suspension order of regulations on cherries

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This section of the FEDERAL REGISTERcontains regulatory documents having generalapplicability and legal effect, most of which

are keyed to and codified in the Code ofFederal Regulations, which is published under50 titles pursuant to 44 U.S.C. 1510.

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Rules and Regulations Federal Register

65357

Vol. 76, No. 204

Friday, October 21, 2011

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Doc. No. AMSFV110047; FV119301

FR]

Tart Cherries Grown in Michigan, NewYork, Pennsylvania, Oregon, Utah,Washington, and Wisconsin;Suspension of Order RegulationsRegarding Random Row Diversion

AGENCY: Agricultural Marketing Service,USDA.ACTION: Final rule.

SUMMARY: This rule changes the growerdiversion regulations prescribed underthe marketing order for tart cherries(order). The order regulates the handling

of tart cherries grown in the States ofMichigan, New York, Pennsylvania,Oregon, Utah, Washington, andWisconsin and is administered locally

by the Cherry Industry AdministrativeBoard (Board). This rule suspendsindefinitely the regulations establishingrandom row as a method of growerdiversion. With growers consistentlychoosing other diversion methodswhich offer more flexibility and fewerpotential problems, the Boardrecommended this suspension to bringgrower diversion requirements in linewith current industry practices.DATES: Effective Date: October 22, 2011.FOR FURTHER INFORMATION CONTACT:

Jennie M. Varela, Marketing Specialist,or Christian D. Nissen, RegionalManager, Southeast Marketing FieldOffice, Marketing Order and AgreementDivision, Fruit and Vegetable Programs,AMS, USDA; Telephone: (863) 3243375, Fax: (863) 3258793, or E-mail:

[email protected]@ams.usda.gov.

Small businesses may requestinformation on complying with thisregulation by contacting Laurel May,

Marketing Order AdministrationBranch, Fruit and Vegetable Programs,AMS, USDA, 1400 IndependenceAvenue, SW., STOP 0237, Washington,DC 202500237; Telephone: (202) 7202491, Fax: (202) 7208938, or E-mail:[email protected].

SUPPLEMENTARY INFORMATION: This finalrule is issued under MarketingAgreement and Order No. 930, both asamended (7 CFR part 930), regulatingthe handling of tart cherries grown inMichigan, New York, Pennsylvania,Oregon, Utah, Washington, andWisconsin, hereinafter referred to as theorder. The order is effective under theAgricultural Marketing Agreement Act

of 1937, as amended (7 U.S.C. 601674),hereinafter referred to as the Act.The Department of Agriculture

(USDA) is issuing this rule inconformance with Executive Order12866.

This final rule has been reviewedunder Executive Order 12988, Civil

Justice Reform. This rule is not intendedto have retroactive effect.

The Act provides that administrativeproceedings must be exhausted beforeparties may file suit in court. Undersection 608c(15)(A) of the Act, anyhandler subject to an order may file

with USDA a petition stating that theorder, any provision of the order, or anyobligation imposed in connection withthe order is not in accordance with lawand request a modification of the orderor to be exempted therefrom. A handleris afforded the opportunity for a hearingon the petition. After the hearing, USDAwould rule on the petition. The Actprovides that the district court of theUnited States in any district in whichthe handler is an inhabitant, or has hisor her principal place of business, hasjurisdiction to review USDAs ruling onthe petition, provided an action is filednot later than 20 days after the date ofthe entry of the ruling.

This final rule changes the growerdiversion regulations prescribed underthe order. This rule suspendsindefinitely the regulations establishingrandom row as a method of growerdiversion. With growers consistentlychoosing other diversion methodswhich offer more flexibility and fewerpotential problems, the Boardrecommended this suspension to bringgrower diversion requirements in linewith current industry practices. The

Board unanimously recommended thisaction at a meeting on March 24, 2011.

