Winter Pears Grown in Oregon, Washington, and California; Recommended Decision and Opportunity To File Written Exceptions To Proposed Further Amendment of Marketing Agreement and Order No. 927

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 927

[Docket Nos. AO-99-A7; FV96-927-1]

Winter Pears Grown in Oregon, Washington, and California;

Recommended Decision and Opportunity To File Written Exceptions To

Proposed Further Amendment of Marketing Agreement and Order No. 927

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule and opportunity to file exceptions.

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SUMMARY: This recommended decision invites written exceptions on

proposed amendments to the marketing agreement and order for winter

pears grown in Oregon, Washington, and California. The proposed

amendments would remove the State of California from the order and make

related changes to provisions concerning the production area,

districts, and establishment and membership of the Winter Pear Control

Committee (Committee). Another amendment would allow the use of

telecopiers or other electronic means in Committee voting procedures.

The proposed amendments are intended to improve the administration,

operation and functioning of the order.

DATES: Written exceptions must be filed by June 26, 1997.

ADDRESSES: Written exceptions should be filed with the Hearing Clerk,

U.S. Department of Agriculture, room 1079-S, Washington, DC 20250-9200,

Facsimile number (202) 720-9776. Four copies of all written exceptions

should be submitted and they should reference the docket numbers and

the date and page number of this issue of the Federal Register.

Exceptions will be made available for public inspection in the Office

of the Hearing Clerk during regular business hours.

FOR FURTHER INFORMATION CONTACT: Kathleen M. Finn, Marketing

Specialist, Marketing Order Administration Branch, Fruit and Vegetable

Division, AMS, USDA, room 2523-S, Washington, DC 20250-0200; telephone:

(202) 720-2491, or FAX (202) 720-5698; or Teresa Hutchinson, Marketing

Specialist, Northwest Marketing Field Office, Marketing Order

Administration Branch, Fruit and Vegetable Division, AMS, USDA, 1220

S.W. Third Avenue, room 369, Portland, OR 97204-2807; telephone (509)

326-2724 or FAX (509) 326-7440. Small businesses may request

information on compliance with this regulation by contacting: Jay

Guerber, Marketing Order Administration Branch, Fruit and Vegetable

Division, AMS, USDA, P.O. Box 96456, room 2523-S, Washington, DC 20090-

6456; telephone (202) 720-2491; Fax (202) 720-5698.

SUPPLEMENTARY INFORMATION: Prior documents in this proceeding: Notice

of Hearing issued on June 24, 1996, and published in the June 26, 1996,

issue of the Federal Register (61 FR 33047).

This administrative 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.

Preliminary Statement

Notice is hereby given of the filing with the Hearing Clerk of this

recommended decision with respect to the proposed further amendment of

Marketing Agreement and Order No. 927, regulating the handling of

winter pears grown in Oregon, Washington, and California, and the

opportunity to file written exceptions thereto. Copies of this decision

can be obtained from Kathleen M. Finn or Teresa Hutchinson whose

addresses are listed above.

This action is issued pursuant to the provisions of the

Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601

et seq.), hereinafter referred to as the ``Act,'' and the applicable

rules of practice and procedure governing the formulation of marketing

agreements and orders (7 CFR Part 900).

The proposed amendment of Marketing Agreement and Order No. 927 is

based on the record of a public hearing held in Sacramento, California,

on July 9, 1996, and in Portland, Oregon, on July 10, 1996. Notice of

this hearing was published in the Federal Register on June 26, 1996.

The notice of hearing contained proposals submitted by the Winter Pear

Control Committee (Committee), which locally administers the order.

The Committee's proposed amendments would: (1) Revise the

definition of ``production area'' to mean only the States of Oregon and

Washington; (2) revise ``district'' by removing California, leaving

only those districts designated in the States of Oregon and Washington;

(3) revise ``establishment and membership'' of the Committee to be

consistent with the reduction in size of the regulated production area;

(4) revise ``procedure of Control Committee'', ``(a) Quorum and

voting'', so that the number of members needed for a quorum is

consistent with the revised Committee representation, and amend ``(b)

mail

[[Page 32549]]

voting'', to allow for the use of telecopiers and other electronic

means; and (5) revise the definition of ``pears'' to exclude pears

produced in California.

