Cranberries Grown in the States of Massachusetts, et al.; Temporary Suspension of a Provision on Producer Continuance Referenda Under the Cranberry Marketing Order

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 929

[Docket No. FV99-929-1 FIR]

Cranberries Grown in the States of Massachusetts, et al.;

Temporary Suspension of a Provision on Producer Continuance Referenda

Under the Cranberry Marketing Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (Department) is adopting, as a

final rule, without change, the provisions of an interim final rule

which temporarily suspended an order provision requiring a producer

continuance referendum to be conducted on the marketing order during

the month of May 1999. The industry currently is experiencing unsettled

marketing conditions due to a surplus of product. The temporary delay

in holding the continuance referendum is allowing the Cranberry

Marketing Committee (Committee) to finalize the development of a plan

to improve the marketing situation, hold producer meetings throughout

the production area to update them on the situation, and begin

implementing the plan.

EFFECTIVE DATE: July 29, 1999.

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

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

2530-S, P.O. Box 96456, Washington, DC 20090-6456, telephone: (202)

720-2491; Fax: (202) 720-5698 or Anne M. Dec, Marketing Order

Administration Branch, Fruit and Vegetable Programs, AMS, USDA, room

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

720-2491; Fax: (202) 720-5698. Small businesses may request information

on compliance with this regulation or obtain a guide on complying with

fruit, vegetable, and specialty crop marketing agreements and orders 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; or E-mail: Jay.G[email protected]. You may also view the marketing

agreements and orders small business compliance guide at the following

website: http://www.ams.usda.gov/fv/moab.html.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order

No. 929, as amended (7 CFR part 929), regulating the handling of

cranberries grown in 10 States. 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 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 will 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.

The action temporarily suspended a provision in Sec. 929.69(d) of

the order which specifies the month and year when a continuance

referendum should be conducted to determine if producers favor

continuance of the cranberry marketing order. This action was

unanimously recommended by the Committee at its March 15, 1999,

meeting.

Section 929.69(d) of the order provides that the Secretary shall

conduct a referendum during the month of May 1975 to ascertain whether

continuance of the order is favored by the producers, and that the

Secretary shall conduct such a referendum during the month of May of

every fourth year thereafter. The next continuance referendum was

scheduled to be conducted in May 1999. The last continuance referendum

was held in May 1995.

Section 929.69(b) of the order authorizes the Secretary to

terminate or suspend the operation of any or all of the provisions of

this part whenever the Secretary finds that such provisions do not tend

to effectuate the declared policy of the Act.

At its March 15, 1999, meeting, the Committee recommended delaying

the May 1999 referendum because the cranberry industry currently is

experiencing significant marketing problems. Over the last few months,

inventories of cranberry juice have been at record levels and producer

prices have dropped significantly.

The Committee reported that, over the last five years, the industry

has enjoyed increasing demand for cranberry products, primarily due to

the success of numerous cranberry juice based beverages. However, such

success has attracted additional production. With increased production

and a leveling of demand, carry-out stocks of cranberry juice and juice

products are at record levels and are predicted to increase

significantly over the next few years. The Committee reported that

carryout stocks at the end of August were approximately 1.2 million

(mill.) barrels (bbls) in 1997, 2.1 mill. bbls in 1998, and are

projected to be 2.7 and 3.2 mill. bbls in 1999 and 2000, respectively.

The Committee also reported that, in recent months, producer prices

have responded to this surplus by dropping from $70-80/barrel to $38/

barrel.

The Committee plans a series of producer meetings throughout the

10-State production area to inform producers about positive actions

being

[[Page 34706]]

undertaken by the Committee to help strengthen marketing conditions.

Some of these actions include proposing amendments to the order, and

filing an application with the Department's Foreign Agricultural

Service for Market Access Program funds to help the industry further

develop export markets for cranberries and cranberry products. The

industry also is working with Congress on amendments to the Act to

include reporting requirements for processors and importers, and adding

cranberries to the list of commodities with the authority to establish

marketing research projects, including paid advertising, to more

effectively promote cranberries and cranberry products.

The Committee believes that a temporary delay in holding the

continuance referendum provided time for its actions to help stabilize

the current marketing situation. The Committee further believes that

holding a continuance referendum in May 1999, given the current

unsettled marketing situation, would not have provided a true indicator

of support for and the value of the order.

Pursuant to Sec. 929.69(b), the interim final rule suspended

provisions in Sec. 929.69(d) to postpone the May 1999 continuance

referendum under the cranberry marketing order. The Department

currently plans to conduct a producer continuance referendum in May

2000. However, a final decision on holding that referendum will not be

made until the spring of 2000. The Committee traditionally meets each

year during the months of February or March to assess the current

marketing situation and prospects for the upcoming season. The

Committee's assessment of marketing conditions at that time will be

used in making the final decision. In accordance with Sec. 929.69(d) of

the order, a continuance referendum is required to be held in May 2003.

The Regulatory Flexibility Act and Effects on Small Businesses

Pursuant to requirements set forth in the Regulatory Flexibility

Act (RFA), AMS has considered the economic impact of this action on

small entities. Accordingly, AMS has prepared this final regulatory

flexibility analysis.

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

business subject to such actions in order that small businesses will

not be unduly or disproportionately burdened. Marketing orders issued

pursuant to the Act, and the rules issued 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 20 handlers of cranberries who are subject

to regulation under the order and approximately 1,100 producers of

cranberries 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 cranberries may be classified as small entities.