Section 930.58 of the order providesauthority for voluntary growerdiversion. Under volume regulation,growers can divert all or a portion oftheir cherries which otherwise, upondelivery to a handler, would be subjectto regulation. Section 930.158 prescribesthe rules and regulations for growerdiversion, including the procedures anddeadline dates for applying fordiversion and the types of diversionavailable to growers. Currently, there arefour types of grower diversion: Randomrow, whole block, partial block, and in-orchard tank. This rule suspends theportions of 930.158 that provide

random row as an option under growerdiversion.

The order contains volume controlprovisions that allow the industry toaddress fluctuations in production fromseason to season, helping to stabilizesupplies and prices. When volumecontrol is in effect, free and restrictedpercentages are established. Handlerscan meet their restricted percentageobligation by placing cherries ininventory reserve, diverting cherriesthemselves, or redeeming growerdiversion certificates.

Under voluntary grower diversion,

growers can divert cherries fromproduction in exchange for Board issuedgrower diversion certificates stating thequantity diverted. Growers can thenpresent these certificates to handlerswho may redeem them as a method ofcomplying with their restrictedpercentage obligation under volumeregulation. By diverting cherries fromproduction, growers can avoid the costsof harvesting and transporting fruit,reduce the supply, and mitigate thedownward pressure on prices that resultfrom oversupply.

Following the promulgation of the

order in 1996, the Board recommendedregulations outlining two growerdiversion options for the 1997 crop year,whole block and random row (63 FR20019). Under whole block diversion,growers select entire orchard blocks to

be left unharvested. With random rowdiversion, the Board randomly selectsrows of trees the grower is to leaveunharvested, providing growers with away to divert a portion of an orchardrather than a whole orchard block.

For the 1998 crop year andsubsequent seasons, the grower

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65358 Federal Register / Vol. 76, No. 204/ Friday, October 21, 2011/ Rules and Regulations

diversion program was expanded toinclude two additional options, partial

block and in-orchard tank diversions (63FR 33523). Partial block diversionallows the grower to select a contiguousportion of an orchard block that will beleft unharvested. With in-orchard tankdiversion, cherries are harvested intotanks, the volume is calculated, and

then diverted in the orchard.The addition of these options

provided growers with greater flexibilitywhen considering diversion, andmarked a substantial decline in the useof random row. For the last ten years,random row has been the least utilizedgrower diversion option, and accountedfor less than three percent of totalgrower diversion during the last threeseasons.

During the discussion of this issue,the Board noted several issues that havecontributed to the nominal use ofrandom row as a grower diversionoption. Random row diversion is theleast flexible of grower diversionoptions in terms of quality control.When a grower selects a whole block orpartial block to divert, the growercontrols which fruit will be harvestedand which trees will be leftunharvested. Similarly, under in-orchard tank diversion, the growerdetermines what fruit is picked andstored in the tanks for diversion.Consequently, these three methodsallow the grower to incorporate qualityinto the decision of which cherries todivert. Delivering higher quality fruitnot only brings the grower a greater

return, but higher quality benefits theindustry overall.

Under the random row method ofdiversion, the diverted rows are selectedrandomly by the Board. This couldresult in the best quality fruit being leftin the orchard, with lower quality fruitdelivered to handlers, leading to lowergrower returns.

In addition to quality concerns, thelogistics of random row also presentparticular challenges to the grower.With the exception of in-orchard tankdiversion, all grower diversion methodsrequire the grower to submit an orchard

map to the Board. The burden of havingto keep orchard maps precisely up-to-date is borne by growers. The randomselection of rows by the Board placesadditional importance on the accuracyand precision of submitted maps.Inaccurate maps can lead to harvestingerrors, with rows selected for diversion

being inadvertently harvested.Even if maps are kept current,

diverting random rows during harvestcan be challenging. While whole andpartial block diversions allow growersto leave contiguous areas unharvested,

random row diversions require thatspecified rows be left unharvested,increasing the likelihood of error.Further, given the prevalence of contractharvesting, workers are often unfamiliarwith the orchards they are harvesting,and mistakes are made in identifyingthe specific rows to be left unharvested.

