

members and alternate members of the

Board shall be conducted through

petition forms and election ballots

distributed to all eligible growers and

handlers via the U.S. Postal Service or

other means, as determined by the

Secretary. Similar petition forms and

election ballots shall be used for both

members and alternate members and

any requirements for election of a

member shall apply to the election of an

alternate.

(b) Nomination:

(1) In order for the name of a grower

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,

except in District 8, contains at least five

signatures of growers, other than the

nominee, from the nominee’s district

who are eligible to vote in the

referendum. Grower petition forms in

District 8 must be signed by only two

growers, other than the nominee, from

the nominee’s district.

(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 at least one

handler, other than the nominee, from

the nominee’s district who is eligible to

vote in the referendum. The

requirement that the petition form be

signed by a handler other than the

nominee shall not apply in any District

where less than two handlers are

eligible to vote.

(3) Only growers, including duly

authorized officers or employees of

growers, who are eligible to serve as

grower members of the Board shall

participate in the nomination of grower

members and alternate grower members

of the Board. No grower shall participate

in the submission of nominees in more

than one district during any fiscal

period. If a grower produces cherries in

more than one district, that grower may

select in which district he or she wishes

to participate in the nominations and

election process and shall notify the

Secretary or the Board of such selection.

A grower may not participate in the

nomination process in one district and

the election process in a second district

in the same election cycle.

(4) Only handlers, including duly

authorized officers or employees of

handlers, who are eligible to serve as

handler members of the Board shall

participate in the nomination of handler

members and alternate handler

members of the Board. No handler shall

participate in the selection of nominees

in more than one district during any

fiscal period. If a handler handles

cherries in more than one district, that

handler may select in which district he

or she wishes to participate in the

nominations and election process and

shall notify the Secretary or the Board

of such selection. A handler may not

participate in the nominations process

in one district and the elections process

in a second district in the same election

cycle. If a person is a grower and a

grower-handler only because some or all

of his or her cherries were custom

packed, but he or she does not own or

lease and operate a processing facility,

such person may vote only as a grower.

(5) In Districts 5, 6, 8 and 9, 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.

(6) All eligible growers and handlers

in all districts may submit the names of

the nominees for the public member and

alternate public member of the Board.

(7) After the appointment of the initial

Board, the Secretary or the Board shall

announce at least 180 days in advance

when a Board member’s term is expiring

and shall solicit nominations for that

position in the manner described in this

section. Nominations for such position

should be submitted to the Secretary or

the Board not less than 120 days prior

to the expiration of such term.

(c) Election:

(1) After receiving nominations, the

Secretary or the Board shall distribute

ballots via the U.S. Postal Service or

other means, as determined by the

Secretary, to all eligible growers and

handlers containing the names of the

nominees by district for the respective

seats on the Board, excluding the public

voting member seat. The ballots will

clearly indicate that growers and

handlers may only rank or otherwise

vote for nominees in their own district.

(2) Except as provided in paragraph

(c)(4) of this section, only growers,

including duly authorized officers or

employees of growers, who are eligible

to serve as grower members of the Board

shall participate in the election of

grower members and alternate grower

members of the Board. No grower shall

participate in the election of Board

members in more than one district

during any fiscal period. If a grower

produces cherries in more than one

district, the grower must vote in the

same district in which he or she chose

to participate in the nominations

process under paragraph (b)(3) of this

section. However, if the grower did not

participate in the nominations process,

he or she may select in which district

he or she wishes to vote and shall notify

the Secretary or the Board of such

selection.

(3) Except as provided in paragraph

(c)(4) of this section, only handlers,

including duly authorized officers or
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employees of handlers, who are eligible

to serve as handler members of the

Board shall participate in the election of

handler members and alternate handler

members of the Board. No handler shall

participate in the election of Board

members in more than one district

during any fiscal period. If a handler

does handle cherries in more than one

district, he or she must vote in the same

district in which the handler elected to

participate in the nominations process

under paragraph (b)(4) of this section.

However, if a handler did not

participate in the nominations process,

that handler may select in which district

he or she chooses to vote and shall

notify the Secretary or the Board of such

selection. If a person is a grower and a

grower-handler only because some or all

of his or her cherries were custom

packed, but he or she does not own or

lease and operate a processing facility,

such person may vote only as a grower.

(4) In Districts 5, 6, 8 and 9, growers

and handlers may vote for either the

grower or handler nominee(s) for the

single seat allocated to those districts.

(d) The members of the Board

appointed by the Secretary pursuant to

§ 930.24 shall, at the first meeting and

whenever necessary thereafter, by at

least a two-thirds vote of the entire

Board, select individuals to serve as the

public member and alternate public

member of the Board from the list of

nominees received from growers and

handlers pursuant to paragraph (b) of

this section or from other persons

nominated by the Board. The persons

selected shall be subject to appointment

by the Secretary under § 930.24.

(e) The Board, with the approval of

the Secretary, may establish rules and

regulations necessary and incidental to

the administration of this section.

§ 930.24 Appointment.

The selection of nominees made

pursuant to elections conducted under

§ 930.23(c) shall be submitted to the

Secretary in a format which indicates

the nominees by district, with the

nominee receiving the highest number

of votes at the top and the number of

votes received being clearly indicated.

The Secretary shall appoint from those

nominees or from other qualified

individuals, the grower and handler

members of the Board and an alternate

for each such member on the basis of

the representation provided for in

§ 930.20 or as provided for in any

reapportionment or reestablishment

undertaken pursuant to § 930.21. The

public member and alternate public

member is nominated by the Board

pursuant to § 930.23(d) and shall also be

subject to appointment by the Secretary.

The Secretary shall appoint from

nominees by the Board or from other

qualified individuals the public member

and the alternate public member.

§ 930.25 Failure to nominate.

