Tart Cherries Grown in the States of Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and Wisconsin; Secretary's Decision and Referendum Order on Proposed Amendment of Marketing Agreement and Order No. 930, 1724-1731 [2010-315]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 75, Number 8 (Wednesday, January 13, 2010)]
[Proposed Rules]
[Pages 1724-1731]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-315]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

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

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Federal Register / Vol. 75, No. 8 / Wednesday, January 13, 2010 / 
Proposed Rules

[[Page 1724]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Docket No. AO-370-A8; AMS-FV-06-0213; FV07-930-2]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule and referendum order.

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SUMMARY: This decision proposes amendments to Marketing Agreement and 
Order No. 930 (order), which regulates the handling of tart cherries 
grown in Michigan, New York, Pennsylvania, Oregon, Utah, Washington, 
and Wisconsin, and provides growers and processors with the opportunity 
to vote in a referendum to determine if they favor the changes. Seven 
amendments were proposed by the Cherry Industry Administrative Board 
(Board), which is responsible for local administration of the order. 
These amendments would: Authorize changing the primary reserve capacity 
associated with the volume control provisions of the order; authorize 
establishment of a minimum inventory level at which all remaining 
product held in reserves would be released to handlers for use as free 
tonnage; establish an age limitation on product placed into reserves; 
revise the nomination and election process for handler members on the 
Board; revise Board membership affiliation requirements; and update 
order language to more accurately reflect grower and handler 
participation in the nomination and election process in districts with 
only one Board representative. In addition, the Agricultural Marketing 
Service (AMS) proposed to make any such changes as may be necessary to 
the order to conform to any amendment that may result from the hearing.
    A Board proposal to revise the voting requirements necessary to 
approve a Board action is not recommended for adoption.
    The amendments are designed to provide flexibility in administering 
the volume control provisions of the order and to update Board 
nomination, election, and membership requirements. The amendments are 
intended to improve the operation and administration of the order.

DATES: The referendum will be conducted from February 1, 2010, through 
February 13, 2010. The representative period for the purpose of the 
referendum will be July 1, 2008 through June 30, 2009.

FOR FURTHER INFORMATION CONTACT: Martin Engeler, Marketing Order 
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 2202 
Monterey Street, Suite 102-B, Fresno, California 93721; telephone: 
(559) 487-5110, Fax: (559) 487-5906; or Marc McFetridge, Marketing 
Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 
1400 Independence Avenue, SW., Stop 0237, Washington, DC 20250-0237; 
telephone: (202) 720-1509, Fax: (202) 720-8938, or e-mail: 
Martin.Engeler@usda.gov or Marc.McFetridge@usda.gov.
    Small businesses may request information on this proceeding by 
contacting Jay Guerber, Marketing Order Administration Branch, Fruit 
and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW., Stop 
0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, Fax: (202) 
720-8938, e-mail: Jay.Guerber@usda.gov.

SUPPLEMENTARY INFORMATION: Prior documents in this proceeding: Notice 
of Hearing issued on February 5, 2007, and published in the February 7, 
2007, issue of the Federal Register (72 FR 5646), and a Recommended 
Decision issued on May 7, 2009 and published in the May 12, 2009, issue 
of the Federal Register (74 FR 22112).
    This action is governed by the provisions of sections 556 and 557 
of title 5 of the United States Code and is therefore excluded from the 
requirements of Executive Order 12866.

Preliminary Statement

    The proposed amendments are based on the record of a public hearing 
held on February 21 and 22, 2007, in Grand Rapids, Michigan, and March 
1 and 2, 2007, in Provo, Utah, to consider such amendments to the 
order. The hearing was held pursuant to the provisions of the 
Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-
674), hereinafter referred to as the ``Act'', and the applicable rules 
of practice and procedure governing the formulation of marketing 
agreements and orders (7 CFR Part 900).
    Notice of this hearing was published in the Federal Register on 
February 7, 2007, and contained amendment proposals submitted by the 
Board.
    The amendments included in this decision would:
    1. Amend Sec.  930.50 of the order to authorize changing the 
primary reserve capacity associated with the volume control provisions 
of the order.
    2. Amend Sec.  930.54 of the order to authorize establishment of a 
minimum inventory level at which all remaining product held in reserves 
would be released to handlers for use as free tonnage.
    3. Amend Sec.  930.55 to establish an age limitation on product 
placed into reserves.
    4. Amend Sec.  930.23 to revise the nomination and election process 
for handler members on the Board, including revisions to conform this 
section to amendment of Sec.  930.20 regarding membership affiliation 
requirements.
    5. Amend Sec.  930.20 to revise Board membership affiliation 
requirements.
    6. Amend Sec.  930.23 to update order language to more accurately 
reflect grower and handler participation in the nomination and election 
process in Districts with only one Board representative.
    In addition to the proposed amendments to the order, AMS proposed 
to make any such additional changes as may be necessary to the order to 
conform to any amendments that may result from the hearing. To the 
extent necessary, conforming changes have been made to the amendments.
    A Board proposal to revise the voting requirements necessary to 
approve a Board action is not recommended for adoption.
    Upon the basis of evidence introduced at the hearing and the record

