Tart Cherries Grown in the States of Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and Wisconsin; Amendments to the Marketing Order, 58636-58644 [2024-15629]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 89, Number 139 (Friday, July 19, 2024)]
[Proposed Rules]
[Pages 58636-58644]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-15629]


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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. 89, No. 139 / Friday, July 19, 2024 / 
Proposed Rules

[[Page 58636]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Doc. No. AMS-SC-22-0052]


Tart Cherries Grown in the States of Michigan, New York, 
Pennsylvania, Oregon, Utah, Washington, and Wisconsin; Amendments to 
the Marketing Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule and referendum order.

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SUMMARY: This rulemaking proposes amendments to Marketing Order No. 
930, which regulates the handling of tart cherries grown in Michigan, 
New York, Pennsylvania, Oregon, Utah, Washington, and Wisconsin. The 
proposed amendments would modify the basis for calculating district 
representation on the Cherry Industry Administrative Board (``Board''), 
change the starting date for the term of office for Board members, 
simplify the way a Board member's sales constituency is determined, 
clarify how the sales constituency applies to alternate Board members, 
change the timeframe for submitting nominations, and clarify when 
districts are subject to volume regulation.

DATES: The referendum will be conducted from August 26, 2024, through 
September 16, 2024. The representative period for the referendum is 
July 1, 2023, through June 30, 2024.

ADDRESSES: Interested persons are invited to submit written questions 
and comments to the Docket Clerk, Market Development Division, 
Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW, STOP 
0237, Washington, DC 20250-0237; Telephone: (202) 720-8085.

FOR FURTHER INFORMATION CONTACT: Geronimo Quinones, Marketing 
Specialist, or Matthew Pavone, Chief, Rulemaking Services Branch, 
Market Development Division, Specialty Crops Program, AMS, USDA, 1400 
Independence Avenue SW, STOP 0237, Washington, DC 20250-0237; 
Telephone: (202) 720-8085, Fax: (202) 720-8938, or Email: 
[email protected] or [email protected].
    Small businesses may request information on complying with this 
regulation by contacting Richard Lower, Market Development Division, 
Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW, STOP 
0237, Washington, DC 20250-0237; Telephone: (202) 720-8085, or Email: 
[email protected].

SUPPLEMENTARY INFORMATION: This action, pursuant to 5 U.S.C. 553, 
proposes to amend regulations issued to carry out a marketing order as 
defined in 7 CFR 900.2(j). This proposal is issued under Marketing 
Order No. 930, as amended (7 CFR part 930), regulating the handling of 
tart cherries grown in Michigan, New York, Pennsylvania, Oregon, Utah, 
Washington, and Wisconsin. Part 930 (referred to as the ``Order'') is 
effective under the Agricultural Marketing Agreement Act of 1937, as 
amended (7 U.S.C. 601-674), hereinafter referred to as the ``Act.'' The 
Board locally administers the Order and is comprised of growers and 
handlers of tart cherries operating within the production area and a 
public member.
    The Agricultural Marketing Service (AMS) is issuing this proposed 
rulemaking in conformance with Executive Orders 12866, 13563, and 
14094. Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
Executive Order 14094 reaffirms, supplements, and updates Executive 
Order 12866 and further directs agencies to solicit and consider input 
from a wide range of affected and interested parties through a variety 
of means. This action falls within a category of regulatory actions 
that the Office of Management and Budget (OMB) exempted from Executive 
Order 12866 review.
    This proposed rulemaking has been reviewed under Executive Order 
13175, Consultation and Coordination with Indian Tribal Governments, 
which requires agencies to consider whether their rulemaking actions 
would have Tribal implications. AMS has determined this proposed 
rulemaking is unlikely to have substantial direct effects on one or 
more Indian Tribes, on the relationship between the Federal Government 
and Indian Tribes, or on the distribution of power and responsibilities 
between the Federal Government and Indian Tribes.
    This proposed rulemaking has been reviewed under Executive Order 
12988, Civil Justice Reform. This rulemaking is not intended to have 
retroactive effect.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 8c(15)(A) of the 
Act (7 U.S.C. 608c(15)(A)), 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 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, USDA would rule on the petition. 
The Act provides that the district court of the United States in any 
district in which the handler is an inhabitant, or has his or her 
principal place of business, has jurisdiction to review USDA's ruling 
on the petition, provided an action is filed no later than 20 days 
after the date of entry of the ruling.
    Section 1504 of the Food, Conservation, and Energy Act of 2008 
(2008 Farm Bill) (Pub. L. 110-246) amended section 8c(17) of the Act, 
which in turn required the addition of supplemental rules of practice 
to 7 CFR part 900 (73 FR 49307; August 21, 2008). The amendment of 
section 8c(17) of the Act and the supplemental rules of practice at 7 
CFR 900.43 authorize the use of informal rulemaking (5 U.S.C. 553) to 
amend Federal fruit, vegetable, and nut marketing agreements and 
orders. USDA may use informal rulemaking to amend marketing orders 
depending upon the nature and complexity of the proposed amendments, 
the potential regulatory