If nominations are not made within

the time and in the manner prescribed

in § 930.23, the Secretary may, without

regard to nominations, select the

members and alternate members of the

Board on the basis of the representation

provided for in § 930.20 or as provided

for in any reapportionment or

reestablishment undertaken pursuant to

§ 930.21.

§ 930.26 Acceptance.

Each person to be appointed by the

Secretary as a member or as an alternate

member of the Board shall, prior to such

appointment, qualify by advising the

Secretary that he/she agrees to serve in

the position for which nominated for

selection.

§ 930.27 Vacancies.

To fill any vacancy occasioned by the

failure of any person appointed as a

member or as an alternate member of

the Board to qualify, or in the event of

the death, removal, resignation, or

disqualification of any member or

alternate member of the Board, a

successor for the unexpired term of such

member or alternate member of the

Board shall be appointed by the

Secretary from the most recent list of

nominations for the Board made by

growers and handlers, from nominations

made by the Board, or from other

qualified individuals. Any nominations

made by the Board to fill a vacancy

must be received by the Secretary

within 90 days of the effective date of

the vacancy. Board members wishing to

resign from the Board must do so in

writing to the Secretary.

§ 930.28 Alternate members.

An alternate member of the Board,

during the absence of the member for

whom that member serves as an

alternate, shall act in the place and

stead of such member and perform such

other duties as assigned. However, if a

member is in attendance at a meeting of

the Board, an alternate member may not

act in the place and stead of such

member. In the event of the death,

removal, resignation, or disqualification

of a member, the alternate shall act for

the member until a successor for such

member is appointed and has qualified.

§ 930.29 Eligibility for membership on

Cherry Industry Administrative Board.

(a) Each grower member and each

grower alternate member of the Board

shall be a grower, or an officer or

employee of a grower, in the district for

which nominated or appointed.

(b) Each handler member and each

handler alternate member of the Board

shall be a handler, or an officer or

employee of a handler, who owns, or

leases, and operates a cherry processing

facility in the district for which

nominated or appointed.

(c) The public member and alternate

public member of the Board shall be

prohibited from having any financial

interest in the cherry industry and shall

possess such additional qualifications as

may be established by regulation.

§ 930.30 Powers.

The Board shall have the following

powers:

(a) To administer this part in

accordance with its terms and

provisions;

(b) To make rules and regulations to

effectuate the terms and provisions of

this part;

(c) To receive, investigate, and report

to the Secretary complaints of violations

of this part; and

(d) To recommend to the Secretary

amendments to this part.

§ 930.31 Duties.

The Board shall have, among others,

the following duties:

(a) To select such officers, including

a chairperson and vice-chairperson, as

may be necessary, and to define the

duties of such officers and the duties of

the chairperson and the vicechairperson;

(b) To employ or contract with such

persons or agents as the Board deems

necessary and to determine the duties

and compensation of such persons or

agents;

(c) To select such committees and

subcommittees as may be necessary;

(d) To adopt bylaws and to adopt such

rules for the conduct of its business as

it may deem advisable;

(e) To submit to the Secretary a

budget for each fiscal period, prior to

the beginning of such period, including

a report explaining the items appearing

therein and a recommendation as to the

rates of assessments for such period;

(f) To keep minutes, books, and

records which will reflect all of the acts

and transactions of the Board and which

shall be subject to examination by the

Secretary;

(g) To prepare periodic statements of

the financial operations of the Board

and to make copies of each statement

available to growers and handlers for

examination at the office of the Board;

(h) To cause its financial statements to

be audited by a certified public

accountant at least once each fiscal year
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and at such times as the Secretary may

request. Such audit shall include an

examination of the receipt of

assessments and the disbursement of all

funds. The Board shall provide the

Secretary with a copy of all audits and

shall make copies of such audits, after

the removal of any confidential

individual grower or handler

information that may be contained in

them, available to growers and handlers

for examination at the offices of the

Board;

(i) To act as intermediary between the

Secretary and any grower or handler

with respect to the operations of this

part;

(j) To investigate and assemble data

on the growing, handling, and

marketing conditions with respect to

cherries;

(k) To apprise the Secretary of all

Board meetings in a timely manner;

(l) To submit to the Secretary such

available information as the Secretary

may request;

(m) To investigate compliance with

the provisions of this part;

(n) To develop and submit an annual

marketing policy for approval by the

Secretary containing the optimum

supply of cherries for the crop year

established pursuant to § 930.50 and

recommending such action(s) necessary

to achieve such optimum supply;

(o) To implement volume regulations

established under § 930.50 and issued

by the Secretary under § 930.51,

including the release of any inventory

reserves;

(p) To provide thorough

communication to growers and handlers

regarding the activities of the Board and

to respond to industry inquiries about

Board activities;

(q) To oversee the collection of

assessments levied under this part;

(r) To enter into contracts or

agreements with such persons and

organizations as the Board may approve

for the development and conduct of

activities, including research and

promotion activities, authorized under

this part or for the provision of services

required by this part and for the

payment of the cost thereof with funds

collected through assessments pursuant

to § 930.41 and income from such

assessments. Contracts or agreements for

any plan or project shall provide that:

(1) The contractors shall develop and

submit to the Board a plan or project

together with a budget(s) which shall

show the estimated cost to be incurred

for such plan or project;

(2) Any contract or agreement for a

plan or project and any plan or project

adopted by the Board shall only become

effective upon approval by the

Secretary; and

(3) Every such contracting party shall

keep accurate records of all of its

transactions and make periodic reports

to the Board of activities conducted and

an accounting for funds received and

expended, and such other reports as the

Secretary or the Board may require. The

Secretary or employees of the Board

may audit periodically the records of

the contracting party;

(s) Pending disbursement consistent

with its budget, to invest, with the

approval of the Secretary, and in

accordance with applicable

Departmental policies, funds collected

through assessments authorized under

§ 930.41 and income from such

assessments;

(t) To establish standards or grade

requirements for cherries for frozen and

canned cherry products, subject to the

approval of the Secretary;

(u) To borrow such funds, subject to

the approval of the Secretary and not to

exceed the expected expenses of one

fiscal year, as are necessary for

administering its responsibilities and

obligations under this part; and

(v) To establish, with the approval of

the Secretary, such rules and procedures

relative to administration of this subpart

as may be consistent with the provisions

contained in this subpart and as may be

necessary to accomplish the purposes of

the Act and the efficient administration

of this subpart.