[[Page 1725]]

thereof, the Administrator of AMS on May 7, 2009, filed a Recommended 
Decision and Opportunity to File Written Exceptions thereto by June 11, 
2009.
    Six exceptions were filed during the period provided. Five of the 
exceptions were filed by growers and processors of tart cherries, and 
one was filed on behalf of the Board. All of the exceptions expressed 
concern about Material Issue Number 6 regarding membership affiliation 
requirements. Five of the exceptions raised specific concerns with the 
changes AMS made in the Recommended Decision to the industry's proposed 
amendment under Material Issue Number 5 regarding the nomination and 
election process of Board members, and its application in conjunction 
with Material Issue Number 6. Two of the exceptions addressed Material 
Issue Number 4 regarding the proposal to change Board voting 
requirements. One exception addressed Material Issue Number 1 
concerning changing the reserve capacity through informal rulemaking, 
Material Issue Number 2 concerning establishment of a minimum inventory 
level at which reserve product would be released to handlers as free 
tonnage, and Material Issue Number 3 concerning placing an age 
limitation on reserve products. The specific issues raised in these 
exceptions are discussed in the Findings and Conclusions; Discussions 
of Exceptions section of this document.

Small Business Considerations

    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA), AMS has considered the economic impact of this 
action on small entities. Accordingly, AMS has prepared this final 
regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions so that small businesses will not be 
unduly or disproportionately burdened. Marketing orders and amendments 
thereto are unique in that they are normally brought about through 
group action of essentially small entities for their own benefit.
    Small agricultural producers have been defined by the Small 
Business Administration (SBA) (13 CFR 121.201) as those having annual 
receipts of less than $750,000. Small agricultural service firms, which 
include handlers regulated under the order, are defined as those with 
annual receipts of less than $7,000,000.
    There are approximately 40 handlers and processors of tart cherries 
subject to regulation under the order and approximately 900 producers 
of tart cherries in the regulated area. A majority of the producers, 
processors, and handlers are considered small entities according to the 
SBA's definition.
    The geographic region regulated under the order covers the States 
of Michigan, New York, Oregon, Pennsylvania, Utah, Washington, and 
Wisconsin. Acreage devoted to tart cherry production in the regulated 
area has declined in recent years. According to data presented at the 
hearing, bearing acreage in 1987-88 totaled 50,050 acres; by 2006-2007 
it had declined to 37,200 acres. Michigan accounts for 74 percent of 
total U.S. bearing acreage with 27,700 bearing acres. Utah is second, 
with a reported 2,800 acres, or approximately eight percent of the 
total. The remaining States' acreage ranges from 700 to 2,000 acres.
    Production of tart cherries can fluctuate widely from year to year. 
The magnitude of these fluctuations is one of the most pronounced for 
any agricultural commodity in the United States, and is due in large 
part to weather related conditions during the bloom and growing 
seasons. This fluctuation in supplies presents a marketing challenge 
for the tart cherry industry because demand for the product is 
relatively static. In addition, the demand for tart cherries is 
inelastic, which means a change in the supply has a proportionately 
larger change in the price level.
    Authorities under the order include volume regulation, promotion 
and research, and grade and quality standards. Volume regulation is 
used under the order to augment supplies during short supply years with 
product placed in reserves during large supply years. This practice is 
intended to reduce the annual fluctuations in supplies and 
corresponding fluctuations in prices.
    The Board is comprised of representatives from all producing areas 
based on the volume of cherries produced in those areas. The Board 
consists of a mix of handler and grower members, and a member that 
represents the public. Board meetings where regulatory recommendations 
and other decisions are made are open to the public. All members are 
able to participate in Board deliberations, and each Board member has 
an equal vote. Others in attendance at meetings are also allowed to 
express their views.
    The Board appointed a subcommittee to consider amendments to the 
marketing order. The subcommittee met several times for this purpose, 
and ultimately recommended several amendments to the order. The Board 
subsequently requested that USDA conduct a hearing to consider the 
proposed amendments. The views of all participants were considered 
throughout this process.
    In addition, the hearing to receive evidence on the proposed 
amendments was open to the public and all interested parties were 
invited and encouraged to participate and express their views.
    The proposed amendments are intended to provide additional 
flexibility in administering the volume control provisions of the 
order, and to update Board nomination, election, and membership 
requirements. The amendments are intended to improve the operation and 
administration of the order. Record evidence indicates the proposals 
are intended to benefit all producers and handlers under the order, 
regardless of size.

Amendment 1--Adding the Authority To Change the Primary Reserve 
Capacity

    This amendment would revise Sec.  930.50 of the order to authorize 
changing the primary reserve capacity associated with the volume 
provisions of the order through informal rulemaking. Changing the 
reserve capacity currently requires amendment of the order through the 
formal rulemaking process.
    The order establishes a fixed quantity of 50-million pounds of tart 
cherries and tart cherry products that can be held in the primary 
reserve. Any reserve product in excess of the 50-million-pound 
limitation must be placed in the secondary reserve.
    Free tonnage product can be sold to any market outlet, but most 
shipments are sold domestically, which is considered the primary 
market. Reserve product can be used only in specific outlets which are 
considered secondary markets. These secondary markets include 
development of export markets, new product development, new markets, 
and government purchases.
    When the order was promulgated, a 50-million-pound limitation was 
placed on the capacity of the primary reserve. Proponents of the 
current order proposed a limitation on the quantity of product that 
could be placed into the primary reserve. That limitation was 
incorporated into the order, and can only be changed through the formal 
rulemaking process.
    Economic data presented when the order was promulgated indicated 
that a reserve program could benefit the industry by managing 
fluctuating supplies. Witnesses at the February and March 2007 hearing 
indicated the order

