Tart Cherries Grown in the States of Michigan, et al.; Establishment of Rules and Regulations for Grower Diversion and a Compensation Rate for the Cherry Industry Administrative Board Public Member and Alternate Public Member

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Docket No. FV97-930-2 FR]

Tart Cherries Grown in the States of Michigan, et al.;

Establishment of Rules and Regulations for Grower Diversion and a

Compensation Rate for the Cherry Industry Administrative Board Public

Member and Alternate Public Member

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule establishes rules and regulations for a grower

diversion program under the tart cherry marketing order for the 1998-

1999 and following crop years. It also establishes a compensation rate

to be paid to the Cherry Industry Administrative Board (Board) public

member and/or alternate public member when attending Board meetings.

EFFECTIVE DATE: This rule becomes effective June 20, 1998.

FOR FURTHER INFORMATION CONTACT: Patricia A. Petrella or Kenneth G.

Johnson, Marketing Order Administration Branch, F&V, AMS, USDA, room

2525-S, P.O. Box 96456, Washington, DC 20090-6456, telephone: (202)

720-5053, Fax: (202) 720-5698. Small businesses may request information

on compliance with this regulation by contacting: Jay Guerber,

Marketing Order Administration Branch, Fruit and Vegetable Programs,

AMS, USDA, P.O. Box 96456, room 2525-S, Washington, DC 20090-6456;

telephone (202) 720-2491; Fax: (202) 720-5698.

SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing

Agreement and Order No. 930 (7 CFR Part 930), regulating the handling

of tart cherries grown in the States of Michigan, New York,

Pennsylvania, Oregon, Utah, Washington, and Wisconsin, hereinafter

referred to as the ``order.'' The marketing agreement and order are

effective under the Agricultural Marketing Agreement Act of 1937, as

amended (7 U.S.C. 601-674), hereinafter referred to as the ``Act.''

The Department of Agriculture (Department) is issuing this rule in

conformance with Executive Order 12866.

This rule has been reviewed under Executive Order 12988, Civil

Justice Reform. This rule is not intended to have retroactive effect.

This rule would not preempt any State or local laws, regulations, or

policies, unless they present an irreconcilable conflict with this

rule.

The Act provides that administrative proceedings must be exhausted

before parties may file suit in court. Under section 608c(15)(A) of the

Act, any handler subject to an order may file with the Secretary a

petition stating that the order, any provision of the order, or any

obligation imposed in connection with the order is not in accordance

with law and request a modification of the order or to be exempted

therefrom. A handler is afforded the opportunity for a hearing on the

petition. After the hearing the Secretary would rule on the petition.

The Act provides that the district court of the United States in any

district in which the handler is an inhabitant, or has his or her

principal place of business, has jurisdiction to review the Secretary's

ruling on the petition, provided an action is filed not later than 20

days after the date of the entry of the ruling.

This final rule establishes rules and regulations for grower

diversion under the tart cherry marketing order and also establishes a

compensation rate of $250 per meeting for the public member and

alternate public member when attending Board meetings. The tart cherry

marketing order became effective in September of 1996 and the Board met

March 12-13, June 26-27, September 11-12, 1997, and January 29-30,

1998, to establish and recommend to the Secretary rules and regulations

to implement order authorities. At its meetings, the Board recommended

grower diversion regulations and a compensation rate for the public

member and alternate public member to the Department for appropriate

action.

An interim final rule was published in the Federal Register on

August 25, 1997, to establish terms and conditions for the issuance of

grower diversion certificates for the 1997-1998 crop season. A final

rule was published on April 22, 1998, in the Federal Register. A

proposed rule establishing the grower diversion program for the 1998-99

and following crop years was published in the Federal Register on April

23, 1998, (63 FR 20274). This final rule contains the terms and

conditions for the grower diversion program to be used for 1998-1999

and subsequent crop years.

Section 930.33 of the order authorizes the Board to compensate the

public member and/or alternate public member for performance of their

duties. The Board at its discretion may request the attendance of the

alternate public member at any or all meetings, notwithstanding the

expected or actual presence of the public member. The $250 compensation

rate will allow the Board to compensate the public member and alternate

public member for attending Board meetings. Such compensation is a per

meeting rate. For example, if a Board meeting is convened and lasts

four days or four hours, the public member and/or alternate public

member attending the meeting will receive $250. This action is intended

to compensate them for loss of work and wages. This payment will be in

addition to compensation for travel, lodging, meals, and other related

costs incurred in attending public Board meetings.