§ 930.32 Procedure.

(a) Twelve members of the Board,

including alternates acting for absent

members, shall constitute a quorum. For

any action of the Board to pass, at least

two-thirds of the entire Board must vote

in support of such action.

(b) The Board may provide through its

own rules and regulations, subject to

approval by the Secretary, for

simultaneous meetings of groups of its

members assembled at different

locations and for votes to be conducted

by telephone or other means of

communication. Votes so cast shall be

promptly confirmed in writing.

(c) All meetings of the Board are open

to the public, although the Board may

hold portions of meetings in executive

session for the consideration of certain

business. The Board will establish, with

the approval of the Secretary, a means

of advanced notification of growers and

handlers of Board meetings.

§ 930.33 Expenses and compensation.

Except for the public member and

alternate public member who shall

receive such compensation as the Board

may establish and the Secretary may

approve, the members of the Board, and

alternates when acting as members,

shall serve without compensation but

shall be reimbursed for necessary and

reasonable expenses, as approved by the

Board, incurred by them in the

performance of their duties under this

part. The Board at its discretion may

request the attendance of one or more

alternates at any or all meetings,

notwithstanding the expected or actual

presence of the respective member(s),

and may pay the expenses of such

alternates.

Expenses and Assessments

§ 930.40 Expenses.

The Board is authorized to incur such

expenses as the Secretary finds are

reasonable and likely to be incurred for

its maintenance and functioning and to

enable it to exercise its powers and

perform its duties in accordance with

the provisions of this part. The funds to

cover such expenses shall be acquired

by the levying of assessments as

provided in § 930.41.

§ 930.41 Assessments.

(a) An assessment may be levied upon

handlers annually under this part to

cover the administrative costs of the

Board, costs of inspection, and any

research, development and promotion

activities initiated by the Board under

§ 930.48.

(b) Each part of an assessment

intended to cover the costs of each

activity in paragraph (a) of this section,

must be identified and approved by the

Board and the Secretary, and any

notification or other statement regarding

assessments provided to handlers must

contain such information.

(c) As a pro rata share of the

administrative, inspection, research,

development, and promotion expenses

which the Secretary finds reasonable

and likely to be incurred by the Board

during a fiscal period, each handler

shall pay to the Board assessments on

all cherries handled, as the handler

thereof, during such period: Provided, a

handler shall be exempt from any

assessment on the tonnage of handled

cherries that are diverted according to

§ 930.59 which includes cherries

represented by grower diversion

certificates issued pursuant to

§ 930.58(b)(2) and acquired by handlers

and those cherries devoted to exempt

uses under § 930.62.

(d) The Secretary, after consideration

of the recommendation of the Board,

shall fix the rate of assessment to be

paid by each handler during the fiscal

period in an amount designed to secure

sufficient funds to cover the expenses

which may be approved and incurred
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during such period or subsequent

period as provided in paragraph (c) of

this section. At any time during or after

the fiscal period, the Secretary may

increase the rate of assessment in order

to secure sufficient funds to cover any

later finding by the Secretary relative to

the expenses which may be incurred.

Such increase shall be applied to all

cherries handled during the applicable

fiscal period. In order to provide funds

for the administration of the provisions

of this part during the first part of a

fiscal period before sufficient operating

income is available from assessments,

the Board may accept the payment of

assessments in advance, and may

borrow money for such purposes.

(e) Assessments not paid within a

time prescribed by the Board may be

made subject to interest or late payment

charges, or both. The period of time, rate

of interest, and late payment charge will

be as recommended by the Board and

approved by the Secretary: Provided,

That when interest or late payment

charges are in effect, they shall be

applied to all assessments not paid

within the prescribed period of time.

(f) Assessments will be calculated on

the basis of pounds of cherries handled:

Provided, That the formula adopted by

the Board and approved by the

Secretary for determining the rate of

assessment will compensate for

differences in the number of pounds of

cherries utilized for various cherry

products and the relative market values

of such cherry products.

(g) The Board, with the approval of

the Secretary, may establish rules and

regulations necessary and incidental to

the administration of this section.

§ 930.42 Accounting.

(a) If, at the end of a fiscal period, the

assessments collected are in excess of

expenses incurred, the Board, with the

approval of the Secretary, may carry

over all or any portion of such excess

into subsequent fiscal periods as a

reserve. Such reserve funds may be used

to cover any expenses authorized by this

part, and to cover necessary expenses of

liquidation in the event of termination

of this part. If any such excess is not

retained in a reserve, it shall be

refunded proportionately to the

handlers from whom the excess was

collected. Without an additional reserve

level approved by the Secretary, the

amount held in reserve may not exceed

approximately one year’s operational

expenses. Upon termination of this part,

any funds not required to defray the

necessary expenses of liquidation shall

be disposed of in such a manner as the

Secretary may determine to be

appropriate: Provided, That to the extent

practicable, such funds shall be

returned pro rata to the persons from

whom such funds were collected.

(b) All funds received by the Board

pursuant to the provisions of this part

shall be used solely for the purpose

specified in this part and shall be

accounted for in the manner provided in

this part. The Secretary may at any time

require the Board and its members to

account for all receipts and

disbursements.

Quality Control

§ 930.44 Quality Control.