[[Page 1726]]

has been successful in this regard. However, the record indicated that 
the order could be more flexible in allowing modifications to the 50-
million-pound limitation should conditions warrant such a change in the 
future.
    If the reserve capacity was changed, costs associated with storing 
product in reserves could also change. In addition, to the extent such 
a change could affect supplies in the marketplace; returns to both 
growers and handlers could also be affected.
    Any Board recommendation to change the reserve capacity would be 
required to be implemented through the informal rulemaking process. As 
part of the informal rulemaking process, USDA expects that any Board 
recommendation will include an analysis of the pertinent factors and 
issues, including the impact of a proposed regulation on producers and 
handlers. During that process, the Board would recommend a change to 
USDA, and only if the recommendation was accompanied by adequate 
justification would USDA proceed with the change.

Amendment 2--Adding the Authority To Establish a Minimum Inventory 
Level at Which Reserves Would Be Released

    This amendment would revise Sec.  930.54 of the order to provide 
the Board with the authority to establish a minimum inventory level at 
which reserves would be released and made available to handlers as free 
tonnage. This amendment would allow the Board to clear out the primary 
reserve and subsequently the secondary reserve when a specified minimum 
inventory level of tart cherries is reached. The specified minimum 
level would be established through the informal rulemaking process.
    Under current order provisions, handlers cannot access the 
secondary reserve until the primary reserve is empty. Based on current 
language of the order, one handler who has not completely disposed of 
or otherwise fulfilled its reserve obligation can prevent access to the 
secondary reserve.
    The amendment would allow the Board to clear out the primary 
reserve when inventory levels are at a minimum level in order to 
provide the industry access to secondary reserve inventories.
    If the amendment were implemented, costs to both handlers and the 
Board could be reduced. Handlers incur costs in maintaining reserves. 
According to the record, these costs include the cost of storage, which 
can be in the range of $.01 per pound per month. Handlers also incur 
costs associated with tracking their own inventory levels. Witnesses 
stated that when inventory levels reach a minimal amount the costs of 
tracking inventory outweigh the benefit from carrying inventory in the 
primary reserve.
    A significant portion of the Board staff's time is directed at 
tracking reserve inventory maintained at handlers' facilities. Hearing 
witnesses testified that while it is difficult to quantify the exact 
value of the Board staff's time to conduct these activities, the time 
could be better spent on other industry issues, and it is unnecessary 
to track minimal levels of inventory.
    The amendment, if implemented, could have a positive impact on the 
market. As inventories are released from the reserves, products could 
be sold, generating revenue for the industry.
    If implemented, this amendment is expected to reduce costs to 
handlers and the Board, thus having a positive economic impact.

Amendment 3--Establishing an Age Limitation on Products Placed Into 
Reserves

    This amendment would revise Sec.  930.55 to require that products 
placed in reserves must have been produced in the current or 
immediately preceding two crop years. If implemented, this amendment 
would allow the Board to place an age limit on products carried in the 
reserve. The purpose of the amendment would be to help ensure that 
products of saleable quality are maintained in reserve inventories.
    Witness supported the amendment by stating that it would add 
credibility to product quality for all products carried in the reserve. 
Currently, handlers can carry products they have no intention of 
selling just to meet their reserve obligation. This amendment would 
require handlers to rotate product in their reserve inventory, thus 
preventing them from maintaining the same product in the reserve year 
after year. Product held in inventory tends to deteriorate over time. 
When reserve product is ultimately released for sale to meet market 
demand, this proposed amendment would help ensure the reserve product 
available is in saleable condition and can satisfy the market's needs. 
Assuring product is available to satisfy the market helps to foster 
long-term market stability.
    In terms of costs, handlers may experience some minimal costs 
associated with periodically rotating product through their reserve 
inventory. It would be difficult to estimate such costs because they 
would vary depending upon each handler's operation. To the extent costs 
would be increased, they would be proportionate to each handler's share 
of the entire industry's reserve inventory. Each handler's reserve 
inventory obligation is based on the handler's share of the total crop 
handled. Thus, small handlers would not be disproportionately burdened.
    It is anticipated that the benefits of providing a good quality 
product in reserves to ultimately supply markets when needed would 
outweigh any costs associated with implementation of this amendment.