The order in section 930.50 provides the method of establishing an

optimum supply level of cherries for the crop year. The optimum supply

is defined as the average of the prior three years' sales of tart

cherries, adjusted for carry-in and desired carry-out inventory. The

optimum supply consists of a free percentage amount of cherries which a

handler could sell to any market and a restricted percentage amount,

when warranted, which would have to be withheld from the market. Based

on the optimum supply level, the Board establishes preliminary free and

restricted percentages. No later than September 15, after harvesting

and processing of the crop, the Board computes and recommends to the

Secretary final free and restricted percentages based on actual crop

[[Page 33524]]

amounts. After receiving the Board's recommendation, the Secretary

designates the final free and restricted percentages through informal

rulemaking if he finds that such action would tend to effectuate the

purposes of the Act. The difference between any final free market

percentage and 100 percent is the final restricted percentage. The

Board established an optimum supply of 247 million pounds and

preliminary free and restricted percentages for tart cherries acquired

by handlers during the 1997-98 crop year during its June 26-27, 1997,

meeting. Final free and restricted percentages which were recommended

by the Board to the Secretary were established during its September 11-

12, 1997, meeting. A final rule setting the final free and restricted

percentages for the 1997-98 crop year at 55 percent and 45 percent,

respectively, was published in the Federal Register on April 27, 1998,

(63 FR 20522).

Handlers can satisfy their restricted percentage in various ways.

The restricted percentage cherries can be maintained in handler-owned

inventory reserve pools. Handlers can also satisfy restricted

percentage obligations by redeeming grower diversion certificates,

exporting cherries to designated countries, shipping to exempt outlets,

contributing to charitable organizations or diverting cherries at the

handler's facility.

The maximum volume of cherries that can be held in the primary

inventory reserve is 50 million pounds. Handlers can establish a

secondary inventory reserve after the primary inventory reserve has

reached its maximum volume. There is no maximum volume in the secondary

inventory reserve. Each handler establishing a reserve (primary and

secondary) is required to pay all of his or her own storage expenses.

Reserve cherries can be released for sale upon Board approval into

commercial outlets when the current crop is not expected to fill

demand.

Section 930.58 of the tart cherry marketing order provides

authority for voluntary grower diversion. Growers can divert all or a

portion of their cherries which otherwise, upon delivery to a handler,

would become restricted percentage cherries. Growers will receive

diversion certificates from the Board stating the weight of cherries

diverted. The grower could then present this certificate to a handler

in lieu of actual cherries. The handler could apply the weight of

cherries represented by the certificate against the handler's

restricted percentage amount. In comments concerning the 1997-98 grower

diversion program there were concerns that such program could act as an

insurance policy for cherries that are not marketable contrary to the

intent of the order. The overall intent of the order is that only

cherries that have reached a harvestable, marketable condition be

allowed to be diverted. Therefore, in order to further clarify this

concept, this rule will provide that the Board will not allow diversion

credit to a grower whose fruit was destroyed before it set and/or

matured on the tree, or whose fruit is unmarketable. If marketable

fruit were to be damaged or destroyed by acts of nature such as storms

or hail, diversion credit could be granted.

A new section 930.158 is added to the rules and regulations

specifying the guidelines for grower diversion for the 1998-99 and

subsequent crop years. First, any grower desiring to divert in the

orchard would need to request an application form from the Board and

would need to apply by June 24, 1998, for the 1998-99 crop year and by

April 15 for subsequent crop years. The proposed June 15, 1998, date is

changed in this final rule to June 24, 1998, to allow growers adequate

time to apply for grower diversion for the 1998-99 crop year. The

application will include the name, address, phone number and a signed

statement certifying that the grower will abide by all the rules and

regulations for diversion. In addition, the grower will need to include

maps of such grower's orchard. Each map will include the grower's name,

address and location of the orchard.

The Board has recommended four types of in-orchard diversion. These

are: (1) random row diversion, in which rows of cherry trees are

randomly selected by the Board's computer programs to remain

unharvested; (2) whole block diversion, in which an entire orchard

block is left unharvested; (3) partial block diversion, in which a

contiguous portion of a definable block is diverted; and (4) in-orchard

tank diversion, in which cherries harvested into tanks are measured,

calculated and then diverted in the orchard. The regulations for the

1997-98 crop year only provide for random row and whole block

diversion.

For all types of diversion, except tank diversion, growers will

need to map each orchard block they intend to divert. A block is

defined as a group of trees that are of similar age, running in the

same direction and having definable boundaries (e.g., roads, ditches).

If a grower desires to divert using the random row method, all of the

grower's orchards would need to be mapped, since random row diversion

involves diverting a certain amount of trees from all the grower's

orchards. If the grower elects whole or partial block diversion, all

blocks to be diverted would need to be mapped. The maps would need to

be supplied to the Board so that the Board can calculate the diversion

amounts. New maps would not need to be prepared each season. However,

maps would have to be updated to reflect any substantive changes in the

grower's orchard such as new trees or trees destroyed by inclement

weather.