[[Page 58637]]

and economic impacts on affected entities, and any other relevant 
matters.
    AMS has considered these factors and has determined that the 
amendments proposed herein are not unduly complex and the nature of the 
proposed amendments is appropriate for utilizing the informal 
rulemaking process to amend the Order. This proposed rulemaking 
encompasses a number of changes that are primarily administrative and 
modernizing in nature. These changes would clarify regulatory text or 
align it with current industry practices. Changes would also simplify 
the administration of seating the Board. In addition, as discussed in 
the ``Final Regulatory Flexibility Analysis'' section below, this 
proposed rule is not anticipated to impose any new costs on affected 
entities. The amendments would apply equally to all producers and 
handlers, regardless of size. The proposed amendments also have no 
additional impact on the reporting, record-keeping, or compliance costs 
of small businesses.
    The Board unanimously recommended all the proposed amendments to 
the Order following deliberations at a public meeting held on February 
15, 2022, except one dissenting vote on the method for establishing a 
member's sales constituency. The Board submitted its formal 
recommendation to amend the Order through the informal rulemaking 
process on April 8, 2022. At USDA's request, the Board conducted an 
additional meeting on December 15, 2022, to publicly clarify its 
original intent that the sales constituency provisions of the proposal 
would apply to both growers and handlers, and that sales constituency 
would be established at the time of nomination. Specifically, the Board 
adjusted the language of the initial recommendation for when a member's 
sales constituency is established from ``nomination and appointment'' 
to just at the time of ``nomination.'' The Board then unanimously voted 
to clarify that the established sales constituency applies to both 
handlers and growers for the duration of the term of office. A separate 
vote to remove the words ``and appointment'' from the language had one 
dissenting individual who believed sales constituency should be 
calculated at the time of appointment.
    A proposed rulemaking soliciting public comments on the proposed 
amendments was published in the Federal Register on December 4, 2023 
(88 FR 84075). AMS received one comment from the Wisconsin Department 
of Agriculture in support of all proposals in the proposed rulemaking, 
noting the proposed changes would favorably impact the Wisconsin cherry 
industry. AMS also received one comment from a Michigan handler who was 
specifically against Proposal 1 of the proposed rulemaking. The handler 
believed that this amendment would require that Board seat allocations 
be calculated by the averaging of the previous five years' production, 
which the handler asserted would yield insufficient representation for 
District 1. The handler felt the appropriate representation for 
District 1 should be four seats based on the district's annual tart 
cherry production from 2019 to 2023. However, Proposal 1 would no 
longer use a district's average annual production to determine its 
representation on the Board, and would instead use the district's 
highest annual production volume within a five-year period (e.g., 2019 
to 2023). Indeed, under the proposal, District 1 would, in fact, be 
allocated four seats for the next four years based on the district's 
recent maximum production.
    Based on all the information available to AMS at this time, 
including the comments received in response to the proposed rulemaking, 
no changes will be made to the proposed amendments.
    AMS will conduct a producer and handler (processor) referendum to 
determine support for the proposed amendments. If appropriate, a final 
rule will then be issued to effectuate the amendments, if they are 
favored by producers and handlers in the referendum.
    The proposed rulemaking would:
     Modify the method for allocating Board seats to a district 
so that it is based on the district's maximum volume of production in 
the most recent five harvests (Proposal 1);
     Change the starting date for the term of office for Board 
members (Proposal 2);
     Modify the basis for determining a Board member's sales 
constituency when a member has multiple affiliations (Proposal 3);
     Clarify how sales constituency applies to alternate Board 
members (Proposal 4);
     Adjust the timeframe for submitting nominations to USDA 
(Proposal 5); and
     Clarify when districts are subject to the Order's volume 
regulations (Proposal 6).

Proposal 1--Establishment of Membership

    Section 930.20 establishes the Board and provides a method for 
calculating its membership, which is drawn from nine subdivisions (or 
``districts'') in the production area. Section 930.20(b) states that 
district representation on the Board is based on the previous three-
year average production in the district and may vary depending on the 
production levels of the district. If the three-year average production 
in a district changes so that a different number of seats should be 
allocated to it, Sec.  930.20(f) states that the Board's membership 
must be adjusted accordingly. Currently, the Board is required to 
calculate the three-year average production in each of the nine 
districts annually. This updated yearly calculation of the three-year 
average may result in a change to the number of representative seats in 
a given district.
    This method for determining the Board's membership has proved to be 
inefficient and costly. If the Board's calculation of the three-year 
average production in a district reduces the number of seats for the 
district, the members of that district follow the procedures specified 
in Sec.  930.120 and recommend to the Board who among them should be 
removed from office. The Board then makes a recommendation to the 
Secretary for approval of the member and alternate to be removed from 
the Board. This process is time-intensive and disrupts the continuity 
of the Board's operations by removing members and alternates from the 
Board as frequently as every year. If the new three-year average 
calculation results in an increase to a district's representation on 
the Board, the Board staff would conduct an election in that district 
to fill the newly established seat. This process costs the Board 
significant time and financial resources because it requires conducting 
additional outreach and nominations annually. Consequently, the Board 
discussed ways to alter Sec.  930.20 to provide a more sustainable 
method for calculating its membership.
    The Board recommended modifying Sec.  930.20(b) so that district 
representation on the Board is based on each district's maximum 
production in the most recent five harvest periods, rather than on the 
district's average production over the previous three years. The Board 
further recommended that the proposed calculation would commence from 
the first season's harvest following implementation of this action. In 
addition, Sec.  930.20(f) would be revised to specify that each 
district's maximum production for the most recent five harvests would 
be determined every five years and as soon as possible after the most 
recent year's production is known. Production numbers would be 
calculated after the Board receives final reports in early September. 
The five-harvest periods for