The greater potential for error during

harvesting is of major concern togrowers because penalties for errors inrandom row diversion are costly. If agrower discovers an error duringharvest, two trees must be leftunharvested for every one of the treesimproperly harvested in order to remainin compliance, with the grower onlyreceiving the original diversion amount.If the grower reports an error at the endof harvesting, a reduced diversionamount is calculated. If an unreportederror is discovered by the Board afterharvesting is complete, no diversioncertificate would be issued.

In addition to the issues affectinggrower interest in this option, the Boardalso has concerns regarding the use ofrandom row diversion. Specifically, theBoard is concerned about the potentialfor miscalculations or misuse that couldlead to overstated diversion amounts.Random row diversion differs from theother options in that the divertedtonnage receiving certificates iscalculated based on volume deliveredfrom the orchard. In contrast, whole andpartial block diversions involvesampling trees in the selected area todetermine the volume being diverted

before harvest takes place, and in-

orchard tank diversion is determined bythe actual volume measured in thetanks.

Calculating the diverted volume afterdelivery creates opportunity for error. Itcan be difficult to determine if thevolume delivered to the handler allcame from appropriately mappedgroves, included in the growersdiversion application. With diversioncalculations based on delivered volume,it is important that the volume onlyinclude cherries from those orchards inwhich random rows were diverted.Some growers care for and deliver fruit

from orchards other than their own.There is concern that the handleraccepting delivery could easily mistakehow much volume came from thegrowers own mapped orchards,resulting in the overstatement of theamount diverted.

With the availability of otherdiversion options that offer the growermore flexibility and less potentialproblems, random row represents a verysmall percentage of total growerdiversion. Further, with the higherpotential for harvesting errors and for

miscalculations of diversion amounts,the Board believes random row is themost problematic of the diversionoptions. Consequently, the Boardunanimously recommended this actionwhich suspends the regulationsproviding random row as a growerdiversion option. The Board voted tosuspend the regulations rather than

eliminating them altogether in the eventthe industry would want to reinstaterandom row diversion in the future.

Final Regulatory Flexibility Analysis

Pursuant to requirements set forth inthe Regulatory Flexibility Act (RFA) (5U.S.C. 601612), the AgriculturalMarketing Service (AMS) hasconsidered the economic impact of thisaction on small entities. Accordingly,AMS has prepared this final regulatoryflexibility analysis.

The purpose of the RFA is to fitregulatory actions to the scale of

business subject to such actions in orderthat small businesses will not be undulyor disproportionately burdened.Marketing orders issued pursuant to theAct, and rules issued thereunder, areunique in that they are brought aboutthrough group action of essentiallysmall entities acting on their own

behalf.There are approximately 40 handlers

of tart cherries who are subject toregulation under the marketing orderand approximately 600 producers of tartcherries in the regulated area. Smallagricultural service firms have beendefined by the Small Business

Administration (SBA) as those havingannual receipts of less than $7,000,000,and small agricultural producers aredefined as those having annual receiptsof less than $750,000 (13 CFR 121.201).

According to the NationalAgricultural Statistics Service, andBoard data, the average annual growerprice for tart cherries during the 20092010 season was $0.197 per pound, andtotal shipments were around 227million pounds. Therefore, averagereceipts for tart cherry producers werearound $75,000, well below the SBAthreshold for small producers. The Food

Institute estimates an f.o.b. price of$0.84 per pound for frozen tart cherries,which make up the majority ofprocessed tart cherries. Using this data,average annual handler receipts wereabout $4.8 million, also below the SBAthreshold for small agricultural servicefirms. Assuming a normal distribution,the majority of producers and handlersof tart cherries may be classified assmall entities.

This action changes the growerdiversion regulations prescribed underthe order. This rule suspends



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65359Federal Register / Vol. 76, No. 204/ Friday, October 21, 2011/ Rules and Regulations

indefinitely the regulations in 930.158establishing random row as a method ofgrower diversion. With growersconsistently choosing other diversionmethods which offer more flexibilityand fewer potential problems, the Boardrecommended this suspension to bringgrower diversion requirements in linewith current industry practices. The

authority for this action is provided forin 930.58 of the order. The Boardunanimously recommended this actionat a meeting on March 24, 2011.