The Notice of Hearing also included a proposal by the Fruit and

Vegetable Division, Agricultural Marketing Service (AMS), U.S.

Department of Agriculture, to make such changes as are necessary to the

order, if any or all of the above amendments are adopted, so that all

of its provisions conform with the proposed amendment.

At the conclusion of the hearing, the Administrative Law Judge

fixed August 16, 1996, as the final date for interested persons to file

proposed findings and conclusions or written arguments and briefs based

on the evidence received at the hearing. No briefs were received.

Small Business Considerations

Pursuant to requirements set forth in the Regulatory Flexibility

Act (RFA), the Agricultural Marketing Service (AMS) has considered the

economic impact of this action on small entities. Accordingly, AMS has

prepared this initial regulatory flexibility analysis.

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

business subject to such actions in order that small businesses will

not be unduly or disproportionately burdened. Small agricultural

producers have been defined by the Small Business Administration (SBA)

(13 CFR 121.601) as those having annual receipts of less than $500,000.

Small agricultural service firms, which include handlers regulated

under the order, are defined as those with annual receipts of less than

$5,000,000.

Interested persons were invited to present evidence at the hearing

on the probable regulatory and informational impact of the proposed

amendments on small businesses. The record indicates that handlers

would not be unduly burdened by any additional regulatory requirements,

including those pertaining to reporting and recordkeeping, that might

result from this proceeding.

During the 1995-96 crop year, approximately 100 handlers were

regulated under Marketing Order No. 927. In addition, there were about

1,800 producers of winter pears in the production area. Production for

the 1995-96 season showed that 15,316,776 standard boxes were produced

in Oregon and Washington, while California produced 434,380 standard

boxes.

The Act requires the application of uniform rules on regulated

handlers. Marketing orders and amendments thereto are unique in that

they are normally brought about through group action of essentially

small entities for their own benefit. Thus, both the RFA and the Act

are compatible with respect to small entities.

The proposed amendment to remove the State of California would

allow the Northwest winter pear industry to operate more efficiently.

There are approximately 60 growers and 19 handlers of winter pears in

California who have asked to be removed from the marketing order since

the harvesting and marketing seasons for California pears are different

than those for pears grown in Oregon and Washington. Production for the

1995-96 season showed that 15,316,776 standard boxes were produced in

Oregon and Washington, while California produced 434,380 standard

boxes. Revenue generated from assessments collected in 1995-96 would be

$175,923 from California compared to $6,203,295 from Oregon and

Washington.

Record evidence indicated that during the 1994-95 crop year winter

pears were assessed at $.43 per standard box. According to preliminary

figures in the record, returns to handlers per standard box for that

year were $8.31. The assessment rate is about 5 percent of the

preliminary returns.

California growers believe they are funding promotion programs that

are in direct competition with their own product. Record evidence

showed that there would not be any additional burden imposed on

handlers if such an amendment was implemented. In fact, handlers in the

State of California would be relieved of any regulatory burden. Those

in Oregon and Washington could continue to benefit from operation of

the program. There are currently 1700 winter pear growers and 93 winter

pear handlers in Oregon and Washington producing over 15 million

standard boxes of pears annually. In California, there are

approximately 60 winter pear growers and 19 handlers of winter pears

producing over 400,000 standard boxes of pears annually.

Record evidence also showed that the collection of information

under the marketing order would not be effected if California was

removed from the marketing order. A witness testified that there are

alternatives that would replace the current information that is being

collected from the State of California, if it is needed. Accordingly,

this action would not impose any additional reporting or recordkeeping

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

Federal marketing order programs, reports and forms are periodically

reviewed to reduce information requirements and duplication by industry

and public sector agencies.

The Department has not identified any relevant Federal rules that

duplicate, overlap or conflict with this proposed rule.