(a) Quality standards. The Board may

establish, with the approval of the

Secretary, such minimum quality and

inspection requirements applicable to

cherries as will contribute to orderly

marketing or be in the public interest. If

such requirements are adopted, no

handler shall process cherries into

manufactured products or sell

manufactured products in the current of

commerce unless such cherries and/or

such cherries used in the manufacture

of products meet the applicable

requirements as evidenced by

certification acceptable to the Board.

The Board, with the approval of the

Secretary, may establish rules and

regulations necessary and incidental to

the administration of this section.

(b) Inspection and certification.

Whenever the handling of any cherries

requires inspection pursuant to this

part, each handler who handles cherries

shall cause such cherries to be inspected

by the appropriate division of USDA,

and certified by it as meeting the

applicable requirements of such

regulation: Provided, That inspection

and certification shall be required for

cherries which previously have been so

inspected and certified only if such

cherries have been regraded, resorted,

repackaged, or in any other way further

prepared for market. Promptly after

inspection and certification, each such

handler shall submit, or cause to be

submitted, to the Board a copy of the

certificate of inspection issued with

respect to such cherries.

Research, Market Development and

Promotion

§ 930.48 Research, Market Development

and Promotion.

The Board, with the approval of the

Secretary, may establish or provide for

the establishment of production and

processing research, market research

and development, and/or promotional

activities, including paid advertising,

designed to assist, improve or promote

the efficient production and processing,

marketing, distribution, and

consumption of cherries subject to this

part. The expense of such projects shall

be paid from funds collected pursuant

to this part and the income from such

funds.

Regulations

§ 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 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.

(b) Preliminary percentages. On or

about July 1 of each crop year, the Board

shall establish a preliminary free market

tonnage percentage which shall be

calculated as follows: from the optimum

supply computed in paragraph (a) of

this section, the Board shall deduct the

carryin inventory to determine the

tonnage requirements (adjusted to a raw

fruit equivalent) for the current crop

year which will be subtracted by the

current year USDA crop forecast. If the

resulting number is positive, this would

represent the estimated over-production

which would need to be the restricted

percentage tonnage. This restricted

percentage tonnage would then be

divided by the sum of the USDA crop

forecast for the regulated districts to

obtain the percentages for the regulated

districts. The Board shall establish a

preliminary restricted percentage equal

to the quotient, rounded to the nearest

whole number, with the compliment

being the preliminary free tonnage

percentage. If subtracting the current

crop year requirement, computed in the

first sentence from the current USDA

crop forecast, results in a negative

number, the Board shall establish a

preliminary free tonnage of 100 percent

with a preliminary restricted percentage

of zero. The Board shall announce these

preliminary percentages in accordance

with paragraph (h) of this section.

(c) Interim percentages. Between July

1 and September 15 of each crop year,

the Board may modify the preliminary

free market tonnage and restricted

percentages to adjust to the actual pack

occurring in the industry. The Board

shall announce any interim percentages
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in accordance with paragraph (h) of this

section.

(d) Final percentages. No later than

September 15 of each crop year, the

Board shall review actual production

during the current crop year and make

such adjustments as are necessary

between free and restricted tonnage to

achieve the optimum supply and

recommend such final free market

tonnage and restricted percentages to

the Secretary and announce them in

accordance with paragraph (h) of this

section. The difference between any

final free market tonnage percentage

designated by the Secretary and 100

percent shall be the final restricted

percentage. With its recommendation,

the Board shall report on its

consideration of the factors in paragraph

(e) of this section.

(e) Factors. When computing

preliminary and interim percentages, or

determining final percentages for

recommendation to the Secretary, the

Board shall give consideration to the

following factors:

(1) The estimated total production of

cherries;

(2) The estimated size of the crop to

be handled;

(3) The expected general quality of

such cherry production;

(4) The expected carryover as of July

1 of canned and frozen cherries and

other cherry products;

(5) The expected demand conditions

for cherries in different market

segments;

(6) Supplies of competing

commodities;

(7) An analysis of economic factors

having a bearing on the marketing of

cherries;

(8) The estimated tonnage held by

handlers in primary or secondary

inventory reserves; and

(9) Any estimated release of primary

or secondary inventory reserve cherries

during the crop year.

(f) Modification. In the event the

Board subsequently deems it advisable

to modify its marketing policy, because

of national emergency, crop failure, or

other major change in economic

conditions, it shall hold a meeting for

that purpose, and file a report thereof

with the Secretary within 5 days

(exclusive of Saturdays, Sundays, and

holidays) after the holding of such

meeting, which report shall show the

Board’s recommended modification and

the basis therefor.

(g) Reserve tonnage to sell as free

tonnage. In addition, the Board shall

make available tonnage equivalent to an

additional 10 percent, if available, of the

average sales of the prior 3 years for

market expansion. Handlers can

determine if they need the additional

tonnage and inform the Board so that

reserve cherries may be released to

them. Handlers not desiring the

additional tonnage would not have it

released to them.

(h) Publicity. The Board shall

promptly give reasonable publicity to

growers and handlers of each meeting to

consider a marketing policy or any

modification thereof, and each such

meeting shall be open to them and to

the public. Similar publicity shall be

given to growers and handlers of each

marketing policy report or modification

thereof, filed with the Secretary and of

the Secretary’s action thereon. Copies of

all marketing policy reports shall be

maintained in the office of the Board,

where they shall be made available for

examination. The Board shall notify

handlers, and give reasonable publicity

to growers, of its computation of the

optimum supply, preliminary

percentages, and interim percentages

and shall notify handlers of the

Secretary’s action on final percentages

by registered or certified mail.

(i) Restricted Percentages. Restricted

percentage requirements established

under paragraph (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

inventory reserve such that the total

primary inventory reserve does not

exceed 50 million pounds. 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.

(j) Inventory Reserve Release. In years

when inventory reserve cherries are

available and when the expected

availability of cherries from the current

crop plus expected carryin inventory

does not fulfill the optimum supply, the

Board shall release not later than

November 1st of the current crop year

such volume from the inventory reserve

as will satisfy the optimum supply.