This final rule will not impose anyadditional costs on growers. The growerdiversion program under the order iscompletely voluntary. In an effort tostabilize supplies and prices, the tartcherry industry uses mechanisms underthe order to attempt to bring supply anddemand into balance. Under voluntarygrower diversion, growers can divertcherries from production in exchangefor Board issued grower diversion

certificates stating the quantity diverted.Growers can then present thesecertificates to handlers who may redeemthem as a method of complying withtheir restricted percentage obligationunder volume regulation. By divertingcherries from production, growers canavoid the costs of harvesting andtransporting fruit, reduce the supply,and mitigate the downward pressure onprices that result from oversupply.

This action suspends only theregulations that provide random row asa method of grower diversion. The otherthree options, whole block, partial

block, and in-orchard tank, remain

unchanged by this action. Random rowis the least utilized of the growerdiversion options, with the other threeoptions accounting for 97 percent ofdiversion volume. Consequently, thischange brings the regulations in linewith current industry preferences andpractices. Further, the remaining growerdiversion options offer the grower someflexibility to control quality, which inturn could increase grower returns. Theeffects of this rule are not expected to

be disproportionately greater or less forsmall entities than for larger entities.

One alternative action considered by

the Board was to remove the regulationspertaining to random row diversion.However, the Board agreed thatsuspension would be the mostappropriate action should the industrydetermine it would like to reinstaterandom row as a diversion option in thefuture. Thus, termination was rejectedas an alternative.

In accordance with the PaperworkReduction Act of 1995, (44 U.S.C.Chapter 35), the orders informationcollection requirements have beenpreviously approved by the Office of

Management and Budget (OMB) andassigned OMB No. 05810177, TartCherries Grown in the States of MI, NY,PA, OR, UT, WA and WI. No changesin those requirements as a result of thisaction are necessary. Should anychanges become necessary, they would

be submitted to OMB for approval.This rule will not impose any

additional reporting or recordkeepingrequirements on either small or largetart cherry handlers. As with all Federalmarketing order programs, reports andforms are periodically reviewed toreduce information requirements andduplication by industry and publicsector agencies.

As noted in the initial regulatoryflexibility analysis, USDA has notidentified any relevant Federal rulesthat duplicate, overlap or conflict withthis final rule. Further, the publiccomments received concerning theproposal did not address the initialregulatory flexibility analysis.

AMS is committed to complying withthe E-Government Act, to promote theuse of the Internet and otherinformation technologies to provideincreased opportunities for citizenaccess to Government information andservices, and for other purposes.

In addition, the Boards meeting waswidely publicized throughout the tartcherry industry and all interestedpersons were invited to attend themeeting and participate in Boarddeliberations on all issues. Like allBoard meetings, the March 24, 2011,meeting was a public meeting and all

entities, both large and small, were ableto express views on this issue.

A proposed rule concerning thisaction as published in the FederalRegister on Monday, July 18, 2011 (76FR 42072). Copies of the rule weremailed or sent via facsimile to all Boardmembers and tart cherry handlers.Finally, the rule was made availablethrough the Internet by USDA and theOffice of the Federal Register. A 10-daycomment period ending July 28, 2011,was provided to allow interestedpersons to respond to the proposal.

One comment was received during

the comment period. The commenter, asmall grower, opposed the proposedchange. The commenter claimed thatrandom row diversion allows theiroperation to save time and labor. Thecommenter stated that by using randomrow they do not have to wait for weightsand estimates for each load and itspeeds up harvesting as the trees thatare to remain unpicked are marked inadvance.