[[Page 58638]]

calculating maximum volume for each district would continue in 
perpetuity until otherwise modified through a Board recommendation and 
rulemaking. The choice of the five-year period is based on balancing 
the interests of the industry. A five-year period would provide 
continuity of district representation on the Board, yet it would also 
allow trends and/or changes impacting tart cherry production to be 
accommodated periodically.
    The Board also recommended amending Sec.  930.20 to insert two new 
subsections, Sec.  930.20(g) and 930.20(h). Section 930.20(g) would 
further clarify that in the event a district experiences substantial 
changes requiring reconsideration of the number of seats in the 
district, the Secretary, based on the Board's recommendation, could 
allocate a different number of seats to the district. In deciding 
whether to make any such recommendation, the Board would consider 
several factors. These factors would include shifts in the tart cherry 
acreage and/or the number of bearing trees within districts and within 
the production area during recent years, the volume of tart cherries 
produced in the district, the importance of either increased or 
decreased production in its relation to existing districts, the 
equitable relationship of Board membership and districts, enhanced 
economies to producers through more efficient administration of Board 
reapportionments, and other relevant factors.
    Additionally, Sec.  930.20(h) would state that no change in the 
number of seats allocated to a district could become effective less 
than 30 days prior to the date on which the term of office begins each 
year, and no recommendation for a change in allocated seats could be 
made less than six months prior to such date. Current Sec.  930.20(g), 
(h), and (i) would be redesignated Sec.  930.20(i), (j), and (k), 
respectively.
    The Board considered alternatives to the proposed five-year period 
for determining a district's maximum production, including 3-year and 
10-year periods. The Board assessed each period and cross-compared 
historical production data to review the hypothetical impact of these 
options on district representation levels. The Board determined the 
five-year period calculation as optimal because it induced the least 
volatility in the seat allocations to each district. Ultimately, the 
Board believes this proposal would stabilize its composition and 
improve the efficiency of its operations.

Proposal 2--Starting Date for Term of Office

    Section 930.22 states that the term of office for Board members and 
alternates is three fiscal years. Section 930.7 defines a fiscal year 
as the 12-month period beginning on July 1 of any year and ending on 
June 30 of the following year. These dates have been used as the 
beginning and end dates for the term of office since the inception of 
the Order. Proposal 2 would adjust the term of office to start on June 
1 and end on May 31 of the third subsequent year. This change would 
allow for activities such as Board forecasting, planning, and final 
recommendations for the optimum supply volume to be conducted by the 
same membership, which industry believes will improve Board operations. 
The optimum supply volume is referred to by the Board as the Optimum 
Supply Formula (OSF).
    Under the Order's current marketing policy located in Sec.  930.50, 
the Board is required to meet on or about July 1 of each crop year to 
establish a preliminary free market tonnage percentage and a 
preliminary restricted percentage, and to meet again no later than 
September 15 to make any modifications to the preliminary percentages 
based on consideration of actual production data, inventories, and 
other current economic information. Therefore, the final OSF 
recommendation incorporates the updated market data, and the Board 
reviews the preliminary estimates calculated by the prior Board 
membership during its June meeting (which is when the Board typically 
holds the meeting required to be held on or about July 1). However, the 
preliminary recommendation from its June meeting can impact industry 
operations during harvest in July and August.
    Therefore, to establish greater continuity of Board operations that 
is stabilizing for industry, the Board recommended changing Sec.  
930.22 so the term of office would be three years, starting on June 1 
and ending on May 31 of the third subsequent year, prior to the start 
of the crop year. This would allow the same Board members to calculate 
both the preliminary estimate and the final OSF recommendation.
    In addition, the Board usually formulates its budget and assessment 
rates for the upcoming season at its June meeting. With this change, 
the newly seated Board would also be making these decisions.

Proposal 3--Determination of Member Sales Constituency

    This proposal would clarify how the term ``sales constituency'' is 
applied to growers and handlers. As defined in Sec.  930.16, a sales 
constituency is a common marketing organization, brokerage firm, or 
individual representing a group of handlers and growers. An 
organization that receives consignments of cherries but does not direct 
where the consigned cherries are sold is not a sales constituency. The 
determination of a Board member's (or prospective Board member's) sales 
constituency is important because, in a district with multiple Board 
members, only one member may be from a given sales constituency. This 
limitation is intended ``to achieve a fair and balanced representation 
on the Board'' and ``to prevent any one sales constituency from gaining 
control of the Board'' (7 CFR 930.20(g)).
    The lack of additional guidance in the Order relating to sales 
constituency determinations has created significant challenges. First, 
the lack of guidance has led to confusion in the industry about how 
these determinations should be made. In addition, under the current 
regulatory criteria, Board members and nominees may be found to have 
multiple sales constituencies since many growers and handlers conduct 
business with several entities at the same time. Further, these 
business transactions may change year-to-year, or even within a year. 
The complicated and volatile nature of sales constituency 
determinations under the current rules means that Board members may 
become ineligible to serve before their terms expire, and this 
contributes to high turnover rates among members. These issues have 
also made it increasingly difficult to identify qualified candidates to 
serve on the Board, exacerbating the economic conditions that have 
caused the tart cherry industry to shrink over time.
    The proposal would address these problems by simplifying sales 
constituency determinations and by providing that such determinations, 
once made at the time of a prospective member's nomination, would 
remain in place until the end of the member's term of office. 
Specifically, this proposal would amend Sec.  930.23(b) to provide that 
a grower's sales constituency is determined by the handler that 
purchases the ``majority of pounds'' of the grower's cherries at the 
time of their nomination. A handler's sales constituency would be the 
entity that directs the sales of its cherries, which is commonly the 
handler itself. Sales