The interim final rule temporarily suspended a provision in the

order requiring a producer referendum to be held in May 1999 to

determine whether producers favor continuance of the order.

Section 929.69(d) of the order provides that the Secretary shall

conduct a referendum during the month of May 1975 to ascertain whether

continuance of the order is favored by the producers, and that the

Secretary shall conduct such a referendum during the month of May of

every fourth year thereafter. The next continuance referendum was

scheduled to be conducted in May 1999. The last continuance referendum

was held in May 1995.

Section 929.69(b) of the order authorizes the Secretary to

terminate or suspend the operation of any or all of the provisions of

this part whenever the Secretary finds that such provisions do not tend

to effectuate the declared policy of the Act.

At its March 15, 1999, meeting, the Committee recommended delaying

the May 1999 referendum because the cranberry industry currently is

experiencing significant marketing problems. Over the last few months,

inventories of cranberry juice have been at record levels and producer

prices have dropped significantly.

The Committee reported that, over the last five years, the industry

has enjoyed increasing demand for cranberry products, primarily due to

the success of numerous cranberry juice based beverages. However, such

success has attracted additional production. With increased production

and a leveling of demand, carry-out stocks of cranberry juice and juice

products are at record levels and are predicted to increase

significantly over the next few years. The Committee reported that

carryout stocks at the end of August were approximately 1.2 million

(mill.) barrels (bbls) in 1997, 2.1 mill. bbls in 1998, and are

projected to be 2.7 and 3.2 mill. bbls in 1999 and 2000, respectively.

The Committee also reported that, in recent months, producer prices

have responded to this surplus by dropping from $70-80/barrel to $38/

barrel.

The Committee plans a series of producer meetings throughout the

10-State production area to inform producers about positive actions

being undertaken by the Committee to help strengthen marketing

conditions. Some of these actions include proposing amendments to the

order, and filing an application with the Department's Foreign

Agricultural Service for Market Access Program funds to help the

industry further develop export markets for cranberries and cranberry

products. The industry also is working with Congress on amendments to

the Act to include reporting requirements for processors and importers,

and adding cranberries to the list of commodities with the authority to

establish marketing research projects, including paid advertising, to

more effectively promote cranberries and cranberry products.

The Committee believes that a temporary delay in holding the

continuance referendum provided time for its actions to help stabilize

the current marketing situation. The Committee further believes that

holding a continuance referendum in May 1999, given the current

unsettled marketing situation, would not have provided a true indicator

of support for and the value of the order.

Pursuant to Sec. 929.69(b), this action suspended provisions in

Sec. 929.69(d) to postpone the May 1999 continuance referendum under

the cranberry marketing order. The Department currently plans to

conduct a producer continuance referendum in May 2000. This should

serve as an alternative to just suspending the May 1999 continuance

referendum. However, a final decision on holding that referendum will

not be made until the spring of 2000. The Committee traditionally meets

each year during the months of February or March to assess the current

marketing situation and prospects for the upcoming season. The

Committee's assessment of marketing conditions at that time will be

used in making the final decision. In accordance with Sec. 929.69(d) of

the order, a continuance referendum is required to be held in May 2003.

This action did not impose any additional recordkeeping

requirements on either small or large cranberry handlers. As with all

Federal marketing order programs, reports and forms are periodically

reviewed to reduce information requirements and

[[Page 34707]]

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 (44 U.S.C. Chapter 35), the information collection and

recordkeeping requirements imposed by Part 929 have been previously

approved by OMB and assigned OMB Number 0581-0103.

Committee meetings are widely publicized throughout the cranberry

industry and are open to all industry members and entities (including

both small and large business entities) and other interested persons--

who are encouraged to participate in the deliberations and voice their

opinions on topics under discussion. Like all Committee meetings, the

March 1999 meeting was a public meeting and all entities, both large

and small, were able to express their views on these issues. The

Committee itself is composed of eight members, of which seven members

are growers and one represents the public.

The interim final rule concerning this action was published in the

Federal Register (64 FR 24023, May 5, 1999) with an effective date of

May 6, 1999, through May 31, 1999. Copies of the rule were mailed by

the Committee's staff to all Committee members and cranberry producers.

In addition, the rule was made available through the Internet by the

Office of the Federal Register. That rule provided for a 15-day comment

period which ended May 20, 1999. No comments were received.

After consideration of all available information, and pursuant to

Sec. 929.69(b), it is found that the second sentence in Sec. 929.69(d)

does not tend to effectuate the declared policy of the Act for the

period specified in the interim final rule and it is temporarily

suspended.

List of Subjects in 7 CFR Part 929

Cranberries, Marketing agreements, Reporting and recordkeeping

requirements.

PART 929--CRANBERRIES GROWN IN THE STATES OF MASSACHUSETTS, RHODE

ISLAND, CONNECTICUT, NEW JERSEY, WISCONSIN, MICHIGAN, MINNESOTA,

OREGON, WASHINGTON, AND LONG ISLAND IN THE STATE OF NEW YORK

Accordingly the interim final rule amending 7 CFR part 929 which

was published at 64 FR 24023 on May 5, 1999, is adopted as a final rule

without change.

Dated: June 17, 1999.

Enrique E. Figueroa,

Administrator, Agricultural Marketing Service.

[FR Doc. 99-16508 Filed 6-28-99; 8:45 am]

BILLING CODE 3410-02-P