DRAFT -- OFFICIAL COPY WILL BE PUBLISHED IN THE FEDERAL REGISTER

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 929

[Docket No. AO-341-A6; FV02-929-1]

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; Hearing on Proposed Amendment of Marketing Agreement and Order No. 929

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Notice of hearing on proposed rulemaking.

SUMMARY: Notice is hereby given of a public hearing to consider amending Marketing Agreement and Order No. 929, hereinafter referred to as the "order." The order regulates the handling of cranberries grown in Massachusetts, Rhode Island, Connecticut, New Jersey, Wisconsin, Michigan, Minnesota, Oregon, Washington, and Long Island in the State of New York. The purpose of the hearing is to receive evidence on a number of amendments proposed by the Cranberry Marketing Committee (Committee), which is responsible for local administration of the order, and other interested parties. These proposals are intended to improve the administration, operation, and functioning of the order.

DATES: The hearing dates are:

1. May 20, 2002, 9:00 a.m. to 5:00 p.m., and continuing on May 21, 2002, at 9:00 a.m., if necessary, Plymouth, Massachusetts.

2. May 23, 2002, 9:00 a.m. to 5:00 p.m., Bangor, Maine.

3. June 3, 2002, 9:00 a.m. to 5:00 p.m., and continuing on June 4, 2002, at 9:00 a.m., if necessary, Wisconsin Rapids, Wisconsin.

4. June 6, 2002, 9:00 a.m. to 5:00 p.m. and continuing on June 7, 2002 at 9:00 a.m., if necessary, Portland, Oregon.

ADDRESSES: The hearing locations are:

1. Plymouth - Sheraton Inn, 180 Water Street, Plymouth, Massachusetts 02360.

2. Bangor - Bangor Motor Inn, Banquet and Conference Center, Hogan Road, Bangor, Maine 04401.

3. Wisconsin Rapids - Hotel Mead and Conference Center, 451 East Grand Avenue, Wisconsin Rapids, Wisconsin 54494.

4. Portland - Edith Green-Wendell Wyatt Federal Building, 1220 SW 3^rd Avenue, Room 322, Portland, Oregon 97204.

FOR FURTHER INFORMATION CONTACT: Kathleen M. Finn, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue SW, Stop 0237, Washington, DC 20250-0237; telephone: (202) 720-2491, Fax: (202) 720-8938. Small businesses may request information on this proceeding by contacting Jay Guerber, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue SW, Stop 0237, Washington, DC 20250-0237; telephone: (202) 720-2491, Fax: (202) 720-8938.

SUPPLEMENTARY INFORMATION: This administrative action is instituted pursuant to the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the "Act." This action is governed by the provisions of sections 556 and 557 of title 5 of the United States Code and, therefore, is excluded from the requirements of Executive Order 12866.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) seeks to ensure that within the statutory authority of a program, the regulatory and informational requirements are tailored to the size and nature of small businesses. Interested persons are invited to present evidence at the hearing on the possible regulatory and informational impacts of the proposals on small businesses.

The amendments proposed herein have been reviewed under Executive Order 12988, Civil Justice Reform. They are not intended to have retroactive effect. If adopted, the proposed amendments would not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with the proposals.

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. 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.

At a Committee meeting in August 2001, the Committee recommended proposed amendments to the cranberry marketing order. The Committee's request for hearing was submitted to USDA on November 5, 2001. A request to consider amendments to the cranberry marketing order was also received on November 5, 2001, from an attorney representing two cranberry handlers, Clement Pappas & Company,Inc. and Cliffstar Corporation.

In addition, USDA issued a press release on January 15, 2002, that invited cranberry growers, handlers and other interested persons to propose amendments to the marketing order. Two persons submitted additional proposals, the Wisconsin Cranberry Cooperative and Doanne Andresen.

The hearing is called pursuant to the provisions of the Act and the applicable rules of practice and procedure governing the formulation of marketing agreements and orders (7 CFR part 900).