The proposal to allow Committee members to vote by telecopiers or

other electronic means would provide members with the option to use

these methods if available when voting on an action is to be done

quickly. This would allow Committee members to vote without assembling

at a meeting place and, therefore, reduce administrative costs and act

quickly on a recommendation that needs the Committee's attention.

``Other electronic means'' includes the use of modems, video and

teleconferencing. The term is flexible to allow for the use of new

technologies by the Committee for voting.

The additional proposals are changes that would need to be made to

the marketing order to reflect the removal of the State of California.

All of these changes are designed to enhance the administration and

functioning of the marketing agreement and order to the benefit of the

industry.

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 amendments.

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 date of the entry of the ruling.

[[Page 32550]]

Material Issues

The material issues of record addressed in this decision are as

follows:

(1) Whether to revise the definition of ``production area'' to mean

only the States of Oregon and Washington;

(2) Whether to revise ``district'' by removing California, leaving

only those districts designated in the States of Oregon and Washington;

(3) Whether to revise ``establishment and membership'' of the

Committee to be consistent with the reduction in size of the regulated

production area;

(4) Whether to revise ``procedure of Control Committee,'' ``(a)

quorum and voting'', so that the number of members needed for a quorum

is consistent with Committee representation, and amend ``(b) mail

voting'', to allow for the use of telecopiers and other electronic

means; and

(5) Whether to revise the definition of ``pears'' to exclude pears

produced in California.

Findings and Conclusions

The findings and conclusions on the material issues, all of which

are based on evidence presented at the hearing and the record thereof,

are:

Material Issue Number 1

The definition of production area under Sec. 927.10 should be

amended by removing the State of California from the production area.

The new production area would include only the States of Oregon and

Washington.

Currently, Sec. 927.10 defines the production area to include the

States of Oregon, Washington and California. The winter pear marketing

order has been in effect since the early 1930's. Record evidence showed

that the primary operations of the marketing order have changed since

the inception of the order from establishing minimum quality

requirements within the industry to primarily providing an extensive

promotion and research program.

Record evidence indicated that there is also a Pear Bureau (Bureau)

that works in conjunction with the marketing order. The Bureau has been

in existence for 60 years. Its purpose is to represent the winter pear

industry in Oregon, Washington and California, and the Bartlett

industry in Oregon and Washington, in market development and promotion

and advertising throughout the international marketplace. The Bureau,

through contractual agreement, is responsible for conducting market

development and paid advertising activities authorized by the

Committee.

Currently, Sec. 927.4 of the order defines the varietal types of

pears that are covered under the order to be the Beurre, D'Anjou,

Beurre Bosc, Winter Nelis, and Doyenne du Comice varieties of pears

grown in Oregon, Washington, and California. Also, the Forelle and

Seckel varieties that are grown in Washington and Oregon are covered by

the order. The major variety grown in California that is covered under

the marketing order is the Beurre Bosc pear. The marketing order does

not cover Bartlett pears, however there are programs conducted for

Northwest Bartlett pears by the Bureau.

Record evidence showed that California Bartlett pears are included

under a California pear promotion program and therefore, are not part

of the Bureau's programs. In the past, the California Bartlett industry

has been encouraged to be represented by the Bureau but they have not

wished to be part of the Bureau. Record evidence indicated that Oregon,

Washington and California winter pear handlers work in conjunction with

each other to market most varieties of winter pears, but are segregated

where Bartlett pears are concerned. A witness testified that California

winter pear and Bartlett pear growers question why they should pay

assessments promoting winter pears as well as Northwest Bartlett pears.

Record evidence also indicated that the harvest and marketing

seasons are different for California pears and Northwest pears (i.e.,

those grown in Oregon and Washington). Winter pears grown in California

are typically harvested and marketed from late July through October

although the season sometimes extends into November. Northwest pears

are harvested and marketed beginning late in September and continuing

through the following June.

Record evidence showed that the timing of the promotional

activities for winter pears are not as effective for California

handlers of winter pears. For example, the majority of Bosc promotional

activities conducted under the order are scheduled to commence in

September or October each season. Bosc pears produced in the Greater

Sacramento District of California are typically harvested and shipped

by August. Therefore, California handlers are not able to take

advantage of such promotional activities.