For the 1998-99 and subsequent crop years, the proposed rule

provided that only trees more than six years old would qualify for

diversion. Based on information from the National Agricultural

Statistical Service (NASS), and from record testimony, it appears that

tart cherry trees do not come into full commercial production before

they are five to seven years old. Using trees which are not producing

cherries or which are only beginning to come into full production when

calculating diversion amounts would result in figures which are not

representative of a grower's true production. A comment was received on

this issue and will be discussed later in this document as well as the

change in the regulations concerning this matter.

By July 1 of each crop year in which volume regulation is

recommended, a grower that has provided the Board with the required

orchard maps would have to inform the Board of such grower's intention

to divert in the orchard and the method of diversion. If a grower does

not elect the method of diversion by July 1, then only random row or

in-orchard tank diversion would be available and the Board would

provide the information necessary for the grower to divert by the

random row method.

Random Row Diversion

Based on orchard maps submitted to the Board by the grower, the

Board, using a computer program, would randomly designate rows of trees

in each orchard block for nonharvest and inform the grower of this

designation. This designation would be based upon the preliminary

restricted percentage amount computed and announced by the Board. For

example, if the preliminary restricted percentage is 20 percent, the

Board's computer would randomly select rows of trees across all blocks

in the grower's orchard to allow the grower to divert 20 percent of

such grower's crop. The grower, however, would not have to choose this

diversion amount. No less than seven days prior to each grower's

individual harvest date, such grower could request a different

diversion percentage (either smaller or greater). The purpose of the

seven day notice is to allow the Board adequate

[[Page 33525]]

time to prepare a different orchard map using different percentages.

To divert cherries through random row diversion, the grower will

not harvest the designated rows. After completing harvest of all trees

not designated for diversion, the grower would be required to notify

the Board and/or a Board compliance officer. Such grower will also need

to provide the Board with total harvested production amounts so the

Board could calculate the amount of grower diversion tonnage to be

placed on the diversion certificate. Independent confirmation by the

Board of the grower's production would also be provided by the handler

on Board form number two.

Growers will receive diversion certificates only after confirmation

of diversion is provided to the Board. After harvest, the Board's

compliance staff will visit the grower's orchards to ensure that the

rows selected on the orchard map for random row diversion had not been

harvested. Once the orchard has been visited by a compliance officer

and the grower has carried out the terms and conditions for random row

diversion, a diversion certificate will be issued to the grower. The

diversion certificate will represent the weight of cherries diverted by

the grower. The grower could then present the certificate to a handler

to be redeemed.

Whole Block Diversion

Whole block diversion involves diversion of the production from an

entire block of cherry trees.

In whole block diversion, the value of the diversion would be

determined by application of a statistical sampling protocol. For

example, if a block has 5 rows or less, 3 rows would be randomly chosen

to be sampled. If a block has 6 to 15 rows, 4 rows would be randomly

chosen to be sampled. If a block has 16 or more rows, 5 rows would be

randomly chosen to be sampled.

The Board originally recommended that a 5 percent sample size be

used. However, after the first season of operation, the Board

determined that the statistical method of sampling would be much more

accurate in obtaining the weight of what is to be diverted. From each

of the rows to be sampled, ten contiguous originally planted tree sites

would be sampled within the rows. A tree site is a planted tree or an

area where a tree was planted and may have been uprooted or died. Only

trees over the age of six years old would be harvested for the sample.

For example, if it is determined that five rows are to be sampled, then

10 tree sites in each of the five rows would be sampled. A total of 50

tree sites would be sampled ((10 original tree sites) x (5 rows)=50

trees). If a total of 4600 pounds is harvested from the sample trees

and this is divided by 50 tree sites, a yield of 92 pounds per tree

site will be obtained. The yield for the block is found by multiplying

92 pounds per site by 880 trees that were mapped in the block to yield

80,960 pounds per block.

The Board discussed another sampling option. This would have

required that mapping be done by the grower each year the grower

applied for diversion. However, the Board felt that was an undue burden

on the grower. Using the sampling method recommended by the Board will

only require the grower to map an orchard one time and update the map,

as necessary, to reflect any substantive changes in the grower's

orchard. The grower will not need to redo the map every year such

grower may want to divert.

Prior to sampling, the grower will notify the Board to allow

observation of the sampling process by a compliance officer. After

harvest, the compliance officer could again visit the grower's orchard

to verify that diversion actually took place.

A diversion certificate will be issued for an amount equal to the

volume of cherries diverted by the grower. The grower could then

present the certificate to a handler to be redeemed.