Amendment 4--Revision of Nomination and Election Process for Handler 
Members on the Board

    This amendment relates to nomination and election of Board members 
under Sec.  930.23 of the order. It would require a handler to receive 
support from handlers that handled at least five percent of the average 
production of tart cherries in the applicable district in order to be a 
candidate and to be elected by the industry and recommended to the 
Secretary for Board membership. Under the current order, there is no 
accounting for handler volume in the nomination and balloting process. 
Each handler is entitled to one equal vote. This proposal would 
continue to allow each handler to have one vote, but would also require 
handler candidates to be supported by handlers representing at least 
five percent of the average production in the applicable district to be 
eligible to run for a Board position and to be elected by the industry 
for recommendation to the Secretary. This would help to ensure that 
handler members on the Board represent the interests of handlers in 
their district that account for at least a minimal percentage of the 
volume in the district. The amendment proposed by the Board was 
modified by AMS. The amendment as modified by AMS would not apply the 
five percent support requirements to candidates whose potential 
election could prevent a sales constituency conflict from occurring, as 
discussed under amendment number five. The modification would help to 
ensure that all qualified handlers could participate in the election 
process.
    This proposed amendment is not anticipated to have a significant 
economic impact on small businesses. It only affects the nomination and 
election criteria for membership on the Board by adding volume as an 
element of support to help ensure that Board membership reflects the 
interests of its constituency. All qualified handlers, regardless of 
size, will continue to be able to participate in the nomination and 
election process. The process would continue to allow for both small 
and

[[Page 1727]]

large handlers to be represented on the Board.

Amendment 5--Revision of Board Membership Affiliation Requirements

    This amendment would revise Sec.  930.20 to allow more than one 
Board member to be affiliated with the same sales constituency from the 
same district, if such a conflict cannot be avoided.
    Currently, Sec.  930.20 does not allow more than one Board member 
to be affiliated with the same sales constituency from the same 
district under any circumstances. The purpose of this provision is to 
prevent any one sales constituency from having a controlling influence 
on Board issues and actions. However, a situation occurred in District 
7, Utah, where this particular provision of the order did not allow the 
district from having two representatives on the Board, as it was 
entitled to under Sec.  930.20 (b) of the order. In that situation, the 
only candidates willing to serve on the Board from Utah were affiliated 
with the same sales constituency. Thus Utah was only able, under the 
marketing order rules, to seat one of the two Board representatives it 
was entitled to.
    The proposed amendment is designed to prevent this problem from 
occurring in the future by allowing more than one Board member 
affiliated with the same sales constituency to represent a district, if 
such a sales constituency conflict cannot be avoided. The hearing 
record is clear that the sales constituency provision should not 
prevent a district from having its allocated number of seats on the 
Board if there are eligible candidates willing to serve on the Board.
    This amendment is not expected to have an economic impact on 
growers or handlers. It relates to representation on the Board, and is 
intended to help ensure each area covered under the order has the 
opportunity to achieve its allocated representation on the Board.

Amendment 6--Update Order Language To Accurately Reflect Grower and 
Handler Participation in the Nomination and Election Process in 
Districts With Only One Board Representative

    This amendment to Sec.  930.23 would revise and update order 
language to more accurately reflect grower and handler participation in 
the nomination and election process in districts with only one Board 
representative.
    Sections 930.23(b)(5) and (c)(4) specifically reference Districts 
5, 6, 8, and 9 in regard to the nomination and election process. Those 
were the districts entitled to one Board seat when the order was 
initially promulgated. However, districts that are entitled to one 
Board seat have changed over time due to shifts in production. Amending 
Sec. Sec.  930.23(b)(5) and (c)(4) by removing the specific references 
to Districts 5, 6, 8, and 9 and replacing it with generic language to 
cover any district that is entitled to only one Board representative 
based on the representative calculation established in Sec.  930.20 
would update order language to better reflect the constantly changing 
tart cherry industry.
    This amendment updates order language to remove incorrect 
references to district representation in the event production shifts 
occur. It has no economic impact on handlers, growers, or any other 
entities.
    Interested persons were invited to present evidence at the hearing 
on the probable regulatory and informational impacts of the proposed 
amendments to the order on small entities. The record evidence is that 
some of the proposed amendments may result in some minimal cost 
increases while others will result in cost decreases. To the extent 
there are any cost increases, the benefits of the proposed changes are 
expected to outweigh the costs. In addition, changes in costs as a 
result of these amendments would be proportional to the size of 
businesses involved and would not unduly or disproportionately impact 
small entities. The informational impact of proposed amendments is 
addressed in the Paperwork Reduction Act discussion that follows.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap or conflict with this proposed rule. These amendments are 
intended to improve the operation and administration of the order to 
the benefit of the industry.
    A Board proposal to change the voting requirements necessary to 
approve a Board action is not being recommended for adoption.

Paperwork Reduction Act

    Information collection requirements for Part 930 are currently 
approved by the Office of Management and Budget (OMB), under OMB Number 
0581-0177, Tart Cherries Grown in the States of Michigan, New York, 
Pennsylvania, Oregon, Utah, Washington, and Wisconsin. Implementation 
of these amendments would not trigger any changes to those 
requirements. It is possible that a change to the reporting 
requirements may occur in the future if the Board believes it would be 
necessary to assist in program compliance efforts. Should any such 
changes become necessary in the future, they would be submitted to OMB 
for approval.
    As with all Federal marketing order programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies.
    AMS is committed to complying with the E-Government Act, to promote 
the use of the Internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.

Civil Justice Reform

    The amendments to Marketing Order 930 proposed herein have been 
reviewed under Executive Order 12988, Civil Justice Reform. They are 
not intended to have retroactive effect.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with USDA a petition 
stating that the order, any provision of the order, or any obligation 
imposed in connection with the order is not in accordance with law and 
request a modification of the order or to be exempted therefrom. A 
handler is afforded the opportunity for a hearing on the petition. 
After the hearing, USDA would rule on the petition. The Act provides 
that the district court of the United Sates in any district in which 
the handler is an inhabitant, or has his or her principal place of 
business, has jurisdiction to review USDA's ruling on the petition, 
provided an action is filed no later than 20 days after the date of the 
entry of the ruling.