Grower diversion is a voluntaryprogram established under the order.Growers can choose whether or not they

want to participate. While this actionsuspends random row as an optionunder grower diversion, three optionsremain: whole block, partial block, andin-orchard tank. Of these options, whole

block and partial block can be usedsimilarly to random row by leavingsegments of the growers productionunharvested. Further, like random row,

weights and estimates of each load arenot required and the trees that are toremain unharvested are determined inadvance, so harvest speeds are notaffected. In addition to havingcharacteristics similar to random row,whole and partial block diversions alsoprovide the grower with control overwhich trees will be left unharvested,allowing the grower some flexibility tocontrol for quality.

Accordingly, no changes will be madeto the rule as proposed, based on thecomment received.

A small business guide on complying

with fruit, vegetable, and specialty cropmarketing agreements and orders maybe viewed at: http://www.ams.usda.gov/MarketingOrdersSmallBusinessGuide.Any questions about the complianceguide should be sent to Laurel May atthe previously mentioned address in theFOR FURTHER INFORMATION CONTACTsection.

After consideration of all relevantmatter presented, including theinformation and recommendationsubmitted by the Board and otheravailable information, it is hereby foundthat the provision suspended, ashereinafter set forth, no longer tends toeffectuate the declared policy of the Act.

It is further found that good causeexists for not postponing the effectivedate of this rule until 30 days afterpublication in the Federal Register (5U.S.C. 553) because handlers are alreadyprocessing tart cherries from the 2011crop and the Board wants to implementthis change as soon as possible. Further,handlers are aware of this rule, whichwas recommended at a public meeting.Also, a 10-day comment period wasprovided for in the proposed rule.

List of Subjects in 7 CFR Part 930

Marketing agreements, Reporting andrecordkeeping requirements, TartCherries.

For the reasons set forth in thepreamble, 7 CFR part 930 is amended asfollows:

PART 930TART CHERRIES GROWNIN MICHIGAN, NEW YORK,PENNSYLVANIA, OREGON, UTAH,WASHINGTON, AND WISCONSIN

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

http://www.ams.usda.gov/MarketingOrdersSmallBusinessGuidehttp://www.ams.usda.gov/MarketingOrdersSmallBusinessGuidehttp://www.ams.usda.gov/MarketingOrdersSmallBusinessGuidehttp://www.ams.usda.gov/MarketingOrdersSmallBusinessGuide


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65360 Federal Register / Vol. 76, No. 204/ Friday, October 21, 2011/ Rules and Regulations

Authority: 7 U.S.C. 601674.

930.158 [Amended]

2. In 930.158: A. Suspend paragraph (b)(1)indefinitely. B. In paragraph (c)(3), redesignate thefirst two sentences as paragraph (c)(3)(i)and the remaining sentences as

paragraph (c)(3)(ii). C. Newly designated paragraph(c)(3)(ii) is suspended indefinitely.

Dated: October 14, 2011.

David R. Shipman,

Acting Administrator, Agricultural MarketingService.

[FR Doc. 201127276 Filed 102011; 8:45 am]

BILLING CODE 341002P

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 953[Doc. No. AMSFV110027; FV119531FR]

Irish Potatoes Grown in SoutheasternStates; Suspension of Marketing OrderProvisions

AGENCY: Agricultural Marketing Service,USDA.

ACTION: Final rule.

SUMMARY: This rule continues in effectthe interim rule that suspended themarketing order for Irish potatoes grownin Southeastern states (order), and the

rules and regulations implementedthereunder, through March 1, 2014. Theorder regulates the handling of Irishpotatoes grown in Southeastern statesand is administered locally by theSoutheastern Potato Committee(Committee). The Committee believesadvances in farming technology andproduction quality have reduced theneed for the order. When consideringthe costs associated with continuing theorder, the Committee unanimouslyrecommended that the order besuspended.

DATES: Effective Date: October 22, 2011through March 1, 2014.FOR FURTHER INFORMATION CONTACT:Dawana J. Clark, Marketing Specialist,or Kenneth G. Johnson, RegionalManager, DC Marketing Field Office,Marketing Order and AgreementDivision, Fruit and Vegetable Programs,AMS, USDA; Telephone: (301) 7345243, Fax: (301) 7345275, or E-mail:[email protected]@ams.usda.gov.