Partial Block Diversion

The Board recommended that partial block diversion be available as

an option to growers. Inclusion of this option would permit growers

added flexibility. Also, it would help discourage the tendency of

growers to break up large blocks into multiple small blocks. Partial

block diversion would also speed up the orchard diversion activity by

decreasing the sampling time for growers and the Board. Growers may

wish to divert only partial blocks of marketable, harvestable cherries

that have been subjected to storm damage or are of lower quality. For

example, this will allow a grower that has a block that is 35 rows by

40 trees per row to divert contiguous rows 1 through 22 and harvest

rows 23 through 35. The partial block would be sampled as in whole

block diversion. This provides the grower with more options when

determining if such grower should in-orchard divert.

The Board recommended limiting partial block diversions to one

partial block per grower per year. This will alleviate the time that

compliance officers would need to spend observing sampling and

diversion at grower's premises. The Board may evaluate partial block

diversions at the end of the season to decide if it is not timely or

not cost effective to administer by the compliance officers. Based on

this evaluation the Board may recommend increasing the number of

partial block diversions or eliminate this type of diversion as an

option to growers. The grower should inform the Board by July 1 if such

grower elects to whole or partial block divert. If whole block or

partial block diversion is not selected by July 1, growers who wish to

divert could then choose the random row method or the in-orchard tank

method of diversion.

In-Orchard Tank Diversion

The Board recommended that in-orchard tank diversion be authorized

to growers as another option for diversion. The Board discussed at

length the fact that the grower diversion program must be grower

friendly in order for growers to take full advantage of the program.

Adding options to the grower diversion program provides more

flexibility to the grower.

A grower diverting by this method would need to notify the Board

and compliance officers of such diversion. Growers may wish to use tank

diversion when marketable cherries in part of the orchard have

sustained damage or are of lower quality. Such cherries could be picked

and placed in harvesting tanks until a compliance officer could come to

the orchard to probe the tanks for volume measurement and observe the

destruction of the cherries on the grower's premises.

To use this diversion option a grower would need to inform a

compliance officer that such grower has tanks ready for diversion. The

Board recommended that the grower have no fewer than 10 tanks for

diversion prior to informing the compliance officer. This will keep the

cost of inspections to a minimum and decrease the compliance officer's

time from traveling from location to location to observe a small amount

of in-orchard tank diversion. The Board discussed the fact that 10

tanks is not a large amount, since each tank holds about 1,000 pounds

and 10 tanks would be about a truckload of cherries. This will not be

an undue hardship on small growers that wish to take advantage of such

diversion.

After the grower informs the compliance officer of such diversion,

the compliance officer will have up to five days to come to the

grower's premises to probe the tanks and observe the diversion. This

will allow the compliance officer the flexibility to schedule visits

throughout the area and save compliance costs.

[[Page 33526]]

Compliance

In-orchard diversion by growers is a voluntary action. However,

once chosen, growers are expected to meet all of the terms and

conditions for diversion to receive a diversion certificate and to be

diligent in actually diverting the percentage of the crop for which

they have applied. Handlers depend upon growers to accurately divert

the percentages requested as they make their marketing and storage

decisions throughout the season. Thus, in the case where growers fail

to properly divert all of the cherries specified in their application,

such growers should not receive diversion credit for the undiverted

cherries.

When a grower chooses random row diversion, such grower would not

harvest trees in rows that have been randomly chosen by the Board's

computer programs, to be left unharvested. Unintended errors could

occur during harvest that could void a growers diversion efforts. The

Board has recommended that growers who choose random row diversion

should be permitted to rectify any unintended errors that may occur

during harvest. Therefore, growers who fail to properly divert

designated rows, but who otherwise meet the terms and conditions of

diversion, will have to divert cherries in addition to those randomly

chosen, but will still receive the diversion percentage originally

applied for.

For example, a grower's map could require such grower to random row

divert rows 5 and 6 and such grower may harvest row 5 in error. Such

grower will then be required to divert another two rows to make up for

the mistake in diverting. This will discourage mistakes being made in

the orchard since such growers know they may have to divert more

cherries to correct a mistake. This recommended adjustment will allow a

grower to correct an error in the orchard and still receive a diversion

certificate.