[[Page 58639]]

constituency determinations for growers and handlers would be based on 
the most recently harvested crop at the time of nomination. This 
assigned sales constituency would remain in effect throughout the 
grower's or handler's term of office. Since growers and handlers do 
business with multiple entities, this clarification would standardize 
the process for determining sales constituency and ensure that the 
sales constituency relationship would remain in place throughout a 
member's three-year term of office. Therefore, the Board recommended 
this proposal to address industry confusion on how to accurately 
determine a nominee's sales constituency relationship.
    This proposal will help keep the sales constituency static 
throughout the term of office and stabilize Board membership, thereby 
reducing turnover interruptions prior to the term of office ending for 
the member. As explained above, this stability is becoming more 
important given business attrition and the economic conditions that 
contribute to the shrinking of the tart cherry industry over time, 
which has made identifying qualified candidates to serve on the Board 
increasingly more difficult. In sum, the Board seeks to limit the 
impact of any single sales constituency and maintain a wide array of 
perspectives and industry interests while simultaneously incorporating 
the flexibility to fully seat the Board. This proposal would promote 
diverse Board representation to reflect industry's business interests 
while retaining the capacity to seat diverse representation for the 
entire three-year term of office in each district. This proposal also 
makes clear that both handlers and growers are subject to sales 
constituency requirements.

Proposal 4--Alternate Member Sales Constituency

    Section 930.28 establishes the criteria to seat an alternate member 
at a Board meeting during the absence of the member for whom that 
member serves as an alternate. The current language does not include 
any provision that incorporates sales constituency with regard to 
alternate members being seated. This proposal clarifies the 
interpretation of the regulatory language regarding who may represent a 
member seat within a district, and the intent of industry on nominating 
and seating an alternate member. When the Order was initially 
established, the intent of industry regarding sales constituencies was 
to permit the seating of alternate members even though they were of the 
same sales constituency as the member for whom they serve as an 
alternate. It was understood that members of the same sales 
constituency could occupy the member and the corresponding alternate 
seat for that chair on the Board. The proposed amendment would confirm 
this original interpretation of the sales constituency limitation and 
clarify when an alternate may serve in place of a member.
    Before 2018, the Board's policy was to allow members and their 
alternates to be from the same sales constituency, even though this 
practice was not explicitly codified. However, in 2018 a district court 
issued an order that disapproved of this practice. In Burnette Foods 
Inc. v. U.S. Department of Agriculture, the United States District 
Court for the Western District of Michigan held that CherrCo, Inc., a 
grower cooperative, was a sales constituency. Burnette Foods, Inc. v. 
U.S. Department of Agriculture, No. 1:16-cv-21, 2018 WL 538583, at *4 
(W.D. Mich. Jan. 24, 2018). In connection with this holding, the court 
issued an order stating that ``Not more than one Board member 
(including an alternate Board member) may be from, or affiliated with, 
CherrCo in those districts having more than one seat on the Board.'' 
Burnette Foods, ECF No. 51 (Mar. 9, 2018) (emphasis added).
    USDA's implementation of the district court's order made it 
difficult to find and seat representatives on the Board who did not 
have a ``constituency conflict'' (that is, a shared sales constituency) 
with other members and alternates on the Board. Under USDA's 
implementation of the order, sales of cherries by a grower to more than 
one handler required that all such handler relationships be considered 
in assessing constituency conflicts. All these grower relationships 
were compared to all constituencies of other members and alternates 
serving on the Board from a multi-seat district, including the member 
holding the seat for which an alternate was standing for nomination and 
election. With this interpretation, if any conflict existed between a 
candidate and any other Board representative in the same district, 
alternates included, the candidate could not be nominated for 
appointment to the Board.
    USDA appealed the district court's decision to the United States 
Court of Appeals for the Sixth Circuit, which reversed the district 
court's judgment and remanded the case for entry of judgment in USDA's 
favor. Burnette Foods, Inc. v. U.S. Department of Agriculture, 920 F.3d 
461, 464, 470 (6th Cir. 2019). However, because the Sixth Circuit ruled 
in USDA's favor on a preliminary issue, it did not address the question 
of whether (or how) the sales constituency limitation in Sec.  
930.20(g) applies to alternate members.
    To clarify this issue, the Board recommended adding language to 
Sec.  930.28 to explicitly state how the sales constituency limitation 
applies to alternate members. Currently, Sec.  930.20(g) provides that 
any conflict of sales constituency in a district for Board members is 
not allowed. The current language in Sec.  930.20(g) does not address 
how an alternate's sales constituency affects a member's qualification 
to serve. The proposed amendment to Sec.  930.28 would add the 
necessary language to clarify the Board's intentions when seating 
alternate members.
    As previously mentioned, attrition and difficult economic 
conditions are shrinking the tart cherry industry. In 2021 and 2022, 
three tart cherry handling operations closed. The Board also recently 
had open alternate seats as a result of the lawsuit surrounding the 
sales constituency clause. Finding and electing candidates to serve has 
become increasingly more difficult. The current process of determining 
sales constituency adds to this difficulty, especially when a member's 
sales constituency may change yearly, and the existing process 
significantly limits the availability of qualified candidates. To seat 
a functioning Board that appropriately represents growers and handlers 
from their corresponding districts, the Board believes that members of 
the same sales constituency must be allowed to sit as member and 
alternate on the Board. This was commonly understood by industry as how 
the Order was originally intended to operate. This is also how industry 
interpreted the Order until 2018.
    This amendment would clarify the regulations and confirm these 
original intentions and the interpretation of sales constituency for 
alternates. The proposal would reclassify the original paragraph 
comprising Sec.  930.28 as Sec.  930.28(a), and add two new paragraphs 
Sec. Sec.  930.28(b) and 930.28(c). Section 930.28(b) would state that 
alternate members may be from the same sales constituency as the member 
for whom they serve as an alternate. It would also provide that, if a 
member and their alternate are absent from a meeting of the Board, 
another alternate of a different district may act for the member 
following the requirements of Sec.  930.28(a), provided this does not 
create a sales constituency conflict with the other members of that 
district. Section 930.28(c) would allow the Board, with the approval of 
the Secretary, to establish rules and regulations necessary and 
incidental to the administration of Sec.  930.28.