(k) The Board, with the approval of

the Secretary, may establish rules and

regulations necessary and incidental to

the administration of this section.

§ 930.51 Issuance of volume regulations.

(a) Whenever the Secretary finds,

from the recommendation and

supporting information supplied by the

Board, that to designate final free market

tonnage and restricted percentages for

any cherries acquired by handlers

during the crop year will tend to

effectuate the declared policy of the Act,

the Secretary shall designate such

percentages. Such regulation

designating such percentage shall fix the

free market tonnage and restricted

percentages, totaling 100 percent, which

shall be applied in accordance with this

section, § 930.55, § 930.57 and § 930.59

to cherries grown in regulated districts,

as determined under § 930.52, and

handled during such fiscal period.

(b) The Board shall be informed

immediately of any such regulation

issued by the Secretary, and the Board

shall promptly give notice thereof to

handlers.

(c) That portion of a handler’s cherries

that are restricted percentage cherries is

the product of the restricted percentage

imposed under paragraph (a) of this

section multiplied by the tonnage of

cherries, originating in a regulated

district, handled, including those

diverted according to § 930.59, by that

handler in that fiscal year. Therefore,

while diverted cherries, including those

represented by grower diversion

certificates, may be exempt from

assessment under § 930.41, they must be

counted when computing restricted

percentage requirements.

(d) The Board, with the approval of

the Secretary, shall develop rules and

regulations which shall provide

guidelines for handlers in complying

with any restricted tonnage

requirements, including, but not limited

to, a grace period of at least 30 days to

segregate and appropriately document

any tonnage they wish to place in the

inventory reserve and to assemble any

applicable diversion certificates.

§ 930.52 Establishment of districts subject

to volume regulations.

(a) Upon adoption of this part, the

districts in which handlers shall be

subject to any volume regulations

implemented in accordance with this

part shall be those districts in which the

average annual production of cherries

over the prior three years has exceeded

15 million pounds. Handlers in districts

not meeting the 15 million pound

requirement at the time of order

promulgation shall become subject to

volume regulation implemented in

accordance with this part in the crop

year that follows any three-year period

in which the 15 million pound average
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production requirement is exceeded in

that district.

(b) Handlers in districts which are not

subject to volume regulation would only

be so regulated to the extent that they

handled cherries which were grown in

a district subject to regulation as

specified in paragraph (a) of this

section. In such a case, the handler must

place in inventory reserve pursuant to

§ 930.55 or § 930.57 or divert pursuant

to § 930.59 the required restricted

percentage of the crop originating in the

regulated district.

(c) Handlers in districts not meeting

the production requirement described in

paragraph (a) of this section in a given

year would not be subject to volume

regulation in the next crop year.

(d) Any district producing a crop

which is less than 50 percent of the

average annual processed production in

that district in the previous five years

would be exempt from any volume

regulation if, in that year, a restricted

percentage is established.

(e) The Board, with the approval of

the Secretary, may establish rules and

regulations necessary and incidental to

the administration of this section.

§ 930.53 Modification, suspension, or

termination of regulations.

(a) In the event the Board at any time

finds that, by reason of changed

conditions, any regulations issued

pursuant to §§ 930.44 or 930.51 should

be modified, suspended, or terminated,

it shall so recommend to the Secretary.

(b) Whenever the Secretary finds,

from the recommendations and

information submitted by the Board or

from other available information, that a

regulation issued pursuant to §§ 930.44

or 930.51 should be modified,

suspended or terminated with respect to

any or all shipments of cherries in order

to effectuate the declared policy of the

Act, the Secretary shall modify,

suspend, or terminate such regulation.

§ 930.54 Prohibition on the use or

disposition of inventory reserve cherries.

(a) Release of primary and secondary

inventory reserve cherries. Except as

provided in § 930.50 and paragraph (b)

of this section, cherries that are placed

in inventory reserve pursuant to the

requirements of § 930.50, § 930.51,

§ 930.55, or § 930.57 shall not be used

or disposed of by any handler or any

other person: Provided, That if the

Board determines that the total available

supplies for use in normal commercial

outlets do not at least equal the amount,

as estimated by the Board, needed to

meet the demand in such outlets, the

Board shall recommend to the Secretary

and provide such justification that,

during such period as may be

recommended by the Board and

approved by the Secretary, a portion or

all of the primary and/or secondary

inventory reserve cherries shall be

released for such use.

§ 930.55 Primary inventory reserves.

(a) Whenever the Secretary has fixed

the free market tonnage and restricted

percentages for any fiscal period, as

provided for in § 930.51(a), each handler

in a regulated district shall place in his

or her primary inventory reserve for

such period, at such time, and in such

manner, as the Board may prescribe, or

otherwise divert, according to § 930.59,

a portion of the cherries acquired during

such period.

(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. 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.

(c) Inventory reserve cherries shall

meet such standards of grade, quality, or

condition as the Board, with the

approval of the Secretary, may establish.

All such cherries shall be inspected by

USDA. A certificate of such inspection

shall be issued which shall show,

among other things, the name and

address of the handler, the number and

type of containers in the lot, the grade

of the product, the location where the

lot is stored, identification marks (can

codes or lot stamp), and a certification

that the cherries meet the prescribed

standards. Promptly after inspection

and certification, each such handler

shall submit, or cause to be submitted,

to the Board, at the place designated by

the Board, a copy of the certificate of

inspection issued with respect to such

cherries.

(d) Handlers shall be compensated for

inspection costs incurred on cherries

placed in the primary inventory reserve.

All reporting of cherries placed in,

rotated in and out, or released from an

inventory reserve shall be in accordance

with rules and procedures established

by the Board, with the approval of the

Secretary. The Board could, with the

approval of the Secretary, also limit the

number of inspections of reserve

cherries being rotated into inventory

reserves for which the Board would be

financially liable.