Proposals submitted by the Cranberry Marketing Committee

The Committee proposes to revise seven areas of program operations. In addition, the Committee recommended that the amendment proceeding be expedited whereby the recommended decision would be omitted in order to have any approved amendments in place as soon as possible. This can only be done if the Secretary finds, on the basis of the record, that due and timely execution of his or her functions imperatively and unavoidably requires such omission. Participants at the hearing are therefore invited to present testimony on this recommendation. The amendments proposed by the Committee are summarized below.

Administrative Body

1. Increase Committee membership to 13 industry members, 1 public member, 9 industry alternate members and 1 public alternate member. The current Committee is composed of 7 industry members, each with an alternate and 1 public member and alternate. This proposal would also incorporate a Aswing@ position whereby the entity (either independent or cooperative) which sells more than 50 percent of the total volume sold is assigned an additional seat.

Related proposed changes would modify '' 929.22 and 929.23 to incorporate nomination and selection procedures to reflect the change in Committee membership. The change to ' 929.22 would also allow the Committee to request tax identification numbers for voting purposes and authorize mail nominations for independent members.

Another related change is proposed in quorum and voting requirements to reflect the increased number of Committee members. In addition, a related change is proposed to reset the clock for tenure limitations to correspond to the change in Committee members.

2. Clarify how alternates may fill positions in any member's absence.

3. Authorize the Committee to reestablish districts within the production area and reapportion grower membership among the various districts.

Volume regulations

4. Simplify criteria considered and set forth more appropriate dates in establishing the Committee's marketing policy.

5. Revise the formula for calculating sales histories under the producer allotment program in ' 929.48. The revision includes providing additional sales history to compensate growers for expected production on younger acres. This proposed change to ' 929.48 would also allow for more flexibility in recommending changes to the formula; add authority for segregating fresh and processed sales; and allow compensation for catastrophic events that impact a grower's crop for more than 2 years.

6. Remove specified dates relating to when information is required to be filed by growers/handlers in order to issue annual allotments.

7. Allow growers to transfer allotment during a year of volume regulation. Currently, growers must lease their acreage in order to transfer allotment.

8. If volume regulation is recommended by the Committee, require the Committee to recommend producer allotment program by March 1 each year and to recommend a withholding program as soon as practicable after August 1.

9. Authorize the implementation of the producer allotment and withholding programs in the same year.

10. Add specific authority to exempt fresh, organic or other forms of cranberries from order provisions.

11. Allow for greater flexibility in establishing other outlets for excess cranberries.

12. Update and streamline the withholding volume control provisions.

Production Area

13. Add Maine, Delaware, and the entire State of New York to the production area.

Paid Advertising

14. Add authority for paid advertising under the research and development provision of the order.

Definition of cranberry

15. Add the species Vaccinium oxycoccus to the definition of cranberry. Currently, only the species Vaccinium macrocarpon is included in the definition of cranberry.

Definition of handle

16. Modify the definition of handle to clarify that transporting fresh cranberries to foreign countries is considered handling and include the temporary cold storage or freezing of withheld cranberries as an exemption from handling.

Reporting requirements

17. Relocate some reporting provisions to a more suitable provision and streamline the language relating to verification of reports and records.

Deletion of obsolete provision

18. Delete an obsolete provision from the order relating to preliminary regulation.

Proposals submitted by Stephen L. Lacey on behalf of Clement Pappas and Company, Inc., and Cliffstar Corporation

Two handlers proposed amendments in two areas of program operations. These proposed amendments are summarized below.

Administrative Body

19. Require Committee member disclosure of non-regulated cranberry production.

20. Alter the way nominations of cooperative members on the Committee are conducted by requiring cooperative nominees to be selected through an election process administered by the Committee. Currently, the cooperative nominates its members without an election process.

Volume regulations

21. Incorporate a handler marketing pool under the producer allotment program to allow handlers without surplus access to cranberries to meet customer needs. This proposal would allow purchases from the pool by non-surplus handlers at the same price the handlers pay their growers.

22. Modify the withholding volume regulations by allowing growers to be compensated under the buy-back provisions if any funds are returned to the handler by the Committee.

Proposals submitted by Wisconsin Cranberry Cooperative

The Wisconsin Cranberry Cooperative, a cranberry cooperative marketing association, proposed revisions in two areas of program operations. These proposed amendments are summarized below.

Administrative Body

23. Recognize that there are more than one cooperative marketing associations in the industry and allow all cooperatives the right to be represented on the Committee.