Findings and Conclusions; Discussion of Exceptions

    The material issues, findings and conclusions, rulings, and general 
findings and determinations included in the Recommended Decision set 
forth in the May 12, 2009, issue of the Federal Register (74 FR 22112) 
are hereby approved and adopted subject to the following additions and 
modifications.

Material Issue Number 1--Authority To Change the Primary Reserve 
Capacity

    Based on the briefs and exceptions filed, the findings and 
conclusions in Material Issue Number 1 of the Recommended Decision are 
amended by adding the following four paragraphs to read as follows:
    One exception to the Recommended Decision concerning Material Issue 
Number 1 was filed by a grower and processor of tart cherries. The 
exception did not support amending the order to

[[Page 1728]]

authorize changing the capacity of the primary reserve pool through 
informal rulemaking. The exception stated that when the order was 
promulgated, a 50 million-pound limitation was established for the 
primary reserve, and that limitation was adequately justified at the 
time. Conversely, the proposed amendment was not adequately justified 
through documentation and economic testimony.
    The proposed amendment in itself would not make a change to the 
reserve capacity. It would change the process by which a change to the 
reserve capacity could be made. Under the proposed amendment, such a 
change could be made through the informal rulemaking process rather 
than the formal rulemaking process that is currently required.
    The hearing record supports that circumstances and conditions in 
the industry change over time which could warrant a change in the 
reserve capacity. If the proposed amendment is adopted and such 
circumstances occur, a change could be made through informal 
rulemaking. During that process, the Board would recommend a change to 
USDA, and only if the recommendation was accompanied by adequate 
justification would USDA proceed with the change.
    The record supports allowing a change to the reserve capacity to be 
made through informal rulemaking rather than formal rulemaking. Thus, 
the exception concerning Material Issue Number 1 is denied.

Material Issue Number 2--Authority To Establish a Minimum Level at 
Which Reserves Would Be Released

    Based on the briefs and exceptions filed, the findings and 
conclusions in Material Issue Number 2 of the Recommended Decision are 
amended by adding the following two paragraphs to read as follows:
    One exception to the Recommended Decision concerning Material Issue 
Number 2 was filed by a grower and processor of tart cherries. The 
exception did not support amending the order to authorize establishing 
a minimum level at which cherries in the reserve would be released. The 
exception indicated that adequate justification for the proposed 
amendment was not provided. It further states that the Board did not 
present a reasonable definition of what the minimum level would be in 
order for the reserves to be released. The exception suggested that 
actual criteria for establishing a minimum level should be developed 
and incorporated into the proposed amendment.
    This proposal would not establish a level at which reserves would 
be released. Informal rulemaking would be required to establish such a 
level. The Board would need to develop adequate justification in any 
recommendation it would make to USDA to implement a regulation that 
would authorize release of the reserve. The intent of the proposal is 
to provide additional flexibility in administering the reserve program, 
and could also reduce costs associated with tracking small amounts of 
reserve product. The record evidence indicates that these objectives 
may be achieved if the proposed amendment is adopted. For these 
reasons, the exception is denied.

Material Issue Number 3--Establishment of a Minimum Age Limitation on 
Product Placed Into Reserves

    Based on the briefs and exceptions filed, the findings and 
conclusions in Material Issue Number 3 of the Recommended Decision are 
amended by adding the following three paragraphs to read as follows:
    One exception to the Recommended Decision concerning Material Issue 
Number 3 was filed by a grower and processor of tart cherries. The 
exception stated that the age of fruit placed in reserves is not truly 
a regulation of fruit quality, and that handlers should be able to 
place whatever product they choose in the reserve. The exception states 
that handlers could still place poor quality product in reserves if the 
amendment is adopted.
    According to the record evidence, the intent of this proposed 
amendment is to help maintain marketable products in the reserve. When 
reserves are ultimately released, they need to be in a condition to 
satisfy market demands.
    While placing an age limitation on reserve products does not 
guarantee a specific level of quality, the record shows that product 
quality deteriorates over time. Placing an age limitation on product 
held in reserves will reduce the likelihood that product of a 
deteriorated quality will be carried in handlers' reserve inventories. 
Based on the record evidence, the proposed amendment should be 
implemented and the exception is therefore denied.