[[Page 58640]]

Proposal 5--Submission of Nominations

    Preparing and completing Board member nomination packages for 
submission to the Secretary entails several stages of work that require 
months to complete. The process begins with the issuance of notices of 
open seats transmitted to industry, followed by the solicitation of 
nominations in the applicable districts. Grower members and at-large 
members (i.e., members in districts with only one seat and who may be 
growers or handlers) are nominated first, then handler members are 
nominated. Once this is completed, the Board focuses efforts on the 
nomination of alternate members, a process that adds several more weeks 
to the timetable.
    Currently, the Board is required to announce the expiration of a 
member's term of office and solicit nominations for the position at 
least 180 days before the term expires. Board staff must then complete 
the above-mentioned steps and submit the nomination package to the 
Secretary or Board at least 120 days before the term expires, in 
accordance with Sec.  930.23(b)(7). This means the Board may have as 
few as 60 days (180 days minus 120 days) to prepare and submit a 
nomination package that adheres to the 120-day deadline. In practice, 
the Board staff cannot complete the process by the 120-day deadline. 
Therefore, the Board has recommended reducing the number of days in 
advance of a term's expiration that nominations must be submitted from 
120 to 60 days. By making the submission date 60 days prior to the end 
of the term of the outgoing Board member, the Board staff would have an 
additional 60 days to conduct outreach for nominees and complete the 
nomination process.
    This proposal is an administrative change for the Board. Aside from 
the proposed change, the Board staff would continue to conduct the 
nomination and election processes in the same manner as they have been 
conducted since the inception of the Order. This amendment would adjust 
by 60 days the deadline for submission of nominations to the Secretary. 
This change would not adversely impact the USDA's requirement to carry 
out the nomination or election processes.

