Proposed Rule2023-26396
Tart Cherries Grown in the States of Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and Wisconsin; Amendments to the Marketing Order
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Published
December 4, 2023
Issuing agencies
Agriculture DepartmentAgricultural Marketing Service
Abstract
This proposed rule invites comments on proposed 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.
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[Federal Register Volume 88, Number 231 (Monday, December 4, 2023)]
[Proposed Rules]
[Pages 84075-84082]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-26396]
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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. 88 , No. 231 / Monday, December 4, 2023 /
Proposed Rules
[[Page 84075]]
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.
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SUMMARY: This proposed rule invites comments on proposed 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: Comments must be received by February 2, 2024.
ADDRESSES: Interested persons are invited to submit written comments
concerning this proposed rule. Comments must be sent to the Docket
Clerk, Market Development Division, Specialty Crops Program, AMS, USDA,
1400 Independence Avenue SW, STOP 0237, Washington, DC 20250-0237; Fax:
(202) 720-8938; or internet: <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Comments
should reference the document number and the date and page number of
this issue of the Federal Register. All comments will be made available
for public inspection in the Office of the Docket Clerk during regular
business hours, or can be viewed at: <a href="https://www.regulations.gov">https://www.regulations.gov</a>. All
comments submitted in response to this proposed rule will be included
in the record and will be made available to the public on the internet
at the address provided above. Please be advised that the identity of
the individuals or entities submitting the comments will be made
public.
FOR FURTHER INFORMATION CONTACT: Thomas Nalepa, 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:
<a href="/cdn-cgi/l/email-protection#cf82aebda4aabba6a1a880bdabaabd8ca0a2a2aaa1bb8fbabcabaee1a8a0b9"><span class="__cf_email__" data-cfemail="1f527e6d747a6b767178506d7b7a6d5c7072727a716b5f6a6c7b7e31787069">[email protected]</span></a>.
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:
<a href="/cdn-cgi/l/email-protection#e6b48f858e879482c8aa89918394a693958287c8818990"><span class="__cf_email__" data-cfemail="53013a303b3221377d1f3c24362113262037327d343c25">[email protected]</span></a>.
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.
Section 8c(17) of the Act (7 U.S.C. 608c(17)) and the applicable
rules of practice and procedure governing the formulation of marketing
agreements and orders (7 CFR part 900) authorize amendment of the Order
through this informal rulemaking action. The Agricultural Marketing
Service (AMS) will consider comments received in response to this
proposed rule, and based on all the information available, will
determine if Order amendment is warranted. If AMS determines amendment
of the Order is warranted, a subsequent proposed rule and notice of
referendum would be issued, and producers and handlers would be allowed
to vote for or against the proposed amendments. AMS would then issue a
final rule effectuating any amendments approved by producers and
handlers in the referendum.
AMS is issuing this proposed rule 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 rule 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 rule 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 proposal has been reviewed under Executive Order 12988, Civil
Justice Reform. This rule 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
[[Page 84076]]
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
authorize the use of informal rulemaking (5 U.S.C. 553) to amend
Federal fruit, vegetable, and nut marketing agreements and orders. AMS
may use informal rulemaking to amend marketing orders depending upon
the nature and complexity of the proposed amendments, the potential
regulatory 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 rule 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
``Initial 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, recordkeeping, 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 AMS'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 February 15th 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. The
proposed rule would:
<bullet> 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);
<bullet> Change the starting date for the term of office for Board
members (Proposal 2);
<bullet> Modify the basis for determining a Board member's sales
constituency when a member has multiple affiliations (Proposal 3);
<bullet> Clarify how sales constituency applies to alternate Board
members (Proposal 4);
<bullet> Adjust the timeframe for submitting nominations to USDA
(Proposal 5); and
<bullet> 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 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
sections, Sec. Sec. 930.20(g) and 930.20(h). Section 930.20(g) would
further clarify that in the event a district experiences
[[Page 84077]]
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 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
[[Page 84078]]
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. United States 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. Dep't 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. Dep't 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. 930.28(b) and Sec. 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.
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
[[Page 84079]]
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
for the selection of the elected members and alternates. 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 confusion when calculating production in a
district.
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 simply 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).
Initial 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 prepared this
initial 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
[[Page 84080]]
$83 million. This 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 rule 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:
<bullet> 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;
<bullet> Proposal 2: change the starting date for the term of
office for Board members;
<bullet> Proposal 3: modify the basis for determining a Board
member's sales constituency when a member has multiple affiliations;
<bullet> Proposal 4: clarify how sales constituency applies to
alternate Board members;
<bullet> Proposal 5: adjust the timeframe for submitting
nominations to USDA; and
<bullet> 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.
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 rule. Should any changes become
necessary, they would be submitted to OMB for approval.
This proposed rule 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 rule.
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.
Interested persons are invited to submit comments on the proposed
amendments to the Order, including comments on the regulatory and
information collection impacts of this action on small businesses.
Following analysis of any comments received on the amendments in
this proposed rule, AMS will evaluate all available information and
determine whether to proceed. If appropriate, a proposed rule and
notice of referendum would be issued, and growers and handlers would be
provided the opportunity to vote for or against the proposed
amendments. Information about the referendum, including dates and voter
eligibility requirements, would be published in a future issue of the
Federal Register. A final rule would then be issued to effectuate any
amendments favored by growers and handlers participating in the
referendum.
A small business guide on complying with fruit, vegetable, and
specialty crop marketing agreements and orders may be viewed at:
<a href="https://www.ams.usda.gov/rules-regulations/moa/small-businesses">https://www.ams.usda.gov/rules-regulations/moa/small-businesses</a>. Any
questions about the compliance guide should be sent to Richard Lower at
the previously mentioned address in the FOR FURTHER INFORMATION CONTACT
section.
General Findings
The findings 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
[[Page 84081]]
commerce or directly burdens, obstructs, or affects such commerce.
A 60-day comment period is provided to allow interested persons to
respond to these proposals. Any comments received on the amendments
proposed in this rule will be analyzed. If AMS determines to proceed
based on all the information presented, a producer and handler
referendum would be conducted to determine the industry support for the
proposed amendments. If appropriate, a final rule would then be issued
to effectuate the amendments favored by producers and handlers
participating in the referendum.
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 paragraph (b) introductory text, and paragraph (f);
0
b. Redesignating paragraphs (g), (h), and (i) as paragraphs (i), (j),
and (k), respectively; 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 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) through (4) and (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
[[Page 84082]]
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) * * *
(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
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 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.
* * * * *
0
7. Amend Sec. 930.62 by revising the introductory text of paragraph
(a) to read as follows:
Sec. 930.62 Exempt uses.
(a) The Board, with the approval of the Secretary, may exempt from
the provisions of Sec. Sec. 930.41, 930.44, 930.51, 930.53, or 930.55
through 930.57 cherries for designated uses. Such uses may include, but
are not limited to:
* * * * *
Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2023-26396 Filed 12-1-23; 8:45 am]
BILLING CODE P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.