Small businesses may requestinformation on complying with this

regulation by contacting Laurel May,Marketing Order and AgreementDivision, Fruit and Vegetable Programs,AMS, USDA, 1400 IndependenceAvenue, SW., STOP 0237, Washington,DC 202500237; Telephone: (202) 7202491, Fax: (202) 7208938, or E-mail:[email protected].

SUPPLEMENTARY INFORMATION: This ruleis issued under Marketing Agreement

No. 104 and Marketing Order No. 953,both as amended (7 CFR part 953),regulating the handling of Irish potatoesgrown in Southeastern states,hereinafter referred to as the order.The order is effective under theAgricultural Marketing Agreement Actof 1937, as amended (7 U.S.C. 601674),hereinafter referred to as the Act.

The Department of Agriculture(USDA) is issuing this rule inconformance with Executive Order12866.

This rule has been reviewed underExecutive Order 12988, Civil JusticeReform. This rule is not intended tohave retroactive effect.

The Act provides that administrativeproceedings must be exhausted beforeparties may file suit in court. Undersection 608c(15)(A) of the Act, anyhandler subject to an order may filewith USDA a petition stating that theorder, any provision of the order, or anyobligation imposed in connection withthe order is not in accordance with lawand request a modification of the orderor to be exempted therefrom. A handler

is afforded the opportunity for a hearingon the petition. After the hearing, USDAwould rule on the petition. The Actprovides that the district court of theUnited States in any district in whichthe handler is an inhabitant, or has hisor her principal place of business, hasjurisdiction to review USDAs ruling onthe petition, provided an action is filednot later than 20 days after the date ofthe entry of the ruling.

This rule continues in effect theinterim rule that suspended the orderand all provisions prescribedthereunder through March 1, 2014. The

suspension includes, but is not limitedto, grade, size, quality, assessment,reporting, and inspection requirements.The Committee believes advances infarming technology and productionquality have reduced the need for theorder. When considering the costsassociated with continuing the order,the Committee agreed that the ordershould be suspended. The Committeemet on February 17, 2011, andunanimously recommended suspendingthe order for three years, through March1, 2014.

The order was promulgated in 1948,and regulates the handling of Irishpotatoes grown in designated countiesof Virginia and North Carolina. Theorder has been used to provide theindustry with grade, size, quality, andinspection requirements. The order alsoauthorizes reporting and recordkeepingfunctions required for the operation of

the order. The program is funded byassessments imposed on handlers.

Over the past several years, theSoutheastern potato industry has beenin decline, with acreage and productiontrending downward. Production hasfallen from an estimated 1,600,000hundredweight for the 199697 season,to a current estimate of 600,000hundredweight for the 201011 season.In 1996, there were approximately 150growers and 60 handlers in theproduction area. Currently, there areapproximately 20 growers and 10handlers covered in the production area.

The Committee met February 17,2011, to discuss the continued need forthe order. During the discussion, severalmembers mentioned that the order waspromulgated at a time when theindustry was having an issue with thequality of potatoes being produced. Thepurpose of the order was to establishstandards to improve the quality ofmarketed product.

Since the implementation of theorder, the quality of Southeasternpotatoes has greatly improved.Advances in farm machinery andimprovements in the grading processhave helped to ensure that only quality

product is being shipped to buyers.Concerns the industry previously hadprior to implementation of the order areno longer an issue, and for the pastseveral years, some industry membershave started questioning the continuedneed for the order and its associatedcosts.

At the meeting, members wereinformed that to maintain the order, theCommittee would have to incur someadditional administrative expenses. Tocover these costs, the Committee wouldneed to increase the assessment rate.Committee members agreed that the

industry would not support anassessment increase.In addition to the assessment costs,

comments were also made regarding thecost of inspection by the Committeerequired under the order. It was statedthat some industry members see the costof mandatory inspection as anunnecessary burden. Other Committeemembers expressed concern overwhether inspection would still beavailable if the order was suspended.This issue was resolved when memberswere assured that inspection would still

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