Material Issue Number 4--Voting Requirements

    Based upon the briefs and exceptions filed, the findings and 
conclusions in Material Issue Number 4 of the Recommended Decision are 
amended by adding the following five paragraphs to read as follows:
    Two exceptions to the Recommended Decision were filed regarding 
Material Issue Number 4. One exception was filed on behalf of the Board 
and the other was filed by a tart cherry producer and processor.
    The exception filed on behalf of the Board was opposed to the 
conclusion in the Recommended Decision to not adopt the amendment as 
proposed by the Board. The proposal would have changed the voting 
requirements necessary for the Board to pass any action from two-thirds 
of the entire Board membership to two-thirds of the members present at 
a meeting. According to the exception, the stringent voting requirement 
was originally implemented because of a perception that an entity or 
entities or any particular dominant district in terms of representation 
on the Board may otherwise have too large an influence on Board 
actions. The exception stated that due to changes in industry 
structure, there is no longer a dominant entity or district in terms of 
Board representation, and a relaxation of the voting requirements would 
thus be appropriate. In addition, the exception stated that experience 
under the order has shown no evidence of control over the Board by any 
entity or region, and based on current industry demographics, no entity 
or region could gain such control. Finally, the exception states that 
safeguards exist under the order to protect the concerns of industry 
members against being adversely affected if the proposed changes to the 
voting requirements were adopted.
    As stated in the Recommended Decision, the super-majority voting 
requirements were incorporated into the order to help ensure a high 
degree of support for issues at the Board level. These requirements 
were included in the order to help ensure minority interests were 
addressed and that the industry majority supported Board actions. These 
fundamentals are still relevant today. While it may be true that the 
industry demographics have changed since the order was promulgated, 
this does not establish a foundation that the current voting 
requirements are not working properly and should be changed. The record 
evidence does not show that the current voting requirements are having 
a negative impact on Board actions or the Board's ability to conduct 
business.
    The other exception regarding Material Issue Number 4 expressed 
support for the determination in the Recommended Decision not to 
implement the proposed amendment.
    The record supports leaving the current voting requirements under 
the

[[Page 1729]]

order in place, and the exception advocating a change to the 
Recommended Decision by adopting Material Issue Number 4 is therefore 
denied.

Material Issue Number 6--Revising Board Membership Affiliation 
Requirements

    Based upon the briefs and exceptions filed, the findings and 
conclusions in Material Issue Number 6 of the Recommended Decision are 
amended by adding the following eight paragraphs to read as follows:
    Six exceptions concerning Material Issue Number 6 were received. 
Five of the exceptions were from tart cherry growers and processors, 
and one was from the Board.
    Five of the exceptions expressed concerns with the interaction of 
Material Issue Number 6 and Material Issue Number 5 as these two issues 
were discussed in the Recommended Decision. The amendment proposed by 
the Board and discussed in Material Issue Number 5 of the Recommended 
Decision would revise Board membership nomination procedures. The 
amendment would require a handler to receive support from handler(s) 
that handled at least five percent of the average production of tart 
cherries in the applicable district in order to be eligible to 
participate as a candidate in an election for Board membership. The 
proposed amendment would also require a handler to receive support from 
handler(s) that handled at least five percent of the average production 
of tart cherries in the applicable district in order to be elected by 
the industry and recommended to the Secretary for selection to the 
Board. The amendment proposed by the Board and discussed in Material 
Issue Number 6 of the Recommended Decision would revise Board 
membership affiliation requirements to allow more than one Board member 
per district to be affiliated with the same sales constituency if it 
cannot be avoided.
    The Recommended Decision included adding a provision to the 
proposal in Material Issue Number 5 to conform to the proposed 
amendment to Sec.  930.20 (g). The added provision would not apply the 
five percent support requirement for Board membership candidates in 
instances where such a requirement would result in a sales constituency 
conflict. (A sales constituency conflict is considered to exist if two 
persons from the same district are affiliated with the same sales 
constituency.)
    The five exceptions that expressed concern with the interaction of 
Material Issues 5 and 6 were opposed to the provisions added in the 
Recommended Decision regarding not applying the five percent support 
requirement in certain instances. These exceptions stated that the five 
percent support requirement should apply in all situations, regardless 
of potential sales constituency conflicts. According to these 
exceptions, having support from handlers with a minimum of five percent 
of the volume of cherries handled in the district requirement is more 
important than avoiding a potential sales constituency conflict. These 
exceptions further state that avoiding a sales constituency conflict is 
not as big an issue now as it was when the order was promulgated 
because the structure of the industry has changed and one sales 
constituency could no longer gain control of the Board. The exceptions 
also state that this amendment should not apply in one District but not 
another.
    One exception expressed the view that the proposed amendment to 
revise Board membership affiliation requirements to allow more than one 
Board member per district to be from the same sales constituency if it 
cannot be avoided, should only apply in situations that are identical 
to those currently prevailing in Utah. In Utah, a situation occurred 
where there were no candidates from a different sales constituency that 
were willing to serve on the Board. Consequently, Utah (District 7) was 
unable to fill a Board position for a period of time.
    One of the exceptions indicated that if the five percent support 
requirement was not applied in certain instances, it would preclude 
other handler candidates from seeking nomination and election if their 
election would present a sales constituency conflict.
    The Recommended Decision took into account both the merits of the 
proposed amendment requiring Board candidates to receive support from 
handlers handling at least five percent of the volume in the District 
to be nominated and elected to the Board and also the merits of the 
proposed amendment to allow a sales constituency conflict to exist in 
Board membership if such a situation cannot be avoided, in the interest 
of each District achieving its allocated representation on the Board. 
The added provision in Material Issue Number 5 recognizes the 
importance of both issues. The changes would not preclude any qualified 
handler from seeking his or her candidacy for nomination or election to 
the Board. Any qualified handler would be able to seek a Board 
position, including those who may present a sales constituency conflict 
with an existing Board member. The effect of the changes to the 
proposal would relieve those handlers that do not present a sales 
constituency conflict from the five percent support requirements. This 
would provide opportunity to avoid a sales constituency conflict among 
Board members if the handler without a sales constituency conflict were 
to win the election. In addition, this requirement would be the same in 
all districts. Although it currently appears to be an issue only in 
Utah at this time, as the record indicates and the exceptions note, 
changes and affiliations in the industry occur over time. It could 
possibly be an issue in another district in the future, and if so, it 
would be applied the same in all instances.
    In order to address the issues raised as a result of the 
interaction of the provisions in proposals in Material Issue Numbers 5 
and 6, and to maintain an open election process that allows all 
qualified handler candidates to participate, USDA believes the proposed 
provisions as presented in the Recommended Decision are appropriate. 
The exceptions are therefore denied.