However, if growers are harvesting at the end of the orchard and

thus, do not have an opportunity to rectify a mistake by diverting

additional rows or trees, the Board could reduce the grower's diversion

certificate by using the two for one method. For example, a grower

specifies a diversion amount of 20 percent on the original application

for diversion (and does not increase or decrease such percentage by the

June 24, 1998, cutoff date for the 1998-99 crop year and by April 15

for subsequent crop years). Subsequently, the grower fails to divert a

complete block or all of the specified rows, resulting in diversion of

only 16 percent of the crop. Thus, the grower has failed to divert an

additional 4 percent of the crop. The Board would then multiply that

percent by two and subtract that amount from the original diversion

application amount. This would reduce the diversion amount by twice the

amount of the mistake that was made and therefore, a 2 for 1 reduction

would be made as explained above. In this example, 2 times 4 percent

equals 8 percent; which, when subtracted from the original percentage

of 20 percent, yields a diversion credit of 12 percent of the grower's

total production. Thus, the grower would receive a diversion

certificate equal to 12 percent of the originally requested amount.

Growers, when aware of such errors, will need to immediately inform

the Board when such errors are made during the diversion process to

ensure that they continue to meet the terms and conditions of

diversion. Growers who divert more than their preliminary percentage

will not receive additional diversion credit. The Department agrees

with this recommendation. The ``two for one'' method is a necessary

part of compliance for the diversion provisions because it is important

that the industry accurately projects the annual tonnage of cherries

available for market.

The Board recommended that all grower diversion certificates should

be redeemed with handlers by November 1. After November 1, grower

diversion certificates will not be valid. It was intended that

diversion certificates be used within the same crop year that they were

issued, as if a crop had been produced. The November 1 date will allow

handlers adequate time to meet their restricted percentage amounts

after final percentages have been established.

Compensation

The Board also recommended adding a new section 930.133 to provide

a compensation rate of $250 to be paid to the public member and to the

alternate public member for each meeting they attend. Section 930.33

provides that the public member and alternate public member shall

receive such compensation as the Board may establish and the Secretary

may approve. The public and alternate public member cannot have a

financial interest in the tart cherry industry. To attend meetings, it

may be necessary for them to be absent from their places of employment.

Therefore, the Board recommended a compensation rate be established.

This payment will be in addition to compensation for travel, lodging,

meals, and other related costs incurred in attending Board meetings.

For example, if a Board meeting is convened and lasts for a day or two

or only four hours, the public member and/or alternate public member

attending the meeting would receive $250.

The Regulatory Flexibility Act and Effects on Small Businesses

The Agricultural Marketing Service (AMS) has considered the

economic impact of this action on small entities and has prepared this

final regulatory flexibility analysis. The Regulatory Flexibility Act

(RFA) would allow AMS to certify that regulations do not have a

significant economic impact on a substantial number of small entities.

However, as a matter of general policy, AMS' Fruit and Vegetable

Programs (Programs) no longer opt for such certification, but rather

perform regulatory flexibility analyses for any rulemaking that would

generate the interest of a significant number of small entities.

Performing such analyses shifts the Programs' efforts from determining

whether regulatory flexibility analyses are required to the

consideration of regulatory options and economic impacts.

The purpose of the RFA is to fit regulatory actions to the scale of

business subject to such actions in order that small businesses will

not be unduly or disproportionately burdened. Marketing orders issued

pursuant to the Act, and rules thereunder, are unique in that they are

brought about through group action of essentially small entities acting

on their own behalf. Thus, both statutes have small entity orientation

and compatibility.

There are approximately 40 handlers of tart cherries who are

subject to regulation under the order and approximately 1,220 producers

or growers of tart cherries in the regulated area. Small agricultural

service firms, which include handlers, have been defined by the Small

Business Administration (13 CFR 121.601) as those having annual

receipts of less than $5,000,000, and small agricultural producers are

defined as those having annual receipts of less than $500,000. The

majority of handlers and producers of tart cherries may be classified

as small entities.

This final rule establishes rules and regulations for grower

diversion under the tart cherry marketing order. The order was

promulgated on September 25, 1996. The Board was established on

December 20, 1996, met several times in 1997 and recommended numerous

rulemaking actions. The Board recommended establishing an assessment

rate and late payment charges, procedures for grower and

[[Page 33527]]

handler diversion and exemptions for certain order provisions. The

Board also recommended regulations for the issuance of grower diversion

certificates and final free and restricted percentages for the 1997-98

crop year. These actions were recommended at Board meetings held March

12-13, June 26-27, September 11-12, 1997, and January 29-30, 1998.

The impact of this rule will be beneficial to growers. The receipt

of grower diversion certificates is one of the methods under the order

that handlers can utilize to meet any such handler's restricted

percentage. Growers may voluntarily choose to divert because they have

an abundance of low value, poor quality marketable cherries or because

they are unable to find a processor willing to process some or all of

their cherries. Before choosing to divert, the grower would most likely

evaluate the harvesting and other cultural costs that could be saved by

diverting and locate a handler that would be willing to redeem such

grower's diversion certificate. An interim final rule was published on

August 25, 1997, (62 FR 44881) establishing terms and conditions for

the issuance of grower diversion certificates by the Board for the

1997-98 crop year. A final rule was published on April 22, 1998, (63 FR

20019) in the Federal Register.