(e) Except as provided in § 930.54,

handlers may not sell inventory reserve

cherries prior to their official release by

the Board. Handlers may rotate cherries

in their inventory reserves with prior

notification to the Board. All cherries

rotated into the inventory reserve must

meet the applicable inspection

requirements.

§ 930.56 Off-premise inventory reserve.

Any handler may, upon notification

to the Board, arrange to hold inventory

reserve, of his or her own production or

which was purchased, on the premises

of another handler or in an approved

commercial storage facility in the same

manner as though the inventory reserve

were on the handler’s own premises.

§ 930.57 Secondary inventory reserve.

(a) In the event the inventory reserve

established under § 930.55 of this part is

at its maximum volume, and the Board

has announced, in accordance with

§ 930.50, that volume regulation will be

necessary to maintain an orderly supply

of quality cherries for the market,

handlers in a regulated district may

elect to place in a secondary inventory

reserve all or a portion of the cherries

the volume regulation would otherwise

require them to divert in accordance

with § 930.59.

(b) Should any handler in a regulated

district exercise his or her right to

establish a secondary inventory reserve

under paragraph (a) of this section, all

costs of maintaining that reserve, as well

as inspection costs, will be the

responsibility of the individual handler.

(c) The secondary inventory reserve

shall be established in accordance with

§§ 930.55(b) and (c) and such other rules

and regulations which the Board, with

the approval of the Secretary, may

establish.

(d) The Board shall retain control over

the release of any cherries from the

secondary inventory reserve. No

cherries may be released from the

secondary reserve until all cherries in

any primary inventory reserve

established under § 930.55 have been

released. Any release of the secondary

inventory reserve shall be in accordance

with the annual marketing policy and

with § 930.54.

§ 930.58 Grower diversion privilege.

(a) In general. Any grower may

voluntarily elect to divert, in accordance

with the provisions of this section, all
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or a portion of the cherries which

otherwise, upon delivery to a handler,

would become restricted percentage

cherries. Upon such diversion and

compliance with the provisions of this

section, the Board shall issue to the

diverting grower a grower diversion

certificate which such grower may

deliver to a handler, as though there

were actual harvested cherries.

(b) Eligible diversion. Grower

diversion certificates shall be issued to

growers only if the cherries are diverted

in accordance with the following terms

and conditions or such other terms and

conditions that the Board, with the

approval of the Secretary, may establish.

Diversion may take such of the

following forms which the Board, with

the approval of the Secretary, may

designate: uses exempt under § 930.62;

nonhuman food uses; or other uses,

including diversion by leaving such

cherries unharvested.

(c) Application/mapping. The Board,

with the approval of Secretary, shall

develop rules and regulations providing

for the diversion of cherries by growers.

Such regulations may include, among

other things: (1) The form and content

of applications and agreements relating

to the diversion, including provisions

for supervision and compensation; and

(2) provisions for mapping areas in

which cherries will be left unharvested.

(d) Diversion certificate. If the Board

approves the application it shall so

notify the applicant and conduct such

supervision of the applicant’s diversion

of cherries as may be necessary to assure

that the cherries have been diverted.

After the diversion has been

accomplished, the Board shall issue to

the diverting grower a diversion

certificate stating the weight of cherries

diverted. Where diversion is carried out

by leaving the cherries unharvested, the

Board shall estimate the weight of

cherries diverted on the basis of such

uniform rule prescribed in rules and

regulations as the Board, with the

approval of the Secretary, may

recommend to implement this section.

§ 930.59 Handler diversion privilege.

(a) In general. Handlers handling

cherries harvested in a regulated district

may fulfill any restricted percentage

requirement in full or in part by

voluntarily diverting cherries or cherry

products in a program approved by the

Board, rather than placing cherries in an

inventory reserve. Upon such diversion

and compliance with the provisions of

this section, the Board shall issue to the

diverting handler a handler diversion

certificate which shall satisfy any

restricted percentage or diversion

requirement to the extent of the Board

or Department inspected weight of the

cherries diverted.

(b) Eligible diversion. Handler

diversion certificates shall be issued to

handlers only if the cherries are

diverted in accordance with the

following terms and conditions or such

other terms and conditions that the

Board, with the approval of the

Secretary, may establish. Such diversion

may take place in any of the following

forms which the Board, with the

approval of the Secretary, may

designate: uses exempt under § 930.62;

contribution to a Board approved food

bank or other approved charitable

organization; acquisition of grower

diversion certificates that have been

issued in accordance with § 930.58; or

other uses, including diversion by

destruction of the cherries at the

handler’s facilities: Provided, That

diversion may not be accomplished by

converting cherries into juice or juice

concentrate.

(c) Notification. The handler electing

to divert cherries through means

specified in this section or other

approved means (not including uses

exempt under § 930.62), shall first notify

the Board of such election. Such

notification shall describe in detail the

manner in which the handler proposes

to divert cherries including, if the

diversion is to be by means of

destruction of the cherries, a detailed

description of the means of destruction

and ultimate disposition of the cherries.

It shall also contain an agreement that

the proposed diversion is to be carried

out under the supervision of the Board

and that the cost of such supervision is

to be paid by the handler. Uniform fees

for such supervision shall be established

by the Board, pursuant to rules and

regulations approved by the Secretary.

(d) Application. The handler electing

to divert cherries by utilizing an

exemption under § 930.62 shall first

apply to the Board for approval of such

diversion; no diversion should take

place prior to such approval. Such

application shall describe in detail the

uses to which the diverted cherries will

be put. It shall also contain an

agreement that the proposed diversion

is to be carried out under the

supervision of the Board and that the

cost of such supervision is to be paid by

the applicant. The Board shall notify the

applicant of the Board’s approval or

disapproval of the submitted

application.

(e) Diversion certificate. The Board

shall conduct such supervision of the

handler’s diversion of cherries under

paragraph (c) or under paragraph (d) of

this section as may be necessary to

assure that the cherries are diverted.