Rulings on Exceptions

    In arriving at the findings and conclusions and the regulatory 
provisions of this decision, the exceptions to the Recommended Decision 
were carefully considered in conjunction with the record evidence. To 
the extent that the findings and conclusions and the regulatory 
provisions of this decision are at variance with the exceptions, such 
exceptions are denied.

Marketing Agreement and Order

    Annexed hereto and made a part hereof is the document entitled 
``Order Amending the Order Regulating the Handling of Tart Cherries 
Grown in the States of Michigan, New York, Pennsylvania, Oregon, Utah, 
Washington, and Wisconsin.'' This document has been decided upon as the 
detailed and appropriate means of effectuating the foregoing findings 
and conclusions.
    It is hereby ordered, that this entire decision be published in the 
Federal Register.

Referendum Order

    It is hereby directed that a referendum be conducted in accordance 
with the procedure for the conduct of referenda (7 CFR part 900.400-
407) to determine whether the annexed order amending the order 
regulating the handling of tart cherries grown in the States of 
Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and 
Wisconsin is approved or favored by

[[Page 1730]]

growers and processors, as defined under the terms of the order, who 
during the representative period were engaged in the production or 
processing of tart cherries in the production area.
    The representative period for the conduct of such referendum is 
hereby determined to be July 1, 2008 through June 30, 2009.
    The agents of the Secretary to conduct such referendum are hereby 
designated to be Kenneth G. Johnson and Patricia A. Petrella, Marketing 
Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 
Suite 2A04, Unit 155, 4700 River Road, Riverdale, MD 20737; telephone: 
(301) 734-5243, Fax: (301) 734-5275; E-mail 
Kenneth.Johnson@ams.usda.gov or Patricia.Petrella@ams.usda.gov.

List of Subjects in 7 CFR Part 930

    Marketing agreements, Reporting and recordkeeping requirements, 
Tart cherries.

    Dated: January 6, 2010.
David R. Shipman,
Acting Administrator, Agricultural Marketing Service.

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

    \1\ This order shall not become effective unless and until the 
requirements of Sec.  900.14 of the rules of practice and procedure 
governing proceedings to formulate marketing agreements and 
marketing orders have been met.
---------------------------------------------------------------------------

Findings and Determinations

    The findings and determinations hereinafter set forth are 
supplementary to the findings and determinations that were previously 
made in connection with the issuance of the marketing agreement and 
order; and all said previous findings and determinations are hereby 
ratified and affirmed, except insofar as such findings and 
determinations may be in conflict with the findings and determinations 
set forth herein.
(a) Findings and Determinations Upon the Basis of the Hearing Record
    Pursuant to the provisions of the Agricultural Marketing Agreement 
Act of 1937, as amended, (7 U.S.C. 601-612), and the applicable rules 
of practice and procedure effective thereunder (7 CFR part 900), a 
public hearing was held upon proposed amendment of Marketing Agreement 
and Order No. 930 (7 CFR part 930), regulating the handling of tart 
cherries grown in Michigan, New York, Pennsylvania, Oregon, Utah, 
Washington, and Wisconsin. Upon the basis of the evidence introduced at 
such hearing and the record thereof, it is found that:
    (1) The marketing agreement and order, as amended, and as hereby 
proposed to be further amended, and all of the terms and conditions 
thereof, would tend to effectuate the declared policy of the Act;
    (2) The marketing agreement and order, as amended, and as hereby 
proposed to be further amended, regulate the handling of tart cherries 
grown in the production area in the same manner as, and are applicable 
only to, persons in the respective classes of commercial and industrial 
activity specified in the marketing agreement and order upon which a 
hearing has been held;
    (3) The marketing agreement and order, as amended, and as hereby 
proposed to be further amended, are limited in their application to the 
smallest regional production area which is practicable, consistent with 
carrying out the declared policy of the Act, and the issuance of 
several orders applicable to subdivisions of the production area would 
not effectively carry out the declared policy of the Act;
    (4) The marketing agreement and order, as amended, and as hereby 
proposed to be further amended, prescribe, insofar as practicable, such 
different terms applicable to different parts of the production area as 
are necessary to give due recognition to the differences in the 
production and marketing of tart cherries grown in the production area; 
and
    (5) All handling of tart cherries grown in the production area as 
defined in the marketing agreement and order is in the current of 
interstate or foreign commerce or directly burdens, obstructs, or 
affects such commerce.