Initially, about 700 growers expressed an interest in participating

in the voluntary grower diversion program. However, because of the

exceptional quality of 1997-98 tart cherry crop, fewer growers opted to

participate in the grower diversion program. As such, approximately 120

growers (65 growers diverting by random row and 55 diverting by whole

block diversion) received diversion certificates for a total of

6,139,600 pounds of diverted cherries for an average of 51,163 pounds

of cherries diverted per grower. Although it is difficult to quantify

the overall effect the grower diversion program has had on the tart

cherry industry at this time, information from the Board indicates that

the program's economic impact on both the handlers and growers appears

to have been positive. There seems to be overall satisfaction among

both growers and handlers with this year's returns. The economic impact

of the grower diversion provisions of this regulation are also expected

to be positive. They should result in benefits to both growers and

handlers which are similar to those which resulted from the 1997-98

program. In addition, this rule offers growers greater flexibility when

diverting their cherries.

With regard to methods of diversion, this rule establishes four

different ones: random row, whole block, partial block and in-orchard

tank. During diversion for the 1997-1998 season only the first two were

used. The Board discussed limiting the blocks to be diverted to 5 acre

blocks, but felt that this could have an adverse impact on small

growers that produce on less than 5 acre blocks. Therefore, the Board

recommended there be no limit on the size of orchard blocks to be

diverted. The Board also discussed a sampling option that would have

required mapping to be done by the grower each year the grower applied

for diversion, but rejected it because it would be an undue burden on

the grower. Using the sampling methods in this rule will only require

the grower to map an orchard one time and not redo the map every year

such grower may want to divert.

This rule also establishes a compensation rate of $250 per meeting

for the public member and alternate public member when attending Board

meetings. The public member and alternate public member would receive

$250 whether the Board meeting convened and lasted for one or two days

or only four hours. The compensation to be paid to the public member

and alternate public member would compensate such persons for loss of

work or wages since such persons do not have a financial interest in

the tart cherry industry. There was consideration for a lower

compensation rate but the Board decided to proceed with the above

mentioned amount. The Board did not support a lower compensation rate

because it did not adequately compensate the public member and

alternate public member for their time to attend Board meetings.

This rule will not impose any reporting or recordkeeping

requirements on either small or large tart cherry growers or handlers

in addition to those already considered or approved during the order

promulgation proceeding. The only written information requested from a

grower is an orchard map and the grower's final production volume.

Since growers maintain this information as part of their normal farming

operations, it takes approximately 10 minutes to prepare a map and less

than a minute to total the final production volume. As with all Federal

marketing order programs, reports and forms are periodically reviewed

to reduce information requirements and duplication by industry and

public sectors. In addition, the Department has not identified any

relevant Federal rules which duplicate, overlap or conflict with this

rule.

In compliance with Office of Management and Budget (OMB)

regulations (5 CFR Part 1320) which implement the Paperwork Reduction

Act of 1995 (Pub. L. 104-13), the information collection and

recordkeeping requirements imposed by this order have been previously

approved by OMB and assigned OMB Number 0581-0177.

The Board's meetings were widely publicized throughout the tart

cherry industry and all interested persons were invited to attend the

meeting and participate in Board deliberations. Like all Board

meetings, the March, June, September 1997, meetings and January 1998

meeting were public meetings and all entities, both large and small,

were allowed to express their views on these issues. The Board itself

is composed of 18 members, of which 17 members are growers and handlers

and one represents the public. Also, the Board has a number of

appointed committees to review certain issues and make recommendations

to the Board. The Board's Diversion Subcommittee met on March 12, 1997,

and discussed grower diversion in detail. That meeting was also a

public meeting and both large and small entities were able to

participate and express their views. Finally, interested persons are

invited to submit information on the regulatory and informational

impacts of this action on small businesses.

A proposed rule concerning this action was published in the Federal

Register on Thursday, April 23, 1998, (63 FR 20274). Copies of the rule

were also mailed or sent via facsimile to all Board members and cherry

handlers. Finally, the rule was made available through the Internet by

the Office of the Federal Register.

A 30-day comment period was provided which ended on May 26, 1998.

One comment was received in response to the proposal. The commenter is

the Executive Director of the Board. The commenter disagreed with the

age of the trees for which diversion is authorized. The Board

recommended to the Secretary that the age of trees for which diversion

of fruit is permitted should be 5 years or older. The proposal stated

that only trees seven years or older qualify for diversion. The

commenter stated that this is not consistent with the needs of the

industry.