Proposal 6--Districts Subject to Volume Regulation

    This proposal would change language in Sec.  930.52 to address two 
industry concerns about how this section establishes which districts 
are subject to the Order's volume regulations. The first issue involves 
the number of years that Sec.  930.52(a) considers in determining a 
district's average production of tart cherries. The second issue 
involves Sec.  930.52(d)'s exemption from volume regulation based on a 
district's ``processed production,'' which is an undefined term. These 
two issues have created volatility and confusion when calculating a 
district's production for the purpose of determining whether it is 
subject to the Order's volume regulations.
    Section 930.52 establishes which districts in the production area 
are subject to the Order's volume regulations. Section 930.52(a) states 
that, as a general rule, the districts in which handlers are subject to 
the volume regulations are those in which the average annual production 
of cherries over the prior three years has exceeded six million pounds. 
Handlers become subject to volume regulation in the crop year that 
follows any three-year period in which the six-million-pound average 
production requirement is exceeded in that district.
    Currently, the Board uses all tart cherry production for each 
district in calculating the OSF and for determining whether a district 
is regulated in any given year. The industry's production information 
comes from multiple sources. Handlers provide the Board with the amount 
of fruit that growers deliver to their facilities and from which 
district produced the fruit. Some growers divert cherries in the field 
in those years when a restriction is calculated under the OSF. The 
Board oversees and calculates the volume of cherries diverted from 
fields by growers. Using all available information, the Board 
determines the production of tart cherries by district that is used to 
calculate the OSF for any given year.
    Tart cherry production can vary dramatically from year to year, 
making the production totals extremely volatile over multiple seasons. 
To make the average calculation for each district less volatile, the 
Board recommended moving to a five-year average instead of the current 
three-year average. The additional two years included in the 
calculation provide a longer window to assess the average production in 
each district, thereby reducing the weight each season has in 
determining the average number. The Board further noted that extending 
the period from three to five years would have a minimal impact on the 
regulation of the various districts, and allow for more consistent 
averages when calculating the six-million-pound threshold for 
determining if a district is subject to regulation. Consequently, the 
Board unanimously recommended changing the period for calculating the 
average pounds for each district from three to five years in Sec.  
930.52(a).
    The second issue involves Sec.  930.52(d)'s use of the term 
``processed production.'' Section 930.52(d) exempts a district from 
volume regulation in a particular year if it produces less than 50 
percent of its ``average annual processed production'' in the previous 
five years. At present, industry operates with the understanding that 
in years with volume restriction, grower diverted cherries are 
subtracted from the district's production when calculating the five-
year average. However, since grower diverted cherries represent an 
insignificant portion of the district's total production, this has a 
negligible impact on the five-year average. By eliminating the term 
``processed'' from Sec.  930.52(d), it would be clearer to the industry 
that ``production'' means all cherries produced in a district when 
determining the exempt status. Therefore, in years where there is a 
restriction, all production, including grower diverted cherries, would 
be part of the production average. This change would simplify the 
calculation for the Board and keep the calculation consistent in years 
with and without volume restriction. A district's production average is 
most impacted by weather conditions from year to year, and not the 
volume of grower diverted fruit.
    Therefore, eliminating the word ``processed'' from ``processed 
production'' would not meaningfully alter the way the industry or the 
Board are already operating, but it would simplify the five-year 
production average and make the calculation consistent from year to 
year. Elimination of the term would also make it clearer to the 
industry to include all tart cherries produced in a district when 
determining the regulation status of districts. The Board unanimously 
recommended this proposed change that would remove the term 
``processed'' from Sec.  930.52(d). Finally, AMS has identified a typo 
in Sec.  930.62(a). A correction would be made by changing the 
reference to Sec.  940.51 with Sec.  930.51. This correction is 
administrative in nature and would not have an effect on the changes 
proposed in this rulemaking.

Final Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), AMS has considered the economic impact of 
this action on small entities. Accordingly, AMS has

[[Page 58641]]

prepared this final regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
businesses subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act are unique in that they are brought about through 
group action of essentially small entities acting on their own behalf.
    There are approximately 400 tart cherry growers in the production 
area and approximately 40 handlers subject to regulation under the 
Order. At the time this analysis was performed, the Small Business 
Administration (SBA) defined small agricultural producers of tart 
cherries as those having annual receipts equal to or less than 
$3,500,000 (Other Noncitrus Fruit Farming, North American Industry 
Classification System Code 111339). Small agricultural service firms 
were defined as those having annual receipts equal to or less than 
$34,000,000 (Postharvest Crop Activities, North American Industry 
Classification System Code 115114) (13 CFR 121.201).
    The National Agricultural Statistics Service (NASS) reported that 
the 2021-22 value of the tart cherry crop for processed utilization was 
approximately $83 million. The tart cherry production was 171.0 million 
pounds and the season average grower price for processed tart cherries 
was $0.485 per pound. Dividing the crop value by the estimated number 
of producers (400) yields an estimated average annual receipts per 
producer of $207,500 ($83 million divided by 400 producers). This is 
well below the SBA threshold for small producers.
    An estimate of the season average price of $0.94 per pound received 
by handlers for processed tart cherries was derived from USDA's 
purchases of dried tart cherries for feeding programs in the 2021-22 
season at an average price of $4.70 per pound. The dried cherry price 
was converted to a raw product equivalent price of $0.94 per pound at 
an industry recognized ratio of five to one ($4.70 divided by 5 equals 
$0.94). Multiplying this price by 2021 total processed utilization of 
171.0 million pounds results in an estimated handler-level tart cherry 
value of $160.7 million ($0.94 per pound multiplied by 171.0 million 
pounds). Dividing this figure by the number of handlers (40) yields 
estimated average annual receipts per handler of approximately $4.0 
million ($160.7 million divided by 40 handlers), which is well below 
the SBA threshold of $34 million for small agricultural service firms. 
Assuming a normal distribution, the majority of producers and handlers 
of tart cherries may be classified as small entities.
    This proposed rulemaking would revise multiple provisions in the 
Order's subpart regulating handling of tart cherries grown in Michigan, 
New York, Pennsylvania, Oregon, Utah, Washington, and Wisconsin:
     Proposal 1: modify the method for allocating Board seats 
to a district so that it is based on the district's maximum volume of 
production in the most recent five harvests;
     Proposal 2: change the starting date for the term of 
office for Board members;
     Proposal 3: modify the basis for determining a Board 
member's sales constituency when a member has multiple affiliations;
     Proposal 4: clarify how sales constituency applies to 
alternate Board members;
     Proposal 5: adjust the timeframe for submitting 
nominations to USDA; and
     Proposal 6: clarify when districts are subject to the 
Order's volume regulations.
    The proposed changes may be considered either modifications of, or 
clarifications to existing administrative Board processes, and affect 
only the Board's activity. AMS does not anticipate that any of the 
proposed changes will increase costs on producers or handlers. The goal 
of these proposed changes is to help further standardize and stabilize 
Board membership and improve Board efficiency and decision making 
throughout the year.
    As an alternative to this proposal, the Board considered making no 
revisions to the Order at this time. However, due to changes in the 
industry, the Board believes the proposals are justified and necessary 
to ensure its ability to locally administer the program. AMS concurs 
with that conclusion.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the Order's information collection requirements have been 
previously approved by OMB and assigned OMB No. 0581-0177, Tart 
Cherries Grown in Michigan, New York, Pennsylvania, Oregon, Utah, 
Washington, and Wisconsin. No changes in those requirements are 
necessary as a result of this proposed rulemaking. Should any changes 
become necessary, they would be submitted to OMB for approval.
    This proposed rulemaking would impose no additional reporting or 
recordkeeping requirements on either small or large tart cherry 
handlers. 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.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this proposed rulemaking.
    The Board's meetings are widely publicized throughout the tart 
cherries production area. All interested persons are invited to attend 
the meetings and encouraged to participate in Board deliberations on 
all issues. Like all Board meetings, the meetings held on February 15 
and December 15, 2022, were public, and all entities, both large and 
small, were encouraged to express their views on the proposed 
amendments.
    A proposed rulemaking concerning this action was published in the 
Federal Register on December 4, 2023 (88 FR 84075). A copy of the 
rulemaking was sent via email to the Board Manager for dissemination to 
all Committee members and tart cherry producers and handlers. Finally, 
the proposed rulemaking was made available by USDA through the internet 
and the Office of the Federal Register. A 60-day comment period ending 
February 2, 2024, was provided to allow interested persons to respond 
to the proposals. Two comments were received. One comment supported all 
the proposed amendments. The other comment, from a Michigan handler, 
was specifically against Proposal 1 of the proposed rulemaking. The 
handler believed that this amendment would require that Board seat 
allocations be calculated by the averaging of the previous five years' 
production, which the handler asserted would yield insufficient 
representation for District 1. However, Proposal 1 would no longer use 
a district's average annual production to determine its representation 
on the Board and would instead allocate seats to a district based on 
its highest annual production volume within a five-year period. For the 
years (2019 to 2023), District 1 would, in fact, be allocated four 
seats. Based on all the information available to AMS at this time, 
including the comments received in response to the proposed rulemaking, 
no changes will be made to the amendments as proposed.