Order Relative to Handling

    It is therefore ordered, That on and after the effective date 
hereof, all handling of tart cherries grown in Michigan, New York, 
Pennsylvania, Oregon, Utah, Washington, and Wisconsin shall be in 
conformity to, and in compliance with the terms and conditions of the 
said order as hereby proposed to be amended as follows:
    The provisions of the proposed marketing agreement and order 
amending the order contained in the Recommended Decision issued on May 
7, 2009, and published in the Federal Register on May 12, 2009, will be 
and are the terms and provisions of this order amending the order and 
are set forth in full herein.

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

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

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

    2. Revise paragraph (g) of Sec.  930.20 to read as follows:


Sec.  930.20  Establishment and Membership.

* * * * *
    (g) In order to achieve a fair and balanced representation on the 
Board, and to prevent any one sales constituency from gaining control 
of the Board, not more than one Board member may be from, or affiliated 
with, a single sales constituency in those districts having more than 
one seat on the Board; Provided, That this prohibition shall not apply 
in a district where such a conflict cannot be avoided. There is no 
prohibition on the number of Board members from differing districts 
that may be elected from a single sales constituency which may have 
operations in more than one district. However, as provided in Sec.  
930.23, a handler or grower may only nominate Board members and vote in 
one district.
* * * * *
    3. In Sec.  930.23 revise paragraphs (b)(2) and (b)(5), redesignate 
paragraph (c)(3) as paragraph (c)(3)(i), add a new paragraph 
(c)(3)(ii), and revise paragraph (c)(4) to read as follows:


Sec.  930.23  Nomination and Election.

* * * * *
    (b) * * *
    (2) In order for the name of a handler nominee to appear on an 
election ballot, the nominee's name must be submitted with a petition 
form, to be supplied by the Secretary or the Board, which contains the 
signature of one or more handler(s), other than the nominee, from the 
nominee's district who is or are eligible to vote in the election and 
that handle(s) a combined total of no less than five percent (5%) of 
the average production, as that term is used Sec.  930.20, handled in 
the district. Provided, that this requirement shall not apply if its 
application would result in a sales constituency conflict as provided 
in Sec.  930.20(g). The requirement that the petition form be signed by 
a handler other than the nominee shall not apply in any district where 
fewer than two handlers are eligible to vote.
* * * * *
    (5) In districts entitled to only one Board member, both growers 
and handlers may be nominated for the

[[Page 1731]]

district's Board seat. Grower and handler nominations must follow the 
petition procedures outlined in paragraphs (b)(1) and (b)(2) of this 
section.
* * * * *
    (c) * * *
    (3)(i) * * *
    (ii) To be seated as a handler representative in any district, the 
successful candidate must receive the support of handler(s) that 
handled a combined total of no less than five percent (5%), of the 
average production, as that term is used in Sec.  930.20, handled in 
the district; Provided, that this paragraph shall not apply if its 
application would result in a sales constituency conflict as provided 
in Sec.  930.20(g).
    (4) In districts entitled to only one Board member, growers and 
handlers may vote for either the grower or handler nominee(s) for the 
single seat allocated to those districts.
* * * * *
    4. Revise paragraph (i) of Sec.  930.50 to read as follows:


Sec.  930.50  Marketing policy.

* * * * *
    (i) Restricted Percentages. Restricted percentage requirements 
established under paragraphs (b), (c), or (d) of this section may be 
fulfilled by handlers by either establishing an inventory reserve in 
accordance with Sec.  930.55 or Sec.  930.57 or by diversion of product 
in accordance with Sec.  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; Provided, 
That such 50-million-pound quantity may be changed upon recommendation 
of the Board and approval of the Secretary. Any such change shall be 
recommended by the Board on or before September 30 of any crop year to 
become effective for the following crop year, and the quantity may be 
changed no more than one time per crop year. Handlers will be permitted 
to divert (at plant or with grower diversion certificates) as much of 
the restricted percentage requirement as they deem appropriate, but may 
not establish a primary inventory reserve in excess of the percentage 
established by the Board for restricted cherries. In the event handlers 
wish to establish inventory reserve in excess of this amount, they may 
do so, in which case it will be classified as a secondary inventory 
reserve and will be regulated accordingly.
* * * * *
    5. Add a new paragraph (d) to Sec.  930.54 to read as follows:


Sec.  930.54  Prohibition on the use or disposition of inventory 
reserve cherries.

* * * * *
    (d) Should the volume of cherries held in the primary inventory 
reserves and, subsequently, the secondary inventory reserves reach a 
minimum amount, which level will be established by the Secretary upon 
recommendation from the Board, the products held in the respective 
reserves shall be released from the reserves and made available to the 
handlers as free tonnage.
    6. Revise paragraph (b) of Sec.  930.55 to read as follows:


Sec.  930.55  Primary inventory reserves.

* * * * *
    (b) The form of the cherries, frozen, canned in any form, dried, or 
concentrated juice, placed in the primary inventory reserve is at the 
option of the handler. The product(s) placed by the handler in the 
primary inventory reserve must have been produced in either the current 
or the preceding two crop years. Except as may be limited by Sec.  
930.50(i) or as may be permitted pursuant to Sec. Sec.  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.
* * * * *
[FR Doc. 2010-315 Filed 1-12-10; 8:45 am]
BILLING CODE 3410-02-P