The commenter further stated its recommendation for change was not

an arbitrary action by the Board. Rather, it is was done to bring the

Board's diversion activities and authority in line with cultural

practices of the industry. The proposal states that tart cherry trees

come into full commercial production

[[Page 33528]]

in a range from their fifth to seventh growing season. The point at

which a particular tree reaches production capacity depends upon

geographic location. The commenter stated that recognition of this

variance must be made for in the diversion process. The commenter

believes that only allowing trees seven years old or older to qualify

for diversion contributes to inequitable treatment of producers in

different areas with different circumstances and with different

cultural practices. The commenter further stated that the Board

unanimously determined that it was more appropriate to recognize the

full age range in the diversion of younger trees and orchards. By

recognizing the full range, the opportunity for diversion activity is

expanded for growers.

After consideration of this comment, the Department is changing the

provision in the regulations concerning the age of trees eligible for

diversion (Sec. 930.158(b)) to provide that trees that are four years

or younger do not qualify for diversion. This would recognize the full

five to seven year range of age maturation for the trees and allow

producers with younger fully producing trees to qualify for diversion.

This is also in keeping with other provisions of the regulations

providing that only cherries that have reached a harvestable,

marketable production will be eligible for diversion.

After consideration of all relevant matter presented, including the

information and recommendation submitted by the Board and other

available information, it is hereby found that this rule, as

hereinafter set forth, will tend to effectuate the declared policy of

the Act.

It is hereby found that good cause exists for not postponing the

effective date of this rule until 30 days after publication in the

Federal Register (5 U.S.C. 553) because growers are expected to begin

harvesting and diverting their crop by mid-June and need to know the

rules and regulations in order to participate in the grower diversion

program. Further, growers are aware of this rule which was recommended

at a public meeting.

List of Subjects in 7 CFR Part 930

Marketing agreements, Tart cherries, Reporting and recordkeeping

requirements.

For the reasons set forth in the preamble, 7 CFR part 930 is

amended as follows:

PART 930--TART CHERRIES GROWN IN THE STATES OF MICHIGAN, NEW YORK,

PENNSYLVANIA, OREGON, UTAH, WASHINGTON, AND WISCONSIN

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

follows:

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

2. A new Sec. 930.133 is added to read as follows:

Sec. 930.133 Compensation rate.

A compensation rate of $250 per meeting shall be paid to the public

member and to the alternate public member when attending Board

meetings. Such compensation is a per meeting rate. For example, if a

Board meeting is convened and lasts one or two days or only four hours,

the public member and/or alternate public member attending the meeting

would receive $250 each.

3. A new Sec. 930.158 is added to read as follows:

Sec. 930.158 Grower diversion and grower diversion certificates.

(a) Grower diversion certificates. The Board may issue diversion

certificates to growers in districts subject to volume regulation who

have voluntarily elected to divert in the orchard all or a portion of

their tart cherry production which otherwise, upon delivery to

handlers, would become restricted percentage cherries. Growers may

offer the diversion certificate to handlers in lieu of delivering

cherries. Handlers may redeem diversion certificates with the Board

through November 1 of each crop year. After November 1 of the crop year

that crop year's grower diversion certificates are no longer valid.

Cherries that have reached a harvestable, marketable condition will be

eligible for diversion. Diversion will not be granted to growers whose

fruit was destroyed before it set and/or matured on the tree, or whose

fruit is unmarketable. If marketable fruit were to be damaged or

destroyed by acts of nature such as storms or hail diversion credit

could be granted.

(b) Application and mapping for diversion. Any grower desiring to

divert cherries using methods other than random row or in-orchard tank

shall submit a map of the orchard or orchards to be diverted, along

with a completed Grower Diversion Application, to the Board by June 24,

1998, for the 1998-99 crop year (July 1, 1998 through June 30, 1999)

and April 15 for subsequent crop years. The application includes a

statement which must be signed by the grower which states that the

grower agrees to comply with the regulations established for a tart

cherry diversion program. Each map shall contain the grower's name and

number assigned by the Board, the grower's address, block name or

number when appropriate, location of orchard or orchards and other

information which may be necessary to accomplish the desired diversion.

On or before July 1, the grower should inform the Board of such

grower's intention to divert in-orchard and what type of diversion will

be used. The four types of diversion are random row diversion, whole

block diversion, partial block diversion and in-orchard tank diversion.