[[Page 58642]]

    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: 
https://www.ams.usda.gov/rules-regulations/moa/small-businesses. Any 
questions about the compliance guide should be sent to Richard Lower at 
the previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.

Findings and Conclusions

    AMS has determined that the findings and conclusions, and general 
findings and determinations included in the proposed rulemaking set 
forth in the December 4, 2023, issue of the Federal Register (88 FR 
84075) are appropriate and necessary and are hereby approved and 
adopted.

Marketing 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 proposed 
rulemaking 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 growers and handlers (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, 2023, through June 30, 2024.
    The agents designated by the Secretary to conduct the referendum 
are Christian Nissen, Jennie Varela, and Steven Kauffman, Southeast 
Region Branch, Market Development Division, Specialty Crops Program, 
AMS, USDA; Telephone: (863) 324-3375, Fax: (863) 291-8614, or Email: 
[email protected], [email protected], and 
[email protected], respectively.

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

    \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 which were previously 
made in connection with the issuance of Marketing Order 930; and all 
said previous findings and determinations are hereby ratified and 
affirmed, except insofar as such findings and determinations may be in 
conflict with the findings and determinations set forth herein.
    1. Marketing Order 930 as hereby proposed to be amended and all the 
terms and conditions thereof, would tend to effectuate the declared 
policy of the Act;
    2. Marketing Order 930 as hereby proposed to be amended regulates 
the handling of tart cherries grown in Michigan, New York, 
Pennsylvania, Oregon, Utah, Washington, and Wisconsin and is applicable 
only to persons in the respective classes of commercial and industrial 
activity specified in the Order;
    3. Marketing Order 930, as hereby proposed to be amended, is 
limited in application to the smallest regional production area, which 
is practicable, consistent with carrying out the declared policy of the 
Act, and the issuance of several marketing orders applicable to 
subdivisions of the production area would not effectively carry out the 
declared policy of the Act;
    4. Marketing Order 930, as hereby proposed to be amended 
prescribes, 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 produced or packed in the production area; and
    5. All handling of tart cherries grown or handled in the production 
area, as defined in Marketing Order 930, 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 in the States of Michigan, New 
York, Pennsylvania, Oregon, Utah, Washington, and Wisconsin shall be in 
conformity to, and in compliance with, the terms and conditions of the 
said Order as hereby proposed to be amended as follows:
    The provisions of the proposed marketing order amending the Order 
contained in the proposed rulemaking issued by the Administrator and 
published in the Federal Register (88 FR 84075) on December 4, 2023, 
will be and are the terms and provisions of this order amending the 
Order and are set forth in full herein.

List of Subjects in 7 CFR Part 930

    Cherries, Marketing agreements, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, the Agricultural 
Marketing Service proposes to amend 7 CFR part 930 as follows:

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

0
1. The authority citation for 7 CFR part 930 continues to read as 
follows:

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

0
2. Amend Sec.  930.20 by:
0
a. Revising the introductory text of paragraph (b) and paragraph (f);
0
b. Redesignating paragraphs (g), (h), and (i), as paragraphs (i), (j), 
and (k); and
0
c. Adding new paragraphs (g) and (h).
    The revisions and the additions read as follows:


Sec.  930.20  Establishment and membership.