24. Establish a nomination process for cooperative marketing associations.

Outlets for Excess Cranberries

25. Expand the noncompetitive outlets for excess cranberries by clearly defining what countries are authorized for foreign development with excess cranberries. 26. Establish a limit on foreign markets eligible for shipments of excess berries as foreign markets with a total annual consumption of less than the equivalent of 20,000 barrels of cranberries and/or cranberry products.

Proposal submitted by Doanne Andresen

Doanne Andresen, a cranberry grower from Duxbury, Massachusetts, proposed the following amendment.

27. Authorize an exemption from order provisions for the first 1000 barrels of cranberries produced by each grower.

28. The Fruit and Vegetable Programs of the Agricultural Marketing Service (AMS) proposes to allow such conforming changes to the order which may be necessary as a result of the hearing.

None of these proposals have received the approval of USDA. The Committee and the other interested parties believe that the proposed changes would improve the administration, operation, and functioning of the order.

The public hearing is held for the purpose of: (i) Receiving evidence about the economic and marketing conditions which relate to the proposed amendments of the order and any appropriate modifications thereof; (ii) determining whether there is a need for the proposed amendments to the order; (iii) determining the economic impact of proposed amendments on the industry in the production area and on the public affected by the amendments; and (iv) determining whether the proposed amendments or any appropriate modifications thereof will tend to effectuate the declared policy of the Act.

Testimony is invited at the hearing on all the proposals and recommendations contained in this notice, as well as any appropriate modifications or alternatives.

All persons wishing to submit written material as evidence at the hearing should be prepared to submit four copies of such material at the hearing and should have prepared testimony available for presentation at the hearing.

From the time the notice of hearing is issued and until the issuance of a final decision in this proceeding, USDA employees involved in the decisional process are prohibited from discussing the merits of the hearing issues on an ex parte basis with any person having an interest in the proceeding. The prohibition applies to employees in the following organizational units: Office of the Secretary of Agriculture; Office of the Administrator, AMS; Office of the General Counsel, except any designated employees of the General Counsel assigned to represent the Committee in this rulemaking proceeding; and the Fruit and Vegetable Programs, AMS.

Procedural matters are not subject to the above prohibition and may be discussed at any time.

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.

1. The authority citation for 7 CFR part 929 continues to read as follows:

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

2. Testimony is invited on the following proposals or appropriate alternatives or modifications to such proposals.

Proposals submitted by the Cranberry Marketing Committee:

Administrative Body

Proposal No. 1

Revise ' 929.20 to read as follows:

' 929.20 Establishment and membership.

(a) There is hereby established a Cranberry Marketing Committee consisting of 13 industry members, and 9 industry alternate members. Except as hereafter provided, members and alternate members shall be growers or employees, agents, or duly authorized representatives of growers.

(b) The committee shall include one public member and one public alternate member nominated by the committee and selected by the Secretary. The public member and public alternate member shall not be a cranberry grower, processor, handler, or have a financial interest in the production, sales, marketing or distribution of cranberries or cranberry products. The committee, with the approval of the Secretary, shall prescribe qualifications and procedures for nominating the public member and public alternate member.

(c) Members shall represent each of the following subdivisions of the production areas in the number specified in Table 1. Members shall reside in the designated district of the production area from which they are nominated and selected. Provided, that there shall also be one cooperative or independent member-at-large who may be nominated from any of the marketing order districts.

District 1: The States of Massachusetts, Maine, Rhode Island, Connecticut; and New York.

District 2: The States of New Jersey and Delaware.

District 3: The States of Wisconsin, Michigan, and Minnesota.

District 4: The States of Oregon and Washington.

Table 1

(d) The committee may establish, with the approval of the Secretary, rules and regulations for the implementation and operation of this section.

Revise ' 929.21 to read as follows:

' 929.21 Term of office.

(a) The term of office for each member and alternate member of the committee shall be for two years, beginning on August 1 of each even-numbered year and ending on the second succeeding July 31. Members and alternate members shall serve the term of office for which they are selected and have been qualified or until their respective successors are selected and have been qualified.