After the diversion has been

accomplished, the Board shall issue to

the diverting handler a handler

diversion certificate indicating the

weight of cherries which may be used

to offset any restricted percentage

requirement.

§ 930.60 Equity holders.

(a) Inventory reserve ownership. The

inventory reserve shall be the sole

responsibility of the handlers who place

products into the inventory reserve. A

handler’s equity in the primary

inventory reserve may be transferred to

another person upon notification to the

Board.

(b) Agreements with growers.

Individual handlers are encouraged to

have written agreements with growers

who deliver their cherries to the handler

as to how any restricted percentage

cherries delivered to the handler will be

handled and what share, if any, the

grower will have in the eventual sale of

any inventory reserve cherries.

(c) Rulemaking authority. The Board,

with the approval of the Secretary, may

adopt rules and regulations necessary

and incidental to the administration of

this section.

§ 930.61 Handler compensation.

Each handler handling cherries from

a regulated district that is subject to

volume regulations shall be

compensated by the Board for

inspection relating to the primary

inventory reserve as the Board may

deem to be appropriate. The Board, with

the approval of the Secretary, may

establish such rules and regulations as

are necessary and incidental to the

administration of this section.

§ 930.62 Exemptions.

The Board, with the approval of the

Secretary, may exempt from the

provisions of § 930.41, § 940.44,

§ 930.51, § 930.53, and § 930.55 through

§ 930.57 cherries: diverted in

accordance with § 930.59; used for new

product and new market development;

used for experimental purposes or for

any other use designated by the Board,

including cherries processed into

products for markets for which less than

5 percent of the preceding 5-year

average production of cherries were

utilized. The Board, with the approval

of the Secretary, shall prescribe such

rules, regulations, and safeguards as it

may deem necessary to ensure that

cherries handled under the provisions

of this section are handled only as

authorized.
26978 Federal Register / Vol. 61, No. 104 / Wednesday, May 29, 1996 / Proposed Rules

§ 930.63 Deferment of restricted

obligation.

(a) Bonding. The Board, with the

approval of the Secretary, may require

handlers to secure bonds on deferred

inventory reserve tonnage. Handlers

may, in order to comply with the

requirements of §§ 930.50 and 930.51

and regulations issued thereunder,

secure bonds on restricted percentage

cherries to temporarily defer the date

that inventory reserve cherries must be

held to any date requested by the

handler. This date shall be not later than

60 days prior to the end of that crop

year. Such deferment shall be

conditioned upon the voluntary

execution and delivery by the handler to

the Board of a written undertaking

within thirty (30) days after the

Secretary announces the final restricted

percentage under § 930.51. Such written

undertaking shall be secured by a bond

or bonds with a surety or sureties

acceptable to the Board that on or prior

to the acceptable deferred date the

handler will have fully satisfied the

restricted percentage amount required

by § 930.51.

(b) Rulemaking authority. The Board,

with the approval of the Secretary, may

adopt rules and regulations necessary

and incidental to the administration of

this section.

Reports and Records

§ 930.70 Reports.

(a) Weekly production, monthly sales,

and inventory data. Each handler shall,

upon request of the Board, file promptly

with the Board, reports showing weekly

production data; monthly sales and

inventory data; and such other

information, including the volume of

any cherries placed in or released from

a primary or secondary inventory

reserve or diverted, as the Board shall

specify with respect to any cherries

handled by the handler. Such

information may be provided to the

Board members in summary or

aggregated form only without any

reference to the individual sources of

the information.

(b) Other reports. Upon the request of

the Board, with the approval of the

Secretary, each handler shall furnish to

the Board such other information with

respect to the cherries acquired,

handled, stored and disposed of by such

handler as may be necessary to enable

the Board to exercise its powers and

perform its duties under this part.

(c) Protection of proprietary

information. Under no circumstances

shall any information or reports be

made available to the Board members,

or to any person designated by the

Board or by the Secretary, which will

reveal the proprietary information of an

individual handler.

§ 930.71 Records.

Each handler shall maintain such

records of all cherries acquired,

handled, stored or sold, or otherwise

disposed of as will substantiate the

required reports and as may be

prescribed by the Board. All such

records shall be maintained for not less

than two years after the termination of

the fiscal year in which the transactions

occurred or for such lesser period as the

Board may direct with the approval of

the Secretary.

§ 930.72 Verification of reports and

records.

For the purpose of assuring

compliance and checking and verifying

the reports filed by handlers, the

Secretary and the Board, through its

duly authorized agents, shall have

access to any premises where applicable

records are maintained, where cherries

are received, stored, or handled, and, at

any time during reasonable business

hours, shall be permitted to inspect

such handlers premises and any and all

records of such handlers with respect to

matters within the purview of this part.

§ 930.73 Confidential information.

All reports and records furnished or

submitted by handlers to the Board and

its authorized agents which include data

or information constituting a trade

secret or disclosing trade position,

financial condition, or business

operations of the particular handler

from whom received, shall be received

by and at all times kept in the custody

and under the control of one or more

employees of the Board or its agent, who

shall disclose such information to no

person other than the Secretary.

Miscellaneous Provisions

§ 930.80 Compliance.

Except as provided in this part, no

person may handle cherries, the

handling of which has been prohibited

by the Secretary under this part, and no

person shall handle cherries except in

conformity with the provisions of this

part and the regulations issued

hereunder. No person may handle any

cherries for which a diversion certificate

has been issued other than as provided

in § 930.58(b) and § 930.59(b).

§ 930.81 Right of the Secretary.

Members of the Board (including

successors and alternates), and any

agents, employees, or representatives

thereof, shall be subject to removal or

suspension by the Secretary at any time.