A grower who informs the Board about the type of diversion he or she

wishes to use by July 1 can elect to use any diversion method or a

combination of diversion methods. Only random row or in-orchard tank

diversion methods may be used if the Board is not so informed by July

1. Trees that are four years or younger do not qualify for diversion.

(1) Random row diversion. Using the orchard map furnished by the

grower, the Board will randomly select rows of trees within the orchard

to be diverted. The amount of cherries to be diverted will be based on

the preliminary restricted percentage amount established pursuant to

Sec. 930.50. A grower may elect a different percentage amount; however,

the grower needs to inform the Board as soon as possible after the

preliminary percentages are announced of this other amount, but in no

event shall this be less than seven days in advance of harvest. The

designated rows indicated by the map must not be harvested. After

completing harvest of the remaining rows in the orchard, the grower

must notify the Board and/or the Board's compliance officer. A

compliance officer will then be allowed to observe the grower's orchard

to assure that the selected rows have not been harvested. The grower

must inform the Board of the total production of the orchard to

calculate the tonnage that was diverted.

(2) Whole block diversion. Based on maps supplied by the grower, a

sampling procedure will be used to determine the amount of cherries in

the orchard to be diverted. A block is defined as rows that run the

same direction, are similar in age, and have definable boundaries. The

Board would require a number of trees to be sampled depending on the

size of the block. For example, if a block has 5 rows or less, 3 rows

would be randomly chosen to be sampled, if a block has 6 to 15 rows, 4

rows would be randomly chosen to be sampled, and if a block has 16 or

more rows, 5 rows would be randomly chosen to be sampled. From each of

the rows

[[Page 33529]]

to be sampled ten contiguous originally planted tree sites will be

sampled within the rows. Only trees more than five years old will be

harvested for the sample. For example, if it is determined that five

rows are to be sampled and 10 trees in the five rows are to be sampled,

then a total of 50 trees are to be sampled ((10 original tree sites)

x (5 rows)= 50 trees). A total of 4600 pounds will be harvested from

the sample trees which is divided by 50 trees to obtain a yield of 92

pounds per tree. To find the yield for the block, 92 pounds is

multiplied by 880 trees that were mapped in the block to yield 80,960

pounds per block. The harvested tonnage will be converted to a volume

that represents the entire block of cherries. The grower should inform

the Board when the samples are being taken so a compliance officer can

observe the sampling. The compliance officer would be allowed to

confirm that the block has been diverted.

(3) Partial block diversion. Partial block diversion will also be

accomplished using maps supplied by the grower. Sampling will be done

as in whole block diversion except that only partial blocks would be

selected and sampled. Growers may divert one partial block per year.

Such block must be mapped and would be sampled as described under whole

block diversion. Rows used in partial block diversion must be

contiguous.

(4) In-orchard tank diversion. Growers wishing to in-orchard tank

divert must pick the cherries to be diverted and place them in

harvesting tanks. A compliance officer would then probe the tanks for

volume measurement and observe the destruction of the cherries on the

grower's premises. Growers wishing to take advantage of this option

must have at least 10 tanks ready for diversion. The compliance officer

has up to five days to come to the grower's premises to observe the

diversion after being contacted.

(c) Compliance. Growers who voluntarily participate in the grower

diversion program must sign and file with the Board a Grower Diversion

Application. By signing the application, a grower agrees to the terms

and conditions of the grower diversion program as contained in these

regulations. To be eligible to receive diversion credit, growers

voluntarily choosing to divert cherries must meet the following terms

and conditions:

(1) In order to receive a certificate, a grower must demonstrate,

to the satisfaction of the Board, that rows or trees which were

selected for diversion were not harvested. Trees four years old or

younger do not qualify for diversion.

(2) The grower must furnish the Board with a total harvested

production amount so the Board can calculate the amount of grower

diversion tonnage to be placed on the diversion certificate. The Board

will confirm the grower's production amount with information provided

by handlers (to which the grower delivers cherries) on Board form

Number Two.

(3) The grower must agree to allow a Board compliance officer to

visit the grower's orchard to confirm that diversion has actually taken

place. If the terms and conditions for whole block, partial block or

in-orchard tank diversion are not completed, the Board shall not issue

the grower a diversion certificate. If a grower who chooses random row

diversion harvests rows that were designated not to be harvested, the

grower should inform the Board immediately of the error. The grower

will then be required to divert twice the amount (rows or trees)

incorrectly harvested to correct the mistake. The grower will still

receive a diversion certificate equal to the original requested amount.

However, in instances where a grower is at the end of harvesting the

orchard and fails to divert a complete block or specified rows, the

Board shall multiply by two the difference between the original

diversion amount and the actual diverted amount. The Board shall

subtract that amount from the diversion application amount. Thus, the

grower would receive a grower diversion certificate equal to a portion

of the originally requested amount. If the grower does not inform the

Board of such errors, the grower will not receive a diversion

certificate.

Dated: June 15, 1998.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 98-16377 Filed 6-18-98; 8:45 am]

BILLING CODE 3410-02-P