(b) Beginning on August 1 of the even-numbered year following the adoption of this amendment, committee members shall be limited to three consecutive terms. This limitation on tenure shall not include service on the committee prior to the adoption of this amendment and shall not apply to alternate members.

(c) Members who have served three consecutive terms must leave the committee for at least one full term before becoming eligible to serve again. The consecutive terms of office for alternate members shall not be so limited.

Revise ' 929.22 to read as follows:

' 929.22 Nomination.

(a) Beginning on June 1 of the even-numbered year following the adoption of this amendment, the committee shall hold nominations in accordance with this section. (b) Whenever any cooperative marketing organization sells more than fifty percent of the total volume of cranberries sold during the fiscal period in which nominations for membership on the committee are made, the cooperative or growers affiliated therewith shall nominate:

(1) Six qualified persons for cooperative members and four qualified persons for cooperative alternate members of the committee. Nominee(s) for cooperative member and cooperative alternate member shall represent growers from each of the marketing order districts designated in ' 929.20.

(2) The seventh cooperative member shall be referred to as member-at-large. The member-at-large may be nominated from any of the marketing order districts.

(3) Six qualified persons for independent members and four qualified persons for independent alternate members of the committee shall be nominated by those growers who market their cranberries through other than cooperative marketing organizations. Nominees for independent member and independent alternate member shall represent growers from each of the marketing order districts as designated in ' 929.20(c).

(c) Whenever any cooperative marketing organization sells less than fifty percent of the total volume of cranberries sold during the fiscal period in which nominations for membership on the committee are made, the cooperative or growers affiliated therewith, shall nominate:

(1) Six qualified persons for cooperative members and four qualified persons for cooperative alternate members of the committee. Nominees for member and alternate member shall represent growers from each of the marketing order districts as designated in ' 929.20(c).

(2) Six qualified persons for independent members and four qualified persons for independent alternate members of the committee shall be nominated by those growers who market their cranberries through other than cooperative marketing organizations. Nominees for independent member and independent alternate member shall represent growers from each of the marketing order districts as designated in ' 929.20(c).

(3) The seventh member nominee shall be referred to as the independent member-at-large. The member-at-large may be nominated from any of the marketing order districts.

(d) Nominations of qualified independent member nominees shall be made through a call for nominations sent to all eligible growers residing within each of the marketing order districts. The call for such nominations shall be by such means as are recommended by the committee and approved by the Secretary.

(1) The names of all eligible nominees from each district received by the committee, by such date and in such form as recommended by the committee and approved by the Secretary, will appear on the nomination ballot for that district.

(2) Election of the independent member nominees and independent alternate member nominees shall be conducted by mail ballot.

(3) Eligible independent growers shall participate in the election of nominees from the district in which they reside.

(4) When voting for independent member nominees, each eligible grower shall be entitled to cast one vote on behalf of him/herself.

(5) The nominee receiving the highest plurality of votes cast in districts two and four shall be the independent member nominee from that district. The nominee receiving the second highest plurality of votes cast in districts two and four shall be the independent alternate member from that district.

(6) The nominees receiving the highest and second highest plurality of votes cast in districts one and three shall be the independent member nominees from that district. The nominee receiving the third highest plurality of votes cast in districts one and three shall be the independent alternate member from that district.

(e) Nominations for the independent member-at-large shall be made through a call for nominations sent to all eligible growers residing within the marketing order districts. The call for such nominations shall be by such means as recommended by the committee and approved by the Secretary.

(1) Election of the member-at-large shall be held by mail ballot sent to all eligible independent growers in the marketing order districts by such date and in such form as recommended by the committee and approved by the Secretary.

(2) Eligible growers casting ballots may vote for a member-at-large nominee from marketing order districts other than where they produce cranberries.

(3) When voting for the member-at-large nominee, each eligible grower shall be entitled to cast one vote on behalf of him/herself.

(4) The nominee receiving the highest plurality of votes cast shall be designated the independent member-at-large nominee. The nominee receiving the second highest plurality of votes cast shall be declared the independent alternate member-at-large nominee.

(f) The committee may request that growers provide their federal tax identification number(s) in order to determine voting eligibility.

(g) The names and addresses of all nominees shall be submitted to the Secretary for selection no later than July 1 of each even-numbered year.