* * * * *
    (b) District representation on the Board shall be based upon the 
maximum volume of production in the most recent five harvests in the 
district and shall be established as follows:
* * * * *
    (f) If the maximum production for the most recent five harvests in 
a district changes so that a different number of seats should be 
allocated to the district, then the Board will be reestablished by the 
Secretary and such seats will be filled according to the applicable 
provisions of this part. Each district's maximum production for the 
five most recent harvests shall be determined every five years and as 
soon as possible after the most recent year's production is known.
    (g) In the event of substantial changes within a district that 
require reconsideration of the number of seats allocated to the 
district, the Board may recommend, and pursuant thereto, the

[[Page 58643]]

Secretary may approve, allocation of a different number of seats to the 
district. In making any such recommendation, the Board shall consider:
    (1) Shifts in tart cherry acreage and/or the number of bearing 
trees within districts and within the production area during recent 
years;
    (2) The volume of tart cherries produced in the district;
    (3) The importance of either increased or decreased production in 
its relation to existing districts;
    (4) The equitable relationship of Board membership and districts;
    (5) Economies to result for producers in promoting efficient 
administration of the Board due to reapportionments;
    (6) Other relevant factors.
    (h) No change in the allocated number of seats for district(s) may 
become effective less than 30 days prior to the date on which terms of 
office begin each year and no recommendation for a change in allocated 
seats may be made less than six months prior to such date.
* * * * *
0
3. Revise Sec.  930.22 to read as follows:


Sec.  930.22  Term of office.

    The term of office of each member and alternate member of the Board 
shall be for three years beginning on June 1 of the year when appointed 
and ending on May 31 three years later: 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 year, one-third of such members and alternates shall serve 
only two years, and one-third of such members and alternates shall 
serve three years; and one-half of the initial members and alternates 
from Districts 4 and 7 shall serve only one year, and one-half of such 
initial members and alternates shall serve two years (determination of 
which of the initial members and their alternates shall serve for one, 
two, or three years 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 three years. The term of office of a 
member and alternate member for the same seat shall be the same. The 
term of office specified in this section will become effective for all 
members, including members whose terms are not expiring, upon the first 
nomination cycle following the effectiveness of the final rule 
establishing this new term of office.
    The Board, with the approval of the Secretary, may establish rules 
and regulations necessary and incidental to the administration of this 
section.
0
4. Amend Sec.  930.23 by revising paragraphs (b)(2), (3), (4), (7) and 
(c)(3)(ii) 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 previous three-year average production 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(i). 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.
    (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 nomination 
cycle. 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. A grower's sales constituency is 
determined by the common marketing organization or brokerage firm or 
individual representing a group of handlers and growers that purchased 
the majority of pounds of the grower's fruit in a given year. For the 
duration of a grower's term on the Board, the sales constituency 
affiliation for said grower will be the affiliation at the time of 
their nomination and will be based on the most recently harvested crop 
at that time.
    (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 nomination 
cycle. 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. For the 
duration of a handler's term on the Board, the sales constituency 
affiliation for said handler will be the affiliation at the time of 
nomination.
* * * * *
    (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 60 days prior to the expiration of such term.
    (c) * * *
    (3) * * *
    (ii) To be seated as a handler representative in any district, the 
successful candidate must receive the support of handler(s) that 
handled a combined total of no less than five percent (5%) of the 
previous three-year average production 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(i).
* * * * *
0
5. Revise Sec.  930.28 to read as follows:


Sec.  930.28  Alternate members.

    (a) 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 a member and his or her alternate are absent from 
a meeting of the Board, such member may designate, in writing and prior 
to the

[[Page 58644]]

meeting, another alternate to act in his or her place: Provided, that 
such alternate represents the same group (grower or handler) as the 
member and is not from the same sales constituency as another acting 
member or acting alternate member in that district. In the event of the 
death, removal, resignation or disqualification of a member, the 
alternate shall act for the member until a successor is appointed and 
has qualified.
    (b) Alternate members may be from the same sales constituency as 
the member for whom they serve as an alternate. In the event a member 
and his or her alternate are absent from a meeting of the Board, 
another alternate may act for the member following the requirements of 
Sec.  930.28(a), provided this does not create a sales constituency 
conflict with the other members of that district.
    (c) The Board, with the approval of the Secretary, may establish 
rules and regulations necessary and incidental to the administration of 
this section.
0
6. Amend Sec.  930.52 by revising paragraphs (a) and (d) to read as 
follows:


Sec.  930.52  Establishment of districts subject to volume regulations.

    (a) 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 5 years has exceeded 6 million pounds. Handlers shall become 
subject to volume regulation implemented in accordance with this part 
in the crop year that follows any 5-year period in which the 6-million-
pound average production requirement is exceeded in that district.
* * * * *
    (d) Any district producing a crop which is less than 50 percent of 
the average annual production in that district in the previous 5 years 
would be exempt from any volume regulation if, in that year, a 
restricted percentage is established.
* * * * *


Sec.  930.62  [Amended]

0
7. Amend Sec.  930.62 by removing in introductory text of paragraph (a) 
the text ``Sec.  940.51'' and adding in its place the text ``Sec.  
930.51''.

Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2024-15629 Filed 7-18-24; 8:45 am]
BILLING CODE 3410-02-P