Record evidence also indicated that the pesticide research programs

conducted under the marketing order may not benefit the California

grower or handler. The Committee has assessed additional money to

retain the registration of post-harvest fungicides, Ethoxyquin and

Sodium O-Phenyl phenate (SOPP). These two materials may not be used by

California shippers because of State regulatory differences. However,

the California handler is still required to pay such assessment.

Record evidence showed that there are currently 1,700 winter pear

growers in Oregon and Washington and 60 growers of winter pears in

California. There are also 93 handlers of winter pears in Oregon and

Washington and 19 handlers of winter pears in California. Production

for the 1995-96 season showed that 15,316,776 standard boxes were

produced in Oregon and Washington, while California produced 434,380

standard boxes. Revenue generated from assessments collected in 1995-96

would be $175,923 from California and $6,203,295 from Oregon and

Washington, for a total of $6,379,218. Record evidence showed that the

loss of revenue would be approximately 2.76 percent of the total

current assessment income if California was excluded from the

production area. A proponent testified that this loss of revenue to the

total program would be relatively insignificant. Such a loss would not

effect the current level of promotional and research activities and

would not adversely effect the Northwest pear industry.

Record evidence showed that the production area of Oregon and

Washington is the smallest practicable area which should be regulated

under the marketing order for winter pears.

Material Issue Number 2

Section 927.11 should be amended by deleting paragraph (e) which

specifies the district of the State of California. Section 927.11

states the districts to be covered under the marketing order. The

districts are specified under the order for purposes of representation

on the Committee. If California is removed from the production area as

proposed by the proponents, such a change would have to be made to this

section to reflect the amendment.

Material Issue Number 3

Section 927.20 should be amended by decreasing the number of

Committee members from 14 members to 12 members. Also, the number of

grower and handler members on the Committee would be decreased from

seven members to six members for each category. Currently, the district

of California is represented by one grower member and one handler

member on the Committee. Since the proposed amendment would remove the

State of California from coverage under the marketing order, record

evidence also

[[Page 32551]]

supports decreasing the Committee membership by the two California

members. A corresponding change would be made in the number of grower

and handler members. The number would be decreased from seven to six

members for each category. If California is removed from the production

area as proposed by the proponents, such a change would have to be made

to this section to reflect the amendment.

Material Issue Number 4

Section 927.33 should be amended by revising paragraph (a) to

reflect the number of Committee members that need to be present for a

quorum. Also, paragraph (b) should be revised by allowing for the use

of telecopiers when Committee members need to vote on an action.

Currently, Sec. 927.33(a) states that 10 members need to be present

to constitute a quorum. Record evidence supports decreasing the quorum

size to reflect the change in the Committee membership due to the

removal of California. The amendment would decrease the quorum size to

nine members. If California is removed from the production area as

proposed by the proponents, such a change should be made to this

section to reflect the amendment.

Section 927.33(b) states that the Committee may provide for members

to vote by mail, telephone, or telegraph, upon due notice to all

members. Record evidence supported adding the use of telecopiers as a

method of voting by Committee members. This would allow the Committee

to vote without being assembled at a meeting place and, therefore,

reduce administrative costs and act quickly on a recommendation that

needs the Committee's attention. ``Other electronic means'' is

envisioned to include the use of modems, video and teleconferencing.

The term is flexible to allow for the use of new technologies by the

Committee for voting.

Material Issue Number 5

Section 927.4 should be amended by deleting the reference to the

State of California. Currently, Sec. 927.4 lists the varieties of pears

that are covered under the marketing order. Record evidence showed that

Forelle and Seckel pear varieties are exclusively grown in Oregon and

Washington and are referenced as such under Sec. 927.4. Other pear

varieties are listed and are specified as being grown in the States of

Oregon, Washington and California. If California is removed from the

production area as proposed by the proponents, such a change would have

to be made to this section to reflect the amendment.