(h) The committee, with the approval of the Secretary, may issue rules and regulations to carry out the provisions or to change the procedures of this section.

Revise ' 929.23 to read as follows:

' 929.23 Selection.

(b) Whenever any cooperative marketing organization sells more than 50 percent of the total volume of cranberries sold during the fiscal year in which nominations for membership on the committee are made, the Secretary shall select:

(1) Six cooperative members and four cooperative alternate members from nominations made pursuant to ' 929.22(b)(1).

(2) One cooperative member-at-large from nominations made pursuant to ' 929.22(b)(2), and

(3) Six independent members and four independent alternate members from growers who market their cranberries through other than cooperative marketing organizations made pursuant to ' 929.22(b)(3).

(c) Whenever any cooperative marketing organization sells less than 50 percent of the total volume of cranberries sold during the fiscal year in which nominations for membership on the committee are made, the Secretary shall select:

(1) Six cooperative members and four cooperative alternate members from nominations made pursuant to ' 929.22(c)(1).

(2) Six independent members and four independent alternate members from nominations made pursuant to ' 929.22(c)(2).

(3) One independent member-at-large from nominations made pursuant to ' 929.22(c)(3).

Revise ' 929.32 to read as follows:

' 929.32 Procedure.

(a) Ten members of the committee, or alternates acting for members, shall constitute a quorum. All actions of the committee shall require at least ten concurring votes: Provided, if the public member or the public alternate member acting in the place and stead of the public member, is present at a meeting, then eleven members shall constitute a quorum. Any action of the committee on which the public member votes shall require eleven concurring votes. If the public member abstains from voting on any particular matter, ten concurring votes shall be required for an action of the committee.

(b) The committee may vote by mail, telephone, fax, telegraph, or other electronic means; Provided that any votes cast by telephone shall be confirmed promptly in writing. Voting by proxy, mail, telephone, fax, telegraph, or other electronic means shall not be permitted at any assembled meeting of the committee.

(c) All assembled meetings of the committee shall be open to growers and handlers. The committee shall publish notice of all meetings in such manner as it deems appropriate.

Proposal No. 2

Revise ' 929.27 to read as follows:

' 929.27 Alternate members.

An alternate member of the committee, shall act in the place and stead of a member during the absence of such member, and may perform such other duties as assigned. In the event of the death, removal, resignation, or disqualification of a member, an alternate shall act for him/her until a successor for such member is selected and has qualified. In the event both a member and alternate member from the same marketing order district are unable to attend a committee meeting, the committee may designate any other alternate member to serve in such member's place and stead at that meeting provided that:

(1) A cooperative alternate member shall not serve in place of an independent member or the public member.

(2) An independent alternate member shall not serve in place of a cooperative member or the public member.

(3) A public alternate member shall not serve in place of a cooperative member or independent member.

Proposal No. 3

Add a new ' 929.28 to read as follows:

' 929.28 Redistricting

(a) The committee, with the approval of the Secretary, may reestablish districts within the production area and reapportion membership among the districts. In recommending such changes, the committee shall give consideration to:

(1) The relative volume of cranberries produced within each district.

(2) The relative number of cranberry producers within each district.

(3) Cranberry acreage within each district.

(4) Other relevant factors.

(b) The committee may establish, with the approval of the Secretary, rules and regulations for the implementation and operation of this section.

Volume Regulations

Proposal No. 4

Revise ' 929.46 to read as follows:

' 929.46 Marketing policy.

(a) As soon as practicable before March 1 the committee shall estimate the marketable quantity for the following crop year.

(b) Prior to August 31 of each crop-year, the committee shall submit to the Secretary a report setting forth its marketing policy for the crop-year. Such marketing policy shall contain the following information for the current crop year:

(1) The estimated total production of cranberries;

(2) The expected general quality of such cranberry production;

(3) The estimated carryover, as of September 1, of frozen cranberries and other cranberry products;

(4) The expected demand conditions for cranberries in different market outlets;

(5) The recommended desirable total marketable quantity of cranberries including a recommended adequate carryover into the following crop year of frozen cranberries and other cranberry products;

(6) Other factors having a bearing on the marketing of cranberries.

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