Each regulation, decision,

determination, or other act of the Board

shall be subject to the Secretary’s

disapproval at any time. Upon such

disapproval, the disapproved action of

the Board shall be deemed null and

void, except as to acts done in reliance

thereon or in accordance therewith prior

to such disapproval by the Secretary.

§ 930.82 Effective time.

The provisions of this part, and of any

amendment thereto, shall become

effective at such time as the Secretary

may declare, and shall continue in force

until terminated, or suspended.

§ 930.83 Termination.

(a) The Secretary may, at any time,

terminate any or all of the provisions of

this part by giving at least 1 day’s notice

by means of a press notice or in any

other manner in which the Secretary

may determine.

(b) The Secretary shall terminate or

suspend the operation of any or all of

the provisions of this part whenever the

Secretary finds that such provisions do

not tend to effectuate the declared

policy of the Act.

(c) The Secretary shall terminate the

provisions of this part whenever the

Secretary finds by referendum or

otherwise that such termination is

favored by a majority of the growers and

processors: Provided, That such

majority has, during the current fiscal

year, produced or canned and frozen

more than 50 percent of the volume of

the cherries which were produced or

processed within the production area.

Such termination shall become effective

on the last day of June subsequent to the

announcement thereof by the Secretary.

(d) The Secretary shall conduct a

referendum within the month of March

of every sixth year after the effective

date of this part to ascertain whether

continuation of this part is favored by

the growers and processors. The

Secretary may terminate the provisions

of this part at the end of any fiscal

period in which the Secretary has found

that continuance is not favored by a

majority of growers and processors who,

during a representative period

determined by the Secretary, have been

engaged in the production or processing

of tart cherries in the production area.

Such termination shall be announced on

or before the end of the fiscal period.

(e) The provisions of this part shall,

in any event, terminate whenever the

provisions of the Act authorizing them

cease to be in effect.

§ 930.84 Proceedings after termination.

(a) Upon the termination of the

provisions of this part, the then
Federal Register / Vol. 61, No. 104 / Wednesday, May 29, 1996 / Proposed Rules 26979

functioning members of the Board shall,

for the purpose of liquidating the affairs

of the Board, continue as trustees of all

the funds and property then in its

possession, or under its control,

including claims for any funds unpaid

or property not delivered at the time of

such termination.

(b) The said trustees shall:

(1) continue in such capacity until

discharged by the Secretary;

(2) from time to time account for all

receipts and disbursements and deliver

all property on hand, together with all

books and records of the Board and of

the trustees, to such person as the

Secretary may direct; and

(3) upon the request of the Secretary,

execute such assignments or other

instruments necessary or appropriate to

vest in such person full title and right

to all of the funds, property, and claims

vested in the Board or in the trustees

pursuant to this part.

(c) Any person to whom funds,

property, and claims have been

transferred or delivered, pursuant to this

section, shall be subject to the same

obligations imposed upon the Board and

upon the trustees.

§ 930.85 Effect of termination or

amendment.

Unless otherwise expressly provided

by the Secretary, the termination of this

part or of any regulation issued

pursuant to this part, or the issuance of

any amendment to either thereof, shall

not:

(a) Affect or waive any right, duty,

obligation, or liability which shall have

risen or which may thereafter arise in

connection with any provision of this

part or any regulation issued

thereunder;

(b) Release or extinguish any violation

of this part or any regulation issued

thereunder;

(c) Affect or impair any rights or

remedies of the Secretary or any other

person with respect to any such

violation.

§ 930.86 Duration of immunities.

The benefits, privileges, and

immunities conferred upon any person

by virtue of this part shall cease upon

its termination, except with respect to

acts done under and during the

existence of this part.

§ 930.87 Agents.

The Secretary may, by designation in

writing, name any officer or employee of

the United States, or name any agency

or division in the U.S. Department of

Agriculture, to act as the Secretary’s

agent or representative in connection

with any provisions of this part.

§ 930.88 Derogation.

Nothing contained in this part is, or

shall be construed to be, in derogation

or in modification of the rights of the

Secretary or of the United States to

exercise any powers granted by the Act

or otherwise, or, in accordance with

such powers, to act in the premises

whenever such action is deemed

advisable.

§ 930.89 Personal liability.

No member or alternate member of

the Board and no employee or agent of

the Board shall be held personally

responsible, either individually or

jointly with others, in any way

whatsoever, to any person for errors in

judgment, mistakes, or other acts, either

of commission or omission, as such

member, alternate member, employee,

or agent, except for acts of dishonesty,

willful misconduct, or gross negligence.

§ 930.90 Separability.

If any provision of this part is

declared invalid or the applicability

thereof to any person, circumstance, or

thing is held invalid, the validity of the

remainder of this part or the

applicability thereof to any other

person, circumstance, or thing shall not

be affected thereby.

§ 930.91 Amendments.

Amendments to this subpart may be

proposed, from time to time, by the

Board or by the Secretary.

§ 930.92 Counterparts.

This agreement may be executed in

multiple counterparts and when one

counterpart is signed by the Secretary,

all such counterparts shall constitute,

when taken together, one and the same

instrument as if all signatures were

contained in one original.

§ 930.93 Additional parties.

After the effective date thereof, any

handler may become a party to this

agreement if a counterpart is executed

by such handler and delivered to the

Secretary. This agreement shall take

effect as to such new contracting part at

the time such counterpart is delivered to

the Secretary, and the benefits,

privileges, and immunities conferred by

this agreement shall then be effective as

to such new contracting party.

§ 930.94 Order with marketing agreement.

Each signatory hereby requests the

Secretary to issue, pursuant to the Act,

an order providing for regulating the

handling of tart cherries in the same

manner as is provided for in this

agreement.

Subpart B—[Reserved]

Dated: May 22, 1996.

Shirley R. Watkins,

Deputy Assistant Secretary, Marketing and

Regulatory Programs.

[FR Doc. 96–13383 Filed 5–24–96; 8:45 am]

BILLING CODE 3410–02–P