The Notice of Hearing also included a proposal by the Fruit and

Vegetable Division, Agricultural Marketing Service (AMS) to make such

changes as are necessary to the order, if any or all of the above

amendments are adopted, so that all of its provisions conform with the

proposed amendment. One proposed amendment has been made deleting

California from the title of the marketing order.

General Findings

(1) The findings hereinafter set forth are supplementary to the

previous findings and determinations which were made in connection with

the issuance of the marketing agreement and order and each previously

issued amendment thereto. Except insofar as such findings and

determinations may be in conflict with the findings and determinations

set forth herein, all of the said prior findings and determinations are

hereby ratified and affirmed;

(2) The marketing agreement and order, as amended, and as hereby

proposed to be further amended, and all of the terms and conditions

thereof, would tend to effectuate the declared policy of the Act;

(3) The marketing agreement and order, as amended, and as hereby

proposed to be further amended, regulate the handling of pears grown in

the production area in the same manner as, and are applicable only to,

persons in the respective classes of commercial and industrial activity

specified in the marketing order and agreement and order upon which a

hearing has been held;

(4) The marketing agreement and order, as amended, and as hereby

proposed to be further amended, are limited in their application to the

smallest regional production area which is practicable, consistent with

carrying out the declared policy of the Act, and the issuance of

several orders applicable to subdivision of the production area would

not effectively carry out the declared policy of the Act; and

(5) All handling of winter pears grown in Oregon and Washington as

defined in the marketing agreement and order, as amended, and as hereby

proposed to be further amended, is in the current of interstate or

foreign commerce or directly burdens, obstructs, or affects such

commerce.

Ten days has been determined to be an appropriate comment period

for this rule because: (1) The fiscal period of the marketing order

begins on July 1, 1997, and shipments of winter pears for the 1997-98

season begin in July. It would be difficult for the committee to

administer this amendment part-way into the season, especially after

shipments have begun. In addition, making this amendment effective as

close to the beginning of the annual pear shipments would be more

equitable to all handlers; (2) these issues were presented at a public

hearing before an administrative law judge and no opposing testimony

was presented; and (3) any comments received will be considered and a

producer referendum will be conducted prior to finalization of this

rule.

List of Subjects in 7 CFR Part 927

Marketing agreements, Pears, Reporting and recordkeeping

requirements.

Recommended Further Amendment of the Marketing Agreement and Order

For the reasons set forth in the preamble, 7 CFR part 927 is

proposed to be amended as follows:

1. The authority citation for 7 CFR part 927 continues to read as

follows:

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

PART 927--[AMENDED]

2. The part heading is revised to read as follows:

PART 927--WINTER PEARS GROWN IN OREGON AND WASHINGTON

3. Section 927.4 is revised to read as follows:

Sec. 927.4 Pears.

Pears means and includes any and all of the Beurre D'Anjou, Beurre

Bosc, Winter Nelis, Doyenne du Comice, Forelle, and Seckel varieties of

pears, and any other winter pear varieties or subvarieties that are

recognized by the Control Committee and approved by the Secretary.

4. Section 927.10 is revised to read as follows:

Sec. 927.10 Production area.

Production area means and includes the States of Oregon and

Washington.

Sec. 927.11 [Amended]

5. In Sec. 927.11, paragraph (e) is removed.

Sec. 927.20 [Amended]

6. Section 927.20 is amended by removing the number ``14'' in the

first sentence and adding in its place the number ``12'', and removing

the word ``seven'' each time it appears in the third sentence and

adding in its place the word ``six''.

[[Page 32552]]

Sec. 927.33 [Amended]

7. In Sec. 927.33, paragraph (a) is amended by removing the word

``ten'' in the first sentence and adding in its place the word

``nine''; and adding the words ``telecopier or other electronic

means,'' and a comma after the word ``mail'' in paragraph (b) first

sentence.

Dated: June 9, 1997.

Lon Hatamiya,

Administrator, Agricultural Marketing Service.

[FR Doc. 97-15663 Filed 6-13-97; 8:45 am]

BILLING CODE 3410-02-P